N-CSR 1 file001.txt NUVEEN VIRGINIA DIV ADV MUNICIPAL FUND 2 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) Jessica R. Droeger Nuveen Investments 333 West Wacker Drive Chicago, IL 60606 ------------------------------------------------------------------------------ (Name and address of agent for service) Registrant's telephone number, including area code: (312) 917-7700 ------------------- Date of fiscal year end: May 31 ------------------ Date of reporting period: May 31, 2004 ------------------ 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. Nuveen Municipal Closed-End Exchange-Traded Funds ANNUAL REPORT May 31, 2004 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 Photo of: Man holding up small boy. Photo of: 2 women with 2 girls looking at seashells. DEPENDABLE, TAX-FREE INCOME BECAUSE IT'S NOT WHAT YOU EARN, IT'S WHAT YOU KEEP.(R) Logo: NUVEEN Investments FASTER INFORMATION RECEIVE YOUR NUVEEN FUND REPORT ELECTRONICALLY By registering for electronic delivery, you will receive an e-mail as soon as your Nuveen Fund information is available. Click on the link and you will be taken directly to the report. Your Fund report can be viewed and saved on your computer. Your report will arrive faster via e-mail than by traditional mail. Registering is easy and only takes a few minutes (see instructions at right). -------------------------------------------------------------------------------- SOME COMMON CONCERNS: WILL MY E-MAIL ADDRESS BE DISTRIBUTED TO OTHER COMPANIES? No, your e-mail address is strictly confidential and will not be used for anything other than notification of shareholder information. WHAT IF I CHANGE MY MIND AND WANT TO RECEIVE INVESTOR MATERIALS THROUGH REGULAR MAIL DELIVERY AGAIN? If you decide you do not like receiving your reports electronically, it's a simple process to go back to regular mail delivery. -------------------------------------------------------------------------------- IF YOUR NUVEEN FUND DIVIDENDS AND STATEMENTS COME FROM YOUR FINANCIAL ADVISOR OR BROKERAGE ACCOUNT, FOLLOW THE STEPS OUTLINED BELOW: 1 Go to WWW.INVESTORDELIVERY.COM and follow the simple instructions, using the address sheet that accompanied this report as a guide. 2 You'll be taken to a page with several options. Select the NEW ENROLLMENT-CREATE screen and follow the simple instructions. 3 Click Submit. Confirm the information you just entered is correct, then click Submit again. 4 You should get a confirmation e-mail within 24 hours. If you do not, go back through these steps to make sure all the information is correct. 5 Use this same process if you need to change your registration information or cancel internet viewing. IF YOUR NUVEEN FUND DIVIDENDS AND STATEMENTS COME DIRECTLY TO YOU FROM NUVEEN, FOLLOW THE STEPS OUTLINED BELOW: 1 Go to WWW.NUVEEN.COM 2 Select ACCESS YOUR ACCOUNT. Select the E-REPORT ENROLLMENT section. Click on Enrollment Today. 3 You'll be taken to a screen that asks for your Social Security number and e-mail address. Fill in this information, then click Enroll. 4 You should get a confirmation e-mail within 24 hours. If you do not, go back through these steps to make sure all the information is correct. 5 Use this same process if you need to change your registration information or cancel internet viewing. Logo: NUVEEN Investments Photo of: Timothy R. Schwertfeger Timothy R. Schwertfeger Chairman of the Board Sidebar text: WE THINK THAT MUNICIPAL BOND INVESTMENTS LIKE YOUR NUVEEN FUND CAN BE IMPORTANT BUILDING BLOCKS IN A WELL-BALANCED PORTFOLIO. Dear SHAREHOLDER I am very pleased to report that for the fiscal year ended May 31, 2004, your Nuveen Fund continued to provide you with attractive monthly tax-free income. While tax-free income is always welcome, we know that many shareholders are beginning to wonder whether interest rates will rise significantly, and whether that possibility should cause them to adjust that portion of their investment portfolios allocated to tax-free municipal bonds. We believe this is a question you should consider carefully with the help of a trusted financial advisor. In many cases, it may be more appropriate to focus on long-term goals and objectives rather than shorter-term market movements, and this is where a professional advisor may be able to help keep you focused on the larger objectives of your investment program. As you read through this report, please review the inside front cover and consider receiving future Fund reports and other Fund information by e-mail and the Internet. Not only will you be able to receive the information faster, but this also may help lower your Fund's expenses. Sign up is quick and easy. Since 1898, Nuveen Investments has offered financial products and solutions that incorporate careful research, diversification and the application of conservative risk-management principles. We are grateful that you have chosen us as a partner as you pursue your financial goals. We look forward to continuing to earn your trust in the months and years ahead. Sincerely, /s/ Timothy R. Schwertfeger Timothy R. Schwertfeger Chairman of the Board July 15, 2004 1 Nuveen Maryland and Virginia Municipal Closed-End Exchange-Traded Funds (NMY, NFM, NZR, NWI, NPV, NGB, NNB) Portfolio Manager's COMMENTS Portfolio manager Paul Brennan reviews the market environment, key investment strategies and the annual performance of these Funds. Paul, who has 13 years of investment experience, including 7 years with Nuveen, assumed portfolio management responsibility for NMY and NPV in 1999, for NFM, NZR, NGB and NNB in 2001, and for NWI in 2002. WHAT FACTORS AFFECTED THE U.S. ECONOMY AND MUNICIPAL MARKET DURING THE 12-MONTH REPORTING PERIOD ENDED MAY 31, 2004? During this reporting period, the U.S. economy demonstrated growing evidence of improvement in such key areas as employment, capital spending and industrial production. Indeed, during the third quarter of 2003, the U.S. gross domestic product grew at an annualized rate of 8.2%, more than double the second quarter's performance and the fastest annualized quarterly growth rate in nearly 20 years. Although this rapid pace was not considered sustainable, the economy continued to turn in steady performance for the rest of the 12-month reporting period, expanding by an annualized 4.1% in the fourth quarter of 2003 and an annualized 3.9% in the first three months of 2004. Inflation also showed some signs of acceleration, driven mainly by higher energy and transportation costs, with the Consumer Price Index rising at a 5.1% rate (annualized) during the first five months of 2004. The combination of economic momentum and growing inflation concerns served as a catalyst for heightened volatility in the fixed-income markets. Although short-term interest rates remained at or near historical lows throughout this 12-month period, bond market long-term yields, including the municipal market, were increasingly driven by expectations that the Federal Reserve would move to increase interest rates and by speculation over the timing and extent of those increases. As one example, the yield on the Bond Buyer 25 Revenue Bond Index, a widely followed municipal bond index, rose from 4.83% at the beginning of the period to 5.50% by the middle of August 2003. The index yield then fell steadily over the next seven months to reach 4.73% by the middle of March 2004, before rising to 5.36% by the end of the reporting period. In general, municipal supply nationwide remained strong over the 12-month reporting period, with $384.8 billion in new bonds coming to market. This represented an increase of 2% over the preceding 12-month period. However, the pace of issuance slowed toward the latter part of the reporting period, with $147.8 billion in new municipal supply during the first five months of 2004, down 6% from January-May 2003. In May 2004 alone, volume decreased 9% from one year earlier. HOW ABOUT ECONOMIC AND MARKET CONDITIONS IN MARYLAND AND VIRGINIA? Maryland's economy continued to grow at a slow but steady pace, as strong activity at the Port of Baltimore, increased federal defense spending, and ties to the vibrant Washington D.C. economy helped to offset the negative impact of a declining manufacturing sector. Among promising developments was renewed growth in the state's aerospace, medical research, security and distribution industries, while consumer spending in this high-wealth state helped to lift retail employment. As of May 2004, unemployment in the state was 4.0%, down from 4.5% in May 2003 and well below the national average of 5.6%. Despite the state's historically well-managed finances and adequate reserves, the 2 $24 billion fiscal 2005-2006 biennial budget presented the challenge of closing an $800 million gap. This was accomplished without adding any new taxes, through new and one-time revenue sources and a transfer from the fully funded stabilization fund. Local economies in Maryland continued to benefit from strong property tax growth and some flexibility in raising revenue. Over the 12-month period ended May 2004, municipal issuance in Maryland totaled $6.5 billion, up 9% over the previous 12 months, although issuance slowed during the first five months of 2004. As of May 31, 2004, Maryland maintained its general obligation debt rating of Aaa/AAA, with stable outlook, from Moody's and Standard & Poor's, respectively. With an improved economy and healthy employment growth, Virginia's recent expansion continued to outpace national trends. The construction and services sectors led in job growth, helping to offset continued losses in textile and apparel manufacturing, tobacco and telecommunications. A strong tourism industry also added strength to the Virginia economy. As of May 2004, Virginia's unemployment was 3.4%, compared with 4.1% in May 2003. While federal spending for defense continued to be a key economic driver, growth remained concentrated in northern Virginia and around Norfolk, while southern and western Virginia's economy remained sluggish. Although Virginia debt continued to be rated Aaa/AAA by Moody's and Standard & Poor's, in September 2003 Moody's put the commonwealth on its negative Watch List. In May 2004, following approval of a budget and tax reform package, Moody's restored Virginia's outlook to stable. During the 12-month period ended May 2004, Virginia issued $6.5 billion in new bonds, a decrease of more than 19% from the previous 12-month period. This pattern strengthened during January-May 2004, as supply dropped 22% from the same period in 2003. IN THIS ENVIRONMENT, WHAT KEY STRATEGIES WERE USED TO MANAGE THESE FUNDS DURING THE 12 MONTHS ENDED MAY 31, 2004? As the market continued to anticipate rising interest rates, our major focus during this reporting period remained on trying to mitigate some of the interest rate risk inherent in each Fund's portfolio. Interest rate risk is the risk that the value of a Fund's portfolio will decline if market interest rates rise (since bond prices move in the opposite direction of interest rates). Since longer-term bonds often carry more interest rate risk than intermediate-term or short-term bonds, we concentrated on finding attractive securities with defensive structures in the long-intermediate part of the yield curve (i.e., bonds that mature in 15 to 20 years). In many cases, bonds in this part of the curve offered yields similar to those of longer-term bonds with less inherent interest rate risk. As new municipal supply softened toward the end of the period, the combination of tighter supply and relatively low yields meant that the new issue market did not offer many bonds that we thought would perform better than those the Funds already owned. When opportunities did arise, we sought to improve portfolio diversification by adding general obligation and tax-backed bonds, especially in Maryland, where increased issuance at the county and local municipality levels provided a greater selection of bonds with the structures we prefer. We also made some purchases in the healthcare sector, where improvements in cost containment and reimbursement practices helped the sector's long-term outlook. Some of these purchases were financed through the sale of bonds with longer maturities and with proceeds from calls, particularly in the single family and multifamily housing sectors. 3 HOW DID THE FUNDS PERFORM? Individual results for the Funds, as well as for relevant benchmarks, are presented in the accompanying table. TOTAL RETURNS ON NET ASSET VALUE For periods ended 5/31/04 (Annualized) 1-YEAR 5-YEAR 10-YEAR ------------------------------------------------------------------- NMY 0.64% 5.97% 7.19% ------------------------------------------------------------------- NFM -0.69% NA NA ------------------------------------------------------------------- NZR -1.16% NA NA ------------------------------------------------------------------- NWI -1.51% NA NA ------------------------------------------------------------------- NPV -0.42% 6.13% 7.68% ------------------------------------------------------------------- NGB -0.50% NA NA ------------------------------------------------------------------- NNB -1.84% NA NA ------------------------------------------------------------------- Lehman Brothers Municipal Bond Index1 -0.03% 5.49% 6.33% ------------------------------------------------------------------- Lipper Other States Municipal Debt Funds Average2 -0.99% 5.95% 7.16% ------------------------------------------------------------------- Past performance is not predictive of future results. For additional information, see the individual Performance Overview for your Fund in this report. For the 12 months ended May 31, 2004, NMY's total annual return on net asset value (NAV) outperformed the return on the Lehman Brothers Municipal Bond Index, while the performance of the other six Funds lagged this measure. NMY, NFM, NPV and NGB also outperformed the Lipper Other States group average, while NZR, NWI and NNB did not. One of the primary factors affecting the 12-month performance of each of these Funds compared with that of the unleveraged Lehman index was the Funds' use of leverage. Leveraging can provide opportunities for additional income and total return for common shareholders, but it is a strategy that adds volatility to the Funds' NAVs and share prices, especially when interest rates move significantly. While each of these Funds was able to generate additional income over this period through its use of leverage, rising interest rates caused larger declines in each Fund's NAV than would have been the case had the Fund not used leverage. This had a direct and negative effect on total returns over this period. Looking at specific holdings, the Funds' performances generally were helped by their positions in lower-rated bonds, which tended to outperform higher-quality bonds as the economy improved and investors' tolerance for additional credit risk increased. NMY, in particular, benefited over this period from its 3% position in bonds rated B3 issued for Dimensions Health Corporation in Prince George's County, which recovered dramatically over the year. NFM, NZR and NWI also held small positions in this issue, as we added to our holdings during the last six months of the period. Many of the Funds had housing sector positions, especially multifamily housing, that also made positive contributions to their total returns over this period. Among these seven Funds, NMY had the heaviest weighting of multifamily housing bonds, at 13% of its portfolio. All of the Funds saw good performance from their holdings in the industrial development resource sector. These bonds, often lower-rated, ranked first in terms of returns among the Lehman municipal revenue sectors during this period. Among other holdings making positive contributions to the Funds' total returns during this reporting period were bonds backed by revenues from the 1998 master tobacco settlement agreement. NMY also benefited from the fact that it had the highest level of call exposure among these Funds, with 21% of its portfolio subject to potential calls during 2004-2005. While we often try to reduce a Fund's call exposure in order to protect its income stream, callable bonds performed well during this period as interest rates rose due to their generally shorter durations. NPV had the second highest level of callable bonds, at 13%. By contrast, call exposures were 6% in NGB, 5% in NFM, 2% in NZR and NWI and 1% in NNB. Ironically, each Fund's performance during this period was constrained to a degree by its relatively large position in AAA-rated securities, 1 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. 2 The Lipper Other States Municipal Debt Funds category average is calculated using the returns of all closed-end exchange-traded funds in this category for each period as follows: 1 year, (44 funds); 5 years, (19 funds); and 10 years, (17 funds). Fund and Lipper returns assume reinvestment of dividends. 4 especially general obligation bonds. In general, these bonds did not perform as well as lower-rated bonds during the 12 month reporting period. Another negative factor affecting the 12-month performance of these Funds, especially when comparing their returns with each other, was their duration3. As previously mentioned, yields rose and bond prices fell during the course of the reporting period, negatively impacting these Funds' total returns. In general, the longer a Fund's duration, the more its value will change as interest rates change. The durations of the Funds that were introduced in 2001 and 2002--NFM, NZR, NWI, NGB and NNB--were longer during this period than NMY and NPV, which had their initial public offerings in 1993. Newer Funds generally invest in longer-term bonds at the time of their inceptions in order to begin generating attractive levels of income. As a result, these Funds tend to have relatively long durations for their first few years until their portfolios begin to season and we have the opportunity to adjust their holdings. In the interim, any rise in interest rates in the months and years immediately following a Fund's IPO often produces a greater impact on the newer Fund's performance than on the performance of an older Fund that has a greater range of bond structures and maturities within its portfolio. HOW ABOUT THE FUNDS' DIVIDENDS AND SHARE PRICES? With short-term interest rates remaining at historically low levels during this reporting period, the leveraged structures of these seven Funds continued to support their dividend-paying capabilities. The extent of this benefit is tied in part to the short-term rates the Funds pay their MuniPreferred(R) shareholders. During periods of low short-term rates, the Funds generally pay relatively lower dividends to their MuniPreferred shareholders, which can leave more earnings to support common share dividends. During this reporting period, this strategy enabled us to increase dividends of NFM, NZR, NGB and NNB, while helping to maintain the dividends of NMY, NWI and NPV throughout the period. All of these Funds seek to pay stable dividends at rates that reflect each Fund's past results and projected future performance. During certain periods, each Fund may pay dividends at a rate that may be more or less than the amount of net investment income actually earned by the Fund during the period. If a Fund has cumulatively earned more than it has paid in dividends, it holds the excess in reserve as undistributed net investment income (UNII) as part of the Fund's NAV. Conversely, if a Fund has cumulatively paid dividends in excess of its earnings, the excess constitutes negative UNII that is likewise reflected in the Fund's NAV. Each Fund will, over time, pay all of its net investment income as dividends to shareholders. As of May 31, 2004, all of the Funds in this report had positive UNII balances. NMY, NFM and NGB were trading at premiums to their net asset values as of May 31, 2004. NPV was trading at its NAV, while NZR, NWI and NNB were trading at discounts. As of the end of the fiscal year, NFM was trading at a greater premium than its average premium over the course of the 12-month period. The other six Funds were trading at smaller premiums or greater discounts than their 12-month averages. HOW WERE THE FUNDS POSITIONED IN TERMS OF CREDIT QUALITY AS OF MAY 31, 2004? Given the current geopolitical and economic climate, we continued to believe that maintaining strong credit quality was an important requirement. As of the end of May 2004, all seven of these Funds continued to offer excellent credit quality, with allocations of bonds rated AAA/U.S. guaranteed and AA ranging from 81% in NWI, NPV and NNB to 80% in NZR, 75% in NGB, 69% in NMY and 66% in NFM. 3 Duration is a measure of a Fund's net asset value (NAV) volatility in reaction to interest rate movements. Fund duration, also known as leverage-adjusted duration, takes into account the leveraging process for a Fund and therefore is generally longer than the duration of the actual portfolio of individual bonds that make up the Fund. References to duration in this commentary are intended to indicate Fund duration unless otherwise noted. 5 Nuveen Maryland Premium Income Municipal Fund Performance OVERVIEW As of May 31, 2004 NMY Pie Chart: CREDIT QUALITY AAA/U.S. Guaranteed 46% AA 23% A 16% BBB 9% NR 2% BB or Lower 4% FUND SNAPSHOT -------------------------------------------------- Share Price $14.45 -------------------------------------------------- Common Share Net Asset Value $14.28 -------------------------------------------------- Premium/(Discount) to NAV 1.19% -------------------------------------------------- Market Yield 6.31% -------------------------------------------------- Taxable-Equivalent Yield1 9.21% -------------------------------------------------- Net Assets Applicable to Common Shares ($000) $151,107 -------------------------------------------------- Average Effective Maturity (Years) 17.63 -------------------------------------------------- Leverage-Adjusted Duration 9.70 -------------------------------------------------- AVERAGE ANNUAL TOTAL RETURN (Inception 3/18/93) -------------------------------------------------- ON SHARE PRICE ON NAV -------------------------------------------------- 1-Year -10.77% 0.64% -------------------------------------------------- 5-Year 4.76% 5.97% -------------------------------------------------- 10-Year 7.26% 7.19% -------------------------------------------------- TOP FIVE SECTORS (as a % of total investments) -------------------------------------------------- Healthcare 17% -------------------------------------------------- Tax Obligation/General 17% -------------------------------------------------- Education and Civic Organizations 14% -------------------------------------------------- Tax Obligation/Limited 14% -------------------------------------------------- Housing/Multifamily 13% -------------------------------------------------- Bar Chart: 2003-2004 MONTHLY TAX-FREE DIVIDENDS PER SHARE Jun 0.076 Jul 0.076 Aug 0.076 Sep 0.076 Oct 0.076 Nov 0.076 Dec 0.076 Jan 0.076 Feb 0.076 Mar 0.076 Apr 0.076 May 0.076 Line Chart: SHARE PRICE PERFORMANCE Weekly Closing Price Past performance is not predictive of future results. 5/31/03 $17.15 16.92 17 16.7 16.32 16.75 16.88 16.41 15.4 15.19 15.45 15 15.25 15.4 15.45 15.69 15.6 15.77 15.45 15.48 15.6 15.7 16.08 15.59 15.36 15.7 15.7 16.35 16.84 16.95 16.9 17.12 17.05 16.64 16.77 16.99 17.05 17.05 17 17.1 16.6 15.75 14.78 14.57 14.46 14.56 14.15 14.4 5/31/04 14.45 1 Taxable-equivalent yield represents the yield that must be earned on a fully taxable investment in order to equal the yield of the Fund on an after-tax basis. It is based on a combined federal and state income tax rate of 31.5%. For investments that generate qualified dividend income, the taxable-equivalent yield is lower. 6 Nuveen Maryland Dividend Advantage Municipal Fund Performance OVERVIEW As of May 31, 2004 NFM Pie Chart: CREDIT QUALITY AAA/U.S. Guaranteed 42% AA 24% A 16% BBB 12% NR 5% BB or Lower 1% FUND SNAPSHOT -------------------------------------------------- Share Price $15.62 -------------------------------------------------- Common Share Net Asset Value $14.43 -------------------------------------------------- Premium/(Discount) to NAV 8.25% -------------------------------------------------- Market Yield 6.03% -------------------------------------------------- Taxable-Equivalent Yield1 8.80% -------------------------------------------------- Net Assets Applicable to Common Shares ($000) $60,041 -------------------------------------------------- Average Effective Maturity (Years) 20.63 -------------------------------------------------- Leverage-Adjusted Duration 10.27 -------------------------------------------------- AVERAGE ANNUAL TOTAL RETURN (Inception 1/23/01) -------------------------------------------------- ON SHARE PRICE ON NAV -------------------------------------------------- 1-Year 2.99% -0.69% -------------------------------------------------- Since Inception 6.83% 6.19% -------------------------------------------------- TOP FIVE SECTORS (as a % of total investments) -------------------------------------------------- Healthcare 17% -------------------------------------------------- Tax Obligation/General 14% -------------------------------------------------- U.S. Guaranteed 14% -------------------------------------------------- Tax Obligation/Limited 13% -------------------------------------------------- Education and Civic Organizations 11% -------------------------------------------------- Bar Chart: 2003-2004 MONTHLY TAX-FREE DIVIDENDS PER SHARE Jun 0.0755 Jul 0.0755 Aug 0.0755 Sep 0.0785 Oct 0.0785 Nov 0.0785 Dec 0.0785 Jan 0.0785 Feb 0.0785 Mar 0.0785 Apr 0.0785 May 0.0785 Line Chart: SHARE PRICE PERFORMANCE Weekly Closing Price Past performance is not predictive of future results. 5/31/03 $16.08 16.01 16.3 16.11 16.23 16.35 16.79 16.22 15.55 14.95 14.9 14.54 14.72 14.8 15.09 15.2 15.01 15.43 15.43 15.25 15.76 16.15 16.19 16.15 16.24 16.4 16.67 16.78 16.75 17 16.83 17 16.8 16.54 16.63 16.75 16.83 16.95 17.03 16.92 16.85 15.7 14.7 14.53 14.44 14.23 13.95 14.43 5/31/04 15.62 1 Taxable-equivalent yield represents the yield that must be earned on a fully taxable investment in order to equal the yield of the Fund on an after-tax basis. It is based on a combined federal and state income tax rate of 31.5%. For investments that generate qualified dividend income, the taxable-equivalent yield is lower. 7 Nuveen Maryland Dividend Advantage Municipal Fund 2 Performance OVERVIEW As of May 31, 2004 NZR Pie Chart: CREDIT QUALITY AAA/U.S. Guaranteed 47% AA 33% A 8% BBB 9% NR 2% BB or Lower 1% FUND SNAPSHOT -------------------------------------------------- Share Price $14.28 -------------------------------------------------- Common Share Net Asset Value $14.64 -------------------------------------------------- Premium/(Discount) to NAV -2.46% -------------------------------------------------- Market Yield 6.13% -------------------------------------------------- Taxable-Equivalent Yield1 8.95% -------------------------------------------------- Net Assets Applicable to Common Shares ($000) $61,064 -------------------------------------------------- Average Effective Maturity (Years) 19.03 -------------------------------------------------- Leverage-Adjusted Duration 11.17 -------------------------------------------------- AVERAGE ANNUAL TOTAL RETURN (Inception 9/25/01) -------------------------------------------------- ON SHARE PRICE ON NAV -------------------------------------------------- 1-Year -2.90% -1.16% -------------------------------------------------- Since Inception 3.62% 6.43% -------------------------------------------------- TOP FIVE SECTORS (as a % of total investments) -------------------------------------------------- Tax Obligation/General 27% -------------------------------------------------- Tax Obligation/Limited 13% -------------------------------------------------- U.S. Guaranteed 13% -------------------------------------------------- Healthcare 13% -------------------------------------------------- Education and Civic Organizations 12% -------------------------------------------------- Bar Chart: 2003-2004 MONTHLY TAX-FREE DIVIDENDS PER SHARE2 Jun 0.072 Jul 0.072 Aug 0.072 Sep 0.072 Oct 0.072 Nov 0.072 Dec 0.073 Jan 0.073 Feb 0.073 Mar 0.073 Apr 0.073 May 0.073 Line Chart: SHARE PRICE PERFORMANCE Weekly Closing Price Past performance is not predictive of future results. 5/31/03 $15.6 15.72 15.7 15.47 15.7 15.9 15.9 15.27 14.56 14.25 14.31 14.25 14.3 14.23 14.22 14.27 14.46 14.67 14.95 14.97 14.87 14.89 14.81 14.87 14.89 15.15 15.1 15.77 15.77 15.83 15.85 15.76 15.55 15.4 15.76 15.7 15.59 15.75 16 16 15.54 14.76 14.39 13.9 13.91 13.54 13.03 13.72 5/31/04 14.28 1 Taxable-equivalent yield represents the yield that must be earned on a fully taxable investment in order to equal the yield of the Fund on an after-tax basis. It is based on a combined federal and state income tax rate of 31.5%. For investments that generate qualified dividend income, the taxable-equivalent yield is lower. 2 The Fund also paid shareholders capital gains and net ordinary income distributions in December 2003 of $0.0187 per share. 8 Nuveen Maryland Dividend Advantage Municipal Fund 3 Performance OVERVIEW As of May 31, 2004 NWI Pie Chart: CREDIT QUALITY AAA/U.S. Guaranteed 41% AA 40% A 10% BBB 8% NR 1% FUND SNAPSHOT -------------------------------------------------- Share Price $13.24 -------------------------------------------------- Common Share Net Asset Value $13.88 -------------------------------------------------- Premium/(Discount) to NAV -4.61% -------------------------------------------------- Market Yield 5.94% -------------------------------------------------- Taxable-Equivalent Yield1 8.67% -------------------------------------------------- Net Assets Applicable to Common Shares ($000) $74,369 -------------------------------------------------- Average Effective Maturity (Years) 19.65 -------------------------------------------------- Leverage-Adjusted Duration 12.52 -------------------------------------------------- AVERAGE ANNUAL TOTAL RETURN (Inception 9/25/02) -------------------------------------------------- ON SHARE PRICE ON NAV -------------------------------------------------- 1-Year -5.97% -1.51% -------------------------------------------------- Since Inception -2.15% 3.35% -------------------------------------------------- TOP FIVE SECTORS (as a % of total investments) -------------------------------------------------- Tax Obligation/Limited 24% -------------------------------------------------- Tax Obligation/General 23% -------------------------------------------------- Housing/Multifamily 11% -------------------------------------------------- Education and Civic Organizations 11% -------------------------------------------------- U.S. Guaranteed 10% -------------------------------------------------- Bar Chart: 2003-2004 MONTHLY TAX-FREE DIVIDENDS PER SHARE Jun 0.0655 Jul 0.0655 Aug 0.0655 Sep 0.0655 Oct 0.0655 Nov 0.0655 Dec 0.0655 Jan 0.0655 Feb 0.0655 Mar 0.0655 Apr 0.0655 May 0.0655 Line Chart: SHARE PRICE PERFORMANCE Weekly Closing Price Past performance is not predictive of future results. 5/31/03 $14.9 14.84 15.05 14.81 14.96 15.05 15.12 14.57 13.8 13.7 13.67 13.19 13.42 13.55 13.38 13.29 13.32 13.21 13.08 13.29 13.31 13.46 13.25 13.31 13.51 13.55 13.41 13.68 14.21 14.21 14.2 14.1 14.17 14.27 14.36 14.46 14.67 14.65 14.8 14.99 14.95 13.89 13.23 13.15 13.45 12.94 12.8 12.95 5/31/04 13.24 1 Taxable-equivalent yield represents the yield that must be earned on a fully taxable investment in order to equal the yield of the Fund on an after-tax basis. It is based on a combined federal and state income tax rate of 31.5%. For investments that generate qualified dividend income, the taxable-equivalent yield is lower. 9 Nuveen Virginia Premium Income Municipal Fund Performance OVERVIEW As of May 31, 2004 NPV Pie Chart: CREDIT QUALITY AAA/U.S. Guaranteed 53% AA 28% A 8% BBB 5% NR 4% BB or Lower 2% FUND SNAPSHOT -------------------------------------------------- Share Price $14.95 -------------------------------------------------- Common Share Net Asset Value $14.95 -------------------------------------------------- Premium/(Discount) to NAV 0.00% -------------------------------------------------- Market Yield 6.10% -------------------------------------------------- Taxable-Equivalent Yield1 8.97% -------------------------------------------------- Net Assets Applicable to Common Shares ($000) $132,122 -------------------------------------------------- Average Effective Maturity (Years) 18.41 -------------------------------------------------- Leverage-Adjusted Duration 9.49 -------------------------------------------------- AVERAGE ANNUAL TOTAL RETURN (Inception 3/18/93) -------------------------------------------------- ON SHARE PRICE ON NAV -------------------------------------------------- 1-Year -10.70% -0.42% -------------------------------------------------- 5-Year 4.09% 6.13% -------------------------------------------------- 10-Year 7.09% 7.68% -------------------------------------------------- TOP FIVE SECTORS (as a % of total investments) -------------------------------------------------- Tax Obligation/Limited 19% -------------------------------------------------- Healthcare 17% -------------------------------------------------- Water and Sewer 12% -------------------------------------------------- Tax Obligation/General 12% -------------------------------------------------- Transportation 9% -------------------------------------------------- Bar Chart: 2003-2004 MONTHLY TAX-FREE DIVIDENDS PER SHARE Jun 0.076 Jul 0.076 Aug 0.076 Sep 0.076 Oct 0.076 Nov 0.076 Dec 0.076 Jan 0.076 Feb 0.076 Mar 0.076 Apr 0.076 May 0.076 Line Chart: SHARE PRICE PERFORMANCE Weekly Closing Price Past performance is not predictive of future results. 5/31/03 $17.67 18.05 18.07 18.17 17.57 17.78 17.89 17.8 16.95 16.83 15.99 16.62 16.48 16.6 16.9 16.75 16.5 16.92 16.71 16.67 16.92 17.24 17.45 17.6 17.12 17.2 17.25 17.42 17.32 18 18.2 18.36 18.46 18.14 17.71 17.86 18.65 18 17.99 17.62 17.85 16.68 16.18 16.1 15.65 14.56 14.5 14.85 5/31/04 14.95 1 Taxable-equivalent yield represents the yield that must be earned on a fully taxable investment in order to equal the yield of the Fund on an after-tax basis. It is based on a combined federal and state income tax rate of 32%. For investments that generate qualified dividend income, the taxable-equivalent yield is lower. 10 Nuveen Virginia Dividend Advantage Municipal Fund Performance OVERVIEW As of May 31, 2004 NGB Pie Chart: CREDIT QUALITY AAA/U.S. Guaranteed 53% AA 22% A 10% BBB 7% NR 5% BB or Lower 3% FUND SNAPSHOT -------------------------------------------------- Share Price $15.07 -------------------------------------------------- Common Share Net Asset Value $14.42 -------------------------------------------------- Premium/(Discount) to NAV 4.51% -------------------------------------------------- Market Yield 6.25% -------------------------------------------------- Taxable-Equivalent Yield1 9.19% -------------------------------------------------- Net Assets Applicable to Common Shares ($000) $44,988 -------------------------------------------------- Average Effective Maturity (Years) 19.17 -------------------------------------------------- Leverage-Adjusted Duration 10.86 -------------------------------------------------- AVERAGE ANNUAL TOTAL RETURN (Inception 1/26/01) -------------------------------------------------- ON SHARE PRICE ON NAV -------------------------------------------------- 1-Year -8.11% -0.50% -------------------------------------------------- Since Inception 5.70% 6.22% -------------------------------------------------- TOP FIVE SECTORS (as a % of total investments) -------------------------------------------------- Tax Obligation/General 19% -------------------------------------------------- Transportation 17% -------------------------------------------------- Healthcare 13% -------------------------------------------------- Tax Obligation/Limited 10% -------------------------------------------------- Water and Sewer 10% -------------------------------------------------- Bar Chart: 2003-2004 MONTHLY TAX-FREE DIVIDENDS PER SHARE Jun 0.0755 Jul 0.0755 Aug 0.0755 Sep 0.0785 Oct 0.0785 Nov 0.0785 Dec 0.0785 Jan 0.0785 Feb 0.0785 Mar 0.0785 Apr 0.0785 May 0.0785 Line Chart: SHARE PRICE PERFORMANCE Weekly Closing Price Past performance is not predictive of future results. 5/31/03 $17.35 17.56 17.5 17.5 17.24 17.25 17.1 16.87 15.79 16.38 16.35 16.02 16.1 16.19 16.02 16.25 15.9 16.56 16.75 16.6 16.8 17.15 17.15 16.25 16.55 16.69 16.63 17.02 17.49 17.95 18.45 17.82 17.86 17.94 17.6 17.75 17.8 17.7 18 17.85 17.55 17.15 15.37 15.45 15.1 14.76 14.35 14.95 5/31/04 15.07 1 Taxable-equivalent yield represents the yield that must be earned on a fully taxable investment in order to equal the yield of the Fund on an after-tax basis. It is based on a combined federal and state income tax rate of 32%. For investments that generate qualified dividend income, the taxable-equivalent yield is lower. 11 Nuveen Virginia Dividend Advantage Municipal Fund 2 Performance OVERVIEW As of May 31, 2004 NNB Pie Chart: CREDIT QUALITY AAA/U.S. Guaranteed 50% AA 31% A 7% BBB 7% NR 4% BB or Lower 1% FUND SNAPSHOT -------------------------------------------------- Share Price $14.65 -------------------------------------------------- Common Share Net Asset Value $14.79 -------------------------------------------------- Premium/(Discount) to NAV -0.95% -------------------------------------------------- Market Yield 6.10% -------------------------------------------------- Taxable-Equivalent Yield1 8.97% -------------------------------------------------- Net Assets Applicable to Common Shares ($000) $84,248 -------------------------------------------------- Average Effective Maturity (Years) 19.82 -------------------------------------------------- Leverage-Adjusted Duration 11.94 -------------------------------------------------- AVERAGE ANNUAL TOTAL RETURN (Inception 11/15/01) -------------------------------------------------- ON SHARE PRICE ON NAV -------------------------------------------------- 1-Year -3.81% -1.84% -------------------------------------------------- Since Inception 4.59% 7.09% -------------------------------------------------- TOP FIVE SECTORS (as a % of total investments) -------------------------------------------------- Tax Obligation/General 22% -------------------------------------------------- Tax Obligation/Limited 20% -------------------------------------------------- Healthcare 15% -------------------------------------------------- Water and Sewer 15% -------------------------------------------------- Housing/Single Family 6% -------------------------------------------------- Bar Chart: 2003-2004 MONTHLY TAX-FREE DIVIDENDS PER SHARE2 Jun 0.073 Jul 0.073 Aug 0.073 Sep 0.0745 Oct 0.0745 Nov 0.0745 Dec 0.0745 Jan 0.0745 Feb 0.0745 Mar 0.0745 Apr 0.0745 May 0.0745 Line Chart: SHARE PRICE PERFORMANCE Weekly Closing Price Past performance is not predictive of future results. 5/31/03 $16.14 16.2 16.76 16.5 16.6 16.8 16.65 16.4 15.1 15.49 15.5 15.52 15.5 15.42 15.61 15.99 15.7 16 15.97 16.12 16.23 16.25 16.53 16.18 16.49 16.35 16.53 17.15 17.75 17.5 17.55 16.93 16.68 16.52 16.7 16.61 16.95 16.7 16.38 16.9 16.95 16.2 15.05 14.7 14.72 14.75 14.5 14.39 5/31/04 14.65 1 Taxable-equivalent yield represents the yield that must be earned on a fully taxable investment in order to equal the yield of the Fund on an after-tax basis. It is based on a combined federal and state income tax rate of 32%. For investments that generate qualified dividend income, the taxable-equivalent yield is lower. 2 The Fund also paid shareholders capital gains and net ordinary income distributions in December 2003 of $0.0472 per share. 12 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 as of May 31, 2004, and the related statements of operations, changes in net assets and the financial highlights for the periods indicated therein. These financial statements and financial highlights are the responsibility of the Funds' management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights. Our procedures included confirmation of securities owned as of May 31, 2004, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. 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 position 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, 2004, and the results of their operations, changes in their net assets and their financial highlights for the periods indicated therein in conformity with U.S. generally accepted accounting principles. /s/ Ernst & Young LLP CHICAGO, ILLINOIS JULY 9, 2004 13 Nuveen Maryland Premium Income Municipal Fund (NMY) Portfolio of INVESTMENTS May 31, 2004
PRINCIPAL OPTIONAL CALL MARKET AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE ------------------------------------------------------------------------------------------------------------------------------------ CONSUMER STAPLES - 1.8% $ 3,255 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 5/12 at 100.00 BBB $ 2,785,499 Asset-Backed Refunding Bonds, Series 2002, 5.375%, 5/15/33 ------------------------------------------------------------------------------------------------------------------------------------ EDUCATION AND CIVIC ORGANIZATIONS - 20.8% 1,000 Hartford County, Maryland, Economic Development Revenue 4/14 at 100.00 A+ 997,380 Bonds, Battelle Memorial Institute, Series 2004, 5.250%, 4/01/34 1,000 Maryland Economic Development Corporation, Student Housing 6/09 at 102.00 Baa3 1,033,530 Revenue Bonds, Collegiate Housing Foundation - Salisbury State University, Series 1999A, 6.000%, 6/01/19 2,250 Maryland Economic Development Corporation, Student Housing 6/09 at 102.00 Baa2 2,251,912 Revenue Bonds, Collegiate Housing Foundation - College Park, Series 1999A, 5.750%, 6/01/24 1,000 Maryland Economic Development Corporation, Student Housing 10/13 at 100.00 Baa3 1,005,330 Revenue Bonds, University of Maryland - Baltimore, Series 2003A, 5.625%, 10/01/23 Maryland Economic Development Corporation, Utility Infrastructure Revenue Bonds, University of Maryland - College Park Project, Series 2001: 1,000 5.375%, 7/01/15 - AMBAC Insured 7/11 at 100.00 AAA 1,072,010 1,000 5.375%, 7/01/16 - AMBAC Insured 7/11 at 100.00 AAA 1,072,010 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 772,170 500 5.250%, 7/01/30 - FSA Insured 1/11 at 101.00 AAA 511,600 1,500 Maryland Health and Higher Educational Facilities Authority, 7/07 at 102.00 AA 1,571,700 Revenue Refunding Bonds, Johns Hopkins University, Series 1997, 5.625%, 7/01/27 1,400 Maryland Health and Higher Educational Facilities Authority, 6/11 at 100.00 Baa1 1,416,296 Revenue Bonds, Maryland Institute College of Art, Series 2001, 5.625%, 6/01/36 9,445 Morgan State University, Maryland, Student Tuition and No Opt. Call AAA 11,008,714 Fee Revenue Refunding Bonds, Academic Fees and Auxiliary Facilities, Series 1993, 6.100%, 7/01/20 - MBIA Insured University of Maryland, Auxiliary Facility and Tuition Revenue Bonds, Series 2003A: 5,645 5.000%, 4/01/15 4/13 at 100.00 AA 6,003,232 2,680 5.000%, 4/01/19 4/13 at 100.00 AA 2,769,780 ------------------------------------------------------------------------------------------------------------------------------------ HEALTHCARE - 25.9% 2,550 Gaithersburg, Maryland, Hospital Facilities Refunding and No Opt. Call AAA 3,016,268 Improvement Revenue Bonds, Shady Grove Adventist Hospital, Series 1995, 6.500%, 9/01/12 - FSA Insured 2,000 Maryland Health and Higher Educational Facilities Authority, 6/09 at 101.00 A 2,092,320 Revenue Bonds, Kaiser Permanente System, Series 1998A, 5.375%, 7/01/15 750 Maryland Health and Higher Educational Facilities Authority, 7/10 at 101.00 A3 844,297 Revenue Bonds, University of Maryland Medical System, Series 2000, 6.750%, 7/01/30 Maryland Health and Higher Educational Facilities Authority, Revenue Bonds, Johns Hopkins Hospital, Howard County General Hospital Acquisition, Series 1998: 1,000 5.000%, 7/01/19 - MBIA Insured 7/08 at 101.00 AAA 1,015,660 1,250 5.000%, 7/01/29 - MBIA Insured 7/08 at 101.00 AAA 1,249,050 1,500 Maryland Health and Higher Educational Facilities Authority, 1/08 at 101.00 Aaa 1,503,030 Revenue Bonds, Upper Chesapeake Hospitals, Series 1998A, 5.125%, 1/01/38 - FSA Insured 1,500 Maryland Health and Higher Educational Facilities Authority, 7/11 at 100.00 A+ 1,426,350 Revenue Bonds, Greater Baltimore Medical Center, Series 2001, 5.000%, 7/01/34 1,500 Maryland Health and Higher Educational Facilities Authority, 7/12 at 100.00 A 1,591,065 Revenue Bonds, University of Maryland Medical System, Series 2002, 6.000%, 7/01/22 14 PRINCIPAL OPTIONAL CALL MARKET AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE ------------------------------------------------------------------------------------------------------------------------------------ HEALTHCARE (continued) $ 4,500 Maryland Health and Higher Educational Facilities Authority, 7/12 at 100.00 Baa1 $ 4,607,325 Revenue Bonds, Carroll County General Hospital, Series 2002, 5.800%, 7/01/32 2,750 Maryland Health and Higher Educational Facilities Authority, 7/12 at 100.00 A3 2,678,555 Revenue Bonds, Frederick Memorial Hospital, Series 2002, 5.125%, 7/01/35 3,250 Maryland Health and Higher Educational Facilities Authority, 7/12 at 100.00 A3 3,294,070 Revenue Bonds, Union Hospital of Cecil County, Series 2002, 5.625%, 7/01/32 3,800 Maryland Health and Higher Educational Facilities Authority, 7/13 at 100.00 Baa2 3,742,848 Revenue Bonds, Kennedy Krieger Institute, Series 2003, 5.500%, 7/01/33 1,000 Maryland Health and Higher Educational Facilities Authority, 7/13 at 100.00 AAA 1,009,780 Revenue Bonds, University of Maryland Medical System, Series 2004B, 5.000%, 7/01/24 - AMBAC Insured 1,500 Maryland Health and Higher Educational Facilities Authority, 8/14 at 100.00 BBB 1,434,000 Revenue Bonds, Medstar Health, Series 2004, 5.375%, 8/15/24 Maryland Health and Higher Educational Facilities Authority, Revenue Bonds, LifeBridge Health System, Series 2004A: 340 4.750%, 7/01/28 7/14 at 100.00 A 311,464 1,540 5.125%, 7/01/34 7/14 at 100.00 A 1,493,076 Prince George's County, Maryland, Revenue Refunding and Project Bonds, Dimensions Health Corporation, Series 1994: 825 5.000%, 7/01/05 7/04 at 102.00 B3 739,951 3,080 5.375%, 7/01/14 7/04 at 102.00 B3 2,432,646 6,000 5.300%, 7/01/24 7/04 at 102.00 B3 4,517,400 ------------------------------------------------------------------------------------------------------------------------------------ HOUSING/MULTIFAMILY - 19.9% 1,795 Charles County, Maryland, FHA-Insured Mortgage Revenue 5/05 at 102.00 AAA 1,849,101 Refunding Bonds, Holly Station IV Townhouses Project, Series 1995A, 6.450%, 5/01/26 Howard County, Maryland, FHA-Insured Mortgage Revenue Refunding Bonds, Normandy Woods III Apartments Project, Series 1996A: 700 6.000%, 7/01/17 7/06 at 102.00 AAA 728,812 2,000 6.100%, 7/01/25 7/06 at 102.00 AAA 2,065,680 2,500 Maryland Community Development Administration, Housing 1/09 at 101.00 Aa2 2,516,150 Revenue Bonds, Series 1999A, 5.350%, 7/01/41 (Alternative Minimum Tax) 880 Maryland Community Development Administration, Housing 1/10 at 100.00 Aa2 919,081 Revenue Bonds, Series 1999B, 6.250%, 7/01/32 (Alternative Minimum Tax) 1,450 Maryland Community Development Administration, FNMA 2/11 at 101.00 Aaa 1,525,966 Multifamily Development Revenue Bonds, Edgewater Village Apartments, Series 2000B, 5.800%, 8/01/20 (Alternative Minimum Tax) 2,000 Montgomery County Housing Opportunities Commission, 7/05 at 102.00 Aa2 2,064,920 Maryland, GNMA/FHA-Insured Multifamily Housing Revenue Bonds, Series 1995A, 5.900%, 7/01/15 1,500 Montgomery County Housing Opportunities Commission, 7/06 at 102.00 Aaa 1,545,345 Maryland, Multifamily Housing Development Bonds, Series 1996B, 5.900%, 7/01/26 3,830 Montgomery County Housing Opportunities Commission, 7/08 at 101.00 Aaa 3,851,448 Maryland, FNMA/FHA-Insured Multifamily Housing Development Bonds, Series 1998A, 5.200%, 7/01/30 2,000 Montgomery County Housing Opportunities Commission, 7/10 at 100.00 Aaa 2,074,780 Maryland, Multifamily Housing Development Bonds, Series 2000A, 6.100%, 7/01/30 Prince George's County Housing Authority, Maryland, Mortgage Revenue Refunding Bonds, Cherry Hill Apartments, Series 1993A: 1,090 5.900%, 9/20/10 - FSA Insured 9/04 at 101.00 AAA 1,111,549 1,930 6.000%, 9/20/15 - FSA Insured 9/04 at 101.00 AAA 1,962,250 1,500 Prince George's County Housing Authority, Maryland, GNMA 12/04 at 102.00 AAA 1,542,165 Collateralized Mortgage Revenue Refunding Bonds, Riverview Terrace Apartments, Series 1995A, 6.700%, 6/20/20 Prince George's County Housing Authority, Maryland, GNMA Collateralized Mortgage Revenue Refunding Bonds, Overlook Apartments, Series 1995A: 2,000 5.700%, 12/20/15 12/05 at 102.00 AAA 2,071,660 1,670 5.750%, 12/20/19 12/05 at 102.00 AAA 1,720,484 15 Nuveen Maryland Premium Income Municipal Fund (NMY) (continued) Portfolio of INVESTMENTS May 31, 2004 PRINCIPAL OPTIONAL CALL MARKET AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE ------------------------------------------------------------------------------------------------------------------------------------ HOUSING/MULTIFAMILY (continued) $ 1,000 Prince George's County Housing Authority, Maryland, 11/04 at 100.00 AAA $ 1,000,670 GNMA Collateralized Mortgage Revenue Refunding Bonds, Foxglenn Apartments, Series 1998A, 5.450%, 11/20/14 (Alternative Minimum Tax) 540 Prince George's County Housing Authority, Maryland, GNMA 9/09 at 102.00 AAA 564,224 Collateralized Mortgage Revenue Bonds, University Landing Apartments, Series 1999, 6.100%, 3/20/41 (Alternative Minimum Tax) 1,000 Salisbury, Maryland, FHA-Insured Mortgage Revenue Refunding 12/04 at 102.00 AAA 1,025,750 Bonds, College Lane Apartments, Series 1995A, 6.600%, 12/01/26 ------------------------------------------------------------------------------------------------------------------------------------ HOUSING/SINGLE FAMILY - 1.0% 940 Prince George's County Housing Authority, Maryland, 8/07 at 102.00 AAA 976,181 FHLMC/FNMA/GNMA Collateralized Single Family Mortgage Revenue Bonds, Series 1997A, 5.625%, 8/01/17 (Alternative Minimum Tax) 130 Prince George's County Housing Authority, Maryland, 8/10 at 100.00 AAA 134,692 FHLMC/FNMA/GNMA Collateralized Single Family Mortgage Revenue Bonds, Series 2000A, 6.150%, 8/01/19 (Alternative Minimum Tax) 400 Puerto Rico Housing Finance Authority, Mortgage-Backed 6/13 at 100.00 AAA 380,648 Securities Program Home Mortgage Revenue Bonds, Series 2003A, 4.875%, 6/01/34 (Alternative Minimum Tax) ------------------------------------------------------------------------------------------------------------------------------------ LONG-TERM CARE - 1.8% 1,000 Carroll County, Maryland, Revenue Refunding Bonds, EMA 1/09 at 101.00 AA 1,026,330 Obligated Group, Series 1999A, 5.625%, 1/01/25 - RAAI Insured 1,745 Maryland Economic Development Corporation, Health and 4/11 at 102.00 N/R 1,742,278 Mental Hygiene Providers Revenue Bonds, Series 1996A, 7.625%, 4/01/21 ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/GENERAL - 25.0% 4,000 Anne Arundel County, Maryland, General Obligation Bonds, No Opt. Call AA+ 4,352,040 Series 2003, 5.000%, 3/01/13 Baltimore County, Maryland, Metropolitan District General Obligation Bonds, 67th Issue: 2,500 5.000%, 6/01/25 6/11 at 101.00 AAA 2,524,375 3,500 5.000%, 6/01/26 6/11 at 101.00 AAA 3,526,495 1,000 Baltimore, Maryland, General Obligation Bonds, Consolidated No Opt. Call A+ 1,164,880 Public Improvement, Series 1989B, 7.150%, 10/15/08 Frederick County, Maryland, General Obligation Public Facilities Bonds, Series 2002: 1,000 5.000%, 11/01/21 11/12 at 101.00 AA 1,031,540 1,000 5.000%, 11/01/22 11/12 at 101.00 AA 1,025,710 3,000 Frederick County, Maryland, General Obligation Public Facilities 7/09 at 101.00 AA 3,177,690 Bonds, Series 1999, 5.250%, 7/01/18 500 Frederick County, Maryland, Special Obligation Bonds, Villages 7/10 at 102.00 AA 515,115 of Lake Linganore Community Development Authority, Series 2001A, 5.700%, 7/01/29 - RAAI Insured Howard County, Maryland, Consolidated Public Improvement Bonds, Series 2004B: 735 5.000%, 8/15/16 2/14 at 100.00 AAA 783,576 1,625 5.000%, 8/15/17 2/14 at 100.00 AAA 1,719,071 1,180 5.000%, 8/15/19 2/14 at 100.00 AAA 1,233,029 1,190 Maryland National Capital Park and Planning Commission, 1/14 at 100.00 AA 1,253,617 Prince George's County, General Obligation Bonds, Park Acquisition and Development, Series 2004EE-2, 5.000%, 1/15/17 Montgomery County, Maryland, General Obligation Refunding Bonds, Consolidated Public Improvement, Series 2001: 1,750 5.250%, 10/01/13 10/11 at 101.00 AAA 1,923,828 2,000 5.250%, 10/01/18 10/11 at 101.00 AAA 2,127,200 925 Northern Mariana Islands, General Obligation Bonds, 6/10 at 100.00 A 963,489 Series 2000A, 6.000%, 6/01/20 - ACA Insured 1,000 Prince George's County, Maryland, General Obligation 12/11 at 101.00 AAA 1,056,130 Consolidated Public Improvement Bonds, Series 2001, 5.250%, 12/01/20 - FGIC Insured 3,000 Prince George's County, Maryland, General Obligation 9/12 at 101.00 AA 2,797,860 Consolidated Public Improvement Bonds, Series 2002, 4.100%, 9/15/19 5,770 Prince George's County, Maryland, General Obligation 10/13 at 100.00 AA 6,034,785 Consolidated Public Improvement Bonds, Series 2003A, 5.000%, 10/01/18 460 Wicomico County, Maryland, General Obligation Public 12/09 at 101.00 AAA 510,361 Improvement Bonds, Series 1999, 5.750%, 12/01/19 - FGIC Insured 16 PRINCIPAL OPTIONAL CALL MARKET AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/LIMITED - 20.4% Baltimore Board of School Commissioners, Maryland, City Public School System Revenue Bonds, Series 2003A: $ 1,500 5.000%, 5/01/16 5/13 at 100.00 AA+ $ 1,584,495 1,000 5.000%, 5/01/18 5/13 at 100.00 AA+ 1,042,730 1,725 Howard County, Maryland, Metropolitan District Refunding 2/12 at 100.00 AAA 1,839,557 Bonds, Series 2002A, 5.250%, 8/15/18 1,465 Maryland Community Development Administration, 6/08 at 101.00 Aaa 1,483,752 Infrastructure Financing Bonds, Series 1998B, 5.200%, 6/01/28 - MBIA Insured 4,250 Maryland Department of Transportation, County Transportation No Opt. Call AA 4,753,413 Revenue Bonds, Series 2002, 5.500%, 2/01/16 1,875 Maryland Economic Development Corporation, Lease 6/12 at 100.50 AA+ 1,991,513 Revenue Bonds, Department of Transportation Headquarters Building, Series 2002, 5.375%, 6/01/19 Maryland Department of Transportation, Certificates of Participation, Mass Transit Administration Project, Series 2000: 880 5.500%, 10/15/19 (Alternative Minimum Tax) 10/10 at 101.00 AA+ 918,685 930 5.500%, 10/15/20 (Alternative Minimum Tax) 10/10 at 101.00 AA+ 966,782 1,700 Maryland Stadium Authority, Lease Revenue Bonds, 6/13 at 100.00 AA+ 1,711,645 Montgomery County Conference Center Facilities, Series 2003, 5.000%, 6/15/24 2,455 Maryland Stadium Authority, Lease Revenue Bonds, Sports 3/06 at 101.00 AAA 2,615,655 Facilities, Series 1996, 5.750%, 3/01/18 - AMBAC Insured 1,000 Montgomery County, Maryland, Lease Revenue Bonds, 6/12 at 100.00 AA 1,016,820 Metrorail Garage, Series 2002, 5.000%, 6/01/21 675 Montgomery County, Maryland, Special Obligation Bonds, 7/12 at 101.00 AA 692,570 West Germantown Development District, Senior Series 2002A, 5.500%, 7/01/27 - RAAI Insured 635 New Baltimore City Board of School Commissioners, 11/10 at 100.00 AA+ 676,694 Maryland, School System Revenue Bonds, Series 2000, 5.125%, 11/01/15 1,000 Puerto Rico Highway and Transportation Authority, Highway 7/16 at 100.00 A 1,022,300 Revenue Bonds, Series 1996Y, 5.500%, 7/01/36 1,500 Puerto Rico Highway and Transportation Authority, Highway No Opt. Call AAA 1,676,100 Revenue Bonds, Series 2003AA, 5.500%, 7/01/19 - MBIA Insured 2,100 Puerto Rico Municipal Finance Agency, Series 2002A, 8/12 at 100.00 AAA 2,227,680 5.250%, 8/01/21 - FSA Insured 2,000 Virgin Islands Public Finance Authority, Gross Receipts Taxes 10/10 at 101.00 BBB 2,229,400 Loan Notes, Series 1999A, 6.500%, 10/01/24 Washington Suburban Sanitary District, Montgomery and Prince George's Counties, Maryland, General Obligation Construction Bonds, Series 2000: 1,085 5.250%, 6/01/20 6/10 at 100.00 AAA 1,142,765 1,205 5.250%, 6/01/21 6/10 at 100.00 AAA 1,264,527 ------------------------------------------------------------------------------------------------------------------------------------ TRANSPORTATION - 3.9% 1,060 Baltimore, Maryland, Revenue Refunding Bonds, Parking No Opt. Call AAA 1,149,453 System Facilities, Series 1998A, 5.250%, 7/01/17 - FGIC Insured 2,075 Puerto Rico Ports Authority, Special Facilities Revenue 6/06 at 102.00 CCC 1,397,782 Bonds, American Airlines Inc., Series 1996A, 6.250%, 6/01/26 (Alternative Minimum Tax) 3,000 District of Columbia Metropolitan Area Transit Authority, No Opt. Call AAA 3,273,600 Gross Revenue Bonds, Series 2003, 5.000%, 1/01/12 - MBIA Insured ------------------------------------------------------------------------------------------------------------------------------------ U.S. GUARANTEED - 14.8% 2,500 Baltimore County, Maryland, General Obligation Consolidated 8/12 at 100.00 AAA 2,735,450 Public Improvement Bonds, Series 2002, 5.000%, 8/01/18 (Pre-refunded to 8/01/12) 2,000 Baltimore, Maryland, Revenue Refunding Bonds, Water 7/08 at 101.00 AAA 2,006,880 Projects, Series 1998A, 5.000%, 7/01/28 - FGIC Insured 2,000 Baltimore, Maryland, Revenue Refunding Bonds, Water No Opt. Call AAA 2,039,440 System Projects, Series 1994A, 5.000%, 7/01/24 - FGIC Insured 1,500 Baltimore, Maryland, Project and Revenue Refunding Bonds, 7/10 at 100.00 AAA 1,686,135 Wastewater Projects, Series 2000A, 5.625%, 7/01/30 (Pre-refunded to 7/01/10) - FSA Insured 17 Nuveen Maryland Premium Income Municipal Fund (NMY) (continued) Portfolio of INVESTMENTS May 31, 2004 PRINCIPAL OPTIONAL CALL MARKET AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE ------------------------------------------------------------------------------------------------------------------------------------ U.S. GUARANTEED (continued) $ 845 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 7/10 at 100.00 AAA $ 909,127 Asset-Backed Bonds, Series 2000, 5.750%, 7/01/20 (Pre-refunded to 7/01/10) 575 Howard County, Maryland, Consolidated Public Improvement 2/12 at 100.00 AAA 637,393 Refunding Bonds, Series 2002A, 5.250%, 8/15/18 (Pre-refunded to 2/15/12) Howard County, Maryland, Consolidated Public Improvement Refunding Bonds, Series 2003A: 1,720 5.000%, 8/15/17 (Pre-refunded to 8/15/12) 8/12 at 100.00 AAA 1,882,265 1,000 5.000%, 8/15/22 (Pre-refunded to 8/15/12) 8/12 at 100.00 AAA 1,094,340 145 Howard County, Maryland, Metropolitan District Refunding 2/12 at 100.00 AAA 160,734 Bonds, Series 2002A, 5.250%, 8/15/18 (Pre-refunded to 2/15/12) 1,875 Maryland Health and Higher Educational Facilities Authority, 7/04 at 101.00 AAA 1,919,269 Revenue Bonds, Good Samaritan Hospital, Series 1993, 5.750%, 7/01/19 - AMBAC Insured 3,125 Maryland Health and Higher Educational Facilities Authority, 7/04 at 101.00 Aaa 3,145,031 Revenue Bonds, Howard County General Hospital, Series 1993, 5.500%, 7/01/25 3,135 Maryland Health and Higher Educational Facilities Authority, No Opt. Call AAA 3,149,829 Revenue Bonds, Helix Health, Series 1997, 5.000%, 7/01/27 - AMBAC Insured 1,000 Puerto Rico Infrastructure Financing Authority, Special 10/10 at 101.00 AAA 1,064,680 Obligation Bonds, Series 2000A, 5.500%, 10/01/20 ------------------------------------------------------------------------------------------------------------------------------------ UTILITIES - 13.8% 6,000 Anne Arundel County, Maryland, Pollution Control Revenue 10/04 at 102.00 A2 6,165,600 Refunding Bonds, Baltimore Gas and Electric Company Project, Series 1994, 6.000%, 4/01/24 6,500 Calvert County, Maryland, Pollution Control Revenue 7/04 at 102.00 A2 6,638,970 Refunding Bonds, Baltimore Gas and Electric Company Project, Series 1993, 5.550%, 7/15/14 3,000 Maryland Energy Financing Administration, Revenue Bonds, 9/05 at 102.00 N/R 3,028,740 AES Warrior Run Project, Series 1995, 7.400%, 9/01/19 (Alternative Minimum Tax) 5,000 Prince George's County, Maryland, Pollution Control Revenue 7/04 at 101.00 A- 5,054,900 Refunding Bonds, Potomac Electric Power Company, Series 1993, 6.375%, 1/15/23 ------------------------------------------------------------------------------------------------------------------------------------ WATER AND SEWER - 0.7% 1,000 Baltimore, Maryland, Revenue Refunding Bonds, Water No Opt. Call AAA 1,024,910 System Projects, Series 1994A, 5.000%, 7/01/24 - FGIC Insured ------------------------------------------------------------------------------------------------------------------------------------ $ 220,830 Total Long-Term Investments (cost $223,291,162) - 149.8% 226,412,884 =============----------------------------------------------------------------------------------------------------------------------- Other Assets Less Liabilities - 2.5% 3,793,913 -------------------------------------------------------------------------------------------------------------------- Preferred Shares, at Liquidation Value - (52.3)% (79,100,000) -------------------------------------------------------------------------------------------------------------------- Net Assets Applicable to Common Shares - 100% $ 151,106,797 ==================================================================================================================== (1) All percentages shown in the Portfolio of Investments are based on net assets applicable to Common shares. * 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. ** Ratings (not covered by the report of independent registered public accounting firm): Using the higher of Standard & Poor's or Moody's rating. N/R Investment is not rated. See accompanying notes to financial statements. 18
Nuveen Maryland Dividend Advantage Municipal Fund (NFM) Portfolio of INVESTMENTS May 31, 2004
PRINCIPAL OPTIONAL CALL MARKET AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE ------------------------------------------------------------------------------------------------------------------------------------ CONSUMER STAPLES - 2.3% $ 1,625 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 5/12 at 100.00 BBB $ 1,390,610 Asset-Backed Refunding Bonds, Series 2002, 5.375%, 5/15/33 ------------------------------------------------------------------------------------------------------------------------------------ EDUCATION AND CIVIC ORGANIZATIONS - 16.4% Frederick County, Maryland, Educational Facilities Revenue Bonds, Mount St. Mary's College, Series 2001A: 465 5.700%, 9/01/20 3/10 at 101.00 BBB 477,132 1,000 5.750%, 9/01/25 3/10 at 101.00 BBB 1,013,570 500 5.800%, 9/01/30 3/10 at 101.00 BBB 506,605 645 Hartford County, Maryland, Economic Development Revenue 4/14 at 100.00 A+ 643,310 Bonds, Battelle Memorial Institute, Series 2004, 5.250%, 4/01/34 1,800 Maryland Economic Development Corporation, Student 7/11 at 101.00 A 1,844,838 Housing Revenue Bonds, Sheppard Pratt University Village, Series 2001, 6.000%, 7/01/33 - ACA Insured 1,000 Maryland Economic Development Corporation, Utility 7/11 at 100.00 AAA 1,030,090 Infrastructure Revenue Bonds, University of Maryland - College Park Project, Series 2001, 5.000%, 7/01/19 - AMBAC Insured 1,500 Maryland Health and Higher Educational Facilities Authority, 7/08 at 102.00 BBB- 1,506,345 Educational Facilities Leasehold Mortgage Revenue Bonds, McLean School, Series 2001, 6.000%, 7/01/31 625 Maryland Health and Higher Educational Facilities Authority, 6/11 at 100.00 Baa1 628,781 Revenue Bonds, Maryland Institute College of Art, Series 2001, 5.500%, 6/01/32 Puerto Rico Industrial, Tourist, Educational, Medical, and Environmental Control Facilities Financing Authority, Higher Education Revenue Bonds, Ana G. Mendez University System Project, Series 1999: 215 5.375%, 2/01/19 2/09 at 101.00 BBB 217,384 410 5.375%, 2/01/29 2/09 at 101.00 BBB 400,656 University of Maryland, Auxiliary Facility and Tuition Revenue Bonds, Series 2003A: 1,000 5.000%, 4/01/15 4/13 at 100.00 AA 1,063,460 500 5.000%, 4/01/19 4/13 at 100.00 AA 516,750 ------------------------------------------------------------------------------------------------------------------------------------ HEALTHCARE - 25.1% 2,725 Maryland Health and Higher Educational Facilities Authority, 6/09 at 101.00 A 2,850,786 Revenue Bonds, Kaiser Permanente System, Series 1998A, 5.375%, 7/01/15 1,000 Maryland Health and Higher Educational Facilities Authority, 7/08 at 102.00 A2 962,690 Revenue Bonds, Calvert Memorial Hospital, Series 1998, 5.000%, 7/01/28 1,000 Maryland Health and Higher Educational Facilities Authority, 7/08 at 101.00 AAA 1,006,710 Revenue Bonds, Anne Arundel Medical Center, Series 1998, 5.125%, 7/01/28 - FSA Insured 570 Maryland Health and Higher Educational Facilities Authority, 7/08 at 101.00 A3 571,368 Revenue Refunding Bonds, Union Hospital of Cecil County, Series 1998, 5.100%, 7/01/22 1,250 Maryland Health and Higher Educational Facilities Authority, 5/11 at 100.00 AA- 1,258,375 Revenue Bonds, Johns Hopkins Hospital, Series 2001, 5.000%, 5/15/21 1,000 Maryland Health and Higher Educational Facilities Authority, 7/11 at 100.00 A- 1,002,260 Revenue Bonds, Mercy Medical Center, Series 2001, 5.625%, 7/01/31 750 Maryland Health and Higher Educational Facilities Authority, 7/11 at 100.00 A+ 713,175 Revenue Bonds, Greater Baltimore Medical Center, Series 2001, 5.000%, 7/01/34 2,000 Maryland Health and Higher Educational Facilities Authority, 7/11 at 100.00 A 1,982,340 Revenue Bonds, University of Maryland Medical System, Series 2001, 5.250%, 7/01/28 1,000 Maryland Health and Higher Educational Facilities Authority, 7/12 at 100.00 Baa1 1,044,520 Revenue Bonds, Carroll County General Hospital, Series 2002, 6.000%, 7/01/26 19 Nuveen Maryland Dividend Advantage Municipal Fund (NFM) (continued) Portfolio of INVESTMENTS May 31, 2004 PRINCIPAL OPTIONAL CALL MARKET AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE ------------------------------------------------------------------------------------------------------------------------------------ HEALTHCARE (continued) $ 1,000 Maryland Health and Higher Educational Facilities Authority, 7/12 at 100.00 A3 $ 974,020 Revenue Bonds, Frederick Memorial Hospital, Series 2002, 5.125%, 7/01/35 1,000 Maryland Health and Higher Educational Facilities Authority, 7/13 at 100.00 Baa2 984,960 Revenue Bonds, Kennedy Krieger Institute, Series 2003, 5.500%, 7/01/33 500 Maryland Health and Higher Educational Facilities Authority, 8/14 at 100.00 BBB 478,000 Revenue Bonds, Medstar Health, Series 2004, 5.375%, 8/15/24 Maryland Health and Higher Educational Facilities Authority, Revenue Bonds, LifeBridge Health System, Series 2004A: 165 4.750%, 7/01/28 7/14 at 100.00 A 151,152 585 5.125%, 7/01/34 7/14 at 100.00 A 567,175 600 Prince George's County, Maryland, Revenue Refunding and 7/04 at 102.00 B3 451,740 Project Bonds, Dimensions Health Corporation, Series 1994, 5.300%, 7/01/24 ------------------------------------------------------------------------------------------------------------------------------------ HOUSING/MULTIFAMILY - 15.9% 750 Baltimore County, Maryland, GNMA Collateralized Revenue 10/08 at 102.00 AAA 752,580 Refunding Bonds, Cross Creek Apartments Project, Series 1998A, 5.250%, 10/20/33 2,000 Maryland Community Development Administration, Housing 7/08 at 101.00 Aa2 2,037,720 Revenue Bonds, Series 1998A, 5.625%, 1/01/40 (Alternative Minimum Tax) 850 Maryland Community Development Administration, Multifamily 5/11 at 100.00 Aa2 856,758 Housing Insured Mortgage Loans, Series 2001B, 5.350%, 5/15/32 (Alternative Minimum Tax) 1,000 Maryland Community Development Administration, Multifamily 12/11 at 100.00 Aaa 1,016,410 Housing Revenue Bonds, Princess Anne Apartments, Series 2001D, 5.450%, 12/15/33 (Alternative Minimum Tax) 750 Montgomery County Housing Opportunities Commission, 7/08 at 101.00 Aaa 754,620 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 2,081,800 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 2,041,380 Maryland, Multifamily Housing Development Bonds, Series 2001A, 5.600%, 7/01/42 (Alternative Minimum Tax) ------------------------------------------------------------------------------------------------------------------------------------ HOUSING/SINGLE FAMILY - 12.4% 195 Maryland Community Development Administration, 9/09 at 100.00 Aa2 200,257 Residential Revenue Bonds, Series 1999E, 5.700%, 9/01/17 3,000 Maryland Community Development Administration, 9/09 at 100.00 Aa2 3,099,840 Residential Revenue Bonds, Series 2000G, 5.950%, 9/01/29 (Alternative Minimum Tax) 1,130 Maryland Community Development Administration, 9/10 at 100.00 Aa2 1,167,606 Residential Revenue Bonds, Series 2000H, 5.800%, 9/01/32 (Alternative Minimum Tax) 415 Maryland Community Development Administration, Single 10/10 at 100.00 Aa2 423,674 Family Program Bonds, First Series 2001, 5.000%, 4/01/17 630 Maryland Community Development Administration, 9/10 at 100.00 Aa2 634,454 Residential Revenue Bonds, Series 2001B, 5.450%, 9/01/32 (Alternative Minimum Tax) 1,000 Maryland Community Development Administration, 3/11 at 100.00 Aa2 1,023,720 Residential Revenue Bonds, Series 2001F, 5.600%, 9/01/28 (Alternative Minimum Tax) 860 Prince George's County Housing Authority, Maryland, 8/07 at 102.00 AAA 881,543 FHLMC/FNMA/GNMA Collateralized Single Family Mortgage Revenue Bonds, Series 1997A, 5.750%, 8/01/30 (Alternative Minimum Tax) ------------------------------------------------------------------------------------------------------------------------------------ INDUSTRIALS - 1.6% 1,000 Northeast Maryland Waste Disposal Authority, Resource 1/09 at 101.00 BBB 988,050 Recovery Revenue Bonds, Baltimore RESCO Retrofit Project, Series 1998, 4.750%, 1/01/12 (Alternative Minimum Tax) ------------------------------------------------------------------------------------------------------------------------------------ LONG-TERM CARE - 1.3% 1,000 Maryland Health and Higher Educational Facilities Authority, 4/11 at 101.00 N/R 790,100 Revenue Bonds, Collington Episcopal Life, Series 2001A, 6.750%, 4/01/23 20 PRINCIPAL OPTIONAL CALL MARKET AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/GENERAL - 21.6% Anne Arundel County, Maryland, General Obligation Bonds, Various Purpose, Series 2001: $ 580 4.800%, 2/15/18 2/11 at 101.00 AA+ $ 594,030 500 5.000%, 2/15/28 2/11 at 101.00 AA+ 501,820 1,000 Anne Arundel County, Maryland, General Obligation Bonds, No Opt. Call AA+ 1,088,010 Series 2003, 5.000%, 3/01/13 3,500 Baltimore County, Maryland, Metropolitan District General 6/11 at 101.00 AAA 3,524,465 Obligation Bonds, 67th Issue, 5.000%, 6/01/27 1,000 Frederick County, Maryland, General Obligation Public 11/12 at 101.00 AA 1,025,710 Facilities Bonds, Series 2002, 5.000%, 11/01/22 1,360 Howard County, Maryland, Consolidated Public Improvement 2/09 at 101.00 AAA 1,367,004 Bonds, Series 2001A, 4.750%, 2/15/21 1,000 Maryland National Capital Park and Planning Commission, 1/14 at 100.00 AA 1,053,460 Prince George's County, General Obligation Bonds, Park Acquisition and Development, Series 2004EE-2, 5.000%, 1/15/17 430 Northern Mariana Islands, General Obligation Bonds, 6/10 at 100.00 A 447,892 Series 2000A, 6.000%, 6/01/20 - ACA Insured 740 Ocean City, Maryland, General Obligation Bonds, 3/11 at 101.00 AAA 757,434 Series 2001, 4.875%, 3/01/19 - FGIC Insured 1,500 Prince George's County, Maryland, General Obligation 12/11 at 101.00 AAA 1,584,195 Consolidated Public Improvement Bonds, Series 2001, 5.250%, 12/01/20 - FGIC Insured 1,000 Prince George's County, Maryland, General Obligation 10/13 at 100.00 AA 1,052,150 Consolidated Public Improvement Bonds, Series 2003A, 5.000%, 10/01/17 ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/LIMITED - 19.8% 815 Anne Arundel County, Maryland, Tax Increment Financing No Opt. Call N/R 810,949 Revenue Bonds, Parole Town Center Project, Series 2002, 5.000%, 7/01/12 500 Baltimore Board of School Commissioners, Maryland, City 5/13 at 100.00 AA+ 521,365 Public School System Revenue Bonds, Series 2003A, 5.000%, 5/01/18 1,500 Maryland Department of Transportation, County Transportation No Opt. Call AA 1,677,675 Revenue Bonds, Series 2002, 5.500%, 2/01/16 1,405 Maryland Economic Development Corporation, Lease 6/12 at 100.50 AA+ 1,492,307 Revenue Bonds, Department of Transportation Headquarters Building, Series 2002, 5.375%, 6/01/19 700 Puerto Rico Highway and Transportation Authority, Highway No Opt. Call AAA 782,180 Revenue Bonds, Series 2003AA, 5.500%, 7/01/19 - MBIA Insured 1,290 Virgin Islands Public Finance Authority, Gross Receipts Taxes 10/10 at 101.00 BBB 1,429,165 Loan Notes, Series 1999A, 6.375%, 10/01/19 Washington Suburban Sanitary District, Montgomery and Prince George's Counties, Maryland, General Obligation Construction Bonds, Series 2001: 895 5.000%, 6/01/22 6/11 at 100.00 AAA 910,072 935 5.000%, 6/01/23 6/11 at 100.00 AAA 946,846 985 5.000%, 6/01/24 6/11 at 100.00 AAA 993,973 1,035 5.000%, 6/01/25 6/11 at 100.00 AAA 1,043,208 1,290 Washington Suburban Sanitary District, Montgomery and 6/11 at 100.00 AAA 1,303,403 Prince George's Counties, Maryland, Water Supply Bonds, Series 2001, 4.750%, 6/01/20 ------------------------------------------------------------------------------------------------------------------------------------ TRANSPORTATION - 4.1% Maryland Health and Higher Educational Facilities Authority, Parking Revenue Bonds, Johns Hopkins Hospital, Series 2001: 650 5.000%, 7/01/27 - AMBAC Insured 7/11 at 100.00 AAA 650,663 750 5.000%, 7/01/34 - AMBAC Insured 7/11 at 100.00 AAA 745,575 1,000 District of Columbia Metropolitan Area Transit Authority, No Opt. Call AAA 1,091,200 Gross Revenue Bonds, Series 2003, 5.000%, 1/01/12 - MBIA Insured 21 Nuveen Maryland Dividend Advantage Municipal Fund (NFM) (continued) Portfolio of INVESTMENTS May 31, 2004 PRINCIPAL OPTIONAL CALL MARKET AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE ------------------------------------------------------------------------------------------------------------------------------------ U.S. GUARANTEED - 21.4% $ 1,500 Baltimore County, Maryland, General Obligation Consolidated 8/12 at 100.00 AAA $ 1,641,270 Public Improvement Bonds, Series 2002, 5.000%, 8/01/18 (Pre-refunded to 8/01/12) 1,015 Baltimore, Maryland, Revenue Refunding Bonds, Water 7/08 at 101.00 AAA 1,018,492 Projects, Series 1998A, 5.000%, 7/01/28 - FGIC Insured 670 Baltimore, Maryland, Revenue Refunding Bonds, Water No Opt. Call AAA 683,212 System Projects, Series 1994A, 5.000%, 7/01/24 - FGIC Insured 2,115 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 7/10 at 100.00 AAA 2,275,507 Asset-Backed Bonds, Series 2000, 5.750%, 7/01/20 (Pre-refunded to 7/01/10) 1,220 Howard County, Maryland, Consolidated Public Improvement 2/09 at 101.00 AAA 1,318,430 Bonds, Series 2001A, 4.750%, 2/15/20 (Pre-refunded to 2/15/09) 500 Howard County, Maryland, Consolidated Public Improvement 8/12 at 100.00 AAA 547,170 Refunding Bonds, Series 2003A, 5.000%, 8/15/15 (Pre-refunded to 8/15/12) 1,000 Maryland Transportation Authority, Revenue Refunding No Opt. Call AAA 1,160,220 Bonds, Transportation Facilities Projects, First Series 1978, 6.800%, 7/01/16 Puerto Rico Infrastructure Financing Authority, Special Obligation Bonds, Series 2000A: 2,300 5.500%, 10/01/32 10/10 at 101.00 AAA 2,416,610 1,700 5.500%, 10/01/40 10/10 at 101.00 AAA 1,786,190 ------------------------------------------------------------------------------------------------------------------------------------ UTILITIES - 7.3% 2,500 Maryland Energy Financing Administration, Revenue Bonds, 9/05 at 102.00 N/R 2,523,950 AES Warrior Run Project, Series 1995, 7.400%, 9/01/19 (Alternative Minimum Tax) 1,800 Puerto Rico Electric Power Authority, Power Revenue 7/05 at 100.00 A- 1,837,280 Refunding Bonds, Series 1995Z, 5.250%, 7/01/21 ------------------------------------------------------------------------------------------------------------------------------------ WATER AND SEWER - 0.6% 330 Baltimore, Maryland, Revenue Refunding Bonds, Water No Opt. Call AAA 338,220 System Projects, Series 1994A, 5.000%, 7/01/24 - FGIC Insured ------------------------------------------------------------------------------------------------------------------------------------ $ 88,020 Total Long-Term Investments (cost $88,998,439) - 149.8% 89,930,616 ============= -------------------------------------------------------------------------------------------------------------------- Other Assets Less Liabilities - 3.5% 2,110,706 -------------------------------------------------------------------------------------------------------------------- Preferred Shares, at Liquidation Value - (53.3)% (32,000,000) -------------------------------------------------------------------------------------------------------------------- Net Assets Applicable to Common Shares - 100% $ 60,041,322 ==================================================================================================================== (1) All percentages shown in the Portfolio of Investments are based on net assets applicable to Common shares. * 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. ** Ratings (not covered by the report of independent registered public accounting firm): Using the higher of Standard & Poor's or Moody's rating. N/R Investment is not rated. See accompanying notes to financial statements. 22
Nuveen Maryland Dividend Advantage Municipal Fund 2 (NZR) Portfolio of INVESTMENTS May 31, 2004
PRINCIPAL OPTIONAL CALL MARKET AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE ------------------------------------------------------------------------------------------------------------------------------------ CONSUMER STAPLES - 2.2% $ 815 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 5/12 at 100.00 BBB $ 697,444 Asset-Backed Refunding Bonds, Series 2002, 5.375%, 5/15/33 800 Virgin Islands Tobacco Settlement Financing Corporation, 5/11 at 100.00 Baa3 660,976 Asset-Backed Bonds, Series 2001, 5.000%, 5/15/31 ------------------------------------------------------------------------------------------------------------------------------------ EDUCATION AND CIVIC ORGANIZATIONS - 17.2% 1,100 Anne Arundel County, Maryland, Economic Development 9/12 at 102.00 A3 1,107,766 Revenue Bonds, Community College Project, Series 2002, 5.125%, 9/01/22 645 Hartford County, Maryland, Economic Development Revenue 4/14 at 100.00 A+ 643,310 Bonds, Battelle Memorial Institute, Series 2004, 5.250%, 4/01/34 1,000 Maryland Economic Development Corporation, Student 10/13 at 100.00 Baa3 1,005,330 Housing Revenue Bonds, University of Maryland - Baltimore, Series 2003A, 5.625%, 10/01/23 250 Maryland Health and Higher Educational Facilities Authority, 7/08 at 102.00 BBB- 251,058 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 424,628 Revenue Bonds, Bullis School, Series 2000, 5.250%, 7/01/30 - FSA Insured 1,000 Maryland Health and Higher Educational Facilities Authority, 7/08 at 102.00 AA 1,078,930 Revenue Refunding Bonds, Johns Hopkins University, Series 1998, 5.125%, 7/01/12 1,250 Maryland Health and Higher Educational Facilities Authority, 6/11 at 100.00 Baa1 1,257,563 Revenue Bonds, Maryland Institute College of Art, Series 2001, 5.500%, 6/01/32 500 Morgan State University, Maryland, Student Tuition and 7/12 at 100.00 AAA 513,315 Fee Revenue Bonds, Academic Fees and Auxiliary Facilities, Series 2001, 4.900%, 7/01/21 - FGIC Insured 500 Morgan State University, Maryland, Student Tuition and 7/13 at 100.00 AAA 519,030 Fee Revenue Bonds, Academic Fees and Auxiliary Facilities, Series 2003A, 5.000%, 7/01/20 - FGIC Insured University of Maryland, Auxiliary Facility and Tuition Revenue Bonds, Series 2001B: 1,580 4.375%, 4/01/17 4/11 at 100.00 AA 1,570,710 1,140 4.500%, 4/01/19 4/11 at 100.00 AA 1,122,353 1,000 University of Maryland, Auxiliary Facility and Tuition Revenue 4/13 at 100.00 AA 1,033,500 Bonds, Series 2003A, 5.000%, 4/01/19 ------------------------------------------------------------------------------------------------------------------------------------ HEALTHCARE - 18.8% 1,000 Maryland Health and Higher Educational Facilities Authority, 7/08 at 101.00 AAA 1,004,680 Revenue Bonds, Anne Arundel Medical Center, Series 1998, 5.125%, 7/01/33 - FSA Insured 1,500 Maryland Health and Higher Educational Facilities Authority, 7/11 at 100.00 A- 1,503,390 Revenue Bonds, Mercy Medical Center, Series 2001, 5.625%, 7/01/31 750 Maryland Health and Higher Educational Facilities Authority, 7/11 at 100.00 A+ 713,175 Revenue Bonds, Greater Baltimore Medical Center, Series 2001, 5.000%, 7/01/34 2,000 Maryland Health and Higher Educational Facilities Authority, 7/11 at 100.00 A 1,982,340 Revenue Bonds, University of Maryland Medical System, Series 2001, 5.250%, 7/01/28 1,000 Maryland Health and Higher Educational Facilities Authority, 7/12 at 100.00 Baa1 1,044,520 Revenue Bonds, Carroll County General Hospital, Series 2002, 6.000%, 7/01/26 500 Maryland Health and Higher Educational Facilities Authority, 7/12 at 100.00 A3 487,010 Revenue Bonds, Frederick Memorial Hospital, Series 2002, 5.125%, 7/01/35 1,000 Maryland Health and Higher Educational Facilities Authority, 7/13 at 100.00 Baa2 984,960 Revenue Bonds, Kennedy Krieger Institute, Series 2003, 5.500%, 7/01/33 500 Maryland Health and Higher Educational Facilities Authority, 8/14 at 100.00 BBB 478,000 Revenue Bonds, Medstar Health, Series 2004, 5.375%, 8/15/24 23 Nuveen Maryland Dividend Advantage Municipal Fund 2 (NZR) (continued) Portfolio of INVESTMENTS May 31, 2004 PRINCIPAL OPTIONAL CALL MARKET AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE ------------------------------------------------------------------------------------------------------------------------------------ HEALTHCARE (continued) Maryland Health and Higher Educational Facilities Authority, Revenue Bonds, LifeBridge Health System, Series 2004A: $ 165 4.750%, 7/01/28 7/14 at 100.00 A $ 151,152 525 5.125%, 7/01/34 7/14 at 100.00 A 509,003 2,160 Montgomery County, Maryland, Economic Development 12/11 at 100.00 AA- 2,172,010 Revenue Bonds, Trinity Healthcare Group, Series 2001, 5.125%, 12/01/22 Prince George's County, Maryland, Revenue Refunding and Project Bonds, Dimensions Health Corporation, Series 1994: 100 5.375%, 7/01/14 7/04 at 102.00 B3 78,982 500 5.300%, 7/01/24 7/04 at 102.00 B3 376,450 ------------------------------------------------------------------------------------------------------------------------------------ HOUSING/MULTIFAMILY - 14.9% 55 Maryland Community Development Administration, 5/11 at 100.00 Aa2 55,117 Multifamily Housing Insured Mortgage Loans, Series 2001A, 5.100%, 5/15/28 4,255 Maryland Community Development Administration, 5/11 at 100.00 Aa2 4,288,827 Multifamily Housing Insured Mortgage Loans, Series 2001B, 5.350%, 5/15/32 (Alternative Minimum Tax) 1,110 Maryland Community Development Administration, 12/11 at 100.00 Aaa 1,128,215 Multifamily Housing Revenue Bonds, Princess Anne Apartments, Series 2001D, 5.450%, 12/15/33 (Alternative Minimum Tax) 3,145 Maryland Community Development Administration, 12/11 at 100.00 Aaa 3,196,609 Multifamily Development Revenue Bonds, Waters Towers Senior Apartments, Series 2001F, 5.450%, 12/15/33 (Alternative Minimum Tax) 440 Maryland Community Development Administration, 5/12 at 100.00 Aa2 450,754 Multifamily Housing Insured Mortgage Revenue Bonds, Series 2002A, 5.300%, 5/15/22 ------------------------------------------------------------------------------------------------------------------------------------ HOUSING/SINGLE FAMILY - 2.5% 500 Maryland Community Development Administration, Residential 3/07 at 101.50 Aa2 514,655 Revenue Bonds, Series 1997B, 5.875%, 9/01/25 (Alternative Minimum Tax) 990 Maryland Community Development Administration, Residential 9/10 at 100.00 Aa2 998,712 Revenue Bonds, Series 2001H, 5.350%, 9/01/32 (Alternative Minimum Tax) ------------------------------------------------------------------------------------------------------------------------------------ INDUSTRIALS - 3.6% 2,250 Northeast Maryland Waste Disposal Authority, Resource 1/09 at 101.00 BBB 2,223,113 Recovery Revenue Bonds, Baltimore RESCO Retrofit Project, Series 1998, 4.750%, 1/01/12 (Alternative Minimum Tax) ------------------------------------------------------------------------------------------------------------------------------------ LONG-TERM CARE - 0.1% Maryland Health and Higher Educational Facilities Authority, Revenue Bonds, Collington Episcopal Life, Series 2001A: 10 6.750%, 4/01/20 4/09 at 100.00 N/R 7,901 25 6.750%, 4/01/23 4/11 at 101.00 N/R 19,753 30 Prince George's County, Maryland, Revenue Bonds, Collington 6/04 at 102.00 N/R 23,700 Episcopal Life Care Community, Inc., Series 1994A, 6.000%, 4/01/13 ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/GENERAL - 41.0% 1,000 Anne Arundel County, Maryland, General Obligation Bonds, No Opt. Call AA+ 1,088,010 Series 2003, 5.000%, 3/01/13 Cecil County, Maryland, General Obligation Bonds, Consolidated Public Improvement, Series 2001B: 975 4.600%, 8/01/18 8/11 at 101.00 AA- 979,514 1,020 4.600%, 8/01/19 8/11 at 101.00 AA- 1,014,319 300 4.625%, 8/01/20 8/11 at 101.00 AA- 296,949 335 4.750%, 8/01/21 8/11 at 101.00 AA- 335,348 1,000 Frederick County, Maryland, General Obligation Public 11/12 at 101.00 AA 1,038,250 Facilities Bonds, Series 2002, 5.000%, 11/01/20 3,000 Frederick County, Maryland, General Obligation Public 12/10 at 101.00 AA 3,146,370 Facilities Bonds, Series 2000, 5.200%, 12/01/19 510 Frederick, Maryland, General Obligation Refunding and 12/11 at 101.00 AA- 517,604 Improvement Bonds, Series 2001, 4.750%, 12/01/19 1,000 Howard County, Maryland, Consolidated Public Improvement 2/14 at 100.00 AAA 1,066,090 Bonds, Series 2004B, 5.000%, 8/15/16 24 PRINCIPAL OPTIONAL CALL MARKET AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/GENERAL (continued) Maryland, General Obligation Bonds, State and Local Facilities Loan, First Series 2001: $ 2,445 5.500%, 3/01/11 No Opt. Call AAA $ 2,748,962 1,500 5.500%, 3/01/12 No Opt. Call AAA 1,692,090 4,730 Montgomery County, Maryland, General Obligation Refunding 10/11 at 101.00 AAA 5,030,828 Bonds, Consolidated Public Improvement, Series 2001, 5.250%, 10/01/18 Prince George's County, Maryland, General Obligation Consolidated Public Improvement Bonds, Series 2001: 1,000 5.250%, 12/01/20 - FGIC Insured 12/11 at 101.00 AAA 1,056,130 2,820 5.250%, 12/01/21 - FGIC Insured 12/11 at 101.00 AAA 2,969,065 2,000 Puerto Rico, Public Improvement General Obligation Refunding 7/11 at 100.00 AAA 2,023,120 Bonds, Series 2001, 5.000%, 7/01/24 - FSA Insured ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/LIMITED - 19.7% 750 Anne Arundel County, Maryland, General Obligation Bonds, 8/09 at 101.00 AA+ 743,040 Consolidated Water and Sewer, Series 1999, 4.500%, 8/01/19 815 Anne Arundel County, Maryland, Tax Increment Financing No Opt. Call N/R 810,949 Revenue Bonds, Parole Town Center Project, Series 2002, 5.000%, 7/01/12 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+ 1,610,763 1,660 5.000%, 8/01/21 8/11 at 101.00 AA+ 1,684,917 530 Baltimore Board of School Commissioners, Maryland, 5/13 at 100.00 AA+ 564,726 City Public School System Revenue Bonds, Series 2003A, 5.000%, 5/01/15 1,000 Maryland Department of Transportation, County Transportation No Opt. Call AA 1,118,450 Revenue Bonds, Series 2002, 5.500%, 2/01/16 1,405 Maryland Economic Development Corporation, Lease Revenue 6/12 at 100.50 AA+ 1,492,307 Bonds, Department of Transportation Headquarters Building, Series 2002, 5.375%, 6/01/19 1,000 Montgomery County, Maryland, Special Obligation Bonds, 7/12 at 101.00 AA 1,026,030 West Germantown Development District, Senior Series 2002A, 5.500%, 7/01/27 - RAAI Insured 700 Puerto Rico Highway and Transportation Authority, Highway No Opt. Call AAA 782,180 Revenue Bonds, Series 2003AA, 5.500%, 7/01/19 - MBIA Insured 1,100 Puerto Rico Infrastructure Financing Authority, Special Tax 1/08 at 101.00 AAA 1,121,318 Revenue Bonds, Series 1997A, 5.000%, 7/01/21 - AMBAC Insured 1,000 Washington Suburban Sanitary District, Montgomery and 6/08 at 102.00 AAA 1,052,990 Prince George's Counties, Maryland, Water Supply Bonds, Series 1998, 5.000%, 6/01/15 ------------------------------------------------------------------------------------------------------------------------------------ TRANSPORTATION - 7.4% Maryland Health and Higher Educational Facilities Authority, Parking Revenue Bonds, Johns Hopkins Hospital, Series 2001: 650 5.000%, 7/01/27 - AMBAC Insured 7/11 at 100.00 AAA 650,663 2,775 5.000%, 7/01/34 - AMBAC Insured 7/11 at 100.00 AAA 2,758,628 1,000 District of Columbia Metropolitan Area Transit Authority, No Opt. Call AAA 1,091,200 Gross Revenue Bonds, Series 2003, 5.000%, 1/01/12 - MBIA Insured ------------------------------------------------------------------------------------------------------------------------------------ U.S. GUARANTEED - 18.9% 1,500 Baltimore County, Maryland, General Obligation Consolidated 8/12 at 100.00 AAA 1,641,270 Public Improvement Bonds, Series 2002, 5.000%, 8/01/18 (Pre-refunded to 8/01/12) 1,000 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 7/10 at 100.00 AAA 1,144,010 Asset-Backed Bonds, Series 2000, 6.000%, 7/01/26 (Pre-refunded to 7/01/10) 750 Howard County, Maryland, Consolidated Public Improvement 8/12 at 100.00 AAA 820,752 Refunding Bonds, Series 2003A, 5.000%, 8/15/15 (Pre-refunded to 8/15/12) 25 Nuveen Maryland Dividend Advantage Municipal Fund 2 (NZR) (continued) Portfolio of INVESTMENTS May 31, 2004 PRINCIPAL OPTIONAL CALL MARKET AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE ------------------------------------------------------------------------------------------------------------------------------------ U.S. GUARANTEED (continued) $ 1,260 Maryland Health and Higher Educational Facilities Authority, No Opt. Call AAA $ 1,346,890 Revenue Bonds, Helix Health, Series 1997, 5.000%, 7/01/17 - AMBAC Insured 1,365 Maryland Transportation Authority, Revenue Refunding No Opt. Call AAA 1,583,700 Bonds, Transportation Facilities Projects, First Series 1978, 6.800%, 7/01/16 4,000 Puerto Rico Infrastructure Financing Authority, Special 10/10 at 101.00 AAA 4,202,800 Obligation Bonds, Series 2000A, 5.500%, 10/01/40 800 Puerto Rico Public Finance Corporation, Commonwealth 8/11 at 100.00 AAA 827,120 Appropriation Bonds, Series 2001A, 5.000%, 8/01/21 (Pre-refunded to 8/01/11) - MBIA Insured ------------------------------------------------------------------------------------------------------------------------------------ UTILITIES - 3.3% 1,000 Guam Power Authority, Revenue Bonds, Series 1999A, 10/09 at 101.00 AAA 1,009,210 5.250%, 10/01/34 - MBIA Insured 1,000 Maryland Energy Financing Administration, Revenue Bonds, 9/05 at 102.00 N/R 1,009,580 AES Warrior Run Project, Series 1995, 7.400%, 9/01/19 (Alternative Minimum Tax) ------------------------------------------------------------------------------------------------------------------------------------ $ 88,780 Total Long-Term Investments (cost $90,342,700) - 149.6% 91,375,083 =============----------------------------------------------------------------------------------------------------------------------- Other Assets Less Liabilities - 2.8% 1,688,937 -------------------------------------------------------------------------------------------------------------------- Preferred Shares, at Liquidation Value - (52.4)% (32,000,000) -------------------------------------------------------------------------------------------------------------------- Net Assets Applicable to Common Shares - 100% $ 61,064,020 ==================================================================================================================== (1) All percentages shown in the Portfolio of Investments are based on net assets applicable to Common shares. * 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. ** Ratings (not covered by the report of independent registered public accounting firm): Using the higher of Standard & Poor's or Moody's rating. N/R Investment is not rated. See accompanying notes to financial statements. 26
Nuveen Maryland Dividend Advantage Municipal Fund 3 (NWI) Portfolio of INVESTMENTS May 31, 2004
PRINCIPAL OPTIONAL CALL MARKET AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE ------------------------------------------------------------------------------------------------------------------------------------ CONSUMER STAPLES - 3.3% $ 2,835 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 5/12 at 100.00 BBB $ 2,426,080 Asset-Backed Refunding Bonds, Series 2002, 5.375%, 5/15/33 ------------------------------------------------------------------------------------------------------------------------------------ EDUCATION AND CIVIC ORGANIZATIONS - 15.8% 225 Anne Arundel County, Maryland, Economic Development 9/12 at 102.00 A3 226,589 Revenue Bonds, Community College Project, Series 2002, 5.125%, 9/01/22 690 Hartford County, Maryland, Economic Development Revenue 4/14 at 100.00 A+ 688,192 Bonds, Battelle Memorial Institute, Series 2004, 5.250%, 4/01/34 130 Maryland Economic Development Corporation, Student 7/11 at 101.00 A 133,238 Housing Revenue Bonds, Sheppard Pratt University Village, Series 2001, 6.000%, 7/01/33 - ACA Insured 1,250 Maryland Economic Development Corporation, Student Housing 10/13 at 100.00 Baa3 1,256,663 Revenue Bonds, University of Maryland - Baltimore, Series 2003A, 5.625%, 10/01/23 740 Maryland Health and Higher Educational Facilities Authority, 10/09 at 101.00 A 724,090 Revenue Bonds, Loyola College, Series 1999, 5.000%, 10/01/39 1,000 Maryland Health and Higher Educational Facilities Authority, 7/12 at 100.00 AA 995,470 Revenue Bonds, Johns Hopkins University, Series 2002A, 5.000%, 7/01/32 1,500 Morgan State University, Maryland, Student Tuition and 7/13 at 100.00 AAA 1,504,275 Fee 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 966,856 Bonds, Series 2001B, 4.625%, 4/01/21 University of Maryland, Auxiliary Facility and Tuition Revenue Bonds, Series 2002A: 1,000 5.000%, 4/01/09 No Opt. Call AA 1,082,200 2,000 5.125%, 4/01/22 4/12 at 100.00 AA 2,049,420 University of Maryland, Auxiliary Facility and Tuition Revenue Bonds, Series 2003A: 1,000 5.000%, 4/01/15 4/13 at 100.00 AA 1,063,460 1,000 5.000%, 4/01/19 4/13 at 100.00 AA 1,033,500 ------------------------------------------------------------------------------------------------------------------------------------ HEALTHCARE - 13.5% 1,000 Maryland Health and Higher Educational Facilities Authority, 7/08 at 101.00 AAA 1,004,680 Revenue Bonds, Anne Arundel Medical Center, Series 1998, 5.125%, 7/01/33 - FSA Insured 1,000 Maryland Health and Higher Educational Facilities Authority, 5/11 at 100.00 AA- 1,006,700 Revenue Bonds, Johns Hopkins Hospital, Series 2001, 5.000%, 5/15/21 650 Maryland Health and Higher Educational Facilities Authority, 7/11 at 100.00 A- 651,469 Revenue Bonds, Mercy Medical Center, Series 2001, 5.625%, 7/01/31 1,000 Maryland Health and Higher Educational Facilities Authority, 7/11 at 100.00 A+ 950,900 Revenue Bonds, Greater Baltimore Medical Center, Series 2001, 5.000%, 7/01/34 1,000 Maryland Health and Higher Educational Facilities Authority, 7/12 at 100.00 A3 974,020 Revenue Bonds, Frederick Memorial Hospital, Series 2002, 5.125%, 7/01/35 1,845 Maryland Health and Higher Educational Facilities Authority, 7/12 at 100.00 A3 1,870,018 Revenue Bonds, Union Hospital of Cecil County, Series 2002, 5.625%, 7/01/32 775 Maryland Health and Higher Educational Facilities Authority, 1/13 at 101.00 Baa1 769,869 Revenue Refunding Bonds, Adventist Healthcare, Series 2003A, 5.750%, 1/01/25 1,000 Maryland Health and Higher Educational Facilities Authority, 7/13 at 100.00 Baa2 984,960 Revenue Bonds, Kennedy Krieger Institute, Series 2003, 5.500%, 7/01/33 500 Maryland Health and Higher Educational Facilities Authority, 8/14 at 100.00 BBB 478,000 Revenue Bonds, Medstar Health, Series 2004, 5.375%, 8/15/24 27 Nuveen Maryland Dividend Advantage Municipal Fund 3 (NWI) (continued) Portfolio of INVESTMENTS May 31, 2004 PRINCIPAL OPTIONAL CALL MARKET AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE ------------------------------------------------------------------------------------------------------------------------------------ HEALTHCARE (continued) Maryland Health and Higher Educational Facilities Authority, Revenue Bonds, LifeBridge Health System, Series 2004A: $ 165 4.750%, 7/01/28 7/14 at 100.00 A $ 151,152 725 5.125%, 7/01/34 7/14 at 100.00 A 702,909 700 Prince George's County, Maryland, Revenue Refunding 7/04 at 102.00 B3 527,030 and Project Bonds, Dimensions Health Corporation, Series 1994, 5.300%, 7/01/24 ------------------------------------------------------------------------------------------------------------------------------------ HOUSING/MULTIFAMILY - 16.5% 2,000 Maryland Community Development Administration, 7/12 at 100.00 Aa2 1,950,720 Housing Revenue Bonds, Series 2002B, 4.950%, 7/01/32 (Alternative Minimum Tax) 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 508,362 3,000 5.200%, 7/01/44 (Alternative Minimum Tax) 7/12 at 100.00 Aaa 2,974,860 2,000 Prince George's County Housing Authority, Maryland, GNMA 2/13 at 102.00 AAA 1,971,880 Collateralized Mortgage Revenue Bonds, Windsor Crossing Apartments, Series 2002A, 5.150%, 8/20/33 (Alternative Minimum Tax) 4,860 Prince George's County Housing Authority, Maryland, GNMA 11/12 at 100.00 AAA 4,861,604 Collateralized Mortgage Revenue Bonds, Fairview and Hillside Projects, Series 2002A, 4.700%, 11/20/22 ------------------------------------------------------------------------------------------------------------------------------------ INDUSTRIALS - 2.5% 1,900 Northeast Maryland Waste Disposal Authority, Resource 1/09 at 101.00 BBB 1,877,295 Recovery Revenue Bonds, Baltimore RESCO Retrofit Project, Series 1998, 4.750%, 1/01/12 (Alternative Minimum Tax) ------------------------------------------------------------------------------------------------------------------------------------ LONG-TERM CARE - 0.3% 265 Maryland Health and Higher Educational Facilities Authority, 4/11 at 101.00 N/R 209,377 Revenue Bonds, Collington Episcopal Life, Series 2001A, 6.750%, 4/01/23 ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/GENERAL - 33.5% 1,000 Annapolis, Maryland, General Obligation Public Improvement 4/12 at 101.00 AA 991,220 Refunding Bonds, Series 2002, 4.375%, 4/01/17 10 Anne Arundel County, Maryland, General Obligation Bonds, 5/09 at 101.00 AA+ 10,323 Consolidated Improvements, Series 1999, 5.000%, 5/15/19 1,000 Anne Arundel County, Maryland, General Obligation Bonds, No Opt. Call AA+ 1,088,010 Series 2003, 5.000%, 3/01/13 1,000 Calvert County, Maryland, General Obligation Public 1/12 at 101.00 AA 1,015,940 Improvement Bonds, Series 2002, 4.500%, 1/01/16 1,260 Charles County, Maryland, Consolidated General Obligation 1/12 at 101.00 AA 1,273,658 Public Improvement Bonds, Series 2002, 4.400%, 1/15/16 Frederick County, Maryland, General Obligation Public Facilities Bonds, Series 2002: 1,830 5.000%, 11/01/20 11/12 at 101.00 AA 1,899,998 2,035 5.000%, 11/01/21 11/12 at 101.00 AA 2,099,184 2,500 5.000%, 11/01/22 11/12 at 101.00 AA 2,564,275 100 Frederick County, Maryland, General Obligation Public 7/09 at 101.00 AA 106,226 Facilities Bonds, Series 1999, 5.250%, 7/01/17 245 Frederick County, Maryland, Special Obligation Bonds, 7/10 at 102.00 AA 260,553 Villages of Lake Linganore Community Development Authority, Series 2001A, 5.600%, 7/01/20 - RAAI Insured 1,000 Maryland National Capital Park and Planning Commission, 1/14 at 100.00 AA 1,053,460 Prince George's County, General Obligation Bonds, Park Acquisition and Development, Series 2004EE-2, 5.000%, 1/15/17 2,000 Maryland, General Obligation Bonds, State and Local Facilities No Opt. Call AAA 2,205,140 Loan, Series 2002B, 5.250%, 2/01/10 2,000 Montgomery County, Maryland, General Obligation Bonds, 2/12 at 101.00 AAA 2,080,000 Consolidated Public Improvement, Series 2002A, 5.000%, 2/01/20 5,000 Prince George's County, Maryland, General Obligation 9/12 at 101.00 AA 4,681,850 Consolidated Public Improvement Bonds, Series 2002, 4.300%, 9/15/21 28 PRINCIPAL OPTIONAL CALL MARKET AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/GENERAL (continued) $ 1,000 Prince George's County, Maryland, General Obligation 10/13 at 100.00 AA $ 1,052,150 Consolidated Public Improvement Bonds, Series 2003A, 5.000%, 10/01/17 1,430 Puerto Rico, Public Improvement General Obligation Refunding 7/11 at 100.00 AAA 1,442,870 Bonds, Series 2001, 5.125%, 7/01/30 - FSA Insured 1,000 St. Mary's County, Maryland, General Obligation Hospital No Opt. Call AA- 1,089,680 Bonds, Series 2002, 5.000%, 10/01/12 ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/LIMITED - 35.7% 530 Baltimore, Maryland, Convention Center Revenue Refunding 9/08 at 102.00 AAA 544,570 Bonds, Series 1998, 5.000%, 9/01/19 - MBIA Insured 1,000 Baltimore Board of School Commissioners, Maryland, City 5/13 at 100.00 AA+ 1,065,520 Public School System Revenue Bonds, Series 2003A, 5.000%, 5/01/15 5,000 Maryland Department of Transportation, County Transportation No Opt. Call AA 5,592,250 Revenue Bonds, Series 2002, 5.500%, 2/01/16 2,200 Maryland Economic Development Corporation, Lease 6/12 at 100.50 AA+ 2,169,860 Revenue Bonds, Department of Transportation Headquarters Building, Series 2002, 4.750%, 6/01/22 2,935 Maryland Economic Development Corporation, Lease Revenue 9/12 at 100.00 AA+ 3,150,957 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+ 1,492,190 1,620 5.000%, 6/15/23 6/13 at 100.00 AA+ 1,636,994 700 Puerto Rico Highway and Transportation Authority, Highway No Opt. Call AAA 782,180 Revenue Bonds, Series 2003AA, 5.500%, 7/01/19 - MBIA Insured 3,500 Puerto Rico Infrastructure Financing Authority, Special Tax 1/08 at 101.00 AAA 3,507,455 Revenue Bonds, Series 1997A, 5.000%, 7/01/28 - AMBAC Insured Puerto Rico Public Buildings Authority, Guaranteed Government Facilities Revenue Bonds, Series 2002G: 1,000 5.250%, 7/01/17 7/12 at 100.00 A- 1,040,380 1,205 5.250%, 7/01/20 7/12 at 100.00 A- 1,233,245 1,275 5.250%, 7/01/21 7/12 at 100.00 A- 1,299,760 1,000 Puerto Rico Public Finance Corporation, Commonwealth No Opt. Call AAA 1,054,060 Appropriation Bonds, Series 1998A, 5.125%, 6/01/24 - AMBAC Insured 935 Puerto Rico Public Finance Corporation, Commonwealth 2/12 at 100.00 BBB+ 952,784 Appropriation Bonds, Series 2002E, 5.500%,8/01/29 25 Washington Suburban Sanitary District, Maryland, General 6/11 at 101.00 AAA 26,166 Obligation Construction Bonds, Second Series 2001, 5.000%, 6/01/17 1,000 Washington Suburban Sanitary District, Montgomery and 6/08 at 102.00 AAA 1,052,990 Prince George's Counties, Maryland, Water Supply Bonds, Series 1998, 5.000%, 6/01/15 ------------------------------------------------------------------------------------------------------------------------------------ TRANSPORTATION - 1.5% 1,000 District of Columbia Metropolitan Area Transit Authority, No Opt. Call AAA 1,091,200 Gross Revenue Bonds, Series 2003, 5.000%, 1/01/12 - MBIA Insured ------------------------------------------------------------------------------------------------------------------------------------ U.S. GUARANTEED - 14.8% 2,115 Baltimore County, Maryland, General Obligation Consolidated 8/12 at 100.00 AAA 2,351,267 Public Improvement Bonds, Series 2002, 5.250%, 8/01/17 (Pre-refunded to 8/01/12) 1,210 Howard County, Maryland, Consolidated Public Improvement 2/09 at 101.00 AAA 1,307,623 Bonds, Series 2001A, 4.750%, 2/15/19 (Pre-refunded to 2/15/09) 1,215 Howard County, Maryland, Consolidated Public Improvement 8/12 at 100.00 AAA 1,329,623 Refunding Bonds, Series 2003A, 5.000%, 8/15/15 (Pre-refunded to 8/15/12) 29 Nuveen Maryland Dividend Advantage Municipal Fund 3 (NWI) (continued) Portfolio of INVESTMENTS May 31, 2004 PRINCIPAL OPTIONAL CALL MARKET AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE ------------------------------------------------------------------------------------------------------------------------------------ U.S. GUARANTEED (continued) $ 690 Maryland Transportation Authority, Revenue Refunding Bonds, No Opt. Call AAA $ 800,552 Transportation Facilities Projects, First Series 1978, 6.800%, 7/01/16 5,000 Puerto Rico Infrastructure Financing Authority, Special 10/10 at 101.00 AAA 5,253,500 Obligation Bonds, Series 2000A, 5.500%, 10/01/40 ------------------------------------------------------------------------------------------------------------------------------------ UTILITIES - 7.2% 1,250 Maryland Energy Financing Administration, Revenue Bonds, 9/05 at 102.00 N/R 1,261,975 AES Warrior Run Project, Series 1995, 7.400%, 9/01/19 (Alternative Minimum Tax) 4,025 Puerto Rico Electric Power Authority, Power Revenue Bonds, 7/10 at 101.00 AAA 4,111,980 Series 2000HH, 5.250%, 7/01/29 - FSA Insured ------------------------------------------------------------------------------------------------------------------------------------ WATER AND SEWER - 3.5% 2,570 Baltimore, Maryland, Revenue Refunding Bonds, Wastewater 7/12 at 100.00 AAA 2,574,933 Projects, Series 2002A, 5.125%, 7/01/42 - FGIC Insured ------------------------------------------------------------------------------------------------------------------------------------ $ 108,130 Total Long-Term Investments (cost $111,733,117) - 148.1% 110,174,389 =============----------------------------------------------------------------------------------------------------------------------- SHORT-TERM INVESTMENTS - 1.7% 1,250 Puerto Rico Government Development Bank, Adjustable A-1 1,250,000 Refunding Bonds, Variable Rate Demand Obligations, Series 1985, 0.970%, 12/01/15 - MBIA Insured+ ------------------------------------------------------------------------------------------------------------------------------------ $ 1,250 Total Short-Term Investments (cost $1,250,000) 1,250,000 =============----------------------------------------------------------------------------------------------------------------------- Total Investments (cost $112,983,117) - 149.8% 111,424,389 -------------------------------------------------------------------------------------------------------------------- Other Assets Less Liabilities - 2.6% 1,944,629 -------------------------------------------------------------------------------------------------------------------- Preferred Shares, at Liquidation Value - (52.4)% (39,000,000) -------------------------------------------------------------------------------------------------------------------- Net Assets Applicable to Common Shares - 100% $ 74,369,018 ==================================================================================================================== (1) All percentages shown in the Portfolio of Investments are based on net assets applicable to Common shares. * 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. ** Ratings (not covered by the report of independent registered public accounting firm): Using the higher of Standard & Poor's or Moody's rating. N/R Investment is not rated. + Security has a maturity of more than one year, but has variable rate and demand features which qualify it as a short-term security. The rate disclosed is that currently in effect. This rate changes periodically based on market conditions or a specified market index. See accompanying notes to financial statements. 30
Nuveen Virginia Premium Income Municipal Fund (NPV) Portfolio of INVESTMENTS May 31, 2004
PRINCIPAL OPTIONAL CALL MARKET AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE ------------------------------------------------------------------------------------------------------------------------------------ CONSUMER STAPLES - 1.1% $ 1,625 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 5/12 at 100.00 BBB $ 1,390,610 Asset-Backed Refunding Bonds, Series 2002, 5.375%, 5/15/33 ------------------------------------------------------------------------------------------------------------------------------------ EDUCATION AND CIVIC ORGANIZATIONS - 11.7% 3,500 Alexandria Industrial Development Authority, Virginia, 10/10 at 101.00 AAA 3,803,170 Fixed Rate Revenue Bonds, Institute for Defense Analyses, Series 2000A, 5.900%, 10/01/30 - AMBAC Insured Danville Industrial Development Authority, Virginia, Student Housing Revenue Bonds, Collegiate Housing Foundation, Averett College Project, Series 1999A: 500 6.875%, 6/01/20 6/09 at 102.00 N/R 464,785 1,500 7.000%, 6/01/30 6/09 at 102.00 N/R 1,374,135 1,000 Prince William County Industrial Development Authority, 10/13 at 101.00 A3 959,890 Virginia, 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 520,770 Revenue Refunding and Improvement Bonds, Series 1999, 6.000%, 10/15/28 500 Rockbridge County Industrial Development Authority, Virginia, 7/11 at 100.00 B2 441,735 Horse Center Revenue and Refunding Bonds, Series 2001C, 6.850%, 7/15/21 2,000 Virginia College Building Authority, Educational Facilities 9/11 at 100.00 AA+ 2,000,440 Revenue Bonds, Public Higher Education Financing Program, Series 2001A, 5.000%, 9/01/26 3,000 Virginia College Building Authority, Educational Facilities 11/04 at 100.00 Aa1 3,051,360 Revenue Bonds, University of Richmond, Series 1994, 5.550%, 11/01/19 (Optional put 11/01/04) 1,000 Virginia College Building Authority, Educational Facilities 4/10 at 101.00 A+ 1,083,140 Revenue Bonds, Hampton University, Series 2000, 6.000%, 4/01/20 1,635 Virginia Commonwealth University, Revenue Bonds, 5/14 at 101.00 AAA 1,708,477 Series 2004A, 5.000%, 5/01/17 - AMBAC Insured ------------------------------------------------------------------------------------------------------------------------------------ HEALTHCARE - 25.2% 2,000 Albemarle County Industrial Development Authority, 10/12 at 100.00 A2 1,952,100 Virginia, Hospital Revenue Bonds, Martha Jefferson Hospital, Series 2002, 5.250%, 10/01/35 2,000 Danville Industrial Development Authority, Virginia, No Opt. Call AAA 2,123,780 Hospital Revenue Bonds, Danville Regional Medical Center, Series 1998, 5.200%, 10/01/18 - AMBAC Insured 4,850 Fairfax County Industrial Development Authority, Virginia, No Opt. Call AA 4,900,537 Hospital Revenue Refunding Bonds, Inova Health System Hospitals Project, Series 1993A, 5.000%, 8/15/23 1,200 Fredericksburg Industrial Development Authority, Virginia, 6/12 at 100.00 A3 1,151,004 Revenue Bonds, MediCorp Health System, Series 2002B, 5.125%, 6/15/33 1,000 Hanover County Industrial Development Authority, Virginia, No Opt. Call AAA 1,180,620 Hospital Revenue Bonds, Memorial Regional Medical Center Project, Series 1995, 6.375%, 8/15/18 - MBIA Insured 4,650 Hanover County Industrial Development Authority, Virginia, 8/05 at 102.00 AAA 4,758,019 Hospital Revenue Bonds, Bon Secours Health System Projects, Series 1995, 5.500%, 8/15/25 - MBIA Insured 1,500 Henrico County Economic Development Authority, Virginia, 11/12 at 100.00 A- 1,506,480 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 1,760,700 Healthcare Revenue Bonds, Bon Secours Health System Inc., Series 1996, 6.250%, 8/15/20 - MBIA Insured Loudoun County Industrial Development Authority, Virginia, Hospital Revenue Bonds, Loudoun Hospital Center, Series 2002A: 375 6.000%, 6/01/22 6/12 at 101.00 BBB 388,583 800 6.100%, 6/01/32 6/12 at 101.00 BBB 820,200 2,260 Manassas Industrial Development Authority, Virginia, 4/13 at 100.00 A2 2,238,281 Hospital Revenue Bonds, Prince William Hospital, Series 2002, 5.250%, 4/01/33 31 Nuveen Virginia Premium Income Municipal Fund (NPV) (continued) Portfolio of INVESTMENTS May 31, 2004 PRINCIPAL OPTIONAL CALL MARKET AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE ------------------------------------------------------------------------------------------------------------------------------------ HEALTHCARE (continued) $ 4,750 Medical College Virginia Hospital Authority, General Revenue 7/08 at 102.00 AAA $ 4,799,733 Bonds, Series 1998, 5.125%, 7/01/23 - MBIA Insured 2,500 Norfolk Industrial Development Authority, Virginia, Hospital 11/04 at 102.00 AA 2,596,000 Revenue Refunding Bonds, Sentara Hospitals - Norfolk, Series 1994A, 6.500%, 11/01/13 3,000 Roanoke Industrial Development Authority, Virginia, Hospital 7/12 at 100.00 AAA 3,183,690 Revenue Bonds, Carilion Health System, Series 2002A, 5.500%, 7/01/19 - MBIA Insured ------------------------------------------------------------------------------------------------------------------------------------ HOUSING/MULTIFAMILY - 6.5% 1,485 Arlington County Industrial Development Authority, Virginia, 5/10 at 100.00 Aaa 1,552,820 Multifamily Housing Revenue Bonds, Patrick Henry Apartments, Series 2000, 6.050%, 11/01/32 (Alternative Minimum Tax) (Mandatory put 11/01/20) 4,445 Hampton Redevelopment and Housing Authority, Virginia, 7/04 at 100.00 A-1 4,466,292 Multifamily Housing Revenue Refunding Bonds, Chase Hampton II Apartments, Series 1994, 7.000%, 7/01/24 (Mandatory put 7/01/04) 1,495 Henrico County Economic Development Authority, Virginia, 7/09 at 102.00 AAA 1,577,644 GNMA Mortgage-Backed Securities Beth Sholom Assisted Living Revenue Bonds, Series 1999A, 5.900%, 7/20/29 1,000 Lynchburg Redevelopment and Housing Authority, 4/10 at 102.00 AAA 1,021,800 Virginia, Vistas GNMA Mortgage-Backed Revenue Bonds, Series 2000A, 6.200%, 1/20/40 (Alternative Minimum Tax) ------------------------------------------------------------------------------------------------------------------------------------ HOUSING/SINGLE FAMILY - 1.1% 425 Puerto Rico Housing Finance Authority, Mortgage-Backed 6/13 at 100.00 AAA 404,439 Securities Program Home Mortgage Revenue Bonds, Series 2003A, 4.875%, 6/01/34 (Alternative Minimum Tax) 1,000 Virginia Housing Development Authority, Commonwealth 7/11 at 100.00 AAA 991,050 Mortgage Bonds, Series 2001H-1, 5.350%, 7/01/31 - MBIA Insured ------------------------------------------------------------------------------------------------------------------------------------ INDUSTRIALS - 1.5% 2,000 Charles County Industrial Development Authority, Virginia, No Opt. Call BBB 2,041,320 Solid Waste Disposal Facility Revenue Refunding Bonds, USA Waste of Virginia, Inc. Project, Series 1999, 4.875%, 2/01/09 (Alternative Minimum Tax) ------------------------------------------------------------------------------------------------------------------------------------ LONG-TERM CARE - 1.7% Winchester Industrial Development Authority, Virginia, Residential Care Facility First Mortgage Revenue Bonds, Westminster-Canterbury of Winchester, Inc., Series 1998: 1,350 5.750%, 1/01/18 7/04 at 101.00 N/R 1,348,650 1,000 5.750%, 1/01/27 7/04 at 101.00 N/R 945,620 ------------------------------------------------------------------------------------------------------------------------------------ MATERIALS - 2.5% 500 Bedford County Industrial Development Authority, Virginia, 2/08 at 102.00 Ba3 454,700 Industrial Development Revenue Refunding Bonds, Nekoosa Packaging Corporation, Series 1998, 5.600%, 12/01/25 (Alternative Minimum Tax) 1,900 Bedford County Industrial Development Authority, Virginia, 12/09 at 101.00 Ba3 1,914,174 Industrial Development Revenue Refunding Bonds, Nekoosa Packaging Corporation, Series 1999A, 6.550%, 12/01/25 (Alternative Minimum Tax) 1,000 Goochland County Industrial Development Authority, Virginia, 12/08 at 101.00 Ba3 919,590 Industrial Development Revenue Refunding Bonds, Nekoosa Packaging Corporation Project, Series 1998, 5.650%, 12/01/25 (Alternative Minimum Tax) ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/GENERAL - 16.9% Chesapeake, Virginia, General Obligation Water and Sewer Bonds, Series 2003B: 1,880 5.000%, 6/01/21 6/13 at 100.00 AA 1,921,717 2,060 5.000%, 6/01/23 6/13 at 100.00 AA 2,083,072 Hampton, Virginia, General Obligation Public Improvement Bonds, Series 2000: 890 5.750%, 2/01/17 2/10 at 102.00 AA 982,062 2,000 6.000%, 2/01/20 2/10 at 102.00 AA 2,225,000 1,355 Harrisonburg, Virginia, General Obligation Bonds, Public 7/12 at 101.00 AAA 1,404,539 Safety and Steam Plant, Series 2002, 5.000%, 7/15/19 - FGIC Insured 585 Loudoun County, Virginia, General Obligation Public 5/12 at 100.00 Aaa 611,378 Improvement Bonds, Series 2002A, 5.250%, 5/01/22 32 PRINCIPAL OPTIONAL CALL MARKET AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/GENERAL (continued) Newport News, Virginia, General Obligation Bonds, General Improvement and Water Projects, Series 2002A: $ 2,770 5.000%, 7/01/19 7/13 at 100.00 AA $ 2,867,061 1,000 5.000%, 7/01/20 7/13 at 100.00 AA 1,029,030 1,250 Newport News, Virginia, General Obligation Bonds, 1/14 at 101.00 AA 1,315,788 Series 2004B, 5.000%, 1/15/17 1,400 Northern Mariana Islands, General Obligation Bonds, 6/10 at 100.00 A 1,458,254 Series 2000A, 6.000%, 6/01/20 - ACA Insured 1,000 Portsmouth, Virginia, General Obligation Bonds, Series 2003, No Opt. Call AAA 1,091,620 5.000%, 7/01/12 - FSA Insured 1,430 Roanoke, Virginia, General Obligation Public Improvement 10/12 at 101.00 AA 1,506,820 Bonds, Series 2002A, 5.000%, 10/01/17 1,425 Virginia Beach, Virginia, General Obligation Public Improvement 6/11 at 101.00 AA+ 1,473,550 Bonds, Series 2001, 5.000%, 6/01/20 2,155 Virginia Beach, Virginia, General Obligation Bonds, 5/13 at 100.00 AA+ 2,299,514 Series 2003B, 5.000%, 5/01/15 ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/LIMITED - 28.1% 750 Bristol, Virginia, General Obligation Utility System Revenue 11/12 at 102.00 AAA 771,240 Bonds, Series 2002, 5.000%, 11/01/24 - FSA Insured Cumberland County, Virginia, Certificates of Participation, Series 1997: 1,075 6.200%, 7/15/12 No Opt. Call N/R 1,164,053 1,350 6.375%, 7/15/17 No Opt. Call N/R 1,472,553 500 Dinwiddie County Industrial Development Authority, Virginia, 2/07 at 102.00 N/R 516,265 Lease Revenue Bonds, Dinwiddie County School Facilities Project, Series 1997A, 6.000%, 2/01/18 Fairfax County Economic Development Authority, Virginia, Lease Revenue Bonds, Laurel Hill Public Facilities Project, Series 2003: 2,260 5.000%, 6/01/14 6/13 at 101.00 AA+ 2,437,342 2,165 5.000%, 6/01/22 6/13 at 101.00 AA+ 2,202,606 1,000 Fairfax County Economic Development Authority, Virginia, 9/09 at 102.00 AA 1,121,840 Parking Revenue Bonds, Vienna II Metrorail Station Project, First Series 1999, 6.000%, 9/01/18 Greater Richmond Convention Center Authority, Virginia, Hotel Tax Revenue Bonds, Convention Center Expansion Project, Series 2000: 600 6.125%, 6/15/25 6/10 at 101.00 A- 652,866 2,000 6.125%, 6/15/29 6/10 at 101.00 A- 2,174,000 3,000 Hampton Roads Regional Jail Authority, Virginia, Regional 7/06 at 102.00 AAA 3,146,970 Jail Facility Revenue Bonds, Series 1996A, 5.500%, 7/01/24 - MBIA Insured 1,200 Puerto Rico Highway and Transportation Authority, Highway No Opt. Call AAA 1,340,880 Revenue Bonds, Series 2003AA, 5.500%, 7/01/19 - MBIA Insured 2,000 Puerto Rico Highway and Transportation Authority, Highway 7/12 at 100.00 AAA 2,001,220 Revenue Bonds, Series 2002D, 5.000%, 7/01/32 - FSA Insured Puerto Rico Public Buildings Authority, Guaranteed Government Facilities Revenue Refunding Bonds, Series 2002D: 1,000 5.250%, 7/01/27 7/12 at 100.00 A- 1,002,430 1,200 5.250%, 7/01/36 7/12 at 100.00 A- 1,185,624 1,110 Spotsylvania County Industrial Development Authority, 8/13 at 100.00 AAA 1,065,134 Virginia, Lease Revenue Bonds, School Facilities, Series 2003B, 4.375%, 8/01/20 - AMBAC Insured 2,000 Virgin Islands Public Finance Authority, Gross Receipts Taxes 10/10 at 101.00 BBB 2,229,400 Loan Notes, Series 1999A, 6.500%, 10/01/24 2,250 Virginia College Building Authority, Educational Facilities 2/09 at 101.00 AA+ 2,467,665 Revenue Bonds, 21st Century College Program, Series 2000, 6.000%, 2/01/20 2,000 Virginia College Building Authority, Educational Facilities 2/12 at 100.00 AA+ 2,029,780 Revenue Bonds, 21st Century College Program, Series 2002A, 5.000%, 2/01/22 2,000 Virginia Public School Authority, School Financing Bonds, 8/10 at 101.00 AA+ 2,069,720 1997 Resolution, Series 2000B, 5.000%, 8/01/18 33 Nuveen Virginia Premium Income Municipal Fund (NPV) (continued) Portfolio of INVESTMENTS May 31, 2004 PRINCIPAL OPTIONAL CALL MARKET AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/LIMITED (continued) Virginia Resources Authority, Infrastructure Revenue Bonds, Pooled Loan Bond Program, Series 2000B: $ 1,120 5.500%, 5/01/20 - FSA Insured 5/10 at 101.00 AAA $ 1,184,938 3,060 5.500%, 5/01/30 - FSA Insured 5/10 at 101.00 AAA 3,167,498 1,740 Virginia Resources Authority, Infrastructure Revenue Bonds, 5/11 at 101.00 AA 1,792,130 Pooled Loan Bond Program, Series 2002A, 5.000%, 5/01/19 ------------------------------------------------------------------------------------------------------------------------------------ TRANSPORTATION - 12.7% 1,400 Metropolitan District of Columbia Airports Authority, 10/07 at 101.00 Aa3 1,418,032 Virginia, Airport System Revenue Bonds, Series 1997A, 5.375%, 10/01/23 4,000 Norfolk Airport Authority, Virginia, Airport Revenue Bonds, 7/11 at 100.00 AAA 4,007,120 Series 2001A, 5.125%, 7/01/31 - FGIC Insured 530 Pocahontas Parkway Association, Virginia, Route 895 8/08 at 102.00 BB 436,238 Connector Toll Road Senior Lien Revenue Bonds, Series 1998A, 5.500%, 8/15/28 2,500 Richmond Metropolitan Authority, Virginia, Revenue Refunding No Opt. Call AAA 2,674,300 Bonds, Expressway System, Series 2002, 5.250%, 7/15/22 - FGIC Insured 6,065 Virginia Port Authority, Revenue Bonds, Port Authority 7/07 at 101.00 AAA 6,200,007 Facilities, Series 1997, 5.600%, 7/01/27 (Alternative Minimum Tax) - MBIA Insured 2,000 Virginia Resources Authority, Airports Revolving Fund Revenue 2/11 at 100.00 Aa2 2,052,460 Bonds, Series 2001A, 5.250%, 8/01/23 ------------------------------------------------------------------------------------------------------------------------------------ U.S. GUARANTEED - 7.8% 395 Arlington County Industrial Development Authority, Virginia, 7/05 at 102.00 A*** 420,146 Multifamily Housing Mortgage Revenue Bonds, Arlington Housing Corporation, Series 1995, 5.700%, 7/01/07 (Pre-refunded to 7/01/05) 1,380 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 7/10 at 100.00 AAA 1,484,728 Asset-Backed Bonds, Series 2000, 5.750%, 7/01/20 (Pre-refunded to 7/01/10) 1,230 Middlesex County Industrial Development Authority, Virginia, 8/09 at 102.00 AAA 1,415,004 Lease Revenue Bonds, School Facilities Project, Series 1999, 6.000%, 8/01/24 (Pre-refunded to 8/01/09) - MBIA Insured 2,500 Puerto Rico Infrastructure Financing Authority, Special 10/10 at 101.00 AAA 2,626,750 Obligation Bonds, Series 2000A, 5.500%, 10/01/40 3,955 Virginia Resources Authority, Water and Sewerage System 10/07 at 100.00 AA*** 4,327,601 Revenue Bonds, Sussex Service Authority, Series 1995A, 5.600%, 10/01/25 (Pre-refunded to 10/01/07) ------------------------------------------------------------------------------------------------------------------------------------ UTILITIES - 11.4% Bristol, Virginia, Utility System Revenue Refunding Bonds, Series 2003: 1,705 5.250%, 7/15/14 - MBIA Insured 7/13 at 100.00 AAA 1,863,872 1,800 5.250%, 7/15/15 - MBIA Insured 7/13 at 100.00 AAA 1,948,410 2,775 5.250%, 7/15/23 - MBIA Insured 7/13 at 100.00 AAA 2,869,378 2,500 Mecklenburg County Industrial Development Authority, 10/12 at 100.00 BBB- 2,522,875 Virginia, Exempt Facility Revenue Refunding Bonds, UAE LP Project, Series 2002, 6.500%, 10/15/17 (Alternative Minimum Tax) 3,500 Richmond, Virginia, Public Utility Revenue Refunding Bonds, 1/08 at 101.00 AAA 3,520,335 Series 1998A, 5.125%, 1/15/28 - FGIC Insured Richmond, Virginia, Public Utility Revenue Refunding Bonds, Series 2002: 750 5.000%, 1/15/27 - FSA Insured 1/12 at 100.00 AAA 750,615 1,600 5.000%, 1/15/33 - FSA Insured 1/12 at 100.00 AAA 1,586,656 ------------------------------------------------------------------------------------------------------------------------------------ WATER AND SEWER - 17.8% 2,000 Fairfax County, Virginia, Sewer Revenue Bonds, Series 1996, 7/06 at 102.00 AAA 2,145,780 5.875%, 7/15/28 - MBIA Insured 2,000 Fairfax County Water Authority, Virginia, Water Revenue 4/10 at 101.00 AAA 2,099,780 Bonds, Series 2000, 5.625%, 4/01/25 Fairfax County Water Authority, Virginia, Water Revenue Refunding Bonds, Series 2002: 2,030 5.375%, 4/01/19 4/12 at 100.00 AAA 2,177,886 1,000 5.000%, 4/01/27 4/12 at 100.00 AAA 1,002,510 1,650 Henrico County, Virginia, Water and Sewer System Revenue 5/09 at 102.00 AA+ 1,644,918 Refunding Bonds, Series 1999, 5.000%, 5/01/28 34 PRINCIPAL OPTIONAL CALL MARKET AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE ------------------------------------------------------------------------------------------------------------------------------------ WATER AND SEWER (continued) $ 6,200 Norfolk, Virginia, Water Revenue Bonds, Series 1995, 11/05 at 102.00 AAA $ 6,604,674 5.875%, 11/01/20 - MBIA Insured Norfolk, Virginia, Water Revenue Refunding Bonds, Series 2001: 1,310 5.000%, 11/01/21 - FGIC Insured 11/11 at 100.00 AAA 1,333,934 1,380 5.000%, 11/01/22 - FGIC Insured 11/11 at 100.00 AAA 1,399,168 1,955 Rivanna Water and Sewerage Authority, Virginia, Regional 10/09 at 101.00 Aa3 2,036,328 Water and Sewerage System Revenue Bonds, Series 1999, 5.625%, 10/01/29 2,250 Virginia Beach, Virginia, Storm Water Utility Revenue Bonds, 9/10 at 101.00 Aa3 2,488,157 Series 2000, 6.000%, 9/01/24 500 Virginia Resources Authority, Clean Water State Revolving 10/10 at 100.00 AAA 542,170 Fund Revenue Bonds, Series 1999, 5.625%, 10/01/22 ------------------------------------------------------------------------------------------------------------------------------------ $ 186,185 Total Long-Term Investments (cost $186,262,606) - 146.0% 192,861,729 =============----------------------------------------------------------------------------------------------------------------------- Other Assets Less Liabilities - 2.3% 3,060,630 -------------------------------------------------------------------------------------------------------------------- Preferred Shares, at Liquidation Value - (48.3)% (63,800,000) -------------------------------------------------------------------------------------------------------------------- Net Assets Applicable to Common Shares - 100% $ 132,122,359 ==================================================================================================================== (1) All percentages shown in the Portfolio of Investments are based on net assets applicable to Common shares. * 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. ** Ratings (not covered by the report of independent registered public accounting firm): Using the higher of Standard & Poor's or Moody's rating. *** Securities are backed by an escrow or trust containing sufficient U.S. Government or U.S. Government agency securities which ensures the timely payment of principal and interest. Such securities are normally considered to be equivalent to AAA rated securities. N/R Investment is not rated. See accompanying notes to financial statements. 35
Nuveen Virginia Dividend Advantage Municipal Fund (NGB) Portfolio of INVESTMENTS May 31, 2004
PRINCIPAL OPTIONAL CALL MARKET AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE ------------------------------------------------------------------------------------------------------------------------------------ CONSUMER STAPLES - 4.4% Guam Economic Development Authority, Tobacco Settlement Asset-Backed Bonds, Series 2001A: $ 125 5.000%, 5/15/22 5/11 at 100.00 Baa3 $ 121,974 850 5.400%, 5/15/31 5/11 at 100.00 Baa3 745,884 1,400 Guam Economic Development Authority, Tobacco Settlement 5/11 at 100.00 Baa3 1,133,580 Asset-Backed Bonds, Series 2001B, 5.500%, 5/15/41 ------------------------------------------------------------------------------------------------------------------------------------ EDUCATION AND CIVIC ORGANIZATIONS - 12.1% 500 Danville Industrial Development Authority, Virginia, 3/11 at 102.00 N/R 487,945 Educational Facilities Revenue Bonds, Averett University Project, Series 2001, 6.000%, 3/15/22 500 Prince William County Industrial Development Authority, 10/13 at 101.00 A3 479,945 Virginia, 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 885,309 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 Project, Series 1999: 160 5.375%, 2/01/19 2/09 at 101.00 BBB 161,774 320 5.375%, 2/01/29 2/09 at 101.00 BBB 312,707 420 Rockbridge County Industrial Development Authority, No Opt. Call B2 364,211 Virginia, Horse Center Revenue and Refunding Bonds, Series 2001B, 6.125%, 7/15/11 1,000 Rockbridge County Industrial Development Authority, Virginia, 7/11 at 100.00 B2 883,470 Horse Center Revenue and Refunding Bonds, Series 2001C, 6.850%, 7/15/21 1,325 Virginia College Building Authority, Educational Facilities 9/10 at 100.00 AA+ 1,366,526 Revenue Bonds, Public Higher Education Financing Program, Series 2000A, 5.000%, 9/01/17 500 Virginia College Building Authority, Educational Facilities 7/08 at 101.00 AA 505,845 Revenue Refunding Bonds, Marymount University, Series 1998, 5.100%, 7/01/18 - RAAI Insured ------------------------------------------------------------------------------------------------------------------------------------ HEALTHCARE - 19.1% 1,000 Fauquier County Industrial Development Authority, Virginia, 10/12 at 102.00 AA 1,001,900 Hospital Revenue Bonds, Fauquier Hospital, Series 2002, 5.250%, 10/01/25 - RAAI Insured 2,000 Fredericksburg Industrial Development Authority, Virginia, 6/07 at 102.00 AAA 2,092,720 Hospital Facilities Revenue Refunding Bonds, MediCorp Health System Obligated Group, Series 1996, 5.250%, 6/15/16 - AMBAC Insured 500 Fredericksburg Industrial Development Authority, Virginia, 6/12 at 100.00 A3 479,585 Revenue Bonds, MediCorp Health System, Series 2002B, 5.125%, 6/15/33 500 Henrico County Economic Development Authority, Virginia, 11/12 at 100.00 A- 502,160 Revenue Bonds, Bon Secours Health System Inc., Series 2002A, 5.600%, 11/15/30 535 Loudoun County Industrial Development Authority, Virginia, 6/05 at 102.00 AAA 560,022 Hospital Revenue Bonds, Loudoun Hospital Center, Series 1995, 5.800%, 6/01/26 - FSA Insured 425 Loudoun County Industrial Development Authority, Virginia, 6/12 at 101.00 BBB 440,394 Hospital Revenue Bonds, Loudoun Hospital Center, Series 2002A, 6.000%, 6/01/22 1,000 Lynchburg Industrial Development Authority, Virginia, 1/08 at 101.00 A+ 999,360 Healthcare Facilities Revenue Refunding Bonds, Centra Health Inc., Series 1998, 5.200%, 1/01/23 675 Manassas Industrial Development Authority, Virginia, 4/13 at 100.00 A2 668,513 Hospital Revenue Bonds, Prince William Hospital, Series 2002, 5.250%, 4/01/33 1,000 Norfolk Industrial Development Authority, Virginia, 8/07 at 102.00 AAA 1,006,030 Healthcare Revenue Bonds, Bon Secours Health System, Series 1997, 5.250%, 8/15/26 - MBIA Insured 800 Norton Industrial Development Authority, Virginia, Hospital 12/11 at 101.00 A 828,704 Revenue Refunding and Improvement Bonds, Norton Community Hospital, Series 2001, 6.000%, 12/01/22 - ACA Insured 36 PRINCIPAL OPTIONAL CALL MARKET AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE ------------------------------------------------------------------------------------------------------------------------------------ HOUSING/MULTIFAMILY - 4.5% $ 1,000 Arlington County Industrial Development Authority, Virginia, 11/11 at 102.00 AAA $ 1,009,630 Multifamily Housing Mortgage Revenue Bonds, Arlington View Terrace Apartments, Series 2001, 5.150%, 11/01/31 (Alternative Minimum Tax) (Mandatory put 11/01/19) 1,000 Virginia Housing Development Authority, Rental Housing 10/10 at 100.00 AA+ 1,030,800 Bonds, Series 2000G, 5.625%, 10/01/20 (Alternative Minimum Tax) ------------------------------------------------------------------------------------------------------------------------------------ HOUSING/SINGLE FAMILY - 2.2% 1,000 Virginia Housing Development Authority, Commonwealth 7/11 at 100.00 AAA 991,050 Mortgage Bonds, Series 2001H-1, 5.350%, 7/01/31 - MBIA Insured ------------------------------------------------------------------------------------------------------------------------------------ LONG-TERM CARE - 4.2% 500 Albemarle County Industrial Development Authority, 1/12 at 100.00 N/R 502,905 Virginia, Residential Care Facility Revenue Bonds, Westminster Canterbury of the Blue Ridge First Mortgage, Series 2001, 6.200%, 1/01/31 James City County Industrial Development Authority, Virginia, Residential Care Facility First Mortgage Revenue Refunding Bonds, Williamburg Landing, Inc., Series 2003A: 1,000 6.000%, 3/01/23 3/12 at 101.00 N/R 993,770 400 6.125%, 3/01/32 3/12 at 101.00 N/R 396,264 ------------------------------------------------------------------------------------------------------------------------------------ MATERIALS - 0.5% 25 Bedford County Industrial Development Authority, Virginia, 2/08 at 102.00 Ba3 22,735 Industrial Development Revenue Refunding Bonds, Nekoosa Packaging Corporation, Series 1998, 5.600%, 12/01/25 (Alternative Minimum Tax) 20 Bedford County Industrial Development Authority, Virginia, 12/09 at 101.00 Ba3 20,149 Industrial Development Revenue Refunding Bonds, Nekoosa Packaging Corporation, Series 1999A, 6.550%, 12/01/25 (Alternative Minimum Tax) 220 Goochland County Industrial Development Authority, Virginia, 12/08 at 101.00 Ba3 202,310 Industrial Development Revenue Refunding Bonds, Nekoosa Packaging Corporation Project, Series 1998, 5.650%, 12/01/25 (Alternative Minimum Tax) ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/GENERAL - 28.2% 2,000 Chesterfield County, Virginia, General Obligation Public 1/11 at 100.00 AAA 2,047,700 Improvement Bonds, Series 2001, 5.000%, 1/15/21 3,310 Leesburg, Virginia, General Obligation Public Improvement 1/11 at 101.00 AAA 3,426,611 Bonds, Series 2000, 5.125%, 1/15/21 - FGIC Insured 1,540 Loudoun County, Virginia, General Obligation Public 1/11 at 101.00 Aaa 1,618,063 Improvement Bonds, Series 2001B, 5.250%, 1/01/20 845 Newport News, Virginia, General Obligation Bonds, 1/14 at 101.00 AA 889,472 Series 2004B, 5.000%, 1/15/17 320 Northern Mariana Islands, General Obligation Bonds, 6/10 at 100.00 A 333,315 Series 2000A, 6.000%, 6/01/20 - ACA Insured 500 Portsmouth, Virginia, General Obligation Bonds, Series 2003, No Opt. Call AAA 545,810 5.000%, 7/01/12 - FSA Insured 1,300 Richmond, Virginia, General Obligation Refunding and Public 1/10 at 101.00 AAA 1,319,838 Improvement Bonds, Series 1999A, 5.125%, 1/15/24 - FSA Insured 2,425 Virginia Beach, Virginia, General Obligation Public Improvement 6/11 at 101.00 AA+ 2,493,167 Bonds, Series 2001, 5.000%, 6/01/21 ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/LIMITED - 15.2% 330 Bell Creek Community Development Authority, Virginia, 3/13 at 101.00 N/R 327,093 Special Assessment Bonds, Series 2003A, 6.750%, 3/01/22 500 Broad Street Community Development Authority, Virginia, 6/13 at 102.00 N/R 483,130 Revenue Bonds, Series 2003, 7.500%, 6/01/33 500 Puerto Rico Highway and Transportation Authority, Highway No Opt. Call AAA 558,700 Revenue Bonds, Series 2003AA, 5.500%, 7/01/19 - MBIA Insured 1,000 Spotsylvania County Industrial Development Authority, 8/13 at 100.00 AAA 1,022,110 Virginia, Lease Revenue Bonds, School Facilities, Series 2003B, 5.125%, 8/01/23 - AMBAC Insured 960 Virgin Islands Public Finance Authority, Gross Receipts 10/10 at 101.00 BBB 1,063,565 Taxes Loan Notes, Series 1999A, 6.375%, 10/01/19 37 Nuveen Virginia Dividend Advantage Municipal Fund (NGB) (continued) Portfolio of INVESTMENTS May 31, 2004 PRINCIPAL OPTIONAL CALL MARKET AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/LIMITED (continued) $ 500 Virginia College Building Authority, Educational Facilities 2/12 at 100.00 AA+ $ 507,445 Revenue Bonds, 21st Century College Program, Series 2002A, 5.000%, 2/01/22 450 Virginia Transportation Board, Transportation Revenue 5/07 at 101.00 AA+ 462,821 Refunding Bonds, Northern Virginia Transportation District Program, Series 1997B, 5.125%, 5/15/19 350 Virginia Gateway Community Development Authority, 3/13 at 102.00 N/R 345,167 Prince William County, Special Assessment Bonds, Series 2003, 6.375%, 3/01/30 2,000 Virginia Public School Authority, School Financing Bonds, 8/11 at 101.00 AA+ 2,067,520 1997 Resolution, Series 2001A, 5.000%, 8/01/19 ------------------------------------------------------------------------------------------------------------------------------------ TRANSPORTATION - 24.8% 1,750 Capital Region Airport Authority, Richmond, Virginia, Airport 7/05 at 102.00 AAA 1,834,158 Revenue Bonds, International Airport Projects, Series 1995A, 5.625%, 7/01/20 - AMBAC Insured 1,000 Chesapeake Bay Bridge and Tunnel Commission, Virginia, No Opt. Call AAA 1,085,890 General Resolution District Revenue Refunding Bonds, Series 1998, 5.500%, 7/01/25 - MBIA Insured 3,000 Metropolitan Washington D.C. Airports Authority, Airport 10/11 at 101.00 AAA 3,055,980 System Revenue Bonds, Series 2001A, 5.500%, 10/01/27 (Alternative Minimum Tax) - MBIA Insured 250 Metropolitan Washington D.C. Airports Authority, Airport 10/11 at 101.00 AAA 252,445 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 AAA 1,502,670 Series 2001A, 5.125%, 7/01/31 - FGIC Insured Pocahontas Parkway Association, Virginia, Route 895 Connector Toll Road Senior Lien Revenue Bonds, Series 1998A: 25 5.000%, 8/15/05 No Opt. Call BB 25,136 200 5.250%, 8/15/07 No Opt. Call BB 197,926 200 5.500%, 8/15/28 8/08 at 102.00 BB 164,618 500 Richmond Metropolitan Authority, Virginia, Revenue Refunding No Opt. Call AAA 534,860 Bonds, Expressway System, Series 2002, 5.250%, 7/15/22 - FGIC Insured 1,225 Virginia Resources Authority, Airports Revolving Fund Revenue 2/11 at 100.00 Aa2 1,257,132 Bonds, Series 2001A, 5.250%, 8/01/23 1,250 Virginia Resources Authority, Airports Revolving Fund Revenue 2/11 at 100.00 Aa2 1,226,800 Bonds, Series 2001B, 5.125%, 8/01/27 (Alternative Minimum Tax) ------------------------------------------------------------------------------------------------------------------------------------ U.S. GUARANTEED - 13.1% 1,000 Bristol, Virginia, Utility System Revenue Refunding Bonds, 7/11 at 102.00 AAA 1,027,490 Series 2001, 5.000%, 7/15/21 - FSA Insured 550 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 7/10 at 100.00 AAA 591,740 Asset-Backed Bonds, Series 2000, 5.750%, 7/01/20 (Pre-refunded to 7/01/10) 1,000 Newport News, Virginia, General Obligation Bonds, 5/10 at 102.00 AA*** 1,138,610 Series 2000A, 5.625%, 5/01/16 (Pre-refunded to 5/01/10) Puerto Rico Infrastructure Financing Authority, Special Obligation Bonds, Series 2000A: 1,500 5.500%, 10/01/32 10/10 at 101.00 AAA 1,576,050 1,500 5.500%, 10/01/40 10/10 at 101.00 AAA 1,576,050 ------------------------------------------------------------------------------------------------------------------------------------ UTILITIES - 7.3% 1,000 Mecklenburg County Industrial Development Authority, 10/12 at 100.00 BBB- 1,009,150 Virginia, Exempt Facility Revenue Refunding Bonds, UAE LP Project, Series 2002, 6.500%, 10/15/17 (Alternative Minimum Tax) 1,725 Puerto Rico Electric Power Authority, Power Revenue 7/05 at 100.00 A- 1,760,725 Refunding Bonds, Series 1995Z, 5.250%, 7/01/21 500 Richmond, Virginia, Public Utility Revenue Refunding Bonds, 1/12 at 100.00 AAA 500,410 Series 2002, 5.000%, 1/15/27 - FSA Insured ------------------------------------------------------------------------------------------------------------------------------------ WATER AND SEWER - 14.4% 2,000 Fairfax County Water Authority, Virginia, Water Revenue No Opt. Call AAA 2,101,340 Refunding Bonds, Series 1997, 5.000%, 4/01/21 2,000 Henrico County, Virginia, Water and Sewer System Revenue 5/09 at 102.00 AA+ 2,029,140 Refunding Bonds, Series 1999, 5.000%, 5/01/22 38 PRINCIPAL OPTIONAL CALL MARKET AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE ------------------------------------------------------------------------------------------------------------------------------------ WATER AND SEWER (continued) $ 520 Prince William County Service Authority, Virginia, Water and 7/09 at 101.00 AAA $ 558,672 Sewerage System Revenue Bonds, Series 1999, 5.500%, 7/01/19 - FGIC Insured 1,680 Virginia Resources Authority, Clean Water State Revolving 10/10 at 100.00 AAA 1,780,948 Fund Revenue Bonds, Series 2000, 5.400%, 10/01/20 ------------------------------------------------------------------------------------------------------------------------------------ $ 66,255 Total Long-Term Investments (cost $66,631,965) - 150.0% 67,497,638 =============----------------------------------------------------------------------------------------------------------------------- Other Assets Less Liabilities - 3.3% 1,490,685 -------------------------------------------------------------------------------------------------------------------- Preferred Shares, at Liquidation Value - (53.3)% (24,000,000) -------------------------------------------------------------------------------------------------------------------- Net Assets Applicable to Common Shares - 100% $ 44,988,323 ==================================================================================================================== (1) All percentages shown in the Portfolio of Investments are based on net assets applicable to Common shares. * 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. ** Ratings (not covered by the report of independent registered public accounting firm): Using the higher of Standard & Poor's or Moody's rating. *** Securities are backed by an escrow or trust containing sufficient U.S. Government or U.S. Government agency securities which ensures the timely payment of principal and interest. Such securities are normally considered to be equivalent to AAA rated securities. N/R Investment is not rated. See accompanying notes to financial statements. 39
Nuveen Virginia Dividend Advantage Municipal Fund 2 (NNB) Portfolio of INVESTMENTS May 31, 2004
PRINCIPAL OPTIONAL CALL MARKET AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE ------------------------------------------------------------------------------------------------------------------------------------ CONSUMER STAPLES - 1.2% $ 1,220 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 5/12 at 100.00 BBB $ 1,044,027 Asset-Backed Refunding Bonds, Series 2002, 5.375%, 5/15/33 ------------------------------------------------------------------------------------------------------------------------------------ EDUCATION AND CIVIC ORGANIZATIONS - 8.3% 1,000 Fairfax County Economic Development Authority, Virginia, 9/09 at 101.00 Aaa 1,022,610 Revenue Bonds, National Wildlife Federation Project, Series 1999, 5.375%, 9/01/29 - MBIA Insured 1,000 Prince William County Industrial Development Authority, 10/13 at 101.00 A3 959,890 Virginia, Educational Facilities Revenue Bonds, Catholic Diocese of Arlington, Series 2003, 5.500%, 10/01/33 3,000 Puerto Rico Industrial, Tourist, Educational, Medical, and 12/12 at 101.00 BBB 2,996,610 Environmental Control Facilities Financing Authority, Higher Education Revenue Bonds, Ana G. Mendez University System Project Refunding, Series 2002, 5.375%, 12/01/21 2,000 Winchester Industrial Development Authority, Virginia, 10/08 at 102.00 AAA 2,026,740 Educational Facilities First Mortgage Revenue Bonds, Shenandoah University, Series 1998, 5.250%, 10/01/28 - MBIA Insured ------------------------------------------------------------------------------------------------------------------------------------ HEALTHCARE - 21.5% 1,500 Albemarle County Industrial Development Authority, 10/12 at 100.00 A2 1,464,075 Virginia, Hospital Revenue Bonds, Martha Jefferson Hospital, Series 2002, 5.250%, 10/01/35 1,215 Danville Industrial Development Authority, Virginia, Hospital No Opt. Call AAA 1,290,196 Revenue Bonds, Danville Regional Medical Center, Series 1998, 5.200%, 10/01/18 - AMBAC Insured 3,000 Fauquier County Industrial Development Authority, Virginia, 10/12 at 102.00 AA 3,005,700 Hospital Revenue Bonds, Fauquier Hospital, Series 2002, 5.250%, 10/01/25 - RAAI Insured 675 Fredericksburg Industrial Development Authority, Virginia, 6/12 at 100.00 A3 647,440 Revenue Bonds, MediCorp Health System, Series 2002B, 5.125%, 6/15/33 1,000 Henrico County Economic Development Authority, Virginia, 11/12 at 100.00 A- 1,004,320 Revenue Bonds, Bon Secours Health System Inc., Series 2002A, 5.600%, 11/15/30 1,000 Loudoun County Industrial Development Authority, Virginia, 6/05 at 102.00 AAA 1,046,770 Hospital Revenue Bonds, Loudoun Hospital Center, Series 1995, 5.800%, 6/01/26 - FSA Insured Loudoun County Industrial Development Authority, Virginia, Hospital Revenue Bonds, Loudoun Hospital Center, Series 2002A: 250 6.000%, 6/01/22 6/12 at 101.00 BBB 259,055 600 6.100%, 6/01/32 6/12 at 101.00 BBB 615,150 1,355 Manassas Industrial Development Authority, Virginia, 4/13 at 100.00 A2 1,341,978 Hospital Revenue Bonds, Prince William Hospital, Series 2002, 5.250%, 4/01/33 1,000 Medical College Virginia Hospital Authority, General Revenue 7/08 at 102.00 AAA 1,061,020 Bonds, Series 1998, 5.250%, 7/01/14 - MBIA Insured 1,200 Norton Industrial Development Authority, Virginia, Hospital 12/11 at 101.00 A 1,243,056 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 1,020,620 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, 7/12 at 100.00 AAA 4,138,468 Hospital Revenue Bonds, Carilion Health System, Series 2002A, 5.500%, 7/01/20 - MBIA Insured ------------------------------------------------------------------------------------------------------------------------------------ HOUSING/SINGLE FAMILY - 8.8% 7,485 Virginia Housing Development Authority, Commonwealth 7/11 at 100.00 AAA 7,418,009 Mortgage Bonds, Series 2001H-1, 5.350%, 7/01/31 - MBIA Insured 40 PRINCIPAL OPTIONAL CALL MARKET AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE ------------------------------------------------------------------------------------------------------------------------------------ LONG-TERM CARE - 2.7% $ 165 Albemarle County Industrial Development Authority, Virginia, 1/12 at 100.00 N/R $ 165,959 Residential Care Facility Revenue Bonds, Westminster Canterbury of the Blue Ridge First Mortgage, Series 2001, 6.200%, 1/01/31 James City County Industrial Development Authority, Virginia, Residential Care Facility First Mortgage Revenue Refunding Bonds, Williamburg Landing Inc., Series 2003A: 1,500 6.000%, 3/01/23 3/12 at 101.00 N/R 1,490,655 600 6.125%, 3/01/32 3/12 at 101.00 N/R 594,396 ------------------------------------------------------------------------------------------------------------------------------------ MATERIALS - 0.5% 40 Bedford County Industrial Development Authority, Virginia, 2/08 at 102.00 Ba3 36,376 Industrial Development Revenue Refunding Bonds, Nekoosa Packaging Corporation, Series 1998, 5.600%, 12/01/25 (Alternative Minimum Tax) 460 Goochland County Industrial Development Authority, 12/08 at 101.00 Ba3 423,011 Virginia, Industrial Development Revenue Refunding Bonds, Nekoosa Packaging Corporation Project, Series 1998, 5.650%, 12/01/25 (Alternative Minimum Tax) ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/GENERAL - 32.9% 1,750 Chesapeake, Virginia, General Obligation Public Improvement 12/11 at 100.00 AA 1,896,370 Refunding Bonds, Series 2001, 5.500%, 12/01/16 1,000 Fairfax County, Virginia, General Obligation Refunding 6/10 at 101.00 AAA 1,032,970 and Improvement Bonds, Series 2002, 5.000%, 6/01/20 1,730 Loudoun County, Virginia, General Obligation Public 11/11 at 101.00 Aaa 1,742,629 Improvement Bonds, Series 2001C, 4.500%, 11/01/17 540 Loudoun County, Virginia, General Obligation Public 5/12 at 100.00 Aaa 564,349 Improvement Bonds, Series 2002A, 5.250%, 5/01/22 1,840 Newport News, Virginia, General Obligation Bonds, General 7/13 at 100.00 AA 1,893,415 Improvement and Water Projects, Series 2002A, 5.000%, 7/01/20 1,000 Newport News, Virginia, General Obligation Bonds, 11/13 at 100.00 AA 1,019,160 Series 2003B, 5.000%, 11/01/22 565 Portsmouth, Virginia, General Obligation Public Utility 6/08 at 100.00 AAA 573,187 Refunding Bonds, Series 2001B, 5.000%, 6/01/21 - FGIC Insured 1,500 Portsmouth, Virginia, General Obligation Bonds, No Opt. Call AAA 1,637,430 Series 2003, 5.000%, 7/01/12 - FSA Insured Powhatan County, Virginia, General Obligation Bonds, Series 2001: 660 5.000%, 1/15/23 - AMBAC Insured 1/11 at 101.00 AAA 666,422 1,000 5.000%, 1/15/27 - AMBAC Insured 1/11 at 101.00 AAA 1,000,190 Roanoke, Virginia, General Obligation Public Improvement Bonds, Series 2002A: 2,400 5.000%, 10/01/18 10/12 at 101.00 AA 2,513,880 2,435 5.000%, 10/01/19 10/12 at 101.00 AA 2,535,371 1,280 Roanoke, Virginia, General Obligation Public Improvement 10/12 at 101.00 AAA 1,347,763 Bonds, Series 2002B, 5.000%, 10/01/15 (Alternative Minimum Tax) - FGIC Insured Salem, Virginia, General Obligation Public Improvement Bonds, Series 2002: 1,145 5.375%, 1/01/21 1/12 at 100.00 Aa3 1,202,387 1,200 5.375%, 1/01/22 1/12 at 100.00 Aa3 1,255,452 1,260 5.375%, 1/01/23 1/12 at 100.00 Aa3 1,313,311 1,325 5.375%, 1/01/24 1/12 at 100.00 Aa3 1,376,781 1,000 Staunton, Virginia, General Obligation Bonds, Series 2004, 2/14 at 101.00 AAA 1,114,520 6.250%, 2/01/25 (WI, settling 6/16/04) - AMBAC Insured 1,500 Virginia Beach, Virginia, General Obligation Public 6/11 at 101.00 AA+ 1,559,760 Improvement Bonds, Series 2001, 5.000%, 6/01/19 1,420 Virginia Beach, Virginia, General Obligation Refunding and 3/12 at 100.00 AA+ 1,457,545 Public Improvement Bonds, Series 2002, 5.000%, 3/01/21 41 Nuveen Virginia Dividend Advantage Municipal Fund 2 (NNB) (continued) Portfolio of INVESTMENTS May 31, 2004 PRINCIPAL OPTIONAL CALL MARKET AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/LIMITED - 29.0% $ 611 Bell Creek Community Development Authority, Virginia, 3/13 at 101.00 N/R $ 605,617 Special Assessment Bonds, Series 2003A, 6.750%, 3/01/22 1,000 Bristol, Virginia, General Obligation Utility System Revenue 11/12 at 102.00 AAA 1,028,320 Bonds, Series 2002, 5.000%, 11/01/24 - FSA Insured 1,000 Broad Street Community Development Authority, Virginia, 6/13 at 102.00 N/R 966,260 Revenue Bonds, Series 2003, 7.500%, 6/01/33 1,800 Loudoun County Industrial Development Authority, Virginia, 3/13 at 100.00 AA 1,853,262 Lease Revenue Refunding Bonds, Public Facility Project, Series 2003, 5.000%, 3/01/19 700 Puerto Rico Highway and Transportation Authority, Highway No Opt. Call AAA 782,180 Revenue Bonds, Series 2003AA, 5.500%, 7/01/19 - MBIA Insured 1,500 Puerto Rico Public Buildings Authority, Guaranteed Government 7/12 at 100.00 A- 1,503,645 Facilities Revenue Refunding Bonds, Series 2002D, 5.250%, 7/01/27 1,800 Puerto Rico Public Finance Corporation, Commonwealth 2/12 at 100.00 BBB+ 1,834,236 Appropriation Bonds, Series 2002E, 5.500%, 8/01/29 1,000 Spotsylvania County Industrial Development Authority, 8/13 at 100.00 AAA 1,022,110 Virginia, Lease Revenue Bonds, School Facilities, Series 2003B, 5.125%, 8/01/23 - AMBAC Insured 1,790 Virginia College Building Authority, Educational Facilities 2/12 at 100.00 AA+ 1,816,653 Revenue Bonds, 21st Century College Program, Series 2002A, 5.000%, 2/01/22 1,000 Virginia College Building Authority, Educational Facilities 8/07 at 101.00 AA+ 1,066,680 Revenue Bonds, 21st Century College Program, Series 1998, 5.000%, 8/01/13 1,710 Virginia Transportation Board, Revenue Bonds, Northern 5/11 at 100.00 AA+ 1,710,462 Virginia Transportation District Program, Series 2001A, 5.000%, 5/15/26 Virginia Transportation Board, Transportation Revenue Bonds, U.S. Route 58 Corridor Development Program, Series 2001B: 1,705 5.000%, 5/15/22 5/11 at 100.00 AA+ 1,727,472 1,665 5.000%, 5/15/23 5/11 at 100.00 AA+ 1,681,051 690 Virginia Gateway Community Development Authority, 3/13 at 102.00 N/R 680,471 Prince William County, Special Assessment Bonds, Series 2003, 6.375%, 3/01/30 1,710 Virginia Public Building Authority, Public Facilities Revenue 8/08 at 100.00 AAA 1,740,353 Bonds, Series 1999A, 5.000%, 8/01/19 - MBIA Insured 500 Virginia Public Building Authority, Public Facilities Revenue 8/10 at 100.00 AA+ 544,575 Bonds, Series 2000A, 5.750%, 8/01/20 2,540 Virginia Public School Authority, School Financing Bonds, 8/11 at 101.00 AA+ 2,625,750 1997 Resolution, Series 2001B, 5.000%, 8/01/19 1,265 Virginia Resources Authority, Infrastructure Revenue Bonds, 5/10 at 101.00 AA 1,255,791 Pooled Loan Bond Program, Series 2001D, 5.000%, 5/01/26 ------------------------------------------------------------------------------------------------------------------------------------ TRANSPORTATION - 5.5% 2,500 Chesapeake Bay Bridge and Tunnel Commission, Virginia, No Opt. Call AAA 2,707,975 General Resolution District Junior Lien Revenue Refunding Bonds, Series 2001B, 5.000%, 7/01/09 - FGIC Insured 1,000 Metropolitan Washington D.C. Airports Authority, Airport 10/12 at 100.00 AAA 989,440 System Revenue Bonds, Series 2002A, 5.125%, 10/01/26 (Alternative Minimum Tax) - FGIC Insured Pocahontas Parkway Association, Virginia, Route 895 Connector Toll Road Senior Lien Revenue Bonds, Series 1998A: 25 5.000%, 8/15/05 No Opt. Call BB 25,136 300 5.250%, 8/15/07 No Opt. Call BB 296,889 325 5.500%, 8/15/28 8/08 at 102.00 BB 267,504 300 Virginia Resources Authority, Airports Revolving Fund Revenue 2/11 at 100.00 Aa2 316,365 Bonds, Series 2001A, 5.250%, 8/01/17 ------------------------------------------------------------------------------------------------------------------------------------ U.S. GUARANTEED - 7.8% 6,250 Puerto Rico Infrastructure Financing Authority, Special 10/10 at 101.00 AAA 6,566,875 Obligation Bonds, Series 2000A, 5.500%, 10/01/40 42 PRINCIPAL OPTIONAL CALL MARKET AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE ------------------------------------------------------------------------------------------------------------------------------------ UTILITIES - 7.5% $ 2,000 Mecklenburg County Industrial Development Authority, 10/12 at 100.00 BBB- $ 2,018,300 Virginia, Exempt Facility Revenue Refunding Bonds, UAE LP Project, Series 2002, 6.500%, 10/15/17 (Alternative Minimum Tax) 3,125 Puerto Rico Electric Power Authority, Power Revenue Bonds, 7/10 at 101.00 AAA 3,192,531 Series 2000HH, 5.250%, 7/01/29 - FSA Insured 1,110 Russell County Industrial Development Authority, Virginia, 11/08 at 101.00 AAA 1,128,237 Pollution Control Revenue Bonds, Appalachian Power Company, Series 1998H, 5.000%, 11/01/21 - MBIA Insured ------------------------------------------------------------------------------------------------------------------------------------ WATER AND SEWER - 21.5% 3,800 Fairfax County Water Authority, Virginia, Water Revenue No Opt. Call AAA 3,992,546 Refunding Bonds, Series 1997, 5.000%, 4/01/21 1,500 Fairfax County Water Authority, Virginia, Water Revenue 4/12 at 100.00 AAA 1,503,765 Refunding Bonds, Series 2002, 5.000%, 4/01/27 Henry County Public Service Authority, Virginia, Water and Sewer Revenue Refunding Bonds, Series 2001: 1,000 5.500%, 11/15/17 - FSA Insured No Opt. Call AAA 1,107,080 3,000 5.500%, 11/15/19 - FSA Insured No Opt. Call AAA 3,322,740 Norfolk, Virginia, Water Revenue Refunding Bonds, Series 2001: 1,130 5.000%, 11/01/18 - FGIC Insured 11/11 at 100.00 AAA 1,170,194 1,190 5.000%, 11/01/19 - FGIC Insured 11/11 at 100.00 AAA 1,223,760 1,450 5.000%, 11/01/23 - FGIC Insured 11/11 at 100.00 AAA 1,464,718 1,525 5.000%, 11/01/24 - FGIC Insured 11/11 at 100.00 AAA 1,533,860 500 Virginia Beach, Virginia, Water and Sewerage System 8/10 at 100.00 AA 535,080 Revenue Bonds, Series 2000, 5.125%, 8/01/14 2,250 Virginia Resources Authority, Water and Sewerage System 5/11 at 101.00 AA 2,221,560 Revenue Bonds, Caroline County Public Improvements Project, Series 2001, 5.000%, 5/01/32 ------------------------------------------------------------------------------------------------------------------------------------ $ 120,996 Total Long-Term Investments (cost $122,120,480) - 147.2% 124,048,466 =============----------------------------------------------------------------------------------------------------------------------- Other Assets Less Liabilities - 2.7% 2,199,869 -------------------------------------------------------------------------------------------------------------------- Preferred Shares, at Liquidation Value - (49.9)% (42,000,000) -------------------------------------------------------------------------------------------------------------------- Net Assets Applicable to Common Shares - 100% $ 84,248,335 ==================================================================================================================== (1) All percentages shown in the Portfolio of Investments are based on net assets applicable to Common shares. * 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. ** Ratings (not covered by the report of independent registered public accounting firm): Using the higher of Standard & Poor's or Moody's rating. N/R Investment is not rated. (WI) Security purchased on a when-issued basis. See accompanying notes to financial statements. 43
Statement of ASSETS AND LIABILITIES May 31, 2004
MARYLAND MARYLAND MARYLAND MARYLAND PREMIUM DIVIDEND DIVIDEND DIVIDEND INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3 (NMY) (NFM) (NZR) (NWI) ------------------------------------------------------------------------------------------------------------------------------------ ASSETS Investments, at market value (cost $223,291,162, $88,998,439, $90,342,700 and $112,983,117, respectively) $226,412,884 $89,930,616 $91,375,083 $111,424,389 Cash -- 479,516 453,012 535,783 Receivables: Interest 4,202,901 1,630,311 1,529,953 1,623,498 Investments sold 694,753 285,880 10,169 -- Other assets 17,112 8,864 339 4,277 ------------------------------------------------------------------------------------------------------------------------------------ Total assets 231,327,650 92,335,187 93,368,556 113,587,947 ------------------------------------------------------------------------------------------------------------------------------------ LIABILITIES Cash overdraft 860,319 -- -- -- Payable for investments purchased 83,725 246,250 246,250 162,525 Accrued expenses: Management fees 125,176 27,212 27,465 31,560 Other 41,529 16,716 24,151 18,238 Preferred share dividends payable 10,104 3,687 6,670 6,606 ------------------------------------------------------------------------------------------------------------------------------------ Total liabilities 1,120,853 293,865 304,536 218,929 ------------------------------------------------------------------------------------------------------------------------------------ Preferred shares, at liquidation value 79,100,000 32,000,000 32,000,000 39,000,000 ==================================================================================================================================== Net assets applicable to Common shares $151,106,797 $60,041,322 $61,064,020 $ 74,369,018 ==================================================================================================================================== Common shares outstanding 10,584,791 4,162,119 4,170,641 5,359,275 ==================================================================================================================================== Net asset value per Common share outstanding (net assets applicable to Common shares, divided by Common shares outstanding) $ 14.28 $ 14.43 $ 14.64 $ 13.88 ==================================================================================================================================== NET ASSETS APPLICABLE TO COMMON SHARES CONSIST OF: ------------------------------------------------------------------------------------------------------------------------------------ Common shares, $.01 par value per share $ 105,848 $ 41,621 $ 41,706 $ 53,593 Paid-in surplus 146,945,125 59,032,938 59,141,539 75,647,829 Undistributed net investment income 1,848,894 621,007 638,104 206,638 Accumulated net realized gain (loss) from investments (914,792) (586,421) 210,288 19,686 Net unrealized appreciation (depreciation) of investments 3,121,722 932,177 1,032,383 (1,558,728) ------------------------------------------------------------------------------------------------------------------------------------ Net assets applicable to Common shares $151,106,797 $60,041,322 $61,064,020 $ 74,369,018 ==================================================================================================================================== Authorized shares: Common Unlimited Unlimited Unlimited Unlimited Preferred Unlimited Unlimited Unlimited Unlimited ====================================================================================================================================
See accompanying notes to financial statements. 44
VIRGINIA VIRGINIA VIRGINIA PREMIUM DIVIDEND DIVIDEND INCOME ADVANTAGE ADVANTAGE 2 (NPV) (NGB) (NNB) ------------------------------------------------------------------------------------------------------------------------------------ ASSETS Investments, at market value (cost $186,262,606, $66,631,965 and $122,120,480, respectively) $192,861,729 $67,497,638 $124,048,466 Cash -- 377,128 -- Receivables: Interest 3,086,799 1,078,237 1,719,559 Investments sold 785,000 60,000 1,908,431 Other assets 8,791 9,119 444 ------------------------------------------------------------------------------------------------------------------------------------ Total assets 196,742,319 69,022,122 127,676,900 ------------------------------------------------------------------------------------------------------------------------------------ LIABILITIES Cash overdraft 671,170 -- 239,446 Payable for investments purchased -- -- 1,117,124 Accrued expenses: Management fees 106,713 20,395 37,270 Other 35,893 9,955 26,275 Preferred share dividends payable 6,184 3,449 8,450 ------------------------------------------------------------------------------------------------------------------------------------ Total liabilities 819,960 33,799 1,428,565 ------------------------------------------------------------------------------------------------------------------------------------ Preferred shares, at liquidation value 63,800,000 24,000,000 42,000,000 ==================================================================================================================================== Net assets applicable to Common shares $132,122,359 $44,988,323 $ 84,248,335 ==================================================================================================================================== Common shares outstanding 8,838,304 3,120,825 5,696,268 ==================================================================================================================================== Net asset value per Common share outstanding (net assets applicable to Common shares, divided by Common shares outstanding) $ 14.95 $ 14.42 $ 14.79 ==================================================================================================================================== NET ASSETS APPLICABLE TO COMMON SHARES CONSIST OF: ------------------------------------------------------------------------------------------------------------------------------------ Common shares, $.01 par value per share $ 88,383 $ 31,208 $ 56,963 Paid-in surplus 124,233,817 44,236,890 80,836,443 Undistributed net investment income 1,592,552 459,798 695,300 Accumulated net realized gain (loss) from investments (391,516) (605,246) 731,643 Net unrealized appreciation (depreciation) of investments 6,599,123 865,673 1,927,986 ------------------------------------------------------------------------------------------------------------------------------------ Net assets applicable to Common shares $132,122,359 $44,988,323 $ 84,248,335 ==================================================================================================================================== Authorized shares: Common Unlimited Unlimited Unlimited Preferred Unlimited Unlimited Unlimited ====================================================================================================================================
See accompanying notes to financial statements. 45 Statement of OPERATIONS Year Ended May 31, 2004
MARYLAND MARYLAND MARYLAND MARYLAND PREMIUM DIVIDEND DIVIDEND DIVIDEND INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3 (NMY) (NFM) (NZR) (NWI) ------------------------------------------------------------------------------------------------------------------------------------ INVESTMENT INCOME $ 12,057,932 $ 4,702,481 $ 4,504,879 $ 5,221,000 ------------------------------------------------------------------------------------------------------------------------------------ EXPENSES Management fees 1,508,376 611,082 618,175 752,312 Preferred shares - auction fees 198,505 80,305 80,452 97,872 Preferred shares - dividend disbursing agent fees 20,053 10,028 10,028 10,028 Shareholders' servicing agent fees and expenses 31,843 2,248 1,173 1,022 Custodian's fees and expenses 55,962 24,714 23,404 25,281 Trustees' fees and expenses 5,335 2,083 814 2,667 Professional fees 17,456 11,733 11,933 12,872 Shareholders' reports - printing and mailing expenses 32,784 10,606 12,918 11,940 Stock exchange listing fees 13,732 238 239 679 Investor relations expense 10,194 5,708 8,370 11,071 Other expenses 20,918 11,996 15,591 9,137 ------------------------------------------------------------------------------------------------------------------------------------ Total expenses before custodian fee credit and expense reimbursement 1,915,158 770,741 783,097 934,881 Custodian fee credit (13,537) (4,640) (7,487) (7,533) Expense reimbursement -- (282,038) (285,312) (370,369) ------------------------------------------------------------------------------------------------------------------------------------ Net expenses 1,901,621 484,063 490,298 556,979 ------------------------------------------------------------------------------------------------------------------------------------ Net investment income 10,156,311 4,218,418 4,014,581 4,664,021 ------------------------------------------------------------------------------------------------------------------------------------ REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENTS Net realized gain (loss) from investments 1,568,621 (29,789) 323,150 419,773 Change in net unrealized appreciation (depreciation) of investments (10,232,161) (4,437,544) (4,844,253) (5,940,325) ------------------------------------------------------------------------------------------------------------------------------------ Net gain (loss) from investments (8,663,540) (4,467,333) (4,521,103) (5,520,552) ------------------------------------------------------------------------------------------------------------------------------------ DISTRIBUTIONS TO PREFERRED SHAREHOLDERS From net investment income (599,393) (223,126) (251,576) (329,706) From accumulated net realized gains from investments -- -- (7,701) -- ------------------------------------------------------------------------------------------------------------------------------------ Decrease in net assets applicable to Common shares from distributions to Preferred shareholders (599,393) (223,126) (259,277) (329,706) ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets applicable to Common shares from operations $ 893,378 $ (472,041) $ (765,799) $(1,186,237) ==================================================================================================================================== See accompanying notes to financial statements. 46
VIRGINIA VIRGINIA VIRGINIA PREMIUM DIVIDEND DIVIDEND INCOME ADVANTAGE ADVANTAGE 2 (NPV) (NGB) (NNB) ------------------------------------------------------------------------------------------------------------------------------------ INVESTMENT INCOME $10,234,990 $3,542,601 $ 6,264,332 ------------------------------------------------------------------------------------------------------------------------------------ EXPENSES Management fees 1,288,717 458,023 839,093 Preferred shares - auction fees 160,109 60,229 105,401 Preferred shares - dividend disbursing agent fees 20,053 10,028 10,028 Shareholders' servicing agent fees and expenses 29,611 1,442 1,681 Custodian's fees and expenses 50,386 17,935 31,064 Trustees' fees and expenses 5,319 1,653 3,253 Professional fees 15,942 6,980 13,394 Shareholders' reports - printing and mailing expenses 24,037 5,804 14,899 Stock exchange listing fees 11,170 210 384 Investor relations expense 10,555 3,352 12,088 Other expenses 15,158 8,046 12,861 ------------------------------------------------------------------------------------------------------------------------------------ Total expenses before custodian fee credit and expense reimbursement 1,631,057 573,702 1,044,146 Custodian fee credit (11,554) (4,049) (7,464) Expense reimbursement -- (211,395) (387,516) ------------------------------------------------------------------------------------------------------------------------------------ Net expenses 1,619,503 358,258 649,166 ------------------------------------------------------------------------------------------------------------------------------------ Net investment income 8,615,487 3,184,343 5,615,166 ------------------------------------------------------------------------------------------------------------------------------------ REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENTS Net realized gain (loss) from investments 1,376,071 134,876 729,712 Change in net unrealized appreciation (depreciation) of investments (10,254,013) (3,401,688) (7,681,558) ------------------------------------------------------------------------------------------------------------------------------------ Net gain (loss) from investments (8,877,942) (3,266,812) (6,951,846) ------------------------------------------------------------------------------------------------------------------------------------ DISTRIBUTIONS TO PREFERRED SHAREHOLDERS From net investment income (443,213) (168,056) (320,789) From accumulated net realized gains from investments -- -- (24,663) ------------------------------------------------------------------------------------------------------------------------------------ Decrease in net assets applicable to Common shares from distributions to Preferred shareholders (443,213) (168,056) (345,452) ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets applicable to Common shares from operations $ (705,668) $ (250,525) $(1,682,132) ====================================================================================================================================
See accompanying notes to financial statements. 47 Statement of CHANGES IN NET ASSETS
MARYLAND PREMIUM MARYLAND DIVIDEND MARYLAND DIVIDEND INCOME (NMY) ADVANTAGE (NFM) ADVANTAGE 2 (NZR) ----------------------------- ----------------------------- ---------------------------- YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED 5/31/04 5/31/03 5/31/04 5/31/03 5/31/04 5/31/03 ------------------------------------------------------------------------------------------------------------------------------------ OPERATIONS Net investment income $ 10,156,311 $ 10,723,401 $ 4,218,418 $ 4,306,567 $ 4,014,581 $ 4,032,768 Net realized gain (loss) from investments 1,568,621 2,417,190 (29,789) (444,217) 323,150 176,840 Change in net unrealized appreciation (depreciation) of investments (10,232,161) 8,129,891 (4,437,544) 5,349,299 (4,844,253) 6,557,094 Distributions to Preferred Shareholders: From net investment income (599,393) (733,384) (223,126) (321,178) (251,576) (356,207) From accumulated net realized gains from investments -- -- -- -- (7,701) -- ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets applicable to Common shares from operations 893,378 20,537,098 (472,041) 8,890,471 (765,799) 10,410,495 ------------------------------------------------------------------------------------------------------------------------------------ DISTRIBUTIONS TO COMMON SHAREHOLDERS From net investment income (9,643,203) (9,412,274) (3,881,861) (3,554,454) (3,627,102) (3,375,174) From accumulated net realized gains from investments -- -- -- -- (77,957) -- ------------------------------------------------------------------------------------------------------------------------------------ Decrease in net assets applicable to Common shares from distributions to Common shareholders (9,643,203) (9,412,274) (3,881,861) (3,554,454) (3,705,059) (3,375,174) ------------------------------------------------------------------------------------------------------------------------------------ CAPITAL SHARE TRANSACTIONS Common shares: Net proceeds from sale of shares -- -- 1,664 -- 3,771 -- Net proceeds from shares issued to shareholders due to reinvestment of distributions 441,548 494,984 55,602 45,521 43,133 34,422 Preferred shares offering costs -- -- -- 31,543 (1,870) 50,355 ------------------------------------------------------------------------------------------------------------------------------------ Net increase in net assets applicable to Common shares from capital share transactions 441,548 494,984 57,266 77,064 45,034 84,777 ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets applicable to Common shares (8,308,277) 11,619,808 (4,296,636) 5,413,081 (4,425,824) 7,120,098 Net assets applicable to Common shares at the beginning of period 159,415,074 147,795,266 64,337,958 58,924,877 65,489,844 58,369,746 ------------------------------------------------------------------------------------------------------------------------------------ Net assets applicable to Common shares at the end of period $151,106,797 $159,415,074 $60,041,322 $64,337,958 $61,064,020 $65,489,844 ==================================================================================================================================== Undistributed net investment income at the end of period $ 1,848,894 $ 1,942,571 $ 621,007 $ 510,849 $ 638,104 $ 502,516 ==================================================================================================================================== See accompanying notes to financial statements. 48
MARYLAND DIVIDEND VIRGINIA PREMIUM VIRGINIA DIVIDEND ADVANTAGE 3 (NWI) INCOME (NPV) ADVANTAGE (NGB) ---------------------------- ----------------------------- ---------------------------- FOR THE PERIOD 9/25/02 (COMMENCEMENT YEAR ENDED OF OPERATIONS) YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED 5/31/04 THROUGH 5/31/03 5/31/04 5/31/03 5/31/04 5/31/03 ------------------------------------------------------------------------------------------------------------------------------------ OPERATIONS Net investment income $ 4,664,021 $ 2,781,714 $ 8,615,487 $ 8,810,923 $ 3,184,343 $ 3,176,943 Net realized gain (loss) from investments 419,773 (400,087) 1,376,071 1,078,214 134,876 (429,332) Change in net unrealized appreciation (depreciation) of investments (5,940,325) 4,381,597 (10,254,013) 9,438,098 (3,401,688) 3,871,254 Distributions to Preferred Shareholders: From net investment income (329,706) (245,067) (443,213) (582,520) (168,056) (223,605) From accumulated net realized gains from investments -- -- -- -- -- -- ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets applicable to Common shares from operations (1,186,237) 6,518,157 (705,668) 18,744,715 (250,525) 6,395,260 ------------------------------------------------------------------------------------------------------------------------------------ DISTRIBUTIONS TO COMMON SHAREHOLDERS From net investment income (4,211,017) (2,453,307) (8,044,962) (7,864,088) (2,910,545) (2,683,388) From accumulated net realized gains from investments -- -- -- -- -- -- ------------------------------------------------------------------------------------------------------------------------------------ Decrease in net assets applicable to Common shares from distributions to Common shareholders (4,211,017) (2,453,307) (8,044,962) (7,864,088) (2,910,545) (2,683,388) ------------------------------------------------------------------------------------------------------------------------------------ CAPITAL SHARE TRANSACTIONS Common shares: Net proceeds from sale of shares -- 76,335,300 -- -- 1,664 -- Net proceeds from shares issued to shareholders due to reinvestment of distributions 72,758 105,659 649,807 687,975 46,219 52,795 Preferred shares offering costs (6,570) (906,000) -- -- -- 28,686 ------------------------------------------------------------------------------------------------------------------------------------ Net increase in net assets applicable to Common shares from capital share transactions 66,188 75,534,959 649,807 687,975 47,883 81,481 ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets applicable to Common shares (5,331,066) 79,599,809 (8,100,823) 11,568,602 (3,113,187) 3,793,353 Net assets applicable to Common shares at the beginning of period 79,700,084 100,275 140,223,182 128,654,580 48,101,510 44,308,157 ------------------------------------------------------------------------------------------------------------------------------------ Net assets applicable to Common shares at the end of period $74,369,018 79,700,084 $132,122,359 140,223,182 $44,988,323 48,101,510 ==================================================================================================================================== Undistributed net investment income at the end of period $ 206,638 $ 83,340 $ 1,592,552 $ 1,506,057 $ 459,798 $ 354,056 ==================================================================================================================================== See accompanying notes to financial statements. 49
Statement of CHANGES IN NET ASSETS (continued)
VIRGINIA DIVIDEND ADVANTAGE 2 (NNB) ---------------------------- YEAR ENDED YEAR ENDED 5/31/04 5/31/03 ------------------------------------------------------------------------------------------------------------------------------------ OPERATIONS Net investment income $ 5,615,166 $ 5,532,519 Net realized gain (loss) from investments 729,712 562,801 Change in net unrealized appreciation (depreciation) of investments (7,681,558) 8,983,926 Distributions to Preferred Shareholders: From net investment income (320,789) (456,477) From accumulated net realized gains from investments (24,663) (21,076) ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets applicable to Common shares from operations (1,682,132) 14,601,693 ------------------------------------------------------------------------------------------------------------------------------------ DISTRIBUTIONS TO COMMON SHAREHOLDERS From net investment income (5,062,594) (4,757,183) From accumulated net realized gains from investments (268,662) (145,463) ------------------------------------------------------------------------------------------------------------------------------------ Decrease in net assets applicable to Common shares from distributions to Common shareholders (5,331,256) (4,902,646) ------------------------------------------------------------------------------------------------------------------------------------ CAPITAL SHARE TRANSACTIONS Common shares: Net proceeds from sale of shares 2,456 -- Net proceeds from shares issued to shareholders due to reinvestment of distributions 193,934 33,189 Preferred shares offering costs -- 8,152 ------------------------------------------------------------------------------------------------------------------------------------ Net increase in net assets applicable to Common shares from capital share transactions 196,390 41,341 ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets applicable to Common shares (6,816,998) 9,740,388 Net assets applicable to Common shares at the beginning of period 91,065,333 81,324,945 ------------------------------------------------------------------------------------------------------------------------------------ Net assets applicable to Common shares at the end of period $84,248,335 $91,065,333 ==================================================================================================================================== Undistributed net investment income at the end of period $ 695,300 $ 465,866 ====================================================================================================================================
See accompanying notes to financial statements. 50 Notes to FINANCIAL STATEMENTS 1. GENERAL INFORMATION AND SIGNIFICANT ACCOUNTING POLICIES The state Funds (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). 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. Prior to the commencement of operations of Maryland Dividend Advantage 3 (NWI), the Fund had no operations other than those related to organizational matters, the initial capital contribution of $100,275 by Nuveen Advisory Corp. (the "Adviser"), a wholly owned subsidiary of Nuveen Investments, Inc. and the recording of the organization expenses ($11,500) and their reimbursement by Nuveen Investments, LLC, also a wholly owned subsidiary of Nuveen Investments, Inc. 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. 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. Securities 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 price quotes are not readily available (which is usually the case for municipal securities), the pricing service establishes fair market 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. If it is determined that market prices for a security are unavailable or inappropriate, the Board of Trustees of the Funds, or its designee, may establish a fair value for the security. Temporary investments in securities that have variable rate and demand features qualifying them as short-term securities are valued at amortized cost, which approximates market value. Securities Transactions Securities transactions are recorded on a trade date basis. Realized gains and losses from such transactions are determined on the specific identification method. Securities purchased or sold on a when-issued or delayed delivery basis may have extended settlement periods. The securities 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 and delayed delivery purchase commitments. At May 31, 2004, Virginia Dividend Advantage 2 (NNB), had an outstanding when-issued purchase commitment of $1,117,124. There were no such outstanding purchase commitments in any of the other 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. 51 Notes to FINANCIAL STATEMENTS (continued) Income Taxes Each Fund is a separate taxpayer for federal income tax purposes. Each Fund intends to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its net investment income to its shareholders. Therefore, no federal income tax provision is required. Furthermore, each Fund intends to satisfy conditions which will enable interest from municipal securities, which is exempt from regular federal and designated state income taxes, to retain such tax-exempt status when distributed to shareholders of the Funds. All monthly tax-exempt income dividends paid during the fiscal year ended May 31, 2004, have been designated Exempt Interest Dividends. Dividends and Distributions to Common Shareholders Dividends from tax-exempt net investment income are declared monthly. Net realized capital gains and/or market discount from investment transactions, if any, are distributed to shareholders not less frequently than annually. Furthermore, capital gains are distributed only to the extent they exceed available capital loss carryforwards. Distributions to Common shareholders of tax-exempt net investment income, net realized capital gains and/or market discount, if any, are recorded on the ex-dividend date. The amount and timing of distributions are determined in accordance with federal income tax regulations, which may differ from U.S. generally accepted accounting principles. Preferred Shares The Funds have issued and outstanding $25,000 stated value Preferred shares. Each Fund's Preferred shares are issued in one or more Series. The dividend rate on each Series may change every seven days, as set pursuant to a dutch auction process by the auction agent, and is payable at or near 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 ================================================================================ 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 ================================================================================ Effective November 15, 2002, Maryland Dividend Advantage 3 (NWI) issued 1,560 Series T, $25,000 stated value Preferred shares. 52 Derivative Financial Instruments The Funds may invest in certain derivative financial instruments including futures, forward, swap and option contracts, and other financial instruments with similar characteristics. Although the Funds are authorized to invest in such financial instruments, and may do so in the future, they did not make any such investments during the fiscal year ended May 31, 2004. Custodian Fee Credit Each Fund has an arrangement with the custodian bank whereby certain custodian fees and expenses are reduced by credits earned on each Fund's cash on deposit with the bank. Such deposit arrangements are an alternative to overnight investments. Offering Costs Nuveen Investments, LLC has agreed to pay all Common share offering costs (other than the sales load) that exceed $.03 per Common share for Maryland Dividend Advantage 3 (NWI). Maryland Dividend Advantage 3's (NWI) share of Common share offering costs ($160,200) was recorded as a reduction of the proceeds from the sale of common shares. Costs incurred by Maryland Dividend Advantage 3 (NWI) in connection with its offering of Preferred shares ($912,570) were recorded as a reduction to paid-in surplus. Indemnifications Under the Funds' organizational documents, its 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. 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 and Preferred shares were as follows:
MARYLAND PREMIUM MARYLAND DIVIDEND MARYLAND DIVIDEND INCOME (NMY) ADVANTAGE (NFM) ADVANTAGE 2 (NZR) ----------------------- ----------------------- ----------------------- YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED 5/31/04 5/31/03 5/31/04 5/31/03 5/31/04 5/31/03 --------------------------------------------------------------------------------------------------------- Common shares: Shares sold -- -- -- -- -- -- Shares issued to shareholders due to reinvestment of distributions 27,206 30,973 3,448 3,029 2,757 2,564 --------------------------------------------------------------------------------------------------------- 27,206 30,973 3,448 3,029 2,757 2,564 ========================================================================================================= Preferred shares sold -- -- -- -- -- -- ========================================================================================================= MARYLAND DIVIDEND VIRGINIA PREMIUM VIRGINIA DIVIDEND ADVANTAGE 3 (NWI) INCOME (NPV) ADVANTAGE (NGB) ---------------------------- ----------------------- ----------------------- FOR THE PERIOD 9/25/02 (COMMENCEMENT YEAR ENDED OF OPERATIONS) YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED 5/31/04 THROUGH 5/31/03 5/31/04 5/31/03 5/31/04 5/31/03 ------------------------------------------------------------------------------------------------------------- Common shares: Shares sold -- 5,340,000 -- -- -- -- Shares issued to shareholders due to reinvestment of distributions 4,992 7,283 37,945 40,954 2,763 3,523 ------------------------------------------------------------------------------------------------------------- 4,992 5,347,283 37,945 40,954 2,763 3,523 ============================================================================================================= Preferred shares sold -- 1,560 -- -- -- -- =============================================================================================================
53 Notes to FINANCIAL STATEMENTS (continued)
VIRGINIA DIVIDEND ADVANTAGE 2 (NNB) ----------------------- YEAR ENDED YEAR ENDED 5/31/04 5/31/03 --------------------------------------------------------------------------------------------------------- Common shares: Shares sold -- -- Shares issued to shareholders due to reinvestment of distributions 11,856 2,299 --------------------------------------------------------------------------------------------------------- 11,856 2,299 ========================================================================================================= Preferred shares sold -- -- =========================================================================================================
3. SECURITIES TRANSACTIONS Purchases and sales (including maturities) of investments in long-term municipal securities during the fiscal year ended May 31, 2004, were as follows: MARYLAND MARYLAND MARYLAND MARYLAND PREMIUM DIVIDEND DIVIDEND DIVIDEND INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3 (NMY) (NFM) (NZR) (NWI) -------------------------------------------------------------------------------- Purchases $43,164,051 $9,416,769 $ 9,950,347 $17,110,586 Sales and maturities 37,456,163 9,167,550 10,329,088 18,319,661 ================================================================================ VIRGINIA VIRGINIA VIRGINIA PREMIUM DIVIDEND DIVIDEND INCOME ADVANTAGE ADVANTAGE 2 (NPV) (NGB) (NNB) -------------------------------------------------------------------------------- Purchases $28,438,668 $5,349,594 $19,826,889 Sales and maturities 28,106,498 4,940,748 20,579,293 ================================================================================ 54 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 income on taxable market discount securities and timing differences in recognizing certain gains and losses on security transactions. At May 31, 2004, the cost of investments were as follows: MARYLAND MARYLAND MARYLAND MARYLAND PREMIUM DIVIDEND DIVIDEND DIVIDEND INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3 (NMY) (NFM) (NZR) (NWI) -------------------------------------------------------------------------------- Cost of investments $223,070,553 $88,986,025 $90,321,835 $112,973,800 ================================================================================ VIRGINIA VIRGINIA VIRGINIA PREMIUM DIVIDEND DIVIDEND INCOME ADVANTAGE ADVANTAGE 2 (NPV) (NGB) (NNB) -------------------------------------------------------------------------------- Cost of investments $186,065,401 $66,619,184 $122,092,060 ================================================================================ Gross unrealized appreciation and gross unrealized depreciation of investments at May 31, 2004, were as follows:
MARYLAND MARYLAND MARYLAND MARYLAND PREMIUM DIVIDEND DIVIDEND DIVIDEND INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3 (NMY) (NFM) (NZR) (NWI) ------------------------------------------------------------------------------------------------------------ Gross unrealized: Appreciation $ 6,981,230 $1,660,115 $1,614,600 $ 470,338 Depreciation (3,638,899) (715,524) (561,352) (2,019,749) ------------------------------------------------------------------------------------------------------------ Net unrealized appreciation (depreciation) of investments $ 3,342,331 $ 944,591 $1,053,248 $(1,549,411) ============================================================================================================ VIRGINIA VIRGINIA VIRGINIA PREMIUM DIVIDEND DIVIDEND INCOME ADVANTAGE ADVANTAGE 2 (NPV) (NGB) (NNB) ------------------------------------------------------------------------------------------------------------ Gross unrealized: Appreciation $ 7,809,412 $1,560,621 $2,567,666 Depreciation (1,013,084) (682,167) (611,260) ------------------------------------------------------------------------------------------------------------ Net unrealized appreciation (depreciation) of investments $ 6,796,328 $ 878,454 $1,956,406 ============================================================================================================
The tax components of undistributed net investment income and net realized gains at May 31, 2004, 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 $2,321,516 $939,005 $928,321 $554,960 Undistributed net ordinary income * -- -- 17,253 -- Undistributed net long-term capital gains -- -- 193,076 19,686 ========================================================================================================= VIRGINIA VIRGINIA VIRGINIA PREMIUM DIVIDEND DIVIDEND INCOME ADVANTAGE ADVANTAGE 2 (NPV) (NGB) (NNB) --------------------------------------------------------------------------------------------------------- Undistributed net tax-exempt income $2,052,978 $695,451 $1,099,704 Undistributed net ordinary income * 20,262 -- -- Undistributed net long-term capital gains -- -- 731,643 =========================================================================================================
* Net ordinary income consists of taxable market discount income and net short-term capital gains, if any. 55 Notes to FINANCIAL STATEMENTS (continued) The tax character of distributions paid during the fiscal years ended May 31, 2004 and May 31, 2003, 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 2004 (NMY) (NFM) (NZR) (NWI) --------------------------------------------------------------------------------------------------------- Distributions from net tax-exempt income $10,234,475 $4,085,826 $3,868,426 $4,538,274 Distributions from net ordinary income * -- -- -- -- Distributions from net long-term capital gains -- -- 85,658 -- ========================================================================================================= VIRGINIA VIRGINIA VIRGINIA PREMIUM DIVIDEND DIVIDEND INCOME ADVANTAGE ADVANTAGE 2 2004 (NPV) (NGB) (NNB) --------------------------------------------------------------------------------------------------------- Distributions from net tax-exempt income $8,481,892 $3,063,648 $5,362,717 Distributions from net ordinary income * -- -- 83,459 Distributions from net long-term capital gains -- -- 209,866 ========================================================================================================= * Net ordinary income consists of taxable market discount income and net short-term capital gains, if any.
MARYLAND MARYLAND MARYLAND MARYLAND PREMIUM DIVIDEND DIVIDEND DIVIDEND INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3 2003 (NMY) (NFM) (NZR) (NWI) --------------------------------------------------------------------------------------------------------- Distributions from net tax-exempt income $10,056,404 $3,859,655 $3,704,764 $2,343,187 Distributions from net ordinary income * 38,307 -- -- -- Distributions from net long-term capital gains -- -- -- -- ========================================================================================================= VIRGINIA VIRGINIA VIRGINIA PREMIUM DIVIDEND DIVIDEND INCOME ADVANTAGE ADVANTAGE 2 2003 (NPV) (NGB) (NNB) --------------------------------------------------------------------------------------------------------- Distributions from net tax-exempt income $8,413,226 $2,895,125 $5,200,254 Distributions from net ordinary income * -- -- 167,216 Distributions from net long-term capital gains -- -- -- ========================================================================================================= * Net ordinary income consists of taxable market discount income and net short-term capital gains, if any.
56 At May 31, 2004, the following Funds had unused capital loss carryforwards available for federal income tax purposes to be applied against future capital gains, if any. If not applied, the carryforwards will expire as follows:
MARYLAND MARYLAND VIRGINIA VIRGINIA PREMIUM DIVIDEND PREMIUM DIVIDEND INCOME ADVANTAGE INCOME ADVANTAGE (NMY) (NFM) (NPV) (NGB) --------------------------------------------------------------------------------------------------------- Expiration year: 2005 $144,358 $ -- $140,749 $ -- 2006 -- -- -- -- 2007 -- -- -- -- 2008 332,070 -- 250,767 -- 2009 317,048 9,875 -- 186,152 2010 -- 37,159 -- 104,197 2011 -- -- -- 32,605 2012 -- 430,282 -- 282,292 --------------------------------------------------------------------------------------------------------- Total $793,476 $477,316 $391,516 $605,246 =========================================================================================================
Maryland Dividend Advantage (NFM) elected to defer net realized losses from investments incurred from November 1, 2003 through May 31, 2004 ("post-October losses") in accordance with Federal income tax regulations. The Fund had $109,105 of post-October losses that were treated as having arisen in the following fiscal year. 5. MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES Under Maryland Premium Income's (NMY) and Virginia Premium Income's (NPV) investment management agreements with the Adviser, each Fund pays an annual management fee, payable monthly, at the rates set forth below, which are based upon the average daily net assets (including net assets attributable to Preferred shares) of each Fund as follows: AVERAGE DAILY NET ASSETS (INCLUDING NET ASSETS ATTRIBUTABLE TO PREFERRED SHARES) MANAGEMENT FEE -------------------------------------------------------------------------------- For the first $125 million .6500% For the next $125 million .6375 For the next $250 million .6250 For the next $500 million .6125 For the next $1 billion .6000 For the next $3 billion .5875 For net assets over $5 billion .5750 ================================================================================ Under Maryland Dividend Advantage's (NFM), Maryland Dividend Advantage 2's (NZR), Maryland Dividend Advantage 3's (NWI), Virginia Dividend Advantage's (NGB) and Virginia Dividend Advantage 2's (NNB) investment management agreements with the Adviser, each Fund pays an annual management fee, payable monthly, at the rates set forth below, which are based upon the average daily net assets (including net assets attributable to Preferred shares) of each Fund as follows: AVERAGE DAILY NET ASSETS (INCLUDING NET ASSETS ATTRIBUTABLE TO PREFERRED SHARES) MANAGEMENT FEE -------------------------------------------------------------------------------- For the first $125 million .6500% For the next $125 million .6375 For the next $250 million .6250 For the next $500 million .6125 For the next $1 billion .6000 For net assets over $2 billion .5750 ================================================================================ 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 their officers, all of whom receive remuneration for their services to the Funds from the Adviser or its affiliates. The Board of Trustees has adopted a deferred compensation plan for independent Trustees that enables Trustees to elect to defer receipt of all or a portion of the annual compensation they are entitled to receive from certain Nuveen advised Funds. Under the plan, deferred amounts are treated as though equal dollar amounts had been invested in shares of select Nuveen advised Funds. 57 Notes to FINANCIAL STATEMENTS (continued) As approved by the Board of Trustees, a complex-wide fee schedule for all Funds managed by the Adviser and its affiliates will go into effect on August 1, 2004. The implementation of this complex-wide fee schedule is expected to result in a marginal immediate decrease in the rate at which management fees are to be paid by the Funds. As assets in the Nuveen Fund complex grow, the management fee rates to be paid by the Funds will decrease further. Under no circumstances will the complex-wide fee schedule result in an increase in the rate at which management fees would be paid by the Funds if the complex-wide fee schedule were not implemented. 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. The Adviser has not agreed to reimburse Maryland Dividend Advantage (NFM) and Virginia Dividend Advantage (NGB) for any portion of its 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. 58 The Adviser has not agreed to reimburse Maryland Dividend Advantage 3 (NWI) for any portion of its fees and expenses beyond September 30, 2010. 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. 6. SUBSEQUENT EVENT -- DISTRIBUTIONS TO COMMON SHAREHOLDERS The Funds declared Common share dividend distributions from their tax-exempt net investment income which were paid on July 1, 2004, to shareholders of record on June 15, 2004, as follows: MARYLAND MARYLAND MARYLAND MARYLAND PREMIUM DIVIDEND DIVIDEND DIVIDEND INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3 (NMY) (NFM) (NZR) (NWI) -------------------------------------------------------------------------------- Dividend per share $.0760 $.0785 $.0730 $.0655 ================================================================================ VIRGINIA VIRGINIA VIRGINIA PREMIUM DIVIDEND DIVIDEND INCOME ADVANTAGE ADVANTAGE 2 (NPV) (NGB) (NNB) -------------------------------------------------------------------------------- Dividend per share $.0760 $.0785 $.0745 ================================================================================ 59 Financial HIGHLIGHTS Selected data for a Common share outstanding throughout each period:
Investment Operations Less Distributions ----------------------------------------------------------------- ---------------------------------- Distributions Distributions from Net from Net Beginning Net Investment Capital Investment Capital Common Realized/ Income to Gains to Income to Gains to Share Net Unrealized Preferred Preferred Common Common Net Asset Investment Investment Share- Share- Share- Share- Value Income Gain (Loss) holders+ holders+ Total holders holders Total ==================================================================================================================================== MARYLAND PREMIUM INCOME (NMY) ------------------------------------------------------------------------------------------------------------------------------------ Year Ended 5/31: 2004 $15.10 $ .96 $ (.81) $(.06) $ -- $ .09 $(.91) $ -- $(.91) 2003 14.04 1.02 1.00 (.07) -- 1.95 (.89) -- (.89) 2002 13.83 1.03 .14 (.13) -- 1.04 (.83) -- (.83) 2001 12.83 1.03 1.01 (.25) -- 1.79 (.79) -- (.79) 2000 14.41 1.02 (1.58) (.24) -- (.80) (.78) -- (.78) MARYLAND DIVIDEND ADVANTAGE (NFM) ------------------------------------------------------------------------------------------------------------------------------------ Year Ended 5/31: 2004 15.47 1.01 (1.07) (.05) -- (.11) (.93) -- (.93) 2003 14.18 1.04 1.18 (.08) -- 2.14 (.86) -- (.86) 2002 13.90 1.04 .22 (.14) -- 1.12 (.84) -- (.84) 2001(a) 14.33 .22 (.25) (.05) -- (.08) (.21) -- (.21) MARYLAND DIVIDEND ADVANTAGE 2 (NZR) ------------------------------------------------------------------------------------------------------------------------------------ Year Ended 5/31: 2004 15.71 .96 (1.08) (.06) -- (.18) (.87) (.02) (.89) 2003 14.01 .97 1.62 (.09) -- 2.50 (.81) -- (.81) 2002(b) 14.33 .57 (.22) (.06) -- .29 (.46) -- (.46) MARYLAND DIVIDEND ADVANTAGE 3 (NWI) ------------------------------------------------------------------------------------------------------------------------------------ Year Ended 5/31: 2004 14.89 .87 (1.03) (.06) -- (.22) (.79) -- (.79) 2003(c) 14.33 .52 .75 (.05) -- 1.22 (.46) -- (.46) ==================================================================================================================================== Total Returns -------------------- Based Offering on Costs and Ending Common Preferred Common Based Share Share Share Ending on Net Underwriting Net Asset Market Market Asset Discounts Value Value Value** Value** ================================================================================== MARYLAND PREMIUM INCOME (NMY) ---------------------------------------------------------------------------------- Year Ended 5/31: 2004 $-- $14.28 $14.4500 (10.77)% .64% 2003 -- 15.10 17.1500 15.22 14.33 2002 -- 14.04 15.7300 4.77 7.71 2001 -- 13.83 15.8500 26.24 14.18 2000 -- 12.83 13.2500 (7.22) (5.57) MARYLAND DIVIDEND ADVANTAGE (NFM) ---------------------------------------------------------------------------------- Year Ended 5/31: 2004 -- 14.43 15.6200 2.99 (.69) 2003 .01 15.47 16.0800 9.98 15.55 2002 -- 14.18 15.4400 1.98 8.21 2001(a) (.14) 13.90 15.9900 8.02 (1.53) MARYLAND DIVIDEND ADVANTAGE 2 (NZR) ---------------------------------------------------------------------------------- Year Ended 5/31: 2004 -- 14.64 14.2800 (2.90) (1.16) 2003 .01 15.71 15.6000 12.71 18.39 2002(b) (.15) 14.01 14.6100 .52 1.01 MARYLAND DIVIDEND ADVANTAGE 3 (NWI) ---------------------------------------------------------------------------------- Year Ended 5/31: 2004 -- 13.88 13.2400 (5.97) (1.51) 2003(c) (.20) 14.89 14.9000 2.53 7.31 ================================================================================== Ratios/Supplemental Data -------------------------------------------------------------------------------------------------- Before Credit/Reimbursement After Credit/Reimbursement*** ------------------------------ ------------------------------- Ratio of Net Ratio of Net Ratio of Investment Ratio of Investment Ending Expenses Income to Expenses Income to Net to Average Average to Average Average Assets Net Assets Net Assets Net Assets Net Assets Applicable Applicable Applicable Applicable Applicable Portfolio to Common to Common to Common to Common to Common Turnover Shares (000) Shares++ Shares++ Shares++ Shares++ Rate ===================================================================================================================== MARYLAND PREMIUM INCOME (NMY) --------------------------------------------------------------------------------------------------------------------- Year Ended 5/31: 2004 $151,107 1.24% 6.54% 1.23% 6.55% 16% 2003 159,415 1.26 7.00 1.25 7.01 16 2002 147,795 1.32 7.33 1.31 7.34 13 2001 145,201 1.31 7.58 1.31 7.58 8 2000 134,299 1.29 7.69 1.28 7.70 13 MARYLAND DIVIDEND ADVANTAGE (NFM) --------------------------------------------------------------------------------------------------------------------- Year Ended 5/31: 2004 60,041 1.24 6.34 .78 6.80 10 2003 64,338 1.26 6.54 .79 7.01 12 2002 58,925 1.35 6.81 .82 7.34 36 2001(a) 57,740 1.17* 4.33* .75* 4.75* 10 MARYLAND DIVIDEND ADVANTAGE 2 (NZR) --------------------------------------------------------------------------------------------------------------------- Year Ended 5/31: 2004 61,064 1.24 5.90 .78 6.36 11 2003 65,490 1.26 6.07 .80 6.53 12 2002(b) 58,370 1.22* 5.55* .79* 5.99* 21 MARYLAND DIVIDEND ADVANTAGE 3 (NWI) --------------------------------------------------------------------------------------------------------------------- Year Ended 5/31: 2004 74,369 1.22 5.59 .73 6.08 15 2003(c) 79,700 1.18* 5.01* .70* 5.50* 13 ===================================================================================================================== Preferred Shares at End of Period ---------------------------------------- Aggregate Liquidation Amount and Market Asset Outstanding Value Coverage (000) Per Share Per Share =========================================================== MARYLAND PREMIUM INCOME (NMY) ----------------------------------------------------------- Year Ended 5/31: 2004 $79,100 $25,000 $72,758 2003 79,100 25,000 75,384 2002 79,100 25,000 71,712 2001 79,100 25,000 70,891 2000 79,100 25,000 67,446 MARYLAND DIVIDEND ADVANTAGE (NFM) ----------------------------------------------------------- Year Ended 5/31: 2004 32,000 25,000 71,907 2003 32,000 25,000 75,264 2002 32,000 25,000 71,035 2001(a) 32,000 25,000 70,109 MARYLAND DIVIDEND ADVANTAGE 2 (NZR) ----------------------------------------------------------- Year Ended 5/31: 2004 32,000 25,000 72,706 2003 32,000 25,000 76,164 2002(b) 32,000 25,000 70,601 MARYLAND DIVIDEND ADVANTAGE 3 (NWI) ----------------------------------------------------------- Year Ended 5/31: 2004 39,000 25,000 72,672 2003(c) 39,000 25,000 76,090 ===========================================================
* Annualized. ** Total Investment Return on Market Value is the combination of reinvested dividend income, reinvested capital gains distributions, if any, and changes in stock price per share. Total Return on Common Share Net Asset Value is the combination of reinvested dividend income at net asset value, reinvested capital gains distributions at net asset value, if any, and changes in Common share net asset value per share. Total returns are not annualized. *** After custodian fee credit and expense reimbursement, where applicable. + The amounts shown are based on Common share equivalents. ++ Ratios do not reflect the effect of dividend payments to Preferred shareholders; income ratios reflect income earned on assets attributable to Preferred shares. (a) For the period January 23, 2001 (commencement of operations) through May 31, 2001. (b) For the period September 25, 2001 (commencement of operations) through May 31, 2002. (c) For the period September 25, 2002 (commencement of operations) through May 31, 2003. See accompanying notes to financial statements. 60-61 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 Net Investment Capital Investment Capital Common Realized/ Income to Gains to Income to Gains to Share Net Unrealized Preferred Preferred Common Common Net Asset Investment Investment Share- Share- Share- Share- Value Income Gain (Loss) holders+ holders+ Total holders holders Total ==================================================================================================================================== VIRGINIA PREMIUM INCOME (NPV) ------------------------------------------------------------------------------------------------------------------------------------ Year Ended 5/31: 2004 $15.93 $ .97 $ (.99) $(.05) $ -- $ (.07) $(.91) $ -- $(.91) 2003 14.69 1.00 1.21 (.07) -- 2.14 (.90) -- (.90) 2002 14.59 1.04 .03 (.11) -- .96 (.86) -- (.86) 2001 13.36 1.08 1.21 (.25) -- 2.04 (.81) -- (.81) 2000 14.89 1.07 (1.52) (.24) -- (.69) (.84) -- (.84) VIRGINIA DIVIDEND ADVANTAGE (NGB) ------------------------------------------------------------------------------------------------------------------------------------ Year Ended 5/31: 2004 15.43 1.02 (1.05) (.05) -- (.08) (.93) -- (.93) 2003 14.23 1.02 1.10 (.07) -- 2.05 (.86) -- (.86) 2002 13.87 1.02 .32 (.13) -- 1.21 (.85) -- (.85) 2001(a) 14.33 .24 (.28) (.05) -- (.09) (.21) -- (.21) VIRGINIA DIVIDEND ADVANTAGE 2 (NNB) ------------------------------------------------------------------------------------------------------------------------------------ Year Ended 5/31: 2004 16.02 .99 (1.22) (.06) -- (.29) (.89) (.05) (.94) 2003 14.31 .97 1.69 (.08) -- 2.58 (.84) (.03) (.87) 2002(b) 14.33 .41 .09 (.04) -- .46 (.35) -- (.35) ==================================================================================================================================== Total Returns -------------------- Based Offering on Costs and Ending Common Preferred Common Based Share Share Share Ending on Net Underwriting Net Asset Market Market Asset Discounts Value Value Value** Value** ================================================================================== VIRGINIA PREMIUM INCOME (NPV) ---------------------------------------------------------------------------------- Year Ended 5/31: 2004 $ -- $14.95 $14.9500 (10.70)% (.42)% 2003 -- 15.93 17.6700 15.27 14.99 2002 -- 14.69 16.1700 6.64 6.71 2001 -- 14.59 16.0000 18.45 15.53 2000 -- 13.36 14.2500 (6.02) (4.64) VIRGINIA DIVIDEND ADVANTAGE (NGB) ---------------------------------------------------------------------------------- Year Ended 5/31: 2004 -- 14.42 15.0700 (8.11) (.50) 2003 .01 15.43 17.3500 21.45 14.92 2002 -- 14.23 15.0900 5.10 8.89 2001(a) (.16) 13.87 15.1800 2.61 (1.73) VIRGINIA DIVIDEND ADVANTAGE 2 (NNB) ---------------------------------------------------------------------------------- Year Ended 5/31: 2004 -- 14.79 14.6500 (3.81) (1.84) 2003 -- 16.02 16.1400 14.58 18.51 2002(b) (.13) 14.31 14.9000 1.71 2.30 ================================================================================== Ratios/Supplemental Data -------------------------------------------------------------------------------------------------- Before Credit/Reimbursement After Credit/Reimbursement*** ------------------------------ ------------------------------- Ratio of Net Ratio of Net Ratio of Investment Ratio of Investment Ending Expenses Income to Expenses Income to Net to Average Average to Average Average Assets Net Assets Net Assets Net Assets Net Assets Applicable Applicable Applicable Applicable Applicable Portfolio to Common to Common to Common to Common to Common Turnover Shares (000) Shares++ Shares++ Shares++ Shares++ Rate ======================================================================================================================= VIRGINIA PREMIUM INCOME (NPV) ----------------------------------------------------------------------------------------------------------------------- Year Ended 5/31: 2004 $132,122 1.20% 6.33% 1.19% 6.34% 14% 2003 140,223 1.25 6.61 1.24 6.62 17 2002 128,655 1.28 7.01 1.27 7.02 14 2001 127,145 1.23 7.51 1.21 7.53 7 2000 115,760 1.29 7.72 1.28 7.73 20 VIRGINIA DIVIDEND ADVANTAGE (NGB) ----------------------------------------------------------------------------------------------------------------------- Year Ended 5/31: 2004 44,988 1.24 6.39 .77 6.86 7 2003 48,102 1.28 6.45 .81 6.92 10 2002 44,308 1.37 6.68 .84 7.21 21 2001(a) 43,155 1.27* 4.76* .80* 5.23* 20 VIRGINIA DIVIDEND ADVANTAGE 2 (NNB) ----------------------------------------------------------------------------------------------------------------------- Year Ended 5/31: 2004 84,248 1.20 5.99 .74 6.44 16 2003 91,065 1.21 6.01 .75 6.47 15 2002(b) 81,325 1.14* 5.00* .70* 5.44* 12 ======================================================================================================================= Preferred Shares at End of Period --------------------------------------- Aggregate Liquidation Amount and Market Asset Outstanding Value Coverage (000) Per Share Per Share ============================================================ VIRGINIA PREMIUM INCOME (NPV) ------------------------------------------------------------ Year Ended 5/31: 2004 $63,800 $25,000 $76,772 2003 63,800 25,000 79,946 2002 63,800 25,000 75,413 2001 63,800 25,000 74,822 2000 63,800 25,000 70,361 VIRGINIA DIVIDEND ADVANTAGE (NGB) ------------------------------------------------------------ Year Ended 5/31: 2004 24,000 25,000 71,863 2003 24,000 25,000 75,106 2002 24,000 25,000 71,154 2001(a) 24,000 25,000 69,953 VIRGINIA DIVIDEND ADVANTAGE 2 (NNB) ------------------------------------------------------------ Year Ended 5/31: 2004 42,000 25,000 75,148 2003 42,000 25,000 79,206 2002(b) 42,000 25,000 73,408 ============================================================
* Annualized. ** Total Investment Return on Market Value is the combination of reinvested dividend income, reinvested capital gains distributions, if any, and changes in stock price per share. Total Return on Common Share Net Asset Value is the combination of reinvested dividend income at net asset value, reinvested capital gains distributions at net asset value, if any, and changes in Common share net asset value per share. Total returns are not annualized. *** After custodian fee credit and expense reimbursement, where applicable. + The amounts shown are based on Common share equivalents. ++ Ratios do not reflect the effect of dividend payments to Preferred shareholders; income ratios reflect income earned on assets attributable to Preferred shares. (a) For the period January 26, 2001 (commencement of operations) through May 31, 2001. (b) For the period November 15, 2001 (commencement of operations) through May 31, 2002. See accompanying notes to financial statements. 62-63 SPREAD Trustees AND OFFICERS The management of the Funds, including general supervision of the duties performed for the Funds by the Adviser, is the responsibility of the Board of Trustees of the Funds. The number of trustees of the Funds is currently set at seven. None of the trustees who are not "interested" persons of the Funds has ever been a director or employee of, or consultant to, Nuveen or its affiliates. The names and business addresses of the trustees and officers of the Funds, their principal occupations and other affiliations during the past five years, the number of portfolios each oversees and other directorships they hold are set forth below.
NUMBER OF POSITION(S) YEAR FIRST PRINCIPAL OCCUPATION(S) PORTFOLIOS IN NAME, BIRTHDATE HELD WITH ELECTED OR INCLUDING OTHER DIRECTORSHIPS FUND COMPLEX AND ADDRESS THE FUNDS APPOINTED(2) DURING PAST 5 YEARS OVERSEEN BY TRUSTEE ------------------------------------------------------------------------------------------------------------------------------------ TRUSTEE WHO IS AN INTERESTED PERSON OF THE FUNDS: ------------------------------------------------------------------------------------------------------------------------------------ Timothy R. Schwertfeger (1) Chairman of 1994 Chairman and Director (since 1996) of Nuveen Investments, 144 3/28/49 the Board Inc. and Nuveen Investments, LLC; Director (since 1992) and 333 W. Wacker Drive and Trustee Chairman (since 1996) of Nuveen Advisory Corp. and Nuveen Chicago, IL 60606 Institutional Advisory Corp.; Chairman and Director (since 1997) of Nuveen Asset Management, Inc.; Director (since 1996) of Institutional Capital Corporation; Chairman and Director (since 1999) of Rittenhouse Asset Management, Inc.; Chairman of Nuveen Investments Advisers Inc. (since 2002). TRUSTEES WHO ARE NOT INTERESTED PERSONS OF THE FUNDS: ------------------------------------------------------------------------------------------------------------------------------------ Robert P. Bremner Trustee 1997 Private Investor and Management Consultant. 144 8/22/40 333 W. Wacker Drive Chicago, IL 60606 ------------------------------------------------------------------------------------------------------------------------------------ Lawrence H. Brown Trustee 1993 Retired (1989) as Senior Vice President of The Northern 144 7/29/34 Trust Company; Director, Community Advisory Board for 333 W. Wacker Drive Highland Park and Highwood, United Way of the North Chicago, IL 60606 Shore (since 2002). ------------------------------------------------------------------------------------------------------------------------------------ Jack B. Evans Trustee 1999 President, The Hall-Perrine Foundation, a private philanthropic 144 10/22/48 corporation (since 1996); Director, Alliant Energy; Director and 333 W. Wacker Drive Vice Chairman, United Fire & Casualty Company; formerly Chicago, IL 60606 Director, Federal Reserve Bank of Chicago; formerly, President and Chief Operating Officer, SCI Financial Group, Inc., a regional financial services firm. ------------------------------------------------------------------------------------------------------------------------------------ William C. Hunter Trustee 2004 Dean and Distinguished Professor of Finance, School of 144 3/6/48 Business at the University of Connecticut; previously Senior 333 W. Wacker Drive Vice President and Director of Research at the Federal Chicago, IL 60606 Reserve Bank of Chicago (1995-2003); Director, Credit Research Center at Georgetown University; Director of Xerox Corporation (since 2004). 64 NUMBER OF POSITION(S) YEAR FIRST PRINCIPAL OCCUPATION(S) PORTFOLIOS IN NAME, BIRTHDATE HELD WITH ELECTED OR INCLUDING OTHER DIRECTORSHIPS FUND COMPLEX AND ADDRESS THE FUNDS APPOINTED(2) DURING PAST 5 YEARS OVERSEEN BY TRUSTEE ------------------------------------------------------------------------------------------------------------------------------------ TRUSTEES WHO ARE NOT INTERESTED PERSONS OF THE FUNDS (CONTINUED): ------------------------------------------------------------------------------------------------------------------------------------ William J. Schneider Trustee 1997 Senior Partner and Chief Operating Officer, Miller-Valentine 144 9/24/44 Group, Vice President, Miller-Valentine Realty, a construction 333 W. Wacker Drive company; Chair, Miami Valley Hospital; Chair, Dayton Chicago, IL 60606 Development Coalition; formerly, Member, Community Advisory Board, National City Bank, Dayton, Ohio and Business Advisory Council, Cleveland Federal Reserve Bank. ------------------------------------------------------------------------------------------------------------------------------------ Judith M. Stockdale Trustee 1997 Executive Director, Gaylord and Dorothy Donnelley 144 12/29/47 Foundation (since 1994); prior thereto, Executive Director, 333 W. Wacker Drive Great Lakes Protection Fund (from 1990 to 1994) Chicago, IL 60606 NUMBER OF POSITION(S) YEAR FIRST PORTFOLIOS IN NAME, BIRTHDATE HELD WITH ELECTED OR PRINCIPAL OCCUPATION(S) FUND COMPLEX AND ADDRESS THE FUNDS APPOINTED(3) DURING PAST 5 YEARS OVERSEEN BY OFFICER ------------------------------------------------------------------------------------------------------------------------------------ OFFICERS OF THE FUNDS: ------------------------------------------------------------------------------------------------------------------------------------ Gifford R. Zimmerman Chief 1988 Managing Director (since 2002), Assistant Secretary and 144 9/9/56 Administrative Associate General Counsel, formerly, Vice President and 333 W. Wacker Drive Officer Assistant General Counsel of Nuveen Investments, LLC; Chicago, IL 60606 Managing Director (since 2002), General Counsel and Assistant Secretary, formerly, Vice President of Nuveen Advisory Corp. and Nuveen Institutional Advisory Corp.; Managing Director (since 2002), Assistant Secretary and Associate General Counsel, formerly, Vice President (since 2000), of Nuveen Asset Management, Inc. Assistant Secretary of Nuveen Investments, Inc. (since 1994); Assistant Secretary of NWQ Investment Management Company, LLC (since 2002); Vice President and Assistant Secretary of Nuveen Investments Advisers Inc. (since 2002); Managing Director, Associate General Counsel and Assistant Secretary of Rittenhouse Asset Management, Inc. (since 2003); Chartered Financial Analyst. ------------------------------------------------------------------------------------------------------------------------------------ Michael T. Atkinson Vice 2000 Vice President (since 2002), formerly, Assistant Vice 144 2/3/66 President President (since 2000), previously, Associate of Nuveen 333 W. Wacker Drive and Investments, LLC. Chicago, IL 60606 Assistant Secretary 65 Trustees AND OFFICERS (CONTINUED) NUMBER OF POSITION(S) YEAR FIRST PORTFOLIOS IN NAME, BIRTHDATE HELD WITH ELECTED OR PRINCIPAL OCCUPATION(S) FUND COMPLEX AND ADDRESS THE FUNDS APPOINTED(3) DURING PAST 5 YEARS OVERSEEN BY OFFICER ------------------------------------------------------------------------------------------------------------------------------------ OFFICERS OF THE FUNDS (CONTINUED): ------------------------------------------------------------------------------------------------------------------------------------ Paul L. Brennan Vice 1999 Vice President (since 2002), formerly, Assistant Vice 128 11/10/66 President President (since 1997), of Nuveen Advisory Corp.; prior 333 W. Wacker Drive thereto, portfolio manager of Flagship Financial Inc.; Chicago, IL 60606 Chartered Financial Analyst and Certified Public Accountant. ------------------------------------------------------------------------------------------------------------------------------------ Peter H. D'Arrigo Vice 1999 Vice President of Nuveen Investments, LLC (since 1999), 144 11/28/67 President prior thereto, Assistant Vice President (since 1997); Vice 333 W. Wacker Drive and President and Treasurer of Nuveen Investments, Inc. (since Chicago, IL 60606 Treasurer 1999); Vice President and Treasurer of Nuveen Advisory Corp. and Nuveen Institutional Advisory Corp (since 1999); Vice President and Treasurer of Nuveen Asset Management, Inc. (since 2002) and of Nuveen Investments Advisers Inc. (since 2002); Assistant Treasurer of NWQ Investment Management Company, LLC (since 2002); Vice President and Treasurer of Nuveen Rittenhouse Asset Management, Inc. (since 2003); Chartered Financial Analyst. ------------------------------------------------------------------------------------------------------------------------------------ Jessica R. Droeger Vice 2000 Vice President (since 2002) and Assistant General Counsel 144 9/24/64 President (since 1998); formerly, Assistant Vice President (since 1998) 333 W. Wacker Drive and of Nuveen Investments, LLC; Vice President (since 2002) Chicago, IL 60606 Secretary and Assistant Secretary (since 1998), formerly Assistant Vice President of Nuveen Advisory Corp. and Nuveen Institutional Advisory Corp. ------------------------------------------------------------------------------------------------------------------------------------ Lorna C. Ferguson Vice 1998 Managing Director (since 2004) formerly, Vice President of 144 10/24/45 President Nuveen Investments, LLC; Managing Director (since 2004) 333 W. Wacker Drive formerly, Vice President (since 1998) of Nuveen Advisory Chicago, IL 60606 Corp. and Nuveen Institutional Advisory Corp. ------------------------------------------------------------------------------------------------------------------------------------ William M. Fitzgerald Vice 1995 Managing Director (since 2002) of Nuveen Investments, 144 3/2/64 President LLC; Managing Director (since 2001), formerly Vice President 333 W. Wacker Drive of Nuveen Advisory Corp. and Nuveen Institutional Advisory Chicago, IL 60606 Corp. (since 1995); Managing Director of Nuveen Asset Management, Inc. (since 2001); Vice President of Nuveen Investment Advisers Inc. (since 2002); Chartered Financial Analyst. ------------------------------------------------------------------------------------------------------------------------------------ Stephen D. Foy Vice 1998 Vice President (since 1993) and Funds Controller (since 1998) 144 5/31/54 President of Nuveen Investments, LLC and Vice President and Funds 333 W. Wacker Drive and Controller (since 1998) of Nuveen Investments, Inc.; Chicago, IL 60606 Controller Certified Public Accountant. ------------------------------------------------------------------------------------------------------------------------------------ J. Thomas Futrell Vice 1988 Vice President of Nuveen Advisory Corp.; Chartered 128 7/5/55 President Financial Analyst. 333 W. Wacker Drive Chicago, IL 60606 66 NUMBER OF POSITION(S) YEAR FIRST PORTFOLIOS IN NAME, BIRTHDATE HELD WITH ELECTED OR PRINCIPAL OCCUPATION(S) FUND COMPLEX AND ADDRESS THE FUNDS APPOINTED(3) DURING PAST 5 YEARS OVERSEEN BY OFFICER ------------------------------------------------------------------------------------------------------------------------------------ OFFICERS OF THE FUNDS (CONTINUED): ------------------------------------------------------------------------------------------------------------------------------------ Steven J. Krupa Vice 1990 Vice President of Nuveen Advisory Corp. 128 8/21/57 President 333 W. Wacker Drive Chicago, IL 60606 ------------------------------------------------------------------------------------------------------------------------------------ David J. Lamb Vice 2000 Vice President (since 2000) of Nuveen Investments, 144 3/22/63 President LLC, previously Assistant Vice President (since 1999); 333 W. Wacker Drive prior thereto, Associate of Nuveen Investments, LLC; Chicago, IL 60606 Certified Public Accountant. ------------------------------------------------------------------------------------------------------------------------------------ Tina M. Lazar Vice 2002 Vice President (since 1999), previously, Assistant Vice 144 8/27/61 President President (since 1993) of Nuveen Investments, LLC. 333 W. Wacker Drive Chicago, IL 60606 ------------------------------------------------------------------------------------------------------------------------------------ Larry W. Martin Vice 1988 Vice President, Assistant Secretary and Assistant General 144 7/27/51 President Counsel of Nuveen Investments, LLC; Vice President and 333 W. Wacker Drive and Assistant Secretary of Nuveen Advisory Corp. and Nuveen Chicago, IL 60606 Assistant Institutional Advisory Corp.; Assistant Secretary of Nuveen Secretary Investments, Inc. and (since 1997) Nuveen Asset Management, Inc.; Vice President (since 2000), Assistant Secretary and Assistant General Counsel (since 1998) of Rittenhouse Asset Management, Inc.; Vice President and Assistant Secretary of Nuveen Investments Advisers Inc. (since 2002); Assistant Secretary of NWQ Investment Management Company, LLC (since 2002). ------------------------------------------------------------------------------------------------------------------------------------ John V. Miller Vice 2003 Vice President (since 2003) previously, Assistant Vice President 128 4/10/67 President (since 1999), prior thereto, credit analyst (since 1996) of Nuveen 333 W. Wacker Drive Advisory Corp.; Chartered Financial Analyst. Chicago, IL 60606 ------------------------------------------------------------------------------------------------------------------------------------ Edward F. Neild, IV Vice 1996 Managing Director (since 2002) of Nuveen Investments, LLC; 144 7/7/65 President Managing Director (since 1997), formerly Vice President 333 W. Wacker Drive (since 1996) of Nuveen Advisory Corp. and Nuveen Institutional Chicago, IL 60606 Advisory Corp.; Managing Director of Nuveen Asset Management, Inc. (since 1999). Chartered Financial Analyst. ------------------------------------------------------------------------------------------------------------------------------------ Daniel S. Solender Vice 2003 Vice President of Nuveen Advisory Corp. (since 2003); previously, 128 10/27/65 President Principal and portfolio manager with The Vanguard Group 333 W. Wacker Drive (1999-2003); prior thereto, Assistant Vice President of the Chicago, IL 60606 Nuveen Advisory Corp.; Chartered Financial Analyst. ------------------------------------------------------------------------------------------------------------------------------------ Thomas C. Spalding Vice 1982 Vice President of Nuveen Advisory Corp. and Nuveen 128 7/31/51 President Institutional Advisory Corp.; Chartered Financial Analyst. 333 W. Wacker Drive Chicago, IL 60606
(1) Mr. Schwertfeger is an "interested person" of the Funds, as defined in the Investment Company Act of 1940, because he is an officer and trustee of the Adviser. (2) Trustees serve an indefinite term until his/her successor is elected. The year first elected or appointed represents the year in which the Trustee was first elected or appointed to any fund in the Nuveen Complex. (3) 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. 67 Build Your Wealth AUTOMATICALLY Sidebar text: NUVEEN MAKES REINVESTING EASY. A PHONE CALL IS ALL IT TAKES TO SET UP YOUR REINVESTMENT ACCOUNT. NUVEEN CLOSED-END EXCHANGE-TRADED FUNDS DIVIDEND REINVESTMENT PLAN Your Nuveen Closed-End Exchange-Traded Fund allows you to conveniently reinvest dividends and/or capital gains distributions in additional fund shares. By choosing to reinvest, you'll be able to invest money regularly and automatically, and watch your investment grow through the power of tax-free compounding. Just like dividends or distributions in cash, there may be times when income or capital gains taxes may be payable on dividends or distributions that are reinvested. It is important to note that an automatic reinvestment plan does not ensure a profit, nor does it protect you against loss in a declining market. EASY AND CONVENIENT To make recordkeeping easy and convenient, each month you'll receive a statement showing your total dividends and distributions, the date of investment, the shares acquired and the price per share, and the total number of shares you own. HOW SHARES ARE PURCHASED The shares you acquire by reinvesting will either be purchased on the open market or newly issued by the Fund. If the shares are trading at or above net asset value at the time of valuation, the Fund will issue new shares at the then-current market price. If the shares are trading at less than net asset value, shares for your account will be purchased on the open market. Dividends and distributions received to purchase shares in the open market will normally be invested shortly after the dividend payment date. No interest will be paid on dividends and distributions awaiting reinvestment. Because the market price of 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. FLEXIBILITY 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. 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. 68 Fund INFORMATION BOARD OF TRUSTEES Robert P. Bremner Lawrence H. Brown Jack B. Evans William C. Hunter William J. Schneider Timothy R. Schwertfeger Judith M. Stockdale FUND MANAGER Nuveen Advisory Corp. 333 West Wacker Drive Chicago, IL 60606 CUSTODIAN State Street Bank & Trust Boston, MA TRANSFER AGENT AND SHAREHOLDER SERVICES State Street Bank & Trust 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 PROXY VOTING POLICIES AND PROCEDURES A description of the policies and procedures that the Funds use to determine how to vote proxies relating to portfolio securities is available (i) without charge, upon request, by calling Nuveen Investments at (800) 257-8787; and (ii) on the Commission's website at http://www.sec.gov. GLOSSARY OF TERMS USED IN THIS REPORT AVERAGE ANNUAL TOTAL RETURN: This is a commonly used method to express an investment's performance over a particular, usually multi-year time period. It expresses the return (including change in NAV and reinvested dividends) that would have been necessary on an annual basis to equal the investment's actual performance over the time period being considered. AVERAGE EFFECTIVE MATURITY: The average of all the maturities of the bonds in a fund's portfolio, computed by weighting each maturity date (the date the security comes due) by the market value of the security. This figure does not account for the likelihood of prepayments or the exercise of call provisions. LEVERAGE-ADJUSTED DURATION: Duration is a measure of a bond or bond fund's sensitivity to changes in interest rates. Generally, the longer a bond 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 generally longer than the duration of the actual portfolio of individual bonds that make up the Fund. MARKET YIELD (ALSO KNOWN AS DIVIDEND YIELD OR CURRENT YIELD): An investment's current annualized dividend divided by its current market price. NET ASSET VALUE (NAV): A fund's NAV is calculated by subtracting the liabilities of 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. --------- Each Fund intends to repurchase shares of its own common or preferred stock in the future at such times and in such amounts as is deemed advisable. No shares were repurchased during the fiscal year ended May 31, 2004. Any future repurchases will be reported to shareholders in the next annual or semiannual report. 69 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. Managing $100 billion in assets, Nuveen Investments offers access to a number of different asset classes and investing solutions through a variety of products. Nuveen Investments markets its capabilities under four distinct brands: Nuveen, a leader in tax-free investments; NWQ, a leader in value-style equities; Rittenhouse, a leader in growth-style equities; and Symphony, a leading institutional manager of market-neutral alternative investment portfolios. To learn more about the products and services Nuveen Investments offers and for a prospectus, where applicable, talk to your financial advisor, or call us at (800) 257-8787. Please read the information carefully before you invest. Distributed by NUVEEN INVESTMENTS, LLC | 333 West Wacker Drive | Chicago, Illinois 60606 | www.nuveen.com EAN-A-0504D 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. The registrant has posted such code of ethics on its website at www.nuveen.com/etf. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. During the reporting period, the registrant's board of directors determined that the registrant had 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 for the reporting period was William E. Bennett, who was "independent" for purposes of Item 3 of Form N-CSR. Although Mr. Bennett served as the audit committee financial expert for part of reporting period, he unexpectedly resigned from the Board effective April 30, 2004. Since that time, the Audit Committee determined that Jack B. Evans, the Chairman of the Audit Committee, qualifies as an audit committee financial expert and recommended to the full Board that he be designated as such. On July 26, 2004, the full Board voted to so designate Mr. Evans. Mr. Bennett was formerly Executive Vice President and Chief Credit Officer of First Chicago Corporation and its principal subsidiary, The First National Bank of Chicago. As part of his role as Chief Credit Officer, Mr. Bennett set policy as to accrual of assets/loans; designated performing/non-performing assets; set the level of reserves against the credit portfolo; and determined the carrying value of credit related assets and exposure. Among other things, Mr. Bennett was also responsible for the oversight of the internal analysis function including setting ground rules for the review and preparation of financial analysis and financial statements for use in making credit and risk decisions for financial analysis and financial statements for use in making credit and risk decisions for clients. Mr. Bennett has significant experience reviewing, analyzing and evaluating financial statements of domestic and international companies in a variety of industries with complex accounting issues. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. NUVEEN VIRGINIA DIVIDEND ADVANTAGE MUNICIPAL FUND 2 FORM N-CSR DISCLOSURE RE: AUDIT FEES The following table shows 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 entered into on or after May 6, 2003, 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 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 BILLED TO FUND BILLED TO FUND BILLED TO FUND ------------------------------------------------------------------------------------------------------------------------------------ May 31, 2004 $ 8,286 $ 0 $ 1,111 $ 2,450 ------------------------------------------------------------------------------------------------------------------------------------ Percentage approved N/A 0% 0% 0% pursuant to pre-approval exception ------------------------------------------------------------------------------------------------------------------------------------ May 31, 2003 $ 7,457 $ 0 $ 355 $ 2,250 ------------------------------------------------------------------------------------------------------------------------------------ Percentage approved N/A 0% 0% 0% pursuant to pre-approval exception ------------------------------------------------------------------------------------------------------------------------------------
The above "Tax Fees" were billed for professional services for tax advice, tax compliance and tax planning. SERVICES THAT THE FUND'S AUDITOR BILLED TO THE ADVISER AND AFFILIATED FUND SERVICE PROVIDERS The following table shows the amount of fees billed by Ernst & Young LLP to Nuveen Advisory Corp. ("NAC" or the "Adviser"), and any entity controlling, controlled by or under common control with NAC ("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 table also shows 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 31, 2004 $ 0 $ 0 $ 0 ------------------------------------------------------------------------------------------------------------------------------------ Percentage approved 0% 0% 0% pursuant to pre-approval exception ------------------------------------------------------------------------------------------------------------------------------------ May 31, 2003 $ 0 $ 0 $ 0 ------------------------------------------------------------------------------------------------------------------------------------ Percentage approved N/A N/A N/A 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. For engagements entered into on or after May 6, 2003, 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 independence.
FISCAL YEAR ENDED TOTAL NON-AUDIT FEES BILLED TO ADVISER AND AFFILIATED FUND SERVICE TOTAL NON-AUDIT FEES PROVIDERS (ENGAGEMENTS BILLED TO ADVISER AND RELATED DIRECTLY TO THE AFFILIATED FUND SERVICE TOTAL NON-AUDIT FEES OPERATIONS AND FINANCIAL PROVIDERS (ALL OTHER BILLED TO FUND REPORTING OF THE FUND) ENGAGEMENTS) TOTAL ------------------------------------------------------------------------------------------------------------------------------------ May 31, 2004 $ 3,561 $ 0 $ 0 $ 3,561 May 31, 2003 $ 2,605 $ 0 $ 0 $ 2,605
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. Not applicable at this time. ITEM 6. SCHEDULE OF INVESTMENTS. Not applicable at this time. ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. In the rare event that a municipal issuer held by the Fund were to issue a proxy or that the Fund were to receive a proxy issued by a cash management security, NAC 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 Fund's Board of Directors or Trustees or its representative. In the case of a conflict of interest, the proxy would be submitted to the applicable Fund's Board to determine how the proxy should be voted. A member of the Adviser's legal department would oversee the administration of the voting, and ensure that records were maintained in accordance with Rule 204-2(c)(2) under the Investment Advisers Act of 1940 (17 CFR 275.204-2(c)(2)), reports were filed with the SEC on Form N-PX, and the results were provided to the Board of Directors or Trustees and made available to shareholders as required by applicable rules. ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. Not applicable at this time. ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. In the event of a vacancy on the Board, the nominating and governance committee receives suggestions from various sources, including shareholders, as to suitable candidates. Suggestions should be sent in writing to Lorna Ferguson, Vice President for Board Relations, Nuveen Investments, 333 West Wacker Drive, Chicago, IL 60606. The nominating and governance committee sets appropriate standards and requirements for nominations for new directors and reserves the right to interview all candidates and to make the final selection of any new directors. ITEM 10. 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 registrant's last fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. ITEM 11. 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 posted on registrant's website at www.nuveen.com/etf. (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 at this time. (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/ Jessica R. Droeger ---------------------------------------------- Jessica R. Droeger Vice President and Secretary Date: August 6, 2004 ------------------------------------------------------------------- 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 6, 2004 ------------------------------------------------------------------- By (Signature and Title)* /s/ Stephen D. Foy ---------------------------------------------- Stephen D. Foy Vice President and Controller (Principal Financial Officer) Date: August 6, 2004 ------------------------------------------------------------------- * Print the name and title of each signing officer under his or her signature.