-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VvQaBAlAGSdSrHxAvvbMz5XRykh5tMKw2IDIjhSQAjW8xBDLZbwgpVyqZdCT6AGa foRujrNClnABxz2l4IATTQ== 0000891804-05-002316.txt : 20050808 0000891804-05-002316.hdr.sgml : 20050808 20050808121522 ACCESSION NUMBER: 0000891804-05-002316 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20050531 FILED AS OF DATE: 20050808 DATE AS OF CHANGE: 20050808 EFFECTIVENESS DATE: 20050808 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NUVEEN VIRGINIA DIVIDEND ADVANTAGE MUNICIPAL FUND 2 CENTRAL INDEX KEY: 0001158728 IRS NUMBER: 364472505 STATE OF INCORPORATION: MA FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-10523 FILM NUMBER: 051005021 BUSINESS ADDRESS: STREET 1: 333 WEST WACKER DRIVE CITY: CHICAGO STATE: IL ZIP: 60606 BUSINESS PHONE: 3129178146 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, 2005 ------------------ Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles. A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget ("OMB") control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. ss. 3507. ITEM 1. REPORTS TO STOCKHOLDERS. ANNUAL REPORT MAY 31, 2005 Nuveen Investments Municipal Closed-End Exchange-Traded Funds 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, woman and child at the beach. Photo of: A child. DEPENDABLE, TAX-FREE INCOME BECAUSE IT'S NOT WHAT YOU EARN, IT'S WHAT YOU KEEP.(R) LOGO: NUVEEN INVESTMENTS Photo of: Woman Photo of: Man and child Photo of: Woman NOW YOU CAN RECEIVE YOUR NUVEEN FUND REPORTS FASTER. NO MORE WAITING. SIGN UP TODAY TO RECEIVE NUVEEN FUND INFORMATION BY E-MAIL. It only takes a minute to sign up for E-Reports. Once enrolled, you'll receive an e-mail as soon as your Nuveen Investments Fund information is ready -- no more waiting for delivery by regular mail. Just click on the link within the e-mail to see the report, and save it on your computer if you wish. DELIVERY DIRECT TO YOUR E-MAIL INBOX IT'S FAST, EASY & FREE: WWW.INVESTORDELIVERY.COM if you get your Nuveen Fund dividends and statements from your financial advisor or brokerage account. OR WWW.NUVEEN.COM/ACCOUNTACCESS if you get your Nuveen Fund dividends and statements directly from Nuveen. (Be sure to have the address sheet that accompanied this report handy. You'll need it to complete the enrollment process.) Logo: NUVEEN Investments Photo of: Timothy R. Schwertfeger Timothy R. Schwertfeger Chairman of the Board CHAIRMAN'S LETTER TO SHAREHOLDERS Once again, I am pleased to report that over the 12-month period covered by this report your Fund continued to provide you with monthly tax-free income and an attractive total return. For more details about the management strategy and performance of your Fund, please see the Portfolio Manager's Comments and Performance Overview sections of this report. As I noted in my last letter to you, many market observers are wondering whether longer-term interest rates will soon begin to rise substantially, mirroring the rise that has taken place over the past year in shorter-term rates. If longer-term rates do begin to rise significantly, some have suggested that this would be a signal to begin adjusting your holdings of fixed-income investments. Nobody knows what the market will do in the future. But from our experience, we do know that a well-balanced portfolio, structured and carefully monitored with the help of a trusted investment professional, can be an important component in helping you achieve your long-term financial goals. In fact, a well-diversified portfolio may actually help to reduce your overall "IN FACT, A WELL-DIVERSIFIED PORTFOLIO MAY ACTUALLY HELP TO REDUCE YOUR OVERALL INVESTMENT RISK OVER THE LONG TERM." investment risk over the long term. That is one reason why we believe that a municipal bond investment like your Nuveen Fund can be an important building block in a comprehensive investment program designed to perform well in a variety of market conditions. As in past reports, I urge you to 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 - see the inside front cover of this report for instructions. You may have heard that in April, 2005, The St. Paul Travelers Companies, Inc., which owned 79% of Nuveen Investments, Inc. (the parent of your Fund's investment adviser) completed a public offering of a substantial portion of its equity stake in Nuveen. At the same time, St. Paul Travelers also entered into agreements to sell the balance of its shares in Nuveen to us or to others at a future date. These transactions had, and will have, no impact on the investment objectives or management of your Fund. However, taken as a whole they are considered to be an "assignment" of your Fund's investment management agreement. This means that you and your fellow Fund shareholders will be asked to formally approve the continuation of your Fund's management contract with Nuveen. We recently sent you more information about this process. Be sure to read the information carefully and return your completed proxy form by the date indicated. At Nuveen Investments, our mission continues to be to assist you and your financial advisor by offering investment services and products that can help you to secure your financial objectives. We are grateful that you have chosen us as a partner as you pursue your financial goals, and we look forward to continuing to earn your trust in the months and years ahead. Sincerely, /s/ Timothy R. Schwertfeger Timothy R. Schwertfeger Chairman of the Board July 15, 2005 Nuveen Investments 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 economic and municipal market environments, key investment strategies and the annual performance of these Funds. Paul, who has 14 years of investment experience, including 8 years with Nuveen, has managed NMY and NPV since 1999; NFM, NZR, NGB and NNB since 2001; and NWI since 2002. WHAT FACTORS AFFECTED THE U.S. ECONOMY AND MUNICIPAL MARKET DURING THE 12-MONTH REPORTING PERIOD ENDED MAY 31, 2005? During this 12-month reporting period, the Federal Reserve implemented eight separate one-quarter-point increases in the fed funds rate. These increases, which were intended to help control economic growth and head off an increase in the rate of inflation, raised this short-term target rate to 3.00% from 1.00%. (On June 30, 2005, after the close of this reporting period, the fed funds rate was raised another quarter point to 3.25%.) As the Fed raised short-term rates, many market observers expected to see longer-term interest rates increase as well. However, yields on longer-term municipal bonds (as measured by the widely-followed Bond Buyer 25 Revenue Bond Index) actually declined by 61 basis points during this reporting period. This resulted in a flattening of the municipal market yield curve over the 12-month period. The Fed's actions during this period seem to have helped the U.S. maintain a fairly steady economic expansion. After growing at an annualized rate of 3.3% in the second quarter of 2004, the U.S. gross domestic product (GDP) grew by 4.0% in the third quarter of 2004 and by 3.8% in both the fourth quarter of 2004 and the first quarter of 2005. The year-over-year increase in the Consumer Price Index (CPI) as of May 31, 2005, was a modest 2.8%, while unemployment in May 2005 dropped to 5.1% nationally, down from 5.6% in May 2004. HOW ABOUT ECONOMIC AND MARKET CONDITIONS IN MARYLAND AND VIRGINIA? Maryland's economy continued to expand at a slow but steady pace over the 12-month period, with good job growth across a variety of industries. Increased federal spending, tourism and ties to the Washington D.C. economy boosted the state's economy and offset the impact of declines in manufacturing, transportation and warehousing. As of May 2005, unemployment in Maryland was 4.2%, on par with May 2004 and well below the national average. Maryland is one of the few states that has managed to maintain 4 healthy reserves despite a difficult budget environment. However, pressures remain, given the rapid growth in Medicaid and education expenditures. As of May 31, 2005, Maryland's general obligation debt, which is constitutionally limited to a maximum term of 15 years, carried Aaa/AAA/AAA ratings from Moody's, Standard & Poor's, and Fitch, respectively. For the 12 months ended May 31, 2005, Maryland issuers offered $5.0 billion in new municipal debt, a decrease of 23% from the previous 12-month period. Over the 12-month period, Virginia continued to outperform the national economy. Construction and professional and business services led employment growth and offset continuing job losses in manufacturing and telecommunications. Federal spending remained a key growth driver, accounting for a third of the job growth over the past year, with the strongest growth concentrated in northern Virginia. In May 2005, Virginia's unemployment rate was 3.6%, slightly below the 3.7% level of May 2004. As of May 31, 2005, Moody's, Standard & Poor's, and Fitch rated Virginia's general obligation debt at Aaa/AAA/AAA, respectively. During the 12-month reporting period ended May 31, 2005, new municipal issuance in Virginia increased 48% from that of the previous 12 months, totaling $9.6 billion. WHAT KEY STRATEGIES WERE USED TO MANAGE THE MARYLAND AND VIRGINIA FUNDS DURING THE 12 MONTHS ENDED MAY 31, 2005? With many market participants anticipating higher interest rates throughout this reporting period, our focus continued to be on finding bonds that we believed would add immediate value to the Funds' portfolios while also offering the potential to perform well under a variety of future market scenarios. Overall, our purchase activity in these Funds emphasized bonds in the intermediate part of the yield curve, that is, bonds that mature in 10 to 20 years. We believed that in Maryland and Virginia this part of the curve generally offered the most attractive opportunities and the best values during this period. We also placed an emphasis on purchasing premium bonds, which are bonds that at the time of purchase were trading above their par values because their coupons were higher than current interest rate levels. These bonds have been in great demand recently, since historically they have held their value better than current coupon bonds when interest rates rise. 5 The majority of our new purchases over this period included insured or highly rated bonds, reflecting the overall high credit quality of new issue supply. However, while the municipal markets in Maryland and Virginia did not provide many opportunities to purchase non-rated bonds, or bonds rated BBB and lower, during this period, we continued to look for these lower-rated issues. Lower-rated bonds were generally among the best performers during this period. Some of the additions to the Maryland and Virginia Funds during this period were financed with the proceeds from sales of older pre-refunded bonds and other "defensive" bonds with shorter maturities, which tended to underperform in the generally bullish interest rate environment of the past 12 months. As discussed in our last shareholder report, in late 2004 we began using forward interest rate swaps, a type of derivative financial instrument, in an attempt to reduce some of the interest rate risk in NFM, NZR, NWI and NNB. It is important to note that we did not use these hedges in an attempt to profit from correctly predicting the timing and direction of interest rate movements. Instead, our sole objective was to reduce these Funds' durations (and therefore their price sensitivity to interest rate changes) without having a negative impact on their income streams or common share dividends over the short term. The gain or loss from each Fund's hedging activity is reflected as an addition or subtraction to the Fund's net asset value (NAV) as the market value of each hedge fluctuates. The hedges were effective in helping to reduce the NAV volatility of these Funds over the course of this reporting period. However, they did have negative impacts on each Fund's total return during this period because declining long-term interest rates caused the value of the hedges to decline as the value of each Fund's portfolio rose. HOW DID THE FUNDS PERFORM? Individual results for these Funds, as well as for comparative indexes and averages, are presented in the accompanying table. TOTAL RETURNS ON NET ASSET VALUE* For periods ended 5/31/05 MARYLAND FUNDS 1-YEAR 5-YEAR 10-YEAR - -------------------------------------------------------------------------------- NMY 12.52% 9.75% 7.24% - -------------------------------------------------------------------------------- NFM 11.60% NA NA - -------------------------------------------------------------------------------- NZR 12.22% NA NA - -------------------------------------------------------------------------------- NWI 12.67% NA NA - -------------------------------------------------------------------------------- 6 VIRGINIA FUNDS 1-YEAR 5-YEAR 10-YEAR - -------------------------------------------------------------------------------- NPV 12.13% 9.62% 7.55% - -------------------------------------------------------------------------------- NGB 14.46% NA NA - -------------------------------------------------------------------------------- NNB 13.75% NA NA - -------------------------------------------------------------------------------- Lehman Brothers Municipal Bond Index1 7.96% 7.30% 6.22% - -------------------------------------------------------------------------------- Lipper Other States Municipal Debt Funds Average2 12.61% 9.88% 7.10% - -------------------------------------------------------------------------------- * Annualized Past performance is not predictive of future results. Current performance may be higher or lower than the data shown. Returns do not reflect the deduction of taxes that shareholders may have to pay on Fund distributions or upon the sale of Fund shares. For additional information, see the individual Performance Overview for your Fund in this report. For the 12 months ended May 31, 2005, the total returns on NAV for all seven of these Funds outperformed the return on the Lehman Brothers Municipal Bond Index. NWI, NGB and NNB also outperformed the average return for the Lipper Other States peer group, while NMY, NFM, NZR and NPV trailed the group average. Please keep in mind that the Lipper Other States average represents the overall average of returns for funds from 10 different states displaying a variety of economic and municipal market conditions. We believe that makes direct comparisons between the returns of specific state funds with a multi-state group average less meaningful. One of the primary factors benefiting the 12-month performance of these Funds relative to that of the unleveraged, unmanaged Lehman Brothers index was the Funds' use of financial leverage. While leveraging can add volatility to a Fund's NAV and share price, especially during periods when interest rates rise, this strategy also can provide opportunities for additional income and total return for common shareholders when short-term interest rates remain relatively low and long-term rates fall. As noted earlier, over most of this reporting period, longer-term rates tended to fall while shorter-term interest rates rose. As a result, bonds with longer effective maturities and longer durations generally performed better than securities with shorter effective maturities and shorter durations. Much of the performance differential between these seven Funds over this period was the result of this effective maturity and duration positioning. All of the Funds in this report benefited during this period from their allocations to non-rated bonds, or to bonds rated BBB or lower. These bonds generally outperformed higher 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. 7 rated securities as the economy improved. Some of the sectors with larger concentrations of these lower quality bonds that made positive contributions to the Funds' 12-month returns were healthcare (including hospitals and lifecare facilities) and higher education. In addition, bonds backed by the 1998 master tobacco settlement agreement also produced solid performance during this period, as the litigation environment improved and increased demand drove prices higher. The performance of each of these Funds also was boosted to some extent by several advance refundings of their holdings during this period, which resulted in price appreciation as well as enhanced credit quality. At the same time, however, their holdings of other bonds that already had been pre-refunded tended to underperform the general municipal market, due primarily to the shorter effective maturities of these bonds. Housing was another sector of the market that tended to underperform during this period, due largely to the increased risk of pre-payments and bond calls in the current interest rate environment. All of the Maryland Funds held housing bonds, with NFM having the largest exposure. Although these holdings were a good source of core income for the Funds, their performance had a negative impact on overall total return during this period. HOW WERE THE FUNDS POSITIONED IN TERMS OF CREDIT QUALITY AND BOND CALLS AS OF MAY 31, 2005? We continued to believe that, given the current geopolitical and economic climate, maintaining strong credit quality was an important requirement. As of May 31, 2005, all seven of these Funds continued to offer excellent credit quality, with allocations of bonds rated AAA/U.S. guaranteed and AA ranging from 70% in NFM to 71% in NMY, 78% in NZR and NGB, 79% in NWI, 82% in NNB, and 83% in NPV. As of May 31, 2005, potential call exposure for the period June 2005 through the end of 2007 ranged from 1% in NNB to 2% in NWI, 3% in NZR, 4% in NFM, 5% in NGB, 8% in NPV and 17% in NMY. In NMY, we have continued to hold most of these callable bonds during the period, in part due to their strong collective performance potential. The number of actual bond calls in all of these Funds depends largely on future market interest rates. 8 DIVIDEND AND SHARE PRICE INFORMATION All seven of these Funds use leverage to enhance opportunities for additional income for common shareholders. 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, leveraged Funds generally pay lower dividends to their MuniPreferred shareholders, which can leave more earnings to support common share dividends. However, when short-term interest rates rise, as they did during this reporting period, the Funds' borrowing costs also rise. While leveraging still provided benefits for common shareholders, the extent of the benefit was reduced. As a result, NMY, NFM, NWI, NPV, NGB and NNB each experienced a single dividend cut over the 12-month period ended May 31, 2005, while the dividend of NZR remained stable during this period. In addition, due to capital gains generated by normal portfolio activity, common shareholders of the following Funds received capital gains and/or net ordinary income distributions at the end of December 2004 as follows: LONG-TERM CAPITAL GAINS ORDINARY INCOME (PER SHARE) (PER SHARE) - -------------------------------------------------------------------------------- NZR $0.0575 $0.0041 - -------------------------------------------------------------------------------- NWI $0.0076 -- - -------------------------------------------------------------------------------- NNB $0.1878 -- - -------------------------------------------------------------------------------- The relatively large distribution from NNB represented an important part of this Fund's total return for this period. For the most part, these distributions were generated by bond calls or by sales of appreciated securities. The proceeds of these calls or sales then were reinvested in bonds paying lower, current interest rates. This had a slight negative impact on the Fund's earning power and was a minor factor in the dividend reduction noted above. All of the Funds in this report seek to pay stable monthly 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, 2005, all of the Funds in this report had positive UNII balances for both financial statement and tax purposes. 9 At the end of the reporting period, the Funds' share prices were trading at premiums or discounts to their NAVs as shown in the accompanying chart: 5/31/05 12-MONTH AVERAGE PREMIUM/DISCOUNT PREMIUM/DISCOUNT - -------------------------------------------------------------------------------- NMY +4.37% +6.25% - -------------------------------------------------------------------------------- NFM +3.30% +4.95% - -------------------------------------------------------------------------------- NZR -0.26% -0.50% - -------------------------------------------------------------------------------- NWI -2.83% -3.73% - -------------------------------------------------------------------------------- NPV +11.57% +8.44% - -------------------------------------------------------------------------------- NGB +9.47% +12.24% - -------------------------------------------------------------------------------- NNB +6.62% +4.60% - -------------------------------------------------------------------------------- 10 Nuveen Maryland Premium Income Municipal Fund NMY PERFORMANCE OVERVIEW As of May 31, 2005 Pie Chart: CREDIT QUALITY (as a % of total investments) AAA/U.S. Guaranteed 45% AA 26% A 13% BBB 10% BB or Lower 4% NR 2% Bar Chart: 2004-2005 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 0.073 Apr 0.073 May 0.073 Line Chart: SHARE PRICE PERFORMANCE Weekly Closing Price Past performance is not predictive of future results. 6/1/04 14.6 14.65 14.85 14.8 14.8 14.55 14.58 14.79 14.35 14.49 14.55 14.7 14.72 14.79 14.9 14.78 14.84 14.54 14.55 14.36 14.7 14.77 14.96 15 15.1 14.94 15 15.13 15.15 15.24 15.13 15.19 15.15 15.02 15.01 14.91 15.01 14.95 14.92 14.98 15.08 14.95 14.95 15.03 15.03 15.11 15.16 15.34 15.41 15.47 15.46 15.51 15.79 15.92 15.92 15.92 15.85 16.15 16.2 16.01 16 15.81 16 16.2 16.29 16.45 16.2 16.01 15.91 16 16.11 16.01 16.05 15.85 16 16.14 16 16.19 16.2 16.21 16.15 16.21 16.22 16.39 16.15 16.04 15.9 15.92 16.08 16.18 16.24 16.05 16.06 15.95 15.92 15.91 15.86 15.82 15.74 15.81 15.82 15.89 15.95 15.92 15.87 15.94 15.98 15.93 15.99 15.86 15.98 15.9 15.64 15.71 15.52 15.82 15.93 15.95 15.99 15.94 15.93 15.96 16 15.85 15.9 15.99 15.9 15.99 16.18 16.02 16.25 16.49 16.45 16.28 16.1 16.17 16.45 16.3 16.53 16.27 16.28 16.45 16.35 16.56 16.4 16.62 16.46 16.37 16.34 16.48 15.98 16.2 16.53 16.38 16.33 16.16 16.2 16 16 15.85 15.97 15.98 16.2 16.17 16.21 16.68 16.25 16.25 16.07 15.88 15.99 16.04 16.05 16.11 16.15 16.35 16.33 16.1 16.05 16.16 16.04 16 16.04 15.96 15.81 16.2 16.49 16.57 16.59 16.27 16.3 16.1 16.15 16.08 16.01 16 16.1 16.2 15.96 16.25 16.25 16.24 16 15.9 15.75 15.6 15.31 14.79 14.64 14.8 15.17 15.3 15.21 15.3 15.36 15.49 15.62 15.5 15.44 15.24 15.18 15.28 15.09 15.19 15.23 15.26 15.13 15.01 15.07 15.16 15.08 15 15 14.98 15.1 15.17 15.22 15.12 15.33 15.55 15.57 15.45 15.57 15.63 15.85 16 16.01 15.91 15.99 15.97 15.8 15.78 15.77 5/31/05 15.78 FUND SNAPSHOT - ------------------------------------ Common Share Price $15.78 - ------------------------------------ Common Share Net Asset Value $15.12 - ------------------------------------ Premium/(Discount) to NAV 4.37% - ------------------------------------ Market Yield 5.55% - ------------------------------------ Taxable-Equivalent Yield1 8.10% - ------------------------------------ Net Assets Applicable to Common Shares ($000) $160,496 - ------------------------------------ Average Effective Maturity on Securities (Years) 16.34 - ------------------------------------ Leverage-Adjusted Duration 8.39 - ------------------------------------ AVERAGE ANNUAL TOTAL RETURN (Inception 3/18/93) - ------------------------------------ ON SHARE PRICE ON NAV - ------------------------------------ 1-Year 15.64% 12.52% - ------------------------------------ 5-Year 9.48% 9.75% - ------------------------------------ 10-Year 8.37% 7.24% - ------------------------------------ SECTORS (as a % of total investments) - ------------------------------------ Tax Obligation/General 19.1% - ------------------------------------ Tax Obligation/Limited 15.6% - ------------------------------------ Healthcare 15.4% - ------------------------------------ Education and Civic Organizations 14.8% - ------------------------------------ U.S. Guaranteed 12.5% - ------------------------------------ Housing/Multifamily 10.1% - ------------------------------------ Utilities 6.1% - ------------------------------------ Other 6.4% - ------------------------------------ 1 Taxable-equivalent yield represents the yield that must be earned on a fully taxable investment in order to equal the yield of the Fund on an after-tax basis. It is based on a combined federal and state income tax rate of 31.5%. When comparing this Fund to investments that generate qualified dividend income, the taxable-equivalent yield is lower. 11 Nuveen Maryland Dividend Advantage Municipal Fund NFM PERFORMANCE OVERVIEW As of May 31, 2005 Pie Chart: CREDIT QUALITY (as a % of total investments) AAA/U.S. Guaranteed 45% AA 25% A 13% BBB 12% BB or Lower 1% NR 4% Bar Chart: 2004-2005 MONTHLY TAX-FREE DIVIDENDS PER SHARE Jun 0.0785 Jul 0.0785 Aug 0.0785 Sep 0.0785 Oct 0.0785 Nov 0.0785 Dec 0.0785 Jan 0.0785 Feb 0.0785 Mar 0.0755 Apr 0.0755 May 0.0755 Line Chart: SHARE PRICE PERFORMANCE Weekly Closing Price Past performance is not predictive of future results. 6/1/04 15.55 15.25 15.1 15.05 15 14.99 14.6 14.75 14.6 14.5 14.54 14.38 14.37 14.35 14.27 14.4 14.37 14.41 14.15 14.06 14.16 14.22 14.4 14.6 14.67 14.83 14.68 14.87 14.83 14.75 14.82 14.78 15 14.9 14.83 14.89 14.86 14.9 14.99 15.3 15.47 15.69 15.69 15.71 15.75 15.55 15.69 15.73 15.6 15.55 15.47 15.4 15.36 15.6 15.75 15.85 16 16.01 16.08 16.03 15.75 16.12 16 15.95 16.15 15.85 15.9 15.75 15.89 15.69 15.7 15.84 15.67 15.65 15.63 15.62 15.66 15.74 15.7 16.09 15.9 15.99 15.92 16.12 15.85 15.92 15.91 15.95 16.2 16.35 16 16 16.2 16.2 16.05 15.95 16.1 16.1 16.25 16.15 16.15 15.94 16.04 16.35 16.38 16.12 16.14 16.15 16.15 16.07 16.44 16.16 15.95 16.17 15.75 15.61 15.63 15.63 15.63 15.55 15.62 15.33 15.36 15.44 15.51 15.49 15.2 15.06 14.96 14.87 15.1 15.13 14.95 15.05 15.05 15.07 15.07 15 15.12 15.21 15.19 15.18 15.35 15.36 15.45 15.55 15.5 15.5 15.75 15.65 15.62 15.78 15.96 16 16.2 16.2 16.2 16.08 15.98 16.2 16.3 16.26 16.26 16.3 16.14 16.1 16.05 16.08 16.09 16.14 16.15 16.15 15.99 16.11 15.93 16.07 16.1 16.14 16.01 16.2 16.13 16.2 16.24 16.12 15.96 16.03 16.05 16 16.16 16.08 16.51 16.4 16.4 16.3 16.3 16.27 16.15 16.17 16.45 16.5 16.22 16.38 16.25 16.1 15.82 15.64 15.6 15.39 15.3 15.55 15.6 15.84 16 16.1 16.1 15.96 15.92 15.87 15.85 15.77 15.65 15.72 15.72 15.97 15.7 15.55 15.52 15.52 15.34 15.38 15.38 15.44 15.44 15.31 15.44 15.5 15.62 15.42 15.32 15.38 15.38 15.56 15.56 15.6 15.7 15.96 15.99 15.73 15.77 15.83 15.85 15.75 15.79 5/31/05 15.63 FUND SNAPSHOT - ------------------------------------ Common Share Price $15.63 - ------------------------------------ Common Share Net Asset Value $15.13 - ------------------------------------ Premium/(Discount) to NAV 3.30% - ------------------------------------ Market Yield 5.80% - ------------------------------------ Taxable-Equivalent Yield1 8.47% - ------------------------------------ Net Assets Applicable to Common Shares ($000) $63,051 - ------------------------------------ Average Effective Maturity on Securities (Years) 18.46 - ------------------------------------ Leverage-Adjusted Duration 7.15 - ------------------------------------ AVERAGE ANNUAL TOTAL RETURN (Inception 1/23/01) - ------------------------------------ ON SHARE PRICE ON NAV - ------------------------------------ 1-Year 6.22% 11.60% - ------------------------------------ Since Inception 6.68% 7.40% - ------------------------------------ SECTORS (as a % of total investments) - ------------------------------------ Tax Obligation/General 18.9% - ------------------------------------ Tax Obligation/Limited 16.8% - ------------------------------------ Healthcare 16.6% - ------------------------------------ U.S. Guaranteed 15.6% - ------------------------------------ Education and Civic Organizations 10.5% - ------------------------------------ Housing/Multifamily 10.1% - ------------------------------------ Other 11.5% - ------------------------------------ 1 Taxable-equivalent yield represents the yield that must be earned on a fully taxable investment in order to equal the yield of the Fund on an after-tax basis. It is based on a combined federal and state income tax rate of 31.5%. When comparing this Fund to investments that generate qualified dividend income, the taxable-equivalent yield is lower. 12 Nuveen Maryland Dividend Advantage Municipal Fund 2 NZR PERFORMANCE OVERVIEW As of May 31, 2005 Pie Chart: CREDIT QUALITY (as a % of total investments) AAA/U.S. Guaranteed 49% AA 29% A 8% BBB 10% BB or Lower 1% NR 3% Bar Chart: 2004-2005 MONTHLY TAX-FREE DIVIDENDS PER SHARE2 Jun 0.073 Jul 0.073 Aug 0.073 Sep 0.073 Oct 0.073 Nov 0.073 Dec 0.073 Jan 0.073 Feb 0.073 Mar 0.073 Apr 0.073 May 0.073 Line Chart: SHARE PRICE PERFORMANCE Weekly Closing Price Past performance is not predictive of future results. 6/1/04 14.2 14.2 14.15 14.3 14.21 14.15 14.16 14.3 14 14.01 14.04 14.22 14.04 14.11 14.06 14.2 14.25 14.14 14.25 14.2 14.18 14.06 14.12 14.25 14.36 14.47 14.3 14.45 14.49 14.5 14.8 14.57 14.66 14.9 14.88 14.64 14.68 14.9 14.9 14.72 14.86 14.98 14.98 15 15.05 15.09 14.96 15.03 14.98 15 15 15 15 15.05 15.13 15 14.91 15.17 15.33 15.01 14.99 15.19 15.34 15.4 15.32 15.4 15.24 15.3 15.35 15.3 15.17 15.4 15.52 15.49 15.35 15.1 15.15 15 15.29 15.15 15.32 15.28 15.32 15.37 15.27 15.42 15.37 15.34 15.5 15.38 15.35 15.39 15.33 15.22 15.2 15.36 15.39 15.34 15.24 15.21 15.31 15.35 15.26 15.28 15.43 15.5 15.65 15.4 15.4 15.4 15.69 15.45 15.15 14.75 14.95 14.94 14.81 14.73 14.7 14.8 15.04 15.03 15.05 15.07 15 15.1 15 15.15 15.25 15.25 15.22 15.32 15.27 15.29 15.38 15.19 15.02 15.14 15.17 15.3 15.3 15.35 15.29 15.1 15.3 15.3 15.6 15.75 15.98 16.09 15.95 16.12 15.9 15.82 15.99 15.96 15.96 15.95 15.75 15.42 15.51 15.35 15.37 15.38 15.31 15.25 15.35 15.41 15.37 15.4 15.45 15.9 15.88 16 15.74 15.83 15.84 15.73 15.65 15.75 15.45 15.35 15.3 15.01 15.01 15.03 15.01 15.01 15.22 15.25 15.31 15.28 15.28 15.24 15.41 15.41 15.07 15.09 14.9 14.94 14.87 15.13 15.12 15.13 15.46 15.06 15.06 15.2 15.1 15.1 15.38 15.6 15.48 15.38 15.65 15.75 15.75 15.74 15.31 15.2 15.35 15.29 15.4 15.25 15.23 14.73 14.89 14.83 14.55 14.67 14.73 14.74 14.74 14.7 14.78 14.84 15.01 15.06 15.18 15.28 15.3 15.22 15.21 15.35 15.35 15.37 15.36 15.52 15.45 15.18 15.26 15.29 15.2 5/31/05 15.41 FUND SNAPSHOT - ------------------------------------ Common Share Price $15.41 - ------------------------------------ Common Share Net Asset Value $15.45 - ------------------------------------ Premium/(Discount) to NAV -0.26% - ------------------------------------ Market Yield 5.68% - ------------------------------------ Taxable-Equivalent Yield1 8.29% - ------------------------------------ Net Assets Applicable to Common Shares ($000) $64,500 - ------------------------------------ Average Effective Maturity on Securities (Years) 16.91 - ------------------------------------ Leverage-Adjusted Duration 7.60 - ------------------------------------ AVERAGE ANNUAL TOTAL RETURN (Inception 9/25/01) - ------------------------------------ ON SHARE PRICE ON NAV - ------------------------------------ 1-Year 14.71% 12.22% - ------------------------------------ Since Inception 6.52% 7.97% - ------------------------------------ SECTORS (as a % of total investments) - ------------------------------------ Tax Obligation/General 25.6% - ------------------------------------ U.S. Guaranteed 17.3% - ------------------------------------ Healthcare 14.5% - ------------------------------------ Education and Civic Organizations 12.3% - ------------------------------------ Tax Obligation/Limited 12.0% - ------------------------------------ Housing/Multifamily 8.0% - ------------------------------------ Other 10.3% - ------------------------------------ 1 Taxable-equivalent yield represents the yield that must be earned on a fully taxable investment in order to equal the yield of the Fund on an after-tax basis. It is based on a combined federal and state income tax rate of 31.5%. When comparing this Fund to 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 2004 of $0.0616 per share. 13 Nuveen Maryland Dividend Advantage Municipal Fund 3 NWI PERFORMANCE OVERVIEW As of May 31, 2005 Pie Chart: CREDIT QUALITY (as a % of total investments) AAA/U.S. Guaranteed 41% AA 38% A 6% BBB 12% BB or Lower 1% NR 2% Bar Chart: 2004-2005 MONTHLY TAX-FREE DIVIDENDS PER SHARE2 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 0.0625 Apr 0.0625 May 0.0625 Line Chart: SHARE PRICE PERFORMANCE Weekly Closing Price Past performance is not predictive of future results. 6/1/04 13.08 13.31 13.05 13.18 13.18 13.25 13.24 13.35 13.25 13.2 13.16 13.08 13.05 13.02 13.04 13 12.97 13.02 12.92 13.11 13.14 13.43 13.47 13.52 13.4 13.48 13.61 13.76 13.63 13.75 13.75 13.51 13.63 13.68 13.51 13.46 13.38 13.4 13.41 13.49 13.49 13.62 13.62 13.79 13.79 13.8 13.78 13.79 13.8 13.83 13.76 13.68 13.69 13.8 13.9 13.92 14 14.02 13.9 13.95 14 14.11 14.02 14.05 14 14.07 14.07 14.08 14.24 14.49 14.34 14.31 14.24 14.35 14.22 14.35 14.48 14.36 14.38 14.35 14.34 14.32 14.32 14.38 14.32 14.33 14.4 14.29 14.09 14.22 14.27 14.48 14.48 14.25 14.11 14.32 14.2 14.33 14.38 14.46 14.5 14.38 14.35 14.35 14.35 14.24 14.1 14.3 14.32 14.13 14.16 13.87 13.54 13.65 13.67 13.65 13.75 13.87 14.05 14.29 14.25 14.07 13.87 13.79 13.75 13.83 13.72 13.59 13.55 13.47 13.55 13.55 13.8 13.68 13.68 13.85 13.72 13.61 13.6 13.69 13.41 13.5 13.57 13.66 13.67 13.4 13.58 13.46 13.71 13.66 14 14.18 14.28 14.42 14.52 14.4 14.33 14.28 14.2 14.3 14.28 14.15 13.87 14.2 14.2 14.05 14.15 14.2 14.2 14.29 14.63 14.65 14.62 14.71 14.55 14.54 14.51 14.47 14.42 14.6 14.6 14.5 14.5 14.17 14.19 14.65 14.5 14.6 14.59 14.65 14.7 14.6 14.57 14.55 14.57 14.22 14.25 14.16 14.55 14.37 13.99 13.76 13.8 13.75 13.93 13.71 13.93 13.72 13.89 13.78 13.98 14.15 14.03 14.14 14.15 14.2 14.2 14.02 14.13 14.18 14.1 13.94 14.21 14.06 14.04 14.04 13.84 13.89 13.81 14.19 14.16 14.06 14.06 14.13 14.07 14.13 14.35 14.14 14.35 14.21 14.5 14.4 14.4 14.55 14.7 14.65 14.5 14.45 14.25 14.53 14.37 14.43 14.36 5/31/05 14.4 FUND SNAPSHOT - ------------------------------------ Common Share Price $14.40 - ------------------------------------ Common Share Net Asset Value $14.82 - ------------------------------------ Premium/(Discount) to NAV -2.83% - ------------------------------------ Market Yield 5.21% - ------------------------------------ Taxable-Equivalent Yield1 7.61% - ------------------------------------ Net Assets Applicable to Common Shares ($000) $79,443 - ------------------------------------ Average Effective Maturity on Securities (Years) 18.11 - ------------------------------------ Leverage-Adjusted Duration 7.69 - ------------------------------------ AVERAGE ANNUAL TOTAL RETURN (Inception 9/25/02) - ------------------------------------ ON SHARE PRICE ON NAV - ------------------------------------ 1-Year 14.98% 12.67% - ------------------------------------ Since Inception 3.92% 6.73% - ------------------------------------ SECTORS (as a % of total investments) - ------------------------------------ Tax Obligation/Limited 25.3% - ------------------------------------ Tax Obligation/General 18.7% - ------------------------------------ U.S. Guaranteed 13.7% - ------------------------------------ Healthcare 11.7% - ------------------------------------ Education and Civic Organizations 10.2% - ------------------------------------ Housing/Multifamily 8.2% - ------------------------------------ Utilities 4.8% - ------------------------------------ Other 7.4% - ------------------------------------ 1 Taxable-equivalent yield represents the yield that must be earned on a fully taxable investment in order to equal the yield of the Fund on an after-tax basis. It is based on a combined federal and state income tax rate of 31.5%. When comparing this Fund to investments that generate qualified dividend income, the taxable-equivalent yield is lower. 2 The Fund also paid shareholders a capital gains distribution in December 2004 of $0.0076 per share. 14 Nuveen Virginia Premium Income Municipal Fund NPV PERFORMANCE OVERVIEW As of May 31, 2005 Pie Chart: CREDIT QUALITY (as a % of total investments) AAA/U.S. Guaranteed 54% AA 29% A 7% BBB 6% BB or Lower 1% NR 3% Bar Chart: 2004-2005 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 0.073 Apr 0.073 May 0.073 Line Chart: SHARE PRICE PERFORMANCE Weekly Closing Price Past performance is not predictive of future results. 6/1/04 15.05 15 15.14 15.43 15.5 15.47 15.12 15.15 15.05 14.92 15.2 14.89 14.79 14.63 14.89 14.9 14.97 15.25 14.98 14.87 15.1 15.35 15.3 15.56 15.65 15.56 15.55 15.75 15.8 15.7 15.4 15.38 15.44 15.4 15.43 15.4 15.53 15.35 15.4 15.35 15.36 15.55 15.55 15.46 15.64 15.65 15.68 15.73 15.94 16.22 16.25 16.07 16.26 16.26 16.14 16.25 16.06 16.28 16.07 15.92 16.33 16.33 16.12 16.32 16.24 16.46 16.41 16.65 16.67 16.39 16.58 16.45 16.43 16.4 16.43 16.5 16.75 16.8 16.65 16.34 16.45 16.3 16.52 16.9 16.87 16.93 16.75 16.97 16.99 16.98 16.99 16.99 17 16.99 17.28 17.5 17.5 17.31 17.45 17.5 17.6 17.9 17.94 17.85 17.69 17.6 17.46 17.73 18 18.01 18.08 17.69 17.35 17.44 17.44 17.35 17.19 17.3 17.4 18.1 17.98 18 18 18.05 17.74 17.65 17.9 17.65 17.52 17.5 17.5 17.69 17.82 17.72 17.68 17.99 17.9 17.95 17.81 17.5 17.7 17.92 17.89 17.78 17.7 17.4 17.32 17.7 17.42 17.57 17.75 17.65 17.7 17.73 17.67 17.72 17.75 17.81 17.53 17.6 17.9 17.91 17.75 17.65 17.61 17.55 17.5 17.51 17.42 17.55 17.8 17.75 17.78 17.9 18.2 17.9 18.01 17.85 18 18.37 17.92 17.82 17.65 17.55 17.67 17.39 17.58 17.56 17.62 17.55 17.7 17.77 17.64 17.64 17.58 17.51 17.73 17.83 17.52 17.64 17.53 17.25 17.23 17.15 17.15 16.76 16.6 16.6 16.75 16.6 16.57 16.5 16.32 16.5 16.5 16.54 16.55 16.46 16.5 16.55 16.5 16.37 16.55 16.65 16.5 16.49 16.51 16.52 16.32 16.52 16.45 16.51 16.51 16.62 16.66 16.7 16.96 16.79 16.56 16.97 17.15 17.18 17.18 17.32 17.54 17.63 17.77 17.76 17.76 18 17.45 17.29 17.4 5/31/05 17.65 FUND SNAPSHOT - ------------------------------------ Common Share Price $17.65 - ------------------------------------ Common Share Net Asset Value $15.82 - ------------------------------------ Premium/(Discount) to NAV 11.57% - ------------------------------------ Market Yield 4.96% - ------------------------------------ Taxable-Equivalent Yield1 7.29% - ------------------------------------ Net Assets Applicable to Common Shares ($000) $140,340 - ------------------------------------ Average Effective Maturity on Securities (Years) 16.15 - ------------------------------------ Leverage-Adjusted Duration 7.99 - ------------------------------------ AVERAGE ANNUAL TOTAL RETURN (Inception 3/18/93) - ------------------------------------ ON SHARE PRICE ON NAV - ------------------------------------ 1-Year 24.54% 12.13% - ------------------------------------ 5-Year 10.12% 9.62% - ------------------------------------ 10-Year 8.98% 7.55% - ------------------------------------ SECTORS (as a % of total investments) - ------------------------------------ Tax Obligation/Limited 19.3% - ------------------------------------ Healthcare 15.2% - ------------------------------------ Tax Obligation/General 14.7% - ------------------------------------ U.S. Guaranteed 12.7% - ------------------------------------ Transportation 8.4% - ------------------------------------ Utilities 7.9% - ------------------------------------ Education and Civic Organizations 7.4% - ------------------------------------ Water and Sewer 6.5% - ------------------------------------ Other 7.9% - ------------------------------------ 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%. When comparing this Fund to investments that generate qualified dividend income, the taxable-equivalent yield is lower. 15 Nuveen Virginia Dividend Advantage Municipal Fund NGB PERFORMANCE OVERVIEW As of May 31, 2005 Pie Chart: CREDIT QUALITY (as a % of total investments) AAA/U.S. Guaranteed 51% AA 27% A 8% BBB 5% BB or Lower 4% NR 5% Bar Chart: 2004-2005 MONTHLY TAX-FREE DIVIDENDS PER SHARE Jun 0.0785 Jul 0.0785 Aug 0.0785 Sep 0.0785 Oct 0.0785 Nov 0.0785 Dec 0.0785 Jan 0.0785 Feb 0.0785 Mar 0.0755 Apr 0.0755 May 0.0755 Line Chart: SHARE PRICE PERFORMANCE Weekly Closing Price Past performance is not predictive of future results. 6/1/04 14.97 15.01 15.07 15.27 15.3 15.34 15.3 15.43 15.08 14.93 14.9 14.96 14.97 15.01 15 15.04 15 14.95 15.07 15.25 15.2 15.13 15.25 15.18 15.24 15.45 15.49 15.67 15.59 15.7 15.75 15.6 15.59 15.88 15.53 15.45 15.68 16.02 15.82 15.83 15.91 15.99 15.99 16.1 16.22 16.25 16.25 16.31 16.3 16.45 16.48 16.45 16.4 16.4 16.42 16.55 16.69 17.05 16.56 16.17 15.95 16 16.22 16.23 16.26 16.46 16.54 16.6 16.7 16.72 16.64 16.67 16.58 16.58 16.52 16.8 16.69 16.8 17 16.95 16.83 16.85 16.85 16.91 17 16.84 16.66 17.05 17.18 17 16.92 17.32 17.66 17.71 17.58 17.75 17.75 17.55 17.8 17.75 17.6 17.6 17.6 17.6 17.7 17.7 17.7 17.49 17.53 17.7 17.8 18 17.7 17.56 17.73 17.55 17.38 17.4 17.46 17.39 17.39 17.18 17.18 17.3 17.3 17.32 17.48 17.35 17.34 17.06 17.1 16.95 17.1 17.26 17.56 17.64 17.43 17.49 17.25 17.26 17.26 17.15 17.15 17.15 17.19 17.27 17.21 17.15 17.99 17.83 17.75 17.9 17.84 17.85 18 17.67 17.51 17.17 16.97 17.1 17.2 18.15 18.1 18 18.01 17.75 17.47 17.55 17.5 17.48 17.4 17.42 17.4 17.59 18.15 18.14 17.94 17.9 18.2 18.1 18 17.93 17.75 17.7 17.25 17.22 17.25 17.45 17.66 17.58 17.32 17.32 17.8 18.1 18 17.92 17.87 17.87 17.74 17.21 17.21 17 17.36 17.59 17.85 17.5 17.4 17.55 17.56 17.56 17.56 17.48 17.53 17.4 17.39 17.43 17.43 17.36 17.5 17.5 17.39 17.2 17.2 17.11 17.04 17.15 17.15 17.35 17.12 17.05 17.05 16.88 16.88 16.96 16.86 16.86 17.34 17.34 17.44 17.43 17.51 17.44 17.35 17.37 17.37 17.37 17.37 17.42 18 17.59 17.29 17.4 17.2 5/31/05 16.99 FUND SNAPSHOT - ------------------------------------ Common Share Price $16.99 - ------------------------------------ Common Share Net Asset Value $15.52 - ------------------------------------ Premium/(Discount) to NAV 9.47% - ------------------------------------ Market Yield 5.33% - ------------------------------------ Taxable-Equivalent Yield1 7.84% - ------------------------------------ Net Assets Applicable to Common Shares ($000) $48,474 - ------------------------------------ Average Effective Maturity on Securities (Years) 16.49 - ------------------------------------ Leverage-Adjusted Duration 7.92 - ------------------------------------ AVERAGE ANNUAL TOTAL RETURN (Inception 1/26/01) - ------------------------------------ ON SHARE PRICE ON NAV - ------------------------------------ 1-Year 19.11% 14.46% - ------------------------------------ Since Inception 8.65% 8.06% - ------------------------------------ SECTORS (as a % of total investments) - ------------------------------------ Tax Obligation/General 18.9% - ------------------------------------ Transportation 15.4% - ------------------------------------ U.S. Guaranteed 14.9% - ------------------------------------ Tax Obligation/Limited 13.6% - ------------------------------------ Education and Civic Organizations 9.1% - ------------------------------------ Healthcare 8.7% - ------------------------------------ Water and Sewer 5.5% - ------------------------------------ Other 13.9% - ------------------------------------ 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%. When comparing this Fund to investments that generate qualified dividend income, the taxable-equivalent yield is lower. 16 Nuveen Virginia Dividend Advantage Municipal Fund 2 NNB PERFORMANCE OVERVIEW As of May 31, 2005 Pie Chart: CREDIT QUALITY (as a % of total investments) AAA/U.S. Guaranteed 48% AA 34% A 7% BBB 5% BB or Lower 2% NR 4% Bar Chart: 2004-2005 MONTHLY TAX-FREE DIVIDENDS PER SHARE2 Jun 0.0745 Jul 0.0745 Aug 0.0745 Sep 0.0745 Oct 0.0745 Nov 0.0745 Dec 0.0745 Jan 0.0745 Feb 0.0745 Mar 0.0715 Apr 0.0715 May 0.0715 Line Chart: SHARE PRICE PERFORMANCE Weekly Closing Price Past performance is not predictive of future results. 6/1/04 14.95 15.15 14.9 14.92 14.97 14.92 15.05 15.05 14.8 14.78 15 14.62 14.66 14.8 14.82 14.88 14.9 14.85 14.97 14.9 15.12 14.99 15.2 15.2 15.05 15.14 15.17 15.31 15.21 15.2 15.03 15.1 15.08 15.09 15 15.06 15.18 15.08 14.97 15.14 15.19 15.4 15.4 15.33 15.2 15.24 15.3 15.37 15.42 15.55 15.51 15.53 15.54 15.55 15.7 16 15.94 15.92 15.68 15.6 15.55 15.6 15.74 15.78 15.84 15.86 15.87 15.87 15.92 16.05 16.19 16.35 16.31 16.35 16.2 15.92 16 16.1 16.2 16.4 16.25 16.21 16.45 16.71 16.37 16.31 16.49 16.45 16.58 16.36 16.55 16.65 16.65 16.42 16.45 16.47 16.5 16.53 16.58 16.48 16.52 16.6 17 16.95 16.7 16.7 16.65 16.65 16.74 16.75 16.8 16.72 16.05 15.91 15.86 15.85 15.89 15.94 15.9 15.97 16.05 16.04 15.84 15.85 15.91 15.95 15.7 15.76 15.8 15.77 16 16.03 16.12 16.45 16.44 16.43 16.03 16.25 16.28 16.28 16.45 16.5 16.55 16.7 16.7 16.85 17.04 17.24 17.03 17.14 17.01 17.25 17.1 17 16.57 16.53 16.65 16.61 16.32 16.55 16.8 17 17 16.92 16.75 16.35 16.36 16.44 16.44 16.44 16.47 16.65 16.54 16.71 16.93 16.8 16.79 17 17.3 17.1 16.7 16.69 16.73 16.5 16.6 16.31 16.36 16.34 16.6 17.03 16.8 16.7 16.7 17 17.1 17.08 16.72 16.64 16.39 16.15 16.04 16.09 16.2 16.11 15.86 16 15.8 15.9 16.01 15.88 16.11 16.45 16.47 16.35 16 16 16.06 16.4 16.3 16.16 16.05 15.93 16.25 16.4 16.28 16.35 16.39 16.4 16.15 16.5 16.74 16.75 16.75 16.9 16.89 16.89 16.72 16.79 16.88 16.83 16.7 16.43 16.42 16.8 16.64 16.6 16.65 16.65 16.85 16.8 16.65 16.87 16.74 5/31/05 16.74 FUND SNAPSHOT - ------------------------------------ Common Share Price $16.74 - ------------------------------------ Common Share Net Asset Value $15.70 - ------------------------------------ Premium/(Discount) to NAV 6.62% - ------------------------------------ Market Yield 5.13% - ------------------------------------ Taxable-Equivalent Yield1 7.54% - ------------------------------------ Net Assets Applicable to Common Shares ($000) $89,626 - ------------------------------------ Average Effective Maturity on Securities (Years) 17.31 - ------------------------------------ Leverage-Adjusted Duration 7.70 - ------------------------------------ AVERAGE ANNUAL TOTAL RETURN (Inception 11/15/01) - ------------------------------------ ON SHARE PRICE ON NAV - ------------------------------------ 1-Year 21.96% 13.75% - ------------------------------------ Since Inception 9.23% 8.93% - ------------------------------------ SECTORS (as a % of total investments) - ------------------------------------ Tax Obligation/General 25.4% - ------------------------------------ Tax Obligation/Limited 17.4% - ------------------------------------ Healthcare 12.9% - ------------------------------------ Water and Sewer 10.8% - ------------------------------------ U.S. Guaranteed 10.0% - ------------------------------------ Housing/Single Family 5.9% - ------------------------------------ Education and Civic Organizations 5.3% - ------------------------------------ Other 12.3% - ------------------------------------ 1 Taxable-equivalent yield represents the yield that must be earned on a fully taxable investment in order to equal the yield of the Fund on an after-tax basis. It is based on a combined federal and state income tax rate of 32%. When comparing this Fund to investments that generate qualified dividend income, the taxable-equivalent yield is lower. 2 The Fund also paid shareholders a capital gains distribution in December 2004 of $0.1878 per share. 17 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, 2005, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for the periods indicated therein. These financial statements and financial highlights are the responsibility of the Funds' management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Funds' internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds' internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of May 31, 2005, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial 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, 2005, the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended, and the financial highlights for the periods indicated therein, in conformity with U.S. generally accepted accounting principles. /s/Ernst & Young LLP CHICAGO, ILLINOIS JULY 14, 2005 18 Nuveen Maryland Premium Income Municipal Fund (NMY) Portfolio of INVESTMENTS May 31, 2005
PRINCIPAL OPTIONAL CALL MARKET AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE - ------------------------------------------------------------------------------------------------------------------------------------ CONSUMER STAPLES - 2.0% (1.4% OF TOTAL INVESTMENTS) $ 3,160 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 5/12 at 100.00 BBB $ 3,197,730 Asset-Backed Refunding Bonds, Series 2002, 5.375%, 5/15/33 - ------------------------------------------------------------------------------------------------------------------------------------ EDUCATION AND CIVIC ORGANIZATIONS - 21.7% (14.8% OF TOTAL INVESTMENTS) Frederick County, Maryland, Educational Facilities Revenue Bonds, Mount St. Mary's College, Series 2001A: 200 5.750%, 9/01/25 3/10 at 101.00 BBB 211,616 200 5.800%, 9/01/30 3/10 at 101.00 BBB 211,986 1,000 Hartford County, Maryland, Economic Development Revenue 4/14 at 100.00 A+ 1,064,840 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 1,062,950 Revenue Bonds, Collegiate Housing Foundation - Salisbury State University, Series 1999A, 6.000%, 6/01/19 2,250 Maryland Economic Development Corporation, Student 6/09 at 102.00 Baa2 2,351,363 Housing 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 1,065,230 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 1,105,660 1,000 5.375%, 7/01/16 - AMBAC Insured 7/11 at 100.00 AAA 1,105,660 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 809,513 500 5.250%, 7/01/30 - FSA Insured 1/11 at 101.00 AAA 535,120 1,500 Maryland Health and Higher Educational Facilities Authority, 7/07 at 102.00 AA 1,597,485 Revenue Refunding Bonds, Johns Hopkins University, Series 1997, 5.625%, 7/01/27 1,460 Maryland Health and Higher Educational Facilities Authority, 6/11 at 100.00 Baa1 1,550,812 Revenue Bonds, Maryland Institute College of Art, Series 2001, 5.625%, 6/01/36 1,250 Maryland Health and Higher Educational Facilities Authority, 7/14 at 100.00 A- 1,305,875 Revenue Bonds, Goucher College, Series 2004, 5.125%, 7/01/34 9,445 Morgan State University, Maryland, Student Tuition and Fee No Opt. Call AAA 11,724,740 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 6,192,113 2,680 5.000%, 4/01/19 4/13 at 100.00 AA 2,913,026 - ------------------------------------------------------------------------------------------------------------------------------------ HEALTHCARE - 22.6% (15.4% OF TOTAL INVESTMENTS) 2,000 Maryland Health and Higher Educational Facilities Authority, 6/09 at 101.00 A+ 2,138,840 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 846,615 Revenue Bonds, University of Maryland Medical System, Series 2000, 6.750%, 7/01/30 1,000 Maryland Health and Higher Educational Facilities Authority, 7/08 at 101.00 AAA 1,054,390 Revenue Bonds, Johns Hopkins Hospital, Howard County General Hospital Acquisition, Series 1998, 5.000%, 7/01/19 - MBIA Insured 1,500 Maryland Health and Higher Educational Facilities Authority, 7/11 at 100.00 A+ 1,540,350 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 1,661,460 Revenue Bonds, University of Maryland Medical System, Series 2002, 6.000%, 7/01/22 19 Nuveen Maryland Premium Income Municipal Fund (NMY) (continued) Portfolio of INVESTMENTS May 31, 2005 PRINCIPAL OPTIONAL CALL MARKET AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE - ------------------------------------------------------------------------------------------------------------------------------------ HEALTHCARE (continued) $ 3,250 Maryland Health and Higher Educational Facilities Authority, 7/12 at 100.00 Baa1 $ 3,458,910 Revenue Bonds, Carroll County General Hospital, Series 2002, 5.800%, 7/01/32 1,400 Maryland Health and Higher Educational Facilities Authority, 7/12 at 100.00 Baa1 1,451,996 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 3,480,718 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 3,972,444 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 1,079,710 Revenue Bonds, University of Maryland Medical System, Series 2004B, 5.000%, 7/01/24 - AMBAC Insured 1,750 Maryland Health and Higher Educational Facilities Authority, 8/14 at 100.00 Baa1 1,849,383 Revenue Bonds, MedStar Health, Series 2004, 5.375%, 8/15/24 1,540 Maryland Health and Higher Educational Facilities Authority, 7/14 at 100.00 A 1,608,838 Revenue Bonds, LifeBridge Health System, Series 2004A, 5.125%, 7/01/34 1,525 Maryland Health and Higher Educational Facilities Authority, 7/14 at 100.00 A2 1,623,454 Revenue Bonds, Calvert Memorial Hospital, Series 2004, 5.500%, 7/01/36 1,665 Maryland Health and Higher Educational Facilities Authority, 7/14 at 100.00 AA 1,734,897 Revenue Bonds, Civista Medical Center, Series 2005, 5.000%, 7/01/37 - RAAI Insured Prince George's County, Maryland, Revenue Refunding and Project Bonds, Dimensions Health Corporation, Series 1994: 825 5.000%, 7/01/05 No Opt. Call B3 823,721 3,080 5.375%, 7/01/14 7/05 at 101.00 B3 2,799,597 6,000 5.300%, 7/01/24 7/05 at 101.00 B3 5,085,240 - ------------------------------------------------------------------------------------------------------------------------------------ HOUSING/MULTIFAMILY - 14.8% (10.1% OF TOTAL INVESTMENTS) 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 725,046 2,000 6.100%, 7/01/25 7/06 at 102.00 AAA 2,068,640 2,500 Maryland Community Development Administration, Housing 1/09 at 101.00 Aa2 2,562,850 Revenue Bonds, Series 1999A, 5.350%, 7/01/41 (Alternative Minimum Tax) 880 Maryland Community Development Administration, Housing 1/10 at 100.00 Aa2 929,491 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 1,550,848 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 2,042,680 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 1,549,905 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 3,924,716 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 2,106,200 Maryland, Multifamily Housing Development Bonds, Series 2000A, 6.100%, 7/01/30 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 2,057,040 1,670 5.750%, 12/20/19 12/05 at 102.00 AAA 1,715,290 970 Prince George's County Housing Authority, Maryland, 11/05 at 100.00 AAA 970,795 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, 9/09 at 102.00 AAA 573,329 GNMA 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 6/05 at 102.00 AAA 1,021,310 Refunding Bonds, College Lane Apartments, Series 1995A, 6.600%, 12/01/26 20 PRINCIPAL OPTIONAL CALL MARKET AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE - ------------------------------------------------------------------------------------------------------------------------------------ HOUSING/SINGLE FAMILY - 0.7% (0.4% OF TOTAL INVESTMENTS) $ 750 Prince George's County Housing Authority, Maryland, 8/07 at 102.00 AA $ 762,443 FHLMC/FNMA/GNMA Collateralized Single Family Mortgage Revenue Bonds, Series 1997A, 5.625%, 8/01/17 (Alternative Minimum Tax) 60 Prince George's County Housing Authority, Maryland, 8/10 at 100.00 AAA 62,944 FHLMC/FNMA/GNMA Collateralized Single Family Mortgage Revenue Bonds, Series 2000A, 6.150%, 8/01/19 (Alternative Minimum Tax) 330 Puerto Rico Housing Finance Authority, Mortgage-Backed 6/13 at 100.00 AAA 334,079 Securities Program Home Mortgage Revenue Bonds, Series 2003A, 4.875%, 6/01/34 (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ LONG-TERM CARE - 1.7% (1.2% OF TOTAL INVESTMENTS) 1,000 Carroll County, Maryland, Revenue Refunding Bonds, EMA 1/09 at 101.00 AA 1,071,910 Obligated Group, Series 1999A, 5.625%, 1/01/25 - RAAI Insured 1,695 Maryland Economic Development Corporation, Health and 4/11 at 102.00 N/R 1,727,171 Mental Hygiene Providers Revenue Bonds, Series 1996A, 7.625%, 4/01/21 - ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/GENERAL - 28.1% (19.1% OF TOTAL INVESTMENTS) 4,000 Anne Arundel County, Maryland, General Obligation Bonds, No Opt. Call AA+ 4,456,240 Series 2003, 5.000%, 3/01/13 2,030 Anne Arundel County, Maryland, General Obligation Bonds, 4/14 at 100.00 AA+ 2,244,124 Series 2004, 5.000%, 4/01/16 Baltimore County, Maryland, Metropolitan District General Obligation Bonds, 67th Issue: 2,500 5.000%, 6/01/25 6/11 at 101.00 AAA 2,669,850 3,500 5.000%, 6/01/26 6/11 at 101.00 AAA 3,719,415 1,000 Baltimore, Maryland, General Obligation Bonds, Consolidated No Opt. Call A+ 1,130,220 Public Improvement, Series 1989B, 7.150%, 10/15/08 1,540 Baltimore, Maryland, General Obligation Bonds, Consolidated 10/14 at 100.00 AAA 1,678,800 Public Improvement, Series 2004A, 5.000%, 10/15/22 - AMBAC Insured 1,000 Charles County, Maryland, Consolidated General Obligation No Opt. Call AA 1,108,380 Public Improvement Bonds, Series 2005, 5.000%, 3/01/12 Frederick County, Maryland, General Obligation Public Facilities Bonds, Series 2002: 1,000 5.000%, 11/01/21 11/12 at 101.00 AA 1,093,280 1,000 5.000%, 11/01/22 11/12 at 101.00 AA 1,090,350 615 Frederick County, Maryland, Special Obligation Bonds, 7/10 at 102.00 AA 676,734 Villages 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 813,307 1,625 5.000%, 8/15/17 2/14 at 100.00 AAA 1,789,174 1,180 5.000%, 8/15/19 2/14 at 100.00 AAA 1,290,000 1,190 Maryland National Capital Park and Planning Commission, 1/14 at 100.00 AA 1,308,334 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 1,964,673 2,000 5.250%, 10/01/18 10/11 at 101.00 AAA 2,215,040 2,000 Montgomery County, Maryland, General Obligation Bonds, No Opt. Call AAA 2,233,660 Consolidated Public Improvement, Series 2004A, 5.000%, 4/01/13 925 Northern Mariana Islands, General Obligation Bonds, 6/10 at 100.00 A 990,139 Series 2000A, 6.000%, 6/01/20 - ACA Insured 1,000 Prince George's County, Maryland, General Obligation 12/11 at 101.00 AAA 1,098,100 Consolidated Public Improvement Bonds, Series 2001, 5.250%, 12/01/20 - FGIC Insured 2,000 Prince George's County, Maryland, General Obligation 9/12 at 101.00 AA 2,027,240 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 6,307,706 Consolidated Public Improvement Bonds, Series 2003A, 5.000%, 10/01/18 2,255 Prince George's County, Maryland, General Obligation No Opt. Call AA 2,498,901 Consolidated Public Improvement Bonds, Series 2004C, 5.000%, 12/01/11 460 Wicomico County, Maryland, General Obligation Public 12/09 at 101.00 AAA 513,917 Improvement Bonds, Series 1999, 5.750%, 12/01/19 - FGIC Insured 21 Nuveen Maryland Premium Income Municipal Fund (NMY) (continued) Portfolio of INVESTMENTS May 31, 2005 PRINCIPAL OPTIONAL CALL MARKET AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE - ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/LIMITED - 22.9% (15.6% OF TOTAL INVESTMENTS) Baltimore Board of School Commissioners, Maryland, Revenue Bonds, City Public School System, Series 2003A: $ 1,500 5.000%, 5/01/16 5/13 at 100.00 AA+ $ 1,638,105 1,000 5.000%, 5/01/18 5/13 at 100.00 AA+ 1,089,200 1,725 Howard County, Maryland, Metropolitan District Refunding 2/12 at 100.00 AAA 1,909,920 Bonds, Series 2002A, 5.250%, 8/15/18 900 Hyattsville, Maryland, Special Obligation Bonds, University 7/14 at 102.00 N/R 924,075 Town Center Project, Series 2004, 5.750%, 7/01/34 1,465 Maryland Community Development Administration, 6/08 at 101.00 Aaa 1,547,685 Infrastructure Financing Bonds, Series 1998B, 5.200%, 6/01/28 - MBIA Insured 4,250 Maryland Department of Transportation, County Transportation No Opt. Call AA 4,949,550 Revenue Bonds, Series 2002, 5.500%, 2/01/16 2,000 Maryland Department of Transportation, Consolidated No Opt. Call AA 2,228,940 Transportation Revenue Bonds, Series 2004, 5.000%, 5/01/13 1,875 Maryland Economic Development Corporation, Lease Revenue 6/12 at 100.50 AA+ 2,093,400 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: 875 5.500%, 10/15/19 (Alternative Minimum Tax) 10/10 at 101.00 AA+ 951,773 925 5.500%, 10/15/20 (Alternative Minimum Tax) 10/10 at 101.00 AA+ 1,006,160 1,700 Maryland Stadium Authority, Lease Revenue Bonds, 6/13 at 100.00 AA+ 1,835,252 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 2,529,779 Facilities, Series 1996, 5.750%, 3/01/18 - AMBAC Insured 1,000 Montgomery County, Maryland, Lease Revenue Bonds, 6/12 at 100.00 AA 1,063,040 Metrorail Garage, Series 2002, 5.000%, 6/01/21 675 Montgomery County, Maryland, Special Obligation Bonds, 7/12 at 101.00 AA 731,336 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+ 695,827 Maryland, School System Revenue Bonds, Series 2000, 5.125%, 11/01/15 1,000 Puerto Rico, Highway Revenue Bonds, Highway and 7/16 at 100.00 A 1,117,800 Transportation Authority, Series 1996Y, 5.500%, 7/01/36 1,500 Puerto Rico, Highway Revenue Bonds, Highway and No Opt. Call AAA 1,784,220 Transportation Authority, Series 2003AA, 5.500%, 7/01/19 - MBIA Insured 2,100 Puerto Rico Municipal Finance Agency, Series 2002A, 8/12 at 100.00 AAA 2,308,698 5.250%, 8/01/21 - FSA Insured 2,000 Virgin Islands Public Finance Authority, Gross Receipts Taxes 10/10 at 101.00 BBB 2,279,900 Loan Note, Series 1999A, 6.500%, 10/01/24 Washington Suburban Sanitary District, Montgomery and Prince George's Counties, Maryland, Sewerage Disposal Bonds, Series 2005: 1,235 5.000%, 6/01/23 6/15 at 100.00 AAA 1,349,275 1,235 5.000%, 6/01/24 6/15 at 100.00 AAA 1,346,076 1,235 5.000%, 6/01/25 6/15 at 100.00 AAA 1,341,803 - ------------------------------------------------------------------------------------------------------------------------------------ TRANSPORTATION - 4.3% (3.0% OF TOTAL INVESTMENTS) 1,060 Baltimore, Maryland, Revenue Refunding Bonds, Parking No Opt. Call AAA 1,207,234 System Facilities, Series 1998A, 5.250%, 7/01/17 - FGIC Insured Maryland Health and Higher Educational Facilities Authority, Parking Facilities Revenue Bonds, Johns Hopkins Medical Institution, Series 2004B: 355 5.000%, 7/01/13 - AMBAC Insured No Opt. Call AAA 393,649 380 5.000%, 7/01/14 - AMBAC Insured No Opt. Call AAA 423,233 2,075 Puerto Rico Ports Authority, Special Facilities Revenue 6/06 at 102.00 CCC 1,610,532 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 3,317,250 Gross Revenue Bonds, Series 2003, 5.000%, 1/01/12 - MBIA Insured 22 PRINCIPAL OPTIONAL CALL MARKET AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE - ------------------------------------------------------------------------------------------------------------------------------------ U.S. GUARANTEED *** - 18.4% (12.5% OF TOTAL INVESTMENTS) $ 2,500 Baltimore County, Maryland, General Obligation Consolidated 8/12 at 100.00 AAA $ 2,776,250 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 2,182,580 Projects, Series 1998A, 5.000%, 7/01/28 - FGIC Insured 2,000 Baltimore, Maryland, Revenue Refunding Bonds, Water No Opt. Call AAA 2,263,680 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 1,678,695 Wastewater Projects, Series 2000A, 5.625%, 7/01/30 (Pre-refunded to 7/01/10) - FSA Insured 745 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 7/10 at 100.00 AAA 791,101 Asset-Backed Bonds, Series 2000, 5.750%, 7/01/20 (Pre-refunded to 7/01/10) 3,000 Frederick County, Maryland, General Obligation Public Facilities 7/09 at 101.00 AAA 3,285,900 Bonds, Series 1999, 5.250%, 7/01/18 (Pre-refunded to 7/01/09) 2,550 Gaithersburg, Maryland, Hospital Facilities Refunding and No Opt. Call AAA 2,940,813 Improvement Revenue Bonds, Shady Grove Adventist Hospital, Series 1995, 6.500%, 9/01/12 - FSA Insured 575 Howard County, Maryland, Consolidated Public Improvement 2/12 at 100.00 AAA 644,495 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 1,910,731 1,000 5.000%, 8/15/22 (Pre-refunded to 8/15/12) 8/12 at 100.00 AAA 1,110,890 145 Howard County, Maryland, Metropolitan District Refunding 2/12 at 100.00 AAA 162,525 Bonds, Series 2002A, 5.250%, 8/15/18 (Pre-refunded to 2/15/12) 1,875 Maryland Health and Higher Educational Facilities Authority, 7/05 at 100.00 AAA 1,901,719 Revenue Bonds, Good Samaritan Hospital, Series 1993, 5.750%, 7/01/19 (Pre-refunded to 7/01/05) - AMBAC Insured 3,125 Maryland Health and Higher Educational Facilities Authority, 7/05 at 100.00 Aaa 3,294,656 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 3,476,746 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 1,114,350 Obligation Bonds, Series 2000A, 5.500%, 10/01/20 - ------------------------------------------------------------------------------------------------------------------------------------ UTILITIES - 8.9% (6.1% OF TOTAL INVESTMENTS) 6,500 Calvert County, Maryland, Pollution Control Revenue Refunding 7/05 at 101.00 A2 6,668,090 Bonds, Baltimore Gas and Electric Company Project, Series 1993, 5.550%, 7/15/14 2,500 Maryland Energy Financing Administration, Revenue Bonds, 9/05 at 102.00 N/R 2,555,222 AES Warrior Run Project, Series 1995, 7.400%, 9/01/19 (Alternative Minimum Tax) 5,000 Prince George's County, Maryland, Pollution Control Revenue No Opt. Call A- 5,133,000 Refunding Bonds, Potomac Electric Power Company, Series 1993, 6.375%, 1/15/23 23 Nuveen Maryland Premium Income Municipal Fund (NMY) (continued) Portfolio of INVESTMENTS May 31, 2005 PRINCIPAL OPTIONAL CALL MARKET AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE - ------------------------------------------------------------------------------------------------------------------------------------ WATER AND SEWER - 0.7% (0.4% OF TOTAL INVESTMENTS) $ 1,000 Baltimore, Maryland, Revenue Refunding Bonds, Water System No Opt. Call AAA $ 1,126,105 Projects, Series 1994A, 5.000%, 7/01/24 - FGIC Insured - ------------------------------------------------------------------------------------------------------------------------------------ $ 219,850 Total Long-Term Investments (cost $223,436,181) - 146.8% 235,581,813 =============----------------------------------------------------------------------------------------------------------------------- Other Assets Less Liabilities - 2.5% 4,014,623 -------------------------------------------------------------------------------------------------------------------- Preferred Shares, at Liquidation Value - (49.3)% (79,100,000) -------------------------------------------------------------------------------------------------------------------- Net Assets Applicable to Common Shares - 100% $ 160,496,436 ====================================================================================================================
(1) All percentages shown in the Portfolio of Investments are based on net assets applicable to Common shares unless otherwise noted. * 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. N/R Investment is not rated. See accompanying notes to financial statements. 24 Nuveen Maryland Dividend Advantage Municipal Fund (NFM) Portfolio of INVESTMENTS May 31, 2005
PRINCIPAL OPTIONAL CALL MARKET AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE - ------------------------------------------------------------------------------------------------------------------------------------ CONSUMER DISCRETIONARY - 0.1% (0.1% OF TOTAL INVESTMENTS) $ 50 Baltimore, Maryland, Pollution Control Revenue Bonds, No Opt. Call Baa3 $ 49,780 General Motors Corporation, Series 1993, 5.350%, 4/01/08 - ------------------------------------------------------------------------------------------------------------------------------------ CONSUMER STAPLES - 2.5% (1.7% OF TOTAL INVESTMENTS) 1,575 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 5/12 at 100.00 BBB 1,593,806 Asset-Backed Refunding Bonds, Series 2002, 5.375%, 5/15/33 - ------------------------------------------------------------------------------------------------------------------------------------ EDUCATION AND CIVIC ORGANIZATIONS - 15.5% (10.5% OF TOTAL INVESTMENTS) 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 494,016 500 5.750%, 9/01/25 3/10 at 101.00 BBB 529,040 645 Hartford County, Maryland, Economic Development Revenue 4/14 at 100.00 A+ 686,822 Bonds, Battelle Memorial Institute, Series 2004, 5.250%, 4/01/34 1,800 Maryland Economic Development Corporation, Student 7/11 at 101.00 A 1,963,476 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 1,080,100 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- 1,571,355 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 660,406 Revenue Bonds, Maryland Institute College of Art, Series 2001, 5.500%, 6/01/32 500 Maryland Health and Higher Educational Facilities Authority, 7/14 at 100.00 A- 522,350 Revenue Bonds, Goucher College, Series 2004, 5.125%, 7/01/34 Puerto Rico Industrial, Tourist, Educational, Medical and Environmental Control Facilities Financing Authority, Higher Education Revenue Bonds, Ana G. Mendez University System, Series 1999: 215 5.375%, 2/01/19 2/09 at 101.00 BBB 223,845 410 5.375%, 2/01/29 2/09 at 101.00 BBB 422,931 University of Maryland, Auxiliary Facility and Tuition Revenue Bonds, Series 2003A: 1,000 5.000%, 4/01/15 4/13 at 100.00 AA 1,096,920 500 5.000%, 4/01/19 4/13 at 100.00 AA 543,475 - ------------------------------------------------------------------------------------------------------------------------------------ HEALTHCARE - 24.5% (16.6% OF TOTAL INVESTMENTS) 2,225 Maryland Health and Higher Educational Facilities Authority, 6/09 at 101.00 A+ 2,379,459 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 1,025,880 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 1,054,560 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 587,642 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- 1,308,213 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- 1,046,790 Revenue Bonds, Mercy Medical Center, Series 2001, 5.625%, 7/01/31 650 Maryland Health and Higher Educational Facilities Authority, 7/11 at 100.00 A+ 667,485 Revenue Bonds, Greater Baltimore Medical Center, Series 2001, 5.000%, 7/01/34 25 Nuveen Maryland Dividend Advantage Municipal Fund (NFM) (continued) Portfolio of INVESTMENTS May 31, 2005 PRINCIPAL OPTIONAL CALL MARKET AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE - ------------------------------------------------------------------------------------------------------------------------------------ HEALTHCARE (continued) $ 2,000 Maryland Health and Higher Educational Facilities Authority, 7/11 at 100.00 A $ 2,088,160 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 1,084,090 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 Baa1 518,570 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 1,045,380 Revenue Bonds, Kennedy Krieger Institute, Series 2003, 5.500%, 7/01/33 700 Maryland Health and Higher Educational Facilities Authority, 8/14 at 100.00 Baa1 739,753 Revenue Bonds, MedStar Health, Series 2004, 5.375%, 8/15/24 585 Maryland Health and Higher Educational Facilities Authority, 7/14 at 100.00 A 611,150 Revenue Bonds, LifeBridge Health System, Series 2004A, 5.125%, 7/01/34 650 Maryland Health and Higher Educational Facilities Authority, 7/14 at 100.00 AA 677,287 Revenue Bonds, Civista Medical Center, Series 2005, 5.000%, 7/01/37 - RAAI Insured Prince George's County, Maryland, Revenue Refunding and Project Bonds, Dimensions Health Corporation, Series 1994: 40 5.375%, 7/01/14 7/05 at 101.00 B3 36,358 700 5.300%, 7/01/24 7/05 at 101.00 B3 593,278 - ------------------------------------------------------------------------------------------------------------------------------------ HOUSING/MULTIFAMILY - 14.9% (10.1% OF TOTAL INVESTMENTS) 750 Baltimore County, Maryland, GNMA Collateralized Revenue 10/08 at 102.00 AAA 770,468 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 2,062,400 Revenue Bonds, Series 1998A, 5.625%, 1/01/40 (Alternative Minimum Tax) 520 Maryland Community Development Administration, 5/11 at 100.00 Aa2 539,583 Multifamily Housing Insured Mortgage Loans, Series 2001B, 5.350%, 5/15/32 (Alternative Minimum Tax) 1,000 Maryland Community Development Administration, 12/11 at 100.00 Aaa 1,040,470 Multifamily 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 768,720 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 2,112,240 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 2,083,460 Maryland, Multifamily Housing Development Bonds, Series 2001A, 5.600%, 7/01/42 (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ HOUSING/SINGLE FAMILY - 6.5% (4.4% OF TOTAL INVESTMENTS) 195 Maryland Community Development Administration, Residential 9/09 at 100.00 Aa2 202,874 Revenue Bonds, Series 1999E, 5.700%, 9/01/17 1,110 Maryland Community Development Administration, Residential 9/10 at 100.00 Aa2 1,138,416 Revenue Bonds, Series 2000H, 5.800%, 9/01/32 (Alternative Minimum Tax) 415 Maryland Community Development Administration, Single 10/10 at 100.00 Aa2 419,673 Family Program Bonds, First Series 2001, 5.000%, 4/01/17 590 Maryland Community Development Administration, Residential 9/10 at 100.00 Aa2 605,830 Revenue Bonds, Series 2001B, 5.450%, 9/01/32 (Alternative Minimum Tax) 1,000 Maryland Community Development Administration, Residential 3/11 at 100.00 Aa2 1,043,630 Revenue Bonds, Series 2001F, 5.600%, 9/01/28 (Alternative Minimum Tax) 690 Prince George's County Housing Authority, Maryland, 8/07 at 102.00 AA 716,413 FHLMC/FNMA/GNMA Collateralized Single Family Mortgage Revenue Bonds, Series 1997A, 5.750%, 8/01/30 (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ INDUSTRIALS - 1.6% (1.1% OF TOTAL INVESTMENTS) 1,000 Northeast Maryland Waste Disposal Authority, Resource 1/09 at 101.00 BBB 1,022,680 Recovery Revenue Bonds, Baltimore RESCO Retrofit Project, Series 1998, 4.750%, 1/01/12 (Alternative Minimum Tax) 26 PRINCIPAL OPTIONAL CALL MARKET AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE - ------------------------------------------------------------------------------------------------------------------------------------ LONG-TERM CARE - 1.4% (0.8% OF TOTAL INVESTMENTS) $ 1,000 Maryland Health and Higher Educational Facilities Authority, 4/11 at 101.00 N/R $ 854,420 Revenue Bonds, Collington Episcopal Life Care Community Inc., Series 2001A, 6.750%, 4/01/23 - ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/GENERAL - 28.0% (18.9% OF TOTAL INVESTMENTS) Anne Arundel County, Maryland, General Obligation Bonds, Various Purpose, Series 2001: 580 4.800%, 2/15/18 2/11 at 101.00 AA+ 614,423 500 5.000%, 2/15/28 2/11 at 101.00 AA+ 528,325 1,000 Anne Arundel County, Maryland, General Obligation Bonds, No Opt. Call AA+ 1,114,060 Series 2003, 5.000%, 3/01/13 3,500 Baltimore County, Maryland, Metropolitan District General 6/11 at 101.00 AAA 3,717,490 Obligation Bonds, 67th Issue, 5.000%, 6/01/27 1,000 Charles County, Maryland, Consolidated General Obligation No Opt. Call AA 1,108,380 Public Improvement Bonds, Series 2005, 5.000%, 3/01/12 1,000 Frederick County, Maryland, General Obligation Public 11/12 at 101.00 AA 1,090,350 Facilities Bonds, Series 2002, 5.000%, 11/01/22 1,360 Howard County, Maryland, Consolidated Public Improvement 2/09 at 101.00 AAA 1,415,121 Bonds, Series 2001A, 4.750%, 2/15/21 1,000 Maryland National Capital Park and Planning Commission, 1/14 at 100.00 AA 1,099,440 Prince George's County, General Obligation Bonds, Park Acquisition and Development, Series 2004EE-2, 5.000%, 1/15/17 1,000 Montgomery County, Maryland, General Obligation Refunding No Opt. Call AAA 1,122,230 Bonds, Consolidated Public Improvement, Series 2002A, 5.250%, 11/01/11 700 Montgomery County, Maryland, General Obligation Bonds, No Opt. Call AAA 781,781 Consolidated Public Improvement, Series 2004A, 5.000%, 4/01/13 430 Northern Mariana Islands, General Obligation Bonds, 6/10 at 100.00 A 460,281 Series 2000A, 6.000%, 6/01/20 - ACA Insured 740 Ocean City, Maryland, General Obligation Bonds, Series 2001, 3/11 at 101.00 AAA 783,712 4.875%, 3/01/19 - FGIC Insured 1,500 Prince George's County, Maryland, General Obligation 12/11 at 101.00 AAA 1,647,150 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 1,093,190 Consolidated Public Improvement Bonds, Series 2003A, 5.000%, 10/01/17 900 Prince George's County, Maryland, General Obligation No Opt. Call AA 997,344 Consolidated Public Improvement Bonds, Series 2004C, 5.000%, 12/01/11 - ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/LIMITED - 24.9% (16.8% OF TOTAL INVESTMENTS) 625 Annapolis, Maryland, Special Obligation Bonds, Park Place 1/15 at 101.00 N/R 634,819 Project, Series 2005A, 5.350%, 7/01/34 745 Anne Arundel County, Maryland, Tax Increment Financing No Opt. Call N/R 752,711 Revenue Bonds, Parole Town Center Project, Series 2002, 5.000%, 7/01/12 500 Baltimore Board of School Commissioners, Maryland, Revenue 5/13 at 100.00 AA+ 544,600 Bonds, City Public School System, Series 2003A, 5.000%, 5/01/18 350 Hyattsville, Maryland, Special Obligation Bonds, University 7/14 at 102.00 N/R 359,363 Town Center Project, Series 2004, 5.750%, 7/01/34 1,500 Maryland Department of Transportation, County Transportation No Opt. Call AA 1,746,900 Revenue Bonds, Series 2002, 5.500%, 2/01/16 1,000 Maryland Department of Transportation, Consolidated No Opt. Call AA 1,114,470 Transportation Revenue Bonds, Series 2004, 5.000%, 5/01/13 1,405 Maryland Economic Development Corporation, Lease Revenue 6/12 at 100.50 AA+ 1,568,654 Bonds, Department of Transportation Headquarters Building, Series 2002, 5.375%, 6/01/19 370 Maryland Economic Development Corporation, Lease Revenue 9/12 at 100.00 AA+ 408,495 Bonds, Montgomery County Town Square Parking Garage, Series 2002A, 5.000%, 9/15/13 740 Prince George's County, Maryland, Lease Revenue Bonds, 6/13 at 100.00 AAA 816,176 Upper Marlboro Justice Center, Series 2003A, 5.000%, 6/30/14 - MBIA Insured 700 Puerto Rico, Highway Revenue Bonds, Highway and No Opt. Call AAA 832,636 Transportation Authority, Series 2003AA, 5.500%, 7/01/19 - MBIA Insured 1,290 Virgin Islands Public Finance Authority, Gross Receipts 10/10 at 101.00 BBB 1,473,232 Taxes Loan Note, Series 1999A, 6.375%, 10/01/19 27 Nuveen Maryland Dividend Advantage Municipal Fund (NFM) (continued) Portfolio of INVESTMENTS May 31, 2005 PRINCIPAL OPTIONAL CALL MARKET AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE - ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/LIMITED (continued) 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 $ 952,137 935 5.000%, 6/01/23 6/11 at 100.00 AAA 994,690 985 5.000%, 6/01/24 6/11 at 100.00 AAA 1,047,882 1,035 5.000%, 6/01/25 6/11 at 100.00 AAA 1,097,090 1,290 Washington Suburban Sanitary District, Montgomery and 6/11 at 100.00 AAA 1,347,805 Prince George's Counties, Maryland, Water Supply Bonds, Series 2001, 4.750%, 6/01/20 - ------------------------------------------------------------------------------------------------------------------------------------ TRANSPORTATION - 3.3% (2.3% OF TOTAL INVESTMENTS) 650 Maryland Health and Higher Educational Facilities Authority, 7/11 at 100.00 AAA 682,799 Parking Facilities Revenue Bonds, Johns Hopkins Hospital, Series 2001, 5.000%, 7/01/27 - AMBAC Insured Maryland Health and Higher Educational Facilities Authority, Parking Facilities Revenue Bonds, Johns Hopkins Medical Institution, Series 2004B: 150 5.000%, 7/01/13 - AMBAC Insured No Opt. Call AAA 166,331 135 5.000%, 7/01/14 - AMBAC Insured No Opt. Call AAA 150,359 1,000 District of Columbia Metropolitan Area Transit Authority, No Opt. Call AAA 1,105,750 Gross Revenue Bonds, Series 2003, 5.000%, 1/01/12 - MBIA Insured - ------------------------------------------------------------------------------------------------------------------------------------ U.S. GUARANTEED *** - 23.0% (15.6% OF TOTAL INVESTMENTS) 500 Anne Arundel County, Maryland, Special Obligation Bonds, 7/09 at 102.00 AAA 586,330 Arundel Mills Project, Series 1999, 7.100%, 7/01/29 (Pre-refunded to 7/01/09) 1,500 Baltimore County, Maryland, General Obligation Consolidated 8/12 at 100.00 AAA 1,665,750 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 1,107,659 Projects, Series 1998A, 5.000%, 7/01/28 - FGIC Insured 1,865 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 7/10 at 100.00 AAA 1,980,406 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 1,308,108 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 555,445 Refunding Bonds, Series 2003A, 5.000%, 8/15/15 (Pre-refunded to 8/15/12) 950 Maryland Transportation Authority, Revenue Refunding Bonds, No Opt. Call AAA 1,119,775 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 2,534,531 1,700 5.500%, 10/01/40 10/10 at 101.00 AAA 1,864,403 1,800 Puerto Rico Electric Power Authority, Power Revenue Refunding 7/05 at 100.00 A-*** 1,803,690 Bonds, Series 1995Z, 5.250%, 7/01/21 (Pre-refunded to 7/01/05) 28 PRINCIPAL OPTIONAL CALL MARKET AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE - ------------------------------------------------------------------------------------------------------------------------------------ UTILITIES - 1.6% (1.1% OF TOTAL INVESTMENTS) $ 1,000 Maryland Energy Financing Administration, Revenue Bonds, 9/05 at 102.00 N/R $ 1,022,090 AES Warrior Run Project, Series 1995, 7.400%, 9/01/19 (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ $ 87,535 Total Long-Term Investments (cost $88,962,873) - 147.8% 93,202,017 =============----------------------------------------------------------------------------------------------------------------------- Other Assets Less Liabilities - 3.0% 1,849,477 -------------------------------------------------------------------------------------------------------------------- Preferred Shares, at Liquidation Value - (50.8)% (32,000,000) -------------------------------------------------------------------------------------------------------------------- Net Assets Applicable to Common Shares - 100% $ 63,051,494 ====================================================================================================================
FORWARD SWAPS OUTSTANDING AT MAY 31, 2005: UNREALIZED EFFECTIVE TERMINATION APPRECIATION NOTIONAL AMOUNT DATE(2) DATE (DEPRECIATION) - ------------------------------------------------------------------------------------------------------------------------------------ Agreement with Goldman Sachs dated December 6, 2004, to pay semi-annually the notional amount multiplied by 5.324% (annualized) and receive quarterly the notional amount multiplied by the three-month USD-LIBOR (United States Dollar-London Inter-Bank Offered Rates). $100,000 7/11/05 7/11/25 $ (8,000) Agreement with JPMorgan dated January 11, 2005, to pay semi-annually the notional amount multiplied by 5.235% (annualized) and receive quarterly the notional amount multiplied by the three-month USD-LIBOR (United States Dollar-London Inter-Bank Offered Rates). 850,000 8/17/05 8/17/25 (56,747) - ------------------------------------------------------------------------------------------------------------------------------------ $(64,747) - ------------------------------------------------------------------------------------------------------------------------------------
(1) All percentages shown in the Portfolio of Investments are based on net assets applicable to Common shares unless otherwise noted. (2) Effective date represents the date on which both the Fund and counterparty commence interest payment accruals on each forward swap contract. * 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. 29 Nuveen Maryland Dividend Advantage Municipal Fund 2 (NZR) Portfolio of INVESTMENTS May 31, 2005
PRINCIPAL OPTIONAL CALL MARKET AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE - ------------------------------------------------------------------------------------------------------------------------------------ CONSUMER DISCRETIONARY - 0.1% (0.1% OF TOTAL INVESTMENTS) $ 75 Baltimore, Maryland, Pollution Control Revenue Bonds, General No Opt. Call Baa3 $ 74,669 Motors Corporation, Series 1993, 5.350%, 4/01/08 - ------------------------------------------------------------------------------------------------------------------------------------ CONSUMER STAPLES - 2.4% (1.6% OF TOTAL INVESTMENTS) 790 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 5/12 at 100.00 BBB 799,433 Asset-Backed Refunding Bonds, Series 2002, 5.375%, 5/15/33 800 Virgin Islands Tobacco Settlement Financing Corporation, 5/11 at 100.00 Baa3 764,720 Asset-Backed Bonds, Series 2001, 5.000%, 5/15/31 - ------------------------------------------------------------------------------------------------------------------------------------ EDUCATION AND CIVIC ORGANIZATIONS - 18.2% (12.3% OF TOTAL INVESTMENTS) 1,100 Anne Arundel County, Maryland, Economic Development 9/12 at 102.00 A3 1,180,740 Revenue Bonds, Community College Project, Series 2002, 5.125%, 9/01/22 Frederick County, Maryland, Educational Facilities Revenue Bonds, Mount St. Mary's College, Series 2001A: 100 5.750%, 9/01/25 3/10 at 101.00 BBB 105,808 100 5.800%, 9/01/30 3/10 at 101.00 BBB 105,993 645 Hartford County, Maryland, Economic Development Revenue 4/14 at 100.00 A+ 686,822 Bonds, Battelle Memorial Institute, Series 2004, 5.250%, 4/01/34 1,000 Maryland Economic Development Corporation, Student 10/13 at 100.00 Baa3 1,065,230 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- 261,893 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 444,150 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 1,077,430 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 1,320,813 Revenue Bonds, Maryland Institute College of Art, Series 2001, 5.500%, 6/01/32 500 Maryland Health and Higher Educational Facilities Authority, 7/14 at 100.00 A- 522,350 Revenue Bonds, Goucher College, Series 2004, 5.125%, 7/01/34 500 Morgan State University, Maryland, Student Tuition and 7/12 at 100.00 AAA 530,195 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 Fee 7/13 at 100.00 AAA 545,405 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 1,630,813 1,140 4.500%, 4/01/19 4/11 at 100.00 AA 1,173,231 1,000 University of Maryland, Auxiliary Facility and Tuition Revenue 4/13 at 100.00 AA 1,086,950 Bonds, Series 2003A, 5.000%, 4/01/19 - ------------------------------------------------------------------------------------------------------------------------------------ HEALTHCARE - 21.4% (14.5% OF TOTAL INVESTMENTS) 1,000 Maryland Health and Higher Educational Facilities Authority, 7/08 at 101.00 AAA 1,054,560 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- 1,570,185 Revenue Bonds, Mercy Medical Center, Series 2001, 5.625%, 7/01/31 650 Maryland Health and Higher Educational Facilities Authority, 7/11 at 100.00 A+ 667,485 Revenue Bonds, Greater Baltimore Medical Center, Series 2001, 5.000%, 7/01/34 30 PRINCIPAL OPTIONAL CALL MARKET AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE - ------------------------------------------------------------------------------------------------------------------------------------ HEALTHCARE (continued) $ 2,000 Maryland Health and Higher Educational Facilities Authority, 7/11 at 100.00 A $ 2,088,160 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 1,084,090 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 Baa1 518,570 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 1,045,380 Revenue Bonds, Kennedy Krieger Institute, Series 2003, 5.500%, 7/01/33 700 Maryland Health and Higher Educational Facilities Authority, 8/14 at 100.00 Baa1 739,753 Revenue Bonds, MedStar Health, Series 2004, 5.375%, 8/15/24 525 Maryland Health and Higher Educational Facilities Authority, 7/14 at 100.00 A 548,468 Revenue Bonds, LifeBridge Health System, Series 2004A, 5.125%, 7/01/34 775 Maryland Health and Higher Educational Facilities Authority, 7/14 at 100.00 A2 825,034 Revenue Bonds, Calvert Memorial Hospital, Series 2004, 5.500%, 7/01/36 650 Maryland Health and Higher Educational Facilities Authority, 7/14 at 100.00 AA 677,287 Revenue Bonds, Civista Medical Center, Series 2005, 5.000%, 7/01/37 - RAAI Insured 2,160 Montgomery County, Maryland, Economic Development 12/11 at 100.00 AA- 2,277,655 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 7/05 at 101.00 B3 90,896 700 5.300%, 7/01/24 7/05 at 101.00 B3 593,278 - ------------------------------------------------------------------------------------------------------------------------------------ HOUSING/MULTIFAMILY - 11.8% (8.0% OF TOTAL INVESTMENTS) 55 Maryland Community Development Administration, Multifamily 5/11 at 100.00 Aa2 56,498 Housing Insured Mortgage Loans, Series 2001A, 5.100%, 5/15/28 2,595 Maryland Community Development Administration, Multifamily 5/11 at 100.00 Aa2 2,692,728 Housing Insured Mortgage Loans, Series 2001B, 5.350%, 5/15/32 (Alternative Minimum Tax) 1,110 Maryland Community Development Administration, Multifamily 12/11 at 100.00 Aaa 1,154,922 Housing Revenue Bonds, Princess Anne Apartments, Series 2001D, 5.450%, 12/15/33 (Alternative Minimum Tax) 3,145 Maryland Community Development Administration, Multifamily 12/11 at 100.00 Aaa 3,272,278 Development Revenue Bonds, Waters Towers Senior Apartments, Series 2001F, 5.450%, 12/15/33 (Alternative Minimum Tax) 435 Maryland Community Development Administration, Multifamily 5/12 at 100.00 Aa2 458,655 Housing Insured Mortgage Revenue Bonds, Series 2002A, 5.300%, 5/15/22 - ------------------------------------------------------------------------------------------------------------------------------------ HOUSING/SINGLE FAMILY - 2.3% (1.6% OF TOTAL INVESTMENTS) 500 Maryland Community Development Administration, Residential 3/07 at 101.50 Aa2 516,845 Revenue Bonds, Series 1997B, 5.875%, 9/01/25 (Alternative Minimum Tax) 945 Maryland Community Development Administration, Residential 9/10 at 100.00 Aa2 970,165 Revenue Bonds, Series 2001H, 5.350%, 9/01/32 (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ INDUSTRIALS - 1.8% (1.2% OF TOTAL INVESTMENTS) 1,150 Northeast Maryland Waste Disposal Authority, Resource 1/09 at 101.00 BBB 1,176,082 Recovery Revenue Bonds, Baltimore RESCO Retrofit Project, Series 1998, 4.750%, 1/01/12 (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ LONG-TERM CARE - 0.4% (0.3% OF TOTAL INVESTMENTS) Maryland Health and Higher Educational Facilities Authority, Revenue Bonds, Collington Episcopal Life Care Community Inc., Series 2001A: 31 6.750%, 4/01/20 4/09 at 100.00 N/R 26,740 25 6.750%, 4/01/23 4/11 at 101.00 N/R 21,360 5 Maryland Health and Higher Educational Facilities Authority, No Opt. Call N/R 4,310 Revenue Bonds, Collington Episcopal Life Care Community Inc., Series 2001B, 6.400%, 4/01/23 (Mandatory put 4/01/07) 31 Nuveen Maryland Dividend Advantage Municipal Fund 2 (NZR) (continued) Portfolio of INVESTMENTS May 31, 2005 PRINCIPAL OPTIONAL CALL MARKET AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE - ------------------------------------------------------------------------------------------------------------------------------------ LONG-TERM CARE (continued) Prince George's County, Maryland, Revenue Bonds, Collington Episcopal Life Care Community Inc., Series 1994A: $ 20 5.625%, 4/01/09 4/06 at 100.00 N/R $ 17,092 175 6.000%, 4/01/13 10/05 at 101.00 N/R 151,856 35 Prince George's County, Maryland, Revenue Bonds, Collington No Opt. Call N/R 34,335 Episcopal Life Care Community Inc., Series 1994B, 8.000%, 4/01/16 (Optional put 4/01/06) - ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/GENERAL - 37.9% (25.6% OF TOTAL INVESTMENTS) 1,000 Anne Arundel County, Maryland, General Obligation Bonds, No Opt. Call AA+ 1,114,060 Series 2003, 5.000%, 3/01/13 750 Baltimore, Maryland, General Obligation Bonds, Consolidated 10/14 at 100.00 AAA 817,598 Public Improvement, Series 2004A, 5.000%, 10/15/22 - AMBAC Insured Cecil County, Maryland, General Obligation Bonds, Consolidated Public Improvement, Series 2001B: 975 4.600%, 8/01/18 8/11 at 101.00 AA- 1,020,542 1,020 4.600%, 8/01/19 8/11 at 101.00 AA- 1,063,656 1,000 Frederick County, Maryland, General Obligation Public Facilities 11/12 at 101.00 AA 1,093,280 Bonds, Series 2002, 5.000%, 11/01/20 510 Frederick, Maryland, General Obligation Refunding and 12/11 at 101.00 AA- 538,795 Improvement Bonds, Series 2001, 4.750%, 12/01/19 1,000 Howard County, Maryland, Consolidated Public Improvement 2/14 at 100.00 AAA 1,106,540 Bonds, Series 2004B, 5.000%, 8/15/16 Maryland, General Obligation Bonds, State and Local Facilities Loan, First Series 2001: 2,445 5.500%, 3/01/11 No Opt. Call AAA 2,755,735 1,500 5.500%, 3/01/12 No Opt. Call AAA 1,709,730 4,730 Montgomery County, Maryland, General Obligation Refunding 10/11 at 101.00 AAA 5,238,570 Bonds, Consolidated Public Improvement, Series 2001, 5.250%, 10/01/18 1,000 Montgomery County, Maryland, General Obligation Refunding No Opt. Call AAA 1,122,230 Bonds, Consolidated Public Improvement, Series 2002A, 5.250%, 11/01/11 800 Montgomery County, Maryland, General Obligation Bonds, No Opt. Call AAA 893,464 Consolidated Public Improvement, Series 2004A, 5.000%, 4/01/13 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 1,098,100 2,820 5.250%, 12/01/21 - FGIC Insured 12/11 at 101.00 AAA 3,096,642 800 Prince George's County, Maryland, General Obligation No Opt. Call AA 886,528 Consolidated Public Improvement Bonds, Series 2004C, 5.000%, 12/01/11 770 Puerto Rico, General Obligation and Public Improvement Bonds, 7/11 at 100.00 AAA 822,329 Series 2001, 5.000%, 7/01/24 - FSA Insured - ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/LIMITED - 17.8% (12.0% OF TOTAL INVESTMENTS) 625 Annapolis, Maryland, Special Obligation Bonds, Park Place 1/15 at 101.00 N/R 634,819 Project, Series 2005A, 5.350%, 7/01/34 750 Anne Arundel County, Maryland, General Obligation Bonds, 8/09 at 101.00 AA+ 773,648 Consolidated Water and Sewerage, Series 1999, 4.500%, 8/01/19 745 Anne Arundel County, Maryland, Tax Increment Financing No Opt. Call N/R 752,711 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+ 1,681,894 1,660 5.000%, 8/01/21 8/11 at 101.00 AA+ 1,762,372 530 Baltimore Board of School Commissioners, Maryland, Revenue 5/13 at 100.00 AA+ 581,850 Bonds, City Public School System, Series 2003A, 5.000%, 5/01/15 350 Hyattsville, Maryland, Special Obligation Bonds, University 7/14 at 102.00 N/R 359,363 Town Center Project, Series 2004, 5.750%, 7/01/34 1,000 Maryland Department of Transportation, County Transportation No Opt. Call AA 1,164,600 Revenue Bonds, Series 2002, 5.500%, 2/01/16 32 PRINCIPAL OPTIONAL CALL MARKET AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE - ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/LIMITED (continued) $ 1,000 Maryland Department of Transportation, Consolidated No Opt. Call AA $ 1,114,470 Transportation Revenue Bonds, Series 2004, 5.000%, 5/01/13 1,405 Maryland Economic Development Corporation, Lease Revenue 6/12 at 100.50 AA+ 1,568,654 Bonds, Department of Transportation Headquarters Building, Series 2002, 5.375%, 6/01/19 1,000 Montgomery County, Maryland, Special Obligation Bonds, 07/12 at 101.00 AA 1,083,460 West Germantown Development District, Senior Series 2002A, 5.500%, 7/01/27 - RAAI Insured - ------------------------------------------------------------------------------------------------------------------------------------ TRANSPORTATION - 4.9% (3.3% OF TOTAL INVESTMENTS) Maryland Health and Higher Educational Facilities Authority, Parking Facilities Revenue Bonds, Johns Hopkins Hospital, Series 2001: 650 5.000%, 7/01/27 - AMBAC Insured 7/11 at 100.00 AAA 682,799 1,000 5.000%, 7/01/34 - AMBAC Insured 7/11 at 100.00 AAA 1,044,980 Maryland Health and Higher Educational Facilities Authority, Parking Facilities Revenue Bonds, Johns Hopkins Medical Institution, Series 2004B: 155 5.000%, 7/01/13 - AMBAC Insured No Opt. Call AAA 171,875 135 5.000%, 7/01/14 - AMBAC Insured No Opt. Call AAA 150,359 1,000 District of Columbia Metropolitan Area Transit Authority, No Opt. Call AAA 1,105,750 Gross Revenue Bonds, Series 2003, 5.000%, 1/01/12 - MBIA Insured - ------------------------------------------------------------------------------------------------------------------------------------ U.S. GUARANTEED *** - 25.6% (17.3% OF TOTAL INVESTMENTS) 750 Anne Arundel County, Maryland, Special Obligation Bonds, 7/09 at 102.00 AAA 879,495 Arundel Mills Project, Series 1999, 7.100%, 7/01/29 (Pre-refunded to 7/01/09) 1,500 Baltimore County, Maryland, General Obligation Consolidated 8/12 at 100.00 AAA 1,665,750 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 1,131,620 Asset-Backed Bonds, Series 2000, 6.000%, 7/01/26 (Pre-refunded to 7/01/10) 3,000 Frederick County, Maryland, General Obligation Public Facilities 12/10 at 101.00 AAA 3,340,860 Bonds, Series 2000, 5.200%, 12/01/19 (Pre-refunded to 12/01/10) 750 Howard County, Maryland, Consolidated Public Improvement 8/12 at 100.00 AAA 833,168 Refunding Bonds, Series 2003A, 5.000%, 8/15/15 (Pre-refunded to 8/15/12) 1,260 Maryland Health and Higher Educational Facilities Authority, No Opt. Call AAA 1,383,568 Revenue Bonds, Helix Health, Series 1997, 5.000%, 7/01/17 - AMBAC Insured 1,295 Maryland Transportation Authority, Revenue Refunding Bonds, No Opt. Call AAA 1,526,429 Transportation Facilities Projects, First Series 1978, 6.800%, 7/01/16 1,230 Puerto Rico, General Obligation and Public Improvement 7/11 at 100.00 AAA 1,352,542 Bonds, Series 2001, 5.000%, 7/01/24 (Pre-refunded to 7/01/11) - FSA Insured 3,000 Puerto Rico Infrastructure Financing Authority, Special 10/10 at 101.00 AAA 3,290,130 Obligation Bonds, Series 2000A, 5.500%, 10/01/40 1,000 Washington Suburban Sanitary District, Montgomery and 6/08 at 102.00 AAA 1,078,930 Prince George's Counties, Maryland, Water Supply Bonds, Series 1998, 5.000%, 6/01/15 (Pre-refunded to 6/01/08) 33 Nuveen Maryland Dividend Advantage Municipal Fund 2 (NZR) (continued) Portfolio of INVESTMENTS May 31, 2005 PRINCIPAL OPTIONAL CALL MARKET AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE - ------------------------------------------------------------------------------------------------------------------------------------ UTILITIES - 3.2% (2.2% OF TOTAL INVESTMENTS) $ 1,000 Guam Power Authority, Revenue Bonds, Series 1999A, 10/09 at 101.00 AAA $ 1,072,170 5.250%, 10/01/34 - MBIA Insured 1,000 Maryland Energy Financing Administration, Revenue Bonds, 9/05 at 102.00 N/R 1,022,090 AES Warrior Run Project, Series 1995, 7.400%, 9/01/19 (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ $ 88,721 Total Long-Term Investments (cost $90,521,026) - 147.8% 95,299,467 =============----------------------------------------------------------------------------------------------------------------------- Other Assets Less Liabilities - 1.8% 1,200,212 -------------------------------------------------------------------------------------------------------------------- Preferred Shares, at Liquidation Value - (49.6)% (32,000,000) -------------------------------------------------------------------------------------------------------------------- Net Assets Applicable to Common Shares - 100% $ 64,499,679 ====================================================================================================================
FORWARD SWAPS OUTSTANDING AT MAY 31, 2005: UNREALIZED EFFECTIVE TERMINATION APPRECIATION NOTIONAL AMOUNT DATE(2) DATE (DEPRECIATION) - ------------------------------------------------------------------------------------------------------------------------------------ Agreement with Goldman Sachs dated December 6, 2004, to pay semi-annually the notional amount multiplied by 5.324% (annualized) and receive quarterly the notional amount multiplied by the three-month USD-LIBOR (United States Dollar-London Inter-Bank Offered Rates). $ 400,000 7/11/05 7/11/25 $(32,001) Agreement with JPMorgan dated January 11, 2005, to pay semi-annually the notional amount multiplied by 5.235% (annualized) and receive quarterly the notional amount multiplied by the three-month USD-LIBOR (United States Dollar-London Inter-Bank Offered Rates). 1,000,000 8/17/05 8/17/25 (66,761) - ------------------------------------------------------------------------------------------------------------------------------------ $(98,762) - ------------------------------------------------------------------------------------------------------------------------------------
(1) All percentages shown in the Portfolio of Investments are based on net assets applicable to Common shares unless otherwise noted. (2) Effective date represents the date on which both the Fund and counterparty commence interest payment accruals on each forward swap contract. * 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. N/R Investment is not rated. See accompanying notes to financial statements. 34 Nuveen Maryland Dividend Advantage Municipal Fund 3 (NWI) Portfolio of INVESTMENTS May 31, 2005
PRINCIPAL OPTIONAL CALL MARKET AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE - ------------------------------------------------------------------------------------------------------------------------------------ CONSUMER DISCRETIONARY - 0.1% (0.2% OF TOTAL INVESTMENTS) $ 75 Baltimore, Maryland, Pollution Control Revenue Bonds, General No Opt. Call Baa3 $ 74,669 Motors Corporation, Series 1993, 5.350%, 4/01/08 - ------------------------------------------------------------------------------------------------------------------------------------ CONSUMER STAPLES - 3.5% (2.4% OF TOTAL INVESTMENTS) 2,750 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 5/12 at 100.00 BBB 2,782,835 Asset-Backed Refunding Bonds, Series 2002, 5.375%, 5/15/33 - ------------------------------------------------------------------------------------------------------------------------------------ EDUCATION AND CIVIC ORGANIZATIONS - 15.0% (10.2% OF TOTAL INVESTMENTS) 225 Anne Arundel County, Maryland, Economic Development 9/12 at 102.00 A3 241,515 Revenue Bonds, Community College Project, Series 2002, 5.125%, 9/01/22 Frederick County, Maryland, Educational Facilities Revenue Bonds, Mount St. Mary's College, Series 2001A: 100 5.750%, 9/01/25 3/10 at 101.00 BBB 105,808 100 5.800%, 9/01/30 3/10 at 101.00 BBB 105,993 690 Hartford County, Maryland, Economic Development Revenue 4/14 at 100.00 A+ 734,740 Bonds, Battelle Memorial Institute, Series 2004, 5.250%, 4/01/34 Maryland Economic Development Corporation, Student Housing Revenue Bonds, Sheppard Pratt University Village, Series 2001: 20 5.875%, 7/01/21 - ACA Insured 7/11 at 101.00 A 21,751 150 6.000%, 7/01/33 - ACA Insured 7/11 at 101.00 A 163,623 1,250 Maryland Economic Development Corporation, Student Housing 10/13 at 100.00 Baa3 1,331,538 Revenue Bonds, University of Maryland - Baltimore, Series 2003A, 5.625%, 10/01/23 1,000 Maryland Health and Higher Educational Facilities Authority, 7/12 at 100.00 AA 1,048,850 Revenue Bonds, Johns Hopkins University, Series 2002A, 5.000%, 7/01/32 625 Maryland Health and Higher Educational Facilities Authority, 7/14 at 100.00 A- 652,938 Revenue Bonds, Goucher College, Series 2004, 5.125%, 7/01/34 1,000 Morgan State University, Maryland, Student Tuition and Fee 7/13 at 100.00 AAA 1,063,840 Revenue Bonds, Academic Fees and Auxiliary Facilities, Series 2003A, 5.000%, 7/01/32 - FGIC Insured 985 University of Maryland, Auxiliary Facility and Tuition Revenue 4/11 at 100.00 AA 1,015,407 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 1,075,440 2,000 5.125%, 4/01/22 4/12 at 100.00 AA 2,150,580 University of Maryland, Auxiliary Facility and Tuition Revenue Bonds, Series 2003A: 1,000 5.000%, 4/01/15 4/13 at 100.00 AA 1,096,920 1,000 5.000%, 4/01/19 4/13 at 100.00 AA 1,086,950 - ------------------------------------------------------------------------------------------------------------------------------------ HEALTHCARE - 17.1% (11.7% OF TOTAL INVESTMENTS) 1,000 Maryland Health and Higher Educational Facilities Authority, 7/08 at 101.00 AAA 1,054,560 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- 1,046,570 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- 680,414 Revenue Bonds, Mercy Medical Center, Series 2001, 5.625%, 7/01/31 800 Maryland Health and Higher Educational Facilities Authority, 7/11 at 100.00 A+ 821,520 Revenue Bonds, Greater Baltimore Medical Center, Series 2001, 5.000%, 7/01/34 1,250 Maryland Health and Higher Educational Facilities Authority, 7/12 at 100.00 Baa1 1,330,350 Revenue Bonds, Carroll County General Hospital, Series 2002, 5.800%, 7/01/32 35 Nuveen Maryland Dividend Advantage Municipal Fund 3 (NWI) (continued) Portfolio of INVESTMENTS May 31, 2005 PRINCIPAL OPTIONAL CALL MARKET AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE - ------------------------------------------------------------------------------------------------------------------------------------ HEALTHCARE (continued) $ 700 Maryland Health and Higher Educational Facilities Authority, 7/12 at 100.00 Baa1 $ 725,998 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 1,975,977 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 837,744 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 1,045,380 Revenue Bonds, Kennedy Krieger Institute, Series 2003, 5.500%, 7/01/33 900 Maryland Health and Higher Educational Facilities Authority, 8/14 at 100.00 Baa1 951,111 Revenue Bonds, MedStar Health, Series 2004, 5.375%, 8/15/24 725 Maryland Health and Higher Educational Facilities Authority, 7/14 at 100.00 A 757,408 Revenue Bonds, LifeBridge Health System, Series 2004A, 5.125%, 7/01/34 775 Maryland Health and Higher Educational Facilities Authority, 7/14 at 100.00 A2 825,034 Revenue Bonds, Calvert Memorial Hospital, Series 2004, 5.500%, 7/01/36 770 Maryland Health and Higher Educational Facilities Authority, 7/14 at 100.00 AA 802,325 Revenue Bonds, Civista Medical Center, Series 2005, 5.000%, 7/01/37 - RAAI Insured 900 Prince George's County, Maryland, Revenue Refunding and 7/05 at 101.00 B3 762,786 Project Bonds, Dimensions Health Corporation, Series 1994, 5.300%, 7/01/24 - ------------------------------------------------------------------------------------------------------------------------------------ HOUSING/MULTIFAMILY - 12.0% (8.2% OF TOTAL INVESTMENTS) 980 Maryland Community Development Administration, Housing 7/12 at 100.00 Aa2 991,339 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 525,434 3,000 5.200%, 7/01/44 (Alternative Minimum Tax) 7/12 at 100.00 Aaa 3,060,930 4,860 Prince George's County Housing Authority, Maryland, GNMA 11/12 at 100.00 AAA 4,986,117 Collateralized Mortgage Revenue Bonds, Fairview and Hillside Projects, Series 2002A, 4.700%, 11/20/22 - ------------------------------------------------------------------------------------------------------------------------------------ INDUSTRIALS - 1.3% (0.9% OF TOTAL INVESTMENTS) 1,000 Northeast Maryland Waste Disposal Authority, Resource 1/09 at 101.00 BBB 1,022,680 Recovery Revenue Bonds, Baltimore RESCO Retrofit Project, Series 1998, 4.750%, 1/01/12 (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ LONG-TERM CARE - 0.4% (0.3% OF TOTAL INVESTMENTS) 280 Maryland Health and Higher Educational Facilities Authority, 4/11 at 101.00 N/R 239,238 Revenue Bonds, Collington Episcopal Life Care Community Inc., Series 2001A, 6.750%, 4/01/23 Prince George's County, Maryland, Revenue Bonds, Collington Episcopal Life Care Community Inc., Series 1994A: 40 5.625%, 4/01/09 4/06 at 100.00 N/R 34,184 35 6.000%, 4/01/13 10/05 at 101.00 N/R 30,371 23 Prince George's County, Maryland, Revenue Bonds, Collington No Opt. Call N/R 22,563 Episcopal Life Care Community Inc., Series 1994B, 8.000%, 4/01/16 (Optional put 4/01/06) - ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/GENERAL - 27.3% (18.7% OF TOTAL INVESTMENTS) 1,000 Annapolis, Maryland, General Obligation Public Improvement 4/12 at 101.00 AA 1,044,770 Refunding Bonds, Series 2002, 4.375%, 4/01/17 1,000 Anne Arundel County, Maryland, General Obligation Bonds, No Opt. Call AA+ 1,114,060 Series 2003, 5.000%, 3/01/13 1,000 Calvert County, Maryland, General Obligation Public 1/12 at 101.00 AA 1,056,900 Improvement Bonds, Series 2002, 4.500%, 1/01/16 1,260 Charles County, Maryland, Consolidated General Obligation 1/12 at 101.00 AA 1,326,163 Public Improvement Bonds, Series 2002, 4.400%, 1/15/16 36 PRINCIPAL OPTIONAL CALL MARKET AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE - ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/GENERAL (continued) $ Frederick County, Maryland, General Obligation Public Facilities Bonds, Series 2002: 1,830 5.000%, 11/01/20 11/12 at 101.00 AA $ 2,000,702 2,035 5.000%, 11/01/21 11/12 at 101.00 AA 2,224,825 2,500 5.000%, 11/01/22 11/12 at 101.00 AA 2,725,875 245 Frederick County, Maryland, Special Obligation Bonds, 7/10 at 102.00 AA 269,909 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 1,099,440 Prince George's County, General Obligation Bonds, Park Acquisition and Development, Series 2004EE-2, 5.000%, 1/15/17 1,000 Maryland, General Obligation Bonds, State and Local No Opt. Call AAA 1,098,170 Facilities Loan, Series 2002B, 5.250%, 2/01/10 2,000 Montgomery County, Maryland, General Obligation Bonds, 2/12 at 101.00 AAA 2,171,640 Consolidated Public Improvement, Series 2002A, 5.000%, 2/01/20 1,000 Montgomery County, Maryland, General Obligation Refunding No Opt. Call AAA 1,122,230 Bonds, Consolidated Public Improvement, Series 2002A, 5.250%, 11/01/11 1,000 Montgomery County, Maryland, General Obligation Bonds, No Opt. Call AAA 1,116,830 Consolidated Public Improvement, Series 2004A, 5.000%, 4/01/13 1,000 Prince George's County, Maryland, General Obligation 10/13 at 100.00 AA 1,093,190 Consolidated Public Improvement Bonds, Series 2003A, 5.000%, 10/01/17 1,000 Prince George's County, Maryland, General Obligation No Opt. Call AA 1,108,160 Consolidated Public Improvement Bonds, Series 2004C, 5.000%, 12/01/11 1,000 St. Mary's County, Maryland, General Obligation Hospital No Opt. Call AA- 1,110,920 Bonds, Series 2002, 5.000%, 10/01/12 - ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/LIMITED - 37.1% (25.3% OF TOTAL INVESTMENTS) 750 Annapolis, Maryland, Special Obligation Bonds, Park Place 1/15 at 101.00 N/R 761,783 Project, Series 2005A, 5.350%, 7/01/34 1,000 Baltimore Board of School Commissioners, Maryland, Revenue 5/13 at 100.00 AA+ 1,097,830 Bonds, City Public School System, Series 2003A, 5.000%, 5/01/15 450 Hyattsville, Maryland, Special Obligation Bonds, University 7/14 at 102.00 N/R 462,038 Town Center Project, Series 2004, 5.750%, 7/01/34 5,000 Maryland Department of Transportation, County Transportation No Opt. Call AA 5,823,000 Revenue Bonds, Series 2002, 5.500%, 2/01/16 1,000 Maryland Department of Transportation, Consolidated No Opt. Call AA 1,114,470 Transportation Revenue Bonds, Series 2004, 5.000%, 5/01/13 2,200 Maryland Economic Development Corporation, Lease 6/12 at 100.50 AA+ 2,289,760 Revenue Bonds, Department of Transportation Headquarters Building, Series 2002, 4.750%, 6/01/22 450 Maryland Economic Development Corporation, Lease 9/12 at 100.00 AA+ 496,818 Revenue Bonds, Montgomery County Town Square Parking Garage, Series 2002A, 5.000%, 9/15/13 2,935 Maryland Economic Development Corporation, Lease 9/12 at 100.00 AA+ 3,261,754 Revenue 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+ 1,593,920 1,620 5.000%, 6/15/23 6/13 at 100.00 AA+ 1,752,970 700 Puerto Rico, Highway Revenue Bonds, Highway and No Opt. Call AAA 832,636 Transportation Authority, Series 2003AA, 5.500%, 7/01/19 - MBIA Insured 3,500 Puerto Rico Infrastructure Financing Authority, Special Tax 1/08 at 101.00 AAA 3,656,065 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 BBB 1,080,250 1,205 5.250%, 7/01/20 7/12 at 100.00 BBB 1,294,760 1,275 5.250%, 7/01/21 7/12 at 100.00 BBB 1,366,736 1,000 Puerto Rico Public Finance Corporation, Commonwealth No Opt. Call AAA 1,145,120 Appropriation Bonds, Series 1998A, 5.125%, 6/01/24 - AMBAC Insured 37 Nuveen Maryland Dividend Advantage Municipal Fund 3 (NWI) (continued) Portfolio of INVESTMENTS May 31, 2005 PRINCIPAL OPTIONAL CALL MARKET AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE - ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/LIMITED (continued) $ 235 Puerto Rico Public Finance Corporation, Commonwealth 2/12 at 100.00 BBB- $ 252,731 Appropriation Bonds, Series 2002E, 5.500%, 8/01/29 25 Washington Suburban Sanitary District, Maryland, General 6/11 at 101.00 AAA 27,265 Obligation Construction Bonds, Second Series 2001, 5.000%, 6/01/17 1,000 Washington Suburban Sanitary District, Montgomery and No Opt. Call AAA 1,118,080 Prince George's Counties, Maryland, Sewerage Disposal Bonds, Series 2004, 5.000%, 6/01/13 - ------------------------------------------------------------------------------------------------------------------------------------ TRANSPORTATION - 1.9% (1.3% OF TOTAL INVESTMENTS) Maryland Health and Higher Educational Facilities Authority, Parking Facilities Revenue Bonds, Johns Hopkins Medical Institution, Series 2004B: 190 5.000%, 7/01/13 - AMBAC Insured No Opt. Call AAA 210,685 175 5.000%, 7/01/14 - AMBAC Insured No Opt. Call AAA 194,910 1,000 District of Columbia Metropolitan Area Transit Authority, No Opt. Call AAA 1,105,750 Gross Revenue Bonds, Series 2003, 5.000%, 1/01/12 - MBIA Insured - ------------------------------------------------------------------------------------------------------------------------------------ U.S. GUARANTEED *** - 20.1% (13.7% OF TOTAL INVESTMENTS) 10 Anne Arundel County, Maryland, General Obligation Bonds, 5/09 at 101.00 AA+*** 10,839 Consolidated Improvements, Series 1999, 5.000%, 5/15/19 (Pre-refunded to 5/15/09) 1,000 Anne Arundel County, Maryland, Special Obligation Bonds, 7/09 at 102.00 AAA 1,172,660 Arundel Mills Project, Series 1999, 7.100%, 7/01/29 (Pre-refunded to 7/01/09) 2,115 Baltimore County, Maryland, General Obligation Consolidated 8/12 at 100.00 AAA 2,382,251 Public Improvement Bonds, Series 2002, 5.250%, 8/01/17 (Pre-refunded to 8/01/12) 100 Frederick County, Maryland, General Obligation Public 7/09 at 101.00 AAA 109,530 Facilities Bonds, Series 1999, 5.250%, 7/01/17 (Pre-refunded to 7/01/09) 1,210 Howard County, Maryland, Consolidated Public Improvement 2/09 at 101.00 AAA 1,297,386 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 1,349,731 Refunding Bonds, Series 2003A, 5.000%, 8/15/15 (Pre-refunded to 8/15/12) 50 Maryland Health and Higher Educational Facilities Authority, No Opt. Call AAA 54,904 Revenue Bonds, Helix Health, Series 1997, 5.000%, 7/01/17 - AMBAC Insured 1,070 Maryland Transportation Authority, Revenue Refunding No Opt. Call AAA 1,261,220 Bonds, Transportation Facilities Projects, First Series 1978, 6.800%, 7/01/16 880 Puerto Rico, General Obligation and Public Improvement 7/11 at 100.00 AAA 973,711 Bonds, Series 2001, 5.125%, 7/01/30 (Pre-refunded to 7/01/11) - FSA Insured 5,000 Puerto Rico Infrastructure Financing Authority, Special 10/10 at 101.00 AAA 5,483,550 Obligation Bonds, Series 2000A, 5.500%, 10/01/40 700 Puerto Rico Public Finance Corporation, Commonwealth 2/12 at 100.00 Aaa 794,227 Appropriation Bonds, Series 2002E, 5.500%, 8/01/29 (Pre-refunded to 2/01/12) 1,000 Washington Suburban Sanitary District, Montgomery 6/08 at 102.00 AAA 1,078,930 and Prince George's Counties, Maryland, Water Supply Bonds, Series 1998, 5.000%, 6/01/15 (Pre-refunded to 6/01/08) - ------------------------------------------------------------------------------------------------------------------------------------ UTILITIES - 7.1% (4.8% OF TOTAL INVESTMENTS) 1,250 Maryland Energy Financing Administration, Revenue Bonds, 9/05 at 102.00 N/R 1,277,613 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 4,347,684 Series 2000HH, 5.250%, 7/01/29 - FSA Insured 38 PRINCIPAL OPTIONAL CALL MARKET AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE - ------------------------------------------------------------------------------------------------------------------------------------ WATER AND SEWER - 3.4% (2.3% OF TOTAL INVESTMENTS) $ 2,570 Baltimore, Maryland, Revenue Refunding Bonds, Wastewater 7/12 at 100.00 AAA $ 2,706,052 Projects, Series 2002A, 5.125%, 7/01/42 - FGIC Insured - ------------------------------------------------------------------------------------------------------------------------------------ $ 108,033 Total Long-Term Investments (cost $112,009,829) - 146.3% 116,206,833 =============----------------------------------------------------------------------------------------------------------------------- Other Assets Less Liabilities - 2.8% 2,235,999 -------------------------------------------------------------------------------------------------------------------- Preferred Shares, at Liquidation Value - (49.1)% (39,000,000) -------------------------------------------------------------------------------------------------------------------- Net Assets Applicable to Common Shares - 100% $ 79,442,832 ====================================================================================================================
FORWARD SWAPS OUTSTANDING AT MAY 31, 2005: UNREALIZED EFFECTIVE TERMINATION APPRECIATION NOTIONAL AMOUNT DATE(2) DATE (DEPRECIATION) - ------------------------------------------------------------------------------------------------------------------------------------ Agreement with Goldman Sachs dated December 6, 2004, to pay semi-annually the notional amount multiplied by 5.324% (annualized) and receive quarterly the notional amount multiplied by the three-month USD-LIBOR (United States Dollar-London Inter-Bank Offered Rates). $ 600,000 7/11/05 7/11/25 $ (48,001) Agreement with JPMorgan dated January 11, 2005, to pay semi-annually the notional amount multiplied by 5.235% (annualized) and receive quarterly the notional amount multiplied by the three-month USD-LIBOR (United States Dollar-London Inter-Bank Offered Rates). 2,200,000 8/17/05 8/17/25 (146,875) - ------------------------------------------------------------------------------------------------------------------------------------ $(194,876) - ------------------------------------------------------------------------------------------------------------------------------------
(1) All percentages shown in the Portfolio of Investments are based on net assets applicable to Common shares unless otherwise noted. (2) Effective date represents the date on which both the Fund and counterparty commence interest payment accruals on each forward swap contract. * 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 Premium Income Municipal Fund (NPV) Portfolio of INVESTMENTS May 31, 2005
PRINCIPAL OPTIONAL CALL MARKET AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE - ------------------------------------------------------------------------------------------------------------------------------------ CONSUMER STAPLES - 3.9% (2.7% OF TOTAL INVESTMENTS) $ Tobacco Settlement Financing Corporation of Virginia, Tobacco Settlement Asset-Backed Bonds, Series 2005: 1,575 5.250%, 6/01/19 6/15 at 100.00 BBB $ 1,585,238 3,850 5.500%, 6/01/26 6/15 at 100.00 BBB 3,851,463 - ------------------------------------------------------------------------------------------------------------------------------------ EDUCATION AND CIVIC ORGANIZATIONS - 10.7% (7.4% OF TOTAL INVESTMENTS) 3,500 Alexandria Industrial Development Authority, Virginia, Fixed 10/10 at 101.00 AAA 3,924,900 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 497,230 1,500 7.000%, 6/01/30 6/09 at 102.00 N/R 1,493,865 1,000 Prince William County Industrial Development Authority, 10/13 at 101.00 A3 1,062,530 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 547,615 Revenue Refunding and Improvement Bonds, Series 1999, 6.000%, 10/15/28 700 Puerto Rico Industrial, Tourist, Educational, Medical and 12/12 at 101.00 BBB 750,015 Environmental Control Facilities Financing Authority, Higher Education Revenue Refunding Bonds, Ana G. Mendez University System, Series 2002, 5.375%, 12/01/21 500 Rockbridge County Industrial Development Authority, 7/11 at 100.00 B2 476,145 Virginia, Horse Center Revenue and Refunding Bonds, Series 2001C, 6.850%, 7/15/21 2,000 Virginia College Building Authority, Educational Facilities No Opt. Call Aa1 2,226,140 Revenue Bonds, Public Higher Education Financing Program, Series 2004B, 5.000%, 9/01/13 2,120 Virginia College Building Authority, Educational Facilities 9/11 at 100.00 AA+ 2,225,915 Revenue Bonds, Public Higher Education Financing Program, Series 2001A, 5.000%, 9/01/26 1,635 Virginia Commonwealth University, Revenue Bonds, 5/14 at 101.00 AAA 1,793,203 Series 2004A, 5.000%, 5/01/17 - AMBAC Insured - ------------------------------------------------------------------------------------------------------------------------------------ HEALTHCARE - 21.7% (15.2% OF TOTAL INVESTMENTS) 2,000 Albemarle County Industrial Development Authority, 10/12 at 100.00 A2 2,077,620 Virginia, Hospital Revenue Bonds, Martha Jefferson Hospital, Series 2002, 5.250%, 10/01/35 2,000 Danville Industrial Development Authority, Virginia, Hospital No Opt. Call AAA 2,237,460 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+ 5,317,298 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 1,235,676 Revenue Bonds, MediCorp Health System, Series 2002B, 5.125%, 6/15/33 1,000 Hanover County Industrial Development Authority, Virginia, No Opt. Call AAA 1,211,290 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 4,761,554 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- 1,592,955 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 1,876,710 Healthcare Revenue Bonds, Bon Secours Health System Inc., Series 1996, 6.250%, 8/15/20 - MBIA Insured 1,950 Manassas Industrial Development Authority, Virginia, 4/13 at 100.00 A2 2,048,806 Hospital Revenue Bonds, Prince William Hospital, Series 2002, 5.250%, 4/01/33 4,750 Medical College of Virginia Hospital Authority, General 7/08 at 102.00 AAA 4,979,995 Revenue Bonds, Series 1998, 5.125%, 7/01/23 - MBIA Insured 40 PRINCIPAL OPTIONAL CALL MARKET AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE - ------------------------------------------------------------------------------------------------------------------------------------ HEALTHCARE (continued) $ 3,000 Roanoke Industrial Development Authority, Virginia, 7/12 at 100.00 AAA $ 3,285,750 Hospital Revenue Bonds, Carilion Health System, Series 2002A, 5.500%, 7/01/19 - MBIA Insured - ------------------------------------------------------------------------------------------------------------------------------------ HOUSING/MULTIFAMILY - 3.0% (2.1% OF TOTAL INVESTMENTS) 1,455 Arlington County Industrial Development Authority, Virginia, 5/10 at 100.00 Aaa 1,542,227 Multifamily Housing Revenue Bonds, Patrick Henry Apartments, Series 2000, 6.050%, 11/01/32 (Alternative Minimum Tax) (Mandatory put 11/01/20) 1,495 Henrico County Economic Development Authority, Virginia, 7/09 at 102.00 AAA 1,650,241 GNMA Mortgage-Backed Securities Beth Sholom Assisted Living Revenue Bonds, Series 1999A, 5.900%, 7/20/29 1,000 Lynchburg Redevelopment and Housing Authority, Virginia, 4/10 at 102.00 AAA 1,046,600 Vistas GNMA Mortgage-Backed Revenue Bonds, Series 2000A, 6.200%, 1/20/40 (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ HOUSING/SINGLE FAMILY - 1.0% (0.8% OF TOTAL INVESTMENTS) 350 Puerto Rico Housing Finance Authority, Mortgage-Backed 6/13 at 100.00 AAA 354,326 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 1,037,110 Mortgage Bonds, Series 2001H-1, 5.350%, 7/01/31 - MBIA Insured - ------------------------------------------------------------------------------------------------------------------------------------ INDUSTRIALS - 1.5% (1.0% OF TOTAL INVESTMENTS) 2,000 Charles County Industrial Development Authority, Virginia, No Opt. Call BBB 2,067,520 Solid Waste Disposal Facility Revenue Refunding Bonds, USA Waste of Virginia Inc., Series 1999, 4.875%, 2/01/09 (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ MATERIALS - 1.8% (1.3% OF TOTAL INVESTMENTS) 500 Bedford County Industrial Development Authority, Virginia, 2/08 at 102.00 Ba3 502,870 Industrial Development Revenue Refunding Bonds, Nekoosa Packaging Corporation, Series 1998, 5.600%, 12/01/25 (Alternative Minimum Tax) (a) 1,000 Goochland County Industrial Development Authority, Virginia, 12/08 at 101.00 Ba3 1,006,190 Industrial Development Revenue Refunding Bonds, Nekoosa Packaging Corporation Project, Series 1998, 5.650%, 12/01/25 (Alternative Minimum Tax) (a) 1,000 Isle of Wight County Industrial Development Authority, 5/07 at 102.00 BBB 1,033,650 Virginia, Solid Waste Disposal Facilities Revenue Bonds, Union Camp Corporation Project, Series 1997, 6.100%, 5/01/27 (Alternative Minimum Tax) (a) - ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/GENERAL - 20.8% (14.5% OF TOTAL INVESTMENTS) 900 Alexandria, Virginia, General Obligation Bonds, Series 2004B, No Opt. Call AAA 1,007,181 5.000%, 6/15/13 900 Alexandria, Virginia, General Obligation Bonds, Series 2004C, No Opt. Call AAA 998,694 5.000%, 12/15/11 1,400 Arlington County, Virginia, General Obligation Bonds, 5/15 at 100.00 AAA 1,568,350 Series 2005, 5.000%, 5/15/16 (WI, settling 6/01/05) Chesapeake, Virginia, General Obligation Water and Sewer Bonds, Series 2003B: 1,880 5.000%, 6/01/21 6/13 at 100.00 AA 2,036,134 2,060 5.000%, 6/01/23 6/13 at 100.00 AA 2,220,907 1,355 Harrisonburg, Virginia, General Obligation Bonds, Public 7/12 at 101.00 AAA 1,477,804 Safety and Steam Plant, Series 2002, 5.000%, 7/15/19 - FGIC Insured 1,920 Loudoun County, Virginia, General Obligation Public No Opt. Call Aaa 2,155,891 Improvement Bonds, Series 2005A, 5.000%, 7/01/14 105 Loudoun County, Virginia, General Obligation Public 5/12 at 100.00 Aaa 115,117 Improvement Bonds, Series 2002A, 5.250%,5/01/22 1,185 Lynchburg, Virginia, General Obligation Bonds, 6/14 at 100.00 AA 1,287,360 Series 2004, 5.000%, 6/01/21 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 3,011,461 1,000 5.000%, 7/01/20 7/13 at 100.00 AA 1,087,170 1,350 Newport News, Virginia, General Obligation Bonds, 5/14 at 101.00 AA 1,496,840 Series 2004C, 5.000%, 5/01/16 1,400 Northern Mariana Islands, General Obligation Bonds, 6/10 at 100.00 A 1,498,588 Series 2000A, 6.000%, 6/01/20 - ACA Insured 1,000 Portsmouth, Virginia, General Obligation Bonds, No Opt. Call AAA 1,109,570 Series 2003, 5.000%, 7/01/12 - FSA Insured 1,480 Richmond, Virginia, General Obligation Bonds, Series 2004A, 7/14 at 100.00 AAA 1,605,667 5.000%, 7/15/21 - FSA Insured 41 Nuveen Virginia Premium Income Municipal Fund (NPV) (continued) Portfolio of INVESTMENTS May 31, 2005 PRINCIPAL OPTIONAL CALL MARKET AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE - ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/GENERAL (continued) $ 1,430 Roanoke, Virginia, General Obligation Public Improvement 10/12 at 101.00 AA $ 1,574,316 Bonds, Series 2002A, 5.000%, 10/01/17 1,425 Virginia Beach, Virginia, General Obligation Public 6/11 at 101.00 AA+ 1,540,895 Improvement Bonds, Series 2001, 5.000%, 6/01/20 2,155 Virginia Beach, Virginia, General Obligation Bonds, 5/13 at 100.00 AA+ 2,365,824 Series 2003B, 5.000%, 5/01/15 1,000 Virginia Beach, Virginia, General Obligation Bonds, No Opt. Call AA+ 1,110,790 Series 2004B, 5.000%, 5/01/13 - ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/LIMITED - 27.6% (19.3% OF TOTAL INVESTMENTS) Buena Vista Public Recreational Facilities Authority, Virginia, Lease Revenue Bonds, Golf Course Project, Series 2005A: 335 5.250%, 7/15/25 - ACA Insured 7/15 at 100.00 A 349,003 260 5.500%, 7/15/35 - ACA Insured 7/15 at 100.00 A 272,168 Cumberland County, Virginia, Certificates of Participation, Series 1997: 1,075 6.200%, 7/15/12 No Opt. Call N/R 1,172,320 1,350 6.375%, 7/15/17 No Opt. Call N/R 1,535,612 500 Dinwiddie County Industrial Development Authority, Virginia, 2/07 at 102.00 N/R 521,535 Lease Revenue Bonds, Dinwiddie County School Facilities, Series 1997A, 6.000%, 2/01/18 1,000 Dinwiddie County Industrial Development Authority, Virginia, 2/14 at 100.00 AAA 1,107,220 Lease Revenue Bonds, Series 2004B, 5.125%, 2/15/16 - MBIA Insured 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+ 2,508,216 2,165 5.000%, 6/01/22 6/13 at 101.00 AA+ 2,331,597 1,000 Fairfax County Economic Development Authority, Virginia, 9/09 at 102.00 AA 1,125,940 Parking Revenue Bonds, Vienna II Metrorail Station Project, 1999 First Series, 6.000%, 9/01/18 1,660 Front Royal and Warren County Industrial Development 4/14 at 100.00 AAA 1,804,951 Authority, Virginia, Lease Revenue Bonds, Series 2004B, 5.000%, 4/01/18 - FSA Insured 2,000 Puerto Rico Highway and Transportation Authority, Highway 7/12 at 100.00 AAA 2,110,240 Revenue Bonds, Series 2002D, 5.000%, 7/01/32 - FSA Insured Puerto Rico Public Buildings Authority, Guaranteed Government Facilities Revenue Refunding Bonds, Series 2002D: 265 5.250%, 7/01/27 7/12 at 100.00 BBB 281,054 320 5.250%, 7/01/36 7/12 at 100.00 BBB 338,182 1,110 Spotsylvania County Industrial Development Authority, 8/13 at 100.00 AAA 1,136,762 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 2,279,900 Loan Note, Series 1999A, 6.500%, 10/01/24 1,400 Virginia Beach Development Authority, Public Facilities 5/15 at 100.00 AA 1,552,950 Revenue Bonds, Series 2005A, 5.000%, 5/01/16 (WI, settling 6/07/05) 1,855 Virginia College Building Authority, Educational Facilities No Opt. Call AA+ 2,034,379 Revenue Bonds, 21st Century College Program, Series 2004A, 5.000%, 2/01/11 2,000 Virginia College Building Authority, Educational Facilities 2/12 at 100.00 AA+ 2,120,720 Revenue Bonds, 21st Century College Program, Series 2002A, 5.000%, 2/01/22 2,250 Virginia Transportation Board, Transportation Revenue Bonds, No Opt. Call AA+ 2,511,180 Northern Virginia Transportation District Program, Series 2004A, 5.000%, 5/15/14 2,000 Virginia Public Building Authority, Public Facilities Revenue No Opt. Call AA+ 2,203,120 Bonds, Series 2004B, 5.000%, 8/01/11 875 Virginia Public School Authority, School Financing Bonds, No Opt. Call AA+ 963,865 1997 Resolution, Series 2004C, 5.000%, 8/01/11 2,000 Virginia Public School Authority, School Financing Bonds, 8/10 at 101.00 AA+ 2,160,740 1997 Resolution, Series 2000B, 5.000%, 8/01/18 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 1,229,782 3,060 5.500%, 5/01/30 - FSA Insured 5/10 at 101.00 AAA 3,339,653 42 PRINCIPAL OPTIONAL CALL MARKET AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE - ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/LIMITED (continued) $ 1,740 Virginia Resources Authority, Infrastructure Revenue Bonds, 5/11 at 101.00 AA $ 1,880,401 Pooled Loan Bond Program, Series 2002A, 5.000%, 5/01/19 - ------------------------------------------------------------------------------------------------------------------------------------ TRANSPORTATION - 12.1% (8.4% OF TOTAL INVESTMENTS) 755 Metropolitan District of Columbia Airports Authority, 10/07 at 101.00 Aa3 794,426 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 4,194,480 Series 2001A, 5.125%, 7/01/31 - FGIC Insured 530 Pocahontas Parkway Association, Virginia, Senior Lien Revenue 8/08 at 102.00 BB 524,133 Bonds, Route 895 Connector Toll Road, Series 1998A, 5.500%, 8/15/28 2,500 Richmond Metropolitan Authority, Virginia, Revenue Refunding No Opt. Call AAA 2,889,650 Bonds, Expressway System, Series 2002, 5.250%, 7/15/22 - FGIC Insured 6,065 Virginia Port Authority, Revenue Bonds, Port Authority Facilities, 7/07 at 101.00 AAA 6,365,581 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 2,146,500 Bonds, Series 2001A, 5.250%, 8/01/23 - ------------------------------------------------------------------------------------------------------------------------------------ U.S. GUARANTEED *** - 18.2% (12.7% OF TOTAL INVESTMENTS) 270 Arlington County Industrial Development Authority, Virginia, 7/05 at 102.00 A*** 276,029 Multifamily Housing Mortgage Revenue Bonds, Arlington Housing Corporation, Series 1995, 5.700%, 7/01/07 (Pre-refunded to 7/01/05) 750 Bristol, Virginia, General Obligation Utility System Revenue 11/12 at 102.00 AAA 839,850 Bonds, Series 2002, 5.000%, 11/01/24 - FSA Insured 1,215 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 7/10 at 100.00 AAA 1,290,184 Asset-Backed Bonds, Series 2000, 5.750%, 7/01/20 (Pre-refunded to 7/01/10) 2,000 Fairfax County Water Authority, Virginia, Water Revenue 4/10 at 101.00 AAA 2,249,400 Bonds, Series 2000, 5.625%, 4/01/25 (Pre-refunded to 4/01/10) Fairfax County Water Authority, Virginia, Water Revenue Refunding Bonds, Series 2002: 1,925 5.375%, 4/01/19 (Pre-refunded to 4/01/12) 4/12 at 100.00 AAA 2,171,881 200 5.000%, 4/01/27 (Pre-refunded to 4/01/12) 4/12 at 100.00 AAA 221,090 Greater Richmond Convention Center Authority, Virginia, Hotel Tax Revenue Bonds, Convention Center Expansion Project, Series 2000: 600 6.125%, 6/15/25 (Pre-refunded to 6/15/10) 6/10 at 101.00 A*** 688,350 2,000 6.125%, 6/15/29 (Pre-refunded to 6/15/10) 6/10 at 101.00 A*** 2,294,500 Hampton, Virginia, General Obligation Public Improvement Bonds, Series 2000: 890 5.750%, 2/01/17 (Pre-refunded to 2/01/10) 2/10 at 102.00 AA*** 1,009,705 2,000 6.000%, 2/01/20 (Pre-refunded to 2/01/10) 2/10 at 102.00 AA*** 2,290,600 480 Loudoun County, Virginia, General Obligation Public 5/12 at 100.00 Aaa 538,963 Improvement Bonds, Series 2002A, 5.250%, 5/01/22 (Pre-refunded to 5/01/12) Loudoun County Industrial Development Authority, Virginia, Hospital Revenue Bonds, Loudoun Hospital Center, Series 2002A: 375 6.000%, 6/01/22 (Pre-refunded to 6/01/12) 6/12 at 101.00 BBB*** 435,499 800 6.100%, 6/01/32 (Pre-refunded to 6/01/12) 6/12 at 101.00 BBB*** 933,992 645 Metropolitan District of Columbia Airports Authority, 10/07 at 101.00 Aa3*** 686,996 Virginia, Airport System Revenue Bonds, Series 1997A, 5.375%, 10/01/23 (Pre-refunded to 10/01/07) 1,230 Middlesex County Industrial Development Authority, 8/09 at 102.00 AAA 1,395,091 Virginia, 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 2,741,775 Obligation Bonds, Series 2000A, 5.500%, 10/01/40 Puerto Rico Public Buildings Authority, Guaranteed Government Facilities Revenue Refunding Bonds, Series 2002D: 735 5.250%, 7/01/27 (Pre-refunded to 7/01/12) 7/12 at 100.00 BBB*** 817,247 880 5.250%, 7/01/36 (Pre-refunded to 7/01/12) 7/12 at 100.00 BBB*** 978,472 2,250 Virginia College Building Authority, Educational Facilities 2/09 at 101.00 AA+*** 2,505,938 Revenue Bonds, 21st Century College Program, Series 2000, 6.000%, 2/01/20 (Pre-refunded to 2/01/09) 43 Nuveen Virginia Premium Income Municipal Fund (NPV) (continued) Portfolio of INVESTMENTS May 31, 2005 PRINCIPAL OPTIONAL CALL MARKET AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE - ------------------------------------------------------------------------------------------------------------------------------------ U.S. GUARANTEED *** (continued) $ 1,000 Virginia College Building Authority, Educational Facilities 4/10 at 101.00 A+*** $ 1,138,050 Revenue Bonds, Hampton University, Series 2000, 6.000%, 4/01/20 (Pre-refunded to 4/01/10) - ------------------------------------------------------------------------------------------------------------------------------------ UTILITIES - 11.4% (7.9% OF TOTAL INVESTMENTS) Bristol, Virginia, Utility System Revenue Refunding Bonds, Series 2003: 1,705 5.250%, 7/15/14 - MBIA Insured 7/13 at 100.00 AAA 1,915,960 1,800 5.250%, 7/15/15 - MBIA Insured 7/13 at 100.00 AAA 2,011,518 2,775 5.250%, 7/15/23 - MBIA Insured 7/13 at 100.00 AAA 3,066,070 2,500 Mecklenburg County Industrial Development Authority, 10/12 at 100.00 A3 2,823,125 Virginia, Revenue Bonds, UAE Mecklenburg Cogeneration LP, 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 3,665,935 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 788,543 1,600 5.000%, 1/15/33 - FSA Insured 1/12 at 100.00 AAA 1,671,840 - ------------------------------------------------------------------------------------------------------------------------------------ WATER AND SEWER - 9.4% (6.5% OF TOTAL INVESTMENTS) Fairfax County Water Authority, Virginia, Water Revenue Refunding Bonds, Series 2002: 105 5.375%, 4/01/19 4/12 at 100.00 AAA 117,104 800 5.000%, 4/01/27 4/12 at 100.00 AAA 844,680 1,650 Henrico County, Virginia, Water and Sewer System Revenue 5/09 at 102.00 AA+ 1,741,179 Refunding Bonds, Series 1999, 5.000%, 5/01/28 1,000 Loudoun County Sanitation Authority, Virginia, Water and 1/15 at 100.00 AA+ 1,071,930 Sewerage System Revenue Bonds, Series 2004, 5.000%, 1/01/26 1,200 Norfolk, Virginia, Water Revenue Bonds, Series 1995, 11/05 at 102.00 AAA 1,238,184 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 1,398,726 1,380 5.000%, 11/01/22 - FGIC Insured 11/11 at 100.00 AAA 1,473,467 1,955 Rivanna Water and Sewerage Authority, Virginia, Regional 10/09 at 101.00 Aa3 2,136,580 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 2,547,829 Series 2000, 6.000%, 9/01/24 500 Virginia Resources Authority, Clean Water State Revolving 10/10 at 100.00 AAA 555,110 Fund Revenue Bonds, Series 1999, 5.625%, 10/01/22 - ------------------------------------------------------------------------------------------------------------------------------------ $ 185,270 Total Long-Term Investments (cost $187,479,800) - 143.1% 200,926,318 =============----------------------------------------------------------------------------------------------------------------------- 44 PRINCIPAL MARKET AMOUNT (000) DESCRIPTION(1) RATINGS** VALUE - ------------------------------------------------------------------------------------------------------------------------------------ SHORT-TERM INVESTMENTS - 0.4% (0.2% OF TOTAL INVESTMENTS) $ 500 Puerto Rico Government Development Bank, Adjustable VMIG-1 $ 500,000 Refunding Bonds, Variable Rate Demand Obligations, Series 1985, 2.850%, 12/01/15 - MBIA Insured+ - ------------------------------------------------------------------------------------------------------------------------------------ $ 500 Total Short-Term Investments (cost $500,000) 500,000 =============----------------------------------------------------------------------------------------------------------------------- Total Investments (cost $187,979,800) - 143.5% 201,426,318 -------------------------------------------------------------------------------------------------------------------- Other Assets Less Liabilities - 2.0% 2,714,078 -------------------------------------------------------------------------------------------------------------------- Preferred Shares, at Liquidation Value - (45.5)% (63,800,000) -------------------------------------------------------------------------------------------------------------------- Net Assets Applicable to Common Shares - 100% $ 140,340,396 ====================================================================================================================
(1) All percentages shown in the Portfolio of Investments are based on net assets applicable to Common shares unless otherwise noted. * 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. (WI) Security purchased on a when-issued basis. (a) The issuer has received a preliminary adverse determination from the Internal Revenue Service (the "IRS") regarding the tax-exempt status of the bonds' coupon payments. The Fund will continue to treat coupon payments as tax-exempt income until such time that it is formally determined that the interest on the bonds should be treated as taxable. + 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 in effect at the end of the reporting period. This rate changes periodically based on market conditions or a specified market index. See accompanying notes to financial statements. 45 Nuveen Virginia Dividend Advantage Municipal Fund (NGB) Portfolio of INVESTMENTS May 31, 2005
PRINCIPAL OPTIONAL CALL MARKET AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE - ------------------------------------------------------------------------------------------------------------------------------------ CONSUMER STAPLES - 4.6% (3.1% OF TOTAL INVESTMENTS) Guam Economic Development Authority, Tobacco Settlement Asset-Backed Bonds, Series 2001A: $ 85 5.000%, 5/15/22 5/11 at 100.00 Baa3 $ 86,204 850 5.400%, 5/15/31 5/11 at 100.00 Baa3 855,695 Tobacco Settlement Financing Corporation of Virginia, Tobacco Settlement Asset-Backed Bonds, Series 2005: 550 5.250%, 6/01/19 6/15 at 100.00 BBB 553,575 725 5.500%, 6/01/26 6/15 at 100.00 BBB 725,276 - ------------------------------------------------------------------------------------------------------------------------------------ EDUCATION AND CIVIC ORGANIZATIONS - 13.4% (9.1% OF TOTAL INVESTMENTS) 500 Danville Industrial Development Authority, Virginia, 3/11 at 102.00 N/R 514,500 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 531,265 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 930,946 Revenue Refunding and Improvement Bonds, Series 1999, 6.000%, 10/15/28 Puerto Rico Industrial, Tourist, Educational, Medical and Environmental Control Facilities Financing Authority, Higher Education Revenue Bonds, Ana G. Mendez University System, Series 1999: 160 5.375%, 2/01/19 2/09 at 101.00 BBB 166,582 320 5.375%, 2/01/29 2/09 at 101.00 BBB 330,093 375 Rockbridge County Industrial Development Authority, Virginia, No Opt. Call B2 360,829 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 952,290 Horse Center Revenue and Refunding Bonds, Series 2001C, 6.850%, 7/15/21 700 Virginia College Building Authority, Educational Facilities No Opt. Call Aa1 779,149 Revenue Bonds, Public Higher Education Financing Program, Series 2004B, 5.000%, 9/01/13 1,325 Virginia College Building Authority, Educational Facilities 9/10 at 100.00 AA+ 1,421,791 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 518,295 Revenue Refunding Bonds, Marymount University, Series 1998, 5.100%, 7/01/18 - RAAI Insured - ------------------------------------------------------------------------------------------------------------------------------------ HEALTHCARE - 12.9% (8.7% OF TOTAL INVESTMENTS) 1,000 Fauquier County Industrial Development Authority, Virginia, 10/12 at 102.00 AA 1,078,720 Hospital Revenue Bonds, Fauquier Hospital, Series 2002, 5.250%, 10/01/25 - RAAI Insured 1,500 Fredericksburg Industrial Development Authority, Virginia, 6/07 at 102.00 AAA 1,586,940 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 514,865 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- 530,985 Revenue Bonds, Bon Secours Health System Inc., Series 2002A, 5.600%, 11/15/30 575 Manassas Industrial Development Authority, Virginia, 4/13 at 100.00 A2 604,135 Hospital Revenue Bonds, Prince William Hospital, Series 2002, 5.250%, 4/01/33 1,000 Norfolk Industrial Development Authority, Virginia, Healthcare 8/07 at 102.00 AAA 1,054,850 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 872,032 Revenue Refunding and Improvement Bonds, Norton Community Hospital, Series 2001, 6.000%, 12/01/22 - ACA Insured 46 PRINCIPAL OPTIONAL CALL MARKET AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE - ------------------------------------------------------------------------------------------------------------------------------------ HOUSING/MULTIFAMILY - 4.3% (2.9% OF TOTAL INVESTMENTS) $ 1,000 Arlington County Industrial Development Authority, Virginia, 11/11 at 102.00 AAA $ 1,038,340 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 Bonds, 10/10 at 100.00 AA+ 1,050,570 Series 2000G, 5.625%, 10/01/20 (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ HOUSING/SINGLE FAMILY - 2.1% (1.5% OF TOTAL INVESTMENTS) 1,000 Virginia Housing Development Authority, Commonwealth 7/11 at 100.00 AAA 1,037,110 Mortgage Bonds, Series 2001H-1, 5.350%, 7/01/31 - MBIA Insured - ------------------------------------------------------------------------------------------------------------------------------------ INDUSTRIALS - 0.1% (0.2% OF TOTAL INVESTMENTS) 50 Charles County Industrial Development Authority, Virginia, No Opt. Call BBB 51,688 Solid Waste Disposal Facility Revenue Refunding Bonds, USA Waste of Virginia Inc., Series 1999, 4.875%, 2/01/09 (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ LONG-TERM CARE - 4.0% (2.7% OF TOTAL INVESTMENTS) 500 Albemarle County Industrial Development Authority, 1/12 at 100.00 N/R 526,720 Virginia, Residential Care Facility Revenue Bonds, Westminster Canterbury of the Blue Ridge First Mortgage, Series 2001, 6.200%, 1/01/31 350 Chesterfield County Health Center Commission, Virginia, 12/15 at 100.00 N/R 349,206 Mortgage Revenue Bonds, Lucy Corr Village, Series 2005, 5.625%, 12/01/39 650 James City County Industrial Development Authority, 3/12 at 101.00 N/R 701,720 Virginia, Residential Care Facility First Mortgage Revenue Refunding Bonds, Williamburg Landing Inc., Series 2003A, 6.000%, 3/01/23 350 Winchester Industrial Development Authority, Virginia, 1/15 at 100.00 N/R 353,668 Residential Care Facility Revenue Bonds, Westminster- Canterbury of Winchester Inc., Series 2005A, 5.200%, 1/01/27 (WI, settling 6/09/05) - ------------------------------------------------------------------------------------------------------------------------------------ MATERIALS - 1.8% (1.2% OF TOTAL INVESTMENTS) 100 Bedford County Industrial Development Authority, Virginia, 2/08 at 102.00 Ba3 100,574 Industrial Development Revenue Refunding Bonds, Nekoosa Packaging Corporation, Series 1998, 5.600%, 12/01/25 (Alternative Minimum Tax) (a) 20 Bedford County Industrial Development Authority, Virginia, 12/09 at 101.00 Ba3 20,968 Industrial Development Revenue Refunding Bonds, Nekoosa Packaging Corporation, Series 1999A, 6.550%, 12/01/25 (Alternative Minimum Tax) 220 Goochland County Industrial Development Authority, 12/08 at 101.00 Ba3 221,362 Virginia, Industrial Development Revenue Refunding Bonds, Nekoosa Packaging Corporation Project, Series 1998, 5.650%, 12/01/25 (Alternative Minimum Tax) (a) 500 Hopewell Industrial Development Authority, Virginia, No Opt. Call B 506,170 Environmental Improvement Revenue Bonds, Smurfit Stone Container Corporation, Series 2005, 5.250%, 6/01/15 - ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/GENERAL - 27.8% (18.9% OF TOTAL INVESTMENTS) 330 Alexandria, Virginia, General Obligation Bonds, Series 2004B, No Opt. Call AAA 369,300 5.000%, 6/15/13 300 Alexandria, Virginia, General Obligation Bonds, Series 2004C, No Opt. Call AAA 332,898 5.000%, 12/15/11 500 Arlington County, Virginia, General Obligation Bonds, 5/15 at 100.00 AAA 560,125 Series 2005, 5.000%, 5/15/16 (WI, settling 6/01/05) 2,000 Chesterfield County, Virginia, General Obligation Public 1/11 at 100.00 AAA 2,124,540 Improvement Bonds, Series 2001, 5.000%, 1/15/21 3,310 Leesburg, Virginia, General Obligation Public Improvement 1/11 at 101.00 AAA 3,559,905 Bonds, Series 2000, 5.125%, 1/15/21 - FGIC Insured 660 Loudoun County, Virginia, General Obligation Public Improvement No Opt. Call Aaa 741,088 Bonds, Series 2005A, 5.000%, 7/01/14 845 Newport News, Virginia, General Obligation Bonds, 5/14 at 101.00 AA 936,911 Series 2004C, 5.000%, 5/01/16 320 Northern Mariana Islands, General Obligation Bonds, 6/10 at 100.00 A 342,534 Series 2000A, 6.000%, 6/01/20 - ACA Insured 500 Portsmouth, Virginia, General Obligation Bonds, Series 2003, No Opt. Call AAA 554,785 5.000%, 7/01/12 - FSA Insured 1,300 Richmond, Virginia, General Obligation Refunding and Public 1/10 at 101.00 AAA 1,389,076 Improvement Bonds, Series 1999A, 5.125%, 1/15/24 - FSA Insured 2,425 Virginia Beach, Virginia, General Obligation Public 6/11 at 101.00 AA+ 2,622,225 Improvement Bonds, Series 2001, 5.000%, 6/01/21 47 Nuveen Virginia Dividend Advantage Municipal Fund (NGB) (continued) Portfolio of INVESTMENTS May 31, 2005 PRINCIPAL OPTIONAL CALL MARKET AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE - ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/LIMITED - 20.1% (13.6% OF TOTAL INVESTMENTS) $ 295 Bell Creek Community Development Authority, Virginia, Special 3/13 at 101.00 N/R $ 302,791 Assessment Bonds, Series 2003A, 6.750%, 3/01/22 500 Broad Street Community Development Authority, Virginia, 6/13 at 102.00 N/R 526,025 Revenue Bonds, Series 2003, 7.500%, 6/01/33 Buena Vista Public Recreational Facilities Authority, Virginia, Lease Revenue Bonds, Golf Course Project, Series 2005A: 120 5.250%, 7/15/25 - ACA Insured 7/15 at 100.00 A 125,016 95 5.500%, 7/15/35 - ACA Insured 7/15 at 100.00 A 99,446 1,000 Spotsylvania County Industrial Development Authority, 8/13 at 100.00 AAA 1,096,640 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 1,096,358 Taxes Loan Note, Series 1999A, 6.375%, 10/01/19 500 Virginia Beach Development Authority, Public Facilities 5/15 at 100.00 AA 554,625 Revenue Bonds, Series 2005A, 5.000%, 5/01/16 (WI, settling 6/07/05) 500 Virginia College Building Authority, Educational Facilities No Opt. Call AA+ 548,350 Revenue Bonds, 21st Century College Program, Series 2004A, 5.000%, 2/01/11 500 Virginia College Building Authority, Educational Facilities 2/12 at 100.00 AA+ 530,180 Revenue Bonds, 21st Century College Program, Series 2002A, 5.000%, 2/01/22 1,000 Virginia Transportation Board, Transportation Revenue No Opt. Call AA+ 1,116,080 Bonds, Northern Virginia Transportation District Program, Series 2004A, 5.000%, 5/15/14 350 Virginia Gateway Community Development Authority, Prince 3/13 at 102.00 N/R 363,997 William County, Special Assessment Bonds, Series 2003, 6.375%, 3/01/30 750 Virginia Public Building Authority, Public Facilities Revenue No Opt. Call AA+ 826,170 Bonds, Series 2004B, 5.000%, 8/01/11 345 Virginia Public School Authority, School Financing Bonds, No Opt. Call AA+ 380,038 1997 Resolution, Series 2004C, 5.000%, 8/01/11 2,000 Virginia Public School Authority, School Financing Bonds, 8/11 at 101.00 AA+ 2,175,580 1997 Resolution, Series 2001A, 5.000%, 8/01/19 - ------------------------------------------------------------------------------------------------------------------------------------ TRANSPORTATION - 22.7% (15.4% OF TOTAL INVESTMENTS) 1,000 Capital Region Airport Authority, Richmond, Virginia, Revenue 7/15 at 100.00 AAA 1,096,630 Bonds, Richmond International Airport, Series 2005A, 5.000%, 7/01/18 - FSA Insured 1,000 Chesapeake Bay Bridge and Tunnel Commission, Virginia, No Opt. Call AAA 1,194,120 General Resolution 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 3,246,840 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 264,518 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 1,572,930 Series 2001A, 5.125%, 7/01/31 - FGIC Insured Pocahontas Parkway Association, Virginia, Senior Lien Revenue Bonds, Route 895 Connector Toll Road, Series 1998A: 25 5.000%, 8/15/05 No Opt. Call BB 25,023 200 5.250%, 8/15/07 No Opt. Call BB 204,706 200 5.500%, 8/15/28 8/08 at 102.00 BB 197,786 500 Richmond Metropolitan Authority, Virginia, Revenue Refunding No Opt. Call AAA 577,930 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 1,314,731 Bonds, Series 2001A, 5.250%, 8/01/23 1,250 Virginia Resources Authority, Airports Revolving Fund Revenue 2/11 at 100.00 Aa2 1,296,975 Bonds, Series 2001B, 5.125%, 8/01/27 (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ U.S. GUARANTEED *** - 22.0% (14.9% OF TOTAL INVESTMENTS) 1,000 Bristol, Virginia, Utility System Revenue Refunding Bonds, 7/11 at 102.00 AAA 1,101,500 Series 2001, 5.000%, 7/15/21 - FSA Insured 48 PRINCIPAL OPTIONAL CALL MARKET AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE - ------------------------------------------------------------------------------------------------------------------------------------ U.S. GUARANTEED *** (continued) $ 750 Capital Region Airport Authority, Richmond, Virginia, Revenue 7/05 at 102.00 AAA $ 766,725 Bonds, Richmond International Airport, Series 1995A, 5.625%, 7/01/20 (Pre-refunded to 7/01/05) - AMBAC Insured 485 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 7/10 at 100.00 AAA 515,012 Asset-Backed Bonds, Series 2000, 5.750%, 7/01/20 (Pre-refunded to 7/01/10) 1,540 Loudoun County, Virginia, General Obligation Public 1/11 at 101.00 Aaa 1,720,226 Improvement Bonds, Series 2001B, 5.250%, 1/01/20 (Pre-refunded to 1/01/11) 425 Loudoun County Industrial Development Authority, Virginia, 6/12 at 101.00 BBB*** 493,565 Hospital Revenue Bonds, Loudoun Hospital Center, Series 2002A, 6.000%, 6/01/22 (Pre-refunded to 6/01/12) 1,000 Lynchburg Industrial Development Authority, Virginia, 1/08 at 101.00 A*** 1,064,430 Healthcare Facilities Revenue Refunding Bonds, Centra Health Inc., Series 1998, 5.200%, 1/01/23 (Pre-refunded to 1/01/08) 1,000 Newport News, Virginia, General Obligation Bonds, 5/10 at 102.00 AA*** 1,133,560 Series 2000A, 5.625%, 5/01/16 (Pre-refunded to 5/01/10) 520 Prince William County Service Authority, Virginia, Water and 7/09 at 101.00 AAA 574,309 Sewerage System Revenue Bonds, Series 1999, 5.500%, 7/01/19 (Pre-refunded to 7/01/09) - FGIC Insured Puerto Rico Infrastructure Financing Authority, Special Obligation Bonds, Series 2000A: 1,500 5.500%, 10/01/32 10/10 at 101.00 AAA 1,652,955 1,500 5.500%, 10/01/40 10/10 at 101.00 AAA 1,645,065 - ------------------------------------------------------------------------------------------------------------------------------------ UTILITIES - 3.4% (2.3% OF TOTAL INVESTMENTS) 1,000 Mecklenburg County Industrial Development Authority, 10/12 at 100.00 A3 1,129,250 Virginia, Revenue Bonds, UAE Mecklenburg Cogeneration LP, Series 2002, 6.500%, 10/15/17 (Alternative Minimum Tax) 500 Richmond, Virginia, Public Utility Revenue Refunding Bonds, 1/12 at 100.00 AAA 525,695 Series 2002, 5.000%, 1/15/27 - FSA Insured - ------------------------------------------------------------------------------------------------------------------------------------ WATER AND SEWER - 8.2% (5.5% OF TOTAL INVESTMENTS) 2,000 Henrico County, Virginia, Water and Sewer System Revenue 5/09 at 102.00 AA+ 2,121,040 Refunding Bonds, Series 1999, 5.000%, 5/01/22 1,680 Virginia Resources Authority, Clean Water State Revolving 10/10 at 100.00 AAA 1,830,577 Fund Revenue Bonds, Series 2000, 5.400%, 10/01/20 - ------------------------------------------------------------------------------------------------------------------------------------ $ 66,510 Total Long-Term Investments (cost $67,351,467) - 147.4% 71,467,894 =============----------------------------------------------------------------------------------------------------------------------- Other Assets Less Liabilities - 2.1% 1,005,720 -------------------------------------------------------------------------------------------------------------------- Preferred Shares, at Liquidation Value - (49.5)% (24,000,000) -------------------------------------------------------------------------------------------------------------------- Net Assets Applicable to Common Shares - 100% $ 48,473,614 ====================================================================================================================
(1) All percentages shown in the Portfolio of Investments are based on net assets applicable to Common shares unless otherwise noted. * 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. (WI) Security purchased on a when-issued basis. (a) The issuer has received a preliminary adverse determination from the Internal Revenue Service (the "IRS") regarding the tax-exempt status of the bonds' coupon payments. The Fund will continue to treat coupon payments as tax-exempt income until such time that it is formally determined that the interest on the bonds should be treated as taxable. See accompanying notes to financial statements. 49 Nuveen Virginia Dividend Advantage Municipal Fund 2 (NNB) Portfolio of INVESTMENTS May 31, 2005
PRINCIPAL OPTIONAL CALL MARKET AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE - ------------------------------------------------------------------------------------------------------------------------------------ CONSUMER STAPLES - 4.2% (2.9% OF TOTAL INVESTMENTS) Tobacco Settlement Financing Corporation of Virginia, Tobacco Settlement Asset-Backed Bonds, Series 2005: $ 1,050 5.250%, 6/01/19 6/15 at 100.00 BBB $ 1,056,825 2,700 5.500%, 6/01/26 6/15 at 100.00 BBB 2,701,026 - ------------------------------------------------------------------------------------------------------------------------------------ EDUCATION AND CIVIC ORGANIZATIONS - 7.8% (5.3% OF TOTAL INVESTMENTS) 1,000 Fairfax County Economic Development Authority, Virginia, 9/09 at 101.00 Aaa 1,079,510 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 1,062,530 Virginia, Educational Facilities Revenue Bonds, Catholic Diocese of Arlington, Series 2003, 5.500%, 10/01/33 1,500 Puerto Rico Industrial, Tourist, Educational, Medical and 12/12 at 101.00 BBB 1,607,175 Environmental Control Facilities Financing Authority, Higher Education Revenue Refunding Bonds, Ana G. Mendez University System, Series 2002, 5.375%, 12/01/21 1,000 Virginia College Building Authority, Educational Facilities No Opt. Call Aa1 1,113,070 Revenue Bonds, Public Higher Education Financing Program, Series 2004B, 5.000%, 9/01/13 2,000 Winchester Industrial Development Authority, Virginia, 10/08 at 102.00 AAA 2,142,780 Educational Facilities First Mortgage Revenue Bonds, Shenandoah University, Series 1998, 5.250%, 10/01/28 - MBIA Insured - ------------------------------------------------------------------------------------------------------------------------------------ HEALTHCARE - 18.8% (12.9% OF TOTAL INVESTMENTS) 1,500 Albemarle County Industrial Development Authority, 10/12 at 100.00 A2 1,558,215 Virginia, Hospital Revenue Bonds, Martha Jefferson Hospital, Series 2002, 5.250%, 10/01/35 1,215 Danville Industrial Development Authority, Virginia, No Opt. Call AAA 1,359,257 Hospital Revenue Bonds, Danville Regional Medical Center, Series 1998, 5.200%, 10/01/18 - AMBAC Insured 3,000 Fauquier County Industrial Development Authority, 10/12 at 102.00 AA 3,236,160 Virginia, 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 695,068 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- 1,061,970 Revenue Bonds, Bon Secours Health System Inc., Series 2002A, 5.600%, 11/15/30 1,155 Manassas Industrial Development Authority, Virginia, 4/13 at 100.00 A2 1,213,524 Hospital Revenue Bonds, Prince William Hospital, Series 2002, 5.250%, 4/01/33 1,000 Medical College of Virginia Hospital Authority, General 7/08 at 102.00 AAA 1,078,610 Revenue Bonds, Series 1998, 5.250%, 7/01/14 - MBIA Insured 1,200 Norton Industrial Development Authority, Virginia, Hospital 12/11 at 101.00 A 1,308,048 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 1,064,410 Virginia, Hospital Facility Revenue Refunding Bonds, Potomac Hospital Corporation of Prince William, Series 1998, 5.000%, 10/01/18 - FSA Insured 3,915 Roanoke Industrial Development Authority, Virginia, Hospital 7/12 at 100.00 AAA 4,290,409 Revenue Bonds, Carilion Health System, Series 2002A, 5.500%, 7/01/20 - MBIA Insured - ------------------------------------------------------------------------------------------------------------------------------------ HOUSING/SINGLE FAMILY - 8.7% (5.9% OF TOTAL INVESTMENTS) 7,485 Virginia Housing Development Authority, Commonwealth 7/11 at 100.00 AAA 7,762,768 Mortgage Bonds, Series 2001H-1, 5.350%, 7/01/31 - MBIA Insured 50 PRINCIPAL OPTIONAL CALL MARKET AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE - ------------------------------------------------------------------------------------------------------------------------------------ LONG-TERM CARE - 3.3% (2.2% OF TOTAL INVESTMENTS) $ 165 Albemarle County Industrial Development Authority, Virginia, 1/12 at 100.00 N/R $ 173,818 Residential Care Facility Revenue Bonds, Westminster Canterbury of the Blue Ridge First Mortgage, Series 2001, 6.200%, 1/01/31 650 Chesterfield County Health Center Commission, Virginia, 12/15 at 100.00 N/R 648,525 Mortgage Revenue Bonds, Lucy Corr Village, Series 2005, 5.625%, 12/01/39 1,350 James City County Industrial Development Authority, Virginia, 3/12 at 101.00 N/R 1,457,419 Residential Care Facility First Mortgage Revenue Refunding Bonds, Williamburg Landing Inc., Series 2003A, 6.000%, 3/01/23 650 Winchester Industrial Development Authority, Virginia, 1/15 at 100.00 N/R 656,812 Residential Care Facility Revenue Bonds, Westminster- Canterbury of Winchester Inc., Series 2005A, 5.200%, 1/01/27 (WI, settling 6/09/05) - ------------------------------------------------------------------------------------------------------------------------------------ MATERIALS - 1.8% (1.4% OF TOTAL INVESTMENTS) 165 Bedford County Industrial Development Authority, Virginia, 2/08 at 102.00 Ba3 165,947 Industrial Development Revenue Refunding Bonds, Nekoosa Packaging Corporation, Series 1998, 5.600%, 12/01/25 (Alternative Minimum Tax) (a) 460 Goochland County Industrial Development Authority, Virginia, 12/08 at 101.00 Ba3 462,847 Industrial Development Revenue Refunding Bonds, Nekoosa Packaging Corporation Project, Series 1998, 5.650%, 12/01/25 (Alternative Minimum Tax) (a) 1,000 Hopewell Industrial Development Authority, Virginia, No Opt. Call B 1,012,340 Environmental Improvement Revenue Bonds, Smurfit Stone Container Corporation, Series 2005, 5.250%, 6/01/15 - ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/GENERAL - 37.1% (25.4% OF TOTAL INVESTMENTS) 600 Alexandria, Virginia, General Obligation Bonds, Series 2004B, No Opt. Call AAA 671,454 5.000%, 6/15/13 540 Alexandria, Virginia, General Obligation Bonds, Series 2004C, No Opt. Call AAA 599,216 5.000%, 12/15/11 1,000 Arlington County, Virginia, General Obligation Bonds, 5/15 at 100.00 AAA 1,120,250 Series 2005, 5.000%, 5/15/16 (WI, settling 6/01/05) 1,750 Chesapeake, Virginia, General Obligation Bonds, 12/11 at 100.00 AA 1,965,740 Series 2001, 5.500%, 12/01/16 1,000 Fairfax County, Virginia, General Obligation Refunding and 6/10 at 101.00 AAA 1,065,240 Improvement Bonds, Series 2002, 5.000%, 6/01/20 1,200 Loudoun County, Virginia, General Obligation Public No Opt. Call Aaa 1,347,432 Improvement Bonds, Series 2005A, 5.000%, 7/01/14 95 Loudoun County, Virginia, General Obligation Public 5/12 at 100.00 Aaa 104,153 Improvement Bonds, Series 2002A, 5.250%, 5/01/22 1,730 Loudoun County, Virginia, General Obligation Public 11/11 at 101.00 Aaa 1,814,995 Improvement Bonds, Series 2001C, 4.500%, 11/01/17 1,840 Newport News, Virginia, General Obligation Bonds, General 7/13 at 100.00 AA 2,000,393 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 1,081,530 Series 2003B, 5.000%, 11/01/22 565 Portsmouth, Virginia, General Obligation Public Utility Refunding 6/08 at 100.00 AAA 589,103 Bonds, Series 2001B, 5.000%, 6/01/21 - FGIC Insured 1,500 Portsmouth, Virginia, General Obligation Bonds, Series 2003, No Opt. Call AAA 1,664,355 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 699,560 1,000 5.000%, 1/15/27 - AMBAC Insured 1/11 at 101.00 AAA 1,050,210 1,000 Richmond, Virginia, General Obligation Bonds, Series 2004A, 7/14 at 100.00 AAA 1,084,910 5.000%, 7/15/21 - FSA Insured Roanoke, Virginia, General Obligation Public Improvement Bonds, Series 2002A: 2,400 5.000%, 10/01/18 10/12 at 101.00 AA 2,638,944 2,435 5.000%, 10/01/19 10/12 at 101.00 AA 2,677,429 1,280 Roanoke, Virginia, General Obligation Public Improvement 10/12 at 101.00 AAA 1,394,880 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 1,251,920 1,200 5.375%, 1/01/22 1/12 at 100.00 Aa3 1,312,056 1,260 5.375%, 1/01/23 1/12 at 100.00 Aa3 1,377,659 1,325 5.375%, 1/01/24 1/12 at 100.00 Aa3 1,448,728 1,000 Staunton, Virginia, General Obligation Bonds, Series 2004, 2/14 at 101.00 AAA 1,205,980 6.250%, 2/01/25 - AMBAC Insured 51 Nuveen Virginia Dividend Advantage Municipal Fund 2 (NNB) (continued) Portfolio of INVESTMENTS May 31, 2005 PRINCIPAL OPTIONAL CALL MARKET AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE - ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/GENERAL (continued) $ 1,500 Virginia Beach, Virginia, General Obligation Public Improvement 6/11 at 101.00 AA+ $ 1,629,435 Bonds, Series 2001, 5.000%, 6/01/19 1,420 Virginia Beach, Virginia, General Obligation Refunding and 3/12 at 100.00 AA+ 1,515,310 Public Improvement Bonds, Series 2002, 5.000%, 3/01/21 - ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/LIMITED - 25.5% (17.4% OF TOTAL INVESTMENTS) 545 Bell Creek Community Development Authority, Virginia, 3/13 at 101.00 N/R 559,393 Special Assessment Bonds, Series 2003A, 6.750%, 3/01/22 1,000 Broad Street Community Development Authority, Virginia, 6/13 at 102.00 N/R 1,052,050 Revenue Bonds, Series 2003, 7.500%, 6/01/33 Buena Vista Public Recreational Facilities Authority, Virginia, Lease Revenue Bonds, Golf Course Project, Series 2005A: 210 5.250%, 7/15/25 - ACA Insured 7/15 at 100.00 A 218,778 165 5.500%, 7/15/35 - ACA Insured 7/15 at 100.00 A 172,722 1,800 Loudoun County Industrial Development Authority, Virginia, 3/13 at 100.00 AA 1,951,272 Lease Revenue Refunding Bonds, Public Facility Project, Series 2003, 5.000%, 3/01/19 400 Puerto Rico Public Buildings Authority, Guaranteed Government 7/12 at 100.00 BBB 424,232 Facilities Revenue Refunding Bonds, Series 2002D, 5.250%, 7/01/27 455 Puerto Rico Public Finance Corporation, Commonwealth 2/12 at 100.00 BBB- 489,330 Appropriation Bonds, Series 2002E, 5.500%, 8/01/29 1,000 Spotsylvania County Industrial Development Authority, 8/13 at 100.00 AAA 1,096,640 Virginia, Lease Revenue Bonds, School Facilities, Series 2003B, 5.125%, 8/01/23 - AMBAC Insured 800 Virginia Beach Development Authority, Public Facilities 5/15 at 100.00 AA 887,400 Revenue Bonds, Series 2005A, 5.000%, 5/01/16 (WI, settling 6/07/05) 1,000 Virginia College Building Authority, Educational Facilities No Opt. Call AA+ 1,096,700 Revenue Bonds, 21st Century College Program, Series 2004A, 5.000%, 2/01/11 1,790 Virginia College Building Authority, Educational Facilities 2/12 at 100.00 AA+ 1,898,044 Revenue Bonds, 21st Century College Program, Series 2002A, 5.000%, 2/01/22 1,710 Virginia Transportation Board, Transportation Revenue 5/11 at 100.00 AA+ 1,785,514 Bonds, Northern 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+ 1,813,097 1,665 5.000%, 5/15/23 5/11 at 100.00 AA+ 1,770,561 1,000 Virginia Transportation Board, Transportation Revenue Bonds, No Opt. Call AA+ 1,116,080 Northern Virginia Transportation District Program, Series 2004A, 5.000%, 5/15/14 690 Virginia Gateway Community Development Authority, 3/13 at 102.00 N/R 717,593 Prince William County, Special Assessment Bonds, Series 2003, 6.375%, 3/01/30 1,000 Virginia Public Building Authority, Public Facilities Revenue No Opt. Call AA+ 1,101,560 Bonds, Series 2004B, 5.000%, 8/01/11 570 Virginia Public School Authority, School Financing Bonds, No Opt. Call AA+ 627,889 1997 Resolution, Series 2004C, 5.000%, 8/01/11 2,540 Virginia Public School Authority, School Financing Bonds, 8/11 at 101.00 AA+ 2,762,987 1997 Resolution, Series 2001B, 5.000%, 8/01/19 1,265 Virginia Resources Authority, Infrastructure Revenue Bonds, 5/10 at 101.00 AA 1,323,215 Pooled Loan Bond Program, Series 2001D, 5.000%, 5/01/26 - ------------------------------------------------------------------------------------------------------------------------------------ TRANSPORTATION - 2.3% (1.5% OF TOTAL INVESTMENTS) 1,000 Metropolitan Washington D.C. Airports Authority, Airport 10/12 at 100.00 AAA 1,047,000 System Revenue Bonds, Series 2002A, 5.125%, 10/01/26 (Alternative Minimum Tax) - FGIC Insured 52 PRINCIPAL OPTIONAL CALL MARKET AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE - ------------------------------------------------------------------------------------------------------------------------------------ TRANSPORTATION (continued) $ Pocahontas Parkway Association, Virginia, Senior Lien Revenue Bonds, Route 895 Connector Toll Road, Series 1998A: 25 5.000%, 8/15/05 No Opt. Call BB $ 25,023 300 5.250%, 8/15/07 No Opt. Call BB 307,059 325 5.500%, 8/15/28 8/08 at 102.00 BB 321,402 300 Virginia Resources Authority, Airports Revolving Fund 2/11 at 100.00 Aa2 326,469 Revenue Bonds, Series 2001A, 5.250%, 8/01/17 - ------------------------------------------------------------------------------------------------------------------------------------ U.S. GUARANTEED *** - 14.6% (10.0% OF TOTAL INVESTMENTS) 1,000 Bristol, Virginia, General Obligation Utility System Revenue 11/12 at 102.00 AAA 1,119,800 Bonds, Series 2002, 5.000%, 11/01/24 - FSA Insured 195 Fairfax County Water Authority, Virginia, Water Revenue 4/12 at 100.00 AAA 215,563 Refunding Bonds, Series 2002, 5.000%, 4/01/27 (Pre-refunded to 4/01/12) 445 Loudoun County, Virginia, General Obligation Public 5/12 at 100.00 Aaa 499,664 Improvement Bonds, Series 2002A, 5.250%, 5/01/22 (Pre-refunded to 5/01/12) Loudoun County Industrial Development Authority, Virginia, Hospital Revenue Bonds, Loudoun Hospital Center, Series 2002A: 250 6.000%, 6/01/22 (Pre-refunded to 6/01/12) 6/12 at 101.00 BBB*** 290,333 600 6.100%, 6/01/32 (Pre-refunded to 6/01/12) 6/12 at 101.00 BBB*** 700,494 3,750 Puerto Rico Infrastructure Financing Authority, Special 10/10 at 101.00 AAA 4,112,663 Obligation Bonds, Series 2000A, 5.500%, 10/01/40 1,100 Puerto Rico Public Buildings Authority, Guaranteed 7/12 at 100.00 BBB*** 1,223,090 Government Facilities Revenue Refunding Bonds, Series 2002D, 5.250%, 7/01/27 (Pre-refunded to 7/01/12) 1,345 Puerto Rico Public Finance Corporation, Commonwealth 2/12 at 100.00 Aaa 1,526,050 Appropriation Bonds, Series 2002E, 5.500%, 8/01/29 (Pre-refunded to 2/01/12) 1,000 Virginia College Building Authority, Educational Facilities 8/07 at 101.00 AA+*** 1,053,690 Revenue Bonds, 21st Century College Program, Series 1998, 5.000%, 8/01/13 (Pre-refunded to 8/01/07) 1,710 Virginia Public Building Authority, Public Facilities Revenue 8/08 at 100.00 AAA 1,816,670 Bonds, Series 1999A, 5.000%, 8/01/19 (Pre-refunded to 8/01/08) - MBIA Insured 500 Virginia Public Building Authority, Public Facilities Revenue 8/10 at 100.00 AA+*** 562,910 Bonds, Series 2000A, 5.750%, 8/01/20 (Pre-refunded to 8/01/10) - ------------------------------------------------------------------------------------------------------------------------------------ UTILITIES - 6.3% (4.3% OF TOTAL INVESTMENTS) 2,000 Mecklenburg County Industrial Development Authority, 10/12 at 100.00 A3 2,258,500 Virginia, Revenue Bonds, UAE Mecklenburg Cogeneration LP, 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 3,375,531 Series 2000HH, 5.250%, 7/01/29 - FSA Insured - ------------------------------------------------------------------------------------------------------------------------------------ WATER AND SEWER - 15.8% (10.8% OF TOTAL INVESTMENTS) 805 Fairfax County Water Authority, Virginia, Water Revenue 4/12 at 100.00 AAA 849,959 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 1,165,800 3,000 5.500%, 11/15/19 - FSA Insured No Opt. Call AAA 3,528,330 Norfolk, Virginia, Water Revenue Refunding Bonds, Series 2001: 1,130 5.000%, 11/01/18 - FGIC Insured 11/11 at 100.00 AAA 1,222,717 1,190 5.000%, 11/01/19 - FGIC Insured 11/11 at 100.00 AAA 1,287,640 1,450 5.000%, 11/01/23 - FGIC Insured 11/11 at 100.00 AAA 1,548,209 1,525 5.000%, 11/01/24 - FGIC Insured 11/11 at 100.00 AAA 1,628,288 53 Nuveen Virginia Dividend Advantage Municipal Fund 2 (NNB) (continued) Portfolio of INVESTMENTS May 31, 2005 PRINCIPAL OPTIONAL CALL MARKET AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE - ------------------------------------------------------------------------------------------------------------------------------------ WATER AND SEWER (continued) $ 500 Virginia Beach, Virginia, Water and Sewerage System 8/10 at 100.00 AA $ 543,345 Revenue Bonds, Series 2000, 5.125%, 8/01/14 2,250 Virginia Resources Authority, Water and Sewerage System 5/11 at 101.00 AA 2,355,525 Revenue Bonds, Caroline County Public Improvements Project, Series 2001, 5.000%, 5/01/32 - ------------------------------------------------------------------------------------------------------------------------------------ $ 121,410 Total Long-Term Investments (cost $123,010,441) - 146.2% 131,056,726 =============----------------------------------------------------------------------------------------------------------------------- Other Assets Less Liabilities - 0.7% 569,337 -------------------------------------------------------------------------------------------------------------------- Preferred Shares, at Liquidation Value - (46.9)% (42,000,000) -------------------------------------------------------------------------------------------------------------------- Net Assets Applicable to Common Shares - 100% $ 89,626,063 ====================================================================================================================
FORWARD SWAPS OUTSTANDING AT MAY 31, 2005:
UNREALIZED EFFECTIVE TERMINATION APPRECIATION NOTIONAL AMOUNT DATE(2) DATE (DEPRECIATION) - ------------------------------------------------------------------------------------------------------------------------------------ Agreement with Goldman Sachs dated December 6, 2004, to pay semi-annually the notional amount multiplied by 5.324% (annualized) and receive quarterly the notional amount multiplied by the three-month USD-LIBOR (United States Dollar-London Inter-Bank Offered Rates). $ 700,000 7/11/05 7/11/25 $ (56,001) Agreement with JPMorgan dated January 11, 2005, to pay semi-annually the notional amount multiplied by 5.235% (annualized) and receive quarterly the notional amount multiplied by the three-month USD-LIBOR (United States Dollar-London Inter-Bank Offered Rates). 2,400,000 8/17/05 8/17/25 (160,227) - ------------------------------------------------------------------------------------------------------------------------------------ $(216,228) - ------------------------------------------------------------------------------------------------------------------------------------
(1) All percentages shown in the Portfolio of Investments are based on net assets applicable to Common shares unless otherwise noted. (2) Effective date represents the date on which both the Fund and counterparty commence interest payment accruals on each forward swap contract. * 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. (WI) Security purchased on a when-issued basis. (a) The issuer has received a preliminary adverse determination from the Internal Revenue Service (the "IRS") regarding the tax-exempt status of the bonds' coupon payments. The Fund will continue to treat coupon payments as tax-exempt income until such time that it is formally determined that the interest on the bonds should be treated as taxable. See accompanying notes to financial statements. 54 Statement of ASSETS AND LIABILITIES May 31, 2005
MARYLAND MARYLAND MARYLAND MARYLAND PREMIUM DIVIDEND DIVIDEND DIVIDEND INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3 (NMY) (NFM) (NZR) (NWI) - ------------------------------------------------------------------------------------------------------------------------------------ ASSETS Investments, at market value (cost $223,436,181, $88,962,873, $90,521,026 and $112,009,829, respectively) $235,581,813 $93,202,017 $95,299,467 $116,206,833 Cash -- 97,545 -- 815,530 Receivables: Interest 4,120,335 1,607,716 1,520,044 1,683,469 Investments sold 100,000 250,000 -- -- Other assets 7,998 7,814 4,527 4,610 - ------------------------------------------------------------------------------------------------------------------------------------ Total assets 239,810,146 95,165,092 96,824,038 118,710,442 - ------------------------------------------------------------------------------------------------------------------------------------ LIABILITIES Cash overdraft 5,198 -- 174,589 -- Payable for investments purchased -- -- -- -- Forward swaps, at value -- 64,747 98,762 194,876 Accrued expenses: Management fees 128,760 27,455 27,864 32,208 Other 54,159 19,642 21,795 26,314 Preferred share dividends payable 25,593 1,754 1,349 14,212 - ------------------------------------------------------------------------------------------------------------------------------------ Total liabilities 213,710 113,598 324,359 267,610 - ------------------------------------------------------------------------------------------------------------------------------------ Preferred shares, at liquidation value 79,100,000 32,000,000 32,000,000 39,000,000 ==================================================================================================================================== Net assets applicable to Common shares $160,496,436 $63,051,494 $64,499,679 $ 79,442,832 ==================================================================================================================================== Common shares outstanding 10,612,282 4,166,281 4,174,247 5,359,275 ==================================================================================================================================== Net asset value per Common share outstanding (net assets applicable to Common shares, divided by Common shares outstanding) $ 15.12 $ 15.13 $ 15.45 $ 14.82 ==================================================================================================================================== NET ASSETS APPLICABLE TO COMMON SHARES CONSIST OF: - ------------------------------------------------------------------------------------------------------------------------------------ Common shares, $.01 par value per share $ 106,123 $ 41,663 $ 41,742 $ 53,593 Paid-in surplus 147,373,888 59,098,438 59,214,312 75,640,534 Undistributed net investment income 989,129 395,654 516,056 110,535 Accumulated net realized gain (loss) from investments and forward swaps (118,336) (658,658) 47,890 (363,958) Net unrealized appreciation of investments and forward swaps 12,145,632 4,174,397 4,679,679 4,002,128 - ------------------------------------------------------------------------------------------------------------------------------------ Net assets applicable to Common shares $160,496,436 $63,051,494 $64,499,679 $ 79,442,832 ==================================================================================================================================== Authorized shares: Common Unlimited Unlimited Unlimited Unlimited Preferred Unlimited Unlimited Unlimited Unlimited ====================================================================================================================================
See accompanying notes to financial statements. 55 Statement of ASSETS AND LIABILITIES (continued)
VIRGINIA VIRGINIA VIRGINIA PREMIUM DIVIDEND DIVIDEND INCOME ADVANTAGE ADVANTAGE 2 (NPV) (NGB) (NNB) - ------------------------------------------------------------------------------------------------------------------------------------ ASSETS Investments, at market value (cost $187,979,800, $67,351,467 and $123,010,441, respectively) $201,426,318 $71,467,894 $131,056,726 Cash 460,718 884,433 800,986 Receivables: Interest 2,906,276 1,012,232 1,679,949 Investments sold 2,640,806 611,562 1,021,611 Other assets 9,702 7,743 6,304 - ------------------------------------------------------------------------------------------------------------------------------------ Total assets 207,443,820 73,983,864 134,565,576 - ------------------------------------------------------------------------------------------------------------------------------------ LIABILITIES Cash overdraft -- -- -- Payable for investments purchased 3,125,612 1,465,415 2,658,399 Forward swaps, at value -- -- 216,228 Accrued expenses: Management fees 109,925 20,910 37,912 Other 45,976 16,034 24,903 Preferred share dividends payable 21,911 7,891 2,071 - ------------------------------------------------------------------------------------------------------------------------------------ Total liabilities 3,303,424 1,510,250 2,939,513 - ------------------------------------------------------------------------------------------------------------------------------------ Preferred shares, at liquidation value 63,800,000 24,000,000 42,000,000 ==================================================================================================================================== Net assets applicable to Common shares $140,340,396 $48,473,614 $ 89,626,063 ==================================================================================================================================== Common shares outstanding 8,871,611 3,123,586 5,708,726 ==================================================================================================================================== Net asset value per Common share outstanding (net assets applicable to Common shares, divided by Common shares outstanding) $ 15.82 $ 15.52 $ 15.70 ==================================================================================================================================== NET ASSETS APPLICABLE TO COMMON SHARES CONSIST OF: - ------------------------------------------------------------------------------------------------------------------------------------ Common shares, $.01 par value per share $ 88,716 $ 31,236 $ 57,087 Paid-in surplus 124,803,922 44,283,129 81,038,843 Undistributed net investment income 1,047,355 370,691 592,424 Accumulated net realized gain (loss) from investments and forward swaps 953,885 (327,869) 107,652 Net unrealized appreciation of investments and forward swaps 13,446,518 4,116,427 7,830,057 - ------------------------------------------------------------------------------------------------------------------------------------ Net assets applicable to Common shares $140,340,396 $48,473,614 $ 89,626,063 ==================================================================================================================================== Authorized shares: Common Unlimited Unlimited Unlimited Preferred Unlimited Unlimited Unlimited ====================================================================================================================================
See accompanying notes to financial statements. 56 Statement of OPERATIONS year ended May 31, 2005
MARYLAND MARYLAND MARYLAND MARYLAND PREMIUM DIVIDEND DIVIDEND DIVIDEND INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3 (NMY) (NFM) (NZR) (NWI) - ------------------------------------------------------------------------------------------------------------------------------------ INVESTMENT INCOME $11,687,694 $4,570,192 $4,418,238 $5,166,760 - ------------------------------------------------------------------------------------------------------------------------------------ EXPENSES Management fees 1,504,914 605,304 614,377 752,609 Preferred shares - auction fees 197,750 80,000 80,000 97,500 Preferred shares - dividend disbursing agent fees 20,000 10,000 10,000 10,000 Shareholders' servicing agent fees and expenses 28,643 2,387 1,290 1,224 Custodian's fees and expenses 55,860 26,913 25,593 30,888 Trustees' fees and expenses 5,517 2,239 2,018 2,604 Professional fees 17,933 12,775 12,686 13,700 Shareholders' reports - printing and mailing expenses 34,903 14,584 13,060 19,985 Stock exchange listing fees 10,786 354 355 456 Investor relations expense 32,728 10,838 8,016 16,065 Other expenses 28,988 14,637 10,949 14,035 - ------------------------------------------------------------------------------------------------------------------------------------ Total expenses before custodian fee credit and expense reimbursement 1,938,022 780,031 778,344 959,066 Custodian fee credit (7,844) (5,257) (5,821) (6,342) Expense reimbursement -- (282,000) (286,227) (374,006) - ------------------------------------------------------------------------------------------------------------------------------------ Net expenses 1,930,178 492,774 486,296 578,718 - ------------------------------------------------------------------------------------------------------------------------------------ Net investment income 9,757,516 4,077,418 3,931,942 4,588,042 - ------------------------------------------------------------------------------------------------------------------------------------ REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain from investments 795,306 114,678 274,944 94,606 Net realized gain (loss) from forward swaps -- (186,945) (171,422) (447,668) Change in net unrealized appreciation (depreciation) of investments 9,023,910 3,306,967 3,746,058 5,755,731 Change in net unrealized appreciation (depreciation) of forward swaps -- (64,747) (98,762) (194,876) - ------------------------------------------------------------------------------------------------------------------------------------ Net realized and unrealized gain 9,819,216 3,169,953 3,750,818 5,207,793 - ------------------------------------------------------------------------------------------------------------------------------------ DISTRIBUTIONS TO PREFERRED SHAREHOLDERS From net investment income (1,044,071) (417,536) (392,360) (514,154) From accumulated net realized gains from investments -- -- (15,798) (2,976) - ------------------------------------------------------------------------------------------------------------------------------------ Decrease in net assets applicable to Common shares from distributions to Preferred shareholders (1,044,071) (417,536) (408,158) (517,130) - ------------------------------------------------------------------------------------------------------------------------------------ Net increase in net assets applicable to Common shares from operations $18,532,661 $6,829,835 $7,274,602 $9,278,705 ====================================================================================================================================
See accompanying notes to financial statements. 57 Statement of OPERATIONS (continued)
VIRGINIA VIRGINIA VIRGINIA PREMIUM DIVIDEND DIVIDEND INCOME ADVANTAGE ADVANTAGE 2 (NPV) (NGB) (NNB) - ------------------------------------------------------------------------------------------------------------------------------------ INVESTMENT INCOME $ 9,879,638 $3,489,824 $ 6,103,885 - ------------------------------------------------------------------------------------------------------------------------------------ EXPENSES Management fees 1,287,027 457,896 836,070 Preferred shares - auction fees 159,500 60,000 105,000 Preferred shares - dividend disbursing agent fees 20,000 10,000 10,000 Shareholders' servicing agent fees and expenses 23,799 1,443 1,734 Custodian's fees and expenses 49,197 20,601 33,651 Trustees' fees and expenses 4,332 1,715 2,793 Professional fees 16,819 13,031 14,084 Shareholders' reports - printing and mailing expenses 28,753 12,049 17,370 Stock exchange listing fees 10,818 266 485 Investor relations expense 28,482 10,188 15,212 Other expenses 16,852 13,933 14,320 - ------------------------------------------------------------------------------------------------------------------------------------ Total expenses before custodian fee credit and expense reimbursement 1,645,579 601,122 1,050,719 Custodian fee credit (8,249) (4,556) (6,372) Expense reimbursement -- (213,330) (389,800) - ------------------------------------------------------------------------------------------------------------------------------------ Net expenses 1,637,330 383,236 654,547 - ------------------------------------------------------------------------------------------------------------------------------------ Net investment income 8,242,308 3,106,588 5,449,338 - ------------------------------------------------------------------------------------------------------------------------------------ REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain from investments 1,338,639 277,377 886,193 Net realized gain (loss) from forward swaps -- -- (378,231) Change in net unrealized appreciation (depreciation) of investments 6,847,395 3,250,753 6,118,300 Change in net unrealized appreciation (depreciation) of forward swaps -- -- (216,228) - ------------------------------------------------------------------------------------------------------------------------------------ Net realized and unrealized gain 8,186,034 3,528,130 6,410,034 - ------------------------------------------------------------------------------------------------------------------------------------ DISTRIBUTIONS TO PREFERRED SHAREHOLDERS From net investment income (765,695) (282,554) (505,130) From accumulated net realized gains from investments -- -- (60,997) - ------------------------------------------------------------------------------------------------------------------------------------ Decrease in net assets applicable to Common shares from distributions to Preferred shareholders (765,695) (282,554) (566,127) - ------------------------------------------------------------------------------------------------------------------------------------ Net increase in net assets applicable to Common shares from operations $15,662,647 $6,352,164 $11,293,245 ====================================================================================================================================
See accompanying notes to financial statements. 58 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 5/31/05 5/31/04 5/31/05 5/31/04 5/31/05 5/31/04 - ------------------------------------------------------------------------------------------------------------------------------------ OPERATIONS Net investment income $ 9,757,516 $ 10,156,311 $ 4,077,418 $ 4,218,418 $ 3,931,942 $ 4,014,581 Net realized gain (loss) from investments 795,306 1,568,621 114,678 (29,789) 274,944 323,150 Net realized gain (loss) from forward swaps -- -- (186,945) -- (171,422) -- Change in net unrealized appreciation (depreciation) of investments 9,023,910 (10,232,161) 3,306,967 (4,437,544) 3,746,058 (4,844,253) Change in net unrealized appreciation (depreciation) of forward swaps -- -- (64,747) -- (98,762) -- Distributions to Preferred Shareholders: From net investment income (1,044,071) (599,393) (417,536) (223,126) (392,360) (251,576) From accumulated net realized gains from investments -- -- -- -- (15,798) (7,701) - ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets applicable to Common shares from operations 18,532,661 893,378 6,829,835 (472,041) 7,274,602 (765,799) - ------------------------------------------------------------------------------------------------------------------------------------ DISTRIBUTIONS TO COMMON SHAREHOLDERS From net investment income (9,572,060) (9,643,203) (3,885,205) (3,881,861) (3,655,367) (3,627,102) From accumulated net realized gains from investments -- -- -- -- (256,385) (77,957) - ------------------------------------------------------------------------------------------------------------------------------------ Decrease in net assets applicable to Common shares from distributions to Common shareholders (9,572,060) (9,643,203) (3,885,205) (3,881,861) (3,911,752) (3,705,059) - ------------------------------------------------------------------------------------------------------------------------------------ CAPITAL SHARE TRANSACTIONS Net proceeds from Common shares sold and issued to shareholders due to reinvestment of distributions 429,038 441,548 65,542 57,266 56,507 46,904 Preferred shares offering costs -- -- -- -- 16,302 (1,870) - ------------------------------------------------------------------------------------------------------------------------------------ Net increase in net assets applicable to Common shares from capital share transactions 429,038 441,548 65,542 57,266 72,809 45,034 - ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets applicable to Common shares 9,389,639 (8,308,277) 3,010,172 (4,296,636) 3,435,659 (4,425,824) Net assets applicable to Common shares at the beginning of year 151,106,797 159,415,074 60,041,322 64,337,958 61,064,020 65,489,844 - ------------------------------------------------------------------------------------------------------------------------------------ Net assets applicable to Common shares at the end of year $160,496,436 $151,106,797 $63,051,494 $60,041,322 $64,499,679 $61,064,020 ==================================================================================================================================== Undistributed net investment income at the end of year $ 989,129 $ 1,848,894 $ 395,654 $ 621,007 $ 516,056 $ 638,104 ====================================================================================================================================
See accompanying notes to financial statements. 59 Statement of CHANGES IN NET ASSETS (continued)
MARYLAND DIVIDEND VIRGINIA PREMIUM VIRGINIA DIVIDEND ADVANTAGE 3 (NWI) INCOME (NPV) ADVANTAGE (NGB) ---------------------------- ----------------------------- ---------------------------- YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED 5/31/05 5/31/04 5/31/05 5/31/04 5/31/05 5/31/04 - ------------------------------------------------------------------------------------------------------------------------------------ OPERATIONS Net investment income $ 4,588,042 $ 4,664,021 $ 8,242,308 $ 8,615,487 $ 3,106,588 $ 3,184,343 Net realized gain (loss) from investments 94,606 419,773 1,338,639 1,376,071 277,377 134,876 Net realized gain (loss) from forward swaps (447,668) -- -- -- -- -- Change in net unrealized appreciation (depreciation) of investments 5,755,731 (5,940,325) 6,847,395 (10,254,013) 3,250,753 (3,401,688) Change in net unrealized appreciation (depreciation) of forward swaps (194,876) -- -- -- -- -- Distributions to Preferred Shareholders: From net investment income (514,154) (329,706) (765,695) (443,213) (282,554) (168,056) From accumulated net realized gains from investments (2,976) -- -- -- -- -- - ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets applicable to Common shares from operations 9,278,705 (1,186,237) 15,662,647 (705,668) 6,352,164 (250,525) - ------------------------------------------------------------------------------------------------------------------------------------ DISTRIBUTIONS TO COMMON SHAREHOLDERS From net investment income (4,164,157) (4,211,017) (7,997,824) (8,044,962) (2,913,141) (2,910,545) From accumulated net realized gains from investments (40,734) -- -- -- -- -- - ------------------------------------------------------------------------------------------------------------------------------------ Decrease in net assets applicable to Common shares from distributions to Common shareholders (4,204,891) (4,211,017) (7,997,824) (8,044,962) (2,913,141) (2,910,545) - ------------------------------------------------------------------------------------------------------------------------------------ CAPITAL SHARE TRANSACTIONS Net proceeds from Common shares sold and issued to shareholders due to reinvestment of distributions -- 72,758 553,214 649,807 46,268 47,883 Preferred shares offering costs -- (6,570) -- -- -- -- - ------------------------------------------------------------------------------------------------------------------------------------ Net increase in net assets applicable to Common shares from capital share transactions -- 66,188 553,214 649,807 46,268 47,883 - ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets applicable to Common shares 5,073,814 (5,331,066) 8,218,037 (8,100,823) 3,485,291 (3,113,187) Net assets applicable to Common shares at the beginning of year 74,369,018 79,700,084 132,122,359 140,223,182 44,988,323 48,101,510 - ------------------------------------------------------------------------------------------------------------------------------------ Net assets applicable to Common shares at the end of year $79,442,832 $74,369,018 $140,340,396 $132,122,359 $48,473,614 $44,988,323 ==================================================================================================================================== Undistributed net investment income at the end of year $ 110,535 $ 206,638 $ 1,047,355 $ 1,592,552 $ 370,691 $ 459,798 ====================================================================================================================================
See accompanying notes to financial statements. 60
VIRGINIA DIVIDEND ADVANTAGE 2 (NNB) ---------------------------- YEAR ENDED YEAR ENDED 5/31/05 5/31/04 - ------------------------------------------------------------------------------------------------------------------------------------ OPERATIONS Net investment income $ 5,449,338 $ 5,615,166 Net realized gain (loss) from investments 886,193 729,712 Net realized gain (loss) from forward swaps (378,231) -- Change in net unrealized appreciation (depreciation) of investments 6,118,300 (7,681,558) Change in net unrealized appreciation (depreciation) of forward swaps (216,228) -- Distributions to Preferred Shareholders: From net investment income (505,130) (320,789) From accumulated net realized gains from investments (60,997) (24,663) - ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets applicable to Common shares from operations 11,293,245 (1,682,132) - ------------------------------------------------------------------------------------------------------------------------------------ DISTRIBUTIONS TO COMMON SHAREHOLDERS From net investment income (5,047,084) (5,062,594) From accumulated net realized gains from investments (1,070,956) (268,662) - ------------------------------------------------------------------------------------------------------------------------------------ Decrease in net assets applicable to Common shares from distributions to Common shareholders (6,118,040) (5,331,256) - ------------------------------------------------------------------------------------------------------------------------------------ CAPITAL SHARE TRANSACTIONS Net proceeds from Common shares sold and issued to shareholders due to reinvestment of distributions 202,523 196,390 Preferred shares offering costs -- -- - ------------------------------------------------------------------------------------------------------------------------------------ Net increase in net assets applicable to Common shares from capital share transactions 202,523 196,390 - ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets applicable to Common shares 5,377,728 (6,816,998) Net assets applicable to Common shares at the beginning of year 84,248,335 91,065,333 - ------------------------------------------------------------------------------------------------------------------------------------ Net assets applicable to Common shares at the end of year $89,626,063 $84,248,335 ==================================================================================================================================== Undistributed net investment income at the end of year $ 592,424 $ 695,300 ====================================================================================================================================
See accompanying notes to financial statements. 61 Notes to FINANCIAL STATEMENTS 1. GENERAL INFORMATION AND SIGNIFICANT ACCOUNTING POLICIES The funds (the "Funds") covered in this report and their corresponding Common share stock exchange symbols are Nuveen 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. 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. Effective January 1, 2005, Nuveen Advisory Corp. ("NAC"), the Funds' previous Adviser, and its affiliate, Nuveen Institutional Advisory Corp. ("NIAC"), were merged into Nuveen Asset Management ("NAM"), each wholly owned subsidiaries of Nuveen Investments, Inc. ("Nuveen"). As a result of the merger, NAM is now the Adviser to all funds previously advised by either NAC or NIAC. The following is a summary of significant accounting policies followed by the Funds in the preparation of their financial statements in accordance with U.S. generally accepted accounting principles. Investment Valuation The prices of municipal bonds in each Fund's investment portfolio are provided by a pricing service approved by the Fund's Board of Trustees. When price quotes are not readily available (which is usually the case for municipal securities), the pricing services 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. Prices of derivative investments are also provided by an independent pricing service approved by each Fund's Board of Trustees. If the pricing service is unable to supply a price for a derivative investment each Fund may use a market quote provided by a major broker/dealer in such investments. If it is determined that market prices for an investment are unavailable or inappropriate, the Board of Trustees of the Funds, or its designee, may establish a fair value for the investment. Temporary investments in securities that have variable rate and demand features qualifying them as short-term 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 on a when-issued or delayed delivery basis may have extended settlement periods. Any 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, 2005, Virginia Premium Income (NPV), Virginia Dividend Advantage (NGB) and Virginia Dividend Advantage 2 (NNB) had outstanding when-issued purchase commitments of $3,125,612, $1,465,415, and $2,658,399, respectively. 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. Investment income also includes paydown gains and losses, if any. 62 Income Taxes Each Fund is a separate taxpayer for federal income tax purposes. Each Fund intends to distribute substantially all net investment income and net capital gains to shareholders and to otherwise comply with the requirements of Subchapter M of the Internal Revenue Code applicable to regulated investment companies. Therefore, no federal income tax provision is required. Furthermore, each Fund intends to satisfy conditions which will enable interest from municipal securities, which is exempt from regular federal and designated state income taxes, to retain such tax-exempt status when distributed to shareholders of the Funds. All monthly tax-exempt income dividends paid during the fiscal year ended May 31, 2005, have been designated Exempt Interest Dividends. Net realized capital gains and ordinary income distributions paid by the Funds are subject to federal taxation. Dividends and Distributions to Common Shareholders Dividends from tax-exempt net investment income are declared monthly. Net realized capital gains and/or market discount from investment transactions, if any, are distributed to shareholders not less frequently than annually. Furthermore, capital gains are distributed only to the extent they exceed available capital loss carryforwards. Distributions to Common shareholders of tax-exempt net investment income, net realized capital gains and/or market discount, if any, are recorded on the ex-dividend date. The amount and timing of distributions are determined in accordance with federal income tax regulations, which may differ from U.S. generally accepted accounting principles. Preferred Shares The Funds have issued and outstanding Preferred shares, $25,000 stated value per share, as a means of effecting financial leverage. Each Fund's Preferred shares are issued in one or more Series. The dividend rate on each Series is determined every seven days, pursuant to a dutch auction process overseen by the auction agent, and is payable weekly at the end of each rate period. The number of Preferred shares outstanding, by Series and in total, for each Fund is as follows: MARYLAND MARYLAND MARYLAND MARYLAND PREMIUM DIVIDEND DIVIDEND DIVIDEND INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3 (NMY) (NFM) (NZR) (NWI) - -------------------------------------------------------------------------------- Number of shares: Series M -- 1,280 -- -- Series T -- -- -- 1,560 Series W 1,404 -- -- -- Series TH 1,760 -- -- -- Series F -- -- 1,280 -- - -------------------------------------------------------------------------------- Total 3,164 1,280 1,280 1,560 ================================================================================ 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 ================================================================================ 63 Notes to FINANCIAL STATEMENTS (continued) Forward Swap Transactions The Funds may invest in certain derivative financial instruments. The Funds' use of forward interest rate swap transactions is intended to mitigate the negative impact that an increase in long-term interest rates could have on Common share net asset value. Forward interest rate swap transactions involve each Fund's agreement with the counterparty to pay, in the future, a fixed rate payment in exchange for the counterparty paying the Fund a variable rate payment. The amount of the payment obligation is based on the notional amount of the forward swap contract. The Funds may close out a contract prior to the effective date at which point a realized gain or loss would be recognized. When a forward swap is terminated, it does not involve the delivery of securities or other underlying assets or principal, but rather is settled in cash. Each Fund intends, but is not obligated to, terminate its forward swaps before the effective date. Accordingly, the risk of loss with respect to the swap counterparty on such transactions is limited to the credit risk associated with a counterparty failing to honor its commitment to pay any realized gain to the Fund upon termination. To minimize such credit risk, all counterparties are required to pledge collateral daily (based on the daily valuation of each swap) on behalf of each Fund with a value approximately equal to the amount of any unrealized gain above a pre-determined threshold. Reciprocally, when any of the Funds have an unrealized loss on a swap contract, the Funds have instructed the custodian to pledge assets of the Funds as collateral with a value approximately equal to the amount of the unrealized loss above a pre-determined threshold. Collateral pledges are monitored and subsequently adjusted if and when the swap valuations fluctuate, either up or down, by at least the pre-determined threshold amount. Custodian Fee Credit Each Fund has an arrangement with the custodian bank whereby certain custodian fees and expenses are reduced by credits earned on each Fund's cash on deposit with the bank. Such deposit arrangements are an alternative to overnight investments. Indemnifications Under the Funds' organizational documents, their Officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Funds. In addition, in the normal course of business, the Funds enter into contracts that provide general indemnifications to other parties. The Funds' maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Funds that have not yet occurred. However, the Funds have not had prior claims or losses pursuant to these contracts and expect the risk of loss to be remote. Use of Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets applicable to Common shares from operations during the reporting period. Actual results may differ from those estimates. 64 2. FUND SHARES Transactions in Common 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 5/31/05 5/31/04 5/31/05 5/31/04 5/31/05 5/31/04 - --------------------------------------------------------------------------------------------------------- Common shares issued to shareholders due to reinvestment of distributions 27,491 27,206 4,162 3,448 3,606 2,757 ========================================================================================================= MARYLAND DIVIDEND VIRGINIA PREMIUM VIRGINIA DIVIDEND ADVANTAGE 3 (NWI) INCOME (NPV) ADVANTAGE (NGB) ------------------------ ----------------------- ----------------------- YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED 5/31/05 5/31/04 5/31/05 5/31/04 5/31/05 5/31/04 - --------------------------------------------------------------------------------------------------------- Common shares issued to shareholders due to reinvestment of distributions -- 4,992 33,307 37,945 2,761 2,763 ========================================================================================================= VIRGINIA DIVIDEND ADVANTAGE 2 (NNB) ----------------------- YEAR ENDED YEAR ENDED 5/31/05 5/31/04 - --------------------------------------------------------------------------------------------------------- Common shares issued to shareholders due to reinvestment of distributions 12,458 11,856 =========================================================================================================
3. SECURITIES TRANSACTIONS Purchases and sales (including maturities) of investments in long-term municipal securities during the fiscal year ended May 31, 2005, were as follows:
MARYLAND MARYLAND MARYLAND MARYLAND PREMIUM DIVIDEND DIVIDEND DIVIDEND INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3 (NMY) (NFM) (NZR) (NWI) - ---------------------------------------------------------------------------------------------------------- Purchases $22,782,143 $9,712,115 $9,756,308 $13,847,395 Sales and maturities 22,973,381 9,669,954 9,600,840 13,206,813 ========================================================================================================== VIRGINIA VIRGINIA VIRGINIA PREMIUM DIVIDEND DIVIDEND INCOME ADVANTAGE ADVANTAGE 2 (NPV) (NGB) (NNB) - ---------------------------------------------------------------------------------------------------------- Purchases $34,305,395 $10,986,478 $17,223,117 Sales and maturities 34,192,119 10,450,186 16,943,064 ==========================================================================================================
65 Notes to FINANCIAL STATEMENTS (continued) 4. INCOME TAX INFORMATION The following information is presented on an income tax basis. Differences between amounts for financial statement and federal income tax purposes are primarily due to the treatment of paydown gains and losses on investments, timing differences in recognizing income on taxable market discount securities and timing differences in recognizing certain gains and losses on investment transactions. At May 31, 2005, the cost of investments was as follows:
MARYLAND MARYLAND MARYLAND MARYLAND PREMIUM DIVIDEND DIVIDEND DIVIDEND INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3 (NMY) (NFM) (NZR) (NWI) - ---------------------------------------------------------------------------------------------------------- Cost of investments $223,153,695 $89,066,231 $90,572,057 $112,240,795 ========================================================================================================== VIRGINIA VIRGINIA VIRGINIA PREMIUM DIVIDEND DIVIDEND INCOME ADVANTAGE ADVANTAGE 2 (NPV) (NGB) (NNB) - ---------------------------------------------------------------------------------------------------------- Cost of investments $187,737,808 $67,328,282 $123,277,111 ==========================================================================================================
Gross unrealized appreciation and gross unrealized depreciation of investments at May 31, 2005, were as follows:
MARYLAND MARYLAND MARYLAND MARYLAND PREMIUM DIVIDEND DIVIDEND DIVIDEND INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3 (NMY) (NFM) (NZR) (NWI) - ---------------------------------------------------------------------------------------------------------- Gross unrealized: Appreciation $13,061,319 $4,406,091 $4,852,235 $4,283,788 Depreciation (633,201) (270,305) (124,825) (317,750) - ---------------------------------------------------------------------------------------------------------- Net unrealized appreciation of investments $12,428,118 $4,135,786 $4,727,410 $3,966,038 ========================================================================================================== VIRGINIA VIRGINIA VIRGINIA PREMIUM DIVIDEND DIVIDEND INCOME ADVANTAGE ADVANTAGE 2 (NPV) (NGB) (NNB) - ---------------------------------------------------------------------------------------------------------- Gross unrealized: Appreciation $13,715,337 $4,199,313 $8,136,964 Depreciation (26,827) (59,701) (357,349) - ---------------------------------------------------------------------------------------------------------- Net unrealized appreciation of investments $13,688,510 $4,139,612 $7,779,615 ==========================================================================================================
66 The tax components of undistributed net investment income and net realized gains at May 31, 2005, 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 * $1,385,615 $691,669 $794,023 $446,690 Undistributed net ordinary income ** -- -- 106 -- Undistributed net long-term capital gains 2,980 -- 126,916 -- ========================================================================================================== VIRGINIA VIRGINIA VIRGINIA PREMIUM DIVIDEND DIVIDEND INCOME ADVANTAGE ADVANTAGE 2 (NPV) (NGB) (NNB) - ---------------------------------------------------------------------------------------------------------- Undistributed net tax-exempt income * $1,474,901 $591,228 $954,043 Undistributed net ordinary income ** -- -- -- Undistributed net long-term capital gains 953,885 -- 422,949 ==========================================================================================================
* Undistributed net tax-exempt income (on a tax basis) has not been reduced for the dividend declared May 2, 2005, paid on June 1, 2005. ** Net ordinary income consists of taxable market discount income and net short-term capital gains, if any. The tax character of distributions paid during the fiscal years ended May 31, 2005 and May 31, 2004, 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 2005 (NMY) (NFM) (NZR) (NWI) - --------------------------------------------------------------------------------------------------------- Distributions from net tax-exempt income $10,630,390 $4,316,846 $4,052,176 $4,686,785 Distributions from net ordinary income ** -- -- 17,820 108 Distributions from net long-term capital gains -- -- 254,971 43,198 =========================================================================================================
VIRGINIA VIRGINIA VIRGINIA PREMIUM DIVIDEND DIVIDEND INCOME ADVANTAGE ADVANTAGE 2 2005 (NPV) (NGB) (NNB) - --------------------------------------------------------------------------------------------------------- Distributions from net tax-exempt income $8,771,875 $3,200,407 $5,574,792 Distributions from net ordinary income ** -- -- -- Distributions from net long-term capital gains -- -- 1,131,953 =========================================================================================================
** Net ordinary income consists of taxable market discount income and net short-term capital gains, if any. 67 Notes to FINANCIAL STATEMENTS (continued)
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. At May 31, 2005, 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 VIRGINIA DIVIDEND DIVIDEND ADVANTAGE ADVANTAGE (NFM) (NGB) - -------------------------------------------------------------------------------- Expiration year: 2005 $ -- $ -- 2006 -- -- 2007 -- -- 2008 -- -- 2009 7,580 -- 2010 37,159 12,972 2011 -- 32,605 2012 430,282 282,292 - -------------------------------------------------------------------------------- Total $475,021 $327,869 ================================================================================ The following Funds have elected to defer net realized losses from investments incurred from November 1, 2004 through May 31, 2005 ("post-October losses") in accordance with Federal income tax regulations. The following post-October losses are treated as having arisen on the first day of the following fiscal year: MARYLAND MARYLAND DIVIDEND DIVIDEND ADVANTAGE ADVANTAGE 3 (NFM) (NWI) - -------------------------------------------------------------------------------- $59,987 $119,983 ================================================================================ 68 5. MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES As approved by the Board of Trustees, effective August 1, 2004, a complex-wide management fee structure was adopted for all funds sponsored by the Adviser, or its predecessor and its affiliates. This fee structure separates each fund's management fee into two components - a complex-level component, based on the aggregate amount of all fund assets managed by the Adviser, and a specific fund-level component, based only on the amount of assets within each individual fund. This pricing structure enables Nuveen fund shareholders to benefit from growth in the assets within each individual fund as well as from growth in the amount of complex-wide assets managed by the Adviser. Under no circumstances will this pricing structure result in a fund paying management fees at a rate higher than would otherwise have been applicable had the complex-wide management fee structure not been implemented. As of June 30, 2005, the complex-level fee rate was .1900%; that is, the funds' effective management fee were reduced by approximately .0100%. Effective August 1, 2004, the annual fund-level fee, payable monthly, for each of the Funds is based upon the average daily net assets (including net assets attributable to Preferred shares) of each Fund as follows: AVERAGE DAILY NET ASSETS MARYLAND PREMIUM INCOME (NMY) (INCLUDING NET ASSETS VIRGINIA PREMIUM INCOME (NPV) ATTRIBUTABLE TO PREFERRED SHARES) FUND-LEVEL FEE RATE - -------------------------------------------------------------------------------- For the first $125 million .4500% For the next $125 million .4375 For the next $250 million .4250 For the next $500 million .4125 For the next $1 billion .4000 For the next $3 billion .3875 For net assets over $5 billion .3750 ================================================================================ MARYLAND DIVIDEND ADVANTAGE (NFM) MARYLAND DIVIDEND ADVANTAGE 2 (NZR) MARYLAND DIVIDEND ADVANTAGE 3 (NWI) AVERAGE DAILY NET ASSETS VIRGINIA DIVIDEND ADVANTAGE (NGB) (INCLUDING NET ASSETS VIRGINIA DIVIDEND ADVANTAGE 2 (NNB) ATTRIBUTABLE TO PREFERRED SHARES) FUND-LEVEL FEE RATE - -------------------------------------------------------------------------------- For the first $125 million .4500% For the next $125 million .4375 For the next $250 million .4250 For the next $500 million .4125 For the next $1 billion .4000 For net assets over $2 billion .3750 ================================================================================ 69 Notes to FINANCIAL STATEMENTS (continued) Effective August 1, 2004, the annual complex-level fee, payable monthly, which is additive to the fund-level fee, for all Nuveen sponsored funds in the U.S., is based on the aggregate amount of total fund assets managed as follows: COMPLEX-LEVEL ASSETS(1) COMPLEX-LEVEL FEE RATE - -------------------------------------------------------------------------------- For the first $55 billion .2000% For the next $1 billion .1800 For the next $1 billion .1600 For the next $3 billion .1425 For the next $3 billion .1325 For the next $3 billion .1250 For the next $5 billion .1200 For the next $5 billion .1175 For the next $15 billion .1150 For Managed Assets over $91 billion (2) .1400 ================================================================================ (1) The complex-level fee component of the management fee for the funds is calculated based upon the aggregate Managed Assets ("Managed Assets" means the average daily net assets of each fund including assets attributable to all types of leverage used by the Nuveen funds) of Nuveen-sponsored funds in the U.S. (2) With respect to the complex-wide Managed Assets over $91 billion, the fee rate or rates that will apply to such assets will be determined at a later date. In the unlikely event that complex-wide Managed Assets reach $91 billion prior to a determination of the complex-level fee rate or rates to be applied to Managed Assets in excess of $91 billion, the complex-level fee rate for such complex-wide Managed Assets shall be .1400% until such time as a different rate or rates is determined. Each Fund paid through July 31, 2004, an annual management fee, payable monthly, at the rates set forth below, which were based upon the average daily net assets (including net assets attributable to Preferred shares) of each Fund as follows: AVERAGE DAILY NET ASSETS MARYLAND PREMIUM INCOME (NMY) (INCLUDING NET ASSETS VIRGINIA PREMIUM INCOME (NPV) ATTRIBUTABLE TO PREFERRED SHARES) MANAGEMENT FEE RATE - -------------------------------------------------------------------------------- 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 ================================================================================ MARYLAND DIVIDEND ADVANTAGE (NFM) MARYLAND DIVIDEND ADVANTAGE 2 (NZR) MARYLAND DIVIDEND ADVANTAGE 3 (NWI) AVERAGE DAILY NET ASSETS VIRGINIA DIVIDEND ADVANTAGE (NGB) (INCLUDING NET ASSETS VIRGINIA DIVIDEND ADVANTAGE 2 (NNB) ATTRIBUTABLE TO PREFERRED SHARES) MANAGEMENT FEE RATE - -------------------------------------------------------------------------------- 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 ================================================================================ 70 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. 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. The Adviser has not agreed to reimburse Maryland Dividend Advantage 3 (NWI) for any portion of its fees and expenses beyond September 30, 2010. 71 Notes to FINANCIAL STATEMENTS (continued) 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. ANNOUNCEMENT REGARDING PARENT COMPANY OF ADVISER In early April, 2005, The St. Paul Travelers Companies, Inc. ("St. Paul Travelers"), which owned 79% of Nuveen, (A) completed a public offering of a substantial portion of its equity stake in Nuveen, (B) sold Nuveen $200 million of its Nuveen shares, (C) entered into an agreement with Nuveen to sell an additional $400 million of its Nuveen shares on a "forward" basis with payment for and settlement of these shares delayed for several months, and (D) entered into agreements with two unaffiliated investment banking firms to sell an amount equal to most or all of its remaining Nuveen shares for current payment but for future settlement. The settlement of transactions (C) and (D) above would likely be deemed an "assignment" (as defined in the 1940 Act) of the investment management agreements between the Funds and the Adviser, which would result in the automatic termination of each agreement under the 1940 Act. The Board of Trustees will consider approval of new ongoing investment management agreements for each Fund and the submission of those agreements for approval by each respective Fund's shareholders, would take effect upon such approval. There can be no assurance that these approvals will be obtained. 7. 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, 2005, to shareholders of record on June 15, 2005, as follows: MARYLAND MARYLAND MARYLAND MARYLAND PREMIUM DIVIDEND DIVIDEND DIVIDEND INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3 (NMY) (NFM) (NZR) (NWI) - -------------------------------------------------------------------------------- Dividend per share $.0690 $.0715 $.0730 $.0595 ================================================================================ VIRGINIA VIRGINIA VIRGINIA PREMIUM DIVIDEND DIVIDEND INCOME ADVANTAGE ADVANTAGE 2 (NPV) (NGB) (NNB) - -------------------------------------------------------------------------------- Dividend per share $.0690 $.0755 $.0715 ================================================================================ 72 Financial HIGHLIGHTS 73 Financial HIGHLIGHTS Selected data for a Common share outstanding throughout each period:
Investment Operations Less Distributions -------------------------------------------------------------- ------------------------------ Distributions Distributions from Net from Net Beginning Investment Capital Investment Capital Common Net Income to Gains to Income to Gains to Share Net Realized/ Preferred Preferred Common Common Net Asset Investment Unrealized Share- Share- Share- Share- Value Income Gain (Loss) holders+ holders+ Total holders holders Total ==================================================================================================================================== MARYLAND PREMIUM INCOME (NMY) - ------------------------------------------------------------------------------------------------------------------------------------ Year Ended 5/31: 2005 $14.28 $ .92 $ .92 $(.10) $ -- $1.74 $(.90) $ -- $(.90) 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) MARYLAND DIVIDEND ADVANTAGE (NFM) - ------------------------------------------------------------------------------------------------------------------------------------ Year Ended 5/31: 2005 14.43 .98 .75 (.10) -- 1.63 (.93) -- (.93) 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: 2005 14.64 .94 .90 (.09) -- 1.75 (.88) (.06) (.94) 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: 2005 13.88 .86 .97 (.10) -- 1.73 (.78) (.01) (.79) 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: 2005 $ -- $15.12 $15.78 15.64% 12.52% 2004 -- 14.28 14.45 (10.77) .64 2003 -- 15.10 17.15 15.22 14.33 2002 -- 14.04 15.73 4.77 7.71 2001 -- 13.83 15.85 26.24 14.18 MARYLAND DIVIDEND ADVANTAGE (NFM) - --------------------------------------------------------------------------------------------- Year Ended 5/31: 2005 -- 15.13 15.63 6.22 11.60 2004 -- 14.43 15.62 2.99 (.69) 2003 .01 15.47 16.08 9.98 15.55 2002 -- 14.18 15.44 1.98 8.21 2001(a) (.14) 13.90 15.99 8.02 (1.53) MARYLAND DIVIDEND ADVANTAGE 2 (NZR) - --------------------------------------------------------------------------------------------- Year Ended 5/31: 2005 -- 15.45 15.41 14.71 12.22 2004 -- 14.64 14.28 (2.90) (1.16) 2003 .01 15.71 15.60 12.71 18.39 2002(b) (.15) 14.01 14.61 .52 1.01 MARYLAND DIVIDEND ADVANTAGE 3 (NWI) - --------------------------------------------------------------------------------------------- Year Ended 5/31: 2005 -- 14.82 14.40 14.98 12.67 2004 -- 13.88 13.24 (5.97) (1.51) 2003(c) (.20) 14.89 14.90 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: 2005 $160,496 1.24% 6.22% 1.23% 6.22% 10% 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 MARYLAND DIVIDEND ADVANTAGE (NFM) - -------------------------------------------------------------------------------------------------------------------------------- Year Ended 5/31: 2005 63,051 1.26 6.11 .79 6.57 11 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: 2005 64,500 1.23 5.74 .77 6.20 10 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: 2005 79,443 1.23 5.40 .74 5.89 12 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: 2005 $79,100 $25,000 $75,726 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 MARYLAND DIVIDEND ADVANTAGE (NFM) - -------------------------------------------------------------------------- Year Ended 5/31: 2005 32,000 25,000 74,259 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: 2005 32,000 25,000 75,390 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: 2005 39,000 25,000 75,925 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 changes in the market price per share and the effect of reinvested dividend income and reinvested capital gains distributions, if any, at the average price paid per share at the time of reinvestment. Total Return on Common Share Net Asset Value is the combination of changes in Common share net asset value, reinvested dividend income at net asset value and reinvested capital gains distributions at net asset value, if any. Total returns are not annualized. *** After custodian fee credit and expense reimbursement, where applicable. + The amounts shown are based on Common share equivalents. ++ Ratios do not reflect the effect of dividend payments to Preferred shareholders; income ratios reflect income earned on assets attributable to Preferred shares. (a) For the period 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. 74-75 SPREAD Financial Highlights (continued) Selected data for a Common share outstanding throughout each period:
Investment Operations Less Distributions -------------------------------------------------------------- ------------------------------ Distributions Distributions from Net from Net Beginning Investment Capital Investment Capital Common Net Income to Gains to Income to Gains to Share Net Realized/ Preferred Preferred Common Common Net Asset Investment Unrealized Share- Share- Share- Share- Value Income Gain (Loss) holders+ holders+ Total holders holders Total ==================================================================================================================================== VIRGINIA PREMIUM INCOME (NPV) - ------------------------------------------------------------------------------------------------------------------------------------ Year Ended 5/31: 2005 $14.95 $ .93 $ .93 $(.09) $ -- $1.77 $(.90) $ -- $ (.90) 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) VIRGINIA DIVIDEND ADVANTAGE (NGB) - ------------------------------------------------------------------------------------------------------------------------------------ Year Ended 5/31: 2005 14.42 .99 1.13 (.09) -- 2.03 (.93) -- (.93) 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: 2005 14.79 .96 1.13 (.09) (.01) 1.99 (.89) (.19) (1.08) 2004 16.02 .99 (1.22) (.06) -- (.29) (.89) (.05) (.94) 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: 2005 $ -- $15.82 $17.65 24.54% 12.13% 2004 -- 14.95 14.95 (10.70) (.42) 2003 -- 15.93 17.67 15.27 14.99 2002 -- 14.69 16.17 6.64 6.71 2001 -- 14.59 16.00 18.45 15.53 VIRGINIA DIVIDEND ADVANTAGE (NGB) - --------------------------------------------------------------------------------------------- Year Ended 5/31: 2005 -- 15.52 16.99 19.11 14.46 2004 -- 14.42 15.07 (8.11) (.50) 2003 .01 15.43 17.35 21.45 14.92 2002 -- 14.23 15.09 5.10 8.89 2001(a) (.16) 13.87 15.18 2.61 (1.73) VIRGINIA DIVIDEND ADVANTAGE 2 (NNB) - --------------------------------------------------------------------------------------------- Year Ended 5/31: 2005 -- 15.70 16.74 21.96 13.75 2004 -- 14.79 14.65 (3.81) (1.84) 2003 -- 16.02 16.14 14.58 18.51 2002(b) (.13) 14.31 14.90 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: 2005 $140,340 1.20% 5.98% 1.19% 5.99% 17% 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 VIRGINIA DIVIDEND ADVANTAGE (NGB) - ---------------------------------------------------------------------------------------------------------------------------------- Year Ended 5/31: 2005 48,474 1.28 6.13 .81 6.59 15 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: 2005 89,626 1.19 5.74 .74 6.19 13 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: 2005 $63,800 $25,000 $79,992 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 VIRGINIA DIVIDEND ADVANTAGE (NGB) - ------------------------------------------------------------------------- Year Ended 5/31: 2005 24,000 25,000 75,493 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: 2005 42,000 25,000 78,349 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 changes in the market price per share and the effect of reinvested dividend income and reinvested capital gains distributions, if any, at the average price paid per share at the time of reinvestment. Total Return on Common Share Net Asset Value is the combination of changes in Common share net asset value, reinvested dividend income at net asset value and reinvested capital gains distributions at net asset value, if any. Total returns are not annualized. *** After custodian fee credit and expense reimbursement, where applicable. + The amounts shown are based on Common share equivalents. ++ Ratios do not reflect the effect of dividend payments to Preferred shareholders; income ratios reflect income earned on assets attributable to Preferred shares. (a) For the period 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. 76-77 SPREAD Board Members AND OFFICERS The management of the Fund, including general supervision of the duties performed for the Fund by the Adviser, is the responsibility of the Board Members of the Fund. The number of board members of the Fund is currently set at nine. None of the board members who are not "interested" persons of the Fund has ever been a director or employee of, or consultant to, Nuveen or its affiliates. The names and business addresses of the board members and officers of the Fund, their principal occupations and other affiliations during the past five years, the number of portfolios each oversees and other directorships they hold are set forth below.
NUMBER OF PORTFOLIOS IN POSITION(S) YEAR FIRST PRINCIPAL OCCUPATION(S) FUND COMPLEX NAME, BIRTHDATE HELD WITH ELECTED OR INCLUDING OTHER DIRECTORSHIPS OVERSEEN BY AND ADDRESS THE FUND APPOINTED(2) DURING PAST 5 YEARS BOARD MEMBER - ------------------------------------------------------------------------------------------------------------------------------------ BOARD MEMBER WHO IS AN INTERESTED PERSON OF THE FUND: - ------------------------------------------------------------------------------------------------------------------------------------ Timothy R. Schwertfeger(1) Chairman of 1994 Chairman and Director (since 1996) of Nuveen Investments, 155 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.(3); Chairman and Director (since 1997) of Nuveen Asset Management; 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). BOARD MEMBERS WHO ARE NOT INTERESTED PERSONS OF THE FUND: - ------------------------------------------------------------------------------------------------------------------------------------ Robert P. Bremner Board member 1997 Private Investor and Management Consultant. 155 8/22/40 333 W. Wacker Drive Chicago, IL 60606 - ------------------------------------------------------------------------------------------------------------------------------------ Lawrence H. Brown Board member 1993 Retired (1989) as Senior Vice President of The Northern 155 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 Board member 1999 President, The Hall-Perrine Foundation, a private philanthropic 155 10/22/48 corporation (since 1996); Director and Vice Chairman, United 333 W. Wacker Drive Fire Group, a publicly held company; Adjunct Faculty Member, Chicago, IL 60606 University of Iowa; Director, Gazette Companies; Life Trustee of Coe College; Director, Iowa College Foundation; formerly, Director, Alliant Energy; formerly, Director, Federal Reserve Bank of Chicago; formerly, President and Chief Operating Officer, SCI Financial Group, Inc., a regional financial services firm. - ------------------------------------------------------------------------------------------------------------------------------------ William C. Hunter Board member 2004 Dean and Distinguished Professor of Finance, School of 155 3/6/48 Business at the University of Connecticut (since 2003); 333 W. Wacker Drive previously, Senior Vice President and Director of Research Chicago, IL 60606 at the Federal Reserve Bank of Chicago (1995-2003); Director (since 1997), Credit Research Center at Georgetown University; Director of Xerox Corporation (since 2004). - ------------------------------------------------------------------------------------------------------------------------------------ David J. Kundert Board member 2005 Retired (2004) as Chairman, JPMorgan Fleming Asset 153 10/28/42 Management, President and CEO, Banc One Investment 333 W. Wacker Drive Advisors Corporation, and President, One Group Mutual Chicago, IL 60606 Funds; prior thereto, Executive Vice President, Banc One Corporation and Chairman and CEO, Banc One Investment Management Group; Board of Regents, Luther College; currently a member of the American and Wisconsin Bar Associations. 78 NUMBER OF PORTFOLIOS IN POSITION(S) YEAR FIRST PRINCIPAL OCCUPATION(S) FUND COMPLEX NAME, BIRTHDATE HELD WITH ELECTED OR INCLUDING OTHER DIRECTORSHIPS OVERSEEN BY AND ADDRESS THE FUND APPOINTED(2) DURING PAST 5 YEARS BOARD MEMBER - ------------------------------------------------------------------------------------------------------------------------------------ BOARD MEMBERS WHO ARE NOT INTERESTED PERSONS OF THE FUND (CONTINUED): - ------------------------------------------------------------------------------------------------------------------------------------ William J. Schneider Board member 1997 Chairman, formerly, Senior Partner and Chief Operating 155 9/24/44 Officer, Miller-Valentine Partners Ltd., a real estate 333 W. Wacker Drive investment company; formerly, Vice President, Miller-Valentine Chicago, IL 60606 Realty, a construction company; Board Member and Chair of the Finance Committee, member of the Audit Committee of Premier Health Partners, the not-for-profit company of Miami Valley Hospital; Board Member, formerly Chair, Dayton Development Coalition; President, Dayton Philharmonic Orchestra Association; formerly, Member, Community Advisory Board, National City Bank, Dayton, Ohio and Business Advisory Council, Cleveland Federal Reserve Bank. - ------------------------------------------------------------------------------------------------------------------------------------ Judith M. Stockdale Board member 1997 Executive Director, Gaylord and Dorothy Donnelley 155 12/29/47 Foundation (since 1994); prior thereto, Executive Director, 333 W. Wacker Drive Great Lakes Protection Fund (from 1990 to 1994). Chicago, IL 60606 - ------------------------------------------------------------------------------------------------------------------------------------ Eugene S. Sunshine Board member 2005 Senior Vice President for Business and Finance (since 1997), 155 1/22/50 Northwestern University; Director (since 2003), Chicago 333 W. Wacker Drive Board of Options Exchange; Director (since 2003), National Chicago, IL 60606 Mentor Holdings, a privately-held, national provider of home and community-based services; Chairman (since 1997), Board of Directors, Rubicon, an insurance company owned by Northwestern University; Director (since 1997), Evanston of Commerce and Evanston Inventure, a business development organization. NUMBER OF PORTFOLIOS IN POSITION(S) YEAR FIRST FUND COMPLEX NAME, BIRTHDATE HELD WITH ELECTED OR PRINCIPAL OCCUPATION(S) OVERSEEN BY AND ADDRESS THE FUNDS APPOINTED(4) DURING PAST 5 YEARS OFFICER - ------------------------------------------------------------------------------------------------------------------------------------ OFFICERS OF THE FUND: - ------------------------------------------------------------------------------------------------------------------------------------ Gifford R. Zimmerman Chief 1988 Managing Director (since 2002), Assistant Secretary and 155 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.(3); Managing Director (since 2002), Assistant Secretary and Associate General Counsel, formerly, Vice President (since 2000), of Nuveen Asset Management; Managing Director (since 2004) and Assistant Secretary (since 1994) of Nuveen Investments, Inc.; Assistant Secretary of NWQ Investment Management Company, LLC (since 2002); Vice President and Assistant Secretary of Nuveen Investments Advisers Inc. (since 2002); Managing Director, Associate General Counsel and Assistant Secretary of Rittenhouse Asset Management, Inc. (since 2003); Chartered Financial Analyst. 79 Board Members AND OFFICERS (CONTINUED) NUMBER OF PORTFOLIOS IN POSITION(S) YEAR FIRST FUND COMPLEX NAME, BIRTHDATE HELD WITH ELECTED OR PRINCIPAL OCCUPATION(S) OVERSEEN BY AND ADDRESS THE FUNDS APPOINTED(4) DURING PAST 5 YEARS OFFICER - ------------------------------------------------------------------------------------------------------------------------------------ OFFICERS OF THE FUND (CONTINUED): - ------------------------------------------------------------------------------------------------------------------------------------ Julia L. Antonatos Vice President 2004 Managing Director (since 2005), previously, Vice President 155 9/22/63 (since 2002), formerly, Assistant Vice President (since 1999) 333 W. Wacker Drive of Nuveen Investments, LLC; Chartered Financial Analyst. Chicago, IL 60606 - ------------------------------------------------------------------------------------------------------------------------------------ Michael T. Atkinson Vice President 2000 Vice President (since 2002), formerly, Assistant Vice 155 2/3/66 and Assistant President (since 2000) of Nuveen Investments, LLC. 333 W. Wacker Drive Secretary Chicago, IL 60606 - ------------------------------------------------------------------------------------------------------------------------------------ Peter H. D'Arrigo Vice President 1999 Vice President of Nuveen Investments, LLC (since 1999); 155 11/28/67 and Treasurer Vice President and Treasurer of Nuveen Investments, Inc. 333 W. Wacker Drive (since 1999); Vice President and Treasurer of Nuveen Advisory Chicago, IL 60606 Corp. and Nuveen Institutional Advisory Corp (since 1999)(3); Vice President and Treasurer of Nuveen Asset Management (since 2002) and of Nuveen Investments Advisers Inc.; 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 President 1998 Vice President (since 2002) and Assistant General Counsel 155 9/24/64 and Secretary (since 1998), formerly, Assistant Vice President (since 1998) of 333 W. Wacker Drive Nuveen Investments, LLC; Vice President (since 2002) Chicago, IL 60606 and Assistant Secretary (since 1998), formerly Assistant Vice President of Nuveen Advisory Corp. and Nuveen Institutional Advisory Corp.(3); and (since 2005) Nuveen Asset Management. - ------------------------------------------------------------------------------------------------------------------------------------ Lorna C. Ferguson Vice President 1998 Managing Director (since 2004) formerly, Vice President of 155 10/24/45 Nuveen Investments, LLC; Managing Director (since 2004) 333 W. Wacker Drive formerly, Vice President (since 1998) of Nuveen Advisory Corp. Chicago, IL 60606 and Nuveen Institutional Advisory Corp.(3); Managing Director (since 2005) of Nuveen Asset Management. - ------------------------------------------------------------------------------------------------------------------------------------ William M. Fitzgerald Vice President 1995 Managing Director (since 2002) of Nuveen Investments, 155 3/2/64 LLC; Managing Director (since 2001), formerly, Vice President 333 W. Wacker Drive (since 1995) of Nuveen Advisory Corp. and Nuveen Institutional Chicago, IL 60606 Advisory Corp.(3); Managing Director (since 2001) of Nuveen Asset Management; Vice President (since 2002) of Nuveen Investment Advisers Inc.; Chartered Financial Analyst. - ------------------------------------------------------------------------------------------------------------------------------------ Stephen D. Foy Vice President 1998 Vice President (since 1993) and Funds Controller (since 1998) 155 5/31/54 and Controller of Nuveen Investments, LLC; formerly, Vice President and 333 W. Wacker Drive Funds Controller (1998-2004) of Nuveen Investments, Inc.; Chicago, IL 60606 Certified Public Accountant. - ------------------------------------------------------------------------------------------------------------------------------------ James D. Grassi Vice President 2004 Vice President and Deputy Director of Compliance (since 2004) 155 4/13/56 and Chief of Nuveen Investments, LLC, Nuveen Investments Advisers Inc., 333 W. Wacker Drive Compliance Nuveen Asset Management and Rittenhouse Asset Management, Chicago, IL 60606 Officer Inc.; previously, Vice President and Deputy Director of Complliance (2004) of Nuveen Advisory Corp. and Nuveen Institutional Advisory Corp. (3); formerly, Senior Attorney (1994 to 2004), The Northern Trust Company. 80 NUMBER OF PORTFOLIOS IN POSITION(S) YEAR FIRST FUND COMPLEX NAME, BIRTHDATE HELD WITH ELECTED OR PRINCIPAL OCCUPATION(S) OVERSEEN BY AND ADDRESS THE FUNDS APPOINTED(4) DURING PAST 5 YEARS OFFICER - ------------------------------------------------------------------------------------------------------------------------------------ OFFICERS OF THE FUND (CONTINUED): - ------------------------------------------------------------------------------------------------------------------------------------ David J. Lamb Vice President 2000 Vice President (since 2000) of Nuveen Investments, 155 3/22/63 LLC; Certified Public Accountant. 333 W. Wacker Drive Chicago, IL 60606 - ------------------------------------------------------------------------------------------------------------------------------------ Tina M. Lazar Vice President 2002 Vice President (since 1999) of Nuveen Investments, LLC. 155 8/27/61 333 W. Wacker Drive Chicago, IL 60606 - ------------------------------------------------------------------------------------------------------------------------------------ Larry W. Martin Vice President 1988 Vice President, Assistant Secretary and Assistant General 155 7/27/51 and Assistant Counsel of Nuveen Investments, LLC; Vice President and 333 W. Wacker Drive Secretary Assistant Secretary of Nuveen Advisory Corp. and Nuveen Chicago, IL 60606 Institutional Advisory Corp.(3); Vice President (since 2005) and Assistant Secretary of Nuveen Investments, Inc. and of Nuveen Asset Management; Vice President (since 2000), Assistant Secretary and Assistant General Counsel (since 1998) of Rittenhouse Asset Management; Vice President and Assistant Secretary of Nuveen Investments Advisers Inc. (since 2002); Assistant Secretary of NWQ Investment Management Company, LLC (since 2002).
(1) Mr. Schwertfeger is an "interested person" of the Fund, as defined in the Investment Company Act of 1940, because he is an officer and board member of the Adviser. (2) Board members serve an indefinite term until his/her successor is elected. The year first elected or appointed represents the year in which the board member was first elected or appointed to any fund in the Nuveen Complex. (3) Nuveen Advisory Corp. and Nuveen Institutional Advisory Corp. were reorganized into Nuveen Asset Management, effective January 1, 2005. (4) Officers serve one year terms through July of each year. The year first elected or appointed represents the year in which the Officer was first elected or appointed to any fund in the Nuveen Complex. 81 ANNUAL INVESTMENT MANAGEMENT AGREEMENT APPROVAL PROCESS At a meeting held on May 10-12, 2005, the Board of Trustees of each Fund, including the independent Trustees, unanimously approved the Investment Management Agreement between each Fund and NAM. THE APPROVAL PROCESS To assist the Board in its evaluation of an advisory contract with NAM, the independent Trustees received a report in adequate time in advance of their meeting which outlined, among other things, the services provided by NAM; the organization of NAM, including the responsibilities of various departments and key personnel; the Fund's past performance as well as the Fund's performance compared to funds of similar investment objectives compiled by an independent third party (a "Peer Group") and if available, with recognized or, in certain cases, customized benchmarks; the profitability of NAM and certain industry profitability analyses for advisers to unaffiliated investment companies; the expenses of NAM in providing the various services; the advisory fees of NAM, including comparisons of such fees with the management fees of comparable funds in its Peer Group as well as comparisons of NAM's management fees with the fees NAM assesses to other types of investment products or accounts, if any; the soft dollar practices of NAM; and the expenses of each Fund, including comparisons of the Fund's expense ratios (after any fee waivers) with the expense ratios of its Peer Group. This information supplements that received by the Board throughout the year regarding Fund performance, expense ratios, portfolio composition, trade execution and sales activity. In addition to the foregoing materials, independent legal counsel to the independent Trustees provided, in advance of the meeting, a legal memorandum outlining, among other things, the duties of the Trustees under the 1940 Act as well as the general principles of relevant state law in reviewing and approving advisory contracts; the requirements of the 1940 Act in such matters; an adviser's fiduciary duty with respect to advisory agreements and compensation; the standards used by courts in determining whether investment company boards of directors have fulfilled their duties and factors to be considered by the board in voting on advisory agreements. At the Board meeting, NAM made a presentation to and responded to questions from the Board. After the presentations and after reviewing the written materials, the independent Trustees met privately with their legal counsel to review the Board's duties in reviewing advisory contracts and consider the renewal of the advisory contract. It is with this background that the Trustees considered each Investment Management Agreement with NAM. The independent Trustees, in consultation with independent counsel, reviewed the factors set out in judicial decisions and SEC directives relating to the renewal of advisory contracts. As outlined in more detail below, the Trustees considered all factors they believed relevant with respect to each Fund, including the following: (a) the nature, extent and quality of the services to be provided by NAM; (b) the investment performance of the Fund and NAM; (c) the costs of the services to be provided and profits to be realized by NAM and its affiliates from the relationship with the Fund; (d) the extent to which economies of scale would be realized as the Fund grows; and (e) whether fee levels reflect these economies of scale for the benefit of Fund investors. A. NATURE, EXTENT AND QUALITY OF SERVICES In evaluating the nature, extent and quality of NAM's services, the Trustees reviewed information concerning the types of services that NAM or its affiliates provide and are expected to provide to the Nuveen Funds; narrative and statistical information concerning the Fund's performance record and how such performance compares to the Fund's Peer Group and, if available, recognized benchmarks or, in certain cases, customized benchmarks (as described in further detail in Section B below); information describing NAM's organization and its various departments, the experience and responsibilities of key personnel, and available resources. In the discussion of key personnel, the Trustees received materials regarding the changes or additions in personnel of NAM. The Trustees further noted the willingness of the personnel of NAM to engage in open, candid discussions with the Board. The Trustees further considered the quality of NAM's investment process in making portfolio management decisions, including any refinements or improvements to the portfolio management processes, enhancements to technology and systems that are available to portfolio managers, and any additions of new personnel which may strengthen or expand the research and investment capabilities of NAM. In their review of advisory contracts for the fixed income funds, the Trustees also noted that Nuveen won the Lipper Award for Best Fund Family: Fixed Income-Large Asset Class, for 2004. Given the Trustees' experience with the Funds, other Nuveen funds and NAM, the Trustees noted that they were familiar with and continue to have a good understanding of the organization, operations and personnel of NAM. In addition to advisory services, the independent Trustees considered the quality of the administrative or non-advisory services provided. In this regard, NAM provides the Fund with such administrative and other services (exclusive of, and in addition to, any such services provided by others for the Funds) and officers and other personnel as are necessary for the operations of the respective Fund. In addition to investment management services, NAM and its affiliates provide each Fund with a wide range of services, including: preparing shareholder reports; providing daily accounting; providing quarterly financial statements; overseeing and coordinating the 82 activities of other service providers; administering and organizing Board meetings and preparing the Board materials for such meetings; providing legal support (such as helping to prepare registration statements, amendments thereto and proxy statements and responding to regulatory inquiries); and performing other Fund administrative tasks necessary for the operation of the respective Fund (such as tax reporting and fulfilling regulatory filing requirements). In addition, in evaluating the administrative services, the Trustees considered, in particular, NAM's policies and procedures for assuring compliance with applicable laws and regulations in light of the new SEC regulations governing compliance. The Trustees noted NAM's focus on compliance and its compliance systems. In their review, the Trustees considered, among other things, the additions of experienced personnel to NAM's compliance group and modifications and other enhancements to NAM's computer systems. In addition to the foregoing, the Trustees also noted that NAM outsources certain services that cannot be replicated without significant costs or at the same level of expertise. Such outsourcing has been a beneficial and efficient use of resources by keeping expenses low while obtaining quality services. In addition to the above, in reviewing the variety of additional services that NAM or its affiliates must provide to closed-end funds, such as the Funds, the independent Trustees determined that Nuveen's commitment to supporting the secondary market for the common shares of its closed-end funds is particularly noteworthy. In this regard, the Trustees noted Nuveen's efforts to sponsor numerous forums for analysts and specialists regarding the various Nuveen closed-end funds, its creation of a new senior position dedicated to providing secondary market support services and enhancing communications with investors and analysts, and its advertising and media relations efforts designed to raise investor and analyst awareness of the closed-end funds. With respect to services provided to municipal funds, such as the Funds, the Trustees also noted, among other things, the enhancements NAM implemented to its municipal portfolio management processes (e.g., the increased use of benchmarks to guide and assess the performance of its portfolio managers); the implementation of a risk management program; and the various initiatives being undertaken to enhance or modify NAM's computer systems as necessary to support the innovations of the municipal investment team (such as, the ability to assess certain historical data in order to create customized benchmarks, perform attribution analysis and facilitate the use of derivatives as hedging instruments). With respect to certain of the Funds with a less seasoned portfolio, the Trustees also noted the hedging program implemented for such Funds and the team responsible for developing, implementing and monitoring the hedging procedures. The hedging program was designed to help maintain the applicable Fund's duration within certain benchmarks. Based on their review, the Trustees found that, overall, the nature, extent and quality of services provided (and expected to be provided) to the Funds under the Investment Management Agreements were of a high level and were quite satisfactory. B. THE INVESTMENT PERFORMANCE OF THE FUND AND ADVISER As previously noted, the Board received a myriad of performance information regarding each Fund and its Peer Group, if available. Among other things, the Board received materials reflecting a Fund's historic performance, the Fund's performance compared to its Peer Group and, if available, its performance compared to recognized and, in certain cases, customized benchmarks. Further, in evaluating the performance information, in certain limited instances, the Trustees noted that the closest Peer Group for a Fund still would not adequately reflect such Fund's investment objectives and strategies, thereby limiting the usefulness of the comparisons of such Fund's performance with that of the Peer Group. For state municipal funds, such as the Funds, the performance data included, among other things, the respective Fund's performance relative to its peers. More specifically, a Fund's one, three and five year total returns (as available) for the periods ending December 31, 2004 were evaluated relative to the unaffiliated funds in its respective Peer Group (including the returns of individual peers as well as the Peer Group average) as well as additional performance information with respect to all the funds in the Peer Group, subject to the following. Certain state municipal Funds do not have a corresponding Peer Group in which case their performance is measured against a state-specific municipal index compiled by an independent third party. Such indices measure bond performance rather than fund performance. The closed-end Funds that utilize such indices are from Connecticut, Georgia, Maryland, Missouri, North Carolina, Texas and Virginia. Based on their review, the Trustees determined that each Fund's absolute and relative investment performance over time had been satisfactory. C. FEES, EXPENSES AND PROFITABILITY 1. FEES AND EXPENSES In evaluating the management fees and expenses that a Fund is expected to bear, the Trustees considered the Fund's current management fee structure and the Fund's expected expense ratios in absolute terms as well as compared with the fees and expense ratios of the unaffiliated funds in its Peer Group. The Trustees reviewed the financial information of NAM, including its respective revenues, expenses and profitability. In reviewing fees, the Trustees, among other things, reviewed comparisons of the Fund's gross management fees (fees after fund-level and complex-wide level breakpoints but before reimbursement and fee waivers), net management fees (after breakpoints and reimbursements and fee waivers) and total expense ratios (before and after waivers) with those of the unaffiliated funds in the Peer Group and peer averages. In this regard, the Trustees noted that the relative ranking of the Nuveen Funds on fees and expenses was aided by the significant level of fee reductions provided by the fund-level and complex-wide breakpoint schedules, and the fee waivers and reimbursements provided by Nuveen for certain Funds launched since 1999. The complex-wide breakpoint schedule was instituted in 2004 and is described in further detail below in Section D entitled "Economies of Scale." In their review of the fee and expense information provided, including, in particular, the expense ratios of the unaffiliated funds in the respective Peer Group, the Trustees determined that each Fund's net total expense ratio was within an acceptable range compared to such peers. 2. COMPARISONS WITH THE FEES OF OTHER CLIENTS The Trustees further compared the fees of NAM to the fees NAM assessed for other types of clients investing in municipal funds (such as municipal managed accounts). With respect to such separately managed accounts, the advisory fees for such accounts 83 ANNUAL INVESTMENT MANAGEMENT AGREEMENT APPROVAL PROCESS (continued) are generally lower than those charged to the comparable Fund. The Trustees noted, however, the additional services that are provided and the costs incurred by Nuveen in managing and operating registered investment companies, such as the Funds, compared to individually managed separate accounts. For instance, as described above, NAM and its affiliates provide numerous services to the Funds including, but not limited to, preparing shareholder reports; providing daily accounting; preparing quarterly financial statements; overseeing and coordinating the activities of other service providers; administering and organizing Board meetings and preparing the Board materials for such meetings; providing legal support; and administering all other aspects of the Fund's operations. Further, the Trustees noted the increased compliance requirements for funds in light of new SEC regulations and other legislation. These services are generally not required to the same extent, if at all, for separate accounts. In addition to the differences in services, the Trustees also considered, among other things, the differences in product distribution, investment policies, investor profiles and account sizes. Accordingly, the Trustees believe that the nature and number of services provided to operate a Fund merit the higher fees than those to separate managed accounts. 3. PROFITABILITY OF ADVISER In conjunction with its review of fees, the Trustees also considered NAM's profitability. The Trustees reviewed NAM's revenues, expenses and profitability margins (on both a pre-tax and after-tax basis). In reviewing profitability, the Trustees recognized that one of the most difficult issues in determining profitability is establishing a method of allocating expenses. Accordingly, the Trustees reviewed NAM's assumptions and methodology of allocating expenses. In this regard, the methods of allocation used appeared reasonable but the Board noted the inherent limitations in allocating costs among various advisory products. The Trustees also recognized that individual fund or product line profitability of other advisers is generally not publicly available. Further, profitability may be affected by numerous factors including the types of funds managed, expense allocations, business mix, etc. and therefore comparability of profitability is somewhat limited. Nevertheless, to the extent available, the Trustees considered NAM's profit margin compared to the profitability of various publicly-traded investment management companies and/or investment management companies that publicly disclose some or all of their financial results compiled by three independent third-party service providers. The Trustees also reviewed the revenues, expenses and profit margins of various unaffiliated advisory firms with similar amounts of assets under management for the last year prepared by NAM. Based on their review, the Trustees were satisfied that NAM's level of profitability from its relationship with each Fund was reasonable in light of the services provided. In evaluating the reasonableness of the compensation, the Trustees also considered any other revenues paid to NAM as well as any indirect benefits (such as soft dollar arrangements, if any) NAM and its affiliates are expected to receive that are directly attributable to their management of the Funds, if any. See Section E below for additional information. Based on their review of the overall fee arrangements of the applicable Fund, the Trustees determined that the advisory fees and expenses of the respective Fund were reasonable. D. ECONOMIES OF SCALE AND WHETHER FEE LEVELS REFLECT THESE ECONOMIES OF SCALE In reviewing the compensation, the Trustees have long understood the benefits of economies of scale as the assets of a fund grows and have sought to ensure that shareholders share in these benefits. One method for shareholders to share in economies of scale is to include breakpoints in the advisory fee schedules that reduce fees as fund assets grow. Accordingly, the Trustees received and reviewed the schedules of advisory fees for each Fund, including fund-level breakpoints thereto. In addition, after lengthy negotiations with management, the Board in May, 2004 approved a complex-wide fee arrangement pursuant to which fees of the funds in the Nuveen complex, including the Funds, are reduced as the assets in the fund complex reach certain levels. The complex-wide fee arrangement was introduced on August 1, 2004 and the Trustees reviewed data regarding the reductions of fees for the Funds for the period of August 1, 2004 to December 31, 2004. In evaluating the complex-wide fee arrangement, the Trustees considered, among other things, the historic and expected fee savings to shareholders as assets grow, the amount of fee reductions at various asset levels, and that the arrangement would extend to all Funds in the Nuveen complex. The Trustees also considered the impact, if any, the complex-wide fee arrangement may have on the level of services provided. Based on their review, the Trustees concluded that the breakpoint schedule and complex-wide fee arrangement currently was acceptable and desirable in providing benefits from economies of scale to shareholders. E. INDIRECT BENEFITS In evaluating fees, the Trustees also considered any indirect benefits or profits NAM or its affiliates may receive as a result of its relationship with each Fund. In this regard, the Trustees considered any benefits from soft dollar arrangements. The Trustees noted that although NAM manages a large amount of assets, it has very little, if any, brokerage to allocate. This is due to the fact that NAM 84 typically manages the portfolios of the municipal funds in the Nuveen complex and municipal bonds generally trade on a principal basis. Accordingly, NAM does not currently have any soft dollar arrangements and does not pay excess brokerage commissions (or spreads on principal transactions) in order to receive research services. In addition to soft dollar arrangements, the Trustees also considered any other revenues, if any, received by NAM or its affiliates. With respect to Funds with outstanding preferred shares and new Funds, the Trustees considered revenues received by Nuveen for serving as agent for broker-dealers at its preferred trading desk and for acting as co-manager in the initial public offering of new closed-end exchange-traded funds. F. OTHER CONSIDERATIONS Nuveen, until recently, was a majority-owned subsidiary of St. Paul Travelers. As noted, St. Paul earlier this year announced its intention to divest its equity stake in Nuveen. Nuveen is the parent of NAM. Pursuant to a series of transactions, St. Paul has begun to reduce its interest in Nuveen which will ultimately result in a change of control of Nuveen and therefore NAM. As mandated by the 1940 Act, such a change in control would result in an assignment of the advisory agreement with NAM and the automatic termination of such agreement. Accordingly, the Board also considered for each Fund the approval of a New Investment Management Agreement with each Fund in light of, and which would take effect upon, the anticipated change of control. More specifically, the Board considered for each Fund a New Investment Management Agreement on substantially identical terms to the existing Investment Management Agreement, to take effect after the change of control has occurred and the contract has been approved by Fund shareholders. In its review, the Board considered whether the various transactions necessary to divest St. Paul's interest will have an impact on the various factors they considered in approving NAM, such as the scope and quality of services to be provided following the change of control. In reviewing the St. Paul transactions, the Board considered, among other things, the impact, if any, on the operations and organizational structure of NAM; the possible benefits and costs of the transactions to the respective Fund; the potential implications of any arrangements used by Nuveen to finance certain of the transactions; the ability of NAM to perform its duties after the transactions; whether a Fund's fee structure or expense ratio would change; any changes to the current practices of the respective Fund; any changes to the terms of the advisory agreement; and any anticipated changes to the operations of NAM. Based on its review, the Board determined that St. Paul's divestiture would not affect the nature and quality of services provided by NAM, the terms of the Investment Management Agreement, including the fees thereunder, and would not materially affect the organization or operations of NAM. Accordingly, the Board determined that their analysis of the various factors regarding their approval of NAM would continue to apply after the change of control. G. APPROVAL The Trustees did not identify any single factor discussed previously as all-important or controlling. The Trustees, including a majority of independent Trustees, concluded that the terms of the Investment Management Agreements were fair and reasonable, that the respective Fund Adviser's fees are reasonable in light of the services provided to each Fund, that the renewal of the NAM Investment Management Agreements should be approved, and that the new, post-change of control NAM Investment Management Agreements be approved and recommended to shareholders. 85 REINVEST AUTOMATICALLY EASILY AND CONVENIENTLY Sidebar text: NUVEEN MAKES REINVESTING EASY. A PHONE CALL IS ALL IT TAKES TO SET UP YOUR REINVESTMENT ACCOUNT. NUVEEN 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 the shares may increase before purchases are completed, the average purchase price per share may exceed the market price at the time of valuation, resulting in the acquisition of fewer shares than if the dividend or distribution had been paid in shares issued by the Fund. A pro rata portion of any applicable brokerage commissions on open market purchases will be paid by Plan participants. These commissions usually will be lower than those charged on individual transactions. FLEXIBLE You may change your distribution option or withdraw from the Plan at any time, should your needs or situation change. Should you withdraw, you can receive a certificate for all whole shares credited to your reinvestment account and cash payment for fractional shares, or cash payment for all reinvestment account shares, less brokerage commissions and a $2.50 service fee. You can reinvest whether your shares are registered in your name, or in the name of a brokerage firm, bank, or other nominee. Ask your investment advisor if his or her firm will participate on your behalf. Participants whose shares are registered in the name of one firm may not be able to transfer the shares to another firm and continue to participate in the Plan. The Fund reserves the right to amend or terminate the Plan at any time. Although the Fund reserves the right to amend the Plan to include a service charge payable by the participants, there is no direct service charge to participants in the Plan at this time. CALL TODAY TO START REINVESTING DIVIDENDS AND/OR DISTRIBUTIONS For more information on the Nuveen Automatic Reinvestment Plan or to enroll in or withdraw from the Plan, speak with your financial advisor or call us at (800) 257-8787. 86 OTHER USEFUL INFORMATION Effective Jan. 1, 2005, the asset management services and operations of Nuveen Advisory Corp. (NAC) and Nuveen Institutional Advisory Corp (NIAC) became part of Nuveen Asset Management (NAM). This internal consolidation is intended to simplify the delivery of services to the investment management clients of Nuveen Investments. It does not affect the investment objectives or portfolio management of any Fund. QUARTERLY PORTFOLIO OF INVESTMENTS AND PROXY VOTING INFORMATION Each Fund's (i) quarterly portfolio of investments, (ii) information regarding how the Funds voted proxies relating to portfolio securities held during the 12-month period ended June 30, 2004, and (iii) a description of the policies and procedures that the Funds used to determine how to vote proxies relating to portfolio securities are available without charge, upon request, by calling Nuveen Investments toll-free at (800) 257-8787 or on Nuveen's website at www.nuveen.com. You may also obtain this and other Fund information directly from the Securities and Exchange Commission ("SEC"). The SEC may charge a copying fee for this information. Visit the SEC on-line at http://www.sec.gov or in person at the SEC's Public Reference Room in Washington, D.C. Call the SEC at 1-202-942-8090 for room hours and operation. You may also request Fund information by sending an e-mail request to publicinfo@sec.gov or by writing to the SEC's Public References Section at 450 Fifth Street NW, Washington, D.C. 20549. CEO CERTIFICATION DISCLOSURE Each Fund's Chief Executive Officer has submitted to the New York Stock Exchange the annual CEO certification as required by Section 303A.12(a) of the NYSE Listed Company Manual. Each Fund has filed with the Securities and Exchange Commission the certification of its Chief Executive Officer and Chief Financial Officer required by Section 302 of the Sarbanes-Oxley Act. GLOSSARY OF TERMS USED IN THIS REPORT AVERAGE ANNUAL TOTAL RETURN: This is a commonly used method to express an investment's performance over a particular, usually multi-year time period. It expresses the return that would have been necessary each year to equal the investment's actual cumulative performance (including change in NAV or market price and reinvested dividends and capital gains distributions, if any) over the time period being considered. AVERAGE EFFECTIVE MATURITY: The average of all the maturities of the bonds in a Fund's portfolio, computed by weighting each maturity date (the date the security comes due) by the market value of the security. This figure does not account for the likelihood of prepayments or the exercise of call provisions. LEVERAGE-ADJUSTED DURATION: Duration is a measure of the expected period over which a bond's principal and interest will be paid, and consequently is a measure of the sensitivity of a bond's or bond Fund's value to changes when market interest rates change. Generally, the longer a bond's or Fund's duration, the more the price of the bond or Fund will change as interest rates change. Leverage-adjusted duration takes into account the leveraging process for a Fund and therefore is longer than the duration of the Fund's portfolio of bonds. MARKET YIELD (ALSO KNOWN AS DIVIDEND YIELD OR CURRENT YIELD): An investment's current annualized dividend divided by its current market price. NET ASSET VALUE (NAV): A Fund's common share NAV per share is calculated by subtracting the liabilities of the Fund (including any MuniPreferred shares issued in order to leverage the Fund) from its total assets and then dividing the remainder by the number of shares outstanding. Fund NAVs are calculated at the end of each business day. TAXABLE-EQUIVALENT YIELD: The yield necessary from a fully taxable investment to equal, on an after-tax basis, the yield of a municipal bond investment. (Sidebar) BOARD OF DIRECTORS/TRUSTEES ROBERT P. BREMNER LAWRENCE H. BROWN JACK B. EVANS WILLIAM C. HUNTER DAVID J. KUNDERT WILLIAM J. SCHNEIDER TIMOTHY R. SCHWERTFEGER JUDITH M. STOCKDALE EUGENE S. SUNSHINE FUND MANAGER NUVEEN ASSET MANAGEMENT 333 WEST WACKER DRIVE CHICAGO, IL 60606 CUSTODIAN STATE STREET BANK & TRUST 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 Each Fund intends to repurchase shares of its own common or preferred stock in the future at such times and in such amounts as is deemed advisable. No shares were repurchased during the period covered by this report. Any future repurchases will be reported to shareholders in the next annual or semiannual report. 87 NUVEEN INVESTMENTS: SERVING INVESTORS FOR GENERATIONS Photo of: 2 women looking at a photo album. Since 1898, financial advisors and their clients have relied on Nuveen Investments to provide dependable investment solutions. For the past century, Nuveen Investments has adhered to the belief that the best approach to investing is to apply conservative risk-management principles to help minimize volatility. Building on this tradition, we today offer a range of high quality equity and fixed-income solutions that are integral to a well-diversified core portfolio. Our clients have come to appreciate this diversity, as well as our continued adherence to proven, long-term investing principles. WE OFFER MANY DIFFERENT INVESTING SOLUTIONS FOR OUR CLIENTS' DIFFERENT NEEDS. Managing more than $115 billion in assets, Nuveen Investments offers access to a number of different asset classes and investing solutions through a variety of products. Nuveen Investments markets its capabilities under four distinct brands: Nuveen, a leader in fixed-income investments; NWQ, a leader in value-style equities; Rittenhouse, a leader in growth-style equities; and Symphony, a leading institutional manager of market-neutral alternative investment portfolios. FIND OUT HOW WE CAN HELP YOU REACH YOUR FINANCIAL GOALS. To learn more about the products and services Nuveen Investments offers, talk to your financial advisor, or call us at (800) 257-8787. Please read the information provided carefully before you invest. Be sure to obtain a prospectus, where applicable. Investors should consider the investment objective and policies, risk considerations, charges and expenses of the Fund carefully before investing. The prospectus contains this and other information relevant to an investment in the Fund. For a prospectus, please contact your securities representative or Nuveen Investments, 333 W. Wacker Dr., Chicago, IL 60606. Please read the prospectus carefully before you invest or send money. (Sidebar) o Share prices o Fund details LEARN MORE o Daily financial news ABOUT NUVEEN FUNDS AT o Investor education WWW.NUVEEN.COM/ETF o Interactive planning tools Logo: NUVEEN Investments EAN-A-0505D ITEM 2. CODE OF ETHICS. As of the end of the period covered by this report, the registrant has adopted a code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. There were no amendments to or waivers from the Code during the period covered by this report. The registrant has posted the code of ethics on its website at www.nuveen.com/etf. (To view the code, click on the Investor Resources drop down menu box, click on Fund Governance and then click on Code of Conduct.) ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. The registrant's Board of Directors or Trustees determined that the registrant has at least one "audit committee financial expert" (as defined in Item 3 of Form N-CSR) serving on its Audit Committee. The registrant's audit committee financial expert is Jack B. Evans, Chairman of the Audit Committee, who is "independent" for purposes of Item 3 of Form N-CSR. Mr. Evans was formerly President and Chief Operating Officer of SCI Financial Group, Inc., a full service registered broker-dealer and registered investment adviser ("SCI"). As part of his role as President and Chief Operating Officer, Mr. Evans actively supervised the Chief Financial Officer (the "CFO") and actively supervised the CFO's preparation of financial statements and other filings with various regulatory authorities. In such capacity, Mr. Evans was actively involved in the preparation of SCI's financial statements and the resolution of issues raised in connection therewith. Mr. Evans has also served on the audit committee of various reporting companies. At such companies, Mr. Evans was involved in the oversight of audits, audit plans, and the preparation of financial statements. Mr. Evans also formerly chaired the audit committee of the Federal Reserve Bank of Chicago. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. Nuveen Virginia Dividend Advantage Municipal Fund 2 The following tables show the amount of fees that Ernst & Young LLP, the Fund's auditor, billed to the Fund during the Fund's last two full fiscal years. For engagements with Ernst & Young LLP 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 to its accountant during the fiscal year in which the services are provided; (B) the Fund did not recognize the services as non-audit services at the time of the engagement; and (C) the services are promptly brought to the Audit Committee's attention, and the Committee (or its delegate) approves the services before the audit is completed. The Audit Committee has delegated certain pre-approval responsibilities to its Chairman (or, in his absence, any other member of the Audit Committee). SERVICES THAT THE FUND'S AUDITOR BILLED TO THE FUND
AUDIT FEES BILLED AUDIT-RELATED FEES TAX FEES ALL OTHER FEES FISCAL YEAR ENDED TO FUND BILLED TO FUND BILLED TO FUND BILLED TO FUND - ------------------------------------------------------------------------------------------------------------------------------------ May 31, 2005 $ 8,710 $ 0 $ 583 $ 2,650 - ------------------------------------------------------------------------------------------------------------------------------------ Percentage approved N/A 0% 0% 0% pursuant to pre-approval exception - ------------------------------------------------------------------------------------------------------------------------------------ May 31, 2004 $ 8,286 $ 0 $ 1,111 $ 2,450 - ------------------------------------------------------------------------------------------------------------------------------------ Percentage approved N/A 0% 0% 0% pursuant to pre-approval exception - ------------------------------------------------------------------------------------------------------------------------------------
The above "All Other Fees" are fees paid to audit firms to perform agreed upon procedures required by the rating agencies to rate fund preferred shares. 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 tables show the amount of fees billed by Ernst & Young LLP to Nuveen Asset Management ("NAM" or the "Adviser"), and any entity controlling, controlled by or under common control with NAM ("Control Affiliate") that provides ongoing services to the Fund ("Affiliated Fund Service Provider"), for engagements directly related to the Fund's operations and financial reporting, during the Fund's last two full fiscal years. The 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, 2005 $ 0 $ 282,575 $ 0 - --------------------------------------------------------------------------------------------------------------------- Percentage approved 0% 0% 0% pursuant to pre-approval exception - --------------------------------------------------------------------------------------------------------------------- May 31, 2004 $ 0 $ 0 $ 0 - --------------------------------------------------------------------------------------------------------------------- Percentage approved N/A N/A N/A pursuant to pre-approval exception - ---------------------------------------------------------------------------------------------------------------------
The above "Tax Fees" are primarily fees billed to the Adviser for Fund tax return preparation. 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's independence.
FISCAL YEAR ENDED TOTAL NON-AUDIT FEES BILLED TO ADVISER AND AFFILIATED FUND SERVICE TOTAL NON-AUDIT FEES PROVIDERS (ENGAGEMENTS BILLED TO ADVISER AND RELATED DIRECTLY TO THE AFFILIATED FUND SERVICE TOTAL NON-AUDIT FEES OPERATIONS AND FINANCIAL PROVIDERS (ALL OTHER BILLED TO FUND REPORTING OF THE FUND) ENGAGEMENTS) TOTAL - ------------------------------------------------------------------------------------------------------------------------------------ May 31, 2005 $ 3,233 $ 282,575 $ 0 $ 285,808 May 31, 2004 $ 3,561 $ 0 $ 0 $ 3,561
The above "Non-Audit Fees billed to Adviser" for 2005 include "Tax-Fees" billed to Adviser in the amount of $282,575 from previous table. Audit Committee Pre-Approval Policies and Procedures. Generally, the audit committee must approve (i) all non-audit services to be performed for the Fund by the Fund's independent accountants and (ii) all audit and non-audit services to be performed by the Fund's independent accountants for the Affiliated Fund Service Providers with respect to operations and financial reporting of the Fund. Regarding tax and research projects conducted by the independent accountants for the Fund and Affiliated Fund Service Providers (with respect to operations and financial reports of the Fund) such engagements will be (i) pre-approved by the audit committee if they are expected to be for amounts greater than $10,000; (ii) reported to the audit committee chairman for his verbal approval prior to engagement if they are expected to be for amounts under $10,000 but greater than $5,000; and (iii) reported to the audit committee at the next audit committee meeting if they are expected to be for an amount under $5,000. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. The registrant's Board of Directors or Trustees has a separately designated audit committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") (15 U.S.C. 78c(a)(58)(A)). The members of the audit committee are Robert P. Bremner, Lawrence H. Brown, Jack B. Evans and William J. Schneider. ITEM 6. SCHEDULE OF INVESTMENTS. See Portfolio of Investments in Item 1. ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. 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, the Adviser 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. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable at this time. ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. Not applicable. ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. There have been no material changes to the procedures by which shareholders may recommend nominees to the registrant's Board implemented after the registrant last provided disclosure in response to this Item. ITEM 11. CONTROLS AND PROCEDURES. (a) The registrant's principal executive and principal financial officers, or persons performing similar functions, have concluded that the registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the "1940 Act") (17 CFR 270.30a-3(c))) are effective, as of a date within 90 days of the filing date of this report that includes the disclosure required by this paragraph, based on their evaluation of the controls and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934, as amended (the "Exchange Act") (17 CFR 240.13a-15(b) or 240.15d-15(b)). (b) There were no changes in the registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR 270.30a-3(d)) that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. ITEM 12. EXHIBITS. File the exhibits listed below as part of this Form. Letter or number the exhibits in the sequence indicated. (a)(1) Any code of ethics, or amendment thereto, that is the subject of the disclosure required by Item 2, to the extent that the registrant intends to satisfy the Item 2 requirements through filing of an exhibit: Not applicable because the code is posted on registrant's website at www.nuveen.com/etf and there were no amendments during the period covered by this report. (To view the code, click on the Investor Resources drop down menu box, click on Fund Governance and then Code of Conduct.) (a)(2) A separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the 1940 Act (17 CFR 270.30a-2(a)) in the exact form set forth below: Ex-99.CERT Attached hereto. (a)(3) Any written solicitation to purchase securities under Rule 23c-1 under the 1940 Act (17 CFR 270.23c-1) sent or given during the period covered by the report by or on behalf of the registrant to 10 or more persons. Not applicable. (b) If the report is filed under Section 13(a) or 15(d) of the Exchange Act, provide the certifications required by Rule 30a-2(b) under the 1940 Act (17 CFR 270.30a-2(b)); Rule 13a-14(b) or Rule 15d-14(b) under the Exchange Act (17 CFR 240.13a-14(b) or 240.15d-14(b)), and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350) as an exhibit. A certification furnished pursuant to this paragraph will not be deemed "filed" for purposes of Section 18 of the Exchange Act (15 U.S.C. 78r), or otherwise subject to the liability of that section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference. Ex-99.906 CERT attached hereto. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. (Registrant) Nuveen Virginia Dividend Advantage Municipal Fund 2 ----------------------------------------------------------- By (Signature and Title)* /s/ Jessica R. Droeger ---------------------------------------------- Jessica R. Droeger Vice President and Secretary Date: August 8, 2005 ------------------------------------------------------------------- Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By (Signature and Title)* /s/ Gifford R. Zimmerman ---------------------------------------------- Gifford R. Zimmerman Chief Administrative Officer (principal executive officer) Date: August 8, 2005 ------------------------------------------------------------------- By (Signature and Title)* /s/ Stephen D. Foy ---------------------------------------------- Stephen D. Foy Vice President and Controller (principal financial officer) Date: August 8, 2005 ------------------------------------------------------------------- * Print the name and title of each signing officer under his or her signature. EX-99.CERT 2 file002.txt CERTIFICATIONS CERTIFICATION I, Gifford R. Zimmerman, certify that: 1. I have reviewed this report on Form N-CSR of Nuveen Virginia Dividend Advantage Municipal Fund 2; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: (a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: August 8, 2005 /s/ Gifford R. Zimmerman ------------------------- -------------------------------- Chief Administrative Officer (principal executive officer) CERTIFICATION I, Stephen D. Foy, certify that: 1. I have reviewed this report on Form N-CSR of Nuveen Virginia Dividend Advantage Municipal Fund 2; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: (a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: August 8, 2005 /s/ Stephen D. Foy ------------------------- -------------------------------- Vice President and Controller (principal financial officer) EX-99.906CERT 3 file003.txt CERTIFICATIONS Certification Pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002; provided by the Chief Executive Officer and Chief Financial Officer, based on each such officer's knowledge and belief. The undersigned officers of Nuveen Virginia Dividend Advantage Municipal Fund 2 (the "Fund"), certify that, to the best of each such officer's knowledge and belief: 1. The Form N-CSR of the Fund for the period ended May 31, 2005 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Fund. Date: August 8, 2005 ----------------------- /s/ Gifford R. Zimmerman --------------------- Chief Administrative Officer (principal executive officer) /s/ Stephen D. Foy --------------------- Vice President, Controller (principal financial officer) -----END PRIVACY-ENHANCED MESSAGE-----