SEMIANNUAL REPORT November 30, 2002
Nuveen
Municipal Closed-End
Exchange-Traded
Funds
GEORGIA
NPG
NZX
NKG
NORTH CAROLINA
NNC
NRB
NNO
NII
PHOTO OF: 2 WOMAN WITH GRADUATION CAP AND GOWN.
PHOTO OF: MAN AND GIRL WORKING ON A LAPTOP COMPUTER.
DEPENDABLE,
TAX-FREE INCOME
BECAUSE
IT'S NOT WHAT YOU EARN,
IT'S WHAT YOU KEEP.(R)
Logo: NUVEEN Investments
RECEIVE YOUR
NUVEEN
FUND
UPDATES
FASTER
THAN EVER!
By registering for online access, you can view and save on your computer the
Fund information you currently receive in the mail. This information then can be
retrieved any time, and you can select only the specific pages you want to view
or print.
Once you sign up, you'll receive an e-mail notice the moment Fund reports are
ready. This notice will contain a link to the report - all you have to do is
click on the internet address provided. You'll be saving time, as well as saving
printing and distribution expenses for your Fund.
Registering for electronic access is easy and only takes a few minutes. (see
instructions at right)
Your e-mail address is strictly confidential and will not be used for anything
other than notifications of shareholder information.
And if you decide you don't like receiving your reports electronically, it's a
simple process to go back to regular mail delivery.
Logo: NUVEEN Investments
SIGN UP TODAY -- HERE'S ALL YOU NEED TO DO...
IF YOUR NUVEEN FUND DIVIDENDS AND STATEMENTS
COME FROM YOUR FINANCIAL ADVISOR OR BROKERAGE ACCOUNT,
FOLLOW THE STEPS OUTLINED BELOW:
--------------------------------------------------------------------------------
1 Go to WWW.INVESTORDELIVERY.COM
2 Look at the address sheet that accompanied this report. Enter the personal
13-CHARACTER ENROLLMENT NUMBER imprinted near your name on the address
sheet.
3 You'll be taken to a page with several options. Select the NEW
ENROLLMENT-CREATE screen. Once there, enter your e-mail address (e.g.
yourID@providerID.com), and a personal, 4-digit PIN of your choice. (Pick a
number that's easy to remember.)
4 Click Submit. Confirm the information you just entered is correct, then
click Submit again.
5 You should get a confirmation e-mail within 24 hours. If you do not, go
back through these steps to make sure all the information is correct.
6 Use this same process if you need to change your registration information
or cancel internet viewing.
IF YOUR NUVEEN FUND DIVIDENDS AND STATEMENTS
COME DIRECTLY TO YOU FROM NUVEEN,
FOLLOW THE STEPS OUTLINED BELOW:
--------------------------------------------------------------------------------
1 Go to WWW.NUVEEN.COM
2 Select the Access Account tab. Select the E-REPORT ENROLLMENT section.
Click on Enrollment Page.
3 You'll be taken to a screen that asks for your Social Security number and
e-mail address. Fill in this information, then click Enroll.
4 You should get a confirmation e-mail within 24 hours. If you do not, go
back through these steps to make sure all the information is correct.
5 Use this same process if you need to change your registration information
or cancel internet viewing.
Photo of: Timothy R. Schwertfeger
Chairman of the Board
Sidebar text: "I URGE YOU TO CONSIDER RECEIVING FUTURE FUND REPORTS AND OTHER
FUND INFORMATION THROUGH THE INTERNET AND BY E-MAIL... SEE THE INSIDE FRONT
COVER OF THIS REPORT FOR STEP-BY-STEP INSTRUCTIONS."
Dear
SHAREHOLDER
Once again, I am pleased to write that during the period covered by this report
your Nuveen Fund continued to meet its objective of providing attractive monthly
income free from federal income taxes and, where applicable, state income taxes.
Detailed information on your Fund's performance can be found in the Portfolio
Manager's Comments and on the Performance Overview pages within this report.
Please take the time to read them.
In addition to providing regular tax-free income, we believe that a municipal
bond investment like your Nuveen Fund also may offer opportunities to reduce the
risk of your overall investment portfolio. This is because the prices of
municipal bonds may move differently than the prices of the common stocks,
mutual funds or other investments you may own. Since one part of your portfolio
may be going up when another is going down, portfolio diversification may reduce
your overall risk. Your financial advisor can explain the advantages of
portfolio diversification in more detail. I urge you to contact him or her soon
for more information on this important investment strategy.
I also urge you to consider receiving future Fund reports and other Fund
information through the Internet and by e-mail rather than in hard copy. Not
only will you be able to receive the information faster, but this also may help
lower your Fund expenses. Sign up is quick and easy - see the inside front cover
of this report for step-by-step instructions.
For more than 100 years, Nuveen has specialized in offering quality investments
such as your Nuveen Fund to those seeking to accumulate and preserve wealth. Our
commitment to careful research, constant surveillance and judicious trading by
our seasoned portfolio management team has never been stronger. Our mission
continues to be to assist you and your financial advisor by offering the
investment solutions and services that can help you meet your financial
objectives. We thank you for choosing us as a partner as you work toward that
goal.
Sincerely,
/s/ Timothy R. Schwertfeger
Timothy R. Schwertfeger
Chairman of the Board
January 15, 2003
1
Nuveen Georgia and North Carolina Municipal Closed-End Exchange-Traded Funds
(NPG, NZX, NKG, NNC, NRB, NNO, NII)
Portfolio Manager's
COMMENTS
Portfolio manager Tom O'Shaughnessy discusses U.S. and state economic
conditions, key investment strategies, and the recent performance of the Funds.
A 20-year Nuveen veteran, Tom has managed NPG and NNC since 1998 and NZX, NRB,
and NNO since 2001, and NKG and NII since their inceptions in September 2002.
(In January 2003, as part of a general realignment of portfolio management
assignments, Rick Huber assumed primary management responsibility for these
Georgia and North Carolina Funds. Rick has 17 years' of investment management
experience. There were no changes in the investment objectives or general
investment strategies of these Funds.)
WHAT WERE THE MAJOR FACTORS AFFECTING THE U.S. ECONOMY AND THE MUNICIPAL MARKET
DURING THIS REPORTING PERIOD?
In many ways, economic and market conditions did not significantly change since
the last shareholder report dated May 31, 2002. We believe the most influential
factors affecting the U.S. economy and the municipal market continued to be the
slow pace of economic growth and interest rates that remained at 40-year lows.
The ongoing threat of terrorism and continued geopolitical uncertainty also had
an economic impact during this reporting period.
In the municipal market, the sluggish economic recovery and lack of inflationary
pressures helped many bonds perform well during much of 2002. However, during
October and, to a lesser degree, November 2002, the market environment for all
fixed income investments was negatively impacted by a rebound in the equity
markets, which appeared to prompt some investors to sell fixed income products
and purchase common stocks.
During the first eleven months of 2002, new municipal supply nationwide reached
a record $328 billion, a 27% increase over January-November 2001 levels. Demand
for municipal bonds also remained strong over most of this period, as many
individual investors continued to seek investments offering tax-free income and
diversification for their portfolios. Institutional investors, especially
traditional municipal bond purchasers such as property/casualty insurance
companies, also were active buyers.
WHAT ABOUT ECONOMIC AND MARKET CONDITIONS IN GEORGIA AND NORTH CAROLINA?
Between January and November 2002, Georgia issued $5.7 billion in new municipal
debt, an increase of 43% over the first 11 months of 2001, while North Carolina
went against the general trend toward increased issuance, offering $4.1 billion
in new bonds, down 18% from 2001 levels. In both states, investor demand often
exceeded available supply. Over the past twelve months, Georgia maintained its
credit rating from Moody's and Standard & Poor's at Aaa/AAA, respectively.
In North Carolina, however, the state's continued budget issues led Moody's to
downgrade the state's general obligation debt to Aa1 from Aaa in August 2002,
while Standard & Poor's maintained its AAA rating for the state.
In Georgia, the state economy appeared to be slowly emerging from recession,
although its overall performance remained weak. Healthy residential building
activity supported construction employment and improving demand for manufactured
products, and the state's transportation industry began to show signs of
recovery. Unemployment in Georgia remained relatively stable over the past year,
standing at 4.6% in November 2002, compared with a state rate of 4.5% a year
earlier and the current national average of 6.0%. Georgia continues to maintain
strong financial reserves and a tradition of conservative fiscal management. As
in other states, tax revenues, particularly those from personal income taxes,
have declined recently, requiring the state to reduce funding to state agencies
and cut budget requests for fiscal 2003. Despite weaker tax collections, the
state continues to have substantial financial flexibility and has not had to
draw down reserves to maintain its balanced budget.
Based on early signs of a potential turnaround in the manufacturing sector,
North Carolina's economy also seemed to be gradually improving. The state
remained a national banking center, and its universities continued to attract
businesses and professional workers to the state. However, downside risks
remained.
2
While the services industry has served as a growth driver, the trade and
construction sectors remained a drag on job growth, and the textile industry
continued to decline. Over the past 12 months, unemployment in North Carolina
has fallen from 6.5% to 6.1% as of November 2002, bringing the state more
closely in line with the national average of 6.0%, although unemployment remains
higher in rural areas. Shortfalls in North Carolina's fiscal 2003 budget were
addressed through non-recurring revenues, funds from rainy day reserves, and
spending measures that left the state to face another structural budget
imbalance in fiscal 2004.
TOTAL RETURN LEHMAN LIPPER
MARKET YIELD ON NAV TOTAL RETURN1 AVERAGE2
--------------------------------------------------------------------------------
1 YEAR 1 YEAR 1 YEAR
TAXABLE- ENDED ENDED ENDED
11/30/02 EQUIVALENT3 11/30/02 11/30/02 11/30/02
--------------------------------------------------------------------------------
NPG 5.38% 8.15% 5.99% 6.32% 7.80%
--------------------------------------------------------------------------------
NZX 5.39% 8.17% 9.15% 6.32% 7.80%
--------------------------------------------------------------------------------
NKG 5.58% 8.45% NA - -
--------------------------------------------------------------------------------
NNC 5.55% 8.67% 8.49% 6.32% 7.80%
--------------------------------------------------------------------------------
NRB 5.59% 8.73% 8.97% 6.32% 7.80%
--------------------------------------------------------------------------------
NNO 5.52% 8.63% 8.38% 6.32% 7.80%
--------------------------------------------------------------------------------
NII 5.51% 8.61% NA - -
--------------------------------------------------------------------------------
Past performance is not predictive of future results.
For additional information, see the individual Performance Overview for your
Fund in this report.
For the twelve months ended November 30, 2002, each of the Funds in this report
having at least one year of performance history (with the exception of NPG)
outperformed the unleveraged, unmanaged Lehman Brothers Municipal Bond Index and
the Lipper average. Much of this outperformance can be attributed to the
leveraged structure of these Funds, which provides the opportunity for
additional income for common shareholders while adding volatility to the Fund's
NAV and share price. It also can be attributed to the relatively long
leverage-adjusted durations4 of these Funds, which ranged from 10.95 to 12.55,
compared with 8.04 for the Lehman Index. A longer duration generally will help a
Fund to perform well during periods of declining interest rates, as has been the
case over much of the past year. (Please see the individual Performance Overview
pages for each Fund's duration.)
It is difficult to compare the performance of these Funds with the Lipper
Average shown in the table because Lipper combines the performance of many
different funds from different states into one overall multi-state average.
Looking specifically at the Nuveen Funds, we believe that in addition to
leverage and duration their relative performances were also influenced by
factors including call exposure, portfolio trading activity, and the price
movement of specific sectors. For example, as of November 30, 2002, NPG held 16%
of its portfolio in multifamily housing bonds, the largest allocation to this
sector among these seven Funds. Over the past twelve months ended November 30,
2002, the performance of the multifamily housing sector lagged that of the
general municipal market as well as other revenue bond sectors. This had a
direct impact on NPG's performance over this period.
HOW DID THE MARKET ENVIRONMENT AFFECT THE FUNDS' DIVIDENDS AND SHARE PRICES?
As the Federal Reserve continued to keep short-term interest rates relatively
low, the dividend-payment capabilities of all of these Funds benefited from
their use of leverage, a strategy that can potentially enhance the dividends
paid to common shareholders. The amount of this benefit is tied in part to the
short-term rates the Funds pay their MuniPreferred, shareholders. Low short-term
rates, such as those currently in effect, can enable the Funds to reduce the
amount of income they pay preferred shareholders, which can leave more earnings
to support common share dividends.
During the fiscal year ended November 30, 2002, the relatively low level of
short-term interest rates enabled us to implement three dividend increases in
NRB, two in NNC, and one in NPG. NZX and NNO, which were introduced in September
and November 2001, respectively, continued to pay attractive monthly dividends
during this period, while the two Funds introduced in September 2002--NKG and
NII--paid their first dividends in November 2002.
Over the course of the twelve months ended November 30, 2002, the share prices
of the three oldest Funds - NPG, NNC, and NRB - rose. For NZX, NKG, NNO and NII,
the general weakening of bond prices during October and November 2002 resulted
in share prices at the end of this period that were lower than at the beginning
or at inception. All of the Funds covered in this report were trading at
premiums to their common share net asset values as of the end of this reporting
period (see charts on individual Performance Overview pages).
1 The total annual returns on common share net asset value (NAV) for these
Nuveen Funds are compared with the total annual return of the Lehman
Brothers Municipal Bond Index, an unleveraged national index comprising a
broad range of in-vestment-grade municipal bonds. Results for the Lehman
index do not reflect any expenses.
2 The total returns of these Funds are compared with the average annualized
return of the 31 funds in the Lipper Other States Municipal Debt Funds
category. Fund and Lipper returns assume reinvestment of dividends.
3 The taxable-equivalent yield represents the yield that must be earned on a
taxable investment in order to equal the yield of the Nuveen Fund on an
after-tax basis. The taxable-equivalent yield is based on the Fund's market
yield on the indicated date and a federal income tax rate of 30% plus the
applicable state income tax rate. The combined federal and state tax rates
used in this report are as follows: Georgia 34% and North Carolina 36%.
4 Duration is a measure of a Fund's NAV volatility in reaction to interest
rate movements. Fund duration, also known as leverage-adjusted duration,
takes into account the leveraging process for a Fund and therefore is
generally longer than the duration of the actual portfolio of individual
bonds that make up the Fund. References to duration in this commentary are
intended to indicate Fund duration unless otherwise noted.
3
WHAT KEY STRATEGIES WERE USED TO MANAGE THESE FUNDS DURING THE FISCAL YEAR ENDED
NOVEMBER 30, 2002?
Over the period, our strategic focus continued to be on diversifying Fund
holdings while remaining fully invested, enhancing call protection, and
positioning the Funds more defensively in anticipation of potential changes in
the interest rate environment. Specifically, that included purchasing a number
of high-quality and insured bonds, as well as bonds in the 15- to 20-year part
of the yield curve. We believed bonds in this maturity range offered yields
similar to those of longer bonds, but with less inherent risk. We think the
addition of these long-intermediate bonds should help to moderate the Funds'
durations over time, making the portfolios less sensitive to interest rate
changes while still allowing the Funds to provide competitive yields and
returns.
Over the past year, the addition of bonds with 15- to 20-year maturities
resulted in shorter durations in the three Funds with 2001 inception dates. In
the two older Funds, NPG and NNC, the reinvestment of proceeds from callable
bonds into this part of the yield curve actually led to a modest lengthening of
their durations.
In addition to an emphasis on yield curve positioning, we also continued to look
for individual issues that we believed would perform well regardless of the
future direction of interest rates. In Georgia, this included selected purchases
in the healthcare sector, which has been one of the top performers in 2002, as
well as general obligation and water and sewer bonds. In North Carolina, we saw
the most opportunities in education bonds. In both states, we avoided the
purchase of industrial development bonds.
In the current geopolitical and economic climate, we believed that maintaining
strong credit quality remained a key requirement. As of November 30, 2002, each
of these Funds continued to offer excellent credit quality, with allocations of
bonds rated AAA/U.S. guaranteed and AA ranging from 77% to 96%. In general, our
weightings in higher quality and insured bonds benefited the performance of
these Funds during the past year.
In September 2002, we introduced two new Funds, NKG and NII. As of November 30,
2002, these Funds had completed their initial investment phase and were in the
process of investing the proceeds from MuniPreferred shares. Due to the tighter
supply of municipal bonds in both Georgia and North Carolina over the past six
months, each of these Funds held bonds issued by other states and Puerto Rico.
We expect to replace these issues with in-state paper as attractive
opportunities present themselves. As mentioned earlier, both NKG and NII paid
their first dividends in November 2002.
WHAT IS YOUR OUTLOOK FOR THE MUNICIPAL MARKET IN GENERAL AND THESE FUNDS IN
PARTICULAR?
In general, our outlook for the fixed income markets remains positive. We
believe the U.S. economy is headed for an eventual recovery, but one that may be
less robust and slower to arrive than some are predicting. We expect inflation
and interest rates to remain relatively low over the near term, while new
municipal volume nationally should continue to be strong, though probably below
the record levels seen in 2002, as issuers take advantage of the low rate
environment for both new issues and refinancings. In Georgia and North Carolina,
however, we expect to see little new issue supply during the first few months of
2003, a situation that is typical in these states. Demand for tax-exempt
municipal bonds should remain solid, as investors continue to look for ways to
rebalance their portfolios and reduce overall investment risk.
Over the next two years, we believe that these Georgia and North Carolina Funds
generally will offer good levels of call protection, with call exposure ranging
from zero in NZX and NKG to 18% in NNC during 2003 and 2004. During the past
twelve months, we worked to mitigate the call risk and improve the positions of
all the Funds, particularly NPG and NNC, which mark their 10-year anniversaries
in May 2003. While the number of actual calls in each Fund will depend largely
on market interest rates over this time, we believe the short-term call exposure
of these Funds is manageable.
In the months ahead, specific areas of concentration will include managing
duration through additional purchases of high-quality bonds in the 15- to
20-year part of the yield curve. In general, we plan to remain focused on
strategies that can add value for our shareholders and provide support for the
Funds' long-term dividend-paying capabilities.
4
Nuveen Georgia Premium Income Municipal Fund
Performance
OVERVIEW As of November 30, 2002
NPG
Pie Chart:
CREDIT QUALITY
AAA/U.S. GUARANTEED 72%
AA 14%
A 10%
BBB 2%
BB OR LOWER 2%
PORTFOLIO STATISTICS
--------------------------------------------------
Share Price $15.95
--------------------------------------------------
Common Share Net Asset Value $14.43
--------------------------------------------------
Market Yield 5.38%
--------------------------------------------------
Taxable-Equivalent Yield
(Federal Income Tax Rate)1 7.69%
--------------------------------------------------
Taxable-Equivalent Yield
(Federal and State Income Tax Rate)1 8.15%
--------------------------------------------------
Net Assets Applicable to
Common Shares ($000) $54,460
--------------------------------------------------
Average Effective Maturity (Years) 20.54
--------------------------------------------------
Leverage-Adjusted Duration 10.12
--------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN (Inception 5/93)
--------------------------------------------------
ON SHARE PRICE ON NAV
--------------------------------------------------
1-Year 10.83% 5.99%
--------------------------------------------------
5-Year 8.10% 6.07%
--------------------------------------------------
Since Inception 6.30% 6.12%
--------------------------------------------------
TOP FIVE SECTORS (as a % of total investments)
--------------------------------------------------
Healthcare 23%
--------------------------------------------------
Water and Sewer 16%
--------------------------------------------------
Housing/Multifamily 16%
--------------------------------------------------
Tax Obligation/Limited 9%
--------------------------------------------------
Utilities 9%
--------------------------------------------------
Bar Chart:
2001-2002 MONTHLY TAX-FREE DIVIDENDS PER SHARE2
12/01 0.07
1/02 0.07
2/02 0.07
3/02 0.0715
4/02 0.0715
5/02 0.0715
6/02 0.0715
7/02 0.0715
8/02 0.0715
9/02 0.0715
10/02 0.0715
11/02 0.0715
Line Chart:
SHARE PRICE PERFORMANCE
Weekly Closing Price
Past performance is not predictive of future results.
12/1/01 15.27
15.5
15.56
15.54
15.53
15.48
15.53
15.52
15.67
15.82
15.86
15.93
15.86
15.82
15.57
15.4
15.32
15.36
15.25
15.48
15.5
15.47
15.65
15.75
15.8
15.83
16
16.32
16.4
16.47
16.5
16.72
16.52
16.5
16.7
16.61
16.6
16.47
16.09
16.04
16.2
16.08
15.95
16.55
16.64
15.96
15.9
15.85
16
16.1
15.7
11/30/02 15.95
1 Taxable-equivalent yield represents the yield on a taxable investment
necessary to equal the yield of the Nuveen Fund on an after-tax basis. It
is calculated using the current market yield and a federal income tax rate
of 30%. The rate shown for federal and state highlights the added value of
owning shares that are also exempt from state income taxes. It is based on
a combined federal and state income tax rate of 34%.
2 The Fund also paid shareholders a net ordinary income distribution in
December 2001 of $0.0189 per share.
5
Nuveen Georgia Dividend Advantage Municipal Fund
Performance
OVERVIEW As of November 30, 2002
NZX
Pie Chart:
CREDIT QUALITY
AAA/U.S. GUARANTEED 76%
AA 10%
A 9%
BBB 5%
PORTFOLIO STATISTICS
--------------------------------------------------
Share Price $14.80
--------------------------------------------------
Common Share Net Asset Value $14.49
--------------------------------------------------
Market Yield 5.39%
--------------------------------------------------
Taxable-Equivalent Yield
(Federal Income Tax Rate)1 7.70%
--------------------------------------------------
Taxable-Equivalent Yield
(Federal and State Income Tax Rate)1 8.17%
--------------------------------------------------
Net Assets Applicable to
Common Shares ($000) $28,352
--------------------------------------------------
Average Effective Maturity (Years) 20.66
--------------------------------------------------
Leverage-Adjusted Duration 12.55
--------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN (Inception 9/01)
--------------------------------------------------
ON SHARE PRICE ON NAV
--------------------------------------------------
1-Year 3.78% 9.15%
--------------------------------------------------
Since Inception 3.90% 6.32%
--------------------------------------------------
TOP FIVE SECTORS (as a % of total investments)
--------------------------------------------------
Education and Civic Organizations 17%
--------------------------------------------------
Healthcare 15%
--------------------------------------------------
Utilities 13%
--------------------------------------------------
Housing/Single Family 12%
--------------------------------------------------
Water and Sewer 9%
--------------------------------------------------
Bar Chart:
2001-2002 MONTHLY TAX-FREE DIVIDENDS PER SHARE
12/01 0.0665
1/02 0.0665
2/02 0.0665
3/02 0.0665
4/02 0.0665
5/02 0.0665
6/02 0.0665
7/02 0.0665
8/02 0.0665
9/02 0.0665
10/02 0.0665
11/02 0.0665
Line Chart:
SHARE PRICE PERFORMANCE
Weekly Closing Price
Past performance is not predictive of future results.
12/1/01 15.3
14.92
14.9
14.69
14.7
14.85
14.94
14.99
15.25
15.25
15.15
15.03
15
15
14.97
14.65
14.65
14.32
14.35
14.83
15.04
14.75
14.65
14.75
14.6
14.74
14.56
14.55
14.5
14.48
14.63
14.8
14.97
14.75
15.2
15.07
15.3
15.23
15.4
15.25
15
14.94
14.86
15.22
15.6
15.25
14.63
15.25
15.15
14.9
14.6
11/30/02 14.8
1 Taxable-equivalent yield represents the yield on a taxable investment
necessary to equal the yield of the Nuveen Fund on an after-tax basis. It
is calculated using the current market yield and a federal income tax rate
of 30%. The rate shown for federal and state highlights the added value of
owning shares that are also exempt from state income taxes. It is based on
a combined federal and state income tax rate of 34%.
6
Nuveen Georgia Dividend Advantage Municipal Fund 2
Performance
OVERVIEW As of November 30, 2002
NKG
Pie Chart:
CREDIT QUALITY
AAA/U.S. GUARANTEED 91%
AA 5%
A 3%
BBB 1%
PORTFOLIO STATISTICS
--------------------------------------------------
Share Price $14.40
--------------------------------------------------
Common Share Net Asset Value $13.82
--------------------------------------------------
Market Yield 5.58%
--------------------------------------------------
Taxable-Equivalent Yield
(Federal Income Tax Rate)1 7.97%
--------------------------------------------------
Taxable-Equivalent Yield
(Federal and State Income Tax Rate)1 8.45%
--------------------------------------------------
Net Assets Applicable to
Common Shares ($000) $62,848
--------------------------------------------------
Average Effective Maturity (Years) 21.85
--------------------------------------------------
Leverage-Adjusted Duration 17.72
--------------------------------------------------
CUMULATIVE TOTAL RETURN (Inception 9/02)
--------------------------------------------------
ON SHARE PRICE ON NAV
--------------------------------------------------
Since Inception -3.55% -3.09%
--------------------------------------------------
TOP FIVE SECTORS (as a % of total investments)
--------------------------------------------------
Tax Obligation/Limited 29%
--------------------------------------------------
Education and Civic Organizations 18%
--------------------------------------------------
Water and Sewer 16%
--------------------------------------------------
Healthcare 16%
--------------------------------------------------
Tax Obligation/General 7%
--------------------------------------------------
THE FUND PAID ITS FIRST REGULAR MONTHLY DIVIDEND OF $.0670 PER SHARE ON DECEMBER
2, 2002.
Line Chart:
SHARE PRICE PERFORMANCE
Weekly Closing Price
Past performance is not predictive of future results.
9/27/02 15
15.01
15.01
15
15.01
15.1
15.02
15
14.35
11/30/02 14.4
1 Taxable-equivalent yield represents the yield on a taxable investment
necessary to equal the yield of the Nuveen Fund on an after-tax basis. It
is calculated using the current market yield and a federal income tax rate
of 30%. The rate shown for federal and state highlights the added value of
owning shares that are also exempt from state income taxes. It is based on
a combined federal and state income tax rate of 34%.
7
Nuveen North Carolina Premium Income Municipal Fund
Performance
OVERVIEW As of November 30, 2002
NNC
Pie Chart:
CREDIT QUALITY
AAA/U.S. GUARANTEED 46%
AA 31%
A 14%
BBB 9%
PORTFOLIO STATISTICS
--------------------------------------------------
Share Price $15.25
--------------------------------------------------
Common Share Net Asset Value $14.54
--------------------------------------------------
Market Yield 5.55%
--------------------------------------------------
Taxable-Equivalent Yield
(Federal Income Tax Rate)1 7.93%
--------------------------------------------------
Taxable-Equivalent Yield
(Federal and State Income Tax Rate)1 8.67%
--------------------------------------------------
Net Assets Applicable to
Common Shares ($000) $91,642
--------------------------------------------------
Average Effective Maturity (Years) 19.78
--------------------------------------------------
Leverage-Adjusted Duration 10.95
--------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN (Inception 5/93)
--------------------------------------------------
ON SHARE PRICE ON NAV
--------------------------------------------------
1-Year 6.63% 8.49%
--------------------------------------------------
5-Year 6.57% 6.30%
--------------------------------------------------
Since Inception 5.63% 6.07%
--------------------------------------------------
TOP FIVE SECTORS (as a % of total investments)
--------------------------------------------------
Healthcare 24%
--------------------------------------------------
Housing/Single Family 11%
--------------------------------------------------
Tax Obligation/Limited 10%
--------------------------------------------------
Education and Civic Organizations 9%
--------------------------------------------------
Tax Obligation/General 9%
--------------------------------------------------
Bar Chart:
2001-2002 MONTHLY TAX-FREE DIVIDENDS PER SHARE
12/01 0.0675
1/02 0.0675
2/02 0.0675
3/02 0.0695
4/02 0.0695
5/02 0.0695
6/02 0.0705
7/02 0.0705
8/02 0.0705
9/02 0.0705
10/02 0.0705
11/02 0.0705
Line Chart:
SHARE PRICE PERFORMANCE
Weekly Closing Price
Past performance is not predictive of future results.
12/1/01 15.13
15.03
14.76
14.27
14.69
14.76
15.04
14.99
15.22
15.49
15.45
15.55
15.7
15.76
15.8
15.72
15.62
15.6
15.54
15.6
15.56
15.45
15.75
16
16.07
16.21
16.4
16.4
16.7
16.69
16.43
16.45
16.72
16.35
16.75
16.8
16.56
16.46
16.39
16.39
16.15
15.79
15.86
15.7
15.69
14.61
14.76
14.95
15.39
15.43
15.4
11/30/02 15.25
1 Taxable-equivalent yield represents the yield on a taxable investment
necessary to equal the yield of the Nuveen Fund on an after-tax basis. It
is calculated using the current market yield and a federal income tax rate
of 30%. The rate shown for federal and state highlights the added value of
owning shares that are also exempt from state income taxes. It is based on
a combined federal and state income tax rate of 36%.
8
Nuveen North Carolina Dividend Advantage Municipal Fund
Performance
OVERVIEW As of November 30, 2002
NRB
Pie Chart:
CREDIT QUALITY
AAA/U.S. GUARANTEED 55%
AA 29%
A 9%
BBB 5%
NR 2%
PORTFOLIO STATISTICS
--------------------------------------------------
Share Price $15.45
--------------------------------------------------
Common Share Net Asset Value $14.81
--------------------------------------------------
Market Yield 5.59%
--------------------------------------------------
Taxable-Equivalent Yield
(Federal Income Tax Rate)1 7.99%
--------------------------------------------------
Taxable-Equivalent Yield
(Federal and State Income Tax Rate)1 8.73%
--------------------------------------------------
Net Assets Applicable to
Common Shares ($000) $33,128
--------------------------------------------------
Average Effective Maturity (Years) 19.55
--------------------------------------------------
Leverage-Adjusted Duration 11.32
--------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN (Inception 1/01)
--------------------------------------------------
ON SHARE PRICE ON NAV
--------------------------------------------------
1-Year 8.57% 8.97%
--------------------------------------------------
Since Inception 7.09% 7.52%
--------------------------------------------------
TOP FIVE SECTORS (as a % of total investments)
--------------------------------------------------
Water and Sewer 20%
--------------------------------------------------
Education and Civic Organizations 17%
--------------------------------------------------
Healthcare 13%
--------------------------------------------------
Utilities 12%
--------------------------------------------------
Tax Obligation/Limited 9%
--------------------------------------------------
Bar Chart:
2001-2002 MONTHLY TAX-FREE DIVIDENDS PER SHARE
12/01 0.068
1/02 0.068
2/02 0.068
3/02 0.069
4/02 0.069
5/02 0.069
6/02 0.07
7/02 0.07
8/02 0.07
9/02 0.072
10/02 0.072
11/02 0.072
Line Chart:
SHARE PRICE PERFORMANCE
Weekly Closing Price
Past performance is not predictive of future results.
12/1/01 15.21
15.03
15.09
15.14
14.99
15.12
15.23
15.2
15.25
15.25
15.19
15.3
15.2
15.38
15.19
14.1
14.5
15.03
15.04
15.17
15
15
15
14.95
15.14
15.44
15.2
15.9
15.65
15.5
15.38
15.32
15.37
14.89
15
15.22
15.11
15.1
15.1
15.1
15.18
15.29
15.35
15.48
15.4
14.45
14.5
15.24
15.25
15.35
15.3
11/30/02 15.45
1 Taxable-equivalent yield represents the yield on a taxable investment
necessary to equal the yield of the Nuveen Fund on an after-tax basis. It
is calculated using the current market yield and a federal income tax rate
of 30%. The rate shown for federal and state highlights the added value of
owning shares that are also exempt from state income taxes. It is based on
a combined federal and state income tax rate of 36%.
9
Nuveen North Carolina Dividend Advantage Municipal Fund 2
Performance
OVERVIEW As of November 30, 2002
NNO
Pie Chart:
CREDIT QUALITY
AAA/U.S. GUARANTEED 60%
AA 24%
A 8%
BBB 8%
PORTFOLIO STATISTICS
--------------------------------------------------
Share Price $14.89
--------------------------------------------------
Common Share Net Asset Value $14.73
--------------------------------------------------
Market Yield 5.52%
--------------------------------------------------
Taxable-Equivalent Yield
(Federal Income Tax Rate)1 7.89%
--------------------------------------------------
Taxable-Equivalent Yield
(Federal and State Income Tax Rate)1 8.63%
--------------------------------------------------
Net Assets Applicable to
Common Shares ($000) $54,990
--------------------------------------------------
Average Effective Maturity (Years) 16.84
--------------------------------------------------
Leverage-Adjusted Duration 11.82
--------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN (Inception 11/01)
--------------------------------------------------
ON SHARE PRICE ON NAV
--------------------------------------------------
1-Year 4.04% 8.38%
--------------------------------------------------
Since Inception 4.39% 8.23%
--------------------------------------------------
TOP FIVE SECTORS (as a % of total investments)
--------------------------------------------------
Education and Civic Organizations 16%
--------------------------------------------------
Utilities 15%
--------------------------------------------------
Healthcare 15%
--------------------------------------------------
Tax Obligation/Limited 13%
--------------------------------------------------
Tax Obligation/General 12%
--------------------------------------------------
Bar Chart:
2002 MONTHLY TAX-FREE DIVIDENDS PER SHARE
1/02 0.0685
2/02 0.0685
3/02 0.0685
4/02 0.0685
5/02 0.0685
6/02 0.0685
7/02 0.0685
8/02 0.0685
9/02 0.0685
10/02 0.0685
11/02 0.0685
Line Chart:
SHARE PRICE PERFORMANCE
Weekly Closing Price
Past performance is not predictive of future results.
12/1/01 15.02
15
14.8
14.51
14.5
14.73
14.61
14.84
14.88
14.99
14.99
14.75
15
15.13
14.99
14.85
14.75
14.36
14.5
14.4
14.9
15
14.75
14.84
14.88
14.9
15
14.99
14.95
14.9
15.4
15.21
15.2
14.6
14.99
14.99
14.99
14.85
14.75
14.94
15.02
14.9
15.25
15.45
15.35
14.85
14.42
14.95
14.99
14.9
14.55
11/30/02 14.89
1 Taxable-equivalent yield represents the yield on a taxable investment
necessary to equal the yield of the Nuveen Fund on an after-tax basis. It
is calculated using the current market yield and a federal income tax rate
of 30%. The rate shown for federal and state highlights the added value of
owning shares that are also exempt from state income taxes. It is based on
a combined federal and state income tax rate of 36%.
10
Nuveen North Carolina Dividend Advantage Municipal Fund 3
Performance
OVERVIEW As of November 30, 2002
NII
Pie Chart:
CREDIT QUALITY
AAA/U.S. GUARANTEED 74%
AA 19%
A 2%
BBB 4%
NR 1%
PORTFOLIO STATISTICS
--------------------------------------------------
Share Price $14.60
--------------------------------------------------
Common Share Net Asset Value $13.85
--------------------------------------------------
Market Yield 5.51%
--------------------------------------------------
Taxable-Equivalent Yield
(Federal Income Tax Rate)1 7.87%
--------------------------------------------------
Taxable-Equivalent Yield
(Federal and State Income Tax Rate)1 8.61%
--------------------------------------------------
Net Assets Applicable to
Common Shares ($000) $54,284
--------------------------------------------------
Average Effective Maturity (Years) 20.56
--------------------------------------------------
Leverage-Adjusted Duration 16.01
--------------------------------------------------
CUMULATIVE TOTAL RETURN (Inception 9/02)
--------------------------------------------------
ON SHARE PRICE ON NAV
--------------------------------------------------
Since Inception -2.22% -2.88%
--------------------------------------------------
TOP FIVE SECTORS (as a % of total investments)
--------------------------------------------------
Tax Obligation/Limited 22%
--------------------------------------------------
Education and Civic Organizations 19%
--------------------------------------------------
Tax Obligation/General 15%
--------------------------------------------------
Utilities 10%
--------------------------------------------------
Healthcare 10%
--------------------------------------------------
THE FUND PAID ITS FIRST REGULAR MONTHLY DIVIDEND OF $.0670 PER SHARE ON DECEMBER
2, 2002.
Line Chart:
SHARE PRICE PERFORMANCE
Weekly Closing Price
Past performance is not predictive of future results.
9/27/02 15.01
15.03
15.2
15.05
15.01
15
15.06
15
14.6
11/30/02 14.6
1 Taxable-equivalent yield represents the yield on a taxable investment
necessary to equal the yield of the Nuveen Fund on an after-tax basis. It
is calculated using the current market yield and a federal income tax rate
of 30%. The rate shown for federal and state highlights the added value of
owning shares that are also exempt from state income taxes. It is based on
a combined federal and state income tax rate of 36%.
11
Shareholder
MEETING REPORT
The Shareholder Meeting was held October 23, 2002 in Chicago at Nuveen's
headquarters.
NPG NZX NNC
------------------------------------------------------------------------------------------------------------------------------------
APPROVAL OF THE BOARD MEMBERS
WAS REACHED AS FOLLOWS:
Preferred Preferred Preferred
Common Shares Common Shares Common Shares
Shares Series-TH Shares Series-M Shares Series-TH
====================================================================================================================================
Robert P. Bremner
For 3,629,996 1,028 1,932,515 586 5,958,634 1,821
Withhold 14,700 1 1,000 -- 61,615 9
------------------------------------------------------------------------------------------------------------------------------------
Total 3,644,696 1,029 1,933,515 586 6,020,249 1,830
====================================================================================================================================
Lawrence H. Brown
For 3,626,196 1,028 1,932,515 586 5,959,581 1,826
Withhold 18,500 1 1,000 -- 60,668 4
------------------------------------------------------------------------------------------------------------------------------------
Total 3,644,696 1,029 1,933,515 586 6,020,249 1,830
====================================================================================================================================
Anne E. Impellizzeri
For 3,624,089 1,028 1,932,515 586 5,952,976 1,821
Withhold 20,607 1 1,000 -- 67,273 9
------------------------------------------------------------------------------------------------------------------------------------
Total 3,644,696 1,029 1,933,515 586 6,020,249 1,830
====================================================================================================================================
Peter R. Sawers
For 3,629,996 1,028 1,932,515 586 5,959,051 1,826
Withhold 14,700 1 1,000 -- 61,198 4
------------------------------------------------------------------------------------------------------------------------------------
Total 3,644,696 1,029 1,933,515 586 6,020,249 1,830
====================================================================================================================================
Judith M. Stockdale
For 3,626,196 1,028 1,932,515 586 5,959,329 1,826
Withhold 18,500 1 1,000 -- 60,920 4
------------------------------------------------------------------------------------------------------------------------------------
Total 3,644,696 1,029 1,933,515 586 6,020,249 1,830
====================================================================================================================================
William J. Schneider
For -- 1,028 -- 586 -- 1,826
Withhold -- 1 -- -- -- 4
------------------------------------------------------------------------------------------------------------------------------------
Total -- 1,029 -- 586 -- 1,830
====================================================================================================================================
Timothy R. Schwertfeger
For -- 1,028 -- 586 -- 1,826
Withhold -- 1 -- -- -- 4
------------------------------------------------------------------------------------------------------------------------------------
Total -- 1,029 -- 586 -- 1,830
====================================================================================================================================
12
NRB NNO
------------------------------------------------------------------------------------------------------------------------------------
APPROVAL OF THE BOARD MEMBERS
WAS REACHED AS FOLLOWS:
Preferred Preferred
Common Shares Common Shares
Shares Series-T Shares Series-F
====================================================================================================================================
Robert P. Bremner
For 2,186,644 607 3,600,259 1,086
Withhold 18,168 -- 31,023 3
------------------------------------------------------------------------------------------------------------------------------------
Total 2,204,812 607 3,631,282 1,089
====================================================================================================================================
Lawrence H. Brown
For 2,186,396 607 3,593,759 1,085
Withhold 18,416 -- 37,523 4
------------------------------------------------------------------------------------------------------------------------------------
Total 2,204,812 607 3,631,282 1,089
====================================================================================================================================
Anne E. Impellizzeri
For 2,184,896 607 3,598,759 1,080
Withhold 19,916 -- 32,523 9
------------------------------------------------------------------------------------------------------------------------------------
Total 2,204,812 607 3,631,282 1,089
====================================================================================================================================
Peter R. Sawers
For 2,186,396 607 3,599,259 1,089
Withhold 18,416 -- 32,023 --
------------------------------------------------------------------------------------------------------------------------------------
Total 2,204,812 607 3,631,282 1,089
====================================================================================================================================
Judith M. Stockdale
For 2,186,644 607 3,601,079 1,083
Withhold 18,168 -- 30,203 6
------------------------------------------------------------------------------------------------------------------------------------
Total 2,204,812 607 3,631,282 1,089
====================================================================================================================================
William J. Schneider
For -- 607 -- 1,089
Withhold -- -- -- --
------------------------------------------------------------------------------------------------------------------------------------
Total -- 607 -- 1,089
====================================================================================================================================
Timothy R. Schwertfeger
For -- 607 -- 1,089
Withhold -- -- -- --
------------------------------------------------------------------------------------------------------------------------------------
Total -- 607 -- 1,089
====================================================================================================================================
13
Nuveen Georgia Premium Income Municipal Fund (NPG)
Portfolio of
INVESTMENTS November 30, 2002 (Unaudited)
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
BASIC MATERIALS - 6.3%
$ 2,500 Effingham County Industrial Development Authority, Georgia, 6/11 at 101.00 BB+ $1,874,050
Pollution Control Revenue Refunding Bonds, Georgia-Pacific Project,
Series 2001, 6.500%, 6/01/31
1,500 Richmond County Development Authority, Georgia, Environmental 2/11 at 101.00 BBB 1,535,550
Improvement Revenue Bonds, International Paper Company
Project, Series 2001A, 6.250%, 2/01/25 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES - 3.8%
2,000 Development Authority of Cartersville, Georgia, Sewage Facilities 5/07 at 101.00 A+ 2,087,580
Refunding Revenue Bonds (Anheuser-Busch Project), Series 1997,
6.125%, 5/01/27 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 11.1%
Urban Residential Finance Authority of the City of Atlanta,
Georgia, Dormitory Facility Refunding Revenue Bonds (Morehouse
College Project), Series 1995:
1,210 5.750%, 12/01/20 12/05 at 102.00 AAA 1,310,466
1,375 5.750%, 12/01/25 12/05 at 102.00 AAA 1,462,271
1,555 Development Authority of DeKalb County, Georgia, Revenue Bonds 10/04 at 102.00 AA 1,683,194
(Emory University Project), Series 1994-A, 6.000%, 10/01/14
1,550 Private Colleges and Universities, Georgia, Authority Revenue 6/03 at 102.00 AA 1,579,667
Bonds (Agnes Scott College Project), Series 1993, 5.625%, 6/01/23
------------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE - 33.0%
3,000 Hospital Authority of Albany-Dougherty County, Georgia, Revenue 9/03 at 102.00 AAA 3,124,320
Bonds (Phoebe Putney Memorial Hospital), Series 1993,
5.700%, 9/01/13
2,300 Hospital Authority of Chatham County, Savannah, Georgia, 7/11 at 101.00 A- 2,405,869
Hospital Revenue Improvement Bonds, Memorial Health University
Medical Center, Inc., Series 2001A, 6.125%, 1/01/24
2,000 Hospital Authority of Clarke County, Georgia, Hospital Revenue 1/12 at 101.00 AAA 1,996,900
Certificates, Athens Regional Medical Center, Series 2002,
5.125%, 1/01/32
3,000 Hospital Authority of Floyd County, Georgia, Revenue Anticipation 7/12 at 101.00 Aaa 3,016,740
Certificates, Floyd Medical Center Project, Series 2002,
5.200%, 7/01/32
1,765 Hospital Authority of Gainesville and Hall County, Georgia, Revenue 10/05 at 102.00 AAA 1,930,010
Anticipation Certificates (Northeast Georgia Healthcare Project),
Series 1995, 6.000%, 10/01/25
1,750 Hospital Authority of Gainesville and Hall County, Georgia, 5/11 at 100.00 A- 1,704,553
Revenue Anticipation Certificates (Northeast Georgia Health
System, Inc. Project), Series 2001, 5.500%, 5/15/31
3,750 Hospital Authority of Gwinnett County, Georgia, Revenue 2/12 at 102.00 AAA 3,836,363
Anticipation Certificates, Gwinnett Hospital System Inc.,
Series 1997B, 5.300%, 9/01/27
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 22.7%
1,145 Housing Authority of Clayton County, Georgia, Multifamily Housing 12/05 at 102.00 AAA 1,178,846
Revenue Bonds (The Advantages Project), Series 1995,
5.800%, 12/01/20
3,400 Housing Authority of DeKalb County, Georgia, Multifamily Housing 1/05 at 102.00 AAA 3,578,670
Revenue Bonds (The Lakes at Indian Creek Apartments Project),
Series 1994, 7.150%, 1/01/25 (Alternative Minimum Tax)
945 Housing Authority of the City of Decatur, Georgia, Mortgage Revenue 1/03 at 102.00 AAA 961,566
Refunding Bonds (FHA-Insured Mortgage Loan - Park Trace
Apartments - Section 8 Assisted Project), Series 1992A,
6.450%, 7/01/25
2,000 Housing Authority of the City of Lawrenceville, Georgia, 12/10 at 100.00 AAA 2,049,880
Multifamily Housing Senior Revenue Bonds, Brisben Greens of
Hillcrest II Project, Series 2000A-1, 5.800%, 12/01/33 (Alternative
Minimum Tax)
3,000 Macon-Bibb County Urban Development Authority, Georgia, 1/04 at 103.00 AAA 3,054,510
Multifamily Housing Refunding Revenue Bonds, Series 1997A,
5.550%, 1/01/24
1,500 Housing Authority of the City of Marietta, Georgia, Multifamily 10/06 at 102.00 AAA 1,541,565
Housing Revenue Bonds (GNMA Collateralized - Country Oaks
Apartments), Series 1996, 6.150%, 10/20/26 (Alternative
Minimum Tax)
14
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 7.8%
$ 255 Housing Authority of Fulton County, Georgia, Single Family 3/05 at 102.00 AAA $ 263,061
Mortgage Revenue Bonds (GNMA Mortgage-Backed Securities
Program), Series 1995A, 6.550%, 3/01/18 (Alternative
Minimum Tax)
2,995 Georgia Housing and Finance Authority, Single Family Mortgage 12/10 at 100.00 AAA 3,053,163
Bonds, 2001 Series A (Subseries A-2), 5.700%, 12/01/31
(Alternative Minimum Tax)
900 Georgia Housing and Finance Agency, Single Family Mortgage 12/11 at 100.00 AAA 910,512
Bonds, 2002 Series B-2, 5.350%, 12/01/22 (Alternative
Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL/OTHER - 0.9%
500 Savannah Economic Development Authority, Georgia, Revenue 7/12 at 100.00 AAA 502,060
Bonds, GTREP Project, Series 2002, 5.000%, 7/01/22
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 7.9%
2,500 Forsyth County School District, Georgia, General Obligation 2/10 at 102.00 Aa2 2,699,475
Bonds, Series 1999, 5.750%, 2/01/19
1,500 Gwinnett County School District, Georgia, General Obligation 2/13 at 100.00 Aaa 1,586,325
Bonds, Series 2002 Refunding, 5.000%, 2/01/15 (WI, settling
12/05/02)
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 13.3%
3,000 Cobb-Marietta Coliseum and Exhibit Hall Authority, Georgia, 10/19 at 100.00 AAA 3,274,680
Revenue Refunding Bonds, Series 1993, 5.625%, 10/01/26
2,600 Macon-Bibb County Urban Development Authority, Georgia, County 8/12 at 101.00 AA 2,796,664
of Bibb Public Facilities Projects, Series 2002A, Revenue
Refunding Bonds, 5.375%, 8/01/17
1,000 Metropolitan Atlanta Rapid Transit Authority, Georgia, Sales No Opt. Call AAA 1,182,070
Tax Revenue Bonds, Refunding Series P, 6.250%, 7/01/20
------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 2.1%
1,000 City of Atlanta, Georgia, Airport Facilities Revenue Refunding No Opt. Call AAA 1,161,710
Bonds, Series 1994A, 6.500%, 1/01/09
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 0.2%
85 Municipal Electric Authority of Georgia, Project One Special No Opt. Call A+*** 99,144
Obligation Bonds, Fifth Crossover Series, 6.400%, 1/01/09
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 12.7%
885 Coweta County Development Authority, Georgia, Revenue Bonds, 1/13 at 100.00 Aaa 930,613
Newnan Water, Sewer and Light Commission Project,
Series 2002, 5.250%, 1/01/18
1,900 Municipal Electric Authority of Georgia, General Power Revenue 1/03 at 100.00 AAA 1,904,332
Bonds, 1992B Series, 5.500%, 1/01/18 (Pre-refunded to 1/01/03)
1,000 Municipal Electric Authority of Georgia, Power Revenue Bonds, No Opt. Call AAA 1,113,860
Series Z, 5.500%, 1/01/20
1,665 Municipal Electric Authority of Georgia, Project One Special No Opt. Call A+ 1,901,680
Obligation Bonds, Fifth Crossover Series, 6.400%, 1/01/09
1,000 Development Authority of Monroe County, Georgia, Pollution No Opt. Call AAA 1,041,580
Control Revenue Bonds, Georgia Power Company Scherer Plant
Project, Series 2001, 4.200%, 1/01/12 (Mandatory put 12/01/08)
15
Nuveen Georgia Premium Income Municipal Fund (NPG) (continued)
Portfolio of INVESTMENTS November 30, 2002 (Unaudited)
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 22.8%
Augusta, Georgia, Water and Sewerage Revenue Bonds, Series 2002:
$ 500 5.000%, 10/01/16 10/12 at 100.00 AAA $ 520,275
1,990 5.000%, 10/01/17 10/12 at 100.00 AAA 2,072,306
3,500 Coweta County Water and Sewer Authority, Georgia, Revenue 6/11 at 102.00 Aaa 3,580,885
Bonds, Series 2001, 5.250%, 6/01/26
2,500 DeKalb County, Georgia, Water and Sewerage Bonds, Series 2000, 10/10 at 101.00 AA 2,514,300
5.125%, 10/01/31
2,685 Harris County, Georgia, Water System Revenue Bonds, Series 2002, 12/12 at 100.00 Aaa 2,580,902
4.750%, 12/01/27 (WI, settling 12/05/02)
1,000 City of Milledgeville, Georgia, Water and Sewerage Revenue and No Opt. Call AAA 1,145,120
Refunding Bonds, Series 1996, 6.000%, 12/01/21
------------------------------------------------------------------------------------------------------------------------------------
$ 76,205 Total Long-Term Investments (cost $75,927,723) - 144.6% 78,747,287
=============-----------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 6.4% 3,513,035
--------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (51.0)% (27,800,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $54,460,322
====================================================================================================================
(1) All percentages shown in the Portfolio of Investments
are based on net assets applicable to Common shares.
* Optional Call Provisions: Dates (month and year) and
prices of the earliest optional call or redemption.
There may be other call provisions at varying prices at
later dates.
** Ratings: 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.
(WI) Security purchased on a when-issued basis.
See accompanying notes to financial statements.
16
Nuveen Georgia Dividend Advantage Municipal Fund (NZX)
Portfolio of
INVESTMENTS November 30, 2002 (Unaudited)
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
BASIC MATERIALS - 3.5%
$ 1,000 Richmond County Development Authority, Georgia, Environmental 2/12 at 101.00 BBB $1,003,300
Improvement Revenue Bonds, International Paper Company
Project Refunding, Series 2002A, 6.000%, 2/01/25 (Alternative
Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES - 3.6%
1,000 Cartersville Development Authority, Georgia, Waste and Wastewater 2/12 at 100.00 A+ 1,030,970
Facilities Revenue Bonds, Anheuser Busch Cos. Inc. Project,
Series 2002 Refunding, 5.950%, 2/01/32 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 24.2%
1,200 Atlanta Development Authority, Georgia, Revenue Bonds, Yamacraw 1/12 at 100.00 AAA 1,205,400
Design Center Project, Series 2001A, 5.125%, 1/01/27
1,620 Bulloch County Development Authority, Georgia, Student Housing 8/12 at 100.00 Aaa 1,641,595
Lease Revenue Bonds, Georgia Southern University Project,
Series 2002, 5.000%, 8/01/20
1,485 Fulton County Development Authority, Georgia, Georgia Tech 4/12 at 100.00 AAA 1,504,260
Athletic Association Revenue Bonds, Series 2001,
5.000%, 10/01/20
1,225 Private Colleges and University Authority, Georgia, Emory 9/11 at 100.00 AA 1,214,747
University Revenue Bonds, Series 2001A, 5.000%, 9/01/31
1,250 Private Colleges and Universities Authority, Georgia, Mercer 10/11 at 102.00 A3 1,289,063
University Project, Revenue Bonds, Series 2001, 5.750%, 10/01/31
------------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE - 22.0%
1,000 Hospital Authority of Clarke County, Georgia, Hospital Revenue 1/12 at 101.00 AAA 1,044,290
Certificates, Athens Regional Medical Center, Series 2002,
5.375%, 1/01/19
1,250 Hospital Authority of Gainesville and Hall County, Georgia, 5/11 at 100.00 A- 1,217,538
Revenue Anticipation Certificates (Northeast Georgia Health
System, Inc. Project), Series 2001, 5.500%, 5/15/31
1,900 Hospital Authority of Gwinnett County, Georgia, Revenue 2/12 at 102.00 AAA 1,943,757
Anticipation Certificates, Gwinnett Hospital System, Inc.,
Series 1997B, 5.300%, 9/01/27
2,000 Hospital Authority of Valdosta and Lowndes County, Georgia, 10/12 at 101.00 AAA 2,021,440
South Georgia Medical Center Project Revenue Certificates,
Series 2002, 5.250%, 10/01/27
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 12.3%
1,000 Housing Authority of DeKalb County, Georgia, Multifamily 8/11 at 103.00 Aaa 1,010,220
Housing Revenue Bonds, GNMA Collateralized, Castaways
Apartments Project, Series 2001A, 5.400%, 2/20/29
1,000 Housing Authority of DeKalb County, Georgia, Multifamily 12/11 at 103.00 Aaa 1,022,540
Housing Revenue Bonds, GNMA Collateralized, Snapwoods
Apartments Project, Series 2001A, 5.500%, 12/20/32
1,400 Housing Authority of Savannah, Georgia, Multifamily Housing 8/16 at 100.00 Aaa 1,449,266
Revenue Refunding Bonds, Chatham Gardens Project,
Series 2001, 5.625%, 8/01/31 (Alternative Minimum Tax)
(Mandatory put 2/01/19)
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 16.6%
2,000 Georgia Housing and Finance Authority, Single Family Mortgage 12/11 at 100.00 AAA 2,029,840
Bonds, 2002 Series A (Subseries A-2), 5.450%, 12/01/22
(Alternative Minimum Tax)
650 Georgia Housing and Finance Agency, Single Family Mortgage 12/11 at 100.00 AAA 657,592
Bonds, 2002 Series B-2, 5.350%, 12/01/22 (Alternative
Minimum Tax)
2,025 Georgia Housing and Finance Authority, Single Family Mortgage 12/12 at 100.00 AAA 2,026,235
Bonds, 2002 Series C-2, 5.300%, 6/01/33 (Alternative
Minimum Tax) (WI, settling 1/09/03)
17
Nuveen Georgia Dividend Advantage Municipal Fund (NZX) (continued)
Portfolio of INVESTMENTS November 30, 2002 (Unaudited)
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL/OTHER - 2.7%
$ 750 Savannah Economic Development Authority, Georgia, GTREP 7/12 at 100.00 AAA $ 765,143
Project, Revenue Bonds, Series 2002, 5.000%, 7/01/19
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 11.0%
2,000 State of Georgia, General Obligation Bonds, Series 2002D, 8/12 at 100.00 AAA 2,070,460
5.000%, 8/01/18
1,000 Gwinnett County School District, Georgia, General Obligation 2/13 at 100.00 Aaa 1,057,550
Bonds, Series 2002 Refunding, 5.000%, 2/01/15
(WI, settling 12/05/02)
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 9.4%
1,525 Macon-Bibb County Urban Development Authority, Georgia, County 8/12 at 101.00 AA 1,624,247
of Bibb Public Facilities Projects, Revenue Refunding Bonds,
Series 2002A, 5.000%, 8/01/14
1,000 Rockdale County Water and Sewerage Authority, Georgia, Revenue 1/10 at 101.00 AAA 1,027,660
Bonds, Series 1999A, 5.375%, 7/01/29
------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 3.8%
1,000 City of Atlanta, Georgia, Airport General Revenue and Refunding 1/10 at 101.00 AAA 1,066,940
Bonds, Series 2000A, 5.400%, 1/01/15
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 18.0%
1,500 Coweta County Development Authority, Georgia, Revenue Bonds, 1/13 at 100.00 Aaa 1,577,310
Newnan Water and Sewer and Light Commission Project,
Series 2002, 5.250%, 1/01/18
1,000 City of Elberton, Georgia, Combined Utility System Refunding 1/12 at 100.00 Aaa 1,003,940
and Improvement Revenue Bonds, Series 2001, 5.000%, 1/01/22
1,250 Municipal Electric Authority of Georgia, Combustion Turbine 11/12 at 100.00 AAA 1,293,438
Revenue Project Bonds, Series 2002A, 5.250%, 11/01/20
1,200 Summerville, Georgia, Combined Public Utility Revenue Refunding 1/12 at 101.00 Baa3 1,218,744
and Improvement Bonds, Series 2002, 5.750%, 1/01/26
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 12.5%
2,065 Augusta, Georgia, Water and Sewerage Revenue Bonds, 10/12 at 100.00 AAA 2,148,736
Series 2002, 5.000%, 10/01/16
1,395 Macon Water Authority, Georgia, Water and Sewer Revenue Bonds, 10/11 at 101.00 AA- 1,402,991
Series 2001B, 5.000%, 10/01/21
------------------------------------------------------------------------------------------------------------------------------------
$ 38,690 Total Long-Term Investments (cost $39,306,844) - 139.6% 39,569,212
=============-----------------------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS - 3.5%
1,000 Residential Care Facility for the Elderly Authority of Fulton County, A-1+ 1,000,000
Georgia, Refunding Revenue Bonds, Lenbrook Square
Foundation Inc., Variable Rate Demand Bonds, Series 1996,
1.250%, 1/01/18+
------------------------------------------------------------------------------------------------------------------------------------
$ 1,000 Total Short-Term Investments (cost $1,000,000) 1,000,000
=============-----------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 9.8% 2,782,689
--------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (52.9)% (15,000,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $28,351,901
====================================================================================================================
(1) All percentages shown in the Portfolio of Investments
are based on net assets applicable to Common shares.
* Optional Call Provisions: Dates (month and year) and
prices of the earliest optional call or redemption.
There may be other call provisions at varying prices at
later dates.
** Ratings: Using the higher of Standard & Poor's or
Moody's rating.
(WI) Security purchased on a when-issued basis.
+ Security has a maturity of more than one year, but has
variable rate and demand features which qualify it as a
short-term security. The rate disclosed is that
currently in effect. This rate changes periodically
based on market conditions or a specified market index.
See accompanying notes to financial statements.
18
Nuveen Georgia Dividend Advantage Municipal Fund 2 (NKG)
Portfolio of
INVESTMENTS November 30, 2002 (Unaudited)
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
BASIC MATERIALS - 1.6%
$ 1,000 Richmond County Development Authority, Georgia, Environmental 2/11 at 101.00 BBB $1,023,700
Improvement Revenue Bonds, International Paper Company
Project, Series 2001A, 6.250%, 2/01/25 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 9.8%
Athens-Clarke County Unified Government Development Authority,
Georgia, Educational Facilities Revenue Bonds, UGAREF CCRC
Building LLC Project, Series 2002:
1,225 5.000%, 12/15/18 12/12 at 100.00 AAA 1,259,570
1,240 5.000%, 12/15/19 12/12 at 100.00 AAA 1,266,003
1,050 Fulton County Development Authority, Georgia, TUFF Morehouse 2/12 at 100.00 AAA 1,040,907
Project, Series 2002A, 5.000%, 2/01/34
1,315 Private Colleges and Universities Authority, Georgia, Emory 9/11 at 100.00 AA 1,321,614
University Revenue Bonds, Series 2001A, 5.125%, 9/01/33
1,250 Private Colleges and Universities Authority, Georgia, Mercer 10/11 at 102.00 A3 1,289,063
University Project, Revenue Bonds, Series 2001, 5.750%, 10/01/31
------------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE - 17.4%
2,000 Hospital Authority of Clarke County, Georgia, Hospital Revenue 1/12 at 101.00 AAA 1,996,900
Certificates, Athens Regional Medical Center, Series 2002,
5.125%, 1/01/32
Hospital Authority of Floyd County, Georgia, Revenue
Anticipation Certificates, Floyd Medical Center Project, Series
2002:
1,480 5.000%, 7/01/22 7/12 at 101.00 Aaa 1,462,640
1,000 5.200%, 7/01/32 7/12 at 101.00 Aaa 1,005,580
1,250 Hospital Authority of Gainesville and Hall County, Georgia, Revenue 5/11 at 100.00 A- 1,217,538
Anticipation Certificates, Northeast Georgia Health System,
Inc. Project, Series 2001, 5.500%, 5/15/31
3,000 Glynn-Brunswick Memorial Hospital Authority, Revenue 8/06 at 102.00 AAA 3,242,400
Anticipation Certificates, Southeast Georgia Health Systems
Project, Series 1996, 5.250%, 8/01/13
1,945 Tift County Hospital Authority, Georgia, Revenue Anticipation Bonds, 12/12 at 101.00 Aaa 2,001,541
Tift Regional Medical Center, Series 2002, 5.250%, 12/01/19
(WI, settling 12/11/02)
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 6.6%
2,455 Georgia Housing and Finance Authority, Single Family Mortgage 6/11 at 100.00 AAA 2,476,309
Bonds, 2001 Series B (Subseries B-2), 5.400%, 12/01/31
(Alternative Minimum Tax)
1,700 Georgia Housing and Finance Authority, Single Family Mortgage 12/12 at 100.00 AAA 1,696,617
Bonds, 2002 Series C-2, 5.100%, 12/01/22 (Alternative
Minimum Tax) (WI, settling 12/05/02)
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 1.3%
750 State of Georgia, General Obligation Bonds, Series 1998D, No Opt. Call AAA 826,320
5.250%, 10/01/15
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 37.7%
6,085 Chicago Park District, Illinois, General Obligation and Parking 1/13 at 100.00 AAA 6,091,876
Revenue Bonds, Series 2002A Refunding, 5.000%, 1/01/21
(WI, settling 12/10/02)
1,620 Georgia Local Government, Certificates of Participation, Grantor No Opt. Call AAA 1,556,107
Trust, Series A, 4.750%, 6/01/28
750 Georgia Municipal Association, Inc., Certificates of Participation, 1/12 at 101.00 AAA 761,693
City of Atlanta Court Project, Series 2002, 5.125%, 12/01/21
3,600 State of Illinois, Sales Tax Revenue Bonds, FIRST Series 2002, 6/13 at 100.00 AAA 3,607,236
5.000%, 6/15/22
2,500 Metropolitan Atlanta Rapid Transit Authority, Georgia, Sales No Opt. Call AAA 2,955,175
Tax Revenue Bonds, Refunding Series P, 6.250%, 7/01/20
5,000 Puerto Rico Public Buildings Authority, Guaranteed Government No Opt. Call AAA 5,322,150
Facilities Revenue Bonds, Series 2002F Refunding,
5.250%, 7/01/21
19
Nuveen Georgia Dividend Advantage Municipal Fund 2 (NKG) (continued)
Portfolio of INVESTMENTS November 30, 2002 (Unaudited)
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED (continued)
Puerto Rico Municipal Finance Agency, General Obligations
Bonds, 2002 Series A:
$ 800 5.250%, 8/01/21 (WI, settling 12/05/02) 8/12 at 100.00 AAA $ 834,144
2,500 5.000%, 8/01/27 (WI, settling 12/05/02) 8/12 at 100.00 AAA 2,516,800
------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 2.9%
1,900 City and County of Denver, Colorado, Airport System Revenue 11/12 at 100.00 AAA 1,837,813
Refunding Bonds, Series 2002E, 5.000%, 11/15/21
(Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 0.9%
525 City of Atlanta, Georgia, Water and Wastewater Revenue Bonds, 5/09 at 101.00 AAA 580,351
Series 1999A, 5.000%, 11/01/38 (Pre-refunded to 5/01/09)
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 3.3%
2,000 Georgia Municipal Electric Authority, General Power Revenue 1/13 at 100.00 AAA 2,064,720
Bonds, Series 2002A, 5.000%, 1/01/17
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 20.9%
3,000 City of Atlanta, Georgia, Water and Wastewater Revenue Bonds, 5/12 at 100.00 AAA 2,964,000
Series 2001A, 5.000%, 11/01/39
3,500 Augusta, Georgia, Water and Sewerage Revenue Bonds, 10/12 at 100.00 AAA 3,479,070
Series 2002, 5.000%, 10/01/27
2,500 DeKalb County, Georgia, Water and Sewerage Bonds, 10/10 at 101.00 AA 2,576,225
Series 2000, 5.375%, 10/01/35
950 Fulton County, Georgia, Water and Sewerage Revenue Bonds, 7/08 at 101.00 AAA 981,141
Series 1998, 5.000%, 1/01/16
3,100 Harris County, Georgia, Water System Revenue Bonds, Series 2002, 12/12 at 100.00 Aaa 3,115,746
5.000%, 12/01/22 (WI, settling 12/05/02)
------------------------------------------------------------------------------------------------------------------------------------
$ 62,990 Total Long-Term Investments (cost $65,638,491) - 102.4% 64,370,949
=============-----------------------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS - 26.1%
8,000 Chester County Industrial Development Authority, Pennsylvania, VMIG-1 8,000,000
Archdiocese of Philadelphia, Revenue Bonds, Series 2001,
Variable Rate Demand Bonds, 1.200%, 7/01/31+
2,000 Idaho Health Facilities Authority, Revenue Bonds, St. Luke's VMIG-1 2,000,000
Regional Medical Center, Variable Rate Demand Bonds,
Series 1995, 1.250%, 5/01/22+
1,200 Monroe County Development Authority, Georgia, Pollution Control VMIG-1 1,200,000
Revenue Bonds, Georgia Power Company, Scherer Plant,
Series 1997, Variable Rate Demand Obligations, 1.300%, 9/01/29+
5,200 Puerto Rico Government Development Bank, Adjustable VMIG-1 5,200,000
Refunding Bonds, Series 1985, Variable Rate Demand Bonds,
1.020%, 12/01/15+
------------------------------------------------------------------------------------------------------------------------------------
$ 16,400 Total Short-Term Investments (cost $16,400,000) 16,400,000
=============-----------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 24.0% 15,076,593
-------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (52.5)% (33,000,000)
-------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $62,847,542
====================================================================================================================
(1) All percentages shown in the Portfolio of Investments
are based on net assets applicable to Common shares.
* Optional Call Provisions: Dates (month and year) and
prices of the earliest optional call or redemption.
There may be other call provisions at varying prices at
later dates.
** Ratings: Using the higher of Standard & Poor's or
Moody's rating.
(WI) Security purchased on a when-issued basis.
+ Security has a maturity of more than one year, but has
variable rate and demand features which qualify it as a
short-term security. The rate disclosed is that
currently in effect. This rate changes periodically
based on market conditions or a specified market index.
See accompanying notes to financial statements.
20
Nuveen North Carolina Premium Income Municipal Fund (NNC)
Portfolio of
INVESTMENTS November 30, 2002 (Unaudited)
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
BASIC MATERIALS - 4.4%
$ 2,100 Haywood County Industrial Facilities and Pollution Control 12/05 at 102.00 BBB $ 2,038,764
Financing Authority, North Carolina, Environmental Improvement
Revenue Bonds, Champion International Corporation Project,
Series 1995A, 5.750%, 12/01/25 (Alternative Minimum Tax)
2,000 Haywood County Industrial Facilities and Pollution Control Financing 3/06 at 102.00 Baa2 2,019,140
Authority, North Carolina, Pollution Control Revenue Refunding
Bonds, Champion International Corporation Project,
Series 1995, 6.000%, 3/01/20
------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 13.6%
State of North Carolina, State Education Assistance Authority,
Guaranteed Student Loan Revenue Bonds, 1995 Series A
(Subordinate Lien):
1,000 6.050%, 7/01/10 (Alternative Minimum Tax) 7/05 at 102.00 A2 1,048,530
2,400 6.300%, 7/01/15 (Alternative Minimum Tax) 7/05 at 102.00 A2 2,502,432
5,875 State of North Carolina, State Education Assistance Authority 7/06 at 102.00 A2 6,158,116
(a political subdivision of the state of North Carolina),
Guaranteed Student Loan Revenue Bonds, 1996 Series C
(Subordinate Lien), 6.350%, 7/01/16 (Alternative Minimum Tax)
1,000 University of North Carolina System, Pool Revenue Bonds, 10/12 at 100.00 AAA 1,041,020
Series 2002A Refunding, 5.375%, 4/01/22
1,675 University of North Carolina at Wilmington, General Revenue 1/12 at 101.00 Aaa 1,687,479
Bonds, Series 2002A, 5.000%, 1/01/23
------------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE - 35.9%
5,630 Charlotte-Mecklenburg Hospital Authority, North Carolina, 1/11 at 101.00 AA 5,404,012
Healthcare System Revenue Bonds, DBA Carolinas Healthcare
System, Series 2001A, 5.000%, 1/15/31
North Carolina Medical Care Commission, Healthcare Facilities
Revenue Bonds, Union Regional Medical Center Project, Series
2002A:
1,000 5.500%, 1/01/19 1/12 at 100.00 A 1,021,100
550 5.500%, 1/01/20 1/12 at 100.00 A 558,421
1,750 5.375%, 1/01/32 1/12 at 100.00 A 1,720,828
2,000 North Carolina Medical Care Commission, Healthcare Facilities 10/09 at 101.00 A 2,129,020
Revenue Bonds, Stanley Memorial Hospital Project,
Series 1999, 6.375%, 10/01/29
4,500 North Carolina Medical Care Commission, Healthcare Facilities 10/11 at 101.00 AAA 4,461,750
Revenue Bonds, WakeMed Project, Series 2001, 5.000%, 10/01/32
3,000 North Carolina Medical Care Commission, Hospital Revenue 5/03 at 101.00 AA- 3,036,030
Refunding Bonds, Carolina Medicorp Project, Series 1992,
5.500%, 5/01/15
3,615 North Carolina Medical Care Commission, Hospital Revenue 10/08 at 101.00 AA 3,354,322
Bonds, FirstHealth of the Carolinas Project, Series 1998,
4.750%, 10/01/26
3,000 North Carolina Medical Care Commission, Hospital Revenue 6/12 at 101.00 A 2,949,870
Bonds, Southeastern Regional Medical Center, Series 2002,
5.375%, 6/01/32
5,000 North Carolina Medical Care Commission, Health System 10/11 at 101.00 AA 4,986,350
Revenue Bonds, Mission-Saint Joseph Health System,
Series 2001, 5.250%, 10/01/31
3,340 Board of Governors of The University of North Carolina, 2/06 at 102.00 AA 3,349,519
University of North Carolina Hospitals at Chapel Hill,
Revenue Bonds, Series 1996, 5.250%, 2/15/26
21
Nuveen North Carolina Premium Income Municipal Fund (NNC) (continued)
Portfolio of INVESTMENTS November 30, 2002 (Unaudited)
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 7.4%
$ 1,000 Housing Authority of the City of Asheville, North Carolina, 11/07 at 102.00 AAA $1,012,490
Multifamily Housing Revenue Bonds (GNMA-Collateralized -
Woodridge Apartments), Series 1997, 5.800%, 11/20/39
(Alternative Minimum Tax)
1,000 City of Charlotte, North Carolina, Mortgage Revenue Refunding 1/03 at 105.00 AAA 1,029,110
Bonds (FHA-Insured Mortgage Loan-Tryon Hills Apartments
Project), Series 1993A, 5.875%, 1/01/25
3,000 County of Mecklenburg, North Carolina, Multifamily Housing 1/12 at 102.00 AAA 3,039,690
Revenue Bonds, Sycamore Green Apartments, Series 2001,
5.500%, 1/15/35 (Alternative Minimum Tax)
North Carolina Housing Finance Agency, Multifamily Revenue Bonds
(FHA-Insured Mortgage Loan Resolution), Series 1993:
650 5.800%, 7/01/14 1/03 at 102.00 AA 656,442
1,000 5.900%, 7/01/26 1/03 at 102.00 AA 1,013,100
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 17.0%
3,395 North Carolina Housing Finance Agency, Single Family Revenue 3/04 at 102.00 AA 3,507,510
Bonds, Series X (1985 Resolution), 6.700%, 9/01/26
(Alternative Minimum Tax)
6,455 North Carolina Housing Finance Agency, Home Ownership 7/09 at 100.00 AA 6,726,885
Revenue Bonds, Series 6A (1998 Trust Agreement),
6.200%, 1/01/29 (Alternative Minimum Tax)
3,575 North Carolina Housing Finance Agency, Single Family Revenue 3/06 at 102.00 AA 3,679,676
Bonds, Series HH (1985 Resolution), 6.300%, 3/01/26
(Alternative Minimum Tax)
1,640 North Carolina Housing Finance Agency, Home Ownership 7/10 at 100.00 AAA 1,652,907
Program Bonds, Series 10A (1998 Trust Agreement),
5.400%, 7/01/32 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 12.3%
1,890 County of Craven, North Carolina, General Obligation Bonds, 5/12 at 101.00 AAA 1,930,748
Series 2002, 5.000%, 5/01/21
4,285 County of Durham, North Carolina, General Obligation Public 4/12 at 100.00 AAA 4,494,965
Improvement Bonds, Series 2002B,5.000%, 4/01/16
4,500 State of North Carolina, General Obligation Bonds, 9/10 at 102.00 AAA 4,810,500
Series 2000A, 5.100%, 9/01/16
v-----------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 14.9%
1,330 County of Cabarrus, North Carolina, Certificates of Participation, 2/13 at 100.00 AA- 1,406,714
Series 2002, 5.250%, 2/01/17
6,000 City of Charlotte, North Carolina, Refunding Certificates of 12/03 at 102.00 AAA 6,200,880
Participation (Convention Facility Project), Series 1993C,
5.250%, 12/01/20
City of Charlotte, North Carolina, Storm Water Fee Revenue
Bonds, Series 2002:
1,050 5.250%, 6/01/20 6/12 at 101.00 AA+ 1,092,588
1,750 5.000%, 6/01/25 6/12 at 101.00 AA+ 1,750,700
2,180 City of Concord, North Carolina, Certificates of Participation, 6/06 at 102.00 AAA 2,425,403
Series 1996A, 6.125%, 6/01/21
750 Johnston County Finance Corporation, North Carolina, Installment 8/09 at 101.00 AAA 769,703
Payment Revenue Bonds, School and Museum Projects,
Series 1999, 5.250%, 8/01/21
------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 4.8
4,450 Raleigh Durham Airport Authority, North Carolina, Airport Revenue 5/11 at 101.00 Aaa 4,379,601
Bonds, Series 2001A, 5.000%, 11/01/31
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 13.2%
4,000 City of Charlotte, North Carolina, Water and Sewer System 6/10 at 101.00 AAA 4,473,920
Revenue Bonds, Series 2000, 5.250%, 6/01/25 (Pre-refunded
to 6/01/10)
2,000 City of Charlotte, North Carolina, Storm Water Fee Revenue Bonds, 6/10 at 101.00 AA+*** 2,332,140
Series 2000, 6.000%, 6/01/25 (Pre-refunded to 6/01/10)
2,475 North Carolina Municipal Power Agency Number 1, Catawba No Opt. Call AAA 3,154,313
Electric Revenue Bonds, Series 1980, 10.500%, 1/01/10
2,000 Orange County, North Carolina, General Obligation School Bonds, 2/04 at 102.00 AA+*** 2,130,680
Series 1994, 5.500%, 2/01/11 (Pre-refunded to 2/01/04)
22
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 12.9%
$ 2,900 City of Fayetteville, North Carolina, Public Works Commission, 3/07 at 101.00 AAA $2,918,589
Revenue Bonds, Series 1997, 5.125%, 3/01/24
2,600 North Carolina Eastern Municipal Power Agency, Power System 1/03 at 102.00 BBB 2,621,476
Revenue Bonds, Series 1993-D, \ 5.600%, 1/01/16
1,000 North Carolina Eastern Municipal Power Agency, Power System 9/03 at 102.50 BBB 1,028,320
Revenue Bonds, Series 1985-G, 5.750%, 12/01/16
4,000 North Carolina Municipal Power Agency Number 1, Catawba 1/10 at 101.00 BBB+ 4,251,400
Electric Revenue Bonds, Series 1999B, 6.500%, 1/01/20
1,000 Wake County Industrial Facilities and Pollution Control Financing 2/12 at 101.00 A3 1,029,570
Authority, North Carolina Revenue Refunding Bonds, Carolina
Power and Light Company Project, Series 2002 Refunding,
5.375%, 2/01/17
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 9.6%
2,350 Orange Water and Sewer Authority, North Carolina, Water and 7/03 at 102.00 Aa1 2,427,950
Sewer System Revenue and Revenue Refunding Bonds,
Series 1993, 5.200%, 7/01/16
Thomasville, North Carolina, Combined Enterprise System
Revenue Bonds, Series 2002:
370 5.000%, 5/01/20 5/12 at 101.00 AAA 379,202
390 5.000%, 5/01/21 5/12 at 101.00 AAA 395,842
1,250 5.125%, 5/01/27 5/12 at 101.00 AAA 1,262,725
2,180 County of Union, North Carolina, Enterprise Systems Revenue 6/06 at 102.00 AAA 2,253,595
Bonds, Series 1996, 5.500%, 6/01/21
2,000 Winston-Salem, North Carolina, Water and Sewer System 6/12 at 100.00 AAA 2,057,160
Revenue Bonds, Series 2002A, 5.000%, 6/01/18
(WI, settling 12/04/02)
------------------------------------------------------------------------------------------------------------------------------------
$ 129,850 Total Long-Term Investments (cost $127,821,546) - 146.0% 133,763,197
=============-----------------------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS - 4.8%
1,000 Guilford County, North Carolina, General Obligation Bonds, VMIG-1 1,000,000
Series 2002C, Variable Rate Demand Obligations,
1.200%, 10/01/21+
3,400 North Carolina Capital Facilities Financing Agency, Exempt VMIG-1 3,400,000
Facilities Revenue Bonds, Republic Services, Inc. Project,
Series 2001, Variable Rate Demand Obligations, 1.350%, 12/01/21+
------------------------------------------------------------------------------------------------------------------------------------
$ 4,400 Total Short-Term Investments (cost $4,400,000) 4,400,000
=============-----------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 0.3% 278,663
--------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (51.1)% (46,800,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $91,641,860
====================================================================================================================
(1) All percentages shown in the Portfolio of Investments
are based on net assets applicable to Common shares.
* Optional Call Provisions: Dates (month and year) and
prices of the earliest optional call or redemption.
There may be other call provisions at varying prices at
later dates.
** Ratings: 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.
(WI) Security purchased on a when-issued basis.
+ Security has a maturity of more than one year, but has
variable rate and demand features which qualify it as a
short-term security. The rate disclosed is that
currently in effect. This rate changes periodically
based on market conditions or a specified market index.
See accompanying notes to financial statements.
23
Nuveen North Carolina Dividend Advantage Municipal Fund (NRB)
Portfolio of
INVESTMENTS November 30, 2002 (Unaudited)
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
BASIC MATERIALS - 4.6%
$ 750 Columbus County, North Carolina, Industrial Facilities and Pollution 4/07 at 102.00 BBB $ 762,300
Control Financing Authority, Environmental Improvement
Revenue Bonds, 1997 Series A, International Paper Company
Project, 6.150%, 4/01/21 (Alternative Minimum Tax)
750 Columbus County, North Carolina, Industrial Facilities and 12/07 at 102.00 BBB 752,603
Pollution Control Financing Authority, Solid Waste Disposal
Revenue Bonds, International Paper Company Project,
Series 1996A Refunding, 5.800%, 12/01/16 (Alternative
Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 27.6%
500 North Carolina Capital Facilities Finance Agency, Educational 9/11 at 101.00 A3 499,960
Facilities Revenue Bonds, High Point University Project,
Series 2001, 5.125%, 9/01/18
2,250 North Carolina Capital Facilities Finance Agency, Revenue Bonds, 10/11 at 100.00 AA+ 2,269,418
Duke University Project, Series 2001A, 5.125%, 10/01/26
1,750 University of North Carolina at Chapel Hill, General Revenue 6/11 at 100.00 AA+ 1,750,595
Bonds, Series 2001A, 5.000%, 12/01/25
1,845 University of North Carolina at Chapel Hill, General Revenue No Opt. Call AA+ 2,001,530
Bonds, Series 2002B, 5.000%, 12/01/11
2,450 University of North Carolina System, Pool Revenue Bonds, 10/12 at 100.00 AAA 2,621,770
Series 2002A Refunding, 5.375%, 4/01/17
------------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE - 21.4%
1,110 North Carolina Medical Care Commission, Healthcare Facilities 1/12 at 100.00 A 1,140,214
Revenue Bonds, Union Regional Medical Center Project,
Series 2002A, 5.250%, 1/01/15
2,500 North Carolina Medical Care Commission, Healthcare Revenue 5/07 at 100.00 AA- 2,498,225
Bonds, Carolina Medicorp Project, Series 1996, 5.250%, 5/01/26
1,500 North Carolina Medical Care Commission, Hospital Revenue 6/12 at 101.00 A 1,472,175
Bonds, Southeastern Regional Medical Center, Series 2002,
5.250%, 6/01/22
2,000 North Carolina Medical Care Commission, Health System Revenue 10/11 at 101.00 AA 1,994,540
Bonds, Mission-Saint Joseph Health System, Series 2001,
5.250%, 10/01/31
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 14.5%
2,250 Housing Authority of the City of Durham, North Carolina, 6/11 at 100.00 AAA 2,286,653
Multifamily Housing Revenue Bonds, Naples Terrace Apartments
Project, FNMA Guaranteed, Series 2001, 5.700%, 6/01/33
(Alternative Minimum Tax)
2,500 County of Mecklenburg, North Carolina, Multifamily Housing 1/12 at 102.00 AAA 2,533,075
Revenue Bonds, Sycamore Green Apartments, Series 2001,
5.500%, 1/15/35 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 11.2%
2,975 North Carolina Housing Finance Agency, Home Ownership 7/09 at 100.00 AA 3,033,816
Revenue Bonds, Series 5A (1998 Trust Agreement),
5.625%, 7/01/30 (Alternative Minimum Tax)
655 North Carolina Housing Finance Agency, Home Ownership 7/10 at 100.00 AAA 660,155
Program Bonds, Series 10A (1998 Trust Agreement),
5.400%, 7/01/32 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
LONG-TERM CARE - 2.8%
900 North Carolina Medical Care Commission, Healthcare Facilities 4/11 at 101.00 N/R 920,700
Revenue Bonds, First Mortgage, Salemtowne Project,
Series 2001, 6.625%, 4/01/31
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 9.3%
2,500 County of Mecklenburg, North Carolina, General Obligation 4/10 at 101.50 AAA 2,688,025
Public Improvement Bonds, Series 2000D, 5.000%, 4/01/13
400 Raleigh, North Carolina, General Obligation Bonds, Series 2002, 6/12 at 100.00 AAA 408,036
5.000%, 6/01/21
24
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 14.8%
$ 1,330 County of Cabarrus, North Carolina, Certificates of Participation, 2/13 at 100.00 AA- $1,426,904
Series 2002, 5.250%, 2/01/15
1,870 County of Dare, North Carolina, Certificates of Participation, 12/12 at 100.00 AAA 2,009,278
Series 2002, 5.250%, 6/01/15 (WI, settling 12/04/02)
1,360 County of Duplin, North Carolina, Certificates of Participation, No Opt. Call AAA 1,467,168
Series 2002 Refunding, 5.000%, 9/01/12
------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 4.8%
1,530 Raleigh Durham Airport Authority, North Carolina, Airport Revenue 5/11 at 101.00 Aaa 1,601,114
Bonds, Series 2001A, 5.250%, 11/01/18
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 20.0%
City of Greenville Utilities Commission, North Carolina,
Combined Enterprise System Revenue Bonds, Series 2001:
1,000 5.250%, 9/01/20 9/11 at 101.00 AAA 1,036,620
500 5.250%, 9/01/21 9/11 at 101.00 AAA 515,165
2,500 North Carolina Eastern Municipal Power Agency, Power System 1/03 at 100.00 AAA 2,505,925
Revenue Bonds, Refunding Series 1993B, 5.500%, 1/01/17
1,000 North Carolina Eastern Municipal Power Agency, Power System 1/09 at 102.00 BBB 1,020,090
Revenue Bonds, Series 1999B Refunding, 5.650%, 1/01/16
1,500 Wake County Industrial Facilities and Pollution Control Financing 2/12 at 101.00 A3 1,544,355
Authority, North Carolina, Revenue Refunding Bonds, Carolina
Power and Light Company Project, Series 2002 Refunding,
5.375%, 2/01/17
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 33.4%
2,290 Broad River Water Authority, North Carolina, Water System 6/10 at 101.00 Aaa 2,365,707
Revenue Bonds, Series 2000, 5.375%, 6/01/26
2,250 City of Charlotte, North Carolina, Water and Sewer System 6/11 at 101.00 AAA 2,285,865
Revenue Bonds, Series 2001, 5.125%, 6/01/26
City of Greensboro, North Carolina, Combined Enterprise System
Revenue Bonds, Series 2001A:
500 5.125%, 6/01/20 6/11 at 101.00 AA- 511,405
500 5.125%, 6/01/21 6/11 at 101.00 AA- 508,350
2,500 City of Kannapolis, North Carolina, Water and Sewer Revenue 2/12 at 101.00 AAA 2,502,725
Bonds, Series 2001B, 5.250%, 2/01/26 (Alternative Minimum Tax)
2,775 Winston-Salem, North Carolina, Water and Sewer System Revenue 6/12 at 100.00 AAA 2,873,732
Bonds, Series 2002A, 5.000%, 6/01/17 (WI, settling 12/04/02)
------------------------------------------------------------------------------------------------------------------------------------
$ 52,990 Total Long-Term Investments (cost $53,736,339) - 164.4% 54,468,193
=============-----------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - (13.1)% (4,339,749)
--------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (51.3)% (17,000,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $33,128,444
====================================================================================================================
(1) All percentages shown in the Portfolio of Investments
are based on net assets applicable to Common shares.
* Optional Call Provisions: Dates (month and year) and
prices of the earliest optional call or redemption.
There may be other call provisions at varying prices at
later dates.
** Ratings: Using the higher of Standard & Poor's or
Moody's rating.
N/R Investment is not rated.
(WI) Security purchased on a when-issued basis.
See accompanying notes to financial statements.
25
Nuveen North Carolina Dividend Advantage Municipal Fund 2 (NNO)
Portfolio of
INVESTMENTS November 30, 2002 (Unaudited)
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
BASIC MATERIALS - 4.5%
$ 1,400 Haywood County Industrial Facilities and Pollution Control 10/03 at 102.00 BBB $1,368,500
Financing Authority, North Carolina, Solid Waste Disposal
Revenue Bonds, Champion International Corporation Project,
Series 1993, 5.500%, 10/01/18 (Alternative Minimum Tax)
1,100 Northampton County Industrial Facilities and Pollution Control 2/11 at 101.00 BBB 1,121,912
Financing Authority, North Carolina, Environmental Improvement
Revenue Bonds, International Paper Company Project, Series 2001A,
6.200%, 2/01/25 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 24.9%
Appalachian State University, North Carolina, Housing and
Student Center System Revenue Bonds, Series 2001 Refunding:
600 5.125%, 7/15/24 1/11 at 101.00 Aaa 606,150
200 5.125%, 7/15/27 1/11 at 101.00 Aaa 201,554
Appalachian State University, North Carolina, Housing and
Student Center System Revenue Bonds, Series 2002 Refunding:
1,000 5.000%, 7/15/13 7/12 at 100.00 Aaa 1,069,720
1,040 5.000%, 7/15/14 7/12 at 100.00 Aaa 1,099,790
1,000 5.000%, 7/15/15 7/12 at 100.00 Aaa 1,047,830
4,750 North Carolina Capital Facilities Financing Agency, Revenue 10/11 at 100.00 AA+ 4,790,993
Bonds, Duke University Project, Series 2001A, 5.125%, 10/01/26
1,840 University of North Carolina at Chapel Hill, General Revenue No Opt. Call AA+ 1,996,106
Bonds, Series 2002B, 5.000%, 12/01/11
400 Board of Governors of the University of North Carolina at 4/11 at 101.00 AAA 426,892
Greensboro, General Revenue and Revenue Refunding Bonds,
Series 2002B, 5.375%, 4/01/17
University of North Carolina System, Pool Revenue Bonds,
Series 2002A Refunding:
1,155 5.375%, 4/01/16 10/12 at 100.00 AAA 1,243,600
1,100 5.375%, 4/01/19 10/12 at 100.00 AAA 1,160,984
------------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE - 21.9%
4,000 Charlotte-Mecklenburg Hospital Authority, North Carolina, 1/11 at 101.00 AA 3,839,440
Healthcare System Revenue Bonds, DBA Carolinas Healthcare
System, Series 2001A, 5.000%, 1/15/31
2,225 New Hanover County, North Carolina Hospital Revenue Bonds, 10/03 at 102.00 AAA 2,154,757
New Hanover Regional Medical Center Project, Series 1993,
4.750%, 10/01/23
1,005 North Carolina Medical Care Commission, Healthcare Facilities 1/12 at 100.00 A 1,053,421
Revenue Bonds, Union Regional Medical Center Project,
Series 2002A, 5.250%, 1/01/13
1,000 North Carolina Medical Care Commission, Healthcare Facilities 10/11 at 101.00 AAA 991,500
Revenue Bonds, WakeMed Project, Series 2001, 5.000%, 10/01/32
North Carolina Medical Care Commission, Hospital Revenue Bonds,
Southeastern Regional Medical Center, Series 2002:
1,000 5.500%, 6/01/15 6/12 at 101.00 A 1,049,480
2,000 5.250%, 6/01/22 6/12 at 101.00 A 1,962,900
1,000 North Carolina Medical Care Commission, Health System 10/11 at 101.00 AA 997,270
Revenue Bonds, Mission-Saint Joseph Health System,
Series 2001, 5.250%, 10/01/31
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 6.4%
3,500 County of Mecklenburg, North Carolina, Multifamily Housing 1/12 at 102.00 AAA 3,546,305
Revenue Bonds, Sycamore Green Apartments, Series 2001,
5.500%, 1/15/35 (Alternative Minimum Tax)
26
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 4.7%
$ 555 North Carolina Housing Finance Agency, Home Ownership Program 7/10 at 100.00 AAA $ 559,368
Bonds, Series 10A (1998 Trust Agreement), 5.400%, 7/01/32
(Alternative Minimum Tax)
North Carolina Housing Finance Agency, Home Ownership
Program Bonds, Series 13-A:
1,000 4.700%, 7/01/12 (Alternative Minimum Tax) 7/11 at 100.00 AA 1,019,510
1,000 4.850%, 7/01/13 (Alternative Minimum Tax) 7/11 at 100.00 AA 1,013,990
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 18.6%
250 County of Durham, North Carolina, General Obligation Bonds, 5/10 at 102.00 AAA 276,460
Series 2000, 5.600%, 5/01/15
3,000 County of Mecklenburg, North Carolina, General Obligation 4/10 at 101.50 AAA 3,225,630
Public Improvement Bonds, Series 2000D, 5.000%, 4/01/13
3,000 State of North Carolina, General Obligation Bonds, 9/10 at 102.00 AAA 3,207,000
Series 2000A, 5.100%, 9/01/16
3,200 County of Wake, North Carolina, General Obligation School 2/10 at 101.50 AAA 3,543,744
Bonds, Series 2000, 5.400%, 2/01/13
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 19.9%
1,330 County of Cabarrus, North Carolina, Certificates of Participation, 2/13 at 100.00 AA- 1,416,769
Series 2002, 5.250%, 2/01/16
City of Charlotte, North Carolina, Storm Water Fee Revenue Bonds,
Series 2002:
1,850 5.250%, 6/01/18 6/12 at 101.00 AA+ 1,950,085
400 5.250%, 6/01/19 6/12 at 101.00 AA+ 418,580
1,325 County of Dare, North Carolina, Certificates of Participation, 12/12 at 100.00 AAA 1,403,798
Series 2002, 5.250%, 6/01/17 (WI, settling 12/04/02)
County of Hartnett, North Carolina, Certificates of Participation,
Series 2002:
1,000 5.250%, 12/01/15 12/12 at 101.00 AAA 1,077,590
2,025 5.375%, 12/01/16 12/12 at 101.00 AAA 2,191,172
825 5.000%, 12/01/18 12/12 at 101.00 AAA 847,861
1,595 Rutherford County, North Carolina, Certificates of Participation, 9/12 at 101.00 AAA 1,638,320
Series 2002, 5.000%, 9/01/18
------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 12.8%
Raleigh Durham Airport Authority, North Carolina, Airport Revenue
Bonds, Series 2001A:
1,000 5.250%, 11/01/15 5/11 at 101.00 Aaa 1,066,940
2,320 5.250%, 11/01/16 5/11 at 101.00 Aaa 2,458,736
2,230 5.250%, 11/01/17 5/11 at 101.00 Aaa 2,349,327
University of North Carolina at Charlotte, Parking System Revenue
Bonds, Series 2002:
360 5.000%, 1/01/17 1/12 at 101.00 Aaa 372,535
270 5.000%, 1/01/20 1/12 at 101.00 Aaa 273,729
500 5.125%, 1/01/27 1/12 at 101.00 Aaa 504,410
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 22.3%
3,000 City of Fayetteville, North Carolina, Public Works Commission, 3/07 at 101.00 AAA 3,019,230
Revenue Bonds, Series 1997, 5.125%, 3/01/24
2,500 North Carolina Eastern Municipal Power Agency, Power System 1/03 at 100.00 AAA 2,505,925
Revenue Bonds, Refunding Series 1993B, 5.500%, 1/01/17
2,400 North Carolina Eastern Municipal Power Agency, Power System 1/03 at 102.00 BBB 2,419,824
Revenue Bonds, Series 1993-D, 5.600%, 1/01/16
1,500 North Carolina Municipal Power Agency Number 1, Catawba Electric 1/10 at 101.00 BBB+ 1,594,275
Revenue Bonds, Series 1999B, 6.500%, 1/01/20
2,600 Wake County Industrial Facilities and Pollution Control 2/12 at 101.00 A3 2,676,882
Financing Authority, North Carolina, Revenue Refunding
Bonds, Carolina Power and Light Company Project,
Series 2002 Refunding, 5.375%, 2/01/17
27
Nuveen North Carolina Dividend Advantage Municipal Fund 2 (NNO) (continued)
Portfolio of INVESTMENTS November 30, 2002 (Unaudited)
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 15.1%
$ 4,520 City of Charlotte, North Carolina, Water and Sewer System No Opt. Call AAA $5,001,606
Revenue Bonds, Series 2002, 5.250%, 7/01/13
Orange Water and Sewer Authority, North Carolina, Water and
Sewer System Revenue Bonds, Series 2001:
1,465 5.000%, 7/01/20 7/11 at 101.00 Aa1 1,486,682
1,000 5.000%, 7/01/26 7/11 at 101.00 Aa1 997,890
850 City of Raleigh, North Carolina, Combined Enterprise System 3/09 at 101.00 AAA 830,473
Revenue Bonds, Series 1999, 4.750%, 3/01/24
------------------------------------------------------------------------------------------------------------------------------------
$ 80,185 Total Long-Term Investments (cost $81,654,511) - 151.1% 83,077,445
=============-----------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - (0.2)% (87,614)
--------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (50.9)% (28,000,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $54,989,831
====================================================================================================================
(1) All percentages shown in the Portfolio of Investments
are based on net assets applicable to Common shares.
* Optional Call Provisions: Dates (month and year) and
prices of the earliest optional call or redemption.
There may be other call provisions at varying prices at
later dates.
** Ratings: Using the higher of Standard & Poor's or
Moody's rating.
(WI) Security purchased on a when-issued basis.
See accompanying notes to financial statements.
28
Nuveen North Carolina Dividend Advantage Municipal Fund 3 (NII)
Portfolio of
INVESTMENTS November 30, 2002 (Unaudited)
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
BASIC MATERIALS - 5.3%
$ 1,400 Haywood County Industrial Facilities and Pollution Control 12/05 at 102.00 BBB $1,359,176
Financing Authority, North Carolina, Environmental Improvement
Revenue Bonds, Champion International Corporation Project,
Series 1995A, 5.750%, 12/01/25 (Alternative Minimum Tax)
1,500 Martin County Industrial Facilities and Pollution Control Financing 3/03 at 102.00 BBB 1,533,360
Authority, North Carolina, Solid Waste Disposal Revenue
Bonds, Weyerhaeuser Company Project, Series 1991,
7.250%, 9/01/14 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 14.1%
North Carolina Capital Facilities Financing Agency, Revenue Bonds,
Duke University Project, Series 2001A:
750 5.125%, 10/01/26 10/11 at 100.00 AA+ 756,473
2,000 5.125%, 10/01/41 10/11 at 100.00 AA+ 2,003,100
3,000 North Carolina Capital Facilities Financing Agency, Revenue 10/12 at 100.00 AA+ 3,004,620
Bonds, Duke University Project, Series 2002A, 5.125%, 7/01/42
1,900 University of North Carolina System, Pool Revenue Bonds, 10/12 at 100.00 AAA 1,895,364
Series 2002A Refunding, 5.000%, 4/01/27
------------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE - 14.4%
2,000 Charlotte-Mecklenburg Hospital Authority, North Carolina, 1/07 at 102.00 AA 1,975,860
Healthcare System Revenue Bonds, Series 1997A, DBA
Carolinas Healthcare System, 5.125%, 1/15/22
1,750 Charlotte-Mecklenburg Hospital Authority, North Carolina, 1/11 at 101.00 AA 1,679,755
Healthcare System Revenue Bonds, DBA Carolinas Healthcare
System, Series 2001A, 5.000%, 1/15/31
2,500 North Carolina Medical Care Commission, Healthcare Facilities 6/08 at 101.00 Aa3 2,311,525
Revenue Bonds, Duke University Health System, Series 1998A,
4.750%, 6/01/28
2,000 North Carolina Medical Care Commission, Hospital Revenue 10/08 at 101.00 AA 1,855,780
Bonds, FirstHealth of the Carolinas Project, Series 1998,
4.750%, 10/01/26
------------------------------------------------------------------------------------------------------------------------------------
LONG-TERM CARE - 1.7%
900 North Carolina Medical Care Commission, Healthcare Facilities 4/11 at 101.00 N/R 920,700
Revenue Bonds, First Mortgage, Salemtowne Project, Series 2001,
6.625%, 4/01/31
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 4.0%
1,000 County of Mecklenburg, North Carolina, General Obligation 4/10 at 101.50 AAA 1,075,210
Public Improvement Bonds, Series 2000D, 5.000%, 4/01/13
1,000 State of North Carolina, General Obligation Bonds, 9/10 at 102.00 AAA 1,069,000
Series 2000A, 5.100%, 9/01/16
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 31.1%
3,900 Cary, North Carolina, General Obligation Water Bonds, 3/11 at 102.00 AAA 4,030,806
Series 2001, 5.000%, 3/01/20
1,550 Cary, North Carolina, Certificates of Participation, Series 2002A, 12/12 at 100.00 AA+ 1,603,677
Public Improvement Projects, 5.000%, 12/01/17
1,500 Centennial Authority, North Carolina, Hotel Tax Revenue Bonds, 9/07 at 102.00 AAA 1,534,425
Arena Project, Series 1997, 5.125%, 9/01/19
3,000 County of Dare, North Carolina, Certificates of Participation, 12/12 at 100.00 AAA 3,005,850
Series 2002, 5.000%, 6/01/23 (WI, settling 12/04/02)
Duplin County, North Carolina, Certificates of Participation,
Series 2002 Refunding:
1,230 5.000%, 9/01/13 No Opt. Call AAA 1,321,549
1,290 5.000%, 9/01/14 No Opt. Call AAA 1,374,405
2,000 Puerto Rico Municipal Finance Agency, General Obligation Bonds, 8/12 at 100.00 AAA 2,013,440
2002 Series A, 5.000%, 8/01/27 (WI, settling 12/05/02)
2,000 Rutherford County, North Carolina, Certificates of Participation, 9/12 at 101.00 AAA 2,012,260
Series 2002, 5.000%, 9/01/21
29
Nuveen North Carolina Dividend Advantage Municipal Fund 3 (NII) (continued)
Portfolio of INVESTMENTS November 30, 2002 (Unaudited)
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 9.3%
Raleigh Durham Airport Authority, North Carolina, Airport Revenue
Bonds, Series 2001A:
$ 1,780 5.250%, 11/01/15 5/11 at 101.00 Aaa $1,899,153
3,100 5.000%, 11/01/20 5/11 at 101.00 Aaa 3,128,861
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 14.5%
4,000 North Carolina Eastern Municipal Power Agency, Power System 1/03 at 100.00 AAA 4,009,480
Revenue Bonds, Refunding Series 1993B, 5.500%, 1/01/17
500 North Carolina Eastern Municipal Power Agency, Power System 9/03 at 102.50 BBB 514,160
Revenue Bonds, Series 1985-G, 5.750%, 12/01/16
1,775 Puerto Rico Electric Power Authority, Power Revenue Bonds, 7/12 at 101.00 AAA 1,902,285
2002 Series II, 5.375%, 7/01/19
1,400 Wake County Industrial Facilities and Pollution Control Financing 2/12 at 101.00 A3 1,441,398
Authority, North Carolina, Revenue Refunding Bonds, Carolina
Power and Light Company Project, Series 2002 Refunding,
5.375%, 2/01/17
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 12.2%
750 Broad River Water Authority, North Carolina, Water System 6/10 at 101.00 Aaa 774,795
Revenue Bonds, Series 2000, 5.375%, 6/01/26
City of Charlotte, North Carolina, Water and Sewer System
Revenue Bonds, Series 2001:
750 5.125%, 6/01/26 6/11 at 101.00 AAA 761,955
1,780 5.125%, 6/01/26 6/11 at 101.00 AAA 1,808,373
3,215 Winston-Salem, North Carolina, Water and Sewer System 6/12 at 100.00 AAA 3,284,540
Revenue Bonds, Series 2002A, 5.000%, 6/01/19
(WI, settling 12/04/02)
------------------------------------------------------------------------------------------------------------------------------------
$ 57,220 Total Long-Term Investments (cost $58,901,083) - 106.6% 57,861,335
=============-----------------------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS - 37.4%
7,000 Chester County Industrial Development Authority, Pennsylvania, VMIG-1 7,000,000
Archdiocese of Philadelphia, Revenue Bonds, Series 2001,
Variable Rate Demand Bonds, 1.200%, 7/01/31+
6,000 Guilford County, North Carolina, General Obligation Bonds, VMIG-1 6,000,000
Series 2002C, Variable Rate Demand Obligations,
1.200%, 10/01/21+
3,500 North Carolina Capital Facilities Financing Agency, Exempt VMIG-1 3,500,000
Facilities Revenue Bonds, Republic Services, Inc. Project,
Series 2001, Variable Rate Demand Obligations,
1.350%, 12/01/21+
3,800 Puerto Rico Government Development Bank, Adjustable Refunding VMIG-1 3,800,000
Bonds, Series 1985, Variable Rate Demand Bonds,
1.020%, 12/01/15+
------------------------------------------------------------------------------------------------------------------------------------
$ 20,300 Total Short-Term Investments (cost $20,300,000) 20,300,000
=============-----------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 7.6% 4,122,441
--------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (51.6)% (28,000,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $54,283,776
====================================================================================================================
(1) All percentages shown in the Portfolio of Investments
are based on net assets applicable to Common shares.
* Optional Call Provisions: Dates (month and year) and
prices of the earliest optional call or redemption.
There may be other call provisions at varying prices at
later dates.
** Ratings: Using the higher of Standard & Poor's or
Moody's rating.
N/R Investment is not rated.
(WI) Security purchased on a when-issued basis.
+ Security has a maturity of more than one year, but has
variable rate and demand features which qualify it as a
short-term security. The rate disclosed is that
currently in effect. This rate changes periodically
based on market conditions or a specified market index.
See accompanying notes to financial statements.
30
Statement of
ASSETS AND LIABILITIES November 30, 2002 (Unaudited)
GEORGIA GEORGIA GEORGIA
PREMIUM DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2
(NPG) (NZX) (NKG)
-----------------------------------------------------------------------------------------------------------------------------------
ASSETS
Investments in municipal securities, at market value $78,747,287 $39,569,212 $64,370,949
Temporary investments in short-term securities, at
amortized cost, which approximates market value -- 1,000,000 16,400,000
Cash 6,377,912 5,405,711 31,232,214
Interest receivable 1,470,526 588,104 624,862
Other assets 7,751 1,325 160
-----------------------------------------------------------------------------------------------------------------------------------
Total assets 86,603,476 46,564,352 112,628,185
-----------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Cash overdraft -- -- --
Payable for investments purchased 4,275,528 3,109,470 16,469,944
Accrued expenses:
Management fees 44,233 12,562 20,838
Organization and offering costs -- 3,709 147,700
Other 21,490 86,710 136,425
Preferred share dividends payable 1,903 -- 5,736
-----------------------------------------------------------------------------------------------------------------------------------
Total liabilities 4,343,154 3,212,451 16,780,643
-----------------------------------------------------------------------------------------------------------------------------------
Preferred shares, at liquidation value 27,800,000 15,000,000 33,000,000
-----------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common shares $54,460,322 $28,351,901 $62,847,542
===================================================================================================================================
Common shares outstanding 3,773,306 1,957,292 4,547,000
===================================================================================================================================
Net asset value per Common share outstanding
(net assets applicable to Common shares,
divided by Common shares outstanding) $ 14.43 $ 14.49 $ 13.82
===================================================================================================================================
NET ASSETS APPLICABLE TO COMMON SHARES CONSIST OF:
-----------------------------------------------------------------------------------------------------------------------------------
Common shares, $.01 par value per share $ 37,733 $ 19,573 $ 45,470
Paid-in surplus 52,185,877 27,645,048 64,172,105
Undistributed (Over-distribution of) net investment income 541,534 143,937 (102,491)
Accumulated net realized gain (loss) from investments (1,124,386) 280,975 --
Net unrealized appreciation (depreciation) of investments 2,819,564 262,368 (1,267,542)
-----------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common shares $54,460,322 $28,351,901 $62,847,542
===================================================================================================================================
Authorized shares:
Common Unlimited Unlimited Unlimited
Preferred Unlimited Unlimited Unlimited
===================================================================================================================================
See accompanying notes to financial statements.
31
Statement of
ASSETS AND LIABILITIES (Unaudited) (continued)
NORTH NORTH NORTH NORTH
CAROLINA CAROLINA CAROLINA CAROLINA
PREMIUM DIVIDEND DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
(NNC) (NRB) (NNO) (NII)
------------------------------------------------------------------------------------------------------------------------------------
ASSETS
Investments in municipal securities, at market value $133,763,197 $54,468,193 $83,077,445 $57,861,335
Temporary investments in short-term securities, at
amortized cost, which approximates market value 4,400,000 -- -- 20,300,000
Cash 72,841 -- 92,568 12,024,771
Interest receivable 2,397,440 841,446 1,304,733 731,638
Other assets 3,336 5,108 3,458 159
------------------------------------------------------------------------------------------------------------------------------------
Total assets 140,636,814 55,314,747 84,478,204 90,917,903
------------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Cash overdraft -- 154,880 -- --
Payable for investments purchased 2,081,240 4,949,043 1,418,930 8,353,774
Accrued expenses:
Management fees 74,200 14,531 24,094 17,688
Organization and offering costs -- 7,713 4,862 128,875
Other 36,310 60,136 40,487 129,495
Preferred share dividends payable 3,204 -- -- 4,295
------------------------------------------------------------------------------------------------------------------------------------
Total liabilities 2,194,954 5,186,303 1,488,373 8,634,127
------------------------------------------------------------------------------------------------------------------------------------
Preferred shares, at liquidation value 46,800,000 17,000,000 28,000,000 28,000,000
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common shares $ 91,641,860 $33,128,444 $54,989,831 $54,283,776
====================================================================================================================================
Common shares outstanding 6,302,088 2,237,086 3,732,017 3,919,500
====================================================================================================================================
Net asset value per Common share outstanding
(net assets applicable to Common shares,
divided by Common shares outstanding) $ 14.54 $ 14.81 $ 14.73 $ 13.85
====================================================================================================================================
NET ASSETS APPLICABLE TO COMMON SHARES CONSIST OF:
------------------------------------------------------------------------------------------------------------------------------------
Common shares, $.01 par value per share $ 63,021 $ 22,371 $ 37,320 $ 39,195
Paid-in surplus 87,285,911 31,644,106 52,890,690 55,311,768
Undistributed (Over-distribution of) net investment income 892,455 325,551 40,592 (27,439)
Accumulated net realized gain (loss) from investments (2,541,178) 404,562 598,295 --
Net unrealized appreciation (depreciation) of investments 5,941,651 731,854 1,422,934 (1,039,748)
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common shares $ 91,641,860 $33,128,444 $54,989,831 $54,283,776
====================================================================================================================================
Authorized shares:
Common Unlimited Unlimited Unlimited Unlimited
Preferred Unlimited Unlimited Unlimited Unlimited
====================================================================================================================================
See accompanying notes to financial statements.
32
Statement of
OPERATIONS Six Months Ended November 30, 2002 (Unaudited)
GEORGIA GEORGIA GEORGIA
PREMIUM DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2
(NPG) (NZX) (NKG)*
-----------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME $2,167,586 $1,035,156 $ 279,699
-----------------------------------------------------------------------------------------------------------------------------------
EXPENSES
Management fees 270,517 141,920 82,808
Preferred shares - auction fees 34,845 18,801 3,616
Preferred shares - dividend disbursing agent fees 5,014 5,014 438
Shareholders' servicing agent fees and expenses 5,728 661 636
Custodian's fees and expenses 18,462 16,679 4,745
Trustees' fees and expenses 752 375 155
Professional fees 4,520 5,893 3,107
Shareholders' reports - printing and mailing expenses 10,263 4,606 5,038
Stock exchange listing fees 276 143 --
Investor relations expense 5,078 3,896 --
Other expenses 5,582 3,009 255
-----------------------------------------------------------------------------------------------------------------------------------
Total expenses before custodian fee credit and expense reimbursement 361,037 200,997 100,798
Custodian fee credit (5,579) (6,549) (1,110)
Expense reimbursement -- (65,501) (40,767)
-----------------------------------------------------------------------------------------------------------------------------------
Net expenses 355,458 128,947 58,921
-----------------------------------------------------------------------------------------------------------------------------------
Net investment income 1,812,128 906,209 220,778
-----------------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENTS
Net realized gain from investments 612,919 631,458 --
Change in net unrealized appreciation (depreciation) of investments (185,197) 288,883 (1,267,542)
-----------------------------------------------------------------------------------------------------------------------------------
Net gain (loss) from investments 427,722 920,341 (1,267,542)
-----------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS
From and in excess of net investment income (150,316) (84,538) (18,620)
From accumulated net realized gains from investments -- (4,890) --
-----------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets applicable to Common shares from
distributions to Preferred shareholders (150,316) (89,428) (18,620)
-----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets applicable to Common shares
from operations $2,089,534 $1,737,122 $(1,065,384)
===================================================================================================================================
* For the period September 25, 2002 (commencement of operations) through
November 30, 2002.
See accompanying notes to financial statements.
33
Statement of
OPERATIONS (Unaudited) (continued)
NORTH NORTH NORTH NORTH
CAROLINA CAROLINA CAROLINA CAROLINA
PREMIUM DIVIDEND DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
(NNC) (NRB) (NNO) (NII)*
-----------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME $3,655,013 $1,283,016 $1,986,909 $ 301,039
-----------------------------------------------------------------------------------------------------------------------------------
EXPENSES
Management fees 451,752 164,230 272,634 69,644
Preferred shares - auction fees 58,660 23,091 35,096 3,068
Preferred shares - dividend disbursing agent fees 5,014 5,014 5,014 438
Shareholders' servicing agent fees and expenses 9,911 1,182 908 449
Custodian's fees and expenses 25,703 22,006 23,580 4,272
Trustees' fees and expenses 853 501 501 113
Professional fees 5,007 4,531 5,439 2,926
Shareholders' reports - printing and mailing expenses 13,516 2,875 7,298 4,151
Stock exchange listing fees 11,298 163 275 --
Investor relations expense 8,334 1,786 2,335 --
Other expenses 6,776 3,987 3,084 254
-----------------------------------------------------------------------------------------------------------------------------------
Total expenses before custodian fee credit and expense reimbursement 596,824 229,366 356,164 85,315
Custodian fee credit (12,222) (1,849) (11,147) (955)
Expense reimbursement -- (75,798) (125,831) (34,286)
-----------------------------------------------------------------------------------------------------------------------------------
Net expenses 584,602 151,719 219,186 50,074
-----------------------------------------------------------------------------------------------------------------------------------
Net investment income 3,070,411 1,131,297 1,767,723 250,965
-----------------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENTS
Net realized gain from investments 749,232 469,381 645,163 --
Change in net unrealized appreciation (depreciation) of investments 1,349,777 389,026 922,359 (1,039,748)
-----------------------------------------------------------------------------------------------------------------------------------
Net gain (loss) from investments 2,099,009 858,407 1,567,522 (1,039,748)
-----------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS
From and in excess of net investment income (247,691) (82,743) (195,130) (15,798)
From accumulated net realized gains from investments -- (5,052) -- --
-----------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets applicable to Common shares from
distributions to Preferred shareholders (247,691) (87,795) (195,130) (15,798)
-----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets applicable to Common shares
from operations $4,921,729 $1,901,909 $3,140,115 $ (804,581)
===================================================================================================================================
* For the period September 25, 2002 (commencement of operations) through
November 30, 2002.
See accompanying notes to financial statements.
34
Statement of
CHANGES IN NET ASSETS (Unaudited)
GEORGIA
GEORGIA GEORGIA DIVIDEND
PREMIUM INCOME (NPG) DIVIDEND ADVANTAGE (NZX) ADVANTAGE 2 (NKG)
---------------------------------- --------------------------------- -----------------
FOR THE FOR THE
PERIOD 9/25/01 PERIOD 9/25/02
(COMMENCEMENT (COMMENCEMENT
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED OF OPERATIONS) OF OPERATIONS)
11/30/02 5/31/02 11/30/02 THROUGH 5/31/02 THROUGH 11/30/02
-----------------------------------------------------------------------------------------------------------------------------------
OPERATIONS
Net investment income $ 1,812,128 $ 3,856,072 $ 906,209 $ 1,128,261 $ 220,778
Net realized gain (loss) from investments 612,919 570,501 631,458 (345,593) --
Change in net unrealized appreciation
(depreciation) of investments (185,197) (195,055) 288,883 (26,515) (1,267,542)
Distributions to Preferred Shareholders:
From and in excess of net
investment income (150,316) (460,881) (84,538) (114,572) (18,620)
From accumulated net realized gains
from investments -- -- (4,890) -- --
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares
from operations 2,089,534 3,770,637 1,737,122 641,581 (1,065,384)
------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS
From and in excess of net investment income (1,617,865) (3,187,446) (780,847) (910,576) (304,649)
------------------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Common shares:
Net proceeds from sale of shares -- -- -- 27,860,955 64,899,300
Net proceeds from shares
issued to shareholders due to
reinvestment of distributions 79,294 158,444 14,240 4,901 --
Preferred shares offering costs -- -- -- (315,750) (782,000)
------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets applicable
to Common shares from capital
share transactions 79,294 158,444 14,240 27,550,106 64,117,300
------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets
applicable to Common shares 550,963 741,635 970,515 27,281,111 62,747,267
Net assets applicable to Common
shares at the beginning of period 53,909,359 53,167,724 27,381,386 100,275 100,275
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common
shares at the end of period $54,460,322 $53,909,359 $28,351,901 $27,381,386 $62,847,542
====================================================================================================================================
Undistributed (Over-distribution of) net
investment income at the end of period $ 541,534 $ 520,560 $ 143,937 $ 103,113 $ (102,491)
====================================================================================================================================
See accompanying notes to financial statements.
35
Statement of
CHANGES IN NET ASSETS (Unaudited) (continued)
NORTH CAROLINA NORTH CAROLINA
PREMIUM INCOME (NNC) DIVIDEND ADVANTAGE (NRB)
--------------------------------- ---------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
11/30/02 5/31/02 11/30/02 5/31/02
-----------------------------------------------------------------------------------------------------------------------------------
OPERATIONS
Net investment income $ 3,070,411 $ 6,403,807 $ 1,131,297 $ 2,364,655
Net realized gain (loss) from investments 749,232 1,171,228 469,381 94,213
Change in net unrealized appreciation
(depreciation) of investments 1,349,777 (237,275) 389,026 744,160
Distributions to Preferred Shareholders:
From and in excess of net investment income (247,691) (795,822) (82,743) (292,515)
From accumulated net realized gains
from investments -- -- (5,052) --
-----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets applicable
to Common shares from operations 4,921,729 6,541,938 1,901,909 2,910,513
-----------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS
From and in excess of net investment income (2,664,693) (5,047,923) (952,755) (1,828,376)
-----------------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Common shares:
Net proceeds from sale of shares -- -- -- --
Net proceeds from shares
issued to shareholders due to
reinvestment of distributions 99,076 177,785 31,267 50,844
Preferred shares offering costs -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets applicable
to Common shares from capital
share transactions 99,076 177,785 31,267 50,844
-----------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets
applicable to Common shares 2,356,112 1,671,800 980,421 1,132,981
Net assets applicable to Common
shares at the beginning of period 89,285,748 87,613,948 32,148,023 31,015,042
-----------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common
shares at the end of period $91,641,860 $89,285,748 $33,128,444 $32,148,023
===================================================================================================================================
Undistributed (Over-distribution of) net
investment income at the end of period $ 892,455 $ 685,795 $ 325,551 $ 229,468
===================================================================================================================================
See accompanying notes to financial statements.
36
NORTH
CAROLINA
DIVIDEND
NORTH CAROLINA ADVANTAGE 3
DIVIDEND ADVANTAGE 2 (NNO) (NII)
---------------------------------- ----------------
FOR THE FOR THE
PERIOD 11/16/01 PERIOD 9/25/02
(COMMENCEMENT (COMMENCEMENT
SIX MONTHS ENDED OF OPERATIONS) OF OPERATIONS)
11/30/02 THROUGH 5/31/02 THROUGH 11/30/02
-----------------------------------------------------------------------------------------------------------------------------------
OPERATIONS
Net investment income $ 1,767,723 $ 1,435,314 $ 250,965
Net realized gain (loss) from investments 645,163 (46,868) --
Change in net unrealized appreciation
(depreciation) of investments 922,359 501,708 (1,039,748)
Distributions to Preferred Shareholders:
From and in excess of net investment income (195,130) (156,382) (15,798)
From accumulated net realized gains
from investments -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets applicable
to Common shares from operations 3,140,115 1,733,772 (804,581)
-----------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS
From and in excess of net investment income (1,533,857) (1,278,209) (262,606)
-----------------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Common shares:
Net proceeds from sale of shares -- 53,248,875 55,929,188
Net proceeds from shares
issued to shareholders due to
reinvestment of distributions 252 -- --
Preferred shares offering costs -- (421,392) (678,500)
-----------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets applicable
to Common shares from capital
share transactions 252 52,827,483 55,250,688
-----------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets
applicable to Common shares 1,606,510 53,283,046 54,183,501
Net assets applicable to Common
shares at the beginning of period 53,383,321 100,275 100,275
-----------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common
shares at the end of period $54,989,831 $53,383,321 $54,283,776
===================================================================================================================================
Undistributed (Over-distribution of) net
investment income at the end of period $ 40,592 $ 723 $ (27,439)
===================================================================================================================================
See accompanying notes to financial statements.
37
Notes to
FINANCIAL STATEMENTS (Unaudited)
1. GENERAL INFORMATION AND SIGNIFICANT ACCOUNTING POLICIES
The state Funds (the "Funds") covered in this report and their corresponding
Common share stock exchange symbols are Nuveen Georgia Premium Income Municipal
Fund (NPG), Nuveen Georgia Dividend Advantage Municipal Fund (NZX), Nuveen
Georgia Dividend Advantage Municipal Fund 2 (NKG), Nuveen North Carolina Premium
Income Municipal Fund (NNC), Nuveen North Carolina Dividend Advantage Municipal
Fund (NRB), Nuveen North Carolina Dividend Advantage Municipal Fund 2 (NNO) and
Nuveen North Carolina Dividend Advantage Municipal Fund 3 (NII). Georgia Premium
Income (NPG), Georgia Dividend Advantage (NZX), Georgia Dividend Advantage 2
(NKG), North Carolina Dividend Advantage (NRB), North Carolina Dividend
Advantage 2 (NNO) and North Carolina Dividend Advantage 3 (NII) are traded on
the American Stock Exchange while North Carolina Premium Income (NNC) is traded
on the New York Stock Exchange.
Prior to the commencement of operations of Georgia Dividend Advantage (NZX),
Georgia Dividend Advantage 2 (NKG), North Carolina Dividend Advantage 2 (NNO)
and North Carolina Dividend Advantage 3 (NII), each Fund had no operations other
than those related to organizational matters, the initial capital contribution
of $100,275 per Fund by Nuveen Advisory Corp. (the "Adviser"), a wholly owned
subsidiary of The John Nuveen Company, and the recording of the organization
expenses ($11,500 per Fund) and their reimbursement by Nuveen Investments, also
a wholly owned subsidiary of The John Nuveen Company.
Each Fund seeks to provide current income exempt from both regular federal and
designated state income taxes by investing primarily in a diversified portfolio
of municipal obligations issued by state and local government authorities within
a single state. The Funds are registered under the Investment Company Act of
1940 as closed-end management investment companies.
The following is a summary of significant accounting policies followed by the
Funds in the preparation of their financial statements in accordance with
accounting principles generally accepted in the United States.
Securities Valuation
The prices of municipal bonds in each Fund's investment portfolio are provided
by a pricing service approved by the Fund's Board of Trustees. When price quotes
are not readily available (which is usually the case for municipal securities),
the pricing service establishes fair market value based on yields or prices of
municipal bonds of comparable quality, type of issue, coupon, maturity and
rating, indications of value from securities dealers and general market
conditions. If it is determined that market prices for a security are
unavailable or inappropriate, the Board of Trustees of the Funds or its designee
may establish a fair value for the security. Temporary investments in securities
that have variable rate and demand features qualifying them as short-term
securities are valued at amortized cost, which approximates market value.
Securities Transactions
Securities transactions are recorded on a trade date basis. Realized gains and
losses from such transactions are determined on the specific identification
method. Securities purchased or sold on a when-issued or delayed delivery basis
may have extended settlement periods. The securities so purchased are subject to
market fluctuation during this period. The Funds have instructed the custodian
to segregate assets in a separate account with a current value at least equal to
the amount of the when-issued and delayed delivery purchase commitments. At
November 30, 2002, Georgia Premium Income (NPG), Georgia Dividend Advantage
(NZX), Georgia Dividend Advantage 2 (NKG), North Carolina Premium Income (NNC),
North Carolina Dividend Advantage (NRB), North Carolina Dividend Advantage 2
(NNO) and North Carolina Dividend Advantage 3 (NII) had outstanding when-issued
purchase commitments of $4,275,528, $3,109,470, $16,469,944, $2,081,240,
$4,949,043, $1,418,930 and $8,353,774, respectively.
Investment Income
Interest income, which includes the amortization of premiums and accretion of
discounts for financial reporting purposes, is recorded on an accrual basis.
Income Taxes
Each Fund is a separate taxpayer for federal income tax purposes. Each Fund
intends to comply with the requirements of the Internal Revenue Code applicable
to regulated investment companies and to distribute all of its net investment
income to its shareholders. Therefore, no federal income tax provision is
required. Furthermore, each Fund intends to satisfy conditions which will enable
interest from municipal securities, which is exempt from regular federal and
designated state income taxes, to retain such tax-exempt status when distributed
to shareholders of the Funds.
38
Dividends and Distributions to Common Shareholders
Dividends from tax-exempt net investment income are declared and paid 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 accounting
principles generally accepted in the United States. Accordingly, temporary
over-distributions as a result of these differences may occur and will be
classified as either distributions in excess of net investment income,
distributions in excess of net realized gains and/or distributions in excess of
net ordinary taxable income from investment transactions, where applicable.
Preferred Shares
The Funds have issued and outstanding $25,000 stated value Preferred shares.
Each Fund's Preferred shares are issued in one Series. The dividend rate on each
Series may change every seven days, as set pursuant to a dutch auction process
by the auction agent, and is payable at or near the end of each rate period. The
number of Preferred shares outstanding for each Fund is as follows:
NORTH NORTH NORTH NORTH
GEORGIA GEORGIA GEORGIA CAROLINA CAROLINA CAROLINA CAROLINA
PREMIUM DIVIDEND DIVIDEND PREMIUM DIVIDEND DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2 INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
(NPG) (NZX) (NKG) (NNC) (NRB) (NNO) (NII)
---------------------------------------------------------------------------------------------------------
Number of shares:
Series M -- 600 -- -- -- -- --
Series T -- -- -- -- 680 -- --
Series W -- -- -- -- -- -- 1,120
Series TH 1,112 -- -- 1,872 -- -- --
Series F -- -- 1,320 -- -- 1,120 --
=========================================================================================================
Effective November 15, 2002, Georgia Dividend Advantage 2 (NKG) issued 1,320
Series F $25,000 stated value Preferred shares. Effective November 15, 2002,
North Carolina Dividend Advantage 3 (NII) issued 1,120 Series W $25,000 stated
value Preferred shares.
Derivative Financial Instruments
The Funds may invest in certain derivative financial instruments including
futures, forward, swap and option contracts, and other financial instruments
with similar characteristics. Although the Funds are authorized to invest in
such financial instruments, and may do so in the future, they did not make any
such investments during the period ended November 30, 2002.
Custodian Fee Credit
Each Fund has an arrangement with the custodian bank whereby certain custodian
fees and expenses are reduced by credits earned on each Fund's cash on deposit
with the bank. Such deposit arrangements are an alternative to overnight
investments.
Offering Costs
Nuveen Investments has agreed to pay all offering costs (other than the sales
load) that exceed $.03 per Common share for Georgia Dividend Advantage (NZX),
Georgia Dividend Advantage 2 (NKG), North Carolina Dividend Advantage 2 (NNO)
and North Carolina Dividend Advantage 3 (NII). Georgia Dividend Advantage's
(NZX), Georgia Dividend Advantage 2's (NKG), North Carolina Dividend Advantage
2's (NNO) and North Carolina Dividend Advantage 3's (NII) share of offering
costs ($58,470, $136,200, $111,750 and $117,375, respectively) were recorded as
a reduction of the proceeds from the sale of Common shares.
Costs incurred by Georgia Dividend Advantage (NZX), Georgia Dividend Advantage 2
(NKG), North Carolina Dividend Advantage 2 (NNO) and North Carolina Dividend
Advantage 3 (NII) in connection with their offering of Preferred shares
($315,750, $782,000, $421,392 and $678,500, respectively) were recorded as a
reduction to paid-in surplus.
Use of Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States 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.
39
Notes to
FINANCIAL STATEMENTS (Unaudited) (continued)
2. FUND SHARES
Transactions in Common and Preferred shares were as follows:
GEORGIA
DIVIDEND
GEORGIA GEORGIA DIVIDEND ADVANTAGE 2
PREMIUM INCOME (NPG) ADVANTAGE (NZX) (NKG)
----------------------- --------------------------- ----------------
FOR THE FOR THE
PERIOD 9/25/01 PERIOD 9/25/02
SIX MONTHS SIX MONTHS (COMMENCEMENT (COMMENCEMENT
ENDED YEAR ENDED ENDED OF OPERATIONS) OF OPERATIONS)
11/30/02 5/31/02 11/30/02 THROUGH 5/31/02 THROUGH 11/30/02
-------------------------------------------------------------------------------------------------------------------
Common shares:
Shares sold -- -- -- 1,949,000 4,540,000
Shares issued to shareholders
due to reinvestment of
distributions 4,920 10,384 956 336 --
-------------------------------------------------------------------------------------------------------------------
4,920 10,384 956 1,949,336 4,540,000
===================================================================================================================
Preferred shares sold -- -- -- 600 1,320
===================================================================================================================
NORTH
CAROLINA
DIVIDEND
NORTH CAROLINA NORTH CAROLINA NORTH CAROLINA ADVANTAGE 3
PREMIUM INCOME (NNC) DIVIDEND ADVANTAGE (NRB) DIVIDEND ADVANTAGE 2 (NNO) (NII)
---------------------- ------------------------- --------------------------- ----------------
FOR THE FOR THE
PERIOD 11/16/01 PERIOD 9/25/02
SIX MONTHS SIX MONTHS SIX MONTHS (COMMENCEMENT (COMMENCEMENT
ENDED YEAR ENDED ENDED YEAR ENDED ENDED OF OPERATIONS) OF OPERATIONS)
11/30/02 5/31/02 11/30/02 5/31/02 11/30/02 THROUGH 5/31/02 THROUGH 11/30/02
-------------------------------------------------------------------------------------------------------------------
Common shares:
Shares sold -- -- -- -- -- 3,725,000 3,912,500
Shares issued to
shareholders due
to reinvestment
of distributions 6,172 11,774 2,281 3,402 17 -- --
-------------------------------------------------------------------------------------------------------------------
6,172 11,774 2,281 3,402 17 3,725,000 3,912,500
===================================================================================================================
Preferred shares sold -- -- -- -- -- 1,120 1,120
===================================================================================================================
40
3. SECURITIES TRANSACTIONS
Purchases and sales (including maturities) of investments in long-term municipal
securities and short-term securities for the six months ended November 30, 2002,
were as follows:
GEORGIA GEORGIA GEORGIA
PREMIUM DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2
(NPG) (NZX) (NKG)*
---------------------------------------------------------------------------------------------------------
Purchases:
Long-term municipal securities $12,018,512 $15,553,653 $65,668,186
Short-term securities -- 1,000,000 16,400,000
Sales and maturities:
Long-term municipal securities 14,360,875 18,865,989 --
Short-term securities -- -- --
=========================================================================================================
* For the period September 25, 2002 (commencement of operations) through
November 30, 2002.
NORTH NORTH NORTH NORTH
CAROLINA CAROLINA CAROLINA CAROLINA
PREMIUM DIVIDEND DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
(NNC) (NRB) (NNO) (NII)*
----------------------------------------------------------------------------------------------------------
Purchases:
Long-term municipal securities $12,448,490 $20,222,877 $18,238,782 $58,931,932
Short-term securities 8,800,000 2,000,000 1,000,000 20,300,000
Sales and maturities:
Long-term municipal securities 14,312,205 15,577,606 19,115,411 --
Short-term securities 5,400,000 2,000,000 1,000,000 --
==========================================================================================================
* For the period September 25, 2002 (commencement of operations) through
November 30, 2002.
4. INCOME TAX INFORMATION
The following information is presented on an income tax basis. Differences
between amounts for financial statement and federal income tax purposes are
primarily due to timing differences in recognizing income on taxable market
discount securities and timing differences in recognizing certain gains and
losses on security transactions.
At November 30, 2002, the cost of investments were as follows:
GEORGIA GEORGIA GEORGIA
PREMIUM DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2
(NPG) (NZX) (NKG)
----------------------------------------------------------------------------------------------------------
Cost of investments $75,844,734 $40,306,844 $82,038,491
==========================================================================================================
NORTH NORTH NORTH NORTH
CAROLINA CAROLINA CAROLINA CAROLINA
PREMIUM DIVIDEND DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
(NNC) (NRB) (NNO) (NII)
----------------------------------------------------------------------------------------------------------
Cost of investments $132,127,395 $53,735,942 $81,652,130 $79,201,083
==========================================================================================================
41
Notes to
FINANCIAL STATEMENTS (Unaudited) (continued)
Gross unrealized appreciation and gross unrealized depreciation on investments
on November 30, 2002, were as follows:
GEORGIA GEORGIA GEORGIA
PREMIUM DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2
(NPG) (NZX) (NKG)
----------------------------------------------------------------------------------------------------------
Gross unrealized:
Appreciation $3,672,367 $ 453,425 $ 105,946
Depreciation (769,814) (191,057) (1,373,488)
----------------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) on investments $2,902,553 $ 262,368 $(1,267,542)
==========================================================================================================
NORTH NORTH NORTH NORTH
CAROLINA CAROLINA CAROLINA CAROLINA
PREMIUM DIVIDEND DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
(NNC) (NRB) (NNO) (NII)
----------------------------------------------------------------------------------------------------------
Gross unrealized:
Appreciation $6,087,319 $ 879,601 $1,549,795 $ 138,186
Depreciation (51,517) (147,350) (124,480) (1,177,934)
----------------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation)
on investments $6,035,802 $ 732,251 $1,425,315 $(1,039,748)
==========================================================================================================
The tax components of undistributed net investment income and net realized gains
at May 31, 2002, the Funds' last fiscal year end, were as follows:
NORTH NORTH NORTH
GEORGIA GEORGIA CAROLINA CAROLINA CAROLINA
PREMIUM DIVIDEND PREMIUM DIVIDEND DIVIDEND
INCOME ADVANTAGE INCOME ADVANTAGE ADVANTAGE 2
(NPG) (NZX) (NNC) (NRB) (NNO)
---------------------------------------------------------------------------------------------------------
Undistributed tax-exempt income $686,277 $235,839 $1,057,462 $385,206 $261,031
Undistributed ordinary income * 1,522 -- 22,036 -- --
Undistributed net long-term capital gains -- -- -- -- --
=========================================================================================================
* Ordinary income consists of taxable market discount income and net short-term
capital gains, if any.
42
The tax character of distributions paid during the period ended May 31, 2002,
the Funds' last fiscal year end, were designated for purposes of the dividends
paid deduction as follows:
NORTH NORTH NORTH
GEORGIA GEORGIA CAROLINA CAROLINA CAROLINA
PREMIUM DIVIDEND PREMIUM DIVIDEND DIVIDEND
INCOME ADVANTAGE INCOME ADVANTAGE ADVANTAGE 2
(NPG) (NZX) (NNC) (NRB) (NNO)
---------------------------------------------------------------------------------------------------------
Distributions from tax-exempt income $3,537,237 $892,422 $5,824,960 $2,119,636 $1,174,283
Distributions from ordinary income * 94,734 -- -- -- --
Distributions from net long-term
capital gains -- -- -- -- --
=========================================================================================================
* Ordinary income consists of taxable market discount income and net
short-term capital gains, if any.
At May 31, 2002, the Funds' last fiscal year end, the following Funds had unused
capital loss carryforwards available for federal income tax purposes to be
applied against future capital gains, if any. If not applied, the carryforwards
will expire as follows:
NORTH NORTH
GEORGIA CAROLINA CAROLINA
PREMIUM PREMIUM DIVIDEND
INCOME INCOME ADVANTAGE
(NPG) (NNC) (NRB)
---------------------------------------------------------------------------------------------------------
Expiration year:
2003 $ -- $1,172,338 $ --
2004 1,266,940 1,137,399 --
2005 340,685 131,993 --
2006 -- -- --
2007 -- -- --
2008 129,908 108,131 --
2009 -- 731,398 59,767
2010 -- -- --
---------------------------------------------------------------------------------------------------------
Total $1,737,533 $3,281,259 $59,767
=========================================================================================================
43
Notes to
FINANCIAL STATEMENTS (Unaudited) (continued)
The following Funds have elected to defer net realized losses from investments
incurred from November 1, 2001 through May 31, 2002 ("post-October losses") in
accordance with Federal income tax regulations. The following post-October
losses are treated as having arisen in the following year:
NORTH
GEORGIA CAROLINA
DIVIDEND DIVIDEND
ADVANTAGE ADVANTAGE 2
(NZX) (NNO)
----------------------------------------------------------------
$345,593 $46,868
================================================================
5. MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Under Georgia Premium Income's (NPG) and North Carolina Premium Income's (NNC)
investment management agreements with the Adviser, each Fund pays an annual
management fee, payable monthly, at the rates set forth below, which are based
upon the average daily net assets (including net assets attributable to
Preferred shares) of each Fund as follows:
AVERAGE DAILY NET ASSETS (INCLUDING NET ASSETS
ATTRIBUTABLE TO PREFERRED SHARES) MANAGEMENT FEE
--------------------------------------------------------------------------------
For the first $125 million .6500%
For the next $125 million .6375
For the next $250 million .6250
For the next $500 million .6125
For the next $1 billion .6000
For the next $3 billion .5875
For net assets over $5 billion .5750
================================================================================
Under Georgia Dividend Advantage's (NZX), Georgia Dividend Advantage 2's (NKG),
North Carolina Dividend Advantage's (NRB), North Carolina Dividend Advantage 2's
(NNO) and North Carolina Dividend Advantage 3's (NII) investment management
agreements with the Adviser, each Fund pays an annual management fee, payable
monthly, at the rates set forth below, which are based upon the average daily
net assets (including net assets attributable to Preferred shares) of each Fund
as follows:
AVERAGE DAILY NET ASSETS (INCLUDING NET ASSETS
ATTRIBUTABLE TO PREFERRED SHARES) MANAGEMENT FEE
--------------------------------------------------------------------------------
For the first $125 million .6500%
For the next $125 million .6375
For the next $250 million .6250
For the next $500 million .6125
For the next $1 billion .6000
For net assets over $2 billion .5750
================================================================================
44
For the first ten years of Georgia Dividend Advantage's (NZX) operations, the
Adviser has agreed to reimburse the Fund, as a percentage of average daily net
assets (including net assets attributable to Preferred shares), for fees and
expenses in the amounts, and for the time periods set forth below:
YEAR ENDING YEAR ENDING
SEPTEMBER 30, SEPTEMBER 30,
-----------------------------------------------------------------------
2001* .30% 2007 .25%
2002 .30 2008 .20
2003 .30 2009 .15
2004 .30 2010 .10
2005 .30 2011 .05
2006 .30
=======================================================================
* From the commencement of operations.
The Adviser has not agreed to reimburse Georgia Dividend Advantage (NZX) for any
portion of its fees and expenses beyond September 30, 2011.
For the first ten years of North Carolina Dividend Advantage's (NRB) operations,
the Adviser has agreed to reimburse the Fund, as a percentage of average daily
net assets (including net assets attributable to Preferred shares), for fees and
expenses in the amounts, and for the time periods set forth below:
YEAR ENDING YEAR ENDING
JANUARY 31, JANUARY 31,
-----------------------------------------------------------------------
2001* .30% 2007 .25%
2002 .30 2008 .20
2003 .30 2009 .15
2004 .30 2010 .10
2005 .30 2011 .05
2006 .30
=======================================================================
* From the commencement of operations.
The Adviser has not agreed to reimburse North Carolina Dividend Advantage (NRB)
for any portion of its fees and expenses beyond January 31, 2011.
For the first ten years of North Carolina Dividend Advantage 2's (NNO)
operations, the Adviser has agreed to reimburse the Fund, as a percentage of
average daily net assets (including net assets attributable to Preferred
shares), for fees and expenses in the amounts, and for the time periods set
forth below:
YEAR ENDING YEAR ENDING
NOVEMBER 30, NOVEMBER 30,
-----------------------------------------------------------------------
2001* .30% 2007 .25%
2002 .30 2008 .20
2003 .30 2009 .15
2004 .30 2010 .10
2005 .30 2011 .05
2006 .30
=======================================================================
* From the commencement of operations.
The Adviser has not agreed to reimburse North Carolina Dividend Advantage 2
(NNO) for any portion of its fees and expenses beyond November 30, 2011.
45
Notes to
FINANCIAL STATEMENTS (Unaudited) (continued)
For the first eight years of Georgia Dividend Advantage 2's (NKG) and North
Carolina Dividend Advantage 3's (NII) operations, the Adviser has agreed to
reimburse the Funds, as a percentage of average daily net assets (including net
assets attributable to Preferred shares), for fees and expenses in the amounts,
and for the time periods set forth below:
YEAR ENDING YEAR ENDING
SEPTEMBER 30, SEPTEMBER 30,
-----------------------------------------------------------------------
2002* .32% 2007 .32%
2003 .32 2008 .24
2004 .32 2009 .16
2005 .32 2010 .08
2006 .32
=======================================================================
* From the commencement of operations.
The Adviser has not agreed to reimburse Georgia Dividend Advantage 2 (NKG) and
North Carolina Dividend Advantage 3 (NII) for any portion of its fees and
expenses beyond September 30, 2010.
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.
6. DISTRIBUTIONS TO COMMON SHAREHOLDERS
The Funds declared Common share dividend distributions from their tax-exempt net
investment income which were paid on December 30, 2002, to shareholders of
record on December 15, 2002, as follows:
NORTH NORTH NORTH NORTH
GEORGIA GEORGIA GEORGIA CAROLINA CAROLINA CAROLINA CAROLINA
PREMIUM DIVIDEND DIVIDEND PREMIUM DIVIDEND DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2 INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
(NPG) (NZX) (NKG) (NNC) (NRB) (NNO) (NII)
---------------------------------------------------------------------------------------------------------
Dividend per share $.0715 $.0665 $.0670 $.0715 $.0720 $.0685 $.0670
=========================================================================================================
At the same time, the following Funds declared capital gains and ordinary income
distributions as follows:
NORTH NORTH NORTH
GEORGIA CAROLINA CAROLINA CAROLINA
DIVIDEND PREMIUM DIVIDEND DIVIDEND
ADVANTAGE INCOME ADVANTAGE ADVANTAGE 2
(NZX) (NNC) (NRB) (NNO)
---------------------------------------------------------------------------------------------------------
Capital gains distributions per share $.0330 $ -- $.1311 $ --
Ordinary income distributions per share * $.0948 $.0031 $ -- $.1293
=========================================================================================================
* Ordinary income consists of taxable market discount income and net short-term
capital gains, if any.
46
Financial
HIGHLIGHTS (Unaudited)
47
Financial
HIGHLIGHTS (Unaudited)
Selected data for a Common share outstanding throughout each period:
Investment Operations Less Distributions
--------------------------------------------------------------- -----------------------------------
Distributions From and
from and in Distributions in Excess
Excess of Net from of Net
Beginning Net Investment Capital Investment Capital
Common Realized/ Income to Gains to Income to Gains to
Share Net Unrealized Preferred Preferred Common Common
Net Asset Investment Investment Share- Share- Share- Share-
Value Income Gain (Loss) holders+ holders+ Total holders holders Total
==================================================================================================================================
GEORGIA PREMIUM INCOME (NPG)
----------------------------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
2003(c) $14.31 $ .48 $ .11 $(.04) $ -- $ .55 $(.43) $ -- $(.43)
2002 14.15 1.02 .11 (.12) -- 1.01 (.85) -- (.85)
2001 12.80 1.06 1.35 (.26) -- 2.15 (.80) -- (.80)
2000 14.45 1.03 (1.65) (.23) -- (.85) (.80) -- (.80)
1999 14.58 1.01 (.13) (.21) -- .67 (.80) -- (.80)
1998 13.70 1.01 .90 (.24) -- 1.67 (.79) -- (.79)
GEORGIA DIVIDEND ADVANTAGE (NZX)
----------------------------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
2003(c) 14.00 .46 .47 (.04) -- .89 (.40) -- (.40)
2002(a) 14.33 .58 (.19) (.06) -- .33 (.47) -- (.47)
GEORGIA DIVIDEND ADVANTAGE 2 (NKG)
----------------------------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
2003(b) 14.33 .05 (.28) -- -- (.23) (.07) -- (.07)
==================================================================================================================================
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**
============================================================================
GEORGIA PREMIUM INCOME (NPG)
----------------------------------------------------------------------------
Year Ended 5/31:
2003(c) $-- $14.43 $15.9500 3.47% 3.83%
2002 -- 14.31 15.8300 8.98 7.32
2001 -- 14.15 15.3500 30.41 16.98
2000 -- 12.80 12.4375 (18.84) (5.87)
1999 -- 14.45 16.2500 13.42 4.64
1998 -- 14.58 15.0625 14.56 12.43
GEORGIA DIVIDEND ADVANTAGE (NZX)
----------------------------------------------------------------------------
Year Ended 5/31:
2003(c) -- 14.49 14.8000 3.12 6.36
2002(a) (.19) 14.00 14.7400 1.42 1.02
GEORGIA DIVIDEND ADVANTAGE 2 (NKG)
----------------------------------------------------------------------------
Year Ended 5/31:
2003(b) (.21) 13.82 14.4000 (3.55) (3.09)
============================================================================
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
============================================================================================================
GEORGIA PREMIUM INCOME (NPG)
------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
2003(c) $54,460 1.30%* 6.52%* 1.28%* 6.54%* 15%
2002 53,909 1.37 7.12 1.35 7.13 37
2001 53,168 1.41 7.67 1.40 7.68 15
2000 47,991 1.43 7.73 1.40 7.76 17
1999 54,022 1.34 6.87 1.33 6.88 14
1998 54,352 1.33 7.10 1.33 7.10 17
GEORGIA DIVIDEND ADVANTAGE (NZX)
------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
2003(c) 28,352 1.40* 5.82* .90* 6.33* 38
2002(a) 27,381 1.37* 5.70* .92* 6.16* 60
------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
2003(b) 62,848 .89* 1.58* .52* 1.95* --
============================================================================================================
Preferred Shares at End of Period
-------------------------------------
Aggregate Liquidation
Amount and Market Asset
Outstanding Value Coverage
(000) Per Share Per Share
=======================================================
GEORGIA PREMIUM INCOME (NPG)
-------------------------------------------------------
Year Ended 5/31:
2003(c) $27,800 $25,000 $73,975
2002 27,800 25,000 73,480
2001 27,800 25,000 72,813
2000 27,800 25,000 68,157
1999 27,800 25,000 73,581
1998 27,800 25,000 73,878
GEORGIA DIVIDEND ADVANTAGE (NZX)
-------------------------------------------------------
Year Ended 5/31:
2003(c) 15,000 25,000 72,253
2002(a) 15,000 25,000 70,636
GEORGIA DIVIDEND ADVANTAGE 2 (NKG)
-------------------------------------------------------
Year Ended 5/31:
2003(b) 33,000 25,000 72,612
=======================================================
* Annualized.
** Total Investment Return on Market Value is the combination of reinvested
dividend income, reinvested capital gains distributions, if any, and
changes in stock price per share. Total Return on Common Share Net Asset
Value is the combination of reinvested dividend income, reinvested capital
gains distributions, if any, and changes in Common share net asset value
per share. Total returns are not annualized.
*** After custodian fee credit and expense reimbursement, where applicable.
+ The amounts shown are based on Common share equivalents.
++ Ratios do not reflect the effect of dividend payments to Preferred
shareholders; income ratios reflect income earned on assets attributable to
Preferred shares.
(a) For the period September 25, 2001 (commencement of operations) through May
31, 2002.
(b) For the period September 25, 2002 (commencement of operations) through
November 30, 2002.
(c) For the six months ended November 30, 2002.
See accompanying notes to financial statements.
48-49 SPREAD
Financial HIGHLIGHTS (Unaudited) (continued)
Selected data for a Common share outstanding throughout each period:
Investment Operations Less Distributions
--------------------------------------------------------------- -----------------------------------
Distributions From and
from and in Distributions in Excess
Excess of Net from of Net
Beginning Net Investment Capital Investment Capital
Common Realized/ Income to Gains to Income to Gains to
Share Net Unrealized Preferred Preferred Common Common
Net Asset Investment Investment Share- Share- Share- Share-
Value Income Gain (Loss) holders+ holders+ Total holders holders Total
==================================================================================================================================
NORTH CAROLINA PREMIUM INCOME (NNC)
----------------------------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
2003(d) $14.18 $ .49 $ .33 $(.04) $ -- $ .78 $(.42) $ -- $(.42)
2002 13.94 1.02 .15 (.13) -- 1.04 (.80) -- (.80)
2001 12.62 1.03 1.31 (.27) -- 2.07 (.75) -- (.75)
2000 14.28 1.02 (1.61) (.26) -- (.85) (.81) -- (.81)
1999 14.48 1.02 (.22) (.21) -- .59 (.79) -- (.79)
1998 13.50 1.02 1.00 (.25) -- 1.77 (.79) -- (.79)
NORTH CAROLINA DIVIDEND ADVANTAGE (NRB)
----------------------------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
2003(d) 14.39 .51 .38 (.04) -- .85 (.43) -- (.43)
2002 13.90 1.06 .38 (.13) -- 1.31 (.82) -- (.82)
2001(a) 14.33 .25 (.26) (.05) -- (.06) (.20) -- (.20)
NORTH CAROLINA DIVIDEND ADVANTAGE 2 (NNO)
----------------------------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
2003(d) 14.30 .47 .42 (.05) -- .84 (.41) -- (.41)
2002(b) 14.33 .38 .11 (.04) -- .45 (.34) -- (.34)
NORTH CAROLINA DIVIDEND ADVANTAGE 3 (NII)
----------------------------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
2003(c) 14.33 .06 (.26) -- -- (.20) (.07) -- (.07)
==================================================================================================================================
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**
============================================================================
NORTH CAROLINA PREMIUM INCOME (NNC)
----------------------------------------------------------------------------
Year Ended 5/31:
2003(d) $ -- $14.54 $15.2500 (3.39)% 5.54%
2002 -- 14.18 16.2100 15.44 7.62
2001 -- 13.94 14.8000 14.03 16.65
2000 -- 12.62 13.6875 (7.76) (5.98)
1999 -- 14.28 15.6875 9.87 4.11
1998 -- 14.48 15.0000 8.17 13.38
NORTH CAROLINA DIVIDEND ADVANTAGE (NRB)
----------------------------------------------------------------------------
Year Ended 5/31:
2003(d) -- 14.81 15.4500 2.89 5.88
2002 -- 14.39 15.4400 7.54 9.58
2001(a) (.17) 13.90 15.1500 2.42 (1.57)
NORTH CAROLINA DIVIDEND ADVANTAGE 2 (NNO)
----------------------------------------------------------------------------
Year Ended 5/31:
2003(d) -- 14.73 14.8900 2.71 5.87
2002(b) (.14) 14.30 14.9000 1.64 2.22
NORTH CAROLINA DIVIDEND ADVANTAGE 3 (NII)
----------------------------------------------------------------------------
Year Ended 5/31:
2003(c) (.21) 13.85 14.6000 (2.22) (2.88)
============================================================================
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
============================================================================================================
NORTH CAROLINA PREMIUM INCOME (NNC)
------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
2003(d) $91,642 1.29%* 6.62%* 1.27%* 6.65%* 9%
2002 89,286 1.33 7.17 1.32 7.18 22
2001 87,614 1.34 7.47 1.30 7.51 19
2000 79,167 1.37 7.81 1.35 7.83 25
1999 89,377 1.30 6.97 1.30 6.97 8
1998 90,470 1.30 7.17 1.30 7.17 9
NORTH CAROLINA DIVIDEND ADVANTAGE (NRB)
------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
2003(d) 33,128 1.37* 6.29* .91* 6.75* 30
2002 32,148 1.44 6.86 .90 7.40 37
2001(a) 31,015 1.31* 5.02* .85* 5.48* 29
NORTH CAROLINA DIVIDEND ADVANTAGE 2 (NNO)
------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
2003(d) 54,990 1.28* 5.84* .78* 6.33* 22
2002(b) 53,383 1.19* 4.70* .74* 5.15* 43
NORTH CAROLINA DIVIDEND ADVANTAGE 3 (NII)
------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
2003(c) 54,284 .90* 2.27* .53* 2.65* --
============================================================================================================
Preferred Shares at End of Period
-------------------------------------
Aggregate Liquidation
Amount and Market Asset
Outstanding Value Coverage
(000) Per Share Per Share
=======================================================
NORTH CAROLINA PREMIUM INCOME (NNC)
-------------------------------------------------------
Year Ended 5/31:
2003(d) $46,800 $25,000 $73,954
2002 46,800 25,000 72,695
2001 46,800 25,000 71,802
2000 46,800 25,000 67,290
1999 46,800 25,000 72,744
1998 46,800 25,000 73,328
NORTH CAROLINA DIVIDEND ADVANTAGE (NRB)
-------------------------------------------------------
Year Ended 5/31:
2003(d) 17,000 25,000 73,718
2002 17,000 25,000 72,277
2001(a) 17,000 25,000 70,610
NORTH CAROLINA DIVIDEND ADVANTAGE 2 (NNO)
-------------------------------------------------------
Year Ended 5/31:
2003(d) 28,000 25,000 74,098
2002(b) 28,000 25,000 72,664
NORTH CAROLINA DIVIDEND ADVANTAGE 3 (NII)
-------------------------------------------------------
Year Ended 5/31:
2003(c) 28,000 25,000 73,468
=======================================================
* Annualized.
** Total Investment Return on Market Value is the combination of reinvested
dividend income, reinvested capital gains distributions, if any, and
changes in stock price per share. Total Return on Common Share Net Asset
Value is the combination of reinvested dividend income, reinvested capital
gains distributions, if any, and changes in Common share net asset value
per share. Total returns are not annualized.
*** After custodian fee credit and expense reimbursement, where applicable.
+ The amounts shown are based on Common share equivalents.
++ Ratios do not reflect the effect of dividend payments to Preferred
shareholders; income ratios reflect income earned on assets attributable to
Preferred shares.
(a) For the period January 31, 2001 (commencement of operations) through May
31, 2001.
(b) For the period November 16, 2001 (commencement of operations) through May
31, 2002.
(c) For the period September 25, 2002 (commencement of operations) through
November 30, 2002.
(d) For the six months ended November 30, 2002.
See accompanying notes to financial statements.
50-51 SPREAD
Build Your Wealth
AUTOMATICALLY
SIDEBAR TEXT: NUVEEN MAKES REINVESTING EASY. A PHONE CALL IS ALL IT TAKES TO SET
UP YOUR REINVESTMENT ACCOUNT.
NUVEEN CLOSED-END EXCHANGE-TRADED FUNDS DIVIDEND REINVESTMENT PLAN
Your Nuveen Closed-End Exchange-Traded Fund allows you to conveniently reinvest
dividends and/or capital gains distributions in additional fund shares.
By choosing to reinvest, you'll be able to invest money regularly and
automatically, and watch your investment grow through the power of tax-free
compounding. Just like dividends or distributions in cash, there may be times
when income or capital gains taxes may be payable on dividends or distributions
that are reinvested.
It is important to note that an automatic reinvestment plan does not ensure a
profit, nor does it protect you against loss in a declining market.
EASY AND CONVENIENT
To make recordkeeping easy and convenient, each month you'll receive a statement
showing your total dividends and distributions, the date of investment, the
shares acquired and the price per share, and the total number of shares you own.
HOW SHARES ARE PURCHASED
The shares you acquire by reinvesting will either be purchased on the open
market or newly issued by the Fund. If the shares are trading at or above net
asset value at the time of valuation, the Fund will issue new shares at the
then-current market price. If the shares are trading at less than net asset
value, shares for your account will be purchased on the open market. Dividends
and distributions received to purchase shares in the open market will normally
be invested shortly after the dividend payment date. No interest will be paid on
dividends and distributions awaiting reinvestment. Because the market price of
shares may increase before purchases are completed, the average purchase price
per share may exceed the market price at the time of valuation, resulting in the
acquisition of fewer shares than if the dividend or distribution had been paid
in shares issued by the Fund. A pro rata portion of any applicable brokerage
commissions on open market purchases will be paid by Plan participants. These
commissions usually will be lower than those charged on individual transactions.
FLEXIBILITY
You may change your distribution option or withdraw from the Plan at any time,
should your needs or situation change. Should you withdraw, you can receive a
certificate for all whole shares credited to your reinvestment account and cash
payment for fractional shares, or cash payment for all reinvestment account
shares, less brokerage commissions and a $2.50 service fee.
You can reinvest whether your shares are registered in your name, or in the name
of a brokerage firm, bank, or other nominee. Ask your investment advisor if his
or her firm will participate on your behalf. Participants whose shares are
registered in the name of one firm may not be able to transfer the shares to
another firm and continue to participate in the Plan.
The Fund reserves the right to amend or terminate the Plan at any time. Although
the Fund reserves the right to amend the Plan to include a service charge
payable by the participants, there is no direct service charge to participants
in the Plan at this time.
For more information on the Nuveen Automatic Reinvestment Plan or to enroll in
or withdraw from the Plan, speak with your financial advisor or call us at (800)
257-8787.
52
Fund
INFORMATION
BOARD OF TRUSTEES
Robert P. Bremner
Lawrence H. Brown
Anne E. Impellizzeri
Peter R. Sawers
William J. Schneider
Timothy R. Schwertfeger
Judith M. Stockdale
FUND MANAGER
Nuveen Advisory Corp.
333 West Wacker Drive
Chicago, IL 60606
CUSTODIAN
State Street Bank & Trust
Boston, MA
TRANSFER AGENT AND
SHAREHOLDER SERVICES
State Street Bank & Trust
Nuveen Funds
P.O. Box 43071
Providence, RI 02940-3071
(800) 257-8787
LEGAL COUNSEL
Morgan, Lewis &
Bockius LLP
Washington, D.C.
INDEPENDENT AUDITORS
Ernst & Young LLP
Chicago, IL
GLOSSARY OF TERMS USED IN THIS REPORT
AVERAGE ANNUAL TOTAL RETURN: This is a commonly used method to express an
investment's performance over a particular, usually multi-year time period. It
expresses the return (including change in NAV and reinvested dividends) that
would have been necessary on an annual basis to equal the investment's actual
performance over the time period being considered.
AVERAGE EFFECTIVE MATURITY: The average of all the maturities of the bonds in a
fund's portfolio, computed by weighting each maturity date (the date the
security comes due) by the market value of the security. This figure does not
account for the likelihood of prepayments or the exercise of call provisions.
LEVERAGE-ADJUSTED DURATION: Duration is a measure of a bond or bond fund's
sensitivity to changes in interest rates. Generally, the longer a bond or fund's
duration, the more the price of the bond or fund will change as interest rates
change. Leverage-adjusted duration takes into account the leveraging process for
a Fund and therefore is generally longer than the duration of the actual
portfolio of individual bonds that make up the Fund.
MARKET YIELD (ALSO KNOWN AS DIVIDEND YIELD OR CURRENT YIELD): An investment's
current annualized dividend divided by its current market price.
NET ASSET VALUE (NAV): A fund's NAV is calculated by subtracting the liabilities
of the fund from its total assets and then dividing the remainder by the number
of shares outstanding. Fund NAVs are calculated at the end of each business day.
TAXABLE-EQUIVALENT YIELD: The yield necessary from a fully taxable investment to
equal, on an after-tax basis, the yield of a municipal bond investment.
---------
Each Fund intends to repurchase shares of its own common or preferred stock in
the future at such times and in such amounts as is deemed advisable. No shares
were repurchased during the period ended November 30, 2002. Any future
repurchases will be reported to shareholders in the next annual or semiannual
report.
53
Serving Investors
FOR GENERATIONS
Photo of: John Nuveen, Sr.
For over a century, generations of Americans have relied on Nuveen Investments
to help them grow and keep the money they've earned. Financial advisors,
investors and their families have associated Nuveen Investments with quality,
expertise and dependability since 1898. That is why financial advisors have
entrusted the assets of more than 1.3 million investors to Nuveen.
With the know-how that comes from a century of experience, Nuveen continues to
build upon its reputation for quality. Now, financial advisors and investors can
count on Nuveen Investments to help them design customized solutions that meet
the far-reaching financial goals unique to family wealth strategies - solutions
that can translate into legacies.
To find out more about how Nuveen Investments' products and services can help
you preserve your financial security, talk with your financial advisor, or call
us at (800) 257-8787 for more information, including a prospectus where
applicable. Please read that information carefully before you invest.
Logo: NUVEEN Investments
Nuveen Investments o 333 West Wacker Drive
Chicago, IL 60606 o www.nuveen.com ESA-D-1102D