UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-21153
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Nuveen Maryland Dividend Advantage Municipal Fund 3
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(Exact name of registrant as specified in charter)
Nuveen Investments
333 West Wacker Drive
Chicago, IL 60606
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(Address of principal executive offices) (Zip code)
Kevin J. McCarthy
Nuveen Investments
333 West Wacker Drive
Chicago, IL 60606
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(Name and address of agent for service)
Registrant's telephone number, including area code: (312) 917-7700
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Date of fiscal year end: May 31
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Date of reporting period: May 31, 2007
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Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
ANNUAL REPORT
May 31, 2007
Nuveen Investments
MUNICIPAL CLOSED-END FUNDS
Photo of: Small child
NUVEEN MARYLAND
PREMIUM INCOME
MUNICIPAL FUND
NMY
NUVEEN MARYLAND
DIVIDEND ADVANTAGE
MUNICIPAL FUND
NFM
NUVEEN MARYLAND
DIVIDEND ADVANTAGE
MUNICIPAL FUND 2
NZR
NUVEEN MARYLAND
DIVIDEND ADVANTAGE
MUNICIPAL FUND 3
NWI
NUVEEN VIRGINIA
PREMIUM INCOME
MUNICIPAL FUND
NPV
NUVEEN VIRGINIA
DIVIDEND ADVANTAGE
MUNICIPAL FUND
NGB
NUVEEN VIRGINIA
DIVIDEND ADVANTAGE
MUNICIPAL FUND 2
NNB
IT'S NOT WHAT YOU EARN, IT'S WHAT YOU KEEP.(R)
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Chairman's
LETTER TO SHAREHOLDERS
Photo of: Timothy R. Schwertfeger
Timothy R. Schwertfeger
Chairman of the Board
ONCE AGAIN, I AM PLEASED TO REPORT THAT OVER THE TWELVE-MONTH PERIOD COVERED BY
THIS REPORT YOUR FUND CONTINUED TO PROVIDE YOU WITH ATTRACTIVE MONTHLY TAX-FREE
INCOME. FOR MORE DETAILS ABOUT THE MANAGEMENT STRATEGY AND PERFORMANCE OF YOUR
FUND, PLEASE READ THE PORTFOLIO MANAGER'S COMMENTS, THE DIVIDEND AND SHARE PRICE
INFORMATION, AND THE PERFORMANCE OVERVIEW SECTIONS OF THIS REPORT.
I ALSO WANTED TO TAKE THIS OPPORTUNITY TO REPORT SOME IMPORTANT NEWS ABOUT
NUVEEN INVESTMENTS. WE HAVE AGREED TO A "GROWTH BUYOUT" OFFER FROM A PRIVATE
EQUITY INVESTMENT FIRM. WHILE THIS MAY AFFECT THE CORPORATE STRUCTURE OF NUVEEN
INVESTMENTS, IT WILL HAVE NO IMPACT ON THE INVESTMENT OBJECTIVES OF THE FUNDS,
PORTFOLIO MANAGEMENT STRATEGIES OR THEIR DIVIDEND POLICIES. WE WILL PROVIDE YOU
WITH ADDITIONAL INFORMATION ABOUT THIS TRANSACTION AS MORE DETAILS BECOME
AVAILABLE.
FOR SOME TIME, I'VE USED THESE LETTERS TO REMIND YOU THAT MUNICIPAL BONDS CAN BE
AN IMPORTANT BUILDING BLOCK IN A WELL-BALANCED INVESTMENT PORTFOLIO. IN ADDITION
TO PROVIDING ATTRACTIVE TAX-FREE MONTHLY INCOME, A MUNICIPAL BOND INVESTMENT
LIKE YOUR FUND MAY HELP YOU ACHIEVE AND BENEFIT FROM GREATER PORTFOLIO
DIVERSIFICATION. PORTFOLIO DIVERSIFICATION IS A RECOGNIZED WAY TO TRY TO REDUCE
SOME OF THE RISK THAT COMES WITH INVESTING. FOR MORE INFORMATION ABOUT THIS
IMPORTANT INVESTMENT STRATEGY, I ENCOURAGE YOU TO CONTACT YOUR PERSONAL
FINANCIAL ADVISOR.
WE ALSO ARE PLEASED TO BE ABLE TO OFFER YOU A CHOICE CONCERNING HOW YOU RECEIVE
YOUR SHAREHOLDER REPORTS AND OTHER FUND INFORMATION. AS AN ALTERNATIVE TO MAILED
COPIES, YOU CAN SIGN UP TO RECEIVE FUTURE FUND REPORTS AND OTHER FUND
INFORMATION BY E-MAIL AND THE INTERNET. THE INSIDE FRONT COVER OF THIS REPORT
CONTAINS INFORMATION ON HOW YOU CAN SIGN UP.
WE ARE GRATEFUL THAT YOU HAVE CHOSEN US AS A PARTNER AS YOU PURSUE YOUR
FINANCIAL GOALS AND WE LOOK FORWARD TO CONTINUING TO EARN YOUR TRUST IN THE
MONTHS AND YEARS AHEAD. AT NUVEEN INVESTMENTS, OUR MISSION CONTINUES TO BE TO
ASSIST YOU AND YOUR FINANCIAL ADVISOR BY OFFERING INVESTMENT SERVICES AND
PRODUCTS THAT CAN HELP YOU TO SECURE YOUR FINANCIAL OBJECTIVES.
SINCERELY,
/S/ TIMOTHY R. SCHWERTFEGER
TIMOTHY R. SCHWERTFEGER
CHAIRMAN OF THE BOARD
July 16, 2007
Portfolio Manager's COMMENTS
Nuveen Investments Municipal Closed-End Funds
NMY, NFM, NZR, NWI,
NPV, NGB, NNB
Portfolio manager Cathryn Steeves reviews national and state economic and
municipal market environments, key investment strategies and the annual
performance of these seven Nuveen Funds. Cathryn, who joined Nuveen in 1996, has
managed the Maryland and Virginia Funds since July 2006.
WHAT FACTORS AFFECTED THE U.S. ECONOMIC AND MUNICIPAL MARKET ENVIRONMENTS DURING
THE 12-MONTH REPORTING PERIOD ENDED MAY 31, 2007?
Between June 1, 2006 and May 31, 2007, we saw interest rates at the short end of
the yield curve rise modestly, while longer rates generally declined. After
announcing one further rate increase in late June 2006, the Federal Reserve
ended its unprecedented series of 17 consecutive 0.25% rate hikes that brought
the fed funds rate to 5.25% over a two-year span. During the remaining 11 months
of this reporting period, the Fed left monetary policy unchanged as it kept
close tabs on inflationary pressures and the pace of economic growth. Over this
same 12-month period, the yield on the benchmark 10-year U.S. Treasury note
dropped 22 basis points to end May 2007 at 4.89%. In the municipal market, the
yield on the Bond Buyer 25 Revenue Bond Index, a widely followed measure of
longer-term municipal market rates, fell to 4.57% at the end of May 2007, a
decline of 65 basis points from the end of May 2006. As interest rates on
shorter-term municipal bonds reached the levels of longer-term bonds, the
municipal yield curve continued to flatten and bonds with longer durations1
generally outperformed those with shorter durations during this period.
Although many market observers had expected to see the Fed act on rates in early
2007, slowing economic growth, higher energy prices and a slumping housing
market helped to keep the Fed on the sidelines. The U.S. gross domestic product
(GDP), a closely watched measure of economic growth, operated at below-trend
levels through most of 2006, expanding at a rate of 2.6% in the second quarter
of 2006, 2.0% in the third quarter, and 2.5% in the fourth quarter (all GDP
numbers annualized). In the first quarter of 2007, the rate of GDP growth slowed
even further to 0.7%, the weakest since 2002, due in part to a 16% decline in
residential investment. While the Consumer Price Index (CPI) registered a 2.7%
year-over-year gain as of May 2007, the increase in this inflation gauge for the
first five months of 2007 was 5.5%, driven largely by a 36% gain in energy
prices. By comparison, the core CPI (which excludes food and energy prices) rose
2.1% as of May 2007, close to the Fed's unofficial target of 2.0% or lower. The
labor market remained tight with a national unemployment rate of 4.5% in May
2007, down from 4.6% in May 2006.
1 Duration is a measure of a bond's price sensitivity as interest rates
change, with longer duration bonds displaying more sensitivity to these
changes than bonds with shorter durations.
4
Over the 12 months ended May 2007, municipal bond issuance nationwide totaled
$423.4 billion, up 15% from the previous 12 months. This total reflected a sharp
increase in supply during the first five months of 2007, when $173.7 billion in
new securities came to market, up almost 30% over the same period in 2006. A
major factor in 2007 volume was the 56% increase in advance refundings,2 driven
by attractive borrowing rates for issuers. The strength and diversity of the
demand for municipal bonds were as important as the increase in supply, as the
surge in issuance was easily absorbed by retail investors, institutional
investors such as hedge funds and arbitragers, and overseas investors, all of
whom continued to participate in the market.
HOW WERE ECONOMIC AND MARKET CONDITIONS IN MARYLAND AND VIRGINIA DURING THIS
PERIOD?
During this reporting period, Maryland's economic growth continued to be driven
by the government sector, professional and business services, education and
health care. Given the state's proximity to Washington D.C., the federal
government remained an important element in the state economy, with Fort George
G. Meade ranking as Maryland's largest employer. Manufacturing employment in
Maryland was about half the national average, which was a positive factor over
the past few years as U.S. manufacturing struggled. Population trends in the
state were on par with the national average over the past six years. In May
2007, Maryland's jobless rate was 3.6%, down from 3.9% in May 2006, putting
unemployment in the state at its lowest level since March 2001. Maryland's $29.2
billion fiscal 2007 budget provided additional funding for schools, health care,
and higher education without adding new taxes. Although revenues lagged initial
projections, the state's rainy day fund was expected to end fiscal 2007 with a
balance of $1.4 billion. The $30 billion fiscal 2008 budget called for an
increase of only 2.5% in spending and proposed drawing down the state's rainy
day reserve to achieve balance. As of May 2007, Moody's and Standard & Poor's
maintained their ratings on Maryland general obligation debt at Aaa/AAA with
stable outlooks. During the 12 months ended May 31, 2007, issuance in the state
totaled $6.4 billion, an increase of 35% over the previous 12-month period. For
January-May 2007, Maryland saw $2.9 billion in new municipal paper, up 13% from
the first five months of 2006. Although Maryland's debt levels have declined
from their peaks in the 1980s, the state's debt per capita and debt as a
percentage of personal income remained above national medians, according to
Moody's.
Virginia's economy continued to be led by the government sector and professional
and business services. Recent reductions in military spending were partially
responsible for a slower pace of economic growth in the commonwealth during this
period, following several years of superior performance. Despite the cutbacks,
federal spending remained a vital factor in the commonwealth's economy, with
federal employment in Virginia accounting for more than twice as many jobs as
the national average. While technology continued to play a growing economic
role, manufacturing, especially in the textile industry, remained a drag on
Virginia's economy. Population growth in the commonwealth over the past six
years remained well above the national average. Job growth, while healthy, was
concentrated in three areas: Northern Virginia, Virginia
2 Advance refundings, also known as pre-refundings or refinancings, occur
when an issuer sells new bonds and uses the proceeds to fund principal and
interest payments of older existing bonds. This process often results in
lower borrowing costs for bond issuers.
5
Beach, and Richmond. In May 2007, Virginia's unemployment rate was the fifth
lowest in the nation at 2.9%, on par with the May 2006 reading. The
commonwealth's 2007-2008 biennium budget, which called for general fund
expenditures of $34.8 billion over the two-year period, increased spending on
education and transportation projects while introducing no major tax hikes.
General fund revenues for fiscal 2007 were projected to come in $340 million
ahead of plan. In October 2006, Moody's reconfirmed its rating on Virginia
General Obligation (GO) debt at Aaa with a stable outlook, and S&P confirmed its
AAA rating with a stable outlook. During the 12 months ended May 31, 2007,
issuance in Virginia totaled $9.7 billion, an increase of 58% over the previous
12 months. The first five months of 2007 saw issuance rise even more sharply to
$4.6 billion, up 170% from the first five months of 2006. Some of this increase
was due to a major refinancing deal, totaling $1.1 billion, involving Virginia
tobacco bonds, which took place in April 2007. According to Moody's, Virginia's
per capita debt and debt as a percentage of personal income remained lower than
national medians.
WHAT KEY STRATEGIES WERE USED TO MANAGE THESE FUNDS DURING THIS REPORTING
PERIOD?
In the municipal bond interest rate environment of the past 12 months, where the
flattening yield curve remained a dominant market factor, we continued to
emphasize a disciplined approach to duration management and yield curve
positioning. As part of this approach, our purchases for the Funds' portfolios
focused mainly on attractively priced bonds maturing in 20 to 30 years. Overall,
we believed that the bonds we purchased during this period represented
opportunities to add value, manage duration, and enhance performance and income.
Our duration management strategies during this period also included the use of
inverse floating rate trusts,3 a type of derivative financial instrument, in all
seven of the Maryland and Virginia Funds. The inverse floaters had the dual
benefit of increasing the Funds' distributable income and bringing their
durations closer to our preferred strategic target. As discussed in past
shareholder reports, we have also used forward interest rate swaps (another type
of derivative instrument) as a duration management tool when we believed this
would support our overall investment performance strategies. The goal of this
strategy helped us manage total return performance in relation to our strategic
target without having a negative impact on the Funds' income streams or common
share dividends over the short term. During this reporting period, we deployed
this strategy in NFM, NWI, and NPV, with swaps remaining in place in NFM and NPV
as of May 31, 2007.
We also continued to emphasize individual credit selection. As previously
mentioned, both Maryland and Virginia saw increased supply during this period,
and steady new issuance as well as a number of major advance refundings and debt
restructurings provided us with a greater variety of bonds and sectors from
which to choose. Since Maryland and Virginia are high-quality states, much of
the new supply was highly rated and/or insured. However, we also found purchase
opportunities among lower credit quality bonds that we considered attractive
based on their strong performance and the support they provide for the Funds'
income streams.
3 An inverse floating rate trust is a financial instrument designed to pay
long-term tax-exempt interest at a rate that varies inversely with a
short-term tax-exempt interest rate index. For the Nuveen Funds, the index
typically used is the Securities Industry and Financial Markets (SIFM)
Municipal Swap Index (previously referred to as the Bond Market Association
Index or BMA). Inverse floaters, including those inverse floating rate
securities in which the Funds invested during the 12-month period, are
further defined within the "Notes to Financial Statements" and "Glossary of
Terms Used in This Report" sections of this shareholder report.
6
During this period, we added to all of the Funds' positions in health care
(including both hospitals and long-term/continuing care facilities), higher
education, and single-family housing. In the three Virginia Funds, we purchased
bonds issued by the Metropolitan Washington DC Airports Authority and
participated in the new offering of Virginia tobacco credits that were issued as
part of the advance refunding of the commonwealth's older tobacco bonds. We also
continued to build positions in bonds that could help us increase the Funds'
income-generating potential and manage duration, including zero coupon and
non-callable bonds.
To maintain the Funds' durations within our preferred strategic range and to
generate cash for purchases, we selectively sold some of the Funds' holdings
with shorter durations. In NMY, NFM, and NWI, we found opportunities to sell a
few of our holdings that were purchased when yields were lower and replace them
with similar, newer credits that yielded comparatively more. This allowed us to
maintain the Funds' current portfolio characteristics while strengthening their
future income streams.
HOW DID THE FUNDS PERFORM?
Individual results for the Nuveen Maryland and Virginia Funds, as well as
relevant index and peer group information, are presented in the accompanying
table.
Total Returns on Net Asset Value
For periods ended 5/31/07
Annualized
---------------------------------------------
1-Year 5-Year 10-Year
Maryland Funds
NMY 5.35% 6.63% 6.42%
NFM 5.74% 6.66% NA
NZR 5.56% 6.99% NA
NWI 5.75% NA NA
Virginia Funds
NPV 4.89% 6.29% 6.56%
NGB 5.82% 7.10% NA
NNB 5.60% 7.25% NA
Lehman Brothers
Municipal Bond Index4 4.84% 4.94% 5.61%
Lipper Other States
Municipal Debt Funds Average5 5.25% 6.68% 6.36%
For the 12 months ended May 31, 2007, the total return on NAV for all seven of
these Funds exceeded the return on the national Lehman Brothers Municipal Bond
Index. NMY, NFM, NZR, NWI, NGB, and NNB also outperformed the average return for
the Lipper Other States Municipal Debt Funds Average, while NPV trailed this
Lipper average. Shareholders should note that the performance of the Lipper
Other States Municipal Debt Funds Average represents the overall average of
returns for
Past performance is not predictive of future results. Current performance may be
higher or lower than the data shown. Returns do not reflect the deduction of
taxes that shareholders may have to pay on Fund distributions or upon the sale
of Fund shares.
For additional information, see the individual Performance Overview for your
Fund in this report.
4 The Lehman Brothers Municipal Bond Index is an unleveraged, unmanaged
national index comprising a broad range of investment-grade municipal
bonds. Results for the Lehman index do not reflect any expenses.
5 The Lipper Other States Municipal Debt Funds Average is calculated using
the returns of all closed-end funds in this category for each period as
follows: 1 year, 46; 5 years, 27; and 10 years, 18. Fund and Lipper returns
assume reinvestment of dividends.
7
funds from 10 different states with a wide variety of municipal market
conditions, making direct comparisons less meaningful.
Factors that influenced the Funds' returns during this period included yield
curve and duration positioning, exposure to lower-rated credits, individual
security selection and sector allocations, and advance refunding activity.
As the yield curve continued to flatten over the course of this period,
municipal bonds with maturities of 15 years and longer, as measured by the
Lehman Brothers Municipal Bond Index, performed best, generally outpacing
municipal bonds with shorter maturities, especially those with maturities of
less than 5 years. While our strategies during this period included adding
longer bonds to our portfolios, most of these Funds remained slightly short of
our strategic target in terms of their holdings of bonds in the longest part of
the yield curve, which was negative for performance. However, this was offset by
the Funds' heavier exposure to the intermediate part of the curve, which
performed well, and their lower allocations to the shorter part of the curve,
which underperformed the general municipal market. The Funds' yield curve and
duration positioning during this period was a positive contributor to their
performance.
With bonds rated BBB or lower and non-rated bonds generally outperforming other
credit quality sectors during this period, all of these Funds benefited from
their weightings in lower-quality credits. The outperformance of these credit
sectors was largely the result of investor demand for the higher yields
typically associated with lower-rated bonds, which drove up their value. As
Dividend Advantage Funds, NFM, NZR, NWI, NGB, and NNB can invest up to 20% of
their assets in below- investment-grade securities (bonds rated BB or below) or
in non-rated bonds judged to be in the same credit quality category. The
exposure of these five Funds to the subinvestment-grade sector, together with a
fee reimbursement agreement, contributed to the outperformance of these Funds
relative to NMY and NPV, which overall represented higher credit quality. In
addition, NFM and NWI also had the heaviest weightings of bonds rated BBB across
all seven of these Funds, which further benefited their performance.
Among the lower-rated holdings making positive contributions to the Funds'
returns for this period were industrial development bonds and health care
(including hospitals) credits, which ranked as the top performing revenue
sectors in the Lehman Brothers Municipal Bond Index. Lower-rated bonds backed by
the 1998 master tobacco settlement agreement performed well. As of May 31, 2007,
NMY, NFM, NZR, and NWI held approximately 1.4% to 2.4% of their portfolios in
lower-rated tobacco bonds, while the Virginia Funds' lower-rated tobacco
allocations ranged from 2.3% in NPV to 3.2% in NNB and 4.5% in NGB.
8
Additional sectors that helped the Funds' performances during this period
included tax-supported bonds and, in the Maryland Funds, higher education and
multifamily housing credits. The Funds' holdings of zero coupon bonds also
provided a positive impact on performance for this period.
We continued to see positive contributions from advance refunding activity,
which benefited the Funds through price appreciation and enhanced credit
quality. All of the Maryland and Virginia Funds (with the exception of NZR) saw
healthy levels of pre-refunding activity. As previously mentioned, one of the
more significant advance refundings during this period involved BBB rated
tobacco bonds issued by Virginia's Tobacco Settlement Financing Corporation,
which were upgraded to AAA as a result of the refundings.
At the same time, holdings of older, previously pre-refunded bonds tended to
underperform the general municipal market during this period, due primarily to
their shorter effective maturities. Among the Virginia Funds, NPV held
appreciably heavier weightings of older pre-refunded bonds than NGB or NNB. In
addition, the performance of the Maryland Funds was impacted by their holdings
of single-family housing bonds, which underperformed during this period as the
municipal market rallied.
We should also note that all of these Funds continued to use financial leverage
to provide opportunities for additional income and total return for common
shareholders. This strategy can also add volatility to a Fund's NAV and share
price. Over this period, the use of leverage was generally a positive factor in
the Funds' total return performance, especially in relation to that of the
unleveraged Lehman Brothers Municipal Bond Index.
9
Dividend and Share Price
INFORMATION
As previously noted, these seven Funds use leverage to potentially enhance
opportunities for additional income for common shareholders. Although the Funds'
use of this strategy continued to provide incremental income, the extent of this
benefit was reduced during this period due to high short-term interest rates
that, in turn, kept the Funds' borrowing costs high. The Funds' income streams
were also impacted as the proceeds from older, higher-yielding bonds that
matured or were called were reinvested into bonds currently available in the
market, which generally offered lower yields. The combination of these factors
resulted in one monthly dividend reduction in NMY, NFM, NZR, NPV and NNB and two
in NGB over the 12-month period ended May 31, 2007. The dividend of NWI remained
stable throughout this reporting period.
Due to normal portfolio activity, common shareholders of the following Funds
received capital gains or net ordinary income distributions at the end of
December 2006 as follows:
Short-Term Capital Gains
Long-Term Capital Gains and/or Ordinary Income
(per share) (per share)
NZR -- $0.0014
NPV $0.0215 --
All of the Funds in this report seek to pay stable dividends at rates that
reflect each Fund's past results and projected future performance. During
certain periods, each Fund may pay dividends at a rate that may be more or less
than the amount of net investment income actually earned by the Fund during the
period. If a Fund has cumulatively earned more than it has paid in dividends, it
holds the excess in reserve as undistributed net investment income (UNII) as
part of the Fund's NAV. Conversely, if a Fund has cumulatively paid dividends in
excess of its earnings, the excess constitutes negative UNII that is likewise
reflected in the Fund's NAV. Each Fund will, over time, pay all of its net
investment income as dividends to shareholders. As of May 31, 2007, all of the
Funds in this report except NPV had positive UNII balances for tax purposes and
negative UNII balances for financial statement purposes. NPV had a positive UNII
balance for tax purposes and a positive UNII balance for financial statement
purposes.
10
As of May 31, 2007, the Funds' share prices were trading at premiums or
discounts to their NAVs as shown in the accompanying chart:
5/31/07 12-Month Average
Premium Premium/Discount
NMY +1.85% -0.50%
NFM +4.30% +6.02%
NZR +3.85% +5.89%
NWI +1.80% -2.07%
NPV +2.35% +1.39%
NGB +16.89% +13.29%
NNB +10.94% +7.31%
11
NMY
Performance
OVERVIEW
Nuveen Maryland Premium Income Municipal Fund
as of 5-31-07
Pie Chart:
Credit Quality (as a % of total investments)
AAA/U.S. Guaranteed 54%
AA 23%
A 8%
BBB 10%
BB or Lower 3%
N/R 2%
Bar Chart:
Monthly Tax-Free Dividends Per Share -- 2006-2007
Jun 0.058
Jul 0.058
Aug 0.058
Sep 0.055
Oct 0.055
Nov 0.055
Dec 0.055
Jan 0.055
Feb 0.055
Mar 0.055
Apr 0.055
May 0.055
Line Chart:
SHARE PRICE PERFORMANCE
Weekly Closing Price
Jun 1, 2006 14.48
14.5
14.2
14.29
14.6
14.34
14.29
14.32
14.44
14.72
14.7
14.8499
14.88
15.1
14.66
14.65
14.74
14.6
14.58
14.34
14.31
14.4
14.63
14.58
14.63
14.63
14.67
14.82
14.43
14.34
14.46
14.42
14.59
14.49
14.59
14.45
14.51
14.65
14.7
14.87
14.85
14.91
15.04
15.01
15.15
15.04
14.9
14.95
14.89
14.74
14.68
May 31, 2007 14.8999
FUND SNAPSHOT
------------------------------------
Common Share Price $14.84
------------------------------------
Common Share
Net Asset Value $14.57
------------------------------------
Premium/(Discount) to NAV 1.85%
------------------------------------
Market Yield 4.45%
------------------------------------
Taxable-Equivalent Yield1 6.49%
------------------------------------
Net Assets Applicable to
Common Shares ($000) $155,004
------------------------------------
Average Effective Maturity
on Securities (Years) 15.9
------------------------------------
Leverage-Adjusted Duration 8.28
------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 3/18/93)
------------------------------------
ON SHARE PRICE ON NAV
------------------------------------
1-Year 6.96% 5.35%
------------------------------------
5-Year 4.30% 6.63%
------------------------------------
10-Year 6.41% 6.42%
------------------------------------
INDUSTRIES
(as a % of total investments)
------------------------------------
Tax Obligation/General 22.7
------------------------------------
Health Care 15.4
------------------------------------
Education and Civic
Organizations 14.5
------------------------------------
U.S. Guaranteed 13.5
------------------------------------
Tax Obligation/Limited 11.9
------------------------------------
Housing/Multifamily 8.7
------------------------------------
Other 13.3
------------------------------------
1 Taxable-Equivalent Yield represents the yield that must be earned on a
fully taxable investment in order to equal the yield of the Fund on an
after-tax basis. It is based on a combined federal and state income tax
rate of 31.4%. When comparing this Fund to investments that generate
qualified dividend income, the Taxable-Equivalent Yield is lower.
12
NFM
Performance
OVERVIEW
Nuveen Maryland Dividend Advantage Municipal Fund
as of 5-31-07
Pie Chart:
Credit Quality (as a % of total investments)
AAA/U.S. Guaranteed 48%
AA 16%
A 15%
BBB 13%
BB or Lower 2%
N/R 6%
Bar Chart:
Monthly Tax-Free Dividends Per Share -- 2006-2007
Jun 0.0645
Jul 0.0645
Aug 0.0645
Sep 0.0615
Oct 0.0615
Nov 0.0615
Dec 0.0615
Jan 0.0615
Feb 0.0615
Mar 0.0615
Apr 0.0615
May 0.0615
Line Chart:
SHARE PRICE PERFORMANCE
Weekly Closing Price
Jun 1, 2006 15.45
15.25
15.33
15.5
15.94
16.03
15.6
15.71
15.61
15.6
15.48
15.48
15.88
16.15
16.15
15.99
15.9616
15.89
15.6
15.47
15.54
15.73
15.66
15.65
15.88
15.6
15.52
15.79
15.15
15.07
15.45
15.3
15.1
15.23
15.12
15.4
15.54
15.8
15.89
15.8
16.3
16.3
15.7
15.84
16.04
16.25
16.42
16.05
15.9
15.38
15.23
May 31, 2007 15.2
FUND SNAPSHOT
------------------------------------
Common Share Price $15.28
------------------------------------
Common Share
Net Asset Value $14.65
------------------------------------
Premium/(Discount) to NAV 4.30%
------------------------------------
Market Yield 4.83%
------------------------------------
Taxable-Equivalent Yield1 7.04%
------------------------------------
Net Assets Applicable to
Common Shares ($000) $61,261
------------------------------------
Average Effective Maturity
on Securities (Years) 18.32
------------------------------------
Leverage-Adjusted Duration 7.79
------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 1/23/01)
------------------------------------
ON SHARE PRICE ON NAV
------------------------------------
1-Year 5.51% 5.74%
------------------------------------
5-Year 5.40% 6.66%
------------------------------------
Since
Inception 5.83% 6.26%
------------------------------------
INDUSTRIES
(as a % of total investments)
------------------------------------
Health Care 20.7
------------------------------------
Tax Obligation/General 16.2
------------------------------------
U.S. Guaranteed 15.8
------------------------------------
Housing/Multifamily 12.3
------------------------------------
Tax Obligation/Limited 11.7
------------------------------------
Education and Civic
Organizations 9.0
------------------------------------
Other 14.3
------------------------------------
1 Taxable-Equivalent Yield represents the yield that must be earned on a
fully taxable investment in order to equal the yield of the Fund on an
after-tax basis. It is based on a combined federal and state income tax
rate of 31.4%. When comparing this Fund to investments that generate
qualified dividend income, the Taxable-Equivalent Yield is lower.
13
NZR
Performance
OVERVIEW
Nuveen Maryland Dividend Advantage Municipal Fund 2
as of 5-31-07
Pie Chart:
Credit Quality (as a % of total investments)
AAA/U.S.Guaranteed 49%
AA 21%
A 10%
BBB 11%
BB or Lower 3%
N/R 6%
Bar Chart:
Monthly Tax-Free Dividends Per Share -- 2006-20072
Jun 0.064
Jul 0.064
Aug 0.064
Sep 0.064
Oct 0.064
Nov 0.064
Dec 0.064
Jan 0.064
Feb 0.064
Mar 0.0615
Apr 0.0615
May 0.0615
Line Chart:
SHARE PRICE PERFORMANCE
Weekly Closing Price
Jun 1, 2006 15
14.87
15.25
15.25
16.3
16.17
15.87
15.89
15.52
15.8
15.7376
15.6
15.85
15.89
15.82
15.6
15.95
16.15
15.79
15.79
15.43
15.89
16.46
16.32
15.83
15.71
15.9024
15.95
15.59
15.99
16.24
15.85
15.51
15.74
16.01
16.2499
16.04
15.77
15.91
16.25
16.3101
16.12
16.09
16.18
16.38
16.06
16.25
15.94
15.94
15.71
15.5
May 31, 2007 15.449
FUND SNAPSHOT
------------------------------------
Common Share Price $15.38
------------------------------------
Common Share
Net Asset Value $14.81
------------------------------------
Premium/(Discount) to NAV 3.85%
------------------------------------
Market Yield 4.80%
------------------------------------
Taxable-Equivalent Yield1 7.00%
------------------------------------
Net Assets Applicable to
Common Shares ($000) $62,064
------------------------------------
Average Effective Maturity
on Securities (Years) 17.73
------------------------------------
Leverage-Adjusted Duration 7.71
------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 9/25/01)
------------------------------------
ON SHARE PRICE ON NAV
------------------------------------
1-Year 9.32% 5.56%
------------------------------------
5-Year 6.77% 6.99%
------------------------------------
Since
Inception 6.03% 6.31%
------------------------------------
INDUSTRIES
(as a % of total investments)
------------------------------------
Tax Obligation/General 23.6
------------------------------------
Health Care 16.8
------------------------------------
U.S. Guaranteed 12.4
------------------------------------
Tax Obligation/Limited 12.3
------------------------------------
Education and Civic
Organizations 11.6
------------------------------------
Housing/Multifamily 6.3
------------------------------------
Housing/Single Family 4.3
------------------------------------
Other 12.7
------------------------------------
1 Taxable-Equivalent Yield represents the yield that must be earned on a
fully taxable investment in order to equal the yield of the Fund on an
after-tax basis. It is based on a combined federal and state income tax
rate of 31.4%. When comparing this Fund to investments that generate
qualified dividend income, the Taxable-Equivalent Yield is lower. 2 The
Fund paid shareholders net ordinary income distributions in December 2006
of $.0014 per share.
14
NWI
Performance
OVERVIEW
Nuveen Maryland Dividend Advantage Municipal Fund 3
as of 5-31-07
Pie Chart:
Credit Quality (as a % of total investments)
AAA/U.S. Guaranteed 46%
AA 24%
A 8%
BBB 14%
BB or Lower 3%
N/R 5%
Bar Chart:
Monthly Tax-Free Dividends Per Share -- 2006-2007
Jun 0.0555
Jul 0.0555
Aug 0.0555
Sep 0.0555
Oct 0.0555
Nov 0.0555
Dec 0.0555
Jan 0.0555
Feb 0.0555
Mar 0.0555
Apr 0.0555
May 0.0555
Line Chart:
SHARE PRICE PERFORMANCE
Weekly Closing Price
Jun 1, 2006 14.16
13.86
13.5
13.37
13.51
13.67
13.4501
13.66
13.78
13.89
13.74
14.1
13.89
14.15
13.89
14.14
14.07
14.39
14.25
14.31
14.34
14.55
14.66
14.53
14.58
14.5
14.57
14.54
14.29
14.2999
14.28
14.3
14.4001
14.16
14.11
14.25
14.58
14.25
14.38
14.5
14.78
14.7928
14.9
14.87
15.05
14.91
14.7
14.82
14.65
14.63
14.75
May 31, 2007 14.85
FUND SNAPSHOT
------------------------------------
Common Share Price $14.74
------------------------------------
Common Share
Net Asset Value $14.48
------------------------------------
Premium/(Discount) to NAV 1.80%
------------------------------------
Market Yield 4.52%
------------------------------------
Taxable-Equivalent Yield1 6.59%
------------------------------------
Net Assets Applicable to
Common Shares ($000) $77,640
------------------------------------
Average Effective Maturity
on Securities (Years) 17.06
------------------------------------
Leverage-Adjusted Duration 8.23
------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 9/25/02)
------------------------------------
ON SHARE PRICE ON NAV
------------------------------------
1-Year 11.47% 5.75%
------------------------------------
Since
Inception 4.86% 5.39%
------------------------------------
INDUSTRIES
(as a % of total investments)
------------------------------------
Tax Obligation/Limited 22.1
------------------------------------
Health Care 15.2
------------------------------------
U.S. Guaranteed 15.1
------------------------------------
Tax Obligation/General 14.7
------------------------------------
Housing/Multifamily 9.8
------------------------------------
Education and Civic
Organizations 8.5
------------------------------------
Other 14.6
------------------------------------
1 Taxable-Equivalent Yield represents the yield that must be earned on a
fully taxable investment in order to equal the yield of the Fund on an
after-tax basis. It is based on a combined federal and state income tax
rate of 31.4%. When comparing this Fund to investments that generate
qualified dividend income, the Taxable-Equivalent Yield is lower.
15
NPV
Performance
OVERVIEW
Nuveen Virginia Premium Income Municipal Fund
as of 5-31-07
Pie Chart:
Credit Quality (as a % of total investments)
AAA/U.S. Guaranteed 61%
AA 24%
A 5%
BBB 6%
BB or Lower 1%
N/R 3%
Bar Chart:
Monthly Tax-Free Dividends Per Share -- 2006-20072
Jun 0.059
Jul 0.059
Aug 0.059
Sep 0.059
Oct 0.059
Nov 0.059
Dec 0.059
Jan 0.059
Feb 0.059
Mar 0.0565
Apr 0.0565
May 0.0565
Line Chart:
SHARE PRICE PERFORMANCE
Weekly Closing Price
Jun 1, 2006 14.81
14.88
14.5
14.26
14.45
14.5
14.31
14.65
14.8
14.96
15
14.78
14.76
14.89
14.89
14.99
15.3001
15.49
15.52
15.58
15.44
15.27
15.08
15.1
15.16
15.12
15.2
15.21
14.8
14.83
15.15
15.25
15.58
15.7501
15.76
16.1
16.69
15.95
15.9199
15.61
15.7
15.59
15.66
15.9
15.98
15.96
15.79
15.84
15.75
15.64
15.46
May 31, 2007 15.37
FUND SNAPSHOT
------------------------------------
Common Share Price $15.24
------------------------------------
Common Share
Net Asset Value $14.89
------------------------------------
Premium/(Discount) to NAV 2.35%
------------------------------------
Market Yield 4.45%
------------------------------------
Taxable-Equivalent Yield1 6.55%
------------------------------------
Net Assets Applicable to
Common Shares ($000) $132,900
------------------------------------
Average Effective Maturity
on Securities (Years) 15.25
------------------------------------
Leverage-Adjusted Duration 9.77
------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 3/18/93)
------------------------------------
ON SHARE PRICE ON NAV
------------------------------------
1-Year 7.18% 4.89%
------------------------------------
5-Year 4.34% 6.29%
------------------------------------
10-Year 6.08% 6.56%
------------------------------------
INDUSTRIES
(as a % of total investments)
------------------------------------
Tax Obligation/Limited 20.2
------------------------------------
U.S. Guaranteed 19.2
------------------------------------
Tax Obligation/General 14.7
------------------------------------
Health Care 14.5
------------------------------------
Transportation 5.8
------------------------------------
Water and Sewer 5.4
------------------------------------
Utilities 4.8
------------------------------------
Education and Civic
Organizations 3.4
------------------------------------
Other 12.0
------------------------------------
1 Taxable-Equivalent Yield represents the yield that must be earned on a
fully taxable investment in order to equal the yield of the Fund on an
after-tax basis. It is based on a combined federal and state income tax
rate of 32.1%. When comparing this Fund to investments that generate
qualified dividend income, the Taxable-Equivalent Yield is lower. 2 The
Fund paid shareholders a capital gains distribution in December 2006 of
$0.0215 per share.
16
NGB
Performance
OVERVIEW
Nuveen Virginia Dividend Advantage Municipal Fund
as of 5-31-07
Pie Chart:
Credit Quality (as a % of total investments)
AAA/U.S. Guaranteed 53%
AA 20%
A 7%
BBB 10%
BB or Lower 1%
N/R 9%
Bar Chart:
Monthly Tax-Free Dividends Per Share -- 2006-2007
Jun 0.0685
Jul 0.0685
Aug 0.0685
Sep 0.0655
Oct 0.0655
Nov 0.0655
Dec 0.0655
Jan 0.0655
Feb 0.0655
Mar 0.063
Apr 0.063
May 0.063
Line Chart:
SHARE PRICE PERFORMANCE
Weekly Closing Price
Jun 1, 2006 17.21
17.2
16.78
16.7
16.8
16.24
15.9
15.96
15.96
16.17
16.35
16.8
17
17.05
16.52
16.53
16.28
16.76
16.75
16.65
16.6
16.5
16.75
16.75
16.69
16.93
17.649
17.18
17.21
17.37
17.5
18
18.19
17.59
17.19
17.85
17.95
17.73
17.53
17.6
17.8
17.82
17.78
17.7
17.765
17.8
17.68
17.6
17.65
17.49
17.41
May 31, 2007 17.51
FUND SNAPSHOT
------------------------------------
Common Share Price $17.51
------------------------------------
Common Share
Net Asset Value $14.98
------------------------------------
Premium/(Discount) to NAV 16.89%
------------------------------------
Market Yield 4.32%
------------------------------------
Taxable-Equivalent Yield1 6.36%
------------------------------------
Net Assets Applicable to
Common Shares ($000) $46,908
------------------------------------
Average Effective Maturity
on Securities (Years) 18.06
------------------------------------
Leverage-Adjusted Duration 10.25
------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 1/26/01)
------------------------------------
ON SHARE PRICE ON NAV
------------------------------------
1-Year 7.24% 5.82%
------------------------------------
5-Year 8.58% 7.10%
------------------------------------
Since
Inception 7.98% 6.69%
------------------------------------
INDUSTRIES
(as a % of total investments)
------------------------------------
Tax Obligation/General 16.4
------------------------------------
Transportation 16.3
------------------------------------
U.S. Guaranteed 14.3
------------------------------------
Tax Obligation/Limited 12.9
------------------------------------
Health Care 8.8
------------------------------------
Long-Term Care 8.4
------------------------------------
Consumer Staples 4.5
------------------------------------
Education and Civic
Organizations 4.5
------------------------------------
Other 13.9
------------------------------------
1 Taxable-Equivalent Yield represents the yield that must be earned on a
fully taxable investment in order to equal the yield of the Fund on an
after-tax basis. It is based on a combined federal and state income tax
rate of 32.1%. When comparing this Fund to investments that generate
qualified dividend income, the Taxable-Equivalent Yield is lower.
17
NNB
Performance
OVERVIEW
Nuveen Virginia Dividend Advantage Municipal Fund 2
as of 5-31-07
Pie Chart:
Credit Quality (as a % of total investments)
AAA/U.S. Guaranteed 55%
AA 20%
A 7%
BBB 8%
BB or Lower 1%
N/R 9%
Bar Chart:
Monthly Tax-Free Dividends Per Share -- 2006-2007
Jun 0.065
Jul 0.065
Aug 0.065
Sep 0.065
Oct 0.065
Nov 0.065
Dec 0.065
Jan 0.065
Feb 0.065
Mar 0.0625
Apr 0.0625
May 0.0625
Line Chart:
SHARE PRICE PERFORMANCE
Weekly Closing Price
Jun 1, 2006 16.6
15.98
15.95
15.79
15.94
15.9501
15.8
15.95
15.66
15.79
15.8399
15.8
15.99
16.1
16.09
15.95
15.9
16.11
15.94
15.8
15.85
16.06
16.34
16.0101
16.3
16.25
16.35
16.6
16.52
16.7101
16.86
16.81
16.96
16.7
16.4
16.75
16.75
16.83
17.04
17.09
17.13
16.91
17.05
16.53
16.85
16.6
16.49
16.5
16.34
16.6
16.65
May 31, 2007 16.7
FUND SNAPSHOT
------------------------------------
Common Share Price $16.73
------------------------------------
Common Share
Net Asset Value $15.08
------------------------------------
Premium/(Discount) to NAV 10.94%
------------------------------------
Market Yield 4.48%
------------------------------------
Taxable-Equivalent Yield1 6.60%
------------------------------------
Net Assets Applicable to
Common Shares ($000) $86,382
------------------------------------
Average Effective Maturity
on Securities (Years) 17.55
------------------------------------
Leverage-Adjusted Duration 9.81
------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 11/15/01)
------------------------------------
ON SHARE PRICE ON NAV
------------------------------------
1-Year 6.96% 5.60%
------------------------------------
5-Year 8.26% 7.25%
------------------------------------
Since
Inception 7.75% 6.95%
------------------------------------
INDUSTRIES
(as a % of total investments)
------------------------------------
Tax Obligation/General 16.7
------------------------------------
U.S. Guaranteed 15.3
------------------------------------
Health Care 14.1
------------------------------------
Tax Obligation/Limited 12.3
------------------------------------
Water and Sewer 11.1
------------------------------------
Housing/Single Family 8.4
------------------------------------
Long-Term Care 8.3
------------------------------------
Other 13.8
------------------------------------
1 Taxable-Equivalent Yield represents the yield that must be earned on a
fully taxable investment in order to equal the yield of the Fund on an
after-tax basis. It is based on a combined federal and state income tax
rate of 32.1%. When comparing this Fund to investments that generate
qualified dividend income, the Taxable-Equivalent Yield is lower.
18
Report of
INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
THE BOARD OF TRUSTEES AND SHAREHOLDERS
NUVEEN MARYLAND PREMIUM INCOME MUNICIPAL
FUND NUVEEN MARYLAND DIVIDEND ADVANTAGE MUNICIPAL FUND
NUVEEN MARYLAND DIVIDEND ADVANTAGE MUNICIPAL FUND 2
NUVEEN MARYLAND DIVIDEND ADVANTAGE MUNICIPAL FUND 3
NUVEEN VIRGINIA PREMIUM INCOME MUNICIPAL FUND
NUVEEN VIRGINIA DIVIDEND ADVANTAGE MUNICIPAL FUND
NUVEEN VIRGINIA DIVIDEND ADVANTAGE MUNICIPAL FUND 2
We have audited the accompanying statements of assets and liabilities, including
the portfolios of investments, of Nuveen Maryland Premium Income Municipal Fund,
Nuveen Maryland Dividend Advantage Municipal Fund, Nuveen Maryland Dividend
Advantage Municipal Fund 2, Nuveen Maryland Dividend Advantage Municipal Fund 3,
Nuveen Virginia Premium Income Municipal Fund, Nuveen Virginia Dividend
Advantage Municipal Fund and Nuveen Virginia Dividend Advantage Municipal Fund 2
(the Funds) as of May 31, 2007, and the related statements of operations for the
year then ended, the statements of changes in net assets for each of the two
years in the period then ended, and the financial highlights for each of the
periods indicated therein. These financial statements and financial highlights
are the responsibility of the Funds' management. Our responsibility is to
express an opinion on these financial statements and financial highlights based
on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. We were
not engaged to perform an audit of the Funds' internal control over financial
reporting. Our audits included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Funds' internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall
financial statement presentation. Our procedures included confirmation of
securities owned as of May 31, 2007, by correspondence with the custodian and
brokers or by other appropriate auditing procedures where replies from brokers
were not received. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial positions of
Nuveen Maryland Premium Income Municipal Fund, Nuveen Maryland Dividend
Advantage Municipal Fund, Nuveen Maryland Dividend Advantage Municipal Fund 2,
Nuveen Maryland Dividend Advantage Municipal Fund 3, Nuveen Virginia Premium
Income Municipal Fund, Nuveen Virginia Dividend Advantage Municipal Fund and
Nuveen Virginia Dividend Advantage Municipal Fund 2 at May 31, 2007, the results
of their operations for the year then ended, changes in their net assets for
each of the two years in the period then ended, and their financial highlights
for each of the periods indicated therein in conformity with U.S. generally
accepted accounting principles.
/s/ Ernst & Young LLP
Chicago, Illinois
July 19, 2007
19
NMY
Nuveen Maryland Premium Income Municipal Fund
Portfolio of INVESTMENTS
as of 5-31-07
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
CONSUMER DISCRETIONARY - 1.4% (1.0% OF TOTAL INVESTMENTS)
$ 2,100 Baltimore, Maryland, Senior Lien Convention Center Hotel Revenue 9/16 at 100.00 AAA $ 2,245,005
Bonds, Series 2006A, 5.250%, 9/01/39 - XLCA Insured
------------------------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES - 2.0% (1.3% OF TOTAL INVESTMENTS)
3,005 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 5/12 at 100.00 BBB 3,144,733
Asset-Backed Refunding Bonds, Series 2002, 5.375%, 5/15/33
------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 21.8% (14.5% OF TOTAL INVESTMENTS)
1,250 Frederick County, Maryland, Educational Facilities Revenue Bonds, 9/16 at 100.00 BBB- 1,330,038
Mount Saint Mary's College, Series 2006, 5.625%, 9/01/38
1,000 Hartford County, Maryland, Economic Development Revenue Bonds, 4/14 at 100.00 A+ 1,053,860
Battelle Memorial Institute, Series 2004, 5.250%, 4/01/34
Maryland Economic Development Corporation, Utility
Infrastructure Revenue Bonds, University of Maryland - College
Park, Series 2001:
980 5.375%, 7/01/15 - AMBAC Insured 7/11 at 100.00 AAA 1,036,321
980 5.375%, 7/01/16 - AMBAC Insured 7/11 at 100.00 AAA 1,036,321
Maryland Health and Higher Educational Facilities Authority,
Revenue Bonds, Bullis School, Series 2000:
750 5.250%, 7/01/25 - FSA Insured 1/11 at 101.00 AAA 785,445
500 5.250%, 7/01/30 - FSA Insured 1/11 at 101.00 AAA 523,630
1,250 Maryland Health and Higher Educational Facilities Authority, 7/14 at 100.00 A- 1,300,738
Revenue Bonds, Goucher College, Series 2004, 5.125%, 7/01/34
1,460 Maryland Health and Higher Educational Facilities Authority, 6/11 at 100.00 Baa1 1,518,969
Revenue Bonds, Maryland Institute College of Art, Series 2001,
5.625%, 6/01/36
1,500 Maryland Health and Higher Educational Facilities Authority, 7/07 at 102.00 AA 1,531,950
Revenue Refunding Bonds, Johns Hopkins University,
Series 1997, 5.625%, 7/01/27
1,365 Montgomery County Revenue Authority, Maryland, Lease Revenue 5/15 at 100.00 A1 1,441,809
Bonds, Montgomery College Arts Center Project, Series 2005A,
5.000%, 5/01/19
9,445 Morgan State University, Maryland, Student Tuition and Fee No Opt. Call AAA 11,153,031
Revenue Refunding Bonds, Academic Fees and Auxiliary
Facilities, Series 1993, 6.100%, 7/01/20 - MBIA Insured
University of Maryland, Auxiliary Facility and Tuition Revenue Bonds,
Series 2003A:
4,000 5.000%, 4/01/15 4/13 at 100.00 AA 4,216,719
2,680 5.000%, 4/01/19 4/13 at 100.00 AA 2,810,248
1,685 University of Maryland, Auxiliary Facility and Tuition Revenue Bonds, 10/16 at 100.00 AA 1,792,789
Series 2006A, 5.000%, 10/01/22
Westminster, Maryland, Educational Facilities Revenue Bonds,
McDaniel College, Series 2006:
1,400 5.000%, 11/01/31 11/16 at 100.00 BBB+ 1,455,384
850 4.500%, 11/01/36 11/16 at 100.00 BBB+ 825,665
------------------------------------------------------------------------------------------------------------------------------------
31,095 Total Education and Civic Organizations 33,812,917
------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE - 23.3% (15.4% OF TOTAL INVESTMENTS)
1,525 Maryland Health and Higher Educational Facilities Authority, 7/14 at 100.00 A2 1,625,604
Revenue Bonds, Calvert Memorial Hospital, Series 2004,
5.500%, 7/01/36
20
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE (continued)
$ 3,250 Maryland Health and Higher Educational Facilities Authority, 7/12 at 100.00 Baa1 $ 3,454,035
Revenue Bonds, Carroll County General Hospital, Series 2002,
5.800%, 7/01/32
1,665 Maryland Health and Higher Educational Facilities Authority, 7/14 at 100.00 AA 1,710,371
Revenue Bonds, Civista Medical Center, Series 2005,
5.000%, 7/01/37 - RAAI Insured
1,740 Maryland Health and Higher Educational Facilities Authority, 7/17 at 100.00 Baa1 1,773,756
Revenue Bonds, Doctors Community Hospital, Series 2007A,
5.000%, 7/01/29
1,400 Maryland Health and Higher Educational Facilities Authority, 7/12 at 100.00 Baa1 1,428,784
Revenue Bonds, Frederick Memorial Hospital, Series 2002,
5.125%, 7/01/35
1,500 Maryland Health and Higher Educational Facilities Authority, 7/11 at 100.00 A+ 1,517,865
Revenue Bonds, Greater Baltimore Medical Center, Series 2001,
5.000%, 7/01/34
1,000 Maryland Health and Higher Educational Facilities Authority, 7/08 at 101.00 AAA 1,019,060
Revenue Bonds, Johns Hopkins Hospital, Howard County
General Hospital Acquisition, Series 1998, 5.000%, 7/01/19 -
MBIA Insured
2,000 Maryland Health and Higher Educational Facilities Authority, 6/09 at 101.00 A+ 2,068,060
Revenue Bonds, Kaiser Permanente System, Series 1998A,
5.375%, 7/01/15
3,800 Maryland Health and Higher Educational Facilities Authority, 7/13 at 100.00 Baa3 3,949,910
Revenue Bonds, Kennedy Krieger Institute, Series 2003,
5.500%, 7/01/33
2,040 Maryland Health and Higher Educational Facilities Authority, 7/14 at 100.00 A 2,091,632
Revenue Bonds, LifeBridge Health System, Series 2004A,
5.125%, 7/01/34
1,750 Maryland Health and Higher Educational Facilities Authority, 8/14 at 100.00 A3 1,830,063
Revenue Bonds, MedStar Health, Series 2004, 5.375%, 8/15/24
3,250 Maryland Health and Higher Educational Facilities Authority, 7/12 at 100.00 A3 3,427,190
Revenue Bonds, Union Hospital of Cecil County, Series 2002,
5.625%, 7/01/32
1,500 Maryland Health and Higher Educational Facilities Authority, 7/12 at 100.00 A 1,617,045
Revenue Bonds, University of Maryland Medical System,
Series 2002, 6.000%, 7/01/22
1,000 Maryland Health and Higher Educational Facilities Authority, 7/13 at 100.00 AAA 1,042,520
Revenue Bonds, University of Maryland Medical System,
Series 2004B, 5.000%, 7/01/24 - AMBAC Insured
4,200 Maryland Health and Higher Educational Facilities Authority, 7/16 at 100.00 AAA 4,394,880
Revenue Bonds, Western Maryland Health, Series 2006A,
5.000%, 7/01/34 - MBIA Insured (UB)
Prince George's County, Maryland, Revenue Bonds, Dimensions
Health Corporation, Series 1994:
3,080 5.375%, 7/01/14 7/07 at 100.00 B3 2,898,927
295 5.300%, 7/01/24 7/07 at 100.00 B3 257,379
------------------------------------------------------------------------------------------------------------------------------------
34,995 Total Health Care 36,107,081
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 13.1% (8.7% OF TOTAL INVESTMENTS)
1,450 Maryland Community Development Administration, FNMA 2/11 at 101.00 Aaa 1,513,336
Multifamily Development Revenue Bonds, Edgewater Village
Apartments, Series 2000B, 5.800%, 8/01/20
(Alternative Minimum Tax)
2,500 Maryland Community Development Administration, Housing 1/09 at 101.00 Aa2 2,535,225
Revenue Bonds, Series 1999A, 5.350%, 7/01/41 (Alternative
Minimum Tax)
880 Maryland Community Development Administration, Housing 1/10 at 100.00 Aa2 906,629
Revenue Bonds, Series 1999B, 6.250%, 7/01/32 (Alternative
Minimum Tax)
1,000 Maryland Economic Development Corporation, Senior Lien 10/13 at 100.00 B2 996,740
Student Housing Revenue Bonds, University of Maryland -
Baltimore, Series 2003A, 5.625%, 10/01/23
1,000 Maryland Economic Development Corporation, Student Housing 6/09 at 102.00 Baa3 1,039,160
Revenue Bonds, Collegiate Housing Foundation - Salisbury
State University, Series 1999A, 6.000%, 6/01/19
1,145 Maryland Economic Development Corporation, Student Housing 6/16 at 100.00 AAA 1,200,372
Revenue Refunding Bonds, University of Maryland College Park
Projects, Series 2006, 5.000%, 6/01/33 - CIFG Insured
3,830 Montgomery County Housing Opportunities Commission, Maryland, 7/08 at 101.00 Aaa 3,887,910
FNMA/FHA-Insured Multifamily Housing Development Bonds,
Series 1998A, 5.200%, 7/01/30
21
NMY
Nuveen Maryland Premium Income Municipal Fund (continued)
Portfolio of INVESTMENTS as of 5-31-07
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY (continued)
$ 360 Montgomery County Housing Opportunities Commission, Maryland, 7/07 at 100.00 Aa2 $ 360,490
GNMA/FHA-Insured Multifamily Housing Revenue Bonds,
Series 1995A, 5.900%, 7/01/15
1,500 Montgomery County Housing Opportunities Commission, Maryland, 7/07 at 101.00 Aaa 1,520,445
Multifamily Housing Development Bonds, Series 1996B,
5.900%, 7/01/26
2,000 Montgomery County Housing Opportunities Commission, Maryland, 7/10 at 100.00 Aaa 2,081,440
Multifamily Housing Development Bonds, Series 2000A,
6.100%, 7/01/30
540 Prince George's County Housing Authority, Maryland, GNMA 9/09 at 102.00 AAA 561,573
Collateralized Mortgage Revenue Bonds, University Landing
Apartments, Series 1999, 6.100%, 3/20/41 (Alternative
Minimum Tax)
Prince George's County Housing Authority, Maryland, GNMA
Collateralized Mortgage Revenue Refunding Bonds, Overlook
Apartments, Series 1995A:
2,000 5.700%, 12/20/15 6/07 at 101.00 AAA 2,016,640
1,670 5.750%, 12/20/19 6/07 at 101.00 AAA 1,682,625
------------------------------------------------------------------------------------------------------------------------------------
19,875 Total Housing/Multifamily 20,302,585
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 5.9% (3.9% OF TOTAL INVESTMENTS)
1,195 Maryland Community Development Administration, Department 9/15 at 100.00 Aa2 1,205,002
of Housing and Community Development, Residential Revenue
Bonds, Series 2006F, 4.900%, 9/01/26 (Alternative Minimum Tax)
4,100 Maryland Community Development Administration, Department 3/16 at 100.00 Aa2 4,128,740
of Housing and Community Development, Residential Revenue
Bonds, Series 2006I, 4.875%, 9/01/26 (Mandatory put 3/01/22)
(Alternative Minimum Tax)
1,630 Maryland Community Development Administration, Department 9/16 at 100.00 Aa2 1,635,298
of Housing and Community Development, Residential Revenue
Bonds, Series 2006L, 4.900%, 9/01/31 (Alternative Minimum Tax)
1,200 Maryland Community Development Administration, Housing and 3/17 at 100.00 Aa2 1,191,432
Community Development Residential Revenue Bonds,
Series 2007D, 4.850%, 9/01/37 (WI/DD, Settling 6/20/07)
(Alternative Minimum Tax)
600 Maryland Community Development Administration, Residential 9/15 at 100.00 Aa2 600,570
Revenue Bonds, Series 2006B, 4.750%, 9/01/25 (Alternative
Minimum Tax)
15 Prince George's County Housing Authority, Maryland, 8/10 at 100.00 AAA 15,422
FHLMC/FNMA/GNMA Collateralized Single Family Mortgage
Revenue Bonds, Series 2000A, 6.150%, 8/01/19 (Alternative
Minimum Tax)
320 Puerto Rico Housing Finance Authority, Mortgage-Backed 6/13 at 100.00 AAA 321,802
Securities Program Home Mortgage Revenue Bonds,
Series 2003A, 4.875%, 6/01/34 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
9,060 Total Housing/Single Family 9,098,266
------------------------------------------------------------------------------------------------------------------------------------
INDUSTRIALS - 0.7% (0.4% OF TOTAL INVESTMENTS)
1,010 Maryland Economic Development Corporation, Solid Waste 4/12 at 101.00 BBB 1,002,274
Disposal Revenue Bonds, Waste Management Inc., Series 2002,
4.600%, 4/01/16 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
LONG-TERM CARE - 2.6% (1.7% OF TOTAL INVESTMENTS)
1,955 Baltimore County, Maryland, Revenue Bonds, Oak Crest Village, 1/17 at 100.00 BBB+ 1,979,418
Series 2007A, 5.000%, 1/01/37
1,000 Carroll County, Maryland, Revenue Refunding Bonds, EMA 1/09 at 101.00 AA 1,032,100
Obligated Group, Series 1999A, 5.625%, 1/01/25 - RAAI Insured
1,065 Maryland Health and Higher Educational Facilities Authority, 7/17 at 100.00 BBB+ 1,053,754
Revenue Bonds, Mercy Ridge Retirement Community,
Series 2007, 4.750%, 7/01/34
------------------------------------------------------------------------------------------------------------------------------------
4,020 Total Long-Term Care 4,065,272
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 34.2% (22.7% OF TOTAL INVESTMENTS)
2,030 Anne Arundel County, Maryland, General Obligation Bonds, 4/14 at 100.00 AAA 2,161,463
Series 2004, 5.000%, 4/01/16
Anne Arundel County, Maryland, General Obligation Bonds,
Series 2006:
1,310 5.000%, 3/01/21 3/16 at 100.00 AAA 1,396,368
1,000 5.000%, 3/01/21 3/16 at 100.00 AAA 1,065,930
685 Anne Arundel County, Maryland, Water and Sewer Revenue Bonds, 3/16 at 100.00 AAA 737,313
Series 2006, 5.000%, 3/01/17
22
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL (continued)
Baltimore County, Maryland, Metropolitan District Special Assessment
Bonds, 67th Issue:
$ 2,500 5.000%, 6/01/25 6/11 at 101.00 AAA $ 2,604,325
3,500 5.000%, 6/01/26 6/11 at 101.00 AAA 3,635,695
1,000 Baltimore, Maryland, Consolidated General Obligation Public No Opt. Call AA- 1,045,140
Improvement Bonds, Series 1989B, 7.150%, 10/15/08
1,540 Baltimore, Maryland, General Obligation Consolidated Public 10/14 at 100.00 AAA 1,626,748
Improvement Bonds, Series 2004A, 5.000%, 10/15/22 -
AMBAC Insured
700 Carroll County, Maryland, Consolidated Public Improvement Bonds, 12/15 at 100.00 AA 755,097
Series 2005A, 5.000%, 12/01/16
Charles County, Maryland, Consolidated General Obligation Public
Improvement Bonds, Series 2006:
2,185 5.000%, 3/01/14 No Opt. Call AA 2,330,587
820 5.000%, 3/01/16 No Opt. Call AA 884,509
1,500 Frederick County, Maryland, General Obligation Public Facilities No Opt. Call AA 1,642,260
Bonds, Series 2006, 5.000%, 11/01/20
615 Frederick County, Maryland, Special Obligation Bonds, Villages of 7/10 at 102.00 AA 653,597
Lake Linganore Community Development Authority, Series 2001A,
5.700%, 7/01/29 - RAAI Insured
Howard County, Maryland, Consolidated Public Improvement Bonds,
Series 2004B:
735 5.000%, 8/15/16 2/14 at 100.00 AAA 782,393
1,625 5.000%, 8/15/17 2/14 at 100.00 AAA 1,729,390
1,180 5.000%, 8/15/19 2/14 at 100.00 AAA 1,248,735
1,725 Howard County, Maryland, Metropolitan District Refunding Bonds, 2/12 at 100.00 AAA 1,822,238
Series 2002A, 5.250%, 8/15/18
1,190 Maryland National Capital Park Planning Commission, 1/14 at 100.00 AA+ 1,260,710
Prince George's County, General Obligation Bonds, Park
Acquisition and Development, Series 2004EE-2, 5.000%, 1/15/17
2,500 Maryland, General Obligation Bonds, Series 2005, 5.000%, 8/01/17 8/15 at 100.00 AAA 2,685,925
3,520 Montgomery County, Maryland, Consolidated General Obligation No Opt. Call AAA 3,811,350
Public Improvement Bonds, Series 2006, 5.000%, 5/01/16
Montgomery County, Maryland, Consolidated General Obligation
Public Improvement Refunding Bonds, Series 2001:
1,750 5.250%, 10/01/13 10/11 at 101.00 AAA 1,863,103
2,000 5.250%, 10/01/18 10/11 at 101.00 AAA 2,118,980
1,000 Prince George's County, Maryland, General Obligation Consolidated 12/11 at 101.00 AAA 1,063,840
Public Improvement Bonds, Series 2001, 5.250%, 12/01/20 -
FGIC Insured
2,000 Prince George's County, Maryland, General Obligation Consolidated 9/12 at 101.00 AA+ 1,988,440
Public Improvement Bonds, Series 2002, 4.100%, 9/15/19
5,770 Prince George's County, Maryland, General Obligation Consolidated 10/13 at 100.00 AA+ 6,081,464
Public Improvement Bonds, Series 2003A, 5.000%, 10/01/18
Washington Suburban Sanitary District, Montgomery and
Prince George's Counties, Maryland, Sewerage Disposal Bonds,
Series 2005:
2,000 5.000%, 6/01/16 6/15 at 100.00 AAA 2,150,940
1,235 5.000%, 6/01/23 6/15 at 100.00 AAA 1,309,730
1,235 5.000%, 6/01/24 6/15 at 100.00 AAA 1,308,001
1,235 5.000%, 6/01/25 6/15 at 100.00 AAA 1,306,272
------------------------------------------------------------------------------------------------------------------------------------
50,085 Total Tax Obligation/General 53,070,543
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 17.9% (11.9% OF TOTAL INVESTMENTS)
Baltimore Board of School Commissioners, Maryland, Revenue
Bonds, City Public School System, Series 2003A:
1,500 5.000%, 5/01/16 5/13 at 100.00 AA+ 1,584,765
1,000 5.000%, 5/01/18 5/13 at 100.00 AA+ 1,051,920
2,900 Baltimore, Maryland, Project Revenue Bonds, Series 2006, 7/16 at 100.00 AAA 3,056,803
5.000%, 7/01/31 - AMBAC Insured
23
NMY
Nuveen Maryland Premium Income Municipal Fund (continued)
Portfolio of INVESTMENTS as of 5-31-07
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED (continued)
$ 300 Baltimore, Maryland, Special Obligation Bonds, North Locust 9/15 at 101.00 N/R $ 311,991
Point Project, Series 2005, 5.500%, 9/01/34
900 Hyattsville, Maryland, Special Obligation Bonds, University Town 7/14 at 102.00 N/R 950,436
Center Project, Series 2004, 5.750%, 7/01/34
Maryland Department of Transportation, Certificates of Participation,
Mass Transit Administration Project, Series 2000:
875 5.500%, 10/15/19 (Alternative Minimum Tax) 10/10 at 101.00 AA+ 919,249
925 5.500%, 10/15/20 (Alternative Minimum Tax) 10/10 at 101.00 AA+ 971,777
4,250 Maryland Department of Transportation, Consolidated Transportation No Opt. Call AAA 4,730,249
Revenue Bonds, Series 2002, 5.500%, 2/01/16
1,875 Maryland Economic Development Corporation, Lease Revenue 6/12 at 100.50 AA+ 2,002,425
Bonds, Department of Transportation Headquarters Building,
Series 2002, 5.375%, 6/01/19
1,700 Maryland Stadium Authority, Lease Revenue Bonds, Montgomery 6/13 at 100.00 AA+ 1,771,842
County Conference Center Facilities, Series 2003, 5.000%, 6/15/24
1,000 Montgomery County, Maryland, Lease Revenue Bonds, Metrorail 6/12 at 100.00 AA 1,043,300
Garage, Series 2002, 5.000%, 6/01/21
675 Montgomery County, Maryland, Special Obligation Bonds, West 7/12 at 101.00 AA 715,777
Germantown Development District, Senior Series 2002A,
5.500%, 7/01/27 - RAAI Insured
635 New Baltimore City Board of School Commissioners, Maryland, 11/10 at 100.00 AA+ 661,124
School System Revenue Bonds, Series 2000, 5.125%, 11/01/15
Puerto Rico Highway and Transportation Authority, Highway
Revenue Bonds, Series 2007N:
1,000 5.500%, 7/01/29 - AMBAC Insured No Opt. Call AAA 1,161,340
2,500 5.250%, 7/01/31 - AMBAC Insured No Opt. Call AAA 2,835,675
2,100 Puerto Rico Municipal Finance Agency, Series 2002A, 8/12 at 100.00 AAA 2,228,352
5.250%, 8/01/21 - FSA Insured
1,500 Puerto Rico, Highway Revenue Bonds, Highway and Transportation No Opt. Call AAA 1,699,245
Authority, Series 2003AA, 5.500%, 7/01/19 - MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
25,635 Total Tax Obligation/Limited 27,696,270
------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 2.1% (1.4% OF TOTAL INVESTMENTS)
1,060 Baltimore, Maryland, Revenue Refunding Bonds, Parking System No Opt. Call AAA 1,161,643
Facilities, Series 1998A, 5.250%, 7/01/17 - FGIC Insured
2,075 Puerto Rico Ports Authority, Special Facilities Revenue Bonds, 6/07 at 101.00 CCC+ 2,090,542
American Airlines Inc., Series 1996A, 6.250%, 6/01/26
(Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
3,135 Total Transportation 3,252,185
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 20.4% (13.5% OF TOTAL INVESTMENTS) (4)
2,500 Baltimore County, Maryland, Consolidated General Obligation 8/12 at 100.00 AAA 2,612,550
Public Improvement Bonds, Series 2002, 5.000%, 8/01/18
(Pre-refunded 8/01/12)
2,000 Baltimore, Maryland, Revenue Refunding Bonds, Water Projects, No Opt. Call AAA 2,151,960
Series 1998A, 5.000%, 7/01/28 - FGIC Insured (ETM)
2,000 Baltimore, Maryland, Revenue Refunding Bonds, Water System No Opt. Call AAA 2,184,880
Projects, Series 1994A, 5.000%, 7/01/24 - FGIC Insured (ETM)
Frederick County, Maryland, Educational Facilities Revenue Bonds,
Mount St. Mary's College, Series 2001A:
200 5.750%, 9/01/25 (Pre-refunded 3/01/10) 3/10 at 101.00 BBB- (4) 211,532
200 5.800%, 9/01/30 (Pre-refunded 3/01/10) 3/10 at 101.00 BBB- (4) 211,792
3,000 Frederick County, Maryland, General Obligation Public Facilities 7/09 at 101.00 AAA 3,119,790
Bonds, Series 1999, 5.250%, 7/01/18 (Pre-refunded 7/01/09)
2,550 Gaithersburg, Maryland, Hospital Facilities Revenue Refunding No Opt. Call AAA 2,735,513
and Improvement Bonds, Shady Grove Adventist Hospital,
Series 1995, 6.500%, 9/01/12 - FSA Insured (ETM)
24
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED (4) (continued)
$ 575 Howard County, Maryland, Consolidated Public Improvement 2/12 at 100.00 AAA $ 610,455
Refunding Bonds, Series 2002A, 5.250%, 8/15/18
(Pre-refunded 2/15/12)
Maryland Economic Development Corporation, Health and Mental
Hygiene Providers Revenue Bonds, Series 1996A:
905 7.625%, 4/01/21 (Pre-refunded 4/01/11) 4/11 at 102.00 N/R (4) 1,021,483
685 7.625%, 4/01/21 (Pre-refunded 4/01/11) 4/11 at 102.00 N/R (4) 773,166
2,250 Maryland Economic Development Corporation, Student Housing 6/09 at 102.00 Baa2 (4) 2,375,393
Revenue Bonds, Collegiate Housing Foundation - College Park,
Series 1999A, 5.750%, 6/01/24 (Pre-refunded 6/01/09)
3,200 Maryland Health and Higher Educational Facilities Authority, No Opt. Call AAA 3,466,240
Revenue Bonds, Helix Health, Series 1997, 5.000%, 7/01/27 -
AMBAC Insured (ETM)
3,125 Maryland Health and Higher Educational Facilities Authority, 7/07 at 100.00 Aaa 3,158,000
Revenue Bonds, Howard County General Hospital, Series 1993,
5.500%, 7/01/25 (ETM)
760 Maryland Health and Higher Educational Facilities Authority, 7/10 at 101.00 A3 (4) 830,809
Revenue Bonds, University of Maryland Medical System,
Series 2000, 6.750%, 7/01/30 (Pre-refunded 7/01/10)
230 Maryland Transportation Authority, Revenue Refunding Bonds, No Opt. Call AAA 258,718
Transportation Facilities Projects, First Series 1978,
6.800%, 7/01/16 (ETM)
925 Northern Mariana Islands, General Obligation Bonds, 6/10 at 100.00 AAA 983,941
Series 2000A, 6.000%, 6/01/20 (Pre-refunded 6/01/10) -
ACA Insured
1,000 Puerto Rico Infrastructure Financing Authority, Special Obligation 10/10 at 101.00 AAA 1,063,950
Bonds, Series 2000A, 5.500%, 10/01/20
1,000 Puerto Rico, Highway Revenue Bonds, Highway and Transportation 7/16 at 100.00 Aaa 1,120,140
Authority, Series 1996Y, 5.500%, 7/01/36 (Pre-refunded 7/01/16)
520 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 7/10 at 100.00 AAA 535,584
Asset-Backed Bonds, Series 2000, 5.750%, 7/01/20
(Pre-refunded 7/01/10)
2,000 Virgin Islands Public Finance Authority, Gross Receipts Taxes 10/10 at 101.00 BBB+ (4) 2,179,500
Loan Note, Series 1999A, 6.500%, 10/01/24
(Pre-refunded 10/01/10)
------------------------------------------------------------------------------------------------------------------------------------
29,625 Total U.S. Guaranteed 31,605,396
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 4.0% (2.7% OF TOTAL INVESTMENTS)
2,500 Maryland Energy Financing Administration, Revenue Bonds, 9/07 at 100.00 N/R 2,521,675
AES Warrior Run Project, Series 1995, 7.400%, 9/01/19
(Alternative Minimum Tax)
3,500 Puerto Rico Electric Power Authority, Power Revenue Bonds, 7/14 at 100.00 AAA 3,696,245
Series 2004PP, 5.000%, 7/01/22 - FGIC Insured
------------------------------------------------------------------------------------------------------------------------------------
6,000 Total Utilities 6,217,920
------------------------------------------------------------------------------------------------------------------------------------
25
NMY
Nuveen Maryland Premium Income Municipal Fund (continued)
Portfolio of INVESTMENTS as of 5-31-07
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 1.4% (0.9% OF TOTAL INVESTMENTS)
$ 1,045 Baltimore, Maryland, Revenue Refunding Bonds, Water System No Opt. Call AAA $ 1,138,799
Projects, Series 1994A, 5.000%, 7/01/24 - FGIC Insured
860 Maryland Water Quality Financing Administration, Revolving Loan No Opt. Call AAA 927,519
Fund Revenue Bonds, Series 2005A, 5.000%, 9/01/15
------------------------------------------------------------------------------------------------------------------------------------
1,905 Total Water and Sewer 2,066,318
------------------------------------------------------------------------------------------------------------------------------------
$ 221,545 Total Investments (cost $226,265,245) - 150.8% 233,686,765
=============-----------------------------------------------------------------------------------------------------------------------
Floating Rate Obligations - (1.8)% (2,800,000)
--------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 2.0% 3,217,369
--------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (51.0)% (79,100,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 155,004,134
====================================================================================================================
(1) All percentages shown in the Portfolio of Investments
are based on net assets applicable to Common shares
unless otherwise noted.
(2) Optional Call Provisions (not covered by the report of
independent registered public accounting firm): Dates
(month and year) and prices of the earliest optional
call or redemption. There may be other call provisions
at varying prices at later dates. Certain
mortgage-backed securities may be subject to periodic
principal paydowns.
(3) Ratings (not covered by the report of independent
registered public accounting firm): Using the higher of
Standard & Poor's or Moody's rating. Ratings below BBB
by Standard & Poor's Group or Baa by Moody's Investor
Service, Inc. are considered to be below investment
grade.
(4) Backed by an escrow or trust containing sufficient U.S.
Government or U.S. Government agency securities which
ensure the timely payment of principal and interest.
Such investments are normally considered to be
equivalent to AAA rated securities.
N/R Not rated.
WI/DD Purchased on a when-issued or delayed delivery basis.
(ETM) Escrowed to maturity.
(UB) Underlying bond of an inverse floating rate trust
reflected as a financing transaction pursuant to the
provisions of SFAS No. 140.
See accompanying notes to financial statements.
26
NFM
Nuveen Maryland Dividend Advantage Municipal Fund
Portfolio of INVESTMENTS
as of 5-31-07
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
CONSUMER DISCRETIONARY - 3.7% (2.4% OF TOTAL INVESTMENTS)
$ 205 Baltimore, Maryland, Pollution Control Revenue Bonds, General No Opt. Call B- $ 204,731
Motors Corporation, Series 1993, 5.350%, 4/01/08
1,000 Baltimore, Maryland, Senior Lien Convention Center Hotel Revenue 9/16 at 100.00 AAA 1,069,050
Bonds, Series 2006A, 5.250%, 9/01/39 - XLCA Insured
310 Baltimore, Maryland, Subordinate Lien Convention Center Hotel 9/16 at 100.00 Ba1 329,629
Revenue Bonds, Series 2006B, 5.875%, 9/01/39
650 Maryland Economic Development Corporation, Revenue Bonds, 12/16 at 100.00 N/R 653,666
Chesapeake Bay Hyatt Conference Center, Series 2006A,
5.000%, 12/01/31
------------------------------------------------------------------------------------------------------------------------------------
2,165 Total Consumer Discretionary 2,257,076
------------------------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES - 2.6% (1.7% OF TOTAL INVESTMENTS)
1,500 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 5/12 at 100.00 BBB 1,569,750
Asset-Backed Refunding Bonds, Series 2002, 5.375%, 5/15/33
------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 13.8% (9.0% OF TOTAL INVESTMENTS)
645 Hartford County, Maryland, Economic Development Revenue 4/14 at 100.00 A+ 679,740
Bonds, Battelle Memorial Institute, Series 2004, 5.250%, 4/01/34
980 Maryland Economic Development Corporation, Utility Infrastructure 7/11 at 100.00 AAA 1,016,368
Revenue Bonds, University of Maryland - College Park,
Series 2001, 5.000%, 7/01/19 - AMBAC Insured
1,500 Maryland Health and Higher Educational Facilities Authority, 7/08 at 102.00 BBB- 1,548,090
Educational Facilities Leasehold Mortgage Revenue Bonds,
McLean School, Series 2001, 6.000%, 7/01/31
500 Maryland Health and Higher Educational Facilities Authority, 7/14 at 100.00 A- 520,295
Revenue Bonds, Goucher College, Series 2004, 5.125%, 7/01/34
625 Maryland Health and Higher Educational Facilities Authority, 6/11 at 100.00 Baa1 647,188
Revenue Bonds, Maryland Institute College of Art, Series 2001,
5.500%, 6/01/32
475 Maryland Industrial Development Financing Authority, Revenue 5/15 at 100.00 N/R 509,404
Bonds, Our Lady of Good Counsel High School, Series 2005A,
6.000%, 5/01/35
615 Montgomery County Revenue Authority, Maryland, Lease Revenue 5/15 at 100.00 A1 647,613
Bonds, Montgomery College Arts Center Project, Series 2005A,
5.000%, 5/01/20
Puerto Rico Industrial, Tourist, Educational, Medical and
Environmental Control Facilities Financing Authority, Higher
Education Revenue Bonds, Ana G. Mendez University System,
Series 1999:
215 5.375%, 2/01/19 2/09 at 101.00 BBB- 220,123
410 5.375%, 2/01/29 2/09 at 101.00 BBB- 418,717
500 University of Maryland, Auxiliary Facility and Tuition Revenue 4/13 at 100.00 AA 524,300
Bonds, Series 2003A, 5.000%, 4/01/19
800 University of Maryland, Auxiliary Facility and Tuition Revenue 10/16 at 100.00 AA 851,176
Bonds, Series 2006A, 5.000%, 10/01/22
900 Westminster, Maryland, Educational Facilities Revenue Bonds, 11/16 at 100.00 BBB+ 874,233
McDaniel College, Series 2006, 4.500%, 11/01/36
------------------------------------------------------------------------------------------------------------------------------------
8,165 Total Education and Civic Organizations 8,457,247
------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE - 31.6% (20.7% OF TOTAL INVESTMENTS)
1,325 Maryland Health and Higher Education Facilities Authority, 7/16 at 100.00 A 1,348,174
Revenue Bonds, University of Maryland Medical System,
Series 2006, 5.000%, 7/01/36
27
NFM
Nuveen Maryland Dividend Advantage Municipal Fund (continued)
Portfolio of INVESTMENTS as of 5-31-07
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE (continued)
$ 1,000 Maryland Health and Higher Educational Facilities Authority, 7/08 at 101.00 AAA $ 1,021,090
Revenue Bonds, Anne Arundel Medical Center, Series 1998,
5.125%, 7/01/28 - FSA Insured
1,000 Maryland Health and Higher Educational Facilities Authority, 7/08 at 102.00 A2 1,013,200
Revenue Bonds, Calvert Memorial Hospital, Series 1998,
5.000%, 7/01/28
1,000 Maryland Health and Higher Educational Facilities Authority, 7/12 at 100.00 Baa1 1,074,250
Revenue Bonds, Carroll County General Hospital, Series 2002,
6.000%, 7/01/26
750 Maryland Health and Higher Educational Facilities Authority, 7/14 at 100.00 AA 770,438
Revenue Bonds, Civista Medical Center, Series 2005,
5.000%, 7/01/37 - RAAI Insured
710 Maryland Health and Higher Educational Facilities Authority, 7/17 at 100.00 Baa1 723,774
Revenue Bonds, Doctors Community Hospital, Series 2007A,
5.000%, 7/01/29
500 Maryland Health and Higher Educational Facilities Authority, 7/12 at 100.00 Baa1 510,280
Revenue Bonds, Frederick Memorial Hospital, Series 2002,
5.125%, 7/01/35
650 Maryland Health and Higher Educational Facilities Authority, 7/11 at 100.00 A+ 657,742
Revenue Bonds, Greater Baltimore Medical Center, Series 2001,
5.000%, 7/01/34
1,250 Maryland Health and Higher Educational Facilities Authority, 5/11 at 100.00 AA- 1,283,550
Revenue Bonds, Johns Hopkins Hospital, Series 2001,
5.000%, 5/15/21
2,225 Maryland Health and Higher Educational Facilities Authority, 6/09 at 101.00 A+ 2,300,717
Revenue Bonds, Kaiser Permanente System, Series 1998A,
5.375%, 7/01/15
1,000 Maryland Health and Higher Educational Facilities Authority, 7/13 at 100.00 Baa3 1,039,450
Revenue Bonds, Kennedy Krieger Institute, Series 2003,
5.500%, 7/01/33
585 Maryland Health and Higher Educational Facilities Authority, 7/14 at 100.00 A 599,806
Revenue Bonds, LifeBridge Health System, Series 2004A,
5.125%, 7/01/34
700 Maryland Health and Higher Educational Facilities Authority, 8/14 at 100.00 A3 732,025
Revenue Bonds, MedStar Health, Series 2004, 5.375%, 8/15/24
1,000 Maryland Health and Higher Educational Facilities Authority, 7/11 at 100.00 A- 1,041,870
Revenue Bonds, Mercy Medical Center, Series 2001,
5.625%, 7/01/31
2,000 Maryland Health and Higher Educational Facilities Authority, 7/11 at 100.00 A 2,049,680
Revenue Bonds, University of Maryland Medical System,
Series 2001, 5.250%, 7/01/28
1,700 Maryland Health and Higher Educational Facilities Authority, 7/16 at 100.00 AAA 1,778,880
Revenue Bonds, Western Maryland Health, Series 2006A,
5.000%, 7/01/34 - MBIA Insured (UB)
570 Maryland Health and Higher Educational Facilities Authority, 7/08 at 101.00 A3 576,538
Revenue Refunding Bonds, Union Hospital of Cecil County,
Series 1998, 5.100%, 7/01/22
Prince George's County, Maryland, Revenue Bonds, Dimensions
Health Corporation, Series 1994:
290 5.375%, 7/01/14 7/07 at 100.00 B3 272,951
700 5.300%, 7/01/24 7/07 at 100.00 B3 610,729
------------------------------------------------------------------------------------------------------------------------------------
18,955 Total Health Care 19,405,144
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 18.9% (12.3% OF TOTAL INVESTMENTS)
750 Baltimore County, Maryland, GNMA Collateralized Revenue 10/08 at 102.00 AAA 762,615
Refunding Bonds, Cross Creek Apartments, Series 1998A,
5.250%, 10/20/33
2,000 Maryland Community Development Administration, Housing 7/08 at 101.00 Aa2 2,032,520
Revenue Bonds, Series 1998A, 5.625%, 1/01/40 (Alternative
Minimum Tax)
1,000 Maryland Community Development Administration, Multifamily 12/11 at 100.00 Aaa 1,026,000
Housing Revenue Bonds, Princess Anne Apartments,
Series 2001D, 5.450%, 12/15/33 (Alternative Minimum Tax)
Maryland Economic Development Corporation, Senior Lien Student
Housing Revenue Bonds, University of Maryland - Baltimore,
Series 2003A:
215 4.250%, 10/01/10 No Opt. Call B2 206,682
50 5.000%, 10/01/15 10/13 at 100.00 B2 48,359
210 5.625%, 10/01/23 10/13 at 100.00 B2 209,315
28
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY (continued)
$ 1,800 Maryland Economic Development Corporation, Student Housing 7/11 at 101.00 A $ 1,922,958
Revenue Bonds, Sheppard Pratt University Village, Series 2001,
6.000%, 7/01/33 - ACA Insured
475 Maryland Economic Development Corporation, Student Housing 6/16 at 100.00 AAA 497,971
Revenue Refunding Bonds, University of Maryland College Park
Projects, Series 2006, 5.000%, 6/01/33 - CIFG Insured
750 Montgomery County Housing Opportunities Commission, 7/08 at 101.00 Aaa 760,283
Maryland, FNMA/FHA-Insured Multifamily Housing Development
Bonds, Series 1998A, 5.250%, 7/01/29 (Alternative Minimum Tax)
2,000 Montgomery County Housing Opportunities Commission, Maryland, 7/10 at 100.00 Aaa 2,063,600
Multifamily Housing Development Bonds, Series 2000B,
6.200%, 7/01/30 (Alternative Minimum Tax)
2,000 Montgomery County Housing Opportunities Commission, 7/11 at 100.00 Aaa 2,049,000
Maryland, Multifamily Housing Development Bonds,
Series 2001A, 5.600%, 7/01/42 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
11,250 Total Housing/Multifamily 11,579,303
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 6.5% (4.2% OF TOTAL INVESTMENTS)
300 Maryland Community Development Administration, Department 9/15 at 100.00 Aa2 302,511
of Housing and Community Development, Residential Revenue
Bonds, Series 2006F, 4.900%, 9/01/26 (Alternative Minimum Tax)
1,200 Maryland Community Development Administration, Department 3/16 at 100.00 Aa2 1,208,412
of Housing and Community Development, Residential Revenue
Bonds, Series 2006I, 4.875%, 9/01/26 (Mandatory put 3/01/22)
(Alternative Minimum Tax)
815 Maryland Community Development Administration, Department 9/16 at 100.00 Aa2 817,649
of Housing and Community Development, Residential Revenue
Bonds, Series 2006L, 4.900%, 9/01/31 (Alternative Minimum Tax)
500 Maryland Community Development Administration, Housing and 3/17 at 100.00 Aa2 496,430
Community Development Residential Revenue Bonds,
Series 2007D, 4.850%, 9/01/37 (WI/DD, Settling 6/20/07)
(Alternative Minimum Tax)
500 Maryland Community Development Administration, Residential 9/10 at 100.00 Aa2 510,750
Revenue Bonds, Series 2001B, 5.450%, 9/01/32
(Alternative Minimum Tax)
600 Maryland Community Development Administration, Residential 9/15 at 100.00 Aa2 600,570
Revenue Bonds, Series 2006B, 4.750%, 9/01/25
(Alternative Minimum Tax)
20 Maryland Community Development Administration, Single Family 10/10 at 100.00 Aa2 20,070
Program Bonds, First Series 2001, 5.000%, 4/01/17
------------------------------------------------------------------------------------------------------------------------------------
3,935 Total Housing/Single Family 3,956,392
------------------------------------------------------------------------------------------------------------------------------------
INDUSTRIALS - 2.3% (1.5% OF TOTAL INVESTMENTS)
410 Maryland Economic Development Corporation, Solid Waste 4/12 at 101.00 BBB 406,864
Disposal Revenue Bonds, Waste Management Inc., Series 2002,
4.600%, 4/01/16 (Alternative Minimum Tax)
1,000 Northeast Maryland Waste Disposal Authority, Baltimore, Resource 1/09 at 101.00 BBB 1,007,690
Recovery Revenue Bonds, RESCO Retrofit Project, Series 1998,
4.750%, 1/01/12 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
1,410 Total Industrials 1,414,554
------------------------------------------------------------------------------------------------------------------------------------
LONG-TERM CARE - 3.5% (2.3% OF TOTAL INVESTMENTS)
650 Baltimore County, Maryland, Revenue Bonds, Oak Crest Village, 1/17 at 100.00 BBB+ 658,119
Series 2007A, 5.000%, 1/01/37
300 Maryland Health and Higher Educational Facilities Authority, 7/16 at 100.00 N/R 311,211
Revenue Bonds, Edenwald, Series 2006A, 5.400%, 1/01/31
720 Maryland Health and Higher Educational Facilities Authority, 1/17 at 100.00 N/R 739,613
Revenue Bonds, King Farm Presbyterian Community,
Series 2007A, 5.250%, 1/01/27
440 Maryland Health and Higher Educational Facilities Authority, 7/17 at 100.00 BBB+ 435,354
Revenue Bonds, Mercy Ridge Retirement Community,
Series 2007, 4.750%, 7/01/34
------------------------------------------------------------------------------------------------------------------------------------
2,110 Total Long-Term Care 2,144,297
------------------------------------------------------------------------------------------------------------------------------------
29
NFM
Nuveen Maryland Dividend Advantage Municipal Fund (continued)
Portfolio of INVESTMENTS as of 5-31-07
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 24.7% (16.2% OF TOTAL INVESTMENTS)
Anne Arundel County, Maryland, General Obligation Bonds, Series 2006:
$ 730 5.000%, 3/01/21 3/16 at 100.00 AAA $ 778,129
565 5.000%, 3/01/21 3/16 at 100.00 AAA 602,250
3,500 Baltimore County, Maryland, Metropolitan District Special 6/11 at 101.00 AAA 3,635,691
Assessment Bonds, 67th Issue, 5.000%, 6/01/27
300 Carroll County, Maryland, Consolidated Public Improvement Bonds, 12/15 at 100.00 AA 323,613
Series 2005A, 5.000%, 12/01/16
500 Frederick County, Maryland, General Obligation Public Facilities No Opt. Call AA 547,420
Bonds, Series 2006, 5.000%, 11/01/20
Frederick, Maryland, General Obligation Bonds, Series 2005:
600 5.000%, 8/01/16 - MBIA Insured 8/15 at 100.00 AAA 643,710
500 5.000%, 8/01/17 - MBIA Insured 8/15 at 100.00 AAA 537,185
1,360 Howard County, Maryland, Consolidated Public Improvement 2/09 at 101.00 AAA 1,386,357
Bonds, Series 2001A, 4.750%, 2/15/21
1,000 Maryland National Capital Park Planning Commission, 1/14 at 100.00 AA+ 1,059,420
Prince George's County, General Obligation Bonds, Park
Acquisition and Development, Series 2004EE-2, 5.000%, 1/15/17
1,360 Montgomery County, Maryland, Consolidated General Obligation No Opt. Call AAA 1,472,567
Public Improvement Bonds, Series 2006, 5.000%, 5/01/16
740 Ocean City, Maryland, General Obligation Bonds, Series 2001, 3/11 at 101.00 AAA 770,118
4.875%, 3/01/19 - FGIC Insured
1,500 Prince George's County, Maryland, General Obligation Consolidated 12/11 at 101.00 AAA 1,595,760
Public Improvement Bonds, Series 2001, 5.250%, 12/01/20 -
FGIC Insured
1,000 Prince George's County, Maryland, General Obligation Consolidated 10/13 at 100.00 AA+ 1,052,550
Public Improvement Bonds, Series 2003A, 5.000%, 10/01/17
700 Washington Suburban Sanitary District, Montgomery and 6/15 at 100.00 AAA 752,829
Prince George's Counties, Maryland, Sewerage Disposal Bonds,
Series 2005, 5.000%, 6/01/16
------------------------------------------------------------------------------------------------------------------------------------
14,355 Total Tax Obligation/General 15,157,599
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 18.0% (11.7% OF TOTAL INVESTMENTS)
625 Annapolis, Maryland, Special Obligation Bonds, Park Place 1/15 at 101.00 N/R 642,063
Project, Series 2005A, 5.350%, 7/01/34
535 Anne Arundel County, Maryland, Tax Increment Financing No Opt. Call N/R 538,675
Revenue Bonds, Parole Town Center Project, Series 2002,
5.000%, 7/01/12
500 Baltimore Board of School Commissioners, Maryland, Revenue 5/13 at 100.00 AA+ 525,960
Bonds, City Public School System, Series 2003A,
5.000%, 5/01/18
500 Baltimore, Maryland, Project Revenue Bonds, Series 2006, 7/16 at 100.00 AAA 527,035
5.000%, 7/01/31 - AMBAC Insured
350 Hyattsville, Maryland, Special Obligation Bonds, University Town 7/14 at 102.00 N/R 369,614
Center Project, Series 2004, 5.750%, 7/01/34
1,500 Maryland Department of Transportation, Consolidated Transportation No Opt. Call AAA 1,669,500
Revenue Bonds, Series 2002, 5.500%, 2/01/16
1,405 Maryland Economic Development Corporation, Lease Revenue 6/12 at 100.50 AA+ 1,500,484
Bonds, Department of Transportation Headquarters Building,
Series 2002, 5.375%, 6/01/19
370 Maryland Economic Development Corporation, Lease Revenue 9/12 at 100.00 AA+ 390,002
Bonds, Montgomery County Town Square Parking Garage,
Series 2002A, 5.000%, 9/15/13
740 Prince George's County, Maryland, Lease Revenue Bonds, Upper 6/13 at 100.00 AAA 783,475
Marlboro Justice Center, Series 2003A, 5.000%, 6/30/14 -
MBIA Insured
270 Prince George's County, Maryland, Special Obligation Bonds, 7/15 at 100.00 N/R 275,252
National Harbor Project, Series 2005, 5.200%, 7/01/34
450 Prince George's County, Maryland, Special Tax District Bonds, 7/13 at 100.00 N/R 456,642
Victoria Falls Project, Series 2005, 5.250%, 7/01/35
1,000 Puerto Rico Highway and Transportation Authority, Highway No Opt. Call AAA 1,134,270
Revenue Bonds, Series 2007N, 5.250%, 7/01/31 - AMBAC Insured
30
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED (continued)
$ 700 Puerto Rico, Highway Revenue Bonds, Highway and Transportation No Opt. Call AAA $ 792,981
Authority, Series 2003AA, 5.500%, 7/01/19 - MBIA Insured
1,290 Virgin Islands Public Finance Authority, Gross Receipts Taxes 10/10 at 101.00 BBB+ 1,392,374
Loan Note, Series 1999A, 6.375%, 10/01/19
------------------------------------------------------------------------------------------------------------------------------------
10,235 Total Tax Obligation/Limited 10,998,327
------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 1.1% (0.7% OF TOTAL INVESTMENTS)
650 Maryland Health and Higher Educational Facilities Authority, 7/11 at 100.00 AAA 668,077
Parking Facilities Revenue Bonds, Johns Hopkins Hospital,
Series 2001, 5.000%, 7/01/27 - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 24.2% (15.8% OF TOTAL INVESTMENTS) (4)
Anne Arundel County, Maryland, Various Purpose General
Obligation Bonds, Series 2001:
580 4.800%, 2/15/18 (Pre-refunded 2/15/11) 2/11 at 101.00 AAA 604,986
500 5.000%, 2/15/28 (Pre-refunded 2/15/11) 2/11 at 101.00 AAA 524,965
1,015 Baltimore, Maryland, Revenue Refunding Bonds, Water Projects, No Opt. Call AAA 1,092,120
Series 1998A, 5.000%, 7/01/28 - FGIC Insured (ETM)
Frederick County, Maryland, Educational Facilities Revenue Bonds,
Mount St. Mary's College, Series 2001A:
465 5.700%, 9/01/20 (Pre-refunded 3/01/10) 3/10 at 101.00 BBB- (4) 491,212
500 5.750%, 9/01/25 (Pre-refunded 3/01/10) 3/10 at 101.00 BBB- (4) 528,830
500 Maryland Health and Higher Educational Facilities Authority, 4/11 at 101.00 N/R (4) 549,590
Revenue Bonds, Collington Episcopal Life Care Community Inc.,
Series 2001A, 6.750%, 4/01/23 (Pre-refunded 4/01/11)
835 Maryland Transportation Authority, Revenue Refunding Bonds, No Opt. Call AAA 939,258
Transportation Facilities Projects, First Series 1978,
6.800%, 7/01/16 (ETM)
430 Northern Mariana Islands, General Obligation Bonds, 6/10 at 100.00 AAA 457,400
Series 2000A, 6.000%, 6/01/20 (Pre-refunded 6/01/10) -
ACA Insured
2,300 Puerto Rico Infrastructure Financing Authority, Special Obligation 10/10 at 101.00 AAA 2,447,821
Bonds, Series 2000A, 5.500%, 10/01/32
1,700 Puerto Rico Infrastructure Financing Authority, Special Obligation 10/10 at 101.00 AAA 1,808,154
Bonds, Series 2000A, 5.500%, 10/01/40
1,300 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 7/10 at 100.00 AAA 1,338,961
Asset-Backed Bonds, Series 2000, 5.750%, 7/01/20
(Pre-refunded 7/01/10)
Washington Suburban Sanitary District, Montgomery and
Prince George's Counties, Maryland, General Obligation
Construction Bonds, Series 2001:
895 5.000%, 6/01/22 (Pre-refunded 6/01/11) 6/11 at 100.00 AAA 934,675
935 5.000%, 6/01/23 (Pre-refunded 6/01/11) 6/11 at 100.00 AAA 976,449
985 5.000%, 6/01/24 (Pre-refunded 6/01/11) 6/11 at 100.00 AAA 1,028,665
1,035 5.000%, 6/01/25 (Pre-refunded 6/01/11) 6/11 at 100.00 AAA 1,080,882
------------------------------------------------------------------------------------------------------------------------------------
13,975 Total U.S. Guaranteed 14,803,968
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 1.6% (1.1% OF TOTAL INVESTMENTS)
1,000 Maryland Energy Financing Administration, Revenue Bonds, 9/07 at 100.00 N/R 1,008,670
AES Warrior Run Project, Series 1995, 7.400%, 9/01/19
(Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
31
NFM
Nuveen Maryland Dividend Advantage Municipal Fund (continued)
Portfolio of INVESTMENTS as of 5-31-07
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 0.6% (0.4% OF TOTAL INVESTMENTS)
$ 355 Maryland Water Quality Financing Administration, Revolving Loan No Opt. Call AAA $ 382,871
Fund Revenue Bonds, Series 2005A, 5.000%, 9/01/15
------------------------------------------------------------------------------------------------------------------------------------
$ 90,060 Total Investments (cost $91,193,616) - 153.1% 93,803,275
=============-----------------------------------------------------------------------------------------------------------------------
Floating Rate Obligations - (1.8)% (1,133,000)
--------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 0.9% 591,154
--------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (52.2)% (32,000,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 61,261,429
====================================================================================================================
FORWARD SWAPS OUTSTANDING AT MAY 31, 2007:
FUND FIXED RATE UNREALIZED
NOTIONAL PAY/RECEIVE FLOATING RATE FIXED RATE PAYMENT EFFECTIVE TERMINATION APPRECIATION
COUNTERPARTY AMOUNT FLOATING RATE INDEX (ANNUALIZED) FREQUENCY DATE (5) DATE (DEPRECIATION)
------------------------------------------------------------------------------------------------------------------------------------
JPMorgan $1,250,000 Pay 3 Month USD-LIBOR 5.388% Semi-Annually 4/25/08 4/25/35 $(39,197)
====================================================================================================================================
USD-LIBOR (United States Dollar-London Inter-Bank Offered Rate)
(1) All percentages shown in the Portfolio of Investments
are based on net assets applicable to Common shares
unless otherwise noted.
(2) Optional Call Provisions (not covered by the report of
independent registered public accounting firm): Dates
(month and year) and prices of the earliest optional
call or redemption. There may be other call provisions
at varying prices at later dates. Certain
mortgage-backed securities may be subject to periodic
principal paydowns.
(3) Ratings (not covered by the report of independent
registered public accounting firm): Using the higher of
Standard & Poor's or Moody's rating. Ratings below BBB
by Standard & Poor's Group or Baa by Moody's Investor
Service, Inc. are considered to be below investment
grade.
(4) Backed by an escrow or trust containing sufficient U.S.
Government or U.S. Government agency securities which
ensure the timely payment of principal and interest.
Such investments are normally considered to be
equivalent to AAA rated securities.
(5) Effective date represents the date on which both the
Fund and counterparty commence interest payment
accruals on each forward swap contract.
N/R Not rated.
WI/DD Purchased on a when-issued or delayed delivery basis.
(ETM) Escrowed to maturity.
(UB) Underlying bond of an inverse floating rate trust
reflected as a financing transaction pursuant to the
provisions of SFAS No. 140.
See accompanying notes to financial statements.
32
NZR
Nuveen Maryland Dividend Advantage Municipal Fund 2
Portfolio of INVESTMENTS
as of 5-31-07
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
CONSUMER DISCRETIONARY - 4.0% (2.6% OF TOTAL INVESTMENTS)
$ 190 Baltimore, Maryland, Pollution Control Revenue Bonds, General No Opt. Call B- $ 189,751
Motors Corporation, Series 1993, 5.350%, 4/01/08
1,200 Baltimore, Maryland, Senior Lien Convention Center Hotel Revenue 9/16 at 100.00 AAA 1,282,860
Bonds, Series 2006A, 5.250%, 9/01/39 - XLCA Insured
310 Baltimore, Maryland, Subordinate Lien Convention Center Hotel 9/16 at 100.00 Ba1 329,629
Revenue Bonds, Series 2006B, 5.875%, 9/01/39
650 Maryland Economic Development Corporation, Revenue Bonds, 12/16 at 100.00 N/R 653,666
Chesapeake Bay Hyatt Conference Center, Series 2006A,
5.000%, 12/01/31
------------------------------------------------------------------------------------------------------------------------------------
2,350 Total Consumer Discretionary 2,455,906
------------------------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES - 2.6% (1.7% OF TOTAL INVESTMENTS)
755 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 5/12 at 100.00 BBB 790,108
Asset-Backed Refunding Bonds, Series 2002, 5.375%, 5/15/33
800 Tobacco Settlement Financing Corporation, Virgin Islands, 5/11 at 100.00 Baa3 812,016
Tobacco Settlement Asset-Backed Bonds, Series 2001,
5.000%, 5/15/31
------------------------------------------------------------------------------------------------------------------------------------
1,555 Total Consumer Staples 1,602,124
------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 17.7% (11.6% OF TOTAL INVESTMENTS)
1,100 Anne Arundel County, Maryland, Economic Development Revenue 9/12 at 102.00 A3 1,147,927
Bonds, Community College Project, Series 2002, 5.125%, 9/01/22
500 Frederick County, Maryland, Educational Facilities Revenue Bonds, 9/16 at 100.00 BBB- 532,015
Mount Saint Mary's College, Series 2006, 5.625%, 9/01/38
645 Hartford County, Maryland, Economic Development Revenue 4/14 at 100.00 A+ 679,740
Bonds, Battelle Memorial Institute, Series 2004, 5.250%, 4/01/34
250 Maryland Health and Higher Educational Facilities Authority, 7/08 at 102.00 BBB- 258,015
Educational Facilities Leasehold Mortgage Revenue Bonds,
McLean School, Series 2001, 6.000%, 7/01/31
415 Maryland Health and Higher Educational Facilities Authority, 1/11 at 101.00 AAA 434,613
Revenue Bonds, Bullis School, Series 2000, 5.250%, 7/01/30 -
FSA Insured
500 Maryland Health and Higher Educational Facilities Authority, 7/14 at 100.00 A- 520,295
Revenue Bonds, Goucher College, Series 2004, 5.125%, 7/01/34
1,250 Maryland Health and Higher Educational Facilities Authority, 6/11 at 100.00 Baa1 1,294,375
Revenue Bonds, Maryland Institute College of Art, Series 2001,
5.500%, 6/01/32
500 Maryland Industrial Development Financing Authority, Revenue 5/15 at 100.00 N/R 536,215
Bonds, Our Lady of Good Counsel High School, Series 2005A,
6.000%, 5/01/35
590 Montgomery County Revenue Authority, Maryland, Lease Revenue 5/15 at 100.00 A1 624,834
Bonds, Montgomery College Arts Center Project, Series 2005A,
5.000%, 5/01/18
500 Morgan State University, Maryland, Student Tuition and Fee 7/12 at 100.00 AAA 521,595
Revenue Bonds, Academic Fees and Auxiliary Facilities,
Series 2001, 4.900%, 7/01/21 - FGIC Insured
500 Morgan State University, Maryland, Student Tuition and Fee 7/13 at 100.00 AAA 524,130
Revenue Bonds, Academic Fees and Auxiliary Facilities,
Series 2003A, 5.000%, 7/01/20 - FGIC Insured
1,140 University of Maryland, Auxiliary Facility and Tuition Revenue 4/11 at 100.00 AA 1,154,877
Bonds, Series 2001B, 4.500%, 4/01/19
33
NZR
Nuveen Maryland Dividend Advantage Municipal Fund 2 (continued)
Portfolio of INVESTMENTS as of 5-31-07
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS (continued)
$ 1,000 University of Maryland, Auxiliary Facility and Tuition Revenue 4/13 at 100.00 AA $ 1,048,600
Bonds, Series 2003A, 5.000%, 4/01/19
650 University of Maryland, Auxiliary Facility and Tuition Revenue 10/16 at 100.00 AA 691,581
Bonds, Series 2006A, 5.000%, 10/01/22
950 Westminster, Maryland, Educational Facilities Revenue Bonds, 11/16 at 100.00 BBB+ 987,582
McDaniel College, Series 2006, 5.000%, 11/01/31
------------------------------------------------------------------------------------------------------------------------------------
10,490 Total Education and Civic Organizations 10,956,394
------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE - 25.5% (16.8% OF TOTAL INVESTMENTS)
1,000 Maryland Health and Higher Educational Facilities Authority, 7/08 at 101.00 AAA 1,021,090
Revenue Bonds, Anne Arundel Medical Center, Series 1998,
5.125%, 7/01/33 - FSA Insured
775 Maryland Health and Higher Educational Facilities Authority, 7/14 at 100.00 A2 826,127
Revenue Bonds, Calvert Memorial Hospital, Series 2004,
5.500%, 7/01/36
1,000 Maryland Health and Higher Educational Facilities Authority, 7/12 at 100.00 Baa1 1,074,250
Revenue Bonds, Carroll County General Hospital, Series 2002,
6.000%, 7/01/26
750 Maryland Health and Higher Educational Facilities Authority, 7/14 at 100.00 AA 770,438
Revenue Bonds, Civista Medical Center, Series 2005,
5.000%, 7/01/37 - RAAI Insured
715 Maryland Health and Higher Educational Facilities Authority, 7/17 at 100.00 Baa1 728,871
Revenue Bonds, Doctors Community Hospital, Series 2007A,
5.000%, 7/01/29
500 Maryland Health and Higher Educational Facilities Authority, 7/12 at 100.00 Baa1 510,280
Revenue Bonds, Frederick Memorial Hospital, Series 2002,
5.125%, 7/01/35
650 Maryland Health and Higher Educational Facilities Authority, 7/11 at 100.00 A+ 657,742
Revenue Bonds, Greater Baltimore Medical Center, Series 2001,
5.000%, 7/01/34
1,000 Maryland Health and Higher Educational Facilities Authority, 7/13 at 100.00 Baa3 1,039,450
Revenue Bonds, Kennedy Krieger Institute, Series 2003,
5.500%, 7/01/33
525 Maryland Health and Higher Educational Facilities Authority, 7/14 at 100.00 A 538,288
Revenue Bonds, LifeBridge Health System, Series 2004A,
5.125%, 7/01/34
700 Maryland Health and Higher Educational Facilities Authority, 8/14 at 100.00 A3 732,025
Revenue Bonds, MedStar Health, Series 2004, 5.375%, 8/15/24
1,500 Maryland Health and Higher Educational Facilities Authority, 7/11 at 100.00 A- 1,562,805
Revenue Bonds, Mercy Medical Center, Series 2001,
5.625%, 7/01/31
2,000 Maryland Health and Higher Educational Facilities Authority, 7/11 at 100.00 A 2,049,679
Revenue Bonds, University of Maryland Medical System,
Series 2001, 5.250%, 7/01/28
1,700 Maryland Health and Higher Educational Facilities Authority, 7/16 at 100.00 AAA 1,778,880
Revenue Bonds, Western Maryland Health, Series 2006A,
5.000%, 7/01/34 - MBIA Insured (UB)
1,610 Montgomery County, Maryland, Economic Development Revenue 12/11 at 100.00 Aa2 1,664,160
Bonds, Trinity Healthcare Group, Series 2001, 5.125%, 12/01/22
Prince George's County, Maryland, Revenue Bonds, Dimensions
Health Corporation, Series 1994:
300 5.375%, 7/01/14 7/07 at 100.00 B3 282,363
700 5.300%, 7/01/24 7/07 at 100.00 B3 610,729
------------------------------------------------------------------------------------------------------------------------------------
15,425 Total Health Care 15,847,177
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 9.5% (6.3% OF TOTAL INVESTMENTS)
10 Maryland Community Development Administration, Insured 5/11 at 100.00 Aa2 10,173
Multifamily Housing Mortgage Loan Revenue Bonds,
Series 2001A, 5.100%, 5/15/28
3,145 Maryland Community Development Administration, Multifamily 12/11 at 100.00 Aaa 3,226,769
Development Revenue Bonds, Waters Towers Senior Apartments,
Series 2001F, 5.450%, 12/15/33 (Alternative Minimum Tax)
1,110 Maryland Community Development Administration, Multifamily 12/11 at 100.00 Aaa 1,138,860
Housing Revenue Bonds, Princess Anne Apartments,
Series 2001D, 5.450%, 12/15/33 (Alternative Minimum Tax)
34
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY (continued)
$ 1,000 Maryland Economic Development Corporation, Senior Lien Student 10/13 at 100.00 B2 $ 996,740
Housing Revenue Bonds, University of Maryland - Baltimore,
Series 2003A, 5.625%, 10/01/23
520 Maryland Economic Development Corporation, Student Housing 6/16 at 100.00 AAA 545,147
Revenue Refunding Bonds, University of Maryland College Park
Projects, Series 2006, 5.000%, 6/01/33 - CIFG Insured
------------------------------------------------------------------------------------------------------------------------------------
5,785 Total Housing/Multifamily 5,917,689
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 6.6% (4.3% OF TOTAL INVESTMENTS)
300 Maryland Community Development Administration, Department 9/15 at 100.00 Aa2 302,511
of Housing and Community Development, Residential Revenue
Bonds, Series 2006F, 4.900%, 9/01/26 (Alternative Minimum Tax)
1,000 Maryland Community Development Administration, Department 3/16 at 100.00 Aa2 1,007,010
of Housing and Community Development, Residential Revenue
Bonds, Series 2006I, 4.875%, 9/01/26 (Mandatory put 3/01/22)
(Alternative Minimum Tax)
815 Maryland Community Development Administration, Department 9/16 at 100.00 Aa2 817,649
of Housing and Community Development, Residential Revenue
Bonds, Series 2006L, 4.900%, 9/01/31 (Alternative Minimum Tax)
500 Maryland Community Development Administration, Housing and 3/17 at 100.00 Aa2 496,430
Community Development Residential Revenue Bonds,
Series 2007D, 4.850%, 9/01/37 (WI/DD, Settling 6/20/07)
(Alternative Minimum Tax)
850 Maryland Community Development Administration, Residential 9/10 at 100.00 Aa2 862,801
Revenue Bonds, Series 2001H, 5.350%, 9/01/32 (Alternative
Minimum Tax)
600 Maryland Community Development Administration, Residential 9/15 at 100.00 Aa2 600,570
Revenue Bonds, Series 2006B, 4.750%, 9/01/25 (Alternative
Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
4,065 Total Housing/Single Family 4,086,971
------------------------------------------------------------------------------------------------------------------------------------
INDUSTRIALS - 2.5% (1.7% OF TOTAL INVESTMENTS)
410 Maryland Economic Development Corporation, Solid Waste 4/12 at 101.00 BBB 406,864
Disposal Revenue Bonds, Waste Management Inc., Series 2002,
4.600%, 4/01/16 (Alternative Minimum Tax)
1,150 Northeast Maryland Waste Disposal Authority, Baltimore, Resource 1/09 at 101.00 BBB 1,158,844
Recovery Revenue Bonds, RESCO Retrofit Project, Series 1998,
4.750%, 1/01/12 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
1,560 Total Industrials 1,565,708
------------------------------------------------------------------------------------------------------------------------------------
LONG-TERM CARE - 3.5% (2.3% OF TOTAL INVESTMENTS)
650 Baltimore County, Maryland, Revenue Bonds, Oak Crest Village, 1/17 at 100.00 BBB+ 658,119
Series 2007A, 5.000%, 1/01/37
300 Maryland Health and Higher Educational Facilities Authority, 7/16 at 100.00 N/R 311,211
Revenue Bonds, Edenwald, Series 2006A, 5.400%, 1/01/31
Maryland Health and Higher Educational Facilities Authority,
Revenue Bonds, King Farm Presbyterian Community, Series 2007A:
500 5.000%, 1/01/17 No Opt. Call N/R 511,445
220 5.250%, 1/01/27 1/17 at 100.00 N/R 225,993
435 Maryland Health and Higher Educational Facilities Authority, 7/17 at 100.00 BBB+ 430,406
Revenue Bonds, Mercy Ridge Retirement Community,
Series 2007, 4.750%, 7/01/34
------------------------------------------------------------------------------------------------------------------------------------
2,105 Total Long-Term Care 2,137,174
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 35.8% (23.6% OF TOTAL INVESTMENTS)
750 Anne Arundel County, Maryland, General Obligation Bonds, 8/09 at 101.00 AAA 760,455
Consolidated Water and Sewerage, Series 1999, 4.500%, 8/01/19
Anne Arundel County, Maryland, General Obligation Bonds, Series 2006:
845 5.000%, 3/01/21 3/16 at 100.00 AAA 900,711
650 5.000%, 3/01/21 3/16 at 100.00 AAA 692,855
750 Baltimore, Maryland, General Obligation Consolidated Public 10/14 at 100.00 AAA 792,248
Improvement Bonds, Series 2004A, 5.000%, 10/15/22 -
AMBAC Insured
35
NZR
Nuveen Maryland Dividend Advantage Municipal Fund 2 (continued)
Portfolio of INVESTMENTS as of 5-31-07
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL (continued)
$ 300 Carroll County, Maryland, Consolidated Public Improvement Bonds, 12/15 at 100.00 AA $ 323,613
Series 2005A, 5.000%, 12/01/16
Cecil County, Maryland, Consolidated General Obligation Public
Improvement Bonds, Series 2001B:
975 4.600%, 8/01/18 8/11 at 101.00 AA- 1,003,002
1,020 4.600%, 8/01/19 8/11 at 101.00 AA- 1,045,867
750 Frederick County, Maryland, General Obligation Public Facilities No Opt. Call AA 821,130
Bonds, Series 2006, 5.000%, 11/01/20
200 Frederick County, Maryland, Special Obligation Bonds, Villages of 7/10 at 102.00 AA 212,552
Lake Linganore Community Development Authority, Series 2001A,
5.700%, 7/01/29 - RAAI Insured
Frederick, Maryland, General Obligation Bonds, Series 2005:
600 5.000%, 8/01/16 - MBIA Insured 8/15 at 100.00 AAA 643,710
500 5.000%, 8/01/17 - MBIA Insured 8/15 at 100.00 AAA 537,185
510 Frederick, Maryland, General Obligation Refunding and 12/11 at 101.00 AA- 530,456
Improvement Bonds, Series 2001, 4.750%, 12/01/19
1,000 Howard County, Maryland, Consolidated Public Improvement 2/14 at 100.00 AAA 1,064,480
Bonds, Series 2004B, 5.000%, 8/15/16
1,000 Maryland, General Obligation Bonds, Series 2005, 5.000%, 8/01/17 8/15 at 100.00 AAA 1,074,370
4,730 Montgomery County, Maryland, Consolidated General Obligation 10/11 at 101.00 AAA 5,011,384
Public Improvement Refunding Bonds, Series 2001,
5.250%, 10/01/18
Prince George's County, Maryland, General Obligation
Consolidated Public Improvement Bonds, Series 2001:
1,000 5.250%, 12/01/20 - FGIC Insured 12/11 at 101.00 AAA 1,063,840
2,820 5.250%, 12/01/21 - FGIC Insured 12/11 at 101.00 AAA 2,992,245
770 Puerto Rico, General Obligation and Public Improvement Bonds, 7/11 at 100.00 AAA 798,128
Series 2001, 5.000%, 7/01/24 - FSA Insured
800 Washington Suburban Sanitary District, Montgomery and 6/15 at 100.00 AAA 860,376
Prince George's Counties, Maryland, Sewerage Disposal Bonds,
Series 2005, 5.000%, 6/01/16
1,000 Washington Suburban Sanitary District, Montgomery and 6/15 at 100.00 AAA 1,075,470
Prince George's Counties, Maryland, Water Supply Bonds,
Series 2005, 5.000%, 6/01/16
------------------------------------------------------------------------------------------------------------------------------------
20,970 Total Tax Obligation/General 22,204,077
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 18.6% (12.3% OF TOTAL INVESTMENTS)
625 Annapolis, Maryland, Special Obligation Bonds, Park Place Project, 1/15 at 101.00 N/R 642,063
Series 2005A, 5.350%, 7/01/34
535 Anne Arundel County, Maryland, Tax Increment Financing Revenue No Opt. Call N/R 538,675
Bonds, Parole Town Center Project, Series 2002, 5.000%, 7/01/12
530 Baltimore Board of School Commissioners, Maryland, Revenue 5/13 at 100.00 AA+ 559,950
Bonds, City Public School System, Series 2003A, 5.000%, 5/01/15
Baltimore County, Maryland, Certificates of Participation, Health
and Social Services Building Project, Series 2001:
1,580 5.000%, 8/01/20 8/11 at 101.00 AA+ 1,640,751
1,660 5.000%, 8/01/21 8/11 at 101.00 AA+ 1,721,885
500 Baltimore, Maryland, Project Revenue Bonds, Series 2006, 7/16 at 100.00 AAA 527,035
5.000%, 7/01/31 - AMBAC Insured
350 Hyattsville, Maryland, Special Obligation Bonds, University Town 7/14 at 102.00 N/R 369,614
Center Project, Series 2004, 5.750%, 7/01/34
1,000 Maryland Department of Transportation, Consolidated Transportation No Opt. Call AAA 1,113,000
Revenue Bonds, Series 2002, 5.500%, 2/01/16
1,405 Maryland Economic Development Corporation, Lease Revenue 6/12 at 100.50 AA+ 1,500,484
Bonds, Department of Transportation Headquarters Building,
Series 2002, 5.375%, 6/01/19
1,000 Montgomery County, Maryland, Special Obligation Bonds, 7/12 at 101.00 AA 1,060,410
West Germantown Development District, Senior Series 2002A,
5.500%, 7/01/27 - RAAI Insured
36
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED (continued)
$ 270 Prince George's County, Maryland, Special Obligation Bonds, 7/15 at 100.00 N/R $ 275,252
National Harbor Project, Series 2005, 5.200%, 7/01/34
475 Prince George's County, Maryland, Special Tax District Bonds, 7/13 at 100.00 N/R 482,011
Victoria Falls Project, Series 2005, 5.250%, 7/01/35
1,000 Puerto Rico Highway and Transportation Authority, Highway No Opt. Call AAA 1,134,270
Revenue Bonds, Series 2007N, 5.250%, 7/01/31 - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
10,930 Total Tax Obligation/Limited 11,565,400
------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 2.7% (1.8% OF TOTAL INVESTMENTS)
Maryland Health and Higher Educational Facilities Authority,
Parking Facilities Revenue Bonds, Johns Hopkins Hospital, Series
2001:
650 5.000%, 7/01/27 - AMBAC Insured 7/11 at 100.00 AAA 668,077
1,000 5.000%, 7/01/34 - AMBAC Insured 7/11 at 100.00 AAA 1,027,810
------------------------------------------------------------------------------------------------------------------------------------
1,650 Total Transportation 1,695,887
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 18.7% (12.4% OF TOTAL INVESTMENTS) (4)
1,500 Baltimore County, Maryland, Consolidated General Obligation 8/12 at 100.00 AAA 1,567,530
Public Improvement Bonds, Series 2002, 5.000%, 8/01/18
(Pre-refunded 8/01/12)
Frederick County, Maryland, Educational Facilities Revenue Bonds,
Mount St. Mary's College, Series 2001A:
100 5.750%, 9/01/25 (Pre-refunded 3/01/10) 3/10 at 101.00 BBB- (4) 105,766
100 5.800%, 9/01/30 (Pre-refunded 3/01/10) 3/10 at 101.00 BBB- (4) 105,896
1,500 Frederick County, Maryland, General Obligation Public Facilities 12/10 at 101.00 AAA 1,582,635
Bonds, Series 2000, 5.200%, 12/01/19 (Pre-refunded 12/01/10)
Maryland Health and Higher Educational Facilities Authority,
Revenue Bonds, Collington Episcopal Life Care Community Inc.,
Series 2001A:
31 6.750%, 4/01/20 (Pre-refunded 4/01/09) 4/09 at 100.00 N/R (4) 32,300
25 6.750%, 4/01/23 (Pre-refunded 4/01/11) 4/11 at 101.00 N/R (4) 27,480
1,260 Maryland Health and Higher Educational Facilities Authority, No Opt. Call AAA 1,335,310
Revenue Bonds, Helix Health, Series 1997, 5.000%, 7/01/17 -
AMBAC Insured (ETM)
1,175 Maryland Transportation Authority, Revenue Refunding Bonds, No Opt. Call AAA 1,321,711
Transportation Facilities Projects, First Series 1978,
6.800%, 7/01/16 (ETM)
3,000 Puerto Rico Infrastructure Financing Authority, Special Obligation 10/10 at 101.00 AAA 3,190,859
Bonds, Series 2000A, 5.500%, 10/01/40
1,230 Puerto Rico, General Obligation and Public Improvement Bonds, 7/11 at 100.00 AAA 1,286,014
Series 2001, 5.000%, 7/01/24 (Pre-refunded 7/01/11) -
FSA Insured
1,000 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 7/10 at 100.00 AAA 1,065,650
Asset-Backed Bonds, Series 2000, 6.000%, 7/01/26
(Pre-refunded 7/01/10)
------------------------------------------------------------------------------------------------------------------------------------
10,921 Total U.S. Guaranteed 11,621,151
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 3.3% (2.2% OF TOTAL INVESTMENTS)
1,000 Guam Power Authority, Revenue Bonds, Series 1999A, 10/09 at 101.00 AAA 1,035,740
5.250%, 10/01/34 - MBIA Insured
1,000 Maryland Energy Financing Administration, Revenue Bonds, 9/07 at 100.00 N/R 1,008,670
AES Warrior Run Project, Series 1995, 7.400%, 9/01/19
(Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
2,000 Total Utilities 2,044,410
------------------------------------------------------------------------------------------------------------------------------------
37
NZR
Nuveen Maryland Dividend Advantage Municipal Fund 2 (continued)
Portfolio of INVESTMENTS as of 5-31-07
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 0.6% (0.4% OF TOTAL INVESTMENTS)
$ 355 Maryland Water Quality Financing Administration, Revolving No Opt. Call AAA $ 382,871
Loan Fund Revenue Bonds, Series 2005A, 5.000%, 9/01/15
------------------------------------------------------------------------------------------------------------------------------------
$ 90,161 Total Investments (cost $91,526,983) - 151.6% 94,082,939
=============-----------------------------------------------------------------------------------------------------------------------
Floating Rate Obligations - (1.8)% (1,133,000)
--------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 1.8% 1,114,466
--------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (51.6)% (32,000,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 62,064,405
====================================================================================================================
(1) All percentages shown in the Portfolio of Investments
are based on net assets applicable to Common shares
unless otherwise noted.
(2) Optional Call Provisions (not covered by the report of
independent registered public accounting firm): Dates
(month and year) and prices of the earliest optional
call or redemption. There may be other call provisions
at varying prices at later dates. Certain
mortgage-backed securities may be subject to periodic
principal paydowns.
(3) Ratings (not covered by the report of independent
registered public accounting firm): Using the higher of
Standard & Poor's or Moody's rating. Ratings below BBB
by Standard & Poor's Group or Baa by Moody's Investor
Service, Inc. are considered to be below investment
grade.
(4) Backed by an escrow or trust containing sufficient U.S.
Government or U.S. Government agency securities which
ensure the timely payment of principal and interest.
Such investments are normally considered to be
equivalent to AAA rated securities.
N/R Not rated.
WI/DD Purchased on a when-issued or delayed delivery basis.
(ETM) Escrowed to maturity.
(UB) Underlying bond of an inverse floating rate trust
reflected as a financing transaction pursuant to the
provisions of SFAS No. 140.
See accompanying notes to financial statements.
38
NWI
Nuveen Maryland Dividend Advantage Municipal Fund 3
Portfolio of INVESTMENTS
as of 5-31-07
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
CONSUMER DISCRETIONARY - 3.1% (2.1% OF TOTAL INVESTMENTS)
$ 220 Baltimore, Maryland, Pollution Control Revenue Bonds, General No Opt. Call B- $ 219,712
Motors Corporation, Series 1993, 5.350%, 4/01/08
1,000 Baltimore, Maryland, Senior Lien Convention Center Hotel Revenue 9/16 at 100.00 AAA 1,069,050
Bonds, Series 2006A, 5.250%, 9/01/39 - XLCA Insured
380 Baltimore, Maryland, Subordinate Lien Convention Center Hotel 9/16 at 100.00 Ba1 404,062
Revenue Bonds, Series 2006B, 5.875%, 9/01/39
700 Maryland Economic Development Corporation, Revenue Bonds, 12/16 at 100.00 N/R 703,948
Chesapeake Bay Hyatt Conference Center, Series 2006A,
5.000%, 12/01/31
------------------------------------------------------------------------------------------------------------------------------------
2,300 Total Consumer Discretionary 2,396,772
------------------------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES - 3.5% (2.4% OF TOTAL INVESTMENTS)
2,620 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 5/12 at 100.00 BBB 2,741,830
Asset-Backed Refunding Bonds, Series 2002, 5.375%, 5/15/33
------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 12.7% (8.5% OF TOTAL INVESTMENTS)
225 Anne Arundel County, Maryland, Economic Development Revenue 9/12 at 102.00 A3 234,803
Bonds, Community College Project, Series 2002, 5.125%, 9/01/22
625 Frederick County, Maryland, Educational Facilities Revenue Bonds, 9/16 at 100.00 BBB- 665,019
Mount Saint Mary's College, Series 2006, 5.625%, 9/01/38
690 Hartford County, Maryland, Economic Development Revenue 4/14 at 100.00 A+ 727,163
Bonds, Battelle Memorial Institute, Series 2004, 5.250%, 4/01/34
625 Maryland Health and Higher Educational Facilities Authority, 7/14 at 100.00 A- 650,369
Revenue Bonds, Goucher College, Series 2004, 5.125%, 7/01/34
1,000 Maryland Health and Higher Educational Facilities Authority, 7/12 at 100.00 AA 1,033,930
Revenue Bonds, Johns Hopkins University, Series 2002A,
5.000%, 7/01/32
625 Maryland Industrial Development Financing Authority, Revenue 5/15 at 100.00 N/R 670,269
Bonds, Our Lady of Good Counsel High School, Series 2005A,
6.000%, 5/01/35
710 Montgomery County Revenue Authority, Maryland, Lease Revenue 5/15 at 100.00 A1 751,918
Bonds, Montgomery College Arts Center Project, Series 2005A,
5.000%, 5/01/18
1,000 Morgan State University, Maryland, Student Tuition and Fee 7/13 at 100.00 AAA 1,042,250
Revenue Bonds, Academic Fees and Auxiliary Facilities,
Series 2003A, 5.000%, 7/01/32 - FGIC Insured
985 University of Maryland, Auxiliary Facility and Tuition Revenue 4/11 at 100.00 AA 999,450
Bonds, Series 2001B, 4.625%, 4/01/21
1,000 University of Maryland, Auxiliary Facility and Tuition Revenue 4/13 at 100.00 AA 1,048,600
Bonds, Series 2003A, 5.000%, 4/01/19
800 University of Maryland, Auxiliary Facility and Tuition Revenue 10/16 at 100.00 AA 851,176
Bonds, Series 2006A, 5.000%, 10/01/22
1,150 Westminster, Maryland, Educational Facilities Revenue Bonds, 11/16 at 100.00 BBB+ 1,195,494
McDaniel College, Series 2006, 5.000%, 11/01/31
------------------------------------------------------------------------------------------------------------------------------------
9,435 Total Education and Civic Organizations 9,870,441
------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE - 22.8% (15.2% OF TOTAL INVESTMENTS)
700 Maryland Health and Higher Education Facilities Authority, 7/16 at 100.00 A 714,315
Revenue Bonds, University of Maryland Medical System,
Series 2006, 5.000%, 7/01/31
39
NWI
Nuveen Maryland Dividend Advantage Municipal Fund 3 (continued)
Portfolio of INVESTMENTS as of 5-31-07
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE (continued)
$ 1,000 Maryland Health and Higher Educational Facilities Authority, 7/08 at 101.00 AAA $ 1,021,090
Revenue Bonds, Anne Arundel Medical Center, Series 1998,
5.125%, 7/01/33 - FSA Insured
775 Maryland Health and Higher Educational Facilities Authority, 7/14 at 100.00 A2 826,127
Revenue Bonds, Calvert Memorial Hospital, Series 2004,
5.500%, 7/01/36
1,250 Maryland Health and Higher Educational Facilities Authority, 7/12 at 100.00 Baa1 1,328,475
Revenue Bonds, Carroll County General Hospital, Series 2002,
5.800%, 7/01/32
870 Maryland Health and Higher Educational Facilities Authority, 7/14 at 100.00 AA 893,708
Revenue Bonds, Civista Medical Center, Series 2005,
5.000%, 7/01/37 - RAAI Insured
885 Maryland Health and Higher Educational Facilities Authority, 7/17 at 100.00 Baa1 902,169
Revenue Bonds, Doctors Community Hospital, Series 2007A,
5.000%, 7/01/29
700 Maryland Health and Higher Educational Facilities Authority, 7/12 at 100.00 Baa1 714,392
Revenue Bonds, Frederick Memorial Hospital, Series 2002,
5.125%, 7/01/35
800 Maryland Health and Higher Educational Facilities Authority, 7/11 at 100.00 A+ 809,528
Revenue Bonds, Greater Baltimore Medical Center, Series 2001,
5.000%, 7/01/34
1,000 Maryland Health and Higher Educational Facilities Authority, 5/11 at 100.00 AA- 1,026,840
Revenue Bonds, Johns Hopkins Hospital, Series 2001,
5.000%, 5/15/21
1,000 Maryland Health and Higher Educational Facilities Authority, 7/13 at 100.00 Baa3 1,039,450
Revenue Bonds, Kennedy Krieger Institute, Series 2003,
5.500%, 7/01/33
725 Maryland Health and Higher Educational Facilities Authority, 7/14 at 100.00 A 743,350
Revenue Bonds, LifeBridge Health System, Series 2004A,
5.125%, 7/01/34
900 Maryland Health and Higher Educational Facilities Authority, 8/14 at 100.00 A3 941,175
Revenue Bonds, MedStar Health, Series 2004, 5.375%, 8/15/24
650 Maryland Health and Higher Educational Facilities Authority, 7/11 at 100.00 A- 677,216
Revenue Bonds, Mercy Medical Center, Series 2001,
5.625%, 7/01/31
1,845 Maryland Health and Higher Educational Facilities Authority, 7/12 at 100.00 A3 1,945,589
Revenue Bonds, Union Hospital of Cecil County, Series 2002,
5.625%, 7/01/32
2,100 Maryland Health and Higher Educational Facilities Authority, 7/16 at 100.00 AAA 2,197,440
Revenue Bonds, Western Maryland Health, Series 2006A,
5.000%, 7/01/34 - MBIA Insured (UB)
775 Maryland Health and Higher Educational Facilities Authority, 1/13 at 101.00 Baa2 820,694
Revenue Refunding Bonds, Adventist Healthcare, Series 2003A,
5.750%, 1/01/25
Prince George's County, Maryland, Revenue Bonds, Dimensions
Health Corporation, Series 1994:
350 5.375%, 7/01/14 7/07 at 100.00 B3 329,424
900 5.300%, 7/01/24 7/07 at 100.00 B3 785,223
------------------------------------------------------------------------------------------------------------------------------------
17,225 Total Health Care 17,716,205
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 14.7% (9.8% OF TOTAL INVESTMENTS)
980 Maryland Community Development Administration, Housing 7/12 at 100.00 Aa2 981,921
Revenue Bonds, Series 2002B, 4.950%, 7/01/32 (Alternative
Minimum Tax)
1,250 Maryland Economic Development Corporation, Senior Lien Student 10/13 at 100.00 B2 1,245,925
Housing Revenue Bonds, University of Maryland - Baltimore,
Series 2003A, 5.625%, 10/01/23
Maryland Economic Development Corporation, Student Housing
Revenue Bonds, Sheppard Pratt University Village, Series 2001:
20 5.875%, 7/01/21 - ACA Insured 7/11 at 101.00 A 21,297
150 6.000%, 7/01/33 - ACA Insured 7/11 at 101.00 A 160,247
475 Maryland Economic Development Corporation, Student Housing 6/16 at 100.00 AAA 497,971
Revenue Refunding Bonds, University of Maryland College Park
Projects, Series 2006, 5.000%, 6/01/33 - CIFG Insured
Montgomery County Housing Opportunities Commission, Maryland,
Multifamily Housing Development Bonds, Series 2002B:
515 5.100%, 7/01/33 (Alternative Minimum Tax) 7/12 at 100.00 Aaa 520,603
3,000 5.200%, 7/01/44 (Alternative Minimum Tax) 7/12 at 100.00 Aaa 3,041,550
40
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY (continued)
$ 4,860 Prince George's County Housing Authority, Maryland, 11/12 at 100.00 AAA $ 4,940,772
GNMA Collateralized Mortgage Revenue Bonds, Fairview and
Hillside Projects, Series 2002A, 4.700%, 11/20/22
------------------------------------------------------------------------------------------------------------------------------------
11,250 Total Housing/Multifamily 11,410,286
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 4.2% (2.8% OF TOTAL INVESTMENTS)
595 Maryland Community Development Administration, Department 9/15 at 100.00 Aa2 599,980
of Housing and Community Development, Residential Revenue
Bonds, Series 2006F, 4.900%, 9/01/26 (Alternative Minimum Tax)
1,200 Maryland Community Development Administration, Department 3/16 at 100.00 Aa2 1,208,412
of Housing and Community Development, Residential Revenue
Bonds, Series 2006I, 4.875%, 9/01/26 (Mandatory put 3/01/22)
(Alternative Minimum Tax)
815 Maryland Community Development Administration, Department 9/16 at 100.00 Aa2 817,649
of Housing and Community Development, Residential Revenue
Bonds, Series 2006L, 4.900%, 9/01/31 (Alternative Minimum Tax)
620 Maryland Community Development Administration, Housing and 3/17 at 100.00 Aa2 615,573
Community Development Residential Revenue Bonds,
Series 2007D, 4.850%, 9/01/37 (WI/DD, Settling 6/20/07)
(Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
3,230 Total Housing/Single Family 3,241,614
------------------------------------------------------------------------------------------------------------------------------------
INDUSTRIALS - 2.0% (1.3% OF TOTAL INVESTMENTS)
510 Maryland Economic Development Corporation, Solid Waste 4/12 at 101.00 BBB 506,099
Disposal Revenue Bonds, Waste Management Inc., Series 2002,
4.600%, 4/01/16 (Alternative Minimum Tax)
1,000 Northeast Maryland Waste Disposal Authority, Baltimore, 1/09 at 101.00 BBB 1,007,690
Resource Recovery Revenue Bonds, RESCO Retrofit Project,
Series 1998, 4.750%, 1/01/12 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
1,510 Total Industrials 1,513,789
------------------------------------------------------------------------------------------------------------------------------------
LONG-TERM CARE - 3.3% (2.2% OF TOTAL INVESTMENTS)
790 Baltimore County, Maryland, Revenue Bonds, Oak Crest Village, 1/17 at 100.00 BBB+ 799,867
Series 2007A, 5.000%, 1/01/37
400 Maryland Health and Higher Educational Facilities Authority, 7/16 at 100.00 N/R 414,948
Revenue Bonds, Edenwald, Series 2006A, 5.400%, 1/01/31
Maryland Health and Higher Educational Facilities Authority,
Revenue Bonds, King Farm Presbyterian Community, Series 2007A:
280 5.000%, 1/01/17 No Opt. Call N/R 286,409
520 5.250%, 1/01/27 1/17 at 100.00 N/R 534,165
540 Maryland Health and Higher Educational Facilities Authority, 7/17 at 100.00 BBB+ 534,298
Revenue Bonds, Mercy Ridge Retirement Community,
Series 2007, 4.750%, 7/01/34
------------------------------------------------------------------------------------------------------------------------------------
2,530 Total Long-Term Care 2,569,687
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 22.0% (14.7% OF TOTAL INVESTMENTS)
1,000 Annapolis, Maryland, General Obligation Public Improvement 4/12 at 101.00 AA 1,021,580
Refunding Bonds, Series 2002, 4.375%, 4/01/17
Anne Arundel County, Maryland, General Obligation Bonds,
Series 2006:
845 5.000%, 3/01/21 3/16 at 100.00 AAA 900,711
650 5.000%, 3/01/21 3/16 at 100.00 AAA 692,855
380 Carroll County, Maryland, Consolidated Public Improvement Bonds, 12/15 at 100.00 AA 409,910
Series 2005A, 5.000%, 12/01/16
1,260 Charles County, Maryland, Consolidated General Obligation Public 1/12 at 101.00 AA 1,294,486
Improvement Bonds, Series 2002, 4.400%, 1/15/16
500 Frederick County, Maryland, General Obligation Public Facilities No Opt. Call AA 547,420
Bonds, Series 2006, 5.000%, 11/01/20
245 Frederick County, Maryland, Special Obligation Bonds, Villages of 7/10 at 102.00 AA 260,188
Lake Linganore Community Development Authority, Series 2001A,
5.600%, 7/01/20 - RAAI Insured
41
NWI
Nuveen Maryland Dividend Advantage Municipal Fund 3 (continued)
Portfolio of INVESTMENTS as of 5-31-07
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL (continued)
Frederick, Maryland, General Obligation Bonds, Series 2005:
$ 710 5.000%, 8/01/16 - MBIA Insured 8/15 at 100.00 AAA $ 761,724
535 5.000%, 8/01/17 - MBIA Insured 8/15 at 100.00 AAA 574,788
1,000 Maryland National Capital Park Planning Commission, 1/14 at 100.00 AA+ 1,059,420
Prince George's County, General Obligation Bonds, Park
Acquisition and Development, Series 2004EE-2, 5.000%, 1/15/17
1,500 Maryland, General Obligation Bonds, Series 2005, 5.000%, 8/01/17 8/15 at 100.00 AAA 1,611,555
1,440 Montgomery County, Maryland, Consolidated General Obligation No Opt. Call AAA 1,559,189
Public Improvement Bonds, Series 2006, 5.000%, 5/01/16
1,000 Prince George's County, Maryland, General Obligation 10/13 at 100.00 AA+ 1,052,550
Consolidated Public Improvement Bonds, Series 2003A,
5.000%, 10/01/17
1,000 Prince George's County, Maryland, General Obligation No Opt. Call AA+ 1,050,260
Consolidated Public Improvement Bonds, Series 2004C,
5.000%, 12/01/11
1,000 St. Mary's County, Maryland, General Obligation Hospital Bonds, No Opt. Call AA 1,056,890
Series 2002, 5.000%, 10/01/12
1,000 Washington Suburban Sanitary District, Montgomery and No Opt. Call AAA 1,063,570
Prince George's Counties, Maryland, Sewerage Disposal Bonds,
Series 2004, 5.000%, 6/01/13
1,000 Washington Suburban Sanitary District, Montgomery and 6/15 at 100.00 AAA 1,075,470
Prince George's Counties, Maryland, Sewerage Disposal Bonds,
Series 2005, 5.000%, 6/01/16
1,000 Washington Suburban Sanitary District, Montgomery and 6/15 at 100.00 AAA 1,075,470
Prince George's Counties, Maryland, Water Supply Bonds,
Series 2005, 5.000%, 6/01/16
------------------------------------------------------------------------------------------------------------------------------------
16,065 Total Tax Obligation/General 17,068,036
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 33.2% (22.1% OF TOTAL INVESTMENTS)
750 Annapolis, Maryland, Special Obligation Bonds, Park Place 1/15 at 101.00 N/R 770,475
Project, Series 2005A, 5.350%, 7/01/34
1,000 Baltimore Board of School Commissioners, Maryland, Revenue 5/13 at 100.00 AA+ 1,056,510
Bonds, City Public School System, Series 2003A, 5.000%, 5/01/15
600 Baltimore, Maryland, Project Revenue Bonds, Series 2006, 7/16 at 100.00 AAA 632,442
5.000%, 7/01/31 - AMBAC Insured
450 Hyattsville, Maryland, Special Obligation Bonds, University 7/14 at 102.00 N/R 475,218
Town Center Project, Series 2004, 5.750%, 7/01/34
5,000 Maryland Department of Transportation, Consolidated Transportation No Opt. Call AAA 5,564,999
Revenue Bonds, Series 2002, 5.500%, 2/01/16
2,200 Maryland Economic Development Corporation, Lease Revenue 6/12 at 100.50 AA+ 2,254,802
Bonds, Department of Transportation Headquarters Building,
Series 2002, 4.750%, 6/01/22
450 Maryland Economic Development Corporation, Lease Revenue 9/12 at 100.00 AA+ 474,327
Bonds, Montgomery County Town Square Parking Garage,
Series 2002A, 5.000%, 9/15/13
2,935 Maryland Economic Development Corporation, Lease Revenue 9/12 at 100.00 AA+ 3,114,328
Bonds, Montgomery County Wayne Avenue Parking Project,
Series 2002A, 5.250%, 9/15/16
Maryland Stadium Authority, Lease Revenue Bonds, Montgomery
County Conference Center Facilities, Series 2003:
1,465 5.000%, 6/15/21 6/13 at 100.00 AA+ 1,535,276
1,620 5.000%, 6/15/23 6/13 at 100.00 AA+ 1,688,461
460 Prince George's County, Maryland, Special Obligation Bonds, 7/15 at 100.00 N/R 468,947
National Harbor Project, Series 2005, 5.200%, 7/01/34
575 Prince George's County, Maryland, Special Tax District Bonds, 7/13 at 100.00 N/R 583,487
Victoria Falls Project, Series 2005, 5.250%, 7/01/35
1,200 Puerto Rico Highway and Transportation Authority, Highway No Opt. Call AAA 1,361,124
Revenue Bonds, Series 2007N, 5.250%, 7/01/31 - AMBAC Insured
42
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED (continued)
Puerto Rico Public Buildings Authority, Guaranteed Government
Facilities Revenue Bonds, Series 2002G:
$ 1,000 5.250%, 7/01/17 7/12 at 100.00 BBB- $ 1,044,550
1,205 5.250%, 7/01/20 7/12 at 100.00 BBB- 1,258,128
1,275 5.250%, 7/01/21 7/12 at 100.00 BBB- 1,330,029
1,000 Puerto Rico Public Finance Corporation, Commonwealth No Opt. Call AAA 1,094,330
Appropriation Bonds, Series 1998A, 5.125%, 6/01/24 -
AMBAC Insured
235 Puerto Rico Public Finance Corporation, Commonwealth 2/12 at 100.00 BBB- 246,795
Appropriation Bonds, Series 2002E, 5.500%, 8/01/29
700 Puerto Rico, Highway Revenue Bonds, Highway and No Opt. Call AAA 792,981
Transportation Authority, Series 2003AA, 5.500%, 7/01/19 -
MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
24,120 Total Tax Obligation/Limited 25,747,209
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 22.7% (15.1% OF TOTAL INVESTMENTS) (4)
10 Anne Arundel County, Maryland, General Obligation Bonds, 5/09 at 101.00 AAA 10,336
Consolidated General Improvements, Series 1999,
5.000%, 5/15/19 (Pre-refunded 5/15/09)
Frederick County, Maryland, Educational Facilities Revenue Bonds,
Mount St. Mary's College, Series 2001A:
100 5.750%, 9/01/25 (Pre-refunded 3/01/10) 3/10 at 101.00 BBB- (4) 105,766
100 5.800%, 9/01/30 (Pre-refunded 3/01/10) 3/10 at 101.00 BBB- (4) 105,896
100 Frederick County, Maryland, General Obligation Public Facilities 7/09 at 101.00 AAA 103,993
Bonds, Series 1999, 5.250%, 7/01/17 (Pre-refunded 7/01/09)
Frederick County, Maryland, General Obligation Public Facilities
Bonds, Series 2002:
1,035 5.000%, 11/01/21 (Pre-refunded 11/01/12) 11/12 at 101.00 AA (4) 1,102,389
2,500 5.000%, 11/01/22 (Pre-refunded 11/01/12) 11/12 at 101.00 AA (4) 2,662,775
280 Maryland Health and Higher Educational Facilities Authority, 4/11 at 101.00 N/R (4) 307,770
Revenue Bonds, Collington Episcopal Life Care Community Inc.,
Series 2001A, 6.750%, 4/01/23 (Pre-refunded 4/01/11)
285 Maryland Health and Higher Educational Facilities Authority, No Opt. Call AAA 302,034
Revenue Bonds, Helix Health, Series 1997, 5.000%, 7/01/17 -
AMBAC Insured (ETM)
1,010 Maryland Transportation Authority, Revenue Refunding Bonds, No Opt. Call AAA 1,136,109
Transportation Facilities Projects, First Series 1978,
6.800%, 7/01/16 (ETM)
4,025 Puerto Rico Electric Power Authority, Power Revenue Bonds, 7/10 at 101.00 AAA 4,238,042
Series 2000HH, 5.250%, 7/01/29 (Pre-refunded 7/01/10) -
FSA Insured
3,500 Puerto Rico Infrastructure Financing Authority, Special Obligation 10/10 at 101.00 AAA 3,722,669
Bonds, Series 2000A, 5.500%, 10/01/40
700 Puerto Rico Public Finance Corporation, Commonwealth 2/12 at 100.00 Aaa 747,789
Appropriation Bonds, Series 2002E, 5.500%, 8/01/29
(Pre-refunded 2/01/12)
880 Puerto Rico, General Obligation and Public Improvement Bonds, 7/11 at 100.00 AAA 924,202
Series 2001, 5.125%, 7/01/30 (Pre-refunded 7/01/11) -
FSA Insured
2,000 University of Maryland, Auxiliary Facility and Tuition Revenue 4/12 at 100.00 AA (4) 2,113,640
Bonds, Series 2002A, 5.125%, 4/01/22 (Pre-refunded 4/01/12)
25 Washington Suburban Sanitary District, Montgomery and 6/11 at 101.00 AAA 26,324
Prince George's Counties, Maryland, General Obligation
Construction Bonds, Second Series 2001, 5.000%,
6/01/17 (Pre-refunded 6/01/11)
------------------------------------------------------------------------------------------------------------------------------------
16,550 Total U.S. Guaranteed 17,609,734
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 1.6% (1.1% OF TOTAL INVESTMENTS)
1,250 Maryland Energy Financing Administration, Revenue Bonds, 9/07 at 100.00 N/R 1,260,838
AES Warrior Run Project, Series 1995, 7.400%, 9/01/19
(Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
43
NWI
Nuveen Maryland Dividend Advantage Municipal Fund 3 (continued)
Portfolio of INVESTMENTS as of 5-31-07
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 4.0% (2.7% OF TOTAL INVESTMENTS)
$ 2,570 Baltimore, Maryland, Revenue Refunding Bonds, Wastewater 7/12 at 100.00 AAA $ 2,676,501
Projects, Series 2002A, 5.125%, 7/01/42 - FGIC Insured
430 Maryland Water Quality Financing Administration, Revolving No Opt. Call AAA 463,759
Loan Fund Revenue Bonds, Series 2005A, 5.000%, 9/01/15
------------------------------------------------------------------------------------------------------------------------------------
3,000 Total Water and Sewer 3,140,260
------------------------------------------------------------------------------------------------------------------------------------
$ 111,085 Total Investments (cost $114,131,178) - 149.8% 116,286,701
=============-----------------------------------------------------------------------------------------------------------------------
Floating Rate Obligations - (1.8)% (1,400,000)
--------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 2.2% 1,752,984
--------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (50.2)% (39,000,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 77,639,685
====================================================================================================================
(1) All percentages shown in the Portfolio of Investments
are based on net assets applicable to Common shares
unless otherwise noted.
(2) Optional Call Provisions (not covered by the report of
independent registered public accounting firm): Dates
(month and year) and prices of the earliest optional
call or redemption. There may be other call provisions
at varying prices at later dates. Certain
mortgage-backed securities may be subject to periodic
principal paydowns.
(3) Ratings (not covered by the report of independent
registered public accounting firm): Using the higher of
Standard & Poor's or Moody's rating. Ratings below BBB
by Standard & Poor's Group or Baa by Moody's Investor
Service, Inc. are considered to be below investment
grade.
(4) Backed by an escrow or trust containing sufficient U.S.
Government or U.S. Government agency securities which
ensure the timely payment of principal and interest.
Such investments are normally considered to be
equivalent to AAA rated securities.
N/R Not rated.
WI/DD Purchased on a when-issued or delayed delivery basis.
(ETM) Escrowed to maturity.
(UB) Underlying bond of an inverse floating rate trust
reflected as a financing transaction pursuant to the
provisions of SFAS No. 140.
See accompanying notes to financial statements.
44
NPV
Nuveen Virginia Premium Income Municipal Fund
Portfolio of INVESTMENTS
as of 5-31-07
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES - 3.4% (2.3% OF TOTAL INVESTMENTS)
$ 4,640 Tobacco Settlement Financing Corporation of Virginia, Tobacco 6/17 at 100.00 BBB $ 4,547,988
Settlement Asset Backed Bonds, Series 2007B1, 5.000%, 6/01/47
------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 5.1% (3.4% OF TOTAL INVESTMENTS)
1,000 Prince William County Industrial Development Authority, Virginia, 10/13 at 101.00 A3 1,058,610
Educational Facilities Revenue Bonds, Catholic Diocese of
Arlington, Series 2003, 5.500%, 10/01/33
500 Prince William County Park Authority, Virginia, Park Facilities 10/09 at 101.00 A3 524,080
Revenue Refunding and Improvement Bonds, Series 1999,
6.000%, 10/15/28
700 Puerto Rico Industrial, Tourist, Educational, Medical and 12/12 at 101.00 BBB- 735,196
Environmental Control Facilities Financing Authority, Higher
Education Revenue Refunding Bonds, Ana G. Mendez University
System, Series 2002, 5.375%, 12/01/21
475 The Rector and Visitors of the University of Virginia, General 6/15 at 100.00 AAA 507,918
Revenue Bonds, Series 2005, 5.000%, 6/01/18
2,120 Virginia College Building Authority, Educational Facilities 9/11 at 100.00 AA+ 2,182,349
Revenue Bonds, Public Higher Education Financing Program,
Series 2001A, 5.000%, 9/01/26
1,635 Virginia Commonwealth University, Revenue Bonds, Series 2004A, 5/14 at 101.00 AAA 1,745,755
5.000%, 5/01/17 - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
6,430 Total Education and Civic Organizations 6,753,908
------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE - 21.5% (14.5% OF TOTAL INVESTMENTS)
2,000 Albemarle County Industrial Development Authority, Virginia, 10/12 at 100.00 A2 2,050,280
Hospital Revenue Bonds, Martha Jefferson Hospital, Series 2002,
5.250%, 10/01/35
4,850 Fairfax County Industrial Development Authority, Virginia, Hospital No Opt. Call AA+ 5,140,950
Revenue Refunding Bonds, Inova Health System, Series 1993A,
5.000%, 8/15/23
1,000 Fredericksburg Economic Development Authority, Virginia, No Opt. Call A3 1,065,530
Healthcare Revenue Bonds, Medicorp Health System, Series 2007,
5.250%, 6/15/23
1,250 Fredericksburg Industrial Development Authority, Virginia, Revenue 6/12 at 100.00 A3 1,271,038
Bonds, MediCorp Health System, Series 2002B, 5.125%, 6/15/33
1,000 Hanover County Industrial Development Authority, Virginia, Hospital No Opt. Call AAA 1,150,000
Revenue Bonds, Memorial Regional Medical Center, Series 1995,
6.375%, 8/15/18 - MBIA Insured
2,300 Harrisonburg Industrial Development Authority, Virginia, Hospital 8/16 at 100.00 AAA 2,404,282
Facilities Revenue Bonds, Rockingham Memorial Hospital,
Series 2006, 5.000%, 8/15/31 - AMBAC Insured
1,500 Henrico County Economic Development Authority, Virginia, Revenue 11/12 at 100.00 A- 1,576,035
Bonds, Bon Secours Health System Inc., Series 2002A,
5.600%, 11/15/30
1,500 Henrico County Industrial Development Authority, Virginia, No Opt. Call AAA 1,796,805
Healthcare Revenue Bonds, Bon Secours Health System,
Series 1996, 6.250%, 8/15/20 - MBIA Insured
1,500 Manassas Industrial Development Authority, Virginia, Hospital 4/13 at 100.00 A2 1,545,810
Revenue Bonds, Prince William Hospital, Series 2002,
5.250%, 4/01/33
4,750 Medical College of Virginia Hospital Authority, General Revenue 7/08 at 102.00 AAA 4,865,567
Bonds, Series 1998, 5.125%, 7/01/23 - MBIA Insured
3,000 Roanoke Industrial Development Authority, Virginia, Hospital 7/12 at 100.00 AAA 3,179,550
Revenue Bonds, Carilion Health System, Series 2002A,
5.500%, 7/01/19 - MBIA Insured
45
NPV
Nuveen Virginia Premium Income Municipal Fund (continued)
Portfolio of INVESTMENTS as of 5-31-07
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE (continued)
$ 1,010 Stafford County Economic Development Authority, Virginia, Hospital 6/16 at 100.00 A3 $ 1,050,501
Facilities Revenue Bonds, MediCorp Health System, Series 2006,
5.250%, 6/15/31
1,425 Winchester Industrial Development Authority, Virginia, Hospital 1/17 at 100.00 AA- 1,481,843
Revenue Bonds, Winchester Medical Center, Series 2007,
5.125%, 1/01/31
------------------------------------------------------------------------------------------------------------------------------------
27,085 Total Health Care 28,578,191
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 3.5% (2.3% OF TOTAL INVESTMENTS)
1,415 Arlington County Industrial Development Authority, Virginia, 5/10 at 100.00 Aaa 1,478,307
Multifamily Housing Revenue Bonds, Patrick Henry Apartments,
Series 2000, 6.050%, 11/01/32 (Mandatory put 11/01/20)
(Alternative Minimum Tax)
Danville Industrial Development Authority, Virginia, Student
Housing Revenue Bonds, Collegiate Housing Foundation, Averett
College, Series 1999A:
500 6.875%, 6/01/20 6/09 at 102.00 N/R 525,225
1,500 7.000%, 6/01/30 6/09 at 102.00 N/R 1,575,840
1,000 Lynchburg Redevelopment and Housing Authority, Virginia, Vistas 4/10 at 102.00 AAA 1,029,910
GNMA Mortgage-Backed Revenue Bonds, Series 2000A,
6.200%, 1/20/40 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
4,415 Total Housing/Multifamily 4,609,282
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 5.0% (3.4% OF TOTAL INVESTMENTS)
335 Puerto Rico Housing Finance Authority, Mortgage-Backed 6/13 at 100.00 AAA 336,886
Securities Program Home Mortgage Revenue Bonds,
Series 2003A, 4.875%, 6/01/34 (Alternative Minimum Tax)
1,000 Virginia Housing Development Authority, Commonwealth Mortgage 7/11 at 100.00 AAA 1,028,830
Bonds, Series 2001H-1, 5.350%, 7/01/31 - MBIA Insured
1,500 Virginia Housing Development Authority, Commonwealth Mortgage 1/15 at 100.00 AAA 1,479,240
Bonds, Series 2005C-C2, 4.750%, 10/01/32 (Alternative
Minimum Tax)
3,900 Virginia Housing Development Authority, Commonwealth Mortgage 7/16 at 100.00 AAA 3,846,375
Bonds, Series 2007B, 4.750%, 7/01/32 (Alternative
Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
6,735 Total Housing/Single Family 6,691,331
------------------------------------------------------------------------------------------------------------------------------------
INDUSTRIALS - 1.5% (1.0% OF TOTAL INVESTMENTS)
2,000 Charles County Industrial Development Authority, Virginia, No Opt. Call BBB 2,017,060
Solid Waste Disposal Facility Revenue Refunding Bonds,
USA Waste of Virginia Inc., Series 1999, 4.875%, 2/01/09
(Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
LONG-TERM CARE - 3.3% (2.2% OF TOTAL INVESTMENTS)
1,080 Fairfax County Economic Development Authority, Virginia, 10/17 at 100.00 N/R 1,099,008
Residential Care Facilities Mortgage Revenue Bonds, Goodwin
House, Inc., Series 2007A, 5.125%, 10/01/37
800 Fairfax County Economic Development Authority, Virginia, 10/16 at 100.00 BBB 796,232
Retirement Center Revenue Bonds, Greenspring Village,
Series 2006A, 4.875%, 10/01/36
1,495 Henrico County Economic Development Authority, Virginia, 7/09 at 102.00 AAA 1,577,913
GNMA Mortgage-Backed Securities Program Assisted Living
Revenue Bonds, Beth Sholom, Series 1999A, 5.900%, 7/20/29
Henrico County Economic Development Authority, Virginia,
Residential Care Facility Revenue Bonds, Westminster Canterbury
of Richmond, Series 2006:
100 5.000%, 10/01/27 10/11 at 103.00 BBB- 101,071
800 5.000%, 10/01/35 No Opt. Call BBB- 804,808
------------------------------------------------------------------------------------------------------------------------------------
4,275 Total Long-Term Care 4,379,032
------------------------------------------------------------------------------------------------------------------------------------
MATERIALS - 1.2% (0.8% OF TOTAL INVESTMENTS)
500 Bedford County Industrial Development Authority, Virginia, 2/08 at 102.00 B2 504,335
Industrial Development Revenue Refunding Bonds, Nekoosa
Packaging Corporation, Series 1998, 5.600%, 12/01/25
(Alternative Minimum Tax) (5)
46
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
MATERIALS (continued)
$ 1,000 Goochland County Industrial Development Authority, Virginia, 12/08 at 101.00 B2 $ 1,008,860
Industrial Development Revenue Refunding Bonds, Nekoosa
Packaging Corporation Project, Series 1998, 5.650%, 12/01/25
(Alternative Minimum Tax) (5)
------------------------------------------------------------------------------------------------------------------------------------
1,500 Total Materials 1,513,195
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 21.8% (14.7% OF TOTAL INVESTMENTS)
1,500 Arlington County, Virginia, General Obligation Bonds, Series 2006, 8/16 at 100.00 AAA 1,609,920
5.000%, 8/01/20
Chesapeake, Virginia, General Obligation Water and Sewerage
Bonds, Series 2003B:
1,880 5.000%, 6/01/21 6/13 at 100.00 AA 1,960,558
2,060 5.000%, 6/01/23 6/13 at 100.00 AA 2,143,842
1,355 Harrisonburg, Virginia, General Obligation Bonds, Public Safety 7/12 at 101.00 AAA 1,424,661
and Steam Plant, Series 2002, 5.000%, 7/15/19 - FGIC Insured
1,390 Henrico County, Virginia, General Obligation Bonds, Series 2005, 7/15 at 100.00 AAA 1,495,904
5.000%, 7/15/16
2,105 Loudoun County, Virginia, General Obligation Bonds, Series 2006, 12/16 at 100.00 AAA 2,245,151
5.000%, 12/01/25
105 Loudoun County, Virginia, General Obligation Public Improvement 5/12 at 100.00 AAA 110,898
Bonds, Series 2002A, 5.250%, 5/01/22
1,435 Loudoun County, Virginia, General Obligation Public Improvement 6/15 at 100.00 AAA 1,534,446
Bonds, Series 2005B, 5.000%, 6/01/18
1,185 Lynchburg, Virginia, General Obligation Bonds, Series 2004, 6/14 at 100.00 AA 1,252,284
5.000%, 6/01/21
1,515 Manassas Park, Virginia, General Obligation Bonds, Series 2007A, 4/17 at 100.00 AAA 1,602,340
5.000%, 4/01/29 (WI/DD, Settling 6/06/07) - CIFG Insured
1,350 Newport News, Virginia, General Obligation Bonds, Series 2004C, 5/14 at 101.00 AA 1,445,148
5.000%, 5/01/16
1,280 Portsmouth, Virginia, General Obligation Bonds, Series 2005A, No Opt. Call AAA 1,373,299
5.000%, 4/01/15 - MBIA Insured
1,480 Richmond, Virginia, General Obligation Bonds, Series 2004A, 7/14 at 100.00 AAA 1,558,499
5.000%, 7/15/21 - FSA Insured
1,500 Richmond, Virginia, General Obligation Bonds, Series 2005A, 7/15 at 100.00 AAA 1,603,620
5.000%, 7/15/17 - FSA Insured
1,430 Roanoke, Virginia, General Obligation Public Improvement Bonds, 10/12 at 101.00 AA 1,513,097
Series 2002A, 5.000%, 10/01/17
1,135 Suffolk, Virginia, General Obligation Bonds, Series 2005, No Opt. Call Aa3 1,220,091
5.000%, 12/01/15
2,155 Virginia Beach, Virginia, General Obligation Bonds, Series 2003B, 5/13 at 100.00 AA+ 2,273,288
5.000%, 5/01/15
1,100 Virginia Beach, Virginia, General Obligation Bonds, Series 2005, 1/16 at 100.00 AA+ 1,170,015
5.000%, 1/15/20
1,425 Virginia Beach, Virginia, General Obligation Public Improvement 6/11 at 101.00 AA+ 1,487,472
Bonds, Series 2001, 5.000%, 6/01/20
------------------------------------------------------------------------------------------------------------------------------------
27,385 Total Tax Obligation/General 29,024,533
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 30.1% (20.2% OF TOTAL INVESTMENTS)
Buena Vista Public Recreational Facilities Authority, Virginia, Lease
Revenue Bonds, Golf Course Project, Series 2005A:
335 5.250%, 7/15/25 - ACA Insured 7/15 at 100.00 A 352,618
260 5.500%, 7/15/35 - ACA Insured 7/15 at 100.00 A 276,240
1,340 Culpeper Industrial Development Authority, Virginia, Lease 1/15 at 100.00 AAA 1,411,181
Revenue Bonds, School Facilities Project, Series 2005,
5.000%, 1/01/20 - MBIA Insured
Cumberland County, Virginia, Certificates of Participation,
Series 1997:
1,075 6.200%, 7/15/12 No Opt. Call N/R 1,121,591
1,350 6.375%, 7/15/17 No Opt. Call N/R 1,484,568
1,000 Dinwiddie County Industrial Development Authority, Virginia, 2/14 at 100.00 AAA 1,064,510
Lease Revenue Bonds, Series 2004B, 5.125%, 2/15/16 -
MBIA Insured
47
NPV
Nuveen Virginia Premium Income Municipal Fund (continued)
Portfolio of INVESTMENTS as of 5-31-07
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED (continued)
$ 1,000 Fairfax County Economic Development Authority, Virginia, Lease 5/16 at 100.00 AA+ $ 1,068,500
Revenue Bonds, Joint Public Uses Community Project,
Series 2006, 5.000%, 5/15/18
Fairfax County Economic Development Authority, Virginia, Lease
Revenue Bonds, Laurel Hill Public Facilities Projects, Series 2003:
2,260 5.000%, 6/01/14 6/13 at 101.00 AA+ 2,405,657
2,165 5.000%, 6/01/22 6/13 at 101.00 AA+ 2,271,128
1,660 Front Royal and Warren County Industrial Development Authority, 4/14 at 100.00 AAA 1,747,449
Virginia, Lease Revenue Bonds, Series 2004B, 5.000%, 4/01/18 -
FSA Insured
1,270 James City County Economic Development Authority, Virginia, 7/15 at 100.00 AA 1,344,625
Revenue Bonds, County Government Projects, Series 2005,
5.000%, 7/15/19
1,930 Prince William County, Virginia, Certificates of Participation, 6/15 at 100.00 Aaa 2,042,191
County Facilities, Series 2005, 5.000%, 6/01/18 -
AMBAC Insured
1,185 Puerto Rico Highway and Transportation Authority, Highway 7/12 at 100.00 AAA 1,229,864
Revenue Bonds, Series 2002D, 5.000%, 7/01/32 - FSA Insured
2,000 Puerto Rico Highway and Transportation Authority, Highway No Opt. Call AAA 2,268,540
Revenue Bonds, Series 2007N, 5.250%, 7/01/31 -
AMBAC Insured
5,000 Puerto Rico Infrastructure Financing Authority, Special Tax Revenue No Opt. Call AAA 950,300
Bonds, Series 2005A, 0.000%, 7/01/43 - AMBAC Insured
5,875 Puerto Rico Infrastructure Financing Authority, Special Tax Revenue No Opt. Call AAA 2,271,686
Bonds, Series 2005C, 0.000%, 7/01/28 - AMBAC Insured
Puerto Rico Public Buildings Authority, Guaranteed Government
Facilities Revenue Refunding Bonds, Series 2002D:
265 5.250%, 7/01/27 7/12 at 100.00 BBB- 275,823
320 5.250%, 7/01/36 7/12 at 100.00 BBB- 331,888
1,110 Spotsylvania County Industrial Development Authority, Virginia, 8/13 at 100.00 AAA 1,118,902
Lease Revenue Bonds, School Facilities, Series 2003B,
4.375%, 8/01/20 - AMBAC Insured
3,235 Stafford County and Staunton Industrial Development Authority, 8/15 at 100.00 AAA 3,381,448
Virginia, Revenue Bonds, Virginia Municipal League and Virginia
Association of Counties Finance Program, Series 2005C,
5.000%, 8/01/35 - MBIA Insured
1,600 Stafford County and Staunton Industrial Development Authority, 8/16 at 100.00 AAA 1,697,088
Virginia, Revenue Bonds, Virginia Municipal League and Virginia
Association of Counties Finance Program, Series 2006A,
5.000%, 8/01/23 - MBIA Insured
1,400 Virginia Beach Development Authority, Public Facilities Revenue 5/15 at 100.00 AA 1,475,684
Bonds, Series 2005A,5.000%, 5/01/22
2,000 Virginia Public School Authority, School Financing Bonds, 8/10 at 101.00 AA+ 2,075,560
1997 Resolution, Series 2000B, 5.000%, 8/01/18
1,625 Virginia Public School Authority, School Financing Bonds, 8/15 at 100.00 AA+ 1,737,645
1997 Resolution, Series 2005C, 5.000%, 8/01/17
Virginia Resources Authority, Infrastructure Revenue Bonds,
Pooled Loan Bond Program, Series 2000B:
95 5.500%, 5/01/20 - FSA Insured 5/10 at 101.00 AAA 99,985
550 5.500%, 5/01/30 - FSA Insured 5/10 at 101.00 AAA 577,533
1,740 Virginia Resources Authority, Infrastructure Revenue Bonds, 5/11 at 101.00 AA 1,812,575
Pooled Loan Bond Program, Series 2002A, 5.000%, 5/01/19
2,000 Virginia Transportation Board, Transportation Revenue Bonds, 5/14 at 100.00 AA+ 2,128,840
U.S. Route 58 Corridor Development Program, Series 2004B,
5.000%, 5/15/15
------------------------------------------------------------------------------------------------------------------------------------
45,645 Total Tax Obligation/Limited 40,023,619
------------------------------------------------------------------------------------------------------------------------------------
48
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 8.7% (5.8% OF TOTAL INVESTMENTS)
$ 1,440 Metropolitan Washington D.C. Airports Authority, Airport System 10/16 at 100.00 AAA $ 1,494,288
Revenue Bonds, Series 2006, 5.000%, 10/01/36 - FGIC Insured
(Alternative Minimum Tax)
4,000 Norfolk Airport Authority, Virginia, Airport Revenue Bonds, 7/11 at 100.00 AAA 4,118,919
Series 2001A, 5.125%, 7/01/31 - FGIC Insured
1,000 Norfolk, Virginia, Parking System Revenue Bonds, Series 2005A, 2/15 at 100.00 AAA 1,052,250
5.000%, 2/01/23 - MBIA Insured
2,500 Richmond Metropolitan Authority, Virginia, Revenue Refunding No Opt. Call AAA 2,790,025
Bonds, Expressway System, Series 2002, 5.250%, 7/15/22 -
FGIC Insured
2,000 Virginia Resources Authority, Airports Revolving Fund Revenue 2/11 at 100.00 Aa2 2,076,060
Bonds, Series 2001A, 5.250%, 8/01/23
------------------------------------------------------------------------------------------------------------------------------------
10,940 Total Transportation 11,531,542
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 28.6% (19.2% OF TOTAL INVESTMENTS) (4)
3,500 Alexandria Industrial Development Authority, Virginia, Fixed Rate 10/10 at 101.00 AAA 3,757,040
Revenue Bonds, Institute for Defense Analyses, Series 2000A,
5.900%, 10/01/30 (Pre-refunded 10/01/10) - AMBAC Insured
750 Bristol, Virginia, General Obligation Utility System Revenue Bonds, No Opt. Call AAA 818,025
Series 2002, 5.000%, 11/01/24 - FSA Insured (ETM)
Fairfax County Water Authority, Virginia, Water Revenue Refunding
Bonds, Series 2002:
925 5.375%, 4/01/19 (Pre-refunded 4/01/12) 4/12 at 100.00 AAA 985,995
200 5.000%, 4/01/27 (Pre-refunded 4/01/12) 4/12 at 100.00 AAA 209,910
Greater Richmond Convention Center Authority, Virginia, Hotel
Tax Revenue Bonds, Convention Center Expansion Project, Series
2000:
600 6.125%, 6/15/25 (Pre-refunded 6/15/10) 6/10 at 101.00 AAA 643,860
2,000 6.125%, 6/15/29 (Pre-refunded 6/15/10) at 101.00 AAA 2,146,200
Loudoun County Industrial Development Authority, Virginia, Hospital
Revenue Bonds, Loudoun Hospital Center, Series 2002A:
375 6.000%, 6/01/22 (Pre-refunded 6/01/12) 6/12 at 101.00 BBB (4) 412,924
800 6.100%, 6/01/32 (Pre-refunded 6/01/12) 6/12 at 101.00 BBB (4) 884,504
755 Metropolitan District of Columbia Airports Authority, Virginia, 10/07 at 101.00 AA- (4) 766,423
Airport System Revenue Bonds, Series 1997A, 5.375%, 10/01/23
(Pre-refunded 10/01/07)
Newport News, Virginia, General Obligation Bonds, General
Improvement and Water Projects, Series 2002A:
2,770 5.000%, 7/01/19 (Pre-refunded 7/01/13) 7/13 at 100.00 AA (4) 2,932,738
1,000 5.000%, 7/01/20 (Pre-refunded 7/01/13) 7/13 at 100.00 AA (4) 1,058,750
1,400 Northern Mariana Islands, General Obligation Bonds, Series 2000A, 6/10 at 100.00 AAA 1,489,208
6.000%, 6/01/20 (Pre-refunded 6/01/10) - ACA Insured
815 Puerto Rico Highway and Transportation Authority, Highway 7/12 at 100.00 Aaa 859,222
Revenue Bonds, Series 2002D, 5.000%, 7/01/32
(Pre-refunded 7/01/12) - FSA Insured
2,500 Puerto Rico Infrastructure Financing Authority, Special Obligation 10/10 at 101.00 AAA 2,659,050
Bonds, Series 2000A, 5.500%, 10/01/40
Puerto Rico Public Buildings Authority, Guaranteed Government
Facilities Revenue Refunding Bonds, Series 2002D:
735 5.250%, 7/01/27 (Pre-refunded 7/01/12) 7/12 at 100.00 BBB- (4) 780,849
880 5.250%, 7/01/36 (Pre-refunded 7/01/12) 7/12 at 100.00 BBB- (4) 934,894
845 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 7/10 at 100.00 AAA 870,325
Asset-Backed Bonds, Series 2000, 5.750%, 7/01/20
(Pre-refunded 7/01/10)
3,500 Richmond, Virginia, Public Utility Revenue Refunding Bonds, 1/08 at 101.00 AAA 3,565,450
Series 1998A, 5.125%, 1/15/28 (Pre-refunded 1/15/08) -
FGIC Insured
Richmond, Virginia, Public Utility Revenue Refunding Bonds,
Series 2002:
750 5.000%, 1/15/27 (Pre-refunded 1/15/12) - FSA Insured 1/12 at 100.00 AAA 785,685
1,700 5.000%, 1/15/33 (Pre-refunded 1/15/12) - FSA Insured 1/12 at 100.00 AAA 1,780,886
49
NPV
Nuveen Virginia Premium Income Municipal Fund (continued)
Portfolio of INVESTMENTS as of 5-31-07
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED (4) (continued)
$ 490 Rockbridge County Industrial Development Authority, Virginia, 7/11 at 105.00 B2 (4) $ 551,230
Horse Center Revenue Refunding Bonds, Series 2001C,
6.850%, 7/15/21 (Pre-refunded 7/15/11)
Tobacco Settlement Financing Corporation of Virginia, Tobacco
Settlement Asset-Backed Bonds, Series 2005:
1,575 5.250%, 6/01/19 (Pre-refunded 6/01/12) 6/12 at 100.00 AAA 1,640,174
3,850 5.500%, 6/01/26 (Pre-refunded 6/01/15) 6/15 at 100.00 AAA 4,184,641
2,000 Virgin Islands Public Finance Authority, Gross Receipts Taxes Loan 10/10 at 101.00 BBB+ (4) 2,179,500
Note, Series 1999A, 6.500%, 10/01/24 (Pre-refunded 10/01/10)
1,000 Virginia College Building Authority, Educational Facilities Revenue 4/10 at 101.00 A+ (4) 1,065,690
Bonds, Hampton University, Series 2000, 6.000%, 4/01/20
(Pre-refunded 4/01/10)
------------------------------------------------------------------------------------------------------------------------------------
35,715 Total U.S. Guaranteed 37,963,173
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 7.1% (4.8% OF TOTAL INVESTMENTS)
Bristol, Virginia, Utility System Revenue Refunding Bonds, Series 2003:
1,705 5.250%, 7/15/14 - MBIA Insured 7/13 at 100.00 AAA 1,828,630
1,800 5.250%, 7/15/15 - MBIA Insured 7/13 at 100.00 AAA 1,927,080
2,775 5.250%, 7/15/23 - MBIA Insured 7/13 at 100.00 AAA 2,944,553
2,500 Mecklenburg County Industrial Development Authority, Virginia, 10/12 at 100.00 Baa1 2,777,000
Revenue Bonds, UAE Mecklenburg Cogeneration LP, Series 2002,
6.500%, 10/15/17 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
8,780 Total Utilities 9,477,263
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 8.0% (5.4% OF TOTAL INVESTMENTS)
Fairfax County Water Authority, Virginia, Water Revenue Refunding
Bonds, Series 2002:
105 5.375%, 4/01/19 4/12 at 100.00 AAA 111,638
800 5.000%, 4/01/27 4/12 at 100.00 AAA 826,272
1,770 Henrico County, Virginia, Water and Sewer System Revenue 5/09 at 102.00 AA+ 1,820,587
Refunding Bonds, Series 1999, 5.000%, 5/01/28
1,000 Loudoun County Sanitation Authority, Virginia, Water and Sewerage 1/15 at 100.00 AA+ 1,049,140
System Revenue Bonds, Series 2004, 5.000%, 1/01/26
Norfolk, Virginia, Water Revenue Refunding Bonds, Series 2001:
1,310 5.000%, 11/01/21 - FGIC Insured 11/11 at 100.00 AAA 1,360,632
1,380 5.000%, 11/01/22 - FGIC Insured 11/11 at 100.00 AAA 1,430,232
2,250 Virginia Beach, Virginia, Storm Water Utility Revenue Bonds, 9/10 at 101.00 Aa3 2,410,470
Series 2000, 6.000%, 9/01/24
1,660 Virginia Resources Authority, Clean Water State Revolving Fund 10/17 at 100.00 AAA 1,649,293
Revenue Bonds, Series 2007, Residuals 1006,
5.397%, 10/01/29 (IF)
------------------------------------------------------------------------------------------------------------------------------------
10,275 Total Water and Sewer 10,658,264
------------------------------------------------------------------------------------------------------------------------------------
$ 195,820 Total Investments (cost $191,342,034) - 148.8% 197,768,381
=============-----------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - (0.8)% (1,068,345)
--------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (48.0)% (63,800,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 132,900,036
====================================================================================================================
50
FORWARD SWAPS OUTSTANDING AT MAY 31, 2007:
FUND FIXED RATE UNREALIZED
NOTIONAL PAY/RECEIVE FLOATING RATE FIXED RATE PAYMENT EFFECTIVE TERMINATION APPRECIATION
COUNTERPARTY AMOUNT FLOATING RATE INDEX (ANNUALIZED) FREQUENCY DATE (6) DATE (DEPRECIATION)
------------------------------------------------------------------------------------------------------------------------------------
JPMorgan $1,250,000 Pay 3-Month USD-LIBOR 5.388% Semi-Annually 4/25/08 4/25/35 $(39,197)
====================================================================================================================================
USD-LIBOR (United States Dollar-London Inter-Bank Offered Rate)
The Fund may invest in "zero coupon" securities. A zero
coupon security does not pay a regular interest coupon
to its holders during the life of the security.
Tax-exempt income to the holder of the security comes
from accretion of the difference between the original
purchase price of the security at issuance and the par
value of the security at maturity and is effectively
paid at maturity. Such securities are included in the
portfolio with a 0.00% coupon rate in their
description. The market prices of zero coupon
securities generally are more volatile than the market
prices of securities that pay interest periodically.
(1) All percentages shown in the Portfolio of Investments
are based on net assets applicable to Common shares
unless otherwise noted.
(2) Optional Call Provisions (not covered by the report of
independent registered public accounting firm): Dates
(month and year) and prices of the earliest optional
call or redemption. There may be other call provisions
at varying prices at later dates. Certain
mortgage-backed securities may be subject to periodic
principal paydowns.
(3) Ratings (not covered by the report of independent
registered public accounting firm): Using the higher of
Standard & Poor's or Moody's rating. Ratings below BBB
by Standard & Poor's Group or Baa by Moody's Investor
Service, Inc. are considered to be below investment
grade.
(4) Backed by an escrow or trust containing sufficient U.S.
Government or U.S. Government agency securities which
ensure the timely payment of principal and interest.
Such investments are normally considered to be
equivalent to AAA rated securities.
(5) The issuer has received a formal adverse determination
from the Internal Revenue Service (the "IRS") regarding
the tax-exempt status of the bonds' coupon payments.
The Fund will continue to treat coupon payments as
tax-exempt income until such time that it is formally
determined that the interest on the bonds should be
treated as taxable.
(6) Effective date represents the date on which both the
Fund and counterparty commence interest payment
accruals on each forward swap contract.
N/R Not rated.
WI/DD Purchased on a when-issued or delayed delivery basis.
(ETM) Escrowed to maturity.
(IF) Inverse floating rate investment.
See accompanying notes to financial statements.
51
NGB
Nuveen Virginia Dividend Advantage Municipal Fund
Portfolio of INVESTMENTS
as of 5-31-07
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES - 6.7% (4.5% OF TOTAL INVESTMENTS)
Guam Economic Development Authority, Tobacco Settlement
Asset-Backed Bonds, Series 2001A:
$ 65 5.000%, 5/15/22 5/11 at 100.00 Baa3 $ 65,788
850 5.400%, 5/15/31 5/11 at 100.00 Baa3 874,939
1,660 Tobacco Settlement Financing Corporation of Virginia, Tobacco 6/17 at 100.00 BBB 1,627,082
Settlement Asset Backed Bonds, Series 2007B1,
5.000%, 6/01/47
715 Tobacco Settlement Financing Corporation of Virginia, Tobacco 6/17 at 100.00 BBB 552,774
Settlement Asset-Backed Bonds, Series 2007B2,
0.000%, 6/01/46
------------------------------------------------------------------------------------------------------------------------------------
3,290 Total Consumer Staples 3,120,583
------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 6.6% (4.5% OF TOTAL INVESTMENTS)
500 Danville Industrial Development Authority, Virginia, Educational 3/11 at 102.00 N/R 515,070
Facilities Revenue Bonds, Averett University, Series 2001,
6.000%, 3/15/22
500 Prince William County Industrial Development Authority, Virginia, 10/13 at 101.00 A3 529,305
Educational Facilities Revenue Bonds, Catholic Diocese of
Arlington, Series 2003, 5.500%, 10/01/33
850 Prince William County Park Authority, Virginia, Park Facilities 10/09 at 101.00 A3 890,936
Revenue Refunding and Improvement Bonds, Series 1999,
6.000%, 10/15/28
Puerto Rico Industrial, Tourist, Educational, Medical and
Environmental Control Facilities Financing Authority, Higher
Education Revenue Bonds, Ana G. Mendez University System,
Series 1999:
160 5.375%, 2/01/19 2/09 at 101.00 BBB- 163,813
320 5.375%, 2/01/29 2/09 at 101.00 BBB- 326,803
160 The Rector and Visitors of the University of Virginia, General 6/15 at 100.00 AAA 171,088
Revenue Bonds, Series 2005, 5.000%, 6/01/18
500 Virginia College Building Authority, Educational Facilities Revenue 7/08 at 101.00 AA 508,895
Refunding Bonds, Marymount University, Series 1998,
5.100%, 7/01/18 - RAAI Insured
------------------------------------------------------------------------------------------------------------------------------------
2,990 Total Education and Civic Organizations 3,105,910
------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE - 13.0% (8.8% OF TOTAL INVESTMENTS)
100 Fairfax County Industrial Development Authority, Virginia, Hospital No Opt. Call AA+ 105,999
Revenue Refunding Bonds, Inova Health System, Series 1993A,
5.000%, 8/15/23
1,000 Fauquier County Industrial Development Authority, Virginia, 10/12 at 102.00 AA 1,050,480
Hospital Revenue Bonds, Fauquier Hospital, Series 2002,
5.250%, 10/01/25 - RAAI Insured
500 Fredericksburg Economic Development Authority, Virginia, No Opt. Call A3 532,765
Healthcare Revenue Bonds, Medicorp Health System,
Series 2007, 5.250%, 6/15/23
500 Fredericksburg Industrial Development Authority, Virginia, 6/12 at 100.00 A3 508,415
Revenue Bonds, MediCorp Health System, Series 2002B,
5.125%, 6/15/33
820 Harrisonburg Industrial Development Authority, Virginia, Hospital 8/16 at 100.00 AAA 857,179
Facilities Revenue Bonds, Rockingham Memorial Hospital,
Series 2006, 5.000%, 8/15/31 - AMBAC Insured
500 Henrico County Economic Development Authority, Virginia, Revenue 11/12 at 100.00 A- 525,345
Bonds, Bon Secours Health System Inc., Series 2002A,
5.600%, 11/15/30
525 Manassas Industrial Development Authority, Virginia, Hospital 4/13 at 100.00 A2 541,034
Revenue Bonds, Prince William Hospital, Series 2002,
5.250%, 4/01/33
800 Norton Industrial Development Authority, Virginia, Hospital 12/11 at 101.00 A 856,632
Revenue Refunding and Improvement Bonds, Norton Community
Hospital, Series 2001, 6.000%, 12/01/22 - ACA Insured
52
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE (continued)
$ 360 Stafford County Economic Development Authority, Virginia, 6/16 at 100.00 A3 $ 374,436
Hospital Facilities Revenue Bonds, MediCorp Health System,
Series 2006, 5.250%, 6/15/31
715 Winchester Industrial Development Authority, Virginia, Hospital 1/17 at 100.00 AA- 743,521
Revenue Bonds, Winchester Medical Center, Series 2007,
5.125%, 1/01/31
------------------------------------------------------------------------------------------------------------------------------------
5,820 Total Health Care 6,095,806
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 4.4% (3.0% OF TOTAL INVESTMENTS)
1,000 Arlington County Industrial Development Authority, Virginia, 11/11 at 102.00 AAA 1,031,960
Multifamily Housing Mortgage Revenue Bonds, Arlington View
Terrace Apartments, Series 2001, 5.150%, 11/01/31 (Mandatory
put 11/01/19) (Alternative Minimum Tax)
1,000 Virginia Housing Development Authority, Rental Housing Bonds, 10/10 at 100.00 AA+ 1,028,470
Series 2000G, 5.625%, 10/01/20 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
2,000 Total Housing/Multifamily 2,060,430
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 6.4% (4.3% OF TOTAL INVESTMENTS)
1,000 Virginia Housing Development Authority, Commonwealth Mortgage 7/11 at 100.00 AAA 1,028,830
Bonds, Series 2001H-1, 5.350%, 7/01/31 - MBIA Insured
600 Virginia Housing Development Authority, Commonwealth Mortgage 1/15 at 100.00 AAA 591,696
Bonds, Series 2005C-C2, 4.750%, 10/01/32 (Alternative
Minimum Tax)
1,400 Virginia Housing Development Authority, Commonwealth Mortgage 7/16 at 100.00 AAA 1,380,750
Bonds, Series 2007B, 4.750%, 7/01/32 (Alternative
Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
3,000 Total Housing/Single Family 3,001,276
------------------------------------------------------------------------------------------------------------------------------------
INDUSTRIALS - 0.1% (0.1% OF TOTAL INVESTMENTS)
50 Charles County Industrial Development Authority, Virginia, No Opt. Call BBB 50,427
Solid Waste Disposal Facility Revenue Refunding Bonds, USA
Waste of Virginia Inc., Series 1999, 4.875%, 2/01/09
(Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
LONG-TERM CARE - 12.5% (8.4% OF TOTAL INVESTMENTS)
700 Albemarle County Industrial Development Authority, Virginia, 1/17 at 100.00 N/R 695,653
Residential Care Facilities Mortgage Revenue Bonds,
Westminster-Cantebury of the Blue Ridge, Series 2007,
5.000%, 1/01/31
350 Chesterfield County Health Center Commission, Virginia, Mortgage 12/15 at 100.00 N/R 355,121
Revenue Bonds, Lucy Corr Village, Series 2005, 5.625%, 12/01/39
400 Fairfax County Economic Development Authority, Virginia, 10/17 at 100.00 N/R 407,040
Residential Care Facilities Mortgage Revenue Bonds, Goodwin
House, Inc., Series 2007A, 5.125%, 10/01/37
500 Fairfax County Economic Development Authority, Virginia, 10/16 at 100.00 BBB 490,970
Retirement Center Revenue Bonds, Greenspring Village,
Series 2006A, 4.750%, 10/01/26
350 Henrico County Economic Development Authority, Virginia, No Opt. Call BBB- 352,104
Residential Care Facility Revenue Bonds, Westminster
Canterbury of Richmond, Series 2006, 5.000%, 10/01/35
700 Industrial Development Authority of the County of Prince William, 1/17 at 100.00 N/R 713,510
Virginia, Residential Care Facility Revenue Bonds, Westminster
at Lake, First Mortgage, Series 2006, 5.125%, 1/01/26
650 James City County Industrial Development Authority, Virginia, 3/12 at 101.00 N/R 689,618
Residential Care Facility First Mortgage Revenue Refunding
Bonds, Williamsburg Landing Inc., Series 2003A, 6.000%, 3/01/23
440 Lynchburg Industrial Development Authority, Virginia, Residential 7/17 at 100.00 N/R 443,102
Care Revenue Bonds, Westminster-Canterbury, Series 2007,
5.000%, 7/01/31
830 Roanoke Industrial Development Authority, Virginia, Residential 12/16 at 100.00 N/R 820,140
Revenue Bonds, Virginia Lutheran Homes Incorporated,
Series 2006, 5.000%, 12/01/39
350 Suffolk Industrial Development Authority, Virginia, Retirement 9/16 at 100.00 N/R 358,141
Facilities First Mortgage Revenue Bonds, Lake Prince Center,
Series 2006, 5.300%, 9/01/31
53
NGB
Nuveen Virginia Dividend Advantage Municipal Fund (continued)
Portfolio of INVESTMENTS as of 5-31-07
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
LONG-TERM CARE (continued)
$ 350 Virginia Beach Development Authority, Virginia, Residential Care 11/15 at 100.00 N/R $ 354,785
Facility Mortgage Revenue Bonds, Westminster Canterbury on
Chesapeake Bay, Series 2005, 5.000%, 11/01/22
175 Winchester Industrial Development Authority, Virginia, Residential 1/15 at 100.00 N/R 178,428
Care Facility Revenue Bonds, Westminster-Canterbury of
Winchester Inc., Series 2005A, 5.200%, 1/01/27
------------------------------------------------------------------------------------------------------------------------------------
5,795 Total Long-Term Care 5,858,612
------------------------------------------------------------------------------------------------------------------------------------
MATERIALS - 1.7% (1.1% OF TOTAL INVESTMENTS)
100 Bedford County Industrial Development Authority, Virginia, 2/08 at 102.00 B2 100,867
Industrial Development Revenue Refunding Bonds, Nekoosa
Packaging Corporation, Series 1998, 5.600%, 12/01/25
(Alternative Minimum Tax) (5)
20 Bedford County Industrial Development Authority, Virginia, 12/09 at 101.00 B2 20,813
Industrial Development Revenue Refunding Bonds, Nekoosa
Packaging Corporation, Series 1999A, 6.550%, 12/01/25
(Alternative Minimum Tax) (5)
220 Goochland County Industrial Development Authority, Virginia, 12/08 at 101.00 B2 221,949
Industrial Development Revenue Refunding Bonds, Nekoosa
Packaging Corporation Project, Series 1998, 5.650%, 12/01/25
(Alternative Minimum Tax) (5)
500 Hopewell Industrial Development Authority, Virginia, Environmental No Opt. Call CCC+ 503,375
Improvement Revenue Bonds, Smurfit Stone Container
Corporation, Series 2005, 5.250%, 6/01/15
------------------------------------------------------------------------------------------------------------------------------------
840 Total Materials 847,004
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 24.4% (16.4% OF TOTAL INVESTMENTS)
600 Arlington County, Virginia, General Obligation Bonds, Series 2006, 8/16 at 100.00 AAA 643,968
5.000%, 8/01/20
500 Henrico County, Virginia, General Obligation Bonds, Series 2005, 7/15 at 100.00 AAA 538,095
5.000%, 7/15/16
3,310 Leesburg, Virginia, General Obligation Public Improvement Bonds, 1/11 at 101.00 AAA 3,456,431
Series 2000, 5.125%, 1/15/21 - FGIC Insured
700 Loudoun County, Virginia, General Obligation Bonds, Series 2006, 12/16 at 100.00 AAA 746,606
5.000%, 12/01/25
500 Loudoun County, Virginia, General Obligation Public Improvement 6/15 at 100.00 AAA 534,650
Bonds, Series 2005B, 5.000%, 6/01/18
535 Manassas Park, Virginia, General Obligation Bonds, Series 2007A, 4/17 at 100.00 AAA 565,843
5.000%, 4/01/29 (WI/DD, Settling 6/06/07) - CIFG Insured
845 Newport News, Virginia, General Obligation Bonds, Series 2004C, 5/14 at 101.00 AA 904,556
5.000%, 5/01/16
620 Richmond, Virginia, General Obligation Bonds, Series 2005A, 7/15 at 100.00 AAA 662,830
5.000%, 7/15/17 - FSA Insured
400 Suffolk, Virginia, General Obligation Bonds, Series 2005, No Opt. Call Aa3 429,988
5.000%, 12/01/15
400 Virginia Beach, Virginia, General Obligation Bonds, Series 2005, 1/16 at 100.00 AA+ 425,460
5.000%, 1/15/20
2,425 Virginia Beach, Virginia, General Obligation Public Improvement 6/11 at 101.00 AA+ 2,531,312
Bonds, Series 2001, 5.000%, 6/01/21
------------------------------------------------------------------------------------------------------------------------------------
10,835 Total Tax Obligation/General 11,439,739
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 19.2% (12.9% OF TOTAL INVESTMENTS)
100 Bell Creek Community Development Authority, Virginia, Special 3/13 at 101.00 N/R 101,341
Assessment Bonds, Series 2003A, 6.750%, 3/01/22
500 Broad Street Community Development Authority, Virginia, Revenue 6/13 at 102.00 N/R 564,180
Bonds, Series 2003, 7.500%, 6/01/33
Buena Vista Public Recreational Facilities Authority, Virginia, Lease
Revenue Bonds, Golf Course Project, Series 2005A:
120 5.250%, 7/15/25 - ACA Insured 7/15 at 100.00 A 126,311
95 5.500%, 7/15/35 - ACA Insured 7/15 at 100.00 A 100,934
1,000 Culpeper Industrial Development Authority, Virginia, Lease Revenue 1/15 at 100.00 AAA 1,049,140
Bonds, School Facilities Project, Series 2005, 5.000%, 1/01/22 -
MBIA Insured
54
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED (continued)
$ 500 Fairfax County Economic Development Authority, Virginia, Lease 5/16 at 100.00 AA+ $ 534,250
Revenue Bonds, Joint Public Uses Community Project,
Series 2006, 5.000%, 5/15/18
580 Prince William County, Virginia, Certificates of Participation, 6/15 at 100.00 Aaa 611,053
County Facilities, Series 2005, 5.000%, 6/01/20 -
AMBAC Insured
700 Puerto Rico Highway and Transportation Authority, Highway No Opt. Call AAA 793,989
Revenue Bonds, Series 2007N, 5.250%, 7/01/31 -
AMBAC Insured
3,000 Puerto Rico Infrastructure Financing Authority, Special Tax Revenue No Opt. Call AAA 1,102,440
Bonds, Series 2005A, 0.000%, 7/01/29 - AMBAC Insured
1,000 Spotsylvania County Industrial Development Authority, Virginia, 8/13 at 100.00 AAA 1,051,400
Lease Revenue Bonds, School Facilities, Series 2003B,
5.125%, 8/01/23 - AMBAC Insured
600 Stafford County and Staunton Industrial Development Authority, 8/16 at 100.00 AAA 636,408
Virginia, Revenue Bonds, Virginia Municipal League and Virginia
Association of Counties Finance Program, Series 2006A,
5.000%, 8/01/23 - MBIA Insured
960 Virgin Islands Public Finance Authority, Gross Receipts Taxes Loan 10/10 at 101.00 BBB+ 1,036,186
Note, Series 1999A, 6.375%, 10/01/19
500 Virginia Beach Development Authority, Public Facilities Revenue 5/15 at 100.00 AA 527,030
Bonds, Series 2005A, 5.000%, 5/01/22
350 Virginia Gateway Community Development Authority, Prince William 3/13 at 102.00 N/R 381,969
County, Special Assessment Bonds, Series 2003, 6.375%, 3/01/30
345 Virginia Public School Authority, School Financing Bonds, 8/15 at 100.00 AA+ 368,915
1997 Resolution, Series 2005C, 5.000%, 8/01/17
------------------------------------------------------------------------------------------------------------------------------------
10,350 Total Tax Obligation/Limited 8,985,546
------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 24.2% (16.3% OF TOTAL INVESTMENTS)
1,000 Capital Region Airport Authority, Richmond, Virginia, Revenue 7/15 at 100.00 AAA 1,057,830
Bonds, Richmond International Airport, Series 2005A,
5.000%, 7/01/18 - FSA Insured
1,000 Chesapeake Bay Bridge and Tunnel Commission, Virginia, No Opt. Call AAA 1,160,050
General Resolution Revenue Refunding Bonds, Series 1998,
5.500%, 7/01/25 - MBIA Insured
3,000 Metropolitan Washington D.C. Airports Authority, Airport System 10/11 at 101.00 AAA 3,178,530
Revenue Bonds, Series 2001A, 5.500%, 10/01/27 -
MBIA Insured (Alternative Minimum Tax)
250 Metropolitan Washington D.C. Airports Authority, Airport System 10/11 at 101.00 AAA 259,030
Revenue Bonds, Series 2001B, 5.000%, 10/01/21 -
MBIA Insured
510 Metropolitan Washington D.C. Airports Authority, Airport System 10/16 at 100.00 AAA 529,227
Revenue Bonds, Series 2006, 5.000%, 10/01/36 - FGIC Insured
(Alternative Minimum Tax)
1,500 Norfolk Airport Authority, Virginia, Airport Revenue Bonds, 7/11 at 100.00 AAA 1,544,595
Series 2001A, 5.125%, 7/01/31 - FGIC Insured
500 Norfolk, Virginia, Parking System Revenue Bonds, Series 2005A, 2/15 at 100.00 AAA 526,125
5.000%, 2/01/23 - MBIA Insured
500 Richmond Metropolitan Authority, Virginia, Revenue Refunding No Opt. Call AAA 558,005
Bonds, Expressway System, Series 2002, 5.250%, 7/15/22 -
FGIC Insured
1,225 Virginia Resources Authority, Airports Revolving Fund Revenue 2/11 at 100.00 Aa2 1,271,587
Bonds, Series 2001A, 5.250%, 8/01/23
1,250 Virginia Resources Authority, Airports Revolving Fund Revenue 2/11 at 100.00 Aa2 1,276,013
Bonds, Series 2001B, 5.125%, 8/01/27 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
10,735 Total Transportation 11,360,992
------------------------------------------------------------------------------------------------------------------------------------
55
NGB
Nuveen Virginia Dividend Advantage Municipal Fund (continued)
Portfolio of INVESTMENTS as of 5-31-07
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 21.3% (14.3% OF TOTAL INVESTMENTS) (4)
$ 500 Albemarle County Industrial Development Authority, Virginia, 1/12 at 100.00 N/R (4) $ 546,615
Residential Care Facility Revenue Bonds, Westminster
Canterbury of the Blue Ridge First Mortgage, Series 2001,
6.200%, 1/01/31 (Pre-refunded 1/01/12)
1,000 Bristol, Virginia, Utility System Revenue Refunding Bonds, No Opt. Call AAA 1,068,660
Series 2001, 5.000%, 7/15/21 - FSA Insured (ETM)
425 Loudoun County Industrial Development Authority, Virginia, 6/12 at 101.00 BBB (4) 467,980
Hospital Revenue Bonds, Loudoun Hospital Center, Series 2002A,
6.000%, 6/01/22 (Pre-refunded 6/01/12)
320 Northern Mariana Islands, General Obligation Bonds, Series 2000A, 6/10 at 100.00 AAA 340,390
6.000%, 6/01/20 (Pre-refunded 6/01/10) - ACA Insured
200 Pocahontas Parkway Association, Virginia, Senior Lien Revenue No Opt. Call AAA 200,592
Bonds, Route 895 Connector Toll Road, Series 1998A,
5.250%, 8/15/07 (ETM)
1,500 Puerto Rico Infrastructure Financing Authority, Special Obligation 10/10 at 101.00 AAA 1,596,405
Bonds, Series 2000A, 5.500%, 10/01/32
1,500 Puerto Rico Infrastructure Financing Authority, Special Obligation 10/10 at 101.00 AAA 1,595,430
Bonds, Series 2000A, 5.500%, 10/01/40
340 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 7/10 at 100.00 AAA 350,190
Asset-Backed Bonds, Series 2000, 5.750%, 7/01/20
(Pre-refunded 7/01/10)
500 Richmond, Virginia, Public Utility Revenue Refunding Bonds, 1/12 at 100.00 AAA 523,790
Series 2002, 5.000%, 1/15/27 (Pre-refunded 1/15/12) -
FSA Insured
280 Rockbridge County Industrial Development Authority, Virginia, No Opt. Call B2 (4) 293,602
Horse Center Revenue Refunding Bonds, Series 2001B,
6.125%, 7/15/11 (ETM)
980 Rockbridge County Industrial Development Authority, Virginia, 7/11 at 105.00 B2 (4) 1,102,461
Horse Center Revenue Refunding Bonds, Series 2001C,
6.850%, 7/15/21 (Pre-refunded 7/15/11)
Tobacco Settlement Financing Corporation of Virginia, Tobacco
Settlement Asset-Backed Bonds, Series 2005:
550 5.250%, 6/01/19 (Pre-refunded 6/01/12) 6/12 at 100.00 AAA 572,759
725 5.500%, 6/01/26 (Pre-refunded 6/01/15) 6/15 at 100.00 AAA 788,017
500 Virginia College Building Authority, Educational Facilities Revenue 2/12 at 100.00 AA+ (4) 523,995
Bonds, 21st Century College Program, Series 2002A,
5.000%, 2/01/22 (Pre-refunded 2/01/12)
------------------------------------------------------------------------------------------------------------------------------------
9,320 Total U.S. Guaranteed 9,970,886
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 2.3% (1.6% OF TOTAL INVESTMENTS)
1,000 Mecklenburg County Industrial Development Authority, Virginia, 10/12 at 100.00 Baa1 1,110,800
Revenue Bonds, UAE Mecklenburg Cogeneration LP, Series 2002,
6.500%, 10/15/17 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
56
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 5.7% (3.8% OF TOTAL INVESTMENTS)
$ 2,000 Henrico County, Virginia, Water and Sewer System Revenue 5/09 at 102.00 AA+ $ 2,062,260
Refunding Bonds, Series 1999, 5.000%, 5/01/22
595 Virginia Resources Authority, Clean Water State Revolving Fund 10/17 at 100.00 AAA 591,162
Revenue Bonds, Series 2007, Residuals 1006, 5.397%, 10/01/29 (IF)
------------------------------------------------------------------------------------------------------------------------------------
2,595 Total Water and Sewer 2,653,422
------------------------------------------------------------------------------------------------------------------------------------
$ 68,620 Total Investments (cost $67,515,636) - 148.5% 69,661,433
=============-----------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 2.7% 1,246,453
--------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (51.2)% (24,000,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 46,907,886
====================================================================================================================
The Fund may invest in "zero coupon" securities. A zero
coupon security does not pay a regular interest coupon
to its holders during the life of the security.
Tax-exempt income to the holder of the security comes
from accretion of the difference between the original
purchase price of the security at issuance and the par
value of the security at maturity and is effectively
paid at maturity. Such securities are included in the
portfolio with a 0.00% coupon rate in their
description. The market prices of zero coupon
securities generally are more volatile than the market
prices of securities that pay interest periodically.
(1) All percentages shown in the Portfolio of Investments
are based on net assets applicable to Common shares
unless otherwise noted.
(2) Optional Call Provisions (not covered by the report of
independent registered public accounting firm): Dates
(month and year) and prices of the earliest optional
call or redemption. There may be other call provisions
at varying prices at later dates. Certain
mortgage-backed securities may be subject to periodic
principal paydowns.
(3) Ratings (not covered by the report of independent
registered public accounting firm): Using the higher of
Standard & Poor's or Moody's rating. Ratings below BBB
by Standard & Poor's Group or Baa by Moody's Investor
Service, Inc. are considered to be below investment
grade.
(4) Backed by an escrow or trust containing sufficient U.S.
Government or U.S. Government agency securities which
ensure the timely payment of principal and interest.
Such investments are normally considered to be
equivalent to AAA rated securities.
(5) The issuer has received a formal adverse determination
from the Internal Revenue Service (the "IRS") regarding
the tax-exempt status of the bonds' coupon payments.
The Fund will continue to treat coupon payments as
tax-exempt income until such time that it is formally
determined that the interest on the bonds should be
treated as taxable.
N/R Not rated.
WI/DD Purchased on a when-issued or delayed delivery basis.
(ETM) Escrowed to maturity.
(IF) Inverse floating rate investment.
See accompanying notes to financial statements.
57
NNB
Nuveen Virginia Dividend Advantage Municipal Fund 2
Portfolio of INVESTMENTS
as of 5-31-07
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES - 4.8% (3.2% OF TOTAL INVESTMENTS)
$ 3,100 Tobacco Settlement Financing Corporation of Virginia, Tobacco 6/17 at 100.00 BBB $ 3,038,527
Settlement Asset Backed Bonds, Series 2007B1,
5.000%, 6/01/47
1,430 Tobacco Settlement Financing Corporation of Virginia, Tobacco 6/17 at 100.00 BBB 1,105,547
Settlement Asset-Backed Bonds, Series 2007B2,
0.000%, 6/01/46
------------------------------------------------------------------------------------------------------------------------------------
4,530 Total Consumer Staples 4,144,074
------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 7.0% (4.7% OF TOTAL INVESTMENTS)
1,000 Fairfax County Economic Development Authority, Virginia, Revenue 9/09 at 101.00 Aaa 1,037,950
Bonds, National Wildlife Federation, Series 1999,
5.375%, 9/01/29 - MBIA Insured
1,000 Prince William County Industrial Development Authority, Virginia, 10/13 at 101.00 A3 1,058,610
Educational Facilities Revenue Bonds, Catholic Diocese of
Arlington, Series 2003, 5.500%, 10/01/33
1,500 Puerto Rico Industrial, Tourist, Educational, Medical and 12/12 at 101.00 BBB- 1,575,420
Environmental Control Facilities Financing Authority, Higher
Education Revenue Refunding Bonds, Ana G. Mendez University
System, Series 2002, 5.375%, 12/01/21
275 The Rector and Visitors of the University of Virginia, General 6/15 at 100.00 AAA 294,058
Revenue Bonds, Series 2005, 5.000%, 6/01/18
2,000 Winchester Industrial Development Authority, Virginia, Educational 10/08 at 102.00 AAA 2,069,100
Facilities First Mortgage Revenue Bonds, Shenandoah
University, Series 1998, 5.250%, 10/01/28 - MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
5,775 Total Education and Civic Organizations 6,035,138
------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE - 21.0% (14.1% OF TOTAL INVESTMENTS)
1,500 Albemarle County Industrial Development Authority, Virginia, 10/12 at 100.00 A2 1,537,710
Hospital Revenue Bonds, Martha Jefferson Hospital,
Series 2002, 5.250%, 10/01/35
3,000 Fauquier County Industrial Development Authority, Virginia, 10/12 at 102.00 AA 3,151,440
Hospital Revenue Bonds, Fauquier Hospital, Series 2002,
5.250%, 10/01/25 - RAAI Insured
1,000 Fredericksburg Economic Development Authority, Virginia, No Opt. Call A3 1,065,530
Healthcare Revenue Bonds, Medicorp Health System,
Series 2007, 5.250%, 6/15/23
675 Fredericksburg Industrial Development Authority, Virginia, 6/12 at 100.00 A3 686,360
Revenue Bonds, MediCorp Health System, Series 2002B,
5.125%, 6/15/33
1,500 Harrisonburg Industrial Development Authority, Virginia, Hospital 8/16 at 100.00 AAA 1,568,010
Facilities Revenue Bonds, Rockingham Memorial Hospital,
Series 2006, 5.000%, 8/15/31 - AMBAC Insured
1,000 Henrico County Economic Development Authority, Virginia, 11/12 at 100.00 A- 1,050,690
Revenue Bonds, Bon Secours Health System Inc., Series 2002A,
5.600%, 11/15/30
1,155 Manassas Industrial Development Authority, Virginia, Hospital 4/13 at 100.00 A2 1,190,274
Revenue Bonds, Prince William Hospital, Series 2002,
5.250%, 4/01/33
1,200 Norton Industrial Development Authority, Virginia, Hospital Revenue 12/11 at 101.00 A 1,284,948
Refunding and Improvement Bonds, Norton Community Hospital,
Series 2001, 6.000%, 12/01/22 - ACA Insured
1,000 Prince William County Industrial Development Authority, Virginia, 10/08 at 102.00 Aaa 1,025,370
Hospital Facility Revenue Refunding Bonds, Potomac Hospital
Corporation of Prince William, Series 1998, 5.000%, 10/01/18 -
FSA Insured
3,915 Roanoke Industrial Development Authority, Virginia, Hospital 7/12 at 100.00 AAA 4,148,412
Revenue Bonds, Carilion Health System, Series 2002A,
5.500%, 7/01/20 - MBIA Insured
58
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE (continued)
$ 655 Stafford County Economic Development Authority, Virginia, 6/16 at 100.00 A3 $ 681,266
Hospital Facilities Revenue Bonds, MediCorp Health System,
Series 2006, 5.250%, 6/15/31
715 Winchester Industrial Development Authority, Virginia, Hospital 1/17 at 100.00 AA- 743,521
Revenue Bonds, Winchester Medical Center, Series 2007,
5.125%, 1/01/31
------------------------------------------------------------------------------------------------------------------------------------
17,315 Total Health Care 18,133,531
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 12.5% (8.4% OF TOTAL INVESTMENTS)
7,485 Virginia Housing Development Authority, Commonwealth Mortgage 7/11 at 100.00 AAA 7,700,791
Bonds, Series 2001H-1, 5.350%, 7/01/31 - MBIA Insured
500 Virginia Housing Development Authority, Commonwealth Mortgage 1/15 at 100.00 AAA 493,080
Bonds, Series 2005C-C2, 4.750%, 10/01/32 (Alternative
Minimum Tax)
2,600 Virginia Housing Development Authority, Commonwealth Mortgage 7/16 at 100.00 AAA 2,564,250
Bonds, Series 2007B, 4.750%, 7/01/32 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
10,585 Total Housing/Single Family 10,758,121
------------------------------------------------------------------------------------------------------------------------------------
LONG-TERM CARE - 12.3% (8.3% OF TOTAL INVESTMENTS)
1,300 Albemarle County Industrial Development Authority, Virginia, 1/17 at 100.00 N/R 1,291,927
Residential Care Facilities Mortgage Revenue Bonds,
Westminster-Cantebury of the Blue Ridge, Series 2007,
5.000%, 1/01/31
650 Chesterfield County Health Center Commission, Virginia, 12/15 at 100.00 N/R 659,510
Mortgage Revenue Bonds, Lucy Corr Village, Series 2005,
5.625%, 12/01/39
720 Fairfax County Economic Development Authority, Virginia, 10/17 at 100.00 N/R 732,672
Residential Care Facilities Mortgage Revenue Bonds, Goodwin
House, Inc., Series 2007A, 5.125%, 10/01/37
500 Fairfax County Economic Development Authority, Virginia, 10/16 at 100.00 BBB 490,970
Retirement Center Revenue Bonds, Greenspring Village,
Series 2006A, 4.750%, 10/01/26
600 Henrico County Economic Development Authority, Virginia, No Opt. Call BBB- 603,606
Residential Care Facility Revenue Bonds, Westminster Canterbury
of Richmond, Series 2006, 5.000%, 10/01/35
1,300 Industrial Development Authority of the County of Prince William, 1/17 at 100.00 N/R 1,325,090
Virginia, Residential Care Facility Revenue Bonds, Westminster at
Lake, First Mortgage, Series 2006, 5.125%, 1/01/26
1,350 James City County Industrial Development Authority, Virginia, 3/12 at 101.00 N/R 1,432,283
Residential Care Facility First Mortgage Revenue Refunding
Bonds, Williamsburg Landing Inc., Series 2003A, 6.000%, 3/01/23
810 Lynchburg Industrial Development Authority, Virginia, Residential 7/17 at 100.00 N/R 815,711
Care Revenue Bonds, Westminster-Canterbury, Series 2007,
5.000%, 7/01/31
1,670 Roanoke Industrial Development Authority, Virginia, Residential 12/16 at 100.00 N/R 1,650,160
Revenue Bonds, Virginia Lutheran Homes Incorporated,
Series 2006, 5.000%, 12/01/39
650 Suffolk Industrial Development Authority, Virginia, Retirement 9/16 at 100.00 N/R 665,119
Facilities First Mortgage Revenue Bonds, Lake Prince Center,
Series 2006, 5.300%, 9/01/31
650 Virginia Beach Development Authority, Virginia, Residential Care 11/15 at 100.00 N/R 658,886
Facility Mortgage Revenue Bonds, Westminster Canterbury on
Chesapeake Bay, Series 2005, 5.000%, 11/01/22
325 Winchester Industrial Development Authority, Virginia, Residential 1/15 at 100.00 N/R 331,367
Care Facility Revenue Bonds, Westminster-Canterbury of
Winchester Inc., Series 2005A, 5.200%, 1/01/27
------------------------------------------------------------------------------------------------------------------------------------
10,525 Total Long-Term Care 10,657,301
------------------------------------------------------------------------------------------------------------------------------------
MATERIALS - 1.8% (1.2% OF TOTAL INVESTMENTS)
165 Bedford County Industrial Development Authority, Virginia, 2/08 at 102.00 B2 166,431
Industrial Development Revenue Refunding Bonds, Nekoosa
Packaging Corporation, Series 1998, 5.600%, 12/01/25
(Alternative Minimum Tax) (5)
59
NNB
Nuveen Virginia Dividend Advantage Municipal Fund 2 (continued)
Portfolio of INVESTMENTS as of 5-31-07
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
MATERIALS (continued)
$ 460 Goochland County Industrial Development Authority, Virginia, 12/08 at 101.00 B2 $ 464,076
Industrial Development Revenue Refunding Bonds, Nekoosa
Packaging Corporation Project, Series 1998, 5.650%, 12/01/25
(Alternative Minimum Tax) (5)
1,000 Hopewell Industrial Development Authority, Virginia, Environmental No Opt. Call CCC+ 1,006,750
Improvement Revenue Bonds, Smurfit Stone Container
Corporation, Series 2005, 5.250%, 6/01/15
------------------------------------------------------------------------------------------------------------------------------------
1,625 Total Materials 1,637,257
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 25.0% (16.7% OF TOTAL INVESTMENTS)
500 Arlington County, Virginia, General Obligation Bonds, Series 2006, 8/16 at 100.00 AAA 536,640
5.000%, 8/01/20
1,750 Chesapeake, Virginia, General Obligation Bonds, Series 2001, 12/11 at 100.00 AA 1,870,505
5.500%, 12/01/16
1,000 Loudoun County, Virginia, General Obligation Bonds, Series 2006, 12/16 at 100.00 AAA 1,066,580
5.000%, 12/01/25
1,730 Loudoun County, Virginia, General Obligation Public Improvement 11/11 at 101.00 AAA 1,774,928
Bonds, Series 2001C, 4.500%, 11/01/17
95 Loudoun County, Virginia, General Obligation Public Improvement 5/12 at 100.00 AAA 100,336
Bonds, Series 2002A, 5.250%, 5/01/22
1,000 Loudoun County, Virginia, General Obligation Public Improvement 6/15 at 100.00 AAA 1,069,300
Bonds, Series 2005B, 5.000%, 6/01/18
1,000 Manassas Park, Virginia, General Obligation Bonds, Series 2007A, 4/17 at 100.00 AAA 1,057,650
5.000%, 4/01/29 (WI/DD, Settling 6/06/07) - CIFG Insured
40 Portsmouth, Virginia, General Obligation Public Utility Refunding 6/08 at 100.00 AAA 40,424
Bonds, Series 2001B, 5.000%, 6/01/21 - FGIC Insured
Powhatan County, Virginia, General Obligation Bonds, Series 2001:
660 5.000%, 1/15/23 - AMBAC Insured 1/11 at 101.00 AAA 683,628
1,000 5.000%, 1/15/27 - AMBAC Insured 1/11 at 101.00 AAA 1,032,400
1,000 Richmond, Virginia, General Obligation Bonds, Series 2004A, 7/14 at 100.00 AAA 1,053,040
5.000%, 7/15/21 - FSA Insured
Roanoke, Virginia, General Obligation Public Improvement Bonds,
Series 2002A:
2,400 5.000%, 10/01/18 10/12 at 101.00 AA 2,537,688
2,435 5.000%, 10/01/19 10/12 at 101.00 AA 2,570,605
1,280 Roanoke, Virginia, General Obligation Public Improvement Bonds, 10/12 at 101.00 AAA 1,352,755
Series 2002B, 5.000%, 10/01/15 - FGIC Insured
(Alternative Minimum Tax)
1,000 Staunton, Virginia, General Obligation Bonds, Series 2004, 2/14 at 101.00 AAA 1,136,880
6.250%, 2/01/25 - AMBAC Insured
600 Virginia Beach, Virginia, General Obligation Bonds, Series 2005, 1/16 at 100.00 AA+ 638,190
5.000%, 1/15/20
1,500 Virginia Beach, Virginia, General Obligation Public Improvement 6/11 at 101.00 AA+ 1,565,760
Bonds, Series 2001, 5.000%, 6/01/19
1,420 Virginia Beach, Virginia, General Obligation Refunding and Public 3/12 at 100.00 AA+ 1,475,806
Improvement Bonds, Series 2002, 5.000%, 3/01/21
------------------------------------------------------------------------------------------------------------------------------------
20,410 Total Tax Obligation/General 21,563,115
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 18.3% (12.3% OF TOTAL INVESTMENTS)
184 Bell Creek Community Development Authority, Virginia, Special 3/13 at 101.00 N/R 186,467
Assessment Bonds, Series 2003A, 6.750%, 3/01/22
1,000 Broad Street Community Development Authority, Virginia, 6/13 at 102.00 N/R 1,128,360
Revenue Bonds, Series 2003, 7.500%, 6/01/33
Buena Vista Public Recreational Facilities Authority, Virginia,
Lease Revenue Bonds, Golf Course Project, Series 2005A:
210 5.250%, 7/15/25 - ACA Insured 7/15 at 100.00 A 221,044
165 5.500%, 7/15/35 - ACA Insured 7/15 at 100.00 A 175,306
800 Fairfax County Economic Development Authority, Virginia, Lease 5/16 at 100.00 AA+ 854,800
Revenue Bonds, Joint Public Uses Community Project,
Series 2006, 5.000%, 5/15/18
60
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED (continued)
$ 1,800 Loudoun County Industrial Development Authority, Virginia, 3/13 at 100.00 AA+ $ 1,886,346
Lease Revenue Refunding Bonds, Public Facility Project,
Series 2003, 5.000%, 3/01/19
1,300 Puerto Rico Highway and Transportation Authority, Highway No Opt. Call AAA 1,474,551
Revenue Bonds, Series 2007N, 5.250%, 7/01/31 -
AMBAC Insured
2,000 Puerto Rico Infrastructure Financing Authority, Special Tax No Opt. Call AAA 734,960
Revenue Bonds, Series 2005A, 0.000%, 7/01/29 -
AMBAC Insured
400 Puerto Rico Public Buildings Authority, Guaranteed Government 7/12 at 100.00 BBB- 416,336
Facilities Revenue Refunding Bonds, Series 2002D,
5.250%, 7/01/27
455 Puerto Rico Public Finance Corporation, Commonwealth 2/12 at 100.00 BBB- 477,836
Appropriation Bonds, Series 2002E, 5.500%, 8/01/29
1,000 Spotsylvania County Industrial Development Authority, Virginia, 8/13 at 100.00 AAA 1,051,400
Lease Revenue Bonds, School Facilities, Series 2003B,
5.125%, 8/01/23 - AMBAC Insured
1,000 Stafford County and Staunton Industrial Development Authority, 8/16 at 100.00 AAA 1,060,680
Virginia, Revenue Bonds, Virginia Municipal League and Virginia
Association of Counties Finance Program, Series 2006A,
5.000%, 8/01/23 - MBIA Insured
800 Virginia Beach Development Authority, Public Facilities Revenue 5/15 at 100.00 AA 843,248
Bonds, Series 2005A, 5.000%, 5/01/22
685 Virginia Gateway Community Development Authority, 3/13 at 102.00 N/R 747,568
Prince William County, Special Assessment Bonds, Series 2003,
6.375%, 3/01/30
2,540 Virginia Public School Authority, School Financing Bonds, 8/11 at 101.00 AA+ 2,654,503
1997 Resolution, Series 2001B, 5.000%, 8/01/19
570 Virginia Public School Authority, School Financing Bonds, 8/15 at 100.00 AA+ 609,512
1997 Resolution, Series 2005C, 5.000%, 8/01/17
1,265 Virginia Resources Authority, Infrastructure Revenue Bonds, 5/10 at 101.00 AA 1,297,713
Pooled Loan Bond Program, Series 2001D, 5.000%, 5/01/26
------------------------------------------------------------------------------------------------------------------------------------
16,174 Total Tax Obligation/Limited 15,820,630
------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 4.5% (3.0% OF TOTAL INVESTMENTS)
1,000 Metropolitan Washington D.C. Airports Authority, Airport System 10/12 at 100.00 AAA 1,032,150
Revenue Bonds, Series 2002A, 5.125%, 10/01/26 - FGIC Insured
(Alternative Minimum Tax)
940 Metropolitan Washington D.C. Airports Authority, Airport System 10/16 at 100.00 AAA 975,438
Revenue Bonds, Series 2006, 5.000%, 10/01/36 - FGIC Insured
(Alternative Minimum Tax)
1,500 Norfolk, Virginia, Parking System Revenue Bonds, Series 2005A, 2/15 at 100.00 AAA 1,578,375
5.000%, 2/01/23 - MBIA Insured
300 Virginia Resources Authority, Airports Revolving Fund Revenue 2/11 at 100.00 Aa2 313,278
Bonds, Series 2001A, 5.250%, 8/01/17
------------------------------------------------------------------------------------------------------------------------------------
3,740 Total Transportation 3,899,241
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 22.8% (15.3% OF TOTAL INVESTMENTS) (4)
165 Albemarle County Industrial Development Authority, Virginia, 1/12 at 100.00 N/R (4) 180,383
Residential Care Facility Revenue Bonds, Westminster
Canterbury of the Blue Ridge First Mortgage, Series 2001,
6.200%, 1/01/31 (Pre-refunded 1/01/12)
1,000 Bristol, Virginia, General Obligation Utility System Revenue Bonds, No Opt. Call AAA 1,090,700
Series 2002, 5.000%, 11/01/24 - FSA Insured (ETM)
195 Fairfax County Water Authority, Virginia, Water Revenue Refunding 4/12 at 100.00 AAA 204,662
Bonds, Series 2002, 5.000%, 4/01/27 (Pre-refunded 4/01/12)
61
NNB
Nuveen Virginia Dividend Advantage Municipal Fund 2 (continued)
Portfolio of INVESTMENTS as of 5-31-07
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED (4) (continued)
Loudoun County Industrial Development Authority, Virginia, Hospital
Revenue Bonds, Loudoun Hospital Center, Series 2002A:
$ 250 6.000%, 6/01/22 (Pre-refunded 6/01/12) 6/12 at 101.00 BBB (4) $ 275,283
600 6.100%, 6/01/32 (Pre-refunded 6/01/12) 6/12 at 101.00 BBB (4) 663,378
1,840 Newport News, Virginia, General Obligation Bonds, General 7/13 at 100.00 AA (4) 1,948,100
Improvement and Water Projects, Series 2002A, 5.000%, 7/01/20
(Pre-refunded 7/01/13)
1,000 Newport News, Virginia, General Obligation Bonds, Series 2003B, 11/13 at 100.00 AA (4) 1,061,590
5.000%, 11/01/22 (Pre-refunded 11/01/13)
300 Pocahontas Parkway Association, Virginia, Senior Lien Revenue No Opt. Call AAA 300,888
Bonds, Route 895 Connector Toll Road, Series 1998A,
5.250%, 8/15/07 (ETM)
2,750 Puerto Rico Infrastructure Financing Authority, Special Obligation 10/10 at 101.00 AAA 2,924,955
Bonds, Series 2000A, 5.500%, 10/01/40
1,100 Puerto Rico Public Buildings Authority, Guaranteed Government 7/12 at 100.00 BBB- (4) 1,168,618
Facilities Revenue Refunding Bonds, Series 2002D,
5.250%, 7/01/27 (Pre-refunded 7/01/12)
1,345 Puerto Rico Public Finance Corporation, Commonwealth 2/12 at 100.00 Aaa 1,436,823
Appropriation Bonds, Series 2002E, 5.500%, 8/01/29
(Pre-refunded 2/01/12)
490 Rockbridge County Industrial Development Authority, Virginia, 7/11 at 105.00 B2 (4) 551,230
Horse Center Revenue Refunding Bonds, Series 2001C,
6.850%, 7/15/21 (Pre-refunded 7/15/11)
Salem, Virginia, General Obligation Public Improvement Bonds,
Series 2002:
1,145 5.375%, 1/01/21 (Pre-refunded 1/01/12) 1/12 at 100.00 Aa3 (4) 1,216,952
1,200 5.375%, 1/01/22 (Pre-refunded 1/01/12) 1/12 at 100.00 Aa3 (4) 1,275,408
1,260 5.375%, 1/01/23 (Pre-refunded 1/01/12) 1/12 at 100.00 Aa3 (4) 1,339,178
Tobacco Settlement Financing Corporation of Virginia, Tobacco
Settlement Asset-Backed Bonds, Series 2005:
1,050 5.250%, 6/01/19 (Pre-refunded 6/01/12) 6/12 at 100.00 AAA 1,093,449
2,700 5.500%, 6/01/26 (Pre-refunded 6/01/15) 6/15 at 100.00 AAA 2,934,684
------------------------------------------------------------------------------------------------------------------------------------
18,390 Total U.S. Guaranteed 19,666,281
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 2.6% (1.7% OF TOTAL INVESTMENTS)
2,000 Mecklenburg County Industrial Development Authority, Virginia, 10/12 at 100.00 Baa1 2,221,600
Revenue Bonds, UAE Mecklenburg Cogeneration LP, Series 2002,
6.500%, 10/15/17 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 16.5% (11.1% OF TOTAL INVESTMENTS)
805 Fairfax County Water Authority, Virginia, Water Revenue Refunding 4/12 at 100.00 AAA 831,436
Bonds, Series 2002, 5.000%, 4/01/27
Henry County Public Service Authority, Virginia, Water and Sewerage
Revenue Refunding Bonds, Series 2001:
1,000 5.500%, 11/15/17 - FSA Insured No Opt. Call AAA 1,119,500
3,000 5.500%, 11/15/19 - FSA Insured No Opt. Call AAA 3,395,430
Norfolk, Virginia, Water Revenue Refunding Bonds, Series 2001:
1,130 5.000%, 11/01/18 - FGIC Insured 11/11 at 100.00 AAA 1,174,138
1,190 5.000%, 11/01/19 - FGIC Insured 11/11 at 100.00 AAA 1,235,994
1,450 5.000%, 11/01/23 - FGIC Insured 11/11 at 100.00 AAA 1,502,780
1,525 5.000%, 11/01/24 - FGIC Insured 11/11 at 100.00 AAA 1,580,510
62
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER (continued)
$ 1,080 Virginia Resources Authority, Clean Water State Revolving Fund 10/17 at 100.00 AAA $ 1,073,034
Revenue Bonds, Series 2007, Residuals 1006,
5.397%, 10/01/29 (IF)
2,250 Virginia Resources Authority, Water and Sewerage System 5/11 at 101.00 AA 2,319,840
Revenue Bonds, Caroline County Public Improvements Project,
Series 2001, 5.000%, 5/01/32
------------------------------------------------------------------------------------------------------------------------------------
13,430 Total Water and Sewer 14,232,662
------------------------------------------------------------------------------------------------------------------------------------
$ 124,499 Total Investments (cost $124,020,171) - 149.1% 128,768,951
=============-----------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - (0.5)% (386,858)
--------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (48.6)% (42,000,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 86,382,093
====================================================================================================================
The Fund may invest in "zero coupon" securities. A zero
coupon security does not pay a regular interest coupon
to its holders during the life of the security.
Tax-exempt income to the holder of the security comes
from accretion of the difference between the original
purchase price of the security at issuance and the par
value of the security at maturity and is effectively
paid at maturity. Such securities are included in the
portfolio with a 0.00% coupon rate in their
description. The market prices of zero coupon
securities generally are more volatile than the market
prices of securities that pay interest periodically.
(1) All percentages shown in the Portfolio of Investments
are based on net assets applicable to Common shares
unless otherwise noted.
(2) Optional Call Provisions (not covered by the report of
independent registered public accounting firm): Dates
(month and year) and prices of the earliest optional
call or redemption. There may be other call provisions
at varying prices at later dates. Certain
mortgage-backed securities may be subject to periodic
principal paydowns.
(3) Ratings (not covered by the report of independent
registered public accounting firm): Using the higher of
Standard & Poor's or Moody's rating. Ratings below BBB
by Standard & Poor's Group or Baa by Moody's Investor
Service, Inc. are considered to be below investment
grade.
(4) Backed by an escrow or trust containing sufficient U.S.
Government or U.S. Government agency securities which
ensure the timely payment of principal and interest.
Such investments are normally considered to be
equivalent to AAA rated securities.
(5) The issuer has received a formal adverse determination
from the Internal Revenue Service (the "IRS") regarding
the tax-exempt status of the bonds' coupon payments.
The Fund will continue to treat coupon payments as
tax-exempt income until such time that it is formally
determined that the interest on the bonds should be
treated as taxable.
N/R Not rated.
WI/DD Purchased on a when-issued or delayed delivery basis.
(ETM) Escrowed to maturity.
(IF) Inverse floating rate investment.
See accompanying notes to financial statements.
63
Statement of
ASSETS & LIABILITIES
May 31, 2007
MARYLAND MARYLAND MARYLAND MARYLAND
PREMIUM DIVIDEND DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
(NMY) (NFM) (NZR) (NWI)
------------------------------------------------------------------------------------------------------------------------------------
ASSETS
Investments, at value (cost $226,265,245, $91,193,616,
$91,526,983 and $114,131,178, respectively) $233,686,765 $93,803,275 $94,082,939 $116,286,701
Cash 635,206 -- 35,875 700,513
Receivables:
Interest 3,885,792 1,631,075 1,565,189 1,736,016
Investments sold 115,000 360,000 75,072 --
Other assets 7,523 7,814 4,528 4,611
------------------------------------------------------------------------------------------------------------------------------------
Total assets 238,330,286 95,802,164 95,763,603 118,727,841
------------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Cash overdraft -- 797,061 -- --
Floating rate obligations 2,800,000 1,133,000 1,133,000 1,400,000
Payable for investments purchased 1,200,000 500,000 500,000 620,000
Unrealized depreciation on forward swaps -- 39,197 -- --
Accrued expenses:
Management fees 125,239 34,413 30,703 31,111
Other 64,865 27,332 25,631 28,923
Preferred share dividends payable 36,048 9,732 9,864 8,122
------------------------------------------------------------------------------------------------------------------------------------
Total liabilities 4,226,152 2,540,735 1,699,198 2,088,156
------------------------------------------------------------------------------------------------------------------------------------
Preferred shares, at liquidation value 79,100,000 32,000,000 32,000,000 39,000,000
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common shares $155,004,134 $61,261,429 $62,064,405 $ 77,639,685
====================================================================================================================================
Common shares outstanding 10,637,954 4,181,361 4,191,688 5,362,670
====================================================================================================================================
Net asset value per Common share outstanding (net assets applicable
to Common shares, divided by Common shares outstanding) $ 14.57 $ 14.65 $ 14.81 $ 14.48
====================================================================================================================================
NET ASSETS APPLICABLE TO COMMON SHARES CONSIST OF:
------------------------------------------------------------------------------------------------------------------------------------
Common shares, $.01 par value per share $ 106,380 $ 41,814 $ 41,917 $ 53,627
Paid-in surplus 147,763,730 59,335,928 59,476,610 75,690,468
Undistributed (Over-distribution of) net investment income (54,806) (79,783) (41,412) (138,732)
Accumulated net realized gain (loss) from investments and
derivative transactions (232,690) (606,992) 31,334 (121,201)
Net unrealized appreciation (depreciation) of investments
and derivative transactions 7,421,520 2,570,462 2,555,956 2,155,523
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common shares $155,004,134 $61,261,429 $62,064,405 $ 77,639,685
====================================================================================================================================
Authorized shares:
Common Unlimited Unlimited Unlimited Unlimited
Preferred Unlimited Unlimited Unlimited Unlimited
====================================================================================================================================
See accompanying notes to financial statements.
64
VIRGINIA VIRGINIA VIRGINIA
PREMIUM DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2
(NPV) (NGB) (NNB)
------------------------------------------------------------------------------------------------------------------------------------
ASSETS
Investments, at value (cost $191,342,034, $67,515,636
and $124,020,171, respectively) $197,768,381 $69,661,433 $128,768,951
Cash -- -- --
Receivables:
Interest 2,960,512 1,031,691 1,736,780
Investments sold 1,282,195 1,816,145 343,110
Other assets 9,246 7,744 6,304
------------------------------------------------------------------------------------------------------------------------------------
Total assets 202,020,334 72,517,013 130,855,145
------------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Cash overdraft 3,495,616 993,075 1,330,367
Floating rate obligations -- -- --
Payable for investments purchased 1,600,355 565,142 1,056,340
Unrealized depreciation on forward swaps 39,197 -- --
Accrued expenses:
Management fees 105,573 26,192 41,905
Other 51,063 22,516 32,877
Preferred share dividends payable 28,494 2,202 11,563
------------------------------------------------------------------------------------------------------------------------------------
Total liabilities 5,320,298 1,609,127 2,473,052
------------------------------------------------------------------------------------------------------------------------------------
Preferred shares, at liquidation value 63,800,000 24,000,000 42,000,000
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common shares $132,900,036 $46,907,886 $ 86,382,093
====================================================================================================================================
Common shares outstanding 8,928,307 3,131,241 5,726,830
====================================================================================================================================
Net asset value per Common share outstanding (net assets applicable
to Common shares, divided by Common shares outstanding) $ 14.89 $ 14.98 $ 15.08
====================================================================================================================================
NET ASSETS APPLICABLE TO COMMON SHARES CONSIST OF:
------------------------------------------------------------------------------------------------------------------------------------
Common shares, $.01 par value per share $ 89,283 $ 31,312 $ 57,268
Paid-in surplus 125,716,566 44,415,804 81,290,977
Undistributed (Over-distribution of) net investment income 45,172 (81,479) (117,479)
Accumulated net realized gain (loss) from investments and
derivative transactions 661,865 396,452 402,547
Net unrealized appreciation (depreciation) of investments
and derivative transactions 6,387,150 2,145,797 4,748,780
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common shares $132,900,036 $46,907,886 $ 86,382,093
====================================================================================================================================
Authorized shares:
Common Unlimited Unlimited Unlimited
Preferred Unlimited Unlimited Unlimited
====================================================================================================================================
See accompanying notes to financial statements.
65
Statement of
OPERATIONS
Year Ended May 31, 2007
MARYLAND MARYLAND MARYLAND MARYLAND
PREMIUM DIVIDEND DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
(NMY) (NFM) (NZR) (NWI)
------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME $11,309,507 $4,547,316 $4,494,578 $ 5,318,113
------------------------------------------------------------------------------------------------------------------------------------
EXPENSES
Management fees 1,483,239 595,639 601,122 744,410
Preferred shares - auction fees 197,750 80,001 80,001 97,499
Preferred shares - dividend disbursing agent fees 20,000 10,000 20,000 10,000
Shareholders' servicing agent fees and expenses 22,282 1,834 1,162 992
Floating rate obligations interest expense and fees 58,711 23,757 23,757 29,356
Custodian's fees and expenses 81,512 35,659 36,753 41,734
Trustees' fees and expenses 5,903 2,430 2,189 2,850
Professional fees 21,143 13,594 15,827 15,926
Shareholders' reports - printing and mailing expenses 34,162 14,796 16,631 18,528
Stock exchange listing fees 9,804 355 356 456
Investor relations expense 33,683 12,594 12,889 16,002
Other expenses 18,830 14,081 14,357 24,356
------------------------------------------------------------------------------------------------------------------------------------
Total expenses before custodian fee credit and expense reimbursement 1,987,019 804,740 825,044 1,002,109
Custodian fee credit (18,703) (13,295) (9,278) (11,568)
Expense reimbursement -- (218,982) (252,295) (375,025)
------------------------------------------------------------------------------------------------------------------------------------
Net expenses 1,968,316 572,463 563,471 615,516
------------------------------------------------------------------------------------------------------------------------------------
Net investment income 9,341,191 3,974,853 3,931,107 4,702,597
------------------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) from investments 19,964 137,858 176,432 120,873
Net realized gain (loss) from forward swaps -- -- -- 33,256
Change in net unrealized appreciation (depreciation)
of investments 1,306,051 379,809 233,703 907,283
Change in net unrealized appreciation (depreciation)
of forward swaps -- (39,197) -- (211,923)
------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) 1,326,015 478,470 410,135 849,489
------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS
From net investment income (2,475,539) (986,560) (969,809) (1,185,502)
From accumulated net realized gains -- -- -- --
------------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets applicable to Common shares
from distributions to Preferred shareholders (2,475,539) (986,560) (969,809) (1,185,502)
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets applicable to Common
shares from operations $ 8,191,667 $3,466,763 $3,371,433 $ 4,366,584
====================================================================================================================================
See accompanying notes to financial statements.
66
VIRGINIA VIRGINIA VIRGINIA
PREMIUM DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2
(NPV) (NGB) (NNB)
------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME $ 9,416,931 $3,436,799 $ 6,184,447
------------------------------------------------------------------------------------------------------------------------------------
EXPENSES
Management fees 1,250,000 452,789 819,744
Preferred shares - auction fees 159,501 59,999 105,000
Preferred shares - dividend disbursing agent fees 20,000 10,000 10,000
Shareholders' servicing agent fees and expenses 18,294 951 1,317
Floating rate obligations interest expense and fees -- -- --
Custodian's fees and expenses 57,027 28,413 44,016
Trustees' fees and expenses 4,647 1,724 3,270
Professional fees 16,666 12,179 14,339
Shareholders' reports - printing and mailing expenses 31,010 13,150 20,264
Stock exchange listing fees 9,848 266 486
Investor relations expense 27,971 9,430 16,728
Other expenses 17,731 13,926 15,349
------------------------------------------------------------------------------------------------------------------------------------
Total expenses before custodian fee credit and expense reimbursement 1,612,695 602,827 1,050,513
Custodian fee credit (16,076) (9,067) (14,106)
Expense reimbursement -- (166,461) (355,109)
------------------------------------------------------------------------------------------------------------------------------------
Net expenses 1,596,619 427,299 681,298
------------------------------------------------------------------------------------------------------------------------------------
Net investment income 7,820,312 3,009,500 5,503,149
------------------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) from investments 662,460 467,890 658,811
Net realized gain (loss) from forward swaps -- -- --
Change in net unrealized appreciation (depreciation)
of investments 53,189 (52,127) (33,280)
Change in net unrealized appreciation (depreciation)
of forward swaps (39,197) -- --
------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) 676,452 415,763 625,531
------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS
From net investment income (2,029,334) (757,118) (1,363,368)
From accumulated net realized gains (38,016) -- --
------------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets applicable to Common shares
from distributions to Preferred shareholders (2,067,350) (757,118) (1,363,368)
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets applicable to Common
shares from operations $ 6,429,414 $2,668,145 $ 4,765,312
====================================================================================================================================
See accompanying notes to financial statements.
67
Statement of
CHANGES in NET ASSETS
MARYLAND PREMIUM MARYLAND DIVIDEND MARYLAND DIVIDEND
INCOME (NMY) ADVANTAGE (NFM) ADVANTAGE 2 (NZR)
----------------------------- ---------------------------- -----------------------------
YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
5/31/07 5/31/06 5/31/07 5/31/06 5/31/07 5/31/06
------------------------------------------------------------------------------------------------------------------------------------
OPERATIONS
Net investment income $ 9,341,191 $ 9,509,021 $ 3,974,853 $ 3,981,268 $ 3,931,107 $ 3,928,931
Net realized gain (loss)
from investments 19,964 83,005 137,858 (25,376) 176,432 (1,124)
Net realized gain (loss)
from forward swaps -- -- -- (62,612) -- (77,385)
Net realized gain (loss)
from futures -- -- -- -- -- --
Change in net unrealized
appreciation (depreciation)
of investments 1,306,051 (6,030,163) 379,809 (2,009,294) 233,703 (2,456,188)
Change in net unrealized
appreciation (depreciation)
of forward swaps -- -- (39,197) 64,747 -- 98,762
Distributions to
Preferred Shareholders:
From net investment income (2,475,539) (1,920,310) (986,560) (790,032) (969,809) (772,031)
From accumulated net
realized gains -- (31,400) -- -- -- (14,225)
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares
from operations 8,191,667 1,610,153 3,466,763 1,158,701 3,371,433 706,740
------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS
From net investment income (7,114,011) (8,311,346) (3,120,217) (3,532,953) (3,190,218) (3,484,393)
From accumulated net
realized gains -- (260,035) -- -- -- (115,219)
------------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets applicable to
Common shares from distributions
to Common shareholders (7,114,011) (8,571,381) (3,120,217) (3,532,953) (3,190,218) (3,599,612)
------------------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Common shares:
Offering costs adjustments -- -- -- -- -- --
Net proceeds from shares issued to
shareholders due to reinvestment
of distributions 92,621 298,649 152,937 84,704 156,976 119,407
Preferred shares offering costs
adjustments -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets
applicable to Common shares from
capital share transactions 92,621 298,649 152,937 84,704 156,976 119,407
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares 1,170,277 (6,662,579) 499,483 (2,289,548) 338,191 (2,773,465)
Net assets applicable to Common
shares at the beginning
of year 153,833,857 160,496,436 60,761,946 63,051,494 61,726,214 64,499,679
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common
shares at the end of year $155,004,134 $153,833,857 $61,261,429 $60,761,946 $62,064,405 $61,726,214
====================================================================================================================================
Undistributed (Over-distribution of)
net investment income at the
end of year $ (54,806) $ 266,281 $ (79,783) $ 52,442 $ (41,412) $ 187,990
====================================================================================================================================
See accompanying notes to financial statements.
68
MARYLAND DIVIDEND VIRGINIA PREMIUM VIRGINIA DIVIDEND
ADVANTAGE 3 (NWI) INCOME (NPV) ADVANTAGE (NGB)
----------------------------- ---------------------------- -----------------------------
YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
5/31/07 5/31/06 5/31/07 5/31/06 5/31/07 5/31/06
------------------------------------------------------------------------------------------------------------------------------------
OPERATIONS
Net investment income $ 4,702,597 $ 4,610,127 $ 7,820,312 $ 7,868,441 $ 3,009,500 $ 3,037,231
Net realized gain (loss)
from investments 120,873 163,785 662,460 1,639,045 467,890 255,078
Net realized gain (loss)
from forward swaps 33,256 (75,241) -- -- -- --
Net realized gain (loss)
from futures -- (156) -- -- -- --
Change in net unrealized
appreciation (depreciation)
of investments 907,283 (2,948,764) 53,189 (7,073,360) (52,127) (1,918,503)
Change in net unrealized
appreciation (depreciation)
of forward swaps (211,923) 406,799 (39,197) -- -- --
Distributions to
preferred shareholders:
From net investment income (1,185,502) (978,804) (2,029,334) (1,304,947) (757,118) (541,517)
From accumulated net
realized gains -- -- (38,016) (231,433) -- --
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares
from operations 4,366,584 1,177,746 6,429,414 897,746 2,668,145 832,289
------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS
From net investment income (3,570,184) (3,826,714) (6,247,006) (7,081,332) (2,464,212) (2,732,873)
From accumulated
net realized gains -- -- (191,731) (2,160,808) -- --
------------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets applicable to
Common shares from distributions
to Common shareholders (3,570,184) (3,826,714) (6,438,737) (9,242,140) (2,464,212) (2,732,873)
------------------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Common shares:
Offering costs adjustments -- -- -- -- -- --
Net proceeds from shares issued to
shareholders due to reinvestment
of distributions 34,058 15,363 282,861 630,496 78,442 52,481
Preferred shares offering costs
adjustments -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets
applicable to Common
shares from capital
share transactions 34,058 15,363 282,861 630,496 78,442 52,481
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets applicable
to Common shares 830,458 (2,633,605) 273,538 (7,713,898) 282,375 (1,848,103)
Net assets applicable to
Common shares at the
beginning of year 76,809,227 79,442,832 132,626,498 140,340,396 46,625,511 48,473,614
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common
shares at the end of year $77,639,685 $76,809,227 $132,900,036 $132,626,498 $46,907,886 $46,625,511
====================================================================================================================================
Undistributed (Over-distribution of)
net investment income at the
end of year $ (138,732) $ (84,856) $ 45,172 $ 501,200 $ (81,479) $ 132,605
====================================================================================================================================
See accompanying notes to financial statements.
69
Statement of
CHANGES in NET ASSETS (continued)
VIRGINIA DIVIDEND
ADVANTAGE 2 (NNB)
-----------------------------
YEAR YEAR
ENDED ENDED
5/31/07 5/31/06
------------------------------------------------------------------------------------------------------------------------------------
OPERATIONS
Net investment income $ 5,503,149 $ 5,449,719
Net realized gain (loss) from investments 658,811 147,265
Net realized gain (loss) from forward swaps -- (161,404)
Net realized gain (loss) from futures -- --
Change in net unrealized appreciation
(depreciation) of investments (33,280) (3,264,225)
Change in net unrealized appreciation
(depreciation) of forward swaps -- 216,228
Distributions to Preferred Shareholders:
From net investment income (1,363,368) (1,029,859)
From accumulated net realized gains -- (42,756)
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares
from operations 4,765,312 1,314,968
------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS
From net investment income (4,420,783) (4,841,986)
From accumulated net realized gains -- (380,508)
------------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets applicable to
Common shares from distributions
to Common shareholders (4,420,783) (5,222,494)
------------------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Common shares:
Offering costs adjustments -- 10,292
Net proceeds from shares issued to
shareholders due to reinvestment
of distributions 150,558 148,139
Preferred shares offering costs adjustments -- 10,038
------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets
applicable to Common shares from
capital share transactions 150,558 168,469
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares 495,087 (3,739,057)
Net assets applicable to Common
shares at the beginning of year 85,887,006 89,626,063
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common
shares at the end of year $86,382,093 $85,887,006
====================================================================================================================================
Undistributed (Over-distribution of)
net investment income at the
end of year $ (117,479) $ 163,523
====================================================================================================================================
See accompanying notes to financial statements.
70
Notes to
FINANCIAL STATEMENTS
1. GENERAL INFORMATION AND SIGNIFICANT ACCOUNTING POLICIES
The funds (the "Funds") covered in this report and their corresponding Common
share stock exchange symbols are Nuveen Maryland Premium Income Municipal Fund
(NMY), Nuveen Maryland Dividend Advantage Municipal Fund (NFM), Nuveen Maryland
Dividend Advantage Municipal Fund 2 (NZR), Nuveen Maryland Dividend Advantage
Municipal Fund 3 (NWI), Nuveen Virginia Premium Income Municipal Fund (NPV),
Nuveen Virginia Dividend Advantage Municipal Fund (NGB) and Nuveen Virginia
Dividend Advantage Municipal Fund 2 (NNB). Common shares of Maryland Premium
Income (NMY) and Virginia Premium Income (NPV) are traded on the New York Stock
Exchange while Common shares of Maryland Dividend Advantage (NFM), Maryland
Dividend Advantage 2 (NZR), Maryland Dividend Advantage 3 (NWI), Virginia
Dividend Advantage (NGB) and Virginia Dividend Advantage 2 (NNB) are traded on
the American Stock Exchange. The Funds are registered under the Investment
Company Act of 1940, as amended, as closed-end management investment companies.
Each Fund seeks to provide current income exempt from both regular federal and
designated state income taxes by investing primarily in a diversified portfolio
of municipal obligations issued by state and local government authorities within
a single state or certain U.S. territories.
The following is a summary of significant accounting policies followed by the
Funds in the preparation of their financial statements in accordance with U.S.
generally accepted accounting principles.
Investment Valuation
The prices of municipal bonds in each Fund's investment portfolio are provided
by a pricing service approved by the Fund's Board of Trustees. When market price
quotes are not readily available (which is usually the case for municipal
securities), the pricing service may establish fair value based on yields or
prices of municipal bonds of comparable quality, type of issue, coupon, maturity
and rating, indications of value from securities dealers, evaluations of
anticipated cash flows or collateral and general market conditions. Prices of
forward swap contracts are also provided by an independent pricing service
approved by each Fund's Board of Trustees. Futures contracts are valued using
the closing settlement price, or, in the absence of such a price, at the mean of
the bid and asked prices. If the pricing service is unable to supply a price for
a municipal bond, forward swap contract or futures contract, each Fund may use a
market price or fair market value quote provided by a major broker/dealer in
such investments. If it is determined that the market price or fair market value
for an investment is unavailable or inappropriate, the Board of Trustees of the
Funds, or its designee, may establish a fair value for the investment. Temporary
investments in securities that have variable rate and demand features qualifying
them as short-term investments are valued at amortized cost, which approximates
market value.
Investment Transactions
Investment transactions are recorded on a trade date basis. Realized gains and
losses from transactions are determined on the specific identification method.
Investments purchased on a when-issued/delayed delivery basis may have extended
settlement periods. Any investments so purchased are subject to market
fluctuation during this period. The Funds have instructed the custodian to
segregate assets with a current value at least equal to the amount of the
when-issued/delayed delivery purchase commitments. At May 31, 2007, Maryland
Premium Income (NMY), Maryland Dividend Advantage (NFM), Maryland Dividend
Advantage 2 (NZR), Maryland Dividend Advantage 3 (NWI), Virginia Premium Income
(NPV), Virginia Dividend Advantage (NGB) and Virginia Dividend Advantage 2 (NNB)
had outstanding when-issued/delayed delivery purchase commitments of $1,200,000,
$500,000, $500,000, $620,000, $1,600,355, $565,142 and $1,056,340, 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.
Investment income also includes paydown gains and losses, if any.
Income Taxes
Each Fund is a separate taxpayer for federal income tax purposes. Each Fund
intends to distribute substantially all net investment income and net capital
gains to shareholders and to otherwise comply with the requirements of
Subchapter M of the Internal
71
Revenue Code applicable to regulated investment companies. Therefore, no federal
income tax provision is required. Furthermore, each Fund intends to satisfy
conditions which will enable interest from municipal securities, which is exempt
from regular federal and designated state income taxes, to retain such
tax-exempt status when distributed to shareholders of the Funds. Net realized
capital gains and ordinary income distributions paid by the Funds are subject to
federal taxation.
Dividends and Distributions to Common Shareholders
Dividends from tax-exempt net investment income are declared monthly. Net
realized capital gains and/or market discount from investment transactions, if
any, are distributed to shareholders not less frequently than annually.
Furthermore, capital gains are distributed only to the extent they exceed
available capital loss carryforwards.
Distributions to Common shareholders of tax-exempt net investment income, net
realized capital gains and/or market discount, if any, are recorded on the
ex-dividend date. The amount and timing of distributions are determined in
accordance with federal income tax regulations, which may differ from U.S.
generally accepted accounting principles.
Preferred Shares
The Funds have issued and outstanding Preferred shares, $25,000 stated value per
share, as a means of effecting financial leverage. Each Fund's Preferred shares
are issued in one or more Series. The dividend rate paid by the Funds on each
Series is determined every seven days, pursuant to a dutch auction process
overseen by the auction agent, and is payable at the end of each rate period.
The number of Preferred shares outstanding, by Series and in total, for each
Fund is as follows:
MARYLAND MARYLAND MARYLAND MARYLAND
PREMIUM DIVIDEND DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
(NMY) (NFM) (NZR) (NWI)
==================================================================================================================
Number of shares:
Series M -- 1,280 -- --
Series T -- -- -- 1,560
Series W 1,404 -- -- --
Series TH 1,760 -- -- --
Series F -- -- 1,280 --
------------------------------------------------------------------------------------------------------------------
Total 3,164 1,280 1,280 1,560
==================================================================================================================
VIRGINIA VIRGINIA VIRGINIA
PREMIUM DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2
(NPV) (NGB) (NNB)
==================================================================================================================
Number of shares:
Series M -- -- 1,680
Series T 832 -- --
Series W -- 960 --
Series TH 1,720 -- --
Series F -- -- --
------------------------------------------------------------------------------------------------------------------
Total 2,552 960 1,680
==================================================================================================================
Inverse Floating Rate Securities
Each Fund may invest in inverse floating rate securities. An inverse floating
rate security is created by depositing a municipal bond, typically with a fixed
interest rate, into a special purpose trust created by a broker-dealer. In turn,
this trust (a) issues floating rate certificates, in face amounts equal to some
fraction of the deposited bond's par amount or market value, that typically pay
short-term tax-exempt interest rates to third parties, and (b) issues to a
long-term investor (such as one of the Funds) an inverse floating rate
certificate (sometimes referred to as an "inverse floater") that represents all
remaining or residual interest in the trust. The income received by the inverse
floater holder varies inversely with the short-term rate paid to the floating
rate certificates' holders, and in most circumstances the inverse floater holder
bears substantially all of the underlying bond's downside investment risk and
also benefits disproportionately from any potential appreciation of the
underlying bond's value. The price of an inverse floating rate security will be
more volatile than that of the underlying bond because the interest rate is
dependent on not only the fixed coupon rate of the underlying bond but also on
the short-term interest paid on the floating rate certificates, and because the
inverse floating rate security essentially bears the risk of loss of the greater
face value of the underlying bond.
A Fund may purchase an inverse floating rate security in a secondary market
transaction without first owning the underlying bond (referred to as an
"externally-deposited inverse floater"), or instead by first selling a
fixed-rate bond to a broker-dealer for deposit into the special purpose trust
and receiving in turn the residual interest in the trust (referred to as a
"self-deposited inverse floater").
72
An investment in an externally-deposited inverse floater is identified in the
Portfolio of Investments as an "Inverse floating rate investment". An
investments in a self-deposited inverse floater is accounted for as a financing
transaction in accordance with Statement of Financial Accounting Standards
(SFAS) No. 140 "Accounting for Transfers and Servicing of Financial Assets and
Extinguishment of Liabilities". In such instances, a fixed-rate bond deposited
into a special purpose trust is identified in the Portfolio of Investments as an
"Underlying bond of an inverse floating rate trust", with the Fund accounting
for the short-term floating rate certificates issued by the trust as "Floating
rate obligations" on the Statement of Assets and Liabilities. In addition, the
Fund reflects in Investment Income the entire earnings of the underlying bond
and accounts for the related interest paid to the holders of the short-term
floating rate certificates as "Floating rate obligations interest expense and
fees" in the Statement of Operations.
During the fiscal year ended May 31, 2007, each Fund invested in externally
deposited inverse floaters and/or self-deposited inverse floaters.
The average floating rate obligations outstanding and average annual interest
rate and fees related to self-deposited inverse floaters during the fiscal year
ended May 31, 2007, were as follows:
MARYLAND MARYLAND MARYLAND MARYLAND
PREMIUM DIVIDEND DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
(NMY) (NFM) (NZR) (NWI)
==================================================================================================================
Average floating rate obligations $ 1,511,233 $ 611,510 $ 611,510 $ 755,616
Average annual interest rate and fees 3.88% 3.88% 3.88% 3.89%
==================================================================================================================
Forward Swap Transactions
The Funds are authorized to invest in certain derivative financial instruments.
Each Funds' use of forward interest rate swap transactions is intended to help
the Fund manage its overall interest rate sensitivity, either shorter or longer,
generally to more closely align the Fund's interest rate sensitivity with that
of the broader municipal market. Forward interest rate swap transactions involve
each Fund's agreement with a counterparty to pay, in the future, a fixed or
variable rate payment in exchange for the counterparty paying the Fund a
variable or fixed rate payment, the accruals for which would begin at a
specified date in the future (the "effective date"). The amount of the payment
obligation is based on the notional amount of the forward swap contract and the
termination date of the swap (which is akin to a bond's maturity). The value of
the Fund's swap commitment would increase or decrease based primarily on the
extent to which long-term interest rates for bonds having a maturity of the
swap's termination date increases or decreases. The Funds may terminate a swap
contract prior to the effective date, at which point a realized gain or loss is
recognized. When a forward swap is terminated, it ordinarily does not involve
the delivery of securities or other underlying assets or principal, but rather
is settled in cash on a net basis. Each Fund intends, but is not obligated, to
terminate its forward swaps before the effective date. Accordingly, the risk of
loss with respect to the swap counterparty on such transactions is limited to
the credit risk associated with a counterparty failing to honor its commitment
to pay any realized gain to the Fund upon termination. To reduce such credit
risk, all counterparties are required to pledge collateral daily (based on the
daily valuation of each swap) on behalf of each Fund with a value approximately
equal to the amount of any unrealized gain above a pre-determined threshold.
Reciprocally, when any of the Funds have an unrealized loss on a swap contract,
the Funds have instructed the custodian to pledge assets of the Funds as
collateral with a value approximately equal to the amount of the unrealized loss
above a pre-determined threshold. Collateral pledges are monitored and
subsequently adjusted if and when the swap valuations fluctuate, either up or
down, by at least the predetermined threshold amount.
Futures Contracts
The Funds are authorized to invest in futures contracts. Upon entering into a
futures contract, a Fund is required to deposit with the broker an amount of
cash or liquid securities equal to a specified percentage of the contract
amount. This is known as the "initial margin." Subsequent payments ("variation
margin") are made or received by a Fund each day, depending on the daily
fluctuation of the value of the contract.
During the period the futures contract is open, changes in the value of the
contract are recognized as an unrealized gain or loss by "marking-to-market" on
a daily basis to reflect the changes in market value of the contract. When the
contract is closed or expired, a Fund records a realized gain or loss equal to
the difference between the value of the contract on the closing date and value
of the contract when originally entered into. Cash held by the broker to cover
initial margin requirements on open futures contracts, if any, is recognized in
the Statement of Assets and Liabilities. Additionally, the Statement of Assets
and Liabilities reflects a receivable or payable for the variation margin when
applicable. The Funds did not invest in any such instruments during the fiscal
year ended May 31, 2007.
73
Risks of investments in futures contracts include the possible adverse movement
of the securities or indices underlying the contracts, the possibility that
there may not be a liquid secondary market for the contracts and/or that a
change in the value of the contract may not correlate with a change in the value
of the underlying securities or indices.
Custodian Fee Credit
Each Fund has an arrangement with the custodian bank whereby certain custodian
fees and expenses are reduced by credits earned on each Fund's cash on deposit
with the bank. Such deposit arrangements are an alternative to overnight
investments.
Indemnifications
Under the Funds' organizational documents, their Officers and Trustees are
indemnified against certain liabilities arising out of the performance of their
duties to the Funds. In addition, in the normal course of business, the Funds
enter into contracts that provide general indemnifications to other parties. The
Funds' maximum exposure under these arrangements is unknown as this would
involve future claims that may be made against the Funds that have not yet
occurred. However, the Funds have not had prior claims or losses pursuant to
these contracts and expect the risk of loss to be remote.
Use of Estimates
The preparation of financial statements in conformity with U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of increases and
decreases in net assets applicable to Common shares from operations during the
reporting period. Actual results may differ from those estimates.
2. FUND SHARES
Transactions in Common shares were as follows:
MARYLAND PREMIUM MARYLAND DIVIDEND MARYLAND DIVIDEND
INCOME (NMY) ADVANTAGE (NFM) ADVANTAGE 2 (NZR)
--------------------- -------------------- --------------------
YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
5/31/07 5/31/06 5/31/07 5/31/06 5/31/07 5/31/06
-----------------------------------------------------------------------------------------------------------------
Common shares issued to
shareholders due to reinvestment
of distributions 6,252 19,420 9,782 5,298 9,920 7,521
=================================================================================================================
MARYLAND DIVIDEND VIRGINIA PREMIUM VIRGINIA DIVIDEND
ADVANTAGE 3 (NWI) INCOME (NPV) ADVANTAGE (NGB)
--------------------- -------------------- --------------------
YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
5/31/07 5/31/06 5/31/07 5/31/06 5/31/07 5/31/06
-----------------------------------------------------------------------------------------------------------------
Common shares issued to
shareholders due to reinvestment
of distributions 2,324 1,071 18,377 38,319 4,617 3,038
=================================================================================================================
VIRGINIA DIVIDEND
ADVANTAGE 2 (NNB)
--------------------
YEAR YEAR
ENDED ENDED
5/31/07 5/31/06
-----------------------------------------------------------------------------------------------------------------
Common shares issued to
shareholders due to reinvestment
of distributions 9,265 8,839
=================================================================================================================
74
3. INVESTMENT TRANSACTIONS
Purchases and sales (including maturities but excluding short-term investments
and derivative transactions) during the fiscal year ended May 31, 2007, were as
follows:
MARYLAND MARYLAND MARYLAND MARYLAND
PREMIUM DIVIDEND DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
(NMY) (NFM) (NZR) (NWI)
==================================================================================================================
Purchases $33,382,065 $14,000,508 $11,125,971 $15,319,295
Sales and maturities 29,560,480 11,299,418 9,139,967 13,191,549
==================================================================================================================
VIRGINIA VIRGINIA VIRGINIA
PREMIUM DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2
(NPV) (NGB) (NNB)
==================================================================================================================
Purchases $36,465,445 $15,948,108 $26,792,214
Sales and maturities 32,202,287 16,377,657 24,477,943
==================================================================================================================
4. INCOME TAX INFORMATION
The following information is presented on an income tax basis. Differences
between amounts for financial statement and federal income tax purposes are
primarily due to the treatment of paydown gains and losses, timing differences
in recognizing taxable market discount, timing differences in recognizing
certain gains and losses on investment transactions and the treatment of
investments in inverse floating rate transactions subject to SFAS No. 140. To
the extent that differences arise that are permanent in nature, such amounts are
reclassified within the capital accounts on the Statement of Assets and
Liabilities presented in the annual report, based on their federal tax basis
treatment; temporary differences do not require reclassification. Temporary and
permanent differences do not impact the net asset values of the Funds.
At May 31, 2007, the cost of investments was as follows:
MARYLAND MARYLAND MARYLAND MARYLAND
PREMIUM DIVIDEND DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
(NMY) (NFM) (NZR) (NWI)
==================================================================================================================
Cost of investments $223,430,916 $90,067,053 $90,438,232 $112,807,910
==================================================================================================================
VIRGINIA VIRGINIA VIRGINIA
PREMIUM DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2
(NPV) (NGB) (NNB)
==================================================================================================================
Cost of investments $191,034,790 $67,478,723 $123,943,055
==================================================================================================================
Gross unrealized appreciation and gross unrealized depreciation of investments
at May 31, 2007, were as follows:
MARYLAND MARYLAND MARYLAND MARYLAND
PREMIUM DIVIDEND DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
(NMY) (NFM) (NZR) (NWI)
==================================================================================================================
Gross unrealized:
Appreciation $8,205,594 $2,820,167 $2,784,046 $2,601,457
Depreciation (749,759) (216,904) (272,298) (522,673)
------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments $7,455,835 $2,603,263 $2,511,748 $2,078,784
==================================================================================================================
VIRGINIA VIRGINIA VIRGINIA
PREMIUM DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2
(NPV) (NGB) (NNB)
==================================================================================================================
Gross unrealized:
Appreciation $7,261,662 $2,391,053 $5,105,213
Depreciation (528,071) (208,343) (279,317)
------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments $6,733,591 $2,182,710 $4,825,896
==================================================================================================================
75
The tax components of undistributed net tax-exempt income, net ordinary income
and net long-term capital gains at May 31, 2007, the Funds' tax year end, were
as follows:
MARYLAND MARYLAND MARYLAND MARYLAND
PREMIUM DIVIDEND DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
(NMY) (NFM) (NZR) (NWI)
==================================================================================================================
Undistributed net tax-exempt income * $258,179 $142,245 $172,965 $127,885
Undistributed net ordinary income ** 69,718 -- -- 3,541
Undistributed net long-term capital gains -- -- 128,819 --
==================================================================================================================
VIRGINIA VIRGINIA VIRGINIA
PREMIUM DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2
(NPV) (NGB) (NNB)
==================================================================================================================
Undistributed net tax-exempt income * $262,579 $ 77,723 $167,225
Undistributed net ordinary income ** 8,291 3,355 1,499
Undistributed net long-term capital gains 661,863 396,454 408,716
==================================================================================================================
* Undistributed net tax-exempt income (on a tax basis) has not been reduced
for the dividend declared on May 1, 2007, paid on June 1, 2007.
** Net ordinary income consists of taxable market discount income and net
short-term capital gains, if any.
The tax character of distributions paid during the tax years ended May 31, 2007
and May 31, 2006, was designated for purposes of the dividends paid deduction as
follows:
MARYLAND MARYLAND MARYLAND MARYLAND
PREMIUM DIVIDEND DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
2007 (NMY) (NFM) (NZR) (NWI)
==================================================================================================================
Distributions from net tax-exempt income *** $9,664,847 $4,128,452 $4,166,021 $4,771,527
Distributions from net ordinary income ** -- -- 6,683 --
Distributions from net long-term capital gains **** -- -- 562 --
==================================================================================================================
VIRGINIA VIRGINIA VIRGINIA
PREMIUM DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2
2007 (NPV) (NGB) (NNB)
==================================================================================================================
Distributions from net tax-exempt income *** $8,317,694 $3,260,186 $5,809,897
Distributions from net ordinary income ** -- -- --
Distributions from net long-term capital gains **** 229,747 -- --
==================================================================================================================
MARYLAND MARYLAND MARYLAND MARYLAND
PREMIUM DIVIDEND DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
2006 (NMY) (NFM) (NZR) (NWI)
==================================================================================================================
Distributions from net tax-exempt income $10,253,086 $4,350,733 $4,281,497 $4,833,094
Distributions from net ordinary income ** 82,432 -- 641 --
Distributions from net long-term capital gains 291,303 -- 114,999 --
==================================================================================================================
VIRGINIA VIRGINIA VIRGINIA
PREMIUM DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2
2006 (NPV) (NGB) (NNB)
==================================================================================================================
Distributions from net tax-exempt income $8,481,521 $3,279,786 $5,886,854
Distributions from net ordinary income ** -- -- 2,260
Distributions from net long-term capital gains 2,392,241 -- 354,292
==================================================================================================================
** Net ordinary income consists of taxable market discount income and net
short-term capital gains, if any.
*** The Funds hereby designate these amounts paid during the fiscal year ended
May 31, 2007, as Exempt Interest Dividends.
**** The Funds hereby designate these amounts paid during the fiscal year ended
May 31, 2007, as long-term capital gain dividends pursuant to Internal
Revenue Code Section 852(b)(3).
76
At May 31, 2007, the following Funds had unused capital loss carryforwards
available for federal income tax purposes to be applied against future capital
gains, if any. If not applied, the carryforwards will expire as follows:
MARYLAND MARYLAND MARYLAND
PREMIUM DIVIDEND DIVIDEND
INCOME INCOME ADVANTAGE 3
(NMY) (NFM) (NWI)
==================================================================================================================
Expiration year:
2009 $ -- $ 774 $ --
2010 -- 37,159 --
2011 -- -- --
2012 -- 430,282 --
2013 -- 15,613 --
2014 -- 62,054 8,870
2015 28,576 -- --
------------------------------------------------------------------------------------------------------------------
Total $28,576 $545,882 $8,870
==================================================================================================================
Maryland Dividend Advantage elected to defer net realized losses from
investments incurred from November 1, 2006 through May 31, 2007 ("post-October
losses") in accordance with federal income tax regulations. The post-October
losses of $9,857 were treated as having arisen on the first day of the following
taxable year.
5. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Each Fund's management fee is separated into two components - a complex-level
component, based on the aggregate amount of all fund assets managed by Nuveen
Asset Management (the "Adviser"), a wholly owned subsidiary of Nuveen
Investments, Inc. ("Nuveen"), and a specific fund-level component, based only on
the amount of assets within each individual fund. This pricing structure enables
Nuveen fund shareholders to benefit from growth in the assets within each
individual fund as well as from growth in the amount of complex-wide assets
managed by the Adviser.
The annual fund-level fee, payable monthly, for each Fund is based upon the
average daily net assets (including net assets attributable to Preferred shares)
of each Fund as follows:
AVERAGE DAILY NET ASSETS MARYLAND PREMIUM INCOME (NMY)
(INCLUDING NET ASSETS VIRGINIA PREMIUM INCOME (NPV)
ATTRIBUTABLE TO PREFERRED SHARES) FUND-LEVEL FEE RATE
================================================================================
For the first $125 million .4500%
For the next $125 million .4375
For the next $250 million .4250
For the next $500 million .4125
For the next $1 billion .4000
For the next $3 billion .3875
For net assets over $5 billion .3750
================================================================================
MARYLAND DIVIDEND ADVANTAGE (NFM)
MARYLAND DIVIDEND ADVANTAGE 2 (NZR)
MARYLAND DIVIDEND ADVANTAGE 3 (NWI)
AVERAGE DAILY NET ASSETS VIRGINIA DIVIDEND ADVANTAGE (NGB)
(INCLUDING NET ASSETS VIRGINIA DIVIDEND ADVANTAGE 2 (NNB)
ATTRIBUTABLE TO PREFERRED SHARES) FUND-LEVEL FEE RATE
================================================================================
For the first $125 million .4500%
For the next $125 million .4375
For the next $250 million .4250
For the next $500 million .4125
For the next $1 billion .4000
For net assets over $2 billion .3750
================================================================================
77
The annual complex-level fee, payable monthly, which is additive to the
fund-level fee, for all Nuveen sponsored funds in the U.S., is based on the
aggregate amount of total fund assets managed as stated in the table below. As
of May 31, 2007, the complex-level fee rate was .1824%.
COMPLEX-LEVEL ASSETS(1) COMPLEX-LEVEL FEE RATE
================================================================================
For the first $55 billion .2000%
For the next $1 billion .1800
For the next $1 billion .1600
For the next $3 billion .1425
For the next $3 billion .1325
For the next $3 billion .1250
For the next $5 billion .1200
For the next $5 billion .1175
For the next $15 billion .1150
For Managed Assets over $91 billion (2) .1400
================================================================================
(1) The complex-level fee component of the management fee for the funds is
calculated based upon the aggregate Managed Assets ("Managed Assets" means
the average daily net assets of each fund including assets attributable to
preferred stock issued by or borrowings by the Nuveen funds) of
Nuveen-sponsored funds in the U.S.
(2) With respect to the complex-wide Managed Assets over $91 billion, the fee
rate or rates that will apply to such assets will be determined at a later
date. In the unlikely event that complex-wide Managed Assets reach $91
billion prior to a determination of the complex-level fee rate or rates to
be applied to Managed Assets in excess of $91 billion, the complex-level
fee rate for such complex-wide Managed Assets shall be .1400% until such
time as a different rate or rates is determined.
The management fee compensates the Adviser for overall investment advisory and
administrative services and general office facilities. The Funds pay no
compensation directly to those of its Trustees who are affiliated with the
Adviser or to its Officers, all of whom receive remuneration for their services
to the Funds from the Adviser or its affiliates. The Board of Trustees has
adopted a deferred compensation plan for independent Trustees that enables
Trustees to elect to defer receipt of all or a portion of the annual
compensation they are entitled to receive from certain Nuveen advised funds.
Under the plan, deferred amounts are treated as though equal dollar amounts had
been invested in shares of select Nuveen advised funds.
For the first ten years of Maryland Dividend Advantage's (NFM) and Virginia
Dividend Advantage's (NGB) operations, the Adviser has agreed to reimburse the
Funds, as a percentage of average daily net assets (including net assets
attributable to Preferred shares), for fees and expenses in the amounts and for
the time periods set forth below:
YEAR ENDING YEAR ENDING
JANUARY 31, JANUARY 31,
================================================================================
2001* .30% 2007 .25%
2002 .30 2008 .20
2003 .30 2009 .15
2004 .30 2010 .10
2005 .30 2011 .05
2006 .30
================================================================================
* From the commencement of operations.
The Adviser has not agreed to reimburse Maryland Dividend Advantage (NFM) and
Virginia Dividend Advantage (NGB) for any portion of its fees and expenses
beyond January 31, 2011.
For the first ten years of Maryland Dividend Advantage 2's (NZR) operations, the
Adviser has agreed to reimburse the Fund, as a percentage of average daily net
assets (including net assets attributable to Preferred shares), for fees and
expenses in the amounts and for the time periods set forth below:
YEAR ENDING YEAR ENDING
SEPTEMBER 30, SEPTEMBER 30,
================================================================================
2001* .30% 2007 .25%
2002 .30 2008 .20
2003 .30 2009 .15
2004 .30 2010 .10
2005 .30 2011 .05
2006 .30
================================================================================
* From the commencement of operations.
The Adviser has not agreed to reimburse Maryland Dividend Advantage 2 (NZR) for
any portion of its fees and expenses beyond September 30, 2011.
78
For the first eight years of Maryland Dividend Advantage 3's (NWI) operations,
the Adviser has agreed to reimburse the Fund, as a percentage of average daily
net assets (including net assets attributable to Preferred shares), for fees and
expenses in the amounts and for the time periods set forth below:
YEAR ENDING YEAR ENDING
SEPTEMBER 30, SEPTEMBER 30,
================================================================================
2002* .32% 2007 .32%
2003 .32 2008 .24
2004 .32 2009 .16
2005 .32 2010 .08
2006 .32
================================================================================
* From the commencement of operations.
The Adviser has not agreed to reimburse Maryland Dividend Advantage 3 (NWI) for
any portion of its fees and expenses beyond September 30, 2010.
For the first ten years of Virginia Dividend Advantage 2's (NNB) operations, the
Adviser has agreed to reimburse the Fund, as a percentage of average daily net
assets (including net assets attributable to Preferred shares), for fees and
expenses in the amounts and for the time periods set forth below:
YEAR ENDING YEAR ENDING
NOVEMBER 30, NOVEMBER 30,
================================================================================
2001* .30% 2007 .25%
2002 .30 2008 .20
2003 .30 2009 .15
2004 .30 2010 .10
2005 .30 2011 .05
2006 .30
================================================================================
* From the commencement of operations.
The Adviser has not agreed to reimburse Virginia Dividend Advantage 2 (NNB) for
any portion of its fees and expenses beyond November 30, 2011.
6. NEW ACCOUNTING PRONOUNCEMENTS
Financial Accounting Standards Board Interpretation No. 48
On July 13, 2006, the Financial Accounting Standards Board (FASB) released FASB
Interpretation No. 48 "Accounting for Uncertainty in Income Taxes" (FIN 48). FIN
48 provides guidance for how uncertain tax positions should be recognized,
measured, presented and disclosed in the financial statements. FIN 48 requires
the evaluation of tax positions taken or expected to be taken in the course of
preparing the Funds' tax returns to determine whether the tax positions are
"more-likely-than-not" of being sustained by the applicable tax authority. Tax
positions not deemed to meet the more-likely-than-not threshold would be
recorded as a tax benefit or expense in the current year. Adoption of FIN 48 is
required for fiscal years beginning after December 15, 2006, and is to be
applied to all open tax years as of the effective date. Recent SEC guidance
allows funds to delay implementing FIN 48 into NAV calculations until the fund's
last NAV calculation in the first required financial statement reporting period.
As a result, the Funds must begin to incorporate FIN 48 into their NAV
calculations by November 30, 2007. At this time, management is continuing to
evaluate the implications of FIN 48 and does not expect the adoption of FIN 48
will have a significant impact on the net assets or results of operations of the
Funds.
Financial Accounting Standards Board Statement of Financial Accounting Standards
No. 157
In September 2006, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 157, "Fair Value
Measurements." This standard establishes a single authoritative definition of
fair value, sets out a framework for measuring fair value and requires
additional disclosures about fair value measurements. SFAS No. 157 applies to
fair value measurements already required or permitted by existing standards.
SFAS No. 157 is effective for financial statements issued for fiscal years
beginning after November 15, 2007, and interim periods within those fiscal
years. The changes to current generally accepted accounting principles from the
application of this standard relate to the definition of fair value, the methods
used to measure fair value, and the expanded disclosures about fair value
measurements. As of May 31, 2007, the Funds do not believe the adoption of SFAS
No. 157 will impact the financial statement amounts; however, additional
disclosures may be required about the inputs used to develop the measurements
and the effect of certain of the measurements included within the Statement of
Operations for the period.
79
7. SUBSEQUENT EVENTS
Distributions to Common Shareholders
The Funds declared Common share dividend distributions from their tax-exempt net
investment income which were paid on July 2, 2007, to shareholders of record on
June 15, 2007, as follows:
MARYLAND MARYLAND MARYLAND MARYLAND
PREMIUM DIVIDEND DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
(NMY) (NFM) (NZR) (NWI)
================================================================================
Dividend per share $.0515 $.0585 $.0585 $.0525
================================================================================
VIRGINIA VIRGINIA VIRGINIA
PREMIUM DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2
(NPV) (NGB) (NNB)
================================================================================
Dividend per share $.0530 $.0595 $.0595
================================================================================
Agreement and Plan of Merger
On June 20, 2007, Nuveen Investments announced that it had entered into a
definitive Agreement and Plan of Merger ("Merger Agreement") with an investor
group majority-led by Madison Dearborn Partners, LLC. Madison Dearborn Partners,
LLC is a private equity investment firm based in Chicago, Illinois. The investor
group includes affiliates of Merrill Lynch, Wachovia, Citigroup, Deutsche Bank
and Morgan Stanley. It is anticipated that Merrill Lynch and its affiliates will
be indirect "affiliated persons" (as that term is defined in the Investment
Company Act of 1940) of the Funds. Under the terms of the merger, each
outstanding share of Nuveen Investments' common stock (other than dissenting
shares) will be converted into the right to receive a specified amount of cash,
without interest. The merger is expected to be completed by the end of the year,
subject to customary conditions, including obtaining the approval of Nuveen
Investments shareholders, obtaining necessary fund and client consents
sufficient to satisfy the terms of the Merger Agreement, and expiration of
certain regulatory waiting periods. The obligations of Madison Dearborn
Partners, LLC to consummate the merger are not conditioned on its obtaining
financing. The Merger Agreement includes a "go shop" provision through July 19,
2007, during which Nuveen Investments may actively solicit and negotiate
competing takeover proposals.
The consummation of the merger will be deemed to be an "assignment" (as defined
in the 1940 Act) of the investment management agreement between each Fund and
the Adviser, and will result in the automatic termination of each Fund's
agreement. Prior to the consummation of the merger, it is anticipated that the
Board of Trustees of each Fund will consider a new investment management
agreement with the Adviser. If approved by the Board, the new agreement would be
presented to the Fund's shareholders for approval, and, if so approved by
shareholders, would take effect upon consummation of the merger. There can be no
assurance that the merger described above will be consummated as contemplated or
that necessary shareholder approvals will be obtained.
80
Financial
HIGHLIGHTS
81
Financial
HIGHLIGHTS
Selected data for a Common share outstanding throughout each period:
Investment Operations Less Distributions
----------------------------------------------------------------- ----------------------------------
Distributions Distributions
from Net from Net
Beginning Investment Capital Investment Capital
Common Net Income to Gains to Income to Gains to
Share Net Realized/ Preferred Preferred Common Common
Net Asset Investment Unrealized Share- Share- Share- Share-
Value Income Gain (Loss) holders+ holders+ Total holders holders Total
====================================================================================================================================
MARYLAND PREMIUM
INCOME (NMY)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
2007 $14.47 $ .88 $ .12 $(.23) $ -- $ .77 $(.67) $ -- $(.67)
2006 15.12 .89 (.56) (.18) -- .15 (.78) (.02) (.80)
2005 14.28 .92 .92 (.10) -- 1.74 (.90) -- (.90)
2004 15.10 .96 (.81) (.06) -- .09 (.91) -- (.91)
2003 14.04 1.02 1.00 (.07) -- 1.95 (.89) -- (.89)
MARYLAND DIVIDEND
ADVANTAGE (NFM)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
2007 14.57 .95 .12 (.24) -- .83 (.75) -- (.75)
2006 15.13 .95 (.47) (.19) -- .29 (.85) -- (.85)
2005 14.43 .98 .75 (.10) -- 1.63 (.93) -- (.93)
2004 15.47 1.01 (1.07) (.05) -- (.11) (.93) -- (.93)
2003 14.18 1.04 1.18 (.08) -- 2.14 (.86) -- (.86)
====================================================================================================================================
Total Returns
----------------------
Offering Based
Costs and Ending on
Preferred Common Based Common
Share Share Ending on Share Net
Underwriting Net Asset Market Market Asset
Discounts Value Value Value* Value*
=========================================================================================
MARYLAND PREMIUM
INCOME (NMY)
-----------------------------------------------------------------------------------------
Year Ended 5/31:
2007 $ -- $14.57 $14.84 6.96% 5.35%
2006 -- 14.47 14.52 (2.94) 1.08
2005 -- 15.12 15.78 15.64 12.52
2004 -- 14.28 14.45 (10.77) .64
2003 -- 15.10 17.15 15.22 14.33
MARYLAND DIVIDEND
ADVANTAGE (NFM)
-----------------------------------------------------------------------------------------
Year Ended 5/31:
2007 -- 14.65 15.28 5.51 5.74
2006 -- 14.57 15.19 2.51 1.95
2005 -- 15.13 15.63 6.22 11.60
2004 -- 14.43 15.62 2.99 (.69)
2003 .01 15.47 16.08 9.98 15.55
=========================================================================================
Ratios/Supplemental Data
--------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets Ratios to Average Net Assets
Applicable to Common Shares Applicable to Common Shares
Before Credit/Reimbursement After Credit/Reimbursement**
-------------------------------------------- -------------------------------------------
Ending
Net
Assets
Applicable Expenses Expenses Net Expenses Expenses Net Portfolio
to Common Including Excluding Investment Including Excluding Investment Turnover
Shares (000) Interest++(a) Interest++(a) Income++ Interest++(a) Interest++(a) Income++ Rate
====================================================================================================================================
MARYLAND PREMIUM
INCOME (NMY)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
2007 $155,004 1.27% 1.23% 5.95% 1.26% 1.22% 5.96% 13%
2006 153,834 1.23 1.23 6.05 1.21 1.21 6.07 13
2005 160,496 1.24 1.24 6.22 1.23 1.23 6.22 10
2004 151,107 1.24 1.24 6.54 1.23 1.23 6.55 16
2003 159,415 1.26 1.26 7.00 1.25 1.25 7.01 16
MARYLAND DIVIDEND
ADVANTAGE (NFM)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
2007 61,261 1.30 1.26 6.06 .93 .89 6.43 12
2006 60,762 1.26 1.26 5.99 .81 .81 6.44 14
2005 63,051 1.26 1.26 6.11 .79 .79 6.57 11
2004 60,041 1.24 1.24 6.34 .78 .78 6.80 10
2003 64,338 1.26 1.26 6.54 .79 .79 7.01 12
====================================================================================================================================
Floating Rate Obligations
Preferred Shares at End of Period at End of Period
-------------------------------------- --------------------------
Aggregate Liquidation Aggregate
Amount and Market Asset Amount Asset
Outstanding Value Coverage Outstanding Coverage
(000) Per Share Per Share (000) Per $1,000
================================================================================
MARYLAND PREMIUM
INCOME (NMY)
--------------------------------------------------------------------------------
Year Ended 5/31:
2007 $79,100 $25,000 $73,990 $2,800 $84,609
2006 79,100 25,000 73,620 -- --
2005 79,100 25,000 75,726 -- --
2004 79,100 25,000 72,758 -- --
2003 79,100 25,000 75,384 -- --
MARYLAND DIVIDEND
ADVANTAGE (NFM)
--------------------------------------------------------------------------------
Year Ended 5/31:
2007 32,000 25,000 72,860 1,133 83,314
2006 32,000 25,000 72,470 -- --
2005 32,000 25,000 74,259 -- --
2004 32,000 25,000 71,907 -- --
2003 32,000 25,000 75,264 -- --
================================================================================
* Total Return on Market Value is the combination of changes in the market
price per share and the effect of reinvested dividend income and reinvested
capital gains distributions, if any, at the average price paid per share at
the time of reinvestment. Total Return on Common Share Net Asset Value is
the combination of changes in Common share net asset value, reinvested
dividend income at net asset value and reinvested capital gains
distributions at net asset value, if any. Total returns are not annualized.
** After custodian fee credit and expense reimbursement, where applicable.
+ The amounts shown are based on Common share equivalents.
++ Ratios do not reflect the effect of dividend payments to Preferred
shareholders; income ratios reflect income earned on assets attributable to
Preferred shares.
(a) Interest expense arises from the application of SFAS No. 140 to certain
inverse floating rate transactions entered into by the Fund as more fully
described in Footnote 1 - Inverse Floating Rate Securities.
See accompanying notes to financial statements.
82-83 spread
Financial
HIGHLIGHTS (continued)
Selected data for a Common share outstanding throughout each period:
Investment Operations Less Distributions
----------------------------------------------------------------- ----------------------------------
Distributions Distributions
from Net from Net
Beginning Investment Capital Investment Capital
Common Net Income to Gains to Income to Gains to
Share Net Realized/ Preferred Preferred Common Common
Net Asset Investment Unrealized Share- Share- Share- Share-
Value Income Gain (Loss) holders+ holders+ Total holders holders Total
====================================================================================================================================
MARYLAND DIVIDEND
ADVANTAGE 2 (NZR)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
2007 $14.76 $.94 $ .10 $(.23) $ -- $ .81 $(.76) $ -- $(.76)
2006 15.45 .94 (.59) (.18) -- .17 (.83) (.03) (.86)
2005 14.64 .94 .90 (.09) -- 1.75 (.88) (.06) (.94)
2004 15.71 .96 (1.08) (.06) -- (.18) (.87) (.02) (.89)
2003 14.01 .97 1.62 (.09) -- 2.50 (.81) -- (.81)
MARYLAND DIVIDEND
ADVANTAGE 3 (NWI)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
2007 14.33 .88 .16 (.22) -- .82 (.67) -- (.67)
2006 14.82 .86 (.46) (.18) -- .22 (.71) -- (.71)
2005 13.88 .86 .97 (.10) -- 1.73 (.78) (.01) (.79)
2004 14.89 .87 (1.03) (.06) -- (.22) (.79) -- (.79)
2003(b) 14.33 .52 .75 (.05) -- 1.22 (.46) -- (.46)
====================================================================================================================================
Total Returns
----------------------
Offering Based
Costs and Ending on
Preferred Common Based Common
Share Share Ending on Share Net
Underwriting Net Asset Market Market Asset
Discounts Value Value Value** Value**
===========================================================================================
MARYLAND DIVIDEND
ADVANTAGE 2 (NZR)
-------------------------------------------------------------------------------------------
Year Ended 5/31:
2007 $ -- $14.81 $15.38 9.32% 5.56%
2006 -- 14.76 14.76 1.13 1.14
2005 -- 15.45 15.41 14.71 12.22
2004 -- 14.64 14.28 (2.90) (1.16)
2003 .01 15.71 15.60 12.71 18.39
MARYLAND DIVIDEND
ADVANTAGE 3 (NWI)
-------------------------------------------------------------------------------------------
Year Ended 5/31:
2007 -- 14.48 14.74 11.47 5.75
2006 -- 14.33 13.85 1.09 1.55
2005 -- 14.82 14.40 14.98 12.67
2004 -- 13.88 13.24 (5.97) (1.51)
2003(b) (.20) 14.89 14.90 2.53 7.31
===========================================================================================
Ratios/Supplemental Data
-------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets Ratios to Average Net Assets
Applicable to Common Shares Applicable to Common Shares
Before Credit/Reimbursement After Credit/Reimbursement***
-------------------------------------------- -------------------------------------------
Ending
Net
Assets
Applicable Expenses Expenses Net Expenses Expenses Net Portfolio
to Common Including Excluding Investment Including Excluding Investment Turnover
Shares (000) Interest++(a) Interest++(a) Income++ Interest++(a) Interest++(a) Income++ Rate
====================================================================================================================================
MARYLAND DIVIDEND
ADVANTAGE 2 (NZR)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
2007 $62,064 1.32% 1.28% 5.86% .90% .86% 6.28% 10%
2006 61,726 1.25 1.25 5.76 .77 .77 6.23 15
2005 64,500 1.23 1.23 5.74 .77 .77 6.20 10
2004 61,064 1.24 1.24 5.90 .78 .78 6.36 11
2003 65,490 1.26 1.26 6.07 .80 .80 6.53 12
MARYLAND DIVIDEND
ADVANTAGE 3 (NWI)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
2007 77,640 1.28 1.24 5.52 .79 .75 6.01 11
2006 76,809 1.23 1.23 5.41 .73 .73 5.91 14
2005 79,443 1.23 1.23 5.40 .74 .74 5.89 12
2004 74,369 1.22 1.22 5.59 .73 .73 6.08 15
2003(b) 79,700 1.18* 1.18* 5.01* .70* .70* 5.50* 13
====================================================================================================================================
Floating Rate Obligations
Preferred Shares at End of Period at End of Period
-------------------------------------- --------------------------
Aggregate Liquidation Aggregate
Amount and Market Asset Amount Asset
Outstanding Value Coverage Outstanding Coverage
(000) Per Share Per Share (000) Per $1,000
================================================================================
MARYLAND DIVIDEND
ADVANTAGE 2 (NZR)
--------------------------------------------------------------------------------
Year Ended 5/31:
2007 $32,000 $25,000 $73,488 $1,133 $84,022
2006 32,000 25,000 73,224 -- --
2005 32,000 25,000 75,390 -- --
2004 32,000 25,000 72,706 -- --
2003 32,000 25,000 76,164 -- --
MARYLAND DIVIDEND
ADVANTAGE 3 (NWI)
--------------------------------------------------------------------------------
Year Ended 5/31:
2007 39,000 25,000 74,769 1,400 84,314
2006 39,000 25,000 74,237 -- --
2005 39,000 25,000 75,925 -- --
2004 39,000 25,000 72,672 -- --
================================================================================
* Annualized.
** Total Return on Market Value is the combination of changes in the market
price per share and the effect of reinvested dividend income and reinvested
capital gains distributions, if any, at the average price paid per share at
the time of reinvestment. Total Return on Common Share Net Asset Value is
the combination of changes in Common share net asset value, reinvested
dividend income at net asset value and reinvested capital gains
distributions at net asset value, if any. Total returns are not annualized.
*** After custodian fee credit and expense reimbursement, where applicable.
+ The amounts shown are based on Common share equivalents.
++ Ratios do not reflect the effect of dividend payments to Preferred
shareholders; income ratios reflect income earned on assets attributable to
Preferred shares.
(a) Interest expense arises from the application of SFAS No. 140 to certain
inverse floating rate transactions entered into by the Fund as more fully
described in Footnote 1 - Inverse Floating Rate Securities.
(b) For the period September 25, 2002 (commencement of operations) through May
31, 2003.
See accompanying notes to financial statements.
84-85 spread
Financial
HIGHLIGHTS (continued)
Selected data for a Common share outstanding throughout each period:
Investment Operations Less Distributions
----------------------------------------------------------------- ----------------------------------
Distributions Distributions
from Net from Net
Beginning Investment Capital Investment Capital
Common Net Income to Gains to Income to Gains to
Share Net Realized/ Preferred Preferred Common Common
Net Asset Investment Unrealized Share- Share- Share- Share-
Value Income Gain (Loss) holders+ holders+ Total holders holders Total
====================================================================================================================================
VIRGINIA PREMIUM INCOME (NPV)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
2007 $14.89 $ .88 $ .07 $(.23) $ --* $ .72 $(.70) $(.02) $ (.72)
2006 15.82 .88 (.59) (.15) (.03) .11 (.80) (.24) (1.04)
2005 14.95 .93 .93 (.09) -- 1.77 (.90) -- (.90)
2004 15.93 .97 (.99) (.05) -- (.07) (.91) -- (.91)
2003 14.69 1.00 1.21 (.07) -- 2.14 (.90) -- (.90)
VIRGINIA DIVIDEND ADVANTAGE (NGB)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
2007 14.91 .96 .14 (.24) -- .86 (.79) -- (.79)
2006 15.52 .97 (.54) (.17) -- .26 (.87) -- (.87)
2005 14.42 .99 1.13 (.09) -- 2.03 (.93) -- (.93)
2004 15.43 1.02 (1.05) (.05) -- (.08) (.93) -- (.93)
2003 14.23 1.02 1.10 (.07) -- 2.05 (.86) -- (.86)
====================================================================================================================================
Total Returns
----------------------
Offering Based
Costs and Ending on
Preferred Common Based Common
Share Share Ending on Share Net
Underwriting Net Asset Market Market Asset
Discounts Value Value Value** Value**
=============================================================================================
VIRGINIA PREMIUM
INCOME (NPV)
---------------------------------------------------------------------------------------------
Year Ended 5/31:
2007 $ -- $14.89 $15.24 7.18% 4.89%
2006 -- 14.89 14.91 (9.98) 0.71
2005 -- 15.82 17.65 24.54 12.13
2004 -- 14.95 14.95 (10.70) (.42)
2003 -- 15.93 17.67 15.27 14.99
VIRGINIA DIVIDEND
ADVANTAGE (NGB)
---------------------------------------------------------------------------------------------
Year Ended 5/31:
2007 -- 14.98 17.51 7.24 5.82
2006 -- 14.91 17.10 5.86 1.74
2005 -- 15.52 16.99 19.11 14.46
2004 -- 14.42 15.07 (8.11) (.50)
2003 .01 15.43 17.35 21.45 14.92
=============================================================================================
Ratios/Supplemental Data
-------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets Ratios to Average Net Assets
Applicable to Common Shares Applicable to Common Shares
Before Credit/Reimbursement After Credit/Reimbursement***
-------------------------------------------- -------------------------------------------
Ending
Net
Assets
Applicable Expenses Expenses Net Expenses Expenses Net Portfolio
to Common Including Excluding Investment Including Excluding Investment Turnover
Shares (000) Interest++(a) Interest++(a) Income++ Interest++(a) Interest++(a) Income++ Rate
====================================================================================================================================
VIRGINIA PREMIUM
INCOME (NPV)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
2007 $132,900 1.20% 1.20% 5.80% 1.19% 1.19% 5.82% 16%
2006 132,626 1.19 1.19 5.75 1.17 1.17 5.77 16
2005 140,340 1.20 1.20 5.98 1.19 1.19 5.99 17
2004 132,122 1.20 1.20 6.33 1.19 1.19 6.34 14
2003 140,223 1.25 1.25 6.61 1.24 1.24 6.62 17
VIRGINIA DIVIDEND
ADVANTAGE (NGB)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
2007 46,908 1.27 1.27 5.99 .90 .90 6.36 23
2006 46,626 1.26 1.26 5.93 .82 .82 6.38 16
2005 48,474 1.28 1.28 6.13 .81 .81 6.59 15
2004 44,988 1.24 1.24 6.39 .77 .77 6.86 7
2003 48,102 1.28 1.28 6.45 .81 .81 6.92 10
====================================================================================================================================
Floating Rate Obligations
Preferred Shares at End of Period at End of Period
-------------------------------------- --------------------------
Aggregate Liquidation Aggregate
Amount and Market Asset Amount Asset
Outstanding Value Coverage Outstanding Coverage
(000) Per Share Per Share (000) Per $1,000
================================================================================
VIRGINIA PREMIUM INCOME (NPV)
--------------------------------------------------------------------------------
Year Ended 5/31:
2007 $63,800 $25,000 $77,077 $ -- $ --
2006 63,800 25,000 76,970 -- --
2005 63,800 25,000 79,992 -- --
2004 63,800 25,000 76,772 -- --
2003 63,800 25,000 79,946 -- --
VIRGINIA DIVIDEND ADVANTAGE (NGB)
--------------------------------------------------------------------------------
Year Ended 5/31:
2007 24,000 25,000 73,862 -- --
2006 24,000 25,000 73,568 -- --
2005 24,000 25,000 75,493 -- --
2004 24,000 25,000 71,863 -- --
2003 24,000 25,000 75,106 -- --
================================================================================
* Per share Distributions from Capital Gains to Preferred Shareholders rounds
to less than $.01 per share.
** Total Return on Market Value is the combination of changes in the market
price per share and the effect of reinvested dividend income and reinvested
capital gains distributions, if any, at the average price paid per share at
the time of reinvestment. Total Return on Common Share Net Asset Value is
the combination of changes in Common share net asset value, reinvested
dividend income at net asset value and reinvested capital gains
distributions at net asset value, if any. Total returns are not annualized.
*** After custodian fee credit and expense reimbursement, where applicable.
+ The amounts shown are based on Common share equivalents.
++ Ratios do not reflect the effect of dividend payments to Preferred
shareholders; income ratios reflect income earned on assets attributable to
Preferred shares.
(a) Interest expense arises from the application of SFAS No. 140 to certain
inverse floating rate transactions entered into by the Fund as more fully
described in Footnote 1 - Inverse Floating Rate Securities.
See accompanying notes to financial statements.
86-87 spread
Financial
HIGHLIGHTS (continued)
Selected data for a Common share outstanding throughout each period:
Investment Operations Less Distributions
----------------------------------------------------------------- ----------------------------------
Distributions Distributions
from Net from Net
Beginning Investment Capital Investment Capital
Common Net Income to Gains to Income to Gains to
Share Net Realized/ Preferred Preferred Common Common
Net Asset Investment Unrealized Share- Share- Share- Share-
Value Income Gain (Loss) holders+ holders+ Total holders holders Total
====================================================================================================================================
VIRGINIA DIVIDEND
ADVANTAGE 2 (NNB)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
2007 $15.02 $.96 $ .11 $(.24) $ -- $ .83 $(.77) $ -- $ (.77)
2006 15.70 .95 (.52) (.18) (.01) .24 (.85) (.07) (.92)
2005 14.79 .96 1.13 (.09) (.01) 1.99 (.89) (.19) (1.08)
2004 16.02 .99 (1.22) (.06) -- (.29) (.89) (.05) (.94)
2003 14.31 .97 1.69 (.08) -- 2.58 (.84) (.03) (.87)
====================================================================================================================================
Total Returns
----------------------
Offering Based
Costs and Ending on
Preferred Common Based Common
Share Share Ending on Share Net
Underwriting Net Asset Market Market Asset
Discounts Value Value Value* Value*
============================================================================================
VIRGINIA DIVIDEND
ADVANTAGE 2 (NNB)
--------------------------------------------------------------------------------------------
Year Ended 5/31:
2007 $ -- $15.08 $16.73 6.96% 5.60%
2006 -- 15.02 16.40 3.45 1.53
2005 -- 15.70 16.74 21.96 13.75
2004 -- 14.79 14.65 (3.81) (1.84)
2003 -- 16.02 16.14 14.58 18.51
============================================================================================
Ratios/Supplemental Data
------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets Ratios to Average Net Assets
Applicable to Common Shares Applicable to Common Shares
Before Credit/Reimbursement After Credit/Reimbursement**
------------------------------------------- ------------------------------------------
Ending
Net
Assets
Applicable Expenses Expenses Net Expenses Expenses Net Portfolio
to Common Including Excluding Investment Including Excluding Investment Turnover
Shares (000) Interest++(a) Interest++(a) Income++ Interest++(a) Interest++(a) Income++ Rate
====================================================================================================================================
VIRGINIA DIVIDEND
ADVANTAGE 2 (NNB)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
2007 $86,382 1.21% 1.21% 5.89% .78% .78% 6.31% 19%
2006 85,887 1.19 1.19 5.75 .73 .73 6.21 10
2005 89,626 1.19 1.19 5.74 .74 .74 6.19 13
2004 84,248 1.20 1.20 5.99 .74 .74 6.44 16
2003 91,065 1.21 1.21 6.01 .75 .75 6.47 15
====================================================================================================================================
Floating Rate Obligations
Preferred Shares at End of Period at End of Period
-------------------------------------- --------------------------
Aggregate Liquidation Aggregate
Amount and Market Asset Amount Asset
Outstanding Value Coverage Outstanding Coverage
(000) Per Share Per Share (000) Per $1,000
================================================================================
VIRGINIA DIVIDEND
ADVANTAGE 2 (NNB)
--------------------------------------------------------------------------------
Year Ended 5/31:
2007 $42,000 $25,000 $76,418 $ -- $ --
2006 42,000 25,000 76,123 -- --
2005 42,000 25,000 78,349 -- --
2004 42,000 25,000 75,148 -- --
2003 42,000 25,000 79,206 -- --
================================================================================
* Total Return on Market Value is the combination of changes in the market
price per share and the effect of reinvested dividend income and reinvested
capital gains distributions, if any, at the average price paid per share at
the time of reinvestment. Total Return on Common Share Net Asset Value is
the combination of changes in Common share net asset value, reinvested
dividend income at net asset value and reinvested capital gains
distributions at net asset value, if any. Total returns are not annualized.
** After custodian fee credit and expense reimbursement, where applicable.
+ The amounts shown are based on Common share equivalents.
++ Ratios do not reflect the effect of dividend payments to Preferred
shareholders; income ratios reflect income earned on assets attributable to
Preferred shares.
(a) Interest expense arises from the application of SFAS No. 140 to certain
inverse floating rate transactions entered into by the Fund as more fully
described in Footnote 1 - Inverse Floating Rate Securities.
See accompanying notes to financial statements.
88-89 spread
Board Members & OFFICERS
The management of the Funds, including general supervision of the duties
performed for the Funds by the Adviser, is the responsibility of the Board
Members of the Funds. The number of board members of the Fund is currently set
at nine. None of the board members who are not "interested" persons of the Funds
has ever been a director or employee of, or consultant to, Nuveen or its
affiliates. The names and business addresses of the board members and officers
of the Funds, their principal occupations and other affiliations during the past
five years, the number of portfolios each oversees and other directorships they
hold are set forth below.
NAME, POSITION(S) HELD YEAR FIRST NUMBER PRINCIPAL
BIRTHDATE WITH THE FUNDS ELECTED OR OF PORTFOLIOS OCCUPATION(S)
& ADDRESS APPOINTED IN FUND COMPLEX INCLUDING OTHER
AND TERM(2) OVERSEEN BY DIRECTORSHIPS
BOARD MEMBER DURING PAST 5 YEARS
BOARD MEMBER WHO IS AN INTERESTED PERSON OF THE FUNDS:
o TIMOTHY R. SCHWERTFEGER(1) Director (since 1996) and Non-executive
3/28/49 Chairman of 1994 Chairman (since July 1, 2007) formerly,
333 W. Wacker Drive the Board ANNUAL 176 Chairman (1996-June 30, 2007) of Nuveen
Chicago, IL 60606 and Board Member Investments, Inc., Nuveen Investments, LLC;
Chairman and Director (since 1997) of Nuveen
Asset Management; Chairman and Director of
Rittenhouse Asset Management, Inc. (since
1999); Chairman of Nuveen Investments
Advisers Inc. (since 2002); formerly,
Chairman and Director (1996-2004) Nuveen
Advisory Corp. and Nuveen Institutional
Advisory Corp.(3); formerly, Director
(1996-2006) of Institutional Capital
Corporation.
BOARD MEMBERS WHO ARE NOT INTERESTED PERSONS OF THE FUNDS:
o ROBERT P. BREMNER Private Investor and Management Consultant.
8/22/40 Lead 1997
333 W. Wacker Drive Independent CLASS III 176
Chicago, IL 60606 Board member
o JACK B. EVANS President, The Hall-Perrine Foundation, a
10/22/48 1999 private philanthropic corporation (since
333 W. Wacker Drive Board member CLASS III 176 1996); Director and Vice Chairman, United
Chicago, IL 60606 Fire Group, a publicly held company; Member
of the Board of Regents for the State of
Iowa University System; Director, Gazette
Companies; Life Trustee of Coe College and
Iowa College Foundation; Member of the
Advisory Council of the Department of
Finance in the Tippie College of Business,
University of Iowa; formerly, Director,
Alliant Energy; formerly, Director, Federal
Reserve Bank of Chicago; formerly, President
and Chief Operating Officer, SCI Financial
Group, Inc., a regional financial services
firm.
o WILLIAM C. HUNTER Dean, Tippie College of Business, University
3/6/48 2004 of Iowa (since July 2006); formerly, Dean
333 W. Wacker Drive Board member CLASS II 176 and Distinguished Professor of Finance,
Chicago, IL 60606 School of Business at the University of
Connecticut (2003-2006); previously, Senior
Vice President and Director of Research at
the Federal Reserve Bank of Chicago
(1995-2003); Director (since 1997), Credit
Research Center at Georgetown University;
Director (since 2004) of Xerox Corporation;
Director, SS&C Technologies, Inc. (May
2005-October 2005).
90
NAME, POSITION(S) HELD YEAR FIRST NUMBER PRINCIPAL
BIRTHDATE WITH THE FUNDS ELECTED OR OF PORTFOLIOS OCCUPATION(S)
& ADDRESS APPOINTED IN FUND COMPLEX INCLUDING OTHER
AND TERM(2) OVERSEEN BY DIRECTORSHIPS
BOARD MEMBER DURING PAST 5 YEARS
BOARD MEMBERS WHO ARE NOT INTERESTED PERSONS OF THE FUNDS:
o DAVID J. KUNDERT Director, Northwestern Mutual Wealth
10/28/42 2005 Management Company; Retired (since 2004) as
333 W. Wacker Drive Board member CLASS II 174 Chairman, JPMorgan Fleming Asset Management,
Chicago, IL 60606 President and CEO, Banc One Investment
Advisors Corporation, and President, One
Group Mutual Funds; prior thereto, Executive
Vice President, Banc One Corporation and
Chairman and CEO, Banc One Investment
Management Group; Board of Regents, Luther
College; member of the Wisconsin Bar
Association; member of Board of Directors,
Friends of Boerner Botanical Gardens; member
of Board of Directors, Milwaukee Repertory
Theater.
o WILLIAM J. SCHNEIDER Chairman of Miller-Valentine Partners Ltd.,
9/24/44 1997 a real estate investment company; formerly,
333 W. Wacker Drive Board member ANNUAL 176 Senior Partner and Chief Operating Officer
Chicago, IL 60606 (retired, 2004) of Miller-Valentine Group;
formerly, Vice President, Miller-Valentine
Realty; Board Member, Chair of the Finance
Committee and member of the Audit Committee
of Premier Health Partners, the
not-for-profit company of Miami Valley
Hospital; Vice President, Dayton
Philharmonic Orchestra Association; Board
Member, Regional Leaders Forum, which
promotes cooperation on economic development
issues; Director, Dayton Development
Coalition; formerly, Member, Community
Advisory Board, National City Bank, Dayton,
Ohio and Business Advisory Council,
Cleveland Federal Reserve Bank.
o JUDITH M. STOCKDALE Executive Director, Gaylord and Dorothy
12/29/47 1997 Donnelley Foundation (since 1994); prior
333 W. Wacker Drive Board member CLASS I 176 thereto, Executive Director, Great Lakes
Chicago, IL 60606 Protection Fund (from 1990 to 1994).
o CAROLE E. STONE Director, Chicago Board Options Exchange
6/28/47 2007 (since 2006); Chair New York Racing
333 West Wacker Drive Board member CLASS I 176 Association Oversight Board (since 2005);
Chicago, IL 60606 Commissioner, New York State Commission on
Public Authority Reform (since 2005);
formerly Director, New York State Division
of the Budget (2000-2004), Chair, Public
Authorities Control Board (2000-2004) and
Director, Local Government Assistance
Corporation (2000-2004).
o EUGENE S. SUNSHINE Senior Vice President for Business and
1/22/50 2005 Finance, Northwestern University (since
333 W. Wacker Drive Board member CLASS II 176 1997); Director (since 2003), Chicago Board
Chicago, IL 60606 Options Exchange; Chairman (since 1997),
Board of Directors, Rubicon, a pure captive
insurance company owned by Northwestern
University; Director (since 1997), Evanston
Chamber of Commerce and Evanston Inventure,
a business development organization;
Director (since 2006), Pathways, a provider
of therapy and related information for
physically disabled infants and young
children; formerly, Director (2003-2006),
National Mentor Holdings, a privately-held,
national provider of home and
community-based services.
91
NAME, POSITION(S) HELD YEAR FIRST NUMBER PRINCIPAL
BIRTHDATE WITH THE FUNDS ELECTED OR OF PORTFOLIOS OCCUPATION(S)
AND ADDRESS APPOINTED(4) IN FUND COMPLEX DURING PAST 5 YEARS
OVERSEEN
BY OFFICER
OFFICERS OF THE FUND:
o GIFFORD R. ZIMMERMAN Managing Director (since 2002), Assistant
9/9/56 Chief Secretary and Associate General Counsel,
333 W. Wacker Drive Administrative 1988 176 formerly, Vice President and Assistant
Chicago, IL 60606 Officer General Counsel, of Nuveen Investments, LLC;
Managing Director (since 2002) and Assistant
Secretary and Associate General Counsel,
formerly, Vice President (since 1997), of
Nuveen Asset Management; Managing Director
(since 2004) and Assistant Secretary (since
1994) of Nuveen Investments, Inc.; Assistant
Secretary of NWQ Investment Management
Company, LLC. (since 2002); Vice President
and Assistant Secretary of Nuveen
Investments Advisers Inc. (since 2002);
Managing Director, Associate General Counsel
Assistant Secretary of Rittenhouse Asset
Management, Inc., Symphony Asset Management
LLC (since 2003), Tradewinds Global
Investors, LLC and Santa Barbara Asset
Management, LLC; (since 2006); formerly,
Managing Director (2002-2004), General
Counsel (1998-2004) and Assistant Secretary,
formerly, Vice President of Nuveen Advisory
Corp. and Nuveen Institutional Advisory
Corp.(3); Chartered Financial Analyst.
o WILLIAMS ADAMS IV Executive Vice President, U.S. Structured
6/9/55 Products of Nuveen Investments, LLC, (since
333 West Wacker Drive Vice President 2007 119 1999), prior thereto, Managing Director of
Chicago, IL 60606 Structured Investments.
o JULIA L. ANTONATOS Managing Director (since 2005), formerly
9/22/63 Vice President (since 2002) of Nuveen
333 W. Wacker Drive Vice President 2004 176 Investments, LLC; Chartered Financial
Chicago, IL 60606 Analyst.
o CEDRIC H. ANTOSIEWICZ Managing Director, (since 2004) previously,
1/11/62 Vice President (1993-2004) of Nuveen
333 W. Wacker Drive Vice President 2007 119 Investments, LLC.
Chicago, IL 60606
o MICHAEL T. ATKINSON Vice President (since 2002) of Nuveen
2/3/66 Vice President Investments, LLC.
333 W. Wacker Drive and Assistant 2000 176
Chicago, IL 60606 Secretary
o PETER H. D'ARRIGO Vice President and Treasurer of Nuveen
11/28/67 Investments, LLC and of Nuveen Investments,
333 W. Wacker Drive Vice President 1999 176 Inc. (since 1999); Vice President and
Chicago, IL 60606 Treasurer of Nuveen Asset Management (since
2002) and of Nuveen Investments Advisers
Inc. (since 2002); Assistant Treasurer of
NWQ Investment Management Company, LLC.
(since 2002); Vice President and Treasurer
of Nuveen Rittenhouse Asset Management, Inc.
(since 2003); Treasurer of Symphony Asset
Management LLC (since 2003) and Santa
Barbara Asset Management, LLC (since 2006);
Assistant Treasurer, Tradewinds Global
Investors, LLC (since 2006); formerly, Vice
President and Treasurer (1999-2004) of
Nuveen Advisory Corp. and Nuveen
Institutional Advisory Corp.(3); Chartered
Financial Analyst.
o LORNA C. FERGUSON Managing Director (since 2004), formerly,
10/24/45 Vice President of Nuveen Investments, LLC,
333 W. Wacker Drive Vice President 1998 176 Managing Director (2004) formerly, Vice
Chicago, IL 60606 President (1998-2004) of Nuveen Advisory
Corp. and Nuveen Institutional Advisory
Corp.(3); Managing Director (since 2005) of
Nuveen Asset Management.
92
NAME, POSITION(S) HELD YEAR FIRST NUMBER PRINCIPAL
BIRTHDATE WITH THE FUNDS ELECTED OR OF PORTFOLIOS OCCUPATION(S)
AND ADDRESS APPOINTED(4) IN FUND COMPLEX DURING PAST 5 YEARS
OVERSEEN
BY OFFICER
OFFICERS OF THE FUND:
o WILLIAM M. FITZGERALD Managing Director (since 2002), formerly,
3/2/64 Vice President of Nuveen Investments, LLC;
333 W. Wacker Drive Vice President 1995 176 Managing Director (1997-2004) of Nuveen
Chicago, IL 60606 Advisory Corp. and Nuveen Institutional
Advisory Corp.(3); Managing Director (since
2001) of Nuveen Asset Management; Vice
President (since 2002) of Nuveen Investments
Advisers Inc.; Chartered Financial Analyst.
o STEPHEN D. FOY Vice President (since 1993) and Funds
5/31/54 Vice President Controller (since 1998) of Nuveen
333 W. Wacker Drive and Controller 1998 176 Investments, LLC; formerly, Vice President
Chicago, IL 60606 and Funds Controller (1998-2004) of Nuveen
Investments, Inc.; Certified Public
Accountant.
o WALTER M. KELLY Assistant Vice President and Assistant
2/24/70 Chief Compliance Secretary of the Nuveen Funds (2003-2006);
333 West Wacker Drive Officer and 2003 176 Vice President (since 2006) formerly,
Chicago, IL 60606 Vice President Assistant Vice President and Assistant
General Counsel (2003-2006) of Nuveen
Investments, LLC; previously, Associate
(2001-2003) at the law firm of Vedder,
Price, Kaufman & Kammholz.
o DAVID J. LAMB Vice President (since 2000) of Nuveen
3/22/63 Investments, LLC; Certified Public
333 W. Wacker Drive Vice President 2000 176 Accountant.
Chicago, IL 60606
o TINA M. LAZAR Vice President of Nuveen Investments, LLC
8/27/61 (since 1999).
333 W. Wacker Drive Vice President 2002 176
Chicago, IL 60606
o LARRY W. MARTIN Vice President, Assistant Secretary and
7/27/51 Vice President Assistant General Counsel of Nuveen
333 W. Wacker Drive and Assistant 1988 176 Investments, LLC; formerly, Vice President
Chicago, IL 60606 Secretary and Assistant Secretary of Nuveen Advisory
Corp. and Nuveen Institutional Advisory
Corp.(3); Vice President (since 2005) and
Assistant Secretary of Nuveen Investments,
Inc.; Vice President (since 2005) and
Assistant Secretary (since 1997) of Nuveen
Asset Management; Vice President (since
2000), Assistant Secretary and Assistant
General Counsel (since 1998) of Rittenhouse
Asset Management, Inc.; Vice President and
Assistant Secretary of Nuveen Investments
Advisers Inc. (since 2002); Assistant
Secretary of NWQ Investment Management
Company, LLC (since 2002), Symphony Asset
Management LLC (since 2003) and Tradewinds
Global Investors, LLC and Santa Barbara
Asset Management, LLC (since 2006).
o KEVIN J. MCCARTHY Vice President and Assistant General
3/26/66 Vice President Counsel, Nuveen Investments, LLC (since
333 W. Wacker Drive and Secretary 2007 176 2007); prior thereto, Partner, Bell, Boyd &
Chicago, IL 60606 Lloyd LLP (1997-2007)
o JOHN V. MILLER Managing Director (since 2007), formerly,
4/10/67 Vice President (2002-2007) of Nuveen
333 W. Wacker Drive Vice President 2007 176 Investments, LLC; Chartered Financial
Chicago, IL 60606 Analyst.
(1) Mr. Schwertfeger is an "interested person" of the Funds, as defined in the
Investment Company Act of 1940, because he is an officer and board member
of the Adviser.
(2) Board Members serve three year terms, except for two board members who are
elected by the holders of Preferred Shares. The Board of Trustees is
divided into three classes, Class I, Class II, and Class III, with each
being elected to serve until the third succeeding annual shareholders'
meeting subsequent to its election or thereafter in each case when its
respective successors are duly elected or appointed, except two board
members are elected by the holders of Preferred Shares to serve until the
next annual shareholders' meeting subsequent to its election or thereafter
in each case when its respective successors are duly elected or appointed.
The first year elected or appointed represents the year in which the board
member was first elected or appointed to any fund in the Nuveen Complex.
(3) Nuveen Advisory Corp. and Nuveen Institutional Advisory Corp. were
reorganized into Nuveen Asset Management, effective January 1, 2005.
(4) Officers serve one year terms through July of each year. The year first
elected or appointed represents the year in which the Officer was first
elected or appointed to any fund in the Nuveen Complex.
93
Annual Investment
Management Agreement
APPROVAL PROCESS
The Board of Trustees is responsible for overseeing the performance of the
investment adviser to the Funds and determining whether to continue the advisory
arrangements. At a meeting held on May 21-23, 2007 (the "May Meeting"), the
Board of Trustees of the Funds, including the independent Trustees, unanimously
approved the continuance of the Investment Management Agreement between each
Fund and NAM (the "Fund Adviser").
THE APPROVAL PROCESS
During the course of the year, the Board received a wide variety of materials
relating to the services provided by the Fund Adviser and the performance of the
Funds. At each of its quarterly meetings, the Board reviews investment
performance and various matters relating to the respective Fund's operations,
including the Fund's compliance program, shareholder services, valuation,
custody, distribution and other information relating to the nature, extent and
quality of services provided by the Fund Adviser. Between the regularly
scheduled quarterly meetings, the Trustees received information on particular
matters as the need arose. In considering whether to renew the respective
advisory contract with the Fund Adviser at the May Meeting, the independent
Trustees also received extensive materials well in advance of their meeting
which outlined, among other things:
o the nature, extent and quality of services provided by the Fund Adviser;
o the organization and business operations of the Fund Adviser, including the
responsibilities of various departments and key personnel;
o the Fund's past performance as well as the Fund's performance compared to
funds with similar investment objectives based on data and information
provided by an independent third party and to customized benchmarks;
o the profitability of the Fund Adviser and certain industry profitability
analyses for unaffiliated advisers;
o the expenses of the Fund Adviser in providing the various services;
o the advisory fees and total expense ratios of the Fund, including
comparisons of such fees and expenses with those of comparable,
unaffiliated funds based on information and data provided by an independent
third party (the "Peer Universe") as well as compared to a subset of funds
within the Peer Universe (the "Peer Group") of the respective Fund (as
applicable);
o the advisory fees the Fund Adviser assesses to other types of investment
products or clients;
o the soft dollar practices of the Fund Adviser, if any; and
o from independent legal counsel, a legal memorandum describing among other
things, applicable laws, regulations and duties in reviewing and approving
advisory contracts.
At the May Meeting, the Fund Adviser made a presentation to and responded to
questions from the Board.
Prior to and after the presentations and reviewing the written materials, the
independent Trustees met privately with their legal counsel to review the
Board's duties in reviewing advisory contracts and consider the renewal of the
advisory contracts. The independent Trustees, in consultation with independent
counsel, reviewed the factors set out in judicial decisions and SEC directives
relating to the renewal of advisory contracts. As outlined in more detail below,
the Trustees considered all factors they believed relevant with respect to each
Fund, including, but not limited to, the following: (a) the nature, extent and
quality of the services to be provided by the Fund Adviser; (b) the investment
performance of the Fund and the Fund Adviser; (c) the costs of the services to
be provided and profits to be realized by the Fund Adviser and its affiliates;
(d) the extent to which economies of scale would be realized; and (e) whether
fee levels reflect these economies of scale for the benefit of Fund investors.
In addition, as noted, the Trustees met regularly throughout the year to oversee
the Funds. In evaluating the advisory contracts, the Trustees also relied upon
94
their knowledge resulting from their meetings and other interactions throughout
the year of the Fund Adviser, its services and the Funds. It is with this
background that the Trustees considered each advisory contract.
A. NATURE, EXTENT AND QUALITY OF SERVICES
In reviewing the Fund Adviser, the Trustees considered the nature, extent and
quality of the Fund Adviser's services. The Trustees reviewed materials
outlining, among other things, the Fund Adviser's organization and business; the
types of services that the Fund Adviser or its affiliates provide and are
expected to provide to the Funds; the performance record of the applicable Fund
(as described in further detail below); and any initiatives Nuveen has taken for
the municipal fund product line. As noted, the Trustees are already familiar
with the organization, operations and personnel of the Fund Adviser due to the
Trustees' experience in governing the respective Fund and working with NAM on
matters relating to the Funds. With respect to personnel, the Trustees
recognized NAM's investment in additional qualified personnel throughout the
various groups in the organization and recommended to NAM that it continue to
review staffing needs as necessary. In addition, with respect to the municipal
funds advised by NAM, the Trustees reviewed materials describing the current
status and, in particular, the developments in 2006 with respect to NAM's
investment process, investment strategies (including additional tools used in
executing such strategies), personnel (including portfolio management and
research teams), trading process, hedging team, risk management team (e.g.,
reviewing credit quality, duration limits, derivative use, as applicable), and
investment operations (such as, enhancements to trading procedures, pricing
procedures, and client services). The Trustees recognized NAM's investment of
resources and efforts to continue to enhance and refine its investment process.
In addition to advisory services, the independent Trustees considered the
quality of any administrative or non-advisory services provided. With respect to
NAM, NAM provides the Funds with a wide variety of services and officers and
other personnel as are necessary for the operations of the respective Fund,
including,
o product management;
o fund administration;
o oversight of shareholder services and other fund service providers;
o administration of Board relations;
o regulatory and portfolio compliance; and
o legal support services.
As the Funds operate in a highly regulated industry and given the importance of
compliance, the Trustees considered, in particular, NAM's compliance activities
for the Funds and enhancements thereto. In this regard, the Trustees recognized
the quality of NAM's compliance team. The Trustees further noted NAM's
negotiations with other service providers and the corresponding reduction in
certain service providers' fees.
With respect to closed-end funds, in addition to the foregoing services, the
Trustees also noted the additional services that NAM or its affiliates provide
to closed-end funds, including, in particular, its secondary market support
activities. The Trustees recognized Nuveen's continued commitment to supporting
the secondary market for the common shares of its closed-end funds through a
variety of programs designed to raise investor and analyst awareness and
understanding of closed-end funds. These efforts include:
o maintaining shareholder communications;
o providing advertising for closed-end funds;
o maintaining its closed-end fund website;
o continual contact with financial advisers;
o providing educational symposia;
o conducting research with investors and financial analysis regarding
closed-end funds; and
o evaluating secondary market performance.
95
With respect to Funds that utilize leverage through the issuance of preferred
shares, the Trustees noted Nuveen's continued support for the preferred shares
by, among other things:
o maintaining an in-house trading desk;
o maintaining a product manager for the preferred shares;
o developing distribution for preferred shares with new market participants;
o maintaining an orderly auction process;
o managing leverage and risk management of leverage; and
o maintaining systems necessary to test compliance with rating agency
criteria.
Based on their review, the Trustees found that, overall, the nature, extent and
quality of services provided (and expected to be provided) to the respective
Funds under the Investment Management Agreements were satisfactory.
B. THE INVESTMENT PERFORMANCE OF THE FUNDS AND FUND ADVISER
The Board considered the investment performance for each Fund, including the
Fund's historic performance as well as its performance compared to funds with
similar investment objectives (the "Performance Peer Group") based on data
provided by an independent third party (as described below). With respect to
municipal funds, the Trustees reviewed portfolio level performance against
customized benchmarks, as described in further detail below.
In evaluating the performance information, in certain instances, the Trustees
noted that the closest Performance Peer Group for a Fund may not adequately
reflect such Fund's investment objectives and strategies, thereby limiting the
usefulness of the comparisons of such Fund's performance with that of the
Performance Peer Group.
With respect to state specific municipal funds, the Trustees also recognized
that certain state municipal funds do not have a corresponding state specific
Performance Peer Group in which case their performance is measured against a
more general municipal category for various states. With respect to municipal
closed-end funds, municipal funds that do not have corresponding state-specific
Performance Peer Groups are from all states other than New York, California,
Florida, New Jersey, Michigan, and Pennsylvania. However, with respect to Funds
based on Florida, New Jersey, Michigan and Pennsylvania, the peer group may be
so small or the Nuveen Funds may dominate the category to such an extent that
performance information for such Funds was also compared to the more general
category for all states (other than New York and California).
With respect to municipal funds, the Trustees reviewed performance information
including, among other things, total return information compared with the Fund's
Performance Peer Group for the one-, three- and five-year periods (as
applicable) ending December 31, 2006. The Trustees also reviewed the Fund's
portfolio level performance (which does not reflect fund level fees and
expenses) compared to customized portfolio-level benchmarks for the one- and
three-year periods ending December 31, 2006 (as applicable). This analysis is
designed to assess the efficacy of investment decisions against appropriate
measures of risk and total return, within specific market segments. This
information supplements the Fund performance information provided to the Board
at each of its quarterly meetings. Based on their review, the Trustees
determined that the respective Fund's absolute and relative investment
performance over time had been satisfactory, subject to the following. With
respect to various municipal closed-end funds, the Trustees have noted the
relative total return underperformance in recent years compared to peers. The
Trustees reviewed materials and discussed with the Fund Adviser the factors
contributing to the shift in performance including, among other things, the
degree of risk undertaken by peers compared to the Funds (such as through the
increased use of leverage or taking concentrated positions in high risk
credits). In addition, the Trustees also considered a Fund's dividend
performance and the extent of any secondary market discounts. The Trustees noted
NAM's efforts to evaluate the factors affecting performance and determine
whether modification to a Fund's investment strategy is necessary or appropriate
and are satisfied with the steps being taken.
96
C. FEES, EXPENSES AND PROFITABILITY
1. FEES AND EXPENSES
In evaluating the management fees and expenses of a Fund, the Board
reviewed, among other things, the Fund's advisory fees (net and gross
management fees) and total expense ratios (before and after expense
reimbursements and/or waivers) in absolute terms as well as comparisons to
the gross management fees (before waivers), net management fees (after
waivers) and total expense ratios (before and after waivers) of comparable
funds in the Peer Universe and the Peer Group. In reviewing the fee
schedule for a Fund, the Trustees considered the fund-level and
complex-wide breakpoint schedules (described in further detail below) and
any fee waivers and reimbursements provided by Nuveen (applicable, in
particular, for certain Funds launched since 1999). The Trustees further
reviewed data regarding the construction of Peer Groups as well as the
methods of measurement for the fee and expense analysis and the performance
analysis. In certain cases, due to the small number of peers in the Peer
Universe, the Peer Universe and Peer Group may be the same. In reviewing
the comparison of fee and expense information, the Trustees recognized that
in certain cases, the Fund size relative to peers, the small size and odd
composition of the Peer Group (including differences in objectives and
strategies), expense anomalies, timing of information used or other factors
impact the comparisons thereby limiting some of their usefulness. With
respect to municipal closed-end funds, the Trustees also considered the
differences in the use of leverage. Based on their review of the fee and
expense information provided, the Trustees determined that each Fund's net
total expense ratio was within an acceptable range compared to peers.
2. COMPARISONS WITH THE FEES OF OTHER CLIENTS
The Trustees further reviewed data comparing the advisory fees of NAM with
fees NAM charges to other clients. With respect to municipal funds, such
other clients include municipal managed accounts. In general, the advisory
fees charged for separate accounts are somewhat lower than the advisory
fees assessed to the Funds. The Trustees considered the differences in the
product types, including, but not limited to, the services provided, the
structure and operations, product distribution and costs thereof, portfolio
investment policies, investor profiles, account sizes and regulatory
requirements. The Trustees noted, in particular, that the range of services
provided to the Funds (as discussed above) is more extensive than that
provided to separately managed accounts. As described in further detail
above, such additional services include, but are not limited to, providing:
product management, fund administration, oversight of third party service
providers, administration of Board relations, and legal support. Funds
further operate in a highly regulated industry requiring extensive
compliance functions compared to the other investment products. Given the
inherent differences in the products, particularly the extensive services
provided to the Funds, the Trustees believe such facts justify the
different levels of fees.
3. PROFITABILITY OF FUND ADVISERS
In conjunction with its review of fees, the Trustees also considered the
profitability of Nuveen for its advisory activities (which incorporated
Nuveen's wholly-owned affiliated sub-advisers) and its financial condition.
The Trustees reviewed the revenues and expenses of Nuveen's advisory
activities for the last three years, the allocation methodology used in
preparing the profitability data as well as the 2006 Annual Report for
Nuveen. The Trustees noted this information supplements the profitability
information requested and received during the year to help keep them
apprised of developments affecting profitability (such as changes in fee
waivers and expense reimbursement commitments). In this regard, the
Trustees noted the enhanced dialogue and information regarding
profitability with NAM during the year, including more frequent meetings
and updates from Nuveen's corporate finance group. The Trustees also
reviewed data comparing Nuveen's profitability with other fund sponsors
prepared by three independent third party service providers as well as
comparisons of the revenues, expenses and profit margins of various
unaffiliated management firms with similar amounts of assets under
management prepared by Nuveen.
In reviewing profitability, the Trustees have recognized the subjective
nature in determining profitability which may be affected by numerous
factors, including, the allocation of expenses. Further, the Trustees
97
have recognized the difficulties in making comparisons as the profitability
of other advisers generally is not publicly available and the profitability
information that is available for certain advisers or management firms may
not be representative of the industry and may be affected by, among other
things, the adviser's particular business mix, capital costs, types of
funds managed and expense allocations.
Notwithstanding the foregoing, the Trustees reviewed Nuveen's methodology and
assumptions for allocating expenses across product lines to determine
profitability. Last year, the Trustees also designated an independent Trustee as
a point person for the Board to review the methodology determinations during the
year and any refinements thereto and report back to them. The Trustees also
reviewed the comparisons of Nuveen's profitability margins (including pre- and
post-marketing profit margins) with the profitability of various unaffiliated
management firms. In reviewing profitability, the Trustees recognized Nuveen's
increased investment into its fund business. Based on its review, the Trustees
concluded that they were satisfied that Nuveen's level of profitability for its
advisory activities was reasonable in light of the services provided.
In evaluating the reasonableness of the compensation, the Trustees also
considered any other revenues paid to the Fund Adviser as well as any indirect
benefits (such as soft dollar arrangements, if any) the Fund Adviser and its
affiliates are expected to receive that are directly attributable to their
management of the Funds, if any. See Section E below for additional information.
Based on their review of the overall fee arrangements of the applicable Fund,
the Trustees determined that the advisory fees and expenses of the respective
Fund were reasonable.
D. ECONOMIES OF SCALE AND WHETHER FEE LEVELS REFLECT THESE ECONOMIES OF SCALE
With respect to economies of scale, the Trustees recognized the potential
benefits resulting from the costs of a Fund being spread over a larger asset
base. To help ensure the shareholders share in these benefits, the Trustees have
reviewed and considered the breakpoints in the advisory fee schedules that
reduce advisory fees. In addition to advisory fee breakpoints, the Board also
approved in 2004 a complex-wide fee arrangement. Pursuant to the complex-wide
fee arrangement, the fees of the funds in the Nuveen complex, including the
Funds, are reduced as the assets in the fund complex reach certain levels. In
evaluating the complex-wide fee arrangement, the Trustees noted that the last
breakpoint for the complex-wide fee schedule is at the $91 billion level and
anticipate further review and/or negotiations prior to the assets of the Nuveen
complex reaching such threshold. Based on their review, the Trustees concluded
that the breakpoint schedule and complex-wide fee arrangement currently was
acceptable and desirable in providing benefits from economies of scale to
shareholders subject to further evaluation of the complex-wide fee schedule as
assets in the complex increase.
E. INDIRECT BENEFITS
In evaluating fees, the Trustees also considered any indirect benefits or
profits the Fund Adviser or its affiliates may receive as a result of its
relationship with each Fund. With respect to closed-end funds, the Trustees
considered revenues received by affiliates of NAM for serving as agent at
Nuveen's preferred trading desk and for serving as a co-manager in the initial
public offering of new closed-end exchange traded funds.
In addition to the above, the Trustees considered whether the Fund Adviser
received any benefits from soft dollar arrangements whereby a portion of the
commissions paid by a Fund for brokerage may be used to acquire research that
may be useful to the Fund Adviser in managing the assets of the Fund and other
clients. With respect to NAM, the Trustees noted that NAM does not currently
have any soft dollar arrangements; however, to the extent certain bona fide
agency transactions that occur on markets that traditionally trade on a
principal basis and riskless principal transactions are considered as generating
"commissions," NAM intends to comply with the applicable safe harbor provisions.
F. OTHER CONSIDERATIONS
The Trustees did not identify any single factor discussed previously as
all-important or controlling. The Trustees, including the independent Trustees,
unanimously concluded that the terms of the NAM Investment Management Agreements
are fair and reasonable, that the Fund Adviser's fees are reasonable in light of
the services provided to each Fund and that the renewal of the NAM Investment
Management Agreements should be approved.
98
Reinvest Automatically
EASILY and CONVENIENTLY
NUVEEN MAKES REINVESTING EASY. A PHONE CALL IS ALL IT TAKES TO SET UP YOUR
REINVESTMENT ACCOUNT.
NUVEEN CLOSED-END FUNDS DIVIDEND REINVESTMENT PLAN
Your Nuveen Closed-End Fund allows you to conveniently reinvest dividends and/or
capital gains distributions in additional Fund shares.
By choosing to reinvest, you'll be able to invest money regularly and
automatically, and watch your investment grow through the power of tax-free
compounding. Just like dividends or distributions in cash, there may be times
when income or capital gains taxes may be payable on dividends or distributions
that are reinvested.
It is important to note that an automatic reinvestment plan does not ensure a
profit, nor does it protect you against loss in a declining market.
EASY AND CONVENIENT
To make recordkeeping easy and convenient, each month you'll receive a statement
showing your total dividends and distributions, the date of investment, the
shares acquired and the price per share, and the total number of shares you own.
HOW SHARES ARE PURCHASED
The shares you acquire by reinvesting will either be purchased on the open
market or newly issued by the Fund. If the shares are trading at or above net
asset value at the time of valuation, the Fund will issue new shares at the
greater of the net asset value or 95% of the then-current market price. If the
shares are trading at less than net asset value, shares for your account will be
purchased on the open market. If the Plan Agent begins purchasing Fund shares on
the open market while shares are trading below net asset value, but the Fund's
shares subsequently trade at or above their net asset value before the Plan
Agent is able to complete its purchases, the Plan Agent may cease open-market
purchases and may invest the uninvested portion of the distribution in
newly-issued Fund shares at a price equal to the greater of the shares' net
asset value or 95% of the shares' market value on the last business day
immediately prior to the purchase date. Dividends and distributions received to
purchase shares in the open market will normally be invested shortly after the
dividend payment date. No interest will be paid on dividends and distributions
awaiting reinvestment. Because the market price of the shares may increase
before purchases are completed, the average purchase price per share may exceed
the market price at the time of valuation, resulting in the acquisition of fewer
shares than if the dividend or distribution had been paid in shares issued by
the Fund. A pro rata portion of any applicable brokerage commissions on open
market purchases will be paid by Plan participants. These commissions usually
will be lower than those charged on individual transactions.
99
FLEXIBLE
You may change your distribution option or withdraw from the Plan at any time,
should your needs or situation change. Should you withdraw, you can receive a
certificate for all whole shares credited to your reinvestment account and cash
payment for fractional shares, or cash payment for all reinvestment account
shares, less brokerage commissions and a $2.50 service fee.
You can reinvest whether your shares are registered in your name, or in the name
of a brokerage firm, bank, or other nominee. Ask your investment advisor if his
or her firm will participate on your behalf. Participants whose shares are
registered in the name of one firm may not be able to transfer the shares to
another firm and continue to participate in the Plan.
The Fund reserves the right to amend or terminate the Plan at any time. Although
the Fund reserves the right to amend the Plan to include a service charge
payable by the participants, there is no direct service charge to participants
in the Plan at this time.
CALL TODAY TO START REINVESTING DIVIDENDS AND/OR DISTRIBUTIONS
For more information on the Nuveen Automatic Reinvestment Plan or to enroll in
or withdraw from the Plan, speak with your financial advisor or call us at (800)
257-8787.
100
NOTES
101
Glossary of
TERMS USED in this REPORT
o AVERAGE ANNUAL TOTAL RETURN: This is a commonly used method to express an
investment's performance over a particular, usually multi-year time period.
It expresses the return that would have been necessary each year to equal
the investment's actual cumulative performance (including change in NAV or
market price and reinvested dividends and capital gains distributions, if
any) over the time period being considered.
o AVERAGE EFFECTIVE MATURITY: The average of the number of years to maturity
of the bonds in a Fund's portfolio, computed by weighting each bond's time
to maturity (the date the security comes due) by the market value of the
security. This figure does not account for the likelihood of prepayments or
the exercise of call provisions unless an escrow account has been
established to redeem the bond before maturity. The market value weighting
for an investment in an inverse floating rate security is the value of the
portfolio's residual interest in the inverse floating rate trust, and does
not include the value of the floating rate securities issued by the trust.
o INVERSE FLOATERS: Inverse floating rate securities are created by
depositing a municipal bond, typically with a fixed interest rate, into a
special purpose trust created by a broker-dealer. This trust, in turn, (a)
issues floating rate certificates typically paying short-term tax-exempt
interest rates to third parties in amounts equal to some fraction of the
deposited bond's par amount or market value, and (b) issues an inverse
floating rate certificate (sometimes referred to as an "inverse floater")
to an investor (such as a Fund) interested in gaining investment exposure
to a long-term municipal bond. The income received by the holder of the
inverse floater varies inversely with the short-term rate paid to the
floating rate certificates' holders, and in most circumstances the holder
of the inverse floater bears substantially all of the underlying bond's
downside investment risk. The holder of the inverse floater typically also
benefits disproportionately from any potential appreciation of the
underlying bond's value. Hence, an inverse floater essentially represents
an investment in the underlying bond on a leveraged basis.
o LEVERAGE-ADJUSTED DURATION: Duration is a measure of the expected period
over which a bond's principal and interest will be paid, and consequently
is a measure of the sensitivity of a bond's or bond Fund's value to changes
when market interest rates change. Generally, the longer a bond's or Fund's
duration, the more the price of the bond or Fund will change as interest
rates change. Leverage-adjusted duration takes into account the leveraging
process for a Fund and therefore is longer than the duration of the Fund's
portfolio of bonds.
o MARKET YIELD (ALSO KNOWN AS DIVIDEND YIELD OR CURRENT YIELD): An
investment's current annualized dividend divided by its current market
price.
o NET ASSET VALUE (NAV): A Fund's common share NAV per share is calculated by
subtracting the liabilities of the Fund (including any MuniPreferred shares
issued in order to leverage the Fund) from its total assets and then
dividing the remainder by the number of shares outstanding. Fund NAVs are
calculated at the end of each business day.
o 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.
102
Other Useful INFORMATION
QUARTERLY PORTFOLIO OF INVESTMENTS AND PROXY VOTING INFORMATION
Each Fund's (i) quarterly portfolio of investments, (ii) information regarding
how the Funds voted proxies relating to portfolio securities held during the
12-month period ended June 30, 2006, and (iii) a description of the policies and
procedures that the Funds used to determine how to vote proxies relating to
portfolio securities are available without charge, upon request, by calling
Nuveen Investments toll-free at (800) 257-8787 or on Nuveen's website at
www.nuveen.com.
You may also obtain this and other Fund information directly from the Securities
and Exchange Commission ("SEC"). The SEC may charge a copying fee for this
information. Visit the SEC on-line at http://www.sec.gov or in person at the
SEC's Public Reference Room in Washington, D.C. Call the SEC at 1-202-942-8090
for room hours and operation. You may also request Fund information by sending
an e-mail request to publicinfo@sec.gov or by writing to the SEC's Public
References Section at 450 Fifth Street NW, Washington, D.C. 20549.
CEO CERTIFICATION DISCLOSURE
For Funds listed on the New York Stock Exchange, each Fund's Chief Executive
Officer has submitted to the Exchange the annual CEO certification as required
by Section 303A.12(a) of the NYSE Listed Company Manual.
Each Fund has filed with the Securities and Exchange Commission the
certification of its Chief Executive Officer and Chief Financial Officer
required by Section 302 of the Sarbanes-Oxley Act.
INVESTMENT POLICY CHANGE
In February 2007, the Board of Trustees voted to remove investment policy
restrictions that limited the territorial bond holdings of these Funds to a
maximum of 10 percent of net assets. This change will give the Funds' portfolio
managers greater flexibility to achieve its investment objectives.
BOARD OF TRUSTEES
Robert P. Bremner
Jack B. Evans
William C. Hunter
David J. Kundert
William J. Schneider
Timothy R. Schwertfeger
Judith M. Stockdale
Carol E. Stone
Eugene S. Sunshine
FUND MANAGER
Nuveen Asset Management
333 West Wacker Drive
Chicago, IL 60606
CUSTODIAN
State Street Bank & Trust Company
Boston, MA
TRANSFER AGENT AND
SHAREHOLDER SERVICES
State Street Bank & Trust Company
Nuveen Funds
P.O. Box 43071
Providence, RI 02940-3071
(800) 257-8787
LEGAL COUNSEL
Chapman and Cutler LLP
Chicago, IL
INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
Ernst & Young LLP
Chicago, IL
Each Fund intends to repurchase shares of its own common or preferred stock in
the future at such times and in such amounts as is deemed advisable. No shares
were repurchased during the period covered by this report. Any future
repurchases will be reported to shareholders in the next annual or semiannual
report.
103
Nuveen Investments:
-------------------
SERVING INVESTORS FOR GENERATIONS
Since 1898, financial advisors and their clients have relied on Nuveen
Investments to provide dependable investment solutions. For the past century,
Nuveen Investments has adhered to the belief that the best approach to investing
is to apply conservative risk-management principles to help minimize volatility.
Building on this tradition, we today offer a range of high quality equity and
fixed-income solutions that are integral to a well-diversified core portfolio.
Our clients have come to appreciate this diversity, as well as our continued
adherence to proven, long-term investing principles.
WE OFFER MANY DIFFERENT INVESTING SOLUTIONS FOR OUR CLIENTS' DIFFERENT NEEDS.
Managing $166 billion in assets, as of March 31, 2007, Nuveen Investments offers
access to a number of different asset classes and investing solutions through a
variety of products. Nuveen Investments markets its capabilities under six
distinct brands: NWQ, specializing in value-style equities; Nuveen, managing
fixed-income investments; Santa Barbara, committed to growth equities;
Tradewinds, specializing in global value equities; Rittenhouse, focused on
"blue-chip" growth equities; and Symphony, with expertise in alternative
investments as well as equity and income portfolios.
FIND OUT HOW WE CAN HELP YOU REACH YOUR FINANCIAL GOALS.
To learn more about the products and services Nuveen Investments offers, talk to
your financial advisor, or call us at (800) 257-8787. Please read the
information provided carefully before you invest.
Be sure to obtain a prospectus, where applicable. Investors should consider the
investment objective and policies, risk considerations, charges and expenses of
the Fund carefully before investing. The prospectus contains this and other
information relevant to an investment in the Fund. For a prospectus, please
contact your securities representative or NUVEEN INVESTMENTS, 333 W. WACKER DR.,
CHICAGO, IL 60606. Please read the prospectus carefully before you invest or
send money.
Learn more about Nuveen Funds at: WWW.NUVEEN.COM/ETF
SHARE PRICES
FUND DETAILS
DAILY FINANCIAL NEWS
INVESTOR EDUCATION
INTERACTIVE PLANNING TOOLS
EAN-A-0507D
ITEM 2. CODE OF ETHICS.
As of the end of the period covered by this report, the registrant has adopted a
code of ethics that applies to the registrant's principal executive officer,
principal financial officer, principal accounting officer or controller, or
persons performing similar functions. There were no amendments to or waivers
from the Code during the period covered by this report. The registrant has
posted the code of ethics on its website at www.nuveen.com/etf. (To view the
code, click on the Investor Resources drop down menu box, click on Fund
Governance and then click on Code of Conduct.)
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The registrant's Board of Directors or Trustees determined that the registrant
has at least one "audit committee financial expert" (as defined in Item 3 of
Form N-CSR) serving on its Audit Committee. The registrant's audit committee
financial expert is Jack B. Evans, Chairman of the Audit Committee, who is
"independent" for purposes of Item 3 of Form N-CSR.
Mr. Evans was formerly President and Chief Operating Officer of SCI Financial
Group, Inc., a full service registered broker-dealer and registered investment
adviser ("SCI"). As part of his role as President and Chief Operating Officer,
Mr. Evans actively supervised the Chief Financial Officer (the "CFO") and
actively supervised the CFO's preparation of financial statements and other
filings with various regulatory authorities. In such capacity, Mr. Evans was
actively involved in the preparation of SCI's financial statements and the
resolution of issues raised in connection therewith. Mr. Evans has also served
on the audit committee of various reporting companies. At such companies, Mr.
Evans was involved in the oversight of audits, audit plans, and the preparation
of financial statements. Mr. Evans also formerly chaired the audit committee of
the Federal Reserve Bank of Chicago.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Nuveen Maryland Dividend Advantage Municipal Fund 3
The following tables show the amount of fees that Ernst & Young LLP, the Fund's
auditor, billed to the Fund during the Fund's last two full fiscal years. For
engagements with Ernst & Young LLP the Audit Committee approved in advance all
audit services and non-audit services that Ernst & Young LLP provided to the
Fund, except for those non-audit services that were subject to the pre-approval
exception under Rule 2-01 of Regulation S-X (the "pre-approval exception"). The
pre-approval exception for services provided directly to the Fund waives the
pre-approval requirement for services other than audit, review or attest
services if: (A) the aggregate amount of all such services provided constitutes
no more than 5% of the total amount of revenues paid by the Fund to its
accountant during the fiscal year in which the services are provided; (B) the
Fund did not recognize the services as non-audit services at the time of the
engagement; and (C) the services are promptly brought to the Audit Committee's
attention, and the Committee (or its delegate) approves the services before the
audit is completed.
The Audit Committee has delegated certain pre-approval responsibilities to its
Chairman (or, in his absence, any other member of the Audit Committee).
SERVICES THAT THE FUND'S AUDITOR BILLED TO THE FUND
AUDIT FEES BILLED AUDIT-RELATED FEES TAX FEES ALL OTHER FEES
FISCAL YEAR ENDED TO FUND (1) BILLED TO FUND (2) BILLED TO FUND (3) BILLED TO FUND (4)
--------------------------------------------------------------------------------------------------------------------------
May 31, 2007 $ 9,445 $ 0 $ 0 $ 2,250
--------------------------------------------------------------------------------------------------------------------------
Percentage approved 0% 0% 0% 0%
pursuant to
pre-approval
exception
--------------------------------------------------------------------------------------------------------------------------
May 31, 2006 $ 8,955 $ 0 $524 $ 2,850
--------------------------------------------------------------------------------------------------------------------------
Percentage approved 0% 0% 0% 0%
pursuant to
pre-approval
exception
--------------------------------------------------------------------------------------------------------------------------
(1) "Audit Fees" are the aggregate fees billed for professional services for
the audit of the Fund's annual financial statements and services provided
in connection with statutory and regulatory filings or engagements.
(2) "Audit Related Fees" are the aggregate fees billed for assurance and
related services reasonably related to the performance of the audit or
review of financial statements and are not reported under "Audit Fees".
(3) "Tax Fees" are the aggregate fees billed for professional services for tax
advice, tax compliance, and tax planning.
(4) "All Other Fees" are the aggregate fees billed for products and services
other than "Audit Fees", "Audit Related Fees", and "Tax Fees".
SERVICES THAT THE FUND'S AUDITOR BILLED TO THE
ADVISER AND AFFILIATED FUND SERVICE PROVIDERS
The following tables show the amount of fees billed by Ernst & Young LLP to
Nuveen Asset Management ("NAM" or the "Adviser"), and any entity controlling,
controlled by or under common control with NAM ("Control Affiliate") that
provides ongoing services to the Fund ("Affiliated Fund Service Provider"), for
engagements directly related to the Fund's operations and financial reporting,
during the Fund's last two full fiscal years.
The tables also show the percentage of fees subject to the pre-approval
exception. The pre-approval exception for services provided to the Adviser and
any Affiliated Fund Service Provider (other than audit, review or attest
services) waives the pre-approval requirement if: (A) the aggregate amount of
all such services provided constitutes no more than 5% of the total amount of
revenues paid to Ernst & Young LLP by the Fund, the Adviser and Affiliated Fund
Service Providers during the fiscal year in which the services are provided that
would have to be pre-approved by the Audit Committee; (B) the Fund did not
recognize the services as non-audit services at the time of the engagement; and
(C) the services are promptly brought to the Audit Committee's attention, and
the Committee (or its delegate) approves the services before the Fund's audit is
completed.
FISCAL YEAR ENDED AUDIT-RELATED FEES TAX FEES BILLED TO ALL OTHER FEES
BILLED TO ADVISER AND ADVISER AND BILLED TO ADVISER
AFFILIATED FUND AFFILIATED FUND AND AFFILIATED FUND
SERVICE PROVIDERS SERVICE PROVIDERS (1) SERVICE PROVIDERS
--------------------------------------------------------------------------------------------------------------
May 31, 2007 $ 0 $ 0 $ 0
--------------------------------------------------------------------------------------------------------------
Percentage approved 0% 0% 0%
pursuant to
pre-approval
exception
--------------------------------------------------------------------------------------------------------------
May 31, 2006 $ 0 $ 2,400 $ 0
--------------------------------------------------------------------------------------------------------------
Percentage approved 0% 0% 0%
pursuant to
pre-approval
exception
--------------------------------------------------------------------------------------------------------------
(1) The amounts reported for the Fund under the column heading "Tax Fees"
represents amounts billed to the Adviser exclusively for the preparation
for the Fund's tax return, the cost of which is borne by the Adviser. In
the aggregate, for all Nuveen funds for which Ernst & Young LLP serves as
independent registered public accounting firm, these fees amounted to
$161,400 in 2006. Beginning with fund fiscal years ending August 31, 2006,
Ernst & Young LLP will no longer prepare the fund tax returns.
NON-AUDIT SERVICES
The following table shows the amount of fees that Ernst & Young LLP billed
during the Fund's last two full fiscal years for non-audit services. The Audit
Committee is required to pre-approve non-audit services that Ernst & Young LLP
provides to the Adviser and any Affiliated Fund Services Provider, if the
engagement related directly to the Fund's operations and financial reporting
(except for those subject to the de minimis exception described above). The
Audit Committee requested and received information from Ernst & Young LLP about
any non-audit services that Ernst & Young LLP rendered during the Fund's last
fiscal year to the Adviser and any Affiliated Fund Service Provider. The
Committee considered this information in evaluating Ernst & Young LLP's
independence.
FISCAL YEAR ENDED TOTAL NON-AUDIT FEES
BILLED TO ADVISER AND
AFFILIATED FUND SERVICE TOTAL NON-AUDIT FEES
PROVIDERS (ENGAGEMENTS BILLED TO ADVISER AND
RELATED DIRECTLY TO THE AFFILIATED FUND SERVICE
TOTAL NON-AUDIT FEES OPERATIONS AND FINANCIAL PROVIDERS (ALL OTHER
BILLED TO FUND REPORTING OF THE FUND) ENGAGEMENTS) TOTAL
------------------------------------------------------------------------------------------------------------------------------------
May 31, 2007 $ 2,250 $ 0 $ 0 $ 2,250
May 31, 2006 $ 3,374 $ 2,400 $ 0 $ 5,774
"Non-Audit Fees billed to Adviser" for both fiscal year ends represent "Tax
Fees" billed to Adviser in their respective amounts from the previous table.
Audit Committee Pre-Approval Policies and Procedures. Generally, the Audit
Committee must approve (i) all non-audit services to be performed for the Fund
by the Fund's independent accountants and (ii) all audit and non-audit services
to be performed by the Fund's independent accountants for the Affiliated Fund
Service Providers with respect to operations and financial reporting of the
Fund. Regarding tax and research projects conducted by the independent
accountants for the Fund and Affiliated Fund Service Providers (with respect to
operations and financial reports of the Fund) such engagements will be (i)
pre-approved by the Audit Committee if they are expected to be for amounts
greater than $10,000; (ii) reported to the Audit Committee chairman for his
verbal approval prior to engagement if they are expected to be for amounts under
$10,000 but greater than $5,000; and (iii) reported to the Audit Committee at
the next Audit Committee meeting if they are expected to be for an amount under
$5,000.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
The registrant's Board of Directors or Trustees has a separately designated
Audit Committee established in accordance with Section 3(a)(58)(A) of the
Securities Exchange Act of 1934, as amended (15 U.S.C. 78c(a)(58)(A)). The
members of the audit committee are Robert P. Bremner, Jack B. Evans, William J.
Schneider, Eugene S. Sunshine and David J. Kundert.
ITEM 6. SCHEDULE OF INVESTMENTS.
See Portfolio of Investments in Item 1.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
The registrant invests its assets primarily in municipal bonds and cash
management securities. On rare occasions the registrant may acquire, directly or
through a special purpose vehicle, equity securities of a municipal bond issuer
whose bonds the registrant already owns when such bonds have deteriorated or are
expected shortly to deteriorate significantly in credit quality. The purpose of
acquiring equity securities generally will be to acquire control of the
municipal bond issuer and to seek to prevent the credit deterioration or
facilitate the liquidation or other workout of the distressed issuer's credit
problem. In the course of exercising control of a distressed municipal issuer,
NAM may pursue the registrant's interests in a variety of ways, which may entail
negotiating and executing consents, agreements and other arrangements, and
otherwise influencing the management of the issuer. NAM does not consider such
activities proxy voting for purposes of Rule 206(4)-6 under the 1940 Act, but
nevertheless provides reports to the registrant's Board of Trustees on its
control activities on a quarterly basis.
In the rare event that a municipal issuer were to issue a proxy or that the
registrant were to receive a proxy issued by a cash management security, NAM
would either engage an independent third party to determine how the proxy should
be voted or vote the proxy with the consent, or based on the instructions, of
the registrant's Board of Trustees or its representative. A member of NAM's
legal department would oversee the administration of the voting, and ensure that
records were maintained in accordance with Rule 206(4)-6, reports were filed
with the SEC on Form N-PX, and the results provided to the registrant's Board of
Trustees and made available to shareholders as required by applicable rules.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
THE PORTFOLIO MANAGER
The following individual has primary responsibility for the day-to-day
implementation of the registrant's investment strategies:
NAME FUND
CATHRYN P. STEEVES Nuveen Maryland Dividend Advantage Municipal Fund 3
Other Accounts Managed. In addition to managing the registrant, the
portfolio manager is also primarily responsible for the day-to-day portfolio
management of the following accounts:
TYPE OF ACCOUNT NUMBER OF
PORTFOLIO MANAGER MANAGED ACCOUNTS ASSETS
---------------------------------------------------------------------------------------------------------------------------
Cathryn P. Steeves Registered Investment Company 41 $8.229 billion
Other Pooled Investment Vehicles -0- $0
Other Accounts -0- $0
* Assets are as of May 31, 2007. None of the assets in these accounts are
subject to an advisory fee based on performance.
Compensation. Each portfolio manager's compensation consists of three basic
elements--base salary, cash bonus and long-term incentive compensation. The
compensation strategy is to annually compare overall compensation, including
these three elements, to the market in order to create a compensation structure
that is competitive and consistent with similar financial services companies. As
discussed below, several factors are considered in determining each portfolio
manager's total compensation. In any year these factors may include, among
others, the effectiveness of the investment strategies recommended by the
portfolio manager's investment team, the investment performance of the accounts
managed by the portfolio manager, and the overall performance of Nuveen
Investments, Inc. (the parent company of NAM). Although investment performance
is a factor in determining the portfolio manager's compensation, it is not
necessarily a decisive factor. The portfolio manager's performance is evaluated
in part by comparing manager's performance against a specified investment
benchmark. This fund-specific benchmark is a customized subset (limited to bonds
in each Fund's specific state and with certain maturity parameters) of the
S&P/Investortools Municipal Bond index, an index comprised of bonds held by
managed municipal bond fund customers of Standard & Poor's Securities Pricing,
Inc. that are priced daily and whose fund holdings aggregate at least $2
million. As of April 30, 2007, the S&P/Investortools Municipal Bond index was
comprised of 50,300 securities with an aggregate current market value of
$985.260 billion.
Base salary. Each portfolio manager is paid a base salary that is set at a
level determined by NAM in accordance with its overall compensation strategy
discussed above. NAM is not under any current contractual obligation to increase
a portfolio manager's base salary.
Cash bonus. Each portfolio manager is also eligible to receive an annual
cash bonus. The level of this bonus is based upon evaluations and determinations
made by each portfolio manager's supervisors, along with reviews submitted by
his peers. These reviews and evaluations often take into account a number of
factors, including the effectiveness of the investment strategies recommended to
the NAM's investment team, the performance of the accounts for which he serves
as portfolio manager relative to any benchmarks established for those accounts,
his effectiveness in communicating investment performance to stockholders and
their representatives, and his contribution to the NAM's investment process and
to the execution of investment strategies. The cash bonus component is also
impacted by the overall performance of Nuveen Investments, Inc. in achieving its
business objectives.
Long-term incentive compensation. Each portfolio manager is eligible to
receive bonus compensation in the form of equity-based awards issued in
securities issued by Nuveen Investments, Inc. The amount of such compensation is
dependent upon the same factors articulated for cash bonus awards but also
factors in his long-term potential with the firm.
Material Conflicts of Interest. Each portfolio manager's simultaneous
management of the registrant and the other accounts noted above may present
actual or apparent conflicts of interest with respect to the allocation and
aggregation of securities orders placed on behalf of the Registrant and the
other account. NAM, however, believes that such potential conflicts are
mitigated by the fact that the NAM has adopted several policies that address
potential conflicts of interest, including best execution and trade allocation
policies that are designed to ensure (1) that portfolio management is seeking
the best price for portfolio securities under the circumstances, (2) fair and
equitable allocation of investment opportunities among accounts over time and
(3) compliance with applicable regulatory requirements. All accounts are to be
treated in a non-preferential manner, such that allocations are not based upon
account performance, fee structure or preference of the portfolio manager. In
addition, NAM has adopted a Code of Conduct that sets forth policies regarding
conflicts of interest.
Beneficial Ownership of Securities. As of the May 31, 2007, the portfolio
manager beneficially owned the following dollar range of equity securities
issued by the Registrant and other Nuveen Funds managed by NAM's municipal
investment team.
-------------------------- ---------------------------------------------- ----------------- ----------------------
DOLLAR RANGE OF
EQUITY SECURITIES
DOLLAR RANGE OF BENEFICIALLY OWNED
EQUITY IN THE REMAINDER OF
SECURITIES NUVEEN FUNDS MANAGED
BENEFICIALLY BY NAM'S MUNICIPAL
NAME OF PORTFOLIO MANAGER FUND OWNED IN FUND INVESTMENT TEAM
-------------------------- ---------------------------------------------- ----------------- ----------------------
Cathryn Steeves Nuveen Maryland Dividend Advantage Municipal $0 $10,000-$50,000
Fund 3
-------------------------- ---------------------------------------------- ----------------- ----------------------
PORTFOLIO MANAGER BIO:
Cathryn Steeves, PhD is currently a portfolio manager for 42 state-specific
municipal bond funds. She joined Nuveen in 1996 and worked as a senior analyst
in the healthcare sector. Cathryn has an undergraduate degree from Wake Forest
University, an MA, MPhil and a PhD from Columbia University.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which shareholders may
recommend nominees to the registrants Board implemented after the registrant
last provided disclosure in response to this item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive and principal financial officers,
or persons performing similar functions, have concluded that the
registrant's disclosure controls and procedures (as defined in Rule
30a-3(c) under the Investment Company Act of 1940, as amended (the
"1940 Act") (17 CFR 270.30a-3(c))) are effective, as of a date within
90 days of the filing date of this report that includes the disclosure
required by this paragraph, based on their evaluation of the controls
and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR
270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")
(17 CFR 240.13a-15(b) or 240.15d-15(b)).
(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act
(17 CFR 270.30a-3(d)) that occurred during the second fiscal quarter
of the period covered by this report that has materially affected, or
is reasonably likely to materially affect, the registrant's internal
control over financial reporting.
ITEM 12. EXHIBITS.
File the exhibits listed below as part of this Form. Letter or number the
exhibits in the sequence indicated.
(a)(1) Any code of ethics, or amendment thereto, that is the subject of the
disclosure required by Item 2, to the extent that the registrant intends to
satisfy the Item 2 requirements through filing of an exhibit: Not applicable
because the code is posted on registrant's website at www.nuveen.com/etf and
there were no amendments during the period covered by this report. (To view the
code, click on the Investor Resources drop down menu box, click on Fund
Governance and then Code of Conduct.)
(a)(2) A separate certification for each principal executive officer and
principal financial officer of the registrant as required by Rule 30a-2(a) under
the 1940 Act (17 CFR 270.30a-2(a)) in the exact form set forth below: Ex-99.CERT
Attached hereto.
(a)(3) Any written solicitation to purchase securities under Rule 23c-1 under
the 1940 Act (17 CFR 270.23c-1) sent or given during the period covered by the
report by or on behalf of the registrant to 10 or more persons. Not applicable.
(b) If the report is filed under Section 13(a) or 15(d) of the Exchange Act,
provide the certifications required by Rule 30a-2(b) under the 1940 Act (17 CFR
270.30a-2(b)); Rule 13a-14(b) or Rule 15d-14(b) under the Exchange Act (17 CFR
240.13a-14(b) or 240.15d-14(b)), and Section 1350 of Chapter 63 of Title 18 of
the United States Code (18 U.S.C. 1350) as an exhibit. A certification furnished
pursuant to this paragraph will not be deemed "filed" for purposes of Section 18
of the Exchange Act (15 U.S.C. 78r), or otherwise subject to the liability of
that section. Such certification will not be deemed to be incorporated by
reference into any filing under the Securities Act of 1933 or the Exchange Act,
except to the extent that the registrant specifically incorporates it by
reference. Ex-99.906 CERT attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Nuveen Maryland Dividend Advantage Municipal Fund 3
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By (Signature and Title)* /s/ Kevin J. McCarthy
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Kevin J. McCarthy
Vice President and Secretary
Date: August 8, 2007
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Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ Gifford R. Zimmerman
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Gifford R. Zimmerman
Chief Administrative Officer
(principal executive officer)
Date: August 8, 2007
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By (Signature and Title)* /s/ Stephen D. Foy
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Stephen D. Foy
Vice President and Controller
(principal financial officer)
Date: August 8, 2007
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* Print the name and title of each signing officer under his or her signature.