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 811-21152
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Nuveen Georgia Dividend Advantage Municipal Fund 2
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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)
Jessica R. Droeger
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 31st
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Date of reporting period: May 31st
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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.
Nuveen
Municipal Closed-End
Exchange-Traded
Funds
Annual Report May 31, 2003
GEORGIA
NPG
NZX
NKG
NORTH CAROLINA
NNC
NRB
NNO
NII
Photo of: 2 woman with graduation cap.
Photo of: Man and child working on computer.
DEPENDABLE,
TAX-FREE INCOME
BECAUSE
IT'S NOT WHAT YOU EARN,
IT'S WHAT YOU KEEP.(R)
Logo: NUVEEN Investments
FASTER Information
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If you decide you do not like receiving your reports electronically, it's a
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If your Nuveen Fund dividends and statements
COME FROM YOUR FINANCIAL ADVISOR OR BROKERAGE ACCOUNT,
follow the steps outlined below:
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If your Nuveen Fund dividends and statements
COME DIRECTLY TO YOU FROM NUVEEN,
follow the steps outlined below:
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Logo: NUVEEN Investments
Photo of: Timothy R. Schwertfeger
Timothy R. Schwertfeger
Chairman of the Board
Sidebar text:" No one knows what the future will bring, which is why we think a
well-balanced portfolio ..... is an important component in achieving your
long-term financial goals."
Dear
SHAREHOLDER
Once again, I am pleased to report that over the most recent reporting period
your Fund continued to provide you with monthly tax-free income and an
attractive total return. For more specific information about the performance of
your Fund, please see the Portfolio Manager's Comments and Performance Overview
sections of this report.
With interest rates at historically low levels, many have begun to wonder
whether interest rates will rise, and whether that possibility should cause them
to adjust their holdings of fixed-income investments. No one knows what the
future will bring, which is why we think a well-balanced portfolio that is
structured and carefully monitored with the help of an investment professional
is an important component in achieving your long-term financial goals. A
well-diversified portfolio may actually help to reduce your overall investment
risk, and we believe that municipal bond investments like your Nuveen Fund can
be important building blocks in a portfolio crafted to perform well through a
variety of market conditions.
I'd also like to direct your attention to the inside front cover of this report,
which explains the quick and easy process to begin receiving Fund reports like
this via e-mail and the internet. Thousands of Nuveen Fund shareholders already
have signed-up, and they are getting their Fund information faster and more
conveniently than ever. I urge you to consider joining them.
Since 1898, Nuveen Investments has offered financial products and solutions that
incorporate careful research, diversification, and the application of
conservative risk-management principles. We are grateful that you have chosen us
as a partner as you pursue your financial goals. We look forward to continuing
to earn your trust in the months and years ahead.
Sincerely,
/s/ Timothy R. Schwertfeger
Timothy R. Schwertfeger
Chairman of the Board
July 15, 2003
1
Nuveen Georgia and North Carolina Municipal Closed-End Exchange-Traded Funds
(NPG, NZX, NKG, NNC, NRB, NNO, NII)
Portfolio Manager's
Comments
Portfolio manager Rick Huber reviews economic and market conditions, key
investment strategies and the recent performance of the Funds. With 18 years of
investment experience, Rick assumed portfolio management responsibility for
these Funds in January 2003.
WHAT FACTORS AFFECTED THE U.S. ECONOMY AND MUNICIPAL MARKET DURING THE
TWELVE-MONTH PERIOD ENDED MAY 31, 2003?
The underlying economic and market conditions remained similar to those we
discussed in our last shareholder report dated November 30, 2002. We believe the
most influential factors affecting the performance of the U.S. economy and the
municipal market continued to be the sluggish pace of economic growth and
interest rates that remained at 40-year lows. At the same time, continued
geopolitical concerns, centering on the threat of terrorism and the Iraqi
situation, also had an impact during this reporting period.
In the municipal market, the slow economic recovery and the continued lack of
inflationary pressures during the reporting period created conditions that
helped many bonds, and especially higher-rated bonds, perform well. Following a
record $357 billion of new supply in calendar year 2002, municipal issuance
nationwide remained strong during the first five months of 2003, with $145.6
billion in new municipal securities, up 14% over the same period in 2002. Much
of this increase in supply reflects issuance intended to address fiscal problems
facing states and localities as the result of slow economic growth, rising costs
(especially for healthcare and pensions) and sharp declines in tax collections.
Given the relatively low interest rate environment, many states and local
governments have turned to borrowing in order to close budget gaps, fund needed
capital projects and free up cash for operating purposes.
The heavy supply of municipal bonds was met with evidence of continued strong
demand over most of this reporting period, as the record issuance was absorbed
without a significant decline in prices. Both individual and institutional
investors were active buyers.
HOW WERE ECONOMIC AND MARKET CONDITIONS IN GEORGIA AND NORTH CAROLINA?
Georgia's economy remained sluggish, but began to show signs of recovery during
this reporting period. Over the twelve months, job growth in the state's health
services, education and government sectors helped to offset weakness in retail
sales, construction and telecommunications. As of May 2003, unemployment in the
state was 4.8%, down from 5.1% in May 2002 and well below the current national
average of 6.1%. With 13 military bases, Georgia also benefited from recent
increases in defense spending. Although Georgia's debt levels remain
above-average, debt ratios are relatively moderate, and the state has not
exhausted its reserve balances. During the first five months of 2003, Georgia
issued $1.6 billion in new bonds, down 44% from the same period in 2002. This
drop-off in supply mainly was a reflection of the heavier volume brought to
market
2
during calendar year 2002. In general, while Georgia's manufacturing and
transportation industries currently remain stalled awaiting improvement in the
national economy, the state's location, strong population trends, and
below-average business costs are expected to encourage economic growth over the
long term. As of May 31, 2003, Georgia maintained its Aaa/AAA ratings with
stable outlooks from both Moody's and Standard & Poor's, respectively.
North Carolina's economy showed mixed results over the course of this reporting
period. While the recession in manufacturing, especially in furniture and
transportation equipment, served as the primary drag on the state's economy,
this was offset to some degree by growth in the services sector. North Carolina
also remained a national banking center as well as a center for high-tech firms
and professionals attracted by the state's universities. Over the past 12
months, North Carolina's unemployment fell to 6.1% in May 2003 from 6.8% a year
earlier, bringing it more closely in line with the national average. Municipal
issuance in the state for the first five months of 2003 topped $4.3 billion,
nearly double the amount seen during the same period last year. Even with
increased issuance, the state's debt ratios remain among the lowest in the
nation at 1.4% of per capita income. In August 2002, the state's budget problems
contributed to Moody's decision to downgrade North Carolina's general obligation
debt to Aa1 with a stable outlook, while Standard & Poor's maintained its AAA
rating for the state.
HOW DID THE FUNDS PERFORM OVER THE TWELVE MONTHS ENDED MAY 31, 2003?
Individual results for these Funds, as well as for selected benchmarks, are
presented in the accompanying table.
TOTAL RETURN LEHMAN LIPPER
MARKET YIELD ON NAV TOTAL RETURN1 AVERAGE2
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1 YEAR 1 YEAR 1 YEAR
TAXABLE- ENDED ENDED ENDED
5/31/03 EQUIVALENT3 5/31/03 5/31/03 5/31/03
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NPG 5.17% 7.66% 13.78% 10.36% 15.88%
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NZX 5.35% 7.93% 18.82% 10.36% 15.88%
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NKG 5.37% 7.96% NA -- --
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NNC 5.17% 7.83% 15.80% 10.36% 15.88%
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NRB 5.36% 8.12% 17.75% 10.36% 15.88%
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NNO 5.15% 7.80% 18.98% 10.36% 15.88%
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NII 5.29% 8.02% NA -- --
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Past performance is not predictive of future results.
For additional information, see the individual Performance Overview for your
Fund in this report.
For the twelve months ended May 31, 2003, all of the Funds in this report with
at least one year of performance history outperformed the national, unleveraged
Lehman Brothers Municipal Bond Index. Their performances were generally
favorable when compared with the Lipper Other States Municipal Debt Funds
category, with NPG the primary exception. While these Lipper comparisons carry
some value, we believe they have limited usefulness because the Lipper average
includes the results of funds from ten different states, each with its own
unique conditions and circumstances.
The performance of these Funds benefited when compared with the results of the
Lehman Index from their use of leverage, a strategy that can provide the
opportunity for additional income for common shareholders. Most of the Funds
also were helped by their relatively long durations.4 During
1 The total annual returns on common share net asset value (NAV) for these
Nuveen Funds are compared with the total annual return of the Lehman
Brothers Municipal Bond Index, an unleveraged, unmanaged national index
comprising a broad range of investment-grade municipal bonds. Results for
the Lehman index do not reflect any expenses.
2 The total returns of these Funds are compared with the average annualized
return of the 36 funds in the Lipper Other States Municipal Debt Funds
category. Fund and Lipper returns assume reinvestment of dividends. It
should be noted that the performance of the Lipper Other States category
represents the overall average of annual returns for funds from 10
different states with a wide variety of economic conditions, municipal
market conditions, and investment guidelines, making direct comparisons
less applicable.
3 The taxable-equivalent yield represents the yield that must be earned on a
taxable investment in order to equal the yield of the Nuveen Fund on an
after-tax basis. The taxable-equivalent yield is based on the Fund's market
yield on the indicated date and a federal income tax rate of 28% plus the
applicable state income tax rate. The combined federal and state tax rates
used in this report are as follows: Georgia 32.5% and North Carolina 34%.
4 Duration is a measure of a fund's NAV volatility in reaction to interest
rate movements. Fund duration, also known as leverage-adjusted duration,
takes into account the leveraging process for a fund and therefore is
generally longer than the duration of the actual portfolio of individual
bonds that make up the fund. References to duration in this commentary are
intended to indicate fund duration unless otherwise noted.
3
periods of declining interest rates, such as that we experienced over most of
the twelve-month reporting period, longer duration investments generally would
be expected to outperform shorter duration investments, assuming all other
factors were equal. As of May 31, 2003, the durations of these Funds, with the
exception of NNC, ranged from 8.80 to 11.54, compared with 7.80 for the Lehman
index. (Please see the individual Performance Overview pages for individual Fund
durations.)
In addition to leverage and duration, the relative performances of these Nuveen
Funds were influenced by factors including call exposure, portfolio trading
activity, and the price movement of specific sectors and holdings. For example,
as of May 31, 2003, NPG held 15% of its portfolio in multifamily housing bonds.
For most of the reporting period, the housing sector in Georgia underperformed
the broader municipal market and lagged most other revenue bond sectors, as
measured by subcategories of the Lehman index. While we continued to hold these
securities because we like their long-term potential, their performance over
this reporting period was a primary reason why NPG's performance lagged the
other Nuveen Georgia Funds.
HOW DID THE MARKET ENVIRONMENT AND THE FUNDS' RETURNS AFFECT DIVIDENDS AND SHARE
PRICES?
As noted earlier, with short-term interest rates at historically low levels, the
dividend-payment capabilities of these Funds benefited from their use of
leverage. The amount of this benefit is tied in part to the short-term rates the
Funds pay their MuniPreferred(R) shareholders. Low short-term rates can enable
the Funds to reduce the amount of income paid to MuniPreferred shareholders,
which potentially can leave more earnings to support common share dividends.
During the 12 months ended May 31, 2003, the continued low level of short-term
interest rates enabled us to implement two dividend increases in NNC and NRB and
one increase in both NPG and NZX. As of May 2003, NNO had paid shareholders
dependable, attractive dividends for 17 consecutive months, while NKG and
NII--which were introduced in September 2002--declared their first monthly
distributions in November 2002.
Over the course of this twelve-month reporting period, strong demand and
favorable market conditions helped to boost the share prices and net asset
values of these Funds. As of May 31, 2003, NPG, NNC, NRB and NII continued to
trade at premiums to their common share NAVs, while NZX, NKG and NNO were
trading at virtually the same levels as their NAVs (see charts on individual
Performance Overview pages).
WHAT KEY STRATEGIES WERE USED TO MANAGE THESE FUNDS DURING THE YEAR ENDED MAY
31, 2003?
Over this twelve-month reporting period, we continued to place strong emphasis
on diversifying the portfolios, enhancing call protection, and improving
dividend-paying capabilities. Strategically, our main focus centered on
systematically shortening the Funds' durations, which we believed would enhance
our ability to control the Funds' interest rate risk and produce more consistent
returns over time. Interest rate risk is the risk that the value of a Fund's
portfolio will decline when market interest rates rise (since bond prices move
in the opposite direction of interest rates). The longer the duration of a
Fund's portfolio, the greater its interest rate risk.
In line with our duration strategy as well as the recent steepness of the
municipal yield curve, we concentrated on finding value in the intermediate part
of the yield curve (i.e., bonds that mature in 15 to 20 years), particularly in
the newer Funds with longer durations. In many cases, bonds in this part of the
curve were offering yields similar to those of longer-term bonds but, in our
opinion, had less inherent interest rate risk.
4
We also continued to look for individual issues that we believed would perform
well regardless of the future direction of interest rates. All the Georgia and
North Carolina Funds remained solidly invested in education and healthcare
bonds, and the Georgia Funds also had relatively large exposures to water and
sewer bonds. These three sectors were among the top performing Lehman Index
sectors over this reporting period.
NKG and NII were introduced in September 2002 and are fully invested. As
mentioned earlier, these Funds began paying regular monthly dividends in
November 2002. As attractive opportunities have arisen, we have replaced bonds
from Puerto Rico and other states that were purchased during the initial
investment phase last fall with Georgia or North Carolina securities. As of May
31, 2003, approximately 85% of NKG's portfolio were invested in Georgia bonds,
and 90% of NII was invested in North Carolina securities. We expect to continue
to incrementally increase these percentages through additional purchases of
in-state bonds, while closely monitoring the generation of capital gains from
sales of any non-Georgia or non-North Carolina securities.
Given the current geopolitical and economic climate, we believed that
maintaining strong credit quality remained a vital requirement. As of May 31,
2003, each of these Funds offered excellent credit quality, with allocations of
bonds rated AAA/U.S. guaranteed and AA ranging from 78% to 93%. In general, our
weightings in AAA and insured bonds benefited the performance of these Funds
during the past year.
WHAT IS YOUR OUTLOOK FOR THE MUNICIPAL MARKET IN GENERAL AND THESE FUNDS IN
PARTICULAR?
We continue to believe the U.S. economy is slowly headed for a recovery, but one
that may take longer and be less robust than some originally anticipated. As a
result, we think that inflation and interest rates will remain relatively low
over the near term.
However, the threat of an eventual rise in interest rates remains, and we intend
to keep a careful watch on the Funds' durations and holdings to be as
well-positioned as possible if and when rates do reverse course.
In Georgia, where supply has been tight during the first part of 2003, we expect
to see issuance pick up slightly in coming months. While North Carolina issuance
should continue to be strong, given the state's budget deficit and continued
need for spending on infrastructure, education and healthcare. Recently,
anticipation of changes to the national tax code led some to wonder about the
new law's potential impact on tax-exempt investments. The final version of the
2003 tax relief law reduced, but did not eliminate, taxes on corporate
dividends, and, as a result, we do not expect to see any significant impact on
the demand or pricing for tax-exempt municipal bonds.
Looking at bond call exposure, we believe these Funds offer good levels of call
protection. As of May 31, 2003, the percentage of bonds eligible for calls among
the seven Funds ranged from zero to 14% during the remainder of 2003 and through
2004. The number of actual calls over the coming months will depend largely on
market interest rates during this time.
We believe that these Nuveen Funds can continue to serve as attractive sources
of tax-free income, as well as offer considerable portfolio diversification
potential. We remain convinced that these Funds are quality investments that can
continue to benefit shareholders as part of a well-balanced core investment
portfolio.
5
Nuveen Georgia Premium Income Municipal Fund
Performance
Overview As of May 31, 2003
NPG
Pie Chart:
CREDIT QUALITY
AAA/U.S. Guaranteed 70%
AA 13%
A 12%
BBB 2%
BB or Lower 3%
PORTFOLIO STATISTICS
--------------------------------------------------
Share Price $16.95
--------------------------------------------------
Common Share Net Asset Value $15.36
--------------------------------------------------
Market Yield 5.17%
--------------------------------------------------
Taxable-Equivalent Yield
(Federal Income Tax Rate)1 7.18%
--------------------------------------------------
Taxable-Equivalent Yield
(Federal and State Income Tax Rate)1 7.66%
--------------------------------------------------
Net Assets Applicable to
Common Shares ($000) $58,050
--------------------------------------------------
Average Effective Maturity (Years) 21.14
--------------------------------------------------
Leverage-Adjusted Duration 8.80
--------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN (Inception 5/20/93)
--------------------------------------------------
ON SHARE PRICE ON NAV
--------------------------------------------------
1-Year 12.92% 13.78%
--------------------------------------------------
5-Year 8.12% 7.07%
--------------------------------------------------
10-Year 6.92% 6.80%
--------------------------------------------------
TOP FIVE SECTORS (as a % of total investments)
--------------------------------------------------
Healthcare 22%
--------------------------------------------------
Housing/Multifamily 15%
--------------------------------------------------
Water and Sewer 15%
--------------------------------------------------
Education and Civic Organizations 10%
--------------------------------------------------
Tax Obligation/Limited 9%
--------------------------------------------------
Bar Chart:
2002-2003 MONTHLY TAX-FREE DIVIDENDS PER SHARE
Jun 0.0715
Jul 0.0715
Aug 0.0715
Sep 0.0715
Oct 0.0715
Nov 0.0715
Dec 0.0715
Jan 0.0715
Feb 0.0715
Mar 0.073
Apr 0.073
May 0.073
Line Chart:
SHARE PRICE PERFORMANCE
Weekly Closing Price
Past performance is not predictive of future results.
6/1/02 16
16.32
16.4
16.47
16.5
16.72
16.52
16.5
16.7
16.61
16.6
16.47
16.09
16.04
16.2
16.08
15.95
16.55
16.64
15.96
15.9
15.85
16
16.1
15.7
15.95
15.98
15.85
15.65
15.85
16
16
16
16.25
16.3
16.61
16.35
16.55
16.45
16.5
16.26
16.22
15.94
15.95
16.02
16.27
16.25
16.1
16.37
16.95
15.7
5/31/03 15.95
1 Taxable-equivalent yield represents the yield on a taxable investment
necessary to equal the yield of the Nuveen Fund on an after-tax basis. It
is calculated using the current market yield and a federal income tax rate
of 28%. The rate shown for federal and state highlights the added value of
owning shares that are also exempt from state income taxes. It is based on
a combined federal and state income tax rate of 32.5%.
6
Nuveen Georgia Dividend Advantage Municipal Fund
Performance
Overview As of May 31, 2003
NZX
Pie Chart:
CREDIT QUALITY
AAA/U.S. Guaranteed 68%
AA 15%
A 9%
BBB 8%
PORTFOLIO STATISTICS
--------------------------------------------------
Share Price $15.59
--------------------------------------------------
Common Share Net Asset Value $15.62
--------------------------------------------------
Market Yield 5.35%
--------------------------------------------------
Taxable-Equivalent Yield
(Federal Income Tax Rate)1 7.43%
--------------------------------------------------
Taxable-Equivalent Yield
(Federal and State Income Tax Rate)1 7.93%
--------------------------------------------------
Net Assets Applicable to
Common Shares ($000) $30,576
--------------------------------------------------
Average Effective Maturity (Years) 21.13
--------------------------------------------------
Leverage-Adjusted Duration 11.06
--------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN (Inception 9/25/01)
--------------------------------------------------
ON SHARE PRICE ON NAV
--------------------------------------------------
1-Year 12.56% 18.82%
--------------------------------------------------
Since Inception 8.25% 11.55%
--------------------------------------------------
TOP FIVE SECTORS (as a % of total investments)
--------------------------------------------------
Education and Civic Organizations 19%
--------------------------------------------------
Healthcare 15%
--------------------------------------------------
Water and Sewer 14%
--------------------------------------------------
Housing/Single Family 11%
--------------------------------------------------
Utilities 10%
--------------------------------------------------
Bar Chart:
2002-2003 MONTHLY TAX-FREE DIVIDENDS PER SHARE2
Jun 0.0665
Jul 0.0665
Aug 0.0665
Sep 0.0665
Oct 0.0665
Nov 0.0665
Dec 0.0665
Jan 0.0665
Feb 0.0665
Mar 0.0695
Apr 0.0695
May 0.0695
Line Chart:
SHARE PRICE PERFORMANCE
Weekly Closing Price
Past performance is not predictive of future results.
6/1/02 14.56
14.55
14.5
14.48
14.63
14.8
14.97
14.75
15.2
15.07
15.3
15.23
15.4
15.25
15
14.94
14.86
15.22
15.6
15.25
14.63
15.25
15.15
14.9
14.6
14.8
14.55
14.5
14.25
14.78
15
14.85
14.75
14.93
15.01
14.84
14.85
14.75
14.9
15.35
15
15.15
14.69
14.73
14.73
14.66
14.87
14.95
14.99
15.59
14.6
5/31/03 14.8
1 Taxable-equivalent yield represents the yield on a taxable investment
necessary to equal the yield of the Nuveen Fund on an after-tax basis. It
is calculated using the current market yield and a federal income tax rate
of 28%. The rate shown for federal and state highlights the added value of
owning shares that are also exempt from state income taxes. It is based on
a combined federal and state income tax rate of 32.5%.
2 The Fund also paid shareholders a capital gains distribution in December
2002 of $0.1278 per share.
7
Nuveen Georgia Dividend Advantage Municipal Fund 2
Performance
Overview As of May 31, 2003
NKG
Pie Chart:
CREDIT QUALITY
AAA/U.S. Guaranteed 82%
AA 11%
A 5%
BBB 2%
PORTFOLIO STATISTICS
--------------------------------------------------
Share Price $14.98
--------------------------------------------------
Net Asset Value $15.01
--------------------------------------------------
Market Yield 5.37%
--------------------------------------------------
Taxable-Equivalent Yield
(Federal Income Tax Rate)1 7.46%
--------------------------------------------------
Taxable-Equivalent Yield
(Federal and State Income Tax Rate)1 7.96%
--------------------------------------------------
Net Assets Applicable to
Common Shares ($000) $68,325
--------------------------------------------------
Average Effective Maturity (Years) 22.55
--------------------------------------------------
Leverage-Adjusted Duration 11.54
--------------------------------------------------
CUMULATIVE TOTAL RETURN (Inception 9/25/02)
--------------------------------------------------
ON SHARE PRICE ON NAV
--------------------------------------------------
Since Inception 3.16% 8.22%
--------------------------------------------------
TOP FIVE SECTORS (as a % of total investments)
--------------------------------------------------
Tax Obligation/Limited 23%
--------------------------------------------------
Water and Sewer 20%
--------------------------------------------------
Healthcare 18%
--------------------------------------------------
Education and Civic Organizations 14%
--------------------------------------------------
Utilities 4%
--------------------------------------------------
Bar Chart:
2002-2003 MONTHLY TAX-FREE DIVIDENDS PER SHARE
Nov 0.067
Dec 0.067
Jan 0.067
Feb 0.067
Mar 0.067
Apr 0.067
May 0.067
Line Chart:
Share Price Performance
Weekly Closing Price
Past performance is not predictive of future results.
9/27/02 15
15.01
15.01
15
15.01
15.1
15.02
15
14.35
14.4
14.64
14.4
14.4
14.2
14.7
14.15
14.3
14.25
14.1
14.1
14.45
14.5
14.35
14.29
14.25
14.56
14.35
14.17
14
14.07
14.5
14.47
14.55
5/31/03 14.98
1 Taxable-equivalent yield represents the yield on a taxable investment
necessary to equal the yield of the Nuveen Fund on an after-tax basis. It
is calculated using the current market yield and a federal income tax rate
of 28%. The rate shown for federal and state highlights the added value of
owning shares that are also exempt from state income taxes. It is based on
a combined federal and state income tax rate of 32.5%.
8
Nuveen North Carolina Premium Income Municipal Fund
Performance
Overview As of May 31, 2003
NNC
Pie Chart:
CREDIT QUALITY
AAA/U.S. Guaranteed 54%
AA 24%
A 14%
BBB 8%
PORTFOLIO STATISTICS
--------------------------------------------------
Share Price $16.95
--------------------------------------------------
Common Share Net Asset Value $15.50
--------------------------------------------------
Market Yield 5.17%
--------------------------------------------------
Taxable-Equivalent Yield
(Federal Income Tax Rate)1 7.18%
--------------------------------------------------
Taxable-Equivalent Yield
(Federal and State Income Tax Rate)1 7.83%
--------------------------------------------------
Net Assets Applicable to
Common Shares ($000) $97,785
--------------------------------------------------
Average Effective Maturity (Years) 17.99
--------------------------------------------------
Leverage-Adjusted Duration 7.48
--------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN (Inception 5/20/93)
--------------------------------------------------
ON SHARE PRICE ON NAV
--------------------------------------------------
1-Year 10.27% 15.80%
--------------------------------------------------
5-Year 8.03% 7.31%
--------------------------------------------------
10-Year 6.67% 6.80%
--------------------------------------------------
TOP FIVE SECTORS (as a % of total investments)
--------------------------------------------------
Healthcare 21%
--------------------------------------------------
US Guaranteed 14%
--------------------------------------------------
Tax Obligation/Limited 10%
--------------------------------------------------
Education and Civic Organizations 10%
--------------------------------------------------
Tax Obligation/General 9%
--------------------------------------------------
Bar Chart:
2002-2003 MONTHLY TAX-FREE DIVIDENDS PER SHARE2
Jun 0.0705
Jul 0.0705
Aug 0.0705
Sep 0.0705
Oct 0.0705
Nov 0.0705
Dec 0.0715
Jan 0.0715
Feb 0.0715
Mar 0.073
Apr 0.073
May 0.073
Line Chart:
SHARE PRICE PERFORMANCE
Weekly Closing Price
Past performance is not predictive of future results.
6/1/02 16.4
16.4
16.7
16.69
16.43
16.45
16.72
16.35
16.75
16.8
16.56
16.46
16.39
16.39
16.15
15.79
15.86
15.7
15.69
14.61
14.76
14.95
15.39
15.43
15.4
15.25
15.23
15.15
15.3
15.33
15.8
15.62
15.73
15.55
15.87
16.15
16.45
16.27
16.6
16.5
16.61
16.28
16.22
16.65
16.15
16.41
16.33
16.56
16.73
5/31/03 16.95
1 Taxable-equivalent yield represents the yield on a taxable investment
necessary to equal the yield of the Nuveen Fund on an after-tax basis. It
is calculated using the current market yield and a federal income tax rate
of 28%. The rate shown for federal and state highlights the added value of
owning shares that are also exempt from state income taxes. It is based on
a combined federal and state income tax rate of 34%.
2 The Fund also paid shareholders a net ordinary income distribution in
December 2002 of $0.0031 per share.
9
Nuveen North Carolina Dividend Advantage Municipal Fund
Performance
Overview As of May 31, 2003
NRB
Pie Chart:
CREDIT QUALITY
AAA/U.S. Guaranteed 53%
AA 30%
A 10%
BBB 5%
NR 2%
PORTFOLIO STATISTICS
--------------------------------------------------
Share Price $16.45
--------------------------------------------------
Common Share Net Asset Value $15.87
--------------------------------------------------
Market Yield 5.36%
--------------------------------------------------
Taxable-Equivalent Yield
(Federal Income Tax Rate)1 7.44%
--------------------------------------------------
Taxable-Equivalent Yield
(Federal and State Income Tax Rate)1 8.12%
--------------------------------------------------
Net Assets Applicable to
Common Shares ($000) $35,591
--------------------------------------------------
Average Effective Maturity (Years) 18.73
--------------------------------------------------
Leverage-Adjusted Duration 9.18
--------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN (Inception 1/31/01)
--------------------------------------------------
ON SHARE PRICE ON NAV
--------------------------------------------------
1-Year 13.52% 17.75%
--------------------------------------------------
Since Inception 10.08% 10.80%
--------------------------------------------------
TOP FIVE SECTORS (as a % of total investments)
--------------------------------------------------
Education and Civic Organizations 19%
--------------------------------------------------
Water and Sewer 17%
--------------------------------------------------
Healthcare 14%
--------------------------------------------------
Utilities 13%
--------------------------------------------------
Tax Obligation/Limited 10%
--------------------------------------------------
Bar Chart:
2002-2003 MONTHLY TAX-FREE DIVIDENDS PER SHARE2
Jun 0.07
Jul 0.07
Aug 0.07
Sep 0.072
Oct 0.072
Nov 0.072
Dec 0.072
Jan 0.072
Feb 0.072
Mar 0.0735
Apr 0.0735
May 0.0735
Line Chart:
SHARE PRICE PERFORMANCE
Weekly Closing Price
Past performance is not predictive of future results.
6/1/02 15.2
15.9
15.65
15.5
15.38
15.32
15.37
14.89
15
15.22
15.11
15.1
15.1
15.1
15.18
15.29
15.35
15.48
15.4
14.45
14.5
15.24
15.25
15.35
15.3
15.45
15.35
15.37
15.75
15.76
15.87
15.55
15.68
15.65
15.6
15.6
15.73
15.65
15.85
15.82
15.82
15.8
15.62
15.8
15.89
16.1
16.27
16.25
16.35
16.45
15.3
5/31/03 15.45
1 Taxable-equivalent yield represents the yield on a taxable investment
necessary to equal the yield of the Nuveen Fund on an after-tax basis. It
is calculated using the current market yield and a federal income tax rate
of 28%. The rate shown for federal and state highlights the added value of
owning shares that are also exempt from state income taxes. It is based on
a combined federal and state income tax rate of 34%.
2 The Fund also paid shareholders a capital gains distribution in December
2002 of $0.1311 per share.
10
Nuveen North Carolina Dividend Advantage Municipal Fund 2
Performance
Overview As of May 31, 2003
NNO
Pie Chart:
CREDIT QUALITY
AAA/U.S. Guaranteed 62%
AA 22%
A 8%
BBB 8%
PORTFOLIO STATISTICS
--------------------------------------------------
Share Price $15.97
--------------------------------------------------
Common Share Net Asset Value $15.98
--------------------------------------------------
Market Yield 5.15%
--------------------------------------------------
Taxable-Equivalent Yield
(Federal Income Tax Rate)1 7.15%
--------------------------------------------------
Taxable-Equivalent Yield
(Federal and State Income Tax Rate)1 7.80%
--------------------------------------------------
Net Assets Applicable to
Common Shares ($000) $59,642
--------------------------------------------------
Average Effective Maturity (Years) 15.50
--------------------------------------------------
Leverage-Adjusted Duration 9.13
--------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN (Inception 11/16/01)
--------------------------------------------------
ON SHARE PRICE ON NAV
--------------------------------------------------
1-Year 14.10% 18.98%
--------------------------------------------------
Since Inception 10.11% 13.56%
--------------------------------------------------
TOP FIVE SECTORS (as a % of total investments)
--------------------------------------------------
Education and Civic Organizations 16%
--------------------------------------------------
Healthcare 15%
--------------------------------------------------
Tax Obligation/Limited 14%
--------------------------------------------------
Tax Obligation/General 13%
--------------------------------------------------
Utilities 11%
--------------------------------------------------
Bar Chart:
2002-2003 MONTHLY TAX-FREE DIVIDENDS PER SHARE2
Jun 0.0685
Jul 0.0685
Aug 0.0685
Sep 0.0685
Oct 0.0685
Nov 0.0685
Dec 0.0685
Jan 0.0685
Feb 0.0685
Mar 0.0685
Apr 0.0685
May 0.0685
Line Chart:
SHARE PRICE PERFORMANCE
Weekly Closing Price
Past performance is not predictive of future results.
6/1/02 15.2
15.9
15.65
15.5
15.38
15.32
15.37
14.89
15
15.22
15.11
15.1
15.1
15.1
15.18
15.29
15.35
15.48
15.4
14.45
14.5
15.24
15.25
15.35
15.3
15.45
15.35
15.37
15.75
15.76
15.87
15.55
15.68
15.65
15.6
15.6
15.73
15.65
15.85
15.82
15.82
15.8
15.62
15.8
15.89
16.1
16.27
16.25
16.35
5/31/03 16.45
1 Taxable-equivalent yield represents the yield on a taxable investment
necessary to equal the yield of the Nuveen Fund on an after-tax basis. It
is calculated using the current market yield and a federal income tax rate
of 28%. The rate shown for federal and state highlights the added value of
owning shares that are also exempt from state income taxes. It is based on
a combined federal and state income tax rate of 34%.
2 The Fund also paid shareholders a capital gains distribution in December
2002 of $0.1293 per share.
11
Nuveen North Carolina Dividend Advantage Municipal Fund 3
Performance
Overview As of May 31, 2003
NII
Pie Chart:
CREDIT QUALITY
AAA/U.S. Guaranteed 64%
AA 28%
A 4%
BBB 3%
NR 1%
PORTFOLIO STATISTICS
--------------------------------------------------
Share Price $15.20
--------------------------------------------------
Common Share Net Asset Value $14.96
--------------------------------------------------
Market Yield 5.29%
--------------------------------------------------
Taxable-Equivalent Yield
(Federal Income Tax Rate)1 7.35%
--------------------------------------------------
Taxable-Equivalent Yield
(Federal and State Income Tax Rate)1 8.02%
--------------------------------------------------
Net Assets Applicable to
Common Shares ($000) $58,653
--------------------------------------------------
Average Effective Maturity (Years) 19.40
--------------------------------------------------
Leverage-Adjusted Duration 9.62
--------------------------------------------------
CUMULATIVE TOTAL RETURN (Inception 9/25/02)
--------------------------------------------------
ON SHARE PRICE ON NAV
--------------------------------------------------
Since Inception 4.56% 7.86%
--------------------------------------------------
TOP FIVE SECTORS (as a % of total investments)
--------------------------------------------------
Tax Obligation/Limited 25%
--------------------------------------------------
Water and Sewer 15%
--------------------------------------------------
Utilities 12%
--------------------------------------------------
Education and Civic Organizations 11%
--------------------------------------------------
Healthcare 10%
--------------------------------------------------
Bar Chart:
2002-2003 MONTHLY TAX-FREE DIVIDENDS PER SHARE
Nov 0.067
Dec 0.067
Jan 0.067
Feb 0.067
Mar 0.067
Apr 0.067
May 0.067
Line Chart:
SHARE PRICE PERFORMANCE
Weekly Closing Price
Past performance is not predictive of future results.
9/27/02 15.01
15.03
15.2
15.05
15.01
15
15.06
15
14.6
14.6
14.94
14.65
14.84
14.81
14.9
14.8
15
14.9
14.98
14.95
14.85
14.85
14.86
14.85
14.8
14.7
14.98
14.99
14.94
15.07
15.05
15.26
15.6
5/31/03 15.2
1 Taxable-equivalent yield represents the yield on a taxable investment
necessary to equal the yield of the Nuveen Fund on an after-tax basis. It
is calculated using the current market yield and a federal income tax rate
of 28%. The rate shown for federal and state highlights the added value of
owning shares that are also exempt from state income taxes. It is based on
a combined federal and state income tax rate of 34%.
12
Report of
INDEPENDENT AUDITORS
THE BOARD OF TRUSTEES AND SHAREHOLDERS
NUVEEN GEORGIA PREMIUM INCOME MUNICIPAL FUND
NUVEEN GEORGIA DIVIDEND ADVANTAGE MUNICIPAL FUND
NUVEEN GEORGIA DIVIDEND ADVANTAGE MUNICIPAL FUND 2
NUVEEN NORTH CAROLINA PREMIUM INCOME MUNICIPAL FUND
NUVEEN NORTH CAROLINA DIVIDEND ADVANTAGE MUNICIPAL FUND
NUVEEN NORTH CAROLINA DIVIDEND ADVANTAGE MUNICIPAL FUND 2
NUVEEN NORTH CAROLINA DIVIDEND ADVANTAGE MUNICIPAL FUND 3
We have audited the accompanying statements of assets and liabilities, including
the portfolios of investments, of Nuveen Georgia Premium Income Municipal Fund,
Nuveen Georgia Dividend Advantage Municipal Fund, Nuveen Georgia Dividend
Advantage Municipal Fund 2, Nuveen North Carolina Premium Income Municipal Fund,
Nuveen North Carolina Dividend Advantage Municipal Fund, Nuveen North Carolina
Dividend Advantage Municipal Fund 2 and Nuveen North Carolina Dividend Advantage
Municipal Fund 3 as of May 31, 2003, and the related statements of operations,
changes in net assets and the financial highlights for the periods indicated
therein. These financial statements and financial highlights are the
responsibility of the Funds' management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our procedures included
confirmation of securities owned as of May 31, 2003, by correspondence with the
custodian and brokers or by other appropriate auditing procedures where replies
from brokers were not received. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Nuveen
Georgia Premium Income Municipal Fund, Nuveen Georgia Dividend Advantage
Municipal Fund, Nuveen Georgia Dividend Advantage Municipal Fund 2, Nuveen North
Carolina Premium Income Municipal Fund, Nuveen North Carolina Dividend Advantage
Municipal Fund, Nuveen North Carolina Dividend Advantage Municipal Fund 2 and
Nuveen North Carolina Dividend Advantage Municipal Fund 3 at May 31, 2003, and
the results of their operations, changes in their net assets and their financial
highlights for the periods indicated therein in conformity with accounting
principles generally accepted in the United States.
Ernst & Young LLP
CHICAGO, ILLINOIS
JULY 11, 2003
13
Nuveen Georgia Premium Income Municipal Fund (NPG)
Portfolio of
Investments May 31, 2003
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES - 6.6%
$ 2,000 Cartersville Development Authority, Georgia, Sewerage 5/07 at 101.00 A+ $ 2,125,780
Facilities Revenue Refunding Bonds, Anheuser-Busch Project,
Series 1997, 6.125%, 5/01/27 (Alternative Minimum Tax)
2,000 The Children's Trust Fund, Puerto Rico, Tobacco Settlement 5/12 at 100.00 A- 1,702,460
Asset-Backed Bonds, Series 2002 Refunding, 5.500%, 5/15/39
------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 13.9%
3,000 Athens Housing Authority, Georgia, Student Housing Lease 12/12 at 100.00 Aaa 3,156,420
Revenue Bonds, UGAREF East Campus Housing LLC Project,
Series 2002, 5.000%, 12/01/33 - AMBAC Insured
Atlanta Urban Residential Finance Authority, Georgia, Dormitory
Facility Revenue Refunding Bonds, Morehouse College Project,
Series 1995:
1,210 5.750%, 12/01/20 - MBIA Insured 12/05 at 102.00 AAA 1,347,057
1,375 5.750%, 12/01/25 - MBIA Insured 12/05 at 102.00 AAA 1,527,144
395 DeKalb County Development Authority, Georgia, Revenue 10/04 at 102.00 AA 426,162
Bonds, Emory University Project, Series 1994-A,
6.000%, 10/01/14
1,550 Private Colleges and Universities Authority, Revenue Bonds, 6/03 at 102.00 AA 1,585,883
Georgia, Agnes Scott College Project, Series 1993,
5.625%, 6/01/23
------------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE - 32.2%
3,000 Albany-Dougherty County Hospital Authority, Georgia, 9/03 at 102.00 AAA 3,091,410
Revenue Bonds, Phoebe Putney Memorial Hospital,
Series 1993, 5.700%, 9/01/13 - AMBAC Insured
2,300 Chatham County Hospital Authority, Savannah, Georgia, 7/11 at 101.00 A- 2,514,567
Hospital Revenue Improvement Bonds, Memorial Health
University Medical Center, Inc., Series 2001A, 6.125%, 1/01/24
2,000 Clarke County Hospital Authority, Georgia, Hospital Revenue 1/12 at 101.00 AAA 2,094,000
Certificates, Athens Regional Medical Center, Series 2002,
5.125%, 1/01/32 - MBIA Insured
3,000 Floyd County Hospital Authority, Georgia, Revenue Anticipation 7/12 at 101.00 Aaa 3,175,800
Certificates, Floyd Medical Center Project, Series 2002,
5.200%, 7/01/32 - MBIA Insured
1,765 Gainesville and Hall Counties Hospital Authority, Georgia, 10/05 at 102.00 AAA 1,957,261
Revenue Anticipation Certificates, Northeast Georgia
" Healthcare System Inc. Project, Series 1995,
6.000%, 10/01/25 - MBIA Insured
1,750 Gainesville and Hall Counties Hospital Authority, Georgia, 5/11 at 100.00 A- 1,806,245
Revenue Anticipation Certificates, Northeast Georgia
Healthcare System Inc. Project, Series 2001, 5.500%, 5/15/31
3,750 Gwinnett County Hospital Authority, Georgia, Revenue 2/12 at 102.00 AAA 4,025,475
Anticipation Certificates, Gwinnett Hospital System Inc.,
Series 1997B, 5.300%, 9/01/27 - MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 21.5%
1,145 Clayton County Housing Authority, Georgia, Multifamily 12/05 at 102.00 AAA 1,201,540
Housing Revenue Bonds, Advantages Project, Series 1995,
5.800%, 12/01/20
3,400 DeKalb County Housing Authority, Georgia, Multifamily 1/05 at 102.00 AAA 3,572,754
Housing Revenue Bonds, Lakes at Indian Creek Apartments
Project, Series 1994, 7.150%, 1/01/25 (Alternative
Minimum Tax) - FSA Insured
935 Decatur Housing Authority, Georgia, Mortgage Revenue 7/03 at 101.00 AAA 951,017
Refunding Bonds, FHA-Insured Mortgage Loan, Park Trace
Apartments Section 8 Assisted Project, Series 1992A, 6.450%,
7/01/25 - MBIA Insured
2,000 Lawrenceville Housing Authority, Georgia, Multifamily 12/10 at 100.00 AAA 2,108,020
Housing Senior Revenue Bonds, Brisben Greens of Hillcrest II
Project, Series 2000A-1, 5.800%, 12/01/33 (Alternative
Minimum Tax) - AMBAC Insured
3,000 Macon-Bibb County Urban Development Authority, Georgia, 1/04 at 103.00 AAA 3,102,390
Multifamily Housing Revenue Refunding Bonds, Series 1997A,
5.550%, 1/01/24 - MBIA Insured
1,500 Marietta Housing Authority, Georgia, Multifamily Housing 10/06 at 102.00 AAA 1,564,560
Revenue Bonds, GNMA Collateralized, Country Oaks
Apartments, Series 1996, 6.150%, 10/20/26 (Alternative
Minimum Tax)
14
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 7.3%
$ 165 Fulton County Housing Authority, Georgia, Single Family 3/05 at 102.00 AAA $ 171,346
Mortgage Revenue Bonds, GNMA Mortgage-Backed
Securities Program, Series 1995A, 6.550%, 3/01/18
(Alternative Minimum Tax)
2,995 Georgia Housing and Finance Authority, Single Family 12/10 at 100.00 AAA 3,138,940
Mortgage Bonds, Series 2001A, Subseries A-2,
5.700%, 12/01/31 (Alternative Minimum Tax)
900 Georgia Housing and Finance Agency, Single Family Mortgage 12/11 at 100.00 AAA 951,858
Bonds, Series 2002B-2, 5.350%, 12/01/22 (Alternatives
Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
INDUSTRIALS - 0.9%
500 Savannah Economic Development Authority, Georgia, 7/12 at 100.00 AAA 534,025
Revenue Bonds, GTREP Project, Series 2002,
5.000%, 7/01/22 - MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
MATERIALS - 6.4%
2,500 Effingham County Industrial Development Authority, 6/11 at 101.00 BB+ 2,105,125
Georgia, Pollution Control Revenue Refunding Bonds,
Georgia-Pacific Project, Series 2001, 6.500%, 6/01/31
1,500 Richmond County Development Authority, Georgia, 2/11 at 101.00 BBB 1,587,090
Environmental Improvement Revenue Bonds, International
Paper Company Project, Series 2001A, 6.250%, 2/01/25
(Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 9.9%
2,500 Forsyth County School District, Georgia, General 2/10 at 102.00 Aa2 2,900,800
Obligation Bonds, Series 1999, 5.750%, 2/01/19
2,500 Gwinnett County School District, Georgia, General 2/13 at 100.00 Aaa 2,843,725
Obligation Bonds, Series 2002 Refunding, 5.000%, 2/01/15
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 13.6%
3,000 Cobb-Marietta Coliseum and Exhibit Hall Authority, Georgia, 10/19 at 100.00 AAA 3,599,130
Revenue Refunding Bonds, Series 1993, 5.625%, 10/01/26 -
MBIA Insured
2,600 Macon-Bibb County Urban Development Authority, Georgia, 8/12 at 101.00 AA 2,999,464
Revenue Refunding Bonds, Public Facilities Projects,
Series 2002A, 5.375%, 8/01/17
1,000 Metropolitan Atlanta Rapid Transit Authority, Georgia, No Opt. Call AAA 1,293,270
Sales Tax Revenue Refunding Bonds, Series 1992P,
6.250%, 7/01/20 - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 2.1%
1,000 Atlanta, Georgia, Airport Facilities Revenue Refunding Bonds, No Opt. Call AAA 1,205,280
Series 1994A, 6.500%, 1/01/09 - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 2.3%
1,160 DeKalb County Development Authority, Georgia, Revenue 10/04 at 102.00 AA*** 1,258,438
Bonds, Emory University Project, Series 1994-A,
6.000%, 10/01/14 (Pre-refunded to 10/01/04)
85 Georgia Municipal Electric Authority, Project One Special No Opt. Call A+*** 102,896
Obligation Bonds, Fifth Crossover, Series 1998,
6.400%, 1/01/09
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 7.2%
885 Coweta County Development Authority, Georgia, Revenue 1/13 at 100.00 Aaa 995,970
Bonds, Newnan Water, Sewer and Light Commission Project,
Series 2002, 5.250%, 1/01/18 - FGIC Insured
1,000 Georgia Municipal Electric Authority, Power Revenue Bonds, No Opt. Call AAA 1,194,030
Series 1993Z, 5.500%, 1/01/20 - FGIC Insured
1,665 Georgia Municipal Electric Authority, Project One Special No Opt. Call A+ 1,971,493
Obligation Bonds, Fifth Crossover, Series 1998,
6.400%, 1/01/09
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 21.0%
Augusta, Georgia, Water and Sewerage Revenue Bonds,
Series 2002:
500 5.000%, 10/01/16 - FSA Insured 10/12 at 100.00 AAA 559,480
1,990 5.000%, 10/01/17 - FSA Insured 10/12 at 100.00 AAA 2,209,995
3,500 Coweta County Water and Sewer Authority, Georgia, Revenue 6/11 at 102.00 Aaa 3,799,040
Bonds, Series 2001, 5.250%, 6/01/26 - AMBAC Insured
2,500 DeKalb County, Georgia, Water and Sewerage Bonds, 10/10 at 101.00 AA 2,646,300
Series 2000, 5.125%, 10/01/31
15
Nuveen Georgia Premium Income Municipal Fund (NPG) (continued)
Portfolio of Investments May 31, 2003
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER (continued)
$ 1,685 Harris County, Georgia, Water System Revenue Bonds, 12/12 at 100.00 Aaa $ 1,734,623
Series 2002, 4.750%, 12/01/27 - AMBAC Insured
1,000 Milledgeville, Georgia, Water and Sewerage Revenue Refunding No Opt. Call AAA 1,254,438
Bonds, Series 1996, 6.000%, 12/01/21 - FSA Insured
------------------------------------------------------------------------------------------------------------------------------------
$ 78,205 Total Long-Term Investments (cost $78,151,371) - 144.9% 84,092,701
=============-----------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 3.0% 1,757,284
--------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (47.9)% (27,800,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $58,049,985
====================================================================================================================
(1) All percentages shown in the Portfolio of Investments
are based on net assets applicable to Common shares.
* Optional Call Provisions (not covered by the report of
independent auditors): Dates (month and year) and
prices of the earliest optional call or redemption.
There may be other call provisions at varying prices at
later dates.
** Ratings (not covered by the report of independent
auditors): Using the higher of Standard & Poor's or
Moody's rating.
*** Securities are backed by an escrow or trust containing
sufficient U.S. Government or U.S. Government agency
securities which ensures the timely payment of
principal and interest. Such securities are normally
considered to be equivalent to AAA rated securities.
See accompanying notes to financial statements.
16
Nuveen Georgia Dividend Advantage Municipal Fund (NZX)
Portfolio of
Investments May 31, 2003
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
CONSUMER DISCRETIONARY - 2.6%
$ 750 DeKalb County Development Authority, Georgia, Pollution 12/12 at 101.00 A3 $ 780,833
Control Revenue Bonds, General Motors Corporation Projects,
Series 2002 Refunding, 6.000%, 3/15/21
------------------------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES - 6.3%
1,000 Cartersville Development Authority, Georgia, Waste and 2/12 at 100.00 A+ 1,073,070
Wastewater Facilities Revenue Bonds, Anheuser Busch
Project, Series 2002 Refunding, 5.950%, 2/01/32
(Alternative Minimum Tax)
1,000 The Children's Trust Fund, Puerto Rico, Tobacco Settlement 5/12 at 100.00 A- 851,230
Asset-Backed Bonds, Series 2002 Refunding, 5.500%, 5/15/39
------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 27.3%
1,000 Athens Housing Authority, Georgia, Student Housing Lease 12/12 at 100.00 Aaa 1,100,090
Revenue Bonds, UGAREF East Campus Housing LLC Project,
Series 2002, 5.250%, 12/01/21 - AMBAC Insured
1,200 Atlanta Development Authority, Georgia, Revenue Bonds, 1/12 at 100.00 AAA 1,271,904
Yamacraw Design Center Project, Series 2001A,
5.125%, 1/01/27 - MBIA Insured
1,620 Bulloch County Development Authority, Georgia, 8/12 at 100.00 Aaa 1,754,233
Student Housing Lease Revenue Bonds, Georgia Southern
University Project, Series 2002, 5.000%, 8/01/20 -
AMBAC Insured
1,485 Fulton County Development Authority, Georgia, Georgia 4/12 at 100.00 AAA 1,604,305
Tech Athletic Association, Revenue Bonds, Series 2001,
5.000%, 10/01/20 - AMBAC Insured
1,225 Private Colleges and University Authority, Georgia, Emory 9/11 at 100.00 AA 1,285,270
University Revenue Bonds, Series 2001A, 5.000%, 9/01/31
1,250 Private Colleges and Universities Authority, Georgia, 10/11 at 102.00 Baa1 1,353,738
Mercer University Project, Revenue Bonds, Series 2001,
5.750%, 10/01/31
------------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE - 21.4%
1,000 Clarke County Hospital Authority, Georgia, Hospital Revenue 1/12 at 101.00 AAA 1,108,870
Certificates, Athens Regional Medical Center, Series 2002,
5.375%, 1/01/19 - MBIA Insured
1,250 Gainesville and Hall County Hospital Authority, Georgia, 5/11 at 100.00 A- 1,290,175
Revenue Anticipation Certificates, Northeast Georgia Health
System Inc. Project, Series 2001, 5.500%, 5/15/31
1,900 Gwinnett County Hospital Authority, Georgia, Revenue 2/12 at 102.00 AAA 2,039,574
Anticipation Certificates, Gwinnett Hospital System Inc.,
Series 1997B, 5.300%, 9/01/27 - MBIA Insured
2,000 Valdosta and Lowndes Counties Hospital Authority, 10/12 at 101.00 AAA 2,133,000
Georgia, South Georgia Medical Center Project, Revenue
Certificates, Series 2002, 5.250%, 10/01/27 - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 12.0%
1,000 DeKalb County Housing Authority, Georgia, Multifamily 8/11 at 103.00 Aaa 1,055,340
Housing Revenue Bonds, GNMA Collateralized, Castaways
Apartments Project, Series 2001A, 5.400%, 2/20/29
1,000 DeKalb County Housing Authority, Georgia, Multifamily 12/11 at 103.00 Aaa 1,066,540
Housing Revenue Bonds, GNMA Collateralized, Snapwoods
Apartments Project, Series 2001A, 5.500%, 12/20/32
1,400 Savannah Housing Authority, Georgia, Multifamily Housing 8/16 at 100.00 Aaa 1,562,064
Revenue Refunding Bonds, Chatham Gardens Project,
Series 2001, 5.625%, 8/01/31 (Alternative Minimum Tax)
(Mandatory put 2/01/19)
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 16.1%
2,000 Georgia Housing and Finance Authority, Single Family 12/11 at 100.00 AAA 2,119,680
Mortgage Bonds, Series 2002A, Subseries A-2,
5.450%, 12/01/22 (Alternative Minimum Tax)
650 Georgia Housing and Finance Authority, Single Family 12/11 at 100.00 AAA 687,453
Mortgage Bonds, Series 2002B-2, 5.350%, 12/01/22
(Alternative Minimum Tax)
2,025 Georgia Housing and Finance Authority, Single Family 12/12 at 100.00 AAA 2,106,547
Mortgage Bonds, Series 2002C-2, 5.300%, 6/01/33
(Alternative Minimum Tax)
17
Nuveen Georgia Dividend Advantage Municipal Fund (NZX) (continued)
Portfolio of Investments May 31, 2003
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
INDUSTRIALS - 2.7%
$ 750 Savannah Economic Development Authority, Georgia, Revenue 7/12 at 100.00 AAA $ 817,080
Bonds, GTREP Project, Series 2002, 5.000%, 7/01/19 -
MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
MATERIALS - 3.4%
1,000 Richmond County Development Authority, Georgia, Environmental 2/12 at 101.00 BBB 1,029,460
Improvement Revenue Refunding Bonds, International Paper
Company Project, Series 2002A, 6.000%, 2/01/25 (Alternative
Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 7.3%
2,000 Georgia, General Obligation Bonds, Series 2002D, 5.000%, 8/01/18 8/12 at 100.00 AAA 2,217,760
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 9.3%
1,525 Macon-Bibb County Urban Development Authority, Georgia, 8/12 at 101.00 AA 1,744,219
Public Facilities Projects, Revenue Refunding Bonds,
Series 2002A, 5.000%, 8/01/14
1,000 Rockdale County Water and Sewerage Authority, Georgia, 1/10 at 101.00 AAA 1,089,320
Revenue Bonds, Series 1999A, 5.375%, 7/01/29 -
MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 3.7%
1,000 Atlanta, Georgia, Airport General Revenue Refunding Bonds, 1/10 at 101.00 AAA 1,130,230
Series 2000A, 5.400%, 1/01/15 - FGIC Insured
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 14.2%
1,500 Coweta County Development Authority, Georgia, Revenue 1/13 at 100.00 Aaa 1,688,085
Bonds, Newnan Water, Sewer and Light Commission Project,
Series 2002, 5.250%, 1/01/18 - FGIC Insured
1,250 Georgia Municipal Electric Authority, Revenue Bonds, 11/12 at 100.00 AAA 1,381,400
Combustion Turbine Project, Series 2002A, 5.250%, 11/01/20 -
MBIA Insured
1,200 Summerville, Georgia, Combined Public Utility Revenue 1/12 at 101.00 Baa3 1,270,164
Refunding and Improvement Bonds, Series 2002,
5.750%, 1/01/26
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 20.1%
2,065 Augusta, Georgia, Water and Sewerage Revenue Bonds, 10/12 at 100.00 AAA 2,310,652
Series 2002, 5.000%, 10/01/16 - FSA Insured
2,200 DeKalb County, Georgia, Water and Sewerage Bonds, 10/10 at 101.00 AA 2,328,744
Series 2000, 5.125%, 10/01/31
1,395 Macon Water Authority, Georgia, Water and Sewer Revenue 10/11 at 101.00 AA- 1,498,787
Bonds, Series 2001B, 5.000%, 10/01/21
------------------------------------------------------------------------------------------------------------------------------------
$ 41,640 Total Long-Term Investments (cost $42,189,306) - 146.4% 44,749,817
=============-----------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 2.7% 826,673
--------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (49.1)% (15,000,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $30,576,490
====================================================================================================================
(1) All percentages shown in the Portfolio of Investments
are based on net assets applicable to Common shares.
* Optional Call Provisions (not covered by the report of
independent auditors): Dates (month and year) and
prices of the earliest optional call or redemption.
There may be other call provisions at varying prices at
later dates.
** Ratings (not covered by the report of independent
auditors): Using the higher of Standard & Poor's or
Moody's rating.
See accompanying notes to financial statements.
18
Nuveen Georgia Dividend Advantage Municipal Fund 2 (NKG)
Portfolio of
Investments May 31, 2003
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
CONSUMER DISCRETIONARY - 2.7%
$ 1,750 DeKalb County Development Authority, Georgia, Pollution 12/12 at 101.00 A3 $ 1,821,943
Control Revenue Refunding Bonds, General Motors Corporation
Projects, Series 2002 Refunding, 6.000%, 3/15/21
------------------------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES - 2.5%
2,000 The Children's Trust Fund, Puerto Rico, Tobacco Settlement 5/12 at 100.00 A- 1,702,460
Asset-Backed Bonds, Series 2002 Refunding, 5.500%, 5/15/39
------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 19.6%
Athens-Clarke County Unified Government Development Authority,
Georgia, Educational Facilities Revenue Bonds, UGAREF CCRC
Building LLC Project, Series 2002:
1,225 5.000%, 12/15/18 - AMBAC Insured 12/12 at 100.00 AAA 1,349,436
1,240 5.000%, 12/15/19 - AMBAC Insured 12/12 at 100.00 AAA 1,355,543
Athens Housing Authority, Georgia, Student Housing Lease Revenue
Bonds, UGAREF East Campus Housing LLC Project, Series 2002:
3,500 5.000%, 12/01/27 - AMBAC Insured 12/12 at 100.00 Aaa 3,691,415
3,000 5.000%, 12/01/33 - AMBAC Insured 12/12 at 100.00 Aaa 3,156,420
1,050 Fulton County Development Authority, Georgia, TUFF 2/12 at 100.00 AAA 1,101,345
Morehouse Project, Series 2002A, 5.000%, 2/01/34 -
AMBAC Insured
1,315 Private Colleges and University Authority, Georgia, Emory 9/11 at 100.00 AA 1,391,296
University Revenue Bonds, Series 2001A, 5.125%, 9/01/33
1,250 Private Colleges and Universities Authority, Georgia, Mercer 10/11 at 102.00 Baa1 1,353,738
University Project, Revenue Bonds, Series 2001,
5.750%, 10/01/31
------------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE - 25.6%
2,000 Clarke County Hospital Authority, Georgia, Hospital Revenue 1/12 at 101.00 AAA 2,094,000
Certificates, Athens Regional Medical Center, Series 2002,
5.125%, 1/01/32 - MBIA Insured
Floyd County Hospital Authority, Georgia, Revenue Anticipation
Certificates, Floyd Medical Center Project, Series 2002:
1,480 5.000%, 7/01/22 - MBIA Insured 7/12 at 101.00 Aaa 1,565,529
1,000 5.200%, 7/01/32 - MBIA Insured 7/12 at 101.00 Aaa 1,058,600
1,250 Gainesville and Hall County Hospital Authority, Georgia, 5/11 at 100.00 A- 1,290,175
Revenue Anticipation Certificates, Northeast Georgia Health
System Inc. Project, Series 2001, 5.500%, 5/15/31
3,000 Glynn-Brunswick Memorial Hospital Authority, Georgia, 8/06 at 102.00 AAA 3,333,540
Revenue Anticipation Certificates, Southeast Georgia Health
Systems Project, Series 1996, 5.250%, 8/01/13 - MBIA Insured
Newnan Hospital Authority, Georgia, Revenue Anticipation
Certificates, Newnan Hospital Inc., Series 2002:
2,260 5.500%, 1/01/19 - MBIA Insured 1/13 at 100.00 Aaa 2,571,044
3,020 5.500%, 1/01/20 - MBIA Insured 1/13 at 100.00 Aaa 3,414,895
1,945 Tift County Hospital Authority, Georgia, Revenue Anticipation 12/12 at 101.00 Aaa 2,135,221
Bonds, Tift Regional Medical Center, Series 2002,
5.250%, 12/01/19 - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 4.5%
Savannah Economic Development Authority, Georgia, Multifamily
Housing Revenue Bonds, Snap I-II-III Apartments, GNMA
Collateral, Series 2002A:
500 5.150%, 11/20/22 (Alternative Minimum Tax) 11/12 at 102.00 AAA 521,485
1,000 5.200%, 11/20/27 (Alternative Minimum Tax) 11/12 at 102.00 AAA 1,032,640
1,500 5.250%, 11/20/32 (Alternative Minimum Tax) 11/12 at 102.00 AAA 1,549,620
19
Nuveen Georgia Dividend Advantage Municipal Fund 2 (NKG) (continued)
Portfolio of Investments May 31, 2003
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 6.3%
$ 2,425 Georgia Housing and Finance Authority, Single Family Mortgage 6/11 at 100.00 AAA $ 2,523,358
Bonds, 2001 Series B, Subseries B-2, 5.400%, 12/01/31
(Alternative Minimum Tax)
1,700 Georgia Housing and Finance Authority, Single Family 12/12 at 100.00 AAA 1,786,479
Mortgage Bonds, 2002 Series C-2, 5.100%, 12/01/22
(Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
MATERIALS - 1.5%
1,000 Richmond County Development Authority, Georgia, 2/11 at 101.00 BBB 1,058,060
Environmental Improvement Revenue Bonds, International
Paper Company Project, Series 2001A, 6.250%, 2/01/25
(Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 6.0%
750 Georgia, General Obligation Bonds, Series 1998D, No Opt. Call AAA 893,408
5.250%, 10/01/15
Oconee County, Georgia, General Obligation Bonds,
Series 2003, Recreation Project:
1,410 5.500%, 1/01/23 - AMBAC Insured 1/13 at 101.00 Aaa 1,590,833
1,470 5.250%, 1/01/26 - AMBAC Insured 1/13 at 101.00 Aaa 1,603,623
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 34.0%
1,405 Clayton County Development Authority, Georgia, Revenue 7/12 at 100.00 AAA 1,543,814
Bonds, TUFF Archives LLC Project, Series 2001A,
5.250%, 7/01/21 - MBIA Insured
4,000 Forsyth County Water and Sewer Authority, Georgia, Revenue 4/13 at 100.00 AA 4,230,640
Bonds, Series 2002, 5.000%, 4/01/32
1,620 Georgia Local Government, Certificates of Participation, No Opt. Call AAA 1,720,991
Series 1998A, 4.750%, 6/01/28 - MBIA Insured
750 Georgia Municipal Association Inc., Certificates of Participation, 1/12 at 101.00 AAA 815,963
City of Atlanta Court Project, Series 2002, 5.125%, 12/01/21 -
AMBAC Insured
2,500 Metropolitan Atlanta Rapid Transit Authority, Georgia, Sales No Opt. Call AAA 3,233,175
Tax Revenue Refunding Bonds, Series 1992P, 6.250%, 7/01/20 -
AMBAC Insured
2,000 Puerto Rico Highway and Transportation Authority, Highway 7/16 at 100.00 AAA 2,304,140
Revenue Bonds, Series 1996Y, 5.500%, 7/01/36 - FSA Insured
5,000 Puerto Rico Public Buildings Authority, Guaranteed Government No Opt. Call AAA 5,788,400
Facilities Revenue Bonds, Series 2002F Refunding,
5.250%, 7/01/21 - CIFG Insured
Puerto Rico Municipal Finance Agency, Series 2002A:
800 5.250%, 8/01/21 - FSA Insured 8/12 at 100.00 AAA 888,080
2,500 5.000%, 8/01/27 - FSA Insured 8/12 at 100.00 AAA 2,653,300
------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 5.9%
3,650 Atlanta, Georgia, Airport General Revenue Refunding Bonds, 1/10 at 101.00 AAA 4,047,485
Series 2000A, 5.500%, 1/01/21 - FGIC Insured
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 0.9%
525 Atlanta, Georgia, Water and Wastewater Revenue Bonds, 5/09 at 101.00 AAA 606,627
Series 1999A, 5.000%, 11/01/38 (Pre-refunded to 5/01/09) -
FGIC Insured
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 6.4%
1,000 Elberton Combined Utility System, Georgia, Revenue Refunding 1/12 at 100.00 Aaa 1,064,920
and Improvement Bonds, Series 2001, 5.000%, 1/01/22 -
AMBAC Insured
2,000 Georgia Municipal Electric Authority, General Power Revenue 1/13 at 100.00 AAA 2,214,120
Bonds, Series 2002A, 5.000%, 1/01/17 - FSA Insured
1,000 Development Authority of Monroe County, Georgia, Pollution No Opt. Call AAA 1,094,920
Control Revenue Bonds, Georgia Power Company Scherer
Plant Project, Series 2001, 4.200%, 1/01/12 (Mandatory
put 12/01/08) - AMBAC Insured
20
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 28.9%
$ 3,000 Atlanta, Georgia, Water and Wastewater Revenue Bonds, 5/12 at 100.00 AAA $ 3,137,130
Series 2001A, 5.000%, 11/01/39 - MBIA Insured
Augusta, Georgia, Water and Sewerage Revenue Bonds,
Series 2002:
1,000 5.250%, 10/01/22 - FSA Insured 10/12 at 100.00 AAA 1,097,760
3,500 5.000%, 10/01/27 - FSA Insured 10/12 at 100.00 AAA 3,711,435
DeKalb County, Georgia, Water and Sewerage Bonds,
Series 2000:
2,500 5.125%, 10/01/31 10/10 at 101.00 AA 2,646,300
2,500 5.375%, 10/01/35 10/10 at 101.00 AA 2,738,075
2,000 Delaware County Industrial Development Authority, 9/13 at 100.00 AAA 2,073,720
Pennsylvania, Water Facilities Revenue Bonds, Pennsylvania
Suburban Water Company Project, Series 2002A,
5.150%, 9/01/32 (Alternative Minimum Tax) - AMBAC Insured
950 Fulton County, Georgia, Water and Sewerage Revenue Bonds, 7/08 at 101.00 AAA 1,042,150
Series 1998, 5.000%, 1/01/16 - FGIC Insured
3,100 Harris County, Georgia, Water System Revenue Bonds, 12/12 at 100.00 Aaa 3,324,066
Series 2002, 5.000%, 12/01/22 - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
$ 91,340 Total Long-Term Investments (cost $94,773,992) - 144.8% 98,923,317
=============-----------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 3.5% 2,401,764
--------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (48.3)% (33,000,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $68,325,081
====================================================================================================================
(1) All percentages shown in the Portfolio of Investments
are based on net assets applicable to Common shares.
* Optional Call Provisions (not covered by the report of
independent auditors): Dates (month and year) and
prices of the earliest optional call or redemption.
There may be other call provisions at varying prices at
later dates.
** Ratings (not covered by the report of independent
auditors): Using the higher of Standard & Poor's or
Moody's rating.
See accompanying notes to financial statements.
21
Nuveen North Carolina Premium Income Municipal Fund (NNC)
Portfolio of
Investments May 31, 2003
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 14.1%
$ 1,050 North Carolina Capital Facilities Financing Agency, Educational 4/13 at 100.00 AAA $ 1,102,794
Facilities Revenue Bonds, Johnson and Wales University
Project, Series 2003A, 5.000%, 4/01/33 - XLCA Insured
North Carolina State Education Assistance Authority, Guaranteed
Student Loan Subordinate Lien Revenue Bonds, Series 1995A:
1,000 6.050%, 7/01/10 (Alternative Minimum Tax) 7/05 at 102.00 A2 1,054,920
2,400 6.300%, 7/01/15 (Alternative Minimum Tax) 7/05 at 102.00 A2 2,521,368
5,875 North Carolina State Education Assistance Authority, 7/06 at 102.00 A2 6,245,008
Guaranteed Student Loan Subordinate Lien Revenue Bonds,
Series 1996, 6.350%, 7/01/16 (Alternative Minimum Tax)
1,000 University of North Carolina System, Pool Revenue Refunding 10/12 at 100.00 AAA 1,112,370
Bonds, Series 2002A, 5.375%, 4/01/22 - AMBAC Insured
1,675 University of North Carolina at Wilmington, General Revenue 1/12 at 101.00 Aaa 1,798,247
Bonds, Series 2002A, 5.000%, 1/01/23 - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE - 30.7%
5,630 Charlotte-Mecklenburg Hospital Authority, North Carolina, 1/11 at 101.00 AA 5,758,364
Healthcare System Revenue Bonds, DBA Carolinas Healthcare
System, Series 2001A, 5.000%, 1/15/31
North Carolina Medical Care Commission, Healthcare Facilities
Revenue Bonds, Union Regional Medical Center Project, Series
2002A:
1,000 5.500%, 1/01/19 1/12 at 100.00 A 1,070,890
550 5.500%, 1/01/20 1/12 at 100.00 A 585,767
1,750 5.375%, 1/01/32 1/12 at 100.00 A 1,813,823
2,000 North Carolina Medical Care Commission, Healthcare 10/09 at 101.00 A- 2,191,300
Facilities Revenue Bonds, Stanly Memorial Hospital Project,
Series 1999, 6.375%, 10/01/29
3,250 North Carolina Medical Care Commission, Healthcare Facilities 10/11 at 101.00 AAA 3,421,958
Revenue Bonds, WakeMed Project, Series 2001,
5.000%, 10/01/32 - AMBAC Insured
3,000 North Carolina Medical Care Commission, Hospital Revenue 11/03 at 101.00 AA- 3,038,580
Refunding Bonds, Carolina Medicorp Project, Series 1992,
5.500%, 5/01/15
3,615 North Carolina Medical Care Commission, Hospital Revenue 10/08 at 101.00 AA 3,622,555
Bonds, FirstHealth of the Carolinas Project, Series 1998,
4.750%, 10/01/26
3,000 North Carolina Medical Care Commission, Hospital Revenue 6/12 at 101.00 A 3,141,840
Bonds, Southeastern Regional Medical Center, Series 2002,
5.375%, 6/01/32
5,000 North Carolina Medical Care Commission, Health System 10/11 at 101.00 AA 5,237,150
Revenue Bonds, Mission-St.Joseph Health System,
Series 2001, 5.250%, 10/01/31
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 8.6%
1,000 Asheville Housing Authority, North Carolina, Multifamily 11/07 at 102.00 AAA 1,037,100
Housing Revenue Bonds, GNMA Collateralized, Woodridge
Apartments, Series 1997, 5.800%, 11/20/39 (Alternative
Minimum Tax)
1,000 Charlotte, North Carolina, Mortgage Revenue Refunding 7/03 at 105.00 AAA 1,048,340
Bonds, FHA-Insured Mortgage Loan, Tryon Hills Apartments
Project, Series 1993A, 5.875%, 1/01/25 - MBIA Insured
3,000 Mecklenburg County, North Carolina, Multifamily Housing 1/12 at 102.00 AAA 3,216,930
Revenue Bonds, Sycamore Green Apartments, Series 2001,
5.500%, 1/15/35 (Alternative Minimum Tax) - FGIC Insured
2,290 Mecklenburg County, North Carolina, Multifamily Housing 7/13 at 105.00 AAA 2,414,965
Revenue Bonds, Little Rock Apartments, FNMA Enhanced,
Series 2003, 5.375%, 1/01/36 (Alternative Minimum Tax)
(WI, settling 6/02/03)
North Carolina Housing Finance Agency, Multifamily Revenue
Bonds, FHA-Insured Mortgage Loan Resolution, Series 1993:
280 5.800%, 7/01/14 7/03 at 102.00 AA 283,660
435 5.900%, 7/01/26 7/03 at 102.00 AA 443,021
22
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 12.7%
$ 685 North Carolina Housing Finance Agency, Single Family Revenue 3/04 at 102.00 AA $ 706,091
Bonds, Series 1994X, 6.700%, 9/01/26 (Alternative Minimum Tax)
6,310 North Carolina Housing Finance Agency, Home Ownership 7/09 at 100.00 AA 6,734,789
Revenue Bonds, Series 1999-6A, 6.200%, 1/01/29 (Alternative
Minimum Tax)
3,235 North Carolina Housing Finance Agency, Single Family Revenue 3/06 at 102.00 AA 3,390,895
Bonds, Series 1996HH, 1998 Trust Agreement,
6.300%, 3/01/26 (Alternative Minimum Tax)
1,485 North Carolina Housing Finance Agency, Home Ownership 7/10 at 100.00 AAA 1,539,366
Program Bonds, Series 2001-10A, 1998 Trust Agreement,
5.400%, 7/01/32 (Alternative Minimum Tax) - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
MATERIALS - 4.3%
2,100 Haywood County Industrial Facilities and Pollution Control 12/05 at 102.00 BBB 2,132,802
Financing Authority, North Carolina, Environmental
Improvement Revenue Bonds, Champion International
Corporation Project, Series 1995A, 5.750%, 12/01/25
(Alternative Minimum Tax)
2,000 Haywood County Industrial Facilities and Pollution Control 3/06 at 102.00 Baa2 2,069,400
Financing Authority, North Carolina, Pollution Control Revenue
Refunding Bonds, Champion International Corporation Project,
Series 1995, 6.000%, 3/01/20
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 13.3%
1,890 Craven County, North Carolina, General Obligation Bonds, 5/12 at 101.00 AAA 2,051,992
Series 2002, 5.000%, 5/01/21 - AMBAC Insured
4,285 Durham County, North Carolina, General Obligation Public 4/12 at 100.00 AAA 4,806,056
Improvement Bonds, Series 2002B, 5.000%, 4/01/16
1,000 Johnston County, North Carolina, General Obligation Bonds, 6/11 at 102.00 AAA 1,120,180
Series 2001, 5.000%, 6/01/16 - FGIC Insured
4,500 North Carolina, General Obligation Bonds, 9/10 at 102.00 AAA 5,058,630
Series 2000A, 5.100%, 9/01/16
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 14.4%
1,330 Cabarrus County, North Carolina, Certificates of 2/13 at 100.00 AA- 1,511,864
Participation, Series 2002, 5.250%, 2/01/17
6,000 Charlotte, North Carolina, Refunding Certificates of Participation, 12/03 at 102.00 AAA 6,219,600
Convention Facility Project, Series 1993C, 5.250%, 12/01/20 -
AMBAC Insured
Charlotte, North Carolina, Storm Water Fee Revenue Bonds,
Series 2002:
1,050 5.250%, 6/01/20 6/12 at 101.00 AA+ 1,170,519
1,750 5.000%, 6/01/25 6/12 at 101.00 AA+ 1,865,588
2,180 Concord, North Carolina, Certificates of Participation, 6/06 at 102.00 AAA 2,474,322
Series 1996A, 6.125%, 6/01/21 - MBIA Insured
750 Johnston County Finance Corporation, North Carolina, 8/09 at 101.00 AAA 820,147
Installment Payment Revenue Bonds, School and Museum
Projects, Series 1999, 5.250%, 8/01/21 - FSA Insured
------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 7.3%
Raleigh-Durham Airport Authority, North Carolina, Airport
Revenue Bonds, Series 2001A:
2,250 5.250%, 11/01/16 - FGIC Insured 5/11 at 101.00 Aaa 2,536,493
4,450 5.000%, 11/01/31 - FGIC Insured 5/11 at 101.00 Aaa 4,650,072
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 20.7%
4,000 Charlotte, North Carolina, Water and Sewer System Revenue 6/10 at 101.00 AAA 4,706,640
Bonds, Series 2000, 5.250%, 6/01/25 (Pre-refunded to 6/01/10)
2,000 Charlotte, North Carolina, Storm Water Fee Revenue Bonds, 6/10 at 101.00 AA+*** 2,447,320
Series 2000, 6.000%, 6/01/25 (Pre-refunded to 6/01/10)
2,900 Fayetteville Public Works Commission, North Carolina, 3/07 at 101.00 AAA 3,277,928
Revenue Bonds, Series 1997, 5.125%, 3/01/24 (Pre-refunded
to 3/01/07) - FSA Insured
1,000 North Carolina Eastern Municipal Power Agency, Power System 9/03 at 102.50 BBB*** 1,036,550
Revenue Bonds, Series 1985G, 5.750%, 12/01/16
(Pre-refunded to 9/01/03)
2,265 North Carolina Municipal Power Agency 1, Catawba No Opt. Call AAA 2,960,876
Electric Revenue Bonds, Series 1980, 10.500%, 1/01/10
23
Nuveen North Carolina Premium Income Municipal Fund (NNC) (continued)
Portfolio of Investments May 31, 2003
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED (continued)
$ 2,000 Orange County, North Carolina, General Obligation School 2/04 at 102.00 AA+*** $ 2,099,820
Bonds, Series 1994, 5.500%, 2/01/11 (Pre-refunded to 2/01/04)
3,340 University of North Carolina Hospitals at Chapel Hill, Revenue 2/06 at 102.00 AA*** 3,744,340
Bonds, Series 1996, 5.250%, 2/15/26 (Pre-refunded to 2/15/06)
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 10.8%
2,600 North Carolina Eastern Municipal Power Agency, Power 7/03 at 102.00 BBB 2,652,182
System Revenue Bonds, Series 1993-D, 5.600%, 1/01/16
4,000 North Carolina Municipal Power Agency 1, Catawba Electric 1/10 at 101.00 BBB+ 4,509,280
Revenue Bonds, Series 1999B, 6.500%, 1/01/20
2,000 North Carolina Municipal Power Agency 1, Catawba Electric 1/13 at 100.00 AAA 2,299,580
Revenue Bonds, Series 2003A, 5.250%, 1/01/15 -
AMBAC Insured
1,000 Wake County Industrial Facilities and Pollution Control Financing 2/12 at 101.00 A3 1,097,290
Authority, North Carolina, Revenue Refunding Bonds,
Carolina Power and Light Company Project, Series 2002,
5.375%, 2/01/17
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 6.9%
Thomasville, North Carolina, Combined Enterprise System
Revenue Bonds, Series 2002:
370 5.000%, 5/01/20 - MBIA Insured 5/12 at 101.00 AAA 403,755
390 5.000%, 5/01/21 - MBIA Insured 5/12 at 101.00 AAA 423,119
1,250 5.125%, 5/01/27 - MBIA Insured 5/12 at 101.00 AAA 1,330,125
2,180 Union, North Carolina, Enterprise Systems Revenue Bonds, 6/06 at 102.00 AAA 2,427,407
Series 1996, 5.500%, 6/01/21 - MBIA Insured
2,000 Winston-Salem, North Carolina, Water and Sewer System 6/12 at 100.00 AAA 2,199,959
Revenue Bonds, Series 2002A, 5.000%, 6/01/18
------------------------------------------------------------------------------------------------------------------------------------
$ 130,345 Total Long-Term Investments (cost $128,941,817) - 143.8% 140,635,927
=============-----------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 4.1% 3,949,208
--------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (47.9)% (46,800,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $97,785,135
====================================================================================================================
(1) All percentages shown in the Portfolio of Investments
are based on net assets applicable to Common shares.
* Optional Call Provisions (not covered by the report of
independent auditors): Dates (month and year) and
prices of the earliest optional call or redemption.
There may be other call provisions at varying prices at
later dates.
** Ratings (not covered by the report of independent
auditors): Using the higher of Standard & Poor's or
Moody's rating.
*** Securities are backed by an escrow or trust containing
sufficient U.S. Government or U.S. Government agency
securities which ensures the timely payment of
principal and interest. Such securities are normally
considered to be equivalent to AAA rated securities.
(WI) Security purchased on a when-issued basis.
See accompanying notes to financial statements.
24
Nuveen North Carolina Dividend Advantage Municipal Fund (NRB)
Portfolio of
Investments May 31, 2003
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 27.3%
$ 500 North Carolina Capital Facilities Finance Agency, Educational 9/11 at 101.00 A3 $ 534,225
Facilities Revenue Bonds, High Point University Project,
Series 2001, 5.125%, 9/01/18
2,250 North Carolina Capital Facilities Financing Agency, Revenue 10/11 at 100.00 AA+ 2,393,033
Bonds, Duke University Project, Series 2001A,
5.125%, 10/01/26
1,750 University of North Carolina at Chapel Hill, General Revenue 6/11 at 100.00 AA+ 1,846,145
Bonds, Series 2001A, 5.000%, 12/01/25
1,845 University of North Carolina at Chapel Hill, General Revenue No Opt. Call AA+ 2,130,145
Bonds, Series 2002B, 5.000%, 12/01/11
2,450 University of North Carolina System, Pool Revenue Bonds, 10/12 at 100.00 AAA 2,818,309
Series 2002A Refunding, 5.375%, 4/01/17 - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE - 20.9%
1,110 North Carolina Medical Care Commission, Healthcare 1/12 at 100.00 A 1,196,980
Facilities Revenue Bonds, Union Regional Medical Center
Project, Series 2002A, 5.250%, 1/01/15
2,500 North Carolina Medical Care Commission, Healthcare Revenue 5/07 at 100.00 AA- 2,560,725
Bonds, Carolina Medicorp Project, Series 1996, 5.250%, 5/01/26
1,500 North Carolina Medical Care Commission, Hospital Revenue 6/12 at 101.00 A 1,580,550
Bonds, Southeastern Regional Medical Center, Series 2002,
5.250%, 6/01/22
2,000 North Carolina Medical Care Commission, Health System 10/11 at 101.00 AA 2,094,860
Revenue Bonds, Mission-St. Joseph Health System,
Series 2001, 5.250%, 10/01/31
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 14.2%
2,250 Durham Housing Authority, North Carolina, Multifamily 6/11 at 100.00 AAA 2,356,447
Housing Revenue Bonds, Naples Terrace Apartments Project,
FNMA Guaranteed, Series 2001, 5.700%, 6/01/33
(Alternative Minimum Tax)
2,500 Mecklenburg County, North Carolina, Multifamily Housing 1/12 at 102.00 AAA 2,680,775
Revenue Bonds, Sycamore Green Apartments, Series 2001,
5.500%, 1/15/35 (Alternative Minimum Tax) - FGIC Insured
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 6.0%
1,470 North Carolina Housing Finance Agency, Home Ownership 7/09 at 100.00 AA 1,534,856
Revenue Bonds, Series 1999-5A, 1998 Trust Agreement,
5.625%, 7/01/30 (Alternative Minimum Tax)
595 North Carolina Housing Finance Agency, Home Ownership 7/10 at 100.00 AAA 616,783
Program Bonds, Series 2001-10A, 1998 Trust Agreement,
5.400%, 7/01/32 (Alternative Minimum Tax) - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
LONG-TERM CARE - 2.6%
900 North Carolina Medical Care Commission, Healthcare Facilities 4/11 at 101.00 N/R 932,184
Revenue Bonds, First Mortgage, Salemtowne Project,
Series 2001, 6.625%, 4/01/31
------------------------------------------------------------------------------------------------------------------------------------
MATERIALS - 4.4%
750 Columbus County Industrial Facilities and Pollution Control 4/07 at 102.00 BBB 778,913
Financing Authority, North Carolina, Environmental Improvement
Revenue Bonds, International Paper Company Project,
Series 1997A, 6.150%, 4/01/21 (Alternative Minimum Tax)
750 Columbus County Industrial Facilities and Pollution Control 12/07 at 102.00 BBB 775,815
Financing Authority, North Carolina, Solid Waste Disposal
Revenue Bonds, International Paper Company Project,
Series 1996A Refunding, 5.800%, 12/01/16 (Alternative
Minimum Tax)
-------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 6.4%
2,000 Mecklenburg County, North Carolina, General Obligation Public 4/10 at 101.50 AAA 2,262,000
Improvement Bonds, Series 2000D, 5.000%, 4/01/13
25
Nuveen North Carolina Dividend Advantage Municipal Fund (NRB) (continued)
Portfolio of Investments May 31, 2003
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 14.8%
$ 1,330 Cabarrus County, North Carolina, Certificates of Participation, 2/13 at 100.00 AA- $ 1,535,405
Series 2002, 5.250%, 2/01/15
1,870 Dare County, North Carolina, Certificates of Participation, 12/12 at 100.00 AAA 2,159,607
Series 2002, 5.250%, 6/01/15 - AMBAC Insured
1,360 Duplin County, North Carolina, Certificates of Participation, No Opt. Call AAA 1,574,948
Series 2002 Refunding, 5.000%, 9/01/12 - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 4.8%
1,530 Raleigh-Durham Airport Authority, North Carolina, Airport 5/11 at 101.00 Aaa 1,704,588
Revenue Bonds, Series 2001A, 5.250%, 11/01/18 -
FGIC Insured
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 19.3%
Greenville Utilities Commission, North Carolina, Combined
Enterprise System Revenue Bonds, Series 2001:
1,000 5.250%, 9/01/20 - FSA Insured 9/11 at 101.00 AAA 1,108,790
500 5.250%, 9/01/21 - FSA Insured 9/11 at 101.00 AAA 551,030
2,500 North Carolina Eastern Municipal Power Agency, Power System 7/03 at 100.00 AAA 2,508,125
Revenue Refunding Bonds, Series 1993, 5.500%, 1/01/17 -
FGIC Insured
1,000 North Carolina Eastern Municipal Power Agency, Power System 1/09 at 102.00 BBB 1,067,700
Revenue Refunding Bonds, Series 1999B, 5.650%, 1/01/16
1,500 Wake County Industrial Facilities and Pollution Control Financing 2/12 at 101.00 A3 1,645,935
Authority, North Carolina, Revenue Refunding Bonds, Carolina
Power and Light Company Project, Series 2002 Refunding,
5.375%, 2/01/17
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 23.9%
2,290 Broad River Water Authority, North Carolina, Water System 6/10 at 101.00 Aaa 2,495,230
Revenue Bonds, Series 2000, 5.375%, 6/01/26 - MBIA Insured
2,250 Charlotte, North Carolina, Water and Sewer System Revenue 6/11 at 101.00 AAA 2,409,570
Bonds, Series 2001, 5.125%, 6/01/26
Greensboro, North Carolina, Combined Enterprise System
Revenue Bonds, Series 2001A:
500 5.125%, 6/01/20 6/11 at 101.00 AA- 545,680
500 5.125%, 6/01/21 6/11 at 101.00 AA- 542,090
2,275 Winston-Salem, North Carolina, Water and Sewer System 6/12 at 100.00 AAA 2,520,835
Revenue Bonds, Series 2002A, 5.000%, 6/01/17
------------------------------------------------------------------------------------------------------------------------------------
$ 47,525 Total Long-Term Investments (cost $48,197,449) - 144.6% 51,462,278
=============-----------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 3.2% 1,128,826
--------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (47.8)% (17,000,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $35,591,104
====================================================================================================================
(1) All percentages shown in the Portfolio of Investments
are based on net assets applicable to Common shares.
* Optional Call Provisions (not covered by the report of
independent auditors): Dates (month and year) and
prices of the earliest optional call or redemption.
There may be other call provisions at varying prices at
later dates.
** Ratings (not covered by the report of independent
auditors): Using the higher of Standard & Poor's or
Moody's rating.
N/R Investment is not rated.
See accompanying notes to financial statements.
26
Nuveen North Carolina Dividend Advantage Municipal Fund 2 (NNO)
Portfolio of
Investments May 31, 2003
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 22.6%
Appalachian State University, North Carolina, Housing and
Student Center System Revenue Bonds, Series 2001 Refunding:
$ 600 5.125%, 7/15/24 1/11 at 101.00 Aaa $ 642,786
200 5.125%, 7/15/27 1/11 at 101.00 Aaa 212,874
Appalachian State University, North Carolina, Housing and
Student Center System Revenue Bonds, Series 2002 Refunding:
1,000 5.000%, 7/15/13 - MBIA Insured 7/12 at 100.00 Aaa 1,146,030
1,040 5.000%, 7/15/14 - MBIA Insured 7/12 at 100.00 Aaa 1,183,031
1,000 5.000%, 7/15/15 - MBIA Insured 7/12 at 100.00 Aaa 1,126,670
3,750 North Carolina Capital Facilities Financing Agency, Revenue 10/11 at 100.00 AA+ 3,988,388
Bonds, Duke University Project, Series 2001A,
5.125%, 10/01/26
1,840 Board of Governors of the University of North Carolina at No Opt. Call AA+ 2,124,372
Chapel Hill, General Revenue Bonds, Series 2002B,
5.000%, 12/01/11
400 Board of Governors of the University of North Carolina at 4/11 at 101.00 AAA 454,776
Greensboro, General Revenue Refunding Bonds, Series 2002B,
5.375%, 4/01/17 - FSA Insured
University of North Carolina System, Pool Revenue Refunding
Bonds, Series 2002A:
1,155 5.375%, 4/01/16 - AMBAC Insured 10/12 at 100.00 AAA 1,337,617
1,100 5.375%, 4/01/19 - AMBAC Insured 10/12 at 100.00 AAA 1,247,532
------------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE - 21.4%
4,000 Charlotte-Mecklenburg Hospital Authority, North Carolina, 1/11 at 101.00 AA 4,091,200
Healthcare System Revenue Bonds, DBA Carolinas Healthcare
System, Series 2001A, 5.000%, 1/15/31
2,225 New Hanover County, North Carolina Hospital Revenue 10/03 at 102.00 AAA 2,250,120
Bonds, New Hanover Regional Medical Center Project,
Series 1993, 4.750%, 10/01/23 - AMBAC Insured
1,005 North Carolina Medical Care Commission, Healthcare Facilities 1/12 at 100.00 A 1,107,389
Revenue Bonds, Union Regional Medical Center Project,
Series 2002A, 5.250%, 1/01/13
1,000 North Carolina Medical Care Commission, Healthcare Facilities 10/11 at 101.00 AAA 1,052,910
Revenue Bonds, WakeMed Project, Series 2001,
5.000%, 10/01/32 - AMBAC Insured
North Carolina Medical Care Commission, Hospital Revenue Bonds,
Southeastern Regional Medical Center, Series 2002:
1,000 5.500%, 6/01/15 6/12 at 101.00 A 1,115,050
2,000 5.250%, 6/01/22 6/12 at 101.00 A 2,107,400
1,000 North Carolina Medical Care Commission, Health System 10/11 at 101.00 AA 1,047,430
Revenue Bonds, Mission-St. Joseph Health System,
Series 2001, 5.250%, 10/01/31
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 6.3%
3,500 Mecklenburg County, North Carolina, Multifamily Housing 1/12 at 102.00 AAA 3,753,085
Revenue Bonds, Sycamore Green Apartments, Series 2001,
5.500%, 1/15/35 (Alternative Minimum Tax) - FGIC Insured
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 4.5%
505 North Carolina Housing Finance Agency, Home Ownership 7/10 at 100.00 AAA 523,488
Program Bonds, Series 10A, 1998 Trust Agreement,
5.400%, 7/01/32 (Alternative Minimum Tax) - AMBAC Insured
North Carolina Housing Finance Agency, Home Ownership
Program Bonds, Series 13A:
1,000 4.700%, 7/01/12 (Alternative Minimum Tax) 7/11 at 100.00 AA 1,070,030
1,000 4.850%, 7/01/13 (Alternative Minimum Tax) 7/11 at 100.00 AA 1,065,310
27
Nuveen North Carolina Dividend Advantage Municipal Fund 2 (NNO) (continued)
Portfolio of Investments May 31, 2003
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
MATERIALS - 4.3%
$ 1,400 Haywood County Industrial Facilities and Pollution 10/03 at 102.00 BBB $ 1,425,186
Control Financing Authority, North Carolina, Solid Waste
Disposal Revenue Bonds, Champion International Corporation
Project, Series 1993, 5.500%, 10/01/18 (Alternative Minimum Tax)
1,100 Northampton County Industrial Facilities and Pollution Control 2/11 at 101.00 BBB 1,156,925
Financing Authority, North Carolina, Environmental Improvement
Revenue Bonds, International Paper Company Project, Series 2001A,
6.200%, 2/01/25 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 18.0%
250 Durham County, North Carolina, General Obligation Bonds, 5/10 at 102.00 AAA 293,665
Series 2000, 5.600%, 5/01/15
3,000 Mecklenburg County, North Carolina, General Obligation 4/10 at 101.50 AAA 3,393,000
Public Improvement Bonds, Series 2000D, 5.000%, 4/01/13
3,000 North Carolina, General Obligation Bonds, Series 2000A, 9/10 at 102.00 AAA 3,372,420
5.100%, 9/01/16
3,200 Wake County, North Carolina, General Obligation School 2/10 at 101.50 AAA 3,692,544
Bonds, Series 2000, 5.400%, 2/01/13
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 19.8%
1,330 Cabarrus County, North Carolina, Certificates of Participation, 2/13 at 100.00 AA- 1,522,411
Series 2002, 5.250%, 2/01/16
Charlotte, North Carolina, Storm Water Fee Revenue Bonds,
Series 2002:
1,850 5.250%, 6/01/18 6/12 at 101.00 AA+ 2,092,554
400 5.250%, 6/01/19 6/12 at 101.00 AA+ 449,164
1,325 Dare County, North Carolina, Certificates of Participation, 12/12 at 100.00 AAA 1,507,055
Series 2002, 5.250%, 6/01/17 - AMBAC Insured
Hartnett County, North Carolina, Certificates of Participation,
Series 2002:
1,000 5.250%, 12/01/15 - FSA Insured 12/12 at 101.00 AAA 1,161,280
2,025 5.375%, 12/01/16 - FSA Insured 12/12 at 101.00 AAA 2,364,836
825 5.000%, 12/01/18 - FSA Insured 12/12 at 101.00 AAA 917,144
1,595 Rutherford County, North Carolina, Certificates of Participation, 9/12 at 101.00 AAA 1,769,477
Series 2002, 5.000%, 9/01/18 - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 12.5%
Raleigh-Durham Airport Authority, North Carolina, Airport
Revenue Bonds, Series 2001A:
1,000 5.250%, 11/01/15 - FGIC Insured 5/11 at 101.00 Aaa 1,134,750
2,320 5.250%, 11/01/16 - FGIC Insured 5/11 at 101.00 Aaa 2,615,406
2,230 5.250%, 11/01/17 - FGIC Insured 5/11 at 101.00 Aaa 2,499,139
University of North Carolina at Charlotte, Parking System
Revenue Bonds, Series 2002:
360 5.000%, 1/01/17 - MBIA Insured 1/12 at 101.00 Aaa 400,003
270 5.000%, 1/01/20 - MBIA Insured 1/12 at 101.00 Aaa 294,146
500 5.125%, 1/01/27 - MBIA Insured 1/12 at 101.00 Aaa 535,640
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 5.7%
3,000 Fayetteville, North Carolina, Public Works Commission, 3/07 at 101.00 AAA 3,390,960
Revenue Bonds, Series 1997, 5.125%, 3/01/24 (Pre-refunded
to 3/01/07) - FSA Insured
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 15.9%
2,500 North Carolina Eastern Municipal Power Agency, Power 7/03 at 100.00 AAA 2,508,125
System Revenue Refunding Bonds, Series 1993,
5.500%, 1/01/17 - FGIC Insured
2,400 North Carolina Eastern Municipal Power Agency, Power 7/03 at 102.00 BBB 2,448,168
System Revenue Bonds, Series 1993D, 5.600%, 1/01/16
1,500 North Carolina Municipal Power Agency 1, Catawba Electric 1/10 at 101.00 BBB+ 1,690,980
Revenue Bonds, Series 1999B, 6.500%, 1/01/20
2,600 Wake County Industrial Facilities and Pollution Control 2/12 at 101.00 A3 2,852,954
Financing Authority, North Carolina, Revenue Refunding Bonds,
Carolina Power and Light Company Project, Series 2002,
5.375%, 2/01/17
28
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 13.1%
$ 4,520 Charlotte, North Carolina, Water and Sewer System Revenue No Opt. Call AAA $ 5,371,206
Bonds, Series 2002, 5.250%, 7/01/13
1,465 Orange Water and Sewer Authority, North Carolina, Water 7/11 at 101.00 AA+ 1,588,104
and Sewer System Revenue Bonds, Series 2001,
5.000%, 7/01/20
850 Raleigh, North Carolina, Combined Enterprise System Revenue 3/09 at 101.00 AAA 874,658
Bonds, Series 1999, 4.750%, 3/01/24
------------------------------------------------------------------------------------------------------------------------------------
$ 78,135 Total Long-Term Investments (cost $79,569,102) - 144.1% 85,969,388
=============-----------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 2.8% 1,672,512
--------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (46.9)% (28,000,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $59,641,900
====================================================================================================================
(1) All percentages shown in the Portfolio of Investments
are based on net assets applicable to Common shares.
* Optional Call Provisions (not covered by the report of
independent auditors): Dates (month and year) and
prices of the earliest optional call or redemption.
There may be other call provisions at varying prices at
later dates.
** Ratings (not covered by the report of independent
auditors): Using the higher of Standard & Poor's or
Moody's rating.
See accompanying notes to financial statements.
29
Nuveen North Carolina Dividend Advantage Municipal Fund 3 (NII)
Portfolio of
Investments May 31, 2003
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES - 2.9%
$ 2,000 The Children's Trust Fund, Puerto Rico, Tobacco Settlement 5/12 at 100.00 A- $ 1,702,460
Asset-Backed Bonds, Series 2002 Refunding, 5.500%, 5/15/39
------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 15.6%
North Carolina Capital Facilities Financing Agency, Revenue
Bonds, Duke University Project, Series 2001A:
1,750 5.125%, 10/01/26 10/11 at 100.00 AA+ 1,861,248
2,000 5.125%, 10/01/41 10/11 at 100.00 AA+ 2,106,860
3,000 North Carolina Capital Facilities Financing Agency, Revenue 10/12 at 100.00 AA+ 3,168,870
Bonds, Duke University Project, Series 2002A, 5.125%, 7/01/42
1,900 University of North Carolina System, Pool Revenue Bonds, 10/12 at 100.00 AAA 2,011,625
Series 2002A Refunding, 5.000%, 4/01/27 - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE - 14.3%
2,000 Charlotte-Mecklenburg Hospital Authority, North Carolina, 1/07 at 102.00 AA 2,096,540
Healthcare System Revenue Bonds, Series 1997A, DBA
Carolinas Healthcare System, 5.125%, 1/15/22
1,750 Charlotte-Mecklenburg Hospital Authority, North Carolina, 1/11 at 101.00 AA 1,789,900
Healthcare System Revenue Bonds, DBA Carolinas
Healthcare System, Series 2001A, 5.000%, 1/15/31
2,500 North Carolina Medical Care Commission, Healthcare 6/08 at 101.00 Aa3 2,501,025
Facilities Revenue Bonds, Duke University Health System,
Series 1998A, 4.750%, 6/01/28
2,000 North Carolina Medical Care Commission, Hospital Revenue 10/08 at 101.00 AA 2,004,180
Bonds, FirstHealth of the Carolinas Project, Series 1998,
4.750%, 10/01/26
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 1.8%
1,000 Mecklenburg County, North Carolina, Multifamily Housing 7/13 at 105.00 AAA 1,060,210
Revenue Bonds, Little Rock Apartments, FNMA Enhanced,
Series 2003, 5.150%, 1/01/22 (Alternative Minimum Tax)
(WI, settling 6/02/03)
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 2.7%
1,495 North Carolina Housing Finance Agency, Home Ownership 7/09 at 100.00 AA 1,560,959
Revenue Bonds, Trust Agreement, Series 1999-5A,
5.625%, 7/01/30 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
LONG-TERM CARE - 1.6%
900 North Carolina Medical Care Commission, Healthcare Facilities 4/11 at 101.00 N/R 932,184
Revenue Bonds, First Mortgage, Salemtowne Project,
Series 2001, 6.625%, 4/01/31
------------------------------------------------------------------------------------------------------------------------------------
MATERIALS - 5.0%
1,400 Haywood County Industrial Facilities and Pollution Control 12/05 at 102.00 BBB 1,421,868
Financing Authority, North Carolina, Environmental Improvement
Revenue Bonds, Champion International Corporation Project,
Series 1995A, 5.750%, 12/01/25 (Alternative Minimum Tax)
1,500 Martin County Industrial Facilities and Pollution Control 9/03 at 101.00 BBB 1,533,675
Financing Authority, North Carolina, Solid Waste Disposal
Revenue Bonds, Weyerhaeuser Company Project, Series 1991,
7.250%, 9/01/14 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 14.3%
Lincoln County, North Carolina, General Obligation Bonds,
Series 2002A:
850 5.000%, 6/01/19 - FGIC Insured 6/12 at 101.00 AAA 937,661
900 5.000%, 6/01/20 - FGIC Insured 6/12 at 101.00 AAA 984,861
1,050 5.000%, 6/01/21 - FGIC Insured 6/12 at 101.00 AAA 1,140,647
1,000 Mecklenburg County, North Carolina, General Obligation Public 4/10 at 101.50 AAA 1,131,000
Improvement Bonds, Series 2000D, 5.000%, 4/01/13
30
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL (continued)
$ 1,000 North Carolina, General Obligation Bonds, Series 2000A, 9/10 at 102.00 AAA $ 1,124,140
5.100%, 9/01/16
2,000 Puerto Rico, Public Improvement Refunding Bonds, General No Opt. Call AAA 2,611,360
Obligation Bonds, Series 1997, 6.500%, 7/01/15 - MBIA Insured
400 Raleigh, North Carolina, General Obligation Bonds, 6/12 at 100.00 AAA 434,244
Series 2002, 5.000%, 6/01/21
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 37.1%
3,900 Cary, North Carolina, General Obligation Water Bonds, 3/11 at 102.00 AAA 4,268,394
Series 2001, 5.000%, 3/01/20
1,550 Cary, North Carolina, Certificates of Participation, Public 12/12 at 100.00 AA+ 1,723,987
Improvement Projects, Series 2002A, 5.000%, 12/01/17
1,500 Centennial Authority, North Carolina, Hotel Tax Revenue Bonds, 9/07 at 102.00 AAA 1,641,105
Arena Project, Series 1997, 5.125%, 9/01/19 - FSA Insured
3,000 Dare County, North Carolina, Certificates of Participation, 12/12 at 100.00 AAA 3,204,630
Series 2002, 5.000%, 6/01/23 - AMBAC Insured
Duplin County, North Carolina, Certificates of Participation,
Series 2002 Refunding:
1,230 5.000%, 9/01/13 - AMBAC Insured No Opt. Call AAA 1,428,227
1,290 5.000%, 9/01/14 - AMBAC Insured No Opt. Call AAA 1,501,547
Forsyth County, North Carolina, Certificates of Participation,
Series 2002, Public Facilities Equipment Project:
1,325 5.125%, 1/01/16 1/13 at 101.00 AA+ 1,504,577
770 5.250%, 1/01/19 1/13 at 101.00 AA+ 865,996
1,235 5.250%, 1/01/23 1/13 at 101.00 AA+ 1,353,424
2,000 Puerto Rico Municipal Finance Agency, 2002 Series A, 8/12 at 100.00 AAA 2,122,640
5.000%, 8/01/27 - FSA Insured
2,000 Rutherford County, North Carolina, Certificates of Participation, 9/12 at 101.00 AAA 2,172,820
Series 2002, 5.000%, 9/01/21 - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 9.1%
Raleigh Durham Airport Authority, North Carolina, Airport Revenue
Bonds, Series 2001A:
1,780 5.250%, 11/01/15 - FGIC Insured 5/11 at 101.00 Aaa 2,019,855
3,100 5.000%, 11/01/20 - FGIC Insured 5/11 at 101.00 Aaa 3,343,257
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 0.9%
500 North Carolina Eastern Municipal Power Agency, Power 9/03 at 102.50 BBB*** 518,275
System Revenue Bonds, Series 1985G, 5.750%, 12/01/16
(Pre-refunded to 9/01/03)
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 18.2%
4,000 North Carolina Eastern Municipal Power Agency, Power 7/03 at 100.00 AAA 4,013,000
System Revenue Refunding Bonds, Series 1993,
5.500%, 1/01/17 - FGIC Insured
2,665 North Carolina Municipal Power Agency 1, Catawba Electric 1/13 at 100.00 AAA 3,064,190
Revenue Bonds, Series 2003A, 5.250%, 1/01/15 - AMBAC Insured
1,775 Puerto Rico Electric Power Authority, Power Revenue Bonds, 7/12 at 101.00 AAA 2,032,322
2002 Series II, 5.375%, 7/01/19 - MBIA Insured
1,400 Wake County Industrial Facilities and Pollution Control 2/12 at 101.00 A3 1,536,206
Financing Authority, North Carolina, Revenue Refunding
Bonds, Carolina Power and Light Company Project,
Series 2002, 5.375%, 2/01/17
31
Nuveen North Carolina Dividend Advantage Municipal Fund 3 (NII) (continued)
Portfolio of Investments May 31, 2003
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 22.4%
$ 750 Broad River Water Authority, North Carolina, Water System 6/10 at 101.00 Aaa $ 817,215
Revenue Bonds, Series 2000, 5.375%, 6/01/26 - MBIA Insured
Charlotte, North Carolina, Water and Sewer System Revenue
Bonds, Series 2001:
750 5.125%, 6/01/26 6/11 at 101.00 AAA 803,190
1,780 5.125%, 6/01/26 - FGIC Insured 6/11 at 101.00 AAA 1,906,238
Durham County, North Carolina, Enterprise System
Revenue Bonds, Series 2002:
680 5.000%, 6/01/16 - MBIA Insured 6/13 at 100.00 AAA 765,762
710 5.000%, 6/01/17 - MBIA Insured 6/13 at 100.00 AAA 793,191
300 5.000%, 6/01/18 - MBIA Insured 6/13 at 100.00 AAA 332,490
2,500 Kannapolis, North Carolina, Water and Sewer Revenue 2/12 at 101.00 AAA 2,610,625
Bonds, Series 2001B, 5.250%, 2/01/26 (Alternative
Minimum Tax) - FSA Insured
1,000 Orange Water and Sewer Authority, North Carolina, 7/11 at 101.00 AA+ 1,059,490
Water and Sewer System Revenue Bonds, Series 2001,
5.000%, 7/01/26
Winston-Salem, North Carolina, Water and Sewer System
Revenue Bonds, Series 2002A:
500 5.000%, 6/01/17 6/12 at 100.00 AAA 554,030
3,215 5.000%, 6/01/19 6/12 at 100.00 AAA 3,510,682
------------------------------------------------------------------------------------------------------------------------------------
$ 79,600 Total Long-Term Investments (cost $82,210,482) - 145.9% 85,582,882
=============-----------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 1.8% 1,070,536
--------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (47.7)% (28,000,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $58,653,418
====================================================================================================================
(1) All percentages shown in the Portfolio of Investments
are based on net assets applicable to Common shares.
* Optional Call Provisions (not covered by the report of
independent auditors): Dates (month and year) and
prices of the earliest optional call or redemption.
There may be other call provisions at varying prices at
later dates.
** Ratings (not covered by the report of independent
auditors): Using the higher of Standard & Poor's or
Moody's rating.
*** Securities are backed by an escrow or trust containing
sufficient U.S. Government or U.S. Government agency
securities which ensures the timely payment of
principal and interest. Such securities are normally
considered to be equivalent to AAA rated securities.
N/R Investment is not rated.
(WI) Security purchased on a when-issued basis.
See accompanying notes to financial statements.
32
Statement of
Assets and Liabilities May 31, 2003
GEORGIA GEORGIA GEORGIA
PREMIUM DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2
(NPG) (NZX) (NKG)
------------------------------------------------------------------------------------------------------------------------------------
ASSETS
Investments, at market value (cost $78,151,371, $42,189,306
and $94,773,992, respectively) $84,092,701 $44,749,817 $ 98,923,317
Cash 279,409 204,505 782,819
Receivables:
Interest 1,546,966 660,237 1,662,069
Investments sold 5,000 -- 30,063
Other assets 3,105 1,182 6,064
------------------------------------------------------------------------------------------------------------------------------------
Total assets 85,927,181 45,615,741 101,404,332
------------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Cash overdraft -- -- --
Payable for investments purchased -- -- --
Accrued expenses:
Management fees 47,060 13,426 30,798
Other 29,526 24,385 45,065
Preferred share dividends payable 610 1,440 3,388
------------------------------------------------------------------------------------------------------------------------------------
Total liabilities 77,196 39,251 79,251
------------------------------------------------------------------------------------------------------------------------------------
Preferred shares, at liquidation value 27,800,000 15,000,000 33,000,000
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common shares $58,049,985 $30,576,490 $ 68,325,081
====================================================================================================================================
Common shares outstanding 3,778,174 1,957,602 4,551,417
====================================================================================================================================
Net asset value per Common share outstanding
(net assets applicable to Common shares,
divided by Common shares outstanding) $ 15.36 $ 15.62 $ 15.01
====================================================================================================================================
NET ASSETS APPLICABLE TO COMMON SHARES CONSIST OF:
------------------------------------------------------------------------------------------------------------------------------------
Common shares, $.01 par value per share $ 37,782 $ 19,576 $ 45,514
Paid-in surplus 52,265,692 27,700,665 64,235,292
Undistributed (Over-distribution of) net investment income 596,770 267,235 (214,528)
Accumulated net realized gain (loss) from investments (791,589) 28,503 109,478
Net unrealized appreciation of investments 5,941,330 2,560,511 4,149,325
====================================================================================================================================
Net assets applicable to Common shares $58,049,985 $30,576,490 $ 68,325,081
====================================================================================================================================
Authorized shares:
Common Unlimited Unlimited Unlimited
Preferred Unlimited Unlimited Unlimited
====================================================================================================================================
See accompanying notes to financial statements.
33
Statement of
Assets and Liabilities (continued)
NORTH NORTH NORTH NORTH
CAROLINA CAROLINA CAROLINA CAROLINA
PREMIUM DIVIDEND DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
(NNC) (NRB) (NNO) (NII)
------------------------------------------------------------------------------------------------------------------------------------
ASSETS
Investments, at market value (cost $128,941,817, $48,197,449,
$79,569,102 and $82,210,482, respectively) $140,635,927 $51,462,278 $85,969,388 $85,582,882
Cash -- 224,770 322,390 803,477
Receivables:
Interest 2,416,938 878,061 1,336,379 1,387,475
Investments sold 5,525,272 56,242 40,900 5,117
Other assets 9,200 10,336 6,571 6,003
------------------------------------------------------------------------------------------------------------------------------------
Total assets 148,587,337 52,631,687 87,675,628 87,784,954
------------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Cash overdraft 329,392 -- -- --
Payable for investments purchased 3,547,821 -- -- 1,063,755
Accrued expenses:
Management fees 79,219 15,506 25,820 26,700
Other 43,208 24,145 5,416 38,782
Preferred share dividends payable 2,562 932 2,492 2,299
------------------------------------------------------------------------------------------------------------------------------------
Total liabilities 4,002,202 40,583 33,728 1,131,536
------------------------------------------------------------------------------------------------------------------------------------
Preferred shares, at liquidation value 46,800,000 17,000,000 28,000,000 28,000,000
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common shares $ 97,785,135 $35,591,104 $59,641,900 $58,653,418
====================================================================================================================================
Common shares outstanding 6,308,273 2,242,127 3,732,424 3,920,235
====================================================================================================================================
Net asset value per Common share outstanding
(net assets applicable to Common shares,
divided by Common shares outstanding) $ 15.50 $ 15.87 $ 15.98 $ 14.96
====================================================================================================================================
NET ASSETS APPLICABLE TO COMMON SHARES CONSIST OF:
------------------------------------------------------------------------------------------------------------------------------------
Common shares, $.01 par value per share $ 63,083 $ 22,421 $ 37,324 $ 39,202
Paid-in surplus 87,113,614 31,750,009 52,909,843 55,322,738
Undistributed (Over-distribution of) net investment income 1,032,400 391,574 181,840 (111,595)
Accumulated net realized gain (loss) from investments (2,118,072) 162,271 112,607 30,673
Net unrealized appreciation of investments 11,694,110 3,264,829 6,400,286 3,372,400
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common shares $ 97,785,135 $35,591,104 $59,641,900 $58,653,418
====================================================================================================================================
Authorized shares:
Common Unlimited Unlimited Unlimited Unlimited
Preferred Unlimited Unlimited Unlimited Unlimited
====================================================================================================================================
See accompanying notes to financial statements.
34
Statement of
Operations Year Ended May 31, 2003
GEORGIA GEORGIA GEORGIA
PREMIUM DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2
(NPG) (NZX) (NKG)*
------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME $4,341,225 $2,109,065 $2,415,003
------------------------------------------------------------------------------------------------------------------------------------
EXPENSES
Management fees 541,551 284,881 400,225
Preferred shares - auction fees 70,177 37,154 43,973
Preferred shares - dividend disbursing agent fees 10,000 10,000 5,425
Shareholders' servicing agent fees and expenses 9,426 960 2,109
Custodian's fees and expenses 30,749 23,777 16,631
Trustees' fees and expenses 992 482 987
Professional fees 10,435 9,176 12,394
Shareholders' reports - printing and mailing expenses 19,547 3,717 17,351
Stock exchange listing fees 678 97 172
Investor relations expense 10,776 3,027 6,818
Other expenses 11,237 5,863 1,442
------------------------------------------------------------------------------------------------------------------------------------
Total expenses before custodian fee credit and expense reimbursement 715,568 379,134 507,527
Custodian fee credit (13,019) (9,313) (10,001)
Expense reimbursement -- (131,484) (197,033)
------------------------------------------------------------------------------------------------------------------------------------
Net expenses 702,549 238,337 300,493
------------------------------------------------------------------------------------------------------------------------------------
Net investment income 3,638,676 1,870,728 2,114,510
------------------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN FROM INVESTMENTS
Net realized gain from investments 920,606 660,108 109,478
Change in net unrealized appreciation (depreciation) of investments 2,936,582 2,587,026 4,149,325
------------------------------------------------------------------------------------------------------------------------------------
Net gain from investments 3,857,188 3,247,134 4,258,803
------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS
From net investment income (258,111) (127,078) (195,435)
From accumulated net realized gains from investments -- (35,847) --
------------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets applicable to Common shares from
distributions to Preferred shareholders (258,111) (162,925) (195,435)
------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets applicable to Common shares
from operations $7,237,753 $4,954,937 $6,177,878
====================================================================================================================================
* For the period September 25, 2002 (commencement of operations) through May 31, 2003.
See accompanying notes to financial statements.
35
Statement of
Operations Year Ended May 31, 2003 (continued)
NORTH NORTH NORTH NORTH
CAROLINA CAROLINA CAROLINA CAROLINA
PREMIUM DIVIDEND DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
(NNC) (NRB) (NNO) (NII)*
------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME $ 7,335,996 $2,511,461 $3,955,660 $2,165,763
------------------------------------------------------------------------------------------------------------------------------------
EXPENSES
Management fees 908,342 329,390 547,188 341,704
Preferred shares - auction fees 118,407 44,283 69,216 37,054
Preferred shares - dividend disbursing agent fees 10,000 10,000 10,000 5,425
Shareholders' servicing agent fees and expenses 18,665 1,188 1,622 1,674
Custodian's fees and expenses 42,399 29,252 29,198 15,339
Trustees' fees and expenses 1,701 436 1,163 820
Professional fees 11,283 9,285 10,027 12,942
Shareholders' reports - printing and mailing expenses 26,099 3,234 13,600 18,566
Stock exchange listing fees 15,087 18 548 148
Investor relations expense 17,952 2,594 5,043 6,211
Other expenses 13,075 6,943 8,409 1,302
------------------------------------------------------------------------------------------------------------------------------------
Total expenses before custodian fee credit and expense reimbursement 1,183,010 436,623 696,014 441,185
Custodian fee credit (18,401) (3,291) (14,212) (8,001)
Expense reimbursement -- (152,026) (252,548) (168,223)
------------------------------------------------------------------------------------------------------------------------------------
Net expenses 1,164,609 281,306 429,254 264,961
------------------------------------------------------------------------------------------------------------------------------------
Net investment income 6,171,387 2,230,155 3,526,406 1,900,802
------------------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN FROM INVESTMENTS
Net realized gain from investments 900,218 554,560 713,547 30,673
Change in net unrealized appreciation (depreciation) of investments 7,102,237 2,922,001 5,899,711 3,372,400
------------------------------------------------------------------------------------------------------------------------------------
Net gain from investments 8,002,455 3,476,561 6,613,258 3,403,073
------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS
From net investment income (455,407) (137,647) (273,894) (174,006)
From accumulated net realized gains from investments -- (39,141) (71,543) --
------------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets applicable to Common shares from
distributions to Preferred shareholders (455,407) (176,788) (345,437) (174,006)
------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets applicable to Common shares
from operations $13,718,435 $5,529,928 $9,794,227 $5,129,869
====================================================================================================================================
* For the period September 25, 2002 (commencement of operations) through May 31, 2003.
See accompanying notes to financial statements.
36
Statement of
Changes in Net Assets
GEORGIA
DIVIDEND
GEORGIA GEORGIA ADVANTAGE 2
PREMIUM INCOME (NPG) DIVIDEND ADVANTAGE (NZX) (NKG)
----------------------------- ----------------------------- ---------------
FOR THE FOR THE
PERIOD 9/25/01 PERIOD 9/25/02
(COMMENCEMENT (COMMENCEMENT
YEAR ENDED YEAR ENDED YEAR ENDED OF OPERATIONS) OF OPERATIONS)
5/31/03 5/31/02 5/31/03 THROUGH 5/31/02 THROUGH 5/31/03
------------------------------------------------------------------------------------------------------------------------------------
OPERATIONS
Net investment income $ 3,638,676 $ 3,856,072 $ 1,870,728 $ 1,128,261 $ 2,114,510
Net realized gain (loss) from investments 920,606 570,501 660,108 (345,593) 109,478
Change in net unrealized appreciation
(depreciation) of investments 2,936,582 (195,055) 2,587,026 (26,515) 4,149,325
Distributions to Preferred Shareholders:
From net investment income (258,111) (460,881) (127,078) (114,572) (195,435)
From accumulated net realized gains
from investments -- -- (35,847) -- --
------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets applicable to
Common shares from operations 7,237,753 3,770,637 4,954,937 641,581 6,177,878
------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS
From net investment income (3,254,832) (3,187,446) (1,579,528) (910,576) (2,133,603)
From accumulated net realized gains
from investment transactions -- -- (250,165) -- --
------------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets applicable to
Common shares from distributions
to Common shareholders (3,254,832) (3,187,446) (1,829,693) (910,576) (2,133,603)
------------------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Common shares:
Net proceeds from sale of shares -- -- -- 27,860,955 64,899,300
Net proceeds from shares
issued to shareholders due to
reinvestment of distributions 157,705 158,444 15,101 4,901 63,231
Preferred shares offering costs -- -- 54,759 (315,750) (782,000)
------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets applicable
to Common shares from capital
share transactions 157,705 158,444 69,860 27,550,106 64,180,531
------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets
applicable to Common shares 4,140,626 741,635 3,195,104 27,281,111 68,224,806
Net assets applicable to Common
shares at the beginning of period 53,909,359 53,167,724 27,381,386 100,275 100,275
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common
shares at the end of period $58,049,985 $53,909,359 $30,576,490 $27,381,386 $68,325,081
====================================================================================================================================
Undistributed (Over-distribution of) net
investment income at the end of period $ 596,770 $ 520,560 $ 267,235 $ 103,113 $ (214,528)
====================================================================================================================================
See accompanying notes to financial statements.
37
Statement of
Changes in Net Assets (continued)
NORTH CAROLINA NORTH CAROLINA
PREMIUM INCOME (NNC) DIVIDEND ADVANTAGE (NRB)
---------------------------- ----------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
5/31/03 5/31/02 5/31/03 5/31/02
------------------------------------------------------------------------------------------------------------------------------------
OPERATIONS
Net investment income $ 6,171,387 $ 6,403,807 $ 2,230,155 $ 2,364,655
Net realized gain (loss) from investments 900,218 1,171,228 554,560 94,213
Change in net unrealized appreciation
(depreciation) of investments 7,102,237 (237,275) 2,922,001 744,160
Distributions to Preferred Shareholders:
From net investment income (455,407) (795,822) (137,647) (292,515)
From accumulated net realized gains
from investments -- -- (39,141) --
------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets applicable
to Common shares from operations 13,718,435 6,541,938 5,529,928 2,910,513
------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS
From net investment income (5,417,766) (5,047,923) (1,930,686) (1,828,376)
From accumulated net realized gains
from investment transactions -- -- (293,381) --
------------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets applicable to
Common shares from distributions
to Common shareholders (5,417,766) (5,047,923) (2,224,067) (1,828,376)
------------------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Common shares:
Net proceeds from sale of shares -- -- -- --
Net proceeds from shares
issued to shareholders due to
reinvestment of distributions 198,718 177,785 112,298 50,844
Preferred shares offering costs -- -- 24,922 --
------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets applicable
to Common shares from capital
share transactions 198,718 177,785 137,220 50,844
------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets
applicable to Common shares 8,499,387 1,671,800 3,443,081 1,132,981
Net assets applicable to Common
shares at the beginning of period 89,285,748 87,613,948 32,148,023 31,015,042
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common
shares at the end of period $97,785,135 $89,285,748 $35,591,104 $32,148,023
====================================================================================================================================
Undistributed (Over-distribution of) net
investment income at the end of period $ 1,032,400 $ 685,795 $ 391,574 $ 229,468
====================================================================================================================================
See accompanying notes to financial statements.
38
NORTH
CAROLINA
DIVIDEND
NORTH CAROLINA ADVANTAGE 3
DIVIDEND ADVANTAGE 2 (NNO) (NII)
----------------------------- ---------------
FOR THE FOR THE
PERIOD 11/16/01 PERIOD 9/25/02
(COMMENCEMENT (COMMENCEMENT
YEAR ENDED OF OPERATIONS) OF OPERATIONS)
5/31/03 THROUGH 5/31/02 THROUGH 5/31/03
------------------------------------------------------------------------------------------------------------------------------------
OPERATIONS
Net investment income $ 3,526,406 $ 1,435,314 $ 1,900,802
Net realized gain (loss) from investments 713,547 (46,868) 30,673
Change in net unrealized appreciation
(depreciation) of investments 5,899,711 501,708 3,372,400
Distributions to Preferred Shareholders:
From net investment income (273,894) (156,382) (174,006)
From accumulated net realized gains
from investments (71,543) -- --
------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets applicable
to Common shares from operations 9,794,227 1,733,772 5,129,869
------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS
From net investment income (3,067,763) (1,278,209) (1,838,391)
From accumulated net realized gains
from investment transactions (482,556) -- --
------------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets applicable
to Common shares from distributions
to Common shareholders (3,550,319) (1,278,209) (1,838,391)
------------------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Common shares:
Net proceeds from sale of shares -- 53,248,875 55,929,188
Net proceeds from shares
issued to shareholders due to
reinvestment of distributions 4,123 -- 10,977
Preferred shares offering costs 10,548 (421,392) (678,500)
------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets applicable
to Common shares from capital
share transactions 14,671 52,827,483 55,261,665
------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets
applicable to Common shares 6,258,579 53,283,046 58,553,143
Net assets applicable to Common
shares at the beginning of period 53,383,321 100,275 100,275
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common
shares at the end of period $59,641,900 $53,383,321 $58,653,418
====================================================================================================================================
Undistributed (Over-distribution of) net
investment income at the end of period $ 181,840 $ 723 $ (111,595)
====================================================================================================================================
39
See accompanying notes to financial statements.
Notes to
Financial Statements
1. GENERAL INFORMATION AND SIGNIFICANT ACCOUNTING POLICIES
The state Funds (the "Funds") covered in this report and their corresponding
Common share stock exchange symbols are Nuveen Georgia Premium Income Municipal
Fund (NPG), Nuveen Georgia Dividend Advantage Municipal Fund (NZX), Nuveen
Georgia Dividend Advantage Municipal Fund 2 (NKG), Nuveen North Carolina Premium
Income Municipal Fund (NNC), Nuveen North Carolina Dividend Advantage Municipal
Fund (NRB), Nuveen North Carolina Dividend Advantage Municipal Fund 2 (NNO) and
Nuveen North Carolina Dividend Advantage Municipal Fund 3 (NII). Georgia Premium
Income (NPG), Georgia Dividend Advantage (NZX), Georgia Dividend Advantage 2
(NKG), North Carolina Dividend Advantage (NRB), North Carolina Dividend
Advantage 2 (NNO) and North Carolina Dividend Advantage 3 (NII) are traded on
the American Stock Exchange while North Carolina Premium Income (NNC) is traded
on the New York Stock Exchange. The Funds are registered under the Investment
Company Act of 1940, as amended, as closed-end management investment companies.
Prior to the commencement of operations of Georgia Dividend Advantage (NZX),
Georgia Dividend Advantage 2 (NKG), North Carolina Dividend Advantage 2 (NNO)
and North Carolina Dividend Advantage 3 (NII), each Fund had no operations other
than those related to organizational matters, the initial capital contribution
of $100,275 per Fund by Nuveen Advisory Corp. (the "Adviser"), a wholly owned
subsidiary of Nuveen Investments, Inc. (formerly, The John Nuveen Company), and
the recording of the organization expenses ($11,500 per Fund) and their
reimbursement by Nuveen Investments, LLC (formerly, Nuveen Investments), also a
wholly owned subsidiary of Nuveen Investments, Inc.
Each Fund seeks to provide current income exempt from both regular federal and
designated state income taxes by investing primarily in a diversified portfolio
of municipal obligations issued by state and local government authorities within
a single state.
The following is a summary of significant accounting policies followed by the
Funds in the preparation of their financial statements in accordance with
accounting principles generally accepted in the United States.
Securities Valuation
The prices of municipal bonds in each Fund's investment portfolio are provided
by a pricing service approved by the Fund's Board of Trustees. When price quotes
are not readily available (which is usually the case for municipal securities),
the pricing service establishes fair market value based on yields or prices of
municipal bonds of comparable quality, type of issue, coupon, maturity and
rating, indications of value from securities dealers and general market
conditions. If it is determined that market prices for a security are
unavailable or inappropriate, the Board of Trustees of the Funds, or its
designee, may establish a fair value for the security. Temporary investments in
securities that have variable rate and demand features qualifying them as
short-term securities are valued at amortized cost, which approximates market
value.
Securities Transactions
Securities transactions are recorded on a trade date basis. Realized gains and
losses from such transactions are determined on the specific identification
method. Securities purchased or sold on a when-issued or delayed delivery basis
may have extended settlement periods. The securities so purchased are subject to
market fluctuation during this period. The Funds have instructed the custodian
to segregate assets with a current value at least equal to the amount of the
when-issued and delayed delivery purchase commitments. At May 31, 2003, North
Carolina Premium Income (NNC) and North Carolina Dividend Advantage 3 (NII) had
outstanding when-issued purchase commitments of $2,428,084 and $1,063,755,
respectively. There were no such outstanding purchase commitments in any of the
other Funds.
Investment Income
Interest income, which includes the amortization of premiums and accretion of
discounts for financial reporting purposes, is recorded on an accrual basis.
Income Taxes
Each Fund is a separate taxpayer for federal income tax purposes. Each Fund
intends to comply with the requirements of the Internal Revenue Code applicable
to regulated investment companies and to distribute all of its net investment
income to its shareholders. Therefore, no federal income tax provision is
required. Furthermore, each Fund intends to satisfy conditions which will enable
interest from municipal securities, which is exempt from regular federal and
designated state income taxes, to retain such tax-exempt status when distributed
to shareholders of the Funds. All monthly tax-exempt income dividends paid
during the fiscal year ended May 31, 2003, have been designated Exempt Interest
Dividends.
40
Dividends and Distributions to Common Shareholders
Dividends from tax-exempt net investment income are declared and paid monthly.
Net realized capital gains and/or market discount from investment transactions,
if any, are distributed to shareholders not less frequently than annually.
Furthermore, capital gains are distributed only to the extent they exceed
available capital loss carryforwards.
Distributions to Common shareholders of tax-exempt net investment income, net
realized capital gains and/or market discount, if any, are recorded on the
ex-dividend date. The amount and timing of distributions are determined in
accordance with federal income tax regulations, which may differ from accounting
principles generally accepted in the United States.
Preferred Shares
The Funds have issued and outstanding $25,000 stated value Preferred shares.
Each Fund's Preferred shares are issued in one Series. The dividend rate on each
Series may change every seven days, as set pursuant to a dutch auction process
by the auction agent, and is payable at or near the end of each rate period. The
number of Preferred shares outstanding for each Fund is as follows:
NORTH NORTH NORTH NORTH
GEORGIA GEORGIA GEORGIA CAROLINA CAROLINA CAROLINA CAROLINA
PREMIUM DIVIDEND DIVIDEND PREMIUM DIVIDEND DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2 INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
(NPG) (NZX) (NKG) (NNC) (NRB) (NNO) (NII)
---------------------------------------------------------------------------------------------------------
Number of shares:
Series M -- 600 -- -- -- -- --
Series T -- -- -- -- 680 -- --
Series W -- -- -- -- -- -- 1,120
Series TH 1,112 -- -- 1,872 -- -- --
Series F -- -- 1,320 -- -- 1,120 --
=========================================================================================================
Effective November 15, 2002, Georgia Dividend Advantage 2 (NKG) issued 1,320
Series F, $25,000 stated value Preferred shares. Effective November 15, 2002,
North Carolina Dividend Advantage 3 (NII) issued 1,120 Series W, $25,000 stated
value Preferred shares.
Derivative Financial Instruments
The Funds may invest in certain derivative financial instruments including
futures, forward, swap and option contracts, and other financial instruments
with similar characteristics. Although the Funds are authorized to invest in
such financial instruments, and may do so in the future, they did not make any
such investments during the fiscal year ended May 31, 2003.
Custodian Fee Credit
Each Fund has an arrangement with the custodian bank whereby certain custodian
fees and expenses are reduced by credits earned on each Fund's cash on deposit
with the bank. Such deposit arrangements are an alternative to overnight
investments.
Offering Costs
Nuveen Investments, LLC has agreed to pay all Common share offering costs (other
than the sales load) that exceed $.03 per Common share for Georgia Dividend
Advantage (NZX), Georgia Dividend Advantage 2 (NKG), North Carolina Dividend
Advantage 2 (NNO) and North Carolina Dividend Advantage 3 (NII). Georgia
Dividend Advantage's (NZX), Georgia Dividend Advantage 2's (NKG), North Carolina
Dividend Advantage 2's (NNO) and North Carolina Dividend Advantage 3's (NII)
share of Common share offering costs ($58,470, $136,200, $111,750 and $117,375,
respectively) were recorded as a reduction of the proceeds from the sale of
Common shares.
Costs incurred by Georgia Dividend Advantage (NZX), Georgia Dividend Advantage 2
(NKG), North Carolina Dividend Advantage 2 (NNO) and North Carolina Dividend
Advantage 3 (NII) in connection with their offering of Preferred shares
($260,991, $782,000, $410,844 and $678,500, respectively) were recorded as a
reduction to paid-in surplus.
Use of Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of increases and
decreases in net assets applicable to Common shares from operations during the
reporting period. Actual results may differ from those estimates.
41
Notes to
Financial Statements (continued)
2. FUND SHARES
Transactions in Common and Preferred shares were as follows:
GEORGIA
DIVIDEND
GEORGIA GEORGIA DIVIDEND ADVANTAGE 2
PREMIUM INCOME (NPG) ADVANTAGE (NZX) (NKG)
------------------------ --------------------------- ---------------
FOR THE FOR THE
PERIOD 9/25/01 PERIOD 9/25/02
(COMMENCEMENT (COMMENCEMENT
YEAR ENDED YEAR ENDED YEAR ENDED OF OPERATIONS) OF OPERATIONS)
5/31/03 5/31/02 5/31/03 THROUGH 5/31/02 THROUGH 5/31/03
------------------------------------------------------------------------------------------------------------------
Common shares:
Shares sold -- -- -- 1,949,000 4,540,000
Shares issued to shareholders
due to reinvestment of
distributions 9,788 10,384 1,266 336 4,417
------------------------------------------------------------------------------------------------------------------
9,788 10,384 1,266 1,949,336 4,544,417
==================================================================================================================
Preferred shares sold -- -- -- 600 1,320
==================================================================================================================
NORTH
CAROLINA
DIVIDEND
NORTH CAROLINA NORTH CAROLINA NORTH CAROLINA ADVANTAGE 3
PREMIUM INCOME (NNC) DIVIDEND ADVANTAGE (NRB) DIVIDEND ADVANTAGE 2 (NNO) (NII)
----------------------- ------------------------ ----------------------------- ---------------
FOR THE FOR THE
PERIOD 11/16/01 PERIOD 9/25/02
(COMMENCEMENT (COMMENCEMENT
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED OF OPERATIONS) OF OPERATIONS)
5/31/03 5/31/02 5/31/03 5/31/02 5/31/03 THROUGH 5/31/02 THROUGH 5/31/03
-------------------------------------------------------------------------------------------------------------------
Common shares:
Shares sold -- -- -- -- -- 3,725,000 3,912,500
Shares issued
to shareholders
due to
reinvestment of
distributions 12,357 11,774 7,322 3,402 424 -- 735
-------------------------------------------------------------------------------------------------------------------
12,357 11,774 7,322 3,402 424 3,725,000 3,913,235
===================================================================================================================
Preferred shares sold -- -- -- -- -- 1,120 1,120
===================================================================================================================
42
3. SECURITIES TRANSACTIONS
Purchases and sales (including maturities) of investments in long-term municipal
securities for the fiscal year ended May 31, 2003, were as follows:
GEORGIA GEORGIA GEORGIA
PREMIUM DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2
(NPG) (NZX) (NKG)*
----------------------------------------------------------------------------------------------------------
Purchases $18,007,292 $20,527,949 $108,281,755
Sales and maturities 18,408,065 20,965,009 13,440,124
==========================================================================================================
NORTH NORTH NORTH NORTH
CAROLINA CAROLINA CAROLINA CAROLINA
PREMIUM DIVIDEND DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
(NNC) (NRB) (NNO) (NII)*
---------------------------------------------------------------------------------------------------------
Purchases $21,619,234 $20,222,877 $18,238,782 $84,358,029
Sales and maturities 22,497,805 21,155,066 21,186,811 2,035,760
==========================================================================================================
* For the period September 25, 2002 (commencement of operations) through May
31, 2003.
4. INCOME TAX INFORMATION
The following information is presented on an income tax basis. Differences
between amounts for financial statement and federal income tax purposes are
primarily due to timing differences in recognizing income on taxable market
discount securities and timing differences in recognizing certain gains and
losses on security transactions.
At May 31, 2003, the cost of investments were as follows:
GEORGIA GEORGIA GEORGIA
PREMIUM DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2
(NPG) (NZX) (NKG)
---------------------------------------------------------------------------------------------------------
Cost of investments $78,114,228 $42,189,306 $94,773,945
=========================================================================================================
NORTH NORTH NORTH NORTH
CAROLINA CAROLINA CAROLINA CAROLINA
PREMIUM DIVIDEND DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
(NNC) (NRB) (NNO) (NII)
---------------------------------------------------------------------------------------------------------
Cost of investments $128,853,782 $48,196,891 $79,565,478 $82,210,482
=========================================================================================================
Gross unrealized appreciation and gross unrealized depreciation on investments
on May 31, 2003, were as follows:
GEORGIA GEORGIA GEORGIA
PREMIUM DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2
(NPG) (NZX) (NKG)
---------------------------------------------------------------------------------------------------------
Gross unrealized:
Appreciation $6,593,595 $2,675,044 $4,369,619
Depreciation (615,122) (114,533) (220,247)
---------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments $5,978,473 $2,560,511 $4,149,372
=========================================================================================================
NORTH NORTH NORTH NORTH
CAROLINA CAROLINA CAROLINA CAROLINA
PREMIUM DIVIDEND DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
(NNC) (NRB) (NNO) (NII)
---------------------------------------------------------------------------------------------------------
Gross unrealized:
Appreciation $11,793,815 $3,265,387 $6,403,910 $3,601,466
Depreciation (11,670) -- -- (229,066)
---------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments $11,782,145 $3,265,387 $6,403,910 $3,372,400
=========================================================================================================
43
Notes to
Financial Statements (continued)
The tax components of undistributed net investment income and net realized gains
at May 31, 2003, were as follows:
GEORGIA GEORGIA GEORGIA
PREMIUM DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2
(NPG) (NZX) (NKG)
---------------------------------------------------------------------------------------------------------
Undistributed net tax-exempt income $810,588 $404,728 $ 93,758
Undistributed net ordinary income * 25,456 -- 109,478
Undistributed net long-term capital gains -- 28,502 --
=========================================================================================================
NORTH NORTH NORTH NORTH
CAROLINA CAROLINA CAROLINA CAROLINA
PREMIUM DIVIDEND DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
(NNC) (NRB) (NNO) (NII)
---------------------------------------------------------------------------------------------------------
Undistributed net tax-exempt income $1,383,598 $556,745 $436,225 $153,360
Undistributed net ordinary income * 14,680 66,536 76,010 30,673
Undistributed net long-term capital gains -- 95,735 36,751 --
=========================================================================================================
* Net ordinary income consists of taxable market discount income and net
short-term capital gains, if any.
The tax character of distributions paid during the fiscal years ended May 31,
2003 and May 31, 2002, was designated for purposes of the dividends paid
deduction as follows:
GEORGIA GEORGIA GEORGIA
PREMIUM DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2
2003 (NPG) (NZX) (NKG)
---------------------------------------------------------------------------------------------------------
Distributions from net tax-exempt income $3,506,728 $1,701,839 $2,020,705
Distributions from net ordinary income * -- 212,091 --
Distributions from net long-term capital gains -- 73,921 --
=========================================================================================================
NORTH NORTH NORTH NORTH
CAROLINA CAROLINA CAROLINA CAROLINA
PREMIUM DIVIDEND DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
2003 (NNC) (NRB) (NNO) (NII)
---------------------------------------------------------------------------------------------------------
Distributions from net tax-exempt income $5,826,633 $2,058,342 $3,348,540 $1,747,442
Distributions from net ordinary income * 22,385 -- 554,099 --
Distributions from net long-term capital gains -- 332,522 -- --
=========================================================================================================
* Net ordinary income consists of taxable market discount income and net
short-term capital gains, if any.
44
NORTH NORTH NORTH
GEORGIA GEORGIA CAROLINA CAROLINA CAROLINA
PREMIUM DIVIDEND PREMIUM DIVIDEND DIVIDEND
INCOME ADVANTAGE INCOME ADVANTAGE ADVANTAGE 2
2002 (NPG) (NZX) (NNC) (NRB) (NNO)
---------------------------------------------------------------------------------------------------------
Distributions from net tax-exempt income $3,537,237 $892,422 $5,824,960 $2,119,636 $1,174,283
Distributions from net ordinary income * 94,734 -- -- -- --
Distributions from net long-term capital gains -- -- -- -- --
=========================================================================================================
* Net ordinary income consists of taxable market discount income and net
short-term capital gains, if any.
At May 31, 2003, the following Funds had unused capital loss carryforwards
available for federal income tax purposes to be applied against future capital
gains, if any. If not applied, the carryforwards will expire as follows:
NORTH
GEORGIA CAROLINA
PREMIUM PREMIUM
INCOME INCOME
(NPG) (NNC)
---------------------------------------------------------------------------------------------------------
Expiration year:
2004 $320,996 $1,137,399
2005 340,685 131,993
2006 -- --
2007 -- --
2008 129,908 108,131
2009 -- 731,398
2010 -- --
---------------------------------------------------------------------------------------------------------
Total $791,589 $2,108,921
=========================================================================================================
5. MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Under Georgia Premium Income's (NPG) and North Carolina Premium Income's (NNC)
investment management agreements with the Adviser, each Fund pays an annual
management fee, payable monthly, at the rates set forth below, which are based
upon the average daily net assets (including net assets attributable to
Preferred shares) of each Fund as follows:
AVERAGE DAILY NET ASSETS (INCLUDING NET ASSETS
ATTRIBUTABLE TO PREFERRED SHARES) MANAGEMENT FEE
-------------------------------------------------------------------------------
For the first $125 million .6500%
For the next $125 million .6375
For the next $250 million .6250
For the next $500 million .6125
For the next $1 billion .6000
For the next $3 billion .5875
For net assets over $5 billion .5750
===============================================================================
Under Georgia Dividend Advantage's (NZX), Georgia Dividend Advantage 2's (NKG),
North Carolina Dividend Advantage's (NRB), North Carolina Dividend Advantage 2's
(NNO) and North Carolina Dividend Advantage 3's (NII) investment management
agreements with the Adviser, each Fund pays an annual management fee, payable
monthly, at the rates set forth below, which are based upon the average daily
net assets (including net assets attributable to Preferred shares) of each Fund
as follows:
AVERAGE DAILY NET ASSETS (INCLUDING NET ASSETS
ATTRIBUTABLE TO PREFERRED SHARES) MANAGEMENT FEE
--------------------------------------------------------------------------------
For the first $125 million .6500%
For the next $125 million .6375
For the next $250 million .6250
For the next $500 million .6125
For the next $1 billion .6000
For net assets over $2 billion .5750
===============================================================================
45
Notes to
Financial Statements (continued)
For the first ten years of Georgia Dividend Advantage's (NZX) operations, the
Adviser has agreed to reimburse the Fund, as a percentage of average daily net
assets (including net assets attributable to Preferred shares), for fees and
expenses in the amounts, and for the time periods set forth below:
YEAR ENDING YEAR ENDING
SEPTEMBER 30, SEPTEMBER 30,
--------------------------------------------------------------------------------
2001* .30% 2007 .25%
2002 .30 2008 .20
2003 .30 2009 .15
2004 .30 2010 .10
2005 .30 2011 .05
2006 .30
================================================================================
* From the commencement of operations.
The Adviser has not agreed to reimburse Georgia Dividend Advantage (NZX) for any
portion of its fees and expenses beyond September 30, 2011.
For the first eight years of Georgia Dividend Advantage 2's (NKG) and North
Carolina Dividend Advantage 3's (NII) operations, the Adviser has agreed to
reimburse the Funds, as a percentage of average daily net assets (including net
assets attributable to Preferred shares), for fees and expenses in the amounts,
and for the time periods set forth below:
YEAR ENDING YEAR ENDING
SEPTEMBER 30, SEPTEMBER 30,
--------------------------------------------------------------------------------
2002* .32% 2007 .32%
2003 .32 2008 .24
2004 .32 2009 .16
2005 .32 2010 .08
2006 .32
================================================================================
* From the commencement of operations.
The Adviser has not agreed to reimburse Georgia Dividend Advantage 2 (NKG) and
North Carolina Dividend Advantage 3 (NII) for any portion of its fees and
expenses beyond September 30, 2010.
For the first ten years of North Carolina Dividend Advantage's (NRB) operations,
the Adviser has agreed to reimburse the Fund, as a percentage of average daily
net assets (including net assets attributable to Preferred shares), for fees and
expenses in the amounts, and for the time periods set forth below:
YEAR ENDING YEAR ENDING
JANUARY 31, JANUARY 31,
--------------------------------------------------------------------------------
2001* .30% 2007 .25%
2002 .30 2008 .20
2003 .30 2009 .15
2004 .30 2010 .10
2005 .30 2011 .05
2006 .30
================================================================================
* From the commencement of operations.
The Adviser has not agreed to reimburse North Carolina Dividend Advantage (NRB)
for any portion of its fees and expenses beyond January 31, 2011.
46
For the first ten years of North Carolina Dividend Advantage 2's (NNO)
operations, the Adviser has agreed to reimburse the Fund, as a percentage of
average daily net assets (including net assets attributable to Preferred
shares), for fees and expenses in the amounts, and for the time periods set
forth below:
YEAR ENDING YEAR ENDING
NOVEMBER 30, NOVEMBER 30,
--------------------------------------------------------------------------------
2001* .30% 2007 .25%
2002 .30 2008 .20
2003 .30 2009 .15
2004 .30 2010 .10
2005 .30 2011 .05
2006 .30
================================================================================
* From the commencement of operations.
The Adviser has not agreed to reimburse North Carolina Dividend Advantage 2
(NNO) for any portion of its fees and expenses beyond November 30, 2011.
The management fee compensates the Adviser for overall investment advisory and
administrative services and general office facilities. The Funds pay no
compensation directly to those of its Trustees who are affiliated with the
Adviser or to their officers, all of whom receive remuneration for their
services to the Funds from the Adviser.
6. SUBSEQUENT EVENT - DISTRIBUTIONS TO COMMON SHAREHOLDERS
The Funds declared Common share dividend distributions from their tax-exempt net
investment income which were paid on July 1, 2003, to shareholders of record on
June 15, 2003, as follows:
NORTH NORTH NORTH NORTH
GEORGIA GEORGIA GEORGIA CAROLINA CAROLINA CAROLINA CAROLINA
PREMIUM DIVIDEND DIVIDEND PREMIUM DIVIDEND DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2 INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
(NPG) (NZX) (NKG) (NNC) (NRB) (NNO) (NII)
---------------------------------------------------------------------------------------------------------
Dividend per share $.0730 $.0710 $.0670 $.0730 $.0735 $.0695 $.0670
=========================================================================================================
47
Financial
HIGHLIGHTS
Selected data for a Common share outstanding throughout each period:
Investment Operations Less Distributions
----------------------------------------------------------------- -----------------------------
Distributions Distributions
from Net from Net
Beginning Net Investment Capital Investment Capital
Common Realized/ Income to Gains to Income to Gains to
Share Net Unrealized Preferred Preferred Common Common
Net Asset Investment Investment Share- Share- Share- Share-
Value Income Gain (Loss) holders+ holders+ Total holders holders Total
====================================================================================================================================
GEORGIA PREMIUM
INCOME (NPG)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
2003 $14.31 $ .96 $ 1.02 $(.07) $-- $1.91 $(.86) $-- $(.86)
2002 14.15 1.02 .11 (.12) -- 1.01 (.85) -- (.85)
2001 12.80 1.06 1.35 (.26) -- 2.15 (.80) -- (.80)
2000 14.45 1.03 (1.65) (.23) -- (.85) (.80) -- (.80)
1999 14.58 1.01 (.13) (.21) -- .67 (.80) -- (.80)
GEORGIA DIVIDEND
ADVANTAGE (NZX)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
2003 14.00 .96 1.65 (.06) (.02) 2.53 (.81) (.13) (.94)
2002(a) 14.33 .58 (.19) (.06) -- .33 (.47) -- (.47)
GEORGIA DIVIDEND
ADVANTAGE 2 (NKG)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
2003(b) 14.33 .47 .92 (.04) -- 1.35 (.47) -- (.47)
====================================================================================================================================
Total Returns
-----------------
Based
Offering on
Costs and Ending Common
Preferred Common Based Share
Share Share Ending on Net
Underwriting Net Asset Market Market Asset
Discounts Value Value Value** Value**
======================================================================================
GEORGIA PREMIUM
INCOME (NPG)
--------------------------------------------------------------------------------------
Year Ended 5/31:
2003 $-- $15.36 $16.9500 12.92% 13.78%
2002 -- 14.31 15.8300 8.98 7.32
2001 -- 14.15 15.3500 30.41 16.98
2000 -- 12.80 12.4375 (18.84) (5.87)
1999 -- 14.45 16.2500 13.42 4.64
GEORGIA DIVIDEND
ADVANTAGE (NZX)
--------------------------------------------------------------------------------------
Year Ended 5/31:
2003 .03 15.62 15.5900 12.56 18.82
2002(a) (.19) 14.00 14.7400 1.42 1.02
GEORGIA DIVIDEND
ADVANTAGE 2 (NKG)
--------------------------------------------------------------------------------------
Year Ended 5/31:
2003(b) (.20) 15.01 14.9800 3.16 8.22
======================================================================================
Ratios/Supplemental Data
----------------------------------------------------------------------------------------------
Before Credit/Reimbursement After Credit/Reimbursement***
---------------------------- ----------------------------
Ratio of Net Ratio of Net
Ratio of Investment Ratio of Investment
Ending Expenses Income to Expenses Income to
Net to Average Average to Average Average
Assets Net Assets Net Assets Net Assets Net Assets
Applicable Applicable Applicable Applicable Applicable Portfolio
to Common to Common to Common to Common to Common Turnover
Shares (000) Shares++ Shares++ Shares++ Shares++ Rate
======================================================================================================================
GEORGIA PREMIUM
INCOME (NPG)
----------------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
2003 $58,050 1.29% 6.53% 1.26% 6.55% 22%
2002 53,909 1.37 7.12 1.35 7.13 37
2001 53,168 1.41 7.67 1.40 7.68 15
2000 47,991 1.43 7.73 1.40 7.76 17
1999 54,022 1.34 6.87 1.33 6.88 14
GEORGIA DIVIDEND
ADVANTAGE (NZX)
----------------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
2003 30,576 1.31 6.00 .83 6.49 48
2002(a) 27,381 1.37* 5.70* .92* 6.16* 60
GEORGIA DIVIDEND
ADVANTAGE 2 (NKG)
----------------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
2003(b) 68,325 1.16* 4.36* .69* 4.84* 17
======================================================================================================================
Preferred Shares at End of Period
---------------------------------------
Aggregate Liquidation
Amount and Market Asset
Outstanding Value Coverage
(000) Per Share Per Share
===============================================================
GEORGIA PREMIUM
INCOME (NPG)
---------------------------------------------------------------
Year Ended 5/31:
2003 $27,800 $25,000 $77,203
2002 27,800 25,000 73,480
2001 27,800 25,000 72,813
2000 27,800 25,000 68,157
1999 27,800 25,000 73,581
GEORGIA DIVIDEND
ADVANTAGE (NZX)
---------------------------------------------------------------
Year Ended 5/31:
2003 15,000 25,000 75,961
2002(a) 15,000 25,000 70,636
GEORGIA DIVIDEND
ADVANTAGE 2 (NKG)
---------------------------------------------------------------
Year Ended 5/31:
2003(b) 33,000 25,000 76,761
===============================================================
* Annualized.
** Total Investment Return on Market Value is the combination of reinvested
dividend income, reinvested capital gains distributions, if any, and
changes in stock price per share. Total Return on Common Share Net Asset
Value is the combination of reinvested dividend income, reinvested capital
gains distributions, if any, and changes in Common share net asset value
per share. Total returns are not annualized.
*** After custodian fee credit and expense reimbursement, where applicable.
+ The amounts shown are based on Common share equivalents.
++ Ratios do not reflect the effect of dividend payments to Preferred
shareholders; income ratios reflect income earned on assets attributable to
Preferred shares.
(a) For the period September 25, 2001 (commencement of operations) through May
31, 2002.
(b) For the period September 25, 2002 (commencement of operations) through May
31, 2003.
See accompanying notes to financial statements.
48-49 spread
Financial HIGHLIGHTS (continued)
Selected data for a Common share outstanding throughout each period:
Investment Operations Less Distributions
----------------------------------------------------------------- -----------------------------
Distributions Distributions
from Net from Net
Beginning Net Investment Capital Investment Capital
Common Realized/ Income to Gains to Income to Gains to
Share Net Unrealized Preferred Preferred Common Common
Net Asset Investment Investment Share- Share- Share- Share-
Value Income Gain (Loss) holders+ holders+ Total holders holders Total
====================================================================================================================================
NORTH CAROLINA
PREMIUM INCOME (NNC)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
2003 $14.18 $ .98 $ 1.27 $(.07) $-- $2.18 $(.86) $-- $(.86)
2002 13.94 1.02 .15 (.13) -- 1.04 (.80) -- (.80)
2001 12.62 1.03 1.31 (.27) -- 2.07 (.75) -- (.75)
2000 14.28 1.02 (1.61) (.26) -- (.85) (.81) -- (.81)
1999 14.48 1.02 (.22) (.21) -- .59 (.79) -- (.79)
NORTH CAROLINA
DIVIDEND ADVANTAGE (NRB)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
2003 14.39 1.00 1.54 (.06) (.02) 2.46 (.86) (.13) (.99)
2002 13.90 1.06 .38 (.13) -- 1.31 (.82) -- (.82)
2001(a) 14.33 .25 (.26) (.05) -- (.06) (.20) -- (.20)
NORTH CAROLINA
DIVIDEND
ADVANTAGE 2 (NNO)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
2003 14.30 .94 1.78 (.07) (.02) 2.63 (.82) (.13) (.95)
2002(b) 14.33 .38 .11 (.04) -- .45 (.34) -- (.34)
NORTH CAROLINA
DIVIDEND
ADVANTAGE 3 (NII)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
2003(c) 14.33 .49 .87 (.05) -- 1.31 (.47) -- (.47)
====================================================================================================================================
Total Returns
-----------------
Based
Offering on
Costs and Ending Common
Preferred Common Based Share
Share Share Ending on Net
Underwriting Net Asset Market Market Asset
Discounts Value Value Value** Value**
=======================================================================================
NORTH CAROLINA
PREMIUM INCOME (NNC)
---------------------------------------------------------------------------------------
Year Ended 5/31:
2003 $-- $15.50 $16.9500 10.27% 15.80%
2002 -- 14.18 16.2100 15.44 7.62
2001 -- 13.94 14.8000 14.03 16.65
2000 -- 12.62 13.6875 (7.76) (5.98)
1999 -- 14.28 15.6875 9.87 4.11
NORTH CAROLINA
DIVIDEND ADVANTAGE (NRB)
---------------------------------------------------------------------------------------
Year Ended 5/31:
2003 .01 15.87 16.4500 13.52 17.75
2002 -- 14.39 15.4400 7.54 9.58
2001(a) (.17) 13.90 15.1500 2.42 (1.57)
NORTH CAROLINA
DIVIDEND
ADVANTAGE 2 (NNO)
---------------------------------------------------------------------------------------
Year Ended 5/31:
2003 -- 15.98 15.9700 14.10 18.98
2002(b) (.14) 14.30 14.9000 1.64 2.22
NORTH CAROLINA
DIVIDEND
ADVANTAGE 3 (NII)
---------------------------------------------------------------------------------------
Year Ended 5/31:
2003(c) (.21) 14.96 15.2000 4.56 7.86
=======================================================================================
Ratios/Supplemental Data
----------------------------------------------------------------------------------------------
Before Credit/Reimbursement After Credit/Reimbursement***
---------------------------- ----------------------------
Ratio of Net Ratio of Net
Ratio of Investment Ratio of Investment
Ending Expenses Income to Expenses Income to
Net to Average Average to Average Average
Assets Net Assets Net Assets Net Assets Net Assets
Applicable Applicable Applicable Applicable Applicable Portfolio
to Common to Common to Common to Common to Common Turnover
Shares (000) Shares++ Shares++ Shares++ Shares++ Rate
=======================================================================================================================
NORTH CAROLINA
PREMIUM INCOME (NNC)
-----------------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
2003 $97,785 1.27% 6.60% 1.25% 6.62% 16%
2002 89,286 1.33 7.17 1.32 7.18 22
2001 87,614 1.34 7.47 1.30 7.51 19
2000 79,167 1.37 7.81 1.35 7.83 25
1999 89,377 1.30 6.97 1.30 6.97 8
NORTH CAROLINA
DIVIDEND ADVANTAGE (NRB)
-----------------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
2003 35,591 1.30 6.16 .83 6.62 39
2002 32,148 1.44 6.86 .90 7.40 37
2001(a) 31,015 1.31* 5.02* .85* 5.48* 29
NORTH CAROLINA
DIVIDEND
ADVANTAGE 2 (NNO)
-----------------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
2003 59,642 1.24 5.80 .76 6.27 22
2002(b) 53,383 1.19* 4.70* .74* 5.15* 43
NORTH CAROLINA
DIVIDEND
ADVANTAGE 3 (NII)
-----------------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
2003(c) 58,653 1.18* 4.61* .71* 5.08* 3
=======================================================================================================================
Preferred Shares at End of Period
---------------------------------------
Aggregate Liquidation
Amount and Market Asset
Outstanding Value Coverage
(000) Per Share Per Share
================================================================
NORTH CAROLINA
PREMIUM INCOME (NNC)
----------------------------------------------------------------
Year Ended 5/31:
2003 $46,800 $25,000 $77,236
2002 46,800 25,000 72,695
2001 46,800 25,000 71,802
2000 46,800 25,000 67,290
1999 46,800 25,000 72,744
NORTH CAROLINA
DIVIDEND ADVANTAGE (NRB)
----------------------------------------------------------------
Year Ended 5/31:
2003 17,000 25,000 77,340
2002 17,000 25,000 72,277
2001(a) 17,000 25,000 70,610
NORTH CAROLINA
DIVIDEND
ADVANTAGE 2 (NNO)
----------------------------------------------------------------
Year Ended 5/31:
2003 28,000 25,000 78,252
2002(b) 28,000 25,000 72,664
NORTH CAROLINA
DIVIDEND
ADVANTAGE 3 (NII)
----------------------------------------------------------------
Year Ended 5/31:
2003(c) 28,000 25,000 77,369
================================================================
* Annualized.
** Total Investment Return on Market Value is the combination of reinvested
dividend income, reinvested capital gains distributions, if any, and
changes in stock price per share. Total Return on Common Share Net Asset
Value is the combination of reinvested dividend income, reinvested capital
gains distributions, if any, and changes in Common share net asset value
per share. Total returns are not annualized.
*** After custodian fee credit and expense reimbursement, where applicable.
+ The amounts shown are based on Common share equivalents.
++ Ratios do not reflect the effect of dividend payments to Preferred
shareholders; income ratios reflect income earned on assets attributable to
Preferred shares.
(a) For the period January 31, 2001 (commencement of operations) through May
31, 2001.
(b) For the period November 16, 2001 (commencement of operations) through May
31, 2002.
(c) For the period September 25, 2002 (commencement of operations) through May
31, 2003.
See accompanying notes to financial statements.
50-51 spread
Trustees
AND OFFICERS
The management of the Fund, including general supervision of the duties
performed for the Fund under the management agreement between Nuveen Advisory
and the Fund, is the responsibility of the Board of Trustees of the Fund. The
number of trustees of the Fund is currently set at seven. None of the trustees
who are not "interested" persons of the Fund has ever been a director or
employee of, or consultant to, Nuveen or its affiliates. The names and business
addresses of the trustees and officers of the Fund, their principal occupations
and other affiliations during the past five years, the number of portfolios each
oversees and other directorships they hold are set forth below.
NUMBER OF
PORTFOLIOS
IN FUND
YEAR FIRST PRINCIPAL OCCUPATION(S) COMPLEX
NAME, BIRTHDATE POSITION(S) HELD ELECTED OR INCLUDING OTHER DIRECTORSHIPS OVERSEEN
AND ADDRESS WITH THE FUND APPOINTED(2) DURING PAST 5 YEARS BY TRUSTEE
------------------------------------------------------------------------------------------------------------------------------------
TRUSTEE WHO IS AN INTERESTED PERSON OF THE FUNDS:
------------------------------------------------------------------------------------------------------------------------------------
Timothy R. Schwertfeger (1) Chairman of the 1994 Chairman and Director (since 1996) of Nuveen 140
3/28/49 Board and Investments, Inc. and Nuveen Investments, LLC;
333 W. Wacker Drive Trustee Director (since 1992) and Chairman (since 1996) of
Chicago, IL 60606 Nuveen Advisory Corp. and Nuveen Institutional
Advisory Corp.; Chairman and Director (since 1997)
of Nuveen Asset Management, Inc.; Director (since 1996)
of Institutional Capital Corporation; Chairman and Director
(since 1999) of Rittenhouse Asset Management, Inc.;
Chairman of Nuveen Investments Advisers Inc. (since 2002).
TRUSTEES WHO ARE NOT INTERESTED PERSONS OF THE FUNDS:
------------------------------------------------------------------------------------------------------------------------------------
Robert P. Bremner Trustee 1997 Private Investor and Management Consultant. 122
8/22/40
333 W. Wacker Drive
Chicago, IL 60606
------------------------------------------------------------------------------------------------------------------------------------
Lawrence H. Brown Trustee 1993 Retired (since 1989) as Senior Vice President of The 122
7/29/34 Northern Trust Company; Director of the United Way of
333 W. Wacker Drive Highland Park-Highwood (since 2002).
Chicago, IL 60606
------------------------------------------------------------------------------------------------------------------------------------
Anne E. Impellizzeri Trustee 1994 Retired, formerly, Executive Director (since 1998) of 122
1/26/33 Manitoga/The Russel Wright Design Center; prior thereto,
333 W. Wacker Drive President and Chief Executive Officer of Blanton-Peale
Chicago, IL 60606 Institute (since 1990); prior thereto, Vice President,
Metropolitan Life Insurance Co.
------------------------------------------------------------------------------------------------------------------------------------
Peter R. Sawers Trustee 1991 Adjunct Professor of Business and Economics, 122
4/3/33 University of Dubuque, Iowa; formerly (1991-2000)
333 W. Wacker Drive Adjunct Professor, Lake Forest Graduate School of
Chicago, IL 60606 Management, Lake Forest, Illinois; prior thereto,
Executive Director, Towers Perrin Australia, a
management consulting firm; Chartered Financial Analyst;
Certified Management Consultant; Director, Executive
Service Corps of Chicago, a not-for-profit organization.
------------------------------------------------------------------------------------------------------------------------------------
William J. Schneider Trustee 1997 Senior Partner and Chief Operating Officer, 122
9/24/44 Miller-Valentine Group, Vice President,
333 W. Wacker Drive Miller-Valentine Realty, a development and contract
Chicago, IL 60606 company; Chair, MiamiValley Hospital; Chair,
Miami Valley Economic Development Coalition; formerly,
Member, Community Advisory Board, National City Bank,
Dayton, Ohio and Business Advisory Council, Cleveland
Federal Reserve Bank.
------------------------------------------------------------------------------------------------------------------------------------
Judith M. Stockdale Trustee 1997 Executive Director, Gaylord and Dorothy Donnelley 122
12/29/47 Foundation (since 1994); prior thereto, Executive
333 W. Wacker Drive Director, Great Lakes Protection Fund (from 1990
Chicago, IL 60606 to 1994).
52
NUMBER OF
PORTFOLIOS
IN FUND
YEAR FIRST PRINCIPAL OCCUPATION(S) COMPLEX
NAME, BIRTHDATE POSITION(S) HELD ELECTED OR INCLUDING OTHER DIRECTORSHIPS OVERSEEN
AND ADDRESS WITH THE FUND APPOINTED(3) DURING PAST 5 YEARS BY OFFICER
------------------------------------------------------------------------------------------------------------------------------------
OFFICERS OF THE FUNDS:
------------------------------------------------------------------------------------------------------------------------------------
Gifford R. Zimmerman Chief 1988 Managing Director (since 2002), Assistant Secretary 140
9/9/56 Administrative and Associate General Counsel, formerly, Vice President
333 W. Wacker Drive Officer and Assistant General Counsel of Nuveen Investments, LLC;
Chicago, IL 60606 Managing Director (since 2002), General Counsel and
Assistant Secretary, formerly, Vice President of Nuveen
Advisory Corp. and Nuveen Institutional Advisory Corp.;
Managing Director (since 2002), Assistant Secretary and
Associate General Counsel, formerly, Vice President
(since 2000), of Nuveen Asset Management, Inc.; Assistant
Secretary of Nuveen Investments, Inc. (since 1994);
Assistant Secretary of NWQ Investment Management
Company, LLC (since 2002); Vice President and
Assistant Secretary of Nuveen Investments Advisers Inc.
(since 2002); Managing Director, Associate General
Counsel and Assistant Secretary of Rittenhouse Asset
Management, Inc. (since May 2003); Chartered
Financial Analyst.
------------------------------------------------------------------------------------------------------------------------------------
Michael T. Atkinson Vice President 2000 Vice President (since 2002), formerly, Assistant 140
2/3/66 and Assistant Vice President (since 2000), previously, Associate of
333 W. Wacker Drive Secretary Nuveen Investments, LLC.
Chicago, IL 60606
------------------------------------------------------------------------------------------------------------------------------------
Paul L. Brennan Vice President 1999 Vice President (since 2002), formerly, Assistant 134
11/10/66 Vice President (since 1997), of Nuveen Advisory Corp.;
333 W. Wacker Drive prior thereto, portfolio manager of Flagship Financial
Chicago, IL 60606 Inc.; Chartered Financial Analyst and Certified Public
Accountant.
------------------------------------------------------------------------------------------------------------------------------------
Peter H. D'Arrigo Vice President 1999 Vice President of Nuveen Investments, LLC (since 1999), 140
11/28/67 and Treasurer prior thereto, Assistant Vice President (since 1997);
333 W. Wacker Drive Vice President and Treasurer of Nuveen Investments,
Chicago, IL 60606 Inc. (since 1999); Vice President and Treasurer of
Nuveen Advisory Corp. and Nuveen Institutional
Advisory Corp. (since 1999); Vice President and
Treasurer of Nuveen Asset Management,
Inc. (since 2002) and of Nuveen Investments
Advisers Inc. (since 2002); Assistant Treasurer
of NWQ Investment Management Company, LLC
(since 2002); Chartered Financial Analyst.
------------------------------------------------------------------------------------------------------------------------------------
Susan M. DeSanto Vice President 2001 Vice President of Nuveen Advisory Corp. (since 2001); 140
9/8/54 previously, Vice President of Van Kampen Investment
333 W. Wacker Drive Advisory Corp. (since 1998); Vice President of Nuveen
Chicago, IL 60606 Institutional Advisory Corp. (since 2002); prior thereto,
Assistant Vice President of Van Kampen Investment
Advisory Corp. (since 1994).
------------------------------------------------------------------------------------------------------------------------------------
Jessica R. Droeger Vice President 2000 Vice President (since 2002) and Assistant General 140
9/24/64 and Secretary Counsel (since 1998); formerly, Assistant Vice
333 W. Wacker Drive President (since 1998) of Nuveen Investments, LLC;
Chicago, IL 60606 Vice President (since 2002) and Assistant Secretary
(since 1998), formerly Assistant Vice President of
Nuveen Advisory Corp. and Nuveen Institutional
Advisory Corp.
53
Trustees
AND OFFICERS (continued)
NUMBER OF
PORTFOLIOS
IN FUND
YEAR FIRST PRINCIPAL OCCUPATION(S) COMPLEX
NAME, BIRTHDATE POSITION(S) HELD ELECTED OR INCLUDING OTHER DIRECTORSHIPS OVERSEEN
AND ADDRESS WITH THE FUND APPOINTED(3) DURING PAST 5 YEARS BY OFFICER
------------------------------------------------------------------------------------------------------------------------------------
OFFICERS OF THE FUNDS (CONTINUED):
------------------------------------------------------------------------------------------------------------------------------------
Lorna C. Ferguson Vice President 1998 Vice President of Nuveen Investments, LLC; Vice 140
10/24/45 President (since 1998) of Nuveen Advisory Corp. and
333 W. Wacker Drive Nuveen Institutional Advisory Corp.
Chicago, IL 60606
------------------------------------------------------------------------------------------------------------------------------------
William M. Fitzgerald Vice President 1995 Managing Director (since 2002) of Nuveen Investments, 140
3/2/64 LLC; Managing Director (since 2001), formerly Vice
333 W. Wacker Drive President of Nuveen Advisory Corp. and Nuveen
Chicago, IL 60606 Institutional Advisory Corp. (since 1995); Managing
Director of Nuveen Asset Management, Inc. (since 2001);
Vice President of Nuveen Investment Advisers Inc.
(since 2002); Chartered Financial Analyst.
------------------------------------------------------------------------------------------------------------------------------------
Stephen D. Foy Vice President 1998 Vice President (since 1993) and Funds Controller 140
5/31/54 and Controller (since 1998) of Nuveen Investments, LLC and Vice
333 W. Wacker Drive President and Funds Controller (since 1998) of Nuveen
Chicago, IL 60606 Investments, Inc.; Certified Public Accountant.
------------------------------------------------------------------------------------------------------------------------------------
J. Thomas Futrell Vice President 1988 Vice President of Nuveen Advisory Corp.; 134
7/5/55 Chartered Financial Analyst.
333 W. Wacker Drive
Chicago, IL 60606
------------------------------------------------------------------------------------------------------------------------------------
Richard A. Huber Vice President 1997 Vice President of Nuveen Institutional Advisory Corp. 134
3/26/63 (since 1998) and Nuveen Advisory Corp. (since 1997);
333 W. Wacker Drive prior thereto, Vice President and Portfolio Manager of
Chicago, IL 60606 Flagship Financial, Inc.
------------------------------------------------------------------------------------------------------------------------------------
Steven J. Krupa Vice President 1990 Vice President of Nuveen Advisory Corp. 134
8/21/57
333 W. Wacker Drive
Chicago, IL 60606
------------------------------------------------------------------------------------------------------------------------------------
David J. Lamb Vice President 2000 Vice President (since 2000) of Nuveen Investments, 140
3/22/63 LLC, previously Assistant Vice President (since 1999);
333 W. Wacker Drive prior thereto, Associate of Nuveen Investments, LLC;
Chicago, IL 60606 Certified Public Accountant.
------------------------------------------------------------------------------------------------------------------------------------
Tina M. Lazar Vice President 2002 Vice President (since 1999), previously, Assistant 140
8/27/61 Vice President (since 1993) of Nuveen Investments, LLC.
333 W. Wacker Drive
Chicago, IL 60606
------------------------------------------------------------------------------------------------------------------------------------
Larry W. Martin Vice President 1988 Vice President, Assistant Secretary and Assistant 140
7/27/51 and Assistant General Counsel of Nuveen Investments, LLC; Vice
333 W. Wacker Drive Secretary President and Assistant Secretary of Nuveen Advisory
Chicago, IL 60606 Corp. and Nuveen Institutional Advisory Corp.; Assistant
Secretary of Nuveen Investments, Inc. and (since 1997)
Nuveen Asset Management, Inc.; Vice President
(since 2000), Assistant Secretary and Assistant
General Counsel (since 1998) of Rittenhouse Asset
Management, Inc.; Vice President and Assistant Secretary
Nuveen Investments Advisers Inc. (since 2002); Assistant
of Secretary of NWQ Investment Management Company,
LLC (since 2002).
54
NUMBER OF
PORTFOLIOS
IN FUND
YEAR FIRST PRINCIPAL OCCUPATION(S) COMPLEX
NAME, BIRTHDATE POSITION(S) HELD ELECTED OR INCLUDING OTHER DIRECTORSHIPS OVERSEEN
AND ADDRESS WITH THE FUND APPOINTED(3) DURING PAST 5 YEARS BY OFFICER
------------------------------------------------------------------------------------------------------------------------------------
OFFICERS OF THE FUNDS (CONTINUED):
------------------------------------------------------------------------------------------------------------------------------------
Edward F. Neild, IV Vice President 1996 Managing Director (since 2002) of Nuveen Investments, 140
7/7/65 LLC; Managing Director (since 1997), formerly Vice
333 W. Wacker Drive President (since 1996) of Nuveen Advisory Corp. and
Chicago, IL 60606 Nuveen Institutional Advisory Corp.; Managing Director
of Nuveen Asset Management, Inc. (since 1999).
Chartered Financial Analyst.
------------------------------------------------------------------------------------------------------------------------------------
Thomas J. O'Shaughnessy Vice President 1999 Vice President (since 2002), formerly, Assistant 134
9/4/60 Vice President (since 1998), of Nuveen Advisory Corp.;
333 W. Wacker Drive prior thereto, portfolio manager.
Chicago, IL 60606
------------------------------------------------------------------------------------------------------------------------------------
Thomas C. Spalding Vice President 1982 Vice President of Nuveen Advisory Corp. and Nuveen 134
7/31/51 Institutional Advisory Corp.; Chartered Financial
333 W. Wacker Drive Analyst.
Chicago, IL 60606
(1) Mr. Schwertfeger is an "interested person" of the Funds, as defined in the
Investment Company Act of 1940, because he is an officer and trustee of
Nuveen Advisory Corp.
(2) Trustees serve a one-year term until his/her successor is elected. The year
first elected or appointed represents the year in which the Trustee was
first elected or appointed to any fund in the Nuveen Complex.
(3) Officers serve a one-year term 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.
55
Build Your Wealth
AUTOMATICALLY
SIDEBAR TEXT: NUVEEN MAKES REINVESTING EASY. A PHONE CALL IS ALL IT TAKES TO SET
UP YOUR REINVESTMENT ACCOUNT.
NUVEEN CLOSED-END EXCHANGE-TRADED FUNDS DIVIDEND REINVESTMENT PLAN
Your Nuveen Closed-End Exchange-Traded Fund allows you to conveniently reinvest
dividends and/or capital gains distributions in additional fund shares.
By choosing to reinvest, you'll be able to invest money regularly and
automatically, and watch your investment grow through the power of tax-free
compounding. Just like dividends or distributions in cash, there may be times
when income or capital gains taxes may be payable on dividends or distributions
that are reinvested.
It is important to note that an automatic reinvestment plan does not ensure a
profit, nor does it protect you against loss in a declining market.
EASY AND CONVENIENT
To make recordkeeping easy and convenient, each month you'll receive a statement
showing your total dividends and distributions, the date of investment, the
shares acquired and the price per share, and the total number of shares you own.
HOW SHARES ARE PURCHASED
The shares you acquire by reinvesting will either be purchased on the open
market or newly issued by the Fund. If the shares are trading at or above net
asset value at the time of valuation, the Fund will issue new shares at the
then-current market price. If the shares are trading at less than net asset
value, shares for your account will be purchased on the open market. Dividends
and distributions received to purchase shares in the open market will normally
be invested shortly after the dividend payment date. No interest will be paid on
dividends and distributions awaiting reinvestment. Because the market price of
shares may increase before purchases are completed, the average purchase price
per share may exceed the market price at the time of valuation, resulting in the
acquisition of fewer shares than if the dividend or distribution had been paid
in shares issued by the Fund. A pro rata portion of any applicable brokerage
commissions on open market purchases will be paid by Plan participants. These
commissions usually will be lower than those charged on individual transactions.
FLEXIBILITY
You may change your distribution option or withdraw from the Plan at any time,
should your needs or situation change. Should you withdraw, you can receive a
certificate for all whole shares credited to your reinvestment account and cash
payment for fractional shares, or cash payment for all reinvestment account
shares, less brokerage commissions and a $2.50 service fee.
You can reinvest whether your shares are registered in your name, or in the name
of a brokerage firm, bank, or other nominee. Ask your investment advisor if his
or her firm will participate on your behalf. Participants whose shares are
registered in the name of one firm may not be able to transfer the shares to
another firm and continue to participate in the Plan.
The Fund reserves the right to amend or terminate the Plan at any time. Although
the Fund reserves the right to amend the Plan to include a service charge
payable by the participants, there is no direct service charge to participants
in the Plan at this time.
For more information on the Nuveen Automatic Reinvestment Plan or to enroll in
or withdraw from the Plan, speak with your financial advisor or call us at (800)
257-8787.
56
Fund
INFORMATION
BOARD OF TRUSTEES
Robert P. Bremner
Lawrence H. Brown
Anne E. Impellizzeri
Peter R. Sawers
William J. Schneider
Timothy R. Schwertfeger
Judith M. Stockdale
FUND MANAGER
Nuveen Advisory Corp.
333 West Wacker Drive
Chicago, IL 60606
CUSTODIAN
State Street Bank & Trust
Boston, MA
TRANSFER AGENT AND
SHAREHOLDER SERVICES
State Street Bank & Trust
Nuveen Funds
P.O. Box 43071
Providence, RI 02940-3071
(800) 257-8787
LEGAL COUNSEL
Morgan, Lewis &
Bockius LLP
Washington, D.C.
INDEPENDENT AUDITORS
Ernst & Young LLP
Chicago, IL
POLICY CHANGE
On November 14, 2002, the Board adopted a policy that allows these Funds, in
addition to investments in municipal bonds, to invest up to 5% of its net assets
(including assets attributable to preferred shares, if any) in tax-exempt or
taxable fixed-income securities or equity securities for the purpose of
acquiring control of an issuer whose municipal bonds (a) the Fund already owns
and (b) have deteriorated or are expected shortly to deteriorate significantly
in credit quality, provided Nuveen Advisory determines that such investment
should enable the Fund to better maximize the value of its existing investment
in such issuer. This policy is a non-fundamental policy of each Fund which means
that it can be changed at any time by the Board of Trustees without vote of the
shareholders.
Glossary of Terms Used in this Report
Average Annual Total Return: This is a commonly used method to express an
investment's performance over a particular, usually multi-year time period. It
expresses the return (including change in NAV and reinvested dividends) that
would have been necessary on an annual basis to equal the investment's actual
performance over the time period being considered.
Average Effective Maturity: The average of all the maturities of the bonds in a
fund's portfolio, computed by weighting each maturity date (the date the
security comes due) by the market value of the security. This figure does not
account for the likelihood of prepayments or the exercise of call provisions.
Leverage-Adjusted Duration: Duration is a measure of a bond or bond fund's
sensitivity to changes in interest rates. Generally, the longer a bond or fund's
duration, the more the price of the bond or fund will change as interest rates
change. Leverage-adjusted duration takes into account the leveraging process for
a Fund and therefore is generally longer than the duration of the actual
portfolio of individual bonds that make up the Fund.
Market Yield (also known as Dividend Yield or Current Yield): An investment's
current annualized dividend divided by its current market price.
Net Asset Value (NAV): A fund's NAV is calculated by subtracting the liabilities
of the fund from its total assets and then dividing the remainder by the number
of shares outstanding. Fund NAVs are calculated at the end of each business day.
Taxable-Equivalent Yield: The yield necessary from a fully taxable investment to
equal, on an after-tax basis, the yield of a municipal bond investment.
---------
Each Fund intends to repurchase shares of its own common or preferred stock in
the future at such times and in such amounts as is deemed advisable. No shares
were repurchased during the period ended May 31, 2003. Any future repurchases
will be reported to shareholders in the next annual or semiannual report.
57
Serving Investors
FOR GENERATIONS
Since 1898, financial advisors and their clients have relied on Nuveen
Investments to provide dependable investment solutions. For the past century,
Nuveen Investments has adhered to the belief that the best approach to investing
is to apply conservative risk-management principles to help minimize volatility.
Building on this tradition, we today offer a range of high quality equity and
fixed-income solutions that are integral to a well-diversified core portfolio.
Our clients have come to appreciate this diversity, as well as our continued
adherence to proven, long-term investing principles.
Managing $80 billion in assets, Nuveen Investments offers access to
a number of different asset classes and investing solutions through a variety of
products. Nuveen Investments markets its capabilities under four distinct
brands: Nuveen, a leader in tax-free investments; NWQ, a leader in value-style
equities; Rittenhouse, a leader in growth-style equities; and Symphony, a
leading institutional manager of market-neutral alternative investment
portfolios.
To learn more about the products and services Nuveen Investments offers and for
a prospectus, where applicable, talk to your financial advisor, or call us at
(800) 257-8787. Please read the information carefully before you invest.
Distributed by
Nuveen Investments, LLC | 333 West Wacker Drive | Chicago, Illinois 60606
| www.nuveen.com
EAN-C-0503D
ITEM 2. CODE OF ETHICS.
Not applicable at this time.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable at this time.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable at this time.
ITEMS 5-6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES
Not applicable to this registrant.
ITEM 8. [RESERVED]
ITEM 9. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive officer and principal financial officer
have concluded that the registrant's Disclosure Controls and Procedures are
effective, based on our evaluation of such Disclosure Controls and Procedures
as of a date within 90 days of the filing of this report on Form N-CSR.
(b) There were no significant changes in the registrant's internal controls or
in other factors that could significantly affect these controls subsequent to
the date of our evaluation.
ITEM 10. EXHIBITS.
File the exhibits listed below as part of this Form. Letter or number the
exhibits in the sequence indicated.
(a) 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.
(b) A separate certification for each principal executive officer and principal
financial officer of the registrant as required by Rule 30a-2 under the Act (17
CFR 270.30a-2) in the exact form set forth below: Ex-99.CERT Attached hereto.
(c) A separate certification for each principal executive officer and principal
financial officer of the registrant as required by Section 906 of the Sarbanes-
Oxley Act of 2002. 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 Georgia Dividend Advantage Municipal Fund 2
-----------------------------------------------------------
By (Signature and Title)* /s/ Jessica R. Droeger
----------------------------------------------
Jessica R. Droeger
Vice President and Secretary
Date August 1, 2003
-------------------------------------------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ Gifford R. Zimmerman
----------------------------------------------
Gifford R. Zimmerman
Chief Administrative Officer
(Principal Executive Officer)
Date August 1, 2003
-------------------------------------------------------------------
By (Signature and Title)* /s/ Stephen D. Foy
----------------------------------------------
Stephen D. Foy
Vice President and Controller
(Principal Financial Officer)
Date August 1, 2003
-------------------------------------------------------------------
* Print the name and title of each signing officer under his or her signature.