UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-21153
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Nuveen Maryland Dividend Advantage Municipal Fund 3
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(Exact name of registrant as specified in charter)
Nuveen Investments
333 West Wacker Drive
Chicago, IL 60606
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(Address of principal executive offices) (Zip code)
Kevin J. McCarthy
Nuveen Investments
333 West Wacker Drive
Chicago, IL 60606
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(Name and address of agent for service)
Registrant's telephone number, including area code: (312) 917-7700
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Date of fiscal year end: May 31
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Date of reporting period: May 31, 2008
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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,
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burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
ANNUAL REPORT
May 31, 2008
Nuveen Investments
MUNICIPAL CLOSED-END FUNDS
Photo of: Small child
NUVEEN MARYLAND
PREMIUM INCOME
MUNICIPAL FUND
NMY
NUVEEN MARYLAND
DIVIDEND ADVANTAGE
MUNICIPAL FUND
NFM
NUVEEN MARYLAND
DIVIDEND ADVANTAGE
MUNICIPAL FUND 2
NZR
NUVEEN MARYLAND
DIVIDEND ADVANTAGE
MUNICIPAL FUND 3
NWI
NUVEEN VIRGINIA
PREMIUM INCOME
MUNICIPAL FUND
NPV
NUVEEN VIRGINIA
DIVIDEND ADVANTAGE
MUNICIPAL FUND
NGB
NUVEEN VIRGINIA
DIVIDEND ADVANTAGE
MUNICIPAL FUND 2
NNB
IT'S NOT WHAT YOU EARN, IT'S WHAT YOU KEEP.(R)
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Chairman's
LETTER TO SHAREHOLDERS
Photo of: Robert P. Bremner
Robert P. Bremner
Chairman of the Board
I'd like to use my initial letter to you to accomplish several things. First, I
want to report that after fourteen years of service on your Fund's Board,
including the last twelve as chairman, Tim Schwertfeger retired from the Board
in June. The Board has elected me to replace him as the chairman, the first time
this role has been filled by someone who is not an employee of Nuveen
Investments. Electing an independent chairman marks a significant milestone in
the management of your Fund, and it aligns us with what is now considered a
"best practice" in the fund industry. Further, it demonstrates the independence
with which your Board has always acted on your behalf.
Following Tim will not be easy. During my eleven previous years on the Nuveen
Fund Board, I found that Tim always set a very high standard by combining
insightful industry and market knowledge and sound, clear judgment. While the
Board will miss his wise counsel, I am certain we will retain the primary
commitment Tim shared with all of us - an unceasing dedication to creating and
retaining value for Nuveen Fund shareholders. This focus on value over time is a
touchstone that I and all the other Board members will continue to use when
making decisions on your behalf.
Second, I also want to report that we are very fortunate to be welcoming two new
Board members to our team. John Amboian, the current chairman and CEO of Nuveen
Investments, has agreed to replace Tim as Nuveen's representative on the Board.
John's presence will allow the independent Board members to benefit not only
from his leadership role at Nuveen but also his broad understanding of the fund
industry and Nuveen's role within it. We also are adding Terry Toth as an
independent director. A former CEO of the Northern Trust Company's asset
management group, Terry will bring extensive experience in the fund industry to
our deliberations.
Third, on behalf of the entire Board, I would like to acknowledge the effort the
whole Nuveen organization is making to resolve the auction rate preferred share
situation in a satisfactory manner. As you know, we are actively pursuing a
number of possible solutions, all with the goal of providing liquidity for
preferred shareholders while preserving the potential benefits of leverage for
common shareholders. We appreciate the patience you have shown as we've worked
through the many details involved.
Finally, I urge you to take the time to review the Portfolio Manager's Comments,
the Common Share Dividend and Share Price Information, and the Performance
Overview sections of this report. All of us are grateful that you have chosen
Nuveen Investments as a partner as you pursue your financial goals, and, on
behalf of myself and the other members of your Fund's Board, let me say we look
forward to continuing to earn your trust in the months and years ahead.
Sincerely,
/s/ Robert P. Bremner
Robert P. Bremner
Chairman of the Board
July 15, 2008
Portfolio Managers' COMMENTS
Nuveen Investments Municipal Closed-End Funds | NMY, NFM, NZR, NWI,
NPV, NGB, NNB
Portfolio manager Cathryn Steeves reviews economic and municipal market
conditions at both the national and state levels, key investment strategies, and
the annual performance of the Nuveen Maryland and Virginia Funds. Cathryn, who
joined Nuveen in 1996, has managed these seven Funds since 2006.
WHAT FACTORS AFFECTED THE U.S. ECONOMIC AND MUNICIPAL MARKET ENVIRONMENTS DURING
THE TWELVE-MONTH REPORTING PERIOD ENDED MAY 31, 2008?
During this period, developments in the credit markets led to increased price
volatility and tightening liquidity, causing a flight to quality. These
developments, which began to take shape last summer, became particularly evident
in August 2007 when market concerns about defaults on sub-prime mortgages
resulted in a liquidity crisis across all fixed income asset classes. In
September 2007, the Federal Reserve (Fed) responded to credit market volatility
by launching a series of interest rate cuts that lowered the fed funds rate by
325 basis points--from 5.25% to 2.00%--in eight months, including reductions of
125 basis points in January 2008 alone.
The Fed's actions also were a response to increased signs of weakness in the
U.S. economy, as evidenced by the slowing growth of the U.S. gross domestic
product (GDP), a closely watched measure of economic performance. While GDP
expanded at 3.8% in the second quarter of 2007 and 4.9% in the third quarter.
This measure dropped sharply to 0.6% in the fourth quarter of 2007 (all GDP
numbers annualized). In the first quarter of 2008, GDP grew at an annual rate of
1.0%, restrained by a 25% decline in residential investment and the weakest
consumer spending since 2001. Driven largely by increased energy and food
prices, the Consumer Price Index (CPI) registered a 4.2% year-over-year gain as
of May 2008. The core CPI (which excludes food and energy prices) rose 2.3%
between June 2007 and May 2008, remaining above the Fed's unofficial target of
2.0% or lower. In the labor markets, January 2008 marked the first decline in
new jobs creation since 2003, breaking the longest string of employment growth
(fifty-two months) in U.S. history. The national unemployment rate for May 2008
was 5.5%, its highest level since October 2004, compared with 4.5% in May 2007.
The 0.5% increase in this rate between April and May 2008 represented the
biggest one-month jump in more than twenty-two years.
In the municipal bond market, factors related to the sub-prime mortgage crisis
had an indirect, but important, influence on performance. General concerns about
the credit markets as well as more specific concerns about municipal bond
insurers with exposure to sub-prime mortgages caused some investors to curtail
purchases. As a result, in February 2008, hedge funds and other non-traditional
buyers of municipal bonds were forced to sell holdings of long-maturity bonds
into a market already
Discussions of specific investments are for illustrative purposes only and are
not intended as recommendations of individual investments. The views expressed
in this commentary represent those of the portfolio manager as of the date of
this report and are subject to change at any time, based on market conditions
and other factors. The Funds disclaim any obligation to advise shareholders of
such changes.
4
experiencing a lack of liquidity. Combined with the Fed rate cuts, this selling
produced a sharp steepening of the municipal yield curve, as longer-term
interest rates rose and short-term interest rates declined. In this environment,
bonds with shorter maturities generally outperformed longer maturity bonds and
higher quality bonds tended to outperform lower quality issues.
Also of note in the municipal market, the U.S. Supreme Court in May 2008 ruled
that individual states could continue to offer their residents special tax
treatment on municipal bonds issued within their borders. The high court's
decision in Department of Revenue of the Commonwealth of Kentucky vs. Davis
preserved tax rules in forty-two states, allowing them to continue to exempt
from taxation the income their residents earn on in-state municipal bonds while
taxing the income earned on municipal bonds issued in other states.
Over the twelve months ended May 2008, municipal bond issuance nationwide
totaled $467.0 billion, an increase of 2% from the previous twelve months. As of
May 31, 2008, insured bonds comprised 25% of new supply, compared with the
recent historical figure of approximately 50%. Despite disruptions in the
markets, new municipal issuance continued to be met with solid demand by
institutional and retail investors as well as nontraditional buyers returning to
the market in the last few months.
HOW WERE ECONOMIC AND MARKET CONDITIONS IN MARYLAND AND VIRGINIA DURING THIS
PERIOD?
Maryland's economic growth continued to be driven by education and health
services, professional and business services, and the government sector, with
Fort George G. Meade ranking as the state's largest employer (military and
civilian). Maryland's 2007 economic growth expanded at a rate of 2.0%, which
placed 22nd in the nation in terms of state GDP. Maryland continued to make
efforts to diversify its economy, and promising developments in the aerospace,
medical research, security, and distribution industries should help to increase
the state's long-term growth potential. While Maryland's old-line manufacturing
sector continued to shed jobs, employment in this sector was about half the
national average, which was a positive factor over the past few years. Housing
activity in Maryland continued to deteriorate, although not to the extent seen
in some other states. However, the consequences were felt in housing-related
industries such as construction and financial services. In May 2008, Maryland's
jobless rate was 4.0%, up from 3.5% in May 2007, putting unemployment in the
state at its highest level since November 2005. For fiscal 2009, the $31 billion
Maryland state budget included $340 million for school construction, $100
million for future retiree health costs, increased funding for the environment
and public safety, and expansion of health care coverage. The budget also called
for adding $739 million to the state's rainy day fund by the end of fiscal 2009.
As of May 2008, Moody's and Standard & Poor's (S&P) maintained their ratings on
Maryland general obligation debt at Aaa/AAA with stable outlooks. During the
twelve months ended May 31, 2008, issuance in the state totaled $7.6 billion, an
increase of 9% over the previous twelve-month period. From January-May 2008,
Maryland saw $2.9 billion in new municipal paper, down 2% from the first five
months of 2007.
Virginia's economy continued to be led by government, education and health
services, and professional and business services. Further growth in the
government sector may be hampered by deficits, which are weighing on all levels
of government, as well as by
5
military cutbacks. The commonwealth's manufacturing sector, beleaguered by the
disappearance of textile, furniture, and apparel factories over the past few
years, continued to decline, negatively affecting employment, especially in
rural areas. Virginia has not been immune to the impact of the housing market
slump nationwide, and the related construction and financial services sectors
also weakened. In 2007, Virginia's 2007 economic growth rate of 1.9%, ranked the
state 25th in the country according to state GDP. Over the long term, low
business costs, a highly skilled labor force, and a favorable regulatory
environment should help Virginia continue to attract new businesses, including
high-tech industries and back-office operations. Although unemployment in the
commonwealth rose from 3.0% in May 2007 to 3.9% in May 2008, Virginia's jobless
rate ranked as the 10th lowest in the nation. As of May 2008, Moody's and S&P
rated Virginia general obligation debt at Aaa/AAA with stable outlooks. During
the twelve months ended May 31, 2008, issuance in Virginia totaled $8.1 billion,
a decrease of 19% from the previous twelve months. The first five months of 2008
saw issuance decline more sharply to $3.4 billion, down 29% from the first five
months of 2007. Some of this decrease reflected the fact that issuance totals
for the previous periods included a $1.1 billion Virginia tobacco bond
refinancing deal in April 2007.
WHAT KEY STRATEGIES WERE USED TO MANAGE THESE FUNDS DURING THIS REPORTING
PERIOD?
During this twelve-month period, as the municipal market was characterized by
volatility and a steepening yield curve, we sought to capitalize on the
turbulent environment by continuing to focus on relative value, using a
fundamental approach to find undervalued sectors and individual credits with the
potential to perform well over the long term.
When August's liquidity crisis led the market to discount lower-quality and
higher-yielding bonds we took advantage of opportunities that we considered
undervalued to selectively add some of these types of bonds to our portfolios.
Among the issues we added to the Maryland and Virginia Funds were health care
and long-term care/retirement facilities bonds. The Virginia Funds also added
housing credits, while the Maryland Funds purchased some lower-rated convention
center bonds. All of the Maryland Funds also added exposure to the short end of
the yield curve by purchasing small positions in auction rate bonds. Because of
their extremely short durations, auction rate securities traditionally have been
far more popular with money market fund managers than municipal bond fund
managers. But demand for these issues evaporated when the credit markets became
relatively illiquid, and their yields rose to unprecedented levels. We saw an
opportunity to buy these bonds at attractive prices relative to their income.
To generate cash for purchases, we selectively sold some holdings with shorter
durations(1). Selling shorter duration bonds and reinvesting further out on the
yield curve also helped to improve the Funds' overall call protection profiles.
We also took advantage of strong bids to sell bonds that were attractive to the
retail market.
(1) Duration is a measure of a bond's price sensitivity as interest rates
change, with longer duration bonds displaying more sensitivity to these
changes than bonds with shorter durations.
6
As part of our disciplined approach to duration management, we used inverse
floating rate securities,(2) a type of derivative financial instrument, in all
seven of the Maryland and Virginia Funds throughout the reporting period. In
addition, we added new inverse floating rate securities to all of these Funds
during the last half of this period. Inverse floaters typically provide the dual
benefit of bringing the durations of the Funds closer to our strategic target
and enhancing their income-generation capabilities. NMY, NFM, NZR, and NPV also
used forward interest rate swaps, another type of derivative financial
instrument. The goal of this strategy was to help us manage the common share net
asset value (NAV) volatility of these Funds without having a negative impact on
their income streams or common share dividends over the short term. Given the
market environment, we thought it prudent to remove the forward interest rate
swaps from these four Funds, and as of May 31, 2008, there were no forward
interest rate swaps held in any of the Maryland or Virginia Funds.
HOW DID THE FUNDS PERFORM?
Individual results for the Nuveen Maryland and Virginia Funds, as well as
relevant index and peer group information, are presented in the accompanying
table.
Total Returns on Common Share Net Asset Value*
For periods ended 5/31/08
1-Year 5-Year 10-Year
Maryland Funds
NMY 1.63% 4.15% 5.45%
NFM 1.25% 3.88% N/A
NZR 1.54% 3.75% N/A
NWI 1.24% 3.83% N/A
Virginia Funds
NPV 1.56% 3.68% 5.46%
NGB 0.23% 4.21% N/A
NNB 0.63% 3.80% N/A
Lipper Other States
Municipal Debt Funds
Average(3) 0.84% 3.75% 5.25%
Lehman Brothers
Municipal Bond Index(4) 3.87% 3.67% 5.06%
For the twelve months ended May 31, 2008, the total returns on common share NAV
for the performance of NMY, NFM, NZR, NWI, and NPV exceeded the average return
for the Lipper Other States peer group, while NGB and NNB trailed the Lipper
average. All seven of the Funds underperformed the return on the national Lehman
Brothers Municipal Bond Index.
* Annualized.
Past performance is not predictive of future results. Current performance may be
higher or lower than the data shown. Returns do not reflect the deduction of
taxes that shareholders may have to pay on Fund distributions or upon the sale
of Fund shares.
For additional information, see the individual Performance Overview for your
Fund in this report.
(2) An inverse floating rate security is a financial instrument designed to pay
long-term tax-exempt interest at a rate that varies inversely with a
short-term tax-exempt interest rate index. For the Nuveen Funds, the index
typically used is the Securities Industry and Financial Markets (SIFM)
Municipal Swap Index (previously referred to as the Bond Market Association
Index or BMA). Inverse floaters, including those inverse floating rate
securities in which the Funds invested during this reporting period, are
further defined within the Notes to Financial Statements and Glossary of
Terms Used in This Report sections of this report.
(3) The Lipper Other States Municipal Debt Funds Average is calculated using
the returns of all closed-end funds in this category for each period as
follows: 1 year, 43; 5 years, 43; and 10 years, 18. Fund and Lipper returns
assume reinvestment of dividends.
(4) The Lehman Brothers Municipal Bond Index is an unleveraged, unmanaged
national index comprising a broad range of investment-grade municipal
bonds. Results for the Lehman index do not reflect any expenses.
7
One of the more significant factors impacting the performance of these Funds in
relation to that of the unleveraged Lehman Brothers Municipal Bond Index was the
use of financial leverage. While leverage provides opportunities for additional
income and total returns for common shareholders, the benefits of leveraging are
impacted by the general price movements of the bonds in each Fund's portfolio.
During this period, as the yields on longer-term bonds rose and their prices
correspondingly fell, declining valuations had a negative effect on performance
that was magnified by the use of leverage. In addition, the Funds' borrowing
costs remained relatively high, negatively impacting their total returns.
Other key factors that influenced the Funds' returns included yield curve and
duration positioning, the use of derivatives, credit exposure and sector
allocations and holdings of bonds backed by lower-rated municipal bond insurers.
Bonds in the Lehman Brothers Municipal Bond Index with maturities of less than
eight years, especially those maturing in approximately four to six years,
benefited the most from changes in the interest rate environment. As a result,
these bonds generally outperformed credits with longer maturities. Bonds having
the longest maturities (twenty-two years and longer) posted the worst returns.
For the most part, the duration positioning of these seven Funds was a net
positive for performance during this period. Although the Maryland Funds were
underexposed to the outperforming shorter maturity categories, this was
generally offset by the Fund's heavier allocations to the intermediate part of
the yield curve, which performed relatively well, and lower weightings in the
underperforming long part of the curve. The story was generally the same among
the Virginia Funds, except their weightings in longer maturity bonds were more
in line with that of the overall municipal market, which meant that this
exposure had a neutral effect on performance.
As mentioned earlier, NMY, NFM, NZR, and NPV used forward interest rate swaps
during part of this period to synthetically extend the Funds' durations and move
them closer to our strategic duration target. Despite the fact that longer
duration municipal bonds generally underperformed those with shorter durations,
the use of forward interest rate swaps had a positive impact on the return
performance of these four Funds. This was due to the fact that these interest
rate swaps provided exposure to taxable markets during a period when, in
contrast to recent historical trends, the taxable markets and the municipal
market moved in the opposite directions. As municipal market performance lagged
the gains in the taxable markets, the interest rate swaps performed very well.
After the removal of the forward interest rate swaps, the durations of these
four Funds remained slightly short of our strategic target, which helped their
performances as shorter duration bonds outperformed.
In addition, the inverse floaters used by all seven of these Funds throughout
the period generally had a negative impact on performance. This resulted from
the fact that the inverse floaters effectively increased the Funds' exposure to
longer maturity bonds during a period when shorter maturities were in favor in
the market. However,
8
the new inverse floating rate securities we added to the Maryland and Virginia
Funds late in this period performed well, due mainly to market conditions
following their establishment and, secondarily, to the high credit quality of
the bonds used to establish these trusts. All of the inverse floaters also
benefited these Funds by helping to support their income streams.
Bonds rated BBB or lower posted poor returns. The underperformance of the lower
credit quality sectors was largely the result of risk-averse investors' flight
to quality as disruptions in the financial and housing markets deepened. The
Funds' allocations to these credit quality sectors were generally higher than
that of the Lehman Brothers Municipal Bond Index, and the negative impact of
this greater exposure to credit risk accounted for some of the performance
differential between these Funds and the index. In addition, the Dividend
Advantage Funds, NFM, NZR, NWI, NGB, and NNB can invest up to 20% of their
assets in below-investment-grade securities (bonds rated BB or below) or in
non-rated bonds judged to be in the same credit quality category. The greater
exposure of these five Funds to this segment of the market detracted from the
performance of these Funds relative to NMY and NPV, which overall represented
higher credit quality. As of May 31, 2008, NMY and NPV had allocated 15% and
14%, respectively, to bonds rated BBB or lower and non-rated bonds, while the
allocations of the five Maryland and Virginia Dividend Advantage Funds ranged
from approximately 17% in NNB to 24% in NFM and NWI.
In general, bonds that carried any credit risk, regardless of sector, tended to
perform poorly. Revenue bonds as a whole, and especially the industrial
development and health care (including hospitals and long-term care) sectors
that had ranked among the top performers in the Lehman Brothers Municipal Bond
Index over the past few years, underperformed the general municipal market. The
housing sector also performed poorly, as did lower-rated bonds backed by the
1998 master tobacco settlement agreement, which comprised approximately 1% to 2%
of the portfolios of the Maryland Funds and approximately 3% of the Virginia
Funds as of May 31, 2008.
Sectors of the market that generally contributed positively to the Funds'
performances included general obligation bonds, water and sewer, special tax
issues, and education. Pre-refunded bonds(5) performed exceptionally well, due
primarily to their shorter effective maturities and higher credit quality.
Another factor that had an impact on the performance of these Funds was their
position in bonds backed by municipal bond insurers that experienced downgrades
in their credit ratings. As concern increased about the balance sheets of these
insurers, prices on bonds insured by these companies declined, detracting from
the Funds' performance. On the whole, the holdings of all of our Funds continued
to be well diversified not only between insured and uninsured bonds, but also
within the insured bond category.
(5) Advance refundings, also known as pre-refundings or refinancings, occur
when an issuer sells new bonds and uses the proceeds to fund principal and
interest payments of older existing bonds. This process often results in
lower borrowing costs for bond issuers.
9
RECENT DEVELOPMENTS REGARDING BOND INSURANCE COMPANIES
The portfolios of investments reflect the ratings on certain bonds insured by
ACA, AMBAC, CIFG, FGIC, MBIA, RAAI and XLCA as of May 31, 2008. During the
period covered by this report, each of these insurers experienced one or more
rating reductions by at least one or more rating agencies. Subsequent to May 31,
2008, at least one rating agency further reduced their rating and at least one
rating agency had withdrawn their rating for AMBAC-insured and MBIA-insured
bonds. At the time this report was prepared, at least one rating agency has
placed each of these insurers on "negative credit watch", which may presage one
or more rating reductions for such insurer or insurers in the future. If one or
more insurers' ratings are reduced by these rating agencies, it would likely
reduce the effective rating of many of the bonds insured by that insurer or
insurers. It is important to note that municipal bonds historically have had a
very low rate of default.
RECENT DEVELOPMENTS IN THE AUCTION RATE PREFERRED SECURITIES (ARPS) MARKETS
Beginning in February 2008, more shares for sale were submitted in the regularly
scheduled auctions for the preferred shares issued by these Funds than there
were offers to buy. This meant that these auctions "failed to clear" and that
many or all auction preferred shareholders who wanted to sell their shares in
these auctions were unable to do so. This decline in liquidity in auction
preferred shares did not lower the credit quality of these shares, and auction
preferred shareholders unable to sell their shares received distributions at the
"maximum rate" applicable to failed auctions as calculated in accordance with
the pre-established terms of the auction preferred shares. At the time this
report was prepared, the Funds' managers could not predict when future auctions
might succeed in attracting sufficient buyers for the shares offered, if ever.
The Funds' managers are working diligently to refund the auction preferred
shares, and have made progress in these efforts, but at present there is no
assurance that these efforts will succeed. These developments generally do not
affect the management or investment policies of these Funds. However, one
implication of these auction failures for common shareholders is that the Funds'
cost of leverage will likely be higher, at least temporarily, than it otherwise
would have been had the auctions continued to be successful. As a result, the
Funds' future common share earnings may be lower than they otherwise would have
been.
On June 11, 2008, Nuveen announced the Fund Board's approval of plans to use
tender option bonds (TOBs), also known as floating rate securities, to refinance
a portion of the municipal funds' outstanding ARPS, whose auctions have been
failing for several months, including an initial phase of approximately $1
billion in forty-one funds. On June 26, 2008, thirteen municipal funds (none of
which are included in this shareholder report) issued par redemption notices for
a portion of their auction-rate securities aggregating approximately $580
million.
For current, up-to-date information, please visit the Nuveen CEF Auction Rate
Preferred Resource Center at:
http://www.nuveen.com/ResourceCenter/AuctionRatePreferred.aspx.
10
Common Share
Dividend and Share Price
INFORMATION
As previously noted, all of the Funds in this report use leverage to potentially
enhance opportunities for additional income for common shareholders. While this
strategy continued to provide incremental income, the extent of this benefit was
reduced to some degree by the borrowing costs associated with leverage, which
remained relatively high. Some of the Funds' income streams were also impacted
as the proceeds from older, higher-yielding bonds that matured or were called
were reinvested into bonds currently available in the market, which generally
offered lower yields than the maturing or called bonds. These factors resulted
in one monthly dividend reduction in NMY and NGB during this reporting period.
Over the twelve-month reporting period ended May 31, 2008, the dividends, NFM,
NZR, NWI, NPV, and NNB remained stable.
Due to normal portfolio activity, common shareholders of the following Funds
received capital gains and/or net ordinary income distributions at the end of
December 2007 as follows:
Short-Term Capital Gains
Long-Term Capital Gains and/or Ordinary Income
(per share) (per share)
NMY -- $0.0074
NZR $0.0327 $0.0016
NPV $0.0863 $0.0007
NGB $0.0977 $0.0069
NNB $0.0570 $0.0029
All of the Funds in this report seek to pay stable dividends at rates that
reflect each Fund's past results and projected future performance. During
certain periods, each Fund may pay dividends at a rate that may be more or less
than the amount of net investment income actually earned by the Fund during the
period. If a Fund has cumulatively earned more than it has paid in dividends, it
holds the excess in reserve as undistributed net investment income (UNII) as
part of the Fund's common share NAV. Conversely, if a Fund has cumulatively paid
dividends in excess of its earnings, the excess constitutes negative UNII that
is likewise reflected in the Fund's common share NAV. Each Fund will, over time,
pay all of its net investment income as dividends to shareholders. As of May 31,
2008, all of the Funds in this report had positive UNII balances for tax
purposes. NMY, NWI, NPV and NGB had positive UNII balances and NFM, NZR and NNB
had negative UNII balances for financial statement purposes.
11
As of May 31, 2008, the Funds' common share prices were trading at premiums or
discounts to their common share NAVs as shown in the accompanying chart:
5/31/08 Twelve-Month Average
Premium/Discount Premium/Discount
NMY -7.68% -8.20%
NFM +0.50% -2.66%
NZR -0.28% -4.38%
NWI -7.20% -8.06%
NPV -2.43% -4.93%
NGB +4.22% +0.20%
NNB +1.81% +0.09%
12
NMY
Performance
OVERVIEW
Nuveen Maryland Premium Income Municipal Fund
as of May 31, 2008
Pie Chart:
Credit Quality (as a % of total investments)(1)
AAA/U.S. Guaranteed 56%
AA 18%
A 11%
BBB 12%
BB or Lower 1%
N/R 2%
Bar Chart:
2007-2008 Monthly Tax-Free Dividends Per Common Share(3)
Jun 0.0515
Jul 0.0515
Aug 0.0515
Sep 0.0515
Oct 0.0495
Nov 0.0495
Dec 0.0495
Jan 0.0495
Feb 0.0495
Mar 0.0495
Apr 0.0495
May 0.0495
Line Chart:
Common Share Price Performance -- Weekly Closing Price
6/01/07 14.73
14.47
14.12
13.94
13.76
13.7
13.46
13.37
13.1984
13.42
13.3
12.95
13.2401
13.68
13.57
13.59
13.23
13.22
13.23
13.08
13.07
13.1399
13.14
12.8
12.42
12.48
12.71
12.94
12.76
12.46
12.63
13.18
13.47
13.31
13.42
13.48
13.53
12.75
12.7
12.25
12.67
12.46
12.48
12.685
12.9
12.8
12.8
12.83
12.92
12.82
12.78
12.92
13.1
5/31/08 13.1
FUND SNAPSHOT
------------------------------------
Common Share Price $13.10
------------------------------------
Common Share
Net Asset Value $14.19
------------------------------------
Premium/(Discount) to NAV -7.68%
------------------------------------
Market Yield 4.53%
------------------------------------
Taxable-Equivalent Yield(2) 6.62%
------------------------------------
Net Assets Applicable to
Common Shares ($000) $150,994
------------------------------------
Average Effective Maturity
on Securities (Years) 15.79
------------------------------------
Leverage-Adjusted Duration 10.23
------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 3/18/93)
------------------------------------
ON SHARE PRICE ON NAV
------------------------------------
1-Year -7.55% 1.63%
------------------------------------
5-Year -0.19% 4.15%
------------------------------------
10-Year 3.98% 5.45%
------------------------------------
INDUSTRIES
(as a % of total investments)
------------------------------------
Tax Obligation/General 22.8%
------------------------------------
Health Care 14.5%
------------------------------------
U.S. Guaranteed 14.3%
------------------------------------
Education and Civic
Organizations 11.4%
------------------------------------
Tax Obligation/Limited 10.1%
------------------------------------
Housing/Multifamily 8.1%
------------------------------------
Housing/Single Family 5.0%
------------------------------------
Other 13.8%
------------------------------------
(1) The percentages shown in the foregoing chart may reflect the ratings on
certain bonds insured by ACA, AMBAC, CIFG, FGIC, MBIA, RAAI and XLCA as of
May 31, 2008. Please see the Portfolio Manager's Commentary for an expanded
discussion of the affect on the Fund of changes to the ratings of certain
bonds in the portfolio resulting from changes to the ratings of the
underlying insurers both during the period and after period end.
(2) Taxable-Equivalent Yield represents the yield that must be earned on a
fully taxable investment in order to equal the yield of the Fund on an
after-tax basis. It is based on a combined federal and state income tax
rate of 31.6%. When comparing this Fund to investments that generate
qualified dividend income, the Taxable-Equivalent Yield is lower.
(3) The Fund paid shareholders a net ordinary income distribution in December
2007 of $0.0074 per share.
13
NFM
Performance
OVERVIEW
Nuveen Maryland Dividend Advantage Municipal Fund
as of May 31, 2008
Pie Chart:
Credit Quality (as a % of total investments)(1)
AAA/U.S. Guaranteed 46%
AA 14%
A 16%
BBB 16%
BB or Lower 1%
N/R 7%
Bar Chart:
2007-2008 Monthly Tax-Free Dividends Per Common Share
Jun 0.0585
Jul 0.0585
Aug 0.0585
Sep 0.0585
Oct 0.0585
Nov 0.0585
Dec 0.0585
Jan 0.0585
Feb 0.0585
Mar 0.0585
Apr 0.0585
May 0.0585
Line Chart:
Common Share Price Performance -- Weekly Closing Price
6/01/07 15.16
14.94
15
14.9
14.62
14.7199
14.51
14.42
14.3
14.68
14.3
13.5
13.78
13.9
14.38
14.06
13.8
14
13.8101
13.73
13.67
13.65
13.36
13.2401
13.07
13.14
13.017
13.35
13
13.01
13.13
13.76
13.89
14
13.96
13.95
13.936
13.74
13.33
12.65
13.13
13.11
13.85
14
14.1
13.72
13.6
13.9
13.95
14.03
14.25
13.91
14.19
5/31/08 14.19
FUND SNAPSHOT
------------------------------------
Common Share Price $14.19
------------------------------------
Common Share
Net Asset Value $14.12
------------------------------------
Premium/(Discount) to NAV 0.50%
------------------------------------
Market Yield 4.95%
------------------------------------
Taxable-Equivalent Yield(2) 7.24%
------------------------------------
Net Assets Applicable to
Common Shares ($000) $59,100
------------------------------------
Average Effective Maturity
on Securities (Years) 18.53
------------------------------------
Leverage-Adjusted Duration 9.90
------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 1/23/01)
------------------------------------
ON SHARE PRICE ON NAV
------------------------------------
1-Year -2.31% 1.25%
------------------------------------
5-Year 2.94% 3.88%
------------------------------------
Since
Inception 4.68% 5.57%
------------------------------------
INDUSTRIES
(as a % of total investments)
------------------------------------
Health Care 20.9%
------------------------------------
Tax Obligation/General 15.1%
------------------------------------
U.S. Guaranteed 13.7%
------------------------------------
Housing/Multifamily 12.3%
------------------------------------
Tax Obligation/Limited 10.6%
------------------------------------
Education and Civic
Organizations 8.3%
------------------------------------
Housing/Single Family 5.4%
------------------------------------
Other 13.7%
------------------------------------
(1) The percentages shown in the foregoing chart may reflect the ratings on
certain bonds insured by ACA, AMBAC, CIFG, FGIC, MBIA, RAAI and XLCA as of
May 31, 2008. Please see the Portfolio Manager's Commentary for an expanded
discussion of the affect on the Fund of changes to the ratings of certain
bonds in the portfolio resulting from changes to the ratings of the
underlying insurers both during the period and after period end.
(2) Taxable-Equivalent Yield represents the yield that must be earned on a
fully taxable investment in order to equal the yield of the Fund on an
after-tax basis. It is based on a combined federal and state income tax
rate of 31.6%. When comparing this Fund to investments that generate
qualified dividend income, the Taxable-Equivalent Yield is lower.
14
NZR
Performance
OVERVIEW
Nuveen Maryland Dividend Advantage Municipal Fund 2
as of May 31, 2008
Pie Chart:
Credit Quality (as a % of total investments)(1)
AAA/U.S. Guaranteed 45%
AA 22%
A 12%
BBB 14%
BB or Lower 2%
N/R 5%
Bar Chart:
2007-2008 Monthly Tax-Free Dividends Per Common Share(3)
Jun 0.0585
Jul 0.0585
Aug 0.0585
Sep 0.0585
Oct 0.0585
Nov 0.0585
Dec 0.0585
Jan 0.0585
Feb 0.0585
Mar 0.0585
Apr 0.0585
May 0.0585
Line Chart:
Common Share Price Performance -- Weekly Closing Price
6/01/07 15.31
14.97
14.75
14.5
14.52
14.5
14.33
14.28
14.08
14.35
14.04
13.68
13.85
13.86
14.37
14.05
13.9
14.04
13.85
13.95
13.7
13.78
13.52
13.54
13.05
13.04
13.26
13.39
13.19
12.86
13.17
13.83
14.19
13.95
13.8001
13.8
13.99
13.24
13.43
12.73
13.26
12.94
13.03
13.11
13.355
13.49
13.31
13.75
14
14.05
13.98
14.21
14.25
5/31/08 14.25
FUND SNAPSHOT
------------------------------------
Common Share Price $14.25
------------------------------------
Common Share
Net Asset Value $14.29
------------------------------------
Premium/(Discount) to NAV -0.28%
------------------------------------
Market Yield 4.93%
------------------------------------
Taxable-Equivalent Yield(2) 7.21%
------------------------------------
Net Assets Applicable to
Common Shares ($000) $59,921
------------------------------------
Average Effective Maturity
on Securities (Years) 17.42
------------------------------------
Leverage-Adjusted Duration 9.80
------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 9/25/01)
------------------------------------
ON SHARE PRICE ON NAV
------------------------------------
1-Year -2.30% 1.54%
------------------------------------
5-Year 3.77% 3.75%
------------------------------------
Since
Inception 4.74% 5.58%
------------------------------------
INDUSTRIES
(as a % of total investments)
------------------------------------
Tax Obligation/General 18.7%
------------------------------------
Health Care 17.0%
------------------------------------
U.S. Guaranteed 14.9%
------------------------------------
Tax Obligation/Limited 11.8%
------------------------------------
Education and Civic
Organizations 9.7%
------------------------------------
Housing/Multifamily 6.2%
------------------------------------
Housing/Single Family 5.5%
------------------------------------
Transportation 3.8%
------------------------------------
Other 12.4%
------------------------------------
(1) The percentages shown in the foregoing chart may reflect the ratings on
certain bonds insured by ACA, AMBAC, CIFG, FGIC, MBIA, RAAI and XLCA as of
May 31, 2008. Please see the Portfolio Manager's Commentary for an expanded
discussion of the affect on the Fund of changes to the ratings of certain
bonds in the portfolio resulting from changes to the ratings of the
underlying insurers both during the period and after period end.
(2) Taxable-Equivalent Yield represents the yield that must be earned on a
fully taxable investment in order to equal the yield of the Fund on an
after-tax basis. It is based on a combined federal and state income tax
rate of 31.6%. When comparing this Fund to investments that generate
qualified dividend income, the Taxable-Equivalent Yield is lower.
(3) The Fund paid shareholders capital gains and net ordinary income
distributions in December 2007 of $.0343 per share.
15
NWI
Performance
OVERVIEW
Nuveen Maryland Dividend Advantage Municipal Fund 3
as of May 31, 2008
Pie Chart:
Credit Quality (as a % of total investments)(1)
AAA/U.S. Guaranteed 40%
AA 25%
A 11%
BBB 17%
BB or Lower 2%
N/R 5%
Bar Chart:
2007-2008 Monthly Tax-Free Dividends Per Common Share
Jun 0.0525
Jul 0.0525
Aug 0.0525
Sep 0.0525
Oct 0.0525
Nov 0.0525
Dec 0.0525
Jan 0.0525
Feb 0.0525
Mar 0.0525
Apr 0.0525
May 0.0525
Line Chart:
Common Share Price Performance -- Weekly Closing Price
6/01/07 14.6
14.51
13.76
13.57
13.56
13.61
13.29
13.16
13.39
13.3
13.2
12.79
12.86
13.39
13.52
13.44
13.04
13.4
13.09
13.06
12.9799
12.95
12.92
12.61
12.21
12.34
12.63
12.56
12.31
12.21
12.38
13.02
13.19
13.04
13.06
13.2
13.32
12.71
12.6
12.5099
12.7
12.29
12.65
12.69
12.76
12.62
12.72
12.7
12.9
12.88
13
13.14
13.01
5/31/08 13.01
FUND SNAPSHOT
------------------------------------
Common Share Price $13.01
------------------------------------
Common Share
Net Asset Value $14.02
------------------------------------
Premium/(Discount) to NAV -7.20%
------------------------------------
Market Yield 4.84%
------------------------------------
Taxable-Equivalent Yield(2) 7.08%
------------------------------------
Net Assets Applicable to
Common Shares ($000) $75,205
------------------------------------
Average Effective Maturity
on Securities (Years) 17.57
------------------------------------
Leverage-Adjusted Duration 10.81
------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 9/25/02)
------------------------------------
ON SHARE PRICE ON NAV
------------------------------------
1-Year -7.38% 1.24%
------------------------------------
5-Year 2.44% 3.83%
------------------------------------
Since
Inception 2.60% 4.65%
------------------------------------
INDUSTRIES
(as a % of total investments)
------------------------------------
Tax Obligation/Limited 20.7%
------------------------------------
Health Care 17.2%
------------------------------------
Tax Obligation/General 14.4%
------------------------------------
U.S. Guaranteed 11.2%
------------------------------------
Housing/Multifamily 9.5%
------------------------------------
Education and Civic
Organizations 8.0%
------------------------------------
Housing/Single Family 3.9%
------------------------------------
Water and Sewer 3.6%
------------------------------------
Other 11.5%
------------------------------------
(1) The percentages shown in the foregoing chart may reflect the ratings on
certain bonds insured by ACA, AMBAC, CIFG, FGIC, MBIA, RAAI and XLCA as of
May 31, 2008. Please see the Portfolio Manager's Commentary for an expanded
discussion of the affect on the Fund of changes to the ratings of certain
bonds in the portfolio resulting from changes to the ratings of the
underlying insurers both during the period and after period end.
(2) Taxable-Equivalent Yield represents the yield that must be earned on a
fully taxable investment in order to equal the yield of the Fund on an
after-tax basis. It is based on a combined federal and state income tax
rate of 31.6%. When comparing this Fund to investments that generate
qualified dividend income, the Taxable-Equivalent Yield is lower.
16
NPV
Performance
OVERVIEW
Nuveen Virginia Premium Income Municipal Fund
as of May 31, 2008
Pie Chart:
Credit Quality (as a % of total investments)(1)
AAA/U.S. Guaranteed 52%
AA 25%
A 9%
BBB 9%
BB or Lower 1%
N/R 4%
Bar Chart:
2007-2008 Monthly Tax-Free Dividends Per Common Share(3)
Jun 0.053
Jul 0.053
Aug 0.053
Sep 0.053
Oct 0.053
Nov 0.053
Dec 0.053
Jan 0.053
Feb 0.053
Mar 0.053
Apr 0.053
May 0.053
Line Chart:
Common Share Price Performance -- Weekly Closing Price
6/01/07 15.25
14.91
14.6
14.62
14.6699
14.87
14.43
14.21
14.11
14.1
13.87
13.98
14.28
14.08
14.41
14.38
14.14
14.27
13.94
13.83
13.7
13.94
13.68
13.57
13.1199
13.38
13.29
13.43
13
13
13.17
13.83
13.93
13.88
13.8
14.07
14.1
13.24
13.33
12.95
13.4701
13.08
13
13.33
13.39
13.51
13.35
13.46
13.47
13.8
13.75
13.993
14.04
5/31/08 14.04
FUND SNAPSHOT
------------------------------------
Common Share Price $14.04
------------------------------------
Common Share
Net Asset Value $14.39
------------------------------------
Premium/(Discount) to NAV -2.43%
------------------------------------
Market Yield 4.53%
------------------------------------
Taxable-Equivalent Yield(2) 6.67%
------------------------------------
Net Assets Applicable to
Common Shares ($000) $128,512
------------------------------------
Average Effective Maturity
on Securities (Years) 16.03
------------------------------------
Leverage-Adjusted Duration 10.45
------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 3/18/93)
------------------------------------
ON SHARE PRICE ON NAV
------------------------------------
1-Year -2.94% 1.56%
------------------------------------
5-Year 0.82% 3.68%
------------------------------------
10-Year 4.09% 5.46%
------------------------------------
INDUSTRIES
(as a % of total investments)
------------------------------------
Tax Obligation/Limited 21.0%
------------------------------------
Health Care 16.5%
------------------------------------
Tax Obligation/General 14.4%
------------------------------------
U.S. Guaranteed 11.6%
------------------------------------
Transportation 7.0%
------------------------------------
Water and Sewer 6.5%
------------------------------------
Housing/Single Family 5.3%
------------------------------------
Utilities 4.8%
------------------------------------
Other 12.9%
------------------------------------
(1) The percentages shown in the foregoing chart may reflect the ratings on
certain bonds insured by ACA, AMBAC, CIFG, FGIC, MBIA, RAAI and XLCA as of
May 31, 2008. Please see the Portfolio Manager's Commentary for an expanded
discussion of the affect on the Fund of changes to the ratings of certain
bonds in the portfolio resulting from changes to the ratings of the
underlying insurers both during the period and after period end.
(2) Taxable-Equivalent Yield represents the yield that must be earned on a
fully taxable investment in order to equal the yield of the Fund on an
after-tax basis. It is based on a combined federal and state income tax
rate of 32.1%. When comparing this Fund to investments that generate
qualified dividend income, the Taxable-Equivalent Yield is lower.
(3) The Fund paid shareholders capital gains and net ordinary income
distributions in December 2007 of $.0870 per share.
17
NGB
Performance
OVERVIEW
Nuveen Virginia Dividend Advantage Municipal Fund
as of May 31, 2008
Pie Chart:
Credit Quality (as a % of total investments)(1)
AAA/U.S. Guaranteed 54%
AA 17%
A 9%
BBB 9%
BB or Lower 1%
N/R 10%
Bar Chart:
2007-2008 Monthly Tax-Free Dividends Per Common Share(3)
Jun 0.0595
Jul 0.0595
Aug 0.0595
Sep 0.0595
Oct 0.0565
Nov 0.0565
Dec 0.0565
Jan 0.0565
Feb 0.0565
Mar 0.0565
Apr 0.0565
May 0.0565
Line Chart:
Common Share Price Performance -- Weekly Closing Price
6/01/07 17.52
17.15
17.04
16.6
16.45
15.99
15.289
15.2799
15.06
14.38
14.52
14.47
14.11
14.901
14.8678
15
14.21
14.252
14.29
14.1225
14.45
14.3
14.19
14.0799
13.95
13.51
13.4
13.8506
13.33
13.36
13.4
14.04
14.5
14.4801
14.67
14.32
14.082
13.45
13.42
13.23
13.2
13.41
13.3
13.5
13.67
14.09
14.5499
14.57
14.8
14.65
14.98
14.6804
14.81
5/31/08 14.81
FUND SNAPSHOT
------------------------------------
Common Share Price $14.81
------------------------------------
Common Share
Net Asset Value $14.21
------------------------------------
Premium/(Discount) to NAV 4.22%
------------------------------------
Market Yield 4.58%
------------------------------------
Taxable-Equivalent Yield(2) 6.75%
------------------------------------
Net Assets Applicable to
Common Shares ($000) $44,512
------------------------------------
Average Effective Maturity
on Securities (Years) 17.05
------------------------------------
Leverage-Adjusted Duration 10.85
------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 1/26/01)
------------------------------------
ON SHARE PRICE ON NAV
------------------------------------
1-Year -10.58% 0.23%
------------------------------------
5-Year 2.13% 4.21%
------------------------------------
Since
Inception 5.24% 5.78%
------------------------------------
INDUSTRIES
(as a % of total investments)
------------------------------------
U.S. Guaranteed 17.0%
------------------------------------
Transportation 16.1%
------------------------------------
Tax Obligation/General 12.7%
------------------------------------
Tax Obligation/Limited 12.5%
------------------------------------
Health Care 10.6%
------------------------------------
Long-Term Care 7.9%
------------------------------------
Housing/Single Family 6.2%
------------------------------------
Water and Sewer 4.7%
------------------------------------
Other 12.3%
------------------------------------
(1) The percentages shown in the foregoing chart may reflect the ratings on
certain bonds insured by ACA, AMBAC, CIFG, FGIC, MBIA, RAAI and XLCA as of
May 31, 2008. Please see the Portfolio Manager's Commentary for an expanded
discussion of the affect on the Fund of changes to the ratings of certain
bonds in the portfolio resulting from changes to the ratings of the
underlying insurers both during the period and after period end.
(2) Taxable-Equivalent Yield represents the yield that must be earned on a
fully taxable investment in order to equal the yield of the Fund on an
after-tax basis. It is based on a combined federal and state income tax
rate of 32.1%. When comparing this Fund to investments that generate
qualified dividend income, the Taxable-Equivalent Yield is lower.
(3) The Fund paid shareholders capital gains and net ordinary income
distributions in December 2007 of $0.1046 per share.
18
NNB
Performance
OVERVIEW
Nuveen Virginia Dividend Advantage Municipal Fund 2
as of May 31, 2008
Pie Chart:
Credit Quality (as a % of total investments)(1)
AAA/U.S. Guaranteed 51%
AA 25%
A 7%
BBB 7%
BB or Lower 1%
N/R 9%
Bar Chart:
2007-2008 Monthly Tax-Free Dividends Per Common Share(3)
Jun 0.0595
Jul 0.0595
Aug 0.0595
Sep 0.0595
Oct 0.0595
Nov 0.0595
Dec 0.0595
Jan 0.0595
Feb 0.0595
Mar 0.0595
Apr 0.0595
May 0.0595
Line Chart:
Common Share Price Performance -- Weekly Closing Price
6/01/07 16.9
16.65
15.92
15.94
15.9
15.9
15.85
15.665
15.139
15.4699
15.5
15
14.9
14.69
15.1
14.6
14.7
14.4
14.46
14.41
14.6
14.56
14.59
14.2499
13.8999
13.9899
13.9
14.01
13.68
13.06
13.34
13.83
14.46
14.3299
14.44
14.52
14.65
13.68
13.8475
13.4
13.95
13.45
13.5
14.35
14.6
14.62
14.55
14.45
14.7
15
14.61
14.33
14.65
5/31/08 14.65
FUND SNAPSHOT
------------------------------------
Common Share Price $14.65
------------------------------------
Common Share
Net Asset Value $14.39
------------------------------------
Premium/(Discount) to NAV 1.81%
------------------------------------
Market Yield 4.87%
------------------------------------
Taxable-Equivalent Yield(2) 7.17%
------------------------------------
Net Assets Applicable to
Common Shares ($000) $82,472
------------------------------------
Average Effective Maturity
on Securities (Years) 16.94
------------------------------------
Leverage-Adjusted Duration 9.98
------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 11/15/01)
------------------------------------
ON SHARE PRICE ON NAV
------------------------------------
1-Year -7.58% 0.63%
------------------------------------
5-Year 3.71% 3.80%
------------------------------------
Since
Inception 5.26% 5.96%
------------------------------------
INDUSTRIES
(as a % of total investments)
------------------------------------
Tax Obligation/General 17.9%
------------------------------------
Health Care 15.9%
------------------------------------
Tax Obligation/Limited 13.1%
------------------------------------
Water and Sewer 12.1%
------------------------------------
U.S. Guaranteed 12.1%
------------------------------------
Housing/Single Family 8.9%
------------------------------------
Long-Term Care 7.6%
------------------------------------
Other 12.4%
------------------------------------
(1) The percentages shown in the foregoing chart may reflect the ratings on
certain bonds insured by ACA, AMBAC, CIFG, FGIC, MBIA, RAAI and XLCA as of
May 31, 2008. Please see the Portfolio Manager's Commentary for an expanded
discussion of the affect on the Fund of changes to the ratings of certain
bonds in the portfolio resulting from changes to the ratings of the
underlying insurers both during the period and after period end.
(2) Taxable-Equivalent Yield represents the yield that must be earned on a
fully taxable investment in order to equal the yield of the Fund on an
after-tax basis. It is based on a combined federal and state income tax
rate of 32.1%. When comparing this Fund to investments that generate
qualified dividend income, the Taxable-Equivalent Yield is lower.
(3) The Fund paid shareholders capital gains and net ordinary income
distributions in December 2007 of $0.0599 per share.
19
Report of
INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
THE BOARD OF TRUSTEES AND SHAREHOLDERS
NUVEEN MARYLAND PREMIUM INCOME MUNICIPAL FUND
NUVEEN MARYLAND DIVIDEND ADVANTAGE MUNICIPAL FUND
NUVEEN MARYLAND DIVIDEND ADVANTAGE MUNICIPAL FUND 2
NUVEEN MARYLAND DIVIDEND ADVANTAGE MUNICIPAL FUND 3
NUVEEN VIRGINIA PREMIUM INCOME MUNICIPAL FUND
NUVEEN VIRGINIA DIVIDEND ADVANTAGE MUNICIPAL FUND
NUVEEN VIRGINIA DIVIDEND ADVANTAGE MUNICIPAL FUND 2
We have audited the accompanying statements of assets and liabilities, including
the portfolios of investments, of Nuveen Maryland Premium Income Municipal Fund,
Nuveen Maryland Dividend Advantage Municipal Fund, Nuveen Maryland Dividend
Advantage Municipal Fund 2, Nuveen Maryland Dividend Advantage Municipal Fund 3,
Nuveen Virginia Premium Income Municipal Fund, Nuveen Virginia Dividend
Advantage Municipal Fund and Nuveen Virginia Dividend Advantage Municipal Fund 2
(the Funds) as of May 31, 2008, and the related statements of operations for the
year then ended, the statements of changes in net assets for each of the two
years in the period then ended, and the financial highlights for each of the
five years in the period then ended. These financial statements and financial
highlights are the responsibility of the Funds' management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. We were
not engaged to perform an audit of the Funds' internal control over financial
reporting. Our audits included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Funds' internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall
financial statement presentation. Our procedures included confirmation of
securities owned as of May 31, 2008, by correspondence with the custodian and
brokers or by other appropriate auditing procedures where replies from brokers
were not received. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial positions of
Nuveen Maryland Premium Income Municipal Fund, Nuveen Maryland Dividend
Advantage Municipal Fund, Nuveen Maryland Dividend Advantage Municipal Fund 2,
Nuveen Maryland Dividend Advantage Municipal Fund 3, Nuveen Virginia Premium
Income Municipal Fund, Nuveen Virginia Dividend Advantage Municipal Fund and
Nuveen Virginia Dividend Advantage Municipal Fund 2 at May 31, 2008, the results
of their operations for the year then ended, changes in their net assets for
each of the two years in the period then ended, and their financial highlights
for each of the five years in the period then ended in conformity with U.S.
generally accepted accounting principles.
/s/ Ernst & Young LLP
Chicago, Illinois
July 21, 2008
20
NMY
Nuveen Maryland Premium Income Municipal Fund
Portfolio of INVESTMENTS
May 31, 2008
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
CONSUMER DISCRETIONARY - 3.0% (2.0% OF TOTAL INVESTMENTS)
$ 4,825 Baltimore, Maryland, Senior Lien Convention Center Hotel Revenue 9/16 at 100.00 A- $ 4,551,615
Bonds, Series 2006A, 5.250%, 9/01/39 - XLCA Insured
------------------------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES - 1.8% (1.2% OF TOTAL INVESTMENTS)
2,885 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 5/12 at 100.00 BBB 2,749,809
Asset-Backed Refunding Bonds, Series 2002, 5.375%, 5/15/33
------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 17.1% (11.4% OF TOTAL INVESTMENTS)
1,250 Frederick County, Maryland, Educational Facilities Revenue Bonds, 9/16 at 100.00 BBB- 1,215,375
Mount Saint Mary's College, Series 2006, 5.625%, 9/01/38
1,000 Hartford County, Maryland, Economic Development Revenue Bonds, 4/14 at 100.00 A+ 1,015,990
Battelle Memorial Institute, Series 2004, 5.250%, 4/01/34
Maryland Economic Development Corporation, Utility
Infrastructure Revenue Bonds, University of Maryland - College
Park, Series 2001:
980 5.375%, 7/01/15 - AMBAC Insured 7/11 at 100.00 AAA 1,031,078
980 5.375%, 7/01/16 - AMBAC Insured 7/11 at 100.00 AAA 1,031,078
Maryland Health and Higher Educational Facilities Authority, Revenue
Bonds, Bullis School, Series 2000:
750 5.250%, 7/01/25 - FSA Insured 1/11 at 101.00 AAA 781,440
500 5.250%, 7/01/30 - FSA Insured 1/11 at 101.00 AAA 518,320
1,250 Maryland Health and Higher Educational Facilities Authority, 7/14 at 100.00 A- 1,251,563
Revenue Bonds, Goucher College, Series 2004, 5.125%, 7/01/34
1,500 Maryland Health and Higher Educational Facilities Authority, 7/08 at 101.00 AA 1,529,130
Revenue Refunding Bonds, Johns Hopkins University, Series 1997,
5.625%, 7/01/27
1,365 Montgomery County Revenue Authority, Maryland, Lease Revenue 5/15 at 100.00 A1 1,440,252
Bonds, Montgomery College Arts Center Project, Series 2005A,
5.000%, 5/01/19
9,445 Morgan State University, Maryland, Student Tuition and Fee Revenue No Opt. Call AAA 10,854,853
Refunding Bonds, Academic Fees and Auxiliary Facilities,
Series 1993, 6.100%, 7/01/20 - MBIA Insured
1,685 University of Maryland, Auxiliary Facility and Tuition Revenue 10/16 at 100.00 AA 1,800,894
Bonds, Series 2006A, 5.000%, 10/01/22
Westminster, Maryland, Educational Facilities Revenue Bonds,
McDaniel College, Series 2006:
2,735 5.000%, 11/01/31 11/16 at 100.00 BBB+ 2,593,929
850 4.500%, 11/01/36 11/16 at 100.00 BBB+ 712,470
------------------------------------------------------------------------------------------------------------------------------------
24,290 Total Education and Civic Organizations 25,776,372
------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE - 21.8% (14.5% OF TOTAL INVESTMENTS)
1,525 Maryland Health and Higher Educational Facilities Authority, 7/14 at 100.00 A2 1,547,341
Revenue Bonds, Calvert Memorial Hospital, Series 2004,
5.500%, 7/01/36
3,250 Maryland Health and Higher Educational Facilities Authority, 7/12 at 100.00 Baa1 3,285,068
Revenue Bonds, Carroll County General Hospital, Series 2002,
5.800%, 7/01/32
400 Maryland Health and Higher Educational Facilities Authority, 7/16 at 100.00 Baa1 364,960
Revenue Bonds, Carroll Hospital Center, Series 2006,
5.000%, 7/01/40
1,665 Maryland Health and Higher Educational Facilities Authority, 7/14 at 100.00 AA 1,584,164
Revenue Bonds, Civista Medical Center, Series 2005,
5.000%, 7/01/37 - RAAI Insured
21
NMY
Nuveen Maryland Premium Income Municipal Fund (continued)
Portfolio of INVESTMENTS May 31, 2008
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE (continued)
$ 1,740 Maryland Health and Higher Educational Facilities Authority, 7/17 at 100.00 Baa2 $ 1,634,191
Revenue Bonds, Doctors Community Hospital, Series 2007A,
5.000%, 7/01/29
1,400 Maryland Health and Higher Educational Facilities Authority, 7/12 at 100.00 Baa1 1,345,470
Revenue Bonds, Frederick Memorial Hospital, Series 2002,
5.125%, 7/01/35
1,500 Maryland Health and Higher Educational Facilities Authority, 7/11 at 100.00 A+ 1,467,840
Revenue Bonds, Greater Baltimore Medical Center, Series 2001,
5.000%, 7/01/34 - MBIA Insured
1,000 Maryland Health and Higher Educational Facilities Authority, 7/08 at 101.00 AAA 1,011,010
Revenue Bonds, Johns Hopkins Hospital, Howard County
General Hospital Acquisition, Series 1998, 5.000%, 7/01/19 -
MBIA Insured
1,430 Maryland Health and Higher Educational Facilities Authority, 7/14 at 100.00 AA 1,515,485
Revenue Bonds, Johns Hopkins Hospital, Series 2004,
Inverse 1003, 11.325%, 7/01/33 (IF)
2,000 Maryland Health and Higher Educational Facilities Authority, 6/09 at 101.00 A+ 2,043,700
Revenue Bonds, Kaiser Permanente System, Series 1998A,
5.375%, 7/01/15
3,800 Maryland Health and Higher Educational Facilities Authority, 7/13 at 100.00 Baa3 3,650,052
Revenue Bonds, Kennedy Krieger Institute, Series 2003,
5.500%, 7/01/33
1,175 Maryland Health and Higher Educational Facilities Authority, 7/17 at 100.00 AAA 1,219,262
Revenue Bonds, LifeBridge Health System, Series 2008,
5.000%, 7/01/28 - AGC Insured
1,750 Maryland Health and Higher Educational Facilities Authority, 8/14 at 100.00 A- 1,781,238
Revenue Bonds, MedStar Health, Series 2004, 5.375%, 8/15/24
Maryland Health and Higher Educational Facilities Authority,
Revenue Bonds, Mercy Medical Center Project, Series 2007A:
1,010 5.000%, 7/01/37 7/17 at 100.00 BBB 895,759
670 5.500%, 7/01/42 7/17 at 100.00 BBB 636,721
1,700 Maryland Health and Higher Educational Facilities Authority, 7/16 at 100.00 A 1,677,186
Revenue Bonds, Peninsula Regional Medical Center,
Series 2006, 5.000%, 7/01/36
3,250 Maryland Health and Higher Educational Facilities Authority, 7/12 at 100.00 A3 3,295,923
Revenue Bonds, Union Hospital of Cecil County, Series 2002,
5.625%, 7/01/32
1,000 Maryland Health and Higher Educational Facilities Authority, 7/13 at 100.00 AAA 1,016,100
Revenue Bonds, University of Maryland Medical System,
Series 2004B, 5.000%, 7/01/24 - AMBAC Insured
2,395 Maryland Health and Higher Educational Facilities Authority, 1/18 at 100.00 BBB- 2,331,796
Revenue Bonds, Washington County Hospital, Series 2008,
5.750%, 1/01/38
Prince George's County, Maryland, Revenue Bonds, Dimensions
Health Corporation, Series 1994:
420 5.375%, 7/01/14 7/08 at 100.00 B3 372,250
295 5.300%, 7/01/24 7/08 at 100.00 B3 227,973
------------------------------------------------------------------------------------------------------------------------------------
33,375 Total Health Care 32,903,489
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 12.1% (8.1% OF TOTAL INVESTMENTS)
1,450 Maryland Community Development Administration, 2/11 at 101.00 Aaa 1,487,294
FNMA Multifamily Development Revenue Bonds, Edgewater
Village Apartments, Series 2000B, 5.800%, 8/01/20
(Alternative Minimum Tax)
2,500 Maryland Community Development Administration, Housing 1/09 at 101.00 Aa2 2,430,025
Revenue Bonds, Series 1999A, 5.350%, 7/01/41
(Alternative Minimum Tax)
880 Maryland Community Development Administration, Housing 1/10 at 100.00 Aa2 891,704
Revenue Bonds, Series 1999B, 6.250%, 7/01/32
(Alternative Minimum Tax)
1,000 Maryland Economic Development Corporation, Senior Lien 10/13 at 100.00 B2 900,060
Student Housing Revenue Bonds, University of Maryland -
Baltimore, Series 2003A, 5.625%, 10/01/23
1,000 Maryland Economic Development Corporation, Student Housing 6/09 at 102.00 Baa3 1,025,280
Revenue Bonds, Collegiate Housing Foundation - Salisbury State
University, Series 1999A, 6.000%, 6/01/19
1,145 Maryland Economic Development Corporation, Student Housing 6/16 at 100.00 A+ 1,045,980
Revenue Refunding Bonds, University of Maryland College Park
Projects, Series 2006, 5.000%, 6/01/33 - CIFG Insured
3,830 Montgomery County Housing Opportunities Commission, Maryland, 7/08 at 101.00 Aaa 3,847,082
FNMA/FHA-Insured Multifamily Housing Development Bonds,
Series 1998A, 5.200%, 7/01/30
22
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY (continued)
$ 360 Montgomery County Housing Opportunities Commission, 7/08 at 100.00 Aa2 $ 360,536
Maryland, GNMA/FHA-Insured Multifamily Housing Revenue
Bonds, Series 1995A, 5.900%, 7/01/15
2,000 Montgomery County Housing Opportunities Commission, 7/10 at 100.00 Aaa 2,040,980
Maryland, Multifamily Housing Development Bonds, Series 2000A,
6.100%, 7/01/30
540 Prince George's County Housing Authority, Maryland, GNMA 9/09 at 102.00 AAA 549,131
Collateralized Mortgage Revenue Bonds, University Landing
Apartments, Series 1999, 6.100%, 3/20/41 (Alternative
Minimum Tax)
Prince George's County Housing Authority, Maryland, GNMA
Collateralized Mortgage Revenue Refunding Bonds, Overlook
Apartments, Series 1995A:
2,000 5.700%, 12/20/15 6/08 at 100.00 AAA 2,002,700
1,670 5.750%, 12/20/19 6/08 at 100.00 AAA 1,671,670
------------------------------------------------------------------------------------------------------------------------------------
18,375 Total Housing/Multifamily 18,252,442
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 7.5% (5.0% OF TOTAL INVESTMENTS)
650 Maryland Community Development Administration Department of 3/17 at 100.00 Aa2 627,354
Housing and Community Development, Residential Revenue
Bonds, Series 2007H, 5.000%, 9/01/27
(Alternative Minimum Tax)
1,195 Maryland Community Development Administration, Department 9/15 at 100.00 Aa2 1,146,172
of Housing and Community Development, Residential Revenue
Bonds, Series 2006F, 4.900%, 9/01/26 (Alternative Minimum Tax)
4,100 Maryland Community Development Administration, Department 3/16 at 100.00 Aa2 3,920,542
of Housing and Community Development, Residential Revenue
Bonds, Series 2006I, 4.875%, 9/01/26 (Alternative Minimum Tax)
1,630 Maryland Community Development Administration, Department 9/16 at 100.00 Aa2 1,532,934
of Housing and Community Development, Residential Revenue
Bonds, Series 2006L, 4.900%, 9/01/31 (Alternative Minimum Tax)
1,200 Maryland Community Development Administration, Department 3/17 at 100.00 Aa2 1,080,660
of Housing and Community Development, Residential Revenue
Bonds, Series 2007D, 4.850%, 9/01/37 (Alternative Minimum Tax)
2,330 Maryland Community Development Administration, Residential 9/14 at 100.00 Aa2 2,155,600
Revenue Bonds, Series 2005E, 4.900%, 9/01/36
(Alternative Minimum Tax)
600 Maryland Community Development Administration, Residential 9/15 at 100.00 Aa2 569,448
Revenue Bonds, Series 2006B, 4.750%, 9/01/25
(Alternative Minimum Tax)
5 Prince George's County Housing Authority, Maryland, 8/10 at 100.00 AAA 5,055
FHLMC/FNMA/GNMA Collateralized Single Family Mortgage
Revenue Bonds, Series 2000A, 6.150%, 8/01/19
(Alternative Minimum Tax)
320 Puerto Rico Housing Finance Authority, Mortgage-Backed 6/13 at 100.00 AAA 300,496
Securities Program Home Mortgage Revenue Bonds, Series 2003A,
4.875%, 6/01/34 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
12,030 Total Housing/Single Family 11,338,261
------------------------------------------------------------------------------------------------------------------------------------
INDUSTRIALS - 1.3% (0.8% OF TOTAL INVESTMENTS)
2,010 Maryland Economic Development Corporation, Solid Waste 4/12 at 101.00 BBB 1,896,556
Disposal Revenue Bonds, Waste Management Inc.,
Series 2002, 4.600%, 4/01/16 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
LONG-TERM CARE - 2.8% (1.9% OF TOTAL INVESTMENTS)
2,455 Baltimore County, Maryland, Revenue Bonds, Oak Crest Village, 1/17 at 100.00 BBB+ 2,269,058
Series 2007A, 5.000%, 1/01/37
1,000 Carroll County, Maryland, Revenue Refunding Bonds, EMA 1/09 at 101.00 AA 1,013,690
Obligated Group, Series 1999A, 5.625%, 1/01/25 - RAAI Insured
1,065 Maryland Health and Higher Educational Facilities Authority, 7/17 at 100.00 BBB+ 928,424
Revenue Bonds, Mercy Ridge Retirement Community,
Series 2007, 4.750%, 7/01/34
------------------------------------------------------------------------------------------------------------------------------------
4,520 Total Long-Term Care 4,211,172
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 34.2% (22.8% OF TOTAL INVESTMENTS)
2,030 Anne Arundel County, Maryland, General Obligation Bonds, 4/14 at 100.00 AAA 2,201,657
Series 2004, 5.000%, 4/01/16
Anne Arundel County, Maryland, General Obligation Bonds,
Series 2006:
1,310 5.000%, 3/01/21 3/16 at 100.00 AAA 1,399,932
1,000 5.000%, 3/01/21 3/16 at 100.00 AAA 1,068,650
685 Anne Arundel County, Maryland, Water and Sewer Revenue Bonds, 3/16 at 100.00 AAA 753,425
Series 2006, 5.000%, 3/01/17
23
NMY
Nuveen Maryland Premium Income Municipal Fund (continued)
Portfolio of INVESTMENTS May 31, 2008
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL (continued)
Baltimore County, Maryland, Metropolitan District Special Assessment
Bonds, 67th Issue:
$ 2,500 5.000%, 6/01/25 6/11 at 101.00 AAA $ 2,583,375
3,500 5.000%, 6/01/26 6/11 at 101.00 AAA 3,599,540
1,000 Baltimore, Maryland, Consolidated General Obligation Public No Opt. Call AA- 1,018,890
Improvement Bonds, Series 1989B, 7.150%, 10/15/08
1,540 Baltimore, Maryland, General Obligation Consolidated Public 10/14 at 100.00 AAA 1,620,080
Improvement Bonds, Series 2004A, 5.000%, 10/15/22 -
AMBAC Insured
700 Carroll County, Maryland, Consolidated Public Improvement Bonds, 12/15 at 100.00 AA 773,374
Series 2005A, 5.000%, 12/01/16
Charles County, Maryland, Consolidated General Obligation Public
Improvement Bonds, Series 2006:
2,185 5.000%, 3/01/14 No Opt. Call AA 2,398,846
820 5.000%, 3/01/16 No Opt. Call AA 909,306
1,500 Frederick County, Maryland, General Obligation Public Facilities No Opt. Call AA 1,656,795
Bonds, Series 2006, 5.000%, 11/01/20
Howard County, Maryland, Consolidated Public Improvement
Bonds, Series 2004B:
1,625 5.000%, 8/15/17 2/14 at 100.00 AAA 1,758,348
1,180 5.000%, 8/15/19 2/14 at 100.00 AAA 1,270,801
1,725 Howard County, Maryland, Metropolitan District Refunding Bonds, 2/12 at 100.00 AAA 1,829,345
Series 2002A, 5.250%, 8/15/18
1,190 Maryland National Capital Park Planning Commission, 1/14 at 100.00 AA+ 1,283,403
Prince George's County, General Obligation Bonds, Park
Acquisition and Development, Series 2004EE-2, 5.000%, 1/15/17
3,000 Montgomery County, Maryland, Consolidated General Obligation No Opt. Call AAA 3,325,830
Public Improvement Bonds, Series 2005A, 5.000%, 7/01/15
3,520 Montgomery County, Maryland, Consolidated General Obligation No Opt. Call AAA 3,915,789
Public Improvement Bonds, Series 2006, 5.000%, 5/01/16
Montgomery County, Maryland, Consolidated General Obligation
Public Improvement Refunding Bonds, Series 2001:
1,750 5.250%, 10/01/13 10/11 at 101.00 AAA 1,887,165
2,000 5.250%, 10/01/18 10/11 at 101.00 AAA 2,137,800
2,000 Prince George's County, Maryland, General Obligation Consolidated 9/12 at 101.00 AAA 2,030,520
Public Improvement Bonds, Series 2002, 4.100%, 9/15/19
5,770 Prince George's County, Maryland, General Obligation Consolidated 10/13 at 100.00 AAA 6,117,007
Public Improvement Bonds, Series 2003A, 5.000%, 10/01/18
Washington Suburban Sanitary District, Montgomery and Prince
George's Counties, Maryland, Sewerage Disposal Bonds, Series 2005:
2,000 5.000%, 6/01/16 6/15 at 100.00 AAA 2,201,200
1,235 5.000%, 6/01/23 6/15 at 100.00 AAA 1,303,604
1,235 5.000%, 6/01/24 6/15 at 100.00 AAA 1,298,998
1,235 5.000%, 6/01/25 6/15 at 100.00 AAA 1,295,169
------------------------------------------------------------------------------------------------------------------------------------
48,235 Total Tax Obligation/General 51,638,849
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 15.2% (10.1% OF TOTAL INVESTMENTS)
300 Baltimore, Maryland, Special Obligation Bonds, North Locust 9/15 at 101.00 N/R 265,332
Point Project, Series 2005, 5.500%, 9/01/34
340 Frederick County, Maryland, Lake Linganore Village Community 7/10 at 102.00 AA 348,456
Development Special Obligation Bonds, Series 2001A,
5.700%, 7/01/29 - RAAI Insured
900 Hyattsville, Maryland, Special Obligation Bonds, University 7/14 at 102.00 N/R 827,802
Town Center Project, Series 2004, 5.750%, 7/01/34
Maryland Department of Transportation, Certificates of Participation,
Mass Transit
Administration Project, Series 2000:
875 5.500%, 10/15/19 (Alternative Minimum Tax) 10/10 at 101.00 AA+ 910,560
925 5.500%, 10/15/20 (Alternative Minimum Tax) 10/10 at 101.00 AA+ 958,374
4,250 Maryland Department of Transportation, Consolidated Transportation No Opt. Call AAA 4,846,317
Revenue Bonds, Series 2002, 5.500%, 2/01/16
24
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED (continued)
$ 1,875 Maryland Economic Development Corporation, Lease Revenue 6/12 at 100.50 AA+ $ 2,007,975
Bonds, Department of Transportation Headquarters Building,
Series 2002, 5.375%, 6/01/19
1,700 Maryland Stadium Authority, Lease Revenue Bonds, Montgomery 6/13 at 100.00 AA+ 1,774,919
County Conference Center Facilities, Series 2003, 5.000%, 6/15/24
1,000 Montgomery County, Maryland, Lease Revenue Bonds, Metrorail 6/12 at 100.00 AA 1,049,280
Garage, Series 2002, 5.000%, 6/01/21
675 Montgomery County, Maryland, Special Obligation Bonds, West 7/12 at 101.00 AA 691,241
Germantown Development District, Senior Series 2002A,
5.500%, 7/01/27 - RAAI Insured
635 New Baltimore City Board of School Commissioners, Maryland, 11/10 at 100.00 AA+ 668,255
School System Revenue Bonds, Series 2000, 5.125%, 11/01/15
Puerto Rico Highway and Transportation Authority, Highway
Revenue Bonds, Series 2007N:
1,000 5.500%, 7/01/29 - AMBAC Insured No Opt. Call AAA 1,082,420
2,500 5.250%, 7/01/31 - AMBAC Insured No Opt. Call AAA 2,637,875
1,000 5.250%, 7/01/33 - MBIA Insured No Opt. Call AAA 1,057,640
2,100 Puerto Rico Municipal Finance Agency, Series 2002A, 8/12 at 100.00 AAA 2,208,003
5.250%, 8/01/21 - FSA Insured
1,500 Puerto Rico, Highway Revenue Bonds, Highway and Transportation No Opt. Call AAA 1,607,385
Authority, Series 2003AA, 5.500%, 7/01/19 - MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
21,575 Total Tax Obligation/Limited 22,941,834
------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 4.6% (3.1% OF TOTAL INVESTMENTS)
1,060 Baltimore, Maryland, Revenue Refunding Bonds, Parking System No Opt. Call A2 1,145,807
Facilities, Series 1998A, 5.250%, 7/01/17 - FGIC Insured
4,335 Maryland Transportation Authority, Revenue Bonds, Transportation 7/17 at 100.00 AAA 4,511,456
Facilities Projects, Series 2007, 5.000%, 7/01/30 - FSA Insured (UB)
2,075 Puerto Rico Ports Authority, Special Facilities Revenue Bonds, 6/08 at 100.00 CCC+ 1,336,487
American Airlines Inc., Series 1996A, 6.250%, 6/01/26
(Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
7,470 Total Transportation 6,993,750
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 21.4% (14.3% OF TOTAL INVESTMENTS) (4)
2,000 Baltimore, Maryland, Revenue Refunding Bonds, Water Projects, No Opt. Call AA (4) 2,118,960
Series 1998A, 5.000%, 7/01/28 - FGIC Insured (ETM)
2,000 Baltimore, Maryland, Revenue Refunding Bonds, Water System No Opt. Call AA (4) 2,154,760
Projects, Series 1994A, 5.000%, 7/01/24 - FGIC Insured (ETM)
1,245 Baltimore, Maryland, Wastewater Project Revenue Bonds, 7/16 at 100.00 Aaa 1,380,581
Series 2006C, 5.000%, 7/01/31 (Pre-refunded 7/01/16) -
AMBAC Insured
Frederick County, Maryland, Educational Facilities Revenue Bonds,
Mount St. Mary's College, Series 2001A:
200 5.750%, 9/01/25 (Pre-refunded 3/01/10) 3/10 at 101.00 BBB- (4) 213,528
200 5.800%, 9/01/30 (Pre-refunded 3/01/10) 3/10 at 101.00 BBB- (4) 213,700
3,000 Frederick County, Maryland, General Obligation Public Facilities 7/09 at 101.00 AAA 3,134,700
Bonds, Series 1999, 5.250%, 7/01/18 (Pre-refunded 7/01/09)
275 Frederick County, Maryland, Lake Linganore Village Community 7/10 at 102.00 AA (4) 298,969
Development Special Obligation Bonds, Series 2001A,
5.700%, 7/01/29 (Pre-refunded 7/01/10) - RAAI Insured
2,255 Gaithersburg, Maryland, Hospital Facilities Revenue Refunding and No Opt. Call AAA 2,455,064
Improvement Bonds, Shady Grove Adventist Hospital, Series 1995,
6.500%, 9/01/12 - FSA Insured (ETM)
575 Howard County, Maryland, Consolidated Public Improvement 2/12 at 100.00 AAA 622,265
Refunding Bonds, Series 2002A, 5.250%, 8/15/18
(Pre-refunded 2/15/12)
Maryland Economic Development Corporation, Health and Mental
Hygiene Providers Revenue Bonds, Series 1996A:
870 7.625%, 4/01/21 (Pre-refunded 4/01/11) 4/11 at 102.00 N/R (4) 987,894
660 7.625%, 4/01/21 (Pre-refunded 4/01/11) 4/11 at 102.00 N/R (4) 749,437
25
NMY
Nuveen Maryland Premium Income Municipal Fund (continued)
Portfolio of INVESTMENTS May 31, 2008
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED (4) (continued)
$ 2,250 Maryland Economic Development Corporation, Student Housing 6/09 at 102.00 Baa2 (4) $ 2,375,483
Revenue Bonds, Collegiate Housing Foundation - College Park,
Series 1999A, 5.750%, 6/01/24 (Pre-refunded 6/01/09)
3,200 Maryland Health and Higher Educational Facilities Authority, No Opt. Call AAA 3,449,536
Revenue Bonds, Helix Health, Series 1997, 5.000%, 7/01/27 -
AMBAC Insured (ETM)
3,125 Maryland Health and Higher Educational Facilities Authority, 7/08 at 100.00 Aaa 3,192,750
Revenue Bonds, Howard County General Hospital, Series 1993,
5.500%, 7/01/25 (ETM)
2,040 Maryland Health and Higher Educational Facilities Authority, 7/14 at 100.00 A (4) 2,231,352
Revenue Bonds, LifeBridge Health System, Series 2004A,
5.125%, 7/01/34 (Pre-refunded 7/01/14)
1,500 Maryland Health and Higher Educational Facilities Authority, 7/12 at 100.00 A (4) 1,662,960
Revenue Bonds, University of Maryland Medical System,
Series 2002, 6.000%, 7/01/22 (Pre-refunded 7/01/12)
210 Maryland Transportation Authority, Revenue Refunding Bonds, No Opt. Call AAA 240,496
Transportation Facilities Projects, First Series 1978,
6.800%, 7/01/16 (ETM)
1,000 Puerto Rico Infrastructure Financing Authority, Special Obligation 10/10 at 101.00 AAA 1,048,370
Bonds, Series 2000A, 5.500%, 10/01/20
1,000 Puerto Rico, Highway Revenue Bonds, Highway and Transportation 7/16 at 100.00 Aaa 1,150,780
Authority, Series 1996Y, 5.500%, 7/01/36 (Pre-refunded 7/01/16)
385 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 7/10 at 100.00 AAA 402,348
Asset-Backed Bonds, Series 2000, 5.750%, 7/01/20
(Pre-refunded 7/01/10)
2,000 Virgin Islands Public Finance Authority, Gross Receipts Taxes 10/10 at 101.00 BBB+ (4) 2,205,740
Loan Note, Series 1999A, 6.500%, 10/01/24
(Pre-refunded 10/01/10)
------------------------------------------------------------------------------------------------------------------------------------
29,990 Total U.S. Guaranteed 32,289,673
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 4.0% (2.6% OF TOTAL INVESTMENTS)
2,500 Maryland Energy Financing Administration, Revenue Bonds, 7/08 at 100.00 N/R 2,494,125
AES Warrior Run Project, Series 1995, 7.400%, 9/01/19
(Alternative Minimum Tax)
3,500 Puerto Rico Electric Power Authority, Power Revenue Bonds, 7/14 at 100.00 A3 3,485,860
Series 2004PP, 5.000%, 7/01/22 - FGIC Insured
------------------------------------------------------------------------------------------------------------------------------------
6,000 Total Utilities 5,979,985
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 3.3% (2.2% OF TOTAL INVESTMENTS)
1,045 Baltimore, Maryland, Revenue Refunding Bonds, Water System No Opt. Call AA 1,100,636
Projects, Series 1994A, 5.000%, 7/01/24 - FGIC Insured
1,655 Baltimore, Maryland, Wastewater Project Revenue Bonds, 7/16 at 100.00 Aaa 1,716,185
Series 2006C, 5.000%, 7/01/31 - AMBAC Insured
1,260 Baltimore, Maryland, Wastewater Project Revenue Bonds, 7/17 at 100.00 AAA 1,276,481
Series 2007D, 5.000%, 7/01/32 - AMBAC Insured
26
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER (continued)
$ 860 Maryland Water Quality Financing Administration, Revolving No Opt. Call AAA $ 954,161
Loan Fund Revenue Bonds, Series 2005A, 5.000%, 9/01/15
------------------------------------------------------------------------------------------------------------------------------------
4,820 Total Water and Sewer 5,047,463
------------------------------------------------------------------------------------------------------------------------------------
$ 220,400 Total Investments (cost $223,871,270) - 150.1% 226,571,270
=============-----------------------------------------------------------------------------------------------------------------------
Floating Rate Obligations - (2.2)% (3,250,000)
--------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 4.5% 6,772,689
--------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (52.4)% (5) (79,100,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $150,993,959
====================================================================================================================
(1) All percentages shown in the Portfolio of Investments are
based on net assets applicable to Common shares unless
otherwise noted.
(2) Optional Call Provisions (not covered by the report of
independent registered public accounting firm): Dates (month
and year) and prices of the earliest optional call or
redemption. There may be other call provisions at varying
prices at later dates. Certain mortgage-backed securities
may be subject to periodic principal paydowns.
(3) Ratings (not covered by the report of independent registered
public accounting firm): Using the higher of Standard &
Poor's Group ("Standard & Poor's") or Moody's Investor
Service, Inc. ("Moody's") rating. Ratings below BBB by
Standard & Poor's or Baa by Moody's are considered to be
below investment grade.
The Portfolio of Investments may reflect the ratings on
certain bonds insured by ACA, AMBAC, CIFG, FGIC, MBIA, RAAI
and XLCA as of May 31, 2008. Please see the Portfolio
Manager's Commentary for an expanded discussion of the
affect on the Fund of changes to the ratings of certain
bonds in the portfolio resulting from changes to the ratings
of the underlying insurers both during the period and after
period end.
(4) Backed by an escrow or trust containing sufficient U.S.
Government or U.S. Government agency securities which ensure
the timely payment of principal and interest. Such
investments are normally considered to be equivalent to AAA
rated securities.
(5) Preferred Shares, at Liquidation Value as a percentage of
total investments is (34.9)%.
N/R Not rated.
(ETM) Escrowed to maturity.
(IF) Inverse floating rate investment.
(UB) Underlying bond of an inverse floating rate trust reflected
as a financing transaction pursuant to the provisions of
SFAS No. 140.
See accompanying notes to financial statements.
27
NFM
Nuveen Maryland Dividend Advantage Municipal Fund
Portfolio of INVESTMENTS
May 31, 2008
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
CONSUMER DISCRETIONARY - 4.7% (3.1% OF TOTAL INVESTMENTS)
$ 2,115 Baltimore, Maryland, Senior Lien Convention Center Hotel Revenue 9/16 at 100.00 A- $ 1,995,164
Bonds, Series 2006A, 5.250%, 9/01/39 - XLCA Insured
310 Baltimore, Maryland, Subordinate Lien Convention Center Hotel 9/16 at 100.00 Ba1 286,322
Revenue Bonds, Series 2006B, 5.875%, 9/01/39
650 Maryland Economic Development Corporation, Revenue Bonds, 12/16 at 100.00 N/R 506,415
Chesapeake Bay Hyatt Conference Center, Series 2006A,
5.000%, 12/01/31
------------------------------------------------------------------------------------------------------------------------------------
3,075 Total Consumer Discretionary 2,787,901
------------------------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES - 2.3% (1.5% OF TOTAL INVESTMENTS)
1,440 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 5/12 at 100.00 BBB 1,372,522
Asset-Backed Refunding Bonds, Series 2002, 5.375%, 5/15/33
------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 12.7% (8.3% OF TOTAL INVESTMENTS)
645 Hartford County, Maryland, Economic Development Revenue Bonds, 4/14 at 100.00 A+ 655,314
Battelle Memorial Institute, Series 2004, 5.250%, 4/01/34
980 Maryland Economic Development Corporation, Utility Infrastructure 7/11 at 100.00 AAA 1,000,306
Revenue Bonds, University of Maryland - College Park,
Series 2001, 5.000%, 7/01/19 - AMBAC Insured
1,500 Maryland Health and Higher Educational Facilities Authority, 7/08 at 102.00 BBB- 1,505,580
Educational Facilities Leasehold Mortgage Revenue Bonds,
McLean School, Series 2001, 6.000%, 7/01/31
500 Maryland Health and Higher Educational Facilities Authority, 7/14 at 100.00 A- 500,625
Revenue Bonds, Goucher College, Series 2004, 5.125%, 7/01/34
565 Maryland Health and Higher Educational Facilities Authority, 6/17 at 100.00 Baa1 524,874
Revenue Bonds, Maryland Institute College of Art, Series 2007,
5.000%, 6/01/36
475 Maryland Industrial Development Financing Authority, Revenue 5/15 at 100.00 N/R 476,435
Bonds, Our Lady of Good Counsel High School, Series 2005A,
6.000%, 5/01/35
615 Montgomery County Revenue Authority, Maryland, Lease Revenue 5/15 at 100.00 A1 645,276
Bonds, Montgomery College Arts Center Project, Series 2005A,
5.000%, 5/01/20
Puerto Rico Industrial, Tourist, Educational, Medical and Environmental
Control Facilities Financing Authority, Higher Education Revenue Bonds,
Ana G. Mendez University System, Series 1999:
215 5.375%, 2/01/19 2/09 at 101.00 BBB- 215,671
410 5.375%, 2/01/29 2/09 at 101.00 BBB- 392,227
800 University of Maryland, Auxiliary Facility and Tuition Revenue 10/16 at 100.00 AA 855,024
Bonds, Series 2006A, 5.000%, 10/01/22
900 Westminster, Maryland, Educational Facilities Revenue Bonds, 11/16 at 100.00 BBB+ 754,380
McDaniel College, Series 2006, 4.500%, 11/01/36
------------------------------------------------------------------------------------------------------------------------------------
7,605 Total Education and Civic Organizations 7,525,712
------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE - 32.0% (20.9% OF TOTAL INVESTMENTS)
1,325 Maryland Health and Higher Education Facilities Authority, 7/16 at 100.00 A 1,307,219
Revenue Bonds, University of Maryland Medical System,
Series 2006, 5.000%, 7/01/36
1,000 Maryland Health and Higher Educational Facilities Authority, 7/08 at 101.00 AAA 1,010,960
Revenue Bonds, Anne Arundel Medical Center, Series 1998,
5.125%, 7/01/28 - FSA Insured
28
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE (continued)
$ 1,000 Maryland Health and Higher Educational Facilities Authority, 7/08 at 102.00 A2 $ 1,000,050
Revenue Bonds, Calvert Memorial Hospital, Series 1998,
5.000%, 7/01/28
1,000 Maryland Health and Higher Educational Facilities Authority, 7/12 at 100.00 Baa1 1,029,800
Revenue Bonds, Carroll County General Hospital, Series 2002,
6.000%, 7/01/26
400 Maryland Health and Higher Educational Facilities Authority, 7/16 at 100.00 Baa1 364,960
Revenue Bonds, Carroll Hospital Center, Series 2006,
5.000%, 7/01/40
750 Maryland Health and Higher Educational Facilities Authority, 7/14 at 100.00 AA 713,588
Revenue Bonds, Civista Medical Center, Series 2005,
5.000%, 7/01/37 - RAAI Insured
710 Maryland Health and Higher Educational Facilities Authority, 7/17 at 100.00 Baa2 666,825
Revenue Bonds, Doctors Community Hospital, Series 2007A,
5.000%, 7/01/29
500 Maryland Health and Higher Educational Facilities Authority, 7/12 at 100.00 Baa1 480,525
Revenue Bonds, Frederick Memorial Hospital, Series 2002,
5.125%, 7/01/35
650 Maryland Health and Higher Educational Facilities Authority, 7/11 at 100.00 A+ 636,064
Revenue Bonds, Greater Baltimore Medical Center, Series 2001,
5.000%, 7/01/34 - MBIA Insured
1,250 Maryland Health and Higher Educational Facilities Authority, 5/11 at 100.00 A+ 1,271,613
Revenue Bonds, Johns Hopkins Hospital, Series 2001,
5.000%, 5/15/21
585 Maryland Health and Higher Educational Facilities Authority, 7/14 at 100.00 AA 619,971
Revenue Bonds, Johns Hopkins Hospital, Series 2004,
Inverse 1003, 11.325%, 7/01/33 (IF)
2,225 Maryland Health and Higher Educational Facilities Authority, 6/09 at 101.00 A+ 2,273,615
Revenue Bonds, Kaiser Permanente System, Series 1998A,
5.375%, 7/01/15
1,000 Maryland Health and Higher Educational Facilities Authority, 7/13 at 100.00 Baa3 960,540
Revenue Bonds, Kennedy Krieger Institute, Series 2003,
5.500%, 7/01/33
485 Maryland Health and Higher Educational Facilities Authority, 7/17 at 100.00 AAA 503,270
Revenue Bonds, LifeBridge Health System, Series 2008,
5.000%, 7/01/28 - AGC Insured
700 Maryland Health and Higher Educational Facilities Authority, 8/14 at 100.00 A- 712,495
Revenue Bonds, MedStar Health, Series 2004, 5.375%, 8/15/24
Maryland Health and Higher Educational Facilities Authority,
Revenue Bonds, Mercy Medical Center Project, Series 2007A:
415 5.000%, 7/01/37 7/17 at 100.00 BBB 368,059
270 5.500%, 7/01/42 7/17 at 100.00 BBB 256,589
1,000 Maryland Health and Higher Educational Facilities Authority, 7/11 at 100.00 BBB 1,000,640
Revenue Bonds, Mercy Medical Center, Series 2001,
5.625%, 7/01/31
700 Maryland Health and Higher Educational Facilities Authority, 7/16 at 100.00 A 690,606
Revenue Bonds, Peninsula Regional Medical Center,
Series 2006, 5.000%, 7/01/36
1,000 Maryland Health and Higher Educational Facilities Authority, 7/15 at 100.00 A3 964,730
Revenue Bonds, Union Hospital of Cecil County, Series 2005,
5.000%, 7/01/35
980 Maryland Health and Higher Educational Facilities Authority, 1/18 at 100.00 BBB- 954,138
Revenue Bonds, Washington County Hospital, Series 2008,
5.750%, 1/01/38
570 Maryland Health and Higher Educational Facilities Authority, 7/08 at 101.00 A3 571,556
Revenue Refunding Bonds, Union Hospital of Cecil County,
Series 1998, 5.100%, 7/01/22
700 Prince George's County, Maryland, Revenue Bonds, Dimensions 7/08 at 100.00 B3 540,953
Health Corporation, Series 1994, 5.300%, 7/01/24
------------------------------------------------------------------------------------------------------------------------------------
19,215 Total Health Care 18,898,766
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 18.7% (12.3% OF TOTAL INVESTMENTS)
750 Baltimore County, Maryland, GNMA Collateralized Revenue 10/08 at 102.00 AAA 753,795
Refunding Bonds, Cross Creek Apartments, Series 1998A,
5.250%, 10/20/33
2,000 Maryland Community Development Administration, Housing Revenue 7/08 at 101.00 Aa2 2,001,840
Bonds, Series 1998A, 5.625%, 1/01/40 (Alternative Minimum Tax)
29
NFM
Nuveen Maryland Dividend Advantage Municipal Fund (continued)
Portfolio of INVESTMENTS May 31, 2008
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY (continued)
$ 1,000 Maryland Community Development Administration, Multifamily 12/11 at 100.00 Aaa $ 1,000,610
Housing Revenue Bonds, Princess Anne Apartments, Series 2001D,
5.450%, 12/15/33 (Alternative Minimum Tax)
Maryland Economic Development Corporation, Senior Lien Student
Housing Revenue Bonds, University of Maryland - Baltimore,
Series 2003A:
215 4.250%, 10/01/10 No Opt. Call B2 208,096
50 5.000%, 10/01/15 10/13 at 100.00 B2 46,349
210 5.625%, 10/01/23 10/13 at 100.00 B2 189,013
1,800 Maryland Economic Development Corporation, Student Housing 7/11 at 101.00 N/R 1,671,444
Revenue Bonds, Sheppard Pratt University Village, Series 2001,
6.000%, 7/01/33 - ACA Insured
475 Maryland Economic Development Corporation, Student Housing 6/16 at 100.00 A+ 433,922
Revenue Refunding Bonds, University of Maryland College Park
Projects, Series 2006, 5.000%, 6/01/33 - CIFG Insured
750 Montgomery County Housing Opportunities Commission, 7/08 at 101.00 Aaa 743,355
Maryland, FNMA/FHA-Insured Multifamily Housing Development
Bonds, Series 1998A, 5.250%, 7/01/29 (Alternative Minimum Tax)
2,000 Montgomery County Housing Opportunities Commission, 7/10 at 100.00 Aaa 2,027,519
Maryland, Multifamily Housing Development Bonds, Series 2000B,
6.200%, 7/01/30 (Alternative Minimum Tax)
2,000 Montgomery County Housing Opportunities Commission, 7/11 at 100.00 Aaa 2,001,120
Maryland, Multifamily Housing Development Bonds, Series 2001A,
5.600%, 7/01/42 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
11,250 Total Housing/Multifamily 11,077,063
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 8.2% (5.4% OF TOTAL INVESTMENTS)
250 Maryland Community Development Administration Department of 3/17 at 100.00 Aa2 241,290
Housing and Community Development, Residential Revenue Bonds,
Series 2007H, 5.000%, 9/01/27 (Alternative Minimum Tax)
300 Maryland Community Development Administration, Department of 9/15 at 100.00 Aa2 287,742
Housing and Community Development, Residential Revenue Bonds,
Series 2006F, 4.900%, 9/01/26 (Alternative Minimum Tax)
1,200 Maryland Community Development Administration, Department of 3/16 at 100.00 Aa2 1,147,476
Housing and Community Development, Residential Revenue Bonds,
Series 2006I, 4.875%, 9/01/26 (Alternative Minimum Tax)
815 Maryland Community Development Administration, Department of 9/16 at 100.00 Aa2 766,467
Housing and Community Development, Residential Revenue Bonds,
Series 2006L, 4.900%, 9/01/31 (Alternative Minimum Tax)
500 Maryland Community Development Administration, Department of 3/17 at 100.00 Aa2 450,275
Housing and Community Development, Residential Revenue Bonds,
Series 2007D, 4.850%, 9/01/37 (Alternative Minimum Tax)
470 Maryland Community Development Administration, Residential 9/10 at 100.00 Aa2 475,983
Revenue Bonds, Series 2001B, 5.450%, 9/01/32
(Alternative Minimum Tax)
970 Maryland Community Development Administration, Residential 9/14 at 100.00 Aa2 897,396
Revenue Bonds, Series 2005E, 4.900%, 9/01/36
(Alternative Minimum Tax)
600 Maryland Community Development Administration, Residential 9/15 at 100.00 Aa2 569,448
Revenue Bonds, Series 2006B, 4.750%, 9/01/25
(Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
5,105 Total Housing/Single Family 4,836,077
------------------------------------------------------------------------------------------------------------------------------------
INDUSTRIALS - 2.4% (1.5% OF TOTAL INVESTMENTS)
410 Maryland Economic Development Corporation, Solid Waste 4/12 at 101.00 BBB 386,860
Disposal Revenue Bonds, Waste Management Inc., Series 2002,
4.600%, 4/01/16 (Alternative Minimum Tax)
1,000 Northeast Maryland Waste Disposal Authority, Baltimore, Resource 1/09 at 101.00 BBB 1,002,150
Recovery Revenue Bonds, RESCO Retrofit Project, Series 1998,
4.750%, 1/01/12 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
1,410 Total Industrials 1,389,010
------------------------------------------------------------------------------------------------------------------------------------
LONG-TERM CARE - 3.5% (2.3% OF TOTAL INVESTMENTS)
850 Baltimore County, Maryland, Revenue Bonds, Oak Crest Village, 1/17 at 100.00 BBB+ 785,621
Series 2007A, 5.000%, 1/01/37
300 Maryland Health and Higher Educational Facilities Authority, 7/16 at 100.00 N/R 278,190
Revenue Bonds, Edenwald, Series 2006A, 5.400%, 1/01/31
720 Maryland Health and Higher Educational Facilities Authority, 1/17 at 100.00 N/R 625,061
Revenue Bonds, King Farm Presbyterian Community,
Series 2007A, 5.250%, 1/01/27
30
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
LONG-TERM CARE (continued)
$ 440 Maryland Health and Higher Educational Facilities Authority, 7/17 at 100.00 BBB+ $ 383,574
Revenue Bonds, Mercy Ridge Retirement Community,
Series 2007, 4.750%, 7/01/34
------------------------------------------------------------------------------------------------------------------------------------
2,310 Total Long-Term Care 2,072,446
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 23.1% (15.1% OF TOTAL INVESTMENTS)
Anne Arundel County, Maryland, General Obligation Bonds,
Series 2006:
730 5.000%, 3/01/21 3/16 at 100.00 AAA 780,115
565 5.000%, 3/01/21 3/16 at 100.00 AAA 603,787
3,500 Baltimore County, Maryland, Metropolitan District Special 6/11 at 101.00 AAA 3,588,198
Assessment Bonds, 67th Issue, 5.000%, 6/01/27
300 Carroll County, Maryland, Consolidated Public Improvement Bonds, 12/15 at 100.00 AA 331,446
Series 2005A, 5.000%, 12/01/16
500 Frederick County, Maryland, General Obligation Public Facilities No Opt. Call AA 552,265
Bonds, Series 2006, 5.000%, 11/01/20
Frederick, Maryland, General Obligation Bonds, Series 2005:
600 5.000%, 8/01/16 - MBIA Insured 8/15 at 100.00 AAA 658,398
500 5.000%, 8/01/17 - MBIA Insured 8/15 at 100.00 AAA 538,945
1,360 Howard County, Maryland, Consolidated Public Improvement 2/09 at 101.00 AAA 1,378,156
Bonds, Series 2001A, 4.750%, 2/15/21
1,000 Maryland National Capital Park Planning Commission, 1/14 at 100.00 AA+ 1,078,490
Prince George's County, General Obligation Bonds, Park
Acquisition and Development, Series 2004EE-2,
5.000%, 1/15/17
1,360 Montgomery County, Maryland, Consolidated General Obligation No Opt. Call AAA 1,512,918
Public Improvement Bonds, Series 2006, 5.000%, 5/01/16
740 Ocean City, Maryland, General Obligation Bonds, Series 2001, 3/11 at 101.00 A1 762,607
4.875%, 3/01/19 - FGIC Insured
1,000 Prince George's County, Maryland, General Obligation 10/13 at 100.00 AAA 1,075,770
Consolidated Public Improvement Bonds, Series 2003A,
5.000%, 10/01/17
700 Washington Suburban Sanitary District, Montgomery and 6/15 at 100.00 AAA 770,420
Prince George's Counties, Maryland,Sewerage Disposal Bonds,
Series 2005, 5.000%, 6/01/16
------------------------------------------------------------------------------------------------------------------------------------
12,855 Total Tax Obligation/General 13,631,515
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 16.1% (10.6% OF TOTAL INVESTMENTS)
625 Annapolis, Maryland, Special Obligation Bonds, Park Place 1/15 at 101.00 N/R 541,188
Project, Series 2005A, 5.350%, 7/01/34
465 Anne Arundel County, Maryland, Tax Increment Financing No Opt. Call N/R 475,923
Revenue Bonds, Parole Town Center Project, Series 2002,
5.000%, 7/01/12
350 Hyattsville, Maryland, Special Obligation Bonds, University 7/14 at 102.00 N/R 321,923
Town Center Project, Series 2004, 5.750%, 7/01/34
1,500 Maryland Department of Transportation, Consolidated Transportation No Opt. Call AAA 1,710,465
Revenue Bonds, Series 2002, 5.500%, 2/01/16
1,405 Maryland Economic Development Corporation, Lease Revenue 6/12 at 100.50 AA+ 1,504,643
Bonds, Department of Transportation Headquarters Building,
Series 2002, 5.375%, 6/01/19
370 Maryland Economic Development Corporation, Lease Revenue 9/12 at 100.00 AA+ 398,986
Bonds, Montgomery County Town Square Parking Garage,
Series 2002A, 5.000%, 9/15/13
740 Prince George's County, Maryland, Lease Revenue Bonds, 6/13 at 100.00 AAA 799,851
Upper Marlboro Justice Center, Series 2003A, 5.000%, 6/30/14 -
MBIA Insured
270 Prince George's County, Maryland, Special Obligation Bonds, 7/15 at 100.00 N/R 228,695
National Harbor Project, Series 2005, 5.200%, 7/01/34
450 Prince George's County, Maryland, Special Tax District Bonds, 7/13 at 100.00 N/R 382,518
Victoria Falls Project, Series 2005, 5.250%, 7/01/35
1,000 Puerto Rico Highway and Transportation Authority, Highway No Opt. Call AAA 1,055,150
Revenue Bonds, Series 2007N, 5.250%, 7/01/31 - AMBAC Insured
700 Puerto Rico, Highway Revenue Bonds, Highway and Transportation No Opt. Call AAA 750,113
Authority, Series 2003AA, 5.500%, 7/01/19 - MBIA Insured
31
NFM
Nuveen Maryland Dividend Advantage Municipal Fund (continued)
Portfolio of INVESTMENTS May 31, 2008
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED (continued)
$ 1,290 Virgin Islands Public Finance Authority, Gross Receipts Taxes 10/10 at 101.00 BBB+ $ 1,372,328
Loan Note, Series 1999A, 6.375%, 10/01/19
------------------------------------------------------------------------------------------------------------------------------------
9,165 Total Tax Obligation/Limited 9,541,783
------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 4.3% (2.8% OF TOTAL INVESTMENTS)
650 Maryland Health and Higher Educational Facilities Authority, 7/11 at 100.00 AAA 658,684
Parking Facilities Revenue Bonds, Johns Hopkins Hospital,
Series 2001, 5.000%, 7/01/27 - AMBAC Insured
1,785 Maryland Transportation Authority, Revenue Bonds, Transportation 7/17 at 100.00 AAA 1,857,658
Facilities Projects, Series 2007, 5.000%, 7/01/30 -
FSA Insured (UB)
------------------------------------------------------------------------------------------------------------------------------------
2,435 Total Transportation 2,516,342
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 21.0% (13.7% OF TOTAL INVESTMENTS) (4)
1,015 Baltimore, Maryland, Revenue Refunding Bonds, Water Projects, No Opt. Call AA (4) 1,075,372
Series 1998A, 5.000%, 7/01/28 - FGIC Insured (ETM)
215 Baltimore, Maryland, Wastewater Project Revenue Bonds, 7/16 at 100.00 AAA 238,414
Series 2006C, 5.000%, 7/01/31 (Pre-refunded 7/01/16) -
AMBAC Insured
Frederick County, Maryland, Educational Facilities Revenue Bonds,
Mount St. Mary's College, Series 2001A:
465 5.700%, 9/01/20 (Pre-refunded 3/01/10) 3/10 at 101.00 BBB- (4) 496,057
500 5.750%, 9/01/25 (Pre-refunded 3/01/10) 3/10 at 101.00 BBB- (4) 533,820
500 Maryland Health and Higher Educational Facilities Authority, 4/11 at 101.00 N/R (4) 555,255
Revenue Bonds, Collington Episcopal Life Care Community Inc.,
Series 2001A, 6.750%, 4/01/23 (Pre-refunded 4/01/11)
585 Maryland Health and Higher Educational Facilities Authority, 7/14 at 100.00 A (4) 639,873
Revenue Bonds, LifeBridge Health System, Series 2004A,
5.125%, 7/01/34 (Pre-refunded 7/01/14)
625 Maryland Health and Higher Educational Facilities Authority, 6/11 at 100.00 Baa1 (4) 672,063
Revenue Bonds, Maryland Institute College of Art, Series 2001,
5.500%, 6/01/32 (Pre-refunded 6/01/11)
2,000 Maryland Health and Higher Educational Facilities Authority, 7/11 at 100.00 A (4) 2,139,259
Revenue Bonds, University of Maryland Medical System,
Series 2001, 5.250%, 7/01/28 (Pre-refunded 7/01/11)
775 Maryland Transportation Authority, Revenue Refunding Bonds, No Opt. Call AAA 887,546
Transportation Facilities Projects, First Series 1978,
6.800%, 7/01/16 (ETM)
Puerto Rico Infrastructure Financing Authority, Special Obligation
Bonds, Series 2000A:
2,300 5.500%, 10/01/32 10/10 at 101.00 AAA 2,395,472
1,700 5.500%, 10/01/40 10/10 at 101.00 AAA 1,767,473
960 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 7/10 at 100.00 AAA 1,003,258
Asset-Backed Bonds, Series 2000, 5.750%, 7/01/20
(Pre-refunded 7/01/10)
------------------------------------------------------------------------------------------------------------------------------------
11,640 Total U.S. Guaranteed 12,403,862
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 1.7% (1.1% OF TOTAL INVESTMENTS)
1,000 Maryland Energy Financing Administration, Revenue Bonds, 7/08 at 100.00 N/R 997,650
AES Warrior Run Project, Series 1995, 7.400%, 9/01/19
(Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
32
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 2.1% (1.4% OF TOTAL INVESTMENTS)
$ 285 Baltimore, Maryland, Wastewater Project Revenue Bonds, 7/16 at 100.00 AAA $ 295,536
Series 2006C, 5.000%, 7/01/31 - AMBAC Insured
540 Baltimore, Maryland, Wastewater Project Revenue Bonds, 7/17 at 100.00 AAA 547,063
Series 2007D, 5.000%, 7/01/32 - AMBAC Insured
355 Maryland Water Quality Financing Administration, Revolving Loan No Opt. Call AAA 393,869
Fund Revenue Bonds, Series 2005A, 5.000%, 9/01/15
------------------------------------------------------------------------------------------------------------------------------------
1,180 Total Water and Sewer 1,236,468
------------------------------------------------------------------------------------------------------------------------------------
$ 89,685 Total Investments (cost $90,410,738) - 152.8% 90,287,117
=============-----------------------------------------------------------------------------------------------------------------------
Floating Rate Obligations - (2.3)% (1,338,000)
--------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 3.6% 2,150,526
--------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (54.1)% (5) (32,000,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $59,099,643
====================================================================================================================
(1) All percentages shown in the Portfolio of Investments are
based on net assets applicable to Common shares unless
otherwise noted.
(2) Optional Call Provisions (not covered by the report of
independent registered public accounting firm): Dates (month
and year) and prices of the earliest optional call or
redemption. There may be other call provisions at varying
prices at later dates. Certain mortgage-backed securities
may be subject to periodic principal paydowns.
(3) Ratings (not covered by the report of independent registered
public accounting firm): Using the higher of Standard &
Poor's Group ("Standard & Poor's") or Moody's Investor
Service, Inc. ("Moody's") rating. Ratings below BBB by
Standard & Poor's or Baa by Moody's are considered to be
below investment grade.
The Portfolio of Investments may reflect the ratings on
certain bonds insured by ACA, AMBAC, CIFG, FGIC, MBIA, RAAI
and XLCA as of May 31, 2008. Please see the Portfolio
Manager's Commentary for an expanded discussion of the
affect on the Fund of changes to the ratings of certain
bonds in the portfolio resulting from changes to the ratings
of the underlying insurers both during the period and after
period end.
(4) Backed by an escrow or trust containing sufficient U.S.
Government or U.S. Government agency securities which ensure
the timely payment of principal and interest. Such
investments are normally considered to be equivalent to AAA
rated securities.
(5) Preferred Shares, at Liquidation Value as a percentage of
total investments is (35.4)%.
N/R Not rated.
(ETM) Escrowed to maturity.
(IF) Inverse floating rate investment.
(UB) Underlying bond of an inverse floating rate trust reflected
as a financing transaction pursuant to the provisions of
SFAS No. 140.
See accompanying notes to financial statements.
33
NZR
Nuveen Maryland Dividend Advantage Municipal Fund 2
Portfolio of INVESTMENTS
May 31, 2008
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
CONSUMER DISCRETIONARY - 5.0% (3.3% OF TOTAL INVESTMENTS)
$ 2,320 Baltimore, Maryland, Senior Lien Convention Center Hotel Revenue 9/16 at 100.00 A- $ 2,188,548
Bonds, Series 2006A, 5.250%, 9/01/39 - XLCA Insured
310 Baltimore, Maryland, Subordinate Lien Convention Center Hotel 9/16 at 100.00 Ba1 286,322
Revenue Bonds, Series 2006B, 5.875%, 9/01/39
650 Maryland Economic Development Corporation, Revenue Bonds, 12/16 at 100.00 N/R 506,415
Chesapeake Bay Hyatt Conference Center, Series 2006A,
5.000%, 12/01/31
------------------------------------------------------------------------------------------------------------------------------------
3,280 Total Consumer Discretionary 2,981,285
------------------------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES - 2.3% (1.5% OF TOTAL INVESTMENTS)
725 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 5/12 at 100.00 BBB 691,027
Asset-Backed Refunding Bonds, Series 2002, 5.375%, 5/15/33
800 Tobacco Settlement Financing Corporation, Virgin Islands, 5/11 at 100.00 Baa3 697,544
Tobacco Settlement Asset-Backed Bonds, Series 2001,
5.000%, 5/15/31
------------------------------------------------------------------------------------------------------------------------------------
1,525 Total Consumer Staples 1,388,571
------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 14.8% (9.7% OF TOTAL INVESTMENTS)
1,100 Anne Arundel County, Maryland, Economic Development Revenue 9/12 at 102.00 A3 1,128,589
Bonds, Community College Project, Series 2002, 5.125%, 9/01/22
500 Frederick County, Maryland, Educational Facilities Revenue Bonds, 9/16 at 100.00 BBB- 486,150
Mount Saint Mary's College, Series 2006, 5.625%, 9/01/38
645 Hartford County, Maryland, Economic Development Revenue Bonds, 4/14 at 100.00 A+ 655,314
Battelle Memorial Institute, Series 2004, 5.250%, 4/01/34
250 Maryland Health and Higher Educational Facilities Authority, 7/08 at 102.00 BBB- 250,930
Educational Facilities Leasehold Mortgage Revenue Bonds,
McLean School, Series 2001, 6.000%, 7/01/31
415 Maryland Health and Higher Educational Facilities Authority, 1/11 at 101.00 AAA 430,206
Revenue Bonds, Bullis School, Series 2000, 5.250%, 7/01/30 -
FSA Insured
500 Maryland Health and Higher Educational Facilities Authority, 7/14 at 100.00 A- 500,625
Revenue Bonds, Goucher College, Series 2004, 5.125%, 7/01/34
565 Maryland Health and Higher Educational Facilities Authority, 6/17 at 100.00 Baa1 524,874
Revenue Bonds, Maryland Institute College of Art, Series 2007,
5.000%, 6/01/36
500 Maryland Industrial Development Financing Authority, Revenue 5/15 at 100.00 N/R 501,510
Bonds, Our Lady of Good Counsel High School, Series 2005A,
6.000%, 5/01/35
590 Montgomery County Revenue Authority, Maryland, Lease Revenue 5/15 at 100.00 A1 626,067
Bonds, Montgomery College Arts Center Project, Series 2005A,
5.000%, 5/01/18
500 Morgan State University, Maryland, Student Tuition and Fee 7/12 at 100.00 A+ 510,830
Revenue Bonds, Academic Fees and Auxiliary Facilities,
Series 2001, 4.900%, 7/01/21 - FGIC Insured
500 Morgan State University, Maryland, Student Tuition and Fee 7/13 at 100.00 A+ 517,090
Revenue Bonds, Academic Fees and Auxiliary Facilities,
Series 2003A, 5.000%, 7/01/20 - FGIC Insured
1,140 University of Maryland, Auxiliary Facility and Tuition Revenue 4/11 at 100.00 AA 1,162,903
Bonds, Series 2001B, 4.500%, 4/01/19
650 University of Maryland, Auxiliary Facility and Tuition Revenue 10/16 at 100.00 AA 694,707
Bonds, Series 2006A, 5.000%, 10/01/22
34
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS (continued)
$ 950 Westminster, Maryland, Educational Facilities Revenue Bonds, 11/16 at 100.00 BBB+ $ 900,999
McDaniel College, Series 2006, 5.000%, 11/01/31
------------------------------------------------------------------------------------------------------------------------------------
8,805 Total Education and Civic Organizations 8,890,794
------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE - 25.9% (17.0% OF TOTAL INVESTMENTS)
1,000 Maryland Health and Higher Educational Facilities Authority, 7/08 at 101.00 AAA 1,009,710
Revenue Bonds, Anne Arundel Medical Center, Series 1998,
5.125%, 7/01/33 - FSA Insured
775 Maryland Health and Higher Educational Facilities Authority, 7/14 at 100.00 A2 786,354
Revenue Bonds, Calvert Memorial Hospital, Series 2004,
5.500%, 7/01/36
1,000 Maryland Health and Higher Educational Facilities Authority, 7/12 at 100.00 Baa1 1,029,800
Revenue Bonds, Carroll County General Hospital, Series 2002,
6.000%, 7/01/26
750 Maryland Health and Higher Educational Facilities Authority, 7/14 at 100.00 AA 713,588
Revenue Bonds, Civista Medical Center, Series 2005,
5.000%, 7/01/37 - RAAI Insured
715 Maryland Health and Higher Educational Facilities Authority, 7/17 at 100.00 Baa2 671,521
Revenue Bonds, Doctors Community Hospital, Series 2007A,
5.000%, 7/01/29
500 Maryland Health and Higher Educational Facilities Authority, 7/12 at 100.00 Baa1 480,525
Revenue Bonds, Frederick Memorial Hospital, Series 2002,
5.125%, 7/01/35
650 Maryland Health and Higher Educational Facilities Authority, 7/11 at 100.00 A+ 636,064
Revenue Bonds, Greater Baltimore Medical Center, Series 2001,
5.000%, 7/01/34 - MBIA Insured
585 Maryland Health and Higher Educational Facilities Authority, 7/14 at 100.00 AA 619,971
Revenue Bonds, Johns Hopkins Hospital, Series 2004,
Inverse 1003, 11.325%, 7/01/33 (IF)
1,000 Maryland Health and Higher Educational Facilities Authority, 7/13 at 100.00 Baa3 960,540
Revenue Bonds, Kennedy Krieger Institute, Series 2003,
5.500%, 7/01/33
480 Maryland Health and Higher Educational Facilities Authority, 7/17 at 100.00 AAA 498,082
Revenue Bonds, LifeBridge Health System, Series 2008,
5.000%, 7/01/28 - AGC Insured
700 Maryland Health and Higher Educational Facilities Authority, 8/14 at 100.00 A- 712,495
Revenue Bonds, MedStar Health, Series 2004, 5.375%, 8/15/24
Maryland Health and Higher Educational Facilities Authority,
Revenue Bonds, Mercy Medical Center Project, Series 2007A:
415 5.000%, 7/01/37 7/17 at 100.00 BBB 368,059
280 5.500%, 7/01/42 7/17 at 100.00 BBB 266,092
1,500 Maryland Health and Higher Educational Facilities Authority, 7/11 at 100.00 BBB 1,500,960
Revenue Bonds, Mercy Medical Center, Series 2001,
5.625%, 7/01/31
700 Maryland Health and Higher Educational Facilities Authority, 7/16 at 100.00 A 690,606
Revenue Bonds, Peninsula Regional Medical Center,
Series 2006, 5.000%, 7/01/36
1,500 Maryland Health and Higher Educational Facilities Authority, 7/15 at 100.00 A3 1,431,990
Revenue Bonds, Union Hospital of Cecil County, Series 2005,
5.000%, 7/01/40
980 Maryland Health and Higher Educational Facilities Authority, 1/18 at 100.00 BBB- 954,138
Revenue Bonds, Washington County Hospital, Series 2008,
5.750%, 1/01/38
1,610 Montgomery County, Maryland, Economic Development Revenue 12/11 at 100.00 AA 1,627,726
Bonds, Trinity Healthcare Group, Series 2001, 5.125%, 12/01/22
700 Prince George's County, Maryland, Revenue Bonds, Dimensions 7/08 at 100.00 B3 540,953
Health Corporation, Series 1994, 5.300%, 7/01/24
------------------------------------------------------------------------------------------------------------------------------------
15,840 Total Health Care 15,499,174
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 9.4% (6.2% OF TOTAL INVESTMENTS)
10 Maryland Community Development Administration, Insured 5/11 at 100.00 Aa2 10,066
Multifamily Housing Mortgage Loan Revenue Bonds,
Series 2001A, 5.100%, 5/15/28
3,145 Maryland Community Development Administration, Multifamily 12/11 at 100.00 Aaa 3,146,917
Development Revenue Bonds, Waters Towers Senior Apartments,
Series 2001F, 5.450%, 12/15/33 (Alternative Minimum Tax)
35
NZR
Nuveen Maryland Dividend Advantage Municipal Fund 2 (continued)
Portfolio of INVESTMENTS May 31, 2008
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY (continued)
$ 1,110 Maryland Community Development Administration, Multifamily 12/11 at 100.00 Aaa $ 1,110,677
Housing Revenue Bonds, Princess Anne Apartments, Series 2001D,
5.450%, 12/15/33 (Alternative Minimum Tax)
1,000 Maryland Economic Development Corporation, Senior Lien Student 10/13 at 100.00 B2 900,060
Housing Revenue Bonds, University of Maryland - Baltimore,
Series 2003A, 5.625%, 10/01/23
520 Maryland Economic Development Corporation, Student Housing 6/16 at 100.00 A+ 475,030
Revenue Refunding Bonds, University of Maryland College Park
Projects, Series 2006, 5.000%, 6/01/33 - CIFG Insured
------------------------------------------------------------------------------------------------------------------------------------
5,785 Total Housing/Multifamily 5,642,750
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 8.4% (5.5% OF TOTAL INVESTMENTS)
250 Maryland Community Development Administration Department of 3/17 at 100.00 Aa2 241,290
Housing and Community Development, Residential Revenue Bonds,
Series 2007H, 5.000%, 9/01/27 (Alternative Minimum Tax)
300 Maryland Community Development Administration, Department of 9/15 at 100.00 Aa2 287,742
Housing and Community Development, Residential Revenue Bonds,
Series 2006F, 4.900%, 9/01/26 (Alternative Minimum Tax)
1,000 Maryland Community Development Administration, Department of 3/16 at 100.00 Aa2 956,230
Housing and Community Development, Residential Revenue Bonds,
Series 2006I, 4.875%, 9/01/26 (Alternative Minimum Tax)
815 Maryland Community Development Administration, Department of 9/16 at 100.00 Aa2 766,467
Housing and Community Development, Residential Revenue Bonds,
Series 2006L, 4.900%, 9/01/31 (Alternative Minimum Tax)
500 Maryland Community Development Administration, Department of 3/17 at 100.00 Aa2 450,275
Housing and Community Development, Residential Revenue Bonds,
Series 2007D, 4.850%, 9/01/37 (Alternative Minimum Tax)
845 Maryland Community Development Administration, Residential 9/10 at 100.00 Aa2 841,290
Revenue Bonds, Series 2001H, 5.350%, 9/01/32 (Alternative
Minimum Tax)
970 Maryland Community Development Administration, Residential 9/14 at 100.00 Aa2 897,396
Revenue Bonds, Series 2005E, 4.900%, 9/01/36 (Alternative
Minimum Tax)
600 Maryland Community Development Administration, Residential 9/15 at 100.00 Aa2 569,448
Revenue Bonds, Series 2006B, 4.750%, 9/01/25 (Alternative
Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
5,280 Total Housing/Single Family 5,010,138
------------------------------------------------------------------------------------------------------------------------------------
INDUSTRIALS - 2.6% (1.7% OF TOTAL INVESTMENTS)
410 Maryland Economic Development Corporation, Solid Waste 4/12 at 101.00 BBB 386,860
Disposal Revenue Bonds, Waste Management Inc., Series 2002,
4.600%, 4/01/16 (Alternative Minimum Tax)
1,150 Northeast Maryland Waste Disposal Authority, Baltimore, Resource 1/09 at 101.00 BBB 1,152,473
Recovery Revenue Bonds, RESCO Retrofit Project, Series 1998,
4.750%, 1/01/12 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
1,560 Total Industrials 1,539,333
------------------------------------------------------------------------------------------------------------------------------------
LONG-TERM CARE - 3.5% (2.3% OF TOTAL INVESTMENTS)
860 Baltimore County, Maryland, Revenue Bonds, Oak Crest Village, 1/17 at 100.00 BBB+ 794,864
Series 2007A, 5.000%, 1/01/37
300 Maryland Health and Higher Educational Facilities Authority, 7/16 at 100.00 N/R 278,190
Revenue Bonds, Edenwald, Series 2006A, 5.400%, 1/01/31
Maryland Health and Higher Educational Facilities Authority, Revenue
Bonds, King Farm Presbyterian Community, Series 2007A:
500 5.000%, 1/01/17 No Opt. Call N/R 480,240
220 5.250%, 1/01/27 1/17 at 100.00 N/R 190,991
435 Maryland Health and Higher Educational Facilities Authority, 7/17 at 100.00 BBB+ 379,216
Revenue Bonds, Mercy Ridge Retirement Community,
Series 2007, 4.750%, 7/01/34
------------------------------------------------------------------------------------------------------------------------------------
2,315 Total Long-Term Care 2,123,501
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 28.4% (18.7% OF TOTAL INVESTMENTS)
750 Anne Arundel County, Maryland, General Obligation Bonds, 8/09 at 101.00 AAA 763,418
Consolidated Water and Sewerage, Series 1999,
4.500%, 8/01/19
Anne Arundel County, Maryland, General Obligation Bonds,
Series 2006:
845 5.000%, 3/01/21 3/16 at 100.00 AAA 903,009
650 5.000%, 3/01/21 3/16 at 100.00 AAA 694,623
36
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL (continued)
$ 750 Baltimore, Maryland, General Obligation Consolidated Public 10/14 at 100.00 AAA $ 789,000
Improvement Bonds, Series 2004A, 5.000%, 10/15/22 -
AMBAC Insured
300 Carroll County, Maryland, Consolidated Public Improvement 12/15 at 100.00 AA 331,446
Bonds, Series 2005A, 5.000%, 12/01/16
Cecil County, Maryland, Consolidated General Obligation Public
Improvement Bonds, Series 2001B:
975 4.600%, 8/01/18 8/11 at 101.00 AA- 1,010,159
1,020 4.600%, 8/01/19 8/11 at 101.00 AA- 1,053,650
750 Frederick County, Maryland, General Obligation Public Facilities No Opt. Call AA 828,398
Bonds, Series 2006, 5.000%, 11/01/20
Frederick, Maryland, General Obligation Bonds, Series 2005:
600 5.000%, 8/01/16 - MBIA Insured 8/15 at 100.00 AAA 658,398
500 5.000%, 8/01/17 - MBIA Insured 8/15 at 100.00 AAA 538,945
510 Frederick, Maryland, General Obligation Refunding and 12/11 at 101.00 AA- 534,414
Improvement Bonds, Series 2001, 4.750%, 12/01/19
1,000 Montgomery County, Maryland, Consolidated General Obligation No Opt. Call AAA 1,108,610
Public Improvement Bonds, Series 2005A, 5.000%, 7/01/15
4,730 Montgomery County, Maryland, Consolidated General Obligation 10/11 at 101.00 AAA 5,055,893
Public Improvement Refunding Bonds, Series 2001,
5.250%, 10/01/18
770 Puerto Rico, General Obligation and Public Improvement Bonds, 7/11 at 100.00 AAA 789,512
Series 2001, 5.000%, 7/01/24 - FSA Insured
800 Washington Suburban Sanitary District, Montgomery and 6/15 at 100.00 AAA 880,480
Prince George's Counties, Maryland, Sewerage Disposal Bonds,
Series 2005, 5.000%, 6/01/16
1,000 Washington Suburban Sanitary District, Montgomery and 6/15 at 100.00 AAA 1,100,600
Prince George's Counties, Maryland, Water Supply Bonds,
Series 2005, 5.000%, 6/01/16
------------------------------------------------------------------------------------------------------------------------------------
15,950 Total Tax Obligation/General 17,040,555
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 17.9% (11.8% OF TOTAL INVESTMENTS)
625 Annapolis, Maryland, Special Obligation Bonds, Park Place 1/15 at 101.00 N/R 541,188
Project, Series 2005A, 5.350%, 7/01/34
465 Anne Arundel County, Maryland, Tax Increment Financing Revenue No Opt. Call N/R 475,923
Bonds, Parole Town Center Project, Series 2002, 5.000%, 7/01/12
530 Baltimore Board of School Commissioners, Maryland, Revenue 5/13 at 100.00 AA+ 570,593
Bonds, City Public School System, Series 2003A, 5.000%, 5/01/15
Baltimore County, Maryland, Certificates of Participation, Health
and Social Services Building Project, Series 2001:
1,580 5.000%, 8/01/20 8/11 at 101.00 AA+ 1,636,327
1,660 5.000%, 8/01/21 8/11 at 101.00 AA+ 1,714,182
110 Frederick County, Maryland, Lake Linganore Village Community 7/10 at 102.00 AA 112,736
Development Special Obligation Bonds, Series 2001A,
5.700%, 7/01/29 - RAAI Insured
350 Hyattsville, Maryland, Special Obligation Bonds, University 7/14 at 102.00 N/R 321,923
Town Center Project, Series 2004, 5.750%, 7/01/34
1,000 Maryland Department of Transportation, Consolidated Transportation No Opt. Call AAA 1,140,310
Revenue Bonds, Series 2002, 5.500%, 2/01/16
1,405 Maryland Economic Development Corporation, Lease Revenue 6/12 at 100.50 AA+ 1,504,643
Bonds, Department of Transportation Headquarters Building,
Series 2002, 5.375%, 6/01/19
1,000 Montgomery County, Maryland, Special Obligation Bonds, West 7/12 at 101.00 AA 1,024,060
Germantown Development District, Senior Series 2002A,
5.500%, 7/01/27 - RAAI Insured
270 Prince George's County, Maryland, Special Obligation Bonds, 7/15 at 100.00 N/R 228,695
National Harbor Project, Series 2005, 5.200%, 7/01/34
475 Prince George's County, Maryland, Special Tax District Bonds, 7/13 at 100.00 N/R 403,769
Victoria Falls Project, Series 2005, 5.250%, 7/01/35
37
NZR
Nuveen Maryland Dividend Advantage Municipal Fund 2 (continued)
Portfolio of INVESTMENTS May 31, 2008
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED (continued)
$ 1,000 Puerto Rico Highway and Transportation Authority, Highway No Opt. Call AAA $ 1,055,150
Revenue Bonds, Series 2007N, 5.250%, 7/01/31 - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
10,470 Total Tax Obligation/Limited 10,729,499
------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 5.9% (3.8% OF TOTAL INVESTMENTS)
Maryland Health and Higher Educational Facilities Authority,
Parking Facilities Revenue Bonds, Johns Hopkins Hospital, Series
2001:
650 5.000%, 7/01/27 - AMBAC Insured 7/11 at 100.00 AAA 658,684
1,000 5.000%, 7/01/34 - AMBAC Insured 7/11 at 100.00 AAA 1,001,650
1,780 Maryland Transportation Authority, Revenue Bonds, Transportation 7/17 at 100.00 AAA 1,852,455
Facilities Projects, Series 2007, 5.000%, 7/01/30 - FSA Insured (UB)
------------------------------------------------------------------------------------------------------------------------------------
3,430 Total Transportation 3,512,789
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 22.7% (14.9% OF TOTAL INVESTMENTS) (4)
1,000 Baltimore County, Maryland, Consolidated General Obligation 8/12 at 100.00 AAA 1,055,090
Public Improvement Bonds, Series 2002, 5.000%, 8/01/18
(Pre-refunded 8/01/12)
215 Baltimore, Maryland, Wastewater Project Revenue Bonds, 7/16 at 100.00 AAA 238,414
Series 2006C, 5.000%, 7/01/31 (Pre-refunded 7/01/16) -
AMBAC Insured
Frederick County, Maryland, Educational Facilities Revenue Bonds,
Mount St. Mary's College, Series 2001A:
100 5.750%, 9/01/25 (Pre-refunded 3/01/10) 3/10 at 101.00 BBB- (4) 106,764
100 5.800%, 9/01/30 (Pre-refunded 3/01/10) 3/10 at 101.00 BBB- (4) 106,850
90 Frederick County, Maryland, Lake Linganore Village Community 7/10 at 102.00 AA (4) 97,844
Development Special Obligation Bonds, Series 2001A,
5.700%, 7/01/29 (Pre-refunded 7/01/10) - RAAI Insured
Maryland Health and Higher Educational Facilities Authority,
Revenue Bonds, Collington Episcopal Life Care Community Inc.,
Series 2001A:
31 6.750%, 4/01/20 (Pre-refunded 4/01/09) 4/09 at 100.00 N/R (4) 31,976
25 6.750%, 4/01/23 (Pre-refunded 4/01/11) 4/11 at 101.00 N/R (4) 27,763
1,260 Maryland Health and Higher Educational Facilities Authority, No Opt. Call AAA 1,363,635
Revenue Bonds, Helix Health, Series 1997, 5.000%, 7/01/17 -
AMBAC Insured (ETM)
525 Maryland Health and Higher Educational Facilities Authority, 7/14 at 100.00 A (4) 574,245
Revenue Bonds, LifeBridge Health System, Series 2004A,
5.125%, 7/01/34 (Pre-refunded 7/01/14)
1,250 Maryland Health and Higher Educational Facilities Authority, 6/11 at 100.00 Baa1 (4) 1,344,125
Revenue Bonds, Maryland Institute College of Art, Series 2001,
5.500%, 6/01/32 (Pre-refunded 6/01/11)
2,000 Maryland Health and Higher Educational Facilities Authority, 7/11 at 100.00 A (4) 2,139,259
Revenue Bonds, University of Maryland Medical System,
Series 2001, 5.250%, 7/01/28 (Pre-refunded 7/01/11)
1,090 Maryland Transportation Authority, Revenue Refunding Bonds, No Opt. Call AAA 1,248,290
Transportation Facilities Projects, First Series 1978,
6.800%, 7/01/16 (ETM)
1,000 Prince George's County, Maryland, General Obligation 12/11 at 101.00 AAA 1,092,060
Consolidated Public Improvement Bonds, Series 2001,
5.250%, 12/01/20 (Pre-refunded 12/01/11) - FGIC Insured
3,000 Puerto Rico Infrastructure Financing Authority, Special Obligation 10/10 at 101.00 AAA 3,119,069
Bonds, Series 2000A, 5.500%, 10/01/40
1,000 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 7/10 at 100.00 AAA 1,060,720
Asset-Backed Bonds, Series 2000, 6.000%, 7/01/26
(Pre-refunded 7/01/10)
------------------------------------------------------------------------------------------------------------------------------------
12,686 Total U.S. Guaranteed 13,606,104
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 3.3% (2.2% OF TOTAL INVESTMENTS)
1,000 Guam Power Authority, Revenue Bonds, Series 1999A, 10/09 at 101.00 AAA 1,001,450
5.250%, 10/01/34 - MBIA Insured
1,000 Maryland Energy Financing Administration, Revenue Bonds, 7/08 at 100.00 N/R 997,650
AES Warrior Run Project, Series 1995, 7.400%, 9/01/19
(Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
2,000 Total Utilities 1,999,100
------------------------------------------------------------------------------------------------------------------------------------
38
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 2.1% (1.4% OF TOTAL INVESTMENTS)
$ 285 Baltimore, Maryland, Wastewater Project Revenue Bonds, 7/16 at 100.00 AAA $ 295,536
Series 2006C, 5.000%, 7/01/31 - AMBAC Insured
540 Baltimore, Maryland, Wastewater Project Revenue Bonds, 7/17 at 100.00 AAA 547,063
Series 2007D, 5.000%, 7/01/32 - AMBAC Insured
355 Maryland Water Quality Financing Administration, Revolving No Opt. Call AAA 393,869
Loan Fund Revenue Bonds, Series 2005A, 5.000%, 9/01/15
------------------------------------------------------------------------------------------------------------------------------------
1,180 Total Water and Sewer 1,236,468
------------------------------------------------------------------------------------------------------------------------------------
$ 90,106 Total Investments (cost $90,958,298) - 152.2% 91,200,061
=============-----------------------------------------------------------------------------------------------------------------------
Floating Rate Obligations - (2.2)% (1,335,000)
--------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 3.4% 2,055,759
--------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (53.4)% (5) (32,000,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $59,920,820
====================================================================================================================
(1) All percentages shown in the Portfolio of Investments are
based on net assets applicable to Common shares unless
otherwise noted.
(2) Optional Call Provisions (not covered by the report of
independent registered public accounting firm): Dates (month
and year) and prices of the earliest optional call or
redemption. There may be other call provisions at varying
prices at later dates. Certain mortgage-backed securities
may be subject to periodic principal paydowns.
(3) Ratings (not covered by the report of independent registered
public accounting firm): Using the higher of Standard &
Poor's Group ("Standard & Poor's") or Moody's Investor
Service, Inc. ("Moody's") rating. Ratings below BBB by
Standard & Poor's or Baa by Moody's are considered to be
below investment grade.
The Portfolio of Investments may reflect the ratings on
certain bonds insured by ACA, AMBAC, CIFG, FGIC, MBIA, RAAI
and XLCA as of May 31, 2008. Please see the Portfolio
Manager's Commentary for an expanded discussion of the
affect on the Fund of changes to the ratings of certain
bonds in the portfolio resulting from changes to the ratings
of the underlying insurers both during the period and after
period end.
(4) Backed by an escrow or trust containing sufficient U.S.
Government or U.S. Government agency securities which ensure
the timely payment of principal and interest. Such
investments are normally considered to be equivalent to AAA
rated securities.
(5) Preferred Shares, at Liquidation Value as a percentage of
total investments is (35.1)%.
N/R Not rated.
(ETM) Escrowed to maturity.
(IF) Inverse floating rate investment.
(UB) Underlying bond of an inverse floating rate trust reflected
as a financing transaction pursuant to the provisions of
SFAS No. 140.
See accompanying notes to financial statements.
39
NWI
Nuveen Maryland Dividend Advantage Municipal Fund 3
Portfolio of INVESTMENTS
May 31, 2008
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
CONSUMER DISCRETIONARY - 4.2% (2.8% OF TOTAL INVESTMENTS)
$ 2,385 Baltimore, Maryland, Senior Lien Convention Center Hotel Revenue 9/16 at 100.00 A- $ 2,249,866
Bonds, Series 2006A, 5.250%, 9/01/39 - XLCA Insured
380 Baltimore, Maryland, Subordinate Lien Convention Center Hotel 9/16 at 100.00 Ba1 350,976
Revenue Bonds, Series 2006B, 5.875%, 9/01/39
700 Maryland Economic Development Corporation, Revenue Bonds, 12/16 at 100.00 N/R 545,370
Chesapeake Bay Hyatt Conference Center, Series 2006A,
5.000%, 12/01/31
------------------------------------------------------------------------------------------------------------------------------------
3,465 Total Consumer Discretionary 3,146,212
------------------------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES - 3.2% (2.1% OF TOTAL INVESTMENTS)
2,515 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 5/12 at 100.00 BBB 2,397,147
Asset-Backed Refunding Bonds, Series 2002, 5.375%, 5/15/33
------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 12.2% (8.0% OF TOTAL INVESTMENTS)
225 Anne Arundel County, Maryland, Economic Development Revenue 9/12 at 102.00 A3 230,848
Bonds, Community College Project, Series 2002, 5.125%, 9/01/22
625 Frederick County, Maryland, Educational Facilities Revenue Bonds, 9/16 at 100.00 BBB- 607,688
Mount Saint Mary's College, Series 2006, 5.625%, 9/01/38
690 Hartford County, Maryland, Economic Development Revenue Bonds, 4/14 at 100.00 A+ 701,033
Battelle Memorial Institute, Series 2004, 5.250%, 4/01/34
625 Maryland Health and Higher Educational Facilities Authority, 7/14 at 100.00 A- 625,781
Revenue Bonds, Goucher College, Series 2004, 5.125%, 7/01/34
1,000 Maryland Health and Higher Educational Facilities Authority, 7/12 at 100.00 AA 1,014,710
Revenue Bonds, Johns Hopkins University, Series 2002A,
5.000%, 7/01/32
625 Maryland Industrial Development Financing Authority, Revenue 5/15 at 100.00 N/R 626,888
Bonds, Our Lady of Good Counsel High School, Series 2005A,
6.000%, 5/01/35
710 Montgomery County Revenue Authority, Maryland, Lease Revenue 5/15 at 100.00 A1 753,402
Bonds, Montgomery College Arts Center Project, Series 2005A,
5.000%, 5/01/18
1,000 Morgan State University, Maryland, Student Tuition and Fee 7/13 at 100.00 A+ 1,010,690
Revenue Bonds, Academic Fees and Auxiliary Facilities,
Series 2003A, 5.000%, 7/01/32 - FGIC Insured
985 University of Maryland, Auxiliary Facility and Tuition Revenue 4/11 at 100.00 AA 1,002,572
Bonds, Series 2001B, 4.625%, 4/01/21
800 University of Maryland, Auxiliary Facility and Tuition Revenue 10/16 at 100.00 AA 855,024
Bonds, Series 2006A, 5.000%, 10/01/22
1,815 Westminster, Maryland, Educational Facilities Revenue Bonds, 11/16 at 100.00 BBB+ 1,721,382
McDaniel College, Series 2006, 5.000%, 11/01/31
------------------------------------------------------------------------------------------------------------------------------------
9,100 Total Education and Civic Organizations 9,150,018
------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE - 26.0% (17.2% OF TOTAL INVESTMENTS)
700 Maryland Health and Higher Education Facilities Authority, 7/16 at 100.00 A 698,068
Revenue Bonds, University of Maryland Medical System,
Series 2006, 5.000%, 7/01/31
1,000 Maryland Health and Higher Educational Facilities Authority, 7/08 at 101.00 AAA 1,009,710
Revenue Bonds, Anne Arundel Medical Center, Series 1998,
5.125%, 7/01/33 - FSA Insured
775 Maryland Health and Higher Educational Facilities Authority, 7/14 at 100.00 A2 786,354
Revenue Bonds, Calvert Memorial Hospital, Series 2004,
5.500%, 7/01/36
40
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE (continued)
$ 1,250 Maryland Health and Higher Educational Facilities Authority, 7/12 at 100.00 Baa1 $ 1,263,488
Revenue Bonds, Carroll County General Hospital, Series 2002,
5.800%, 7/01/32
1,750 Maryland Health and Higher Educational Facilities Authority, 7/16 at 100.00 Baa1 1,596,700
Revenue Bonds, Carroll Hospital Center, Series 2006,
5.000%, 7/01/40
870 Maryland Health and Higher Educational Facilities Authority, 7/14 at 100.00 AA 827,762
Revenue Bonds, Civista Medical Center, Series 2005,
5.000%, 7/01/37 - RAAI Insured
885 Maryland Health and Higher Educational Facilities Authority, 7/17 at 100.00 Baa2 831,183
Revenue Bonds, Doctors Community Hospital, Series 2007A,
5.000%, 7/01/29
700 Maryland Health and Higher Educational Facilities Authority, 7/12 at 100.00 Baa1 672,735
Revenue Bonds, Frederick Memorial Hospital, Series 2002,
5.125%, 7/01/35
800 Maryland Health and Higher Educational Facilities Authority, 7/11 at 100.00 A+ 782,848
Revenue Bonds, Greater Baltimore Medical Center, Series 2001,
5.000%, 7/01/34 - MBIA Insured
1,000 Maryland Health and Higher Educational Facilities Authority, 5/11 at 100.00 A+ 1,017,290
Revenue Bonds, Johns Hopkins Hospital, Series 2001,
5.000%, 5/15/21
735 Maryland Health and Higher Educational Facilities Authority, 7/14 at 100.00 AA 778,938
Revenue Bonds, Johns Hopkins Hospital, Series 2004,
Inverse 1003, 11.325%, 7/01/33 (IF)
1,000 Maryland Health and Higher Educational Facilities Authority, 7/13 at 100.00 Baa3 960,540
Revenue Bonds, Kennedy Krieger Institute, Series 2003,
5.500%, 7/01/33
595 Maryland Health and Higher Educational Facilities Authority, 7/17 at 100.00 AAA 617,414
Revenue Bonds, LifeBridge Health System, Series 2008,
5.000%, 7/01/28 - AGC Insured
900 Maryland Health and Higher Educational Facilities Authority, 8/14 at 100.00 A- 916,065
Revenue Bonds, MedStar Health, Series 2004, 5.375%, 8/15/24
Maryland Health and Higher Educational Facilities Authority,
Revenue Bonds, Mercy Medical Center Project, Series 2007A:
525 5.000%, 7/01/37 7/17 at 100.00 BBB 465,617
340 5.500%, 7/01/42 7/17 at 100.00 BBB 323,112
650 Maryland Health and Higher Educational Facilities Authority, 7/11 at 100.00 BBB 650,416
Revenue Bonds, Mercy Medical Center, Series 2001,
5.625%, 7/01/31
850 Maryland Health and Higher Educational Facilities Authority, 7/16 at 100.00 A 838,593
Revenue Bonds, Peninsula Regional Medical Center, Series 2006,
5.000%, 7/01/36
1,845 Maryland Health and Higher Educational Facilities Authority, 7/12 at 100.00 A3 1,871,070
Revenue Bonds, Union Hospital of Cecil County, Series 2002,
5.625%, 7/01/32
1,220 Maryland Health and Higher Educational Facilities Authority, 1/18 at 100.00 BBB- 1,187,804
Revenue Bonds, Washington County Hospital, Series 2008,
5.750%, 1/01/38
775 Maryland Health and Higher Educational Facilities Authority, 1/13 at 101.00 Baa2 788,260
Revenue Refunding Bonds, Adventist Healthcare, Series 2003A,
5.750%, 1/01/25
900 Prince George's County, Maryland, Revenue Bonds, Dimensions 7/08 at 100.00 B3 695,511
Health Corporation, Series 1994, 5.300%, 7/01/24
------------------------------------------------------------------------------------------------------------------------------------
20,065 Total Health Care 19,579,478
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 14.4% (9.5% OF TOTAL INVESTMENTS)
980 Maryland Community Development Administration, Housing 7/12 at 100.00 Aa2 925,963
Revenue Bonds, Series 2002B, 4.950%, 7/01/32
(Alternative Minimum Tax)
1,250 Maryland Economic Development Corporation, Senior Lien Student 10/13 at 100.00 B2 1,125,075
Housing Revenue Bonds, University of Maryland - Baltimore,
Series 2003A, 5.625%, 10/01/23
Maryland Economic Development Corporation, Student Housing
Revenue Bonds, Sheppard Pratt University Village, Series 2001:
20 5.875%, 7/01/21 - ACA Insured 7/11 at 101.00 N/R 19,606
150 6.000%, 7/01/33 - ACA Insured 7/11 at 101.00 N/R 139,287
475 Maryland Economic Development Corporation, Student Housing 6/16 at 100.00 A+ 433,922
Revenue Refunding Bonds, University of Maryland College Park
Projects, Series 2006, 5.000%, 6/01/33 - CIFG Insured
41
NWI
Nuveen Maryland Dividend Advantage Municipal Fund 3 (continued)
Portfolio of INVESTMENTS May 31, 2008
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY (continued)
Montgomery County Housing Opportunities Commission, Maryland,
Multifamily Housing Development Bonds, Series 2002B:
$ 515 5.100%, 7/01/33 (Alternative Minimum Tax) 7/12 at 100.00 Aaa $ 497,310
3,000 5.200%, 7/01/44 (Alternative Minimum Tax) 7/12 at 100.00 Aaa 2,841,359
4,860 Prince George's County Housing Authority, Maryland, 11/12 at 100.00 AAA 4,870,011
GNMA Collateralized Mortgage Revenue Bonds, Fairview and
Hillside Projects, Series 2002A, 4.700%, 11/20/22
------------------------------------------------------------------------------------------------------------------------------------
11,250 Total Housing/Multifamily 10,852,533
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 5.9% (3.9% OF TOTAL INVESTMENTS)
350 Maryland Community Development Administration Department 3/17 at 100.00 Aa2 337,806
of Housing and Community Development, Residential Revenue
Bonds, Series 2007H, 5.000%, 9/01/27 (Alternative Minimum Tax)
595 Maryland Community Development Administration, Department 9/15 at 100.00 Aa2 570,688
of Housing and Community Development, Residential Revenue
Bonds, Series 2006F, 4.900%, 9/01/26 (Alternative Minimum Tax)
1,200 Maryland Community Development Administration, Department 3/16 at 100.00 Aa2 1,147,476
of Housing and Community Development, Residential Revenue
Bonds, Series 2006I, 4.875%, 9/01/26 (Alternative Minimum Tax)
815 Maryland Community Development Administration, Department 9/16 at 100.00 Aa2 766,467
of Housing and Community Development, Residential Revenue
Bonds, Series 2006L, 4.900%, 9/01/31 (Alternative Minimum Tax)
620 Maryland Community Development Administration, Department 3/17 at 100.00 Aa2 558,341
of Housing and Community Development, Residential Revenue
Bonds, Series 2007D, 4.850%, 9/01/37 (Alternative Minimum Tax)
1,160 Maryland Community Development Administration, Residential 9/14 at 100.00 Aa2 1,073,174
Revenue Bonds, Series 2005E, 4.900%, 9/01/36
(Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
4,740 Total Housing/Single Family 4,453,952
------------------------------------------------------------------------------------------------------------------------------------
INDUSTRIALS - 2.0% (1.3% OF TOTAL INVESTMENTS)
510 Maryland Economic Development Corporation, Solid Waste 4/12 at 101.00 BBB 481,216
Disposal Revenue Bonds, Waste Management Inc., Series 2002,
4.600%, 4/01/16 (Alternative Minimum Tax)
1,000 Northeast Maryland Waste Disposal Authority, Baltimore, 1/09 at 101.00 BBB 1,002,150
Resource Recovery Revenue Bonds, RESCO Retrofit Project,
Series 1998, 4.750%, 1/01/12 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
1,510 Total Industrials 1,483,366
------------------------------------------------------------------------------------------------------------------------------------
LONG-TERM CARE - 3.4% (2.2% OF TOTAL INVESTMENTS)
1,050 Baltimore County, Maryland, Revenue Bonds, Oak Crest Village, 1/17 at 100.00 BBB+ 970,473
Series 2007A, 5.000%, 1/01/37
400 Maryland Health and Higher Educational Facilities Authority, 7/16 at 100.00 N/R 370,920
Revenue Bonds, Edenwald, Series 2006A, 5.400%, 1/01/31
Maryland Health and Higher Educational Facilities Authority,
Revenue Bonds, King Farm Presbyterian Community, Series 2007A:
280 5.000%, 1/01/17 No Opt. Call N/R 268,934
520 5.250%, 1/01/27 1/17 at 100.00 N/R 451,433
540 Maryland Health and Higher Educational Facilities Authority, 7/17 at 100.00 BBB+ 470,750
Revenue Bonds, Mercy Ridge Retirement Community,
Series 2007, 4.750%, 7/01/34
------------------------------------------------------------------------------------------------------------------------------------
2,790 Total Long-Term Care 2,532,510
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 21.9% (14.4% OF TOTAL INVESTMENTS)
1,000 Annapolis, Maryland, General Obligation Public Improvement 4/12 at 101.00 AA 1,038,410
Refunding Bonds, Series 2002, 4.375%, 4/01/17
Anne Arundel County, Maryland, General Obligation Bonds,
Series 2006:
845 5.000%, 3/01/21 3/16 at 100.00 AAA 903,009
650 5.000%, 3/01/21 3/16 at 100.00 AAA 694,623
380 Carroll County, Maryland, Consolidated Public Improvement Bonds, 12/15 at 100.00 AA 419,832
Series 2005A, 5.000%, 12/01/16
1,260 Charles County, Maryland, Consolidated General Obligation 1/12 at 101.00 AA 1,314,533
Public Improvement Bonds, Series 2002, 4.400%, 1/15/16
42
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL (continued)
$ 500 Frederick County, Maryland, General Obligation Public Facilities No Opt. Call AA $ 552,265
Bonds, Series 2006, 5.000%, 11/01/20
Frederick, Maryland, General Obligation Bonds, Series 2005:
710 5.000%, 8/01/16 - MBIA Insured 8/15 at 100.00 AAA 779,104
535 5.000%, 8/01/17 - MBIA Insured 8/15 at 100.00 AAA 576,671
1,000 Maryland National Capital Park Planning Commission, 1/14 at 100.00 AA+ 1,078,490
Prince George's County, General Obligation Bonds, Park Acquisition
and Development, Series 2004EE-2, 5.000%, 1/15/17
1,850 Montgomery County, Maryland, Consolidated General Obligation No Opt. Call AAA 2,050,929
Public Improvement Bonds, Series 2005A, 5.000%, 7/01/15
1,440 Montgomery County, Maryland, Consolidated General Obligation No Opt. Call AAA 1,601,914
Public Improvement Bonds, Series 2006, 5.000%, 5/01/16
1,000 Prince George's County, Maryland, General Obligation Consolidated 10/13 at 100.00 AAA 1,075,770
Public Improvement Bonds, Series 2003A, 5.000%, 10/01/17
1,000 Prince George's County, Maryland, General Obligation Consolidated No Opt. Call AAA 1,077,180
Public Improvement Bonds, Series 2004C, 5.000%, 12/01/11
1,000 St. Mary's County, Maryland, General Obligation Hospital Bonds, No Opt. Call AA 1,084,950
Series 2002, 5.000%, 10/01/12
1,000 Washington Suburban Sanitary District, Montgomery and 6/15 at 100.00 AAA 1,100,600
Prince George's Counties, Maryland, Sewerage Disposal Bonds,
Series 2005, 5.000%, 6/01/16
1,000 Washington Suburban Sanitary District, Montgomery and 6/15 at 100.00 AAA 1,100,600
Prince George's Counties, Maryland, Water Supply Bonds,
Series 2005, 5.000%, 6/01/16
------------------------------------------------------------------------------------------------------------------------------------
15,170 Total Tax Obligation/General 16,448,880
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 31.2% (20.7% OF TOTAL INVESTMENTS)
750 Annapolis, Maryland, Special Obligation Bonds, Park Place 1/15 at 101.00 N/R 649,425
Project, Series 2005A, 5.350%, 7/01/34
1,000 Baltimore Board of School Commissioners, Maryland, Revenue 5/13 at 100.00 AA+ 1,076,590
Bonds, City Public School System, Series 2003A, 5.000%, 5/01/15
135 Frederick County, Maryland, Lake Linganore Village Community 7/10 at 102.00 AA 139,454
Development Special Obligation Bonds, Series 2001A,
5.600%, 7/01/20 - RAAI Insured
450 Hyattsville, Maryland, Special Obligation Bonds, University Town 7/14 at 102.00 N/R 413,901
Center Project, Series 2004, 5.750%, 7/01/34
5,000 Maryland Department of Transportation, Consolidated Transportation No Opt. Call AAA 5,701,548
Revenue Bonds, Series 2002, 5.500%, 2/01/16
2,200 Maryland Economic Development Corporation, Lease Revenue 6/12 at 100.50 AA+ 2,250,094
Bonds, Department of Transportation Headquarters Building,
Series 2002, 4.750%, 6/01/22
450 Maryland Economic Development Corporation, Lease Revenue 9/12 at 100.00 AA+ 485,253
Bonds, Montgomery County Town Square Parking Garage,
Series 2002A, 5.000%, 9/15/13
2,935 Maryland Economic Development Corporation, Lease Revenue 9/12 at 100.00 AA+ 3,159,556
Bonds, Montgomery County Wayne Avenue Parking Project,
Series 2002A, 5.250%, 9/15/16
Maryland Stadium Authority, Lease Revenue Bonds, Montgomery
County Conference Center Facilities, Series 2003:
1,465 5.000%, 6/15/21 6/13 at 100.00 AA+ 1,544,257
1,620 5.000%, 6/15/23 6/13 at 100.00 AA+ 1,693,273
460 Prince George's County, Maryland, Special Obligation Bonds, 7/15 at 100.00 N/R 389,629
National Harbor Project, Series 2005, 5.200%, 7/01/34
575 Prince George's County, Maryland, Special Tax District Bonds, 7/13 at 100.00 N/R 488,773
Victoria Falls Project, Series 2005, 5.250%, 7/01/35
1,200 Puerto Rico Highway and Transportation Authority, Highway No Opt. Call AAA 1,266,180
Revenue Bonds, Series 2007N, 5.250%, 7/01/31 -
AMBAC Insured
43
NWI
Nuveen Maryland Dividend Advantage Municipal Fund 3 (continued)
Portfolio of INVESTMENTS May 31, 2008
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED (continued)
Puerto Rico Public Buildings Authority, Guaranteed Government
Facilities Revenue Bonds, Series 2002G:
$ 1,000 5.250%, 7/01/17 7/12 at 100.00 BBB- $ 1,011,850
1,205 5.250%, 7/01/20 7/12 at 100.00 BBB- 1,212,640
1,275 5.250%, 7/01/21 7/12 at 100.00 BBB- 1,279,820
700 Puerto Rico, Highway Revenue Bonds, Highway and Transportation No Opt. Call AAA 750,113
Authority, Series 2003AA, 5.500%, 7/01/19 - MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
22,420 Total Tax Obligation/Limited 23,512,356
------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 3.1% (2.0% OF TOTAL INVESTMENTS)
2,210 Maryland Transportation Authority, Revenue Bonds, Transportation 7/17 at 100.00 AAA 2,299,958
Facilities Projects, Series 2007, 5.000%, 7/01/30 -
FSA Insured (UB)
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 17.0% (11.2% OF TOTAL INVESTMENTS) (4)
10 Anne Arundel County, Maryland, General Obligation Bonds, 5/09 at 101.00 AAA 10,388
Consolidated General Improvements, Series 1999,
5.000%, 5/15/19 (Pre-refunded 5/15/09)
255 Baltimore, Maryland, Wastewater Project Revenue Bonds, 7/16 at 100.00 AAA 282,770
Series 2006C, 5.000%, 7/01/31 (Pre-refunded 7/01/16) -
AMBAC Insured
Frederick County, Maryland, Educational Facilities Revenue Bonds,
Mount St. Mary's College, Series 2001A:
100 5.750%, 9/01/25 (Pre-refunded 3/01/10) 3/10 at 101.00 BBB- (4) 106,764
100 5.800%, 9/01/30 (Pre-refunded 3/01/10) 3/10 at 101.00 BBB- (4) 106,850
100 Frederick County, Maryland, General Obligation Public Facilities 7/09 at 101.00 AAA 104,490
Bonds, Series 1999, 5.250%, 7/01/17 (Pre-refunded 7/01/09)
110 Frederick County, Maryland, Lake Linganore Village Community 7/10 at 102.00 AA (4) 119,364
Development Special Obligation Bonds, Series 2001A,
5.600%, 7/01/20 (Pre-refunded 7/01/10) - RAAI Insured
280 Maryland Health and Higher Educational Facilities Authority, 4/11 at 101.00 N/R (4) 310,943
Revenue Bonds, Collington Episcopal Life Care Community Inc.,
Series 2001A, 6.750%, 4/01/23 (Pre-refunded 4/01/11)
285 Maryland Health and Higher Educational Facilities Authority, No Opt. Call Aaa 308,441
Revenue Bonds, Helix Health, Series 1997, 5.000%, 7/01/17 -
AMBAC Insured (ETM)
725 Maryland Health and Higher Educational Facilities Authority, 7/14 at 100.00 A (4) 793,005
Revenue Bonds, LifeBridge Health System, Series 2004A,
5.125%, 7/01/34 (Pre-refunded 7/01/14)
935 Maryland Transportation Authority, Revenue Refunding Bonds, No Opt. Call AAA 1,070,781
Transportation Facilities Projects, First Series 1978,
6.800%, 7/01/16 (ETM)
1,525 Puerto Rico Electric Power Authority, Power Revenue Bonds, 7/10 at 101.00 AAA 1,632,741
Series 2000HH, 5.250%, 7/01/29 (Pre-refunded 7/01/10) -
FSA Insured
3,500 Puerto Rico Infrastructure Financing Authority, Special Obligation 10/10 at 101.00 AAA 3,638,914
Bonds, Series 2000A, 5.500%, 10/01/40
1,000 Puerto Rico Public Finance Corporation, Commonwealth No Opt. Call AAA 1,079,430
Appropriation Bonds, Series 1998A, 5.125%, 6/01/24 -
AMBAC Insured (ETM)
Puerto Rico Public Finance Corporation, Commonwealth Appropriation
Bonds, Series 2002E:
700 5.500%, 8/01/29 (Pre-refunded 2/01/12) 2/12 at 100.00 Aaa 751,975
235 5.500%, 8/01/29 (Pre-refunded 2/01/12) 2/12 at 100.00 AAA 252,449
2,000 University of Maryland, Auxiliary Facility and Tuition Revenue Bonds, 4/12 at 100.00 AA (4) 2,159,240
Series 2002A, 5.125%, 4/01/22 (Pre-refunded 4/01/12)
25 Washington Suburban Sanitary District, Montgomery and 6/11 at 101.00 AAA 26,920
Prince George's Counties, Maryland, General Obligation
Construction Bonds, Second Series 2001, 5.000%, 6/01/17
(Pre-refunded 6/01/11)
------------------------------------------------------------------------------------------------------------------------------------
11,885 Total U.S. Guaranteed 12,755,465
------------------------------------------------------------------------------------------------------------------------------------
44
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 1.6% (1.1% OF TOTAL INVESTMENTS)
$ 1,250 Maryland Energy Financing Administration, Revenue Bonds, 7/08 at 100.00 N/R $ 1,247,063
AES Warrior Run Project, Series 1995, 7.400%, 9/01/19
(Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 5.4% (3.6% OF TOTAL INVESTMENTS)
2,570 Baltimore, Maryland, Revenue Refunding Bonds, Wastewater 7/12 at 100.00 AA 2,577,761
Projects, Series 2002A, 5.125%, 7/01/42 - FGIC Insured
345 Baltimore, Maryland, Wastewater Project Revenue Bonds, 7/16 at 100.00 AAA 357,755
Series 2006C, 5.000%, 7/01/31 - AMBAC Insured
660 Baltimore, Maryland, Wastewater Project Revenue Bonds, 7/17 at 100.00 AAA 668,633
Series 2007D, 5.000%, 7/01/32 - AMBAC Insured
430 Maryland Water Quality Financing Administration, Revolving No Opt. Call AAA 477,081
Loan Fund Revenue Bonds, Series 2005A, 5.000%, 9/01/15
------------------------------------------------------------------------------------------------------------------------------------
4,005 Total Water and Sewer 4,081,230
------------------------------------------------------------------------------------------------------------------------------------
$ 112,375 Total Investments (cost $114,618,167) - 151.5% 113,940,168
=============-----------------------------------------------------------------------------------------------------------------------
Floating Rate Obligations - (2.2)% (1,657,000)
--------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 2.6% 1,921,719
--------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (51.9)% (5) (39,000,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $75,204,887
====================================================================================================================
(1) All percentages shown in the Portfolio of Investments are
based on net assets applicable to Common shares unless
otherwise noted.
(2) Optional Call Provisions (not covered by the report of
independent registered public accounting firm): Dates (month
and year) and prices of the earliest optional call or
redemption. There may be other call provisions at varying
prices at later dates. Certain mortgage-backed securities
may be subject to periodic principal paydowns.
(3) Ratings (not covered by the report of independent registered
public accounting firm): Using the higher of Standard &
Poor's Group ("Standard & Poor's") or Moody's Investor
Service, Inc. ("Moody's") rating. Ratings below BBB by
Standard & Poor's or Baa by Moody's are considered to be
below investment grade.
The Portfolio of Investments may reflect the ratings on
certain bonds insured by ACA, AMBAC, CIFG, FGIC, MBIA, RAAI
and XLCA as of May 31, 2008. Please see the Portfolio
Manager's Commentary for an expanded discussion of the
affect on the Fund of changes to the ratings of certain
bonds in the portfolio resulting from changes to the ratings
of the underlying insurers both during the period and after
period end.
(4) Backed by an escrow or trust containing sufficient U.S.
Government or U.S. Government agency securities which ensure
the timely payment of principal and interest. Such
investments are normally considered to be equivalent to AAA
rated securities.
(5) Preferred Shares, at Liquidation Value as a percentage of
total investments is (34.2)%.
N/R Not rated.
(ETM) Escrowed to maturity.
(IF) Inverse floating rate investment.
(UB) Underlying bond of an inverse floating rate trust reflected
as a financing transaction pursuant to the provisions of
SFAS No. 140.
See accompanying notes to financial statements.
45
NPV
Nuveen Virginia Premium Income Municipal Fund
Portfolio of INVESTMENTS
May 31, 2008
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES - 4.0% (2.6% OF TOTAL INVESTMENTS)
$ 6,640 Tobacco Settlement Financing Corporation of Virginia, Tobacco 6/17 at 100.00 BBB $ 5,091,419
Settlement Asset Backed Bonds, Series 2007B1, 5.000%, 6/01/47
------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 4.8% (3.2% OF TOTAL INVESTMENTS)
1,000 Prince William County Industrial Development Authority, Virginia, 10/13 at 101.00 A3 1,015,400
Educational Facilities Revenue Bonds, Catholic Diocese of
Arlington, Series 2003, 5.500%, 10/01/33
500 Prince William County Park Authority, Virginia, Park Facilities 10/09 at 101.00 A3 518,025
Revenue Refunding and Improvement Bonds, Series 1999,
6.000%, 10/15/28
700 Puerto Rico Industrial, Tourist, Educational, Medical and 12/12 at 101.00 BBB- 700,987
Environmental Control Facilities Financing Authority, Higher
Education Revenue Refunding Bonds, Ana G. Mendez University
System, Series 2002, 5.375%, 12/01/21
2,120 Virginia College Building Authority, Educational Facilities Revenue 9/11 at 100.00 AA+ 2,163,820
Bonds, Public Higher Education Financing Program, Series 2001A,
5.000%, 9/01/26 - MBIA Insured
1,635 Virginia Commonwealth University, Revenue Bonds, Series 2004A, 5/14 at 101.00 AAA 1,748,109
5.000%, 5/01/17 - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
5,955 Total Education and Civic Organizations 6,146,341
------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE - 24.6% (16.5% OF TOTAL INVESTMENTS)
2,000 Albemarle County Industrial Development Authority, Virginia, 10/12 at 100.00 A2 1,979,800
Hospital Revenue Bonds, Martha Jefferson Hospital, Series 2002,
5.250%, 10/01/35
650 Charlotte County Industrial Development Authority, Virginia, 9/17 at 100.00 A- 648,752
Hospital Revenue Bonds, Halifax Regional Hospital Incorporated,
Series 2007, 5.000%, 9/01/27
4,850 Fairfax County Industrial Development Authority, Virginia, Hospital No Opt. Call AA+ 5,109,183
Revenue Refunding Bonds, Inova Health System, Series 1993A,
5.000%, 8/15/23
1,000 Fredericksburg Economic Development Authority, Virginia, Hospital No Opt. Call A3 1,046,700
Facilities Revenue Bonds, MediCorp Health System, Series 2007,
5.250%, 6/15/23
1,250 Fredericksburg Industrial Development Authority, Virginia, Revenue 6/12 at 100.00 A3 1,206,400
Bonds, MediCorp Health System, Series 2002B, 5.125%, 6/15/33
1,000 Hanover County Industrial Development Authority, Virginia, Hospital No Opt. Call AAA 1,146,480
Revenue Bonds, Memorial Regional Medical Center, Series 1995,
6.375%, 8/15/18 - MBIA Insured
2,300 Harrisonburg Industrial Development Authority, Virginia, Hospital 8/16 at 100.00 AAA 2,305,980
Facilities Revenue Bonds, Rockingham Memorial Hospital,
Series 2006, 5.000%, 8/15/31 - AMBAC Insured
1,440 Henrico County Economic Development Authority, Virginia, 11/12 at 100.00 A- 1,470,542
Revenue Bonds, Bon Secours Health System Inc., Series 2002A,
5.600%, 11/15/30
1,500 Henrico County Industrial Development Authority, Virginia, No Opt. Call AAA 1,732,305
Healthcare Revenue Bonds, Bon Secours Health System,
Series 1996, 6.250%, 8/15/20 - MBIA Insured
1,500 Manassas Industrial Development Authority, Virginia, Hospital 4/13 at 100.00 A2 1,481,430
Revenue Bonds, Prince William Hospital, Series 2002,
5.250%, 4/01/33
4,750 Medical College of Virginia Hospital Authority, General Revenue 7/08 at 102.00 AAA 4,803,580
Bonds, Series 1998, 5.125%, 7/01/23 - MBIA Insured
46
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE (continued)
$ 3,000 Roanoke Industrial Development Authority, Virginia, Hospital 7/12 at 100.00 AAA $ 3,149,520
Revenue Bonds, Carilion Health System, Series 2002A,
5.500%, 7/01/19 - MBIA Insured
Stafford County Economic Development Authority, Virginia,
Hospital Facilities Revenue Bonds, MediCorp Health System,
Series 2006:
2,000 5.250%, 6/15/26 6/16 at 100.00 A3 2,041,360
1,010 5.250%, 6/15/31 6/16 at 100.00 A3 1,014,242
1,210 Virginia Small Business Financing Authority, Wellmont Health 9/17 at 100.00 BBB+ 1,121,489
System Project Revenue Bonds, Series 2007A, 5.250%, 9/01/37
1,425 Winchester Industrial Development Authority, Virginia, Hospital 1/17 at 100.00 AA- 1,430,330
Revenue Bonds, Winchester Medical Center, Series 2007,
5.125%, 1/01/31
------------------------------------------------------------------------------------------------------------------------------------
30,885 Total Health Care 31,688,093
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 3.5% (2.3% OF TOTAL INVESTMENTS)
1,395 Arlington County Industrial Development Authority, Virginia, 5/10 at 100.00 Aaa 1,437,129
Multifamily Housing Revenue Bonds, Patrick Henry Apartments,
Series 2000, 6.050%, 11/01/32 (Mandatory put 11/01/20)
(Alternative Minimum Tax)
Danville Industrial Development Authority, Virginia, Student
Housing Revenue Bonds, Collegiate Housing Foundation, Averett
College, Series 1999A:
500 6.875%, 6/01/20 6/09 at 102.00 N/R 515,100
1,500 7.000%, 6/01/30 6/09 at 102.00 N/R 1,536,330
1,000 Lynchburg Redevelopment and Housing Authority, Virginia, 4/10 at 102.00 AAA 1,006,700
Vistas GNMA Mortgage-Backed Revenue Bonds, Series 2000A,
6.200%, 1/20/40 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
4,395 Total Housing/Multifamily 4,495,259
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 7.8% (5.3% OF TOTAL INVESTMENTS)
335 Puerto Rico Housing Finance Authority, Mortgage-Backed Securities 6/13 at 100.00 AAA 314,582
Program Home Mortgage Revenue Bonds, Series 2003A,
4.875%, 6/01/34 (Alternative Minimum Tax)
1,000 Virginia Housing Development Authority, Commonwealth Mortgage 7/11 at 100.00 AAA 1,011,330
Bonds, Series 2001H-1, 5.350%, 7/01/31 - MBIA Insured
1,500 Virginia Housing Development Authority, Commonwealth Mortgage 1/15 at 100.00 AAA 1,370,610
Bonds, Series 2005C-2, 4.750%, 10/01/32 (Alternative Minimum Tax)
2,740 Virginia Housing Development Authority, Commonwealth Mortgage 7/15 at 100.00 AAA 2,565,243
Bonds, Series 2006 D1, 4.900%, 1/01/33 (Alternative Minimum Tax)
1,340 Virginia Housing Development Authority, Commonwealth Mortgage 7/15 at 100.00 AAA 1,260,337
Bonds, Series 2006, 4.800%, 7/01/29 (Alternative Minimum Tax)
3,900 Virginia Housing Development Authority, Commonwealth Mortgage 7/16 at 100.00 AAA 3,565,380
Bonds, Series 2007B, 4.750%, 7/01/32 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
10,815 Total Housing/Single Family 10,087,482
------------------------------------------------------------------------------------------------------------------------------------
INDUSTRIALS - 1.6% (1.0% OF TOTAL INVESTMENTS)
2,000 Charles County Industrial Development Authority, Virginia, No Opt. Call BBB 2,009,700
Solid Waste Disposal Facility Revenue Refunding Bonds,
USA Waste of Virginia Inc., Series 1999, 4.875%, 2/01/09
(Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
LONG-TERM CARE - 4.7% (3.2% OF TOTAL INVESTMENTS)
2,765 Fairfax County Economic Development Authority, Virginia, 10/17 at 100.00 N/R 2,513,938
Residential Care Facilities Mortgage Revenue Bonds,
Goodwin House, Inc., Series 2007A, 5.125%, 10/01/37
47
NPV
Nuveen Virginia Premium Income Municipal Fund (continued)
Portfolio of INVESTMENTS May 31, 2008
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
LONG-TERM CARE (continued)
$ 800 Fairfax County Economic Development Authority, Virginia, 10/16 at 100.00 BBB $ 687,712
Retirement Center Revenue Bonds, Greenspring Village,
Series 2006A, 4.875%, 10/01/36
1,495 Henrico County Economic Development Authority, Virginia, 7/09 at 102.00 AAA 1,560,810
GNMA Mortgage-Backed Securities Program Assisted Living
Revenue Bonds, Beth Sholom, Series 1999A, 5.900%, 7/20/29
Henrico County Economic Development Authority, Virginia,
Residential Care Facility Revenue Bonds, Westminster Canterbury
of Richmond, Series 2006:
100 5.000%, 10/01/27 10/11 at 103.00 BBB- 94,199
1,345 5.000%, 10/01/35 No Opt. Call BBB- 1,201,623
------------------------------------------------------------------------------------------------------------------------------------
6,505 Total Long-Term Care 6,058,282
------------------------------------------------------------------------------------------------------------------------------------
MATERIALS - 1.0% (0.6% OF TOTAL INVESTMENTS)
500 Bedford County Industrial Development Authority, Virginia, 8/08 at 102.00 B2 413,110
Industrial Development Revenue Refunding Bonds, Nekoosa
Packaging Corporation, Series 1998, 5.600%, 12/01/25 (Alternative
Minimum Tax) (4)
1,000 Goochland County Industrial Development Authority, Virginia, 12/08 at 101.00 B2 831,090
Industrial Development Revenue Refunding Bonds, Nekoosa
Packaging Corporation Project, Series 1998, 5.650%, 12/01/25
(Alternative Minimum Tax) (4)
------------------------------------------------------------------------------------------------------------------------------------
1,500 Total Materials 1,244,200
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 21.5% (14.4% OF TOTAL INVESTMENTS)
Chesapeake, Virginia, General Obligation Bonds, Water and
Sewerage Series 2003B:
1,880 5.000%, 6/01/21 6/13 at 100.00 AA 1,958,076
2,060 5.000%, 6/01/23 6/13 at 100.00 AA 2,132,718
1,355 Harrisonburg, Virginia, General Obligation Bonds, Public Safety 7/12 at 101.00 Aa3 1,410,420
and Steam Plant, Series 2002, 5.000%, 7/15/19 - FGIC Insured
2,105 Loudoun County, Virginia, General Obligation Bonds, 12/16 at 100.00 AAA 2,225,911
Series 2006, 5.000%, 12/01/25
105 Loudoun County, Virginia, General Obligation Public 5/12 at 100.00 AAA 110,728
Improvement Bonds, Series 2002A, 5.250%, 5/01/22
1,435 Loudoun County, Virginia, General Obligation Public 6/15 at 100.00 AAA 1,553,847
Improvement Bonds, Series 2005B, 5.000%, 6/01/18
1,185 Lynchburg, Virginia, General Obligation Bonds, Series 2004, 6/14 at 100.00 AA 1,249,559
5.000%, 6/01/21
1,350 Newport News, Virginia, General Obligation Bonds, Series 2004C, 5/14 at 101.00 AA 1,473,674
5.000%, 5/01/16
1,280 Portsmouth, Virginia, General Obligation Bonds, Series 2005A, No Opt. Call AAA 1,407,616
5.000%, 4/01/15 - MBIA Insured
1,480 Richmond, Virginia, General Obligation Bonds, Series 2004A, 7/14 at 100.00 AAA 1,561,104
5.000%, 7/15/21 - FSA Insured
1,430 Roanoke, Virginia, General Obligation Public Improvement Bonds, 10/12 at 101.00 AA 1,538,437
Series 2002A, 5.000%, 10/01/17
1,135 Suffolk, Virginia, General Obligation Bonds, Series 2005, No Opt. Call Aa3 1,254,130
5.000%, 12/01/15
2,155 Virginia Beach, Virginia, General Obligation Bonds, Series 2003B, 5/13 at 100.00 AAA 2,318,026
5.000%, 5/01/15
1,100 Virginia Beach, Virginia, General Obligation Bonds, Series 2005, 1/16 at 100.00 AAA 1,182,104
5.000%, 1/15/20
4,500 Virginia Beach, Virginia, General Obligation Bonds, 10/17 at 100.00 AAA 4,722,210
5.000%, 10/01/27 (UB)
1,425 Virginia Beach, Virginia, General Obligation Public Improvement 6/11 at 101.00 AAA 1,501,394
Bonds, Series 2001, 5.000%, 6/01/20
------------------------------------------------------------------------------------------------------------------------------------
25,980 Total Tax Obligation/General 27,599,954
------------------------------------------------------------------------------------------------------------------------------------
48
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 31.4% (21.0% OF TOTAL INVESTMENTS)
Buena Vista Public Recreational Facilities Authority, Virginia,
Lease Revenue Bonds, Golf Course Project, Series 2005A:
$ 335 5.250%, 7/15/25 - ACA Insured 7/15 at 100.00 N/R $ 303,818
260 5.500%, 7/15/35 - ACA Insured 7/15 at 100.00 N/R 221,634
1,340 Culpeper Industrial Development Authority, Virginia, Lease 1/15 at 100.00 AAA 1,399,509
Revenue Bonds, School Facilities Project, Series 2005,
5.000%, 1/01/20 - MBIA Insured
Cumberland County, Virginia, Certificates of Participation, Series 1997:
1,075 6.200%, 7/15/12 No Opt. Call N/R 1,133,276
1,375 6.375%, 7/15/17 No Opt. Call N/R 1,514,191
1,000 Dinwiddie County Industrial Development Authority, Virginia, 2/14 at 100.00 AAA 1,070,220
Lease Revenue Bonds, Series 2004B, 5.125%, 2/15/16 -
MBIA Insured
1,000 Fairfax County Economic Development Authority, Virginia, 5/16 at 100.00 AA+ 1,077,100
Lease Revenue Bonds, Joint Public Uses Community Project,
Series 2006, 5.000%, 5/15/18
Fairfax County Economic Development Authority, Virginia, Lease
Revenue Bonds, Laurel Hill Public Facilities Projects, Series
2003:
2,260 5.000%, 6/01/14 6/13 at 101.00 AA+ 2,462,134
1,165 5.000%, 6/01/22 6/13 at 101.00 AA+ 1,219,347
1,660 Front Royal and Warren County Industrial Development Authority, 4/14 at 100.00 AAA 1,762,405
Virginia, Lease Revenue Bonds, Series 2004B, 5.000%, 4/01/18 -
FSA Insured
1,270 James City County Economic Development Authority, Virginia, 7/15 at 100.00 AA 1,350,353
Revenue Bonds, County Government Projects, Series 2005,
5.000%, 7/15/19
1,930 Prince William County, Virginia, Certificates of Participation, 6/15 at 100.00 Aaa 2,020,324
County Facilities, Series 2005, 5.000%, 6/01/18 - AMBAC Insured
1,185 Puerto Rico Highway and Transportation Authority, Highway 7/12 at 100.00 AAA 1,200,227
Revenue Bonds, Series 2002D, 5.000%, 7/01/32 - FSA Insured
2,000 Puerto Rico Highway and Transportation Authority, Highway No Opt. Call AAA 2,110,300
Revenue Bonds, Series 2007N, 5.250%, 7/01/31 - AMBAC Insured
5,000 Puerto Rico Infrastructure Financing Authority, Special Tax No Opt. Call AAA 694,050
Revenue Bonds, Series 2005A, 0.000%, 7/01/43 - AMBAC Insured
5,875 Puerto Rico Infrastructure Financing Authority, Special Tax No Opt. Call AAA 1,993,858
Revenue Bonds, Series 2005C, 0.000%, 7/01/28 - AMBAC Insured
Puerto Rico Public Buildings Authority, Guaranteed Government
Facilities Revenue Refunding Bonds, Series 2002D:
265 5.250%, 7/01/27 7/12 at 100.00 BBB- 265,085
320 5.250%, 7/01/36 7/12 at 100.00 BBB- 318,355
1,110 Spotsylvania County Industrial Development Authority, Virginia, 8/13 at 100.00 AAA 1,105,382
Lease Revenue Bonds, School Facilities, Series 2003B,
4.375%, 8/01/20 - AMBAC Insured
1,600 Stafford County and Staunton Industrial Development Authority, 8/16 at 100.00 AAA 1,660,736
Virginia, Revenue Bonds, Virginia Municipal League and Virginia
Association of Counties Finance Program, Series 2006A,
5.000%, 8/01/23 - MBIA Insured
2,500 Stafford County Economic Development Authority, Virginia, 4/18 at 100.00 AAA 2,582,250
Public Project Lease Revenue Bonds, 5.000%, 4/01/33 -
AGC Insured (UB)
49
NPV
Nuveen Virginia Premium Income Municipal Fund (continued)
Portfolio of INVESTMENTS May 31, 2008
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED (continued)
$ 1,400 Virginia Beach Development Authority, Public Facilities Revenue 5/15 at 100.00 AA+ $ 1,468,404
Bonds, Series 2005A, 5.000%, 5/01/22
2,000 Virginia Public School Authority, School Financing Bonds, 8/10 at 101.00 AA+ 2,090,240
1997 Resolution, Series 2000B, 5.000%, 8/01/18 - MBIA Insured
1,625 Virginia Public School Authority, School Financing Bonds, 8/15 at 100.00 AA+ 1,771,088
1997 Resolution, Series 2005C, 5.000%, 8/01/17
Virginia Resources Authority, Infrastructure Revenue Bonds,
Pooled Loan Bond Program, Series 2000B:
95 5.500%, 5/01/20 - FSA Insured 5/10 at 101.00 AAA 100,027
550 5.500%, 5/01/30 - FSA Insured 5/10 at 101.00 AAA 571,835
1,740 Virginia Resources Authority, Infrastructure Revenue Bonds, 5/11 at 101.00 AA 1,821,084
Pooled Loan Bond Program, Series 2002A, 5.000%, 5/01/19
2,815 Virginia Resources Authority, Infrastructure Revenue Bonds, 11/16 at 100.00 AAA 2,906,656
Pooled Loan Bond Program, Series 2006C, 5.000%, 11/01/36
2,000 Virginia Transportation Board, Transportation Revenue Bonds, 5/14 at 100.00 AA+ 2,182,300
U.S. Route 58 Corridor Development Program, Series 2004B,
5.000%, 5/15/15
------------------------------------------------------------------------------------------------------------------------------------
46,750 Total Tax Obligation/Limited 40,376,188
------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 10.4% (7.0% OF TOTAL INVESTMENTS)
2,500 Metropolitan Washington D.C. Airports Authority, System Revenue 10/17 at 100.00 AAA 2,395,650
Bonds, Series 2007B, 5.000%, 10/01/35 - AMBAC Insured
(Alternative Minimum Tax)
4,000 Norfolk Airport Authority, Virginia, Airport Revenue Bonds, 7/11 at 100.00 A3 3,989,080
Series 2001A, 5.125%, 7/01/31 - FGIC Insured
1,000 Norfolk, Virginia, Parking System Revenue Bonds, Series 2005A, 2/15 at 100.00 AAA 1,024,420
5.000%, 2/01/23 - MBIA Insured
2,500 Richmond Metropolitan Authority, Virginia, Revenue Refunding No Opt. Call Baa3 2,743,775
Bonds, Expressway System, Series 2002, 5.250%, 7/15/22 -
FGIC Insured
1,260 Virginia Port Authority, Revenue Bonds, Port Authority Facilities, 7/13 at 100.00 Aa3 1,190,977
Series 2006, 5.000%, 7/01/36 - FGIC Insured
(Alternative Minimum Tax)
2,000 Virginia Resources Authority, Airports Revolving Fund Revenue 2/11 at 100.00 Aa2 2,072,840
Bonds, Series 2001A, 5.250%, 8/01/23
------------------------------------------------------------------------------------------------------------------------------------
13,260 Total Transportation 13,416,742
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 17.3% (11.6% OF TOTAL INVESTMENTS) (5)
3,500 Alexandria Industrial Development Authority, Virginia, Fixed Rate 10/10 at 101.00 AAA 3,815,105
Revenue Bonds, Institute for Defense Analyses, Series 2000A,
5.900%, 10/01/30 (Pre-refunded 10/01/10) - AMBAC Insured
750 Bristol, Virginia, General Obligation Utility System Revenue Bonds, No Opt. Call AAA 811,808
Series 2002, 5.000%, 11/01/24 - FSA Insured (ETM)
925 Fairfax County Water Authority, Virginia, Water Revenue Refunding 4/12 at 100.00 AAA 1,007,686
Bonds, Series 2002, 5.375%, 4/01/19 (Pre-refunded 4/01/12)
600 Greater Richmond Convention Center Authority, Virginia, Hotel 6/10 at 101.00 AAA 651,096
Tax Revenue Bonds, Convention Center Expansion Project,
Series 2000, 6.125%, 6/15/25 (Pre-refunded 6/15/10)
60 Henrico County Economic Development Authority, Virginia, 11/12 at 100.00 A3 (5) 66,490
Revenue Bonds, Bon Secours Health System Inc., Series 2002A,
5.600%, 11/15/30 (Pre-refunded 11/15/12)
50
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED (5) (continued)
Loudoun County Industrial Development Authority, Virginia,
Hospital Revenue Bonds, Loudoun Hospital Center, Series 2002A:
$ 375 6.000%, 6/01/22 (Pre-refunded 6/01/12) 6/12 at 101.00 BBB (5) $ 420,949
800 6.100%, 6/01/32 (Pre-refunded 6/01/12) 6/12 at 101.00 BBB (5) 901,016
815 Puerto Rico Highway and Transportation Authority, Highway 7/12 at 100.00 Aaa 881,300
Revenue Bonds, Series 2002D, 5.000%, 7/01/32
(Pre-refunded 7/01/12) - FSA Insured
2,500 Puerto Rico Infrastructure Financing Authority, Special 10/10 at 101.00 AAA 2,599,225
Obligation Bonds, Series 2000A, 5.500%, 10/01/40
Puerto Rico Public Buildings Authority, Guaranteed Government
Facilities Revenue Refunding Bonds, Series 2002D:
735 5.250%, 7/01/27 (Pre-refunded 7/01/12) 7/12 at 100.00 BBB- (5) 786,009
880 5.250%, 7/01/36 (Pre-refunded 7/01/12) 7/12 at 100.00 BBB- (5) 941,072
625 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 7/10 at 100.00 AAA 653,163
Asset-Backed Bonds, Series 2000, 5.750%, 7/01/20
(Pre-refunded 7/01/10)
475 Rockbridge County Industrial Development Authority, Virginia, 7/11 at 105.00 B2 (5) 533,145
Horse Center Revenue Refunding Bonds, Series 2001C,
6.850%, 7/15/21 (Pre-refunded 7/15/11)
Tobacco Settlement Financing Corporation of Virginia, Tobacco
Settlement Asset-Backed Bonds, Series 2005:
1,575 5.250%, 6/01/19 (Pre-refunded 6/01/12) 6/12 at 100.00 AAA 1,670,351
3,850 5.500%, 6/01/26 (Pre-refunded 6/01/15) 6/15 at 100.00 AAA 4,273,346
2,000 Virgin Islands Public Finance Authority, Gross Receipts Taxes 10/10 at 101.00 BBB+ (5) 2,205,740
Loan Note, Series 1999A, 6.500%, 10/01/24
(Pre-refunded 10/01/10)
------------------------------------------------------------------------------------------------------------------------------------
20,465 Total U.S. Guaranteed 22,217,501
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 7.2% (4.8% OF TOTAL INVESTMENTS)
Bristol, Virginia, Utility System Revenue Refunding Bonds, Series 2003:
1,705 5.250%, 7/15/14 - MBIA Insured 7/13 at 100.00 AAA 1,832,466
1,800 5.250%, 7/15/15 - MBIA Insured 7/13 at 100.00 AAA 1,937,178
2,775 5.250%, 7/15/23 - MBIA Insured 7/13 at 100.00 AAA 2,917,108
2,500 Mecklenburg County Industrial Development Authority, Virginia, 10/12 at 100.00 Baa1 2,615,100
Revenue Bonds, UAE Mecklenburg Cogeneration LP,
Series 2002, 6.500%, 10/15/17 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
8,780 Total Utilities 9,301,852
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 9.7% (6.5% OF TOTAL INVESTMENTS)
Fairfax County Water Authority, Virginia, Water Revenue Refunding
Bonds, Series 2002:
105 5.375%, 4/01/19 4/12 at 100.00 AAA 111,791
800 5.000%, 4/01/27 4/12 at 100.00 AAA 816,440
1,770 Henrico County, Virginia, Water and Sewer System Revenue 5/09 at 102.00 AA+ 1,796,320
Refunding Bonds, Series 1999, 5.000%, 5/01/28
1,000 Loudoun County Sanitation Authority, Virginia, Water and Sewerage 1/15 at 100.00 AA+ 1,041,490
System Revenue Bonds, Series 2004, 5.000%, 1/01/26
51
NPV
Nuveen Virginia Premium Income Municipal Fund (continued)
Portfolio of INVESTMENTS May 31, 2008
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER (continued)
Norfolk, Virginia, Water Revenue Refunding Bonds, Series 2001:
$ 1,310 5.000%, 11/01/21 - FGIC Insured 11/11 at 100.00 AA+ $ 1,349,785
1,380 5.000%, 11/01/22 - FGIC Insured 11/11 at 100.00 AA+ 1,425,885
2,250 Virginia Beach, Virginia, Storm Water Utility Revenue Bonds, 9/10 at 101.00 Aa3 2,390,985
Series 2000, 6.000%, 9/01/24
1,800 Virginia Beach, Virginia, Water and Sewer System Revenue Bonds, 10/15 at 100.00 AA 1,851,066
Series 2005, 5.000%, 10/01/30
1,660 Virginia Resources Authority, Clean Water State Revolving Fund 10/17 at 100.00 AAA 1,655,219
Revenue Bonds, Series 2007, Residuals 1006, 9.690%, 10/01/29 (IF)
12,075 Total Water and Sewer 12,438,981
------------------------------------------------------------------------------------------------------------------------------------
$ 196,005 Total Investments (cost $190,378,324) - 149.5% 192,171,994
=============-----------------------------------------------------------------------------------------------------------------------
Floating Rate Obligations - (4.1)% (5,250,000)
--------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 4.2% 5,390,311
--------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (49.6)% (6) (63,800,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $128,512,305
====================================================================================================================
(1) All percentages shown in the Portfolio of Investments are
based on net assets applicable to Common shares unless
otherwise noted.
(2) Optional Call Provisions (not covered by the report of
independent registered public accounting firm): Dates (month
and year) and prices of the earliest optional call or
redemption. There may be other call provisions at varying
prices at later dates. Certain mortgage-backed securities
may be subject to periodic principal paydowns.
(3) Ratings (not covered by the report of independent registered
public accounting firm): Using the higher of Standard &
Poor's Group ("Standard & Poor's") or Moody's Investor
Service, Inc. ("Moody's") rating. Ratings below BBB by
Standard & Poor's or Baa by Moody's are considered to be
below investment grade.
The Portfolio of Investments may reflect the ratings on
certain bonds insured by ACA, AMBAC, CIFG, FGIC, MBIA, RAAI
and XLCA as of May 31, 2008. Please see the Portfolio
Manager's Commentary for an expanded discussion of the
affect on the Fund of changes to the ratings of certain
bonds in the portfolio resulting from changes to the ratings
of the underlying insurers both during the period and after
period end.
(4) The issuer has received a formal adverse determination from
the Internal Revenue Service (the "IRS") regarding the
tax-exempt status of the bonds' coupon payments. The Fund
will continue to treat coupon payments as tax-exempt income
until such time that it is formally determined that the
interest on the bonds should be treated as taxable.
(5) Backed by an escrow or trust containing sufficient U.S.
Government or U.S. Government agency securities which ensure
the timely payment of principal and interest. Such
investments are normally considered to be equivalent to AAA
rated securities.
(6) Preferred Shares, at Liquidation Value as a percentage of
total investments is (33.2)%.
N/R Not rated.
(ETM) Escrowed to maturity.
(IF) Inverse floating rate investment.
(UB) Underlying bond of an inverse floating rate trust reflected
as a financing transaction pursuant to the provisions of
SFAS No. 140.
See accompanying notes to financial statements.
52
NGB
Nuveen Virginia Dividend Advantage Municipal Fund
Portfolio of INVESTMENTS
May 31, 2008
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES - 3.8% (2.5% OF TOTAL INVESTMENTS)
$ 1,660 Tobacco Settlement Financing Corporation of Virginia, Tobacco 6/17 at 100.00 BBB $ 1,272,855
Settlement Asset Backed Bonds, Series 2007B1, 5.000%, 6/01/47
715 Tobacco Settlement Financing Corporation of Virginia, Tobacco 6/17 at 100.00 BBB 435,242
Settlement Asset-Backed Bonds, Series 2007B2, 0.000%, 6/01/46
------------------------------------------------------------------------------------------------------------------------------------
2,375 Total Consumer Staples 1,708,097
------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 6.4% (4.2% OF TOTAL INVESTMENTS)
500 Danville Industrial Development Authority, Virginia, Educational 3/11 at 102.00 N/R 499,715
Facilities Revenue Bonds, Averett University, Series 2001,
6.000%, 3/15/22
500 Prince William County Industrial Development Authority, Virginia, 10/13 at 101.00 A3 507,700
Educational Facilities Revenue Bonds, Catholic Diocese of
Arlington, Series 2003, 5.500%, 10/01/33
850 Prince William County Park Authority, Virginia, Park Facilities 10/09 at 101.00 A3 880,643
Revenue Refunding and Improvement Bonds, Series 1999,
6.000%, 10/15/28
Puerto Rico Industrial, Tourist, Educational, Medical and
Environmental Control Facilities Financing Authority, Higher
Education Revenue Bonds, Ana G. Mendez University System,
Series 1999:
160 5.375%, 2/01/19 2/09 at 101.00 BBB- 160,499
320 5.375%, 2/01/29 2/09 at 101.00 BBB- 306,128
500 Virginia College Building Authority, Educational Facilities 7/08 at 101.00 AA 504,600
Revenue Refunding Bonds, Marymount University, Series 1998,
5.100%, 7/01/18 - RAAI Insured
------------------------------------------------------------------------------------------------------------------------------------
2,830 Total Education and Civic Organizations 2,859,285
------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE - 16.3% (10.6% OF TOTAL INVESTMENTS)
250 Charlotte County Industrial Development Authority, Virginia, 9/17 at 100.00 A- 238,713
Hospital Revenue Bonds, Halifax Regional Hospital Incorporated,
Series 2007, 5.000%, 9/01/37
100 Fairfax County Industrial Development Authority, Virginia, No Opt. Call AA+ 105,344
Hospital Revenue Refunding Bonds, Inova Health System,
Series 1993A, 5.000%, 8/15/23
1,000 Fauquier County Industrial Development Authority, Virginia, 10/12 at 102.00 AA 1,010,660
Hospital Revenue Bonds, Fauquier Hospital, Series 2002,
5.250%, 10/01/25 - RAAI Insured
500 Fredericksburg Economic Development Authority, Virginia, No Opt. Call A3 523,350
Hospital Facilities Revenue Bonds, MediCorp Health System,
Series 2007, 5.250%, 6/15/23
500 Fredericksburg Industrial Development Authority, Virginia, 6/12 at 100.00 A3 482,560
Revenue Bonds, MediCorp Health System, Series 2002B,
5.125%, 6/15/33
820 Harrisonburg Industrial Development Authority, Virginia, Hospital 8/16 at 100.00 AAA 822,132
Facilities Revenue Bonds, Rockingham Memorial Hospital,
Series 2006, 5.000%, 8/15/31 - AMBAC Insured
480 Henrico County Economic Development Authority, Virginia, 11/12 at 100.00 A- 490,181
Revenue Bonds, Bon Secours Health System Inc., Series 2002A,
5.600%, 11/15/30
525 Manassas Industrial Development Authority, Virginia, Hospital 4/13 at 100.00 A2 518,501
Revenue Bonds, Prince William Hospital, Series 2002,
5.250%, 4/01/33
800 Norton Industrial Development Authority, Virginia, Hospital 12/11 at 101.00 N/R 816,680
Revenue Refunding and Improvement Bonds, Norton Community
Hospital, Series 2001, 6.000%, 12/01/22 - ACA Insured
53
NGB
Nuveen Virginia Dividend Advantage Municipal Fund (continued)
Portfolio of INVESTMENTS May 31, 2008
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE (continued)
Stafford County Economic Development Authority, Virginia,
Hospital Facilities Revenue Bonds, MediCorp Health System,
Series 2006:
$ 750 5.250%, 6/15/25 6/16 at 100.00 A3 $ 768,008
360 5.250%, 6/15/31 6/16 at 100.00 A3 361,512
430 Virginia Small Business Financing Authority, Wellmont Health 9/17 at 100.00 BBB+ 398,546
System Project Revenue Bonds, Series 2007A, 5.250%, 9/01/37
715 Winchester Industrial Development Authority, Virginia, Hospital 1/17 at 100.00 AA- 717,674
Revenue Bonds, Winchester Medical Center, Series 2007,
5.125%, 1/01/31
------------------------------------------------------------------------------------------------------------------------------------
7,230 Total Health Care 7,253,861
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 4.6% (3.0% OF TOTAL INVESTMENTS)
1,000 Arlington County Industrial Development Authority, Virginia, 11/11 at 102.00 AAA 1,032,520
Multifamily Housing Mortgage Revenue Bonds, Arlington View
Terrace Apartments, Series 2001, 5.150%, 11/01/31
(Mandatory put 11/01/19) (Alternative Minimum Tax)
1,000 Virginia Housing Development Authority, Rental Housing Bonds, 10/10 at 100.00 AA+ 1,012,450
Series 2000G, 5.625%, 10/01/20 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
2,000 Total Housing/Multifamily 2,044,970
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 9.4% (6.2% OF TOTAL INVESTMENTS)
1,000 Virginia Housing Development Authority, Commonwealth 7/11 at 100.00 AAA 1,011,330
Mortgage Bonds, Series 2001H-1, 5.350%, 7/01/31 -
MBIA Insured
600 Virginia Housing Development Authority, Commonwealth 1/15 at 100.00 AAA 548,244
Mortgage Bonds, Series 2005C-2, 4.750%, 10/01/32
(Alternative Minimum Tax)
960 Virginia Housing Development Authority, Commonwealth 7/15 at 100.00 AAA 898,771
Mortgage Bonds, Series 2006 D1, 4.900%, 1/01/33
(Alternative Minimum Tax)
480 Virginia Housing Development Authority, Commonwealth 7/15 at 100.00 AAA 451,464
Mortgage Bonds, Series 2006, 4.800%, 7/01/29
(Alternative Minimum Tax)
1,400 Virginia Housing Development Authority, Commonwealth 7/16 at 100.00 AAA 1,279,880
Mortgage Bonds, Series 2007B, 4.750%, 7/01/32
(Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
4,440 Total Housing/Single Family 4,189,689
------------------------------------------------------------------------------------------------------------------------------------
INDUSTRIALS - 0.1% (0.1% OF TOTAL INVESTMENTS)
50 Charles County Industrial Development Authority, Virginia, No Opt. Call BBB 50,243
Solid Waste Disposal Facility Revenue Refunding Bonds,
USA Waste of Virginia Inc., Series 1999, 4.875%, 2/01/09
(Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
LONG-TERM CARE - 12.0% (7.9% OF TOTAL INVESTMENTS)
700 Albemarle County Industrial Development Authority, Virginia, 1/17 at 100.00 N/R 641,893
Residential Care Facilities Mortgage Revenue Bonds,
Westminster-Cantebury of the Blue Ridge, Series 2007,
5.000%, 1/01/31
350 Chesterfield County Health Center Commission, Virginia, 12/15 at 100.00 N/R 315,266
Mortgage Revenue Bonds, Lucy Corr Village, Series 2005,
5.625%, 12/01/39
1,005 Fairfax County Economic Development Authority, Virginia, 10/17 at 100.00 N/R 913,746
Residential Care Facilities Mortgage Revenue Bonds,
Goodwin House, Inc., Series 2007A, 5.125%, 10/01/37
500 Fairfax County Economic Development Authority, Virginia, 10/16 at 100.00 BBB 450,045
Retirement Center Revenue Bonds, Greenspring Village,
Series 2006A, 4.750%, 10/01/26
540 Henrico County Economic Development Authority, Virginia, No Opt. Call BBB- 482,436
Residential Care Facility Revenue Bonds, Westminster
Canterbury of Richmond, Series 2006, 5.000%, 10/01/35
54
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
LONG-TERM CARE (continued)
$ 700 Industrial Development Authority of the County of Prince William, 1/17 at 100.00 N/R $ 638,085
Virginia, Residential Care Facility Revenue Bonds,
Westminster at Lake, First Mortgage, Series 2006,
5.125%, 1/01/26
650 James City County Industrial Development Authority, Virginia, 3/12 at 101.00 N/R 652,990
Residential Care Facility First Mortgage Revenue Refunding
Bonds, Williamsburg Landing Inc., Series 2003A,
6.000%, 3/01/23
530 Roanoke Industrial Development Authority, Virginia, Residential 12/16 at 100.00 N/R 435,819
Revenue Bonds, Virginia Lutheran Homes Incorporated,
Series 2006, 5.000%, 12/01/39
350 Suffolk Industrial Development Authority, Virginia, Retirement 9/16 at 100.00 N/R 317,146
Facilities First Mortgage Revenue Bonds, Lake Prince Center,
Series 2006, 5.300%, 9/01/31
350 Virginia Beach Development Authority, Virginia, Residential 11/15 at 100.00 N/R 341,730
Care Facility Mortgage Revenue Bonds, Westminster Canterbury
on Chesapeake Bay, Series 2005, 5.000%, 11/01/22
175 Winchester Industrial Development Authority, Virginia, 1/15 at 100.00 N/R 168,474
Residential Care Facility Revenue Bonds, Westminster-Canterbury
of Winchester Inc., Series 2005A, 5.200%, 1/01/27
------------------------------------------------------------------------------------------------------------------------------------
5,850 Total Long-Term Care 5,357,630
------------------------------------------------------------------------------------------------------------------------------------
MATERIALS - 1.6% (1.0% OF TOTAL INVESTMENTS)
100 Bedford County Industrial Development Authority, Virginia, 8/08 at 102.00 B2 82,622
Industrial Development Revenue Refunding Bonds, Nekoosa
Packaging Corporation, Series 1998, 5.600%, 12/01/25
(Alternative Minimum Tax) (4)
20 Bedford County Industrial Development Authority, Virginia, 12/09 at 101.00 B2 18,374
Industrial Development Revenue Refunding Bonds, Nekoosa
Packaging Corporation, Series 1999A, 6.550%, 12/01/25
(Alternative Minimum Tax) (4)
220 Goochland County Industrial Development Authority, Virginia, 12/08 at 101.00 B2 182,840
Industrial Development Revenue Refunding Bonds, Nekoosa
Packaging Corporation Project, Series 1998, 5.650%, 12/01/25
(Alternative Minimum Tax) (4)
500 Hopewell Industrial Development Authority, Virginia, Environmental No Opt. Call B- 431,585
Improvement Revenue Bonds, Smurfit Stone Container
Corporation, Series 2005, 5.250%, 6/01/15
------------------------------------------------------------------------------------------------------------------------------------
840 Total Materials 715,421
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 19.4% (12.7% OF TOTAL INVESTMENTS)
600 Arlington County, Virginia, General Obligation Bonds, Series 2006, 8/16 at 100.00 AAA 648,552
5.000%, 8/01/20
700 Loudoun County, Virginia, General Obligation Bonds, Series 2006, 12/16 at 100.00 AAA 740,208
5.000%, 12/01/25
500 Loudoun County, Virginia, General Obligation Public Improvement 6/15 at 100.00 AAA 541,410
Bonds, Series 2005B, 5.000%, 6/01/18
845 Newport News, Virginia, General Obligation Bonds, Series 2004C, 5/14 at 101.00 AA 922,410
5.000%, 5/01/16
620 Richmond, Virginia, General Obligation Bonds, Series 2005A, 7/15 at 100.00 AAA 672,681
5.000%, 7/15/17 - FSA Insured
400 Suffolk, Virginia, General Obligation Bonds, Series 2005, No Opt. Call Aa3 441,984
5.000%, 12/01/15
400 Virginia Beach, Virginia, General Obligation Bonds, Series 2005, 1/16 at 100.00 AAA 429,856
5.000%, 1/15/20
1,600 Virginia Beach, Virginia, General Obligation Bonds, 10/17 at 100.00 AAA 1,684,032
5.000%, 10/01/26 (UB)
2,425 Virginia Beach, Virginia, General Obligation Public Improvement 6/11 at 101.00 AAA 2,555,004
Bonds, Series 2001, 5.000%, 6/01/21
------------------------------------------------------------------------------------------------------------------------------------
8,090 Total Tax Obligation/General 8,636,137
------------------------------------------------------------------------------------------------------------------------------------
55
NGB
Nuveen Virginia Dividend Advantage Municipal Fund (continued)
Portfolio of INVESTMENTS May 31, 2008
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 19.1% (12.5% OF TOTAL INVESTMENTS)
$ 100 Bell Creek Community Development Authority, Virginia, 3/13 at 101.00 N/R $ 101,731
Special Assessment Bonds, Series 2003A, 6.750%, 3/01/22
500 Broad Street Community Development Authority, Virginia, 6/13 at 102.00 N/R 526,770
Revenue Bonds, Series 2003, 7.500%, 6/01/33
Buena Vista Public Recreational Facilities Authority, Virginia,
Lease Revenue Bonds, Golf Course Project, Series 2005A:
120 5.250%, 7/15/25 - ACA Insured 7/15 at 100.00 N/R 108,830
95 5.500%, 7/15/35 - ACA Insured 7/15 at 100.00 N/R 80,982
500 Fairfax County Economic Development Authority, Virginia, 5/16 at 100.00 AA+ 538,550
Lease Revenue Bonds, Joint Public Uses Community Project,
Series 2006, 5.000%, 5/15/18
580 Prince William County, Virginia, Certificates of Participation, 6/15 at 100.00 Aaa 599,331
County Facilities, Series 2005, 5.000%, 6/01/20 -
AMBAC Insured
700 Puerto Rico Highway and Transportation Authority, Highway No Opt. Call AAA 738,605
Revenue Bonds, Series 2007N, 5.250%, 7/01/31 -
AMBAC Insured
3,000 Puerto Rico Infrastructure Financing Authority, Special Tax No Opt. Call AAA 958,290
Revenue Bonds, Series 2005A, 0.000%, 7/01/29 -
AMBAC Insured
1,000 Spotsylvania County Industrial Development Authority, Virginia, 8/13 at 100.00 AAA 1,040,450
Lease Revenue Bonds, School Facilities, Series 2003B,
5.125%, 8/01/23 - AMBAC Insured
600 Stafford County and Staunton Industrial Development Authority, 8/16 at 100.00 AAA 622,776
Virginia, Revenue Bonds, Virginia Municipal League and Virginia
Association of Counties Finance Program, Series 2006A,
5.000%, 8/01/23 - MBIA Insured
890 Stafford County Economic Development Authority, Virginia, 4/18 at 100.00 AAA 919,281
Public Project Lease Revenue Bonds, 5.000%, 4/01/33 -
AGC Insured (UB)
960 Virgin Islands Public Finance Authority, Gross Receipts Taxes 10/10 at 101.00 BBB+ 1,021,267
Loan Note, Series 1999A, 6.375%, 10/01/19
500 Virginia Beach Development Authority, Public Facilities Revenue 5/15 at 100.00 AA+ 524,430
Bonds, Series 2005A, 5.000%, 5/01/22
348 Virginia Gateway Community Development Authority, 3/13 at 102.00 N/R 350,704
Prince William County, Special Assessment Bonds, Series 2003,
6.375%, 3/01/30
345 Virginia Public School Authority, School Financing Bonds, 8/15 at 100.00 AA+ 376,016
1997 Resolution, Series 2005C, 5.000%, 8/01/17
------------------------------------------------------------------------------------------------------------------------------------
10,238 Total Tax Obligation/Limited 8,508,013
------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 24.7% (16.1% OF TOTAL INVESTMENTS)
1,000 Capital Region Airport Authority, Richmond, Virginia, Revenue 7/15 at 100.00 AAA 1,060,510
Bonds, Richmond International Airport, Series 2005A,
5.000%, 7/01/18 - FSA Insured
1,000 Chesapeake Bay Bridge and Tunnel Commission, Virginia, No Opt. Call AAA 1,141,510
General Resolution Revenue Refunding Bonds, Series 1998,
5.500%, 7/01/25 - MBIA Insured
3,000 Metropolitan Washington D.C. Airports Authority, Airport System 10/11 at 101.00 AAA 3,022,737
Revenue Bonds, Series 2001A, 5.500%, 10/01/27 -
MBIA Insured (Alternative Minimum Tax)
250 Metropolitan Washington D.C. Airports Authority, Airport 10/11 at 101.00 AAA 254,435
System Revenue Bonds, Series 2001B, 5.000%, 10/01/21 -
MBIA Insured
1,500 Norfolk Airport Authority, Virginia, Airport Revenue Bonds, 7/11 at 100.00 A3 1,495,905
Series 2001A, 5.125%, 7/01/31 - FGIC Insured
500 Norfolk, Virginia, Parking System Revenue Bonds, Series 2005A, 2/15 at 100.00 AAA 512,210
5.000%, 2/01/23 - MBIA Insured
56
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION (continued)
$ 500 Richmond Metropolitan Authority, Virginia, Revenue Refunding No Opt. Call Baa3 $ 548,755
Bonds, Expressway System, Series 2002, 5.250%, 7/15/22 -
FGIC Insured
455 Virginia Port Authority, Revenue Bonds, Port Authority Facilities, 7/13 at 100.00 Aa3 430,075
Series 2006, 5.000%, 7/01/36 - FGIC Insured
(Alternative Minimum Tax)
1,225 Virginia Resources Authority, Airports Revolving Fund 2/11 at 100.00 Aa2 1,269,615
Revenue Bonds, Series 2001A, 5.250%, 8/01/23
1,250 Virginia Resources Authority, Airports Revolving Fund 2/11 at 100.00 Aa2 1,241,613
Revenue Bonds, Series 2001B, 5.125%, 8/01/27
(Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
10,680 Total Transportation 10,977,365
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 26.1% (17.0% OF TOTAL INVESTMENTS) (5)
500 Albemarle County Industrial Development Authority, Virginia, 1/12 at 100.00 N/R (5) 553,550
Residential Care Facility Revenue Bonds, Westminster Canterbury
of the Blue Ridge First Mortgage, Series 2001, 6.200%, 1/01/31
(Pre-refunded 1/01/12)
1,000 Bristol, Virginia, Utility System Revenue Refunding Bonds, No Opt. Call AAA 1,081,510
Series 2001, 5.000%, 7/15/21 - FSA Insured (ETM)
Guam Economic Development Authority, Tobacco Settlement
Asset-Backed Bonds, Series 2001A:
30 5.000%, 5/15/22 (Pre-refunded 5/15/11) 5/11 at 100.00 Baa3 (5) 31,852
850 5.400%, 5/15/31 (Pre-refunded 5/15/11) 5/11 at 100.00 Baa3 (5) 912,067
20 Henrico County Economic Development Authority, Virginia, 11/12 at 100.00 A3 (5) 22,163
Revenue Bonds, Bon Secours Health System Inc., Series 2002A,
5.600%, 11/15/30 (Pre-refunded 11/15/12)
2,310 Leesburg, Virginia, General Obligation Public Improvement Bonds, 1/11 at 101.00 AA (5) 2,483,735
Series 2000, 5.125%, 1/15/21 (Pre-refunded 1/15/11) -
FGIC Insured
425 Loudoun County Industrial Development Authority, Virginia, 6/12 at 101.00 BBB (5) 477,075
Hospital Revenue Bonds, Loudoun Hospital Center, Series 2002A,
6.000%, 6/01/22 (Pre-refunded 6/01/12)
Puerto Rico Infrastructure Financing Authority, Special Obligation
Bonds, Series 2000A:
1,500 5.500%, 10/01/32 10/10 at 101.00 AAA 1,562,265
1,500 5.500%, 10/01/40 10/10 at 101.00 AAA 1,559,535
250 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 7/10 at 100.00 AAA 261,265
Asset-Backed Bonds, Series 2000, 5.750%, 7/01/20
(Pre-refunded 7/01/10)
230 Rockbridge County Industrial Development Authority, Virginia, No Opt. Call B2 (5) 243,421
Horse Center Revenue Refunding Bonds, Series 2001B,
6.125%, 7/15/11 (ETM)
950 Rockbridge County Industrial Development Authority, Virginia, 7/11 at 105.00 B2 (5) 1,066,290
Horse Center Revenue Refunding Bonds, Series 2001C,
6.850%, 7/15/21 (Pre-refunded 7/15/11)
725 Tobacco Settlement Financing Corporation of Virginia, 6/15 at 100.00 AAA 804,721
Tobacco Settlement Asset-Backed Bonds, Series 2005,
5.500%, 6/01/26 (Pre-refunded 6/01/15)
500 Virginia College Building Authority, Educational Facilities 2/12 at 100.00 AA+ (5) 536,605
Revenue Bonds, 21st Century College Program, Series 2002A,
5.000%, 2/01/22 (Pre-refunded 2/01/12)
------------------------------------------------------------------------------------------------------------------------------------
10,790 Total U.S. Guaranteed 11,596,054
------------------------------------------------------------------------------------------------------------------------------------
57
NGB
Nuveen Virginia Dividend Advantage Municipal Fund (continued)
Portfolio of INVESTMENTS May 31, 2008
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 2.4% (1.5% OF TOTAL INVESTMENTS)
$ 1,000 Mecklenburg County Industrial Development Authority, Virginia, 10/12 at 100.00 Baa1 $ 1,046,040
Revenue Bonds, UAE Mecklenburg Cogeneration LP,
Series 2002, 6.500%, 10/15/17 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 7.1% (4.7% OF TOTAL INVESTMENTS)
2,000 Henrico County, Virginia, Water and Sewer System Revenue 5/09 at 102.00 AA+ 2,063,020
Refunding Bonds, Series 1999, 5.000%, 5/01/22
500 Virginia Beach, Virginia, Water and Sewer System Revenue 10/15 at 100.00 AA 514,185
Bonds, Series 2005, 5.000%, 10/01/30
595 Virginia Resources Authority, Clean Water State Revolving 10/17 at 100.00 AAA 593,286
Fund Revenue Bonds, Series 2007, Residuals 1006,
9.690%, 10/01/29 (IF)
------------------------------------------------------------------------------------------------------------------------------------
3,095 Total Water and Sewer 3,170,491
------------------------------------------------------------------------------------------------------------------------------------
$ 69,508 Total Investments (cost $68,166,095) - 153.0% 68,113,296
=============-----------------------------------------------------------------------------------------------------------------------
Floating Rate Obligations - (4.2)% (1,865,000)
--------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 5.1% 2,263,808
--------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (53.9)% (6) (24,000,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $44,512,104
====================================================================================================================
(1) All percentages shown in the Portfolio of Investments are
based on net assets applicable to Common shares unless
otherwise noted.
(2) Optional Call Provisions (not covered by the report of
independent registered public accounting firm): Dates (month
and year) and prices of the earliest optional call or
redemption. There may be other call provisions at varying
prices at later dates. Certain mortgage-backed securities
may be subject to periodic principal paydowns.
(3) Ratings (not covered by the report of independent registered
public accounting firm): Using the higher of Standard &
Poor's Group ("Standard & Poor's") or Moody's Investor
Service, Inc. ("Moody's") rating. Ratings below BBB by
Standard & Poor's or Baa by Moody's are considered to be
below investment grade.
The Portfolio of Investments may reflect the ratings on
certain bonds insured by ACA, AMBAC, CIFG, FGIC, MBIA, RAAI
and XLCA as of May 31, 2008. Please see the Portfolio
Manager's Commentary for an expanded discussion of the
affect on the Fund of changes to the ratings of certain
bonds in the portfolio resulting from changes to the ratings
of the underlying insurers both during the period and after
period end.
(4) The issuer has received a formal adverse determination from
the Internal Revenue Service (the "IRS") regarding the
tax-exempt status of the bonds' coupon payments. The Fund
will continue to treat coupon payments as tax-exempt income
until such time that it is formally determined that the
interest on the bonds should be treated as taxable.
(5) Backed by an escrow or trust containing sufficient U.S.
Government or U.S. Government agency securities which ensure
the timely payment of principal and interest. Such
investments are normally considered to be equivalent to AAA
rated securities.
(6) Preferred Shares, at Liquidation Value as a percentage of
total investments is (35.2)%.
N/R Not rated.
(ETM) Escrowed to maturity.
(IF) Inverse floating rate investment.
(UB) Underlying bond of an inverse floating rate trust reflected
as a financing transaction pursuant to the provisions of
SFAS No. 140.
See accompanying notes to financial statements.
58
NNB
Nuveen Virginia Dividend Advantage Municipal Fund 2
Portfolio of INVESTMENTS
May 31, 2008
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES - 4.0% (2.6% OF TOTAL INVESTMENTS)
$ 3,100 Tobacco Settlement Financing Corporation of Virginia, Tobacco 6/17 at 100.00 BBB $ 2,377,018
Settlement Asset Backed Bonds, Series 2007B1, 5.000%, 6/01/47
1,430 Tobacco Settlement Financing Corporation of Virginia, Tobacco 6/17 at 100.00 BBB 870,484
Settlement Asset-Backed Bonds, Series 2007B2, 0.000%, 6/01/46
------------------------------------------------------------------------------------------------------------------------------------
4,530 Total Consumer Staples 3,247,502
------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 6.8% (4.4% OF TOTAL INVESTMENTS)
1,000 Fairfax County Economic Development Authority, Virginia, 9/09 at 101.00 Aaa 1,026,830
Revenue Bonds, National Wildlife Federation, Series 1999,
5.375%, 9/01/29 - MBIA Insured
1,000 Prince William County Industrial Development Authority, 10/13 at 101.00 A3 1,015,400
Virginia, Educational Facilities Revenue Bonds, Catholic
Diocese of Arlington, Series 2003, 5.500%, 10/01/33
1,500 Puerto Rico Industrial, Tourist, Educational, Medical and 12/12 at 101.00 BBB- 1,502,115
Environmental Control Facilities Financing Authority, Higher
Education Revenue Refunding Bonds, Ana G. Mendez University
System, Series 2002, 5.375%, 12/01/21
2,000 Winchester Industrial Development Authority, Virginia, Educational 10/08 at 102.00 AAA 2,047,800
Facilities First Mortgage Revenue Bonds, Shenandoah University,
Series 1998, 5.250%, 10/01/28 - MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
5,500 Total Education and Civic Organizations 5,592,145
------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE - 24.3% (15.9% OF TOTAL INVESTMENTS)
1,500 Albemarle County Industrial Development Authority, Virginia, 10/12 at 100.00 A2 1,484,850
Hospital Revenue Bonds, Martha Jefferson Hospital, Series 2002,
5.250%, 10/01/35
450 Charlotte County Industrial Development Authority, Virginia, 9/17 at 100.00 A- 449,136
Hospital Revenue Bonds, Halifax Regional Hospital Incorporated,
Series 2007, 5.000%, 9/01/27
3,000 Fauquier County Industrial Development Authority, Virginia, 10/12 at 102.00 AA 3,031,979
Hospital Revenue Bonds, Fauquier Hospital, Series 2002,
5.250%, 10/01/25 - RAAI Insured
1,000 Fredericksburg Economic Development Authority, Virginia, No Opt. Call A3 1,046,700
Hospital Facilities Revenue Bonds, MediCorp Health System,
Series 2007, 5.250%, 6/15/23
675 Fredericksburg Industrial Development Authority, Virginia, 6/12 at 100.00 A3 651,456
Revenue Bonds, MediCorp Health System, Series 2002B,
5.125%, 6/15/33
1,500 Harrisonburg Industrial Development Authority, Virginia, 8/16 at 100.00 AAA 1,503,900
Hospital Facilities Revenue Bonds, Rockingham Memorial
Hospital, Series 2006, 5.000%, 8/15/31 - AMBAC Insured
960 Henrico County Economic Development Authority, Virginia, 11/12 at 100.00 A- 980,362
Revenue Bonds, Bon Secours Health System Inc., Series 2002A,
5.600%, 11/15/30
1,155 Manassas Industrial Development Authority, Virginia, Hospital 4/13 at 100.00 A2 1,140,701
Revenue Bonds, Prince William Hospital, Series 2002,
5.250%, 4/01/33
1,200 Norton Industrial Development Authority, Virginia, Hospital 12/11 at 101.00 N/R 1,225,020
Revenue Refunding and Improvement Bonds, Norton Community
Hospital, Series 2001, 6.000%, 12/01/22 - ACA Insured
1,000 Prince William County Industrial Development Authority, 10/08 at 102.00 Aaa 1,024,810
Virginia, Hospital Facility Revenue Refunding Bonds, Potomac
Hospital Corporation of Prince William, Series 1998,
5.000%, 10/01/18 - FSA Insured
3,915 Roanoke Industrial Development Authority, Virginia, Hospital 7/12 at 100.00 AAA 4,095,911
Revenue Bonds, Carilion Health System, Series 2002A,
5.500%, 7/01/20 - MBIA Insured
59
NNB
Nuveen Virginia Dividend Advantage Municipal Fund 2 (continued)
Portfolio of INVESTMENTS May 31, 2008
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE (continued)
Stafford County Economic Development Authority, Virginia,
Hospital Facilities Revenue Bonds, MediCorp Health System,
Series 2006:
$ 1,250 5.250%, 6/15/25 6/16 at 100.00 A3 $ 1,280,013
655 5.250%, 6/15/31 6/16 at 100.00 A3 657,751
785 Virginia Small Business Financing Authority, Wellmont Health 9/17 at 100.00 BBB+ 727,577
System Project Revenue Bonds, Series 2007A, 5.250%, 9/01/37
715 Winchester Industrial Development Authority, Virginia, Hospital 1/17 at 100.00 AA- 717,674
Revenue Bonds, Winchester Medical Center, Series 2007,
5.125%, 1/01/31
------------------------------------------------------------------------------------------------------------------------------------
19,760 Total Health Care 20,017,840
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 13.6% (8.9% OF TOTAL INVESTMENTS)
7,485 Virginia Housing Development Authority, Commonwealth 7/11 at 100.00 AAA 7,569,803
Mortgage Bonds, Series 2001H-1, 5.350%, 7/01/31 -
MBIA Insured
500 Virginia Housing Development Authority, Commonwealth 1/15 at 100.00 AAA 456,870
Mortgage Bonds, Series 2005C-2, 4.750%, 10/01/32
(Alternative Minimum Tax)
870 Virginia Housing Development Authority, Commonwealth 7/15 at 100.00 AAA 818,279
Mortgage Bonds, Series 2006, 4.800%, 7/01/29
(Alternative Minimum Tax)
2,600 Virginia Housing Development Authority, Commonwealth 7/16 at 100.00 AAA 2,376,920
Mortgage Bonds, Series 2007B, 4.750%, 7/01/32
(Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
11,455 Total Housing/Single Family 11,221,872
------------------------------------------------------------------------------------------------------------------------------------
LONG-TERM CARE - 11.5% (7.6% OF TOTAL INVESTMENTS)
1,300 Albemarle County Industrial Development Authority, Virginia, 1/17 at 100.00 N/R 1,192,087
Residential Care Facilities Mortgage Revenue Bonds,
Westminster-Cantebury of the Blue Ridge, Series 2007,
5.000%, 1/01/31
650 Chesterfield County Health Center Commission, Virginia, 12/15 at 100.00 N/R 585,494
Mortgage Revenue Bonds, Lucy Corr Village, Series 2005,
5.625%, 12/01/39
1,815 Fairfax County Economic Development Authority, Virginia, 10/17 at 100.00 N/R 1,650,198
Residential Care Facilities Mortgage Revenue Bonds,
Goodwin House, Inc., Series 2007A, 5.125%, 10/01/37
500 Fairfax County Economic Development Authority, Virginia, 10/16 at 100.00 BBB 450,045
Retirement Center Revenue Bonds, Greenspring Village,
Series 2006A, 4.750%, 10/01/26
855 Henrico County Economic Development Authority, Virginia, No Opt. Call BBB- 763,857
Residential Care Facility Revenue Bonds, Westminster
Canterbury of Richmond, Series 2006, 5.000%, 10/01/35
1,300 Industrial Development Authority of the County of 1/17 at 100.00 N/R 1,185,015
Prince William, Virginia, Residential Care Facility Revenue
Bonds, Westminster at Lake, First Mortgage, Series 2006,
5.125%, 1/01/26
1,350 James City County Industrial Development Authority, Virginia, 3/12 at 101.00 N/R 1,356,210
Residential Care Facility First Mortgage Revenue Refunding
Bonds, Williamsburg Landing Inc., Series 2003A,
6.000%, 3/01/23
970 Roanoke Industrial Development Authority, Virginia, Residential 12/16 at 100.00 N/R 797,631
Revenue Bonds, Virginia Lutheran Homes Incorporated,
Series 2006, 5.000%, 12/01/39
650 Suffolk Industrial Development Authority, Virginia, Retirement 9/16 at 100.00 N/R 588,985
Facilities First Mortgage Revenue Bonds, Lake Prince Center,
Series 2006, 5.300%, 9/01/31
650 Virginia Beach Development Authority, Virginia, Residential 11/15 at 100.00 N/R 634,641
Care Facility Mortgage Revenue Bonds, Westminster Canterbury
on Chesapeake Bay, Series 2005, 5.000%, 11/01/22
325 Winchester Industrial Development Authority, Virginia, 1/15 at 100.00 N/R 312,881
Residential Care Facility Revenue Bonds, Westminster-Canterbury
of Winchester Inc., Series 2005A, 5.200%, 1/01/27
------------------------------------------------------------------------------------------------------------------------------------
10,365 Total Long-Term Care 9,517,044
------------------------------------------------------------------------------------------------------------------------------------
60
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
MATERIALS - 1.7% (1.1% OF TOTAL INVESTMENTS)
$ 165 Bedford County Industrial Development Authority, Virginia, 8/08 at 102.00 B2 $ 136,326
Industrial Development Revenue Refunding Bonds, Nekoosa
Packaging Corporation, Series 1998, 5.600%, 12/01/25
(Alternative Minimum Tax) (4)
460 Goochland County Industrial Development Authority, Virginia, 12/08 at 101.00 B2 382,301
Industrial Development Revenue Refunding Bonds, Nekoosa
Packaging Corporation Project, Series 1998, 5.650%, 12/01/25
(Alternative Minimum Tax) (4)
1,000 Hopewell Industrial Development Authority, Virginia, Environmental No Opt. Call B- 863,170
Improvement Revenue Bonds, Smurfit Stone Container
Corporation, Series 2005, 5.250%, 6/01/15
------------------------------------------------------------------------------------------------------------------------------------
1,625 Total Materials 1,381,797
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 27.3% (17.9% OF TOTAL INVESTMENTS)
500 Arlington County, Virginia, General Obligation Bonds, Series 2006, 8/16 at 100.00 AAA 540,460
5.000%, 8/01/20
1,750 Chesapeake, Virginia, General Obligation Bonds, Series 2001, 12/11 at 100.00 AA 1,891,663
5.500%, 12/01/16
1,000 Loudoun County, Virginia, General Obligation Bonds, Series 2006, 12/16 at 100.00 AAA 1,057,440
5.000%, 12/01/25
1,730 Loudoun County, Virginia, General Obligation Public Improvement 11/11 at 101.00 AAA 1,799,287
Bonds, Series 2001C, 4.500%, 11/01/17
95 Loudoun County, Virginia, General Obligation Public Improvement 5/12 at 100.00 AAA 100,182
Bonds, Series 2002A, 5.250%, 5/01/22
1,000 Loudoun County, Virginia, General Obligation Public Improvement 6/15 at 100.00 AAA 1,082,820
Bonds, Series 2005B, 5.000%, 6/01/18
40 Portsmouth, Virginia, General Obligation Public Utility Refunding 6/08 at 100.00 AA- 40,052
Bonds, Series 2001B, 5.000%, 6/01/21 - FGIC Insured
Powhatan County, Virginia, General Obligation Bonds, Series 2001:
660 5.000%, 1/15/23 - AMBAC Insured 1/11 at 101.00 AAA 678,579
1,000 5.000%, 1/15/27 - AMBAC Insured 1/11 at 101.00 AAA 1,008,840
1,000 Richmond, Virginia, General Obligation Bonds, Series 2004A, 7/14 at 100.00 AAA 1,054,800
5.000%, 7/15/21 - FSA Insured
Roanoke, Virginia, General Obligation Public Improvement Bonds,
Series 2002A:
2,400 5.000%, 10/01/18 10/12 at 101.00 AA 2,547,456
2,435 5.000%, 10/01/19 10/12 at 101.00 AA 2,584,606
1,280 Roanoke, Virginia, General Obligation Public Improvement Bonds, 10/12 at 101.00 AA 1,332,467
Series 2002B, 5.000%, 10/01/15 - FGIC Insured
(Alternative Minimum Tax)
600 Virginia Beach, Virginia, General Obligation Bonds, Series 2005, 1/16 at 100.00 AAA 644,784
5.000%, 1/15/20
2,900 Virginia Beach, Virginia, General Obligation Bonds, 10/17 at 100.00 AAA 3,052,308
5.000%, 10/01/26 (UB)
1,500 Virginia Beach, Virginia, General Obligation Public Improvement 6/11 at 101.00 AAA 1,580,415
Bonds, Series 2001, 5.000%, 6/01/19
1,420 Virginia Beach, Virginia, General Obligation Refunding and Public 3/12 at 100.00 AAA 1,476,970
Improvement Bonds, Series 2002, 5.000%, 3/01/21
------------------------------------------------------------------------------------------------------------------------------------
21,310 Total Tax Obligation/General 22,473,129
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 20.0% (13.1% OF TOTAL INVESTMENTS)
130 Bell Creek Community Development Authority, Virginia, Special 3/13 at 101.00 N/R 132,250
Assessment Bonds, Series 2003A, 6.750%, 3/01/22
1,000 Broad Street Community Development Authority, Virginia, Revenue 6/13 at 102.00 N/R 1,053,540
Bonds, Series 2003, 7.500%, 6/01/33
61
NNB
Nuveen Virginia Dividend Advantage Municipal Fund 2 (continued)
Portfolio of INVESTMENTS May 31, 2008
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED (continued)
Buena Vista Public Recreational Facilities Authority, Virginia,
Lease Revenue Bonds, Golf Course Project, Series 2005A:
$ 210 5.250%, 7/15/25 - ACA Insured 7/15 at 100.00 N/R $ 190,453
165 5.500%, 7/15/35 - ACA Insured 7/15 at 100.00 N/R 140,653
800 Fairfax County Economic Development Authority, Virginia, Lease 5/16 at 100.00 AA+ 861,680
Revenue Bonds, Joint Public Uses Community Project,
Series 2006, 5.000%, 5/15/18
1,800 Loudoun County Industrial Development Authority, Virginia, 3/13 at 100.00 AA+ 1,895,022
Lease Revenue Refunding Bonds,Public Facility Project,
Series 2003, 5.000%, 3/01/19
1,300 Puerto Rico Highway and Transportation Authority, Highway No Opt. Call AAA 1,371,695
Revenue Bonds, Series 2007N, 5.250%, 7/01/31 -
AMBAC Insured
2,000 Puerto Rico Infrastructure Financing Authority, Special Tax No Opt. Call AAA 638,860
Revenue Bonds, Series 2005A, 0.000%, 7/01/29 -
AMBAC Insured
400 Puerto Rico Public Buildings Authority, Guaranteed Government 7/12 at 100.00 BBB- 400,128
Facilities Revenue Refunding Bonds, Series 2002D,
5.250%, 7/01/27
1,000 Spotsylvania County Industrial Development Authority, Virginia, 8/13 at 100.00 AAA 1,040,450
Lease Revenue Bonds, School Facilities, Series 2003B,
5.125%, 8/01/23 - AMBAC Insured
1,000 Stafford County and Staunton Industrial Development Authority, 8/16 at 100.00 AAA 1,037,960
Virginia, Revenue Bonds, Virginia Municipal League and
Virginia Association of Counties Finance Program, Series 2006A,
5.000%, 8/01/23 - MBIA Insured
1,610 Stafford County Economic Development Authority, Virginia, 4/18 at 100.00 AAA 1,662,969
Public Project Lease Revenue Bonds, 5.000%, 4/01/33 -
AGC Insured (UB)
800 Virginia Beach Development Authority, Public Facilities Revenue 5/15 at 100.00 AA+ 839,088
Bonds, Series 2005A, 5.000%, 5/01/22
679 Virginia Gateway Community Development Authority, 3/13 at 102.00 N/R 684,276
Prince William County, Special Assessment Bonds, Series 2003,
6.375%, 3/01/30
2,540 Virginia Public School Authority, School Financing Bonds, 8/11 at 101.00 AA+ 2,674,036
1997 Resolution, Series 2001B, 5.000%, 8/01/19
570 Virginia Public School Authority, School Financing Bonds, 8/15 at 100.00 AA+ 621,243
1997 Resolution, Series 2005C, 5.000%, 8/01/17
1,265 Virginia Resources Authority, Infrastructure Revenue Bonds, 5/10 at 101.00 AA 1,286,922
Pooled Loan Bond Program, Series 2001D, 5.000%, 5/01/26
------------------------------------------------------------------------------------------------------------------------------------
17,269 Total Tax Obligation/Limited 16,531,225
------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 4.0% (2.6% OF TOTAL INVESTMENTS)
1,000 Metropolitan Washington D.C. Airports Authority, Airport System 10/12 at 100.00 AA- 992,300
Revenue Bonds, Series 2002A, 5.125%, 10/01/26 -
FGIC Insured (Alternative Minimum Tax)
1,500 Norfolk, Virginia, Parking System Revenue Bonds, Series 2005A, 2/15 at 100.00 AAA 1,536,630
5.000%, 2/01/23 - MBIA Insured
825 Virginia Port Authority, Revenue Bonds, Port Authority Facilities, 7/13 at 100.00 Aa3 779,807
Series 2006, 5.000%, 7/01/36 - FGIC Insured
(Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
3,325 Total Transportation 3,308,737
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 18.4% (12.1% OF TOTAL INVESTMENTS) (5)
165 Albemarle County Industrial Development Authority, Virginia, 1/12 at 100.00 N/R (5) 182,672
Residential Care Facility Revenue Bonds, Westminster Canterbury
of the Blue Ridge First Mortgage, Series 2001, 6.200%, 1/01/31
(Pre-refunded 1/01/12)
1,000 Bristol, Virginia, General Obligation Utility System Revenue No Opt. Call AAA 1,082,410
Bonds, Series 2002, 5.000%, 11/01/24 - FSA Insured (ETM)
62
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED (5) (continued)
$ 40 Henrico County Economic Development Authority, Virginia, 11/12 at 100.00 A3 (5) $ 44,327
Revenue Bonds, Bon Secours Health System Inc., Series 2002A,
5.600%, 11/15/30 (Pre-refunded 11/15/12)
Loudoun County Industrial Development Authority, Virginia,
Hospital Revenue Bonds, Loudoun Hospital Center, Series 2002A:
250 6.000%, 6/01/22 (Pre-refunded 6/01/12) 6/12 at 101.00 BBB (5) 280,633
600 6.100%, 6/01/32 (Pre-refunded 6/01/12) 6/12 at 101.00 BBB (5) 675,762
1,000 Newport News, Virginia, General Obligation Bonds, 11/13 at 100.00 AA (5) 1,095,760
Series 2003B, 5.000%, 11/01/22 (Pre-refunded 11/01/13)
2,750 Puerto Rico Infrastructure Financing Authority, Special Obligation 10/10 at 101.00 AAA 2,859,148
Bonds, Series 2000A, 5.500%, 10/01/40
1,100 Puerto Rico Public Buildings Authority, Guaranteed Government 7/12 at 100.00 BBB- (5) 1,176,340
Facilities Revenue Refunding Bonds, Series 2002D,
5.250%, 7/01/27 (Pre-refunded 7/01/12)
Puerto Rico Public Finance Corporation, Commonwealth
Appropriation Bonds, Series 2002E:
545 5.500%, 8/01/29 (Pre-refunded 2/01/12) 2/12 at 100.00 Aaa 585,466
455 5.500%, 8/01/29 (Pre-refunded 2/01/12) 2/12 at 100.00 AAA 488,784
475 Rockbridge County Industrial Development Authority, Virginia, 7/11 at 105.00 B2 (5) 533,145
Horse Center Revenue Refunding Bonds, Series 2001C,
6.850%, 7/15/21 (Pre-refunded 7/15/11)
1,260 Salem, Virginia, General Obligation Public Improvement Bonds, 1/12 at 100.00 Aa3 (5) 1,366,571
Series 2002, 5.375%, 1/01/23 (Pre-refunded 1/01/12)
1,000 Staunton, Virginia, General Obligation Bonds, Series 2004, 2/14 at 101.00 AAA 1,167,110
6.250%, 2/01/25 (Pre-refunded 2/01/14) - AMBAC Insured
Tobacco Settlement Financing Corporation of Virginia, Tobacco
Settlement Asset-Backed Bonds, Series 2005:
600 5.250%, 6/01/19 (Pre-refunded 6/01/12) 6/12 at 100.00 AAA 636,324
2,700 5.500%, 6/01/26 (Pre-refunded 6/01/15) 6/15 at 100.00 AAA 2,996,891
------------------------------------------------------------------------------------------------------------------------------------
13,940 Total U.S. Guaranteed 15,171,343
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 2.5% (1.7% OF TOTAL INVESTMENTS)
2,000 Mecklenburg County Industrial Development Authority, Virginia, 10/12 at 100.00 Baa1 2,092,080
Revenue Bonds, UAE Mecklenburg Cogeneration LP, Series 2002,
6.500%, 10/15/17 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 18.5% (12.1% OF TOTAL INVESTMENTS)
805 Fairfax County Water Authority, Virginia, Water Revenue 4/12 at 100.00 AAA 821,543
Refunding Bonds, Series 2002, 5.000%, 4/01/27
Henry County Public Service Authority, Virginia, Water and
Sewerage Revenue Refunding Bonds, Series 2001:
1,000 5.500%, 11/15/17 - FSA Insured No Opt. Call AAA 1,137,660
3,000 5.500%, 11/15/19 - FSA Insured No Opt. Call AAA 3,449,969
Norfolk, Virginia, Water Revenue Refunding Bonds, Series 2001:
1,130 5.000%, 11/01/18 - FGIC Insured 11/11 at 100.00 AA+ 1,176,556
1,190 5.000%, 11/01/19 - FGIC Insured 11/11 at 100.00 AA+ 1,239,028
1,450 5.000%, 11/01/23 - FGIC Insured 11/11 at 100.00 AA+ 1,498,213
1,525 5.000%, 11/01/24 - FGIC Insured 11/11 at 100.00 AA+ 1,567,792
1,000 Virginia Beach, Virginia, Water and Sewer System Revenue Bonds, 10/15 at 100.00 AA 1,028,370
Series 2005, 5.000%, 10/01/30
1,080 Virginia Resources Authority, Clean Water State Revolving Fund 10/17 at 100.00 AAA 1,076,890
Revenue Bonds, Series 2007, Residuals 1006,
9.690%, 10/01/29 (IF)
63
NNB
Nuveen Virginia Dividend Advantage Municipal Fund 2 (continued)
Portfolio of INVESTMENTS May 31, 2008
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER (continued)
$ 2,250 Virginia Resources Authority, Water and Sewerage System Revenue 5/11 at 101.00 AA $ 2,288,138
Bonds, Caroline County Public Improvements Project, Series 2001,
5.000%, 5/01/32
------------------------------------------------------------------------------------------------------------------------------------
14,430 Total Water and Sewer 15,284,159
------------------------------------------------------------------------------------------------------------------------------------
$ 125,509 Total Investments (cost $124,718,630) - 152.6% 125,838,873
=============-----------------------------------------------------------------------------------------------------------------------
Floating Rate Obligations - (4.1)% (3,385,000)
--------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 2.4% 2,017,697
--------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (50.9)% (6) (42,000,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $82,471,570
====================================================================================================================
(1) All percentages shown in the Portfolio of Investments are
based on net assets applicable to Common shares unless
otherwise noted.
(2) Optional Call Provisions (not covered by the report of
independent registered public accounting firm): Dates (month
and year) and prices of the earliest optional call or
redemption. There may be other call provisions at varying
prices at later dates. Certain mortgage-backed securities
may be subject to periodic principal paydowns.
(3) Ratings (not covered by the report of independent registered
public accounting firm): Using the higher of Standard &
Poor's Group ("Standard & Poor's") or Moody's Investor
Service, Inc. ("Moody's") rating. Ratings below BBB by
Standard & Poor's or Baa by Moody's are considered to be
below investment grade. The Portfolio of Investments may
reflect the ratings on certain bonds insured by ACA, AMBAC,
CIFG, FGIC, MBIA, RAAI and XLCA as of May 31, 2008. Please
see the Portfolio Manager's Commentary for an expanded
discussion of the affect on the Fund of changes to the
ratings of certain bonds in the portfolio resulting from
changes to the ratings of the underlying insurers both
during the period and after period end.
(4) The issuer has received a formal adverse determination from
the Internal Revenue Service (the "IRS") regarding the
tax-exempt status of the bonds' coupon payments. The Fund
will continue to treat coupon payments as tax-exempt income
until such time that it is formally determined that the
interest on the bonds should be treated as taxable.
(5) Backed by an escrow or trust containing sufficient U.S.
Government or U.S. Government agency securities which ensure
the timely payment of principal and interest. Such
investments are normally considered to be equivalent to AAA
rated securities.
(6) Preferred Shares, at Liquidation Value as a percentage of
total investments is (33.4)%.
N/R Not rated.
(ETM) Escrowed to maturity.
(IF) Inverse floating rate investment.
(UB) Underlying bond of an inverse floating rate trust reflected
as a financing transaction pursuant to the provisions of
SFAS No. 140.
See accompanying notes to financial statements.
64
Statement of
ASSETS & LIABILITIES
May 31, 2008
MARYLAND MARYLAND MARYLAND MARYLAND
PREMIUM DIVIDEND DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
(NMY) (NFM) (NZR) (NWI)
------------------------------------------------------------------------------------------------------------------------------------
ASSETS
Investments, at value (cost $223,871,270, $90,410,738,
$90,958,298 and $114,618,167, respectively) $226,571,270 $90,287,117 $91,200,061 $113,940,168
Cash 3,269,228 384,403 682,027 406,364
Receivables:
Interest 4,030,251 1,637,451 1,595,228 1,851,508
Investments sold 135,000 425,207 75,068 --
Other assets 7,256 7,955 4,657 4,777
------------------------------------------------------------------------------------------------------------------------------------
Total assets 234,013,005 92,742,133 93,557,041 116,202,817
------------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Floating Rate Obligations 3,250,000 1,338,000 1,335,000 1,657,000
Accrued expenses:
Management fees 122,730 37,460 33,890 38,257
Other 54,765 26,009 26,270 29,705
Common share dividends payable 478,184 229,674 229,710 261,905
Preferred share dividends payable 13,367 11,347 11,351 11,063
------------------------------------------------------------------------------------------------------------------------------------
Total liabilities 3,919,046 1,642,490 1,636,221 1,997,930
------------------------------------------------------------------------------------------------------------------------------------
Preferred shares, at liquidation value 79,100,000 32,000,000 32,000,000 39,000,000
====================================================================================================================================
Net assets applicable to Common shares $150,993,959 $59,099,643 $59,920,820 $ 75,204,887
====================================================================================================================================
Common shares outstanding 10,640,076 4,185,344 4,192,551 5,363,909
====================================================================================================================================
Net asset value per Common share outstanding (net assets applicable
to Common shares, divided by Common shares outstanding) $ 14.19 $ 14.12 $ 14.29 $ 14.02
====================================================================================================================================
NET ASSETS APPLICABLE TO COMMON SHARES CONSIST OF:
------------------------------------------------------------------------------------------------------------------------------------
Common shares, $.01 par value per share $ 106,401 $ 41,853 $ 41,926 $ 53,639
Paid-in surplus 147,794,543 59,392,514 59,488,757 75,714,486
Undistributed (Over-distribution of) net investment income 199,876 (27,384) (42,143) 38,423
Accumulated net realized gain (loss) from investments and
derivative transactions 193,139 (183,719) 190,517 76,338
Net unrealized appreciation (depreciation) of investments
and derivative transactions 2,700,000 (123,621) 241,763 (677,999)
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common shares $150,993,959 $59,099,643 $59,920,820 $ 75,204,887
====================================================================================================================================
Authorized shares:
Common Unlimited Unlimited Unlimited Unlimited
Preferred Unlimited Unlimited Unlimited Unlimited
====================================================================================================================================
See accompanying notes to financial statements.
65
Statement of
ASSETS & LIABILITIES (continued)
May 31, 2008
VIRGINIA VIRGINIA VIRGINIA
PREMIUM DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2
(NPV) (NGB) (NNB)
------------------------------------------------------------------------------------------------------------------------------------
ASSETS
Investments, at value (cost $190,378,324, $68,166,095
and $124,718,630, respectively) $192,171,994 $68,113,296 $125,838,873
Cash 2,706,979 1,327,004 578,454
Receivables:
Interest 3,029,939 1,061,310 1,849,725
Investments sold 220,000 90,000 --
Other assets 8,956 7,849 6,478
------------------------------------------------------------------------------------------------------------------------------------
Total assets 198,137,868 70,599,459 128,273,530
------------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Floating Rate Obligations 5,250,000 1,865,000 3,385,000
Accrued expenses:
Management fees 102,913 28,168 45,891
Other 47,898 20,886 31,532
Common share dividends payable 413,004 168,253 324,645
Preferred share dividends payable 11,748 5,048 14,892
------------------------------------------------------------------------------------------------------------------------------------
Total liabilities 5,825,563 2,087,355 3,801,960
------------------------------------------------------------------------------------------------------------------------------------
Preferred shares, at liquidation value 63,800,000 24,000,000 42,000,000
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common shares $128,512,305 $44,512,104 $ 82,471,570
====================================================================================================================================
Common shares outstanding 8,933,535 3,133,062 5,731,510
====================================================================================================================================
Net asset value per Common share outstanding (net assets applicable
to Common shares, divided by Common shares outstanding) $ 14.39 $ 14.21 $ 14.39
====================================================================================================================================
NET ASSETS APPLICABLE TO COMMON SHARES CONSIST OF:
------------------------------------------------------------------------------------------------------------------------------------
Common shares, $.01 par value per share $ 89,335 $ 31,331 $ 57,315
Paid-in surplus 125,791,437 44,441,742 81,360,370
Undistributed (Over-distribution of) net investment income 263,247 37,356 (107,261)
Accumulated net realized gain (loss) from investments and
derivative transactions 574,616 54,474 40,903
Net unrealized appreciation (depreciation) of investments
and derivative transactions 1,793,670 (52,799) 1,120,243
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common shares $128,512,305 $44,512,104 $ 82,471,570
====================================================================================================================================
Authorized shares:
Common Unlimited Unlimited Unlimited
Preferred Unlimited Unlimited Unlimited
====================================================================================================================================
See accompanying notes to financial statements.
66
Statement of
OPERATIONS
Year Ended May 31, 2008
MARYLAND MARYLAND MARYLAND MARYLAND
PREMIUM DIVIDEND DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
(NMY) (NFM) (NZR) (NWI)
------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME $11,245,471 $ 4,589,433 $ 4,527,208 $ 5,410,116
------------------------------------------------------------------------------------------------------------------------------------
EXPENSES
Management fees 1,455,543 582,153 587,568 729,031
Preferred shares - auction fees 198,021 80,110 80,110 97,632
Preferred shares - dividend disbursing agent fees 20,005 10,000 10,011 10,011
Shareholders' servicing agent fees and expenses 20,890 1,743 1,196 1,193
Interest expense on floating rate obligations 23,042 9,427 9,414 11,666
Custodian's fees and expenses 73,238 34,369 38,639 44,038
Trustees' fees and expenses 4,859 1,941 2,282 2,551
Professional fees 18,651 12,103 11,515 13,591
Shareholders' reports - printing and mailing expenses 45,611 20,462 20,056 24,327
Stock exchange listing fees 9,508 454 455 582
Investor relations expense 19,524 8,172 8,452 10,483
Other expenses 17,228 13,158 13,213 14,150
------------------------------------------------------------------------------------------------------------------------------------
Total expenses before custodian fee credit and expense reimbursement 1,906,120 774,092 782,911
959,255
Custodian fee credit (28,906) (11,482) (13,166) (13,308)
Expense reimbursement -- (168,471) (200,658) (306,399)
------------------------------------------------------------------------------------------------------------------------------------
Net expenses 1,877,214 594,139 569,087 639,548
------------------------------------------------------------------------------------------------------------------------------------
Net investment income 9,368,257 3,995,294 3,958,121 4,770,568
------------------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) from:
Investments (16,478) 306,804 268,320 203,469
Forward swaps 363,696 115,883 69,275 --
Change in net unrealized appreciation (depreciation) of:
Investments (4,721,520) (2,733,280) (2,314,193) (2,833,522)
Forward swaps -- 39,197 -- --
------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) (4,374,302) (2,271,396) (1,976,598) (2,630,053)
------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS
From net investment income (2,550,899) (1,005,532) (1,008,770) (1,213,876)
From accumulated net realized gains -- -- (42,112) --
------------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets applicable to Common shares
from distributions to Preferred shareholders (2,550,899) (1,005,532) (1,050,882) (1,213,876)
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets applicable to Common
shares from operations $ 2,443,056 $ 718,366 $ 930,641 $ 926,639
====================================================================================================================================
See accompanying notes to financial statements.
67
Statement of
OPERATIONS (continued)
Year Ended May 31, 2008
VIRGINIA VIRGINIA VIRGINIA
PREMIUM DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2
(NPV) (NGB) (NNB)
------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME $ 9,455,915 $ 3,430,444 $ 6,235,491
------------------------------------------------------------------------------------------------------------------------------------
EXPENSES
Management fees 1,221,701 439,332 797,202
Preferred shares - auction fees 159,719 60,081 105,144
Preferred shares - dividend disbursing agent fees 20,009 10,000 10,016
Shareholders' servicing agent fees and expenses 17,525 1,070 1,379
Interest expense on floating rate obligations 22,168 7,875 14,294
Custodian's fees and expenses 73,414 22,921 42,225
Trustees' fees and expenses 4,341 1,597 2,958
Professional fees 17,755 11,107 14,123
Shareholders' reports - printing and mailing expenses 38,392 14,633 23,205
Stock exchange listing fees 9,560 340 622
Investor relations expense 21,306 7,696 13,446
Other expenses 16,692 12,445 14,381
------------------------------------------------------------------------------------------------------------------------------------
Total expenses before custodian fee credit and expense reimbursement 1,622,582 589,097 1,038,995
Custodian fee credit (12,144) (11,565) (5,620)
Expense reimbursement -- (127,184) (282,908)
------------------------------------------------------------------------------------------------------------------------------------
Net expenses 1,610,438 450,348 750,467
------------------------------------------------------------------------------------------------------------------------------------
Net investment income 7,845,477 2,980,096 5,485,024
------------------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) from:
Investments 831,194 60,379 66,158
Forward swaps 109,060 -- --
Change in net unrealized appreciation (depreciation) of:
Investments (4,632,677) (2,198,596) (3,628,537)
Forward swaps 39,197 -- --
------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) (3,653,226) (2,138,217) (3,562,379)
------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS
From net investment income (1,939,555) (678,177) (1,366,380)
From accumulated net realized gains (258,821) (97,853) (102,026)
------------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets applicable to Common shares
from distributions to Preferred shareholders (2,198,376) (776,030) (1,468,406)
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets applicable to Common
shares from operations $ 1,993,875 $ 65,849 $ 454,239
====================================================================================================================================
See accompanying notes to financial statements.
68
Statement of
CHANGES in NET ASSETS
MARYLAND PREMIUM MARYLAND DIVIDEND MARYLAND DIVIDEND
INCOME (NMY) ADVANTAGE (NFM) ADVANTAGE 2 (NZR)
----------------------------- ---------------------------- -----------------------------
YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
5/31/08 5/31/07 5/31/08 5/31/07 5/31/08 5/31/07
------------------------------------------------------------------------------------------------------------------------------------
OPERATIONS
Net investment income $ 9,368,257 $ 9,341,191 $ 3,995,294 $ 3,974,853 $ 3,958,121 $ 3,931,107
Net realized gain (loss) from:
Investments (16,478) 19,964 306,804 137,858 268,320 176,432
Forward swaps 363,696 -- 115,883 -- 69,275 --
Change in net unrealized
appreciation
(depreciation) of:
Investments (4,721,520) 1,306,051 (2,733,280) 379,809 (2,314,193) 233,703
Forward swaps -- -- 39,197 (39,197) -- --
Distributions to
Preferred Shareholders:
From net investment income (2,550,899) (2,475,539) (1,005,532) (986,560) (1,008,770) (969,809)
From accumulated net
realized gains -- -- -- -- (42,112) --
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares
from operations 2,443,056 8,191,667 718,366 3,466,763 930,641 3,371,433
------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS
From net investment income (6,484,065) (7,114,011) (2,936,953) (3,120,217) (2,949,879) (3,190,218)
From accumulated net
realized gains -- -- -- -- (137,096) --
------------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets applicable to
Common shares from distributions
to Common shareholders (6,484,065) (7,114,011) (2,936,953) (3,120,217) (3,086,975) (3,190,218)
------------------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Net proceeds from Common shares issued
to shareholders due to reinvestment
of distributions 30,834 92,621 56,801 152,937 12,749 156,976
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares from
capital share transactions 30,834 92,621 56,801 152,937 12,749 156,976
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets
applicable to
Common shares (4,010,175) 1,170,277 (2,161,786) 499,483 (2,143,585) 338,191
Net assets applicable to Common
shares at the
beginning of year 155,004,134 153,833,857 61,261,429 60,761,946 62,064,405 61,726,214
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common
shares at the end of year $150,993,959 $155,004,134 $59,099,643 $61,261,429 $59,920,820 $62,064,405
====================================================================================================================================
Undistributed (Over-distribution of)
net investment income at the
end of year $ 199,876 $ (54,806) $ (27,384) $ (79,783) $ (42,143) $ (41,412)
====================================================================================================================================
See accompanying notes to financial statements.
69
Statement of
CHANGES in NET ASSETS (continued)
MARYLAND DIVIDEND VIRGINIA PREMIUM VIRGINIA DIVIDEND
ADVANTAGE 3 (NWI) INCOME (NPV) ADVANTAGE (NGB)
----------------------------- ---------------------------- -----------------------------
YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
5/31/08 5/31/07 5/31/08 5/31/07 5/31/08 5/31/07
------------------------------------------------------------------------------------------------------------------------------------
OPERATIONS
Net investment income $ 4,770,568 $ 4,702,597 $ 7,845,477 $ 7,820,312 $ 2,980,096 $ 3,009,500
Net realized gain (loss) from:
Investments 203,469 120,873 831,194 662,460 60,379 467,890
Forward swaps -- 33,256 109,060 -- -- --
Change in net unrealized
appreciation (depreciation) of:
Investments (2,833,522) 907,283 (4,632,677) 53,189 (2,198,596) (52,127)
Forward swaps -- (211,923) 39,197 (39,197) -- --
Distributions to
Preferred Shareholders:
From net investment income (1,213,876) (1,185,502) (1,939,555) (2,029,334) (678,177) (757,118)
From accumulated net
realized gains -- -- (258,821) (38,016) (97,853) --
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares
from operations 926,639 4,366,584 1,993,875 6,429,414 65,849 2,668,145
------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS
From net investment income (3,379,332) (3,570,184) (5,687,847) (6,247,006) (2,183,084) (2,464,212)
From accumulated net
realized gains -- -- (770,964) (191,731) (306,068) --
------------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets applicable to
Common shares from distributions
to Common shareholders (3,379,332) (3,570,184) (6,458,811) (6,438,737) (2,489,152) (2,464,212)
------------------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Net proceeds from Common shares issued
to shareholders due to reinvestment
of distributions 17,895 34,058 77,205 282,861 27,521 78,442
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares from
capital share transactions 17,895 34,058 77,205 282,861 27,521 78,442
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets
applicable to
Common shares (2,434,798) 830,458 (4,387,731) 273,538 (2,395,782) 282,375
Net assets applicable to Common
shares at the beginning
of year 77,639,685 76,809,227 132,900,036 132,626,498 46,907,886 46,625,511
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common
shares at the end of year $75,204,887 $77,639,685 $128,512,305 $132,900,036 $44,512,104 $46,907,886
====================================================================================================================================
Undistributed (Over-distribution of)
net investment income at the
end of year $ 38,423 $ (138,732) $ 263,247 $ 45,172 $ 37,356 $ (81,479)
====================================================================================================================================
See accompanying notes to financial statements.
70
VIRGINIA DIVIDEND
ADVANTAGE 2 (NNB)
-----------------------------
YEAR YEAR
ENDED ENDED
5/31/08 5/31/07
------------------------------------------------------------------------------------------------------------------------------------
OPERATIONS
Net investment income $ 5,485,024 $ 5,503,149
Net realized gain (loss) from:
Investments 66,158 658,811
Forward swaps -- --
Change in net unrealized appreciation (depreciation) of:
Investments (3,628,537) (33,280)
Forward Swaps -- --
Distributions to Preferred Shareholders:
From net investment income (1,366,380) (1,363,368)
From accumulated net realized gains (102,026) --
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares
from operations 454,239 4,765,312
------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS
From net investment income (4,107,601) (4,420,783)
From accumulated net realized gains (326,601) --
------------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets applicable to
Common shares from distributions
to Common shareholders (4,434,202) (4,420,783)
------------------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Net proceeds from Common shares issued
to shareholders due to reinvestment
of distributions 69,440 150,558
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares from
capital share transactions 69,440 150,558
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares (3,910,523) 495,087
Net assets applicable to Common
shares at the beginning of year 86,382,093 85,887,006
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common
shares at the end of year $82,471,570 $86,382,093
====================================================================================================================================
Undistributed (Over-distribution of)
net investment income at the
end of year $ (107,261) $ (117,479)
====================================================================================================================================
See accompanying notes to financial statements.
71
Notes to
FINANCIAL STATEMENTS
1. GENERAL INFORMATION AND SIGNIFICANT ACCOUNTING POLICIES
The funds covered in this report and their corresponding Common share stock
exchange symbols are Nuveen Maryland Premium Income Municipal Fund (NMY), Nuveen
Maryland Dividend Advantage Municipal Fund (NFM), Nuveen Maryland Dividend
Advantage Municipal Fund 2 (NZR), Nuveen Maryland Dividend Advantage Municipal
Fund 3 (NWI), Nuveen Virginia Premium Income Municipal Fund (NPV), Nuveen
Virginia Dividend Advantage Municipal Fund (NGB) and Nuveen Virginia Dividend
Advantage Municipal Fund 2 (NNB) (collectively, the "Funds"). Common shares of
Maryland Premium Income (NMY) and Virginia Premium Income (NPV) are traded on
the New York Stock Exchange while Common shares of Maryland Dividend Advantage
(NFM), Maryland Dividend Advantage 2 (NZR), Maryland Dividend Advantage 3 (NWI),
Virginia Dividend Advantage (NGB) and Virginia Dividend Advantage 2 (NNB) are
traded on the American Stock Exchange. The Funds are registered under the
Investment Company Act of 1940, as amended, as closed-end management investment
companies.
Each Fund seeks to provide current income exempt from both regular federal and
designated state income taxes by investing primarily in a diversified portfolio
of municipal obligations issued by state and local government authorities within
a single state or certain U.S. territories.
The following is a summary of significant accounting policies followed by the
Funds in the preparation of their financial statements in accordance with U.S.
generally accepted accounting principles.
Investment Valuation
The prices of municipal bonds in each Fund's investment portfolio are provided
by a pricing service approved by the Fund's Board of Trustees. When market price
quotes are not readily available (which is usually the case for municipal
securities), the pricing service may establish fair value based on yields or
prices of municipal bonds of comparable quality, type of issue, coupon, maturity
and rating, indications of value from securities dealers, evaluations of
anticipated cash flows or collateral and general market conditions. Prices of
forward swap contracts are also provided by an independent pricing service
approved by each Fund's Board of Trustees. If the pricing service is unable to
supply a price for a municipal bond or forward swap contract, each Fund may use
market quotes provided by major broker/dealers in such investments. If it is
determined that the market price for an investment or derivative instrument is
unavailable or inappropriate, the Board of Trustees of the Funds, or its
designee, may establish fair value in accordance with procedures established in
good faith by the Board of Trustees. Temporary investments in securities that
have variable rate and demand features qualifying them as short-term investments
are valued at amortized cost, which approximates market value.
Investment Transactions
Investment transactions are recorded on a trade date basis. Realized gains and
losses from transactions are determined on the specific identification method.
Investments purchased on a when-issued/delayed delivery basis may have extended
settlement periods. Any investments so purchased are subject to market
fluctuation during this period. The Funds have instructed the custodian to
segregate assets with a current value at least equal to the amount of the
when-issued/delayed delivery purchase commitments. At May 31, 2008, there were
no such outstanding purchase commitments in any of the 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.
Interest income also includes paydown gains and losses, if any.
72
Income Taxes
Each Fund is a separate taxpayer for federal income tax purposes. Each Fund
intends to distribute substantially all of its net investment income and net
capital gains to shareholders and to otherwise comply with the requirements of
Subchapter M of the Internal Revenue Code applicable to regulated investment
companies. Therefore, no federal income tax provision is required. Furthermore,
each Fund intends to satisfy conditions which will enable interest from
municipal securities, which is exempt from regular federal and designated state
income taxes, to retain such tax-exempt status when distributed to shareholders
of the Funds. Net realized capital gains and ordinary income distributions paid
by the Funds are subject to federal taxation.
Effective November 30, 2007, the Funds adopted Financial Accounting Standards
Board (FASB) Interpretation No. 48 "Accounting for Uncertainty in Income Taxes"
(FIN 48). FIN 48 provides guidance for how uncertain tax positions should be
recognized, measured, presented and disclosed in the financial statements. FIN
48 requires the affirmative evaluation of tax positions taken or expected to be
taken in the course of preparing the Funds' tax returns to determine whether it
is "more-likely-than-not" (i.e., a greater than 50-percent likelihood) of being
sustained by the applicable tax authority. Tax positions not deemed to meet the
more-likely-than-not threshold may result in a tax benefit or expense in the
current year.
Implementation of FIN 48 required management of the Funds to analyze all open
tax years, as defined by the statute of limitations, for all major
jurisdictions, which includes federal and certain states. Open tax years are
those that are open for examination by taxing authorities (i.e., generally the
last four tax year ends and the interim tax period since then). The Funds have
no examinations in progress.
For all open tax years and all major taxing jurisdictions through the end of the
reporting period, management of the Funds has reviewed all tax positions taken
or expected to be taken in the preparation of the Funds' tax returns and
concluded the adoption of FIN 48 resulted in no impact to the Funds' net assets
or results of operations as of and during the fiscal year ended May 31, 2008.
The Funds are also not aware of any tax positions for which it is reasonably
possible that the total amounts of unrecognized tax benefits will significantly
change in the next twelve months.
Dividends and Distributions to Common Shareholders
Dividends from tax-exempt net investment income are declared monthly. Net
realized capital gains and/or market discount from investment transactions, if
any, are distributed to shareholders at least annually. Furthermore, capital
gains are distributed only to the extent they exceed available capital loss
carryforwards.
Distributions to Common shareholders of tax-exempt net investment income, net
realized capital gains and/or market discount, if any, are recorded on the
ex-dividend date. The amount and timing of distributions are determined in
accordance with federal income tax regulations, which may differ from U.S.
generally accepted accounting principles.
Preferred Shares
The Funds have issued and outstanding Preferred shares, $25,000 stated value per
share, as a means of effecting financial leverage. Each Fund's Preferred shares
are issued in one or more Series. The dividend rate paid by the Funds on each
Series is determined every seven days, pursuant to a dutch auction process
overseen by the auction agent, and is payable at the end of each rate period.
The number of Preferred shares outstanding, by Series and in total, for each
Fund is as follows:
MARYLAND MARYLAND MARYLAND MARYLAND
PREMIUM DIVIDEND DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
(NMY) (NFM) (NZR) (NWI)
--------------------------------------------------------------------------------
Number of shares:
Series M -- 1,280 -- --
Series T -- -- -- 1,560
Series W 1,404 -- -- --
Series TH 1,760 -- -- --
Series F -- -- 1,280 --
--------------------------------------------------------------------------------
Total 3,164 1,280 1,280 1,560
================================================================================
73
Notes to
FINANCIAL STATEMENTS (continued)
VIRGINIA VIRGINIA VIRGINIA
PREMIUM DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2
(NPV) (NGB) (NNB)
--------------------------------------------------------------------------------
Number of shares:
Series M -- -- 1,680
Series T 832 -- --
Series W -- 960 --
Series TH 1,720 -- --
Series F -- -- --
--------------------------------------------------------------------------------
Total 2,552 960 1,680
================================================================================
Beginning in February 2008, more shares for sale were submitted in the regularly
scheduled auctions for the Preferred shares issued by the Funds than there were
offers to buy. This meant that these auctions "failed to clear," and that many
Preferred shareholders who wanted to sell their shares in these auctions were
unable to do so. Preferred shareholders unable to sell their shares received
distributions at the "maximum rate" applicable to failed auctions as calculated
in accordance with the pre-established terms of the Preferred shares.
These developments generally do not affect the management or investment policies
of the Funds. However, one implication of these auction failures for Common
shareholders is that the Funds' cost of leverage will likely be higher, at least
temporarily, than it otherwise would have been had the auctions continued to be
successful. As a result, the Funds' future Common share earnings may be lower
than they otherwise would have been.
Inverse Floating Rate Securities
Each Fund is authorized to invest in inverse floating rate securities. An
inverse floating rate security is created by depositing a municipal bond,
typically with a fixed interest rate, into a special purpose trust created by a
broker-dealer. In turn, this trust (a) issues floating rate certificates, in
face amounts equal to some fraction of the deposited bond's par amount or market
value, that typically pay short-term tax-exempt interest rates to third parties,
and (b) issues to a long-term investor (such as one of the Funds) an inverse
floating rate certificate (sometimes referred to as an "inverse floater") that
represents all remaining or residual interest in the trust. The income received
by the inverse floater holder varies inversely with the short-term rate paid to
the floating rate certificates' holders, and in most circumstances the inverse
floater holder bears substantially all of the underlying bond's downside
investment risk and also benefits disproportionately from any potential
appreciation of the underlying bond's value. The price of an inverse floating
rate security will be more volatile than that of the underlying bond because the
interest rate is dependent on not only the fixed coupon rate of the underlying
bond but also on the short-term interest paid on the floating rate certificates,
and because the inverse floating rate security essentially bears the risk of
loss of the greater face value of the underlying bond.
A Fund may purchase an inverse floating rate security in a secondary market
transaction without first owning the underlying bond (referred to as an
"externally-deposited inverse floater"), or instead by first selling a
fixed-rate bond to a broker-dealer for deposit into the special purpose trust
and receiving in turn the residual interest in the trust (referred to as a
"self-deposited inverse floater"). A Fund may also enter into shortfall and
forbearance agreements (sometimes referred to as a "recourse trust" or "credit
recovery swap") with a broker-dealer by which a Fund agrees to reimburse the
broker-dealer, in certain circumstances, for the difference between the
liquidation value of the fixed-rate bond held by the trust and the liquidation
value of the floating rate certificates, as well as any shortfalls in interest
cash flows. The inverse floater held by a Fund gives the Fund the right (a) to
cause the holders of the floating rate certificates to tender their notes at
par, and (b) to have the broker transfer the fixed-rate bond held by the trust
to the Fund, thereby collapsing the trust. An investment in an
externally-deposited inverse floater is identified in the Portfolio of
Investments as an "Inverse floating rate investment". An investment in a
self-deposited inverse floater, recourse trust or credit
74
recovery swap is accounted for as a financing transaction in accordance with
Statement of Financial Accounting Standards (SFAS) No. 140 "Accounting for
Transfers and Servicing of Financial Assets and Extinguishment of Liabilities".
In such instances, a fixed-rate bond deposited into a special purpose trust is
identified in the Portfolio of Investments as an "Underlying bond of an inverse
floating rate trust", with the Fund accounting for the short-term floating rate
certificates issued by the trust as "Floating rate obligations" on the Statement
of Assets and Liabilities. In addition, the Fund reflects in Investment Income
the entire earnings of the underlying bond and accounts for the related interest
paid to the holders of the short-term floating rate certificates as "Interest
expense on floating rate obligations" in the Statement of Operations.
During the fiscal year ended May 31, 2008, each Fund invested in externally
deposited inverse floaters and/or self-deposited inverse floaters.
The average floating rate obligations outstanding and average annual interest
rate and fees related to self-deposited inverse floaters during the fiscal year
ended May 31, 2008, were as follows:
MARYLAND MARYLAND MARYLAND MARYLAND
PREMIUM DIVIDEND DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
(NMY) (NFM) (NZR) (NWI)
------------------------------------------------------------------------------------------------------------------
Average floating rate obligations $862,432 $353,546 $352,948 $437,598
Average annual interest rate and fees 2.67% 2.67% 2.67% 2.67%
==================================================================================================================
VIRGINIA VIRGINIA VIRGINIA
PREMIUM DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2
(NPV) (NGB) (NNB)
------------------------------------------------------------------------------------------------------------------
Average floating rate obligations $982,582 $349,030 $633,552
Average annual interest rate and fees 2.26% 2.26% 2.26%
==================================================================================================================
Forward Swap Transactions
Each Fund is authorized to invest in forward interest rate swap transactions.
Each Fund's use of forward interest rate swap transactions is intended to help
the Fund manage its overall interest rate sensitivity, either shorter or longer,
generally to more closely align the Fund's interest rate sensitivity with that
of the broader municipal market. Forward interest rate swap transactions involve
each Fund's agreement with a counterparty to pay, in the future, a fixed or
variable rate payment in exchange for the counterparty paying the Fund a
variable or fixed rate payment, the accruals for which would begin at a
specified date in the future (the "effective date"). The amount of the payment
obligation is based on the notional amount of the forward swap contract and the
termination date of the swap (which is akin to a bond's maturity). The value of
the Fund's swap commitment would increase or decrease based primarily on the
extent to which long-term interest rates for bonds having a maturity of the
swap's termination date increases or decreases. The Funds may terminate a swap
contract prior to the effective date, at which point a realized gain or loss is
recognized. When a forward swap is terminated, it ordinarily does not involve
the delivery of securities or other underlying assets or principal, but rather
is settled in cash on a net basis. Each Fund intends, but is not obligated, to
terminate its forward swaps before the effective date. Accordingly, the risk of
loss with respect to the swap counterparty on such transactions is limited to
the credit risk associated with a counterparty failing to honor its commitment
to pay any realized gain to the Fund upon termination. To reduce such credit
risk, all counterparties are required to pledge collateral daily (based on the
daily valuation of each swap) on behalf of each Fund with a value approximately
equal to the amount of any unrealized gain above a pre-determined threshold.
Reciprocally, when any of the Funds have an unrealized loss on a swap contract,
the Funds have instructed the custodian to pledge assets of the Funds as
collateral with a value approximately equal to the amount of the unrealized loss
above a pre-determined threshold. Collateral pledges are monitored and
subsequently adjusted if and when the swap valuations fluctuate, either up or
down, by at least the predetermined threshold amount. Maryland Premium Income
(NMY), Maryland Dividend Advantage (NFM), Maryland Dividend Advantage 2 (NZR)
and Virginia Premium Income (NPV) were the only Funds to invest in forward
interest rate swap transactions during the fiscal year ended May 31, 2008.
Zero Coupon Securities
Each Fund is authorized to invest in zero coupon securities. A zero coupon
security does not pay a regular interest coupon to its holders during the life
of the security. Tax-exempt income to the holder of the security comes from
accretion of the difference between the original purchase price of the security
at issuance and the par value of the security at maturity and is effectively
paid at maturity. Such securities are included in the Portfolios of Investments
with a 0.000% coupon rate in their description. The market prices of zero coupon
securities generally are more volatile than the market prices of securities that
pay interest periodically.
75
Notes to
FINANCIAL STATEMENTS (continued)
Custodian Fee Credit
Each Fund has an arrangement with the custodian bank whereby certain custodian
fees and expenses are reduced by net credits earned on each Fund's cash on
deposit with the bank. Such deposit arrangements are an alternative to overnight
investments. Credits for cash balances may be offset by charges for any days on
which a Fund overdraws its account at the custodian bank.
Indemnifications
Under the Funds' organizational documents, their Officers and Trustees are
indemnified against certain liabilities arising out of the performance of their
duties to the Funds. In addition, in the normal course of business, the Funds
enter into contracts that provide general indemnifications to other parties. The
Funds' maximum exposure under these arrangements is unknown as this would
involve future claims that may be made against the Funds that have not yet
occurred. However, the Funds have not had prior claims or losses pursuant to
these contracts and expect the risk of loss to be remote.
Use of Estimates
The preparation of financial statements in conformity with U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of increases and
decreases in net assets applicable to Common shares from operations during the
reporting period. Actual results may differ from those estimates.
2. FUND SHARES
Transactions in Common shares were as follows:
MARYLAND PREMIUM MARYLAND DIVIDEND MARYLAND DIVIDEND
INCOME (NMY) ADVANTAGE (NFM) ADVANTAGE 2 (NZR)
--------------------- -------------------- --------------------
YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
5/31/08 5/31/07 5/31/08 5/31/07 5/31/08 5/31/07
------------------------------------------------------------------------------------------------------------------
Common shares issued to shareholders
due to reinvestment of distributions 2,122 6,252 3,983 9,782 863 9,920
==================================================================================================================
MARYLAND DIVIDEND VIRGINIA PREMIUM VIRGINIA DIVIDEND
ADVANTAGE 3 (NWI) INCOME (NPV) ADVANTAGE (NGB)
--------------------- -------------------- --------------------
YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
5/31/08 5/31/07 5/31/08 5/31/07 5/31/08 5/31/07
------------------------------------------------------------------------------------------------------------------
Common shares issued to shareholders
due to reinvestment of distributions 1,239 2,324 5,228 18,377 1,821 4,617
==================================================================================================================
VIRGINIA DIVIDEND
ADVANTAGE 2 (NNB)
--------------------
YEAR YEAR
ENDED ENDED
5/31/08 5/31/07
------------------------------------------------------------------------------------------------------------------
Common shares issued to shareholders
due to reinvestment of distributions 4,680 9,265
==================================================================================================================
76
3. INVESTMENT TRANSACTIONS
Purchases and sales (including maturities but excluding short-term investments
and derivative transactions) during the fiscal year ended May 31, 2008, were as
follows:
MARYLAND MARYLAND MARYLAND MARYLAND
PREMIUM DIVIDEND DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
(NMY) (NFM) (NZR) (NWI)
------------------------------------------------------------------------------------------------------------------
Purchases $32,021,857 $10,933,359 $12,113,937 $15,997,827
Sales and maturities 33,847,662 11,860,939 12,785,289 $15,335,019
==================================================================================================================
VIRGINIA VIRGINIA VIRGINIA
PREMIUM DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2
(NPV) (NGB) (NNB)
------------------------------------------------------------------------------------------------------------------
Purchases $27,724,865 $7,232,317 $13,129,575
Sales and maturities 29,324,257 6,594,952 12,397,952
==================================================================================================================
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 taxable market discount,
timing differences in recognizing certain gains and losses on investment
transactions and the treatment of investments in inverse floating rate
transactions subject to SFAS No. 140. To the extent that differences arise that
are permanent in nature, such amounts are reclassified within the capital
accounts on the Statement of Assets and Liabilities presented in the annual
report, based on their federal tax basis treatment; temporary differences do not
require reclassification. Temporary and permanent differences do not impact the
net asset values of the Funds.
At May 31, 2008, the cost of investments was as follows:
MARYLAND MARYLAND MARYLAND MARYLAND
PREMIUM DIVIDEND DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
(NMY) (NFM) (NZR) (NWI)
------------------------------------------------------------------------------------------------
Cost of investments $220,689,330 $89,023,167 $89,574,831 $112,968,527
================================================================================================
VIRGINIA VIRGINIA VIRGINIA
PREMIUM DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2
(NPV) (NGB) (NNB)
------------------------------------------------------------------------------------------------
Cost of investments $184,760,632 $66,288,495 $121,288,853
================================================================================================
Gross unrealized appreciation and gross unrealized depreciation of investments
at May 31, 2008, were as follows:
MARYLAND MARYLAND MARYLAND MARYLAND
PREMIUM DIVIDEND DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
(NMY) (NFM) (NZR) (NWI)
------------------------------------------------------------------------------------------------------------------
Gross unrealized:
Appreciation $ 6,995,021 $ 1,817,592 $ 2,096,389 $ 1,767,524
Depreciation (4,362,877) (1,891,519) (1,806,159) (2,452,802)
------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments $ 2,632,144 $ (73,927) $ 290,230 $ (685,278)
==================================================================================================================
VIRGINIA VIRGINIA VIRGINIA
PREMIUM DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2
(NPV) (NGB) (NNB)
------------------------------------------------------------------------------------------------------------------
Gross unrealized:
Appreciation $ 6,184,522 $ 1,732,118 $ 3,928,443
Depreciation (4,023,160) (1,771,988) (2,763,752)
------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments $ 2,161,362 $ (39,870) $ 1,164,691
==================================================================================================================
77
Notes to
FINANCIAL STATEMENTS (continued)
The tax components of undistributed net tax-exempt income, net ordinary income
and net long-term capital gains at May 31, 2008, the Funds' tax year end, were
as follows:
MARYLAND MARYLAND MARYLAND MARYLAND
PREMIUM DIVIDEND DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
(NMY) (NFM) (NZR) (NWI)
------------------------------------------------------------------------------------------------------------------
Undistributed net tax-exempt income * $603,666 $170,872 $157,399 $283,959
Undistributed net ordinary income ** 77,161 8,237 73,371 7,997
Undistributed net long-term capital gains 320,091 -- 125,752 122,752
==================================================================================================================
VIRGINIA VIRGINIA VIRGINIA
PREMIUM DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2
(NPV) (NGB) (NNB)
------------------------------------------------------------------------------------------------------------------
Undistributed net tax-exempt income * $380,781 $206,494 $177,008
Undistributed net ordinary income ** 109,298 -- 18,227
Undistributed net long-term capital gains 465,316 54,477 56,020
==================================================================================================================
* Undistributed net tax-exempt income (on a tax basis) has not been reduced
for the dividend declared on May 1, 2008, paid on June 2, 2008.
** 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 Funds' tax years ended May
31, 2008 and May 31, 2007, was designated for purposes of the dividends paid
deduction as follows:
MARYLAND MARYLAND MARYLAND MARYLAND
PREMIUM DIVIDEND DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
2008 (NMY) (NFM) (NZR) (NWI)
------------------------------------------------------------------------------------------------------------------
Distributions from net tax-exempt income *** $9,009,735 $3,953,181 $3,960,918 $4,602,748
Distributions from net ordinary income ** 106,313 -- 8,769 3,541
Distributions from net long-term capital gains **** -- -- 179,208 --
==================================================================================================================
VIRGINIA VIRGINIA VIRGINIA
PREMIUM DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2
2008 (NPV) (NGB) (NNB)
------------------------------------------------------------------------------------------------------------------
Distributions from net tax-exempt income *** $7,666,828 $2,850,082 $5,465,830
Distributions from net ordinary income ** 8,291 28,583 21,724
Distributions from net long-term capital gains **** 1,029,785 403,921 428,627
==================================================================================================================
** Net ordinary income consists of taxable market discount income and net
short-term capital gains, if any.
*** The Funds hereby designate these amounts paid during the fiscal year ended
May 31, 2008, as Exempt Interest Dividends.
**** The Funds designated as a long-term capital gain dividend, pursuant to the
Internal Revenue Code Section 852(b)(3), the amount necessary to reduce
earnings and profits of the Funds related to net capital gain to zero for
the tax year ended May 31, 2008.
78
MARYLAND MARYLAND MARYLAND MARYLAND
PREMIUM DIVIDEND DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
2007 (NMY) (NFM) (NZR) (NWI)
------------------------------------------------------------------------------------------------------------------
Distributions from net tax-exempt income $9,664,847 $4,128,452 $4,166,021 $4,771,527
Distributions from net ordinary income ** -- -- 6,683 --
Distributions from net long-term capital gains -- -- 562 --
==================================================================================================================
VIRGINIA VIRGINIA VIRGINIA
PREMIUM DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2
2007 (NPV) (NGB) (NNB)
------------------------------------------------------------------------------------------------------------------
Distributions from net tax-exempt income $8,317,694 $3,260,186 $5,809,897
Distributions from net ordinary income ** -- -- --
Distributions from net long-term capital gains 229,747 -- --
==================================================================================================================
** Net ordinary income consists of taxable market discount income and net
short-term capital gains, if any.
At May 31, 2008, the Funds' tax year end, Maryland Dividend Advantage (NFM) had
unused capital loss carryforwards of $183,719 available for federal income tax
purposes to be applied against future capital gains, if any. If not applied,
$106,052, $15,613 and $62,504 of the carryforward will expire in the years ended
May 31, 2012, 2013 and 2014, respectively.
Virginia Dividend Advantage 2 (NNB) elected to defer net realized losses from
investments incurred from November 1, 2007 through May 31, 2008 ("post-October
losses") in accordance with federal income tax regulations. Post-October losses
of $6,148 were treated as having arisen on the first day of the following fiscal
year.
5. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Each Fund's management fee is separated into two components - a complex-level
component, based on the aggregate amount of all fund assets managed by Nuveen
Asset Management (the "Adviser"), a wholly owned subsidiary of Nuveen
Investments, Inc. ("Nuveen"), and a specific fund-level component, based only on
the amount of assets within each individual Fund. This pricing structure enables
Nuveen fund shareholders to benefit from growth in the assets within each
individual fund as well as from growth in the amount of complex-wide assets
managed by the Adviser.
The annual fund-level fee, payable monthly, for each Fund is based upon the
average daily net assets (including net assets attributable to Preferred shares)
of each Fund as follows:
AVERAGE DAILY NET ASSETS MARYLAND PREMIUM INCOME (NMY)
(INCLUDING NET ASSETS VIRGINIA PREMIUM INCOME (NPV)
ATTRIBUTABLE TO PREFERRED SHARES) FUND-LEVEL FEE RATE
--------------------------------------------------------------------------------
For the first $125 million .4500%
For the next $125 million .4375
For the next $250 million .4250
For the next $500 million .4125
For the next $1 billion .4000
For the next $3 billion .3875
For net assets over $5 billion .3750
================================================================================
79
Notes to
FINANCIAL STATEMENTS (continued)
MARYLAND DIVIDEND ADVANTAGE (NFM)
MARYLAND DIVIDEND ADVANTAGE 2 (NZR)
MARYLAND DIVIDEND ADVANTAGE 3 (NWI)
AVERAGE DAILY NET ASSETS VIRGINIA DIVIDEND ADVANTAGE (NGB)
(INCLUDING NET ASSETS VIRGINIA DIVIDEND ADVANTAGE 2 (NNB)
ATTRIBUTABLE TO PREFERRED SHARES) FUND-LEVEL FEE RATE
--------------------------------------------------------------------------------
For the first $125 million .4500%
For the next $125 million .4375
For the next $250 million .4250
For the next $500 million .4125
For the next $1 billion .4000
For net assets over $2 billion .3750
================================================================================
The annual complex-level fee, payable monthly, which is additive to the
fund-level fee, for all Nuveen sponsored funds in the U.S., is based on the
aggregate amount of total fund assets managed as stated in the tables below. As
of May 31, 2008, the complex-level fee rate was .1851%.
Effective August 20, 2007, the complex-level fee schedule is as follows:
COMPLEX-LEVEL ASSET BREAKPOINT LEVEL (1) EFFECTIVE RATE AT BREAKPOINT LEVEL
--------------------------------------------------------------------------------
$55 billion .2000%
$56 billion .1996
$57 billion .1989
$60 billion .1961
$63 billion .1931
$66 billion .1900
$71 billion .1851
$76 billion .1806
$80 billion .1773
$91 billion .1691
$125 billion .1599
$200 billion .1505
$250 billion .1469
$300 billion .1445
================================================================================
80
Prior to August 20, 2007, the complex-level fee schedule was as follows:
COMPLEX-LEVEL ASSET BREAKPOINT LEVEL (1) EFFECTIVE RATE AT BREAKPOINT LEVEL
--------------------------------------------------------------------------------
$55 billion .2000%
$56 billion .1996
$57 billion .1989
$60 billion .1961
$63 billion .1931
$66 billion .1900
$71 billion .1851
$76 billion .1806
$80 billion .1773
$91 billion .1698
$125 billion .1617
$200 billion .1536
$250 billion .1509
$300 billion .1490
================================================================================
(1) The complex-level fee component of the management fee for the funds is
calculated based upon the aggregate Managed Assets ("Managed Assets" means
the average daily net assets of each fund including assets attributable to
preferred stock issued by or borrowings by the Nuveen funds) of
Nuveen-sponsored funds in the U.S.
The management fee compensates the Adviser for overall investment advisory and
administrative services and general office facilities. The Funds pay no
compensation directly to those of its Trustees who are affiliated with the
Adviser or to its Officers, all of whom receive remuneration for their services
to the Funds from the Adviser or its affiliates. The Board of Trustees has
adopted a deferred compensation plan for independent Trustees that enables
Trustees to elect to defer receipt of all or a portion of the annual
compensation they are entitled to receive from certain Nuveen advised funds.
Under the plan, deferred amounts are treated as though equal dollar amounts had
been invested in shares of select Nuveen advised funds.
For the first ten years of Maryland Dividend Advantage's (NFM) and Virginia
Dividend Advantage's (NGB) operations, the Adviser has agreed to reimburse the
Funds, as a percentage of average daily net assets (including net assets
attributable to Preferred shares), for fees and expenses in the amounts and for
the time periods set forth below:
YEAR ENDING YEAR ENDING
JANUARY 31, JANUARY 31,
--------------------------------------------------------------------------------
2001* .30% 2007 .25%
2002 .30 2008 .20
2003 .30 2009 .15
2004 .30 2010 .10
2005 .30 2011 .05
2006 .30
================================================================================
* From the commencement of operations.
81
Notes to
FINANCIAL STATEMENTS (continued)
The Adviser has not agreed to reimburse Maryland Dividend Advantage (NFM) and
Virginia Dividend Advantage (NGB) for any portion of their fees and expenses
beyond January 31, 2011.
For the first ten years of Maryland Dividend Advantage 2's (NZR) operations, the
Adviser has agreed to reimburse the Fund, as a percentage of average daily net
assets (including net assets attributable to Preferred shares), for fees and
expenses in the amounts and for the time periods set forth below:
YEAR ENDING YEAR ENDING
SEPTEMBER 30, SEPTEMBER 30,
--------------------------------------------------------------------------------
2001* .30% 2007 .25%
2002 .30 2008 .20
2003 .30 2009 .15
2004 .30 2010 .10
2005 .30 2011 .05
2006 .30
================================================================================
* From the commencement of operations.
The Adviser has not agreed to reimburse Maryland Dividend Advantage 2 (NZR) for
any portion of its fees and expenses beyond September 30, 2011.
For the first eight years of Maryland Dividend Advantage 3's (NWI) operations,
the Adviser has agreed to reimburse the Fund, as a percentage of average daily
net assets (including net assets attributable to Preferred shares), for fees and
expenses in the amounts and for the time periods set forth below:
YEAR ENDING YEAR ENDING
SEPTEMBER 30, SEPTEMBER 30,
--------------------------------------------------------------------------------
2002* .32% 2007 .32%
2003 .32 2008 .24
2004 .32 2009 .16
2005 .32 2010 .08
2006 .32
================================================================================
* From the commencement of operations.
The Adviser has not agreed to reimburse Maryland Dividend Advantage 3 (NWI) for
any portion of its fees and expenses beyond September 30, 2010.
82
For the first ten years of Virginia Dividend Advantage 2's (NNB) operations, the
Adviser has agreed to reimburse the Fund, as a percentage of average daily net
assets (including net assets attributable to Preferred shares), for fees and
expenses in the amounts and for the time periods set forth below:
YEAR ENDING YEAR ENDING
NOVEMBER 30, NOVEMBER 30,
--------------------------------------------------------------------------------
2001* .30% 2007 .25%
2002 .30 2008 .20
2003 .30 2009 .15
2004 .30 2010 .10
2005 .30 2011 .05
2006 .30
================================================================================
* From the commencement of operations.
The Adviser has not agreed to reimburse Virginia Dividend Advantage 2 (NNB) for
any portion of its fees and expenses beyond November 30, 2011.
Agreement and Plan of Merger
On June 20, 2007, Nuveen Investments announced that it had entered into a
definitive Agreement and Plan of Merger ("Merger Agreement") with Windy City
Investments, Inc. ("Windy City"), a corporation formed by investors led by
Madison Dearborn Partners, LLC ("Madison Dearborn"), pursuant to which Windy
City would acquire Nuveen Investments. Madison Dearborn is a private equity
investment firm based in Chicago, Illinois. The merger was consummated on
November 13, 2007.
The consummation of the merger was deemed to be an "assignment" (as that term is
defined in the Investment Company Act of 1940) of the investment management
agreement between each Fund and the Adviser, and resulted in the automatic
termination of each Fund's agreement. The Board of Trustees of each Fund
considered and approved a new investment management agreement with the Adviser
on the same terms as the previous agreement. Each new ongoing agreement, was
approved by the shareholders of each Fund and took effect on November 13, 2007.
The investors led by Madison Dearborn includes an affiliate of Merrill Lynch. As
a result, Merrill Lynch is an indirect "affiliated person" (as that term is
defined in the Investment Company Act of 1940) of each Fund. Certain conflicts
of interest may arise as a result of such indirect affiliation. For example, the
Funds are generally prohibited from entering into principal transactions with
Merrill Lynch and its affiliates. The Adviser does not believe that any such
prohibitions or limitations as a result of Merrill Lynch's affiliation will
significantly impact the ability of the Funds to pursue their investment
objectives and policies.
6. NEW ACCOUNTING PRONOUNCEMENTS
Financial Accounting Standards Board Statement of Financial Accounting
Standards No. 157
In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements." This
standard establishes a single authoritative definition of fair value, sets out a
framework for measuring fair value and requires additional disclosures about
fair value measurements. SFAS No. 157 applies to fair value measurements already
required or permitted by existing standards. SFAS No. 157 is effective for
financial statements issued for fiscal years beginning after November 15, 2007,
and interim periods within those fiscal years. The changes to current generally
accepted accounting principles from the application of this standard relate to
the definition of fair value, the methods used to measure fair value, and the
expanded disclosures about fair value measurements. As of May 31, 2008,
management does not believe the adoption of SFAS No. 157 will impact the
financial statement amounts; however, additional disclosures may be required
about the inputs used to develop the measurements and the effect of certain of
the measurements included within the Statement of Operations for the period.
Financial Accounting Standards Board Statement of Financial Accounting
Standards No. 161
In March 2008, the FASB issued SFAS No. 161, "Disclosures about Derivative
Instruments and Hedging Activities." This standard is intended to enhance
financial statement disclosures for derivative instruments and hedging
activities and enable investors to understand: a) how and why a fund uses
derivative instruments, b) how derivative instruments and related hedge items
are accounted for, and c) how derivative instruments and related hedge items
affect a fund's financial position, results of operations and cash flows. SFAS
No. 161 is effective for financial statements issued for fiscal years and
interim periods beginning after November 15, 2008. As of May 31, 2008,
management does not believe the adoption of SFAS No. 161 will impact the
financial statement amounts; however, additional footnote disclosures may be
required about the use of derivative instruments and hedging items.
83
Notes to
FINANCIAL STATEMENTS (continued)
7. SUBSEQUENT EVENTS
Distributions to Common Shareholders
The Funds declared Common share dividend distributions from their tax-exempt net
investment income which were paid on July 1, 2008, to shareholders of record on
June 15, 2008, as follows:
MARYLAND MARYLAND MARYLAND MARYLAND
PREMIUM DIVIDEND DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
(NMY) (NFM) (NZR) (NWI)
--------------------------------------------------------------------------------
Dividend per share $.0495 $.0585 $.0585 $.0525
================================================================================
VIRGINIA VIRGINIA VIRGINIA
PREMIUM DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2
(NPV) (NGB) (NNB)
--------------------------------------------------------------------------------
Dividend per share $.0530 $.0565 $.0595
================================================================================
Auction Rate Preferred Shares (ARPS)
On June 11, 2008, Nuveen announced the Fund Board's approval of plans to use
tender option bonds (TOBs), also known as floating rate securities, to refinance
a portion of the municipal funds' outstanding ARPS, whose auctions have been
failing for several months, including an initial phase of approximately $1
billion in forty-one funds. On June 26, 2008, thirteen municipal funds (none of
which are included in this shareholder report) issued par redemption notices for
a portion of their auction-rate securities aggregating approximately $580
million.
84
Financial
HIGHLIGHTS
85
Financial
HIGHLIGHTS
Selected data for a Common share outstanding throughout each period:
Investment Operations Less Distributions
------------------------------------------------------------------ ---------------------------------
Distributions Distributions
from Net from Net
Beginning Investment Capital Investment Capital
Common Net Income to Gains to Income to Gains to
Share Net Realized/ Preferred Preferred Common Common
Net Asset Investment Unrealized Share- Share- Share- Share-
Value Income Gain (Loss) holders+ holders+ Total holders holders Total
====================================================================================================================================
MARYLAND PREMIUM INCOME (NMY)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
2008 $14.57 $ .88 $ (.41) $(.24) $ -- $ .23 $(.61) $ -- $(.61)
2007 14.47 .88 .12 (.23) -- .77 (.67) -- (.67)
2006 15.12 .89 (.56) (.18) -- .15 (.78) (.02) (.80)
2005 14.28 .92 .92 (.10) -- 1.74 (.90) -- (.90)
2004 15.10 .96 (.81) (.06) -- .09 (.91) -- (.91)
MARYLAND DIVIDEND ADVANTAGE (NFM)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
2008 14.65 .95 (.54) (.24) -- .17 (.70) -- (.70)
2007 14.57 .95 .12 (.24) -- .83 (.75) -- (.75)
2006 15.13 .95 (.47) (.19) -- .29 (.85) -- (.85)
2005 14.43 .98 .75 (.10) -- 1.63 (.93) -- (.93)
2004 15.47 1.01 (1.07) (.05) -- (.11) (.93) -- (.93)
====================================================================================================================================
Total Returns
----------------------
Based
Ending on
Common Based Common
Share Ending on Share Net
Net Asset Market Market Asset
Value Value Value* Value*
============================================================================
MARYLAND PREMIUM INCOME (NMY)
----------------------------------------------------------------------------
Year Ended 5/31:
2008 $14.19 $13.10 (7.55)% 1.63%
2007 14.57 14.84 6.96 5.35
2006 14.47 14.52 (2.94) 1.08
2005 15.12 15.78 15.64 12.52
2004 14.28 14.45 (10.77) .64
MARYLAND DIVIDEND ADVANTAGE (NFM)
----------------------------------------------------------------------------
Year Ended 5/31:
2008 14.12 14.19 (2.31) 1.25
2007 14.65 15.28 5.51 5.74
2006 14.57 15.19 2.51 1.95
2005 15.13 15.63 6.22 11.60
2004 14.43 15.62 2.99 (.69)
============================================================================
Ratios/Supplemental Data
-------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets Ratios to Average Net Assets
Applicable to Common Shares Applicable to Common Shares
Before Credit/Reimbursement After Credit/Reimbursement***
------------------------------------------ -------------------------------------------
Ending
Net
Assets
Applicable Expenses Expenses Net Expenses Expenses Net Portfolio
to Common Including Excluding Investment Including Excluding Investment Turnover
Shares (000) Interest++(a) Interest++(a) Income++ Interest++(a) Interest++(a) Income++ Rate
====================================================================================================================================
MARYLAND PREMIUM INCOME (NMY)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
2008 $150,994 1.25% 1.24% 6.13% 1.23% 1.22% 6.15% 14%
2007 155,004 1.27 1.23 5.95 1.26 1.22 5.96 13
2006 153,834 1.23 1.23 6.05 1.21 1.21 6.07 13
2005 160,496 1.24 1.24 6.22 1.23 1.23 6.22 10
2004 151,107 1.24 1.24 6.54 1.23 1.23 6.55 16
MARYLAND DIVIDEND ADVANTAGE (NFM)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
2008 59,100 1.30 1.28 6.39 .99 .98 6.69 12
2007 61,261 1.30 1.26 6.06 .93 .89 6.43 12
2006 60,762 1.26 1.26 5.99 .81 .81 6.44 14
2005 63,051 1.26 1.26 6.11 .79 .79 6.57 11
2004 60,041 1.24 1.24 6.34 .78 .78 6.80 10
====================================================================================================================================
Floating Rate Obligations
Preferred Shares at End of Period at End of Period
-------------------------------------- -------------------------
Aggregate Liquidation Aggregate
Amount and Market Asset Amount Asset
Outstanding Value Coverage Outstanding Coverage
(000) Per Share Per Share (000) Per $1,000
================================================================================
MARYLAND PREMIUM INCOME (NMY)
--------------------------------------------------------------------------------
Year Ended 5/31:
2008 $79,100 $25,000 $72,722 $3,250 $71,798
2007 79,100 25,000 73,990 2,800 84,609
2006 79,100 25,000 73,620 -- --
2005 79,100 25,000 75,726 -- --
2004 79,100 25,000 72,758 -- --
MARYLAND DIVIDEND ADVANTAGE (NFM)
--------------------------------------------------------------------------------
Year Ended 5/31:
2008 32,000 25,000 71,172 1,338 69,086
2007 32,000 25,000 72,860 1,133 83,314
2006 32,000 25,000 72,470 -- --
2005 32,000 25,000 74,259 -- --
2004 32,000 25,000 71,907 -- --
================================================================================
* Total Return on Market Value is the combination of changes in the market
price per share and the effect of reinvested dividend income and reinvested
capital gains distributions, if any, at the average price paid per share at
the time of reinvestment. The last dividend declared in the period, which
is typically paid on the first business day of the following month, is
assumed to be reinvested at the ending market price. The actual
reinvestment for the last dividend declared in the period may take place
over several days, and in some instances may not be based on the market
price, so the actual reinvestment price may be different from the price
used in the calculation. Total returns are not annualized.
Total Return on Common Share Net Asset Value is the combination of changes
in Common share net asset value, reinvested dividend income at net asset
value and reinvested capital gains distributions at net asset value, if
any. The last dividend declared in the period, which is typically paid on
the first business day of the following month, is assumed to be reinvested
at the ending net asset value. The actual reinvest price for the last
dividend declared in the period may often be based on the Fund's market
price (and not its net asset value), and therefore may be different from
the price used in calculation. Total returns are not annualized.
** After custodian fee credit and expense reimbursement, where applicable.
+ The amounts shown are based on Common share equivalents.
++ Ratios do not reflect the effect of dividend payments to Preferred
shareholders; income ratios reflect income earned on assets attributable to
Preferred shares.
(a) Interest expense arises from the application of SFAS No. 140 to certain
inverse floating rate transactions entered into by the Fund as more fully
described in Footnote 1 - Inverse Floating Rate Securities.
See accompanying notes to financial statements.
86-87 spread
Financial
HIGHLIGHTS (continued)
Selected data for a Common share outstanding throughout each period:
Investment Operations Less Distributions
------------------------------------------------------------------ ---------------------------------
Distributions Distributions
from Net from Net
Beginning Investment Capital Investment Capital
Common Net Income to Gains to Income to Gains to
Share Net Realized/ Preferred Preferred Common Common
Net Asset Investment Unrealized Share- Share- Share- Share-
Value Income Gain (Loss) holders+ holders+ Total holders holders Total
====================================================================================================================================
MARYLAND DIVIDEND ADVANTAGE 2 (NZR)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
2008 $14.81 $.94 $ (.48) $(.24) $(.01) $ .21 $(.70) $(.03) $(.73)
2007 14.76 .94 .10 (.23) -- .81 (.76) -- (.76)
2006 15.45 .94 (.59) (.18) -- .17 (.83) (.03) (.86)
2005 14.64 .94 .90 (.09) -- 1.75 (.88) (.06) (.94)
2004 15.71 .96 (1.08) (.06) -- (.18) (.87) (.02) (.89)
MARYLAND DIVIDEND ADVANTAGE 3 (NWI)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
2008 14.48 .89 (.49) (.23) -- .17 (.63) -- (.63)
2007 14.33 .88 .16 (.22) -- .82 (.67) -- (.67)
2006 14.82 .86 (.46) (.18) -- .22 (.71) -- (.71)
2005 13.88 .86 .97 (.10) -- 1.73 (.78) (.01) (.79)
2004 14.89 .87 (1.03) (.06) -- (.22) (.79) -- (.79)
====================================================================================================================================
Total Returns
----------------------
Based
Ending on
Common Based Common
Share Ending on Share Net
Net Asset Market Market Asset
Value Value Value* Value*
=========================================================================
MARYLAND DIVIDEND ADVANTAGE 2 (NZR)
-------------------------------------------------------------------------
Year Ended 5/31:
2008 $14.29 $14.25 (2.30)% 1.54%
2007 14.81 15.38 9.32 5.56
2006 14.76 14.76 1.13 1.14
2005 15.45 15.41 14.71 12.22
2004 14.64 14.28 (2.90) (1.16)
MARYLAND DIVIDEND ADVANTAGE 3 (NWI)
-------------------------------------------------------------------------
Year Ended 5/31:
2008 14.02 13.01 (7.38) 1.24
2007 14.48 14.74 11.47 5.75
2006 14.33 13.85 1.09 1.55
2005 14.82 14.40 14.98 12.67
2004 13.88 13.24 (5.97) (1.51)
=========================================================================
Ratios/Supplemental Data
------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets Ratios to Average Net Assets
Applicable to Common Shares Applicable to Common Shares
Before Credit/Reimbursement After Credit/Reimbursement**
------------------------------------------ -------------------------------------------
Ending
Net
Assets
Applicable Expenses Expenses Net Expenses Expenses Net Portfolio
to Common Including Excluding Investment Including Excluding Investment Turnover
Shares (000) Interest++(a) Interest++(a) Income++ Interest++(a) Interest++(a) Income++ Rate
====================================================================================================================================
MARYLAND DIVIDEND ADVANTAGE 2 (NZR)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
2008 $59,921 1.29% 1.28% 6.18% .94% .92% 6.53% 13%
2007 62,064 1.32 1.28 5.86 .90 .86 6.28 10
2006 61,726 1.25 1.25 5.76 .77 .77 6.23 15
2005 64,500 1.23 1.23 5.74 .77 .77 6.20 10
2004 61,064 1.24 1.24 5.90 .78 .78 6.36 11
MARYLAND DIVIDEND ADVANTAGE 3 (NWI)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
2008 75,205 1.26 1.25 5.86 .84 .83 6.29 13
2007 77,640 1.28 1.24 5.52 .79 .75 6.01 11
2006 76,809 1.23 1.23 5.41 .73 .73 5.91 14
2005 79,443 1.23 1.23 5.40 .74 .74 5.89 12
2004 74,369 1.22 1.22 5.59 .73 .73 6.08 15
====================================================================================================================================
Floating Rate Obligations
Preferred Shares at End of Period at End of Period
-------------------------------------- -------------------------
Aggregate Liquidation Aggregate
Amount and Market Asset Amount Asset
Outstanding Value Coverage Outstanding Coverage
(000) Per Share Per Share (000) Per $1,000
================================================================================
MARYLAND DIVIDEND ADVANTAGE 2 (NZR)
--------------------------------------------------------------------------------
Year Ended 5/31:
2008 $32,000 $25,000 $71,813 $1,335 $69,855
2007 32,000 25,000 73,488 1,133 84,022
2006 32,000 25,000 73,224 -- --
2005 32,000 25,000 75,390 -- --
2004 32,000 25,000 72,706 -- --
MARYLAND DIVIDEND ADVANTAGE 3 (NWI)
--------------------------------------------------------------------------------
Year Ended 5/31:
2008 39,000 25,000 73,208 1,657 69,923
2007 39,000 25,000 74,769 1,400 84,314
2006 39,000 25,000 74,237 -- --
2005 39,000 25,000 75,925 -- --
2004 39,000 25,000 72,672 -- --
================================================================================
* Total Return on Market Value is the combination of changes in the market
price per share and the effect of reinvested dividend income and reinvested
capital gains distributions, if any, at the average price paid per share at
the time of reinvestment. The last dividend declared in the period, which
is typically paid on the first business day of the following month, is
assumed to be reinvested at the ending market price. The actual
reinvestment for the last dividend declared in the period may take place
over several days, and in some instances may not be based on the market
price, so the actual reinvestment price may be different from the price
used in the calculation. Total returns are not annualized.
Total Return on Common Share Net Asset Value is the combination of changes
in Common share net asset value, reinvested dividend income at net asset
value and reinvested capital gains distributions at net asset value, if
any. The last dividend declared in the period, which is typically paid on
the first business day of the following month, is assumed to be reinvested
at the ending net asset value. The actual reinvest price for the last
dividend declared in the period may often be based on the Fund's market
price (and not its net asset value), and therefore may be different from
the price used in calculation. Total returns are not annualized.
** After custodian fee credit and expense reimbursement, where applicable.
+ The amounts shown are based on Common share equivalents.
++ Ratios do not reflect the effect of dividend payments to Preferred
shareholders; income ratios reflect income earned on assets attributable to
Preferred shares.
(a) Interest expense arises from the application of SFAS No. 140 to certain
inverse floating rate transactions entered into by the Fund as more fully
described in Footnote 1 - Inverse Floating Rate Securities.
See accompanying notes to financial statements.
88-89 spread
Financial
HIGHLIGHTS (continued)
Selected data for a Common share outstanding throughout each period:
Investment Operations Less Distributions
------------------------------------------------------------------ ---------------------------------
Distributions Distributions
from Net from Net
Beginning Investment Capital Investment Capital
Common Net Income to Gains to Income to Gains to
Share Net Realized/ Preferred Preferred Common Common
Net Asset Investment Unrealized Share- Share- Share- Share-
Value Income Gain (Loss) holders+ holders+ Total holders holders Total
====================================================================================================================================
VIRGINIA PREMIUM INCOME (NPV)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
2008 $14.89 $ .88 $ (.40) $(.22) $(.03) $ .23 $(.64) $(.09) $ (.73)
2007 14.89 .88 .07 (.23) --* .72 (.70) (.02) (.72)
2006 15.82 .88 (.59) (.15) (.03) .11 (.80) (.24) (1.04)
2005 14.95 .93 .93 (.09) -- 1.77 (.90) -- (.90)
2004 15.93 .97 (.99) (.05) -- (.07) (.91) -- (.91)
VIRGINIA DIVIDEND ADVANTAGE (NGB)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
2008 14.98 .95 (.67) (.22) (.03) .03 (.70) (.10) (.80)
2007 14.91 .96 .14 (.24) -- .86 (.79) -- (.79)
2006 15.52 .97 (.54) (.17) -- .26 (.87) -- (.87)
2005 14.42 .99 1.13 (.09) -- 2.03 (.93) -- (.93)
2004 15.43 1.02 (1.05) (.05) -- (.08) (.93) -- (.93)
====================================================================================================================================
Total Returns
----------------------
Based
Ending on
Common Based Common
Share Ending on Share Net
Net Asset Market Market Asset
Value Value Value** Value**
=============================================================================
VIRGINIA PREMIUM INCOME (NPV)
-----------------------------------------------------------------------------
Year Ended 5/31:
2008 $14.39 $14.04 (2.94)% 1.56%
2007 14.89 15.24 7.18 4.89
2006 14.89 14.91 (9.98) 0.71
2005 15.82 17.65 24.54 12.13
2004 14.95 14.95 (10.70) (.42)
VIRGINIA DIVIDEND ADVANTAGE (NGB)
-----------------------------------------------------------------------------
Year Ended 5/31:
2008 14.21 14.81 (10.58) .23
2007 14.98 17.51 7.24 5.82
2006 14.91 17.10 5.86 1.74
2005 15.52 16.99 19.11 14.46
2004 14.42 15.07 (8.11) (.50)
=============================================================================
Ratios/Supplemental Data
-------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets Ratios to Average Net Assets
Applicable to Common Shares Applicable to Common Shares
Before Credit/Reimbursement After Credit/Reimbursement**
------------------------------------------ -------------------------------------------
Ending
Net
Assets
Applicable Expenses Expenses Net Expenses Expenses Net Portfolio
to Common Including Excluding Investment Including Excluding Investment Turnover
Shares (000) Interest++(a) Interest++(a) Income++ Interest++(a) Interest++(a) Income++ Rate
====================================================================================================================================
VIRGINIA PREMIUM INCOME (NPV)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
2008 $128,512 1.25% 1.23% 6.02% 1.24% 1.22% 6.03% 14%
2007 132,900 1.20 1.20 5.80 1.19 1.19 5.82 16
2006 132,626 1.19 1.19 5.75 1.17 1.17 5.77 16
2005 140,340 1.20 1.20 5.98 1.19 1.19 5.99 17
2004 132,122 1.20 1.20 6.33 1.19 1.19 6.34 14
VIRGINIA DIVIDEND ADVANTAGE (NGB)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
2008 44,512 1.30 1.28 6.28 1.00 .98 6.59 10
2007 46,908 1.27 1.27 5.99 .90 .90 6.36 23
2006 46,626 1.26 1.26 5.93 .82 .82 6.38 16
2005 48,474 1.28 1.28 6.13 .81 .81 6.59 15
2004 44,988 1.24 1.24 6.39 .77 .77 6.86 7
====================================================================================================================================
Floating Rate Obligations
Preferred Shares at End of Period at End of Period
-------------------------------------- -------------------------
Aggregate Liquidation Aggregate
Amount and Market Asset Amount Asset
Outstanding Value Coverage Outstanding Coverage
(000) Per Share Per Share (000) Per $1,000
================================================================================
VIRGINIA PREMIUM INCOME (NPV)
--------------------------------------------------------------------------------
Year Ended 5/31:
2008 $63,800 $25,000 $75,357 $5,250 $37,631
2007 63,800 25,000 77,077 -- --
2006 63,800 25,000 76,970 -- --
2005 63,800 25,000 79,992 -- --
2004 63,800 25,000 76,772 -- --
VIRGINIA DIVIDEND ADVANTAGE (NGB)
--------------------------------------------------------------------------------
Year Ended 5/31:
2008 24,000 25,000 71,367 1,865 37,736
2007 24,000 25,000 73,862 -- --
2006 24,000 25,000 73,568 -- --
2005 24,000 25,000 75,493 -- --
2004 24,000 25,000 71,863 -- --
================================================================================
* Distributions from Capital Gains to Preferred Shareholders rounds to less
than $.01 per share.
** Total Return on Market Value is the combination of changes in the market
price per share and the effect of reinvested dividend income and reinvested
capital gains distributions, if any, at the average price paid per share at
the time of reinvestment. The last dividend declared in the period, which
is typically paid on the first business day of the following month, is
assumed to be reinvested at the ending market price. The actual
reinvestment for the last dividend declared in the period may take place
over several days, and in some instances may not be based on the market
price, so the actual reinvestment price may be different from the price
used in the calculation. Total returns are not annualized.
Total Return on Common Share Net Asset Value is the combination of changes
in Common share net asset value, reinvested dividend income at net asset
value and reinvested capital gains distributions at net asset value, if
any. The last dividend declared in the period, which is typically paid on
the first business day of the following month, is assumed to be reinvested
at the ending net asset value. The actual reinvest price for the last
dividend declared in the period may often be based on the Fund's market
price (and not its net asset value), and therefore may be different from
the price used in calculation. Total returns are not annualized.
*** After custodian fee credit and expense reimbursement, where applicable.
+ The amounts shown are based on Common share equivalents.
++ Ratios do not reflect the effect of dividend payments to Preferred
shareholders; income ratios reflect income earned on assets attributable to
Preferred shares.
(a) Interest expense arises from the application of SFAS No. 140 to certain
inverse floating rate transactions entered into by the Fund as more fully
described in Footnote 1 - Inverse Floating Rate Securities.
See accompanying notes to financial statements.
90-91 spread
Financial
HIGHLIGHTS (continued)
Selected data for a Common share outstanding throughout each period:
Investment Operations Less Distributions
------------------------------------------------------------------ ---------------------------------
Distributions Distributions
from Net from Net
Beginning Investment Capital Investment Capital
Common Net Income to Gains to Income to Gains to
Share Net Realized/ Preferred Preferred Common Common
Net Asset Investment Unrealized Share- Share- Share- Share-
Value Income Gain (Loss) holders+ holders+ Total holders holders Total
====================================================================================================================================
VIRGINIA DIVIDEND ADVANTAGE 2 (NNB)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
2008 $15.08 $.96 $ (.61) $(.24) $(.02) $ .09 $(.72) $(.06) $ (.78)
2007 15.02 .96 .11 (.24) -- .83 (.77) -- (.77)
2006 15.70 .95 (.52) (.18) (.01) .24 (.85) (.07) (.92)
2005 14.79 .96 1.13 (.09) (.01) 1.99 (.89) (.19) (1.08)
2004 16.02 .99 (1.22) (.06) -- (.29) (.89) (.05) (.94)
====================================================================================================================================
Total Returns
----------------------
Based
Ending on
Common Based Common
Share Ending on Share Net
Net Asset Market Market Asset
Value Value Value* Value*
==========================================================================
VIRGINIA DIVIDEND ADVANTAGE 2 (NNB)
--------------------------------------------------------------------------
Year Ended 5/31:
2008 $14.39 $14.65 (7.58)% .63%
2007 15.08 16.73 6.96 5.60
2006 15.02 16.40 3.45 1.53
2005 15.70 16.74 21.96 13.75
2004 14.79 14.65 (3.81) (1.84)
==========================================================================
Ratios/Supplemental Data
------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets Ratios to Average Net Assets
Applicable to Common Shares Applicable to Common Shares
Before Credit/Reimbursement After Credit/Reimbursement**
------------------------------------------ -------------------------------------------
Ending
Net
Assets
Applicable Expenses Expenses Net Expenses Expenses Net Portfolio
to Common Including Excluding Investment Including Excluding Investment Turnover
Shares (000) Interest++(a) Interest++(a) Income++ Interest++(a) Interest++(a) Income++ Rate
====================================================================================================================================
VIRGINIA DIVIDEND ADVANTAGE 2 (NNB)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
2008 $82,472 1.24% 1.22% 6.21% .90% .88% 6.56% 10%
2007 86,382 1.21 1.21 5.89 .78 .78 6.31 19
2006 85,887 1.19 1.19 5.75 .73 .73 6.21 10
2005 89,626 1.19 1.19 5.74 .74 .74 6.19 13
2004 84,248 1.20 1.20 5.99 .74 .74 6.44 16
====================================================================================================================================
Floating Rate Obligations
Preferred Shares at End of Period at End of Period
-------------------------------------- -------------------------
Aggregate Liquidation Aggregate
Amount and Market Asset Amount Asset
Outstanding Value Coverage Outstanding Coverage
(000) Per Share Per Share (000) Per $1,000
================================================================================
VIRGINIA DIVIDEND ADVANTAGE 2 (NNB)
--------------------------------------------------------------------------------
Year Ended 5/31:
2008 $42,000 $25,000 $74.090 $3,385 $37,772
2007 42,000 25,000 76,418 -- --
2006 42,000 25,000 76,123 -- --
2005 42,000 25,000 78,349 -- --
2004 42,000 25,000 75,148 -- --
================================================================================
* Total Return on Market Value is the combination of changes in the market
price per share and the effect of reinvested dividend income and reinvested
capital gains distributions, if any, at the average price paid per share at
the time of reinvestment. The last dividend declared in the period, which
is typically paid on the first business day of the following month, is
assumed to be reinvested at the ending market price. The actual
reinvestment for the last dividend declared in the period may take place
over several days, and in some instances may not be based on the market
price, so the actual reinvestment price may be different from the price
used in the calculation. Total returns are not annualized.
Total Return on Common Share Net Asset Value is the combination of changes
in Common share net asset value, reinvested dividend income at net asset
value and reinvested capital gains distributions at net asset value, if
any. The last dividend declared in the period, which is typically paid on
the first business day of the following month, is assumed to be reinvested
at the ending net asset value. The actual reinvest price for the last
dividend declared in the period may often be based on the Fund's market
price (and not its net asset value), and therefore may be different from
the price used in calculation. Total returns are not annualized.
** After custodian fee credit and expense reimbursement, where applicable.
+ The amounts shown are based on Common share equivalents.
++ Ratios do not reflect the effect of dividend payments to Preferred
shareholders; income ratios reflect income earned on assets attributable to
Preferred shares.
(a) Interest expense arises from the application of SFAS No. 140 to certain
inverse floating rate transactions entered into by the Fund as more fully
described in Footnote 1 - Inverse Floating Rate Securities.
See accompanying notes to financial statements.
92-93 spread
Board Members & Officers
The management of the Funds, including general supervision of the duties
performed for the Funds by the Adviser, is the responsibility of the Board
Members of the Funds. The number of board members of the Fund is currently set
at nine. None of the board members who are not "interested" persons of the Funds
(referred to herein as "independent board members") has ever been a director or
employee of, or consultant to, Nuveen or its affiliates. The names and business
addresses of the board members and officers of the Funds, their principal
occupations and other affiliations during the past five years, the number of
portfolios each oversees and other directorships they hold are set forth below.
NAME, POSITION(S) HELD YEAR FIRST NUMBER PRINCIPAL
BIRTHDATE WITH THE FUNDS ELECTED OR OF PORTFOLIOS OCCUPATION(S)
& ADDRESS APPOINTED IN FUND COMPLEX INCLUDING OTHER
AND TERM(1) OVERSEEN BY DIRECTORSHIPS
BOARD MEMBER DURING PAST 5 YEARS
INDEPENDENT BOARD MEMBERS:
[] ROBERT P. BREMNER Private Investor and Management Consultant.
8/22/40 Chairman of 1997
333 W. Wacker Drive the Board CLASS III 186
Chicago, IL 60606 and Board member
[] JACK B. EVANS President, The Hall-Perrine Foundation, a
10/22/48 1999 private philanthropic corporation (since
333 W. Wacker Drive Board member CLASS III 186 1996); Director and Vice Chairman, United
Chicago, IL 60606 Fire Group, a publicly held company;
Member of the Board of Regents for the
State of Iowa University System;
Director, Gazette Companies; Life Trustee
of Coe College and Iowa College
Foundation; Member of the Advisory
Council of the Department of Finance in
the Tippie College of Business,
University of Iowa; formerly, Director,
Alliant Energy; formerly, Director,
Federal Reserve Bank of Chicago;
formerly, President and Chief Operating
Officer, SCI Financial Group, Inc., a
regional financial services firm.
[] WILLIAM C. HUNTER Dean, Tippie College of Business,
3/6/48 2004 University of Iowa (since July 2006);
333 W. Wacker Drive Board member ANNUAL 186 formerly, Dean and Distinguished
Chicago, IL 60606 Professor of Finance, School of Business
at the University of Connecticut
(2003-2006); previously, Senior Vice
President and Director of Research at the
Federal Reserve Bank of Chicago
(1995-2003); Director (since 1997),
Credit Research Center at Georgetown
University; Director (since 2004) of
Xerox Corporation; Director (since 2005),
Beta Gamma Sigma International Honor
Society; Director, SS&C Technologies,
Inc. (May 2005-October 2005).
[] DAVID J. KUNDERT Director, Northwestern Mutual Wealth
10/28/42 2005 Management Company; Retired (since 2004)
333 W. Wacker Drive Board member CLASS II 186 as Chairman, JPMorgan Fleming Asset
Chicago, IL 60606 Management, President and CEO, Banc One
Investment Advisors Corporation, and
President, One Group Mutual Funds; prior
thereto, Executive Vice President, Banc
One Corporation and Chairman and CEO,
Banc One Investment Management Group;
Member, Board of Regents, Luther College;
member of the Wisconsin Bar Association;
member of Board of Directors, Friends of
Boerner Botanical Gardens; member of
Investment Committee, Greater Milwaukee
Foundation.
[] WILLIAM J. SCHNEIDER Chairman, formerly, Senior Partner and
9/24/44 1997 Chief Operating Officer (retired, 2004)
333 W. Wacker Drive Board member ANNUAL 186 of Miller-Valentine Partners Ltd., a real
Chicago, IL 60606 estate investment company; Director,
Dayton Development Coalition; formerly,
member, Business Advisory Council,
Cleveland Federal Reserve Bank.
94
NAME, POSITION(S) HELD YEAR FIRST NUMBER PRINCIPAL
BIRTHDATE WITH THE FUNDS ELECTED OR OF PORTFOLIOS OCCUPATION(S)
& ADDRESS APPOINTED IN FUND COMPLEX INCLUDING OTHER
AND TERM(1) OVERSEEN BY DIRECTORSHIPS
BOARD MEMBER DURING PAST 5 YEARS
INDEPENDENT BOARD MEMBERS:
[] JUDITH M. STOCKDALE Executive Director, Gaylord and Dorothy
12/29/47 1997 Donnelley Foundation (since 1994); prior
333 W. Wacker Drive Board member CLASS I 186 thereto, Executive Director, Great Lakes
Chicago, IL 60606 Protection Fund (from 1990 to 1994).
[] CAROLE E. STONE Director, Chicago Board Options Exchange
6/28/47 2007 (since 2006); Chair New York Racing
333 W. Wacker Drive Board member CLASS I 186 Association Oversight Board (since 2005);
Chicago, IL 60606 Commissioner, New York State Commission
on Public Authority Reform (since 2005);
formerly Director, New York State
Division of the Budget (2000-2004),
Chair, Public Authorities Control Board
(2000-2004) and Director, Local
Government Assistance Corporation
(2000-2004).
[] TERENCE J. TOTH(2)
9/29/59 2008 Private Investor (since 2007); CEO and
333 W. Wacker Drive Board Member CLASS II 174(4) President, Northern Trust Investments
Chicago, IL 60606 (2004-2007); Executive Vice President,
Quantitative Management & Securities
Lending (2007-2004); prior thereto,
various positions with Northern Trust
Company (since 1994); Member: Goodman
Theatre Board (Since 2004); Chicago
Fellowship Boards (since 2005),
University of Illinois Leadership Council
Board (since 2007) and Catalyst Schools
of Chicago Board (since 2008); formerly
Member: Northern Trust Mutual Funds Board
(2005-2007), Northern Trust Japan Board
(2004-2007), Northern Trust Securities
Inc. Board (2003-2007) and Northern Trust
Hong Kong Board (1997-2004).
INTERESTED BOARD MEMBER:
[] JOHN P. AMBOIAN(2)(3) Chief Executive Officer (since July 2007)
6/14/61 2008 and Director (since 1999) of Nuveen
333 W. Wacker Drive Board Member CLASS II 174(4) Investments, Inc.; Chief Executive
Chicago, IL 60606 Officer (since 2007) of Nuveen Asset
Management, Rittenhouse Asset Management,
Nuveen Investments Advisors, Inc.
formerly, President (1999-2004) of Nuveen
Advisory Corp. and Nuveen Institutional
Advisory Corp.
OFFICERS OF THE FUND:
[] GIFFORD R. ZIMMERMAN Managing Director (since 2002), Assistant
9/9/56 Chief Secretary and Associate General Counsel,
333 W. Wacker Drive Administrative 1988 186 formerly, Vice President and Assistant
Chicago, IL 60606 Officer General Counsel, of Nuveen Investments,
LLC; Managing Director (since 2002),
Associate General Counsel and Assistant
Secretary, of Nuveen Asset Management;
Vice President and Assistant Secretary of
NWQ Investment Management Company, LLC.
(since 2002), Nuveen Investments Advisers
Inc. (since 2002), Symphony Asset
Management LLC, and NWQ Investment
Management Company, LLC (since 2003),
Tradewinds Global Investors, LLC, and
Santa Barbara Asset Management, LLC
(since 2006); Nuveen HydePark Group LLC
and Richards & Tierney, Inc. (since
2007); Managing Director, Associate
General Counsel and Assistant Secretary
of Rittenhouse Asset Management, Inc.
(since 2003); Managing Director (since
2004) and Assistant Secretary (since
1994) of Nuveen Investments, Inc.;
formerly, Managing Director (2002-2004),
General Counsel (1998-2004) and Assistant
Secretary of Nuveen Advisory Corp. and
Nuveen Institutional Advisory Corp.(5);
Chartered Financial Analyst.
[] WILLIAM ADAMS IV Executive Vice President, U.S. Structured
6/9/55 Products of Nuveen Investments, LLC,
333 W. Wacker Drive Vice President 2007 120 (since 1999), prior thereto, Managing
Chicago, IL 60606 Director of Structured Investments.
95
NAME, POSITION(S) HELD YEAR FIRST NUMBER PRINCIPAL
BIRTHDATE WITH THE FUNDS ELECTED OR OF PORTFOLIOS OCCUPATION(S)
AND ADDRESS APPOINTED(6) IN FUND COMPLEX DURING PAST 5 YEARS
OVERSEEN
BY OFFICER
OFFICERS OF THE FUND:
[] CEDRIC H. ANTOSIEWICZ
1/11/62 Managing Director, (since 2004)
333 W. Wacker Drive Vice President 2007 120 previously, Vice President (1993-2004) of
Chicago, IL 60606 Nuveen Investments, LLC.
[] MICHAEL T. ATKINSON Vice President (since 2002) of Nuveen
2/3/66 Vice President Investments, LLC.
333 W. Wacker Drive and Assistant 2000 186
Chicago, IL 60606 Secretary
[] LORNA C. FERGUSON Managing Director (since 2004), formerly,
10/24/45 Vice President of Nuveen Investments,
333 W. Wacker Drive Vice President 1998 186 LLC, Managing Director (2004) formerly,
Chicago, IL 60606 Vice President (1998-2004) of Nuveen
Advisory Corp. and Nuveen Institutional
Advisory Corp.(5); Managing Director
(since 2005) of Nuveen Asset Management.
[] STEPHEN D. FOY Vice President (since 1993) and Funds
5/31/54 Vice President Controller (since 1998) of Nuveen
333 W. Wacker Drive and Controller 1998 186 Investments, LLC; formerly, Vice
Chicago, IL 60606 President and Funds Controller
(1998-2004) of Nuveen Investments, Inc.;
Certified Public Accountant.
[] WALTER M. KELLY Senior Vice President (since 2008), Vice
2/24/70 Chief Compliance President (2006-2008) formerly, Assistant
333 W. Wacker Drive Officer and 2003 186 Vice President and Assistant General
Chicago, IL 60606 Vice President Counsel (2003-2006) of Nuveen
Investments, LLC; Vice President (since
2006) and Assistant Secretary (since
2008) of Nuveen Asset Management.
[] DAVID J. LAMB Vice President (since 2000) of Nuveen
3/22/63 Investments, LLC; Certified Public
333 W. Wacker Drive Vice President 2000 186 Accountant.
Chicago, IL 60606
[] TINA M. LAZAR Vice President of Nuveen Investments, LLC
8/27/61 (since 1999).
333 W. Wacker Drive Vice President 2002 186
Chicago, IL 60606
[] LARRY W. MARTIN Vice President, Assistant Secretary and
7/27/51 Vice President Assistant General Counsel of Nuveen
333 W. Wacker Drive and Assistant 1988 186 Investments, LLC; Vice President (since
Chicago, IL 60606 Secretary 2005) and Assistant Secretary of Nuveen
Investments, Inc.; Vice President (since
2005) and Assistant Secretary (since
1997) of Nuveen Asset Management; Vice
President (since 2000), Assistant
Secretary and Assistant General Counsel
(since 1998) of Rittenhouse Asset
Management, Inc.; Vice President and
Assistant Secretary of Nuveen Investments
Advisers Inc. (since 2002); NWQ
Investment Management Company, LLC (since
2002), Symphony Asset Management LLC
(since 2003), Tradewinds Global
Investors, LLC, Santa Barbara Asset
Management LLC (since 2006) and of Nuveen
HydePark Group, LLC and Richards
& Tierney, Inc. (since 2007); formerly,
Vice President and Assistant Secretary of
Nuveen Advisory Corp. and Nuveen
Institutional Advisory Corp.(5)
96
NAME, POSITION(S) HELD YEAR FIRST NUMBER PRINCIPAL
BIRTHDATE WITH THE FUNDS ELECTED OR OF PORTFOLIOS OCCUPATION(S)
AND ADDRESS APPOINTED(6) IN FUND COMPLEX DURING PAST 5 YEARS
OVERSEEN
BY OFFICER
OFFICERS OF THE FUND:
[] KEVIN J. MCCARTHY Managing Director (since 2008), formerly,
3/26/66 Vice President Vice President (2007-2008), Nuveen
333 W. Wacker Drive and Secretary 2007 186 Investments, LLC; Vice President, and
Chicago, IL 60606 Assistant Secretary, Nuveen Asset
Management, Rittenhouse Asset Management,
Inc., Nuveen Investment Advisers Inc.,
Nuveen Investment Institutional Services
Group LLC, NWQ Investment Management
Company, LLC, Tradewinds Global Investors
LLC, NWQ Holdings, LLC, Symphony Asset
Management LLC, Santa Barbara Asset
Management LLC, Nuveen HydePark Group,
LLC and Richards & Tierney, Inc. (since
2007); Managing Director (since 2008),
formerly, Vice President (2007-2008) and
Assistant General Counsel, Nuveen
Investments, Inc. prior thereto, Partner,
Bell, Boyd & Lloyd LLP (1997-2007).
[] JOHN V. MILLER Managing Director (since 2007), formerly,
4/10/67 Vice President Vice President (2002-2007) of Nuveen
333 W. Wacker Drive and Assistant 2007 186 Investments, LLC; Chartered Financial
Chicago, IL 60606 Analyst.
[] CHRISTOPHER M. ROHRBACHER Vice President, Nuveen Investments, LLC
8/1/71 Vice President (since 2008); Vice President and
333 W. Wacker Drive and Assistant 2008 186 Assistant Secretary, Nuveen Asset
Chicago, IL 60606 Secretary Management (since 2008); Vice President
and Assistant General Counsel, Nuveen
Investment, Inc. (since 2008); prior
thereto, Associate, Skadden, Arps, Slate
Meagher & Flom LLP (2002-2008).
[] JAMES F. RUANE Vice President, Nuveen Investments since
7/3/62 Vice President 2007; prior thereto, Partner, Deloitte &
333 W. Wacker Drive and Assistant 2007 186 Touche USA LLP (since 2005), formerly,
Chicago, IL 60606 Secretary senior tax manager (since 2002);
Certified Public Accountant.
[] MARK L. WINGET Vice President, Nuveen Investments, LLC
12/21/68 Vice President (since 2008); Vice President and
333 W. Wacker Drive and Assistant 2008 186 Assistant Secretary, Nuveen Asset
Chicago, IL 60606 Secretary Management (since 2008); Vice President
and Assistant General Counsel, Nuveen
Investments Inc. (since 2008); prior
thereto, Counsel, Vedder Price P.C.
(1997-2007).
(1) Board Members serve three year terms, except for two board members who are
elected by the holders of Preferred Shares. The Board of Trustees is
divided into three classes, Class I, Class II, and Class III, with each
being elected to serve until the third succeeding annual shareholders'
meeting subsequent to its election or thereafter in each case when its
respective successors are duly elected or appointed, except two board
members are elected by the holders of Preferred Shares to serve until the
next annual shareholders' meeting subsequent to its election or thereafter
in each case when its respective successors are duly elected or appointed.
The first year elected or appointed represents the year in which the board
member was first elected or appointed to any fund in the Nuveen Complex.
(2) Mr. Amboian and Mr. Toth were appointed to the Board of Trustees of certain
Nuveen Funds, effective July 1, 2008. In connection with the appointment of
Mr. Amboian as trustee, Timothy R. Schwertfeger, an interested trustee,
resigned from the Board of Trustees, effective July 1, 2008.
(3) Mr. Amboian is an interested trustee because of his position with Nuveen
Investments, Inc. and certain of its subsidiaries, which are affiliates of
the Nuveen Funds.
(4) Mr. Amboian and Mr. Toth are standing for election to the Boards of twelve
Nuveen closed-end funds whose annual meeting on June 30, 2008 was adjourned
to July 29, 2008.
(5) Nuveen Advisory Corp. and Nuveen Institutional Advisory Corp. were
reorganized into Nuveen Asset Management, effective January 1, 2005.
(6) Officers serve one year terms through July of each year. The year first
elected or appointed represents the year in which the Officer was first
elected or appointed to any fund in the Nuveen Complex.
97
Annual Investment
Management Agreement
APPROVAL PROCESS
The Investment Company Act of 1940, as amended (the "1940 Act"), provides, in
substance, that each investment advisory agreement between a fund and its
investment adviser will continue in effect from year to year only if its
continuance is approved at least annually by the fund's board members, including
by a vote of a majority of the board members who are not parties to the advisory
agreement or "interested persons" of any parties (the "Independent Board
Members"), cast in person at a meeting called for the purpose of considering
such approval. In connection with such approvals, the fund's board members must
request and evaluate, and the investment adviser is required to furnish, such
information as may be reasonably necessary to evaluate the terms of the advisory
agreement. Accordingly, at a meeting held on May 28-29, 2008 (the "May
Meeting"), the Boards of Trustees or Directors (as the case may be)(each a
"Board" and each Trustee or Director, a "Board Member") of the Funds, including
a majority of the Independent Board Members, considered and approved the
continuation of the advisory agreement (each, an "Advisory Agreement") between
each Fund and Nuveen Asset Management ("NAM") for an additional one-year period.
In preparation for their considerations at the May Meeting, the Board also held
a separate meeting on April 23, 2008 (the "April Meeting"). Accordingly, the
factors considered and determinations made regarding the renewals by the
Independent Board Members include those made at the April Meeting.
In addition, in evaluating the Advisory Agreements, as described in further
detail below, the Independent Board Members reviewed a broad range of
information relating to the Funds and NAM, including absolute performance, fee
and expense information for the Funds as well as comparative performance, fee
and expense information for a comparable peer group of funds, the performance
information of recognized benchmarks (as applicable), the profitability of
Nuveen for its advisory activities (which includes its wholly owned
subsidiaries), and other information regarding the organization, personnel, and
services provided by NAM. The Independent Board Members also met quarterly as
well as at other times as the need arose during the year and took into account
the information provided at such meetings and the knowledge gained therefrom.
Prior to approving the renewal of the Advisory Agreements, the Independent Board
Members reviewed the foregoing information with their independent legal counsel
and with management, reviewed materials from independent legal counsel
describing applicable law and their duties in reviewing advisory contracts, and
met with independent legal counsel in private sessions without management
present. The Independent Board Members considered the legal advice provided by
independent legal counsel and relied upon their knowledge of NAM, its services
and the Funds resulting from their meetings and other interactions throughout
the year and their own business judgment in determining the factors to be
considered in evaluating the Advisory Agreements. Each Board Member may have
accorded different weight to the various factors in reaching his or her
conclusions with respect to a Fund's Advisory Agreement. The Independent Board
Members did not identify any single factor as all-important or controlling. The
Independent Board Members considerations were instead based on a comprehensive
consideration of all the information presented. The principal factors considered
by the Board and its conclusions are described below.
A. NATURE, EXTENT AND QUALITY OF SERVICES
In considering renewal of the Advisory Agreements, the Independent Board Members
considered the nature, extent and quality of NAM's services, including advisory
services and administrative services. The Independent Board Members reviewed
materials outlining, among other things, NAM's organization and business; the
types of services that NAM or its affiliates provide and are expected to provide
to the Funds;
98
the performance record of the applicable Fund (as described in further detail
below); and any initiatives Nuveen had taken for the applicable fund product
line. With respect to personnel, the Independent Board Members evaluated the
background, experience and track record of NAM's investment personnel. In this
regard, the Independent Board Members considered the additional investment in
personnel to support Nuveen fund advisory activities, including in operations,
product management and marketing as well as related fund support functions,
including sales, executive, finance, human resources and information technology.
The Independent Board Members also reviewed information regarding portfolio
manager compensation arrangements to evaluate NAM's ability to attract and
retain high quality investment personnel.
In evaluating the services of NAM, the Independent Board Members also considered
NAM's ability to supervise the Fund's other service providers and given the
importance of compliance, NAM's compliance program. Among other things, the
Independent Board Members considered the report of the chief compliance officer
regarding the Funds' compliance policies and procedures.
In addition to advisory services, the Independent Board Members considered the
quality of administrative services provided by NAM and its affiliates including
product management, fund administration, oversight of service providers,
shareholder services, administration of Board relations, regulatory and
portfolio compliance and legal support.
In addition to the foregoing services, the Independent Board Members also noted
the additional services that NAM or its affiliates provide to closed-end funds,
including, in particular, its secondary market support activities and the costs
of such activities. The Independent Board Members recognized Nuveen's continued
commitment to supporting the secondary market for the common shares of its
closed-end funds through a variety of programs designed to raise investor and
analyst awareness and understanding of closed-end funds. These efforts include
maintaining an investor relations program to timely provide information and
education to financial advisers and investors; providing advertising and
marketing for the closed-end funds; maintaining its closed-end fund website; and
providing educational seminars. With respect to closed-end funds that utilize
leverage through the issuance of auction rate preferred securities ("ARPS"), the
Board has recognized the unprecedented market conditions in the auction rate
market industry with the failure of the auction process. The Independent Board
Members noted Nuveen's efforts and the resources and personnel employed to
analyze the situation, explore potential alternatives and develop and implement
solutions that serve the interests of the respective Fund and all of its
shareholders. The Independent Board Members further noted Nuveen's commitment
and efforts to keep investors and financial advisers informed as to its progress
in addressing the ARPS situation through, among other things, conference calls,
press releases, and information posted on its website as well as its refinancing
activities. The Independent Board Members also noted Nuveen's continued support
for holders of preferred shares of its closed-end funds by, among other things,
seeking distribution for preferred shares with new market participants, managing
relations with remarketing agents and the broker community, maintaining the
leverage and risk management of leverage and maintaining systems necessary to
test compliance with rating agency criteria.
Based on their review, the Independent Board Members found that, overall, the
nature, extent and quality of services provided (and expected to be provided) to
the respective Funds under the Advisory Agreements were satisfactory.
B. THE INVESTMENT PERFORMANCE OF THE FUNDS AND NAM
The Board considered the investment performance of each Fund, including the
Fund's historic performance as well as its performance compared to funds with
similar investment objectives (the "Performance Peer Group") based on data
provided by an independent third party (as described below). The Independent
Board Members also reviewed portfolio level performance (which does not reflect
fund level fees, expenses and leverage), as described in further detail below.
99
ANNUAL INVESTMENT MANAGEMENT AGREEMENT
APPROVAL PROCESS (continued)
In evaluating the performance information, the Board considered whether the Fund
has operated within its investment objectives and parameters and the impact that
the investment mandates may have had on performance. In addition, in comparing a
Fund's performance with that of its Performance Peer Group, the Independent
Board Members took into account that the closest Performance Peer Group in
certain instances may not adequately reflect the respective Fund's investment
objectives and strategies thereby hindering a meaningful comparison of the
Fund's performance with that of the Performance Peer Group.
With respect to state specific municipal funds, the Independent Board Members
also recognized that certain funds lack comparable peers in which case their
performance is measured against a more general municipal category for various
states. The closed-end municipal funds that do not have corresponding
state-specific Performance Peer Groups are from states other than New York,
California, Florida, New Jersey, Michigan, and Pennsylvania.
With respect to municipal funds, the Independent Board Members reviewed
performance information including, among other things, total return information
compared with the Fund's Performance Peer Group and recognized benchmarks for
the one-, three- and five-year periods (as applicable) ending December 31, 2007
and with the Performance Peer Group for the quarter and same yearly periods
ending March 31, 2008. The Independent Board Members also reviewed the Fund's
portfolio level performance (which does not reflect fund level fees and expenses
(and leverage for closed-end funds)) compared to recognized benchmarks for the
one- three, and five-year periods ending December 31, 2007 (as applicable). The
analysis was used to assess the efficacy of investment decisions against
appropriate measures of risk and total return, within specific market segments.
This information supplemented the Fund performance information provided to the
Board at each of its quarterly meetings. Based on their review, the Independent
Board Members determined that each Fund's investment performance over time had
been satisfactory.
C. FEES, EXPENSES AND PROFITABILITY
1. FEES AND EXPENSES
The Board evaluated the management fees and expenses of each Fund
reviewing, among other things, such Fund's gross management fees (which
take into account breakpoints), net management fees (which take into
account fee waivers or reimbursements) and total expense ratios (before and
after expense reimbursements and/or waivers) in absolute terms as well as
compared to the gross management fees, net management fees (after waivers
and/or reimbursements) and total expense ratios (before and after waivers)
of a comparable universe of unaffiliated funds based on data provided by an
independent data provider (the "Peer Universe") and/or a more focused
subset of funds therein (the "Peer Group"). The Independent Board Members
further reviewed data regarding the construction of Peer Groups as well as
the methods of measurement for the fee and expense analysis and the
performance analysis. In reviewing the comparisons of fee and expense
information, the Independent Board Members took into account that in
certain instances various factors such as the size of the Fund relative to
peers, the size and particular composition of the Peer Group, the
investment objectives of the peers, expense anomalies, and the timing of
information used may impact the comparative data, thereby limiting the
ability to make a meaningful comparison. With respect to closed-end funds,
the Independent Board Members also considered, among other things, the
differences in the use of leverage and with respect to municipal funds, the
Independent Board Members considered the differences in the use of
insurance as well as the states reflected in a respective Peer Group for
the state municipal funds (such as the use of a general "other states"
category for closed-end state funds (other than New York and California)).
In reviewing the fee schedule for a Fund, the Independent Board Members
also considered the fund-level and complex-wide breakpoint schedules
(described in further detail below) and any fee waivers and reimbursements
provided by Nuveen (applicable, in particular, for certain closed-end funds
launched
100
since 1999). Based on their review of the fee and expense information
provided, the Independent Board Members determined that each Fund's
management fees and net total expense ratio were reasonable in light of the
nature, extent and quality of services provided to the Fund.
2. COMPARISONS WITH THE FEES OF OTHER CLIENTS
The Independent Board Members further reviewed information regarding the
nature of services and fee rates offered by NAM to other clients. With
respect to municipal funds, such other clients include NAM's municipal
separately managed accounts. In evaluating the comparisons of fees, the
Independent Board Members noted that the fee rates charged to the Funds and
other clients vary, among other things, because of the different services
involved and the additional regulatory and compliance requirements
associated with registered investment companies, such as the Funds.
Accordingly, the Independent Board Members considered the differences in
the product types, including, but not limited to, the services provided,
the structure and operations, product distribution and costs thereof,
portfolio investment policies, investor profiles, account sizes and
regulatory requirements. The Independent Board Members noted, in
particular, that the range of services provided to the Funds (as discussed
above) is much more extensive than that provided to separately managed
accounts. Given the inherent differences in the products, particularly the
extensive services provided to the Funds, the Independent Board Members
believe such facts justify the different levels of fees.
3. PROFITABILITY OF NUVEEN
In conjunction with its review of fees, the Independent Board Members also
considered the profitability of Nuveen for its advisory activities (which
incorporated Nuveen's wholly-owned affiliated sub-advisers) and its
financial condition. The Independent Board Members reviewed the revenues
and expenses of Nuveen's advisory activities for the last two years and the
allocation methodology used in preparing the profitability data. The
Independent Board Members noted this information supplemented the
profitability information requested and received during the year to help
keep them apprised of developments affecting profitability (such as changes
in fee waivers and expense reimbursement commitments). In this regard, the
Independent Board Members noted that they had also appointed an Independent
Board Member as a point person to review and keep them apprised of changes
to the profitability analysis and/or methodologies during the year. The
Independent Board Members considered Nuveen's profitability compared with
other fund sponsors prepared by two independent third party service
providers as well as comparisons of the revenues, expenses and profit
margins of various unaffiliated management firms with similar amounts of
assets under management prepared by Nuveen.
In reviewing profitability, the Independent Board Members recognized the
subjective nature of determining profitability which may be affected by
numerous factors including the allocation of expenses. Further, the
Independent Board Members recognized the difficulties in making comparisons
as the profitability of other advisers generally is not publicly available
and the profitability information that is available for certain advisers or
management firms may not be representative of the industry and may be
affected by, among other things, the adviser's particular business mix,
capital costs, types of funds managed and expense allocations.
Notwithstanding the foregoing, the Independent Board Members reviewed Nuveen's
methodology and assumptions for allocating expenses across product lines to
determine profitability. In reviewing profitability, the Independent Board
Members recognized Nuveeninvestment in its fund business.
Based on its review, the Independent Board Members concluded that Nuveen's level
of profitability for its advisory activities was reasonable in light of the
services provided.
In evaluating the reasonableness of the compensation, the Independent Board
Members also considered other amounts paid to NAM by the Funds as well as any
indirect benefits (such as soft dollar arrangements, if any) NAM and its
affiliates receive, or are expected to receive, that are directly attributable
to the
101
ANNUAL INVESTMENT MANAGEMENT AGREEMENT
APPROVAL PROCESS (continued)
management of the Funds, if any. See Section E below for additional information
on indirect benefits NAM may receive as a result of its relationship with the
Funds. Based on their review of the overall fee arrangements of each Fund, the
Independent Board Members determined that the advisory fees and expenses of the
respective Fund were reasonable.
D. ECONOMIES OF SCALE AND WHETHER FEE LEVELS REFLECT THESE ECONOMIES OF SCALE
With respect to economies of scale, the Independent Board Members recognized the
potential benefits resulting from the costs of a Fund being spread over a larger
asset base. The Independent Board Members therefore considered whether the Funds
have appropriately benefited from any economies of scale and whether there is
potential realization of any further economies of scale. In considering
economies of scale, the Independent Board Members have recognized that economies
of scale are difficult to measure and predict with precision, particularly on a
fund-by-fund basis. Notwithstanding the foregoing, one method to help ensure the
shareholders share in these benefits is to include breakpoints in the advisory
fee schedule. Accordingly, the Independent Board Members reviewed and considered
the fund-level breakpoints in the advisory fee schedules that reduce advisory
fees. In this regard, given that the Funds are closed-end funds, the Independent
Board Members recognized that although the Funds may from time to time make
additional share offerings, the growth in their assets will occur primarily
through appreciation of such Fund's investment portfolio.
In addition to fund-level advisory fee breakpoints, the Board also considered
the Funds' complex-wide fee arrangement. Pursuant to the complex-wide fee
arrangement, the fees of the funds in the Nuveen complex, including the Funds,
are reduced as the assets in the fund complex reach certain levels. In
evaluating the complex-wide fee arrangement, the Independent Board Members
recognized that the complex-wide fee schedule was recently revised in 2007 to
provide for additional fee savings to shareholders and considered the amended
schedule. The Independent Board Members further considered that the complex-wide
fee arrangement seeks to provide the benefits of economies of scale to fund
shareholders when total fund complex assets increase, even if assets of a
particular Fund are unchanged or have decreased. The approach reflects the
notion that some of Nuveen's costs are attributable to services provided to all
its Funds in the complex and therefore all Funds benefit if these costs are
spread over a larger asset base. Based on their review, the Independent Board
Members concluded that the breakpoint schedule and complex-wide fee arrangement
were acceptable and desirable in providing benefits from economies of scale to
shareholders.
E. INDIRECT BENEFITS
In evaluating fees, the Independent Board Members received and considered
information regarding potential "fall out" or ancillary benefits NAM or its
affiliates may receive as a result of its relationship with each Fund. In this
regard, the Independent Board Members considered revenues received by affiliates
of NAM for serving as agent at Nuveen's preferred trading desk and for serving
as a co-manager in the initial public offering of new closed-end exchange traded
funds.
In addition to the above, the Independent Board Members considered whether NAM
received any benefits from soft dollar arrangements whereby a portion of the
commissions paid by a Fund for brokerage may be used to acquire research that
may be useful to NAM in managing the assets of the Funds and other clients. The
Independent Board Members noted that NAM does not currently have any soft dollar
arrangements; however, to the extent certain bona fide agency transactions that
occur on markets that traditionally trade on a principal basis and riskless
principal transactions are considered as generating "commissions," NAM intends
to comply with the applicable safe harbor provisions.
102
Based on their review, the Independent Board Members concluded that any indirect
benefits received by NAM as a result of its relationship with the Funds were
reasonable and within acceptable parameters.
F. OTHER CONSIDERATIONS
The Independent Board Members did not identify any single factor discussed
previously as all-important or controlling. The Board Members, including the
Independent Board Members, unanimously concluded that the terms of the Advisory
Agreements are fair and reasonable, that NAM's fees are reasonable in light of
the services provided to each Fund and that the Advisory Agreements be renewed.
103
Reinvest Automatically
EASILY and CONVENIENTLY
NUVEEN MAKES REINVESTING EASY. A PHONE CALL IS ALL IT TAKES TO SET UP YOUR
REINVESTMENT ACCOUNT.
NUVEEN CLOSED-END FUNDS DIVIDEND REINVESTMENT PLAN
Your Nuveen Closed-End Fund allows you to conveniently reinvest dividends and/or
capital gains distributions in additional Fund shares.
By choosing to reinvest, you'll be able to invest money regularly and
automatically, and watch your investment grow through the power of tax-free
compounding. Just like dividends or distributions in cash, there may be times
when income or capital gains taxes may be payable on dividends or distributions
that are reinvested.
It is important to note that an automatic reinvestment plan does not ensure a
profit, nor does it protect you against loss in a declining market.
EASY AND CONVENIENT
To make recordkeeping easy and convenient, each month you'll receive a statement
showing your total dividends and distributions, the date of investment, the
shares acquired and the price per share, and the total number of shares you own.
HOW SHARES ARE PURCHASED
The shares you acquire by reinvesting will either be purchased on the open
market or newly issued by the Fund. If the shares are trading at or above net
asset value at the time of valuation, the Fund will issue new shares at the
greater of the net asset value or 95% of the then-current market price. If the
shares are trading at less than net asset value, shares for your account will be
purchased on the open market. If the Plan Agent begins purchasing Fund shares on
the open market while shares are trading below net asset value, but the Fund's
shares subsequently trade at or above their net asset value before the Plan
Agent is able to complete its purchases, the Plan Agent may cease open-market
purchases and may invest the uninvested portion of the distribution in
newly-issued Fund shares at a price equal to the greater of the shares' net
asset value or 95% of the shares' market value on the last business day
immediately prior to the purchase date. Dividends and distributions received to
purchase shares in the open market will normally be invested shortly after the
dividend payment date. No interest will be paid on dividends and distributions
awaiting reinvestment. Because the market price of the shares may increase
before purchases are completed, the average purchase price per share may exceed
the market price at the time of valuation, resulting in the acquisition of fewer
shares than if the dividend or distribution had been paid in shares issued by
the Fund. A pro rata portion of any applicable brokerage commissions on open
market purchases will be paid by Plan participants. These commissions usually
will be lower than those charged on individual transactions.
104
FLEXIBLE
You may change your distribution option or withdraw from the Plan at any time,
should your needs or situation change. Should you withdraw, you can receive a
certificate for all whole shares credited to your reinvestment account and cash
payment for fractional shares, or cash payment for all reinvestment account
shares, less brokerage commissions and a $2.50 service fee.
You can reinvest whether your shares are registered in your name, or in the name
of a brokerage firm, bank, or other nominee. Ask your investment advisor if his
or her firm will participate on your behalf. Participants whose shares are
registered in the name of one firm may not be able to transfer the shares to
another firm and continue to participate in the Plan.
The Fund reserves the right to amend or terminate the Plan at any time. Although
the Fund reserves the right to amend the Plan to include a service charge
payable by the participants, there is no direct service charge to participants
in the Plan at this time.
CALL TODAY TO START REINVESTING DIVIDENDS AND/OR DISTRIBUTIONS
For more information on the Nuveen Automatic Reinvestment Plan or to enroll in
or withdraw from the Plan, speak with your financial advisor or call us at (800)
257-8787.
105
Glossary of
TERMS USED in this REPORT
[] AUCTION RATE BOND: An auction rate bond is a security whose interest
payments are adjusted periodically through an auction process, which
process typically also serves as a means for buying and selling the bond.
Auctions that fail to attract enough buyers for all the shares offered for
sale are deemed to have "failed", with current holders receiving a
formula-based interest rate until the next scheduled auction.
[] AVERAGE ANNUAL TOTAL RETURN: This is a commonly used method to express an
investment's performance over a particular, usually multi-year time period.
It expresses the return that would have been necessary each year to equal
the investment's actual cumulative performance (including change in NAV or
market price and reinvested dividends and capital gains distributions, if
any) over the time period being considered.
[] AVERAGE EFFECTIVE MATURITY: The average of the number of years to maturity
of the bonds in a Fund's portfolio, computed by weighting each bond's time
to maturity (the date the security comes due) by the market value of the
security. This figure does not account for the likelihood of prepayments or
the exercise of call provisions unless an escrow account has been
established to redeem the bond before maturity. The market value weighting
for an investment in an inverse floating rate security is the value of the
portfolio's residual interest in the inverse floating rate trust, and does
not include the value of the floating rate securities issued by the trust.
[] INVERSE FLOATERS: Inverse floating rate securities are created by
depositing a municipal bond, typically with a fixed interest rate, into a
special purpose trust created by a broker-dealer. This trust, in turn, (a)
issues floating rate certificates typically paying short-term tax-exempt
interest rates to third parties in amounts equal to some fraction of the
deposited bond's par amount or market value, and (b) issues an inverse
floating rate certificate (sometimes referred to as an "inverse floater")
to an investor (such as a Fund) interested in gaining investment exposure
to a long-term municipal bond. The income received by the holder of the
inverse floater varies inversely with the short-term rate paid to the
floating rate certificates' holders, and in most circumstances the holder
of the inverse floater bears substantially all of the underlying bond's
downside investment risk. The holder of the inverse floater typically also
benefits disproportionately from any potential appreciation of the
underlying bond's value. Hence, an inverse floater essentially represents
an investment in the underlying bond on a leveraged basis.
[] LEVERAGE-ADJUSTED DURATION: Duration is a measure of the expected period
over which a bond's principal and interest will be paid, and consequently
is a measure of the sensitivity of a bond's or bond Fund's value to changes
when market interest rates change. Generally, the longer a bond's or Fund's
duration, the more the price of the bond or Fund will change as interest
rates change. Leverage-adjusted duration takes into account the leveraging
process for a Fund and therefore is longer than the duration of the Fund's
portfolio of bonds.
[] MARKET YIELD (ALSO KNOWN AS DIVIDEND YIELD OR CURRENT YIELD): An
investment's current annualized dividend divided by its current market
price.
[] NET ASSET VALUE (NAV): A Fund's common share NAV per share is calculated by
subtracting the liabilities of the Fund (including any Preferred shares
issued in order to leverage the Fund) from its total assets and then
dividing the remainder by the number of shares outstanding. Fund NAVs are
calculated at the end of each business day.
[] TAXABLE-EQUIVALENT YIELD: The yield necessary from a fully taxable
investment to equal, on an after-tax basis, the yield of a municipal bond
investment.
[] ZERO COUPON BOND: A zero coupon bond does not pay a regular interest coupon
to its holders during the life of the bond. Tax-exempt income to the holder
of the bond comes from accretion of the difference between the original
purchase price of the bond at issuance and the par value of the bond at
maturity and is effectively paid at maturity. The market prices of zero
coupon bonds generally are more volatile than the market prices of bonds
that pay interest periodically.
106
Other Useful INFORMATION
QUARTERLY PORTFOLIO OF INVESTMENTS AND PROXY VOTING INFORMATION
You may obtain (i) each Fund's quarterly portfolio of investments, (ii)
information regarding how the Funds voted proxies relating to portfolio
securities held during the twelve-month period ended June 30, 2007, and (iii) a
description of the policies and procedures that the Funds used to determine how
to vote proxies relating to portfolio securities without charge, upon request,
by calling Nuveen Investments toll-free at (800) 257-8787 or on Nuveen's website
at www.nuveen.com.
You may also obtain this and other Fund information directly from the Securities
and Exchange Commission ("SEC"). The SEC may charge a copying fee for this
information. Visit the SEC on-line at http://www.sec.gov or in person at the
SEC's Public Reference Room in Washington, D.C. Call the SEC at (202) 942-8090
for room hours and operation. You may also request Fund information by sending
an e-mail request to publicinfo@sec.gov or by writing to the SEC's Public
References Section at 100 F Street NE, Washington, D.C. 20549.
CEO CERTIFICATION DISCLOSURE
Each Fund's Chief Executive Officer has submitted to the New York Stock Exchange
(NYSE) the annual CEO certification as required by Section 303A.12(a) of the
NYSE Listed Company Manual.
Each Fund has filed with the Securities and Exchange Commission the
certification of its Chief Executive Officer and Chief Financial Officer
required by Section 302 of the Sarbanes-Oxley Act.
BOARD OF TRUSTEES
John P. Amboian
Robert P. Bremner
Jack B. Evans
William C. Hunter
David J. Kundert
William J. Schneider
Judith M. Stockdale
Carole E. Stone
Terence J. Toth
FUND MANAGER
Nuveen Asset Management
333 West Wacker Drive
Chicago, IL 60606
CUSTODIAN
State Street Bank & Trust Company
Boston, MA
TRANSFER AGENT AND
SHAREHOLDER SERVICES
State Street Bank & Trust Company
Nuveen Funds
P.O. Box 43071
Providence, RI 02940-3071
(800) 257-8787
LEGAL COUNSEL
Chapman and Cutler LLP
Chicago, IL
INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
Ernst & Young LLP
Chicago, IL
Each Fund intends to repurchase shares of its own common or preferred stock in
the future at such times and in such amounts as is deemed advisable. No common
or preferred shares were repurchased during the period covered by this report.
Any future repurchases will be reported to shareholders in the next annual or
semi-annual report.
107
Nuveen Investments:
-------------------
SERVING INVESTORS FOR GENERATIONS
Since 1898, financial advisors and their clients have relied on Nuveen
Investments to provide dependable investment solutions. For the past century,
Nuveen Investments has adhered to the belief that the best approach to investing
is to apply conservative risk-management principles to help minimize volatility.
Building on this tradition, we today offer a range of high quality equity and
fixed-income solutions that are integral to a well-diversified core portfolio.
Our clients have come to appreciate this diversity, as well as our continued
adherence to proven, long-term investing principles.
We offer many different investing solutions for our clients' different needs.
Managing $153 billion in assets, as of March 31, 2008, Nuveen Investments offers
access to a number of different asset classes and investing solutions through a
variety of products. Nuveen Investments markets its capabilities under six
distinct brands: Nuveen, a leader in fixed-income investments; NWQ, a leader in
value-style equities; Rittenhouse, a leader in growth-style equities; Symphony,
a leading institutional manager of market-neutral alternative investment
portfolios; Santa Barbara, a leader in growth equities; and Tradewinds, a leader
in global equities.
Find out how we can help you reach your financial goals.
To learn more about the products and services Nuveen Investments offers, talk to
your financial advisor, or call us at (800) 257-8787. Please read the
information provided carefully before you invest. Be sure to obtain a
prospectus, where applicable. Investors should consider the investment objective
and policies, risk considerations, charges and expenses of the Fund carefully
before investing. The prospectus contains this and other information relevant to
an investment in the Fund. For a prospectus, please contact your securities
representative or Nuveen Investments, 333 W. Wacker Dr., Chicago, IL 60606.
Please read the prospectus carefully before you invest or send money.
Learn more about Nuveen Funds at: www.nuveen.com/etf
Share prices
Fund details
Daily financial news
Investor education
Interactive planning tools
EAN-A-0508D
ITEM 2. CODE OF ETHICS.
As of the end of the period covered by this report, the registrant has adopted a
code of ethics that applies to the registrant's principal executive officer,
principal financial officer, principal accounting officer or controller, or
persons performing similar functions. There were no amendments to or waivers
from the Code during the period covered by this report. The registrant has
posted the code of ethics on its website at www.nuveen.com/etf. (To view the
code, click on the Shareholder Resources drop down menu box, click on Fund
Governance and then click on Code of Conduct.)
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The registrant's Board of Directors or Trustees determined that the registrant
has at least one "audit committee financial expert" (as defined in Item 3 of
Form N-CSR) serving on its Audit Committee. The registrant's audit committee
financial expert is Jack B. Evans, who is "independent" for purposes of Item 3
of Form N-CSR.
Mr. Evans was formerly President and Chief Operating Officer of SCI Financial
Group, Inc., a full service registered broker-dealer and registered investment
adviser ("SCI"). As part of his role as President and Chief Operating Officer,
Mr. Evans actively supervised the Chief Financial Officer (the "CFO") and
actively supervised the CFO's preparation of financial statements and other
filings with various regulatory authorities. In such capacity, Mr. Evans was
actively involved in the preparation of SCI's financial statements and the
resolution of issues raised in connection therewith. Mr. Evans has also served
on the audit committee of various reporting companies. At such companies, Mr.
Evans was involved in the oversight of audits, audit plans, and the preparation
of financial statements. Mr. Evans also formerly chaired the audit committee of
the Federal Reserve Bank of Chicago.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Nuveen Maryland Dividend Advantage Municipal Fund 3
The following tables show the amount of fees that Ernst & Young LLP, the Fund's
auditor, billed to the Fund during the Fund's last two full fiscal years. For
engagements with Ernst & Young LLP the Audit Committee approved in advance all
audit services and non-audit services that Ernst & Young LLP provided to the
Fund, except for those non-audit services that were subject to the pre-approval
exception under Rule 2-01 of Regulation S-X (the "pre-approval exception"). The
pre-approval exception for services provided directly to the Fund waives the
pre-approval requirement for services other than audit, review or attest
services if: (A) the aggregate amount of all such services provided constitutes
no more than 5% of the total amount of revenues paid by the Fund to its
accountant during the fiscal year in which the services are provided; (B) the
Fund did not recognize the services as non-audit services at the time of the
engagement; and (C) the services are promptly brought to the Audit Committee's
attention, and the Committee (or its delegate) approves the services before the
audit is completed.
The Audit Committee has delegated certain pre-approval responsibilities to its
Chairman (or, in his absence, any other member of the Audit Committee).
SERVICES THAT THE FUND'S AUDITOR BILLED TO THE FUND
AUDIT FEES BILLED AUDIT-RELATED FEES TAX FEES ALL OTHER FEES
FISCAL YEAR ENDED TO FUND (1) BILLED TO FUND (2) BILLED TO FUND (3) BILLED TO FUND (4)
--------------------------------------------------------------------------------------------------------------------------------
May 30, 2008 $ 10,711 $ 0 $ 500 $ 800
--------------------------------------------------------------------------------------------------------------------------------
Percentage approved 0% 0% 0% 0%
pursuant to
pre-approval
exception
--------------------------------------------------------------------------------------------------------------------------------
May 31, 2007 $ 9,445 $ 0 $ 0 $ 2,250
--------------------------------------------------------------------------------------------------------------------------------
Percentage approved 0% 0% 0% 0%
pursuant to
pre-approval
exception
--------------------------------------------------------------------------------------------------------------------------------
(1) "Audit Fees" are the aggregate fees billed for professional services for
the audit of the Fund's annual financial statements and services provided
in connection with statutory and regulatory filings or engagements.
(2) "Audit Related Fees" are the aggregate fees billed for assurance and
related services reasonably related to the performance of the audit or
review of financial statements and are not reported under "Audit Fees".
(3) "Tax Fees" are the aggregate fees billed for professional services for tax
advice, tax compliance, and tax planning.
(4) "All Other Fees" are the aggregate fees billed for products and services
for agreed upon procedures engagements performed for leveraged funds.
SERVICES THAT THE FUND'S AUDITOR BILLED TO THE
ADVISER AND AFFILIATED FUND SERVICE PROVIDERS
The following tables show the amount of fees billed by Ernst & Young LLP to
Nuveen Asset Management ("NAM" or the "Adviser"), and any entity controlling,
controlled by or under common control with NAM ("Control Affiliate") that
provides ongoing services to the Fund ("Affiliated Fund Service Provider"), for
engagements directly related to the Fund's operations and financial reporting,
during the Fund's last two full fiscal years.
The tables also show the percentage of fees subject to the pre-approval
exception. The pre-approval exception for services provided to the Adviser and
any Affiliated Fund Service Provider (other than audit, review or attest
services) waives the pre-approval requirement if: (A) the aggregate amount of
all such services provided constitutes no more than 5% of the total amount of
revenues paid to Ernst & Young LLP by the Fund, the Adviser and Affiliated Fund
Service Providers during the fiscal year in which the services are provided that
would have to be pre-approved by the Audit Committee; (B) the Fund did not
recognize the services as non-audit services at the time of the engagement; and
(C) the services are promptly brought to the Audit Committee's attention, and
the Committee (or its delegate) approves the services before the Fund's audit is
completed.
FISCAL YEAR ENDED AUDIT-RELATED FEES TAX FEES BILLED TO ALL OTHER FEES
BILLED TO ADVISER AND ADVISER AND BILLED TO ADVISER
AFFILIATED FUND AFFILIATED FUND AND AFFILIATED FUND
SERVICE PROVIDERS SERVICE PROVIDERS SERVICE PROVIDERS
--------------------------------------------------------------------------------------------------------------
May 30, 2008 $ 0 $ 0 $ 0
--------------------------------------------------------------------------------------------------------------
Percentage approved 0% 0% 0%
pursuant to
pre-approval
exception
--------------------------------------------------------------------------------------------------------------
May 31, 2007 $ 0 $ 0 $ 0
--------------------------------------------------------------------------------------------------------------
Percentage approved 0% 0% 0%
pursuant to
pre-approval
exception
--------------------------------------------------------------------------------------------------------------
NON-AUDIT SERVICES
The following table shows the amount of fees that Ernst & Young LLP billed
during the Fund's last two full fiscal years for non-audit services. The Audit
Committee is required to pre-approve non-audit services that Ernst & Young LLP
provides to the Adviser and any Affiliated Fund Services Provider, if the
engagement related directly to the Fund's operations and financial reporting
(except for those subject to the de minimis exception described above). The
Audit Committee requested and received information from Ernst & Young LLP about
any non-audit services that Ernst & Young LLP rendered during the Fund's last
fiscal year to the Adviser and any Affiliated Fund Service Provider. The
Committee considered this information in evaluating Ernst & Young LLP's
independence.
FISCAL YEAR ENDED TOTAL NON-AUDIT FEES
BILLED TO ADVISER AND
AFFILIATED FUND SERVICE TOTAL NON-AUDIT FEES
PROVIDERS (ENGAGEMENTS BILLED TO ADVISER AND
RELATED DIRECTLY TO THE AFFILIATED FUND SERVICE
TOTAL NON-AUDIT FEES OPERATIONS AND FINANCIAL PROVIDERS (ALL OTHER
BILLED TO FUND REPORTING OF THE FUND) ENGAGEMENTS) TOTAL
-----------------------------------------------------------------------------------------------------------------------------
May 30, 2008 $ 1,300 $ 0 $ 0 $ 1,300
May 31, 2007 $ 2,250 $ 0 $ 0 $ 2,250
"Non-Audit Fees billed to Adviser" for both fiscal year ends represent "Tax
Fees" billed to Adviser in their respective amounts from the previous table.
Audit Committee Pre-Approval Policies and Procedures. Generally, the Audit
Committee must approve (i) all non-audit services to be performed for the Fund
by the Fund's independent accountants and (ii) all audit and non-audit services
to be performed by the Fund's independent accountants for the Affiliated Fund
Service Providers with respect to operations and financial reporting of the
Fund. Regarding tax and research projects conducted by the independent
accountants for the Fund and Affiliated Fund Service Providers (with respect to
operations and financial reports of the Fund) such engagements will be (i)
pre-approved by the Audit Committee if they are expected to be for amounts
greater than $10,000; (ii) reported to the Audit Committee chairman for his
verbal approval prior to engagement if they are expected to be for amounts under
$10,000 but greater than $5,000; and (iii) reported to the Audit Committee at
the next Audit Committee meeting if they are expected to be for an amount under
$5,000.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
The registrant's Board of Directors or Trustees has a separately designated
Audit Committee established in accordance with Section 3(a)(58)(A) of the
Securities Exchange Act of 1934, as amended (15 U.S.C. 78c(a)(58)(A)). As of
May 31, 2008, the members of the audit committee are Robert P. Bremner, Jack
B. Evans, William J. Schneider and David J. Kundert.
ITEM 6. SCHEDULE OF INVESTMENTS.
See Portfolio of Investments in Item 1.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
The registrant invests its assets primarily in municipal bonds and cash
management securities. On rare occasions the registrant may acquire, directly or
through a special purpose vehicle, equity securities of a municipal bond issuer
whose bonds the registrant already owns when such bonds have deteriorated or are
expected shortly to deteriorate significantly in credit quality. The purpose of
acquiring equity securities generally will be to acquire control of the
municipal bond issuer and to seek to prevent the credit deterioration or
facilitate the liquidation or other workout of the distressed issuer's credit
problem. In the course of exercising control of a distressed municipal issuer,
NAM may pursue the registrant's interests in a variety of ways, which may entail
negotiating and executing consents, agreements and other arrangements, and
otherwise influencing the management of the issuer. NAM does not consider such
activities proxy voting for purposes of Rule 206(4)-6 under the 1940 Act, but
nevertheless provides reports to the registrant's Board of Trustees on its
control activities on a quarterly basis.
In the rare event that a municipal issuer were to issue a proxy or that the
registrant were to receive a proxy issued by a cash management security, NAM
would either engage an independent third party to determine how the proxy should
be voted or vote the proxy with the consent, or based on the instructions, of
the registrant's Board of Trustees or its representative. A member of NAM's
legal department would oversee the administration of the voting, and ensure that
records were maintained in accordance with Rule 206(4)-6, reports were filed
with the SEC on Form N-PX, and the results provided to the registrant's Board of
Trustees and made available to shareholders as required by applicable rules.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
THE PORTFOLIO MANAGER
The following individual has primary responsibility for the day-to-day
implementation of the registrant's investment strategies:
NAME FUND
Cathryn P. Steeves Nuveen Maryland Dividend Advantage Municipal Fund 3
Other Accounts Managed. In addition to managing the registrant, the portfolio
manager is also primarily responsible for the day-to-day portfolio management of
the following accounts:
TYPE OF ACCOUNT NUMBER OF
PORTFOLIO MANAGER MANAGED ACCOUNTS ASSETS
--------------------------------------------------------------------------------
Cathryn P. Steeves Registered Investment Company 41 $8.245 billion
Other Pooled Investment Vehicles 0 $0
Other Accounts 0 $0
* Assets are as of May 31, 2008. None of the assets in these accounts are
subject to an advisory fee based on performance.
Compensation. Each portfolio manager's compensation consists of three basic
elements--base salary, cash bonus and long-term incentive compensation. The
compensation strategy is to annually compare overall compensation to the market
in order to create a compensation structure that is competitive and consistent
with similar financial services companies. As discussed below, several factors
are considered in determining each portfolio manager's total compensation. In
any year these factors may include, among others, the effectiveness of the
investment strategies recommended by the portfolio manager's investment team,
the investment performance of the accounts managed by the portfolio manager, and
the overall performance of Nuveen Investments, Inc. (the parent company of NAM).
Although investment performance is a factor in determining the portfolio
manager's compensation, it is not necessarily a decisive factor. The portfolio
manager's performance is evaluated in part by comparing manager's performance
against a specified investment benchmark. This fund-specific benchmark is a
customized subset (limited to bonds in each Fund's specific state and with
certain maturity parameters) of the S&P/Investortools Municipal Bond index, an
index comprised of bonds held by managed municipal bond fund customers of
Standard & Poor's Securities Pricing, Inc. that are priced daily and whose fund
holdings aggregate at least $2 million. As of June 30, 2008, the
S&P/Investortools Municipal Bond index was comprised of 52,385 securities with
an aggregate current market value of $1,052 billion.
Base salary. Each portfolio manager is paid a base salary that is set at a level
determined by NAM in accordance with its overall compensation strategy discussed
above. NAM is not under any current contractual obligation to increase a
portfolio manager's base salary.
Cash bonus. Each portfolio manager is also eligible to receive an annual cash
bonus. The level of this bonus is based upon evaluations and determinations made
by each portfolio manager's supervisors, along with reviews submitted by his
peers. These reviews and evaluations often take into account a number of
factors, including the effectiveness of the investment strategies recommended to
the NAM's investment team, the performance of the accounts for which he serves
as portfolio manager relative to any benchmarks established for those accounts,
his effectiveness in communicating investment performance to stockholders and
their representatives, and his contribution to the NAM's investment process and
to the execution of investment strategies. The cash bonus component is also
impacted by the overall performance of Nuveen Investments, Inc. in achieving its
business objectives.
Long-term incentive compensation. In connection with the acquisition of Nuveen
Investments, Inc., by a group of investors lead by Madison Dearborn Partners in
November 2007, certain employees, including portfolio managers, received profit
interests in Nuveen's parent. These profit interests entitle the holders to
participate in the appreciation in the value of Nuveen beyond the issue date and
vest over five to seven years, or earlier in the case of a liquidity event.
Material Conflicts of Interest. Each portfolio manager's simultaneous management
of the registrant and the other accounts noted above may present actual or
apparent conflicts of interest with respect to the allocation and aggregation of
securities orders placed on behalf of the Registrant and the other account. NAM,
however, believes that such potential conflicts are mitigated by the fact that
the NAM has adopted several policies that address potential conflicts of
interest, including best execution and trade allocation policies that are
designed to ensure (1) that portfolio management is seeking the best price for
portfolio securities under the circumstances, (2) fair and equitable allocation
of investment opportunities among accounts over time and (3) compliance with
applicable regulatory requirements. All accounts are to be treated in a
non-preferential manner, such that allocations are not based upon account
performance, fee structure or preference of the portfolio manager, although the
allocation procedures may provide allocation preferences to funds with special
characteristics (such as favoring state funds versus national funds for
allocations of in-state bonds). In addition, NAM has adopted a Code of Conduct
that sets forth policies regarding conflicts of interest.
Beneficial Ownership of Securities. As of May 31, 2008, the portfolio manager
beneficially owned the following dollar range of equity securities issued by the
Registrant and other Nuveen Funds managed by NAM's municipal investment team.
DOLLAR RANGE OF
EQUITY SECURITIES
DOLLAR RANGE OF BENEFICIALLY OWNED
EQUITY IN THE REMAINDER OF
SECURITIES NUVEEN FUNDS MANAGED
BENEFICIALLY BY NAM'S MUNICIPAL
NAME OF PORTFOLIO MANAGER FUND OWNED IN FUND INVESTMENT TEAM
------------------------------------------------------------------------------------------------------------------
Cathryn P. Steeves Nuveen Maryland Dividend Advantage Municipal $0 $10,001-$50,000
Fund 3
PORTFOLIO MANAGER BIO:
Cathryn P. Steeves, PhD is currently a portfolio manager for 42 state-specific
municipal bond funds. She joined Nuveen in 1996 and worked as a senior analyst
in the healthcare sector. Ms. Steeves has an undergraduate degree from Wake
Forest University as well as an MA, an MPhil and a PhD from Columbia University.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which shareholders may
recommend nominees to the registrants Board implemented after the registrant
last provided disclosure in response to this item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive and principal financial officers,
or persons performing similar functions, have concluded that the
registrant's disclosure controls and procedures (as defined in Rule
30a-3(c) under the Investment Company Act of 1940, as amended (the
"1940 Act") (17 CFR 270.30a-3(c))) are effective, as of a date within
90 days of the filing date of this report that includes the disclosure
required by this paragraph, based on their evaluation of the controls
and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR
270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")
(17 CFR 240.13a-15(b) or 240.15d-15(b)).
(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act
(17 CFR 270.30a-3(d)) that occurred during the second fiscal quarter
of the period covered by this report that has materially affected, or
is reasonably likely to materially affect, the registrant's internal
control over financial reporting.
ITEM 12. EXHIBITS.
File the exhibits listed below as part of this Form. Letter or number the
exhibits in the sequence indicated.
(a)(1) Any code of ethics, or amendment thereto, that is the subject of the
disclosure required by Item 2, to the extent that the registrant intends to
satisfy the Item 2 requirements through filing of an exhibit: Not applicable
because the code is posted on registrant's website at www.nuveen.com/etf and
there were no amendments during the period covered by this report. (To view the
code, click on the Investor Resources drop down menu box, click on Fund
Governance and then Code of Conduct.)
(a)(2) A separate certification for each principal executive officer and
principal financial officer of the registrant as required by Rule 30a-2(a) under
the 1940 Act (17 CFR 270.30a-2(a)) in the exact form set forth below: Ex-99.CERT
Attached hereto.
(a)(3) Any written solicitation to purchase securities under Rule 23c-1 under
the 1940 Act (17 CFR 270.23c-1) sent or given during the period covered by the
report by or on behalf of the registrant to 10 or more persons. Not applicable.
(b) If the report is filed under Section 13(a) or 15(d) of the Exchange Act,
provide the certifications required by Rule 30a-2(b) under the 1940 Act (17 CFR
270.30a-2(b)); Rule 13a-14(b) or Rule 15d-14(b) under the Exchange Act (17 CFR
240.13a-14(b) or 240.15d-14(b)), and Section 1350 of Chapter 63 of Title 18 of
the United States Code (18 U.S.C. 1350) as an exhibit. A certification furnished
pursuant to this paragraph will not be deemed "filed" for purposes of Section 18
of the Exchange Act (15 U.S.C. 78r), or otherwise subject to the liability of
that section. Such certification will not be deemed to be incorporated by
reference into any filing under the Securities Act of 1933 or the Exchange Act,
except to the extent that the registrant specifically incorporates it by
reference. Ex-99.906 CERT attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Nuveen Maryland Dividend Advantage Municipal Fund 3
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By (Signature and Title) /s/ Kevin J. McCarthy
----------------------------------------------
Kevin J. McCarthy
Vice President and Secretary
Date: August 7, 2008
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Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title) /s/ Gifford R. Zimmerman
----------------------------------------------
Gifford R. Zimmerman
Chief Administrative Officer
(principal executive officer)
Date: August 7, 2008
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By (Signature and Title) /s/ Stephen D. Foy
----------------------------------------------
Stephen D. Foy
Vice President and Controller
(principal financial officer)
Date: August 7, 2008
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