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 811-07608
-----------------------
Nuveen North Carolina Premium Income Municipal Fund
--------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
Nuveen Investments
333 West Wacker Drive
Chicago, IL 60606
--------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
Jessica R. Droeger
Nuveen Investments
333 West Wacker Drive
Chicago, IL 60606
--------------------------------------------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: (312) 917-7700
---------------------
Date of fiscal year end: May 31
-------------------
Date of reporting period: February 28, 2006
-----------------------
Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
QUARTERLY REPORT February 28, 2006
(Unaudited)
Nuveen Investments
Municipal Exchange-Traded
Closed-End
Funds
NUVEEN NORTH CAROLINA PREMIUM INCOME MUNICIPAL FUND
NNC
Dear Shareholder:
Once again, I am pleased to report that over the nine month period covered by
this report your Fund continued to provide you with attractive monthly tax-free
income. For more details about the management strategy and performance of your
Fund, please read the Portfolio Manager's Comments, the Distribution and Share
Price Information, and the Performance Overview sections of this report.
Municipal bonds can be an important building block in a well balanced investment
portfolio. In addition to providing attractive tax-free monthly income, a
municipal bond investment like your Fund may help you achieve and benefit from
greater portfolio diversification. Portfolio diversification is a recognized way
to try to reduce some of the risk that comes with investing. I encourage you to
contact your personal financial advisor who can help explain this important
investment strategy.
Nuveen Investments is pleased to offer you choices when it comes to receiving
your fund reports. In addition to mailed print copies, you can also sign up to
receive future Fund reports and other Fund information by e-mail and the
Internet. Not only will you be able to receive the information faster, but this
also may help lower your Fund's expenses. The inside front cover of this report
contains information on how you can sign up.
We are grateful that you have chosen us as a partner as you pursue your
financial goals, and we look forward to continuing to earn your trust in the
months and years ahead. At Nuveen Investments, our mission continues to be to
assist you and your financial advisor by offering investment services and
products that can help you to secure your financial objectives.
Sincerely,
/s/ Timothy R. Schwertfeger
---------------------------
Timothy R. Schwertfeger
Chairman of the Board
April 3, 2006
NUVEEN INVESTMENTS MUNICIPAL EXCHANGE-TRADED CLOSED-END FUNDS
QUARTERLY REPORT FOR THE PERIOD ENDED 2/28/06
NUVEEN NORTH CAROLINA PREMIUM INCOME MUNICIPAL FUND NNC
PORTFOLIO MANAGER'S COMMENTS
PORTFOLIO MANAGER CATHRYN STEEVES REVIEWS KEY INVESTMENT STRATEGIES AND THE
PERFORMANCE OF THE NUVEEN NORTH CAROLINA PREMIUM INCOME MUNICIPAL FUND (NNC).
CATHRYN, WHO JOINED NUVEEN IN 1996, HAS MANAGED NNC SINCE 2004.
WHAT KEY STRATEGIES WERE USED TO MANAGE NNC DURING THE NINE-MONTH REPORTING
PERIOD ENDED FEBRUARY 28, 2006?
During this reporting period, we saw a general increase in interest rates across
the yield curve, with short-term rates rising faster than long-term rates.
Between June 1, 2005, and February 28, 2006, the Federal Reserve implemented six
increases of 0.25% each in the fed funds rate, raising this short-term target by
150 basis points.
Although the longer end of the curve remained resistant to the rate increases
experienced at the short end during the first part of this period, longer-term
yields generally began to rise in late September 2005. By the end of February
2006, the yield on the benchmark 10-year U.S. Treasury note stood at 4.55%, up
from 3.98% nine months earlier, while the yield on the Bond Buyer 25 Revenue
Bond Index, a widely followed measure of longer-term municipal market rates,
ended February 2006 at 5.04%, an increase of 26 basis points from the end of May
2005. As rates increased, bond valuations generally declined, and the yield
curve flattened as shorter-term rates approached the levels of longer-term
rates.
In this environment, one of our key strategies continued to be careful
duration(1) management. Given the recent trends in interest rates, our purchase
activity during this period focused mainly on attractively priced bonds maturing
in 15 to 25 years. As the yield curve flattened, we believed that bonds in this
part of the curve generally offered more attractive opportunities and the best
values. We also continued to emphasize premium bonds, that is, bonds that at the
time of purchase were trading above par value because their coupons were higher
than prevailing interest rates. These bonds have been in demand because they
have historically held their value better when interest rates rise than bonds
with coupons closer to the prevailing interest rate.
To help us maintain NNC's duration within the preferred strategic range, we were
also selectively selling holdings with shorter maturities, especially
pre-refunded bonds. The proceeds from these sales -- as well as proceeds from
called bonds -- were then generally reinvested in the 15- to 25-year part of the
yield curve as attractive opportunities arose.
In looking for potential purchase candidates, we kept an opportunistic eye
toward all types of issuance that we believed could add value to NNC's
portfolio. However, municipal supply in North Carolina tightened in recent
months, especially during the first two months of 2006, when issuance declined
23% from levels seen in early 2005. While we continued to emphasize maintaining
the Fund's weightings of BBB and nonrated bonds, tighter supply meant fewer
opportunities to further diversify NNC's credit profile with additional
lower-rated issues. Due to limited new issuance and the overall high credit
quality of the state's supply, the majority of our new purchases for NNC during
this period were AAA rated credits.
HOW DID NNC PERFORM?
Results for NNC, as well as relevant index and peer group information, are
presented in the accompanying table.
TOTAL RETURNS ON NET ASSET VALUE*
For periods ended 2/28/06
9-Month 1-Year 5-Year 10-Year
------- ------ ------ -------
NNC 1.96% 4.11% 7.01% 6.93%
Lehman Brothers Municipal
Bond Index(2) 2.18% 3.87% 5.51% 5.80%
Lipper Other States
Municipal Debt Funds
Average(3) 2.61% 4.91% 7.30% 6.64%
*Nine-month returns are cumulative; returns for one year, five years, and ten
years are 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 Performance Overview for NNC in this report.
For the nine months ended February 28, 2006, NNC's cumulative return on net
asset value (NAV) underperformed the return on the Lehman Brothers Municipal
Bond Index and the average return for the Lipper Other States peer group. It
should be noted that the performance of the Lipper Other States category
represents the overall average of returns for funds from 10 different states
with a wide variety of municipal market conditions. We believe this makes direct
comparisons with a state-specific Fund like NNC less meaningful.
One of the factors affecting NNC's nine-month performance relative to that of
the unleveraged Lehman Brothers municipal index was the Fund's use of financial
leverage. While leveraging provides opportunities for additional income and
total returns for common shareholders when interest rates fall or remain
consistently low (as they have over the past several years), this benefit is
reduced when interest rates rise. With the increase in both short-term and
long-term interest rates during this period, the
decline in value of the bonds in NNC's portfolio was exacerbated by the effects
of leveraging. In addition, the benefits of leveraging are tied in part to the
short-term rates a leveraged Fund pays its MuniPreferred(R) shareholders. During
periods of low short-term rates, a leveraged Fund generally pays lower dividends
to MuniPreferred shareholders, which can leave more earnings to support common
share dividends. Conversely, when short-term interest rates rise, as they did
during this reporting period, the Fund's borrowing costs also rise, impacting
the Fund's income stream, and total return. However, we remain convinced that,
over the long term, leveraging should work to the benefit of NNC's performance.
During this reporting period, positive contributors to NNC's return included the
Fund's exposure to the intermediate and long part of the yield curve, allocation
to lower-rated credits, and holdings of higher coupon, housing, and student loan
bonds. As the yield curve continued to flatten over the course of the period,
bonds with intermediate and long maturities generally outperformed those with
shorter maturities. NNC's relatively heavy exposure to the intermediate part of
the curve helped the Fund during this period. However, NNC had less exposure to
bonds in the longest part of the curve, which meant that the Fund was not able
to participate fully in the gains made by these maturities.
With bonds rated BBB or lower and nonrated bonds generally outperforming other
credit quality sectors during this period, NNC also benefited from its
allocation of lower-quality credits. The performance of this sector was largely
the result of investor demand for the higher yields typically associated with
lower-quality bonds, which drove up their value and kept credit spreads narrow.
As of February 28, 2006, BBB and nonrated bonds accounted for 7% of NNC's
portfolio.
In addition, housing bonds, particularly those issued for multifamily housing,
were among the top performing credits for this period, as rising interest rates
lessened the
incidence and impact of prepayments and bond calls. NNC had a 6% allocation to
single-family housing credits and 4% to multifamily.
The rising interest rate environment during this nine-month period generally
meant that NNC's holdings of older pre-refunded bonds tended to underperform the
general municipal market, due primarily to the shorter effective maturities of
these bonds. In addition, bond calls affecting NNC's higher-yielding student
loan holdings also hampered the Fund's performance during this period.
HOW WAS NNC POSITIONED IN TERMS OF CREDIT QUALITY AND BOND CALLS AS OF FEBRUARY
28, 2006?
As of February 28, 2006, NNC continued to offer excellent credit quality, with
78% of its portfolio allocated to bonds rated AAA/U.S. guaranteed and AA. As of
this date, 11% of NNC's portfolio faced potential bond calls during the period
from March 2006 through the end of 2007. The number of actual bond calls during
this period depends largely on future market interest rates.
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.
2 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.
3 The Lipper Other States Municipal Debt Funds average is calculated
using the returns of all closed-end exchange-traded funds in this
category for each period as follows: 9 months, 43; 1 year, 43; 5
years, 24; and 10 years, 16. Fund and Lipper returns assume
reinvestment of dividends.
DIVIDEND AND SHARE PRICE INFORMATION
As previously noted, NNC uses leverage to potentially enhance opportunities for
additional income for common shareholders. During periods of rising short-term
interest rates, as was the case during this reporting period, the Fund's
borrowing costs also rise, reducing the extent of the benefits of leveraging.
The Fund's income stream was also impacted as the proceeds from older,
higher-yielding bonds that matured or were called were reinvested into bonds
that generally offered lower yields. These factors resulted in a single monthly
dividend reduction in NNC over the nine-month period ended February 28, 2006.
(On March 1, 2006, the Fund announced an additional monthly dividend reduction.)
Due to normal portfolio activity, common shareholders of NNC received a
long-term capital gains distribution of $0.1594 per share and a net ordinary
income distribution of $0.0034 per share at the end of December 2005. This
relatively large distribution, which represented an important part of NNC's
total return for this period, was generated by bond calls and the sale of
appreciated securities. This had a slight negative impact on the Fund's earning
power per common share and was a minor factor in the per share dividend
reductions noted above.
NNC seeks to pay stable dividends at rates that reflect the Fund's past results
and projected future performance. During certain periods, NNC may pay dividends
at a rate that may be more or less than the amount of net investment income
actually earned by the Fund during the period. If a Fund has cumulatively earned
more than it has paid in dividends, it holds the excess in reserve as
undistributed net investment income (UNII) as part of the Fund's NAV.
Conversely, if a Fund has cumulatively paid dividends in excess of its earnings,
the excess constitutes negative UNII that is likewise reflected in the Fund's
NAV. The Fund will, over time, pay all of its net investment income as dividends
to shareholders. As of February 28, 2006, NNC had a positive UNII balance for
financial statement purposes and a positive UNII balance, based on our best
estimate, for tax purposes.
At the end of the reporting period, NNC's share price was trading at a premium
to its NAV as shown in the accompanying chart:
2/28/06 9-Month Average
Premium/Discount Premium/Discount
---------------- ----------------
NNC +9.67% +8.88%
Nuveen North Carolina Premium Income Municipal Fund
NNC
Performance
OVERVIEW As of February 28, 2006
CREDIT QUALITY
(as a % of total investments)
------------------------------------
AAA/U.S. Guaranteed 45%
------------------------------------
AA 33%
------------------------------------
A 15%
------------------------------------
BBB 6%
------------------------------------
N/R 1%
------------------------------------
Bar Chart:
2005-2006 MONTHLY TAX-FREE DISTRIBUTIONS PER SHARE(1)
Mar 0.0715
Apr 0.0715
May 0.0715
Jun 0.0680
Jul 0.0680
Aug 0.0680
Sep 0.0680
Oct 0.0680
Nov 0.0680
Dec 0.0645
Jan 0.0645
Feb 0.0645
Line Chart:
SHARE PRICE PERFORMANCE
Weekly Closing Price
Past performance is not predictive of future results.
3/1/2005 17.40
3/4/2005 17.20
3/11/2005 16.89
3/18/2005 16.78
3/24/2005 16.10
4/1/2005 16.57
4/8/2005 15.90
4/15/2005 16.20
4/22/2005 16.31
4/29/2005 16.55
5/6/2005 16.90
5/13/2005 16.95
5/20/2005 17.21
5/27/2005 17.29
6/3/2005 17.20
6/10/2005 17.15
6/17/2005 17.11
6/24/2005 16.65
7/1/2005 16.62
7/8/2005 16.51
7/15/2005 16.88
7/22/2005 16.52
7/29/2005 16.51
8/5/2005 16.54
8/12/2005 16.48
8/19/2005 16.75
8/26/2005 16.94
9/2/2005 16.99
9/9/2005 17.00
9/16/2005 16.65
9/23/2005 16.45
9/30/2005 16.01
10/7/2005 16.20
10/14/2005 15.70
10/21/2005 15.55
10/28/2005 15.69
11/4/2005 15.20
11/11/2005 15.10
11/18/2005 14.96
11/25/2005 14.20
12/2/2005 15.03
12/9/2005 14.82
12/16/2005 14.67
12/23/2005 15.19
12/30/2005 15.60
1/6/2006 15.55
1/13/2006 15.16
1/20/2006 15.70
1/27/2006 16.27
2/3/2006 15.79
2/10/2006 16.10
2/17/2006 15.68
2/24/2006 15.97
2/28/2006 16.10
FUND SNAPSHOT
------------------------------------
Common Share Price $16.10
------------------------------------
Common Share Net
Asset Value $14.68
------------------------------------
Premium / (Discount) to NAV 9.67%
------------------------------------
Market Yield 4.81%
------------------------------------
Tax-Equivalent Yield(2) 7.29%
------------------------------------
Net Assets Attributable to
Common Shares ($000) $93,137
------------------------------------
Average Effective Maturity
on Securities (Years) 15.86
------------------------------------
Leverage-Adjusted Duration 7.87
------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 5/20/93)
------------------------------------
ON SHARE PRICE ON NAV
------------------------------------
9-Month
(Cumulative) -1.80% 1.96%
------------------------------------
1-Year -1.01% 4.11%
------------------------------------
5-Year 8.01% 7.01%
------------------------------------
10-Year 7.75% 6.93%
------------------------------------
INDUSTRIES
(as a % of total investments)
------------------------------------
Tax Obligation/Limited 20.4%
------------------------------------
Education and Civic
Organizations 18.3%
------------------------------------
Health Care 14.9%
------------------------------------
Utilities 8.6%
------------------------------------
U.S. Guaranteed 7.8%
------------------------------------
Housing/Single Family 6.0%
------------------------------------
Tax Obligation/General 5.9%
------------------------------------
Water and Sewer 5.0%
------------------------------------
Other 13.1%
------------------------------------
(1) The Fund paid shareholders capital gains and net ordinary income
distributions in December 2005 of $0.1628 per share.
(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 34%. When comparing this Fund to investments that generate
qualified dividend income, the Taxable-Equivalent Yield is lower.
Nuveen North Carolina Premium Income Municipal Fund (NNC)
PORTFOLIO OF INVESTMENTS February 28, 2006(Unaudited)
OPTIONAL
PRINCIPAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 27.1% (18.3% OF TOTAL INVESTMENTS)
$ 1,000 North Carolina Capital Facilities Financing Agency, 6/13 at 100.00 AAA $ 1,049,220
Housing Revenue Bonds, Elizabeth City State
University, Series 2003A, 5.000%, 6/01/28 - AMBAC Insured
970 North Carolina Capital Facilities Financing Agency, 4/13 at 100.00 AAA 1,038,928
Revenue Bonds, Johnson and Wales University,
Series 2003A, 5.250%, 4/01/23 - XLCA Insured
5,875 North Carolina Education Assistance Authority, 7/06 at 102.00 A 6,027,746
Subordinate Lien Guaranteed Student Loan Revenue
Bonds, Series 1996C, 6.350%, 7/01/16 (Alternative
Minimum Tax)
3,285 North Carolina State University at Raleigh, General 10/13 at 100.00 AA 3,544,548
Revenue Bonds, Series 2003A, 5.000%, 10/01/15
750 University of North Carolina System, Pooled Revenue 4/14 at 100.00 Aaa 800,580
Bonds, Series 2004C, 5.000%, 4/01/21 - AMBAC Insured
1,530 University of North Carolina System, Pooled Revenue No Opt. Call AAA 1,668,128
Bonds, Series 2005A, 5.000%, 4/01/15 - AMBAC Insured
1,000 University of North Carolina System, Pooled Revenue 10/12 at 100.00 AAA 1,092,560
Refunding Bonds, Series 2002A, 5.375%, 4/01/22 -
AMBAC Insured
University of North Carolina, Chapel Hill, System
Net Revenue Bonds, Series 2003:
2,380 5.000%, 12/01/19 12/13 at 100.00 AA+ 2,562,760
2,725 5.000%, 12/01/21 12/13 at 100.00 AA+ 2,909,374
1,500 5.000%, 12/01/23 12/13 at 100.00 AA+ 1,601,490
1,200 University of North Carolina, Charlotte, Certificates of 3/15 at 100.00 AAA 1,261,728
Participation, Student Housing Project, Series 2005,
5.000%, 3/01/31 - AMBAC Insured
1,675 University of North Carolina, Wilmington, General 1/12 at 101.00 Aaa 1,780,274
Revenue Bonds, Series 2002A, 5.000%, 1/01/23 -
AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
23,890 Total Education and Civic Organizations 25,337,336
------------------------------------------------------------------------------------------------------------------------------------
ENERGY - 1.8% (1.3% OF TOTAL INVESTMENTS)
1,500 Virgin Islands Public Finance Authority, Revenue 1/14 at 100.00 BBB 1,650,615
Bonds, Refinery Project - Hovensa LLC, Series 2003,
6.125%, 7/01/22 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE - 22.3% (14.9% OF TOTAL INVESTMENTS)
250 Charlotte-Mecklenburg Hospital Authority, North Carolina, 1/15 at 100.00 AA 256,788
Healthcare System Revenue Bonds, DBA Carolinas
Healthcare System, Series 2005A, 5.000%, 1/15/45
5,000 North Carolina Medical Care Commission, 10/11 at 101.00 AA 5,246,500
Health System Revenue Bonds, Mission St. Joseph's
Health System, Series 2001, 5.250%, 10/01/31
2,000 North Carolina Medical Care Commission, Healthcare 11/13 at 100.00 AA- 2,103,940
Facilities Revenue Bonds, Novant Health Obligated
Group, Series 2003A, 5.000%, 11/01/19
OPTIONAL
PRINCIPAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE (continued)
$ 2,000 North Carolina Medical Care Commission, 10/09 at 101.00 A- $ 2,131,480
Healthcare Facilities Revenue Bonds, Stanly
Memorial Hospital, Series 1999, 6.375%, 10/01/29
North Carolina Medical Care Commission, Healthcare
Facilities Revenue Bonds, Union Regional Medical
Center, Series 2002A:
1,000 5.500%, 1/01/19 1/12 at 100.00 A 1,062,140
550 5.500%, 1/01/20 1/12 at 100.00 A 583,011
1,750 5.375%, 1/01/32 1/12 at 100.00 A 1,809,623
1,615 North Carolina Medical Care Commission, 10/08 at 101.00 AA 1,632,846
Hospital Revenue Bonds, FirstHealth of the Carolinas
Inc., Series 1998, 4.750%, 10/01/26
3,000 North Carolina Medical Care Commission, Hospital 6/12 at 101.00 A 3,119,340
Revenue Bonds, Southeastern Regional Medical
Center, Series 2002, 5.375%, 6/01/32
800 North Carolina Medical Care Commission, 1/15 at 100.00 AAA 835,392
Revenue Bonds, Blue Ridge Healthcare
System, Series 2005, 5.000%, 1/01/33 - FGIC Insured
North Carolina Medical Care Commission,
Revenue Bonds, Cleveland County Healthcare
System, Series 2004A:
600 5.250%, 7/01/20 - AMBAC Insured 7/14 at 100.00 AAA 650,064
500 5.250%, 7/01/22 - AMBAC Insured 7/14 at 100.00 AAA 540,615
735 North Carolina Medical Care Commission, 11/14 at 100.00 AA 768,634
Revenue Bonds, Northeast Medical Center,
Series 2004, 5.000%, 11/01/24
------------------------------------------------------------------------------------------------------------------------------------
19,800 Total Health Care 20,740,373
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 5.5% (3.7% OF TOTAL INVESTMENTS)
1,000 Asheville Housing Authority, North Carolina, GNMA 11/07 at 102.00 AA 1,024,290
Collateralized Multifamily Housing Revenue
Bonds, Woodridge Apartments, Series 1997,
5.800%, 11/20/39 (Alternative Minimum Tax)
1,000 Charlotte, North Carolina, FHA-Insured 7/06 at 102.00 AAA 1,029,430
Mortgage Revenue Refunding Bonds, Tryon
Hills Apartments, Series 1993A, 5.875%,
1/01/25 - MBIA Insured
2,290 Mecklenburg County, North Carolina, FNMA 7/13 at 105.00 AAA 2,391,859
Multifamily Housing Revenue Bonds, Little
Rock Apartments, Series 2003, 5.375%, 1/01/36
(Alternative Minimum Tax)
North Carolina Housing Finance Agency,
FHA-Insured Multifamily Revenue Bonds,
Series 1993:
230 5.800%, 7/01/14 7/06 at 100.00 Aa2 230,306
435 5.900%, 7/01/26 7/06 at 100.00 Aa2 435,431
------------------------------------------------------------------------------------------------------------------------------------
4,955 Total Housing/Multifamily 5,111,316
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 9.0% (6.0% OF TOTAL INVESTMENTS)
1,180 North Carolina Housing Finance Agency, Home 7/10 at 100.00 AAA 1,205,464
Ownership Revenue Bonds, 1998 Trust
Agreement, Series 10A, 5.400%, 7/01/32 -
AMBAC Insured (Alternative Minimum Tax)
4,985 North Carolina Housing Finance Agency, 7/09 at 100.00 AA 5,173,283
Home Ownership Revenue Bonds, 1998 Trust
Agreement, Series 6A, 6.200%, 1/01/29
(Alternative Minimum Tax)
1,945 North Carolina Housing Finance Agency, 3/06 at 102.00 AA 1,985,534
Single Family Revenue Bonds, Series 1996HH,
6.300%, 3/01/26 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
8,110 Total Housing/Single Family 8,364,281
------------------------------------------------------------------------------------------------------------------------------------
INDUSTRIALS - 1.5% (1.0% OF TOTAL INVESTMENTS)
1,400 North Carolina Capital Facilities Financing Agency, 8/14 at 100.00 BBB 1,393,112
Exempt Facilities Revenue Bonds, Waste
Management Inc., Series 2001, 3.750%, 8/01/14
(Mandatory put 8/01/07) (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
LONG-TERM CARE - 0.3% (0.2% OF TOTAL INVESTMENTS)
250 North Carolina Medical Care Commission, 9/15 at 100.00 N/R 257,258
Revenue Bonds, United Church Homes and
Services, Series 2005A, 5.250%, 9/01/21
------------------------------------------------------------------------------------------------------------------------------------
OPTIONAL
PRINCIPAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
MATERIALS - 3.8% (2.6% OF TOTAL INVESTMENTS)
$ 1,425 Gaston County Industrial Facilities and Pollution 8/15 at 100.00 N/R $ 1,500,226
Control Financing Authority, North Carolina, National
Gypsum Company Project Exempt Facilities Revenue
Bonds, Series 2005, 5.750%, 8/01/35
(Alternative Minimum Tax)
2,000 Haywood County Industrial Facilities and Pollution Control 3/06 at 102.00 Baa3 2,042,640
Financing Authority, North Carolina, Pollution
Control Revenue Refunding Bonds, Champion
International Corporation, Series 1995, 6.000%, 3/01/20
------------------------------------------------------------------------------------------------------------------------------------
3,425 Total Materials 3,542,866
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 8.8% (5.9% OF TOTAL INVESTMENTS)
1,890 Craven County, North Carolina, General Obligation 5/12 at 101.00 AAA 2,012,226
Bonds, Series 2002, 5.000%, 5/01/21 - AMBAC Insured
4,285 Durham County, North Carolina, General Obligation 4/12 at 100.00 AAA 4,590,521
Bonds, Series 2002B, 5.000%, 4/01/16
1,000 Johnston County, North Carolina, General Obligation 6/11 at 102.00 AAA 1,076,740
Bonds, Series 2001, 5.000%, 6/01/16 - FGIC Insured
500 North Carolina, General Obligation Bonds, Series 2004A, 3/14 at 100.00 AAA 535,920
5.000%, 3/01/22
------------------------------------------------------------------------------------------------------------------------------------
7,675 Total Tax Obligation/General 8,215,407
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 30.4% (20.4% OF TOTAL INVESTMENTS)
1,330 Cabarrus County, North Carolina, Certificates of 2/13 at 100.00 AA- 1,423,752
Participation, Series 2002, 5.250%, 2/01/17
1,800 Catawba County, North Carolina, Certificates of Participation, 6/14 at 100.00 Aaa 1,953,504
Series 2004, 5.250%, 6/01/21 - MBIA Insured
Charlotte, North Carolina, Certificates of Participation,
Governmental Facilities Projects, Series 2003G:
1,145 5.000%, 6/01/18 6/13 at 100.00 AA+ 1,206,555
1,700 5.375%, 6/01/26 6/13 at 100.00 AA+ 1,824,848
Charlotte, North Carolina, Storm Water Fee
Revenue Bonds, Series 2002:
1,050 5.250%, 6/01/20 6/12 at 101.00 AA+ 1,143,797
1,750 5.000%, 6/01/25 6/12 at 101.00 AA+ 1,857,048
2,180 Concord, North Carolina, Certificates of Participation, 6/06 at 102.00 AAA 2,237,988
Series 1996A, 6.125%, 6/01/21 - MBIA Insured
1,000 Davidson County, North Carolina, Certificates of No Opt. Call AAA 1,098,030
Participation, Series 2004, 5.250%, 6/01/14 - AMBAC Insured
750 Johnston County Finance Corporation, North Carolina, 8/09 at 101.00 AAA 793,913
Installment Payment Revenue Bonds, School and Museum
Projects, Series 1999, 5.250%, 8/01/21 - FSA Insured
Lee County, North Carolina, Certificates of Participation,
Public Schools and Community College, Series 2004:
1,715 5.250%, 4/01/18 - FSA Insured 4/14 at 100.00 AAA 1,864,977
500 5.250%, 4/01/20 - FSA Insured 4/14 at 100.00 AAA 542,645
1,000 5.250%, 4/01/22 - FSA Insured 4/14 at 100.00 AAA 1,082,410
OPTIONAL
PRINCIPAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED (continued)
North Carolina Infrastructure Finance Corporation,
Certificates of Participation, Correctional Facilities,
Series 2004A:
$ 2,500 5.000%, 2/01/19 2/14 at 100.00 AA+ $ 2,640,450
1,500 5.000%, 2/01/23 2/14 at 100.00 AA+ 1,571,895
1,500 North Carolina, Certificates of Participation, Repair 6/14 at 100.00 AA+ 1,582,920
and Renovation Project, Series 2004B, 5.000%, 6/01/20
North Carolina, Certificates of Participation, Series 2003:
1,130 5.250%, 6/01/21 6/13 at 100.00 AA+ 1,207,868
1,000 5.250%, 6/01/23 6/13 at 100.00 AA+ 1,066,330
2,000 Puerto Rico Highway and Transportation Authority, 3/14 at 100.00 AAA 2,141,380
Grant Anticipation Revenue Bonds, Series 2004, 5.000%,
9/15/21 - MBIA Insured
1,000 Randolph County, North Carolina, Certificates of 6/14 at 102.00 AAA 1,076,860
Participation, Series 2004, 5.000%, 6/01/20 - FSA Insured
------------------------------------------------------------------------------------------------------------------------------------
26,550 Total Tax Obligation/Limited 28,317,170
------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 6.5% (4.3% OF TOTAL INVESTMENTS)
600 Charlotte, North Carolina, Airport Revenue Bonds, 7/14 at 100.00 AAA 648,516
Series 2004A, 5.250%, 7/01/24 - MBIA Insured
500 Piedmont Triad Airport Authority, North Carolina, 7/15 at 100.00 AAA 534,405
Airport Revenue Bonds, Series 2005A, 5.000%,
7/01/20 - XLCA Insured
2,250 Raleigh Durham Airport Authority, North Carolina, 5/11 at 101.00 Aaa 2,419,155
Airport Revenue Bonds, Series 2001A, 5.250%,
11/01/16 - FGIC Insured
2,300 Raleigh Durham Airport Authority, North Carolina, 5/15 at 100.00 Aaa 2,427,121
Airport Revenue Bonds, Series 2005A, 5.000%,
5/01/30 - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
5,650 Total Transportation 6,029,197
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 11.6% (7.8% OF TOTAL INVESTMENTS) (4)
2,000 Charlotte, North Carolina, Storm Water Fee Revenue 6/10 at 101.00 AA+ (4) 2,212,680
Bonds, Series 2000, 6.000%, 6/01/25 (Pre-refunded 6/01/10)
1,485 North Carolina Municipal Power Agency 1, Catawba No Opt. Call AAA 1,713,942
Electric Revenue Bonds, Series 1980, 10.500%,
1/01/10 (ETM)
4,260 North Carolina Municipal Power Agency 1, Catawba No Opt. Call AAA 4,741,891
Electric Revenue Bonds, Series 1986, 5.000%, 1/01/20 (ETM)
2,000 North Carolina, General Obligation Bonds, Series 9/10 at 102.00 AAA 2,166,420
2000A, 5.100%, 9/01/16 (Pre-refunded 9/01/10)
------------------------------------------------------------------------------------------------------------------------------------
9,745 Total U.S. Guaranteed 10,834,933
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 12.9% (8.6% OF TOTAL INVESTMENTS)
3,000 North Carolina Eastern Municipal Power Agency, 1/13 at 100.00 BBB 3,254,700
Power System Revenue Bonds, Series 2003F,
5.500%, 1/01/15
1,000 North Carolina Eastern Municipal Power Agency, 1/16 at 100.00 AAA 1,100,390
Power System Revenue Bonds, Series 2005,
5.250%, 1/01/20 - AMBAC Insured
4,000 North Carolina Municipal Power Agency 1, Catawba 1/10 at 101.00 A3 4,386,160
Electric Revenue Bonds, Series 1999B, 6.500%, 1/01/20
2,000 North Carolina Municipal Power Agency 1, Catawba 1/13 at 100.00 AAA 2,173,800
Electric Revenue Bonds, Series 2003A, 5.250%,
1/01/15 - AMBAC Insured
1,000 Wake County Industrial Facilities and Pollution Control 2/12 at 101.00 A3 1,067,500
Financing Authority, North Carolina, Revenue Refunding
Bonds, Carolina Power and Light Company, Series 2002,
5.375%, 2/01/17
------------------------------------------------------------------------------------------------------------------------------------
11,000 Total Utilities 11,982,550
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 7.5% (5.0% OF TOTAL INVESTMENTS)
1,605 Broad River Water Authority, North Carolina, Water 6/15 at 100.00 Aaa 1,714,622
System Revenue Bonds, Series 2005, 5.000%, 6/01/20 -
XLCA Insured
1,295 Greensboro, North Carolina, Combined Enterprise System 6/15 at 100.00 AA+ 1,373,192
Revenue Bonds, Series 2005A, 5.000%, 6/01/26
500 Onslow County, North Carolina, Combined Enterprise 6/14 at 100.00 AAA 528,890
System Revenue Bonds, Series 2004B, 5.000%, 6/01/23 -
XLCA Insured
2,000 Winston-Salem, North Carolina, Water and Sewerage 6/12 at 100.00 AAA 2,127,300
System Revenue Bonds, Series 2002A, 5.000%, 6/01/18
1,170 Winston-Salem, North Carolina, Water and Sewerage 6/15 at 100.00 AAA 1,263,951
System Revenue Bonds, Series 2005, 5.000%, 6/01/20
------------------------------------------------------------------------------------------------------------------------------------
6,570 Total Water and Sewer 7,007,955
------------------------------------------------------------------------------------------------------------------------------------
$ 130,520 Total Investments (cost $133,636,507) - 149.0% 138,784,369
================--------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 1.2% 1,152,739
--------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (50.2)% (46,800,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 93,137,108
====================================================================================================================
(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: 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: Using the higher of Standard & Poor's or Moody's
rating. Ratings below BBB by Standard & Poor's Group or Baa by
Moody's Investor Service, Inc. are considered to be below
investment grade.
(4) Investment is backed by an escrow or trust containing
sufficient U.S. Government or U.S. Government agency
securities which ensure the timely payment of principal and
interest. Such investments are normally considered to be
equivalent to AAA rated securities.
N/R Investment is not rated.
(ETM) Investment is escrowed to maturity.
See accompanying notes to financial statements.
Statement of
ASSETS AND LIABILITIES February 28, 2006 (Unaudited)
--------------------------------------------------------------------------------
ASSETS
Investments, at value (cost $133,636,507) $138,784,369
Interest receivable 1,861,867
Other assets 13,833
--------------------------------------------------------------------------------
Total assets 140,660,069
--------------------------------------------------------------------------------
LIABILITIES
Cash overdraft 612,630
Accrued expenses:
Management fees 68,232
Other 28,634
Preferred share dividends payable 13,465
--------------------------------------------------------------------------------
Total liabilities 722,961
--------------------------------------------------------------------------------
Preferred shares, at liquidation value 46,800,000
--------------------------------------------------------------------------------
Net assets applicable to Common shares $ 93,137,108
================================================================================
Common shares outstanding 6,345,682
================================================================================
Net asset value per Common share outstanding
(net assets applicable to Common shares,
divided by Common shares outstanding) $ 14.68
================================================================================
NET ASSETS APPLICABLE TO COMMON SHARES CONSIST OF:
--------------------------------------------------------------------------------
Common shares, $.01 par value per share $ 63,457
Paid-in surplus 87,737,264
Undistributed (Over-distribution of) net investment income 177,912
Accumulated net realized gain (loss) from investments 10,613
Net unrealized appreciation (depreciation) of investments 5,147,862
--------------------------------------------------------------------------------
Net assets applicable to Common shares $ 93,137,108
--------------------------------------------------------------------------------
Authorized shares:
Common Unlimited
Preferred Unlimited
================================================================================
See accompanying notes to financial statements.
Statement of
OPERATIONS Nine Months Ended February 28, 2006 (Unaudited)
--------------------------------------------------------------------------------
INVESTMENT INCOME $5,090,928
--------------------------------------------------------------------------------
EXPENSES
Management fees 672,336
Preferred shares - auction fees 87,344
Preferred shares - dividend disbursing agent fees 7,479
Shareholders' servicing agent fees and expenses 9,773
Custodian's fees and expenses 32,841
Trustees' fees and expenses 2,455
Professional fees 10,351
Shareholders' reports - printing and mailing expenses 18,762
Stock exchange listing fees 7,801
Investor relations expense 14,002
Other expenses 12,190
--------------------------------------------------------------------------------
Total expenses before custodian fee credit 875,334
Custodian fee credit (6,124)
--------------------------------------------------------------------------------
Net expenses 869,210
--------------------------------------------------------------------------------
Net investment income 4,221,718
--------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) from investments 439,315
Change in net unrealized appreciation (depreciation) of investments (2,062,478)
--------------------------------------------------------------------------------
Net realized and unrealized gain (loss) (1,623,163)
--------------------------------------------------------------------------------
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS
From net investment income (670,477)
From accumulated net realized gains (136,337)
--------------------------------------------------------------------------------
Decrease in net assets applicable to Common shares from
distributions to Preferred shareholders (806,814)
--------------------------------------------------------------------------------
Net increase (decrease) in net assets applicable to Common shares
from operations $1,791,741
================================================================================
See accompanying notes to financial statements.
Statement of
CHANGES IN NET ASSETS (Unaudited)
NINE MONTHS ENDED YEAR ENDED
2/28/06 5/31/05
------------------------------------------------------------------------------------------------
OPERATIONS
Net investment income $ 4,221,718 $ 5,780,153
Net realized gain (loss) from
investments 439,315 1,595,461
Change in net unrealized appreciation
(depreciation) of investments (2,062,478) 2,755,786
Distributions to Preferred Shareholders:
From net investment income (670,477) (680,330)
From accumulated net realized gains (136,337) --
------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares
from operations 1,791,741 9,451,070
------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS
From net investment income (3,835,023) (5,600,573)
From accumulated net realized gains (1,010,708) --
------------------------------------------------------------------------------------------------
Decrease in net assets applicable to
Common shares from distributions
to Common shareholders (4,845,731) (5,600,573)
------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Net proceeds from Common shares
issued to shareholders due to
reinvestment of distributions 183,234 216,479
------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable Common shares from
capital share transactions 183,234 216,479
------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares (2,870,756) 4,066,976
Net assets applicable to Common
shares at the beginning of period 96,007,864 91,940,888
------------------------------------------------------------------------------------------------
Net assets applicable to Common
shares at the end of period $93,137,108 $96,007,864
================================================================================================
Undistributed (Over-distribution of)
net investment income at the
end of period $ 177,912 $ 461,694
================================================================================================
See accompanying notes to financial statements.
Notes to
FINANCIAL STATEMENTS (Unaudited)
1. GENERAL INFORMATION AND SIGNIFICANT ACCOUNTING POLICIES
The fund (the "Fund") covered in this report and its corresponding Common share
New York Stock Exchange symbol is Nuveen North Carolina Premium Income Municipal
Fund (NNC). The Fund is registered under the Investment Company Act of 1940, as
amended, as a closed-end management investment company.
The Fund seeks to provide current income exempt from both regular federal and
North Carolina state income taxes by investing primarily in a diversified
portfolio of municipal obligations issued by state and local government
authorities within the state of North Carolina or certain U.S. territories.
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements in accordance with U.S.
generally accepted accounting principles.
Investment Valuation
The prices of municipal bonds in the 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 establishes fair market value based on yields
or prices of municipal bonds of comparable quality, type of issue, coupon,
maturity and rating, indications of value from securities dealers, evaluations
of anticipated cash flows or collateral and general market conditions. Prices of
derivative investments are also provided by an independent pricing service
approved by the Fund's Board of Trustees. If the pricing service is unable to
supply a price for a municipal bond or derivative investment, the Fund may use a
market price or fair market value quote provided by a major broker/dealer in
such investments. If it is determined that the market price or fair market value
for an investment is unavailable or inappropriate, the Board of Trustees of the
Fund, or its designee, may establish a fair value for the investment. Temporary
investments in securities that have variable rate and demand features qualifying
them as short-term investments are valued at amortized cost, which approximates
market value.
Investment Transactions
Investment transactions are recorded on a trade date basis. Realized gains and
losses from transactions are determined on the specific identification method.
Investments purchased on a when-issued or delayed delivery basis may have
extended settlement periods. Any investments so purchased are subject to market
fluctuation during this period. The Fund has instructed the custodian to
segregate assets with a current value at least equal to the amount of the
when-issued and delayed delivery purchase commitments. At February 28, 2006, the
Fund had no such outstanding purchase commitments.
Investment Income
Interest income, which includes the amortization of premiums and accretion of
discounts for financial reporting purposes, is recorded on an accrual basis.
Investment income also includes paydown gains and losses, if any.
Income Taxes
The Fund intends to distribute substantially all net investment income and net
capital gains to shareholders and to otherwise comply with the requirements of
Subchapter M of the Internal Revenue Code applicable to regulated investment
companies. Therefore, no federal income tax provision is required. Furthermore,
the Fund intends to satisfy conditions which will enable interest from municipal
securities, which is exempt from regular federal and North Carolina state income
taxes, to retain such tax-exempt status when distributed to shareholders of the
Fund. Net realized capital gains and ordinary income distributions paid by the
Fund are subject to federal taxation.
Dividends and Distributions to Common Shareholders
Dividends from tax-exempt net investment income are declared monthly. Net
realized capital gains and/or market discount from investment transactions, if
any, are distributed to shareholders not less frequently than annually.
Furthermore, capital gains are distributed only to the extent they exceed
available capital loss carryforwards.
Distributions to Common shareholders of tax-exempt net investment income, net
realized capital gains and/or market discount, if any, are recorded on the
ex-dividend date. The amount and timing of distributions are determined in
accordance with federal income tax regulations, which may differ from U.S.
generally accepted accounting principles.
Preferred Shares
The Fund has issued and outstanding 1,872 Series TH, Preferred shares, $25,000
stated value per share, as a means of effecting financial leverage. The Fund's
Preferred shares are issued in one Series. The dividend rate paid by the Fund 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.
Custodian Fee Credit
The Fund has an arrangement with the custodian bank whereby certain custodian
fees and expenses are reduced by credits earned on the Fund's cash on deposit
with the bank. Such deposit arrangements are an alternative to overnight
investments.
Indemnifications
Under the Fund's organizational documents, its Officers and Trustees are
indemnified against certain liabilities arising out of the performance of their
duties to the Fund. In addition, in the normal course of business, the Fund
enters into contracts that provide general indemnifications to other parties.
The Fund's maximum exposure under these arrangements is unknown as this would
involve future claims that may be made against the Fund that have not yet
occurred. However, the Fund has 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.
Notes to
FINANCIAL STATEMENTS (Unaudited) (continued)
2. FUND SHARES
Transactions in Common shares were as follows:
NINE MONTHS
ENDED YEAR ENDED
2/28/06 5/31/05
-------------------------------------------------------------------------------
Common shares issued to shareholders
due to reinvestment of distributions 11,437 13,171
===============================================================================
3. INVESTMENT TRANSACTIONS
Purchases and sales (including maturities but excluding short-term investments)
during the nine months ended February 28, 2006, were as follows:
------------------------------------------------------------------
Purchases $12,485,593
Sales and maturities 12,318,871
==================================================================
4. INCOME TAX INFORMATION
The following information is presented on an income tax basis. Differences
between amounts for financial statement and federal income tax purposes are
primarily due to the treatment of paydown gains and losses, timing differences
in recognizing taxable market discount and timing differences in recognizing
certain gains and losses on investment transactions.
At February 28, 2006, the cost of investments was $133,628,563.
Notes to
FINANCIAL STATEMENTS (Unaudited) (continued)
Gross unrealized appreciation and gross unrealized depreciation of investments
at February 28, 2006, were as follows:
-------------------------------------------------------------------
Gross unrealized:
Appreciation $5,219,855
Depreciation (64,049)
-------------------------------------------------------------------
Net unrealized appreciation (depreciation)
of investments $5,155,806
===================================================================
The tax components of undistributed net investment income and net realized gains
at May 31, 2005, the Fund's last tax year end, were as follows:
------------------------------------------------------------------
Undistributed net tax-exempt income * $895,718
Undistributed net ordinary income ** 3,258
Undistributed net long-term capital gains 718,343
==================================================================
* Undistributed net tax-exempt income (on a tax basis) has not been reduced
for the dividend declared on May 2, 2005, paid on June 1, 2005.
** Net ordinary income consists of taxable market discount income and net
short-term capital gains, if any.
The tax character of distributions paid during the Fund's last tax year ended
May 31, 2005, was designated for purposes of the dividends paid deduction as
follows:
------------------------------------------------------------------
Distributions from net tax-exempt income $6,287,760
Distributions from net ordinary income ** --
Distributions from net long-term capital gains --
==================================================================
** Net ordinary income consists of taxable market discount income and net
short-term capital gains, if any.
Notes to
FINANCIAL STATEMENTS (Unaudited) (continued)
5. MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES
The 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., and a specific fund-level component, based only on the amount
of assets within the Fund. This pricing structure enables Nuveen fund
shareholders to benefit from growth in the assets within the 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 the Fund is based upon the
average daily net assets (including net assets attributable to Preferred shares)
of the Fund as follows:
AVERAGE DAILY NET ASSETS
(INCLUDING NET ASSETS
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
================================================================================
The annual complex-level fee, payable monthly, which is additive to the
fund-level fee, for all Nuveen sponsored funds in the U.S., is based on the
aggregate amount of total fund assets managed as stated in the table below. As
of February 28, 2006, the complex-level fee rate was .1886%.
COMPLEX-LEVEL ASSETS(1) COMPLEX-LEVEL FEE RATE
-------------------------------------------------------------------------------
For the first $55 billion .2000%
For the next $1 billion .1800
For the next $1 billion .1600
For the next $3 billion .1425
For the next $3 billion .1325
For the next $3 billion .1250
For the next $5 billion .1200
For the next $5 billion .1175
For the next $15 billion .1150
For Managed Assets over $91 billion (2) .1400
================================================================================
(1) The complex-level fee component of the management fee for the funds is
calculated based upon the aggregate Managed Assets ("Managed Assets" means
the average daily net assets of each fund including assets attributable to
all types of leverage used by the Nuveen funds) of Nuveen-sponsored funds
in the U.S.
(2) With respect to the complex-wide Managed Assets over $91 billion, the fee
rate or rates that will apply to such assets will be determined at a later
date. In the unlikely event that complex-wide Managed Assets reach $91
billion prior to a determination of the complex-level fee rate or rates to
be applied to Managed Assets in excess of $91 billion, the complex-level
fee rate for such complex-wide Managed Assets shall be .1400% until such
time as a different rate or rates is determined.
The management fee compensates the Adviser for overall investment advisory and
administrative services and general office facilities. The Fund pays 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 Fund 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.
6. SUBSEQUENT EVENT - DISTRIBUTIONS TO COMMON SHAREHOLDERS
The Fund declared a Common share dividend distribution of $.0610 per share from
its tax-exempt net investment income which was paid on April 3, 2006, to
shareholders of record on March 15, 2006.
FINANCIAL HIGHLIGHTS (Unaudited)
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
====================================================================================================================================
Year Ended 5/31:
2006(a) $15.16 $ .67 $ (.26) $(.11) $(.02) $ .28 $(.60) $(.16) $(.76)
2005 14.55 .91 .70 (.11) -- 1.50 (.89) -- (.89)
2004 15.50 .95 (.95) (.06) -- (.06) (.89) -- (.89)
2003 14.18 .98 1.27 (.07) -- 2.18 (.86) -- (.86)
2002 13.94 1.02 .15 (.13) -- 1.04 (.80) -- (.80)
2001 12.62 1.03 1.31 (.27) -- 2.07 (.75) -- (.75)
Total Returns
-------------------
Based
Offering on
Costs and Ending Common
Preferred Common Based Share
Share Share Ending on Net
Underwriting Net Asset Market Market Asset
Discounts Value Value Value** Value**
==============================================================================================
Year Ended 5/31:
2006(a) $ -- $14.68 $16.10 (1.80)% 1.96%
2005 -- 15.16 17.20 17.79 10.52
2004 -- 14.55 15.40 (4.08) (.40)
2003 -- 15.50 16.95 10.27 15.80
2002 -- 14.18 16.21 15.44 7.62
2001 -- 13.94 14.80 14.03 16.65
Ratios/Supplemental Data
---------------------------------------------------------------------------------------------
Before Credit After Credit***
----------------------------- ------------------------------
Ratio of Net Ratio of Net
Ratio of Investment Ratio of Investment
Ending Expenses Income to Expenses Income to
Net to Average Average to Average Average
Assets Net Assets Net Assets Net Assets Net Assets
Applicable Applicable Applicable Applicable Applicable Portfolio
to Common to Common to Common to Common to Common Turnover
Shares (000) Shares++ Shares++ Shares++ Shares++ Rate
===============================================================================================================================
Year Ended 5/31:
2006(a) $93,137 1.24%* 6.00%* 1.24%* 6.00%* 9%
2005 96,008 1.23 6.09 1.22 6.10 19
2004 91,941 1.23 6.35 1.22 6.36 20
2003 97,785 1.27 6.60 1.25 6.62 16
2002 89,286 1.33 7.17 1.32 7.18 22
2001 87,614 1.34 7.47 1.30 7.51 19
Preferred Shares at End of Period
------------------------------------------
Aggregate Liquidation
Amount and Market Asset
Outstanding Value Coverage
(000) Per Share Per Share
=============================================================================
Year Ended 5/31:
2006(a) $46,800 $25,000 $74,753
2005 46,800 25,000 76,286
2004 46,800 25,000 74,114
2003 46,800 25,000 77,236
2002 46,800 25,000 72,695
2001 46,800 25,000 71,802
* Annualized.
** Total Return on Market Value is the combination of changes in
the market price per share and the effect of reinvested dividend income
and reinvested capital gains distributions, if any, at the average price
paid per share at the time of reinvestment. Total Returns on Common Share
Net Asset Value is the combination of changes in Common share net asset
value, reinvested dividend income at net asset value and reinvested
capital gains distributions at net asset value, if any. Total returns are
not annualized.
*** After custodian fee credit, where applicable.
+ The amounts shown are based on Common share equivalents.
++ Ratios do not reflect the effect of dividend payments to Preferred
shareholders; income ratios reflect income earned on assets attributable
to Preferred shares.
(a) For the nine months ended February 28, 2006.
See accompanying notes to financial statements.
ITEM 2. CODE OF ETHICS.
Not applicable to this filing.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable to this filing.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable to this filing.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable to this filing.
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.
Not applicable to this filing.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable to this filing.
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.
During this reporting period, the registrant's Board of Trustees implemented a
change to the procedures by which shareholders may recommend nominees to the
registrant's board of trustees by amending the registrant's by-laws to include a
provision specifying the date by which shareholder nominations for election as
trustee at a subsequent meeting must be submitted to the registrant.
Shareholders must deliver or mail notice to the registrant not less than
forty-five days nor more than sixty days prior to the first anniversary date of
the date on which the registrant first mailed its proxy materials for the prior
year's annual meeting; provided, however, if and only if the annual meeting is
not scheduled to be held within a period that commences thirty days before the
first anniversary date of the annual meeting for the preceding year and ends
thirty days after such anniversary date (an annual meeting date outside such
period being referred to as an "Other Annual Meeting Date" hereafter), the
shareholder notice must be given no later than the close of business on the date
forty-five days prior to such Other Annual Meeting Date or the tenth business
day following the date such Other Annual Meeting Date is first publicly
announced or disclosed. The shareholder's notice must be in writing and set
forth the name, age, date of birth, business address, residence address and
nationality of the person(s) being nominated and the class or series, number of
all shares of the registrant owned of record or beneficially be each such
person(s), any other information regarding such person required by Item 401 of
Regulation S-K or Item 22 of Rule 14a-101 (Schedule 14A) under the Securities
Exchange Act of 1934, as amended, any other information regarding the person(s)
to be nominated that would be required to be disclosed in a proxy statement or
other filings required to be made in connection with solicitation of proxies for
election of trustees, and whether such shareholder believes any nominee is or
will be an "interested person" (as that term is defined in the Investment
Company Act of 1940, as amended) of the registrant or sufficient information to
enable the registrant to make that determination and the written and signed
consent of the person(s) to be nominated.
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 NORTH CAROLINA PREMIUM INCOME MUNICIPAL FUND
-------------------------------------------------------
By (Signature and Title)* /s/ Jessica R. Droeger
------------------------------------------
Jessica R. Droeger
Vice President and Secretary
Date: May 5, 2006
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: May 5, 2006
By (Signature and Title)* /s/ Stephen D. Foy
------------------------------------------
Stephen D. Foy
Vice President and Controller
(principal financial officer)
Date: May 5, 2006
* Print the name and title of each signing officer under his or her signature.