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 811-21157
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Nuveen Arizona Dividend Advantage Municipal Fund 3
-------------------------------------------------------------------------------
(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: July 31
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Date of reporting period: January 31, 2010
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Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
[LOGO]
NUVEEN
INVESTMENTS
Closed-End Funds
--------------------------------------------------------------------------------
Nuveen Investments
Municipal Closed-End Funds
IT'S NOT WHAT YOU EARN, IT'S WHAT YOU KEEP.(R)
Semi-Annual Report
January 31, 2010
-------------------------- ------------------------ -------------------------- --------------------------
NUVEEN ARIZONA NUVEEN ARIZONA NUVEEN ARIZONA NUVEEN ARIZONA
PREMIUM INCOME DIVIDEND ADVANTAGE DIVIDEND ADVANTAGE DIVIDEND ADVANTAGE
MUNICIPAL FUND, INC. MUNICIPAL FUND MUNICIPAL FUND 2 MUNICIPAL FUND 3
NAZ NFZ NKR NXE
--------------------------
NUVEEN TEXAS
QUALITY INCOME
MUNICIPAL FUND
NTX
(JANUARY 10)
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[LOGO]
NUVEEN
INVESTMENTS
Chairman's
Letter to Shareholders
[PHOTO OF ROBERT P. BREMNER]
DEAR SHAREHOLDER,
The economic environment in which your Fund operates reflects continuing but
uneven economic recovery. The U.S. and other major industrial countries are
experiencing steady but comparatively low levels of economic growth, while
emerging market countries are seeing a resumption of relatively strong economic
expansion. The largest source of economic uncertainty is the potential impact of
steps being considered by many governments to counteract the extraordinary
governmental spending and credit expansion carried out to deal with the
financial and economic crisis of 2008. Consequently, the implications for future
tax rates, government spending, interest rates and the pace of economic recovery
in the U.S. and other leading economies are extremely difficult to predict at
the present time. The long term health of the global economy depends on
restoring some measure of fiscal discipline around the world, but since all of
the corrective steps require economic pain, it is not surprising that
governments are reluctant to undertake them.
In the near term, governments remain committed to furthering economic recovery
and realizing a meaningful reduction in their national unemployment rates. Such
an environment should produce continued economic growth and, consequently,
attractive investment opportunities. Over the longer term, the larger
uncertainty mentioned earlier carries the risk of unexpected potholes in the
road to sustained recovery. For this reason, Nuveen's investment management
teams are working hard to balance return and risk by building well-diversified
portfolios, among other strategies. I encourage you to read the following
commentary on the management of your Fund. As always, I also encourage you to
contact your financial consultant if you have any questions about your Nuveen
Fund investment.
Nuveen remains committed to refinancing all of the auction rate preferred shares
issued by its closed end funds. By the fall of 2009, all of the Nuveen taxable
closed end funds had completed redemption of their auction rate preferred
shares, at par value. As of March 2010, approximately 25% of the municipal
auction rate preferred shares issued by the Nuveen Funds also had been redeemed.
Subject to market conditions and no changes in current regulatory approvals,
Nuveen expects to continue this redemption process, at par value, through the
further issuance of MuniFund Term Preferreds, the resumption of issuance of
Variable Rate Demand Preferred Shares, and other portfolio management actions.
Please consult the Nuveen web site for the most recent information on this issue
and all recent developments on your Nuveen Funds at: www.nuveen.com.
On behalf of the other members of your Fund's Board, 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 and Lead Independent Director
March 25, 2010
Nuveen Investments 1
Portfolio Managers' Comments
NUVEEN ARIZONA PREMIUM INCOME MUNICIPAL FUND, INC. (NAZ)
NUVEEN ARIZONA DIVIDEND ADVANTAGE MUNICIPAL FUND (NFZ)
NUVEEN ARIZONA DIVIDEND ADVANTAGE MUNICIPAL FUND 2 (NKR)
NUVEEN ARIZONA DIVIDEND ADVANTAGE MUNICIPAL FUND 3 (NXE)
NUVEEN TEXAS QUALITY INCOME MUNICIPAL FUND (NTX)
PORTFOLIO MANAGERS SCOTT ROMANS AND DANIEL CLOSE DISCUSS KEY INVESTMENT
STRATEGIES AND THE SIX-MONTH PERFORMANCE OF THESE FIVE NUVEEN FUNDS. SCOTT, WHO
HAS BEEN WITH NUVEEN SINCE 2000, HAS MANAGED THE ARIZONA FUNDS SINCE 2003. DAN,
WHO JOINED NUVEEN IN 2000, ASSUMED PORTFOLIO MANAGEMENT RESPONSIBILITY FOR NTX
IN 2007.
WHAT KEY STRATEGIES WERE USED TO MANAGE THE ARIZONA AND TEXAS FUNDS DURING THE
SIX-MONTH REPORTING PERIOD ENDED JANUARY 31, 2010?
During this period, municipal bond prices generally rose, as strong cash flows
into municipal bond funds combined with tighter supply of new tax-exempt
issuance to create favorable supply and demand conditions.
One reason for the supply reduction was the introduction of the Build America
Bond program, a new class of taxable municipal debt created as part of the
February 2009 economic stimulus package. These bonds offer municipal issuers a
federal subsidy equal to 35% of a security's interest payments, and therefore
offer issuers an attractive alternative to traditional tax-exempt debt. During
the six-month period ended January 31, 2010, taxable Build America Bonds
issuance totaled $51.9 billion, accounting for almost 24% of new municipal bonds
nationwide.
In both Arizona and Texas, the Build America Bond program had a significant
impact on the availability of tax-exempt issuance, especially among the longer
maturities that we typically seek to purchase for these Funds. During this
period, Build America Bonds comprised approximately 30% of new municipal supply
in Texas, which ranked as the second largest user of these bonds (after
California). In Arizona, where municipal issuance was already down 49% from the
same period a year earlier, Build America Bonds represented almost 19% of
municipal supply between August 1, 2009, and January 31, 2010. Since interest
payments from Build America Bonds represent taxable income, we do not view these
bonds as good investment opportunities for the Arizona and Texas Funds
CERTAIN STATEMENTS IN THIS REPORT ARE FORWARD-LOOKING STATEMENTS. DISCUSSIONS OF
SPECIFIC INVESTMENTS ARE FOR ILLUSTRATION ONLY AND ARE NOT INTENDED AS
RECOMMENDATIONS OF INDIVIDUAL INVESTMENTS. THE FORWARD-LOOKING STATEMENTS AND
OTHER VIEWS EXPRESSED HEREIN ARE THOSE OF THE PORTFOLIO MANAGERS AS OF THE DATE
OF THIS REPORT. ACTUAL FUTURE RESULTS OR OCCURRENCES MAY DIFFER SIGNIFICANTLY
FROM THOSE ANTICIPATED IN ANY FORWARD-LOOKING STATEMENTS, AND THE VIEWS
EXPRESSED HEREIN ARE SUBJECT TO CHANGE AT ANY TIME, DUE TO NUMEROUS MARKET AND
OTHER FACTORS. THE FUNDS DISCLAIM ANY OBLIGATION TO UPDATE PUBLICLY OR REVISE
ANY FORWARD-LOOKING STATEMENTS OR VIEWS EXPRESSED HEREIN.
2 Nuveen Investments
Because the supply of new tax-exempt municipal bonds was constrained during this
period, investment activity in the Arizona Funds was more limited than usual.
However, we continued to find some attractive value opportunities, taking a
bottom-up approach to discovering undervalued sectors and individual credits
with the potential to perform well over the long term. During this period, NTX
purchased several higher-rated general obligation issues, bonds issued for an A
rated toll road system, an electric utility and a lower-rated tax incremental
financing (TIF) district credit. In the Arizona Funds, we added positions in a
high-grade tax revenue bond and lower-rated water/sewer and electric utility
bonds. In both Arizona and Texas, cash for new purchases was generated by bond
calls.
As of January 31, 2010, all five of these Funds continued to use inverse
floating rate securities.(1) We employ inverse floaters as a form of leverage
for a variety of reasons, including duration management, and income and total
return enhancement.
HOW DID THE FUNDS PERFORM?
Individual results for these Nuveen Arizona and Texas Funds, as well as relevant
index and peer group information, are presented in the accompanying table.
AVERAGE ANNUAL TOTAL RETURNS ON COMMON SHARE NET ASSET VALUE* FOR PERIODS ENDED
1/31/10
SIX-MONTH 1-YEAR 5-YEAR 10-YEAR
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ARIZONA FUNDS
NAZ 8.56% 20.82% 3.44% 5.65%
NFZ 10.46% 20.56% 2.67% N/A
NKR 9.00% 19.23% 3.59% N/A
NXE 10.35% 23.06% 3.54% N/A
Standard & Poor's (S&P) Arizona Municipal Bond 5.33% 11.03% 4.23% 5.74%
Index(2)
TEXAS FUND
NTX 8.58% 16.45% 4.05% 6.73%
Standard & Poor's (S&P) Texas Municipal Bond 5.90% 11.37% 4.47% 6.03%
Index(2)
Standard & Poor's (S&P) National Municipal Bond 5.57% 10.75% 4.07% 5.82%
Index(3)
Lipper Other States Municipal Debt Funds Average(4) 8.96% 19.19% 3.72% 6.73%
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For the six months ended January 31, 2010, the cumulative returns on common
share net asset value (NAV) for all four Arizona Funds exceeded the return for
the Standard & Poor's (S&P) Arizona Municipal Bond Index and NTX outperformed
the S&P Texas Municipal Bond Index. All of the Funds also outperformed the S&P
National Municipal Bond Index. For the six-month period, NFZ, NKR and NXE
exceeded the average return for the Lipper Other States Municipal Debt Funds
Average, while NAZ and NTX trailed the Lipper group average.
* Six-month returns are cumulative; returns for one-year, five-year, and
ten-year 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 individual Performance Overview for
your Fund in this report.
1 An inverse floating rate security, also known as an inverse floater, 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.
2 The Standard & Poor's (S&P) Arizona and Texas Municipal Bond Indexes are
unlever-aged, market value-weighted indexes designed to measure the
performance of the investment-grade municipal bond markets in Arizona and
Texas, respectively. These indexes do not reflect any initial or ongoing
expenses and are not available for direct investment.
3 The Standard & Poor's (S&P) National Municipal Bond Index is an
unleveraged, market value-weighted index designed to measure the
performance of the investment-grade U.S. municipal bond market. This index
does not reflect any initial or ongoing expenses and is not available for
direct investment.
4 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: six-months, 43 funds; 1-year, 43 funds; 5-year, 43 funds; and
10-year, 20 funds. The performance of the Lipper Other States Municipal
Debt Funds Average represents the overall average of returns for funds
from ten different states with a wide variety of municipal market
conditions. Lipper returns account for the effects of management fees and
assume reinvestment of dividends, but do not reflect any applicable sales
charges. The Lipper average is not available for direct investment.
Nuveen Investments 3
Key management factors that influenced the Funds' returns during this period
included yield curve and duration positioning, credit exposure and sector
allocation. In addition, leverage was an important factor affecting each Fund's
performance over this period. The impact of leverage is discussed in more detail
on page five.
During this period, we saw yields on tax-exempt bonds generally decline and bond
prices rise, especially at the longer end of the municipal yield curve. As a
result, longer-term bonds generally outperformed credits with shorter
maturities. Overall, duration and yield curve positioning was a net positive for
the performance of these Funds, with the exception of NKR. In general, the Funds
were underexposed to the underperforming short end of the yield curve and tended
to have heavier weightings in the longer part of the curve, which had a positive
impact on performance. NKR was not as advantageously positioned as the other
Arizona Funds, with a duration shorter than its target. This detracted from the
Fund's relative performance as yields fell.
While yield curve positioning and duration played important roles in performance
during these six months, credit exposure also had a significant impact. The
demand for municipal bonds increased among both institutional and individual
investors during this period. This increase was driven by a variety of factors,
including concerns about potential tax increases, the need to rebalance
portfolio allocations and a growing appetite for additional risk. At the same
time, the supply of new tax-exempt municipal securities declined. As investors
bid up municipal bond prices, bonds rated BBB or below and non-rated bonds
generally outperformed those rated AAA. In this environment, the Funds'
benefited from their allocations to lower quality credits. This was especially
true in NXE, which had the heaviest weighting of BBB and non-rated bonds among
these five Funds. NAZ, which cannot invest in sub-investment-grade bonds, was
more constrained in its opportunities to take advantage of this environment.
Holdings that generally contributed positively to the Funds' performance
included industrial development revenue (IDR) and health care bonds, both of
which exceeded the overall municipal market return by a substantial margin.
Revenue bonds as a whole also performed well, as did the transportation and
housing sectors. In addition, zero coupon bonds were among the strongest
performers.
Pre-refunded bonds, which are often backed by U.S. Treasury securities and which
had been one of the top performing segments of the municipal bond market over
the past two years, performed poorly on a relative basis during this period.
This was primarily due to their shorter effective maturities and higher credit
quality. Among these five Funds, NFZ had the smallest allocation of pre-refunded
bonds during this period, which benefited its relative performance. Many general
obligation bonds also failed to keep pace with the overall municipal market,
while education, water and sewer, and leasing trailed the other revenue sectors.
In the Arizona Funds, our holdings of improvement district bonds, also known as
dirt deals, generally performed poorly. Despite good structures and credit, the
market for these lower-rated bonds tends to be underdeveloped in Arizona, which
meant less in-state demand, especially from retail buyers, and underper-formance
for the segment as a whole. During this period, NFZ, NKR and NXE were
overexposed to improvement district bonds, which hurt their performance, while
NAZ's smaller position in these credits lessened the negative impact.
4 Nuveen Investments
IMPACT OF THE FUNDS' LEVERAGE STRATEGIES ON PERFORMANCE
One important factor impacting the returns of these Funds relative to the
comparative indexes was the Funds' use of financial leverage. The Funds use
leverage because their managers believe that, over time, leveraging provides
opportunities for additional income and total returns for common shareholders.
However, use of leverage also can expose common shareholders to additional
volatility. For example, as the prices of securities held by a Fund decline, the
negative impact of these valuation changes on common share net asset value and
common shareholder total return is magnified by the use of leverage. Conversely,
leverage may enhance common share returns during periods when bond prices
generally are rising.
Leverage made a significant positive contribution to the performance of these
Funds over this reporting period.
RECENT DEVELOPMENTS REGARDING THE FUNDS' LEVERAGED CAPITAL STRUCTURE
Shortly after their inceptions, each of the Funds issued auction rate preferred
shares (ARPS) to create financial leverage. As noted in the past shareholder
reports, the ARPS issued by many closed-end funds, including these Funds, have
been hampered by a lack of liquidity since February 2008. Since that time, more
auction rate preferred shares have been submitted for sale in each of their
regularly scheduled auctions than there have been offers to buy. In fact, offers
to buy have been almost completely non-existent since late February 2008. This
means that these auctions have "failed to clear," and that many, or all, of the
ARPS shareholders who wanted to sell their shares in these auctions were unable
to do so. This lack of liquidity in ARPS did not lower the credit quality of
these shares, and ARPS 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 ARPS. In the recent market,
with short-term rates at multi-generational lows, those maximum rates also have
been low.
One continuing implication for common shareholders from the auction failures is
that each Fund's cost of leverage likely has been incrementally higher at times
than it otherwise might have been had the auctions continued to be successful.
As a result, each Fund's common share earnings likely have been incrementally
lower at times than they otherwise might have been.
As noted in past shareholder reports, the Nuveen funds' Board of
Directors/Trustees authorized several methods to refinance a portion of the
Nuveen funds' outstanding ARPS. Some Funds have invested in tender option bonds
(TOBs), also known as floating rate securities. The amount of TOBs that a Fund
may use varies according to the composition of each Fund's portfolio. Some Funds
have a greater ability to use TOBs than others. As of January 31, 2010, some
Funds have issued Variable Rate Demand Preferred Shares (VRDP), but these
issuances have been limited since it has been difficult to find liquidity
facilities on economically viable terms given the constrained credit
environment. Some Funds also have issued MuniFund Term Preferred Shares (MTP), a
fixed-rate form of preferred stock with a mandatory redemption period of five
years.
Nuveen Investments 5
While all these efforts have reduced the total amount of outstanding ARPS issued
by the Nuveen funds, the Funds cannot provide any assurance on when the
remaining outstanding ARPS might be redeemed.
As of January 31, 2010, the amount of ARPS redeemed by the Funds are as shown in
the accompanying table.
AUCTION RATE % OF ORIGINAL
PREFERRED SHARES AUCTION RATE
FUND REDEEMED PREFERRED SHARES
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NAZ $2,125,000 7.1%
NFZ $1,400,000 11.7%
NKR $1,875,000 10.1%
NXE $3,600,000 16.4%
NTX $3,950.000 5.7%
--------------------------------------------------------------------------------
Subsequent to the reporting period, NFZ, NKR and NXE filed with the Securities
and Exchange Commission (SEC) a registration statement seeking to register MTP.
These registration statements, declared effective by the SEC, enables the Funds
to issue to the public shares of MTP to refinance all or a portion of their
ARPS. The issuance of MTP by NFZ, NKR and NXE is subject to market conditions.
There is no assurance that these MTP shares will be issued.
As of January 31, 2010, 78 out of the 84 Nuveen closed-end municipal funds that
had issued ARPS have redeemed, at par, all or a portion of these shares. These
redemptions bring the total amount of Nuveen's municipal closed-end funds' ARPS
redemptions to approximately $2.8 billion of the original $11 billion
outstanding.
For up-to-date information, please visit the Nuveen CEF Auction Rate Preferred
Resource Center at: http://www.nuveen.com/arps.
6 Nuveen Investments
COMMON SHARE DIVIDEND AND SHARE PRICE INFORMATION
During the six-month period ended January 31, 2010, NAZ, NFZ, NKR, NXE and NTX
each had two monthly dividend increases.
Due to normal portfolio activity, common shareholders of NTX received a
long-term capital gains distribution of $0.0118 per share and a short-term
capital gains distribution of $0.0002 per share at the end of December 2009.
All of the Funds in this report seek to pay stable dividends at rates that
reflect each Fund's past results and projected future performance. During
certain periods, each Fund may pay dividends at a rate that may be more or less
than the amount of net investment income actually earned by the Fund during the
period. If a Fund has cumulatively earned more than it has paid in dividends, it
holds the excess in reserve as undistributed net investment income (UNII) as
part of the Fund's NAV. Conversely, if a Fund has cumulatively paid dividends in
excess of its earnings, the excess constitutes negative UNII that is likewise
reflected in the Fund's NAV. Each Fund will, over time, pay all of its net
investment income as dividends to shareholders. As of January 31, 2010, all of
the Funds in this report had positive UNII balances, based upon our best
estimate, for tax purposes and positive UNII balances for financial statement
purposes.
COMMON SHARE REPURCHASES AND SHARE PRICE INFORMATION
During the six-month reporting period, NFZ, NKR and NXE did not repurchase any
of their outstanding commons shares. As of January 31, 2010, NFZ, NKR and NXE
cumulatively repurchased their outstanding common shares as shown in the
accompanying table. Since the inception of the Funds' repurchase program, NAZ
and NTX have not repurchased any of their outstanding common shares.
COMMON SHARES % OF OUTSTANDING
FUND REPURCHASED COMMON SHARES
-------------------------------------------------------------------------------
NFZ 2,500 0.2%
NKR 800 0.0%*
NXE 1,600 0.1%
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*Rounds to less than 0.1%.
As of January 31, 2010, the Funds' common share prices were trading at (+)
premiums or (-) discounts to their common share NAVs as shown in the
accompanying table.
1/31/10 SIX-MONTH AVERAGE
(+)PREMIUM/(-)DISCOUNT (+)PREMIUM/(+)DISCOUNT
--------------------------------------------------------------------------------
NAZ +1.17% -4.08%
NFZ -10.11% -6.52%
NKR -7.83% -7.56%
NXE -7.80% -7.27%
NTX +4.24% +4.11%
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Nuveen Investments 7
NAZ Performance OVERVIEW | Nuveen Arizona Premium Income Municipal Fund, Inc.
| as of January 31, 2010
FUND SNAPSHOT
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Common Share Price $ 13.84
--------------------------------------------------------------------------------
Common Share Net Asset Value $ 13.68
--------------------------------------------------------------------------------
Premium/(Discount) to NAV 1.17%
--------------------------------------------------------------------------------
Market Yield 5.12%
--------------------------------------------------------------------------------
Taxable-Equivalent Yield(1) 7.45%
--------------------------------------------------------------------------------
Net Assets Applicable to Common Shares ($000) $61,160
--------------------------------------------------------------------------------
Average Effective Maturity on Securities (Years) 17.19
--------------------------------------------------------------------------------
Leverage-Adjusted Duration 8.87
--------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 11/19/92)
--------------------------------------------------------------------------------
ON SHARE PRICE ON NAV
--------------------------------------------------------------------------------
6-Month (Cumulative) 15.57% 8.56%
--------------------------------------------------------------------------------
1-Year 34.93% 20.82%
--------------------------------------------------------------------------------
5-Year 2.31% 3.44%
--------------------------------------------------------------------------------
10-Year 5.25% 5.65%
--------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
(as a % of total investments)
--------------------------------------------------------------------------------
Tax Obligation/Limited 23.5%
--------------------------------------------------------------------------------
Utilities 16.4%
--------------------------------------------------------------------------------
Health Care 15.2%
--------------------------------------------------------------------------------
Water and Sewer 13.3%
--------------------------------------------------------------------------------
U.S. Guaranteed 12.2%
--------------------------------------------------------------------------------
Education and Civic Organizations 7.9%
--------------------------------------------------------------------------------
Tax Obligation/General 7.5%
--------------------------------------------------------------------------------
Other 4.0%
--------------------------------------------------------------------------------
CREDIT QUALITY (as a % of total investments)
[PIE CHART]
AAA/U.S.
Guaranteed 27%
AA 20%
A 34%
BBB 8%
N/R 11%
2009-2010 MONTHLY TAX-FREE DIVIDENDS PER COMMON SHARE
[BAR CHART]
Feb $ 0.053
Mar 0.053
Apr 0.053
May 0.054
Jun 0.054
Jul 0.054
Aug 0.054
Sep 0.057
Oct 0.057
Nov 0.057
Dec 0.059
Jan 0.059
COMMON SHARE PRICE PERFORMANCE -- WEEKLY CLOSING PRICE
[LINE GRAPH]
2/01/09 $ 10.81
11.01
11.23
10.8981
10.93
10.83
10.6501
10.96
11.23
11.1
11.12
11.18
11.6
11.79
11.85
11.85
12.09
11.8985
11.94
11.88
11.93
11.65
11.91
12.58
12.6
12.37
12.29
12.57
12.49
12.47
12.52
12.8
12.88
13.07
13.3
13.23
13.52
12.93
13.1517
12.72
12.99
12.7501
12.81
13.06
13.31
12.9388
13.08
13.1
12.87
13.55
13.89
13.9499
1/31/10 13.84
1 Taxable-Equivalent Yield represents the yield that must be earned on a
fully taxable investment in order to equal the yield of the Fund on an
after-tax basis. It is based on a combined federal and state income tax
rate of 31.3%. When comparing this Fund to investments that generate
qualified dividend income, the Taxable-Equivalent Yield is lower.
8 Nuveen Investments
NFZ Performance OVERVIEW | Nuveen Arizona Dividend Advantage Municipal Fund
| as of January 31, 2010
CREDIT QUALITY (as a % of total investments)
[PIE CHART]
AAA/U.S. Guaranteed 19%
AA 25%
A 32%
BBB 16%
N/R 8%
2009-2010 MONTHLY TAX-FREE DIVIDENDS PER COMMON SHARE
[BAR CHART]
Feb $ 0.0525
Mar 0.0525
Apr 0.0525
May 0.0525
Jun 0.0525
Jul 0.0525
Aug 0.0525
Sep 0.054
Oct 0.054
Nov 0.054
Dec 0.057
Jan 0.057
COMMON SHARE PRICE PERFORMANCE -- WEEKLY CLOSING PRICE
[LINE GRAPH]
2/01/09 $ 10.18
10.3299
10.31
9.95
10.04
10.0265
9.43
9.59
9.97
10.58
11.39
10.9
10.93
11.33
11
10.96
11.1845
11.3199
11.52
11.27
11.27
11.19
11.35
11.69
11.5135
12.16
12.14
12.45
12
12.14
12.1
12.28
12.58
12.8999
13.29
13.07
13.32
12
12.75
12.59
12.538
12.4
12.38
13
12.67
12.51
12.535
12.41
12.39
12.49
12.46
12.4
1/31/10 12.27
1 Taxable-Equivalent Yield represents the yield that must be earned on a
fully taxable investment in order to equal the yield of the Fund on an
after-tax basis. It is based on a combined federal and state income tax
rate of 31.3%. When comparing this Fund to investments that generate
qualified dividend income, the Taxable-Equivalent Yield is lower.
FUND SNAPSHOT
--------------------------------------------------------------------------------
Common Share Price $ 12.27
--------------------------------------------------------------------------------
Common Share
Net Asset Value $ 13.65
--------------------------------------------------------------------------------
Premium/(Discount) to NAV -10.11%
--------------------------------------------------------------------------------
Market Yield 5.57%
--------------------------------------------------------------------------------
Taxable-Equivalent Yield(1) 8.11%
--------------------------------------------------------------------------------
Net Assets Applicable to Common Shares ($000) $21,131
--------------------------------------------------------------------------------
Average Effective Maturity on Securities (Years) 15.37
--------------------------------------------------------------------------------
Leverage-Adjusted Duration 9.10
--------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 1/30/01)
--------------------------------------------------------------------------------
ON SHARE PRICE ON NAV
--------------------------------------------------------------------------------
6-Month (Cumulative) 3.74% 10.46%
--------------------------------------------------------------------------------
1-Year 26.44% 20.56%
--------------------------------------------------------------------------------
5-Year -0.69% 2.67%
--------------------------------------------------------------------------------
Since
Inception 3.36% 5.20%
--------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
(as a % of total investments)
--------------------------------------------------------------------------------
Tax Obligation/Limited 31.9%
--------------------------------------------------------------------------------
Utilities 22.8%
--------------------------------------------------------------------------------
Health Care 12.3%
--------------------------------------------------------------------------------
Water and Sewer 8.7%
--------------------------------------------------------------------------------
Tax Obligation/General 7.9%
--------------------------------------------------------------------------------
U.S. Guaranteed 6.1%
--------------------------------------------------------------------------------
Education and Civic Organizations 5.4%
--------------------------------------------------------------------------------
Other 4.9%
--------------------------------------------------------------------------------
Nuveen Investments 9
NKR Performance OVERVIEW | Nuveen Arizona Dividend Advantage Municipal Fund 2
| as of January 31, 2010
FUND SNAPSHOT
--------------------------------------------------------------------------------
Common Share Price $ 13.18
--------------------------------------------------------------------------------
Common Share
Net Asset Value $ 14.30
--------------------------------------------------------------------------------
Premium/(Discount) to NAV -7.83%
--------------------------------------------------------------------------------
Market Yield 5.83%
--------------------------------------------------------------------------------
Taxable-Equivalent Yield(1) 8.49%
--------------------------------------------------------------------------------
Net Assets Applicable to Common Shares ($000) $34,896
--------------------------------------------------------------------------------
Average Effective Maturity on Securities (Years) 14.11
--------------------------------------------------------------------------------
Leverage-Adjusted Duration 7.29
--------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 3/25/02)
--------------------------------------------------------------------------------
ON SHARE PRICE ON NAV
--------------------------------------------------------------------------------
6-Month (Cumulative) 8.22% 9.00%
--------------------------------------------------------------------------------
1-Year 26.10% 19.23%
--------------------------------------------------------------------------------
5-Year 1.96% 3.59%
--------------------------------------------------------------------------------
Since Inception 4.15% 5.74%
--------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
(as a % of total investments)
--------------------------------------------------------------------------------
Tax Obligation/Limited 32.0%
--------------------------------------------------------------------------------
Health Care 16.5%
--------------------------------------------------------------------------------
U.S. Guaranteed 13.9%
--------------------------------------------------------------------------------
Tax Obligation/General 13.7%
--------------------------------------------------------------------------------
Water and Sewer 7.9%
--------------------------------------------------------------------------------
Education and Civic Organizations 4.5%
--------------------------------------------------------------------------------
Other 11.5%
--------------------------------------------------------------------------------
CREDIT QUALITY (as a % of total investments)
[PIE CHART]
AAA/U.S.
Guaranteed 34%
AA 14%
A 23%
BBB 13%
N/R 16%
2009-2010 MONTHLY TAX-FREE DIVIDENDS PER COMMON SHARE
[BAR CHART]
Feb $ 0.0585
Mar 0.0585
Apr 0.0585
May 0.0585
Jun 0.0585
Jul 0.0585
Aug 0.0585
Sep 0.0595
Oct 0.0595
Nov 0.0595
Dec 0.064
Jan 0.064
COMMON SHARE PRICE PERFORMANCE -- WEEKLY CLOSING PRICE
[LINE GRAPH]
2/01/09 $ 11.09
11.2
11.3
11.07
11.273
10.354
10.37
10.4401
10.6901
11.12
11.82
11.33
11.6
12.03
11.92
11.824
12.15
12.2
12.44
12.2
12.2
12.0501
12.18
12.83
13.05
12.4488
12.52
12.47
12.2
12.429
12.41
12.6999
12.7
12.9999
13.3202
13.464
13.64
12.8499
13.01
12.91
13.31
13.1725
13.31
13.24
13.16
13.0325
13.0201
13.19
13.166
13.55
13.42
13.5393
1/31/10 13.1776
1 Taxable-Equivalent Yield represents the yield that must be earned on a
fully taxable investment in order to equal the yield of the Fund on an
after-tax basis. It is based on a combined federal and state income tax
rate of 31.3%. When comparing this Fund to investments that generate
qualified dividend income, the Taxable-Equivalent Yield is lower.
10 Nuveen Investments
NXE Performance OVERVIEW | Nuveen Arizona Dividend Advantage Municipal Fund 3
| as of January 31, 2010
CREDIT QUALITY (as a % of total investments)
[PIE CHART]
AAA/U.S. Guaranteed 21%
AA 20%
A 27%
BBB 18%
N/R 14%
2009-2010 MONTHLY TAX-FREE DIVIDENDS PER COMMON SHARE
[BAR CHART]
Feb $ 0.0545
Mar 0.0545
Apr 0.0545
May 0.0545
Jun 0.0545
Jul 0.0545
Aug 0.0545
Sep 0.059
Oct 0.059
Nov 0.059
Dec 0.062
Jan 0.062
COMMON SHARE PRICE PERFORMANCE -- WEEKLY CLOSING PRICE
[LINE GRAPH]
2/01/09 $ 10.37
10.531
10.45
9.9999
10.07
9.9982
9.51
9.69
9.76
9.88
10.131
10.35
10.64
10.34
10.7
10.97
11.62
11.5
11.4
11.26
11.03
11.1
11.19
11.56
11.62
11.6154
11.73
11.7
11.63
11.7
12.0225
12.18
12.53
13.14
13.142
13.09
13.12
12.382
13.2
12.792
12.4
12.7
12.69
13.05
12.69
12.6899
12.4299
12.58
12.5
12.6
12.634
12.55
1/31/10 12.65
1 Taxable-Equivalent Yield represents the yield that must be earned on a
fully taxable investment in order to equal the yield of the Fund on an
after-tax basis. It is based on a combined federal and state income tax
rate of 31.3%. When comparing this Fund to investments that generate
qualified dividend income, the Taxable-Equivalent Yield is lower.
FUND SNAPSHOT
--------------------------------------------------------------------------------
Common Share Price $ 12.65
--------------------------------------------------------------------------------
Common Share
Net Asset Value $ 13.72
--------------------------------------------------------------------------------
Premium/(Discount) to NAV -7.80%
--------------------------------------------------------------------------------
Market Yield 5.88%
--------------------------------------------------------------------------------
Taxable-Equivalent Yield(1) 8.56%
--------------------------------------------------------------------------------
Net Assets Applicable to Common Shares ($000) $42,078
--------------------------------------------------------------------------------
Average Effective Maturity on Securities (Years) 15.77
--------------------------------------------------------------------------------
Leverage-Adjusted Duration 8.08
--------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 9/25/02)
--------------------------------------------------------------------------------
ON SHARE PRICE ON NAV
--------------------------------------------------------------------------------
6-Month (Cumulative) 10.90% 10.35%
--------------------------------------------------------------------------------
1-Year 30.07% 23.06%
--------------------------------------------------------------------------------
5-Year 2.34% 3.54%
--------------------------------------------------------------------------------
Since
Inception 3.10% 4.66%
--------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
(as a % of total investments)
--------------------------------------------------------------------------------
Tax Obligation/Limited 22.1%
--------------------------------------------------------------------------------
Health Care 20.6%
--------------------------------------------------------------------------------
U.S. Guaranteed 13.4%
--------------------------------------------------------------------------------
Education and Civic Organizations 10.4%
--------------------------------------------------------------------------------
Transportation 9.7%
--------------------------------------------------------------------------------
Water and Sewer 9.4%
--------------------------------------------------------------------------------
Utilities 9.3%
--------------------------------------------------------------------------------
Other 5.1%
--------------------------------------------------------------------------------
Nuveen Investments 11
NTX Performance OVERVIEW | Nuveen Texas Quality Income Municipal Fund
| as of January 31, 2010
FUND SNAPSHOT
--------------------------------------------------------------------------------
Common Share Price $ 15.23
--------------------------------------------------------------------------------
Common Share Net Asset Value $ 14.61
--------------------------------------------------------------------------------
Premium/(Discount) to NAV 4.24%
--------------------------------------------------------------------------------
Market Yield 5.36%
--------------------------------------------------------------------------------
Taxable-Equivalent Yield(1) 7.44%
--------------------------------------------------------------------------------
Net Assets Applicable to Common Shares ($000) $139,034
--------------------------------------------------------------------------------
Average Effective Maturity on Securities (Years) 15.84
--------------------------------------------------------------------------------
Leverage-Adjusted Duration 7.31
--------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 10/17/91)
--------------------------------------------------------------------------------
ON SHARE PRICE ON NAV
--------------------------------------------------------------------------------
6-Month (Cumulative) 5.97% 8.58%
--------------------------------------------------------------------------------
1-Year 27.65% 16.45%
--------------------------------------------------------------------------------
5-Year 5.70% 4.05%
--------------------------------------------------------------------------------
10-Year 8.62% 6.73%
--------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
(as a % of total investments)
--------------------------------------------------------------------------------
Tax Obligation/General 32.1%
--------------------------------------------------------------------------------
U.S. Guaranteed 10.9%
--------------------------------------------------------------------------------
Education and Civic Organizations 10.2%
--------------------------------------------------------------------------------
Health Care 8.5%
--------------------------------------------------------------------------------
Utilities 8.5%
--------------------------------------------------------------------------------
Water and Sewer 8.1%
--------------------------------------------------------------------------------
Transportation 6.3%
--------------------------------------------------------------------------------
Tax Obligation/Limited 6.2%
--------------------------------------------------------------------------------
Other 9.2%
--------------------------------------------------------------------------------
CREDIT QUALITY (as a % of total investments)
[PIE CHART]
AAA/U.S. Guaranteed 42%
AA 24%
A 16%
BBB 14%
BB or Lower 4%
2009-2010 MONTHLY TAX-FREE DIVIDENDS PER COMMON SHARE(2)
[BAR CHART]
Feb $ 0.058
Mar 0.058
Apr 0.058
May 0.062
Jun 0.062
Jul 0.062
Aug 0.062
Sep 0.067
Oct 0.067
Nov 0.067
Dec 0.068
Jan 0.068
COMMON SHARE PRICE PERFORMANCE -- WEEKLY CLOSING PRICE
[LINE GRAPH]
2/01/09 $ 12.56
12.92
12.9501
12.41
13.118
13.05
13.08
13.07
13.38
13.2
13.4
13.13
13.36
13.25
13.42
13.75
13.6696
13.864
13.55
13.81
13.6001
14.1
14.18
14.49
14.26
14.212
14.78
14.5
14.9
14.54
14.74
15.09
14.95
15.25
15.4199
15.4215
15.6283
15.75
15.4
14.61
14.61
14.35
14.3999
14.7
15.19
15.11
14.95
14.8899
15.1
15.16
15.3399
15.35
1/31/10 15.23
1 Taxable-Equivalent Yield represents the yield that must be earned on a
fully taxable investment in order to equal the yield of the Fund on an
after-tax basis. It is based on a federal income tax rate of 28%. When
comparing this Fund to investments that generate qualified dividend
income, the Taxable-Equivalent Yield is lower.
2 The Fund paid shareholders capital gains and net ordinary income
distributions in December 2009 of $0.0120 per share.
12 Nuveen Investments
NAZ | Nuveen Arizona Premium Income Municipal Fund, Inc.
| Portfolio of Investments January 31, 2010 (Unaudited)
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
-----------------------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES - 1.2% (0.8% OF TOTAL INVESTMENTS)
$ 785 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 5/12 at 100.00 BBB $ 757,156
Asset-Backed Refunding Bonds, Series 2002, 5.375%, 5/15/33
-----------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 11.4% (7.9% OF TOTAL
INVESTMENTS)
2,500 Arizona Higher Education Loan Authority, Student Loan Revenue 9/10 at 100.00 AAA 2,219,975
Bonds, Series 2007B, Auction Rate Securities, 0.000%, 11/01/41
(Alternative Minimum Tax) (4)
1,000 Arizona State University, System Revenue Bonds, Series 2002, 7/12 at 100.00 AA 1,051,300
5.000%, 7/01/25 - FGIC Insured
Arizona State University, System Revenue Bonds, Series 2005:
1,455 5.000%, 7/01/20 - AMBAC Insured 7/15 at 100.00 N/R 1,518,758
750 5.000%, 7/01/21 - AMBAC Insured 7/15 at 100.00 N/R 777,330
1,500 Tempe Industrial Development Authority, Arizona, Lease Revenue 7/13 at 100.00 N/R 1,399,815
Bonds, Arizona State University Foundation Project, Series
2003, 5.000%, 7/01/34 - AMBAC Insured
-----------------------------------------------------------------------------------------------------------------------------------
7,205 Total Education and Civic Organizations 6,967,178
-----------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE - 22.0% (15.2% OF TOTAL INVESTMENTS)
1,430 Arizona Health Facilities Authority, Hospital Revenue Bonds, 1/17 at 100.00 A+ 1,447,460
Banner Health Systems, Series 2007A, 5.000%, 1/01/25
885 Arizona Health Facilities Authority, Hospital Revenue Bonds, 1/17 at 100.00 A+ 582,994
Banner Health Systems, Series 2007B, 1.004%, 1/02/37
3,470 Arizona Health Facilities Authority, Hospital Revenue Bonds, 1/18 at 100.00 A+ 3,523,230
Banner Health Systems, Series 2008D, 5.500%, 1/01/38
675 Glendale Industrial Development Authority, Arizona, Revenue 12/15 at 100.00 BBB 593,217
Bonds, John C. Lincoln Health Network, Series 2005B, 5.000%,
12/01/37
1,110 Glendale Industrial Development Authority, Arizona, Revenue 12/17 at 100.00 BBB 958,529
Bonds, John C. Lincoln Health Network, Series 2007, 5.000%,
12/01/42
2,150 Maricopa County Industrial Development Authority, Arizona, 7/14 at 100.00 A 2,195,215
Health Facility Revenue Bonds, Catholic Healthcare West,
Series 2004A, 5.375%, 7/01/23
2,800 Maricopa County Industrial Development Authority, Arizona, 7/17 at 100.00 A 2,727,900
Health Facility Revenue Bonds, Catholic Healthcare West,
Series 2007A, 5.250%, 7/01/32
515 Puerto Rico Industrial, Tourist, Educational, Medical and 11/10 at 101.00 Aa1 538,772
Environmental Control Facilities Financing Authority, Hospital
Revenue Bonds, Hospital de la Concepcion, Series 2000A,
6.375%, 11/15/15
1,005 Winslow Industrial Development Authority, Arizona, Hospital 6/10 at 100.00 N/R 887,757
Revenue Bonds, Winslow Memorial Hospital, Series 1998, 5.500%,
6/01/22
-----------------------------------------------------------------------------------------------------------------------------------
14,040 Total Health Care 13,455,074
-----------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 4.6% (3.2% OF TOTAL INVESTMENTS)
610 Phoenix and Pima County Industrial Development Authority, 7/17 at 103.00 Aaa 642,464
Arizona, Single Family Mortgage Revenue Bonds, Series 2007-4,
5.800%, 12/01/39 (Alternative Minimum Tax)
2,115 Tucson and Pima County Industrial Development Authority, 6/17 at 101.00 Aaa 2,172,655
Arizona, Joint Single Family Mortgage Revenue Bonds, Series
2007B, 5.350%, 6/01/47 (Alternative Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
2,725 Total Housing/Single Family 2,815,119
-----------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 10.8% (7.5% OF TOTAL INVESTMENTS)
1,265 Gila County Unified School District 10 Payson, Arizona, School 7/18 at 100.00 A2 1,334,044
Improvement Bonds, Project 2006, Series 2008B, 3.000%, 7/01/28
1,200 Maricopa County Unified School District 95 Queen Creek, Arizona, 7/18 at 100.00 Aa3 1,241,628
General Obligation Bonds, Series 2008, 5.000%, 7/01/27 - AGM
Insured
3,530 Pinal County Unified School District 1, Florence, Arizona, 7/18 at 100.00 A 3,726,408
General Obligation Bonds, Series 2008C, 5.250%, 7/01/28
330 Puerto Rico, General Obligation and Public Improvement Bonds, 7/11 at 100.00 BBB- 328,268
Series 2001A, 5.375%, 7/01/28
-----------------------------------------------------------------------------------------------------------------------------------
6,325 Total Tax Obligation/General 6,630,348
-----------------------------------------------------------------------------------------------------------------------------------
Nuveen Investments 13
NAZ | Nuveen Arizona Premium Income Municipal Fund, Inc. (continued)
| Portfolio of Investments January 31, 2010 (Unaudited)
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
-----------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 34.0% (23.5% OF TOTAL INVESTMENTS)
$ 376 Estrella Mountain Ranch Community Facilities District, Goodyear, 7/10 at 102.00 N/R $ 384,460
Arizona, Special Assessment Lien Bonds, Series 2001A, 7.875%,
7/01/25
3,000 Glendale Western Loop 101 Public Facilities Corporation, 1/14 at 100.00 AA 3,142,800
Arizona, Third Lien Excise Tax Revenue Bonds, Series 2008B,
6.250%, 7/01/38
1,280 Greater Arizona Development Authority, Infrastructure Revenue 8/16 at 100.00 A+ 1,321,869
Bonds, Series 2006-1, 5.000%, 8/01/22 - NPFG Insured
740 Greater Arizona Development Authority, Infrastructure Revenue 8/16 at 100.00 AA- 775,712
Bonds, Series 2006A, 5.000%, 8/01/23 - NPFG Insured
575 Marana Municipal Property Corporation, Arizona, Revenue Bonds, 7/13 at 100.00 AA 589,502
Series 2003, 5.000%, 7/01/28 - AMBAC Insured
1,511 Marana, Arizona, Tangerine Farms Road Improvement District 7/16 at 100.00 Baa1 1,347,238
Revenue Bonds, Series 2006, 4.600%, 1/01/26
3,400 Maricopa County Stadium District, Arizona, Revenue Refunding 6/12 at 100.00 N/R 3,610,561
Bonds, Series 2002, 5.375%, 6/01/18 - AMBAC Insured
3,400 Mesa, Arizona, Street and Highway User Tax Revenue Bonds, Series 7/15 at 100.00 AAA 3,591,317
2005, 5.000%, 7/01/24 - AGM Insured
1,140 Pinetop Fire District of Navajo County, Arizona, Certificates of 6/16 at 102.00 Baa2 1,140,536
Participation, Series 2008, 7.750%, 6/15/29
1,200 Prescott Valley Municipal Property Corporation, Arizona, 1/13 at 100.00 AA- 1,223,460
Municipal Facilities Revenue Bonds, Series 2003, 5.000%,
1/01/27 - FGIC Insured
265 Puerto Rico Public Buildings Authority, Guaranteed Government 7/12 at 100.00 BBB- 257,750
Facilities Revenue Refunding Bonds, Series 2002D, 5.125%,
7/01/24
1,610 San Luis Civic Improvement Corporation, Arizona, Municipal 7/15 at 100.00 A- 1,641,315
Facilities Excise Tax Revenue Bonds, Series 2005, 5.000%,
7/01/25 - SYNCORA GTY Insured
1,000 Scottsdale Municipal Property Corporation, Arizona, Excise Tax No Opt. Call AAA 1,132,860
Revenue Bonds, Series 2006, 5.000%, 7/01/24
645 Vistancia Community Facilities District, Arizona, Restricted 7/15 at 100.00 Baa1 631,365
General Obligation Bonds, Series 2005, 5.750%, 7/15/24
-----------------------------------------------------------------------------------------------------------------------------------
20,142 Total Tax Obligation/Limited 20,790,745
-----------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 17.7% (12.2% OF TOTAL INVESTMENTS) (5)
800 Arizona Health Facilities Authority, Hospital Revenue Bonds, 7/10 at 101.00 N/R (5) 826,936
Catholic Healthcare West, Series 1999A, 6.625%, 7/01/20
(Pre-refunded 7/01/10)
1,000 Arizona Health Facilities Authority, Hospital System Revenue 12/10 at 102.00 BBB (5) 1,073,550
Bonds, John C. Lincoln Health Network, Series 2000, 7.000%,
12/01/25 (Pre-refunded 12/01/10)
1,250 Glendale Industrial Development Authority, Arizona, Revenue 5/11 at 101.00 AAA 1,349,175
Bonds, Midwestern University, Series 2001A, 5.875%, 5/15/31
(Pre-refunded 5/15/11)
1,250 Maricopa County Industrial Development Authority, Arizona, No Opt. Call A (5) 1,533,413
Hospital Revenue Refunding Bonds, Samaritan Health Services,
Series 1990A, 7.000%, 12/01/16 - MBIA Insured (ETM)
385 Maricopa County, Arizona, Hospital Revenue Bonds, Sun Health 4/15 at 100.00 N/R (5) 443,212
Corporation, Series 2005, 5.000%, 4/01/16 (Pre-refunded
4/01/15)
2,000 Phoenix Civic Improvement Corporation, Arizona, Junior Lien 7/10 at 101.00 AA+ (5) 2,069,300
Wastewater System Revenue Bonds, Series 2000, 6.000%, 7/01/24
(Pre-refunded 7/01/10) - FGIC Insured
1,000 Puerto Rico Highway and Transportation Authority, Highway 7/10 at 101.00 BBB (5) 1,036,460
Revenue Bonds, Series 2000B, 6.500%, 7/01/27 (Pre-refunded
7/01/10)
735 Puerto Rico Public Buildings Authority, Guaranteed Government 7/12 at 100.00 Baa3 (5) 807,839
Facilities Revenue Refunding Bonds, Series 2002D, 5.125%,
7/01/24 (Pre-refunded 7/01/12)
1,500 Scottsdale Industrial Development Authority, Arizona, Hospital 12/11 at 101.00 N/R (5) 1,652,415
Revenue Bonds, Scottsdale Healthcare, Series 2001, 5.800%,
12/01/31 (Pre-refunded 12/01/11)
-----------------------------------------------------------------------------------------------------------------------------------
9,920 Total U.S. Guaranteed 10,792,300
-----------------------------------------------------------------------------------------------------------------------------------
14 Nuveen Investments
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
-----------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 23.7% (16.4% OF TOTAL INVESTMENTS)
$ 1,000 Arizona Power Authority, Special Obligation Power Resource No Opt. Call AA $ 1,157,730
Revenue Refunding Crossover Bonds, Hoover Project, Series
2001, 5.250%, 10/01/15
105 Pima County Industrial Development Authority, Arizona, Lease 4/10 at 100.00 Aa3 105,618
Obligation Revenue Refunding Bonds, Tucson Electric Power
Company, Series 1988A, 7.250%, 7/15/10 - AGM Insured
1,340 Pima County Industrial Development Authority, Arizona, Revenue 4/15 at 100.00 BBB- 1,356,040
Bonds, Tucson Electric Power Company, Series 2008, 5.750%,
9/01/29
2,170 Puerto Rico Electric Power Authority, Power Revenue Bonds, 7/15 at 100.00 A3 2,162,427
Series 2005RR, 5.000%, 7/01/27 - SYNCORA GTY Insured
530 Salt River Project Agricultural Improvement and Power District, 1/13 at 100.00 Aa1 566,798
Arizona, Electric System Revenue Bonds, Series 2002B, 5.000%,
1/01/22
715 Salt River Project Agricultural Improvement and Power District, 1/18 at 100.00 Aa1 802,588
Arizona, Electric System Revenue Bonds, Tender Option Bond
Trust 09-9W, 17.125%, 1/01/38 (IF)
1,000 Salt River Project Agricultural Improvement and Power District, 1/12 at 101.00 Aa1 1,031,090
Arizona, Electric System Revenue Refunding Bonds, Series
2002A, 5.125%, 1/01/27
Salt Verde Financial Corporation, Arizona, Senior Gas Revenue
Bonds, Series 2007:
4,500 5.500%, 12/01/29 No Opt. Call A 4,321,259
3,500 5.000%, 12/01/37 No Opt. Call A 2,995,335
-----------------------------------------------------------------------------------------------------------------------------------
14,860 Total Utilities 14,498,885
-----------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 19.2% (13.3% OF TOTAL INVESTMENTS)
1,005 Cottonwood, Arizona, Senior Lien Water System Revenue Bonds, 7/14 at 100.00 A 977,785
Municipal Property Corporation, Series 2004, 5.000%, 7/01/24 -
SYNCORA GTY Insured
3,500 Glendale, Arizona, Water and Sewer Revenue Bonds, Subordinate 7/13 at 100.00 AA 3,605,594
Lien, Series 2003, 5.000%, 7/01/28 - AMBAC Insured
1,425 Goodyear, Arizona, Water and Sewer Revenue Obligations, Series 7/20 at 100.00 A- 1,384,060
2010, 5.625%, 7/01/39
600 Oro Valley Municipal Property Corporation, Arizona, Senior Lien 7/13 at 100.00 AA- 618,120
Water Revenue Bonds, Series 2003, 5.000%, 7/01/23 - NPFG
Insured
1,000 Phoenix Civic Improvement Corporation, Arizona, Junior Lien 7/14 at 100.00 AA+ 1,036,850
Wastewater System Revenue Bonds, Series 2004, 5.000%, 7/01/24
- NPFG Insured
1,500 Phoenix Civic Improvement Corporation, Arizona, Junior Lien 7/12 at 100.00 AAA 1,521,105
Water System Revenue Bonds, Series 2002, 5.000%, 7/01/26 -
FGIC Insured
1,250 Phoenix Civic Improvement Corporation, Arizona, Junior Lien No Opt. Call AAA 1,495,413
Water System Revenue Refunding Bonds, Series 2001, 5.500%,
7/01/21 - FGIC Insured
Surprise Municipal Property Corporation, Arizona, Wastewater
System Revenue Bonds, Series 2007:
600 4.700%, 4/01/22 4/14 at 100.00 N/R 525,228
695 4.900%, 4/01/32 4/17 at 100.00 N/R 558,620
-----------------------------------------------------------------------------------------------------------------------------------
11,575 Total Water and Sewer 11,722,775
-----------------------------------------------------------------------------------------------------------------------------------
$ 87,577 Total Investments (cost $85,048,139) - 144.6% 88,429,580
=============----------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 1.0% 605,455
--------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (45.6)% (6) (27,875,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 61,160,035
====================================================================================================================
(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 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.
(4) Investment valued at fair value using methods determined in good faith by,
or at the discretion of, the Board of Directors. For fair value
measurement disclosure purposes, investment categorized as Level 3. See
Notes to Financial Statements, Footnote 2 - Fair Value Measurements for
more information.
(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 31.5%.
N/R Not rated.
(ETM) Escrowed to maturity.
(IF) Inverse floating rate investment.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
Nuveen Investments 15
NFZ | Nuveen Arizona Dividend Advantage Municipal Fund
| Portfolio of Investments January 31, 2010 (Unaudited)
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
-----------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 8.1% (5.4% OF TOTAL
INVESTMENTS)
$ 280 Arizona Higher Education Loan Authority, Student Loan Revenue 9/10 at 100.00 AAA $ 248,637
Bonds, Series 2007B, Auction Rate Securities, 0.000%, 11/01/41
(Alternative Minimum Tax) (4)
1,000 Puerto Rico Industrial, Tourist, Educational, Medical and 2/10 at 100.50 BBB- 897,320
Environmental Control Facilities Financing Authority, Higher
Education Revenue Bonds, Ana G. Mendez University System,
Series 1999, 5.375%, 2/01/29
300 Puerto Rico Industrial, Tourist, Educational, Medical and 9/11 at 100.00 BBB 300,255
Environmental Control Facilities Financing Authority, Higher
Education Revenue Bonds, University of the Sacred Heart,
Series 2001, 5.250%, 9/01/21
305 Tucson Industrial Development Authority, Arizona, Charter School 9/14 at 100.00 BBB- 268,071
Revenue Bonds, Arizona Agribusiness and Equine Center Charter
School, Series 2004A, 6.125%, 9/01/34
-----------------------------------------------------------------------------------------------------------------------------------
1,885 Total Education and Civic Organizations 1,714,283
-----------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE - 18.3% (12.3% OF TOTAL INVESTMENTS)
565 Arizona Health Facilities Authority, Hospital Revenue Bonds, 1/17 at 100.00 A+ 571,899
Banner Health Systems, Series 2007A, 5.000%, 1/01/25
325 Arizona Health Facilities Authority, Hospital Revenue Bonds, 1/17 at 100.00 A+ 214,094
Banner Health Systems, Series 2007B, 1.004%, 1/02/37
720 Arizona Health Facilities Authority, Hospital Revenue Bonds, 1/18 at 100.00 A+ 731,045
Banner Health Systems, Series 2008D, 5.500%, 1/01/38
10 California Health Facilities Financing Authority, Health Facility 3/13 at 100.00 A 9,676
Revenue Bonds, Adventist Health System/West, Series 2003A,
5.000%, 3/01/28
250 Glendale Industrial Development Authority, Arizona, Revenue 12/15 at 100.00 BBB 219,710
Bonds, John C. Lincoln Health Network, Series 2005B, 5.000%,
12/01/37
415 Glendale Industrial Development Authority, Arizona, Revenue 12/17 at 100.00 BBB 358,369
Bonds, John C. Lincoln Health Network, Series 2007, 5.000%,
12/01/42
750 Maricopa County Industrial Development Authority, Arizona, Health 7/14 at 100.00 A 765,773
Facility Revenue Bonds, Catholic Healthcare West, Series
2004A, 5.375%, 7/01/23
1,025 Maricopa County Industrial Development Authority, Arizona, Health 7/17 at 100.00 A 998,606
Facility Revenue Bonds, Catholic Healthcare West, Series
2007A, 5.250%, 7/01/32
-----------------------------------------------------------------------------------------------------------------------------------
4,060 Total Health Care 3,869,172
-----------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 3.5% (2.4% OF TOTAL INVESTMENTS)
1,000 Maricopa County Industrial Development Authority, Arizona, 2/10 at 102.00 Baa1 757,080
Multifamily Housing Revenue Bonds, Whispering Palms
Apartments, Series 1999A, 5.900%, 7/01/29 - NPFG Insured
-----------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 3.7% (2.5% OF TOTAL INVESTMENTS)
760 Tucson and Pima County Industrial Development Authority, Arizona, 6/17 at 101.00 Aaa 780,718
Joint Single Family Mortgage Revenue Bonds, Series 2007B,
5.350%, 6/01/47 (Alternative Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 11.8% (7.9% OF TOTAL INVESTMENTS)
1,000 Maricopa County Unified School District 11, Peoria, Arizona, 7/15 at 100.00 AA- 1,063,210
General Obligation Bonds, Second Series 2005, 5.000%, 7/01/20
- FGIC Insured
1,340 Yuma & La Paz Counties Community College District, Arizona, 7/16 at 100.00 A+ 1,433,197
General Obligation Bonds, Series 2006, 5.000%, 7/01/21 - NPFG
Insured
-----------------------------------------------------------------------------------------------------------------------------------
2,340 Total Tax Obligation/General 2,496,407
-----------------------------------------------------------------------------------------------------------------------------------
16 Nuveen Investments
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
-----------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 47.7% (31.9% OF TOTAL INVESTMENTS)
$ 1,220 Arizona Tourism and Sports Authority, Tax Revenue Bonds, 7/13 at 100.00 A2 $ 1,220,708
Multipurpose Stadium Facility Project, Series 2003A, 5.000%,
7/01/31 - NPFG Insured
91 Centerra Community Facilities District, Goodyear, Arizona, 7/15 at 100.00 N/R 73,392
General Obligation Bonds, Series 2005, 5.500%, 7/15/29
207 Estrella Mountain Ranch Community Facilities District, Arizona, 1/17 at 100.00 N/R 151,352
Special Assessment Bonds, Montecito Assessment District,
Series 2007, 5.700%, 7/01/27
146 Estrella Mountain Ranch Community Facilities District, Goodyear, 7/10 at 102.00 N/R 149,285
Arizona, Special Assessment Lien Bonds, Series 2001A, 7.875%,
7/01/25
1,000 Greater Arizona Development Authority, Infrastructure Revenue 8/16 at 100.00 A+ 1,032,710
Bonds, Series 2006-1, 5.000%, 8/01/22 - NPFG Insured
275 Greater Arizona Development Authority, Infrastructure Revenue 8/16 at 100.00 AA- 288,272
Bonds, Series 2006A, 5.000%, 8/01/23 - NPFG Insured
1,180 Marana Municipal Property Corporation, Arizona, Revenue Bonds, 7/13 at 100.00 AA 1,223,200
Series 2003, 5.000%, 7/01/23 - AMBAC Insured
528 Marana, Arizona, Tangerine Farms Road Improvement District 7/16 at 100.00 Baa1 470,775
Revenue Bonds, Series 2006, 4.600%, 1/01/26
150 Marley Park Community Facilities District, City of Surprise, 7/17 at 100.00 N/R 127,065
Arizona, Limited Tax General Obligation Bonds, Series 2007,
6.100%, 7/15/32
255 Merrill Ranch Community Facilities District 1, Florence, Arizona, 7/18 at 100.00 N/R 250,152
General Obligation Bonds, Series 2008A, 7.400%, 7/15/33
330 Palm Valley Community Facility District 3, Goodyear, Arizona, 7/16 at 100.00 N/R 253,414
General Obligation Bonds, Series 2006, 5.300%, 7/15/31
225 Palm Valley Community Facility District 3, Goodyear, Arizona, 7/17 at 100.00 N/R 183,332
Limited Tax General Obligation Bonds, Series 2007, 5.800%,
7/15/32
100 Parkway Community Facilities District 1, Prescott Valley, 7/16 at 100.00 N/R 77,321
Arizona, General Obligation Bonds, Series 2006, 5.350%, 7/15/31
900 Phoenix Industrial Development Authority, Arizona, Government 3/12 at 100.00 A1 958,959
Bonds, Capitol Mall LLC II, Series 2001, 5.250%, 9/15/16 -
AMBAC Insured
680 Pinal County Industrial Development Authority, Arizona, No Opt. Call BBB- 634,046
Correctional Facilities Contract Revenue Bonds, Florence West
Prison LLC, Series 2002A, 5.000%, 10/01/18 - ACA Insured
600 San Luis Civic Improvement Corporation, Arizona, Municipal 7/15 at 100.00 A- 611,670
Facilities Excise Tax Revenue Bonds, Series 2005, 5.000%,
7/01/25 - SYNCORA GTY Insured
1,000 Scottsdale Municipal Property Corporation, Arizona, Excise Tax No Opt. Call AAA 1,132,860
Revenue Bonds, Series 2006, 5.000%, 7/01/24
350 Tartesso West Community Facility District, Buckeye, Arizona, 7/17 at 100.00 N/R 288,950
Limited Tax General Obligation Bonds, Series 2007, 5.900%,
7/15/32
500 Vistancia Community Facilities District, Arizona, Restricted 7/15 at 100.00 Baa1 489,430
General Obligation Bonds, Series 2005, 5.750%, 7/15/24
353 Watson Road Community Facilities District, Arizona, Special 7/16 at 100.00 N/R 283,106
Assessment Revenue Bonds, Series 2005, 6.000%, 7/01/30
225 Westpark Community Facilities District, Buckeye, Arizona, General 7/16 at 100.00 N/R 171,590
Obligation Tax Increment Bonds Series 2006, 5.250%, 7/15/31
-----------------------------------------------------------------------------------------------------------------------------------
10,315 Total Tax Obligation/Limited 10,071,589
-----------------------------------------------------------------------------------------------------------------------------------
Nuveen Investments 17
NFZ | Nuveen Arizona Dividend Advantage Municipal Fund (continued)
| Portfolio of Investments January 31, 2010 (Unaudited)
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
----------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 9.1% (6.1% OF TOTAL INVESTMENTS) (5)
$ 365 Arizona Health Facilities Authority, Hospital Revenue 7/10 at 101.00 N/R (5) $ 377,290
Bonds,Catholic Healthcare West, Series 1999A, 6.625%,
7/01/20 (Pre-refunded 7/01/10)
240 Maricopa County Union High School District 210 Phoenix, 7/16 at 100.00 AA (5) 280,586
Arizona, General Obligation Bonds, Series 2006C, 5.000%,
7/01/24 (Pre-refunded 7/01/16) - MBIA Insured
140 Maricopa County, Arizona, Hospital Revenue Bonds, 4/15 at 100.00 N/R (5) 161,168
Sun Health Corporation, Series 2005, 5.000%,
4/01/16 (Pre-refunded 4/01/15)
1,000 Scottsdale Industrial Development Authority, Arizona, 12/11 at 101.00 N/R (5) 1,101,610
Hospital Revenue Bonds, Scottsdale Healthcare,
Series 2001, 5.800%, 12/01/31 (Pre-refunded 12/01/11)
----------------------------------------------------------------------------------------------------------------------------------
1,745 Total U.S. Guaranteed 1,920,654
----------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 31.7% (21.2% OF TOTAL INVESTMENTS)
1,500 Arizona Power Authority, Special Obligation Power Resource No Opt. Call AA 1,738,392
Revenue Refunding Crossover Bonds, Hoover Project,
Series 2001, 5.250%, 10/01/17
1,000 Mesa, Arizona, Utility System Revenue Refunding Bonds, No Opt. Call AA- 1,120,080
Series 2002, 5.250%, 7/01/17 - FGIC Insured
665 Pima County Industrial Development Authority, 1/15 at 100.00 BBB- 672,960
Arizona, Revenue Bonds, Tucson Electric Power Company,
Series 2008, 5.750%, 9/01/29
1,000 Puerto Rico Electric Power Authority, Power Revenue Bonds, 7/15 at 100.00 A3 1,001,370
Series 2005RR, 5.000%, 7/01/26 - SYNCORA GTY Insured
200 Salt River Project Agricultural Improvement and Power 1/13 at 100.00 Aa1 213,886
District, Arizona, Electric System Revenue Bonds,
Series 2002B, 5.000%, 1/01/22
560 Salt River Project Agricultural Improvement and Power District, 1/18 at 100.00 Aa1 628,600
Arizona, Electric System Revenue Bonds,
Tender Option Bond Trust 09-9W, 17.125%, 1/01/38 (IF)
235 Salt River Project Agricultural Improvement and Power District, 4/10 at 100.00 Aa1 235,766
Arizona, Electric System Revenue Refunding Bonds,
Series 1997A, 5.000%, 1/01/20
1,000 Salt River Project Agricultural Improvement and Power District, 1/12 at 101.00 Aa1 1,077,320
Arizona, Electric System Revenue Refunding Bonds,
Series 2002A, 5.250%, 1/01/18
----------------------------------------------------------------------------------------------------------------------------------
6,160 Total Utilities 6,688,374
----------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 13.0% (8.7% OF TOTAL INVESTMENTS)
475 Goodyear, Arizona, Water and Sewer Revenue Obligations, 7/20 at 100.00 A- 461,353
Series 2010, 5.625%, 7/01/39
225 Oro Valley Municipal Property Corporation, Arizona, 7/13 at 100.00 AA- 231,795
Senior Lien Water Revenue Bonds, Series 2003, 5.000%,
7/01/23 - NPFG Insured
1,500 Phoenix Civic Improvement Corporation, Arizona, 7/12 at 100.00 AAA 1,521,105
Junior Lien Water System Revenue Bonds, Series 2002,
5.000%, 7/01/26 - FGIC Insured
Surprise Municipal Property Corporation, Arizona,
Wastewater System Revenue Bonds, Series 2007:
225 4.700%, 4/01/22 4/14 at 100.00 N/R 196,961
260 4.900%, 4/01/32 4/17 at 100.00 N/R 208,980
175 Yuma County Industrial Development Authority, Arizona, 12/17 at 100.00 N/R 136,812
Exempt Revenue Bonds, Far West Water & Sewer Inc.
Refunding, Series 2007A, 6.375%, 12/01/37
(Alternative Minimum Tax)
----------------------------------------------------------------------------------------------------------------------------------
2,860 Total Water and Sewer 2,757,006
----------------------------------------------------------------------------------------------------------------------------------
$ 31,125 Total Long-Term Investments (cost $31,260,370) - 146.9% 31,055,283
=============---------------------------------------------------------------------------------------------------------------------
18 Nuveen Investments
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
-----------------------------------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS - 2.4% (1.6% OF TOTAL INVESTMENTS)
UTILITIES - 2.4% (1.6% OF TOTAL INVESTMENTS)
$ 500 The Industrial Development Authority of the County of Apache, 4/10 at 100.00 VMIG-1 $ 500,000
Arizona, Industrial Development Revenue Bonds, 1985 Series A,
Tucson Electric Power Company Springville Project, Variable
Rate Demand Obligations, 0.200%, 12/01/20 (6)
=============----------------------------------------------------------------------------------------------------------------------
Total Short-Term Investments (cost $500,000) 500,000
-------------------------------------------------------------------------------------------------------------------
Total Investments (cost $31,760,370) - 149.3% 31,555,283
-------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 0.9% 175,514
-------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (50.2)% (7) (10,600,000)
-------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 21,130,797
===================================================================================================================
(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 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.
(4) Investment valued at fair value using methods determined in good faith by,
or at the discretion of, the Board of Trustees. For fair value measurement
disclosure purposes, investment categorized as Level 3. See Notes to
Financial Statements, Footnote 2 - Fair Value Measurements for more
information.
(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) Investment has a maturity of more then one year, but has variable rate and
demand features which qualify it as a short-term investment. The rate
disclosed is that in effect at the end of the reporting period. This rate
changes periodically based on market conditions or a specified market
index.
(7) Preferred shares, at Liquidation Value as a percentage of Total
Investments is 33.6%.
N/R Not rated.
(IF) Inverse floating rate investment.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
Nuveen Investments 19
NKR | Nuveen Arizona Dividend Advantage Municipal Fund 2
| Portfolio of Investments January 31, 2010 (Unaudited)
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
-----------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 6.5% (4.5% OF TOTAL
INVESTMENTS)
$ 1,130 Arizona Higher Education Loan Authority, Student Loan Revenue 9/10 at 100.00 AAA $ 1,003,429
Bonds, Series 2007B, Auction Rate Securities, 0.000%,
11/01/41 (Alternative Minimum Tax) (4)
485 Pima County Industrial Development Authority, Arizona, Charter 12/14 at 100.00 BBB- 431,931
School Revenue Bonds, Noah Webster Basic Schools Inc., Series
2004, 6.000%, 12/15/24
320 Puerto Rico Industrial, Tourist, Educational, Medical and 2/10 at 100.50 BBB- 313,411
Environmental Control Facilities Financing Authority, Higher
Education Revenue Bonds, Ana G. Mendez University System,
Series 1999, 5.375%, 2/01/19
480 Tucson Industrial Development Authority, Arizona, Charter School 9/14 at 100.00 BBB- 421,882
Revenue Bonds, Arizona Agribusiness and Equine Center Charter
School, Series 2004A, 6.125%, 9/01/34
University of Arizona, Certificates of Participation,
Series 2002A:
65 5.500%, 6/01/18 - AMBAC Insured 6/12 at 100.00 AA- 70,013
40 5.125%, 6/01/22 - AMBAC Insured 6/12 at 100.00 AAA 40,494
-----------------------------------------------------------------------------------------------------------------------------------
2,520 Total Education and Civic Organizations 2,281,160
-----------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE - 24.1% (16.5% OF TOTAL INVESTMENTS)
845 Arizona Health Facilities Authority, Hospital Revenue Bonds, 1/17 at 100.00 A+ 855,317
Banner Health Systems, Series 2007A, 5.000%, 1/01/25
520 Arizona Health Facilities Authority, Hospital Revenue Bonds, 1/17 at 100.00 A+ 342,550
Banner Health Systems, Series 2007B, 1.004%, 1/02/37
1,150 Arizona Health Facilities Authority, Hospital Revenue Bonds, 1/18 at 100.00 A+ 1,167,641
Banner Health Systems, Series 2008D, 5.500%, 1/01/38
600 Arizona Health Facilities Authority, Revenue Bonds, Blood 4/14 at 100.00 A 611,028
Systems Inc., Series 2004, 5.000%, 4/01/20
400 Glendale Industrial Development Authority, Arizona, Revenue 12/15 at 100.00 BBB 351,536
Bonds, John C. Lincoln Health Network, Series 2005B, 5.000%,
12/01/37
655 Glendale Industrial Development Authority, Arizona, Revenue 12/17 at 100.00 BBB 565,619
Bonds, John C. Lincoln Health Network, Series 2007, 5.000%,
12/01/42
1,375 Maricopa County Industrial Development Authority, Arizona, 7/14 at 100.00 A 1,403,916
Health Facility Revenue Bonds, Catholic Healthcare West,
Series 2004A, 5.375%, 7/01/23
1,650 Maricopa County Industrial Development Authority, Arizona, 7/17 at 100.00 A 1,607,513
Health Facility Revenue Bonds, Catholic Healthcare West,
Series 2007A, 5.250%, 7/01/32
500 Maricopa County Industrial Development Authority, Arizona, 5/10 at 100.00 Aa2 500,520
Hospital Revenue Bonds, Mayo Clinic Hospital, Series 1998,
5.250%, 11/15/37
1,000 Yavapai County Industrial Development Authority, Arizona, 8/13 at 100.00 Baa2 1,003,750
Hospital Revenue Bonds, Yavapai Regional Medical Center,
Series 2003A, 6.000%, 8/01/33
-----------------------------------------------------------------------------------------------------------------------------------
8,695 Total Health Care 8,409,390
-----------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 3.0% (2.1% OF TOTAL INVESTMENTS)
1,000 Maricopa County Industrial Development Authority, Arizona, GNMA 10/11 at 105.00 AAA 1,051,770
Collateralized Multifamily Housing Revenue Refunding Bonds,
Pine Ridge, Cambridge Court, Cove on 44th and Fountain Place
Apartments, Series 2001A-1, 6.000%, 10/20/31
-----------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 3.7% (2.5% OF TOTAL INVESTMENTS)
1,245 Tucson and Pima County Industrial Development Authority, 6/17 at 101.00 Aaa 1,278,939
Arizona, Joint Single Family Mortgage Revenue Bonds, Series
2007B, 5.350%, 6/01/47 (Alternative Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 20.0% (13.7% OF TOTAL INVESTMENTS)
1,000 Maricopa County School District 6, Arizona, General Obligation No Opt. Call AAA 1,159,290
Refunding Bonds, Washington Elementary School, Series 2002A,
5.375%, 7/01/16 - AGM Insured
1,165 Maricopa County Unified School District 69, Paradise Valley, No Opt. Call Aa3 1,331,362
Arizona, General Obligation Refunding Bonds, Series 2002A,
5.250%, 7/01/14 - FGIC Insured
20 Nuveen Investments
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
-----------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL (continued)
$ 1,405 Mesa, Arizona, General Obligation Bonds, Series 2002, 5.375%, No Opt. Call AA $ 1,620,232
7/01/15 - FGIC Insured
Phoenix, Arizona, Various Purpose General Obligation Bonds,
Series 2002B:
1,700 5.000%, 7/01/22 7/12 at 100.00 AAA 1,819,136
500 5.000%, 7/01/27 7/12 at 100.00 AAA 514,270
510 Scottsdale, Arizona, General Obligation Bonds, Series 2002, 7/11 at 100.00 AAA 521,541
5.000%, 7/01/24
-----------------------------------------------------------------------------------------------------------------------------------
6,280 Total Tax Obligation/General 6,965,831
-----------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 46.7% (32.0% OF TOTAL INVESTMENTS)
Arizona State, Certificates of Participation, Series 2002A:
750 5.000%, 11/01/17 - NPFG Insured 5/12 at 100.00 A+ 775,890
1,000 5.000%, 11/01/18 - NPFG Insured 5/12 at 100.00 A+ 1,028,810
500 5.000%, 11/01/20 - NPFG Insured 5/12 at 100.00 A+ 511,380
128 Centerra Community Facilities District, Goodyear, Arizona, 7/15 at 100.00 N/R 103,233
General Obligation Bonds, Series 2005, 5.500%, 7/15/29
340 Estrella Mountain Ranch Community Facilities District, Arizona, 1/17 at 100.00 N/R 236,616
Special Assessment Bonds, Montecito Assessment District,
Series 2007, 5.800%, 7/01/32
231 Estrella Mountain Ranch Community Facilities District, Goodyear, 7/10 at 102.00 N/R 236,198
Arizona, Special Assessment Lien Bonds, Series 2001A, 7.875%,
7/01/25
884 Marana, Arizona, Tangerine Farms Road Improvement District 7/16 at 100.00 Baa1 788,192
Revenue Bonds, Series 2006, 4.600%, 1/01/26
Maricopa County Stadium District, Arizona, Revenue Refunding
Bonds, Series 2002:
840 5.375%, 6/01/18 - AMBAC Insured 6/12 at 100.00 N/R 892,021
2,645 5.375%, 6/01/19 - AMBAC Insured 6/12 at 100.00 N/R 2,784,231
240 Marley Park Community Facilities District, City of Surprise, 7/17 at 100.00 N/R 203,304
Arizona, Limited Tax General Obligation Bonds, Series 2007,
6.100%, 7/15/32
415 Merrill Ranch Community Facilities District 1, Florence, Arizona, 7/18 at 100.00 N/R 407,111
General Obligation Bonds, Series 2008A, 7.400%, 7/15/33
530 Palm Valley Community Facility District 3, Goodyear, Arizona, 7/16 at 100.00 N/R 406,998
General Obligation Bonds, Series 2006, 5.300%, 7/15/31
350 Palm Valley Community Facility District 3, Goodyear, Arizona, 7/17 at 100.00 N/R 285,184
Limited Tax General Obligation Bonds, Series 2007, 5.800%,
7/15/32
140 Parkway Community Facilities District 1, Prescott Valley, 7/16 at 100.00 N/R 108,249
Arizona, General Obligation Bonds, Series 2006, 5.350%,
7/15/31
1,500 Phoenix Industrial Development Authority, Arizona, Government 3/12 at 100.00 A1 1,598,265
Bonds, Capitol Mall LLC II, Series 2001, 5.250%, 9/15/16 -
AMBAC Insured
1,070 Pinal County Industrial Development Authority, Arizona, No Opt. Call BBB- 997,689
Correctional Facilities Contract Revenue Bonds, Florence West
Prison LLC, Series 2002A, 5.000%, 10/01/18 - ACA Insured
270 Puerto Rico Public Buildings Authority, Guaranteed Government 7/12 at 100.00 BBB- 262,613
Facilities Revenue Refunding Bonds, Series 2002D, 5.125%,
7/01/24
960 San Luis Civic Improvement Corporation, Arizona, Municipal 7/15 at 100.00 A- 978,672
Facilities Excise Tax Revenue Bonds, Series 2005, 5.000%,
7/01/25 - SYNCORA GTY Insured
1,000 Scottsdale Municipal Property Corporation, Arizona, Excise Tax No Opt. Call AAA 1,132,860
Revenue Bonds, Series 2006, 5.000%, 7/01/24
555 Tartesso West Community Facility District, Buckeye, Arizona, 7/17 at 100.00 N/R 458,191
Limited Tax General Obligation Bonds, Series 2007, 5.900%,
7/15/32
750 Vistancia Community Facilities District, Arizona, Restricted 7/15 at 100.00 Baa1 734,145
General Obligation Bonds, Series 2005, 5.750%, 7/15/24
558 Watson Road Community Facilities District, Arizona, Special 7/16 at 100.00 N/R 447,516
Assessment Revenue Bonds, Series 2005, 6.000%, 7/01/30
350 Westpark Community Facilities District, Buckeye, Arizona, 7/16 at 100.00 N/R 266,917
General Obligation Tax Increment Bonds Series 2006, 5.250%,
7/15/31
640 Yuma Municipal Property Corporation, Arizona, Municipal 7/10 at 100.00 AA- 643,379
Facilities Tax Revenue Bonds, Series 2001, 5.000%, 7/01/21 -
AMBAC Insured
-----------------------------------------------------------------------------------------------------------------------------------
16,646 Total Tax Obligation/Limited 16,287,664
-----------------------------------------------------------------------------------------------------------------------------------
Nuveen Investments 21
NKR | Nuveen Arizona Dividend Advantage Municipal Fund 2 (continued)
| Portfolio of Investments January 31, 2010 (Unaudited)
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
-----------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 4.2% (2.9% OF TOTAL INVESTMENTS)
$ 470 Phoenix Civic Improvement Corporation, Arizona, Senior Lien 7/10 at 100.00 AAA $ 473,652
Airport Revenue Bonds, Series 1998A, 5.000%, 7/01/25 - AGM
Insured
1,000 Phoenix, Arizona, Civic Improvement Corporation, Senior Lien 7/12 at 100.00 AA- 1,003,330
Airport Revenue Bonds, Series 2002B, 5.250%, 7/01/27 - FGIC
Insured (Alternative Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
1,470 Total Transportation 1,476,982
-----------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 20.3% (13.9% OF TOTAL INVESTMENTS) (5)
400 Arizona Health Facilities Authority, Hospital Revenue Bonds, 7/10 at 101.00 N/R(5) 413,468
Catholic Healthcare West, Series 1999A, 6.625%, 7/01/20
(Pre-refunded 7/01/10)
735 Arizona Health Facilities Authority, Hospital System Revenue 2/12 at 101.00 N/R(5) 819,856
Bonds, Phoenix Children's Hospital, Series 2002A, 6.250%,
2/15/21 (Pre-refunded 2/15/12)
715 Arizona State University, System Revenue Bonds, Series 2002, 7/12 at 100.00 AAA 800,922
5.750%, 7/01/27 (Pre-refunded 7/01/12) - FGIC Insured
100 Maricopa County Unified School District 89, Dysart, Arizona, 7/14 at 100.00 AAA 116,803
General Obligation Bonds, Series 2004B, 5.250%, 7/01/20
(Pre-refunded 7/01/14) - AGM Insured
375 Maricopa County Union High School District 210 Phoenix, Arizona, 7/16 at 100.00 AA(5) 438,416
General Obligation Bonds, Series 2006C, 5.000%, 7/01/24
(Pre-refunded 7/01/16) - MBIA Insured
225 Maricopa County, Arizona, Hospital Revenue Bonds, Sun Health 4/15 at 100.00 N/R(5) 259,020
Corporation, Series 2005, 5.000%, 4/01/16 (Pre-refunded
4/01/15)
730 Puerto Rico Public Buildings Authority, Guaranteed Government 7/12 at 100.00 Baa3(5) 802,343
Facilities Revenue Refunding Bonds, Series 2002D, 5.125%,
7/01/24 (Pre-refunded 7/01/12)
1,000 Scottsdale Industrial Development Authority, Arizona, Hospital 12/11 at 101.00 N/R(5) 1,101,610
Revenue Bonds, Scottsdale Healthcare, Series 2001, 5.800%,
12/01/31 (Pre-refunded 12/01/11)
990 Scottsdale, Arizona, General Obligation Bonds, Series 2002, 7/11 at 100.00 AAA 1,054,004
5.000%, 7/01/24 (Pre-refunded 7/01/11)
University of Arizona, Certificates of Participation,
Series 2002A:
685 5.500%, 6/01/18 (Pre-refunded 6/01/12) - AMBAC Insured 6/12 at 100.00 AA-(5) 758,062
460 5.125%, 6/01/22 (Pre-refunded 6/01/12) - AMBAC Insured 6/12 at 100.00 A1(5) 505,080
-----------------------------------------------------------------------------------------------------------------------------------
6,415 Total U.S. Guaranteed 7,069,584
-----------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 5.8% (4.0% OF TOTAL INVESTMENTS)
665 Pima County Industrial Development Authority, Arizona, Revenue 1/15 at 100.00 BBB- 672,960
Bonds, Tucson Electric Power Company, Series 2008, 5.750%,
9/01/29
450 Salt River Project Agricultural Improvement and Power District, 1/18 at 100.00 Aa1 505,125
Arizona, Electric System Revenue Bonds, Tender Option Bond
Trust 09-9W, 17.125%, 1/01/38 (IF)
1,000 Salt Verde Financial Corporation, Arizona, Senior Gas Revenue No Opt. Call A 855,810
Bonds, Series 2007, 5.000%,12/01/37
-----------------------------------------------------------------------------------------------------------------------------------
2,115 Total Utilities 2,033,895
-----------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 11.5% (7.9% OF TOTAL INVESTMENTS)
500 Maricopa County Industrial Development Authority, Arizona, Water 6/10 at 100.00 N/R 500,060
System Improvement Revenue Bonds, Chaparral City Water
Company, Series 1997A, 5.400%, 12/01/22 - AMBAC Insured
(Alternative Minimum Tax)
360O Oro Valley Municipal Property Corporation, Arizona, Senior Lien 7/13 at 100.00 AA- 370,872
Water Revenue Bonds, Series 2003, 5.000%, 7/01/23 - NPFG
Insured
1,000 Phoenix Civic Improvement Corporation, Arizona, Junior Lien No Opt. Call AAA 1,177,390
Water System Revenue Refunding Bonds, Series 2001, 5.500%,
7/01/22 - FGIC Insured
Surprise Municipal Property Corporation, Arizona, Wastewater
System Revenue Bonds, Series 2007:
350 4.700%, 4/01/22 4/14 at 100.00 N/R 306,383
410 4.900%, 4/01/32 4/17 at 100.00 N/R 329,546
22 Nuveen Investments
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
-----------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER (continued)
$ 1,000 Tucson, Arizona, Water System Revenue Refunding Bonds, Series 7/12 at 102.00 AA- $ 1,107,970
2002, 5.500%, 7/01/18 - FGIC Insured
275 Yuma County Industrial Development Authority, Arizona, Exempt 12/17 at 100.00 N/R 214,990
Revenue Bonds, Far West Water & Sewer Inc. Refunding, Series
2007A, 6.375%, 12/01/37 (Alternative Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
3,895 Total Water and Sewer 4,007,211
-----------------------------------------------------------------------------------------------------------------------------------
$ 50,281 Total Investments (cost $50,212,144) - 145.8% 50,862,426
=============----------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 1.8% 658,705
--------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (47.6)% (6) (16,625,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 34,896,131
====================================================================================================================
(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 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.
(4) Investment valued at fair value using methods determined in good faith by,
or at the discretion of, the Board of Trustees. For fair value measurement
disclosure purposes, investment categorized as Level 3. See Notes to
Financial Statements, Footnote 2 - Fair Value Measurements for more
information.
(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 32.7%.
N/R Not rated.
(IF) Inverse floating rate investment.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
Nuveen Investments 23
NXE | Nuveen Arizona Dividend Advantage Municipal Fund 3
| Portfolio of Investments January 31, 2010 (Unaudited)
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
----------------------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES - 1.1% (0.8% OF TOTAL INVESTMENTS)
$ 495 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 5/12 at 100.00 BBB $ 477,442
Asset-Backed Refunding Bonds, Series 2002, 5.375%, 5/15/33
----------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 14.9% (10.4% OF TOTAL
INVESTMENTS)
690 Arizona Higher Education Loan Authority, Student Loan Revenue 9/10 at 100.00 AAA 612,713
Bonds, Series 2007B, Auction Rate Securities, 0.000%,
11/01/41 (Alternative Minimum Tax) (4)
1,250 Arizona State University, System Revenue Bonds, Series 2005, 7/15 at 100.00 N/R 1,304,775
5.000%, 7/01/20 - AMBAC Insured
1,130 Energy Management Services LLC, Arizona State University, Energy 7/12 at 100.00 AA 1,215,699
Conservation Revenue Bonds, Main Campus Project, Series 2002,
5.250%, 7/01/18 - NPFG Insured
560 Pima County Industrial Development Authority, Arizona, Charter 12/14 at 100.00 BBB- 498,725
School Revenue Bonds, Noah Webster Basic Schools Inc., Series
2004, 6.000%, 12/15/24
565 Tucson Industrial Development Authority, Arizona, Charter School 9/14 at 100.00 BBB- 496,590
Revenue Bonds, Arizona Agribusiness and Equine Center Charter
School, Series 2004A, 6.125%, 9/01/34
2,000 University of Arizona, Certificates of Participation, Series 6/12 at 100.00 AA- 2,120,680
2002B, 5.125%, 6/01/20 - AMBAC Insured
----------------------------------------------------------------------------------------------------------------------------------
6,195 Total Education and Civic Organizations 6,249,182
----------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE - 29.5% (20.6% OF TOTAL INVESTMENTS)
1,015 Arizona Health Facilities Authority, Hospital Revenue Bonds, 1/17 at 100.00 A+ 1,027,393
Banner Health Systems, Series 2007A, 5.000%, 1/01/25
620 Arizona Health Facilities Authority, Hospital Revenue Bonds, 1/17 at 100.00 A+ 408,425
Banner Health Systems, Series 2007B, 1.004%, 1/02/37
2,390 Arizona Health Facilities Authority, Hospital Revenue Bonds, 1/18 at 100.00 A+ 2,426,662
Banner Health Systems, Series 2008D, 5.500%, 1/01/38
625 Arizona Health Facilities Authority, Revenue Bonds, Blood 4/14 at 100.00 A 636,488
Systems Inc., Series 2004, 5.000%, 4/01/20
475 Glendale Industrial Development Authority, Arizona, Revenue 12/15 at 100.00 BBB 417,449
Bonds, John C. Lincoln Health Network, Series 2005B, 5.000%,
12/01/37
785 Glendale Industrial Development Authority, Arizona, Revenue 12/17 at 100.00 BBB 677,879
Bonds, John C. Lincoln Health Network, Series 2007, 5.000%,
12/01/42
1,825 Maricopa County Industrial Development Authority, Arizona, 7/14 at 100.00 A 1,863,380
Health Facility Revenue Bonds, Catholic Healthcare West,
Series 2004A, 5.375%, 7/01/23
1,985 Maricopa County Industrial Development Authority, Arizona, 7/17 at 100.00 A 1,933,886
Health Facility Revenue Bonds, Catholic Healthcare West,
Series 2007A, 5.250%, 7/01/32
2,000 Maricopa County Industrial Development Authority, Arizona, 5/10 at 100.00 Aa2 2,002,080
Hospital Revenue Bonds, Mayo Clinic Hospital, Series 1998,
5.250%, 11/15/37
1,000 Yavapai County Industrial Development Authority, Arizona, 8/13 at 100.00 Baa2 1,003,750
Hospital Revenue Bonds, Yavapai Regional Medical Center,
Series 2003A, 6.000%, 8/01/33
----------------------------------------------------------------------------------------------------------------------------------
12,720 Total Health Care 12,397,392
----------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 3.6% (2.5% OF TOTAL INVESTMENTS)
1,495 Tucson and Pima County Industrial Development Authority, 6/17 at 101.00 Aaa 1,535,754
Arizona, Joint Single Family Mortgage Revenue Bonds, Series
2007B, 5.350%, 6/01/47 (Alternative Minimum Tax)
----------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 2.5% (1.8% OF TOTAL INVESTMENTS)
1,000 Pinal County Unified School District 1, Florence, Arizona, 7/18 at 100.00 A 1,055,640
General Obligation Bonds, Series 2008C, 5.250%, 7/01/28
----------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 31.5% (22.1% OF TOTAL INVESTMENTS)
146 Centerra Community Facilities District, Goodyear, Arizona, 7/15 at 100.00 N/R 117,750
General Obligation Bonds, Series 2005, 5.500%, 7/15/29
2,250 DC Ranch Community Facilities District, Scottsdale, Arizona, 7/13 at 100.00 Baa1 2,163,780
General Obligation Bonds, Series 2002, 5.000%, 7/15/27 - AMBAC
Insured
24 Nuveen Investments
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
----------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED (continued)
Estrella Mountain Ranch Community Facilities District, Arizona,
Special Assessment Bonds, Montecito Assessment District,
Series 2007:
$ 251 5.700%, 7/01/27 1/17 at 100.00 N/R $ 183,524
155 5.800%, 7/01/32 1/17 at 100.00 N/R 107,869
271 Estrella Mountain Ranch Community Facilities District, Goodyear, 7/10 at 102.00 N/R 277,098
Arizona, Special Assessment Lien Bonds, Series 2001A, 7.875%,
7/01/25
525 Greater Arizona Development Authority, Infrastructure Revenue 8/16 at 100.00 AA- 550,337
Bonds, Series 2006A, 5.000%, 8/01/23 - NPFG Insured
1,033 Marana, Arizona, Tangerine Farms Road Improvement District 7/16 at 100.00 Baa1 921,043
Revenue Bonds, Series 2006, 4.600%, 1/01/26
290 Marley Park Community Facilities District, City of Surprise, 7/17 at 100.00 N/R 245,659
Arizona, Limited Tax General Obligation Bonds, Series 2007,
6.100%, 7/15/32
490 Merrill Ranch Community Facilities District 1, Florence, 7/18 at 100.00 N/R 480,685
Arizona, General Obligation Bonds, Series 2008A, 7.400%,
7/15/33
2,175 Mohave County, Arizona, Certificates of Participation, Series 7/14 at 100.00 N/R 2,300,845
2004, 5.250%, 7/01/19 - AMBAC Insured
640 Palm Valley Community Facility District 3, Goodyear, Arizona, 7/16 at 100.00 N/R 491,469
General Obligation Bonds, Series 2006, 5.300%, 7/15/31
425 Palm Valley Community Facility District 3, Goodyear, Arizona, 7/17 at 100.00 N/R 346,294
Limited Tax General Obligation Bonds, Series 2007, 5.800%,
7/15/32
160 Parkway Community Facilities District 1, Prescott Valley, 7/16 at 100.00 N/R 123,714
Arizona, General Obligation Bonds, Series 2006, 5.350%,
7/15/31
1,250 Pinal County Industrial Development Authority, Arizona, No Opt. Call BBB- 1,165,525
Correctional Facilities Contract Revenue Bonds, Florence West
Prison LLC, Series 2002A, 5.000%, 10/01/18 - ACA Insured
1,130 San Luis Civic Improvement Corporation, Arizona, Municipal 7/15 at 100.00 A- 1,151,979
Facilities Excise Tax Revenue Bonds, Series 2005, 5.000%,
7/01/25 - SYNCORA GTY Insured
665 Tartesso West Community Facility District, Buckeye, Arizona, 7/17 at 100.00 N/R 549,004
Limited Tax General Obligation Bonds, Series 2007, 5.900%,
7/15/32
1,250 Vistancia Community Facilities District, Arizona, Restricted 7/15 at 100.00 Baa1 1,223,575
General Obligation Bonds, Series 2005, 5.750%, 7/15/24
662 Watson Road Community Facilities District, Arizona, Special 7/16 at 100.00 N/R 530,924
Assessment Revenue Bonds, Series 2005, 6.000%, 7/01/30
425 Westpark Community Facilities District, Buckeye, Arizona, 7/16 at 100.00 N/R 324,114
General Obligation Tax Increment Bonds Series 2006, 5.250%,
7/15/31
----------------------------------------------------------------------------------------------------------------------------------
14,193 Total Tax Obligation/Limited 13,255,188
----------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 13.9% (9.7% OF TOTAL INVESTMENTS)
Phoenix, Arizona, Civic Improvement Corporation, Senior Lien
Airport Revenue Bonds, Series 2002B:
1,000 5.750%, 7/01/16 - FGIC Insured (Alternative Minimum Tax) 7/12 at 100.00 AA- 1,046,690
2,300 5.250%, 7/01/21 - FGIC Insured (Alternative Minimum Tax) 7/12 at 100.00 AA- 2,331,187
2,450 Tucson Airport Authority Inc., Arizona, Revenue Refunding Bonds, 6/11 at 100.00 A1 2,457,766
Series 2001B, 5.000%, 6/01/20 - AMBAC Insured (Alternative
Minimum Tax)
----------------------------------------------------------------------------------------------------------------------------------
5,750 Total Transportation 5,835,643
----------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 19.1% (13.4% OF TOTAL INVESTMENTS) (5)
300 Arizona Health Facilities Authority, Hospital Revenue Bonds, 7/10 at 101.00 N/R (5) 310,101
Catholic Healthcare West, Series 1999A, 6.625%, 7/01/20
(Pre-refunded 7/01/10)
1,000 Arizona Health Facilities Authority, Hospital System Revenue 12/10 at 102.00 BBB (5) 1,072,550
Bonds, John C. Lincoln Health Network, Series 2000, 6.875%,
12/01/20 (Pre-refunded 12/01/10)
1,575 Maricopa County Union High School District 210, Phoenix, 7/14 at 100.00 AAA 1,822,795
Arizona, General Obligation Bonds, Series 2004A, 5.000%,
7/01/20 (Pre-refunded 7/01/14) - AGM Insured
270 Maricopa County, Arizona, Hospital Revenue Bonds, Sun Health 4/15 at 100.00 N/R (5) 310,824
Corporation, Series 2005, 5.000%, 4/01/16 (Pre-refunded
4/01/15)
1,250 Scottsdale Industrial Development Authority, Arizona, Hospital 12/11 at 101.00 N/R (5) 1,377,013
Revenue Bonds, Scottsdale Healthcare, Series 2001, 5.800%,
12/01/31 (Pre-refunded 12/01/11)
Nuveen Investments 25
NXE | Nuveen Arizona Dividend Advantage Municipal Fund 3 (continued)
| Portfolio of Investments January 31, 2010 (Unaudited)
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
----------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED (5) (continued)
$ 2,770 Tempe, Arizona, Excise Tax Revenue Refunding Bonds, Series 2003, 7/13 at 100.00 AAA $ 3,142,342
5.000%, 7/01/22 (Pre-refunded 7/01/13)
----------------------------------------------------------------------------------------------------------------------------------
7,165 Total U.S. Guaranteed 8,035,625
----------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 13.4% (9.4% OF TOTAL INVESTMENTS)
1,250 Maricopa County Pollution Control Corporation, Arizona, Revenue 11/12 at 100.00 Baa2 1,163,938
Bonds, Arizona Public Service Company - Palo Verde Project,
Series 2002A, 5.050%, 5/01/29 - AMBAC Insured
665 Pima County Industrial Development Authority, Arizona, Revenue 1/15 at 100.00 BBB- 672,960
Bonds, Tucson Electric Power Company, Series 2008, 5.750%,
9/01/29
1,660 Puerto Rico Electric Power Authority, Power Revenue Bonds, 7/15 at 100.00 A3 1,662,274
Series 2005RR, 5.000%, 7/01/26 - SYNCORA GTY Insured
270 Salt River Project Agricultural Improvement and Power District, 1/13 at 100.00 Aa1 288,746
Arizona, Electric System Revenue Bonds, Series 2002B, 5.000%,
1/01/22
775 Salt River Project Agricultural Improvement and Power District, 1/18 at 100.00 Aa1 869,938
Arizona, Electric System Revenue Bonds, Tender Option Bond
Trust 09-9W, 17.125%, 1/01/38 (IF)
1,165 Salt Verde Financial Corporation, Arizona, Senior Gas Revenue No Opt. Call A 997,019
Bonds, Series 2007, 5.000%, 12/01/37
----------------------------------------------------------------------------------------------------------------------------------
5,785 Total Utilities 5,654,875
----------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 13.2% (9.3% OF TOTAL INVESTMENTS)
955 Goodyear, Arizona, Water and Sewer Revenue Obligations, Series 7/20 at 100.00 A- 927,563
2010, 5.625%, 7/01/39
405 Oro Valley Municipal Property Corporation, Arizona, Senior Lien 7/13 at 100.00 AA- 417,231
Water Revenue Bonds, Series 2003, 5.000%, 7/01/23 - NPFG
Insured
1,000 Phoenix Civic Improvement Corporation, Arizona, Junior Lien 7/11 at 100.00 AA+ 1,047,980
Wastewater System Revenue Refunding Bonds, Series 2001,
5.125%, 7/01/21 - FGIC Insured
2,000 Phoenix Civic Improvement Corporation, Arizona, Junior Lien 7/12 at 100.00 AAA 2,151,500
Water System Revenue Bonds, Series 2002, 5.000%, 7/01/18 -
FGIC Insured
Surprise Municipal Property Corporation, Arizona, Wastewater
System Revenue Bonds, Series 2007:
425 4.700%, 4/01/22 4/14 at 100.00 N/R 372,037
490 4.900%, 4/01/32 4/17 at 100.00 N/R 393,847
330 Yuma County Industrial Development Authority, Arizona, Exempt 12/17 at 100.00 N/R 257,987
Revenue Bonds, Far West Water & Sewer Inc. Refunding, Series
2007A, 6.375%, 12/01/37 (Alternative Minimum Tax)
----------------------------------------------------------------------------------------------------------------------------------
5,605 Total Water and Sewer 5,568,145
----------------------------------------------------------------------------------------------------------------------------------
$ 60,403 Total Investments (cost $60,233,474) - 142.7% 60,064,886
=============---------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 1.0% 413,204
------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (43.7)% (6) (18,400,000)
------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 42,078,090
==================================================================================================================
(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 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.
(4) Investment valued at fair value using methods determined in good faith by,
or at the discretion of, the Board of Trustees. For fair value measurement
disclosure purposes, investment categorized as Level 3. See Notes to
Financial Statements, Footnote 2 - Fair Value Measurements for more
information.
(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 a percentage of Total Investments
is 30.6%.
N/R Not rated.
(IF) Inverse floating rate investment.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
26 Nuveen Investments
NTX | Nuveen Texas Quality Income Municipal Fund
| Portfolio of Investments January 31, 2010 (Unaudited)
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
-----------------------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES - 1.6% (1.1% OF TOTAL INVESTMENTS)
$ 2,340 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 5/12 at 100.00 BBB $ 2,257,000
Asset-Backed Refunding Bonds, Series 2002, 5.375%, 5/15/33
-----------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 15.1% (10.2% OF TOTAL
INVESTMENTS)
1,000 Central Texas Higher Education Authority Inc., Texas, Student 4/10 at 100.00 A2 954,353
Loan Revenue Bonds, Auction Rate Coupon, 0.560%, 12/01/37 (4)
Red River Education Finance Corporation, Texas, Revenue Bonds,
Hockaday School, Series 2005:
1,170 5.000%, 5/15/27 5/15 at 100.00 AA 1,204,983
1,230 5.000%, 5/15/28 5/15 at 100.00 AA 1,262,681
1,290 5.000%, 5/15/29 5/15 at 100.00 AA 1,320,612
Texas Public Finance Authority, Revenue Bonds, Texas Southern
University Financing System, Series 2003:
1,710 5.000%, 5/01/18 - FGIC Insured 5/13 at 100.00 Ba1 1,562,239
1,795 5.000%, 5/01/19 - FGIC Insured 5/13 at 100.00 Ba1 1,619,018
1,885 5.000%, 5/01/20 - FGIC Insured 5/13 at 100.00 Ba1 1,682,042
1,665 Texas State University System, Financing Revenue Bonds, Series 9/14 at 100.00 AAA 1,744,520
2004, 5.000%, 3/15/24 - AGM Insured
2,000 Texas State University System, Financing Revenue Refunding Bonds, 3/12 at 100.00 AAA 2,132,980
Series 2002, 5.000%, 3/15/20 - AGM Insured
2,330 Universal City Education Facilities Corporation, Texas, Revenue 3/11 at 102.00 A- 2,351,902
Bonds, Wayland Baptist University Project, Series 2001,
5.625%, 3/01/26
5,000 University of North Texas, Financing System Revenue Bonds, Series 4/12 at 100.00 AAA 5,162,300
2001, 5.000%, 4/15/24 - AGM Insured
-----------------------------------------------------------------------------------------------------------------------------------
21,075 Total Education and Civic Organizations 20,997,630
-----------------------------------------------------------------------------------------------------------------------------------
ENERGY - 2.0% (1.4% OF TOTAL INVESTMENTS)
3,000 Gulf Coast Waste Disposal Authority, Texas, Waste Disposal 4/10 at 100.00 BBB 2,791,170
Revenue Bonds, Valero Energy Corporation Project, Series
1998, 5.600%, 4/01/32 (Alternative Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE - 12.6% (8.5% OF TOTAL INVESTMENTS)
Brazoria County Health Facilities Development Corporation, Texas,
Revenue Bonds, Brazosport Memorial Hospital, Series 2004:
1,745 5.250%, 7/01/20 - RAAI Insured 7/14 at 100.00 BBB- 1,615,242
1,835 5.250%, 7/01/21 - RAAI Insured 7/14 at 100.00 BBB- 1,682,456
2,650 Midland County Hospital District, Texas, Hospital Revenue Bonds, No Opt. Call BBB- 2,479,048
Series 1992, 0.000%, 6/01/11
2,000 North Central Texas Health Facilities Development Corporation, 5/11 at 100.00 Aa2 2,007,660
Hospital Revenue Bonds, Baylor Healthcare System, Series
2001A, 5.125%, 5/15/29
Richardson Hospital Authority, Texas, Revenue Bonds, Richardson
Regional Medical Center, Series 2004:
2,000 5.875%, 12/01/24 12/13 at 100.00 Baa2 1,916,760
1,000 6.000%, 12/01/34 12/13 at 100.00 Baa2 919,130
2,500 Tarrant County Cultural & Educational Facilities Financing 11/17 at 100.00 AA- 2,433,025
Corporation, Texas, Revenue Bonds, Tarrant County Health
Resources, Series 2007B, 5.000%, 11/15/42
2,000 Tarrant County Cultural Education Facilities Finance Corporation, 1/19 at 100.00 AAA 2,201,620
Texas, Revenue Refunding Bonds, Christus Health,
Series 2008, 6.500%, 7/01/37
700 Tyler Health Facilities Development Corporation, Texas, Hospital 7/17 at 100.00 Baa1 577,164
Revenue Bonds, Mother Frances Hospital Regional Healthcare
Center, Series 2007B, 5.000%, 7/01/37
2,000 Tyler Health Facilities Development Corporation, Texas, Hospital 7/17 at 100.00 Baa1 1,681,580
Revenue Bonds, Mother Frances Hospital Regional Healthcare
Center, Series 2007, 5.000%, 7/01/33
-----------------------------------------------------------------------------------------------------------------------------------
18,430 Total Health Care 17,513,685
-----------------------------------------------------------------------------------------------------------------------------------
Nuveen Investments 27
NTX | Nuveen Texas Quality Income Municipal Fund (continued)
| Portfolio of Investments January 31, 2010 (Unaudited)
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
-----------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 1.4% (1.0% OF TOTAL INVESTMENTS)
Bexar County Housing Finance Corporation, Texas, Insured
Multifamily Housing Revenue Bonds, Waters at Northern
Hills Apartments Project, Series 2001A:
$ 2,000 6.000%, 8/01/31 - NPFG Insured 8/11 at 102.00 Baa1 $ 1,451,460
750 6.050%, 8/01/36 - NPFG Insured 8/11 at 102.00 Baa1 529,132
-----------------------------------------------------------------------------------------------------------------------------------
2,750 Total Housing/Multifamily 1,980,592
-----------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 3.1% (2.1% OF TOTAL INVESTMENTS)
1,480 El Paso Housing Finance Corporation, Texas, GNMA Collateralized 4/11 at 106.75 AAA 1,570,203
Single Family Mortgage Revenue Bonds, Series 2001A-3,
6.180%, 4/01/33
10 Galveston Property Finance Authority Inc., Texas, Single Family 3/10 at 100.00 Caa1 9,847
Mortgage Revenue Bonds, Series 1991A, 8.500%, 9/01/11
2,700 Texas Department of Housing and Community Affairs, Single Family 3/12 at 100.00 AAA 2,716,740
Mortgage Bonds, Series 2002B, 5.550%, 9/01/33 - NPFG
Insured (Alternative Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
4,190 Total Housing/Single Family 4,296,790
-----------------------------------------------------------------------------------------------------------------------------------
LONG-TERM CARE - 1.1% (0.7% OF TOTAL INVESTMENTS)
Bexar County, Texas, Health Facilities Development Corporation
Revenue Bonds, Army Retirement Residence, Series 2007:
1,000 5.000%, 7/01/27 7/17 at 100.00 BBB 888,830
600 5.000%, 7/01/37 7/17 at 100.00 BBB 503,538
-----------------------------------------------------------------------------------------------------------------------------------
1,600 Total Long-Term Care 1,392,368
-----------------------------------------------------------------------------------------------------------------------------------
MATERIALS - 4.3% (2.9% OF TOTAL INVESTMENTS)
3,000 Cass County Industrial Development Corporation, Texas, 3/10 at 101.00 BBB 3,031,410
Environmental Improvement Revenue Bonds, International Paper
Company, Series 2000A, 6.600%, 3/15/24
(Alternative Minimum Tax)
3,000 Guadalupe-Blanco River Authority, Texas, Sewage and Solid Waste 4/10 at 100.00 A 3,001,890
Disposal Facility Bonds, E.I. DuPont de Nemours and Company
Project, Series 1996, 6.400%, 4/01/26 (Alternative Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
6,000 Total Materials 6,033,300
-----------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 47.5% (32.1% OF TOTAL INVESTMENTS)
1,260 Bexar County, Texas, Combined Tax and Revenue Certificates of 6/14 at 100.00 AA+ 1,346,549
Obligation, Series 2004, 5.000%, 6/15/19
2,000 Borger Independent School District, Hutchison County, Texas, 2/16 at 100.00 AAA 2,065,720
General Obligation Bonds, Series 2006, 5.000%, 2/15/36
400 Calallen Independent School District, Nueces County, Texas, 2/18 at 100.00 AAA 412,956
General Obligation Bonds, School Building Series 2008,
5.000%, 2/15/38
1,190 Canutillo Independent School District, El Paso County, Texas, 8/15 at 100.00 AAA 1,302,193
General Obligation Bonds, Series 2006A, 5.000%, 8/15/22
325 Copperas Cove, Texas, Certificates of Obligation, Series 2003, 8/12 at 100.00 AA 341,588
5.000%, 8/15/23 - MBIA Insured
2,305 Corpus Christi, Texas, Combination Tax and Municipal Hotel 9/12 at 100.00 AAA 2,479,235
Occupancy Tax Revenue Certificates of Obligation, Series
2002, 5.500%, 9/01/21 - AGM Insured
2,595 Denton County, Texas, Permanent Improvement General Obligation 7/12 at 100.00 AAA 2,763,364
Bonds, Series 2005, 5.000%, 7/15/25
1,750 El Paso County, Texas, Certificates of Obligation, Series 2001, No Opt. Call AAA 1,981,175
5.000%, 2/15/21 - AGM Insured
Fort Bend County Municipal Utility District 25, Texas, General
Obligation Bonds, Series 2005:
1,330 5.000%, 10/01/26 - FGIC Insured 10/12 at 100.00 A 1,337,501
1,320 5.000%, 10/01/27 - FGIC Insured 10/12 at 100.00 A 1,324,818
28 Nuveen Investments
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
-----------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL (continued)
$ 3,615 Frisco, Texas, General Obligation Bonds, Series 2006, 5.000%, 2/16 at 100.00 AA $ 3,803,378
2/15/26 - FGIC Insured
8,500 Grand Prairie Independent School District, Dallas County, Texas, 8/18 at 22.64 AA- 1,144,015
General Obligation Bonds, Capital Appreciation Refunding
Series 2009, 0.000%, 8/15/39
Houston Community College, Texas, Limited Tax General Obligation
Bonds, Series 2003:
2,500 5.000%, 2/15/20 - AMBAC Insured 2/13 at 100.00 AA+ 2,675,325
2,235 5.000%, 2/15/21 - AMBAC Insured 2/13 at 100.00 AA+ 2,381,482
5,000 Houston, Texas, General Obligation Bonds, Series 2005E, 5.000%, 3/15 at 100.00 AA 5,291,000
3/01/23 - AMBAC Insured
100 Judson Independent School District, Bexar County, Texas, General 2/11 at 100.00 Aaa 103,960
Obligation Refunding Bonds, Series 2002, 5.250%, 2/01/21
4,900 Leander Independent School District, Williamson and Travis 8/14 at 17.78 AAA 679,238
Counties, Texas, General Obligation Bonds, Series 2006,
0.000%, 8/15/45
1,000 Leander Independent School District, Williamson and Travis 8/17 at 33.01 AAA 224,070
Counties, Texas, General Obligation Bonds, Series 2008,
0.000%, 8/15/36
5,220 Leander Independent School District, Williamson and Travis 4/10 at 48.64 AAA 2,522,356
Counties, Texas, Unlimited Tax School Building and Refunding
Bonds, Series 2000, 0.000%, 8/15/21
365 Lone Star College System, Harris and Montgomery Counties, Texas, 8/19 at 100.00 AAA 379,458
General Obligation Bonds, Series 2009, 5.000%, 8/15/34
1,000 Mansfield Independent School District, Tarrant County, Texas, 2/14 at 100.00 AAA 1,105,040
General Obligation Bonds, Series 2004, 5.000%, 2/15/20
1,010 Mercedes Independent School District, Hidalgo County, Texas, 8/15 at 100.00 AAA 1,088,528
General Obligation Bonds, Series 2005, 5.000%, 8/15/23
5,515 Midlothian Independent School District, Ellis County, Texas, 2/15 at 100.00 Aaa 5,687,013
General Obligation Bonds, Series 2005, 5.000%, 2/15/34
1,500 Montgomery County, Texas, General Obligation Bonds, Refunding 3/19 at 100.00 AA 1,586,550
Series 2008B, 5.250%, 3/01/32
925 Northside Independent School District, Bexar County, Texas, 8/10 at 100.00 AAA 947,366
Unlimited Tax School Building and Refunding Bonds, Series
2000, 5.875%, 8/15/25
2,000 Plano Independent School District, Collin County, Texas, General 2/18 at 100.00 Aa1 2,132,920
Obligation Bonds, Series 2008, 5.250%, 2/15/34
Roma Independent School District, Texas, General Obligation
Bonds, Series 2005:
1,110 5.000%, 8/15/22 8/15 at 100.00 AAA 1,214,651
1,165 5.000%, 8/15/23 - AGM Insured 8/15 at 100.00 AAA 1,269,885
1,250 Southside Independent School District, Bexar County, Texas, 8/14 at 100.00 Aaa 1,358,163
General Obligation Bonds, Series 2004A, 5.000%, 8/15/22
1,140 Sunnyvale School District, Texas, General Obligation Bonds, 2/14 at 100.00 AAA 1,232,750
Series 2004, 5.250%, 2/15/25
5,000 Texas State, General Obligation Bonds, Transportation Commission 4/17 at 100.00 AA+ 5,231,000
Mobility Fund, Series 2006A, 5.000%, 4/01/33 (UB)
1,000 Texas State, General Obligation Bonds, Transportation Commission 4/18 at 100.00 AA+ 1,063,700
Mobility Fund, Series 2008, 5.000%, 4/01/30 (UB)
1,110 Texas State, General Obligation Bonds, Water Utility, Series 8/11 at 100.00 AA+ 1,168,330
2001, 5.250%, 8/01/23
1,500 Texas, General Obligation Refunding Bonds, Public Finance 10/12 at 100.00 AA+ 1,633,965
Authority, Series 2002, 5.000%, 10/01/18
3,025 Victoria Independent School District, Victoria County, Texas, 2/17 at 100.00 AAA 3,196,699
General Obligation Bonds, Series 2007, 5.000%, 2/15/32
Nuveen Investments 29
NTX | Nuveen Texas Quality Income Municipal Fund (continued)
| Portfolio of Investments January 31, 2010 (Unaudited)
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
-----------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL (continued)
West Texas Independent School District, McLennan and Hill
Counties, General Obligation Refunding Bonds, Series 1998:
$ 1,000 0.000%, 8/15/22 8/13 at 61.20 AAA $ 528,220
1,000 0.000%, 8/15/24 8/13 at 54.88 AAA 470,390
White Settlement Independent School District, Tarrant County,
Texas, General Obligation Bonds, Series 2006:
1,500 0.000%, 8/15/43 8/15 at 23.12 AAA 244,470
1,500 0.000%, 8/15/44 8/15 at 21.88 AAA 230,190
425 0.000%, 8/15/45 8/15 at 20.76 AAA 61,141
-----------------------------------------------------------------------------------------------------------------------------------
81,585 Total Tax Obligation/General 66,010,352
-----------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 9.2% (6.2% OF TOTAL INVESTMENTS)
7,940 Dallas Area Rapid Transit, Texas, Senior Lien Sales Tax Revenue
Bonds, Series 2007, 5.000%, 12/01/36 - AMBAC Insured 12/16 at 100.00 AAA 8,121,747
Harris County-Houston Sports Authority, Texas, Junior Lien
Revenue Bonds, Series 2001H:
1,720 0.000%, 11/15/34 - NPFG Insured 11/31 at 83.17 A 294,911
930 0.000%, 11/15/36 - NPFG Insured 11/31 at 73.51 A 138,319
3,265 0.000%, 11/15/38 - NPFG Insured 11/31 at 64.91 A 415,406
Harris County-Houston Sports Authority, Texas, Senior Lien
Revenue Bonds, Series 2001G:
2,250 5.250%, 11/15/22 - NPFG Insured 11/11 at 100.00 A 2,250,608
2,475 0.000%, 11/15/41 - NPFG Insured 11/31 at 53.78 A 254,034
1,470 Houston, Texas, Hotel Occupancy Tax and Special Revenue Bonds,
Convention and Entertainment Project, Series 2001B, 0.000%,
9/01/32 - AMBAC Insured No Opt. Call A- 363,678
1,000 Uptown Development Authority, Texas, Tax Increment Revenue Bonds,
Series 2009 (Infrastructure Improvement Facilities), 5.500%,
9/01/29 9/19 at 100.00 BBB+ 981,150
-----------------------------------------------------------------------------------------------------------------------------------
21,050 Total Tax Obligation/Limited 12,819,853
-----------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 9.2% (6.3% OF TOTAL INVESTMENTS)
1,000 Austin, Texas, Airport System Prior Lien Revenue Bonds, Series
2003, 5.250%, 11/15/16 - NPFG Insured 11/13 at 100.00 A 1,099,300
3,260 Central Texas Regional Mobility Authority, Travis and Williamson
Counties, Toll Road Revenue Bonds, Series 2005, 5.000%,
1/01/22 - FGIC Insured 1/15 at 100.00 A 3,219,543
2,600 Dallas-Ft. Worth International Airport Facility Improvement
Corporation, Texas, Revenue Bonds, American Airlines Inc.,
Series 1999, 6.375%, 5/01/35 (Alternative Minimum Tax) 5/10 at 101.00 CCC+ 1,847,326
2,000 Houston, Texas, Subordinate Lien Airport System Revenue Bonds,
Series 2000A, 5.625%, 7/01/30 - AGM Insured (Alternative
Minimum Tax) 7/10 at 100.00 AAA 2,003,500
2,500 North Texas Thruway Authority, First Tier System Revenue
Refunding Bonds, Capital Appreciation Series 2008, 0.000%,
1/01/36 - AGC Insured No Opt. Call AAA 531,925
395 North Texas Thruway Authority, First Tier System Revenue
Refunding Bonds, Series 2008A, 5.750%, 1/01/40 1/18 at 100.00 A2 404,053
North Texas Thruway Authority, First Tier System Revenue
Refunding Bonds, Series 2008B:
325 5.750%, 1/01/40 1/18 at 100.00 A2 332,449
225 5.750%, 1/01/40 - NPFG Insured 1/18 at 100.00 A 230,157
950 North Texas Thruway Authority, Second Tier System Revenue
Refunding Bonds, Series 2008, 5.750%, 1/01/38 1/18 at 100.00 A3 963,215
North Texas Tollway Authority, System Revenue Bonds, Series 2009:
100 6.100%, 1/01/28 1/19 at 100.00 A2 107,314
2,000 6.250%, 1/01/39 1/19 at 100.00 A2 2,120,460
-----------------------------------------------------------------------------------------------------------------------------------
15,355 Total Transportation 12,859,242
-----------------------------------------------------------------------------------------------------------------------------------
30 Nuveen Investments
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
-----------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 16.2% (10.9% OF TOTAL INVESTMENTS) (5)
$ 295 Coppell Independent School District, Dallas County, Texas,
Unlimited Tax School Building and Refunding Bonds, Series
1992, 0.000%, 8/15/14 - MBIA Insured (ETM) No Opt. Call Aa3 (5) $ 269,710
950 Copperas Cove, Texas, Certificates of Obligation, Series 2003,
5.000%, 8/15/23 (Pre-refunded 8/15/12) - MBIA Insured 8/12 at 100.00 A3 (5) 1,050,444
Gregg County Health Facilities Development Corporation, Texas,
Hospital Revenue Bonds, Good Shepherd Medical Center Project,
Series 2000:
2,000 6.875%, 10/01/20 (Pre-refunded 10/01/10) - RAAI Insured 10/10 at 101.00 N/R (5) 2,103,120
3,250 6.375%, 10/01/25 (Pre-refunded 10/01/10) - RAAI Insured 10/10 at 101.00 N/R (5) 3,406,813
500 Harris County Health Facilities Development Corporation, Texas,
Revenue Bonds, St. Luke's Episcopal Hospital, Series 2001A,
5.500%, 2/15/21 (Pre-refunded 8/15/11) 8/11 at 100.00 AAA 538,420
1,000 Judson Independent School District, Bexar County, Texas, General
Obligation Refunding Bonds, Series 2002, 5.250%, 2/01/21
(Pre-refunded 2/01/11) 2/11 at 100.00 Aaa 1,049,500
1,000 North Central Texas Health Facilities Development Corporation,
Hospital Revenue Bonds, Presbyterian Healthcare System, Series
1996B, 5.750%, 6/01/26 - NPFG Insured (ETM) No Opt. Call Aaa 1,205,960
1,075 Northside Independent School District, Bexar County, Texas,
Unlimited Tax School Building and Refunding Bonds, Series
2000, 5.875%, 8/15/25 (Pre-refunded 8/15/10) 8/10 at 100.00 AAA 1,108,056
2,500 Retama Development Corporation, Texas, Special Facilities Revenue
Bonds, Retama Park Racetrack, Series 1993, 8.750%, 12/15/18
(Pre-refunded 12/15/17) (6) 12/17 at 100.00 AAA 3,396,475
1,750 San Antonio, Texas, Electric and Gas System Revenue Refunding
Bonds, Series 2002, 5.375%, 2/01/20 (Pre-refunded 2/01/12) 2/12 at 100.00 AAA 1,907,325
1,440 South Texas Community College District, General Obligation Bonds,
Series 2002, 5.500%, 8/15/17 (Pre-refunded 8/15/12) - AMBAC
Insured 8/12 at 100.00 A+ (5) 1,611,518
3,500 Tarrant County Health Facilities Development Corporation, Texas,
Hospital Revenue Bonds, Adventist Health System - Sunbelt
Obligated Group, Series 2000, 6.625%, 11/15/20 (Pre-refunded
11/15/10) 11/10 at 101.00 N/R (5) 3,708,670
1,000 Tyler Health Facilities Development Corporation, Texas, Hospital
Revenue Bonds, Mother Frances Hospital Regional Healthcare
Center, Series 2001, 6.000%, 7/01/31 (Pre-refunded 7/01/12) 7/12 at 100.00 Baa1 (5) 1,111,570
-----------------------------------------------------------------------------------------------------------------------------------
20,260 Total U.S. Guaranteed 22,467,581
-----------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 12.5% (8.5% OF TOTAL INVESTMENTS)
2,560 Brazos River Authority, Texas, Pollution Control Revenue
Refunding Bonds, TXU Electric Company, Series 1999C, 7.700%,
3/01/32 (Alternative Minimum Tax) 4/13 at 101.00 Caa3 1,659,955
2,400 Brazos River Authority, Texas, Revenue Bonds, Reliant Energy
Inc., Series 1999A, 5.375%, 4/01/19 4/10 at 100.50 BBB- 2,400,960
5,000 Brownsville, Texas, Utility System Priority Revenue Bonds, Series
2005A, 5.000%, 9/01/27 - AMBAC Insured 9/15 at 100.00 A 5,154,500
2,000 Bryan, Brazos County, Texas, Electric System Revenue Bonds,
Series 2009, 5.000%, 7/01/34 7/17 at 100.00 A+ 2,009,760
2,000 Harris County Health Facilities Development Corporation, Texas,
Thermal Utility Revenue Bonds, TECO Project, Series 2000,
5.750%, 2/15/15 - AMBAC Insured (Alternative Minimum Tax) 2/10 at 100.00 Aa3 2,004,240
2,000 Lower Colorado River Authority, Texas, Revenue Bonds, Series
2008, 5.750%, 5/15/37 5/15 at 100.00 A1 2,087,740
1,000 Matagorda County Navigation District 1, Texas, Revenue Bonds,
Reliant Energy Inc., Series 1999B, 5.950%, 5/01/30
(Alternative Minimum Tax) 5/10 at 100.50 BBB- 970,600
1,000 Matagorda County Navigation District Number One, Texas, Pollution
Control Revenue Refunding Bonds, Central Power and Light
Company Project, Series 2009A, 6.300%, 11/01/29 7/19 at 102.00 BBB 1,084,820
-----------------------------------------------------------------------------------------------------------------------------------
17,960 Total Utilities 17,372,575
-----------------------------------------------------------------------------------------------------------------------------------
Nuveen Investments 31
NTX | Nuveen Texas Quality Income Municipal Fund (continued)
| Portfolio of Investments January 31, 2010 (Unaudited)
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
-----------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 11.9% (8.1% OF TOTAL INVESTMENTS)
Coastal Water Authority, Texas, Contract Revenue Bonds, Houston
Water Projects, Series 2004:
$ 1,005 5.000%, 12/15/20 - FGIC Insured 12/14 at 100.00 A $ 1,050,547
1,030 5.000%, 12/15/21 - FGIC Insured 12/14 at 100.00 A 1,072,405
1,000 El Paso, Texas, Water and Sewer Revenue Bonds, Refunding Series
2008C, 5.375%, 3/01/29 3/18 at 100.00 AA 1,074,870
3,000 Houston, Texas, First Lien Combined Utility System Revenue Bonds,
Series 2004A, 5.250%, 5/15/23 - FGIC Insured 5/14 at 100.00 AA 3,167,400
3,500 Houston, Texas, Junior Lien Water and Sewerage System Revenue
Refunding Bonds, Series 2001A, 5.500%, 12/01/17 - AGM Insured 12/11 at 100.00 AAA 3,773,910
Irving, Texas, Subordinate Lien Waterworks and Sewerage Revenue
Bonds, Series 2004:
1,680 5.000%, 8/15/22 - AMBAC Insured 8/14 at 100.00 AA 1,781,808
1,760 5.000%, 8/15/23 - AMBAC Insured 8/14 at 100.00 AA 1,858,102
1,260 Rowlett, Rockwall and Dallas Counties, Texas, Waterworks and
Sewerage System Revenue Bonds, Series 2004A, 5.000%, 3/01/22 -
NPFG Insured 3/14 at 100.00 AA- 1,313,714
1,500 Texas Water Development Board, Senior Lien State Revolving Fund
Revenue Bonds, Series 1999A, 5.500%, 7/15/21 7/10 at 100.00 AAA 1,506,090
------------------------------------------------------------------------------------------------------------------------------------
15,735 Total Water and Sewer 16,598,846
------------------------------------------------------------------------------------------------------------------------------------
$ 231,330 Total Investments (cost $202,017,964) - 147.7% 205,390,984
=============-----------------------------------------------------------------------------------------------------------------------
Floating Rate Obligations - (2.8)% (3,960,000)
---------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 1.9% 2,653,075
---------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (46.8)% (7) (65,050,000)
---------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 139,034,059
=====================================================================================================================
(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 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.
(4) Investment valued at fair value using methods determined in good faith by,
or at the discretion of, the Board of Trustees. For fair value measurement
disclosure purposes, investment categorized as Level 3. See Notes to
Financial Statements, Footnote 2 - Fair Value Measurements for more
information.
(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) 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.
(7) Preferred Shares, at Liquidation Value as a percentage of Total
Investments is 31.7%.
N/R Not rated.
(ETM) Escrowed to maturity.
(UB) Underlying bond of an inverse floating rate trust reflected as a financing
transaction. See Notes to Financial Statements, Footnote 1 - Inverse
Floating Rate Securities for more information.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
32 Nuveen Investments
| Statement of
| Assets & Liabilities
January 31, 2010 (Unaudited)
ARIZONA ARIZONA ARIZONA ARIZONA TEXAS
PREMIUM DIVIDEND DIVIDEND DIVIDEND QUALITY
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3 INCOME
(NAZ) (NFZ) (NKR) (NXE) (NTX)
-----------------------------------------------------------------------------------------------------------------------------------
ASSETS
Investments, at value (cost $85,048,139,
$31,760,370, $50,212,144, $60,233,474
and $202,017,964, respectively) $ 88,429,580 $ 31,555,283 $ 50,862,426 $ 60,064,886 $ 205,390,984
Cash 362,266 35,198 441,284 236,847 252,089
Receivables:
Interest 569,165 255,300 409,681 414,959 3,083,437
Investments sold -- -- -- -- 26,279
Other assets 11,065 4,958 8,891 15,054 25,622
-----------------------------------------------------------------------------------------------------------------------------------
Total assets 89,372,076 31,850,739 51,722,282 60,731,746 208,778,411
-----------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Floating rate obligations -- -- -- -- 3,960,000
Payables:
Common share dividends 246,429 85,881 151,842 188,299 570,606
Preferred share dividends 731 508 612 1,190 2,225
Accrued expenses:
Management fees 53,349 14,506 24,363 34,026 111,782
Other 36,532 19,047 24,334 30,141 49,739
-----------------------------------------------------------------------------------------------------------------------------------
Total liabilities 337,041 119,942 201,151 253,656 4,694,352
-----------------------------------------------------------------------------------------------------------------------------------
Preferred shares, at liquidation value 27,875,000 10,600,000 16,625,000 18,400,000 65,050,000
-----------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common shares $ 61,160,035 $ 21,130,797 $ 34,896,131 $ 42,078,090 $ 139,034,059
===================================================================================================================================
Common shares outstanding 4,469,154 1,548,020 2,439,551 3,066,030 9,514,078
===================================================================================================================================
Net asset value per Common share
outstanding (net assets applicable
to Common shares, divided by Common
shares outstanding) $ 13.68 $ 13.65 $ 14.30 $ 13.72 $ 14.61
===================================================================================================================================
NET ASSETS APPLICABLE TO COMMON
SHARES CONSIST OF:
-----------------------------------------------------------------------------------------------------------------------------------
Common shares, $.01 par value per share $ 44,692 $ 15,480 $ 24,396 $ 30,660 $ 95,141
Paid-in surplus 62,155,941 21,910,005 34,577,972 43,233,092 134,891,571
Undistributed (Over-distribution of)
net investment income 784,193 188,390 316,185 344,885 1,650,604
Accumulated net realized gain (loss)
from investments and derivative
transactions (5,206,232) (777,991) (672,704) (1,361,959) (976,277)
Net unrealized appreciation (depreciation)
of investments 3,381,441 (205,087) 650,282 (168,588) 3,373,020
-----------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common shares $ 61,160,035 $ 21,130,797 $ 34,896,131 $ 42,078,090 $ 139,034,059
===================================================================================================================================
Authorized shares:
Common 200,000,000 Unlimited Unlimited Unlimited Unlimited
Preferred 1,000,000 Unlimited Unlimited Unlimited Unlimited
===================================================================================================================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
Nuveen Investments 33
| Statement of
| Operations
Six Months Ended January 31, 2010
(Unaudited)
ARIZONA ARIZONA ARIZONA ARIZONA TEXAS
PREMIUM DIVIDEND DIVIDEND DIVIDEND QUALITY
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3 INCOME
(NAZ) (NFZ) (NKR) (NXE) (NTX)
-----------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME $ 2,255,504 $ 770,893 $ 1,269,995 $ 1,542,042 $ 5,287,932
-----------------------------------------------------------------------------------------------------------------------------------
EXPENSES
Management fees 292,381 101,400 168,651 199,871 661,545
Preferred shares - auction fees 21,077 8,015 12,571 13,914 49,189
Preferred shares - dividend disbursing agent fees 5,041 5,041 5,041 5,041 10,082
Shareholders' servicing agent fees and expenses 1,659 251 219 173 4,513
Interest expense on floating rate obligations -- -- -- -- 10,395
Custodian's fees and expenses 10,704 6,019 8,046 8,462 21,467
Directors'/Trustees' fees and expenses 1,235 471 755 889 2,819
Professional fees 7,416 4,872 5,321 5,535 8,852
Shareholders' reports - printing
and mailing expenses 12,918 5,930 8,512 9,699 24,011
Stock exchange listing fees 4,649 110 174 219 4,647
Investor relations expense 3,586 1,277 2,068 2,396 7,415
Other expenses 9,744 8,503 9,186 10,070 13,219
-----------------------------------------------------------------------------------------------------------------------------------
Total expenses before custodian fee credit and
expense reimbursement 370,410 141,889 220,544 256,269 818,154
Custodian fee credit (54) (115) (221) (116) (64)
Expense reimbursement -- (15,826) (38,915) (32,286) --
-----------------------------------------------------------------------------------------------------------------------------------
Net expenses 370,356 125,948 181,408 223,867 818,090
-----------------------------------------------------------------------------------------------------------------------------------
Net investment income 1,885,148 644,945 1,088,587 1,318,175 4,469,842
-----------------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) from investments 159,406 (28) (47) 11,761 125,837
Change in net unrealized appreciation
(depreciation)of investments 2,954,068 1,412,963 1,905,284 2,749,657 6,781,608
-----------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) 3,113,474 1,412,935 1,905,237 2,761,418 6,907,445
-----------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS
From net investment income (60,398) (23,349) (36,612) (40,349) (129,407)
From accumulated net realized gains -- -- -- -- (19,921)
-----------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets applicable to
Common shares from distributions
to Preferred shareholders (60,398) (23,349) (36,612) (40,349) (149,328)
-----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares from
operations $ 4,938,224 $ 2,034,531 $ 2,957,212 $ 4,039,244 $ 11,227,959
===================================================================================================================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
34 Nuveen Investments
| Statement of
| Changes in Net Assets(Unaudited)
ARIZONA ARIZONA ARIZONA
PREMIUM INCOME (NAZ) DIVIDEND ADVANTAGE (NFZ) DIVIDEND ADVANTAGE 2 (NKR)
--------------------------- --------------------------- ---------------------------
SIX MONTHS YEAR SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
1/31/10 7/31/09 1/31/10 7/31/09 1/31/10 7/31/09
------------------------------------------------------------------------------------------------------------------------------------
OPERATIONS
Net investment income $ 1,885,148 $ 3,812,672 $ 644,945 $ 1,299,942 $ 1,088,587 $ 2,259,065
Net realized gain (loss) from:
Investments 159,406 (2,710,445) (28) (429,021) (47) (349,393)
Futures contracts -- -- -- -- -- --
Change in net unrealized
appreciation (depreciation) of:
Investments 2,954,068 1,955,974 1,412,963 (604,752) 1,905,284 (337,136)
Futures contracts -- -- -- -- -- --
Distributions to Preferred shareholders:
From net investment income (60,398) (565,487) (23,349) (220,718) (36,612) (349,919)
From accumulated net realized gains -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net
assets applicable to Common shares
from operations 4,938,224 2,492,714 2,034,531 45,451 2,957,212 1,222,617
------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS
From net investment income (1,532,920) (2,846,851) (508,524) (976,248) (890,435) (1,712,859)
From accumulated net realized gains -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets applicable
to Common shares from distributions
to Common shareholders (1,532,920) (2,846,851) (508,524) (976,248) (890,435) (1,712,859)
------------------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Common shares:
Net proceeds from shares issued to
shareholders due to reinvestment
of distributions -- 12,298 -- 7,371 -- 16,440
Repurchased -- -- -- (24,038) -- (8,296)
------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets applicable
to Common shares from capital share
transactions -- 12,298 -- (16,667) -- 8,144
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares 3,405,304 (341,839) 1,526,007 (947,464) 2,066,777 (482,098)
Net assets applicable to Common shares
at the beginning of period 57,754,731 58,096,570 19,604,790 20,552,254 32,829,354 33,311,452
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common shares
at the end of period $ 61,160,035 $ 57,754,731 $ 21,130,797 $ 19,604,790 $ 34,896,131 $ 32,829,354
====================================================================================================================================
Undistributed (Over-distribution of) net
investment income at the end of period $ 784,193 $ 492,363 $ 188,390 $ 75,318 $ 316,185 $ 154,645
====================================================================================================================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
Nuveen Investments 35
| Statement of
| Changes in Net Assets (Unaudited) (continued)
ARIZONA TEXAS
DIVIDEND ADVANTAGE 3 (NXE) QUALITY INCOME (NTX)
----------------------------- -----------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
1/31/10 7/31/09 1/31/10 7/31/09
------------------------------------------------------------------------------------------------------------------------------------
OPERATIONS
Net investment income $ 1,318,175 $ 2,685,306 $ 4,469,842 $ 8,942,930
Net realized gain (loss) from:
Investments 11,761 (323,361) 125,837 (260,097)
Futures contracts -- -- -- 279,232
Change in net unrealized appreciation (depreciation)
of:
Investments 2,749,657 (880,027) 6,781,608 (1,592,328)
Futures contracts -- -- -- (80,805)
Distributions to Preferred shareholders:
From net investment income (40,349) (412,423) (129,407) (1,209,638)
From accumulated net realized gains -- -- (19,921) (148,005)
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets applicable to
Common shares from operations 4,039,244 1,069,495 11,227,959 5,931,289
------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS
From net investment income (1,089,974) (2,005,865) (3,793,706) (6,752,824)
From accumulated net realized gains -- -- (114,136) (446,272)
------------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets applicable to Common shares
from distributions to Common shareholders (1,089,974) (2,005,865) (3,907,842) (7,199,096)
------------------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Common shares:
Net proceeds from shares issued to shareholders due
to reinvestment of distributions -- -- 200,582 67,966
Repurchased -- (15,380) -- --
------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets applicable to Common shares
from capital share transactions -- (15,380) 200,582 67,966
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets applicable to
Common shares 2,949,270 (951,750) 7,520,699 (1,199,841)
Net assets applicable to Common shares at the
beginning of period 39,128,820 40,080,570 131,513,360 132,713,201
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common shares at the end of
period $ 42,078,090 $ 39,128,820 $ 139,034,059 $ 131,513,360
====================================================================================================================================
Undistributed (Over-distribution of) net investment
income at the end of period $ 344,885 $ 157,033 $ 1,650,604 $ 1,103,875
====================================================================================================================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
36 Nuveen Investments
| Notes to
| Financial Statements(Unaudited)
1. GENERAL INFORMATION AND SIGNIFICANT ACCOUNTING POLICIES
The funds covered in this report and their corresponding Common share stock
exchange symbols are Nuveen Arizona Premium Income Municipal Fund, Inc. (NAZ),
Nuveen Arizona Dividend Advantage Municipal Fund (NFZ), Nuveen Arizona Dividend
Advantage Municipal Fund 2 (NKR), Nuveen Arizona Dividend Advantage Municipal
Fund 3 (NXE) and Nuveen Texas Quality Income Municipal Fund (NTX) (collectively,
the "Funds"). Common shares of Arizona Premium Income (NAZ) and Texas Quality
Income (NTX) are traded on the New York Stock Exchange (NYSE) while Common
shares of Arizona Dividend Advantage (NFZ), Arizona Dividend Advantage 2 (NKR)
and Arizona Dividend Advantage 3 (NXE) are traded on the NYSE Amex. 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 portfolio of municipal
obligations issued by state and local government authorities within a single
state or certain U.S. territories.
In June 2009, the Financial Accounting Standards Board (FASB) established the
FASB Accounting Standards Codification(TM) (the "Codification") as the single
source of authoritative accounting principles recognized by the FASB in the
preparation of financial statements in conformity with generally accepted
accounting principles (GAAP). The Codification supersedes existing
non-grandfathered, non-SEC accounting and reporting standards. The Codification
did not change GAAP but rather organized it into a hierarchy where all guidance
within the Codification carries an equal level of authority. The Codification
became effective for financial statements issued for interim and annual periods
ending after September 15, 2009. The Codification did not have a material effect
on the Funds' financial statements.
The following is a summary of significant accounting policies followed by the
Funds in the preparation of their financial statements in accordance with US
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 Directors/Trustees. Futures
contracts are valued using the closing settlement price, or, in the absence of
such a price, at the mean of the bid and asked prices. When market price quotes
are not readily available (which is usually the case for municipal securities),
the pricing service or, in the absence of a pricing service for a particular
investment or derivative instrument, the Board of Directors/Trustees of the
Fund, or its designee, may establish fair value using a wide variety of market
data including yields or prices of investments of comparable quality, type of
issue, coupon, maturity and rating, market quotes or indications of value from
security dealers, evaluations of anticipated cash flows or collateral, general
market conditions and other information and analysis, including the obligor's
credit characteristics considered relevant. Temporary investments in securities
that have variable rate and demand features qualifying them as short-term
investments are valued at amortized cost, which approximates 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 January 31, 2010, 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.
Investment income also includes paydown gains and losses, if any.
INCOME TAXES
Each Fund is a separate taxpayer for federal income tax purposes. Each Fund
intends to distribute substantially all 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.
Nuveen Investments 37
| Notes to
| Financial Statements (Unaudited) (continued)
For all open tax years and all major taxing jurisdictions, management of the
Funds has concluded that there are no significant uncertain tax positions that
would require recognition in the financial statements. 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). Furthermore,
management of the Funds is 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 US
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. As
of January 31, 2010, the number of Preferred shares outstanding, by Series and
in total, for each Fund is as follows:
ARIZONA ARIZONA ARIZONA ARIZONA TEXAS
PREMIUM DIVIDEND DIVIDEND DIVIDEND QUALITY
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3 INCOME
(NAZ) (NFZ) (NKR) (NXE) (NTX)
----------------------------------------------------------------------------------------------
Number of shares:
Series M -- -- -- 736 716
Series T -- 424 -- -- --
Series W -- -- 665 -- --
Series TH 1,115 -- -- -- 1,886
----------------------------------------------------------------------------------------------
Total 1,115 424 665 736 2,602
==============================================================================================
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 have generally not affected the portfolio management or
investment policies of the Funds. However, one continuing implication of these
auction failures for Common shareholders is that the Funds' cost of leverage
likely has been incrementally higher at times, than it otherwise might have been
had the auctions continued to be successful. As a result, the Funds' future
Common share earnings may likely have been incrementally lower than they
otherwise might have been. As of January 31, 2010, the aggregate amount of
outstanding Preferred shares redeemed by each Fund is as follows:
ARIZONA ARIZONA ARIZONA ARIZONA TEXAS
PREMIUM DIVIDEND DIVIDEND DIVIDEND QUALITY
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3 INCOME
(NAZ) (NFZ) (NKR) (NXE) (NTX)
-------------------------------------------------------------------------------------------------------------------------------
Preferred shares redeemed, at liquidation value $2,125,000 $1,400,000 $1,875,000 $3,600,000 $3,950,000
===============================================================================================================================
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
38 Nuveen Investments
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"). 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 "(IF) - Inverse floating rate investment." An investment in a
self-deposited inverse floater is accounted for as a financing transaction. In
such instances, a fixed-rate bond deposited into a special purpose trust is
identified in the Portfolio of Investments as "(UB) - Underlying bond of an
inverse floating rate trust reflected as a financing transaction," 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 recognizes the related interest paid to the holders of the
short-term floating rate certificates as "Interest expense on floating rate
obligations" on the Statement of Operations.
During the six months ended January 31, 2010, each Fund invested in
externally-deposited inverse floaters and/or self-deposited inverse floaters.
Each Fund may also enter into shortfall and forbearance agreements (sometimes
referred to as a "recourse trust" or "credit recovery swap") (such agreements
referred to herein as "Recourse Trusts") 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 issued by the
trust plus any shortfalls in interest cash flows. Under these agreements, a
Fund's potential exposure to losses related to or on inverse floaters may
increase beyond the value of a Fund's inverse floater investments as a Fund may
potentially be liable to fulfill all amounts owed to holders of the floating
rate certificates. At period end, any such shortfall is recognized as
"Unrealized depreciation on Recourse Trusts" on the Statement of Assets and
Liabilities.
At January 31, 2010, the Funds were not invested in externally-deposited
Recourse Trusts.
ARIZONA ARIZONA ARIZONA ARIZONA TEXAS
PREMIUM DIVIDEND DIVIDEND DIVIDEND QUALITY
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3 INCOME
(NAZ) (NFZ) (NKR) (NXE) (NTX)
--------------------------------------------------------------------------------------------------------------------------
Maximum exposure to Recourse Trusts $ -- $ -- $ -- $ -- $ --
==========================================================================================================================
The average floating rate obligations outstanding and average annual interest
rate and fees related to self-deposited inverse floaters during the six months
ended January 31, 2010, were as follows:
TEXAS
QUALITY
INCOME
(NTX)
--------------------------------------------------------------
Average floating rate obligations outstanding $3,960,000
Average annual interest rate and fees 0.52%
==============================================================
FUTURES CONTRACTS
Each Fund is subject to interest rate risk in the normal course of pursuing its
investment objectives and is authorized to invest in futures contracts in
attempt to manage such risk. Upon entering into a futures contract, a Fund is
required to deposit with the broker an amount of cash or liquid securities equal
to a specified percentage of the contract amount. This is known as the "initial
margin." Cash held by the broker to cover initial margin requirements on open
futures contracts, if any, is recognized as "Deposits with brokers for open
futures contracts" on the Statement of Assets and Liabilities. Subsequent
payments ("variation margin") are made or received by a Fund each day, depending
on the daily fluctuation of the value of the contract. Variation margin is
recognized as a receivable or payable for "Variation margin on futures
contracts" on the Statement of Assets and Liabilities, when applicable.
During the period the futures contract is open, changes in the value of the
contract are recorded as an unrealized gain or loss by "marking-to-market" on a
daily basis to reflect the changes in market value of the contract and is
recognized as "Change in net unrealized appreciation (depreciation) of futures
contracts" on the Statement of Operations. When the contract is closed or
expired, a Fund records a realized gain or loss equal to the difference between
the value of the contract on the closing date and value of the contract when
originally entered into and is recognized as "Net realized gain (loss) from
futures contracts" on the Statement of Operations.
Nuveen Investments 39
| Notes to
| Financial Statements (Unaudited) (continued)
Risks of investments in futures contracts include the possible adverse movement
of the securities or indices underlying the contracts, the possibility that
there may not be a liquid secondary market for the contracts and/or that a
change in the value of the contract may not correlate with a change in the value
of the underlying securities or indices. The Funds did not invest in futures
contracts during the six months ended January 31, 2010.
MARKET AND COUNTERPARTY CREDIT RISK
In the normal course of business each Fund may invest in financial instruments
and enter into financial transactions where risk of potential loss exists due to
changes in the market (market risk) or failure of the other party to the
transaction to perform (counterparty credit risk). The potential loss could
exceed the value of the financial assets recorded on the financial statements.
Financial assets, which potentially expose each Fund to counterparty credit
risk, consist principally of cash due from counterparties on forward, option and
swap transactions. The extent of each Fund's exposure to counterparty credit
risk in respect to these financial assets approximates their carrying value as
recorded on the Statement of Assets and Liabilities. Futures contracts expose a
Fund to minimal counterparty credit risk as they are exchange traded and the
exchange's clearinghouse, which is counterparty to all exchange traded futures,
guarantees the futures contracts against default.
Each Fund helps manage counterparty credit risk by entering into agreements only
with counterparties Nuveen Asset Management (the "Adviser"), a wholly-owned
subsidiary of Nuveen Investments, Inc. ("Nuveen"), believes have the financial
resources to honor their obligations and by having the Adviser monitor the
financial stability of the counterparties. Additionally, counterparties may be
required to pledge collateral daily (based on the daily valuation of the
financial asset) on behalf of each Fund with a value approximately equal to the
amount of any unrealized gain above a pre-determined threshold. Reciprocally,
when each Fund has an unrealized loss, 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 valuations
fluctuate, either up or down, by at least the predetermined threshold amount.
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.
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 directors/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 US 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.
40 Nuveen Investments
2. FAIR VALUE MEASUREMENTS
In determining the value of each Fund's investments, various inputs are used.
These inputs are summarized in the three broad levels listed below:
Level 1 - Quoted prices in active markets for identical securities.
Level 2 - Other significant observable inputs (including quoted prices for
similar securities, interest rates, prepayment speeds, credit risk, etc.).
Level 3 - Significant unobservable inputs (including management's
assumptions in determining the fair value of investments).
The inputs or methodology used for valuing securities are not an indication of
the risk associated with investing in those securities. The following is a
summary of each Fund's fair value measurements as of January 31, 2010:
ARIZONA PREMIUM INCOME (NAZ) LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
---------------------------------------------------------------------------------------------------
Investments:
Municipal Bonds* $ -- $ 86,209,605 $2,219,975 $ 88,429,580
===================================================================================================
ARIZONA DIVIDEND ADVANTAGE (NFZ) LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
---------------------------------------------------------------------------------------------------
Investments:
Municipal Bonds* $ -- $ 30,806,646 $248,637 $ 31,055,283
Short-Term Investments -- 500,000 -- 500,000
---------------------------------------------------------------------------------------------------
Total $ -- $ 31,306,646 $ 248,637 $ 31,555,283
===================================================================================================
ARIZONA DIVIDEND ADVANTAGE 2 (NKR) LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
---------------------------------------------------------------------------------------------------
Investments:
Municipal Bonds* $ -- $ 49,858,997 $1,003,429 $ 50,862,426
===================================================================================================
ARIZONA DIVIDEND ADVANTAGE 3 (NXE) LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
---------------------------------------------------------------------------------------------------
Investments:
Municipal Bonds* $ -- $ 59,452,173 $ 612,713 $ 60,064,886
===================================================================================================
TEXAS QUALITY INCOME (NTX) LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
---------------------------------------------------------------------------------------------------
Investments:
Municipal Bonds* $ -- $204,436,631 $ 954,353 $205,390,984
===================================================================================================
* Refer to the Fund's Portfolio of Investments for industry breakdown of
Municipal Bonds classified as Level 3.
The following is a reconciliation of each Fund's Level 3 investments held at the
beginning and end of the measurement period:
ARIZONA ARIZONA ARIZONA ARIZONA TEXAS
PREMIUM DIVIDEND DIVIDEND DIVIDEND QUALITY
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3 INCOME
(NAZ) (NFZ) (NKR) (NXE) (NTX)
LEVEL 3 LEVEL 3 LEVEL 3 LEVEL 3 LEVEL 3
MUNICIPAL MUNICIPAL MUNICIPAL MUNICIPAL MUNICIPAL
BONDS BONDS BONDS BONDS BONDS
----------------------------------------------------------------------------------------------------------------------------
Balance at beginning of period $1,978,300 $ 221,570 $ 894,192 $ 546,011 $ 950,615
Gains (losses):
Net realized gains (losses) -- -- -- -- --
Net change in unrealized appreciation (depreciation) 241,675 27,067 109,237 66,702 3,738
Net purchases at cost (sales at proceeds) -- -- -- -- --
Net discounts (premiums) -- -- -- -- --
Net transfers in to (out of) at end of period fair value -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------
Balance at end of period $2,219,975 $ 248,637 $1,003,429 $ 612,713 $ 954,353
============================================================================================================================
"Change in net unrealized appreciation (depreciation) of investments" presented
on the Statement of Operations includes net appreciation (depreciation) related
to securities classified as Level 3 at period end as follows:
ARIZONA ARIZONA ARIZONA ARIZONA TEXAS
PREMIUM DIVIDEND DIVIDEND DIVIDEND QUALITY
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3 INCOME
(NAZ) (NFZ) (NKR) (NXE) (NTX)
----------------------------------------------------------------------------------------------------------------------------
Level 3 net appreciation (depreciation) $ 241,675 $ 27,067 $ 109,237 $ 66,702 $ 3,738
============================================================================================================================
Nuveen Investments 41
| Notes to
| Financial Statements (Unaudited) (continued)
3. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
The Funds record derivative instruments at fair value, with changes in fair
value recognized on the Statement of Operations, when applicable. Even though
the Funds' investments in derivatives may represent economic hedges, they are
considered to be non-hedge transactions for financial reporting purposes. The
Funds did not invest in derivative instruments during the six months ended
January 31, 2010.
4. FUND SHARES
COMMON SHARES
Transactions in Common shares were as follows:
ARIZONA PREMIUM ARIZONA DIVIDEND ARIZONA DIVIDEND
INCOME (NAZ) ADVANTAGE (NFZ) ADVANTAGE 2 (NKR)
-------------------- -------------------- ---------------------
SIX MONTHS YEAR SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
1/31/10 7/31/09 1/31/10 7/31/09 1/31/10 7/31/09
------------------------------------------------------------------------------------------------------------------------------------
Common shares:
Issued to shareholders due to
reinvestment of distributions -- 944 -- 581 -- 1,193
Repurchased -- -- -- (2,500) -- (800)
------------------------------------------------------------------------------------------------------------------------------------
Weighted average Common share:
Price per share repurchased -- -- -- $9.60 -- $10.35
Discount per share repurchased -- -- -- 19.20% -- 17.60%
====================================================================================================================================
ARIZONA DIVIDEND TEXAS QUALITY
ADVANTAGE 3 (NXE) INCOME (NTX)
-------------------- ---------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
1/31/10 7/31/09 1/31/10 7/31/09
------------------------------------------------------------------------------------------------------------------------------------
Common shares:
Issued to shareholders due to
reinvestment of distributions -- -- 13,882 5,052
Repurchased -- (1,600) -- --
------------------------------------------------------------------------------------------------------------------------------------
Weighted average Common share:
Price per share repurchased -- $9.59 -- --
Discount per share repurchased -- 18.61% -- --
====================================================================================================================================
PREFERRED SHARES
Transactions in Preferred shares were as follows:
ARIZONA PREMIUM INCOME (NAZ) ARIZONA DIVIDEND ADVANTAGE (NFZ)
------------------------------------- --------------------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
1/31/10 7/31/09 1/31/10 7/31/09
------------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
------------------------------------------------------------------------------------------------------------------------------------
Preferred shares redeemed:
Series T -- $ -- -- $ -- -- $ -- 56 $1,400,000
Series TH -- -- 85 2,125,000 -- -- -- --
------------------------------------------------------------------------------------------------------------------------------------
Total -- $ -- 85 $2,125,000 -- $ -- 56 $1,400,000
====================================================================================================================================
42 Nuveen Investments
ARIZONA DIVIDEND ARIZONA DIVIDEND
ADVANTAGE 2 (NKR) ADVANTAGE 3 (NXE)
------------------------------------- --------------------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
1/31/10 7/31/09 1/31/10 7/31/09
------------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
------------------------------------------------------------------------------------------------------------------------------------
Preferred shares redeemed:
Series M -- $-- -- $ -- -- $-- 144 $3,600,000
Series W -- -- 75 1,875,000 -- -- -- --
------------------------------------------------------------------------------------------------------------------------------------
Total -- $-- 75 $1,875,000 -- $-- 144 $3,600,000
====================================================================================================================================
TEXAS QUALITY
INCOME (NTX)
--------------------------------------
SIX MONTHS YEAR
ENDED ENDED
1/31/10 7/31/09
--------------------------------------
SHARES AMOUNT SHARES AMOUNT
------------------------------------------------------------------------------------------------------------------------------------
Preferred shares redeemed:
Series M -- $-- 44 $1,100,000
Series TH -- -- 114 2,850,000
------------------------------------------------------------------------------------------------------------------------------------
Total -- $-- 158 $3,950,000
====================================================================================================================================
5. INVESTMENT TRANSACTIONS
Purchases and sales (including maturities but excluding short-term investments)
during the six months ended January 31, 2010, were as follows:
ARIZONA ARIZONA ARIZONA ARIZONA TEXAS
PREMIUM DIVIDEND DIVIDEND DIVIDEND QUALITY
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3 INCOME
(NAZ) (NFZ) (NKR) (NXE) (NTX)
------------------------------------------------------------------------------------------------------------------------------------
Purchases $3,866,010 $2,260,457 $1,817,361 $1,787,309 $8,930,997
Sales and maturities 3,370,410 27,060 43,100 926,120 5,745,237
====================================================================================================================================
6. 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
securities reflected as financing transactions, if any. 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 January 31, 2010, the cost of investments was as follows:
ARIZONA ARIZONA ARIZONA ARIZONA TEXAS
PREMIUM DIVIDEND DIVIDEND DIVIDEND QUALITY
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3 INCOME
(NAZ) (NFZ) (NKR) (NXE) (NTX)
------------------------------------------------------------------------------------------------------------------------------------
Cost of investments $84,992,286 $31,747,766 $50,197,855 $60,217,413 $198,082,309
====================================================================================================================================
Nuveen Investments 43
| Notes to
| Financial Statements (Unaudited) (continued)
Gross unrealized appreciation and gross unrealized depreciation of investments
at January 31, 2010, were as follows:
ARIZONA ARIZONA ARIZONA ARIZONA TEXAS
PREMIUM DIVIDEND DIVIDEND DIVIDEND QUALITY
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3 INCOME
(NAZ) (NFZ) (NKR) (NXE) (NTX)
------------------------------------------------------------------------------------------------------------------------------------
Gross unrealized:
Appreciation $ 4,534,006 $ 951,837 $ 2,108,210 $ 1,719,038 $ 8,170,956
Depreciation (1,096,712) (1,144,320) (1,443,639) (1,871,565) (4,822,381)
------------------------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments $ 3,437,294 $ (192,483) $ 664,571 $ (152,527) $ 3,348,575
====================================================================================================================================
The tax components of undistributed net tax-exempt income, net ordinary income
and net long-term capital gains at July 31, 2009, the Funds' last tax year end,
were as follows:
ARIZONA ARIZONA ARIZONA ARIZONA TEXAS
PREMIUM DIVIDEND DIVIDEND DIVIDEND QUALITY
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3 INCOME
(NAZ) (NFZ) (NKR) (NXE) (NTX)
------------------------------------------------------------------------------------------------------------------------------------
Undistributed net tax-exempt income * $670,156 $147,439 $288,408 $313,130 $1,652,176
Undistributed net ordinary income ** -- 11 -- -- 690
Undistributed net long-term capital gains -- -- -- -- 348
====================================================================================================================================
* Undistributed net tax-exempt income (on a tax basis) has not been reduced
for the dividend declared on July 1, 2009, paid on August 3, 2009.
** 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' last tax year ended
July 31, 2009, was designated for purposes of the dividends paid deduction as
follows:
ARIZONA ARIZONA ARIZONA ARIZONA TEXAS
PREMIUM DIVIDEND DIVIDEND DIVIDEND QUALITY
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3 INCOME
(NAZ) (NFZ) (NKR) (NXE) (NTX)
------------------------------------------------------------------------------------------------------------------------------------
Distributions from net tax-exempt income $3,419,031 $1,198,865 $2,063,963 $2,423,629 $7,900,976
Distributions from net ordinary income** -- -- -- -- 378,151
Distributions from net long-term capital gains -- -- -- -- 268,060
====================================================================================================================================
** Net ordinary income consists of taxable market discount income and net
short-term capital gains, if any.
At July 31, 2009, the Funds' last tax year end, the following Funds had unused
capital loss carryforwards available for federal income tax purposes to be
applied against future capital gains, if any. If not applied, the carryforwards
will expire as follows:
ARIZONA ARIZONA ARIZONA ARIZONA
PREMIUM DIVIDEND DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
(NAZ) (NFZ) (NKR) (NXE)
------------------------------------------------------------------------------------------------------------------------------------
Expiration:
July 31, 2011 $ 359,724 $ -- $ -- $ --
July 31, 2012 1,553,627 -- -- 158,487
July 31, 2013 -- -- -- 160,902
July 31, 2014 -- -- -- 218,127
July 31, 2016 562,384 246,571 212,903 363,937
July 31, 2017 323,876 210,308 220,271 258,905
------------------------------------------------------------------------------------------------------------------------------------
Total $2,799,611 $456,879 $433,174 $1,160,358
====================================================================================================================================
The Funds have elected to defer net realized losses from investments incurred
from November 1, 2008 through July 31, 2009, the Funds' last tax year end,
("post-October losses") in accordance with federal income tax regulations.
Post-October losses are treated as having arisen on the first day of the current
fiscal year:
ARIZONA ARIZONA ARIZONA ARIZONA TEXAS
PREMIUM DIVIDEND DIVIDEND DIVIDEND QUALITY
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3 INCOME
(NAZ) (NFZ) (NKR) (NXE) (NTX)
------------------------------------------------------------------------------------------------------------------------------------
Post-October capital losses $2,566,026 $321,087 $239,484 $213,362 $883,729
====================================================================================================================================
44 Nuveen Investments
7. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Each Fund's management fee is separated into two components - a fund-level fee,
based only on the amount of assets within each individual Fund, and a
complex-level fee, based on the aggregate amount of all fund assets managed by
the Adviser. This pricing structure enables each Fund's shareholders to benefit
from growth in the assets within their respective Fund as well as from growth in
the amount of complex-wide assets managed by the Adviser.
The annual fund-level fee for each Fund, payable monthly, is calculated
according to the following schedule:
ARIZONA PREMIUM INCOME (NAZ)
TEXAS QUALITY INCOME (NTX)
AVERAGE DAILY NET ASSETS* 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
===============================================================================
ARIZONA DIVIDEND ADVANTAGE (NFZ)
ARIZONA DIVIDEND ADVANTAGE 2 (NKR)
ARIZONA DIVIDEND ADVANTAGE 3 (NXE)
AVERAGE DAILY NET ASSETS* 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 for each Fund, payable monthly, is calculated
according to the following schedule:
COMPLEX-LEVEL ASSET BREAKPOINT LEVEL* 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
===============================================================================
* The complex-level fee component of the management fee for the funds is
calculated based upon the aggregate daily managed assets of all Nuveen
funds, with such daily managed assets defined separately for each fund in
its management agreement, but excluding assets attributable to investments
in other Nuveen funds. For the complex-level and fund-level fees, daily
managed assets include assets managed by the Adviser that are attributable
to financial leverage. For these purposes, financial leverage includes the
funds' use of preferred stock and borrowings and investments in the
residual interest certificates (also called inverse floating rate
securities) in tender option bond (TOB) trusts, including the portion of
assets held by a TOB trust that has been effectively financed by the
trust's issuance of floating rate securities, subject to an agreement by
the Adviser to limit the amount of such assets for determining managed
assets in certain circumstances. As of January 31, 2010, the complex-level
fee rate was .1881%.
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 directors/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
Directors/Trustees has adopted a deferred compensation plan for independent
directors/trustees that enables directors/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.
Nuveen Investments 45
| Notes to
| Financial Statements (Unaudited) (continued)
For the first ten years of Arizona Dividend Advantage's (NFZ) operations, the
Adviser has agreed to reimburse the Fund, as a percentage of average daily net
assets, for fees and expenses in the amounts and for the time periods set forth
below:
YEAR ENDING YEAR ENDING
JANUARY 31, JANUARY 31,
-------------------------------------------------------------------------------
2001* .30% 2007 .25%
2002 .30 2008 .20
2003 .30 2009 .15
2004 .30 2010 .10
2005 .30 2011 .05
2006 .30
===============================================================================
* From the commencement of operations.
The Adviser has not agreed to reimburse Arizona Dividend Advantage (NFZ) for any
portion of its fees and expenses beyond January 31, 2011.
For the first ten years of Arizona Dividend Advantage 2's (NKR) operations, the
Adviser has agreed to reimburse the Fund, as a percentage of average daily net
assets, for fees and expenses in the amounts and for the time periods set forth
below:
YEAR ENDING YEAR ENDING
MARCH 31, MARCH 31,
-------------------------------------------------------------------------------
2002* .30% 2008 .25%
2003 .30 2009 .20
2004 .30 2010 .15
2005 .30 2011 .10
2006 .30 2012 .05
2007 .30
===============================================================================
* From the commencement of operations.
The Adviser has not agreed to reimburse Arizona Dividend Advantage 2 (NKR) for
any portion of its fees and expenses beyond March 31, 2012.
For the first eight years of Arizona Dividend Advantage 3's (NXE) operations,
the Adviser has agreed to reimburse the Fund, as a percentage of average daily
net assets, 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 Arizona Dividend Advantage 3 (NXE) for
any portion of its fees and expenses beyond September 30, 2010.
8. NEW ACCOUNTING PRONOUNCEMENTS
ACCOUNTING FOR TRANSFERS OF FINANCIAL ASSETS
During June 2009, the FASB issued changes to the authoritative guidance under
GAAP on accounting for transfers of financial assets. The objective of this
guidance is to improve the relevance, representational faithfulness, and
comparability of the information that a reporting entity provides in its
financial statements about a transfer of financial assets; the effects of a
transfer on its financial position, financial performance, and cash flows; and
transferor's continuing involvement, if any, in transferred financial assets.
This guidance is effective as of the beginning of each reporting entity's first
annual reporting period that begins after November 15, 2009, for interim periods
within that first annual reporting period and for interim and annual reporting
periods thereafter. Earlier application is prohibited. The recognition and
measurement provisions of this guidance must be applied to transfers occurring
on or after the effective date. Additionally, the disclosure provisions of this
guidance should be applied to transfers that occurred both before and after the
effective date of this guidance. At this time, management is evaluating the
implications of this guidance and the impact it will have on the financial
statement amounts and disclosures, if any.
FAIR VALUE MEASUREMENTS
On January 21, 2010, FASB issued changes to the authoritative guidance under
GAAP for fair value measurements. The objective of which is to provide guidance
on how investment assets and liabilities are to be valued and disclosed.
Specifically, the amendment requires reporting entities to disclose i) the input
and valuation techniques used to measure fair value for both recurring and
nonrecurring fair value measurements, for both Level 2 and Level 3 positions,
ii) transfers between all levels (including Level 1 and Level 2) on a gross
basis (i.e., transfers out must be disclosed separately from transfers in) as
well as the reason(s) for the transfer and iii) purchases, sales, issuances and
settlements in the Level 3 rollforward must be shown
46 Nuveen Investments
on a gross basis rather than as one net number. The effective date of the
amendment is for interim and annual periods beginning after December 15, 2009,
however, the requirement to provide the Level 3 activity for purchases, sales,
issuances and settlements on a gross basis will be effective for interim and
annual periods beginning after December 15, 2010. At this time the Funds are
evaluating the implications of this guidance and the impact it will have to the
financial statement amounts and footnote disclosures, if any.
9. SUBSEQUENT EVENTS
DISTRIBUTIONS TO COMMON SHAREHOLDERS
The Funds declared Common share dividend distributions from their tax-exempt net
investment income which were paid on March 1, 2010, to shareholders of record on
February 15, 2010, as follows:
ARIZONA ARIZONA ARIZONA ARIZONA TEXAS
PREMIUM DIVIDEND DIVIDEND DIVIDEND QUALITY
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3 INCOME
(NAZ) (NFZ) (NKR) (NXE) (NTX)
-----------------------------------------------------------------------------------------------------
Dividend per share $0.059 $ 0.057 $ 0.064 $ 0.062 $ 0.068
=====================================================================================================
MUNIFUND TERM PREFERRED SHARES
Subsequent to the reporting period, Arizona Dividend Advantage (NFZ), Arizona
Dividend Advantage 2 (NKR) and Arizona Dividend Advantage 3 (NXE) filed with the
Securities and Exchange Commission (the "SEC") registration statements seeking
to register MuniFund Term Preferred shares ("MTP"). These registration
statements, declared effective by the SEC, enables the Funds to issue to the
public shares of MTP to refinance all or a portion of their Preferred shares.
The issuance of MTP by Arizona Dividend Advantage (NFZ), Arizona Dividend
Advantage 2 (NKR) and Arizona Dividend Advantage 3 (NXE) is subject to market
conditions. There is no assurance that MTP will be issued.
Nuveen Investments 47
| 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
==================================================================================================================================
ARIZONA PREMIUM INCOME (NAZ)
----------------------------------------------------------------------------------------------------------------------------------
Year Ended 7/31:
2010(b) $12.92 $.42 $ .69 $(.01) $ -- $1.10 $(.34) $ -- $(.34)
2009 13.00 .85 (.16) (.13) -- .56 (.64) -- (.64)
2008 14.00 .88 (1.05) (.22) -- (.39) (.61) -- (.61)
2007 14.10 .83 (.10) (.22) -- .51 (.61) -- (.61)
2006 14.53 .83 (.39) (.18) -- .26 (.69) -- (.69)
2005 14.04 .86 .56 (.09) -- 1.33 (.84) -- (.84)
ARIZONA DIVIDEND ADVANTAGE (NFZ)
----------------------------------------------------------------------------------------------------------------------------------
Year Ended 7/31:
2010(b) 12.66 .42 .92 (.02) -- 1.32 (.33) -- (.33)
2009 13.26 .84 (.67) (.14) -- .03 (.63) -- (.63)
2008 14.48 .91 (1.23) (.25) --*** (.57) (.64) (.01) (.65)
2007 14.77 .91 (.17) (.24) (.02) .48 (.71) (.06) (.77)
2006 15.37 .93 (.40) (.20) (.01) .32 (.84) (.08) (.92)
2005 15.00 .97 .46 (.10) -- 1.33 (.92) (.04) (.96)
==================================================================================================================================
PREFERRED SHARES AT END OF PERIOD
ENDING ------------------------------------
COMMON AGGREGATE LIQUIDATION
SHARE ENDING AMOUNT AND MARKET ASSET
NET ASSET MARKET OUTSTANDING VALUE COVERAGE
VALUE VALUE (000) PER SHARE PER SHARE
================================================================================
ARIZONA PREMIUM INCOME (NAZ)
--------------------------------------------------------------------------------
Year Ended 7/31:
2010(b) $13.68 $13.84 $27,875 $25,000 $79,852
2009 12.92 12.29 27,875 25,000 76,798
2008 13.00 13.35 30,000 25,000 73,414
2007 14.00 13.07 30,000 25,000 77,111
2006 14.10 13.69 30,000 25,000 77,520
2005 14.53 15.22 30,000 25,000 79,019
ARIZONA DIVIDEND ADVANTAGE (NFZ)
--------------------------------------------------------------------------------
Year Ended 7/31:
2010(b) 13.65 12.27 10,600 25,000 74,837
2009 12.66 12.14 10,600 25,000 71,238
2008 13.26 13.70 12,000 25,000 67,817
2007 14.48 13.35 12,000 25,000 71,748
2006 14.77 15.90 12,000 25,000 72,628
2005 15.37 16.08 12,000 25,000 74,485
================================================================================
48 Nuveen Investments
RATIOS/SUPPLEMENTAL DATA
----------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
APPLICABLE TO COMMON SHARES
TOTAL RETURNS BEFORE REIMBURSEMENT++
------------------ -----------------------------------------
BASED ENDING
ON NET
BASED COMMON ASSETS
ON SHARE NET APPLICABLE EXPENSES EXPENSES NET
MARKET ASSET TO COMMON INCLUDING EXCLUDING INVESTMENT
VALUE* VALUE* SHARES (000) INTEREST(a) INTEREST INCOME
=========================================================================================================
ARIZONA PREMIUM INCOME (NAZ)
---------------------------------------------------------------------------------------------------------
Year Ended 7/31:
2010(b) 15.57% 8.56% $61,160 1.21%**** 1.21%**** 6.14%****
2009 (2.61) 4.73 57,755 1.33 1.33 7.01
2008 7.10 (2.87) 58,097 1.40 1.26 6.42
2007 (.22) 3.62 62,534 1.32 1.24 5.81
2006 (5.62) 1.84 63,024 1.21 1.21 5.83
2005 5.17 9.69 64,822 1.20 1.20 5.91
ARIZONA DIVIDEND ADVANTAGE (NFZ)
---------------------------------------------------------------------------------------------------------
Year Ended 7/31:
2010(b) 3.74 10.46 21,131 1.35**** 1.35**** 6.00****
2009 (6.12) .58 19,605 1.51 1.51 6.70
2008 7.72 (4.09) 20,552 1.58 1.44 6.14
2007 (11.63) 3.24 22,439 1.48 1.38 5.74
2006 4.54 2.14 22,862 1.36 1.36 5.79
2005 10.88 9.04 23,753 1.34 1.34 5.82
=========================================================================================================
RATIOS/SUPPLEMENTAL DATA
---------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
APPLICABLE TO COMMON SHARES
AFTER REIMBURSEMENT++**
-----------------------------------------
EXPENSES EXPENSES NET PORTFOLIO
INCLUDING EXCLUDING INVESTMENT TURNOVER
INTEREST(a) INTEREST INCOME RATE
======================================================================================
ARIZONA PREMIUM INCOME (NAZ)
--------------------------------------------------------------------------------------
Year Ended 7/31:
2010(b) 1.21%**** 1.21%**** 6.14%**** 4%
2009 1.34 1.34 7.00 25
2008 1.40 1.26 6.42 21
2007 1.32 1.23 5.82 13
2006 1.21 1.21 5.82 22
2005 1.20 1.20 5.91 17
ARIZONA DIVIDEND ADVANTAGE (NFZ)
--------------------------------------------------------------------------------------
Year Ended 7/31:
2010(b) 1.20**** 1.20**** 6.15**** --*****
2009 1.30 1.30 6.91 6
2008 1.31 1.16 6.42 10
2007 1.14 1.04 6.08 19
2006 .94 .94 6.21 24
2005 .89 .89 6.26 18
======================================================================================
* Total Return Based 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 Based 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 the calculation. Total returns are not annualized.
** After expense reimbursement from the Adviser, where applicable. Expense
ratios do not reflect the reduction of custodian fee credits earned on the
Fund's net cash on deposit with the custodian bank, where applicable.
*** Rounds to less than $.01 per share.
**** Annualized.
***** Calculates to less than 1%.
+ The amounts shown are based on Common share equivalents.
++ Ratios do not reflect the effect of dividend payments to Preferred
shareholders; Net Investment Income ratios reflect income earned and
expenses incurred on assets attributable to Preferred shares.
(a) The expense ratios in the above table reflect, among other things, the
interest expense deemed to have been paid by the Fund on the floating rate
certificates issued by the special purpose trusts for the self-deposited
inverse floaters held by the Fund, as described in Footnote 1 - Inverse
Floating Rate Securities.
(b) For the six months ended January 31, 2010.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
Nuveen Investments 49
| Financial
| Highlights (Unaudited) (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
==================================================================================================================================
ARIZONA DIVIDEND ADVANTAGE 2 (NKR)
----------------------------------------------------------------------------------------------------------------------------------
Year Ended 7/31:
2010(b) $13.46 $.45 $ .78 $(.02) $ -- $1.21 $(.37) $ -- $(.37)
2009 13.66 .93 (.29) (.14) -- .50 (.70) -- (.70)
2008 14.76 .96 (1.03) (.24) (.02) (.33) (.71) (.06) (.77)
2007 15.00 .97 (.18) (.24) (.01) .54 (.74) (.04) (.78)
2006 15.56 .96 (.37) (.20) (.01) .38 (.83) (.11) (.94)
2005 15.10 .97 .59 (.11) (.01) 1.44 (.86) (.12) (.98)
ARIZONA DIVIDEND ADVANTAGE 3 (NXE)
----------------------------------------------------------------------------------------------------------------------------------
Year Ended 7/31:
2010(b) 12.76 .43 .90 (.01) -- 1.32 (.36) -- (.36)
2009 13.07 .88 (.41) (.13) -- .34 (.65) -- (.65)
2008 14.20 .91 (1.15) (.24) -- (.48) (.65) -- (.65)
2007 14.32 .90 (.10) (.25) -- .55 (.67) -- (.67)
2006 14.62 .88 (.26) (.19) -- .43 (.73) -- (.73)
2005 14.01 .89 .62 (.10) -- 1.41 (.80) -- (.80)
==================================================================================================================================
PREFERRED SHARES AT END OF PERIOD
ENDING ------------------------------------
COMMON AGGREGATE LIQUIDATION
SHARE ENDING AMOUNT AND MARKET ASSET
NET ASSET MARKET OUTSTANDING VALUE COVERAGE
VALUE VALUE (000) PER SHARE PER SHARE
================================================================================
ARIZONA DIVIDEND ADVANTAGE 2 (NKR)
--------------------------------------------------------------------------------
Year Ended 7/31:
2010(b) $14.30 $13.18 $16,625 $25,000 $77,475
2009 13.46 12.52 16,625 25,000 74,367
2008 13.66 14.00 18,500 25,000 70,015
2007 14.76 15.27 18,500 25,000 73,616
2006 15.00 15.37 18,500 25,000 74,277
2005 15.56 16.19 18,500 25,000 75,952
ARIZONA DIVIDEND ADVANTAGE 3 (NXE)
--------------------------------------------------------------------------------
Year Ended 7/31:
2010(b) 13.72 12.65 18,400 25,000 82,171
2009 12.76 11.73 18,400 25,000 78,164
2008 13.07 13.30 22,000 25,000 70,546
2007 14.20 13.44 22,000 25,000 74,490
2006 14.32 13.52 22,000 25,000 74,902
2005 14.62 14.48 22,000 25,000 75,942
================================================================================
50 Nuveen Investments
RATIOS/SUPPLEMENTAL DATA
----------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
APPLICABLE TO COMMON SHARES
TOTAL RETURNS BEFORE REIMBURSEMENT++
------------------ -----------------------------------------
BASED ENDING
ON NET
BASED COMMON ASSETS
ON SHARE NET APPLICABLE EXPENSES EXPENSES NET
MARKET ASSET TO COMMON INCLUDING EXCLUDING INVESTMENT
VALUE* VALUE* SHARES (000) INTEREST(a) INTEREST INCOME
========================================================================================================
ARIZONA DIVIDEND ADVANTAGE 2 (NKR)
--------------------------------------------------------------------------------------------------------
Year Ended 7/31:
2010(b) 8.22% 9.00% $34,896 1.27%*** 1.27%*** 6.04%***
2009 (4.99) 4.09 32,829 1.40 1.40 6.93
2008 (3.16) (2.38) 33,311 1.49 1.34 6.32
2007 4.52 3.59 35,976 1.39 1.29 5.92
2006 .82 2.49 36,465 1.28 1.28 5.88
2005 16.30 9.74 37,704 1.27 1.27 5.76
ARIZONA DIVIDEND ADVANTAGE 3 (NXE)
--------------------------------------------------------------------------------------------------------
Year Ended 7/31:
2010(b) 10.90 10.35 42,078 1.22*** 1.22*** 6.14***
2009 (6.18) 3.08 39,129 1.37 1.37 6.97
2008 3.96 (3.48) 40,081 1.46 1.30 6.17
2007 4.21 3.81 43,552 1.36 1.26 5.69
2006 (1.80) 3.03 43,913 1.26 1.26 5.63
2005 15.11 10.21 44,829 1.25 1.25 5.63
========================================================================================================
RATIOS/SUPPLEMENTAL DATA
-------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
APPLICABLE TO COMMON SHARES
AFTER REIMBURSEMENT++**
-----------------------------------------
EXPENSES EXPENSES NET PORTFOLIO
INCLUDING EXCLUDING INVESTMENT TURNOVER
INTEREST(a) INTEREST INCOME RATE
======================================================================================
ARIZONA DIVIDEND ADVANTAGE 2 (NKR)
--------------------------------------------------------------------------------------
Year Ended 7/31:
2010(b) 1.05%*** 1.05%*** 6.26%*** --%****
2009 1.11 1.11 7.22 5
2008 1.13 .98 6.68 15
2007 .96 .86 6.35 14
2006 .83 .83 6.33 11
2005 .83 .83 6.21 11
ARIZONA DIVIDEND ADVANTAGE 3 (NXE)
--------------------------------------------------------------------------------------
Year Ended 7/31:
2010(b) 1.07*** 1.07*** 6.30*** 2
2009 1.09 1.09 7.25 9
2008 1.08 .92 6.55 16
2007 .88 .78 6.16 15
2006 .79 .79 6.11 12
2005 .78 .78 6.10 15
======================================================================================
* Total Return Based 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 Based 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 the calculation. Total returns are not annualized.
** After expense reimbursement from the Adviser, where applicable. Expense
ratios do not reflect the reduction of custodian fee credits earned on the
Fund's net cash on deposit with the custodian bank, where applicable.
*** Annualized.
**** Calculates to less than 1%.
+ The amounts shown are based on Common share equivalents.
++ Ratios do not reflect the effect of dividend payments to Preferred
shareholders; Net Investment Income ratios reflect income earned and
expenses incurred on assets attributable to Preferred shares.
(a) The expense ratios in the above table reflect, among other things, the
interest expense deemed to have been paid by the Fund on the floating rate
certificates issued by the special purpose trusts for the self-deposited
inverse floaters held by the Fund, as described in Footnote 1 - Inverse
Floating Rate Securities.
(b) For the six months ended January 31, 2010.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
Nuveen Investments 51
| Financial
| Highlights (Unaudited) (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
====================================================================================================================================
TEXAS QUALITY INCOME (NTX)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 7/31:
2010(b) $13.84 $ .47 $ .72 $(.01) $ --*** $1.18 $(.40) $(.01) $(.41)
2009 13.98 .94 (.17) (.13) (.02) .62 (.71) (.05) (.76)
2008 14.87 .94 (.83) (.23) (.02) (.14) (.69) (.06) (.75)
2007 15.06 .95 (.11) (.25) (.01) .58 (.73) (.04) (.77)
2006 15.46 .96 (.32) (.22) -- .42 (.82) -- (.82)
2005 15.12 1.00 .41 (.13) -- 1.28 (.94) -- (.94)
------------------------------------------------------------------------------------------------------------------------------------
PREFERRED SHARES AT END OF PERIOD
ENDING -------------------------------------
COMMON AGGREGATE LIQUIDATION
SHARE ENDING AMOUNT AND MARKET ASSET
NET ASSET MARKET OUTSTANDING VALUE COVERAGE
VALUE VALUE (000) PER SHARE PER SHARE
===============================================================================
TEXAS QUALITY INCOME (NTX)
-------------------------------------------------------------------------------
Year Ended 7/31:
2010(b) $14.61 $15.23 $65,050 $25,000 $78,434
2009 13.84 14.78 65,050 25,000 75,543
2008 13.98 12.46 69,000 25,000 73,084
2007 14.87 13.89 69,000 25,000 76,173
2006 15.06 14.71 69,000 25,000 76,815
2005 15.46 16.19 69,000 25,000 78,159
===============================================================================
52 Nuveen Investments
RATIOS/SUPPLEMENTAL DATA
------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
APPLICABLE TO COMMON SHARES
TOTAL RETURNS BEFORE REIMBURSEMENT++
------------------ ---------------------------------------------
BASED ENDING
ON NET
BASED COMMON ASSETS
ON SHARE NET APPLICABLE EXPENSES EXPENSES NET
MARKET ASSET TO COMMON INCLUDING EXCLUDING INVESTMENT
VALUE* VALUE* SHARES (000) INTEREST(a) INTEREST INCOME
============================================================================================================
TEXAS QUALITY INCOME (NTX)
------------------------------------------------------------------------------------------------------------
Year Ended 7/31:
2010(b) 5.97% 8.58% $139,034 1.18%**** 1.17%**** 6.45%****
2009 25.98 4.80 131,513 1.27 1.26 7.06
2008 (5.16) (1.04) 132,713 1.26 1.21 6.46
2007 (.52) 3.82 141,238 1.24 1.18 6.24
2006 (4.03) 2.77 143,009 1.19 1.19 6.31
2005 17.83 8.61 146,718 1.18 1.18 6.42
============================================================================================================
RATIOS/SUPPLEMENTAL DATA
-------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
APPLICABLE TO COMMON SHARES
AFTER REIMBURSEMENT++**
----------------------------------------
EXPENSES EXPENSES NET PORTFOLIO
INCLUDING EXCLUDING INVESTMENT TURNOVER
INTEREST(a) INTEREST INCOME RATE
================================================================================
TEXAS QUALITY INCOME (NTX)
--------------------------------------------------------------------------------
Year Ended 7/31:
2010(b) 1.18%**** 1.17%**** 6.45%**** 3%
2009 1.26 1.26 7.07 10
2008 1.26 1.21 6.46 8
2007 1.24 1.18 6.24 9
2006 1.20 1.20 6.31 13
2005 1.18 1.18 6.42 14
================================================================================
* Total Return Based 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 Based 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 the calculation. Total returns are not annualized.
** After expense reimbursement from the Adviser, where applicable. Expense
ratios do not reflect the reduction of custodian fee credits earned on the
Fund's net cash on deposit with the custodian bank, where applicable.
*** Rounds to less than $.01 per share.
**** Annualized.
+ The amounts shown are based on Common share equivalents.
++ Ratios do not reflect the effect of dividend payments to Preferred
shareholders; Net Investment Income ratios reflect income earned and
expenses incurred on assets attributable to Preferred shares.
(a) The expense ratios in the above table reflect, among other things, the
interest expense deemed to have been paid by the Fund on the floating rate
certificates issued by the special purpose trusts for the self-deposited
inverse floaters held by the Fund, as described in Footnote 1 - Inverse
Floating Rate Securities.
(b) For the six months ended January 31, 2010.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
Nuveen Investments 53
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 AUTOMATIC 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
54 Nuveen Investments
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.
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.
Nuveen Investments 55
Glossary of Terms Used in this Report
o 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.
o AVERAGE ANNUAL TOTAL RETURN: This is a commonly used method to express an
investment's performance over a particular, usually multi-year time period. It
expresses the return that would have been necessary each year to equal the
investment's actual cumulative performance (including change in NAV or market
price and reinvested dividends and capital gains distributions, if any) over
the time period being considered.
o AVERAGE EFFECTIVE MATURITY: The average of the number of years to maturity of
the bonds in a Fund's portfolio, computed by weighting each bond's time to
maturity (the date the security comes due) by the market value of the
security. This figure does not account for the likelihood of prepayments or
the exercise of call provisions unless an escrow account has been established
to redeem the bond before maturity. The market value weighting for an
investment in an inverse floating rate security is the value of the
portfolio's residual interest in the inverse floating rate trust, and does not
include the value of the floating rate securities issued by the trust.
o INVERSE FLOATERS: Inverse floating rate securities, also known as inverse
floaters, 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.
56 Nuveen Investments
o LEVERAGE-ADJUSTED DURATION: Duration is a measure of the expected period over
which a bond's principal and interest will be paid, and consequently is a
measure of the sensitivity of a bond's or bond Fund's value to changes when
market interest rates change. Generally, the longer a bond's or Fund's
duration, the more the price of the bond or Fund will change as interest rates
change. Leverage-adjusted duration takes into account the leveraging process
for a Fund and therefore is longer than the duration of the Fund's portfolio
of bonds.
o MARKET YIELD (ALSO KNOWN AS DIVIDEND YIELD OR CURRENT YIELD): An investment's
current annualized dividend divided by its current market price.
o NET ASSET VALUE (NAV): A Fund's NAV per common 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 common shares outstanding. Fund NAVs are calculated
at the end of each business day.
o PRE-REFUNDING: Pre-refunding, also known as advanced refundings or
refinancings, is a procedure used by state and local governments to refinance
municipal bonds to lower interest expenses. The issuer sells new bonds with a
lower yield and uses the proceeds to buy U.S. Treasury securities, the
interest from which is used to make payments on the higher-yielding bonds.
Because of this collateral, pre-refunding generally raises a bond's credit
rating and thus its value.
o TAXABLE-EQUIVALENT YIELD: The yield necessary from a fully taxable investment
to equal, on an after-tax basis, the yield of a municipal bond investment.
o 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.
Nuveen Investments 57
Notes
58 Nuveen Investments
Notes
Nuveen Investments 59
Notes
60 Nuveen Investments
Other Useful Information
BOARD OF
DIRECTORS/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
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, 2009, 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 SEC the certification of its Chief Executive
Officer and Chief Financial Officer required by Section 302 of the
Sarbanes-Oxley Act.
COMMON AND PREFERRED SHARE INFORMATION
Each Fund intends to repurchase and/or redeem shares of its own common or
preferred stock in the future at such times and in such amounts as is deemed
advisable. During the period covered by this report, the Funds did not
repurchased and/or redeemed shares of their common and/or preferred stock. Any
future repurchases and/or redemptions will be reported to shareholders in the
next annual or semi-annual report.
Nuveen Investments 61
Nuveen Investments:
Serving Investors for Generations
Since 1898, financial advisors and their clients have relied on Nuveen
Investments to provide dependable investment solutions through continued
adherence to proven, longterm investing principles. Today, we offer a range of
high quality equity and fixed-income solutions designed to be integral
components of a well-diversified core portfolio.
FOCUSED ON MEETING INVESTOR NEEDS.
Nuveen Investments is a global investment management firm that seeks to help
secure the long-term goals of institutions and high net worth investors as well
as the consultants and financial advisors who serve them. We market our growing
range of specialized investment solutions under the high-quality brands of
HydePark, NWQ, Nuveen, Santa Barbara, Symphony, Tradewinds and Winslow Capital.
In total, Nuveen Investments managed approximately $145 billion of assets on
December 31, 2009.
FIND OUT HOW WE CAN HELP YOU.
To learn more about how the products and services of Nuveen Investments may be
able to help you meet your financial goals, talk to your financial advisor, or
call us at (800) 257-8787. Please read the information provided carefully before
you invest. Investors should consider the investment objective and policies,
risk considerations, charges and expenses of any investment carefully. Where
applicable, be sure to obtain a prospectus, which contains this and other
relevant information. To obtain 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/CEF
o Share prices
o Fund details
o Daily financial news
o Investor education
o Interactive planning tools
Distributed by
Nuveen Investments, LLC
333 West Wacker Drive
Chicago, IL 60606
www.nuveen.com
ESA-A-0110D
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.
(a) See Portfolio of Investments in Item 1.
(b) Not applicable.
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.
There have been no material changes to the procedures by which shareholders may
recommend nominees to the registrant's Board of Directors or Trustees
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.
(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 to
this filing.
(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: See
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: See 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 Arizona Dividend Advantage Municipal Fund 3
-----------------------------------------------------------
By (Signature and Title) /s/ Kevin J. McCarthy
----------------------------------------------
Kevin J. McCarthy
(Vice President and Secretary)
Date: April 9, 2010
-------------------------------------------------------------------
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: April 9, 2010
-------------------------------------------------------------------
By (Signature and Title) /s/ Stephen D. Foy
----------------------------------------------
Stephen D. Foy
Vice President and Controller
(principal financial officer)
Date: April 9, 2010
-------------------------------------------------------------------