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 811-7278
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Nuveen Arizona Premium Income Municipal Fund, Inc.
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(Exact name of registrant as specified in charter)
Nuveen Investments
333 West Wacker Drive
Chicago, IL 60606
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(Address of principal executive offices) (Zip code)
Jessica R. Droeger
Nuveen Investments
333 West Wacker Drive
Chicago, IL 60606
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(Name and address of agent for service)
Registrant's telephone number, including area code: (312) 917-7700
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Date of fiscal year end: July 31
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Date of reporting period: January 31
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Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
Nuveen Investments
Municipal Closed-End
Exchange-Traded
Funds
SEMIANNUAL REPORT January 31, 2004
NUVEEN ARIZONA PREMIUM INCOME MUNICIPAL FUND
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
Photo of: Man holding up small boy.
Photo of: 2 women with 2 girls looking at seashells.
DEPENDABLE,
TAX-FREE INCOME
BECAUSE
IT'S NOT WHAT YOU EARN,
IT'S WHAT YOU KEEP.(R)
Logo:
NUVEEN INVESTMENTS
FASTER INFORMATION
RECEIVE YOUR
NUVEEN FUND REPORT
ELECTRONICALLY
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taken directly to the report. Your Fund report can be viewed and saved on your
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Registering is easy and only takes a few minutes (see instructions at right).
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No, your e-mail address is strictly confidential and will not be used for
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WHAT IF I CHANGE MY MIND AND WANT TO RECEIVE INVESTOR MATERIALS THROUGH REGULAR
MAIL DELIVERY AGAIN?
If you decide you do not like receiving your reports electronically, it's a
simple process to go back to regular mail delivery.
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IF YOUR NUVEEN FUND DIVIDENDS AND STATEMENTS
COME FROM YOUR FINANCIAL ADVISOR ORBROKERAGE ACCOUNT,
FOLLOW THE STEPS OUTLINED BELOW:
1 Go to WWW.INVESTORDELIVERY.COM and follow the simple instructions, using
the address sheet that accompanied this report as a guide.
2 You'll be taken to a page with several options. Select the NEW
ENROLLMENT-CREATE screen and follow the simple instructions.
3 Click Submit. Confirm the information you just entered is correct, then
click Submit again.
4 You should get a confirmation e-mail within 24 hours. If you do not, go
back through these steps to make sure all the information is correct.
5 Use this same process if you need to change your registration information
or cancel internet viewing.
IF YOUR NUVEEN FUND DIVIDENDS AND STATEMENTS
COME DIRECTLY TO YOU FROM NUVEEN,
FOLLOW THE STEPS OUTLINED BELOW:
1 Go to WWW.NUVEEN.COM
2 Select ACCESS YOUR ACCOUNT. Select the E-REPORT ENROLLMENT section. Click
on Enrollment Today.
3 You'll be taken to a screen that asks for your Social Security number and
e-mail address. Fill in this information, then click Enroll.
4 You should get a confirmation e-mail within 24 hours. If you do not, go
back through these steps to make sure all the information is correct.
5 Use this same process if you need to change your registration information
or cancel internet viewing.
Logo:
NUVEEN Investments
Photo of: Timothy R. Schwertfeger
Timothy R. Schwertfeger
Chairman of the Board
Sidebar text: "We think that municipal bond investments like your Nuveen Fund
can be important building blocks in a portfolio designed to perform well through
a variety of market conditions."
Dear
SHAREHOLDER
I am very pleased to report that for the period ended January 31, 2004, your
Nuveen Fund continued to provide you with attractive monthly tax-free income.
Your Fund is managed with a value investing strategy that puts an emphasis on
finding securities that we think are undervalued or underrated. We believe there
are always some municipal bonds that the market is not properly valuing, and
that by using a consistent, research-oriented management approach we have the
opportunity to find them for your Fund.
In the current environment, many have begun to wonder whether interest rates
will soon start to rise, and whether that possibility should cause them to
adjust their holdings of fixed-income investments. We believe that by
constructing a carefully balanced portfolio with the help of a trusted
investment professional you may be able to reduce your overall investment risk
and give yourself a better chance to meet your financial goals. We think that
municipal bond investments like your Nuveen Fund can be important building
blocks in a portfolio designed to perform well through a variety of market
conditions.
Since 1898, Nuveen Investments has offered financial products and solutions that
incorporate careful research, diversification, and the application of
conservative risk-management principles. We are grateful that you have chosen us
as a partner as you pursue your financial goals. We look forward to continuing
to earn your trust in the months and years ahead.
Sincerely,
/s/ Timothy R. Schwertfeger
Timothy R. Schwertfeger
Chairman of the Board
March 15, 2004
1
Nuveen Arizona and Texas Municipal Closed-End Exchange-Traded Funds
(NAZ, NFZ, NKR, NXE, NTX)
Portfolio Managers'
COMMENTS
Portfolio managers Scott Romans and Dan Solender review national and state
economic and market conditions, key investment strategies, and the recent
performance of these Funds. Scott, who joined Nuveen in 2000, assumed portfolio
management responsibility for the four Arizona Funds in November 2003. With
eleven years of investment experience, including seven at Nuveen, Dan took over
management responsibility for NTX in November 2003.
WHAT FACTORS AFFECTED THE U.S. ECONOMY AND MUNICIPAL MARKET DURING THE REPORTING
PERIOD ENDED JANUARY 31, 2004?
During this period, the greatest influences on the general economy and the
municipal market continued to be historically low interest rates, a generally
modest rate of inflation and the overall pace of economic improvement. Since its
last credit easing in June 2003, the Federal Reserve has maintained the fed
funds rate at 1.0%, the lowest level since 1958. Inflation remained under
control, with the 1.1% annual change in the core CPI rate for 2003 representing
the smallest gain in more than 40 years. The gross domestic product growth rate
in 2003 was a respectable 3.1%, the fastest pace since 2000.
The combination of low interest rates, the absence of inflationary pressures,
and a slowly improving economy created generally favorable conditions for
municipal bonds. In 2003, municipal bond new issue supply reached $382 billion
nationally, a 7% increase over the previous new issue record set in 2002.
However, the pace of issuance slowed somewhat during the last half of 2003 and
the slow pace continued into the first month of 2004.
HOW WERE CONDITIONS IN ARIZONA AND TEXAS?
Arizona's economy continued to recover during this reporting period, with steady
job growth in the services industry, positive developments in the high-tech and
biotech sector, and increased defense-related manufacturing. In terms of total
jobs gained in 2003, Arizona ranked third in the nation (behind Florida and
Georgia). As of January 2004, Moody's rated Arizona's debt A1 with a negative
outlook, while Standard & Poor's rated the state AA with a negative outlook.
These negative outlooks reflected the fact that, despite the state's current
economic rebound, Arizona's surplus funds were depleted in 2002 and, according
to the rating agencies, budget imbalances could continue over the next several
fiscal years.
In Texas, low oil and gas inventories and rising prices gave a boost to the
state's energy industry, while employment in the financial services sector rose,
supported by a rapidly growing population and increased demand for mortgage
financing. As home to more than 200,000 military personnel, the state also
continued to benefit from new defense contracts and increased military activity.
Texas ranked fourth in the nation, behind Arizona, in jobs added during 2003.
Both Moody's and S&P maintained their Aa1/AA general obligation rating and
stable outlook for Texas.
HOW DID THESE FUNDS PERFORM OVER THE 12-MONTH PERIOD ENDED JANUARY 31, 2004?
Individual results for these Arizona and Texas Funds, as well as for relevant
benchmarks, are presented in the accompanying table.
TOTAL RETURN LEHMAN LIPPER
MARKET YIELD ON NAV TOTAL RETURN1 AVERAGE2
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1 YEAR 1 YEAR 1 YEAR
TAXABLE- ENDED ENDED ENDED
1/31/04 EQUIVALENT3 1/31/04 1/31/04 1/31/04
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NAZ 5.64% 8.23% 8.78% 6.19% 9.57%
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NFZ 5.35% 7.81% 9.82% 6.19% 9.57%
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NKR 5.79% 8.45% 9.46% 6.19% 9.57%
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NXE 5.70% 8.32% 9.56% 6.19% 9.57%
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NTX 6.34% 8.81% 11.06% 6.19% 9.57%
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Past performance is not predictive of future results.
For additional information, see the individual Performance Overview for your
Fund in this report.
1 The total annual returns on common share net asset value (NAV) for these
Nuveen Funds are compared with the total annual return of the Lehman Brothers
Municipal Bond Index, an unleveraged, unmanaged national index comprising a
broad range of investment-grade municipal bonds. Results for the Lehman index
do not reflect any expenses. You cannot invest directly in an index.
2 The total returns of these Nuveen Funds are compared with the average
annualized return of the 44 funds in the Lipper Other States Municipal Debt
Funds category. Fund and Lipper returns assume reinvestment of dividends. It
should be noted that the performance of the Lipper Other States category
represents the overall average of annual returns for funds from 10 different
states with a wide variety of economic and municipal market conditions.
3 The taxable-equivalent yield represents the yield that must be earned on a
fully taxable investment in order to equal the yield of the Nuveen Fund on an
after-tax basis. With respect to investments that generate qualified dividend
income that is taxable at a maximum rate of 15%, the taxable-equivalent yield
is lower. The taxable-equivalent yield is calculated using the current yield
and a federal income tax rate of 28% plus the applicable state income tax
rate. Because Texas has no state income tax, NTX's taxable-equivalent yield is
calculated using the current market yield and a federal income tax rate of
28%, while the combined federal and state tax rate used for Arizona is 31.5%.
The yields shown for Arizona highlight the added value of owning shares that
are exempt from state as well as federal income taxes.
2
For the 12 months ended January 31, 2004, the total returns of all five of the
Funds in this report outperformed the unleveraged national Lehman Brothers
Municipal Bond Index. The Funds' use of leverage was a primary factor that
influenced their total return performance relative to the Lehman index.
Leveraging can add volatility to a Fund's net asset value, share price and
income. However, during periods of low short-term interest rates and low or
falling long-term interest rates, such as the environment during much of this
12-month period, this strategy also can provide opportunities for net asset
value appreciation and enhanced income for common shareholders.
In addition to leverage, factors such as bond calls and the price movement of
specific sectors and holdings also had an impact on each Fund's relative
performance during this period. For example, NTX benefited from its holdings of
bonds backed by American Airlines, as airline-backed bonds rebounded strongly in
the last part of 2003. The Texas Fund was also helped by the fact that Texas
municipal bonds were, on average, the nation's best performers in 2003, as
ranked by Lehman.
Among the Arizona Funds, NAZ marked its 10-year anniversary in November 2002, a
point in a Fund's life cycle that often signals an increased potential for bond
calls from the portfolio. Through the year, NAZ held a relatively large group of
bonds that were priced to near-term call dates, which limited their upside price
potential in the period's generally declining interest rate environment. In
addition, as these bonds were called from NAZ's portfolio, the proceeds were
reinvested in the lower-yielding securities reflecting current market rates.
Both of these factors acted to restrain the performance of this Fund relative to
the other Arizona Funds in this report.
Over the 12-month period, increased investor demand for higher-yielding
securities caused the yield spreads between higher- and lower-rated bonds to
narrow as the market yields for all bonds generally fell. Since the yields of
lower-rated bonds generally fell more than higher-rated bonds, and the prices of
lower-rated bonds rose accordingly, some of the Funds' lower-rated holdings were
among their best performers. For example, all four Arizona Funds also held bonds
issued for Catholic Healthcare West, which showed improved financial performance
during the period and began a bond buyback to reduce its outstanding debt. In
addition, both NAZ and NXE held industrial development revenue bonds issued by
Yavapai County, which has been repurchasing its outstanding bonds as it converts
from a standard utility to a telecommunications company. In some cases, we took
advantage of these narrowed credit spreads to sell some of our positions in
lower-rated bonds at what we believed were very attractive prices.
WHAT ABOUT DIVIDENDS AND SHARE PRICES?
With short-term interest rates at historically low levels, the dividend-paying
capabilities of all these Funds benefited from their use of leverage. The extent
of this benefit is tied in part to the short-term rates the Funds pay their
MuniPreferred(R) shareholders. Low short-term rates can enable the Funds to
reduce the amount of income paid to MuniPreferred shareholders, which can leave
more earnings to support common share dividends. During the 12 months ended
January 2004, continued low short-term rates enabled us to implement two
dividend increases in NFZ and one in NTX. Leverage also
3
helped to support the dividend of NAZ, which as of January 31, 2004, had offered
shareholders 44 consecutive months of steady or increasing dividends. NKR and
NXE, which were introduced in 2002, had provided 21 and 15 months, respectively,
of stable, attractive dividends.
Each Fund seeks to pay a stable dividend at a rate that reflects the Fund's past
results and projected future performance. A 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 the 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 net asset value (NAV).
Conversely, if the 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, 2004, all of the Funds in this
report had positive UNII.
Over the 12-month period ended January 31, 2004, the share prices of these Funds
generally performed well, with most ending the period higher than they began.
The lone exception was NKR, which saw its share price decline. As of January 31,
2004, NAZ and NFZ were trading at premiums, while NKR, NXE and NTX were trading
at discounts to their NAV (see charts on individual Performance Overview pages).
WHAT KEY STRATEGIES WERE USED TO MANAGE THESE FUNDS DURING THE PERIOD ENDED
JANUARY 31, 2004?
Over this reporting period, a major focus continued to be management of the
Funds' durations4 in an attempt to make the interest rate risk more consistent
across funds. Interest rate risk is the risk that the value of a Fund's
portfolio will decline when market interest rates rise (since bond prices move
in the opposite direction of interest rates). The longer the duration of a
Fund's portfolio, the greater its interest rate risk. Overall, our goal was to
properly calibrate each Fund's interest rate risk. In NAZ, this meant working to
extend the Fund's duration, as we reinvested proceeds from a number of bond
calls and the sale of issues with relatively short effective maturities into
bonds with longer maturities.
In the other Funds, our objective was to shorten the Funds' durations.
Generally, we focused on selling 30-year bonds and replacing them with bonds in
the 20-year maturity range and with 8 to 10 years of call protection. In many
cases, we believed that bonds in this part of the yield curve offered yields
similar to those of longer-term bonds but had better total return potential.
Although the heavy volume of municipal issuance during 2003 provided some
opportunities to make trades that we believed would benefit the Funds, in recent
months we have seen supply soften. This was true in both Arizona and Texas,
where issuance during August 2003-January 2004
4 Duration is a measure of a Fund's NAV volatility in reaction to interest rate
movements. Fund duration, also known as leverage-adjusted duration, takes into
account the leveraging process for a Fund and therefore is generally longer
than the duration of the actual portfolio of individual bonds that make up the
Fund. References to duration in this commentary are intended to indicate Fund
duration unless otherwise noted.
4
declined 17% and 10%, respectively, from levels of the previous six months. Both
markets presented challenges in finding issues with the types of structures we
prefer and the potential to add value. In Texas, our focus was on purchasing
higher quality issues, particularly in the general obligation category,
reflecting the increased issuance in this sector. For the Arizona Funds, we
looked for bonds that had the potential to enhance the Fund's income while
maintaining diversity and overall credit quality. We found the majority of our
yield opportunities in the healthcare, utilities, and-- to a lesser
degree--higher education sectors.
HOW WERE THE FUNDS POSITIONED IN TERMS OF CREDIT QUALITY AND BOND CALLS AS OF
JANUARY 31, 2004?
We believe that, given the current geopolitical and economic
climate, maintaining strong credit quality is a vital requirement. As of January
31, 2004, all of these Funds offered excellent credit quality, with allocations
of bonds rated AAA/U.S. guaranteed and AA ranging from 75% to 87%.
As of January 31, 2004, potential call exposure over the 2004 - 2006 period
ranged from zero in NKR and NXE to 14% in NTX. The actual number of bond calls
these Funds will face in the coming months will depend largely on current and
anticipated changes in market interest rates.
In general, we believe that these Funds can continue to serve as attractive
sources of tax-free income, while simultaneously offering the potential for
portfolio diversification. In our opinion, they represent a quality component
within a well-balanced core investment portfolio that can continue to benefit
shareholders over time.
5
Nuveen Arizona Premium Income Municipal Fund, Inc.
Performance
OVERVIEW As of January 31, 2004
NAZ
Pie Chart:
CREDIT QUALITY
AAA/U.S. Guaranteed 65%
AA 14%
A 3%
BBB 13%
NR 1%
BB or Lower 4%
PORTFOLIO STATISTICS
--------------------------------------------------
Share Price $16.27
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Common Share Net Asset Value $14.42
--------------------------------------------------
Premium/(Discount) to NAV 12.83%
--------------------------------------------------
Market Yield 5.64%
--------------------------------------------------
Taxable-Equivalent Yield
(Federal Income Tax Rate)1 7.83%
--------------------------------------------------
Taxable-Equivalent Yield
(Federal and State Income Tax Rate)1 8.23%
--------------------------------------------------
Net Assets Applicable to
Common Shares ($000) $64,041
--------------------------------------------------
Average Effective Maturity (Years) 18.37
--------------------------------------------------
Leverage-Adjusted Duration 9.00
--------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN (Inception 11/19/92)
--------------------------------------------------
On Share Price On NAV
--------------------------------------------------
1-Year 10.58% 8.78%
--------------------------------------------------
5-Year 5.73% 4.48%
--------------------------------------------------
10-Year 6.55% 5.29%
--------------------------------------------------
TOP FIVE SECTORS (as a % of total investments)
--------------------------------------------------
Tax Obligation/Limited 31%
--------------------------------------------------
Healthcare 14%
--------------------------------------------------
U.S. Guaranteed 11%
--------------------------------------------------
Education and Civic Organizations 10%
--------------------------------------------------
Utilities 8%
--------------------------------------------------
Bar Chart:
2003-2004 MONTHLY TAX-FREE DIVIDENDS PER SHARE
Feb 0.0765
Mar 0.0765
Apr 0.0765
May 0.0765
Jun 0.0765
Jul 0.0765
Aug 0.0765
Sep 0.0765
Oct 0.0765
Nov 0.0765
Dec 0.0765
Jan 0.0765
Line Chart:
SHARE PRICE PERFORMANCE
2/1/03 15.6
16.18
15.87
15.89
15.95
16
16.11
16.11
16.12
16.08
15.85
15.59
15.37
15.84
16
15.9
16.56
16.52
16.45
16.7
16.58
16.9
16.62
14.96
15.03
14.9
14.76
14.77
14.8
14.66
14.71
14.86
15.27
15.18
15.16
15.1
15.05
15.24
15.39
15.41
15.49
15.61
16.1
16.06
16.17
16.14
1/31/04 16.27
Weekly Closing Price
Past performance is not predictive of future results.
1 Taxable-equivalent yield represents the yield that must be earned on a fully
taxable investment in order to equal the yield of the Nuveen Fund on an
after-tax basis. With respect to investments that generate qualified dividend
income that is taxable at a maximum rate of 15%, the taxable-equivalent yield
is lower. The taxable-equivalent yield is calculated using the current market
yield and a federal income tax rate of 28%. The rate shown for federal and
state highlights the added value of owning shares that are also exempt from
state income taxes. It is based on a combined federal and state income tax
rate of 31.5%.
6
Nuveen Arizona Dividend Advantage Municipal Fund
Performance
OVERVIEW As of January 31, 2004
NFZ
Pie Chart:
CREDIT QUALITY
AAA/U.S. Guaranteed 55%
AA 20%
A 11%
BBB 13%
BB or Lower 1%
PORTFOLIO STATISTICS
--------------------------------------------------
Share Price $17.17
--------------------------------------------------
Common Share Net Asset Value $15.45
--------------------------------------------------
Premium/(Discount) to NAV 11.13%
--------------------------------------------------
Market Yield 5.35%
--------------------------------------------------
Taxable-Equivalent Yield
(Federal Income Tax Rate)1 7.43%
--------------------------------------------------
Taxable-Equivalent Yield
(Federal and State Income Tax Rate)1 7.81%
--------------------------------------------------
Net Assets Applicable to
Common Shares ($000) $23,834
--------------------------------------------------
Average Effective Maturity (Years) 19.20
--------------------------------------------------
Leverage-Adjusted Duration 9.56
--------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN (Inception 1/30/01)
--------------------------------------------------
ON SHARE PRICE ON NAV
--------------------------------------------------
1-Year 19.30% 9.82%
--------------------------------------------------
Since Inception 10.67% 8.78%
--------------------------------------------------
TOP FIVE SECTORS (as a % of total investments)
--------------------------------------------------
Tax Obligation/Limited 29%
--------------------------------------------------
Utilities 14%
--------------------------------------------------
Housing/Multifamily 13%
--------------------------------------------------
U.S. Guaranteed 11%
--------------------------------------------------
Education and Civic Organizations 10%
--------------------------------------------------
Bar Chart:
2003-2004 MONTHLY TAX-FREE DIVIDENDS PER SHARE2
Feb 0.073
Mar 0.0755
Apr 0.0755
May 0.0755
Jun 0.0755
Jul 0.0755
Aug 0.0755
Sep 0.0755
Oct 0.0755
Nov 0.0755
Dec 0.0765
Jan 0.0765
Line Chart:
SHARE PRICE PERFORMANCE
2/1/03 15.28
15.28
15.24
15.5
15.65
16.19
16.23
16.09
15.8
15.53
15.52
15.56
15.38
15.65
16.01
16.3
16.25
16.57
16.5
16.54
16.79
16.88
16.52
15.1
15.12
15.14
15.12
15.14
15.05
14.95
14.91
14.78
14.66
14.67
14.81
14.9
15.04
15.49
15.51
15.64
15.65
16.6
16.67
16.58
16.49
16.8
1/31/04 17.17
Weekly Closing Price
Past performance is not predictive of future results.
1 Taxable-equivalent yield represents the yield that must be earned on a fully
taxable investment in order to equal the yield of the Nuveen Fund on an
after-tax basis. With respect to investments that generate qualified dividend
income that is taxable at a maximum rate of 15%, the taxable-equivalent yield
is lower. The taxable-equivalent yield is calculated using the current market
yield and a federal income tax rate of 28%. The rate shown for federal and
state highlights the added value of owning shares that are also exempt from
state income taxes. It is based on a combined federal and state income tax
rate of 31.5%.
2 The Fund also paid shareholders a net ordinary income distribution in December
2003 of $0.0418 per share.
7
Nuveen Arizona Dividend Advantage Municipal Fund 2
Performance
OVERVIEW As of January 31, 2004
NKR
Pie Chart:
CREDIT QUALITY
AAA/U.S. Guaranteed 75%
AA 12%
A 4%
BBB 8%
BB or Lower 1%
PORTFOLIO STATISTICS
--------------------------------------------------
Share Price $14.92
--------------------------------------------------
Common Share Net Asset Value $15.52
--------------------------------------------------
Premium/(Discount) to NAV -3.87%
--------------------------------------------------
Market Yield 5.79%
--------------------------------------------------
Taxable-Equivalent Yield
(Federal Income Tax Rate)1 8.04%
--------------------------------------------------
Taxable-Equivalent Yield
(Federal and State Income Tax Rate)1 8.45%
--------------------------------------------------
Net Assets Applicable to
Common Shares ($000) $37,543
--------------------------------------------------
Average Effective Maturity (Years) 17.22
--------------------------------------------------
Leverage-Adjusted Duration 10.42
--------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN (Inception 3/25/02)
--------------------------------------------------
ON SHARE PRICE ON NAV
--------------------------------------------------
1-Year 1.98% 9.46%
--------------------------------------------------
Since Inception 5.45% 10.36%
--------------------------------------------------
TOP FIVE SECTORS (as a % of total investments)
--------------------------------------------------
Tax Obligation/General 32%
--------------------------------------------------
Tax Obligation/Limited 26%
--------------------------------------------------
Education and Civic Organizations 8%
--------------------------------------------------
Healthcare 7%
--------------------------------------------------
Utilities 6%
--------------------------------------------------
Bar Chart:
2003-2004 MONTHLY TAX-FREE DIVIDENDS PER SHARE2
Feb 0.072
Mar 0.072
Apr 0.072
May 0.072
Jun 0.072
Jul 0.072
Aug 0.072
Sep 0.072
Oct 0.072
Nov 0.072
Dec 0.072
Jan 0.072
Line Chart:
SHARE PRICE PERFORMANCE
2/1/03 15.55
15.3
15.09
15.15
15.34
15.21
15.26
15.1
15.1
15.23
15.31
15.32
15.12
15.21
15.44
15.86
15.8
16.08
15.83
16.15
16.18
16.2
15.76
14.05
14.32
14.27
14.09
14.09
14.3
14.43
14.39
14.3
14.36
14.3
14.2
14.5
14.4
14.38
14.4
14.24
14.35
14.43
14.76
14.74
15.1
15.23
1/31/04 14.92
Weekly Closing Price
Past performance is not predictive of future results.
1 Taxable-equivalent yield represents the yield that must be earned on a fully
taxable investment in order to equal the yield of the Nuveen Fund on an
after-tax basis. With respect to investments that generate qualified dividend
income that is taxable at a maximum rate of 15%, the taxable-equivalent yield
is lower. The taxable-equivalent yield is calculated using the current market
yield and a federal income tax rate of 28%. The rate shown for federal and
state highlights the added value of owning shares that are also exempt from
state income taxes. It is based on a combined federal and state income tax
rate of 31.5%.
2 The Fund also paid shareholders capital gains and net ordinary income
distributions in December 2003 of $0.0441 per share.
8
Nuveen Arizona Dividend Advantage Municipal Fund 3
Performance
OVERVIEW As of January 31, 2004
NXE
Pie Chart:
CREDIT QUALITY
AAA/U.S. Guaranteed 70%
AA 14%
A 3%
BBB 11%
BB or Lower 2%
PORTFOLIO STATISTICS
--------------------------------------------------
Share Price $14.10
--------------------------------------------------
Common Share Net Asset Value $14.40
--------------------------------------------------
Premium/(Discount) to NAV -2.08%
--------------------------------------------------
Market Yield 5.70%
--------------------------------------------------
Taxable-Equivalent Yield
(Federal Income Tax Rate)1 7.92%
--------------------------------------------------
Taxable-Equivalent Yield
(Federal and State Income Tax Rate)1 8.32%
--------------------------------------------------
Net Assets Applicable to
Common Shares ($000) $44,163
--------------------------------------------------
Average Effective Maturity (Years) 19.38
--------------------------------------------------
Leverage-Adjusted Duration 11.07
--------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN (Inception 9/25/02)
--------------------------------------------------
ON SHARE PRICE ON NAV
--------------------------------------------------
1-Year 10.56% 9.56%
--------------------------------------------------
Since Inception 0.83% 5.79%
--------------------------------------------------
TOP FIVE SECTORS (as a % of total investments)
--------------------------------------------------
Tax Obligation/Limited 20%
--------------------------------------------------
Tax Obligation/General 18%
--------------------------------------------------
Housing/Multifamily 13%
--------------------------------------------------
Education and Civic Organizations 13%
--------------------------------------------------
Healthcare 11%
--------------------------------------------------
Bar Chart:
2003-2004 MONTHLY TAX-FREE DIVIDENDS PER SHARE
Feb 0.067
Mar 0.067
Apr 0.067
May 0.067
Jun 0.067
Jul 0.067
Aug 0.067
Sep 0.067
Oct 0.067
Nov 0.067
Dec 0.067
Jan 0.067
Line Chart:
SHARE PRICE PERFORMANCE
2/1/03 13.52
13.85
13.75
13.85
14
14.01
14.02
13.85
13.8
13.65
13.4
13.65
13.93
14.01
14.01
14.18
14.11
14.26
14.05
14.29
14.7
14.73
14.25
13.96
13.5
13.57
13.13
13.26
13.25
13.05
13.1
13.19
13.2
13.03
13.14
13.21
13.09
13.1
13.34
13.21
13.3
13.4
13.45
13.65
14.19
14.2
1/31/04 14.1
Weekly Closing Price
Past performance is not predictive of future results.
1 Taxable-equivalent yield represents the yield that must be earned on a fully
taxable investment in order to equal the yield of the Nuveen Fund on an
after-tax basis. With respect to investments that generate qualified dividend
income that is taxable at a maximum rate of 15%, the taxable-equivalent yield
is lower. The taxable-equivalent yield is calculated using the current market
yield and a federal income tax rate of 28%. The rate shown for federal and
state highlights the added value of owning shares that are also exempt from
state income taxes. It is based on a combined federal and state income tax
rate of 31.5%.
9
Nuveen Texas Quality Income Municipal Fund
Performance
OVERVIEW As of January 31, 2004
NTX
Pie Chart:
CREDIT QUALITY
AAA/U.S. Guaranteed 65%
AA 11%
A 9%
BBB 14%
BB or Lower 1%
PORTFOLIO STATISTICS
--------------------------------------------------
Share Price $15.15
--------------------------------------------------
Common Share Net Asset Value $15.54
--------------------------------------------------
Premium/(Discount) to NAV -2.51%
--------------------------------------------------
Market Yield 6.34%
--------------------------------------------------
Taxable-Equivalent Yield
(Federal Income Tax Rate)1 8.81%
--------------------------------------------------
Net Assets Applicable to
Common Shares ($000) $147,187
--------------------------------------------------
Average Effective Maturity (Years) 20.12
--------------------------------------------------
Leverage-Adjusted Duration 8.94
--------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN (Inception 10/17/91)
--------------------------------------------------
ON SHARE PRICE ON NAV
--------------------------------------------------
1-Year 11.98% 11.06%
--------------------------------------------------
5-Year 6.12% 5.92%
--------------------------------------------------
10-Year 6.39% 6.35%
--------------------------------------------------
TOP FIVE SECTORS (as a % of total investments)
--------------------------------------------------
Tax Obligation/General 24%
--------------------------------------------------
Healthcare 14%
--------------------------------------------------
Tax Obligation/Limited 9%
--------------------------------------------------
Water and Sewer 8%
--------------------------------------------------
Utilities 7%
--------------------------------------------------
Bar Chart:
2003-2004 MONTHLY TAX-FREE DIVIDENDS PER SHARE
Feb 0.079
Mar 0.08
Apr 0.08
May 0.08
Jun 0.08
Jul 0.08
Aug 0.08
Sep 0.08
Oct 0.08
Nov 0.08
Dec 0.08
Jan 0.08
Line Chart:
SHARE PRICE PERFORMANCE
2/1/03 14.43
14.51
14.29
14.39
14.55
14.9
14.93
14.74
14.82
14.94
14.9
15.09
15.09
15.05
15.17
15.34
15.38
15.54
15.53
15.25
15.44
15.7
15.17
14.52
14.8
14.45
14.64
14.35
14.2
14.23
14.35
14.4
14.22
14.27
14.34
14.4
14.56
14.66
14.68
14.82
14.98
15.02
15.52
15.34
15.3
15.55
1/31/04 15.15
Weekly Closing Price
Past performance is not predictive of future results.
1 Taxable-equivalent yield represents the yield that must be earned on a
fully taxable investment in order to equal the yield of the Nuveen Fund on
an after-tax basis. With respect to investments that generate qualified
dividend income that is taxable at a maximum rate of 15%, the
taxable-equivalent yield is lower. The taxable-equivalent yield is
calculated using the current market yield and a federal income tax rate of
28%.
10
Shareholder
MEETING REPORT
The Shareholder Meeting was held in Chicago, Illinois, on October 22, 2003.
NAZ NFZ
------------------------------------------------------------------------------------------------------------------------------------
APPROVAL OF THE BOARD MEMBERS WAS REACHED AS FOLLOWS:
Common and Common and
MuniPreferred MuniPreferred MuniPreferred MuniPreferred
shares voting shares voting shares voting shares voting
together together together together
as a class as a class as a class as a class
====================================================================================================================================
William E. Bennett
For 3,795,380 -- 1,508,925 --
Withhold 128,560 -- 3,600 --
------------------------------------------------------------------------------------------------------------------------------------
Total 3,923,940 -- 1,512,525 --
====================================================================================================================================
Robert P. Bremner
For 3,795,380 -- 1,508,925 --
Withhold 128,560 -- 3,600 --
------------------------------------------------------------------------------------------------------------------------------------
Total 3,923,940 -- 1,512,525 --
====================================================================================================================================
Lawrence H. Brown
For 3,795,380 -- 1,508,925 --
Withhold 128,560 -- 3,600 --
------------------------------------------------------------------------------------------------------------------------------------
Total 3,923,940 -- 1,512,525 --
====================================================================================================================================
Jack B. Evans
For 3,795,380 -- 1,508,925 --
Withhold 128,560 -- 3,600 --
------------------------------------------------------------------------------------------------------------------------------------
Total 3,923,940 -- 1,512,525 --
====================================================================================================================================
Anne E. Impellizzeri
For 3,795,380 -- 1,508,925 --
Withhold 128,560 -- 3,600 --
------------------------------------------------------------------------------------------------------------------------------------
Total 3,923,940 -- 1,512,525 --
====================================================================================================================================
William L. Kissick
For 3,795,380 -- 1,508,925 --
Withhold 128,560 -- 3,600 --
------------------------------------------------------------------------------------------------------------------------------------
Total 3,923,940 -- 1,512,525 --
====================================================================================================================================
Thomas E. Leafstrand
For 3,795,380 -- 1,508,925 --
Withhold 128,560 -- 3,600 --
------------------------------------------------------------------------------------------------------------------------------------
Total 3,923,940 -- 1,512,525 --
====================================================================================================================================
Peter R. Sawers
For 3,795,380 -- 1,508,925 --
Withhold 128,560 -- 3,600 --
------------------------------------------------------------------------------------------------------------------------------------
Total 3,923,940 -- 1,512,525 --
====================================================================================================================================
11
Shareholder
MEETING REPORT (continued)
NAZ NFZ
------------------------------------------------------------------------------------------------------------------------------------
APPROVAL OF THE BOARD MEMBERS
WAS REACHED AS FOLLOWS: (CONTINUED)
Common and Common and
MuniPreferred MuniPreferred MuniPreferred MuniPreferred
shares voting shares voting shares voting shares voting
together together together together
as a class as a class as a class as a class
====================================================================================================================================
William J. Schneider
For -- 1,117 -- 432
Withhold -- 4 -- --
------------------------------------------------------------------------------------------------------------------------------------
Total -- 1,121 -- 432
====================================================================================================================================
Timothy R. Schwertfeger
For -- 1,117 -- 432
Withhold -- 4 -- --
------------------------------------------------------------------------------------------------------------------------------------
Total -- 1,121 -- 432
====================================================================================================================================
Judith M. Stockdale
For 3,795,380 -- 1,508,925 --
Withhold 128,560 -- 3,600 --
------------------------------------------------------------------------------------------------------------------------------------
Total 3,923,940 -- 1,512,525 --
====================================================================================================================================
Sheila W. Wellington
For 3,795,380 -- 1,508,925 --
Withhold 128,560 -- 3,600 --
------------------------------------------------------------------------------------------------------------------------------------
Total 3,923,940 -- 1,512,525 --
====================================================================================================================================
12
NKR NXE
------------------------------------------------------------------------------------------------------------------------------------
APPROVAL OF THE BOARD MEMBERS
WAS REACHED AS FOLLOWS:
Common and Common and
MuniPreferred MuniPreferred MuniPreferred MuniPreferred
shares voting shares voting shares voting shares voting
together together together together
as a class as a class as a class as a class
====================================================================================================================================
William E. Bennett
For 2,315,969 -- 3,018,535 --
Withhold 83,133 -- 5,630 --
------------------------------------------------------------------------------------------------------------------------------------
Total 2,399,102 -- 3,024,165 --
====================================================================================================================================
Robert P. Bremner
For 2,315,969 -- 3,018,535 --
Withhold 83,133 -- 5,630 --
------------------------------------------------------------------------------------------------------------------------------------
Total 2,399,102 -- 3,024,165 --
====================================================================================================================================
Lawrence H. Brown
For 2,312,969 -- 3,018,535 --
Withhold 86,133 -- 5,630 --
------------------------------------------------------------------------------------------------------------------------------------
Total 2,399,102 -- 3,024,165 --
====================================================================================================================================
Jack B. Evans
For 2,311,779 -- 3,018,535 --
Withhold 87,323 -- 5,630 --
------------------------------------------------------------------------------------------------------------------------------------
Total 2,399,102 -- 3,024,165 --
====================================================================================================================================
Anne E. Impellizzeri
For 2,312,969 -- 3,018,535 --
Withhold 86,133 -- 5,630 --
------------------------------------------------------------------------------------------------------------------------------------
Total 2,399,102 -- 3,024,165 --
====================================================================================================================================
William L. Kissick
For 2,312,969 -- 3,018,535 --
Withhold 86,133 -- 5,630 --
------------------------------------------------------------------------------------------------------------------------------------
Total 2,399,102 -- 3,024,165 --
====================================================================================================================================
Thomas E. Leafstrand
For 2,308,779 -- 3,018,535 --
Withhold 90,323 -- 5,630 --
------------------------------------------------------------------------------------------------------------------------------------
Total 2,399,102 -- 3,024,165 --
====================================================================================================================================
Peter R. Sawers
For 2,312,969 -- 3,018,535 --
Withhold 86,133 -- 5,630 --
------------------------------------------------------------------------------------------------------------------------------------
Total 2,399,102 -- 3,024,165 --
====================================================================================================================================
13
Shareholder
MEETING REPORT (continued)
NKR NXE
------------------------------------------------------------------------------------------------------------------------------------
APPROVAL OF THE BOARD MEMBERS
WAS REACHED AS FOLLOWS: (CONTINUED)
Common and Common and
MuniPreferred MuniPreferred MuniPreferred MuniPreferred
shares voting shares voting shares voting shares voting
together together together together
as a class as a class as a class as a class
====================================================================================================================================
William J. Schneider
For -- 684 -- 847
Withhold -- 3 -- --
------------------------------------------------------------------------------------------------------------------------------------
Total -- 687 -- 847
====================================================================================================================================
Timothy R. Schwertfeger
For -- 684 -- 847
Withhold -- 3 -- --
------------------------------------------------------------------------------------------------------------------------------------
Total -- 687 -- 847
====================================================================================================================================
Judith M. Stockdale
For 2,311,779 -- 3,018,535 --
Withhold 87,323 -- 5,630 --
------------------------------------------------------------------------------------------------------------------------------------
Total 2,399,102 -- 3,024,165 --
====================================================================================================================================
Sheila W. Wellington
For 2,301,279 -- 3,018,535 --
Withhold 97,823 -- 5,630 --
------------------------------------------------------------------------------------------------------------------------------------
Total 2,399,102 -- 3,024,165 --
====================================================================================================================================
14
NTX
------------------------------------------------------------------------------------------------------------------------------------
APPROVAL OF THE BOARD MEMBERS
WAS REACHED AS FOLLOWS:
Common and
MuniPreferred MuniPreferred
shares voting shares voting
together together
as a class as a class
====================================================================================================================================
William E. Bennett
For 8,612,314 --
Withhold 87,608 --
------------------------------------------------------------------------------------------------------------------------------------
Total 8,699,922 --
====================================================================================================================================
Robert P. Bremner
For 8,607,546 --
Withhold 92,376 --
------------------------------------------------------------------------------------------------------------------------------------
Total 8,699,922 --
====================================================================================================================================
Lawrence H. Brown
For 8,610,846 --
Withhold 89,076 --
------------------------------------------------------------------------------------------------------------------------------------
Total 8,699,922 --
====================================================================================================================================
Jack B. Evans
For 8,612,646 --
Withhold 87,276 --
------------------------------------------------------------------------------------------------------------------------------------
Total 8,699,922 --
====================================================================================================================================
Anne E. Impellizzeri
For 8,609,473 --
Withhold 90,449 --
------------------------------------------------------------------------------------------------------------------------------------
Total 8,699,922 --
====================================================================================================================================
William L. Kissick
For 8,611,273 --
Withhold 88,649 --
------------------------------------------------------------------------------------------------------------------------------------
Total 8,699,922 --
====================================================================================================================================
Thomas E. Leafstrand
For 8,611,646 --
Withhold 88,276 --
------------------------------------------------------------------------------------------------------------------------------------
Total 8,699,922 --
====================================================================================================================================
Peter R. Sawers
For 8,611,846 --
Withhold 88,076 --
------------------------------------------------------------------------------------------------------------------------------------
Total 8,699,922 --
====================================================================================================================================
15
Shareholder
MEETING REPORT (continued)
NTX
------------------------------------------------------------------------------------------------------------------------------------
APPROVAL OF THE BOARD MEMBERS
WAS REACHED AS FOLLOWS: (CONTINUED)
Common and
MuniPreferred MuniPreferred
shares voting shares voting
together together
as a class as a class
====================================================================================================================================
William J. Schneider
For -- 2,479
Withhold -- 17
------------------------------------------------------------------------------------------------------------------------------------
Total -- 2,496
====================================================================================================================================
Timothy R. Schwertfeger
For -- 2,479
Withhold -- 17
------------------------------------------------------------------------------------------------------------------------------------
Total -- 2,496
====================================================================================================================================
Judith M. Stockdale
For 8,609,473 --
Withhold 90,449 --
------------------------------------------------------------------------------------------------------------------------------------
Total 8,699,922 --
====================================================================================================================================
Sheila W. Wellington
For 8,608,696 --
Withhold 91,226 --
------------------------------------------------------------------------------------------------------------------------------------
Total 8,699,922 --
====================================================================================================================================
16
Nuveen Arizona Premium Income Municipal Fund, Inc. (NAZ)
Portfolio of
INVESTMENTS January 31, 2004 (Unaudited)
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES - 1.4%
$ 965 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 5/12 at 100.00 BBB $ 922,482
Asset-Backed Refunding Bonds, Series 2002, 5.375%, 5/15/33
------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 14.6%
1,000 Arizona State University, Certificates of Participation, 7/12 at 100.00 AAA 1,094,070
Series 2002, 5.375%, 7/01/19 - MBIA Insured
1,000 Arizona State University, System Revenue Bonds, 7/12 at 100.00 AAA 1,035,750
Series 2002, 5.000%, 7/01/25 - FGIC Insured
1,750 Arizona Student Loan Acquisition Authority, Student Loan 5/04 at 102.00 Aa1 1,806,858
Revenue Bonds, Subordinated Fixed Rate, Series 1994B,
6.600%, 5/01/10 (Alternative Minimum Tax)
1,250 Glendale Industrial Development Authority, Arizona, 5/11 at 101.00 BBB+ 1,314,300
Revenue Bonds, Midwestern University, Series 2001A,
5.875%, 5/15/31
1,050 Northern Arizona University, System Revenue Bonds, 6/12 at 100.00 AAA 1,080,062
Series 2002, 5.000%, 6/01/34 - FGIC Insured
1,400 Southern Arizona Capital Facilities Financing Corporation, 9/12 at 100.00 AAA 1,456,938
Student Housing Revenue Bonds, La Aldea Project at the
University of Arizona, Series 2002, 5.000%, 9/01/23 -
MBIA Insured
1,500 Tempe Industrial Development Authority, Arizona, Lease 7/13 at 100.00 AAA 1,547,355
Revenue Bonds, Arizona State University Foundation Project,
Series 2003, 5.000%, 7/01/34 - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE - 20.5%
2,000 Arizona Health Facilities Authority, Hospital System 11/09 at 100.00 Ba2 1,741,280
Revenue Bonds, Phoenix Children's Hospital, Series 1999A,
6.125%, 11/15/22
2,125 Arizona Health Facilities Authority, Hospital System 12/10 at 102.00 BBB 2,297,635
Revenue Bonds, John C. Lincoln Health Network,
Series 2000, 7.000%, 12/01/25
800 Arizona Health Facilities Authority, Hospital Revenue Bonds, 7/10 at 101.00 Baa1 889,216
Catholic Healthcare West, Series 1999A, 6.625%, 7/01/20
3,000 Mesa Industrial Development Authority, Arizona, Revenue 1/10 at 101.00 AAA 3,284,790
Bonds, Discovery Health System, Series 1999A,
5.750%, 1/01/25 - MBIA Insured
515 Puerto Rico Industrial, Tourist, Educational, Medical 11/10 at 101.00 AA 588,866
and Environmental Control Facilities Financing Authority,
Hospital Revenue Bonds, Hospital de la Concepcion Project,
Series 2000A, 6.375%, 11/15/15
1,500 Scottsdale Industrial Development Authority, Arizona, 12/11 at 101.00 A3 1,564,065
Hospital Revenue Bonds, Scottsdale Healthcare, Series 2001,
5.800%, 12/01/31
2,000 University Medical Center Corporation Tucson, Arizona, 7/04 at 100.00 AAA 2,027,300
Hospital Revenue Refunding Bonds, Series 1992,
6.250%, 7/01/16 - MBIA Insured
1,055 Industrial Development Authority, Winslow, Arizona, 6/08 at 101.00 N/R 743,100
Hospital Revenue Bonds, Winslow Memorial Hospital
Project, Series 1998, 5.500%, 6/01/22
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 11.2%
2,011 Glendale Industrial Development Authority, Arizona, GNMA 10/10 at 105.00 Aaa 2,215,237
Collateralized Mortgage Loan Multifamily Housing
Revenue Bonds, Maridale Apartments Project, Series
2000A, 7.500%, 10/20/35
400 Phoenix Industrial Development Authority, Arizona, GNMA 6/11 at 102.00 Aaa 423,644
Collateralized Multifamily Housing Revenue Bonds,
Campaigne Place on Jackson Project, Series 2001,
5.700%, 6/20/31 (Alternative Minimum Tax)
1,000 Phoenix Industrial Development Authority, Arizona, 9/10 at 103.00 Aaa 1,089,920
GNMA Collateralized Mortgage Loan Multifamily Housing
Revenue Bonds, Camelback Crossings Apartments Project,
Series 2000, 6.350%, 9/20/35
3,215 Tucson Industrial Development Authority, Arizona, Senior 7/10 at 101.00 AA 3,448,988
Living Facilities Revenue Bonds, Christian Care Project,
Series 2000A, 5.625%, 7/01/20 - RAAI Insured
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 0.1%
75 Phoenix Industrial Development Authority, Arizona, Statewide 6/05 at 102.00 AAA 79,107
Single Family Mortgage Revenue Bonds, Series 1995,
6.150%, 6/01/08 (Alternative Minimum Tax)
17
Nuveen Arizona Premium Income Municipal Fund, Inc. (NAZ) (continued)
Portfolio of INVESTMENTS January 31, 2004 (Unaudited)
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
INDUSTRIALS - 3.3%
$ 2,000 Yavapai County Industrial Development Authority, Arizona, No Opt. Call BBB $ 2,093,200
Solid Waste Disposal Revenue Bonds, Waste Management
Inc. Project, Series 2003B, 4.450%, 3/01/28 (Alternative
Minimum Tax) (Mandatory put 3/01/08)
------------------------------------------------------------------------------------------------------------------------------------
LONG-TERM CARE - 0.6%
345 Mohave County Industrial Development Authority, Arizona, 5/06 at 103.00 AAA 365,321
GNMA Collateralized Health Care Revenue Refunding Bonds,
Chris Ridge and Silver Ridge Village Projects, Series 1996,
6.375%, 11/01/31
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 7.6%
3,000 Mesa, Arizona, General Obligation Bonds, Series 1999, 7/09 at 100.00 AAA 3,183,630
5.000%, 7/01/18 - FGIC Insured
Puerto Rico Public Improvement, General Obligation Bonds,
Series 2002A:
500 5.500%, 7/01/19 - FGIC Insured No Opt. Call AAA 582,840
500 5.375%, 7/01/28 7/11 at 100.00 A- 521,645
585 Tempe Union High School District 213, Maricopa County, 7/04 at 101.00 AAA 602,170
Arizona, General Obligation Bonds, Series 1994,
6.000%, 7/01/12 - FGIC Insured
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 43.9%
1,985 Arizona School Facilities Board, State School Improvement 7/13 at 100.00 AAA 2,106,621
Revenue Bonds, Series 2003, 5.000%, 7/01/21
Arizona Tourism and Sports Authority, Tax Revenue Bonds,
Multipurpose Stadium Facility Project, Series 2003A:
3,000 5.375%, 7/01/20 - MBIA Insured 7/13 at 100.00 Aaa 3,299,970
1,000 5.375%, 7/01/21 - MBIA Insured 7/13 at 100.00 Aaa 1,095,080
Bullhead City, Arizona, Parkway District Special Assessment
Improvement Bonds, Series 1993:
830 6.100%, 1/01/08 7/04 at 102.00 Baa2 857,598
890 6.100%, 1/01/09 7/04 at 102.00 Baa2 918,177
575 Marana Municipal Property Corporation, Arizona, Revenue 7/13 at 100.00 AAA 595,200
Bonds, Series 2003, 5.000%, 7/01/28 - AMBAC Insured
1,500 Maricopa County Industrial Development Authority, Education 7/10 at 102.00 Baa3 1,498,980
Revenue Bonds, Arizona Charter Schools Project I,
Series 2000A, 6.750%, 7/01/29
3,400 Maricopa County Stadium District, Arizona, Revenue 6/12 at 100.00 Aaa 3,729,698
Refunding Bonds, Series 2002, 5.375%, 6/01/18 -
AMBAC Insured
Phoenix Industrial Development Authority, Arizona, Government
Office Lease Revenue Bonds, Capitol Mall LLC Project, Series 2000:
1,000 5.375%, 9/15/22 - AMBAC Insured 9/10 at 100.00 AAA 1,081,700
2,000 5.500%, 9/15/27 - AMBAC Insured 9/10 at 100.00 AAA 2,160,300
2,150 Phoenix Civic Plaza Building Corporation, Arizona, Senior 7/05 at 101.00 AAA 2,306,391
Lien Excise Tax Revenue Bonds, Series 1994,
6.000%, 7/01/14
2,000 Phoenix Civic Improvement Corporation, Arizona, Subordinate 7/13 at 100.00 AAA 2,108,220
Lien Excise Tax Revenue Bonds, Series 2003A,
5.000%, 7/01/21 - MBIA Insured
1,200 Prescott Valley Municipal Property Corp., Arizona, 1/13 at 100.00 AAA 1,243,188
Municipal Facilities Revenue Bonds, Series 2003,
5.000%, 1/01/27 - FGIC Insured
1,000 Puerto Rico Public Buildings Authority, Guaranteed 7/12 at 100.00 A- 1,031,690
Government Facilities Revenue Refunding Bonds,
Series 2002D, 5.125%, 7/01/24
500 Tucson, Arizona, Certificates of Participation, Series 2000, 7/08 at 100.00 AAA 555,365
5.700%, 7/01/20 - MBIA Insured
1,100 Tucson, Arizona, Streets and Highway Junior Lien User Fee 7/10 at 100.00 AAA 1,167,518
Revenue Bonds, Series 1994E, 5.000%, 7/01/18 - FGIC Insured
2,300 Virgin Islands Public Finance Authority, Gross Receipts 10/14 at 100.00 AA 2,335,029
Taxes Loan Notes, Series 2003, 5.000%, 10/01/33 - RAAI Insured
------------------------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATION SERVICES - 2.4%
1,450 Industrial Development Authority, Yavapai County, Arizona, 6/07 at 101.00 BBB 1,513,205
Revenue Bonds, Citizens Utilities Company Project,
Series 1998, 5.450%, 6/01/33 (Alternative Minimum Tax)
18
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 15.7%
$ 530 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 7/10 at 100.00 AAA $ 593,362
Asset-Backed Bonds, Series 2000, 5.750%, 7/01/20
(Pre-refunded to 7/01/10)
3,500 Maricopa County Industrial Development Authority, No Opt. Call AAA 4,515,525
Arizona, Hospital Revenue Refunding Bonds, Samaritan
Health Services, Series 1990A, 7.000%, 12/01/16 -
MBIA Insured
2,000 Phoenix Civic Improvement Corporation, Arizona, Junior 7/10 at 101.00 AAA 2,397,500
Lien Wastewater System Revenue Bonds, Series 2000,
6.000%, 7/01/24 (Pre-refunded to 7/01/10) - FGIC Insured
1,000 Puerto Rico Highway and Transportation Authority, 7/10 at 101.00 A*** 1,237,320
Highway Revenue Bonds, Series 2000B, 6.500%, 7/01/27
(Pre-refunded to 7/01/10)
500 Surprise Municipal Property Corporation, Arizona, Excise 7/09 at 101.00 AAA 585,120
Tax Revenue Bonds, Series 2000, 5.700%, 7/01/20
(Pre-refunded to 7/01/09) - FGIC Insured
725 Tucson, Arizona, Certificates of Participation, Series 1994, 7/04 at 100.00 AA*** 741,305
6.375%, 7/01/09 (Pre-refunded to 7/01/04) - RAAI Insured
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 11.7%
1,000 Arizona Power Authority, Special Obligation Power No Opt. Call AA 1,132,060
Resource Revenue Refunding Crossover Bonds, Hoover
Project, Series 2001, 5.250%, 10/01/15
1,615 Coconino County, Arizona, Pollution Control Revenue 10/06 at 102.00 B- 1,579,050
Bonds, Nevada Power Company Project, Series 1996,
6.375%, 10/01/36 (Alternative Minimum Tax)
500 Navajo County Pollution Control Corp., Arizona, Pollution 2/04 at 102.00 AAA 511,600
Control Revenue Refunding Bonds, Arizona Public
Service Company, Series 1993A, 5.875%, 8/15/28 -
MBIA Insured
1,075 Pima County Industrial Development Authority, Arizona, 7/04 at 102.00 AAA 1,128,965
Lease Obligation Revenue Refunding Bonds, Tucson
Electric Power Company Irvington Project, Series 1988A,
7.250%, 7/15/10 - FSA Insured
Salt River Project Agricultural Improvement and Power District,
Arizona, Electric System Revenue Refunding Bonds, Salt River
Project, Series 2002A:
2,000 5.125%, 1/01/27 1/12 at 101.00 AA 2,091,980
1,000 5.000%, 1/01/31 1/12 at 101.00 AA 1,032,280
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 10.3%
3,500 Glendale, Arizona, Water and Sewer Revenue Bonds, 7/13 at 100.00 AAA 3,625,685
Subordinate Lien, Series 2003, 5.000%, 7/01/28
1,250 Phoenix Civic Improvement Corporation, Arizona, Junior No Opt. Call AAA 1,438,373
Lien Water System Revenue Refunding Bonds,
Series 2001, 5.500%, 7/01/21 - FGIC Insured
1,500 Phoenix Civic Improvement Corporation, Arizona, Junior 7/12 at 100.00 AAA 1,550,430
Lien Water System Revenue Bonds, Series 2002,
5.000%, 7/01/26 - FGIC Insured
------------------------------------------------------------------------------------------------------------------------------------
$ 86,116 Total Long-Term Investments (cost $86,763,422) - 143.3% 91,764,254
=============-----------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 3.5% 2,276,686
--------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (46.8)% (30,000,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 64,040,940
====================================================================================================================
(1) All percentages shown in the Portfolio of Investments
are based on net assets applicable to Common shares.
* 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.
** Ratings: Using the higher of Standard & Poor's or
Moody's rating.
*** Securities are backed by an escrow or trust containing
sufficient U.S. Government or U.S. Government agency
securities which ensures the timely payment of
principal and interest. Such securities are normally
considered to be equivalent to AAA rated securities.
N/R Investment is not rated.
See accompanying notes to financial statements.
19
Nuveen Arizona Dividend Advantage Municipal Fund (NFZ)
Portfolio of
INVESTMENTS January 31, 2004 (Unaudited)
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 14.2%
$ 1,020 Mesa Industrial Development Authority, Arizona, Student 7/11 at 101.00 BBB- $ 1,031,689
Housing Revenue Bonds, ASU East/Maricopa County
Community College District, Williams Campus Project,
Series 2001A, 6.000%, 7/01/26
1,000 Puerto Rico Industrial, Tourist, Educational, Medical, 2/09 at 101.00 BBB 1,008,700
and Environmental Control Facilities Financing Authority,
Higher Education Revenue Bonds, Ana G. Mendez
University System Project, Series 1999, 5.375%, 2/01/29
300 Puerto Rico Industrial, Tourist, Educational, Medical, 9/11 at 100.00 BBB 311,481
and Environmental Control Facilities Financing Authority,
Higher Education Revenue Bonds, University of the Sacred
Heart Project, Series 2001, 5.250%, 9/01/21
1,000 Tempe Industrial Development Authority, Arizona, 7/13 at 100.00 AAA 1,031,570
Lease Revenue Bonds, Arizona State University Foundation
Project, Series 2003, 5.000%, 7/01/34 - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE - 8.6%
550 Arizona Health Facilities Authority, Hospital System 12/10 at 102.00 BBB 601,398
Revenue Bonds, John C. Lincoln Health Network,
Series 2000, 6.875%, 12/01/20
365 Arizona Health Facilities Authority, Hospital Revenue 7/10 at 101.00 Baa1 405,705
Bonds, Catholic Healthcare West, Series 1999A,
6.625%, 7/01/20
1,000 Scottsdale Industrial Development Authority, Arizona, 12/11 at 101.00 A3 1,042,710
Hospital Revenue Bonds, Scottsdale Healthcare, Series 2001,
5.800%, 12/01/31
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 19.4%
1,000 Maricopa County Industrial Development Authority, Arizona, 7/09 at 102.00 Aaa 1,041,530
Multifamily Housing Revenue Bonds, Whispering Palms
Apartments Project, Series 1999A, 5.900%, 7/01/29 -
MBIA Insured
1,125 Maricopa County Industrial Development Authority, Arizona, 10/11 at 103.00 Aaa 1,190,970
Multifamily Housing Revenue Bonds, Syl-Mar Apartments
Project, Series 2001, 5.650%, 4/20/21 (Alternative
Minimum Tax)
275 Phoenix Industrial Development Authority, Arizona, 6/11 at 102.00 Aaa 291,255
GNMA Collateralized Multifamily Housing Revenue Bonds,
Campaigne Place on Jackson Project, Series 2001,
5.700%, 6/20/31 (Alternative Minimum Tax)
990 Phoenix Industrial Development Authority, Arizona, 10/12 at 102.00 Aaa 1,001,375
GNMA Enhanced Mortgage Loan Multifamily Housing
Revenue Bonds, Liberty Cove Apartments, Series 2002A,
5.050%, 10/20/32
1,000 Phoenix Industrial Development Authority, Arizona, 9/10 at 103.00 Aaa 1,089,920
GNMA Collateralized Mortgage Loan Multifamily Housing
Revenue Bonds, Camelback Crossings Apartments Project,
Series 2000, 6.350%, 9/20/35
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 1.4%
320 Pima County Industrial Development Authority, Arizona, 11/10 at 101.00 AAA 336,080
FNMA/GNMA Single Family Mortgage Revenue Bonds,
Series 2001A-4, 5.050%, 5/01/17
------------------------------------------------------------------------------------------------------------------------------------
INDUSTRIALS - 4.4%
1,000 Yavapai County Industrial Development Authority, Arizona, No Opt. Call BBB 1,046,600
Solid Waste Disposal Revenue Bonds, Waste Management
Inc. Project, Series 2003B, 4.450%, 3/01/28 (Alternative
Minimum Tax) (Mandatory put 3/01/08)
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 11.3%
1,000 Mesa, Arizona, General Obligation Bonds, Series 1999, 7/09 at 100.00 AAA 1,068,650
5.000%, 7/01/17 - FGIC Insured
500 Puerto Rico Public Improvement, General Obligation Bonds, No Opt. Call A- 549,885
Series 2002A, 5.500%, 7/01/29
1,020 Tucson, Arizona, General Obligation Refunding Bonds, 7/07 at 100.00 AA 1,073,417
Series 1997, 5.000%, 7/01/19
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 42.3%
700 Arizona School Facilities Board, School Improvement 7/11 at 100.00 AAA 782,523
Revenue Bonds, Series 2001, 5.500%, 7/01/18
1,000 Arizona State Transportation Board, Highway Revenue Bonds, 7/13 at 100.00 AAA 1,054,110
Series 2003A, 5.000%, 7/01/22
20
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED (continued)
$ 1,000 Arizona Tourism and Sports Authority, Tax Revenue Bonds, 7/13 at 100.00 Aaa $ 1,095,080
Multipurpose Stadium Facility Project, Series 2003A,
5.375%, 7/01/21 - MBIA Insured
1,180 Marana Municipal Property Corporation, Arizona, Revenue 7/13 at 100.00 AAA 1,231,755
Bonds, Series 2003, 5.000%, 7/01/23 - AMBAC Insured
2,000 Maricopa County Industrial Development Authority, Arizona, 6/07 at 102.00 A 2,119,020
Education Revenue Bonds, Horizon Community Learning
Center Project, Series 2000, 6.350%, 6/01/26 - ACA Insured
900 Phoenix Industrial Development, Arizona, Government 3/12 at 100.00 AAA 987,480
Office Lease Revenue Bonds, Capitol Mall LLC II Project,
Series 2001, 5.250%, 9/15/16 - AMBAC Insured
2,675 Tempe, Arizona, Excise Tax Revenue Refunding Bonds, 7/13 at 100.00 AA+ 2,821,857
Series 2003, 5.000%, 7/01/21
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 15.9%
500 Maricopa County Industrial Development Authority, Arizona, 9/05 at 101.00 AAA 538,505
Baptist Hospital System Revenue Refunding Bonds,
Series 1995, 5.500%, 9/01/16 (Pre-refunded to 9/01/05) -
MBIA Insured
1,000 Mesa, Arizona, Utility System Revenue Bonds, Series 2000, 7/09 at 100.00 AAA 1,132,520
5.125%, 7/01/19 (Pre-refunded to 7/01/09) - FGIC Insured
1,350 Puerto Rico Infrastructure Financing Authority, Special 10/10 at 101.00 AAA 1,481,544
Obligation Bonds, Series 2000A, 5.500%, 10/01/40
Salt River Project Agricultural Improvement and Power District,
Arizona, Salt River Project Electric System Revenue Refunding
Bonds, Series 1997A:
140 5.000%, 1/01/20 (Pre-refunded to 1/01/08) 1/08 at 101.00 AA*** 156,514
430 5.000%, 1/01/20 (Pre-refunded to 1/01/08) 1/08 at 101.00 AA*** 485,229
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 21.0%
1,500 Arizona Power Authority, Special Obligation Power Resource No Opt. Call AA 1,693,335
Revenue Refunding Crossover Bonds, Hoover Project,
Series 2001, 5.250%, 10/01/17
500 Coconino County, Arizona, Pollution Control Revenue 5/04 at 101.00 B- 452,260
Bonds, Nevada Power Company Project, Series 1997B,
5.800%, 11/01/32 (Alternative Minimum Tax)
1,000 Mesa, Arizona, Utility System Revenue Refunding Bonds, No Opt. Call AAA 1,136,050
Series 2002, 5.250%, 7/01/17 - FGIC Insured
350 Puerto Rico Electric Power Authority, Power Revenue Bonds, 7/12 at 101.00 AAA 370,713
Series 2002II, 5.125%, 7/01/26 - FSA Insured
1,000 Salt River Project Agricultural Improvement and Power 1/12 at 101.00 AA 1,096,760
District, Arizona, Electric System Revenue Refunding Bonds,
Salt River Project, Series 2002A, 5.250%, 1/01/18
235 Salt River Project Agricultural Improvement and Power 1/08 at 101.00 AA 247,325
District, Arizona, Salt River Project Electric System Revenue
Refunding Bonds, Series 1997A, 5.000%, 1/01/20
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 6.5%
1,500 Phoenix Civic Improvement Corporation, Arizona, Junior 7/12 at 100.00 AAA 1,550,430
Lien Water System Revenue Bonds, Series 2002,
5.000%, 7/01/26 - FGIC Insured
------------------------------------------------------------------------------------------------------------------------------------
$ 32,425 Total Long-Term Investments (cost $32,831,457) - 145.0% 34,555,945
=============-----------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 5.3% 1,277,799
--------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (50.3)% (12,000,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 23,833,744
====================================================================================================================
(1) All percentages shown in the Portfolio of Investments
are based on net assets applicable to Common shares.
* 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.
** Ratings: Using the higher of Standard & Poor's or
Moody's rating.
*** Securities are backed by an escrow or trust containing
sufficient U.S. Government or U.S. Government agency
securities which ensures the timely payment of
principal and interest. Such securities are normally
considered to be equivalent to AAA rated securities.
See accompanying notes to financial statements.
21
Nuveen Arizona Dividend Advantage Municipal Fund 2 (NKR)
Portfolio of
INVESTMENTS January 31, 2004 (Unaudited)
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 11.6%
$ 510 Arizona State University, Certificates of Participation, 7/12 at 100.00 AAA $ 530,920
Series 2002, 5.125%, 7/01/26 - MBIA Insured
715 Arizona State University, System Revenue Bonds, 7/12 at 100.00 AAA 798,040
Series 2002, 5.750%, 7/01/27 - FGIC Insured
1,250 Glendale Industrial Development Authority, Arizona, Revenue 5/11 at 101.00 BBB+ 1,314,300
Bonds, Midwestern University, Series 2001A, 5.875%, 5/15/31
320 Puerto Rico Industrial, Tourist, Educational, Medical, 2/09 at 101.00 BBB 330,550
and Environmental Control Facilities Financing Authority,
Higher Education Revenue Bonds, Ana G. Mendez University
System Project, Series 1999, 5.375%, 2/01/19
University of Arizona, Certificates of Participation, Series 2002A:
750 5.500%, 6/01/18 - AMBAC Insured 6/12 at 100.00 AAA 839,812
500 5.125%, 6/01/22 - AMBAC Insured 6/12 at 100.00 AAA 526,000
------------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE - 9.9%
735 Arizona Health Facilities Authority, Hospital System 2/12 at 101.00 Ba2 653,202
Revenue Bonds, Phoenix Children's Hospital, Series 2002A,
6.250%, 2/15/21
400 Arizona Health Facilities Authority, Hospital Revenue 7/10 at 101.00 Baa1 444,608
Bonds, Catholic Healthcare West, Series 1999A,
6.625%, 7/01/20
500 Maricopa County Industrial Development Authority, 5/08 at 101.00 AA 513,890
Arizona, Hospital Revenue Bonds, Mayo Clinic
Hospital, Series 1998, 5.250%, 11/15/37
1,000 Mesa Industrial Development Authority, Arizona, Revenue 1/10 at 101.00 AAA 1,080,580
Bonds, Discovery Health System, Series 1999A,
5.625%, 1/01/29 - MBIA Insured
1,000 Yavapai County Industrial Development Authority, Arizona, 8/13 at 100.00 Baa2 1,026,570
Hospital Revenue Bonds, Yavapai Regional Medical Center,
Series 2003A, 6.000%, 8/01/33
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 6.8%
1,000 Maricopa County Industrial Development Authority, 10/11 at 105.00 AAA 1,053,280
Arizona, GNMA Collateralized Multifamily Housing
Revenue Refunding Bonds, Pine Ridge, Cambridge Court,
Cove on 44th and Fountain Place Apartments
Projects, Series 2001A-1, 6.000%, 10/20/31
1,425 Phoenix Industrial Development Authority, Arizona, 7/12 at 105.00 AAA 1,515,958
GNMA Collateralized Multifamily Housing Revenue Bonds,
Summit Apartments Project, Series 2002, 6.450%, 7/20/32
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 0.4%
150 Pima County Industrial Development Authority, Arizona, 11/10 at 101.00 AAA 155,252
FNMA/GNMA Single Family Mortgage Revenue Bonds,
Series 2001A-1, 5.350%, 11/01/24 (Alternative
Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
INDUSTRIALS - 2.8%
1,000 Yavapai County Industrial Development Authority, No Opt. Call BBB 1,046,600
Arizona, Solid Waste Disposal Revenue Bonds,
Waste Management Inc. Project, Series 2003B,
4.450%, 3/01/28 (Alternative Minimum Tax)
(Mandatory put 3/01/08)
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 47.0%
1,725 Chandler, Arizona, General Obligation Bonds, 7/12 at 100.00 AA+ 1,858,084
Series 2002, 5.000%, 7/01/17
1,000 Gilbert, Arizona, General Obligation Bonds, Series 2002A, 7/11 at 100.00 AAA 1,069,250
5.000%, 7/01/18 - AMBAC Insured
Maricopa County School District 6, Arizona, General Obligation
Refunding Bonds, Washington Elementary School, Series 2002A:
1,000 5.375%, 7/01/15 - FSA Insured No Opt. Call AAA 1,153,310
2,000 5.375%, 7/01/16 - FSA Insured No Opt. Call AAA 2,304,140
2,165 Maricopa County Unified School District 69 Paradise Valley, No Opt. Call AAA 2,469,984
Arizona, General Obligation Refunding Bonds, Series 2002A,
5.250%, 7/01/14 - FGIC Insured
1,000 Mesa, Arizona, General Obligation Bonds, Series 2000, No Opt. Call AAA 1,222,670
6.500%, 7/01/11 - FGIC Insured
22
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL (continued)
$ 1,405 Mesa, Arizona, General Obligation Bonds, Series 2002, No Opt. Call AAA $ 1,620,401
5.375%, 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 AA+ 1,771,179
250 5.000%, 7/01/27 7/12 at 100.00 AA+ 258,848
1,000 Pinal County Unified School District 43, Apache Junction, No Opt. Call AAA 1,183,850
Arizona, General Obligation Refunding Bonds, Series 2001,
5.750%, 7/01/15 - FGIC Insured
1,500 Scottsdale, Arizona, General Obligation Bonds, 7/11 at 100.00 AAA 1,548,525
Series 2002, 5.000%, 7/01/24
1,090 Tempe, Arizona, General Obligation Bonds, Certificates 7/14 at 100.00 AA+ 1,196,231
of Ownership, Series 2004, 5.000%, 7/01/17
(WI, Settling 2/03/04)
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 38.8%
Arizona State, Certificates of Participation, Series 2002A:
750 5.000%, 11/01/17 - MBIA Insured 5/12 at 100.00 AAA 803,595
1,000 5.000%, 11/01/18 - MBIA Insured 5/12 at 100.00 AAA 1,065,660
500 5.000%, 11/01/20 - MBIA Insured 5/12 at 100.00 AAA 526,730
1,000 Arizona State Transportation Board, Highway Revenue 7/12 at 100.00 AAA 1,080,040
Bonds, Series 2002B, 5.250%, 7/01/21
670 Goodyear Community Facilities Utility District No. 1, 7/13 at 100.00 A 673,189
Arizona, General Obligation Bonds, Series 2003,
5.350%, 7/15/28 - ACA Insured
1,000 Maricopa County Public Finance Authority, Arizona, Lease 7/11 at 100.00 Aaa 1,130,920
Revenue Bonds, Series 2001, 5.500%, 7/01/15 -
AMBAC Insured
Maricopa County Stadium District, Arizona, Revenue
Refunding Bonds, Series 2002:
840 5.375%, 6/01/18 - AMBAC Insured 6/12 at 100.00 Aaa 921,455
2,645 5.375%, 6/01/19 - AMBAC Insured 6/12 at 100.00 Aaa 2,885,827
1,500 Phoenix Industrial Development, Arizona, Government 3/12 at 100.00 AAA 1,645,800
Office Lease Revenue Bonds, Capitol Mall LLC II Project,
Series 2001, 5.250%, 9/15/16 - AMBAC Insured
500 Puerto Rico Highway and Transportation Authority, Highway 7/16 at 100.00 A 537,145
Revenue Bonds, Series 1996Y, 5.500%, 7/01/36
500 Puerto Rico Highway and Transportation Authority, Highway 7/12 at 100.00 AAA 519,475
Revenue Bonds, Series 2002D, 5.000%, 7/01/32 -
FSA Insured
1,000 Puerto Rico Public Buildings Authority, Guaranteed 7/12 at 100.00 A- 1,031,690
Government Facilities Revenue Refunding Bonds,
Series 2002D, 5.125%, 7/01/24
1,000 Tucson, Arizona, Streets and Highway Junior Lien User 7/10 at 100.00 AAA 1,061,380
Fee Revenue Bonds, Series 1994E, 5.000%, 7/01/18 -
FGIC Insured
640 Yuma Municipal Property Corporation, Arizona, Municipal 7/10 at 100.00 AAA 665,056
Facilities Tax Revenue Bonds, Series 2001,
5.000%, 7/01/21 - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 5.5%
1,000 Phoenix Civic Improvement Corporation, Arizona, Senior 7/08 at 101.00 AAA 1,021,420
Lien Airport Revenue Bonds, Series 1998A,
5.000%, 7/01/25 - FSA Insured
1,000 Phoenix Civic Improvement Corporation, Arizona, Senior 7/12 at 100.00 AAA 1,035,940
Lien Airport Revenue Bonds, Series 2002B,
5.250%, 7/01/27 (Alternative Minimum Tax) - FGIC Insured
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 8.2%
1,215 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 7/10 at 100.00 AAA 1,439,520
Asset-Backed Bonds, Series 2000, 5.750%, 7/01/12
(Pre-refunded to 7/01/10)
1,500 Puerto Rico Infrastructure Financing Authority, Special 10/10 at 101.00 AAA 1,646,160
Obligation Bonds, Series 2000A, 5.500%, 10/01/40
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 9.2%
1,115 Arizona Power Authority, Special Obligation Power No Opt. Call AA 1,262,247
Resource Revenue Refunding Crossover Bonds, Hoover
Project, Series 2001, 5.250%, 10/01/15
1,000 Mesa, Arizona, Utility System Revenue Bonds, 7/11 at 100.00 AAA 1,050,580
Series 2002, 5.000%, 7/01/20 - FGIC Insured
1,000 Mesa, Arizona, Utility System Revenue Refunding Bonds, No Opt. Call AAA 1,136,050
Series 2002, 5.250%, 7/01/17 - FGIC Insured
23
Nuveen Arizona Dividend Advantage Municipal Fund 2 (NKR) (continued)
Portfolio of INVESTMENTS January 31, 2004 (Unaudited)
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 7.4%
$ 500 Maricopa County Industrial Development Authority, 12/07 at 102.00 AAA $ 523,700
Arizona, Water System Improvement Revenue Bonds,
Chaparral City Water Company Project, Series 1997A,
5.400%, 12/01/22 (Alternative Minimum Tax) -
AMBAC Insured
1,000 Phoenix Civic Improvement Corporation, Arizona, No Opt. Call AAA 1,146,730
Junior Lien Water System Revenue Refunding Bonds,
Series 2001, 5.500%, 7/01/22 - FGIC Insured
1,000 Tucson, Arizona, Water System Revenue Refunding 7/12 at 102.00 AAA 1,124,839
Bonds, Series 2001, 5.500%, 7/01/18 - FGIC Insured
------------------------------------------------------------------------------------------------------------------------------------
$ 50,965 Total Long-Term Investments (cost $52,371,670) - 147.6% 55,421,182
=============-----------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 1.7% 621,612
--------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (49.3)% (18,500,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 37,542,794
====================================================================================================================
(1) All percentages shown in the Portfolio of Investments
are based on net assets applicable to Common shares.
* 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.
** Ratings: Using the higher of Standard & Poor's or
Moody's rating.
(WI) Security purchased on a when-issued basis.
See accompanying notes to financial statements.
24
Nuveen Arizona Dividend Advantage Municipal Fund 3 (NXE)
Portfolio of
INVESTMENTS January 31, 2004 (Unaudited)
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES - 4.2%
$ 1,930 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 5/12 at 100.00 BBB $ 1,844,964
Asset-Backed Refunding Bonds, Series 2002,
5.375%, 5/15/33
------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 18.6%
2,000 Arizona State University, System Revenue Bonds, 7/12 at 100.00 AAA 2,232,280
Series 2002, 5.750%, 7/01/27 - FGIC Insured
1,000 Arizona Student Loan Acquisition Authority, Student Loan 11/09 at 102.00 Aaa 1,085,050
Revenue Refunding Bonds, Senior Series 1999A1,
5.750%, 5/01/15 (Alternative Minimum Tax)
1,130 Energy Management Services LLC, Arizona State University, 7/12 at 100.00 AAA 1,232,197
Energy Conservation Revenue Bonds, Main Campus
Project, Series 2002, 5.250%, 7/01/18 - MBIA Insured
500 Glendale Industrial Development Authority, Arizona, 5/08 at 101.00 BBB+ 512,005
Revenue Bonds, Midwestern University, Series 1998A,
5.375%, 5/15/28
1,000 Tucson Industrial Development Authority, Arizona, 7/12 at 100.00 AAA 1,029,870
Lease Revenue Bonds, University of Arizona - Marshall
Foundation Project, Series 2002A, 5.000%, 7/15/32 -
AMBAC Insured
2,000 University of Arizona, Certificates of Participation, 6/12 at 100.00 AAA 2,131,340
Series 2002B, 5.125%, 6/01/20 - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE - 15.7%
Arizona Health Facilities Authority, Hospital System Revenue
Bonds, Phoenix Children's Hospital, Series 1999A:
750 6.125%, 11/15/22 11/09 at 100.00 Ba2 652,980
520 6.250%, 11/15/29 11/09 at 100.00 Ba2 450,991
1,000 Arizona Health Facilities Authority, Hospital System 12/10 at 102.00 BBB 1,093,450
Revenue Bonds, John C. Lincoln Health Network,
Series 2000, 6.875%, 12/01/20
300 Arizona Health Facilities Authority, Hospital Revenue 7/10 at 101.00 Baa1 333,456
Bonds, Catholic Healthcare West, Series 1999A,
6.625%, 7/01/20
2,000 Maricopa County Industrial Development Authority, 5/08 at 101.00 AA 2,055,560
Arizona, Hospital Revenue Bonds, Mayo Clinic Hospital,
Series 1998, 5.250%, 11/15/37
1,250 Scottsdale Industrial Development Authority, Arizona, 12/11 at 101.00 A3 1,303,388
Hospital Revenue Bonds, Scottsdale Healthcare,
Series 2001, 5.800%, 12/01/31
1,000 Yavapai County Industrial Development Authority, Arizona, 8/13 at 100.00 Baa2 1,026,570
Hospital Revenue Bonds, Yavapai Regional Medical
Center, Series 2003A, 6.000%, 8/01/33
------------------------------------------------------------------------------------------------------------------------------------
Housing/Multifamily - 19.4%
1,750 Maricopa County Industrial Development Authority, 1/18 at 100.00 AAA 1,796,883
Arizona, Multifamily Housing Senior Revenue Bonds,
National Voluntary Health Facilities II Project,
Series 1998A, 5.100%, 1/01/33 - FSA Insured
2,500 Maricopa County Industrial Development Authority, 10/10 at 105.00 Aaa 2,635,100
Arizona, GNMA Collateralized Multifamily Housing
Revenue Bonds, Villas at Augusta Project, Series 2000,
6.500%, 10/20/33
1,545 Phoenix Industrial Development Authority, Arizona, 6/11 at 102.00 Aaa 1,642,011
GNMA Collateralized Multifamily Housing Revenue Bonds,
Campaigne Place on Jackson Project, Series 2001,
5.600%, 6/20/21 (Alternative Minimum Tax)
2,460 Phoenix Industrial Development Authority, Arizona, 10/12 at 102.00 Aaa 2,502,853
GNMA Enhanced Mortgage, Loan Multifamily Housing
Revenue Bonds, Liberty Cove Apartments, Series 2002A,
4.950%, 10/20/22 (Alternative Minimum Tax)
25
Nuveen Arizona Dividend Advantage Municipal Fund 3 (NXE) (continued)
Portfolio of INVESTMENTS January 31, 2004 (Unaudited)
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
INDUSTRIALS - 3.6%
$ 1,500 Yavapai County Industrial Development Authority, Arizona, No Opt. Call BBB $ 1,569,900
Solid Waste Disposal Revenue Bonds, Waste Management
Inc. Project, Series 2003B, 4.450%, 3/01/28 (Alternative
Minimum Tax) (Mandatory put 3/01/08)
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 26.4%
660 Chandler, Arizona, General Obligation Bonds, 7/12 at 100.00 AA+ 707,494
Series 2002, 5.000%, 7/01/18
2,250 DC Ranch Community Facilities District, Scottsdale, 7/13 at 100.00 Aaa 2,333,565
Arizona, General Obligation Bonds, Series 2002,
5.000%, 7/15/27 - AMBAC Insured
1,930 Glendale, Arizona, General Obligation Refunding Bonds, 7/11 at 100.00 AA 2,043,388
Series 2002, 5.000%, 7/01/19
1,000 Maricopa County School District 11, Peoria, Arizona, No Opt. Call AAA 1,114,730
General Obligation Refunding Bonds, Series 2002,
5.000%, 7/01/15 - FSA Insured
765 Maricopa County Unified School District 69, Paradise No Opt. Call AAA 854,276
Valley, Arizona, General Obligation Refunding Bonds,
Series 2002, 5.000%, 7/01/15 - FSA Insured
1,000 Maricopa County Unified School District 95, Queen Creek No Opt. Call Aaa 1,117,490
Arizona, General Obligation Bonds, Series 2002,
5.000%, 7/01/14 - FGIC Insured
1,500 Puerto Rico Public Improvement, General Obligation No Opt. Call AAA 1,744,200
Refunding Bonds, Series 2002A, 5.500%, 7/01/20 -
MBIA Insured
1,150 Scottsdale, Arizona, General Obligation Refunding Bonds, No Opt. Call AAA 1,288,610
Series 2002, 5.000%, 7/01/16
440 Tucson, Arizona, General Obligation Bonds, Series 2001B, 7/11 at 100.00 AA 462,255
5.000%, 7/01/20
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 29.8%
2,000 Arizona School Facilities Board, School Improvement 7/12 at 100.00 AAA 2,168,380
Revenue Bonds, Series 2002, 5.250%, 7/01/20
3,000 Arizona State Transportation Board, Highway Revenue 7/12 at 102.00 AAA 3,332,670
Refunding Bonds, Series 2002A, 5.250%, 7/01/18
1,000 Arizona State Transportation Board, Highway Revenue Bonds, 7/12 at 100.00 AAA 1,074,880
Series 2002B, 5.250%, 7/01/22
2,660 Arizona Tourism and Sports Authority, Tax Revenue Bonds, 7/13 at 100.00 Aaa 2,925,973
Multipurpose Stadium Facility Project, Series 2003A,
5.375%, 7/01/20 - MBIA Insured
800 Goodyear Community Facilities Utility District No. 1, 7/13 at 100.00 A 803,808
Arizona, General Obligation Bonds, Series 2003,
5.350%, 7/15/28 - ACA Insured
2,770 Tempe, Arizona, Excise Tax Revenue Refunding Bonds, 7/13 at 100.00 AA+ 2,904,567
Series 2003, 5.000%, 7/01/22
------------------------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATION SERVICES - 1.3%
530 Industrial Development Authority, Yavapai County, Arizona, 6/07 at 101.00 BBB 553,103
Revenue Bonds, Citizens Utilities Company Project,
Series 1998, 5.450%, 6/01/33 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 13.7%
Phoenix, Arizona, Civic Improvement Corporation, Senior Lien
Airport Revenue Bonds, Series 2002B:
1,000 5.750%, 7/01/16 (Alternative Minimum Tax) - FGIC Insured 7/12 at 100.00 AAA 1,110,800
2,300 5.250%, 7/01/21 (Alternative Minimum Tax) - FGIC Insured 7/12 at 100.00 AAA 2,404,121
2,450 Tucson Airport Authority Inc., Arizona, Revenue Refunding 6/11 at 100.00 AAA 2,514,117
Bonds, Series 2001B, 5.000%, 6/01/20 (Alternative
Minimum Tax) - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 6.4%
1,750 Maricopa County, Arizona, Pollution Control Corporation 11/12 at 100.00 AAA 1,813,105
Revenue Bonds, Arizona Public Service Company Palo
Verde Project, Series 2002A, 5.050%, 5/01/29 -
AMBAC Insured
1,000 Salt River Project Agricultural Improvement and Power 1/13 at 100.00 AA 1,032,280
District, Arizona, Electric System Revenue Bonds,
Salt River Project, Series 2002B, 5.000%, 1/01/31
26
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 7.2%
$ 1,000 Phoenix Civic Improvement Corporation, Arizona, 7/11 at 100.00 AAA $ 1,053,850
Junior Lien Wastewater System Revenue Refunding
Bonds, Series 2001, 5.125%, 7/01/21 - FGIC Insured
2,000 Phoenix Civic Improvement Corporation, Arizona, Junior 7/12 at 100.00 AAA 2,129,936
Lien Water System Revenue Bonds, Series 2002,
5.000%, 7/01/18 - FGIC Insured
------------------------------------------------------------------------------------------------------------------------------------
$ 61,090 Total Long-Term Investments (cost $63,369,767) - 146.3% 64,618,446
=============-----------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 3.5% 1,544,801
--------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (49.8)% (22,000,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 44,163,247
====================================================================================================================
(1) All percentages shown in the Portfolio of Investments
are based on net assets applicable to Common shares.
* 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.
** Ratings: Using the higher of Standard & Poor's or
Moody's rating.
See accompanying notes to financial statements.
27
Nuveen Texas Quality Income Municipal Fund (NTX)
Portfolio of
INVESTMENTS January 31, 2004 (Unaudited)
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES - 1.9%
$ 2,895 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 5/12 at 100.00 BBB $ 2,767,446
Asset-Backed Refunding Bonds, Series 2002, 5.375%, 5/15/33
------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 9.1%
205 Brazos Higher Education Authority, Inc., Texas, Student No Opt. Call Aa2 211,993
Loan Revenue Refunding Bonds, Subordinate
Series 1993A-2, 6.800%, 12/01/04 (Alternative
Minimum Tax)
1,000 Georgetown Higher Education Finance Corporation, 2/04 at 100.00 Aa3 1,001,690
Texas, Higher Education Revenue Bonds, Southwestern
University Project, Series 1994, 6.300%, 2/15/14
1,000 Raven Hills Higher Education Corporation, Texas, Student 8/11 at 100.00 Aaa 1,046,270
Housing Revenue Bonds, Cardinal Village LLC - Lamar
University Project, Series 2001A, 5.250%, 8/01/24 -
MBIA Insured
2,000 Texas State University System, Financing Revenue No Opt. Call AAA 2,102,760
Refunding Bonds, Series 2002, 5.000%, 3/15/20 -
FSA Insured
1,445 Tyler Junior College District, Smith and Van Zanlt 8/04 at 100.00 AAA 1,479,680
Counties, Texas, Combined Fee Improvement Revenue
Refunding Bonds, Series 1994, 5.900%, 8/15/13 -
MBIA Insured
2,330 Universal City Education Facilities Corporation, Texas, 3/11 at 102.00 A- 2,401,624
Revenue Bonds, Wayland Baptist University Project,
Series 2001, 5.625%, 3/01/26
5,000 University of North Texas, Financing System Revenue Bonds, 4/12 at 100.00 AAA 5,167,950
Series 2001, 5.000%, 4/15/24 - FSA Insured
------------------------------------------------------------------------------------------------------------------------------------
ENERGY - 2.9%
3,000 Gulf Coast Waste Disposal Authority, Texas, Waste 4/08 at 102.00 BBB 2,978,700
Disposal Revenue Bonds, Valero Energy Corporation
Project, Series 1998, 5.600%, 4/01/32 (Alternative
Minimum Tax)
1,300 Gulf Coast Waste Disposal Authority, Texas, Waste 4/09 at 101.00 BBB 1,299,883
Disposal Revenue Bonds, Valero Energy Corporation
Project, Series 1999, 5.700%, 4/01/32 (Alternative
Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE - 20.0%
3,500 Abilene Health Facilities Development Corporation, Texas, 9/05 at 102.00 AAA 3,781,470
Hospital Revenue Refunding and Improvement Bonds,
Hendrick Medical Center Project, Series 1995C,
6.150%, 9/01/25 - MBIA Insured
Gregg County Health Facilities Development Corporation, Texas,
Hospital Revenue Bonds, Good Shepherd Medical Center Project,
Series 2000:
2,000 6.875%, 10/01/20 - RAAI Insured 10/10 at 101.00 AA 2,380,340
3,250 6.375%, 10/01/25 - RAAI Insured 10/10 at 101.00 AA 3,714,458
1,500 Harris County Health Facilities Development Corporation, 8/11 at 100.00 AA- 1,571,055
Texas, Revenue Bonds, St. Luke's Episcopal Hospital,
Series 2001A, 5.500%, 2/15/21
2,000 Harris County Health Facilities Development Corporation, 6/11 at 101.00 A 2,154,720
Texas, Hospital Revenue Bonds, Memorial Hermann
Healthcare System, Series 2001A, 6.375%, 6/01/29
5,750 Midland County Hospital District, Texas, Hospital Revenue No Opt. Call BBB 3,944,443
Bonds, Series 1992, 0.000%, 6/01/11
2,000 North Central Texas Health Facilities Development 5/11 at 100.00 AA- 2,024,100
Corporation, Hospital Revenue Bonds, Baylor Health
Care System Project, Series 2001A, 5.125%, 5/15/29
1,760 Parker County Hospital District, Texas, Hospital Revenue 8/09 at 102.00 BBB- 1,776,878
Bonds, Campbell Health System, Series 1999,
6.250%, 8/15/19
1,050 Tarrant County Health Facilities Development Corporation, 11/08 at 101.00 A 1,079,778
Texas, Hospital Revenue Bonds, Adventist Health System/
Sunbelt Obligated Group, Series 1998, 5.375%, 11/15/20
3,500 Tarrant County Health Facilities Development Corporation, 11/10 at 101.00 A 3,889,795
Texas, Hospital Revenue Bonds, Adventist Health System/
Sunbelt Obligated Group, Series 2000, 6.625%, 11/15/20
2,000 Tom Green County Health Facilities Development 5/11 at 101.00 Baa3 2,115,460
Corporation, Texas, Hospital Revenue Bonds, Shannon
Health System Project, Series 2001, 6.750%, 5/15/21
1,000 Tyler Health Facilities Development Corporation, Texas, 7/12 at 100.00 Baa1 1,027,860
Hospital Revenue Bonds, Mother Frances Hospital
Regional Health Center, Series 2001, 6.000%, 7/01/31
28
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 8.3%
Bexar County Housing Finance Corporation, Texas, Multifamily
Housing Revenue Bonds, Waters at Northern Hills Apartments
Project, Series 2001A:
$ 2,000 6.000%, 8/01/31 - MBIA Insured 8/11 at 102.00 Aaa $ 2,092,060
750 6.050%, 8/01/36 - MBIA Insured 8/11 at 102.00 Aaa 785,925
Grand Prairie Housing Finance Corporation, Texas, GNMA
Multifamily Housing Revenue Bonds, Landings of Carrier Project,
Series 2000A:
1,000 6.650%, 9/20/22 9/10 at 105.00 AAA 1,106,550
2,030 6.750%, 9/20/28 9/10 at 105.00 AAA 2,248,022
5,668 Houston Housing Finance Corporation, Texas, GNMA 9/11 at 105.00 Aaa 6,011,254
Collateralized Mortgage Multifamily Housing Revenue
Bonds, RRG Apartments Project, Series 2001,
6.250%, 9/20/35
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 6.0%
2,800 El Paso Housing Finance Corporation, Texas, GNMA 4/11 at 106.75 AAA 2,920,120
Collateralized Single Family Mortgage Revenue Bonds,
Series 2001A-3, 6.180%, 4/01/33
270 Galveston Property Finance Authority, Inc., Texas, Single 3/04 at 101.00 A3 273,494
Family Mortgage Revenue Bonds, Series 1991A,
8.500%, 9/01/11
455 Houston Housing Finance Corporation, Texas, Single 6/04 at 101.00 AAA 458,085
Family Mortgage Revenue Refunding Bonds, Series 1993A,
5.950%, 12/01/10 - FSA Insured
1,745 Texas Department of Housing, Single Family Mortgage 9/06 at 102.00 AAA 1,839,474
Revenue Bonds, Series 1996E, 6.000%, 9/01/17 -
MBIA Insured
2,995 Texas Department of Housing and Community Affairs, 3/12 at 100.00 AAA 3,104,527
Single Family Mortgage Bonds, Series 2002B,
5.550%, 9/01/33 (Alternative Minimum Tax) -
MBIA Insured
235 Victoria Housing Finance Corporation, Texas, FNMA Single No Opt. Call Aaa 240,370
Family Mortgage Revenue Refunding Bonds,
Series 1995, 8.125%, 1/01/11
------------------------------------------------------------------------------------------------------------------------------------
LONG-TERM CARE - 7.2%
Bell County Health Facilities Development Corporation,
Texas, Retirement Facility Revenue Bonds,
Buckner Retirement Services, Inc. Obligated Group Project,
Series 1998:
3,400 5.250%, 11/15/19 11/08 at 101.00 A- 3,433,558
5,000 5.250%, 11/15/28 11/08 at 101.00 A- 4,874,400
2,000 Tarrant County Health Facilities Development Corporation, 1/08 at 105.00 AAA 2,257,540
Texas, Tax-Exempt Mortgage Revenue Bonds, South
Central Nursing Homes Inc. Project, Series 1997A,
6.000%, 1/01/37 - MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
MATERIALS - 5.5%
4,500 Cass County Industrial Development Corporation, Texas, 3/10 at 101.00 BBB 4,883,985
Environmental Improvement Revenue Bonds, International
Paper Company Project, Series 2000A, 6.600%, 3/15/24
(Alternative Minimum Tax)
3,000 Guadalupe-Blanco River Authority, Texas, Sewage and Solid 4/06 at 102.00 AA- 3,269,310
Waste Disposal Facility Bonds, E.I. DuPont de Nemours
and Company Project, Series 1996, 6.400%, 4/01/26
(Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 34.3%
4,130 Coppell Independent School District, Dallas County, 8/09 at 75.34 AAA 2,575,675
Texas, Unlimited Tax School Building and Refunding
Bonds, Series 1992, 0.000%, 8/15/14 - MBIA Insured
1,450 Donna Independent School District, Hidalgo County, 2/11 at 100.00 AAA 1,683,406
Texas, Unlimited Tax School Building Bonds, Series 2000,
6.000%, 2/15/17
1,750 El Paso County, Texas, Certificates of Obligation, 2/12 at 100.00 AAA 1,828,278
Series 2001, 5.000%, 2/15/21 - FSA Insured
5,000 Grand Prairie Independent School District, Dallas County, 2/13 at 100.00 AAA 5,194,900
Texas, General Obligation Bonds, Series 2003,
5.125%, 2/15/31 - FSA Insured
2,000 Harlingen Independent School District, Cameron County, 8/09 at 100.00 AAA 2,194,500
Texas, Unlimited Tax School Building Bonds, Series 1999,
5.650%, 8/15/29
2,000 Harris County, Texas, Tax and Revenue Certificates 8/11 at 100.00 AA+ 2,052,000
of Obligation, Series 2001, 5.000%, 8/15/27
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 AAA 2,640,450
2,235 5.000%, 2/15/21 - AMBAC Insured 2/13 at 100.00 AAA 2,345,163
1,500 Judson Independent School District, Bexar County, Texas, 2/11 at 100.00 Aaa 1,588,635
General Obligation Refunding Bonds, Series 2002,
5.250%, 2/01/21
29
Nuveen Texas Quality Income Municipal Fund (NTX) (continued)
Portfolio of INVESTMENTS January 31, 2004 (Unaudited)
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL (continued)
$ 2,600 Klein Independent School District, Harris County, Texas, 8/09 at 100.00 AAA $ 2,757,066
Unlimited Tax Schoolhouse Bonds, Series 1999A,
5.000%, 8/01/18
5,220 Leander Independent School District Williamson & Travis 8/09 at 46.74 AAA 1,970,550
Counties, Texas, Unlimited Tax School Building and
Refunding Bonds, Series 2000, 0.000%, 8/15/21
1,545 Montgomery County, Texas, General Obligation Refunding 9/07 at 72.39 AAA 964,111
Bonds, Series 1997, 0.000%, 3/01/14 - MBIA Insured
2,000 Northside Independent School District Bexar County, 8/10 at 100.00 AAA 2,254,380
Texas, Unlimited Tax School Building and Refunding Bonds,
Series 2000, 5.875%, 8/15/25
500 Puerto Rico Public Improvement, General Obligation Bonds, No Opt. Call A- 549,885
Series 2002A, 5.500%, 7/01/29
1,825 Socorro Independent School District, El Paso County, 2/06 at 100.00 Aaa 1,945,249
Texas, General Obligation Bonds, Series 1996,
5.750%, 2/15/21
1,440 South Texas Community College District, General Obligation 8/12 at 100.00 AAA 1,616,659
Bonds, Series 2002, 5.500%, 8/15/17 - AMBAC Insured
2,000 Texas State, General Obligation Bonds, Veterans Land Board, 12/04 at 100.00 Aa1 2,072,180
Series 1994, 6.400%, 12/01/24 (Alternative Minimum Tax)
2,000 Texas State, General Obligation Bonds, Water Financial 8/11 at 100.00 Aa1 2,105,420
Assistance Program, Series 2001, 5.250%, 8/01/23
1,500 Texas State Public Finance Authority, General Obligation 10/12 at 100.00 Aa1 1,603,800
Refunding Bonds, Series 2002, 5.000%, 10/01/18
1,795 United Independent School District, Webb County, Texas, 8/12 at 100.00 AAA 1,968,666
Unlimited Tax School Building Bonds, Series 2000,
5.375%, 8/15/18
5,290 Weslaco Independent School District, Hidalgo County, 2/10 at 100.00 Aaa 5,702,356
Texas, General School Building Obligation Bonds,
Series 2000, 5.500%, 2/15/25
West Texas Independent School District, McLennan and Hill
Counties, Unlimited Tax School Building and Refunding Bonds,
Series 1998:
1,000 0.000%, 8/15/22 8/13 at 61.20 AAA 374,390
1,000 0.000%, 8/15/24 8/13 at 54.88 AAA 331,350
1,800 Williamson County, Texas, General Obligation Road 2/12 at 100.00 AAA 2,025,684
Bonds, Series 2002, 5.500%, 2/15/16 - FSA Insured
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 12.6%
4,500 Austin, Texas, Hotel Occupancy Tax Subordinate Lien 11/09 at 100.00 AAA 5,037,345
Revenue Refunding Bonds, Series 1999, 5.800%, 11/15/29 -
AMBAC Insured
1,275 Copperas Cove, Texas, Certificates of Obligation, 8/12 at 100.00 AAA 1,324,814
Series 2003, 5.000%, 8/15/23 - MBIA Insured
2,305 Corpus Christi, Texas, Certificates of Obligation, Limited 9/12 at 100.00 AAA 2,530,360
Tax and Hotel Occupancy Tax Revenue Bonds, Series 2002,
5.500%, 9/01/21 - FSA Insured
2,250 Harris County-Houston Sports Authority, Texas, Senior 11/11 at 100.00 AAA 2,335,748
Lien Revenue Bonds, Series 2001G, 5.250%, 11/15/22 -
MBIA Insured
1,000 Laredo, Texas, Sports Venue Sales Tax Revenue Bonds, 3/09 at 100.00 AAA 1,051,230
Series 2001, 5.300%, 3/15/26 - FGIC Insured
1,255 Pasadena, Texas, Certificates of Obligation, Series 2002, 4/11 at 100.00 AAA 1,295,549
5.125%, 4/01/24 - FGIC Insured
4,580 San Antonio, Texas, Hotel Occupancy Tax Revenue Bonds, 8/06 at 102.00 AAA 5,037,634
Henry B. Gonzalez Convention Center Project, Series 1996,
5.700%, 8/15/26 - FGIC Insured
------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 6.4%
1,000 Austin, Texas, Airport System Prior Lien Revenue Bonds, 11/13 at 100.00 AAA 1,099,970
Series 2003, 5.250%, 11/15/16 - MBIA Insured
2,600 Dallas-Fort Worth International Airport Facility Improvement 11/09 at 101.00 CCC 1,898,104
Corporation, Texas, Revenue Bonds, American Airlines, Inc.,
Series 1999, 6.375%, 5/01/35 (Alternative Minimum Tax)
1,000 Harris County, Texas, Toll Road Senior Lien Revenue Refunding 8/04 at 102.00 AAA 1,036,420
Bonds, Series 1994, 5.375%, 8/15/20 - FGIC Insured
30
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION (continued)
$ 2,000 Houston, Texas, Airport System Subordinate Lien Revenue 7/10 at 100.00 AAA $ 2,106,400
Bonds, Series 2000A, 5.625%, 7/01/30 (Alternative
Minimum Tax) - FSA Insured
3,000 Texas Turnpike Authority, Central Texas Turnpike System 8/12 at 100.00 AAA 3,233,220
First Tier Revenue Bonds, Series 2002A, 5.500%, 8/15/39 -
AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 9.0%
195 Abilene Housing Development Corporation, Texas, No Opt. Call N/R*** 217,454
Section 8 First Lien Revenue Bonds, Abilene East
Apartments, Series 1978, 7.000%, 7/01/08
1,000 Caddo Mills Independent School District, Hunt County, 2/05 at 100.00 N/R*** 1,054,750
Texas, General Obligation Unlimited Tax School Building
and Refunding Bonds, Series 1995, 6.375%, 8/15/25
(Pre-refunded to 2/15/05)
575 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 7/10 at 100.00 AAA 643,741
Asset-Backed Bonds, Series 2000, 5.750%, 7/01/20
(Pre-refunded to 7/01/10)
1,185 Fort Bend County Levee Improvement District 11, Texas, 9/04 at 100.00 AAA 1,225,989
Unlimited Tax Levee Improvement Bonds, Series 1994,
6.900%, 9/01/17 (Pre-refunded to 9/01/04) - MBIA Insured
1,450 Galveston Industrial Development Corporation, Texas, 9/05 at 100.00 AAA 1,553,110
Sales Tax Revenue Bonds, Series 1995, 5.750%, 9/01/15
(Pre-refunded to 9/01/05) - AMBAC Insured
800 Laredo, Webb County, Texas, Waterworks System Combined 8/04 at 100.00 AAA 819,952
Tax and Revenue Certificates of Obligation, Series 1994,
5.625%, 8/15/11 (Pre-refunded to 8/15/04) -
MBIA Insured
1,000 North Central Texas Health Facilities Development No Opt. Call AAA 1,155,570
Corporation, Hospital Revenue Bonds, Presbyterian
Health Care System Project, Series 1996B,
5.750%, 6/01/26 - MBIA Insured
2,500 Retama Development Corporation, Texas, Special Facilities No Opt. Call AAA 3,759,050
Revenue Bonds, Retama Park Racetrack Project,
Series 1993, 8.750%, 12/15/17
665 San Antonio, Texas, Water System Revenue Refunding No Opt. Call AAA 787,254
Bonds, Series 1992, 6.500%, 5/15/10 - MBIA Insured
2,000 University of Houston, Texas, Consolidated Revenue 2/05 at 100.00 AAA 2,101,100
Bonds, Series 1995, 6.000%, 2/15/17 (Pre-refunded
to 2/15/05) - FGIC Insured
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 9.7%
2,560 Brazos River Authority, Texas, Pollution Control Revenue 4/13 at 101.00 BBB 2,914,074
Refunding Bonds, TXU Electric Company Project,
Series 1999C, 7.700%, 3/01/32 (Alternative
Minimum Tax)
2,500 Brazos River Authority, Texas, Revenue Refunding Bonds, 4/09 at 101.00 BBB- 2,485,200
Reliant Energy, Incorporated Project, Series 1999A,
5.375%, 4/01/19
2,000 Harris County Health Facilities Development Corporation, 2/10 at 100.00 AAA 2,222,860
Texas, Thermal Utility Revenue Bonds, TECO Project,
Series 2000, 5.750%, 2/15/15 (Alternative Minimum
Tax) - AMBAC Insured
1,500 Matagorda County Navigation District 1, Texas, Pollution 7/04 at 101.00 AAA 1,534,920
Control Revenue Refunding Bonds, Central Power and
Light Company Project, Series 1993, 6.000%, 7/01/28 -
MBIA Insured
1,000 Matagorda County Navigation District 1, Texas, Revenue 5/09 at 101.00 BBB- 1,001,930
Refunding Bonds, Reliant Energy Project, Series 1999B,
5.950%, 5/01/30 (Alternative Minimum Tax)
2,000 Sabine River Authority, Texas, Pollution Control Revenue No Opt. Call BBB 2,154,620
Refunding Bonds, TXU Electric Company Project,
Series 2001A, 5.500%, 5/01/22 (Mandatory put 11/01/11)
1,750 San Antonio, Texas, Electric and Gas System Revenue 2/12 at 100.00 AA+ 1,897,823
Refunding Bonds, Series 2002, 5.375%, 2/01/20
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 11.2%
3,500 Houston, Texas, Water and Sewer System Junior Lien 12/12 at 100.00 AAA 3,599,225
Revenue Refunding Bonds, Series 2002A,
5.000%, 12/01/30 - FSA Insured
5,275 Houston, Texas, Water and Sewer System Junior Lien 12/10 at 100.00 AAA 5,522,661
Revenue Refunding Bonds, Series 2000B,
5.250%, 12/01/30 - FGIC Insured
800 Houston, Texas, Water and Sewer System Junior Lien 12/07 at 101.00 AAA 844,328
Revenue Refunding Bonds, Series 1997A,
5.375%, 12/01/27 - FGIC Insured
31
Nuveen Texas Quality Income Municipal Fund (NTX) (continued)
Portfolio of INVESTMENTS January 31, 2004 (Unaudited)
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER (continued)
$ 3,500 Houston, Texas, Water and Sewer System Junior Lien 12/11 at 100.00 AAA $ 3,912,090
Revenue Refunding Bonds, Series 2001A,
5.500%, 12/01/17 - FSA Insured
1,000 San Antonio, Texas, Water System Senior Lien Revenue 5/12 at 100.00 AAA 1,028,220
Refunding Bonds, Series 2002, 5.000%, 5/15/28 -
FSA Insured
1,500 Texas Water Development Board, State Revolving Fund 7/09 at 100.00 AAA 1,643,413
Senior Lien Revenue Bonds, Series 1999A, 5.500%, 7/15/21
------------------------------------------------------------------------------------------------------------------------------------
$ 208,433 Total Long-Term Investments (cost $197,135,949) - 144.2% 212,127,908
------------------------------------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS - 0.3%
500 Puerto Rico Government Development Bank, Adjustable A-1 500,000
Refunding Bonds, Variable Rate Demand Obligations,
Series 1985, 0.900%, 12/01/15 - MBIA Insured+
------------------------------------------------------------------------------------------------------------------------------------
$ 500 Total Short-Term Investments (cost $500,000) 500,000
=============-----------------------------------------------------------------------------------------------------------------------
Total Investments (cost $197,635,949) - 144.5% 212,627,908
--------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 2.4% 3,559,586
--------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (46.9)% (69,000,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 147,187,494
====================================================================================================================
(1) All percentages shown in the Portfolio of Investments
are based on net assets applicable to Common shares.
* 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.
** Ratings: Using the higher of Standard & Poor's or
Moody's rating.
*** Securities are backed by an escrow or trust containing
sufficient U.S. Government or U.S. Government agency
securities which ensures the timely payment of
principal and interest. Such securities are normally
considered to be equivalent to AAA rated securities.
N/R Investment is not rated.
+ Security has a maturity of more than one year, but has
variable rate and demand features which qualify it as a
short-term security. The rate disclosed is that
currently in effect. This rate changes periodically
based on market conditions or a specified market index.
See accompanying notes to financial statements.
32
Statement of
ASSETS AND LIABILITIES January 31, 2004 (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 market value (cost $86,763,422,
$32,831,457, $52,371,670, $63,369,767 and
$197,635,949, respectively) $91,764,254 $34,555,945 $55,421,182 $64,618,446 $212,627,908
Cash 1,615,472 955,878 1,442,824 84,025 253,335
Receivables:
Interest 769,237 344,824 413,238 502,914 3,511,669
Investments sold -- -- -- 1,000,000 --
Other assets 1,315 1,963 3,585 794 1,166
-----------------------------------------------------------------------------------------------------------------------------------
Total assets 94,150,278 35,858,610 57,280,829 66,206,179 216,394,078
-----------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Payable for investments purchased -- -- 1,205,425 -- --
Accrued expenses:
Management fees 51,887 10,638 16,712 18,578 118,435
Other 56,628 13,109 14,560 22,544 83,711
Preferred share dividends payable 823 1,119 1,338 1,810 4,438
-----------------------------------------------------------------------------------------------------------------------------------
Total liabilities 109,338 24,866 1,238,035 42,932 206,584
-----------------------------------------------------------------------------------------------------------------------------------
Preferred shares, at liquidation value 30,000,000 12,000,000 18,500,000 22,000,000 69,000,000
-----------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common shares $64,040,940 $23,833,744 $37,542,794 $44,163,247 $147,187,494
===================================================================================================================================
Common shares outstanding 4,439,903 1,543,102 2,419,197 3,067,117 9,470,787
===================================================================================================================================
Net asset value per Common share outstanding
(net assets applicable to Common shares,
divided by Common shares outstanding) $ 14.42 $ 15.45 $ 15.52 $ 14.40 $ 15.54
===================================================================================================================================
NET ASSETS APPLICABLE TO COMMON SHARES CONSIST OF:
-----------------------------------------------------------------------------------------------------------------------------------
Common shares, $.01 par value per share $ 44,399 $ 15,431 $ 24,192 $ 30,671 $ 94,708
Paid-in surplus 61,703,377 21,817,418 34,260,492 43,241,735 134,225,160
Undistributed net investment income 539,144 231,855 78,941 14,433 1,627,109
Accumulated net realized gain (loss)
from investments (3,246,812) 44,552 129,657 (372,271) (3,751,442)
Net unrealized appreciation of investments 5,000,832 1,724,488 3,049,512 1,248,679 14,991,959
-----------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common shares $64,040,940 $23,833,744 $37,542,794 $44,163,247 $147,187,494
===================================================================================================================================
Authorized shares:
Common 200,000,000 Unlimited Unlimited Unlimited Unlimited
Preferred 1,000,000 Unlimited Unlimited Unlimited Unlimited
===================================================================================================================================
See accompanying notes to financial statements.
33
Statement of
OPERATIONS Six Months Ended January 31, 2004 (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 $2,457,451 $ 860,480 $1,306,538 $1,513,759 $ 5,747,331
-----------------------------------------------------------------------------------------------------------------------------------
EXPENSES
Management fees 302,042 114,874 180,464 212,528 688,463
Preferred shares - auction fees 37,845 15,143 23,446 27,752 87,042
Preferred shares - dividend disbursing agent fees 5,042 5,042 5,042 5,042 10,081
Shareholders' servicing agent fees and expenses 2,532 141 373 151 7,664
Custodian's fees and expenses 13,345 4,115 5,692 8,265 30,499
Directors'/Trustees' fees and expenses 1,084 527 948 942 2,666
Professional fees 5,477 4,424 5,392 7,638 6,568
Shareholders' reports - printing and mailing expenses 3,322 524 5,206 1,250 13,746
Stock exchange listing fees 5,616 71 110 141 5,628
Investor relations expense 965 996 2,761 3,420 10,298
Other expenses 5,906 4,329 4,788 5,055 8,056
-----------------------------------------------------------------------------------------------------------------------------------
Total expenses before custodian fee credit and expense
reimbursement 383,176 150,186 234,222 272,184 870,711
Custodian fee credit (5,128) (2,208) (2,704) (2,347) (6,425)
Expense reimbursement -- (53,019) (83,291) (104,629) --
-----------------------------------------------------------------------------------------------------------------------------------
Net expenses 378,048 94,959 148,227 165,208 864,286
-----------------------------------------------------------------------------------------------------------------------------------
Net investment income 2,079,403 765,521 1,158,311 1,348,551 4,883,045
-----------------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENTS
Net realized gain (loss) from investments 465,780 82,220 129,794 (300,495) 85,830
Change in net unrealized appreciation
(depreciation) of investments 2,966,939 1,492,156 2,235,913 3,208,177 9,037,894
-----------------------------------------------------------------------------------------------------------------------------------
Net gain from investments 3,432,719 1,574,376 2,365,707 2,907,682 9,123,724
-----------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS
From net investment income (116,083) (42,780) (69,300) (92,479) (305,012)
From accumulated net realized gains from investments -- (4,168) (9,227) -- --
-----------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets applicable to Common shares
from distributions to Preferred shareholders (116,083) (46,948) (78,527) (92,479) (305,012)
-----------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets applicable to Common shares
from operations $5,396,039 $2,292,949 $3,445,491 $4,163,754 $13,701,757
===================================================================================================================================
See accompanying notes to financial statements.
34
Statement of
CHANGES IN NET ASSETS (Unaudited)
ARIZONA ARIZONA ARIZONA
PREMIUM INCOME (NAZ) DIVIDEND ADVANTAGE (NFZ) DIVIDEND ADVANTAGE 2 (NKR)
--------------------------- ---------------------------- ---------------------------
SIX MONTHS SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED ENDED YEAR ENDED
1/31/04 7/31/03 1/31/04 7/31/03 1/31/04 7/31/03
------------------------------------------------------------------------------------------------------------------------------------
OPERATIONS
Net investment income $ 2,079,403 $ 4,313,339 $ 765,521 $ 1,536,065 $ 1,158,311 $ 2,310,487
Net realized gain (loss)
from investments 465,780 (3,250,460) 82,220 43,532 129,794 132,780
Change in net unrealized
appreciation (depreciation)
of investments 2,966,939 649,626 1,492,156 (623,996) 2,235,913 (880,264)
Distributions to Preferred
Shareholders:
From net investment income (116,083) (295,481) (42,780) (100,618) (69,300) (185,421)
From accumulated net realized
gains from investments -- -- (4,168) (8,316) (9,227) (3,802)
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares
from operations 5,396,039 1,417,024 2,292,949 846,667 3,445,491 1,373,780
------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS
From net investment income (2,036,290) (4,059,731) (701,903) (1,357,099) (1,046,243) (2,088,653)
From accumulated net realized gains
from investments -- -- (64,486) (65,547) (105,537) (28,590)
------------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets applicable to
Common shares from distributions
to Common shareholders (2,036,290) (4,059,731) (766,389) (1,422,646) (1,151,780) (2,117,243)
------------------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Common shares:
Net proceeds from sale of shares -- -- 1,664 -- -- --
Net proceeds from shares
issued to shareholders due to
reinvestment of distributions 134,381 313,593 15,111 45,775 13,007 80,623
Preferred shares offering costs -- -- -- 29,976 (1,400) (12,866)
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares
from capital share transactions 134,381 313,593 16,775 75,751 11,607 67,757
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares 3,494,130 (2,329,114) 1,543,335 (500,228) 2,305,318 (675,706)
Net assets applicable to Common
shares at the beginning
of period 60,546,810 62,875,924 22,290,409 22,790,637 35,237,476 35,913,182
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common
shares at the end of period $64,040,940 $60,546,810 $23,833,744 $22,290,409 $37,542,794 $35,237,476
====================================================================================================================================
Undistributed (Over-distribution of)
net investment income at the
end of period $ 539,144 $ 612,114 $ 231,855 $ 211,017 $ 78,941 $ 36,173
====================================================================================================================================
See accompanying notes to financial statements.
35
Statement of
CHANGES IN NET ASSETS (Unaudited) (continued)
ARIZONA TEXAS
DIVIDEND ADVANTAGE 3 (NXE) QUALITY INCOME (NTX)
----------------------------- ---------------------------
FOR THE
PERIOD 9/25/02
SIX MONTHS (COMMENCEMENT SIX MONTHS
ENDED OF OPERATIONS) ENDED YEAR ENDED
1/31/04 THROUGH 7/31/03 1/31/04 7/31/03
------------------------------------------------------------------------------------------------------------------------------------
OPERATIONS
Net investment income $ 1,348,551 $ 2,008,218 $ 4,883,045 $ 9,977,143
Net realized gain (loss) from investments (300,495) (72,291) 85,830 (3,211,937)
Change in net unrealized appreciation
(depreciation) of investments 3,208,177 (1,959,498) 9,037,894 (2,256,490)
Distributions to Preferred Shareholders:
From net investment income (92,479) (166,960) (305,012) (768,750)
From accumulated net realized gains
from investments -- -- -- (8,765)
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares
from operations 4,163,754 (190,531) 13,701,757 3,731,201
------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS
From net investment income (1,232,981) (1,849,401) (4,545,977) (9,027,160)
From accumulated net realized gains
from investments -- -- -- (100,152)
------------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets applicable to
Common shares from distributions
to Common shareholders (1,232,981) (1,849,401) (4,545,977) (9,127,312)
------------------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Common shares:
Net proceeds from sale of shares -- 43,742,700 -- --
Net proceeds from shares
issued to shareholders due to
reinvestment of distributions 1,632 -- 56,605 66,550
Preferred shares offering costs (16,200) (556,001) -- --
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares
from capital share transactions (14,568) 43,186,699 56,605 66,550
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares 2,916,205 41,146,767 9,212,385 (5,329,561)
Net assets applicable to Common
shares at the beginning of period 41,247,042 100,275 137,975,109 143,304,670
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common
shares at the end of period $44,163,247 $41,247,042 $147,187,494 $137,975,109
====================================================================================================================================
Undistributed (Over-distribution of)
net investment income at the
end of period $ 14,433 $ (8,658) $ 1,627,109 $ 1,595,053
====================================================================================================================================
See accompanying notes to financial statements.
36
Notes to
FINANCIAL STATEMENTS (Unaudited)
1. GENERAL INFORMATION AND SIGNIFICANT ACCOUNTING POLICIES
The state Funds (the "Funds") covered in this report and their corresponding
common share stock exchange symbols are Nuveen 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). Common shares of Arizona Premium Income (NAZ) and Texas Quality Income
(NTX) are traded on the New York Stock Exchange while Common shares of Arizona
Dividend Advantage (NFZ), Arizona Dividend Advantage 2 (NKR) and Arizona
Dividend Advantage 3 (NXE) are traded on the American Stock Exchange. The Funds
are registered under the Investment Company Act of 1940, as amended, as
closed-end management investment companies.
Prior to the commencement of operations of Arizona Dividend Advantage 3 (NXE),
the Fund had no operations other than those related to organizational matters,
the initial capital contribution of $100,275 by Nuveen Advisory Corp. (the
"Adviser"), a wholly owned subsidiary of Nuveen Investments, Inc., and the
recording of the organization expenses ($11,500) and its reimbursement by Nuveen
Investments, LLC, also a wholly owned subsidiary of Nuveen Investments, Inc.
Each Fund seeks to provide current income exempt from both regular federal and
designated state income taxes, where applicable, by investing primarily in a
diversified portfolio of municipal obligations issued by state and local
government authorities within a single state.
The following is a summary of significant accounting policies followed by the
Funds in the preparation of their financial statements in accordance with
accounting principles generally accepted in the United States.
Securities Valuation
The prices of municipal bonds in each Fund's investment portfolio are provided
by a pricing service approved by the Funds' Board of Directors/Trustees. When
price quotes are not readily available (which is usually the case for municipal
securities), the pricing service establishes fair market value based on yields
or prices of municipal bonds of comparable quality, type of issue, coupon,
maturity and rating, indications of value from securities dealers, evaluations
of anticipated cash flows or collateral and general market conditions. If it is
determined that market prices for a security are unavailable or inappropriate,
the Board of Directors/Trustees of the Funds, or its designee, may establish a
fair value for the security. Temporary investments in securities that have
variable rate and demand features qualifying them as short-term securities are
valued at amortized cost, which approximates market value.
Securities Transactions
Securities transactions are recorded on a trade date basis. Realized gains and
losses from such transactions are determined on the specific identification
method. Securities purchased or sold on a when-issued or delayed delivery basis
may have extended settlement periods. The securities so purchased are subject to
market fluctuation during this period. The Funds have instructed the custodian
to segregate assets with a current value at least equal to the amount of the
when-issued and delayed delivery purchase commitments. At January 31, 2004,
Arizona Dividend Advantage 2 (NKR)had an outstanding when-issued purchase
commitment of $1,205,425. There were no such outstanding purchase commitments in
any of the other Funds.
37
Notes to
FINANCIAL STATEMENTS (Unaudited) (continued)
Investment Income
Interest income, which includes the amortization of premiums and accretion of
discounts for financial reporting purposes, is recorded on an accrual basis.
Income Taxes
Each Fund is a separate taxpayer for federal income tax purposes. Each Fund
intends to comply with the requirements of the Internal Revenue Code applicable
to regulated investment companies and to distribute all of its net investment
income to its share holders. 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, where applicable, to retain such tax-exempt
status when distributed to shareholders of the Funds.
Dividends and Distributions to Common Shareholders
Dividends from tax-exempt net investment income are declared monthly. Net
realized capital gains and/or market discount from investment transactions, if
any, are distributed to shareholders not less frequently than annually.
Furthermore, capital gains are distributed only to the extent they exceed
available capital loss carryforwards.
Distributions to Common shareholders of tax-exempt net investment income, net
realized capital gains and/or market discount, if any, are recorded on the
ex-dividend date. The amount and timing of distributions are determined in
accordance with federal income tax regulations, which may differ from accounting
principles generally accepted in the United States.
Preferred Shares
The Funds have issued and outstanding $25,000 stated value Preferred shares.
Each Fund's Preferred shares are issued in one or more Series. The dividend rate
on each Series may change every seven days, as set pursuant to a dutch auction
process by the auction agent, and is payable at or near the end of each rate
period. The number of Preferred shares outstanding, 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 -- -- -- 880 760
Series T -- 480 -- -- --
Series W -- -- 740 -- --
Series TH 1,200 -- -- -- 2,000
--------------------------------------------------------------------------------
Total 1,200 480 740 880 2,760
================================================================================
Arizona Dividend Advantage 3 (NXE) issued the Preferred shares listed above on
November 15, 2002.
38
Derivative Financial Instruments
The Funds may invest in certain derivative financial instruments including
futures, forward, swap, and option contracts, and other financial instruments
with similar characteristics. Although the Funds are authorized to invest in
such financial instruments, and may do so in the future, they did not make any
such investments during the six months ended January 31, 2004.
Custodian Fee Credit
Each Fund has an arrangement with the custodian bank whereby certain custodian
fees and expenses are reduced by credits earned on each Fund's cash on deposit
with the bank. Such deposit arrangements are an alternative to overnight
investments.
Offering Costs
Nuveen Investments, LLC has agreed to pay all common share offering costs (other
than the sales load) that exceed $.03 per Common share for Arizona Dividend
Advantage 3 (NXE). Arizona Dividend Advantage 3's (NXE) share of common share
offering costs of ($91,800) was recorded as a reduction of the proceeds from the
sale of common shares.
Costs incurred by Arizona Dividend Advantage 3 (NXE) in connection with its
offering of Preferred shares ($572,201) were recorded as a reduction to paid-in
surplus.
Use of Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of increases and
decreases in net assets applicable to Common shares from operations during the
reporting period. Actual results may differ from those estimates.
39
Notes to
FINANCIAL STATEMENTS (Unaudited) (continued)
2. FUND SHARES
Transactions in Common and Preferred shares were as follows:
ARIZONA PREMIUM ARIZONA DIVIDEND ARIZONA DIVIDEND
INCOME (NAZ) ADVANTAGE (NFZ) ADVANTAGE 2 (NKR)
------------------------ ------------------------ ------------------------
SIX MONTHS SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED ENDED YEAR ENDED
1/31/04 7/31/03 1/31/04 7/31/03 1/31/04 7/31/03
---------------------------------------------------------------------------------------------------------
Common shares:
Shares sold -- -- -- -- -- --
Shares issued to
shareholders due to
reinvestment of
distributions 8,855 19,523 960 2,947 926 5,171
---------------------------------------------------------------------------------------------------------
8,855 19,523 960 2,947 926 5,171
=========================================================================================================
Preferred shares sold -- -- -- -- -- --
=========================================================================================================
ARIZONA DIVIDEND TEXAS QUALITY
ADVANTAGE 3 (NXE) INCOME (NTX)
------------------------ ------------------------
FOR THE
PERIOD
9/25/02
(COMMENCE-
MENT OF
SIX MONTHS OPERATIONS) SIX MONTHS
ENDED THROUGH ENDED YEAR ENDED
1/31/04 7/31/03 1/31/04 7/31/03
---------------------------------------------------------------------------------------------------------
Common shares:
Shares sold -- 3,060,000 -- --
Shares issued to shareholders
due to reinvestment of
distributions 117 -- 3,899 4,266
---------------------------------------------------------------------------------------------------------
117 3,060,000 3,899 4,266
=========================================================================================================
Preferred shares sold -- 880 -- --
=========================================================================================================
40
3. SECURITIES TRANSACTIONS
Purchases and sales (including maturities) of investments in long-term municipal
securities for the six months ended January 31, 2004, 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 $20,042,871 $3,232,037 $2,845,541 $7,859,985 $13,465,971
Sales and maturities 14,453,605 3,342,455 1,736,760 7,805,644 12,752,790
=========================================================================================================
4. INCOME TAX INFORMATION
The following information is presented on an income tax basis. Differences
between amounts for financial statement and federal income tax purposes are
primarily due to timing differences in recognizing income on taxable market
discount securities and timing differences in recognizing certain gains and
losses on security transactions.
At January 31, 2004, the cost of investments 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)
---------------------------------------------------------------------------------------------------------
Cost of investments $86,745,933 $32,833,383 $52,371,100 $63,367,960 $197,534,223
=========================================================================================================
Gross unrealized appreciation and gross unrealized depreciation of investments
at January 31, 2004, 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 $5,575,900 $1,727,740 $3,237,121 $1,472,903 $15,875,848
Depreciation (557,579) (5,178) (187,039) (222,417) (782,163)
---------------------------------------------------------------------------------------------------------
Net unrealized appreciation
of investments $5,018,321 $1,722,562 $3,050,082 $1,250,486 $15,093,685
=========================================================================================================
41
Notes to
FINANCIAL STATEMENTS (Unaudited) (continued)
The tax components of undistributed net investment income and net realized gains
at July 31, 2003, the Funds' last fiscal 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 $937,435 $325,194 $208,855 $196,735 $2,271,776
Undistributed net ordinary income * 216 68,563 110,761 -- --
Undistributed net long-term capital gains -- -- 5,120 -- --
=========================================================================================================
* Net ordinary income consists of taxable market discount income and net
short-term capital gains, if any.
The tax character of distributions paid during the fiscal year ended July 31,
2003, the Funds' last fiscal year end, 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 $4,355,548 $1,446,815 $2,277,296 $1,809,880 $9,784,102
Distributions from net ordinary income * -- 2,222 33,393 -- 21,034
Distributions from net long-term
capital gains -- 73,795 -- -- 93,585
============================================================================================================
* Net ordinary income consists of taxable market discount income and net
short-term capital gains, if any.
At July 31, 2003, the Funds' last fiscal 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 TEXAS
PREMIUM QUALITY
INCOME INCOME
(NAZ) (NTX)
--------------------------------------------------------------------------------
Expiration year:
2010 $ 2,164 $ --
2011 1,436,486 855,431
--------------------------------------------------------------------------------
Total $1,438,650 $855,431
================================================================================
The following Funds elected to defer net realized losses from investments
incurred from November 1, 2002 through July 31, 2003 ("post-October losses") in
accordance with Federal income tax regulations. The following post-October
losses are treated as having arisen on the first day of the current fiscal year:
ARIZONA ARIZONA ARIZONA TEXAS
PREMIUM DIVIDEND DIVIDEND QUALITY
INCOME ADVANTAGE ADVANTAGE 3 INCOME
(NAZ) (NFZ) (NXE) (NTX)
--------------------------------------------------------------------------------
$2,273,974 $32,396 $71,776 $2,981,841
================================================================================
42
5. MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Under Arizona Premium Income's (NAZ) and Texas Quality Income's (NTX) investment
management agreements with the Adviser, each Fund pays an annual management fee,
payable monthly, at the rates set forth below, which are based upon the average
daily net assets (including net assets attributable to Preferred shares) of each
Fund as follows:
AVERAGE DAILY NET ASSETS (INCLUDING NET ASSETS
ATTRIBUTABLE TOPREFERRED SHARES) MANAGEMENT FEE
--------------------------------------------------------------------------------
For the first $125 million .6500%
For the next $125 million .6375
For the next $250 million .6250
For the next $500 million .6125
For the next $1 billion .6000
For the next $3 billion .5875
For net assets over $5 billion .5750
================================================================================
Under Arizona Dividend Advantage's (NFZ), Arizona Dividend Advantage 2's (NKR)
and Arizona Dividend Advantage 3's (NXE) investment management agreements with
the Adviser, each Fund pays an annual management fee, payable monthly, at the
rates set forth below, which are based upon the average daily net assets
(including net assets attributable to Preferred shares) of each Fund as follows:
AVERAGE DAILY NET ASSETS (INCLUDING NET ASSETS
ATTRIBUTABLE TO PREFERRED SHARES) MANAGEMENT FEE
--------------------------------------------------------------------------------
For the first $125 million .6500%
For the next $125 million .6375
For the next $250 million .6250
For the next $500 million .6125
For the next $1 billion .6000
For net assets over $2 billion .5750
================================================================================
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 their officers, all of whom receive remuneration for their
services to the Funds from the Adviser or its affiliates.
43
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 (including net assets attributable to Preferred shares), for fees and
expenses in the amounts and for the time periods set forth below:
YEAR ENDING YEAR ENDING
JANUARY 31, JANUARY 31,
--------------------------------------------------------------------------------
2001* .30% 2007 .25%
2002 .30 2008 .20
2003 .30 2009 .15
2004 .30 2010 .10
2005 .30 2011 .05
2006 .30
================================================================================
* From the commencement of operations.
The Adviser has not agreed to reimburse 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 (including net assets attributable to Preferred shares), for fees and
expenses in the amounts and for the time periods set forth below:
YEAR ENDING YEAR ENDING
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.
44
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 (including net assets attributable to Preferred shares), for fees and
expenses in the amounts and for the time periods set forth below:
YEAR ENDING YEAR ENDING
SEPTEMBER 30, SEPTEMBER 30,
--------------------------------------------------------------------------------
2002* .32% 2007 .32%
2003 .32 2008 .24
2004 .32 2009 .16
2005 .32 2010 .08
2006 .32
================================================================================
* From the commencement of operations.
The Adviser has not agreed to reimburse Arizona Dividend Advantage 3 (NXE) for
any portion of its fees and expenses beyond September 30, 2010.
6. SUBSEQUENT EVENT - DISTRIBUTIONS TO COMMON SHAREHOLDERS
The Funds declared Common share dividend distributions from their tax-exempt net
investment income which were paid on March 1, 2004, to shareholders of record on
February 15, 2004, 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 $.0765 $.0765 $.0720 $.0670 $.0800
================================================================================
45
Financial
HIGHLIGHTS (Unaudited)
Selected data for a Common share outstanding throughout each period:
Investment Operations Less Distributions
----------------------------------------------------------------- ------------------------------
Distributions Distributions
from Net from Net
Beginning Net Investment Capital Investment Capital
Common Realized/ Income to Gains to Income to Gains to
Share Net Unrealized Preferred Preferred Common Common
Net Asset Investment Investment Share- Share- Share- Share-
Value Income Gain (Loss) holders+ holders+ Total holders holders Total
===============================================================================================================================
ARIZONA PREMIUM
INCOME (NAZ)
-------------------------------------------------------------------------------------------------------------------------------
Year Ended 7/31:
2004(d) $13.66 $ .47 $ .78 $(.03) $ -- $1.22 $(.46) $ -- $ (.46)
2003 14.25 .97 (.57) (.07) -- .33 (.92) -- (.92)
2002 14.77 1.07 (.57) (.09) (.01) .40 (.88) (.04) (.92)
2001 14.25 1.09 .50 (.23) -- 1.36 (.83) (.01) (.84)
2000 14.90 1.06 (.61) (.25) -- .20 (.85) -- (.85)
1999 15.43 1.07 (.55) (.21) -- .31 (.84) -- (.84)
ARIZONA DIVIDEND
ADVANTAGE (NFZ)
-------------------------------------------------------------------------------------------------------------------------------
Year Ended 7/31:
2004(d) 14.45 .50 1.03 (.03) -- 1.50 (.46) (.04) (.50)
2003 14.81 1.00 (.38) (.07) (.01) .54 (.88) (.04) (.92)
2002 14.37 1.04 .36 (.11) -- 1.29 (.84) (.01) (.85)
2001(a) 14.33 .44 .23 (.08) -- .59 (.35) -- (.35)
ARIZONA DIVIDEND
ADVANTAGE 2 (NKR)
-------------------------------------------------------------------------------------------------------------------------------
Year Ended 7/31:
2004(d) 14.57 .48 .97 (.03) -- 1.42 (.43) (.04) (.47)
2003 14.88 .96 (.31) (.08) -- .57 (.86) (.01) (.87)
2002(b) 14.33 .24 .71 (.02) -- .93 (.22) -- (.22)
ARIZONA DIVIDEND
ADVANTAGE 3 (NXE)
-------------------------------------------------------------------------------------------------------------------------------
Year Ended 7/31:
2004(d) 13.45 .44 .95 (.03) -- 1.36 (.40) -- (.40)
2003(c) 14.33 .66 (.67) (.05) -- (.06) (.61) -- (.61)
TEXAS QUALITY
INCOME (NTX)
-------------------------------------------------------------------------------------------------------------------------------
Year Ended 7/31:
2004(d) 14.57 .52 .96 (.03) -- 1.45 (.48) -- (.48)
2003 15.14 1.05 (.58) (.08) -- .39 (.95) (.01) (.96)
2002 15.16 1.11 (.02) (.10) (.02) .97 (.92) (.07) (.99)
2001 14.26 1.16 .88 (.27) -- 1.77 (.87) -- (.87)
2000 15.13 1.16 (.74) (.27) (.02) .13 (.91) (.09) (1.00)
1999 15.90 1.16 (.72) (.22) (.02) .20 (.90) (.07) (.97)
===============================================================================================================================
Total Returns
--------------------
Based
Offering on
Costs and Ending Common
Preferred Common Based Share
Share Share Ending on Net
Underwriting Net Asset Market Market Asset
Discounts Value Value Value** Value**
==================================================================================
ARIZONA PREMIUM
INCOME (NAZ)
----------------------------------------------------------------------------------
Year Ended 7/31:
2004(d) $-- $14.42 $16.2700 11.74% 9.04%
2003 -- 13.66 15.0000 (5.98) 2.21
2002 -- 14.25 16.9000 9.63 2.88
2001 -- 14.77 16.3200 17.77 9.74
2000 -- 14.25 14.6250 (8.80) 1.61
1999 -- 14.90 17.0000 8.67 1.92
ARIZONA DIVIDEND
ADVANTAGE (NFZ)
----------------------------------------------------------------------------------
Year Ended 7/31:
2004(d) -- 15.45 17.1700 15.81 10.48
2003 .02 14.45 15.3000 3.06 3.67
2002 -- 14.81 15.7500 6.38 9.32
2001(a) (.20) 14.37 15.6500 6.76 2.81
ARIZONA DIVIDEND
ADVANTAGE 2 (NKR)
----------------------------------------------------------------------------------
Year Ended 7/31:
2004(d) -- 15.52 14.9200 7.05 9.88
2003 (.01) 14.57 14.4000 (3.53) 3.67
2002(b) (.16) 14.88 15.8000 6.81 5.38
ARIZONA DIVIDEND
ADVANTAGE 3 (NXE)
----------------------------------------------------------------------------------
Year Ended 7/31:
2004(d) (.01) 14.40 14.1000 3.99 10.15
2003(c) (.21) 13.45 13.9700 (2.76) (2.05)
TEXAS QUALITY
INCOME (NTX)
----------------------------------------------------------------------------------
Year Ended 7/31:
2004(d) -- 15.54 15.1500 6.39 10.07
2003 -- 14.57 14.7100 4.14 2.54
2002 -- 15.14 15.0700 9.29 6.61
2001 -- 15.16 14.7300 21.16 12.74
2000 -- 14.26 12.9375 (7.93) 1.15
1999 -- 15.13 15.1875 2.97 1.21
==================================================================================
Ratios/Supplemental Data
---------------------------------------------------------------------------------------------
Before Credit/Reimbursement After Credit/Reimbursement***
----------------------------- -----------------------------
Ratio of Net Ratio of Net
Ratio of Investment Ratio of Investment
Ending Expenses Income to Expenses Income to
Net to Average Average to Average Average
Assets Net Assets Net Assets Net Assets Net Assets
Applicable Applicable Applicable Applicable Applicable Portfolio
to Common to Common to Common to Common to Common Turnover
Shares (000) Shares++ Shares++ Shares++ Shares++ Rate
====================================================================================================================
ARIZONA PREMIUM
INCOME (NAZ)
--------------------------------------------------------------------------------------------------------------------
Year Ended 7/31:
2004(d) $ 64,041 1.22%* 6.59%* 1.20%* 6.61%* 16%
2003 60,547 1.25 6.81 1.24 6.82 17
2002 62,876 1.28 7.45 1.26 7.47 19
2001 64,859 1.28 7.47 1.27 7.48 18
2000 62,287 1.26 7.58 1.25 7.59 33
1999 64,775 1.29 6.88 1.29 6.88 6
ARIZONA DIVIDEND
ADVANTAGE (NFZ)
--------------------------------------------------------------------------------------------------------------------
Year Ended 7/31:
2004(d) 23,834 1.29* 6.08* .81* 6.56* 9
2003 22,290 1.35 6.11 .91 6.55 20
2002 22,791 1.41 6.72 .93 7.20 40
2001(a) 22,072 1.43* 5.80* .95* 6.28* 21
ARIZONA DIVIDEND
ADVANTAGE 2 (NKR)
--------------------------------------------------------------------------------------------------------------------
Year Ended 7/31:
2004(d) 37,543 1.26* 5.79* .80* 6.25* 3
2003 35,237 1.27 5.78 .82 6.23 4
2002(b) 35,913 1.19* 4.43* .77* 4.85* 1
ARIZONA DIVIDEND
ADVANTAGE 3 (NXE)
--------------------------------------------------------------------------------------------------------------------
Year Ended 7/31:
2004(d) 44,163 1.25* 5.72* .76* 6.21* 12
2003(c) 41,247 1.19* 5.05* .73* 5.52* 16
TEXAS QUALITY
INCOME (NTX)
--------------------------------------------------------------------------------------------------------------------
Year Ended 7/31:
2004(d) 147,187 1.20* 6.75* 1.20* 6.75* 6
2003 137,975 1.20 6.93 1.19 6.94 12
2002 143,305 1.23 7.40 1.22 7.42 22
2001 143,127 1.21 7.87 1.19 7.88 24
2000 134,637 1.27 8.18 1.26 8.19 32
1999 142,784 1.23 7.31 1.23 7.32 19
====================================================================================================================
Preferred Shares at End of Period
------------------------------------------
Aggregate Liquidation
Amount and Market Asset
Outstanding Value Coverage
(000) Per Share Per Share
=================================================================
ARIZONA PREMIUM
INCOME (NAZ)
-----------------------------------------------------------------
Year Ended 7/31:
2004(d) $30,000 $25,000 $78,367
2003 30,000 25,000 75,456
2002 30,000 25,000 77,397
2001 30,000 25,000 79,049
2000 30,000 25,000 76,906
1999 30,000 25,000 78,979
ARIZONA DIVIDEND
ADVANTAGE (NFZ)
-----------------------------------------------------------------
Year Ended 7/31:
2004(d) 12,000 25,000 74,654
2003 12,000 25,000 71,438
2002 12,000 25,000 72,480
2001(a) 12,000 25,000 70,984
ARIZONA DIVIDEND
ADVANTAGE 2 (NKR)
-----------------------------------------------------------------
Year Ended 7/31:
2004(d) 18,500 25,000 75,734
2003 18,500 25,000 72,618
2002(b) 18,500 25,000 73,531
ARIZONA DIVIDEND
ADVANTAGE 3 (NXE)
-----------------------------------------------------------------
Year Ended 7/31:
2004(d) 22,000 25,000 75,186
2003(c) 22,000 25,000 71,872
TEXAS QUALITY
INCOME (NTX)
-----------------------------------------------------------------
Year Ended 7/31:
2004(d) 69,000 25,000 78,329
2003 69,000 25,000 74,991
2002 69,000 25,000 76,922
2001 69,000 25,000 76,858
2000 69,000 25,000 73,782
1999 69,000 25,000 76,733
=================================================================
* Annualized.
** Total Investment Return on Market Value is the combination of reinvested
dividend income, reinvested capital gains distributions, if any, and
changes in stock price per share. Total Return on Common Share Net Asset
Value is the combination of reinvested dividend income at net asset value,
reinvested capital gains distributions at net asset value, if any, and
changes in Common share net asset value per share. Total returns are not
annualized.
*** After custodian fee credit and expense reimbursement, where applicable.
+ The amounts shown are based on Common share equivalents.
++ Ratios do not reflect the effect of dividend payments to Preferred
shareholders; income ratios reflect income earned on assets attributable to
Preferred shares.
(a) For the period January 30, 2001 (commencement of operations) through July
31, 2001.
(b) For the period March 25, 2002 (commencement of operations) through July 31,
2002.
(c) For the period September 25, 2002 (commencement of operations) through July
31, 2003.
(d) For the six months ended January 31, 2004.
See accompanying notes to financial statements.
46-47 spread
Build Your Wealth
AUTOMATICALLY
Sidebar text: Nuveen makes reinvesting easy. A phone call is all it takes to set
up your reinvestment account.
NUVEEN CLOSED-END EXCHANGE-TRADED FUNDS DIVIDEND REINVESTMENT PLAN
Your Nuveen Closed-End Exchange-Traded Fund allows you to conveniently reinvest
dividends and/or capital gains distributions in additional fund shares.
By choosing to reinvest, you'll be able to invest money regularly and
automatically, and watch your investment grow through the power of tax-free
compounding. Just like dividends or distributions in cash, there may be times
when income or capital gains taxes may be payable on dividends or distributions
that are reinvested.
It is important to note that an automatic reinvestment plan does not ensure a
profit, nor does it protect you against loss in a declining market.
EASY AND CONVENIENT
To make recordkeeping easy and convenient, each month you'll receive a statement
showing your total dividends and distributions, the date of investment, the
shares acquired and the price per share, and the total number of shares you own.
HOW SHARES ARE PURCHASED
The shares you acquire by reinvesting will either be purchased on the open
market or newly issued by the Fund. If the shares are trading at or above net
asset value at the time of valuation, the Fund will issue new shares at the
then-current market price. If the shares are trading at less than net asset
value, shares for your account will be purchased on the open market. Dividends
and distributions received to purchase shares in the open market will normally
be invested shortly after the dividend payment date. No interest will be paid on
dividends and distributions awaiting reinvestment. Because the market price of
shares may increase before purchases are completed, the average purchase price
per share may exceed the market price at the time of valuation, resulting in the
acquisition of fewer shares than if the dividend or distribution had been paid
in shares issued by the Fund. A pro rata portion of any applicable brokerage
commissions on open market purchases will be paid by Plan participants. These
commissions usually will be lower than those charged on individual transactions.
FLEXIBILITY
You may change your distribution option or withdraw from the Plan at any time,
should your needs or situation change. Should you withdraw, you can receive a
certificate for all whole shares credited to your reinvestment account and cash
payment for fractional shares, or cash payment for all reinvestment account
shares, less brokerage commissions and a $2.50 service fee.
You can reinvest whether your shares are registered in your name, or in the name
of a brokerage firm, bank, or other nominee. Ask your investment advisor if his
or her firm will participate on your behalf. Participants whose shares are
registered in the name of one firm may not be able to transfer the shares to
another firm and continue to participate in the Plan.
The Fund reserves the right to amend or terminate the Plan at any time. Although
the Fund reserves the right to amend the Plan to include a service charge
payable by the participants, there is no direct service charge to participants
in the Plan at this time.
For more information on the Nuveen Automatic Reinvestment Plan or to enroll in
or withdraw from the Plan, speak with your financial advisor or call us at (800)
257-8787.
48
Fund
INFORMATION
BOARD OF DIRECTORS/TRUSTEES
William E. Bennett
Robert P. Bremner
Lawrence H. Brown
Jack B. Evans
William C. Hunter*
Anne E. Impellizzeri
William L. Kissick
Thomas E. Leafstrand
Peter R. Sawers
William J. Schneider
Timothy R. Schwertfeger
Judith M. Stockdale
Sheila W. Wellington
FUND MANAGER
Nuveen Advisory Corp.
333 West Wacker Drive
Chicago, IL 60606
CUSTODIAN
State Street Bank & Trust
Boston, MA
TRANSFER AGENT AND
SHAREHOLDER SERVICES
State Street Bank & Trust
Nuveen Funds
P.O. Box 43071
Providence, RI 02940-3071
(800) 257-8787
LEGAL COUNSEL
Chapman and Cutler LLP
Chicago, IL
INDEPENDENT AUDITORS
Ernst & Young LLP
Chicago, IL
POLICY CHANGE
On February 25, 2004, the Board approved policies that would allow each Fund, at
the discretion of the Adviser, to engage in certain types of derivative
transactions for the purpose of hedging interest rate risk. There is no
guarantee that the Adviser will cause a Fund to enter into such transactions. If
a Fund were to engage in hedging, there is no guarantee that such hedging will
be successful or that it will not reduce the Fund's total return.
PROXY VOTING POLICIES AND PROCEDURES
A description of the policies and procedures that the Funds use to determine how
to vote proxies relating to portfolio securities is available (i) without
charge, upon request, by calling Nuveen Investments at (800) 257-8787; and (ii)
on the Commission's website at http://www.sec.gov.
GLOSSARY OF TERMS USED IN THIS REPORT
AVERAGE ANNUAL TOTAL RETURN: This is a commonly used method to express an
investment's performance over a particular, usually multi-year time period. It
expresses the return (including change in NAV and reinvested dividends) that
would have been necessary on an annual basis to equal the investment's actual
performance over the time period being considered.
AVERAGE EFFECTIVE MATURITY: The average of all the maturities of the bonds in a
fund's portfolio, computed by weighting each maturity date (the date the
security comes due) by the market value of the security. This figure does not
account for the likelihood of prepayments or the exercise of call provisions.
LEVERAGE-ADJUSTED DURATION: Duration is a measure of a bond or bond fund's
sensitivity to changes in interest rates. Generally, the longer a bond or fund's
duration, the more the price of the bond or fund will change as interest rates
change. Leverage-adjusted duration takes into account the leveraging process for
a Fund and therefore is generally longer than the duration of the actual
portfolio of individual bonds that make up the Fund.
MARKET YIELD (ALSO KNOWN AS DIVIDEND YIELD OR CURRENT YIELD): An investment's
current annualized dividend divided by its current market price.
NET ASSET VALUE (NAV): A fund's NAV is calculated by subtracting the liabilities
of the fund from its total assets and then dividing the remainder by the number
of shares outstanding. Fund NAVs are calculated at the end of each business day.
TAXABLE-EQUIVALENT YIELD: The yield necessary from a fully taxable investment to
equal, on an after-tax basis, the yield of a municipal bond investment.
---------
Each Fund intends to repurchase shares of its own common or preferred stock in
the future at such times and in such amounts as is deemed advisable. No shares
were repurchased during the period ended January 31, 2004. Any future
repurchases will be reported to shareholders in the next annual or semiannual
report.
* Director for certain of the Funds contained in this report.
49
Serving Investors
FOR GENERATIONS
Since 1898, financial advisors and their clients have relied on Nuveen
Investments to provide dependable investment solutions. For the past century,
Nuveen Investments has adhered to the belief that the best approach to investing
is to apply conservative risk-management principles to help minimize volatility.
Building on this tradition, we today offer a range of high quality equity and
fixed-income solutions that are integral to a well-diversified core portfolio.
Our clients have come to appreciate this diversity, as well as our continued
adherence to proven, long-term investing principles.
Managing $80 billion in assets, Nuveen Investments offers access to
a number of different asset classes and investing solutions through a variety of
products. Nuveen Investments markets its capabilities under four distinct
brands: Nuveen, a leader in tax-free investments; NWQ, a leader in value-style
equities; Rittenhouse, a leader in growth-style equities; and Symphony, a
leading institutional manager of market-neutral alternative investment
portfolios.
To learn more about the products and services Nuveen Investments offers and for
a prospectus, where applicable, talk to your financial advisor, or call us at
(800) 257-8787. Please read the information carefully before you invest.
Distributed by
Nuveen Investments, LLC | 333 West Wacker Drive | Chicago, Illinois 60606
| www.nuveen.com
ESA-A-0104D
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
Not applicable at this time.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES
Not applicable to this filing.
ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS
Not applicable at this time.
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no material changes by which shareholders may recommend nominees to
the registrant's Board of Trustees implemented after the registrant last
provided disclosure in response to the requirements of Item 7(d)(2)(ii)(G) of
Schedule 14A (17 CFR 240.14a-101) or this Item.
ITEM 10. 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 registrant's last
fiscal half-year (the registrant's second fiscal half-year in the case
of an annual report) that has materially affected, or is reasonably
likely to materially affect, the registrant's internal control over
financial reporting.
ITEM 11. 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
because posted on registrant's website at www.nuveen.com/etf.
(a)(2) A separate certification for each principal executive officer and
principal financial officer of the registrant as required by Rule 30a-2(a) under
the 1940 Act (17 CFR 270.30a-2(a)) in the exact form set forth below: Ex-99.CERT
attached hereto.
(a)(3) Any written solicitation to purchase securities under Rule 23c-1 under
the 1940 Act (17 CFR 270.23c-1) sent or given during the period covered by the
report by or on behalf of the registrant to 10 or more persons: Not applicable
at this time.
(b) If the report is filed under Section 13(a) or 15(d) of the Exchange Act,
provide the certifications required by Rule 30a-2(b) under the 1940 Act (17 CFR
270.30a-2(b)); Rule 13a-14(b) or Rule 15d-14(b) under the Exchange Act (17 CFR
240.13a-14(b) or 240.15d-14(b)), and Section 1350 of Chapter 63 of Title 18 of
the United States Code (18 U.S.C. 1350) as an exhibit. A certification furnished
pursuant to this paragraph will not be deemed "filed" for purposes of Section 18
of the Exchange Act (15 U.S.C. 78r), or otherwise subject to the liability of
that section. Such certification will not be deemed to be incorporated by
reference into any filing under the Securities Act of 1933 or the Exchange Act,
except to the extent that the registrant specifically incorporates it by
reference. Ex-99.906 CERT attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Nuveen Arizona Premium Income Municipal Fund, Inc.
-----------------------------------------------------------
By (Signature and Title)* /s/ Jessica R. Droeger
----------------------------------------------
Jessica R. Droeger
Vice President and Secretary
Date: April 8, 2004
-------------------------------------------------------------------
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 8, 2004
-------------------------------------------------------------------
By (Signature and Title)* /s/ Stephen D. Foy
----------------------------------------------
Stephen D. Foy
Vice President and Controller
(Principal Financial Officer)
Date: April 8, 2004
-------------------------------------------------------------------
* Print the name and title of each signing officer under his or her signature.