N-CSR 1 file001.txt NUVEEN MUNICIPAL MARKET OPPORTUNITY FUND, INC. 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 811-06040 --------------------- Nuveen Municipal Market Opportunity Fund, Inc. -------------------------------------------------------------------------------- (Exact name of registrant as specified in charter) Nuveen Investments 333 West Wacker Drive Chicago, IL 60606 -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip code) Kevin J. McCarthy Nuveen Investments 333 West Wacker Drive Chicago, IL 60606 -------------------------------------------------------------------------------- (Name and address of agent for service) Registrant's telephone number, including area code: (312) 917-7700 ------------------- Date of fiscal year end: October 31 ------------------ Date of reporting period: October 31, 2008 ------------------ 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. ANNUAL REPORT | Nuveen Investments October 31, 2008 | MUNICIPAL CLOSED-END FUNDS Photo of: Small child NUVEEN PERFORMANCE PLUS MUNICIPAL FUND, INC. NPP NUVEEN MUNICIPAL ADVANTAGE FUND, INC. NMA NUVEEN MUNICIPAL MARKET OPPORTUNITY FUND, INC. NMO NUVEEN DIVIDEND ADVANTAGE MUNICIPAL FUND NAD NUVEEN DIVIDEND ADVANTAGE MUNICIPAL FUND 2 NXZ NUVEEN DIVIDEND ADVANTAGE MUNICIPAL FUND 3 NZF IT'S NOT WHAT YOU EARN, IT'S WHAT YOU KEEP.(R) Logo: NUVEEN Investments Photo of: Man working on computer LIFE IS COMPLEX. NUVEEN MAKES THINGS E-simple. It only takes a minute to sign up for e-Reports. Once enrolled, you'll receive an e-mail as soon as your Nuveen Investments Fund information is ready--no more waiting for delivery by regular mail. Just click on the link within the e-mail to see the report and save it on your computer if you wish. FREE E-REPORTS RIGHT TO YOUR E-MAIL! www.investordelivery.com If you receive your Nuveen Fund dividends and statements from your financial advisor or brokerage account. OR www.nuveen.com/accountaccess If you receive your Nuveen Fund dividends and statements directly from Nuveen. Logo: NUVEEN Investments Photo of: Robert P. Bremner Chairman's LETTER TO SHAREHOLDERS | Robert P. Bremner | Chairman of the Board Dear Shareholders, I'd like to use my initial letter to you to accomplish several things. First, I want to report that after fourteen years of service on your Fund's Board, including the last twelve as chairman, Tim Schwertfeger retired from the Board in June. The Board has elected me to replace him as the chairman, the first time this role has been filled by someone who is not an employee of Nuveen Investments. Electing an independent chairman marks a significant milestone in the management of your Fund, and it aligns us with what is now considered a "best practice" in the fund industry. Further, it demonstrates the independence with which your Board has always acted on your behalf. Following Tim will not be easy. During my eleven previous years on the Nuveen Fund Board, I found that Tim always set a very high standard by combining insightful industry and market knowledge and sound, clear judgment. While the Board will miss his wise counsel, I am certain we will retain the primary commitment Tim shared with all of us - an unceasing dedication to creating and retaining value for Nuveen Fund shareholders. This focus on value over time is a touchstone that I and all the other Board members will continue to use when making decisions on your behalf. Second, I also want to report that we are very fortunate to welcome two new Board members to our team. John Amboian, the current chairman and CEO of Nuveen Investments, has replaced Tim as Nuveen's representative on the Board. John's presence will allow the independent Board members to benefit not only from his leadership role at Nuveen but also his broad understanding of the fund industry and Nuveen's role within it. We also added Terry Toth as an independent director. A former CEO of the Northern Trust Company's asset management group, Terry will bring extensive experience in the fund industry to our deliberations. Third, on behalf of the entire Board, I would like you to know that we are closely monitoring the unprecedented market developments and their distressing impact on the Funds. We believe that these Funds continue to be actively and constructively managed for the long term and at the same time we are very aware that these are trying times for our investors. We appreciate the patience you have shown with the Board and with Nuveen Investments as they manage your investment through this extremely difficult period. Fourth, again on behalf of the entire Board, I would like to acknowledge the effort the whole Nuveen organization is making to resolve the auction rate preferred share situation in a satisfactory manner. As you know, we are actively pursuing a number of possible solutions, all with the goal of providing liquidity for preferred shareholders while preserving the potential benefits of leverage for common shareholders. We appreciate the patience you have shown as we've worked through the many difficulties involved. Finally, I urge you to take the time to review the Portfolio Managers' Comments, the Common Share Dividend and Share Price Information, and the Performance Overview sections of this report. All of us are grateful that you have chosen Nuveen Investments as a partner as you pursue your financial goals, and, on behalf of myself and the other members of your Fund's Board, let me say we look forward to continuing to earn your trust in the months and years ahead. Sincerely, /s/ Robert P. Bremner Robert P. Bremner Chairman of the Board December 23, 2008 Portfolio Managers' COMMENTS Nuveen Investments Municipal Closed-End Funds | NPP, NMA, NMO NAD, NXZ, NZF Portfolio managers Tom Spalding and Paul Brennan discuss U.S. economic and municipal market conditions, key investment strategies, and the twelve-month performance of these six national Funds. A thirty-two-year veteran of Nuveen, Tom has managed NXZ since its inception in 2001 and NPP, NMA, NMO, and NAD since 2003. With nineteen years of industry experience, including eleven years at Nuveen, Paul assumed portfolio management responsibility for NZF in 2006. WHAT FACTORS AFFECTED THE U.S. ECONOMY AND MUNICIPAL MARKET DURING THE TWELVE-MONTH REPORTING PERIOD ENDED OCTOBER 31, 2008? During this period, stress in the financial and credit markets led to increased price volatility for many securities, reduced liquidity and a general flight to quality. The Federal Reserve (Fed) began in September 2007 a series of interest rate cuts that lowered the fed funds rate by 325 basis points--from 5.25% to 2.00%--over an eight-month period ending April 2008. In October 2008, the Fed announced two additional reductions of 50 basis points each, bringing the fed funds rate down to 1.00%, its lowest level since 2003. (On December 16, after the end of this twelve-month period, the Fed reduced the fed funds rate target to 0.25% or less.) The Fed's rate-cutting actions also were a response to concerns about the pace of U.S. economic growth, as measured by the U.S. gross domestic product (GDP). After declining at an annual rate of 0.2% in the fourth quarter of 2007, GDP improved to a positive 0.9% in the first quarter of 2008 and posted growth of 2.8% in the second quarter of 2008 (all GDP numbers annualized). During the third quarter of 2008, however, GDP contracted at an annual rate of 0.5%, the biggest decrease since 2001, mainly as the result of the first decline in consumer spending since 1991 and an 18% drop in residential investment. The Consumer Price Index (CPI), driven largely by increased energy, food and transportation prices, registered a 3.7% year-over-year gain as of October 2008, while the core CPI (which excludes food and energy) rose 2.2% over this same period, above the Fed's unofficial target of 2.0% or lower. In the labor markets, October 2008 marked the tenth consecutive month of job losses. The national unemployment rate for October 2008 was 6.5%, its highest point in more than fourteen years, up from 4.8% in October 2007. In the municipal bond market, performance was significantly impacted by concerns about the credit markets, downgrades of municipal bond insurers, failed auctions of preferred shares and institutional investors' need to unwind various leveraging strategies. These events created surges of selling pressure, especially in late September and early October 2008. While some investors curtailed purchases, non-traditional buyers of Discussions of specific investments are for illustrative purposes only and are not intended as recommendations of individual investments. The views expressed in this commentary represent those of the portfolio managers as of the date of this report and are subject to change at any time, based on market conditions and other factors. The Funds disclaim any obligation to advise shareholders of such changes. 4 municipal bonds such as hedge funds, traditional buyers such as tax-exempt money market funds, and institutions were forced to sell holdings of longer-maturity bonds into a market already experiencing reduced liquidity. Combined with the Fed rate cuts, this selling produced a sharp steepening of the municipal yield curve, as longer-term interest rates rose and short-term rates declined over this period. In this environment, bonds with shorter maturities generally outperformed longer maturity bonds, and higher quality bonds tended to outperform lower quality credits. Another item of note in the municipal market was the U.S. Supreme Court's May 2008 ruling that individual states could continue to offer their residents special tax treatment on municipal bonds issued within their borders. The high court's decision preserved tax rules in forty-two states, allowing them to continue to exempt from taxation the income their residents earn on in-state municipal bonds while taxing the income earned on municipal bonds issued in other states. Over the twelve months ended October 31, 2008, municipal bond issuance nationwide totaled $450.3 billion, a drop of 8% from the previous twelve months. In 2008, insured bonds comprised less than 20% of new supply, compared with the recent historical figure of approximately 50%. While market conditions during this period impacted the demand for municipal bonds, we continued to see demand from investors attracted by higher interest rates and yields relative to taxable bonds. WHAT KEY STRATEGIES WERE USED TO MANAGE THESE FUNDS DURING THIS REPORTING PERIOD? During this twelve-month period, with the municipal market characterized by volatility and a relatively steep yield curve, we sought to capitalize on a turbulent environment by continuing to focus on relative value and investing for the long term, preserving and enhancing liquidity, and managing duration(1) risk. As events in the general financial markets unfolded, we found attractive opportunities in various sectors of the municipal market, using a fundamental approach to identify undervalued sectors and individual credits with the potential to perform well over the long term. Among the bonds we added during this period were health care and housing issues that we believed were attractively priced and had good credit fundamentals. Some of the Funds also added tobacco bonds to bring their allocations in line with the market. In addition, some portfolio activity was driven by our efforts to boost liquidity or cash reserves. Especially during the commotion of September and October, we believed that it was prudent to take defensive measures that would reduce the Funds' exposure to market risk. These measures included pre-emptively selling some holdings and raising the Funds' cash reserves. Throughout the period, we selectively sold holdings with shorter durations, including pre-refunded(2) bonds. We also took advantage of strong bids to sell bonds that were attractive to the retail market. Given the market environment, retail demand was often strongest for higher credit quality bonds. At all times, we (1) Duration is a measure of a bond's price sensitivity as interest rates change, with longer duration bonds displaying more sensitivity to these changes than bonds with shorter durations. (2) Pre-refundings, also known as advance refundings or refinancings, occur when an issuer sells new bonds and uses the proceeds to fund principal and interest payments of older existing bonds. This process often results in lower borrowing costs for bond issuers. 5 were careful to balance our efforts to enhance liquidity through sales to the retail market with our focus on maintaining the credit quality of our portfolios in an uncertain market. Some of our new purchases were also funded by reinvesting the proceeds from called or matured bonds. As a key dimension of risk management, we employed a disciplined approach to duration positioning as an important component of our overall strategy. As part of this approach, we used inverse floating rate securities(3), in all six of these Funds. Inverse floaters typically provide the dual benefit of bringing the Funds' durations closer to our strategic target and enhancing their income-generation capabilities. NZF also used certain derivative instruments in an effort to lengthen its duration and help manage common share net asset value (NAV) volatility while trying to minimize any negative impact on its income stream or common share dividends over the short term. As of October 31, 2008, we continued to use inverse floaters in all of these Funds and the derivatives remained in place in NZF. HOW DID THE FUNDS PERFORM? Individual results for these Funds, as well as relevant index and peer group information, are presented in the accompanying table. Annualized Total Returns on Common Share Net Asset Value For periods ended 10/31/08 1-Year 5-Year 10-Year NPP -12.49% 1.63% 3.91% NMA -15.65% 0.89% 3.66% NMO -13.07% 1.35% 3.37% NAD -16.42% 0.85% N/A NXZ -13.23% 2.79% N/A NZF -14.99% 1.97% N/A Lipper General Leveraged Municipal Debt Funds Average(4) -19.05% 0.29% 2.87% Barclays Capital Municipal Bond Index(5) -3.30% 2.73% 4.14% S&P National Municipal Bond Index(6) -4.15% 2.75% N/A Past performance is not predictive of future results. Current performance may be higher or lower than the data shown. Returns do not reflect the deduction of taxes that shareholders may have to pay on Fund distributions or upon the sale of Fund shares. For additional information, see the individual Performance Overview for your Fund in this report. (3) An inverse floating rate security is a financial instrument designed to pay long-term tax-exempt interest at a rate that varies inversely with a short-term tax-exempt interest rate index. For the Nuveen Funds, the index typically used is the Securities Industry and Financial Markets (SIFM) Municipal Swap Index (previously referred to as the Bond Market Association Index or BMA). Inverse floaters, including those inverse floating rate securities in which the Funds invested during this reporting period, are further defined within the Notes to Financial Statements and Glossary of Terms Used in this Report sections of this shareholder report. (4) The Lipper General Leveraged Municipal Debt Funds Average is calculated using the returns of all closed-end funds in this category for each period as follows: 1 year, 54 funds; 5 years, 52 funds; and 10 years, 38 funds. Fund and Lipper returns assume reinvestment of dividends. (5) The Barclays Capital (formerly Lehman Brothers) Municipal Bond Index is an unleveraged, unmanaged national index comprising a broad range of investment-grade municipal bonds. Results for the Barclays Capital index do not reflect any expenses. (6) The Standard & Poor's (S&P) National Municipal Bond Index is an unleveraged, market value-weighted index designed to measure the performance of the investment-grade U.S. municipal bond market. 6 For the twelve months ended October 31, 2008, the total returns on common share NAV for all six of the Funds in this report exceeded the average return for the Lipper General Leveraged Municipal Debt Funds Average. The Funds underperformed the Barclays Capital Municipal Bond Index and the Standard & Poor's (S&P) National Municipal Bond Index. Key management factors that influenced the Funds' returns included duration positioning, the use of derivatives, credit exposure and sector allocations. In addition, a major factor affecting each Fund's performance over this period was the use of leverage. The impact of leverage is discussed in more detail on page eight. Given the changes in the interest rate environment during this period, bonds in the Barclays Capital Municipal Bond Index with maturities of ten years or less outperformed the market as a whole, with bonds maturing in one to six years benefiting the most. Because they were less sensitive to interest rate changes, these shorter bonds generally outperformed credits with longer maturities, with the biggest losses posted by bonds with the longest maturities (twenty-two years and longer). In general, the greater the Fund's exposure to the underperforming longer part of the yield curve, the greater the negative impact on the Fund's return. Overall, among these six Funds, NAD was the most heavily weighted in the longer part of the curve, while NMO had the smallest exposure to this part of the curve. As mentioned earlier, NZF used derivative positions throughout this period to synthetically extend duration and move it closer to our strategic duration target. Despite the fact that longer duration municipal bonds generally underperformed those with shorter durations, the use of these derivatives had a positive impact on NZF's total return performance. This positive impact was attributable to the fact that the derivative positions provided exposure to taxable markets during a period when the taxable securities performed relatively well when compared with their non-taxable counterparts. However, the inverse floaters used by all six of these Funds generally had a negative impact on performance. This resulted from the fact that the inverse floaters effectively increased the Funds' exposure to longer maturity bonds at a time when shorter maturities were in favor in the market. Credit exposure, including exposure to bonds backed by municipal bond insurers, also was a factor in performance during this period. Because risk-averse investors generally sought higher quality investments as disruptions in the financial markets deepened, bonds with higher credit quality ratings typically performed very well. However, insured bonds with underlying credits that were rated BBB or non-rated, originally purchased because of the higher yields they offered, experienced a disproportionately negative impact (compared with bonds with underlying credits rated AA or A ) if the insurer backing the bond was downgraded from AAA. As many investors avoided high-yield securities, bonds rated BBB or below and non-rated bonds generally posted poor returns. As of October 31, 2008, allocations of bonds rated BBB or lower and 7 non-rated bonds accounted for approximately 9% of NMO's portfolio, 13% of NAD, 14% of NPP and NZF, 16% of NMA and 19% of NXZ. This lower-rated credit exposure, which was generally higher than that of the Barclays Capital Municipal Bond Index, was a negative influence on Funds' performances for this period. Conversely, the Funds' weightings in bonds rated AAA were generally positive for performance. Sectors of the market that generally contributed positively to the Funds' performances included general obligation bonds, resource recovery, water and sewer, and utilities. Pre-refunded bonds, which are usually backed by U.S. Treasury securities, were one of the top performing segments of the market, due primarily to their shorter effective maturities, higher credit quality, and perceived safety. Holdings of pre-refunded bonds ranged from 18% to 40% among these Funds, with NMO having the heaviest weighting of pre-refunded issues and NAD the smallest. In general, bonds that carried any credit risk, regardless of sector, continued to post weak performance. Revenue bonds as a whole, and the industrial development sector in particular, underperformed the general municipal market. Next to the industrial development sector, zero coupon bonds were among the worst performing categories. The health care and housing sectors also performed very poorly, as did lower-rated bonds backed by the 1998 master tobacco settlement agreement. IMPACT OF THE FUNDS' CAPITAL STRUCTURES AND LEVERAGE STRATEGIES ON PERFORMANCE In addition to the factors mentioned above, one of the primary factors negatively impacting the annual returns of these Funds relative to those of the unleveraged indexes was the Funds' use of financial leverage. While leverage offers opportunities to generate additional income and total returns for common shareholders, the benefits provided by leveraging are influenced by the price movements of the bonds in each Fund's portfolio. During this period, as yields on longer-term bonds rose and their prices correspondingly fell, declining valuations had a negative effect on performance that was magnified by the use of leverage. In addition, at various points during the twelve-month period, the Funds' borrowing costs were relatively high, negatively impacting their total returns. In the turbulent market environment of the past twelve months, the impact of any valuation change in the Fund's holdings-whether positive or negative-was magnified by the use of leverage. RECENT DEVELOPMENTS IN THE MARKET ENVIRONMENT Beginning in October, the nation's financial institutions and financial markets--including the municipal bond market--experienced significant turmoil. Reductions in demand decreased valuations of municipal bonds across all credit ratings, especially those with lower credit ratings, and this generally reduced the Funds' net asset values. The municipal market is one in which dealer firms make markets in bonds on a principal basis using their proprietary capital, and during the recent market turmoil these firms'capital was severely constrained. As a result, some firms were unwilling to commit their capital to purchase and to serve as a dealer for municipal bonds. This reduction in dealer 8 involvement in the market was accompanied by significant net selling pressure by investors, particularly with respect to lower-rated municipal bonds, as institutional investors generally removed money from the municipal bond market, at least in part because of their need to reduce the leveraging of their municipal investments. This de-leveraging was in part driven by the overall reduction in the amount of financing available for such leverage, the increased costs of such leverage financing, and the need to reduce leverage levels that had recently increased due to the decline in municipal bond prices. Municipal bond prices were further negatively impacted by concerns that the need for further de-leveraging and a supply overhang as a large amount of new issues were postponed would cause selling pressure to persist for a period of time. In addition to falling prices, these market conditions resulted in greater price volatility of municipal bonds; wider credit spreads (i.e., lower quality bonds fell in price more than higher quality bonds); significantly reduced liquidity (i.e., the ability to sell bonds at a price close to their carrying value), particularly for lower quality bonds; and a lack of price transparency (i.e., the ability to accurately determine the price at which a bond would likely trade). Reduced liquidity was most pronounced in mid-October, and although liquidity improved considerably over ensuing weeks, it may reoccur if financial turmoil persists or worsens. RECENT DEVELOPMENTS REGARDING BOND INSURANCE COMPANIES As mentioned earlier, another factor that had an impact on the performance of these Funds was their position in bonds backed by municipal bond insurers that experienced downgrades in their credit ratings. During the period covered by this report, ACA, AMBAC, FGIC, MBIA, RAAI and SYNCORA (formerly XLCA) experienced one or more rating reductions by at least one or more rating agencies. Subsequent to the reporting period, AMBAC, MBIA and SYNCORA experienced further rating reductions while AGC and FSA received their first rating reductions by at least one rating agency. At the time this report was prepared, at least one rating agency has placed each of these insurers except AGC on "negative outlook" or "negative credit watch," which may presage one or more rating reductions for such insurer or insurers in the future. As concern increased about the balance sheets of these insurers, prices on bonds insured by these companies - especially those bonds with weaker underlying credits - declined, detracting from the Funds' performance. By the end of this period, most insured bonds were being valued according to their fundamentals as if they were uninsured. On the whole, the holdings of all of our Funds continued to be well diversified not only between insured and uninsured bonds, but also within the insured bond category. It is important to note that municipal bonds historically have had a very low rate of default. RECENT DEVELOPMENTS IN THE AUCTION RATE PREFERRED SECURITIES MARKETS Beginning in February 2008, more shares for sale were submitted in the regularly scheduled auctions for the auction rate preferred shares issued by these Funds than 9 there were offers to buy. This meant that these auctions "failed to clear" and that many or all auction rate preferred shareholders who wanted to sell their shares in these auctions were unable to do so. This decline in liquidity in auction rate preferred shares did not lower the credit quality of these shares, and auction rate preferred shareholders unable to sell their shares received distributions at the "maximum rate'' applicable to failed auctions as calculated in accordance with the pre-established terms of the auction rate preferred shares. On June 11, 2008, Nuveen announced the Fund Board's approval of plans to use tender option bonds (TOBs), also known as floating rate securities, to refinance a portion of the municipal Funds' outstanding auction rate preferred shares, for which auctions have been failing for several months. This plan included an initial phase of approximately $1 billion in forty-one Funds. During the twelve-month reporting period, NPP, NMA, NMO, NAD and NZF redeemed $39,350,000, $16,350,000, $18,325,000, $28,200,000 and $41,225,000 of their outstanding auction rate preferred shares, respectively, at liquidation value, using the proceeds from the issuance of TOBs. On August 7, 2008, NXZ issued par redemption notices for all outstanding shares of its auction rate preferred securities totaling $222 million. These redemptions were achieved through the issuance of $196 million of variable rate demand preferred shares (VRDP) and the proceeds from the creation of TOBs. VRDP is a new instrument designed to replace the auction rate preferred securities used as leverage in many Nuveen closed-end Funds. VRDP is offered only to qualified institutional buyers, as defined pursuant to Rule 144A under the Securities Act of 1933. For current, up-to-date information, please visit the Nuveen CEF Auction Rate Preferred Resource Center at: http://www.nuveen.com/ResourceCenter/AuctionRatePreferred.aspx. 10 Common Share Dividend and Share Price INFORMATION During the twelve-month reporting period ended October 31, 2008, there was one dividend increase in NPP, NMA, NMO, NAD and NZF, while the dividend of NXZ remained stable throughout the period. Due to capital gains generated by normal portfolio activity, common shareholders of the following Funds received capital gains or net ordinary income distributions at the end of December 2007 as follows: Short-Term Capital Gains Long-Term Capital Gains and/or Ordinary Income (per share) (per share) NMA $0.0238 -- NAD -- $0.0033 All of the Funds in this report seek to pay stable dividends at rates that reflect each Fund's past results and projected future performance. During certain periods, each Fund may pay dividends at a rate that may be more or less than the amount of net investment income actually earned by the Fund during the period. If a Fund has cumulatively earned more than it has paid in dividends, it holds the excess in reserve as undistributed net investment income (UNII) as part of the Fund's NAV. Conversely, if a Fund has cumulatively paid dividends in excess of its earnings, the excess constitutes negative UNII that is likewise reflected in the Fund's NAV. Each Fund will, over time, pay all of its net investment income as dividends to shareholders. As of October 31, 2008, NPP, NMA and NAD had positive UNII balances for both tax and financial statement purposes while NMO, NXZ and NZF had positive UNII balances for tax purposes and negative UNII balances for financial statement purposes. 11 The Funds' Board of Directors/Trustees approved an open-market share repurchase program on July 30, 2008, under which each Fund may repurchase up to 10% of its common shares. As of October 31, 2008, the Funds had not repurchased any of their outstanding common shares. As of October 31, 2008, the Funds' common share prices were trading at discounts to their common share NAVs as shown in the accompanying chart: 10/31/08 Twelve-Month Discount Average Discount NPP -9.38% -11.03% NMA -5.86% -7.47% NMO -5.81% -9.06% NAD -8.92% -8.14% NXZ -2.83% -2.24% NZF -11.40% -8.61% 12 NPP Performance OVERVIEW Nuveen Performance Plus Municipal Fund, Inc. as of October 31, 2008 Pie Chart: Credit Quality (as a % of total investments)(1) AAA/U.S. Guaranteed 48% AA 32% A 6% BBB 10% BB or Lower 2% N/R 2% Bar Chart: 2007-2008 Monthly Tax-Free Dividends Per Common Share NOV 0.0575 DEC 0.0575 JAN 0.0575 FEB 0.0575 MAR 0.0575 APR 0.0575 MAY 0.0575 JUN 0.0575 JUL 0.0575 AUG 0.0575 SEP 0.0605 OCT 0.0605 Line Chart: Common Share Price Performance -- Weekly Closing Price 11/01/07 13.53 13.62 13.19 12.87 13.07 13.17 13.27 13.05 13.10 13.27 13.85 13.94 13.74 13.95 13.96 14.20 13.37 13.1549 12.83 13.30 13.00 13.08 13.40 13.50 13.47 13.37 13.27 13.46 13.48 13.53 13.56 13.53 13.49 13.15 12.86 12.95 13.06 13.06 12.71 12.64 12.58 12.74 12.74 12.76 12.87 12.97 12.69 12.28 11.43 11.32 8.35 10.24 11.72 10/31/08 11.50 FUND SNAPSHOT ------------------------------------ Common Share Price $11.50 ------------------------------------ Common Share Net Asset Value $12.69 ------------------------------------ Premium/(Discount) to NAV -9.38% ------------------------------------ Market Yield 6.31% ------------------------------------ Taxable-Equivalent Yield(2) 8.76% ------------------------------------ Net Assets Applicable to Common Shares ($000) $760,496 ------------------------------------ Average Effective Maturity on Securities (Years) 14.16 ------------------------------------ Leverage-Adjusted Duration 13.43 ------------------------------------ AVERAGE ANNUAL TOTAL RETURN (Inception 6/22/89) ------------------------------------ ON SHARE PRICE ON NAV ------------------------------------ 1-Year -10.71% -12.49% ------------------------------------ 5-Year 1.10% 1.63% ------------------------------------ 10-Year 3.29% 3.91% ------------------------------------ STATES (as a % of total investments) ------------------------------------ Illinois 15.2% ------------------------------------ California 9.5% ------------------------------------ New Jersey 5.5% ------------------------------------ New York 5.3% ------------------------------------ Texas 4.9% ------------------------------------ Florida 4.9% ------------------------------------ Colorado 4.8% ------------------------------------ Ohio 4.2% ------------------------------------ Massachusetts 3.9% ------------------------------------ Indiana 3.9% ------------------------------------ Washington 3.4% ------------------------------------ Michigan 3.1% ------------------------------------ South Carolina 2.8% ------------------------------------ Pennsylvania 2.2% ------------------------------------ Georgia 2.2% ------------------------------------ Utah 2.1% ------------------------------------ Minnesota 2.0% ------------------------------------ Wisconsin 1.9% ------------------------------------ Nevada 1.9% ------------------------------------ Louisiana 1.8% ------------------------------------ Other 14.5% ------------------------------------ INDUSTRIES (as a % of total investments) ------------------------------------ U.S. Guaranteed 25.2% ------------------------------------ Tax Obligation/Limited 15.2% ------------------------------------ Tax Obligation/General 14.4% ------------------------------------ Transportation 11.7% ------------------------------------ Utilities 9.7% ------------------------------------ Health Care 8.9% ------------------------------------ Consumer Staples 4.4% ------------------------------------ Other 10.5% ------------------------------------ (1) The percentages shown in the foregoing chart may reflect the ratings on certain bonds insured by ACA, AGC, AMBAC, FGIC, FSA, MBIA, RAAI and SYNCORA as of October 31, 2008. Please see the Portfolio Managers' Commentary for an expanded discussion of the affect on the Fund of changes to the ratings of certain bonds in the portfolio resulting from changes to the ratings of the underlying insurers both during the period and after period end. (2) Taxable-Equivalent Yield represents the yield that must be earned on a fully taxable investment in order to equal the yield of the Fund on an after-tax basis. It is based on a federal income tax rate of 28%. When comparing this Fund to investments that generate qualified dividend income, the Taxable-Equivalent Yield is lower. 13 NMA Performance OVERVIEW Nuveen Municipal Advantage Fund, Inc. as of October 31, 2008 Pie Chart: Credit Quality (as a % of total investments)(1} AAA/U.S. Guaranteed 44% AA 32% A 8% BBB 12% BB or Lower 4% Bar Chart: 2007-2008 Monthly Tax-Free Dividends Per Common Share(3) NOV 0.064 DEC 0.064 JAN 0.064 FEB 0.064 MAR 0.064 APR 0.064 MAY 0.064 JUN 0.064 JUL 0.064 AUG 0.064 SEP 0.066 OCT 0.066 Line Chart: Common Share Price Performance -- Weekly Closing Price 11/01/07 13.90 13.96 13.52 13.17 13.24 13.46 13.59 13.36 13.24 13.69 14.39 14.59 14.26 14.46 14.51 14.58 13.67 13.47 13.08 13.45 13.2799 13.20 13.37 13.56 13.65 13.52 13.55 13.56 13.57 13.78 13.75 13.824 13.73 13.48 13.23 13.06 13.18 13.19 13.09 13.06 13.22 13.15 13.11 13.01 13.35 13.44 13.21 12.59 11.80 11.85 8.43 10.36 11.40 10/31/08 11.41 FUND SNAPSHOT ------------------------------------ Common Share Price $11.41 ------------------------------------ Common Share Net Asset Value $12.12 ------------------------------------ Premium/(Discount) to NAV -5.86% ------------------------------------ Market Yield 6.94% ------------------------------------ Taxable-Equivalent Yield(2) 9.64% ------------------------------------ Net Assets Applicable to Common Shares ($000) $523,602 ------------------------------------ Average Effective Maturity on Securities (Years) 14.60 ------------------------------------ Leverage-Adjusted Duration 14.54 ------------------------------------ AVERAGE ANNUAL TOTAL RETURN (Inception 12/19/89) ------------------------------------ ON SHARE PRICE ON NAV ------------------------------------ 1-Year -13.16% -15.65% ------------------------------------ 5-Year 0.07% 0.89% ------------------------------------ 10-Year 3.29% 3.66% ------------------------------------ STATES (as a % of total investments) ------------------------------------ California 9.6% ------------------------------------ Illinois 9.5% ------------------------------------ Washington 9.1% ------------------------------------ Texas 8.8% ------------------------------------ Louisiana 8.3% ------------------------------------ New York 7.6% ------------------------------------ Ohio 4.7% ------------------------------------ Colorado 4.5% ------------------------------------ Tennessee 4.0% ------------------------------------ Oklahoma 3.2% ------------------------------------ South Carolina 3.1% ------------------------------------ Nevada 2.9% ------------------------------------ New Jersey 2.6% ------------------------------------ Alabama 2.1% ------------------------------------ Florida 2.0% ------------------------------------ Puerto Rico 1.9% ------------------------------------ Wisconsin 1.8% ------------------------------------ Other 14.3% ------------------------------------ INDUSTRIES (as a % of total investments) ------------------------------------ U.S. Guaranteed 32.9% ------------------------------------ Utilities 13.4% ------------------------------------ Health Care 12.0% ------------------------------------ Tax Obligation/Limited 11.5% ------------------------------------ Tax Obligation/General 8.4% ------------------------------------ Transportation 7.8% ------------------------------------ Other 14.0% ------------------------------------ (1) The percentages shown in the foregoing chart may reflect the ratings on certain bonds insured by ACA, AGC, AMBAC, FGIC, FSA, MBIA, RAAI and SYNCORA as of October 31, 2008. Please see the Portfolio Managers' Commentary for an expanded discussion of the affect on the Fund of changes to the ratings of certain bonds in the portfolio resulting from changes to the ratings of the underlying insurers both during the period and after period end. (2) Taxable-Equivalent Yield represents the yield that must be earned on a fully taxable investment in order to equal the yield of the Fund on an after-tax basis. It is based on a federal income tax rate of 28%. When comparing this Fund to investments that generate qualified dividend income, the Taxable-Equivalent Yield is lower. (3) The Fund paid shareholders a capital gains distribution in December 2007 of $0.0238 per share. 14 NMO Performance OVERVIEW Nuveen Municipal Market Opportunity Fund, Inc. as of October 31, 2008 Pie Chart: Credit Quality (as a % of total investments)(1) AAA/U.S. Guaranteed 54% AA 32% A 5% BBB 7% BB or Lower 2% Bar Chart: 2007-2008 Monthly Tax-Free Dividends Per Common Share NOV 0.0605 DEC 0.0605 JAN 0.0605 FEB 0.0605 MAR 0.0605 APR 0.0605 MAY 0.0605 JUN 0.0605 JUL 0.0605 AUG 0.0605 SEP 0.063 OCT 0.063 Line Chart: Common Share Price Performance -- Weekly Closing Price 11/01/07 13.55 13.59 13.12 12.59 12.95 13.13 13.25 13.00 12.72 13.08 13.73 14.02 13.74 14.10 14.13 14.23 13.35 13.10 12.90 13.15 12.91 12.73 12.97 13.19 13.08 13.17 13.18 13.23 13.32 13.37 13.58 13.65 13.35 13.04 12.61 12.65 12.73 12.56 12.35 12.30 12.35 12.40 12.28 12.32 12.40 12.49 12.23 11.98 11.42 10.99 8.09 10.06 11.80 10/31/08 11.52 FUND SNAPSHOT ------------------------------------ Common Share Price $11.52 ------------------------------------ Common Share Net Asset Value $12.23 ------------------------------------ Premium/(Discount) to NAV -5.81% ------------------------------------ Market Yield 6.56% ------------------------------------ Taxable-Equivalent Yield(2) 9.11% ------------------------------------ Net Assets Applicable to Common Shares ($000) $557,346 ------------------------------------ Average Effective Maturity on Securities (Years) 11.97 ------------------------------------ Leverage-Adjusted Duration 11.99 ------------------------------------ AVERAGE ANNUAL TOTAL RETURN (Inception 3/21/90) ------------------------------------ ON SHARE PRICE ON NAV ------------------------------------ 1-Year -9.87% -13.07% ------------------------------------ 5-Year 1.61% 1.35% ------------------------------------ 10-Year 3.06% 3.37% ------------------------------------ STATES (as a % of total investments) ------------------------------------ Texas 13.8% ------------------------------------ Washington 10.7% ------------------------------------ Illinois 8.4% ------------------------------------ New York 6.4% ------------------------------------ California 5.7% ------------------------------------ Minnesota 5.7% ------------------------------------ South Carolina 5.3% ------------------------------------ New Jersey 4.4% ------------------------------------ Colorado 4.2% ------------------------------------ Ohio 3.6% ------------------------------------ Georgia 3.3% ------------------------------------ North Dakota 3.0% ------------------------------------ Massachusetts 2.5% ------------------------------------ Puerto Rico 2.2% ------------------------------------ Nevada 2.2% ------------------------------------ Pennsylvania 1.9% ------------------------------------ Oregon 1.7% ------------------------------------ North Carolina 1.4% ------------------------------------ Other 13.6% ------------------------------------ INDUSTRIES (as a % of total investments) ------------------------------------ U.S. Guaranteed 38.9% ------------------------------------ Tax Obligation/General 14.4% ------------------------------------ Transportation 10.2% ------------------------------------ Tax Obligation/Limited 9.7% ------------------------------------ Health Care 8.1% ------------------------------------ Utilities 5.7% ------------------------------------ Consumer Staples 5.2% ------------------------------------ Other 7.8% ------------------------------------ (1) The percentages shown in the foregoing chart may reflect the ratings on certain bonds insured by ACA, AGC, AMBAC, FGIC, FSA, MBIA, RAAI and SYNCORA as of October 31, 2008. Please see the Portfolio Managers' Commentary for an expanded discussion of the affect on the Fund of changes to the ratings of certain bonds in the portfolio resulting from changes to the ratings of the underlying insurers both during the period and after period end. (2) Taxable-Equivalent Yield represents the yield that must be earned on a fully taxable investment in order to equal the yield of the Fund on an after-tax basis. It is based on a federal income tax rate of 28%. When comparing this Fund to investments that generate qualified dividend income, the Taxable-Equivalent Yield is lower. 15 NAD Performance OVERVIEW Nuveen Dividend Advantage Municipal Fund as of October 31, 2008 Pie Chart: Credit Quality (as a % of municipal bonds)(1) AAA/U.S. Guaranteed 39% AA 41% A 7% BBB 7% BB or Lower 4% N/R 2% Bar Chart: 2007-2008 Monthly Tax-Free Dividends Per Common Share(3) NOV 0.0635 DEC 0.0635 JAN 0.0635 FEB 0.0635 MAR 0.0635 APR 0.0635 MAY 0.0635 JUN 0.0635 JUL 0.0635 AUG 0.0635 SEP 0.0655 OCT 0.0655 Line Chart: Common Share Price Performance -- Weekly Closing Price 11/01/07 13.67 13.66 13.27 12.88 13.20 13.37 13.31 13.26 12.95 13.24 14.15 14.056 13.7899 14.13 14.09 14.09 13.42 13.00 12.60 13.16 12.85 12.88 13.27 13.58 13.43 13.51 13.30 13.54 13.45 13.50 13.43 13.64 13.56 13.11 12.90 12.85 13.10 13.04 12.71 12.82 12.82 12.78 12.80 12.79 12.71 12.80 12.50 12.02 11.68 11.06 7.90 9.783 10.90 10/31/08 10.72 FUND SNAPSHOT ------------------------------------ Common Share Price $10.72 ------------------------------------ Common Share Net Asset Value $11.77 ------------------------------------ Premium/(Discount) to NAV -8.92% ------------------------------------ Market Yield 7.33% ------------------------------------ Taxable-Equivalent Yield(2) 10.18% ------------------------------------ Net Assets Applicable to Common Shares ($000) $462,554 ------------------------------------ Average Effective Maturity on Securities (Years) 14.58 ------------------------------------ Leverage-Adjusted Duration 15.26 ------------------------------------ AVERAGE ANNUAL TOTAL RETURN (Inception 5/26/99) ------------------------------------ ON SHARE PRICE ON NAV ------------------------------------ 1-Year -16.46% -16.42% ------------------------------------ 5-Year -0.74% 0.85% ------------------------------------ Since Inception 2.67% 4.08% ------------------------------------ STATES (as a % of municipal bonds) ------------------------------------ Illinois 20.2% ------------------------------------ New York 7.2% ------------------------------------ Washington 7.2% ------------------------------------ Florida 6.3% ------------------------------------ Wisconsin 5.7% ------------------------------------ Texas 5.2% ------------------------------------ Indiana 4.3% ------------------------------------ Louisiana 4.2% ------------------------------------ New Jersey 4.1% ------------------------------------ Pennsylvania 3.7% ------------------------------------ Colorado 3.4% ------------------------------------ Ohio 3.3% ------------------------------------ Michigan 3.2% ------------------------------------ California 3.1% ------------------------------------ Missouri 2.9% ------------------------------------ Rhode Island 2.2% ------------------------------------ Other 13.8% ------------------------------------ INDUSTRIES (as a % of total investments) ------------------------------------ Tax Obligation/Limited 19.7% ------------------------------------ U.S. Guaranteed 16.1% ------------------------------------ Tax Obligation/General 14.7% ------------------------------------ Health Care 14.7% ------------------------------------ Transportation 12.5% ------------------------------------ Utilities 6.2% ------------------------------------ Consumer Staples 5.1% ------------------------------------ Other 11.0% ------------------------------------ (1) The percentages shown in the foregoing chart may reflect the ratings on certain bonds insured by ACA, AGC, AMBAC, FGIC, FSA, MBIA, RAAI and SYNCORA as of October 31, 2008. Please see the Portfolio Managers' Commentary for an expanded discussion of the affect on the Fund of changes to the ratings of certain bonds in the portfolio resulting from changes to the ratings of the underlying insurers both during the period and after period end. (2) Taxable-Equivalent Yield represents the yield that must be earned on a fully taxable investment in order to equal the yield of the Fund on an after-tax basis. It is based on a federal income tax rate of 28%. When comparing this Fund to investments that generate qualified dividend income, the Taxable-Equivalent Yield is lower. (3) The Fund paid shareholders a net ordinary income distribution in December 2007 of $.0033 per share. 16 NXZ Performance OVERVIEW Nuveen Dividend Advantage Municipal Fund 2 as of October 31, 2008 Pie Chart: Credit Quality (as a % of total investments)(1) AAA/U.S. Guaranteed 49% AA 27% A 5% BBB 13% BB or Lower 5% N/R 1% Bar Chart: 2007-2008 Monthly Tax-Free Dividends Per Common Share NOV 0.073 DEC 0.073 JAN 0.073 FEB 0.073 MAR 0.073 APR 0.073 MAY 0.073 JUN 0.073 JUL 0.073 AUG 0.073 SEP 0.073 OCT 0.073 Line Chart: Common Share Price Performance -- Weekly Closing Price 11/01/07 15.54 15.50 14.95 14.47 14.62 14.92 15.17 15.17 15.08 14.80 15.56 15.68 15.55 15.90 15.97 16.15 14.848 14.56 14.2399 14.65 14.11 14.18 14.65 14.70 14.63 14.72 14.95 15.01 15.03 15.22 15.21 15.30 15.27 14.90 14.47 14.5269 14.80 14.73 14.28 14.37 14.47 14.80 14.52 14.6399 14.56 14.39 14.10 13.47 12.13 12.2604 8.94 10.71 12.06 10/31/08 12.35 FUND SNAPSHOT ------------------------------------ Common Share Price $12.35 ------------------------------------ Common Share Net Asset Value $12.71 ------------------------------------ Premium/(Discount) to NAV -2.83% ------------------------------------ Market Yield 7.09% ------------------------------------ Taxable-Equivalent Yield(2) 9.85% ------------------------------------ Net Assets Applicable to Common Shares ($000) $373,940 ------------------------------------ Average Effective Maturity on Securities (Years) 15.26 ------------------------------------ Leverage-Adjusted Duration 8.68 ------------------------------------ AVERAGE ANNUAL TOTAL RETURN (Inception 3/27/01) ------------------------------------ ON SHARE PRICE ON NAV ------------------------------------ 1-Year -15.21% -13.23% ------------------------------------ 5-Year 2.60% 2.79% ------------------------------------ Since Inception 3.77% 4.74% ------------------------------------ STATES (as a % of total investments) ------------------------------------ Texas 18.2% ------------------------------------ Illinois 9.1% ------------------------------------ Michigan 8.6% ------------------------------------ New York 6.6% ------------------------------------ California 5.3% ------------------------------------ Colorado 5.0% ------------------------------------ New Mexico 4.3% ------------------------------------ Alabama 3.5% ------------------------------------ Washington 3.0% ------------------------------------ Florida 2.9% ------------------------------------ Louisiana 2.9% ------------------------------------ Oregon 2.9% ------------------------------------ Kansas 2.6% ------------------------------------ Minnesota 2.6% ------------------------------------ Pennsylvania 2.6% ------------------------------------ Indiana 2.3% ------------------------------------ Massachusetts 2.2% ------------------------------------ Nevada 2.0% ------------------------------------ Other 13.4% ------------------------------------ INDUSTRIES (as a % of total investments) ------------------------------------ U.S. Guaranteed 34.6% ------------------------------------ Tax Obligation/Limited 16.6% ------------------------------------ Health Care 13.4% ------------------------------------ Transportation 10.8% ------------------------------------ Consumer Staples 6.0% ------------------------------------ Utilities 5.4% ------------------------------------ Other 13.2% ------------------------------------ (1) The percentages shown in the foregoing chart may reflect the ratings on certain bonds insured by ACA, AGC, AMBAC, FGIC, FSA, MBIA, RAAI and SYNCORA as of October 31, 2008. Please see the Portfolio Managers' Commentary for an expanded discussion of the affect on the Fund of changes to the ratings of certain bonds in the portfolio resulting from changes to the ratings of the underlying insurers both during the period and after period end. (2) Taxable-Equivalent Yield represents the yield that must be earned on a fully taxable investment in order to equal the yield of the Fund on an after-tax basis. It is based on a federal income tax rate of 28%. When comparing this Fund to investments that generate qualified dividend income, the Taxable-Equivalent Yield is lower. 17 NZF Performance OVERVIEW Nuveen Dividend Advantage Municipal Fund 3 as of October 31, 2008 Credit Quality (as a % of municipal bonds)(1), (2) AAA/U.S. Guaranteed 46% AA 34% A 6% BBB 6% BB or Lower 2% N/R 6% Bar Chart: 2007-2008 Monthly Tax-Free Dividends Per Common Share NOV 0.064 DEC 0.064 JAN 0.064 FEB 0.064 MAR 0.064 APR 0.064 MAY 0.064 JUN 0.064 JUL 0.064 AUG 0.064 SEP 0.0665 OCT 0.0665 Line Chart: Common Share Price Performance -- Weekly Closing Price 11/01/07 13.84 13.77 13.21 13.01 13.16 13.41 13.52 13.28 13.16 13.41 14.29 14.43 14.40 14.65 14.61 14.82 13.55 13.42 13.08 13.73 13.22 13.05 13.36 13.62 13.54 13.62 13.66 13.77 13.83 13.79 13.85 13.80 13.84 13.45 13.05 13.14 13.15 13.10 12.93 12.98 12.90 12.97 12.90 12.83 12.94 13.03 12.82 12.60 11.64 11.35 7.55 9.821 11.30 10/31/08 10.72 FUND SNAPSHOT ------------------------------------ Common Share Price $10.72 ------------------------------------ Common Share Net Asset Value $12.10 ------------------------------------ Premium/(Discount) to NAV -11.40% ------------------------------------ Market Yield 7.44% ------------------------------------ Taxable-Equivalent Yield(3) 10.33% ------------------------------------ Net Assets Applicable to Common Shares ($000) $488,561 ------------------------------------ Average Effective Maturity on Securities (Years) 15.06 ------------------------------------ Leverage-Adjusted Duration 14.17 ------------------------------------ AVERAGE ANNUAL TOTAL RETURN (Inception 9/25/01) ------------------------------------ ON SHARE PRICE ON NAV ------------------------------------ 1-Year -17.85% -14.99% ------------------------------------ 5-Year 1.12% 1.97% ------------------------------------ Since Inception 1.47% 3.62% ------------------------------------ STATES (as a % of municipal bonds)(2) ------------------------------------ Texas 12.8% ------------------------------------ Washington 11.1% ------------------------------------ Illinois 10.6% ------------------------------------ California 8.1% ------------------------------------ Michigan 6.8% ------------------------------------ Iowa 4.5% ------------------------------------ Indiana 4.1% ------------------------------------ Wisconsin 3.3% ------------------------------------ Colorado 3.2% ------------------------------------ New Jersey 2.5% ------------------------------------ Louisiana 2.5% ------------------------------------ New York 2.4% ------------------------------------ Kentucky 2.4% ------------------------------------ Missouri 2.1% ------------------------------------ Ohio 1.8% ------------------------------------ Oregon 1.7% ------------------------------------ Georgia 1.6% ------------------------------------ Maryland 1.6% ------------------------------------ Oklahoma 1.6% ------------------------------------ Florida 1.5% ------------------------------------ Other 13.8% ------------------------------------ INDUSTRIES (as a % of total investments)(2) ------------------------------------ U.S. Guaranteed 25.0% ------------------------------------ Transportation 14.9% ------------------------------------ Health Care 14.1% ------------------------------------ Tax Obligation/General 10.6% ------------------------------------ Tax Obligation/Limited 6.5% ------------------------------------ Utilities 5.6% ------------------------------------ Education and Civic Organizations 5.1% ------------------------------------ Water and Sewer 4.4% ------------------------------------ Other 13.8% ------------------------------------ (1) The percentages shown in the foregoing chart may reflect the ratings on certain bonds insured by ACA, AGC, AMBAC, FGIC, FSA, MBIA, RAAI and SYNCORA as of October 31, 2008. Please see the Portfolio Managers' Commentary for an expanded discussion of the affect on the Fund of changes to the ratings of certain bonds in the portfolio resulting from changes to the ratings of the underlying insurers both during the period and after period end. (2) Excluding derivative transactions. (3) Taxable-Equivalent Yield represents the yield that must be earned on a fully taxable investment in order to equal the yield of the Fund on an after-tax basis. It is based on a federal income tax rate of 28%. When comparing this Fund to investments that generate qualified dividend income, the Taxable-Equivalent Yield is lower. 18 NPP NMA NMO Shareholder MEETING REPORT The annual meeting of shareholders was held on July 29, 2008, at The Northern Trust Company, 50 South La Salle Street, Chicago, IL 60675; at this meeting the shareholders were asked to vote on the election of Board Members, the elimination of Fundamental Investment Policies and the approval of new Fundamental Investment Policies. The meeting was subsequently adjourned to August 29, 2008, and additionally adjourned to September 30, 2008, October 28, 2008 and November 25, 2008.
NPP NMA NMO ------------------------------------------------------------------------------------------------------------------------------------ Common and Common and Common and Auction Rate Auction Rate Auction Rate Auction Rate Auction Rate Auction Rate Preferred Preferred Preferred Preferred Preferred Preferred shares voting shares voting shares voting shares voting shares voting shares voting together together together together together together as a class as a class as a class as a class as a class as a class ==================================================================================================================================== TO APPROVE THE ELIMINATION OF THE FUND'S FUNDAMENTAL POLICY RELATING TO INVESTMENTS IN MUNICIPAL SECURITIES AND BELOW INVESTMENT GRADE SECURITIES. For 31,015,202 3,989 22,214,414 2,948 22,612,039 2,959 Against 2,664,030 614 1,512,764 641 1,701,472 418 Abstain 1,133,036 83 1,572,156 134 935,654 123 Broker Non-Votes 8,713,336 11,180 5,763,413 8,940 6,907,691 9,329 ------------------------------------------------------------------------------------------------------------------------------------ Total 43,525,604 15,866 31,062,747 12,663 32,156,856 12,829 ==================================================================================================================================== TO APPROVE THE ELIMINATION OF THE FUND'S FUNDAMENTAL POLICY RELATING TO INVESTMENTS IN MUNICIPAL SECURITIES. For -- -- -- -- -- -- Against -- -- -- -- -- -- Abstain -- -- -- -- -- -- Broker Non-Votes -- -- -- -- -- -- ------------------------------------------------------------------------------------------------------------------------------------ Total -- -- -- -- -- -- ==================================================================================================================================== TO APPROVE THE NEW FUNDAMENTAL POLICY RELATING TO INVESTMENTS IN MUNICIPAL SECURITIES FOR THE FUND. For 31,228,341 4,033 22,370,519 3,040 22,890,232 2,980 Against 2,389,570 561 1,365,064 591 1,467,395 397 Abstain 1,194,357 92 1,563,751 92 891,538 123 Broker Non-Votes 8,713,336 11,180 5,763,413 8,940 6,907,691 9,329 ------------------------------------------------------------------------------------------------------------------------------------ Total 43,525,604 15,866 31,062,747 12,663 32,156,856 12,829 ==================================================================================================================================== TO APPROVE THE ELIMINATION OF THE FUNDAMENTAL POLICY RELATING TO INVESTING IN OTHER INVESTMENT COMPANIES. For 30,642,197 3,990 22,072,817 3,025 22,558,126 2,955 Against 2,931,662 598 1,576,290 601 1,725,732 459 Abstain 1,238,409 98 1,650,227 97 965,307 86 Broker Non-Votes 8,713,336 11,180 5,763,413 8,940 6,907,691 9,329 ------------------------------------------------------------------------------------------------------------------------------------ Total 43,525,604 15,866 31,062,747 12,663 32,156,856 12,829 ==================================================================================================================================== TO APPROVE THE ELIMINATION OF THE FUNDAMENTAL POLICY RELATING TO DERIVATIVES AND SHORT SALES. For 30,540,286 3,936 21,961,133 2,864 22,521,371 2,917 Against 3,003,058 630 1,703,165 685 1,754,157 479 Abstain 1,268,924 120 1,635,036 174 973,637 104 Broker Non-Votes 8,713,336 11,180 5,763,413 8,940 6,907,691 9,329 ------------------------------------------------------------------------------------------------------------------------------------ Total 43,525,604 15,866 31,062,747 12,663 32,156,856 12,829 ==================================================================================================================================== TO APPROVE THE ELIMINATION OF THE FUNDAMENTAL POLICY RELATING TO COMMODITIES. For 30,384,824 3,926 22,033,116 2,963 22,548,121 2,907 Against 3,160,397 632 1,615,126 578 1,727,539 481 Abstain 1,267,047 128 1,651,092 182 973,505 112 Broker Non-Votes 8,713,336 11,180 5,763,413 8,940 6,907,691 9,329 ------------------------------------------------------------------------------------------------------------------------------------ Total 43,525,604 15,866 31,062,747 12,663 32,156,856 12,829 ==================================================================================================================================== TO APPROVE THE NEW FUNDAMENTAL POLICY RELATING TO COMMODITIES. For 30,532,211 3,982 22,201,425 2,928 22,656,714 2,893 Against 3,048,760 579 1,478,403 643 1,638,200 501 Abstain 1,231,297 125 1,619,506 152 954,251 106 Broker Non-Votes 8,713,336 11,180 5,763,413 8,940 6,907,691 9,329 ------------------------------------------------------------------------------------------------------------------------------------ Total 43,525,604 15,866 31,062,747 12,663 32,156,856 12,829 ==================================================================================================================================== 19 NPP NMA NMO Shareholder MEETING REPORT (continued) NPP NMA NMO ------------------------------------------------------------------------------------------------------------------------------------ Common and Common and Common and Auction Rate Auction Rate Auction Rate Auction Rate Auction Rate Auction Rate Preferred Preferred Preferred Preferred Preferred Preferred shares voting shares voting shares voting shares voting shares voting shares voting together together together together together together as a class as a class as a class as a class as a class as a class ==================================================================================================================================== APPROVAL OF THE BOARD MEMBERS WAS REACHED AS FOLLOWS: John P. Amboian For 41,364,196 -- 29,944,896 -- 30,921,528 -- Withhold 2,161,391 -- 1,116,819 -- 1,234,580 -- ------------------------------------------------------------------------------------------------------------------------------------ Total 43,525,587 -- 31,061,715 -- 32,156,108 -- ==================================================================================================================================== Robert P. Bremner For 41,356,327 -- 29,939,708 -- 30,923,886 -- Withhold 2,169,260 -- 1,122,007 -- 1,232,222 -- ------------------------------------------------------------------------------------------------------------------------------------ Total 43,525,587 -- 31,061,715 -- 32,156,108 -- ==================================================================================================================================== Jack B. Evans For 41,332,715 -- 29,935,063 -- 30,933,568 -- Withhold 2,192,872 -- 1,126,652 -- 1,222,540 -- ------------------------------------------------------------------------------------------------------------------------------------ Total 43,525,587 -- 31,061,715 -- 32,156,108 -- ==================================================================================================================================== William C. Hunter For -- 15,065 -- 12,157 -- 12,398 Withhold -- 784 -- 459 -- 385 ------------------------------------------------------------------------------------------------------------------------------------ Total -- 15,849 -- 12,616 -- 12,783 ==================================================================================================================================== David J. Kundert For 41,359,760 -- 29,927,129 -- 30,929,167 -- Withhold 2,165,827 -- 1,134,586 -- 1,226,941 -- ------------------------------------------------------------------------------------------------------------------------------------ Total 43,525,587 -- 31,061,715 -- 32,156,108 -- ==================================================================================================================================== William J. Schneider For -- 15,063 -- 12,157 -- 12,402 Withhold -- 786 -- 459 -- 381 ------------------------------------------------------------------------------------------------------------------------------------ Total -- 15,849 -- 12,616 -- 12,783 ==================================================================================================================================== Judith M. Stockdale For 41,334,865 -- 29,927,229 -- 30,906,205 -- Withhold 2,190,722 -- 1,134,486 -- 1,249,903 -- ------------------------------------------------------------------------------------------------------------------------------------ Total 43,525,587 -- 31,061,715 -- 32,156,108 -- ==================================================================================================================================== Carole E. Stone For 41,357,083 -- 29,927,754 -- 30,901,572 -- Withhold 2,168,504 -- 1,133,961 -- 1,254,536 -- ------------------------------------------------------------------------------------------------------------------------------------ Total 43,525,587 -- 31,061,715 -- 32,156,108 -- ==================================================================================================================================== Terence J. Toth For 41,334,132 -- 29,927,057 -- 30,928,570 -- Withhold 2,191,455 -- 1,134,658 -- 1,227,538 -- ------------------------------------------------------------------------------------------------------------------------------------ Total 43,525,587 -- 31,061,715 -- 32,156,108 -- ==================================================================================================================================== 20 NAD NXZ NZF Shareholder MEETING REPORT (continued) NAD NXZ NZF ------------------------------------------------------------------------------------------------------------------------------------ Common and Common and Common and Auction Rate Auction Rate Auction Rate Auction Rate Auction Rate Auction Rate Preferred Preferred Preferred Preferred Preferred Preferred shares voting shares voting shares voting shares voting shares voting shares voting together together together together together together as a class as a class as a class as a class as a class as a class ==================================================================================================================================== TO APPROVE THE ELIMINATION OF THE FUND'S FUNDAMENTAL POLICY RELATING TO INVESTMENTS IN MUNICIPAL SECURITIES AND BELOW INVESTMENT GRADE SECURITIES. For 18,885,210 2,378 -- -- -- -- Against 1,498,936 360 -- -- -- -- Abstain 613,768 103 -- -- -- -- Broker Non-Votes 5,613,613 7,252 -- -- -- -- ------------------------------------------------------------------------------------------------------------------------------------ Total 26,611,527 10,093 -- -- -- -- ==================================================================================================================================== TO APPROVE THE ELIMINATION OF THE FUND'S FUNDAMENTAL POLICY RELATING TO INVESTMENTS IN MUNICIPAL SECURITIES. For -- -- 14,502,552 1,779 19,224,433 2,594 Against -- -- 762,921 302 1,232,153 309 Abstain -- -- 444,031 69 659,097 187 Broker Non-Votes -- -- 4,434,989 5,665 6,153,673 8,072 ------------------------------------------------------------------------------------------------------------------------------------ Total -- -- 20,144,493 7,815 27,269,356 11,162 ==================================================================================================================================== TO APPROVE THE NEW FUNDAMENTAL POLICY RELATING TO INVESTMENTS IN MUNICIPAL SECURITIES FOR THE FUND. For 18,987,736 2,405 14,556,694 1,823 19,344,257 2,605 Against 1,357,368 334 723,338 256 1,148,459 295 Abstain 652,810 102 429,472 71 622,967 190 Broker Non-Votes 5,613,613 7,252 4,434,989 5,665 6,153,673 8,072 ------------------------------------------------------------------------------------------------------------------------------------ Total 26,611,527 10,093 20,144,493 7,815 27,269,356 11,162 ==================================================================================================================================== TO APPROVE THE ELIMINATION OF THE FUNDAMENTAL POLICY RELATING TO INVESTING IN OTHER INVESTMENT COMPANIES. For -- -- -- -- -- -- Against -- -- -- -- -- -- Abstain -- -- -- -- -- -- Broker Non-Votes -- -- -- -- -- -- ------------------------------------------------------------------------------------------------------------------------------------ Total -- -- -- -- -- -- ==================================================================================================================================== TO APPROVE THE ELIMINATION OF THE FUNDAMENTAL POLICY RELATING TO DERIVATIVES AND SHORT SALES. For -- -- -- -- -- -- Against -- -- -- -- -- -- Abstain -- -- -- -- -- -- Broker Non-Votes -- -- -- -- -- -- ------------------------------------------------------------------------------------------------------------------------------------ Total -- -- -- -- -- -- ==================================================================================================================================== TO APPROVE THE ELIMINATION OF THE FUNDAMENTAL POLICY RELATING TO COMMODITIES. For -- -- -- -- -- -- Against -- -- -- -- -- -- Abstain -- -- -- -- -- -- Broker Non-Votes -- -- -- -- -- -- ------------------------------------------------------------------------------------------------------------------------------------ Total -- -- -- -- -- -- ==================================================================================================================================== TO APPROVE THE NEW FUNDAMENTAL POLICY RELATING TO COMMODITIES. For -- -- -- -- -- -- Against -- -- -- -- -- -- Abstain -- -- -- -- -- -- Broker Non-Votes -- -- -- -- -- -- ------------------------------------------------------------------------------------------------------------------------------------ Total -- -- -- -- -- -- ==================================================================================================================================== 21 NAD NXZ NZF Shareholder MEETING REPORT (continued) NAD NXZ NZF ------------------------------------------------------------------------------------------------------------------------------------ Common and Common and Common and Auction Rate Auction Rate Auction Rate Auction Rate Auction Rate Auction Rate Preferred Preferred Preferred Preferred Preferred Preferred shares voting shares voting shares voting shares voting shares voting shares voting together together together together together together as a class as a class as a class as a class as a class as a class ==================================================================================================================================== APPROVAL OF THE BOARD MEMBERS WAS REACHED AS FOLLOWS: John P. Amboian For 25,358,735 -- 19,549,143 -- 26,172,348 -- Withhold 1,252,786 -- 595,346 -- 1,095,352 -- ------------------------------------------------------------------------------------------------------------------------------------ Total 26,611,521 -- 20,144,489 -- 27,267,700 -- ==================================================================================================================================== Robert P. Bremner For -- -- -- -- -- -- Withhold -- -- -- -- -- -- ------------------------------------------------------------------------------------------------------------------------------------ Total -- -- -- -- -- -- ==================================================================================================================================== Jack B. Evans For -- -- -- -- -- -- Withhold -- -- -- -- -- -- ------------------------------------------------------------------------------------------------------------------------------------ Total -- -- -- -- -- -- ==================================================================================================================================== William C. Hunter For -- 9,724 -- 7,385 -- 10,600 Withhold -- 363 -- 426 -- 456 ------------------------------------------------------------------------------------------------------------------------------------ Total -- 10,087 -- 7,811 -- 11,056 ==================================================================================================================================== David J. Kundert For 25,342,294 -- 19,548,963 -- 26,211,608 -- Withhold 1,269,227 -- 595,526 -- 1,056,092 -- ------------------------------------------------------------------------------------------------------------------------------------ Total 26,611,521 -- 20,144,489 -- 27,267,700 -- ==================================================================================================================================== William J. Schneider For -- 9,724 -- 7,385 -- 10,607 Withhold -- 363 -- 426 -- 449 ------------------------------------------------------------------------------------------------------------------------------------ Total -- 10,087 -- 7,811 -- 11,056 ==================================================================================================================================== Judith M. Stockdale For -- -- -- -- -- -- Withhold -- -- -- -- -- -- ------------------------------------------------------------------------------------------------------------------------------------ Total -- -- -- -- -- -- ==================================================================================================================================== Carole E. Stone For -- -- -- -- -- -- Withhold -- -- -- -- -- -- ------------------------------------------------------------------------------------------------------------------------------------ Total -- -- -- -- -- -- ==================================================================================================================================== Terence J. Toth For 25,355,076 -- 19,545,305 -- 26,173,147 -- Withhold 1,256,445 -- 599,184 -- 1,094,553 -- ------------------------------------------------------------------------------------------------------------------------------------ Total 26,611,521 -- 20,144,489 -- 27,267,700 -- ====================================================================================================================================
22 Report of INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM THE BOARD OF DIRECTORS/TRUSTEES AND SHAREHOLDERS NUVEEN PERFORMANCE PLUS MUNICIPAL FUND, INC. NUVEEN MUNICIPAL ADVANTAGE FUND, INC. NUVEEN MUNICIPAL MARKET OPPORTUNITY FUND, INC. NUVEEN DIVIDEND ADVANTAGE MUNICIPAL FUND NUVEEN DIVIDEND ADVANTAGE MUNICIPAL FUND 2 NUVEEN DIVIDEND ADVANTAGE MUNICIPAL FUND 3 We have audited the accompanying statements of assets and liabilities, including the portfolios of investments, of Nuveen Performance Plus Municipal Fund, Inc., Nuveen Municipal Advantage Fund, Inc., Nuveen Municipal Market Opportunity Fund, Inc., Nuveen Dividend Advantage Municipal Fund, Nuveen Dividend Advantage Municipal Fund 2, and Nuveen Dividend Advantage Municipal Fund 3 (the "Funds") as of October 31, 2008, and the related statements of operations and cash flows (Nuveen Dividend Advantage Municipal Fund 2 only) for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Funds' management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Funds' internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds' internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2008, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial positions of Nuveen Performance Plus Municipal Fund, Inc., Nuveen Municipal Advantage Fund, Inc., Nuveen Municipal Market Opportunity Fund, Inc., Nuveen Dividend Advantage Municipal Fund, Nuveen Dividend Advantage Municipal Fund 2, and Nuveen Dividend Advantage Municipal Fund 3 at October 31, 2008, the results of their operations and cash flows (Nuveen Dividend Advantage Municipal Fund 2 only) for the year then ended, changes in their net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended in conformity with U.S. generally accepted accounting principles. /s/ Ernst & Young LLP Chicago, Illinois December 23, 2008 23 NPP Nuveen Performance Plus Municipal Fund, Inc. Portfolio of INVESTMENTS October 31, 2008
PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ ALABAMA - 0.3% (0.2% OF TOTAL INVESTMENTS) Jefferson County, Alabama, Sewer Revenue Refunding Warrants, Series 1997A: $ 1,435 5.625%, 2/01/22 - FGIC Insured 2/09 at 100.00 BB $ 975,728 1,505 5.375%, 2/01/27 - FGIC Insured 12/08 at 100.00 BB 1,016,853 ------------------------------------------------------------------------------------------------------------------------------------ 2,940 Total Alabama 1,992,581 ------------------------------------------------------------------------------------------------------------------------------------ ALASKA - 0.1% (0.1% OF TOTAL INVESTMENTS) 2,200 Northern Tobacco Securitization Corporation, Alaska, Tobacco 6/14 at 100.00 Baa3 1,170,400 Settlement Asset-Backed Bonds, Series 2006A, 5.000%, 6/01/46 ------------------------------------------------------------------------------------------------------------------------------------ ARIZONA - 1.5% (0.9% OF TOTAL INVESTMENTS) 1,000 Arizona State Transportation Board, Highway Revenue Bonds, 7/12 at 100.00 AAA 1,074,830 Series 2002B, 5.250%, 7/01/22 (Pre-refunded 7/01/12) Phoenix, Arizona, Civic Improvement Corporation, Senior Lien Airport Revenue Bonds, Series 2002B: 5,365 5.750%, 7/01/15 - FGIC Insured (Alternative Minimum Tax) 7/12 at 100.00 AA 5,251,423 5,055 5.750%, 7/01/16 - FGIC Insured (Alternative Minimum Tax) 7/12 at 100.00 AA 4,899,407 ------------------------------------------------------------------------------------------------------------------------------------ 11,420 Total Arizona 11,225,660 ------------------------------------------------------------------------------------------------------------------------------------ ARKANSAS - 0.5% (0.3% OF TOTAL INVESTMENTS) 5,080 Independence County, Arkansas, Hydroelectric Power Revenue Bonds, 5/13 at 100.00 B 2,926,791 Series 2003, 5.350%, 5/01/28 - ACA Insured 1,000 Washington County, Arkansas, Hospital Revenue Bonds, Washington 2/15 at 100.00 Baa1 705,200 Regional Medical Center, Series 2005A, 5.000%, 2/01/35 ------------------------------------------------------------------------------------------------------------------------------------ 6,080 Total Arkansas 3,631,991 ------------------------------------------------------------------------------------------------------------------------------------ CALIFORNIA - 15.2% (9.5% OF TOTAL INVESTMENTS) 3,500 Alameda Corridor Transportation Authority, California, Subordinate Lien 10/17 at 100.00 AA 2,802,135 Revenue Bonds, Series 2004A, 0.000%, 10/01/25 - AMBAC Insured 11,000 Anaheim Public Finance Authority, California, Subordinate Lease Revenue No Opt. Call AAA 5,532,450 Bonds, Public Improvement Project, Series 1997C, 0.000%, 9/01/20 - FSA Insured California Department of Water Resources, Power Supply Revenue Bonds, Series 2002A: 4,000 6.000%, 5/01/15 (Pre-refunded 5/01/12) 5/12 at 101.00 Aaa 4,448,160 3,175 5.375%, 5/01/22 (Pre-refunded 5/01/12) 5/12 at 101.00 Aaa 3,465,132 3,365 California Health Facilities Financing Authority, Health Facility Revenue 3/13 at 100.00 A 2,655,658 Bonds, Adventist Health System/West, Series 2003A, 5.000%, 3/01/33 California Health Facilities Financing Authority, Revenue Bonds, Kaiser Permanante System, Series 2006: 5,000 5.000%, 4/01/37 4/16 at 100.00 A+ 3,963,050 7,000 5.250%, 4/01/39 4/16 at 100.00 A+ 5,766,460 2,380 California Infrastructure Economic Development Bank, Revenue Bonds, 10/11 at 101.00 A- 2,081,834 J. David Gladstone Institutes, Series 2001, 5.250%, 10/01/34 3,500 California Pollution Control Financing Authority, Revenue Bonds, Pacific 6/17 at 100.00 A3 2,308,740 Gas and Electric Company, Series 2004C, 4.750%, 12/01/23 - FGIC Insured (Alternative Minimum Tax) 5,000 California, General Obligation Bonds, Series 2005, 5.000%, 3/01/31 3/16 at 100.00 A+ 4,543,000 4,000 California, General Obligation Bonds, Trust 2652, 0.751%, 6/01/37 (IF) 6/17 at 100.00 A+ 2,202,960 24 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ CALIFORNIA (continued) $ 6,435 California, General Obligation Refunding Bonds, Series 2002, 6.000%, 4/01/16 - AMBAC Insured No Opt. Call AA $ 7,038,989 5,000 Coast Community College District, Orange County, California, General 8/18 at 100.00 AAA 3,439,350 Obligation Bonds, Series 2006C, 0.000%, 8/01/32 - FSA Insured 1,500 Golden State Tobacco Securitization Corporation, California, Enhanced 6/17 at 100.00 BBB 885,750 Tobacco Settlement Asset-Backed Bonds, Series 2007A-1, 5.125%, 6/01/47 10,000 Golden State Tobacco Securitization Corporation, California, Enhanced 6/22 at 100.00 BBB 4,070,000 Tobacco Settlement Asset-Backed Bonds, Series 2007A-2, 0.000%, 6/01/37 10,000 Golden State Tobacco Securitization Corporation, California, Tobacco 6/13 at 100.00 AAA 11,299,300 Settlement Asset-Backed Bonds, Series 2003A-1, 6.750%, 6/01/39 (Pre-refunded 6/01/13) 1,000 Mt. Diablo Hospital District, California, Insured Hospital Revenue Bonds, 12/08 at 100.00 AA (4) 1,033,860 Series 1993A, 5.125%, 12/01/23 - AMBAC Insured (ETM) 13,450 Ontario Redevelopment Financing Authority, San Bernardino County, No Opt. Call AA 15,337,573 California, Revenue Refunding Bonds, Redevelopment Project 1, Series 1995, 7.200%, 8/01/17 - MBIA Insured 7,770 Palmdale Community Redevelopment Agency, California, Residential No Opt. Call AAA 8,030,994 Mortgage Revenue Refunding Bonds, Series 1991A, 7.150%, 2/01/10 (ETM) 2,325 Palmdale Community Redevelopment Agency, California, Restructured No Opt. Call AAA 2,945,705 Single Family Mortgage Revenue Bonds, Series 1986D, 8.000%, 4/01/16 (Alternative Minimum Tax) (ETM) 2,000 San Francisco Airports Commission, California, Revenue Bonds, San 5/09 at 101.00 A1 (4) 2,055,140 Francisco International Airport, Second Series 1999, Issue 23B, 5.125%, 5/01/30 (Pre-refunded 5/01/09) - FGIC Insured 2,000 San Francisco Airports Commission, California, Revenue Refunding 5/11 at 100.00 AA 1,897,020 Bonds, San Francisco International Airport, Second Series 2001, Issue 27B, 5.125%, 5/01/26 - FGIC Insured 3,000 San Joaquin Hills Transportation Corridor Agency, Orange County, No Opt. Call AA 505,800 California, Toll Road Revenue Refunding Bonds, Series 1997A, 0.000%, 1/15/35 - MBIA Insured 15,745 Walnut Valley Unified School District, Los Angeles County, California, 8/11 at 103.00 AA 17,619,914 General Obligation Refunding Bonds, Series 1997A, 7.200%, 2/01/16 - MBIA Insured ------------------------------------------------------------------------------------------------------------------------------------ 132,145 Total California 115,928,974 ------------------------------------------------------------------------------------------------------------------------------------ COLORADO - 7.7% (4.8% OF TOTAL INVESTMENTS) 5,240 Adams 12 Five Star Schools, Adams County, Colorado, General Obligation 12/15 at 100.00 AAA 5,154,326 Bonds, Series 2005, 5.000%, 12/15/24 - FSA Insured 3,000 Colorado Educational and Cultural Facilities Authority, Charter School 8/14 at 100.00 A 2,684,730 Revenue Bonds, Peak-to-Peak Charter School, Series 2004, 5.250%, 8/15/34 - SYNCORA GTY Insured 5,860 Colorado Health Facilities Authority, Revenue Refunding Bonds, Catholic 9/11 at 100.00 AA (4) 6,220,390 Health Initiatives, Series 2001, 5.250%, 9/01/21 (Pre-refunded 9/01/11) 4,500 Denver City and County, Colorado, Airport System Revenue Refunding 11/11 at 100.00 A+ 4,286,385 Bonds, Series 2001A, 5.500%, 11/15/16 - FGIC Insured (Alternative Minimum Tax) 20,000 Denver Convention Center Hotel Authority, Colorado, Senior Revenue 12/13 at 100.00 N/R (4) 21,236,999 Bonds, Convention Center Hotel, Series 2003A, 5.000%, 12/01/33 (Pre-refunded 12/01/13) - SYNCORA GTY Insured 12,615 E-470 Public Highway Authority, Colorado, Senior Revenue Bonds, Series No Opt. Call AA 5,523,478 1997B, 0.000%, 9/01/21 - MBIA Insured E-470 Public Highway Authority, Colorado, Senior Revenue Bonds, Series 2000B: 15,700 0.000%, 9/01/32 - MBIA Insured No Opt. Call AA 2,949,559 33,120 0.000%, 9/01/33 - MBIA Insured No Opt. Call AA 5,786,726 18,500 E-470 Public Highway Authority, Colorado, Toll Revenue Bonds, Series No Opt. Call AA 2,676,025 2004A, 0.000%, 3/01/36 - MBIA Insured 755 Jefferson County School District R1, Colorado, General Obligation Bonds, 12/14 at 100.00 AAA 743,698 Series 2004, 5.000%, 12/15/22 - FSA Insured (UB) 1,330 University of Colorado Hospital Authority, Revenue Bonds, Series 1999A, 11/09 at 101.00 Aa3 1,000,160 5.000%, 11/15/29 - AMBAC Insured ------------------------------------------------------------------------------------------------------------------------------------ 120,620 Total Colorado 58,262,476 ------------------------------------------------------------------------------------------------------------------------------------ 25 NPP Nuveen Performance Plus Municipal Fund, Inc. (continued) Portfolio of INVESTMENTS October 31, 2008 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ DISTRICT OF COLUMBIA - 1.9% (1.2% OF TOTAL INVESTMENTS) $ 5,275 District of Columbia Tobacco Settlement Corporation, Tobacco 5/11 at 101.00 BBB $ 4,697,757 Settlement Asset-Backed Bonds, Series 2001, 6.250%, 5/15/24 5,590 District of Columbia, General Obligation Bonds, Series 1999B, 5.500%, 6/09 at 101.00 AAA 5,721,700 6/01/13 - FSA Insured 5,000 Washington Convention Center Authority, District of Columbia, Senior 10/16 at 100.00 AA 4,022,150 Lien Dedicated Tax Revenue Bonds, Series 2007A, 4.500%, 10/01/30 - AMBAC Insured ------------------------------------------------------------------------------------------------------------------------------------ 15,865 Total District of Columbia 14,441,607 ------------------------------------------------------------------------------------------------------------------------------------ FLORIDA - 7.8% (4.9% OF TOTAL INVESTMENTS) Broward County Housing Finance Authority, Florida, Multifamily Housing Revenue Bonds, Venice Homes Apartments, Series 2001A: 1,545 5.700%, 1/01/32 - FSA Insured (Alternative Minimum Tax) 7/11 at 100.00 AAA 1,277,962 1,805 5.800%, 1/01/36 - FSA Insured (Alternative Minimum Tax) 7/11 at 100.00 AAA 1,510,785 5,300 Escambia County Health Facilities Authority, Florida, Revenue Bonds, No Opt. Call Aa1 5,451,050 Ascension Health Credit Group, Series 2003A, 5.250%, 11/15/14 2,095 Florida Housing Finance Corporation, Homeowner Mortgage Revenue 1/10 at 100.00 AAA 1,968,483 Bonds, Series 2000-11, 5.850%, 1/01/22 - FSA Insured (Alternative Minimum Tax) 5,675 Florida Housing Finance Corporation, Homeowner Mortgage Revenue 1/16 at 100.00 AA+ 4,076,239 Bonds, Series 2006-2, 4.950%, 7/01/37 (Alternative Minimum Tax) 10,050 Florida State Board of Education, Full Faith and Credit Public Education 6/10 at 101.00 AAA 10,400,243 Capital Outlay Refunding Bonds, Series 2000D, 5.750%, 6/01/22 7,000 Hillsborough County Aviation Authority, Florida, Revenue Bonds, Tampa 10/13 at 100.00 AA 6,494,950 International Airport, Series 2003A, 5.250%, 10/01/17 - MBIA Insured (Alternative Minimum Tax) 10,000 JEA, Florida, Electric System Revenue Bonds, Series 2006-3A, 4/15 at 100.00 AAA 8,936,100 5.000%, 10/01/41 - FSA Insured (UB) 10,750 Martin County Industrial Development Authority, Florida, Industrial 12/08 at 100.00 BB+ 9,697,038 Development Revenue Bonds, Indiantown Cogeneration LP, Series 1994A, 7.875%, 12/15/25 (Alternative Minimum Tax) 2,570 Miami-Dade County Housing Finance Authority, Florida, Multifamily 6/11 at 100.00 AAA 2,172,472 Mortgage Revenue Bonds, Country Club Villas II Project, Series 2001-1A, 5.850%, 1/01/37 - FSA Insured (Alternative Minimum Tax) 3,500 Miami-Dade County, Florida, Aviation Revenue Bonds, Miami 10/15 at 100.00 A2 2,522,765 International Airport, Series 2005A, 5.000%, 10/01/37 - SYNCORA GTY Insured (Alternative Minimum Tax) 1,700 Miami-Dade County, Florida, Beacon Tradeport Community Development 5/12 at 102.00 BBB+ 1,461,966 District, Special Assessment Bonds, Commercial Project, Series 2002A, 5.625%, 5/01/32 - RAAI Insured 4,500 Port Saint Lucie, Florida, Special Assessment Revenue Bonds, Southwest 7/17 at 100.00 AA 3,602,655 Annexation District 1B, Series 2007, 5.000%, 7/01/40 - MBIA Insured ------------------------------------------------------------------------------------------------------------------------------------ 66,490 Total Florida 59,572,708 ------------------------------------------------------------------------------------------------------------------------------------ GEORGIA - 3.6% (2.2% OF TOTAL INVESTMENTS) 4,920 Atlanta, Georgia, Airport General Revenue Refunding Bonds, Series 1/10 at 101.00 A+ (4) 5,145,090 2000A, 5.600%, 1/01/30 (Pre-refunded 1/01/10) - FGIC Insured 5,000 Atlanta, Georgia, Water and Wastewater Revenue Bonds, Series 1999A, No Opt. Call AA 4,733,750 5.500%, 11/01/22 - FGIC Insured 2,000 George L. Smith II World Congress Center Authority, Atlanta, Georgia, 7/10 at 101.00 AA 1,770,560 Revenue Refunding Bonds, Domed Stadium Project, Series 2000, 5.500%, 7/01/20 - MBIA Insured (Alternative Minimum Tax) 15,000 Private Colleges and Universities Authority, Georgia, Revenue Bonds, 11/09 at 101.00 AA (4) 15,718,200 Emory University, Series 1999A, 5.500%, 11/01/25 (Pre-refunded 11/01/09) ------------------------------------------------------------------------------------------------------------------------------------ 26,920 Total Georgia 27,367,600 ------------------------------------------------------------------------------------------------------------------------------------ IDAHO - 0.1% (0.1% OF TOTAL INVESTMENTS) 390 Idaho Housing and Finance Association, Single Family Mortgage Bonds, 1/10 at 100.00 Aa3 393,159 Series 2000D, 6.200%, 7/01/14 (Alternative Minimum Tax) 26 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ IDAHO (continued) $ 275 Idaho Housing and Finance Association, Single Family Mortgage Bonds, 7/10 at 100.00 Aa2 $ 275,085 Series 2000G-2, 5.950%, 7/01/25 (Alternative Minimum Tax) ------------------------------------------------------------------------------------------------------------------------------------ 665 Total Idaho 668,244 ------------------------------------------------------------------------------------------------------------------------------------ ILLINOIS - 24.5% (15.2% OF TOTAL INVESTMENTS) 10,000 Chicago Board of Education, Illinois, Unlimited Tax General Obligation No Opt. Call AA 5,517,500 Bonds, Dedicated Tax Revenues, Series 1998B-1, 0.000%, 12/01/19 - FGIC Insured 10,000 Chicago Board of Education, Illinois, Unlimited Tax General Obligation No Opt. Call AA 5,143,900 Bonds, Dedicated Tax Revenues, Series 1999A, 0.000%, 12/01/20 - FGIC Insured Chicago, Illinois, General Obligation Bonds, City Colleges, Series 1999: 32,170 0.000%, 1/01/21 - FGIC Insured No Opt. Call AA 16,507,392 32,670 0.000%, 1/01/22 - FGIC Insured No Opt. Call AA 15,727,665 9,145 Chicago, Illinois, Revenue Bonds, Midway Airport, Series 1996A, 5.500%, 1/09 at 100.00 AA 8,603,250 1/01/29 - MBIA Insured 1,665 Chicago, Illinois, Third Lien General Airport Revenue Bonds, O'Hare 1/16 at 100.00 A1 1,436,778 International Airport, Series 2005A, 5.000%, 1/01/33 - FGIC Insured DuPage County Forest Preserve District, Illinois, General Obligation Bonds, Series 2000: 8,000 0.000%, 11/01/18 No Opt. Call AAA 4,829,120 15,285 0.000%, 11/01/19 No Opt. Call AAA 8,618,600 2,000 Illinois Finance Authority, Revenue Bonds, Children's Memorial Hospital, 8/18 at 100.00 AAA 1,706,740 Series 2008, 5.250%, 8/15/47 - AGC Insured (UB) 5,245 Illinois Finance Authority, Revenue Bonds, Loyola University of Chicago, 7/17 at 100.00 AA 3,962,598 Tender Option Bond Trust 1137, 7.720%, 7/01/46 (IF) 4,000 Illinois Health Facilities Authority, FHA-Insured Mortgage Revenue 8/13 at 100.00 AAA 3,514,800 Refunding Bonds, Sinai Health System, Series 2003, 5.150%, 2/15/37 1,180 Illinois Health Facilities Authority, Revenue Bonds, Lake Forest Hospital, 7/12 at 100.00 A- 1,035,131 Series 2002A, 5.750%, 7/01/29 3,000 Illinois Health Facilities Authority, Revenue Bonds, Lake Forest Hospital, 7/13 at 100.00 A- 2,714,550 Series 2003, 6.000%, 7/01/33 4,580 Illinois Health Facilities Authority, Revenue Bonds, Midwest Care Center 8/10 at 102.00 Aaa 4,611,739 IX Inc., Series 2000, 6.250%, 8/20/35 2,160 Illinois Health Facilities Authority, Revenue Bonds, Silver Cross Hospital 8/09 at 101.00 A 2,126,196 and Medical Centers, Series 1999, 5.250%, 8/15/15 (Mandatory put 8/15/09) 7,250 Kane, Kendall, LaSalle, and Will Counties, Illinois, Community College 12/13 at 57.71 AA 2,696,420 District 516, General Obligation Bonds, Series 2005E, 0.000%, 12/15/24 - FGIC Insured 3,700 Libertyville, Illinois, Affordable Housing Revenue Bonds, Liberty Towers 11/09 at 100.00 Aaa 3,881,152 Project, Series 1999A, 7.000%, 11/01/29 (Pre-refunded 11/01/09) (Alternative Minimum Tax) 6,000 McHenry County Conservation District, Illinois, General Obligation Bonds, 2/11 at 100.00 Aa1 (4) 6,384,660 Series 2001A, 5.625%, 2/01/21 (Pre-refunded 2/01/11) - FGIC Insured 5,000 Metropolitan Pier and Exposition Authority, Illinois, Revenue Bonds, 6/12 at 101.00 AAA 4,744,650 McCormick Place Expansion Project, Series 2002A, 5.250%, 6/15/42 - MBIA Insured 10,650 Metropolitan Pier and Exposition Authority, Illinois, Revenue Bonds, No Opt. Call AAA 12,530,471 McCormick Place Hospitality Facility, Series 1996A, 7.000%, 7/01/26 (ETM) Metropolitan Pier and Exposition Authority, Illinois, Revenue Refunding Bonds, McCormick Place Expansion Project, Series 1996A: 9,400 0.000%, 12/15/18 - MBIA Insured No Opt. Call AA 5,575,140 16,570 0.000%, 12/15/20 - MBIA Insured No Opt. Call AA 8,554,428 23,550 0.000%, 12/15/22 - MBIA Insured No Opt. Call AA 10,736,681 13,000 0.000%, 12/15/24 - MBIA Insured No Opt. Call AA 5,236,790 5,100 Metropolitan Pier and Exposition Authority, Illinois, Revenue Refunding No Opt. Call AAA 5,242,341 Bonds, McCormick Place Expansion Project, Series 1998A, 5.500%, 12/15/23 - FGIC Insured 27 NPP Nuveen Performance Plus Municipal Fund, Inc. (continued) Portfolio of INVESTMENTS October 31, 2008 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ ILLINOIS (continued) $ 5,180 Metropolitan Pier and Exposition Authority, Illinois, Revenue Refunding No Opt. Call AAA $ 5,477,643 Bonds, McCormick Place Expansion Project, Series 1998A, 5.500%, 12/15/23 - FGIC Insured (ETM) 17,865 Regional Transportation Authority, Cook, DuPage, Kane, Lake, McHenry No Opt. Call AAA 18,509,747 and Will Counties, Illinois, General Obligation Bonds, Series 1999, 5.750%, 6/01/23 - FSA Insured 6,090 Sherman, Illinois, GNMA Mortgage Revenue Refunding Bonds, Villa 10/09 at 102.00 AAA 6,186,283 Vianney, Series 1999A, 6.450%, 10/01/29 10,000 Will County Community High School District 210 Lincoln-Way, Illinois, No Opt. Call Aaa 4,424,200 General Obligation Bonds, Series 2006, 0.000%, 1/01/23 - FSA Insured ------------------------------------------------------------------------------------------------------------------------------------ 280,455 Total Illinois 186,236,565 ------------------------------------------------------------------------------------------------------------------------------------ INDIANA - 6.2% (3.9% OF TOTAL INVESTMENTS) 2,465 Danville Multi-School Building Corporation, Indiana, First Mortgage 7/11 at 100.00 AA 2,490,784 Refunding Bonds, Series 2001, 5.250%, 7/15/18 - AMBAC Insured 3,000 Hospital Authority of Delaware County, Indiana, Hospital Revenue Bonds, 8/16 at 100.00 Baa2 2,003,220 Cardinal Health System, Series 2006, 5.250%, 8/01/36 14,000 Indiana Health Facility Financing Authority, Hospital Revenue Bonds, 8/10 at 101.50 AA (4) 14,957,740 Clarian Health Obligated Group, Series 2000A, 5.500%, 2/15/30 (Pre-refunded 8/15/10) - MBIA Insured 750 Indiana Health Facility Financing Authority, Hospital Revenue Bonds, 2/16 at 100.00 A+ 617,520 Clarian Health Obligation Group, Series 2006B, 5.000%, 2/15/23 2,500 Indiana Health Facility Financing Authority, Hospital Revenue Refunding No Opt. Call AAA 2,757,525 Bonds, Columbus Regional Hospital, Series 1993, 7.000%, 8/15/15 - FSA Insured 4,320 Indiana Health Facility Financing Authority, Revenue Bonds, Ancilla 12/08 at 100.50 AA (4) 4,329,763 Systems Inc. Obligated Group, Series 1997, 5.250%, 7/01/22 - MBIA Insured (ETM) 3,000 Indiana Health Facility Financing Authority, Revenue Bonds, Community 3/17 at 100.00 BBB 2,208,240 Foundation of Northwest Indiana, Series 2007, 5.500%, 3/01/37 2,000 Indiana Health Facility Financing Authority, Revenue Bonds, Community 5/15 at 100.00 AA 1,660,360 Hospitals of Indiana, Series 2005A, 5.000%, 5/01/35 - AMBAC Insured Indiana Transportation Finance Authority, Highway Revenue Bonds, Series 2000: 1,285 5.375%, 12/01/25 (Pre-refunded 12/01/10) 12/10 at 100.00 AA+ (4) 1,359,273 6,715 5.375%, 12/01/25 (Pre-refunded 12/01/10) 12/10 at 100.00 AA+ (4) 7,103,127 3,105 Indiana University, Student Fee Revenue Bonds, Series 2003O, 5.250%, 8/13 at 100.00 Aa1 3,129,374 8/01/20 - FGIC Insured 1,000 Marion County Convention and Recreational Facilities Authority, Indiana, 6/11 at 100.00 AA 961,120 Excise Taxes Lease Rental Revenue Refunding Senior Bonds, Series 2001A, 5.000%, 6/01/21 - MBIA Insured 2,395 Shelbyville Central Renovation School Building Corporation, Indiana, 7/15 at 100.00 AA+ 2,053,976 First Mortgage Bonds, Series 2005, 4.375%, 7/15/26 - MBIA Insured 1,800 Sunman Dearborn High School Building Corporation, Indiana, First 1/15 at 100.00 AA+ 1,760,004 Mortgage Bonds, Series 2005, 5.000%, 7/15/25 - MBIA Insured ------------------------------------------------------------------------------------------------------------------------------------ 48,335 Total Indiana 47,392,026 ------------------------------------------------------------------------------------------------------------------------------------ IOWA - 2.1% (1.3% OF TOTAL INVESTMENTS) 1,500 Iowa Finance Authority, Health Facility Revenue Bonds, Care Initiatives 7/16 at 100.00 BBB- 1,214,910 Project, Series 2006A, 5.500%, 7/01/21 Iowa Tobacco Settlement Authority, Asset Backed Settlement Revenue Bonds, Series 2005C: 5,000 5.375%, 6/01/38 6/15 at 100.00 BBB 2,958,400 5,300 5.625%, 6/01/46 6/15 at 100.00 BBB 3,152,917 4,500 Iowa Tobacco Settlement Authority, Tobacco Asset-Backed Revenue 6/17 at 100.00 BBB 3,132,810 Bonds, Series 2005B, 5.600%, 6/01/34 5,000 Iowa Tobacco Settlement Authority, Tobacco Settlement Asset-Backed 6/11 at 101.00 AAA 5,292,300 Revenue Bonds, Series 2001B, 5.600%, 6/01/35 (Pre-refunded 6/01/11) ------------------------------------------------------------------------------------------------------------------------------------ 21,300 Total Iowa 15,751,337 ------------------------------------------------------------------------------------------------------------------------------------ 28 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ KANSAS - 1.6% (1.0% OF TOTAL INVESTMENTS) $ 3,790 Kansas Department of Transportation, Highway Revenue Bonds, Series 3/14 at 100.00 AAA $ 3,809,140 2008, 5.000%, 3/01/23 (UB) 5,790 Sedgwick County Unified School District 259, Wichita, Kansas, General 9/10 at 100.00 AA 5,347,586 Obligation Bonds, Series 2000, 3.500%, 9/01/17 3,200 Wyandotte County Unified School District 500, Kansas, General 9/11 at 100.00 AAA 2,862,080 Obligation Bonds, Series 2001, 4.000%, 9/01/21 - FSA Insured ------------------------------------------------------------------------------------------------------------------------------------ 12,780 Total Kansas 12,018,806 ------------------------------------------------------------------------------------------------------------------------------------ LOUISIANA - 2.9% (1.8% OF TOTAL INVESTMENTS) 725 East Baton Rouge Mortgage Finance Authority, Louisiana, GNMA/FNMA 4/09 at 101.50 Aaa 733,780 Mortgage-Backed Securities Program Single Family Mortgage Revenue Refunding Bonds, Series 1997B-1, 5.750%, 10/01/26 4,000 Lafayette City and Parish, Louisiana, Utilities Revenue Bonds, Series 11/14 at 100.00 AA 3,929,440 2004, 5.250%, 11/01/25 - MBIA Insured 4,650 Louisiana Public Facilities Authority, Revenue Bonds, Baton Rouge 7/14 at 100.00 AA 4,073,912 General Hospital, Series 2004, 5.250%, 7/01/33 - MBIA Insured Tobacco Settlement Financing Corporation, Louisiana, Tobacco Settlement Asset-Backed Bonds, Series 2001B: 10,000 5.500%, 5/15/30 5/11 at 101.00 BBB 8,399,100 6,680 5.875%, 5/15/39 5/11 at 101.00 BBB 4,779,139 ------------------------------------------------------------------------------------------------------------------------------------ 26,055 Total Louisiana 21,915,371 ------------------------------------------------------------------------------------------------------------------------------------ MAINE - 0.7% (0.4% OF TOTAL INVESTMENTS) 5,680 Portland, Maine, Airport Revenue Bonds, Series 2003A, 5.000%, 7/13 at 100.00 AAA 5,105,298 7/01/32 - FSA Insured ------------------------------------------------------------------------------------------------------------------------------------ MARYLAND - 1.7% (1.1% OF TOTAL INVESTMENTS) 7,720 Maryland Transportation Authority, Airport Parking Revenue Bonds, 3/12 at 101.00 AA 6,778,392 Baltimore-Washington International Airport Passenger Facility, Series 2002B, 5.125%, 3/01/20 - AMBAC Insured (Alternative Minimum Tax) 5,660 Takoma Park, Maryland, Hospital Facilities Revenue Refunding and No Opt. Call AAA 6,112,121 Improvement Bonds, Washington Adventist Hospital, Series 1995, 6.500%, 9/01/12 - FSA Insured (ETM) ------------------------------------------------------------------------------------------------------------------------------------ 13,380 Total Maryland 12,890,513 ------------------------------------------------------------------------------------------------------------------------------------ MASSACHUSETTS - 6.3% (3.9% OF TOTAL INVESTMENTS) Massachusetts Development Finance Authority, Revenue Bonds, 100 Cambridge Street Redevelopment, M/SRBC Project, Series 2002A: 4,000 5.125%, 8/01/28 - MBIA Insured 2/12 at 100.00 AA 3,684,600 5,625 5.125%, 2/01/34 - MBIA Insured 2/12 at 100.00 AA 5,042,250 995 Massachusetts Educational Finance Authority, Student Loan Revenue 12/09 at 101.00 AA 1,010,512 Refunding Bonds, Series 2000G, 5.700%, 12/01/11 - MBIA Insured (Alternative Minimum Tax) 8,730 Massachusetts Health and Educational Facilities Authority, Revenue 10/15 at 100.00 AAA 8,446,624 Bonds, Berkshire Health System, Series 2008, 5.000%, 10/01/19 - AGC Insured (UB) 500 Massachusetts Health and Educational Facilities Authority, Revenue 7/18 at 100.00 A3 339,440 Bonds, CareGroup Inc., Series 2008E-1, 5.125%, 7/01/38 1,530 Massachusetts Health and Educational Facilities Authority, Revenue 1/09 at 101.00 A2 1,211,944 Bonds, Southcoast Health System Obligated Group, Series 1998A, 4.750%, 7/01/27 - MBIA Insured 5,745 Massachusetts Industrial Finance Agency, Resource Recovery Revenue 12/08 at 102.00 BBB 4,975,630 Refunding Bonds, Ogden Haverhill Project, Series 1998A, 5.600%, 12/01/19 (Alternative Minimum Tax) 10,150 Massachusetts Turnpike Authority, Metropolitan Highway System 1/09 at 100.00 AA 8,051,082 Revenue Bonds, Senior Series 1997A, 5.000%, 1/01/37 - MBIA Insured 890 Massachusetts, General Obligation Bonds, Consolidated Loan, Series 11/12 at 100.00 AA (4) 948,286 2002C, 5.250%, 11/01/30 (Pre-refunded 11/01/12) 29 NPP Nuveen Performance Plus Municipal Fund, Inc. (continued) Portfolio of INVESTMENTS October 31, 2008 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ MASSACHUSETTS (continued) Massachusetts, General Obligation Bonds, Consolidated Loan, Series 2002E: $ 1,255 5.250%, 1/01/22 (Pre-refunded 1/01/13) - FGIC Insured 1/13 at 100.00 AA (4) $ 1,336,148 3,745 5.250%, 1/01/22 (Pre-refunded 1/01/13) - FGIC Insured 1/13 at 100.00 AA (4) 3,987,152 8,500 Route 3 North Transportation Improvements Association, 6/10 at 100.00 AA (4) 8,921,175 Massachusetts, Lease Revenue Bonds, Series 2000, 5.375%, 6/15/33 (Pre-refunded 6/15/10) - MBIA Insured ------------------------------------------------------------------------------------------------------------------------------------ 51,665 Total Massachusetts 47,954,843 ------------------------------------------------------------------------------------------------------------------------------------ MICHIGAN - 5.0% (3.1% OF TOTAL INVESTMENTS) 6,155 Birmingham City School District, Oakland County, Michigan, School 5/09 at 100.00 AAA 5,824,661 Building and Site Bonds, Series 1998, 4.750%, 11/01/24 - FSA Insured 5,000 Detroit, Michigan, Second Lien Sewerage Disposal System Revenue 7/15 at 100.00 AA 4,273,700 Bonds, Series 2005A, 5.000%, 7/01/35 - MBIA Insured 1,500 Michigan State Building Authority, Revenue Bonds, Facilities Program, 10/11 at 100.00 A+ 1,455,045 Series 2001I, 5.000%, 10/15/24 5,000 Michigan State Building Authority, Revenue Refunding Bonds, Facilities 10/13 at 100.00 AA 4,667,550 Program, Series 2003II, 5.000%, 10/15/29 - MBIA Insured 7,115 Michigan State Hospital Finance Authority, Hospital Revenue Refunding 3/13 at 100.00 A1 (4) 7,719,419 Bonds, Henry Ford Health System, Series 2003A, 5.500%, 3/01/16 (Pre-refunded 3/01/13) 3,000 Michigan Strategic Fund, Collateralized Limited Obligation Pollution 9/09 at 102.00 AA 2,512,080 Control Revenue Refunding Bonds, Detroit Edison Company, Series 1999A, 5.550%, 9/01/29 - MBIA Insured (Alternative Minimum Tax) 3,050 Michigan Tobacco Settlement Finance Authority, Tobacco Settlement 6/18 at 100.00 Baa3 2,279,845 Asset-Backed Revenue Bonds, Series 2008A, 6.875%, 6/01/42 10,000 Wayne County, Michigan, Airport Revenue Bonds, Detroit Metropolitan 12/08 at 101.00 AA 9,473,200 Wayne County Airport, Series 1998A, 5.375%, 12/01/16 - MBIA Insured (Alternative Minimum Tax) ------------------------------------------------------------------------------------------------------------------------------------ 40,820 Total Michigan 38,205,500 ------------------------------------------------------------------------------------------------------------------------------------ MINNESOTA - 3.2% (2.0% OF TOTAL INVESTMENTS) 3,000 Minneapolis-St. Paul Metropolitan Airports Commission, Minnesota, 1/11 at 100.00 A (4) 3,162,090 Subordinate Airport Revenue Bonds, Series 2001C, 5.250%, 1/01/26 (Pre-refunded 1/01/11) - FGIC Insured 18,820 St. Paul Housing and Redevelopment Authority, Minnesota, Sales Tax 11/15 at 103.00 AAA 21,325,690 Revenue Refunding Bonds, Civic Center Project, Series 1996, 7.100%, 11/01/23 - FSA Insured ------------------------------------------------------------------------------------------------------------------------------------ 21,820 Total Minnesota 24,487,780 ------------------------------------------------------------------------------------------------------------------------------------ MISSISSIPPI - 1.3% (0.8% OF TOTAL INVESTMENTS) 9,750 Mississippi Business Finance Corporation, Pollution Control Revenue 4/09 at 100.00 BBB 7,891,163 Refunding Bonds, System Energy Resources Inc. Project, Series 1998, 5.875%, 4/01/22 2,475 Mississippi Hospital Equipment and Facilities Authority, Revenue Bonds, 9/14 at 100.00 AA 2,187,059 Baptist Memorial Healthcare, Series 2008, 5.000%, 9/01/24 (UB) ------------------------------------------------------------------------------------------------------------------------------------ 12,225 Total Mississippi 10,078,222 ------------------------------------------------------------------------------------------------------------------------------------ MISSOURI - 1.8% (1.1% OF TOTAL INVESTMENTS) 6,350 Kansas City, Missouri, Airport Revenue Bonds, General Improvement 9/12 at 100.00 A+ 6,388,227 Projects, Series 2003B, 5.250%, 9/01/17 - FGIC Insured 1,845 Missouri Health and Educational Facilities Authority, Revenue Bonds, 5/13 at 100.00 AA 1,789,779 BJC Health System, Series 2003, 5.250%, 5/15/18 3,815 Missouri Health and Educational Facilities Authority, Revenue Bonds, 6/11 at 101.00 AA (4) 4,070,719 SSM Healthcare System, Series 2001A, 5.250%, 6/01/28 (Pre-refunded 6/01/11) - AMBAC Insured 2,000 Missouri-Illinois Metropolitan District Bi-State Development Agency, Mass 10/13 at 100.00 AAA 1,787,200 Transit Sales Tax Appropriation Bonds, Metrolink Cross County Extension Project, Series 2002B, 5.000%, 10/01/32 - FSA Insured ------------------------------------------------------------------------------------------------------------------------------------ 14,010 Total Missouri 14,035,925 ------------------------------------------------------------------------------------------------------------------------------------ 30 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ MONTANA - 0.6% (0.4% OF TOTAL INVESTMENTS) $ 595 Montana Board of Housing, Single Family Mortgage Bonds, Series 12/09 at 100.00 AA+ $ 605,656 2000A-2, 6.450%, 6/01/29 (Alternative Minimum Tax) 4,795 Montana Higher Education Student Assistance Corporation, Student Loan 12/08 at 101.00 A2 3,967,623 Revenue Bonds, Subordinate Series 1998B, 5.500%, 12/01/31 (Alternative Minimum Tax) ------------------------------------------------------------------------------------------------------------------------------------ 5,390 Total Montana 4,573,279 ------------------------------------------------------------------------------------------------------------------------------------ NEBRASKA - 0.2% (0.1% OF TOTAL INVESTMENTS) 1,220 Nebraska Investment Finance Authority, Single Family Housing Revenue 9/10 at 100.00 AAA 1,217,621 Bonds, Series 2000E, 5.850%, 9/01/20 (Alternative Minimum Tax) ------------------------------------------------------------------------------------------------------------------------------------ NEVADA - 3.1% (1.9% OF TOTAL INVESTMENTS) 10,900 Clark County School District, Nevada, General Obligation Bonds, Series 6/12 at 100.00 AA (4) 11,808,842 2002C, 5.500%, 6/15/19 (Pre-refunded 6/15/12) - MBIA Insured Director of Nevada State Department of Business and Industry, Revenue Bonds, Las Vegas Monorail Project, First Tier, Series 2000: 3,500 0.000%, 1/01/21 - AMBAC Insured No Opt. Call AA 1,023,540 2,780 0.000%, 1/01/28 - AMBAC Insured No Opt. Call AA 400,014 6,980 5.375%, 1/01/40 - AMBAC Insured 1/10 at 100.00 AA 4,195,957 5,000 Reno, Nevada, Health Facilities Revenue Bonds, Catholic Healthcare 7/17 at 100.00 A 4,017,100 West, Series 2007A, 5.250%, 7/01/31 2,500 Reno, Nevada, Health Facility Revenue Bonds, Catholic Healthcare West, 7/17 at 100.00 A 1,918,700 Trust 2634, 0.777%, 7/01/31 (IF) ------------------------------------------------------------------------------------------------------------------------------------ 31,660 Total Nevada 23,364,153 ------------------------------------------------------------------------------------------------------------------------------------ NEW HAMPSHIRE - 1.7% (1.0% OF TOTAL INVESTMENTS) 3,265 New Hampshire Health and Education Facilities Authority, Revenue Bonds, 1/15 at 100.00 BBB 2,332,516 Southern New Hampshire University, Series 2005, 5.000%, 1/01/30 - ACA Insured New Hampshire Housing Finance Authority, FHLMC Multifamily Housing Remarketed Revenue Bonds, Countryside LP, Series 1994: 3,725 6.000%, 7/01/18 (Alternative Minimum Tax) 7/10 at 101.00 Aaa 3,709,802 6,945 6.100%, 7/01/24 (Alternative Minimum Tax) 7/10 at 101.00 Aaa 6,511,840 ------------------------------------------------------------------------------------------------------------------------------------ 13,935 Total New Hampshire 12,554,158 ------------------------------------------------------------------------------------------------------------------------------------ NEW JERSEY - 8.8% (5.5% OF TOTAL INVESTMENTS) 3,000 New Jersey Economic Development Authority, Transportation Sublease 5/09 at 100.00 AAA 3,054,450 Revenue Bonds, Light Rail Transit System, Series 1999A, 5.250%, 5/01/17 (Pre-refunded 5/01/09) - FSA Insured 2,110 New Jersey Higher Education Assistance Authority, Student Loan 6/10 at 101.00 Aaa 2,148,676 Revenue Bonds, Series 2000A, 6.000%, 6/01/13 - MBIA Insured (Alternative Minimum Tax) 4,500 New Jersey Transportation Trust Fund Authority, Transportation System No Opt. Call AAA 4,751,055 Bonds, Series 2001C, 5.500%, 12/15/18 - FSA Insured 9,250 New Jersey Transportation Trust Fund Authority, Transportation System 6/13 at 100.00 AAA 10,148,638 Bonds, Series 2003C, 5.500%, 6/15/23 (Pre-refunded 6/15/13) New Jersey Transportation Trust Fund Authority, Transportation System Bonds, Series 2006C: 35,000 0.000%, 12/15/29 - FSA Insured No Opt. Call AAA 10,086,300 10,000 0.000%, 12/15/30 - FGIC Insured No Opt. Call AA 2,671,200 10,000 New Jersey Turnpike Authority, Revenue Bonds, Series 2005A, 5.000%, 7/13 at 100.00 AAA 10,057,200 1/01/20 - FSA Insured (UB) 11,070 Tobacco Settlement Financing Corporation, New Jersey, Tobacco 6/12 at 100.00 AAA 11,806,266 Settlement Asset-Backed Bonds, Series 2002, 5.750%, 6/01/32 (Pre-refunded 6/01/12) 4,450 Tobacco Settlement Financing Corporation, New Jersey, Tobacco 6/13 at 100.00 AAA 5,092,847 Settlement Asset-Backed Bonds, Series 2003, 6.750%, 6/01/39 (Pre-refunded 6/01/13) 31 NPP Nuveen Performance Plus Municipal Fund, Inc. (continued) Portfolio of INVESTMENTS October 31, 2008 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ NEW JERSEY (continued) West Deptford Township, Gloucester County, New Jersey, General Obligation Bonds, Series 2000: $ 3,150 5.500%, 9/01/21 (Pre-refunded 9/01/10) - FGIC Insured 9/10 at 100.00 Baa1 (4) $ 3,327,566 3,335 5.500%, 9/01/22 (Pre-refunded 9/01/10) - FGIC Insured 9/10 at 100.00 Baa1 (4) 3,522,994 ------------------------------------------------------------------------------------------------------------------------------------ 95,865 Total New Jersey 66,667,192 ------------------------------------------------------------------------------------------------------------------------------------ NEW YORK - 8.5% (5.3% OF TOTAL INVESTMENTS) 5,500 Dormitory Authority of the State of New York, FHA-Insured Mortgage 2/14 at 100.00 AAA 5,068,525 Revenue Bonds, Kaleida Health, Series 2004, 5.050%, 2/15/25 2,070 Dormitory Authority of the State of New York, Insured Revenue Bonds, 1/09 at 101.00 AA 2,091,611 853 Schools Program, Gateway-Longview Inc., Series 1998A, 5.500%, 7/01/18 - AMBAC Insured 2,250 Dormitory Authority of the State of New York, Lease Revenue Bonds, 7/09 at 101.00 AA (4) 2,332,395 State University Dormitory Facilities, Series 1999C, 5.500%, 7/01/29 (Pre-refunded 7/01/09) - MBIA Insured Dormitory Authority of the State of New York, Revenue Bonds, Marymount Manhattan College, Series 1999: 1,580 6.375%, 7/01/13 - RAAI Insured 7/09 at 101.00 BBB+ 1,628,000 9,235 6.125%, 7/01/21 - RAAI Insured 7/09 at 101.00 BBB+ 9,008,004 1,500 Dormitory Authority of the State of New York, Revenue Bonds, St. 2/09 at 100.00 AA 1,357,440 Barnabas Hospital, Series 1997, 5.450%, 8/01/35 - AMBAC Insured 1,500 Hempstead Industrial Development Agency, New York, Resource Recovery No Opt. Call Baa3 1,457,325 Revenue Refunding Bonds, American Ref-Fuel Company of Hempstead LP, Series 2001, 5.000%, 12/01/10 (Mandatory put 6/01/10) 13,220 Metropolitan Transportation Authority, New York, Dedicated Tax Fund 11/12 at 100.00 AAA 13,286,100 Bonds, Series 2002A, 5.500%, 11/15/26 - FSA Insured 13,335 Metropolitan Transportation Authority, New York, Transportation Revenue 11/16 at 100.00 AAA 10,733,875 Bonds, Series 2006B, 4.500%, 11/15/32 - FSA Insured (UB) 68 Metropolitan Transportation Authority, New York, Transportation Revenue 11/16 at 100.00 AAA 34,840 Bonds, Series 2006B, Drivers 1662, 5.904%, 11/15/32 - FSA Insured (IF) 7,810 New York City Transitional Finance Authority, New York, Future Tax 8/09 at 101.00 AAA 8,138,723 Secured Bonds, Fiscal Series 2000A, 5.750%, 8/15/24 (Pre-refunded 8/15/09) 6,300 New York City, New York, General Obligation Bonds, Fiscal Series 2000A, 5/10 at 101.00 AAA 6,661,431 6.250%, 5/15/26 - FSA Insured 3,000 New York State Energy Research and Development Authority, Pollution 3/09 at 102.00 Aaa 2,587,230 Control Revenue Bonds, Rochester Gas and Electric Corporation, Series 1998A, 5.950%, 9/01/33 - MBIA Insured (Alternative Minimum Tax) ------------------------------------------------------------------------------------------------------------------------------------ 67,368 Total New York 64,385,499 ------------------------------------------------------------------------------------------------------------------------------------ NORTH CAROLINA - 1.5% (1.0% OF TOTAL INVESTMENTS) 4,900 Charlotte-Mecklenburg Hospital Authority, North Carolina, Healthcare 1/15 at 100.00 AA- (4) 5,231,289 System Revenue Bonds, DBA Carolinas Healthcare System, Series 2005A, 5.000%, 1/15/45 (Pre-refunded 1/15/15) 2,000 North Carolina Municipal Power Agency 1, Catawba Electric Revenue 1/09 at 101.00 AA 1,891,680 Bonds, Series 1998A, 5.000%, 1/01/20 - MBIA Insured 5,500 The Charlotte-Mecklenberg Hospital Authority, North Carolina, Doing 1/18 at 100.00 AA- 4,590,300 Business as Carolinas HealthCare System, Health Care Refunding Revenue Bonds, Series 2008A, 5.000%, 1/15/39 - AGC Insured ------------------------------------------------------------------------------------------------------------------------------------ 12,400 Total North Carolina 11,713,269 ------------------------------------------------------------------------------------------------------------------------------------ OHIO - 6.7% (4.2% OF TOTAL INVESTMENTS) 10,000 American Municipal Power Ohio Inc., General Revenue Bonds, Series 2/18 at 100.00 A1 8,916,300 2008, 5.250%, 2/15/43 32 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ OHIO (continued) Buckeye Tobacco Settlement Financing Authority, Ohio, Tobacco Settlement Asset-Backed Revenue Bonds, Senior Lien, Series 2007A-2: $ 345 5.125%, 6/01/24 6/17 at 100.00 BBB $ 270,411 3,570 5.875%, 6/01/30 6/17 at 100.00 BBB 2,502,606 3,475 5.750%, 6/01/34 6/17 at 100.00 BBB 2,314,350 14,830 5.875%, 6/01/47 6/17 at 100.00 BBB 9,277,796 5,150 Buckeye Tobacco Settlement Financing Authority, Ohio, Tobacco 6/22 at 100.00 BBB 2,565,576 Settlement Asset-Backed Revenue Bonds, Senior Lien, Series 2007A-3, 0.000%, 6/01/37 6,720 Cleveland, Ohio, Airport System Revenue Bonds, Series 2001A, 5.000%, 1/10 at 101.00 AAA 6,092,419 1/01/31 - FSA Insured 780 Cleveland, Ohio, Airport System Revenue Bonds, Series 2001A, 5.000%, 1/10 at 101.00 AAA 812,464 1/01/31 (Pre-refunded 1/01/10) - FSA Insured 3,650 Montgomery County, Ohio, Revenue Bonds, Catholic Health Initiatives, 5/14 at 100.00 AA 3,141,373 Series 2004A, 5.000%, 5/01/30 5,800 Ohio Water Development Authority, Solid Waste Disposal Revenue Bonds, 3/09 at 102.00 N/R 4,649,164 Bay Shore Power, Series 1998A, 5.875%, 9/01/20 (Alternative Minimum Tax) 12,400 Ohio Water Development Authority, Solid Waste Disposal Revenue Bonds, 9/09 at 102.00 N/R 10,633,868 Bay Shore Power, Series 1998B, 6.625%, 9/01/20 (Alternative Minimum Tax) ------------------------------------------------------------------------------------------------------------------------------------ 66,720 Total Ohio 51,176,327 ------------------------------------------------------------------------------------------------------------------------------------ OKLAHOMA - 0.4% (0.2% OF TOTAL INVESTMENTS) 3,400 Tulsa Municipal Airport Trust, Oklahoma, Revenue Refunding Bonds, 6/09 at 100.00 B- 3,370,046 American Airlines Inc., Series 2000B, 6.000%, 6/01/35 (Mandatory put 12/01/08) (Alternative Minimum Tax) ------------------------------------------------------------------------------------------------------------------------------------ OREGON - 1.2% (0.7% OF TOTAL INVESTMENTS) 9,150 Port of St. Helens, Oregon, Pollution Control Revenue Bonds, Portland No Opt. Call BBB 8,982,281 General Electric Company, Series 1985B, 4.800%, 6/01/10 ------------------------------------------------------------------------------------------------------------------------------------ PENNSYLVANIA - 3.6% (2.2% OF TOTAL INVESTMENTS) Bethlehem Authority, Northampton and Lehigh Counties, Pennsylvania, Guaranteed Water Revenue Bonds, Series 1998: 3,125 0.000%, 5/15/22 - FSA Insured No Opt. Call AAA 1,458,188 3,125 0.000%, 5/15/23 - FSA Insured No Opt. Call AAA 1,368,656 3,135 0.000%, 5/15/24 - FSA Insured No Opt. Call AAA 1,285,538 3,155 0.000%, 5/15/26 - FSA Insured No Opt. Call AAA 1,134,002 4,145 0.000%, 11/15/26 - FSA Insured No Opt. Call AAA 1,447,020 2,800 0.000%, 5/15/28 - FSA Insured No Opt. Call AAA 885,444 3,000 0.000%, 11/15/28 - FSA Insured No Opt. Call AAA 921,150 2,050 Carbon County Industrial Development Authority, Pennsylvania, Resource No Opt. Call BBB- 2,071,115 Recovery Revenue Refunding Bonds, Panther Creek Partners Project, Series 2000, 6.650%, 5/01/10 (Alternative Minimum Tax) 11,000 Delaware County Authority, Pennsylvania, Revenue Bonds, Catholic 11/08 at 102.00 AA 10,647,670 Health East, Series 1998A, 4.875%, 11/15/18 - AMBAC Insured 1,250 Erie, Pennsylvania, Water Authority, Water Revenue Bonds, Series 2008, 12/18 at 100.00 AAA 1,069,400 5.000%, 12/01/43 - FSA Insured Pennsylvania Economic Development Financing Authority, Senior Lien Resource Recovery Revenue Bonds, Northampton Generating Project, Series 1994A: 700 6.400%, 1/01/09 (Alternative Minimum Tax) 12/08 at 100.00 B- 691,908 4,500 6.500%, 1/01/13 (Alternative Minimum Tax) 1/09 at 100.00 B- 4,111,695 400 Pennsylvania Economic Development Financing Authority, Subordinate 1/09 at 100.00 N/R 378,320 Resource Recovery Revenue Bonds, Northampton Generating Project, Series 1994C, 6.875%, 1/01/11 (Alternative Minimum Tax) ------------------------------------------------------------------------------------------------------------------------------------ 42,385 Total Pennsylvania 27,470,106 ------------------------------------------------------------------------------------------------------------------------------------ 33 NPP Nuveen Performance Plus Municipal Fund, Inc. (continued) Portfolio of INVESTMENTS October 31, 2008 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ PUERTO RICO - 0.6% (0.4% OF TOTAL INVESTMENTS) $ 1,250 Puerto Rico Highway and Transportation Authority, Highway Revenue 7/10 at 101.00 AAA $ 1,335,613 Bonds, Series 2000B, 5.875%, 7/01/21 (Pre-refunded 7/01/10) - MBIA Insured 25,000 Puerto Rico Sales Tax Financing Corporation, Sales Tax Revenue Bonds, No Opt. Call AA 1,780,250 Series 2007A, 0.000%, 8/01/47 - AMBAC Insured 3,750 Puerto Rico Sales Tax Financing Corporation, Sales Tax Revenue Bonds, 8/17 at 100.00 A+ 1,791,375 Trust 2653, 0.777%, 8/01/57 (IF) ------------------------------------------------------------------------------------------------------------------------------------ 30,000 Total Puerto Rico 4,907,238 ------------------------------------------------------------------------------------------------------------------------------------ RHODE ISLAND - 0.7% (0.4% OF TOTAL INVESTMENTS) 2,000 Kent County Water Authority, Rhode Island, General Revenue Bonds, 7/12 at 100.00 AA 1,937,100 Series 2002A, 5.000%, 7/15/23 - MBIA Insured Rhode Island Health and Educational Building Corporation, Revenue Refunding Bonds, Salve Regina University, Series 2002: 1,260 5.250%, 3/15/17 - RAAI Insured 3/12 at 101.00 BBB+ 1,174,219 1,080 5.250%, 3/15/18 - RAAI Insured 3/12 at 101.00 BBB+ 1,570 Rhode Island Tobacco Settlement Financing Corporation, Tobacco 6/12 at 100.00 BBB 1,225,558 Settlement Asset-Backed Bonds, Series 2002A, 6.125%, 6/01/32 ------------------------------------------------------------------------------------------------------------------------------------ 5,910 Total Rhode Island 5,325,552 ------------------------------------------------------------------------------------------------------------------------------------ SOUTH CAROLINA - 4.5% (2.8% OF TOTAL INVESTMENTS) 2,625 Medical University Hospital Authority, South Carolina, FHA-Insured 8/14 at 100.00 AA 2,565,806 Mortgage Revenue Bonds, Series 2004A, 5.250%, 2/15/25 - MBIA Insured 22,855 Piedmont Municipal Power Agency, South Carolina, Electric Revenue No Opt. Call AA 5,280,648 Bonds, Series 2004A-2, 0.000%, 1/01/31 - AMBAC Insured 6,925 South Carolina, General Obligation Bonds, Series 1999A, 4.000%, 10/01/14 10/09 at 101.00 Aaa 6,983,378 18,825 Tobacco Settlement Revenue Management Authority, South Carolina, 5/12 at 100.00 BBB (4) 19,578,564 Tobacco Settlement Asset-Backed Bonds, Series 2001B, 6.000%, 5/15/22 (Pre-refunded 5/15/12) ------------------------------------------------------------------------------------------------------------------------------------ 51,230 Total South Carolina 34,408,396 ------------------------------------------------------------------------------------------------------------------------------------ TENNESSEE - 1.4% (0.9% OF TOTAL INVESTMENTS) 2,860 Johnson City Health and Educational Facilities Board, Tennessee, 7/23 at 100.00 AA (4) 2,864,147 Hospital Revenue Refunding and Improvement Bonds, Johnson City Medical Center, Series 1998C, 5.125%, 7/01/25 (Pre-refunded 7/01/23) - MBIA Insured 1,700 Memphis-Shelby County Airport Authority, Tennessee, Airport Revenue 3/10 at 101.00 AA 1,553,426 Bonds, Series 1999D, 6.000%, 3/01/24 - AMBAC Insured (Alternative Minimum Tax) 6,000 Metropolitan Government of Nashville-Davidson County Health and 12/17 at 100.00 AA 6,250,200 Educational Facilities Board, Tennessee, Revenue Refunding and Improvement Bonds, Meharry Medical College, Series 1996, 6.000%, 12/01/19 - AMBAC Insured ------------------------------------------------------------------------------------------------------------------------------------ 10,560 Total Tennessee 10,667,773 ------------------------------------------------------------------------------------------------------------------------------------ TEXAS - 7.9% (4.9% OF TOTAL INVESTMENTS) 3,975 Bell County Health Facilities Development Corporation, Texas, Revenue 2/10 at 101.00 AAA 4,204,397 Bonds, Scott and White Memorial Hospital and Scott, Sherwood and Brindley Foundation, Series 2000A, 6.125%, 8/15/23 (Pre-refunded 2/15/10) - MBIA Insured 5,000 Bexar Metropolitan Water District, Texas, Waterworks System Revenue 5/16 at 100.00 AA 4,505,550 Bonds, Series 2006, 5.000%, 5/01/35 - MBIA Insured Central Texas Regional Mobility Authority, Travis and Williamson Counties, Toll Road Revenue Bonds, Series 2005: 4,000 5.000%, 1/01/35 - FGIC Insured 1/15 at 100.00 AA 3,157,400 13,000 5.000%, 1/01/45 - FGIC Insured 1/15 at 100.00 AA 9,795,110 34 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ TEXAS (continued) $ 4,000 Houston Community College, Texas, Limited Tax General Obligation 2/13 at 100.00 AA $ 3,869,360 Bonds, Series 2003, 5.000%, 2/15/27 - AMBAC Insured 3,885 Houston Independent School District, Public Facility Corporation, Harris No Opt. Call AA 2,159,710 County, Texas, Lease Revenue Bonds, Cesar E. Chavez High School, Series 1998A, 0.000%, 9/15/19 - AMBAC Insured 33,855 Leander Independent School District, Williamson and Travis Counties, 8/14 at 23.67 AAA 4,472,246 Texas, General Obligation Bonds, Series 2006, 0.000%, 8/15/40 Leander Independent School District, Williamson and Travis Counties, Texas, Unlimited Tax School Building and Refunding Bonds, Series 1998: 4,930 0.000%, 8/15/20 12/08 at 52.84 AAA 2,550,289 3,705 0.000%, 8/15/22 12/08 at 47.05 AAA 1,609,267 215 Lubbock Housing Finance Corporation, Texas, GNMA Mortgage-Backed 11/08 at 101.00 AAA 217,698 Securities Program Single Family Mortgage Revenue Refunding Bonds, Series 1997A, 6.125%, 12/01/17 3,480 Pearland, Texas, General Obligation Bonds, Series 2002, 5.000%, 3/12 at 100.00 Aaa 3,697,361 3/01/27 (Pre-refunded 3/01/12) - FGIC Insured 6,835 San Antonio, Texas, Electric and Gas System Revenue Refunding Bonds, 2/09 at 100.00 Aa1 6,478,623 New Series 1998A, 4.500%, 2/01/21 6,000 Spring Branch Independent School District, Harris County, Texas, Limited 2/11 at 100.00 AAA 6,315,600 Tax Schoolhouse and Refunding Bonds, Series 2001, 5.125%, 2/01/26 (Pre-refunded 2/01/11) 4,000 Tarrant Regional Water District, Texas, Water Revenue Refunding and 3/13 at 100.00 AAA 3,980,480 Improvement Bonds, Series 1999, 5.000%, 3/01/22 - FSA Insured 1,740 Texas, General Obligation Bonds, Water Financial Assistance, State 8/09 at 100.00 Aa1 1,743,515 Participation Program, Series 1999C, 5.500%, 8/01/29 - MBIA Insured 1,690 Webb County, Laredo, Texas, Combination Tax and Sewer System, 2/09 at 100.00 AA 1,665,934 Revenue Certificates of Obligation, Series 1998A, 4.500%, 2/15/18 - MBIA Insured ------------------------------------------------------------------------------------------------------------------------------------ 100,310 Total Texas 60,422,540 ------------------------------------------------------------------------------------------------------------------------------------ UTAH - 3.4% (2.1% OF TOTAL INVESTMENTS) Utah County, Utah, Hospital Revenue Bonds, IHC Health Services Inc., Series 1997: 12,885 5.250%, 8/15/21 - MBIA Insured (ETM) 12/08 at 100.00 AA (4) 12,912,445 3,900 5.250%, 8/15/26 - MBIA Insured (ETM) 12/08 at 100.00 AA (4) 3,908,307 2,280 Utah Housing Corporation, Single Family Mortgage Bonds, Series 1/12 at 100.00 AA- 2,158,248 2002A-1, 5.300%, 7/01/18 (Alternative Minimum Tax) 5 Utah Housing Finance Agency, Single Family Mortgage Bonds, Series 1/10 at 100.00 Aa2 5,085 2000B, 6.250%, 7/01/22 (Alternative Minimum Tax) 905 Utah Housing Finance Agency, Single Family Mortgage Bonds, Series 7/10 at 100.00 Aa3 911,616 2000D-1, 6.050%, 7/01/14 (Alternative Minimum Tax) 570 Utah Housing Finance Agency, Single Family Mortgage Bonds, Series 7/10 at 100.00 Aa2 579,280 2000E-1, Class II, 6.150%, 1/01/27 (Alternative Minimum Tax) 1,175 Utah Housing Finance Agency, Single Family Mortgage Bonds, Series 7/10 at 100.00 Aa3 1,183,202 2000E-1, Class III, 6.000%, 1/01/15 (Alternative Minimum Tax) 805 Utah Housing Finance Agency, Single Family Mortgage Bonds, Series 7/11 at 100.00 Aa2 708,625 2001A-2, 5.650%, 7/01/27 (Alternative Minimum Tax) 615 Utah Housing Finance Agency, Single Family Mortgage Bonds, Series 1/11 at 100.00 Aaa 611,316 2001B-1, 5.750%, 7/01/19 (Alternative Minimum Tax) 3,000 Utah Water Finance Agency, Revenue Bonds, Pooled Loan Financing 10/12 at 100.00 Aa3 (4) 3,238,950 Program, Series 2002C, 5.250%, 10/01/28 (Pre-refunded 10/01/12) - AMBAC Insured ------------------------------------------------------------------------------------------------------------------------------------ 26,140 Total Utah 26,217,074 ------------------------------------------------------------------------------------------------------------------------------------ 35 NPP Nuveen Performance Plus Municipal Fund, Inc. (continued) Portfolio of INVESTMENTS October 31, 2008 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ VIRGIN ISLANDS - 0.8% (0.5% OF TOTAL INVESTMENTS) $ 4,700 Virgin Islands Public Finance Authority, Gross Receipts Taxes Loan Note, 10/14 at 100.00 A3 $ 3,752,433 Series 2003, 5.000%, 10/01/33 - RAAI Insured 2,500 Virgin Islands Public Finance Authority, Revenue Bonds, Refinery 1/14 at 100.00 BBB 1,977,275 Project - Hovensa LLC, Series 2003, 6.125%, 7/01/22 (Alternative Minimum Tax) ------------------------------------------------------------------------------------------------------------------------------------ 7,200 Total Virgin Islands 5,729,708 ------------------------------------------------------------------------------------------------------------------------------------ WASHINGTON - 5.5% (3.4% OF TOTAL INVESTMENTS) 12,235 Chelan County Public Utility District 1, Washington, Columbia River-Rock No Opt. Call AA 4,195,871 Island Hydro-Electric System Revenue Refunding Bonds, Series 1997A, 0.000%, 6/01/26 - MBIA Insured Cowlitz County Public Utilities District 1, Washington, Electric Production Revenue Bonds, Series 2004: 465 5.000%, 9/01/22 - FGIC Insured 9/14 at 100.00 A- 435,370 3,100 5.000%, 9/01/28 - FGIC Insured 9/14 at 100.00 A- 2,762,813 5,000 Energy Northwest, Washington, Electric Revenue Refunding Bonds, 7/13 at 100.00 Aaa 5,257,450 Nuclear Project 1, Series 2008, 5.500%, 7/01/16 (UB) 10,000 Washington State Healthcare Facilities Authority, Revenue Bonds, 10/16 at 100.00 AA 7,678,900 Providence Health Care Services, Series 2006A, 4.625%, 10/01/34 - FGIC Insured 4,685 Washington State Healthcare Facilities Authority, Revenue Bonds, 12/09 at 101.00 AA (4) 4,914,706 Providence Services, Series 1999, 5.375%, 12/01/19 (Pre-refunded 12/01/09) - MBIA Insured 5,000 Washington State Housing Finance Commission, Non-Profit Housing 7/09 at 101.00 BBB+ 4,340,000 Revenue Bonds, Kline Galland Center, Series 1999, 6.000%, 7/01/29 - RAAI Insured 12,000 Washington, Motor Vehicle Fuel Tax General Obligation Bonds, Series 2001D, 5.250%, 1/01/26 1/11 at 100.00 AA+ 12,023,400 ------------------------------------------------------------------------------------------------------------------------------------ 52,485 Total Washington 41,608,510 ------------------------------------------------------------------------------------------------------------------------------------ WEST VIRGINIA - 0.6% (0.4% OF TOTAL INVESTMENTS) 5,000 Mason County, West Virginia, Pollution Control Revenue Bonds, 10/11 at 100.00 BBB 4,303,600 Appalachian Power Company, Series 2003L, 5.500%, 10/01/22 ------------------------------------------------------------------------------------------------------------------------------------ 36 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ WISCONSIN - 3.1% (1.9% OF TOTAL INVESTMENTS) 11,620 Wisconsin Health and Educational Facilities Authority, Revenue Bonds, 2/10 at 101.00 BBB+ 10,450,331 Marshfield Clinic, Series 1999, 6.250%, 2/15/29 - RAAI Insured 7,490 Wisconsin Health and Educational Facilities Authority, Revenue Bonds, 1/09 at 103.00 N/R 6,130,865 Millennium Housing Foundation Inc., Series 1998, 6.100%, 1/01/28 9,810 Wisconsin Housing and Economic Development Authority, Home 9/14 at 100.00 AA 6,991,587 Ownership Revenue Bonds, Series 2005C, 4.875%, 3/01/36 (Alternative Minimum Tax) ------------------------------------------------------------------------------------------------------------------------------------ 28,920 Total Wisconsin 23,572,783 ------------------------------------------------------------------------------------------------------------------------------------ $ 1,601,118 Total Investments (cost $1,299,989,044) - 160.8% 1,222,971,532 =============----------------------------------------------------------------------------------------------------------------------- Floating Rate Obligations - (5.0)% (38,288,000) -------------------------------------------------------------------------------------------------------------------- Other Assets Less Liabilities - 2.0% 15,462,237 -------------------------------------------------------------------------------------------------------------------- Auction Rate Preferred Shares, at Liquidation Value - (57.8)% (5) (439,650,000) -------------------------------------------------------------------------------------------------------------------- Net Assets Applicable to Common Shares - 100% $ 760,495,769 ====================================================================================================================
(1) All percentages shown in the Portfolio of Investments are based on net assets applicable to Common shares unless otherwise noted. (2) Optional Call Provisions (not covered by the report of independent registered public accounting firm): Dates (month and year) and prices of the earliest optional call or redemption. There may be other call provisions at varying prices at later dates. Certain mortgage-backed securities may be subject to periodic principal paydowns. (3) Ratings (not covered by the report of independent registered public accounting firm): Using the higher of Standard & Poor's Group ("Standard & Poor's") or Moody's Investor Service, Inc. ("Moody's") rating. Ratings below BBB by Standard & Poor's or Baa by Moody's are considered to be below investment grade. The Portfolio of Investments may reflect the ratings on certain bonds insured by ACA, AGC, AMBAC, FGIC, FSA, MBIA, RAAI and SYNCORA as of October 31, 2008. Please see the Portfolio Managers' Commentary for an expanded discussion of the affect on the Fund of changes to the ratings of certain bonds in the portfolio resulting from changes to the ratings of the underlying insurers both during the period and after period end. (4) Backed by an escrow or trust containing sufficient U.S. Government or U.S. Government agency securities which ensure the timely payment of principal and interest. Such investments are normally considered to be equivalent to AAA rated securities. (5) Auction Rate Preferred Shares, at Liquidation Value as a percentage of Total Investments is 35.9%. N/R Not rated. (ETM) Escrowed to maturity. (IF) Inverse floating rate investment. (UB) Underlying bond of an inverse floating rate trust reflected as a financing transaction pursuant to the provisions of SFAS No. 140. See accompanying notes to financial statements. 37 NMA Nuveen Municipal Advantage Fund, Inc. Portfolio of INVESTMENTS October 31, 2008
PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ ALABAMA - 3.5% (2.1% OF TOTAL INVESTMENTS) $ 10,000 Jefferson County, Alabama, Sewer Revenue Capital Improvement 2/09 at 101.00 AAA $10,189,800 Warrants, Series 1999A, 5.375%, 2/01/36 (Pre-refunded 2/01/09) - FGIC Insured 5,075 Lauderdale County and Florence Healthcare Authority, Alabama, Revenue 7/09 at 101.00 AA 4,187,027 Bonds, Coffee Health Group, Series 1999A, 5.250%, 7/01/24 - MBIA Insured 5,155 Phenix City Industrial Development Board, Alabama, Environmental 5/12 at 100.00 BBB 3,873,879 Improvement Revenue Bonds, MeadWestvaco Corporation, Series 2002A, 6.350%, 5/15/35 (Alternative Minimum Tax) ------------------------------------------------------------------------------------------------------------------------------------ 20,230 Total Alabama 18,250,706 ------------------------------------------------------------------------------------------------------------------------------------ ALASKA - 0.9% (0.5% OF TOTAL INVESTMENTS) Alaska Housing Finance Corporation, General Housing Purpose Bonds, Series 2005A: 1,125 5.250%, 12/01/34 - FGIC Insured 12/14 at 100.00 AA 1,047,983 1,280 5.250%, 12/01/41 - FGIC Insured 12/14 at 100.00 AA 1,153,536 Northern Tobacco Securitization Corporation, Alaska, Tobacco Settlement Asset-Backed Bonds, Series 2006A: 895 4.625%, 6/01/23 12/08 at 100.00 Baa3 727,393 3,250 5.000%, 6/01/46 6/14 at 100.00 Baa3 1,729,000 ------------------------------------------------------------------------------------------------------------------------------------ 6,550 Total Alaska 4,657,912 ------------------------------------------------------------------------------------------------------------------------------------ ARIZONA - 1.9% (1.2% OF TOTAL INVESTMENTS) 4,905 Maricopa County Industrial Development Authority, Arizona, Health 7/17 at 100.00 A 4,001,352 Facility Revenue Bonds, Catholic Healthcare West, Series 2007A, 5.250%, 7/01/32 5,000 Maricopa County Pollution Control Corporation, Arizona, Remarketed 12/08 at 100.00 Baa3 3,886,750 Revenue Refunding Bonds, Public Service Company of New Mexico, Series 1992A, 5.750%, 11/01/22 2,500 Phoenix, Arizona, Civic Improvement Corporation, Senior Lien Airport 7/18 at 100.00 AA- 2,221,425 Revenue Bonds, Series 2008A, 5.000%, 7/01/38 ------------------------------------------------------------------------------------------------------------------------------------ 12,405 Total Arizona 10,109,527 ------------------------------------------------------------------------------------------------------------------------------------ CALIFORNIA - 16.0% (9.6% OF TOTAL INVESTMENTS) 3,500 Alameda Corridor Transportation Authority, California, Subordinate Lien 10/17 at 100.00 AA 2,802,135 Revenue Bonds, Series 2004A, 0.000%, 10/01/25 - AMBAC Insured Calexico Unified School District, Imperial County, California, General Obligation Bonds, Series 2005B: 4,070 0.000%, 8/01/32 - FGIC Insured No Opt. Call AA 818,640 6,410 0.000%, 8/01/34 - FGIC Insured No Opt. Call AA 1,125,852 3,000 California Health Facilities Financing Authority, Health Facility Revenue 3/13 at 100.00 A 2,367,600 Bonds, Adventist Health System/West, Series 2003A, 5.000%, 3/01/33 7,500 California State Public Works Board, Lease Revenue Bonds, Department 6/14 at 100.00 A 6,828,750 of Mental Health, Coalinga State Hospital, Series 2004A, 5.125%, 6/01/29 11,200 California, General Obligation Bonds, Series 2003, 5.250%, 2/01/28 8/13 at 100.00 A+ 10,740,688 4,000 California, General Obligation Bonds, Trust 2652, 0.751%, 6/01/37 (IF) 6/17 at 100.00 A+ 2,202,960 9,955 Capistrano Unified School District, Orange County, California, Special Tax No Opt. Call AA 2,210,707 Bonds, Community Facilities District, Series 2005, 0.000%, 9/01/31 - FGIC Insured 38 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ CALIFORNIA (continued) Colton Joint Unified School District, San Bernardino County, California, General Obligation Bonds, Series 2006C: $ 3,800 0.000%, 2/01/33 - FGIC Insured 2/15 at 38.73 AA $ 740,316 3,795 0.000%, 2/01/37 - FGIC Insured No Opt. Call AA 583,026 7,535 Contra Costa County, California, GNMA Mortgage-Backed Securities No Opt. Call AAA 9,018,717 Program Home Mortgage Revenue Bonds, Series 1989, 7.750%, 5/01/22 (Alternative Minimum Tax) (ETM) 8,145 Cupertino Union School District, Santa Clara County, California, General 8/13 at 55.54 AA 2,924,299 Obligation Bonds, Series 2003B, 0.000%, 8/01/25 - FGIC Insured 2,510 Folsom Cordova Unified School District, Sacramento County, California, No Opt. Call AA 738,216 General Obligation Bonds, School Facilities Improvement District 1, Series 2004B, 0.000%, 10/01/28 - MBIA Insured 3,360 Folsom Cordova Unified School District, Sacramento County, California, No Opt. Call AA 1,070,966 General Obligation Bonds, School Facilities Improvement District 2, Series 2002A, 0.000%, 7/01/27 - MBIA Insured 2,315 Gateway Unified School District, California, General Obligation Bonds, No Opt. Call AA 497,494 Series 2004B, 0.000%, 8/01/32 - FGIC Insured 1,000 Golden State Tobacco Securitization Corporation, California, Enhanced 6/17 at 100.00 BBB 590,500 Tobacco Settlement Asset-Backed Bonds, Series 2007A-1, 5.125%, 6/01/47 3,000 Golden State Tobacco Securitization Corporation, California, Tobacco No Opt. Call AAA 980,190 Settlement Asset-Backed Revenue Bonds, Series 2005A, 0.000%, 6/01/26 - FSA Insured 1,275 Madera Unified School District, Madera County, California, General 8/12 at 100.00 AAA 1,277,040 Obligation Bonds, Series 2002, 5.250%, 8/01/23 - FSA Insured North Orange County Community College District, California, General Obligation Bonds, Series 2003B: 7,735 0.000%, 8/01/25 - FGIC Insured No Opt. Call AA 2,896,990 4,000 0.000%, 8/01/26 - FGIC Insured No Opt. Call AA 1,400,680 5,000 Palmdale Community Redevelopment Agency, California, Residential No Opt. Call AAA 5,528,500 Mortgage Revenue Refunding Bonds, Series 1991B, 7.375%, 2/01/12 (ETM) 5,000 Palmdale Community Redevelopment Agency, California, Single Family No Opt. Call AAA 6,323,500 Restructured Mortgage Revenue Bonds, Series 1986A, 8.000%, 3/01/16 (Alternative Minimum Tax) (ETM) 9,315 Perris, California, GNMA Mortgage-Backed Securities Program Single No Opt. Call AAA 10,863,339 Family Mortgage Revenue Bonds, Series 1989A, 7.600%, 1/01/23 (Alternative Minimum Tax) (ETM) 7,660 San Joaquin Hills Transportation Corridor Agency, Orange County, No Opt. Call AAA 3,373,847 California, Senior Lien Toll Road Revenue Bonds, Series 1993, 0.000%, 1/01/24 (ETM) 23,000 San Joaquin Hills Transportation Corridor Agency, Orange County, No Opt. Call AA 3,877,800 California, Toll Road Revenue Refunding Bonds, Series 1997A, 0.000%, 1/15/35 - MBIA Insured 7,250 San Jose-Evergreen Community College District, Santa Clara County, 9/15 at 47.82 Aa2 2,044,210 California, General Obligation Bonds, Series 2005A, 0.000%, 9/01/29 - MBIA Insured ------------------------------------------------------------------------------------------------------------------------------------ 155,330 Total California 83,826,962 ------------------------------------------------------------------------------------------------------------------------------------ COLORADO - 7.6% (4.5% OF TOTAL INVESTMENTS) 1,600 Arkansas River Power Authority, Colorado, Power Revenue Bonds, Series 10/16 at 100.00 BBB 1,221,504 2006, 5.250%, 10/01/40 - SYNCORA GTY Insured 9,440 Colorado Health Facilities Authority, Colorado, Revenue Bonds, Catholic 9/16 at 100.00 AA 6,957,658 Health Initiatives, Series 2006A, 4.500%, 9/01/38 8,350 Colorado Health Facilities Authority, Remarketed Revenue Bonds, Kaiser 12/08 at 101.00 AAA 8,450,117 Permanente System, Series 1994A, 5.350%, 11/01/16 (ETM) 1,150 Colorado Health Facilities Authority, Revenue Bonds, Poudre Valley Health 9/18 at 102.00 AAA 1,036,162 System, Series 2005C, 5.250%, 3/01/40 - FSA Insured 2,000 Denver Convention Center Hotel Authority, Colorado, Senior Revenue 11/16 at 100.00 BBB- 1,410,460 Bonds, Convention Center Hotel, Series 2006, 4.750%, 12/01/35 - SYNCORA GTY Insured 39 NMA Nuveen Municipal Advantage Fund, Inc. (continued) Portfolio of INVESTMENTS October 31, 2008 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ COLORADO (continued) Denver, Colorado, Airport Revenue Bonds, Trust 2365: $ 1,340 2.901%, 11/15/23 - FGIC Insured (IF) 11/16 at 100.00 AA $ 923,662 825 1.184%, 11/15/24 - FGIC Insured (IF) 11/16 at 100.00 AA 558,212 1,085 1.186%, 11/15/25 - FGIC Insured (IF) 11/16 at 100.00 AA 699,196 E-470 Public Highway Authority, Colorado, Senior Revenue Bonds, Series 1997B: 2,650 0.000%, 9/01/16 - MBIA Insured No Opt. Call AA 1,713,676 8,645 0.000%, 9/01/26 - MBIA Insured No Opt. Call AA 2,569,726 1,000 E-470 Public Highway Authority, Colorado, Senior Revenue Bonds, Series 9/10 at 102.00 AAA 1,075,660 2000A, 5.750%, 9/01/35 (Pre-refunded 9/01/10) - MBIA Insured E-470 Public Highway Authority, Colorado, Senior Revenue Bonds, Series 2000B: 7,500 0.000%, 9/01/29 - MBIA Insured No Opt. Call AA 1,774,425 10,000 0.000%, 9/01/31 - MBIA Insured No Opt. Call AA 2,024,100 10,000 0.000%, 9/01/32 - MBIA Insured No Opt. Call AA 1,878,700 Platte River Power Authority, Colorado, Power Revenue Refunding Bonds, Series 2002EE: 1,030 5.375%, 6/01/17 (Pre-refunded 6/01/12) 6/12 at 100.00 Aa2 (4) 1,110,865 4,890 5.375%, 6/01/18 (Pre-refunded 6/01/12) 6/12 at 100.00 Aa2 (4) 5,273,914 Platte River Power Authority, Colorado, Power Revenue Refunding Bonds, Series 2002EE: 970 5.375%, 6/01/17 6/12 at 100.00 AA 1,011,254 110 5.375%, 6/01/18 6/12 at 100.00 AA 113,726 ------------------------------------------------------------------------------------------------------------------------------------ 72,585 Total Colorado 39,803,017 ------------------------------------------------------------------------------------------------------------------------------------ DISTRICT OF COLUMBIA - 0.2% (0.1% OF TOTAL INVESTMENTS) 1,380 District of Columbia Housing Finance Agency, GNMA/FNMA Single Family 12/08 at 101.00 AAA 1,380,000 Mortgage Revenue Bonds, Series 1997B, 5.900%, 12/01/28 (Alternative Minimum Tax) ------------------------------------------------------------------------------------------------------------------------------------ FLORIDA - 3.4% (2.0% OF TOTAL INVESTMENTS) 2,770 Florida Housing Finance Corporation, Housing Revenue Bonds, Stratford 12/10 at 100.00 AAA 2,413,390 Point Apartments, Series 2000O-1, 5.850%, 12/01/31 - FSA Insured (Alternative Minimum Tax) 8,100 South Miami Health Facilities Authority, Florida, Revenue Bonds, Baptist 8/17 at 100.00 AA- 4,956,309 Health Systems of South Florida, Trust 1025, 7.368%, 8/15/42 (IF) 10,130 Tampa, Florida, Healthcare System Revenue Bonds, Allegany Health 12/08 at 100.00 AA (4) 10,271,617 System - St. Mary's Hospital, Series 1993, 5.125%, 12/01/23 - MBIA Insured (ETM) ------------------------------------------------------------------------------------------------------------------------------------ 21,000 Total Florida 17,641,316 ------------------------------------------------------------------------------------------------------------------------------------ GEORGIA - 1.1% (0.7% OF TOTAL INVESTMENTS) 4,000 Augusta, Georgia, Water and Sewerage Revenue Bonds, Series 2004, 10/14 at 100.00 AAA 3,927,800 5.250%, 10/01/39 - FSA Insured 2,900 Coffee County Hospital Authority, Georgia, Revenue Bonds, Coffee County 12/14 at 100.00 BBB 2,022,170 Regional Medical Center, Series 2004, 5.000%, 12/01/26 ------------------------------------------------------------------------------------------------------------------------------------ 6,900 Total Georgia 5,949,970 ------------------------------------------------------------------------------------------------------------------------------------ HAWAII - 0.5% (0.3% OF TOTAL INVESTMENTS) 2,215 Hawaii Housing and Community Development Corporation, GNMA 7/10 at 102.00 AA 2,080,749 Collateralized Multifamily Housing Revenue Bonds, Sunset Villas, Series 2000, 5.700%, 7/20/31 525 Hawaii Housing Finance and Development Corporation, Single Family 1/09 at 101.00 AAA 521,672 Mortgage Purchase Revenue Bonds, Series 1997A, 5.750%, 7/01/30 (Alternative Minimum Tax) ------------------------------------------------------------------------------------------------------------------------------------ 2,740 Total Hawaii 2,602,421 ------------------------------------------------------------------------------------------------------------------------------------ ILLINOIS - 15.9% (9.5% OF TOTAL INVESTMENTS) 4,345 Chicago Board of Education, Illinois, Unlimited Tax General Obligation No Opt. Call AA 1,330,613 Bonds, Dedicated Tax Revenues, Series 1998B-1, 0.000%, 12/01/28 - FGIC Insured 4,010 Chicago Board of Education, Illinois, Unlimited Tax General Obligation No Opt. Call AA 1,013,046 Bonds, Dedicated Tax Revenues, Series 1999A, 0.000%, 12/01/31 - FGIC Insured 40 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ ILLINOIS (continued) $ 5,865 Chicago, Illinois, General Obligation Bonds, Neighborhoods Alive 21 7/10 at 101.00 AAA $ 6,304,171 Program, Series 2000A, 6.500%, 1/01/35 (Pre-refunded 7/01/10) - FGIC Insured 5,000 Chicago, Illinois, Second Lien Passenger Facility Charge Revenue Bonds, 1/11 at 101.00 AA 4,023,600 O'Hare International Airport, Series 2001A, 5.375%, 1/01/32 - AMBAC Insured (Alternative Minimum Tax) 2,000 Illinois Finance Authority, Revenue Bonds, Children's Memorial Hospital, 8/18 at 100.00 AAA 1,706,740 Series 2008, 5.250%, 8/15/47 - AGC Insured (UB) 8,395 Illinois Finance Authority, Revenue Bonds, Loyola University of Chicago, 7/17 at 100.00 AA 6,342,423 Tender Option Bond Trust 1137, 7.720%, 7/01/46 (IF) 6,000 Illinois Health Facilities Authority, Revenue Bonds, Condell Medical 5/12 at 100.00 Baa3 5,326,440 Center, Series 2002, 5.750%, 5/15/22 6,165 Illinois Health Facilities Authority, Revenue Bonds, Sarah Bush Lincoln 2/09 at 100.00 A 5,715,633 Health Center, Series 1996B, 5.750%, 2/15/22 10,740 Lake and McHenry Counties Community Unit School District 118, 1/15 at 66.94 Aaa 4,540,765 Wauconda, Illinois, General Obligation Bonds, Series 2005B, 0.000%, 1/01/23 - FSA Insured 1,090 Metropolitan Pier and Exposition Authority, Illinois, Revenue Bonds, No Opt. Call A1 544,172 McCormick Place Expansion Project, Series 1993A, 0.000%, 6/15/21 - FGIC Insured Metropolitan Pier and Exposition Authority, Illinois, Revenue Bonds, McCormick Place Expansion Project, Series 1999A: 13,455 5.500%, 12/15/24 - FGIC Insured 12/09 at 101.00 AAA 13,588,337 10,430 5.250%, 12/15/28 - FGIC Insured 12/09 at 101.00 AAA 10,226,198 3,175 Metropolitan Pier and Exposition Authority, Illinois, Revenue Bonds, No Opt. Call AAA 440,119 McCormick Place Expansion Project, Series 2002A, 0.000%, 6/15/41 - MBIA Insured 6,000 Metropolitan Pier and Exposition Authority, Illinois, Revenue Refunding No Opt. Call AA 2,486,100 Bonds, McCormick Place Expansion Project, Series 1996A, 0.000%, 6/15/24 - MBIA Insured 4,600 Regional Transportation Authority, Cook, DuPage, Kane, Lake, McHenry No Opt. Call AA 5,278,638 and Will Counties, Illinois, General Obligation Bonds, Series 1990A, 7.200%, 11/01/20 - AMBAC Insured 1,940 University of Illinois, Auxiliary Facilities Systems Revenue Bonds, Series 4/13 at 100.00 AA 1,879,860 2003A, 5.000%, 4/01/23 - AMBAC Insured 7,500 Valley View Public Schools, Community Unit School District 365U of No Opt. Call AA 2,832,825 Will County, Illinois, General Obligation Bonds, Series 2005, 0.000%, 11/01/25 - MBIA Insured 23,125 Will County Community High School District 210 Lincoln-Way, Illinois, No Opt. Call Aaa 9,573,750 General Obligation Bonds, Series 2006, 0.000%, 1/01/24 - FSA Insured ------------------------------------------------------------------------------------------------------------------------------------ 123,835 Total Illinois 83,153,430 ------------------------------------------------------------------------------------------------------------------------------------ INDIANA - 3.0% (1.8% OF TOTAL INVESTMENTS) 5,205 Indiana Health Facility Financing Authority, Hospital Revenue Bonds, 8/10 at 101.50 AA (4) 5,561,074 Clarian Health Obligated Group, Series 2000A, 5.500%, 2/15/30 (Pre-refunded 8/15/10) - MBIA Insured 2,435 Indiana Health Facility Financing Authority, Revenue Bonds, Community 3/17 at 100.00 BBB 1,792,355 Foundation of Northwest Indiana, Series 2007, 5.500%, 3/01/37 6,075 LaGrange County Jail Building Corporation, Indiana, First Mortgage Jail 10/09 at 101.00 A3 (4) 6,340,295 Bonds, Series 1998, 5.400%, 10/01/21 (Pre-refunded 10/01/09) 1,915 St. Joseph County Hospital Authority, Indiana, Revenue Bonds, Madison 2/09 at 102.00 BBB- 1,862,165 Center Inc., Series 1999, 5.450%, 2/15/12 ------------------------------------------------------------------------------------------------------------------------------------ 15,630 Total Indiana 15,555,889 ------------------------------------------------------------------------------------------------------------------------------------ IOWA - 0.5% (0.3% OF TOTAL INVESTMENTS) 4,000 Iowa Tobacco Settlement Authority, Asset Backed Settlement Revenue 6/15 at 100.00 BBB 2,366,720 Bonds, Series 2005C, 5.375%, 6/01/38 250 Iowa Tobacco Settlement Authority, Tobacco Asset-Backed Revenue 6/17 at 100.00 BBB 174,045 Bonds, Series 2005B, 5.600%, 6/01/34 ------------------------------------------------------------------------------------------------------------------------------------ 4,250 Total Iowa 2,540,765 ------------------------------------------------------------------------------------------------------------------------------------ 41 NMA Nuveen Municipal Advantage Fund, Inc. (continued) Portfolio of INVESTMENTS October 31, 2008 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ KANSAS - 0.2% (0.1% OF TOTAL INVESTMENTS) $ 1,750 Wamego, Kansas, Pollution Control Revenue Bonds, Kansas Gas and 6/14 at 100.00 AA $ 1,515,255 Electric Company, Series 2004, 5.300%, 6/01/31 - MBIA Insured ------------------------------------------------------------------------------------------------------------------------------------ KENTUCKY - 1.2% (0.7% OF TOTAL INVESTMENTS) 1,000 Kentucky Economic Development Finance Authority, Louisville Arena 6/18 at 100.00 AAA 970,940 Project Revenue Bonds, Louisville Arena Authority, Inc., Series 2008A-1, 6.000%, 12/01/33 - AGC Insured 5,500 Louisville and Jefferson County Metropolitan Sewer District, Kentucky, 11/08 at 100.50 AA 5,291,825 Sewer and Drainage System Revenue Bonds, Series 1997A, 5.250%, 5/15/27 - MBIA Insured ------------------------------------------------------------------------------------------------------------------------------------ 6,500 Total Kentucky 6,262,765 ------------------------------------------------------------------------------------------------------------------------------------ LOUISIANA - 14.0% (8.3% OF TOTAL INVESTMENTS) 13,500 DeSoto Parish, Louisiana, Pollution Control Revenue Refunding Bonds, 9/09 at 102.00 AA 13,573,843 Cleco Utility Group Inc. Project, Series 1999, 5.875%, 9/01/29 - AMBAC Insured Louisiana Public Facilities Authority, Extended Care Facilities Revenue Bonds, Comm-Care Corporation Project, Series 1994: 720 11.000%, 2/01/14 (ETM) No Opt. Call N/R (4) 866,002 6,460 11.000%, 2/01/14 (ETM) No Opt. Call N/R (4) 7,768,990 6,650 Louisiana Public Facilities Authority, Revenue Bonds, Baton Rouge 7/14 at 100.00 AA 5,826,132 General Hospital, Series 2004, 5.250%, 7/01/33 - MBIA Insured 9,000 Louisiana Public Facilities Authority, Revenue Bonds, Ochsner Clinic 5/17 at 100.00 A3 7,012,890 Foundation Project, Series 2007A, 5.500%, 5/15/47 28 Louisiana State, Gasoline Tax Revenue Bonds, Series 2006, Residuals 5/16 at 100.00 Aa3 1,892 660-1, 10.855%, 5/01/41 - FGIC Insured (IF) Louisiana State, Gasoline Tax Revenue Bonds, Series 2006: 20,690 4.500%, 5/01/41 - FGIC Insured (UB) 5/16 at 100.00 Aa3 15,862,816 10,000 5.000%, 5/01/41 - FGIC Insured (UB) 5/16 at 100.00 Aa3 8,718,300 Tobacco Settlement Financing Corporation, Louisiana, Tobacco Settlement Asset-Backed Bonds, Series 2001B: 6,050 5.500%, 5/15/30 5/11 at 101.00 BBB 5,081,456 11,855 5.875%, 5/15/39 5/11 at 101.00 BBB 8,481,541 ------------------------------------------------------------------------------------------------------------------------------------ 84,953 Total Louisiana 73,193,862 ------------------------------------------------------------------------------------------------------------------------------------ MASSACHUSETTS - 2.0% (1.2% OF TOTAL INVESTMENTS) 620 Massachusetts Health and Educational Facilities Authority, Revenue 7/18 at 100.00 A3 433,343 Bonds, CareGroup Inc., Series 2008E-1, 5.125%, 7/01/33 1,750 Massachusetts Health and Educational Facilities Authority, Revenue 1/09 at 101.00 AA 1,324,120 Bonds, UMass Memorial Healthcare, Series 1998A, 5.000%, 7/01/28 - AMBAC Insured 180 Massachusetts Housing Finance Agency, Single Family Housing Revenue 12/09 at 100.00 AAA 172,334 Bonds, Series 77, 5.950%, 6/01/25 - FSA Insured (Alternative Minimum Tax) Massachusetts Turnpike Authority, Metropolitan Highway System Revenue Bonds, Senior Series 1997A: 2,000 5.125%, 1/01/17 - MBIA Insured 1/09 at 100.00 AA 1,970,380 500 5.000%, 1/01/27 - MBIA Insured 1/09 at 100.00 AA 430,700 5,000 5.000%, 1/01/37 - MBIA Insured 1/09 at 100.00 AA 3,966,050 2,290 Massachusetts Turnpike Authority, Metropolitan Highway System 1/09 at 100.00 AA 2,012,635 Revenue Bonds, Subordinate Series 1997B, 5.250%, 1/01/29 - MBIA Insured ------------------------------------------------------------------------------------------------------------------------------------ 12,340 Total Massachusetts 10,309,562 ------------------------------------------------------------------------------------------------------------------------------------ MICHIGAN - 2.0% (1.2% OF TOTAL INVESTMENTS) Michigan State Hospital Finance Authority, Hospital Revenue Bonds, Detroit Medical Center Obligated Group, Series 1998A: 4,995 5.250%, 8/15/23 2/09 at 101.00 BB 3,564,282 3,000 5.250%, 8/15/28 2/09 at 101.00 BB 1,994,010 42 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ MICHIGAN (continued) $ 3,275 Michigan State Hospital Finance Authority, Revenue Refunding Bonds, 2/09 at 100.00 BB $ 2,882,622 Detroit Medical Center Obligated Group, Series 1993A, 6.500%, 8/15/18 3,050 Michigan Tobacco Settlement Finance Authority, Tobacco Settlement 6/18 at 100.00 Baa3 2,279,845 Asset-Backed Revenue Bonds, Series 2008A, 6.875%, 6/01/42 ------------------------------------------------------------------------------------------------------------------------------------ 14,320 Total Michigan 10,720,759 ------------------------------------------------------------------------------------------------------------------------------------ MINNESOTA - 1.3% (0.8% OF TOTAL INVESTMENTS) 5,000 Minneapolis-St. Paul Metropolitan Airports Commission, Minnesota, 1/11 at 100.00 A (4) 5,270,150 Subordinate Airport Revenue Bonds, Series 2001C, 5.250%, 1/01/32 (Pre-refunded 1/01/11) - FGIC Insured 555 Minnesota Housing Finance Agency, Single Family Mortgage Revenue 7/09 at 100.00 AA+ 523,149 Bonds, Series 2000C, 5.550%, 7/01/24 (Alternative Minimum Tax) 1,155 Minnesota Housing Finance Agency, Single Family Mortgage Revenue 1/10 at 100.00 AA+ 1,081,738 Bonds, Series 2000J, 5.400%, 1/01/23 (Alternative Minimum Tax) ------------------------------------------------------------------------------------------------------------------------------------ 6,710 Total Minnesota 6,875,037 ------------------------------------------------------------------------------------------------------------------------------------ MISSOURI - 1.0% (0.6% OF TOTAL INVESTMENTS) 12,005 Kansas City Municipal Assistance Corporation, Missouri, Leasehold No Opt. Call AA 3,540,034 Revenue Bonds, Series 2004B-1, 0.000%, 4/15/29 - AMBAC Insured 140 Missouri Housing Development Commission, Single Family Mortgage 9/09 at 102.00 AAA 147,487 Revenue Bonds, Homeownership Loan Program, Series 2000A-1, 7.500%, 3/01/31 (Alternative Minimum Tax) 1,500 Missouri-Illinois Metropolitan District Bi-State Development Agency, 10/13 at 100.00 AAA 1,340,400 Mass Transit Sales Tax Appropriation Bonds, Metrolink Cross County Extension Project, Series 2002B, 5.000%, 10/01/32 - FSA Insured ------------------------------------------------------------------------------------------------------------------------------------ 13,645 Total Missouri 5,027,921 ------------------------------------------------------------------------------------------------------------------------------------ NEVADA - 4.8% (2.9% OF TOTAL INVESTMENTS) 7,310 Clark County, Nevada, Limited Tax General Obligation Bank Bonds, Series 7/10 at 100.00 AA+ (4) 7,691,948 2000, 5.500%, 7/01/19 (Pre-refunded 7/01/10) 7,500 Clark County, Nevada, Subordinate Lien Airport Revenue Bonds, Series 7/10 at 101.00 AA (4) 8,016,075 1999A, 6.000%, 7/01/29 (Pre-refunded 7/01/10) - MBIA Insured Director of Nevada State Department of Business and Industry, Revenue Bonds, Las Vegas Monorail Project, First Tier, Series 2000: 3,025 0.000%, 1/01/16 - AMBAC Insured No Opt. Call AA 1,434,032 7,910 5.375%, 1/01/40 - AMBAC Insured 1/10 at 100.00 AA 4,755,017 3,750 Henderson, Nevada, Healthcare Facility Revenue Refunding Bonds, 7/17 at 100.00 A 2,878,050 Catholic Healthcare West, Series 2007B, Trust 2633, 1.032%, 7/01/31 (IF) 310 Nevada Housing Division, Single Family Mortgage Bonds, Senior Series 4/09 at 100.00 Aaa 307,994 1997C-2, 5.750%, 4/01/29 (Alternative Minimum Tax) ------------------------------------------------------------------------------------------------------------------------------------ 29,805 Total Nevada 25,083,116 ------------------------------------------------------------------------------------------------------------------------------------ NEW JERSEY - 4.3% (2.6% OF TOTAL INVESTMENTS) 15,000 New Jersey Transportation Trust Fund Authority, Transportation System No Opt. Call AA 4,006,800 Bonds, Series 2006C, 0.000%, 12/15/30 - FGIC Insured Tobacco Settlement Financing Corporation, New Jersey, Tobacco Settlement Asset-Backed Bonds, Series 2002: 12,075 5.750%, 6/01/32 (Pre-refunded 6/01/12) 6/12 at 100.00 AAA 12,878,106 5,050 6.125%, 6/01/42 (Pre-refunded 6/01/12) 6/12 at 100.00 AAA 5,556,061 ------------------------------------------------------------------------------------------------------------------------------------ 32,125 Total New Jersey 22,440,967 ------------------------------------------------------------------------------------------------------------------------------------ NEW MEXICO - 1.1% (0.7% OF TOTAL INVESTMENTS) 7,500 Farmington, New Mexico, Pollution Control Revenue Refunding Bonds, 4/09 at 100.00 Baa3 5,896,800 Public Service Company of New Mexico - San Juan Project, Series 1997B, 5.800%, 4/01/22 ------------------------------------------------------------------------------------------------------------------------------------ 43 NMA Nuveen Municipal Advantage Fund, Inc. (continued) Portfolio of INVESTMENTS October 31, 2008 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ NEW YORK - 12.8% (7.6% OF TOTAL INVESTMENTS) $ 7,000 Metropolitan Transportation Authority, New York, State Service Contract 7/12 at 100.00 AA- $ 6,356,910 Refunding Bonds, Series 2002A, 5.125%, 1/01/29 Nassau County, New York, General Obligation Improvement Bonds, Series 2000F: 3,980 7.000%, 3/01/11 (Pre-refunded 3/01/10) - FSA Insured 3/10 at 100.00 AAA 4,233,964 4,070 7.000%, 3/01/12 (Pre-refunded 3/01/10) - FSA Insured 3/10 at 100.00 AAA 4,329,707 3,925 7.000%, 3/01/15 (Pre-refunded 3/01/10) - FSA Insured 3/10 at 100.00 AAA 4,175,454 4,975 New York City Industrial Development Agency, New York, Special 12/08 at 102.00 Ba1 2,608,343 Facilities Revenue Bonds, British Airways PLC, Series 1998, 5.250%, 12/01/32 (Alternative Minimum Tax) 3,000 New York City Industrial Development Agency, New York, Special 12/12 at 101.00 Ba1 2,177,880 Facilities Revenue Bonds, British Airways PLC, Series 2002, 7.625%, 12/01/32 (Alternative Minimum Tax) 9,850 New York City Municipal Water Finance Authority, New York, Water and 6/09 at 101.00 AAA 10,194,947 Sewerage System Revenue Bonds, Fiscal Series 2000A, 5.750%, 6/15/31 (Pre-refunded 6/15/09) - FGIC Insured 5,000 New York City Municipal Water Finance Authority, New York, Water and 12/14 at 100.00 AAA 4,109,000 Sewerage System Revenue Bonds, Series 2008, Trust 1199, 6.714%, 6/15/36 - FSA Insured (IF) 10,000 New York City Transitional Finance Authority, New York, Future Tax 5/10 at 101.00 AAA 10,659,200 Secured Bonds, Fiscal Series 2000B, 6.000%, 11/15/29 (Pre-refunded 5/15/10) 7,435 New York City, New York, General Obligation Bonds, Fiscal Series 2000A, 5/10 at 101.00 AA (4) 7,897,160 5.750%, 5/15/20 (Pre-refunded 5/15/10) 5,250 New York State Mortgage Agency, Homeowner Mortgage Revenue 4/10 at 100.00 Aa1 4,984,770 Bonds, Series 94, 5.800%, 10/01/20 (Alternative Minimum Tax) 5,000 New York State Urban Development Corporation, Service Contract 1/09 at 101.00 AA (4) 5,086,200 Revenue Bonds, Correctional Facilities, Series 1999C, 6.000%, 1/01/29 (Pre-refunded 1/01/09) - AMBAC Insured ------------------------------------------------------------------------------------------------------------------------------------ 69,485 Total New York 66,813,535 ------------------------------------------------------------------------------------------------------------------------------------ NORTH CAROLINA - 2.0% (1.2% OF TOTAL INVESTMENTS) 1,135 North Carolina Housing Finance Agency, Home Ownership Revenue 7/10 at 100.00 AA 927,488 Bonds, 1998 Trust Agreement, Series 10A, 5.400%, 7/01/32 - AMBAC Insured (Alternative Minimum Tax) 4,980 North Carolina Housing Finance Agency, Home Ownership Revenue 7/09 at 100.00 AA 4,634,836 Bonds, 1998 Trust Agreement, Series 7A, 6.250%, 1/01/29 (Alternative Minimum Tax) 1,240 North Carolina Housing Finance Agency, Home Ownership Revenue 1/10 at 100.00 AA 1,187,362 Bonds, 1998 Trust Agreement, Series 8A, 5.950%, 1/01/27 (Alternative Minimum Tax) 4,415 North Carolina Housing Finance Agency, Home Ownership Revenue 1/10 at 100.00 AA 3,863,169 Bonds, 1998 Trust Agreement, Series 9A, 5.875%, 7/01/31 (Alternative Minimum Tax) ------------------------------------------------------------------------------------------------------------------------------------ 11,770 Total North Carolina 10,612,855 ------------------------------------------------------------------------------------------------------------------------------------ NORTH DAKOTA - 0.6% (0.3% OF TOTAL INVESTMENTS) 1,465 North Dakota Housing Finance Agency, Home Mortgage Finance Program 1/09 at 102.00 Aa1 1,444,783 Bonds, Series 1998B, 5.500%, 7/01/29 - MBIA Insured (Alternative Minimum Tax) 2,250 Ward County Health Care, North Dakota, Revenue Bonds, Trinity 7/16 at 100.00 BBB+ 1,620,608 Obligated Group, Series 2006, 5.125%, 7/01/25 ------------------------------------------------------------------------------------------------------------------------------------ 3,715 Total North Dakota 3,065,391 ------------------------------------------------------------------------------------------------------------------------------------ OHIO - 7.9% (4.7% OF TOTAL INVESTMENTS) 5,000 Akron, Bath and Copley Joint Township Hospital District, Ohio, Hospital 11/09 at 101.00 Baa1 4,746,150 Facilities Revenue Bonds, Summa Health System, Series 1998A, 5.375%, 11/15/18 10,000 American Municipal Power Ohio Inc., General Revenue Bonds, Series 2/18 at 100.00 A1 8,916,300 2008, 5.250%, 2/15/43 Buckeye Tobacco Settlement Financing Authority, Ohio, Tobacco Settlement Asset-Backed Revenue Bonds, Senior Lien, Series 2007A-2: 260 5.125%, 6/01/24 6/17 at 100.00 BBB 203,788 2,700 5.875%, 6/01/30 6/17 at 100.00 BBB 1,892,727 2,635 5.750%, 6/01/34 6/17 at 100.00 BBB 1,754,910 5,895 5.875%, 6/01/47 6/17 at 100.00 BBB 3,687,971 44 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ OHIO (continued) $ 5,150 Buckeye Tobacco Settlement Financing Authority, Ohio, Tobacco 6/22 at 100.00 BBB $ 2,565,576 Settlement Asset-Backed Revenue Bonds, Senior Lien, Series 2007A-3, 0.000%, 6/01/37 Montgomery County, Ohio, Hospital Facilities Revenue Bonds, Kettering Medical Center, Series 1999: 7,840 6.750%, 4/01/18 (Pre-refunded 4/01/10) 4/10 at 101.00 A (4) 8,398,678 5,000 6.750%, 4/01/22 (Pre-refunded 4/01/10) 4/10 at 101.00 A (4) 5,356,300 1,235 Ohio Housing Finance Agency, GNMA Mortgage-Backed Securities 8/10 at 100.00 Aaa 1,135,521 Program Residential Mortgage Revenue Bonds, Series 2000D, 5.450%, 9/01/31 (Alternative Minimum Tax) 2,650 Ohio, General Obligation Bonds, Higher Education, Series 2003A, 5/13 at 100.00 AA+ 2,654,240 5.000%, 5/01/22 ------------------------------------------------------------------------------------------------------------------------------------ 48,365 Total Ohio 41,312,161 ------------------------------------------------------------------------------------------------------------------------------------ OKLAHOMA - 5.3% (3.2% OF TOTAL INVESTMENTS) 1,675 Oklahoma Development Finance Authority, Health System Revenue 8/18 at 100.00 AA- 1,435,676 Bonds, Integris Baptist Medical Center, Series 2008B, 5.250%, 8/15/38 12,000 Oklahoma Development Finance Authority, Revenue Bonds, Saint John 2/17 at 100.00 AA- 9,696,240 Health System, Series 2007, 5.000%, 2/15/42 2,000 Oklahoma Municipal Power Authority, Power Supply System Revenue 1/17 at 100.00 AA 1,429,480 Bonds, Series 2007, 4.500%, 1/01/47 - FGIC Insured Oklahoma State Industries Authority, Health System Revenue Bonds, Integris Baptist Medical Center, Series 1999A: 2,110 5.750%, 8/15/29 (Pre-refunded 8/15/09) - MBIA Insured 8/09 at 101.00 AAA 2,186,382 2,890 5.750%, 8/15/29 (Pre-refunded 8/15/09) - MBIA Insured 8/09 at 101.00 AA (4) 2,994,618 10,000 Tulsa Municipal Airport Trust, Oklahoma, Revenue Refunding Bonds, 12/08 at 100.00 B- 9,925,400 American Airlines Inc., Series 2001B, 5.650%, 12/01/35 (Mandatory put 12/01/08) (Alternative Minimum Tax) ------------------------------------------------------------------------------------------------------------------------------------ 30,675 Total Oklahoma 27,667,796 ------------------------------------------------------------------------------------------------------------------------------------ OREGON - 0.5% (0.3% OF TOTAL INVESTMENTS) 3,000 Oregon State Facilities Authority, Revenue Bonds, Willamette University, 10/17 at 100.00 A 2,486,970 Series 2007A, 5.000%, 10/01/36 ------------------------------------------------------------------------------------------------------------------------------------ PENNSYLVANIA - 1.2% (0.7% OF TOTAL INVESTMENTS) 1,160 Carbon County Industrial Development Authority, Pennsylvania, Resource No Opt. Call BBB- 1,171,948 Recovery Revenue Refunding Bonds, Panther Creek Partners Project, Series 2000, 6.650%, 5/01/10 (Alternative Minimum Tax) 1,250 Erie, Pennsylvania, Water Authority, Water Revenue Bonds, Series 2008, 12/18 at 100.00 AAA 1,069,400 5.000%, 12/01/43 - FSA Insured 1,500 Pennsylvania Housing Finance Agency, Single Family Mortgage Revenue 10/16 at 100.00 AA+ 1,065,885 Bonds, Series 2008, 4.650%, 10/01/31 (Alternative Minimum Tax) (UB) 2,600 Pennsylvania Turnpike Commission, Turnpike Revenue Bonds, Series 12/14 at 100.00 AA 2,605,200 2004A, 5.500%, 12/01/31 - AMBAC Insured 465 Washington County Authority, Pennsylvania, Capital Funding Revenue No Opt. Call AA 398,989 Bonds, Capital Projects and Equipment Acquisition Program, Series 1999, 6.150%, 12/01/29 - AMBAC Insured ------------------------------------------------------------------------------------------------------------------------------------ 6,975 Total Pennsylvania 6,311,422 ------------------------------------------------------------------------------------------------------------------------------------ PUERTO RICO - 3.2% (1.9% OF TOTAL INVESTMENTS) 5,000 Puerto Rico Electric Power Authority, Power Revenue Bonds, Series 7/15 at 100.00 A3 4,360,900 2005RR, 5.000%, 7/01/26 - SYNCORA GTY Insured 10,070 Puerto Rico Highway and Transportation Authority, Highway Revenue No Opt. Call BBB+ 8,358,805 Bonds, Series 2007N, 5.250%, 7/01/39 - FGIC Insured 4,000 Puerto Rico, General Obligation Bonds, Series 2000B, 5.625%, 7/10 at 100.00 AA 3,899,600 7/01/19 - MBIA Insured ------------------------------------------------------------------------------------------------------------------------------------ 19,070 Total Puerto Rico 16,619,305 ------------------------------------------------------------------------------------------------------------------------------------ 45 NMA Nuveen Municipal Advantage Fund, Inc. (continued) Portfolio of INVESTMENTS October 31, 2008 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ RHODE ISLAND - 1.3% (0.8% OF TOTAL INVESTMENTS) $ 1,235 Rhode Island Health and Educational Building Corporation, Hospital 11/08 at 101.00 AA $ 1,228,208 Financing Revenue Bonds, Lifespan Obligated Group, Series 1996, 5.500%, 5/15/16 - MBIA Insured 7,000 Rhode Island Housing and Mortgage Finance Corporation, 10/14 at 100.00 AA+ 5,496,470 Homeownership Opportunity Bond Program, Series 50A, 4.650%, 10/01/34 ------------------------------------------------------------------------------------------------------------------------------------ 8,235 Total Rhode Island 6,724,678 ------------------------------------------------------------------------------------------------------------------------------------ SOUTH CAROLINA - 5.2% (3.1% OF TOTAL INVESTMENTS) 10,000 Greenville County School District, South Carolina, Installment Purchase 12/12 at 101.00 AA (4) 11,197,100 Revenue Bonds, Series 2002, 6.000%, 12/01/20 (Pre-refunded 12/01/12) 2,500 Lexington County Health Service District, South Carolina, Hospital 11/13 at 100.00 A+ (4) 2,745,750 Revenue Refunding and Improvement Bonds, Series 2003, 5.750%, 11/01/28 (Pre-refunded 11/01/13) 3,000 Myrtle Beach, South Carolina, Hospitality and Accommodation Fee 6/14 at 100.00 A+ 2,459,040 Revenue Bonds, Series 2004A, 5.000%, 6/01/36 - FGIC Insured 1,220 Piedmont Municipal Power Agency, South Carolina, Electric Revenue No Opt. Call AA 474,385 Bonds, Series 2004A-2, 0.000%, 1/01/23 - FGIC Insured 2,125 South Carolina Public Service Authority, Revenue Refunding Bonds, 7/13 at 100.00 AA 2,101,965 Santee Cooper Electric System, Series 2003A, 5.000%, 1/01/21 - AMBAC Insured 7,585 Tobacco Settlement Revenue Management Authority, South Carolina, 5/16 at 100.00 BBB (4) 8,128,162 Tobacco Settlement Asset-Backed Bonds, Series 2001B, 6.375%, 5/15/28 (Pre-refunded 5/15/16) ------------------------------------------------------------------------------------------------------------------------------------ 26,430 Total South Carolina 27,106,402 ------------------------------------------------------------------------------------------------------------------------------------ SOUTH DAKOTA - 0.4% (0.2% OF TOTAL INVESTMENTS) 2,945 South Dakota Health and Educational Facilities Authority, Revenue Bonds, 5/17 at 100.00 AA- 2,338,330 Sanford Health, Series 2007, 5.000%, 11/01/40 ------------------------------------------------------------------------------------------------------------------------------------ TENNESSEE - 6.7% (4.0% OF TOTAL INVESTMENTS) 6,000 Knox County Health, Educational and Housing Facilities Board, 4/12 at 101.00 A1 4,960,440 Tennessee, Hospital Revenue Bonds, Baptist Health System of East Tennessee Inc., Series 2002, 6.500%, 4/15/31 20,415 Knox County Health, Educational and Housing Facilities Board, 1/13 at 75.87 AAA 12,304,733 Tennessee, Hospital Revenue Refunding Bonds, Covenant Health, Series 2002A, 0.000%, 1/01/18 - FSA Insured 14,385 Metropolitan Government of Nashville-Davidson County Health and 11/09 at 101.00 AAA 15,138,197 Educational Facilities Board, Tennessee, Revenue Bonds, Ascension Health Credit Group, Series 1999A, 5.875%, 11/15/28 (Pre-refunded 11/15/09) - AMBAC Insured 1,750 Metropolitan Government of Nashville-Davidson County, Tennessee, 5/11 at 100.00 AA+ 1,731,013 Electric System Revenue Bonds, Series 2001A, 5.125%, 5/15/26 1,500 Sumner County Health, Educational, and Housing Facilities Board, 11/17 at 100.00 N/R 1,079,115 Tennessee, Revenue Refunding Bonds, Sumner Regional Health System Inc., Series 2007, 5.500%, 11/01/46 ------------------------------------------------------------------------------------------------------------------------------------ 44,050 Total Tennessee 35,213,498 ------------------------------------------------------------------------------------------------------------------------------------ TEXAS - 14.8% (8.8% OF TOTAL INVESTMENTS) 2,000 Abilene Higher Education Authority, Inc., Texas, Student Loan Revenue 11/08 at 100.00 Aa3 1,962,440 Bonds, Subordinate Series 1998B, 5.050%, 7/01/13 (Alternative Minimum Tax) 11,810 Brazos River Authority, Texas, Pollution Control Revenue Refunding No Opt. Call Caa1 10,259,938 Bonds, TXU Electric Company, Series 2001C, 5.750%, 5/01/36 (Mandatory put 11/01/11) (Alternative Minimum Tax) 6,000 Brazos River Authority, Texas, Revenue Refunding Bonds, Houston No Opt. Call A 5,360,640 Lighting and Power Company, Series 1998, 5.050%, 11/01/18 - AMBAC Insured (Alternative Minimum Tax) 4,250 Ennis Independent School District, Ellis County, Texas, General Obligation 8/16 at 60.73 Aaa 1,434,928 Bonds, Series 2006, 0.000%, 8/15/26 8,400 Gulf Coast Waste Disposal Authority, Texas, Waste Disposal Revenue 4/09 at 101.00 Baa2 5,449,500 Bonds, Valero Energy Corporation, Series 1999, 5.700%, 4/01/32 (Alternative Minimum Tax) 7,500 Harris County Health Facilities Development Corporation, Texas, Thermal 11/13 at 100.00 AA 6,741,525 Utility Revenue Bonds, TECO Project, Series 2003, 5.000%, 11/15/30 - MBIA Insured 46 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ TEXAS (continued) $ 1,540 Houston Community College, Texas, Limited Tax General Obligation 2/13 at 100.00 AA $ 1,475,520 Bonds, Series 2003, 5.000%, 2/15/28 - AMBAC Insured 3,460 Houston Community College, Texas, Limited Tax General Obligation 2/13 at 100.00 AA (4) 3,710,435 Bonds, Series 2003, 5.000%, 2/15/28 (Pre-refunded 2/15/13) - AMBAC Insured Houston, Texas, Water Conveyance System Contract, Certificates of Participation, Series 1993A-J: 5,490 6.800%, 12/15/10 - AMBAC Insured No Opt. Call AA 5,825,219 2,000 6.800%, 12/15/11 - AMBAC Insured No Opt. Call AA 2,158,700 9,345 Leander Independent School District, Williamson and Travis Counties, 8/15 at 35.34 AA 1,751,160 Texas, General Obligation Bonds, Series 2005, 0.000%, 8/15/34 - FGIC Insured 16,305 Matagorda County Navigation District 1, Texas, Revenue Bonds, Reliant 5/09 at 101.00 BBB- 11,151,153 Energy Inc., Series 1999B, 5.950%, 5/01/30 (Alternative Minimum Tax) 3,425 Sabine River Authority, Texas, Pollution Control Revenue Refunding No Opt. Call Caa1 2,997,834 Bonds, TXU Electric Company, Series 2001A, 5.500%, 5/01/22 (Mandatory put 11/01/11) 4,700 Sam Rayburn Municipal Power Agency, Texas, Power Supply System 10/12 at 100.00 Baa2 4,245,134 Revenue Refunding Bonds, Series 2002A, 6.000%, 10/01/21 4,000 Texas, General Obligation Bonds, Water Financial Assistance, State 8/09 at 100.00 Aa1 4,001,960 Participation Program, Series 1999C, 5.500%, 8/01/35 6,840 Travis County Health Facilities Development Corporation, Texas, Revenue 11/09 at 101.00 AAA 7,153,819 Bonds, Ascension Health Credit Group, Series 1999A, 5.875%, 11/15/24 (Pre-refunded 11/15/09) - AMBAC Insured 245 Wood Glen Housing Finance Corporation, Texas, FHA-Insured Section 8 12/08 at 100.00 Aaa 245,995 Assisted Mortgage Revenue Bonds, Copperwood I Project, Series 1990A, 7.625%, 1/01/10 - MBIA Insured (ETM) 3,000 Wylie Independent School District, Taylor County, Texas, General 8/15 at 74.57 AAA 1,443,270 Obligation Bonds, Series 2005, 0.000%, 8/15/21 ------------------------------------------------------------------------------------------------------------------------------------ 100,310 Total Texas 77,369,170 ------------------------------------------------------------------------------------------------------------------------------------ VIRGINIA - 0.2% (0.1% OF TOTAL INVESTMENTS) 2,855 Tobacco Settlement Financing Corporation of Virginia, Tobacco 6/17 at 100.00 BBB 1,309,960 Settlement Asset-Backed Bonds, Series 2007B2, 0.000%, 6/01/46 ------------------------------------------------------------------------------------------------------------------------------------ WASHINGTON - 15.2% (9.1% OF TOTAL INVESTMENTS) 1,260 Central Puget Sound Regional Transit Authority, Washington, Sales Tax 2/09 at 101.00 AAA 1,151,338 and Motor Vehicle Excise Tax Bonds, Series 1999, 4.750%, 2/01/28 - FGIC Insured 8,810 Chelan County Public Utility District 1, Washington, Hydro Consolidated 7/11 at 101.00 AA 7,236,534 System Revenue Bonds, Series 2001A, 5.600%, 1/01/36 - MBIA Insured (Alternative Minimum Tax) 5,665 Chelan County Public Utility District 1, Washington, Hydro Consolidated 7/12 at 100.00 AA 4,293,617 System Revenue Bonds, Series 2002B, 5.250%, 7/01/37 (Mandatory put 7/01/12) - AMBAC Insured (Alternative Minimum Tax) 10,730 Chelan County Public Utility District 1, Washington, Hydro Consolidated 7/11 at 101.00 AA 9,043,888 System Revenue Refunding Bonds, Series 2001C, 5.650%, 7/01/32 - MBIA Insured (Alternative Minimum Tax) 10,730 Pierce County School District 320, Sumner, Washington, Unlimited Tax 12/10 at 100.00 Aaa 11,564,579 General Obligation Bonds, Series 2000, 6.250%, 12/01/17 (Pre-refunded 12/01/10) - FSA Insured 10,550 Port of Seattle, Washington, Limited Tax General Obligation Bonds, 12/10 at 100.00 AAA 9,916,051 Series 2000B, 5.750%, 12/01/25 (Alternative Minimum Tax) 5,315 Port of Seattle, Washington, Revenue Bonds, Series 2000B, 6.000%, No Opt. Call AA 5,413,700 2/01/10 - MBIA Insured (Alternative Minimum Tax) 19,475 Port of Seattle, Washington, Special Facility Revenue Bonds, Terminal 18, 3/10 at 101.00 AA (4) 20,587,796 Series 1999A, 6.000%, 9/01/29 (Pre-refunded 3/01/10) - MBIA Insured 5,000 Port of Seattle, Washington, Special Facility Revenue Bonds, Terminal 18, 3/10 at 101.00 AA 4,712,700 Series 1999B, 6.000%, 9/01/20 - MBIA Insured (Alternative Minimum Tax) 5,000 Washington State Healthcare Facilities Authority, Revenue Bonds, 12/09 at 101.00 AA (4) 5,245,150 Providence Services, Series 1999, 5.375%, 12/01/19 (Pre-refunded 12/01/09) - MBIA Insured 47 NMA Nuveen Municipal Advantage Fund, Inc. (continued) Portfolio of INVESTMENTS October 31, 2008 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ WASHINGTON (continued) $ 1,270 Washington State, Motor Vehicle Fuel Tax General Obligation Bonds, No Opt. Call AA+ $ 515,925 Series 2003F, 0.000%, 12/01/24 - MBIA Insured ------------------------------------------------------------------------------------------------------------------------------------ 83,805 Total Washington 79,681,278 ------------------------------------------------------------------------------------------------------------------------------------ WEST VIRGINIA - 0.8% (0.5% OF TOTAL INVESTMENTS) 5,000 Mason County, West Virginia, Pollution Control Revenue Bonds, 10/11 at 100.00 BBB 4,303,600 Appalachian Power Company, Series 2003L, 5.500%, 10/01/22 ------------------------------------------------------------------------------------------------------------------------------------ WISCONSIN - 3.1% (1.8% OF TOTAL INVESTMENTS) Badger Tobacco Asset Securitization Corporation, Wisconsin, Tobacco Settlement Asset-Backed Bonds, Series 2002: 1,195 6.000%, 6/01/17 6/12 at 100.00 BBB 1,122,440 6,375 6.125%, 6/01/27 6/12 at 100.00 BBB 6,073,335 565 Green Bay, Wisconsin, Water System Revenue Bonds, Series 2004, 11/14 at 100.00 Aaa 518,224 5.000%, 11/01/29 - FSA Insured 5,000 Madison, Wisconsin, Industrial Development Revenue Refunding Bonds, 4/12 at 100.00 AA- 4,584,250 Madison Gas and Electric Company Projects, Series 2002A, 5.875%, 10/01/34 (Alternative Minimum Tax) 3,000 Southeast Wisconsin Professional Baseball Park District, Sales Tax No Opt. Call AA 3,172,020 Revenue Refunding Bonds, Series 1998A, 5.500%, 12/15/19 - MBIA Insured 550 Wisconsin Housing and Economic Development Authority, Home 3/10 at 100.00 AA 532,015 Ownership Revenue Bonds, Series 2000B, 5.750%, 3/01/22 (Alternative Minimum Tax) ------------------------------------------------------------------------------------------------------------------------------------ 16,685 Total Wisconsin 16,002,284 ------------------------------------------------------------------------------------------------------------------------------------ $ 1,135,853 Total Investments (cost $957,998,565) - 167.6% 877,736,594 =============----------------------------------------------------------------------------------------------------------------------- Floating Rate Obligations - (4.8)% (25,008,333) -------------------------------------------------------------------------------------------------------------------- Other Assets Less Liabilities - 2.4% 12,524,034 -------------------------------------------------------------------------------------------------------------------- Auction Rate Preferred Shares, at Liquidation Value - (65.2)% (5) (341,650,000) -------------------------------------------------------------------------------------------------------------------- Net Assets Applicable to Common Shares - 100% $ 523,602,295 ====================================================================================================================
(1) All percentages shown in the Portfolio of Investments are based on net assets applicable to Common shares unless otherwise noted. (2) Optional Call Provisions (not covered by the report of independent registered public accounting firm): Dates (month and year) and prices of the earliest optional call or redemption. There may be other call provisions at varying prices at later dates. Certain mortgage-backed securities may be subject to periodic principal paydowns. (3) Ratings (not covered by the report of independent registered public accounting firm): Using the higher of Standard & Poor's Group ("Standard & Poor's") or Moody's Investor Service, Inc. ("Moody's") rating. Ratings below BBB by Standard & Poor's or Baa by Moody's are considered to be below investment grade. The Portfolio of Investments may reflect the ratings on certain bonds insured by ACA, AGC, AMBAC, FGIC, FSA, MBIA and SYNCORA as of October 31, 2008. Please see the Portfolio Managers' Commentary for an expanded discussion of the affect on the Fund of changes to the ratings of certain bonds in the portfolio resulting from changes to the ratings of the underlying insurers both during the period and after period end. (4) Backed by an escrow or trust containing sufficient U.S. Government or U.S. Government agency securities which ensure the timely payment of principal and interest. Such investments are normally considered to be equivalent to AAA rated securities. (5) Auction Rate Preferred Shares, at Liquidation Value as a percentage of Total Investments is 38.9%. N/R Not rated. (ETM) Escrowed to maturity. (IF) Inverse floating rate investment. (UB) Underlying bond of an inverse floating rate trust reflected as a financing transaction pursuant to the provisions of SFAS No. 140. See accompanying notes to financial statements. 48 NMO Nuveen Municipal Market Opportunity Fund, Inc. Portfolio of INVESTMENTS October 31, 2008
PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ ALABAMA - 0.6% (0.4% OF TOTAL INVESTMENTS) Henry County Water Authority, Alabama, Water Revenue Bonds, Series 2006: $ 1,935 5.000%, 1/01/36 - RAAI Insured 1/16 at 100.00 BBB+ $ 1,529,830 2,485 5.000%, 1/01/41 - RAAI Insured 1/16 at 100.00 BBB+ 1,921,700 ------------------------------------------------------------------------------------------------------------------------------------ 4,420 Total Alabama 3,451,530 ------------------------------------------------------------------------------------------------------------------------------------ ALASKA - 1.6% (0.9% OF TOTAL INVESTMENTS) Alaska Housing Finance Corporation, General Housing Purpose Bonds, Series 2005A: 1,125 5.250%, 12/01/34 - FGIC Insured 12/14 at 100.00 AA 1,047,983 1,275 5.250%, 12/01/41 - FGIC Insured 12/14 at 100.00 AA 1,149,030 12,280 Northern Tobacco Securitization Corporation, Alaska, Tobacco Settlement 12/08 at 100.00 Baa3 6,532,960 Asset-Backed Bonds, Series 2006A, 5.000%, 6/01/46 ------------------------------------------------------------------------------------------------------------------------------------ 14,680 Total Alaska 8,729,973 ------------------------------------------------------------------------------------------------------------------------------------ ARKANSAS - 1.5% (0.9% OF TOTAL INVESTMENTS) 5,000 Arkansas Development Finance Authority, Hospital Revenue Bonds, 2/10 at 100.00 Baa1 (4) 5,281,200 Washington Regional Medical Center, Series 2000, 7.000%, 2/01/15 (Pre-refunded 2/01/10) 3,480 Cabot School District 4, Lonoke County, Arkansas, General Obligation 12/08 at 100.00 Aa3 3,273,218 Refunding Bonds, Series 2003, 5.000%, 2/01/27 - AMBAC Insured ------------------------------------------------------------------------------------------------------------------------------------ 8,480 Total Arkansas 8,554,418 ------------------------------------------------------------------------------------------------------------------------------------ CALIFORNIA - 9.3% (5.7% OF TOTAL INVESTMENTS) 12,500 Anaheim Public Finance Authority, California, Subordinate Lease Revenue No Opt. Call AAA 2,183,000 Bonds, Public Improvement Project, Series 1997C, 0.000%, 9/01/35 - FSA Insured 1,350 Antelope Valley Union High School District, Los Angeles County, No Opt. Call AA 376,475 California, General Obligation Bonds, Series 2004B, 0.000%, 8/01/29 - MBIA Insured 7,800 California County Tobacco Securitization Agency, Tobacco Settlement 12/18 at 100.00 Baa3 4,274,868 Asset-Backed Bonds, Los Angeles County Securitization Corporation, Series 2006A, 0.000%, 6/01/36 (Mandatory put 6/01/23) 1,350 California Educational Facilities Authority, Revenue Refunding Bonds, No Opt. Call A2 190,229 Loyola Marymount University, Series 2001A, 0.000%, 10/01/39 - MBIA Insured 4,295 California Health Facilities Financing Authority, Health Facility Revenue 3/13 at 100.00 A 3,389,614 Bonds, Adventist Health System/West, Series 2003A, 5.000%, 3/01/33 9,000 California Health Facilities Financing Authority, Revenue Bonds, Kaiser 3/16 at 100.00 A+ 7,229,070 Permanante System, Series 2006, 5.250%, 3/01/45 1,550 California Statewide Community Development Authority, Revenue Bonds, 7/18 at 100.00 AA- 1,379,934 St. Joseph Health System, Series 2007A, 5.750%, 7/01/47 - FGIC Insured 6,250 California, Various Purpose General Obligation Bonds, Series 2005 Trust 3/16 at 100.00 AA 2,167,125 2813, 0.930%, 3/01/35 - MBIA Insured (IF) 10,445 Castaic Lake Water Agency, California, Certificates of Participation, Water No Opt. Call AA 3,020,276 System Improvement Project, Series 1999, 0.000%, 8/01/29 - AMBAC Insured 8,365 Cupertino Union School District, Santa Clara County, California, General 8/13 at 52.66 AA 2,800,937 Obligation Bonds, Series 2003B, 0.000%, 8/01/26 - FGIC Insured 5,000 Golden State Tobacco Securitization Corporation, California, Enhanced 6/13 at 100.00 AAA 5,283,450 Tobacco Settlement Asset-Backed Bonds, Series 2003B, 5.000%, 6/01/38 (Pre-refunded 6/01/13) - AMBAC Insured 49 NMO Nuveen Municipal Market Opportunity Fund, Inc. (continued) Portfolio of INVESTMENTS October 31, 2008 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ CALIFORNIA (continued) $ 1,000 Golden State Tobacco Securitization Corporation, California, Enhanced 6/17 at 100.00 BBB $ 590,500 Tobacco Settlement Asset-Backed Bonds, Series 2007A-1, 5.125%, 6/01/47 Golden State Tobacco Securitization Corporation, California, Tobacco Settlement Asset-Backed Revenue Bonds, Series 2005A: 3,500 0.000%, 6/01/26 - FSA Insured No Opt. Call AAA 1,143,555 3,000 5.000%, 6/01/45 6/15 at 100.00 A 2,166,750 1,500 Lincoln Unified School District, Placer County, California, Community No Opt. Call AA 460,875 Facilities District 1, Special Tax Bonds, Series 2005, 0.000%, 9/01/26 - AMBAC Insured 490 Los Angeles Department of Water and Power, California, Electric Plant 12/08 at 100.00 AA- (4) 489,980 Revenue Bonds, Second Series 1993, 4.750%, 10/15/20 (ETM) 995 Los Angeles Department of Water and Power, California, Electric Plant 12/08 at 100.00 AA- (4) 994,940 Revenue Bonds, Series 1994, 5.375%, 2/15/34 (ETM) 1,000 Pajaro Valley Unified School District, Santa Cruz County, California, No Opt. Call AAA 293,500 General Obligation Bonds, Series 2005B, 0.000%, 8/01/29 - FSA Insured 8,040 Placentia-Yorba Linda Unified School District, Orange County, California, No Opt. Call AA 1,517,952 Certificates of Participation, Series 2006, 0.000%, 10/01/34 - FGIC Insured San Joaquin Hills Transportation Corridor Agency, Orange County, California, Toll Road Revenue Refunding Bonds, Series 1997A: 5,000 5.650%, 1/15/17 - MBIA Insured 1/14 at 102.00 AA 4,394,300 26,000 0.000%, 1/15/35 - MBIA Insured No Opt. Call AA 5,000 San Jose-Evergreen Community College District, Santa Clara County, 9/15 at 50.47 AA 1,501,000 California, General Obligation Bonds, Series 2005A, 0.000%, 9/01/28 - MBIA Insured 4,825 Santa Monica Community College District, Los Angeles County, 8/15 at 61.27 AA 1,773,332 California, General Obligation Bonds, Series 2005C, 0.000%, 8/01/25 - MBIA Insured ------------------------------------------------------------------------------------------------------------------------------------ 128,255 Total California 52,005,262 ------------------------------------------------------------------------------------------------------------------------------------ COLORADO - 7.0% (4.2% OF TOTAL INVESTMENTS) 1,085 Arkansas River Power Authority, Colorado, Power Revenue Bonds, Series 10/16 at 100.00 BBB 828,332 2006, 5.250%, 10/01/40 - SYNCORA GTY Insured 3,000 Broomfield, Colorado, Master Facilities Lease Purchase Agreement, 12/09 at 100.00 Aa3 3,005,760 Certificates of Participation, Series 1999, 5.750%, 12/01/24 - AMBAC Insured 6,285 Broomfield, Colorado, Sales and Use Tax Revenue Refunding and 12/12 at 100.00 Aa3 6,330,315 Improvement Bonds, Series 2002A, 5.500%, 12/01/22 - AMBAC Insured 11,465 Denver City and County, Colorado, Airport System Revenue Refunding 11/10 at 100.00 AA 11,054,897 Bonds, Series 2000A, 6.000%, 11/15/18 - AMBAC Insured (Alternative Minimum Tax) E-470 Public Highway Authority, Colorado, Senior Revenue Bonds, Series 2000B: 2,200 0.000%, 9/01/22 - MBIA Insured No Opt. Call AA 886,468 7,000 0.000%, 9/01/30 - MBIA Insured No Opt. Call AA 1,529,150 15,960 0.000%, 9/01/33 - MBIA Insured No Opt. Call AA 2,788,531 20,000 E-470 Public Highway Authority, Colorado, Senior Revenue Bonds, Series 9/10 at 31.42 Aaa 5,958,200 2000B, 0.000%, 9/01/28 (Pre-refunded 9/01/10) - MBIA Insured E-470 Public Highway Authority, Colorado, Toll Revenue Bonds, Series 2004B: 3,800 0.000%, 9/01/27 - MBIA Insured 9/20 at 67.94 AA 1,045,684 13,300 0.000%, 9/01/31 - MBIA Insured 9/20 at 53.77 AA 2,692,053 6,250 0.000%, 9/01/32 - MBIA Insured 9/20 at 50.83 AA 1,174,188 10,000 0.000%, 3/01/36 - MBIA Insured 9/20 at 41.72 AA 1,446,500 ------------------------------------------------------------------------------------------------------------------------------------ 100,345 Total Colorado 38,740,078 ------------------------------------------------------------------------------------------------------------------------------------ DISTRICT OF COLUMBIA - 1.4% (0.9% OF TOTAL INVESTMENTS) 10,000 Washington Convention Center Authority, District of Columbia, Senior 10/16 at 100.00 AA 8,044,300 Lien Dedicated Tax Revenue Bonds, Series 2007A, 4.500%, 10/01/30 - AMBAC Insured ------------------------------------------------------------------------------------------------------------------------------------ 50 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ FLORIDA - 0.8% (0.5% OF TOTAL INVESTMENTS) $ 10,220 Florida Housing Finance Corporation, Homeowner Mortgage Revenue 1/17 at 100.00 AA+ $ 4,576,823 Bonds, Series 2008, Trust 1191, 7.103%, 7/01/32 (Alternative Minimum Tax) (IF) ------------------------------------------------------------------------------------------------------------------------------------ GEORGIA - 5.5% (3.3% OF TOTAL INVESTMENTS) 15,000 Atlanta, Georgia, Airport General Revenue Refunding Bonds, Series 1/10 at 101.00 A+ (4) 15,686,250 2000A, 5.600%, 1/01/30 (Pre-refunded 1/01/10) - FGIC Insured 14,330 Fulton County Facilities Corporation, Georgia, Certificates of 11/10 at 101.00 AA 14,658,874 Participation, Public Purpose Project, Series 1999, 5.500%, 11/01/18 - AMBAC Insured ------------------------------------------------------------------------------------------------------------------------------------ 29,330 Total Georgia 30,345,124 ------------------------------------------------------------------------------------------------------------------------------------ ILLINOIS - 13.9% (8.4% OF TOTAL INVESTMENTS) 4,595 Bolingbrook, Illinois, General Obligation Refunding Bonds, Series 2002B, No Opt. Call AA 1,058,183 0.000%, 1/01/32 - FGIC Insured 4,600 Chicago Board of Education, Illinois, Unlimited Tax General Obligation No Opt. Call AA 2,366,194 Bonds, Dedicated Tax Revenues, Series 1999A, 0.000%, 12/01/20 - FGIC Insured 4,000 Chicago, Illinois, Motor Fuel Tax Revenue Bonds, Series 2003A, 5.000%, 7/13 at 100.00 AA+ 3,659,240 1/01/33 - AMBAC Insured 2,300 Chicago, Illinois, Motor Fuel Tax Revenue Refunding Bonds, Series 1993, No Opt. Call AA+ 2,437,356 5.375%, 1/01/14 - AMBAC Insured 5,250 Chicago, Illinois, Revenue Bonds, Midway Airport, Series 1998B, 5.000%, 1/09 at 101.00 AA 4,678,275 1/01/28 - MBIA Insured 3,400 Illinois Finance Authority, Illinois, Northwestern University, Revenue 12/15 at 100.00 AAA 2,772,626 Bonds, Tender Option Bond Trust 3174, 10.395%, 12/01/42 (IF) 38,645 Illinois, General Obligation Bonds, Illinois FIRST Program, Series 2000, 4/10 at 100.00 AA 38,768,274 5.500%, 4/01/25 - MBIA Insured Lake and McHenry Counties Community Unit School District 118, Wauconda, Illinois, General Obligation Bonds, Series 2005B: 10,230 0.000%, 1/01/22 - FSA Insured 1/15 at 70.63 Aaa 4,667,131 6,780 0.000%, 1/01/24 - FSA Insured 1/15 at 63.44 Aaa 2,577,349 1,975 Lake County Community High School District 127, Grayslake, Illinois, No Opt. Call AA 2,382,206 General Obligation Bonds, Series 2002A, 9.000%, 2/01/13 - FGIC Insured Metropolitan Pier and Exposition Authority, Illinois, Revenue Bonds, McCormick Place Expansion Project, Series 2002A: 6,500 0.000%, 6/15/25 - MBIA Insured 6/22 at 101.00 AAA 4,010,175 3,270 5.000%, 12/15/28 - MBIA Insured 6/12 at 101.00 AAA 3,129,815 3,700 0.000%, 6/15/30 - MBIA Insured No Opt. Call AAA 1,037,036 3,280 0.000%, 6/15/37 - MBIA Insured No Opt. Call AAA 584,168 11,715 0.000%, 12/15/38 - MBIA Insured No Opt. Call AAA 1,894,901 9,170 0.000%, 6/15/39 - MBIA Insured No Opt. Call AAA 1,434,830 ------------------------------------------------------------------------------------------------------------------------------------ 119,410 Total Illinois 77,457,759 ------------------------------------------------------------------------------------------------------------------------------------ INDIANA - 1.1% (0.7% OF TOTAL INVESTMENTS) 4,695 Indiana Educational Facilities Authority, Revenue Bonds, Butler University, 2/11 at 100.00 AA 4,567,202 Series 2001, 5.500%, 2/01/26 - MBIA Insured 2,000 Petersburg, Indiana, Pollution Control Revenue Refunding Bonds, 8/11 at 102.00 Baa1 1,679,360 Indianapolis Power and Light Company, Series 1991, 5.750%, 8/01/21 ------------------------------------------------------------------------------------------------------------------------------------ 6,695 Total Indiana 6,246,562 ------------------------------------------------------------------------------------------------------------------------------------ IOWA - 0.8% (0.5% OF TOTAL INVESTMENTS) 970 Iowa Finance Authority, Health Facility Revenue Bonds, Care Initiatives 7/16 at 100.00 BBB- 778,658 Project, Series 2006A, 5.000%, 7/01/19 5,000 Iowa Tobacco Settlement Authority, Tobacco Asset-Backed Revenue 6/17 at 100.00 BBB 3,480,900 Bonds, Series 2005B, 5.600%, 6/01/34 ------------------------------------------------------------------------------------------------------------------------------------ 5,970 Total Iowa 4,259,558 ------------------------------------------------------------------------------------------------------------------------------------ 51 NMO Nuveen Municipal Market Opportunity Fund, Inc. (continued) Portfolio of INVESTMENTS October 31, 2008 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ KANSAS - 0.5% (0.3% OF TOTAL INVESTMENTS) $ 2,500 Kansas Development Finance Authority, Water Pollution Control 11/12 at 100.00 AAA $ 2,575,375 Revolving Fund Leveraged Bonds, Series 2002-II, 5.500%, 11/01/21 500 Salina, Kansas, Hospital Revenue Bonds, Salina Regional Medical Center, 4/16 at 100.00 A1 374,125 Series 2006, 4.625%, 10/01/31 ------------------------------------------------------------------------------------------------------------------------------------ 3,000 Total Kansas 2,949,500 ------------------------------------------------------------------------------------------------------------------------------------ KENTUCKY - 2.2% (1.3% OF TOTAL INVESTMENTS) Jefferson County School District Finance Corporation, Kentucky, School Building Revenue Bonds, Series 2000A: 3,045 5.250%, 7/01/17 (Pre-refunded 1/01/10) - FSA Insured 1/10 at 101.00 AAA 3,181,538 7,490 5.250%, 7/01/20 (Pre-refunded 1/01/10) - FSA Insured 1/10 at 101.00 AAA 7,825,852 1,000 Kentucky Economic Development Finance Authority, Louisville Arena 6/18 at 100.00 AAA 950,660 Project Revenue Bonds, Louisville Arena Authority, Inc., Series 2008A-1, 6.000%, 12/01/38 - AGC Insured ------------------------------------------------------------------------------------------------------------------------------------ 11,535 Total Kentucky 11,958,050 ------------------------------------------------------------------------------------------------------------------------------------ LOUISIANA - 1.7% (1.0% OF TOTAL INVESTMENTS) 7,415 Louisiana Local Government Environmental Facilities and Community 12/12 at 100.00 AA 6,244,987 Development Authority, Revenue Bonds, Baton Rouge Community College Facilities Corporation, Series 2002, 5.000%, 12/01/32 - MBIA Insured 3,350 Louisiana Public Facilities Authority, Revenue Bonds, Baton Rouge 7/14 at 100.00 AA 2,934,969 General Hospital, Series 2004, 5.250%, 7/01/33 - MBIA Insured ------------------------------------------------------------------------------------------------------------------------------------ 10,765 Total Louisiana 9,179,956 ------------------------------------------------------------------------------------------------------------------------------------ MARYLAND - 1.0% (0.6% OF TOTAL INVESTMENTS) 4,410 Maryland Community Development Administration, Department of 3/17 at 100.00 Aa2 3,096,129 Housing and Community Development, Residential Revenue Bonds, Series 2007D, 4.900%, 9/01/42 (Alternative Minimum Tax) 2,500 Maryland Department of Transportation, Consolidated Transportation No Opt. Call AAA 2,744,550 Revenue Bonds, Series 2002, 5.500%, 2/01/16 ------------------------------------------------------------------------------------------------------------------------------------ 6,910 Total Maryland 5,840,679 ------------------------------------------------------------------------------------------------------------------------------------ MASSACHUSETTS - 4.1% (2.5% OF TOTAL INVESTMENTS) 440 Massachusetts Bay Transportation Authority, Assessment Bonds, Series 7/10 at 100.00 AAA 425,599 2000A, 5.250%, 7/01/30 Massachusetts Bay Transportation Authority, Assessment Bonds, Series 2000A: 4,150 5.250%, 7/01/30 (Pre-refunded 7/01/10) 7/10 at 100.00 Aa1 (4) 4,352,769 660 5.250%, 7/01/30 (Pre-refunded 7/01/10) 7/10 at 100.00 Aa1 (4) 692,248 8,315 Massachusetts Turnpike Authority, Metropolitan Highway System 1/09 at 100.00 AA 6,595,541 Revenue Bonds, Senior Series 1997A, 5.000%, 1/01/37 - MBIA Insured 10,000 Massachusetts Water Resources Authority, General Revenue Bonds, 8/10 at 101.00 AA (4) 10,593,000 Series 2000A, 5.750%, 8/01/39 (Pre-refunded 8/01/10) - FGIC Insured ------------------------------------------------------------------------------------------------------------------------------------ 23,565 Total Massachusetts 22,659,157 ------------------------------------------------------------------------------------------------------------------------------------ MICHIGAN - 1.5% (0.9% OF TOTAL INVESTMENTS) 5,000 Detroit Water Supply System, Michigan, Water Supply System Revenue 7/16 at 100.00 AAA 4,060,750 Bonds, Series 2006D, 4.625%, 7/01/32 - FSA Insured 2,090 Grand Rapids Building Authority, Kent County, Michigan, Limited Tax 8/10 at 100.00 AA 2,168,835 General Obligation Bonds, Series 2000, 5.375%, 8/01/17 - AMBAC Insured 3,050 Michigan Tobacco Settlement Finance Authority, Tobacco Settlement 6/18 at 100.00 Baa3 2,279,845 Asset-Backed Revenue Bonds, Series 2008A, 6.875%, 6/01/42 ------------------------------------------------------------------------------------------------------------------------------------ 10,140 Total Michigan 8,509,430 ------------------------------------------------------------------------------------------------------------------------------------ MINNESOTA - 9.3% (5.7% OF TOTAL INVESTMENTS) 930 Minnesota Agricultural and Economic Development Board, Healthcare 11/10 at 101.00 A 917,789 System Revenue Bonds, Fairview Hospital and Healthcare Services, Series 2000A, 6.375%, 11/15/29 52 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ MINNESOTA (continued) $ 29,070 Minnesota Agricultural and Economic Development Board, Healthcare 11/10 at 101.00 A (4) $31,438,332 System Revenue Bonds, Fairview Hospital and Healthcare Services, Series 2000A, 6.375%, 11/15/29 (Pre-refunded 11/15/10) 2,045 Minnesota Housing Finance Agency, Single Family Remarketed Mortgage 1/11 at 101.00 AA+ 2,060,992 Bonds, Series 1998H-2, 6.050%, 7/01/31 (Alternative Minimum Tax) 13,675 Minnesota, General Obligation Bonds, Series 2000, 5.125%, 11/01/16 11/10 at 100.00 AAA 14,208,052 2,925 St. Paul Housing and Redevelopment Authority, Minnesota, Sales Tax 11/15 at 103.00 AAA 3,314,435 Revenue Refunding Bonds, Civic Center Project, Series 1996, 7.100%, 11/01/23 - FSA Insured ------------------------------------------------------------------------------------------------------------------------------------ 48,645 Total Minnesota 51,939,600 ------------------------------------------------------------------------------------------------------------------------------------ MISSISSIPPI - 1.0% (0.6% OF TOTAL INVESTMENTS) 5,900 Mississippi Business Finance Corporation, Pollution Control Revenue 4/09 at 100.00 BBB 4,775,165 Refunding Bonds, System Energy Resources Inc. Project, Series 1998, 5.875%, 4/01/22 920 Mississippi Home Corporation, GNMA Mortgage-Backed Securities 1/09 at 104.00 Aaa 939,265 Program Single Family Mortgage Revenue Bonds, Series 1997D-5, 6.750%, 7/01/29 (Alternative Minimum Tax) ------------------------------------------------------------------------------------------------------------------------------------ 6,820 Total Mississippi 5,714,430 ------------------------------------------------------------------------------------------------------------------------------------ MISSOURI - 0.7% (0.4% OF TOTAL INVESTMENTS) Kansas City Municipal Assistance Corporation, Missouri, Leasehold Revenue Bonds, Series 2004B-1: 8,000 0.000%, 4/15/27 - AMBAC Insured No Opt. Call AA 2,677,280 5,000 0.000%, 4/15/31 - AMBAC Insured No Opt. Call AA 1,294,250 ------------------------------------------------------------------------------------------------------------------------------------ 13,000 Total Missouri 3,971,530 ------------------------------------------------------------------------------------------------------------------------------------ NEBRASKA - 1.7% (1.1% OF TOTAL INVESTMENTS) 11,690 Omaha Convention Hotel Corporation, Nebraska, Convention Center 2/17 at 100.00 AA 9,685,165 Revenue Bonds, Series 2007, 5.000%, 2/01/35 - AMBAC Insured ------------------------------------------------------------------------------------------------------------------------------------ NEVADA - 3.6% (2.2% OF TOTAL INVESTMENTS) Director of Nevada State Department of Business and Industry, Revenue Bonds, Las Vegas Monorail Project, First Tier, Series 2000: 6,125 0.000%, 1/01/17 - AMBAC Insured No Opt. Call AA 2,704,371 8,500 0.000%, 1/01/26 - AMBAC Insured No Opt. Call AA 1,502,205 7,860 0.000%, 1/01/27 - AMBAC Insured No Opt. Call AA 1,255,714 21,000 5.375%, 1/01/40 - AMBAC Insured 1/10 at 100.00 AA 12,623,940 2,135 Reno, Nevada, Capital Improvement Revenue Bonds, Series 2005B, 6/15 at 33.61 AA 301,227 0.000%, 6/01/37 - FGIC Insured 2,500 Reno, Nevada, Health Facility Revenue Bonds, Catholic Healthcare West, 7/17 at 100.00 A 1,918,700 Trust 2634, 0.777%, 7/01/31 (IF) ------------------------------------------------------------------------------------------------------------------------------------ 48,120 Total Nevada 20,306,157 ------------------------------------------------------------------------------------------------------------------------------------ NEW JERSEY - 7.3% (4.4% OF TOTAL INVESTMENTS) 18,400 New Jersey Health Care Facilities Financing Authority, Revenue Bonds, 1/17 at 35.47 Baa2 1,682,496 Saint Barnabas Health Care System, Series 2006A, 0.000%, 7/01/37 18,000 New Jersey Transportation Trust Fund Authority, Transportation System 6/10 at 100.00 AAA 18,989,820 Bonds, Series 2000B, 5.750%, 6/15/17 (Pre-refunded 6/15/10) 35,000 New Jersey Transportation Trust Fund Authority, Transportation System No Opt. Call AAA 7,280,350 Bonds, Series 2006C, 0.000%, 12/15/34 - FSA Insured 5,000 New Jersey Turnpike Authority, Revenue Bonds, Growth and Income 1/17 at 100.00 AA 3,053,500 Securities, Series 2004B, 0.000%, 1/01/35 - AMBAC Insured 3,000 Rahway Valley Sewerage Authority, New Jersey, Sewer Revenue Bonds, No Opt. Call A1 1,070,550 Series 2005A, 0.000%, 9/01/25 - MBIA Insured 3,525 Tobacco Settlement Financing Corporation, New Jersey, Tobacco 6/12 at 100.00 AAA 3,878,240 Settlement Asset-Backed Bonds, Series 2002, 6.125%, 6/01/42 (Pre-refunded 6/01/12) 53 NMO Nuveen Municipal Market Opportunity Fund, Inc. (continued) Portfolio of INVESTMENTS October 31, 2008 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ NEW JERSEY (continued) $ 2,100 Tobacco Settlement Financing Corporation, New Jersey, Tobacco 6/13 at 100.00 AAA $ 2,296,308 Settlement Asset-Backed Bonds, Series 2003, 6.375%, 6/01/32 (Pre-refunded 6/01/13) 4,000 Tobacco Settlement Financing Corporation, New Jersey, Tobacco 6/17 at 100.00 BBB 2,161,600 Settlement Asset-Backed Bonds, Series 2007-1A, 5.000%, 6/01/41 ------------------------------------------------------------------------------------------------------------------------------------ 89,025 Total New Jersey 40,412,864 ------------------------------------------------------------------------------------------------------------------------------------ NEW MEXICO - 2.0% (1.2% OF TOTAL INVESTMENTS) 5,925 New Mexico Hospital Equipment Loan Council, Hospital Revenue Bonds, 8/11 at 101.00 AA- (4) 6,315,280 Presbyterian Healthcare Services, Series 2001A, 5.500%, 8/01/21 (Pre-refunded 8/01/11) 4,675 University of New Mexico, Revenue Refunding Bonds, Series 1992A, 6.250%, 6/01/12 No Opt. Call AA 4,927,123 ------------------------------------------------------------------------------------------------------------------------------------ 10,600 Total New Mexico 11,242,403 ------------------------------------------------------------------------------------------------------------------------------------ NEW YORK - 10.5% (6.4% OF TOTAL INVESTMENTS) 3,000 Long Island Power Authority, New York, Electric System General Revenue 6/16 at 100.00 A- 2,689,050 Bonds, Series 2006B, 5.000%, 12/01/35 6,750 Nassau County Tobacco Settlement Corporation, New York, Tobacco 7/09 at 101.00 AAA 7,049,835 Settlement Asset-Backed Bonds, Series 1999A, 6.400%, 7/15/33 (Pre-refunded 7/15/09) 17,870 New York City Transitional Finance Authority, New York, Future Tax 8/09 at 101.00 AAA 18,622,148 Secured Bonds, Fiscal Series 2000A, 5.750%, 8/15/24 (Pre-refunded 8/15/09) 5 New York City, New York, General Obligation Bonds, Fiscal Series 1997H, 8/09 at 100.00 AA 5,038 6.125%, 8/01/25 New York City, New York, General Obligation Bonds, Fiscal Series 2002G: 1,000 5.000%, 8/01/17 8/12 at 100.00 AA 1,006,000 6,530 5.750%, 8/01/18 8/12 at 100.00 AAA 6,808,962 5,000 New York City, New York, General Obligation Bonds, Fiscal Series 2003A, 8/12 at 100.00 AA 5,301,900 5.750%, 8/01/16 10,000 Port Authority of New York and New Jersey, Special Project Bonds, JFK 12/08 at 101.00 AA 8,891,200 International Air Terminal LLC, Sixth Series 1997, 5.750%, 12/01/22 - MBIA Insured (Alternative Minimum Tax) 8,000 TSASC Inc., New York, Tobacco Flexible Amortization Bonds, Series 7/09 at 101.00 AAA 8,346,960 1999-1, 6.250%, 7/15/34 (Mandatory put 7/15/24) (Pre-refunded 7/15/09) ------------------------------------------------------------------------------------------------------------------------------------ 58,155 Total New York 58,721,093 ------------------------------------------------------------------------------------------------------------------------------------ NORTH CAROLINA - 2.2% (1.4% OF TOTAL INVESTMENTS) 1,900 Charlotte-Mecklenburg Hospital Authority, North Carolina, Healthcare 1/15 at 100.00 AA- (4) 2,028,459 System Revenue Bonds, DBA Carolinas Healthcare System, Series 2005A, 5.000%, 1/15/45 (Pre-refunded 1/15/15) 4,000 North Carolina Medical Care Commission, Health System Revenue 10/17 at 100.00 AA 3,050,440 Bonds, Mission St. Joseph's Health System, Series 2007, 4.500%, 10/01/31 (UB) 7,500 North Carolina Municipal Power Agency 1, Catawba Electric Revenue 1/13 at 100.00 AA 7,360,575 Bonds, Series 2003A, 5.250%, 1/01/19 - MBIA Insured ------------------------------------------------------------------------------------------------------------------------------------ 13,400 Total North Carolina 12,439,474 ------------------------------------------------------------------------------------------------------------------------------------ NORTH DAKOTA - 4.9% (3.0% OF TOTAL INVESTMENTS) 23,035 Fargo, North Dakota, Health System Revenue Bonds, MeritCare Obligated 6/10 at 101.00 AAA 22,165,428 Group, Series 2000A, 5.625%, 6/01/31 - FSA Insured North Dakota Water Commission, Water Development and Management Program Bonds, Series 2000A: 2,230 5.700%, 8/01/18 (Pre-refunded 8/01/10) - MBIA Insured 8/10 at 100.00 AA (4) 2,358,760 2,450 5.750%, 8/01/19 (Pre-refunded 8/01/10) - MBIA Insured 8/10 at 100.00 AA (4) 2,593,546 ------------------------------------------------------------------------------------------------------------------------------------ 27,715 Total North Dakota 27,117,734 ------------------------------------------------------------------------------------------------------------------------------------ 54 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ OHIO - 5.9% (3.6% OF TOTAL INVESTMENTS) Buckeye Tobacco Settlement Financing Authority, Ohio, Tobacco Settlement Asset-Backed Revenue Bonds, Senior Lien, Series 2007A-2: $ 120 5.125%, 6/01/24 6/17 at 100.00 BBB $ 94,056 1,250 5.875%, 6/01/30 6/17 at 100.00 BBB 876,263 1,215 5.750%, 6/01/34 6/17 at 100.00 BBB 809,190 4,300 6.000%, 6/01/42 6/17 at 100.00 BBB 2,800,418 4,750 5.875%, 6/01/47 6/17 at 100.00 BBB 2,971,648 10,000 Columbus City School District, Franklin County, Ohio, General Obligation 12/16 at 100.00 AAA 8,037,100 Bonds, Series 2006, 4.250%, 12/01/32 - FSA Insured (UB) 16,140 Montgomery County, Ohio, Hospital Facilities Revenue Bonds, Kettering No Opt. Call A 17,203,465 Medical Center, Series 1999, 6.300%, 4/01/12 ------------------------------------------------------------------------------------------------------------------------------------ 37,775 Total Ohio 32,792,140 ------------------------------------------------------------------------------------------------------------------------------------ OKLAHOMA - 0.3% (0.2% OF TOTAL INVESTMENTS) 1,675 Oklahoma Development Finance Authority, Health System Revenue 8/18 at 100.00 AA- 1,435,676 Bonds, Integris Baptist Medical Center, Series 2008B, 5.250%, 8/15/38 300 Tulsa Municipal Airport Trust, Oklahoma, Revenue Refunding Bonds, 6/09 at 100.00 B- 297,357 American Airlines Inc., Series 2000B, 6.000%, 6/01/35 (Mandatory put 12/01/08) (Alternative Minimum Tax) ------------------------------------------------------------------------------------------------------------------------------------ 1,975 Total Oklahoma 1,733,033 ------------------------------------------------------------------------------------------------------------------------------------ OREGON - 2.9% (1.7% OF TOTAL INVESTMENTS) 5,000 Oregon Health Sciences University, Revenue Bonds, Series 2002A, 1/13 at 100.00 AA 4,756,100 5.250%, 7/01/22 - MBIA Insured Portland, Oregon, Water System Revenue Bonds, Series 2000A: 6,780 5.375%, 8/01/18 (Pre-refunded 8/01/10) 8/10 at 100.00 Aa1 (4) 7,133,916 3,880 5.500%, 8/01/20 (Pre-refunded 8/01/10) 8/10 at 100.00 Aa1 (4) 4,090,800 ------------------------------------------------------------------------------------------------------------------------------------ 15,660 Total Oregon 15,980,816 ------------------------------------------------------------------------------------------------------------------------------------ PENNSYLVANIA - 3.2% (1.9% OF TOTAL INVESTMENTS) 5,000 Delaware County Industrial Development Authority, Pennsylvania, 1/09 at 101.00 BB+ 4,345,400 Resource Recovery Revenue Refunding Bonds, Series 1997A, 6.200%, 7/01/19 5,000 Pennsylvania Higher Education Assistance Agency, Capital Acquisition 12/10 at 100.00 A2 (4) 5,356,600 Revenue Bonds, Series 2000, 5.875%, 12/15/30 (Pre-refunded 12/15/10) - MBIA Insured 7,550 Pennsylvania, General Obligation Bonds, Second Series 2001, 5.000%, 9/11 at 101.00 AA 7,888,014 9/15/14 ------------------------------------------------------------------------------------------------------------------------------------ 17,550 Total Pennsylvania 17,590,014 ------------------------------------------------------------------------------------------------------------------------------------ PUERTO RICO - 3.7% (2.2% OF TOTAL INVESTMENTS) 3,330 Puerto Rico Aqueduct and Sewerage Authority, Revenue Bonds, Senior 7/18 at 100.00 BBB- 2,980,850 Lien Series 2008A, 6.000%, 7/01/44 12,500 Puerto Rico Housing Finance Authority, Capital Fund Program Revenue 12/13 at 100.00 AA+ 12,251,137 Bonds, Series 2003, 4.500%, 12/01/23 (UB) 6,990 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 5/12 at 100.00 BBB 5,271,509 Asset-Backed Refunding Bonds, Series 2002, 5.375%, 5/15/33 ------------------------------------------------------------------------------------------------------------------------------------ 22,820 Total Puerto Rico 20,503,496 ------------------------------------------------------------------------------------------------------------------------------------ RHODE ISLAND - 0.4% (0.2% OF TOTAL INVESTMENTS) 2,960 Rhode Island Tobacco Settlement Financing Corporation, Tobacco 6/12 at 100.00 BBB 2,161,658 Settlement Asset-Backed Bonds, Series 2002A, 6.250%, 6/01/42 ------------------------------------------------------------------------------------------------------------------------------------ SOUTH CAROLINA - 8.7% (5.3% OF TOTAL INVESTMENTS) 24,730 Greenville County School District, South Carolina, Installment Purchase 12/12 at 101.00 AA (4) 27,219,321 Revenue Bonds, Series 2002, 5.500%, 12/01/22 (Pre-refunded 12/01/12) 21,570 Piedmont Municipal Power Agency, South Carolina, Electric Revenue No Opt. Call AA 5,357,125 Bonds, Series 2004A-2, 0.000%, 1/01/30 - AMBAC Insured 55 NMO Nuveen Municipal Market Opportunity Fund, Inc. (continued) Portfolio of INVESTMENTS October 31, 2008 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ SOUTH CAROLINA (continued) $ 3,560 South Carolina Public Service Authority, Revenue Refunding Bonds, 7/13 at 100.00 AA $ 3,562,706 Santee Cooper Electric System, Series 2003A, 5.000%, 1/01/20 - AMBAC Insured 11,665 Tobacco Settlement Revenue Management Authority, South Carolina, 5/16 at 100.00 BBB (4) 12,500,331 Tobacco Settlement Asset-Backed Bonds, Series 2001B, 6.375%, 5/15/28 (Pre-refunded 5/15/16) ------------------------------------------------------------------------------------------------------------------------------------ 61,525 Total South Carolina 48,639,483 ------------------------------------------------------------------------------------------------------------------------------------ TENNESSEE - 0.7% (0.4% OF TOTAL INVESTMENTS) 5,000 Knox County Health, Educational and Housing Facilities Board, 7/13 at 100.00 A3 3,779,950 Tennessee, Hospital Revenue Bonds, East Tennessee Children's Hospital, Series 2003A, 5.000%, 7/01/23 - RAAI Insured ------------------------------------------------------------------------------------------------------------------------------------ TEXAS - 22.8% (13.8% OF TOTAL INVESTMENTS) 2,500 Alliance Airport Authority, Texas, Special Facilities Revenue Bonds, 12/12 at 100.00 CCC+ 853,000 American Airlines Inc., Series 2007, 5.250%, 12/01/29 (Alternative Minimum Tax) 12,250 Austin, Texas, Subordinate Lien Hotel Occupancy Tax Revenue Refunding 11/09 at 100.00 AA (4) 12,748,698 Bonds, Series 1999, 5.800%, 11/15/29 (Pre-refunded 11/15/09) - AMBAC Insured 11,255 Brazos River Authority, Texas, Pollution Control Revenue Refunding No Opt. Call Caa1 9,777,781 Bonds, TXU Electric Company, Series 2001C, 5.750%, 5/01/36 (Mandatory put 11/01/11) (Alternative Minimum Tax) Brownsville Independent School District, Cameron County, Texas, General Obligation Bonds, Series 1999: 5,015 5.625%, 8/15/25 (Pre-refunded 8/15/09) 8/09 at 100.00 AAA 5,170,465 8,825 5.625%, 8/15/29 (Pre-refunded 8/15/09) 8/09 at 100.00 AAA 9,098,575 1,000 Cedar Hill Independent School District, Dallas County, Texas, General No Opt. Call AA 213,370 Obligation Bonds, Series 2002, 0.000%, 8/15/32 - FGIC Insured 15,000 Central Texas Regional Mobility Authority, Travis and Williamson Counties, 1/15 at 100.00 AA 11,302,050 Toll Road Revenue Bonds, Series 2005, 5.000%, 1/01/45 - FGIC Insured Clear Creek Independent School District, Galveston and Harris Counties, Texas, Unlimited Tax Schoolhouse and Refunding Bonds, Series 2000: 585 5.400%, 2/15/18 2/10 at 100.00 AAA 591,938 340 5.650%, 2/15/19 2/10 at 100.00 AAA 344,413 235 5.700%, 2/15/20 2/10 at 100.00 AAA 237,818 270 5.700%, 2/15/21 2/10 at 100.00 AAA 272,927 Clear Creek Independent School District, Galveston and Harris Counties, Texas, Unlimited Tax Schoolhouse and Refunding Bonds, Series 2000: 16,740 5.400%, 2/15/18 (Pre-refunded 2/15/10) 2/10 at 100.00 AAA 17,414,287 9,660 5.650%, 2/15/19 (Pre-refunded 2/15/10) 2/10 at 100.00 AAA 10,079,630 6,645 5.700%, 2/15/20 (Pre-refunded 2/15/10) 2/10 at 100.00 AAA 6,937,845 7,750 5.700%, 2/15/21 (Pre-refunded 2/15/10) 2/10 at 100.00 AAA 8,091,543 2,500 Comal Independent School District, Comal, Bexar, Guadalupe, Hays, and No Opt. Call Aaa 1,133,250 Kendall Counties, Texas, General Obligation Bonds, Series 2005A, 0.000%, 2/01/23 6,000 Dallas-Ft. Worth International Airport Facility Improvement Corporation, 11/09 at 101.00 CCC+ 2,407,980 Texas, Revenue Bonds, American Airlines Inc., Series 1999, 6.375%, 5/01/35 (Alternative Minimum Tax) Ennis Independent School District, Ellis County, Texas, General Obligation Bonds, Series 2006: 3,950 0.000%, 8/15/30 8/16 at 49.21 Aaa 1,022,655 4,000 0.000%, 8/15/31 8/16 at 46.64 Aaa 967,520 1,440 Houston, Texas, Hotel Occupancy Tax and Special Revenue Bonds, No Opt. Call AA 317,894 Convention and Entertainment Project, Series 2001B, 0.000%, 9/01/32 - AMBAC Insured 1,250 Houston, Texas, Junior Lien Water and Sewerage System Revenue 12/11 at 100.00 AAA 1,254,900 Refunding Bonds, Series 2001A, 5.000%, 12/01/20 - FSA Insured 9,350 Leander Independent School District, Williamson and Travis Counties, 8/15 at 39.50 AA 1,995,010 Texas, General Obligation Bonds, Series 2005, 0.000%, 8/15/32 - FGIC Insured 56 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ TEXAS (continued) $ 6,000 Leander Independent School District, Williamson and Travis Counties, 8/14 at 35.28 AAA $ 1,267,860 Texas, General Obligation Bonds, Series 2006, 0.000%, 8/15/33 15,000 San Antonio Independent School District, Bexar County, Texas, General 8/09 at 100.00 AAA 15,489,150 Obligation Bonds, Series 1999, 5.800%, 8/15/29 (Pre-refunded 8/15/09) 3,295 Tarrant County, Texas, Cultural & Educational Facilities Financing 2/17 at 100.00 AA- 826,386 Corporation, Revenue Bonds, Series 2007, Residuals 1760-3, 0.726%, 2/15/36 (IF) 5,000 White Settlement Independent School District, Tarrant County, Texas, 8/15 at 36.81 AAA 989,850 General Obligation Bonds, Series 2005, 0.000%, 8/15/34 3,970 Wichita Falls, Wichita County, Texas, Priority Lien Water and Sewerage 8/11 at 100.00 AA (4) 4,203,555 System Revenue Bonds, Series 2001, 5.000%, 8/01/21 (Pre-refunded 8/01/11) - AMBAC Insured Wylie Independent School District, Taylor County, Texas, General Obligation Bonds, Series 2005: 3,000 0.000%, 8/15/23 8/15 at 67.10 AAA 1,265,940 2,000 0.000%, 8/15/24 8/15 at 63.56 AAA 799,800 ------------------------------------------------------------------------------------------------------------------------------------ 164,825 Total Texas 127,076,090 ------------------------------------------------------------------------------------------------------------------------------------ WASHINGTON - 17.7% (10.7% OF TOTAL INVESTMENTS) 5,500 Clark County Public Utility District 1, Washington, Generating System 1/11 at 100.00 AAA 5,515,950 Revenue Refunding Bonds, Series 2000, 5.125%, 1/01/20 - FSA Insured 2,755 Cowlitz County, Washington, Special Sewerage Revenue Refunding No Opt. Call A- 2,833,214 Bonds, CSOB Wastewater Treatment Facilities, Series 2002, 5.500%, 11/01/16 - FGIC Insured 10,000 Energy Northwest, Washington, Electric Revenue Refunding Bonds, 7/11 at 101.00 AAA 10,453,600 Nuclear Project 3, Series 2001A, 5.500%, 7/01/17 - FSA Insured 2,500 King County, Washington, Sewer Revenue Bonds, Series 2001, 5.000%, 1/12 at 100.00 AA+ 2,474,825 1/01/23 - FGIC Insured 33,490 Port of Seattle, Washington, Revenue Bonds, Series 2000A, 5.625%, 8/10 at 100.00 AA (4) 35,380,844 2/01/30 (Pre-refunded 8/01/10) - MBIA Insured 6,950 Port of Seattle, Washington, Revenue Bonds, Series 2000B, 5.625%, 8/10 at 100.00 AA 6,181,400 2/01/24 - MBIA Insured (Alternative Minimum Tax) 2,150 Seattle, Washington, General Obligation Refunding and Improvement 12/12 at 100.00 AAA 2,054,798 Bonds, Series 2002, 4.500%, 12/01/20 3,000 Spokane County School District 81, Spokane, Washington, General 6/15 at 100.00 AA 2,805,060 Obligation Bonds, Series 2005, 5.000%, 6/01/24 - MBIA Insured 3,520 Washington State Healthcare Facilities Authority, Revenue Bonds, 10/11 at 100.00 Aa3 (4) 3,732,819 Children's Hospital and Regional Medical Center, Series 2001, 5.000%, 10/01/21 (Pre-refunded 10/01/11) - AMBAC Insured 7,890 Washington State Higher Education Facilities Authority, Revenue Bonds, 11/09 at 101.00 BBB+ (4) 8,301,542 Pacific Lutheran University, Series 1999, 5.950%, 11/01/29 (Pre-refunded 11/01/09) - RAAI Insured 11,130 Washington State Tobacco Settlement Authority, Tobacco Settlement 6/13 at 100.00 BBB 9,902,806 Asset-Backed Revenue Bonds, Series 2002, 6.500%, 6/01/26 9,000 Washington, Motor Vehicle Fuel Tax General Obligation Bonds, Series 1/12 at 100.00 AAA 9,025,470 2002C, 5.000%, 1/01/21 - FSA Insured ------------------------------------------------------------------------------------------------------------------------------------ 97,885 Total Washington 98,662,328 ------------------------------------------------------------------------------------------------------------------------------------ WISCONSIN - 1.0% (0.6% OF TOTAL INVESTMENTS) 3,630 Badger Tobacco Asset Securitization Corporation, Wisconsin, Tobacco 6/12 at 100.00 BBB 3,458,228 Settlement Asset-Backed Bonds, Series 2002, 6.125%, 6/01/27 1,755 Wisconsin Health and Educational Facilities Authority, Revenue Bonds, 5/16 at 100.00 BBB 1,317,373 Divine Savior Healthcare, Series 2006, 4.750%, 5/01/25 57 NMO Nuveen Municipal Market Opportunity Fund, Inc. (continued) Portfolio of INVESTMENTS October 31, 2008 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ WISCONSIN (continued) $ 1,250 Wisconsin Health and Educational Facilities Authority, Revenue Bonds, 3/09 at 100.50 N/R $ 886,713 United Lutheran Program for the Aging Inc., Series 1998, 5.700%, 3/01/28 ------------------------------------------------------------------------------------------------------------------------------------ 6,635 Total Wisconsin 5,662,314 $ 1,265,500 Total Investments (cost $982,534,401) - 165.0% 919,639,931 =============----------------------------------------------------------------------------------------------------------------------- Floating Rate Obligations - (2.9)% (16,275,000) -------------------------------------------------------------------------------------------------------------------- Other Assets Less Liabilities - 2.8% 15,655,682 -------------------------------------------------------------------------------------------------------------------- Auction Rate Preferred Shares, at Liquidation Value - (64.9)% (5) (361,675,000) -------------------------------------------------------------------------------------------------------------------- Net Assets Applicable to Common Shares - 100% $ 557,345,613 ====================================================================================================================
(1) All percentages shown in the Portfolio of Investments are based on net assets applicable to Common shares unless otherwise noted. (2) Optional Call Provisions (not covered by the report of independent registered public accounting firm): Dates (month and year) and prices of the earliest optional call or redemption. There may be other call provisions at varying prices at later dates. Certain mortgage-backed securities may be subject to periodic principal paydowns. (3) Ratings (not covered by the report of independent registered public accounting firm): Using the higher of Standard & Poor's Group ("Standard & Poor's") or Moody's Investor Service, Inc. ("Moody's") rating. Ratings below BBB by Standard & Poor's or Baa by Moody's are considered to be below investment grade. The Portfolio of Investments may reflect the ratings on certain bonds insured by ACA, AGC, AMBAC, FGIC, FSA, MBIA, RAAI and SYNCORA as of October 31, 2008. Please see the Portfolio Managers' Commentary for an expanded discussion of the affect on the Fund of changes to the ratings of certain bonds in the portfolio resulting from changes to the ratings of the underlying insurers both during the period and after period end. (4) Backed by an escrow or trust containing sufficient U.S. Government or U.S. Government agency securities which ensure the timely payment of principal and interest. Such investments are normally considered to be equivalent to AAA rated securities. (5) Auction Rate Preferred Shares, at Liquidation Value as a percentage of Total Investments is 39.3%. N/R Not rated. (ETM) Escrowed to maturity. (IF) Inverse floating rate investment. (UB) Underlying bond of an inverse floating rate trust reflected as a financing transaction pursuant to the provisions of SFAS No. 140. See accompanying notes to financial statements. 58 NAD Nuveen Dividend Advantage Municipal Fund Portfolio of INVESTMENTS October 31, 2008
PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ MUNICIPAL BONDS - 160.6% (97.4% OF TOTAL INVESTMENTS) ALABAMA - 0.3% (0.2% OF TOTAL INVESTMENTS) $ 1,500 Alabama 21st Century Authority, Tobacco Settlement Revenue Bonds, 6/10 at 102.00 A- $ 1,295,805 Series 2000, 5.750%, 12/01/20 ------------------------------------------------------------------------------------------------------------------------------------ ALASKA - 0.2% (0.1% OF TOTAL INVESTMENTS) 750 Alaska Housing Finance Corporation, General Housing Purpose Bonds, 12/14 at 100.00 AA 698,655 Series 2005A, 5.250%, 12/01/34 - FGIC Insured ------------------------------------------------------------------------------------------------------------------------------------ ARIZONA - 1.1% (0.7% OF TOTAL INVESTMENTS) 2,350 Phoenix, Arizona, Civic Improvement Corporation, Senior Lien Airport 7/18 at 100.00 AA- 2,142,049 Revenue Bonds, Series 2008A, 5.000%, 7/01/33 5,000 Salt Verde Financial Corporation, Arizona, Senior Gas Revenue Bonds, No Opt. Call AA- 3,027,350 Series 2007, 5.000%, 12/01/37 ------------------------------------------------------------------------------------------------------------------------------------ 7,350 Total Arizona 5,169,399 ------------------------------------------------------------------------------------------------------------------------------------ CALIFORNIA - 5.2% (3.1% OF TOTAL INVESTMENTS) 1,535 Alameda Corridor Transportation Authority, California, Senior Lien No Opt. Call AA 246,352 Revenue Bonds, Series 1999A, 0.000%, 10/01/37 - MBIA Insured 5,500 Anaheim Public Finance Authority, California, Subordinate Lease Revenue No Opt. Call AAA 1,552,595 Bonds, Public Improvement Project, Series 1997C, 0.000%, 9/01/28 - FSA Insured 65 California, General Obligation Bonds, Series 1997, 5.000%, 10/01/18 - 12/08 at 100.00 Aaa 65,005 AMBAC Insured 5,000 California, General Obligation Bonds, Series 2005, 5.000%, 3/01/31 3/16 at 100.00 A+ 4,543,000 Golden State Tobacco Securitization Corporation, California, Enhanced Tobacco Settlement Asset-Backed Bonds, Series 2007A-1: 5,200 5.000%, 6/01/33 6/17 at 100.00 BBB 3,242,512 1,000 5.125%, 6/01/47 6/17 at 100.00 BBB 590,500 Golden State Tobacco Securitization Corporation, California, Tobacco Settlement Asset-Backed Revenue Bonds, Series 2005A: 3,500 0.000%, 6/01/26 - FSA Insured No Opt. Call AAA 1,143,555 9,925 5.000%, 6/01/45 6/15 at 100.00 AAA 8,148,425 1,495 Palmdale Civic Authority, California, Revenue Refinancing Bonds, Civic 1/09 at 101.00 AA 1,512,088 Center Project, Series 1997A, 5.375%, 7/01/12 - MBIA Insured 17,000 San Joaquin Hills Transportation Corridor Agency, Orange County, No Opt. Call AA 2,866,200 California, Toll Road Revenue Refunding Bonds, Series 1997A, 0.000%, 1/15/35 - MBIA Insured ------------------------------------------------------------------------------------------------------------------------------------ 50,220 Total California 23,910,232 ------------------------------------------------------------------------------------------------------------------------------------ COLORADO - 5.6% (3.4% OF TOTAL INVESTMENTS) 1,125 Antelope Heights Metropolitan District, Colorado, Limited Tax General 12/17 at 100.00 A3 779,130 Obligation Bonds, Series 2007, 5.000%, 12/01/37 - RAAI Insured Denver City and County, Colorado, Airport Special Facilities Revenue Bonds, Rental Car Projects, Series 1999A: 3,205 6.000%, 1/01/12 - MBIA Insured (Alternative Minimum Tax) 1/09 at 101.00 AA 3,240,896 1,000 6.000%, 1/01/13 - MBIA Insured (Alternative Minimum Tax) 1/09 at 101.00 AA 1,010,760 1,475 Denver, Colorado, FHA-Insured Multifamily Housing Revenue Bonds, 4/09 at 101.00 AA 1,312,868 Boston Lofts Project, Series 1997A, 5.750%, 10/01/27 (Alternative Minimum Tax) 59 NAD Nuveen Dividend Advantage Municipal Fund (continued) Portfolio of INVESTMENTS October 31, 2008 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ COLORADO (continued) $ 8,515 E-470 Public Highway Authority, Colorado, Senior Revenue Bonds, Series No Opt. Call AA $ 2,735,784 1997B, 0.000%, 9/01/25 - MBIA Insured 25,000 E-470 Public Highway Authority, Colorado, Senior Revenue Bonds, Series No Opt. Call AA 5,060,250 2000B, 0.000%, 9/01/31 - MBIA Insured 60,000 E-470 Public Highway Authority, Colorado, Toll Revenue Bonds, Series No Opt. Call AA 8,679,000 2004A, 0.000%, 3/01/36 - MBIA Insured 12,500 E-470 Public Highway Authority, Colorado, Toll Revenue Bonds, Series 9/26 at 54.77 AA 1,481,875 2006A, 0.000%, 9/01/38 - MBIA Insured 2,000 Metropolitan Football Stadium District, Colorado, Sales Tax Revenue No Opt. Call AA 1,751,160 Bonds, Series 1999A, 0.000%, 1/01/12 - MBIA Insured ------------------------------------------------------------------------------------------------------------------------------------ 114,820 Total Colorado 26,051,723 ------------------------------------------------------------------------------------------------------------------------------------ CONNECTICUT - 0.7% (0.4% OF TOTAL INVESTMENTS) 4,335 Mashantucket Western Pequot Tribe, Connecticut, Subordinate Special 11/17 at 100.00 Baa3 3,037,404 Revenue Bonds, Series 2007A, 5.750%, 9/01/34 ------------------------------------------------------------------------------------------------------------------------------------ FLORIDA - 10.4% (6.3% OF TOTAL INVESTMENTS) 1,570 Florida Housing Finance Agency, Housing Revenue Bonds, Mar Lago 12/08 at 101.00 AA 1,552,055 Village Apartments, Series 1997F, 5.800%, 12/01/17 - AMBAC Insured (Alternative Minimum Tax) 15,000 Florida State Board of Education, Public Education Capital Outlay Bonds, 6/15 at 101.00 AAA 12,219,750 Series 2005E, 4.500%, 6/01/35 (UB) 2,500 Marion County Hospital District, Florida, Revenue Bonds, Munroe 10/17 at 100.00 A2 1,768,325 Regional Medical Center, Series 2007, 5.000%, 10/01/34 13,625 Martin County Industrial Development Authority, Florida, Industrial 12/08 at 100.00 BB+ 12,290,430 Development Revenue Bonds, Indiantown Cogeneration LP, Series 1994A, 7.875%, 12/15/25 (Alternative Minimum Tax) 22,000 South Miami Health Facilities Authority, Florida, Revenue Bonds, Baptist 8/17 at 100.00 AA- 17,702,520 Health Systems of South Florida, Series 2007, 5.000%, 8/15/37 (UB) 4,055 South Miami Health Facilities Authority, Florida, Revenue Bonds, Baptist 8/17 at 100.00 AA- 2,481,214 Health Systems of South Florida, Trust 1025, 7.368%, 8/15/42 (IF) ------------------------------------------------------------------------------------------------------------------------------------ 58,750 Total Florida 48,014,294 ------------------------------------------------------------------------------------------------------------------------------------ GEORGIA - 2.6% (1.6% OF TOTAL INVESTMENTS) 5,000 Cobb County Development Authority, Georgia, Student Housing Revenue 7/17 at 100.00 Aa3 4,227,750 Bonds, KSU Village II Real Estate Foundation LLC Project, Series 2007A, 5.250%, 7/15/38 - AMBAC Insured 4,000 Forsyth County Water and Sewerage Authority, Georgia, Revenue Bonds, 4/10 at 101.00 AA+ (4) 4,247,520 Series 2000, 6.000%, 4/01/25 (Pre-refunded 4/01/10) Gainesville and Hall County Hospital Authority, Georgia, Revenue Anticipation Certificates, Northeast Georgia Health Services Inc., Series 1999: 2,620 5.500%, 5/15/29 (Pre-refunded 5/15/09) - MBIA Insured 5/09 at 101.00 AA (4) 2,700,198 880 5.500%, 5/15/29 (Pre-refunded 5/15/09) - MBIA Insured 5/09 at 101.00 AA (4) 906,259 ------------------------------------------------------------------------------------------------------------------------------------ 12,500 Total Georgia 12,081,727 ------------------------------------------------------------------------------------------------------------------------------------ IDAHO - 0.2% (0.1% OF TOTAL INVESTMENTS) 120 Idaho Housing and Finance Association, Single Family Mortgage Bonds, 7/09 at 101.00 Aa2 119,316 Series 1999E, 5.750%, 1/01/21 (Alternative Minimum Tax) 175 Idaho Housing and Finance Association, Single Family Mortgage Bonds, 1/10 at 100.00 Aa2 176,589 Series 2000D, 6.350%, 7/01/22 (Alternative Minimum Tax) 260 Idaho Housing and Finance Association, Single Family Mortgage Bonds, 7/10 at 100.00 Aaa 260,065 Series 2000E, 5.950%, 7/01/20 (Alternative Minimum Tax) ------------------------------------------------------------------------------------------------------------------------------------ 555 Total Idaho 555,970 ------------------------------------------------------------------------------------------------------------------------------------ 60 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ ILLINOIS - 33.3% (20.2% OF TOTAL INVESTMENTS) $ 2,460 Channahon, Illinois, Revenue Refunding Bonds, Morris Hospital, Series 12/09 at 102.00 BBB+ $ 2,478,622 1999, 5.750%, 12/01/12 2,205 Chicago Board of Education, Illinois, Unlimited Tax General Obligation No Opt. Call Aaa 633,761 Bonds, Dedicated Tax Revenues, Series 1998B-1, 0.000%, 12/01/29 - FGIC Insured 7,250 Chicago Board of Education, Illinois, Unlimited Tax General Obligation No Opt. Call AA 7,290,963 Bonds, Dedicated Tax Revenues, Series 1999A, 5.500%, 12/01/26 - FGIC Insured Chicago, Illinois, FHA/GNMA Multifamily Housing Revenue Bonds, Archer Court Apartments, Series 1999A: 750 5.500%, 12/20/19 (Alternative Minimum Tax) 10/10 at 101.00 AA 704,258 1,210 5.600%, 12/20/29 (Alternative Minimum Tax) 10/10 at 101.00 AA 1,031,501 1,925 5.650%, 12/20/40 (Alternative Minimum Tax) 10/10 at 101.00 AA 1,553,071 22,750 Chicago, Illinois, General Obligation Refunding Bonds, Emergency No Opt. Call AA 23,265,969 Telephone System, Series 1999, 5.500%, 1/01/23 - FGIC Insured 2,620 Chicago, Illinois, Motor Fuel Tax Revenue Refunding Bonds, Series 1993, No Opt. Call AA+ 2,776,466 5.375%, 1/01/14 - AMBAC Insured 3,340 Chicago, Illinois, Third Lien General Airport Revenue Bonds, O'Hare 1/16 at 100.00 A1 2,882,186 International Airport, Series 2005A, 5.000%, 1/01/33 - FGIC Insured 190 DuPage County Community School District 200, Wheaton, Illinois, 11/13 at 100.00 Aaa 193,002 General Obligation Bonds, Series 2003B, 5.250%, 11/01/20 - FSA Insured 810 DuPage County Community School District 200, Wheaton, Illinois, 11/13 at 100.00 Aaa 884,010 General Obligation Bonds, Series 2003B, 5.250%, 11/01/20 (Pre-refunded 11/01/13) - FSA Insured 500 Hoffman Estates Park District, Cook County, Illinois, General Obligation 12/09 at 102.00 AA 488,575 Bonds, Series 1999, 5.375%, 12/01/29 - MBIA Insured 3,935 Illinois Development Finance Authority, Local Government Program No Opt. Call Baa1 2,874,124 Revenue Bonds, Lake County School District 116 - Round Lake, Series 1999, 0.000%, 1/01/15 - MBIA Insured 2,000 Illinois Finance Authority, Revenue Bonds, Children's Memorial Hospital, 8/18 at 100.00 AAA 1,706,740 Series 2008, 5.250%, 8/15/47 - AGC Insured (UB) 1,000 Illinois Finance Authority, Revenue Bonds, Edward Health Services 2/18 at 100.00 AA 804,190 Corporation, Series 2008A, 5.500%, 2/01/40 - AMBAC Insured 5,570 Illinois Finance Authority, Revenue Bonds, University of Chicago, Series 7/14 at 100.00 Aa1 5,082,124 2004A, 5.000%, 7/01/34 9,840 Illinois Health Facilities Authority, Remarketed Revenue Bonds, University 8/11 at 103.00 Aa1 9,507,211 of Chicago Project, Series 1985A, 5.500%, 8/01/20 5,595 Illinois Health Facilities Authority, Revenue Bonds, Loyola University 1/09 at 100.50 AAA 4,747,973 Health System, Series 1997A, 5.000%, 7/01/24 - MBIA Insured 5,490 Illinois Health Facilities Authority, Revenue Bonds, Sarah Bush Lincoln 2/09 at 100.00 A 5,370,428 Health Center, Series 1996B, 5.500%, 2/15/16 1,500 Illinois Housing Development Authority, Housing Finance Bonds, Series 1/15 at 100.00 A+ 1,176,585 2005E, 4.800%, 1/01/36 - FGIC Insured 2,000 Kane & DeKalb Counties, Illinois, Community United School District 301, No Opt. Call A3 925,180 General Obligation Bonds, Series 2006, 0.000%, 12/01/21 - MBIA Insured 11,345 Lake and McHenry Counties Community Unit School District 118, 1/15 at 60.14 Aaa 4,090,894 Wauconda, Illinois, General Obligation Bonds, Series 2005B, 0.000%, 1/01/25 - FSA Insured 3,000 Lombard Public Facilities Corporation, Illinois, First Tier Conference 1/16 at 100.00 N/R 2,457,360 Center and Hotel Revenue Bonds, Series 2005A-1, 7.125%, 1/01/36 22,500 Metropolitan Pier and Exposition Authority, Illinois, Revenue Bonds, 12/09 at 101.00 AAA 22,722,974 McCormick Place Expansion Project, Series 1999A, 5.500%, 12/15/24 - FGIC Insured Metropolitan Pier and Exposition Authority, Illinois, Revenue Refunding Bonds, McCormick Place Expansion Project, Series 1996A: 12,250 0.000%, 12/15/22 - MBIA Insured No Opt. Call AA 5,584,898 13,000 0.000%, 12/15/23 - MBIA Insured No Opt. Call AA 5,581,420 61 NAD Nuveen Dividend Advantage Municipal Fund (continued) Portfolio of INVESTMENTS October 31, 2008 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ ILLINOIS (continued) $ 1,840 Oak Park, Illinois, General Obligation Bonds, Series 2005B, 0.000%, 11/15 at 54.14 AA- $ 549,792 11/01/27 - SYNCORA GTY Insured Regional Transportation Authority, Cook, DuPage, Kane, Lake, McHenry and Will Counties, Illinois, General Obligation Bonds, Series 1999: 22,650 5.750%, 6/01/19 - FSA Insured No Opt. Call AAA 24,758,486 3,500 5.750%, 6/01/23 - FSA Insured No Opt. Call AAA 3,626,315 1,300 Schaumburg, Illinois, General Obligation Bonds, Series 2004B, 5.250%, 12/14 at 100.00 AA+ 1,227,720 12/01/34 - FGIC Insured 10,000 Will County Community High School District 210 Lincoln-Way, Illinois, No Opt. Call Aaa 4,424,200 General Obligation Bonds, Series 2006, 0.000%, 1/01/23 - FSA Insured 4,500 Will County School District 122, New Lenox, Illinois, General Obligation No Opt. Call Aaa 2,671,740 Bonds, Series 2000B, 0.000%, 11/01/18 - FSA Insured ------------------------------------------------------------------------------------------------------------------------------------ 188,825 Total Illinois 154,072,738 ------------------------------------------------------------------------------------------------------------------------------------ INDIANA - 7.0% (4.3% OF TOTAL INVESTMENTS) 8,755 Indiana Health Facility Financing Authority, Hospital Revenue Bonds, 11/09 at 101.00 AAA 9,123,148 Charity Obligated Group, Series 1999D, 5.500%, 11/15/24 (Pre-refunded 11/15/09) - MBIA Insured 8,000 Indiana Health Facility Financing Authority, Hospital Revenue Bonds, 8/10 at 101.50 AA (4) 8,547,280 Clarian Health Obligated Group, Series 2000A, 5.500%, 2/15/26 (Pre-refunded 8/15/10) - MBIA Insured 2,000 Indiana Health Facility Financing Authority, Revenue Bonds, Community 3/17 at 100.00 BBB 1,472,160 Foundation of Northwest Indiana, Series 2007, 5.500%, 3/01/37 6,830 Indiana Housing and Community Development Authority, Single Family 1/17 at 100.00 Aaa 3,667,055 Mortgage Revenue Bonds, Series 2007A-1, Drivers 1847, 6.603%, 7/01/32 (Alternative Minimum Tax) (IF) 6,675 Indiana Municipal Power Agency, Power Supply Revenue Bonds, Series 1/17 at 100.00 AA 5,453,408 2007A, 5.000%, 1/01/42 - MBIA Insured 4,190 Indianapolis, Indiana, Economic Development Revenue Bonds, Park 6/09 at 101.00 Aa3 (4) 4,330,114 Tudor Foundation Inc., Project, Series 1999, 5.700%, 6/01/24 (Pre-refunded 6/01/09) ------------------------------------------------------------------------------------------------------------------------------------ 36,450 Total Indiana 32,593,165 ------------------------------------------------------------------------------------------------------------------------------------ IOWA - 0.9% (0.5% OF TOTAL INVESTMENTS) 7,000 Iowa Tobacco Settlement Authority, Asset Backed Settlement Revenue 6/15 at 100.00 BBB 4,164,230 Bonds, Series 2005C, 5.625%, 6/01/46 ------------------------------------------------------------------------------------------------------------------------------------ KANSAS - 0.9% (0.5% OF TOTAL INVESTMENTS) 3,825 Wichita, Kansas, Water and Sewerage Utility Revenue Bonds, Series 4/09 at 100.00 AA 3,401,573 1999, 4.000%, 10/01/18 - FGIC Insured 1,000 Wyandotte County-Kansas City Unified Government, Kansas, Sales Tax 12/15 at 100.00 N/R 850,280 Special Obligation Bonds, Redevelopment Project Area B, Series 2005, 5.000%, 12/01/20 ------------------------------------------------------------------------------------------------------------------------------------ 4,825 Total Kansas 4,251,853 ------------------------------------------------------------------------------------------------------------------------------------ KENTUCKY - 1.8% (1.1% OF TOTAL INVESTMENTS) 3,030 Hardin County School District Finance Corporation, Kentucky, School 2/10 at 101.00 Aa3 (4) 3,191,196 Building Revenue Bonds, Series 2000, 5.750%, 2/01/20 (Pre-refunded 2/01/10) Kentucky Economic Development Finance Authority, Hospital System Revenue Refunding and Improvement Bonds, Appalachian Regional Healthcare Inc., Series 1997: 1,850 5.850%, 10/01/17 4/09 at 101.00 BB- 1,478,261 5,000 5.875%, 10/01/22 4/09 at 101.00 BB- 3,702,650 ------------------------------------------------------------------------------------------------------------------------------------ 9,880 Total Kentucky 8,372,107 ------------------------------------------------------------------------------------------------------------------------------------ LOUISIANA - 6.9% (4.2% OF TOTAL INVESTMENTS) 2,245 Lafayette, Louisiana, Sales Tax Revenue Bonds, Public Improvements, 5/10 at 101.50 AA- (4) 2,388,680 Series 2000B, 5.625%, 5/01/25 (Pre-refunded 5/01/10) - FGIC Insured 1,750 Louisiana Local Government Environmental Facilities and Community 6/12 at 105.00 Aaa 1,786,365 Development Authority, GNMA Collateralized Mortgage Revenue Refunding Bonds, Sharlo Apartments, Series 2002A, 6.500%, 6/20/37 62 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ LOUISIANA (continued) $ 5,350 Louisiana Public Facilities Authority, Revenue Bonds, Baton Rouge 7/14 at 100.00 AA $ 4,687,189 General Hospital, Series 2004, 5.250%, 7/01/33 - MBIA Insured 9,000 Louisiana Public Facilities Authority, Revenue Bonds, Ochsner Clinic 5/17 at 100.00 A3 7,012,890 Foundation Project, Series 2007A, 5.500%, 5/15/47 5,445 Louisiana State, Gasoline and Fuels Tax Revenue Bonds, Series 2006, 5/16 at 100.00 AA 4,174,627 4.500%, 5/01/41 - FGIC Insured (UB) 13,570 Louisiana Transportation Authority, Senior Lien Toll Road Revenue Bonds, 12/10 at 38.73 AA 3,640,424 Series 2005B, 0.000%, 12/01/28 - AMBAC Insured 9,545 Tobacco Settlement Financing Corporation, Louisiana, Tobacco 5/11 at 101.00 BBB 8,016,941 Settlement Asset-Backed Bonds, Series 2001B, 5.500%, 5/15/30 ------------------------------------------------------------------------------------------------------------------------------------ 46,905 Total Louisiana 31,707,116 ------------------------------------------------------------------------------------------------------------------------------------ MASSACHUSETTS - 1.8% (1.1% OF TOTAL INVESTMENTS) 1,455 Boston Industrial Development Financing Authority, Massachusetts, 9/12 at 102.00 N/R 1,056,606 Subordinate Revenue Bonds, Crosstown Center Project, Series 2002, 8.000%, 9/01/35 (Alternative Minimum Tax) 4,365 Massachusetts Health and Educational Facilities Authority, Revenue 10/15 at 100.00 AAA 4,223,312 Bonds, Berkshire Health System, Series 2008, 5.000%, 10/01/19 - AGC Insured (UB) 620 Massachusetts Health and Educational Facilities Authority, Revenue 7/18 at 100.00 A3 433,343 Bonds, CareGroup Inc., Series 2008E-1, 5.125%, 7/01/33 785 Massachusetts Port Authority, Special Facilities Revenue Bonds, US 3/09 at 100.00 AA 662,516 Airways Group Inc., Series 1996A, 5.875%, 9/01/23 - MBIA Insured (Alternative Minimum Tax) 2,000 Massachusetts Turnpike Authority, Metropolitan Highway System 1/09 at 100.00 AA 1,970,380 Revenue Bonds, Senior Series 1997A, 5.125%, 1/01/17 - MBIA Insured ------------------------------------------------------------------------------------------------------------------------------------ 9,225 Total Massachusetts 8,346,157 ------------------------------------------------------------------------------------------------------------------------------------ MICHIGAN - 4.1% (2.5% OF TOTAL INVESTMENTS) 6,000 Detroit, Michigan, Second Lien Sewerage Disposal System Revenue 7/15 at 100.00 AA 5,128,440 Bonds, Series 2005A, 5.000%, 7/01/35 - MBIA Insured 15,255 Michigan State Hospital Finance Authority, Hospital Revenue Bonds, 2/09 at 101.00 BB 10,139,541 Detroit Medical Center Obligated Group, Series 1998A, 5.250%, 8/15/28 4,000 Wayne County, Michigan, Airport Revenue Bonds, Detroit Metropolitan 12/08 at 101.00 AA 3,789,280 Wayne County Airport, Series 1998A, 5.375%, 12/01/16 - MBIA Insured (Alternative Minimum Tax) ------------------------------------------------------------------------------------------------------------------------------------ 25,255 Total Michigan 19,057,261 ------------------------------------------------------------------------------------------------------------------------------------ MINNESOTA - 0.2% (0.1% OF TOTAL INVESTMENTS) 810 Minnesota Housing Finance Agency, Single Family Mortgage Bonds, 1/10 at 101.00 AA+ 803,593 Series 1998H-1, 5.650%, 7/01/31 (Alternative Minimum Tax) ------------------------------------------------------------------------------------------------------------------------------------ MISSOURI - 2.6% (1.6% OF TOTAL INVESTMENTS) Kansas City Municipal Assistance Corporation, Missouri, Leasehold Revenue Bonds, Series 2004B-1: 7,000 0.000%, 4/15/27 - AMBAC Insured No Opt. Call AA 2,342,620 5,000 0.000%, 4/15/29 - AMBAC Insured No Opt. Call AA 1,474,400 2,185 Missouri Health and Educational Facilities Authority, Revenue Bonds, 6/11 at 101.00 AA 2,057,374 SSM Healthcare System, Series 2001A, 5.250%, 6/01/21 - AMBAC Insured Missouri Health and Educational Facilities Authority, Revenue Bonds, SSM Healthcare System, Series 2001A: 2,185 5.250%, 6/01/21 (Pre-refunded 6/01/11) - AMBAC Insured 6/11 at 101.00 AA (4) 2,338,256 3,670 5.250%, 6/01/28 (Pre-refunded 6/01/11) - AMBAC Insured 6/11 at 101.00 AA (4) 3,916,000 ------------------------------------------------------------------------------------------------------------------------------------ 20,040 Total Missouri 12,128,650 ------------------------------------------------------------------------------------------------------------------------------------ 63 NAD Nuveen Dividend Advantage Municipal Fund (continued) Portfolio of INVESTMENTS October 31, 2008 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ MONTANA - 0.4% (0.2% OF TOTAL INVESTMENTS) $ 815 Montana Board of Housing, Single Family Mortgage Bonds, Series 12/09 at 100.00 AA+ $ 829,597 2000A-2, 6.450%, 6/01/29 (Alternative Minimum Tax) 1,000 Montana Higher Education Student Assistance Corporation, Student Loan 12/09 at 100.00 A2 922,290 Revenue Bonds, Subordinate Series 1999B, 6.400%, 12/01/32 (Alternative Minimum Tax) ------------------------------------------------------------------------------------------------------------------------------------ 1,815 Total Montana 1,751,887 ------------------------------------------------------------------------------------------------------------------------------------ NEBRASKA - 0.2% (0.1% OF TOTAL INVESTMENTS) 1,000 NebHelp Inc., Nebraska, Senior Subordinate Bonds, Student Loan No Opt. Call A2 1,028,370 Program, Series 1993A-5A, 6.200%, 6/01/13 - MBIA Insured (Alternative Minimum Tax) ------------------------------------------------------------------------------------------------------------------------------------ NEVADA - 2.2% (1.3% OF TOTAL INVESTMENTS) Director of Nevada State Department of Business and Industry, Revenue Bonds, Las Vegas Monorail Project, First Tier, Series 2000: 8,000 0.000%, 1/01/19 - AMBAC Insured No Opt. Call AA 2,863,520 4,000 5.625%, 1/01/32 - AMBAC Insured 1/10 at 102.00 AA 2,411,720 3,000 5.375%, 1/01/40 - AMBAC Insured 1/10 at 100.00 AA 1,803,420 3,750 Henderson, Nevada, Healthcare Facility Revenue Refunding Bonds, 7/17 at 100.00 A 2,878,050 Catholic Healthcare West, Series 2007B, Trust 2633, 1.032%, 7/01/31 (IF) ------------------------------------------------------------------------------------------------------------------------------------ 18,750 Total Nevada 9,956,710 ------------------------------------------------------------------------------------------------------------------------------------ NEW JERSEY - 6.7% (4.1% OF TOTAL INVESTMENTS) 355 New Jersey Health Care Facilities Financing Authority, FHA-Insured 8/11 at 100.00 AA 355,291 Mortgage Revenue Bonds, Jersey City Medical Center, Series 2001, 4.800%, 8/01/21 - AMBAC Insured 1,830 New Jersey Higher Education Assistance Authority, Student Loan 6/10 at 101.00 Aaa 1,863,544 Revenue Bonds, Series 2000A, 6.000%, 6/01/13 - MBIA Insured (Alternative Minimum Tax) 4,130 New Jersey Transit Corporation, Certificates of Participation, Federal No Opt. Call AA 4,357,604 Transit Administration Grants, Series 2002A, 5.500%, 9/15/13 - AMBAC Insured 4,000 New Jersey Transportation Trust Fund Authority, Transportation System No Opt. Call AA- 4,292,400 Bonds, Series 1999A, 5.750%, 6/15/18 20,000 New Jersey Transportation Trust Fund Authority, Transportation System No Opt. Call AA 6,075,200 Bonds, Series 2006C, 0.000%, 12/15/28 - AMBAC Insured Tobacco Settlement Financing Corporation, New Jersey, Tobacco Settlement Asset-Backed Bonds, Series 2002: 8,615 5.750%, 6/01/32 (Pre-refunded 6/01/12) 6/12 at 100.00 AAA 9,187,984 3,165 6.125%, 6/01/42 (Pre-refunded 6/01/12) 6/12 at 100.00 AAA 3,482,165 1,365 Tobacco Settlement Financing Corporation, New Jersey, Tobacco 6/13 at 100.00 AAA 1,562,188 Settlement Asset-Backed Bonds, Series 2003, 6.750%, 6/01/39 (Pre-refunded 6/01/13) ------------------------------------------------------------------------------------------------------------------------------------ 43,460 Total New Jersey 31,176,376 ------------------------------------------------------------------------------------------------------------------------------------ NEW MEXICO - 0.7% (0.4% OF TOTAL INVESTMENTS) 3,855 University of New Mexico, FHA-Insured Mortgage Hospital Revenue 7/14 at 100.00 AAA 3,397,296 Bonds, Series 2004, 5.000%, 7/01/32 - FSA Insured ------------------------------------------------------------------------------------------------------------------------------------ NEW YORK - 11.8% (7.2% OF TOTAL INVESTMENTS) 2,170 Dormitory Authority of the State of New York, Insured Revenue Bonds, 1/09 at 101.00 A3 2,060,762 Franciscan Health Partnership Obligated Group - Frances Shervier Home and Hospital, Series 1997, 5.500%, 7/01/17 - RAAI Insured 7,500 Dormitory Authority of the State of New York, Secured Hospital Revenue 2/09 at 100.75 AA 7,147,725 Refunding Bonds, Wyckoff Heights Medical Center, Series 1998H, 5.300%, 8/15/21 - MBIA Insured Nassau County, New York, General Obligation Improvement Bonds, Series 1999B: 4,005 5.250%, 6/01/19 (Pre-refunded 6/01/09) - AMBAC Insured 6/09 at 102.00 AA (4) 4,167,443 7,005 5.250%, 6/01/21 (Pre-refunded 6/01/09) - AMBAC Insured 6/09 at 102.00 AA (4) 7,289,123 64 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ NEW YORK (continued) $ 6,000 New York City Industrial Development Agency, New York, American 8/16 at 101.00 B- $ 4,142,580 Airlines-JFK International Airport Special Facility Revenue Bonds, Series 2005, 7.750%, 8/01/31 (Alternative Minimum Tax) 2,500 New York City Municipal Water Finance Authority, New York, Water and 12/14 at 100.00 AAA 2,054,500 Sewerage System Revenue Bonds, Series 2008, Trust 1199, 6.714%, 6/15/36 - FSA Insured (IF) 8,800 New York City Sales Tax Asset Receivable Corporation, New York, 10/14 at 100.00 AAA 8,329,816 Dedicated Revenue Bonds, Local Government Assistance Corporation, Series 2008, 5.000%, 10/15/32 - AMBAC Insured (UB) 10,000 New York City Transitional Finance Authority, New York, Future Tax 8/09 at 101.00 AAA 10,420,900 Secured Bonds, Fiscal Series 2000A, 5.750%, 8/15/24 (Pre-refunded 8/15/09) 10,000 Port Authority of New York and New Jersey, Special Project Bonds, JFK 12/08 at 101.00 AA 9,114,800 International Air Terminal LLC, Sixth Series 1997, 5.900%, 12/01/17 - MBIA Insured (Alternative Minimum Tax) ------------------------------------------------------------------------------------------------------------------------------------ 57,980 Total New York 54,727,649 ------------------------------------------------------------------------------------------------------------------------------------ NORTH CAROLINA - 1.2% (0.7% OF TOTAL INVESTMENTS) 3,830 Charlotte-Mecklenburg Hospital Authority, North Carolina, Healthcare 1/15 at 100.00 AA- (4) 4,088,946 System Revenue Bonds, DBA Carolinas Healthcare System, Series 2005A, 5.000%, 1/15/45 (Pre-refunded 1/15/15) 1,500 The Charlotte-Mecklenberg Hospital Authority, North Carolina, Doing 1/18 at 100.00 AA- 1,421,610 Business as Carolinas HealthCare System, Health Care Refunding Revenue Bonds, Series 2008A, 5.250%, 1/15/24 - AGC Insured ------------------------------------------------------------------------------------------------------------------------------------ 5,330 Total North Carolina 5,510,556 ------------------------------------------------------------------------------------------------------------------------------------ OHIO - 5.4% (3.3% OF TOTAL INVESTMENTS) 2,300 Amherst Exempted Village School District, Ohio, Unlimited Tax General 12/11 at 100.00 A1 (4) 2,454,192 Obligation School Improvement Bonds, Series 2001, 5.125%, 12/01/21 (Pre-refunded 12/01/11) - FGIC Insured Buckeye Tobacco Settlement Financing Authority, Ohio, Tobacco Settlement Asset-Backed Revenue Bonds, Senior Lien, Series 2007A-2: 170 5.125%, 6/01/24 6/17 at 100.00 BBB 133,246 1,800 5.875%, 6/01/30 6/17 at 100.00 BBB 1,261,818 1,740 5.750%, 6/01/34 6/17 at 100.00 BBB 1,158,840 3,930 5.875%, 6/01/47 6/17 at 100.00 BBB 2,458,647 3,635 Franklin County, Ohio, FHA-Insured Multifamily Housing Mortgage 1/09 at 100.00 Aa2 3,216,793 Revenue Bonds, Hamilton Creek Apartments Project, Series 1994A, 5.550%, 7/01/24 (Alternative Minimum Tax) 3,650 Montgomery County, Ohio, Revenue Bonds, Catholic Health Initiatives, 5/14 at 100.00 AA 3,141,373 Series 2004A, 5.000%, 5/01/30 11,900 Ohio Water Development Authority, Solid Waste Disposal Revenue Bonds, 9/09 at 102.00 N/R 10,205,083 Bay Shore Power, Series 1998B, 6.625%, 9/01/20 (Alternative Minimum Tax) 1,115 Warren County, Ohio, Limited Tax General Obligations, Series 1997, 12/08 at 100.00 Aa2 1,117,342 5.500%, 12/01/17 ------------------------------------------------------------------------------------------------------------------------------------ 30,240 Total Ohio 25,147,334 ------------------------------------------------------------------------------------------------------------------------------------ OREGON - 0.5% (0.3% OF TOTAL INVESTMENTS) 2,355 Portland, Oregon, Downtown Waterfront Urban Renewal and 6/10 at 101.00 Aa3 2,333,522 Redevelopment Revenue Bonds, Series 2000A, 5.500%, 6/15/20 - AMBAC Insured ------------------------------------------------------------------------------------------------------------------------------------ PENNSYLVANIA - 6.1% (3.7% OF TOTAL INVESTMENTS) 3,480 Allegheny County Hospital Development Authority, Pennsylvania, 11/10 at 102.00 AAA 3,968,348 Revenue Bonds, West Penn Allegheny Health System, Series 2000B, 9.250%, 11/15/22 (Pre-refunded 11/15/10) 1,030 Carbon County Industrial Development Authority, Pennsylvania, Resource No Opt. Call BBB- 1,040,609 Recovery Revenue Refunding Bonds, Panther Creek Partners Project, Series 2000, 6.650%, 5/01/10 (Alternative Minimum Tax) 1,250 Erie, Pennsylvania, Water Authority, Water Revenue Bonds, Series 2008, 12/18 at 100.00 AAA 1,069,400 5.000%, 12/01/43 - FSA Insured 1,500 Pennsylvania Housing Finance Agency, Single Family Mortgage Revenue 10/16 at 100.00 AA+ 1,065,885 Bonds, Series 2008, 4.650%, 10/01/31 (Alternative Minimum Tax) (UB) 65 NAD Nuveen Dividend Advantage Municipal Fund (continued) Portfolio of INVESTMENTS October 31, 2008 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ PENNSYLVANIA (continued) $ 18,900 Philadelphia Airport System, Pennsylvania, Revenue Bonds, Series 12/08 at 102.00 A+ $17,567,171 1998A, 5.500%, 6/15/18 - FGIC Insured (Alternative Minimum Tax) 3,205 Philadelphia School District, Pennsylvania, General Obligation Bonds, 8/12 at 100.00 Aa3 (4) 3,493,771 Series 2002B, 5.625%, 8/01/16 (Pre-refunded 8/01/12) - FGIC Insured ------------------------------------------------------------------------------------------------------------------------------------ 29,365 Total Pennsylvania 28,205,184 ------------------------------------------------------------------------------------------------------------------------------------ PUERTO RICO - 3.4% (2.1% OF TOTAL INVESTMENTS) 2,500 Puerto Rico Aqueduct and Sewerage Authority, Revenue Bonds, Senior 7/18 at 100.00 BBB- 2,237,875 Lien Series 2008A, 6.000%, 7/01/44 12,500 Puerto Rico Housing Finance Authority, Capital Fund Program Revenue 12/13 at 100.00 AA+ 12,252,952 Bonds, Series 2008, 4.500%, 12/01/23 (UB) 12,845 Puerto Rico Infrastructure Financing Authority, Special Tax Revenue No Opt. Call BBB+ 1,273,582 Bonds, Series 2005A, 0.000%, 7/01/42 - FGIC Insured ------------------------------------------------------------------------------------------------------------------------------------ 27,845 Total Puerto Rico 15,764,409 ------------------------------------------------------------------------------------------------------------------------------------ RHODE ISLAND - 3.7% (2.2% OF TOTAL INVESTMENTS) 2,015 Central Falls, Rhode Island, General Obligation School Bonds, Series 5/09 at 102.00 Baa3 2,049,718 1999, 6.250%, 5/15/20 - RAAI Insured 3,500 Providence Redevelopment Agency, Rhode Island, Revenue Bonds, Public 4/10 at 101.00 Aa3 (4) 3,704,470 Safety and Municipal Building Projects, Series 1999A, 5.750%, 4/01/29 (Pre-refunded 4/01/10) - AMBAC Insured Rhode Island Housing & Mortgage Finance Corporation, Homeownership Opportunity 57-B Bond Program, Series 2008, Trust 1177: 1,500 8.125%, 10/01/27 (Alternative Minimum Tax) (IF) 4/17 at 100.00 AA+ 1,011,840 1,000 8.225%, 10/01/32 (Alternative Minimum Tax) (IF) 4/17 at 100.00 AA+ 605,920 12,500 Rhode Island Tobacco Settlement Financing Corporation, Tobacco 6/12 at 100.00 BBB 9,757,625 Settlement Asset-Backed Bonds, Series 2002A, 6.125%, 6/01/32 ------------------------------------------------------------------------------------------------------------------------------------ 20,515 Total Rhode Island 17,129,573 ------------------------------------------------------------------------------------------------------------------------------------ SOUTH CAROLINA - 0.3% (0.2% OF TOTAL INVESTMENTS) 1,500 Greenville, South Carolina, Hospital Facilities Revenue Bonds, Series 5/11 at 101.00 AA 1,292,925 2001, 5.000%, 5/01/31 - AMBAC Insured ------------------------------------------------------------------------------------------------------------------------------------ TENNESSEE - 2.3% (1.4% OF TOTAL INVESTMENTS) 6,400 Memphis-Shelby County Airport Authority, Tennessee, Airport Revenue 3/10 at 101.00 AA 5,848,192 Bonds, Series 1999D, 6.000%, 3/01/24 - AMBAC Insured (Alternative Minimum Tax) 2,425 Memphis-Shelby County Airport Authority, Tennessee, Airport Revenue 3/11 at 100.00 AAA 2,345,072 Bonds, Series 2001B, 5.125%, 3/01/26 - FSA Insured 1,910 Sullivan County Health Educational and Housing Facilities Board, 9/16 at 100.00 BBB+ 1,255,806 Tennessee, Revenue Bonds, Wellmont Health System, Series 2006C, 5.250%, 9/01/36 1,500 Sumner County Health, Educational, and Housing Facilities Board, 11/17 at 100.00 N/R 1,079,115 Tennessee, Revenue Refunding Bonds, Sumner Regional Health System Inc., Series 2007, 5.500%, 11/01/46 ------------------------------------------------------------------------------------------------------------------------------------ 12,235 Total Tennessee 10,528,185 ------------------------------------------------------------------------------------------------------------------------------------ TEXAS - 8.6% (5.2% OF TOTAL INVESTMENTS) 2,560 Brazos River Authority, Texas, Pollution Control Revenue Refunding 4/13 at 101.00 Caa1 1,904,717 Bonds, TXU Electric Company, Series 1999C, 7.700%, 3/01/32 (Alternative Minimum Tax) 4,675 Carrollton-Farmers Branch Independent School District, Dallas County, 2/09 at 100.00 AAA 4,733,344 Texas, Unlimited Tax School Building Bonds, Series 1999, 6.000%, 2/15/20 (Pre-refunded 2/15/09) 2,820 Central Texas Regional Mobility Authority, Travis and Williamson Counties, 1/15 at 100.00 AA 2,124,785 Toll Road Revenue Bonds, Series 2005, 5.000%, 1/01/45 - FGIC Insured 66 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ TEXAS (continued) Coppell Independent School District, Dallas County, Texas, Unlimited Tax School Building and Refunding Bonds, Series 1999: $ 1,535 0.000%, 8/15/20 8/09 at 52.47 AAA $ 782,512 2,100 0.000%, 8/15/21 8/09 at 49.48 AAA 977,466 2,200 0.000%, 8/15/23 8/09 at 44.01 AAA 893,068 2,100 0.000%, 8/15/24 8/09 at 41.50 AAA 795,942 2,200 0.000%, 8/15/25 8/09 at 39.14 AAA 782,870 2,095 0.000%, 8/15/26 8/09 at 36.91 AAA 692,607 820 Dallas Area Rapid Transit, Texas, Senior Lien Sales Tax Revenue Bonds, 12/11 at 100.00 AAA 872,718 Series 2001, 5.000%, 12/01/31 (Pre-refunded 12/01/11) - AMBAC Insured 2,205 Harris County-Houston Sports Authority, Texas, Senior Lien Revenue No Opt. Call AA 1,040,451 Refunding Bonds, Series 2001A, 0.000%, 11/15/20 - MBIA Insured 3,130 Houston, Texas, Hotel Occupancy Tax and Special Revenue Bonds, No Opt. Call AA 794,394 Convention and Entertainment Project, Series 2001B, 0.000%, 9/01/30 - AMBAC Insured 2,500 Jefferson County, Texas, Certificates of Obligation, Series 2000, 6.000%, 8/10 at 100.00 AAA 2,657,125 8/01/25 (Pre-refunded 8/01/10) - FSA Insured 2,000 Laredo, Texas, Sports Venue Sales Tax Revenue Bonds, Series 2001, 3/09 at 100.00 A- (4) 2,025,700 5.300%, 3/15/26 (Pre-refunded 3/15/09) - FGIC Insured 30,095 Leander Independent School District, Williamson and Travis Counties, 8/12 at 27.94 AAA 5,854,681 Texas, General Obligation Bonds, Series 2004, 0.000%, 8/15/34 9,345 Leander Independent School District, Williamson and Travis Counties, 8/15 at 37.33 AA 1,873,112 Texas, General Obligation Bonds, Series 2005, 0.000%, 8/15/33 - FGIC Insured 33,160 Leander Independent School District, Williamson and Travis Counties, 8/14 at 26.50 AAA 5,004,176 Texas, General Obligation Bonds, Series 2006, 0.000%, 8/15/38 1,000 San Antonio, Texas, Water System Revenue Bonds, Series 2005, 4.750%, 5/15 at 100.00 AA 829,720 5/15/37 - MBIA Insured 3,295 Tarrant County, Texas, Cultural & Educational Facilities Financing 2/17 at 100.00 AA- 826,386 Corporation, Revenue Bonds, Series 2007, Residuals 1760-3, 0.726%, 2/15/36 (IF) 7,000 White Settlement Independent School District, Tarrant County, Texas, 8/15 at 34.92 AAA 1,293,390 General Obligation Bonds, Series 2005, 0.000%, 8/15/35 Wylie Independent School District, Taylor County, Texas, General Obligation Bonds, Series 2005: 3,000 0.000%, 8/15/20 8/15 at 78.46 AAA 1,559,220 3,000 0.000%, 8/15/22 8/15 at 70.77 AAA 1,351,020 ------------------------------------------------------------------------------------------------------------------------------------ 122,835 Total Texas 39,669,404 ------------------------------------------------------------------------------------------------------------------------------------ UTAH - 0.2% (0.1% OF TOTAL INVESTMENTS) Utah Housing Finance Agency, Single Family Mortgage Bonds, Series 1999C-2, Class II: 280 5.700%, 7/01/19 (Alternative Minimum Tax) 1/10 at 101.50 Aaa 277,794 90 5.750%, 7/01/21 (Alternative Minimum Tax) 1/10 at 101.50 Aa2 89,496 35 Utah Housing Finance Agency, Single Family Mortgage Bonds, Series 7/09 at 101.00 AA 34,935 1999D, 5.850%, 7/01/21 (Alternative Minimum Tax) 10 Utah Housing Finance Agency, Single Family Mortgage Bonds, Series 7/09 at 101.50 Aa3 10,179 1999F, 6.300%, 7/01/21 (Alternative Minimum Tax) 685 Utah Housing Finance Agency, Single Family Mortgage Bonds, Series 7/10 at 100.00 Aa3 673,533 2000F-2, Class III, 6.000%, 1/01/15 (Alternative Minimum Tax) ------------------------------------------------------------------------------------------------------------------------------------ 1,100 Total Utah 1,085,937 ------------------------------------------------------------------------------------------------------------------------------------ VIRGINIA - 0.0% (0.0% OF TOTAL INVESTMENTS) 3,395 Virginia Small Business Financing Authority, Industrial Development 11/09 at 102.00 N/R 110,338 Water Revenue Bonds, S.I.L. Clean Water, LLC Project, Series 1999, 7.250%, 11/01/24 (Alternative Minimum Tax) (5) ------------------------------------------------------------------------------------------------------------------------------------ 67 NAD Nuveen Dividend Advantage Municipal Fund (continued) Portfolio of INVESTMENTS October 31, 2008 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ WASHINGTON - 11.8% (7.2% OF TOTAL INVESTMENTS) $ 4,000 Energy Northwest, Washington, Electric Revenue Refunding Bonds, 7/13 at 100.00 AA- $ 4,169,840 Nuclear Project 3, Series 2003A, 5.500%, 7/01/17 - SYNCORA GTY Insured Port of Seattle, Washington, Special Facility Revenue Bonds, Terminal 18, Series 1999B: 1,755 6.000%, 9/01/15 - MBIA Insured (Alternative Minimum Tax) 3/10 at 101.00 AA 1,743,873 2,590 6.000%, 9/01/16 - MBIA Insured (Alternative Minimum Tax) 3/10 at 101.00 AA 2,557,496 Port of Seattle, Washington, Special Facility Revenue Bonds, Terminal 18, Series 1999C: 875 6.000%, 9/01/15 - MBIA Insured (Alternative Minimum Tax) 3/10 at 101.00 AA 869,453 1,260 6.000%, 9/01/16 - MBIA Insured (Alternative Minimum Tax) 3/10 at 101.00 AA 1,244,187 4,820 Seattle, Washington, Municipal Light and Power Revenue Refunding and 3/11 at 100.00 AAA 4,921,798 Improvement Bonds, Series 2001, 5.500%, 3/01/19 - FSA Insured 6,655 Washington State Tobacco Settlement Authority, Tobacco Settlement 6/13 at 100.00 BBB 5,921,220 Asset-Backed Revenue Bonds, Series 2002, 6.500%, 6/01/26 11,605 Washington, Certificates of Participation, Washington Convention and 7/09 at 100.00 AA 11,780,236 Trade Center, Series 1999, 5.250%, 7/01/16 - MBIA Insured 3,350 Washington, General Obligation Compound Interest Bonds, Series No Opt. Call AAA 2,118,909 1999S-2, 0.000%, 1/01/18 - FSA Insured Washington, General Obligation Compound Interest Bonds, Series 1999S-3: 17,650 0.000%, 1/01/20 No Opt. Call AA+ 9,724,444 18,470 0.000%, 1/01/21 No Opt. Call AA+ 9,556,378 ------------------------------------------------------------------------------------------------------------------------------------ 73,030 Total Washington 54,607,834 ------------------------------------------------------------------------------------------------------------------------------------ WISCONSIN - 9.3% (5.7% OF TOTAL INVESTMENTS) 1,115 Badger Tobacco Asset Securitization Corporation, Wisconsin, Tobacco 6/12 at 100.00 BBB 1,047,297 Settlement Asset-Backed Bonds, Series 2002, 6.000%, 6/01/17 1,690 Green Bay, Wisconsin, Water System Revenue Bonds, Series 2004, 11/14 at 100.00 Aaa 1,825,369 5.000%, 11/01/29 (Pre-refunded 11/01/14) - FSA Insured 560 Green Bay, Wisconsin, Water System Revenue Bonds, Series 2004, 11/14 at 100.00 Aaa 513,638 5.000%, 11/01/29 - FSA Insured 3,810 La Crosse, Wisconsin, Industrial Development Revenue Refunding Bonds, 12/08 at 102.00 Aaa 3,858,501 Dairyland Power Cooperative, Series 1997C, 5.550%, 2/01/15 - AMBAC Insured 7,410 Wisconsin Health and Educational Facilities Authority, Revenue Bonds, 11/16 at 100.00 Aa1 6,107,396 Ascension Health, Series 2006A, 5.000%, 11/15/36 Wisconsin Health and Educational Facilities Authority, Revenue Bonds, FH Healthcare Development Inc., Series 1999: 8,375 6.250%, 11/15/20 (Pre-refunded 11/15/09) 11/09 at 101.00 N/R (4) 8,845,759 5,000 6.250%, 11/15/28 (Pre-refunded 11/15/09) 11/09 at 101.00 N/R (4) 5,281,050 4,180 Wisconsin Health and Educational Facilities Authority, Revenue Bonds, 5/09 at 101.00 A 3,674,011 Kenosha Hospital and Medical Center Inc., Series 1999, 5.625%, 5/15/29 12,700 Wisconsin Health and Educational Facilities Authority, Revenue Bonds, 8/09 at 101.00 Aa3 10,701,655 Mercy Health System Corporation, Series 1999, 5.500%, 8/15/25 - AMBAC Insured 2,200 Wisconsin Health and Educational Facilities Authority, Revenue Bonds, 8/13 at 100.00 A- 1,354,848 Wheaton Franciscan Services Inc., Series 2003A, 5.125%, 8/15/33 ------------------------------------------------------------------------------------------------------------------------------------ 47,040 Total Wisconsin 43,209,524 ------------------------------------------------------------------------------------------------------------------------------------ $ 1,103,640 Total Municipal Bonds (cost $826,316,827) 742,945,092 =============----------------------------------------------------------------------------------------------------------------------- 68 SHARES DESCRIPTION (1) VALUE ------------------------------------------------------------------------------------------------------------------------------------ INVESTMENT COMPANIES - 0.1% (0.1% OF TOTAL INVESTMENTS) 9,219 BlackRock MuniHoldings Fund Inc. $ 98,920 32,332 Morgan Stanley Quality Municipal Income Trust 298,101 ------------------------------------------------------------------------------------------------------------------------------------ Total Investment Companies (cost $534,262) 397,021 -------------------------------------------------------------------------------------------------------------------- Total Long-Term Investments (cost $826,851,089) - 160.7% 743,342,113 -------------------------------------------------------------------------------------------------------------------- PRINCIPAL AMOUNT (000) DESCRIPTION (1) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ SHORT-TERM INVESTMENTS - 4.2% (2.5% OF TOTAL INVESTMENTS) $ 5,620 Michigan Strategic Fund, Limited Obligation Revenue Bonds, MCSM Inc. A-1+ 5,620,000 Project, Variable Rate Demand Obligations, Series 2007, 1.750%, 3/01/27 (Alternative Minimum Tax) (6) 2,865 Missouri Development Finance Board, Kansas City, Infrastructure VMIG-1 2,865,000 Facilities Revenue Bonds, Ninth Street Garage Project, Variable Rate Demand Obligations, Series 2004B, 1.500%, 6/01/34 (6) 3,990 Montgomery County Public Building Authority, Tennessee, Tennessee VMIG-1 3,990,000 County Loan Pool Program Revenue Bonds, Variable Rate Demand Obligations, Series 1997, 1.500%, 11/01/27 (6) 6,850 St. Charles County Public Water Supply District 2, Missouri, Certificates VMIG-1 6,850,000 of Participation, Variable Rate Demand Obligations, Series 2005A, 1.500%, 12/01/33 (6) ------------------------------------------------------------------------------------------------------------------------------------ $ 19,325 Total Short-Term Investments (cost $19,325,000) 19,325,000 =============----------------------------------------------------------------------------------------------------------------------- Total Investments (cost $846,176,089) - 164.9% 762,667,113 -------------------------------------------------------------------------------------------------------------------- Floating Rate Obligations - (10.5)% (48,740,000) -------------------------------------------------------------------------------------------------------------------- Other Assets Less Liabilities - 3.3% 15,427,179 -------------------------------------------------------------------------------------------------------------------- Auction Rate Preferred Shares, at Liquidation Value - (57.7)% (7) (266,800,000) -------------------------------------------------------------------------------------------------------------------- Net Assets Applicable to Common Shares - 100% $ 462,554,292 ====================================================================================================================
(1) All percentages shown in the Portfolio of Investments are based on net assets applicable to Common shares unless otherwise noted. (2) Optional Call Provisions (not covered by the report of independent registered public accounting firm): Dates (month and year) and prices of the earliest optional call or redemption. There may be other call provisions at varying prices at later dates. Certain mortgage-backed securities may be subject to periodic principal paydowns. (3) Ratings (not covered by the report of independent registered public accounting firm): Using the higher of Standard & Poor's Group ("Standard & Poor's") or Moody's Investor Service, Inc. ("Moody's") rating. Ratings below BBB by Standard & Poor's or Baa by Moody's are considered to be below investment grade. The Portfolio of Investments may reflect the ratings on certain bonds insured by ACA, AGC, AMBAC, FGIC, FSA, MBIA, RAAI and SYNCORA as of October 31, 2008. Please see the Portfolio Managers' Commentary for an expanded discussion of the affect on the Fund of changes to the ratings of certain bonds in the portfolio resulting from changes to the ratings of the underlying insurers both during the period and after period end. (4) Backed by an escrow or trust containing sufficient U.S. Government or U.S. Government agency securities which ensure the timely payment of principal and interest. Such investments are normally considered to be equivalent to AAA rated securities. (5) Non-income producing security, in the case of a bond, generally denotes that the issuer has defaulted on the payment of principal or interest or has filed for bankruptcy. (6) Investment has a maturity of more than one year, but has variable rate and demand features which qualify it as a short-term investment. The rate disclosed is that in effect at the end of the reporting period. This rate changes periodically based on market conditions or a specified market index. (7) Auction Rate Preferred Shares, at Liquidation Value as a percentage of Total Investments is 35.0%. N/R Not rated. (IF) Inverse floating rate investment. (UB) Underlying bond of an inverse floating rate trust reflected as a financing transaction pursuant to the provisions of SFAS No. 140. See accompanying notes to financial statements. 69 NXZ Nuveen Dividend Advantage Municipal Fund 2 Portfolio of INVESTMENTS October 31, 2008
PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ ALABAMA - 5.3% (3.5% OF TOTAL INVESTMENTS) $ 18,500 Huntsville Healthcare Authority, Alabama, Revenue Bonds, Series 2001A, 6/11 at 101.00 A2 (4) $19,815,349 5.750%, 6/01/31 (Pre-refunded 6/01/11) ------------------------------------------------------------------------------------------------------------------------------------ ALASKA - 0.3% (0.2% OF TOTAL INVESTMENTS) 2,200 Northern Tobacco Securitization Corporation, Alaska, Tobacco Settlement 6/14 at 100.00 Baa3 1,170,400 Asset-Backed Bonds, Series 2006A, 5.000%, 6/01/46 ------------------------------------------------------------------------------------------------------------------------------------ ARIZONA - 0.7% (0.4% OF TOTAL INVESTMENTS) 3,120 Phoenix, Arizona, Civic Improvement Corporation, Senior Lien Airport 7/12 at 100.00 AA 2,441,930 Revenue Bonds, Series 2002B, 5.250%, 7/01/32 - FGIC Insured (Alternative Minimum Tax) ------------------------------------------------------------------------------------------------------------------------------------ ARKANSAS - 0.2% (0.2% OF TOTAL INVESTMENTS) 1,105 Arkansas Development Finance Authority, Single Family Mortgage 1/12 at 100.00 AAA 888,199 Revenue Bonds, GNMA Mortgage-Backed Securities Program, Series 2002C, 5.400%, 1/01/34 (Alternative Minimum Tax) ------------------------------------------------------------------------------------------------------------------------------------ CALIFORNIA - 8.0% (5.3% OF TOTAL INVESTMENTS) 9,000 California County Tobacco Securitization Agency, Tobacco Settlement 12/18 at 100.00 Baa3 4,932,540 Asset-Backed Bonds, Los Angeles County Securitization Corporation, Series 2006A, 0.000%, 6/01/36 (Mandatory put 6/01/23) 6,000 California Educational Facilities Authority, Revenue Bonds, Stanford 6/11 at 101.00 AAA 5,991,600 University, Series 2001Q, 5.250%, 12/01/32 4,080 California Health Facilities Financing Authority, Revenue Bonds, Kaiser 4/16 at 100.00 AAA 3,669,634 Permanante System, Series 2006, 5.000%, 4/01/37 - BHAC Insured Golden State Tobacco Securitization Corporation, California, Enhanced Tobacco Settlement Asset-Backed Bonds, Series 2007A-1: 1,000 5.000%, 6/01/33 6/17 at 100.00 BBB 623,560 1,000 5.125%, 6/01/47 6/17 at 100.00 BBB 590,500 5,000 Golden State Tobacco Securitization Corporation, California, Tobacco 6/13 at 100.00 AAA 5,649,650 Settlement Asset-Backed Bonds, Series 2003A-1, 6.750%, 6/01/39 (Pre-refunded 6/01/13) 5,000 Golden State Tobacco Securitization Corporation, California, Tobacco 6/15 at 100.00 A -- Settlement Asset-Backed Revenue Bonds, Series 2005A, Trust 2448, 0.891%, 6/01/45 - FGIC Insured (IF) 6,000 Los Angeles Regional Airports Improvement Corporation, California, 12/12 at 102.00 B- 4,360,500 Sublease Revenue Bonds, Los Angeles International Airport, American Airlines Inc. Terminal 4 Project, Series 2002C, 7.500%, 12/01/24 (Alternative Minimum Tax) 5,000 San Jose, California, Airport Revenue Bonds, Series 2007A, 6.000%, 3/17 at 100.00 AA 4,140,400 3/01/47 - AMBAC Insured (Alternative Minimum Tax) 110 Yuba County Water Agency, California, Yuba River Development Revenue 3/09 at 100.00 Baa3 108,074 Bonds, Pacific Gas and Electric Company, Series 1966A, 4.000%, 3/01/16 ------------------------------------------------------------------------------------------------------------------------------------ 42,190 Total California 30,066,458 ------------------------------------------------------------------------------------------------------------------------------------ COLORADO - 7.6% (5.0% OF TOTAL INVESTMENTS) 2,495 Colorado Educational and Cultural Facilities Authority, Charter School 8/11 at 100.00 AAA 2,777,209 Revenue Bonds, Peak-to-Peak Charter School, Series 2001, 7.500%, 8/15/21 (Pre-refunded 8/15/11) 70 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ COLORADO (continued) Denver, Colorado, Airport Revenue Bonds, Trust 2365: $ 1,340 2.901%, 11/15/23 - FGIC Insured (IF) 11/16 at 100.00 AA $ 923,662 825 1.184%, 11/15/24 - FGIC Insured (IF) 11/16 at 100.00 AA 558,212 1,085 1.186%, 11/15/25 - FGIC Insured (IF) 11/16 at 100.00 AA 699,196 10,000 E-470 Public Highway Authority, Colorado, Senior Revenue Bonds, Series 9/10 at 31.42 Aaa 2,979,100 2000B, 0.000%, 9/01/28 (Pre-refunded 9/01/10) - MBIA Insured 1,280 Eagle County Air Terminal Corporation, Colorado, Airport Terminal 5/11 at 101.00 N/R 1,119,117 Revenue Bonds, Series 2001, 7.125%, 5/01/31 (Alternative Minimum Tax) 755 Jefferson County School District R1, Colorado, General Obligation Bonds, 12/14 at 100.00 AAA 743,698 Series 2004, 5.000%, 12/15/22 - FSA Insured (UB) 5,000 Northwest Parkway Public Highway Authority, Colorado, Revenue Bonds, 6/11 at 102.00 AAA 5,349,900 Senior Series 2001A, 5.250%, 6/15/41 (Pre-refunded 6/15/11) - FSA Insured (5) Northwest Parkway Public Highway Authority, Colorado, Senior Lien Revenue Bonds, Series 2001B: 22,000 0.000%, 6/15/28 (Pre-refunded 6/15/11) - FSA Insured 6/11 at 35.65 AAA 7,126,240 17,650 0.000%, 6/15/29 (Pre-refunded 6/15/11) - AMBAC Insured 6/11 at 33.46 AA (4) 5,365,071 1,000 Plaza Metropolitan District 1, Lakewood, Colorado, Tax Increment 6/14 at 101.00 N/R 925,710 Revenue Bonds, Series 2003, 8.000%, 12/01/25 ------------------------------------------------------------------------------------------------------------------------------------ 63,430 Total Colorado 28,567,115 ------------------------------------------------------------------------------------------------------------------------------------ DISTRICT OF COLUMBIA - 1.3% (0.9% OF TOTAL INVESTMENTS) 985 District of Columbia Tobacco Settlement Corporation, Tobacco 5/11 at 101.00 BBB 877,211 Settlement Asset-Backed Bonds, Series 2001, 6.250%, 5/15/24 5,000 Washington Convention Center Authority, District of Columbia, Senior 10/16 at 100.00 AA 4,022,150 Lien Dedicated Tax Revenue Bonds, Series 2007A, 4.500%, 10/01/30 - AMBAC Insured ------------------------------------------------------------------------------------------------------------------------------------ 5,985 Total District of Columbia 4,899,361 ------------------------------------------------------------------------------------------------------------------------------------ FLORIDA - 4.5% (2.9% OF TOTAL INVESTMENTS) 15,000 Jacksonville, Florida, Transportation Revenue Bonds, Series 2001, 10/11 at 100.00 AA 14,321,550 5.250%, 10/01/29 - MBIA Insured 3,000 Miami-Dade County, Florida, Aviation Revenue Bonds, Miami 10/12 at 100.00 A2 2,392,380 International Airport, Series 2002, 5.375%, 10/01/32 - FGIC Insured (Alternative Minimum Tax) ------------------------------------------------------------------------------------------------------------------------------------ 18,000 Total Florida 16,713,930 ------------------------------------------------------------------------------------------------------------------------------------ HAWAII - 2.8% (1.8% OF TOTAL INVESTMENTS) Honolulu Board of Water Supply, Hawaii, Water System Revenue Bonds, Series 2001: 3,000 5.250%, 7/01/26 (Pre-refunded 7/01/11) - FSA Insured 7/11 at 100.00 AAA 3,195,840 6,725 5.250%, 7/01/31 (Pre-refunded 7/01/11) - FSA Insured 7/11 at 100.00 AAA 7,164,008 ------------------------------------------------------------------------------------------------------------------------------------ 9,725 Total Hawaii 10,359,848 ------------------------------------------------------------------------------------------------------------------------------------ ILLINOIS - 13.7% (9.1% OF TOTAL INVESTMENTS) 3,590 Chicago, Illinois, FHA/GNMA Collateralized Multifamily Housing Revenue 12/11 at 100.00 AAA 3,240,155 Bonds, Stone Terrace Apartments, Series 2001A, 5.750%, 12/20/42 (Alternative Minimum Tax) 870 Chicago, Illinois, FNMA/GNMA Collateralized Single Family Mortgage 4/11 at 105.00 AAA 885,590 Revenue Bonds, Series 2001A, 6.250%, 10/01/32 (Alternative Minimum Tax) 5,000 Chicago, Illinois, General Obligation Bonds, City Colleges, Series 1999, No Opt. Call AA 1,110,200 0.000%, 1/01/34 - FGIC Insured 3,985 Chicago, Illinois, General Obligation Bonds, Series 2001A, 5.250%, 1/11 at 101.00 AA 3,741,038 1/01/33 - MBIA Insured 5,285 Chicago, Illinois, General Obligation Bonds, Series 2001A, 5.250%, 1/11 at 101.00 AA (4) 5,620,492 1/01/33 (Pre-refunded 1/01/11) - MBIA Insured 3,180 Illinois Development Finance Authority, Revenue Bonds, Chicago Charter 12/12 at 100.00 BBB (4) 3,512,755 School Foundation, Series 2002A, 6.250%, 12/01/32 (Pre-refunded 12/01/12) 71 NXZ Nuveen Dividend Advantage Municipal Fund 2 (continued) Portfolio of INVESTMENTS October 31, 2008 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ ILLINOIS (continued) $ 910 Illinois Development Finance Authority, Revenue Bonds, Illinois Wesleyan 9/11 at 100.00 AA $ 881,745 University, Series 2001, 5.500%, 9/01/32 - AMBAC Insured 4,090 Illinois Development Finance Authority, Revenue Bonds, Illinois Wesleyan 9/11 at 100.00 AA (4) 4,346,239 University, Series 2001, 5.500%, 9/01/32 (Pre-refunded 9/01/11) - AMBAC Insured 3,100 Illinois Development Finance Authority, Revenue Bonds, Midwestern 5/11 at 101.00 AAA 3,346,574 University, Series 2001B, 6.000%, 5/15/31 (Pre-refunded 5/15/11) 9,450 Illinois Finance Authority, Revenue Bonds, Palos Community Hospital, 5/17 at 100.00 AA 7,311,182 Series 2007A, 5.000%, 5/15/32 - MBIA Insured 5,000 Illinois Health Facilities Authority, Revenue Bonds, Edward Hospital 2/11 at 101.00 AAA 5,323,350 Obligated Group, Series 2001B, 5.250%, 2/15/34 (Pre-refunded 2/15/11) - FSA Insured 2,500 Illinois Housing Development Authority, Homeowner Mortgage Revenue 2/16 at 100.00 AA 2,036,575 Bonds, Series 2006C2, 5.050%, 8/01/27 (Alternative Minimum Tax) 2,275 Illinois, Sales Tax Revenue Bonds, Series 2001, 5.500%, 6/15/16 6/11 at 100.00 AAA 2,387,499 2,500 Kane & DeKalb Counties, Illinois, Community United School District 301, No Opt. Call A3 1,010,000 General Obligation Bonds, Series 2006, 0.000%, 12/01/23 - MBIA Insured 4,980 Metropolitan Pier and Exposition Authority, Illinois, Revenue Refunding 12/08 at 100.00 AA 4,627,416 Bonds, McCormick Place Expansion Project, Series 1996A, 5.250%, 6/15/27 - AMBAC Insured 986 Montgomery, Illinois, Lakewood Creek Project Special Assessment 3/16 at 100.00 BBB+ 744,588 Bonds, Series 2007, 4.700%, 3/01/30 - RAAI Insured 3,360 Northfield Township High School District 225, Cook County, Illinois, 12/16 at 69.01 AAA 1,300,421 Glenbrook, General Obligation School Bonds, Series 2007B, 0.000%, 12/01/24 ------------------------------------------------------------------------------------------------------------------------------------ 61,061 Total Illinois 51,425,819 ------------------------------------------------------------------------------------------------------------------------------------ INDIANA - 3.6% (2.3% OF TOTAL INVESTMENTS) 2,000 Indiana Health Facility Financing Authority, Hospital Revenue Bonds, 9/11 at 100.00 BBB+ 1,455,720 Methodist Hospitals Inc., Series 2001, 5.500%, 9/15/31 2,500 Indiana Health Facility Financing Authority, Hospital Revenue Refunding No Opt. Call AAA 2,757,525 Bonds, Columbus Regional Hospital, Series 1993, 7.000%, 8/15/15 - FSA Insured 4,000 Indiana Transportation Finance Authority, Highway Revenue Bonds, 6/13 at 100.00 AAA 3,959,040 Series 2003A, 5.000%, 6/01/23 - FSA Insured 6,100 St. Joseph County Hospital Authority, Indiana, Revenue Bonds, Madison 2/09 at 102.00 BBB- 5,137,725 Center Inc., Series 1999, 5.800%, 2/15/24 ------------------------------------------------------------------------------------------------------------------------------------ 14,600 Total Indiana 13,310,010 ------------------------------------------------------------------------------------------------------------------------------------ IOWA - 1.5% (1.0% OF TOTAL INVESTMENTS) 1,000 Iowa Higher Education Loan Authority, Private College Facility Revenue 10/12 at 100.00 N/R (4) 1,084,580 Bonds, WartburgCollege, Series 2002, 5.500%, 10/01/28 (Pre-refunded 10/01/12) - ACA Insured 6,340 Iowa Tobacco Settlement Authority, Tobacco Asset-Backed Revenue 6/17 at 100.00 BBB 4,413,781 Bonds, Series 2005B, 5.600%, 6/01/34 ------------------------------------------------------------------------------------------------------------------------------------ 7,340 Total Iowa 5,498,361 ------------------------------------------------------------------------------------------------------------------------------------ KANSAS - 4.0% (2.6% OF TOTAL INVESTMENTS) 17,000 Wichita, Kansas, Hospital Facilities Revenue Refunding and Improvement 11/11 at 101.00 A+ 15,014,229 Bonds, Via Christi Health System Inc., Series 2001-III, 5.625%, 11/15/31 ------------------------------------------------------------------------------------------------------------------------------------ KENTUCKY - 0.3% (0.2% OF TOTAL INVESTMENTS) 1,000 Kentucky Economic Development Finance Authority, Louisville Arena 6/18 at 100.00 AAA 950,660 Project Revenue Bonds, Louisville Arena Authority, Inc., Series 2008A-1, 6.000%, 12/01/38 - AGC Insured ------------------------------------------------------------------------------------------------------------------------------------ 73 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ LOUISIANA - 4.4% (2.9% OF TOTAL INVESTMENTS) $ 3,960 Louisiana State, Gasoline and Fuels Tax Revenue Bonds, Series 2006, 5/16 at 100.00 AA $ 3,036,092 4.500%, 5/01/41 - FGIC Insured (UB) 18,825 Tobacco Settlement Financing Corporation, Louisiana, Tobacco 5/11 at 101.00 BBB 13,468,158 Settlement Asset-Backed Bonds, Series 2001B, 5.875%, 5/15/39 ------------------------------------------------------------------------------------------------------------------------------------ 22,785 Total Louisiana 16,504,250 ------------------------------------------------------------------------------------------------------------------------------------ MASSACHUSETTS - 3.3% (2.2% OF TOTAL INVESTMENTS) 15,585 Massachusetts Turnpike Authority, Metropolitan Highway System 1/09 at 100.00 AA 12,362,178 Revenue Bonds, Senior Series 1997A, 5.000%, 1/01/37 - MBIA Insured ------------------------------------------------------------------------------------------------------------------------------------ MICHIGAN - 13.0% (8.6% OF TOTAL INVESTMENTS) Detroit, Michigan, Senior Lien Water Supply System Revenue Bonds, Series 2001A: 20,000 5.500%, 7/01/33 (Pre-refunded 7/01/11) - FGIC Insured 7/11 at 101.00 A (4) 21,533,599 15,390 5.250%, 7/01/33 (Pre-refunded 7/01/11) - FGIC Insured 7/11 at 100.00 A+ (4) 16,268,460 4,000 Michigan Municipal Bond Authority, Public School Academy Revenue 10/09 at 102.00 Ba1 3,776,200 Bonds, Detroit Academy of Arts and Sciences Charter School, Series 2001A, 8.000%, 10/01/31 2,000 Michigan State Hospital Finance Authority, Hospital Revenue Bonds, 2/09 at 101.00 BB 1,554,160 Detroit Medical Center Obligated Group, Series 1998A, 5.125%, 8/15/18 Michigan State Hospital Finance Authority, Revenue Refunding Bonds, Detroit Medical Center Obligated Group, Series 1993A: 2,000 6.250%, 8/15/13 2/09 at 100.00 BB 1,915,340 4,000 6.500%, 8/15/18 2/09 at 100.00 BB 3,520,760 ------------------------------------------------------------------------------------------------------------------------------------ 47,390 Total Michigan 48,568,519 ------------------------------------------------------------------------------------------------------------------------------------ MINNESOTA - 3.9% (2.6% OF TOTAL INVESTMENTS) 14,000 Minneapolis-St. Paul Metropolitan Airports Commission, Minnesota, 1/11 at 100.00 AAA 14,756,420 Airport Revenue Bonds, Series 2001A, 5.250%, 1/01/32 (Pre-refunded 1/01/11) - FGIC Insured ------------------------------------------------------------------------------------------------------------------------------------ MONTANA - 0.7% (0.4% OF TOTAL INVESTMENTS) 2,455 Montana Board of Housing, Single Family Program Bonds, Series 12/10 at 100.00 AA+ 2,440,368 2001A-2, 5.700%, 6/01/32 (Alternative Minimum Tax) ------------------------------------------------------------------------------------------------------------------------------------ NEVADA - 3.0% (2.0% OF TOTAL INVESTMENTS) 12,275 Director of Nevada State Department of Business and Industry, Revenue 1/10 at 100.00 AA 7,378,994 Bonds, Las Vegas Monorail Project, First Tier, Series 2000, 5.375%, 1/01/40 - AMBAC Insured 3,500 Director of Nevada State Department of Business and Industry, Revenue 1/10 at 102.00 N/R 815,605 Bonds, Las Vegas Monorail Project, Second Tier, Series 2000, 7.375%, 1/01/40 2,000 Henderson, Nevada, Healthcare Facility Revenue Refunding Bonds, 7/17 at 100.00 A 1,534,960 Catholic Healthcare West, Series 2007B, Trust 2633, 1.032%, 7/01/31 (IF) 1,750 Reno, Nevada, Health Facility Revenue Bonds, Catholic Healthcare West, 7/17 at 100.00 A 1,343,090 Trust 2634, 0.777%, 7/01/31 (IF) ------------------------------------------------------------------------------------------------------------------------------------ 19,525 Total Nevada 11,072,649 ------------------------------------------------------------------------------------------------------------------------------------ NEW HAMPSHIRE - 2.1% (1.4% OF TOTAL INVESTMENTS) 8,000 New Hampshire Business Finance Authority, Pollution Control 4/09 at 102.00 Baa1 6,653,840 Remarketed Revenue Refunding Bonds, Connecticut Light and Power Company, Series 1992A, 5.850%, 12/01/22 1,160 New Hampshire Housing Finance Authority, Single Family Mortgage 5/11 at 100.00 Aa2 1,152,970 Acquisition Bonds, Series 2001A, 5.700%, 1/01/31 (Alternative Minimum Tax) ------------------------------------------------------------------------------------------------------------------------------------ 9,160 Total New Hampshire 7,806,810 ------------------------------------------------------------------------------------------------------------------------------------ 73 NXZ Nuveen Dividend Advantage Municipal Fund 2 (continued) Portfolio of INVESTMENTS October 31, 2008 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ NEW JERSEY - 2.5% (1.6% OF TOTAL INVESTMENTS) $ 3,995 New Jersey Economic Development Authority, Special Facilities Revenue 11/10 at 101.00 B $ 2,586,723 Bonds, Continental Airlines Inc., Series 2000, 7.000%, 11/15/30 (Alternative Minimum Tax) 385 Tobacco Settlement Financing Corporation, New Jersey, Tobacco 6/12 at 100.00 AAA 410,606 Settlement Asset-Backed Bonds, Series 2002, 5.750%, 6/01/32 (Pre-refunded 6/01/12) Tobacco Settlement Financing Corporation, New Jersey, Tobacco Settlement Asset-Backed Bonds, Series 2003: 2,200 6.375%, 6/01/32 (Pre-refunded 6/01/13) 6/13 at 100.00 AAA 2,405,656 425 6.750%, 6/01/39 (Pre-refunded 6/01/13) 6/13 at 100.00 AAA 486,396 3,085 6.250%, 6/01/43 (Pre-refunded 6/01/13) 6/13 at 100.00 AAA 3,465,566 ------------------------------------------------------------------------------------------------------------------------------------ 10,090 Total New Jersey 9,354,947 ------------------------------------------------------------------------------------------------------------------------------------ NEW MEXICO - 6.5% (4.3% OF TOTAL INVESTMENTS) New Mexico Hospital Equipment Loan Council, Hospital Revenue Bonds, Presbyterian Healthcare Services, Series 2001A: 12,000 5.500%, 8/01/25 (Pre-refunded 8/01/11) 8/11 at 101.00 AA- (4) 12,790,440 10,800 5.500%, 8/01/30 (Pre-refunded 8/01/11) 8/11 at 101.00 AA- (4) 11,511,396 ------------------------------------------------------------------------------------------------------------------------------------ 22,800 Total New Mexico 24,301,836 ------------------------------------------------------------------------------------------------------------------------------------ NEW YORK - 10.0% (6.6% OF TOTAL INVESTMENTS) 1,300 Dormitory Authority of the State of New York, Revenue Bonds, Mount 7/10 at 101.00 A3 1,312,610 Sinai NYU Health Obligated Group, Series 2000A, 6.625%, 7/01/19 3,600 Dormitory Authority of the State of New York, Revenue Bonds, Mount 7/10 at 101.00 A3 (4) 3,891,060 Sinai NYU Health Obligated Group, Series 2000A, 6.625%, 7/01/19 (Pre-refunded 7/01/10) 6,000 Long Island Power Authority, New York, Electric System General Revenue 5/11 at 100.00 AAA 6,402,300 Bonds, Series 2001L, 5.375%, 5/01/33 (Pre-refunded 5/01/11) 12,800 Metropolitan Transportation Authority, New York, Transportation Revenue 11/16 at 100.00 AAA 10,303,232 Bonds, Series 2006B, 4.500%, 11/15/32 - FSA Insured (UB) 5,000 New York City Industrial Development Agency, New York, Special 8/12 at 101.00 B- 3,791,000 Facilities Revenue Bonds, JFK Airport - American Airlines Inc., Series 2002B, 8.500%, 8/01/28 (Alternative Minimum Tax) 12,000 New York City Municipal Water Finance Authority, New York, Water and 6/11 at 101.00 AAA 11,600,280 Sewerage System Revenue Bonds, Fiscal Series 2001C, 5.125%, 6/15/33 ------------------------------------------------------------------------------------------------------------------------------------ 40,700 Total New York 37,300,482 ------------------------------------------------------------------------------------------------------------------------------------ NORTH CAROLINA - 1.9% (1.2% OF TOTAL INVESTMENTS) 2,950 North Carolina Capital Facilities Financing Agency, Revenue Bonds, 4/13 at 100.00 BBB- 2,443,131 Johnson and Wales University, Series 2003A, 5.000%, 4/01/33 - SYNCORA GTY Insured 4,500 North Carolina Eastern Municipal Power Agency, Power System Revenue 1/09 at 102.00 BBB+ 4,521,465 Refunding Bonds, Series 1999B, 5.600%, 1/01/15 ------------------------------------------------------------------------------------------------------------------------------------ 7,450 Total North Carolina 6,964,596 ------------------------------------------------------------------------------------------------------------------------------------ NORTH DAKOTA - 0.5% (0.3% OF TOTAL INVESTMENTS) 1,865 North Dakota Housing Finance Agency, Home Mortgage Finance Program 7/10 at 100.00 Aa1 1,793,664 Refunding Bonds, Series 2001A, 5.550%, 1/01/32 (Alternative Minimum Tax) ------------------------------------------------------------------------------------------------------------------------------------ OHIO - 1.9% (1.3% OF TOTAL INVESTMENTS) Buckeye Tobacco Settlement Financing Authority, Ohio, Tobacco Settlement Asset-Backed Revenue Bonds, Senior Lien, Series 2007A-2: 10,000 5.750%, 6/01/34 6/17 at 100.00 BBB 6,660,000 1,000 5.875%, 6/01/47 6/17 at 100.00 BBB 625,610 ------------------------------------------------------------------------------------------------------------------------------------ 11,000 Total Ohio 7,285,610 ------------------------------------------------------------------------------------------------------------------------------------ 75 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ OKLAHOMA - 1.0% (0.7% OF TOTAL INVESTMENTS) Oklahoma Development Finance Authority, Revenue Refunding Bonds, Hillcrest Healthcare System, Series 1999A: $ 2,655 5.125%, 8/15/10 (Pre-refunded 8/15/09) 8/09 at 101.00 AAA $ 2,750,155 1,000 5.200%, 8/15/11 (Pre-refunded 8/15/09) 8/09 at 101.00 AAA 1,036,430 ------------------------------------------------------------------------------------------------------------------------------------ 3,655 Total Oklahoma 3,786,585 ------------------------------------------------------------------------------------------------------------------------------------ OREGON - 4.3% (2.9% OF TOTAL INVESTMENTS) 8,000 Clackamas County Hospital Facility Authority, Oregon, Revenue 5/11 at 101.00 A+ 7,529,200 Refunding Bonds, Legacy Health System, Series 2001, 5.250%, 5/01/21 9,000 Oregon Department of Administrative Services, Certificates of 5/11 at 101.00 AA 8,694,540 Participation, Series 2001D, 5.000%, 5/01/26 - AMBAC Insured ------------------------------------------------------------------------------------------------------------------------------------ 17,000 Total Oregon 16,223,740 ------------------------------------------------------------------------------------------------------------------------------------ PENNSYLVANIA - 3.9% (2.6% OF TOTAL INVESTMENTS) 5,000 Allegheny County Hospital Development Authority, Pennsylvania, 11/10 at 102.00 AAA 5,701,650 Revenue Bonds, West Penn Allegheny Health System, Series 2000B, 9.250%, 11/15/30 (Pre-refunded 11/15/10) 1,155 Carbon County Industrial Development Authority, Pennsylvania, Resource No Opt. Call BBB- 1,166,897 Recovery Revenue Refunding Bonds, Panther Creek Partners Project, Series 2000, 6.650%, 5/01/10 (Alternative Minimum Tax) 8,000 Pennsylvania Higher Educational Facilities Authority, Revenue Bonds, 1/11 at 101.00 AA- 7,613,440 UPMC Health System, Series 2001A, 6.000%, 1/15/31 ------------------------------------------------------------------------------------------------------------------------------------ 14,155 Total Pennsylvania 14,481,987 ------------------------------------------------------------------------------------------------------------------------------------ TEXAS - 27.6% (18.2% OF TOTAL INVESTMENTS) 7,500 Austin, Texas, Electric Utility System Revenue Refunding Bonds, Series 11/10 at 100.00 AAA 7,006,050 2001, 5.000%, 11/15/30 - FSA Insured 10,000 Central Texas Regional Mobility Authority, Travis and Williamson Counties, 1/15 at 100.00 AA 7,534,700 Toll Road Revenue Bonds, Series 2005, 5.000%, 1/01/45 - FGIC Insured Dallas-Fort Worth International Airport Public Facility Corporation, Texas, Airport Hotel Revenue Bonds, Series 2001: 15,000 5.250%, 1/15/26 - FSA Insured 1/09 at 100.00 AAA 14,439,750 1,750 5.200%, 1/15/31 - FSA Insured 1/09 at 100.00 AAA 1,636,233 6,000 Decatur Hospital Authority, Texas, Revenue Bonds, Wise Regional Health 9/14 at 100.00 N/R 5,044,860 System, Series 2004A, 7.125%, 9/01/34 10,000 Gulf Coast Industrial Development Authority, Texas, Solid Waste Disposal 4/12 at 100.00 Baa3 9,392,500 Revenue Bonds, Citgo Petroleum Corporation Project, Series 1998, 8.000%, 4/01/28 (Alternative Minimum Tax) 30,980 Harris County-Houston Sports Authority, Texas, Junior Lien Revenue 11/11 at 100.00 AA 25,086,054 Refunding Bonds, Series 2001B, 5.250%, 11/15/40 - MBIA Insured 40,000 Harris County-Houston Sports Authority, Texas, Senior Lien Revenue 11/30 at 54.04 AA 3,654,400 Refunding Bonds, Series 2001A, 0.000%, 11/15/40 - MBIA Insured 3,965 Harris County-Houston Sports Authority, Texas, Third Lien Revenue 11/24 at 52.47 AA 547,249 Bonds, Series 2004-A3., 0.000%, 11/15/35 - MBIA Insured Hays Consolidated Independent School District, Hays County, Texas, General Obligation School Building Bonds, Series 2001: 10,715 0.000%, 8/15/25 (Pre-refunded 8/15/11) 8/11 at 43.18 AAA 4,220,424 12,940 0.000%, 8/15/26 (Pre-refunded 8/15/11) 8/11 at 40.60 AAA 4,792,976 Houston, Texas, Hotel Occupancy Tax and Special Revenue Bonds, Convention and Entertainment Project, Series 2001B: 5,000 0.000%, 9/01/30 - AMBAC Insured No Opt. Call AA 1,269,000 5,540 0.000%, 9/01/31 - AMBAC Insured No Opt. Call AA 1,311,706 75 NXZ Nuveen Dividend Advantage Municipal Fund 2 (continued) Portfolio of INVESTMENTS October 31, 2008 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ TEXAS (continued) $ 5,000 Metro Health Facilities Development Corporation, Texas, Hospital 1/11 at 100.00 Ba3 $ 4,313,750 Revenue Bonds, Wilson N. Jones Memorial Hospital, Series 2001, 7.250%, 1/01/31 3,295 Tarrant County, Texas, Cultural & Educational Facilities Financing 2/17 at 100.00 AA- 826,386 Corporation, Revenue Bonds, Series 2007, Residuals 1760-3, 0.726%, 2/15/36 (IF) 10,500 Texas, General Obligation Bonds, Water Financial Assistance Program, 8/11 at 100.00 Aa1 10,176,495 Series 2001, 5.250%, 8/01/35 2,000 Tom Green County Health Facilities Development Corporation, Texas, 5/11 at 101.00 Baa3 1,981,620 Hospital Revenue Bonds, Shannon Health System Project, Series 2001, 6.750%, 5/15/21 ------------------------------------------------------------------------------------------------------------------------------------ 180,185 Total Texas 103,234,153 ------------------------------------------------------------------------------------------------------------------------------------ WASHINGTON - 4.5% (3.0% OF TOTAL INVESTMENTS) 7,250 Seattle, Washington, Municipal Light and Power Revenue Refunding and 3/11 at 100.00 AAA 6,909,178 Improvement Bonds, Series 2001, 5.125%, 3/01/26 - FSA Insured 7,500 Washington State Healthcare Facilities Authority, Revenue Bonds, Sisters 10/11 at 100.00 AA 7,038,750 of Providence Health System, Series 2001A, 5.250%, 10/01/21 - MBIA Insured 900 Washington State Tobacco Settlement Authority, Tobacco Settlement 6/13 at 100.00 BBB 800,766 Asset-Backed Revenue Bonds, Series 2002, 6.500%, 6/01/26 2,100 Washington, Certificates of Participation, Washington Convention and 7/09 at 100.00 AA 2,129,988 Trade Center, Series 1999, 5.125%, 7/01/13 - MBIA Insured ------------------------------------------------------------------------------------------------------------------------------------ 17,750 Total Washington 16,878,682 ------------------------------------------------------------------------------------------------------------------------------------ WEST VIRGINIA - 1.1% (0.8% OF TOTAL INVESTMENTS) 5,000 Mason County, West Virginia, Pollution Control Revenue Bonds, 10/11 at 100.00 BBB 4,303,600 Appalachian Power Company, Series 2003L, 5.500%, 10/01/22 ------------------------------------------------------------------------------------------------------------------------------------ WISCONSIN - 0.3% (0.2% OF TOTAL INVESTMENTS) 1,000 Wisconsin Health and Educational Facilities Authority, Revenue Bonds, 5/12 at 100.00 N/R (4) 1,127,840 Divine Savior Healthcare, Series 2002A, 7.375%, 5/01/26 (Pre-refunded 5/01/12) ------------------------------------------------------------------------------------------------------------------------------------ $ 728,806 Total Long-Term Investments (cost $602,139,786) - 150.2% 561,670,585 =============----------------------------------------------------------------------------------------------------------------------- 76 PRINCIPAL AMOUNT (000) DESCRIPTION (1) RATINGS (3) VALUEE ------------------------------------------------------------------------------------------------------------------------------------ SHORT-TERM INVESTMENTS - 1.3% (0.8% OF TOTAL INVESTMENTS) $ 4,680 South Carolina JOBS Economic Development Authority, Economic A-1+ $ 4,680,000 Development Revenue Bonds, Franco Manufacturing Company, Variable Rate Demand Obligations, Series 1998, 1.750%, 5/01/19 (Alternative Minimum Tax) (6) =============----------------------------------------------------------------------------------------------------------------------- Total Short-Term Investments (cost $4,680,000) 4,680,000 -------------------------------------------------------------------------------------------------------------------- Total Investments (cost $606,819,786) - 151.5% 566,350,585 -------------------------------------------------------------------------------------------------------------------- Floating Rate Obligations - (3.0)% (11,245,000) -------------------------------------------------------------------------------------------------------------------- Variable Rate Demand Preferred Shares, at Liquidation Value - (52.4)% (7) (196,000,000) -------------------------------------------------------------------------------------------------------------------- Other Assets Less Liabilities - 3.9% 14,833,985 -------------------------------------------------------------------------------------------------------------------- Net Assets Applicable to Common Shares - 100% $ 373,939,570 ====================================================================================================================
(1) All percentages shown in the Portfolio of Investments are based on net assets applicable to Common shares unless otherwise noted. (2) Optional Call Provisions (not covered by the report of independent registered public accounting firm): Dates (month and year) and prices of the earliest optional call or redemption. There may be other call provisions at varying prices at later dates. Certain mortgage-backed securities may be subject to periodic principal paydowns. (3) Ratings (not covered by the report of independent registered public accounting firm): Using the higher of Standard & Poor's Group ("Standard & Poor's") or Moody's Investor Service, Inc. ("Moody's") rating. Ratings below BBB by Standard & Poor's or Baa by Moody's are considered to be below investment grade. The Portfolio of Investments may reflect the ratings on certain bonds insured by ACA, AGC, AMBAC, FGIC, FSA, MBIA, RAAI and SYNCORA as of October 31, 2008. Please see the Portfolio Managers' Commentary for an expanded discussion of the affect on the Fund of changes to the ratings of certain bonds in the portfolio resulting from changes to the ratings of the underlying insurers both during the period and after period end. (4) Backed by an escrow or trust containing sufficient U.S. Government or U.S. Government agency securities which ensure the timely payment of principal and interest. Such investments are normally considered to be equivalent to AAA rated securities. (5) Portion of investment has been pledged as collateral for Recourse Trusts. (6) Investment has a maturity of more than one year, but has variable rate and demand features which qualify it as a short-term investment. The rate disclosed is that in effect at the end of the reporting period. This rate changes periodically based on market conditions or a specified market index. (7) Variable Rate Demand Preferred Shares, at Liquidation Value as a percentage of Total Investments is 34.6%. N/R Not rated. (IF) Inverse floating rate investment. (UB) Underlying bond of an inverse floating rate trust reflected as a financing transaction pursuant to the provisions of SFAS No. 140. See accompanying notes to financial statements. 77 NZF Nuveen Dividend Advantage Municipal Fund 3 Portfolio of INVESTMENTS October 31, 2008
PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ MUNICIPAL BONDS - 160.3% (99.8% OF TOTAL INVESTMENTS) ALABAMA - 1.8% (1.1% OF TOTAL INVESTMENTS) $ 3,500 Alabama Special Care Facilities Financing Authority, Revenue Bonds, 11/16 at 100.00 AA $ 2,892,750 Ascension Health, Series 2008, 5.000%, 11/15/36 (UB) 5,655 Alabama State Port Authority, Revenue Bonds, State Docks Department 10/11 at 100.00 AA (4) 6,029,700 Facilities, Series 2001, 5.250%, 10/01/26 (Pre-refunded 10/01/11) - AMBAC Insured (Alternative Minimum Tax) ------------------------------------------------------------------------------------------------------------------------------------ 9,155 Total Alabama 8,922,450 ------------------------------------------------------------------------------------------------------------------------------------ ALASKA - 0.1% (0.1% OF TOTAL INVESTMENTS) 1,000 Northern Tobacco Securitization Corporation, Alaska, Tobacco Settlement 6/14 at 100.00 Baa3 532,000 Asset-Backed Bonds, Series 2006A, 5.000%, 6/01/46 ------------------------------------------------------------------------------------------------------------------------------------ ARIZONA - 0.9% (0.5% OF TOTAL INVESTMENTS) 3,390 Arizona State Transportation Board, Highway Revenue Bonds, Series 7/18 at 100.00 AAA 2,821,734 2006, Trust 3151, 10.121%, 7/01/33 (IF) 2,200 Salt Verde Financial Corporation, Arizona, Senior Gas Revenue Bonds, No Opt. Call AA- 1,332,034 Series 2007, 5.000%, 12/01/37 ------------------------------------------------------------------------------------------------------------------------------------ 5,590 Total Arizona 4,153,768 ------------------------------------------------------------------------------------------------------------------------------------ ARKANSAS - 0.7% (0.5% OF TOTAL INVESTMENTS) Sebastian County Health Facilities Board, Arkansas, Hospital Revenue Improvement Bonds, Sparks Regional Medical Center, Series 2001A: 1,805 5.500%, 11/01/13 11/11 at 101.00 Baa3 1,754,929 1,900 5.500%, 11/01/14 11/11 at 101.00 Baa3 1,823,468 ------------------------------------------------------------------------------------------------------------------------------------ 3,705 Total Arkansas 3,578,397 ------------------------------------------------------------------------------------------------------------------------------------ CALIFORNIA - 13.0% (8.1% OF TOTAL INVESTMENTS) California Health Facilities Financing Authority, Health Facility Revenue Bonds, Adventist Health System/West, Series 2003A: 855 5.000%, 3/01/28 3/13 at 100.00 A 709,154 140 5.000%, 3/01/33 3/13 at 100.00 A 110,488 920 California Health Facilities Financing Authority, Revenue Bonds, Sutter 11/16 at 100.00 AA- 531,476 Health, Tender Option Bond Trust 3175, 11.475%, 11/15/42 (IF) 5,000 California Infrastructure Economic Development Bank, Revenue Bonds, 8/11 at 102.00 A+ 4,372,800 Kaiser Hospital Assistance LLC, Series 2001A, 5.550%, 8/01/31 4,955 California Statewide Community Development Authority, Revenue Bonds, 5/18 at 100.00 AA- 3,311,796 Sutter Health, Tender Option Bond Trust 3175, 11.640%, 11/15/48 (IF) 18,850 California, General Obligation Veterans Welfare Bonds, Series 2001BZ, 12/08 at 100.00 AA 17,212,499 5.350%, 12/01/21 - MBIA Insured (Alternative Minimum Tax) (5) 11,865 Golden State Tobacco Securitization Corporation, California, Enhanced 6/17 at 100.00 BBB 7,006,283 Tobacco Settlement Asset-Backed Bonds, Series 2007A-1, 5.125%, 6/01/47 Los Angeles Regional Airports Improvement Corporation, California, Lease Revenue Refunding Bonds, LAXFUEL Corporation at Los Angeles International Airport, Series 2001: 13,955 5.750%, 1/01/16 - AMBAC Insured (Alternative Minimum Tax) 1/12 at 100.00 AA 13,744,838 5,000 5.375%, 1/01/21 - AMBAC Insured (Alternative Minimum Tax) 1/12 at 100.00 AA 4,437,050 1,500 5.250%, 1/01/23 - AMBAC Insured (Alternative Minimum Tax) 1/12 at 100.00 AA 1,277,145 10,000 5.500%, 1/01/32 - AMBAC Insured (Alternative Minimum Tax) 1/12 at 100.00 AA 8,281,400 78 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ CALIFORNIA (continued) $ 10,000 San Joaquin Hills Transportation Corridor Agency, Orange County, No Opt. Call AA $ 1,686,000 California, Toll Road Revenue Refunding Bonds, Series 1997A, 0.000%, 1/15/35 - MBIA Insured 3,000 San Mateo County Community College District, California, General No Opt. Call Aa1 806,370 Obligation Bonds, Series 2006C, 0.000%, 9/01/30 - MBIA Insured ------------------------------------------------------------------------------------------------------------------------------------ 86,040 Total California 63,487,299 ------------------------------------------------------------------------------------------------------------------------------------ COLORADO - 5.2% (3.2% OF TOTAL INVESTMENTS) 2,250 Canterberry Crossing Metropolitan District II, Parker, Colorado, Limited 12/12 at 100.00 N/R 1,961,258 Tax General Obligation Bonds, Series 2002, 7.375%, 12/01/32 1,575 Colorado Educational and Cultural Facilities Authority, Charter School 3/13 at 100.00 N/R (4) 1,798,178 Revenue Bonds, Belle Creek Education Center, Series 2002A, 7.625%, 3/15/32 (Pre-refunded 3/15/13) 3,160 Colorado Educational and Cultural Facilities Authority, Charter School 3/10 at 102.00 N/R (4) 3,411,726 Revenue Bonds, Montessori Peaks Building Foundation, Series 2002A, 8.000%, 5/01/32 (Pre-refunded 3/01/10) 1,775 Colorado Educational and Cultural Facilities Authority, Charter School 6/11 at 100.00 Ba1 (4) 1,965,564 Revenue Bonds, Weld County School District 6 - Frontier Academy, Series 2001, 7.375%, 6/01/31 (Pre-refunded 6/01/11) 3,465 Colorado Educational and Cultural Facilities Authority, Revenue Bonds, 5/16 at 102.00 N/R 2,556,269 Montessori Peaks Academy, Series 2006, 5.400%, 5/01/26 3,380 Colorado Housing Finance Authority, Multifamily Project Bonds, Class I, 10/11 at 100.00 AAA 2,817,061 Series 2001A-1, 5.500%, 4/01/31 (Alternative Minimum Tax) 5,000 Compark Business Campus Metropolitan District, Colorado, General 12/17 at 100.00 BBB+ 4,160,700 Obligation Limited Tax Bonds, Series 2007, 5.600%, 12/01/34 - RAAI Insured 2,000 Denver City and County, Colorado, Airport System Revenue Refunding 11/11 at 100.00 A+ 1,905,060 Bonds, Series 2001A, 5.500%, 11/15/16 - FGIC Insured (Alternative Minimum Tax) Denver, Colorado, Airport Revenue Bonds, Trust 2365: 1,340 2.901%, 11/15/23 - FGIC Insured (IF) 11/16 at 100.00 AA 923,662 825 1.184%, 11/15/24 - FGIC Insured (IF) 11/16 at 100.00 AA 558,212 1,085 1.186%, 11/15/25 - FGIC Insured (IF) 11/16 at 100.00 AA 699,196 2,000 Maher Ranch Metropolitan District 4, Colorado, General Obligation 12/17 at 100.00 A3 1,464,800 Limited Tax Bonds, Series 2007, 5.250%, 12/01/36 - RAAI Insured 1,000 Plaza Metropolitan District 1, Lakewood, Colorado, Tax Increment 6/14 at 101.00 N/R 925,710 Revenue Bonds, Series 2003, 8.000%, 12/01/25 ------------------------------------------------------------------------------------------------------------------------------------ 28,855 Total Colorado 25,147,396 ------------------------------------------------------------------------------------------------------------------------------------ DELAWARE - 0.3% (0.2% OF TOTAL INVESTMENTS) 1,595 Delaware Housing Authority, Multifamily Mortgage Revenue Bonds, 7/12 at 100.00 Aa3 1,632,897 Series 2001A, 5.400%, 7/01/24 ------------------------------------------------------------------------------------------------------------------------------------ DISTRICT OF COLUMBIA - 0.7% (0.5% OF TOTAL INVESTMENTS) 1,375 District of Columbia, Revenue Bonds, Catholic University of America, 10/09 at 101.00 AA 1,369,074 Series 1999, 5.625%, 10/01/29 - AMBAC Insured 1,335 Washington Convention Center Authority, District of Columbia, Senior 10/16 at 100.00 AA 627,597 Lien Dedicated Tax Revenue Bonds, Series 2007, Residuals 1606, 1.947%, 10/01/30 - AMBAC Insured (IF) 3,335 Washington DC Convention Center Authority, Dedicated Tax Revenue 10/16 at 100.00 AA 1,567,817 Bonds, Residual Series 1730,1731, 1736, 0.469%, 10/01/30 - AMBAC Insured (IF) ------------------------------------------------------------------------------------------------------------------------------------ 6,045 Total District of Columbia 3,564,488 ------------------------------------------------------------------------------------------------------------------------------------ FLORIDA - 2.4% (1.5% OF TOTAL INVESTMENTS) Orange County Housing Finance Authority, Florida, Multifamily Housing Revenue Bonds, Oak Glen Apartments, Series 2001G: 1,105 5.400%, 12/01/32 - FSA Insured 12/11 at 100.00 AAA 899,426 2,195 5.450%, 12/01/41 - FSA Insured 12/11 at 100.00 AAA 1,721,758 4,175 Pace Property Finance Authority Inc., Florida, Utility System Improvement 3/09 at 101.00 AA 4,183,058 and Revenue Refunding Bonds, Series 1997, 5.250%, 9/01/17 - AMBAC Insured 79 NZF Nuveen Dividend Advantage Municipal Fund 3 (continued) Portfolio of INVESTMENTS October 31, 2008 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ FLORIDA (continued) $ 5,455 South Miami Health Facilities Authority, Florida, Hospital Revenue, Baptist 8/17 at 100.00 AA- $ 4,291,721 Health System Obligation Group, Series 2007, 5.000%, 8/15/42 (UB) 1,000 Tolomato Community Development District, Florida, Special Assessment 5/18 at 100.00 N/R 807,270 Bonds, Series 2007, 6.650%, 5/01/40 ------------------------------------------------------------------------------------------------------------------------------------ 13,930 Total Florida 11,903,233 ------------------------------------------------------------------------------------------------------------------------------------ GEORGIA - 2.6% (1.6% OF TOTAL INVESTMENTS) 5,000 Atlanta, Georgia, Airport General Revenue Bonds, Series 2000B, 5.625%, 1/10 at 101.00 A+ 4,207,550 1/01/30 - FGIC Insured (Alternative Minimum Tax) 2,700 Atlanta, Georgia, Tax Allocation Bonds, Atlantic Station Project, Series 12/11 at 101.00 AAA 3,124,224 2001, 7.900%, 12/01/24 (Pre-refunded 12/01/11) 2,000 Fulton County Residential Care Facilities Authority, Georgia, Revenue 7/17 at 100.00 N/R 1,172,040 Bonds, Elderly Care, Lenbrook Square Project, Series 2006A, 5.125%, 7/01/42 3,740 Gainesville and Hall County Hospital Authority, Georgia, Revenue 5/11 at 100.00 A- (4) 3,969,786 Anticipation Certificates, Northeast Georgia Health Services Inc., Series 2001, 5.500%, 5/15/31 (Pre-refunded 5/15/11) 500 Gainesville Redevelopment Authority, Georgia, Educational Facilities 3/17 at 100.00 N/R 285,350 Revenue Bonds, Riverside Military Academy Project, Series 2007, 5.125%, 3/01/37 ------------------------------------------------------------------------------------------------------------------------------------ 13,940 Total Georgia 12,758,950 ------------------------------------------------------------------------------------------------------------------------------------ ILLINOIS - 17.0% (10.6% OF TOTAL INVESTMENTS) 8,375 Chicago, Illinois, Revenue Bonds, Midway Airport, Series 2001A, 5.500%, 1/11 at 101.00 AAA 7,787,578 1/01/19 - FSA Insured (Alternative Minimum Tax) 1,600 Chicago, Illinois, Sales Tax Revenue Bonds, Series 1998, 5.250%, 1/01/28 - FGIC Insured 1/09 at 101.50 AAA 1,569,568 4,950 Chicago, Illinois, Second Lien Passenger Facility Charge Revenue Bonds, 1/11 at 101.00 AA 3,983,364 O'Hare International Airport, Series 2001A, 5.375%, 1/01/32 - AMBAC Insured (Alternative Minimum Tax) 2,220 Chicago, Illinois, Second Lien Wastewater Transmission Revenue Bonds, No Opt. Call AA 2,379,840 Series 2001A, 5.500%, 1/01/16 - MBIA Insured 10,000 Chicago, Illinois, Senior Lien Water Revenue Bonds, Series 2001, 11/11 at 100.00 AA (4) 10,628,200 5.000%, 11/01/26 (Pre-refunded 11/01/11) - AMBAC Insured 1,665 Chicago, Illinois, Third Lien General Airport Revenue Bonds, O'Hare 1/16 at 100.00 A1 1,436,778 International Airport, Series 2005A, 5.000%, 1/01/33 - FGIC Insured 2,415 Illinois Finance Authority, General Obligation Debt Certificates, Local 12/14 at 100.00 Aa3 2,228,828 Government Program - Kankakee County, Series 2005B, 5.000%, 12/01/24 - AMBAC Insured 2,385 Illinois Finance Authority, Revenue Bonds, Sherman Health Systems, 8/17 at 100.00 A- 1,650,038 Series 2007A, 5.500%, 8/01/37 1,130 Illinois Health Facilities Authority, Revenue Bonds, Condell Medical 5/10 at 101.00 Baa3 1,025,746 Center, Series 2000, 6.500%, 5/15/30 9,000 Illinois Health Facilities Authority, Revenue Bonds, Covenant Retirement 12/11 at 101.00 BBB 7,622,280 Communities Inc., Series 2001, 5.875%, 12/01/31 15,000 Illinois Health Facilities Authority, Revenue Bonds, Loyola University 7/11 at 100.00 Baa2 (4) 16,162,050 Health System, Series 2001A, 6.125%, 7/01/31 (Pre-refunded 7/01/11) 5,000 Lake County School District 38, Big Hallow, Illinois, General Obligation No Opt. Call Baa1 2,255,250 Bonds, Series 2005, 0.000%, 2/01/22 - AMBAC Insured 7,000 Lombard Public Facilities Corporation, Illinois, First Tier Conference 1/16 at 100.00 N/R 5,733,840 Center and Hotel Revenue Bonds, Series 2005A-1, 7.125%, 1/01/36 16,900 Metropolitan Pier and Exposition Authority, Illinois, Revenue Bonds, 12/09 at 101.00 AAA 16,569,772 McCormick Place Expansion Project, Series 1999A, 5.250%, 12/15/28 - FGIC Insured 2,000 Metropolitan Pier and Exposition Authority, Illinois, Revenue Refunding No Opt. Call AAA 2,017,100 Bonds, McCormick Place Expansion Project, Series 1998A, 5.500%, 6/15/29 - FGIC Insured ------------------------------------------------------------------------------------------------------------------------------------ 89,640 Total Illinois 83,050,232 ------------------------------------------------------------------------------------------------------------------------------------ 80 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ INDIANA - 6.6% (4.1% OF TOTAL INVESTMENTS) Clark-Pleasant Community School Building Corporation, Indiana, First Mortgage Bonds, Series 2001: $ 1,255 5.000%, 7/15/21 (Pre-refunded 1/15/12) - AMBAC Insured 1/12 at 100.00 AA (4) $ 1,331,116 1,000 5.000%, 1/15/26 (Pre-refunded 1/15/12) - AMBAC Insured 1/12 at 100.00 AA (4) 1,060,650 Evansville Vanderburgh Public Library Lease Corporation, Indiana, First Mortgage Bonds, Series 2001: 2,000 5.750%, 7/15/18 (Pre-refunded 1/15/12) - MBIA Insured 1/12 at 100.00 AA (4) 2,166,800 2,750 5.125%, 1/15/24 (Pre-refunded 1/15/12) - MBIA Insured 1/12 at 100.00 AA (4) 2,927,210 1,250 Hamilton Southeastern Cumberland Campus School Building 1/12 at 100.00 AA (4) 1,330,550 Corporation, Indiana, First Mortgage Bonds, Series 2001, 5.125%, 1/15/23 (Pre-refunded 1/15/12) - AMBAC Insured 9,500 Indiana Educational Facilities Authority, Revenue Bonds, Butler University, 2/11 at 100.00 AA 9,241,410 Series 2001, 5.500%, 2/01/26 - MBIA Insured 4,230 Indiana Finance Authority, Educational Facilities Revenue Bonds, Tudor 6/15 at 100.00 Aa3 3,984,998 Park Foundation, Series 2005B, 5.000%, 6/01/24 2,800 Indiana Health Facility Financing Authority, Revenue Bonds, Community 5/15 at 100.00 AA 2,324,504 Hospitals of Indiana, Series 2005A, 5.000%, 5/01/35 - AMBAC Insured 3,500 University of Southern Indiana, Student Fee Bonds, Series 2001H, 10/11 at 100.00 Aa3 3,314,745 5.000%, 10/01/21 - AMBAC Insured Vigo County, Indiana, Hospital Authority, Union Hospital, Revenue Bonds, Series 2007: 2,500 5.750%, 9/01/42 9/17 at 100.00 N/R 1,642,800 2,500 5.800%, 9/01/47 9/17 at 100.00 N/R 1,641,725 1,090 Wayne County Jail Holding Corporation, Indiana, First Mortgage Bonds, 1/13 at 101.00 AA (4) 1,198,749 Series 2001, 5.500%, 7/15/22 (Pre-refunded 1/15/13) - AMBAC Insured ------------------------------------------------------------------------------------------------------------------------------------ 34,375 Total Indiana 32,165,257 ------------------------------------------------------------------------------------------------------------------------------------ IOWA - 7.3% (4.5% OF TOTAL INVESTMENTS) 2,000 Iowa Finance Authority, Healthcare Revenue Bonds, Great River Medical 5/11 at 100.00 Aaa 1,827,420 Center, Series 2001, 5.250%, 5/15/31 - FSA Insured Iowa Tobacco Settlement Authority, Tobacco Settlement Asset-Backed Revenue Bonds, Series 2001B: 28,000 5.300%, 6/01/25 (Pre-refunded 6/01/11) 6/11 at 101.00 AAA 29,609,435 3,950 5.600%, 6/01/35 (Pre-refunded 6/01/11) 6/11 at 101.00 AAA 4,180,917 ------------------------------------------------------------------------------------------------------------------------------------ 33,950 Total Iowa 35,617,772 ------------------------------------------------------------------------------------------------------------------------------------ KANSAS - 0.2% (0.1% OF TOTAL INVESTMENTS) Manhattan Health Care Facility Revenue Bonds, Kansas, Meadowlarks Hills Retirement, Series 2007B: 1,000 5.125%, 5/15/37 5/14 at 103.00 N/R 604,110 1,000 5.125%, 5/15/42 5/14 at 103.00 N/R 590,340 ------------------------------------------------------------------------------------------------------------------------------------ 2,000 Total Kansas 1,194,450 ------------------------------------------------------------------------------------------------------------------------------------ KENTUCKY - 3.8% (2.4% OF TOTAL INVESTMENTS) 1,000 Kentucky Economic Development Finance Authority, Louisville Arena 6/18 at 100.00 AAA 932,090 Project Revenue Bonds, Louisville Arena Authority, Inc., Series 2008A-1, 6.000%, 12/01/42 - AGC Insured 18,500 Louisville and Jefferson County Metropolitan Sewer District, Kentucky, 11/11 at 101.00 AA 17,534,853 Sewer and DrainageSystem Revenue Bonds, Series 2001A, 5.125%, 5/15/27 - MBIA Insured ------------------------------------------------------------------------------------------------------------------------------------ 19,500 Total Kentucky 18,466,943 ------------------------------------------------------------------------------------------------------------------------------------ LOUISIANA - 4.0% (2.5% OF TOTAL INVESTMENTS) 3,000 Louisiana Local Government Environmental Facilities & Community 11/17 at 100.00 BB+ 2,282,220 Development Authority, Revenue Bonds, Westlake Chemical Corporation Project, Series 2007, 6.750%, 11/01/32 3,700 Louisiana Public Facilities Authority, Revenue Bonds, Ochsner Clinic 5/17 at 100.00 A3 2,883,077 Foundation Project, Series 2007A, 5.500%, 5/15/47 81 NZF Nuveen Dividend Advantage Municipal Fund 3 (continued) Portfolio of INVESTMENTS October 31, 2008 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ LOUISIANA (continued) $ 19,890 Tobacco Settlement Financing Corporation, Louisiana, Tobacco 5/11 at 101.00 BBB $14,230,102 Settlement Asset-Backed Bonds, Series 2001B, 5.875%, 5/15/39 ------------------------------------------------------------------------------------------------------------------------------------ 26,590 Total Louisiana 19,395,399 ------------------------------------------------------------------------------------------------------------------------------------ MAINE - 1.2% (0.7% OF TOTAL INVESTMENTS) Maine State Housing Authority, Single Family Mortgage Purchase Bonds, Series 2001B: 4,610 5.400%, 11/15/21 (Alternative Minimum Tax) 11/10 at 100.00 AA+ 4,161,770 1,610 5.500%, 11/15/32 (Alternative Minimum Tax) 11/10 at 100.00 AA+ 1,588,410 ------------------------------------------------------------------------------------------------------------------------------------ 6,220 Total Maine 5,750,180 ------------------------------------------------------------------------------------------------------------------------------------ MARYLAND - 2.6% (1.6% OF TOTAL INVESTMENTS) 1,000 Howard County, Maryland, Retirement Community Revenue Bonds, 4/17 at 100.00 N/R 591,200 Vantage House, Series 2007B, 5.250%, 4/01/37 1,570 Maryland Community Development Administration, Insured Multifamily 7/11 at 100.00 Aa2 1,397,237 Housing Mortgage Loan Revenue Bonds, Series 2001B, 5.250%, 7/01/21 (Alternative Minimum Tax) 2,000 Maryland Economic Development Corporation, Revenue Bonds, 12/16 at 100.00 N/R 1,198,720 Chesapeake Bay Hyatt Conference Center, Series 2006A, 5.000%, 12/01/31 10,600 Maryland Energy Financing Administration, Revenue Bonds, AES Warrior 1/09 at 100.00 N/R 9,077,628 Run Project, Series 1995, 7.400%, 9/01/19 (Alternative Minimum Tax) 555 Maryland Health and Higher Educational Facilities Authority, Revenue 7/17 at 100.00 BBB+ 361,749 Bonds, Mercy Ridge Retirement Community, Series 2007, 4.750%, 7/01/34 ------------------------------------------------------------------------------------------------------------------------------------ 15,725 Total Maryland 12,626,534 ------------------------------------------------------------------------------------------------------------------------------------ MASSACHUSETTS - 2.3% (1.4% OF TOTAL INVESTMENTS) 1,375 Massachusetts Development Finance Agency, Revenue Bonds, Orchard 10/12 at 102.00 BB- 898,824 Cove, Series 2007, 5.250%, 10/01/26 1,000 Massachusetts Health and Educational Facilities Authority, Revenue 7/15 at 100.00 BBB- 708,260 Bonds, Milton Hospital Project, Series 2005D, 5.250%, 7/01/30 4,860 Massachusetts Housing Finance Agency, Single Family Housing Revenue 6/18 at 100.00 Aa2 2,987,248 Bonds, Series 2008, Trust 3145, 11.962%, 6/01/39 (IF) 5,000 Massachusetts Port Authority, Special Facilities Revenue Bonds, Delta 1/11 at 101.00 AA 4,013,900 Air Lines Inc., Series2001A, 5.500%, 1/01/18 - AMBAC Insured (Alternative Minimum Tax) 3,465 Massachusetts Water Resources Authority, General Revenue Bonds, 2/17 at 100.00 AAA 2,673,144 4.500%, 8/01/46 - FSA Insured (UB) ------------------------------------------------------------------------------------------------------------------------------------ 15,700 Total Massachusetts 11,281,376 ------------------------------------------------------------------------------------------------------------------------------------ MICHIGAN - 10.9% (6.8% OF TOTAL INVESTMENTS) 15,000 Detroit City School District, Wayne County, Michigan, Unlimited Tax No Opt. Call AAA 15,955,500 School Building and SiteImprovement Bonds, Series 2001A, 6.000%, 5/01/29 - FSA Insured (UB) 2,000 Garden City Hospital Finance Authority, Michigan, Revenue Bonds, 8/17 at 100.00 N/R 1,097,680 Garden City Hospital Obligated Group, Series 2007A, 5.000%, 8/15/38 11,000 Kent Hospital Finance Authority, Michigan, Revenue Bonds, Spectrum 7/11 at 101.00 AA (4) 11,827,420 Health, Series 2001A, 5.500%, 1/15/31 (Pre-refunded 7/15/11) 1,235 Michigan State Building Authority, Revenue Bonds, Facilities Program, 10/11 at 100.00 A+ 1,247,115 Series 2001I, 5.500%, 10/15/18 1,355 Michigan State Hospital Finance Authority, Hospital Revenue Bonds, 2/09 at 101.00 BB 966,887 Detroit Medical Center Obligated Group, Series 1998A, 5.250%, 8/15/23 3,485 Michigan State Hospital Finance Authority, Hospital Revenue Refunding No Opt. Call AA (4) 3,725,012 Bonds, Sisters of Mercy Health Corporation, Series 1993P, 5.375%, 8/15/14 - MBIA Insured (ETM) 82 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ MICHIGAN (continued) Michigan State Hospital Finance Authority, Hospital Revenue Refunding Bonds, Sparrow Obligated Group, Series 2001: $ 1,400 5.500%, 11/15/21 (Pre-refunded 11/15/11) 11/11 at 101.00 A+ (4) $ 1,513,918 2,500 5.625%, 11/15/31 (Pre-refunded 11/15/11) 11/11 at 101.00 A+ (4) 2,712,425 3,500 Michigan State Hospital Finance Authority, Revenue Bonds, Trinity Health 12/16 at 100.00 Aa2 2,999,325 Care Group, Series 2008, 5.000%, 12/01/31 (UB) 12,640 Royal Oak Hospital Finance Authority, Michigan, Hospital Revenue Bonds, 11/11 at 100.00 AA 11,262,240 William Beaumont Hospital, Series 2001M, 5.250%, 11/15/31 - MBIA Insured ------------------------------------------------------------------------------------------------------------------------------------ 54,115 Total Michigan 53,307,522 ------------------------------------------------------------------------------------------------------------------------------------ MINNESOTA - 0.6% (0.4% OF TOTAL INVESTMENTS) 2,275 Dakota County Community Development Agency, Minnesota, GNMA 10/11 at 105.00 Aaa 1,949,470 Collateralized Multifamily Housing Revenue Bonds, Rose Apartments Project, Series 2001, 6.350%, 10/20/37 (Alternative Minimum Tax) 1,375 Saint Paul Port Authority, Minnesota, Lease Revenue Bonds, Regions 8/16 at 100.00 N/R 831,696 Hospital Parking Ramp Project, Series 2007-1, 5.000%, 8/01/36 ------------------------------------------------------------------------------------------------------------------------------------ 3,650 Total Minnesota 2,781,166 ------------------------------------------------------------------------------------------------------------------------------------ MISSISSIPPI - 1.0% (0.6% OF TOTAL INVESTMENTS) 2,155 Mississippi Business Finance Corporation, GNMA Collateralized 5/09 at 103.00 AAA 1,987,794 Retirement Facility Mortgage Revenue Refunding Bonds, Aldersgate Retirement Community Inc. Project, Series 1999A, 5.450%, 5/20/34 3,000 Mississippi Hospital Equipment and Facilities Authority, Revenue Bonds, 9/14 at 100.00 AA 2,650,980 Baptist Memorial Healthcare, Series 2008, 5.000%, 9/01/24 (UB) ------------------------------------------------------------------------------------------------------------------------------------ 5,155 Total Mississippi 4,638,774 ------------------------------------------------------------------------------------------------------------------------------------ MISSOURI - 3.3% (2.1% OF TOTAL INVESTMENTS) 1,495 Cape Girardeau County Industrial Development Authority, Missouri, 6/17 at 100.00 N/R 1,041,043 Health Facilities Revenue Bonds, Southeast Missouri Hospital Association, Series 2007, 5.000%, 6/01/36 1,000 Clinton County Industrial Development Authority, Missouri, Revenue 12/17 at 100.00 N/R 612,160 Bonds, Cameron Regional Medical Center, Series 2007, 5.000%, 12/01/32 1,825 Fenton, Missouri, Tax Increment Refunding and Improvement Revenue 10/12 at 100.00 N/R (4) 2,015,384 Bonds, Gravois Bluffs Redevelopment Project, Series 2002, 6.125%, 10/01/21 (Pre-refunded 10/01/12) Missouri Development Finance Board, Cultural Facilities Revenue Bonds, Nelson Gallery Foundation, Series 2001A: 3,335 5.250%, 12/01/19 - MBIA Insured 12/11 at 100.00 AA 3,376,454 3,510 5.250%, 12/01/20 - MBIA Insured 12/11 at 100.00 AA 3,536,606 3,695 5.250%, 12/01/21 - MBIA Insured 12/11 at 100.00 AA 3,708,376 2,040 5.250%, 12/01/22 - MBIA Insured 12/11 at 100.00 AA 2,037,899 ------------------------------------------------------------------------------------------------------------------------------------ 16,900 Total Missouri 16,327,922 ------------------------------------------------------------------------------------------------------------------------------------ MONTANA - 0.9% (0.5% OF TOTAL INVESTMENTS) 5,000 Montana Board of Investments, Exempt Facility Revenue Bonds, 7/10 at 101.00 Caa1 4,127,550 Stillwater Mining Company, Series 2000, 8.000%, 7/01/20 (Alternative Minimum Tax) ------------------------------------------------------------------------------------------------------------------------------------ NEBRASKA - 1.2% (0.7% OF TOTAL INVESTMENTS) Nebraska Investment Finance Authority, Single Family Housing Revenue Bonds, Series 2001D: 2,135 5.250%, 9/01/21 (Alternative Minimum Tax) 9/11 at 100.00 AAA 2,081,561 2,860 5.375%, 9/01/32 (Alternative Minimum Tax) 9/11 at 100.00 AAA 2,807,405 1,005 Omaha Public Power District, Nebraska, Separate Electric System 2/17 at 100.00 AAA 893,083 Revenue Bonds, Nebraska City 2, Series 2006A, Trust 11673, 14.495%, 2/01/49 - AMBAC Insured (IF) ------------------------------------------------------------------------------------------------------------------------------------ 6,000 Total Nebraska 5,782,049 ------------------------------------------------------------------------------------------------------------------------------------ 83 NZF Nuveen Dividend Advantage Municipal Fund 3 (continued) Portfolio of INVESTMENTS October 31, 2008 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ NEVADA - 1.4% (0.9% OF TOTAL INVESTMENTS) $ 2,000 Director of Nevada State Department of Business and Industry, Revenue 1/10 at 100.00 AA $ 1,202,280 Bonds, Las Vegas Monorail Project, First Tier, Series 2000, 5.375%, 1/01/40 - AMBAC Insured 4,000 Director of Nevada State Department of Business and Industry, Revenue 1/10 at 102.00 N/R 932,120 Bonds, Las Vegas Monorail Project, Second Tier, Series 2000, 7.375%, 1/01/40 200 Nevada Housing Division, Single Family Mortgage Bonds, Senior Series 4/09 at 100.75 Aaa 194,846 1998A-1, 5.300%, 4/01/18 (Alternative Minimum Tax) 4,290 University of Nevada, Revenue Bonds, Community College System, 1/12 at 100.00 AA- (4) 4,580,004 Series 2001A, 5.250%, 7/01/26 (Pre-refunded 1/01/12) - FGIC Insured ------------------------------------------------------------------------------------------------------------------------------------ 10,490 Total Nevada 6,909,250 ------------------------------------------------------------------------------------------------------------------------------------ NEW HAMPSHIRE - 0.4% (0.3% OF TOTAL INVESTMENTS) 2,000 New Hampshire Health and Education Authority, Hospital Revenue Bonds, 10/11 at 101.00 Aaa 2,001,860 Concord Hospital, Series 2001, 5.500%, 10/01/21 - FSA Insured ------------------------------------------------------------------------------------------------------------------------------------ NEW JERSEY - 4.0% (2.5% OF TOTAL INVESTMENTS) 10,000 New Jersey Economic Development Authority, Water Facilities Revenue 11/12 at 101.00 Aa3 7,863,500 Bonds, American Water Company, Series 2002A, 5.250%, 11/01/32 - AMBAC Insured (Alternative Minimum Tax) 450 New Jersey Health Care Facilities Financing Authority, Revenue Bonds, 7/13 at 100.00 Ba2 260,663 Somerset Medical Center, Series 2003, 5.500%, 7/01/33 4,125 New Jersey Transit Corporation, Certificates of Participation, Federal No Opt. Call AA 4,352,329 Transit Administration Grants, Series 2002A, 5.500%, 9/15/13 - AMBAC Insured 20,000 New Jersey Transportation Trust Fund Authority, Transportation System No Opt. Call AA 6,075,200 Bonds, Series 2006C, 0.000%, 12/15/28 - AMBAC Insured 2,000 Tobacco Settlement Financing Corporation, New Jersey, Tobacco 6/17 at 100.00 BBB 1,101,240 Settlement Asset-Backed Bonds, Series 2007-1A, 4.750%, 6/01/34 ------------------------------------------------------------------------------------------------------------------------------------ 36,575 Total New Jersey 19,652,932 ------------------------------------------------------------------------------------------------------------------------------------ NEW YORK - 3.9% (2.4% OF TOTAL INVESTMENTS) 900 Albany Industrial Development Agency, New York, Revenue Bonds, 4/17 at 100.00 N/R 611,253 Brighter Choice Charter Schools, Series 2007A, 5.000%, 4/01/32 1,780 East Rochester Housing Authority, New York, GNMA Secured Revenue 10/11 at 101.00 AAA 1,587,101 Bonds, Gates Senior Housing Inc., Series 2001, 5.300%, 4/20/31 220 Hudson Yards Infrastructure Corporation, New York, Revenue Bonds, 2/17 at 100.00 AA 90,614 Driver Trust 1649, 2006, 4.745%, 2/15/47 - MBIA Insured (IF) 4,360 Hudson Yards Infrastructure Corporation, New York, Revenue Bonds, 2/17 at 100.00 AA 3,102,881 Series 2006A, 4.500%, 2/15/47 - MBIA Insured (UB) 4,155 Monroe County Airport Authority, New York, Revenue Refunding Bonds, No Opt. Call AA 4,192,852 Greater Rochester International Airport, Series 1999, 5.750%, 1/01/13 - MBIA Insured (Alternative Minimum Tax) 7,000 New York City Industrial Development Agency, New York, American 8/16 at 101.00 B- 4,833,010 Airlines-JFK International Airport Special Facility Revenue Bonds, Series 2005, 7.750%, 8/01/31 (Alternative Minimum Tax) 1,715 New York City, New York, General Obligation Bonds, Fiscal Series 2002G, 8/12 at 100.00 AA 1,733,694 5.625%, 8/01/20 - MBIA Insured 785 New York City, New York, General Obligation Bonds, Fiscal Series 2002G, 8/12 at 100.00 Aa3 (4) 860,101 5.625%, 8/01/20 (Pre-refunded 8/01/12) - MBIA Insured 2,000 New York State Tobacco Settlement Financing Corporation, Tobacco 6/11 at 100.00 AA- 2,027,240 Settlement Asset-Backed and State Contingency Contract-Backed Bonds, Series 2003B-1C, 5.500%, 6/01/16 ------------------------------------------------------------------------------------------------------------------------------------ 22,915 Total New York 19,038,746 ------------------------------------------------------------------------------------------------------------------------------------ 84 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ NORTH CAROLINA - 1.3% (0.8% OF TOTAL INVESTMENTS) $ 3,080 Charlotte-Mecklenberg Hospital Authority, North Carolina, Carolinas 1/18 at 100.00 AA- $ 1,893,954 Health Care System Revenue Bonds, Series 2008, Trust 1149, 6.780%, 1/15/47 (IF) 1,200 Charlotte-Mecklenburg Hospital Authority, North Carolina, Health Care 1/17 at 100.00 AA- 1,026,204 System Revenue Bonds, Carolinas Health Care, Series 2007A, 5.000%, 1/15/31 1,750 Charlotte-Mecklenburg Hospital Authority, North Carolina, Healthcare 1/15 at 100.00 AA- (4) 1,856,313 System Revenue Bonds, DBA Carolinas Healthcare System, Series 2005A, 4.875%, 1/15/32 (Pre-refunded 1/15/15) 1,600 North Carolina Municipal Power Agency 1, Catawba Electric Revenue No Opt. Call A2 1,664,384 Bonds, Series 2003A, 5.500%, 1/01/13 ------------------------------------------------------------------------------------------------------------------------------------ 7,630 Total North Carolina 6,440,855 ------------------------------------------------------------------------------------------------------------------------------------ OHIO - 2.8% (1.8% OF TOTAL INVESTMENTS) Buckeye Tobacco Settlement Financing Authority, Ohio, Tobacco Settlement Asset-Backed Revenue Bonds, Senior Lien, Series 2007A-2: 3,435 5.125%, 6/01/24 6/17 at 100.00 BBB 2,692,353 710 5.875%, 6/01/30 6/17 at 100.00 BBB 497,717 685 5.750%, 6/01/34 6/17 at 100.00 BBB 456,210 1,570 5.875%, 6/01/47 6/17 at 100.00 BBB 982,208 1,505 Ohio Housing Finance Agency, GNMA Mortgage-Backed Securities 3/09 at 100.75 Aaa 1,393,209 Program Residential MortgageRevenue Bonds, Series 1998A-1, 5.300%, 9/01/19 - FSA Insured (Alternative Minimum Tax) 6,900 Ohio Water Development Authority, Solid Waste Disposal Revenue Bonds, 9/09 at 102.00 N/R 5,917,233 Bay Shore Power, Series 1998B, 6.625%, 9/01/20 (Alternative Minimum Tax) 1,870 Portage County, Ohio, General Obligation Bonds, Series 2001, 5.000%, 12/11 at 100.00 AA 1,869,925 12/01/21 - FGIC Insured ------------------------------------------------------------------------------------------------------------------------------------ 16,675 Total Ohio 13,808,855 ------------------------------------------------------------------------------------------------------------------------------------ OKLAHOMA - 2.5% (1.6% OF TOTAL INVESTMENTS) Oklahoma Development Finance Authority, Revenue Bonds, Saint John Health System, Series 2007: 4,930 5.000%, 2/15/37 2/17 at 100.00 AA- 4,076,962 955 5.000%, 2/15/42 2/17 at 100.00 AA- 771,659 2,500 Oklahoma Development Finance Authority, Revenue Refunding Bonds, 8/09 at 101.00 AAA 2,599,350 Hillcrest Healthcare System, Series 1999A, 5.625%, 8/15/29 (Pre-refunded 8/15/09) Tulsa County Industrial Authority, Oklahoma, Health Care Revenue Bonds, Saint Francis Health System, Series 2006: 6,305 5.000%, 12/15/36 (UB) 12/16 at 100.00 AA 4,903,335 88 Tulsa County Industrial Authority, Oklahoma, Health Care Revenue Bonds, 12/16 at 100.00 AA 48,873 Saint Francis Health System, Series 2006, Trust 3500, 7.262%, 12/15/36 (IF) ------------------------------------------------------------------------------------------------------------------------------------ 14,778 Total Oklahoma 12,400,179 ------------------------------------------------------------------------------------------------------------------------------------ OREGON - 2.7% (1.7% OF TOTAL INVESTMENTS) 4,700 Oregon Health, Housing, Educational and Cultural Facilities Authority, 11/11 at 101.00 AA 4,490,897 Revenue Bonds, PeaceHealth Project, Series 2001, 5.250%, 11/15/21 - AMBAC Insured 10,000 Oregon Housing and Community Services Department, Multifamily 7/10 at 100.00 Aaa 8,527,100 Housing Revenue Bonds, Series 2000A, 6.050%, 7/01/42 (Alternative Minimum Tax) ------------------------------------------------------------------------------------------------------------------------------------ 14,700 Total Oregon 13,017,997 ------------------------------------------------------------------------------------------------------------------------------------ 85 NZF Nuveen Dividend Advantage Municipal Fund 3 (continued) Portfolio of INVESTMENTS October 31, 2008 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ PENNSYLVANIA - 2.3% (1.4% OF TOTAL INVESTMENTS) Allegheny County Hospital Development Authority, Pennsylvania, Revenue Bonds, West Penn Allegheny Health System, Series 2000B: $ 2,000 9.250%, 11/15/22 (Pre-refunded 11/15/10) 11/10 at 102.00 AAA $ 2,280,660 2,000 9.250%, 11/15/30 (Pre-refunded 11/15/10) 11/10 at 102.00 AAA 2,280,660 500 Bucks County Industrial Development Authority, Pennsylvania, Charter 3/17 at 100.00 BBB 323,625 School Revenue Bonds, School Lane Charter School, Series 2007A, 5.000%, 3/15/37 3,500 Pennsylvania Economic Development Financing Authority, Senior Lien 1/09 at 100.00 B- 2,973,740 Resource Recovery Revenue Bonds, Northampton Generating Project, Series 1994A, 6.600%, 1/01/19 (Alternative Minimum Tax) 3,205 Philadelphia School District, Pennsylvania, General Obligation Bonds, 8/12 at 100.00 Aa3 (4) 3,493,771 Series 2002B, 5.625%, 8/01/16 (Pre-refunded 8/01/12) - FGIC Insured ------------------------------------------------------------------------------------------------------------------------------------ 11,205 Total Pennsylvania 11,352,456 ------------------------------------------------------------------------------------------------------------------------------------ PUERTO RICO - 0.5% (0.3% OF TOTAL INVESTMENTS) 2,500 Puerto Rico Sales Tax Financing Corporation, Sales Tax Revenue Bonds, 8/17 at 100.00 A+ 2,173,450 Series 2007A, 5.250%, 8/01/57 ------------------------------------------------------------------------------------------------------------------------------------ SOUTH CAROLINA - 1.5% (0.9% OF TOTAL INVESTMENTS) 6,850 South Carolina Transportation Infrastructure Bank, Revenue Bonds, 10/11 at 100.00 Aa3 (4) 7,365,394 Series 2001A, 5.500%, 10/01/22 (Pre-refunded 10/01/11) - AMBAC Insured ------------------------------------------------------------------------------------------------------------------------------------ TENNESSEE - 2.0% (1.2% OF TOTAL INVESTMENTS) 3,680 Knox County Health, Educational and Housing Facilities Board, 1/17 at 30.07 A- 319,976 Tennessee, Hospital Revenue Refunding Bonds, Covenant Health, Series 2006, 0.000%, 1/01/41 5,210 Memphis-Shelby County Airport Authority, Tennessee, Airport Revenue 3/11 at 100.00 AAA 5,142,010 Bonds, Series 2001A, 5.500%, 3/01/14 - FSA Insured (Alternative Minimum Tax) 275 Sullivan County Health Educational and Housing Facilities Board, 9/16 at 100.00 BBB+ 180,810 Tennessee, Revenue Bonds, Wellmont Health System, Series 2006C, 5.250%, 9/01/36 Sumner County Health, Educational, and Housing Facilities Board, Tennessee, Revenue Refunding Bonds, Sumner Regional Health System Inc., Series 2007: 800 5.500%, 11/01/37 11/17 at 100.00 N/R 593,344 2,800 5.500%, 11/01/46 11/17 at 100.00 N/R 2,014,348 745 Tennessee Housing Development Agency, Homeownership Program 1/09 at 101.00 AA 657,120 Bonds, Series 1998-2, 5.350%, 7/01/23 (Alternative Minimum Tax) 760 Tennessee Housing Development Agency, Homeownership Program 7/11 at 100.00 AA 665,714 Bonds, Series 2001-3A, 5.200%, 7/01/22 (Alternative Minimum Tax) ------------------------------------------------------------------------------------------------------------------------------------ 14,270 Total Tennessee 9,573,322 ------------------------------------------------------------------------------------------------------------------------------------ TEXAS - 20.6% (12.8% OF TOTAL INVESTMENTS) 5,445 Board of Regents, University of Texas System, Financing System 2/17 at 100.00 AAA 4,199,456 Revenue Bonds, Series 2006F, 4.250%, 8/15/36 (UB) 1,125 Brushy Creek Municipal Utility District, Williamson County, Texas, 6/09 at 100.00 Aaa 1,112,749 Combination Unlimited Tax and Revenue Refunding Bonds, Series 2001, 5.125%, 6/01/26 - FSA Insured Collins and Denton Counties, Frisco, Texas, General Obligation Bonds, Series 2001: 1,910 5.000%, 2/15/20 - FGIC Insured 2/11 at 100.00 AA 1,904,958 2,005 5.000%, 2/15/21 - FGIC Insured 2/11 at 100.00 AA 1,974,123 3,850 Dallas-Ft. Worth International Airport, Texas, Joint Revenue Refunding 11/11 at 100.00 A+ 3,052,742 and Improvement Bonds, Series 2001A, 5.500%, 11/01/35 - FGIC Insured (Alternative Minimum Tax) 5,000 Decatur Hospital Authority, Texas, Revenue Bonds, Wise Regional Health 9/14 at 100.00 N/R 4,185,800 System, Series 2004A, 7.000%, 9/01/25 4,040 Harris County, Texas, Tax and Revenue Certificates of Obligation, Series 8/11 at 100.00 AAA 3,948,252 2001, 5.000%, 8/15/27 86 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ TEXAS (continued) $ 6,000 Houston, Texas, Junior Lien Water and Sewerage System Revenue No Opt. Call AA (4) $ 6,181,860 Refunding Bonds, Series 2001B, 5.500%, 12/01/29 - MBIA Insured (ETM) 7,000 Houston, Texas, Subordinate Lien Airport System Revenue Bonds, Series 1/09 at 100.50 A+ 6,773,130 1998B, 5.250%, 7/01/14 - FGIC Insured (Alternative Minimum Tax) Houston, Texas, Subordinate Lien Airport System Revenue Refunding Bonds, Series 2001A: 2,525 5.500%, 7/01/13 - FGIC Insured (Alternative Minimum Tax) 1/12 at 100.00 A+ 2,508,411 2,905 5.500%, 7/01/14 - FGIC Insured (Alternative Minimum Tax) 1/12 at 100.00 A+ 2,845,360 14,200 Hutto Independent School District, Williamson County, Texas, General 8/16 at 100.00 AAA 11,980,682 Obligation Bonds, Series 2007A, 4.750%, 8/01/43 Jefferson County Health Facilities Development Corporation, Texas, FHA-Insured Mortgage Revenue Bonds, Baptist Hospital of Southeast Texas, Series 2001: 8,500 5.400%, 8/15/31 - AMBAC Insured 8/11 at 100.00 AA 6,646,490 8,500 5.500%, 8/15/41 - AMBAC Insured 8/11 at 100.00 AA 6,305,895 10,700 Laredo Independent School District, Webb County, Texas, General 8/11 at 100.00 AAA 10,567,748 Obligation Refunding Bonds, Series 2001, 5.000%, 8/01/25 2,500 Matagorda County Navigation District 1, Texas, Collateralized Revenue No Opt. Call Aaa 1,999,500 Refunding Bonds, Houston Light and Power Company, Series 1997, 5.125%, 11/01/28 - AMBAC Insured (Alternative Minimum Tax) 3,150 North Texas Thruway Authority, Second Tier System Revenue Refunding 1/18 at 100.00 A3 2,659,356 Bonds, Series 2008, 5.750%, 1/01/38 3,045 Port of Houston Authority, Harris County, Texas, General Obligation Port 10/11 at 100.00 AAA 2,854,901 Improvement Bonds, Series 2001B, 5.500%, 10/01/17 - FGIC Insured (Alternative Minimum Tax) 7,700 Tarrant County, Texas, Cultural & Educational Facilities Financing 2/17 at 100.00 AA- 6,257,790 Corporation, Texas, Revenue Bonds, Series 2007A, 5.000%, 2/15/36 (UB) 9,840 Texas Department of Housing and Community Affairs, Residential 7/11 at 100.00 AAA 9,358,529 Mortgage Revenue Bonds, Series 2001A, 5.350%, 7/01/33 (Alternative Minimum Tax) White Settlement Independent School District, Tarrant County, Texas, General Obligation Bonds, Series 2006: 9,110 0.000%, 8/15/37 8/15 at 31.98 AAA 1,464,888 9,110 0.000%, 8/15/40 8/15 at 27.11 AAA 1,200,880 7,110 0.000%, 8/15/44 8/15 at 21.88 AAA 719,248 ------------------------------------------------------------------------------------------------------------------------------------ 135,270 Total Texas 100,702,748 ------------------------------------------------------------------------------------------------------------------------------------ UTAH - 0.7% (0.4% OF TOTAL INVESTMENTS) Utah Housing Corporation, Single Family Mortgage Bonds, Series 2001E: 1,165 5.200%, 1/01/18 (Alternative Minimum Tax) 7/11 at 100.00 AA- 1,075,994 295 5.500%, 1/01/23 (Alternative Minimum Tax) 7/11 at 100.00 Aaa 290,643 Utah Housing Corporation, Single Family Mortgage Bonds, Series 2001 F-1: 1,600 4.950%, 7/01/18 (Alternative Minimum Tax) 7/11 at 100.00 AA- 1,539,568 400 5.300%, 7/01/23 (Alternative Minimum Tax) 7/11 at 100.00 Aaa 390,924 ------------------------------------------------------------------------------------------------------------------------------------ 3,460 Total Utah 3,297,129 ------------------------------------------------------------------------------------------------------------------------------------ VIRGINIA - 0.1% (0.1% OF TOTAL INVESTMENTS) 1,000 Chesterfield County Health Center Commission, Virginia, Mortgage 12/15 at 100.00 N/R 663,640 Revenue Bonds, Lucy Corr Village, Series 2005, 5.375%, 12/01/28 ------------------------------------------------------------------------------------------------------------------------------------ 87 NZF Nuveen Dividend Advantage Municipal Fund 3 (continued) Portfolio of INVESTMENTS October 31, 2008 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ WASHINGTON - 17.8% (11.1% OF TOTAL INVESTMENTS) Bellingham Housing Authority, Washington, Housing Revenue Bonds, Varsity Village Project, Series 2001A: $ 1,000 5.500%, 12/01/27 - MBIA Insured 12/11 at 100.00 A1 $ 990,630 2,000 5.600%, 12/01/36 - MBIA Insured 12/11 at 100.00 A1 1,956,420 12,955 Port of Seattle, Washington, Passenger Facility Charge Revenue Bonds, 12/08 at 101.00 AA 12,219,286 Series 1998B, 5.300%, 12/01/16 - AMBAC Insured (Alternative Minimum Tax) Port of Seattle, Washington, Revenue Bonds, Series 2001B: 2,535 5.625%, 4/01/18 - FGIC Insured (Alternative Minimum Tax) 10/11 at 100.00 AA 2,383,838 16,000 5.100%, 4/01/24 - FGIC Insured (Alternative Minimum Tax) 4/09 at 100.00 AA 13,141,280 2,090 Public Utility District 1, Benton County, Washington, Electric Revenue 11/11 at 100.00 AAA 2,202,463 Refunding Bonds, Series 2001A, 5.625%, 11/01/15 - FSA Insured 5,680 Seattle, Washington, Municipal Light and Power Revenue Refunding and 3/11 at 100.00 AAA 5,850,400 Improvement Bonds, Series 2001, 5.500%, 3/01/18 - FSA Insured 4,530 Tacoma, Washington, Solid Waste Utility Revenue Refunding Bonds, 12/11 at 100.00 AA (4) 4,850,271 Series 2001, 5.250%, 12/01/21 (Pre-refunded 12/01/11) - AMBAC Insured 3,720 Washington State Healthcare Facilities Authority, Revenue Bonds, 10/11 at 100.00 Aa3 (4) 3,983,711 Children's Hospital and Regional Medical Center, Series 2001, 5.375%, 10/01/18 (Pre-refunded 10/01/11) - AMBAC Insured Washington State Healthcare Facilities Authority, Revenue Bonds, Good Samaritan Hospital, Series 2001: 5,480 5.500%, 10/01/21 (Pre-refunded 10/01/11) - RAAI Insured 10/11 at 101.00 BBB+ (4) 5,938,018 25,435 5.625%, 10/01/31 (Pre-refunded 10/01/11) - RAAI Insured 10/11 at 101.00 BBB+ (4) 27,649,115 Washington State Healthcare Facilities Authority, Revenue Bonds, Group Health Cooperative of Puget Sound, Series 2001: 3,005 5.375%, 12/01/17 - AMBAC Insured 12/11 at 101.00 AAA 3,054,222 2,915 5.375%, 12/01/18 - AMBAC Insured 12/11 at 101.00 AAA 2,947,619 ------------------------------------------------------------------------------------------------------------------------------------ 87,345 Total Washington 87,167,273 ------------------------------------------------------------------------------------------------------------------------------------ WISCONSIN - 5.2% (3.3% OF TOTAL INVESTMENTS) Appleton, Wisconsin, Waterworks Revenue Refunding Bonds, Series 2001: 3,705 5.375%, 1/01/20 (Pre-refunded 1/01/12) - FGIC Insured 1/12 at 100.00 N/R (4) 3,969,352 1,850 5.000%, 1/01/21 (Pre-refunded 1/01/12) - FGIC Insured 1/12 at 100.00 N/R (4) 1,961,185 12,250 La Crosse, Wisconsin, Pollution Control Revenue Refunding Bonds, 12/08 at 102.00 Aaa 12,405,943 Dairyland Power Cooperative, Series 1997B, 5.550%, 2/01/15 - AMBAC Insured 1,000 Wisconsin Health and Educational Facilities Authority, Revenue Bonds, 9/17 at 100.00 BBB+ 702,950 Franciscan Sisters of Christian Charity HealthCare Ministry, Series 2007, 5.000%, 9/01/33 350 Wisconsin Health and Educational Facilities Authority, Revenue Bonds, 10/11 at 101.00 AA- 308,767 Froedtert and Community Health Obligated Group, Series 2001, 5.375%, 10/01/30 3,650 Wisconsin Health and Educational Facilities Authority, Revenue Bonds, 10/11 at 101.00 AA- (4) 3,942,365 Froedtert and Community Health Obligated Group, Series 2001, 5.375%, 10/01/30 (Pre-refunded 10/01/11) 2,500 Wisconsin Health and Educational Facilities Authority, Revenue Bonds, 2/12 at 100.00 BBB+ 2,265,750 Marshfield Clinic, Series 2001B, 6.000%, 2/15/25 50 Wisconsin Health and Educational Facilities Authority, Revenue Bonds, 8/13 at 100.00 A- 30,796 Wheaton Franciscan Services Inc., Series 2003A, 5.125%, 8/15/33 ------------------------------------------------------------------------------------------------------------------------------------ 25,355 Total Wisconsin 25,587,108 ------------------------------------------------------------------------------------------------------------------------------------ $ 917,393 Total Municipal Bonds (cost $867,562,658) 783,347,198 =============----------------------------------------------------------------------------------------------------------------------- 88 SHARES DESCRIPTION (1) VALUE ------------------------------------------------------------------------------------------------------------------------------------ INVESTMENT COMPANIES - 0.3% (0.2% OF TOTAL INVESTMENTS) 29,401 BlackRock MuniHoldings Fund Inc. $ 315,473 26,880 Dreyfus Strategic Municipal Fund 163,968 27,920 PIMCO Municipal Income Fund II 258,818 42,020 Van Kampen Investment Grade Municipal Trust 424,822 19,260 Van Kampen Municipal Trust 195,489 ------------------------------------------------------------------------------------------------------------------------------------ Total Investment Companies (cost $1,846,128) 1,358,570 -------------------------------------------------------------------------------------------------------------------- Total Investments (cost $869,408,786) - 160.6% 784,705,768 -------------------------------------------------------------------------------------------------------------------- Floating Rate Obligations - (7.6)% (37,032,000) -------------------------------------------------------------------------------------------------------------------- Other Assets Less Liabilities - 2.4% 11,662,070 -------------------------------------------------------------------------------------------------------------------- Auction Rate Preferred Shares, at Liquidation Value - (55.4)% (6) (270,775,000) -------------------------------------------------------------------------------------------------------------------- Net Assets Applicable to Common Shares - 100% $ 488,560,838 ====================================================================================================================
FUTURES CONTRACTS OUTSTANDING AT OCTOBER 31, 2008: UNREALIZED CONTRACT NUMBER OF CONTRACT VALUE AT APPRECIATION TYPE POSITION CONTRACTS EXPIRATION OCTOBER 31, 2008 (DEPRECIATION) -------------------------------------------------------------------------------------------------------------------- U.S. Treasury Bond Long 156 12/08 $17,647,500 $(679,241) ====================================================================================================================
(1) All percentages shown in the Portfolio of Investments are based on net assets applicable to Common shares unless otherwise noted. (2) Optional Call Provisions (not covered by the report of independent registered public accounting firm): Dates (month and year) and prices of the earliest optional call or redemption. There may be other call provisions at varying prices at later dates. Certain mortgage-backed securities may be subject to periodic principal paydowns. (3) Ratings (not covered by the report of independent registered public accounting firm): Using the higher of Standard & Poor's Group ("Standard & Poor's") or Moody's Investor Service, Inc. ("Moody's") rating. Ratings below BBB by Standard & Poor's or Baa by Moody's are considered to be below investment grade. The Portfolio of Investments may reflect the ratings on certain bonds insured by ACA, AGC, AMBAC, FGIC, FSA, MBIA, RAAI and SYNCORA as of October 31, 2008. Please see the Portfolio Managers' Commentary for an expanded discussion of the affect on the Fund of changes to the ratings of certain bonds in the portfolio resulting from changes to the ratings of the underlying insurers both during the period and after period end. (4) Backed by an escrow or trust containing sufficient U.S. Government or U.S. Government agency securities which ensure the timely payment of principal and interest. Such investments are normally considered to be equivalent to AAA rated securities. (5) Portion of investment has been pledged to collateralize the net payment obligations under futures contracts. (6) Auction Rate Preferred Shares, at Liquidation Value as a percentage of Total Investments is 34.5%. N/R Not rated. (ETM) Escrowed to maturity. (IF) Inverse floating rate investment. (UB) Underlying bond of an inverse floating rate trust reflected as a financing transaction pursuant to the provisions of SFAS No. 140. See accompanying notes to financial statements. 89 Statement of ASSETS & LIABILITIES October 31, 2008
PERFORMANCE MUNICIPAL MARKET DIVIDEND DIVIDEND DIVIDEND PLUS ADVANTAGE OPPORTUNITY ADVANTAGE ADVANTAGE 2 ADVANTAGE 3 (NPP) (NMA) (NMO) (NAD) (NXZ) (NZF) ------------------------------------------------------------------------------------------------------------------------------------ ASSETS Investments, at value (cost $1,299,989,044, $957,998,565, $982,534,401, $846,176,089, $606,819,786 and $869,408,786, respectively) $1,222,971,532 $877,736,594 $919,639,931 $762,667,113 $566,350,585 $784,705,768 Cash -- -- 323,710 6,100,102 -- -- Deposits with brokers for open futures contracts -- -- -- -- -- 74,651 Receivables: Dividend and interest 19,497,827 16,153,365 15,602,429 12,357,190 11,032,760 14,925,408 Investments sold 700,128 -- 2,984,000 -- 12,500,502 656,503 Deferred offering costs -- -- -- -- 2,252,175 -- Other assets 132,984 101,190 108,167 91,761 61,535 58,757 ------------------------------------------------------------------------------------------------------------------------------------ Total assets 1,243,302,471 893,991,149 938,658,237 781,216,166 592,197,557 800,421,087 ------------------------------------------------------------------------------------------------------------------------------------ LIABILITIES Cash overdraft 589,492 497,704 -- -- 182,797 631,450 Variable Rate Demand Preferred shares, at liquidation value -- -- -- -- 196,000,000 -- Floating rate obligations 38,288,000 25,008,333 16,275,000 48,740,000 11,245,000 37,032,000 Unrealized depreciation on Recourse Trusts -- -- -- -- 554,400 -- Payables: Investments purchased -- -- -- -- 7,746,444 -- Variation margin on futures contracts -- -- -- -- -- 185,250 Common share dividends 3,092,411 2,381,196 2,451,807 2,453,912 2,059,178 2,575,662 Auction Rate Preferred share dividends 124,979 94,112 115,977 64,460 -- 63,079 Offering costs -- -- -- -- 222,222 -- Accrued expenses: Management fees 627,043 458,383 484,803 357,442 233,170 308,331 Other 434,777 299,126 310,037 246,060 14,776 289,477 ------------------------------------------------------------------------------------------------------------------------------------ Total liabilities 43,156,702 28,738,854 19,637,624 51,861,874 218,257,987 41,085,249 ------------------------------------------------------------------------------------------------------------------------------------ Auction Rate Preferred shares, at liquidation value 439,650,000 341,650,000 361,675,000 266,800,000 -- 270,775,000 ------------------------------------------------------------------------------------------------------------------------------------ Net assets applicable to Common shares $ 760,495,769 $523,602,295 $557,345,613 $462,554,292 $373,939,570 $488,560,838 ==================================================================================================================================== Common shares outstanding 59,914,073 43,214,524 45,557,788 39,287,298 29,426,326 40,378,174 ==================================================================================================================================== Net asset value per Common share outstanding (net assets applicable to Common shares, divided by Common shares outstanding) $ 12.69 $ 12.12 $ 12.23 $ 11.77 $ 12.71 $ 12.10 ==================================================================================================================================== NET ASSETS APPLICABLE TO COMMON SHARES CONSIST OF: ------------------------------------------------------------------------------------------------------------------------------------ Common shares, $.01 par value per share $ 599,141 $ 432,145 $ 455,578 $ 392,873 $ 294,263 $ 403,782 Paid-in surplus 836,437,628 604,052,660 635,757,048 550,788,248 418,451,843 573,909,890 Undistributed (Over-distribution of) net investment income 871,663 444,924 (1,194,990) 154,163 (762,556) (568,658) Accumulated net realized gain (loss) from investments and derivative transactions (395,151) (1,065,463) (14,777,553) (5,272,016) (3,020,379) 198,083 Net unrealized appreciation (depreciation) of investments and derivative transactions (77,017,512) (80,261,971) (62,894,470) (83,508,976) (41,023,601) (85,382,259) ------------------------------------------------------------------------------------------------------------------------------------ Net assets applicable to Common shares $ 760,495,769 $523,602,295 $557,345,613 $462,554,292 $373,939,570 $488,560,838 ==================================================================================================================================== Authorized shares: Common 200,000,000 200,000,000 200,000,000 Unlimited Unlimited Unlimited Auction Rate Preferred and Variable Rate Demand Preferred 1,000,000 1,000,000 1,000,000 Unlimited Unlimited Unlimited ====================================================================================================================================
See accompanying notes to financial statements. 90 Statement of OPERATIONS Year Ended October 31, 2008
PERFORMANCE MUNICIPAL MARKET DIVIDEND DIVIDEND DIVIDEND PLUS ADVANTAGE OPPORTUNITY ADVANTAGE ADVANTAGE 2 ADVANTAGE 3 (NPP) (NMA) (NMO) (NAD) (NXZ) (NZF) ------------------------------------------------------------------------------------------------------------------------------------ INVESTMENT INCOME $ 71,675,160 $ 54,966,066 $ 55,699,409 $ 47,974,587 $ 37,149,261 $ 48,881,721 ------------------------------------------------------------------------------------------------------------------------------------ EXPENSES Management fees 8,107,704 5,950,476 6,207,591 5,146,483 4,027,559 5,392,507 Auction fees 1,169,626 888,135 942,392 719,163 510,709 750,340 Dividend disbursing agent fees 50,000 50,000 40,000 30,000 33,535 30,000 Shareholders' servicing agent fees and expenses 128,608 79,879 84,403 11,195 4,849 6,269 Interest expense 678,511 1,059,512 881,530 1,142,379 2,147,370 1,117,381 Custodian's fees and expenses 246,694 134,732 174,205 135,237 118,434 154,155 Directors'/Trustees' fees and expenses 27,271 19,910 20,501 17,019 13,475 17,948 Professional fees 82,465 63,190 65,148 54,273 44,644 56,948 Shareholders' reports - printing and mailing expenses 153,999 117,159 118,624 99,322 74,097 99,882 Stock exchange listing fees 20,714 15,305 15,799 13,639 3,882 5,334 Investor relations expense 171,445 124,289 131,627 105,886 81,559 109,964 Other expenses 58,108 46,792 50,490 32,455 385,591 33,481 ------------------------------------------------------------------------------------------------------------------------------------ Total expenses before custodian fee credit and expense reimbursement 10,895,145 8,549,379 8,732,310 7,507,051 7,445,704 7,774,209 Custodian fee credit (118,866) (113,251) (81,913) (118,267) (51,508) (112,966) Expense reimbursement -- -- -- (741,847) (1,120,050) (1,730,003) ------------------------------------------------------------------------------------------------------------------------------------ Net expenses 10,776,279 8,436,128 8,650,397 6,646,937 6,274,146 5,931,240 ------------------------------------------------------------------------------------------------------------------------------------ Net investment income 60,898,881 46,529,938 47,049,012 41,327,650 30,875,115 42,950,481 ------------------------------------------------------------------------------------------------------------------------------------ REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) from: Investments (328,499) (1,136,012) (1,618,281) 1,445,057 3,731,159 (3,045,414) Forward swaps -- -- -- -- -- 2,733,000 Futures -- -- -- -- -- 865,654 Change in net unrealized appreciation (depreciation) of: Investments (153,071,771) (130,946,869) (116,402,236) (124,805,304) (86,311,451) (117,423,115) Forward swaps -- -- -- -- -- (1,472,119) Futures -- -- -- -- -- (679,241) ------------------------------------------------------------------------------------------------------------------------------------ Net realized and unrealized gain (loss) (153,400,270) (132,082,881) (118,020,517) (123,360,247) (82,580,292) (119,021,235) ------------------------------------------------------------------------------------------------------------------------------------ DISTRIBUTIONS TO AUCTION RATE PREFERRED SHAREHOLDERS From net investment income (17,368,890) (12,897,786) (13,956,934) (10,685,162) (6,026,331) (11,064,289) From accumulated net realized gains -- (363,253) -- -- -- -- ------------------------------------------------------------------------------------------------------------------------------------ Decrease in net assets applicable to Common shares from distributions to Auction Rate Preferred shareholders (17,368,890) (13,261,039) (13,956,934) (10,685,162) (6,026,331) (11,064,289) ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets applicable to Common shares from operations $(109,870,279) $ (98,813,982) $ (84,928,439) $ (92,717,759) $(57,731,508) $ (87,135,043) ====================================================================================================================================
See accompanying notes to financial statements. 91 Statement of CHANGES in NET ASSETS
PERFORMANCE PLUS (NPP) MUNICIPAL ADVANTAGE (NMA) MARKET OPPORTUNITY (NMO) ------------------------------- ------------------------------ ------------------------------- YEAR YEAR YEAR YEAR YEAR YEAR ENDED ENDED ENDED ENDED ENDED ENDED 10/31/08 10/31/07 10/31/08 10/31/07 10/31/08 10/31/07 ------------------------------------------------------------------------------------------------------------------------------------ OPERATIONS Net investment income $ 60,898,881 $ 59,081,814 $ 46,529,938 $ 46,092,114 $ 47,049,012 $ 47,185,988 Net realized gain (loss) from: Investments (328,499) (114,084) (1,136,012) 1,405,723 (1,618,281) (2,764,433) Forward swaps -- -- -- -- -- -- Futures -- -- -- -- -- -- Change in net unrealized appreciation (depreciation) of: Investments (153,071,771) (27,296,563) (130,946,869) (28,042,883) (116,402,236) (22,450,181) Forward swaps -- -- -- -- -- -- Futures -- -- -- -- -- -- Distributions to Auction Rate Preferred shareholders: From net investment income (17,368,890) (16,373,121) (12,897,786) (12,659,658) (13,956,934) (13,663,433) From accumulated net realized gains -- (858,202) (363,253) -- -- -- ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets applicable to Common shares from operations (109,870,279) 14,439,844 (98,813,982) 6,795,296 (84,928,439) 8,307,941 ------------------------------------------------------------------------------------------------------------------------------------ DISTRIBUTIONS TO COMMON SHAREHOLDERS From net investment income (41,700,208) (44,830,422) (33,361,611) (36,025,128) (33,302,749) (34,547,696) From accumulated net realized gains -- (2,765,395) (1,028,506) -- -- -- ------------------------------------------------------------------------------------------------------------------------------------ Decrease in net assets applicable to Common shares from distributions to Common shareholders (41,700,208) (47,595,817) (34,390,117) (36,025,128) (33,302,749) (34,547,696) ------------------------------------------------------------------------------------------------------------------------------------ CAPITAL SHARE TRANSACTIONS Net proceeds from Common shares issued to shareholders due to reinvestment of distributions -- -- -- 2,361,680 -- 257,295 ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets applicable to Common shares from capital share transactions -- -- -- 2,361,680 -- 257,295 ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets applicable to Common shares (151,570,487) (33,155,973) (133,204,099) (26,868,152) (118,231,188) (25,982,460) Net assets applicable to Common shares at the beginning of year 912,066,256 945,222,229 656,806,394 683,674,546 675,576,801 701,559,261 ------------------------------------------------------------------------------------------------------------------------------------ Net assets applicable to Common shares at the end of year $ 760,495,769 $912,066,256 $ 523,602,295 $656,806,394 $ 557,345,613 $675,576,801 ==================================================================================================================================== Undistributed (Over-distribution of) net investment income at the end of year $ 871,663 $ (904,878) $ 444,924 $ 293,060 $ (1,194,990) $ (967,250) ====================================================================================================================================
See accompanying notes to financial statements. 92
DIVIDEND ADVANTAGE (NAD) DIVIDEND ADVANTAGE 2 (NXZ) DIVIDEND ADVANTAGE 3 (NZF) ------------------------------- ------------------------------ ------------------------------- YEAR YEAR YEAR YEAR YEAR YEAR ENDED ENDED ENDED ENDED ENDED ENDED 10/31/08 10/31/07 10/31/08 10/31/07 10/31/08 10/31/07 ------------------------------------------------------------------------------------------------------------------------------------ OPERATIONS Net investment income $ 41,327,650 $ 40,737,006 $ 30,875,115 $ 33,194,589 $ 42,950,481 $43,162,296 Net realized gain (loss) from: Investments 1,445,057 2,375,892 3,731,159 (1,406,045) (3,045,414) 172,182 Forward swaps -- -- -- -- 2,733,000 (455,000) Futures -- -- -- -- 865,654 (418,916) Change in net unrealized appreciation (depreciation) of: Investments (124,805,304) (25,931,805) (86,311,451) (11,366,291) (117,423,115) (18,402,081) Forward swaps -- -- -- -- (1,472,119) 1,331,159 Futures -- -- -- -- (679,241) (129,711) Distributions to Auction Rate Preferred shareholders: From net investment income (10,685,162) (10,593,575) (6,026,331) (7,987,669) (11,064,289) (11,080,897) From accumulated net realized gains -- -- -- -- -- (226,888) ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets applicable to Common shares from operations (92,717,759) 6,587,518 (57,731,508) 12,434,584 (87,135,043) 13,952,144 ------------------------------------------------------------------------------------------------------------------------------------ DISTRIBUTIONS TO COMMON SHAREHOLDERS From net investment income (30,223,720) (31,716,407) (25,763,976) (26,454,214) (31,212,328) (33,803,641) From accumulated net realized gains -- -- -- -- -- (798,769) ------------------------------------------------------------------------------------------------------------------------------------ Decrease in net assets applicable to Common shares from distributions to Common shareholders (30,223,720) (31,716,407) (25,763,976) (26,454,214) (31,212,328) (34,602,410) ------------------------------------------------------------------------------------------------------------------------------------ CAPITAL SHARE TRANSACTIONS Net proceeds from Common shares issued to shareholders due to reinvestment of distributions -- 308,799 443,496 821,897 -- 722,964 ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets applicable to Common shares from capital share transactions -- 308,799 443,496 821,897 -- 722,964 ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets applicable to Common shares (122,941,479) (24,820,090) (83,051,988) (13,197,733) (118,347,371) (19,927,302) Net assets applicable to Common shares at the beginning of year 585,495,771 610,315,861 456,991,558 470,189,291 606,908,209 626,835,511 ------------------------------------------------------------------------------------------------------------------------------------ Net assets applicable to Common shares at the end of year $462,554,292 $585,495,771 $373,939,570 $456,991,558 $ 488,560,838 $606,908,209 ==================================================================================================================================== Undistributed (Over-distribution of) net investment income at the end of year $ 154,163 $ (207,189) $ (762,556) $ 164,014 $ (568,658) $ (1,234,602) ====================================================================================================================================
See accompanying notes to financial statements. 93 Statement of CASH FLOWS Year Ended October 31, 2008
DIVIDEND ADVANTAGE 2 (NXZ) ------------------------------------------------------------------------------------------------------------------------------------ CASH FLOWS FROM OPERATING ACTIVITIES: NET INCREASE (DECREASE) IN NET ASSETS APPLICABLE TO COMMON SHARES FROM OPERATIONS $ (57,731,508) Adjustments to reconcile the net increase (decrease) in net assets applicable to Common shares from operations to net cash provided by (used in) operating activities: Purchases of investments (62,126,117) Proceeds from sales and maturities of investments 115,255,550 Proceeds from (Purchases of) short-term investments, net (4,680,000) Amortization (Accretion) of premiums and discounts, net (2,195,512) (Increase) Decrease in receivable for dividend and interest 578,589 (Increase) Decrease in receivable for investments sold (12,500,502) (Increase) Decrease in other assets 8 Increase (Decrease) in payable for investments purchased 7,746,444 Increase (Decrease) in payable for Auction Rate Preferred share dividends (37,883) Increase (Decrease) in accrued management fees (4,344) Increase (Decrease) in accrued other liabilities (128,233) Net realized (gain) loss from investments (3,731,159) Change in net unrealized (appreciation) depreciation of investments 86,311,451 Change in taxes paid on undistributed capital gains (97) ------------------------------------------------------------------------------------------------------------------------------------ Net cash provided by (used in) operating activities 66,756,687 ------------------------------------------------------------------------------------------------------------------------------------ CASH FLOWS FROM FINANCING ACTIVITIES: Increase (Decrease) in cash overdraft balance 104,124 Increase (Decrease) in floating rate obligations (13,520,000) Cash distributions paid to Common shareholders (25,310,858) Increase (Decrease) in Variable Rate Demand Preferred shares 196,000,000 (Increase) Decrease in deferred offering costs (2,252,175) Increase (Decrease) in payable for offering cost 222,222 Increase (Decrease) in Auction Rate Preferred shares (222,000,000) ------------------------------------------------------------------------------------------------------------------------------------ Net cash provided by (used in) financing activities (66,756,687) ------------------------------------------------------------------------------------------------------------------------------------ NET INCREASE (DECREASE) IN CASH -- Cash at the beginning of year -- ------------------------------------------------------------------------------------------------------------------------------------ CASH AT THE END OF YEAR $ -- ====================================================================================================================================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash paid by Dividend Advantage 2 (NXZ) for interest (excluding amortization of offering costs) was $2,129,545. Non-cash financing activities not included herein consist of reinvestments of Common share distributions of $443,496. See accompanying notes to financial statements. 94 Notes to FINANCIAL STATEMENTS 1. GENERAL INFORMATION AND SIGNIFICANT ACCOUNTING POLICIES The funds covered in this report and their corresponding Common share stock exchange symbols are Nuveen Performance Plus Municipal Fund, Inc. (NPP), Nuveen Municipal Advantage Fund, Inc. (NMA), Nuveen Municipal Market Opportunity Fund, Inc. (NMO), Nuveen Dividend Advantage Municipal Fund (NAD), Nuveen Dividend Advantage Municipal Fund 2 (NXZ) and Nuveen Dividend Advantage Municipal Fund 3 (NZF) (collectively, the "Funds"). Performance Plus (NPP), Municipal Advantage (NMA), Market Opportunity (NMO) and Dividend Advantage (NAD) are traded on the New York Stock Exchange while Dividend Advantage 2 (NXZ) and Dividend Advantage 3 (NZF) are traded on the American Stock Exchange. The Funds are registered under the Investment Company Act of 1940, as amended, as closed-end, diversified management investment companies. Each Fund seeks to provide current income exempt from regular federal income tax by investing primarily in a diversified portfolio of municipal obligations issued by state and local government authorities or certain U.S. territories. The following is a summary of significant accounting policies followed by the Funds in the preparation of their financial statements in accordance with U.S. generally accepted accounting principles. Investment Valuation The prices of municipal bonds in each Fund's investment portfolio are provided by a pricing service approved by the Fund's Board of Directors/Trustees. When market price quotes are not readily available (which is usually the case for municipal securities), the pricing service may establish fair value based on yields or prices of municipal bonds of comparable quality, type of issue, coupon, maturity and rating, indications of value from securities dealers, evaluations of anticipated cash flows or collateral and general market conditions. Prices of forward swap contracts are also provided by an independent pricing service approved by each Fund's Board of Directors/Trustees. Futures contracts are valued using the closing settlement price, or, in the absence of such a price, at the mean of the bid and asked prices. If the pricing service is unable to supply a price for an investment or derivative instrument, each Fund may use market quotes provided by major broker/dealers in such investments. If it is determined that the market price for an investment or derivative instrument is unavailable or inappropriate, the Board of Directors/Trustees of the Funds, or its designee, may establish fair value in accordance with procedures established in good faith by the Board of Directors/Trustees. Temporary investments in securities that have variable rate and demand features qualifying them as short-term investments are valued at amortized cost, which approximates market value. Investment Transactions Investment transactions are recorded on a trade date basis. Realized gains and losses from transactions are determined on the specific identification method. Investments purchased on a when-issued/delayed delivery basis may have extended settlement periods. Any investments so purchased are subject to market fluctuation during this period. The Funds have instructed the custodian to segregate assets with a current value at least equal to the amount of the when-issued/delayed delivery purchase commitments. At October 31, 2008, there were no such outstanding purchase commitments in any of the Funds. Investment Income Interest income, which includes the amortization of premiums and accretion of discounts for financial reporting purposes, is recorded on an accrual basis. Interest income also includes paydown gains and losses, if any. Dividend income, if any, is recorded on the ex-dividend date. Income Taxes Each Fund is a separate taxpayer for federal income tax purposes. Each Fund intends to distribute substantially all of its net investment income and net capital gains to shareholders and to otherwise comply with the requirements of Subchapter M of the Internal Revenue Code applicable to regulated investment companies. Therefore, no federal income tax provision is required. Furthermore, each Fund intends to satisfy conditions which will enable interest from municipal securities, which is exempt from 95 Notes to FINANCIAL STATEMENTS (continued) regular federal income tax, to retain such tax-exempt status when distributed to shareholders of the Funds. Net realized capital gains and ordinary income distributions paid by the Funds are subject to federal taxation. Effective April 30, 2008, the Funds adopted Financial Accounting Standards Board (FASB) Interpretation No. 48 "Accounting for Uncertainty in Income Taxes" (FIN 48). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. FIN 48 requires the affirmative evaluation of tax positions taken or expected to be taken in the course of preparing the Funds' tax returns to determine whether it is "more-likely-than-not" (i.e., a greater than 50-percent likelihood) of being sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold may result in a tax expense in the current year. Implementation of FIN 48 required management of the Funds to analyze all open tax years, as defined by the statute of limitations, for all major jurisdictions, which includes federal and certain states. Open tax years are those that are open for examination by taxing authorities (i.e., generally the last four tax year ends and the interim tax period since then). The Funds have no examinations in progress. For all open tax years and all major taxing jurisdictions through the end of the reporting period, management of the Funds has reviewed all tax positions taken or expected to be taken in the preparation of the Funds' tax returns and concluded the adoption of FIN 48 resulted in no impact to the Funds' net assets or results of operations as of and during the fiscal year ended October 31, 2008. The Funds are also not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. Dividends and Distributions to Common Shareholders Dividends from tax-exempt net investment income are declared monthly. Net realized capital gains and/or market discount from investment transactions, if any, are distributed to shareholders at least annually. Furthermore, capital gains are distributed only to the extent they exceed available capital loss carryforwards. Distributions to Common shareholders of tax-exempt net investment income, net realized capital gains and/or market discount, if any, are recorded on the ex-dividend date. The amount and timing of distributions are determined in accordance with federal income tax regulations, which may differ from U.S. generally accepted accounting principles. Auction Rate Preferred Shares The following Funds have issued and outstanding Auction Rate Preferred shares, $25,000 stated value per share, as a means of effecting financial leverage. Each Fund's Auction Rate Preferred shares are issued in more than one series. The dividend rate paid by the Funds on each Series is determined every seven days, pursuant to a dutch auction process overseen by the auction agent, and is payable at the end of each rate period. As of October 31, 2008, the number of Auction Rate Preferred shares outstanding, by Series and in total, for each Fund is as follows:
PERFORMANCE MUNICIPAL MARKET DIVIDEND DIVIDEND PLUS ADVANTAGE OPPORTUNITY ADVANTAGE ADVANTAGE 3 (NPP) (NMA) (NMO) (NAD) (NZF) ------------------------------------------------------------------------------------------------------------------- Number of shares: Series M 3,672 2,863 3,807 3,618 -- Series T 3,671 2,863 3,807 3,617 -- Series W 3,671 2,863 3,046 -- 3,610 Series TH 2,900 2,214 -- 3,437 3,610 Series F 3,672 2,863 3,807 -- 3,611 ------------------------------------------------------------------------------------------------------------------- Total 17,586 13,666 14,467 10,672 10,831 ===================================================================================================================
96 Beginning in February 2008, more shares for sale were submitted in the regularly scheduled auctions for the Auction Rate Preferred shares issued by the Funds than there were offers to buy. This meant that these auctions "failed to clear," and that many Auction Rate Preferred shareholders who wanted to sell their shares in these auctions were unable to do so. Auction Rate Preferred shareholders unable to sell their shares received distributions at the "maximum rate" applicable to failed auctions as calculated in accordance with the pre-established terms of the Auction Rate Preferred shares. These developments generally do not affect the management or investment policies of the Funds. However, one implication of these auction failures for Common shareholders is that the Funds' cost of leverage will be higher, at least temporarily, than it otherwise would have been had the auctions continued to be successful. As a result, the Funds' future Common share earnings may be lower than they otherwise would have been. On June 11, 2008, Nuveen Investments, Inc. ("Nuveen") announced the Fund Board's approval of plans to use tender option bonds (TOBs), also known as "floaters" or floating rate obligations, to refinance a portion of the municipal funds' outstanding Auction Rate Preferred shares, whose auctions have been failing for several months. The plan included an initial phase of approximately $1 billion in forty-one funds. During the fiscal year ended October 31, 2008 Performance Plus (NPP), Municipal Advantage (NMA), Market Opportunity (NMO), Dividend Advantage (NAD) and Dividend Advantage 3 (NZF) redeemed $39,350,000, $16,350,000, $18,325,000, $28,200,000 and $41,225,000 of their outstanding Auction Rate Preferred shares, respectively, at liquidation value, using the proceeds from the issuance of TOBs. Variable Rate Demand Preferred Shares On August 7, 2008, Dividend Advantage 2 (NXZ) issued 1,960 Series 1 Variable Rate Demand Preferred (VRDP) shares, $100,000 liquidation value per share, through a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933. Proceeds of this offering along with the proceeds from the Fund's creation of TOBs, discussed above, were used to redeem all of the Fund's outstanding Auction Rate Preferred shares totaling $222,000,000. The VRDP shares have a maturity date of August 1, 2038. Dividends on the VRDP shares are set through a weekly remarketing process at a rate established by a remarketing agent, which is intended to result in the value of the VRDP shares approximately equaling their liquidation value. VRDP shares include a liquidity feature that allows VRDP shareholders who are tendering shares for remarketing to have their shares purchased by a liquidity provider, Deutsche Bank AG (acting through its New York branch), in the event that the remarketing agent is not able to sell the tendered VRDP shares to other qualified institutional buyers. Subject to certain conditions, VRDP shares may be redeemed, in whole or in part, at any time at the option of the Fund. The Fund may also redeem certain of the VRDP shares if the Fund fails to maintain certain asset coverage requirements and such failures are not cured by the applicable cure date. The redemption price per share is equal to the sum of the liquidation value per share plus any accumulated but unpaid dividends. The terms of the VRDP shares provide that, if any VRDP shares tendered to the liquidity provider cannot be successfully remarketed, the dividend rate for all VRDP shares will be set at the Maximum Rate determined under a formula set forth in the Fund's organizational documents. The Maximum Rate is generally equal to a stated percentage spread in excess of the seven-day London Inter-Bank Offered Rate (LIBOR). If remarketings for these shares continue to be unsuccessful, the Maximum Rate is designed to escalate according to a specified schedule in order to enhance the remarketing agent's ability to successfully remarket the VRDP shares. This would increase the Fund's cost of leverage over time and reduce the Fund's Common share net earnings. There are various potential factors that could result in unsuccessful remarketings. These include periods of market stress, an actual or potential downgrade of the liquidity provider's credit ratings as well as changes in market perceptions regarding the financial strength of the Fund's liquidity provider. Dividend Advantage 2 (NXZ) had $196,000,000 VRDP shares outstanding for the period August 7, 2008 through October 31, 2008 with an annualized interest rate of 3.56%. For financial reporting purposes only, VRDP shares, at the liquidation value, are recorded as a liability on the Statement of Assets and Liabilities and the dividends paid on the VRDP shares are included as a component of "Interest expense" on the Statement of Operations. Inverse Floating Rate Securities Each Fund is authorized to invest in inverse floating rate securities. An inverse floating rate security is created by depositing a municipal bond, typically with a fixed interest rate, into a special purpose trust created by a broker-dealer. In turn, this trust (a) issues floating rate certificates, in face amounts equal to some fraction of the deposited bond's par amount or market value, that typically pay short-term tax-exempt interest rates to third parties, and (b) issues to a long-term investor (such as one of the Funds) an inverse floating rate certificate (sometimes referred to as an "inverse floater") that represents all remaining or residual interest in the trust. The income received by the inverse floater holder varies inversely with the short-term rate paid to the floating rate certificates' holders, and in most circumstances the inverse floater holder bears substantially all of the underlying bond's downside investment risk and also benefits disproportionately from any potential appreciation of the underlying bond's value. The price of an inverse floating rate security will be more volatile than that of the underlying bond because the interest rate is dependent on not 97 Notes to FINANCIAL STATEMENTS (continued) only the fixed coupon rate of the underlying bond but also on the short-term interest paid on the floating rate certificates, and because the inverse floating rate security essentially bears the risk of loss of the greater face value of the underlying bond. A Fund may purchase an inverse floating rate security in a secondary market transaction without first owning the underlying bond (referred to as an "externally-deposited inverse floater"), or instead by first selling a fixed-rate bond to a broker-dealer for deposit into the special purpose trust and receiving in turn the residual interest in the trust (referred to as a "self-deposited inverse floater"). The inverse floater held by a Fund gives the Fund the right (a) to cause the holders of the floating rate certificates to tender their notes at par, and (b) to have the broker transfer the fixed-rate bond held by the trust to the Fund, thereby collapsing the trust. An investment in an externally-deposited inverse floater is identified in the Portfolio of Investments as an "Inverse floating rate investment". An investment in a self-deposited inverse floater is accounted for as a financing transaction in accordance with Statement of Financial Accounting Standards No. 140 (SFAS No. 140) "Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities". In such instances, a fixed-rate bond deposited into a special purpose trust is identified in the Portfolio of Investments as an "Underlying bond of an inverse floating rate trust", with the Fund accounting for the short-term floating rate certificates issued by the trust as "Floating rate obligations" on the Statement of Assets and Liabilities. In addition, the Fund reflects in Investment Income the entire earnings of the underlying bond and the related interest paid to the holders of the short-term floating rate certificates is included as a component of "Interest expense" on the Statement of Operations. Each Fund may also enter into shortfall and forbearance agreements (sometimes referred to as a "recourse trust" or "credit recovery swap") (such agreements referred to herein as "Recourse Trusts") with a broker-dealer by which a Fund agrees to reimburse the broker-dealer, in certain circumstances, for the difference between the liquidation value of the fixed-rate bond held by the trust and the liquidation value of the floating rate certificates issued by the trust plus any shortfalls in interest cash flows. Under these agreements, a Fund's potential exposure to losses related to or on inverse floaters may increase beyond the value of a Fund's inverse floater investments as a Fund may potentially be liable to fulfill all amounts owed to holders of the floating rate certificates. At period end, any such shortfall is included as "Unrealized depreciation on Recourse Trusts" on the Statement of Assets and Liabilities. During the fiscal year ended October 31, 2008, each Fund invested in externally deposited inverse floaters and/or self-deposited inverse floaters. At October 31, 2008, each Fund's maximum exposure to externally-deposited Recourse Trusts, if any, is as follows:
PERFORMANCE MUNICIPAL MARKET DIVIDEND DIVIDEND DIVIDEND PLUS ADVANTAGE OPPORTUNITY ADVANTAGE ADVANTAGE 2 ADVANTAGE 3 (NPP) (NMA) (NMO) (NAD) (NXZ) (NZF) ------------------------------------------------------------------------------------------------------------------------------------ Maximum exposure $30,750,000 $33,001,650 $7,500,000 $11,250,000 $36,001,650 $9,751,650 ====================================================================================================================================
The average floating rate obligations outstanding and average annual interest rate and fees related to self-deposited inverse floaters during the fiscal year ended October 31, 2008, were as follows:
PERFORMANCE MUNICIPAL MARKET DIVIDEND DIVIDEND DIVIDEND PLUS ADVANTAGE OPPORTUNITY ADVANTAGE ADVANTAGE 2 ADVANTAGE 3 (NPP) (NMA) (NMO) (NAD) (NXZ) (NZF) ------------------------------------------------------------------------------------------------------------------------------------ Average floating rate obligations $23,377,306 $37,179,863 $31,164,317 $40,431,995 $17,280,628 $39,844,432 Average annual interest rate and fees 2.90% 2.85% 2.83% 2.83% 2.83% 2.80% ====================================================================================================================================
Forward Swap Transactions Each Fund is authorized to invest in forward interest rate swap transactions. Each Fund's use of forward interest rate swap transactions is intended to help the Fund manage its overall interest rate sensitivity, either shorter or longer, generally to more closely align the Fund's interest rate sensitivity with that of the broader municipal market. Forward interest rate swap transactions 98 involve each Fund's agreement with a counterparty to pay, in the future, a fixed or variable rate payment in exchange for the counterparty paying the Fund a variable or fixed rate payment, the accruals for which would begin at a specified date in the future (the "effective date"). The amount of the payment obligation is based on the notional amount of the forward swap contract and the termination date of the swap (which is akin to a bond's maturity). The value of the Fund's swap commitment would increase or decrease based primarily on the extent to which long-term interest rates for bonds having a maturity of the swap's termination date increases or decreases. The Funds may terminate a swap contract prior to the effective date, at which point a realized gain or loss is recognized. When a forward swap is terminated, it ordinarily does not involve the delivery of securities or other underlying assets or principal, but rather is settled in cash on a net basis. Each Fund intends, but is not obligated, to terminate its forward swaps before the effective date. Accordingly, the risk of loss with respect to the swap counterparty on such transactions is limited to the credit risk associated with a counterparty failing to honor its commitment to pay any realized gain to the Fund upon termination. To reduce such credit risk, all counterparties are required to pledge collateral daily (based on the daily valuation of each swap) on behalf of each Fund with a value approximately equal to the amount of any unrealized gain above a pre-determined threshold. Reciprocally, when any of the Funds have an unrealized loss on a swap contract, the Funds have instructed the custodian to pledge assets of the Funds as collateral with a value approximately equal to the amount of the unrealized loss above a pre-determined threshold. Collateral pledges are monitored and subsequently adjusted if and when the swap valuations fluctuate, either up or down, by at least the predetermined threshold amount. Dividend Advantage 3 (NZF) was the only Fund to invest in forward interest swap transactions during the fiscal year ended October 31, 2008. Futures Contracts Each Fund is authorized to invest in futures contracts. Upon entering into a futures contract, a Fund is required to deposit with the broker an amount of cash or liquid securities equal to a specified percentage of the contract amount. This is known as the "initial margin." Subsequent payments ("variation margin") are made or received by a Fund each day, depending on the daily fluctuation of the value of the contract. During the period the futures contract is open, changes in the value of the contract are recognized as an unrealized gain or loss by "marking-to-market" on a daily basis to reflect the changes in market value of the contract. When the contract is closed or expired, a Fund records a realized gain or loss equal to the difference between the value of the contract on the closing date and value of the contract when originally entered into. Cash held by the broker to cover initial margin requirements on open futures contracts, if any, is recognized on the Statement of Assets and Liabilities. Additionally, the Statement of Assets and Liabilities reflects a receivable or payable for the variation margin, when applicable. Dividend Advantage 3 (NZF) was the only Fund to invest in futures contracts during the fiscal year ended October 31, 2008. Risks of investments in futures contracts include the possible adverse movement of the securities or indices underlying the contracts, the possibility that there may not be a liquid secondary market for the contracts and/or that a change in the value of the contract may not correlate with a change in the value of the underlying securities or indices. Zero Coupon Securities Each Fund is authorized to invest in zero coupon securities. A zero coupon security does not pay a regular interest coupon to its holders during the life of the security. Tax-exempt income to the holder of the security comes from accretion of the difference between the original purchase price of the security at issuance and the par value of the security at maturity and is effectively paid at maturity. Such securities are included in the Portfolios of Investments with a 0.000% coupon rate in their description. The market prices of zero coupon securities generally are more volatile than the market prices of securities that pay interest periodically. Offering Costs Costs incurred by Dividend Advantage 2 (NXZ) in connection with its offering of the VRDP shares ($2,270,000) were recorded as a deferred charge which will be amortized over the 30-year life of the shares and is included as a component of "Interest expense"on the Statement of Operations. Custodian Fee Credit Each Fund has an arrangement with the custodian bank whereby certain custodian fees and expenses are reduced by net credits earned on each Fund's cash on deposit with the bank. Such deposit arrangements are an alternative to overnight investments. Credits for cash balances may be offset by charges for any days on which a Fund overdraws its account at the custodian bank. Indemnifications Under the Funds' organizational documents, their Officers and Director/Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Funds. In addition, in the normal course of business, the Funds enter into contracts that provide general indemnifications to other parties. The Funds' maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Funds that have not yet occurred. However, the Funds have not had prior claims or losses pursuant to these contracts and expect the risk of loss to be remote. 99 Notes to FINANCIAL STATEMENTS (continued) Use of Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets applicable to Common shares from operations during the reporting period. Actual results may differ from those estimates. 2. FUND SHARES Common Shares On July 30, 2008, the Funds' Board of Directors/Trustees approved an open-market share repurchase program under which each Fund may repurchase an aggregate of up to approximately 10% of its outstanding Common shares. The Funds did not repurchase any of their Common shares during the fiscal year ended October 31, 2008. Transactions in Common shares were as follows:
MUNICIPAL MARKET PERFORMANCE PLUS (NPP) ADVANTAGE (NMA) OPPORTUNITY (NMO) ----------------------- --------------------- --------------------- YEAR YEAR YEAR YEAR YEAR YEAR ENDED ENDED ENDED ENDED ENDED ENDED 10/31/08 10/31/07 10/31/08 10/31/07 10/31/08 10/31/07 ------------------------------------------------------------------------------------------------------------------ Common shares issued to shareholders due to reinvestment of distributions -- -- -- 148,621 -- 16,916 ================================================================================================================== DIVIDEND DIVIDEND DIVIDEND ADVANTAGE (NAD) ADVANTAGE 2 (NXZ) ADVANTAGE 3 (NZF) ----------------------- --------------------- --------------------- YEAR YEAR YEAR YEAR YEAR YEAR ENDED ENDED ENDED ENDED ENDED ENDED 10/31/08 10/31/07 10/31/08 10/31/07 10/31/08 10/31/07 ------------------------------------------------------------------------------------------------------------------ Common shares issued to shareholders due to reinvestment of distributions -- 19,807 29,827 50,467 -- 46,333 ==================================================================================================================
Preferred Shares Transactions in Auction Rate Preferred shares were as follows:
PERFORMANCE PLUS (NPP) MUNICIPAL ADVANTAGE (NMA) -------------------------------------------- ------------------------------------------ YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED 10/31/08 10/31/07 10/31/08 10/31/07 -------------------------------------------------------------------------------------------------------------------------- SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT -------------------------------------------------------------------------------------------------------------------------- Auction Rate Preferred shares redeemed: Series M 328 $ 8,200,000 -- $ -- 137 $ 3,425,000 -- $ -- Series T 329 8,225,000 -- -- 137 3,425,000 -- -- Series W 329 8,225,000 -- -- 137 3,425,000 -- -- Series TH 260 6,500,000 -- -- 106 2,650,000 -- -- Series F 328 8,200,000 -- -- 137 3,425,000 -- -- -------------------------------------------------------------------------------------------------------------------------- Total 1,574 $39,350,000 -- $ -- 654 $16,350,000 -- $ -- ==========================================================================================================================
100
MARKET OPPORTUNITY (NMO) DIVIDEND ADVANTAGE (NAD) -------------------------------------------- ------------------------------------------ YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED 10/31/08 10/31/07 10/31/08 10/31/07 -------------------------------------------------------------------------------------------------------------------------- SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT -------------------------------------------------------------------------------------------------------------------------- Auction Rate Preferred shares redeemed: Series M 193 $ 4,825,000 -- $ -- 382 $ 9,550,000 -- $ -- Series T 193 4,825,000 -- -- 383 9,575,000 -- -- Series W 154 3,850,000 -- -- -- -- -- -- Series TH -- -- -- -- 363 9,075,000 -- -- Series F 193 4,825,000 -- -- -- -- -- -- -------------------------------------------------------------------------------------------------------------------------- Total 733 $18,325,000 -- $ -- 1,128 $28,200,000 -- $ -- ========================================================================================================================== DIVIDEND ADVANTAGE 2 (NXZ) DIVIDEND ADVANTAGE 3 (NZF) -------------------------------------------- ------------------------------------------ YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED 10/31/08 10/31/07 10/31/08 10/31/07 -------------------------------------------------------------------------------------------------------------------------- SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT -------------------------------------------------------------------------------------------------------------------------- Auction Rate Preferred shares redeemed: Series M 3,000 $ 75,000,000 -- $ -- -- $ -- -- $ -- Series T 3,000 75,000,000 -- -- -- -- -- -- Series W -- -- -- -- 550 13,750,000 -- -- Series TH -- -- -- -- 550 13,750,000 -- -- Series F 2,880 72,000,000 -- -- 549 13,725,000 -- -- -------------------------------------------------------------------------------------------------------------------------- Total 8,880 $222,000,000 -- $ -- 1,649 $41,225,000 -- $ -- ==========================================================================================================================
Transactions in Variable Rate Demand Preferred shares were as follows:
DIVIDEND ADVANTAGE 2 (NXZ) ------------------------------------------ YEAR ENDED YEAR ENDED 10/31/08 10/31/07 -------------------------------------------------------------------------------------------------------------------------- SHARES AMOUNT SHARES AMOUNT -------------------------------------------------------------------------------------------------------------------------- Variable Rate Demand Preferred shares issued: Series 1 1,960 $196,000,000 -- $ -- ==========================================================================================================================
3. INVESTMENT TRANSACTIONS Purchases and sales (including maturities but excluding short-term investments and derivative transactions) during the fiscal year ended October 31, 2008, were as follows:
PERFORMANCE MUNICIPAL MARKET DIVIDEND DIVIDEND DIVIDEND PLUS ADVANTAGE OPPORTUNITY ADVANTAGE ADVANTAGE 2 ADVANTAGE 3 (NPP) (NMA) (NMO) (NAD) (NXZ) (NZF) ------------------------------------------------------------------------------------------------------------------------------------ Purchases $123,620,755 $127,780,691 $ 82,319,343 $ 92,619,494 $ 62,126,117 $59,480,551 Sales and maturities 145,226,088 175,267,119 139,011,635 132,897,726 115,255,550 86,663,867 ====================================================================================================================================
4. INCOME TAX INFORMATION The following information is presented on an income tax basis. Differences between amounts for financial statement and federal income tax purposes are primarily due to timing differences in recognizing taxable market discount, timing differences in recognizing certain gains and losses on investment transactions and the treatment of investments in inverse floating rate transactions subject to SFAS No. 140. To the extent that differences arise that are permanent in nature, such amounts are reclassified within the capital accounts on the Statement of Assets and Liabilities presented in the annual report, based on their federal tax basis treatment; temporary differences do not require reclassification. Temporary and permanent differences do not impact the net asset values of the Funds. At October 31, 2008, the cost of investments was as follows:
PERFORMANCE MUNICIPAL MARKET DIVIDEND DIVIDEND DIVIDEND PLUS ADVANTAGE OPPORTUNITY ADVANTAGE ADVANTAGE 2 ADVANTAGE 3 (NPP) (NMA) (NMO) (NAD) (NXZ) (NZF) ------------------------------------------------------------------------------------------------------------------------------------ Cost of investments $1,260,467,249 $931,359,400 $966,004,462 $796,434,756 $594,717,363 $832,318,433 ====================================================================================================================================
101 Notes to FINANCIAL STATEMENTS (continued) Gross unrealized appreciation and gross unrealized depreciation of investments at October 31, 2008, were as follows:
PERFORMANCE MUNICIPAL MARKET DIVIDEND DIVIDEND DIVIDEND PLUS ADVANTAGE OPPORTUNITY ADVANTAGE ADVANTAGE 2 ADVANTAGE 3 (NPP) (NMA) (NMO) (NAD) (NXZ) (NZF) ------------------------------------------------------------------------------------------------------------------------------------ Gross unrealized: Appreciation $ 29,817,057 $ 25,185,475 $ 31,201,920 $ 15,840,155 $ 18,077,115 $ 16,511,283 Depreciation (105,608,945) (103,809,567) (93,831,453) (98,345,862) (57,672,259) (101,204,502) ------------------------------------------------------------------------------------------------------------------------------------ Net unrealized appreciation (depreciation) of investments $ (75,791,888) $ (78,624,092) $(62,629,533) $(82,505,707) $(39,595,144) $ (84,693,219) ====================================================================================================================================
The tax components of undistributed net tax-exempt income, net ordinary income and net long-term capital gains at October 31, 2008, the Funds' tax year end, were as follows:
PERFORMANCE MUNICIPAL MARKET DIVIDEND DIVIDEND DIVIDEND PLUS ADVANTAGE OPPORTUNITY ADVANTAGE ADVANTAGE 2 ADVANTAGE 3 (NPP) (NMA) (NMO) (NAD) (NXZ) (NZF) ------------------------------------------------------------------------------------------------------------------------------------ Undistributed net tax-exempt income * $3,489,193 $1,437,801 $1,322,949 $1,215,719 $164,196 $1,724,493 Undistributed net ordinary income ** 60,857 126,563 198 -- 347,635 311,541 Undistributed net long-term capital gains -- -- -- -- -- -- ====================================================================================================================================
* Undistributed net tax-exempt income (on a tax basis) has not been reduced for the dividend declared on October 1, 2008, paid on November 3, 2008. ** Net ordinary income consists of taxable market discount income and net short-term capital gains, if any. The tax character of distributions paid during the Funds' tax years ended October 31, 2008 and October 31, 2007, was designated for purposes of the dividends paid deduction as follows:
PERFORMANCE MUNICIPAL MARKET DIVIDEND DIVIDEND DIVIDEND PLUS ADVANTAGE OPPORTUNITY ADVANTAGE ADVANTAGE 2 ADVANTAGE 3 2008 (NPP) (NMA) (NMO) (NAD) (NXZ) (NZF) ------------------------------------------------------------------------------------------------------------------ Distributions from net tax-exempt income*** $58,938,252 $46,196,128 $47,134,373 $40,676,616 $33,466,437 $42,267,778 Distributions from net ordinary income ** -- -- -- 171,088 -- -- Distributions from net long-term capital gains**** -- 1,389,990 -- -- -- -- ================================================================================================================== PERFORMANCE MUNICIPAL MARKET DIVIDEND DIVIDEND DIVIDEND PLUS ADVANTAGE OPPORTUNITY ADVANTAGE ADVANTAGE 2 ADVANTAGE 3 2007 (NPP) (NMA) (NMO) (NAD) (NXZ) (NZF) ------------------------------------------------------------------------------------------------------------------ Distributions from net tax-exempt income $61,544,192 $49,015,900 $48,416,601 $42,441,771 $34,569,733 $45,208,503 Distributions from net ordinary income ** 58,535 -- 77,487 121,024 -- -- Distributions from net long-term capital gains 3,618,054 -- -- -- -- 1,024,327 ==================================================================================================================
** Net ordinary income consists of taxable market discount income and net short-term capital gains, if any. *** The Funds hereby designate these amounts paid during the fiscal year ended October 31, 2008, as Exempt Interest Dividends. **** The Funds designated as a long-term capital gain dividend, pursuant to the Internal Revenue Code Section 852(b)(3), the amount necessary to reduce earnings and profits of the Funds related to net capital gain to zero for the tax year ended October 31, 2008. 102 At October 31, 2008, the Funds' tax year end, the 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:
PERFORMANCE MUNICIPAL MARKET DIVIDEND DIVIDEND DIVIDEND PLUS ADVANTAGE OPPORTUNITY ADVANTAGE ADVANTAGE 2 ADVANTAGE 3 (NPP) (NMA) (NMO) (NAD) (NXZ) (NZF) ------------------------------------------------------------------------------------------------------------------- Expiration: October 31, 2011 $ -- $ -- $ 7,158,110 $4,594,300 $ -- $ -- October 31, 2012 -- -- 973,824 -- -- -- October 31, 2013 -- -- -- 104,762 177,536 -- October 31, 2014 -- -- 3,141,529 -- 1,882,135 -- October 31, 2015 105,896 -- 1,902,879 -- 961,027 347,417 October 31, 2016 443,483 876,507 1,398,166 -- -- -- ------------------------------------------------------------------------------------------------------------------- Total $549,379 $876,507 $14,574,508 $4,699,062 $3,020,698 $347,417 ===================================================================================================================
Dividend Advantage (NAD) had $7,670,294 of its capital loss carryforward expire on October 31, 2008. 5. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES Each Fund's management fee is separated into two components - a complex-level component, based on the aggregate amount of all fund assets managed by Nuveen Asset Management (the "Adviser"), a wholly owned subsidiary of Nuveen, and a specific fund-level component, based only on the amount of assets within each individual Fund. This pricing structure enables Nuveen fund shareholders to benefit from growth in the assets within each individual fund as well as from growth in the amount of complex-wide assets managed by the Adviser. The annual fund-level fee, payable monthly, for each Fund is based upon the average daily net assets (including net assets attributable to Auction Rate Preferred shares or VRDP shares) of each Fund as follows: PERFORMANCE PLUS (NPP) AVERAGE DAILY NET ASSETS (INCLUDING MUNICIPAL ADVANTAGE (NMA) NET ASSETS ATTRIBUTABLE TO MARKET OPPORTUNITY (NMO) AUCTION RATE PREFERRED SHARES OR VRDP SHARES) FUND-LEVEL FEE RATE -------------------------------------------------------------------------------- For the first $125 million .4500% For the next $125 million .4375 For the next $250 million .4250 For the next $500 million .4125 For the next $1 billion .4000 For the next $3 billion .3875 For net assets over $5 billion .3750 ================================================================================ DIVIDEND ADVANTAGE (NAD) AVERAGE DAILY NET ASSETS (INCLUDING DIVIDEND ADVANTAGE 2 (NXZ) NET ASSETS ATTRIBUTABLE TO DIVIDEND ADVANTAGE 3 (NZF) AUCTION RATE PREFERRED SHARES OR VRDP SHARES) FUND-LEVEL FEE RATE -------------------------------------------------------------------------------- For the first $125 million .4500% For the next $125 million .4375 For the next $250 million .4250 For the next $500 million .4125 For the next $1 billion .4000 For net assets over $2 billion .3750 ================================================================================ The annual complex-level fee, payable monthly, which is additive to the fund-level fee, for all Nuveen sponsored funds in the U.S., is based on the aggregate amount of total fund assets managed as stated in the following table. As of October 31, 2008, the complex-level fee rate was .1998%. 103 Notes to FINANCIAL STATEMENTS (continued) The complex-level fee schedule is as follows: COMPLEX-LEVEL ASSET BREAKPOINT LEVEL (1) EFFECTIVE RATE AT BREAKPOINT LEVEL -------------------------------------------------------------------------------- $55 billion .2000% $56 billion .1996 $57 billion .1989 $60 billion .1961 $63 billion .1931 $66 billion .1900 $71 billion .1851 $76 billion .1806 $80 billion .1773 $91 billion .1691 $125 billion .1599 $200 billion .1505 $250 billion .1469 $300 billion .1445 ================================================================================ (1) The complex-level component of the management fee for the funds is calculated based upon the aggregate daily net assets of all Nuveen funds, with such daily net assets to include assets attributable to preferred stock (Auction Rate Preferred shares or VRDP shares) issued by or borrowings by such funds) but to exclude assets attributable to investments in other Nuveen funds. The management fee compensates the Adviser for overall investment advisory and administrative services and general office facilities. The Funds pay no compensation directly to those of its Directors/Trustees who are affiliated with the Adviser or to its Officers, all of whom receive remuneration for their services to the Funds from the Adviser or its affiliates. The Board of Directors/Trustees has adopted a deferred compensation plan for independent Directors/Trustees that enables Directors/Trustees to elect to defer receipt of all or a portion of the annual compensation they are entitled to receive from certain Nuveen advised funds. Under the plan, deferred amounts are treated as though equal dollar amounts had been invested in shares of select Nuveen advised funds. For the first ten years of Dividend Advantage's (NAD) operations, the Adviser has agreed to reimburse the Fund, as a percentage of average daily net assets (including net assets attributable to Auction Rate Preferred shares or VRDP shares), for fees and expenses in the amounts and for the time periods set forth below: YEAR ENDING YEAR ENDING JULY 31, JULY 31, -------------------------------------------------------------------------------- 1999* .30% 2005 .25% 2000 .30 2006 .20 2001 .30 2007 .15 2002 .30 2008 .10 2003 .30 2009 .05 2004 .30 ================================================================================ * From the commencement of operations. The Adviser has not agreed to reimburse Dividend Advantage (NAD) for any portion of its fees and expenses beyond July 31, 2009. 104 For the first ten years of Dividend Advantage 2's (NXZ) operations, the Adviser has agreed to reimburse the Fund, as a percentage of average daily net assets (including net assets attributable to Auction Rate Preferred shares or VRDP shares), for fees and expenses in the amounts and for the time periods set forth below: YEAR ENDING YEAR ENDING MARCH 31, MARCH 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 Dividend Advantage 2 (NXZ) for any portion of its fees and expenses beyond March 31, 2011. For the first ten years of Dividend Advantage 3's (NZF) operations, the Adviser has agreed to reimburse the Fund, as a percentage of average daily net assets (including net assets attributable to Auction Rate Preferred shares or VRDP shares), for fees and expenses in the amounts and for the time periods set forth below: YEAR ENDING YEAR ENDING SEPTEMBER 30, SEPTEMBER 30, -------------------------------------------------------------------------------- 2001* .30% 2007 .25% 2002 .30 2008 .20 2003 .30 2009 .15 2004 .30 2010 .10 2005 .30 2011 .05 2006 .30 ================================================================================ * From the commencement of operations. The Adviser has not agreed to reimburse Dividend Advantage 3 (NZF) for any portion of its fees and expenses beyond September 30, 2011. 6. NEW ACCOUNTING PRONOUNCEMENTS Financial Accounting Standards Board Statement of Financial Accounting Standards No. 157 (SFASNo. 157) In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements." This standard establishes a single authoritative definition of fair value, sets out a framework for measuring fair value and requires additional disclosures about fair value measurements. SFAS No. 157 applies to fair value measurements already required or permitted by existing standards. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. The changes to current generally accepted accounting principles from the application of this standard relate to the definition of fair value, the methods used to measure fair value, and the expanded disclosures about fair value measurements. As of October 31, 2008, management does not believe the adoption of SFAS No. 157 will impact the financial statement amounts; however, additional disclosures may be required about the inputs used to develop the measurements and the effect of certain of the measurements included within the Statement of Operations for the period. Financial Accounting Standards Board Statement of Financial Accounting Standards No. 161 (SFASNo. 161) In March 2008, the FASB issued SFAS No. 161, "Disclosures about Derivative Instruments and Hedging Activities." This standard is intended to enhance financial statement disclosures for derivative instruments and hedging activities and enable investors to understand: a) how and why a fund uses derivative instruments, b) how derivative instruments and related hedge items are accounted for, and c) how derivative instruments and related hedge items affect a fund's financial position, results of operations and cash flows. SFAS No. 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. As of October 31, 2008, management does not believe the adoption of SFAS No. 161 will impact the financial statement amounts; however, additional footnote disclosures may be required about the use of derivative instruments and hedging items. 105 Notes to FINANCIAL STATEMENTS (continued) 7. SUBSEQUENT EVENTS Distributions to Common Shareholders The Funds declared Common share dividend distributions from their tax-exempt net investment income which were paid on December 1, 2008, to shareholders of record on November 15, 2008, as follows:
PERFORMANCE MUNICIPAL MARKET DIVIDEND DIVIDEND DIVIDEND PLUS ADVANTAGE OPPORTUNITY ADVANTAGE ADVANTAGE 2 ADVANTAGE 3 (NPP) (NMA) (NMO) (NAD) (NXZ) (NZF) ------------------------------------------------------------------------------------------------------------------ Dividend per share $.0605 $.0660 $.0630 $.0655 $.0730 $.0665 ==================================================================================================================
106 Financial HIGHLIGHTS 107 Financial HIGHLIGHTS Selected data for a Common share outstanding throughout each period:
Investment Operations Less Distributions --------------------------------------------------------------- -------------------------------- Distributions Distributions from Net from Investment Capital Net Beginning Income to Gains to Investment Capital Common Net Auction Auction Income to Gains to Share Net Realized/ Rate Rate Common Common Net Asset Investment Unrealized Preferred Preferred Share- Share- Value Income Gain (Loss) Shareholders+ Shareholders+ Total holders holders Total ================================================================================================================================= PERFORMANCE PLUS (NPP) --------------------------------------------------------------------------------------------------------------------------------- Year Ended 10/31: 2008 $15.22 $1.02 $(2.56) $(.29) $ -- $(1.83) $ (.70) $ -- $ (.70) 2007 15.78 .99 (.47) (.27) (.01) .24 (.75) (.05) (.80) 2006 15.51 1.00 .38 (.25) -- 1.13 (.84) (.02) (.86) 2005 15.87 1.02 (.26) (.16) -- .60 (.94) (.02) (.96) 2004 15.45 1.04 .42 (.07) -- 1.39 (.97) -- (.97) MUNICIPAL ADVANTAGE (NMA) --------------------------------------------------------------------------------------------------------------------------------- Year Ended 10/31: 2008 15.20 1.08 (3.06) (.30) (.01) (2.29) (.77) (.02) (.79) 2007 15.88 1.07 (.63) (.29) -- .15 (.83) -- (.83) 2006 15.70 1.08 .27 (.26) -- 1.09 (.90) (.01) (.91) 2005 16.02 1.09 (.24) (.16) -- .69 (1.00) (.01) (1.01) 2004 15.62 1.11 .41 (.08) -- 1.44 (1.03) (.01) (1.04) ================================================================================================================================= Total Returns -------------------- Based Ending on Common Based Common Share Ending on Share Net Net Asset Market Market Asset Value Value Value* Value* ===================================================================== PERFORMANCE PLUS (NPP) --------------------------------------------------------------------- Year Ended 10/31: 2008 $12.69 $11.50 (10.71)% (12.49)% 2007 15.22 13.59 (4.97) 1.53 2006 15.78 15.09 10.78 7.50 2005 15.51 14.43 3.02 3.83 2004 15.87 14.95 9.10 9.30 MUNICIPAL ADVANTAGE (NMA) --------------------------------------------------------------------- Year Ended 10/31: 2008 12.12 11.41 (13.16) (15.65) 2007 15.20 13.95 (7.08) 1.06 2006 15.88 15.85 10.68 7.16 2005 15.70 15.19 3.29 4.42 2004 16.02 15.70 8.82 9.57 ===================================================================== Ratios/Supplemental Data ---------------------------------------------------------------------------------------------------------------- Ratios to Average Net Assets Ratios to Average Net Assets Applicable to Common Shares Applicable to Common Shares Before Credit/Reimbursement/Refund After Credit/Reimbursement/Refund** ------------------------------------------ ------------------------------------------ Ending Net Assets Applicable Expenses Expenses Net Expenses Expenses Net Portfolio to Common Including Excluding Investment Including Excluding Investment Turnover Shares (000) Interest++(a) Interest++(a) Income++ Interest++(a) Interest++(a) Income++ Rate ==================================================================================================================================== PERFORMANCE PLUS (NPP) ------------------------------------------------------------------------------------------------------------------------------------ Year Ended 10/31: 2008 $760,496 1.25% 1.17% 6.96% 1.23% 1.16% 6.98% 9% 2007 912,066 1.16 1.14 6.38 1.14 1.13 6.39 6 2006 945,222 1.15 1.15 6.44 1.14 1.14 6.45 9 2005 929,544 1.15 1.15 6.45 1.14 1.14 6.46 6 2004 950,993 1.17 1.17 6.69 1.17 1.17 6.70 11 MUNICIPAL ADVANTAGE (NMA) ------------------------------------------------------------------------------------------------------------------------------------ Year Ended 10/31: 2008 523,602 1.38 1.21 7.50 1.36 1.19 7.52 13 2007 656,806 1.40 1.17 6.87 1.38 1.15 6.89 10 2006 683,675 1.18 1.18 6.92 1.17 1.17 6.93 11 2005 675,678 1.17 1.17 6.81 1.16 1.16 6.82 8 2004 689,190 1.19 1.19 7.00 1.18 1.18 7.00 4 ====================================================================================================================================
Auction Rate Preferred Shares Variable Rate Demand Preferred Shares at End of Period at End of Period -------------------------------------- ------------------------------------------- Aggregate Liquidation Aggregate Liquidation Amount and Market Asset Amount and Market Asset Outstanding Value Coverage Outstanding Value Coverage (000) Per Share Per Share (000) Per Share Per Share ================================================================================================= PERFORMANCE PLUS (NPP) ------------------------------------------------------------------------------------------------- Year Ended 10/31: 2008 $439,650 $25,000 $68,244 $ -- $ -- $ -- 2007 479,000 25,000 72,603 -- -- -- 2006 479,000 25,000 74,333 -- -- -- 2005 479,000 25,000 73,515 -- -- -- 2004 479,000 25,000 74,634 -- -- -- MUNICIPAL ADVANTAGE (NMA) ------------------------------------------------------------------------------------------------- Year Ended 10/31: 2008 341,650 25,000 63,314 -- -- -- 2007 358,000 25,000 70,866 -- -- -- 2006 358,000 25,000 72,743 -- -- -- 2005 358,000 25,000 72,184 -- -- -- 2004 358,000 25,000 73,128 -- -- -- =================================================================================================
* Total Return Based on Market Value is the combination of changes in the market price per share and the effect of reinvested dividend income and reinvested capital gains distributions, if any, at the average price paid per share at the time of reinvestment. The last dividend declared in the period, which is typically paid on the first business day of the following month, is assumed to be reinvested at the ending market price. The actual reinvestment for the last dividend declared in the period may take place over several days, and in some instances may not be based on the market price, so the actual reinvestment price may be different from the price used in the calculation. Total returns are not annualized. Total Return Based on Common Share Net Asset Value is the combination of changes in Common share net asset value, reinvested dividend income at net asset value and reinvested capital gains distributions at net asset value, if any. The last dividend declared in the period, which is typically paid on the first business day of the following month, is assumed to be reinvested at the ending net asset value. The actual reinvest price for the last dividend declared in the period may often be based on the Fund's market price (and not its net asset value), and therefore may be different from the price used in the calculation. Total returns are not annualized. ** After custodian fee credit, expense reimbursement and legal fee refund, where applicable. + The amounts shown are based on Common share equivalents. ++ Ratios do not reflect the effect of dividend payments to Auction Rate Preferred shareholders; income ratios reflect income earned on assets attributable to Auction Rate Preferred shares or VRDP shares, where applicable. (a) Interest expense arises from payments to Variable Rate Demand Preferred shareholders and the application of SFAS No. 140 to certain inverse floating rate transactions entered into by the Fund as more fully described in Footnote 1 - Variable Rate Demand Preferred Shares and Inverse Floating Rate Securities, where applicable. See accompanying notes to financial statements. 108-109 spread Financial HIGHLIGHTS (continued) Selected data for a Common share outstanding throughout each period:
Investment Operations Less Distributions --------------------------------------------------------------- -------------------------------- Distributions Distributions from Net from Investment Capital Net Beginning Income to Gains to Investment Capital Common Net Auction Auction Income to Gains to Share Net Realized/ Rate Rate Common Common Net Asset Investment Unrealized Preferred Preferred Share- Share- Value Income Gain (Loss) Shareholders+ Shareholders+ Total holders holders Total ================================================================================================================================= MARKET OPPORTUNITY (NMO) --------------------------------------------------------------------------------------------------------------------------------- Year Ended 10/31: 2008 $14.83 $1.03 $(2.59) $(.31) $ -- $(1.87) $ (.73) $ -- $ (.73) 2007 15.41 1.04 (.56) (.30) -- .18 (.76) -- (.76) 2006 15.14 1.02 .34 (.26) -- 1.10 (.83) -- (.83) 2005 15.48 1.03 (.29) (.16) -- .58 (.92) -- (.92) 2004 15.11 1.03 .37 (.08) -- 1.32 (.95) -- (.95) DIVIDEND ADVANTAGE (NAD) --------------------------------------------------------------------------------------------------------------------------------- Year Ended 10/31: 2008 14.90 1.05 (3.14) (.27) -- (2.36) (.77) -- (.77) 2007 15.54 1.04 (.60) (.27) -- .17 (.81) -- (.81) 2006 15.28 1.04 .32 (.24) -- 1.12 (.86) -- (.86) 2005 15.62 1.06 (.25) (.15) -- .66 (1.00) -- (1.00) 2004 15.17 1.09 .46 (.07) -- 1.48 (1.03) -- (1.03) ================================================================================================================================= Total Returns -------------------- Based Ending on Common Based Common Share Ending on Share Net Net Asset Market Market Asset Value Value Value* Value* ==================================================================== MARKET OPPORTUNITY (NMO) -------------------------------------------------------------------- Year Ended 10/31: 2008 $12.23 $11.52 (9.87)% (13.07)% 2007 14.83 13.53 (5.00) 1.20 2006 15.41 15.00 11.92 7.49 2005 15.14 14.19 4.70 3.78 2004 15.48 14.44 7.97 9.00 DIVIDEND ADVANTAGE (NAD) -------------------------------------------------------------------- Year Ended 10/31: 2008 11.77 10.72 (16.46) (16.42) 2007 14.90 13.63 (5.96) 1.10 2006 15.54 15.30 11.19 7.59 2005 15.28 14.58 1.77 4.27 2004 15.62 15.31 8.37 10.06 ==================================================================== Ratios/Supplemental Data ----------------------------------------------------------------------------------------------------------------- Ratios to Average Net Assets Ratios to Average Net Assets Applicable to Common Shares Applicable to Common Shares Before Credit/Reimbursement/Refund After Credit/Reimbursement/Refund** ------------------------------------------ ------------------------------------------ Ending Net Assets Applicable Expenses Expenses Net Expenses Expenses Net Portfolio to Common Including Excluding Investment Including Excluding Investment Turnover Shares (000) Interest++(a) Interest++(a) Income++ Interest++(a) Interest++(a) Income++ Rate ==================================================================================================================================== MARKET OPPORTUNITY (NMO) ------------------------------------------------------------------------------------------------------------------------------------ Year Ended 10/31: 2008 $557,346 1.36% 1.23% 7.33% 1.35% 1.21% 7.35% 8% 2007 675,577 1.38 1.19 6.87 1.36 1.17 6.88 5 2006 701,559 1.19 1.19 6.73 1.18 1.18 6.74 14 2005 689,682 1.19 1.19 6.66 1.18 1.18 6.67 7 2004 704,760 1.21 1.21 6.75 1.19 1.19 6.77 4 DIVIDEND ADVANTAGE (NAD) ------------------------------------------------------------------------------------------------------------------------------------ Year Ended 10/31: 2008 462,554 1.36 1.15 7.33 1.20 1.00 7.48 11 2007 585,496 1.24 1.13 6.60 1.01 .90 6.83 11 2006 610,316 1.12 1.12 6.54 .83 .83 6.83 8 2005 599,887 1.17 1.17 6.48 .80 .80 6.84 11 2004 613,328 1.14 1.14 6.69 .70 .70 7.12 7 ====================================================================================================================================
Auction Rate Preferred Shares Variable Rate Demand Preferred Shares at End of Period at End of Period -------------------------------------- ------------------------------------------- Aggregate Liquidation Aggregate Liquidation Amount and Market Asset Amount and Market Asset Outstanding Value Coverage Outstanding Value Coverage (000) Per Share Per Share (000) Per Share Per Share ================================================================================================= MARKET OPPORTUNITY (NMO) ------------------------------------------------------------------------------------------------- Year Ended 10/31: 2008 $361,675 $25,000 $63,525 $ -- $ -- $ -- 2007 380,000 25,000 69,446 -- -- -- 2006 380,000 25,000 71,155 -- -- -- 2005 380,000 25,000 70,374 -- -- -- 2004 380,000 25,000 71,366 -- -- -- DIVIDEND ADVANTAGE (NAD) ------------------------------------------------------------------------------------------------- Year Ended 10/31: 2008 266,800 25,000 68,343 -- -- -- 2007 295,000 25,000 74,618 -- -- -- 2006 295,000 25,000 76,722 -- -- -- 2005 295,000 25,000 75,838 -- -- -- 2004 295,000 25,000 76,977 -- -- -- =================================================================================================
* Total Return Based on Market Value is the combination of changes in the market price per share and the effect of reinvested dividend income and reinvested capital gains distributions, if any, at the average price paid per share at the time of reinvestment. The last dividend declared in the period, which is typically paid on the first business day of the following month, is assumed to be reinvested at the ending market price. The actual reinvestment for the last dividend declared in the period may take place over several days, and in some instances may not be based on the market price, so the actual reinvestment price may be different from the price used in the calculation. Total returns are not annualized. Total Return Based on Common Share Net Asset Value is the combination of changes in Common share net asset value, reinvested dividend income at net asset value and reinvested capital gains distributions at net asset value, if any. The last dividend declared in the period, which is typically paid on the first business day of the following month, is assumed to be reinvested at the ending net asset value. The actual reinvest price for the last dividend declared in the period may often be based on the Fund's market price (and not its net asset value), and therefore may be different from the price used in the calculation. Total returns are not annualized. ** After custodian fee credit, expense reimbursement and legal fee refund, where applicable. + The amounts shown are based on Common share equivalents. ++ Ratios do not reflect the effect of dividend payments to Auction Rate Preferred shareholders; income ratios reflect income earned on assets attributable to Auction Rate Preferred shares or VRDP shares, where applicable. (a) Interest expense arises from payments to Variable Rate Demand Preferred shareholders and the application of SFAS No. 140 to certain inverse floating rate transactions entered into by the Fund as more fully described in Footnote 1 - Variable Rate Demand Preferred Shares and Inverse Floating Rate Securities, where applicable. See accompanying notes to financial statements. 110-111 spread Financial HIGHLIGHTS (continued) Selected data for a Common share outstanding throughout each period:
Investment Operations Less Distributions --------------------------------------------------------------- -------------------------------- Distributions Distributions from Net from Investment Capital Net Beginning Income to Gains to Investment Capital Common Net Auction Auction Income to Gains to Share Net Realized/ Rate Rate Common Common Net Asset Investment Unrealized Preferred Preferred Share- Share- Value Income Gain (Loss) Shareholders+ Shareholders+ Total holders holders Total ================================================================================================================================= DIVIDEND ADVANTAGE 2 (NXZ) --------------------------------------------------------------------------------------------------------------------------------- Year Ended 10/31: 2008 $15.55 $1.05 $(2.81) $(.20) $ -- $(1.96) $ (.88) $ -- $ (.88) 2007 16.02 1.13 (.43) (.27) -- .43 (.90) -- (.90) 2006 15.80 1.12 .32 (.24) -- 1.20 (.98) -- (.98) 2005 15.63 1.13 .22 (.15) -- 1.20 (1.03) -- (1.03) 2004 15.13 1.12 .51 (.07) -- 1.56 (1.03) (.03) (1.06) DIVIDEND ADVANTAGE 3 (NZF) --------------------------------------------------------------------------------------------------------------------------------- Year Ended 10/31: 2008 15.03 1.06 (2.95) (.27) -- (2.16) (.77) -- (.77) 2007 15.54 1.07 (.44) (.27) (.01) .35 (.84) (.02) (.86) 2006 15.32 1.07 .29 (.24) -- 1.12 (.90) -- (.90) 2005 15.36 1.06 .01 (.15) -- .92 (.96) -- (.96) 2004 14.74 1.06 .59 (.07) -- 1.58 (.96) -- (.96) ================================================================================================================================= Total Returns -------------------- Based Ending on Common Based Common Share Ending on Share Net Net Asset Market Market Asset Value Value Value* Value* ===================================================================== DIVIDEND ADVANTAGE 2 (NXZ) --------------------------------------------------------------------- Year Ended 10/31: 2008 $12.71 $12.35 (15.21)% (13.23)% 2007 15.55 15.48 (.78) 2.76 2006 16.02 16.50 11.95 7.86 2005 15.80 15.64 8.58 7.83 2004 15.63 15.38 11.16 10.67 DIVIDEND ADVANTAGE 3 (NZF) --------------------------------------------------------------------- Year Ended 10/31: 2008 12.10 10.72 (17.85) (14.99) 2007 15.03 13.85 (7.72) 2.31 2006 15.54 15.88 16.90 7.57 2005 15.32 14.41 6.11 6.09 2004 15.36 14.50 12.45 11.10 ===================================================================== Ratios/Supplemental Data ---------------------------------------------------------------------------------------------------------------- Ratios to Average Net Assets Ratios to Average Net Assets Applicable to Common Shares Applicable to Common Shares Before Credit/Reimbursement/Refund After Credit/Reimbursement/Refund** ------------------------------------------ ------------------------------------------ Ending Net Assets Applicable Expenses Expenses Net Expenses Expenses Net Portfolio to Common Including Excluding Investment Including Excluding Investment Turnover Shares (000) Interest++(a) Interest++(a) Income++ Interest++(a) Interest++(a) Income++ Rate ==================================================================================================================================== DIVIDEND ADVANTAGE 2 (NXZ) ------------------------------------------------------------------------------------------------------------------------------------ Year Ended 10/31: 2008 $373,940 1.71% 1.22% 6.82% 1.44% .95% 7.09% 10% 2007 456,992 1.25 1.11 6.83 .91 .77 7.18 5 2006 470,189 1.11 1.11 6.70 .70 .70 7.11 5 2005 462,862 1.12 1.12 6.66 .67 .67 7.12 2 2004 457,552 1.14 1.14 6.87 .69 .69 7.32 3 DIVIDEND ADVANTAGE 3 (NZF) ------------------------------------------------------------------------------------------------------------------------------------ Year Ended 10/31: 2008 488,561 1.34 1.15 7.08 1.02 .83 7.39 7 2007 606,908 1.32 1.13 6.65 .93 .75 7.03 14 2006 626,836 1.13 1.13 6.51 .68 .68 6.96 9 2005 617,358 1.13 1.13 6.39 .68 .68 6.84 3 2004 619,118 1.15 1.15 6.64 .69 .69 7.10 3 ====================================================================================================================================
Auction Rate Preferred Shares Variable Rate Demand Preferred Shares at End of Period at End of Period -------------------------------------- ------------------------------------------- Aggregate Liquidation Aggregate Liquidation Amount and Market Asset Amount and Market Asset Outstanding Value Coverage Outstanding Value Coverage (000) Per Share Per Share (000) Per Share Per Share ================================================================================================= DIVIDEND ADVANTAGE 2 (NXZ) ------------------------------------------------------------------------------------------------- Year Ended 10/31: 2008 $ -- $ -- $ -- $196,000 $100,000 $290,785 2007 222,000 25,000 76,463 -- -- -- 2006 222,000 25,000 77,949 -- -- -- 2005 222,000 25,000 77,124 -- -- -- 2004 222,000 25,000 76,526 -- -- -- DIVIDEND ADVANTAGE 3 (NZF) ------------------------------------------------------------------------------------------------- Year Ended 10/31: 2008 270,775 25,000 70,108 -- -- -- 2007 312,000 25,000 73,630 -- -- -- 2006 312,000 25,000 75,227 -- -- -- 2005 312,000 25,000 74,468 -- -- -- 2004 312,000 25,000 74,609 -- -- -- =================================================================================================
* Total Return Based on Market Value is the combination of changes in the market price per share and the effect of reinvested dividend income and reinvested capital gains distributions, if any, at the average price paid per share at the time of reinvestment. The last dividend declared in the period, which is typically paid on the first business day of the following month, is assumed to be reinvested at the ending market price. The actual reinvestment for the last dividend declared in the period may take place over several days, and in some instances may not be based on the market price, so the actual reinvestment price may be different from the price used in the calculation. Total returns are not annualized. Total Return Based on Common Share Net Asset Value is the combination of changes in Common share net asset value, reinvested dividend income at net asset value and reinvested capital gains distributions at net asset value, if any. The last dividend declared in the period, which is typically paid on the first business day of the following month, is assumed to be reinvested at the ending net asset value. The actual reinvest price for the last dividend declared in the period may often be based on the Fund's market price (and not its net asset value), and therefore may be different from the price used in the calculation. Total returns are not annualized. ** After custodian fee credit, expense reimbursement and legal fee refund, where applicable. + The amounts shown are based on Common share equivalents. ++ Ratios do not reflect the effect of dividend payments to Auction Rate Preferred shareholders; income ratios reflect income earned on assets attributable to Auction Rate Preferred shares or VRDP shares, where applicable. (a) Interest expense arises from payments to Variable Rate Demand Preferred shareholders and the application of SFAS No. 140 to certain inverse floating rate transactions entered into by the Fund as more fully described in Footnote 1 - Variable Rate Demand Preferred Shares and Inverse Floating Rate Securities, where applicable. See accompanying notes to financial statements. 112-113 spread Board Members & Officers The management of the Funds, including general supervision of the duties performed for the Funds by the Adviser, is the responsibility of the Board Members of the Funds. The number of board members of the Fund is currently set at nine. None of the board members who are not "interested" persons of the Funds (referred to herein as "independent board members") has ever been a director or employee of, or consultant to, Nuveen or its affiliates. The names and business addresses of the board members and officers of the Funds, their principal occupations and other affiliations during the past five years, the number of portfolios each oversees and other directorships they hold are set forth below.
NAME, POSITION(S) HELD YEAR FIRST NUMBER PRINCIPAL BIRTHDATE WITH THE FUNDS ELECTED OR OF PORTFOLIOS OCCUPATION(S) & ADDRESS APPOINTED IN FUND COMPLEX INCLUDING OTHER AND TERM(1) OVERSEEN BY DIRECTORSHIPS BOARD MEMBER DURING PAST 5 YEARS INDEPENDENT BOARD MEMBERS: [] ROBERT P. BREMNER Private Investor and Management Consultant. 8/22/40 Chairman of 333 W. Wacker Drive the Board 1997 186 Chicago, IL 60606 and Board member [] JACK B. EVANS President, The Hall-Perrine Foundation, a 10/22/48 private philanthropic corporation (since 333 W. Wacker Drive Board member 1999 186 1996); Director and Vice Chairman, United Chicago, IL 60606 Fire Group, a publicly held company; Member of the Board of Regents for the State of Iowa University System; Director, Gazette Companies; Life Trustee of Coe College and Iowa College Foundation; Member of the Advisory Council of the Department of Finance in the Tippie College of Business, University of Iowa; formerly, Director, Alliant Energy; formerly, Director, Federal Reserve Bank of Chicago; formerly, President and Chief Operating Officer, SCI Financial Group, Inc., a regional financial services firm. [] WILLIAM C. HUNTER Dean, Tippie College of Business, 3/6/48 University of Iowa (since July 2006); 333 W. Wacker Drive Board member 2004 186 formerly, Dean and Distinguished Chicago, IL 60606 Professor of Finance, School of Business at the University of Connecticut (2003-2006); previously, Senior Vice President and Director of Research at the Federal Reserve Bank of Chicago (1995-2003); Director (since 1997), Credit Research Center at Georgetown University; Director (since 2004) of Xerox Corporation; Director (since 2005), Beta Gamma Sigma International Honor Society; Director, SS&C Technologies, Inc. (May 2005-October 2005). [] DAVID J. KUNDERT Director, Northwestern Mutual Wealth 10/28/42 Management Company; Retired (since 2004) 333 W. Wacker Drive Board member 2005 186 as Chairman, JPMorgan Fleming Asset Chicago, IL 60606 Management, President and CEO, Banc One Investment Advisors Corporation, and President, One Group Mutual Funds; prior thereto, Executive Vice President, Banc One Corporation and Chairman and CEO, Banc One Investment Management Group; Member, Board of Regents, Luther College; member of the Wisconsin Bar Association; member of Board of Directors, Friends of Boerner Botanical Gardens; member of Investment Committee, Greater Milwaukee Foundation. [] WILLIAM J. SCHNEIDER Chairman, formerly, Senior Partner and 9/24/44 Chief Operating Officer (retired, 2004) 333 W. Wacker Drive Board member 1997 186 of Miller-Valentine Partners Ltd., a real Chicago, IL 60606 estate investment company; Director, Dayton Development Coalition; formerly, member, Business Advisory Council, Cleveland Federal Reserve Bank. 114 NAME, POSITION(S) HELD YEAR FIRST NUMBER PRINCIPAL BIRTHDATE WITH THE FUNDS ELECTED OR OF PORTFOLIOS OCCUPATION(S) & ADDRESS APPOINTED IN FUND COMPLEX INCLUDING OTHER AND TERM(1) OVERSEEN BY DIRECTORSHIPS BOARD MEMBER DURING PAST 5 YEARS INDEPENDENT BOARD MEMBERS: [] JUDITH M. STOCKDALE Executive Director, Gaylord and Dorothy 12/29/47 Donnelley Foundation (since 1994); prior 333 W. Wacker Drive Board member 1997 186 thereto, Executive Director, Great Lakes Chicago, IL 60606 Protection Fund (from 1990 to 1994). [] CAROLE E. STONE Director, Chicago Board Options Exchange 6/28/47 (since 2006); Commissioner, New York 333 W. Wacker Drive Board member 2007 186 State Commission on Public Authority Chicago, IL 60606 Reform (since 2005); formerly, Chair New York Racing Association Oversight Board (2005-2007); formerly, Director, New York State Division of the Budget (2000-2004), Chair, Public Authorities Control Board (2000-2004) and Director, Local Government Assistance Corporation (2000-2004). [] TERENCE J. TOTH 9/29/59 Director, Legal & General Investment 333 W. Wacker Drive Board Member 2008 186 Management (since 2008); Private Investor Chicago, IL 60606 (since 2007); CEO and President, Northern Trust Investments (2004-2007); Executive Vice President, Quantitative Management & Securities Lending (2007-2004); prior thereto, various positions with Northern Trust Company (since 1994); Member: Goodman Theatre Board (Since 2004); Chicago Fellowship Boards (since 2005), University of Illinois Leadership Council Board (since 2007) and Catalyst Schools of Chicago Board (since 2008); formerly Member: Northern Trust Mutual Funds Board (2005-2007), Northern Trust Japan Board (2004-2007), Northern Trust Securities Inc. Board (2003-2007) and Northern Trust Hong Kong Board (1997-2004). INTERESTED BOARD MEMBER: [] JOHN P. AMBOIAN(2)(3) Chief Executive Officer (since July 2007) 6/14/61 and Director (since 1999) of Nuveen 333 W. Wacker Drive Board Member 2008 186 Investments, Inc.; Chief Executive Chicago, IL 60606 Officer (since 2007) of Nuveen Asset Management, Rittenhouse Asset Management, Nuveen Investments Advisors, Inc. formerly, President (1999-2004) of Nuveen Advisory Corp. and Nuveen Institutional Advisory Corp.(3) 115 NAME, POSITION(S) HELD YEAR FIRST NUMBER PRINCIPAL BIRTHDATE WITH THE FUNDS ELECTED OR OF PORTFOLIOS OCCUPATION(S) AND ADDRESS APPOINTED(4) IN FUND COMPLEX DURING PAST 5 YEARS OVERSEEN BY OFFICER OFFICERS OF THE FUNDS: [] GIFFORD R. ZIMMERMAN Managing Director (since 2002), Assistant 9/9/56 Chief Secretary and Associate General Counsel 333 W. Wacker Drive Administrative 1988 186 of Nuveen Investments, LLC; Managing Chicago, IL 60606 Officer Director (since 2002), Associate General Counsel and Assistant Secretary, of Nuveen Asset Management; Vice President and Assistant Secretary of NWQ Investment Management Company, LLC. (since 2002), Nuveen Investments Advisers Inc. (since 2002), Symphony Asset Management LLC, and NWQ Investment Management Company, LLC (since 2003), Tradewinds Global Investors, LLC, and Santa Barbara Asset Management, LLC (since 2006), Nuveen HydePark Group LLC and Nuveen Investment Solutions, Inc. (since 2007); Managing Director, Associate General Counsel and Assistant Secretary of Rittenhouse Asset Management, Inc. (since 2003); Managing Director (since 2004) and Assistant Secretary (since 1994) of Nuveen Investments, Inc.; formerly, Managing Director (2002-2004), General Counsel (1998-2004) and Assistant Secretary of Nuveen Advisory Corp. and Nuveen Institutional Advisory Corp.(3); Chartered Financial Analyst. [] WILLIAM ADAMS IV Executive Vice President of Nuveen 6/9/55 Investments, Inc.; Executive Vice 333 W. Wacker Drive Vice President 2007 120 President, U.S. Structured Products of Chicago, IL 60606 Nuveen Investments, LLC, (since 1999), prior thereto, Managing Director of Structured Investments. [] CEDRIC H. ANTOSIEWICZ Managing Director, (since 2004) 1/11/62 previously, Vice President (1993-2004) of 333 W. Wacker Drive Vice President 2007 120 Nuveen Investments, LLC. Chicago, IL 60606 [] MICHAEL T. ATKINSON Vice President (since 2002) of Nuveen 2/3/66 Vice President Investments, LLC. 333 W. Wacker Drive and Assistant 2000 186 Chicago, IL 60606 Secretary [] LORNA C. FERGUSON Managing Director (since 2004), formerly, 10/24/45 Vice President of Nuveen Investments, 333 W. Wacker Drive Vice President 1998 186 LLC; Managing Director (since 2005) of Chicago, IL 60606 Nuveen Asset Management; Managing Director (2004-2005), formerly, Vice President (1998-2004) of Nuveen Advisory Corp. and Nuveen Institutional Advisory Corp.(3) [] STEPHEN D. FOY Vice President (since 1993) and Funds 5/31/54 Vice President Controller (since 1998) of Nuveen 333 W. Wacker Drive and Controller 1998 186 Investments, LLC; formerly, Vice Chicago, IL 60606 President and Funds Controller (1998-2004) of Nuveen Investments, Inc.; Certified Public Accountant. [] WALTER M. KELLY Senior Vice President (since 2008), Vice 2/24/70 Chief Compliance President (2006-2008) formerly, Assistant 333 W. Wacker Drive Officer and 2003 186 Vice President and Assistant General Chicago, IL 60606 Vice President Counsel (2003-2006) of Nuveen Investments, LLC; Vice President (since 2006) and Assistant Secretary (since 2008) of Nuveen Asset Management. [] DAVID J. LAMB Vice President (since 2000) of Nuveen 3/22/63 Investments, LLC; Certified Public 333 W. Wacker Drive Vice President 2000 186 Accountant. Chicago, IL 60606 116 NAME, POSITION(S) HELD YEAR FIRST NUMBER PRINCIPAL BIRTHDATE WITH THE FUNDS ELECTED OR OF PORTFOLIOS OCCUPATION(S) AND ADDRESS APPOINTED(4) IN FUND COMPLEX DURING PAST 5 YEARS OVERSEEN BY OFFICER OFFICERS OF THE FUNDS: [] TINA M. LAZAR Vice President of Nuveen Investments, LLC 8/27/61 (since 1999). 333 W. Wacker Drive Vice President 2002 186 Chicago, IL 60606 [] LARRY W. MARTIN Vice President, Assistant Secretary and 7/27/51 Vice President Assistant General Counsel of Nuveen 333 W. Wacker Drive and Assistant 1988 186 Investments, LLC; Vice President (since Chicago, IL 60606 Secretary 2005) and Assistant Secretary of Nuveen Investments, Inc.; Vice President (since 2005) and Assistant Secretary (since 1997) of Nuveen Asset Management; Vice President (since 2000), Assistant Secretary and Assistant General Counsel (since 1998) of Rittenhouse Asset Management, Inc.; Vice President and Assistant Secretary of Nuveen Investments Advisers Inc. (since 2002); NWQ Investment Management Company, LLC (since 2002), Symphony Asset Management LLC (since 2003), Tradewinds Global Investors, LLC, Santa Barbara Asset Management LLC (since 2006) and of Nuveen HydePark LLC and Nuveen Investment Solutions, Inc. (since 2007); formerly, Vice President and Assistant Secretary of Nuveen Advisory Corp. and Nuveen Institutional Advisory Corp.(3) [] KEVIN J. MCCARTHY Managing Director (since 2008), formerly, 3/26/66 Vice President Vice President (2007-2008), Nuveen 333 W. Wacker Drive and Secretary 2007 186 Investments, LLC; Vice President, and Chicago, IL 60606 Assistant Secretary, Nuveen Asset Management, Rittenhouse Asset Management, Inc., Nuveen Investment Advisers Inc., Nuveen Investment Institutional Services Group LLC, NWQ Investment Management Company, LLC, Tradewinds Global Investors LLC, NWQHoldings, LLC, Symphony Asset Management LLC, Santa Barbara Asset Management LLC, Nuveen HydePark Group, LLC and Nuveen Investment Solutions, Inc. (since 2007); prior thereto, Partner, Bell, Boyd & Lloyd LLP (1997-2007). [] JOHN V. MILLER Managing Director (since 2007), formerly, 4/10/67 Vice President 2007 186 Vice President (2002-2007) of Nuveen 333 W. Wacker Drive Asset Management and Nuveen Investments, Chicago, IL 60606 LLC; Chartered Financial Analyst. [] CHRISTOPHER M. ROHRBACHER Vice President, Nuveen Investments, LLC 8/1/71 Vice President (since 2008); Vice President and 333 W. Wacker Drive and Assistant 2008 186 Assistant Secretary, Nuveen Asset Chicago, IL 60606 Secretary Management (since 2008); prior thereto, Associate, Skadden, Arps, Slate Meagher & Flom LLP (2002-2008). [] JAMES F. RUANE Vice President, Nuveen Investments, LLC 7/3/62 Vice President (since 2007); prior thereto, Partner, 333 W. Wacker Drive and Assistant 2007 186 Deloitte & Touche USA LLP (2005-2007), Chicago, IL 60606 Secretary formerly, senior tax manager (2002-2005); Certified Public Accountant. [] MARK L. WINGET Vice President, Nuveen Investments, LLC 12/21/68 Vice President (since 2008); Vice President and 333 W. Wacker Drive and Assistant 2008 186 Assistant Secretary, Nuveen Asset Chicago, IL 60606 Secretary Management (since 2008); prior thereto, Counsel, Vedder Price P.C. (1997-2007).
(1) For Dividend Advantage (NAD), Dividend Advantage 2 (NXZ) and Dividend Advantage 3 (NZF), Board Members serve three year terms, except for two board members who are elected by the holders of Preferred Shares. The Board of Trustees for NAD, NXZ and NZF is divided into three classes, Class I, Class II, and Class III, with each being elected to serve until the third succeeding annual shareholders' meeting subsequent to its election or thereafter in each case when its respective successors are duly elected or appointed, except two board members are elected by the holders of Preferred Shares to serve until the next annual shareholders' meeting subsequent to its election or thereafter in each case when its respective successors are duly elected or appointed. For Performance Plus (NPP), Municipal Advantage (NMA) and Market Opportunity (NMO), the Board Members serve a one year term to serve until the next annual meeting or until their successors shall have been duly elected and qualified. The first year elected or appointed represents the year in which the board member was first elected or appointed to any fund in the Nuveen Complex. (2) Mr. Amboian is an interested trustee because of his position with Nuveen Investments, Inc. and certain of its subsidiaries, which are affiliates of the Nuveen Funds. (3) Nuveen Advisory Corp. and Nuveen Institutional Advisory Corp. were reorganized into Nuveen Asset Management, effective January 1, 2005. (4) Officers serve one year terms through July of each year. The year first elected or appointed represents the year in which the Officer was first elected or appointed to any fund in the Nuveen Complex. 117 Annual Investment Management Agreement APPROVAL PROCESS The Investment Company Act of 1940, as amended (the "1940 Act"), provides, in substance, that each investment advisory agreement between a fund and its investment adviser will continue in effect from year to year only if its continuance is approved at least annually by the fund's board members, including by a vote of a majority of the board members who are not parties to the advisory agreement or "interested persons" of any parties (the "Independent Board Members"), cast in person at a meeting called for the purpose of considering such approval. In connection with such approvals, the fund's board members must request and evaluate, and the investment adviser is required to furnish, such information as may be reasonably necessary to evaluate the terms of the advisory agreement. Accordingly, at a meeting held on May 28-29, 2008 (the "May Meeting"), the Boards of Trustees or Directors (as the case may be)(each, a "Board" and each Trustee or Director, a "Board Member") of the Funds, including a majority of the Independent Board Members, considered and approved the continuation of the advisory agreement (each, an "Advisory Agreement") between each Fund and Nuveen Asset Management ("NAM") for an additional one-year period. In preparation for their considerations at the May Meeting, the Board also held a separate meeting on April 23, 2008 (the "April Meeting"). Accordingly, the factors considered and determinations made regarding the renewals by the Independent Board Members include those made at the April Meeting. In addition, in evaluating the Advisory Agreements, as described in further detail below, the Independent Board Members reviewed a broad range of information relating to the Funds and NAM, including absolute performance, fee and expense information for the Funds as well as comparative performance, fee and expense information for a comparable peer group of funds, the performance information of recognized benchmarks (as applicable), the profitability of Nuveen for its advisory activities (which includes its wholly owned subsidiaries), and other information regarding the organization, personnel, and services provided by NAM. The Independent Board Members also met quarterly as well as at other times as the need arose during the year and took into account the information provided at such meetings and the knowledge gained therefrom. Prior to approving the renewal of the Advisory Agreements, the Independent Board Members reviewed the foregoing information with their independent legal counsel and with management, reviewed materials from independent legal counsel describing applicable law and their duties in reviewing advisory contracts, and met with independent legal counsel in private sessions without management present. The Independent Board Members considered the legal advice provided by independent legal counsel and relied upon their knowledge of NAM, its services and the Funds resulting from their meetings and other interactions throughout the year and their own business judgment in determining the factors to be considered in evaluating the Advisory Agreements. Each Board Member may have accorded different weight to the various factors in reaching his or her conclusions with respect to a Fund's Advisory Agreement. The Independent Board Members did not identify any single factor as all-important or controlling. The Independent Board Members' considerations were instead based on a comprehensive consideration of all the information presented. The principal factors considered by the Board and its conclusions are described below. A. NATURE, EXTENT AND QUALITY OF SERVICES In considering renewal of the Advisory Agreements, the Independent Board Members considered the nature, extent and quality of NAM's services, including advisory services and administrative services. The Independent Board Members reviewed materials outlining, among other things, NAM's organization and business; the types of services that NAM or its affiliates provide and are expected to provide to the Funds; the performance record of the applicable Fund (as described in further detail below); and any initiatives Nuveen had taken for the applicable fund product line. With respect to personnel, the Independent Board Members evaluated the background, experience and track record of NAM's 118 investment personnel. In this regard, the Independent Board Members considered the additional investment in personnel to support Nuveen fund advisory activities, including in operations, product management and marketing as well as related fund support functions, including sales, executive, finance, human resources and information technology. The Independent Board Members also reviewed information regarding portfolio manager compensation arrangements to evaluate NAM's ability to attract and retain high quality investment personnel. In evaluating the services of NAM, the Independent Board Members also considered NAM's ability to supervise the Funds' other service providers and given the importance of compliance, NAM's compliance program. Among other things, the Independent Board Members considered the report of the chief compliance officer regarding the Funds' compliance policies and procedures. In addition to advisory services, the Independent Board Members considered the quality of administrative services provided by NAM and its affiliates including product management, fund administration, oversight of service providers, shareholder services, administration of Board relations, regulatory and portfolio compliance and legal support. In addition to the foregoing services, the Independent Board Members also noted the additional services that NAM or its affiliates provide to closed-end funds, including, in particular, its secondary market support activities and the costs of such activities. The Independent Board Members recognized Nuveen's continued commitment to supporting the secondary market for the common shares of its closed-end funds through a variety of programs designed to raise investor and analyst awareness and understanding of closed-end funds. These efforts include maintaining an investor relations program to timely provide information and education to financial advisers and investors; providing advertising and marketing for the closed-end funds; maintaining its closed-end fund website; and providing educational seminars. With respect to closed-end funds that utilize leverage through the issuance of auction rate preferred securities ("ARPS"), the Board has recognized the unprecedented market conditions in the auction rate market industry with the failure of the auction process. The Independent Board Members noted Nuveen's efforts and the resources and personnel employed to analyze the situation, explore potential alternatives and develop and implement solutions that serve the interests of the affected funds and all of their respective shareholders. The Independent Board Members further noted Nuveen's commitment and efforts to keep investors and financial advisers informed as to its progress in addressing the ARPS situation through, among other things, conference calls, press releases, and information posted on its website as well as its refinancing activities. The Independent Board Members also noted Nuveen's continued support for holders of preferred shares of its closed-end funds by, among other things, seeking distribution for preferred shares with new market participants, managing relations with remarketing agents and the broker community, maintaining the leverage and risk management of leverage and maintaining systems necessary to test compliance with rating agency criteria. Based on their review, the Independent Board Members found that, overall, the nature, extent and quality of services provided (and expected to be provided) to the respective Funds under the Advisory Agreements were satisfactory. B. THE INVESTMENT PERFORMANCE OF THE FUNDS AND NAM The Board considered the investment performance of each Fund, including the Fund's historic performance as well as its performance compared to funds with similar investment objectives (the "Performance Peer Group") based on data provided by an independent third party (as described below). The Independent Board Members also reviewed portfolio level performance (which does not reflect fund level fees, expenses and leverage), as described in further detail below. In evaluating the performance information, the Board considered whether the Fund has operated within its investment objectives and parameters and the impact that the investment mandates may have had on performance. In addition, in comparing a Fund's performance with that of its Performance Peer Group, the Independent Board Members took into account that the closest Performance Peer Group in certain 119 ANNUAL INVESTMENT MANAGEMENT AGREEMENT APPROVAL PROCESS (continued) instances may not adequately reflect the respective fund's investment objectives and strategies thereby hindering a meaningful comparison of the fund's performance with that of the Performance Peer Group. The Independent Board Members reviewed performance information including, among other things, total return information compared with the Fund's Performance Peer Group and recognized benchmarks for the one-, three-, and five-year periods (as applicable) ending December 31, 2007 and with the Performance Peer Group for the quarter and same yearly periods ending March 31, 2008 (as applicable). The Independent Board Members also reviewed the Fund's portfolio level performance (which does not reflect fund level fees and expenses (and leverage for closed-end funds)) compared to recognized benchmarks for the one-, three-, and five-year periods ending December 31, 2007 (as applicable). The analysis was used to assess the efficacy of investment decisions against appropriate measures of risk and total return, within specific market segments. This information supplemented the Fund performance information provided to the Board at each of its quarterly meetings. Based on their review, the Independent Board Members determined that each Fund's investment performance over time had been satisfactory. C. FEES, EXPENSES AND PROFITABILITY 1. FEES AND EXPENSES The Board evaluated the management fees and expenses of each Fund reviewing, among other things, such Fund's gross management fees (which take into account breakpoints), net management fees (which take into account fee waivers or reimbursements) and total expense ratios (before and after expense reimbursements and/or waivers) in absolute terms as well as compared to the gross management fees, net management fees (after waivers and/or reimbursements) and total expense ratios (before and after waivers) of a comparable universe of unaffiliated funds based on data provided by an independent data provider (the "Peer Universe") and/or a more focused subset of funds therein (the "Peer Group"). The Independent Board Members further reviewed data regarding the construction of Peer Groups as well as the methods of measurement for the fee and expense analysis and the performance analysis. In reviewing the comparisons of fee and expense information, the Independent Board Members took into account that in certain instances various factors such as the size of the Fund relative to peers, the size and particular composition of the Peer Group, the investment objectives of the peers, expense anomalies, and the timing of information used may impact the comparative data, thereby limiting the ability to make a meaningful comparison. The Independent Board Members also considered, among other things, the differences in the use of leverage and the differences in the use of insurance, if any. In reviewing the fee schedule for a Fund, the Independent Board Members also considered the fund-level and complex-wide breakpoint schedules (described in further detail below) and any fee waivers and reimbursements provided by Nuveen (applicable, in particular, for certain closed-end funds launched since 1999). Based on their review of the fee and expense information provided, the Independent Board Members determined that each Fund's management fees and net total expense ratio were reasonable in light of the nature, extent and quality of services provided to the Fund. 2. COMPARISONS WITH THE FEES OF OTHER CLIENTS The Independent Board Members further reviewed information regarding the nature of services and fee rates offered by NAM to other clients. Such other clients include NAM's municipal separately managed accounts. In evaluating the comparisons of fees, the Independent Board Members noted that the fee rates charged to the Funds and other clients vary, among other things, because of the different services involved and the additional regulatory and compliance requirements associated with registered investment companies, such as the Funds. Accordingly, the Independent Board Members considered the differences in the product types, including, but not limited to, the services provided, the structure and operations, product distribution and costs thereof, portfolio investment policies, investor profiles, account sizes and regulatory requirements. The Independent Board Members noted, in particular, that 120 the range of services provided to the Funds (as discussed above) is much more extensive than that provided to separately managed accounts. Given the inherent differences in the products, particularly the extensive services provided to the Funds, the Independent Board Members believe such facts justify the different levels of fees. 3. PROFITABILITY OF NUVEEN In conjunction with its review of fees, the Independent Board Members also considered the profitability of Nuveen for its advisory activities (which incorporated Nuveen's wholly-owned affiliated sub-advisers) and its financial condition. The Independent Board Members reviewed the revenues and expenses of Nuveen's advisory activities for the last two years and the allocation methodology used in preparing the profitability data. The Independent Board Members noted this information supplemented the profitability information requested and received during the year to help keep them apprised of developments affecting profitability (such as changes in fee waivers and expense reimbursement commitments). In this regard, the Independent Board Members noted that they had also appointed an Independent Board Member as a point person to review and keep them apprised of changes to the profitability analysis and/or methodologies during the year. The Independent Board Members considered Nuveen's profitability compared with other fund sponsors prepared by two independent third party service providers as well as comparisons of the revenues, expenses and profit margins of various unaffiliated management firms with similar amounts of assets under management prepared by Nuveen. In reviewing profitability, the Independent Board Members recognized the subjective nature of determining profitability which may be affected by numerous factors including the allocation of expenses. Further, the Independent Board Members recognized the difficulties in making comparisons as the profitability of other advisers generally is not publicly available and the profitability information that is available for certain advisers or management firms may not be representative of the industry and may be affected by, among other things, the adviser's particular business mix, capital costs, types of funds managed and expense allocations. Notwithstanding the foregoing, the Independent Board Members reviewed Nuveen's methodology and assumptions for allocating expenses across product lines to determine profitability. In reviewing profitability, the Independent Board Members recognized Nuveen's investment in its fund business. Based on its review, the Independent Board Members concluded that Nuveen's level of profitability for its advisory activities was reasonable in light of the services provided. In evaluating the reasonableness of the compensation, the Independent Board Members also considered other amounts paid to NAM by the Funds as well as any indirect benefits (such as soft dollar arrangements, if any) NAM and its affiliates receive, or are expected to receive, that are directly attributable to the management of the Funds, if any. See Section E below for additional information on indirect benefits NAM may receive as a result of its relationship with the Funds. Based on their review of the overall fee arrangements of each Fund, the Independent Board Members determined that the advisory fees and expenses of the respective Fund were reasonable. D. ECONOMIES OF SCALE AND WHETHER FEE LEVELS REFLECT THESE ECONOMIES OF SCALE With respect to economies of scale, the Independent Board Members recognized the potential benefits resulting from the costs of a fund being spread over a larger asset base. The Independent Board Members therefore considered whether the Funds have appropriately benefited from any economies of scale and whether there is potential realization of any further economies of scale. In considering economies of scale, the Independent Board Members have recognized that economies of scale are difficult to measure and predict with precision, particularly on a fund-by-fund basis. Notwithstanding the foregoing, one method to help ensure the shareholders share in these benefits is to include breakpoints in the advisory fee schedule. Accordingly, the Independent Board Members reviewed and considered the fund-level breakpoints in the 121 ANNUAL INVESTMENT MANAGEMENT AGREEMENT APPROVAL PROCESS (continued) advisory fee schedules that reduce advisory fees. In this regard, given that the Funds are closed-end funds, the Independent Board Members recognized that although the Funds may from time to time make additional share offerings, the growth in their assets will occur primarily through appreciation of each Fund's investment portfolio. In addition to fund-level advisory fee breakpoints, the Board also considered the Funds' complex-wide fee arrangement. Pursuant to the complex-wide fee arrangement, the fees of the funds in the Nuveen complex, including the Funds, are reduced as the assets in the fund complex reach certain levels. In evaluating the complex-wide fee arrangement, the Independent Board Members recognized that the complex-wide fee schedule was recently revised in 2007 to provide for additional fee savings to shareholders and considered the amended schedule. The Independent Board Members further considered that the complex-wide fee arrangement seeks to provide the benefits of economies of scale to fund shareholders when total fund complex assets increase, even if assets of a particular fund are unchanged or have decreased. The approach reflects the notion that some of Nuveen's costs are attributable to services provided to all its funds in the complex and therefore all funds benefit if these costs are spread over a larger asset base. Based on their review, the Independent Board Members concluded that the breakpoint schedule and complex-wide fee arrangement were acceptable and desirable in providing benefits from economies of scale to shareholders. E. INDIRECT BENEFITS In evaluating fees, the Independent Board Members received and considered information regarding potential "fall out" or ancillary benefits NAM or its affiliates may receive as a result of its relationship with each Fund. In this regard, the Independent Board Members considered revenues received by affiliates of NAM for serving as agent at Nuveen's preferred trading desk and for serving as a co-manager in the initial public offering of new closed-end exchange traded funds. In addition to the above, the Independent Board Members considered whether NAM received any benefits from soft dollar arrangements whereby a portion of the commissions paid by a Fund for brokerage may be used to acquire research that may be useful to NAM in managing the assets of the Funds and other clients. The Independent Board Members noted that NAM does not currently have any soft dollar arrangements; however, to the extent certain bona fide agency transactions that occur on markets that traditionally trade on a principal basis and riskless principal transactions are considered as generating "commissions," NAM intends to comply with the applicable safe harbor provisions. Based on their review, the Independent Board Members concluded that any indirect benefits received by NAM as a result of its relationship with the Funds were reasonable and within acceptable parameters. F. OTHER CONSIDERATIONS The Independent Board Members did not identify any single factor discussed previously as all-important or controlling. The Board Members, including the Independent Board Members, unanimously concluded that the terms of the Advisory Agreements are fair and reasonable, that NAM's fees are reasonable in light of the services provided to each Fund and that the Advisory Agreements be renewed. 122 Reinvest Automatically EASILY and CONVENIENTLY NUVEEN MAKES REINVESTING EASY. A PHONE CALL IS ALL IT TAKES TO SET UP YOUR REINVESTMENT ACCOUNT. NUVEEN CLOSED-END FUNDS DIVIDEND REINVESTMENT PLAN Your Nuveen Closed-End Fund allows you to conveniently reinvest dividends and/or capital gains distributions in additional Fund shares. By choosing to reinvest, you'll be able to invest money regularly and automatically, and watch your investment grow through the power of tax-free compounding. Just like dividends or distributions in cash, there may be times when income or capital gains taxes may be payable on dividends or distributions that are reinvested. It is important to note that an automatic reinvestment plan does not ensure a profit, nor does it protect you against loss in a declining market. EASY AND CONVENIENT To make recordkeeping easy and convenient, each month you'll receive a statement showing your total dividends and distributions, the date of investment, the shares acquired and the price per share, and the total number of shares you own. HOW SHARES ARE PURCHASED The shares you acquire by reinvesting will either be purchased on the open market or newly issued by the Fund. If the shares are trading at or above net asset value at the time of valuation, the Fund will issue new shares at the greater of the net asset value or 95% of the then-current market price. If the shares are trading at less than net asset value, shares for your account will be purchased on the open market. If the Plan Agent begins purchasing Fund shares on the open market while shares are trading below net asset value, but the Fund's shares subsequently trade at or above their net asset value before the Plan Agent is able to complete its purchases, the Plan Agent may cease open-market purchases and may invest the uninvested portion of the distribution in newly-issued Fund shares at a price equal to the greater of the shares' net asset value or 95% of the shares' market value on the last business day immediately prior to the purchase date. Dividends and distributions received to purchase shares in the open market will normally be invested shortly after the dividend payment date. No interest will be paid on dividends and distributions awaiting reinvestment. Because the market price of the shares may increase before purchases are completed, the average purchase price per share may exceed the market price at the time of valuation, resulting in the acquisition of fewer shares than if the dividend or distribution had been paid in shares issued by the Fund. A pro rata portion of any applicable brokerage commissions on open market purchases will be paid by Plan participants. These commissions usually will be lower than those charged on individual transactions. 123 FLEXIBLE You may change your distribution option or withdraw from the Plan at any time, should your needs or situation change. Should you withdraw, you can receive a certificate for all whole shares credited to your reinvestment account and cash payment for fractional shares, or cash payment for all reinvestment account shares, less brokerage commissions and a $2.50 service fee. You can reinvest whether your shares are registered in your name, or in the name of a brokerage firm, bank, or other nominee. Ask your investment advisor if his or her firm will participate on your behalf. Participants whose shares are registered in the name of one firm may not be able to transfer the shares to another firm and continue to participate in the Plan. The Fund reserves the right to amend or terminate the Plan at any time. Although the Fund reserves the right to amend the Plan to include a service charge payable by the participants, there is no direct service charge to participants in the Plan at this time. CALL TODAY TO START REINVESTING DIVIDENDS AND/OR DISTRIBUTIONS For more information on the Nuveen Automatic Reinvestment Plan or to enroll in or withdraw from the Plan, speak with your financial advisor or call us at (800) 257-8787. 124 NOTES 125 Glossary of TERMS USED in this REPORT [] AUCTION RATE BOND: An auction rate bond is a security whose interest payments are adjusted periodically through an auction process, which process typically also serves as a means for buying and selling the bond. Auctions that fail to attract enough buyers for all the shares offered for sale are deemed to have "failed", with current holders receiving a formula-based interest rate until the next scheduled auction. [] AVERAGE ANNUAL TOTAL RETURN: This is a commonly used method to express an investment's performance over a particular, usually multi-year time period. It expresses the return that would have been necessary each year to equal the investment's actual cumulative performance (including change in NAV or market price and reinvested dividends and capital gains distributions, if any) over the time period being considered. [] AVERAGE EFFECTIVE MATURITY: The average of the number of years to maturity of the bonds in a Fund's portfolio, computed by weighting each bond's time to maturity (the date the security comes due) by the market value of the security. This figure does not account for the likelihood of prepayments or the exercise of call provisions unless an escrow account has been established to redeem the bond before maturity. The market value weighting for an investment in an inverse floating rate security is the value of the portfolio's residual interest in the inverse floating rate trust, and does not include the value of the floating rate securities issued by the trust. [] INVERSE FLOATERS: Inverse floating rate securities are created by depositing a municipal bond, typically with a fixed interest rate, into a special purpose trust created by a broker-dealer. This trust, in turn, (a) issues floating rate certificates typically paying short-term tax-exempt interest rates to third parties in amounts equal to some fraction of the deposited bond's par amount or market value, and (b) issues an inverse floating rate certificate (sometimes referred to as an "inverse floater") to an investor (such as a Fund) interested in gaining investment exposure to a long-term municipal bond. The income received by the holder of the inverse floater varies inversely with the short-term rate paid to the floating rate certificates' holders, and in most circumstances the holder of the inverse floater bears substantially all of the underlying bond's downside investment risk. The holder of the inverse floater typically also benefits disproportionately from any potential appreciation of the underlying bond's value. Hence, an inverse floater essentially represents an investment in the underlying bond on a leveraged basis. [] LEVERAGE-ADJUSTED DURATION: Duration is a measure of the expected period over which a bond's principal and interest will be paid, and consequently is a measure of the sensitivity of a bond's or bond Fund's value to changes when market interest rates change. Generally, the longer a bond's or Fund's duration, the more the price of the bond or Fund will change as interest rates change. Leverage-adjusted duration takes into account the leveraging process for a Fund and therefore is longer than the duration of the Fund's portfolio of bonds. [] MARKET YIELD (ALSO KNOWN AS DIVIDEND YIELD OR CURRENT YIELD): An investment's current annualized dividend divided by its current market price. [] NET ASSET VALUE (NAV): A Fund's NAV per common share is calculated by subtracting the liabilities of the Fund (including any Preferred shares issued in order to leverage the Fund) from its total assets and then dividing the remainder by the number of common shares outstanding. Fund NAVs are calculated at the end of each business day. [] TAXABLE-EQUIVALENT YIELD: The yield necessary from a fully taxable investment to equal, on an after-tax basis, the yield of a municipal bond investment. [] ZERO COUPON BOND: A zero coupon bond does not pay a regular interest coupon to its holders during the life of the bond. Tax-exempt income to the holder of the bond comes from accretion of the difference between the original purchase price of the bond at issuance and the par value of the bond at maturity and is effectively paid at maturity. The market prices of zero coupon bonds generally are more volatile than the market prices of bonds that pay interest periodically. 126 Other Useful INFORMATION QUARTERLY PORTFOLIO OF INVESTMENTS AND PROXY VOTING INFORMATION You may obtain (i) each Fund's quarterly portfolio of investments, (ii) information regarding how the Funds voted proxies relating to portfolio securities held during the twelve-month period ended June 30, 2008, and (iii) a description of the policies and procedures that the Funds used to determine how to vote proxies relating to portfolio securities without charge, upon request, by calling Nuveen Investments toll-free at (800) 257-8787 or on Nuveen's website at www.nuveen.com. You may also obtain this and other Fund information directly from the Securities and Exchange Commission ("SEC"). The SEC may charge a copying fee for this information. Visit the SEC on-line at http://www.sec.gov or in person at the SEC's Public Reference Room in Washington, D.C. Call the SEC at (202) 942-8090 for room hours and operation. You may also request Fund information by sending an e-mail request to publicinfo@sec.gov or by writing to the SEC's Public References Section at 100 F Street NE, Washington, D.C. 20549. CEO CERTIFICATION DISCLOSURE Each Fund's Chief Executive Officer has submitted to the New York Stock Exchange (NYSE) the annual CEO certification as required by Section 303A.12(a) of the NYSE Listed Company Manual. Each Fund has filed with the Securities and Exchange Commission the certification of its Chief Executive Officer and Chief Financial Officer required by Section 302 of the Sarbanes-Oxley Act. BOARD OF DIRECTORS/TRUSTEES John P. Amboian Robert P. Bremner Jack B. Evans William C. Hunter David J. Kundert William J. Schneider Judith M. Stockdale Carole E. Stone Terence J. Toth FUND MANAGER Nuveen Asset Management 333 West Wacker Drive Chicago, IL 60606 CUSTODIAN State Street Bank & Trust Company Boston, MA TRANSFER AGENT AND SHAREHOLDER SERVICES State Street Bank & Trust Company Nuveen Funds P.O. Box 43071 Providence, RI 02940-3071 (800) 257-8787 LEGAL COUNSEL Chapman and Cutler LLP Chicago, IL INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Ernst & Young LLP Chicago, IL Each Fund intends to repurchase and/or redeem shares of its own common or auction rate preferred stock in the future at such times and in such amounts as is deemed advisable. During the period covered by this report, NPP, NMA, NMO, NAD, NXZ and NZF redeemed 1,574, 654, 733, 1,128, 8,880 and 1,649 auction rate preferred shares, respectively. Any future repurchases and/or redemptions will be reported to shareholders in the next annual or semi-annual report. 127 Nuveen Investments: ------------------- SERVING INVESTORS FOR GENERATIONS Since 1898, financial advisors and their clients have relied on Nuveen Investments to provide dependable investment solutions. For the past century, Nuveen Investments has adhered to the belief that the best approach to investing is to apply conservative risk-management principles to help minimize volatility. Building on this tradition, we today offer a range of high quality equity and fixed-income solutions that are integral to a well-diversified core portfolio. Our clients have come to appreciate this diversity, as well as our continued adherence to proven, long-term investing principles. We offer many different investing solutions for our clients' different needs. Nuveen Investments is a global investment management firm that seeks to help secure the long-term goals of institutions and high net worth investors as well as the consultants and financial advisors who serve them. Nuveen Investments markets its growing range of specialized investment solutions under the high-quality brands of HydePark, NWQ, Nuveen, Rittenhouse, Santa Barbara, Symphony and Tradewinds. In total, the Company managed $134 billion of assets on September 30, 2008. Find out how we can help you reach your financial goals. To learn more about the products and services Nuveen Investments offers, talk to your financial advisor, or call us at (800) 257-8787. Please read the information provided carefully before you invest. Be sure to obtain a prospectus, where applicable. Investors should consider the investment objective and policies, risk considerations, charges and expenses of the Fund carefully before investing. The prospectus contains this and other information relevant to an investment in the Fund. For a prospectus, please contact your securities representative or Nuveen Investments, 333 W. Wacker Dr., Chicago, IL 60606. Please read the prospectus carefully before you invest or send money. Learn more about Nuveen Funds at: www.nuveen.com/etf Share prices Fund details Daily financial news Investor education Interactive planning tools EAN-B-1008D ITEM 2. CODE OF ETHICS. As of the end of the period covered by this report, the registrant has adopted a code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. There were no amendments to or waivers from the Code during the period covered by this report. The registrant has posted the code of ethics on its website at www.nuveen.com/etf. (To view the code, click on the Shareholder Resources drop down menu box, click on Fund Governance and then click on Code of Conduct.) ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. The registrant's Board of Directors or Trustees determined that the registrant has at least one "audit committee financial expert" (as defined in Item 3 of Form N-CSR) serving on its Audit Committee. The registrant's audit committee financial expert is Jack B. Evans, who is "independent" for purposes of Item 3 of Form N-CSR. Mr. Evans was formerly President and Chief Operating Officer of SCI Financial Group, Inc., a full service registered broker-dealer and registered investment adviser ("SCI"). As part of his role as President and Chief Operating Officer, Mr. Evans actively supervised the Chief Financial Officer (the "CFO") and actively supervised the CFO's preparation of financial statements and other filings with various regulatory authorities. In such capacity, Mr. Evans was actively involved in the preparation of SCI's financial statements and the resolution of issues raised in connection therewith. Mr. Evans has also served on the audit committee of various reporting companies. At such companies, Mr. Evans was involved in the oversight of audits, audit plans, and the preparation of financial statements. Mr. Evans also formerly chaired the audit committee of the Federal Reserve Bank of Chicago. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. Nuveen Municipal Market Opportunity Fund, Inc. The following tables show the amount of fees that Ernst & Young LLP, the Fund's auditor, billed to the Fund during the Fund's last two full fiscal years. For engagements with Ernst & Young LLP the Audit Committee approved in advance all audit services and non-audit services that Ernst & Young LLP provided to the Fund, except for those non-audit services that were subject to the pre-approval exception under Rule 2-01 of Regulation S-X (the "pre-approval exception"). The pre-approval exception for services provided directly to the Fund waives the pre-approval requirement for services other than audit, review or attest services if: (A) the aggregate amount of all such services provided constitutes no more than 5% of the total amount of revenues paid by the Fund to its accountant during the fiscal year in which the services are provided; (B) the Fund did not recognize the services as non-audit services at the time of the engagement; and (C) the services are promptly brought to the Audit Committee's attention, and the Committee (or its delegate) approves the services before the audit is completed. The Audit Committee has delegated certain pre-approval responsibilities to its Chairman (or, in his absence, any other member of the Audit Committee). SERVICES THAT THE FUND'S AUDITOR BILLED TO THE FUND
AUDIT FEES BILLED AUDIT-RELATED FEES TAX FEES ALL OTHER FEES FISCAL YEAR ENDED TO FUND (1) BILLED TO FUND (2) BILLED TO FUND (3) BILLED TO FUND (4) ------------------------------------------------------------------------------------------------------------------------------------ October 31, 2008 $ 39,058 $ 0 $ 0 $ 3,350 ------------------------------------------------------------------------------------------------------------------------------------ Percentage approved 0% 0% 0% 0% pursuant to pre-approval exception ------------------------------------------------------------------------------------------------------------------------------------ October 31, 2007 $ 34,515 $ 0 $ 500 $ 2,350 ------------------------------------------------------------------------------------------------------------------------------------ Percentage approved 0% 0% 0% 0% pursuant to pre-approval exception ------------------------------------------------------------------------------------------------------------------------------------
(1) "Audit Fees" are the aggregate fees billed for professional services for the audit of the Fund's annual financial statements and services provided in connection with statutory and regulatory filings or engagements. (2) "Audit Related Fees" are the aggregate fees billed for assurance and related services reasonably related to the performance of the audit or review of financial statements and are not reported under "Audit Fees". (3) "Tax Fees" are the aggregate fees billed for professional services for tax advice, tax compliance, and tax planning. (4) "All Other Fees" are the aggregate fees billed for products and services for agreed upon procedures engagements performed for leveraged funds. SERVICES THAT THE FUND'S AUDITOR BILLED TO THE ADVISER AND AFFILIATED FUND SERVICE PROVIDERS The following tables show the amount of fees billed by Ernst & Young LLP to Nuveen Asset Management ("NAM" or the "Adviser"), and any entity controlling, controlled by or under common control with NAM ("Control Affiliate") that provides ongoing services to the Fund ("Affiliated Fund Service Provider"), for engagements directly related to the Fund's operations and financial reporting, during the Fund's last two full fiscal years. The tables also show the percentage of fees subject to the pre-approval exception. The pre-approval exception for services provided to the Adviser and any Affiliated Fund Service Provider (other than audit, review or attest services) waives the pre-approval requirement if: (A) the aggregate amount of all such services provided constitutes no more than 5% of the total amount of revenues paid to Ernst & Young LLP by the Fund, the Adviser and Affiliated Fund Service Providers during the fiscal year in which the services are provided that would have to be pre-approved by the Audit Committee; (B) the Fund did not recognize the services as non-audit services at the time of the engagement; and (C) the services are promptly brought to the Audit Committee's attention, and the Committee (or its delegate) approves the services before the Fund's audit is completed.
FISCAL YEAR ENDED AUDIT-RELATED FEES TAX FEES BILLED TO ALL OTHER FEES BILLED TO ADVISER AND ADVISER AND BILLED TO ADVISER AFFILIATED FUND AFFILIATED FUND AND AFFILIATED FUND SERVICE PROVIDERS SERVICE PROVIDERS SERVICE PROVIDERS -------------------------------------------------------------------------------------------------------------- October 31, 2008 $ 0 $ 0 $ 0 -------------------------------------------------------------------------------------------------------------- Percentage approved 0% 0% 0% pursuant to pre-approval exception -------------------------------------------------------------------------------------------------------------- October 31, 2007 $ 0 $ 0 $ 0 -------------------------------------------------------------------------------------------------------------- Percentage approved 0% 0% 0% pursuant to pre-approval exception --------------------------------------------------------------------------------------------------------------
NON-AUDIT SERVICES The following table shows the amount of fees that Ernst & Young LLP billed during the Fund's last two full fiscal years for non-audit services. The Audit Committee is required to pre-approve non-audit services that Ernst & Young LLP provides to the Adviser and any Affiliated Fund Services Provider, if the engagement related directly to the Fund's operations and financial reporting (except for those subject to the de minimis exception described above). The Audit Committee requested and received information from Ernst & Young LLP about any non-audit services that Ernst & Young LLP rendered during the Fund's last fiscal year to the Adviser and any Affiliated Fund Service Provider. The Committee considered this information in evaluating Ernst & Young LLP's independence.
FISCAL YEAR ENDED TOTAL NON-AUDIT FEES BILLED TO ADVISER AND AFFILIATED FUND SERVICE TOTAL NON-AUDIT FEES PROVIDERS (ENGAGEMENTS BILLED TO ADVISER AND RELATED DIRECTLY TO THE AFFILIATED FUND SERVICE TOTAL NON-AUDIT FEES OPERATIONS AND FINANCIAL PROVIDERS (ALL OTHER BILLED TO FUND REPORTING OF THE FUND) ENGAGEMENTS) TOTAL ----------------------------------------------------------------------------------------------------------------------------- October 31, 2008 $ 3,350 $ 0 $ 0 $ 3,350 October 31, 2007 $ 2,850 $ 0 $ 0 $ 2,850
"Non-Audit Fees billed to Adviser" for both fiscal year ends represent "Tax Fees" billed to Adviser in their respective amounts from the previous table. Audit Committee Pre-Approval Policies and Procedures. Generally, the Audit Committee must approve (i) all non-audit services to be performed for the Fund by the Fund's independent accountants and (ii) all audit and non-audit services to be performed by the Fund's independent accountants for the Affiliated Fund Service Providers with respect to operations and financial reporting of the Fund. Regarding tax and research projects conducted by the independent accountants for the Fund and Affiliated Fund Service Providers (with respect to operations and financial reports of the Fund) such engagements will be (i) pre-approved by the Audit Committee if they are expected to be for amounts greater than $10,000; (ii) reported to the Audit Committee chairman for his verbal approval prior to engagement if they are expected to be for amounts under $10,000 but greater than $5,000; and (iii) reported to the Audit Committee at the next Audit Committee meeting if they are expected to be for an amount under $5,000. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. The registrant's Board of Directors or Trustees has a separately designated Audit Committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended (15 U.S.C. 78c(a)(58)(A)). The members of the audit committee are Robert P. Bremner, Jack B. Evans, Terence J. Toth, William J. Schneider and David J. Kundert. ITEM 6. SCHEDULE OF INVESTMENTS. See Portfolio of Investments in Item 1. ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. The registrant invests its assets primarily in municipal bonds and cash management securities. On rare occasions the registrant may acquire, directly or through a special purpose vehicle, equity securities of a municipal bond issuer whose bonds the registrant already owns when such bonds have deteriorated or are expected shortly to deteriorate significantly in credit quality. The purpose of acquiring equity securities generally will be to acquire control of the municipal bond issuer and to seek to prevent the credit deterioration or facilitate the liquidation or other workout of the distressed issuer's credit problem. In the course of exercising control of a distressed municipal issuer, NAM may pursue the registrant's interests in a variety of ways, which may entail negotiating and executing consents, agreements and other arrangements, and otherwise influencing the management of the issuer. NAM does not consider such activities proxy voting for purposes of Rule 206(4)-6 under the 1940 Act, but nevertheless provides reports to the registrant's Board of Trustees on its control activities on a quarterly basis. In the rare event that a municipal issuer were to issue a proxy or that the registrant were to receive a proxy issued by a cash management security, NAM would either engage an independent third party to determine how the proxy should be voted or vote the proxy with the consent, or based on the instructions, of the registrant's Board of Trustees or its representative. A member of NAM's legal department would oversee the administration of the voting, and ensure that records were maintained in accordance with Rule 206(4)-6, reports were filed with the SEC on Form N-PX, and the results provided to the registrant's Board of Trustees and made available to shareholders as required by applicable rules. ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. THE PORTFOLIO MANAGER The following individual has primary responsibility for the day-to-day implementation of the registrant's investment strategies: NAME FUND THOMAS SPALDING Nuveen Municipal Market Opportunity Fund, Inc. Other Accounts Managed. In addition to managing the registrant, the portfolio manager is also primarily responsible for the day-to-day portfolio management of the following accounts: NUMBER OF PORTFOLIO MANAGER TYPE OF ACCOUNT MANAGED ACCOUNTS ASSETS -------------------------------------------------------------------------------- Thomas Spalding Registered Investment Company 11 $7.49 billion Other Pooled Investment Vehicles 0 $0 Other Accounts 5 $15 million * Assets are as of October 31, 2008. None of the assets in these accounts are subject to an advisory fee based on performance. Compensation. Each portfolio manager's compensation consists of three basic elements--base salary, cash bonus and long-term incentive compensation. The compensation strategy is to annually compare overall compensation, including these three elements, to the market in order to create a compensation structure that is competitive and consistent with similar financial services companies. As discussed below, several factors are considered in determining each portfolio manager's total compensation. In any year these factors may include, among others, the effectiveness of the investment strategies recommended by the portfolio manager's investment team, the investment performance of the accounts managed by the portfolio manager, and the overall performance of Nuveen Investments, Inc. (the parent company of NAM). Although investment performance is a factor in determining the portfolio manager's compensation, it is not necessarily a decisive factor. The portfolio manager's performance is evaluated in part by comparing manager's performance against a specified investment benchmark. This fund-specific benchmark is a customized subset (limited to bonds in each Fund's specific state and with certain maturity parameters) of the S&P/Investortools Municipal Bond index, an index comprised of bonds held by managed municipal bond fund customers of Standard & Poor's Securities Pricing, Inc. that are priced daily and whose fund holdings aggregate at least $2 million. As of October 31, 2008, the S&P/Investortools Municipal Bond index was comprised of 52,959 securities with an aggregate current market value of $1,009 billion. Base salary. Each portfolio manager is paid a base salary that is set at a level determined by NAM in accordance with its overall compensation strategy discussed above. NAM is not under any current contractual obligation to increase a portfolio manager's base salary. Cash bonus. Each portfolio manager is also eligible to receive an annual cash bonus. The level of this bonus is based upon evaluations and determinations made by each portfolio manager's supervisors, along with reviews submitted by his peers. These reviews and evaluations often take into account a number of factors, including the effectiveness of the investment strategies recommended to the NAM's investment team, the performance of the accounts for which he serves as portfolio manager relative to any benchmarks established for those accounts, his effectiveness in communicating investment performance to stockholders and their representatives, and his contribution to the NAM's investment process and to the execution of investment strategies. The cash bonus component is also impacted by the overall performance of Nuveen Investments, Inc. in achieving its business objectives. Long-term incentive compensation. In connection with the acquisition of Nuveen Investments, Inc., by a group of investors lead by Madison Dearborn Partners in November 2007, certain employees, including portfolio managers, received profit interests in Nuveen's parent. These profit interests entitle the holders to participate in the appreciation in the value of Nuveen beyond the issue date and vest over five to seven years, or earlier in the case of a liquidity event. Material Conflicts of Interest. Each portfolio manager's simultaneous management of the registrant and the other accounts noted above may present actual or apparent conflicts of interest with respect to the allocation and aggregation of securities orders placed on behalf of the Registrant and the other account. NAM, however, believes that such potential conflicts are mitigated by the fact that the NAM has adopted several policies that address potential conflicts of interest, including best execution and trade allocation policies that are designed to ensure (1) that portfolio management is seeking the best price for portfolio securities under the circumstances, (2) fair and equitable allocation of investment opportunities among accounts over time and (3) compliance with applicable regulatory requirements. All accounts are to be treated in a non-preferential manner, such that allocations are not based upon account performance, fee structure or preference of the portfolio manager, although the allocation procedures may provide allocation preferences to funds with special characteristics (such as favoring state funds versus national funds for allocations of in-state bonds). In addition, NAM has adopted a Code of Conduct that sets forth policies regarding conflicts of interest. Beneficial Ownership of Securities. As of October 31, 2008, the portfolio manager beneficially owned the following dollar range of equity securities issued by the Registrant and other Nuveen Funds managed by NAM's municipal investment team.
DOLLAR RANGE OF EQUITY SECURITIES DOLLAR RANGE OF BENEFICIALLY OWNED EQUITY IN THE REMAINDER OF SECURITIES NUVEEN FUNDS MANAGED BENEFICIALLY BY NAM'S MUNICIPAL NAME OF PORTFOLIO MANAGER FUND OWNED IN FUND INVESTMENT TEAM -------------------------------------------------------------------------------------------------------------------- Thomas Spalding Nuveen Municipal Market Opportunity Fund, Inc. $100,001-$500,000 $500,001-$1,000,000
PORTFOLIO MANAGER BIO: Thomas Spalding, CFA, is Vice President and Senior Investment Officer of Nuveen Investments. He has direct investment responsibility for the National Long Term funds. He joined Nuveen in 1976 as assistant portfolio manager and has been the portfolio manager of the Nuveen Municipal Value Fund, Nuveen's first closed-end exchange traded fund, since its inception in 1987. He received his undergraduate degree and MBA from the University of Michigan and attained the CFA designation in 1979. Currently, he manages investments for 12 Nuveen-sponsored investment companies. ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS.
Period* (a) (b) (c) (d)* TOTAL NUMBER OF AVERAGE TOTAL NUMBER OF SHARES MAXIMUM NUMBER (OR SHARES (OR PRICE (OR UNITS) PURCHASED AS APPROXIMATE DOLLAR VALUE) OF UNITS) PAID PER PART OF PUBLICLY SHARES (OR UNITS) THAT MAY YET PURCHASED SHARE (OR ANNOUNCED PLANS OR BE PURCHASED UNDER THE PLANS OR UNIT) PROGRAMS PROGRAMS AUGUST 7-31, 2008 0 $0 0 4,555,000 SEPTEMBER 1-30, 2008 0 $0 0 4,555,000 OCTOBER 1-31, 2008 0 $0 0 4,555,000 TOTAL 0
* The registrant's repurchase program, which authorized the repurchase of 4,555,000 shares, was announced August 7, 2008. Any repurchases made by the registrant pursuant to the program were made through open-market transactions. ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. There have been no material changes to the procedures by which shareholders may recommend nominees to the registrant's Board implemented after the registrant last provided disclosure in response to this item. ITEM 11. CONTROLS AND PROCEDURES. (a) The registrant's principal executive and principal financial officers, or persons performing similar functions, have concluded that the registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the "1940 Act") (17 CFR 270.30a-3(c))) are effective, as of a date within 90 days of the filing date of this report that includes the disclosure required by this paragraph, based on their evaluation of the controls and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934, as amended (the "Exchange Act") (17 CFR 240.13a-15(b) or 240.15d-15(b)). (b) There were no changes in the registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR 270.30a-3(d)) that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. ITEM 12. EXHIBITS. File the exhibits listed below as part of this Form. Letter or number the exhibits in the sequence indicated. (a)(1) Any code of ethics, or amendment thereto, that is the subject of the disclosure required by Item 2, to the extent that the registrant intends to satisfy the Item 2 requirements through filing of an exhibit: Not applicable because the code is posted on registrant's website at www.nuveen.com/etf and there were no amendments during the period covered by this report. (To view the code, click on the Investor Resources drop down menu box, click on Fund Governance and then Code of Conduct.) (a)(2) A separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the 1940 Act (17 CFR 270.30a-2(a)) in the exact form set forth below: Ex-99.CERT Attached hereto. (a)(3) Any written solicitation to purchase securities under Rule 23c-1 under the 1940 Act (17 CFR 270.23c-1) sent or given during the period covered by the report by or on behalf of the registrant to 10 or more persons. Not applicable. (b) If the report is filed under Section 13(a) or 15(d) of the Exchange Act, provide the certifications required by Rule 30a-2(b) under the 1940 Act (17 CFR 270.30a-2(b)); Rule 13a-14(b) or Rule 15d-14(b) under the Exchange Act (17 CFR 240.13a-14(b) or 240.15d-14(b)), and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350) as an exhibit. A certification furnished pursuant to this paragraph will not be deemed "filed" for purposes of Section 18 of the Exchange Act (15 U.S.C. 78r), or otherwise subject to the liability of that section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference. Ex-99.906 CERT attached hereto. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. (Registrant) Nuveen Municipal Market Opportunity Fund, Inc. ----------------------------------------------------------- By (Signature and Title) /s/ Kevin J. McCarthy ---------------------------------------------- Kevin J. McCarthy Vice President and Secretary Date: January 9, 2009 ------------------------------------------------------------------- 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: January 9, 2009 ------------------------------------------------------------------- By (Signature and Title) /s/ Stephen D. Foy ---------------------------------------------- Stephen D. Foy Vice President and Controller (principal financial officer) Date: January 9, 2009 -------------------------------------------------------------------