-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GuXDu50BwyaYANbYxAQSWv9BTZSM+YFD+O816unam4Juz1cemhpSFexinPqc/cz0 hOClIj4Z4Ou3d3iNsKLfIg== 0000891804-04-000788.txt : 20040408 0000891804-04-000788.hdr.sgml : 20040408 20040408095115 ACCESSION NUMBER: 0000891804-04-000788 CONFORMED SUBMISSION TYPE: N-CSRS PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20040131 FILED AS OF DATE: 20040408 EFFECTIVENESS DATE: 20040408 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NUVEEN TEXAS QUALITY INCOME MUNICIPAL FUND CENTRAL INDEX KEY: 0000878201 IRS NUMBER: 363778171 STATE OF INCORPORATION: MA FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: N-CSRS SEC ACT: 1940 Act SEC FILE NUMBER: 811-06384 FILM NUMBER: 04723659 BUSINESS ADDRESS: STREET 1: 333 W WACKER DR CITY: CHICAGO STATE: IL ZIP: 60606 BUSINESS PHONE: 3129178200 N-CSRS 1 file001.txt NUVEEN TEXAS QUALITY INCOME MUNICIPAL FUND 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 811-6384 --------------------- Nuveen Texas Quality Income Municipal Fund ------------------------------------------------------------------------------ (Exact name of registrant as specified in charter) Nuveen Investments 333 West Wacker Drive Chicago, IL 60606 - ------------------------------------------------------------------------------ (Address of principal executive offices) (Zip code) Jessica R. Droeger Nuveen Investments 333 West Wacker Drive Chicago, IL 60606 - ------------------------------------------------------------------------------ (Name and address of agent for service) Registrant's telephone number, including area code: (312) 917-7700 ------------------- Date of fiscal year end: July 31 ------------------ Date of reporting period: January 31 ------------------ Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles. A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget ("OMB") control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. ss. 3507. ITEM 1. REPORTS TO STOCKHOLDERS. Nuveen Investments Municipal Closed-End Exchange-Traded Funds SEMIANNUAL REPORT January 31, 2004 NUVEEN ARIZONA PREMIUM INCOME MUNICIPAL FUND NAZ NUVEEN ARIZONA DIVIDEND ADVANTAGE MUNICIPAL FUND NFZ NUVEEN ARIZONA DIVIDEND ADVANTAGE MUNICIPAL FUND 2 NKR NUVEEN ARIZONA DIVIDEND ADVANTAGE MUNICIPAL FUND 3 NXE NUVEEN TEXAS QUALITY INCOME MUNICIPAL FUND NTX Photo of: Man holding up small boy. Photo of: 2 women with 2 girls looking at seashells. DEPENDABLE, TAX-FREE INCOME BECAUSE IT'S NOT WHAT YOU EARN, IT'S WHAT YOU KEEP.(R) Logo: NUVEEN INVESTMENTS FASTER INFORMATION RECEIVE YOUR NUVEEN FUND REPORT ELECTRONICALLY By registering for electronic delivery, you will receive an e-mail as soon as your Nuveen Fund information is available. Click on the link and you will be taken directly to the report. Your Fund report can be viewed and saved on your computer. Your report will arrive faster via e-mail than by traditional mail. Registering is easy and only takes a few minutes (see instructions at right). - -------------------------------------------------------------------------------- SOME COMMON CONCERNS: WILL MY E-MAIL ADDRESS BE DISTRIBUTED TO OTHER COMPANIES? No, your e-mail address is strictly confidential and will not be used for anything other than notification of shareholder information. WHAT IF I CHANGE MY MIND AND WANT TO RECEIVE INVESTOR MATERIALS THROUGH REGULAR MAIL DELIVERY AGAIN? If you decide you do not like receiving your reports electronically, it's a simple process to go back to regular mail delivery. - -------------------------------------------------------------------------------- IF YOUR NUVEEN FUND DIVIDENDS AND STATEMENTS COME FROM YOUR FINANCIAL ADVISOR ORBROKERAGE ACCOUNT, FOLLOW THE STEPS OUTLINED BELOW: 1 Go to WWW.INVESTORDELIVERY.COM and follow the simple instructions, using the address sheet that accompanied this report as a guide. 2 You'll be taken to a page with several options. Select the NEW ENROLLMENT-CREATE screen and follow the simple instructions. 3 Click Submit. Confirm the information you just entered is correct, then click Submit again. 4 You should get a confirmation e-mail within 24 hours. If you do not, go back through these steps to make sure all the information is correct. 5 Use this same process if you need to change your registration information or cancel internet viewing. IF YOUR NUVEEN FUND DIVIDENDS AND STATEMENTS COME DIRECTLY TO YOU FROM NUVEEN, FOLLOW THE STEPS OUTLINED BELOW: 1 Go to WWW.NUVEEN.COM 2 Select ACCESS YOUR ACCOUNT. Select the E-REPORT ENROLLMENT section. Click on Enrollment Today. 3 You'll be taken to a screen that asks for your Social Security number and e-mail address. Fill in this information, then click Enroll. 4 You should get a confirmation e-mail within 24 hours. If you do not, go back through these steps to make sure all the information is correct. 5 Use this same process if you need to change your registration information or cancel internet viewing. Logo: NUVEEN Investments Photo of: Timothy R. Schwertfeger Timothy R. Schwertfeger Chairman of the Board Sidebar text: "We think that municipal bond investments like your Nuveen Fund can be important building blocks in a portfolio designed to perform well through a variety of market conditions." Dear SHAREHOLDER I am very pleased to report that for the period ended January 31, 2004, your Nuveen Fund continued to provide you with attractive monthly tax-free income. Your Fund is managed with a value investing strategy that puts an emphasis on finding securities that we think are undervalued or underrated. We believe there are always some municipal bonds that the market is not properly valuing, and that by using a consistent, research-oriented management approach we have the opportunity to find them for your Fund. In the current environment, many have begun to wonder whether interest rates will soon start to rise, and whether that possibility should cause them to adjust their holdings of fixed-income investments. We believe that by constructing a carefully balanced portfolio with the help of a trusted investment professional you may be able to reduce your overall investment risk and give yourself a better chance to meet your financial goals. We think that municipal bond investments like your Nuveen Fund can be important building blocks in a portfolio designed to perform well through a variety of market conditions. Since 1898, Nuveen Investments has offered financial products and solutions that incorporate careful research, diversification, and the application of conservative risk-management principles. We are grateful that you have chosen us as a partner as you pursue your financial goals. We look forward to continuing to earn your trust in the months and years ahead. Sincerely, /s/ Timothy R. Schwertfeger Timothy R. Schwertfeger Chairman of the Board March 15, 2004 1 Nuveen Arizona and Texas Municipal Closed-End Exchange-Traded Funds (NAZ, NFZ, NKR, NXE, NTX) Portfolio Managers' COMMENTS Portfolio managers Scott Romans and Dan Solender review national and state economic and market conditions, key investment strategies, and the recent performance of these Funds. Scott, who joined Nuveen in 2000, assumed portfolio management responsibility for the four Arizona Funds in November 2003. With eleven years of investment experience, including seven at Nuveen, Dan took over management responsibility for NTX in November 2003. WHAT FACTORS AFFECTED THE U.S. ECONOMY AND MUNICIPAL MARKET DURING THE REPORTING PERIOD ENDED JANUARY 31, 2004? During this period, the greatest influences on the general economy and the municipal market continued to be historically low interest rates, a generally modest rate of inflation and the overall pace of economic improvement. Since its last credit easing in June 2003, the Federal Reserve has maintained the fed funds rate at 1.0%, the lowest level since 1958. Inflation remained under control, with the 1.1% annual change in the core CPI rate for 2003 representing the smallest gain in more than 40 years. The gross domestic product growth rate in 2003 was a respectable 3.1%, the fastest pace since 2000. The combination of low interest rates, the absence of inflationary pressures, and a slowly improving economy created generally favorable conditions for municipal bonds. In 2003, municipal bond new issue supply reached $382 billion nationally, a 7% increase over the previous new issue record set in 2002. However, the pace of issuance slowed somewhat during the last half of 2003 and the slow pace continued into the first month of 2004. HOW WERE CONDITIONS IN ARIZONA AND TEXAS? Arizona's economy continued to recover during this reporting period, with steady job growth in the services industry, positive developments in the high-tech and biotech sector, and increased defense-related manufacturing. In terms of total jobs gained in 2003, Arizona ranked third in the nation (behind Florida and Georgia). As of January 2004, Moody's rated Arizona's debt A1 with a negative outlook, while Standard & Poor's rated the state AA with a negative outlook. These negative outlooks reflected the fact that, despite the state's current economic rebound, Arizona's surplus funds were depleted in 2002 and, according to the rating agencies, budget imbalances could continue over the next several fiscal years. In Texas, low oil and gas inventories and rising prices gave a boost to the state's energy industry, while employment in the financial services sector rose, supported by a rapidly growing population and increased demand for mortgage financing. As home to more than 200,000 military personnel, the state also continued to benefit from new defense contracts and increased military activity. Texas ranked fourth in the nation, behind Arizona, in jobs added during 2003. Both Moody's and S&P maintained their Aa1/AA general obligation rating and stable outlook for Texas. HOW DID THESE FUNDS PERFORM OVER THE 12-MONTH PERIOD ENDED JANUARY 31, 2004? Individual results for these Arizona and Texas Funds, as well as for relevant benchmarks, are presented in the accompanying table. TOTAL RETURN LEHMAN LIPPER MARKET YIELD ON NAV TOTAL RETURN1 AVERAGE2 - ------------------------------------------------------------------------------- 1 YEAR 1 YEAR 1 YEAR TAXABLE- ENDED ENDED ENDED 1/31/04 EQUIVALENT3 1/31/04 1/31/04 1/31/04 - ------------------------------------------------------------------------------- NAZ 5.64% 8.23% 8.78% 6.19% 9.57% - ------------------------------------------------------------------------------- NFZ 5.35% 7.81% 9.82% 6.19% 9.57% - ------------------------------------------------------------------------------- NKR 5.79% 8.45% 9.46% 6.19% 9.57% - ------------------------------------------------------------------------------- NXE 5.70% 8.32% 9.56% 6.19% 9.57% - ------------------------------------------------------------------------------- NTX 6.34% 8.81% 11.06% 6.19% 9.57% - ------------------------------------------------------------------------------- Past performance is not predictive of future results. For additional information, see the individual Performance Overview for your Fund in this report. 1 The total annual returns on common share net asset value (NAV) for these Nuveen Funds are compared with the total annual return of the Lehman Brothers Municipal Bond Index, an unleveraged, unmanaged national index comprising a broad range of investment-grade municipal bonds. Results for the Lehman index do not reflect any expenses. You cannot invest directly in an index. 2 The total returns of these Nuveen Funds are compared with the average annualized return of the 44 funds in the Lipper Other States Municipal Debt Funds category. Fund and Lipper returns assume reinvestment of dividends. It should be noted that the performance of the Lipper Other States category represents the overall average of annual returns for funds from 10 different states with a wide variety of economic and municipal market conditions. 3 The taxable-equivalent yield represents the yield that must be earned on a fully taxable investment in order to equal the yield of the Nuveen Fund on an after-tax basis. With respect to investments that generate qualified dividend income that is taxable at a maximum rate of 15%, the taxable-equivalent yield is lower. The taxable-equivalent yield is calculated using the current yield and a federal income tax rate of 28% plus the applicable state income tax rate. Because Texas has no state income tax, NTX's taxable-equivalent yield is calculated using the current market yield and a federal income tax rate of 28%, while the combined federal and state tax rate used for Arizona is 31.5%. The yields shown for Arizona highlight the added value of owning shares that are exempt from state as well as federal income taxes. 2 For the 12 months ended January 31, 2004, the total returns of all five of the Funds in this report outperformed the unleveraged national Lehman Brothers Municipal Bond Index. The Funds' use of leverage was a primary factor that influenced their total return performance relative to the Lehman index. Leveraging can add volatility to a Fund's net asset value, share price and income. However, during periods of low short-term interest rates and low or falling long-term interest rates, such as the environment during much of this 12-month period, this strategy also can provide opportunities for net asset value appreciation and enhanced income for common shareholders. In addition to leverage, factors such as bond calls and the price movement of specific sectors and holdings also had an impact on each Fund's relative performance during this period. For example, NTX benefited from its holdings of bonds backed by American Airlines, as airline-backed bonds rebounded strongly in the last part of 2003. The Texas Fund was also helped by the fact that Texas municipal bonds were, on average, the nation's best performers in 2003, as ranked by Lehman. Among the Arizona Funds, NAZ marked its 10-year anniversary in November 2002, a point in a Fund's life cycle that often signals an increased potential for bond calls from the portfolio. Through the year, NAZ held a relatively large group of bonds that were priced to near-term call dates, which limited their upside price potential in the period's generally declining interest rate environment. In addition, as these bonds were called from NAZ's portfolio, the proceeds were reinvested in the lower-yielding securities reflecting current market rates. Both of these factors acted to restrain the performance of this Fund relative to the other Arizona Funds in this report. Over the 12-month period, increased investor demand for higher-yielding securities caused the yield spreads between higher- and lower-rated bonds to narrow as the market yields for all bonds generally fell. Since the yields of lower-rated bonds generally fell more than higher-rated bonds, and the prices of lower-rated bonds rose accordingly, some of the Funds' lower-rated holdings were among their best performers. For example, all four Arizona Funds also held bonds issued for Catholic Healthcare West, which showed improved financial performance during the period and began a bond buyback to reduce its outstanding debt. In addition, both NAZ and NXE held industrial development revenue bonds issued by Yavapai County, which has been repurchasing its outstanding bonds as it converts from a standard utility to a telecommunications company. In some cases, we took advantage of these narrowed credit spreads to sell some of our positions in lower-rated bonds at what we believed were very attractive prices. WHAT ABOUT DIVIDENDS AND SHARE PRICES? With short-term interest rates at historically low levels, the dividend-paying capabilities of all these Funds benefited from their use of leverage. The extent of this benefit is tied in part to the short-term rates the Funds pay their MuniPreferred(R) shareholders. Low short-term rates can enable the Funds to reduce the amount of income paid to MuniPreferred shareholders, which can leave more earnings to support common share dividends. During the 12 months ended January 2004, continued low short-term rates enabled us to implement two dividend increases in NFZ and one in NTX. Leverage also 3 helped to support the dividend of NAZ, which as of January 31, 2004, had offered shareholders 44 consecutive months of steady or increasing dividends. NKR and NXE, which were introduced in 2002, had provided 21 and 15 months, respectively, of stable, attractive dividends. Each Fund seeks to pay a stable dividend at a rate that reflects the Fund's past results and projected future performance. A Fund may pay dividends at a rate that may be more or less than the amount of net investment income actually earned by the Fund during the period. If the Fund has cumulatively earned more than it has paid in dividends, it holds the excess in reserve as undistributed net investment income (UNII) as part of the Fund's net asset value (NAV). Conversely, if the Fund has cumulatively paid dividends in excess of its earnings, the excess constitutes negative UNII that is likewise reflected in the Fund's NAV. Each Fund will, over time, pay all of its net investment income as dividends to shareholders. As of January 31, 2004, all of the Funds in this report had positive UNII. Over the 12-month period ended January 31, 2004, the share prices of these Funds generally performed well, with most ending the period higher than they began. The lone exception was NKR, which saw its share price decline. As of January 31, 2004, NAZ and NFZ were trading at premiums, while NKR, NXE and NTX were trading at discounts to their NAV (see charts on individual Performance Overview pages). WHAT KEY STRATEGIES WERE USED TO MANAGE THESE FUNDS DURING THE PERIOD ENDED JANUARY 31, 2004? Over this reporting period, a major focus continued to be management of the Funds' durations4 in an attempt to make the interest rate risk more consistent across funds. Interest rate risk is the risk that the value of a Fund's portfolio will decline when market interest rates rise (since bond prices move in the opposite direction of interest rates). The longer the duration of a Fund's portfolio, the greater its interest rate risk. Overall, our goal was to properly calibrate each Fund's interest rate risk. In NAZ, this meant working to extend the Fund's duration, as we reinvested proceeds from a number of bond calls and the sale of issues with relatively short effective maturities into bonds with longer maturities. In the other Funds, our objective was to shorten the Funds' durations. Generally, we focused on selling 30-year bonds and replacing them with bonds in the 20-year maturity range and with 8 to 10 years of call protection. In many cases, we believed that bonds in this part of the yield curve offered yields similar to those of longer-term bonds but had better total return potential. Although the heavy volume of municipal issuance during 2003 provided some opportunities to make trades that we believed would benefit the Funds, in recent months we have seen supply soften. This was true in both Arizona and Texas, where issuance during August 2003-January 2004 4 Duration is a measure of a Fund's NAV volatility in reaction to interest rate movements. Fund duration, also known as leverage-adjusted duration, takes into account the leveraging process for a Fund and therefore is generally longer than the duration of the actual portfolio of individual bonds that make up the Fund. References to duration in this commentary are intended to indicate Fund duration unless otherwise noted. 4 declined 17% and 10%, respectively, from levels of the previous six months. Both markets presented challenges in finding issues with the types of structures we prefer and the potential to add value. In Texas, our focus was on purchasing higher quality issues, particularly in the general obligation category, reflecting the increased issuance in this sector. For the Arizona Funds, we looked for bonds that had the potential to enhance the Fund's income while maintaining diversity and overall credit quality. We found the majority of our yield opportunities in the healthcare, utilities, and-- to a lesser degree--higher education sectors. HOW WERE THE FUNDS POSITIONED IN TERMS OF CREDIT QUALITY AND BOND CALLS AS OF JANUARY 31, 2004? We believe that, given the current geopolitical and economic climate, maintaining strong credit quality is a vital requirement. As of January 31, 2004, all of these Funds offered excellent credit quality, with allocations of bonds rated AAA/U.S. guaranteed and AA ranging from 75% to 87%. As of January 31, 2004, potential call exposure over the 2004 - 2006 period ranged from zero in NKR and NXE to 14% in NTX. The actual number of bond calls these Funds will face in the coming months will depend largely on current and anticipated changes in market interest rates. In general, we believe that these Funds can continue to serve as attractive sources of tax-free income, while simultaneously offering the potential for portfolio diversification. In our opinion, they represent a quality component within a well-balanced core investment portfolio that can continue to benefit shareholders over time. 5 Nuveen Arizona Premium Income Municipal Fund, Inc. Performance OVERVIEW As of January 31, 2004 NAZ Pie Chart: CREDIT QUALITY AAA/U.S. Guaranteed 65% AA 14% A 3% BBB 13% NR 1% BB or Lower 4% PORTFOLIO STATISTICS - -------------------------------------------------- Share Price $16.27 - -------------------------------------------------- Common Share Net Asset Value $14.42 - -------------------------------------------------- Premium/(Discount) to NAV 12.83% - -------------------------------------------------- Market Yield 5.64% - -------------------------------------------------- Taxable-Equivalent Yield (Federal Income Tax Rate)1 7.83% - -------------------------------------------------- Taxable-Equivalent Yield (Federal and State Income Tax Rate)1 8.23% - -------------------------------------------------- Net Assets Applicable to Common Shares ($000) $64,041 - -------------------------------------------------- Average Effective Maturity (Years) 18.37 - -------------------------------------------------- Leverage-Adjusted Duration 9.00 - -------------------------------------------------- AVERAGE ANNUAL TOTAL RETURN (Inception 11/19/92) - -------------------------------------------------- On Share Price On NAV - -------------------------------------------------- 1-Year 10.58% 8.78% - -------------------------------------------------- 5-Year 5.73% 4.48% - -------------------------------------------------- 10-Year 6.55% 5.29% - -------------------------------------------------- TOP FIVE SECTORS (as a % of total investments) - -------------------------------------------------- Tax Obligation/Limited 31% - -------------------------------------------------- Healthcare 14% - -------------------------------------------------- U.S. Guaranteed 11% - -------------------------------------------------- Education and Civic Organizations 10% - -------------------------------------------------- Utilities 8% - -------------------------------------------------- Bar Chart: 2003-2004 MONTHLY TAX-FREE DIVIDENDS PER SHARE Feb 0.0765 Mar 0.0765 Apr 0.0765 May 0.0765 Jun 0.0765 Jul 0.0765 Aug 0.0765 Sep 0.0765 Oct 0.0765 Nov 0.0765 Dec 0.0765 Jan 0.0765 Line Chart: SHARE PRICE PERFORMANCE 2/1/03 15.6 16.18 15.87 15.89 15.95 16 16.11 16.11 16.12 16.08 15.85 15.59 15.37 15.84 16 15.9 16.56 16.52 16.45 16.7 16.58 16.9 16.62 14.96 15.03 14.9 14.76 14.77 14.8 14.66 14.71 14.86 15.27 15.18 15.16 15.1 15.05 15.24 15.39 15.41 15.49 15.61 16.1 16.06 16.17 16.14 1/31/04 16.27 Weekly Closing Price Past performance is not predictive of future results. 1 Taxable-equivalent yield represents the yield that must be earned on a fully taxable investment in order to equal the yield of the Nuveen Fund on an after-tax basis. With respect to investments that generate qualified dividend income that is taxable at a maximum rate of 15%, the taxable-equivalent yield is lower. The taxable-equivalent yield is calculated using the current market yield and a federal income tax rate of 28%. The rate shown for federal and state highlights the added value of owning shares that are also exempt from state income taxes. It is based on a combined federal and state income tax rate of 31.5%. 6 Nuveen Arizona Dividend Advantage Municipal Fund Performance OVERVIEW As of January 31, 2004 NFZ Pie Chart: CREDIT QUALITY AAA/U.S. Guaranteed 55% AA 20% A 11% BBB 13% BB or Lower 1% PORTFOLIO STATISTICS - -------------------------------------------------- Share Price $17.17 - -------------------------------------------------- Common Share Net Asset Value $15.45 - -------------------------------------------------- Premium/(Discount) to NAV 11.13% - -------------------------------------------------- Market Yield 5.35% - -------------------------------------------------- Taxable-Equivalent Yield (Federal Income Tax Rate)1 7.43% - -------------------------------------------------- Taxable-Equivalent Yield (Federal and State Income Tax Rate)1 7.81% - -------------------------------------------------- Net Assets Applicable to Common Shares ($000) $23,834 - -------------------------------------------------- Average Effective Maturity (Years) 19.20 - -------------------------------------------------- Leverage-Adjusted Duration 9.56 - -------------------------------------------------- AVERAGE ANNUAL TOTAL RETURN (Inception 1/30/01) - -------------------------------------------------- ON SHARE PRICE ON NAV - -------------------------------------------------- 1-Year 19.30% 9.82% - -------------------------------------------------- Since Inception 10.67% 8.78% - -------------------------------------------------- TOP FIVE SECTORS (as a % of total investments) - -------------------------------------------------- Tax Obligation/Limited 29% - -------------------------------------------------- Utilities 14% - -------------------------------------------------- Housing/Multifamily 13% - -------------------------------------------------- U.S. Guaranteed 11% - -------------------------------------------------- Education and Civic Organizations 10% - -------------------------------------------------- Bar Chart: 2003-2004 MONTHLY TAX-FREE DIVIDENDS PER SHARE2 Feb 0.073 Mar 0.0755 Apr 0.0755 May 0.0755 Jun 0.0755 Jul 0.0755 Aug 0.0755 Sep 0.0755 Oct 0.0755 Nov 0.0755 Dec 0.0765 Jan 0.0765 Line Chart: SHARE PRICE PERFORMANCE 2/1/03 15.28 15.28 15.24 15.5 15.65 16.19 16.23 16.09 15.8 15.53 15.52 15.56 15.38 15.65 16.01 16.3 16.25 16.57 16.5 16.54 16.79 16.88 16.52 15.1 15.12 15.14 15.12 15.14 15.05 14.95 14.91 14.78 14.66 14.67 14.81 14.9 15.04 15.49 15.51 15.64 15.65 16.6 16.67 16.58 16.49 16.8 1/31/04 17.17 Weekly Closing Price Past performance is not predictive of future results. 1 Taxable-equivalent yield represents the yield that must be earned on a fully taxable investment in order to equal the yield of the Nuveen Fund on an after-tax basis. With respect to investments that generate qualified dividend income that is taxable at a maximum rate of 15%, the taxable-equivalent yield is lower. The taxable-equivalent yield is calculated using the current market yield and a federal income tax rate of 28%. The rate shown for federal and state highlights the added value of owning shares that are also exempt from state income taxes. It is based on a combined federal and state income tax rate of 31.5%. 2 The Fund also paid shareholders a net ordinary income distribution in December 2003 of $0.0418 per share. 7 Nuveen Arizona Dividend Advantage Municipal Fund 2 Performance OVERVIEW As of January 31, 2004 NKR Pie Chart: CREDIT QUALITY AAA/U.S. Guaranteed 75% AA 12% A 4% BBB 8% BB or Lower 1% PORTFOLIO STATISTICS - -------------------------------------------------- Share Price $14.92 - -------------------------------------------------- Common Share Net Asset Value $15.52 - -------------------------------------------------- Premium/(Discount) to NAV -3.87% - -------------------------------------------------- Market Yield 5.79% - -------------------------------------------------- Taxable-Equivalent Yield (Federal Income Tax Rate)1 8.04% - -------------------------------------------------- Taxable-Equivalent Yield (Federal and State Income Tax Rate)1 8.45% - -------------------------------------------------- Net Assets Applicable to Common Shares ($000) $37,543 - -------------------------------------------------- Average Effective Maturity (Years) 17.22 - -------------------------------------------------- Leverage-Adjusted Duration 10.42 - -------------------------------------------------- AVERAGE ANNUAL TOTAL RETURN (Inception 3/25/02) - -------------------------------------------------- ON SHARE PRICE ON NAV - -------------------------------------------------- 1-Year 1.98% 9.46% - -------------------------------------------------- Since Inception 5.45% 10.36% - -------------------------------------------------- TOP FIVE SECTORS (as a % of total investments) - -------------------------------------------------- Tax Obligation/General 32% - -------------------------------------------------- Tax Obligation/Limited 26% - -------------------------------------------------- Education and Civic Organizations 8% - -------------------------------------------------- Healthcare 7% - -------------------------------------------------- Utilities 6% - -------------------------------------------------- Bar Chart: 2003-2004 MONTHLY TAX-FREE DIVIDENDS PER SHARE2 Feb 0.072 Mar 0.072 Apr 0.072 May 0.072 Jun 0.072 Jul 0.072 Aug 0.072 Sep 0.072 Oct 0.072 Nov 0.072 Dec 0.072 Jan 0.072 Line Chart: SHARE PRICE PERFORMANCE 2/1/03 15.55 15.3 15.09 15.15 15.34 15.21 15.26 15.1 15.1 15.23 15.31 15.32 15.12 15.21 15.44 15.86 15.8 16.08 15.83 16.15 16.18 16.2 15.76 14.05 14.32 14.27 14.09 14.09 14.3 14.43 14.39 14.3 14.36 14.3 14.2 14.5 14.4 14.38 14.4 14.24 14.35 14.43 14.76 14.74 15.1 15.23 1/31/04 14.92 Weekly Closing Price Past performance is not predictive of future results. 1 Taxable-equivalent yield represents the yield that must be earned on a fully taxable investment in order to equal the yield of the Nuveen Fund on an after-tax basis. With respect to investments that generate qualified dividend income that is taxable at a maximum rate of 15%, the taxable-equivalent yield is lower. The taxable-equivalent yield is calculated using the current market yield and a federal income tax rate of 28%. The rate shown for federal and state highlights the added value of owning shares that are also exempt from state income taxes. It is based on a combined federal and state income tax rate of 31.5%. 2 The Fund also paid shareholders capital gains and net ordinary income distributions in December 2003 of $0.0441 per share. 8 Nuveen Arizona Dividend Advantage Municipal Fund 3 Performance OVERVIEW As of January 31, 2004 NXE Pie Chart: CREDIT QUALITY AAA/U.S. Guaranteed 70% AA 14% A 3% BBB 11% BB or Lower 2% PORTFOLIO STATISTICS - -------------------------------------------------- Share Price $14.10 - -------------------------------------------------- Common Share Net Asset Value $14.40 - -------------------------------------------------- Premium/(Discount) to NAV -2.08% - -------------------------------------------------- Market Yield 5.70% - -------------------------------------------------- Taxable-Equivalent Yield (Federal Income Tax Rate)1 7.92% - -------------------------------------------------- Taxable-Equivalent Yield (Federal and State Income Tax Rate)1 8.32% - -------------------------------------------------- Net Assets Applicable to Common Shares ($000) $44,163 - -------------------------------------------------- Average Effective Maturity (Years) 19.38 - -------------------------------------------------- Leverage-Adjusted Duration 11.07 - -------------------------------------------------- AVERAGE ANNUAL TOTAL RETURN (Inception 9/25/02) - -------------------------------------------------- ON SHARE PRICE ON NAV - -------------------------------------------------- 1-Year 10.56% 9.56% - -------------------------------------------------- Since Inception 0.83% 5.79% - -------------------------------------------------- TOP FIVE SECTORS (as a % of total investments) - -------------------------------------------------- Tax Obligation/Limited 20% - -------------------------------------------------- Tax Obligation/General 18% - -------------------------------------------------- Housing/Multifamily 13% - -------------------------------------------------- Education and Civic Organizations 13% - -------------------------------------------------- Healthcare 11% - -------------------------------------------------- Bar Chart: 2003-2004 MONTHLY TAX-FREE DIVIDENDS PER SHARE Feb 0.067 Mar 0.067 Apr 0.067 May 0.067 Jun 0.067 Jul 0.067 Aug 0.067 Sep 0.067 Oct 0.067 Nov 0.067 Dec 0.067 Jan 0.067 Line Chart: SHARE PRICE PERFORMANCE 2/1/03 13.52 13.85 13.75 13.85 14 14.01 14.02 13.85 13.8 13.65 13.4 13.65 13.93 14.01 14.01 14.18 14.11 14.26 14.05 14.29 14.7 14.73 14.25 13.96 13.5 13.57 13.13 13.26 13.25 13.05 13.1 13.19 13.2 13.03 13.14 13.21 13.09 13.1 13.34 13.21 13.3 13.4 13.45 13.65 14.19 14.2 1/31/04 14.1 Weekly Closing Price Past performance is not predictive of future results. 1 Taxable-equivalent yield represents the yield that must be earned on a fully taxable investment in order to equal the yield of the Nuveen Fund on an after-tax basis. With respect to investments that generate qualified dividend income that is taxable at a maximum rate of 15%, the taxable-equivalent yield is lower. The taxable-equivalent yield is calculated using the current market yield and a federal income tax rate of 28%. The rate shown for federal and state highlights the added value of owning shares that are also exempt from state income taxes. It is based on a combined federal and state income tax rate of 31.5%. 9 Nuveen Texas Quality Income Municipal Fund Performance OVERVIEW As of January 31, 2004 NTX Pie Chart: CREDIT QUALITY AAA/U.S. Guaranteed 65% AA 11% A 9% BBB 14% BB or Lower 1% PORTFOLIO STATISTICS - -------------------------------------------------- Share Price $15.15 - -------------------------------------------------- Common Share Net Asset Value $15.54 - -------------------------------------------------- Premium/(Discount) to NAV -2.51% - -------------------------------------------------- Market Yield 6.34% - -------------------------------------------------- Taxable-Equivalent Yield (Federal Income Tax Rate)1 8.81% - -------------------------------------------------- Net Assets Applicable to Common Shares ($000) $147,187 - -------------------------------------------------- Average Effective Maturity (Years) 20.12 - -------------------------------------------------- Leverage-Adjusted Duration 8.94 - -------------------------------------------------- AVERAGE ANNUAL TOTAL RETURN (Inception 10/17/91) - -------------------------------------------------- ON SHARE PRICE ON NAV - -------------------------------------------------- 1-Year 11.98% 11.06% - -------------------------------------------------- 5-Year 6.12% 5.92% - -------------------------------------------------- 10-Year 6.39% 6.35% - -------------------------------------------------- TOP FIVE SECTORS (as a % of total investments) - -------------------------------------------------- Tax Obligation/General 24% - -------------------------------------------------- Healthcare 14% - -------------------------------------------------- Tax Obligation/Limited 9% - -------------------------------------------------- Water and Sewer 8% - -------------------------------------------------- Utilities 7% - -------------------------------------------------- Bar Chart: 2003-2004 MONTHLY TAX-FREE DIVIDENDS PER SHARE Feb 0.079 Mar 0.08 Apr 0.08 May 0.08 Jun 0.08 Jul 0.08 Aug 0.08 Sep 0.08 Oct 0.08 Nov 0.08 Dec 0.08 Jan 0.08 Line Chart: SHARE PRICE PERFORMANCE 2/1/03 14.43 14.51 14.29 14.39 14.55 14.9 14.93 14.74 14.82 14.94 14.9 15.09 15.09 15.05 15.17 15.34 15.38 15.54 15.53 15.25 15.44 15.7 15.17 14.52 14.8 14.45 14.64 14.35 14.2 14.23 14.35 14.4 14.22 14.27 14.34 14.4 14.56 14.66 14.68 14.82 14.98 15.02 15.52 15.34 15.3 15.55 1/31/04 15.15 Weekly Closing Price Past performance is not predictive of future results. 1 Taxable-equivalent yield represents the yield that must be earned on a fully taxable investment in order to equal the yield of the Nuveen Fund on an after-tax basis. With respect to investments that generate qualified dividend income that is taxable at a maximum rate of 15%, the taxable-equivalent yield is lower. The taxable-equivalent yield is calculated using the current market yield and a federal income tax rate of 28%. 10 Shareholder MEETING REPORT The Shareholder Meeting was held in Chicago, Illinois, on October 22, 2003.
NAZ NFZ - ------------------------------------------------------------------------------------------------------------------------------------ APPROVAL OF THE BOARD MEMBERS WAS REACHED AS FOLLOWS: Common and Common and MuniPreferred MuniPreferred MuniPreferred MuniPreferred shares voting shares voting shares voting shares voting together together together together as a class as a class as a class as a class ==================================================================================================================================== William E. Bennett For 3,795,380 -- 1,508,925 -- Withhold 128,560 -- 3,600 -- - ------------------------------------------------------------------------------------------------------------------------------------ Total 3,923,940 -- 1,512,525 -- ==================================================================================================================================== Robert P. Bremner For 3,795,380 -- 1,508,925 -- Withhold 128,560 -- 3,600 -- - ------------------------------------------------------------------------------------------------------------------------------------ Total 3,923,940 -- 1,512,525 -- ==================================================================================================================================== Lawrence H. Brown For 3,795,380 -- 1,508,925 -- Withhold 128,560 -- 3,600 -- - ------------------------------------------------------------------------------------------------------------------------------------ Total 3,923,940 -- 1,512,525 -- ==================================================================================================================================== Jack B. Evans For 3,795,380 -- 1,508,925 -- Withhold 128,560 -- 3,600 -- - ------------------------------------------------------------------------------------------------------------------------------------ Total 3,923,940 -- 1,512,525 -- ==================================================================================================================================== Anne E. Impellizzeri For 3,795,380 -- 1,508,925 -- Withhold 128,560 -- 3,600 -- - ------------------------------------------------------------------------------------------------------------------------------------ Total 3,923,940 -- 1,512,525 -- ==================================================================================================================================== William L. Kissick For 3,795,380 -- 1,508,925 -- Withhold 128,560 -- 3,600 -- - ------------------------------------------------------------------------------------------------------------------------------------ Total 3,923,940 -- 1,512,525 -- ==================================================================================================================================== Thomas E. Leafstrand For 3,795,380 -- 1,508,925 -- Withhold 128,560 -- 3,600 -- - ------------------------------------------------------------------------------------------------------------------------------------ Total 3,923,940 -- 1,512,525 -- ==================================================================================================================================== Peter R. Sawers For 3,795,380 -- 1,508,925 -- Withhold 128,560 -- 3,600 -- - ------------------------------------------------------------------------------------------------------------------------------------ Total 3,923,940 -- 1,512,525 -- ==================================================================================================================================== 11 Shareholder MEETING REPORT (continued) NAZ NFZ - ------------------------------------------------------------------------------------------------------------------------------------ APPROVAL OF THE BOARD MEMBERS WAS REACHED AS FOLLOWS: (CONTINUED) Common and Common and MuniPreferred MuniPreferred MuniPreferred MuniPreferred shares voting shares voting shares voting shares voting together together together together as a class as a class as a class as a class ==================================================================================================================================== William J. Schneider For -- 1,117 -- 432 Withhold -- 4 -- -- - ------------------------------------------------------------------------------------------------------------------------------------ Total -- 1,121 -- 432 ==================================================================================================================================== Timothy R. Schwertfeger For -- 1,117 -- 432 Withhold -- 4 -- -- - ------------------------------------------------------------------------------------------------------------------------------------ Total -- 1,121 -- 432 ==================================================================================================================================== Judith M. Stockdale For 3,795,380 -- 1,508,925 -- Withhold 128,560 -- 3,600 -- - ------------------------------------------------------------------------------------------------------------------------------------ Total 3,923,940 -- 1,512,525 -- ==================================================================================================================================== Sheila W. Wellington For 3,795,380 -- 1,508,925 -- Withhold 128,560 -- 3,600 -- - ------------------------------------------------------------------------------------------------------------------------------------ Total 3,923,940 -- 1,512,525 -- ==================================================================================================================================== 12 NKR NXE - ------------------------------------------------------------------------------------------------------------------------------------ APPROVAL OF THE BOARD MEMBERS WAS REACHED AS FOLLOWS: Common and Common and MuniPreferred MuniPreferred MuniPreferred MuniPreferred shares voting shares voting shares voting shares voting together together together together as a class as a class as a class as a class ==================================================================================================================================== William E. Bennett For 2,315,969 -- 3,018,535 -- Withhold 83,133 -- 5,630 -- - ------------------------------------------------------------------------------------------------------------------------------------ Total 2,399,102 -- 3,024,165 -- ==================================================================================================================================== Robert P. Bremner For 2,315,969 -- 3,018,535 -- Withhold 83,133 -- 5,630 -- - ------------------------------------------------------------------------------------------------------------------------------------ Total 2,399,102 -- 3,024,165 -- ==================================================================================================================================== Lawrence H. Brown For 2,312,969 -- 3,018,535 -- Withhold 86,133 -- 5,630 -- - ------------------------------------------------------------------------------------------------------------------------------------ Total 2,399,102 -- 3,024,165 -- ==================================================================================================================================== Jack B. Evans For 2,311,779 -- 3,018,535 -- Withhold 87,323 -- 5,630 -- - ------------------------------------------------------------------------------------------------------------------------------------ Total 2,399,102 -- 3,024,165 -- ==================================================================================================================================== Anne E. Impellizzeri For 2,312,969 -- 3,018,535 -- Withhold 86,133 -- 5,630 -- - ------------------------------------------------------------------------------------------------------------------------------------ Total 2,399,102 -- 3,024,165 -- ==================================================================================================================================== William L. Kissick For 2,312,969 -- 3,018,535 -- Withhold 86,133 -- 5,630 -- - ------------------------------------------------------------------------------------------------------------------------------------ Total 2,399,102 -- 3,024,165 -- ==================================================================================================================================== Thomas E. Leafstrand For 2,308,779 -- 3,018,535 -- Withhold 90,323 -- 5,630 -- - ------------------------------------------------------------------------------------------------------------------------------------ Total 2,399,102 -- 3,024,165 -- ==================================================================================================================================== Peter R. Sawers For 2,312,969 -- 3,018,535 -- Withhold 86,133 -- 5,630 -- - ------------------------------------------------------------------------------------------------------------------------------------ Total 2,399,102 -- 3,024,165 -- ==================================================================================================================================== 13 Shareholder MEETING REPORT (continued) NKR NXE - ------------------------------------------------------------------------------------------------------------------------------------ APPROVAL OF THE BOARD MEMBERS WAS REACHED AS FOLLOWS: (CONTINUED) Common and Common and MuniPreferred MuniPreferred MuniPreferred MuniPreferred shares voting shares voting shares voting shares voting together together together together as a class as a class as a class as a class ==================================================================================================================================== William J. Schneider For -- 684 -- 847 Withhold -- 3 -- -- - ------------------------------------------------------------------------------------------------------------------------------------ Total -- 687 -- 847 ==================================================================================================================================== Timothy R. Schwertfeger For -- 684 -- 847 Withhold -- 3 -- -- - ------------------------------------------------------------------------------------------------------------------------------------ Total -- 687 -- 847 ==================================================================================================================================== Judith M. Stockdale For 2,311,779 -- 3,018,535 -- Withhold 87,323 -- 5,630 -- - ------------------------------------------------------------------------------------------------------------------------------------ Total 2,399,102 -- 3,024,165 -- ==================================================================================================================================== Sheila W. Wellington For 2,301,279 -- 3,018,535 -- Withhold 97,823 -- 5,630 -- - ------------------------------------------------------------------------------------------------------------------------------------ Total 2,399,102 -- 3,024,165 -- ==================================================================================================================================== 14 NTX - ------------------------------------------------------------------------------------------------------------------------------------ APPROVAL OF THE BOARD MEMBERS WAS REACHED AS FOLLOWS: Common and MuniPreferred MuniPreferred shares voting shares voting together together as a class as a class ==================================================================================================================================== William E. Bennett For 8,612,314 -- Withhold 87,608 -- - ------------------------------------------------------------------------------------------------------------------------------------ Total 8,699,922 -- ==================================================================================================================================== Robert P. Bremner For 8,607,546 -- Withhold 92,376 -- - ------------------------------------------------------------------------------------------------------------------------------------ Total 8,699,922 -- ==================================================================================================================================== Lawrence H. Brown For 8,610,846 -- Withhold 89,076 -- - ------------------------------------------------------------------------------------------------------------------------------------ Total 8,699,922 -- ==================================================================================================================================== Jack B. Evans For 8,612,646 -- Withhold 87,276 -- - ------------------------------------------------------------------------------------------------------------------------------------ Total 8,699,922 -- ==================================================================================================================================== Anne E. Impellizzeri For 8,609,473 -- Withhold 90,449 -- - ------------------------------------------------------------------------------------------------------------------------------------ Total 8,699,922 -- ==================================================================================================================================== William L. Kissick For 8,611,273 -- Withhold 88,649 -- - ------------------------------------------------------------------------------------------------------------------------------------ Total 8,699,922 -- ==================================================================================================================================== Thomas E. Leafstrand For 8,611,646 -- Withhold 88,276 -- - ------------------------------------------------------------------------------------------------------------------------------------ Total 8,699,922 -- ==================================================================================================================================== Peter R. Sawers For 8,611,846 -- Withhold 88,076 -- - ------------------------------------------------------------------------------------------------------------------------------------ Total 8,699,922 -- ==================================================================================================================================== 15 Shareholder MEETING REPORT (continued) NTX - ------------------------------------------------------------------------------------------------------------------------------------ APPROVAL OF THE BOARD MEMBERS WAS REACHED AS FOLLOWS: (CONTINUED) Common and MuniPreferred MuniPreferred shares voting shares voting together together as a class as a class ==================================================================================================================================== William J. Schneider For -- 2,479 Withhold -- 17 - ------------------------------------------------------------------------------------------------------------------------------------ Total -- 2,496 ==================================================================================================================================== Timothy R. Schwertfeger For -- 2,479 Withhold -- 17 - ------------------------------------------------------------------------------------------------------------------------------------ Total -- 2,496 ==================================================================================================================================== Judith M. Stockdale For 8,609,473 -- Withhold 90,449 -- - ------------------------------------------------------------------------------------------------------------------------------------ Total 8,699,922 -- ==================================================================================================================================== Sheila W. Wellington For 8,608,696 -- Withhold 91,226 -- - ------------------------------------------------------------------------------------------------------------------------------------ Total 8,699,922 -- ====================================================================================================================================
16 Nuveen Arizona Premium Income Municipal Fund, Inc. (NAZ) Portfolio of INVESTMENTS January 31, 2004 (Unaudited)
PRINCIPAL OPTIONAL CALL MARKET AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE - ------------------------------------------------------------------------------------------------------------------------------------ CONSUMER STAPLES - 1.4% $ 965 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 5/12 at 100.00 BBB $ 922,482 Asset-Backed Refunding Bonds, Series 2002, 5.375%, 5/15/33 - ------------------------------------------------------------------------------------------------------------------------------------ EDUCATION AND CIVIC ORGANIZATIONS - 14.6% 1,000 Arizona State University, Certificates of Participation, 7/12 at 100.00 AAA 1,094,070 Series 2002, 5.375%, 7/01/19 - MBIA Insured 1,000 Arizona State University, System Revenue Bonds, 7/12 at 100.00 AAA 1,035,750 Series 2002, 5.000%, 7/01/25 - FGIC Insured 1,750 Arizona Student Loan Acquisition Authority, Student Loan 5/04 at 102.00 Aa1 1,806,858 Revenue Bonds, Subordinated Fixed Rate, Series 1994B, 6.600%, 5/01/10 (Alternative Minimum Tax) 1,250 Glendale Industrial Development Authority, Arizona, 5/11 at 101.00 BBB+ 1,314,300 Revenue Bonds, Midwestern University, Series 2001A, 5.875%, 5/15/31 1,050 Northern Arizona University, System Revenue Bonds, 6/12 at 100.00 AAA 1,080,062 Series 2002, 5.000%, 6/01/34 - FGIC Insured 1,400 Southern Arizona Capital Facilities Financing Corporation, 9/12 at 100.00 AAA 1,456,938 Student Housing Revenue Bonds, La Aldea Project at the University of Arizona, Series 2002, 5.000%, 9/01/23 - MBIA Insured 1,500 Tempe Industrial Development Authority, Arizona, Lease 7/13 at 100.00 AAA 1,547,355 Revenue Bonds, Arizona State University Foundation Project, Series 2003, 5.000%, 7/01/34 - AMBAC Insured - ------------------------------------------------------------------------------------------------------------------------------------ HEALTHCARE - 20.5% 2,000 Arizona Health Facilities Authority, Hospital System 11/09 at 100.00 Ba2 1,741,280 Revenue Bonds, Phoenix Children's Hospital, Series 1999A, 6.125%, 11/15/22 2,125 Arizona Health Facilities Authority, Hospital System 12/10 at 102.00 BBB 2,297,635 Revenue Bonds, John C. Lincoln Health Network, Series 2000, 7.000%, 12/01/25 800 Arizona Health Facilities Authority, Hospital Revenue Bonds, 7/10 at 101.00 Baa1 889,216 Catholic Healthcare West, Series 1999A, 6.625%, 7/01/20 3,000 Mesa Industrial Development Authority, Arizona, Revenue 1/10 at 101.00 AAA 3,284,790 Bonds, Discovery Health System, Series 1999A, 5.750%, 1/01/25 - MBIA Insured 515 Puerto Rico Industrial, Tourist, Educational, Medical 11/10 at 101.00 AA 588,866 and Environmental Control Facilities Financing Authority, Hospital Revenue Bonds, Hospital de la Concepcion Project, Series 2000A, 6.375%, 11/15/15 1,500 Scottsdale Industrial Development Authority, Arizona, 12/11 at 101.00 A3 1,564,065 Hospital Revenue Bonds, Scottsdale Healthcare, Series 2001, 5.800%, 12/01/31 2,000 University Medical Center Corporation Tucson, Arizona, 7/04 at 100.00 AAA 2,027,300 Hospital Revenue Refunding Bonds, Series 1992, 6.250%, 7/01/16 - MBIA Insured 1,055 Industrial Development Authority, Winslow, Arizona, 6/08 at 101.00 N/R 743,100 Hospital Revenue Bonds, Winslow Memorial Hospital Project, Series 1998, 5.500%, 6/01/22 - ------------------------------------------------------------------------------------------------------------------------------------ HOUSING/MULTIFAMILY - 11.2% 2,011 Glendale Industrial Development Authority, Arizona, GNMA 10/10 at 105.00 Aaa 2,215,237 Collateralized Mortgage Loan Multifamily Housing Revenue Bonds, Maridale Apartments Project, Series 2000A, 7.500%, 10/20/35 400 Phoenix Industrial Development Authority, Arizona, GNMA 6/11 at 102.00 Aaa 423,644 Collateralized Multifamily Housing Revenue Bonds, Campaigne Place on Jackson Project, Series 2001, 5.700%, 6/20/31 (Alternative Minimum Tax) 1,000 Phoenix Industrial Development Authority, Arizona, 9/10 at 103.00 Aaa 1,089,920 GNMA Collateralized Mortgage Loan Multifamily Housing Revenue Bonds, Camelback Crossings Apartments Project, Series 2000, 6.350%, 9/20/35 3,215 Tucson Industrial Development Authority, Arizona, Senior 7/10 at 101.00 AA 3,448,988 Living Facilities Revenue Bonds, Christian Care Project, Series 2000A, 5.625%, 7/01/20 - RAAI Insured - ------------------------------------------------------------------------------------------------------------------------------------ HOUSING/SINGLE FAMILY - 0.1% 75 Phoenix Industrial Development Authority, Arizona, Statewide 6/05 at 102.00 AAA 79,107 Single Family Mortgage Revenue Bonds, Series 1995, 6.150%, 6/01/08 (Alternative Minimum Tax) 17 Nuveen Arizona Premium Income Municipal Fund, Inc. (NAZ) (continued) Portfolio of INVESTMENTS January 31, 2004 (Unaudited) PRINCIPAL OPTIONAL CALL MARKET AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE - ------------------------------------------------------------------------------------------------------------------------------------ INDUSTRIALS - 3.3% $ 2,000 Yavapai County Industrial Development Authority, Arizona, No Opt. Call BBB $ 2,093,200 Solid Waste Disposal Revenue Bonds, Waste Management Inc. Project, Series 2003B, 4.450%, 3/01/28 (Alternative Minimum Tax) (Mandatory put 3/01/08) - ------------------------------------------------------------------------------------------------------------------------------------ LONG-TERM CARE - 0.6% 345 Mohave County Industrial Development Authority, Arizona, 5/06 at 103.00 AAA 365,321 GNMA Collateralized Health Care Revenue Refunding Bonds, Chris Ridge and Silver Ridge Village Projects, Series 1996, 6.375%, 11/01/31 - ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/GENERAL - 7.6% 3,000 Mesa, Arizona, General Obligation Bonds, Series 1999, 7/09 at 100.00 AAA 3,183,630 5.000%, 7/01/18 - FGIC Insured Puerto Rico Public Improvement, General Obligation Bonds, Series 2002A: 500 5.500%, 7/01/19 - FGIC Insured No Opt. Call AAA 582,840 500 5.375%, 7/01/28 7/11 at 100.00 A- 521,645 585 Tempe Union High School District 213, Maricopa County, 7/04 at 101.00 AAA 602,170 Arizona, General Obligation Bonds, Series 1994, 6.000%, 7/01/12 - FGIC Insured - ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/LIMITED - 43.9% 1,985 Arizona School Facilities Board, State School Improvement 7/13 at 100.00 AAA 2,106,621 Revenue Bonds, Series 2003, 5.000%, 7/01/21 Arizona Tourism and Sports Authority, Tax Revenue Bonds, Multipurpose Stadium Facility Project, Series 2003A: 3,000 5.375%, 7/01/20 - MBIA Insured 7/13 at 100.00 Aaa 3,299,970 1,000 5.375%, 7/01/21 - MBIA Insured 7/13 at 100.00 Aaa 1,095,080 Bullhead City, Arizona, Parkway District Special Assessment Improvement Bonds, Series 1993: 830 6.100%, 1/01/08 7/04 at 102.00 Baa2 857,598 890 6.100%, 1/01/09 7/04 at 102.00 Baa2 918,177 575 Marana Municipal Property Corporation, Arizona, Revenue 7/13 at 100.00 AAA 595,200 Bonds, Series 2003, 5.000%, 7/01/28 - AMBAC Insured 1,500 Maricopa County Industrial Development Authority, Education 7/10 at 102.00 Baa3 1,498,980 Revenue Bonds, Arizona Charter Schools Project I, Series 2000A, 6.750%, 7/01/29 3,400 Maricopa County Stadium District, Arizona, Revenue 6/12 at 100.00 Aaa 3,729,698 Refunding Bonds, Series 2002, 5.375%, 6/01/18 - AMBAC Insured Phoenix Industrial Development Authority, Arizona, Government Office Lease Revenue Bonds, Capitol Mall LLC Project, Series 2000: 1,000 5.375%, 9/15/22 - AMBAC Insured 9/10 at 100.00 AAA 1,081,700 2,000 5.500%, 9/15/27 - AMBAC Insured 9/10 at 100.00 AAA 2,160,300 2,150 Phoenix Civic Plaza Building Corporation, Arizona, Senior 7/05 at 101.00 AAA 2,306,391 Lien Excise Tax Revenue Bonds, Series 1994, 6.000%, 7/01/14 2,000 Phoenix Civic Improvement Corporation, Arizona, Subordinate 7/13 at 100.00 AAA 2,108,220 Lien Excise Tax Revenue Bonds, Series 2003A, 5.000%, 7/01/21 - MBIA Insured 1,200 Prescott Valley Municipal Property Corp., Arizona, 1/13 at 100.00 AAA 1,243,188 Municipal Facilities Revenue Bonds, Series 2003, 5.000%, 1/01/27 - FGIC Insured 1,000 Puerto Rico Public Buildings Authority, Guaranteed 7/12 at 100.00 A- 1,031,690 Government Facilities Revenue Refunding Bonds, Series 2002D, 5.125%, 7/01/24 500 Tucson, Arizona, Certificates of Participation, Series 2000, 7/08 at 100.00 AAA 555,365 5.700%, 7/01/20 - MBIA Insured 1,100 Tucson, Arizona, Streets and Highway Junior Lien User Fee 7/10 at 100.00 AAA 1,167,518 Revenue Bonds, Series 1994E, 5.000%, 7/01/18 - FGIC Insured 2,300 Virgin Islands Public Finance Authority, Gross Receipts 10/14 at 100.00 AA 2,335,029 Taxes Loan Notes, Series 2003, 5.000%, 10/01/33 - RAAI Insured - ------------------------------------------------------------------------------------------------------------------------------------ TELECOMMUNICATION SERVICES - 2.4% 1,450 Industrial Development Authority, Yavapai County, Arizona, 6/07 at 101.00 BBB 1,513,205 Revenue Bonds, Citizens Utilities Company Project, Series 1998, 5.450%, 6/01/33 (Alternative Minimum Tax) 18 PRINCIPAL OPTIONAL CALL MARKET AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE - ------------------------------------------------------------------------------------------------------------------------------------ U.S. GUARANTEED - 15.7% $ 530 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 7/10 at 100.00 AAA $ 593,362 Asset-Backed Bonds, Series 2000, 5.750%, 7/01/20 (Pre-refunded to 7/01/10) 3,500 Maricopa County Industrial Development Authority, No Opt. Call AAA 4,515,525 Arizona, Hospital Revenue Refunding Bonds, Samaritan Health Services, Series 1990A, 7.000%, 12/01/16 - MBIA Insured 2,000 Phoenix Civic Improvement Corporation, Arizona, Junior 7/10 at 101.00 AAA 2,397,500 Lien Wastewater System Revenue Bonds, Series 2000, 6.000%, 7/01/24 (Pre-refunded to 7/01/10) - FGIC Insured 1,000 Puerto Rico Highway and Transportation Authority, 7/10 at 101.00 A*** 1,237,320 Highway Revenue Bonds, Series 2000B, 6.500%, 7/01/27 (Pre-refunded to 7/01/10) 500 Surprise Municipal Property Corporation, Arizona, Excise 7/09 at 101.00 AAA 585,120 Tax Revenue Bonds, Series 2000, 5.700%, 7/01/20 (Pre-refunded to 7/01/09) - FGIC Insured 725 Tucson, Arizona, Certificates of Participation, Series 1994, 7/04 at 100.00 AA*** 741,305 6.375%, 7/01/09 (Pre-refunded to 7/01/04) - RAAI Insured - ------------------------------------------------------------------------------------------------------------------------------------ UTILITIES - 11.7% 1,000 Arizona Power Authority, Special Obligation Power No Opt. Call AA 1,132,060 Resource Revenue Refunding Crossover Bonds, Hoover Project, Series 2001, 5.250%, 10/01/15 1,615 Coconino County, Arizona, Pollution Control Revenue 10/06 at 102.00 B- 1,579,050 Bonds, Nevada Power Company Project, Series 1996, 6.375%, 10/01/36 (Alternative Minimum Tax) 500 Navajo County Pollution Control Corp., Arizona, Pollution 2/04 at 102.00 AAA 511,600 Control Revenue Refunding Bonds, Arizona Public Service Company, Series 1993A, 5.875%, 8/15/28 - MBIA Insured 1,075 Pima County Industrial Development Authority, Arizona, 7/04 at 102.00 AAA 1,128,965 Lease Obligation Revenue Refunding Bonds, Tucson Electric Power Company Irvington Project, Series 1988A, 7.250%, 7/15/10 - FSA Insured Salt River Project Agricultural Improvement and Power District, Arizona, Electric System Revenue Refunding Bonds, Salt River Project, Series 2002A: 2,000 5.125%, 1/01/27 1/12 at 101.00 AA 2,091,980 1,000 5.000%, 1/01/31 1/12 at 101.00 AA 1,032,280 - ------------------------------------------------------------------------------------------------------------------------------------ WATER AND SEWER - 10.3% 3,500 Glendale, Arizona, Water and Sewer Revenue Bonds, 7/13 at 100.00 AAA 3,625,685 Subordinate Lien, Series 2003, 5.000%, 7/01/28 1,250 Phoenix Civic Improvement Corporation, Arizona, Junior No Opt. Call AAA 1,438,373 Lien Water System Revenue Refunding Bonds, Series 2001, 5.500%, 7/01/21 - FGIC Insured 1,500 Phoenix Civic Improvement Corporation, Arizona, Junior 7/12 at 100.00 AAA 1,550,430 Lien Water System Revenue Bonds, Series 2002, 5.000%, 7/01/26 - FGIC Insured - ------------------------------------------------------------------------------------------------------------------------------------ $ 86,116 Total Long-Term Investments (cost $86,763,422) - 143.3% 91,764,254 =============----------------------------------------------------------------------------------------------------------------------- Other Assets Less Liabilities - 3.5% 2,276,686 -------------------------------------------------------------------------------------------------------------------- Preferred Shares, at Liquidation Value - (46.8)% (30,000,000) -------------------------------------------------------------------------------------------------------------------- Net Assets Applicable to Common Shares - 100% $ 64,040,940 ====================================================================================================================
(1) All percentages shown in the Portfolio of Investments are based on net assets applicable to Common shares. * Optional Call Provisions: Dates (month and year) and prices of the earliest optional call or redemption. There may be other call provisions at varying prices at later dates. ** Ratings: Using the higher of Standard & Poor's or Moody's rating. *** Securities are backed by an escrow or trust containing sufficient U.S. Government or U.S. Government agency securities which ensures the timely payment of principal and interest. Such securities are normally considered to be equivalent to AAA rated securities. N/R Investment is not rated. See accompanying notes to financial statements. 19 Nuveen Arizona Dividend Advantage Municipal Fund (NFZ) Portfolio of INVESTMENTS January 31, 2004 (Unaudited)
PRINCIPAL OPTIONAL CALL MARKET AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE - ------------------------------------------------------------------------------------------------------------------------------------ EDUCATION AND CIVIC ORGANIZATIONS - 14.2% $ 1,020 Mesa Industrial Development Authority, Arizona, Student 7/11 at 101.00 BBB- $ 1,031,689 Housing Revenue Bonds, ASU East/Maricopa County Community College District, Williams Campus Project, Series 2001A, 6.000%, 7/01/26 1,000 Puerto Rico Industrial, Tourist, Educational, Medical, 2/09 at 101.00 BBB 1,008,700 and Environmental Control Facilities Financing Authority, Higher Education Revenue Bonds, Ana G. Mendez University System Project, Series 1999, 5.375%, 2/01/29 300 Puerto Rico Industrial, Tourist, Educational, Medical, 9/11 at 100.00 BBB 311,481 and Environmental Control Facilities Financing Authority, Higher Education Revenue Bonds, University of the Sacred Heart Project, Series 2001, 5.250%, 9/01/21 1,000 Tempe Industrial Development Authority, Arizona, 7/13 at 100.00 AAA 1,031,570 Lease Revenue Bonds, Arizona State University Foundation Project, Series 2003, 5.000%, 7/01/34 - AMBAC Insured - ------------------------------------------------------------------------------------------------------------------------------------ HEALTHCARE - 8.6% 550 Arizona Health Facilities Authority, Hospital System 12/10 at 102.00 BBB 601,398 Revenue Bonds, John C. Lincoln Health Network, Series 2000, 6.875%, 12/01/20 365 Arizona Health Facilities Authority, Hospital Revenue 7/10 at 101.00 Baa1 405,705 Bonds, Catholic Healthcare West, Series 1999A, 6.625%, 7/01/20 1,000 Scottsdale Industrial Development Authority, Arizona, 12/11 at 101.00 A3 1,042,710 Hospital Revenue Bonds, Scottsdale Healthcare, Series 2001, 5.800%, 12/01/31 - ------------------------------------------------------------------------------------------------------------------------------------ HOUSING/MULTIFAMILY - 19.4% 1,000 Maricopa County Industrial Development Authority, Arizona, 7/09 at 102.00 Aaa 1,041,530 Multifamily Housing Revenue Bonds, Whispering Palms Apartments Project, Series 1999A, 5.900%, 7/01/29 - MBIA Insured 1,125 Maricopa County Industrial Development Authority, Arizona, 10/11 at 103.00 Aaa 1,190,970 Multifamily Housing Revenue Bonds, Syl-Mar Apartments Project, Series 2001, 5.650%, 4/20/21 (Alternative Minimum Tax) 275 Phoenix Industrial Development Authority, Arizona, 6/11 at 102.00 Aaa 291,255 GNMA Collateralized Multifamily Housing Revenue Bonds, Campaigne Place on Jackson Project, Series 2001, 5.700%, 6/20/31 (Alternative Minimum Tax) 990 Phoenix Industrial Development Authority, Arizona, 10/12 at 102.00 Aaa 1,001,375 GNMA Enhanced Mortgage Loan Multifamily Housing Revenue Bonds, Liberty Cove Apartments, Series 2002A, 5.050%, 10/20/32 1,000 Phoenix Industrial Development Authority, Arizona, 9/10 at 103.00 Aaa 1,089,920 GNMA Collateralized Mortgage Loan Multifamily Housing Revenue Bonds, Camelback Crossings Apartments Project, Series 2000, 6.350%, 9/20/35 - ------------------------------------------------------------------------------------------------------------------------------------ HOUSING/SINGLE FAMILY - 1.4% 320 Pima County Industrial Development Authority, Arizona, 11/10 at 101.00 AAA 336,080 FNMA/GNMA Single Family Mortgage Revenue Bonds, Series 2001A-4, 5.050%, 5/01/17 - ------------------------------------------------------------------------------------------------------------------------------------ INDUSTRIALS - 4.4% 1,000 Yavapai County Industrial Development Authority, Arizona, No Opt. Call BBB 1,046,600 Solid Waste Disposal Revenue Bonds, Waste Management Inc. Project, Series 2003B, 4.450%, 3/01/28 (Alternative Minimum Tax) (Mandatory put 3/01/08) - ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/GENERAL - 11.3% 1,000 Mesa, Arizona, General Obligation Bonds, Series 1999, 7/09 at 100.00 AAA 1,068,650 5.000%, 7/01/17 - FGIC Insured 500 Puerto Rico Public Improvement, General Obligation Bonds, No Opt. Call A- 549,885 Series 2002A, 5.500%, 7/01/29 1,020 Tucson, Arizona, General Obligation Refunding Bonds, 7/07 at 100.00 AA 1,073,417 Series 1997, 5.000%, 7/01/19 - ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/LIMITED - 42.3% 700 Arizona School Facilities Board, School Improvement 7/11 at 100.00 AAA 782,523 Revenue Bonds, Series 2001, 5.500%, 7/01/18 1,000 Arizona State Transportation Board, Highway Revenue Bonds, 7/13 at 100.00 AAA 1,054,110 Series 2003A, 5.000%, 7/01/22 20 PRINCIPAL OPTIONAL CALL MARKET AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE - ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/LIMITED (continued) $ 1,000 Arizona Tourism and Sports Authority, Tax Revenue Bonds, 7/13 at 100.00 Aaa $ 1,095,080 Multipurpose Stadium Facility Project, Series 2003A, 5.375%, 7/01/21 - MBIA Insured 1,180 Marana Municipal Property Corporation, Arizona, Revenue 7/13 at 100.00 AAA 1,231,755 Bonds, Series 2003, 5.000%, 7/01/23 - AMBAC Insured 2,000 Maricopa County Industrial Development Authority, Arizona, 6/07 at 102.00 A 2,119,020 Education Revenue Bonds, Horizon Community Learning Center Project, Series 2000, 6.350%, 6/01/26 - ACA Insured 900 Phoenix Industrial Development, Arizona, Government 3/12 at 100.00 AAA 987,480 Office Lease Revenue Bonds, Capitol Mall LLC II Project, Series 2001, 5.250%, 9/15/16 - AMBAC Insured 2,675 Tempe, Arizona, Excise Tax Revenue Refunding Bonds, 7/13 at 100.00 AA+ 2,821,857 Series 2003, 5.000%, 7/01/21 - ------------------------------------------------------------------------------------------------------------------------------------ U.S. GUARANTEED - 15.9% 500 Maricopa County Industrial Development Authority, Arizona, 9/05 at 101.00 AAA 538,505 Baptist Hospital System Revenue Refunding Bonds, Series 1995, 5.500%, 9/01/16 (Pre-refunded to 9/01/05) - MBIA Insured 1,000 Mesa, Arizona, Utility System Revenue Bonds, Series 2000, 7/09 at 100.00 AAA 1,132,520 5.125%, 7/01/19 (Pre-refunded to 7/01/09) - FGIC Insured 1,350 Puerto Rico Infrastructure Financing Authority, Special 10/10 at 101.00 AAA 1,481,544 Obligation Bonds, Series 2000A, 5.500%, 10/01/40 Salt River Project Agricultural Improvement and Power District, Arizona, Salt River Project Electric System Revenue Refunding Bonds, Series 1997A: 140 5.000%, 1/01/20 (Pre-refunded to 1/01/08) 1/08 at 101.00 AA*** 156,514 430 5.000%, 1/01/20 (Pre-refunded to 1/01/08) 1/08 at 101.00 AA*** 485,229 - ------------------------------------------------------------------------------------------------------------------------------------ UTILITIES - 21.0% 1,500 Arizona Power Authority, Special Obligation Power Resource No Opt. Call AA 1,693,335 Revenue Refunding Crossover Bonds, Hoover Project, Series 2001, 5.250%, 10/01/17 500 Coconino County, Arizona, Pollution Control Revenue 5/04 at 101.00 B- 452,260 Bonds, Nevada Power Company Project, Series 1997B, 5.800%, 11/01/32 (Alternative Minimum Tax) 1,000 Mesa, Arizona, Utility System Revenue Refunding Bonds, No Opt. Call AAA 1,136,050 Series 2002, 5.250%, 7/01/17 - FGIC Insured 350 Puerto Rico Electric Power Authority, Power Revenue Bonds, 7/12 at 101.00 AAA 370,713 Series 2002II, 5.125%, 7/01/26 - FSA Insured 1,000 Salt River Project Agricultural Improvement and Power 1/12 at 101.00 AA 1,096,760 District, Arizona, Electric System Revenue Refunding Bonds, Salt River Project, Series 2002A, 5.250%, 1/01/18 235 Salt River Project Agricultural Improvement and Power 1/08 at 101.00 AA 247,325 District, Arizona, Salt River Project Electric System Revenue Refunding Bonds, Series 1997A, 5.000%, 1/01/20 - ------------------------------------------------------------------------------------------------------------------------------------ WATER AND SEWER - 6.5% 1,500 Phoenix Civic Improvement Corporation, Arizona, Junior 7/12 at 100.00 AAA 1,550,430 Lien Water System Revenue Bonds, Series 2002, 5.000%, 7/01/26 - FGIC Insured - ------------------------------------------------------------------------------------------------------------------------------------ $ 32,425 Total Long-Term Investments (cost $32,831,457) - 145.0% 34,555,945 =============----------------------------------------------------------------------------------------------------------------------- Other Assets Less Liabilities - 5.3% 1,277,799 -------------------------------------------------------------------------------------------------------------------- Preferred Shares, at Liquidation Value - (50.3)% (12,000,000) -------------------------------------------------------------------------------------------------------------------- Net Assets Applicable to Common Shares - 100% $ 23,833,744 ====================================================================================================================
(1) All percentages shown in the Portfolio of Investments are based on net assets applicable to Common shares. * Optional Call Provisions: Dates (month and year) and prices of the earliest optional call or redemption. There may be other call provisions at varying prices at later dates. ** Ratings: Using the higher of Standard & Poor's or Moody's rating. *** Securities are backed by an escrow or trust containing sufficient U.S. Government or U.S. Government agency securities which ensures the timely payment of principal and interest. Such securities are normally considered to be equivalent to AAA rated securities. See accompanying notes to financial statements. 21 Nuveen Arizona Dividend Advantage Municipal Fund 2 (NKR) Portfolio of INVESTMENTS January 31, 2004 (Unaudited)
PRINCIPAL OPTIONAL CALL MARKET AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE - ------------------------------------------------------------------------------------------------------------------------------------ EDUCATION AND CIVIC ORGANIZATIONS - 11.6% $ 510 Arizona State University, Certificates of Participation, 7/12 at 100.00 AAA $ 530,920 Series 2002, 5.125%, 7/01/26 - MBIA Insured 715 Arizona State University, System Revenue Bonds, 7/12 at 100.00 AAA 798,040 Series 2002, 5.750%, 7/01/27 - FGIC Insured 1,250 Glendale Industrial Development Authority, Arizona, Revenue 5/11 at 101.00 BBB+ 1,314,300 Bonds, Midwestern University, Series 2001A, 5.875%, 5/15/31 320 Puerto Rico Industrial, Tourist, Educational, Medical, 2/09 at 101.00 BBB 330,550 and Environmental Control Facilities Financing Authority, Higher Education Revenue Bonds, Ana G. Mendez University System Project, Series 1999, 5.375%, 2/01/19 University of Arizona, Certificates of Participation, Series 2002A: 750 5.500%, 6/01/18 - AMBAC Insured 6/12 at 100.00 AAA 839,812 500 5.125%, 6/01/22 - AMBAC Insured 6/12 at 100.00 AAA 526,000 - ------------------------------------------------------------------------------------------------------------------------------------ HEALTHCARE - 9.9% 735 Arizona Health Facilities Authority, Hospital System 2/12 at 101.00 Ba2 653,202 Revenue Bonds, Phoenix Children's Hospital, Series 2002A, 6.250%, 2/15/21 400 Arizona Health Facilities Authority, Hospital Revenue 7/10 at 101.00 Baa1 444,608 Bonds, Catholic Healthcare West, Series 1999A, 6.625%, 7/01/20 500 Maricopa County Industrial Development Authority, 5/08 at 101.00 AA 513,890 Arizona, Hospital Revenue Bonds, Mayo Clinic Hospital, Series 1998, 5.250%, 11/15/37 1,000 Mesa Industrial Development Authority, Arizona, Revenue 1/10 at 101.00 AAA 1,080,580 Bonds, Discovery Health System, Series 1999A, 5.625%, 1/01/29 - MBIA Insured 1,000 Yavapai County Industrial Development Authority, Arizona, 8/13 at 100.00 Baa2 1,026,570 Hospital Revenue Bonds, Yavapai Regional Medical Center, Series 2003A, 6.000%, 8/01/33 - ------------------------------------------------------------------------------------------------------------------------------------ HOUSING/MULTIFAMILY - 6.8% 1,000 Maricopa County Industrial Development Authority, 10/11 at 105.00 AAA 1,053,280 Arizona, GNMA Collateralized Multifamily Housing Revenue Refunding Bonds, Pine Ridge, Cambridge Court, Cove on 44th and Fountain Place Apartments Projects, Series 2001A-1, 6.000%, 10/20/31 1,425 Phoenix Industrial Development Authority, Arizona, 7/12 at 105.00 AAA 1,515,958 GNMA Collateralized Multifamily Housing Revenue Bonds, Summit Apartments Project, Series 2002, 6.450%, 7/20/32 - ------------------------------------------------------------------------------------------------------------------------------------ HOUSING/SINGLE FAMILY - 0.4% 150 Pima County Industrial Development Authority, Arizona, 11/10 at 101.00 AAA 155,252 FNMA/GNMA Single Family Mortgage Revenue Bonds, Series 2001A-1, 5.350%, 11/01/24 (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ INDUSTRIALS - 2.8% 1,000 Yavapai County Industrial Development Authority, No Opt. Call BBB 1,046,600 Arizona, Solid Waste Disposal Revenue Bonds, Waste Management Inc. Project, Series 2003B, 4.450%, 3/01/28 (Alternative Minimum Tax) (Mandatory put 3/01/08) - ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/GENERAL - 47.0% 1,725 Chandler, Arizona, General Obligation Bonds, 7/12 at 100.00 AA+ 1,858,084 Series 2002, 5.000%, 7/01/17 1,000 Gilbert, Arizona, General Obligation Bonds, Series 2002A, 7/11 at 100.00 AAA 1,069,250 5.000%, 7/01/18 - AMBAC Insured Maricopa County School District 6, Arizona, General Obligation Refunding Bonds, Washington Elementary School, Series 2002A: 1,000 5.375%, 7/01/15 - FSA Insured No Opt. Call AAA 1,153,310 2,000 5.375%, 7/01/16 - FSA Insured No Opt. Call AAA 2,304,140 2,165 Maricopa County Unified School District 69 Paradise Valley, No Opt. Call AAA 2,469,984 Arizona, General Obligation Refunding Bonds, Series 2002A, 5.250%, 7/01/14 - FGIC Insured 1,000 Mesa, Arizona, General Obligation Bonds, Series 2000, No Opt. Call AAA 1,222,670 6.500%, 7/01/11 - FGIC Insured 22 PRINCIPAL OPTIONAL CALL MARKET AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE - ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/GENERAL (continued) $ 1,405 Mesa, Arizona, General Obligation Bonds, Series 2002, No Opt. Call AAA $ 1,620,401 5.375%, 7/01/15 - FGIC Insured Phoenix, Arizona, Various Purpose General Obligation Bonds, Series 2002B: 1,700 5.000%, 7/01/22 7/12 at 100.00 AA+ 1,771,179 250 5.000%, 7/01/27 7/12 at 100.00 AA+ 258,848 1,000 Pinal County Unified School District 43, Apache Junction, No Opt. Call AAA 1,183,850 Arizona, General Obligation Refunding Bonds, Series 2001, 5.750%, 7/01/15 - FGIC Insured 1,500 Scottsdale, Arizona, General Obligation Bonds, 7/11 at 100.00 AAA 1,548,525 Series 2002, 5.000%, 7/01/24 1,090 Tempe, Arizona, General Obligation Bonds, Certificates 7/14 at 100.00 AA+ 1,196,231 of Ownership, Series 2004, 5.000%, 7/01/17 (WI, Settling 2/03/04) - ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/LIMITED - 38.8% Arizona State, Certificates of Participation, Series 2002A: 750 5.000%, 11/01/17 - MBIA Insured 5/12 at 100.00 AAA 803,595 1,000 5.000%, 11/01/18 - MBIA Insured 5/12 at 100.00 AAA 1,065,660 500 5.000%, 11/01/20 - MBIA Insured 5/12 at 100.00 AAA 526,730 1,000 Arizona State Transportation Board, Highway Revenue 7/12 at 100.00 AAA 1,080,040 Bonds, Series 2002B, 5.250%, 7/01/21 670 Goodyear Community Facilities Utility District No. 1, 7/13 at 100.00 A 673,189 Arizona, General Obligation Bonds, Series 2003, 5.350%, 7/15/28 - ACA Insured 1,000 Maricopa County Public Finance Authority, Arizona, Lease 7/11 at 100.00 Aaa 1,130,920 Revenue Bonds, Series 2001, 5.500%, 7/01/15 - AMBAC Insured Maricopa County Stadium District, Arizona, Revenue Refunding Bonds, Series 2002: 840 5.375%, 6/01/18 - AMBAC Insured 6/12 at 100.00 Aaa 921,455 2,645 5.375%, 6/01/19 - AMBAC Insured 6/12 at 100.00 Aaa 2,885,827 1,500 Phoenix Industrial Development, Arizona, Government 3/12 at 100.00 AAA 1,645,800 Office Lease Revenue Bonds, Capitol Mall LLC II Project, Series 2001, 5.250%, 9/15/16 - AMBAC Insured 500 Puerto Rico Highway and Transportation Authority, Highway 7/16 at 100.00 A 537,145 Revenue Bonds, Series 1996Y, 5.500%, 7/01/36 500 Puerto Rico Highway and Transportation Authority, Highway 7/12 at 100.00 AAA 519,475 Revenue Bonds, Series 2002D, 5.000%, 7/01/32 - FSA Insured 1,000 Puerto Rico Public Buildings Authority, Guaranteed 7/12 at 100.00 A- 1,031,690 Government Facilities Revenue Refunding Bonds, Series 2002D, 5.125%, 7/01/24 1,000 Tucson, Arizona, Streets and Highway Junior Lien User 7/10 at 100.00 AAA 1,061,380 Fee Revenue Bonds, Series 1994E, 5.000%, 7/01/18 - FGIC Insured 640 Yuma Municipal Property Corporation, Arizona, Municipal 7/10 at 100.00 AAA 665,056 Facilities Tax Revenue Bonds, Series 2001, 5.000%, 7/01/21 - AMBAC Insured - ------------------------------------------------------------------------------------------------------------------------------------ TRANSPORTATION - 5.5% 1,000 Phoenix Civic Improvement Corporation, Arizona, Senior 7/08 at 101.00 AAA 1,021,420 Lien Airport Revenue Bonds, Series 1998A, 5.000%, 7/01/25 - FSA Insured 1,000 Phoenix Civic Improvement Corporation, Arizona, Senior 7/12 at 100.00 AAA 1,035,940 Lien Airport Revenue Bonds, Series 2002B, 5.250%, 7/01/27 (Alternative Minimum Tax) - FGIC Insured - ------------------------------------------------------------------------------------------------------------------------------------ U.S. GUARANTEED - 8.2% 1,215 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 7/10 at 100.00 AAA 1,439,520 Asset-Backed Bonds, Series 2000, 5.750%, 7/01/12 (Pre-refunded to 7/01/10) 1,500 Puerto Rico Infrastructure Financing Authority, Special 10/10 at 101.00 AAA 1,646,160 Obligation Bonds, Series 2000A, 5.500%, 10/01/40 - ------------------------------------------------------------------------------------------------------------------------------------ UTILITIES - 9.2% 1,115 Arizona Power Authority, Special Obligation Power No Opt. Call AA 1,262,247 Resource Revenue Refunding Crossover Bonds, Hoover Project, Series 2001, 5.250%, 10/01/15 1,000 Mesa, Arizona, Utility System Revenue Bonds, 7/11 at 100.00 AAA 1,050,580 Series 2002, 5.000%, 7/01/20 - FGIC Insured 1,000 Mesa, Arizona, Utility System Revenue Refunding Bonds, No Opt. Call AAA 1,136,050 Series 2002, 5.250%, 7/01/17 - FGIC Insured 23 Nuveen Arizona Dividend Advantage Municipal Fund 2 (NKR) (continued) Portfolio of INVESTMENTS January 31, 2004 (Unaudited) PRINCIPAL OPTIONAL CALL MARKET AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE - ------------------------------------------------------------------------------------------------------------------------------------ WATER AND SEWER - 7.4% $ 500 Maricopa County Industrial Development Authority, 12/07 at 102.00 AAA $ 523,700 Arizona, Water System Improvement Revenue Bonds, Chaparral City Water Company Project, Series 1997A, 5.400%, 12/01/22 (Alternative Minimum Tax) - AMBAC Insured 1,000 Phoenix Civic Improvement Corporation, Arizona, No Opt. Call AAA 1,146,730 Junior Lien Water System Revenue Refunding Bonds, Series 2001, 5.500%, 7/01/22 - FGIC Insured 1,000 Tucson, Arizona, Water System Revenue Refunding 7/12 at 102.00 AAA 1,124,839 Bonds, Series 2001, 5.500%, 7/01/18 - FGIC Insured - ------------------------------------------------------------------------------------------------------------------------------------ $ 50,965 Total Long-Term Investments (cost $52,371,670) - 147.6% 55,421,182 =============----------------------------------------------------------------------------------------------------------------------- Other Assets Less Liabilities - 1.7% 621,612 -------------------------------------------------------------------------------------------------------------------- Preferred Shares, at Liquidation Value - (49.3)% (18,500,000) -------------------------------------------------------------------------------------------------------------------- Net Assets Applicable to Common Shares - 100% $ 37,542,794 ====================================================================================================================
(1) All percentages shown in the Portfolio of Investments are based on net assets applicable to Common shares. * Optional Call Provisions: Dates (month and year) and prices of the earliest optional call or redemption. There may be other call provisions at varying prices at later dates. ** Ratings: Using the higher of Standard & Poor's or Moody's rating. (WI) Security purchased on a when-issued basis. See accompanying notes to financial statements. 24 Nuveen Arizona Dividend Advantage Municipal Fund 3 (NXE) Portfolio of INVESTMENTS January 31, 2004 (Unaudited)
PRINCIPAL OPTIONAL CALL MARKET AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE - ------------------------------------------------------------------------------------------------------------------------------------ CONSUMER STAPLES - 4.2% $ 1,930 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 5/12 at 100.00 BBB $ 1,844,964 Asset-Backed Refunding Bonds, Series 2002, 5.375%, 5/15/33 - ------------------------------------------------------------------------------------------------------------------------------------ EDUCATION AND CIVIC ORGANIZATIONS - 18.6% 2,000 Arizona State University, System Revenue Bonds, 7/12 at 100.00 AAA 2,232,280 Series 2002, 5.750%, 7/01/27 - FGIC Insured 1,000 Arizona Student Loan Acquisition Authority, Student Loan 11/09 at 102.00 Aaa 1,085,050 Revenue Refunding Bonds, Senior Series 1999A1, 5.750%, 5/01/15 (Alternative Minimum Tax) 1,130 Energy Management Services LLC, Arizona State University, 7/12 at 100.00 AAA 1,232,197 Energy Conservation Revenue Bonds, Main Campus Project, Series 2002, 5.250%, 7/01/18 - MBIA Insured 500 Glendale Industrial Development Authority, Arizona, 5/08 at 101.00 BBB+ 512,005 Revenue Bonds, Midwestern University, Series 1998A, 5.375%, 5/15/28 1,000 Tucson Industrial Development Authority, Arizona, 7/12 at 100.00 AAA 1,029,870 Lease Revenue Bonds, University of Arizona - Marshall Foundation Project, Series 2002A, 5.000%, 7/15/32 - AMBAC Insured 2,000 University of Arizona, Certificates of Participation, 6/12 at 100.00 AAA 2,131,340 Series 2002B, 5.125%, 6/01/20 - AMBAC Insured - ------------------------------------------------------------------------------------------------------------------------------------ HEALTHCARE - 15.7% Arizona Health Facilities Authority, Hospital System Revenue Bonds, Phoenix Children's Hospital, Series 1999A: 750 6.125%, 11/15/22 11/09 at 100.00 Ba2 652,980 520 6.250%, 11/15/29 11/09 at 100.00 Ba2 450,991 1,000 Arizona Health Facilities Authority, Hospital System 12/10 at 102.00 BBB 1,093,450 Revenue Bonds, John C. Lincoln Health Network, Series 2000, 6.875%, 12/01/20 300 Arizona Health Facilities Authority, Hospital Revenue 7/10 at 101.00 Baa1 333,456 Bonds, Catholic Healthcare West, Series 1999A, 6.625%, 7/01/20 2,000 Maricopa County Industrial Development Authority, 5/08 at 101.00 AA 2,055,560 Arizona, Hospital Revenue Bonds, Mayo Clinic Hospital, Series 1998, 5.250%, 11/15/37 1,250 Scottsdale Industrial Development Authority, Arizona, 12/11 at 101.00 A3 1,303,388 Hospital Revenue Bonds, Scottsdale Healthcare, Series 2001, 5.800%, 12/01/31 1,000 Yavapai County Industrial Development Authority, Arizona, 8/13 at 100.00 Baa2 1,026,570 Hospital Revenue Bonds, Yavapai Regional Medical Center, Series 2003A, 6.000%, 8/01/33 - ------------------------------------------------------------------------------------------------------------------------------------ Housing/Multifamily - 19.4% 1,750 Maricopa County Industrial Development Authority, 1/18 at 100.00 AAA 1,796,883 Arizona, Multifamily Housing Senior Revenue Bonds, National Voluntary Health Facilities II Project, Series 1998A, 5.100%, 1/01/33 - FSA Insured 2,500 Maricopa County Industrial Development Authority, 10/10 at 105.00 Aaa 2,635,100 Arizona, GNMA Collateralized Multifamily Housing Revenue Bonds, Villas at Augusta Project, Series 2000, 6.500%, 10/20/33 1,545 Phoenix Industrial Development Authority, Arizona, 6/11 at 102.00 Aaa 1,642,011 GNMA Collateralized Multifamily Housing Revenue Bonds, Campaigne Place on Jackson Project, Series 2001, 5.600%, 6/20/21 (Alternative Minimum Tax) 2,460 Phoenix Industrial Development Authority, Arizona, 10/12 at 102.00 Aaa 2,502,853 GNMA Enhanced Mortgage, Loan Multifamily Housing Revenue Bonds, Liberty Cove Apartments, Series 2002A, 4.950%, 10/20/22 (Alternative Minimum Tax) 25 Nuveen Arizona Dividend Advantage Municipal Fund 3 (NXE) (continued) Portfolio of INVESTMENTS January 31, 2004 (Unaudited) PRINCIPAL OPTIONAL CALL MARKET AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE - ------------------------------------------------------------------------------------------------------------------------------------ INDUSTRIALS - 3.6% $ 1,500 Yavapai County Industrial Development Authority, Arizona, No Opt. Call BBB $ 1,569,900 Solid Waste Disposal Revenue Bonds, Waste Management Inc. Project, Series 2003B, 4.450%, 3/01/28 (Alternative Minimum Tax) (Mandatory put 3/01/08) - ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/GENERAL - 26.4% 660 Chandler, Arizona, General Obligation Bonds, 7/12 at 100.00 AA+ 707,494 Series 2002, 5.000%, 7/01/18 2,250 DC Ranch Community Facilities District, Scottsdale, 7/13 at 100.00 Aaa 2,333,565 Arizona, General Obligation Bonds, Series 2002, 5.000%, 7/15/27 - AMBAC Insured 1,930 Glendale, Arizona, General Obligation Refunding Bonds, 7/11 at 100.00 AA 2,043,388 Series 2002, 5.000%, 7/01/19 1,000 Maricopa County School District 11, Peoria, Arizona, No Opt. Call AAA 1,114,730 General Obligation Refunding Bonds, Series 2002, 5.000%, 7/01/15 - FSA Insured 765 Maricopa County Unified School District 69, Paradise No Opt. Call AAA 854,276 Valley, Arizona, General Obligation Refunding Bonds, Series 2002, 5.000%, 7/01/15 - FSA Insured 1,000 Maricopa County Unified School District 95, Queen Creek No Opt. Call Aaa 1,117,490 Arizona, General Obligation Bonds, Series 2002, 5.000%, 7/01/14 - FGIC Insured 1,500 Puerto Rico Public Improvement, General Obligation No Opt. Call AAA 1,744,200 Refunding Bonds, Series 2002A, 5.500%, 7/01/20 - MBIA Insured 1,150 Scottsdale, Arizona, General Obligation Refunding Bonds, No Opt. Call AAA 1,288,610 Series 2002, 5.000%, 7/01/16 440 Tucson, Arizona, General Obligation Bonds, Series 2001B, 7/11 at 100.00 AA 462,255 5.000%, 7/01/20 - ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/LIMITED - 29.8% 2,000 Arizona School Facilities Board, School Improvement 7/12 at 100.00 AAA 2,168,380 Revenue Bonds, Series 2002, 5.250%, 7/01/20 3,000 Arizona State Transportation Board, Highway Revenue 7/12 at 102.00 AAA 3,332,670 Refunding Bonds, Series 2002A, 5.250%, 7/01/18 1,000 Arizona State Transportation Board, Highway Revenue Bonds, 7/12 at 100.00 AAA 1,074,880 Series 2002B, 5.250%, 7/01/22 2,660 Arizona Tourism and Sports Authority, Tax Revenue Bonds, 7/13 at 100.00 Aaa 2,925,973 Multipurpose Stadium Facility Project, Series 2003A, 5.375%, 7/01/20 - MBIA Insured 800 Goodyear Community Facilities Utility District No. 1, 7/13 at 100.00 A 803,808 Arizona, General Obligation Bonds, Series 2003, 5.350%, 7/15/28 - ACA Insured 2,770 Tempe, Arizona, Excise Tax Revenue Refunding Bonds, 7/13 at 100.00 AA+ 2,904,567 Series 2003, 5.000%, 7/01/22 - ------------------------------------------------------------------------------------------------------------------------------------ TELECOMMUNICATION SERVICES - 1.3% 530 Industrial Development Authority, Yavapai County, Arizona, 6/07 at 101.00 BBB 553,103 Revenue Bonds, Citizens Utilities Company Project, Series 1998, 5.450%, 6/01/33 (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ TRANSPORTATION - 13.7% Phoenix, Arizona, Civic Improvement Corporation, Senior Lien Airport Revenue Bonds, Series 2002B: 1,000 5.750%, 7/01/16 (Alternative Minimum Tax) - FGIC Insured 7/12 at 100.00 AAA 1,110,800 2,300 5.250%, 7/01/21 (Alternative Minimum Tax) - FGIC Insured 7/12 at 100.00 AAA 2,404,121 2,450 Tucson Airport Authority Inc., Arizona, Revenue Refunding 6/11 at 100.00 AAA 2,514,117 Bonds, Series 2001B, 5.000%, 6/01/20 (Alternative Minimum Tax) - AMBAC Insured - ------------------------------------------------------------------------------------------------------------------------------------ UTILITIES - 6.4% 1,750 Maricopa County, Arizona, Pollution Control Corporation 11/12 at 100.00 AAA 1,813,105 Revenue Bonds, Arizona Public Service Company Palo Verde Project, Series 2002A, 5.050%, 5/01/29 - AMBAC Insured 1,000 Salt River Project Agricultural Improvement and Power 1/13 at 100.00 AA 1,032,280 District, Arizona, Electric System Revenue Bonds, Salt River Project, Series 2002B, 5.000%, 1/01/31 26 PRINCIPAL OPTIONAL CALL MARKET AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE - ------------------------------------------------------------------------------------------------------------------------------------ WATER AND SEWER - 7.2% $ 1,000 Phoenix Civic Improvement Corporation, Arizona, 7/11 at 100.00 AAA $ 1,053,850 Junior Lien Wastewater System Revenue Refunding Bonds, Series 2001, 5.125%, 7/01/21 - FGIC Insured 2,000 Phoenix Civic Improvement Corporation, Arizona, Junior 7/12 at 100.00 AAA 2,129,936 Lien Water System Revenue Bonds, Series 2002, 5.000%, 7/01/18 - FGIC Insured - ------------------------------------------------------------------------------------------------------------------------------------ $ 61,090 Total Long-Term Investments (cost $63,369,767) - 146.3% 64,618,446 =============----------------------------------------------------------------------------------------------------------------------- Other Assets Less Liabilities - 3.5% 1,544,801 -------------------------------------------------------------------------------------------------------------------- Preferred Shares, at Liquidation Value - (49.8)% (22,000,000) -------------------------------------------------------------------------------------------------------------------- Net Assets Applicable to Common Shares - 100% $ 44,163,247 ====================================================================================================================
(1) All percentages shown in the Portfolio of Investments are based on net assets applicable to Common shares. * Optional Call Provisions: Dates (month and year) and prices of the earliest optional call or redemption. There may be other call provisions at varying prices at later dates. ** Ratings: Using the higher of Standard & Poor's or Moody's rating. See accompanying notes to financial statements. 27 Nuveen Texas Quality Income Municipal Fund (NTX) Portfolio of INVESTMENTS January 31, 2004 (Unaudited)
PRINCIPAL OPTIONAL CALL MARKET AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE - ------------------------------------------------------------------------------------------------------------------------------------ CONSUMER STAPLES - 1.9% $ 2,895 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 5/12 at 100.00 BBB $ 2,767,446 Asset-Backed Refunding Bonds, Series 2002, 5.375%, 5/15/33 - ------------------------------------------------------------------------------------------------------------------------------------ EDUCATION AND CIVIC ORGANIZATIONS - 9.1% 205 Brazos Higher Education Authority, Inc., Texas, Student No Opt. Call Aa2 211,993 Loan Revenue Refunding Bonds, Subordinate Series 1993A-2, 6.800%, 12/01/04 (Alternative Minimum Tax) 1,000 Georgetown Higher Education Finance Corporation, 2/04 at 100.00 Aa3 1,001,690 Texas, Higher Education Revenue Bonds, Southwestern University Project, Series 1994, 6.300%, 2/15/14 1,000 Raven Hills Higher Education Corporation, Texas, Student 8/11 at 100.00 Aaa 1,046,270 Housing Revenue Bonds, Cardinal Village LLC - Lamar University Project, Series 2001A, 5.250%, 8/01/24 - MBIA Insured 2,000 Texas State University System, Financing Revenue No Opt. Call AAA 2,102,760 Refunding Bonds, Series 2002, 5.000%, 3/15/20 - FSA Insured 1,445 Tyler Junior College District, Smith and Van Zanlt 8/04 at 100.00 AAA 1,479,680 Counties, Texas, Combined Fee Improvement Revenue Refunding Bonds, Series 1994, 5.900%, 8/15/13 - MBIA Insured 2,330 Universal City Education Facilities Corporation, Texas, 3/11 at 102.00 A- 2,401,624 Revenue Bonds, Wayland Baptist University Project, Series 2001, 5.625%, 3/01/26 5,000 University of North Texas, Financing System Revenue Bonds, 4/12 at 100.00 AAA 5,167,950 Series 2001, 5.000%, 4/15/24 - FSA Insured - ------------------------------------------------------------------------------------------------------------------------------------ ENERGY - 2.9% 3,000 Gulf Coast Waste Disposal Authority, Texas, Waste 4/08 at 102.00 BBB 2,978,700 Disposal Revenue Bonds, Valero Energy Corporation Project, Series 1998, 5.600%, 4/01/32 (Alternative Minimum Tax) 1,300 Gulf Coast Waste Disposal Authority, Texas, Waste 4/09 at 101.00 BBB 1,299,883 Disposal Revenue Bonds, Valero Energy Corporation Project, Series 1999, 5.700%, 4/01/32 (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ HEALTHCARE - 20.0% 3,500 Abilene Health Facilities Development Corporation, Texas, 9/05 at 102.00 AAA 3,781,470 Hospital Revenue Refunding and Improvement Bonds, Hendrick Medical Center Project, Series 1995C, 6.150%, 9/01/25 - MBIA Insured Gregg County Health Facilities Development Corporation, Texas, Hospital Revenue Bonds, Good Shepherd Medical Center Project, Series 2000: 2,000 6.875%, 10/01/20 - RAAI Insured 10/10 at 101.00 AA 2,380,340 3,250 6.375%, 10/01/25 - RAAI Insured 10/10 at 101.00 AA 3,714,458 1,500 Harris County Health Facilities Development Corporation, 8/11 at 100.00 AA- 1,571,055 Texas, Revenue Bonds, St. Luke's Episcopal Hospital, Series 2001A, 5.500%, 2/15/21 2,000 Harris County Health Facilities Development Corporation, 6/11 at 101.00 A 2,154,720 Texas, Hospital Revenue Bonds, Memorial Hermann Healthcare System, Series 2001A, 6.375%, 6/01/29 5,750 Midland County Hospital District, Texas, Hospital Revenue No Opt. Call BBB 3,944,443 Bonds, Series 1992, 0.000%, 6/01/11 2,000 North Central Texas Health Facilities Development 5/11 at 100.00 AA- 2,024,100 Corporation, Hospital Revenue Bonds, Baylor Health Care System Project, Series 2001A, 5.125%, 5/15/29 1,760 Parker County Hospital District, Texas, Hospital Revenue 8/09 at 102.00 BBB- 1,776,878 Bonds, Campbell Health System, Series 1999, 6.250%, 8/15/19 1,050 Tarrant County Health Facilities Development Corporation, 11/08 at 101.00 A 1,079,778 Texas, Hospital Revenue Bonds, Adventist Health System/ Sunbelt Obligated Group, Series 1998, 5.375%, 11/15/20 3,500 Tarrant County Health Facilities Development Corporation, 11/10 at 101.00 A 3,889,795 Texas, Hospital Revenue Bonds, Adventist Health System/ Sunbelt Obligated Group, Series 2000, 6.625%, 11/15/20 2,000 Tom Green County Health Facilities Development 5/11 at 101.00 Baa3 2,115,460 Corporation, Texas, Hospital Revenue Bonds, Shannon Health System Project, Series 2001, 6.750%, 5/15/21 1,000 Tyler Health Facilities Development Corporation, Texas, 7/12 at 100.00 Baa1 1,027,860 Hospital Revenue Bonds, Mother Frances Hospital Regional Health Center, Series 2001, 6.000%, 7/01/31 28 PRINCIPAL OPTIONAL CALL MARKET AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE - ------------------------------------------------------------------------------------------------------------------------------------ HOUSING/MULTIFAMILY - 8.3% Bexar County Housing Finance Corporation, Texas, Multifamily Housing Revenue Bonds, Waters at Northern Hills Apartments Project, Series 2001A: $ 2,000 6.000%, 8/01/31 - MBIA Insured 8/11 at 102.00 Aaa $ 2,092,060 750 6.050%, 8/01/36 - MBIA Insured 8/11 at 102.00 Aaa 785,925 Grand Prairie Housing Finance Corporation, Texas, GNMA Multifamily Housing Revenue Bonds, Landings of Carrier Project, Series 2000A: 1,000 6.650%, 9/20/22 9/10 at 105.00 AAA 1,106,550 2,030 6.750%, 9/20/28 9/10 at 105.00 AAA 2,248,022 5,668 Houston Housing Finance Corporation, Texas, GNMA 9/11 at 105.00 Aaa 6,011,254 Collateralized Mortgage Multifamily Housing Revenue Bonds, RRG Apartments Project, Series 2001, 6.250%, 9/20/35 - ------------------------------------------------------------------------------------------------------------------------------------ HOUSING/SINGLE FAMILY - 6.0% 2,800 El Paso Housing Finance Corporation, Texas, GNMA 4/11 at 106.75 AAA 2,920,120 Collateralized Single Family Mortgage Revenue Bonds, Series 2001A-3, 6.180%, 4/01/33 270 Galveston Property Finance Authority, Inc., Texas, Single 3/04 at 101.00 A3 273,494 Family Mortgage Revenue Bonds, Series 1991A, 8.500%, 9/01/11 455 Houston Housing Finance Corporation, Texas, Single 6/04 at 101.00 AAA 458,085 Family Mortgage Revenue Refunding Bonds, Series 1993A, 5.950%, 12/01/10 - FSA Insured 1,745 Texas Department of Housing, Single Family Mortgage 9/06 at 102.00 AAA 1,839,474 Revenue Bonds, Series 1996E, 6.000%, 9/01/17 - MBIA Insured 2,995 Texas Department of Housing and Community Affairs, 3/12 at 100.00 AAA 3,104,527 Single Family Mortgage Bonds, Series 2002B, 5.550%, 9/01/33 (Alternative Minimum Tax) - MBIA Insured 235 Victoria Housing Finance Corporation, Texas, FNMA Single No Opt. Call Aaa 240,370 Family Mortgage Revenue Refunding Bonds, Series 1995, 8.125%, 1/01/11 - ------------------------------------------------------------------------------------------------------------------------------------ LONG-TERM CARE - 7.2% Bell County Health Facilities Development Corporation, Texas, Retirement Facility Revenue Bonds, Buckner Retirement Services, Inc. Obligated Group Project, Series 1998: 3,400 5.250%, 11/15/19 11/08 at 101.00 A- 3,433,558 5,000 5.250%, 11/15/28 11/08 at 101.00 A- 4,874,400 2,000 Tarrant County Health Facilities Development Corporation, 1/08 at 105.00 AAA 2,257,540 Texas, Tax-Exempt Mortgage Revenue Bonds, South Central Nursing Homes Inc. Project, Series 1997A, 6.000%, 1/01/37 - MBIA Insured - ------------------------------------------------------------------------------------------------------------------------------------ MATERIALS - 5.5% 4,500 Cass County Industrial Development Corporation, Texas, 3/10 at 101.00 BBB 4,883,985 Environmental Improvement Revenue Bonds, International Paper Company Project, Series 2000A, 6.600%, 3/15/24 (Alternative Minimum Tax) 3,000 Guadalupe-Blanco River Authority, Texas, Sewage and Solid 4/06 at 102.00 AA- 3,269,310 Waste Disposal Facility Bonds, E.I. DuPont de Nemours and Company Project, Series 1996, 6.400%, 4/01/26 (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/GENERAL - 34.3% 4,130 Coppell Independent School District, Dallas County, 8/09 at 75.34 AAA 2,575,675 Texas, Unlimited Tax School Building and Refunding Bonds, Series 1992, 0.000%, 8/15/14 - MBIA Insured 1,450 Donna Independent School District, Hidalgo County, 2/11 at 100.00 AAA 1,683,406 Texas, Unlimited Tax School Building Bonds, Series 2000, 6.000%, 2/15/17 1,750 El Paso County, Texas, Certificates of Obligation, 2/12 at 100.00 AAA 1,828,278 Series 2001, 5.000%, 2/15/21 - FSA Insured 5,000 Grand Prairie Independent School District, Dallas County, 2/13 at 100.00 AAA 5,194,900 Texas, General Obligation Bonds, Series 2003, 5.125%, 2/15/31 - FSA Insured 2,000 Harlingen Independent School District, Cameron County, 8/09 at 100.00 AAA 2,194,500 Texas, Unlimited Tax School Building Bonds, Series 1999, 5.650%, 8/15/29 2,000 Harris County, Texas, Tax and Revenue Certificates 8/11 at 100.00 AA+ 2,052,000 of Obligation, Series 2001, 5.000%, 8/15/27 Houston Community College, Texas, Limited Tax General Obligation Bonds, Series 2003: 2,500 5.000%, 2/15/20 - AMBAC Insured 2/13 at 100.00 AAA 2,640,450 2,235 5.000%, 2/15/21 - AMBAC Insured 2/13 at 100.00 AAA 2,345,163 1,500 Judson Independent School District, Bexar County, Texas, 2/11 at 100.00 Aaa 1,588,635 General Obligation Refunding Bonds, Series 2002, 5.250%, 2/01/21 29 Nuveen Texas Quality Income Municipal Fund (NTX) (continued) Portfolio of INVESTMENTS January 31, 2004 (Unaudited) PRINCIPAL OPTIONAL CALL MARKET AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE - ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/GENERAL (continued) $ 2,600 Klein Independent School District, Harris County, Texas, 8/09 at 100.00 AAA $ 2,757,066 Unlimited Tax Schoolhouse Bonds, Series 1999A, 5.000%, 8/01/18 5,220 Leander Independent School District Williamson & Travis 8/09 at 46.74 AAA 1,970,550 Counties, Texas, Unlimited Tax School Building and Refunding Bonds, Series 2000, 0.000%, 8/15/21 1,545 Montgomery County, Texas, General Obligation Refunding 9/07 at 72.39 AAA 964,111 Bonds, Series 1997, 0.000%, 3/01/14 - MBIA Insured 2,000 Northside Independent School District Bexar County, 8/10 at 100.00 AAA 2,254,380 Texas, Unlimited Tax School Building and Refunding Bonds, Series 2000, 5.875%, 8/15/25 500 Puerto Rico Public Improvement, General Obligation Bonds, No Opt. Call A- 549,885 Series 2002A, 5.500%, 7/01/29 1,825 Socorro Independent School District, El Paso County, 2/06 at 100.00 Aaa 1,945,249 Texas, General Obligation Bonds, Series 1996, 5.750%, 2/15/21 1,440 South Texas Community College District, General Obligation 8/12 at 100.00 AAA 1,616,659 Bonds, Series 2002, 5.500%, 8/15/17 - AMBAC Insured 2,000 Texas State, General Obligation Bonds, Veterans Land Board, 12/04 at 100.00 Aa1 2,072,180 Series 1994, 6.400%, 12/01/24 (Alternative Minimum Tax) 2,000 Texas State, General Obligation Bonds, Water Financial 8/11 at 100.00 Aa1 2,105,420 Assistance Program, Series 2001, 5.250%, 8/01/23 1,500 Texas State Public Finance Authority, General Obligation 10/12 at 100.00 Aa1 1,603,800 Refunding Bonds, Series 2002, 5.000%, 10/01/18 1,795 United Independent School District, Webb County, Texas, 8/12 at 100.00 AAA 1,968,666 Unlimited Tax School Building Bonds, Series 2000, 5.375%, 8/15/18 5,290 Weslaco Independent School District, Hidalgo County, 2/10 at 100.00 Aaa 5,702,356 Texas, General School Building Obligation Bonds, Series 2000, 5.500%, 2/15/25 West Texas Independent School District, McLennan and Hill Counties, Unlimited Tax School Building and Refunding Bonds, Series 1998: 1,000 0.000%, 8/15/22 8/13 at 61.20 AAA 374,390 1,000 0.000%, 8/15/24 8/13 at 54.88 AAA 331,350 1,800 Williamson County, Texas, General Obligation Road 2/12 at 100.00 AAA 2,025,684 Bonds, Series 2002, 5.500%, 2/15/16 - FSA Insured - ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/LIMITED - 12.6% 4,500 Austin, Texas, Hotel Occupancy Tax Subordinate Lien 11/09 at 100.00 AAA 5,037,345 Revenue Refunding Bonds, Series 1999, 5.800%, 11/15/29 - AMBAC Insured 1,275 Copperas Cove, Texas, Certificates of Obligation, 8/12 at 100.00 AAA 1,324,814 Series 2003, 5.000%, 8/15/23 - MBIA Insured 2,305 Corpus Christi, Texas, Certificates of Obligation, Limited 9/12 at 100.00 AAA 2,530,360 Tax and Hotel Occupancy Tax Revenue Bonds, Series 2002, 5.500%, 9/01/21 - FSA Insured 2,250 Harris County-Houston Sports Authority, Texas, Senior 11/11 at 100.00 AAA 2,335,748 Lien Revenue Bonds, Series 2001G, 5.250%, 11/15/22 - MBIA Insured 1,000 Laredo, Texas, Sports Venue Sales Tax Revenue Bonds, 3/09 at 100.00 AAA 1,051,230 Series 2001, 5.300%, 3/15/26 - FGIC Insured 1,255 Pasadena, Texas, Certificates of Obligation, Series 2002, 4/11 at 100.00 AAA 1,295,549 5.125%, 4/01/24 - FGIC Insured 4,580 San Antonio, Texas, Hotel Occupancy Tax Revenue Bonds, 8/06 at 102.00 AAA 5,037,634 Henry B. Gonzalez Convention Center Project, Series 1996, 5.700%, 8/15/26 - FGIC Insured - ------------------------------------------------------------------------------------------------------------------------------------ TRANSPORTATION - 6.4% 1,000 Austin, Texas, Airport System Prior Lien Revenue Bonds, 11/13 at 100.00 AAA 1,099,970 Series 2003, 5.250%, 11/15/16 - MBIA Insured 2,600 Dallas-Fort Worth International Airport Facility Improvement 11/09 at 101.00 CCC 1,898,104 Corporation, Texas, Revenue Bonds, American Airlines, Inc., Series 1999, 6.375%, 5/01/35 (Alternative Minimum Tax) 1,000 Harris County, Texas, Toll Road Senior Lien Revenue Refunding 8/04 at 102.00 AAA 1,036,420 Bonds, Series 1994, 5.375%, 8/15/20 - FGIC Insured 30 PRINCIPAL OPTIONAL CALL MARKET AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE - ------------------------------------------------------------------------------------------------------------------------------------ TRANSPORTATION (continued) $ 2,000 Houston, Texas, Airport System Subordinate Lien Revenue 7/10 at 100.00 AAA $ 2,106,400 Bonds, Series 2000A, 5.625%, 7/01/30 (Alternative Minimum Tax) - FSA Insured 3,000 Texas Turnpike Authority, Central Texas Turnpike System 8/12 at 100.00 AAA 3,233,220 First Tier Revenue Bonds, Series 2002A, 5.500%, 8/15/39 - AMBAC Insured - ------------------------------------------------------------------------------------------------------------------------------------ U.S. GUARANTEED - 9.0% 195 Abilene Housing Development Corporation, Texas, No Opt. Call N/R*** 217,454 Section 8 First Lien Revenue Bonds, Abilene East Apartments, Series 1978, 7.000%, 7/01/08 1,000 Caddo Mills Independent School District, Hunt County, 2/05 at 100.00 N/R*** 1,054,750 Texas, General Obligation Unlimited Tax School Building and Refunding Bonds, Series 1995, 6.375%, 8/15/25 (Pre-refunded to 2/15/05) 575 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 7/10 at 100.00 AAA 643,741 Asset-Backed Bonds, Series 2000, 5.750%, 7/01/20 (Pre-refunded to 7/01/10) 1,185 Fort Bend County Levee Improvement District 11, Texas, 9/04 at 100.00 AAA 1,225,989 Unlimited Tax Levee Improvement Bonds, Series 1994, 6.900%, 9/01/17 (Pre-refunded to 9/01/04) - MBIA Insured 1,450 Galveston Industrial Development Corporation, Texas, 9/05 at 100.00 AAA 1,553,110 Sales Tax Revenue Bonds, Series 1995, 5.750%, 9/01/15 (Pre-refunded to 9/01/05) - AMBAC Insured 800 Laredo, Webb County, Texas, Waterworks System Combined 8/04 at 100.00 AAA 819,952 Tax and Revenue Certificates of Obligation, Series 1994, 5.625%, 8/15/11 (Pre-refunded to 8/15/04) - MBIA Insured 1,000 North Central Texas Health Facilities Development No Opt. Call AAA 1,155,570 Corporation, Hospital Revenue Bonds, Presbyterian Health Care System Project, Series 1996B, 5.750%, 6/01/26 - MBIA Insured 2,500 Retama Development Corporation, Texas, Special Facilities No Opt. Call AAA 3,759,050 Revenue Bonds, Retama Park Racetrack Project, Series 1993, 8.750%, 12/15/17 665 San Antonio, Texas, Water System Revenue Refunding No Opt. Call AAA 787,254 Bonds, Series 1992, 6.500%, 5/15/10 - MBIA Insured 2,000 University of Houston, Texas, Consolidated Revenue 2/05 at 100.00 AAA 2,101,100 Bonds, Series 1995, 6.000%, 2/15/17 (Pre-refunded to 2/15/05) - FGIC Insured - ------------------------------------------------------------------------------------------------------------------------------------ UTILITIES - 9.7% 2,560 Brazos River Authority, Texas, Pollution Control Revenue 4/13 at 101.00 BBB 2,914,074 Refunding Bonds, TXU Electric Company Project, Series 1999C, 7.700%, 3/01/32 (Alternative Minimum Tax) 2,500 Brazos River Authority, Texas, Revenue Refunding Bonds, 4/09 at 101.00 BBB- 2,485,200 Reliant Energy, Incorporated Project, Series 1999A, 5.375%, 4/01/19 2,000 Harris County Health Facilities Development Corporation, 2/10 at 100.00 AAA 2,222,860 Texas, Thermal Utility Revenue Bonds, TECO Project, Series 2000, 5.750%, 2/15/15 (Alternative Minimum Tax) - AMBAC Insured 1,500 Matagorda County Navigation District 1, Texas, Pollution 7/04 at 101.00 AAA 1,534,920 Control Revenue Refunding Bonds, Central Power and Light Company Project, Series 1993, 6.000%, 7/01/28 - MBIA Insured 1,000 Matagorda County Navigation District 1, Texas, Revenue 5/09 at 101.00 BBB- 1,001,930 Refunding Bonds, Reliant Energy Project, Series 1999B, 5.950%, 5/01/30 (Alternative Minimum Tax) 2,000 Sabine River Authority, Texas, Pollution Control Revenue No Opt. Call BBB 2,154,620 Refunding Bonds, TXU Electric Company Project, Series 2001A, 5.500%, 5/01/22 (Mandatory put 11/01/11) 1,750 San Antonio, Texas, Electric and Gas System Revenue 2/12 at 100.00 AA+ 1,897,823 Refunding Bonds, Series 2002, 5.375%, 2/01/20 - ------------------------------------------------------------------------------------------------------------------------------------ WATER AND SEWER - 11.2% 3,500 Houston, Texas, Water and Sewer System Junior Lien 12/12 at 100.00 AAA 3,599,225 Revenue Refunding Bonds, Series 2002A, 5.000%, 12/01/30 - FSA Insured 5,275 Houston, Texas, Water and Sewer System Junior Lien 12/10 at 100.00 AAA 5,522,661 Revenue Refunding Bonds, Series 2000B, 5.250%, 12/01/30 - FGIC Insured 800 Houston, Texas, Water and Sewer System Junior Lien 12/07 at 101.00 AAA 844,328 Revenue Refunding Bonds, Series 1997A, 5.375%, 12/01/27 - FGIC Insured 31 Nuveen Texas Quality Income Municipal Fund (NTX) (continued) Portfolio of INVESTMENTS January 31, 2004 (Unaudited) PRINCIPAL OPTIONAL CALL MARKET AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE - ------------------------------------------------------------------------------------------------------------------------------------ WATER AND SEWER (continued) $ 3,500 Houston, Texas, Water and Sewer System Junior Lien 12/11 at 100.00 AAA $ 3,912,090 Revenue Refunding Bonds, Series 2001A, 5.500%, 12/01/17 - FSA Insured 1,000 San Antonio, Texas, Water System Senior Lien Revenue 5/12 at 100.00 AAA 1,028,220 Refunding Bonds, Series 2002, 5.000%, 5/15/28 - FSA Insured 1,500 Texas Water Development Board, State Revolving Fund 7/09 at 100.00 AAA 1,643,413 Senior Lien Revenue Bonds, Series 1999A, 5.500%, 7/15/21 - ------------------------------------------------------------------------------------------------------------------------------------ $ 208,433 Total Long-Term Investments (cost $197,135,949) - 144.2% 212,127,908 - ------------------------------------------------------------------------------------------------------------------------------------ SHORT-TERM INVESTMENTS - 0.3% 500 Puerto Rico Government Development Bank, Adjustable A-1 500,000 Refunding Bonds, Variable Rate Demand Obligations, Series 1985, 0.900%, 12/01/15 - MBIA Insured+ - ------------------------------------------------------------------------------------------------------------------------------------ $ 500 Total Short-Term Investments (cost $500,000) 500,000 =============----------------------------------------------------------------------------------------------------------------------- Total Investments (cost $197,635,949) - 144.5% 212,627,908 -------------------------------------------------------------------------------------------------------------------- Other Assets Less Liabilities - 2.4% 3,559,586 -------------------------------------------------------------------------------------------------------------------- Preferred Shares, at Liquidation Value - (46.9)% (69,000,000) -------------------------------------------------------------------------------------------------------------------- Net Assets Applicable to Common Shares - 100% $ 147,187,494 ====================================================================================================================
(1) All percentages shown in the Portfolio of Investments are based on net assets applicable to Common shares. * Optional Call Provisions: Dates (month and year) and prices of the earliest optional call or redemption. There may be other call provisions at varying prices at later dates. ** Ratings: Using the higher of Standard & Poor's or Moody's rating. *** Securities are backed by an escrow or trust containing sufficient U.S. Government or U.S. Government agency securities which ensures the timely payment of principal and interest. Such securities are normally considered to be equivalent to AAA rated securities. N/R Investment is not rated. + Security has a maturity of more than one year, but has variable rate and demand features which qualify it as a short-term security. The rate disclosed is that currently in effect. This rate changes periodically based on market conditions or a specified market index. See accompanying notes to financial statements. 32 Statement of ASSETS AND LIABILITIES January 31, 2004 (Unaudited)
ARIZONA ARIZONA ARIZONA ARIZONA TEXAS PREMIUM DIVIDEND DIVIDEND DIVIDEND QUALITY INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3 INCOME (NAZ) (NFZ) (NKR) (NXE) (NTX) - ----------------------------------------------------------------------------------------------------------------------------------- ASSETS Investments, at market value (cost $86,763,422, $32,831,457, $52,371,670, $63,369,767 and $197,635,949, respectively) $91,764,254 $34,555,945 $55,421,182 $64,618,446 $212,627,908 Cash 1,615,472 955,878 1,442,824 84,025 253,335 Receivables: Interest 769,237 344,824 413,238 502,914 3,511,669 Investments sold -- -- -- 1,000,000 -- Other assets 1,315 1,963 3,585 794 1,166 - ----------------------------------------------------------------------------------------------------------------------------------- Total assets 94,150,278 35,858,610 57,280,829 66,206,179 216,394,078 - ----------------------------------------------------------------------------------------------------------------------------------- LIABILITIES Payable for investments purchased -- -- 1,205,425 -- -- Accrued expenses: Management fees 51,887 10,638 16,712 18,578 118,435 Other 56,628 13,109 14,560 22,544 83,711 Preferred share dividends payable 823 1,119 1,338 1,810 4,438 - ----------------------------------------------------------------------------------------------------------------------------------- Total liabilities 109,338 24,866 1,238,035 42,932 206,584 - ----------------------------------------------------------------------------------------------------------------------------------- Preferred shares, at liquidation value 30,000,000 12,000,000 18,500,000 22,000,000 69,000,000 - ----------------------------------------------------------------------------------------------------------------------------------- Net assets applicable to Common shares $64,040,940 $23,833,744 $37,542,794 $44,163,247 $147,187,494 =================================================================================================================================== Common shares outstanding 4,439,903 1,543,102 2,419,197 3,067,117 9,470,787 =================================================================================================================================== Net asset value per Common share outstanding (net assets applicable to Common shares, divided by Common shares outstanding) $ 14.42 $ 15.45 $ 15.52 $ 14.40 $ 15.54 =================================================================================================================================== NET ASSETS APPLICABLE TO COMMON SHARES CONSIST OF: - ----------------------------------------------------------------------------------------------------------------------------------- Common shares, $.01 par value per share $ 44,399 $ 15,431 $ 24,192 $ 30,671 $ 94,708 Paid-in surplus 61,703,377 21,817,418 34,260,492 43,241,735 134,225,160 Undistributed net investment income 539,144 231,855 78,941 14,433 1,627,109 Accumulated net realized gain (loss) from investments (3,246,812) 44,552 129,657 (372,271) (3,751,442) Net unrealized appreciation of investments 5,000,832 1,724,488 3,049,512 1,248,679 14,991,959 - ----------------------------------------------------------------------------------------------------------------------------------- Net assets applicable to Common shares $64,040,940 $23,833,744 $37,542,794 $44,163,247 $147,187,494 =================================================================================================================================== Authorized shares: Common 200,000,000 Unlimited Unlimited Unlimited Unlimited Preferred 1,000,000 Unlimited Unlimited Unlimited Unlimited ===================================================================================================================================
See accompanying notes to financial statements. 33 Statement of OPERATIONS Six Months Ended January 31, 2004 (Unaudited)
ARIZONA ARIZONA ARIZONA ARIZONA TEXAS PREMIUM DIVIDEND DIVIDEND DIVIDEND QUALITY INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3 INCOME (NAZ) (NFZ) (NKR) (NXE) (NTX) - ----------------------------------------------------------------------------------------------------------------------------------- INVESTMENT INCOME $2,457,451 $ 860,480 $1,306,538 $1,513,759 $ 5,747,331 - ----------------------------------------------------------------------------------------------------------------------------------- EXPENSES Management fees 302,042 114,874 180,464 212,528 688,463 Preferred shares - auction fees 37,845 15,143 23,446 27,752 87,042 Preferred shares - dividend disbursing agent fees 5,042 5,042 5,042 5,042 10,081 Shareholders' servicing agent fees and expenses 2,532 141 373 151 7,664 Custodian's fees and expenses 13,345 4,115 5,692 8,265 30,499 Directors'/Trustees' fees and expenses 1,084 527 948 942 2,666 Professional fees 5,477 4,424 5,392 7,638 6,568 Shareholders' reports - printing and mailing expenses 3,322 524 5,206 1,250 13,746 Stock exchange listing fees 5,616 71 110 141 5,628 Investor relations expense 965 996 2,761 3,420 10,298 Other expenses 5,906 4,329 4,788 5,055 8,056 - ----------------------------------------------------------------------------------------------------------------------------------- Total expenses before custodian fee credit and expense reimbursement 383,176 150,186 234,222 272,184 870,711 Custodian fee credit (5,128) (2,208) (2,704) (2,347) (6,425) Expense reimbursement -- (53,019) (83,291) (104,629) -- - ----------------------------------------------------------------------------------------------------------------------------------- Net expenses 378,048 94,959 148,227 165,208 864,286 - ----------------------------------------------------------------------------------------------------------------------------------- Net investment income 2,079,403 765,521 1,158,311 1,348,551 4,883,045 - ----------------------------------------------------------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENTS Net realized gain (loss) from investments 465,780 82,220 129,794 (300,495) 85,830 Change in net unrealized appreciation (depreciation) of investments 2,966,939 1,492,156 2,235,913 3,208,177 9,037,894 - ----------------------------------------------------------------------------------------------------------------------------------- Net gain from investments 3,432,719 1,574,376 2,365,707 2,907,682 9,123,724 - ----------------------------------------------------------------------------------------------------------------------------------- DISTRIBUTIONS TO PREFERRED SHAREHOLDERS From net investment income (116,083) (42,780) (69,300) (92,479) (305,012) From accumulated net realized gains from investments -- (4,168) (9,227) -- -- - ----------------------------------------------------------------------------------------------------------------------------------- Decrease in net assets applicable to Common shares from distributions to Preferred shareholders (116,083) (46,948) (78,527) (92,479) (305,012) - ----------------------------------------------------------------------------------------------------------------------------------- Net increase in net assets applicable to Common shares from operations $5,396,039 $2,292,949 $3,445,491 $4,163,754 $13,701,757 ===================================================================================================================================
See accompanying notes to financial statements. 34 Statement of CHANGES IN NET ASSETS (Unaudited)
ARIZONA ARIZONA ARIZONA PREMIUM INCOME (NAZ) DIVIDEND ADVANTAGE (NFZ) DIVIDEND ADVANTAGE 2 (NKR) --------------------------- ---------------------------- --------------------------- SIX MONTHS SIX MONTHS SIX MONTHS ENDED YEAR ENDED ENDED YEAR ENDED ENDED YEAR ENDED 1/31/04 7/31/03 1/31/04 7/31/03 1/31/04 7/31/03 - ------------------------------------------------------------------------------------------------------------------------------------ OPERATIONS Net investment income $ 2,079,403 $ 4,313,339 $ 765,521 $ 1,536,065 $ 1,158,311 $ 2,310,487 Net realized gain (loss) from investments 465,780 (3,250,460) 82,220 43,532 129,794 132,780 Change in net unrealized appreciation (depreciation) of investments 2,966,939 649,626 1,492,156 (623,996) 2,235,913 (880,264) Distributions to Preferred Shareholders: From net investment income (116,083) (295,481) (42,780) (100,618) (69,300) (185,421) From accumulated net realized gains from investments -- -- (4,168) (8,316) (9,227) (3,802) - ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets applicable to Common shares from operations 5,396,039 1,417,024 2,292,949 846,667 3,445,491 1,373,780 - ------------------------------------------------------------------------------------------------------------------------------------ DISTRIBUTIONS TO COMMON SHAREHOLDERS From net investment income (2,036,290) (4,059,731) (701,903) (1,357,099) (1,046,243) (2,088,653) From accumulated net realized gains from investments -- -- (64,486) (65,547) (105,537) (28,590) - ------------------------------------------------------------------------------------------------------------------------------------ Decrease in net assets applicable to Common shares from distributions to Common shareholders (2,036,290) (4,059,731) (766,389) (1,422,646) (1,151,780) (2,117,243) - ------------------------------------------------------------------------------------------------------------------------------------ CAPITAL SHARE TRANSACTIONS Common shares: Net proceeds from sale of shares -- -- 1,664 -- -- -- Net proceeds from shares issued to shareholders due to reinvestment of distributions 134,381 313,593 15,111 45,775 13,007 80,623 Preferred shares offering costs -- -- -- 29,976 (1,400) (12,866) - ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets applicable to Common shares from capital share transactions 134,381 313,593 16,775 75,751 11,607 67,757 - ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets applicable to Common shares 3,494,130 (2,329,114) 1,543,335 (500,228) 2,305,318 (675,706) Net assets applicable to Common shares at the beginning of period 60,546,810 62,875,924 22,290,409 22,790,637 35,237,476 35,913,182 - ------------------------------------------------------------------------------------------------------------------------------------ Net assets applicable to Common shares at the end of period $64,040,940 $60,546,810 $23,833,744 $22,290,409 $37,542,794 $35,237,476 ==================================================================================================================================== Undistributed (Over-distribution of) net investment income at the end of period $ 539,144 $ 612,114 $ 231,855 $ 211,017 $ 78,941 $ 36,173 ====================================================================================================================================
See accompanying notes to financial statements. 35 Statement of CHANGES IN NET ASSETS (Unaudited) (continued)
ARIZONA TEXAS DIVIDEND ADVANTAGE 3 (NXE) QUALITY INCOME (NTX) ----------------------------- --------------------------- FOR THE PERIOD 9/25/02 SIX MONTHS (COMMENCEMENT SIX MONTHS ENDED OF OPERATIONS) ENDED YEAR ENDED 1/31/04 THROUGH 7/31/03 1/31/04 7/31/03 - ------------------------------------------------------------------------------------------------------------------------------------ OPERATIONS Net investment income $ 1,348,551 $ 2,008,218 $ 4,883,045 $ 9,977,143 Net realized gain (loss) from investments (300,495) (72,291) 85,830 (3,211,937) Change in net unrealized appreciation (depreciation) of investments 3,208,177 (1,959,498) 9,037,894 (2,256,490) Distributions to Preferred Shareholders: From net investment income (92,479) (166,960) (305,012) (768,750) From accumulated net realized gains from investments -- -- -- (8,765) - ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets applicable to Common shares from operations 4,163,754 (190,531) 13,701,757 3,731,201 - ------------------------------------------------------------------------------------------------------------------------------------ DISTRIBUTIONS TO COMMON SHAREHOLDERS From net investment income (1,232,981) (1,849,401) (4,545,977) (9,027,160) From accumulated net realized gains from investments -- -- -- (100,152) - ------------------------------------------------------------------------------------------------------------------------------------ Decrease in net assets applicable to Common shares from distributions to Common shareholders (1,232,981) (1,849,401) (4,545,977) (9,127,312) - ------------------------------------------------------------------------------------------------------------------------------------ CAPITAL SHARE TRANSACTIONS Common shares: Net proceeds from sale of shares -- 43,742,700 -- -- Net proceeds from shares issued to shareholders due to reinvestment of distributions 1,632 -- 56,605 66,550 Preferred shares offering costs (16,200) (556,001) -- -- - ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets applicable to Common shares from capital share transactions (14,568) 43,186,699 56,605 66,550 - ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets applicable to Common shares 2,916,205 41,146,767 9,212,385 (5,329,561) Net assets applicable to Common shares at the beginning of period 41,247,042 100,275 137,975,109 143,304,670 - ------------------------------------------------------------------------------------------------------------------------------------ Net assets applicable to Common shares at the end of period $44,163,247 $41,247,042 $147,187,494 $137,975,109 ==================================================================================================================================== Undistributed (Over-distribution of) net investment income at the end of period $ 14,433 $ (8,658) $ 1,627,109 $ 1,595,053 ====================================================================================================================================
See accompanying notes to financial statements. 36 Notes to FINANCIAL STATEMENTS (Unaudited) 1. GENERAL INFORMATION AND SIGNIFICANT ACCOUNTING POLICIES The state Funds (the "Funds") covered in this report and their corresponding common share stock exchange symbols are Nuveen Arizona Premium Income Municipal Fund, Inc. (NAZ), Nuveen Arizona Dividend Advantage Municipal Fund (NFZ), Nuveen Arizona Dividend Advantage Municipal Fund 2 (NKR), Nuveen Arizona Dividend Advantage Municipal Fund 3 (NXE) and Nuveen Texas Quality Income Municipal Fund (NTX). Common shares of Arizona Premium Income (NAZ) and Texas Quality Income (NTX) are traded on the New York Stock Exchange while Common shares of Arizona Dividend Advantage (NFZ), Arizona Dividend Advantage 2 (NKR) and Arizona Dividend Advantage 3 (NXE) are traded on the American Stock Exchange. The Funds are registered under the Investment Company Act of 1940, as amended, as closed-end management investment companies. Prior to the commencement of operations of Arizona Dividend Advantage 3 (NXE), the Fund had no operations other than those related to organizational matters, the initial capital contribution of $100,275 by Nuveen Advisory Corp. (the "Adviser"), a wholly owned subsidiary of Nuveen Investments, Inc., and the recording of the organization expenses ($11,500) and its reimbursement by Nuveen Investments, LLC, also a wholly owned subsidiary of Nuveen Investments, Inc. Each Fund seeks to provide current income exempt from both regular federal and designated state income taxes, where applicable, by investing primarily in a diversified portfolio of municipal obligations issued by state and local government authorities within a single state. The following is a summary of significant accounting policies followed by the Funds in the preparation of their financial statements in accordance with accounting principles generally accepted in the United States. Securities Valuation The prices of municipal bonds in each Fund's investment portfolio are provided by a pricing service approved by the Funds' Board of Directors/Trustees. When price quotes are not readily available (which is usually the case for municipal securities), the pricing service establishes fair market value based on yields or prices of municipal bonds of comparable quality, type of issue, coupon, maturity and rating, indications of value from securities dealers, evaluations of anticipated cash flows or collateral and general market conditions. If it is determined that market prices for a security are unavailable or inappropriate, the Board of Directors/Trustees of the Funds, or its designee, may establish a fair value for the security. Temporary investments in securities that have variable rate and demand features qualifying them as short-term securities are valued at amortized cost, which approximates market value. Securities Transactions Securities transactions are recorded on a trade date basis. Realized gains and losses from such transactions are determined on the specific identification method. Securities purchased or sold on a when-issued or delayed delivery basis may have extended settlement periods. The securities so purchased are subject to market fluctuation during this period. The Funds have instructed the custodian to segregate assets with a current value at least equal to the amount of the when-issued and delayed delivery purchase commitments. At January 31, 2004, Arizona Dividend Advantage 2 (NKR)had an outstanding when-issued purchase commitment of $1,205,425. There were no such outstanding purchase commitments in any of the other Funds. 37 Notes to FINANCIAL STATEMENTS (Unaudited) (continued) Investment Income Interest income, which includes the amortization of premiums and accretion of discounts for financial reporting purposes, is recorded on an accrual basis. Income Taxes Each Fund is a separate taxpayer for federal income tax purposes. Each Fund intends to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its net investment income to its share holders. Therefore, no federal income tax provision is required. Furthermore, each Fund intends to satisfy conditions which will enable interest from municipal securities, which is exempt from regular federal and designated state income taxes, where applicable, to retain such tax-exempt status when distributed to shareholders of the Funds. Dividends and Distributions to Common Shareholders Dividends from tax-exempt net investment income are declared monthly. Net realized capital gains and/or market discount from investment transactions, if any, are distributed to shareholders not less frequently than annually. Furthermore, capital gains are distributed only to the extent they exceed available capital loss carryforwards. Distributions to Common shareholders of tax-exempt net investment income, net realized capital gains and/or market discount, if any, are recorded on the ex-dividend date. The amount and timing of distributions are determined in accordance with federal income tax regulations, which may differ from accounting principles generally accepted in the United States. Preferred Shares The Funds have issued and outstanding $25,000 stated value Preferred shares. Each Fund's Preferred shares are issued in one or more Series. The dividend rate on each Series may change every seven days, as set pursuant to a dutch auction process by the auction agent, and is payable at or near the end of each rate period. The number of Preferred shares outstanding, by Series and in total, for each Fund is as follows: ARIZONA ARIZONA ARIZONA ARIZONA TEXAS PREMIUM DIVIDEND DIVIDEND DIVIDEND QUALITY INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3 INCOME (NAZ) (NFZ) (NKR) (NXE) (NTX) - -------------------------------------------------------------------------------- Number of shares: Series M -- -- -- 880 760 Series T -- 480 -- -- -- Series W -- -- 740 -- -- Series TH 1,200 -- -- -- 2,000 - -------------------------------------------------------------------------------- Total 1,200 480 740 880 2,760 ================================================================================ Arizona Dividend Advantage 3 (NXE) issued the Preferred shares listed above on November 15, 2002. 38 Derivative Financial Instruments The Funds may invest in certain derivative financial instruments including futures, forward, swap, and option contracts, and other financial instruments with similar characteristics. Although the Funds are authorized to invest in such financial instruments, and may do so in the future, they did not make any such investments during the six months ended January 31, 2004. Custodian Fee Credit Each Fund has an arrangement with the custodian bank whereby certain custodian fees and expenses are reduced by credits earned on each Fund's cash on deposit with the bank. Such deposit arrangements are an alternative to overnight investments. Offering Costs Nuveen Investments, LLC has agreed to pay all common share offering costs (other than the sales load) that exceed $.03 per Common share for Arizona Dividend Advantage 3 (NXE). Arizona Dividend Advantage 3's (NXE) share of common share offering costs of ($91,800) was recorded as a reduction of the proceeds from the sale of common shares. Costs incurred by Arizona Dividend Advantage 3 (NXE) in connection with its offering of Preferred shares ($572,201) were recorded as a reduction to paid-in surplus. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets applicable to Common shares from operations during the reporting period. Actual results may differ from those estimates. 39 Notes to FINANCIAL STATEMENTS (Unaudited) (continued) 2. FUND SHARES Transactions in Common and Preferred shares were as follows:
ARIZONA PREMIUM ARIZONA DIVIDEND ARIZONA DIVIDEND INCOME (NAZ) ADVANTAGE (NFZ) ADVANTAGE 2 (NKR) ------------------------ ------------------------ ------------------------ SIX MONTHS SIX MONTHS SIX MONTHS ENDED YEAR ENDED ENDED YEAR ENDED ENDED YEAR ENDED 1/31/04 7/31/03 1/31/04 7/31/03 1/31/04 7/31/03 - --------------------------------------------------------------------------------------------------------- Common shares: Shares sold -- -- -- -- -- -- Shares issued to shareholders due to reinvestment of distributions 8,855 19,523 960 2,947 926 5,171 - --------------------------------------------------------------------------------------------------------- 8,855 19,523 960 2,947 926 5,171 ========================================================================================================= Preferred shares sold -- -- -- -- -- -- ========================================================================================================= ARIZONA DIVIDEND TEXAS QUALITY ADVANTAGE 3 (NXE) INCOME (NTX) ------------------------ ------------------------ FOR THE PERIOD 9/25/02 (COMMENCE- MENT OF SIX MONTHS OPERATIONS) SIX MONTHS ENDED THROUGH ENDED YEAR ENDED 1/31/04 7/31/03 1/31/04 7/31/03 - --------------------------------------------------------------------------------------------------------- Common shares: Shares sold -- 3,060,000 -- -- Shares issued to shareholders due to reinvestment of distributions 117 -- 3,899 4,266 - --------------------------------------------------------------------------------------------------------- 117 3,060,000 3,899 4,266 ========================================================================================================= Preferred shares sold -- 880 -- -- =========================================================================================================
40 3. SECURITIES TRANSACTIONS Purchases and sales (including maturities) of investments in long-term municipal securities for the six months ended January 31, 2004, were as follows:
ARIZONA ARIZONA ARIZONA ARIZONA TEXAS PREMIUM DIVIDEND DIVIDEND DIVIDEND QUALITY INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3 INCOME (NAZ) (NFZ) (NKR) (NXE) (NTX) - --------------------------------------------------------------------------------------------------------- Purchases $20,042,871 $3,232,037 $2,845,541 $7,859,985 $13,465,971 Sales and maturities 14,453,605 3,342,455 1,736,760 7,805,644 12,752,790 =========================================================================================================
4. INCOME TAX INFORMATION The following information is presented on an income tax basis. Differences between amounts for financial statement and federal income tax purposes are primarily due to timing differences in recognizing income on taxable market discount securities and timing differences in recognizing certain gains and losses on security transactions. At January 31, 2004, the cost of investments were as follows:
ARIZONA ARIZONA ARIZONA ARIZONA TEXAS PREMIUM DIVIDEND DIVIDEND DIVIDEND QUALITY INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3 INCOME (NAZ) (NFZ) (NKR) (NXE) (NTX) - --------------------------------------------------------------------------------------------------------- Cost of investments $86,745,933 $32,833,383 $52,371,100 $63,367,960 $197,534,223 =========================================================================================================
Gross unrealized appreciation and gross unrealized depreciation of investments at January 31, 2004, were as follows:
ARIZONA ARIZONA ARIZONA ARIZONA TEXAS PREMIUM DIVIDEND DIVIDEND DIVIDEND QUALITY INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3 INCOME (NAZ) (NFZ) (NKR) (NXE) (NTX) - --------------------------------------------------------------------------------------------------------- Gross unrealized: Appreciation $5,575,900 $1,727,740 $3,237,121 $1,472,903 $15,875,848 Depreciation (557,579) (5,178) (187,039) (222,417) (782,163) - --------------------------------------------------------------------------------------------------------- Net unrealized appreciation of investments $5,018,321 $1,722,562 $3,050,082 $1,250,486 $15,093,685 =========================================================================================================
41 Notes to FINANCIAL STATEMENTS (Unaudited) (continued) The tax components of undistributed net investment income and net realized gains at July 31, 2003, the Funds' last fiscal year end, were as follows:
ARIZONA ARIZONA ARIZONA ARIZONA TEXAS PREMIUM DIVIDEND DIVIDEND DIVIDEND QUALITY INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3 INCOME (NAZ) (NFZ) (NKR) (NXE) (NTX) - --------------------------------------------------------------------------------------------------------- Undistributed net tax-exempt income $937,435 $325,194 $208,855 $196,735 $2,271,776 Undistributed net ordinary income * 216 68,563 110,761 -- -- Undistributed net long-term capital gains -- -- 5,120 -- -- =========================================================================================================
* Net ordinary income consists of taxable market discount income and net short-term capital gains, if any. The tax character of distributions paid during the fiscal year ended July 31, 2003, the Funds' last fiscal year end, was designated for purposes of the dividends paid deduction as follows:
ARIZONA ARIZONA ARIZONA ARIZONA TEXAS PREMIUM DIVIDEND DIVIDEND DIVIDEND QUALITY INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3 INCOME (NAZ) (NFZ) (NKR) (NXE) (NTX) - ------------------------------------------------------------------------------------------------------------ Distributions from net tax-exempt income $4,355,548 $1,446,815 $2,277,296 $1,809,880 $9,784,102 Distributions from net ordinary income * -- 2,222 33,393 -- 21,034 Distributions from net long-term capital gains -- 73,795 -- -- 93,585 ============================================================================================================
* Net ordinary income consists of taxable market discount income and net short-term capital gains, if any. At July 31, 2003, the Funds' last fiscal year end, the following Funds had unused capital loss carryforwards available for federal income tax purposes to be applied against future capital gains, if any. If not applied, the carryforwards will expire as follows: ARIZONA TEXAS PREMIUM QUALITY INCOME INCOME (NAZ) (NTX) - -------------------------------------------------------------------------------- Expiration year: 2010 $ 2,164 $ -- 2011 1,436,486 855,431 - -------------------------------------------------------------------------------- Total $1,438,650 $855,431 ================================================================================ The following Funds elected to defer net realized losses from investments incurred from November 1, 2002 through July 31, 2003 ("post-October losses") in accordance with Federal income tax regulations. The following post-October losses are treated as having arisen on the first day of the current fiscal year: ARIZONA ARIZONA ARIZONA TEXAS PREMIUM DIVIDEND DIVIDEND QUALITY INCOME ADVANTAGE ADVANTAGE 3 INCOME (NAZ) (NFZ) (NXE) (NTX) - -------------------------------------------------------------------------------- $2,273,974 $32,396 $71,776 $2,981,841 ================================================================================ 42 5. MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES Under Arizona Premium Income's (NAZ) and Texas Quality Income's (NTX) investment management agreements with the Adviser, each Fund pays an annual management fee, payable monthly, at the rates set forth below, which are based upon the average daily net assets (including net assets attributable to Preferred shares) of each Fund as follows: AVERAGE DAILY NET ASSETS (INCLUDING NET ASSETS ATTRIBUTABLE TOPREFERRED SHARES) MANAGEMENT FEE - -------------------------------------------------------------------------------- For the first $125 million .6500% For the next $125 million .6375 For the next $250 million .6250 For the next $500 million .6125 For the next $1 billion .6000 For the next $3 billion .5875 For net assets over $5 billion .5750 ================================================================================ Under Arizona Dividend Advantage's (NFZ), Arizona Dividend Advantage 2's (NKR) and Arizona Dividend Advantage 3's (NXE) investment management agreements with the Adviser, each Fund pays an annual management fee, payable monthly, at the rates set forth below, which are based upon the average daily net assets (including net assets attributable to Preferred shares) of each Fund as follows: AVERAGE DAILY NET ASSETS (INCLUDING NET ASSETS ATTRIBUTABLE TO PREFERRED SHARES) MANAGEMENT FEE - -------------------------------------------------------------------------------- For the first $125 million .6500% For the next $125 million .6375 For the next $250 million .6250 For the next $500 million .6125 For the next $1 billion .6000 For net assets over $2 billion .5750 ================================================================================ The management fee compensates the Adviser for overall investment advisory and administrative services and general office facilities. The Funds pay no compensation directly to those of its Directors/Trustees who are affiliated with the Adviser or to their officers, all of whom receive remuneration for their services to the Funds from the Adviser or its affiliates. 43 Notes to FINANCIAL STATEMENTS (Unaudited) (continued) For the first ten years of Arizona Dividend Advantage's (NFZ) operations, the Adviser has agreed to reimburse the Fund, as a percentage of average daily net assets (including net assets attributable to Preferred shares), for fees and expenses in the amounts and for the time periods set forth below: YEAR ENDING YEAR ENDING JANUARY 31, JANUARY 31, - -------------------------------------------------------------------------------- 2001* .30% 2007 .25% 2002 .30 2008 .20 2003 .30 2009 .15 2004 .30 2010 .10 2005 .30 2011 .05 2006 .30 ================================================================================ * From the commencement of operations. The Adviser has not agreed to reimburse Arizona Dividend Advantage (NFZ) for any portion of its fees and expenses beyond January 31, 2011. For the first ten years of Arizona Dividend Advantage 2's (NKR) operations, the Adviser has agreed to reimburse the Fund, as a percentage of average daily net assets (including net assets attributable to Preferred shares), for fees and expenses in the amounts and for the time periods set forth below: YEAR ENDING YEAR ENDING MARCH 31, MARCH 31, - -------------------------------------------------------------------------------- 2002* .30% 2008 .25% 2003 .30 2009 .20 2004 .30 2010 .15 2005 .30 2011 .10 2006 .30 2012 .05 2007 .30 ================================================================================ * From the commencement of operations. The Adviser has not agreed to reimburse Arizona Dividend Advantage 2 (NKR) for any portion of its fees and expenses beyond March 31, 2012. 44 For the first eight years of Arizona Dividend Advantage 3's (NXE) operations, the Adviser has agreed to reimburse the Fund, as a percentage of average daily net assets (including net assets attributable to Preferred shares), for fees and expenses in the amounts and for the time periods set forth below: YEAR ENDING YEAR ENDING SEPTEMBER 30, SEPTEMBER 30, - -------------------------------------------------------------------------------- 2002* .32% 2007 .32% 2003 .32 2008 .24 2004 .32 2009 .16 2005 .32 2010 .08 2006 .32 ================================================================================ * From the commencement of operations. The Adviser has not agreed to reimburse Arizona Dividend Advantage 3 (NXE) for any portion of its fees and expenses beyond September 30, 2010. 6. SUBSEQUENT EVENT - DISTRIBUTIONS TO COMMON SHAREHOLDERS The Funds declared Common share dividend distributions from their tax-exempt net investment income which were paid on March 1, 2004, to shareholders of record on February 15, 2004, as follows: ARIZONA ARIZONA ARIZONA ARIZONA TEXAS PREMIUM DIVIDEND DIVIDEND DIVIDEND QUALITY INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3 INCOME (NAZ) (NFZ) (NKR) (NXE) (NTX) - -------------------------------------------------------------------------------- Dividend per share $.0765 $.0765 $.0720 $.0670 $.0800 ================================================================================ 45 Financial HIGHLIGHTS (Unaudited) Selected data for a Common share outstanding throughout each period:
Investment Operations Less Distributions ----------------------------------------------------------------- ------------------------------ Distributions Distributions from Net from Net Beginning Net Investment Capital Investment Capital Common Realized/ Income to Gains to Income to Gains to Share Net Unrealized Preferred Preferred Common Common Net Asset Investment Investment Share- Share- Share- Share- Value Income Gain (Loss) holders+ holders+ Total holders holders Total =============================================================================================================================== ARIZONA PREMIUM INCOME (NAZ) - ------------------------------------------------------------------------------------------------------------------------------- Year Ended 7/31: 2004(d) $13.66 $ .47 $ .78 $(.03) $ -- $1.22 $(.46) $ -- $ (.46) 2003 14.25 .97 (.57) (.07) -- .33 (.92) -- (.92) 2002 14.77 1.07 (.57) (.09) (.01) .40 (.88) (.04) (.92) 2001 14.25 1.09 .50 (.23) -- 1.36 (.83) (.01) (.84) 2000 14.90 1.06 (.61) (.25) -- .20 (.85) -- (.85) 1999 15.43 1.07 (.55) (.21) -- .31 (.84) -- (.84) ARIZONA DIVIDEND ADVANTAGE (NFZ) - ------------------------------------------------------------------------------------------------------------------------------- Year Ended 7/31: 2004(d) 14.45 .50 1.03 (.03) -- 1.50 (.46) (.04) (.50) 2003 14.81 1.00 (.38) (.07) (.01) .54 (.88) (.04) (.92) 2002 14.37 1.04 .36 (.11) -- 1.29 (.84) (.01) (.85) 2001(a) 14.33 .44 .23 (.08) -- .59 (.35) -- (.35) ARIZONA DIVIDEND ADVANTAGE 2 (NKR) - ------------------------------------------------------------------------------------------------------------------------------- Year Ended 7/31: 2004(d) 14.57 .48 .97 (.03) -- 1.42 (.43) (.04) (.47) 2003 14.88 .96 (.31) (.08) -- .57 (.86) (.01) (.87) 2002(b) 14.33 .24 .71 (.02) -- .93 (.22) -- (.22) ARIZONA DIVIDEND ADVANTAGE 3 (NXE) - ------------------------------------------------------------------------------------------------------------------------------- Year Ended 7/31: 2004(d) 13.45 .44 .95 (.03) -- 1.36 (.40) -- (.40) 2003(c) 14.33 .66 (.67) (.05) -- (.06) (.61) -- (.61) TEXAS QUALITY INCOME (NTX) - ------------------------------------------------------------------------------------------------------------------------------- Year Ended 7/31: 2004(d) 14.57 .52 .96 (.03) -- 1.45 (.48) -- (.48) 2003 15.14 1.05 (.58) (.08) -- .39 (.95) (.01) (.96) 2002 15.16 1.11 (.02) (.10) (.02) .97 (.92) (.07) (.99) 2001 14.26 1.16 .88 (.27) -- 1.77 (.87) -- (.87) 2000 15.13 1.16 (.74) (.27) (.02) .13 (.91) (.09) (1.00) 1999 15.90 1.16 (.72) (.22) (.02) .20 (.90) (.07) (.97) =============================================================================================================================== Total Returns -------------------- Based Offering on Costs and Ending Common Preferred Common Based Share Share Share Ending on Net Underwriting Net Asset Market Market Asset Discounts Value Value Value** Value** ================================================================================== ARIZONA PREMIUM INCOME (NAZ) - ---------------------------------------------------------------------------------- Year Ended 7/31: 2004(d) $-- $14.42 $16.2700 11.74% 9.04% 2003 -- 13.66 15.0000 (5.98) 2.21 2002 -- 14.25 16.9000 9.63 2.88 2001 -- 14.77 16.3200 17.77 9.74 2000 -- 14.25 14.6250 (8.80) 1.61 1999 -- 14.90 17.0000 8.67 1.92 ARIZONA DIVIDEND ADVANTAGE (NFZ) - ---------------------------------------------------------------------------------- Year Ended 7/31: 2004(d) -- 15.45 17.1700 15.81 10.48 2003 .02 14.45 15.3000 3.06 3.67 2002 -- 14.81 15.7500 6.38 9.32 2001(a) (.20) 14.37 15.6500 6.76 2.81 ARIZONA DIVIDEND ADVANTAGE 2 (NKR) - ---------------------------------------------------------------------------------- Year Ended 7/31: 2004(d) -- 15.52 14.9200 7.05 9.88 2003 (.01) 14.57 14.4000 (3.53) 3.67 2002(b) (.16) 14.88 15.8000 6.81 5.38 ARIZONA DIVIDEND ADVANTAGE 3 (NXE) - ---------------------------------------------------------------------------------- Year Ended 7/31: 2004(d) (.01) 14.40 14.1000 3.99 10.15 2003(c) (.21) 13.45 13.9700 (2.76) (2.05) TEXAS QUALITY INCOME (NTX) - ---------------------------------------------------------------------------------- Year Ended 7/31: 2004(d) -- 15.54 15.1500 6.39 10.07 2003 -- 14.57 14.7100 4.14 2.54 2002 -- 15.14 15.0700 9.29 6.61 2001 -- 15.16 14.7300 21.16 12.74 2000 -- 14.26 12.9375 (7.93) 1.15 1999 -- 15.13 15.1875 2.97 1.21 ================================================================================== Ratios/Supplemental Data --------------------------------------------------------------------------------------------- Before Credit/Reimbursement After Credit/Reimbursement*** ----------------------------- ----------------------------- Ratio of Net Ratio of Net Ratio of Investment Ratio of Investment Ending Expenses Income to Expenses Income to Net to Average Average to Average Average Assets Net Assets Net Assets Net Assets Net Assets Applicable Applicable Applicable Applicable Applicable Portfolio to Common to Common to Common to Common to Common Turnover Shares (000) Shares++ Shares++ Shares++ Shares++ Rate ==================================================================================================================== ARIZONA PREMIUM INCOME (NAZ) - -------------------------------------------------------------------------------------------------------------------- Year Ended 7/31: 2004(d) $ 64,041 1.22%* 6.59%* 1.20%* 6.61%* 16% 2003 60,547 1.25 6.81 1.24 6.82 17 2002 62,876 1.28 7.45 1.26 7.47 19 2001 64,859 1.28 7.47 1.27 7.48 18 2000 62,287 1.26 7.58 1.25 7.59 33 1999 64,775 1.29 6.88 1.29 6.88 6 ARIZONA DIVIDEND ADVANTAGE (NFZ) - -------------------------------------------------------------------------------------------------------------------- Year Ended 7/31: 2004(d) 23,834 1.29* 6.08* .81* 6.56* 9 2003 22,290 1.35 6.11 .91 6.55 20 2002 22,791 1.41 6.72 .93 7.20 40 2001(a) 22,072 1.43* 5.80* .95* 6.28* 21 ARIZONA DIVIDEND ADVANTAGE 2 (NKR) - -------------------------------------------------------------------------------------------------------------------- Year Ended 7/31: 2004(d) 37,543 1.26* 5.79* .80* 6.25* 3 2003 35,237 1.27 5.78 .82 6.23 4 2002(b) 35,913 1.19* 4.43* .77* 4.85* 1 ARIZONA DIVIDEND ADVANTAGE 3 (NXE) - -------------------------------------------------------------------------------------------------------------------- Year Ended 7/31: 2004(d) 44,163 1.25* 5.72* .76* 6.21* 12 2003(c) 41,247 1.19* 5.05* .73* 5.52* 16 TEXAS QUALITY INCOME (NTX) - -------------------------------------------------------------------------------------------------------------------- Year Ended 7/31: 2004(d) 147,187 1.20* 6.75* 1.20* 6.75* 6 2003 137,975 1.20 6.93 1.19 6.94 12 2002 143,305 1.23 7.40 1.22 7.42 22 2001 143,127 1.21 7.87 1.19 7.88 24 2000 134,637 1.27 8.18 1.26 8.19 32 1999 142,784 1.23 7.31 1.23 7.32 19 ==================================================================================================================== Preferred Shares at End of Period ------------------------------------------ Aggregate Liquidation Amount and Market Asset Outstanding Value Coverage (000) Per Share Per Share ================================================================= ARIZONA PREMIUM INCOME (NAZ) - ----------------------------------------------------------------- Year Ended 7/31: 2004(d) $30,000 $25,000 $78,367 2003 30,000 25,000 75,456 2002 30,000 25,000 77,397 2001 30,000 25,000 79,049 2000 30,000 25,000 76,906 1999 30,000 25,000 78,979 ARIZONA DIVIDEND ADVANTAGE (NFZ) - ----------------------------------------------------------------- Year Ended 7/31: 2004(d) 12,000 25,000 74,654 2003 12,000 25,000 71,438 2002 12,000 25,000 72,480 2001(a) 12,000 25,000 70,984 ARIZONA DIVIDEND ADVANTAGE 2 (NKR) - ----------------------------------------------------------------- Year Ended 7/31: 2004(d) 18,500 25,000 75,734 2003 18,500 25,000 72,618 2002(b) 18,500 25,000 73,531 ARIZONA DIVIDEND ADVANTAGE 3 (NXE) - ----------------------------------------------------------------- Year Ended 7/31: 2004(d) 22,000 25,000 75,186 2003(c) 22,000 25,000 71,872 TEXAS QUALITY INCOME (NTX) - ----------------------------------------------------------------- Year Ended 7/31: 2004(d) 69,000 25,000 78,329 2003 69,000 25,000 74,991 2002 69,000 25,000 76,922 2001 69,000 25,000 76,858 2000 69,000 25,000 73,782 1999 69,000 25,000 76,733 =================================================================
* Annualized. ** Total Investment Return on Market Value is the combination of reinvested dividend income, reinvested capital gains distributions, if any, and changes in stock price per share. Total Return on Common Share Net Asset Value is the combination of reinvested dividend income at net asset value, reinvested capital gains distributions at net asset value, if any, and changes in Common share net asset value per share. Total returns are not annualized. *** After custodian fee credit and expense reimbursement, where applicable. + The amounts shown are based on Common share equivalents. ++ Ratios do not reflect the effect of dividend payments to Preferred shareholders; income ratios reflect income earned on assets attributable to Preferred shares. (a) For the period January 30, 2001 (commencement of operations) through July 31, 2001. (b) For the period March 25, 2002 (commencement of operations) through July 31, 2002. (c) For the period September 25, 2002 (commencement of operations) through July 31, 2003. (d) For the six months ended January 31, 2004. See accompanying notes to financial statements. 46-47 spread Build Your Wealth AUTOMATICALLY Sidebar text: Nuveen makes reinvesting easy. A phone call is all it takes to set up your reinvestment account. NUVEEN CLOSED-END EXCHANGE-TRADED FUNDS DIVIDEND REINVESTMENT PLAN Your Nuveen Closed-End Exchange-Traded Fund allows you to conveniently reinvest dividends and/or capital gains distributions in additional fund shares. By choosing to reinvest, you'll be able to invest money regularly and automatically, and watch your investment grow through the power of tax-free compounding. Just like dividends or distributions in cash, there may be times when income or capital gains taxes may be payable on dividends or distributions that are reinvested. It is important to note that an automatic reinvestment plan does not ensure a profit, nor does it protect you against loss in a declining market. EASY AND CONVENIENT To make recordkeeping easy and convenient, each month you'll receive a statement showing your total dividends and distributions, the date of investment, the shares acquired and the price per share, and the total number of shares you own. HOW SHARES ARE PURCHASED The shares you acquire by reinvesting will either be purchased on the open market or newly issued by the Fund. If the shares are trading at or above net asset value at the time of valuation, the Fund will issue new shares at the then-current market price. If the shares are trading at less than net asset value, shares for your account will be purchased on the open market. Dividends and distributions received to purchase shares in the open market will normally be invested shortly after the dividend payment date. No interest will be paid on dividends and distributions awaiting reinvestment. Because the market price of shares may increase before purchases are completed, the average purchase price per share may exceed the market price at the time of valuation, resulting in the acquisition of fewer shares than if the dividend or distribution had been paid in shares issued by the Fund. A pro rata portion of any applicable brokerage commissions on open market purchases will be paid by Plan participants. These commissions usually will be lower than those charged on individual transactions. FLEXIBILITY You may change your distribution option or withdraw from the Plan at any time, should your needs or situation change. Should you withdraw, you can receive a certificate for all whole shares credited to your reinvestment account and cash payment for fractional shares, or cash payment for all reinvestment account shares, less brokerage commissions and a $2.50 service fee. You can reinvest whether your shares are registered in your name, or in the name of a brokerage firm, bank, or other nominee. Ask your investment advisor if his or her firm will participate on your behalf. Participants whose shares are registered in the name of one firm may not be able to transfer the shares to another firm and continue to participate in the Plan. The Fund reserves the right to amend or terminate the Plan at any time. Although the Fund reserves the right to amend the Plan to include a service charge payable by the participants, there is no direct service charge to participants in the Plan at this time. For more information on the Nuveen Automatic Reinvestment Plan or to enroll in or withdraw from the Plan, speak with your financial advisor or call us at (800) 257-8787. 48 Fund INFORMATION BOARD OF DIRECTORS/TRUSTEES William E. Bennett Robert P. Bremner Lawrence H. Brown Jack B. Evans William C. Hunter* Anne E. Impellizzeri William L. Kissick Thomas E. Leafstrand Peter R. Sawers William J. Schneider Timothy R. Schwertfeger Judith M. Stockdale Sheila W. Wellington FUND MANAGER Nuveen Advisory Corp. 333 West Wacker Drive Chicago, IL 60606 CUSTODIAN State Street Bank & Trust Boston, MA TRANSFER AGENT AND SHAREHOLDER SERVICES State Street Bank & Trust Nuveen Funds P.O. Box 43071 Providence, RI 02940-3071 (800) 257-8787 LEGAL COUNSEL Chapman and Cutler LLP Chicago, IL INDEPENDENT AUDITORS Ernst & Young LLP Chicago, IL POLICY CHANGE On February 25, 2004, the Board approved policies that would allow each Fund, at the discretion of the Adviser, to engage in certain types of derivative transactions for the purpose of hedging interest rate risk. There is no guarantee that the Adviser will cause a Fund to enter into such transactions. If a Fund were to engage in hedging, there is no guarantee that such hedging will be successful or that it will not reduce the Fund's total return. PROXY VOTING POLICIES AND PROCEDURES A description of the policies and procedures that the Funds use to determine how to vote proxies relating to portfolio securities is available (i) without charge, upon request, by calling Nuveen Investments at (800) 257-8787; and (ii) on the Commission's website at http://www.sec.gov. GLOSSARY OF TERMS USED IN THIS REPORT AVERAGE ANNUAL TOTAL RETURN: This is a commonly used method to express an investment's performance over a particular, usually multi-year time period. It expresses the return (including change in NAV and reinvested dividends) that would have been necessary on an annual basis to equal the investment's actual performance over the time period being considered. AVERAGE EFFECTIVE MATURITY: The average of all the maturities of the bonds in a fund's portfolio, computed by weighting each maturity date (the date the security comes due) by the market value of the security. This figure does not account for the likelihood of prepayments or the exercise of call provisions. LEVERAGE-ADJUSTED DURATION: Duration is a measure of a bond or bond fund's sensitivity to changes in interest rates. Generally, the longer a bond or fund's duration, the more the price of the bond or fund will change as interest rates change. Leverage-adjusted duration takes into account the leveraging process for a Fund and therefore is generally longer than the duration of the actual portfolio of individual bonds that make up the Fund. MARKET YIELD (ALSO KNOWN AS DIVIDEND YIELD OR CURRENT YIELD): An investment's current annualized dividend divided by its current market price. NET ASSET VALUE (NAV): A fund's NAV is calculated by subtracting the liabilities of the fund from its total assets and then dividing the remainder by the number of shares outstanding. Fund NAVs are calculated at the end of each business day. TAXABLE-EQUIVALENT YIELD: The yield necessary from a fully taxable investment to equal, on an after-tax basis, the yield of a municipal bond investment. - --------- Each Fund intends to repurchase shares of its own common or preferred stock in the future at such times and in such amounts as is deemed advisable. No shares were repurchased during the period ended January 31, 2004. Any future repurchases will be reported to shareholders in the next annual or semiannual report. * Director for certain of the Funds contained in this report. 49 Serving Investors FOR GENERATIONS Since 1898, financial advisors and their clients have relied on Nuveen Investments to provide dependable investment solutions. For the past century, Nuveen Investments has adhered to the belief that the best approach to investing is to apply conservative risk-management principles to help minimize volatility. Building on this tradition, we today offer a range of high quality equity and fixed-income solutions that are integral to a well-diversified core portfolio. Our clients have come to appreciate this diversity, as well as our continued adherence to proven, long-term investing principles. Managing $80 billion in assets, Nuveen Investments offers access to a number of different asset classes and investing solutions through a variety of products. Nuveen Investments markets its capabilities under four distinct brands: Nuveen, a leader in tax-free investments; NWQ, a leader in value-style equities; Rittenhouse, a leader in growth-style equities; and Symphony, a leading institutional manager of market-neutral alternative investment portfolios. To learn more about the products and services Nuveen Investments offers and for a prospectus, where applicable, talk to your financial advisor, or call us at (800) 257-8787. Please read the information carefully before you invest. Distributed by Nuveen Investments, LLC | 333 West Wacker Drive | Chicago, Illinois 60606 | www.nuveen.com ESA-A-0104D ITEM 2. CODE OF ETHICS. Not applicable to this filing. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. Not applicable to this filing. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. Not applicable to this filing. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable to this filing. ITEM 6. SCHEDULE OF INVESTMENTS Not applicable at this time. ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES Not applicable to this filing. ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS Not applicable at this time. ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS There were no material changes by which shareholders may recommend nominees to the registrant's Board of Trustees implemented after the registrant last provided disclosure in response to the requirements of Item 7(d)(2)(ii)(G) of Schedule 14A (17 CFR 240.14a-101) or this Item. ITEM 10. CONTROLS AND PROCEDURES. (a) The registrant's principal executive and principal financial officers, or persons performing similar functions, have concluded that the registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the "1940 Act") (17 CFR 270.30a-3(c))) are effective, as of a date within 90 days of the filing date of this report that includes the disclosure required by this paragraph, based on their evaluation of the controls and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")(17 CFR 240.13a-15(b) or 240.15d-15(b)). (b) There were no changes in the registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR 270.30a-3(d)) that occurred during the registrant's last fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. ITEM 11. EXHIBITS. File the exhibits listed below as part of this Form. (a)(1) Any code of ethics, or amendment thereto, that is the subject of the disclosure required by Item 2, to the extent that the registrant intends to satisfy the Item 2 requirements through filing of an exhibit: Not applicable because posted on registrant's website at www.nuveen.com/etf. (a)(2) A separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the 1940 Act (17 CFR 270.30a-2(a)) in the exact form set forth below: Ex-99.CERT attached hereto. (a)(3) Any written solicitation to purchase securities under Rule 23c-1 under the 1940 Act (17 CFR 270.23c-1) sent or given during the period covered by the report by or on behalf of the registrant to 10 or more persons: Not applicable at this time. (b) If the report is filed under Section 13(a) or 15(d) of the Exchange Act, provide the certifications required by Rule 30a-2(b) under the 1940 Act (17 CFR 270.30a-2(b)); Rule 13a-14(b) or Rule 15d-14(b) under the Exchange Act (17 CFR 240.13a-14(b) or 240.15d-14(b)), and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350) as an exhibit. A certification furnished pursuant to this paragraph will not be deemed "filed" for purposes of Section 18 of the Exchange Act (15 U.S.C. 78r), or otherwise subject to the liability of that section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference. Ex-99.906 CERT attached hereto. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. (Registrant) Nuveen Texas Quality Income Municipal Fund ----------------------------------------------------------- By (Signature and Title)* /s/ Jessica R. Droeger ---------------------------------------------- Jessica R. Droeger Vice President and Secretary Date: April 8, 2004 ------------------------------------------------------------------- Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By (Signature and Title)* /s/ Gifford R. Zimmerman ---------------------------------------------- Gifford R. Zimmerman Chief Administrative Officer (Principal Executive Officer) Date: April 8, 2004 ------------------------------------------------------------------- By (Signature and Title)* /s/ Stephen D. Foy ---------------------------------------------- Stephen D. Foy Vice President and Controller (Principal Financial Officer) Date: April 8, 2004 ------------------------------------------------------------------- * Print the name and title of each signing officer under his or her signature. EX-99.CERT 3 file002.txt CERTIFICATIONS CERTIFICATION I, Gifford R. Zimmerman, certify that: 1. I have reviewed this report on Form N-CSR of Nuveen Texas Quality Income Municipal Fund; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) for the registrant and have: (a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (c) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: April 8, 2004 /s/ Gifford R. Zimmerman ------------------------- -------------------------------- Chief Administrative Officer (Principal Executive Officer) CERTIFICATION I, Stephen D. Foy, certify that: 1. I have reviewed this report on Form N-CSR of Nuveen Texas Quality Income Municipal Fund; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) for the registrant and have: (a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (c) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: April 8, 2004 /s/ Stephen D. Foy ------------------------- -------------------------------- Vice President and Controller (Principal Financial Officer) EX-99.906CERT 4 file003.txt CERTIFICATIONS Certification Pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002; provided by the Chief Executive Officer and Chief Financial Officer, based on each such officer's knowledge and belief. The undersigned officers of Nuveen Texas Quality Income Municipal Fund (the "Fund"), certify that, to the best of each such officer's knowledge and belief: 1. The Form N-CSR of the Fund for the period ended December 31, 2003 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Fund. Date: April 8, 2004 ----------------------- /s/ Gifford R. Zimmerman --------------------- Chief Administrative Officer (Chief Executive Officer) /s/ Stephen D. Foy --------------------- Vice President, Controller (Chief Financial Officer) -----END PRIVACY-ENHANCED MESSAGE-----