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 811-10345
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Nuveen Dividend Advantage Municipal Fund 3
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(Exact name of registrant as specified in charter)
Nuveen Investments
333 West Wacker Drive
Chicago, IL 60606
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(Address of principal executive offices) (Zip code)
Kevin J. McCarthy
Nuveen Investments
333 West Wacker Drive
Chicago, IL 60606
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(Name and address of agent for service)
Registrant's telephone number, including area code: (312) 917-7700
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Date of fiscal year end: October 31
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Date of reporting period: October 31, 2007
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Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
ANNUAL REPORT | Nuveen Investments
October 31, 2007 | Municipal Closed-End Funds
Photo of: Small child
NUVEEN PERFORMANCE
PLUS MUNICIPAL
FUND, INC.
NPP
NUVEEN MUNICIPAL
ADVANTAGE FUND, INC.
NMA
NUVEEN MUNICIPAL
MARKET OPPORTUNITY
FUND, INC.
NMO
NUVEEN DIVIDEND
ADVANTAGE
MUNICIPAL FUND
NAD
NUVEEN DIVIDEND
ADVANTAGE
MUNICIPAL FUND 2
NXZ
NUVEEN DIVIDEND
ADVANTAGE
MUNICIPAL FUND 3
NZF
IT'S NOT WHAT YOU EARN, IT'S WHAT YOU KEEP.(R) | [LOGO]
NUVEEN
INVESTMENTS
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Chairman's
LETTER TO SHAREHOLDERS
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photo: Timothy R. Schwertfeger
| Timothy R. Schwertfeger | Chairman of the Board
Once again, I am pleased to report that over the twelve-month period covered by
this report your Fund continued to provide you with attractive monthly tax-free
income. For more details about the management strategy and performance of your
Fund, please read the Portfolio Managers' Comments, the Dividend and Share Price
Information, and the Performance Overview sections of this report.
I also wanted to take this opportunity to report some important news about
Nuveen Investments. The firm recently was acquired by a group led by Madison
Dearborn Partners, LLC. While this affects the corporate structure of Nuveen
Investments, it has no impact on the investment objectives, portfolio management
strategies or dividend policy of your Fund.
With the recent volatility in the stock market, many have begun to wonder which
way the market is headed, and whether they need to adjust their holdings of
investments. No one knows what the future will bring, which is why we think a
well-balanced portfolio that is structured and carefully monitored with the help
of an investment professional is an important component in achieving your
long-term financial goals. A well-diversified portfolio may actually help to
reduce your overall investment risk, and we believe that investments like your
Nuveen Investments Fund can be important building blocks in a portfolio crafted
to perform well through a variety of market conditions.
We also are pleased to be able to offer you a choice concerning how you receive
your shareholder reports and other Fund information. As an alternative to mailed
copies, you can sign up to receive future Fund reports and other Fund
information by e-mail and the internet. The inside front cover of this report
contains information on how you can sign up.
We are grateful that you have chosen us as a partner as you pursue your
financial goals and we look forward to continuing to earn your trust in the
months and years ahead. At Nuveen Investments, our mission continues to be to
assist you and your financial advisor by offering investment services and
products that can help you to secure your financial objectives.
Sincerely,
/s/ Timothy R. Schwertfeger
Timothy R. Schwertfeger
Chairman of the Board
December 14, 2007
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Portfolio Managers' COMMENTS
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Nuveen Investments Municipal Closed-End Funds | NPP, NMA, NMO
| NAD, NXZ, NZF
PORTFOLIO MANAGERS TOM SPALDING AND PAUL BRENNAN DISCUSS U.S. ECONOMIC AND
MUNICIPAL MARKET CONDITIONS, KEY INVESTMENT STRATEGIES, AND THE ANNUAL
PERFORMANCE OF THESE SIX FUNDS. A 31-YEAR VETERAN OF NUVEEN, TOM HAS MANAGED NXZ
SINCE ITS INCEPTION IN 2001 AND NPP, NMA, NMO, AND NAD SINCE 2003. WITH 18 YEARS
OF INDUSTRY EXPERIENCE, INCLUDING 16 YEARS AT NUVEEN, PAUL ASSUMED PORTFOLIO
MANAGEMENT RESPONSIBILITY FOR NZF IN 2006.
WHAT FACTORS AFFECTED THE U.S. ECONOMY AND MUNICIPAL MARKET DURING THE ANNUAL
REPORTING PERIOD ENDED OCTOBER 31, 2007?
Between November 1, 2006, and October 31, 2007, the yield on the benchmark
10-year U.S. Treasury note dropped 14 basis points to end the reporting period
at 4.47%. In the municipal bond market, the yield on the Bond Buyer 25 Revenue
Bond Index, a widely followed measure of longer-term municipal bond interest
rates, fell to 4.67% at the end of October 2007, a decline of 11 basis points
from the end of October 2006. The numbers, however, do not give a true
indication of the events of the summer of 2007, when developments in the credit
markets led to increased volatility, tightening liquidity and a flight to
quality. This was particularly evident in August, when market concerns about
defaults on subprime mortgages resulted in a liquidity crisis across all fixed
income asset classes. (NONE OF THESE FUNDS HAD EXPOSURE TO THE COLLATERALIZED
DEBT PRODUCTS THAT WERE AT THE CENTER OF THIS LIQUIDITY CRISIS.)
Discussions of specific investments are for illustrative purposes only and are
not intended as recommendations of individual investments. The views expressed
in this commentary represent those of the portfolio managers as of the date of
this report and are subject to change at any time, based on market conditions
and other factors. The Funds disclaim any obligation to advise shareholders of
such changes.
4
After fourteen months of remaining on the sidelines, the Federal Reserve
responded to credit market volatility by cutting the fed funds rate by 50 basis
points--from 5.25% to 4.75%--in September 2007 and another 25 basis points--to
4.50%--in October 2007. A corresponding decline in short-term municipal bond
interest rates, coupled with a jump in longer-term municipal bonds interest
rates, produced a steepening of the yield curve late in the reporting period.
For the annual period, bonds with longer maturities generally underperformed
shorter maturity bonds. In addition, as the markets repriced risk, higher
quality bonds generally outperformed lower quality credits.
The U.S. gross domestic product (GDP), a closely watched measure of economic
growth, expanded at below-trend levels of 2.1% in the fourth quarter of 2006 and
0.6% in the first quarter of 2007 before rebounding sharply to 3.8% in the
second quarter of 2007 (all GDP numbers are annualized). In the third quarter of
2007, increases in consumer spending, business investment, and exports helped
GDP growth climb to 4.9%, overcoming a 20% decline in residential investment.
Driven largely by higher energy and food prices, the Consumer Price Index (CPI)
registered a 3.5% year-over-year gain as of October 2007. The labor market
continued to be tight, with a national unemployment rate of 4.7% in October
2007, up from 4.4% in October 2006. October 2007 marked the 50th consecutive
month of employment growth, the longest string in U.S. history.
Over the twelve months ended October 2007, municipal bond issuance nationwide
totaled $487.9 billion, an increase of 27% from the previous twelve months. One
factor in this increased volume was an increase in advance refundings,(1) driven
by attractive borrowing rates for issuers during the earlier part of this
period. For the majority of the period, the strength and diversity of demand for
municipal bonds were as important as supply, as the surge in issuance was
absorbed by a broad-based universe of traditional and nontraditional buyers,
including retail investors, property and casualty insurance companies, hedge
funds and arbitragers and overseas investors.
(1) Advance refundings, also known as pre-refundings or refinancings, occur
when an issuer sells new bonds and uses the proceeds to fund principal and
interest payments of older existing bonds. This process often results in
lower borrowing costs for bond issuers.
5
WHAT KEY STRATEGIES WERE USED TO MANAGE THESE FUNDS DURING THIS REPORTING
PERIOD?
With the substantial increase in municipal issuance nationwide during this
reporting period, our investment strategies continued to focus on finding
opportunities in undervalued sectors and individual securities with the
potential to add value to the Funds. The majority of our purchases were bonds at
the longer end of the yield curve (i.e., bonds with at least 20 years to
maturity). These purchases helped to offset the shortening of the Funds'
portfolio durations due to bond calls and the natural tendency of bond durations
to shorten as time passes. In addition, as the yield curve steepened, bonds at
this end of the curve generally offered some incremental yield to support the
Funds' dividends.
Given the market events over the past twelve months, the Funds generally placed
greater priority on higher quality bonds through most of this period. During the
late summer of 2007, we also took advantage of opportunities to add a few
lower-quality credits. For example, all of the Funds except NXZ participated in
the $5.5 billion Ohio Buckeye Tobacco Settlement Financing Authority offering,
the largest tobacco settlement financing deal ever issued. Tobacco bonds in
general were being offered at attractive spreads compared with the national
norm, and NZF also purchased some additional tobacco credits from other issuers
in order to bring the Fund's tobacco bond exposure closer to the market average.
During this period, a number of uninsured health care credits--mostly rated
AA--came to market at very attractive prices. As credit spreads widened and
lower-quality credits began to underperform the market, we believed that these
AA rated hospital credits offered a good alternative to lower-rated bonds and
provided us with an opportunity to add both quality and attractive yields that
we believed would help to support the Funds' income streams.
To generate cash for purchases, we generally sold bonds that were nearing their
redemption dates, particularly some of the Funds' pre-refunded holdings. The
proceeds from these sales, as well as called bond proceeds, were reinvested out
longer on
6
the yield curve, which helped to maintain the Funds' durations within our
preferred strategic range and improve the Funds' overall call protection
profile.
In the municipal bond interest rate environment over the twelve-month period, we
also continued to emphasize a disciplined approach to duration(2) management and
yield curve positioning. As part of our duration management strategies we used
inverse floating rate securities,(3) a type of derivative financial instrument,
in all six of these Funds. These inverse floaters had the dual benefit of
bringing the Funds' durations closer to our preferred strategic target and
enhancing their income-generation capabilities. In addition, NZF used forward
interest rate swaps and futures contracts, two other types of derivative
financial instruments. The goal of this strategy was to help us manage net asset
value (NAV) volatility without having a negative impact on income streams or
common share dividends over the short term.
HOW DID THE FUNDS PERFORM?
Individual results for these Funds, as well as relevant index and peer group
information, are presented in the accompanying table.
Total Returns on Net Asset Value*
For periods ended 10/31/07
1-YEAR 5-YEAR 10-YEAR
NPP 1.53% 5.79% 6.10%
NMA 1.06% 6.14% 6.22%
NMO 1.20% 6.29% 5.58%
NAD 1.10% 6.24% NA
NXZ 2.76% 7.53% NA
NZF 2.31% 6.94% NA
LEHMAN BROTHERS
MUNICIPAL
BOND INDEX(4) 2.91% 4.46% 5.29%
LIPPER GENERAL
LEVERAGED
MUNICIPAL DEBT
FUNDS AVERAGE(5) 0.70% 6.31% 5.76%
* Annualized.
Past performance is not predictive of future results. Current performance may be
higher or lower than the data shown. Returns do not reflect the deduction of
taxes that shareholders may have to pay on Fund distributions or upon the sale
of Fund shares.
For additional information, see the individual Performance Overview for your
Fund in this report.
(2) Duration is a measure of a bond's price sensitivity as interest rates
change, with longer duration bonds displaying more sensitivity to these
changes than bonds with shorter durations.
(3) An inverse floating rate security is a financial instrument designed to
pay long-term tax-exempt interest at a rate that varies inversely with a
short-term tax-exempt interest rate index. For the Nuveen Funds, the index
typically used is the Securities Industry and Financial Markets (SIFM)
Municipal Swap Index (previously referred to as the Bond Market
Association Index or BMA). Inverse floaters, including those inverse
floating rate securities in which the Funds invested during the reporting
period, are further defined within the "Notes to Financial Statements" and
"Glossary of Terms Used in This Report" sections of this shareholder
report.
(4) The Lehman Brothers Municipal Bond Index is an unleveraged, unmanaged
national index comprising a broad range of investment-grade municipal
bonds. Results for the Lehman index do not reflect any expenses.
(5) The Lipper General Leveraged Municipal Debt Funds Average category is
calculated using the returns of all closed-end funds in this category for
each period as follows: 1 year, 54 funds; 5 years, 52 funds; and 10 years,
38 funds. Fund and Lipper returns assume reinvestment of dividends.
7
For the twelve months ended October 31, 2007, the total return on NAV for all
six Funds was less than the return on the Lehman Brothers Municipal Bond Index.
All six Funds exceeded the Lipper General Leveraged Municipal Debt Funds Average
for this period.
One of the key factors in the performance of these Funds relative to that of the
unleveraged Lehman Brothers Municipal Bond Index over this period was the use of
financial leverage. The returns of all of these Funds were negatively impacted
by their use of leverage. Although leveraging provides opportunities for
additional income and total returns for common shareholders, it can also expose
shareholders to additional risk when market conditions are unfavorable. With the
increases in yields on longer municipal bonds, the impact of valuation changes
in these bonds was magnified by the use of leverage. However, we firmly believe
that the use of this strategy should work to the benefit of the Funds over the
long term. This is demonstrated by the longer-term return performances--both in
absolute terms and relative to the Lehman Brothers Municipal Bond Index--of
these Funds.
Other factors that influenced the Funds' returns included yield curve
positioning and duration management, the use of derivatives, credit exposure and
sector allocations.
During this twelve-month period, bonds in the Lehman Brothers Municipal Bond
Index with maturities between one and eight years, especially those maturing in
approximately three years, benefited the most from changes in the interest rate
environment. As a result, these bonds generally outperformed credits with longer
maturities. Bonds having the longest maturities (22 years and longer) posted the
worst returns for the period. Varying levels of exposure to the longer part of
the yield curve, accounted for much of the performance differential among these
six Funds.
8
Because they effectively increased exposure to longer maturity bonds during a
period when shorter maturities were in favor in the market, the inverse floaters
in place in these six Funds had a negative impact on their returns for the
period. At the same time, however, the inverse floaters benefited these Funds by
helping to support their income streams. We believe that, over time, these
derivative financial instruments will work to the advantage of the Funds.
While yield curve and duration positioning played an important role in
performance, especially during the last part of this period, credit exposure was
also a dominant factor over this period. As the markets repriced risk, lower
credit quality bonds generally underperformed the municipal market as a whole
for the first time in several years. As of October 31, 2007, allocations of
bonds rated BBB or lower and non-rated bonds accounted for approximately 8% of
NMO's portfolio, 11% of NPP, 13% of NAD, 16% of NXZ and NZF, and 18% of NMA. In
NXZ, however, some of the negative impact of this credit exposure was offset by
the fact that many of the Fund's holdings of lower-rated credits had shorter
durations, and bonds with shorter durations tended to perform well. At the same
time, the Funds' weightings in bonds rated AAA and AA were generally positive
for performance during this twelve-month period.
Bonds backed by the 1998 master tobacco settlement agreement also performed
poorly, due to the overall lower credit quality of the tobacco sector as well as
the ample supply of these bonds in the marketplace. As of October 31, 2007,
these bonds comprised approximately 3% to 6% of the portfolios of these six
Funds, with NMA and NAD having the heaviest weightings.
9
Sectors of the market that performed well included transportation credits,
special tax-backed issues, and water and sewer bonds. Pre-refunded bonds,
especially those that were advance refunded before longer municipal interest
rates began to rise in mid-2007, also performed well.
10
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Dividend and Share Price
INFORMATION
--------------------------------------------------------------------------------
As previously noted, all of the Funds in this report use leverage to potentially
enhance opportunities for additional income for common shareholders. Although
the Funds' use of this strategy continued to provide incremental income, the
extent of this benefit was reduced due to short-term interest rates that
remained relatively high during most of this period. This, in turn, kept the
Funds' borrowing costs high. The Funds' income streams were also impacted as the
proceeds from older, higher-yielding bonds that matured or were called were
reinvested into bonds currently available in the market, which generally offered
lower yields during the majority of this period. These factors resulted in one
monthly dividend reduction in NXZ, two in NPP, NMA, NMO and NAD, and three in
NZF over the twelve-month period ended October 31, 2007.
Due to normal portfolio activity, common shareholders of the following Funds
also received capital gains and/or net ordinary income distributions at the end
of December 2006 as follows:
Short-Term Capital Gains
Long-Term Capital Gains and/or Ordinary Income
(per share) (per share)
NPP $0.0461 $ 0.0008
NMO -- $ 0.0014
NAD -- $ 0.0024
NZF $0.0198 --
All of the Funds in this report seek to pay stable dividends at rates that
reflect each Fund's past results and projected future performance. During
certain periods, each Fund may pay dividends at a rate that may be more or less
than the amount of net investment income actually earned by the Fund during the
period. If a Fund has cumulatively earned more than it has paid in dividends, it
holds the excess in reserve as undistributed net investment income (UNII) as
part of the Fund's NAV. Conversely, if a Fund has cumulatively paid dividends in
excess of its earnings, the excess constitutes negative UNII that is likewise
reflected in the Fund's NAV. Each Fund will, over time, pay all of its net
investment income as dividends to shareholders. As of October 31, 2007, NMA and
NXZ had a positive UNII balance for both financial
11
statement and tax purposes. NPP, NMO, NAD, and NZF had negative UNII balances
for financial statement purposes and positive UNII balances for tax purposes.
As of October 31, 2007, the Funds' share prices were trading at discounts to
their NAVs as shown in the accompanying chart:
10/31/07 Twelve Month
Discount Average Premium/Discount
NPP -10.71% -4.92%
NMA -8.22% -0.34%
NMO -8.77% -3.34%
NAD -8.52% -1.81%
NXZ -0.45% +3.67%
NZF -7.85% +0.54%
12
NPP | Nuveen Performance
PERFORMANCE | Plus Municipal
OVERVIEW | Fund, Inc.
as of October 31, 2007
Credit Quality (as a % of total investments)
[PIE CHART]
AAA/U.S. Guaranteed 76%
AA 7%
A 6%
BBB 8%
BB or Lower 1%
N/R 2%
2006-2007 Monthly Tax-Free Dividends Per Share(2)
[BAR CHART]
0.064 0.064 0.064 0.064 0.064 0.064 0.064 0.060 0.060 0.060 0.060 0.057
Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct
Share Price Performance -- Weekly Closing Price
[LINE CHART]
11/01/06 15.14
15.17
15.18
15.07
15.13
15.18
15.11
14.91
14.78
15.19
15.06
15.01
15.03
15.07
15.16
15.30
15.15
15.12
15.24
15.23
15.19
15.18
15.16
15.13
15.10
15.12
15.15
15.23
15.27
15.26
15.21
15.14
14.67
14.32
14.17
14.21
14.21
14.02
13.92
14.00
14.11
13.90
13.82
13.78
13.98
14.46
14.01
13.91
13.99
13.88
13.63
13.59
13.50
10/31/07 13.59
FUND SNAPSHOT
--------------------------------------------------------------------------------
Common Share Price $13.59
--------------------------------------------------------------------------------
Common Share Net Asset Value $15.22
--------------------------------------------------------------------------------
Premium/(Discount) to NAV -10.71%
--------------------------------------------------------------------------------
Market Yield 5.08%
--------------------------------------------------------------------------------
Taxable-Equivalent Yield(1) 7.06%
--------------------------------------------------------------------------------
Net Assets Applicable to
Common Shares ($000) $912,066
--------------------------------------------------------------------------------
Average Effective Maturity
on Securities (Years) 14.41
--------------------------------------------------------------------------------
Leverage-Adjusted Duration 9.14
--------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 6/22/89)
--------------------------------------------------------------------------------
ON SHARE PRICE ON NAV
--------------------------------------------------------------------------------
1-Year -4.97% 1.53%
--------------------------------------------------------------------------------
5-Year 5.33% 5.79%
--------------------------------------------------------------------------------
10-Year 5.42% 6.10%
--------------------------------------------------------------------------------
STATES
(as a % of total investments)
--------------------------------------------------------------------------------
Illinois 15.1%
--------------------------------------------------------------------------------
California 10.3%
--------------------------------------------------------------------------------
New York 6.9%
--------------------------------------------------------------------------------
New Jersey 5.2%
--------------------------------------------------------------------------------
Indiana 4.5%
--------------------------------------------------------------------------------
Texas 4.5%
--------------------------------------------------------------------------------
Michigan 4.3%
--------------------------------------------------------------------------------
Florida 4.2%
--------------------------------------------------------------------------------
Colorado 3.9%
--------------------------------------------------------------------------------
Massachusetts 3.9%
--------------------------------------------------------------------------------
Ohio 3.6%
--------------------------------------------------------------------------------
Washington 3.3%
--------------------------------------------------------------------------------
South Carolina 2.8%
--------------------------------------------------------------------------------
Nevada 2.5%
--------------------------------------------------------------------------------
Pennsylvania 2.2%
--------------------------------------------------------------------------------
Georgia 2.1%
--------------------------------------------------------------------------------
Utah 2.1%
--------------------------------------------------------------------------------
Minnesota 1.9%
--------------------------------------------------------------------------------
Louisiana 1.9%
--------------------------------------------------------------------------------
Other 14.8%
--------------------------------------------------------------------------------
INDUSTRIES
(as a % of total investments)
--------------------------------------------------------------------------------
U.S. Guaranteed 27.4%
--------------------------------------------------------------------------------
Tax Obligation/Limited 15.6%
--------------------------------------------------------------------------------
Tax Obligation/General 14.5%
--------------------------------------------------------------------------------
Transportation 9.8%
--------------------------------------------------------------------------------
Utilities 9.5%
--------------------------------------------------------------------------------
Health Care 8.8%
--------------------------------------------------------------------------------
Other 14.4%
--------------------------------------------------------------------------------
(1) Taxable-Equivalent Yield represents the yield that must be earned on a
fully taxable investment in order to equal the yield of the Fund on an
after-tax basis. It is based on a federal income tax rate of 28%. When
comparing this Fund to investments that generate qualified dividend
income, the Taxable-Equivalent Yield is lower.
(2) The Fund paid shareholders capital gains and net ordinary income
distributions in December 2006 of $0.0469 per share.
13
NMA | Nuveen Municipal
PERFORMANCE | Advantage
OVERVIEW | Fund, Inc.
as of October 31, 2007
FUND SNAPSHOT
--------------------------------------------------------------------------------
Common Share Price $13.95
--------------------------------------------------------------------------------
Common Share
Net Asset Value $15.20
--------------------------------------------------------------------------------
Premium/(Discount) to NAV -8.22%
--------------------------------------------------------------------------------
Market Yield 5.51%
--------------------------------------------------------------------------------
Taxable-Equivalent Yield(1) 7.65%
--------------------------------------------------------------------------------
Net Assets Applicable to
Common Shares ($000) $656,806
--------------------------------------------------------------------------------
Average Effective Maturity
on Securities (Years) 15.59
--------------------------------------------------------------------------------
Leverage-Adjusted Duration 9.36
--------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 12/19/89)
--------------------------------------------------------------------------------
ON SHARE PRICE ON NAV
--------------------------------------------------------------------------------
1-Year -7.08% 1.06%
--------------------------------------------------------------------------------
5-Year 5.52% 6.14%
--------------------------------------------------------------------------------
10-Year 5.33% 6.22%
--------------------------------------------------------------------------------
STATES
(as a % of total investments)
--------------------------------------------------------------------------------
Texas 10.5%
--------------------------------------------------------------------------------
Illinois 10.4%
--------------------------------------------------------------------------------
Washington 9.1%
--------------------------------------------------------------------------------
California 8.4%
--------------------------------------------------------------------------------
Louisiana 8.3%
--------------------------------------------------------------------------------
New York 8.0%
--------------------------------------------------------------------------------
Colorado 4.9%
--------------------------------------------------------------------------------
Ohio 4.2%
--------------------------------------------------------------------------------
Nevada 3.8%
--------------------------------------------------------------------------------
Tennessee 3.5%
--------------------------------------------------------------------------------
Oklahoma 2.8%
--------------------------------------------------------------------------------
Florida 2.6%
--------------------------------------------------------------------------------
South Carolina 2.6%
--------------------------------------------------------------------------------
New Jersey 2.3%
--------------------------------------------------------------------------------
Alabama 2.0%
--------------------------------------------------------------------------------
Wisconsin 1.9%
--------------------------------------------------------------------------------
Other 14.7%
--------------------------------------------------------------------------------
INDUSTRIES
(as a % of total investments)
--------------------------------------------------------------------------------
U.S. Guaranteed 30.6%
--------------------------------------------------------------------------------
Health Care 13.5%
--------------------------------------------------------------------------------
Utilities 13.2%
--------------------------------------------------------------------------------
Tax Obligation/Limited 10.5%
--------------------------------------------------------------------------------
Transportation 8.9%
--------------------------------------------------------------------------------
Tax Obligation/General 7.2%
--------------------------------------------------------------------------------
Consumer Staples 5.1%
--------------------------------------------------------------------------------
Other 11.0%
--------------------------------------------------------------------------------
Credit Quality (as a % of total investments)
[PIE CHART]
AAA/U.S. Guaranteed 68%
AA 9%
A 5%
BBB 13%
BB or Lower 5%
2006-2007 Monthly Tax-Free Dividends Per Share
[BAR CHART]
0.0715 0.0715 0.0715 0.0715 0.0715 0.0715 0.0715 0.0675 0.0675 0.0675 0.0675 0.0640
Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct
Share Price Performance -- Weekly Closing Price
[LINE CHART]
11/01/06 15.88
15.87
15.80
15.80
15.94
16.04
16.03
16.04
15.93
16.36
16.14
16.17
16.29
16.19
16.12
16.21
16.21
16.05
16.16
16.27
16.06
16.10
16.06
16.10
16.00
16.07
16.05
16.21
16.28
16.13
16.05
16.06
15.50
15.07
14.98
14.93
14.80
14.65
14.55
14.74
14.85
14.48
14.01
14.24
14.62
15.12
14.57
14.42
14.48
14.26
13.94
14.10
13.92
10/31/07 13.95
(1) Taxable-Equivalent Yield represents the yield that must be earned on a
fully taxable investment in order to equal the yield of the Fund on an
after-tax basis. It is based on a federal income tax rate of 28%. When
comparing this Fund to investments that generate qualified dividend
income, the Taxable-Equivalent Yield is lower.
14
NMO | Nuveen Municipal
PERFORMANCE | Market Opportunity
OVERVIEW | Fund, Inc.
as of October 31, 2007
Credit Quality (as a % of total investments)
[PIE CHART]
AAA/U.S. Guaranteed 81%
AA 7%
A 4%
BBB 5%
BB or Lower 3%
2006-2007 Monthly Tax-Free Dividends Per Share(2)
[BAR CHART]
0.0660 0.0660 0.0660 0.0660 0.0635 0.0635 0.0635 0.0605 0.0605 0.0605 0.0605 0.0605
Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct
Share Price Performance -- Weekly Closing Price
[LINE CHART]
11/01/06 15.03
14.99
15.07
15.09
15.16
15.23
15.19
15.02
15.01
15.29
15.18
15.31
15.33
15.32
15.16
15.17
15.19
15.20
15.21
15.18
15.03
15.01
15.15
15.10
15.02
15.00
14.99
15.13
15.00
15.02
14.88
14.94
14.64
14.13
14.01
14.03
13.91
13.75
13.73
13.61
13.76
13.44
13.21
13.47
13.79
14.09
13.77
13.59
13.79
13.73
13.60
13.47
13.46
10/31/07 13.53
FUND SNAPSHOT
--------------------------------------------------------------------------------
Common Share Price $13.53
--------------------------------------------------------------------------------
Common Share
Net Asset Value $14.83
--------------------------------------------------------------------------------
Premium/(Discount) to NAV -8.77%
--------------------------------------------------------------------------------
Market Yield 5.37%
--------------------------------------------------------------------------------
Taxable-Equivalent Yield(1) 7.46%
--------------------------------------------------------------------------------
Net Assets Applicable to
Common Shares ($000) $675,577
--------------------------------------------------------------------------------
Average Effective Maturity
on Securities (Years) 12.79
--------------------------------------------------------------------------------
Leverage-Adjusted Duration 9.14
--------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 3/21/90)
--------------------------------------------------------------------------------
ON SHARE PRICE ON NAV
--------------------------------------------------------------------------------
1-Year -5.00% 1.20%
--------------------------------------------------------------------------------
5-Year 5.86% 6.29%
--------------------------------------------------------------------------------
10-Year 4.68% 5.58%
--------------------------------------------------------------------------------
STATES
(as a % of total investments)
--------------------------------------------------------------------------------
Texas 16.3%
--------------------------------------------------------------------------------
Washington 11.1%
--------------------------------------------------------------------------------
Illinois 8.2%
--------------------------------------------------------------------------------
California 7.5%
--------------------------------------------------------------------------------
New York 6.4%
--------------------------------------------------------------------------------
Minnesota 4.9%
--------------------------------------------------------------------------------
South Carolina 4.7%
--------------------------------------------------------------------------------
New Jersey 4.1%
--------------------------------------------------------------------------------
Nevada 3.9%
--------------------------------------------------------------------------------
Colorado 3.6%
--------------------------------------------------------------------------------
Ohio 3.0%
--------------------------------------------------------------------------------
Georgia 2.8%
--------------------------------------------------------------------------------
North Dakota 2.7%
--------------------------------------------------------------------------------
Pennsylvania 2.4%
--------------------------------------------------------------------------------
Massachusetts 2.3%
--------------------------------------------------------------------------------
Puerto Rico 1.8%
--------------------------------------------------------------------------------
Other 14.3%
--------------------------------------------------------------------------------
INDUSTRIES
(as a % of total investments)
--------------------------------------------------------------------------------
U.S. Guaranteed 36.0%
--------------------------------------------------------------------------------
Tax Obligation/General 16.8%
--------------------------------------------------------------------------------
Transportation 12.6%
--------------------------------------------------------------------------------
Health Care 8.3%
--------------------------------------------------------------------------------
Tax Obligation/Limited 7.9%
--------------------------------------------------------------------------------
Utilities 5.7%
--------------------------------------------------------------------------------
Other 12.7%
--------------------------------------------------------------------------------
(1) Taxable-Equivalent Yield represents the yield that must be earned on a
fully taxable investment in order to equal the yield of the Fund on an
after-tax basis. It is based on a federal income tax rate of 28%. When
comparing this Fund to investments that generate qualified dividend
income, the Taxable-Equivalent Yield is lower.
(2) The Fund paid shareholders a net ordinary income distribution in December
2006 of $0.0014 per share.
15
NAD | Nuveen Dividend
PERFORMANCE | Advantage
OVERVIEW | Municipal Fund
as of October 31, 2007
FUND SNAPSHOT
--------------------------------------------------------------------------------
Common Share Price $13.63
--------------------------------------------------------------------------------
Common Share
Net Asset Value $14.90
--------------------------------------------------------------------------------
Premium/(Discount) to NAV -8.52%
--------------------------------------------------------------------------------
Market Yield 5.59%
--------------------------------------------------------------------------------
Taxable-Equivalent Yield(1) 7.76%
--------------------------------------------------------------------------------
Net Assets Applicable to
Common Shares ($000) $585,496
--------------------------------------------------------------------------------
Average Effective Maturity
on Securities (Years) 15.04
--------------------------------------------------------------------------------
Leverage-Adjusted Duration 9.53
--------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 5/26/99)
--------------------------------------------------------------------------------
ON SHARE PRICE ON NAV
--------------------------------------------------------------------------------
1-Year -5.96% 1.10%
--------------------------------------------------------------------------------
5-Year 5.14% 6.24%
--------------------------------------------------------------------------------
Since
Inception 5.21% 6.82%
--------------------------------------------------------------------------------
STATES
(as a % of total investments)
--------------------------------------------------------------------------------
Illinois 17.9%
--------------------------------------------------------------------------------
Texas 10.5%
--------------------------------------------------------------------------------
New York 9.6%
--------------------------------------------------------------------------------
Washington 7.0%
--------------------------------------------------------------------------------
Florida 6.8%
--------------------------------------------------------------------------------
Wisconsin 5.3%
--------------------------------------------------------------------------------
Louisiana 4.2%
--------------------------------------------------------------------------------
New Jersey 3.8%
--------------------------------------------------------------------------------
Indiana 3.6%
--------------------------------------------------------------------------------
Ohio 3.4%
--------------------------------------------------------------------------------
Pennsylvania 3.3%
--------------------------------------------------------------------------------
California 2.8%
--------------------------------------------------------------------------------
Nevada 2.8%
--------------------------------------------------------------------------------
Michigan 2.3%
--------------------------------------------------------------------------------
Rhode Island 2.2%
--------------------------------------------------------------------------------
Other 14.5%
--------------------------------------------------------------------------------
INDUSTRIES
(as a % of total investments)
--------------------------------------------------------------------------------
U.S. Guaranteed 21.5%
--------------------------------------------------------------------------------
Health Care 17.6%
--------------------------------------------------------------------------------
Tax Obligation/General 15.8%
--------------------------------------------------------------------------------
Tax Obligation/Limited 14.3%
--------------------------------------------------------------------------------
Transportation 10.2%
--------------------------------------------------------------------------------
Utilities 5.8%
--------------------------------------------------------------------------------
Consumer Staples 5.7%
--------------------------------------------------------------------------------
Other 9.1%
--------------------------------------------------------------------------------
Credit Quality (as a % of total investments)
[PIE CHART]
AAA/U.S. Guaranteed 69%
AA 13%
A 5%
BBB 6%
BB or Lower 5%
N/R 2%
2006-2007 Monthly Tax-Free Dividends Per Share(2)
[BAR CHART]
0.0690 0.0690 0.0690 0.0690 0.0665 0.0665 0.0665 0.0665 0.0665 0.0665 0.0665 0.0635
Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct
Share Price Performance -- Weekly Closing Price
[LINE CHART]
11/01/06 15.32
15.25
15.43
15.34
15.38
15.54
15.52
15.48
15.54
15.72
15.65
15.74
15.73
15.55
15.55
15.43
15.39
15.43
15.44
15.42
15.33
15.22
14.86
14.91
14.89
14.86
15.01
15.29
15.36
15.27
15.16
15.07
14.82
14.81
14.71
14.76
14.60
14.46
14.38
14.27
14.31
14.09
14.23
14.24
14.28
14.54
14.35
14.26
14.30
14.15
13.76
13.73
13.66
10/31/07 13.63
(1) Taxable-Equivalent Yield represents the yield that must be earned on a
fully taxable investment in order to equal the yield of the Fund on an
after-tax basis. It is based on a federal income tax rate of 28%. When
comparing this Fund to investments that generate qualified dividend
income, the Taxable-Equivalent Yield is lower.
(2) The Fund paid shareholders a net ordinary income distribution in December
2006 of $0.0024 per share.
16
NXZ | Nuveen Dividend
PERFORMANCE | Advantage
OVERVIEW | Municipal Fund 2
as of October 31, 2007
Credit Quality (as a % of total investments)
[PIE CHART]
AAA/U.S. Guaranteed 68%
AA 8%
A 8%
BBB 9%
BB or Lower 5%
N/R 2%
2006-2007 Monthly Tax-Free Dividends Per Share
[BAR CHART]
0.0765 0.0765 0.0765 0.0765 0.0765 0.0765 0.0765 0.0730 0.0730 0.0730 0.0730 0.0730
Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct
Share Price Performance -- Weekly Closing Price
[LINE CHART]
11/01/06 16.57
16.59
16.85
16.70
16.61
16.70
16.82
16.72
16.68
16.91
16.98
17.30
16.90
17.03
17.05
16.97
16.98
16.86
16.96
16.98
16.86
17.00
17.03
17.01
17.11
17.13
17.01
17.19
17.16
17.06
16.84
16.80
16.12
15.76
15.60
15.81
15.76
15.47
15.54
15.55
15.62
15.26
14.61
14.95
15.30
15.94
15.48
15.32
15.50
15.34
15.35
15.56
15.37
10/31/07 15.48
FUND SNAPSHOT
--------------------------------------------------------------------------------
Common Share Price $15.48
--------------------------------------------------------------------------------
Common Share
Net Asset Value $15.55
--------------------------------------------------------------------------------
Premium/(Discount) to NAV -0.45%
--------------------------------------------------------------------------------
Market Yield 5.66%
--------------------------------------------------------------------------------
Taxable-Equivalent Yield(1) 7.86%
--------------------------------------------------------------------------------
Net Assets Applicable to
Common Shares ($000) $456,992
--------------------------------------------------------------------------------
Average Effective Maturity
on Securities (Years) 16.25
--------------------------------------------------------------------------------
Leverage-Adjusted Duration 7.19
--------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 3/27/01)
--------------------------------------------------------------------------------
ON SHARE PRICE ON NAV
--------------------------------------------------------------------------------
1-Year -0.78% 2.76%
--------------------------------------------------------------------------------
5-Year 8.93% 7.53%
--------------------------------------------------------------------------------
Since
Inception 7.00% 7.77%
--------------------------------------------------------------------------------
STATES
(as a % of total investments)
--------------------------------------------------------------------------------
Texas 16.6%
--------------------------------------------------------------------------------
Michigan 9.4%
--------------------------------------------------------------------------------
Illinois 7.8%
--------------------------------------------------------------------------------
New York 6.1%
--------------------------------------------------------------------------------
California 5.5%
--------------------------------------------------------------------------------
Nevada 4.9%
--------------------------------------------------------------------------------
Colorado 4.8%
--------------------------------------------------------------------------------
New Mexico 3.5%
--------------------------------------------------------------------------------
Washington 3.4%
--------------------------------------------------------------------------------
Florida 3.3%
--------------------------------------------------------------------------------
Louisiana 3.3%
--------------------------------------------------------------------------------
Missouri 3.2%
--------------------------------------------------------------------------------
Indiana 3.1%
--------------------------------------------------------------------------------
Alabama 2.9%
--------------------------------------------------------------------------------
Kansas 2.5%
--------------------------------------------------------------------------------
Oregon 2.5%
--------------------------------------------------------------------------------
Pennsylvania 2.3%
--------------------------------------------------------------------------------
Other 14.9%
--------------------------------------------------------------------------------
INDUSTRIES
(as a % of total investments)
--------------------------------------------------------------------------------
U.S. Guaranteed 37.2%
--------------------------------------------------------------------------------
Tax Obligation/Limited 16.7%
--------------------------------------------------------------------------------
Health Care 13.7%
--------------------------------------------------------------------------------
Transportation 10.9%
--------------------------------------------------------------------------------
Utilities 5.8%
--------------------------------------------------------------------------------
Tax Obligation/General 4.2%
--------------------------------------------------------------------------------
Other 11.5%
--------------------------------------------------------------------------------
(1) Taxable-Equivalent Yield represents the yield that must be earned on a
fully taxable investment in order to equal the yield of the Fund on an
after-tax basis. It is based on a federal income tax rate of 28%. When
comparing this Fund to investments that generate qualified dividend
income, the Taxable-Equivalent Yield is lower.
17
NZF | Nuveen Dividend
PERFORMANCE | Advantage
OVERVIEW | Municipal Fund 3
as of October 31, 2007
FUND SNAPSHOT
--------------------------------------------------------------------------------
Common Share Price $13.85
--------------------------------------------------------------------------------
Common Share
Net Asset Value $15.03
--------------------------------------------------------------------------------
Premium/(Discount) to NAV -7.85%
--------------------------------------------------------------------------------
Market Yield 5.55%
--------------------------------------------------------------------------------
Taxable-Equivalent Yield(1) 7.71%
--------------------------------------------------------------------------------
Net Assets Applicable to
Common Shares ($000) $606,908
--------------------------------------------------------------------------------
Average Effective Maturity
on Securities (Years) 16.72
--------------------------------------------------------------------------------
Leverage-Adjusted Duration 9.48
--------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 9/25/01)
--------------------------------------------------------------------------------
ON SHARE PRICE ON NAV
--------------------------------------------------------------------------------
1-Year -7.72% 2.31%
--------------------------------------------------------------------------------
5-Year 7.01% 6.94%
--------------------------------------------------------------------------------
Since
Inception 5.04% 7.04%
--------------------------------------------------------------------------------
STATES
(as a % of total investments)
--------------------------------------------------------------------------------
Illinois 12.7%
--------------------------------------------------------------------------------
Texas 11.8%
--------------------------------------------------------------------------------
Washington 9.9%
--------------------------------------------------------------------------------
California 9.1%
--------------------------------------------------------------------------------
Michigan 6.3%
--------------------------------------------------------------------------------
Iowa 3.9%
--------------------------------------------------------------------------------
Indiana 3.8%
--------------------------------------------------------------------------------
Colorado 3.8%
--------------------------------------------------------------------------------
Wisconsin 2.8%
--------------------------------------------------------------------------------
New York 2.6%
--------------------------------------------------------------------------------
New Jersey 2.6%
--------------------------------------------------------------------------------
Louisiana 2.5%
--------------------------------------------------------------------------------
Ohio 2.1%
--------------------------------------------------------------------------------
Kentucky 2.1%
--------------------------------------------------------------------------------
Missouri 1.9%
--------------------------------------------------------------------------------
Oklahoma 1.7%
--------------------------------------------------------------------------------
Maryland 1.7%
--------------------------------------------------------------------------------
Oregon 1.6%
--------------------------------------------------------------------------------
Georgia 1.6%
--------------------------------------------------------------------------------
Florida 1.5%
--------------------------------------------------------------------------------
Other 14.0%
--------------------------------------------------------------------------------
INDUSTRIES
(as a % of total investments)
--------------------------------------------------------------------------------
U.S. Guaranteed 23.9%
--------------------------------------------------------------------------------
Transportation 15.4%
--------------------------------------------------------------------------------
Health Care 14.3%
--------------------------------------------------------------------------------
Tax Obligation/General 11.7%
--------------------------------------------------------------------------------
Tax Obligation/Limited 6.0%
--------------------------------------------------------------------------------
Utilities 5.6%
--------------------------------------------------------------------------------
Education and Civic Organizations 5.0%
--------------------------------------------------------------------------------
Consumer Staples 4.2%
--------------------------------------------------------------------------------
Other 13.9%
--------------------------------------------------------------------------------
Credit Quality (as a % of total investments)
[PIE CHART]
AAA/U.S. Guaranteed 75%
AA 7%
A 2%
BBB 7%
BB or Lower 2%
N/R 7%
2006-2007 Monthly Tax-Free Dividends Per Share(2)
[BAR CHART]
0.0730 0.0730 0.0730 0.0730 0.0705 0.0705 0.0705 0.0675 0.0675 0.0675 0.0675 0.0640
Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct
Share Price Performance -- Weekly Closing Price
[LINE CHART]
11/01/06 15.89
15.85
16.02
15.92
15.93
15.98
16.10
15.90
16.07
16.17
16.24
16.03
15.85
15.93
15.95
16.00
15.90
15.93
16.05
16.05
15.95
15.95
15.82
15.92
15.89
15.75
15.81
15.86
15.90
15.82
15.60
15.47
14.96
14.65
14.67
14.88
14.96
14.73
14.66
14.39
14.44
14.26
14.10
14.08
14.45
14.66
14.58
14.25
14.32
14.12
13.95
13.98
13.90
10/31/07 13.85
(1) Taxable-Equivalent Yield represents the yield that must be earned on a
fully taxable investment in order to equal the yield of the Fund on an
after-tax basis. It is based on a federal income tax rate of 28%. When
comparing this Fund to investments that generate qualified dividend
income, the Taxable-Equivalent Yield is lower.
(2) The Fund paid shareholders a capital gains distribution in December 2006
of $0.0198 per share.
18
NPP | Shareholder MEETING REPORT
NMA | The annual meeting of shareholders was held on July 31, 2007, at The
NMO | Northern Trust Company, 50 South La Salle Street, Chicago, IL 60675;
at this meeting shareholders were asked to vote on the election of
Board Members. Additionally a special meeting of shareholders was
held in the offices of Nuveen Investments on October 12, 2007; at
this meeting shareholders were asked to vote on a New Investment
Management Agreement and to ratify the selection of Ernst and Young
LLP as the Funds' independent registered public accounting firm.
NPP NMA NMO
---------------------------------------------------------------------------------------------------------------------
TO APPROVE A NEW INVESTMENT MANAGEMENT AGREEMENT:
Common and Common and Common and
MuniPreferred MuniPreferred MuniPreferred MuniPreferred MuniPreferred MuniPreferred
shares voting shares voting shares voting shares voting shares voting shares voting
together together together together together together
as a class as a class as a class as a class as a class as a class
---------------------------------------------------------------------------------------------------------------------
For 33,019,803 -- 23,118,106 -- 23,103,671 --
Against 1,343,355 -- 988,823 -- 1,222,141 --
Abstain 1,146,239 -- 850,001 -- 776,871 --
Broker Non-Votes 8,837,535 -- 6,570,425 -- 7,542,509 --
---------------------------------------------------------------------------------------------------------------------
Total 44,346,932 -- 31,527,355 -- 32,645,192 --
=====================================================================================================================
APPROVAL OF THE BOARD MEMBERS WAS REACHED AS FOLLOWS:
Robert P. Bremner
For 51,601,356 -- 36,626,204 -- 39,604,075 --
Withhold 813,223 -- 664,659 -- 569,288 --
---------------------------------------------------------------------------------------------------------------------
Total 52,414,579 -- 37,290,863 -- 40,173,363 --
=====================================================================================================================
Jack B. Evans
For 51,597,653 -- 36,624,074 -- 39,611,550 --
Withhold 816,926 -- 666,789 -- 561,813 --
---------------------------------------------------------------------------------------------------------------------
Total 52,414,579 -- 37,290,863 -- 40,173,363 --
=====================================================================================================================
William C. Hunter
For 51,618,169 -- 36,618,268 -- 39,609,619 --
Withhold 796,410 -- 672,595 -- 563,744 --
---------------------------------------------------------------------------------------------------------------------
Total 52,414,579 -- 37,290,863 -- 40,173,363 --
=====================================================================================================================
David J. Kundert
For 51,598,019 -- 36,626,073 -- 39,607,073 --
Withhold 816,560 -- 664,790 -- 566,290 --
---------------------------------------------------------------------------------------------------------------------
Total 52,414,579 -- 37,290,863 -- 40,173,363 --
=====================================================================================================================
William J. Schneider
For -- 16,813 -- 12,754 -- 13,320
Withhold -- 28 -- 260 -- 29
---------------------------------------------------------------------------------------------------------------------
Total -- 16,841 -- 13,014 -- 13,349
=====================================================================================================================
Timothy R. Schwertfeger
For -- 16,813 -- 12,754 -- 13,320
Withhold -- 28 -- 260 -- 29
---------------------------------------------------------------------------------------------------------------------
Total -- 16,841 -- 13,014 -- 13,349
=====================================================================================================================
Judith M. Stockdale
For 51,611,442 -- 36,628,839 -- 39,596,146 --
Withhold 803,137 -- 662,024 -- 577,217 --
---------------------------------------------------------------------------------------------------------------------
Total 52,414,579 -- 37,290,863 -- 40,173,363 --
=====================================================================================================================
Carole E. Stone
For 51,609,587 -- 36,611,626 -- 39,591,867 --
Withhold 804,992 -- 679,237 -- 581,496 --
---------------------------------------------------------------------------------------------------------------------
Total 52,414,579 -- 37,290,863 -- 40,173,363 --
=====================================================================================================================
Eugene S. Sunshine (1)
For 51,604,995 -- 36,617,233 -- 39,597,071 --
Withhold 809,584 -- 673,630 -- 576,292 --
---------------------------------------------------------------------------------------------------------------------
Total 52,414,579 -- 37,290,863 -- 40,173,363 --
=====================================================================================================================
TO RATIFY THE SELECTION OF ERNST & YOUNG LLP AS THE INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM FOR THE CURRENT FISCAL YEAR:
For 43,041,554 -- 30,707,156 -- 31,697,826 --
Against 563,486 -- 370,457 -- 409,367 --
Abstain 741,892 -- 449,742 -- 537,999 --
---------------------------------------------------------------------------------------------------------------------
Total 44,346,932 -- 31,527,355 -- 32,645,192 --
=====================================================================================================================
19
NAD | Shareholder MEETING REPORT (continued)
NXZ |
NZF |
NAD NXZ NZF
---------------------------------------------------------------------------------------------------------------------
TO APPROVE A NEW INVESTMENT MANAGEMENT AGREEMENT:
Common and Common and Common and
MuniPreferred MuniPreferred MuniPreferred MuniPreferred MuniPreferred MuniPreferred
shares voting shares voting shares voting shares voting shares voting shares voting
together together together together together together
as a class as a class as a class as a class as a class as a class
---------------------------------------------------------------------------------------------------------------------
For 21,124,422 -- 15,333,938 -- 20,309,141 --
Against 850,622 -- 788,428 -- 778,156 --
Abstain 703,968 -- 528,668 -- 740,896 --
Broker Non-Votes 6,543,436 -- 5,002,836 -- 7,734,911 --
---------------------------------------------------------------------------------------------------------------------
Total 29,222,448 -- 21,653,870 -- 29,563,104 --
=====================================================================================================================
APPROVAL OF THE BOARD MEMBERS WAS REACHED AS FOLLOWS:
Robert P. Bremner
For -- -- -- -- -- --
Withhold -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------
Total -- -- -- -- -- --
=====================================================================================================================
Jack B. Evans
For -- -- -- -- -- --
Withhold -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------
Total -- -- -- -- -- --
=====================================================================================================================
William C. Hunter
For -- -- -- -- -- --
Withhold -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------
Total -- -- -- -- -- --
=====================================================================================================================
David J. Kundert
For -- -- -- -- -- --
Withhold -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------
Total -- -- -- -- -- --
=====================================================================================================================
William J. Schneider
For -- 10,342 -- 7,964 -- 11,031
Withhold -- 23 -- 13 -- 4
---------------------------------------------------------------------------------------------------------------------
Total -- 10,365 -- 7,977 -- 11,035
=====================================================================================================================
Timothy R. Schwertfeger
For -- 10,342 -- 7,964 -- 11,031
Withhold -- 23 -- 13 -- 4
---------------------------------------------------------------------------------------------------------------------
Total -- 10,365 -- 7,977 -- 11,035
=====================================================================================================================
Judith M. Stockdale
For 36,639,177 -- 27,888,280 -- 37,724,999 --
Withhold 550,094 -- 377,207 -- 549,225 --
---------------------------------------------------------------------------------------------------------------------
Total 37,189,271 -- 28,265,487 -- 38,274,224 --
=====================================================================================================================
Carole E. Stone
For 36,629,724 -- 27,888,302 -- 37,721,783 --
Withhold 559,547 -- 377,185 -- 552,441 --
---------------------------------------------------------------------------------------------------------------------
Total 37,189,271 -- 28,265,487 -- 38,274,224 --
=====================================================================================================================
Eugene S. Sunshine (1)
For -- -- -- -- -- --
Withhold -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------
Total -- -- -- -- -- --
=====================================================================================================================
TO RATIFY THE SELECTION OF ERNST & YOUNG LLP AS THE INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM FOR THE CURRENT FISCAL YEAR:
For 28,346,168 -- 21,138,179 -- 28,871,890 --
Against 390,998 -- 212,090 -- 282,367 --
Abstain 485,282 -- 303,601 -- 408,847 --
---------------------------------------------------------------------------------------------------------------------
Total 29,222,448 -- 21,653,870 -- 29,563,104 --
=====================================================================================================================
(1) Mr. Sunshine resigned from the Funds' Board of Directors/Trustees on July
31, 2007.
20
Report of
INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
THE BOARD OF DIRECTORS/TRUSTEES AND SHAREHOLDERS
NUVEEN PERFORMANCE PLUS MUNICIPAL FUND, INC.
NUVEEN MUNICIPAL ADVANTAGE FUND, INC.
NUVEEN MUNICIPAL MARKET OPPORTUNITY FUND, INC.
NUVEEN DIVIDEND ADVANTAGE MUNICIPAL FUND
NUVEEN DIVIDEND ADVANTAGE MUNICIPAL FUND 2
NUVEEN DIVIDEND ADVANTAGE MUNICIPAL FUND 3
We have audited the accompanying statements of assets and liabilities, including
the portfolios of investments, of Nuveen Performance Plus Municipal Fund, Inc.,
Nuveen Municipal Advantage Fund, Inc., Nuveen Municipal Market Opportunity Fund,
Inc., Nuveen Dividend Advantage Municipal Fund, Nuveen Dividend Advantage
Municipal Fund 2 and Nuveen Dividend Advantage Municipal Fund 3 (the "Funds") as
of October 31, 2007, and the related statements of operations for the year then
ended, the statements of changes in net assets for each of the two years in the
period then ended, and the financial highlights for each of the five years in
the period then ended. These financial statements and financial highlights are
the responsibility of the Funds' management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. We were
not engaged to perform an audit of the Funds' internal control over financial
reporting. Our audits included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Funds' internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall
financial statement presentation. Our procedures included confirmation of
securities owned as of October 31, 2007, by correspondence with the custodian
and brokers or by other appropriate auditing procedures where replies from
brokers were not received. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial positions of
Nuveen Performance Plus Municipal Fund, Inc., Nuveen Municipal Advantage Fund,
Inc., Nuveen Municipal Market Opportunity Fund, Inc., Nuveen Dividend Advantage
Municipal Fund, Nuveen Dividend Advantage Municipal Fund 2 and Nuveen Dividend
Advantage Municipal Fund 3 at October 31, 2007, the results of their operations
for the year then ended, changes in their net assets for each of the two years
in the period then ended, and the financial highlights for each of the five
years in the period then ended in conformity with U.S. generally accepted
accounting principles.
/s/ Ernst & Young LLP
Chicago, Illinois
December 20, 2007
21
| Nuveen Performance Plus Municipal Fund, Inc.
NPP | Portfolio of INVESTMENTS
October 31, 2007
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
-----------------------------------------------------------------------------------------------------------------------------------
ALABAMA - 0.3% (0.2% OF TOTAL INVESTMENTS)
Jefferson County, Alabama, Sewer Revenue Refunding Warrants,
Series 1997A:
$ 1,435 5.625%, 2/01/22 - FGIC Insured 2/08 at 100.50 AAA $ 1,451,459
1,505 5.375%, 2/01/27 - FGIC Insured 2/08 at 100.00 AAA 1,506,656
-----------------------------------------------------------------------------------------------------------------------------------
2,940 Total Alabama 2,958,115
-----------------------------------------------------------------------------------------------------------------------------------
ARIZONA - 1.4% (0.9% OF TOTAL INVESTMENTS)
1,000 Arizona State Transportation Board, Highway Revenue Bonds, 7/12 at 100.00 AAA 1,073,580
Series 2002B, 5.250%, 7/01/22 (Pre-refunded 7/01/12)
Phoenix, Arizona, Civic Improvement Corporation, Senior Lien
Airport Revenue Bonds, Series 2002B:
5,365 5.750%, 7/01/15 - FGIC Insured (Alternative Minimum Tax) 7/12 at 100.00 Aaa 5,777,300
5,055 5.750%, 7/01/16 - FGIC Insured (Alternative Minimum Tax) 7/12 at 100.00 Aaa 5,445,701
-----------------------------------------------------------------------------------------------------------------------------------
11,420 Total Arizona 12,296,581
-----------------------------------------------------------------------------------------------------------------------------------
ARKANSAS - 0.7% (0.5% OF TOTAL INVESTMENTS)
5,080 Independence County, Arkansas, Hydroelectric Power Revenue 5/13 at 100.00 A 5,104,486
Bonds, Series 2003, 5.350%, 5/01/28 - ACA Insured
1,000 Washington County, Arkansas, Hospital Revenue Bonds, Washington 2/15 at 100.00 BBB 967,420
Regional Medical Center, Series 2005A, 5.000%, 2/01/35
-----------------------------------------------------------------------------------------------------------------------------------
6,080 Total Arkansas 6,071,906
-----------------------------------------------------------------------------------------------------------------------------------
CALIFORNIA - 15.6% (10.3% OF TOTAL INVESTMENTS)
3,500 Alameda Corridor Transportation Authority, California, 10/17 at 100.00 AAA 2,936,815
Subordinate Lien Revenue Bonds, Series 2004A, 0.000%, 10/01/25
- AMBAC Insured
11,000 Anaheim Public Finance Authority, California, Subordinate Lease No Opt. Call AAA 6,221,710
Revenue Bonds, Public Improvement Project, Series 1997C,
0.000%, 9/01/20 - FSA Insured
California Department of Water Resources, Power Supply Revenue
Bonds, Series 2002A:
4,000 6.000%, 5/01/15 (Pre-refunded 5/01/12) 5/12 at 101.00 Aaa 4,458,760
3,175 5.375%, 5/01/22 (Pre-refunded 5/01/12) 5/12 at 101.00 Aaa 3,457,035
3,365 California Health Facilities Financing Authority, Health 3/13 at 100.00 A 3,373,345
Facility Revenue Bonds, Adventist Health System/West, Series
2003A, 5.000%, 3/01/33
California Health Facilities Financing Authority, Revenue Bonds,
Kaiser Permanante System, Series 2006:
5,000 5.000%, 4/01/37 4/16 at 100.00 A+ 5,004,900
7,000 5.250%, 4/01/39 4/16 at 100.00 A+ 7,130,760
2,380 California Infrastructure Economic Development Bank, Revenue 10/11 at 101.00 A- 2,414,867
Bonds, J. David Gladstone Institutes, Series 2001, 5.250%,
10/01/34
3,500 California Pollution Control Financing Authority, Revenue 6/17 at 100.00 AAA 3,507,875
Bonds, Pacific Gas and Electric Company, Series 2004C, 4.750%,
12/01/23 - FGIC Insured (Alternative Minimum Tax)
5,335 California State, Variable Purpose General Obligation Bonds, 6/17 at 100.00 A+ 5,559,550
Series 2007, Lehman Municipal Trust Receipts FC5, 7.690%,
6/01/37 (IF)
5,300 California, General Obligation Bonds, Series 2004, 5.100%, 2/09 at 100.00 A + (4) 5,411,989
2/01/34 (Pre-refunded 2/01/09)
5,000 California, General Obligation Bonds, Series 2005, 5.000%, 3/16 at 100.00 A+ 5,079,700
3/01/31
6,435 California, General Obligation Refunding Bonds, Series 2002, No Opt. Call AAA 7,422,837
6.000%, 4/01/16 - AMBAC Insured
22
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
-----------------------------------------------------------------------------------------------------------------------------------
CALIFORNIA (continued)
$ 5,000 Coast Community College District, Orange County, California, 8/18 at 100.00 AAA $ 3,864,200
General Obligation Bonds, Series 2006C, 0.000%, 8/01/32 -
FSA Insured
1,500 Golden State Tobacco Securitization Corporation, California, 6/17 at 100.00 BBB 1,319,520
Enhanced Tobacco Settlement Asset-Backed Bonds, Series 2007A-1,
5.125%, 6/01/47
10,000 Golden State Tobacco Securitization Corporation, California, 6/13 at 100.00 AAA 11,582,800
Tobacco Settlement Asset-Backed Bonds, Series 2003A-1, 6.750%,
6/01/39 (Pre-refunded 6/01/13)
8,000 Golden State Tobacco Securitization Corporation, California, 6/15 at 100.00 A 8,027,200
Tobacco Settlement Asset-Backed Revenue Bonds, Series 2005A,
5.000%, 6/01/45
1,000 Mt. Diablo Hospital District, California, Insured Hospital 12/07 at 100.00 AAA 1,061,770
Revenue Bonds, Series 1993A, 5.125%, 12/01/23 - AMBAC
Insured (ETM)
13,450 Ontario Redevelopment Financing Authority, San Bernardino No Opt. Call AAA 16,511,758
County, California, Revenue Refunding Bonds, Redevelopment
Project 1, Series 1995, 7.200%, 8/01/17 - MBIA Insured
11,270 Palmdale Community Redevelopment Agency, California, No Opt. Call AAA 11,687,328
Residential Mortgage Revenue Refunding Bonds, Series 1991A,
7.150%, 2/01/10 (ETM)
2,325 Palmdale Community Redevelopment Agency, California, No Opt. Call AAA 3,019,757
Restructured Single Family Mortgage Revenue Bonds, Series
1986D, 8.000%, 4/01/16 (Alternative Minimum Tax) (ETM)
2,000 San Francisco Airports Commission, California, Revenue Bonds, 5/09 at 101.00 AAA 2,068,300
San Francisco International Airport, Second Series 1999,
Issue 23B, 5.125%, 5/01/30 (Pre-refunded 5/01/09) -
FGIC Insured
2,000 San Francisco Airports Commission, California, Revenue 5/11 at 100.00 AAA 2,075,460
Refunding Bonds, San Francisco International Airport, Second
Series 2001, Issue 27B, 5.125%, 5/01/26 - FGIC Insured
3,000 San Joaquin Hills Transportation Corridor Agency, Orange No Opt. Call AAA 810,240
County, California, Toll Road Revenue Refunding Bonds, Series
1997A, 0.000%, 1/15/35 - MBIA Insured
15,745 Walnut Valley Unified School District, Los Angeles County, 8/11 at 103.00 AAA 18,189,253
California, General Obligation Refunding Bonds, Series 1997A,
7.200%, 2/01/16 - MBIA Insured
-----------------------------------------------------------------------------------------------------------------------------------
140,280 Total California 142,197,729
-----------------------------------------------------------------------------------------------------------------------------------
COLORADO - 5.9% (3.9% OF TOTAL INVESTMENTS)
5,240 Adams 12 Five Star Schools, Adams County, Colorado, General 12/15 at 100.00 AAA 5,501,790
Obligation Bonds, Series 2005, 5.000%, 12/15/24 - FSA Insured
3,000 Colorado Educational and Cultural Facilities Authority, Charter 8/14 at 100.00 AAA 3,127,500
School Revenue Bonds, Peak-to-Peak Charter School, Series 2004,
5.250%, 8/15/34 - XLCA Insured
5,860 Colorado Health Facilities Authority, Revenue Refunding Bonds, 9/11 at 100.00 AA (4) 6,212,713
Catholic Health Initiatives, Series 2001, 5.250%, 9/01/21
(Pre-refunded 9/01/11)
20,000 Denver Convention Center Hotel Authority, Colorado, Senior 12/13 at 100.00 Aaa 21,533,799
Revenue Bonds, Convention Center Hotel, Series 2003A, 5.000%,
12/01/33 (Pre-refunded 12/01/13) - XLCA Insured
12,615 E-470 Public Highway Authority, Colorado, Senior Revenue Bonds, No Opt. Call AAA 6,788,510
Series 1997B, 0.000%, 9/01/21 - MBIA Insured
15,700 E-470 Public Highway Authority, Colorado, Senior Revenue Bonds, No Opt. Call AAA 4,741,400
Series 2000B, 0.000%, 9/01/32 - MBIA Insured
755 Jefferson County School District R1, Colorado, General 12/14 at 100.00 AAA 795,279
Obligation Bonds, Series 2004, 5.000%, 12/15/22 - FSA Insured
4,125 Municipal Subdistrict Northern Colorado Water District, Revenue 12/07 at 101.00 AAA 4,171,406
Bonds, Series 1997G, 5.250%, 12/01/15 (Pre-refunded 12/01/07)
- AMBAC Insured
1,330 University of Colorado Hospital Authority, Revenue Bonds, 11/09 at 101.00 Aaa 1,348,514
Series 1999A, 5.000%, 11/15/29 - AMBAC Insured
-----------------------------------------------------------------------------------------------------------------------------------
68,625 Total Colorado 54,220,911
-----------------------------------------------------------------------------------------------------------------------------------
DISTRICT OF COLUMBIA - 1.8% (1.2% OF TOTAL INVESTMENTS)
5,745 District of Columbia Tobacco Settlement Corporation, Tobacco 5/11 at 101.00 BBB 5,953,314
Settlement Asset-Backed Bonds, Series 2001, 6.250%, 5/15/24
23
| Nuveen Performance Plus Municipal Fund, Inc. (continued)
NPP | Portfolio of INVESTMENTS October 31, 2007
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
-----------------------------------------------------------------------------------------------------------------------------------
DISTRICT OF COLUMBIA (continued)
$ 5,590 District of Columbia, General Obligation Bonds, Series 1999B, 6/09 at 101.00 AAA $ 5,808,178
5.500%, 6/01/13 - FSA Insured
5,000 Washington Convention Center Authority, District of Columbia, 10/16 at 100.00 AAA 4,870,700
Senior Lien Dedicated Tax Revenue Bonds, Series 2007A, 4.500%,
10/01/30 - AMBAC Insured
-----------------------------------------------------------------------------------------------------------------------------------
16,335 Total District of Columbia 16,632,192
-----------------------------------------------------------------------------------------------------------------------------------
FLORIDA - 6.4% (4.2% OF TOTAL INVESTMENTS)
Broward County Housing Finance Authority, Florida, Multifamily
Housing Revenue Bonds, Venice Homes Apartments, Series 2001A:
1,545 5.700%, 1/01/32 - FSA Insured (Alternative Minimum Tax) 7/11 at 100.00 AAA 1,557,298
1,805 5.800%, 1/01/36 - FSA Insured (Alternative Minimum Tax) 7/11 at 100.00 AAA 1,821,119
5,300 Escambia County Health Facilities Authority, Florida, Revenue No Opt. Call AA 5,675,346
Bonds, Ascension Health Credit Group, Series 2003A, 5.250%,
11/15/14
2,105 Florida Housing Finance Corporation, Homeowner Mortgage Revenue 1/10 at 100.00 AAA 2,142,322
Bonds, Series 2000-11, 5.850%, 1/01/22 - FSA Insured
(Alternative Minimum Tax)
10,050 Florida State Board of Education, Full Faith and Credit Public 6/10 at 101.00 AAA 10,626,368
Education Capital Outlay Refunding Bonds, Series 1999D, 5.750%,
6/01/22
7,000 Hillsborough County Aviation Authority, Florida, Revenue Bonds, 10/13 at 100.00 AAA 7,362,530
Tampa International Airport, Series 2003A, 5.250%, 10/01/17 -
MBIA Insured (Alternative Minimum Tax)
10,000 JEA, Florida, Electric System Revenue Bonds, Series 2006-3A, 4/15 at 100.00 AAA 10,208,900
5.000%, 10/01/41 - FSA Insured
10,750 Martin County Industrial Development Authority, Florida, 12/07 at 100.00 BB+ 10,862,338
Industrial Development Revenue Bonds, Indiantown Cogeneration
LP, Series 1994A, 7.875%, 12/15/25 (Alternative Minimum Tax)
2,570 Miami-Dade County Housing Finance Authority, Florida, 6/11 at 100.00 AAA 2,631,860
Multifamily Mortgage Revenue Bonds, Country Club Villas II
Project, Series 2001-1A, 5.850%, 1/01/37 - FSA Insured
(Alternative Minimum Tax)
3,500 Miami-Dade County, Florida, Aviation Revenue Bonds, Miami 10/15 at 100.00 AAA 3,513,475
International Airport, Series 2005A, 5.000%, 10/01/37 - XLCA
Insured (Alternative Minimum Tax)
1,700 Miami-Dade County, Florida, Beacon Tradeport Community 5/12 at 102.00 AA 1,759,296
Development District, Special Assessment Bonds, Commercial
Project, Series 2002A, 5.625%, 5/01/32 - RAAI Insured
-----------------------------------------------------------------------------------------------------------------------------------
56,325 Total Florida 58,160,852
-----------------------------------------------------------------------------------------------------------------------------------
GEORGIA - 3.1% (2.1% OF TOTAL INVESTMENTS)
4,920 Atlanta, Georgia, Airport General Revenue Refunding Bonds, 1/10 at 101.00 AAA 5,187,107
Series 2000A, 5.600%, 1/01/30 (Pre-refunded 1/01/10) -
FGIC Insured
5,000 Atlanta, Georgia, Water and Wastewater Revenue Bonds, Series No Opt. Call AAA 5,491,750
1999A, 5.500%, 11/01/22 - FGIC Insured
2,000 George L. Smith II World Congress Center Authority, Atlanta, 7/10 at 101.00 AAA 2,082,980
Georgia, Revenue Refunding Bonds, Domed Stadium Project,
Series 2000, 5.500%, 7/01/20 - MBIA Insured (Alternative
Minimum Tax)
15,000 Private Colleges and Universities Authority, Georgia, Revenue 11/09 at 101.00 AA (4) 15,716,100
Bonds, Emory University, Series 1999A, 5.500%, 11/01/25
(Pre-refunded 11/01/09)
-----------------------------------------------------------------------------------------------------------------------------------
26,920 Total Georgia 28,477,937
-----------------------------------------------------------------------------------------------------------------------------------
IDAHO - 0.1% (0.1% OF TOTAL INVESTMENTS)
510 Idaho Housing and Finance Association, Single Family Mortgage 1/10 at 100.00 Aa3 511,897
Bonds, Series 2000D, 6.200%, 7/01/14 (Alternative Minimum Tax)
295 Idaho Housing and Finance Association, Single Family Mortgage 7/10 at 100.00 Aa2 300,345
Bonds, Series 2000G-2, 5.950%, 7/01/25 (Alternative Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
805 Total Idaho 812,242
-----------------------------------------------------------------------------------------------------------------------------------
24
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
-----------------------------------------------------------------------------------------------------------------------------------
ILLINOIS - 22.9% (15.1% OF TOTAL INVESTMENTS)
$ 10,000 Chicago Board of Education, Illinois, Unlimited Tax General No Opt. Call AAA $ 5,917,200
Obligation Bonds, Dedicated Tax Revenues, Series 1998B-1,
0.000%, 12/01/19 - FGIC Insured
10,000 Chicago Board of Education, Illinois, Unlimited Tax General No Opt. Call AAA 5,622,400
Obligation Bonds, Dedicated Tax Revenues, Series 1999A, 0.000%,
12/01/20 - FGIC Insured
Chicago, Illinois, General Obligation Bonds, City Colleges,
Series 1999:
32,170 0.000%, 1/01/21 - FGIC Insured No Opt. Call AAA 17,882,338
32,670 0.000%, 1/01/22 - FGIC Insured No Opt. Call AAA 17,272,302
3,000 Chicago, Illinois, General Obligation Bonds, Library Projects, 1/08 at 102.00 AAA 3,070,800
Series 1997, 5.750%, 1/01/17 (Pre-refunded 1/01/08) -
FGIC Insured
9,145 Chicago, Illinois, Revenue Bonds, Midway Airport, Series 1996A, 1/08 at 100.50 AAA 9,248,430
5.500%, 1/01/29 - MBIA Insured
1,665 Chicago, Illinois, Third Lien General Airport Revenue Bonds, 1/16 at 100.00 AAA 1,713,818
O'Hare International Airport, Series 2005A, 5.000%, 1/01/33 -
FGIC Insured
DuPage County Forest Preserve District, Illinois, General
Obligation Bonds, Series 2000:
8,000 0.000%, 11/01/18 No Opt. Call AAA 5,000,400
15,285 0.000%, 11/01/19 No Opt. Call AAA 9,087,850
3,530 Illinois Finance Authority, Revenue Bonds, University of 7/17 at 100.00 AA 3,591,210
Chicago, Series 2007, Trust 73TP, 7.568%, 7/01/46 (IF)
4,000 Illinois Health Facilities Authority, FHA-Insured Mortgage 8/13 at 100.00 AAA 4,071,960
Revenue Refunding Bonds, Sinai Health System, Series 2003,
5.150%, 2/15/37
1,180 Illinois Health Facilities Authority, Revenue Bonds, Lake 7/12 at 100.00 A- 1,223,542
Forest Hospital, Series 2002A, 5.750%, 7/01/29
3,000 Illinois Health Facilities Authority, Revenue Bonds, Lake 7/13 at 100.00 A- 3,166,650
Forest Hospital, Series 2003, 6.000%, 7/01/33
4,580 Illinois Health Facilities Authority, Revenue Bonds, Midwest 8/10 at 102.00 Aaa 4,844,403
Care Center IX Inc., Series 2000, 6.250%, 8/20/35
2,410 Illinois Health Facilities Authority, Revenue Bonds, Silver 8/09 at 101.00 A 2,480,685
Cross Hospital and Medical Centers, Series 1999, 5.250%,
8/15/15 (Mandatory put 8/15/08)
7,250 Kane, Kendall, LaSalle, and Will Counties, Illinois, Community 12/13 at 57.71 AAA 3,096,185
College District 516, General Obligation Bonds, Series 2005E,
0.000%, 12/15/24 - FGIC Insured
5,000 Kane, McHenry, Cook and DeKalb Counties Community Unit School 12/11 at 100.00 AAA 5,378,250
District 300, Carpentersville, Illinois, General Obligation
Bonds, Series 2000, 5.500%, 12/01/19 (Pre-refunded 12/01/11) -
MBIA Insured
3,700 Libertyville, Illinois, Affordable Housing Revenue Bonds, 11/09 at 100.00 Aaa 3,925,589
Liberty Towers Project, Series 1999A, 7.000%, 11/01/29
(Pre-refunded 11/01/09) (Alternative Minimum Tax)
6,000 McHenry County Conservation District, Illinois, General 2/11 at 100.00 AAA 6,389,040
Obligation Bonds, Series 2001A, 5.625%, 2/01/21 (Pre-refunded
2/01/11) - FGIC Insured
5,000 Metropolitan Pier and Exposition Authority, Illinois, Revenue 6/12 at 101.00 AAA 5,194,250
Bonds, McCormick Place Expansion Project, Series 2002A, 5.250%,
6/15/42 - MBIA Insured
10,650 Metropolitan Pier and Exposition Authority, Illinois, Revenue No Opt. Call AAA 13,818,588
Bonds, McCormick Place Hospitality Facility, Series 1996A,
7.000%, 7/01/26 (ETM)
Metropolitan Pier and Exposition Authority, Illinois, Revenue
Refunding Bonds, McCormick Place Expansion Project,
Series 1996A:
9,400 0.000%, 12/15/18 - MBIA Insured No Opt. Call AAA 5,849,996
16,570 0.000%, 12/15/20 - MBIA Insured No Opt. Call AAA 9,300,410
23,550 0.000%, 12/15/22 - MBIA Insured No Opt. Call AAA 11,926,662
13,000 0.000%, 12/15/24 - MBIA Insured No Opt. Call AAA 5,937,100
5,100 Metropolitan Pier and Exposition Authority, Illinois, Revenue No Opt. Call AAA 5,771,109
Refunding Bonds, McCormick Place Expansion Project, Series
1998A, 5.500%, 12/15/23 - FGIC Insured
5,180 Metropolitan Pier and Exposition Authority, Illinois, Revenue No Opt. Call AAA 5,944,309
Refunding Bonds, McCormick Place Expansion Project, Series
1998A, 5.500%, 12/15/23 - FGIC Insured (ETM)
25
| Nuveen Performance Plus Municipal Fund, Inc. (continued)
NPP | Portfolio of INVESTMENTS October 31, 2007
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
-----------------------------------------------------------------------------------------------------------------------------------
ILLINOIS (continued)
$ 17,865 Regional Transportation Authority, Cook, DuPage, Kane, Lake, No Opt. Call AAA $ 20,797,360
McHenry and Will Counties, Illinois, General Obligation Bonds,
Series 1999, 5.750%, 6/01/23 - FSA Insured
6,090 Sherman, Illinois, GNMA Mortgage Revenue Refunding Bonds, Villa 10/09 at 102.00 AAA 6,410,639
Vianney, Series 1999A, 6.450%, 10/01/29
10,000 Will County Community High School District 210 Lincoln-Way, No Opt. Call Aaa 5,009,500
Illinois, General Obligation Bonds, Series 2006, 0.000%,
1/01/23 - FSA Insured
-----------------------------------------------------------------------------------------------------------------------------------
284,990 Total Illinois 208,942,975
-----------------------------------------------------------------------------------------------------------------------------------
INDIANA - 6.8% (4.5% OF TOTAL INVESTMENTS)
2,465 Danville Multi-School Building Corporation, Indiana, First 7/11 at 100.00 AAA 2,588,620
Mortgage Refunding Bonds, Series 2001, 5.250%, 7/15/18 -
AMBAC Insured
14,000 Indiana Health Facility Financing Authority, Hospital Revenue 8/10 at 101.50 AAA 14,935,340
Bonds, Clarian Health Obligated Group, Series 2000A, 5.500%,
2/15/30 (Pre-refunded 8/15/10) - MBIA Insured
2,500 Indiana Health Facility Financing Authority, Hospital Revenue No Opt. Call AAA 2,850,200
Refunding Bonds, Columbus Regional Hospital, Series 1993,
7.000%, 8/15/15 - FSA Insured
Indiana Health Facility Financing Authority, Revenue Bonds,
Ancilla Systems Inc. Obligated Group, Series 1997:
15,380 5.250%, 7/01/17 - MBIA Insured (ETM) 1/08 at 101.00 AAA 15,553,794
4,320 5.250%, 7/01/22 - MBIA Insured (ETM) 1/08 at 101.00 AAA 4,368,384
2,250 5.250%, 7/01/22 - MBIA Insured (ETM) 1/08 at 101.00 AAA 2,275,200
2,000 Indiana Health Facility Financing Authority, Revenue Bonds, 5/15 at 100.00 AAA 2,043,260
Community Hospitals of Indiana, Series 2005A, 5.000%, 5/01/35
- AMBAC Insured
Indiana Transportation Finance Authority, Highway Revenue
Bonds, Series 2000:
1,285 5.375%, 12/01/25 (Pre-refunded 12/01/10) 12/10 at 100.00 AA (4) 1,357,307
6,715 5.375%, 12/01/25 (Pre-refunded 12/01/10) 12/10 at 100.00 AA (4) 7,092,853
3,105 Indiana University, Student Fee Revenue Bonds, Series 2003O, 8/13 at 100.00 AAA 3,316,388
5.250%, 8/01/20 - FGIC Insured
1,000 Marion County Convention and Recreational Facilities Authority, 6/11 at 100.00 AAA 1,038,630
Indiana, Excise Taxes Lease Rental Revenue Refunding Senior
Bonds, Series 2001A, 5.000%, 6/01/21 - MBIA Insured
2,395 Shelbyville Central Renovation School Building Corporation, 7/15 at 100.00 AAA 2,330,383
Indiana, First Mortgage Bonds, Series 2005, 4.375%, 7/15/26 -
MBIA Insured
1,800 Sunman Dearborn High School Building Corporation, Indiana, 1/15 at 100.00 AAA 1,867,644
First Mortgage Bonds, Series 2005, 5.000%, 7/15/25 -
MBIA Insured
-----------------------------------------------------------------------------------------------------------------------------------
59,215 Total Indiana 61,618,003
-----------------------------------------------------------------------------------------------------------------------------------
IOWA - 0.8% (0.5% OF TOTAL INVESTMENTS)
1,500 Iowa Finance Authority, Health Facility Revenue Bonds, Care 7/16 at 100.00 BBB- 1,525,200
Initiatives Project, Series 2006A, 5.500%, 7/01/21
5,000 Iowa Tobacco Settlement Authority, Tobacco Settlement 6/11 at 101.00 AAA 5,385,100
Asset-Backed Revenue Bonds, Series 2001B, 5.600%, 6/01/35
(Pre-refunded 6/01/11)
-----------------------------------------------------------------------------------------------------------------------------------
6,500 Total Iowa 6,910,300
-----------------------------------------------------------------------------------------------------------------------------------
KANSAS - 1.4% (0.9% OF TOTAL INVESTMENTS)
3,790 Kansas Department of Transportation, Highway Revenue Bonds, 3/14 at 100.00 AAA 3,951,530
Series 2004A, 5.000%, 3/01/23
5,790 Sedgwick County Unified School District 259, Wichita, Kansas, 9/10 at 100.00 AA 5,507,332
General Obligation Bonds, Series 2000, 3.500%, 9/01/17
3,200 Wyandotte County Unified School District 500, Kansas, General 9/11 at 100.00 AAA 3,124,992
Obligation Bonds, Series 2001, 4.000%, 9/01/21 - FSA Insured
-----------------------------------------------------------------------------------------------------------------------------------
12,780 Total Kansas 12,583,854
-----------------------------------------------------------------------------------------------------------------------------------
LOUISIANA - 2.9% (1.9% OF TOTAL INVESTMENTS)
860 East Baton Rouge Mortgage Finance Authority, Louisiana, 4/08 at 102.00 Aaa 867,267
GNMA/FNMA Mortgage-Backed Securities Program Single Family
Mortgage Revenue Refunding Bonds, Series 1997B-1, 5.750%,
10/01/26
26
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
-----------------------------------------------------------------------------------------------------------------------------------
LOUISIANA (continued)
$ 4,000 Lafayette City and Parish, Louisiana, Utilities Revenue Bonds, 11/14 at 100.00 AAA $ 4,265,200
Series 2004, 5.250%, 11/01/25 - MBIA Insured
4,650 Louisiana Public Facilities Authority, Revenue Bonds, Baton 7/14 at 100.00 AAA 4,814,796
Rouge General Hospital, Series 2004, 5.250%, 7/01/33 -
MBIA Insured
Tobacco Settlement Financing Corporation, Louisiana, Tobacco
Settlement Asset-Backed Bonds, Series 2001B:
10,000 5.500%, 5/15/30 5/11 at 101.00 BBB 9,993,300
6,680 5.875%, 5/15/39 5/11 at 101.00 BBB 6,682,405
-----------------------------------------------------------------------------------------------------------------------------------
26,190 Total Louisiana 26,622,968
-----------------------------------------------------------------------------------------------------------------------------------
MAINE - 0.6% (0.4% OF TOTAL INVESTMENTS)
5,680 Portland, Maine, Airport Revenue Bonds, Series 2003A, 5.000%, 7/13 at 100.00 AAA 5,807,459
7/01/32 - FSA Insured
-----------------------------------------------------------------------------------------------------------------------------------
MARYLAND - 1.7% (1.1% OF TOTAL INVESTMENTS)
7,720 Maryland Transportation Authority, Airport Parking Revenue 3/12 at 101.00 AAA 7,986,649
Bonds, Baltimore-Washington International Airport Passenger
Facility, Series 2002B, 5.125%, 3/01/20 - AMBAC Insured
(Alternative Minimum Tax)
6,865 Takoma Park, Maryland, Hospital Facilities Revenue Refunding No Opt. Call AAA 7,410,424
and Improvement Bonds, Washington Adventist Hospital, Series
1995, 6.500%, 9/01/12 - FSA Insured (ETM)
-----------------------------------------------------------------------------------------------------------------------------------
14,585 Total Maryland 15,397,073
-----------------------------------------------------------------------------------------------------------------------------------
MASSACHUSETTS - 5.8% (3.9% OF TOTAL INVESTMENTS)
Massachusetts Development Finance Authority, Revenue Bonds, 100
Cambridge Street Redevelopment, M/SRBC Project, Series 2002A:
4,000 5.125%, 8/01/28 - MBIA Insured 2/12 at 100.00 AAA 4,161,320
5,625 5.125%, 2/01/34 - MBIA Insured 2/12 at 100.00 AAA 5,823,225
1,075 Massachusetts Educational Finance Authority, Student Loan 12/09 at 101.00 AAA 1,099,284
Revenue Refunding Bonds, Series 2000G, 5.700%, 12/01/11 - MBIA
Insured (Alternative Minimum Tax)
8,730 Massachusetts Health and Educational Facilities Authority, 10/15 at 100.00 AAA 9,121,191
Revenue Bonds, Berkshire Health System, Series 2005F, 5.000%,
10/01/19 - AGC Insured
1,530 Massachusetts Health and Educational Facilities Authority, 7/08 at 101.00 Aaa 1,536,181
Revenue Bonds, Southcoast Health System Obligated Group, Series
1998A, 4.750%, 7/01/27 - MBIA Insured
5,745 Massachusetts Industrial Finance Agency, Resource Recovery 12/08 at 102.00 BBB 5,873,860
Revenue Refunding Bonds, Ogden Haverhill Project, Series 1998A,
5.600%, 12/01/19 (Alternative Minimum Tax)
10,150 Massachusetts Turnpike Authority, Metropolitan Highway System 1/08 at 101.00 AAA 10,205,825
Revenue Bonds, Senior Series 1997A, 5.000%, 1/01/37 -
MBIA Insured
890 Massachusetts, General Obligation Bonds, Consolidated Loan, 11/12 at 100.00 AA (4) 959,393
Series 2002C, 5.250%, 11/01/30 (Pre-refunded 11/01/12)
Massachusetts, General Obligation Bonds, Consolidated Loan,
Series 2002E:
1,255 5.250%, 1/01/22 (Pre-refunded 1/01/13) - FGIC Insured 1/13 at 100.00 AAA 1,353,304
3,745 5.250%, 1/01/22 (Pre-refunded 1/01/13) - FGIC Insured 1/13 at 100.00 AAA 4,038,346
8,500 Route 3 North Transportation Improvements Association, 6/10 at 100.00 AAA 8,914,120
Massachusetts, Lease Revenue Bonds, Series 2000, 5.375%,
6/15/33 (Pre-refunded 6/15/10) - MBIA Insured
-----------------------------------------------------------------------------------------------------------------------------------
51,245 Total Massachusetts 53,086,049
-----------------------------------------------------------------------------------------------------------------------------------
MICHIGAN - 6.5% (4.3% OF TOTAL INVESTMENTS)
17,000 Birmingham City School District, Oakland County, Michigan, 11/07 at 100.00 AAA 17,033,660
School Building and Site Bonds, Series 1998, 4.750%, 11/01/24 -
FSA Insured
5,000 Detroit, Michigan, Second Lien Sewerage Disposal System Revenue 7/15 at 100.00 AAA 5,135,800
Bonds, Series 2005A, 5.000%, 7/01/35 - MBIA Insured
3,990 Hancock Hospital Finance Authority, Michigan, FHA-Insured 8/08 at 100.00 AAA 4,044,304
Mortgage Hospital Revenue Bonds, Portage Health System Inc.,
Series 1998, 5.450%, 8/01/47 (Pre-refunded 8/01/08) -
MBIA Insured
27
| Nuveen Performance Plus Municipal Fund, Inc. (continued)
NPP | Portfolio of INVESTMENTS October 31, 2007
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
-----------------------------------------------------------------------------------------------------------------------------------
MICHIGAN (continued)
$ 1,500 Michigan State Building Authority, Revenue Bonds, Facilities 10/11 at 100.00 A+ $ 1,549,695
Program, Series 2001I, 5.000%, 10/15/24
5,000 Michigan State Building Authority, Revenue Refunding Bonds, 10/13 at 100.00 AAA 5,142,400
Facilities Program, Series 2003II, 5.000%, 10/15/29 -
MBIA Insured
7,115 Michigan State Hospital Finance Authority, Hospital Revenue 3/13 at 100.00 A1 (4) 7,759,904
Refunding Bonds, Henry Ford Health System, Series 2003A, 5.500%,
3/01/16 (Pre-refunded 3/01/13)
5,000 Michigan State Hospital Finance Authority, Hospital Revenue No Opt. Call AAA 5,288,500
Refunding Bonds, Sisters of Mercy Health Corporation, Series
1993P, 5.375%, 8/15/14 - MBIA Insured (ETM)
3,000 Michigan Strategic Fund, Collateralized Limited Obligation 9/09 at 102.00 AAA 3,108,390
Pollution Control Revenue Refunding Bonds, Detroit Edison
Company, Series 1999A, 5.550%, 9/01/29 - MBIA Insured
(Alternative Minimum Tax)
10,000 Wayne County, Michigan, Airport Revenue Bonds, Detroit 12/08 at 101.00 AAA 10,235,000
Metropolitan Wayne County Airport, Series 1998A, 5.375%,
12/01/16 - MBIA Insured (Alternative Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
57,605 Total Michigan 59,297,653
-----------------------------------------------------------------------------------------------------------------------------------
MINNESOTA - 2.9% (1.9% OF TOTAL INVESTMENTS)
3,000 Minneapolis-St. Paul Metropolitan Airports Commission, 1/11 at 100.00 AAA 3,156,390
Minnesota, Subordinate Airport Revenue Bonds, Series 2001C,
5.250%, 1/01/26 (Pre-refunded 1/01/11) - FGIC Insured
19,515 St. Paul Housing and Redevelopment Authority, Minnesota, Sales 11/15 at 103.00 AAA 23,569,240
Tax Revenue Refunding Bonds, Civic Center Project, Series 1996,
7.100%, 11/01/23 - FSA Insured
-----------------------------------------------------------------------------------------------------------------------------------
22,515 Total Minnesota 26,725,630
-----------------------------------------------------------------------------------------------------------------------------------
MISSISSIPPI - 1.4% (0.9% OF TOTAL INVESTMENTS)
9,750 Mississippi Business Finance Corporation, Pollution Control 4/08 at 100.00 BBB- 9,860,273
Revenue Refunding Bonds, System Energy Resources Inc. Project,
Series 1998, 5.875%, 4/01/22
2,475 Mississippi Hospital Equipment and Facilities Authority, Revenue 9/14 at 100.00 N/R 2,508,413
Bonds, Baptist Memorial Healthcare, Series 2004B-1, 5.000%,
9/01/24
-----------------------------------------------------------------------------------------------------------------------------------
12,225 Total Mississippi 12,368,686
-----------------------------------------------------------------------------------------------------------------------------------
MISSOURI - 1.6% (1.1% OF TOTAL INVESTMENTS)
6,350 Kansas City, Missouri, Airport Revenue Bonds, General 9/12 at 100.00 AAA 6,741,224
Improvement Projects, Series 2003B, 5.250%, 9/01/17 -
FGIC Insured
1,845 Missouri Health and Educational Facilities Authority, Revenue 5/13 at 100.00 AA 1,939,353
Bonds, BJC Health System, Series 2003, 5.250%, 5/15/18
3,815 Missouri Health and Educational Facilities Authority, Revenue 6/11 at 101.00 AAA 4,069,575
Bonds, SSM Healthcare System, Series 2001A, 5.250%, 6/01/28
(Pre-refunded 6/01/11) - AMBAC Insured
2,000 Missouri-Illinois Metropolitan District Bi-State Development 10/13 at 100.00 AAA 2,053,460
Agency, Mass Transit Sales Tax Appropriation Bonds, Metrolink
Cross County Extension Project, Series 2002B, 5.000%, 10/01/32 -
FSA Insured
-----------------------------------------------------------------------------------------------------------------------------------
14,010 Total Missouri 14,803,612
-----------------------------------------------------------------------------------------------------------------------------------
MONTANA - 0.6% (0.4% OF TOTAL INVESTMENTS)
665 Montana Board of Housing, Single Family Mortgage Bonds, Series 12/09 at 100.00 AA+ 680,082
2000A-2, 6.450%, 6/01/29 (Alternative Minimum Tax)
4,795 Montana Higher Education Student Assistance Corporation, Student 12/08 at 101.00 A2 4,875,364
Loan Revenue Bonds, Subordinate Series 1998B, 5.500%, 12/01/31
(Alternative Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
5,460 Total Montana 5,555,446
-----------------------------------------------------------------------------------------------------------------------------------
NEBRASKA - 0.2% (0.1% OF TOTAL INVESTMENTS)
1,395 Nebraska Investment Finance Authority, Single Family Housing 9/10 at 100.00 AAA 1,407,164
Revenue Bonds, Series 2000E, 5.850%, 9/01/20 (Alternative
Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
28
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
-----------------------------------------------------------------------------------------------------------------------------------
NEVADA - 3.8% (2.5% OF TOTAL INVESTMENTS)
$ 10,900 Clark County School District, Nevada, General Obligation Bonds, 6/12 at 100.00 AAA $ 11,810,368
Series 2002C, 5.500%, 6/15/19 (Pre-refunded 6/15/12) -
MBIA Insured
6,980 Director of Nevada State Department of Business and Industry, 1/10 at 100.00 AAA 7,162,318
Revenue Bonds, Las Vegas Monorail Project, First Tier, Series
2000, 5.375%, 1/01/40 - AMBAC Insured
Reno, Nevada, Health Facilities Revenue Bonds, Catholic
Healthcare West, Series 2007A:
10,000 5.250%, 7/01/31 (UB) 7/17 at 100.00 A 10,196,800
5,000 5.250%, 7/01/31 7/17 at 100.00 A 5,098,400
-----------------------------------------------------------------------------------------------------------------------------------
32,880 Total Nevada 34,267,886
-----------------------------------------------------------------------------------------------------------------------------------
NEW HAMPSHIRE - 1.6% (1.0% OF TOTAL INVESTMENTS)
3,265 New Hampshire Health and Education Facilities Authority, Revenue 1/15 at 100.00 A 3,131,755
Bonds, Southern
New Hampshire University, Series 2005, 5.000%, 1/01/30 - ACA
Insured New Hampshire Housing Finance Authority, FHLMC
Multifamily Housing Remarketed Revenue Bonds, Countryside LP,
Series 1994:
3,725 6.000%, 7/01/18 (Alternative Minimum Tax) 7/10 at 101.00 Aaa 3,858,243
6,945 6.100%, 7/01/24 (Alternative Minimum Tax) 7/10 at 101.00 Aaa 7,164,879
-----------------------------------------------------------------------------------------------------------------------------------
13,935 Total New Hampshire 14,154,877
-----------------------------------------------------------------------------------------------------------------------------------
NEW JERSEY - 7.8% (5.2% OF TOTAL INVESTMENTS)
3,000 New Jersey Economic Development Authority, Transportation 5/09 at 100.00 AAA 3,079,830
Sublease Revenue Bonds, Light Rail Transit System, Series
1999A, 5.250%, 5/01/17 (Pre-refunded 5/01/09) - FSA Insured
2,110 New Jersey Higher Education Assistance Authority, Student Loan 6/10 at 101.00 AAA 2,175,136
Revenue Bonds, Series 2000A, 6.000%, 6/01/13 - MBIA Insured
(Alternative Minimum Tax)
4,500 New Jersey Transportation Trust Fund Authority, Transportation No Opt. Call AAA 5,098,860
System Bonds, Series 2001C, 5.500%, 12/15/18 - FSA Insured
9,250 New Jersey Transportation Trust Fund Authority, Transportation 6/13 at 100.00 AAA 10,159,183
System Bonds, Series 2003C, 5.500%, 6/15/23 (Pre-refunded
6/15/13)
New Jersey Transportation Trust Fund Authority, Transportation
System Bonds, Series 2006C:
35,000 0.000%, 12/15/29 - FSA Insured No Opt. Call AAA 12,389,300
10,000 0.000%, 12/15/30 - FGIC Insured No Opt. Call AAA 3,362,200
10,000 New Jersey Turnpike Authority, Revenue Bonds, Series 2003A, 7/13 at 100.00 AAA 10,535,700
5.000%, 1/01/20 - FSA Insured
11,960 Tobacco Settlement Financing Corporation, New Jersey, Tobacco 6/12 at 100.00 AAA 12,830,688
Settlement Asset-Backed Bonds, Series 2002, 5.750%, 6/01/32
(Pre-refunded 6/01/12)
4,450 Tobacco Settlement Financing Corporation, New Jersey, Tobacco 6/13 at 100.00 AAA 5,151,899
Settlement Asset-Backed Bonds, Series 2003, 6.750%, 6/01/39
(Pre-refunded 6/01/13)
West Deptford Township, Gloucester County, New Jersey, General
Obligation Bonds, Series 2000:
3,150 5.500%, 9/01/21 (Pre-refunded 9/01/10) - FGIC Insured 9/10 at 100.00 Aaa 3,325,172
3,335 5.500%, 9/01/22 (Pre-refunded 9/01/10) - FGIC Insured 9/10 at 100.00 Aaa 3,520,459
-----------------------------------------------------------------------------------------------------------------------------------
96,755 Total New Jersey 71,628,427
-----------------------------------------------------------------------------------------------------------------------------------
NEW YORK - 10.4% (6.9% OF TOTAL INVESTMENTS)
5,500 Dormitory Authority of the State of New York, FHA-Insured 2/14 at 100.00 AAA 5,688,980
Mortgage Revenue Bonds, Kaleida Health, Series 2004, 5.050%,
2/15/25
5 Dormitory Authority of the State of New York, Improvement 2/08 at 100.00 AAA 5,020
Revenue Bonds, Mental Health Services Facilities, Series 1996B,
5.375%, 2/15/26 - MBIA Insured
2,070 Dormitory Authority of the State of New York, Insured Revenue 7/08 at 101.00 AAA 2,116,534
Bonds, 853 Schools Program, Gateway-Longview Inc., Series 1998A,
5.500%, 7/01/18 - AMBAC Insured
2,250 Dormitory Authority of the State of New York, Lease Revenue 7/09 at 101.00 AAA 2,347,650
Bonds, State University Dormitory Facilities, Series 1999C,
5.500%, 7/01/29 (Pre-refunded 7/01/09) - MBIA Insured
29
| Nuveen Performance Plus Municipal Fund, Inc. (continued)
NPP | Portfolio of INVESTMENTS October 31, 2007
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
-----------------------------------------------------------------------------------------------------------------------------------
NEW YORK (continued)
Dormitory Authority of the State of New York, Revenue Bonds,
Marymount Manhattan College, Series 1999:
$ 1,580 6.375%, 7/01/13 - RAAI Insured 7/09 at 101.00 AA $ 1,657,878
9,235 6.125%, 7/01/21 - RAAI Insured 7/09 at 101.00 AA 9,580,297
1,500 Dormitory Authority of the State of New York, Revenue Bonds, St. 2/08 at 101.00 AAA 1,516,770
Barnabas Hospital, Series 1997, 5.450%, 8/01/35 - AMBAC Insured
3,000 Dormitory Authority of the State of New York, Third General 1/08 at 102.00 AAA 3,069,150
Resolution Consolidated Revenue Bonds, City University System,
Series 1997-1, 5.375%, 7/01/24 (Pre-refunded 1/01/08) -
FSA Insured
17,000 Dormitory Authority of the State of New York, Third General 7/09 at 101.00 AAA 17,737,800
Resolution Consolidated Revenue Bonds, City University System,
Series 1999-1, 5.500%, 7/01/29 (Pre-refunded 7/01/09) -
FSA Insured
1,500 Hempstead Industrial Development Agency, New York, Resource No Opt. Call Baa3 1,518,735
Recovery Revenue Refunding Bonds, American Ref-Fuel Company of
Hempstead LP, Series 2001, 5.000%, 12/01/10 (Mandatory
put 6/01/10)
13,220 Metropolitan Transportation Authority, New York, Dedicated Tax 11/12 at 100.00 AAA 14,122,794
Fund Bonds, Series 2002A, 5.500%, 11/15/26 - FSA Insured
4,545 Metropolitan Transportation Authority, New York, Transportation 11/16 at 100.00 AAA 4,353,292
Revenue Bonds, Series 2006B, Drivers 1662, 6.055%, 11/15/32 -
FSA Insured (IF)
10,000 New York City Municipal Water Finance Authority, New York, Water 6/09 at 101.00 AA+ (4) 10,464,500
and Sewerage System Revenue Bonds, Fiscal Series 2000A, 5.750%,
6/15/30 (Pre-refunded 6/15/09)
7,810 New York City Transitional Finance Authority, New York, Future 8/09 at 101.00 AAA 8,201,125
Tax Secured Bonds, Fiscal Series 2000A, 5.750%, 8/15/24
(Pre-refunded 8/15/09)
5 New York City, New York, General Obligation Bonds, Fiscal Series 2/08 at 100.00 AA 5,061
1987D, 8.500%, 8/01/08
6,300 New York City, New York, General Obligation Bonds, Fiscal Series 5/10 at 101.00 AAA 6,754,293
2000A, 6.250%, 5/15/26 - FSA Insured
3,000 New York State Energy Research and Development Authority, 9/08 at 102.00 AAA 3,104,700
Pollution Control Revenue Bonds, Rochester Gas and Electric
Corporation, Series 1998A, 5.950%, 9/01/33 - MBIA Insured
(Alternative Minimum Tax)
2,320 New York State Tobacco Settlement Financing Corporation, Tobacco 6/10 at 100.00 AA- 2,413,496
Settlement Asset-Backed and State Contingency Contract-Backed
Bonds, Series 2003A-1, 5.500%, 6/01/16
-----------------------------------------------------------------------------------------------------------------------------------
90,840 Total New York 94,658,075
-----------------------------------------------------------------------------------------------------------------------------------
NORTH CAROLINA - 0.8% (0.5% OF TOTAL INVESTMENTS)
4,900 Charlotte-Mecklenburg Hospital Authority, North Carolina, 1/15 at 100.00 AA- (4) 5,291,363
Healthcare System Revenue Bonds, DBA Carolinas Healthcare
System, Series 2005A, 5.000%, 1/15/45 (Pre-refunded 1/15/15)
2,000 North Carolina Municipal Power Agency 1, Catawba Electric 1/08 at 102.00 AAA 2,043,360
Revenue Bonds, Series 1998A, 5.000%, 1/01/20 - MBIA Insured
-----------------------------------------------------------------------------------------------------------------------------------
6,900 Total North Carolina 7,334,723
-----------------------------------------------------------------------------------------------------------------------------------
OHIO - 5.4% (3.6% OF TOTAL INVESTMENTS)
Buckeye Tobacco Settlement Financing Authority, Ohio, Tobacco
Settlement Asset-Backed Revenue Bonds, Senior Lien,
Series 2007A-2:
355 5.125%, 6/01/24 6/17 at 100.00 BBB 342,682
3,570 5.875%, 6/01/30 6/17 at 100.00 BBB 3,525,839
3,475 5.750%, 6/01/34 6/17 at 100.00 BBB 3,353,375
7,855 5.875%, 6/01/47 6/17 at 100.00 BBB 7,625,870
5,150 Buckeye Tobacco Settlement Financing Authority, Ohio, Tobacco 6/22 at 100.00 BBB 3,776,186
Settlement Asset-Backed Revenue Bonds, Senior Lien, Series
2007A-3, 0.000%, 6/01/37
6,720 Cleveland, Ohio, Airport System Revenue Bonds, Series 2001A, 1/10 at 101.00 AAA 6,812,803
5.000%, 1/01/31 - FSA Insured
780 Cleveland, Ohio, Airport System Revenue Bonds, Series 2001A, 1/10 at 101.00 AAA 812,651
5.000%, 1/01/31 (Pre-refunded 1/01/10) - FSA Insured
30
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
-----------------------------------------------------------------------------------------------------------------------------------
OHIO (continued)
$ 3,650 Montgomery County, Ohio, Revenue Bonds, Catholic Health 5/14 at 100.00 AA $ 3,695,443
Initiatives, Series 2004A, 5.000%, 5/01/30
635 Ohio Housing Finance Agency, GNMA Mortgage-Backed Securities 7/09 at 100.00 Aaa 640,080
Program Residential Mortgage Revenue Bonds, Series 1999C,
5.750%, 9/01/30 (Alternative Minimum Tax)
6,100 Ohio Water Development Authority, Solid Waste Disposal Revenue 9/08 at 102.00 N/R 6,151,545
Bonds, Bay Shore Power, Series 1998A, 5.875%, 9/01/20
(Alternative Minimum Tax)
12,900 Ohio Water Development Authority, Solid Waste Disposal Revenue 9/09 at 102.00 N/R 13,283,904
Bonds, Bay Shore Power, Series 1998B, 6.625%, 9/01/20
(Alternative Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
51,190 Total Ohio 50,020,378
-----------------------------------------------------------------------------------------------------------------------------------
OKLAHOMA - 0.4% (0.2% OF TOTAL INVESTMENTS)
3,400 Tulsa Municipal Airport Trust, Oklahoma, Revenue Refunding 6/09 at 100.00 B 3,401,734
Bonds, American Airlines Inc., Series 2000B, 6.000%, 6/01/35
(Mandatory put 12/01/08) (Alternative Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
OREGON - 1.0% (0.7% OF TOTAL INVESTMENTS)
9,150 Port of St. Helens, Oregon, Pollution Control Revenue Bonds, No Opt. Call BBB 9,162,170
Portland General Electric Company, Series 1985B, 4.800%,
6/01/10
-----------------------------------------------------------------------------------------------------------------------------------
PENNSYLVANIA - 3.3% (2.2% OF TOTAL INVESTMENTS)
Bethlehem Authority, Northampton and Lehigh Counties,
Pennsylvania, Guaranteed Water Revenue Bonds, Series 1998:
3,125 0.000%, 5/15/22 - FSA Insured No Opt. Call AAA 1,629,344
3,125 0.000%, 5/15/23 - FSA Insured No Opt. Call AAA 1,543,813
3,135 0.000%, 5/15/24 - FSA Insured No Opt. Call AAA 1,470,503
3,155 0.000%, 5/15/26 - FSA Insured No Opt. Call AAA 1,335,827
4,145 0.000%, 11/15/26 - FSA Insured No Opt. Call AAA 1,714,787
2,800 0.000%, 5/15/28 - FSA Insured No Opt. Call AAA 1,063,328
3,000 0.000%, 11/15/28 - FSA Insured No Opt. Call AAA 1,112,760
2,845 Carbon County Industrial Development Authority, Pennsylvania, No Opt. Call BBB- 2,953,764
Resource Recovery Revenue Refunding Bonds, Panther Creek
Partners Project, Series 2000, 6.650%, 5/01/10 (Alternative
Minimum Tax)
11,000 Delaware County Authority, Pennsylvania, Revenue Bonds, Catholic 11/08 at 102.00 AAA 11,220,550
Health East, Series 1998A, 4.875%, 11/15/18 - AMBAC Insured
Pennsylvania Economic Development Financing Authority, Senior
Lien Resource Recovery Revenue Bonds, Northampton Generating
Project, Series 1994A:
1,400 6.400%, 1/01/09 (Alternative Minimum Tax) 1/08 at 100.00 BB+ 1,401,456
4,500 6.500%, 1/01/13 (Alternative Minimum Tax) 1/08 at 100.00 BB+ 4,548,555
500 Pennsylvania Economic Development Financing Authority, 1/08 at 100.00 N/R 498,635
Subordinate Resource Recovery Revenue Bonds, Northampton
Generating Project, Series 1994C, 6.875%, 1/01/11 (Alternative
Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
42,730 Total Pennsylvania 30,493,322
-----------------------------------------------------------------------------------------------------------------------------------
PUERTO RICO - 0.7% (0.5% OF TOTAL INVESTMENTS)
1,250 Puerto Rico Highway and Transportation Authority, Highway 7/10 at 101.00 AAA 1,340,750
Revenue Bonds, Series 2000B, 5.875%, 7/01/21 (Pre-refunded
7/01/10) - MBIA Insured
5,000 Puerto Rico Sales Tax Financing Corporation, Sales Tax Revenue 8/17 at 100.00 A+ 5,513,600
Bonds, Series 2007A, Lehman Municipal Trust Receipts FC8,
8.252%, 8/01/57 (IF)
-----------------------------------------------------------------------------------------------------------------------------------
6,250 Total Puerto Rico 6,854,350
-----------------------------------------------------------------------------------------------------------------------------------
31
| Nuveen Performance Plus Municipal Fund, Inc. (continued)
NPP | Portfolio of INVESTMENTS October 31, 2007
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
-----------------------------------------------------------------------------------------------------------------------------------
RHODE ISLAND - 0.5% (0.3% OF TOTAL INVESTMENTS)
$ 2,000 Kent County Water Authority, Rhode Island, General Revenue 7/12 at 100.00 AAA $ 2,084,900
Bonds, Series 2002A, 5.000%, 7/15/23 - MBIA Insured
Rhode Island Health and Educational Building Corporation,
Revenue Refunding Bonds, Salve Regina University, Series 2002:
1,260 5.250%, 3/15/17 - RAAI Insured 3/12 at 101.00 AA 1,302,865
1,080 5.250%, 3/15/18 - RAAI Insured 3/12 at 101.00 AA 1,114,582
-----------------------------------------------------------------------------------------------------------------------------------
4,340 Total Rhode Island 4,502,347
-----------------------------------------------------------------------------------------------------------------------------------
SOUTH CAROLINA - 4.3% (2.8% OF TOTAL INVESTMENTS)
2,625 Medical University Hospital Authority, South Carolina, 8/14 at 100.00 AAA 2,760,056
FHA-Insured Mortgage Revenue Bonds, Series 2004A, 5.250%,
2/15/25 - MBIA Insured
22,855 Piedmont Municipal Power Agency, South Carolina, Electric No Opt. Call AAA 7,530,723
Revenue Bonds, Series 2004A-2, 0.000%, 1/01/31 - AMBAC Insured
6,925 South Carolina, General Obligation Bonds, Series 1999A, 4.000%, 10/09 at 101.00 Aaa 6,997,020
10/01/14
21,000 Tobacco Settlement Revenue Management Authority, South Carolina, 5/11 at 101.00 BBB 21,586,529
Tobacco Settlement Asset-Backed Bonds, Series 2001B, 6.000%,
5/15/22
-----------------------------------------------------------------------------------------------------------------------------------
53,405 Total South Carolina 38,874,328
-----------------------------------------------------------------------------------------------------------------------------------
TENNESSEE - 1.3% (0.8% OF TOTAL INVESTMENTS)
2,860 Johnson City Health and Educational Facilities Board, Tennessee, 7/23 at 100.00 AAA 2,926,752
Hospital Revenue Refunding and Improvement Bonds, Johnson City
Medical Center, Series 1998C, 5.125%, 7/01/25 (Pre-refunded
7/01/23) - MBIA Insured
1,700 Memphis-Shelby County Airport Authority, Tennessee, Airport 3/10 at 101.00 AAA 1,784,405
Revenue Bonds, Series 1999D, 6.000%, 3/01/24 - AMBAC Insured
(Alternative Minimum Tax)
6,000 Metropolitan Government of Nashville-Davidson County Health and 12/17 at 100.00 AAA 6,943,980
Educational Facilities Board, Tennessee, Revenue Refunding and
Improvement Bonds, Meharry Medical College, Series 1996,
6.000%, 12/01/19 - AMBAC Insured
-----------------------------------------------------------------------------------------------------------------------------------
10,560 Total Tennessee 11,655,137
-----------------------------------------------------------------------------------------------------------------------------------
TEXAS - 6.7% (4.5% OF TOTAL INVESTMENTS)
3,975 Bell County Health Facilities Development Corporation, Texas, 2/10 at 101.00 AAA 4,244,068
Revenue Bonds, Scott and White Memorial Hospital and Scott,
Sherwood and Brindley Foundation, Series 2000A, 6.125%, 8/15/23
(Pre-refunded 2/15/10) - MBIA Insured
5,000 Bexar Metropolitan Water District, Texas, Waterworks System 5/16 at 100.00 AAA 5,155,350
Revenue Bonds, Series 2006, 5.000%, 5/01/35 - MBIA Insured
Central Texas Regional Mobility Authority, Travis and Williamson
Counties, Toll Road Revenue Bonds, Series 2005:
4,000 5.000%, 1/01/35 - FGIC Insured 1/15 at 100.00 AAA 4,087,920
3,000 5.000%, 1/01/45 - FGIC Insured 1/15 at 100.00 AAA 3,044,010
1,000 Fort Worth, Texas, Water and Sewerage Revenue Bonds, Series 2/08 at 100.00 AA (4) 1,004,760
1998, 5.250%, 2/15/15 (Pre-refunded 2/15/08)
1,000 Harlingen Independent School District, Cameron County, Texas, 8/09 at 100.00 AAA 1,038,230
Unlimited Tax School Building Bonds, Series 1999, 5.650%,
8/15/29 (Pre-refunded 8/15/09)
1,625 Harris County Health Facilities Development Corporation, Texas, 7/09 at 101.00 AAA 1,690,114
Revenue Bonds, Christus Health, Series 1999A, 5.375%, 7/01/24
(Pre-refunded 7/01/09) - MBIA Insured
4,000 Houston Community College, Texas, Limited Tax General Obligation 2/13 at 100.00 AAA 4,109,040
Bonds, Series 2003, 5.000%, 2/15/27 - AMBAC Insured
3,885 Houston Independent School District, Public Facility No Opt. Call AAA 2,306,563
Corporation, Harris County, Texas, Lease Revenue Bonds, Cesar
E. Chavez High School, Series 1998A, 0.000%, 9/15/19 - AMBAC
Insured
33,855 Leander Independent School District, Williamson and Travis 8/14 at 23.67 AAA 5,677,145
Counties, Texas, General Obligation Bonds, Series 2006, 0.000%,
8/15/40
32
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
-----------------------------------------------------------------------------------------------------------------------------------
TEXAS (continued)
Leander Independent School District, Williamson and Travis
Counties, Texas, Unlimited Tax School Building and Refunding
Bonds, Series 1998:
$ 4,930 0.000%, 8/15/20 2/08 at 50.44 AAA $ 2,450,259
3,705 0.000%, 8/15/22 2/08 at 44.90 AAA 1,638,499
245 Lubbock Housing Finance Corporation, Texas, GNMA Mortgage-Backed 11/07 at 102.00 AAA 247,085
Securities Program Single Family Mortgage Revenue Refunding
Bonds, Series 1997A, 6.125%, 12/01/17
3,480 Pearland, Texas, General Obligation Bonds, Series 2002, 5.000%, 3/12 at 100.00 AAA 3,684,450
3/01/27 (Pre-refunded 3/01/12) - FGIC Insured
6,835 San Antonio, Texas, Electric and Gas System Revenue Refunding 2/09 at 100.00 Aa1 6,846,551
Bonds, New Series 1998A, 4.500%, 2/01/21
6,000 Spring Branch Independent School District, Harris County, Texas, 2/11 at 100.00 AAA 6,297,660
Limited Tax Schoolhouse and Refunding Bonds, Series 2001,
5.125%, 2/01/26 (Pre-refunded 2/01/11)
4,000 Tarrant Regional Water District, Texas, Water Revenue Refunding 3/13 at 100.00 AAA 4,166,000
and Improvement Bonds, Series 1999, 5.000%, 3/01/22 - FSA
Insured
1,740 Texas, General Obligation Bonds, Water Financial Assistance, 8/09 at 100.00 AAA 1,784,161
State Participation Program, Series 1999C, 5.500%, 8/01/29 -
MBIA Insured
1,690 Webb County, Laredo, Texas, Combination Tax and Sewer System, 2/08 at 100.00 AAA 1,691,910
Revenue Certificates of Obligation, Series 1998A, 4.500%,
2/15/18 - MBIA Insured
-----------------------------------------------------------------------------------------------------------------------------------
93,965 Total Texas 61,163,775
-----------------------------------------------------------------------------------------------------------------------------------
UTAH - 3.1% (2.1% OF TOTAL INVESTMENTS)
Utah County, Utah, Hospital Revenue Bonds, IHC Health Services
Inc., Series 1997:
12,885 5.250%, 8/15/21 - MBIA Insured (ETM) 2/08 at 101.00 AAA 13,031,631
3,900 5.250%, 8/15/26 - MBIA Insured (ETM) 2/08 at 101.00 AAA 3,944,382
3,070 Utah Housing Corporation, Single Family Mortgage Bonds, Series 1/12 at 100.00 AA- 3,195,164
2002A-1, 5.300%, 7/01/18 (Alternative Minimum Tax)
15 Utah Housing Finance Agency, Single Family Mortgage Bonds, 1/10 at 100.00 AA 15,326
Series 2000B, 6.250%, 7/01/22 (Alternative Minimum Tax)
1,245 Utah Housing Finance Agency, Single Family Mortgage Bonds, 7/10 at 100.00 AA- 1,257,599
Series 2000D-1, 6.050%, 7/01/14 (Alternative Minimum Tax)
610 Utah Housing Finance Agency, Single Family Mortgage Bonds, 7/10 at 100.00 AA 622,743
Series 2000E-1, Class II, 6.150%, 1/01/27 (Alternative
Minimum Tax)
1,540 Utah Housing Finance Agency, Single Family Mortgage Bonds, 7/10 at 100.00 Aa1 1,554,953
Series 2000E-1, Class III, 6.000%, 1/01/15 (Alternative
Minimum Tax)
875 Utah Housing Finance Agency, Single Family Mortgage Bonds, 7/11 at 100.00 AA 886,323
Series 2001A-2, 5.650%, 7/01/27 (Alternative Minimum Tax)
675 Utah Housing Finance Agency, Single Family Mortgage Bonds, 1/11 at 100.00 Aaa 685,935
Series 2001B-1, 5.750%, 7/01/19 (Alternative Minimum Tax)
3,000 Utah Water Finance Agency, Revenue Bonds, Pooled Loan Financing 10/12 at 100.00 Aaa 3,231,660
Program, Series 2002C, 5.250%, 10/01/28 (Pre-refunded 10/01/12)
- AMBAC Insured
-----------------------------------------------------------------------------------------------------------------------------------
27,815 Total Utah 28,425,716
-----------------------------------------------------------------------------------------------------------------------------------
VIRGIN ISLANDS - 0.8% (0.5% OF TOTAL INVESTMENTS)
4,700 Virgin Islands Public Finance Authority, Gross Receipts Taxes 10/14 at 100.00 AA 4,702,538
Loan Note, Series 2003, 5.000%, 10/01/33 - RAAI Insured
2,500 Virgin Islands Public Finance Authority, Revenue Bonds, Refinery 1/14 at 100.00 BBB 2,585,175
Project - Hovensa LLC, Series 2003, 6.125%, 7/01/22
(Alternative Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
7,200 Total Virgin Islands 7,287,713
-----------------------------------------------------------------------------------------------------------------------------------
33
| Nuveen Performance Plus Municipal Fund, Inc. (continued)
NPP | Portfolio of INVESTMENTS October 31, 2007
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
-----------------------------------------------------------------------------------------------------------------------------------
WASHINGTON - 5.0% (3.3% OF TOTAL INVESTMENTS)
$ 12,235 Chelan County Public Utility District 1, Washington, Columbia No Opt. Call AAA $ 4,976,342
River-Rock Island Hydro-Electric System Revenue Refunding Bonds,
Series 1997A, 0.000%, 6/01/26 - MBIA Insured
3,100 Cowlitz County Public Utilities District 1, Washington, Electric 9/14 at 100.00 AAA 3,196,565
Production Revenue Bonds, Series 2004, 5.000%, 9/01/28 -
FGIC Insured
5,000 Energy Northwest, Washington, Electric Revenue Refunding Bonds, 7/13 at 100.00 Aaa 5,393,700
Nuclear Project 1, Series 2003A, 5.500%, 7/01/16
10,000 Washington State Healthcare Facilities Authority, Revenue Bonds, 10/16 at 100.00 AAA 9,788,500
Providence Health Care Services, Series 2006A, 4.625%,
10/01/34 - FGIC Insured
4,685 Washington State Healthcare Facilities Authority, Revenue Bonds, 12/09 at 101.00 AAA 4,906,835
Providence Services, Series 1999, 5.375%, 12/01/19
(Pre-refunded 12/01/09) - MBIA Insured
5,000 Washington State Housing Finance Commission, Non-Profit Housing 7/09 at 101.00 AA 5,169,700
Revenue Bonds, Kline Galland Center, Series 1999, 6.000%,
7/01/29 - RAAI Insured
12,000 Washington, Motor Vehicle Fuel Tax General Obligation Bonds, 1/11 at 100.00 Aa1 12,328,080
Series 2001D, 5.250%, 1/01/26
-----------------------------------------------------------------------------------------------------------------------------------
52,020 Total Washington 45,759,722
-----------------------------------------------------------------------------------------------------------------------------------
WEST VIRGINIA - 0.5% (0.4% OF TOTAL INVESTMENTS)
5,000 Mason County, West Virginia, Pollution Control Revenue Bonds, 10/11 at 100.00 BBB 5,049,650
Appalachian Power Company, Series 2003L, 5.500%, 10/01/22
-----------------------------------------------------------------------------------------------------------------------------------
WISCONSIN - 2.5% (1.6% OF TOTAL INVESTMENTS)
11,620 Wisconsin Health and Educational Facilities Authority, Revenue 2/10 at 101.00 AA 12,157,657
Bonds, Marshfield Clinic, Series 1999, 6.250%, 2/15/29 - RAAI
Insured
7,490 Wisconsin Health and Educational Facilities Authority, Revenue 7/08 at 103.00 N/R 7,616,506
Bonds, Millennium Housing Foundation Inc., Series 1998,
6.100%, 1/01/28
3,270 Wisconsin Housing and Economic Development Authority, Home 9/14 at 100.00 AA 2,904,970
Ownership Revenue Bonds, Residual Trust 1517, 6.959%, 3/01/36
(IF)
-----------------------------------------------------------------------------------------------------------------------------------
22,380 Total Wisconsin 22,679,133
-----------------------------------------------------------------------------------------------------------------------------------
$ 1,534,840 Total Investments (cost $1,304,274,541) - 151.3% 1,380,328,800
============-----------------------------------------------------------------------------------------------------------------------
Floating Rate Obligations - (0.7)% (6,665,000)
-------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 1.9% 17,402,456
-------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (52.5)% (479,000,000)
-------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 912,066,256
===================================================================================================================
The Fund may invest in "zero coupon" securities. A zero coupon security
does not pay a regular interest coupon to its holders during the life of
the security. Tax-exempt income to the holder of the security comes from
accretion of the difference between the original purchase price of the
security at issuance and the par value of the security at maturity and is
effectively paid at maturity. Such securities are included in the
Portfolio of Investments with a 0.000% coupon rate in their description.
The market prices of zero coupon securities generally are more volatile
than the market prices of securities that pay interest periodically.
(1) All percentages shown in the Portfolio of Investments are based on net
assets applicable to Common shares unless otherwise noted.
(2) Optional Call Provisions (not covered by the report of independent
registered public accounting firm): Dates (month and year) and prices of
the earliest optional call or redemption. There may be other call
provisions at varying prices at later dates. Certain mortgage-backed
securities may be subject to periodic principal paydowns.
(3) Ratings (not covered by the report of independent registered public
accounting firm): Using the higher of Standard & Poor's Group ("Standard &
Poor's") or Moody's Investor Service, Inc. ("Moody's") rating. Ratings
below BBB by Standard & Poor's or Baa by Moody's are considered to be
below investment grade.
(4) Backed by an escrow or trust containing sufficient U.S. Government or U.S.
Government agency securities which ensure the timely payment of principal
and interest. Such investments are normally considered to be equivalent to
AAA rated securities.
N/R Not rated.
(ETM) Escrowed to maturity.
(IF) Inverse floating rate investment.
(UB) Underlying bond of an inverse floating rate trust reflected as a financing
transaction pursuant to the provisions of SFAS No. 140.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
34
| Nuveen Municipal Advantage Fund, Inc.
NMA | Portfolio of INVESTMENTS
October 31, 2007
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
ALABAMA - 3.2% (2.0% OF TOTAL INVESTMENTS)
$ 10,000 Jefferson County, Alabama, Sewer Revenue Capital Improvement 2/09 at 101.00 AAA $ 10,331,900
Warrants, Series 1999A, 5.375%, 2/01/36 (Pre-refunded 2/01/09) -
FGIC Insured
5,075 Lauderdale County and Florence Healthcare Authority, Alabama, 7/09 at 101.00 AAA 5,230,143
Revenue Bonds, Coffee Health Group, Series 1999A, 5.250%,
7/01/24 - MBIA Insured
5,155 Phenix City Industrial Development Board, Alabama, 5/12 at 100.00 BBB 5,338,157
Environmental Improvement Revenue Bonds, MeadWestvaco
Corporation, Series 2002A, 6.350%, 5/15/35 (Alternative Minimum
Tax)
------------------------------------------------------------------------------------------------------------------------------------
20,230 Total Alabama 20,900,200
------------------------------------------------------------------------------------------------------------------------------------
ALASKA - 0.8% (0.5% OF TOTAL INVESTMENTS)
Alaska Housing Finance Corporation, General Housing Purpose
Bonds, Series 2005A:
1,125 5.250%, 12/01/34 - FGIC Insured 12/14 at 100.00 AAA 1,176,694
1,280 5.250%, 12/01/41 - FGIC Insured 12/14 at 100.00 AAA 1,329,370
3,050 Northern Tobacco Securitization Corporation, Alaska, Tobacco 6/14 at 100.00 Baa3 2,595,459
Settlement Asset-Backed Bonds, Series 2006A, 5.000%, 6/01/46
------------------------------------------------------------------------------------------------------------------------------------
5,455 Total Alaska 5,101,523
------------------------------------------------------------------------------------------------------------------------------------
ARIZONA - 1.5% (1.0% OF TOTAL INVESTMENTS)
4,905 Maricopa County Industrial Development Authority, Arizona, 7/17 at 100.00 A 5,009,084
Health Facility Revenue Bonds, Catholic Healthcare West, Series
2007A, 5.250%, 7/01/32
5,000 Maricopa County Pollution Control Corporation, Arizona, 11/07 at 100.50 BBB 5,024,700
Remarketed Revenue Refunding Bonds, Public Service Company of
New Mexico, Series 1992A, 5.750%, 11/01/22
------------------------------------------------------------------------------------------------------------------------------------
9,905 Total Arizona 10,033,784
------------------------------------------------------------------------------------------------------------------------------------
CALIFORNIA - 13.2% (8.2% OF TOTAL INVESTMENTS)
2,500 Alameda Corridor Transportation Authority, California, 10/17 at 100.00 AAA 2,097,725
Subordinate Lien Revenue Bonds, Series 2004A, 0.000%, 10/01/25 -
AMBAC Insured
Calexico Unified School District, Imperial County, California,
General Obligation Bonds, Series 2005B:
4,070 0.000%, 8/01/32 - FGIC Insured No Opt. Call AAA 1,249,083
6,410 0.000%, 8/01/34 - FGIC Insured No Opt. Call AAA 1,778,839
3,000 California Health Facilities Financing Authority, Health 3/13 at 100.00 A 3,007,440
Facility Revenue Bonds, Adventist Health System/West, Series
2003A, 5.000%, 3/01/33
7,500 California State Public Works Board, Lease Revenue Bonds, 6/14 at 100.00 A 7,671,975
Department of Mental Health, Coalinga State Hospital, Series
2004A, 5.125%, 6/01/29
5,335 California State, Variable Purpose General Obligation Bonds, 6/17 at 100.00 A+ 5,559,550
Series 2007, Lehman Municipal Trust Receipts FC5, 7.690%,
6/01/37 (IF)
9,955 Capistrano Unified School District, Orange County, California, No Opt. Call AAA 3,199,338
Special Tax Bonds, Community Facilities District, Series 2005,
0.000%, 9/01/31 - FGIC Insured
Colton Joint Unified School District, San Bernardino County,
California, General Obligation Bonds, Series 2006C:
3,800 0.000%, 2/01/33 - FGIC Insured 2/15 at 38.73 AAA 1,017,906
3,795 0.000%, 2/01/37 - FGIC Insured No Opt. Call AAA 928,940
7,535 Contra Costa County, California, GNMA Mortgage-Backed No Opt. Call AAA 9,496,059
Securities Program Home Mortgage Revenue Bonds, Series 1989,
7.750%, 5/01/22 (Alternative Minimum Tax) (ETM)
35
| Nuveen Municipal Advantage Fund, Inc. (continued)
NMA | Portfolio of INVESTMENTS October 31, 2007
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
CALIFORNIA (CONTINUED)
$ 8,145 Cupertino Union School District, Santa Clara County, 8/13 at 55.54 AAA $ 3,395,813
California, General Obligation Bonds, Series 2003B, 0.000%,
8/01/25 - FGIC Insured
2,000 Folsom Cordova Unified School District, Sacramento County, No Opt. Call AAA 747,640
California, General Obligation Bonds, School Facilities
Improvement District 1, Series 2004B, 0.000%, 10/01/28 - MBIA
Insured
3,360 Folsom Cordova Unified School District, Sacramento County, No Opt. Call AAA 1,339,834
California, General Obligation Bonds, School Facilities
Improvement District 2, Series 2002A, 0.000%, 7/01/27 - MBIA
Insured
2,315 Gateway Unified School District, California, General Obligation No Opt. Call AAA 705,357
Bonds, Series 2004B, 0.000%, 8/01/32 - FGIC Insured
1,000 Golden State Tobacco Securitization Corporation, California, 6/17 at 100.00 BBB 879,680
Enhanced Tobacco Settlement Asset-Backed Bonds, Series 2007A-1,
5.125%, 6/01/47
3,000 Golden State Tobacco Securitization Corporation, California, No Opt. Call AAA 1,224,630
Tobacco Settlement Asset-Backed Revenue Bonds, Series 2005A,
0.000%, 6/01/26 - FSA Insured
1,275 Madera Unified School District, Madera County, California, 8/12 at 100.00 AAA 1,351,169
General Obligation Bonds, Series 2002, 5.250%, 8/01/23 - FSA
Insured
North Orange County Community College District, California,
General Obligation Bonds, Series 2003B:
7,735 0.000%, 8/01/25 - FGIC Insured No Opt. Call AAA 3,414,693
4,000 0.000%, 8/01/26 - FGIC Insured No Opt. Call AAA 1,677,120
5,000 Palmdale Community Redevelopment Agency, California, No Opt. Call AAA 5,621,900
Residential Mortgage Revenue Refunding Bonds, Series 1991B,
7.375%, 2/01/12 (ETM)
5,000 Palmdale Community Redevelopment Agency, California, Single No Opt. Call AAA 6,481,350
Family Restructured Mortgage Revenue Bonds, Series 1986A,
8.000%, 3/01/16 (Alternative Minimum Tax) (ETM)
9,315 Perris, California, GNMA Mortgage-Backed Securities Program No Opt. Call AAA 11,420,842
Single Family Mortgage Revenue Bonds, Series 1989A, 7.600%,
1/01/23 (Alternative Minimum Tax) (ETM)
7,660 San Joaquin Hills Transportation Corridor Agency, Orange No Opt. Call AAA 3,689,592
County, California, Senior Lien Toll Road Revenue Bonds, Series
1993, 0.000%, 1/01/24 (ETM)
23,000 San Joaquin Hills Transportation Corridor Agency, Orange No Opt. Call AAA 6,211,840
County, California, Toll Road Revenue Refunding Bonds, Series
1997A, 0.000%, 1/15/35 - MBIA Insured
7,250 San Jose-Evergreen Community College District, Santa Clara 9/15 at 100.00 AAA 2,338,415
County, California, General Obligation Bonds, Series 2005A,
0.000%, 9/01/29 - MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
143,955 Total California 86,506,730
------------------------------------------------------------------------------------------------------------------------------------
COLORADO - 7.8% (4.9% OF TOTAL INVESTMENTS)
1,600 Arkansas River Power Authority, Colorado, Power Revenue Bonds, 10/16 at 100.00 AAA 1,673,520
Series 2006, 5.250%, 10/01/40 - XLCA Insured
8,350 Colorado Health Facilities Authority, Remarketed Revenue Bonds, 1/08 at 101.50 AAA 8,486,690
Kaiser Permanente System, Series 1994A, 5.350%, 11/01/16 (ETM)
9,440 Colorado Health Facilities Authority, Revenue Bonds, Catholic 9/16 at 100.00 AA 8,820,736
Health Initiatives, Series 2006A, 4.500%, 9/01/38
Denver City and County, Colorado, Airport Revenue Bonds,
Series 2006:
5,365 5.000%, 11/15/23 - FGIC Insured (UB) 11/16 at 100.00 AAA 5,625,256
3,300 5.000%, 11/15/24 - FGIC Insured (UB) 11/16 at 100.00 AAA 3,455,067
1,445 7.501%, 11/15/25 - FGIC Insured (IF) 11/16 at 100.00 AAA 1,643,182
2,000 Denver Convention Center Hotel Authority, Colorado, Senior 11/16 at 100.00 AAA 1,964,900
Revenue Bonds, Convention Center Hotel, Series 2006, 4.750%,
12/01/35 - XLCA Insured
E-470 Public Highway Authority, Colorado, Senior Revenue Bonds,
Series 1997B:
2,650 0.000%, 9/01/16 - MBIA Insured No Opt. Call AAA 1,842,492
8,645 0.000%, 9/01/26 - MBIA Insured No Opt. Call AAA 3,577,647
1,000 E-470 Public Highway Authority, Colorado, Senior Revenue Bonds, 9/10 at 102.00 AAA 1,078,770
Series 2000A, 5.750%, 9/01/35 (Pre-refunded 9/01/10) - MBIA
Insured
36
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
COLORADO (CONTINUED)
E-470 Public Highway Authority, Colorado, Senior Revenue Bonds,
Series 2000B:
$ 7,500 0.000%, 9/01/29 - MBIA Insured No Opt. Call AAA $ 2,651,250
10,000 0.000%, 9/01/32 - MBIA Insured No Opt. Call AAA 3,020,000
Platte River Power Authority, Colorado, Power Revenue Refunding
Bonds, Series 2002EE:
1,030 5.375%, 6/01/17 (Pre-refunded 6/01/12) 6/12 at 100.00 Aa2 (4) 1,109,969
4,890 5.375%, 6/01/18 (Pre-refunded 6/01/12) 6/12 at 100.00 Aa2 (4) 5,269,660
Platte River Power Authority, Colorado, Power Revenue Refunding
Bonds, Series 2002EE:
970 5.375%, 6/01/17 6/12 at 100.00 AA 1,036,620
110 5.375%, 6/01/18 6/12 at 100.00 AA 117,293
------------------------------------------------------------------------------------------------------------------------------------
68,295 Total Colorado 51,373,052
------------------------------------------------------------------------------------------------------------------------------------
DISTRICT OF COLUMBIA - 0.2% (0.1% OF TOTAL INVESTMENTS)
1,585 District of Columbia Housing Finance Agency, GNMA/FNMA Single 12/07 at 102.00 AAA 1,612,516
Family Mortgage Revenue Bonds, Series 1997B, 5.900%, 12/01/28
(Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
FLORIDA - 4.2% (2.6% OF TOTAL INVESTMENTS)
2,770 Florida Housing Finance Corporation, Housing Revenue Bonds, 12/10 at 100.00 AAA 2,833,599
Stratford Point Apartments, Series 2000O-1, 5.850%, 12/01/31 -
FSA Insured (Alternative Minimum Tax)
14,730 South Miami Health Facilities Authority, Florida, Revenue 8/17 at 100.00 AA- 14,644,713
Bonds, Baptist Health Systems of South Florida, Series 2007,
5.000%, 8/15/42 (UB)
10,130 Tampa, Florida, Healthcare System Revenue Bonds, Allegany 12/07 at 100.00 AAA 10,198,985
Health System - St. Mary's Hospital, Series 1993, 5.125%,
12/01/23 - MBIA Insured (ETM)
------------------------------------------------------------------------------------------------------------------------------------
27,630 Total Florida 27,677,297
------------------------------------------------------------------------------------------------------------------------------------
GEORGIA - 0.7% (0.4% OF TOTAL INVESTMENTS)
4,000 Augusta, Georgia, Water and Sewerage Revenue Bonds, Series 10/14 at 100.00 AAA 4,179,120
2004, 5.250%, 10/01/39 - FSA Insured
------------------------------------------------------------------------------------------------------------------------------------
HAWAII - 0.4% (0.3% OF TOTAL INVESTMENTS)
2,215 Hawaii Housing and Community Development Corporation, GNMA 7/10 at 102.00 AAA 2,292,924
Collateralized Multifamily Housing Revenue Bonds, Sunset
Villas, Series 2000, 5.700%, 7/20/31
525 Hawaii Housing Finance and Development Corporation, Single 1/08 at 102.00 AAA 533,489
Family Mortgage Purchase Revenue Bonds, Series 1997A, 5.750%,
7/01/30 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
2,740 Total Hawaii 2,826,413
------------------------------------------------------------------------------------------------------------------------------------
ILLINOIS - 16.8% (10.4% OF TOTAL INVESTMENTS)
12,500 Chicago Board of Education, Illinois, Unlimited Tax General 12/07 at 102.00 AAA 12,765,250
Obligation Bonds, Dedicated Tax Revenues, Series 1997A, 5.250%,
12/01/27 (Pre-refunded 12/01/07) - AMBAC Insured
4,000 Chicago Board of Education, Illinois, Unlimited Tax General 12/07 at 102.00 AAA 4,086,520
Obligation Bonds, Dedicated Tax Revenues, Series 1997, 5.750%,
12/01/20 (Pre-refunded 12/01/07) - AMBAC Insured
4,345 Chicago Board of Education, Illinois, Unlimited Tax General No Opt. Call AAA 1,621,554
Obligation Bonds, Dedicated Tax Revenues, Series 1998B-1,
0.000%, 12/01/28 - FGIC Insured
3,420 Chicago Board of Education, Illinois, Unlimited Tax General No Opt. Call AAA 1,091,219
Obligation Bonds, Dedicated Tax Revenues, Series 1999A, 0.000%,
12/01/31 - FGIC Insured
5,865 Chicago, Illinois, General Obligation Bonds, Neighborhoods 7/10 at 101.00 AAA 6,374,141
Alive 21 Program, Series 2000A, 6.500%, 1/01/35 (Pre-refunded
7/01/10) - FGIC Insured
5,000 Chicago, Illinois, Second Lien Passenger Facility Charge 1/11 at 101.00 AAA 5,106,500
Revenue Bonds, O'Hare International Airport, Series 2001A,
5.375%, 1/01/32 - AMBAC Insured (Alternative Minimum Tax)
5,000 Chicago, Illinois, Second Lien Wastewater Transmission Revenue 1/08 at 102.00 AAA 5,113,350
Bonds, Series 1997, 5.250%, 1/01/28 (Pre-refunded 1/01/08) -
AMBAC Insured
5,645 Illinois Finance Authority, Revenue Bonds, University of 7/17 at 100.00 AA 5,742,884
Chicago, Series 2007, Trust 73TP, 7.568%, 7/01/46 (IF)
37
| Nuveen Municipal Advantage Fund, Inc. (continued)
NMA | Portfolio of INVESTMENTS October 31, 2007
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
ILLINOIS (CONTINUED)
$ 6,000 Illinois Health Facilities Authority, Revenue Bonds, Condell 5/12 at 100.00 Baa2 $ 6,172,020
Medical Center, Series 2002, 5.750%, 5/15/22
6,165 Illinois Health Facilities Authority, Revenue Bonds, Sarah Bush 2/08 at 101.00 A 6,246,070
Lincoln Health Center, Series 1996B, 5.750%, 2/15/22
10,740 Lake and McHenry Counties Community Unit School District 118, 1/15 at 66.94 Aaa 5,071,428
Wauconda, Illinois, General Obligation Bonds, Series 2005B,
0.000%, 1/01/23 - FSA Insured
1,090 Metropolitan Pier and Exposition Authority, Illinois, Revenue No Opt. Call AAA 593,712
Bonds, McCormick Place Expansion Project, Series 1993A, 0.000%,
6/15/21 - FGIC Insured
Metropolitan Pier and Exposition Authority, Illinois, Revenue
Bonds, McCormick Place Expansion Project, Series 1999A:
13,455 5.500%, 12/15/24 - FGIC Insured 12/09 at 101.00 AAA 14,018,359
10,430 5.250%, 12/15/28 - FGIC Insured 12/09 at 101.00 AAA 10,783,786
3,175 Metropolitan Pier and Exposition Authority, Illinois, Revenue No Opt. Call AAA 629,730
Bonds, McCormick Place Expansion Project, Series 2002A, 0.000%,
6/15/41 - MBIA Insured
6,000 Metropolitan Pier and Exposition Authority, Illinois, Revenue No Opt. Call AAA 2,803,680
Refunding Bonds, McCormick Place Expansion Project, Series
1996A, 0.000%, 6/15/24 - MBIA Insured
4,600 Regional Transportation Authority, Cook, DuPage, Kane, Lake, No Opt. Call AAA 5,638,450
McHenry and Will Counties, Illinois, General Obligation Bonds,
Series 1990A, 7.200%, 11/01/20 - AMBAC Insured
1,940 University of Illinois, Auxiliary Facilities Systems Revenue 4/13 at 100.00 AAA 2,020,335
Bonds, Series 2003A, 5.000%, 4/01/23 - AMBAC Insured
7,500 Valley View Public Schools, Community Unit School District 365U No Opt. Call AAA 3,267,300
of Will County, Illinois, General Obligation Bonds, Series
2005, 0.000%, 11/01/25 - MBIA Insured
23,125 Will County Community High School District 210 Lincoln-Way, No Opt. Call Aaa 10,998,713
Illinois, General Obligation Bonds, Series 2006, 0.000%,
1/01/24 - FSA Insured
------------------------------------------------------------------------------------------------------------------------------------
139,995 Total Illinois 110,145,001
------------------------------------------------------------------------------------------------------------------------------------
INDIANA - 2.2% (1.4% OF TOTAL INVESTMENTS)
5,205 Indiana Health Facility Financing Authority, Hospital Revenue 8/10 at 101.50 AAA 5,552,746
Bonds, Clarian Health Obligated Group, Series 2000A, 5.500%,
2/15/30 (Pre-refunded 8/15/10) - MBIA Insured
6,075 LaGrange County Jail Building Corporation, Indiana, First 10/09 at 101.00 A3 (4) 6,347,889
Mortgage Jail Bonds, Series 1998, 5.400%, 10/01/21
(Pre-refunded 10/01/09)
2,330 St. Joseph County Hospital Authority, Indiana, Revenue Bonds, 2/09 at 102.00 BBB 2,400,739
Madison Center Inc., Series 1999, 5.450%, 2/15/12
------------------------------------------------------------------------------------------------------------------------------------
13,610 Total Indiana 14,301,374
------------------------------------------------------------------------------------------------------------------------------------
KANSAS - 1.1% (0.7% OF TOTAL INVESTMENTS)
4,935 Kansas Department of Transportation, Highway Revenue Bonds, 3/14 at 100.00 AAA 5,188,116
Series 2004A, 5.000%, 3/01/22
1,750 Wamego, Kansas, Pollution Control Revenue Bonds, Kansas Gas and 6/14 at 100.00 AAA 1,833,703
Electric Company, Series 2004, 5.300%, 6/01/31 - MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
6,685 Total Kansas 7,021,819
------------------------------------------------------------------------------------------------------------------------------------
KENTUCKY - 1.6% (1.0% OF TOTAL INVESTMENTS)
5,500 Louisville and Jefferson County Metropolitan Sewer District, 11/07 at 101.00 AAA 5,560,280
Kentucky, Sewer and Drainage System Revenue Bonds, Series
1997A, 5.250%, 5/15/27 - MBIA Insured
4,950 Louisville and Jefferson County Metropolitan Sewer District, 11/07 at 101.00 AAA 5,004,005
Kentucky, Sewer and Drainage System Revenue Bonds, Series
1997B, 5.200%, 5/15/25 - MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
10,450 Total Kentucky 10,564,285
------------------------------------------------------------------------------------------------------------------------------------
LOUISIANA - 13.4% (8.3% OF TOTAL INVESTMENTS)
13,500 DeSoto Parish, Louisiana, Pollution Control Revenue Refunding 9/09 at 102.00 AAA 14,215,633
Bonds, Cleco Utility Group Inc. Project, Series 1999, 5.875%,
9/01/29 - AMBAC Insured
38
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
LOUISIANA (CONTINUED)
$ 7,190 Louisiana Public Facilities Authority, Extended Care Facilities No Opt. Call BBB $ 8,625,484
Revenue Bonds, Comm-Care Corporation Project, Series 1994,
11.000%, 2/01/14
805 Louisiana Public Facilities Authority, Extended Care Facilities No Opt. Call N/R (4) 984,394
Revenue Bonds, Comm-Care Corporation Project, Series 1994,
11.000%, 2/01/14 (ETM)
6,650 Louisiana Public Facilities Authority, Revenue Bonds, Baton 7/14 at 100.00 AAA 6,885,676
Rouge General Hospital, Series 2004, 5.250%, 7/01/33 - MBIA
Insured
Louisiana State, Gasoline and Fuels Tax Revenue Bonds,
Series 2006:
20,690 4.500%, 5/01/41 - FGIC Insured (UB) 5/16 at 100.00 AAA 19,877,297
10,000 5.000%, 5/01/41 - FGIC Insured (UB) 5/16 at 100.00 AAA 10,282,400
28 Louisiana State, Gasoline Tax Revenue Bonds, Series 2006, 5/16 at 100.00 AAA 24,995
Residuals 660-1, 5.940%, 5/01/41 - FGIC Insured (IF)
9,000 Lousiana Public Facilities Authority, Revenue Bonds, Ochsner 5/17 at 100.00 A3 9,071,550
Clinic Foundation Project, Series 2007A, 5.500%, 5/15/47
Tobacco Settlement Financing Corporation, Louisiana, Tobacco
Settlement Asset-Backed Bonds, Series 2001B:
6,000 5.500%, 5/15/30 5/11 at 101.00 BBB 5,995,980
11,750 5.875%, 5/15/39 5/11 at 101.00 BBB 11,754,230
------------------------------------------------------------------------------------------------------------------------------------
85,613 Total Louisiana 87,717,639
------------------------------------------------------------------------------------------------------------------------------------
MASSACHUSETTS - 1.4% (0.9% OF TOTAL INVESTMENTS)
1,750 Massachusetts Health and Educational Facilities Authority, 1/09 at 101.00 AAA 1,784,160
Revenue Bonds, UMass Memorial Healthcare, Series 1998A, 5.000%,
7/01/28 - AMBAC Insured
375 Massachusetts Housing Finance Agency, Single Family Housing 12/09 at 100.00 AAA 381,761
Revenue Bonds, Series 77, 5.950%, 6/01/25 - FSA Insured
(Alternative Minimum Tax)
Massachusetts Turnpike Authority, Metropolitan Highway System
Revenue Bonds, Senior Series 1997A:
2,000 5.125%, 1/01/17 - MBIA Insured 1/09 at 100.00 AAA 2,035,36
5,000 5.000%, 1/01/37 - MBIA Insured 1/08 at 101.00 AAA 5,027,50
------------------------------------------------------------------------------------------------------------------------------------
9,125 Total Massachusetts 9,228,781
------------------------------------------------------------------------------------------------------------------------------------
MICHIGAN - 1.7% (1.0% OF TOTAL INVESTMENTS)
Michigan State Hospital Finance Authority, Hospital Revenue
Bonds, Detroit Medical Center Obligated Group, Series 1998A:
4,995 5.250%, 8/15/23 8/08 at 101.00 BB- 4,815,430
3,000 5.250%, 8/15/28 8/08 at 101.00 BB- 2,820,870
3,275 Michigan State Hospital Finance Authority, Revenue Refunding 2/08 at 100.00 BB- 3,276,146
Bonds, Detroit Medical Center Obligated Group, Series 1993A,
6.500%, 8/15/18
------------------------------------------------------------------------------------------------------------------------------------
11,270 Total Michigan 10,912,446
------------------------------------------------------------------------------------------------------------------------------------
MINNESOTA - 1.3% (0.8% OF TOTAL INVESTMENTS)
5,000 Minneapolis-St. Paul Metropolitan Airports Commission, 1/11 at 100.00 AAA 5,260,650
Minnesota, Subordinate Airport Revenue Bonds, Series 2001C,
5.250%, 1/01/32 (Pre-refunded 1/01/11) - FGIC Insured
1,745 Minnesota Housing Finance Agency, Single Family Mortgage 7/09 at 100.00 AA+ 1,758,838
Revenue Bonds, Series 2000C, 5.550%, 7/01/24 (Alternative
Minimum Tax)
1,575 Minnesota Housing Finance Agency, Single Family Mortgage 1/10 at 100.00 AA+ 1,585,285
Revenue Bonds, Series 2000J, 5.400%, 1/01/23 (Alternative
Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
8,320 Total Minnesota 8,604,773
------------------------------------------------------------------------------------------------------------------------------------
MISSOURI - 0.9% (0.6% OF TOTAL INVESTMENTS)
12,005 Kansas City Municipal Assistance Corporation, Missouri, No Opt. Call AAA 4,375,462
Leasehold Revenue Bonds, Series 2004B-1, 0.000%, 4/15/29 -
AMBAC Insured
39
| Nuveen Municipal Advantage Fund, Inc. (continued)
NMA | Portfolio of INVESTMENTS October 31, 2007
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
MISSOURI (CONTINUED)
$ 150 Missouri Housing Development Commission, Single Family Mortgage 9/09 at 102.00 AAA $ 157,541
Revenue Bonds, Homeownership Loan Program, Series 2000A-1,
7.500%, 3/01/31 (Alternative Minimum Tax)
1,500 Missouri-Illinois Metropolitan District Bi-State Development 10/13 at 100.00 AAA 1,540,095
Agency, Mass Transit Sales Tax Appropriation Bonds, Metrolink
Cross County Extension Project, Series 2002B, 5.000%, 10/01/32 -
FSA Insured
------------------------------------------------------------------------------------------------------------------------------------
13,655 Total Missouri 6,073,098
------------------------------------------------------------------------------------------------------------------------------------
NEVADA - 6.0% (3.8% OF TOTAL INVESTMENTS)
7,310 Clark County, Nevada, Limited Tax General Obligation Bank 7/10 at 100.00 AA+ (4) 7,693,044
Bonds, Series 2000, 5.500%, 7/01/19 (Pre-refunded 7/01/10)
7,500 Clark County, Nevada, Subordinate Lien Airport Revenue Bonds, 7/10 at 101.00 AAA 8,056,275
Series 1999A, 6.000%, 7/01/29 (Pre-refunded 7/01/10) - MBIA
Insured
7,910 Director of Nevada State Department of Business and Industry, 1/10 at 100.00 AAA 8,116,609
Revenue Bonds, Las Vegas Monorail Project, First Tier, Series
2000, 5.375%, 1/01/40 - AMBAC Insured
15,000 Henderson, Nevada, Healthcare Facility Revenue Refunding Bonds, 7/17 at 100.00 A 15,272,100
Catholic Healthcare West, Series 2007B, 5.250%, 7/01/31 (UB)
350 Nevada Housing Division, Single Family Mortgage Bonds, Senior 4/08 at 101.00 Aaa 352,797
Series 1997C-2, 5.750%, 4/01/29 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
38,070 Total Nevada 39,490,825
------------------------------------------------------------------------------------------------------------------------------------
NEW JERSEY - 3.8% (2.3% OF TOTAL INVESTMENTS)
15,000 New Jersey Transportation Trust Fund Authority, Transportation No Opt. Call AAA 5,043,300
System Bonds, Series 2006C, 0.000%, 12/15/30 - FGIC Insured
Tobacco Settlement Financing Corporation, New Jersey, Tobacco
Settlement Asset-Backed Bonds, Series 2002:
13,045 5.750%, 6/01/32 (Pre-refunded 6/01/12) 6/12 at 100.00 AAA 13,994,676
5,050 6.125%, 6/01/42 (Pre-refunded 6/01/12) 6/12 at 100.00 AAA 5,585,300
------------------------------------------------------------------------------------------------------------------------------------
33,095 Total New Jersey 24,623,276
------------------------------------------------------------------------------------------------------------------------------------
NEW MEXICO - 1.1% (0.7% OF TOTAL INVESTMENTS)
7,500 Farmington, New Mexico, Pollution Control Revenue Refunding 4/08 at 100.00 BBB 7,544,925
Bonds, Public Service Company of New Mexico - San Juan Project,
Series 1997B, 5.800%, 4/01/22
------------------------------------------------------------------------------------------------------------------------------------
NEW YORK - 12.9% (8.0% OF TOTAL INVESTMENTS)
555 Dormitory Authority of the State of New York, Revenue Bonds, 2/08 at 101.00 AA- 566,827
Mental Health Services Facilities Improvements, Series 1997B,
5.625%, 2/15/21
3,655 Dormitory Authority of the State of New York, Revenue Bonds, 5/08 at 101.00 AA- (4) 3,724,518
State University Educational Facilities, Series 1997, 5.125%,
5/15/27 (Pre-refunded 5/15/08)
440 Hudson Yards Infrastructure Corporation, New York, Revenue 2/17 at 100.00 AAA 420,099
Bonds, Series 2006A, 4.500%, 2/15/47 - MBIA Insured
7,000 Metropolitan Transportation Authority, New York, State Service 7/12 at 100.00 AA- 7,211,540
Contract Refunding Bonds, Series 2002A, 5.125%, 1/01/29
Nassau County, New York, General Obligation Improvement Bonds,
Series 2000F:
3,980 7.000%, 3/01/11 (Pre-refunded 3/01/10) - FSA Insured 3/10 at 100.00 AAA 4,298,997
4,070 7.000%, 3/01/12 (Pre-refunded 3/01/10) - FSA Insured 3/10 at 100.00 AAA 4,396,211
3,925 7.000%, 3/01/15 (Pre-refunded 3/01/10) - FSA Insured 3/10 at 100.00 AAA 4,239,589
4,975 New York City Industrial Development Agency, New York, Special 12/08 at 102.00 BB+ 4,517,897
Facilities Revenue Bonds, British Airways PLC, Series 1998,
5.250%, 12/01/32 (Alternative Minimum Tax)
3,000 New York City Industrial Development Agency, New York, Special 12/12 at 101.00 BB+ 3,255,480
Facilities Revenue Bonds, British Airways PLC, Series 2002,
7.625%, 12/01/32 (Alternative Minimum Tax)
9,850 New York City Municipal Water Finance Authority, New York, 6/09 at 101.00 AAA 10,307,533
Water and Sewerage System Revenue Bonds, Fiscal Series 2000A,
5.750%, 6/15/31 (Pre-refunded 6/15/09) - FGIC Insured
40
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
NEW YORK (CONTINUED)
$ 10,000 New York City Municipal Water Finance Authority, New York, 12/14 at 100.00 AAA $ 10,304,400
Water and Sewerage System Revenue Bonds, Fiscal Series 2005B,
5.000%, 6/15/36 - FSA Insured
10,000 New York City Transitional Finance Authority, New York, Future 5/10 at 101.00 AAA 10,722,700
Tax Secured Bonds, Fiscal Series 2000B, 6.000%, 11/15/29
(Pre-refunded 5/15/10)
7,435 New York City, New York, General Obligation Bonds, Fiscal 5/10 at 101.00 AA (4) 7,927,494
Series 2000A, 5.750%, 5/15/20 (Pre-refunded 5/15/10)
7,475 New York State Mortgage Agency, Homeowner Mortgage Revenue 4/10 at 100.00 Aa1 7,630,480
Bonds, Series 94, 5.800%, 10/01/20 (Alternative Minimum Tax)
5,000 New York State Urban Development Corporation, Service Contract 1/09 at 101.00 AAA 5,196,150
Revenue Bonds, Correctional Facilities, Series 1999C, 6.000%,
1/01/29 (Pre-refunded 1/01/09) - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
81,360 Total New York 84,719,915
------------------------------------------------------------------------------------------------------------------------------------
NORTH CAROLINA - 2.0% (1.3% OF TOTAL INVESTMENTS)
1,150 North Carolina Housing Finance Agency, Home Ownership Revenue 7/10 at 100.00 AAA 1,158,269
Bonds, 1998 Trust Agreement, Series 10A, 5.400%, 7/01/32 -
AMBAC Insured (Alternative Minimum Tax)
5,210 North Carolina Housing Finance Agency, Home Ownership Revenue 7/09 at 100.00 AA 5,295,392
Bonds, 1998 Trust Agreement, Series 7A, 6.250%, 1/01/29
(Alternative Minimum Tax)
2,125 North Carolina Housing Finance Agency, Home Ownership Revenue 1/10 at 100.00 AA 2,144,359
Bonds, 1998 Trust Agreement, Series 8A, 5.950%, 1/01/27
(Alternative Minimum Tax)
4,565 North Carolina Housing Finance Agency, Home Ownership Revenue 1/10 at 100.00 AA 4,622,793
Bonds, 1998 Trust Agreement, Series 9A, 5.875%, 7/01/31
(Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
13,050 Total North Carolina 13,220,813
------------------------------------------------------------------------------------------------------------------------------------
NORTH DAKOTA - 0.6% (0.4% OF TOTAL INVESTMENTS)
1,790 North Dakota Housing Finance Agency, Home Mortgage Finance 7/08 at 102.00 Aaa 1,815,830
Program Bonds, Series 1998B, 5.500%, 7/01/29 - MBIA Insured
(Alternative Minimum Tax)
2,250 Ward County Health Care, North Dakota, Revenue Bonds, Trinity 7/16 at 100.00 BBB+ 2,256,075
Obligated Group, Series 2006, 5.125%, 7/01/25
------------------------------------------------------------------------------------------------------------------------------------
4,040 Total North Dakota 4,071,905
------------------------------------------------------------------------------------------------------------------------------------
OHIO - 6.8% (4.2% OF TOTAL INVESTMENTS)
5,000 Akron, Bath and Copley Joint Township Hospital District, Ohio, 11/09 at 101.00 Baa1 5,081,000
Hospital Facilities Revenue Bonds, Summa Health System, Series
1998A, 5.375%, 11/15/18
Buckeye Tobacco Settlement Financing Authority, Ohio, Tobacco
Settlement Asset-Backed Revenue Bonds, Senior Lien,
Series 2007A-2:
270 5.125%, 6/01/24 6/17 at 100.00 BBB 260,631
2,700 5.875%, 6/01/30 6/17 at 100.00 BBB 2,666,601
2,635 5.750%, 6/01/34 6/17 at 100.00 BBB 2,542,775
5,895 5.875%, 6/01/47 6/17 at 100.00 BBB 5,723,043
5,150 Buckeye Tobacco Settlement Financing Authority, Ohio, Tobacco 6/22 at 100.00 BBB 3,776,186
Settlement Asset-Backed Revenue Bonds, Senior Lien, Series
2007A-3, 0.000%, 6/01/37
6,000 Cuyahoga County, Ohio, Hospital Revenue Bonds, University 7/09 at 101.00 AAA 6,256,800
Hospitals Health System, Series 1999, 5.500%, 1/15/30
(Pre-refunded 7/15/09) - AMBAC Insured
Montgomery County, Ohio, Hospital Facilities Revenue Bonds,
Kettering Medical Center, Series 1999:
7,840 6.750%, 4/01/18 (Pre-refunded 4/01/10) 4/10 at 101.00 A (4) 8,502,088
5,000 6.750%, 4/01/22 (Pre-refunded 4/01/10) 4/10 at 101.00 A (4) 5,422,250
1,405 Ohio Housing Finance Agency, GNMA Mortgage-Backed Securities 8/10 at 100.00 Aaa 1,456,690
Program Residential Mortgage Revenue Bonds, Series 2000D,
5.450%, 9/01/31 (Alternative Minimum Tax)
2,650 Ohio, General Obligation Bonds, Higher Education, Series 2003A, 5/13 at 100.00 AA+ 2,773,013
5.000%, 5/01/22
------------------------------------------------------------------------------------------------------------------------------------
44,545 Total Ohio 44,461,077
------------------------------------------------------------------------------------------------------------------------------------
41
| Nuveen Municipal Advantage Fund, Inc. (continued)
NMA | Portfolio of INVESTMENTS October 31, 2007
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
OKLAHOMA - 4.4% (2.8% OF TOTAL INVESTMENTS)
$ 12,000 Oklahoma Development Finance Authority, Revenue Bonds, Saint 2/17 at 100.00 AA- $ 12,012,360
John Health System, Series 2007, 5.000%, 2/15/42 (UB)
2,000 Oklahoma Municipal Power Authority, Power Supply System Revenue 1/17 at 100.00 AAA 1,905,220
Bonds, Series 2007, 4.500%, 1/01/47 - FGIC Insured
2,890 Oklahoma State Industries Authority, Health System Revenue 8/09 at 101.00 AAA 2,999,126
Bonds, Integris Baptist Medical Center, Series 1999A, 5.750%,
8/15/29 - MBIA Insured
2,110 Oklahoma State Industries Authority, Health System Revenue 8/09 at 101.00 AAA 2,212,652
Bonds, Integris Baptist Medical Center, Series 1999A, 5.750%,
8/15/29 (Pre-refunded 8/15/09) - MBIA Insured
10,000 Tulsa Municipal Airport Trust, Oklahoma, Revenue Refunding 6/09 at 100.00 B 9,968,900
Bonds, American Airlines Inc., Series 2001B, 5.650%, 12/01/35
(Mandatory put 12/01/08) (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
29,000 Total Oklahoma 29,098,258
------------------------------------------------------------------------------------------------------------------------------------
OREGON - 0.5% (0.3% OF TOTAL INVESTMENTS)
3,000 Oregon State Facilities Authority, Revenue Bonds, Willamette 10/17 at 100.00 A 3,030,270
University, Series 2007A, 5.000%, 10/01/36
------------------------------------------------------------------------------------------------------------------------------------
PENNSYLVANIA - 1.0% (0.6% OF TOTAL INVESTMENTS)
1,610 Carbon County Industrial Development Authority, Pennsylvania, No Opt. Call BBB- 1,671,550
Resource Recovery Revenue Refunding Bonds, Panther Creek
Partners Project, Series 2000, 6.650%, 5/01/10 (Alternative
Minimum Tax)
1,500 Pennsylvania Housing Finance Agency, Single Family Mortgage 10/16 at 100.00 AA+ 1,410,240
Revenue Bonds, Series 96A, 4.650%, 10/01/31 (Alternative
Minimum Tax)
2,600 Pennsylvania Turnpike Commission, Turnpike Revenue Bonds, 12/14 at 100.00 AAA 2,826,200
Series 2004A, 5.500%, 12/01/31 - AMBAC Insured
920 Washington County Authority, Pennsylvania, Capital Funding No Opt. Call AAA 927,148
Revenue Bonds, Capital Projects and Equipment Acquisition
Program, Series 1999, 6.150%, 12/01/29 - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
6,630 Total Pennsylvania 6,835,138
------------------------------------------------------------------------------------------------------------------------------------
PUERTO RICO - 1.4% (0.9% OF TOTAL INVESTMENTS)
5,000 Puerto Rico Electric Power Authority, Power Revenue Bonds, 7/15 at 100.00 AAA 5,227,900
Series 2005RR, 5.000%, 7/01/26 - XLCA Insured
4,000 Puerto Rico, General Obligation Bonds, Series 2000B, 5.625%, 7/10 at 100.00 AAA 4,210,760
7/01/19 - MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
9,000 Total Puerto Rico 9,438,660
------------------------------------------------------------------------------------------------------------------------------------
RHODE ISLAND - 1.2% (0.8% OF TOTAL INVESTMENTS)
1,235 Rhode Island Health and Educational Building Corporation, 11/07 at 102.00 AAA 1,261,392
Hospital Financing Revenue Bonds, Lifespan Obligated Group,
Series 1996, 5.500%, 5/15/16 - MBIA Insured
7,000 Rhode Island Housing and Mortgage Finance Corporation, 10/14 at 100.00 AA+ 6,781,320
Homeownership Opportunity Bond Program, Series 50A, 4.650%,
10/01/34
------------------------------------------------------------------------------------------------------------------------------------
8,235 Total Rhode Island 8,042,712
------------------------------------------------------------------------------------------------------------------------------------
SOUTH CAROLINA - 4.2% (2.6% OF TOTAL INVESTMENTS)
10,000 Greenville County School District, South Carolina, Installment 12/12 at 101.00 AA- (4) 11,216,100
Purchase Revenue Bonds, Series 2002, 6.000%, 12/01/20
(Pre-refunded 12/01/12)
2,500 Lexington County Health Service District, South Carolina, 11/13 at 100.00 A+ (4) 2,778,475
Hospital Revenue Refunding and Improvement Bonds, Series 2003,
5.750%, 11/01/28 (Pre-refunded 11/01/13)
3,000 Myrtle Beach, South Carolina, Hospitality and Accommodation Fee 6/14 at 100.00 AAA 3,059,700
Revenue Bonds, Series 2004A, 5.000%, 6/01/36 - FGIC Insured
1,220 Piedmont Municipal Power Agency, South Carolina, Electric No Opt. Call AAA 608,451
Revenue Bonds, Series 2004A-2, 0.000%, 1/01/23 - FGIC Insured
2,125 South Carolina Public Service Authority, Revenue Refunding 7/13 at 100.00 AAA 2,236,626
Bonds, Santee Cooper Electric System, Series 2003A, 5.000%,
1/01/21 - AMBAC Insured
42
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
SOUTH CAROLINA (CONTINUED)
$ 7,500 Tobacco Settlement Revenue Management Authority, South 5/11 at 101.00 BBB $ 7,713,300
Carolina, Tobacco Settlement Asset-Backed Bonds, Series 2001B,
6.375%, 5/15/28
------------------------------------------------------------------------------------------------------------------------------------
26,345 Total South Carolina 27,612,652
------------------------------------------------------------------------------------------------------------------------------------
SOUTH DAKOTA - 0.4% (0.3% OF TOTAL INVESTMENTS)
2,945 South Dakota Health and Educational Facilities Authority, 5/17 at 100.00 AA- 2,952,068
Revenue Bonds, Sanford Health, Series 2007, 5.000%, 11/01/40
------------------------------------------------------------------------------------------------------------------------------------
TENNESSEE - 5.6% (3.5% OF TOTAL INVESTMENTS)
6,000 Knox County Health, Educational and Housing Facilities Board, 4/12 at 101.00 Ba2 6,116,700
Tennessee, Hospital Revenue Bonds, Baptist Health System of
East Tennessee Inc., Series 2002, 6.500%, 4/15/31
20,415 Knox County Health, Educational and Housing Facilities Board, 1/13 at 75.87 AAA 12,338,418
Tennessee, Hospital Revenue Refunding Bonds, Covenant Health,
Series 2002A, 0.000%, 1/01/18 - FSA Insured
14,385 Metropolitan Government of Nashville-Davidson County Health and 11/09 at 101.00 AAA 15,186,962
Educational Facilities Board, Tennessee, Revenue Bonds,
Ascension Health Credit Group, Series 1999A, 5.875%, 11/15/28
(Pre-refunded 11/15/09) - AMBAC Insured
1,750 Metropolitan Government of Nashville-Davidson County, 5/11 at 100.00 AA 1,793,260
Tennessee, Electric System Revenue Bonds, Series 2001A, 5.125%,
5/15/26
1,500 Sumner County Health, Educational, and Housing Facilities 11/17 at 100.00 N/R 1,504,920
Board, Tennessee, Revenue Refunding Bonds, Sumner Regional
Health System Inc., Series 2007, 5.500%, 11/01/46
------------------------------------------------------------------------------------------------------------------------------------
44,050 Total Tennessee 36,940,260
------------------------------------------------------------------------------------------------------------------------------------
TEXAS - 16.9% (10.5% OF TOTAL INVESTMENTS)
11,810 Brazos River Authority, Texas, Pollution Control Revenue No Opt. Call Caa1 11,670,170
Refunding Bonds, TXU Electric Company, Series 2001C, 5.750%,
5/01/36 (Mandatory put 11/01/11) (Alternative Minimum Tax)
6,000 Brazos River Authority, Texas, Revenue Refunding Bonds, Houston No Opt. Call AAA 6,404,700
Lighting and Power Company, Series 1998, 5.050%, 11/01/18 -
AMBAC Insured (Alternative Minimum Tax)
10,000 Central Texas Regional Mobility Authority, Travis and 1/15 at 100.00 AAA 10,146,700
Williamson Counties, Toll Road Revenue Bonds, Series 2005,
5.000%, 1/01/45 - FGIC Insured
4,250 Ennis Independent School District, Ellis County, Texas, General 8/16 at 60.73 Aaa 1,667,913
Obligation Bonds, Series 2006, 0.000%, 8/15/26
8,400 Gulf Coast Waste Disposal Authority, Texas, Waste Disposal 4/09 at 101.00 BBB 8,408,568
Revenue Bonds, Valero Energy Corporation, Series 1999, 5.700%,
4/01/32 (Alternative Minimum Tax)
5,000 Harris County Health Facilities Development Corporation, Texas, 11/13 at 100.00 AAA 5,118,850
Thermal Utility Revenue Bonds, TECO Project, Series 2003,
5.000%, 11/15/30 - MBIA Insured
1,540 Houston Community College, Texas, Limited Tax General 2/13 at 100.00 AAA 1,580,517
Obligation Bonds, Series 2003, 5.000%, 2/15/28 - AMBAC Insured
3,460 Houston Community College, Texas, Limited Tax General 2/13 at 100.00 AAA 3,697,218
Obligation Bonds, Series 2003, 5.000%, 2/15/28 (Pre-refunded
2/15/13) - AMBAC Insured
13,110 Houston, Texas, Subordinate Lien Airport System Revenue Bonds, 7/10 at 100.00 AAA 13,796,964
Series 2000B, 5.500%, 7/01/30 (Pre-refunded 7/01/10) - FSA
Insured
Houston, Texas, Water Conveyance System Contract, Certificates
of Participation, Series 1993A-J:
5,490 6.800%, 12/15/10 - AMBAC Insured No Opt. Call AAA 6,016,217
2,000 6.800%, 12/15/11 - AMBAC Insured No Opt. Call AAA 2,244,600
9,345 Leander Independent School District, Williamson and Travis 8/15 at 35.34 AAA 2,229,250
Counties, Texas, General Obligation Bonds, Series 2005, 0.000%,
8/15/34 - FGIC Insured
16,305 Matagorda County Navigation District 1, Texas, Revenue Bonds, 5/09 at 101.00 BBB- 16,589,031
Reliant Energy Inc., Series 1999B, 5.950%, 5/01/30 (Alternative
Minimum Tax)
3,425 Sabine River Authority, Texas, Pollution Control Revenue No Opt. Call Caa1 3,374,653
Refunding Bonds, TXU Electric Company, Series 2001A, 5.500%,
5/01/22 (Mandatory put 11/01/11)
43
| Nuveen Municipal Advantage Fund, Inc. (continued)
NMA | Portfolio of INVESTMENTS October 31, 2007
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
TEXAS (CONTINUED)
$ 4,700 Sam Rayburn Municipal Power Agency, Texas, Power Supply System 10/12 at 100.00 Baa2 $ 4,888,893
Revenue Refunding Bonds, Series 2002A, 6.000%, 10/01/21
4,000 Texas, General Obligation Bonds, Water Financial Assistance, 8/09 at 100.00 Aa1 4,102,880
State Participation Program, Series 1999C, 5.500%, 8/01/35
6,840 Travis County Health Facilities Development Corporation, Texas, 11/09 at 101.00 AAA 7,225,434
Revenue Bonds, Ascension Health Credit Group, Series 1999A,
5.875%, 11/15/24 (Pre-refunded 11/15/09) - AMBAC Insured
245 Wood Glen Housing Finance Corporation, Texas, FHA-Insured 1/08 at 100.00 AAA 245,806
Section 8 Assisted Mortgage Revenue Bonds, Copperwood I
Project, Series 1990A, 7.625%, 1/01/10 - MBIA Insured (ETM)
3,000 Wylie Independent School District, Taylor County, Texas, 8/15 at 74.57 AAA 1,550,850
General Obligation Bonds, Series 2005, 0.000%, 8/15/21
------------------------------------------------------------------------------------------------------------------------------------
118,920 Total Texas 110,959,214
------------------------------------------------------------------------------------------------------------------------------------
VIRGINIA - 0.3% (0.2% OF TOTAL INVESTMENTS)
2,855 Tobacco Settlement Financing Corporation of Virginia, Tobacco 6/17 at 100.00 BBB 1,905,570
Settlement Asset-Backed Bonds, Series 2007B2, 0.000%, 6/01/46
------------------------------------------------------------------------------------------------------------------------------------
WASHINGTON - 14.5% (9.1% OF TOTAL INVESTMENTS)
8,810 Chelan County Public Utility District 1, Washington, Hydro 7/11 at 101.00 AAA 9,281,159
Consolidated System Revenue Bonds, Series 2001A, 5.600%,
1/01/36 - MBIA Insured (Alternative Minimum Tax)
5,665 Chelan County Public Utility District 1, Washington, Hydro 7/12 at 100.00 AAA 5,742,441
Consolidated System Revenue Bonds, Series 2002B, 5.250%,
7/01/37 - AMBAC Insured (Alternative Minimum Tax)
10,730 Chelan County Public Utility District 1, Washington, Hydro 7/11 at 101.00 AAA 11,335,709
Consolidated System Revenue Refunding Bonds, Series 2001C,
5.650%, 7/01/32 - MBIA Insured (Alternative Minimum Tax)
10,730 Pierce County School District 320, Sumner, Washington, 12/10 at 100.00 Aaa 11,606,212
Unlimited Tax General Obligation Bonds, Series 2000, 6.250%,
12/01/17 (Pre-refunded 12/01/10) - FSA Insured
10,550 Port of Seattle, Washington, Limited Tax General Obligation 12/10 at 100.00 AAA 11,010,086
Bonds, Series 2000B, 5.750%, 12/01/25 (Alternative Minimum Tax)
5,315 Port of Seattle, Washington, Revenue Bonds, Series 2000B, No Opt. Call AAA 5,578,571
6.000%, 2/01/10 - MBIA Insured (Alternative Minimum Tax)
19,475 Port of Seattle, Washington, Special Facility Revenue Bonds, 3/10 at 101.00 AAA 20,769,305
Terminal 18, Series 1999A, 6.000%, 9/01/29 (Pre-refunded
3/01/10) - MBIA Insured
5,000 Port of Seattle, Washington, Special Facility Revenue Bonds, 3/10 at 101.00 AAA 5,248,250
Terminal 18, Series 1999B, 6.000%, 9/01/20 - MBIA Insured
(Alternative Minimum Tax)
8,750 Washington Public Power Supply System, Revenue Refunding Bonds, 7/08 at 102.00 Aaa 8,987,300
Nuclear Project 3, Series 1998A, 5.125%, 7/01/18
5,000 Washington State Healthcare Facilities Authority, Revenue 12/09 at 101.00 AAA 5,236,750
Bonds, Providence Services, Series 1999, 5.375%, 12/01/19
(Pre-refunded 12/01/09) - MBIA Insured
1,270 Washington State, Motor Vehicle Fuel Tax General Obligation No Opt. Call AAA 580,073
Bonds, Series 2003F, 0.000%, 12/01/24 - MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
91,295 Total Washington 95,375,856
------------------------------------------------------------------------------------------------------------------------------------
WEST VIRGINIA - 0.8% (0.5% OF TOTAL INVESTMENTS)
5,000 Mason County, West Virginia, Pollution Control Revenue Bonds, 10/11 at 100.00 BBB 5,049,650
Appalachian Power Company, Series 2003L, 5.500%, 10/01/22
------------------------------------------------------------------------------------------------------------------------------------
44
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
WISCONSIN - 3.1% (1.9% OF TOTAL INVESTMENTS)
Badger Tobacco Asset Securitization Corporation, Wisconsin,
Tobacco Settlement Asset-Backed Bonds, Series 2002:
$ 1,100 6.000%, 6/01/17 6/12 at 100.00 BBB $ 1,127,544
6,635 6.125%, 6/01/27 6/12 at 100.00 BBB 6,861,585
1,685 Green Bay, Wisconsin, Water System Revenue Bonds, Series 2004, 11/14 at 100.00 Aaa 1,828,191
5.000%, 11/01/29 (Pre-refunded 11/01/14) - FSA Insured
565 Green Bay, Wisconsin, Water System Revenue Bonds, Series 2004, 11/14 at 100.00 Aaa 585,063
5.000%, 11/01/29 - FSA Insured
5,000 Madison, Wisconsin, Industrial Development Revenue Refunding 4/12 at 100.00 AA- 5,224,150
Bonds, Madison Gas and Electric Company Projects, Series
2002A, 5.875%, 10/01/34 (Alternative Minimum Tax)
3,000 Southeast Wisconsin Professional Baseball Park District, Sales No Opt. Call AAA 3,384,120
Tax Revenue Refunding Bonds, Series 1998A, 5.500%, 12/15/19 -
MBIA Insured
1,210 Wisconsin Housing and Economic Development Authority, Home 3/10 at 100.00 AA 1,229,928
Ownership Revenue Bonds, Series 2000B, 5.750%, 3/01/22
(Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
19,195 Total Wisconsin 20,240,581
------------------------------------------------------------------------------------------------------------------------------------
$ 1,170,648 Total Long-Term Investments (cost $999,708,578) - 159.9% 1,050,393,476
============------------------------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS - 0.4% (0.2% OF TOTAL INVESTMENTS)
$ 2,500 California Statewide Community Development Authority, A-1+ 2,500,000
Certificates of Participation, John Muir/Mt. Diablo Health
System, Variable Rate Demand Obligations, Series 1997, 3.550%,
8/15/27 - AMBAC Insured (5)
============------------------------------------------------------------------------------------------------------------------------
Total Short-Term Investments (cost $2,500,000) 2,500,000
--------------------------------------------------------------------------------------------------------------------
Total Investments (cost $1,002,208,578) - 160.3% 1,052,893,476
--------------------------------------------------------------------------------------------------------------------
Floating Rate Obligations - (8.2)% (54,048,333)
--------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 2.4% 15,961,251
--------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (54.5)% (358,000,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 656,806,394
====================================================================================================================
The Fund may invest in "zero coupon" securities. A zero coupon security
does not pay a regular interest coupon to its holders during the life of
the security. Tax-exempt income to the holder of the security comes from
accretion of the difference between the original purchase price of the
security at issuance and the par value of the security at maturity and is
effectively paid at maturity. Such securities are included in the
Portfolio of Investments with a 0.000% coupon rate in their description.
The market prices of zero coupon securities generally are more volatile
than the market prices of securities that pay interest periodically.
(1) All percentages shown in the Portfolio of Investments are based on net
assets applicable to Common shares unless otherwise noted.
(2) Optional Call Provisions (not covered by the report of independent
registered public accounting firm): Dates (month and year) and prices of
the earliest optional call or redemption. There may be other call
provisions at varying prices at later dates. Certain mortgage-backed
securities may be subject to periodic principal paydowns.
(3) Ratings (not covered by the report of independent registered public
accounting firm): Using the higher of Standard & Poor's Group ("Standard &
Poor's") or Moody's Investor Service, Inc. ("Moody's") rating. Ratings
below BBB by Standard & Poor's or Baa by Moody's are considered to be
below investment grade.
(4) Backed by an escrow or trust containing sufficient U.S. Government or U.S.
Government agency securities which ensure the timely payment of principal
and interest. Such investments are normally considered to be equivalent to
AAA rated securities.
(5) Investment has a maturity of more than one year, but has variable rate and
demand features which qualify it as a short-term investment. The rate
disclosed is that in effect at the end of the reporting period. This rate
changes periodically based on market conditions or a specified market
index.
N/R Not rated.
(ETM) Escrowed to maturity.
(IF) Inverse floating rate investment.
(UB) Underlying bond of an inverse floating rate trust reflected as a financing
transaction pursuant to the provisions of SFAS No. 140.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
45
| Nuveen Municipal Market Opportunity Fund, Inc.
NMO | Portfolio of INVESTMENTS
October 31, 2007
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
ALABAMA - 0.6% (0.4% OF TOTAL INVESTMENTS)
Henry County Water Authority, Alabama, Water Revenue Bonds,
Series 2006:
$ 1,935 5.000%, 1/01/36 - RAAI Insured 1/16 at 100.00 AA $ 1,865,495
2,485 5.000%, 1/01/41 - RAAI Insured 1/16 at 100.00 AA 2,379,064
------------------------------------------------------------------------------------------------------------------------------------
4,420 Total Alabama 4,244,559
------------------------------------------------------------------------------------------------------------------------------------
ALASKA - 0.5% (0.2% OF TOTAL INVESTMENTS)
Alaska Housing Finance Corporation, General Housing Purpose
Bonds, Series 2005A:
1,125 5.250%, 12/01/34 - FGIC Insured 12/14 at 100.00 AAA 1,176,694
1,275 5.250%, 12/01/41 - FGIC Insured 12/14 at 100.00 AAA 1,324,177
------------------------------------------------------------------------------------------------------------------------------------
2,400 Total Alaska 2,500,871
------------------------------------------------------------------------------------------------------------------------------------
ARKANSAS - 1.3% (0.8% OF TOTAL INVESTMENTS)
5,000 Arkansas Development Finance Authority, Hospital Revenue Bonds, 2/10 at 100.00 BBB (4) 5,367,800
Washington Regional Medical Center, Series 2000, 7.000%,
2/01/15 (Pre-refunded 2/01/10)
3,480 Cabot School District 4, Lonoke County, Arkansas, General 8/08 at 100.00 Aaa 3,504,464
Obligation Refunding Bonds, Series 2003, 5.000%, 2/01/27 -
AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
8,480 Total Arkansas 8,872,264
------------------------------------------------------------------------------------------------------------------------------------
CALIFORNIA - 12.1% (7.5% OF TOTAL INVESTMENTS)
1,350 Antelope Valley Union High School District, Los Angeles County, No Opt. Call AAA 483,206
California, General Obligation Bonds, Series 2004B, 0.000%,
8/01/29 - MBIA Insured
7,800 California County Tobacco Securitization Agency, Tobacco 12/18 at 100.00 Baa3 6,014,112
Settlement Asset-Backed Bonds, Los Angeles County
Securitization Corporation, Series 2006A, 0.000%, 6/01/36
(Mandatory put 6/01/11)
1,000 California Department of Water Resources, Power Supply Revenue 5/12 at 101.00 Aaa 1,104,340
Bonds, Series 2002A, 5.750%, 5/01/17 (Pre-refunded 5/01/12)
1,350 California Educational Facilities Authority, Revenue Refunding No Opt. Call Aaa 287,051
Bonds, Loyola Marymount University, Series 2001A, 0.000%,
10/01/39 - MBIA Insured
4,295 California Health Facilities Financing Authority, Health 3/13 at 100.00 A 4,305,652
Facility Revenue Bonds, Adventist Health System/West, Series
2003A, 5.000%, 3/01/33
9,000 California Health Facilities Financing Authority, Revenue 3/16 at 100.00 A+ 9,117,540
Bonds, Kaiser Permanante System, Series 2006, 5.250%, 3/01/45
25,000 California, General Obligation Bonds, Series 2005, 4.750%, 3/16 at 100.00 AAA 25,075,500
3/01/35 - MBIA Insured (UB)
10,445 Castaic Lake Water Agency, California, Revenue Certificates of No Opt. Call AAA 3,738,579
Participation, Water System Improvement Project, Series 1999,
0.000%, 8/01/29 - AMBAC Insured
8,365 Cupertino Union School District, Santa Clara County, 8/13 at 52.66 AAA 3,301,666
California, General Obligation Bonds, Series 2003B, 0.000%,
8/01/26 - FGIC Insured
5,000 Golden State Tobacco Securitization Corporation, California, 6/13 at 100.00 AAA 5,352,350
Enhanced Tobacco Settlement Asset-Backed Bonds, Series 2003B,
5.000%, 6/01/38 (Pre-refunded 6/01/13) - AMBAC Insured
1,000 Golden State Tobacco Securitization Corporation, California, 6/17 at 100.00 BBB 879,680
Enhanced Tobacco Settlement Asset-Backed Bonds, Series 2007A-1,
5.125%, 6/01/47
3,500 Golden State Tobacco Securitization Corporation, California, No Opt. Call AAA 1,428,735
Tobacco Settlement Asset-Backed Revenue Bonds, Series 2005A,
0.000%, 6/01/26 - FSA Insured
46
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
CALIFORNIA (CONTINUED)
$ 1,500 Lincoln Unified School District, Placer County, California, No Opt. Call AAA $ 621,900
Community Facilities District 1, Special Tax Bonds, Series
2005, 0.000%, 9/01/26 - AMBAC Insured
490 Los Angeles Department of Water and Power, California, Electric 4/08 at 100.00 AA- (4) 490,402
Plant Revenue Bonds, Second Series 1993, 4.750%, 10/15/20 (ETM)
995 Los Angeles Department of Water and Power, California, Electric 2/08 at 100.00 AA- (4) 996,204
Plant Revenue Bonds, Series 1994, 5.375%, 2/15/34 (ETM)
1,000 Pajaro Valley Unified School District, Santa Cruz County, No Opt. Call AAA 357,930
California, General Obligation Bonds, Series 2005B, 0.000%,
8/01/29 - FSA Insured
8,040 Placentia-Yorba Linda Unified School District, Orange County, No Opt. Call AAA 2,196,046
California, Certificates of Participation, Series 2006, 0.000%,
10/01/34 - FGIC Insured
San Joaquin Hills Transportation Corridor Agency, Orange
County, California, Toll Road Revenue Refunding Bonds,
Series 1997A:
5,000 5.650%, 1/15/17 - MBIA Insured 1/14 at 102.00 AAA 5,548,900
26,000 0.000%, 1/15/35 - MBIA Insured No Opt. Call AAA 7,022,080
5,000 San Jose-Evergreen Community College District, Santa Clara 9/15 at 100.00 AAA 1,704,750
County, California, General Obligation Bonds, Series 2005A,
0.000%, 9/01/28 - MBIA Insured
4,825 Santa Monica Community College District, Los Angeles County, No Opt. Call AAA 2,011,639
California, General Obligation Bonds, Series 2005C, 0.000%,
8/01/25 - MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
130,955 Total California 82,038,262
------------------------------------------------------------------------------------------------------------------------------------
COLORADO - 5.9% (3.6% OF TOTAL INVESTMENTS)
1,085 Arkansas River Power Authority, Colorado, Power Revenue Bonds, 10/16 at 100.00 AAA 1,134,856
Series 2006, 5.250%, 10/01/40 - XLCA Insured
3,000 Broomfield, Colorado, Master Facilities Lease Purchase 12/09 at 100.00 Aaa 3,116,010
Agreement, Certificates of Participation, Series 1999, 5.750%,
12/01/24 - AMBAC Insured
6,285 Broomfield, Colorado, Sales and Use Tax Revenue Refunding and 12/12 at 100.00 Aaa 6,741,417
Improvement Bonds, Series 2002A, 5.500%, 12/01/22 - AMBAC
Insured
11,465 Denver City and County, Colorado, Airport System Revenue 11/10 at 100.00 AAA 12,069,549
Refunding Bonds, Series 2000A, 6.000%, 11/15/18 - AMBAC Insured
(Alternative Minimum Tax)
7,000 E-470 Public Highway Authority, Colorado, Senior Revenue Bonds, No Opt. Call AAA 2,343,670
Series 2000B, 0.000%, 9/01/30 - MBIA Insured
20,000 E-470 Public Highway Authority, Colorado, Senior Revenue Bonds, 9/10 at 31.42 AAA 5,663,800
Series 2000B, 0.000%, 9/01/28 (Pre-refunded 9/01/10) - MBIA
Insured
E-470 Public Highway Authority, Colorado, Toll Revenue Bonds,
Series 2004B:
3,800 0.000%, 9/01/27 - MBIA Insured 9/20 at 67.94 AAA 1,383,504
13,300 0.000%, 9/01/31 - MBIA Insured 9/20 at 53.77 AAA 3,794,756
6,250 0.000%, 9/01/32 - MBIA Insured 9/20 at 50.83 AAA 1,683,313
8,000 0.000%, 3/01/36 - MBIA Insured No Opt. Call AAA 1,762,080
------------------------------------------------------------------------------------------------------------------------------------
80,185 Total Colorado 39,692,955
------------------------------------------------------------------------------------------------------------------------------------
DISTRICT OF COLUMBIA - 2.0% (1.2% OF TOTAL INVESTMENTS)
3,420 Washington Convention Center Authority, District of Columbia, 10/08 at 100.00 AAA 3,460,459
Senior Lien Dedicated Tax Revenue Bonds, Series 1998, 4.750%,
10/01/28 (Pre-refunded 10/01/08) - AMBAC Insured
10,000 Washington Convention Center Authority, District of Columbia, 10/16 at 100.00 AAA 9,741,400
Senior Lien Dedicated Tax Revenue Bonds, Series 2007A, 4.500%,
10/01/30 - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
13,420 Total District of Columbia 13,201,859
------------------------------------------------------------------------------------------------------------------------------------
FLORIDA - 0.9% (0.6% OF TOTAL INVESTMENTS)
6,965 Florida Housing Finance Corporation, Homeowner Mortgage Revenue 1/17 at 100.00 AA+ 6,103,708
Bonds, RITES Series 1515, 6.735%, 7/01/32 (Alternative Minimum
Tax) (IF)
------------------------------------------------------------------------------------------------------------------------------------
47
| Nuveen Municipal Market Opportunity Fund, Inc. (continued)
NMO | Portfolio of INVESTMENTS October 31, 2007
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
GEORGIA - 4.6% (2.8% OF TOTAL INVESTMENTS)
$ 15,000 Atlanta, Georgia, Airport General Revenue Refunding Bonds, 1/10 at 101.00 AAA $ 15,814,350
Series 2000A, 5.600%, 1/01/30 (Pre-refunded 1/01/10) - FGIC
Insured
14,330 Fulton County Facilities Corporation, Georgia, Certificates of 11/10 at 101.00 AAA 15,178,193
Participation, Public Purpose Project, Series 1999, 5.500%,
11/01/18 - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
29,330 Total Georgia 30,992,543
------------------------------------------------------------------------------------------------------------------------------------
ILLINOIS - 13.2% (8.2% OF TOTAL INVESTMENTS)
4,595 Bolingbrook, Illinois, General Obligation Refunding Bonds, No Opt. Call AAA 1,450,044
Series 2002B, 0.000%, 1/01/32 - FGIC Insured
4,600 Chicago Board of Education, Illinois, Unlimited Tax General No Opt. Call AAA 2,586,304
Obligation Bonds, Dedicated Tax Revenues, Series 1999A, 0.000%,
12/01/20 - FGIC Insured
4,000 Chicago, Illinois, Motor Fuel Tax Revenue Bonds, Series 2003A, 7/13 at 100.00 AAA 4,101,840
5.000%, 1/01/33 - AMBAC Insured
2,300 Chicago, Illinois, Motor Fuel Tax Revenue Refunding Bonds, No Opt. Call AAA 2,507,253
Series 1993, 5.375%, 1/01/14 - AMBAC Insured
5,250 Chicago, Illinois, Revenue Bonds, Midway Airport, Series 1998B, 1/09 at 101.00 AAA 5,330,220
5.000%, 1/01/28 - MBIA Insured
10,000 Illinois Finance Authority, Illinois, Northwestern University, 2/15 at 100.00 Aaa 10,243,400
Revenue Bonds, Series 2006, 5.000%, 12/01/42 (UB)
38,645 Illinois, General Obligation Bonds, Illinois FIRST Program, 4/10 at 100.00 AAA 39,988,682
Series 2000, 5.500%, 4/01/25 - MBIA Insured
Lake and McHenry Counties Community Unit School District 118,
Wauconda, Illinois, General Obligation Bonds, Series 2005B:
10,230 0.000%, 1/01/22 - FSA Insured 1/15 at 70.63 Aaa 5,125,025
6,780 0.000%, 1/01/24 - FSA Insured 1/15 at 63.44 Aaa 3,023,541
1,975 Lake County Community High School District 127, Grayslake, No Opt. Call AAA 2,470,449
Illinois, General Obligation Bonds, Series 2002A, 9.000%,
2/01/13 - FGIC Insured
Metropolitan Pier and Exposition Authority, Illinois, Revenue
Bonds, McCormick Place Expansion Project, Series 2002A:
3,250 0.000%, 6/15/25 - MBIA Insured 6/22 at 101.00 AAA 2,198,918
3,270 5.000%, 12/15/28 - MBIA Insured 6/12 at 101.00 AAA 3,362,508
3,700 0.000%, 6/15/30 - MBIA Insured No Opt. Call AAA 1,270,876
3,280 0.000%, 6/15/37 - MBIA Insured No Opt. Call AAA 793,202
11,715 0.000%, 12/15/38 - MBIA Insured No Opt. Call AAA 2,636,461
9,170 0.000%, 6/15/39 - MBIA Insured No Opt. Call AAA 2,008,689
------------------------------------------------------------------------------------------------------------------------------------
122,760 Total Illinois 89,097,412
------------------------------------------------------------------------------------------------------------------------------------
INDIANA - 1.0% (0.6% OF TOTAL INVESTMENTS)
4,695 Indiana Educational Facilities Authority, Revenue Bonds, Butler 2/11 at 100.00 AAA 4,905,852
University, Series 2001, 5.500%, 2/01/26 - MBIA Insured
2,000 Petersburg, Indiana, Pollution Control Revenue Refunding Bonds, 8/11 at 102.00 Baa1 2,041,760
Indianapolis Power and Light Company, Series 1991, 5.750%,
8/01/21
------------------------------------------------------------------------------------------------------------------------------------
6,695 Total Indiana 6,947,612
------------------------------------------------------------------------------------------------------------------------------------
KANSAS - 0.5% (0.3% OF TOTAL INVESTMENTS)
2,500 Kansas Development Finance Authority, Water Pollution Control 11/12 at 100.00 AAA 2,688,350
Revolving Fund Leveraged Bonds, Series 2002-II, 5.500%, 11/01/21
500 Salina, Kansas, Hospital Revenue Bonds, Salina Regional Medical 4/16 at 100.00 A1 471,990
Center, Series 2006, 4.625%, 10/01/31
------------------------------------------------------------------------------------------------------------------------------------
3,000 Total Kansas 3,160,340
------------------------------------------------------------------------------------------------------------------------------------
48
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
KENTUCKY - 1.7% (1.0% OF TOTAL INVESTMENTS)
Jefferson County School District Finance Corporation, Kentucky,
School Building Revenue Bonds, Series 2000A:
$ 3,045 5.250%, 7/01/17 (Pre-refunded 1/01/10) - FSA Insured 1/10 at 101.00 AAA $ 3,188,237
7,490 5.250%, 7/01/20 (Pre-refunded 1/01/10) - FSA Insured 1/10 at 101.00 AAA 7,842,330
------------------------------------------------------------------------------------------------------------------------------------
10,535 Total Kentucky 11,030,567
------------------------------------------------------------------------------------------------------------------------------------
LOUISIANA - 1.7% (1.0% OF TOTAL INVESTMENTS)
7,415 Louisiana Local Government Environmental Facilities and 12/12 at 100.00 AAA 7,569,677
Community Development Authority, Revenue Bonds, Baton Rouge
Community College Facilities Corporation, Series 2002, 5.000%,
12/01/32 - MBIA Insured
3,350 Louisiana Public Facilities Authority, Revenue Bonds, Baton 7/14 at 100.00 AAA 3,468,724
Rouge General Hospital, Series 2004, 5.250%, 7/01/33 - MBIA
Insured
------------------------------------------------------------------------------------------------------------------------------------
10,765 Total Louisiana 11,038,401
------------------------------------------------------------------------------------------------------------------------------------
MARYLAND - 1.0% (0.6% OF TOTAL INVESTMENTS)
4,410 Maryland Community Development Administration, Department of 3/17 at 100.00 Aa2 4,228,617
Housing and Community Development, Residential Revenue Bonds,
Series 2007D, 4.900%, 9/01/42 (Alternative Minimum Tax)
2,500 Maryland Department of Transportation, Consolidated No Opt. Call AAA 2,798,975
Transportation Revenue Bonds, Series 2002, 5.500%, 2/01/16
------------------------------------------------------------------------------------------------------------------------------------
6,910 Total Maryland 7,027,592
------------------------------------------------------------------------------------------------------------------------------------
MASSACHUSETTS - 3.6% (2.3% OF TOTAL INVESTMENTS)
440 Massachusetts Bay Transportation Authority, Assessment Bonds, 7/10 at 100.00 AAA 454,432
Series 2000A, 5.250%, 7/01/30
Massachusetts Bay Transportation Authority, Assessment Bonds,
Series 2000A:
4,150 5.250%, 7/01/30 (Pre-refunded 7/01/10) 7/10 at 100.00 AAA 4,342,311
660 5.250%, 7/01/30 (Pre-refunded 7/01/10) 7/10 at 100.00 Aa1 (4) 690,584
8,315 Massachusetts Turnpike Authority, Metropolitan Highway System 1/08 at 101.00 AAA 8,360,733
Revenue Bonds, Senior Series 1997A, 5.000%, 1/01/37 - MBIA
Insured
10,000 Massachusetts Water Resources Authority, General Revenue Bonds, 8/10 at 101.00 AAA 10,692,200
Series 2000A, 5.750%, 8/01/39 (Pre-refunded 8/01/10) - FGIC
Insured
------------------------------------------------------------------------------------------------------------------------------------
23,565 Total Massachusetts 24,540,260
------------------------------------------------------------------------------------------------------------------------------------
MICHIGAN - 1.1% (0.7% OF TOTAL INVESTMENTS)
5,000 Detroit Water Supply System, Michigan, Water Supply System 7/16 at 100.00 AAA 4,956,100
Revenue Bonds, Series 2006D, 4.625%, 7/01/32 - FSA Insured
2,090 Grand Rapids Building Authority, Kent County, Michigan, Limited 8/10 at 100.00 AAA 2,189,526
Tax General Obligation Bonds, Series 2000, 5.375%, 8/01/17 -
AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
7,090 Total Michigan 7,145,626
------------------------------------------------------------------------------------------------------------------------------------
MINNESOTA - 7.8% (4.9% OF TOTAL INVESTMENTS)
930 Minnesota Agricultural and Economic Development Board, 11/10 at 101.00 A 981,011
Healthcare System Revenue Bonds, Fairview Hospital and
Healthcare Services, Series 2000A, 6.375%, 11/15/29
29,070 Minnesota Agricultural and Economic Development Board, 11/10 at 101.00 A (4) 31,760,427
Healthcare System Revenue Bonds, Fairview Hospital and
Healthcare Services, Series 2000A, 6.375%, 11/15/29
(Pre-refunded 11/15/10)
2,205 Minnesota Housing Finance Agency, Single Family Remarketed 1/11 at 101.00 AA+ 2,227,601
Mortgage Bonds, Series 1998H-2, 6.050%, 7/01/31 (Alternative
Minimum Tax)
13,675 Minnesota, General Obligation Bonds, Series 2000, 5.125%, 11/10 at 100.00 AAA 14,302,683
11/01/16
3,030 St. Paul Housing and Redevelopment Authority, Minnesota, Sales 11/15 at 103.00 AAA 3,659,483
Tax Revenue Refunding Bonds, Civic Center Project, Series 1996,
7.100%, 11/01/23 - FSA Insured
------------------------------------------------------------------------------------------------------------------------------------
48,910 Total Minnesota 52,931,205
------------------------------------------------------------------------------------------------------------------------------------
49
| Nuveen Municipal Market Opportunity Fund, Inc. (continued)
NMO | Portfolio of INVESTMENTS October 31, 2007
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
MISSISSIPPI - 1.0% (0.7% OF TOTAL INVESTMENTS)
$ 5,900 Mississippi Business Finance Corporation, Pollution Control 4/08 at 100.00 BBB- $ 5,966,729
Revenue Refunding Bonds, System Energy Resources Inc. Project,
Series 1998, 5.875%, 4/01/22
1,080 Mississippi Home Corporation, GNMA Mortgage-Backed Securities 1/08 at 105.00 Aaa 1,107,562
Program Single Family Mortgage Revenue Bonds, Series 1997D-5,
6.750%, 7/01/29 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
6,980 Total Mississippi 7,074,291
------------------------------------------------------------------------------------------------------------------------------------
MISSOURI - 0.7% (0.4% OF TOTAL INVESTMENTS)
Kansas City Municipal Assistance Corporation, Missouri,
Leasehold Revenue Bonds, Series 2004B-1:
7,000 0.000%, 4/15/27 - AMBAC Insured No Opt. Call AAA 2,829,750
5,000 0.000%, 4/15/31 - AMBAC Insured No Opt. Call AAA 1,643,550
------------------------------------------------------------------------------------------------------------------------------------
12,000 Total Missouri 4,473,300
------------------------------------------------------------------------------------------------------------------------------------
NEBRASKA - 0.6% (0.4% OF TOTAL INVESTMENTS)
3,900 Omaha Convention Hotel Corporation, Nebraska, Convention Center 2/17 at 100.00 AAA 4,102,956
Revenue Bonds, Series 2007, 7.567%, 2/01/35 - AMBAC Insured (IF)
------------------------------------------------------------------------------------------------------------------------------------
NEVADA - 6.3% (3.9% OF TOTAL INVESTMENTS)
Director of Nevada State Department of Business and Industry,
Revenue Bonds, Las Vegas Monorail Project, First Tier,
Series 2000:
6,125 0.000%, 1/01/17 - AMBAC Insured No Opt. Call AAA 4,117,348
8,500 0.000%, 1/01/26 - AMBAC Insured No Opt. Call AAA 3,597,115
5,685 0.000%, 1/01/27 - AMBAC Insured No Opt. Call AAA 2,281,788
21,000 5.375%, 1/01/40 - AMBAC Insured 1/10 at 100.00 AAA 21,548,520
10,000 Reno, Nevada, Health Facilities, Revenue Bonds, Catholic 7/17 at 100.00 A 10,196,800
Healthcare West, Series 2007A, 5.250%, 7/01/31 (UB)
2,135 Reno, Nevada, Capital Improvement Revenue Bonds, Series 2005B, 6/15 at 33.61 AAA 455,460
0.000%, 6/01/37 - FGIC Insured
------------------------------------------------------------------------------------------------------------------------------------
53,445 Total Nevada 42,197,031
------------------------------------------------------------------------------------------------------------------------------------
NEW JERSEY - 6.7% (4.1% OF TOTAL INVESTMENTS)
18,000 New Jersey Transportation Trust Fund Authority, Transportation 6/10 at 100.00 AAA 19,044,900
System Bonds, Series 2000B, 5.750%, 6/15/17 (Pre-refunded
6/15/10)
35,000 New Jersey Transportation Trust Fund Authority, Transportation No Opt. Call AAA 9,617,300
System Bonds, Series 2006C, 0.000%, 12/15/34 - FSA Insured
5,000 New Jersey Turnpike Authority, Revenue Bonds, Growth and Income 1/17 at 100.00 AAA 3,606,700
Securities, Series 2004B, 0.000%, 1/01/35 - AMBAC Insured
3,000 Rahway Valley Sewerage Authority, New Jersey, Sewer Revenue No Opt. Call Aaa 1,319,310
Bonds, Series 2005A, 0.000%, 9/01/25 - MBIA Insured
3,525 Tobacco Settlement Financing Corporation, New Jersey, Tobacco 6/12 at 100.00 AAA 3,898,650
Settlement Asset-Backed Bonds, Series 2002, 6.125%, 6/01/42
(Pre-refunded 6/01/12)
Tobacco Settlement Financing Corporation, New Jersey, Tobacco
Settlement Asset-Backed Bonds, Series 2003:
2,100 6.375%, 6/01/32 (Pre-refunded 6/01/13) 6/13 at 100.00 AAA 2,386,041
2,925 6.750%, 6/01/39 (Pre-refunded 6/01/13) 6/13 at 100.00 AAA 3,386,360
2,000 Tobacco Settlement Financing Corporation, New Jersey, Tobacco 6/17 at 100.00 BBB 1,716,160
Settlement Asset-Backed Bonds, Series 2007-1A, 5.000%, 6/01/41
------------------------------------------------------------------------------------------------------------------------------------
71,550 Total New Jersey 44,975,421
------------------------------------------------------------------------------------------------------------------------------------
NEW MEXICO - 1.8% (1.2% OF TOTAL INVESTMENTS)
5,925 New Mexico Hospital Equipment Loan Council, Hospital Revenue 8/11 at 101.00 AA- (4) 6,377,848
Bonds, Presbyterian Healthcare Services, Series 2001A, 5.500%,
8/01/21 (Pre-refunded 8/01/11)
5,675 University of New Mexico, Revenue Refunding Bonds, Series No Opt. Call AA 6,052,671
1992A, 6.250%, 6/01/12
------------------------------------------------------------------------------------------------------------------------------------
11,600 Total New Mexico 12,430,519
------------------------------------------------------------------------------------------------------------------------------------
50
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
NEW YORK - 10.3% (6.4% OF TOTAL INVESTMENTS)
$ 50 Dormitory Authority of the State of New York, Improvement 2/09 at 100.00 AA- $ 51,072
Revenue Bonds, Mental Health Services Facilities, Series 1997A,
5.750%, 2/15/27
3,000 Long Island Power Authority, New York, Electric System General 6/16 at 100.00 A- 3,080,970
Revenue Bonds, Series 2006B, 5.000%, 12/01/35
6,750 Nassau County Tobacco Settlement Corporation, New York, Tobacco 7/09 at 101.00 AAA 7,139,745
Settlement Asset-Backed Bonds, Series 1999A, 6.400%, 7/15/33
(Pre-refunded 7/15/09)
17,870 New York City Transitional Finance Authority, New York, Future 8/09 at 101.00 AAA 18,764,930
Tax Secured Bonds, Fiscal Series 2000A, 5.750%, 8/15/24
(Pre-refunded 8/15/09)
5 New York City, New York, General Obligation Bonds, Fiscal 8/09 at 100.00 AA 5,060
Series 1997H, 6.125%, 8/01/25 New York City, New York, General
Obligation Bonds, Fiscal Series 2002G:
1,000 5.000%, 8/01/17 8/12 at 100.00 AA 1,038,990
6,530 5.750%, 8/01/18 8/12 at 100.00 AA 7,045,805
5,000 New York City, New York, General Obligation Bonds, Fiscal 8/12 at 100.00 AA 5,444,700
Series 2003A, 5.750%, 8/01/16
10,000 Port Authority of New York and New Jersey, Special Project 12/07 at 102.00 AAA 10,213,800
Bonds, JFK International Air Terminal LLC, Sixth Series 1997,
5.750%, 12/01/22 - MBIA Insured (Alternative Minimum Tax)
7,805 Power Authority of the State of New York, General Revenue 11/12 at 100.00 Aa2 (4) 8,354,472
Bonds, Series 2002A, 5.000%, 11/15/21 (Pre-refunded 11/15/12)
8,000 TSASC Inc., New York, Tobacco Flexible Amortization Bonds, 7/09 at 101.00 AAA 8,442,240
Series 1999-1, 6.250%, 7/15/34 (Mandatory put 7/15/24)
(Pre-refunded 7/15/09)
------------------------------------------------------------------------------------------------------------------------------------
66,010 Total New York 69,581,784
------------------------------------------------------------------------------------------------------------------------------------
NORTH CAROLINA - 2.0% (1.3% OF TOTAL INVESTMENTS)
1,900 Charlotte-Mecklenburg Hospital Authority, North Carolina, 1/15 at 100.00 AA- (4) 2,051,753
Healthcare System Revenue Bonds, DBA Carolinas Healthcare
System, Series 2005A, 5.000%, 1/15/45 (Pre-refunded 1/15/15)
4,000 North Carolina Medical Care Commission, Health System Revenue 10/17 at 100.00 AA 3,796,440
Bonds, Mission St. Joseph's Health System, Series 2007, 4.500%,
10/01/31
7,500 North Carolina Municipal Power Agency 1, Catawba Electric 1/13 at 100.00 AAA 7,963,875
Revenue Bonds, Series 2003A, 5.250%, 1/01/19 - MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
13,400 Total North Carolina 13,812,068
------------------------------------------------------------------------------------------------------------------------------------
NORTH DAKOTA - 4.3% (2.7% OF TOTAL INVESTMENTS)
23,035 Fargo, North Dakota, Health System Revenue Bonds, MeritCare 6/10 at 101.00 AAA 24,124,323
Obligated Group, Series 2000A, 5.625%, 6/01/31 - FSA Insured
North Dakota Water Commission, Water Development and Management
Program Bonds, Series 2000A:
2,230 5.700%, 8/01/18 (Pre-refunded 8/01/10) - MBIA Insured 8/10 at 100.00 AAA 2,361,748
2,450 5.750%, 8/01/19 (Pre-refunded 8/01/10) - MBIA Insured 8/10 at 100.00 AAA 2,597,931
------------------------------------------------------------------------------------------------------------------------------------
27,715 Total North Dakota 29,084,002
------------------------------------------------------------------------------------------------------------------------------------
OHIO - 4.8% (3.0% OF TOTAL INVESTMENTS)
Buckeye Tobacco Settlement Financing Authority, Ohio, Tobacco
Settlement Asset-Backed Revenue Bonds, Senior Lien,
Series 2007A-2:
125 5.125%, 6/01/24 6/17 at 100.00 BBB 120,663
1,250 5.875%, 6/01/30 6/17 at 100.00 BBB 1,234,538
1,215 5.750%, 6/01/34 6/17 at 100.00 BBB 1,172,475
2,750 5.875%, 6/01/47 6/17 at 100.00 BBB 2,669,783
10,000 Columbus City School District, Franklin County, Ohio, General 12/16 at 100.00 AAA 9,460,600
Obligation Bonds, Series 2006, 4.250%, 12/01/32 - FSA
Insured (UB)
16,140 Montgomery County, Ohio, Hospital Facilities Revenue Bonds, No Opt. Call A 17,495,437
Kettering Medical Center, Series 1999, 6.300%, 4/01/12
------------------------------------------------------------------------------------------------------------------------------------
31,480 Total Ohio 32,153,496
------------------------------------------------------------------------------------------------------------------------------------
51
| Nuveen Municipal Market Opportunity Fund, Inc. (continued)
NMO | Portfolio of INVESTMENTS October 31, 2007
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
OKLAHOMA - 0.0% (0.0% OF TOTAL INVESTMENTS)
$ 300 Tulsa Municipal Airport Trust, Oklahoma, Revenue Refunding 6/09 at 100.00 B $ 300,153
Bonds, American Airlines Inc., Series 2000B, 6.000%, 6/01/35
(Mandatory put 12/01/08) (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
OREGON - 2.4% (1.5% OF TOTAL INVESTMENTS)
5,000 Oregon Health Sciences University, Revenue Bonds, Series 2002A, 1/13 at 100.00 AAA 5,298,450
5.250%, 7/01/22 - MBIA Insured
Portland, Oregon, Water System Revenue Bonds, Series 2000A:
6,780 5.375%, 8/01/18 (Pre-refunded 8/01/10) 8/10 at 100.00 Aa1 (4) 7,123,271
3,880 5.500%, 8/01/20 (Pre-refunded 8/01/10) 8/10 at 100.00 Aa1 (4) 4,089,054
------------------------------------------------------------------------------------------------------------------------------------
15,660 Total Oregon 16,510,775
------------------------------------------------------------------------------------------------------------------------------------
PENNSYLVANIA - 3.9% (2.4% OF TOTAL INVESTMENTS)
5,000 Delaware County Industrial Development Authority, Pennsylvania, 1/08 at 102.00 BB+ 5,109,550
Resource Recovery Revenue Refunding Bonds, Series 1997A,
6.200%, 7/01/19
5,000 Pennsylvania Higher Education Assistance Agency, Capital 12/10 at 100.00 Aaa 5,358,050
Acquisition Revenue Bonds, Series 2000, 5.875%, 12/15/30
(Pre-refunded 12/15/10) - MBIA Insured
15,050 Pennsylvania, General Obligation Bonds, Second Series 2001, 9/11 at 101.00 AA 15,946,830
5.000%, 9/15/14
------------------------------------------------------------------------------------------------------------------------------------
25,050 Total Pennsylvania 26,414,430
------------------------------------------------------------------------------------------------------------------------------------
PUERTO RICO - 2.9% (1.8% OF TOTAL INVESTMENTS)
12,500 Puerto Rico Housing Finance Authority, Capital Fund Program No Opt. Call AA 12,522,625
Revenue Bonds, Series 2003, 4.500%, 12/01/23
7,265 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 5/12 at 100.00 BBB 7,264,782
Asset-Backed Refunding Bonds, Series 2002, 5.375%, 5/15/33
------------------------------------------------------------------------------------------------------------------------------------
19,765 Total Puerto Rico 19,787,407
------------------------------------------------------------------------------------------------------------------------------------
SOUTH CAROLINA - 7.6% (4.7% OF TOTAL INVESTMENTS)
24,730 Greenville County School District, South Carolina, Installment 12/12 at 101.00 AA- (4) 27,166,892
Purchase Revenue Bonds, Series 2002, 5.500%, 12/01/22
(Pre-refunded 12/01/12)
21,570 Piedmont Municipal Power Agency, South Carolina, Electric No Opt. Call AAA 7,488,457
Revenue Bonds, Series 2004A-2, 0.000%, 1/01/30 - AMBAC Insured
3,560 South Carolina Public Service Authority, Revenue Refunding 7/13 at 100.00 AAA 3,745,156
Bonds, Santee Cooper Electric System, Series 2003A, 5.000%,
1/01/20 - AMBAC Insured
665 Three Rivers Solid Waste Authority, South Carolina, Solid Waste 1/08 at 101.00 AAA 675,973
Disposal Facilities Revenue Bonds, Series 1997, 5.300%, 1/01/27
- MBIA Insured
11,665 Tobacco Settlement Revenue Management Authority, South 5/11 at 101.00 BBB 11,996,753
Carolina, Tobacco Settlement Asset-Backed Bonds, Series 2001B,
6.375%, 5/15/28
------------------------------------------------------------------------------------------------------------------------------------
62,190 Total South Carolina 51,073,231
------------------------------------------------------------------------------------------------------------------------------------
TENNESSEE - 0.7% (0.5% OF TOTAL INVESTMENTS)
5,000 Knox County Health, Educational and Housing Facilities Board, 7/13 at 100.00 AA 5,026,600
Tennessee, Hospital Revenue Bonds, East Tennessee Children's
Hospital, Series 2003A, 5.000%, 7/01/23 - RAAI Insured
------------------------------------------------------------------------------------------------------------------------------------
TEXAS - 26.3% (16.3% OF TOTAL INVESTMENTS)
2,500 Alliance Airport Authority, Texas, Special Facilities Revenue 12/12 at 100.00 CCC+ 2,228,650
Bonds, American Airlines Inc., Series 2007, 5.250%, 12/01/29
(Alternative Minimum Tax)
12,250 Austin, Texas, Subordinate Lien Hotel Occupancy Tax Revenue 11/09 at 100.00 AAA 12,818,033
Refunding Bonds, Series 1999, 5.800%, 11/15/29 (Pre-refunded
11/15/09) - AMBAC Insured
11,255 Brazos River Authority, Texas, Pollution Control Revenue No Opt. Call Caa1 11,121,741
Refunding Bonds, TXU Electric Company, Series 2001C, 5.750%,
5/01/36 (Mandatory put 11/01/11) (Alternative Minimum Tax)
Brownsville Independent School District, Cameron County, Texas,
General Obligation Bonds, Series 1999:
5,015 5.625%, 8/15/25 (Pre-refunded 8/15/09) 8/09 at 100.00 AAA 5,201,057
8,825 5.625%, 8/15/29 (Pre-refunded 8/15/09) 8/09 at 100.00 AAA 9,152,408
52
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
TEXAS (continued)
$ 1,000 Cedar Hill Independent School District, Dallas County, Texas, No Opt. Call AAA $ 305,590
General Obligation Bonds, Series 2002, 0.000%, 8/15/32 - FGIC
Insured
15,000 Central Texas Regional Mobility Authority, Travis and 1/15 at 100.00 AAA 15,220,050
Williamson Counties, Toll Road Revenue Bonds, Series 2005,
5.000%, 1/01/45 - FGIC Insured
Clear Creek Independent School District, Galveston and Harris
Counties, Texas, Unlimited Tax Schoolhouse and Refunding Bonds,
Series 2000:
585 5.400%, 2/15/18 2/10 at 100.00 AAA 606,510
340 5.650%, 2/15/19 2/10 at 100.00 AAA 354,668
235 5.700%, 2/15/20 2/10 at 100.00 AAA 245,394
270 5.700%, 2/15/21 2/10 at 100.00 AAA 281,942
Clear Creek Independent School District, Galveston and Harris
Counties, Texas, Unlimited Tax Schoolhouse and Refunding Bonds,
Series 2000:
16,740 5.400%, 2/15/18 (Pre-refunded 2/15/10) 2/10 at 100.00 AAA 17,460,992
9,660 5.650%, 2/15/19 (Pre-refunded 2/15/10) 2/10 at 100.00 AAA 10,128,800
6,645 5.700%, 2/15/20 (Pre-refunded 2/15/10) 2/10 at 100.00 AAA 6,974,725
7,750 5.700%, 2/15/21 (Pre-refunded 2/15/10) 2/10 at 100.00 AAA 8,134,555
2,500 Comal Independent School District, Comal, Bexar, Guadalupe, No Opt. Call Aaa 1,247,625
Hays, and Kendall Counties, Texas, General Obligation Bonds,
Series 2005A, 0.000%, 2/01/23
6,000 Dallas-Ft. Worth International Airport Facility Improvement 11/09 at 101.00 CCC+ 6,031,200
Corporation, Texas, Revenue Bonds, American Airlines Inc.,
Series 1999, 6.375%, 5/01/35 (Alternative Minimum Tax)
11,750 Dallas-Ft. Worth International Airport Facility Improvement 11/07 at 100.00 CCC+ 11,746,123
Corporation, Texas, Revenue Refunding Bonds, American Airlines
Inc., Series 2000C, 6.150%, 5/01/29 (Mandatory put 11/01/07)
(Alternative Minimum Tax)
Ennis Independent School District, Ellis County, Texas, General
Obligation Bonds, Series 2006:
3,950 0.000%, 8/15/30 8/16 at 49.21 Aaa 1,246,383
4,000 0.000%, 8/15/31 8/16 at 46.64 Aaa 1,194,240
1,440 Houston, Texas, Hotel Occupancy Tax and Special Revenue Bonds, No Opt. Call AAA 439,128
Convention and Entertainment Project, Series 2001B, 0.000%,
9/01/32 - AMBAC Insured
1,250 Houston, Texas, Junior Lien Water and Sewerage System Revenue 12/11 at 100.00 AAA 1,304,038
Refunding Bonds, Series 2001A, 5.000%, 12/01/20 - FSA Insured
21,500 Houston, Texas, Subordinate Lien Airport System Revenue Bonds, 7/10 at 100.00 AAA 22,626,600
Series 2000B, 5.500%, 7/01/30 (Pre-refunded 7/01/10) - FSA
Insured
9,350 Leander Independent School District, Williamson and Travis 8/15 at 39.49 AAA 2,496,450
Counties, Texas, General Obligation Bonds, Series 2005, 0.000%,
8/15/32 - FGIC Insured
6,000 Leander Independent School District, Williamson and Travis 8/14 at 35.27 AAA 1,503,600
Counties, Texas, General Obligation Bonds, Series 2006, 0.000%,
8/15/33
15,000 San Antonio Independent School District, Bexar County, Texas, 8/09 at 100.00 AAA 15,612,150
General Obligation Bonds, Series 1999, 5.800%, 8/15/29
(Pre-refunded 8/15/09)
4,390 Tarrant County, Texas, Cultural & Educational Facilities 2/17 at 100.00 AA- 4,442,417
Financing Corporation, Revenue Bonds, Series 2007, Residuals
1760-3, 7.511%, 2/15/36 (IF)
5,000 White Settlement Independent School District, Tarrant County, 8/15 at 36.81 AAA 1,236,650
Texas, General Obligation Bonds, Series 2005, 0.000%, 8/15/34
3,970 Wichita Falls, Wichita County, Texas, Priority Lien Water and 8/11 at 100.00 AAA 4,178,068
Sewerage System Revenue Bonds, Series 2001, 5.000%, 8/01/21
(Pre-refunded 8/01/11) - AMBAC Insured
Wylie Independent School District, Taylor County, Texas,
General Obligation Bonds, Series 2005:
3,000 0.000%, 8/15/23 8/15 at 67.10 AAA 1,377,540
2,000 0.000%, 8/15/24 8/15 at 63.56 AAA 866,540
------------------------------------------------------------------------------------------------------------------------------------
199,170 Total Texas 177,783,867
------------------------------------------------------------------------------------------------------------------------------------
53
| Nuveen Municipal Market Opportunity Fund, Inc. (continued)
NMO | Portfolio of INVESTMENTS October 31, 2007
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
WASHINGTON - 17.9% (11.1% OF TOTAL INVESTMENTS)
$ 5,500 Clark County Public Utility District 1, Washington, Generating 1/11 at 100.00 AAA $ 5,651,635
System Revenue Refunding Bonds, Series 2000, 5.125%, 1/01/20 -
FSA Insured
2,755 Cowlitz County, Washington, Special Sewerage Revenue Refunding No Opt. Call AAA 3,066,095
Bonds, CSOB Wastewater Treatment Facilities, Series 2002,
5.500%, 11/01/16 - FGIC Insured
10,000 Energy Northwest, Washington, Electric Revenue Refunding Bonds, 7/11 at 101.00 AAA 10,702,300
Nuclear Project 3, Series 2001A, 5.500%, 7/01/17 - FSA Insured
2,500 King County, Washington, Sewer Revenue Bonds, Series 2001, 1/12 at 100.00 AAA 2,593,975
5.000%, 1/01/23 - FGIC Insured
33,490 Port of Seattle, Washington, Revenue Bonds, Series 2000A, 8/10 at 100.00 AAA 35,385,197
5.625%, 2/01/30 (Pre-refunded 8/01/10) - MBIA Insured
6,950 Port of Seattle, Washington, Revenue Bonds, Series 2000B, 8/10 at 100.00 AAA 7,197,768
5.625%, 2/01/24 - MBIA Insured (Alternative Minimum Tax)
Seattle, Washington, General Obligation Refunding and
Improvement Bonds, Series 2002:
6,165 4.400%, 12/01/19 12/12 at 100.00 AAA 6,247,488
6,445 4.500%, 12/01/20 12/12 at 100.00 AAA 6,539,870
3,000 Spokane County School District 81, Spokane, Washington, General 6/15 at 100.00 AAA 2,939,670
Obligation Bonds, Series 2005, 0.000%, 6/01/24 - MBIA Insured
6,630 Tacoma, Washington, Electric System Revenue Refunding Bonds, 1/11 at 101.00 AAA 7,133,549
Series 2001A, 5.750%, 1/01/17 (Pre-refunded 1/01/11) - FSA
Insured
3,520 Washington State Healthcare Facilities Authority, Revenue 10/11 at 100.00 Aaa 3,709,622
Bonds, Children's Hospital and Regional Medical Center, Series
2001, 5.000%, 10/01/21 (Pre-refunded 10/01/11) - AMBAC Insured
7,890 Washington State Higher Education Facilities Authority, Revenue 11/09 at 101.00 AA (4) 8,339,414
Bonds, Pacific Lutheran University, Series 1999, 5.950%,
11/01/29 (Pre-refunded 11/01/09) - RAAI Insured
11,685 Washington State Tobacco Settlement Authority, Tobacco 6/13 at 100.00 BBB 12,265,277
Settlement Asset-Backed Revenue Bonds, Series 2002, 6.500%,
6/01/26
9,000 Washington, Motor Vehicle Fuel Tax General Obligation Bonds, 1/12 at 100.00 AAA 9,389,160
Series 2002C, 5.000%, 1/01/21 - FSA Insured
------------------------------------------------------------------------------------------------------------------------------------
115,530 Total Washington 121,161,020
------------------------------------------------------------------------------------------------------------------------------------
WISCONSIN - 1.0% (0.6% OF TOTAL INVESTMENTS)
3,790 Badger Tobacco Asset Securitization Corporation, Wisconsin, 6/12 at 100.00 BBB 3,919,429
Tobacco Settlement Asset-Backed Bonds, Series 2002, 6.125%,
6/01/27
1,755 Wisconsin Health and Educational Facilities Authority, Revenue 5/16 at 100.00 BBB 1,625,955
Bonds, Divine Savior Healthcare, Series 2006, 4.750%, 5/01/25
1,250 Wisconsin Health and Educational Facilities Authority, Revenue 3/08 at 101.00 N/R 1,235,075
Bonds, United Lutheran Program for the Aging Inc., Series 1998,
5.700%, 3/01/28
------------------------------------------------------------------------------------------------------------------------------------
6,795 Total Wisconsin 6,780,459
------------------------------------------------------------------------------------------------------------------------------------
54
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
WYOMING - 0.4% (0.3% OF TOTAL INVESTMENTS)
$ 2,800 Jackson National Rural Utilities Cooperative Financing 11/07 at 101.00 A $ 2,830,575
Corporation, Wyoming, Guaranteed Gas Supply Revenue Bonds,
Lower Valley Power and Light Inc., Series 1997B, 5.875%,
5/01/26 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
$ 1,266,725 Total Investments (cost $1,034,611,655) - 161.1% 1,088,119,421
============------------------------------------------------------------------------------------------------------------------------
Floating Rate Obligations - (5.4)% (36,660,000)
--------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 0.5% 4,117,380
--------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (56.2)% (380,000,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 675,576,801
====================================================================================================================
The Fund may invest in "zero coupon" securities. A zero coupon security
does not pay a regular interest coupon to its holders during the life of
the security. Tax-exempt income to the holder of the security comes from
accretion of the difference between the original purchase price of the
security at issuance and the par value of the security at maturity and is
effectively paid at maturity. Such securities are included in the
Portfolio of Investments with a 0.000% coupon rate in their description.
The market prices of zero coupon securities generally are more volatile
than the market prices of securities that pay interest periodically.
(1) All percentages shown in the Portfolio of Investments are based on net
assets applicable to Common shares unless otherwise noted.
(2) Optional Call Provisions (not covered by the report of independent
registered public accounting firm): Dates (month and year) and prices of
the earliest optional call or redemption. There may be other call
provisions at varying prices at later dates. Certain mortgage-backed
securities may be subject to periodic principal paydowns.
(3) Ratings (not covered by the report of independent registered public
accounting firm): Using the higher of Standard & Poor's Group ("Standard &
Poor's") or Moody's Investor Service, Inc. ("Moody's") rating. Ratings
below BBB by Standard & Poor's or Baa by Moody's are considered to be
below investment grade.
(4) Backed by an escrow or trust containing sufficient U.S. Government or U.S.
Government agency securities which ensure the timely payment of principal
and interest. Such investments are normally considered to be equivalent to
AAA rated securities.
N/R Not rated.
(ETM) Escrowed to maturity.
(IF) Inverse floating rate investment.
(UB) Underlying bond of an inverse floating rate trust reflected as a financing
transaction pursuant to the provisions of SFAS No. 140.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
55
| Nuveen Dividend Advantage Municipal Fund
NAD | Portfolio of INVESTMENTS
October 31, 2007
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
-----------------------------------------------------------------------------------------------------------------------------------
ALABAMA - 0.3% (0.2% OF TOTAL INVESTMENTS)
$ 1,500 Alabama 21st Century Authority, Tobacco Settlement Revenue 6/10 at 102.00 A- $ 1,544,580
Bonds, Series 2000, 5.750%, 12/01/20
-----------------------------------------------------------------------------------------------------------------------------------
ALASKA - 0.2% (0.1% OF TOTAL INVESTMENTS)
750 Alaska Housing Finance Corporation, General Housing Purpose 12/14 at 100.00 AAA 784,463
Bonds, Series 2005A, 5.250%, 12/01/34 - FGIC Insured
-----------------------------------------------------------------------------------------------------------------------------------
ARIZONA - 0.8% (0.5% OF TOTAL INVESTMENTS)
5,000 Salt Verde Financial Corporation, Arizona, Senior Gas Revenue No Opt. Call Aa1 4,793,550
Bonds, Series 2007, 5.000%,12/01/37
-----------------------------------------------------------------------------------------------------------------------------------
CALIFORNIA - 3.9% (2.5% OF TOTAL INVESTMENTS)
1,535 Alameda Corridor Transportation Authority, California, Senior No Opt. Call AAA 363,872
Lien Revenue Bonds, Series 1999A, 0.000%, 10/01/37 -
MBIA Insured
5,500 Anaheim Public Finance Authority, California, Subordinate Lease No Opt. Call AAA 2,018,445
Revenue Bonds, Public Improvement Project, Series 1997C, 0.000%,
9/01/28 - FSA Insured
200 California, General Obligation Bonds, Series 1997, 5.000%, 10/08 at 100.00 AAA 202,108
10/01/18 - AMBAC Insured
5,000 California, General Obligation Bonds, Series 2005, 5.000%, 3/16 at 100.00 A+ 5,079,700
3/01/31
Golden State Tobacco Securitization Corporation, California,
Enhanced Tobacco Settlement Asset-Backed Bonds, Series 2007A-1:
5,000 5.000%, 6/01/33 6/17 at 100.00 BBB 4,454,600
1,000 5.125%, 6/01/47 6/17 at 100.00 BBB 879,680
3,210 Golden State Tobacco Securitization Corporation, California, 6/15 at 100.00 AAA 3,635,999
Enhanced Tobacco Settlement Revenue Bonds, Residual Trust
07-1034, 8.006%, 6/01/45 - AGC Insured (IF)
3,500 Golden State Tobacco Securitization Corporation, California, No Opt. Call AAA 1,428,735
Tobacco Settlement Asset-Backed Revenue Bonds, Series 2005A,
0.000%, 6/01/26 - FSA Insured
17,000 San Joaquin Hills Transportation Corridor Agency, Orange No Opt. Call AAA 4,591,360
County, California, Toll Road Revenue Refunding Bonds, Series
1997A, 0.000%, 1/15/35 - MBIA Insured
-----------------------------------------------------------------------------------------------------------------------------------
41,945 Total California 22,654,499
-----------------------------------------------------------------------------------------------------------------------------------
COLORADO - 2.6% (1.7% OF TOTAL INVESTMENTS)
1,125 Antelope Heights Metropolitan District, Colorado, Limited Tax 12/17 at 100.00 AA 1,107,743
General Obligation Bonds, Series 2007, 5.000%, 12/01/37 -
RAAI Insured
3,205 Denver City and County, Colorado, Airport Special Facilities 1/09 at 101.00 AAA 3,311,086
Revenue Bonds, Rental Car Projects, Series 1999A, 6.000%,
1/01/12 - MBIA Insured (Alternative Minimum Tax)
2,950 Denver Convention Center Hotel Authority, Colorado, Senior 12/13 at 100.00 Aaa 3,176,236
Revenue Bonds, Convention Center Hotel, Series 2003A, 5.000%,
12/01/22 (Pre-refunded 12/01/13) - XLCA Insured
1,475 Denver, Colorado, FHA-Insured Multifamily Housing Revenue 4/08 at 102.00 AAA 1,492,361
Bonds, Boston Lofts Project, Series 1997A, 5.750%, 10/01/27
(Alternative Minimum Tax)
8,515 E-470 Public Highway Authority, Colorado, Senior Revenue Bonds, No Opt. Call AAA 3,718,671
Series 1997B, 0.000%, 9/01/25 - MBIA Insured
12,500 E-470 Public Highway Authority, Colorado, Toll Revenue Bonds, 9/26 at 54.77 AAA 2,676,375
Series 2006A, 0.000%, 9/01/38 - MBIA Insured
-----------------------------------------------------------------------------------------------------------------------------------
29,770 Total Colorado 15,482,472
-----------------------------------------------------------------------------------------------------------------------------------
56
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
-----------------------------------------------------------------------------------------------------------------------------------
FLORIDA - 10.6% (6.8% OF TOTAL INVESTMENTS)
$ 1,630 Florida Housing Finance Agency, Housing Revenue Bonds, Mar Lago 12/07 at 102.00 AAA $ 1,663,774
Village Apartments, Series 1997F, 5.800%, 12/01/17 - AMBAC
Insured (Alternative Minimum Tax)
15,000 Florida State Board of Education, Public Education Capital 6/15 at 101.00 AAA 14,518,049
Outlay Bonds, Series 2005E, 4.500%, 6/01/35
2,500 Marion County Hospital District, Florida, Revenue Bonds, Munroe 10/17 at 100.00 A2 2,474,350
Regional Medical Center, Series 2007, 5.000%, 10/01/34
13,625 Martin County Industrial Development Authority, Florida, 12/07 at 100.00 BB+ 13,767,381
Industrial Development Revenue Bonds, Indiantown Cogeneration
LP, Series 1994A, 7.875%, 12/15/25 (Alternative Minimum Tax)
South Miami Health Facilities Authority, Florida, Revenue
Bonds, Baptist Health Systems of South Florida, Series 2007:
22,000 5.000%, 8/15/37 (UB) 8/17 at 100.00 AA- 22,074,580
7,370 5.000%, 8/15/42 (UB) 8/17 at 100.00 AA- 7,327,328
-----------------------------------------------------------------------------------------------------------------------------------
62,125 Total Florida 61,825,462
-----------------------------------------------------------------------------------------------------------------------------------
GEORGIA - 2.2% (1.4% OF TOTAL INVESTMENTS)
5,000 Cobb County Development Authority, Georgia, Student Housing 7/17 at 100.00 Aaa 5,253,750
Revenue Bonds, KSU Village II Real Estate Foundation LLC
Project, Series 2007A, 5.250%, 7/15/38 - AMBAC Insured
4,000 Forsyth County Water and Sewerage Authority, Georgia, Revenue 4/10 at 101.00 AA+ (4) 4,271,720
Bonds, Series 2000, 6.000%, 4/01/25 (Pre-refunded 4/01/10)
880 Gainesville and Hall County Hospital Authority, Georgia, 5/09 at 101.00 AAA 907,377
Revenue Anticipation Certificates, Northeast Georgia Health
Services Inc., Series 1999, 5.500%, 5/15/29 - MBIA Insured
2,620 Gainesville and Hall County Hospital Authority, Georgia, 5/09 at 101.00 AAA 2,724,040
Revenue Anticipation Certificates,Northeast Georgia Health
Services Inc., Series 1999, 5.500%, 5/15/29 (Pre-refunded
5/15/09) - MBIA Insured
-----------------------------------------------------------------------------------------------------------------------------------
12,500 Total Georgia 13,156,887
-----------------------------------------------------------------------------------------------------------------------------------
IDAHO - 0.1% (0.1% OF TOTAL INVESTMENTS)
195 Idaho Housing and Finance Association, Single Family Mortgage 7/09 at 101.00 Aa2 198,335
Bonds, Series 1999E, 5.750%, 1/01/21 (Alternative Minimum Tax)
220 Idaho Housing and Finance Association, Single Family Mortgage 1/10 at 100.00 Aa2 223,230
Bonds, Series 2000D, 6.350%, 7/01/22 (Alternative Minimum Tax)
310 Idaho Housing and Finance Association, Single Family Mortgage 7/10 at 100.00 Aaa 315,856
Bonds, Series 2000E, 5.950%, 7/01/20 (Alternative Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
725 Total Idaho 737,421
-----------------------------------------------------------------------------------------------------------------------------------
ILLINOIS - 27.8% (17.9% OF TOTAL INVESTMENTS)
2,875 Channahon, Illinois, Revenue Refunding Bonds, Morris Hospital, 12/09 at 102.00 BBB+ 3,000,638
Series 1999, 5.750%, 12/01/12
7,250 Chicago Board of Education, Illinois, Unlimited Tax General No Opt. Call AAA 8,307,920
Obligation Bonds, Dedicated Tax Revenues, Series 1999A, 5.500%,
12/01/26 - FGIC Insured
Chicago, Illinois, FHA/GNMA Multifamily Housing Revenue Bonds,
Archer Court Apartments, Series 1999A:
790 5.500%, 12/20/19 (Alternative Minimum Tax) 10/10 at 101.00 AAA 810,216
1,210 5.600%, 12/20/29 (Alternative Minimum Tax) 10/10 at 101.00 AAA 1,224,762
1,925 5.650%, 12/20/40 (Alternative Minimum Tax) 10/10 at 101.00 AAA 1,943,519
22,750 Chicago, Illinois, General Obligation Refunding Bonds, No Opt. Call AAA 25,862,654
Emergency Telephone System, Series 1999, 5.500%, 1/01/23 -
FGIC Insured
2,620 Chicago, Illinois, Motor Fuel Tax Revenue Refunding Bonds, No Opt. Call AAA 2,856,088
Series 1993, 5.375%, 1/01/14 - AMBAC Insured
3,340 Chicago, Illinois, Third Lien General Airport Revenue Bonds, 1/16 at 100.00 AAA 3,437,929
O'Hare International Airport, Series 2005A, 5.000%, 1/01/33 -
FGIC Insured
57
| Nuveen Dividend Advantage Municipal Fund (continued)
NAD | Portfolio of INVESTMENTS October 31, 2007
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
-----------------------------------------------------------------------------------------------------------------------------------
ILLINOIS (continued)
$ 190 DuPage County Community School District 200, Wheaton, Illinois, 11/13 at 100.00 Aaa $ 203,237
General Obligation Bonds, Series 2003B, 5.250%, 11/01/20 -
FSA Insured
810 DuPage County Community School District 200, Wheaton, Illinois, 11/13 at 100.00 Aaa 883,143
General Obligation Bonds, Series 2003B, 5.250%, 11/01/20
(Pre-refunded 11/01/13) - FSA Insured
500 Hoffman Estates Park District, Cook County, Illinois, General 12/09 at 102.00 AAA 522,905
Obligation Bonds, Series 1999, 5.375%, 12/01/29 - MBIA Insured
3,935 Illinois Development Finance Authority, Local Government No Opt. Call Aaa 2,956,366
Program Revenue Bonds, Lake County School District 116 - Round
Lake, Series 1999, 0.000%, 1/01/15 - MBIA Insured
5,570 Illinois Finance Authority, Revenue Bonds, University of 7/14 at 100.00 Aa1 5,710,810
Chicago, Series 2004A, 5.000%, 7/01/34
9,860 Illinois Health Facilities Authority, Remarketed Revenue Bonds, 8/11 at 103.00 Aa1 10,497,646
University of Chicago Project, Series 1985A, 5.500%, 8/01/20
5,400 Illinois Health Facilities Authority, Revenue Bonds, Loyola 1/08 at 101.00 AAA 5,457,618
University Health System, Series 1997A, 5.000%, 7/01/24 -
MBIA Insured
5,490 Illinois Health Facilities Authority, Revenue Bonds, Sarah Bush 2/08 at 101.00 A 5,558,625
Lincoln Health Center, Series 1996B, 5.500%, 2/15/16
1,500 Illinois Housing Development Authority, Housing Finance Bonds, 1/15 at 100.00 AAA 1,487,310
Series 2005E, 4.800%, 1/01/36 - FGIC Insured
11,345 Lake and McHenry Counties Community Unit School District 118, 1/15 at 60.14 Aaa 4,789,178
Wauconda, Illinois, General Obligation Bonds, Series 2005B,
0.000%, 1/01/25 - FSA Insured
3,000 Lombard Public Facilities Corporation, Illinois, First Tier 1/16 at 100.00 N/R 3,204,090
Conference Center and Hotel Revenue Bonds, Series 2005A-1,
7.125%, 1/01/36
22,500 Metropolitan Pier and Exposition Authority, Illinois, Revenue 12/09 at 101.00 AAA 23,442,074
Bonds, McCormick Place Expansion Project, Series 1999A, 5.500%,
12/15/24 - FGIC Insured
Metropolitan Pier and Exposition Authority, Illinois, Revenue
Refunding Bonds, McCormick Place Expansion Project,
Series 1996A:
9,750 0.000%, 12/15/22 - MBIA Insured No Opt. Call AAA 4,937,790
13,000 0.000%, 12/15/23 - MBIA Insured No Opt. Call AAA 6,254,560
Regional Transportation Authority, Cook, DuPage, Kane, Lake,
McHenry and Will Counties, Illinois, General Obligation Bonds,
Series 1999:
22,650 5.750%, 6/01/19 - FSA Insured No Opt. Call AAA 25,966,408
3,500 5.750%, 6/01/23 - FSA Insured No Opt. Call AAA 4,074,490
1,300 Schaumburg, Illinois, General Obligation Bonds, Series 2004B, 12/14 at 100.00 AAA 1,361,334
5.250%, 12/01/34 - FGIC Insured
10,000 Will County Community High School District 210 Lincoln-Way, No Opt. Call Aaa 5,009,500
Illinois, General Obligation Bonds, Series 2006, 0.000%,
1/01/23 - FSA Insured
4,500 Will County School District 122, New Lenox, Illinois, General No Opt. Call Aaa 2,812,725
Obligation Bonds, Series 2000B, 0.000%, 11/01/18 - FSA Insured
-----------------------------------------------------------------------------------------------------------------------------------
177,560 Total Illinois 162,573,535
-----------------------------------------------------------------------------------------------------------------------------------
INDIANA - 5.5% (3.6% OF TOTAL INVESTMENTS)
8,755 Indiana Health Facility Financing Authority, Hospital Revenue 11/09 at 101.00 AAA 9,179,005
Bonds, Charity Obligated Group, Series 1999D, 5.500%, 11/15/24
(Pre-refunded 11/15/09) - MBIA Insured
8,000 Indiana Health Facility Financing Authority, Hospital Revenue 8/10 at 101.50 AAA 8,534,480
Bonds, Clarian Health Obligated Group, Series 2000A, 5.500%,
2/15/26 (Pre-refunded 8/15/10) - MBIA Insured
3,870 Indiana Housing and Community Development Authority, Single 1/17 at 100.00 Aaa 3,407,187
Family Mortgage Revenue Bonds, Series 2007A-1, Drivers 1847,
6.880%, 7/01/32 (Alternative Minimum Tax) (IF)
6,675 Indiana Municipal Power Agency, Power Supply Revenue Bonds, 1/17 at 100.00 AAA 6,839,806
Series 2007A, 5.000%, 1/01/42 - MBIA Insured
4,190 Indianapolis, Indiana, Economic Development Revenue Bonds, Park 6/09 at 101.00 Aa3 (4) 4,372,600
Tudor Foundation Inc., Project, Series 1999, 5.700%, 6/01/24
(Pre-refunded 6/01/09)
-----------------------------------------------------------------------------------------------------------------------------------
31,490 Total Indiana 32,333,078
-----------------------------------------------------------------------------------------------------------------------------------
58
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
-----------------------------------------------------------------------------------------------------------------------------------
IOWA - 1.1% (0.7% OF TOTAL INVESTMENTS)
$ 7,000 Iowa Tobacco Settlement Authority, Asset Backed Settlement 6/15 at 100.00 BBB $ 6,611,780
Revenue Bonds, Series 2005C, 5.625%, 6/01/46
-----------------------------------------------------------------------------------------------------------------------------------
KANSAS - 0.8% (0.5% OF TOTAL INVESTMENTS)
3,825 Wichita, Kansas, Water and Sewerage Utility Revenue Bonds, 4/08 at 100.50 AAA 3,807,482
Series 1999, 4.000%, 10/01/18 - FGIC Insured
1,000 Wyandotte County-Kansas City Unified Government, Kansas, Sales 12/15 at 100.00 N/R 1,008,890
Tax Special Obligation Bonds, Redevelopment Project Area B,
Series 2005, 5.000%, 12/01/20
-----------------------------------------------------------------------------------------------------------------------------------
4,825 Total Kansas 4,816,372
-----------------------------------------------------------------------------------------------------------------------------------
KENTUCKY - 1.7% (1.1% OF TOTAL INVESTMENTS)
3,030 Hardin County School District Finance Corporation, Kentucky, 2/10 at 101.00 Aa3 (4) 3,209,194
School Building Revenue Bonds, Series 2000, 5.750%, 2/01/20
(Pre-refunded 2/01/10)
Kentucky Economic Development Finance Authority, Hospital
System Revenue Refunding and Improvement Bonds, Appalachian
Regional Healthcare Inc., Series 1997:
1,850 5.850%, 10/01/17 4/08 at 102.00 BB- 1,861,452
5,000 5.875%, 10/01/22 4/08 at 102.00 BB- 5,018,100
-----------------------------------------------------------------------------------------------------------------------------------
9,880 Total Kentucky 10,088,746
-----------------------------------------------------------------------------------------------------------------------------------
LOUISIANA - 6.6% (4.2% OF TOTAL INVESTMENTS)
2,245 Lafayette, Louisiana, Sales Tax Revenue Bonds, Public 5/10 at 101.50 AAA 2,393,305
Improvements, Series 2000B, 5.625%, 5/01/25 (Pre-refunded
5/01/10) - FGIC Insured
1,750 Louisiana Local Government Environmental Facilities and 6/12 at 105.00 Aaa 1,912,628
Community Development Authority, GNMA Collateralized Mortgage
Revenue Refunding Bonds, Sharlo Apartments, Series 2002A,
6.500%, 6/20/37
5,350 Louisiana Public Facilities Authority, Revenue Bonds, Baton 7/14 at 100.00 AAA 5,539,604
Rouge General Hospital, Series 2004, 5.250%, 7/01/33 -
MBIA Insured
5,445 Louisiana State, Gasoline and Fuels Tax Revenue Bonds, Series 5/16 at 100.00 AAA 5,231,120
2006, 4.500%, 5/01/41 - FGIC Insured (UB)
13,570 Louisiana Transportation Authority, Senior Lien Toll Road 12/10 at 38.73 AAA 4,521,253
Revenue Bonds, Series 2005B, 0.000%, 12/01/28 - AMBAC Insured
9,000 Lousiana Public Facilties Authority, Revenue Bonds, Ochsner 5/17 at 100.00 A3 9,071,550
Clinic Foundation Project, Series 2007A, 5.500%, 5/15/47
9,545 Tobacco Settlement Financing Corporation, Louisiana, Tobacco 5/11 at 101.00 BBB 9,538,605
Settlement Asset-Backed Bonds, Series 2001B, 5.500%, 5/15/30
-----------------------------------------------------------------------------------------------------------------------------------
46,905 Total Louisiana 38,208,065
-----------------------------------------------------------------------------------------------------------------------------------
MASSACHUSETTS - 1.5% (1.0% OF TOTAL INVESTMENTS)
1,470 Boston Industrial Development Financing Authority, 9/12 at 102.00 N/R 1,464,223
Massachusetts, Subordinate Revenue Bonds, Crosstown Center
Project, Series 2002, 8.000%, 9/01/35 (Alternative Minimum Tax)
4,365 Massachusetts Health and Educational Facilities Authority, 10/15 at 100.00 AAA 4,560,596
Revenue Bonds, Berkshire Health System, Series 2005F, 5.000%,
10/01/19 - AGC Insured
785 Massachusetts Port Authority, Special Facilities Revenue Bonds, 3/08 at 101.00 AAA 794,098
US Airways Group Inc., Series 1996A, 5.875%, 9/01/23 - MBIA
Insured (Alternative Minimum Tax)
2,000 Massachusetts Turnpike Authority, Metropolitan Highway System 1/09 at 100.00 AAA 2,035,360
Revenue Bonds, Senior Series 1997A, 5.125%, 1/01/17 -
MBIA Insured
-----------------------------------------------------------------------------------------------------------------------------------
8,620 Total Massachusetts 8,854,277
-----------------------------------------------------------------------------------------------------------------------------------
MICHIGAN - 3.6% (2.3% OF TOTAL INVESTMENTS)
2,435 Detroit, Michigan, Senior Lien Water Supply System Revenue 7/11 at 100.00 AAA 2,579,030
Bonds, Series 2001A, 5.250%, 7/01/33 (Pre-refunded 7/01/11) -
FGIC Insured
59
| Nuveen Dividend Advantage Municipal Fund (continued)
NAD | Portfolio of INVESTMENTS October 31, 2007
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
-----------------------------------------------------------------------------------------------------------------------------------
MICHIGAN (continued)
$ 15,255 Michigan State Hospital Finance Authority, Hospital Revenue 8/08 at 101.00 BB- $ 14,344,124
Bonds, Detroit Medical Center Obligated Group, Series 1998A,
5.250%, 8/15/28
4,000 Wayne County, Michigan, Airport Revenue Bonds, Detroit 12/08 at 101.00 AAA 4,094,000
Metropolitan Wayne County Airport, Series 1998A, 5.375%,
12/01/16 - MBIA Insured (Alternative Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
21,690 Total Michigan 21,017,154
-----------------------------------------------------------------------------------------------------------------------------------
MINNESOTA - 0.2% (0.1% OF TOTAL INVESTMENTS)
910 Minnesota Housing Finance Agency, Single Family Mortgage Bonds, 1/10 at 101.00 AA+ 930,393
Series 1998H-1, 5.650%, 7/01/31 (Alternative Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
MISSOURI - 2.3% (1.5% OF TOTAL INVESTMENTS)
Kansas City Municipal Assistance Corporation, Missouri,
Leasehold Revenue Bonds, Series 2004B-1:
7,000 0.000%, 4/15/27 - AMBAC Insured No Opt. Call AAA 2,829,750
5,000 0.000%, 4/15/29 - AMBAC Insured No Opt. Call AAA 1,822,350
2,185 Missouri Health and Educational Facilities Authority, Revenue 6/11 at 101.00 AAA 2,297,222
Bonds, SSM Healthcare System, Series 2001A, 5.250%, 6/01/21 -
AMBAC Insured
Missouri Health and Educational Facilities Authority, Revenue
Bonds, SSM Healthcare System, Series 2001A:
2,185 5.250%, 6/01/21 (Pre-refunded 6/01/11) - AMBAC Insured 6/11 at 101.00 AAA 2,332,335
3,670 5.250%, 6/01/28 (Pre-refunded 6/01/11) - AMBAC Insured 6/11 at 101.00 AAA 3,914,899
-----------------------------------------------------------------------------------------------------------------------------------
20,040 Total Missouri 13,196,556
-----------------------------------------------------------------------------------------------------------------------------------
MONTANA - 0.4% (0.2% OF TOTAL INVESTMENTS)
905 Montana Board of Housing, Single Family Mortgage Bonds, Series 12/09 at 100.00 AA+ 925,525
2000A-2, 6.450%, 6/01/29 (Alternative Minimum Tax)
1,000 Montana Higher Education Student Assistance Corporation, 12/09 at 100.00 A2 1,035,950
Student Loan Revenue Bonds, Subordinate Series 1999B, 6.400%,
12/01/32 (Alternative Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
1,905 Total Montana 1,961,475
-----------------------------------------------------------------------------------------------------------------------------------
NEBRASKA - 0.2% (0.1% OF TOTAL INVESTMENTS)
1,200 NebHelp Inc., Nebraska, Senior Subordinate Bonds, Student Loan No Opt. Call Aaa 1,261,596
Program, Series 1993A-5A, 6.200%, 6/01/13 - MBIA Insured
(Alternative Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
NEVADA - 4.4% (2.8% OF TOTAL INVESTMENTS)
2,115 Clark County, Nevada, General Obligation Bank Bonds, Southern 6/11 at 100.00 AAA 2,242,471
Nevada Water Authority Loan, Series 2001, 5.300%, 6/01/19
(Pre-refunded 6/01/11) - FGIC Insured
Director of Nevada State Department of Business and Industry,
Revenue Bonds, Las Vegas Monorail Project, First Tier,
Series 2000:
8,000 0.000%, 1/01/19 - AMBAC Insured No Opt. Call AAA 4,867,200
3,000 5.375%, 1/01/40 - AMBAC Insured 1/10 at 100.00 AAA 3,078,360
15,000 Henderson, Nevada, Healthcare Facility Revenue Refunding Bonds, 7/17 at 100.00 A 15,272,100
Catholic Healthcare West, Series 2007B, 5.250%, 7/01/31 (UB)
-----------------------------------------------------------------------------------------------------------------------------------
28,115 Total Nevada 25,460,131
-----------------------------------------------------------------------------------------------------------------------------------
NEW HAMPSHIRE - 0.1% (0.1% OF TOTAL INVESTMENTS)
695 New Hampshire Housing Finance Authority, Single Family Mortgage 1/08 at 100.00 Aa2 711,805
Acquisition Revenue Bonds, Series 1995D, 6.550%, 7/01/26
(Alternative Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
NEW JERSEY - 5.8% (3.8% OF TOTAL INVESTMENTS)
700 New Jersey Health Care Facilities Financing Authority, 8/11 at 100.00 AAA 704,942
FHA-Insured Mortgage Revenue Bonds, Jersey City Medical Center,
Series 2001, 4.800%, 8/01/21 - AMBAC Insured
1,830 New Jersey Higher Education Assistance Authority, Student Loan 6/10 at 101.00 AAA 1,886,492
Revenue Bonds, Series 2000A, 6.000%, 6/01/13 - MBIA Insured
(Alternative Minimum Tax)
60
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
-----------------------------------------------------------------------------------------------------------------------------------
NEW JERSEY (continued)
$ 4,130 New Jersey Transit Corporation, Certificates of Participation, No Opt. Call AAA $ 4,510,084
Federal Transit Administration Grants, Series 2002A, 5.500%,
9/15/13 - AMBAC Insured
4,000 New Jersey Transportation Trust Fund Authority, Transportation No Opt. Call AA- 4,543,240
System Bonds, Series 1999A, 5.750%, 6/15/18
20,000 New Jersey Transportation Trust Fund Authority, Transportation No Opt. Call AAA 7,465,800
System Bonds, Series 2006C, 0.000%, 12/15/28 - AMBAC Insured
Tobacco Settlement Financing Corporation, New Jersey, Tobacco
Settlement Asset-Backed Bonds, Series 2002:
9,305 5.750%, 6/01/32 (Pre-refunded 6/01/12) 6/12 at 100.00 AAA 9,982,404
3,165 6.125%, 6/01/42 (Pre-refunded 6/01/12) 6/12 at 100.00 AAA 3,500,490
1,365 Tobacco Settlement Financing Corporation, New Jersey, Tobacco 6/13 at 100.00 AAA 1,580,301
Settlement Asset-Backed Bonds, Series 2003, 6.750%, 6/01/39
(Pre-refunded 6/01/13)
-----------------------------------------------------------------------------------------------------------------------------------
44,495 Total New Jersey 34,173,753
-----------------------------------------------------------------------------------------------------------------------------------
NEW MEXICO - 0.7% (0.5% OF TOTAL INVESTMENTS)
4,000 University of New Mexico, FHA-Insured Mortgage Hospital Revenue 7/14 at 100.00 AAA 4,108,040
Bonds, Series 2004, 5.000%, 7/01/32 - FSA Insured
-----------------------------------------------------------------------------------------------------------------------------------
NEW YORK - 14.8% (9.6% OF TOTAL INVESTMENTS)
10 Dormitory Authority of the State of New York, Improvement 2/08 at 100.00 AAA 10,038
Revenue Bonds, Mental Health Services Facilities, Series 1996B,
5.125%, 8/15/21 - MBIA Insured
2,170 Dormitory Authority of the State of New York, Insured Revenue 1/08 at 102.00 AA 2,216,156
Bonds, Franciscan Health Partnership Obligated Group - Frances
Shervier Home and Hospital, Series 1997, 5.500%, 7/01/17 -
RAAI Insured
7,500 Dormitory Authority of the State of New York, Secured Hospital 2/08 at 101.50 AAA 7,646,625
Revenue Refunding Bonds, Wyckoff Heights Medical Center, Series
1998H, 5.300%, 8/15/21 - MBIA Insured
2,000 Dormitory Authority of the State of New York, Third General 1/08 at 102.00 AAA 2,046,100
Resolution Consolidated Revenue Bonds, City University System,
Series 1997-1, 5.375%, 7/01/24 (Pre-refunded 1/01/08) - FSA
Insured
5,000 Long Island Power Authority, New York, Electric System General 6/08 at 101.00 AAA 5,102,300
Revenue Bonds, Series 1998A, 5.250%, 12/01/26 (Pre-refunded
6/01/08) - FSA Insured
Nassau County, New York, General Obligation Improvement Bonds,
Series 1999B:
4,005 5.250%, 6/01/19 (Pre-refunded 6/01/09) - AMBAC Insured 6/09 at 102.00 AAA 4,195,037
7,005 5.250%, 6/01/21 (Pre-refunded 6/01/09) - AMBAC Insured 6/09 at 102.00 AAA 7,337,387
6,000 New York City Industrial Development Agency, New York, American 8/16 at 101.00 B 6,814,140
Airlines-JFK International Airport Special Facility Revenue
Bonds, Series 2005, 7.750%, 8/01/31 (Alternative Minimum Tax)
5,000 New York City Municipal Water Finance Authority, New York, 12/14 at 100.00 AAA 5,152,200
Water and Sewerage System Revenue Bonds, Fiscal Series 2005B,
5.000%, 6/15/36 - FSA Insured
8,800 New York City Sales Tax Asset Receivable Corporation, New York, 10/14 at 100.00 AAA 9,147,952
Dedicated Revenue Bonds, Local Government Assistance
Corporation, Series 2004A, 5.000%, 10/15/32 - AMBAC Insured
10,000 New York City Transitional Finance Authority, New York, Future 8/09 at 101.00 AAA 10,500,800
Tax Secured Bonds, Fiscal Series 2000A, 5.750%, 8/15/24
(Pre-refunded 8/15/09)
New York City, New York, General Obligation Bonds,
Fiscal Series 1998F:
1,980 5.250%, 8/01/14 - AMBAC Insured 2/08 at 101.00 AAA 2,007,482
13,860 5.375%, 8/01/19 - MBIA Insured 2/08 at 101.00 AAA 14,057,921
New York City, New York, General Obligation Bonds, Fiscal
Series 1998F:
20 5.250%, 8/01/14 (Pre-refunded 2/01/08) - AMBAC Insured 2/08 at 101.00 Aaa 20,288
140 5.375%, 8/01/19 (Pre-refunded 2/01/08) - MBIA Insured 2/08 at 101.00 AAA 142,058
10,000 Port Authority of New York and New Jersey, Special Project 12/07 at 102.00 AAA 10,215,600
Bonds, JFK International Air Terminal LLC, Sixth Series 1997,
5.900%, 12/01/17 - MBIA Insured (Alternative Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
83,490 Total New York 86,612,084
-----------------------------------------------------------------------------------------------------------------------------------
61
| Nuveen Dividend Advantage Municipal Fund (continued)
NAD | Portfolio of INVESTMENTS October 31, 2007
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
-----------------------------------------------------------------------------------------------------------------------------------
NORTH CAROLINA - 0.7% (0.5% OF TOTAL INVESTMENTS)
$ 3,830 Charlotte-Mecklenburg Hospital Authority, North Carolina, 1/15 at 100.00 AA- (4) $ 4,135,902
Healthcare System Revenue Bonds, DBA Carolinas Healthcare
System, Series 2005A, 5.000%, 1/15/45 (Pre-refunded 1/15/15)
-----------------------------------------------------------------------------------------------------------------------------------
OHIO - 5.3% (3.4% OF TOTAL INVESTMENTS)
2,300 Amherst Exempted Village School District, Ohio, Unlimited Tax 12/11 at 100.00 Aaa 2,439,656
General Obligation School Improvement Bonds, Series 2001,
5.125%, 12/01/21 (Pre-refunded 12/01/11) - FGIC Insured
Buckeye Tobacco Settlement Financing Authority, Ohio, Tobacco
Settlement Asset-Backed Revenue Bonds, Senior Lien,
Series 2007A-2:
180 5.125%, 6/01/24 6/17 at 100.00 BBB 173,754
1,800 5.875%, 6/01/30 6/17 at 100.00 BBB 1,777,734
1,740 5.750%, 6/01/34 6/17 at 100.00 BBB 1,679,100
3,930 5.875%, 6/01/47 6/17 at 100.00 BBB 3,815,362
3,635 Franklin County, Ohio, FHA-Insured Multifamily Housing Mortgage 1/08 at 100.00 Aa2 3,636,672
Revenue Bonds, Hamilton Creek Apartments Project, Series 1994A,
5.550%, 7/01/24 (Alternative Minimum Tax)
3,650 Montgomery County, Ohio, Revenue Bonds, Catholic Health 5/14 at 100.00 AA 3,695,443
Initiatives, Series 2004A, 5.000%, 5/01/30
12,300 Ohio Water Development Authority, Solid Waste Disposal Revenue 9/09 at 102.00 N/R 12,666,048
Bonds, Bay Shore Power, Series 1998B, 6.625%, 9/01/20
(Alternative Minimum Tax)
1,115 Warren County, Ohio, Limited Tax General Obligations, Series 12/07 at 101.00 Aa2 1,127,845
1997, 5.500%, 12/01/17
-----------------------------------------------------------------------------------------------------------------------------------
30,650 Total Ohio 31,011,614
-----------------------------------------------------------------------------------------------------------------------------------
OREGON - 0.4% (0.3% OF TOTAL INVESTMENTS)
2,355 Portland, Oregon, Downtown Waterfront Urban Renewal and 6/10 at 101.00 Aaa 2,485,844
Redevelopment Revenue Bonds, Series 2000A, 5.500%, 6/15/20 -
AMBAC Insured
-----------------------------------------------------------------------------------------------------------------------------------
PENNSYLVANIA - 5.1% (3.3% OF TOTAL INVESTMENTS)
3,480 Allegheny County Hospital Development Authority, Pennsylvania, 11/10 at 102.00 AAA 4,110,228
Revenue Bonds, West Penn Allegheny Health System, Series 2000B,
9.250%, 11/15/22 (Pre-refunded 11/15/10)
1,425 Carbon County Industrial Development Authority, Pennsylvania, No Opt. Call BBB- 1,479,478
Resource Recovery Revenue Refunding Bonds, Panther Creek
Partners Project, Series 2000, 6.650%, 5/01/10 (Alternative
Minimum Tax)
1,500 Pennsylvania Housing Finance Agency, Single Family Mortgage 10/16 at 100.00 AA+ 1,410,240
Revenue Bonds, Series 96A, 4.650%, 10/01/31 (Alternative
Minimum Tax)
18,900 Philadelphia Airport System, Pennsylvania, Revenue Bonds, 6/08 at 102.00 AAA 19,416,158
Series 1998A, 5.500%, 6/15/18 - FGIC Insured (Alternative
Minimum Tax)
3,205 Philadelphia School District, Pennsylvania, General Obligation 8/12 at 100.00 AAA 3,496,815
Bonds, Series 2002B, 5.625%, 8/01/16 (Pre-refunded 8/01/12) -
FGIC Insured
-----------------------------------------------------------------------------------------------------------------------------------
28,510 Total Pennsylvania 29,912,919
-----------------------------------------------------------------------------------------------------------------------------------
PUERTO RICO - 2.1% (1.4% OF TOTAL INVESTMENTS)
12,500 Puerto Rico Housing Finance Authority, Capital Fund Program No Opt. Call AA 12,522,625
Revenue Bonds, Series 2003, 4.500%, 12/01/23
-----------------------------------------------------------------------------------------------------------------------------------
RHODE ISLAND - 3.5% (2.2% OF TOTAL INVESTMENTS)
2,015 Central Falls, Rhode Island, General Obligation School Bonds, 5/09 at 102.00 AA 2,107,065
Series 1999, 6.250%, 5/15/20 - RAAI Insured
3,500 Providence Redevelopment Agency, Rhode Island, Revenue Bonds, 4/10 at 101.00 Aaa 3,719,345
Public Safety and Municipal Building Projects, Series 1999A,
5.750%, 4/01/29 (Pre-refunded 4/01/10) - AMBAC Insured
Rhode Island Housing & Mortgage Finance Corporation,
Homeownership Opportunity Bond Program, Residual Trust 1038:
1,000 8.175%, 10/01/27 (Alternative Minimum Tax) (IF) 4/17 at 100.00 AA+ 1,054,720
670 8.134%, 10/01/32 (Alternative Minimum Tax) (IF) 4/17 at 100.00 AA+ 702,575
62
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
-----------------------------------------------------------------------------------------------------------------------------------
RHODE ISLAND (continued)
$ 12,500 Rhode Island Tobacco Settlement Financing Corporation, Tobacco 6/12 at 100.00 BBB $ 12,807,500
Settlement Asset-Backed Bonds, Series 2002A, 6.125%, 6/01/32
-----------------------------------------------------------------------------------------------------------------------------------
19,685 Total Rhode Island 20,391,205
-----------------------------------------------------------------------------------------------------------------------------------
SOUTH CAROLINA - 0.3% (0.2% OF TOTAL INVESTMENTS)
1,500 Greenville, South Carolina, Hospital Facilities Revenue Bonds, 5/11 at 101.00 AAA 1,526,880
Series 2001, 5.000%, 5/01/31 - AMBAC Insured
-----------------------------------------------------------------------------------------------------------------------------------
TENNESSEE - 2.1% (1.4% OF TOTAL INVESTMENTS)
6,400 Memphis-Shelby County Airport Authority, Tennessee, Airport 3/10 at 101.00 AAA 6,717,760
Revenue Bonds, Series 1999D, 6.000%, 3/01/24 - AMBAC Insured
(Alternative Minimum Tax)
2,425 Memphis-Shelby County Airport Authority, Tennessee, Airport 3/11 at 100.00 AAA 2,477,841
Revenue Bonds, Series 2001B, 5.125%, 3/01/26 - FSA Insured
1,910 Sullivan County Health Educational and Housing Facilities 9/16 at 100.00 BBB+ 1,886,087
Board, Tennessee, Revenue Bonds, Wellmont Health System,
Series 2006C, 5.250%, 9/01/36
1,500 Sumner County Health, Educational, and Housing Facilities 11/17 at 100.00 N/R 1,504,920
Board, Tennessee, Revenue Refunding Bonds, Sumner Regional
Health System Inc., Series 2007, 5.500%, 11/01/46
-----------------------------------------------------------------------------------------------------------------------------------
12,235 Total Tennessee 12,586,608
-----------------------------------------------------------------------------------------------------------------------------------
TEXAS - 16.2% (10.5% OF TOTAL INVESTMENTS)
2,560 Brazos River Authority, Texas, Pollution Control Revenue 4/13 at 101.00 Caa1 2,769,126
Refunding Bonds, TXU Electric Company, Series 1999C, 7.700%,
3/01/32 (Alternative Minimum Tax)
4,675 Carrollton-Farmers Branch Independent School District, Dallas 2/09 at 100.00 AAA 4,825,255
County, Texas, Unlimited Tax School Building Bonds, Series
1999, 6.000%, 2/15/20 (Pre-refunded 2/15/09)
2,820 Central Texas Regional Mobility Authority, Travis and 1/15 at 100.00 AAA 2,861,369
Williamson Counties, Toll Road Revenue Bonds, Series 2005,
5.000%, 1/01/45 - FGIC Insured
Coppell Independent School District, Dallas County, Texas,
Unlimited Tax School Building and Refunding Bonds, Series 1999:
1,535 0.000%, 8/15/20 8/09 at 52.47 AAA 747,867
2,100 0.000%, 8/15/21 8/09 at 49.48 AAA 962,598
2,200 0.000%, 8/15/23 8/09 at 52.47 AAA 896,852
2,100 0.000%, 8/15/24 8/09 at 41.50 AAA 807,324
2,200 0.000%, 8/15/25 8/09 at 39.14 AAA 797,346
2,095 0.000%, 8/15/26 8/09 at 36.91 AAA 715,778
Coppell Independent School District, Dallas County, Texas,
Unlimited Tax School Building and Refunding Bonds, Series 1999:
3,595 0.000%, 8/15/20 (Pre-refunded 8/15/09) 8/09 at 52.47 N/R (4) 1,768,057
4,900 0.000%, 8/15/21 (Pre-refunded 8/15/09) 8/09 at 49.48 N/R (4) 2,272,620
5,145 0.000%, 8/15/23 (Pre-refunded 8/15/09) 8/09 at 44.01 N/R (4) 2,122,210
4,900 0.000%, 8/15/24 (Pre-refunded 8/15/09) 8/09 at 41.50 N/R (4) 1,906,051
5,150 0.000%, 8/15/25 (Pre-refunded 8/15/09) 8/09 at 39.14 N/R (4) 1,889,226
4,905 0.000%, 8/15/26 (Pre-refunded 8/15/09) 8/09 at 36.91 N/R (4) 1,696,885
820 Dallas Area Rapid Transit, Texas, Senior Lien Sales Tax Revenue 12/11 at 100.00 AAA 866,560
Bonds, Series 2001, 5.000%, 12/01/31 (Pre-refunded 12/01/11) -
AMBAC Insured
Harris County Health Facilities Development Corporation, Texas,
Revenue Bonds, Christus Health, Series 1999A:
12,240 5.375%, 7/01/24 (Pre-refunded 7/01/09) - MBIA Insured 7/09 at 101.00 AAA 12,730,457
11,180 5.375%, 7/01/29 (Pre-refunded 7/01/09) - MBIA Insured 7/09 at 101.00 AAA 11,627,983
2,205 Harris County-Houston Sports Authority, Texas, Senior Lien No Opt. Call AAA 1,234,271
Revenue Refunding Bonds, Series 2001A, 0.000%, 11/15/20 -
MBIA Insured
2,500 Houston, Texas, Hotel Occupancy Tax and Special Revenue Bonds, No Opt. Call AAA 844,525
Convention and Entertainment Project, Series 2001B, 0.000%,
9/01/30 - AMBAC Insured
63
| Nuveen Dividend Advantage Municipal Fund (continued)
NAD | Portfolio of INVESTMENTS October 31, 2007
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
-----------------------------------------------------------------------------------------------------------------------------------
TEXAS (continued)
$ 2,500 Jefferson County, Texas, Certificates of Obligation, Series 8/10 at 100.00 AAA $ 2,667,225
2000, 6.000%, 8/01/25 (Pre-refunded 8/01/10) - FSA Insured
2,000 Laredo, Texas, Sports Venue Sales Tax Revenue Bonds, Series 3/09 at 100.00 AAA 2,049,760
2001, 5.300%, 3/15/26 (Pre-refunded 3/15/09) - FGIC Insured
30,095 Leander Independent School District, Williamson and Travis 8/12 at 27.94 AAA 6,824,342
Counties, Texas, General Obligation Bonds, Series 2004, 0.000%,
8/15/34
9,345 Leander Independent School District, Williamson and Travis 8/15 at 37.33 AAA 2,356,529
Counties, Texas, General Obligation Bonds, Series 2005, 0.000%,
8/15/33 - FGIC Insured
33,160 Leander Independent School District, Williamson and Travis 8/14 at 26.50 AAA 6,231,427
Counties, Texas, General Obligation Bonds, Series 2006, 0.000%,
8/15/38
1,000 San Antonio, Texas, Water System Revenue Bonds, Series 2005, 5/15 at 100.00 AAA 1,000,290
4.750%, 5/15/37 - MBIA Insured
4,390 Tarrant County, Texas, Cultural & Educational Facilities 2/17 at 100.00 AA- 4,442,417
Financing Corporation, Revenue Bonds, Series 2007, Residuals
1760-3, 7.511%, 2/15/36 (IF)
10,000 Tarrant County Health Facilities Development Corporation, 2/08 at 102.00 AAA 10,246,500
Texas, Revenue Bonds, Texas Health Resources System, Series
1997A, 5.250%, 2/15/17 (Pre-refunded 2/15/08) - MBIA Insured
7,000 White Settlement Independent School District, Tarrant County, 8/15 at 34.92 AAA 1,641,360
Texas, General Obligation Bonds, Series 2005, 0.000%, 8/15/35
Wylie Independent School District, Taylor County, Texas,
General Obligation Bonds, Series 2005:
3,000 0.000%, 8/15/20 8/15 at 78.46 AAA 1,639,230
3,000 0.000%, 8/15/22 8/15 at 70.77 AAA 1,461,780
-----------------------------------------------------------------------------------------------------------------------------------
185,315 Total Texas 94,903,220
-----------------------------------------------------------------------------------------------------------------------------------
UTAH - 0.2% (0.1% OF TOTAL INVESTMENTS)
Utah Housing Finance Agency, Single Family Mortgage Bonds,
Series 1999C-2, Class II:
325 5.700%, 7/01/19 (Alternative Minimum Tax) 1/10 at 101.50 Aaa 330,431
105 5.750%, 7/01/21 (Alternative Minimum Tax) 1/10 at 101.50 AA 106,752
80 Utah Housing Finance Agency, Single Family Mortgage Bonds, 7/09 at 101.00 AA 81,432
Series 1999D, 5.850%, 7/01/21 (Alternative Minimum Tax)
25 Utah Housing Finance Agency, Single Family Mortgage Bonds, 7/09 at 101.50 Aa2 25,565
Series 1999F, 6.300%, 7/01/21 (Alternative Minimum Tax)
895 Utah Housing Finance Agency, Single Family Mortgage Bonds, 7/10 at 100.00 AA- 911,092
Series 2000F-2, Class III, 6.000%, 1/01/15 (Alternative
Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
1,430 Total Utah 1,455,272
-----------------------------------------------------------------------------------------------------------------------------------
VIRGINIA - 0.2% (0.1% OF TOTAL INVESTMENTS)
3,395 Virginia Small Business Financing Authority, Industrial 11/09 at 102.00 N/R 1,067,049
Development Water Revenue Bonds, S.I.L. Clean Water, LLC
Project, Series 1999, 7.250%, 11/01/24 (Alternative Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
WASHINGTON - 10.8% (7.0% OF TOTAL INVESTMENTS)
4,000 Energy Northwest, Washington, Electric Revenue Refunding Bonds, 7/13 at 100.00 AAA 4,341,400
Nuclear Project 3, Series 2003A, 5.500%, 7/01/17 - XLCA Insured
Port of Seattle, Washington, Special Facility Revenue Bonds,
Terminal 18, Series 1999B:
1,755 6.000%, 9/01/15 - MBIA Insured (Alternative Minimum Tax) 3/10 at 101.00 AAA 1,848,138
2,590 6.000%, 9/01/16 - MBIA Insured (Alternative Minimum Tax) 3/10 at 101.00 AAA 2,725,690
Port of Seattle, Washington, Special Facility Revenue Bonds,
Terminal 18, Series 1999C:
875 6.000%, 9/01/15 - MBIA Insured (Alternative Minimum Tax) 3/10 at 101.00 AAA 921,436
1,260 6.000%, 9/01/16 - MBIA Insured (Alternative Minimum Tax) 3/10 at 101.00 AAA 1,326,011
9,760 Tacoma, Washington, Electric System Revenue Refunding Bonds, 1/11 at 101.00 AAA 10,465,062
Series 2001A, 5.625%, 1/01/21 (Pre-refunded 1/01/11) -
FSA Insured
64
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
-----------------------------------------------------------------------------------------------------------------------------------
WASHINGTON (continued)
$ 6,985 Washington State Tobacco Settlement Authority, Tobacco 6/13 at 100.00 BBB $ 7,331,875
Settlement Asset-Backed Revenue Bonds, Series 2002, 6.500%,
6/01/26
11,605 Washington, Certificates of Participation, Washington 7/09 at 100.00 AAA 11,919,031
Convention and Trade Center, Series 1999, 5.250%, 7/01/16 -
MBIA Insured
3,350 Washington, General Obligation Compound Interest Bonds, Series No Opt. Call AAA 2,175,859
1999S-2, 0.000%, 1/01/18 - FSA Insured
Washington, General Obligation Compound Interest Bonds,
Series 1999S-3:
17,650 0.000%, 1/01/20 No Opt. Call Aa1 10,234,176
18,470 0.000%, 1/01/21 No Opt. Call Aa1 10,161,640
-----------------------------------------------------------------------------------------------------------------------------------
78,300 Total Washington 63,450,318
-----------------------------------------------------------------------------------------------------------------------------------
WISCONSIN - 8.2% (5.3% OF TOTAL INVESTMENTS)
650 Badger Tobacco Asset Securitization Corporation, Wisconsin, 6/12 at 100.00 BBB 666,276
Tobacco Settlement Asset-Backed Bonds, Series 2002, 6.000%,
6/01/17
1,690 Green Bay, Wisconsin, Water System Revenue Bonds, Series 2004, 11/14 at 100.00 Aaa 1,833,616
5.000%, 11/01/29 (Pre-refunded 11/01/14) - FSA Insured
560 Green Bay, Wisconsin, Water System Revenue Bonds, Series 2004, 11/14 at 100.00 Aaa 579,886
5.000%, 11/01/29 - FSA Insured
3,810 La Crosse, Wisconsin, Industrial Development Revenue Refunding 12/08 at 102.00 AAA 3,954,551
Bonds, Dairyland Power Cooperative, Series 1997C, 5.550%,
2/01/15 - AMBAC Insured
7,410 Wisconsin Health and Educational Facilities Authority, Revenue 11/16 at 100.00 AA 7,450,014
Bonds, Ascension Health, Series 2006A, 5.000%, 11/15/36
Wisconsin Health and Educational Facilities Authority, Revenue
Bonds, FH Healthcare Development Inc., Series 1999:
8,375 6.250%, 11/15/20 (Pre-refunded 11/15/09) 11/09 at 101.00 N/R (4) 8,903,128
5,000 6.250%, 11/15/28 (Pre-refunded 11/15/09) 11/09 at 101.00 N/R (4) 5,315,300
4,180 Wisconsin Health and Educational Facilities Authority, Revenue 5/09 at 101.00 A 4,247,423
Bonds, Kenosha Hospital and Medical Center Inc., Series 1999,
5.625%, 5/15/29
12,700 Wisconsin Health and Educational Facilities Authority, Revenue 8/09 at 101.00 Aaa 13,124,307
Bonds, Mercy Health System Corporation, Series 1999, 5.500%,
8/15/25 - AMBAC Insured
2,200 Wisconsin Health and Educational Facilities Authority, Revenue 8/13 at 100.00 A- 2,105,818
Bonds, Wheaton Franciscan Services Inc., Series 2003A, 5.125%,
8/15/33
-----------------------------------------------------------------------------------------------------------------------------------
46,575 Total Wisconsin 48,180,319
-----------------------------------------------------------------------------------------------------------------------------------
$ 1,073,415 Total Long-Term Investments (cost $856,231,621) - 153.3% 897,527,949
============-----------------------------------------------------------------------------------------------------------------------
65
| Nuveen Dividend Advantage Municipal Fund (continued)
NAD | Portfolio of INVESTMENTS October 31, 2007
PRINCIPAL
AMOUNT (000) DESCRIPTION (1) RATINGS (3) VALUE
-----------------------------------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS - 1.5% (1.0% OF TOTAL INVESTMENTS)
$ 2,000 California Housing Finance Agency, Home Mortgage Revenue A-1+ $ 2,000,000
Bonds, Variable Rate Demand Obligations, Series 2001U, 3.610%,
8/01/32 - MBIA Insured (Alternative Minimum Tax) (5)
1,000 California Statewide Economic Recovery, Variable Rate A-1+ 1,000,000
Demand Obligations, Series 2004C-16, 3.130%, 7/01/23 -
FSA Insured (5)
1,000 Moffat County, Colorado, Pollution Control Revenue A-1 1,000,000
Refunding Bonds, Pacificorp Projects, Variable Rate Demand
Obligations, Series 1994, 3.580%, 5/01/13 - AMBAC Insured (5)
5,050 Puerto Rico Government Development Bank, Adjustable A-1+ 5,050,000
Refunding Bonds, Variable Rate Demand Obligations, Series 1985,
3.200%, 12/01/15 - MBIA Insured (5)
-----------------------------------------------------------------------------------------------------------------------------------
$ 9,050 Total Short-Term Investments (cost $9,050,000) 9,050,000
============-----------------------------------------------------------------------------------------------------------------------
Total Investments (cost $865,281,621) - 154.8% 906,577,949
-------------------------------------------------------------------------------------------------------------------
Floating Rate Obligations - (5.7)% (33,200,000)
-------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 1.3% 7,117,822
-------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (50.4)% (295,000,000)
-------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 585,495,771
===================================================================================================================
The Fund may invest in "zero coupon" securities. A zero coupon security
does not pay a regular interest coupon to its holders during the life of
the security. Tax-exempt income to the holder of the security comes from
accretion of the difference between the original purchase price of the
security at issuance and the par value of the security at maturity and is
effectively paid at maturity. Such securities are included in the
Portfolio of Investments with a 0.000% coupon rate in their description.
The market prices of zero coupon securities generally are more volatile
than the market prices of securities that pay interest periodically.
(1) All percentages shown in the Portfolio of Investments are based on net
assets applicable to Common shares unless otherwise noted.
(2) Optional Call Provisions (not covered by the report of independent
registered public accounting firm): Dates (month and year) and prices of
the earliest optional call or redemption. There may be other call
provisions at varying prices at later dates. Certain mortgage-backed
securities may be subject to peri- odic principal paydowns.
(3) Ratings (not covered by the report of independent registered public
accounting firm): Using the higher of Standard & Poor's Group ("Standard &
Poor's") or Moody's Investor Service, Inc. ("Moody's") rating. Ratings
below BBB by Standard & Poor's or Baa by Moody's are considered to be
below investment grade.
(4) Backed by an escrow or trust containing sufficient U.S. Government or U.S.
Government agency securities which ensure the timely payment of principal
and interest. Such investments are normally considered to be equivalent to
AAA rated securities.
(5) Investment has a maturity of more than one year, but has variable rate and
demand features which qualify it as a short-term investment. The rate
disclosed is that in effect at the end of the reporting period. This rate
changes periodically based on market conditions or a specified market
index.
N/R Not rated.
(IF) Inverse floating rate investment.
(UB) Underlying bond of an inverse floating rate trust reflected as a financing
transaction pursuant to the provisions of SFAS No. 140.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
66
| Nuveen Dividend Advantage Municipal Fund 2
NXZ | Portfolio of INVESTMENTS
October 31, 2007
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
ALABAMA - 4.4% (2.9% OF TOTAL INVESTMENTS)
$ 18,500 Huntsville Healthcare Authority, Alabama, Revenue Bonds, Series 6/11 at 101.00 A2 (4) $ 20,030,320
2001A, 5.750%, 6/01/31 (Pre-refunded 6/01/11)
------------------------------------------------------------------------------------------------------------------------------------
ALASKA - 0.7% (0.5% OF TOTAL INVESTMENTS)
2,955 Northern Tobacco Securitization Corporation, Alaska, Tobacco 6/11 at 100.00 AAA 3,150,769
Settlement Asset-Backed Bonds, Series 2001, 5.500%, 6/01/29
(Pre-refunded 6/01/11)
------------------------------------------------------------------------------------------------------------------------------------
ARIZONA - 0.7% (0.5% OF TOTAL INVESTMENTS)
3,120 Phoenix, Arizona, Civic Improvement Corporation, Senior Lien 7/12 at 100.00 Aaa 3,183,086
Airport Revenue Bonds, Series 2002B, 5.250%, 7/01/32 - FGIC
Insured (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
ARKANSAS - 0.3% (0.2% OF TOTAL INVESTMENTS)
1,525 Arkansas Development Finance Authority, Single Family Mortgage 1/12 at 100.00 AAA 1,541,577
Revenue Bonds, GNMA Mortgage-Backed Securities Program, Series
2002C, 5.400%, 1/01/34 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
CALIFORNIA - 8.4% (5.5% OF TOTAL INVESTMENTS)
6,000 California Educational Facilities Authority, Revenue Bonds, 6/11 at 101.00 AAA 6,213,900
Stanford University, Series 2001Q, 5 12/01/32
11,200 California, General Obligation Bonds, Series 2003, 5.250%, 8/13 at 100.00 A+ 11,710,048
2/01/28
6,525 Golden State Tobacco Securitization Corporation, California, 6/15 at 100.00 AAA 7,279,421
Enhanced Tobacco Settle Revenue Bonds, Residual Trust 07-1035,
7.879%, 6/01/45 - FGIC Insured (IF)
1,000 Golden State Tobacco Securitization Corporation, California, 6/17 at 100.00 BBB 879,680
Enhanced Tobacco Settlement Asset-Backed Bonds, Series 2007A-1,
5.125%, 6/01/47
5,000 Golden State Tobacco Securitization Corporation, California, 6/13 at 100.00 AAA 5,791,400
Tobacco Settlement Asset-Backed Bonds, Series 2003A-1, 6.750%,
6/01/39 (Pre-refunded 6/01/13)
6,000 Los Angeles Regional Airports Improvement Corporation, 12/12 at 102.00 B 6,523,140
California, Sublease Revenue Bonds, Los Angeles International
Airport, American Airlines Inc. Terminal 4 Project, Series
2002C, 7 12/01/24 (Alternative Minimum Tax)
135 Yuba County Water Agency, California, Yuba River Development 3/08 at 100.00 Baa3 134,757
Revenue Bonds, Pacific Gas and Electric Company, Series 1966A,
4.000%, 3/01/16
------------------------------------------------------------------------------------------------------------------------------------
35,860 Total California 38,532,346
------------------------------------------------------------------------------------------------------------------------------------
COLORADO - 7.2% (4.8% OF TOTAL INVESTMENTS)
2,625 Colorado Educational and Cultural Facilities Authority, Charter 8/11 at 100.00 AAA 2,963,021
School Revenue Bonds, Peak-to-Peak Charter School, Series 2001,
7.500%, 8/15/21 (Pre-refunded 8/15/11)
Denver City and County, Colorado, Airport Revenue Bonds, Series 2006:
1,790 7.501% 11/15/23 - FGIC Insured (IF) 11/16 at 100.00 AAA 2,035,499
3,300 5.000 11/15/24 - FGIC Insured (UB) 11/16 at 100.00 AAA 3,455,067
1,445 7.501 11/15/25 - FGIC Insured (IF) 11/16 at 100.00 AAA 1,643,182
10,000 E-470 Public Highway Authority, Colorado, Senior Revenue Bonds, 9/10 at 31.42 AAA 2,831,900
Series 2000B, 0.000%, 9/01/28 (Pre-refunded 9/01/10) - MBIA
Insured
1,280 Eagle County Air Terminal Corporation, Colorado, Airport 5/11 at 101.00 N/R 1,349,530
Terminal Revenue Bonds, Series 2001, 7 5/01/31 (Alternative
Minimum Tax)
755 Jefferson County School District R1, Colorado, General 12/14 at 100.00 AAA 795,279
Obligation Bonds, Series 2004, 5.000%, 12/15/22 - FSA Insured
67
| Nuveen Dividend Advantage Municipal Fund 2 (continued)
NXZ | Portfolio of INVESTMENTS October 31, 2007
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
COLORADO (continued)
$ 5,000 Northwest Parkway Public Highway Authority, Colorado, Revenue 6/11 at 102.00 AAA $ 5,210,650
Bonds, Senior Series 2001A, 5.250%, 6/15/41 - FSA Insured
Northwest Parkway Public Highway Authority, Colorado, Senior
Lien Revenue Bonds, Series 2001B:
22,000 0.000%, 6/15/28 - FSA Insured 6/11 at 35.65 AAA 6,711,100
17,650 0.000%, 6/15/29 - AMBAC Insured 6/11 at 33.45 AAA 5,052,489
1,000 Plaza Metropolitan District 1, Lakewood, Colorado, Tax 6/14 at 101.00 N/R 1,074,960
Increment Revenue Bonds, Series 2003, 8.000%, 12/01/25
------------------------------------------------------------------------------------------------------------------------------------
66,845 Total Colorado 33,122,677
------------------------------------------------------------------------------------------------------------------------------------
DISTRICT OF COLUMBIA - 1.3% (0.9% OF TOTAL INVESTMENTS)
1,075 District of Columbia Tobacco Settlement Corporation, Tobacco 5/11 at 101.00 BBB 1,113,980
Settlement Asset-Backed Bonds, Series 2001, 6.250%, 5/15/24
5,000 Washington Convention Center Authority, District of Columbia, 10/16 at 100.00 AAA 4,870,700
Senior Lien Dedicated Tax Revenue Bonds, Series 2007A, 4.500%,
10/01/30 - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
6,075 Total District of Columbia 5,984,680
------------------------------------------------------------------------------------------------------------------------------------
FLORIDA - 5.0% (3.3% OF TOTAL INVESTMENTS)
15,000 Jacksonville, Florida, Transportation Revenue Bonds, Series 10/11 at 100.00 AAA 15,667,500
2001, 5.250%, 10/01/29 - MBIA Insured
4,000 Miami-Dade County Health Facility Authority, Florida, Hospital 8/11 at 101.00 AAA 4,255,560
Revenue Refunding Bonds, Miami Children's Hospital, Series
2001A, 5.125%, 8/15/26 (Pre-refunded 8/15/11) - AMBAC Insured
3,000 Miami-Dade County, Florida, Aviation Revenue Bonds, Miami 10/12 at 100.00 AAA 3,076,860
International Airport, Series 2002, 5.375%, 10/01/32 - FGIC
Insured (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
22,000 Total Florida 22,999,920
------------------------------------------------------------------------------------------------------------------------------------
HAWAII - 2.3% (1.5% OF TOTAL INVESTMENTS)
Honolulu Board of Water Supply, Hawaii, Water System Revenue
Bonds, Series 2001:
3,000 5.250%, 7/01/26 (Pre-refunded 7/01/11) - FSA Insured 7/11 at 100.00 AAA 3,179,58
6,725 5.250%, 7/01/31 (Pre-refunded 7/01/11) - FSA Insured 7/11 at 100.00 AAA 7,127,55
------------------------------------------------------------------------------------------------------------------------------------
9,725 Total Hawaii 10,307,139
------------------------------------------------------------------------------------------------------------------------------------
ILLINOIS - 11.9% (7.8% OF TOTAL INVESTMENTS)
3,620 Chicago, Illinois, FHA/GNMA Collateralized Multifamily Housing 12/11 at 100.00 A+ 3,697,721
Revenue Bonds, Stone Terrace Apartments, Series 2001A, 5.750%,
12/20/42 (Alternative Minimum Tax)
1,005 Chicago, Illinois, FNMA/GNMA Collateralized Single Family 4/11 at 105.00 AAA 1,026,658
Mortgage Revenue Bonds, Series 2001A, 6.250%, 10/01/32
(Alternative Minimum Tax)
3,985 Chicago, Illinois, General Obligation Bonds, Series 2001A, 1/11 at 101.00 AAA 4,161,137
5.250%, 1/01/33 - MBIA Insured
11,285 Chicago, Illinois, General Obligation Bonds, Series 2001A, 1/11 at 101.00 AAA 11,974,401
5.250%, 1/01/33 (Pre-refunded 1/01/11) - MBIA Insured
3,180 Illinois Development Finance Authority, Revenue Bonds, Chicago 12/12 at 100.00 BBB (4) 3,567,388
Charter School Foundation, Series 2002A, 6.250%, 12/01/32
(Pre-refunded 12/01/12)
910 Illinois Development Finance Authority, Revenue Bonds, Illinois 9/11 at 100.00 AAA 957,347
Wesleyan University, Series 2001, 5.500%, 9/01/32 - AMBAC
Insured
4,090 Illinois Development Finance Authority, Revenue Bonds, Illinois 9/11 at 100.00 Aaa 4,381,617
Wesleyan University, Series 2001, 5.500%, 9/01/32 (Pre-refunded
9/01/11) - AMBAC Insured
3,100 Illinois Development Finance Authority, Revenue Bonds, 5/11 at 101.00 A- (4) 3,381,604
Midwestern University, Series 2001B, 6.000%, 5/15/31
(Pre-refunded 5/15/11)
3,150 Illinois Finance Authority, Revenue Bonds, Palos Community 5/17 at 100.00 AAA 3,435,390
Hospital, Series 2007A, Residuals 07-1028, 7.491%, 5/15/32 -
MBIA Insured (IF)
5,000 Illinois Health Facilities Authority, Revenue Bonds, Edward 2/11 at 101.00 AAA 5,308,350
Hospital Obligated Group, Series 2001B, 5.250%, 2/15/34
(Pre-refunded 2/15/11) - FSA Insured
68
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
ILLINOIS (continued)
$ 2,500 Illinois Housing Development Authority, Homeowner Mortgage 2/16 at 100.00 AA $ 2,504,825
Revenue Bonds, Series 2006C2, 5.050%, 8/01/27 (Alternative
Minimum Tax)
2,275 Illinois, Sales Tax Revenue Bonds, Series 2001, 5.500%, 6/15/16 6/11 at 100.00 AAA 2,424,445
4,980 Metropolitan Pier and Exposition Authority, Illinois, Revenue 12/07 at 101.00 AAA 5,016,404
Refunding Bonds, McCormick Place Expansion Project, Series
1996A, 5.250%, 6/15/27 - AMBAC Insured
1,000 Montgomery, Illinois, Lakewood Creek Project Special Assessment 3/16 at 100.00 AA 945,950
Bonds, Series 2007, 4.700%, 3/01/30 - RAAI Insured
3,360 Northfield Township High School District Number 225, Cook 12/16 at 69.01 AAA 1,450,075
County, Illinois, Glenbrook, General Obligation School Bonds,
Series 2007B, 0.000%, 12/01/24
------------------------------------------------------------------------------------------------------------------------------------
53,440 Total Illinois 54,233,312
------------------------------------------------------------------------------------------------------------------------------------
INDIANA - 4.7% (3.1% OF TOTAL INVESTMENTS)
2,000 Indiana Health Facility Financing Authority, Hospital Revenue 9/11 at 100.00 A- 2,001,580
Bonds, Methodist Hospitals Inc., Series 2001, 5.500%, 9/15/31
2,500 Indiana Health Facility Financing Authority, Hospital Revenue No Opt. Call AAA 2,850,200
Refunding Bonds, Columbus Regional Hospital, Series 1993,
7.000%, 8/15/15 - FSA Insured
4,000 Indiana Transportation Finance Authority, Highway Revenue 6/13 at 100.00 AAA 4,162,280
Bonds, Series 2003A, 5.000%, 6/01/23 - FSA Insured
6,000 Indiana Transportation Finance Authority, Highway Revenue 6/13 at 100.00 AAA 6,432,240
Bonds, Series 2003A, 5.000%, 6/01/24 (Pre-refunded 6/01/13) -
FSA Insured
6,100 St. Joseph County Hospital Authority, Indiana, Revenue Bonds, 2/09 at 102.00 BBB 6,234,078
Madison Center Inc., Series 1999, 5.800%, 2/15/24
------------------------------------------------------------------------------------------------------------------------------------
20,600 Total Indiana 21,680,378
------------------------------------------------------------------------------------------------------------------------------------
IOWA - 0.2% (0.2% OF TOTAL INVESTMENTS)
1,000 Iowa Higher Education Loan Authority, Private College Facility 10/12 at 100.00 A (4) 1,084,650
Revenue Bonds, Wartburg College, Series 2002, 5.500%, 10/01/28
(Pre-refunded 10/01/12) - ACA Insured
------------------------------------------------------------------------------------------------------------------------------------
KANSAS - 3.8% (2.5% OF TOTAL INVESTMENTS)
17,000 Wichita, Kansas, Hospital Facilities Revenue Refunding and 11/11 at 101.00 A+ 17,555,560
Improvement Bonds, Via Christi Health System Inc., Series
2001-III, 5.625%, 11/15/31
------------------------------------------------------------------------------------------------------------------------------------
LOUISIANA - 5.0% (3.3% OF TOTAL INVESTMENTS)
3,960 Louisiana State, Gasoline and Fuels Tax Revenue Bonds, Series 5/16 at 100.00 AAA 3,804,451
2006, 4.500%, 5/01/41 - FGIC Insured (UB)
18,825 Tobacco Settlement Financing Corporation, Louisiana, Tobacco 5/11 at 101.00 BBB 18,831,777
Settlement Asset-Backed Bonds,
Series 2001B, 5.875%, 5/15/39
------------------------------------------------------------------------------------------------------------------------------------
22,785 Total Louisiana 22,636,228
------------------------------------------------------------------------------------------------------------------------------------
MASSACHUSETTS - 3.4% (2.3% OF TOTAL INVESTMENTS)
15,585 Massachusetts Turnpike Authority, Metropolitan Highway System 1/08 at 101.00 AAA 15,670,718
Revenue Bonds, Senior Series 1997A, 5.000%, 1/01/37 - MBIA
Insured
------------------------------------------------------------------------------------------------------------------------------------
MICHIGAN - 14.3% (9.4% OF TOTAL INVESTMENTS)
Detroit, Michigan, Senior Lien Water Supply System Revenue
Bonds, Series 2001A:
20,000 5.500%, 7/01/33 (Pre-refunded 7/01/11) - FGIC Insured 7/11 at 101.00 AAA 21,529,600
15,390 5.250%, 7/01/33 (Pre-refunded 7/01/11) - FGIC Insured 7/11 at 100.00 AAA 16,300,319
14,610 5.250%, 7/01/33 (Pre-refunded 7/01/11) - FGIC Insured 7/11 at 100.00 AAA 15,474,182
4,000 Michigan Municipal Bond Authority, Public School Academy 10/09 at 102.00 Ba1 4,175,080
Revenue Bonds, Detroit Academy of Arts and Sciences Charter
School, Series 2001A, 8.000%, 10/01/31
2,000 Michigan State Hospital Finance Authority, Hospital Revenue 8/08 at 101.00 BB- 1,954,500
Bonds, Detroit Medical Center Obligated Group, Series 1998A,
5.125%, 8/15/18
69
| Nuveen Dividend Advantage Municipal Fund 2 (continued)
NXZ | Portfolio of INVESTMENTS October 31, 2007
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
MICHIGAN (continued)
Michigan State Hospital Finance Authority, Revenue Refunding
Bonds, Detroit Medical Center Obligated Group, Series 1993A:
$ 2,000 6.250%, 8/15/13 2/08 at 100.00 BB- $ 2,000,480
4,000 6.500%, 8/15/18 2/08 at 100.00 BB- 4,001,400
------------------------------------------------------------------------------------------------------------------------------------
62,000 Total Michigan 65,435,561
------------------------------------------------------------------------------------------------------------------------------------
MINNESOTA - 3.2% (2.1% OF TOTAL INVESTMENTS)
14,000 Minneapolis-St. Paul Metropolitan Airports Commission, 1/11 at 100.00 AAA 14,729,820
Minnesota, Airport Revenue Bonds, Series 2001A, 5.250%, 1/01/32
(Pre-refunded 1/01/11) - FGIC Insured
------------------------------------------------------------------------------------------------------------------------------------
MISSOURI - 4.9% (3.2% OF TOTAL INVESTMENTS)
21,000 Missouri Health and Educational Facilities Authority, Revenue 6/11 at 101.00 AAA 22,401,330
Bonds, SSM Healthcare System, Series 2001A, 5.250%, 6/01/28
(Pre-refunded 6/01/11) - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
MONTANA - 0.6% (0.4% OF TOTAL INVESTMENTS)
2,600 Montana Board of Housing, Single Family Program Bonds, Series 12/10 at 100.00 AA+ 2,625,350
2001A-2, 5.700%, 6/01/32 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
NEVADA - 7.4% (4.9% OF TOTAL INVESTMENTS)
12,275 Director of Nevada State Department of Business and Industry, 1/10 at 100.00 AAA 12,595,623
Revenue Bonds, Las Vegas Monorail Project, First Tier, Series
2000, 5.375%, 1/01/40 - AMBAC Insured
3,500 Director of Nevada State Department of Business and Industry, 1/10 at 102.00 N/R 3,380,020
Revenue Bonds, Las Vegas Monorail Project, Second Tier, Series
2000, 7.375%, 1/01/40
2,330 Henderson, Nevada, Healthcare Facility Revenue Bonds, Catholic 7/08 at 101.00 A (4) 2,379,513
Healthcare West, Series 1998A, 5.250%, 7/01/18 (Pre-refunded
7/01/08)
8,000 Henderson, Nevada, Healthcare Facility Revenue Refunding Bonds, 7/17 at 100.00 A 8,145,120
Catholic Healthcare West, Series 2007B, 5.250%, 7/01/31 (UB)
7,000 Reno, Nevada, Health Facilities Revenue Bonds, Catholic 7/17 at 100.00 A 7,137,760
Healthcare West, Series 2007A, 5.250%, 7/01/31 (UB)
------------------------------------------------------------------------------------------------------------------------------------
33,105 Total Nevada 33,638,036
------------------------------------------------------------------------------------------------------------------------------------
NEW HAMPSHIRE - 2.1% (1.4% OF TOTAL INVESTMENTS)
8,000 New Hampshire Business Finance Authority, Pollution Control 10/08 at 102.00 Baa1 8,219,600
Remarketed Revenue Refunding Bonds, Connecticut Light and Power
Company, Series 1992A, 5.850%, 12/01/22
1,210 New Hampshire Housing Finance Authority, Single Family Mortgage 5/11 at 100.00 Aa2 1,229,058
Acquisition Bonds, Series 2001A, 5.700%, 1/01/31
(Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
9,210 Total New Hampshire 9,448,658
------------------------------------------------------------------------------------------------------------------------------------
NEW JERSEY - 2.4% (1.6% OF TOTAL INVESTMENTS)
3,995 New Jersey Economic Development Authority, Special Facilities 11/10 at 101.00 B 4,145,012
Revenue Bonds, Continental Airlines Inc., Series 2000, 7.000%,
11/15/30 (Alternative Minimum Tax)
415 Tobacco Settlement Financing Corporation, New Jersey, Tobacco 6/12 at 100.00 AAA 445,212
Settlement Asset-Backed Bonds, Series 2002, 5.750%, 6/01/32
(Pre-refunded 6/01/12)
Tobacco Settlement Financing Corporation, New Jersey, Tobacco
Settlement Asset-Backed Bonds, Series 2003:
2,200 6.375%, 6/01/32 (Pre-refunded 6/01/13) 6/13 at 100.00 AAA 2,499,662
425 6.750%, 6/01/39 (Pre-refunded 6/01/13) 6/13 at 100.00 AAA 492,035
3,085 6.250%, 6/01/43 (Pre-refunded 6/01/13) 6/13 at 100.00 AAA 3,494,225
------------------------------------------------------------------------------------------------------------------------------------
10,120 Total New Jersey 11,076,146
------------------------------------------------------------------------------------------------------------------------------------
70
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
NEW MEXICO - 5.4% (3.5% OF TOTAL INVESTMENTS)
New Mexico Hospital Equipment Loan Council, Hospital Revenue
Bonds, Presbyterian Healthcare Services, Series 2001A:
$ 12,000 5.500%, 8/01/25 (Pre-refunded 8/01/11) 8/11 at 101.00 AA- (4) $ 12,917,160
10,800 5.500%, 8/01/30 (Pre-refunded 8/01/11) 8/11 at 101.00 AA- (4) 11,625,444
------------------------------------------------------------------------------------------------------------------------------------
22,800 Total New Mexico 24,542,604
------------------------------------------------------------------------------------------------------------------------------------
NEW YORK - 9.3% (6.1% OF TOTAL INVESTMENTS)
1,300 Dormitory Authority of the State of New York, Revenue Bonds, 7/10 at 101.00 Baa1 1,369,238
Mount Sinai NYU Health Obligated Group, Series 2000A, 6.625%,
7/01/19
3,600 Dormitory Authority of the State of New York, Revenue Bonds, 7/10 at 101.00 Baa1 (4) 3,925,800
Mount Sinai NYU Health Obligated Group, Series 2000A, 6.625%,
7/01/19 (Pre-refunded 7/01/10)
6,000 Long Island Power Authority, New York, Electric System General 5/11 at 100.00 AAA 6,380,820
Revenue Bonds, Series 2001L, 5.375%, 5/01/33 (Pre-refunded
5/01/11)
12,800 Metropolitan Transportation Authority, New York, Transportation 11/16 at 100.00 AAA 12,620,032
Revenue Bonds, Series 2006B, 4.500%, 11/15/32 - FSA Insured (UB)
5,000 New York City Industrial Development Agency, New York, Special 8/12 at 101.00 B 5,598,650
Facilities Revenue Bonds, JFK Airport - American Airlines Inc.,
Series 2002B, 8.500%, 8/01/28 (Alternative Minimum Tax)
12,000 New York City Municipal Water Finance Authority, New York, 6/11 at 101.00 AA+ 12,436,920
Water and Sewerage System Revenue Bonds, Fiscal Series 2001C,
5.125%, 6/15/33
------------------------------------------------------------------------------------------------------------------------------------
40,700 Total New York 42,331,460
------------------------------------------------------------------------------------------------------------------------------------
NORTH CAROLINA - 1.7% (1.1% OF TOTAL INVESTMENTS)
2,950 North Carolina Capital Facilities Financing Agency, Revenue 4/13 at 100.00 AAA 3,010,564
Bonds, Johnson and Wales University, Series 2003A, 5.000%,
4/01/33 - XLCA Insured
4,500 North Carolina Eastern Municipal Power Agency, Power System 1/09 at 102.00 Baa1 4,654,890
Revenue Refunding Bonds, Series 1999B, 5.600%, 1/01/15
------------------------------------------------------------------------------------------------------------------------------------
7,450 Total North Carolina 7,665,454
------------------------------------------------------------------------------------------------------------------------------------
NORTH DAKOTA - 0.5% (0.3% OF TOTAL INVESTMENTS)
2,045 North Dakota Housing Finance Agency, Home Mortgage Finance 7/10 at 100.00 Aa1 2,124,816
Program Refunding Bonds, Series 2001A, 5.550%, 1/01/32
(Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
OKLAHOMA - 0.8% (0.5% OF TOTAL INVESTMENTS)
Oklahoma Development Finance Authority, Revenue Refunding
Bonds, Hillcrest Healthcare System, Series 1999A:
2,655 5.125%, 8/15/10 (Pre-refunded 8/15/09) 8/09 at 101.00 AAA 2,755,651
1,000 5.200%, 8/15/11 (Pre-refunded 8/15/09) 8/09 at 101.00 AAA 1,039,190
------------------------------------------------------------------------------------------------------------------------------------
3,655 Total Oklahoma 3,794,841
------------------------------------------------------------------------------------------------------------------------------------
OREGON - 3.8% (2.5% OF TOTAL INVESTMENTS)
8,000 Clackamas County Hospital Facility Authority, Oregon, Revenue 5/11 at 101.00 AA- 8,269,920
Refunding Bonds, Legacy Health System, Series 2001, 5.250%,
5/01/21
9,000 Oregon Department of Administrative Services, Certificates of 5/11 at 101.00 AAA 9,212,760
Participation, Series 2001D, 5.000%, 5/01/26 - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
17,000 Total Oregon 17,482,680
------------------------------------------------------------------------------------------------------------------------------------
PENNSYLVANIA - 3.5% (2.3% OF TOTAL INVESTMENTS)
5,000 Allegheny County Hospital Development Authority, Pennsylvania, 11/10 at 102.00 AAA 5,905,500
Revenue Bonds, West Penn Allegheny Health System, Series 2000B,
9.250%, 11/15/30 (Pre-refunded 11/15/10)
1,605 Carbon County Industrial Development Authority, Pennsylvania, No Opt. Call BBB- 1,666,359
Resource Recovery Revenue Refunding Bonds, Panther Creek
Partners Project, Series 2000, 6.650%, 5/01/10 (Alternative
Minimum Tax)
71
| Nuveen Dividend Advantage Municipal Fund 2 (continued)
NXZ | Portfolio of INVESTMENTS October 31, 2007
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
PENNSYLVANIA (continued)
$ 8,000 Pennsylvania Higher Educational Facilities Authority, Revenue 1/11 at 101.00 AA- $ 8,544,320
Bonds, UPMC Health System, Series 2001A, 6.000%, 1/15/31
------------------------------------------------------------------------------------------------------------------------------------
14,605 Total Pennsylvania 16,116,179
------------------------------------------------------------------------------------------------------------------------------------
TEXAS - 25.2% (16.6% OF TOTAL INVESTMENTS)
7,500 Austin, Texas, Electric Utility System Revenue Refunding Bonds, 11/10 at 100.00 AAA 7,612,725
Series 2001, 5.000%, 11/15/30 - FSA Insured
Dallas-Fort Worth International Airport Public Facility
Corporation, Texas, Airport Hotel Revenue Bonds, Series 2001:
15,000 5.250%, 1/15/26 - FSA Insured 1/09 at 100.00 AAA 15,210,600
1,750 5.200%, 1/15/31 - FSA Insured 1/09 at 100.00 AAA 1,773,468
6,000 Decatur Hospital Authority, Texas, Revenue Bonds, Wise Regional 9/14 at 100.00 N/R 6,352,500
Health System, Series 2004A, 7.125%, 9/01/34
10,000 Gulf Coast Industrial Development Authority, Texas, Solid Waste 4/12 at 100.00 Baa3 11,081,300
Disposal Revenue Bonds, Citgo Petroleum Corporation Project,
Series 1998, 8.000%, 4/01/28 (Alternative Minimum Tax)
30,980 Harris County-Houston Sports Authority, Texas, Junior Lien 11/11 at 100.00 AAA 31,741,484
Revenue Refunding Bonds, Series 2001B, 5.250%, 11/15/40 - MBIA
Insured
40,000 Harris County-Houston Sports Authority, Texas, Senior Lien 11/30 at 54.04 AAA 6,790,000
Revenue Refunding Bonds, Series 2001A, 0.000%, 11/15/40 - MBIA
Insured
Hays Consolidated Independent School District, Hays County,
Texas, General Obligation School Building Bonds, Series 2001:
10,715 0.000%, 8/15/25 (Pre-refunded 8/15/11) 8/11 at 43.18 AAA 4,020,375
12,940 0.000%, 8/15/26 (Pre-refunded 8/15/11) 8/11 at 40.60 AAA 4,565,879
Houston, Texas, Hotel Occupancy Tax and Special Revenue Bonds,
Convention and Entertainment Project, Series 2001B:
5,000 0.000%, 9/01/30 - AMBAC Insured No Opt. Call AAA 1,689,050
5,540 0.000%, 9/01/31 - AMBAC Insured No Opt. Call AAA 1,776,290
5,000 Metro Health Facilities Development Corporation, Texas, 1/11 at 100.00 B1 5,119,900
Hospital Revenue Bonds, Wilson N. Jones Memorial Hospital,
Series 2001, 7.250%, 1/01/31
4,390 Tarrant County, Texas, Cultural & Educational Facilities 2/17 at 100.00 AA- 4,442,417
Financing Corporation, Revenue Bonds, Series 2007, Residuals
1760-3, 7.511%, 2/15/36 (IF)
10,500 Texas, General Obligation Bonds, Water Financial Assistance 8/11 at 100.00 Aa1 10,914,330
Program, Series 2001, 5.250%, 8/01/35
2,000 Tom Green County Health Facilities Development Corporation, 5/11 at 101.00 Baa3 2,121,960
Texas, Hospital Revenue Bonds, Shannon Health System Project,
Series 2001, 6.750%, 5/15/21
------------------------------------------------------------------------------------------------------------------------------------
167,315 Total Texas 115,212,278
------------------------------------------------------------------------------------------------------------------------------------
VIRGINIA - 0.3% (0.2% OF TOTAL INVESTMENTS)
5,000 Pocahontas Parkway Association, Virginia, Senior Lien Revenue 8/08 at 23.55 AAA 1,145,350
Bonds, Route 895 Connector Toll Road, Series 1998B, 0.000%,
8/15/33 (Pre-refunded 8/15/08)
------------------------------------------------------------------------------------------------------------------------------------
WASHINGTON - 5.2% (3.4% OF TOTAL INVESTMENTS)
Seattle, Washington, Municipal Light and Power Revenue
Refunding and Improvement Bonds, Series 2001:
4,820 5.500%, 3/01/19 - FSA Insured 3/11 at 100.00 AAA 5,082,497
7,250 5.125%, 3/01/26 - FSA Insured 3/11 at 100.00 AAA 7,501,793
7,500 Washington State Healthcare Facilities Authority, Revenue 10/11 at 100.00 AAA 7,817,175
Bonds, Sisters of Providence Health System, Series 2001A,
5.250%, 10/01/21 - MBIA Insured
945 Washington State Tobacco Settlement Authority, Tobacco 6/13 at 100.00 BBB 991,929
Settlement Asset-Backed Revenue Bonds, Series 2002, 6.500%,
6/01/26
72
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
WASHINGTON (CONTINUED)
$ 2,100 Washington, Certificates of Participation, Washington Convention 7/09 at 100.00 AAA $ 2,152,626
and Trade Center, Series 1999, 5.125%, 7/01/13 - MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
22,615 Total Washington 23,546,020
------------------------------------------------------------------------------------------------------------------------------------
WEST VIRGINIA - 1.1% (0.7% OF TOTAL INVESTMENTS)
5,000 Mason County, West Virginia, Pollution Control Revenue Bonds, 10/11 at 100.00 BBB 5,049,650
Appalachian Power Company, Series 2003L, 5.500%, 10/01/22
------------------------------------------------------------------------------------------------------------------------------------
WISCONSIN - 0.7% (0.5% OF TOTAL INVESTMENTS)
1,000 Wisconsin Health and Educational Facilities Authority, Revenue 5/12 at 100.00 N/R (4) 1,140,610
Bonds, Divine Savior Healthcare, Series 2002A, 7.375%, 5/01/26
(Pre-refunded 5/01/12)
2,100 Wisconsin Health and Educational Facilities Authority, Revenue 8/13 at 100.00 A- 2,010,098
Bonds, Wheaton Franciscan Services Inc., Series 2003A, 5.125%,
8/15/33
------------------------------------------------------------------------------------------------------------------------------------
3,100 Total Wisconsin 3,150,708
------------------------------------------------------------------------------------------------------------------------------------
$ 760,335 Total Investments (cost $647,942,451) - 151.7% 693,230,301
============-----------------------------------------------------------------------------------------------------------------------
Floating Rate Obligations - (5.1)% (23,365,000)
--------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 2.0% 9,126,257
--------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (48.6)% (222,000,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 456,991,558
====================================================================================================================
The Fund may invest in "zero coupon" securities. A zero coupon security
does not pay a regular interest coupon to its holders during the life of
the security. Tax-exempt income to the holder of the security comes from
accretion of the difference between the original purchase price of the
security at issuance and the par value of the security at maturity and is
effectively paid at maturity. Such securities are included in the
Portfolio of Investments with a 0.000% coupon rate in their description.
The market prices of zero coupon securities generally are more volatile
than the market prices of securities that pay interest periodically.
(1) All percentages shown in the Portfolio of Investments are based on net
assets applicable to Common shares unless otherwise noted.
(2) Optional Call Provisions (not covered by the report of independent
registered public accounting firm): Dates (month and year) and prices of
the earliest optional call or redemption. There may be other call
provisions at varying prices at later dates. Certain mortgage-backed
securities may be subject to periodic principal paydowns.
(3) Ratings (not covered by the report of independent registered public
accounting firm): Using the higher of Standard & Poor's Group ("Standard &
Poor's") or Moody's Investor Service, Inc. ("Moody's") rating. Ratings
below BBB by Standard & Poor's or Baa by Moody's are considered to be
below investment grade.
(4) Backed by an escrow or trust containing sufficient U.S. Government or U.S.
Government agency securities which ensure the timely payment of principal
and interest. Such investments are normally considered to be equivalent to
AAA rated securities.
N/R Not rated.
(IF) Inverse floating rate investment.
(UB) Underlying bond of an inverse floating rate trust reflected as a financing
transaction pursuant to the provisions of SFAS No. 140.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
73
| Nuveen Dividend Advantage Municipal Fund 3
NZF | Portfolio of INVESTMENTS
October 31, 2007
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
-----------------------------------------------------------------------------------------------------------------------------------
ALABAMA - 1.6% (1.0% OF TOTAL INVESTMENTS)
$ 3,500 Alabama Special Care Facilities Financing Authority, Revenue 11/16 at 100.00 AA $ 3,518,900
Bonds, Ascension Health, Series 2006C-2, 5.000%, 11/15/36
5,655 Alabama State Port Authority, Revenue Bonds, State Docks 10/11 at 100.00 AAA 6,006,684
Department Facilities, Series 2001, 5.250%, 10/01/26
(Pre-refunded 10/01/11) - AMBAC Insured (Alternative Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
9,155 Total Alabama 9,525,584
-----------------------------------------------------------------------------------------------------------------------------------
ALASKA - 0.8% (0.5% OF TOTAL INVESTMENTS)
4,000 Alaska Student Loan Corporation, Student Loan Revenue Bonds, 7/08 at 100.00 AAA 4,033,640
Series 1998A, 5.250%, 7/01/14 - AMBAC Insured (Alternative
Minimum Tax)
1,000 Northern Tobacco Securitization Corporation, Alaska, Tobacco 6/14 at 100.00 Baa3 850,970
Settlement Asset-Backed Bonds, Series 2006A, 5.000%, 6/01/46
-----------------------------------------------------------------------------------------------------------------------------------
5,000 Total Alaska 4,884,610
-----------------------------------------------------------------------------------------------------------------------------------
ARKANSAS - 0.9% (0.6% OF TOTAL INVESTMENTS)
Sebastian County Health Facilities Board, Arkansas, Hospital
Revenue Improvement Bonds, Sparks Regional Medical Center,
Series 2001A:
1,805 5.500%, 11/01/13 11/11 at 101.00 Baa2 1,894,636
1,900 5.500%, 11/01/14 11/11 at 101.00 Baa2 1,988,160
1,745 5.250%, 11/01/21 11/11 at 101.00 Baa2 1,772,187
-----------------------------------------------------------------------------------------------------------------------------------
5,450 Total Arkansas 5,654,983
-----------------------------------------------------------------------------------------------------------------------------------
CALIFORNIA - 14.0% (9.1% OF TOTAL INVESTMENTS)
California Health Facilities Financing Authority, Health
Facility Revenue Bonds, Adventist Health System/West, Series
2003A:
855 5.000%, 3/01/28 3/13 at 100.00 A 861,105
140 5.000%, 3/01/33 3/13 at 100.00 A 140,347
2,900 California Health Facilities Financing Authority, Revenue 11/16 at 100.00 AA- 2,900,986
Bonds, Sutter Health, Series 2007A, 5.000%, 11/15/42
10,000 California Infrastructure Economic Development Bank, First Lien 1/28 at 100.00 AAA 10,901,600
Revenue Bonds, San Francisco Bay Area Toll Bridge, Series
2003A, 5.000%, 7/01/33 (Pre-refunded 1/01/28) - AMBAC
Insured (UB)
5,000 California Infrastructure Economic Development Bank, Revenue 8/11 at 102.00 A+ 5,164,000
Bonds, Kaiser Hospital Assistance LLC, Series 2001A, 5.550%,
8/01/31
18,850 California, General Obligation Veterans Welfare Bonds, Series 12/07 at 101.00 AAA 18,925,211
2001BZ, 5.350%, 12/01/21 - MBIA Insured (Alternative Minimum
Tax)
11,865 Golden State Tobacco Securitization Corporation, California, 6/17 at 100.00 BBB 10,437,403
Enhanced Tobacco Settlement Asset-Backed Bonds, Series
2007A-1, 5.125%, 6/01/47
Los Angeles Regional Airports Improvement Corporation,
California, Lease Revenue Refunding Bonds, LAXFUEL
Corporation at Los Angeles International Airport, Series 2001:
13,955 5.750%, 1/01/16 - AMBAC Insured (Alternative Minimum Tax) 1/12 at 100.00 AAA 14,819,652
5,000 5.375%, 1/01/21 - AMBAC Insured (Alternative Minimum Tax) 1/12 at 100.00 AAA 5,167,850
1,500 5.250%, 1/01/23 - AMBAC Insured (Alternative Minimum Tax) 1/12 at 100.00 AAA 1,535,925
10,000 5.500%, 1/01/32 - AMBAC Insured (Alternative Minimum Tax) 1/12 at 100.00 AAA 10,291,200
74
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
-----------------------------------------------------------------------------------------------------------------------------------
CALIFORNIA (continued)
$ 10,000 San Joaquin Hills Transportation Corridor Agency, Orange No Opt. Call AAA $ 2,700,800
County, California, Toll Road Revenue Refunding Bonds,
Series 1997A, 0.000%, 1/15/35 - MBIA Insured
3,000 San Mateo County Community College District, California, No Opt. Call AAA 1,015,680
General Obligation Bonds, Series 2006C, 0.000%, 9/01/30 -
MBIA Insured
-----------------------------------------------------------------------------------------------------------------------------------
93,065 Total California 84,861,759
-----------------------------------------------------------------------------------------------------------------------------------
COLORADO - 5.9% (3.8% OF TOTAL INVESTMENTS)
2,250 Canterberry Crossing Metropolitan District II, Parker, 12/12 at 100.00 N/R 2,343,263
Colorado, Limited Tax General Obligation Bonds, Series 2002,
7.375%, 12/01/32
1,605 Colorado Educational and Cultural Facilities Authority, Charter 3/13 at 100.00 N/R (4) 1,875,539
School Revenue Bonds, Belle Creek Education Center, Series
2002A, 7.625%, 3/15/32 (Pre-refunded 3/15/13)
3,200 Colorado Educational and Cultural Facilities Authority, Charter 3/10 at 102.00 N/R (4) 3,520,736
School Revenue Bonds, Montessori Peaks Building Foundation,
Series 2002A, 8.000%, 5/01/32 (Pre-refunded 3/01/10)
1,775 Colorado Educational and Cultural Facilities Authority, Charter 6/11 at 100.00 Ba1 (4) 1,999,893
School Revenue Bonds, Weld County School District 6 -
Frontier Academy, Series 2001, 7.375%, 6/01/31 (Pre-refunded
6/01/11)
3,560 Colorado Educational and Cultural Facilities Authority, Revenue 5/16 at 102.00 N/R 3,336,468
Bonds, Montessori Peaks Academy, Series 2006, 5.400%, 5/01/26
3,380 Colorado Housing Finance Authority, Multifamily Project Bonds, 10/11 at 100.00 AAA 3,426,712
Class I, Series 2001A-1, 5.500%, 4/01/31 (Alternative
Minimum Tax)
5,000 Compark Business Campus Metropolitan District, Colorado, 12/17 at 100.00 AA 5,216,600
General Obligation Limited Tax Bonds, Series 2007, 5.600%,
12/01/34 - RAAI Insured
Denver City and County, Colorado, Airport Revenue Bonds, Series 2006:
5,365 5.000%, 11/15/23 - FGIC Insured (UB) 11/16 at 100.00 AAA 5,625,256
1,100 7.501%, 11/15/24 - FGIC Insured (IF) 11/16 at 100.00 AAA 1,250,865
1,445 7.501%, 11/15/25 - FGIC Insured (IF) 11/16 at 100.00 AAA 1,643,182
2,000 Denver City and County, Colorado, Airport System Revenue 11/11 at 100.00 AAA 2,104,360
Refunding Bonds, Series 2001A, 5.500%, 11/15/16 - FGIC
Insured (Alternative Minimum Tax)
2,000 Maher Ranch Metropolitan District 4, Colorado, General 12/17 at 100.00 AA 2,013,920
Obligation Limited Tax Bonds, Series 2007, 5.250%, 12/01/36 -
RAAI Insured
1,000 Plaza Metropolitan District 1, Lakewood, Colorado, Tax 6/14 at 101.00 N/R 1,074,960
Increment Revenue Bonds, Series 2003, 8.000%, 12/01/25
-----------------------------------------------------------------------------------------------------------------------------------
33,680 Total Colorado 35,431,754
-----------------------------------------------------------------------------------------------------------------------------------
DELAWARE - 0.4% (0.2% OF TOTAL INVESTMENTS)
1,940 Delaware Housing Authority, Multifamily Mortgage Revenue Bonds, 7/12 at 100.00 Aa3 2,009,161
Series 2001A, 5.400%, 7/01/24
-----------------------------------------------------------------------------------------------------------------------------------
DISTRICT OF COLUMBIA - 0.9% (0.6% OF TOTAL INVESTMENTS)
1,375 District of Columbia, Revenue Bonds, Catholic University of 10/09 at 101.00 AAA 1,429,821
America, Series 1999, 5.625%, 10/01/29 - AMBAC Insured
1,335 Washington Convention Center Authority, District of Columbia, 10/16 at 100.00 AAA 1,231,444
Senior Lien Dedicated Tax Revenue Bonds, Series 2007,
Residuals 1606, 6.094%, 10/01/30 - AMBAC Insured (IF)
3,335 Washington DC Convention Center Authority, Dedicated Tax 10/16 at 100.00 AAA 3,076,304
Revenue Bonds, Residual Series 1730, 1731, 1736, 6.093%,
10/01/30 - AMBAC Insured (IF)
-----------------------------------------------------------------------------------------------------------------------------------
6,045 Total District of Columbia 5,737,569
-----------------------------------------------------------------------------------------------------------------------------------
FLORIDA - 2.3% (1.5% OF TOTAL INVESTMENTS)
Orange County Housing Finance Authority, Florida, Multifamily
Housing Revenue Bonds, Oak Glen Apartments, Series 2001G:
1,105 5.400%, 12/01/32 - FSA Insured 12/11 at 100.00 AAA 1,116,426
2,195 5.450%, 12/01/41 - FSA Insured 12/11 at 100.00 AAA 2,215,260
75
| Nuveen Dividend Advantage Municipal Fund 3 (continued)
NZF | Portfolio of INVESTMENTS October 31, 2007
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
-----------------------------------------------------------------------------------------------------------------------------------
FLORIDA (continued)
$ 4,175 Pace Property Finance Authority Inc., Florida, Utility System 3/08 at 102.00 AAA $ 4,263,969
Improvement and Revenue Refunding Bonds, Series 1997,
5.250%, 9/01/17 - AMBAC Insured
5,455 South Miami Health Facilities Authority, Florida, Hospital 8/17 at 100.00 AA- 5,423,416
Revenue, Baptist Health System Obligation Group, Series
2007, 5.000%, 8/15/42
1,000 Tolomato Community Development District, Florida, Special 5/18 at 100.00 N/R 1,001,650
Assessment Bonds, Series 2007, 6.650%, 5/01/40
-----------------------------------------------------------------------------------------------------------------------------------
13,930 Total Florida 14,020,721
-----------------------------------------------------------------------------------------------------------------------------------
GEORGIA - 2.4% (1.6% OF TOTAL INVESTMENTS)
5,000 Atlanta, Georgia, Airport General Revenue Bonds, Series 2000B, 1/10 at 101.00 AAA 5,183,550
5.625%, 1/01/30 - FGIC Insured (Alternative Minimum Tax)
2,700 Atlanta, Georgia, Tax Allocation Bonds, Atlantic Station 12/11 at 101.00 AAA 3,166,614
Project, Series 2001, 7.900%, 12/01/24 (Pre-refunded
12/01/11)
2,000 Fulton County Residential Care Facilities Authority, Georgia, 7/17 at 100.00 N/R 1,745,740
Revenue Bonds, Elderly Care, Lenbrook Square Project, Series
2006A, 5.125%, 7/01/42
3,740 Gainesville and Hall County Hospital Authority, Georgia, 5/11 at 100.00 A- (4) 3,970,870
Revenue Anticipation Certificates, Northeast Georgia Health
Services Inc., Series 2001, 5.500%, 5/15/31 (Pre-refunded
5/15/11)
500 Gainesville Redevelopment Authority, Georgia, Educational 3/17 at 100.00 N/R 475,955
Facilities Revenue Bonds, Riverside Military Academy
Project, Series 2007, 5.125%, 3/01/37
-----------------------------------------------------------------------------------------------------------------------------------
13,940 Total Georgia 14,542,729
-----------------------------------------------------------------------------------------------------------------------------------
ILLINOIS - 19.5% (12.7% OF TOTAL INVESTMENTS)
16,000 Chicago Greater Metropolitan Water Area Sanitary District, 12/16 at 100.00 AAA 17,507,680
Illinois, General Obligation Bonds, Series 2006, 5.000%,
12/01/35 (UB)
8,375 Chicago, Illinois, Revenue Bonds, Midway Airport, Series 2001A, 1/11 at 101.00 AAA 8,748,525
5.500%, 1/01/19 - FSA Insured (Alternative Minimum Tax)
1,750 Chicago, Illinois, Sales Tax Revenue Bonds, Series 1998, 7/08 at 102.00 AAA 1,797,775
5.250%, 1/01/28 - FGIC Insured
4,950 Chicago, Illinois, Second Lien Passenger Facility Charge 1/11 at 101.00 AAA 5,055,435
Revenue Bonds, O'Hare International Airport, Series 2001A,
5.375%, 1/01/32 - AMBAC Insured (Alternative Minimum Tax)
8,610 Chicago, Illinois, Second Lien Wastewater Transmission Revenue 1/11 at 100.00 AAA 9,122,812
Bonds, Series 2001A, 5.500%, 1/01/26 (Pre-refunded 1/01/11)
- AMBAC Insured
2,220 Chicago, Illinois, Second Lien Wastewater Transmission Revenue No Opt. Call AAA 2,465,443
Bonds, Series 2001A, 5.500%, 1/01/16 - MBIA Insured
10,000 Chicago, Illinois, Senior Lien Water Revenue Bonds, Series 11/11 at 100.00 AAA 10,557,300
2001, 5.000%, 11/01/26 (Pre-refunded 11/01/11) - AMBAC
Insured
1,665 Chicago, Illinois, Third Lien General Airport Revenue Bonds, 1/16 at 100.00 AAA 1,713,818
O'Hare International Airport, Series 2005A, 5.000%, 1/01/33 -
FGIC Insured
2,415 Illinois Finance Authority, General Obligation Debt 12/14 at 100.00 Aaa 2,504,500
Certificates, Local Government Program - Kankakee County,
Series 2005B, 5.000%, 12/01/24 - AMBAC Insured
2,385 Illinois Finance Authority, Revenue Bonds, Sherman Health 8/17 at 100.00 A- 2,394,612
Systems, Series 2007A, 5.500%, 8/01/37
1,100 Illinois Health Facilities Authority, Revenue Bonds, Condell 5/10 at 101.00 Baa2 1,147,091
Medical Center, Series 2000, 6.500%, 5/15/30
9,000 Illinois Health Facilities Authority, Revenue Bonds, Covenant 12/11 at 101.00 BBB 9,283,410
Retirement Communities Inc., Series 2001, 5.875%, 12/01/31
15,000 Illinois Health Facilities Authority, Revenue Bonds, Loyola 7/11 at 100.00 Baa2 (4) 16,275,900
University Health System, Series 2001A, 6.125%, 7/01/31
(Pre-refunded 7/01/11)
76
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
-----------------------------------------------------------------------------------------------------------------------------------
ILLINOIS (continued)
$ 5,000 Lake County School District 38, Big Hallow, Illinois, General No Opt. Call Aaa $ 2,615,250
Obligation Bonds, Series 2005, 0.000%, 2/01/22 - AMBAC Insured
7,000 Lombard Public Facilities Corporation, Illinois, First Tier 1/16 at 100.00 N/R 7,476,210
Conference Center and Hotel Revenue Bonds, Series 2005A-1,
7.125%, 1/01/36
16,900 Metropolitan Pier and Exposition Authority, Illinois, Revenue 12/09 at 101.00 AAA 17,473,248
Bonds, McCormick Place Expansion Project, Series 1999A,
5.250%, 12/15/28 - FGIC Insured
2,000 Metropolitan Pier and Exposition Authority, Illinois, Revenue No Opt. Call AAA 2,279,040
Refunding Bonds, McCormick Place Expansion Project, Series
1998A, 5.500%, 6/15/29 - FGIC Insured
-----------------------------------------------------------------------------------------------------------------------------------
114,370 Total Illinois 118,418,049
-----------------------------------------------------------------------------------------------------------------------------------
INDIANA - 5.9% (3.8% OF TOTAL INVESTMENTS)
Clark-Pleasant Community School Building Corporation, Indiana,
First Mortgage Bonds, Series 2001:
1,255 5.000%, 7/15/21 (Pre-refunded 1/15/12) - AMBAC Insured 1/12 at 100.00 AAA 1,326,698
1,000 5.000%, 1/15/26 (Pre-refunded 1/15/12) - AMBAC Insured 1/12 at 100.00 AAA 1,057,130
Evansville Vanderburgh Public Library Lease Corporation,
Indiana, First Mortgage Bonds, Series 2001:
2,000 5.750%, 7/15/18 (Pre-refunded 1/15/12) - MBIA Insured 1/12 at 100.00 AAA 2,172,400
2,750 5.125%, 1/15/24 (Pre-refunded 1/15/12) - MBIA Insured 1/12 at 100.00 AAA 2,920,445
1,250 Hamilton Southeastern Cumberland Campus School Building 1/12 at 100.00 AAA 1,327,475
Corporation, Indiana, First Mortgage Bonds, Series 2001,
5.125%, 1/15/23 (Pre-refunded 1/15/12) - AMBAC Insured
9,500 Indiana Educational Facilities Authority, Revenue Bonds, Butler 2/11 at 100.00 AAA 9,926,645
University, Series 2001, 5.500%, 2/01/26 - MBIA Insured
4,230 Indiana Finance Authority, Educational Facilities Revenue 6/15 at 100.00 Aa3 4,357,619
Bonds, Tudor Park Foundation, Series 2005B, 5.000%, 6/01/24
2,800 Indiana Health Facility Financing Authority, Revenue Bonds, 5/15 at 100.00 AAA 2,860,564
Community Hospitals of Indiana, Series 2005A, 5.000%,
5/01/35 - AMBAC Insured
3,500 University of Southern Indiana, Student Fee Bonds, Series 10/11 at 100.00 Aaa 3,646,860
2001H, 5.000%, 10/01/21 - AMBAC Insured
Vigo County, Indiana, Hospital Authority, Union Hospital,
Revenue Bonds, Series 2007:
2,500 5.750%, 9/01/42 9/17 at 100.00 N/R 2,408,875
2,500 5.800%, 9/01/47 9/17 at 100.00 N/R 2,424,350
1,090 Wayne County Jail Holding Corporation, Indiana, First Mortgage 1/13 at 101.00 AAA 1,198,411
Bonds, Series 2001, 5.500%, 7/15/22 (Pre-refunded 1/15/13) -
AMBAC Insured
-----------------------------------------------------------------------------------------------------------------------------------
34,375 Total Indiana 35,627,472
-----------------------------------------------------------------------------------------------------------------------------------
IOWA - 5.9% (3.9% OF TOTAL INVESTMENTS)
2,000 Iowa Finance Authority, Healthcare Revenue Bonds, Great River 5/11 at 100.00 Aaa 2,046,220
Medical Center, Series 2001, 5.250%, 5/15/31 - FSA Insured
Iowa Tobacco Settlement Authority, Tobacco Settlement
Asset-Backed Revenue Bonds, Series 2001B:
28,000 5.300%, 6/01/25 (Pre-refunded 6/01/11) 6/11 at 101.00 AAA 29,633,517
3,950 5.600%, 6/01/35 (Pre-refunded 6/01/11) 6/11 at 101.00 AAA 4,254,229
-----------------------------------------------------------------------------------------------------------------------------------
33,950 Total Iowa 35,933,966
-----------------------------------------------------------------------------------------------------------------------------------
KANSAS - 0.3% (0.2% OF TOTAL INVESTMENTS)
Manhattan Health Care Facility Revenue Bonds, Kansas,
Meadowlarks Hills Retirement, Series 2007B:
1,000 5.125%, 5/15/37 5/14 at 103.00 N/R 927,670
1,000 5.125%, 5/15/42 5/14 at 103.00 N/R 920,620
-----------------------------------------------------------------------------------------------------------------------------------
2,000 Total Kansas 1,848,290
-----------------------------------------------------------------------------------------------------------------------------------
77
| Nuveen Dividend Advantage Municipal Fund 3 (continued)
NZF | Portfolio of INVESTMENTS October 31, 2007
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
-----------------------------------------------------------------------------------------------------------------------------------
KENTUCKY - 3.2% (2.1% OF TOTAL INVESTMENTS)
$ 18,500 Louisville and Jefferson County Metropolitan Sewer District, 11/11 at 101.00 AAA $ 19,390,404
Kentucky, Sewer and Drainage System Revenue Bonds, Series
2001A, 5.125%, 5/15/27 - MBIA Insured
-----------------------------------------------------------------------------------------------------------------------------------
LOUISIANA - 3.9% (2.5% OF TOTAL INVESTMENTS)
3,700 Lousiana Public Facilties Authority, Revenue Bonds, Ochsner 5/17 at 100.00 A3 3,729,415
Clinic Foundation Project, Series 2007A, 5.500%, 5/15/47
19,890 Tobacco Settlement Financing Corporation, Louisiana, Tobacco 5/11 at 101.00 BBB 19,897,159
Settlement Asset-Backed Bonds, Series 2001B, 5.875%, 5/15/39
-----------------------------------------------------------------------------------------------------------------------------------
23,590 Total Louisiana 23,626,574
-----------------------------------------------------------------------------------------------------------------------------------
MAINE - 1.0% (0.7% OF TOTAL INVESTMENTS)
Maine State Housing Authority, Single Family Mortgage Purchase
Bonds, Series 2001B:
4,610 5.400%, 11/15/21 (Alternative Minimum Tax) 11/10 at 100.00 AA+ 4,674,909
1,610 5.500%, 11/15/32 (Alternative Minimum Tax) 11/10 at 100.00 AA+ 1,616,649
-----------------------------------------------------------------------------------------------------------------------------------
6,220 Total Maine 6,291,558
-----------------------------------------------------------------------------------------------------------------------------------
MARYLAND - 2.6% (1.7% OF TOTAL INVESTMENTS)
1,000 Howard County, Maryland, Retirement Community Revenue Bonds, 4/17 at 100.00 N/R 924,740
Vantage House, Series 2007B, 5.250%, 4/01/37
1,570 Maryland Community Development Administration, Insured 7/11 at 100.00 Aa2 1,589,970
Multifamily Housing Mortgage Loan Revenue Bonds, Series
2001B, 5.250%, 7/01/21 (Alternative Minimum Tax)
2,000 Maryland Economic Development Corporation, Revenue Bonds, 12/16 at 100.00 N/R 1,834,880
Chesapeake Bay Hyatt Conference Center, Series 2006A,
5.000%, 12/01/31
10,600 Maryland Energy Financing Administration, Revenue Bonds, AES 3/08 at 100.00 N/R 10,627,666
Warrior Run Project, Series 1995, 7.400%, 9/01/19
(Alternative Minimum Tax)
555 Maryland Health and Higher Educational Facilities Authority, 7/17 at 100.00 BBB+ 524,503
Revenue Bonds, Mercy Ridge Retirement Community, Series
2007, 4.750%, 7/01/34
-----------------------------------------------------------------------------------------------------------------------------------
15,725 Total Maryland 15,501,759
-----------------------------------------------------------------------------------------------------------------------------------
MASSACHUSETTS - 1.4% (0.9% OF TOTAL INVESTMENTS)
1,375 Massachusetts Development Finance Agency, Revenue Bonds, 10/12 at 102.00 BBB- 1,305,398
Orchard Cove, Series 2007, 5.250%, 10/01/26
1,000 Massachusetts Health and Educational Facilities Authority, 7/15 at 100.00 BBB- 965,240
Revenue Bonds, Milton Hospital Project, Series 2005D,
5.250%, 7/01/30
5,000 Massachusetts Port Authority, Special Facilities Revenue Bonds, 1/11 at 101.00 AAA 5,241,200
Delta Air Lines Inc., Series 2001A, 5.500%, 1/01/18 - AMBAC
Insured (Alternative Minimum Tax)
1,155 Massachusetts Water Resources Authority, General Revenue Bonds, 2/17 at 100.00 AAA 987,294
Series 2007, Residual Trust 7039, 6.272%, 8/01/46 - FSA
Insured (IF)
-----------------------------------------------------------------------------------------------------------------------------------
8,530 Total Massachusetts 8,499,132
-----------------------------------------------------------------------------------------------------------------------------------
MICHIGAN - 9.7% (6.3% OF TOTAL INVESTMENTS)
15,000 Detroit City School District, Wayne County, Michigan, Unlimited No Opt. Call AAA 18,107,400
Tax School Building and Site Improvement Bonds, Series
2001A, 6.000%, 5/01/29 - FSA Insured
2,000 Garden City Hsopital Finance Authority, Michigan, Revenue 8/17 at 100.00 N/R 1,761,040
Bonds, Garden City Hospital Obligated Group, Series 2007A,
5.000%, 8/15/38
11,000 Kent Hospital Finance Authority, Michigan, Revenue Bonds, 7/11 at 101.00 AA (4) 11,840,510
Spectrum Health, Series 2001A, 5.500%, 1/15/31 (Pre-refunded
7/15/11)
1,235 Michigan State Building Authority, Revenue Bonds, Facilities 10/11 at 100.00 A+ 1,313,978
Program, Series 2001I, 5.500%, 10/15/18
78
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
-----------------------------------------------------------------------------------------------------------------------------------
MICHIGAN (continued)
$ 1,355 Michigan State Hospital Finance Authority, Hospital Revenue 8/08 at 101.00 BB- $ 1,306,288
Bonds, Detroit Medical Center Obligated Group, Series 1998A,
5.250%, 8/15/23
3,485 Michigan State Hospital Finance Authority, Hospital Revenue No Opt. Call AAA 3,686,085
Refunding Bonds, Sisters of Mercy Health Corporation, Series
1993P, 5.375%, 8/15/14 - MBIA Insured (ETM)
Michigan State Hospital Finance Authority, Hospital Revenue
Refunding Bonds, Sparrow Obligated Group, Series 2001:
1,400 5.500%, 11/15/21 (Pre-refunded 11/15/11) 11/11 at 101.00 A+ (4) 1,514,828
2,500 5.625%, 11/15/31 (Pre-refunded 11/15/11) 11/11 at 101.00 A+ (4) 2,716,725
3,500 Michigan State Hospital Finance Authority, Revenue Bonds, 12/16 at 100.00 Aa2 3,547,040
Trinity Health Care Group, Series 2006A, 5.000%, 12/01/31
12,640 Royal Oak Hospital Finance Authority, Michigan, Hospital 11/11 at 100.00 AAA 12,979,258
Revenue Bonds, William Beaumont Hospital, Series 2001M,
5.250%, 11/15/31 - MBIA Insured
-----------------------------------------------------------------------------------------------------------------------------------
54,115 Total Michigan 58,773,152
-----------------------------------------------------------------------------------------------------------------------------------
MINNESOTA - 0.6% (0.4% OF TOTAL INVESTMENTS)
2,305 Dakota County Community Development Agency, Minnesota, GNMA 10/11 at 105.00 Aaa 2,418,083
Collateralized Multifamily Housing Revenue Bonds, Rose
Apartments Project, Series 2001, 6.350%, 10/20/37
(Alternative Minimum Tax)
1,375 Saint Paul Port Authority, Minnesota, Lease Revenue Bonds, 8/16 at 100.00 N/R 1,243,165
Regions Hospital Parking Ramp Project, Series 2007-1,
5.000%, 8/01/36
-----------------------------------------------------------------------------------------------------------------------------------
3,680 Total Minnesota 3,661,248
-----------------------------------------------------------------------------------------------------------------------------------
MISSISSIPPI - 0.9% (0.6% OF TOTAL INVESTMENTS)
2,155 Mississippi Business Finance Corporation, GNMA Collateralized 5/09 at 103.00 AAA 2,193,984
Retirement Facility Mortgage Revenue Refunding Bonds,
Aldersgate Retirement Community Inc. Project, Series 1999A,
5.450%, 5/20/34
3,000 Mississippi Hospital Equipment and Facilities Authority, 9/14 at 100.00 N/R 3,040,500
Revenue Bonds, Baptist Memorial Healthcare, Series 2004B-1,
5.000%, 9/01/24
-----------------------------------------------------------------------------------------------------------------------------------
5,155 Total Mississippi 5,234,484
-----------------------------------------------------------------------------------------------------------------------------------
MISSOURI - 2.9% (1.9% OF TOTAL INVESTMENTS)
1,495 Cape Girardeau County Industrial Development Authority, 6/17 at 100.00 N/R 1,428,218
Missouri, Health Facilities Revenue Bonds, Southeast
Missouri Hospital Association, Series 2007, 5.000%, 6/01/36
1,000 Clinton County Industrial Development Authority, Missouri, 12/17 at 100.00 N/R 902,210
Revenue Bonds, Cameron Regional Medical Center, Series 2007,
5.000%, 12/01/32
1,825 Fenton, Missouri, Tax Increment Refunding and Improvement 10/12 at 100.00 N/R (4) 2,035,678
Revenue Bonds, Gravois Bluffs Redevelopment Project, Series
2002, 6.125%, 10/01/21 (Pre-refunded 10/01/12)
Missouri Development Finance Board, Cultural Facilities Revenue
Bonds, Nelson Gallery Foundation, Series 2001A:
3,335 5.250%, 12/01/19 - MBIA Insured 12/11 at 100.00 AAA 3,520,726
3,510 5.250%, 12/01/20 - MBIA Insured 12/11 at 100.00 AAA 3,705,472
3,695 5.250%, 12/01/21 - MBIA Insured 12/11 at 100.00 AAA 3,900,775
2,040 5.250%, 12/01/22 - MBIA Insured 12/11 at 100.00 AAA 2,142,959
-----------------------------------------------------------------------------------------------------------------------------------
16,900 Total Missouri 17,636,038
-----------------------------------------------------------------------------------------------------------------------------------
MONTANA - 0.8% (0.5% OF TOTAL INVESTMENTS)
5,000 Montana Board of Investments, Exempt Facility Revenue Bonds, 7/10 at 101.00 B2 5,066,750
Stillwater Mining Company, Series 2000, 8.000%, 7/01/20
(Alternative Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
79
| Nuveen Dividend Advantage Municipal Fund 3 (continued)
NZF | Portfolio of INVESTMENTS October 31, 2007
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
-----------------------------------------------------------------------------------------------------------------------------------
NEBRASKA - 1.6% (1.1% OF TOTAL INVESTMENTS)
Nebraska Investment Finance Authority, Single Family Housing
Revenue Bonds, Series 2001D:
$ 2,250 5.250%, 9/01/21 (Alternative Minimum Tax) 9/11 at 100.00 AAA $ 2,261,228
3,025 5.375%, 9/01/32 (Alternative Minimum Tax) 9/11 at 100.00 AAA 3,039,823
4,490 Omaha Public Power District, Nebraska, Separate Electric System 2/17 at 100.00 AAA 4,626,137
Revenue Bonds, Nebraska City 2, Series 2006A, 5.000%,
2/01/49 - AMBAC Insured (UB)
-----------------------------------------------------------------------------------------------------------------------------------
9,765 Total Nebraska 9,927,188
-----------------------------------------------------------------------------------------------------------------------------------
NEVADA - 1.8% (1.1% OF TOTAL INVESTMENTS)
2,000 Director of Nevada State Department of Business and Industry, 1/10 at 100.00 AAA 2,052,240
Revenue Bonds, Las Vegas Monorail Project, First Tier,
Series 2000, 5.375%, 1/01/40 - AMBAC Insured
4,000 Director of Nevada State Department of Business and Industry, 1/10 at 102.00 N/R 3,862,880
Revenue Bonds, Las Vegas Monorail Project, Second Tier,
Series 2000, 7.375%, 1/01/40
205 Nevada Housing Division, Single Family Mortgage Bonds, Senior 4/08 at 101.50 Aaa 206,439
Series 1998A-1, 5.300%, 4/01/18 (Alternative Minimum Tax)
4,290 University of Nevada, Revenue Bonds, Community College System, 1/12 at 100.00 AAA 4,574,213
Series 2001A, 5.250%, 7/01/26 (Pre-refunded 1/01/12) - FGIC
Insured
-----------------------------------------------------------------------------------------------------------------------------------
10,495 Total Nevada 10,695,772
-----------------------------------------------------------------------------------------------------------------------------------
NEW HAMPSHIRE - 0.4% (0.2% OF TOTAL INVESTMENTS)
2,000 New Hampshire Health and Education Authority, Hospital Revenue 10/11 at 101.00 Aaa 2,127,820
Bonds, Concord Hospital, Series 2001, 5.500%, 10/01/21 - FSA
Insured
-----------------------------------------------------------------------------------------------------------------------------------
NEW JERSEY - 3.9% (2.6% OF TOTAL INVESTMENTS)
10,000 New Jersey Economic Development Authority, Water Facilities 11/12 at 101.00 Aaa 10,237,400
Revenue Bonds, American Water Company, Series 2002A, 5.250%,
11/01/32 - AMBAC Insured (Alternative Minimum Tax)
4,125 New Jersey Transit Corporation, Certificates of Participation, No Opt. Call AAA 4,504,624
Federal Transit Administration Grants, Series 2002A, 5.500%,
9/15/13 - AMBAC Insured
20,000 New Jersey Transportation Trust Fund Authority, Transportation No Opt. Call AAA 7,465,800
System Bonds, Series 2006C, 0.000%, 12/15/28 - AMBAC Insured
2,000 Tobacco Settlement Financing Corporation, New Jersey, Tobacco 6/17 at 100.00 BBB 1,668,640
Settlement Asset-Backed Bonds, Series 2007-1A, 4.750%,
6/01/34
-----------------------------------------------------------------------------------------------------------------------------------
36,125 Total New Jersey 23,876,464
-----------------------------------------------------------------------------------------------------------------------------------
NEW YORK - 4.0% (2.6% OF TOTAL INVESTMENTS)
900 Albany Industrial Development Agency, New York, Revenue Bonds, 4/17 at 100.00 N/R 837,036
Brighter Choice Charter Schools, Series 2007A, 5.000%,
4/01/32
1,780 East Rochester Housing Authority, New York, GNMA Secured 10/11 at 101.00 AAA 1,830,107
Revenue Bonds, Gates Senior Housing Inc., Series 2001,
5.300%, 4/20/31
220 Hudson Yards Infrastructure Corporation, New York, Revenue 2/17 at 100.00 AAA 190,153
Bonds, Driver Trust 1649, 2006, 6.058%, 2/15/47 - MBIA
Insured (IF)
4,360 Hudson Yards Infrastructure Corporation, New York, Revenue 2/17 at 100.00 AAA 4,162,797
Bonds, Series 2006A, 4.500%, 2/15/47 - MBIA Insured (UB)
4,155 Monroe County Airport Authority, New York, Revenue Refunding No Opt. Call AAA 4,503,231
Bonds, Greater Rochester International Airport, Series 1999,
5.750%, 1/01/13 - MBIA Insured (Alternative Minimum Tax)
7,000 New York City Industrial Development Agency, New York, American 8/16 at 101.00 B 7,949,830
Airlines-JFK International Airport Special Facility Revenue
Bonds, Series 2005, 7.750%, 8/01/31 (Alternative Minimum Tax)
1,715 New York City, New York, General Obligation Bonds, Fiscal 8/12 at 100.00 AAA 1,863,330
Series 2002G, 5.625%, 8/01/20 - MBIA Insured
785 New York City, New York, General Obligation Bonds, Fiscal 8/12 at 100.00 Aaa 858,272
Series 2002G, 5.625%, 8/01/20 (Pre-refunded 8/01/12) - MBIA
Insured
80
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
-----------------------------------------------------------------------------------------------------------------------------------
NEW YORK (continued)
$ 2,000 New York State Tobacco Settlement Financing Corporation, 6/11 at 100.00 AA- $ 2,109,740
Tobacco Settlement Asset-Backed and State Contingency
Contract-Backed Bonds, Series 2003B-1C, 5.500%, 6/01/16
-----------------------------------------------------------------------------------------------------------------------------------
22,915 Total New York 24,304,496
-----------------------------------------------------------------------------------------------------------------------------------
NORTH CAROLINA - 0.8% (0.5% OF TOTAL INVESTMENTS)
1,200 Charlotte-Mecklenburg Hospital Authority, North Carolina, 1/17 at 100.00 AA- 1,217,160
Health Care System Revenue Bonds, Carolinas Health Care,
5.000%, 1/15/31
1,750 Charlotte-Mecklenburg Hospital Authority, North Carolina, 1/15 at 100.00 AA- (4) 1,876,070
Healthcare System Revenue Bonds, DBA Carolinas Healthcare
System, Series 2005A, 4.875%, 1/15/32 (Pre-refunded 1/15/15)
1,800 North Carolina Municipal Power Agency 1, Catawba Electric No Opt. Call A3 1,916,154
Revenue Bonds, Series 2003A, 5.500%, 1/01/13
-----------------------------------------------------------------------------------------------------------------------------------
4,750 Total North Carolina 5,009,384
-----------------------------------------------------------------------------------------------------------------------------------
OHIO - 3.2% (2.1% OF TOTAL INVESTMENTS)
Buckeye Tobacco Settlement Financing Authority, Ohio, Tobacco
Settlement Asset-Backed Revenue Bonds, Senior Lien, Series
2007A-2:
3,535 5.125%, 6/01/24 6/17 at 100.00 BBB 3,412,336
710 5.875%, 6/01/30 6/17 at 100.00 BBB 701,217
685 5.750%, 6/01/34 6/17 at 100.00 BBB 661,025
1,570 5.875%, 6/01/47 6/17 at 100.00 BBB 1,524,203
1,935 Ohio Housing Finance Agency, GNMA Mortgage-Backed Securities 3/08 at 101.50 AAA 1,956,924
Program Residential Mortgage Revenue Bonds, Series 1998A-1,
5.300%, 9/01/19 - FSA Insured (Alternative Minimum Tax)
7,200 Ohio Water Development Authority, Solid Waste Disposal Revenue 9/09 at 102.00 N/R 7,414,272
Bonds, Bay Shore Power, Series 1998B, 6.625%, 9/01/20
(Alternative Minimum Tax)
Portage County, Ohio, General Obligation Bonds, Series 2001:
1,870 5.000%, 12/01/21 - FGIC Insured 12/11 at 100.00 AAA 1,952,280
1,775 5.000%, 12/01/23 - FGIC Insured 12/11 at 100.00 AAA 1,843,231
-----------------------------------------------------------------------------------------------------------------------------------
19,280 Total Ohio 19,465,488
-----------------------------------------------------------------------------------------------------------------------------------
OKLAHOMA - 2.6% (1.7% OF TOTAL INVESTMENTS)
Oklahoma Development Finance Authority, Revenue Bonds, Saint
John Health System, Series 2007:
6,000 5.000%, 2/15/37 2/17 at 100.00 AA- 6,032,760
2,735 5.000%, 2/15/42 2/17 at 100.00 AA- 2,737,817
2,500 Oklahoma Development Finance Authority, Revenue Refunding 8/09 at 101.00 AAA 2,616,250
Bonds, Hillcrest Healthcare System, Series 1999A, 5.625%,
8/15/29 (Pre-refunded 8/15/09)
4,305 Tulsa County Industrial Authority, Oklahoma, Health Care 12/16 at 100.00 AA 4,328,247
Revenue Bonds, Saint Francis Health System, Series 2006,
5.000%, 12/15/36
-----------------------------------------------------------------------------------------------------------------------------------
15,540 Total Oklahoma 15,715,074
-----------------------------------------------------------------------------------------------------------------------------------
OREGON - 2.5% (1.6% OF TOTAL INVESTMENTS)
4,700 Oregon Health, Housing, Educational and Cultural Facilities 11/11 at 101.00 AAA 4,903,510
Authority, Revenue Bonds, PeaceHealth Project, Series 2001,
5.250%, 11/15/21 - AMBAC Insured
10,000 Oregon Housing and Community Services Department, Multifamily 7/10 at 100.00 Aaa 10,174,700
Housing Revenue Bonds, Series 2000A, 6.050%, 7/01/42
(Alternative Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
14,700 Total Oregon 15,078,210
-----------------------------------------------------------------------------------------------------------------------------------
PENNSYLVANIA - 2.0% (1.3% OF TOTAL INVESTMENTS)
Allegheny County Hospital Development Authority, Pennsylvania,
Revenue Bonds, West Penn Allegheny Health System, Series 2000B:
2,000 9.250%, 11/15/22 (Pre-refunded 11/15/10) 11/10 at 102.00 AAA 2,362,200
2,000 9.250%, 11/15/30 (Pre-refunded 11/15/10) 11/10 at 102.00 AAA 2,362,200
81
| Nuveen Dividend Advantage Municipal Fund 3 (continued)
NZF | Portfolio of INVESTMENTS October 31, 2007
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
-----------------------------------------------------------------------------------------------------------------------------------
PENNSYLVANIA (continued)
$ 500 Bucks County Industrial Development Authority, Pennsylvania, 3/17 at 100.00 BBB $ 463,405
Charter School Revenue Bonds, School Lane Charter School,
Series 2007A, 5.000%, 3/15/37
3,500 Pennsylvania Economic Development Financing Authority, Senior 1/08 at 100.00 B+ 3,516,205
Lien Resource Recovery Revenue Bonds, Northampton Generating
Project, Series 1994A, 6.600%, 1/01/19 (Alternative Minimum
Tax)
3,205 Philadelphia School District, Pennsylvania, General Obligation 8/12 at 100.00 AAA 3,496,815
Bonds, Series 2002B, 5.625%, 8/01/16 (Pre-refunded 8/01/12)
- FGIC Insured
-----------------------------------------------------------------------------------------------------------------------------------
11,205 Total Pennsylvania 12,200,825
-----------------------------------------------------------------------------------------------------------------------------------
PUERTO RICO - 0.4% (0.3% OF TOTAL INVESTMENTS)
2,500 Puerto Rico Sales Tax Financing Corporation, Sales Tax Revenue 8/17 at 100.00 A+ 2,585,600
Bonds, Series 2007A, 5.250%, 8/01/57
-----------------------------------------------------------------------------------------------------------------------------------
SOUTH CAROLINA - 1.2% (0.8% OF TOTAL INVESTMENTS)
6,850 South Carolina Transportation Infrastructure Bank, Revenue 10/11 at 100.00 Aaa 7,348,475
Bonds, Series 2001A, 5.500%, 10/01/22 (Pre-refunded
10/01/11) - AMBAC Insured
-----------------------------------------------------------------------------------------------------------------------------------
TENNESSEE - 1.9% (1.3% OF TOTAL INVESTMENTS)
3,680 Knox County Health, Educational and Housing Facilities Board, 1/17 at 30.07 A- 610,549
Tennessee, Hospital Revenue Refunding Bonds, Covenant
Health, Series 2006, 0.000%, 1/01/41
5,210 Memphis-Shelby County Airport Authority, Tennessee, Airport 3/11 at 100.00 AAA 5,459,611
Revenue Bonds, Series 2001A, 5.500%, 3/01/14 - FSA Insured
(Alternative Minimum Tax)
275 Sullivan County Health Educational and Housing Facilities 9/16 at 100.00 BBB+ 271,557
Board, Tennessee, Revenue Bonds, Wellmont Health System,
Series 2006C, 5.250%, 9/01/36
Sumner County Health, Educational, and Housing Facilities
Board, Tennessee, Revenue Refunding Bonds, Sumner Regional
Health System Inc., Series 2007:
800 5.500%, 11/01/37 11/17 at 100.00 N/R 809,512
2,800 5.500%, 11/01/46 11/17 at 100.00 N/R 2,809,184
900 Tennessee Housing Development Agency, Homeownership Program 1/09 at 101.00 AA 907,002
Bonds, Series 1998-2, 5.350%, 7/01/23 (Alternative Minimum Tax)
880 Tennessee Housing Development Agency, Homeownership Program 7/11 at 100.00 AA 888,844
Bonds, Series 2001-3A, 5.200%, 7/01/22 (Alternative Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
14,545 Total Tennessee 11,756,259
-----------------------------------------------------------------------------------------------------------------------------------
TEXAS - 18.1% (11.8% OF TOTAL INVESTMENTS)
5,445 Board of Regents, University of Texas System, Financing System 2/17 at 100.00 AAA 4,985,605
Revenue Bonds, Series 2006F, 4.250%, 8/15/36 (UB)
1,125 Brushy Creek Municipal Utility District, Williamson County, 6/09 at 100.00 Aaa 1,137,589
Texas, Combination Unlimited Tax and Revenue Refunding
Bonds, Series 2001, 5.125%, 6/01/26 - FSA Insured
Collins and Denton Counties, Frisco, Texas, General Obligation
Bonds, Series 2001:
1,910 5.000%, 2/15/20 - FGIC Insured 2/11 at 100.00 AAA 1,975,055
2,005 5.000%, 2/15/21 - FGIC Insured 2/11 at 100.00 AAA 2,075,797
3,850 Dallas-Ft. Worth International Airport, Texas, Joint Revenue 11/11 at 100.00 AAA 3,976,704
Refunding and Improvement Bonds, Series 2001A, 5.500%,
11/01/35 - FGIC Insured (Alternative Minimum Tax)
5,000 Decatur Hospital Authority, Texas, Revenue Bonds, Wise Regional 9/14 at 100.00 N/R 5,302,200
Health System, Series 2004A, 7.000%, 9/01/25
4,040 Harris County, Texas, Tax and Revenue Certificates of 8/11 at 100.00 AA+ 4,122,780
Obligation, Series 2001, 5.000%, 8/15/27
6,000 Houston, Texas, Junior Lien Water and Sewerage System Revenue No Opt. Call AAA 6,912,120
Refunding Bonds, Series 2001B, 5.500%, 12/01/29 - MBIA
Insured (ETM)
7,000 Houston, Texas, Subordinate Lien Airport System Revenue Bonds, 7/08 at 101.00 AAA 7,137,830
Series 1998B, 5.250%, 7/01/14 - FGIC Insured (Alternative
Minimum Tax)
82
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
-----------------------------------------------------------------------------------------------------------------------------------
TEXAS (continued)
Houston, Texas, Subordinate Lien Airport System Revenue
Refunding Bonds, Series 2001A:
$ 2,525 5.500%, 7/01/13 - FGIC Insured (Alternative Minimum Tax) 1/12 at 100.00 AAA $ 2,673,849
2,905 5.500%, 7/01/14 - FGIC Insured (Alternative Minimum Tax) 1/12 at 100.00 AAA 3,059,720
4,735 Hutto Independent School District, Williamson County, Texas, 8/16 at 100.00 AAA 4,434,943
General Obligation Bonds, Series 2007, Residuals 07-1001,
6.678%, 8/01/43 (IF)
Jefferson County Health Facilities Development Corporation,
Texas, FHA-Insured Mortgage Revenue Bonds, Baptist Hospital
of Southeast Texas, Series 2001:
8,500 5.400%, 8/15/31 - AMBAC Insured 8/11 at 100.00 AAA 8,833,030
8,500 5.500%, 8/15/41 - AMBAC Insured 8/11 at 100.00 AAA 8,870,090
10,700 Laredo Independent School District, Webb County, Texas, General 8/11 at 100.00 AAA 11,051,174
Obligation Refunding Bonds, Series 2001, 5.000%, 8/01/25
2,500 Matagorda County Navigation District 1, Texas, Collateralized No Opt. Call AAA 2,649,450
Revenue Refunding Bonds, Houston Light and Power Company,
Series 1997, 5.125%, 11/01/28 - AMBAC Insured (Alternative
Minimum Tax)
5,430 Mineral Wells Independent School District, Pale Pinto and 2/08 at 100.00 Aaa 5,439,285
Parker Counties, Texas, Unlimited School Tax Building and
Refunding Bonds, Series 1998, 4.750%, 2/15/22
95 North Central Texas Health Facilities Development Corporation, 2/08 at 102.00 Aaa 97,384
Revenue Bonds, Texas Health Resources System, Series 1997B,
5.375%, 2/15/26 (Pre-refunded 2/15/08) - MBIA Insured
3,045 Port of Houston Authority, Harris County, Texas, General 10/11 at 100.00 AAA 3,181,446
Obligation Port Improvement Bonds, Series 2001B, 5.500%,
10/01/17 - FGIC Insured (Alternative Minimum Tax)
6,300 Tarrant County, Texas, Cultural & Educational Facilities 2/17 at 100.00 AA- 6,325,074
Financing Corporation, Revenue Bonds, Series 2007A, 5.000%,
2/15/36
10,590 Texas Department of Housing and Community Affairs, Residential 7/11 at 100.00 AAA 10,947,201
Mortgage Revenue Bonds, Series 2001A, 5.350%, 7/01/33
(Alternative Minimum Tax)
White Settlement Independent School District, Tarrant County,
Texas, General Obligation Bonds, Series 2006:
9,110 0.000%, 8/15/37 8/15 at 31.98 AAA 1,954,551
9,110 0.000%, 8/15/40 8/15 at 27.11 AAA 1,656,927
7,110 0.000%, 8/15/44 8/15 at 21.88 AAA 1,041,899
-----------------------------------------------------------------------------------------------------------------------------------
127,530 Total Texas 109,841,703
-----------------------------------------------------------------------------------------------------------------------------------
UTAH - 0.8% (0.5% OF TOTAL INVESTMENTS)
Utah Housing Corporation, Single Family Mortgage Bonds, Series 2001E:
1,555 5.200%, 1/01/18 (Alternative Minimum Tax) 7/11 at 100.00 AA- 1,594,217
515 5.500%, 1/01/23 (Alternative Minimum Tax) 7/11 at 100.00 Aaa 528,730
Utah Housing Corporation, Single Family Mortgage Bonds, Series 2001F-1:
1,995 4.950%, 7/01/18 (Alternative Minimum Tax) 7/11 at 100.00 Aaa 2,013,294
530 5.300%, 7/01/23 (Alternative Minimum Tax) 7/11 at 100.00 Aaa 536,699
-----------------------------------------------------------------------------------------------------------------------------------
4,595 Total Utah 4,672,940
-----------------------------------------------------------------------------------------------------------------------------------
VIRGINIA - 1.0% (0.7% OF TOTAL INVESTMENTS)
1,000 Chesterfield County Health Center Commission, Virginia, 12/15 at 100.00 N/R 963,930
Mortgage Revenue Bonds, Lucy Corr Village, Series 2005,
5.375%, 12/01/28
7,000 Pocahontas Parkway Association, Virginia, Senior Lien Revenue 8/08 at 77.58 AAA 5,281,780
Bonds, Route 895 Connector Toll Road, Series 1998B, 0.000%,
8/15/13 (Pre-refunded 8/15/08)
-----------------------------------------------------------------------------------------------------------------------------------
8,000 Total Virginia 6,245,710
-----------------------------------------------------------------------------------------------------------------------------------
83
| Nuveen Dividend Advantage Municipal Fund 3 (continued)
NZF | Portfolio of INVESTMENTS October 31, 2007
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
-----------------------------------------------------------------------------------------------------------------------------------
WASHINGTON - 15.1% (9.9% OF TOTAL INVESTMENTS)
Bellingham Housing Authority, Washington, Housing Revenue
Bonds, Varsity Village Project, Series 2001A:
$ 1,000 5.500%, 12/01/27 - MBIA Insured 12/11 at 100.00 Aaa $ 1,053,260
2,000 5.600%, 12/01/36 - MBIA Insured 12/11 at 100.00 Aaa 2,113,980
12,955 Port of Seattle, Washington, Passenger Facility Charge Revenue 12/08 at 101.00 AAA 13,241,953
Bonds, Series 1998B, 5.300%, 12/01/16 - AMBAC Insured
(Alternative Minimum Tax)
Port of Seattle, Washington, Revenue Bonds, Series 2001B:
2,535 5.625%, 4/01/18 - FGIC Insured (Alternative Minimum Tax) 10/11 at 100.00 AAA 2,664,589
16,000 5.100%, 4/01/24 - FGIC Insured (Alternative Minimum Tax) 10/08 at 100.00 AAA 16,063,200
2,090 Public Utility District 1, Benton County, Washington, Electric 11/11 at 100.00 AAA 2,247,168
Revenue Refunding Bonds, Series 2001A, 5.625%, 11/01/15 -
FSA Insured
5,680 Seattle, Washington, Municipal Light and Power Revenue 3/11 at 100.00 AAA 5,989,333
Refunding and Improvement Bonds, Series 2001, 5.500%,
3/01/18 - FSA Insured
4,530 Tacoma, Washington, Solid Waste Utility Revenue Refunding 12/11 at 100.00 AAA 4,829,977
Bonds, Series 2001, 5.250%, 12/01/21 (Pre-refunded 12/01/11) -
AMBAC Insured
3,720 Washington State Healthcare Facilities Authority, Revenue 10/11 at 100.00 Aaa 3,970,988
Bonds, Children's Hospital and Regional Medical Center,
Series 2001, 5.375%, 10/01/18 (Pre-refunded 10/01/11) -
AMBAC Insured
Washington State Healthcare Facilities Authority, Revenue
Bonds, Good Samaritan Hospital, Series 2001:
5,480 5.500%, 10/01/21 (Pre-refunded 10/01/11) - RAAI Insured 10/11 at 101.00 AA (4) 5,922,400
25,435 5.625%, 10/01/31 (Pre-refunded 10/01/11) - RAAI Insured 10/11 at 101.00 AA (4) 27,603,841
Washington State Healthcare Facilities Authority, Revenue
Bonds, Group Health Cooperative of Puget Sound, Series 2001:
3,005 5.375%, 12/01/17 - AMBAC Insured 12/11 at 101.00 AAA 3,172,469
2,915 5.375%, 12/01/18 - AMBAC Insured 12/11 at 101.00 AAA 3,069,582
-----------------------------------------------------------------------------------------------------------------------------------
87,345 Total Washington 91,942,740
-----------------------------------------------------------------------------------------------------------------------------------
WISCONSIN - 4.4% (2.8% OF TOTAL INVESTMENTS)
Appleton, Wisconsin, Waterworks Revenue Refunding Bonds, Series 2001:
3,705 5.375%, 1/01/20 (Pre-refunded 1/01/12) - FGIC Insured 1/12 at 100.00 Aaa 3,968,277
1,850 5.000%, 1/01/21 (Pre-refunded 1/01/12) - FGIC Insured 1/12 at 100.00 Aaa 1,954,803
12,250 La Crosse, Wisconsin, Pollution Control Revenue Refunding 12/08 at 102.00 AAA 12,714,765
Bonds, Dairyland Power Cooperative, Series 1997B, 5.550%,
2/01/15 - AMBAC Insured
1,000 Wisconsin Health and Educational Facilities Authority, Revenue 9/17 at 100.00 BBB+ 953,250
Bonds, Franciscan Sisters of Christian Charity HealthCare
Ministry, Series 2007, 5.000%, 9/01/33
350 Wisconsin Health and Educational Facilities Authority, Revenue 10/11 at 101.00 AA- 368,981
Bonds, Froedtert and Community Health Obligated Group,
Series 2001, 5.375%, 10/01/30
3,650 Wisconsin Health and Educational Facilities Authority, Revenue 10/11 at 101.00 N/R (4) 3,922,582
Bonds, Froedtert and Community Health Obligated Group,
Series 2001, 5.375%, 10/01/30 (Pre-refunded 10/01/11)
2,500 Wisconsin Health and Educational Facilities Authority, Revenue 2/12 at 100.00 BBB+ 2,590,825
Bonds, Marshfield Clinic, Series 2001B, 6.000%, 2/15/25
50 Wisconsin Health and Educational Facilities Authority, Revenue 8/13 at 100.00 A- 47,866
Bonds, Wheaton Franciscan Services Inc., Series 2003A,
5.125%, 8/15/33
-----------------------------------------------------------------------------------------------------------------------------------
25,355 Total Wisconsin 26,521,349
-----------------------------------------------------------------------------------------------------------------------------------
84
| Nuveen Dividend Advantage Municipal Fund 3 (continued)
NZF | Portfolio of INVESTMENTS October 31, 2007
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
-----------------------------------------------------------------------------------------------------------------------------------
$ 947,810 Total Investments (cost $898,773,146) - 153.5% $ 931,493,243
============-----------------------------------------------------------------------------------------------------------------------
Floating Rate Obligations - (5.0)% (30,345,000)
-------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 2.9% 17,759,966
-------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (51.4)% (312,000,000)
-------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 606,908,209
===================================================================================================================
FORWARD SWAPS OUTSTANDING AT OCTOBER 31, 2007:
FUND FIXED RATE UNREALIZED
NOTIONAL PAY/RECEIVE FLOATING RATE FIXED RATE PAYMENT EFFECTIVE TERMINATION APPRECIATION
COUNTERPARTY AMOUNT FLOATING RATE INDEX (ANNUALIZED) FREQUENCY DATE (5) DATE (DEPRECIATION)
------------------------------------------------------------------------------------------------------------------------------------
JPMorgan $21,500,000 Pay SIFM 4.383% Quarterly 8/06/08 8/06/37 $ 828,575
UBS 15,000,000 Pay 3-Month USD-LIBOR 5.718 Semi-Annually 8/06/08 8/06/28 643,544
------------------------------------------------------------------------------------------------------------------------------------
$ 1,472,119
====================================================================================================================================
USD - LIBOR (United States Dollar-London Inter-Bank Offered Rate)
SIFM - The daily arithmetic average of the weekly SIFM (Securities Industry and
Financial Markets) Municipal Swap Index.
The Fund may invest in "zero coupon" securities. A zero coupon security
does not pay a regular interest coupon to its holders during the life of
the security. Tax-exempt income to the holder of the security comes from
accretion of the difference between the original purchase price of the
security at issuance and the par value of the security at maturity and is
effectively paid at maturity. Such securities are included in the
Portfolio of Investments with a 0.000% coupon rate in their description.
The market prices of zero coupon securities generally are more volatile
than the market prices of securities that pay interest periodically.
(1) All percentages shown in the Portfolio of Investments are based on net
assets applicable to Common shares unless otherwise noted.
(2) Optional Call Provisions (not covered by the report of independent
registered public accounting firm): Dates (month and year) and prices of
the earliest optional call or redemption. There may be other call
provisions at varying prices at later dates. Certain mortgage-backed
securities may be subject to peri- odic principal paydowns.
(3) Ratings (not covered by the report of independent registered public
accounting firm): Using the higher of Standard & Poor's Group ("Standard &
Poor's") or Moody's Investor Service, Inc. ("Moody's") rating. Ratings
below BBB by Standard & Poor's or Baa by Moody's are considered to be
below investment grade.
(4) Backed by an escrow or trust containing sufficient U.S. Government or U.S.
Government agency securities which ensure the timely payment of principal
and interest. Such investments are normally considered to be equivalent to
AAA rated securities.
(5) Effective date represents the date on which both the Fund and counterparty
commence interest payment accruals on each forward swap contract.
N/R Not rated.
(ETM) Escrowed to maturity.
(IF) Inverse floating rate investment.
(UB) Underlying bond of an inverse floating rate trust reflected as a financing
transaction pursuant to the provisions of SFAS No. 140.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
85
| Statement of
| ASSETS & LIABILITIES
October 31, 2007
PERFORMANCE MUNICIPAL MARKET DIVIDEND
PLUS ADVANTAGE OPPORTUNITY ADVANTAGE
(NPP) (NMA) (NMO) (NAD)
----------------------------------------------------------------------------------------------------------------------------
ASSETS
Investments, at value (cost $1,304,274,541,
$1,002,208,578, $1,034,611,655,
$865,281,621, $647,942,451 and
$898,773,146, respectively) $ 1,380,328,800 $ 1,052,893,476 $ 1,088,119,421 $ 906,577,949
Cash -- 907,813 -- --
Unrealized appreciation on forward swaps -- -- -- --
Receivables:
Interest 20,077,464 16,179,207 16,247,546 12,792,131
Investments sold 8,468,078 1,958,922 160,000 138,780
Other assets 136,221 105,359 112,037 93,023
----------------------------------------------------------------------------------------------------------------------------
Total assets 1,409,010,563 1,072,044,777 1,104,639,004 919,601,883
----------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Cash overdraft 7,144,521 -- 9,146,590 2,890,566
Floating rate obligations 6,665,000 54,048,333 36,660,000 33,200,000
Accrued expenses:
Management fees 709,548 523,260 543,059 380,559
Other 360,670 269,377 283,944 193,258
Common share dividends payable 2,890,694 2,281,911 2,324,049 2,359,873
Preferred share dividends payable 173,874 115,502 104,561 81,856
----------------------------------------------------------------------------------------------------------------------------
Total liabilities 17,944,307 57,238,383 49,062,203 39,106,112
----------------------------------------------------------------------------------------------------------------------------
Preferred shares, at liquidation value 479,000,000 358,000,000 380,000,000 295,000,000
----------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common shares $ 912,066,256 $ 656,806,394 $ 675,576,801 $ 585,495,771
============================================================================================================================
Common shares outstanding 59,914,073 43,214,524 45,557,788 39,287,298
============================================================================================================================
Net asset value per Common share
outstanding (net assets applicable
to Common shares, divided by
Common shares outstanding) $ 15.22 $ 15.20 $ 14.83 $ 14.90
============================================================================================================================
NET ASSETS APPLICABLE TO COMMON SHARES CONSIST OF:
----------------------------------------------------------------------------------------------------------------------------
Common shares, $.01 par value per share $ 599,141 $ 432,145 $ 455,578 $ 392,873
Paid-in surplus 836,423,631 604,056,301 635,757,048 558,458,542
Undistributed (Over-distribution of) net
investment income (904,878) 293,060 (967,250) (207,189)
Accumulated net realized gain (loss) from
investments and derivative transactions (105,897) 1,339,990 (13,176,341) (14,444,783)
Net unrealized appreciation
(depreciation) of investments
and derivative transactions 76,054,259 50,684,898 53,507,766 41,296,328
============================================================================================================================
Net assets applicable to Common shares $ 912,066,256 $ 656,806,394 $ 675,576,801 $ 585,495,771
============================================================================================================================
Authorized shares:
Common 200,000,000 200,000,000 200,000,000 Unlimited
Preferred 1,000,000 1,000,000 1,000,000 Unlimited
============================================================================================================================
DIVIDEND DIVIDEND
ADVANTAGE 2 ADVANTAGE 3
(NXZ) (NZF)
---------------------------------------------------------------------------------------
ASSETS
Investments, at value (cost $1,304,274,541,
$1,002,208,578, $1,034,611,655,
$865,281,621, $647,942,451 and
$898,773,146, respectively) $ 693,230,301 $ 931,493,243
Cash -- --
Unrealized appreciation on forward swaps -- 1,472,119
Receivables:
Interest 11,611,349 15,032,336
Investments sold -- 10,508,638
Other assets 61,543 57,649
---------------------------------------------------------------------------------------
Total assets 704,903,193 958,563,985
---------------------------------------------------------------------------------------
LIABILITIES
Cash overdraft 78,673 6,189,019
Floating rate obligations 23,365,000 30,345,000
Accrued expenses:
Management fees 237,514 318,144
Other 143,009 170,806
Common share dividends payable 2,049,556 2,477,621
Preferred share dividends payable 37,883 155,186
---------------------------------------------------------------------------------------
Total liabilities 25,911,635 39,655,776
---------------------------------------------------------------------------------------
Preferred shares, at liquidation value 222,000,000 312,000,000
---------------------------------------------------------------------------------------
Net assets applicable to Common shares $ 456,991,558 $ 606,908,209
=======================================================================================
Common shares outstanding 29,396,499 40,378,174
=======================================================================================
Net asset value per Common share
outstanding (net assets applicable
to Common shares, divided by
Common shares outstanding) $ 15.55 $ 15.03
=======================================================================================
NET ASSETS APPLICABLE TO COMMON SHARES CONSIST OF:
---------------------------------------------------------------------------------------
Common shares, $.01 par value per share $ 293,965 $ 403,782
Paid-in surplus 418,026,186 573,906,085
Undistributed (Over-distribution of) net
investment income 164,014 (1,234,602)
Accumulated net realized gain (loss) from
investments and derivative transactions (6,780,457) (359,272)
Net unrealized appreciation
(depreciation) of investments
and derivative transactions 45,287,850 34,192,216
=======================================================================================
Net assets applicable to Common shares $ 456,991,558 $ 606,908,209
=======================================================================================
Authorized shares:
Common Unlimited Unlimited
Preferred Unlimited Unlimited
=======================================================================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
86
| Statement of
| OPERATIONS
Year Ended October 31, 2007
PERFORMANCE MUNICIPAL MARKET DIVIDEND
PLUS ADVANTAGE OPPORTUNITY ADVANTAGE
(NPP) (NMA) (NMO) (NAD)
------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME $ 69,659,340 $ 55,337,894 $ 56,506,142 $ 46,776,477
------------------------------------------------------------------------------------------------------------
EXPENSES
Management fees 8,421,790 6,230,123 6,452,675 5,423,912
Preferred shares - auction fees 1,197,499 894,998 950,000 737,501
Preferred shares - dividend
disbursing agent fees 50,000 50,000 40,000 30,000
Shareholders' servicing agent fees
and expenses 144,212 88,541 93,487 12,491
Interest expense on floating rate obligations 133,900 1,531,542 1,295,319 665,485
Custodian's fees and expenses 261,537 222,481 223,101 234,214
Directors'/Trustees' fees and expenses 33,150 24,352 25,455 21,657
Professional fees 67,826 53,600 58,412 43,941
Shareholders' reports - printing and
mailing expenses 135,473 94,973 108,280 86,556
Stock exchange listing fees 21,544 15,720 16,375 14,119
Investor relations expense 144,253 105,733 110,509 90,305
Other expenses 72,246 58,008 59,035 39,142
------------------------------------------------------------------------------------------------------------
Total expenses before custodian fee
credit and expense reimbursement 10,683,430 9,370,071 9,432,648 7,399,323
Custodian fee credit (105,904) (124,291) (112,494) (133,010)
Expense reimbursement -- -- -- (1,226,842)
------------------------------------------------------------------------------------------------------------
Net expenses 10,577,526 9,245,780 9,320,154 6,039,471
------------------------------------------------------------------------------------------------------------
Net investment income 59,081,814 46,092,114 47,185,988 40,737,006
------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) from:
Investments (114,084) 1,405,723 (2,764,433) 2,375,892
Forward swaps -- -- -- --
Futures -- -- -- --
Change in net unrealized appreciation
(depreciation) of:
Investments (27,296,563) (28,042,883) (22,450,181) (25,931,805)
Forward swaps -- -- -- --
Futures -- -- -- --
------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) (27,410,647) (26,637,160) (25,214,614) (23,555,913)
------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS
From net investment income (16,373,121) (12,659,658) (13,663,433) (10,593,575)
From accumulated net realized gains (858,202) -- -- --
------------------------------------------------------------------------------------------------------------
Decrease in net assets applicable to
Common shares from distributions
to Preferred shareholders (17,231,323) (12,659,658) (13,663,433) (10,593,575)
------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares
from operations $ 14,439,844 $ 6,795,296 $ 8,307,941 $ 6,587,518
============================================================================================================
DIVIDEND DIVIDEND
ADVANTAGE 2 ADVANTAGE 3
(NXZ) (NZF)
----------------------------------------------------------------------------
INVESTMENT INCOME $ 37,402,382 $ 48,896,909
----------------------------------------------------------------------------
EXPENSES
Management fees 4,189,818 5,629,045
Preferred shares - auction fees 555,001 780,001
Preferred shares - dividend
disbursing agent fees 30,000 41,153
Shareholders' servicing agent fees
and expenses 5,392 6,950
Interest expense on floating rate obligations 659,092 1,127,035
Custodian's fees and expenses 135,582 201,399
Directors'/Trustees' fees and expenses 16,237 22,154
Professional fees 36,970 47,284
Shareholders' reports - printing and
mailing expenses 67,153 87,457
Stock exchange listing fees 2,494 3,429
Investor relations expense 68,701 92,386
Other expenses 32,704 43,129
----------------------------------------------------------------------------
Total expenses before custodian fee
credit and expense reimbursement 5,799,144 8,081,422
Custodian fee credit (79,346) (70,823)
Expense reimbursement (1,512,005) (2,275,986)
----------------------------------------------------------------------------
Net expenses 4,207,793 5,734,613
----------------------------------------------------------------------------
Net investment income 33,194,589 43,162,296
----------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) from:
Investments (1,406,045) 172,182
Forward swaps -- (455,000)
Futures -- (418,916)
Change in net unrealized appreciation
(depreciation) of:
Investments (11,366,291) (18,402,081)
Forward swaps -- 1,331,159
Futures -- (129,711)
----------------------------------------------------------------------------
Net realized and unrealized gain (loss) (12,772,336) (17,902,367)
----------------------------------------------------------------------------
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS
From net investment income (7,987,669) (11,080,897)
From accumulated net realized gains -- (226,888)
----------------------------------------------------------------------------
Decrease in net assets applicable to
Common shares from distributions
to Preferred shareholders (7,987,669) (11,307,785)
----------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares
from operations $ 12,434,584 $ 13,952,144
============================================================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
87
| Statement of
| CHANGES in NET ASSETS
PERFORMANCE PLUS (NPP) MUNICIPAL ADVANTAGE (NMA)
------------------------------ ------------------------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
10/31/07 10/31/06 10/31/07 10/31/06
-----------------------------------------------------------------------------------------------------------
OPERATIONS
Net investment income $ 59,081,814 $ 59,826,874 $ 46,092,114 $ 46,635,201
Net realized gain (loss) from:
Investments (114,084) 3,609,041 1,405,723 (38,686)
Forward swaps -- -- -- --
Futures -- -- -- --
Change in net unrealized appreciation
(depreciation) of:
Investments (27,296,563) 18,585,165 (28,042,883) 11,410,086
Forward swaps -- -- -- --
Futures -- -- -- --
Distributions to Preferred shareholders:
From net investment income (16,373,121) (14,851,985) (12,659,658) (11,096,228)
From accumulated net realized gains (858,202) (204,889) -- (95,203)
-----------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares
from operations 14,439,844 66,964,206 6,795,296 46,815,170
-----------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS
From net investment income (44,830,422) (50,243,956) (36,025,128) (38,834,236)
From accumulated net realized gains (2,765,395) (1,042,505) -- (628,192)
-----------------------------------------------------------------------------------------------------------
Decrease in net assets applicable to
Common shares from distributions
to Common shareholders (47,595,817) (51,286,461) (36,025,128) (39,462,428)
-----------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Net proceeds from Common shares issued
to shareholders due to reinvestment
of distributions -- -- 2,361,680 643,731
-----------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares from
capital share transactions -- -- 2,361,680 643,731
-----------------------------------------------------------------------------------------------------------
Net increase (decrease) net assets
applicable to Common shares (33,155,973) 15,677,745 (26,868,152) 7,996,473
Net assets applicable to Common
shares at the beginning of year 945,222,229 929,544,484 683,674,546 675,678,073
-----------------------------------------------------------------------------------------------------------
Net assets applicable to Common
shares at the end of year $ 912,066,256 $ 945,222,229 $ 656,806,394 $ 683,674,546
===========================================================================================================
Undistributed (Over-distribution of)
net investment income at the
end of year $ (904,878) $ 1,230,581 $ 293,060 $ 2,927,826
===========================================================================================================
MARKET OPPORTUNITY (NMO)
------------------------------
YEAR YEAR
ENDED ENDED
10/31/07 10/31/06
-------------------------------------------------------------------------
OPERATIONS
Net investment income $ 47,185,988 $ 46,502,877
Net realized gain (loss) from:
Investments (2,764,433) (3,186,736)
Forward swaps -- --
Futures -- --
Change in net unrealized appreciation
(depreciation) of:
Investments (22,450,181) 18,252,758
Forward swaps -- --
Futures -- --
Distributions to Preferred shareholders:
From net investment income (13,663,433) (11,933,888)
From accumulated net realized gains -- --
-------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares
from operations 8,307,941 49,635,011
-------------------------------------------------------------------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS
From net investment income (34,547,696) (37,757,943)
From accumulated net realized gains -- --
-------------------------------------------------------------------------
Decrease in net assets applicable to
Common shares from distributions
to Common shareholders (34,547,696) (37,757,943)
-------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Net proceeds from Common shares issued
to shareholders due to reinvestment
of distributions 257,295 --
-------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares from
capital share transactions 257,295 --
-------------------------------------------------------------------------
Net increase (decrease) net assets
applicable to Common shares (25,982,460) 11,877,068
Net assets applicable to Common
shares at the beginning of year 701,559,261 689,682,193
-------------------------------------------------------------------------
Net assets applicable to Common
shares at the end of year $ 675,576,801 $ 701,559,261
=========================================================================
Undistributed (Over-distribution of)
net investment income at the
end of year $ (967,250) $ 919,444
=========================================================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
88
DIVIDEND ADVANTAGE (NAD) DIVIDEND ADVANTAGE 2 (NXZ)
------------------------------ ------------------------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
10/31/07 10/31/06 10/31/07 10/31/06
-----------------------------------------------------------------------------------------------------------
OPERATIONS
Net investment income $ 40,737,006 $ 40,993,576 $ 33,194,589 $ 32,992,169
Net realized gain (loss) from:
Investments 2,375,892 4,172,514 (1,406,045) (1,053,678)
Forward swaps -- -- -- --
Futures -- -- -- --
Change in net unrealized appreciation
(depreciation) of:
Investments (25,931,805) 8,567,260 (11,366,291) 10,301,195
Forward swaps -- -- -- --
Futures -- -- -- --
Distributions to Preferred shareholders:
From net investment income (10,593,575) (9,396,656) (7,987,669) (7,047,610)
From accumulated net realized gains -- -- -- --
-----------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares
from operations 6,587,518 44,336,694 12,434,584 35,192,076
-----------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS
From net investment income (31,716,407) (33,907,479) (26,454,214) (28,774,873)
From accumulated net realized gains -- -- -- --
-----------------------------------------------------------------------------------------------------------
Decrease in net assets applicable to
Common shares from distributions
to Common shareholders (31,716,407) (33,907,479) (26,454,214) (28,774,873)
-----------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Net proceeds from Common shares issued
to shareholders due to reinvestment
of distributions 308,799 -- 821,897 909,885
-----------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares from
capital share transactions 308,799 -- 821,897 909,885
-----------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares (24,820,090) 10,429,215 (13,197,733) 7,327,088
Net assets applicable to Common
shares at the beginning of year 610,315,861 599,886,646 470,189,291 462,862,203
-----------------------------------------------------------------------------------------------------------
Net assets applicable to Common
shares at the end of year $ 585,495,771 $ 610,315,861 $ 456,991,558 $ 470,189,291
===========================================================================================================
Undistributed (Over-distribution of)
net investment income at the
end of year $ (207,189) $ 1,374,504 $ 164,014 $ 1,988,926
===========================================================================================================
DIVIDEND ADVANTAGE 3 (NZF)
------------------------------
YEAR YEAR
ENDED ENDED
10/31/07 10/31/06
-------------------------------------------------------------------------
OPERATIONS
Net investment income $ 43,162,296 $ 43,005,594
Net realized gain (loss) from:
Investments 172,182 1,509,431
Forward swaps (455,000) --
Futures (418,916) --
Change in net unrealized appreciation
(depreciation) of:
Investments (18,402,081) 10,632,281
Forward swaps 1,331,159 140,960
Futures (129,711) 129,711
Distributions to Preferred shareholders:
From net investment income (11,080,897) (9,830,888)
From accumulated net realized gains (226,888) --
-------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares
from operations 13,952,144 45,587,089
-------------------------------------------------------------------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS
From net investment income (33,803,641) (36,446,494)
From accumulated net realized gains (798,769) --
-------------------------------------------------------------------------
Decrease in net assets applicable to
Common shares from distributions
to Common shareholders (34,602,410) (36,446,494)
-------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Net proceeds from Common shares issued
to shareholders due to reinvestment
of distributions 722,964 337,160
-------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares from
capital share transactions 722,964 337,160
-------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares (19,927,302) 9,477,755
Net assets applicable to Common
shares at the beginning of year 626,835,511 617,357,756
-------------------------------------------------------------------------
Net assets applicable to Common
shares at the end of year $ 606,908,209 $ 626,835,511
=========================================================================
Undistributed (Over-distribution of)
net investment income at the
end of year $ (1,234,602) $ 962,737
=========================================================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
89
| Notes to
| FINANCIAL STATEMENTS
1. GENERAL INFORMATION AND SIGNIFICANT ACCOUNTING POLICIES
The funds (the "Funds") covered in this report and their corresponding Common
share stock exchange symbols are Nuveen Performance Plus Municipal Fund, Inc.
(NPP), Nuveen Municipal Advantage Fund, Inc. (NMA), Nuveen Municipal Market
Opportunity Fund, Inc. (NMO), Nuveen Dividend Advantage Municipal Fund (NAD),
Nuveen Dividend Advantage Municipal Fund 2 (NXZ) and Nuveen Dividend Advantage
Municipal Fund 3 (NZF). Performance Plus (NPP), Municipal Advantage (NMA),
Market Opportunity (NMO) and Dividend Advantage (NAD) are traded on the New York
Stock Exchange while Dividend Advantage 2 (NXZ) and Dividend Advantage 3 (NZF)
are traded on the American Stock Exchange. The Funds are registered under the
Investment Company Act of 1940, as amended, as closed-end, diversified
management investment companies.
Each Fund seeks to provide current income exempt from regular federal income tax
by investing primarily in a diversified portfolio of municipal obligations
issued by state and local government authorities or certain U.S. territories.
The following is a summary of significant accounting policies followed by the
Funds in the preparation of their financial statements in accordance with U.S.
generally accepted accounting principles.
INVESTMENT VALUATION
The prices of municipal bonds in each Fund's investment portfolio are provided
by a pricing service approved by the Fund's Board of Directors/Trustees. When
market price quotes are not readily available (which is usually the case for
municipal securities), the pricing service may establish fair value based on
yields or prices of municipal bonds of comparable quality, type of issue,
coupon, maturity and rating, indications of value from securities dealers,
evaluations of anticipated cash flows or collateral and general market
conditions. Prices of forward swap contracts are also provided by an independent
pricing service approved by each Fund's Board of Directors/Trustees. Futures
contracts are valued using the closing settlement price, or, in the absence of
such a price, at the mean of the bid and asked prices. If the pricing service is
unable to supply a price for a municipal bond, forward swap contract or futures
contract, each Fund may use a market price or fair market value quote provided
by a major broker/dealer in such investments. If it is determined that the
market price or fair market value for an investment or derivative transaction is
unavailable or inappropriate, the Board of Directors/Trustees of the Funds, or
its designee, may establish a fair value for the investment. Temporary
investments in securities that have variable rate and demand features qualifying
them as short-term investments are valued at amortized cost, which approximates
market value.
INVESTMENT TRANSACTIONS
Investment transactions are recorded on a trade date basis. Realized gains and
losses from transactions are determined on the specific identification method.
Investments purchased on a when-issued/delayed delivery basis may have extended
settlement periods. Any investments so purchased are subject to market
fluctuation during this period. The Funds have instructed the custodian to
segregate assets with a current value at least equal to the amount of the
when-issued/delayed delivery purchase commitments. At October 31, 2007, there
were no such outstanding purchase commitments in any of the Funds.
INVESTMENT INCOME
Interest income, which includes the amortization of premiums and accretion of
discounts for financial reporting purposes, is recorded on an accrual basis.
Investment income also includes paydown gains and losses, if any.
FEDERAL INCOME TAXES
Each Fund is a separate taxpayer for federal income tax purposes. Each Fund
intends to distribute substantially all net investment income and net capital
gains to shareholders and to otherwise comply with the requirements of
Subchapter M of the Internal Revenue Code applicable to regulated investment
companies. Therefore, no federal income tax provision is required. Furthermore,
each Fund intends to satisfy conditions which will enable interest from
municipal securities, which is exempt from regular federal income tax, to retain
such tax-exempt status when distributed to shareholders of the Funds. Net
realized capital gains and ordinary income distributions paid by the Funds are
subject to federal taxation.
90
DIVIDENDS AND DISTRIBUTIONS TO COMMON SHAREHOLDERS
Dividends from tax-exempt net investment income are declared monthly. Net
realized capital gains and/or market discount from investment transactions, if
any, are distributed to shareholders not less frequently than annually.
Furthermore, capital gains are distributed only to the extent they exceed
available capital loss carryforwards.
Distributions to Common shareholders of tax-exempt net investment income, net
realized capital gains and/or market discount, if any, are recorded on the
ex-dividend date. The amount and timing of distributions are determined in
accordance with federal income tax regulations, which may differ from U.S.
generally accepted accounting principles.
PREFERRED SHARES
The Funds have issued and outstanding Preferred shares, $25,000 stated value per
share, as a means of effecting financial leverage. Each Fund's Preferred shares
are issued in more than one Series. The dividend rate paid by the Funds on each
Series is determined every seven days, pursuant to a dutch auction process
overseen by the auction agent, and is payable at the end of each rate period.
The number of Preferred shares outstanding, by Series and in total, for each
Fund is as follows:
PERFORMANCE MUNICIPAL MARKET DIVIDEND DIVIDEND DIVIDEND
PLUS ADVANTAGE OPPORTUNITY ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
(NPP) (NMA) (NMO) (NAD) (NXZ) (NZF)
---------------------------------------------------------------------------------------------------
Number of shares:
Series M 4,000 3,000 4,000 4,000 3,000 --
Series T 4,000 3,000 4,000 4,000 3,000 --
Series W 4,000 3,000 3,200 -- -- 4,160
Series TH 3,160 2,320 -- 3,800 -- 4,160
Series F 4,000 3,000 4,000 -- 2,880 4,160
---------------------------------------------------------------------------------------------------
Total 19,160 14,320 15,200 11,800 8,880 12,480
===================================================================================================
INVERSE FLOATING RATE SECURITIES
Each Fund may invest in inverse floating rate securities. An inverse floating
rate security is created by depositing a municipal bond, typically with a fixed
interest rate, into a special purpose trust created by a broker-dealer. In turn,
this trust (a) issues floating rate certificates, in face amounts equal to some
fraction of the deposited bond's par amount or market value, that typically pay
short-term tax-exempt interest rates to third parties, and (b) issues to a
long-term investor (such as one of the Funds) an inverse floating rate
certificate (sometimes referred to as an "inverse floater") that represents all
remaining or residual interest in the trust. The income received by the inverse
floater holder varies inversely with the short-term rate paid to the floating
rate certificates' holders, and in most circumstances the inverse floater holder
bears substantially all of the underlying bond's downside investment risk and
also benefits disproportionately from any potential appreciation of the
underlying bond's value. The price of an inverse floating rate security will be
more volatile than that of the underlying bond because the interest rate is
dependent on not only the fixed coupon rate of the underlying bond but also on
the short-term interest paid on the floating rate certificates, and because the
inverse floating rate security essentially bears the risk of loss of the greater
face value of the underlying bond.
A Fund may purchase an inverse floating rate security in a secondary market
transaction without first owning the underlying bond (referred to as an
"externally-deposited inverse floater"), or instead by first selling a
fixed-rate bond to a broker-dealer for deposit into the special purpose trust
and receiving in turn the residual interest in the trust (referred to as a
"self-deposited inverse floater"). A Fund may also enter into shortfall and
forbearance agreements (sometimes referred to as a "recourse trust" or "credit
recovery swap") with a broker-dealer by which a Fund agrees to reimburse the
broker-dealer, in certain circumstances, for the difference between the
liquidation value of the fixed-rate bond held by the trust and the liquidation
value of the floating rate certificates, as well as any shortfalls in interest
cash flows. The inverse floater held by a Fund gives the Fund the right (a) to
cause the holders of the floating rate certificates to tender their notes at
par, and (b) to have the broker transfer the fixed-rate bond held by the trust
to the Fund, thereby collapsing the trust. An investment in an
externally-deposited inverse floater is identified in the Portfolio of
Investments as an "Inverse floating rate investment". An investment in a
self-deposited inverse floater, recourse trust or credit recovery swap is
accounted for as a financing transaction in accordance with Statement of
Financial Accounting Standards (SFAS) No. 140 "Accounting for Transfers and
Servicing of Financial Assets and Extinguishment of Liabilities". In such
instances, a fixed-rate bond deposited into a special purpose trust is
identified in the Portfolio of Investments as an "Underlying bond of an inverse
floating rate trust", with the Fund accounting for the short-term floating rate
certificates issued by the trust as "Floating rate obligations" on the Statement
of Assets and Liabilities. In addition, the Fund reflects in Investment Income
the entire earnings of the underlying bond and accounts for the related interest
paid to the holders of the short-term floating rate certificates as "Interest
expense on floating rate obligations" in the Statement of Operations.
During the fiscal year ended October 31, 2007, each Fund invested in externally
deposited inverse floaters and/or self-deposited inverse floaters.
91
| Notes to
| FINANCIAL STATEMENTS (continued)
The average floating rate obligations outstanding and average annual interest
rate and fees related to self-deposited inverse floaters during the fiscal year
ended October 31, 2007, were as follows:
PERFORMANCE MUNICIPAL MARKET DIVIDEND DIVIDEND DIVIDEND
PLUS ADVANTAGE OPPORTUNITY ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
(NPP) (NMA) (NMO) (NAD) (NXZ) (NZF)
----------------------------------------------------------------------------------------------------------------------------------
Average floating rate obligations $3,451,192 $39,555,146 $33,446,192 $17,243,397 $17,042,589 $29,082,753
Average annual interest rate and fees 3.88% 3.87% 3.87% 3.86% 3.87% 3.88%
==================================================================================================================================
FORWARD SWAP TRANSACTIONS
The Funds are authorized to invest in forward interest rate swap transactions.
Each Fund's use of forward interest rate swap transactions is intended to help
the Fund manage its overall interest rate sensitivity, either shorter or longer,
generally to more closely align the Fund's interest rate sensitivity with that
of the broader municipal market. Forward interest rate swap transactions involve
each Fund's agreement with a counterparty to pay, in the future, a fixed or
variable rate payment in exchange for the counterparty paying the Fund a
variable or fixed rate payment, the accruals for which would begin at a
specified date in the future (the "effective date"). The amount of the payment
obligation is based on the notional amount of the forward swap contract and the
termination date of the swap (which is akin to a bond's maturity). The value of
the Fund's swap commitment would increase or decrease based primarily on the
extent to which long-term interest rates for bonds having a maturity of the
swap's termination date increases or decreases. The Funds may terminate a swap
contract prior to the effective date, at which point a realized gain or loss is
recognized. When a forward swap is terminated, it ordinarily does not involve
the delivery of securities or other underlying assets or principal, but rather
is settled in cash on a net basis. Each Fund intends, but is not obligated, to
terminate its forward swaps before the effective date. Accordingly, the risk of
loss with respect to the swap counterparty on such transactions is limited to
the credit risk associated with a counterparty failing to honor its commitment
to pay any realized gain to the Fund upon termination. To reduce such credit
risk, all counterparties are required to pledge collateral daily (based on the
daily valuation of each swap) on behalf of each Fund with a value approximately
equal to the amount of any unrealized gain above a pre-determined threshold.
Reciprocally, when any of the Funds have an unrealized loss on a swap contract,
the Funds have instructed the custodian to pledge assets of the Funds as
collateral with a value approximately equal to the amount of the unrealized loss
above a pre-determined threshold. Collateral pledges are monitored and
subsequently adjusted if and when the swap valuations fluctuate, either up or
down, by at least the predetermined threshold amount. Dividend Advantage 3 (NZF)
was the only Fund to invest in forward swap transactions during the fiscal year
ended October 31, 2007.
FUTURES CONTRACTS
The Funds are authorized to invest in futures contracts. Upon entering into a
futures contract, a Fund is required to deposit with the broker an amount of
cash or liquid securities equal to a specified percentage of the contract
amount. This is known as the "initial margin." Subsequent payments ("variation
margin") are made or received by a Fund each day, depending on the daily
fluctuation of the value of the contract.
During the period the futures contract is open, changes in the value of the
contract are recognized as an unrealized gain or loss by "marking-to-market" on
a daily basis to reflect the changes in market value of the contract. When the
contract is closed or expired, a Fund records a realized gain or loss equal to
the difference between the value of the contract on the closing date and value
of the contract when originally entered into. Cash held by the broker to cover
initial margin requirements on open futures contracts, if any, is recognized in
the Statement of Assets and Liabilities. Additionally, the Statement of Assets
and Liabilities reflects a receivable or payable for the variation margin when
applicable.
Risks of investments in futures contracts include the possible adverse movement
of the securities or indices underlying the contracts, the possibility that
there may not be a liquid secondary market for the contracts and/or that a
change in the value of
92
the contract may not correlate with a change in the value of the underlying
securities or indices. Dividend Advantage 3 (NZF) was the only Fund to invest in
futures contracts during the fiscal year ended October 31, 2007.
CUSTODIAN FEE CREDIT
Each Fund has an arrangement with the custodian bank whereby certain custodian
fees and expenses are reduced by net credits earned on each Fund's cash on
deposit with the bank. Such deposit arrangements are an alternative to overnight
investments. Credits for cash balances may be offset by charges for any days on
which the Fund overdraws its account at the custodian bank.
INDEMNIFICATIONS
Under the Funds' organizational documents, their Officers and Director/Trustees
are indemnified against certain liabilities arising out of the performance of
their duties to the Funds. In addition, in the normal course of business, the
Funds enter into contracts that provide general indemnifications to other
parties. The Funds' maximum exposure under these arrangements is unknown as this
would involve future claims that may be made against the Funds that have not yet
occurred. However, the Funds have not had prior claims or losses pursuant to
these contracts and expect the risk of loss to be remote.
USE OF ESTIMATES
The preparation of financial statements in conformity with U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of increases and
decreases in net assets applicable to Common shares from operations during the
reporting period. Actual results may differ from those estimates.
2. FUND SHARES
Transactions in Common shares were as follows:
MUNICIPAL MARKET
PERFORMANCE PLUS (NPP) ADVANTAGE (NMA) OPPORTUNITY (NMO)
-------------------------- -------------------------- --------------------------
YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
10/31/07 10/31/06 10/31/07 10/31/06 10/31/07 10/31/06
----------------------------------------------------------------------------------------------------------------------------------
Common shares issued to
shareholders due to
reinvestment of distributions -- -- 148,621 40,309 16,916 --
==================================================================================================================================
DIVIDEND DIVIDEND DIVIDEND
ADVANTAGE (NAD) ADVANTAGE 2 (NXZ) ADVANTAGE 3 (NZF)
-------------------------- -------------------------- --------------------------
YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
10/31/07 10/31/06 10/31/07 10/31/06 10/31/07 10/31/06
----------------------------------------------------------------------------------------------------------------------------------
Common shares issued to
shareholders due to
reinvestment of distributions 19,807 -- 50,467 55,164 46,333 21,722
==================================================================================================================================
3. INVESTMENT TRANSACTIONS
Purchases and sales (including maturities but excluding short-term investments
and derivative transactions) during the fiscal year ended October 31, 2007, were
as follows:
PERFORMANCE MUNICIPAL MARKET DIVIDEND DIVIDEND DIVIDEND
PLUS ADVANTAGE OPPORTUNITY ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
(NPP) (NMA) (NMO) (NAD) (NXZ) (NZF)
----------------------------------------------------------------------------------------------------------------------------------
Purchases $76,613,471 $143,630,707 $64,323,883 $117,703,392 $54,308,243 $142,423,215
Sales and maturities 81,471,010 103,202,545 53,557,155 94,184,998 36,435,894 132,541,423
==================================================================================================================================
4. INCOME TAX INFORMATION
The following information is presented on an income tax basis. Differences
between amounts for financial statement and federal income tax purposes are
primarily due to the treatment of paydown gains and losses, timing differences
in recognizing taxable market discount, timing differences in recognizing
certain gains and losses on investment transactions and the treatment of
investments in inverse floating rate transactions subject to SFAS No. 140. To
the extent that differences arise that are permanent in nature, such amounts are
reclassified within the capital accounts on the Statement of Assets and
Liabilities presented in the annual report, based on their federal tax basis
treatment; temporary differences do not require reclassification. Temporary and
permanent differences do not impact the net asset values of the Funds.
93
| Notes to
| FINANCIAL STATEMENTS (continued)
At October 31, 2007, the cost of investments was as follows:
PERFORMANCE MUNICIPAL MARKET DIVIDEND DIVIDEND DIVIDEND
PLUS ADVANTAGE OPPORTUNITY ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
(NPP) (NMA) (NMO) (NAD) (NXZ) (NZF)
----------------------------------------------------------------------------------------------------------------------------------
Cost of investments $1,296,695,292 $946,433,172 $997,590,611 $830,873,386 $623,812,236 $868,087,650
==================================================================================================================================
Gross unrealized appreciation and gross unrealized depreciation of investments
at October 31, 2007, were as follows:
PERFORMANCE MUNICIPAL MARKET DIVIDEND DIVIDEND DIVIDEND
PLUS ADVANTAGE OPPORTUNITY ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
(NPP) (NMA) (NMO) (NAD) (NXZ) (NZF)
---------------------------------------------------------------------------------------------------------------------------------
Gross unrealized:
Appreciation $78,709,123 $55,738,069 $56,975,173 $48,096,729 $47,447,408 $36,940,773
Depreciation (1,740,517) (3,321,696) (3,106,631) (5,569,093) (1,386,044) (3,845,301)
----------------------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation
(depreciation) of investments $76,968,606 $52,416,373 $53,868,542 $42,527,636 $46,061,364 $33,095,472
==================================================================================================================================
The tax components of undistributed net tax-exempt income, net ordinary income
and net long-term capital gains at October 31, 2007, the Funds' tax year end,
were as follows:
PERFORMANCE MUNICIPAL MARKET DIVIDEND DIVIDEND DIVIDEND
PLUS ADVANTAGE OPPORTUNITY ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
(NPP) (NMA) (NMO) (NAD) (NXZ) (NZF)
----------------------------------------------------------------------------------------------------------------------------------
Undistributed net tax-exempt income * $1,782,388 $1,392,822 $1,532,785 $967,015 $1,573,952 $1,124,939
Undistributed net ordinary income ** 17,323 -- -- 171,088 381 4,477
Undistributed net long-term capital gains -- 1,389,990 -- -- -- --
==================================================================================================================================
* Undistributed net tax-exempt income (on a tax basis) has not been reduced
for the dividend declared on October 1, 2007, paid on November 1, 2007.
** Net ordinary income consists of taxable market discount income and net
short-term capital gains, if any.
The tax character of distributions paid during the Funds' tax years ended
October 31, 2007 and October 31, 2006, was designated for purposes of the
dividends paid deduction as follows:
PERFORMANCE MUNICIPAL MARKET DIVIDEND DIVIDEND DIVIDEND
PLUS ADVANTAGE OPPORTUNITY ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
2007 (NPP) (NMA) (NMO) (NAD) (NXZ) (NZF)
----------------------------------------------------------------------------------------------------------------------------------
Distributions from net tax-exempt
income *** $61,544,192 $49,015,900 $48,416,601 $42,441,771 $34,569,733 $45,208,503
Distributions from net ordinary
income ** 58,535 -- 77,487 121,024 -- --
Distributions from net long-term
capital gains **** 3,618,054 -- -- -- -- 1,024,327
==================================================================================================================================
PERFORMANCE MUNICIPAL MARKET DIVIDEND DIVIDEND DIVIDEND
PLUS ADVANTAGE OPPORTUNITY ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
2006 (NPP) (NMA) (NMO) (NAD) (NXZ) (NZF)
----------------------------------------------------------------------------------------------------------------------------------
Distributions from net tax-exempt
income $65,689,928 $50,218,101 $49,767,991 $43,683,872 $36,096,315 $46,380,901
Distributions from net ordinary
income ** 6,686 154,403 196,171 -- -- --
Distributions from net long-term
capital gains 1,247,394 593,511 -- -- -- --
==================================================================================================================================
** Net ordinary income consists of taxable market discount income and net
short-term capital gains, if any.
*** The Funds hereby designate these amounts paid during the fiscal year ended
October 31, 2007, as Exempt Interest Dividends.
**** The Funds hereby designate these amounts paid during the fiscal year ended
October 31, 2007, as long-term capital gain dividends pursuant to Internal
Revenue Code Section 852(b)(3).
94
At October 31, 2007, the Funds' tax year end, the following Funds had unused
capital loss carryforwards available for federal income tax purposes to be
applied against future capital gains, if any. If not applied, the carryforwards
will expire as follows:
PERFORMANCE MARKET DIVIDEND DIVIDEND DIVIDEND
PLUS OPPORTUNITY ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
(NPP) (NMO) (NAD) (NXZ) (NZF)
-------------------------------------------------------------------------------------------------------------------
Expiration Year:
2008 $ -- $ -- $ 9,745,720 $ -- $ --
2009 -- -- -- -- --
2010 -- -- -- -- --
2011 -- 7,158,110 4,594,300 -- --
2012 -- 973,824 -- 246,691 --
2013 -- -- 104,763 1,591,323 --
2014 -- 3,141,529 -- 1,882,135 --
2015 105,897 1,902,878 -- 961,027 359,272
-------------------------------------------------------------------------------------------------------------------
Total $ 105,897 $13,176,341 $14,444,783 $4,681,176 $359,272
===================================================================================================================
5. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Each Fund's management fee is separated into two components - a complex-level
component, based on the aggregate amount of all fund assets managed by Nuveen
Asset Management (the "Adviser"), a wholly owned subsidiary of Nuveen
Investments, Inc. ("Nuveen"), and a specific fund-level component, based only on
the amount of assets within each individual Fund. This pricing structure enables
Nuveen fund shareholders to benefit from growth in the assets within each
individual fund as well as from growth in the amount of complex-wide assets
managed by the Adviser.
The annual fund-level fee, payable monthly, for each Fund is based upon the
average daily net assets (including net assets attributable to Preferred shares)
of each Fund as follows:
PERFORMANCE PLUS (NPP)
MUNICIPAL ADVANTAGE (NMA)
MARKET OPPORTUNITY (NMO)
AVERAGE DAILY NET ASSETS (INCLUDING NET ASSETS ATTRIBUTABLE TO PREFERRED SHARES) FUND-LEVEL FEE RATE
----------------------------------------------------------------------------------------------------------------------------------
For the first $125 million .4500%
For the next $125 million .4375
For the next $250 million .4250
For the next $500 million .4125
For the next $1 billion .4000
For the next $3 billion .3875
For net assets over $5 billion .3750
==================================================================================================================================
DIVIDEND ADVANTAGE (NAD)
DIVIDEND ADVANTAGE 2 (NXZ)
DIVIDEND ADVANTAGE 3 (NZF)
AVERAGE DAILY NET ASSETS (INCLUDING NET ASSETS ATTRIBUTABLE TO PREFERRED SHARES) FUND-LEVEL FEE RATE
----------------------------------------------------------------------------------------------------------------------------------
For the first $125 million .4500%
For the next $125 million .4375
For the next $250 million .4250
For the next $500 million .4125
For the next $1 billion .4000
For net assets over $2 billion .3750
==================================================================================================================================
The annual complex-level fee, payable monthly, which is additive to the
fund-level fee, for all Nuveen sponsored funds in the U.S., is based on the
aggregate amount of total fund assets managed as stated in the tables below. As
of October 31, 2007, the complex-level fee rate was .1828%.
95
Notes to
FINANCIAL STATEMENTS (continued)
Effective August 20, 2007, the complex-level fee schedule is as follows:
COMPLEX-LEVEL ASSET BREAKPOINT LEVEL (1) EFFECTIVE RATE AT BREAKPOINT LEVEL
--------------------------------------------------------------------------------
$55 billion .2000%
$56 billion .1996
$57 billion .1989
$60 billion .1961
$63 billion .1931
$66 billion .1900
$71 billion .1851
$76 billion .1806
$80 billion .1773
$91 billion .1691
$125 billion .1599
$200 billion .1505
$250 billion .1469
$300 billion .1445
================================================================================
Prior to August 20, 2007, the complex-level fee schedule was as follows:
COMPLEX-LEVEL ASSET BREAKPOINT LEVEL (1) EFFECTIVE RATE AT BREAKPOINT LEVEL
--------------------------------------------------------------------------------
$55 billion .2000%
$56 billion .1996
$57 billion .1989
$60 billion .1961
$63 billion .1931
$66 billion .1900
$71 billion .1851
$76 billion .1806
$80 billion .1773
$91 billion .1698
$125 billion .1617
$200 billion .1536
$250 billion .1509
$300 billion .1490
================================================================================
(1) The complex-level fee component of the management fee for the funds is
calculated based upon the aggregate Managed Assets ("Managed Assets" means
the average daily net assets of each fund including assets attributable to
preferred stock issued by or borrowings by the Nuveen funds) of
Nuveen-sponsored funds in the U.S.
96
The management fee compensates the Adviser for overall investment advisory and
administrative services and general office facilities. The Funds pay no
compensation directly to those of its Directors/Trustees who are affiliated with
the Adviser or to its Officers, all of whom receive remuneration for their
services to the Funds from the Adviser or its affiliates. The Board of
Directors/Trustees has adopted a deferred compensation plan for independent
Directors/Trustees that enables Directors/Trustees to elect to defer receipt of
all or a portion of the annual compensation they are entitled to receive from
certain Nuveen advised funds. Under the plan, deferred amounts are treated as
though equal dollar amounts had been invested in shares of select Nuveen advised
funds.
For the first ten years of Dividend Advantage's (NAD) operations, the Adviser
has agreed to reimburse the Fund, as a percentage of average daily net assets
(including net assets attributable to Preferred shares), for fees and expenses
in the amounts and for the time periods set forth below:
YEAR ENDING YEAR ENDING
JULY 31, JULY 31,
--------------------------------------------------------------------------------
1999* .30% 2005 .25%
2000 .30 2006 .20
2001 .30 2007 .15
2002 .30 2008 .10
2003 .30 2009 .05
2004 .30
================================================================================
* From the commencement of operations.
The Adviser has not agreed to reimburse Dividend Advantage (NAD) for any portion
of its fees and expenses beyond July 31, 2009.
For the first ten years of Dividend Advantage 2's (NXZ) operations, the Adviser
has agreed to reimburse the Fund, as a percentage of average daily net assets
(including net assets attributable to 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,
--------------------------------------------------------------------------------
2001* .30% 2007 .25%
2002 .30 2008 .20
2003 .30 2009 .15
2004 .30 2010 .10
2005 .30 2011 .05
2006 .30
================================================================================
* From the commencement of operations.
The Adviser has not agreed to reimburse Dividend Advantage 2 (NXZ) for any
portion of its fees and expenses beyond March 31, 2011.
For the first ten years of Dividend Advantage 3's (NZF) operations, the Adviser
has agreed to reimburse the Fund, as a percentage of average daily net assets
(including net assets attributable to 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,
--------------------------------------------------------------------------------
2001* .30% 2007 .25%
2002 .30 2008 .20
2003 .30 2009 .15
2004 .30 2010 .10
2005 .30 2011 .05
2006 .30
================================================================================
* From the commencement of operations.
The Adviser has not agreed to reimburse Dividend Advantage 3 (NZF) for any
portion of its fees and expenses beyond September 30, 2011.
97
| Notes to
| FINANCIAL STATEMENTS (continued)
AGREEMENT AND PLAN OF MERGER
On June 20, 2007, Nuveen Investments announced that it had entered into a
definitive Agreement and Plan of Merger ("Merger Agreement") with Windy City
Investments, Inc. ("Windy City"), a corporation formed by investors led by
Madison Dearborn Partners, LLC ("Madison Dearborn"), pursuant to which Windy
City would acquire Nuveen Investments. Madison Dearborn is a private equity
investment firm based in Chicago, Illinois. The merger was consummated on
November 13, 2007.
The consummation of the merger was deemed to be an "assignment" (as that term is
defined in the Investment Company Act of 1940) of the investment management
agreement between each Fund and the Adviser, and resulted in the automatic
termination of each Fund's agreement. The Board of Directors/Trustees of each
Fund considered and approved a new investment management agreement with the
Adviser at the same fee rate. The new ongoing agreement was approved by the
shareholders of each Fund and took effect on November 13, 2007.
The investors led by Madison Dearborn include an affiliate of Merrill Lynch. As
a result, Merrill Lynch is an indirect "affiliated person" (as that term is
defined in the Investment Company Act of 1940) of each Fund. Certain conflicts
of interest may arise as a result of such indirect affiliation. For example, the
Funds are generally prohibited from entering into principal transactions with
Merrill Lynch and its affiliates. The Adviser does not believe that any such
prohibitions or limitations as a result of Merrill Lynch's affiliation will
significantly impact the ability of the Funds to pursue their investment
objectives and policies.
6. NEW ACCOUNTING PRONOUNCEMENTS
FINANCIAL ACCOUNTING STANDARDS BOARD INTERPRETATION NO. 48
On July 13, 2006, the Financial Accounting Standards Board (FASB) released FASB
Interpretation No. 48, "Accounting for Uncertainty in Income Taxes" (FIN 48).
FIN 48 provides guidance regarding how uncertain tax positions should be
recognized, measured, presented and disclosed in the financial statements. FIN
48 requires the evaluation of tax positions taken or expected to be taken in the
course of preparing the Funds' tax returns to determine whether the tax
positions are "more-likely-than-not" of being sustained by the applicable tax
authority. Tax positions not deemed to meet the more-likely-than-not threshold
would be recorded as a tax benefit or expense in the current year. Adoption of
FIN 48 is required for fiscal years beginning after December 15, 2006, and is to
be applied to all open tax years as of the effective date. SEC guidance allows
funds to delay implementing FIN 48 into NAV calculations until the fund's last
NAV calculation in the first required financial statement reporting period. As a
result, the Funds must begin to incorporate FIN 48 into their NAV calculations
by April 30, 2008. At this time, management is continuing to evaluate the
implications of FIN 48 and does not expect the adoption of FIN 48 will have a
significant impact on the net assets or results of operations of the Funds.
FINANCIAL ACCOUNTING STANDARDS BOARD STATEMENT OF FINANCIAL ACCOUNTING STANDARDS
NO. 157
In September 2006, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 157, "Fair Value
Measurements." This standard establishes a single authoritative definition of
fair value, sets out a framework for measuring fair value and requires
additional disclosures about fair value measurements. SFAS No. 157 applies to
fair value measurements already required or permitted by existing standards.
SFAS No. 157 is effective for financial statements issued for fiscal years
beginning after November 15, 2007, and interim periods within those fiscal
years. The changes to current generally accepted accounting principles from the
application of this standard relate to the definition of fair value, the methods
used to measure fair value, and the expanded disclosures about fair value
measurements. As of October 31, 2007, management does not believe the adoption
of SFAS No. 157 will impact the financial statement amounts; however, additional
disclosures may be required about the inputs used to develop the measurements
and the effect of certain of the measurements included within the Statement of
Operations for the period.
98
7. SUBSEQUENT EVENT
DISTRIBUTIONS TO COMMON SHAREHOLDERS
The Funds declared Common share dividend distributions from their tax-exempt net
investment income which were paid on December 3, 2007, to shareholders of record
on November 15, 2007, as follows:
PERFORMANCE MUNICIPAL MARKET DIVIDEND DIVIDEND DIVIDEND
PLUS ADVANTAGE OPPORTUNITY ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
(NPP) (NMA) (NMO) (NAD) (NXZ) (NZF)
----------------------------------------------------------------------------------------------------------------------------------
Dividend per share $.0575 $.0640 $.0605 $.0635 $.0730 $.0640
==================================================================================================================================
99
| Financial
| HIGHLIGHTS
Selected data for a Common share outstanding throughout each period:
Investment Operations Less Distributions
------------------------------------------------------------------ -------------------------------
Distributions Distributions
from Net from Net
Beginning Investment Capital Investment Capital
Common Net Income to Gains to Income to Gains to
Share Net Realized/ Preferred Preferred Common Common
Net Asset Investment Unrealized Share- Share- Share- Share-
Value Income Gain (Loss) holders+ holders+ Total holders holders Total
--------------------------------------------------------------------------------------------------------------------------------
PERFORMANCE PLUS (NPP)
--------------------------------------------------------------------------------------------------------------------------------
Year Ended 10/31:
2007 $15.78 $ .99 $ (.47) $(.27) $ (.01) $ .24 $ (.75) $ (.05) $ (.80)
2006 15.51 1.00 .38 (.25) -- 1.13 (.84) (.02) (.86)
2005 15.87 1.02 (.26) (.16) -- .60 (.94) (.02) (.96)
2004 15.45 1.04 .42 (.07) -- 1.39 (.97) -- (.97)
2003 15.38 1.07 .05 (.07) -- 1.05 (.95) (.03) (.98)
MUNICIPAL ADVANTAGE (NMA)
--------------------------------------------------------------------------------------------------------------------------------
Year Ended 10/31:
2007 15.88 1.07 (.63) (.29) -- .15 (.83) -- (.83)
2006 15.70 1.08 .27 (.26) -- 1.09 (.90) (.01) (.91)
2005 16.02 1.09 (.24) (.16) -- .69 (1.00) (.01) (1.01)
2004 15.62 1.11 .41 (.08) -- 1.44 (1.03) (.01) (1.04)
2003 15.41 1.13 .25 (.07) (.01) 1.30 (1.02) (.07) (1.09)
================================================================================================================================
Total Returns
-------------------
Offering Based
Costs and Ending on
Preferred Common Based Common
Share Share Ending on Share Net
Underwriting Net Asset Market Market Asset
Discounts Value Value Value* Value*
----------------------------------------------------------------------
PERFORMANCE PLUS (NPP)
----------------------------------------------------------------------
Year Ended 10/31
2007 $ -- $15.22 $ 13.59 (4.97)% 1.53%
2006 -- 15.78 15.09 10.78 7.50
2005 -- 15.51 14.43 3.02 3.83
2004 -- 15.87 14.95 9.10 9.30
2003 -- 15.45 14.64 9.58 6.97
MUNICIPAL ADVANTAGE (NMA)
----------------------------------------------------------------------
Year Ended 10/31
2007 -- 15.20 13.95 (7.08) 1.06
2006 -- 15.88 15.85 10.68 7.16
2005 -- 15.70 15.19 3.29 4.42
2004 -- 16.02 15.70 8.82 9.57
2003 -- 15.62 15.44 13.17 8.71
======================================================================
Ratios/Supplemental Data
-------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets Ratios to Average Net Assets
Applicable to Common Shares Applicable to Common Shares
Before Credit/Reimbursement/Refund After Credit/Reimbursement/Refund**
-------------------------------------------- ------------------------------------------
Ending
Net
Assets
Applicable Expenses Expenses Net Expenses Expenses Net Portfolio
to Common Including Excluding Investment Including Excluding Investment Turnover
Shares (000) Interest++(a) Interest++(a) Income++ Interest++(a) Interest++(a) Income++ Rate
----------------------------------------------------------------------------------------------------------------------------------
PERFORMANCE PLUS (NPP)
----------------------------------------------------------------------------------------------------------------------------------
Year Ended 10/31
2007 $912,066 1.16% 1.14% 6.38% 1.14 1.13% 6.39% 6%
2006 945,222 1.15 1.15 6.44 1.14 1.14 6.45 9
2005 929,544 1.15 1.15 6.45 1.10 41.14 6.46 6
2004 950,993 1.17 1.17 6.69 1.17 1.17 6.70 11
2003 925,525 1.18 1.18 6.89 1.18 1.18 6.90 10
MUNICIPAL ADVANTAGE (NMA)
----------------------------------------------------------------------------------------------------------------------------------
Year Ended 10/31
2007 656,806 1.40 1.17 6.87 1.38 1.15 6.89 10
2006 683,675 1.18 1.18 6.92 1.17 1.17 6.93 11
2005 675,678 1.17 1.17 6.81 1.16 1.16 6.82 8
2004 689,190 1.19 1.19 7.00 1.18 1.18 7.00 4
2003 671,147 1.21 1.21 7.27 1.20 1.20 7.27 7
==================================================================================================================================
Floating Rate Obligations
Preferred Shares at End of Period at End of Period
-------------------------------------- -----------------------------
Aggregate Liquidation Aggregate
Amount and Market Asset Amount Asset
Outstanding Value Coverage Outstanding Coverage
(000) Per Share Per Share (000) Per $1,000
------------------------------------------------------------------------------------
PERFORMANCE PLUS (NPP)
------------------------------------------------------------------------------------
Year Ended 10/31:
2007 $479,000 $25,000 $72,603 $ 6,665 $209,712
2006 479,000 25,000 74,333 -- --
2005 479,000 25,000 73,515 -- --
2004 479,000 25,000 74,634 -- --
2003 479,000 25,000 73,305 -- --
MUNICIPAL ADVANTAGE (NMA)
------------------------------------------------------------------------------------
Year Ended 10/31:
2007 358,000 25,000 70,866 54,048 19,776
2006 358,000 25,000 72,743 -- --
2005 358,000 25,000 72,184 -- --
2004 358,000 25,000 73,128 -- --
2003 358,000 25,000 71,868 -- --
====================================================================================
* Total Return on Market Value is the combination of changes in the market
price per share and the effect of reinvested dividend income and
reinvested capital gains distributions, if any, at the average price paid
per share at the time of reinvestment. The last dividend declared in the
period, which is typically paid on the first business day of the following
month, is assumed to be reinvested at the ending market price. The actual
reinvestment for the last dividend declared in the period takes place over
several days, and in some instances may not be based on the market price,
so the actual reinvestment price may be different from the price used in
the calculation. Total returns are not annualized.
Total Return on Common Share Net Asset Value is the combination of changes
in Common share net asset value, reinvested dividend income at net asset
value and reinvested capital gains distributions at net asset value, if
any. The last dividend declared in the period, which is typically paid on
the first business day of the following month, is assumed to be reinvested
at the ending net asset value. The actual reinvest price for the last
dividend declared in the period may often be based on the Fund's market
price (and not its net asset value), and therefore may be different from
the price used in the calculation. Total returns are not annualized.
** After custodian fee credit, expense reimbursement, and legal fee refund,
where applicable.
+ The amounts shown are based on Common share equivalents.
++ Ratios do not reflect the effect of dividend payments to Preferred
shareholders; income ratios reflect income earned on assets attributable
to Preferred shares.
(a) Interest expense arises from the application of SFAS No. 140 to certain
inverse floating rate transactions entered into by the Fund as more fully
described in Footnote 1 - Inverse Floating Rate Securities.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
100-101
| Financial
| HIGHLIGHTS (continued)
Selected data for a Common share outstanding throughout each period:
Investment Operations Less Distributions
------------------------------------------------------------------ -------------------------------
Distributions Distributions
from Net from Net
Beginning Investment Capital Investment Capital
Common Net Income to Gains to Income to Gains to
Share Net Realized/ Preferred Preferred Common Common
Net Asset Investment Unrealized Share- Share- Share- Share-
Value Income Gain (Loss) holders+ holders+ Total holders holders Total
--------------------------------------------------------------------------------------------------------------------------------
MARKET OPPORTUNITY (NMO)
--------------------------------------------------------------------------------------------------------------------------------
Year Ended 10/31:
2007 $15.41 $1.04 $(.56) $(.30) $ -- $ .18 $ (.76) $ -- $ (.76)
2006 15.14 1.02 .34 (.26) -- 1.10 (.83) -- (.83)
2005 15.48 1.03 (.29) (.16) -- .58 (.92) -- (.92)
2004 15.11 1.03 .37 (.08) -- 1.32 (.95) -- (.95)
2003 14.60 1.03 .50 (.08) -- 1.45 (.94) -- (.94)
DIVIDEND ADVANTAGE (NAD)
--------------------------------------------------------------------------------------------------------------------------------
Year Ended 10/31:
2007 15.54 1.04 (.60) (.27) -- .17 (.81) -- (.81)
2006 15.28 1.04 .32 (.24) -- 1.12 (.86) -- (.86)
2005 15.62 1.06 (.25) (.15) -- .66 (1.00) -- (1.00)
2004 15.17 1.09 .46 (.07) -- 1.48 (1.03) -- (1.03)
2003 14.94 1.10 .19 (.07) -- 1.22 (.99) -- (.99)
================================================================================================================================
Total Returns
-------------------
Offering Based
Costs and Ending on
Preferred Common Based Common
Share Share Ending on Share Net
Underwriting Net Asset Market Market Asset
Discounts Value Value Value* Value*
----------------------------------------------------------------------
MARKET OPPORTUNITY (NMO)
----------------------------------------------------------------------
Year Ended 10/31:
2007 $ -- $14.83 $13.53 (5.00)% 1.20%
2006 -- 15.41 15.00 11.92 7.49
2005 -- 15.14 14.19 4.70 3.78
2004 -- 15.48 14.44 7.97 9.00
2003 -- 15.11 14.29 10.62 10.24
DIVIDEND ADVANTAGE (NAD)
----------------------------------------------------------------------
Year Ended 10/31:
2007 -- 14.90 13.63 (5.96) 1.10
2006 -- 15.54 15.30 11.19 7.59
2005 -- 15.28 14.58 1.77 4.27
2004 -- 15.62 15.31 8.37 10.06
2003 -- 15.17 15.12 11.41 8.41
======================================================================
Ratios/Supplemental Data
--------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets Ratios to Average Net Assets
Applicable to Common Shares Applicable to Common Shares
Before Credit/Reimbursement/Refund After Credit/Reimbursement/Refund**
-------------------------------------------- ------------------------------------------
Ending
Net
Assets
Applicable Expenses Expenses Net Expenses Expenses Net Portfolio
to Common Including Excluding Investment Including Excluding Investment Turnover
Shares (000) Interest++(a) Interest++(a) Income++ Interest++(a) Interest++(a) Income++ Rate
----------------------------------------------------------------------------------------------------------------------------------
MARKET OPPORTUNITY (NMO)
----------------------------------------------------------------------------------------------------------------------------------
Year Ended 10/31
2007 $ 675,577 1.38% 1.19% 6.87% 1.36% 1.17% 6.88% 5%
2006 701,559 1.19 1.19 6.73 1.18 1.18 6.74 14
2005 689,682 1.19 1.19 6.66 1.18 1.18 6.67 7
2004 704,760 1.21 1.21 6.75 1.19 1.19 6.77 4
2003 687,955 1.25 1.25 6.94 1.25 1.25 6.94 9
DIVIDEND ADVANTAGE (NAD)
----------------------------------------------------------------------------------------------------------------------------------
Year Ended 10/31
2007 585,496 1.24 1.13 6.60 1.01 .90 6.83 11
2006 610,316 1.12 1.12 6.54 .83 .83 6.83 8
2005 599,887 1.17 1.17 6.48 .80 .80 6.84 11
2004 613,328 1.14 1.14 6.69 .70 .70 7.12 7
2003 595,266 1.35 1.35 6.78 .89 .89 7.24 3
==================================================================================================================================
Floating Rate Obligations
Preferred Shares at End of Period at End of Period
-------------------------------------- -----------------------------
Aggregate Liquidation Aggregate
Amount and Market Asset Amount Asset
Outstanding Value Coverage Outstanding Coverage
(000) Per Share Per Share (000) Per $1,000
------------------------------------------------------------------------------------
MARKET OPPORTUNITY (NMO)
------------------------------------------------------------------------------------
Year Ended 10/31:
2007 $380,000 $25,000 $ 69,446 $36,660 $29,794
2006 380,000 25,000 71,155 -- --
2005 380,000 25,000 70,374 -- --
2004 380,000 25,000 71,366 -- --
2003 380,000 25,000 70,260 -- --
DIVIDEND ADVANTAGE (NAD)
------------------------------------------------------------------------------------
Year Ended 10/31:
2007 295,000 25,000 74,618 33,200 27,521
2006 295,000 25,000 76,722 -- --
2005 295,000 25,000 75,838 -- --
2004 295,000 25,000 76,977 -- --
2003 295,000 25,000 75,446 -- --
====================================================================================
* Total Return on Market Value is the combination of changes in the market
price per share and the effect of reinvested dividend income and
reinvested capital gains distributions, if any, at the average price paid
per share at the time of reinvestment. The last dividend declared in the
period, which is typically paid on the first business day of the following
month, is assumed to be reinvested at the ending market price. The actual
reinvestment for the last dividend declared in the period takes place over
several days, and in some instances may not be based on the market price,
so the actual reinvestment price may be different from the price used in
the calculation. Total returns are not annualized.
Total Return on Common Share Net Asset Value is the combination of changes
in Common share net asset value, reinvested dividend income at net asset
value and reinvested capital gains distributions at net asset value, if
any. The last dividend declared in the period, which is typically paid on
the first business day of the following month, is assumed to be reinvested
at the ending net asset value. The actual reinvest price for the last
dividend declared in the period may often be based on the Fund's market
price (and not its net asset value), and therefore may be different from
the price used in the calculation. Total returns are not annualized.
** After custodian fee credit, expense reimbursement, and legal fee refund,
where applicable.
+ The amounts shown are based on Common share equivalents.
++ Ratios do not reflect the effect of dividend payments to Preferred
shareholders; income ratios reflect income earned on assets attributable
to Preferred shares.
(a) Interest expense arises from the application of SFAS No. 140 to certain
inverse floating rate transactions entered into by the Fund as more fully
described in Footnote 1 - Inverse Floating Rate Securities.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
102-103
| Financial
| HIGHLIGHTS (continued)
Selected data for a Common share outstanding throughout each period:
Investment Operations Less Distributions
------------------------------------------------------------------ -------------------------------
Distributions Distributions
from Net from Net
Beginning Investment Capital Investment Capital
Common Net Income to Gains to Income to Gains to
Share Net Realized/ Preferred Preferred Common Common
Net Asset Investment Unrealized Share- Share- Share- Share-
Value Income Gain (Loss) holders+ holders+ Total holders holders Total
--------------------------------------------------------------------------------------------------------------------------------
DIVIDEND ADVANTAGE 2 (NXZ)
--------------------------------------------------------------------------------------------------------------------------------
Year Ended 10/31:
2007 $16.02 $1.13 $(.43) $(.27) $ -- $ .43 $ (.90) $ -- $ (.90)
2006 15.80 1.12 .32 (.24) -- 1.20 (.98) -- (.98)
2005 15.63 1.13 .22 (.15) -- 1.20 (1.03) -- (1.03)
2004 15.13 1.12 .51 (.07) -- 1.56 (1.03) (.03) (1.06)
2003 14.89 1.16 .17 (.07) -- 1.26 (1.01) (.01) (1.02)
DIVIDEND ADVANTAGE 3 (NZF)
--------------------------------------------------------------------------------------------------------------------------------
Year Ended 10/31:
2007 15.54 1.07 (.44) (.27) (.01) .35 (.84) (.02) (.86)
2006 15.32 1.07 .29 (.24) -- 1.12 (.90) -- (.90)
2005 15.36 1.06 .01 (.15) -- .92 (.96) -- (.96)
2004 14.74 1.06 .59 (.07) -- 1.58 (.96) -- (.96)
2003 14.56 1.07 .10 (.07) -- 1.10 (.93) -- (.93)
================================================================================================================================
Total Returns
-------------------
Offering Based
Costs and Ending on
Preferred Common Based Common
Share Share Ending on Share Net
Underwriting Net Asset Market Market Asset
Discounts Value Value Value* Value*
----------------------------------------------------------------------
DIVIDEND ADVANTAGE 2 (NXZ)
----------------------------------------------------------------------
Year Ended 10/31:
2007 $ -- $15.55 $15.48 (.78)% 2.76%
2006 -- 16.02 16.50 11.95 7.86
2005 -- 15.80 15.64 8.58 7.83
2004 -- 15.63 15.38 11.16 10.67
2003 -- 15.13 14.85 14.39 8.67
DIVIDEND ADVANTAGE 3 (NZF)
----------------------------------------------------------------------
Year Ended 10/31:
2007 -- 15.03 13.85 (7.72) 2.31
2006 -- 15.54 15.88 16.90 7.57
2005 -- 15.32 14.41 6.11 6.09
2004 -- 15.36 14.50 12.45 11.10
2003 .01 14.74 13.80 9.04 7.82
======================================================================
Ratios/Supplemental Data
--------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets Ratios to Average Net Assets
Applicable to Common Shares Applicable to Common Shares
Before Credit/Reimbursement/Refund After Credit/Reimbursement/Refund**
-------------------------------------------- ------------------------------------------
Ending
Net
Assets
Applicable Expenses Expenses Net Expenses Expenses Net Portfolio
to Common Including Excluding Investment Including Excluding Investment Turnover
Shares (000) Interest++(a) Interest++(a) Income++ Interest++(a) Interest++(a) Income++ Rate
----------------------------------------------------------------------------------------------------------------------------------
DIVIDEND ADVANTAGE 2 (NXZ)
----------------------------------------------------------------------------------------------------------------------------------
Year Ended 10/31:
2007 456,992 1.25% 1.11% 6.83% .91 .77% 7.18% 5%
2006 470,189 1.11 1.11 6.70 .70 .70 7.11 5
2005 462,862 1.12 1.12 6.66 .67 .67 7.12 2
2004 457,552 1.14 1.14 6.87 .69 .69 7.32 3
2003 443,101 1.17 1.17 7.20 .71 .71 7.66 11
DIVIDEND ADVANTAGE 3 (NZF)
----------------------------------------------------------------------------------------------------------------------------------
Year Ended 10/31:
2007 606,908 1.32 1.13 6.65 .93 .75 7.03 14
2006 626,836 1.13 1.13 6.51 .68 .68 6.96 9
2005 617,358 1.13 1.13 6.39 .68 .68 6.84 3
2004 619,118 1.15 1.15 6.64 .69 .69 7.10 3
2003 594,154 1.17 1.17 6.80 .71 .71 7.26 3
==================================================================================================================================
Floating Rate Obligations
Preferred Shares at End of Period at End of Period
-------------------------------------- -----------------------------
Aggregate Liquidation Aggregate
Amount and Market Asset Amount Asset
Outstanding Value Coverage Outstanding Coverage
(000) Per Share Per Share (000) Per $1,000
------------------------------------------------------------------------------------
DIVIDEND ADVANTAGE 2 (NXZ)
------------------------------------------------------------------------------------
Year Ended 10/31:
2007 $222,000 $25,000 $76,463 $23,365 $30,060
2006 222,000 25,000 77,949 -- --
2005 222,000 25,000 77,124 -- --
2004 222,000 25,000 76,526 -- --
2003 222,000 25,000 74,899 -- --
DIVIDEND ADVANTAGE 3 (NZF)
------------------------------------------------------------------------------------
Year Ended 10/31:
2007 312,000 25,000 73,630 30,345 31,282
2006 312,000 25,000 75,227 -- --
2005 312,000 25,000 74,468 -- --
2004 312,000 25,000 74,609 -- --
2003 312,000 25,000 72,608 -- --
====================================================================================
* Total Return on Market Value is the combination of changes in the market
price per share and the effect of reinvested dividend income and
reinvested capital gains distributions, if any, at the average price paid
per share at the time of reinvestment. The last dividend declared in the
period, which is typically paid on the first business day of the following
month, is assumed to be reinvested at the ending market price. The actual
reinvestment for the last dividend declared in the period takes place over
several days, and in some instances may not be based on the market price,
so the actual reinvestment price may be different from the price used in
the calculation. Total returns are not annualized.
Total Return on Common Share Net Asset Value is the combination of changes
in Common share net asset value, reinvested dividend income at net asset
value and reinvested capital gains distributions at net asset value, if
any. The last dividend declared in the period, which is typically paid on
the first business day of the following month, is assumed to be reinvested
at the ending net asset value. The actual reinvest price for the last
dividend declared in the period may often be based on the Fund's market
price (and not its net asset value), and therefore may be different from
the price used in the calculation. Total returns are not annualized.
** After custodian fee credit, expense reimbursement, and legal fee refund,
where applicable.
+ The amounts shown are based on Common share equivalents.
++ Ratios do not reflect the effect of dividend payments to Preferred
shareholders; income ratios reflect income earned on assets attributable
to Preferred shares.
(a) Interest expense arises from the application of SFAS No. 140 to certain
inverse floating rate transactions entered into by the Fund as more fully
described in Footnote 1 - Inverse Floating Rate Securities.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
104-105
--------------------------------------------------------------------------------
Board Members & Officers
--------------------------------------------------------------------------------
The management of the Funds, including general supervision of the duties
performed for the Funds by the Adviser, is the responsibility of the Board
Members of the Funds. The number of board members of the Fund is currently set
at eight. None of the board members who are not "interested" persons of the
Funds has ever been a director or employee of, or consultant to, Nuveen or its
affiliates. The names and business addresses of the board members and officers
of the Funds, their principal occupations and other affiliations during the past
five years, the number of portfolios each oversees and other directorships they
hold are set forth below.
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NAME, POSITION(s) HELD YEAR FIRST NUMBER PRINCIPAL
BIRTHDATE WITH THE FUNDS ELECTED OR OF PORTFOLIOS OCCUPATION(S)
& ADDRESS APPOINTED IN FUND COMPLEX INCLUDING OTHER
AND TERM(2) OVERSEEN BY DIRECTORSHIPS
BOARD MEMBER DURING PAST 5 YEARS
-----------------------------------------------------------------------------------------------------------------------------------
BOARD MEMBER WHO IS AN INTERESTED PERSON OF THE FUNDS:
o TIMOTHY R. SCHWERTFEGER(1) Former director (1994-November 12, 2007), Chairman
3/28/49 Chairman of 1994 (1996-June 30, 2007), Non-Executive Chairman
333 W. Wacker Drive the Board ANNUAL 182 (July 1, 2007-November 12, 2007) and Chief Executive
Chicago, IL 60606 and Board Member Officer (1996-June 30, 2007) of Nuveen Investments,
Inc. and Nuveen Asset Management and certain other
subsidiaries of Nuveen Investments, Inc.; formerly,
Director (1992-2006) of Institutional Capital
Corporation.
BOARD MEMBERS WHO ARE NOT INTERESTED PERSONS OF THE FUNDS:
o ROBERT P. BREMNER Private Investor and Management Consultant.
8/22/40 Lead 1997
333 W. Wacker Drive Independent ANNUAL OR 182
Chicago, IL 60606 Board member CLASS III
o JACK B. EVANS President, The Hall-Perrine Foundation, a private
10/22/48 1999 philanthropic corporation (since 1996); Director and
333 W. Wacker Drive Board member ANNUAL OR 182 Vice Chairman, United Fire Group, a publicly held
Chicago, IL 60606 CLASS III company; Member of the Board of Regents for the
State of Iowa University System; Director, Gazette
Companies; Life Trustee of Coe College and Iowa
College Foundation; Member of the Advisory Council
of the Department of Finance in the Tippie College
of Business, University of Iowa; formerly, Director,
Alliant Energy; formerly, Director, Federal Reserve
Bank of Chicago; formerly, President and Chief
Operating Officer, SCI Financial Group, Inc., a
regional financial services firm.
o WILLIAM C. HUNTER Dean, Tippie College of Business, University of Iowa
3/6/48 2004 (since July 2006); formerly, Dean and Distinguished
333 W. Wacker Drive Board member ANNUAL OR 182 Professor of Finance, School of Business at the
Chicago, IL 60606 CLASS II University of Connecticut (2003-2006); previously,
Senior Vice President and Director of Research at
the Federal Reserve Bank of Chicago (1995-2003);
Director (since 1997), Credit Research Center at
Georgetown University; Director (since 2004) of
Xerox Corporation; Director, SS&C Technologies, Inc.
(May 2005-October 2005).
106
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NAME, POSITION(S) HELD YEAR FIRST NUMBER PRINCIPAL
BIRTHDATE WITH THE FUNDS ELECTED OR OF PORTFOLIOS OCCUPATION(S)
& ADDRESS APPOINTED IN FUND COMPLEX INCLUDING OTHER
AND TERM(2) OVERSEEN BY DIRECTORSHIPS
BOARD MEMBER DURING PAST 5 YEARS
-----------------------------------------------------------------------------------------------------------------------------------
BOARD MEMBERS WHO ARE NOT INTERESTED PERSONS OF THE FUNDS:
o DAVID J. KUNDERT Director, Northwestern Mutual Wealth Management
10/28/42 2005 Company; Retired (since 2004) as Chairman, JPMorgan
333 W. Wacker Drive Board member ANNUAL OR 180 Fleming Asset Management, President and CEO, Banc
Chicago, IL 60606 CLASS II One Investment Advisors Corporation, and President,
One Group Mutual Funds; prior thereto, Executive
Vice President, Banc One Corporation and Chairman
and CEO, Banc One Investment Management Group;
Member, Board of Regents, Luther College; member of
the Wisconsin Bar Association; member of Board of
Directors, Friends of Boerner Botanical Gardens;
member of Board of Directors, Milwaukee Repertory
Theater.
o WILLIAM J. SCHNEIDER Chairman of Miller-Valentine Partners Ltd., a real
9/24/44 1997 estate investment company, formerly, Senior Partner
333 W. Wacker Drive Board member ANNUAL 182 and Chief Operating Officer (retired, 2004);
Chicago, IL 60606 Director, Dayton Development Coalition; formerly,
Member, Business Advisory Council, Cleveland Federal
Reserve Bank.
o JUDITH M. STOCKDALE Executive Director, Gaylord and Dorothy Donnelley
12/29/47 1997 Foundation (since 1994); prior thereto, Executive
333 W. Wacker Drive Board member ANNUAL OR 182 Director, Great Lakes Protection Fund
Chicago, IL 60606 CLASS I (from 1990 to 1994).
o CAROLE E. STONE Director, Chicago Board Options Exchange
6/28/47 2007 (since 2006); Chair New York Racing Association
333 West Wacker Board member ANNUAL OR 182 Oversight Board (since 2005); Commissioner, New York
Drive Chicago, CLASS I State Commission on Public Authority Reform
IL 60606 (since 2005); formerly Director, New York State
Division of the Budget (2000-2004), Chair, Public
Authorities Control Board (2000-2004) and Director,
Local Government Assistance Corporation (2000-2004).
107
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NAME, POSITION(S) HELD YEAR FIRST NUMBER PRINCIPAL
BIRTHDATE WITH THE FUNDS ELECTED OR OF PORTFOLIOS OCCUPATION(S)
AND ADDRESS APPOINTED(4) IN FUND COMPLEX DURING PAST 5 YEARS
OVERSEEN
BY OFFICER
-----------------------------------------------------------------------------------------------------------------------------------
OFFICERS OF THE FUND:
o GIFFORD R. ZIMMERMAN Managing Director (since 2002), Assistant Secretary
9/9/56 Chief and Associate General Counsel, formerly, Vice
333 W. Wacker Drive Administrative 1988 182 President and Assistant General Counsel, of Nuveen
Chicago, IL 60606 Investments, LLC; Managing Director (since 2002),
Associate General Counsel and Assistant Secretary,
of Nuveen Asset Management; Vice President and
Assistant Secretary of NWQ Investment Management
Company, LLC. (since 2002), Nuveen Investments
Advisers Inc. (since 2002), Symphony Asset
Management LLC, and NWQ Investment Management
Company, LLC (since 2003), Tradewinds Global
Investors, LLC, and Santa Barbara Asset Management,
LLC (since 2006); Nuveen HydePark Group LLC and
Richards & Tierney, Inc. (since 2007); Managing
Director, Associate General Counsel and Assistant
Secretary of Rittenhouse Asset Management, Inc.
(since 2003); Managing Director (since 2004) and
Assistant Secretary (since 1994) of Nuveen
Investments, Inc., Assistant Secretary (since 2003)
of Symphony Asset Management LLC.
o WILLIAMS ADAMS IV Executive Vice President, U.S. Structured Products
6/9/55 of Nuveen Investments, LLC, (since 1999), prior
333 West Wacker Drive Vice President 2007 120 thereto, Managing Director of Structured
Chicago, IL 60606 Investments.
o JULIA L. ANTONATOS Managing Director (since 2005), formerly Vice
9/22/63 President (since 2002) of Nuveen Investments, LLC;
333 W. Wacker Drive Vice President 2004 182 Chartered Financial Analyst.
Chicago, IL 60606
o CEDRIC H. ANTOSIEWICZ Managing Director, (since 2004) previously, Vice
1/11/62 President (1993-2004) of Nuveen Investments, LLC.
333 W. Wacker Drive Vice President 2007 120
Chicago, IL 60606
o MICHAEL T. ATKINSON Vice President (since 2002) of Nuveen Investments,
2/3/66 Vice President LLC.
333 W. Wacker Drive and Assistant 2000 182
Chicago, IL 60606 Secretary
o PETER H. D'ARRIGO Vice President and Treasurer of Nuveen Investments,
11/28/67 LLC and Nuveen Investments, Inc.; Vice President
333 W. Wacker Drive Vice President 1999 182 and Treasurer of Nuveen Asset Management
Chicago, IL 60606 (since 2002), Nuveen Investments Advisers Inc.
(since 2002); NWQ Investment Management Company,
LLC. (since 2002); Rittenhouse Asset Management,
Inc. (since 2003), Tradewinds NWQ Global Investors,
LLC (since 2006), Santa Barbara Asset Management,
LLC (since 2006) and Nuveen HydePark Group, LLC and
Richards & Tierney, Inc. (since 2007); Treasurer of
Symphony Asset Management LLC (since 2003);
formerly, Vice President and Treasurer (1999-2004)
of Nuveen Advisory Corp. and Nuveen Institutional
Advisory Corp.(3), Chartered Financial Analyst.
o LORNA C. FERGUSON Managing Director (since 2004), formerly, Vice
10/24/45 President of Nuveen Investments, LLC, Managing
333 W. Wacker Drive Vice President 1998 182 Director (2004) formerly, Vice President (1998-2004)
Chicago, IL 60606 of Nuveen Advisory Corp. and Nuveen Institutional
Advisory Corp.(3); Managing Director (since 2005)
of Nuveen Asset Management.
o WILLIAM M. FITZGERALD Managing Director (since 2002), formerly, Vice
3/2/64 President of Nuveen Investments, LLC; Managing
333 W. Wacker Drive Vice President 1995 182 Director (1997-2004) of Nuveen Advisory Corp. and
Chicago, IL 60606 Nuveen Institutional Advisory Corp.(3); Managing
Director (since 2001) of Nuveen Asset Management;
Vice President (since 2002) of Nuveen Investments
Advisers Inc.; Chartered Financial Analyst.
108
-----------------------------------------------------------------------------------------------------------------------------------
NAME, POSITION(S) HELD YEAR FIRST NUMBER PRINCIPAL
BIRTHDATE WITH THE FUNDS ELECTED OR OF PORTFOLIOS OCCUPATION(S)
AND ADDRESS APPOINTED(4) IN FUND COMPLEX DURING PAST 5 YEARS
OVERSEEN
BY OFFICER
-----------------------------------------------------------------------------------------------------------------------------------
OFFICERS OF THE FUND:
o STEPHEN D. FOY Vice President (since 1993) and Funds Controller
5/31/54 Vice President (since 1998) of Nuveen Investments, LLC; formerly,
333 W. Wacker Drive and Controller 1998 182 Vice President and Funds Controller (1998-2004) of
Chicago, IL 60606 Nuveen Investments, Inc.; Certified Public
Accountant.
o WALTER M. KELLY Vice President (since 2006) formerly, Assistant
2/24/70 Chief Compliance Vice President and Assistant General Counsel
333 West Wacker Drive Officer and 2003 182 (2003-2006) of Nuveen Investments, LLC; Assistant
Chicago, IL 60606 Vice President Vice President and Assistant Secretary of the
Nuveen Funds (2003-2006); previously, Associate
(2001-2003) at the law firm of Vedder, Price,
Kaufman & Kammholz.
o DAVID J. LAMB Vice President (since 2000) of Nuveen Investments,
3/22/63 LLC; Certified Public Accountant.
333 W. Wacker Drive Vice President 2000 182
Chicago, IL 60606
o TINA M. LAZAR Vice President of Nuveen Investments, LLC
8/27/61 (since 1999).
333 W. Wacker Drive Vice President 2002 182
Chicago, IL 60606
o LARRY W. MARTIN Vice President, Assistant Secretary and Assistant
7/27/51 Vice President General Counsel of Nuveen Investments, LLC;
333 W. Wacker Drive and Assistant 1988 182 formerly, Vice President and Assistant Secretary of
Chicago, IL 60606 Secretary Nuveen Advisory Corp. and Nuveen Institutional
Advisory Corp.(3); Vice President (since 2005) and
Assistant Secretary of Nuveen Investments, Inc.;
Vice President (since 2005) and Assistant Secretary
(since 1997) of Nuveen Asset Management; Vice
President (since 2000), Assistant Secretary and
Assistant General Counsel (since 1998) of
Rittenhouse Asset Management, Inc.; Vice President
and Assistant Secretary of Nuveen Investments
Advisers Inc. (since 2002); NWQ Investment
Management Company, LLC (since 2002), Symphony
Asset Management LLC (since 2003), Tradewinds
Global Investors, LLC, Santa Barbara Asset
Management LLC (since 2006) and of Nuveen HydePark
Group, LLC and Richards & Tierney, Inc. (since
2007).
o KEVIN J. MCCARTHY Vice President, Nuveen Investments, LLC
3/26/66 Vice President (since 2007); Vice President, and Assistant
333 W. Wacker Drive and Secretary 2007 182 Secretary, Nuveen Asset Management, Rittenhouse
Chicago, IL 60606 Asset Management, Inc., Nuveen Investment Advisers
Inc., Nuveen Investment Institutional Services
Group LLC, NWQ Investment Management Company,
LLC, Tradewinds Global Investors LLC, NWQ Holdings,
LLC, Symphony Asset Management LLC, Santa Barbara
Asset Management LLC, Nuveen HydePark Group, LLC
and Richards & Tierney, Inc. (since 2007); Vice
President and Assistant General Counsel, Nuveen
Investments, Inc. (since 2007). prior thereto,
Partner, Bell, Boyd & Lloyd LLP (1997-2007).
o JOHN V. MILLER Managing Director (since 2007), formerly, Vice
4/10/67 President (2002-2007) of Nuveen Investments, LLC;
333 W. Wacker Drive Vice President 2007 182 Chartered Financial Analyst.
Chicago, IL 60606
o JAMES F. RUANE Vice President, Nuveen Investments since 2007;
7/3/62 Vice President Partner, prior thereto, Deloitte & Touche USA LLP
333 W. Wacker Drive and Assistant 2007 182 (since 2005), formerly, senior tax manager
Chicago, IL 60606 Secretary (since 2002); Certified Public Accountant.
(1) Mr. Schwertfeger is an "interested person" of the Funds, as defined in the
Investment Company Act of 1940, by reason of being the former Chairman and
Chief Executive Officer of Nuveen Investments, Inc. and having previously
served in various other capacities with Nuveen Investments, Inc. and its
subsidiaries. It is expected that Mr. Schwertfeger will resign from the
Board of Trustees by the end of the second quarter of 2008.
(2) For Dividend Advantage (NAD), Dividend Advantage 2 (NXZ) and Dividend
Advantage 3 (NZF), Board Members serve three year terms, except for two
board members who are elected by the holders of Preferred Shares. The
Board of Trustees for NAD, NXZ and NZF is divided into three classes,
Class I, Class II, and Class III, with each being elected to serve until
the third succeeding annual shareholders' meeting subsequent to its
election or thereafter in each case when its respective successors are
duly elected or appointed, except two board members are elected by the
holders of Preferred Shares to serve until the next annual shareholders'
meeting subsequent to its election or thereafter in each case when its
respective successors are duly elected or appointed. For Performance Plus
(NPP), Municipal Advantage (NMA) and Market Opportunity (NMO), the Board
Members serve a one year term to serve until the next annual meeting or
until their successors shall have been duly elected and qualified. The
first year elected or appointed represents the year in which the board
member was first elected or appointed to any fund in the Nuveen Complex.
(3) Nuveen Advisory Corp. and Nuveen Institutional Advisory Corp. were
reorganized into Nuveen Asset Management, effective January 1, 2005.
(4) Officers serve one year terms through July of each year. The year first
elected or appointed represents the year in which the Officer was first
elected or appointed to any fund in the Nuveen Complex.
109
--------------------------------------------------------------------------------
Annual Investment
Management Agreement
APPROVAL PROCESS
--------------------------------------------------------------------------------
The Board Members are responsible for overseeing the performance of the
investment adviser to the Funds and determining whether to continue the advisory
arrangements. At the annual review meeting held on May 21, 2007 (the "May
Meeting"), the Board Members of the Funds, including the Independent Board
Members, unanimously approved the continuance of the Investment Management
Agreement between each Fund (each, a "Fund") and Nuveen Asset Management
("NAM"). The foregoing Investment Management Agreements with NAM are hereafter
referred to as the "Original Investment Management Agreements."
Subsequent to the May Meeting, Nuveen Investments, Inc. ("Nuveen"), the parent
company of NAM, entered into a merger agreement providing for the acquisition of
Nuveen by Windy City Investments, Inc., a corporation formed by investors led by
Madison Dearborn Partners, LLC ("MDP"), a private equity investment firm (the
"Transaction"). Each Original Investment Management Agreement, as required by
Section 15 of the Investment Company Act of 1940 (the "1940 Act"), provides for
its automatic termination in the event of its "assignment" (as defined in the
1940 Act). Any change in control of the adviser is deemed to be an assignment.
The consummation of the Transaction will result in a change of control of NAM as
well as its affiliated sub-advisers and therefore cause the automatic
termination of each Original Investment Management Agreement, as required by the
1940 Act. Accordingly, in anticipation of the Transaction, at a meeting held on
July 31, 2007 (the "July Meeting"), the Board Members, including the Independent
Board Members, unanimously approved new Investment Management Agreements (the
"New Investment Management Agreements") with NAM on behalf of each Fund to take
effect immediately after the Transaction or shareholder approval of the new
advisory contracts, whichever is later. The 1940 Act also requires that each New
Investment Management Agreement be approved by the respective Fund's
shareholders in order for it to become effective. Accordingly, to ensure
continuity of advisory services, the Board Members, including the Independent
Board Members, unanimously approved Interim Investment Management Agreements to
take effect upon the closing of the Transaction if shareholders have not yet
approved the New Investment Management Agreements.
Because the information provided and considerations made at the annual review
continue to be relevant with respect to the evaluation of the New Investment
Management Agreements, the Board considered the foregoing as part of its
deliberations of the New Investment Management Agreements. Accordingly, as
indicated, the discussions immediately below outline the materials and
information presented to the Board in connection with the Board's prior annual
review and the analysis undertaken and the conclusions reached by Board Members
when determining to continue the Original Investment Management Agreements.
I. APPROVAL OF THE ORIGINAL INVESTMENT MANAGEMENT AGREEMENTS
During the course of the year, the Board received a wide variety of materials
relating to the services provided by NAM and the performance of the Funds. At
each of its quarterly meetings, the Board reviewed investment performance and
various matters relating to the operations of the Funds and other Nuveen funds,
including the compliance program, shareholder services, valuation, custody,
distribution and other information relating to the nature, extent and quality of
services provided by NAM. Between the regularly scheduled quarterly meetings,
the Board Members received information on particular matters as the need arose.
In preparation for their considerations at the May Meeting, the Independent
Board Members received extensive materials, well in advance of the meeting,
which outlined or are related to, among other things:
o the nature, extent and quality of services provided by NAM;
o the organization and business operations of NAM, including the
responsibilities of various departments and key personnel;
110
o each Fund's past performance as well as the Fund's performance compared to
funds with similar investment objectives based on data and information
provided by an independent third party and to customized benchmarks;
o the profitability of Nuveen and certain industry profitability analyses
for unaffiliated advisers;
o the expenses of Nuveen in providing the various services;
o the advisory fees and total expense ratios of each Fund, including
comparisons of such fees and expenses with those of comparable,
unaffiliated funds based on information and data provided by an
independent third party (the "Peer Universe") as well as compared to a
subset of funds within the Peer Universe (the "Peer Group") of the
respective Fund (as applicable);
o the advisory fees NAM assesses to other types of investment products or
clients;
o the soft dollar practices of NAM, if any; and
o from independent legal counsel, a legal memorandum describing among other
things, applicable laws, regulations and duties in reviewing and approving
advisory contracts.
At the May Meeting, NAM made a presentation to, and responded to questions from,
the Board. Prior to and after the presentations and reviewing the written
materials, the Independent Board Members met privately with their legal counsel
to review the Board's duties in reviewing advisory contracts and considering the
renewal of the advisory contracts. The Independent Board Members, in
consultation with independent counsel, reviewed the factors set out in judicial
decisions and Securities and Exchange Commission ("SEC") directives relating to
the renewal of advisory contracts. As outlined in more detail below, the Board
Members considered all factors they believed relevant with respect to each Fund,
including, but not limited to, the following: (a) the nature, extent and quality
of the services to be provided by NAM; (b) the investment performance of the
Fund and NAM; (c) the costs of the services to be provided and profits to be
realized by Nuveen and its affiliates; (d) the extent to which economies of
scale would be realized; and (e) whether fee levels reflect those economies of
scale for the benefit of the Fund's investors. In addition, as noted, the Board
Members met regularly throughout the year to oversee the Funds. In evaluating
the Original Investment Management Agreements, the Board Members also relied
upon their knowledge of NAM, its services and the Funds resulting from their
meetings and other interactions throughout the year. It is with this background
that the Board Members considered each Original Investment Management Agreement.
A. NATURE, EXTENT AND QUALITY OF SERVICES
In considering the renewal of the Original Investment Management Agreements, the
Board Members considered the nature, extent and quality of NAM's services. The
Board Members reviewed materials outlining, among other things, Nuveen's
organization and business; the types of services that NAM or its affiliates
provide and are expected to provide to the Funds; the performance record of the
applicable Fund (as described in further detail below); and, any initiatives
Nuveen had taken for the municipal fund product line. As noted, at the annual
review, the Board Members were already familiar with the organization,
operations and personnel of NAM due to the Board Members' experience in
governing the respective Funds and working with NAM on matters relating to the
Funds. With respect to personnel, the Board Members recognized NAM's investment
in additional qualified personnel throughout the various groups in the
organization and recommended to NAM that it continue to review staffing needs as
necessary. In addition, the Board Members reviewed materials describing the
current status and, in particular, the developments in 2006 with respect to
NAM's investment process, investment strategies (including additional tools used
in executing such strategies), personnel (including portfolio management and
research teams), trading process, hedging activities, risk management operations
(e.g., reviewing credit quality, duration limits, and derivatives use, as
applicable), and investment operations (such as enhancements to trading
procedures, pricing procedures, and client services). The Board Members
recognized NAM's investment of resources and efforts to continue to enhance and
refine its investment process.
111
| ANNUAL INVESTMENT MANAGEMENT AGREEMENT
| APPROVAL PROCESS (continued)
In addition to advisory services, the Independent Board Members considered the
quality of administrative and non-advisory services provided by NAM and noted
that NAM and its affiliates provide the Funds with a wide variety of services
and officers and other personnel as are necessary for the operations of the
Funds, including:
o product management;
o fund administration;
o oversight by shareholder services and other fund service providers;
o administration of Board relations;
o regulatory and portfolio compliance; and
o legal support.
As the Funds operate in a highly regulated industry and given the importance of
compliance, the Board Members considered, in particular, Nuveen's compliance
activities for the Funds and enhancements thereto. In this regard, the Board
Members recognized the quality of Nuveen's compliance team. The Board Members
further noted Nuveen's negotiations with other service providers and the
corresponding reduction in certain service providers' fees at the May Meeting.
In addition to the foregoing services, the Board Members also noted the
additional services that NAM or its affiliates provide to Nuveen's closed-end
funds, including, in particular, its secondary market support activities. The
Board Members recognized Nuveen's continued commitment to supporting the
secondary market for the common shares of its closed-end funds through a variety
of programs designed to raise investor and analyst awareness and understanding
of closed-end funds. These efforts include:
o maintaining shareholder communications;
o providing advertising for the Nuveen closed-end funds;
o maintaining its closed-end fund website;
o maintaining continual contact with financial advisers;
o providing educational symposia;
o conducting research with investors and financial analysis regarding
closed-end funds; and
o evaluating secondary market performance.
With respect to the Nuveen closed-end funds that utilize leverage through the
issuance of preferred shares ("Preferred Shares"), the Board Members noted
Nuveen's continued support for the holders of Preferred Shares by, among other
things:
o maintaining an in-house trading desk;
o maintaining a product manager for the Preferred Shares;
o developing distribution for Preferred Shares with new market participants;
o maintaining an orderly auction process;
o managing leverage and risk management of leverage; and
o maintaining systems necessary to test compliance with rating agency
criteria.
Based on their review, the Board Members found that, overall, the nature, extent
and quality of services provided (and expected to be provided) to the respective
Funds under the Original Investment Management Agreements were satisfactory.
112
B. THE INVESTMENT PERFORMANCE OF THE FUNDS AND NAM
At the May Meeting, the Board considered the investment performance for each
Fund, including the Fund's historic performance as well as its performance
compared to funds with similar investment objectives (the "Performance Peer
Group") based on data provided by an independent third party (as described
below). The Board Members also reviewed the respective Fund's portfolio level
performance (which does not reflect fund level fees and expenses, and leverage)
against customized benchmarks, described in further detail below.
In evaluating the performance information during the annual review at the May
Meeting, in certain instances, the Board Members noted that the closest
Performance Peer Group for a fund may not adequately reflect such fund's
investment objectives and strategies, thereby limiting the usefulness of the
comparisons of such fund's performance with that of the Performance Peer Group.
With respect to state-specific municipal funds, the Board Members also
recognized that certain funds do not have a corresponding state-specific
Performance Peer Group in which case their performance is measured against a
more general municipal category for various states. With respect to municipal
closed-end funds, funds that do not have corresponding state-specific
Performance Peer Groups are from states other than New York, California,
Florida, New Jersey, Michigan and Pennsylvania. However, with respect to funds
based in Florida, New Jersey, Michigan and Pennsylvania, the peer group may be
so small or the Nuveen funds may dominate the category to such an extent that
performance information for such funds was also compared to the more general
category for all states (other than New York and California).
The Board Members reviewed performance information including, among other
things, total return information compared with the Fund's Performance Peer Group
for the one-, three- and five-year periods (as applicable) ending December 31,
2006. The Board Members also reviewed the Fund's portfolio level performance
(which does not reflect fund level fees and expenses, and leverage) compared to
customized portfolio level benchmarks for the one- and three-year periods ending
December 31, 2006 (as applicable). The analysis was used to assess the efficacy
of investment decisions against appropriate measures of risk and total return,
within specific market segments. This information supplemented the Fund
performance information provided to the Board at each of its quarterly meetings.
Based on their review, the Board Members determined that each Fund's investment
performance over time had been satisfactory, subject to the following. With
respect to various municipal closed-end funds, the Board Members noted relative
total return underperformance in recent years compared to peers. The Board
Members reviewed materials and discussed with NAM the factors contributing to
the shift in performance including, among other things, the degree of risk
undertaken by peers compared to the municipal closed-end funds (such as through
the increased use of leverage or taking concentrated positions in high risk
credits). In addition, the Board Members also considered a fund's dividend
performance and the extent of any secondary market discounts. The Board Members
noted NAM's efforts to evaluate the factors affecting performance and determine
whether modification to a fund's investment strategy is necessary or
appropriate, and concluded that they were satisfied with the steps being taken.
C. FEES, EXPENSES AND PROFITABILITY
1. FEES AND EXPENSES
During the annual review, in evaluating the management fees and expenses
of a Fund, the Board reviewed, among other things, the Fund's advisory
fees (net and gross management fees) and total expense ratios (before and
after expense reimbursements and/or waivers) in absolute terms as well as
comparisons to the gross management fees (before waivers), net management
fees (after waivers) and total expense ratios (before and after waivers)
of comparable funds in the Peer Universe and the Peer Group. In reviewing
the fee schedule for a Fund, the Board Members considered the fund-level
and complex-wide breakpoint schedules (described in further detail below)
and any fee waivers and reimbursements provided by Nuveen (applicable, in
particular, for certain funds launched since 1999). The Board Members
further reviewed data regarding the construction of Peer Groups as well as
the methods of measurement for the fee and expense analysis and the
performance analysis. In certain cases, due to the small number of peers
in the Peer Universe, the Peer Universe and Peer Group had significant
overlap or even consisted entirely of the same unaffiliated funds. In
reviewing the comparisons of fee and expense information, the Board
Members recognized that in certain cases, the fund size relative to peers,
the small size and odd composition of the Peer Group (including
differences
113
| ANNUAL INVESTMENT MANAGEMENT AGREEMENT
| APPROVAL PROCESS (continued)
in objectives and strategies), expense anomalies, timing of information
used or other factors impacting the comparisons thereby limited some of
the usefulness of the comparative data. The Board Members also considered
the differences in the use of leverage. Based on their review of the fee
and expense information provided, the Board Members determined that each
Fund's net total expense ratio was within an acceptable range compared to
peers.
2. COMPARISONS WITH THE FEES OF OTHER CLIENTS
At the annual review, the Board Members further reviewed data comparing
the advisory fees of NAM with fees NAM charges to other clients. With
respect to municipal funds, such clients include NAM's municipal
separately managed accounts. In general, the advisory fees charged for
separate accounts are somewhat lower than the advisory fees assessed to
the Funds. The Board Members considered the differences in the product
types, including, but not limited to, the services provided, the structure
and operations, product distribution and costs thereof, portfolio
investment policies, investor profiles, account sizes and regulatory
requirements. The Board Members noted, in particular, that the range of
services provided to the Funds (as discussed above) is much more extensive
than that provided to separately managed accounts. As described in further
detail above, such additional services include, but are not limited to:
product management, fund administration, oversight of third party service
providers, administration of Board relations, and legal support. The Board
Members noted that the Funds operate in a highly regulated industry
requiring extensive compliance functions compared to other investment
products. Given the inherent differences in the products, particularly the
extensive services provided to the Funds, the Board Members believe such
facts justify the different levels of fees.
3. PROFITABILITY OF NUVEEN
In conjunction with its review of fees, the Board Members also considered
the profitability of Nuveen for its advisory activities (which
incorporated Nuveen's wholly-owned affiliated sub-advisers) and its
financial condition. At the annual review, the Board Members reviewed the
revenues and expenses of Nuveen's advisory activities for the last three
years, the allocation methodology used in preparing the profitability data
as well as the 2006 Annual Report for Nuveen. The Board Members noted this
information supplemented the profitability information requested and
received during the year to help keep them apprised of developments
affecting profitability (such as changes in fee waivers and expense
reimbursement commitments). In this regard, the Board Members noted the
enhanced dialogue and information regarding profitability with NAM during
the year, including more frequent meetings and updates from Nuveen's
corporate finance group. The Board Members also reviewed data comparing
Nuveen's profitability with other fund sponsors prepared by three
independent third party service providers as well as comparisons of the
revenues, expenses and profit margins of various unaffiliated management
firms with similar amounts of assets under management prepared by Nuveen.
In reviewing profitability, the Board Members recognized the subjective
nature of determining profitability which may be affected by numerous
factors, including the allocation of expenses. Further, the Board Members
recognized the difficulties in making comparisons as the profitability of
other advisers generally is not publicly available and the profitability
information that is available for certain advisers or management firms may
not be representative of the industry and may be affected by, among other
things, the adviser's particular business mix, capital costs, types of
funds managed and expense allocations.
Notwithstanding the foregoing, the Board Members reviewed Nuveen's methodology
and assumptions for allocating expenses across product lines to determine
profitability. Last year, the Board Members also designated an Independent Board
Member as a point person for the Board to review the methodology determinations
during the year and any refinements thereto, which relevant information produced
from such process was reported to the full Board. In reviewing profitability,
the Board Members recognized Nuveen's increased investment in its fund business.
Based on its review, the Board Members concluded that Nuveen's level of
profitability for its advisory activities was reasonable in light of the
services provided.
In evaluating the reasonableness of the compensation, the Board Members also
considered other amounts paid to NAM by the Funds as well as any indirect
benefits (such as soft dollar arrangements, if any) NAM and its affiliates
receive, or are expected to receive, that are directly attributable to the
management of the
114
Funds, if any. See Section E below for additional information on indirect
benefits NAM may receive as a result of its relationship with the Funds. Based
on their review of the overall fee arrangements of each Fund, the Board Members
determined that the advisory fees and expenses of the Funds were reasonable.
D. ECONOMIES OF SCALE AND WHETHER FEE LEVELS REFLECT THESE ECONOMIES OF SCALE
With respect to economies of scale, the Board Members recognized the potential
benefits resulting from the costs of a Fund being spread over a larger asset
base. To help ensure the shareholders share in these benefits, the Board Members
reviewed and considered the breakpoints in the advisory fee schedules that
reduce advisory fees. In addition to advisory fee breakpoints, the Board also
approved a complex-wide fee arrangement in 2004. Pursuant to the complex-wide
fee arrangement, the fees of the funds in the Nuveen complex, including the
Funds, are reduced as the assets in the fund complex reach certain levels. In
evaluating the complex-wide fee arrangement, the Board Members noted that the
last complex-wide asset level breakpoint for the complex-wide fee schedule was
at $91 billion and that the Board Members anticipated further review and/or
negotiations prior to the assets of the Nuveen complex reaching such threshold.
Based on their review, the Board Members concluded that the breakpoint schedule
and complex-wide fee arrangement were acceptable and desirable in providing
benefits from economies of scale to shareholders, subject to further evaluation
of the complex-wide fee schedule as assets in the complex increase. See Section
II, Paragraph D - "Approval of the New Investment Management Agreements -
Economies of Scale and Whether Fee Levels Reflect These Economies of Scale" for
information regarding subsequent modifications to the complex-wide fee.
E. INDIRECT BENEFITS
In evaluating fees, the Board Members also considered any indirect benefits or
profits NAM or its affiliates may receive as a result of its relationship with
each Fund. With respect to closed-end funds, the Board Members considered the
revenues received by affiliates of NAM for serving as agent at Nuveen's
preferred trading desk and for serving as a co-manager in the initial public
offering of new closed-end exchange traded funds.
In addition to the above, the Board Members considered whether NAM received any
benefits from soft dollar arrangements whereby a portion of the commissions paid
by a Fund for brokerage may be used to acquire research that may be useful to
NAM in managing the assets of the Funds and other clients. With respect to NAM,
the Board Members noted that NAM does not currently have any soft dollar
arrangements; however, to the extent certain bona fide agency transactions that
occur on markets that traditionally trade on a principal basis and riskless
principal transactions are considered as generating "commissions," NAM intends
to comply with the applicable safe harbor provisions.
Based on their review, the Board Members concluded that any indirect benefits
received by NAM as a result of its relationship with the Funds were reasonable
and within acceptable parameters.
F. OTHER CONSIDERATIONS
The Board Members did not identify any single factor discussed previously as
all-important or controlling in their considerations to continue an advisory
contract. The Board Members, including the Independent Board Members,
unanimously concluded that the terms of the Original Investment Management
Agreements are fair and reasonable, that NAM's fees are reasonable in light of
the services provided to each Fund and that the renewal of the Original
Investment Management Agreements be approved.
II. APPROVAL OF THE NEW INVESTMENT MANAGEMENT AGREEMENTS
Following the May Meeting, the Board Members were advised of the potential
Transaction. As noted above, the completion of the Transaction would terminate
each of the Original Investment Management Agreements. Accordingly, at the July
Meeting, the Board of each Fund, including the Independent Board Members,
unanimously approved the New Investment Management Agreements on behalf of the
respective Funds. Leading up to the July Meeting, the Board Members had several
meetings and deliberations with and without Nuveen management present, and with
the advice of legal counsel, regarding the proposed Transaction as outlined
below.
On June 8, 2007, the Board Members held a special telephonic meeting to discuss
the proposed Transaction. At that meeting, the Board Members established a
special ad hoc committee comprised solely of Independent Board Members to focus
on the Transaction and to keep the Independent Board Members
115
| ANNUAL INVESTMENT MANAGEMENT AGREEMENT
| APPROVAL PROCESS (continued)
updated with developments regarding the Transaction. On June 15, 2007, the ad
hoc committee discussed with representatives of NAM the Transaction and
modifications to the complex-wide fee schedule that would generate additional
fee savings at specified levels of complex-wide asset growth. Following the
foregoing meetings and several subsequent telephonic conferences among
Independent Board Members and independent counsel, and between Independent Board
Members and representatives of Nuveen, the Board met on June 18, 2007 to further
discuss the proposed Transaction. Immediately prior to and then again during the
June 18, 2007 meeting, the Independent Board Members met privately with their
independent legal counsel. At that meeting, the Board met with representatives
of MDP, of Goldman Sachs, Nuveen's financial adviser in the Transaction, and of
the Nuveen Board to discuss, among other things, the history and structure of
MDP, the terms of the proposed Transaction (including the financing terms), and
MDP's general plans and intentions with respect to Nuveen (including with
respect to management, employees, and future growth prospects). On July 9, 2007,
the Board also met to be updated on the Transaction as part of a special
telephonic Board meeting. The Board Members were further updated at a special
in-person Board meeting held on July 19, 2007 (one Independent Board Member
participated telephonically). Subsequently, on July 27, 2007, the ad hoc
committee held a telephonic conference with representatives of Nuveen and MDP to
further discuss, among other things, the Transaction, the financing of the
Transaction, retention and incentive plans for key employees, the effect of
regulatory restrictions on transactions with affiliates after the Transaction,
and current volatile market conditions and their impact on the Transaction.
In connection with their review of the New Investment Management Agreements, the
Independent Board Members, through their independent legal counsel, also
requested in writing and received additional information regarding the proposed
Transaction and its impact on the provision of services by NAM and its
affiliates.
The Independent Board Members received, well in advance of the July Meeting,
materials which outlined, among other things:
o the structure and terms of the Transaction, including MDP's co-investor
entities and their expected ownership interests, and the financing
arrangements that will exist for Nuveen following the closing of the
Transaction;
o the strategic plan for Nuveen following the Transaction;
o the governance structure for Nuveen following the Transaction;
o any anticipated changes in the operations of the Nuveen funds following
the Transaction, including changes to NAM's and Nuveen's day-to-day
management, infrastructure and ability to provide advisory, distribution
or other applicable services to the Funds;
o any changes to senior management or key personnel who work on Fund related
matters (including portfolio management, investment oversight, and
legal/compliance) and any retention or incentive arrangements for such
persons;
o any anticipated effect on each Fund's expense ratio (including advisory
fees) following the Transaction;
o any benefits or undue burdens imposed on the Funds as a result of the
Transaction;
o any legal issues for the Funds as a result of the Transaction;
o the nature, quality and extent of services expected to be provided to the
Funds following the Transaction, changes to any existing services and
policies affecting the Funds, and cost-cutting efforts, if any, that may
impact such services or policies;
o any conflicts of interest that may arise for Nuveen or MDP with respect to
the Funds;
o the costs associated with obtaining necessary shareholder approvals and
who would bear those costs; and
o from legal counsel, a memorandum describing the applicable laws,
regulations and duties in approving advisory contracts, including, in
particular, with respect to a change of control.
116
Immediately preceding the July Meeting, representatives of MDP met with the
Board to further respond to questions regarding the Transaction. After the
meeting with MDP, the Independent Board Members met with independent legal
counsel in executive session. At the July Meeting, Nuveen also made a
presentation and responded to questions. Following the presentations and
discussions of the materials presented to the Board, the Independent Board
Members met again in executive session with their counsel. As outlined in more
detail below, the Independent Board Members considered all factors they believed
relevant with respect to each Fund, including the impact that the Transaction
could be expected to have on the following: (a) the nature, extent and quality
of services to be provided; (b) the investment performance of the Funds; (c) the
costs of the services and profits to be realized by Nuveen and its affiliates;
(d) the extent to which economies of scale would be realized; and (e) whether
fee levels reflect those economies of scale for the benefit of investors. As
noted above, the Board Members had completed their annual review of the
respective Original Investment Management Agreements at the May Meeting and many
of the factors considered at the annual review were applicable to their
evaluation of the New Investment Management Agreements. Accordingly, in
evaluating the New Investment Management Agreements, the Board Members relied
upon their knowledge and experience with NAM and considered the information
received and their evaluations and conclusions drawn at the annual review. While
the Board reviewed many Nuveen funds at the July Meeting, the Independent Board
Members evaluated all information available to them on a fund-by-fund basis, and
their determinations were made separately in respect of each Fund.
A. NATURE, EXTENT AND QUALITY OF SERVICES
In evaluating the nature, quality and extent of the services expected to be
provided by NAM under the New Investment Management Agreements, the Independent
Board Members considered, among other things, the expected impact, if any, of
the Transaction on the operations, facilities, organization and personnel of
NAM; the potential implications of regulatory restrictions on the Funds
following the Transaction; the ability of NAM and its affiliates to perform
their duties after the Transaction; and any anticipated changes to the current
investment and other practices of the Funds.
The Board noted that the terms of each New Investment Management Agreement,
including the fees payable thereunder, are substantially identical to those of
the Original Investment Management Agreement relating to the same Fund (with
both reflecting reductions to fee levels in the complex-wide fee schedule for
complex-wide assets in excess of $80 billion that have an effective date of
August 20, 2007). The Board considered that the services to be provided and the
standard of care under the New Investment Management Agreements are the same as
the Original Investment Management Agreements. The Board Members further noted
that key personnel who have responsibility for the Funds in each area, including
portfolio management, investment oversight, fund management, fund operations,
product management, legal/compliance and board support functions, are expected
to be the same following the Transaction. The Board Members considered and are
familiar with the qualifications, skills and experience of such personnel. The
Board also considered certain information regarding anticipated retention or
incentive plans designed to retain key personnel. Further, the Board Members
noted that no changes to Nuveen's infrastructure or operations as a result of
the Transaction were anticipated other than potential enhancements as a result
of an expected increase in the level of investment in such infrastructure and
personnel. The Board noted MDP's representations that it does not plan to have a
direct role in the management of Nuveen, appointing new management personnel, or
directly impacting individual staffing decisions. The Board Members also noted
that there were not any planned "cost cutting" measures that could be expected
to reduce the nature, extent or quality of services. After consideration of the
foregoing, the Board Members concluded that no diminution in the nature, quality
and extent of services provided to the Funds and their shareholders is expected.
In addition to the above, the Board Members considered potential changes in the
operations of each Fund. In this regard, the Board Members considered the
potential effect of regulatory restrictions on the Funds' transactions with
future affiliated persons. During their deliberations, it was noted that, after
the Transaction, a subsidiary of Merrill Lynch is expected to have an ownership
interest in Nuveen at a level that will make Merrill Lynch an affiliated person
of Nuveen. The Board Members recognized that applicable law would generally
prohibit the Funds from engaging in securities transactions with Merrill Lynch
as principal, and would also impose restrictions on using Merrill Lynch for
agency transactions. They recognized that having MDP and Merrill Lynch as
affiliates may restrict the Nuveen funds' ability to invest in securities of
issuers controlled by MDP or issued by Merrill Lynch and its affiliates even if
not bought directly from MDP or Merrill
117
| ANNUAL INVESTMENT MANAGEMENT AGREEMENT
| APPROVAL PROCESS (continued)
Lynch as principal. They also recognized that various regulations may require
the Nuveen funds to apply investment limitations on a combined basis with
affiliates of Merrill Lynch. The Board Members considered information provided
by NAM regarding the potential impact on the Nuveen funds' operations as a
result of these regulatory restrictions. The Board Members considered, in
particular, the Nuveen funds that may be impacted most by the restricted access
to Merrill Lynch, including: municipal funds (particularly certain
state-specific funds), senior loan funds, taxable fixed income funds, preferred
security funds and funds that heavily use derivatives. The Board Members
considered such funds' historic use of Merrill Lynch as principal in their
transactions and information provided by NAM regarding the expected impact
resulting from Merrill Lynch's affiliation with Nuveen and available measures
that could be taken to minimize such impact. NAM informed the Board Members
that, although difficult to determine with certainty, its management did not
believe that MDP's or Merrill Lynch's status as an affiliate of Nuveen would
have a material adverse effect on any Nuveen fund's ability to pursue its
investment objectives and policies.
In addition to the regulatory restrictions considered by the Board, the Board
Members also considered potential conflicts of interest that could arise between
the Nuveen funds and various parties to the Transaction and discussed possible
ways of addressing such conflicts.
Based on its review along with its considerations regarding services at the
annual review, the Board concluded that the Transaction was not expected to
adversely affect the nature, quality or extent of services provided by NAM and
that the expected nature, quality and extent of such services supported approval
of the New Investment Management Agreements.
B. PERFORMANCE OF THE FUNDS
With respect to the performance of the Funds, the Board considered that the
portfolio management personnel responsible for the management of the Funds'
portfolios were expected to continue to manage the portfolios following the
completion of the Transaction.
In addition, the Board Members recently reviewed Fund performance at the May
Meeting, as described above, and determined that Fund performance was
satisfactory or better, subject to the following. With respect to certain
municipal closed-end funds with relative short-term underperformance, the Board
Members concluded NAM was taking steps to evaluate the factors affecting
performance and those steps would continue following the Transaction. Further,
the investment policies and strategies were not expected to change as a result
of the Transaction.
In light of the foregoing factors, along with the prior findings regarding
performance at the annual review, the Board concluded that its findings with
respect to performance supported approval of the New Investment Management
Agreements.
C. FEES, EXPENSES AND PROFITABILITY
As described in more detail above, during the annual review, the Board Members
considered, among other things, the management fees and expenses of the Funds,
the breakpoint schedules, and comparisons of such fees and expenses with peers.
At the annual review, the Board Members determined that the respective Fund's
advisory fees and expenses were reasonable. In evaluating the costs of services
to be provided by NAM under the New Investment Management Agreements and the
profitability of Nuveen for its advisory activities, the Board Members
considered their prior conclusions at the annual review and whether the
management fees or other expenses would change as a result of the Transaction.
As described above, the investment management fee is composed of two
components--a fund-level component and complex-wide level component. The fee
schedule under the New Investment Management Agreements to be paid to NAM is
identical to that under the Original Investment Management Agreements, including
the modified complex-wide fee schedule. As noted above, the Board recently
approved a modified complex-wide fee schedule that would generate additional fee
savings on complex-wide assets above $80 billion. The modifications have an
effective date of August 20, 2007 and are part of the Original Investment
Management Agreements. Accordingly, the terms of the complex-wide component
under the New Investment Management Agreements are the same as under the
Original Investment Management Agreements. The Board Members also noted that
Nuveen has committed for a period of two years from the
118
date of closing of the Transaction that it will not increase gross management
fees for any Nuveen fund and will not reduce voluntary expense reimbursement
levels for any Nuveen fund from their currently scheduled prospective levels.
Based on the information provided, the Board Members did not expect that overall
Fund expenses would increase as a result of the Transaction.
In addition, the Board Members considered that additional fund launches were
anticipated after the Transaction which would result in an increase in total
assets under management in the complex and a corresponding decrease in overall
management fees under the complex-wide fee schedule. Taking into consideration
the Board's prior evaluation of fees and expenses at the annual renewal, and the
modification to the complex-wide fee schedule, the Board determined that the
management fees and expenses were reasonable.
While it is difficult to predict with any degree of certainty the impact of the
Transaction on Nuveen's profitability, at the recent annual review, the Board
Members were satisfied that Nuveen's level of profitability for its advisory
activities was reasonable. During the year, the Board Members had noted the
enhanced dialogue regarding profitability and the appointment of an Independent
Board Member as a point person to review methodology determinations and
refinements in calculating profitability. Given their considerations at the
annual review and the modifications to the complex-wide fee schedule, the Board
Members were satisfied that Nuveen's level of profitability for its advisory
activities continues to be reasonable.
D. ECONOMIES OF SCALE AND WHETHER FEE LEVELS REFLECT THESE ECONOMIES OF SCALE
The Board Members have been cognizant of economies of scale and the potential
benefits resulting from the costs of a Fund being spread over a larger asset
base. To help ensure that shareholders share in the benefits derived from
economies of scale, the Board adopted the complex-wide fee arrangement in 2004.
At the May Meeting, the Board Members reviewed the complex-wide fee arrangements
and noted that additional negotiations may be necessary or appropriate as the
assets in the complex approached the $91 billion threshold. In light of this
assessment coupled with the upcoming Transaction, at the June 15, 2007 meeting,
the ad hoc committee met with representatives of Nuveen to further discuss
modifications to the complex-wide fee schedule that would generate additional
savings for shareholders as the assets of the complex grow. The proposed terms
for the complex-wide fee schedule are expressed in terms of targeted cumulative
savings at specified levels of complex-wide assets, rather than in terms of
targeted marginal complex-wide fee rates. Under the modified schedule, the
schedule would generate additional fee savings beginning at complex-wide assets
of $80 billion in order to achieve targeted cumulative annual savings at $91
billion of $28 million on a complex-wide level (approximately $0.6 million
higher than those generated under the then current schedule) and generate
additional fee savings for asset growth above complex-wide assets of $91 billion
in order to achieve targeted annual savings at $125 billion of assets of
approximately $50 million on a complex-wide level (approximately $2.2 million
higher annually than that generated under the then current schedule). At the
July Meeting, the Board approved the modified complex-wide fee schedule for the
Original Investment Management Agreements and these same terms will apply to the
New Investment Management Agreements. Accordingly, the Board Members believe
that the breakpoint schedules and revised complex-wide fee schedule are
appropriate and desirable in ensuring that shareholders participate in the
benefits derived from economies of scale.
E. INDIRECT BENEFITS
During their recent annual review, the Board Members considered any indirect
benefits that NAM may receive as a result of its relationship with the Funds, as
described above. As the policies and operations of Nuveen are not anticipated to
change significantly after the Transaction, such indirect benefits should remain
after the Transaction. The Board Members further considered any additional
indirect benefits to be received by NAM or its affiliates after the Transaction.
The Board Members noted that other than benefits from its ownership interest in
Nuveen and indirect benefits from fee revenues paid by the Funds under the
management agreements and other Board-approved relationships, it was currently
not expected that MDP or its affiliates would derive any benefit from the Funds
as a result of the Transaction or transact any business with or on behalf of the
Funds (other than perhaps potential Fund acquisitions, in secondary market
transactions, of securities issued by MDP portfolio companies); or that Merrill
Lynch or its affiliates would derive any benefits from the Funds as a result of
the Transaction (noting that, indeed, Merrill Lynch would stand to experience
the discontinuation of principal transaction activity with the Nuveen funds and
likely would experience a noticeable reduction in the volume of agency
transactions with the Nuveen funds).
119
| ANNUAL INVESTMENT MANAGEMENT AGREEMENT
| APPROVAL PROCESS (continued)
F. OTHER CONSIDERATIONS
In addition to the factors above, the Board Members also considered the
following with respect to the Funds:
o Nuveen would rely on the provisions of Section 15(f) of the 1940 Act.
Section 15(f) provides, in substance, that when a sale of a controlling
interest in an investment adviser occurs, the investment adviser or any of
its affiliated persons may receive any amount or benefit in connection
with the sale so long as (i) during the three-year period following the
consummation of a transaction, at least 75% of the investment company's
board of directors must not be "interested persons" (as defined in the
1940 Act) of the investment adviser or predecessor adviser and (ii) an
"unfair burden" (as defined in the 1940 Act, including any interpretations
or no-action letters of the SEC) must not be imposed on the investment
company as a result of the transaction relating to the sale of such
interest, or any express or implied terms, conditions or understanding
applicable thereto. In this regard, to help ensure that an unfair burden
is not imposed on the Nuveen funds, Nuveen has committed for a period of
two years from the date of the closing of the Transaction (i) not to
increase gross management fees for any Nuveen fund; (ii) not to reduce
voluntary expense reimbursement levels for any Nuveen fund from their
currently scheduled prospective levels during that period; (iii) that no
Nuveen fund whose portfolio is managed by a Nuveen affiliate shall use
Merrill Lynch as a broker with respect to portfolio transactions done on
an agency basis, except as may be approved in the future by the Compliance
Committee of the Board; and (iv) that NAM shall not cause the Funds and
other municipal funds that NAM manages, as a whole, to enter into
portfolio transactions with or through the other minority owners of
Nuveen, on either a principal or an agency basis, to a significantly
greater extent than both what one would expect an investment team to use
such firm in the normal course of business, and what NAM has historically
done, without prior Board or Compliance Committee approval (excluding the
impact of proportionally increasing the use of such other "minority
owners" to fill the void necessitated by not being able to use Merrill
Lynch).
o The Funds would not incur any costs in seeking the necessary shareholder
approvals for the New Investment Management Agreements (except for any
costs attributed to seeking shareholder approvals of Fund specific matters
unrelated to the Transaction, such as approval of Board Members, in which
case a portion of such costs will be borne by the applicable Funds).
o The reputation, financial strength and resources of MDP.
o The long-term investment philosophy of MDP and anticipated plans to grow
Nuveen's business to the benefit of the Nuveen funds.
o The benefits to the Nuveen funds as a result of the Transaction including:
(i) as a private company, Nuveen may have more flexibility in making
additional investments in its business; (ii) as a private company, Nuveen
may be better able to structure compensation packages to attract and
retain talented personnel; (iii) as certain of Nuveen's distribution
partners are expected to be equity or debt investors in Nuveen, Nuveen may
be able to take advantage of new or enhanced distribution arrangements
with such partners; and (iv) MDP's experience, capabilities and resources
that may help Nuveen identify and acquire investment teams or firms and
finance such acquisitions.
o The historic premium and discount levels at which the shares of the Nuveen
funds have traded at specified dates with particular focus on the premiums
and discounts after the announcement of the Transaction, taking into
consideration recent volatile market conditions and steps or initiatives
considered or undertaken by NAM to address discount levels.
120
G. CONCLUSION
The Board Members did not identify any single factor discussed previously as
all-important or controlling. The Board Members, including the Independent Board
Members, unanimously concluded that the terms of the New Investment Management
Agreements are fair and reasonable, that the fees therein are reasonable in
light of the services to be provided to each Fund and that the New Investment
Management Agreements should be approved and recommended to shareholders.
III. APPROVAL OF INTERIM CONTRACTS
As noted above, at the July Meeting, the Board Members, including the
Independent Board Members, unanimously approved the Interim Investment
Management Agreements. If necessary to assure continuity of advisory services,
the Interim Investment Management Agreements will take effect upon the closing
of the Transaction if shareholders have not yet approved the New Investment
Management Agreements. The terms of each Interim Investment Management Agreement
are substantially identical to those of the corresponding Original Investment
Management Agreement and New Investment Management Agreement, respectively,
except for certain term and escrow provisions. In light of the foregoing, the
Board Members, including the Independent Board Members, unanimously determined
that the scope and quality of services to be provided to the Funds under the
respective Interim Investment Management Agreement are at least equivalent to
the scope and quality of services provided under the applicable Original
Investment Management Agreement.
121
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Reinvest Automatically
EASILY and CONVENIENTLY
--------------------------------------------------------------------------------
NUVEEN MAKES REINVESTING EASY. A PHONE CALL IS ALL IT TAKES TO SET UP YOUR
REINVESTMENT ACCOUNT.
NUVEEN CLOSED-END FUNDS DIVIDEND REINVESTMENT PLAN
Your Nuveen Closed-End Fund allows you to conveniently reinvest dividends and/or
capital gains distributions in additional Fund shares.
By choosing to reinvest, you'll be able to invest money regularly and
automatically, and watch your investment grow through the power of tax-free
compounding. Just like dividends or distributions in cash, there may be times
when income or capital gains taxes may be payable on dividends or distributions
that are reinvested.
It is important to note that an automatic reinvestment plan does not ensure a
profit, nor does it protect you against loss in a declining market.
EASY AND CONVENIENT
To make recordkeeping easy and convenient, each month you'll receive a statement
showing your total dividends and distributions, the date of investment, the
shares acquired and the price per share, and the total number of shares you own.
HOW SHARES ARE PURCHASED
The shares you acquire by reinvesting will either be purchased on the open
market or newly issued by the Fund. If the shares are trading at or above net
asset value at the time of valuation, the Fund will issue new shares at the
greater of the net asset value or 95% of the then-current market price. If the
shares are trading at less than net asset value, shares for your account will be
purchased on the open market. If the Plan Agent begins purchasing Fund shares on
the open market while shares are trading below net asset value, but the Fund's
shares subsequently trade at or above their net asset value before the Plan
Agent is able to complete its purchases, the Plan Agent may cease open-market
purchases and may invest the uninvested portion of the distribution in
newly-issued Fund shares at a price equal to the greater of the shares' net
asset value or 95% of the shares' market value on the last business day
immediately prior to the purchase date. Dividends and distributions received to
purchase shares in the open market will normally be invested shortly after the
dividend payment date. No interest will be paid on dividends and distributions
awaiting reinvestment. Because the market price of the shares may increase
before purchases are completed, the average purchase price per share may exceed
the market price at the time of valuation, resulting in the acquisition of fewer
shares than if the dividend or distribution had been paid in shares issued by
the Fund. A pro rata portion of any applicable brokerage commissions on open
market purchases will be paid by Plan participants. These commissions usually
will be lower than those charged on individual transactions.
122
FLEXIBLE
You may change your distribution option or withdraw from the Plan at any time,
should your needs or situation change. Should you withdraw, you can receive a
certificate for all whole shares credited to your reinvestment account and cash
payment for fractional shares, or cash payment for all reinvestment account
shares, less brokerage commissions and a $2.50 service fee.
You can reinvest whether your shares are registered in your name, or in the name
of a brokerage firm, bank, or other nominee. Ask your investment advisor if his
or her firm will participate on your behalf. Participants whose shares are
registered in the name of one firm may not be able to transfer the shares to
another firm and continue to participate in the Plan.
The Fund reserves the right to amend or terminate the Plan at any time. Although
the Fund reserves the right to amend the Plan to include a service charge
payable by the participants, there is no direct service charge to participants
in the Plan at this time.
CALL TODAY TO START REINVESTING DIVIDENDS AND/OR DISTRIBUTIONS
For more information on the Nuveen Automatic Reinvestment Plan or to enroll in
or withdraw from the Plan, speak with your financial advisor or call us at (800)
257-8787.
123
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NOTES
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124
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NOTES
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125
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Glossary of
TERMS USED in this REPORT
--------------------------------------------------------------------------------
o AVERAGE ANNUAL TOTAL RETURN: This is a commonly used method to express an
investment's performance over a particular, usually multi-year time
period. It expresses the return that would have been necessary each year
to equal the investment's actual cumulative performance (including change
in NAV or market price and reinvested dividends and capital gains
distributions, if any) over the time period being considered.
o AVERAGE EFFECTIVE MATURITY: The average of the number of years to maturity
of the bonds in a Fund's portfolio, computed by weighting each bond's time
to maturity (the date the security comes due) by the market value of the
security. This figure does not account for the likelihood of prepayments
or the exercise of call provisions unless an escrow account has been
established to redeem the bond before maturity. The market value weighting
for an investment in an inverse floating rate security is the value of the
portfolio's residual interest in the inverse floating rate trust, and does
not include the value of the floating rate securities issued by the trust.
o INVERSE FLOATERS: Inverse floating rate securities are created by
depositing a municipal bond, typically with a fixed interest rate, into a
special purpose trust created by a broker-dealer. This trust, in turn, (a)
issues floating rate certificates typically paying short-term tax-exempt
interest rates to third parties in amounts equal to some fraction of the
deposited bond's par amount or market value, and (b) issues an inverse
floating rate certificate (sometimes referred to as an "inverse floater")
to an investor (such as a Fund) interested in gaining investment exposure
to a long-term municipal bond. The income received by the holder of the
inverse floater varies inversely with the short-term rate paid to the
floating rate certificates' holders, and in most circumstances the holder
of the inverse floater bears substantially all of the underlying bond's
downside investment risk. The holder of the inverse floater typically also
benefits disproportionately from any potential appreciation of the
underlying bond's value. Hence, an inverse floater essentially represents
an investment in the underlying bond on a leveraged basis.
o LEVERAGE-ADJUSTED DURATION: Duration is a measure of the expected period
over which a bond's principal and interest will be paid, and consequently
is a measure of the sensitivity of a bond's or bond Fund's value to
changes when market interest rates change. Generally, the longer a bond's
or Fund's duration, the more the price of the bond or Fund will change as
interest rates change. Leverage-adjusted duration takes into account the
leveraging process for a Fund and therefore is longer than the duration of
the Fund's portfolio of bonds.
o MARKET YIELD (ALSO KNOWN AS DIVIDEND YIELD OR CURRENT YIELD): An
investment's current annualized dividend divided by its current market
price.
o NET ASSET VALUE (NAV): A Fund's common share NAV per share is calculated
by subtracting the liabilities of the Fund (including any MuniPreferred
shares issued in order to leverage 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.
o TAXABLE-EQUIVALENT YIELD: The yield necessary from a fully taxable
investment to equal, on an after-tax basis, the yield of a municipal bond
investment.
o ZERO COUPON BOND: A zero coupon bond does not pay a regular interest
coupon to its holders during the life of the bond. Tax-exempt income to
the holder of the bond comes from accretion of the difference between the
original purchase price of the bond at issuance and the par value of the
bond at maturity and is effectively paid at maturity. The market prices of
zero coupon bonds generally are more volatile than the market prices of
bonds that pay interest periodically.
126
| Other Useful INFORMATION
QUARTERLY PORTFOLIO OF INVESTMENTS AND PROXY VOTING INFORMATION
Each Fund's (i) quarterly portfolio of investments, (ii) information regarding
how the Funds voted proxies relating to portfolio securities held during the
twelve-month period ended June 30, 2007, and (iii) a description of the policies
and procedures that the Funds used to determine how to vote proxies relating to
portfolio securities are available without charge, upon request, by calling
Nuveen Investments toll-free at (800) 257-8787 or on Nuveen's website at
www.nuveen.com.
You may also obtain this and other Fund information directly from the Securities
and Exchange Commission ("SEC"). The SEC may charge a copying fee for this
information. Visit the SEC on-line at http://www.sec.gov or in person at the
SEC's Public Reference Room in Washington, D.C. Call the SEC at 1-202-942-8090
for room hours and operation. You may also request Fund information by sending
an e-mail request to publicinfo@sec.gov or by writing to the SEC's Public
References Section at 450 Fifth Street NW, Washington, D.C. 20549.
CEO CERTIFICATION DISCLOSURE
Each Fund's Chief Executive Officer has submitted to the Exchange the annual CEO
certification as required by Section 303A.12(a) of the NYSE Listed Company
Manual.
Each Fund has filed with the Securities and Exchange Commission the
certification of its Chief Executive Officer and Chief Financial Officer
required by Section 302 of the Sarbanes-Oxley Act.
INVESTMENT POLICY CHANGES
In May 2007, the Funds' Board of Directors/Trustees voted to permit the Funds'
to make loans from Fund assets to certain bond issuers. The amounts of these
loans are subject to strict limits. This policy is designed to enhance the
Funds' ability to meet their Funds' investment objectives by providing for
increased portfolio management flexibility, greater diversification potential,
and opportunities for increased capital appreciation over time.
BOARD OF DIRECTORS/TRUSTEES
Robert P. Bremner
Jack B. Evans
William C. Hunter
David J. Kundert
William J. Schneider
Timothy R. Schwertfeger
Judith M. Stockdale
Carole E. Stone
FUND MANAGER
Nuveen Asset Management
333 West Wacker Drive
Chicago, IL 60606
CUSTODIAN
State Street Bank & Trust Company
Boston, MA
TRANSFER AGENT AND
SHAREHOLDER SERVICES
State Street Bank & Trust Company
Nuveen Funds
P.O. Box 43071
Providence, RI 02940-3071
(800) 257-8787
LEGAL COUNSEL
Chapman and Cutler LLP
Chicago, IL
INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
Ernst & Young LLP
Chicago, IL
Each Fund intends to repurchase shares of its own common stock in the future at
such times and in such amounts as is deemed advisable. No shares were
repurchased during the period covered by this report. Any future repurchases
will be reported to shareholders in the next annual or semi-annual report.
127
Nuveen Investments:
-------------------
SERVING INVESTORS FOR GENERATIONS
Since 1898, financial advisors and their clients have relied on Nuveen
Investments to provide dependable investment solutions. For the past century,
Nuveen Investments has adhered to the belief that the best approach to investing
is to apply conservative risk-management principles to help minimize volatility.
Building on this tradition, we today offer a range of high quality equity and
fixed-income solutions that are integral to a well-diversified core portfolio.
Our clients have come to appreciate this diversity, as well as our continued
adherence to proven, long-term investing principles.
WE OFFER MANY DIFFERENT INVESTING SOLUTIONS FOR OUR CLIENTS' DIFFERENT NEEDS.
Managing $170 billion in assets, as of September 30, 2007, 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
six distinct brands: Nuveen, a leader in fixed-income investments; NWQ, a leader
in value-style equities; Rittenhouse, a leader in growth-style equities;
Symphony, a leading institutional manager of market-neutral alternative
investment portfolios; Santa Barbara, a leader in growth equities; and
Tradewinds, a leader in global equities.
FIND OUT HOW WE CAN HELP YOU REACH YOUR FINANCIAL GOALS.
To learn more about the products and services Nuveen Investments offers, talk to
your financial advisor, or call us at (800) 257-8787. Please read the
information provided carefully before you invest. Be sure to obtain a
prospectus, where applicable. Investors should consider the investment objective
and policies, risk considerations, charges and expenses of the Fund carefully
before investing. The prospectus contains this and other information relevant to
an investment in the Fund. For a prospectus, please contact your securities
representative or NUVEEN INVESTMENTS, 333 W. WACKER DR., CHICAGO, IL 60606.
PLEASE read the prospectus carefully before you invest or send money.
Learn more about Nuveen Funds at: www.nuveen.com/etf
Share prices
Fund details
Daily financial news
Investor education
Interactive planning tools
EAN-B-1007D
ITEM 2. CODE OF ETHICS.
As of the end of the period covered by this report, the registrant has adopted a
code of ethics that applies to the registrant's principal executive officer,
principal financial officer, principal accounting officer or controller, or
persons performing similar functions. There were no amendments to or waivers
from the Code during the period covered by this report. The registrant has
posted the code of ethics on its website at www.nuveen.com/etf. (To view the
code, click on the Investor Resources drop down menu box, click on Fund
Governance and then click on Code of Conduct.)
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The registrant's Board of Directors or Trustees determined that the registrant
has at least one "audit committee financial expert" (as defined in Item 3 of
Form N-CSR) serving on its Audit Committee. The registrant's audit committee
financial expert is Jack B. Evans, Chairman of the Audit Committee, who is
"independent" for purposes of Item 3 of Form N-CSR.
Mr. Evans was formerly President and Chief Operating Officer of SCI Financial
Group, Inc., a full service registered broker-dealer and registered investment
adviser ("SCI"). As part of his role as President and Chief Operating Officer,
Mr. Evans actively supervised the Chief Financial Officer (the "CFO") and
actively supervised the CFO's preparation of financial statements and other
filings with various regulatory authorities. In such capacity, Mr. Evans was
actively involved in the preparation of SCI's financial statements and the
resolution of issues raised in connection therewith. Mr. Evans has also served
on the audit committee of various reporting companies. At such companies, Mr.
Evans was involved in the oversight of audits, audit plans, and the preparation
of financial statements. Mr. Evans also formerly chaired the audit committee of
the Federal Reserve Bank of Chicago.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Nuveen Dividend Advantage Municipal Fund 3
The following tables show the amount of fees that Ernst & Young LLP, the Fund's
auditor, billed to the Fund during the Fund's last two full fiscal years. For
engagements with Ernst & Young LLP the Audit Committee approved in advance all
audit services and non-audit services that Ernst & Young LLP provided to the
Fund, except for those non-audit services that were subject to the pre-approval
exception under Rule 2-01 of Regulation S-X (the "pre-approval exception"). The
pre-approval exception for services provided directly to the Fund waives the
pre-approval requirement for services other than audit, review or attest
services if: (A) the aggregate amount of all such services provided constitutes
no more than 5% of the total amount of revenues paid by the Fund to its
accountant during the fiscal year in which the services are provided; (B) the
Fund did not recognize the services as non-audit services at the time of the
engagement; and (C) the services are promptly brought to the Audit Committee's
attention, and the Committee (or its delegate) approves the services before the
audit is completed.
The Audit Committee has delegated certain pre-approval responsibilities to its
Chairman (or, in his absence, any other member of the Audit Committee).
SERVICES THAT THE FUND'S AUDITOR BILLED TO THE FUND
AUDIT FEES BILLED AUDIT-RELATED FEES TAX FEES ALL OTHER FEES
FISCAL YEAR ENDED TO FUND (1) BILLED TO FUND (2) BILLED TO FUND (3) BILLED TO FUND (4)
----------------------------------------------------------------------------------------------------------------------------
October 31, 2007 $ 30,797 $ 0 $ 500 $ 1,550
----------------------------------------------------------------------------------------------------------------------------
Percentage approved 0% 0% 0% 0%
pursuant to
pre-approval
exception
----------------------------------------------------------------------------------------------------------------------------
October 31, 2006 $ 29,311 $ 0 $ 400 $ 2,950
----------------------------------------------------------------------------------------------------------------------------
Percentage approved 0% 0% 0% 0%
pursuant to
pre-approval
exception
----------------------------------------------------------------------------------------------------------------------------
(1) "Audit Fees" are the aggregate fees billed for professional services for
the audit of the Fund's annual financial statements and services provided
in connection with statutory and regulatory filings or engagements.
(2) "Audit Related Fees" are the aggregate fees billed for assurance and
related services reasonably related to the performance of the audit or
review of financial statements and are not reported under "Audit Fees".
(3) "Tax Fees" are the aggregate fees billed for professional services for tax
advice, tax compliance, and tax planning.
(4) "All Other Fees" are the aggregate fees billed for products and services
for agreed upon procedures engagements performed for leveraged funds.
SERVICES THAT THE FUND'S AUDITOR BILLED TO THE
ADVISER AND AFFILIATED FUND SERVICE PROVIDERS
The following tables show the amount of fees billed by Ernst & Young LLP to
Nuveen Asset Management ("NAM" or the "Adviser"), and any entity controlling,
controlled by or under common control with NAM ("Control Affiliate") that
provides ongoing services to the Fund ("Affiliated Fund Service Provider"), for
engagements directly related to the Fund's operations and financial reporting,
during the Fund's last two full fiscal years.
The tables also show the percentage of fees subject to the pre-approval
exception. The pre-approval exception for services provided to the Adviser and
any Affiliated Fund Service Provider (other than audit, review or attest
services) waives the pre-approval requirement if: (A) the aggregate amount of
all such services provided constitutes no more than 5% of the total amount of
revenues paid to Ernst & Young LLP by the Fund, the Adviser and Affiliated Fund
Service Providers during the fiscal year in which the services are provided that
would have to be pre-approved by the Audit Committee; (B) the Fund did not
recognize the services as non-audit services at the time of the engagement; and
(C) the services are promptly brought to the Audit Committee's attention, and
the Committee (or its delegate) approves the services before the Fund's audit is
completed.
FISCAL YEAR ENDED AUDIT-RELATED FEES TAX FEES BILLED TO ALL OTHER FEES
BILLED TO ADVISER AND ADVISER AND BILLED TO ADVISER
AFFILIATED FUND AFFILIATED FUND AND AFFILIATED FUND
SERVICE PROVIDERS SERVICE PROVIDERS SERVICE PROVIDERS
---------------------------------------------------------------------------------------------------------
October 31, 2007 $ 0 $ 0 $ 0
---------------------------------------------------------------------------------------------------------
Percentage approved 0% 0% 0%
pursuant to
pre-approval
exception
---------------------------------------------------------------------------------------------------------
October 31, 2006 $ 0 $ 0 $ 0
---------------------------------------------------------------------------------------------------------
Percentage approved 0% 0% 0%
pursuant to
pre-approval
exception
---------------------------------------------------------------------------------------------------------
NON-AUDIT SERVICES
The following table shows the amount of fees that Ernst & Young LLP billed
during the Fund's last two full fiscal years for non-audit services. The Audit
Committee is required to pre-approve non-audit services that Ernst & Young LLP
provides to the Adviser and any Affiliated Fund Services Provider, if the
engagement related directly to the Fund's operations and financial reporting
(except for those subject to the de minimis exception described above). The
Audit Committee requested and received information from Ernst & Young LLP about
any non-audit services that Ernst & Young LLP rendered during the Fund's last
fiscal year to the Adviser and any Affiliated Fund Service Provider. The
Committee considered this information in evaluating Ernst & Young LLP's
independence.
FISCAL YEAR ENDED TOTAL NON-AUDIT FEES TOTAL NON-AUDIT
BILLED TO ADVISER AND FEES BILLED TO
AFFILIATED FUND SERVICE ADVISER AND
PROVIDERS (ENGAGEMENTS AFFILIATED FUND
TOTAL RELATED DIRECTLY TO THE SERVICE PROVIDERS
NON-AUDIT FEES OPERATIONS AND FINANCIAL (ALL OTHER
BILLED TO FUND REPORTING OF THE FUND) ENGAGEMENTS) TOTAL
-------------------------------------------------------------------------------------------------------------------------
October 31, 2007 $ 2,050 $ 0 $ 0 $ 2,050
October 31, 2006 $ 3,350 $ 0 $ 0 $ 3,350
"Non-Audit Fees billed to Adviser" for both fiscal year ends represent "Tax
Fees" billed to Adviser in their respective amounts from the previous table.
Audit Committee Pre-Approval Policies and Procedures. Generally, the Audit
Committee must approve (i) all non-audit services to be performed for the Fund
by the Fund's independent accountants and (ii) all audit and non-audit services
to be performed by the Fund's independent accountants for the Affiliated Fund
Service Providers with respect to operations and financial reporting of the
Fund. Regarding tax and research projects conducted by the independent
accountants for the Fund and Affiliated Fund Service Providers (with respect to
operations and financial reports of the Fund) such engagements will be (i)
pre-approved by the Audit Committee if they are expected to be for amounts
greater than $10,000; (ii) reported to the Audit Committee chairman for his
verbal approval prior to engagement if they are expected to be for amounts under
$10,000 but greater than $5,000; and (iii) reported to the Audit Committee at
the next Audit Committee meeting if they are expected to be for an amount under
$5,000.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
The registrant's Board of Directors or Trustees has a separately designated
Audit Committee established in accordance with Section 3(a)(58)(A) of the
Securities Exchange Act of 1934, as amended (15 U.S.C. 78c(a)(58)(A)). The
members of the audit committee are Robert P. Bremner, Jack B. Evans, William J.
Schneider and David J. Kundert. Mr. Eugene S. Sunshine, who also served as a
member of the Committee during this reporting period, resigned from the Board of
Directors or Trustees effective July 31, 2007.
ITEM 6. SCHEDULE OF INVESTMENTS.
See Portfolio of Investments in Item 1.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
The registrant invests its assets primarily in municipal bonds and cash
management securities. On rare occasions the registrant may acquire, directly or
through a special purpose vehicle, equity securities of a municipal bond issuer
whose bonds the registrant already owns when such bonds have deteriorated or are
expected shortly to deteriorate significantly in credit quality. The purpose of
acquiring equity securities generally will be to acquire control of the
municipal bond issuer and to seek to prevent the credit deterioration or
facilitate the liquidation or other workout of the distressed issuer's credit
problem. In the course of exercising control of a distressed municipal issuer,
NAM may pursue the registrant's interests in a variety of ways, which may entail
negotiating and executing consents, agreements and other arrangements, and
otherwise influencing the management of the issuer. NAM does not consider such
activities proxy voting for purposes of Rule 206(4)-6 under the 1940 Act, but
nevertheless provides reports to the registrant's Board of Trustees on its
control activities on a quarterly basis.
In the rare event that a municipal issuer were to issue a proxy or that the
registrant were to receive a proxy issued by a cash management security, NAM
would either engage an independent third party to determine how the proxy should
be voted or vote the proxy with the consent, or based on the instructions, of
the registrant's Board of Trustees or its representative. A member of NAM's
legal department would oversee the administration of the voting, and ensure that
records were maintained in accordance with Rule 206(4)-6, reports were filed
with the SEC on Form N-PX, and the results provided to the registrant's Board of
Trustees and made available to shareholders as required by applicable rules.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
THE PORTFOLIO MANAGER
The following individual has primary responsibility for the day-to-day
implementation of the registrant's investment strategies:
NAME FUND
PAUL BRENNAN Nuveen Dividend Advantage Municipal Fund 3
Other Accounts Managed. In addition to managing the registrant, the portfolio
manager is also primarily responsible for the day-to-day portfolio management of
the following accounts:
TYPE OF ACCOUNT NUMBER OF
PORTFOLIO MANAGER MANAGED ACCOUNTS ASSETS
--------------------------------------------------------------------------------
Paul Brennan Registered Investment Company 14 $11.390 billion
Other Pooled Investment Vehicles 0 $0
Other Accounts 1 $.7 million
* Assets are as of October 31, 2007. None of the assets in these accounts are
subject to an advisory fee based on performance.
Compensation. Each portfolio manager's compensation consists of three basic
elements--base salary, cash bonus and long-term incentive compensation. The
compensation strategy is to annually compare overall compensation, including
these three elements, to the market in order to create a compensation structure
that is competitive and consistent with similar financial services companies. As
discussed below, several factors are considered in determining each portfolio
manager's total compensation. In any year these factors may include, among
others, the effectiveness of the investment strategies recommended by the
portfolio manager's investment team, the investment performance of the accounts
managed by the portfolio manager, and the overall performance of Nuveen
Investments, Inc. (the parent company of NAM). Although investment performance
is a factor in determining the portfolio manager's compensation, it is not
necessarily a decisive factor. The portfolio manager's performance is evaluated
in part by comparing manager's performance against a specified investment
benchmark. This fund-specific benchmark is a customized subset (limited to bonds
in each Fund's specific state and with certain maturity parameters) of the
S&P/Investortools Municipal Bond index, an index comprised of bonds held by
managed municipal bond fund customers of Standard & Poor's Securities Pricing,
Inc. that are priced daily and whose fund holdings aggregate at least $2
million. As of November 30, 2007, the S&P/Investortools Municipal Bond Index was
comprised of 52,116 securities with an aggregate current market value of $1,034
billion.
Base salary. Each portfolio manager is paid a base salary that is set at a level
determined by NAM in accordance with its overall compensation strategy discussed
above. NAM is not under any current contractual obligation to increase a
portfolio manager's base salary.
Cash bonus. Each portfolio manager is also eligible to receive an annual cash
bonus. The level of this bonus is based upon evaluations and determinations made
by each portfolio manager's supervisors, along with reviews submitted by his
peers. These reviews and evaluations often take into account a number of
factors, including the effectiveness of the investment strategies recommended to
the NAM's investment team, the performance of the accounts for which he serves
as portfolio manager relative to any benchmarks established for those accounts,
his effectiveness in communicating investment performance to stockholders and
their representatives, and his contribution to the NAM's investment process and
to the execution of investment strategies. The cash bonus component is also
impacted by the overall performance of Nuveen Investments, Inc. in achieving its
business objectives.
Long-term incentive compensation. Each portfolio manager is eligible to receive
bonus compensation in the form of equity-based awards issued in securities
issued by Nuveen Investments, Inc. The amount of such compensation is dependent
upon the same factors articulated for cash bonus awards but also factors in his
long-term potential with the firm.
Material Conflicts of Interest. Each portfolio manager's simultaneous management
of the registrant and the other accounts noted above may present actual or
apparent conflicts of interest with respect to the allocation and aggregation of
securities orders placed on behalf of the Registrant and the other account. NAM,
however, believes that such potential conflicts are mitigated by the fact that
the NAM has adopted several policies that address potential conflicts of
interest, including best execution and trade allocation policies that are
designed to ensure (1) that portfolio management is seeking the best price for
portfolio securities under the circumstances, (2) fair and equitable allocation
of investment opportunities among accounts over time and (3) compliance with
applicable regulatory requirements. All accounts are to be treated in a
non-preferential manner, such that allocations are not based upon account
performance, fee structure or preference of the portfolio manager, although the
allocation procedures may provide allocation preferences to funds with special
characteristics (such as favoring state funds versus national funds for
allocations of in-state bonds). In addition, NAM has adopted a Code of Conduct
that sets forth policies regarding conflicts of interest.
Beneficial Ownership of Securities. As of October 31, 2007, the portfolio
manager beneficially owned the following dollar range of equity securities
issued by the Registrant and other Nuveen Funds managed by NAM's municipal
investment team.
DOLLAR RANGE OF
EQUITY SECURITIES
DOLLAR RANGE OF BENEFICIALLY OWNED
EQUITY IN THE REMAINDER OF
SECURITIES NUVEEN FUNDS MANAGED
BENEFICIALLY BY NAM'S MUNICIPAL
NAME OF PORTFOLIO MANAGER FUND OWNED IN FUND INVESTMENT TEAM
------------------------------------------------------------------------------------------------------------------
Paul Brennan Nuveen Dividend Advantage Municipal Fund 3 $0 $10,001-$50,000
PORTFOLIO MANAGER BIO:
Paul Brennan, CFA, CPA, became a portfolio manager of Flagship Financial Inc. in
1994, and subsequently became an Assistant Vice President of NAM upon the
acquisition of Flagship Resources Inc. by Nuveen in 1997. He became Vice
President of NAM in 2002. He currently manages investments for 15
Nuveen-sponsored investment companies.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which shareholders may
recommend nominees to the registrants Board implemented after the registrant
last provided disclosure in response to this item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive and principal financial officers,
or persons performing similar functions, have concluded that the
registrant's disclosure controls and procedures (as defined in Rule
30a-3(c) under the Investment Company Act of 1940, as amended (the
"1940 Act") (17 CFR 270.30a-3(c))) are effective, as of a date within
90 days of the filing date of this report that includes the disclosure
required by this paragraph, based on their evaluation of the controls
and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR
270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")
(17 CFR 240.13a-15(b) or 240.15d-15(b)).
(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act
(17 CFR 270.30a-3(d)) that occurred during the second fiscal quarter
of the period covered by this report that has materially affected, or
is reasonably likely to materially affect, the registrant's internal
control over financial reporting.
ITEM 12. EXHIBITS.
File the exhibits listed below as part of this Form. Letter or number the
exhibits in the sequence indicated.
(a)(1) Any code of ethics, or amendment thereto, that is the subject of the
disclosure required by Item 2, to the extent that the registrant intends to
satisfy the Item 2 requirements through filing of an exhibit: Not applicable
because the code is posted on registrant's website at www.nuveen.com/etf and
there were no amendments during the period covered by this report. (To view the
code, click on the Investor Resources drop down menu box, click on Fund
Governance and then Code of Conduct.)
(a)(2) A separate certification for each principal executive officer and
principal financial officer of the registrant as required by Rule 30a-2(a) under
the 1940 Act (17 CFR 270.30a-2(a)) in the exact form set forth below: Ex-99.CERT
Attached hereto.
(a)(3) Any written solicitation to purchase securities under Rule 23c-1 under
the 1940 Act (17 CFR 270.23c-1) sent or given during the period covered by the
report by or on behalf of the registrant to 10 or more persons. Not applicable.
(b) If the report is filed under Section 13(a) or 15(d) of the Exchange Act,
provide the certifications required by Rule 30a-2(b) under the 1940 Act (17 CFR
270.30a-2(b)); Rule 13a-14(b) or Rule 15d-14(b) under the Exchange Act (17 CFR
240.13a-14(b) or 240.15d-14(b)), and Section 1350 of Chapter 63 of Title 18 of
the United States Code (18 U.S.C. 1350) as an exhibit. A certification furnished
pursuant to this paragraph will not be deemed "filed" for purposes of Section 18
of the Exchange Act (15 U.S.C. 78r), or otherwise subject to the liability of
that section. Such certification will not be deemed to be incorporated by
reference into any filing under the Securities Act of 1933 or the Exchange Act,
except to the extent that the registrant specifically incorporates it by
reference. Ex-99.906 CERT attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Nuveen Dividend Advantage Municipal Fund 3
-----------------------------------------------------------
By (Signature and Title)* /s/ Kevin J. McCarthy
----------------------------------------------
Kevin J. McCarthy
Vice President and Secretary
Date: January 7, 2008
-------------------------------------------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ Gifford R. Zimmerman
----------------------------------------------
Gifford R. Zimmerman
Chief Administrative Officer
(principal executive officer)
Date: January 7, 2008
-------------------------------------------------------------------
By (Signature and Title)* /s/ Stephen D. Foy
----------------------------------------------
Stephen D. Foy
Vice President and Controller
(principal financial officer)
Date: January 7, 2008
-------------------------------------------------------------------
* Print the name and title of each signing officer under his or her signature.