FORM DEF 14A
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No.   )
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Nuveen Arizona Dividend Advantage Municipal Fund 3 (NXE)
 
(Name of Registrant as Specified In Its Charter)
 
 
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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Important Notice to Fund Shareholders
 
OCTOBER 26, 2009
 
Although we recommend that you read the complete Proxy Statement, for your convenience, we have provided a brief overview of the issues to be voted on.
 
Q. Why am I receiving this Proxy Statement?
 
A. You are receiving this Proxy Statement as a Fund shareholder in connection with the annual shareholders meeting for the Nuveen closed-end funds listed at the top of the Notice of Annual Meeting of Shareholders.
 
You are being asked to vote on a number of important matters:
 
  (i)    Updated Investment Policies (all Affected Municipal Funds (as defined in the Proxy Statement)). Nuveen’s municipal closed-end funds are seeking to adopt a uniform, “up to date” set of investment policies (the “New Investment Policies”). In general, these funds currently have a somewhat diverse set of policies, reflecting when the funds were launched over the past 20 years as well as developments over time in the municipal market, including new types of securities as well as investment strategies.
 
  (ii)   Elimination of Fundamental Investment Policies and Approval of New Fundamental Investment Policy (Insured Funds (as defined in the Proxy Statement)). Fund shareholders are being asked to approve the elimination of certain fundamental investment policies and to approve a new fundamental policy or policies (also referred to as, the “New Investment Policy” or “New Investment Policies”). These changes are designed to give the Insured Funds important flexibility to respond to ongoing developments in the bond insurance market while maintaining their current focus on insured bonds backed by insurers with solid credit ratings. In addition, the Insured Funds are seeking to adopt a uniform, “up to date” set of investment policies.
 
  (iii)  Approval of Fund Board Nominees (all Funds). Each year, you and other Fund shareholders must approve the election of Board members to serve on your Fund’s Board. This is a requirement for all funds that list their common shares on a stock exchange. The Funds described in this Proxy Statement are holding their annual shareholders meetings at which Board members will be elected. The list of specific nominees is contained in the enclosed Proxy Statement.
 
Your Fund’s Board of Trustees/Directors, including your Board’s independent members, unanimously recommends that you vote FOR each proposal.
 
Your vote is very important. We encourage you as a shareholder to participate in your Fund’s governance by returning your vote as soon as possible. If enough shareholders don’t cast their votes, your Fund may not be able to hold its meeting or the vote on each issue, and will be required to incur additional solicitation costs in order to obtain sufficient shareholder participation.
 
Q. What are the potential benefits of the New Investment Policies for common shareholders of the Affected Municipal Funds?
 
A. The potential benefits to common shareholders are:
 
•   Enhanced ability of the Affected Municipal Funds to generate attractive tax-free income while retaining their orientation on investment grade quality municipal securities;


 

 
•   Increased flexibility in diversifying portfolio risks and managing duration (the sensitivity of bond prices to interest rate changes) to pursue the preservation and possible growth of capital, which, if successful, will help to sustain and build net asset value; and
 
•   Improved secondary market competitiveness that may lead to a higher relative market price and/or stronger premium/discount performance.
 
Q. What are the potential benefits of the New Investment Policies for preferred shareholders of the Affected Municipal Funds?
 
A. The potential benefits to preferred shareholders are increased flexibility in diversifying portfolio risks and managing duration (the sensitivity of bond prices to interest rate changes) to pursue the preservation and possible growth of capital, which, if successful, will help to sustain and build net asset value and therefore asset coverage levels for preferred shares.
 
Q. What actions are required in order to implement the New Investment Policies?
 
A. In order to implement the New Investment Policies and obtain the potential benefits described above, each Affected Municipal Fund or Insured Fund must make certain changes to its existing policies, including certain fundamental policies that require approval of shareholders. In some cases, this may require shareholder approval of the elimination of an existing fundamental policy as well as the implementation of a new replacement fundamental policy. Because each Affected Municipal Fund or Insured Fund tends to be situated somewhat differently, the specific changes required to implement the New Investment Policies often vary from fund to fund.
 
Q. Why are shareholders of the Insured Funds being asked to approve the elimination of fundamental investment policies and to approve a New Investment Policy?
 
A. As a result of conditions facing the bond insurance market, shareholders are being asked to approve the elimination of certain fundamental investment policies that are restricting, or may be expected in the future to restrict, each Insured Fund’s ability to effectively maintain its existing focus on insured bonds backed by insurers with solid credit ratings. In connection with eliminating the respective fundamental investment policies, shareholders are being asked to approve a new fundamental investment policy that will provide the Insured Funds with flexibility to respond to ongoing developments in the bond insurance market, while ensuring that the Insured Funds continue to invest substantially all (at least 80%) of their investments in insured bonds backed by insurers with solid credit ratings.
 
Q. What happens if shareholders don’t approve the elimination of the fundamental investment policies and/or don’t approve the New Investment Policy or Policies?
 
A. An Affected Municipal Fund or Insured Fund will not be able to implement the New Investment Policies as discussed above. The Affected Municipal Fund or Insured Fund would likely incur further expenses to solicit additional shareholder participation, and may experience potential disruptions to its investment operations. The Boards of the Affected Municipal Funds and Insured Funds urge you to vote without delay in order to avoid the potential for higher costs and/or disruptions to portfolio operations.


 

 
Q. Who do I call if I have questions?
 
A. If you need any assistance, or have any questions regarding the proposals or how to vote your shares, please call Computershare Fund Services, your Fund’s proxy solicitor, at (866) 612-5814. Please have your proxy material available when you call.
 
Q. How do I vote my shares?
 
A. You can vote your shares by completing and signing the enclosed proxy card, and mailing it in the enclosed postage-paid envelope. Alternatively, you may vote by telephone by calling the toll-free number on the proxy card or by computer by going to the Internet address provided on the proxy card and following the instructions, using your proxy card as a guide.
 
Q. Will anyone contact me?
 
A. You may receive a call from Computershare Fund Services, the proxy solicitor hired by your Fund, to verify that you received your proxy materials, to answer any questions you may have about the proposals and to encourage you to vote your proxy.
 
We recognize the inconvenience of the proxy solicitation process and would not impose on you if we did not believe that the matters being proposed were important and in the best interests of the Funds. Once your vote has been registered with the proxy solicitor, your name will be removed from the solicitor’s follow-up contact list.


 

 
333 West Wacker Drive
Chicago, Illinois 60606
(800) 257-8787
Notice of Annual Meeting
of Shareholders
November 30, 2009
 
October 26, 2009
 
Nuveen Floating Rate Income Fund (JFR)
Nuveen Floating Rate Income Opportunity Fund (JRO)
Nuveen Senior Income Fund (NSL)
Nuveen Tax-Advantaged Floating Rate Fund (JFP)
Nuveen Arizona Dividend Advantage Municipal Fund (NFZ)
Nuveen Arizona Dividend Advantage Municipal Fund 2 (NKR)
Nuveen Arizona Dividend Advantage Municipal Fund 3 (NXE)
Nuveen Arizona Premium Income Municipal Fund, Inc. (NAZ)
Nuveen California Dividend Advantage Municipal Fund (NAC)
Nuveen California Dividend Advantage Municipal Fund 2 (NVX)
Nuveen California Dividend Advantage Municipal Fund 3 (NZH)
Nuveen California Investment Quality Municipal Fund, Inc. (NQC)
Nuveen California Municipal Market Opportunity Fund, Inc. (NCO)
Nuveen California Municipal Value Fund, Inc. (NCA)
Nuveen California Performance Plus Municipal Fund, Inc. (NCP)
Nuveen California Premium Income Municipal Fund (NCU)
Nuveen California Quality Income Municipal Fund, Inc. (NUC)
Nuveen California Select Quality Municipal Fund, Inc. (NVC)
Nuveen Insured California Dividend Advantage Municipal Fund (NKL)
Nuveen Insured California Premium Income Municipal Fund, Inc. (NPC)
Nuveen Insured California Premium Income Municipal Fund 2, Inc. (NCL)
Nuveen Insured California Tax-Free Advantage Municipal Fund (NKX)
Nuveen Connecticut Dividend Advantage Municipal Fund (NFC)
Nuveen Connecticut Dividend Advantage Municipal Fund 2 (NGK)
Nuveen Connecticut Dividend Advantage Municipal Fund 3 (NGO)
Nuveen Connecticut Premium Income Municipal Fund (NTC)
Nuveen Georgia Dividend Advantage Municipal Fund (NZX)
Nuveen Georgia Dividend Advantage Municipal Fund 2 (NKG)
Nuveen Georgia Premium Income Municipal Fund (NPG)
Nuveen Maryland Dividend Advantage Municipal Fund (NFM)
Nuveen Maryland Dividend Advantage Municipal Fund 2 (NZR)
Nuveen Maryland Dividend Advantage Municipal Fund 3 (NWI)
Nuveen Maryland Premium Income Municipal Fund (NMY)
Nuveen Massachusetts Dividend Advantage Municipal Fund (NMB)
Nuveen Massachusetts Premium Income Municipal Fund (NMT)
Nuveen Insured Massachusetts Tax-Free Advantage Municipal Fund (NGX)
Nuveen Michigan Dividend Advantage Municipal Fund (NZW)
Nuveen Michigan Premium Income Municipal Fund, Inc. (NMP)
Nuveen Michigan Quality Income Municipal Fund, Inc. (NUM)
Nuveen Missouri Premium Income Municipal Fund (NOM)
Nuveen New Jersey Dividend Advantage Municipal Fund (NXJ)
Nuveen New Jersey Dividend Advantage Municipal Fund 2 (NUJ)
Nuveen New Jersey Investment Quality Municipal Fund, Inc. (NQJ)
Nuveen New Jersey Premium Income Municipal Fund, Inc. (NNJ)
Nuveen North Carolina Dividend Advantage Municipal Fund (NRB)
Nuveen North Carolina Dividend Advantage Municipal Fund 2 (NNO)


 

Nuveen North Carolina Dividend Advantage Municipal Fund 3 (NII)
Nuveen North Carolina Premium Income Municipal Fund (NNC)
Nuveen Ohio Dividend Advantage Municipal Fund (NXI)
Nuveen Ohio Dividend Advantage Municipal Fund 2 (NBJ)
Nuveen Ohio Dividend Advantage Municipal Fund 3 (NVJ)
Nuveen Ohio Quality Income Municipal Fund, Inc. (NUO)
Nuveen Pennsylvania Dividend Advantage Municipal Fund (NXM)
Nuveen Pennsylvania Dividend Advantage Municipal Fund 2 (NVY)
Nuveen Pennsylvania Investment Quality Municipal Fund (NQP)
Nuveen Pennsylvania Premium Income Municipal Fund 2 (NPY)
Nuveen Texas Quality Income Municipal Fund (NTX)
Nuveen Virginia Dividend Advantage Municipal Fund (NGB)
Nuveen Virginia Dividend Advantage Municipal Fund 2 (NNB)
Nuveen Virginia Premium Income Municipal Fund (NPV)
 
To the Shareholders of the Above Funds:
 
Notice is hereby given that the Annual Meeting of Shareholders (the “Annual Meeting”) of Nuveen Arizona Premium Income Municipal Fund, Inc. (“Arizona Premium Income”), Nuveen California Investment Quality Municipal Fund, Inc. (“California Investment Quality”), Nuveen California Municipal Market Opportunity Fund, Inc. (“California Market Opportunity”), Nuveen California Municipal Value Fund, Inc. (“California Value”), Nuveen California Performance Plus Municipal Fund, Inc. (“California Performance Plus”), Nuveen California Quality Income Municipal Fund, Inc. (“California Quality Income”), Nuveen California Select Quality Municipal Fund, Inc. (“California Select Quality”), Nuveen Insured California Premium Income Municipal Fund, Inc. (“Insured California Premium Income”), Nuveen Insured California Premium Income Municipal Fund 2, Inc. (“Insured California Premium Income 2”), Nuveen Michigan Premium Income Municipal Fund, Inc. (“Michigan Premium Income”), Nuveen Michigan Quality Income Municipal Fund, Inc. (“Michigan Quality Income”), Nuveen New Jersey Investment Quality Municipal Fund, Inc. (“New Jersey Investment Quality”), Nuveen New Jersey Premium Income Municipal Fund, Inc. (“New Jersey Premium Income”) and Nuveen Ohio Quality Income Municipal Fund, Inc. (“Ohio Quality Income”), each a Minnesota corporation (each a “Minnesota Fund” and collectively, the “Minnesota Funds”), and Nuveen Floating Rate Income Fund (“Floating Rate Income”), Nuveen Floating Rate Income Opportunity Fund (“Floating Rate Income Opportunity”), Nuveen Senior Income Fund (“Senior Income”), Nuveen Tax-Advantaged Floating Rate Fund (“Tax-Advantaged Floating Rate”), Nuveen Arizona Dividend Advantage Municipal Fund (“Arizona Dividend Advantage”), Nuveen Arizona Dividend Advantage Municipal Fund 2 (“Arizona Dividend Advantage 2”), Nuveen Arizona Dividend Advantage Municipal Fund 3 (“Arizona Dividend Advantage 3”), Nuveen California Dividend Advantage Municipal Fund (“California Dividend Advantage”), Nuveen California Dividend Advantage Municipal Fund 2 (“California Dividend Advantage 2”), Nuveen California Dividend Advantage Municipal Fund 3 (“California Dividend Advantage 3”), Nuveen California Premium Income Municipal Fund (“California Premium Income”), Nuveen Insured California Dividend Advantage Municipal Fund (“Insured California Dividend Advantage”), Nuveen Insured California Tax-Free Advantage Municipal Fund (“Insured California Tax-Free Advantage”), Nuveen Connecticut Dividend Advantage Municipal Fund (“Connecticut Dividend Advantage”), Nuveen Connecticut Dividend Advantage Municipal Fund 2 (“Connecticut Dividend Advantage 2”), Nuveen Connecticut Dividend Advantage Municipal Fund 3 (“Connecticut Dividend Advantage 3”), Nuveen Connecticut Premium Income Municipal Fund (“Connecticut Premium Income”), Nuveen Georgia Dividend Advantage Municipal Fund (“Georgia Dividend Advantage”), Nuveen Georgia Dividend Advantage Municipal Fund 2 (“Georgia Dividend Advantage 2”), Nuveen Georgia Premium Income Municipal Fund (“Georgia Premium Income”), Nuveen Maryland Dividend Advantage


 

Municipal Fund (“Maryland Dividend Advantage”), Nuveen Maryland Dividend Advantage Municipal Fund 2 (“Maryland Dividend Advantage 2”), Nuveen Maryland Dividend Advantage Municipal Fund 3 (“Maryland Dividend Advantage 3”), Nuveen Maryland Premium Income Municipal Fund (“Maryland Premium Income”), Nuveen Massachusetts Dividend Advantage Municipal Fund (“Massachusetts Dividend Advantage”), Nuveen Massachusetts Premium Income Municipal Fund (“Massachusetts Premium Income”), Nuveen Insured Massachusetts Tax-Free Advantage Municipal Fund (“Insured Massachusetts Tax-Free Advantage”), Nuveen Michigan Dividend Advantage Municipal Fund (“Michigan Dividend Advantage”), Nuveen Missouri Premium Income Municipal Fund (“Missouri Premium Income”), Nuveen New Jersey Dividend Advantage Municipal Fund (“New Jersey Dividend Advantage”), Nuveen New Jersey Dividend Advantage Municipal Fund 2 (“New Jersey Dividend Advantage 2”), Nuveen North Carolina Dividend Advantage Municipal Fund (“North Carolina Dividend Advantage”), Nuveen North Carolina Dividend Advantage Municipal Fund 2 (“North Carolina Dividend Advantage 2”), Nuveen North Carolina Dividend Advantage Municipal Fund 3 (“North Carolina Dividend Advantage 3”), Nuveen North Carolina Premium Income Municipal Fund (“North Carolina Premium Income”), Nuveen Ohio Dividend Advantage Municipal Fund (“Ohio Dividend Advantage”), Nuveen Ohio Dividend Advantage Municipal Fund 2 (“Ohio Dividend Advantage 2”), Nuveen Ohio Dividend Advantage Municipal Fund 3 (“Ohio Dividend Advantage 3”), Nuveen Pennsylvania Dividend Advantage Municipal Fund (“Pennsylvania Dividend Advantage”), Nuveen Pennsylvania Dividend Advantage Municipal Fund 2 (“Pennsylvania Dividend Advantage 2”), Nuveen Pennsylvania Investment Quality Municipal Fund (“Pennsylvania Investment Quality”), Nuveen Pennsylvania Premium Income Municipal Fund 2 (“Pennsylvania Premium Income 2”), Nuveen Texas Quality Income Municipal Fund (“Texas Quality Income”), Nuveen Virginia Dividend Advantage Municipal Fund (“Virginia Dividend Advantage”), Nuveen Virginia Dividend Advantage Municipal Fund 2 (“Virginia Dividend Advantage 2”) and Nuveen Virginia Premium Income Municipal Fund (“Virginia Premium Income”), each a Massachusetts business trust (each a “Massachusetts Fund” and collectively, the “Massachusetts Funds”) (the Minnesota Funds and Massachusetts Funds are each, a “Fund” and collectively, the “Funds”), will be held in the offices of Nuveen Investments, 333 West Wacker Drive, Chicago, Illinois 60606, on Monday, November 30, 2009, at 9:30 a.m., Central time, for the following purposes and to transact such other business, if any, as may properly come before the Annual Meeting:


 

Matters to Be Voted on by Shareholders:
 
1.  To elect Members to the Board of Directors/Trustees (each a “Board” and each Director or Trustee a “Board Member”) of each Fund as outlined below:
 
  a.  For each Minnesota Fund, except California Value, to elect nine (9) Board Members:
 
  i)  seven (7) Board Members to be elected by the holders of Common Shares and Municipal Auction Rate Cumulative Preferred Shares (“Preferred Shares”), voting together as a single class; and
 
  ii)  two (2) Board Members to be elected by the holders of Preferred Shares only, voting separately as a single class.
 
b. For California Value, to elect three (3) Board Members.
 
  c.  For each Massachusetts Fund, except Floating Rate Income, Floating Rate Income Opportunity, Senior Income and Tax-Advantaged Floating Rate, to elect four (4) Board Members:
 
  i)  two (2) Board Members to be elected by the holders of Common Shares and Preferred Shares, voting together as a single class; and
 
  ii)  two (2) Board Members to be elected by the holders of Preferred Shares only, voting separately as a single class.
 
  d.  For Floating Rate Income, Floating Rate Income Opportunity, Senior Income and Tax-Advantaged Floating Rate, to elect four (4) Board Members.
 
2.  To approve the elimination of fundamental investment policies and/or to approve the new fundamental investment policies for Arizona Dividend Advantage, Arizona Dividend Advantage 2, Arizona Dividend Advantage 3, Arizona Premium Income, California Dividend Advantage, California Dividend Advantage 2, California Dividend Advantage 3, California Investment Quality, California Market Opportunity, California Performance Plus, California Premium Income, California Quality Income, California Select Quality, Connecticut Dividend Advantage, Connecticut Dividend Advantage 2, Connecticut Dividend Advantage 3, Connecticut Premium Income, Georgia Dividend Advantage 2, Georgia Premium Income, Maryland Dividend Advantage, Maryland Dividend Advantage 2, Maryland Dividend Advantage 3, Massachusetts Dividend Advantage, Massachusetts Premium Income, Michigan Dividend Advantage, Michigan Premium Income, Missouri Premium Income, New Jersey Dividend Advantage, New Jersey Dividend Advantage 2, New Jersey Investment Quality, New Jersey Premium Income, North Carolina Dividend Advantage, North Carolina Dividend Advantage 2, Ohio Dividend Advantage, Ohio Dividend Advantage 2, Ohio Dividend Advantage 3, Ohio Quality Income, Pennsylvania Dividend Advantage, Pennsylvania Dividend Advantage 2, Pennsylvania Investment Quality, Pennsylvania Premium Income 2, Texas Quality Income and Virginia Premium Income.
 
3.  To approve the elimination of fundamental investment policies and to approve the new fundamental investment policies for Insured California Dividend Advantage, Insured California Premium Income, Insured California Premium Income 2, Insured California Tax-Free Advantage and Insured Massachusetts Tax-Free Advantage.
 
4.  To transact such other business as may properly come before the Annual Meeting.
 
Shareholders of record at the close of business on October 2, 2009 are entitled to notice of and to vote at the Annual Meeting.


 

All shareholders are cordially invited to attend the Annual Meeting. In order to avoid delay and additional expense and to assure that your shares are represented, please vote as promptly as possible, regardless of whether or not you plan to attend the Annual Meeting. You may vote by mail, telephone or over the Internet. To vote by mail, please mark, sign, date and mail the enclosed proxy card. No postage is required if mailed in the United States. To vote by telephone, please call the toll-free number located on your proxy card and follow the recorded instructions, using your proxy card as a guide. To vote over the Internet, go to the Internet address provided on your proxy card and follow the instructions, using your proxy card as a guide.
 
Kevin J. McCarthy
Vice President and Secretary


 

 
333 West Wacker Drive
Chicago, Illinois 60606
(800) 257-8787
Joint Proxy Statement
 
October 26, 2009
 
This Joint Proxy Statement is first being mailed to shareholders on or about October 26, 2009.
 
Nuveen Floating Rate Income Fund (JFR)
Nuveen Floating Rate Income Opportunity Fund (JRO)
Nuveen Senior Income Fund (NSL)
Nuveen Tax-Advantaged Floating Rate Fund (JFP)
Nuveen Arizona Dividend Advantage Municipal Fund (NFZ)
Nuveen Arizona Dividend Advantage Municipal Fund 2 (NKR)
Nuveen Arizona Dividend Advantage Municipal Fund 3 (NXE)
Nuveen Arizona Premium Income Municipal Fund, Inc. (NAZ)
Nuveen California Dividend Advantage Municipal Fund (NAC)
Nuveen California Dividend Advantage Municipal Fund 2 (NVX)
Nuveen California Dividend Advantage Municipal Fund 3 (NZH)
Nuveen California Investment Quality Municipal Fund, Inc. (NQC)
Nuveen California Municipal Market Opportunity Fund, Inc. (NCO)
Nuveen California Municipal Value Fund, Inc. (NCA)
Nuveen California Performance Plus Municipal Fund, Inc. (NCP)
Nuveen California Premium Income Municipal Fund (NCU)
Nuveen California Quality Income Municipal Fund, Inc. (NUC)
Nuveen California Select Quality Municipal Fund, Inc. (NVC)
Nuveen Insured California Dividend Advantage Municipal Fund (NKL)
Nuveen Insured California Premium Income Municipal Fund, Inc. (NPC)
Nuveen Insured California Premium Income Municipal Fund 2, Inc. (NCL)
Nuveen Insured California Tax-Free Advantage Municipal Fund (NKX)
Nuveen Connecticut Dividend Advantage Municipal Fund (NFC)
Nuveen Connecticut Dividend Advantage Municipal Fund 2 (NGK)
Nuveen Connecticut Dividend Advantage Municipal Fund 3 (NGO)
Nuveen Connecticut Premium Income Municipal Fund (NTC)
Nuveen Georgia Dividend Advantage Municipal Fund (NZX)
Nuveen Georgia Dividend Advantage Municipal Fund 2 (NKG)
Nuveen Georgia Premium Income Municipal Fund (NPG)
Nuveen Maryland Dividend Advantage Municipal Fund (NFM)
Nuveen Maryland Dividend Advantage Municipal Fund 2 (NZR)
Nuveen Maryland Dividend Advantage Municipal Fund 3 (NWI)
Nuveen Maryland Premium Income Municipal Fund (NMY)
Nuveen Massachusetts Dividend Advantage Municipal Fund (NMB)
Nuveen Massachusetts Premium Income Municipal Fund (NMT)
Nuveen Insured Massachusetts Tax-Free Advantage Municipal Fund (NGX)
Nuveen Michigan Dividend Advantage Municipal Fund (NZW)
Nuveen Michigan Premium Income Municipal Fund, Inc. (NMP)
Nuveen Michigan Quality Income Municipal Fund, Inc. (NUM)
Nuveen Missouri Premium Income Municipal Fund (NOM)
Nuveen New Jersey Dividend Advantage Municipal Fund (NXJ)
Nuveen New Jersey Dividend Advantage Municipal Fund 2 (NUJ)
Nuveen New Jersey Investment Quality Municipal Fund, Inc. (NQJ)
Nuveen New Jersey Premium Income Municipal Fund, Inc. (NNJ)
Nuveen North Carolina Dividend Advantage Municipal Fund (NRB)


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Nuveen North Carolina Dividend Advantage Municipal Fund 2 (NNO)
Nuveen North Carolina Dividend Advantage Municipal Fund 3 (NII)
Nuveen North Carolina Premium Income Municipal Fund (NNC)
Nuveen Ohio Dividend Advantage Municipal Fund (NXI)
Nuveen Ohio Dividend Advantage Municipal Fund 2 (NBJ)
Nuveen Ohio Dividend Advantage Municipal Fund 3 (NVJ)
Nuveen Ohio Quality Income Municipal Fund, Inc. (NUO)
Nuveen Pennsylvania Dividend Advantage Municipal Fund (NXM)
Nuveen Pennsylvania Dividend Advantage Municipal Fund 2 (NVY)
Nuveen Pennsylvania Investment Quality Municipal Fund (NQP)
Nuveen Pennsylvania Premium Income Municipal Fund 2 (NPY)
Nuveen Texas Quality Income Municipal Fund (NTX)
Nuveen Virginia Dividend Advantage Municipal Fund (NGB)
Nuveen Virginia Dividend Advantage Municipal Fund 2 (NNB)
Nuveen Virginia Premium Income Municipal Fund (NPV)
 
General Information
 
This Joint Proxy Statement is furnished in connection with the solicitation by the Board of Directors or Trustees (each a “Board” and collectively, the “Boards,” and each Director or Trustee, a “Board Member” and collectively, the “Board Members”) of Nuveen Arizona Premium Income Municipal Fund, Inc. (“Arizona Premium Income”), Nuveen California Investment Quality Municipal Fund, Inc. (“California Investment Quality”), Nuveen California Municipal Market Opportunity Fund, Inc. (“California Market Opportunity”), Nuveen California Municipal Value Fund, Inc. (“California Value”), Nuveen California Performance Plus Municipal Fund, Inc. (“California Performance Plus”), Nuveen California Quality Income Municipal Fund, Inc. (“California Quality Income”), Nuveen California Select Quality Municipal Fund, Inc. (“California Select Quality”), Nuveen Insured California Premium Income Municipal Fund, Inc. (“Insured California Premium Income”), Nuveen Insured California Premium Income Municipal Fund 2, Inc. (“Insured California Premium Income 2”), Nuveen Michigan Premium Income Municipal Fund, Inc. (“Michigan Premium Income”), Nuveen Michigan Quality Income Municipal Fund, Inc. (“Michigan Quality Income”), Nuveen New Jersey Investment Quality Municipal Fund, Inc. (“New Jersey Investment Quality”), Nuveen New Jersey Premium Income Municipal Fund, Inc. (“New Jersey Premium Income”) and Nuveen Ohio Quality Income Municipal Fund, Inc. (“Ohio Quality Income”), each a Minnesota Corporation (each referred to herein as a “Minnesota Fund” and collectively, the “Minnesota Funds”), and Nuveen Floating Rate Income Fund (“Floating Rate Income”), Nuveen Floating Rate Income Opportunity Fund (“Floating Rate Income Opportunity”), Nuveen Senior Income Fund (“Senior Income”), Nuveen Tax-Advantaged Floating Rate Fund (“Tax-Advantaged Floating Rate”), Nuveen Arizona Dividend Advantage Municipal Fund (“Arizona Dividend Advantage”), Nuveen Arizona Dividend Advantage Municipal Fund 2 (“Arizona Dividend Advantage 2”), Nuveen Arizona Dividend Advantage Municipal Fund 3 (“Arizona Dividend Advantage 3”), Nuveen California Dividend Advantage Municipal Fund (“California Dividend Advantage”), Nuveen California Dividend Advantage Municipal Fund 2 (“California Dividend Advantage 2”), Nuveen California Dividend Advantage Municipal Fund 3 (“California Dividend Advantage 3”), Nuveen California Premium Income Municipal Fund (“California Premium Income”), Nuveen Insured California Dividend Advantage Municipal Fund (“Insured California Dividend Advantage”), Nuveen Insured California Tax-Free Advantage Municipal Fund (“Insured California Tax-Free Advantage”), Nuveen Connecticut Dividend Advantage Municipal Fund (“Connecticut Dividend Advantage”), Nuveen Connecticut Dividend Advantage Municipal Fund 2 (“Connecticut Dividend Advantage 2”),


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Nuveen Connecticut Dividend Advantage Municipal Fund 3 (“Connecticut Dividend Advantage 3”), Nuveen Connecticut Premium Income Municipal Fund (“Connecticut Premium Income”), Nuveen Georgia Dividend Advantage Municipal Fund (“Georgia Dividend Advantage”), Nuveen Georgia Dividend Advantage Municipal Fund 2 (“Georgia Dividend Advantage 2”), Nuveen Georgia Premium Income Municipal Fund (“Georgia Premium Income”), Nuveen Maryland Dividend Advantage Municipal Fund (“Maryland Dividend Advantage”), Nuveen Maryland Dividend Advantage Municipal Fund 2 (“Maryland Dividend Advantage 2”), Nuveen Maryland Dividend Advantage Municipal Fund 3 (“Maryland Dividend Advantage 3”), Nuveen Maryland Premium Income Municipal Fund (“Maryland Premium Income”), Nuveen Massachusetts Dividend Advantage Municipal Fund (“Massachusetts Dividend Advantage”), Nuveen Massachusetts Premium Income Municipal Fund (“Massachusetts Premium Income”), Nuveen Insured Massachusetts Tax-Free Advantage Municipal Fund (“Insured Massachusetts Tax-Free Advantage”), Nuveen Michigan Dividend Advantage Municipal Fund (“Michigan Dividend Advantage”), Nuveen Missouri Premium Income Municipal Fund (“Missouri Premium Income”), Nuveen New Jersey Dividend Advantage Municipal Fund (“New Jersey Dividend Advantage”), Nuveen New Jersey Dividend Advantage Municipal Fund 2 (“New Jersey Dividend Advantage 2”), Nuveen North Carolina Dividend Advantage Municipal Fund (“North Carolina Dividend Advantage”), Nuveen North Carolina Dividend Advantage Municipal Fund 2 (“North Carolina Dividend Advantage 2”), Nuveen North Carolina Dividend Advantage Municipal Fund 3 (“North Carolina Dividend Advantage 3”), Nuveen North Carolina Premium Income Municipal Fund (“North Carolina Premium Income”), Nuveen Ohio Dividend Advantage Municipal Fund (“Ohio Dividend Advantage”), Nuveen Ohio Dividend Advantage Municipal Fund 2 (“Ohio Dividend Advantage 2”), Nuveen Ohio Dividend Advantage Municipal Fund 3 (“Ohio Dividend Advantage 3”), Nuveen Pennsylvania Dividend Advantage Municipal Fund (“Pennsylvania Dividend Advantage”), Nuveen Pennsylvania Dividend Advantage Municipal Fund 2 (“Pennsylvania Dividend Advantage 2”), Nuveen Pennsylvania Investment Quality Municipal Fund (“Pennsylvania Investment Quality”), Nuveen Pennsylvania Premium Income Municipal Fund 2 (“Pennsylvania Premium Income 2”), Nuveen Texas Quality Income Municipal Fund (“Texas Quality Income”), Nuveen Virginia Dividend Advantage Municipal Fund (“Virginia Dividend Advantage”), Nuveen Virginia Dividend Advantage Municipal Fund 2 (“Virginia Dividend Advantage 2”) and Nuveen Virginia Premium Income Municipal Fund (“Virginia Premium Income”), each a Massachusetts Business Trust (each referred to herein as a “Massachusetts Fund” and collectively, the “Massachusetts Funds”) (the Massachusetts Funds and Minnesota Funds are each, a “Fund” and collectively, the “Funds”), of proxies to be voted at the Annual Meeting of Shareholders to be held in the offices of Nuveen Investments, 333 West Wacker Drive, Chicago, Illinois 60606, on Monday, November 30, 2009, at 9:30 a.m., Central time (for each Fund, an “Annual Meeting” and collectively, the “Annual Meetings”), and at any and all adjournments thereof.
 
On the matters coming before each Annual Meeting as to which a choice has been specified by shareholders on the proxy, the shares will be voted accordingly. If a proxy is returned and no choice is specified, the shares will be voted FOR the election of the nominees as listed in this Joint Proxy Statement and FOR the elimination of the fundamental investment policies and the adoption of new fundamental investment policies for the Affected Municipal Funds (as defined below) and the Insured Funds (as defined below). Shareholders of a Fund who execute proxies may revoke them at any time before they are voted by filing with that Fund a written notice of revocation, by delivering a duly executed proxy bearing a later date, or by attending the Annual Meeting and voting in person.


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The Board of each Fund has determined that the use of this Joint Proxy Statement for each Annual Meeting is in the best interest of each Fund and its shareholders in light of the similar matters being considered and voted on by the shareholders.
 
The following table indicates which shareholders are solicited with respect to each matter:
 
                 
 
Matter     Common Shares     Preferred Shares(1)
 
1(a)(i)
  For each Minnesota Fund, except California Value, election of seven (7) Board Members by all shareholders.     X     X
 
 
1(a)(ii)
  For each Minnesota Fund, except California Value, election of two (2) Board Members by Preferred Shares only.           X
 
 
1(b)
  For California Value, election of three (3) Board Members by all shareholders.     X     N/A
 
 
1(c)(i)
  For each Massachusetts Fund, except Floating Rate Income, Floating Rate Income Opportunity, Senior Income and Tax-Advantaged Floating Rate, election of two (2) Board Members by all shareholders.     X     X
 
 
1(c)(ii)
  For each Massachusetts Business Trust, except Floating Rate Income, Floating Rate Income Opportunity, Senior Income and Tax-Advantaged Floating Rate, election of two (2) Board Members by Preferred Shares only.           X
 
 
1(d)
  For Floating Rate Income, Floating Rate Income Opportunity, Senior Income and Tax-Advantaged Floating Rate, election of four (4) Board Members by all shareholders.     X     N/A
 
 


4


 

                 
 
Matter     Common Shares     Preferred Shares(1)
 
2.
  For Arizona Dividend Advantage, Arizona Dividend Advantage 2, Arizona Dividend Advantage 3, Arizona Premium Income, California Dividend Advantage, California Dividend Advantage 2, California Dividend Advantage 3, California Investment Quality, California Market Opportunity, California Performance Plus, California Premium Income, California Quality Income, California Select Quality, Connecticut Dividend Advantage, Connecticut Dividend Advantage 2, Connecticut Dividend Advantage 3, Connecticut Premium Income, Georgia Dividend Advantage 2, Georgia Premium Income, Maryland Dividend Advantage, Maryland Dividend Advantage 2, Maryland Dividend Advantage 3, Massachusetts Dividend Advantage, Massachusetts Premium Income, Michigan Dividend Advantage, Michigan Premium Income, Missouri Premium Income, New Jersey Dividend Advantage, New Jersey Dividend Advantage 2, New Jersey Investment Quality, New Jersey Premium Income, North Carolina Dividend Advantage, North Carolina Dividend Advantage 2, Ohio Dividend Advantage, Ohio Dividend Advantage 2, Ohio Dividend Advantage 3, Ohio Quality Income, Pennsylvania Dividend Advantage, Pennsylvania Dividend Advantage 2, Pennsylvania Investment Quality, Pennsylvania Premium Income 2, Texas Quality Income and Virginia Premium Income (each an “Affected Municipal Fund”), to approve the elimination of fundamental investment policies and/or to approve the new fundamental investment policies.     X     X
 
 
2(a)
  For each Affected Municipal Fund, except Michigan Premium Income, to approve the elimination of the Fund’s fundamental investment policies relating to investments in municipal securities and below investment grade securities.     X     X
 
 
2(b)
  For each Affected Municipal Fund, except Michigan Premium Income, to approve the new fundamental policy relating to investments in municipal securities.     X     X
 
 

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Matter     Common Shares     Preferred Shares(1)
 
2(c)
  For Arizona Premium Income, California Investment Quality, California Market Opportunity, California Performance Plus, California Premium Income, California Quality Income, California Select Quality, Connecticut Premium Income, Georgia Premium Income, Massachusetts Premium Income, Michigan Premium Income, Missouri Premium Income, New Jersey Investment Quality, New Jersey Premium Income, Ohio Quality Income, Pennsylvania Investment Quality, Pennsylvania Premium Income 2, Texas Quality Income and Virginia Premium Income (each a “Premium/Quality Fund”), to approve the elimination of the Fund’s fundamental policy relating to commodities.     X     X
 
 
2(d)
  For each Premium/Quality Fund, to approve the new fundamental policy relating to commodities.     X     X
 
 
2(e)
  For each Premium/Quality Fund, to approve the elimination of the Fund’s fundamental policies relating to derivatives and short sales.     X     X
 
 
2(f)
  For each Premium/Quality Fund, to approve the elimination of the Fund’s fundamental policy prohibiting investment in other investment companies.     X     X
 
 
3(a)
  For Insured California Dividend Advantage, Insured California Premium Income, Insured California Premium Income 2, Insured California Tax-Free Advantage and Insured Massachusetts Tax-Free Advantage (each an “Insured Fund”), to approve the elimination of the Fund’s fundamental investment policies relating to investments in insured municipal securities.     X     X
 
 
3(b)
  For each Insured Fund, to approve the new fundamental investment policy relating to investments in insured municipal securities.     X     X
 
 
3(c)
  For Insured California Premium Income and Insured California Premium Income 2, to approve the elimination of the Fund’s fundamental policy relating to commodities.     X     X
 
 
3(d)
  For Insured California Premium Income and Insured California Premium Income 2, to approve the new fundamental policy relating to commodities.     X     X
 
 

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Matter     Common Shares     Preferred Shares(1)
 
3(e)
  For Insured California Premium Income and Insured California Premium Income 2, to approve the elimination of the Fund’s fundamental policies relating to derivatives and short sales.     X     X
 
 
3(f)
  For Insured California Premium Income and Insured California Premium Income 2, to approve the elimination of the Fund’s fundamental policy prohibiting investment in other investment companies.     X     X
 
 
 
(1)  Variable Rate Demand Preferred Shares for Insured California Tax-Free Advantage and Municipal Auction Rate Cumulative Preferred Shares for each other municipal fund, except California Value, are referred to as “Preferred Shares.” California Value has not issued Preferred Shares. Floating Rate Income, Floating Rate Income Opportunity, Senior Income and Tax-Advantaged Floating Rate do not have any Preferred Shares outstanding.
 
A quorum of shareholders is required to take action at each Annual Meeting. A majority of the shares entitled to vote at each Annual Meeting, represented in person or by proxy, will constitute a quorum of shareholders at that Annual Meeting, except that for the election of the two Board Member nominees to be elected by holders of Preferred Shares of each Fund (except California Value), 331/3% of the Preferred Shares entitled to vote and represented in person or by proxy will constitute a quorum. Votes cast by proxy or in person at each Annual Meeting will be tabulated by the inspectors of election appointed for that Annual Meeting. The inspectors of election will determine whether or not a quorum is present at the Annual Meeting. The inspectors of election will treat abstentions and “broker non-votes” (i.e., shares held by brokers or nominees, typically in “street name,” as to which (i) instructions have not been received from the beneficial owners or persons entitled to vote and (ii) the broker or nominee does not have discretionary voting power on a particular matter) as present for purposes of determining a quorum.
 
For each Fund, the affirmative vote of a plurality of the shares present and entitled to vote at the Annual Meeting will be required to elect the Board Members of that Fund. For purposes of determining the approval of the proposal to elect nominees for each Fund, abstentions and broker non-votes will have no effect on the election of Board Members. For purposes of determining the approval of the elimination of the fundamental investment policies and the approval of the new fundamental investment policies for the Affected Municipal Funds and Insured Funds, a change will only be consummated if approved by the affirmative vote of the holders of a majority of the outstanding shares of a Fund’s Common Shares and Preferred Shares, voting together as a single class, and by the affirmative vote of a majority of the Fund’s outstanding Preferred Shares, voting as a separate class. For this purpose, a majority of the outstanding shares means, as defined in the Investment Company Act of 1940, as amended (the “1940 Act”), (a) 67% or more of the voting securities present at the Annual Meeting, if the holders of more than 50% of the outstanding voting securities are present or represented by proxy; or (b) more than 50% of the outstanding voting securities, whichever is less. For purposes of determining the approval of the elimination of the fundamental investment policies and the approval of the new fundamental investment policies, abstentions and broker non-votes will have the same effect as shares voted against the proposal.
 
Preferred Shares held in “street name” as to which voting instructions have not been received from the beneficial owners or persons entitled to vote as of one business day before the Annual

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Meeting, or, if adjourned, one business day before the day to which the Annual Meeting is adjourned, and that would otherwise be treated as “broker non-votes” may, pursuant to Rule 452 of the New York Stock Exchange, be voted by the broker on the proposal in the same proportion as the votes cast by all holders of Preferred Shares as a class who have voted on the proposal or in the same proportion as the votes cast by all holders of Preferred Shares of the Fund who have voted on that item. Rule 452 permits proportionate voting of Preferred Shares with respect to a particular item if, among other things, (i) a minimum of 30% of the Preferred Shares or shares of a series of Preferred Shares outstanding has been voted by the holders of such shares with respect to such item and (ii) less than 10% of the Preferred Shares or shares of a series of Preferred Shares outstanding has been voted by the holders of such shares against such item. For the purpose of meeting the 30% test, abstentions will be treated as shares “voted” and, for the purpose of meeting the 10% test, abstentions will not be treated as shares “voted” against the item.
 
Those persons who were shareholders of record at the close of business on October 2, 2009 will be entitled to one vote for each share held and a proportionate fractional vote for each fractional share held. As of October 2, 2009, the shares of the Funds were issued and outstanding as follows:
 
                                 
 
    Fund   Ticker Symbol*   Common Shares     Preferred Shares      
 
    Floating Rate Income   JFR     47,399,976     N/A            
 
 
    Floating Rate Income Opportunity   JRO     28,406,922     N/A            
 
 
    Senior Income   NSL     29,834,353     N/A            
 
 
    Tax-Advantaged Floating Rate   JFP     13,918,947     N/A            
 
 
    Arizona Dividend Advantage   NFZ     1,548,019     Series T     424      
 
 
    Arizona Dividend Advantage 2   NKR     2,439,549     Series W     665      
 
 
    Arizona Dividend Advantage 3   NXE     3,066,030     Series M     736      
 
 
    Arizona Premium Income   NAZ     4,469,154     Series TH     1,115      
 
 
    California Dividend Advantage   NAC     23,480,254     Series TH     2,710      
                    Series F     2,711      
 
 
    California Dividend Advantage 2   NVX     14,746,722     Series M     1,965      
                    Series F     1,966      
 
 
    California Dividend Advantage 3   NZH     24,119,434     Series M     3,081      
                    Series TH     3,082      
 
 
    California Investment Quality   NQC     13,580,232     Series M     3,051      
                    Series W     746      
 
 
    California Market Opportunity   NCO     8,143,348     Series W     1,500      
                    Series F     451      
 
 
    California Value   NCA     25,253,681     N/A            
 
 
    California Performance Plus   NCP     12,939,442     Series T     1,548      
                    Series W     551      
                    Series F     1,548      
 
 
    California Premium Income   NCU     5,737,288     Series M     1,555      
 
 
    California Quality Income   NUC     21,989,090     Series M     1,189      
                    Series W     2,550      
                    Series F     2,550      
 
 


8


 

                                 
 
    Fund   Ticker Symbol*   Common Shares     Preferred Shares      
 
    California Select Quality   NVC     23,088,470     Series T     1,975      
                    Series W     1,383      
                    Series TH     2,963      
 
 
    Insured California Dividend Advantage   NKL     15,253,305     Series T     2,165      
                    Series F     2,165      
 
 
    Insured California Premium Income   NPC     6,446,532     Series T     1,800      
 
 
    Insured California Premium Income 2   NCL     12,662,870     Series T     1,597      
                    Series TH     1,596      
 
 
    Insured California Tax-Free Advantage   NKX     5,886,667     Series 1     355      
 
 
    Connecticut Dividend Advantage   NFC     2,581,761     Series T     690      
 
 
    Connecticut Dividend Advantage 2   NGK     2,317,676     Series W     618      
 
 
    Connecticut Dividend Advantage 3   NGO     4,365,873     Series F     1,131      
 
 
    Connecticut Premium Income   NTC     5,363,976     Series TH     1,338      
 
 
    Georgia Dividend Advantage   NZX     1,969,350     Series M     556      
 
 
    Georgia Dividend Advantage 2   NKG     4,554,659     Series F     1,172      
 
 
    Georgia Premium Income   NPG     3,805,652     Series TH     1,028      
 
 
    Maryland Dividend Advantage   NFM     4,193,517     Series M     1,033      
 
 
    Maryland Dividend Advantage 2   NZR     4,196,366     Series F     1,065      
 
 
    Maryland Dividend Advantage 3   NWI     5,363,909     Series T     1,400      
 
 
    Maryland Premium Income   NMY     10,641,816     Series W     1,258      
                    Series TH     1,577      
 
 
    Massachusetts Dividend Advantage   NMB     1,962,452     Series T     570      
 
 
    Massachusetts Premium Income   NMT     4,764,710     Series TH     1,360      
 
 
    Insured Massachusetts Tax-Free Advantage   NGX     2,724,558     Series W     820      
 
 
    Michigan Dividend Advantage   NZW     2,066,086     Series W     571      
 
 
    Michigan Premium Income   NMP     7,682,048     Series M     805      
                    Series TH     1,343      
 
 
    Michigan Quality Income   NUM     11,638,753     Series TH     2,972      
                    Series F     521      
 
 
    Missouri Premium Income   NOM     2,311,415     Series TH     640      
 
 
    New Jersey Dividend Advantage   NXJ     6,569,912     Series T     1,757      
 
 
    New Jersey Dividend Advantage 2   NUJ     4,520,321     Series W     1,249      
 
 
    New Jersey Investment Quality   NQJ     20,453,722     Series M     2,834      
                    Series TH     1,772      
                    Series F     1,132      
 
 
    New Jersey Premium Income   NNJ     12,036,596     Series T     599      
                    Series W     1,381      
                    Series TH     1,535      
 
 
    North Carolina Dividend Advantage   NRB     2,266,549     Series T     643      
 
 

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    Fund   Ticker Symbol*   Common Shares     Preferred Shares      
 
    North Carolina Dividend Advantage 2   NNO     3,749,642     Series F     1,120      
 
 
    North Carolina Dividend Advantage 3   NII     3,933,682     Series W     1,120      
 
 
    North Carolina Premium Income   NNC     6,351,838     Series TH     1,806      
 
 
    Ohio Dividend Advantage   NXI     4,243,493     Series W     1,240      
 
 
    Ohio Dividend Advantage 2   NBJ     3,121,477     Series F     924      
 
 
    Ohio Dividend Advantage 3   NVJ     2,156,758     Series T     660      
 
 
    Ohio Quality Income   NUO     9,746,032     Series M     680      
                    Series TH1     1,400      
                    Series TH2     1,000      
 
 
    Pennsylvania Dividend Advantage   NXM     3,330,584     Series T     900      
 
 
    Pennsylvania Dividend Advantage 2   NVY     3,725,809     Series M     920      
 
 
    Pennsylvania Investment Quality   NQP     16,134,098     Series T     744      
                    Series W     2,033      
                    Series TH     1,693      
 
 
    Pennsylvania Premium Income 2   NPY     15,618,851     Series M     710      
                    Series TH     1,748      
                    Series F     1,513      
 
 
    Texas Quality Income   NTX     9,504,400     Series M     716      
                    Series TH     1,886      
 
 
    Virginia Dividend Advantage   NGB     3,137,362     Series W     780      
 
 
    Virginia Dividend Advantage 2   NNB     5,744,294     Series M     1,477      
 
 
    Virginia Premium Income   NPV     8,958,420     Series T     743      
                    Series TH     1,537      
 
 
 
* The Common Shares of all of the Funds are listed on the NYSE Amex, except JFR, JRO, NSL, JFP, NAZ, NAC, NQC, NCO, NCA, NCP, NUC, NVC, NPC, NCL, NTC, NMY, NMT, NMP, NUM, NQJ, NNJ, NNC, NUO, NQP, NPY, NTX and NPV, which are listed on the New York Stock Exchange.
 
1.   Election of Board Members
 
Minnesota Funds
 
At the Annual Meeting of each Minnesota Fund, except California Value, Board Members are to be elected to serve until the next annual meeting or until their successors have been duly elected and qualified. Under the terms of each Minnesota Fund’s organizational documents (except California Value), under normal circumstances, holders of Preferred Shares are entitled to elect two (2) Board Members, and the remaining Board Members are to be elected by holders of Common Shares and Preferred Shares, voting together as a single class. Pursuant to the organizational documents of California Value, its Board is divided into three classes, with each class being elected to serve until the third succeeding annual meeting subsequent to their election or thereafter in each case when their respective successors are duly elected and

10


 

qualified. For California Value, three (3) Board Members are nominated to be elected at this Annual Meeting.
 
(a)  For each Minnesota Fund, except California Value:
 
  (i)  seven (7) Board Members are to be elected by holders of Common Shares and Preferred Shares, voting together as a single class. Board Members Amboian, Bremner, Evans, Kundert, Stockdale, Stone and Toth are nominees for election by all shareholders.
 
  (ii)  two (2) Board Members are to be elected by holders of Preferred Shares, each series voting together as a single class. Board Members Hunter and Schneider are nominees for election by holders of Preferred Shares.
 
  (b)   For California Value: three (3) Board Members are to be elected by all shareholders.
 
With respect to California Value, Board Members Bremner, Evans and Schneider have been designated as Class III Board Members and as nominees for Board Members for a term expiring at the annual meeting of shareholders in 2012 or until their successors have been duly elected and qualified. Board Members Amboian, Hunter, Kundert, Stockdale, Stone and Toth are current and continuing Board Members. Board Members Hunter, Stockdale and Stone have been designated as Class I Board Members for a term expiring at the annual meeting of shareholders in 2010 or until their successors have been duly elected and qualified. Board Members Amboian, Kundert and Toth have been designated as Class II Board Members for a term expiring at the annual meeting of shareholders in 2011 or until their successors have been duly elected and qualified.
 
Massachusetts Funds
 
Pursuant to the organizational documents of each Massachusetts Fund, each Board is divided into three classes, Class I, Class II and Class III, to be elected by the holders of the outstanding Common Shares and any outstanding Preferred Shares, voting together as a single class to serve until the third succeeding annual meeting subsequent to their election or thereafter, in each case until their successors have been duly elected and qualified. For each Massachusetts Fund, under normal circumstances, holders of Preferred Shares are entitled to elect two (2) Board Members. The Board Members elected by holders of Preferred Shares will be elected to serve until the next annual meeting or until their successors have been duly elected and qualified.
 
  (c)   For each Massachusetts Fund, except Floating Rate Income, Floating Rate Income Opportunity, Senior Income and Tax-Advantaged Floating Rate:
 
  (i)  two (2) Board Members are to be elected by holders of Common Shares and Preferred Shares, voting together as a single class. Board Members Bremner and Evans have been designated as Class III Board Members and as nominees for Board Members for a term expiring at the annual meeting of shareholders in 2012 or until their successors have been duly elected and qualified. Board Members Amboian, Kundert, Stockdale, Stone and Toth are current and continuing Board Members. Board Members Stockdale and Stone have been designated as Class I Board Members for a term expiring at the annual meeting


11


 

  of shareholders in 2010 or until their successors have been duly elected and qualified. Board Members Amboian, Kundert and Toth have been designated as Class II Board Members for a term expiring at the annual meeting of shareholders in 2011 or until their successors have been duly elected and qualified.
 
  (ii)  two (2) Board Members are to be elected by holders of Preferred Shares, voting separately as a single class. Board Members Hunter and Schneider are nominees for election by holders of Preferred Shares for a term expiring at the next annual meeting or until their successors have been duly elected and qualified.
 
  (d)   For Floating Rate Income, Floating Rate Income Opportunity, Senior Income and Tax-Advantaged Floating Rate: four (4) Board Members are to be elected by all shareholders.
 
With respect to Floating Rate Income, Floating Rate Income Opportunity, Senior Income and Tax-Advantaged Floating Rate, Board Members Bremner and Evans have been designated as Class III Board Members and as nominees for Board Members for a term expiring at the annual meeting of shareholders in 2012 or until their successors have been duly elected and qualified. Board Members Hunter and Schneider have been re-designated as Class I and Class III Board Members, respectively, and as Board Member nominees for a term expiring at the annual meeting of shareholders in 2010 with respect to Board Member Hunter and 2012 with respect to Board Member Schneider or until their successors have been duly elected and qualified. Board Members Amboian, Kundert, Stockdale, Stone and Toth are current and continuing Board Members. Board Members Stockdale and Stone have been designated as Class I Board Members for a term expiring at the annual meeting of shareholders in 2010 or until their successors have been duly elected and qualified. Board Members Amboian, Kundert and Toth have been designated as Class II Board Members for a term expiring at the annual meeting of shareholders in 2011 or until their successors have been duly elected and qualified.
 
It is the intention of the persons named in the enclosed proxy to vote the shares represented thereby for the election of the nominees listed in the table below unless the proxy is marked otherwise. Each of the nominees has agreed to serve as a Board Member of each Fund if elected. However, should any nominee become unable or unwilling to accept nomination for election, the proxies will be voted for substitute nominees, if any, designated by that Fund’s present Board.
 
For each Minnesota Fund, except for California Value, all Board Member nominees, were last elected to each Fund’s Board at the annual meeting of shareholders held on November 18, 2008 and adjourned to January 13, 2009.
 
For California Value, Board Members Amboian, Kundert and Toth were last elected as Class II Board Members at the annual meeting of shareholders held on November 18, 2008 and adjourned to January 13, 2009. Board Member Hunter was last elected as a Class I Board Member of the Board of California Value at the annual meeting of shareholders held on November 18, 2008 and adjourned to January 13, 2009. Board Members Stockdale and Stone were last elected as Class I Board Members of the Board of California Value at the annual meeting of shareholders held on December 18, 2007. Board Members Bremner, Evans and


12


 

Schneider were last elected as Class III Board Members at the annual meeting of shareholders held on November 14, 2006.
 
For each Massachusetts Fund, Board Members Amboian, Kundert and Toth were last elected to each Fund’s Board as Class II Board Members and Board Members Hunter and Schneider were last elected to each Fund’s Board at the annual meeting of shareholders held on November 18, 2008 and adjourned to January 13, 2009 and for Insured California Tax-Free Advantage adjourned to March 17, 2009 and March 18, 2009.
 
For each Massachusetts Fund, except Floating Rate Income, Floating Rate Income Opportunity, Tax-Advantage Floating Rate, California Dividend Advantage, California Dividend Advantage 2, California Dividend Advantage 3, California Premium Income, Insured California Dividend Advantage, Insured California Tax-Free Advantage, Maryland Dividend Advantage 3 and New Jersey Dividend Advantage, Board Members Stockdale and Stone were last elected to each Fund’s Board as Class I Board Members at the annual meeting of shareholders held on October 12, 2007. For Floating Rate Income, Floating Rate Income Opportunity and Maryland Dividend Advantage 3, Board Members Stockdale and Stone were last elected to each Fund’s Board as Class I Board Members at the annual meeting of shareholders held on October 12, 2007, which was adjourned to October 22, 2007. For New Jersey Dividend Advantage, Board Members Stockdale and Stone were last elected to each Fund’s Board as Class I Board Members at the annual meeting of shareholders held on October 12, 2007 and adjourned to October 22, 2007 and November 8, 2007. For Tax-Advantaged Floating Rate, Board Members Stockdale and Stone were last elected to the Fund’s Board as Class I Board Members at the annual meeting of shareholders held on October 12, 2007 and adjourned to October 22, 2007, November 12, 2007 and November 30, 2007.
 
For each Massachusetts Fund, except California Dividend Advantage, California Dividend Advantage 2, California Dividend Advantage 3, California Premium Income, Insured California Dividend Advantage and Insured California Tax-Free Advantage, Board Members Bremner and Evans were last elected to each Fund’s Board at the annual meeting of shareholders held on November 14, 2006.
 
For California Dividend Advantage, California Dividend Advantage 2, California Dividend Advantage 3, California Premium Income, Insured California Dividend Advantage and Insured California Tax-Free Advantage, Board Members Stockdale and Stone were last elected to each Fund’s Board as Class I Board Members at the annual meeting of shareholders held on December 18, 2007. Board Members Bremner and Evans were last elected to each Fund’s Board at the annual meeting of shareholders held on November 14, 2006.
 
Other than Mr. Amboian (for all Funds), all Board Member nominees are not “interested persons” as defined in the 1940 Act, of the Funds or of Nuveen Asset Management (the “Adviser” or “NAM”) and have never been an employee or director of Nuveen Investments, Inc. (“Nuveen”), the Adviser’s parent company, or any affiliate. Accordingly, such Board Members are deemed “Independent Board Members.”
 
The Board unanimously recommends that shareholders vote FOR the election of the nominees named below.


13


 

Board Nominees/Board Members
 
                         
                Number of
     
                Portfolios
     
                in Fund
    Other
                Complex
    Director-
        Term of Office
      Overseen
    ships Held
Name, Address
  Position(s)
  and Length
  Principal Occupation(s)
  by Board
    by Board
and Birth Date   Held with Fund   of Time Served(1)   During Past 5 Years   Member     Member
 
 
Nominees/Board Members who are not interested persons of the Funds
                         
Robert P. Bremner
c/o Nuveen Investments, Inc.
333 West Wacker Drive
Chicago, IL 60606
(8/22/40)
  Chairman of the Board, Board Member  
Term: Annual or Class III Board Member until 2012

Length of Service: Since 1996; Chairman of the Board Since 2008; Lead Independent Director (2005-2008)
  Private Investor and Management Consultant; Treasurer and Director, Humanities Council of Washington D.C.     197     N/A
                         
Jack B. Evans
c/o Nuveen Investments, Inc.
333 West Wacker Drive
Chicago, IL 60606
(10/22/48)
  Board Member  
Term: Annual or Class III Board Member until 2012

Length of Service: Since 1999
  President, The Hall-Perrine Foundation, a private philanthropic corporation (since 1996); Director and Vice Chairman, United Fire Group, a publicly held company; Member of the Board of Regents for the State of Iowa University System; Director, Gazette Companies; Life Trustee of Coe College and Iowa College Foundation; Member of the Advisory Council of the Department of Finance in the Tippie College of Business, University of Iowa; formerly, Director, Alliant Energy; formerly, Director, Federal Reserve Bank of Chicago; formerly, President and Chief Operating Officer, SCI Financial Group, Inc., a regional financial services firm.     197     See Principal Occupation Description
                         


14


 

                         
                Number of
     
                Portfolios
     
                in Fund
    Other
                Complex
    Director-
        Term of Office
      Overseen
    ships Held
Name, Address
  Position(s)
  and Length
  Principal Occupation(s)
  by Board
    by Board
and Birth Date   Held with Fund   of Time Served(1)   During Past 5 Years   Member     Member
 
 
William C. Hunter
c/o Nuveen Investments, Inc.
333 West Wacker Drive
Chicago, IL 60606
(3/6/48)
  Board Member  
Term: Annual or Class I Board Member until 2010

Length of Service: Since 2004
  Dean, Tippie College of Business, University of Iowa (since 2006); Director (since 2004) of Xerox Corporation, a publicly held company; Director, Beta Gamma Sigma International Honor Society (since 2005); formerly, (2003-2006), Dean and Distinguished Professor of Finance, School of Business at the University of Connecticut; formerly, Senior Vice President and Director of Research at the Federal Reserve Bank of Chicago (1995-2003); formerly, Director, SS&C Technologies, Inc. (May 2005-October 2005); formerly, Director, Credit Research Center at Georgetown University (1997-2007).     197     See Principal Occupation Description
                         
David J. Kundert
c/o Nuveen Investments, Inc.
333 West Wacker Drive
Chicago, IL 60606
(10/28/42)
  Board Member  
Term: Annual or Class II Board Member until 2011

Length of Service: Since 2005
  Director, Northwestern Mutual Wealth Management Company; retired (2004) as Chairman, JPMorgan Fleming Asset Management, President and CEO, Banc One Investment Advisors Corporation, and President, One Group Mutual Funds; prior thereto, Executive Vice President, Bank One Corporation and Chairman and CEO, Banc One Investment Management Group; Board of Regents, Luther College; member of the Wisconsin Bar Association; member of Board of Directors, Friends of Boerner Botanical Gardens; member of Investment Committee, Greater Milwaukee Foundation.     197     See Principal Occupation Description
                         

15


 

                         
                Number of
     
                Portfolios
     
                in Fund
    Other
                Complex
    Director-
        Term of Office
      Overseen
    ships Held
Name, Address
  Position(s)
  and Length
  Principal Occupation(s)
  by Board
    by Board
and Birth Date   Held with Fund   of Time Served(1)   During Past 5 Years   Member     Member
 
 
William J. Schneider
c/o Nuveen Investments, Inc.
333 West Wacker Drive
Chicago, IL 60606
(9/24/44)
  Board Member  
Term: Annual or Class III Board Member until 2012

Length of Service: Since 1996
  Chairman, of Miller-Valentine Partners Ltd., a real estate investment company; formerly, Senior Partner and Chief Operating Officer (retired, 2004) of Miller-Valentine Group; Member, University of Dayton Business School Advisory Council; Member, Dayton Philharmonic Orchestra Board; formerly, Member, Business Advisory Council, Cleveland Federal Reserve Bank; formerly, Director, Dayton Development Coalition.     197     See Principal Occupation Description
                         
Judith M. Stockdale
c/o Nuveen Investments, Inc.
333 West Wacker Drive
Chicago, IL 60606
(12/29/47)
  Board Member  
Term: Annual or Class I Board Member until 2010

Length of Service: Since 1997
  Executive Director, Gaylord and Dorothy Donnelley Foundation (since 1994); prior thereto, Executive Director, Great Lakes Protection Fund (from 1990 to 1994).     197     N/A
                         
Carole E. Stone
c/o Nuveen Investments, Inc. 333 West Wacker Drive
Chicago, IL 60606
(6/28/47)
  Board Member  
Term: Annual or Class I Board Member until 2010

Length of Service: Since 2007
  Director, C2 Options Exchange, Incorporated (since 2009); Director, Chicago Board Options Exchange (since 2006); Commissioner, NYSE Commission on Public Authority Reform (since 2005); formerly, Chair, New York Racing Association Oversight Board (2005-2007).     197     See Principal Occupation Description
                         

16


 

                         
                Number of
     
                Portfolios
     
                in Fund
    Other
                Complex
    Director-
        Term of Office
      Overseen
    ships Held
Name, Address
  Position(s)
  and Length
  Principal Occupation(s)
  by Board
    by Board
and Birth Date   Held with Fund   of Time Served(1)   During Past 5 Years   Member     Member
 
 
Terence J. Toth
c/o Nuveen Investments, Inc.
333 West Wacker Drive
Chicago, IL 60606
(9/29/59)
  Board Member  
Term: Annual or Class II Board Member until 2011

Length of Service: Since 2008
  Director, Legal & General Investment Management America, Inc. (since 2008); Managing Partner, Musso Capital Management (since 2008); formerly, CEO and President, Northern Trust Investments (2004-2007); Executive Vice President, Quantitative Management & Securities Lending (2000-2004); prior thereto, various positions with Northern Trust Company (since 1994); Member: Goodman Theatre Board (since 2004), Chicago Fellowship Board (since 2005), University of Illinois Leadership Council Board (since 2007) and Catalyst Schools of Chicago Board (since 2008); formerly, Member: Northern Trust Mutual Funds Board (2005-2007), Northern Trust Investments Board (2004-2007), Northern Trust Japan Board (2004-2007), Northern Trust Securities Inc. Board (2003-2007) and Northern Trust Hong Kong Board (1997-2004).     197     See Principal Occupation Description

17


 

                         
                Number of
     
                Portfolios
     
                in Fund
    Other
                Complex
    Director-
        Term of Office
      Overseen
    ships Held
Name, Address
  Position(s)
  and Length
  Principal Occupation(s)
  by Board
    by Board
and Birth Date   Held with Fund   of Time Served(1)   During Past 5 Years   Member     Member
 
 
Nominee/Board Member who is an interested person of the Funds
                         
John P. Amboian(2)
333 West Wacker Drive
Chicago, IL 60606
(6/14/61)
  Board Member  
Term: Annual or Class II Board Member until 2011

Length of Service: Since 2008
  Chief Executive Officer (since July 2007) and Director (since 1999) of Nuveen Investments, Inc.; Chief Executive Officer (since 2007) of Nuveen Asset Management, Nuveen Investments Advisers, Inc. formerly, President (1999-2004) of Nuveen Advisory Corp. and Nuveen Institutional Advisory Corp.(3)     197     See Principal Occupation Description
 
 
 
(1) Length of Time Served indicates the year in which the individual became a Board Member of a fund in the Nuveen fund complex.
 
(2) “Interested person” as defined in the 1940 Act, by reason of being an officer and director of each Fund’s Adviser.
 
(3) Nuveen Advisory Corp. and Nuveen Institutional Advisory Corp. were merged into Nuveen Asset Management, effective January 1, 2005.
 
The dollar range of equity securities beneficially owned by each Board Member in each Fund and all Nuveen funds overseen by the Board Member as of December 31, 2008 is set forth in Appendix A. The number of shares of each Fund beneficially owned by each Board Member and by the Board Members and officers of the Funds as a group as of December 31, 2008 is set forth in Appendix A. On December 31, 2008, Board Members and executive officers as a group beneficially owned approximately 640,000 shares of all funds managed by NAM (including shares held by the Board Members through the Deferred Compensation Plan for Independent Board Members and by executive officers in Nuveen’s 401 (k)/profit sharing plan). As of October 2, 2009, each Board Member’s individual beneficial shareholdings of each Fund constituted less than 1% of the outstanding shares of each Fund. As of October 2, 2009, the Board Members and executive officers as a group beneficially owned less than 1% of the outstanding shares of each Fund. As of October 2, 2009, no shareholder beneficially owned more than 5% of any class of shares of any Fund, except as provided in Appendix B.
 
Compensation
 
Each Independent Board Member receives a $100,000 annual retainer plus (a) a fee of $3,250 per day for attendance in person or by telephone at a regularly scheduled meeting of the Board; (b) a fee of $2,500 per meeting for attendance in person where such in-person attendance is required and $1,500 per meeting for attendance by telephone or in person where in-person attendance is not required at a special, non-regularly scheduled board meeting; (c) a fee of $2,000 per meeting for attendance in person or $1,500 per meeting for by telephone at an audit committee meeting; (d) a fee of $2,000 per meeting for attendance at a regularly scheduled compliance, risk management and regulatory oversight committee meeting where in-person attendance is required and $1,000 per meeting for attendance of other meetings where

18


 

in-person attendance is required; (e) a fee of $1,000 per meeting for attendance in person or by telephone for a meeting of the dividend committee; and (f) a fee of $500 per meeting for attendance in person at all other committee meetings, $1,000 for attendance at shareholder meetings, on a day on which no regularly scheduled board meeting is held in which in-person attendance is required and $250 per meeting for attendance by telephone or in person at such committee meetings (excluding shareholder meetings) where in-person attendance is not required and $100 per meeting when the executive committee acts as pricing committee for IPOs or other public offerings by a fund, plus, in each case, expenses incurred in attending such meetings. In addition to the payments described above, the Independent Chairman receives $50,000 annually and the Lead Independent Director, if any, receives $35,000, the chairpersons of the audit committee, the dividend committee and the compliance, risk management and regulatory oversight committee receive $7,500 and the chairperson of the nominating and governance committee receives $5,000 as additional retainers to the annual retainer paid to such individuals. Independent Board Members also receive a fee of $2,500 per day for site visits to entities that provide services to the Nuveen funds on days on which no regularly scheduled board meeting is held. When ad hoc committees are organized, the nominating and governance committee will at the time of formation determine compensation to be paid to the members of such committee, however, in general such fees will be $1,000 per meeting for attendance in person at any ad hoc committee meeting where in-person attendance is required and $500 per meeting for attendance by telephone or in person at such meetings where in-person attendance is not required. The annual retainer, fees and expenses are allocated among the funds managed by the Adviser, on the basis of relative net asset sizes although fund management may, in its discretion, establish a minimum amount to be allocated to each fund. The Board Member affiliated with Nuveen and the Adviser serves without any compensation from the Funds.
 
The boards of certain Nuveen funds (the “Participating Funds”) established a Deferred Compensation Plan for Independent Board Members (“Deferred Compensation Plan”). Under the Deferred Compensation Plan, Independent Board Members of the Participating Funds may defer receipt of all, or a portion, of the compensation they earn for their services to the Participating Funds, in lieu of receiving current payments of such compensation. Any deferred amount is treated as though an equivalent dollar amount had been invested in shares of one or more eligible Nuveen funds.


19


 

                                                                 
Aggregate Compensation from the Funds(2)  
   
    Robert P.
    Jack B.
    William C.
    David J.
    William J.
    Judith M.
    Carol E.
    Terence J.
 
Fund   Bremner     Evans     Hunter     Kundert     Schneider     Stockdale     Stone     Toth  
   
 
Floating Rate Income
  $ 2,642     $ 2,287     $ 1,792     $ 2,235     $ 2,313     $ 2,000     $ 1,834     $ 2,153  
Floating Rate Income Opportunity
    1,587       1,373       1,075       1,342       1,389       1,200       1,101       1,293  
Senior Income
    979       846       666       827       856       742       681       798  
Tax-Advantaged Floating Rate
    385       2,316       246       270       286       2,317       294       1,227  
Arizona Dividend Advantage
    133       115       91       108       112       99       94       106  
Arizona Dividend Advantage 2
    219       189       151       177       185       164       155       175  
Arizona Dividend Advantage 3
    257       223       177       208       217       192       182       205  
Arizona Premium Income
    372       322       256       301       314       278       263       297  
California Dividend Advantage
    1,682       1,419       841       889       990       1,225       1,310       540  
California Dividend Advantage 2
    1,126       948       565       600       667       819       873       382  
California Dividend Advantage 3
    1,718       1,448       860       909       1,013       1,250       1,336       559  
California Investment Quality
    1,033       871       517       548       610       752       802       339  
California Market Opportunity
    676       596       485       567       595       523       499       280  
California Value
    815       680       405       433       482       581       631       280  
California Performance Plus
    997       838       499       529       589       725       772       333  
California Premium Income
    447       394       321       375       393       346       330       186  
California Quality Income
    1,741       1,465       872       924       1,028       1,267       1,350       580  
California Select Quality
    1,775       1,495       889       941       1,048       1,292       1,378       587  
Insured California Dividend Advantage
    1,172       986       587       622       693       853       908       393  
Insured California Premium Income
    521       460       374       437       458       403       385       218  
Insured California Premium Income 2
    921       776       461       488       543       671       716       301  
Insured California Tax-Free Advantage
    447       395       321       376       395       346       333       176  
Connecticut Dividend Advantage
    226       193       156       183       191       167       161       146  
Connecticut Dividend Advantage 2
    204       174       141       165       173       150       145       132  
Connecticut Dividend Advantage 3
    367       314       254       298       311       271       261       237  
Connecticut Premium Income
    448       383       310       364       380       331       319       289  
 
 


20


 

                                                                 
Aggregate Compensation from the Funds(2)  
   
    Robert P.
    Jack B.
    William C.
    David J.
    William J.
    Judith M.
    Carol E.
    Terence J.
 
Fund   Bremner     Evans     Hunter     Kundert     Schneider     Stockdale     Stone     Toth  
   
 
Georgia Dividend Advantage
  $ 171     $ 146     $ 119     $ 139     $ 145     $ 127     $ 122     $ 111  
Georgia Dividend Advantage 2
    373       318       258       303       316       275       265       240  
Georgia Premium Income
    320       273       221       260       271       236       228       206  
Maryland Dividend Advantage
    345       295       239       281       293       255       246       221  
Maryland Dividend Advantage 2
    350       299       242       284       297       258       249       224  
Maryland Dividend Advantage 3
    441       377       305       358       374       326       314       283  
Maryland Premium Income
    898       767       622       730       762       663       639       579  
Massachusetts Dividend Advantage
    167       142       115       135       141       123       119       107  
Massachusetts Premium Income
    393       336       272       319       334       290       280       253  
Insured Massachusetts Tax-Free Advantage
    234       200       162       191       199       173       167       152  
Michigan Dividend Advantage
    165       145       118       138       145       127       121       68  
Michigan Premium Income
    610       538       437       511       536       472       450       256  
Michigan Quality Income
    923       777       464       493       548       671       715       318  
Missouri Premium Income
    183       156       127       149       155       135       130       118  
New Jersey Dividend Advantage
    546       466       378       443       463       403       388       350  
New Jersey Dividend Advantage 2
    381       325       264       309       323       281       271       244  
New Jersey Investment Quality
    1,729       1,458       1,080       1,248       1,311       1,264       1,246       1,083  
New Jersey Premium Income
    1,042       879       653       755       792       763       751       657  
North Carolina Dividend Advantage
    200       171       138       162       169       148       142       130  
North Carolina Dividend Advantage 2
    328       280       227       266       278       242       233       212  
North Carolina Dividend Advantage 3
    333       284       230       270       282       246       237       216  
North Carolina Premium Income
    537       459       372       437       456       397       382       348  
Ohio Dividend Advantage
    342       301       245       286       301       265       252       144  
Ohio Dividend Advantage 2
    250       220       179       209       220       193       184       104  
Ohio Dividend Advantage 3
    178       157       128       149       157       138       131       75  
Ohio Quality Income
    835       736       598       699       734       646       616       351  
Pennsylvania Dividend Advantage
    280       239       194       228       238       207       199       179  
Pennsylvania Dividend Advantage 2
    320       274       222       260       272       237       228       206  
Pennsylvania Investment Quality
    1,385       1,168       866       999       1,050       1,013       998       867  
Pennsylvania Premium Income 2
    1,257       1,060       785       907       953       919       907       785  
Texas Quality Income
    860       745       593       697       727       644       609       688  
Virginia Dividend Advantage
    259       221       180       211       220       192       185       166  
Virginia Dividend Advantage 2
    479       409       332       389       406       354       341       307  
Virginia Premium Income
    750       641       519       610       636       554       534       483  
Total Compensation from Nuveen Funds Paid to Board Members/ Nominees(1)
  $ 216,138     $ 189,578     $ 120,659     $ 128,240     $ 140,917     $ 160,362     $ 171,750     $ 28,695  
 
 
 
(1)  Based on the total compensation paid, including deferred fees (including the return from the assumed investment in the eligible Nuveen funds), to the Board Members for the calendar year ended December 31, 2008 for services to the Nuveen open-end and closed-end funds advised by NAM.


21


 

 
(2)  Includes deferred fees. Pursuant to a deferred compensation agreement with certain of the Funds, deferred amounts are treated as though an equivalent dollar amount has been invested in shares of one or more Participating Funds. Total deferred fees for the Funds (including the return from the assumed investment in the Participating Funds) payable are:
 
                                                                 
   
    Robert P.
    Jack B.
    William C.
    David J.
    William J.
    Judith M.
    Carol E.
    Terence J.
 
Fund   Bremner     Evans     Hunter     Kundert     Schneider     Stockdale     Stone     Toth  
   
 
Floating Rate Income
  $ 423     $ 603     $ 983     $ 2,235     $ 2,313     $ 918     $     $ 1,679  
Floating Rate Income Opportunity
    254       362       588       1,342       1,389       552             1,007  
Senior Income
    157       223       370       827       856       340             626  
Tax-Advantaged Floating Rate
    53       561       215       270       286       1,019             709  
California Dividend Advantage
    178       245       841       889       990       264             540  
California Dividend Advantage 2
    121       165       565       600       667       178             382  
California Dividend Advantage 3
    182       251       860       909       1,013       270             559  
California Investment Quality
    110       151       517       548       610       163             339  
California Value
    87       119       405       433       482       127             280  
California Performance Plus
    106       146       499       529       589       158             333  
California Quality Income
    186       255       872       924       1,028       275             580  
California Select Quality
    189       260       889       941       1,048       280             587  
Insured California Dividend Advantage
    125       172       587       622       693       185             393  
Insured California Premium Income 2
    98       135       461       488       543       145             301  
Michigan Quality Income
    99       136       464       493       548       147             318  
New Jersey Investment Quality
    241       336       716       1,248       1,311       471             865  
New Jersey Premium Income
    145       203       427       755       792       287             522  
Pennsylvania Investment Quality
    193       269       572       999       1,050       378             691  
Pennsylvania Premium Income 2
    175       244       519       907       953       343             626  
 
 
 


22


 

Committees
 
The Board of each Fund has five standing committees: the executive committee, the audit committee, the nominating and governance committee, the dividend committee and the compliance, risk management and regulatory oversight committee.
 
John P. Amboian, Robert P. Bremner, Chair, and Judith M. Stockdale serve as current members of the executive committee of each Fund. The executive committee, which meets between regular meetings of the Board, is authorized to exercise all of the powers of the Board; provided that the scope of the powers of the executive committee, unless otherwise specifically authorized by the full Board, is limited to: (i) emergency matters where assembly of the full Board is impracticable (in which case management will take all reasonable steps to quickly notify each individual Board Member of the actions taken by the executive committee) and (ii) matters of an administrative or ministerial nature. The number of executive committee meetings of each Fund held during its last fiscal year is shown in Appendix C.
 
Jack B. Evans, Chair, Judith M. Stockdale and Terence J. Toth are current members of the dividend committee of each Fund. The dividend committee is authorized to declare distributions on the Fund’s shares including, but not limited to, regular and special dividends, capital gains and ordinary income distributions. The number of dividend committee meetings of each Fund held during its last fiscal year is shown in Appendix C.
 
William C. Hunter, William J. Schneider, Chair, Judith M. Stockdale and Carole E. Stone are current members of the compliance, risk management and regulatory oversight committee of each Fund. The compliance, risk management and regulatory oversight committee is responsible for the oversight of compliance issues, risk management, and other regulatory matters affecting the Funds which are not otherwise the jurisdiction of the other Board committees. The number of compliance, risk management and regulatory oversight committee meetings of each Fund held during its last fiscal year is shown in Appendix C.
 
Each Fund’s Board has an audit committee, in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended (the “1934 Act”), that is composed of Independent Board Members who are also “independent” as that term is defined in the listing standards pertaining to closed-end funds of the New York Stock Exchange or the NYSE Amex, as applicable. Robert P. Bremner, Jack B. Evans, David J. Kundert, Chair, William J. Schneider and Terence J. Toth are current members of the audit committee of each Fund. The audit committee is responsible for the oversight and monitoring of (1) the accounting and reporting policies, procedures and practices and the audit of the financial statements of the Funds, (2) the quality and integrity of the financial statements of the Funds and (3) the independent registered public accounting firm’s qualifications, performance and independence. The audit committee reviews the work and any recommendations of the Funds’ independent registered public accounting firm. Based on such review, it is authorized to make recommendations to the Board. The audit committee is also responsible for the oversight of the Pricing Procedures of the Funds and the internal Valuation Group. The Boards have adopted a written Audit Committee Charter that conforms to the listing standards of the New York Stock Exchange or the NYSE Amex, as applicable. A copy of the Audit Committee Charter is attached as Appendix D. The number of audit committee meetings of each Fund held during its last fiscal year is shown in Appendix C.
 
Each Fund has a nominating and governance committee that is composed entirely of Independent Board Members who are also “independent” as defined by New York Stock


23


 

Exchange or NYSE Amex US listing standards, as applicable. Robert P. Bremner, Chair, Jack B. Evans, William C. Hunter, David J. Kundert, William J. Schneider, Judith M. Stockdale, Carole E. Stone and Terence J. Toth are current members of the nominating and governance committee of each Fund. The purpose of the nominating and governance committee is to seek, identify and recommend to the Board qualified candidates for election or appointment to each Fund’s Board. In addition, the committee oversees matters of corporate governance, including the evaluation of Board performance and processes, and assignment and rotation of committee members, and the establishment of corporate governance guidelines and procedures, to the extent necessary or desirable. The committee operates under a written charter adopted and approved by the Boards of each Fund, a copy of which is available on the Funds’ website at www.nuveen.com/CEF/Info/Shareholder/. The number of nominating and governance committee meetings of each Fund held during its last fiscal year is shown in Appendix C.
 
The nominating and governance committee looks to many sources for recommendations of qualified candidates, including current Board Members, employees of the Adviser, current shareholders of the Funds, third party sources and any other persons or entities that may be deemed necessary or desirable by the committee. Shareholders of the Funds who wish to nominate a candidate to their Fund’s Board should mail information to the attention of Lorna Ferguson, Manager of Fund Board Relations, Nuveen Investments, 333 West Wacker Drive, Chicago, Illinois 60606. This information must include evidence of Fund ownership of the person or entity recommending the candidate, a full listing of the proposed candidate’s education, experience, current employment, date of birth, names and addresses of at least three professional references, information as to whether the candidate is an “interested person” (as such term is defined in the 1940 Act) in relation to the Fund and such other information that would be helpful to the nominating and governance committee in evaluating the candidate. All satisfactorily completed information regarding candidates will be forwarded to the chairman of the nominating and governance committee and the outside counsel to the Independent Board Members. Recommendations for candidates to the Board will be evaluated in light of whether the number of Board members is expected to change and whether the Board expects any vacancies. All nominations from Fund shareholders will be acknowledged, although there may be times when the committee is not actively recruiting new Board members. In those circumstances nominations will be kept on file until active recruitment is under way.
 
The nominating and governance committee sets appropriate standards and requirements for nominations to the Board. In considering a candidate’s qualifications, each candidate must meet certain basic requirements, including relevant skills and experience, time availability and, if qualifying as an Independent Board Member candidate, independence from the Adviser or other service providers. These experience requirements may vary depending on the current composition of the Board, since the goal is to ensure an appropriate range of skills and experience, in the aggregate. All candidates must meet high expectations of personal integrity, governance experience and professional competence that are assessed on the basis of personal interviews, recommendations, or direct knowledge by committee members. The committee may use any process it deems appropriate for the purpose of evaluating candidates, which process may include, without limitation, personal interviews, background checks, written submissions by the candidates and third party references. There is no difference in the manner in which the nominating and governance committee evaluates candidates when the candidate is submitted by a shareholder. The nominating and governance committee reserves the right to make the final selection regarding the nomination of any prospective Board member.


24


 

The number of regular quarterly meetings and special meetings held by the Board of each Fund during the Fund’s last fiscal year is shown in Appendix C. During the last fiscal year, each Board Member attended 75% or more of each Fund’s Board meetings and the committee meetings (if a member thereof) held during the period for which such Board Member was a Board Member. The policy of the Board relating to attendance by Board Members at annual meetings of the Funds and the number of Board Members who attended the last annual meeting of shareholders of each Fund is posted on the Funds’ website at www.nuveen.com/CEF/Info/Shareholder/.


25


 

The Officers
 
The following table sets forth information with respect to each officer of the Funds. Officers receive no compensation from the Funds. The officers are elected by the Board on an annual basis to serve until successors are elected and qualified.
 
                     
   
        Term of Office
      Number of
 
        and
      Portfolios in Fund
 
Name, Address
  Position(s) Held with
  Length of Time
  Principal Occupation(s)
  Complex Served by
 
and Birthdate   Fund   Served(1)   During Past 5 Years   Officer  
   
 
Gifford R. Zimmerman
333 West Wacker Drive
Chicago, IL 60606
(9/9/56)
  Chief Administrative Officer   Term: Annual

Length of Service: Since 1988
  Managing Director (since 2002), Assistant Secretary and Associate General Counsel of Nuveen Investments, LLC; Managing Director (since 2002), Assistant Secretary and Associate General Counsel of Nuveen Asset Management; Managing Director (since 2004) and Assistant Secretary (since 1994) of Nuveen Investments, Inc.; Vice President and Assistant Secretary of NWQ Investment Management Company, LLC (since 2002); Managing Director and Assistant Secretary of Nuveen Investments Advisers Inc. (since 2002); Managing Director, Associate General Counsel and Assistant Secretary of Symphony Asset Management LLC (since 2003); Vice President and Assistant Secretary of Tradewinds Global Investors, LLC and Santa Barbara Asset Management LLC (since 2006), Nuveen HydePark Group, LLC and Nuveen Investment Solutions, Inc. (since 2007); previously, Managing Director (from 2002-2004), General Counsel and Assistant Secretary of Nuveen Advisory Corp. and Nuveen Institutional Advisory Corp.(2); Chartered Financial Analyst.     197  
                     
Williams Adams IV
333 West Wacker Drive
Chicago, IL 60606
(6/9/55)
  Vice President   Term: Annual

Length of Service: Since 2007
  Executive Vice President, U.S. Structured Products of Nuveen Investments, LLC (since 1999), prior thereto, Managing Director of Structured Investments.     122  
                     


26


 

                     
   
        Term of Office
      Number of
 
        and
      Portfolios in Fund
 
Name, Address
  Position(s) Held with
  Length of Time
  Principal Occupation(s)
  Complex Served by
 
and Birthdate   Fund   Served(1)   During Past 5 Years   Officer  
   
 
Mark J.P. Anson
333 West Wacker Drive
Chicago, IL 60606
(6/10/59)
  Vice President   Term: Annual

Length of Service: Since 2009
  President and Executive Director of Nuveen Investments, Inc. (since 2007); President of Nuveen Investments Institutional Services Group LLC (since 2007); previously, Chief Executive Officer of British Telecom Pension Scheme (2006-2007); Chief Investment Officer of Calpers (1999-2006); PhD, Chartered Financial Analyst, Chartered Alternative Investment Analyst, Certified Public Accountant, Certified Management Accountant and Certified Internal Auditor.     197  
                     
Cedric H. Antosiewicz
333 West Wacker Drive
Chicago, IL 60606
(1/11/62)
  Vice President   Term: Annual

Length of Service: Since 2007
  Managing Director (since 2004), previously, Vice President (1993-2004) of Nuveen Investments LLC.     122  
                     
Nizida Arriaga
333 West Wacker Drive
Chicago, IL 60606
(6/1/68)
  Vice President   Term: Annual

Length of Service: Since 2009
  Vice President of Nuveen Investments, LLC (since 2007); previously, Portfolio Manager, Allstate Investments, LLC (1996-2006); Chartered Financial Analyst.     197  
                     
Michael T. Atkinson
333 West Wacker Drive
Chicago, IL 60606
(2/3/66)
  Vice President and Assistant Secretary   Term: Annual

Length of Service: Since 2002
  Vice President (since 2002) of Nuveen Investments, LLC; Vice President of Nuveen Asset Management (since 2005).     197  
                     
Margo L. Cook
333 West Wacker Drive
Chicago, IL 60606
(4/11/64)
  Vice President   Term: Annual

Length of Service: Since 2009
  Executive Vice President (since 2008) of Nuveen Investments, Inc.; previously, Head of Institutional Asset Management (2007-2008) of Bear Stearns Asset Management; Head of Institutional Asset Mgt. (1986-2007) of Bank of NY Mellon; Chartered Financial Analyst.     197  
                     
Stephen D. Foy
333 West Wacker Drive
Chicago, IL 60606
(5/31/54)
  Vice President and Controller   Term: Annual

Length of Service: Since 1993
  Vice President (since 1993) and Funds Controller (since 1998) of Nuveen Investments, LLC; Vice President (since 2005) of Nuveen Asset Management; Certified Public Accountant.     197  
                     

27


 

                     
   
        Term of Office
      Number of
 
        and
      Portfolios in Fund
 
Name, Address
  Position(s) Held with
  Length of Time
  Principal Occupation(s)
  Complex Served by
 
and Birthdate   Fund   Served(1)   During Past 5 Years   Officer  
   
 
William T. Huffman
333 West Wacker Drive
Chicago, IL 60606
(5/7/69)
  Vice President   Term: Annual

Length of Service: Since 2009
  Chief Operating Officer, Municipal Fixed Income (since 2008) of Nuveen Asset Management; previously, Chairman, President and Chief Executive Officer (2002-2007) of Northern Trust Global Advisors, Inc. and Chief Executive Officer (2007) of Northern Trust Global Investments Limited; Certified Public Accountant.     133  
                     
Walter M. Kelly
333 West Wacker Drive
Chicago, IL 60606
(2/24/70)
  Chief Compliance Officer and Vice President   Term: Annual

Length of Service: Since 2003
  Senior Vice President (since 2008) formerly, Vice President (2006-2008), formerly, Assistant Vice President and Assistant General Counsel of Nuveen Investments, LLC; Senior Vice President (since 2008), formerly, Vice President (2006-2008), and Assistant Secretary (since 2003) of Nuveen Asset Management; formerly, Assistant Vice President and Assistant Secretary of the Nuveen Funds (2003-2006).     197  
                     
David J. Lamb
333 West Wacker Drive
Chicago, IL 60606
(3/22/63)
  Vice President   Term: Annual

Length of Service: Since 2000
  Senior Vice President (since 2009), formerly, Vice President (2000-2009) of Nuveen Investments, LLC; Vice President of Nuveen Asset Management (since 2005); Certified Public Accountant.     197  
                     
Tina M. Lazar
333 West Wacker Drive
Chicago, IL 60606
(8/27/61)
  Vice President   Term: Annual

Length of Service: Since 2002
  Senior Vice President (since 2009), formerly, Vice President (1999-2009) of Nuveen Investments, LLC; Vice President of Nuveen Asset Management (since 2005).     197  
                     

28


 

                     
   
        Term of Office
      Number of
 
        and
      Portfolios in Fund
 
Name, Address
  Position(s) Held with
  Length of Time
  Principal Occupation(s)
  Complex Served by
 
and Birthdate   Fund   Served(1)   During Past 5 Years   Officer  
   
 
Larry W. Martin
333 West Wacker Drive
Chicago, IL 60606
(7/27/51)
  Vice President and Assistant Secretary   Term: Annual

Length of Service: Since 1988
  Vice President, Assistant Secretary and Assistant General Counsel of Nuveen Investments, LLC; Vice President, Assistant General Counsel and Assistant Secretary of Nuveen Investments, Inc.; Vice President (since 2005) and Assistant Secretary (since 1997) of Nuveen Asset Management; 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 and Santa Barbara Asset Management LLC (since 2006), Nuveen Hyde Park Group, LLC and Nuveen Investment Solutions, Inc. (since 2007); formerly, Vice President and Assistant Secretary of Nuveen Advisory Corp. and Nuveen Institutional Advisory Corp.(2)     197  
                     
Kevin J. McCarthy
333 West Wacker Drive
Chicago, IL 60606
(3/26/66)
  Vice President and Secretary   Term: Annual

Length of Service: Since 2007
  Managing Director (since 2008), formerly Vice President (2007-2008), Nuveen Investments, LLC; Managing Director (since 2008), formerly Vice President (2007-2008) and Assistant Secretary (since 2007), Nuveen Asset Management, Nuveen Investments 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 Nuveen Investment Solutions, Inc.; prior thereto, Partner, Bell, Boyd & Lloyd LLP (1997-2007).     197  
                     

29


 

                     
   
        Term of Office
      Number of
 
        and
      Portfolios in Fund
 
Name, Address
  Position(s) Held with
  Length of Time
  Principal Occupation(s)
  Complex Served by
 
and Birthdate   Fund   Served(1)   During Past 5 Years   Officer  
   
 
John V. Miller
333 West Wacker Drive
Chicago, IL 60606
(4/10/67)
  Vice President   Term: Annual

Length of Service: Since 2007
  Chief Investment Officer and Managing Director (since 2007), formerly, Vice President (2002-2007) of Nuveen Asset Management; Managing Director (since 2007), formerly, Vice President (2002-2007) of Nuveen Investments, LLC; Chartered Financial Analyst.     133  
                     
Gregory Mino
333 West Wacker Drive
Chicago, IL 60606
(1/4/71)
  Vice President   Term: Annual

Length of Service: Since 2009
  Vice President of Nuveen Investments, LLC (since 2008); previously, Director (2004-2007) and Executive Director (2007-2008) of UBS Global Asset Management; previously, Vice President (2000-2003) and Director (2003-2004) of Merrill Lynch Investment Managers; Chartered Financial Analyst.     197  
                     
Christopher M. Rohrbacher
333 West Wacker Drive
Chicago, IL 60606
(8/1/71)
  Vice President and Assistant Secretary   Term: Annual

Length of Service: Since 2008
  Vice President and Assistant Secretary of Nuveen Investments, LLC (since 2008); Vice President and Assistant Secretary of Nuveen Asset Management (since 2008); prior thereto, Associate, Skadden, Arps, Slate Meagher & Flom LLP (2002-2008).     197  
                     
James F. Ruane
333 West Wacker Drive
Chicago, IL 60606
(7/3/62)
  Vice President and Assistant Secretary   Term: Annual

Length of Service: Since 2007
  Vice President, Nuveen Investments (since 2007); prior thereto, Partner, Deloitte & Touche USA LLP (2005-2007), formerly, senior tax manager (2002-2005); Certified Public Accountant.     197  
                     
Mark L. Winget
333 West Wacker Drive
Chicago, IL 60606
(12/21/68)
  Vice President and Assistant Secretary   Term: Annual

Length of Service: Since 2008
  Vice President, Nuveen Investments, LLC (since 2008); Vice President and Assistant Secretary, Nuveen Asset Management (since 2008); prior thereto, Counsel, Vedder Price P.C. (1997-2007).     197  
 
 
(1) Length of Time Served indicates the year the individual became an officer of a fund in the Nuveen fund complex.
 
(2) Nuveen Advisory Corp. and Nuveen Institutional Advisory Corp. were reorganized into Nuveen Asset Management, effective January 1, 2005.

30


 

 
2.   Approval of the Elimination of Fundamental Investment Policies and Approval of New Fundamental Policies for each Affected Municipal Fund
 
The Affected Municipal Funds have adopted certain fundamental investment policies relating to (i) investments in municipal securities and below investment grade securities, (ii) investments in other investment companies and/or (iii) investments in derivatives, short sales and commodities as described below (together, the “Current Fundamental Policies,” and each, a “Current Fundamental Policy”), that can only be changed by shareholder vote. The Current Fundamental Policies adopted by the Affected Municipal Funds reflected industry and other market conditions present at the time of the inception of each Fund.
 
Nuveen’s municipal closed-end funds are seeking to adopt a uniform, “up to date” set of investment policies (the “New Investment Policies”). In general, the funds currently have a somewhat diverse set of policies, reflecting when the funds were launched over the past 20 years as well as developments over time in the municipal market, including new types of securities as well as investment strategies. The potential benefits of the New Investment Policies to you as a Fund shareholder are:
 
•  enhanced ability of the Affected Municipal Funds to generate attractive levels of tax-exempt income, while retaining the Affected Municipal Funds’ orientation on investment grade quality municipal securities;
 
•  increased flexibility in diversifying portfolio risks and managing duration (the sensitivity of bond prices to interest rate changes) to pursue the preservation and possible growth of capital, which, if successful, will help to sustain and build common shareholder net asset value and asset coverage levels for preferred shares; and
 
•  improved secondary market competitiveness which may benefit common shareholders through higher relative market price and/or stronger premium/discount performance.
 
In order to implement the New Investment Policies, each Affected Municipal Fund must make certain changes to its existing policies, including certain fundamental policies that require your vote of approval. In some cases, this may require your separate votes to approve the elimination of a Current Fundamental Policy as well as the implementation of a new, replacement fundamental policy (together, the “New Fundamental Policies” and each, a “New Fundamental Policy”). Because each Affected Municipal Fund tends to be situated somewhat differently, the specific changes required to implement the New Investment Policies often vary from fund to fund.
 
The primary purposes of these changes are to provide the Affected Municipal Funds with increased investment flexibility and to create consistent investment policies for all Nuveen municipal bond funds to promote operational efficiencies. Implementation of the New Fundamental Policies is contingent on shareholder approval of the elimination of the Current Fundamental Policies.
 
The Board has unanimously approved, and unanimously recommends the approval by shareholders of each Affected Municipal Fund, the elimination of the Current Fundamental Policies of the Affected Municipal Funds. In connection with eliminating the Current Fundamental Policies, the Board unanimously approved, and unanimously recommends the approval by shareholders of each Affected Municipal Fund of, the New Fundamental Policies, described


31


 

below. In addition, the Board has approved certain new non-fundamental policies, described below (the “New Non-Fundamental Policies”).
 
  (a)   Elimination of Fundamental Policies Relating to Investments in Municipal Securities and Below Investment Grade Securities (All Affected Municipal Funds except Michigan Premium Income)
 
The Current Fundamental Policies with respect to each Affected Municipal Fund’s investments in municipal securities and the ability to invest in below investment grade securities that are proposed to be eliminated are as follows:
 
Arizona Dividend Advantage, Arizona Dividend Advantage 2, Connecticut Dividend Advantage, Maryland Dividend Advantage, Maryland Dividend Advantage 2, Massachusetts Dividend Advantage, Michigan Dividend Advantage, New Jersey Dividend Advantage, North Carolina Dividend Advantage, North Carolina Dividend Advantage 2, Ohio Dividend Advantage, Ohio Dividend Advantage 2 and Pennsylvania Dividend Advantage
 
(i) Under normal [circumstances/market conditions], the Fund will invest its net assets in a portfolio of municipal bonds that are exempt from regular federal and [State] income taxes. Under normal market conditions, the Fund expects to be fully invested (at least 95% of its assets) in such tax-exempt municipal bonds.
 
Arizona Dividend Advantage 3, Connecticut Dividend Advantage 2, Connecticut Dividend Advantage 3, Georgia Dividend Advantage 2, Maryland Dividend Advantage 3, New Jersey Dividend Advantage 2, Ohio Dividend Advantage 3 and Pennsylvania Dividend Advantage 2
 
(i) The Fund [as a fundamental policy] may not, under normal circumstances, invest less than 80% of the Fund’s net assets (plus any borrowings for investment purposes) in investments the income from which is exempt from both regular federal and [State] income tax.
 
Arizona Premium Income, California Premium Income, Connecticut Premium Income, Georgia Premium Income, Massachusetts Premium Income, Missouri Premium Income, New Jersey Premium Income, Ohio Quality Income, Pennsylvania Premium Income, Texas Quality Income and Virginia Premium Income
 
(i) [Except to the extent the Fund invests in temporary investments as described below and more fully in the Statement of Additional Information], the Fund [will, as a fundamental policy,] invest substantially all (in excess of 80%) of its assets in tax-exempt [State] Municipal Obligations rated at the time of purchase within the four highest grades (Baa or BBB or better) by Moody’s Investors Services, Inc. (“Moody’s”) or Standard & Poor’s Corporation (“S&P”), or in unrated [State] Municipal Obligations which, in the opinion of the Adviser, have credit characteristics equivalent to, and will be of comparable quality to, [State] Municipal Obligations rated within the four highest grades by Moody’s or S&P, provided that the Fund may not invest more than 20% of its assets in such unrated [State] Municipal Obligations.
 
(ii) The Fund will not invest in any rated [State] Municipal Obligations that are rated lower than Baa by Moody’s or BBB by S&P at the time of purchase.


32


 

 
California Dividend Advantage
 
(i) The Fund will invest its net assets in a diversified portfolio of municipal bonds that are exempt from regular Federal and California income tax. Under normal market conditions, the Fund expects to be fully invested (at least 95% of its assets) in such tax-exempt municipal bonds.
 
(ii) The Fund will invest at least 80% of its net assets in investment grade quality municipal bonds.
 
(iii) The Fund may invest up to 20% of its net assets in municipal bonds that are rated, at the time of investment, Ba/BB or B by Moody’s, S&P or Fitch or that are unrated but judged to be of comparable quality by Nuveen Advisory.
 
California Dividend Advantage 2 and California Dividend Advantage 3
 
(i) The Fund will invest its net assets in a diversified portfolio of municipal bonds that are exempt from regular Federal and California income tax. Under normal market conditions, the Fund expects to be fully invested (at least 95% of its assets) in such tax-exempt municipal bonds.
 
California Investment Quality, California Market Opportunity, California Performance Plus, New Jersey Investment Quality and Pennsylvania Investment Quality
 
(i) Except to the extent that the Fund buys temporary investments as described in [the Fund’s Statement of Additional Information], the Fund will, as a fundamental policy, invest substantially all of its assets (more than 80%) in tax-exempt [State] municipal bonds that are rated at the time of purchase within the four highest grades (Baa or BBB or better) by Moody’s or Standard and Poor’s, except that the Fund may invest up to 20% of its assets in unrated [State] municipal bonds which, in Nuveen Advisory’s opinion, have credit characteristics equivalent to, and are of comparable quality to, municipal bonds so rated.
 
California Quality Income and California Select Quality
 
(i) Except to the extent that the Fund buys temporary investments as described in [the Fund’s Statement of Additional Information], the Fund will, as a fundamental policy, invest substantially all of its assets (more than 80%) in tax-exempt California municipal bonds that are rated at the time of purchase within the four highest grades (Baa or BBB or better) by Moody’s or Standard and Poor’s, except that the Fund may invest up to 20% of its assets in unrated California municipal bonds which, in Nuveen Advisory’s opinion, have credit characteristics equivalent to, and are of comparable quality to, California municipal bonds so rated.
 
  (b)   Approval of New Fundamental Policy Relating to Investments in Municipal Securities (All Affected Municipal Funds except Michigan Premium Income)
 
The following New Fundamental Policy will replace each Affected Municipal Fund’s Current Fundamental Policy or Policies referenced in 2(a) above. Implementation of the following New Fundamental Policy by each Affected Municipal Fund is contingent on


33


 

shareholder approval of the elimination of each Affected Municipal Fund’s Current Fundamental Policy or Policies. The proposed New Fundamental Policy with respect to each Fund’s investments in municipal securities is as follows:
 
(i) Under normal circumstances, the Fund will invest at least 80% of its net assets, including assets attributable to any principal amount of any borrowings (including the issuance of commercial paper or notes) or any preferred shares outstanding (“Managed Assets”) in municipal securities and other related investments, the income from which is exempt from regular federal [and state] income taxes.
 
In addition, the Board has adopted New Non-Fundamental Policies with respect to investing in investment grade securities for each Affected Municipal Fund, which will be implemented upon the elimination of the Current Fundamental Policies described in 2(a) above. The New Non-Fundamental Policies relating to investing in investment grade securities are as follows:
 
(i) Under normal circumstances, the Fund will invest at least 80% of its Managed Assets in investment grade securities that, at the time of investment, are rated within the four highest grades (Baa or BBB or better) by at least one nationally recognized statistical rating organization or are unrated but judged to be of comparable quality by the Fund’s investment adviser (“NAM”).
 
(ii) The Fund may invest up to 20% of its Managed Assets in municipal securities that at the time of investment are rated below investment grade or are unrated but judged to be of comparable quality by NAM.
 
(iii) No more than 10% of the Fund’s Managed Assets may be invested in municipal securities rated below B3/B- or that are unrated but judged to be of comparable quality by NAM.
 
Related to these changes, the Board of each Affected Municipal Fund has also amended and standardized the description of “municipal securities” or “municipal obligations” in which an Affected Municipal Fund may invest to include various types of municipal securities. The new description, tailored as appropriate to each Affected Municipal Fund, generally provides:
 
The Fund may invest in various municipal securities, including municipal bonds and notes, other securities issued to finance and refinance public projects, and other related securities and derivative instruments creating exposure to municipal bonds, notes and securities that provide for the payment of interest income that is exempt from federal income tax (“Municipal Obligations”). Municipal Obligations are generally debt obligations issued by state and local governmental entities and may be issued by U.S. territories to finance or refinance public projects such as roads, schools, and water supply systems. Municipal Obligations may also be issued for private activities, such as housing, medical and educational facility construction, or for privately owned transportation, electric utility and pollution control projects. Municipal Obligations may be issued on a long term basis to provide permanent financing. The repayment of such debt may be secured generally by a pledge of the full faith and credit taxing power of the issuer, a limited or special tax, or any other revenue source including project revenues, which may include tolls, fees and other user charges, lease payments, and mortgage payments. Municipal Obligations may also be issued to finance projects on a short term interim basis, anticipating repayment with the proceeds on long term debt. Municipal Obligations may be issued and purchased in


34


 

the form of bonds, notes, leases or certificates of participation; structured as callable or noncallable; with payment forms including fixed coupon, variable rate, zero coupon, capital appreciation bonds, tender option bonds, and residual interest bonds or inverse floating rate securities; or acquired through investments in pooled vehicles, partnerships or other investment companies. Inverse floating rate securities are securities that pay interest at rates that vary inversely with changes in prevailing short-term tax-exempt interest rates and represent a leveraged investment in an underlying municipal security, which may increase the effective leverage of the Fund.
 
  (c)   Elimination of Fundamental Policies Relating to Commodities (All Premium/Quality Funds)
 
The Current Fundamental Policies relating to commodities that are proposed to be eliminated are as follow:
 
Arizona Premium Income, California Investment Quality, California Market Opportunity, California Performance Plus, California Quality Income, California Select Quality, Michigan Premium Income, New Jersey Investment Quality, New Jersey Premium Income, Pennsylvania Investment Quality and Texas Quality Income
 
(i) The Fund, as a fundamental policy, may not purchase or sell commodities or commodities contracts, except for transactions involving futures contracts within the limits described under “Certain Trading Strategies of the Fund — Financial Futures and Options Transactions.”*
 
California Premium Income, Connecticut Premium Income, Georgia Premium Income, Massachusetts Premium Income, Missouri Premium Income, Ohio Quality Income, Pennsylvania Premium Income 2 and Virginia Premium Income
 
(i) The Fund, as a fundamental policy, may not purchase or sell commodities or commodities contracts, except for transactions involving futures contracts that represent no more than 10% of the Fund’s total assets and are otherwise within the limits described in “Certain Trading Strategies of The Fund — Financial Futures and Options Transactions.”*
 
  (d)   Approval of New Fundamental Policy Relating to Commodities (All Premium/Quality Funds)
 
It is proposed that each Premium/Quality Fund adopt a New Fundamental Policy with respect to commodities. The adoption of the following New Fundamental Policy for each Premium/Quality Fund is contingent on shareholder approval of the elimination of that Premium/Quality Fund’s Current Fundamental Policy with respect to commodities, as reflected in 2(c) above. The proposed New Fundamental Policy is as follows:
 
(i) The Fund may not purchase or sell physical commodities unless acquired as a result of ownership of securities or other instruments (but this shall not prevent the Fund from purchasing or selling options, futures contracts or derivative instruments
 
 
* References are to a Fund’s registration statement.


35


 

or from investing in securities or other instruments backed by physical commodities).
 
  (e)   Elimination of Fundamental Policies Relating to Derivatives and Short Sales (All Premium/Quality Funds)
 
The Current Fundamental Policies relating to derivatives and short sales that are proposed to be eliminated are as follows:
 
Arizona Premium Income, California Investment Quality, California Market Opportunity, California Performance Plus, California Quality Income, California Select Quality, Michigan Premium Income, New Jersey Investment Quality, New Jersey Premium Income, Pennsylvania Investment Quality and Texas Quality Income
 
(i) The Fund may not make short sales of securities or purchase any securities on margin (except for such short-term credits as are necessary for the clearance of transactions), or write or purchase put or call options, except to the extent that the purchase of a stand-by commitment may be considered the purchase of a put, and except for transactions involving options within the limits described [in/under] “Certain Trading Strategies of The Fund — Financial Futures and Options Transactions.”
 
(ii) The Fund may not purchase financial futures and options except within the limits described in “Certain Trading Strategies of The Fund — Financial Futures and Options Transactions.”*
 
California Premium Income, Connecticut Premium Income, Georgia Premium Income, Massachusetts Premium Income, Missouri Premium Income, Ohio Quality Income, Pennsylvania Premium Income 2 and Virginia Premium Income
 
(i) The Fund may not make short sales of securities or purchase any securities on margin (except for such short-term credits as are necessary for the clearance of transactions), or write or purchase put or call options, except to the extent that the purchase of a stand-by commitment may be considered the purchase of a put, and except for transactions involving options that represent no more than 10% of the Fund’s total assets and are otherwise within the limits described in “Certain Trading Strategies of The Fund — Financial Futures and Options Transactions.”*
 
(ii) The Fund may not purchase financial futures and options except for futures and options that represent no more than 10% of the Fund’s total assets and are otherwise within the limits described in “Certain Trading Strategies of The Fund — Financial Futures and Options Transactions.”
 
In connection with the elimination of the Current Fundamental Policies relating to derivatives and short sales, as reflected in 2(e) above, the Board has adopted the following New Non-Fundamental Policies for each of the above Premium/Quality Funds. The New Non-Fundamental Policies are contingent on shareholder approval of the
 
 
* References are to a Fund’s registration statement.


36


 

elimination of that Premium/Quality Fund’s Current Fundamental Policies with respect to derivatives and short sales. The New Non-Fundamental Polices are as follows:
 
(i) The Fund may invest in derivative instruments in pursuit of its investment objectives. Such instruments include financial futures contracts, swap contracts (including interest rate and credit default swaps), options on financial futures, options on swap contracts, or other derivative instruments. NAM uses derivatives to seek to enhance return, to hedge some of the risks of its investments in fixed income securities or as a substitute for a position in the underlying asset.
 
(ii) The Fund may not sell securities short, unless the Fund owns or has the right to obtain securities equivalent in kind and amount to the securities sold at no added cost, and provided that transactions in options, futures contracts, options on futures contracts, or other derivative instruments are not deemed to constitute selling securities short.
 
(iii) The Fund may not enter into futures contracts or related options or forward contracts, if more than 30% of the Fund’s net assets would be represented by futures contracts or more than 5% of the Fund’s net assets would be committed to initial margin deposits and premiums on futures contracts and related options.
 
  (f)   Elimination of the Fundamental Policy Prohibiting Investment in Other Investment Companies (All Premium/Quality Funds)
 
The Premium/Quality Funds do not have specific restrictions as to investments in other investment companies. However, each such Premium/Quality Fund has an investment policy which only permits investment in municipal obligations and temporary investments and thereby prohibits investment in other investment companies. The general restriction that only permits investment in municipal obligations and temporary investments is as follows:
 
(i) The Fund may not invest in securities other than [state] Municipal Obligations and temporary investments[,] as described [in/under] “Investment Objective and Policies [of the Funds] — Portfolio Investments.”*
 
In addition, with respect to each Fund’s ability to invest in other investment companies, the Board has adopted a New Non-Fundamental Policy to be implemented upon the elimination of that Premium/Quality Fund’s Current Fundamental Policy prohibiting investments in other investment companies. The proposed New Non-Fundamental Policy relating to investments in other investment companies is as follows:
 
(i) The Fund may invest up to 10% of its Managed Assets in securities of other open- or closed-end investment companies (including exchange-traded funds (often referred to as “ETFs”)) that invest primarily in municipal securities of the types in which the Fund may invest directly.
 
Board Recommendation
 
The Board believes that eliminating the Current Fundamental Policies and adopting the New Investment Policies gives the Adviser flexibility to rapidly respond to continuing developments in the municipal market and would enhance the portfolio managers’ ability to meet each Affected Municipal Fund’s investment objective. In addition, the Board
 
 
* References are to a Fund’s registration statement.


37


 

believes that the proposed changes will create consistent investment policies for all Nuveen municipal bond funds and will help to promote operational efficiencies.
 
The Board recommends that shareholders of each Affected Municipal Fund vote to approve the elimination of each Current Fundamental Policy and vote to approve each New Fundamental Policy.
 
3.   Approval of the Elimination of Fundamental Investment Policies and Approval of New Fundamental Policy for Each Insured Fund
 
The Insured Funds have adopted certain fundamental investment policies, as described below (together, “Insured Fundamental Policies,” each an “Insured Fundamental Policy”), that can only be changed by shareholder vote. The Insured Fundamental Policies adopted by the Insured Funds reflected industry conditions present in the municipal bond market at the time of the inception of these Funds.
 
Since that time, however, deterioration in the credit quality of securities backed by sub-prime residential mortgages has disrupted many markets and companies, including bond insurers, who in addition to insuring municipal bonds, have also provided guarantees on these mortgage-related securities. As a result, the financial strength ratings of certain municipal bond insurers have come under greater scrutiny. The ratings assigned to some municipal bond insurers either have been downgraded or are being reviewed for possible downgrades by certain of the primary ratings agencies.
 
As a result of these conditions facing the bond insurance market, the Board unanimously approved, and unanimously recommends the approval by each Insured Fund’s shareholders of the elimination of certain Insured Fundamental Policies of the Insured Funds that are restricting, or may be expected in the future to restrict, each Insured Fund’s ability to effectively make investments. In connection with eliminating the Insured Fundamental Policies, the Board unanimously approved, and unanimously recommends the approval by shareholders of a new fundamental policy, described below (each a “New Insured Fundamental Policy”). The elimination of each Fundamental Policy described below is contingent on shareholder approval of the New Fundamental Policy. In addition, the Board has approved new non-fundamental policies, described below (the “New Insured Non-Fundamental Policies” and together with the New Insured Fundamental Policy, the “New Insured Policies”). The New Insured Policies are designed to provide portfolio managers with important flexibility to respond to ongoing developments in the bond insurance market, while ensuring the Insured Funds continue to invest substantially all (at least 80%) of their municipal investments in insured bonds backed by insurers with solid credit ratings.
 
  (a)   Elimination of Insured Fundamental Policies Relating to Investments in Insured Municipal Securities (All Insured Funds)
 
The Insured Fundamental Policies of each Insured Fund that are proposed to be eliminated are as follows:
 
Insured California Dividend Advantage
 
(i) Under normal circumstances, the Fund will invest at least 80% of its net assets in a portfolio of municipal bonds that are exempt from regular federal and California income taxes and that are covered by insurance guaranteeing the timely payment of principal and interest thereon.


38


 

 
Insured California Premium Income and Insured California Premium Income 2
 
(i) Except to the extent the Fund invests in temporary investments, the Fund will invest all of its assets in tax-exempt [State] Municipal Obligations which are either covered by insurance guaranteeing the timely payment of principal and interest thereon or backed by an escrow or trust account containing sufficient U.S. Government or U.S. Government agency securities to ensure timely payment of principal and interest.
 
(ii) Each insured [State] Municipal Obligation held by the Fund will either be (1) covered by an insurance policy applicable to a specific security, whether obtained by the issuer of the security or a third party at the time of original issuance (“Original Issue Insurance”) by the Fund or a third party subsequent to the time of original issuance (“Secondary Market Insurance”), or (2) covered by a master municipal insurance policy purchased by the Fund (“Portfolio Insurance”).
 
(iii) The Fund will only obtain policies of portfolio insurance issued by insurers whose claims-paying ability is rated “Aaa” by Moody’s Investors Services, Inc. (“Moody’s”) or “AAA” by Standard & Poor’s Corporation (“Standard & Poor’s”).
 
(iv) Municipal obligations backed by an escrow account or trust account will not constitute more than 20% of the Fund’s assets.
 
Insured California Tax-Free Advantage and Insured Massachusetts Tax-Free Advantage
 
(i) Under normal circumstances, the Fund will invest at least 80% of its average daily net assets, including assets attributable to MuniPreferred shares outstanding (“Managed Assets”) in a portfolio of municipal bonds that pay interest that is exempt from regular federal and [State] income tax and from the federal alternative minimum tax applicable to individuals.
 
(ii) Under normal circumstances, the Fund will invest at least 80% of its average daily net assets, including assets attributable to MuniPreferred shares outstanding (“Managed Assets”) in a portfolio of municipal bonds that are covered by insurance guaranteeing the timely payment of principal and interest thereon.
 
  (b)   Approval of the New Insured Fundamental Policy Relating to Investments in Insured Municipal Securities (All Insured Funds)
 
In connection with eliminating the Insured Fundamental Policies, the Board of each Insured Fund has unanimously approved, and recommends that shareholders of each Insured Fund approve, a New Insured Fundamental Policy relating to each Insured Fund’s policy of investing 80% (or greater) of its assets in a portfolio of municipal securities or related investments that pay tax-exempt interest. The New Insured Fundamental Policy will replace each Insured Fund’s Insured Fundamental Policy or Insured Fundamental Policies, as described above. Implementation of the New Insured Fundamental Policy is contingent on shareholder approval


39


 

of the elimination of the Insured Fundamental Policy or Insured Fundamental Policies for each Insured Fund, as applicable. The New Insured Fundamental Policy is as follows:
 
(i) Under normal circumstances, the Fund will invest at least 80% of its net assets, including assets attributable to any principal amount of any borrowings (including the issuance of commercial paper or notes) or preferred shares outstanding (“Managed Assets”), in municipal securities and other related investments that pay interest exempt from federal and [State] income taxes (“municipal securities”) and are covered by insurance guaranteeing the timely payment of principal and interest thereon.
 
New Insured Non-Fundamental Policies
 
In connection with eliminating the Insured Fundamental Policies, the Board of each Insured Fund has also adopted New Insured Non-Fundamental Policies, as described below. To the extent that the New Insured Non-Fundamental Policies conflict with the existing Insured Fundamental Policies, implementation of the New Insured Non-Fundamental Policies is contingent on shareholder approval of the elimination of the Insured Fundamental Policies. To the extent such Insured Non-Fundamental Policies do not conflict with the existing Insured Fundamental Policies, the New Insured Non-Fundamental Policies have already been implemented. By eliminating the Insured Fundamental Policies and adopting the New Insured Non-Fundamental Policies, each Insured Fund would be able to change these policies in the future with the approval of the Board, without the need to obtain prior shareholder approval. However, each Insured Fund’s New Insured Non-Fundamental Policy that it will invest at least 80% of its Managed Assets in a portfolio of securities that are covered by insurance may only be changed by such Fund’s Board following the provision of 60 days’ prior written notice to shareholders.
 
The New Insured Non-Fundamental Policies that the Board of each Insured Fund has adopted are as follows:
 
(i) Under normal circumstances, the Fund will invest at least 80% of its net assets, including assets attributable to any principal amount of any borrowings (including the issuance of commercial paper or notes) or preferred shares outstanding (“Managed Assets”), in a portfolio of securities that are covered by insurance guaranteeing the timely payment of principal and interest thereon. Inverse floaters whose underlying bonds are covered by insurance guaranteeing the timely payment of principal and interest thereon are included in the above-referenced 80% test. In addition, for the 80% test above, insurers must have a claims-paying ability rated at least A by a nationally recognized statistical rating organization (NRSRO) at the time of purchase or at the time the bond is insured while in the portfolio.†
 
(ii) Under normal circumstances, the Fund will invest at least 80% of its Managed Assets in municipal securities covered by insurance from insurers with a claims-paying ability rated AA or better by an NRSRO at the time of purchase; municipal securities rated AA or better by an NRSRO, or that are unrated but judged to be of comparable quality by the Fund’s investment adviser, at the time of purchase; or municipal bonds backed by an escrow or trust account containing sufficient U.S. Government or U.S. Government agency securities to ensure timely payment of principal and interest.
 
 
† The above referenced 80% test refers to the New Insured Fundamental Policy proposed in item 3(b).


40


 

 
(iii) Under normal circumstances, the Fund may invest up to 20% of its Managed Assets in municipal securities covered by insurance from insurers with a claims-paying ability rated BBB or better by an NRSRO; or municipal securities rated at least BBB or better by an NRSRO, or that are unrated but judged to be of comparable quality by the Fund’s investment adviser, at the time of purchase.
 
  (c)   Elimination of Fundamental Policies Relating to Commodities (Insured California Premium Income and Insured California Premium Income 2)
 
The Current Insured Fundamental Policies relating to commodities that are proposed to be eliminated are as follows:
 
Insured California Premium Income
 
(i) The Fund, as a fundamental policy, may not purchase or sell commodities or commodities contracts, except for transactions involving futures contracts within the limits described in “Certain Trading Strategies of the Fund — Financial Futures and Options Transactions.”*
 
Insured California Premium Income 2
 
(i) The Fund, as a fundamental policy, may not purchase or sell commodities or commodities contracts, except for transactions involving futures contracts that represent no more than 10% of the Fund’s total assets and are otherwise within the limits described in “Certain Trading Strategies of The Fund — Financial Futures and Options Transactions.”*
 
  (d)   Approval of New Fundamental Policy Relating to Commodities (Insured California Premium Income and Insured California Premium Income 2)
 
It is proposed that Insured California Premium Income and Insured California Premium Income 2 adopt a New Insured Fundamental Policy with respect to commodities, the adoption of which is contingent on shareholder approval of the elimination of that Insured Fund’s Current Insured Fundamental Policy with respect to commodities, as reflected in 3(c) above. The proposed New Insured Fundamental Policy is as follows:
 
Insured California Premium Income and Insured California Premium Income 2
 
(i) The Fund may not purchase or sell physical commodities unless acquired as a result of ownership of securities or other instruments (but this shall not prevent the Fund from purchasing or selling options, futures contracts or derivative instruments or from investing in securities or other instruments backed by physical commodities).
 
 
* References are to a Fund’s registration statement.


41


 

 
  (e)   Elimination of Fundamental Policies Relating to Derivatives and Short Sales (Insured California Premium Income and Insured California Premium Income 2)
 
The Current Insured Fundamental Policies relating to derivatives and short sales that are proposed to be eliminated are as follows:
 
Insured California Premium Income
 
(i) The Fund, as a fundamental policy, may not make short sales of securities or purchase any securities on margin (except for such short-term credits as are necessary for the clearance of transactions), or write or purchase put or call options, except to the extent that the purchase of a stand-by commitment may be considered the purchase of a put, and except for transactions involving options within the limits described in “Certain Trading Strategies of The Fund — Financial Futures and Options Transactions.”*
 
(ii) The Fund may not purchase financial futures and options except within the limits described in “Certain Trading Strategies of The Fund — Financial Futures and Options Transactions.”*
 
Insured California Premium Income 2
 
(i) The Fund may not make short sales of securities or purchase any securities on margin (except for such short-term credits as are necessary for the clearance of transactions), or write or purchase put or call options, except to the extent that the purchase of a stand-by commitment may be considered the purchase of a put, and except for transactions involving options within the limits described in “Certain Trading Strategies of The Fund — Financial Futures and Options Transactions.”*
 
(ii) The Fund may not purchase financial futures and options that represent no more than 10% of the Fund’s total assets and are otherwise within the limits described in “Certain Trading Strategies of The Fund — Financial Futures and Options Transactions.”*
 
In connection with the elimination of the Current Insured Fundamental Policies relating to derivatives and short sales, as reflected in 3(e) above, the Board has adopted the following New Insured Non-Fundamental Policies for each of Insured California Premium Income and Insured California Premium Income 2. The New Insured Non-Fundamental Policies are contingent on shareholder approval of the elimination of that Insured Fund’s Current Fundamental Policies with respect to derivatives and short sales. The New Insured Non-Fundamental Polices are as follows:
 
(i) The Fund may invest in derivative instruments in pursuit of its investment objectives. Such instruments include financial futures contracts, swap contracts (including interest rate and credit default swaps), options on financial futures, options on swap contracts, or other derivative instruments. NAM uses derivatives to seek to enhance return, to hedge some of the risks of its investments in fixed income securities or as a substitute for a position in the underlying asset.
 
 
* References are to a Fund’s registration statement.


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(ii) The Fund may not sell securities short, unless the Fund owns or has the right to obtain securities equivalent in kind and amount to the securities sold at no added cost, and provided that transactions in options, futures contracts, options on futures contracts, or other derivative instruments are not deemed to constitute selling securities short.
 
(iii) The Fund may not enter into futures contracts or related options or forward contracts, if more than 30% of the Fund’s net assets would be represented by futures contracts or more than 5% of the Fund’s net assets would be committed to initial margin deposits and premiums on futures contracts and related options.
 
  (f)   Elimination of the Fundamental Policy Prohibiting Investment in Other Investment Companies (Insured California Premium Income and Insured California Premium Income 2)
 
Insured California Premium Income and Insured California Premium Income 2 do not have specific restrictions as to investments in other investment companies. However, each such Fund has an investment policy which only permits investment in municipal obligations and temporary investments and thereby prohibits investment in other investment companies. The general restriction that only permits investment in municipal obligations and temporary investments is as follows:
 
(i) The Fund may not invest in securities other than [state] Municipal Obligations and temporary investments, as described in “Investment Objective and Policies — Portfolio Investments.”*
 
In addition, with respect to each Fund’s ability to invest in other investment companies, the Board has adopted a New Insured Non-Fundamental Policy to be implemented upon the elimination of Insured California Premium Income’s and Insured California Premium Income 2’s Current Insured Fundamental Policy prohibiting investments in other investment companies. The proposed New Insured Non-Fundamental Policy relating to investments in other investment companies is as follows:
 
(i) The Fund may invest up to 10% of its Managed Assets in securities of other open- or closed-end investment companies (including exchange-traded funds (often referred to as “ETFs”)) that invest primarily in municipal securities of the types in which the Fund may invest directly.
 
Board Recommendation
 
The Board believes that eliminating the Insured Fundamental Policies and adopting the New Insured Policies gives the Adviser flexibility to rapidly respond to continuing developments in the bond insurance market and would enhance the portfolio managers’ ability to meet each Insured Fund’s investment objective and keep each Fund fully invested. While the Board believes that the New Insured Policies give the Adviser adequate flexibility under current market conditions, if the market changes in the future, the Insured Funds may desire to refine these parameters further and the Board may change the New Insured Non-Fundamental Policies without shareholder approval.
 
 
* References are to a Fund’s registration statement.


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The Board of Trustees recommends that shareholders of each Insured Fund vote to approve the elimination of each Insured Fundamental Policy and vote to approve each New Insured Fundamental Policy.
 
Audit Committee Report
 
The audit committee of each Board is responsible for the oversight and monitoring of (1) the accounting and reporting policies, processes and practices, and the audit of the financial statements, of each Fund, (2) the quality and integrity of the Funds’ financial statements and (3) the independent registered public accounting firm’s qualifications, performance and independence. In its oversight capacity, the committee reviews each Fund’s annual financial statements with both management and the independent registered public accounting firm and the committee meets periodically with the independent registered public accounting firm and internal auditors to consider their evaluation of each Fund’s financial and internal controls. The committee also selects, retains, evaluates and may replace each Fund’s independent registered public accounting firm. The committee is currently composed of five Independent Board Members and operates under a written charter adopted and approved by each Board. Each committee member meets the independence and experience requirements, as applicable, of the New York Stock Exchange, NYSE Amex, Section 10A of the 1934 Act and the rules and regulations of the SEC.
 
The committee, in discharging its duties, has met with and held discussions with management and each Fund’s independent registered public accounting firm. The committee has also reviewed and discussed the audited financial statements with management. Management has represented to the independent registered public accounting firm that each Fund’s financial statements were prepared in accordance with generally accepted accounting principles. The committee has also discussed with the independent registered public accounting firm the matters required to be discussed by Statement on Auditing Standards (“SAS”) No. 61 (Communication with Audit Committees), as amended by SAS No. 90 (Audit Committee Communications). Each Fund’s independent registered public accounting firm provided to the committee the written disclosure required by Independence Standards Board Standard No. 1 (Independence Discussions with Audit Committees), and the committee discussed with representatives of the independent registered public accounting firm their firm’s independence. As provided in the Audit Committee Charter, it is not the committee’s responsibility to determine, and the considerations and discussions referenced above do not ensure, that each Fund’s financial statements are complete and accurate and presented in accordance with generally accepted accounting principles.
 
Based on the committee’s review and discussions with management and the independent registered public accounting firm, the representations of management and the report of the independent registered public accounting firm to the committee, the committee has recommended that the Boards include the audited financial statements in each Fund’s Annual Report.
 
The current members of the committee are:
 
Robert P. Bremner
Jack B. Evans
David J. Kundert
William J. Schneider
Terence J. Toth


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Audit and Related Fees. The following tables provide the aggregate fees billed during each Fund’s last two fiscal years by each Fund’s independent registered accounting firm for engagements directly related to the operations and financial reporting of each Fund, including those relating (i) to each Fund for services provided to the Fund and (ii) to the Adviser and certain entities controlling, controlled by, or under common control with the Adviser that provide ongoing services to each Fund (“Adviser Entities”).
 
                                                                                                                 
 
    Audit Fees   Audit Related Fees   Tax Fees   All Other Fees
            Adviser and Adviser
      Adviser and Adviser
      Adviser and Adviser
    Fund(1)   Fund(2)   Entities   Fund(3)   Entities   Fund(4)   Entities
    Fiscal
  Fiscal
  Fiscal
  Fiscal
  Fiscal
  Fiscal
  Fiscal
  Fiscal
  Fiscal
  Fiscal
  Fiscal
  Fiscal
  Fiscal
  Fiscal
    Year
  Year
  Year
  Year
  Year
  Year
  Year
  Year
  Year
  Year
  Year
  Year
  Year
  Year
    Ended
  Ended
  Ended
  Ended
  Ended
  Ended
  Ended
  Ended
  Ended
  Ended
  Ended
  Ended
  Ended
  Ended
    2008   2009   2008   2009   2008   2009   2008   2009   2008   2009   2008   2009   2008   2009
     
 
Floating Rate Income
  $ 66,809     $ 68,028     $ 0     $ 0     $ 0     $ 0     $ 1,000     $ 0     $ 0     $ 0     $ 1,800     $ 10,000     $ 0     $ 0  
Floating Rate Income Opportunity
    48,236       49,347       0       0       0       0       1,000       0       0       0       1,800       10,000       0       0  
Senior Income
    37,955       35,625       0       0       0       0       1,000       0       0       0       7,400       16,000       0       0  
Tax-Advantaged Floating Rate
    24,000       24,000       0       0       0       0       1,000       0       0       0       1,800       2,000       0       0  
Arizona Dividend Advantage
    8,242       8,264       0       0       0       0       500       0       0       0       800       850       0       0  
Arizona Dividend Advantage 2
    8,847       8,906       0       0       0       0       500       0       0       0       800       850       0       0  
Arizona Dividend Advantage 3
    9,182       9,229       0       0       0       0       500       0       0       0       800       850       0       0  
Arizona Premium Income
    10,005       10,109       0       0       0       0       500       0       0       0       3,300       3,400       0       0  
California Dividend Advantage
    23,226       21,843       0       0       0       0       0       0       0       0       800       850       0       0  
California Dividend Advantage 2
    17,257       17,675       0       0       0       0       0       0       0       0       800       850       0       0  
California Dividend Advantage 3
    23,388       22,326       0       0       0       0       0       0       0       0       800       850       0       0  
California Investment Quality
    16,795       16,482       0       0       0       0       0       0       0       0       3,300       1,700       0       0  
California Market Opportunity
    12,998       12,970       0       0       0       0       0       0       0       0       3,300       1,700       0       0  
California Value
    14,840       14,994       0       0       0       0       0       0       0       0       0       0       0       0  
California Performance Plus
    16,280       16,334       0       0       0       0       0       0       0       0       3,300       1,700       0       0  
California Premium Income
    11,006       11,182       0       0       0       0       0       0       0       0       800       850       0       0  
California Quality Income
    23,024       23,119       0       0       0       0       0       0       0       0       3,300       1,700       0       0  
California Select Quality
    23,540       23,133       0       0       0       0       0       0       0       0       3,300       1,700       0       0  
Insured California Dividend Advantage
    17,818       18,156       0       0       0       0       0       0       0       0       800       850       0       0  
Insured California Premium Income
    11,604       11,946       0       0       0       0       0       0       0       0       3,300       1,700       0       0  
Insured California Premium Income 2
    15,795       15,647       0       0       0       0       0       0       0       0       3,300       1,700       0       0  


45


 

 
                                                                                                                 
 
    Audit Fees   Audit Related Fees   Tax Fees   All Other Fees
            Adviser and Adviser
      Adviser and Adviser
      Adviser and Adviser
    Fund(1)   Fund(2)   Entities   Fund(3)   Entities   Fund(4)   Entities
    Fiscal
  Fiscal
  Fiscal
  Fiscal
  Fiscal
  Fiscal
  Fiscal
  Fiscal
  Fiscal
  Fiscal
  Fiscal
  Fiscal
  Fiscal
  Fiscal
    Year
  Year
  Year
  Year
  Year
  Year
  Year
  Year
  Year
  Year
  Year
  Year
  Year
  Year
    Ended
  Ended
  Ended
  Ended
  Ended
  Ended
  Ended
  Ended
  Ended
  Ended
  Ended
  Ended
  Ended
  Ended
    2008   2009   2008   2009   2008   2009   2008   2009   2008   2009   2008   2009   2008   2009
     
 
Insured California Tax-Free Advantage
  $ 11,215     $ 11,059     $ 0     $ 0     $ 0     $ 0     $ 0     $ 0     $ 0     $ 0     $ 800     $ 850     $ 0     $ 0  
Connecticut Dividend Advantage
    8,952       9,100       0       0       0       0       500       0       0       0       800       850       0       0  
Connecticut Dividend Advantage 2
    8,780       8,916       0       0       0       0       500       0       0       0       800       850       0       0  
Connecticut Dividend Advantage 3
    10,064       10,292       0       0       0       0       500       0       0       0       800       850       0       0  
Connecticut Premium Income
    10,711       10,967       0       0       0       0       500       0       0       0       800       850       0       0  
Georgia Dividend Advantage
    8,537       8,643       0       0       0       0       500       0       0       0       800       850       0       0  
Georgia Dividend Advantage 2
    10,173       10,345       0       0       0       0       500       0       0       0       800       850       0       0  
Georgia Premium Income
    9,723       9,902       0       0       0       0       500       0       0       0       800       850       0       0  
Maryland Dividend Advantage
    9,996       10,090       0       0       0       0       500       0       0       0       800       850       0       0  
Maryland Dividend Advantage 2
    10,025       10,120       0       0       0       0       500       0       0       0       800       850       0       0  
Maryland Dividend Advantage 3
    10,711       10,899       0       0       0       0       500       0       0       0       800       850       0       0  
Maryland Premium Income
    14,295       14,742       0       0       0       0       500       0       0       0       800       850       0       0  
Massachusetts Dividend Advantage
    8,530       8,597       0       0       0       0       500       0       0       0       800       850       0       0  
Massachusetts Premium Income
    10,330       10,495       0       0       0       0       500       0       0       0       800       850       0       0  
Insured Massachusetts Tax-Free Advantage
    9,032       9,197       0       0       0       0       500       0       0       0       800       850       0       0  
Michigan Dividend Advantage
    8,603       8,641       0       0       0       0       500       0       0       0       800       850       0       0  
Michigan Premium Income
    12,343       12,753       0       0       0       0       500       0       0       0       3,300       1,700       0       0  
Michigan Quality Income
    15,368       15,986       0       0       0       0       500       0       0       0       3,300       1,700       0       0  
Missouri Premium Income
    8,656       8,718       0       0       0       0       500       0       0       0       800       850       0       0  
New Jersey Dividend Advantage
    11,592       11,738       0       0       0       0       500       0       0       0       800       850       0       0  
New Jersey Dividend Advantage 2
    10,274       10,310       0       0       0       0       500       0       0       0       800       850       0       0  
New Jersey Investment Quality
    21,228       21,756       0       0       0       0       500       0       0       0       3,250       3,400       0       0  
New Jersey Premium Income
    15,464       16,100       0       0       0       0       500       0       0       0       3,250       3,400       0       0  
North Carolina Dividend Advantage
    8,727       8,908       0       0       0       0       500       0       0       0       800       850       0       0  
North Carolina Dividend Advantage 2
    9,723       9,992       0       0       0       0       500       0       0       0       800       850       0       0  


46


 

 
                                                                                                                 
 
    Audit Fees   Audit Related Fees   Tax Fees   All Other Fees
            Adviser and Adviser
      Adviser and Adviser
      Adviser and Adviser
    Fund(1)   Fund(2)   Entities   Fund(3)   Entities   Fund(4)   Entities
    Fiscal
  Fiscal
  Fiscal
  Fiscal
  Fiscal
  Fiscal
  Fiscal
  Fiscal
  Fiscal
  Fiscal
  Fiscal
  Fiscal
  Fiscal
  Fiscal
    Year
  Year
  Year
  Year
  Year
  Year
  Year
  Year
  Year
  Year
  Year
  Year
  Year
  Year
    Ended
  Ended
  Ended
  Ended
  Ended
  Ended
  Ended
  Ended
  Ended
  Ended
  Ended
  Ended
  Ended
  Ended
    2008   2009   2008   2009   2008   2009   2008   2009   2008   2009   2008   2009   2008   2009
     
 
North Carolina Dividend Advantage 3
  $ 9,767     $ 10,041     $ 0     $ 0     $ 0     $ 0     $ 500     $ 0     $ 0     $ 0     $ 800     $ 850     $ 0     $ 0  
North Carolina Premium Income
    11,371       11,772       0       0       0       0       500       0       0       0       800       850       0       0  
Ohio Dividend Advantage
    10,057       10,325       0       0       0       0       500       0       0       0       800       850       0       0  
Ohio Dividend Advantage 2
    9,309       9,452       0       0       0       0       500       0       0       0       800       850       0       0  
Ohio Dividend Advantage 3
    8,685       8,832       0       0       0       0       500       0       0       0       800       850       0       0  
Ohio Quality Income
    14,208       14,823       0       0       0       0       500       0       0       0       3,300       1,700       0       0  
Pennsylvania Dividend Advantage
    9,462       9,532       0       0       0       0       500       0       0       0       800       850       0       0  
Pennsylvania Dividend Advantage 2
    9,754       9,886       0       0       0       0       500       0       0       0       800       850       0       0  
Pennsylvania Investment Quality
    18,476       18,743       0       0       0       0       500       0       0       0       800       850       0       0  
Pennsylvania Premium Income 2
    17,550       17,824       0       0       0       0       500       0       0       0       800       850       0       0  
Texas Quality Income
    13,557       14,008       0       0       0       0       500       0       0       0       800       850       0       0  
Virginia Dividend Advantage
    9,306       9,292       0       0       0       0       500       0       0       0       800       850       0       0  
Virginia Dividend Advantage 2
    11,022       11,197       0       0       0       0       500       0       0       0       800       850       0       0  
Virginia Premium Income
    13,122       13,515       0       0       0       0       500       0       0       0       800       850       0       0  
 
 
 
(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 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 for the leveraged Funds.


47


 

 
Non-Audit Fees. The following tables provide the aggregate non-audit fees billed by each Fund’s independent registered accounting firm for services rendered to each Fund, the Adviser and the Adviser Entities during each Fund’s last two fiscal years.
 
                                                                 
 
        Total Non-Audit Fees
       
        Billed to Adviser and
       
        Adviser Entities
       
        (Engagements Related
  Total Non-Audit Fees
   
        Directly to the Operations
  Billed to Adviser and
   
    Total Non-Audit Fees
  and Financial Reporting
  Adviser Entities (All Other
   
Fund   Billed to Fund   of Fund)   Engagements)   Total
    Fiscal Year
  Fiscal Year
  Fiscal Year
  Fiscal Year
  Fiscal Year
  Fiscal Year
  Fiscal Year
  Fiscal Year
    Ended 2008   Ended 2009   Ended 2008   Ended 2009   Ended 2008   Ended 2009   Ended 2008   Ended 2009
 
 
Floating Rate Income
  $ 2,800     $ 10,000     $ 0     $ 0     $ 0     $ 0     $ 2,800     $ 10,000  
Floating Rate Income Opportunity
    2,800       10,000       0       0       0       0       2,800       10,000  
Senior Income
    8,400       16,000       0       0       0       0       8,400       16,000  
Tax-Advantaged Floating Rate
    2,800       2,000       0       0       0       0       2,800       2,000  
Arizona Dividend Advantage
    1,300       850       0       0       0       0       1,300       850  
Arizona Dividend Advantage 2
    1,300       850       0       0       0       0       1,300       850  
Arizona Dividend Advantage 3
    1,300       850       0       0       0       0       1,300       850  
Arizona Premium Income
    3,800       3,400       0       0       0       0       3,800       3,400  
California Dividend Advantage
    800       850       0       0       0       0       800       850  
California Dividend Advantage 2
    800       850       0       0       0       0       800       850  
California Dividend Advantage 3
    800       850       0       0       0       0       800       850  
California Investment Quality
    3,300       1,700       0       0       0       0       3,300       1,700  
California Market Opportunity
    3,300       1,700       0       0       0       0       3,300       1,700  
California Value
    0       0       0       0       0       0       0       0  
California Performance Plus
    3,300       1,700       0       0       0       0       3,300       1,700  
California Premium Income
    800       850       0       0       0       0       800       850  
California Quality Income
    3,300       1,700       0       0       0       0       3,300       1,700  
California Select Quality
    3,300       1,700       0       0       0       0       3,300       1,700  
Insured California Dividend Advantage
    800       850       0       0       0       0       800       850  
Insured California Premium Income
    3,300       1,700       0       0       0       0       3,300       1,700  
Insured California Premium Income 2
    3,300       1,700       0       0       0       0       3,300       1,700  
Insured California Tax-Free Advantage
    800       850       0       0       0       0       800       850  


48


 

 
                                                                 
 
        Total Non-Audit Fees
       
        Billed to Adviser and
       
        Adviser Entities
       
        (Engagements Related
  Total Non-Audit Fees
   
        Directly to the Operations
  Billed to Adviser and
   
    Total Non-Audit Fees
  and Financial Reporting
  Adviser Entities (All Other
   
Fund   Billed to Fund   of Fund)   Engagements)   Total
    Fiscal Year
  Fiscal Year
  Fiscal Year
  Fiscal Year
  Fiscal Year
  Fiscal Year
  Fiscal Year
  Fiscal Year
    Ended 2008   Ended 2009   Ended 2008   Ended 2009   Ended 2008   Ended 2009   Ended 2008   Ended 2009
 
 
Connecticut Dividend Advantage
  $ 1,300     $ 850     $ 0     $ 0     $ 0     $ 0     $ 1,300     $ 850  
Connecticut Dividend Advantage 2
    1,300       850       0       0       0       0       1,300       850  
Connecticut Dividend Advantage 3
    1,300       850       0       0       0       0       1,300       850  
Connecticut Premium Income
    1,300       850       0       0       0       0       1,300       850  
Georgia Dividend Advantage
    1,300       850       0       0       0       0       1,300       850  
Georgia Dividend Advantage 2
    1,300       850       0       0       0       0       1,300       850  
Georgia Premium Income
    1,300       850       0       0       0       0       1,300       850  
Maryland Dividend Advantage
    1,300       850       0       0       0       0       1,300       850  
Maryland Dividend Advantage 2
    1,300       850       0       0       0       0       1,300       850  
Maryland Dividend Advantage 3
    1,300       850       0       0       0       0       1,300       850  
Maryland Premium Income
    1,300       850       0       0       0       0       1,300       850  
Massachusetts Dividend Advantage
    1,300       850       0       0       0       0       1,300       850  
Massachusetts Premium Income
    1,300       850       0       0       0       0       1,300       850  
Insured Massachusetts Tax-Free Advantage
    1,300       850       0       0       0       0       1,300       850  
Michigan Dividend Advantage
    1,300       850       0       0       0       0       1,300       850  
Michigan Premium Income
    3,800       1,700       0       0       0       0       3,800       1,700  
Michigan Quality Income
    3,800       1,700       0       0       0       0       3,800       1,700  
Missouri Premium Income
    1,300       850       0       0       0       0       1,300       850  
New Jersey Dividend Advantage
    1,300       850       0       0       0       0       1,300       850  
New Jersey Dividend Advantage 2
    1,300       850       0       0       0       0       1,300       850  
New Jersey Investment Quality
    3,750       3,400       0       0       0       0       3,750       3,400  
New Jersey Premium Income
    3,750       3,400       0       0       0       0       3,750       3,400  
North Carolina Dividend Advantage
    1,300       850       0       0       0       0       1,300       850  
North Carolina Dividend Advantage 2
    1,300       850       0       0       0       0       1,300       850  
North Carolina Dividend Advantage 3
    1,300       850       0       0       0       0       1,300       850  
North Carolina Premium Income
    1,300       850       0       0       0       0       1,300       850  


49


 

 
                                                                 
 
        Total Non-Audit Fees
       
        Billed to Adviser and
       
        Adviser Entities
       
        (Engagements Related
  Total Non-Audit Fees
   
        Directly to the Operations
  Billed to Adviser and
   
    Total Non-Audit Fees
  and Financial Reporting
  Adviser Entities (All Other
   
Fund   Billed to Fund   of Fund)   Engagements)   Total
    Fiscal Year
  Fiscal Year
  Fiscal Year
  Fiscal Year
  Fiscal Year
  Fiscal Year
  Fiscal Year
  Fiscal Year
    Ended 2008   Ended 2009   Ended 2008   Ended 2009   Ended 2008   Ended 2009   Ended 2008   Ended 2009
 
 
Ohio Dividend Advantage
  $ 1,300     $ 850     $ 0     $ 0     $ 0     $ 0     $ 1,300     $ 850  
Ohio Dividend Advantage 2
    1,300       850       0       0       0       0       1,300       850  
Ohio Dividend Advantage 3
    1,300       850       0       0       0       0       1,300       850  
Ohio Quality Income
    3,800       1,700       0       0       0       0       3,800       1,700  
Pennsylvania Dividend Advantage
    1,300       850       0       0       0       0       1,300       850  
Pennsylvania Dividend Advantage 2
    1,300       850       0       0       0       0       1,300       850  
Pennsylvania Investment Quality
    1,300       850       0       0       0       0       1,300       850  
Pennsylvania Premium Income 2
    1,300       850       0       0       0       0       1,300       850  
Texas Quality Income
    1,300       850       0       0       0       0       1,300       850  
Virginia Dividend Advantage
    1,300       850       0       0       0       0       1,300       850  
Virginia Dividend Advantage 2
    1,300       850       0       0       0       0       1,300       850  
Virginia Premium Income
    1,300       850       0       0       0       0       1,300       850  


50


 

Audit Committee Pre-Approval Policies and Procedures.  Generally, the audit committee must approve each Fund’s independent registered public accounting firm’s engagements (i) with the Fund for audit or non-audit services and (ii) with the Adviser and Adviser Entities for non-audit services if the engagement relates directly to the operations and financial reporting of the Fund. Regarding tax and research projects conducted by the independent registered public accounting firm for each Fund and the Adviser and Adviser Entities (with respect to the operations and financial reporting of each 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.
 
The audit committee has approved in advance all audit services and non-audit services that the independent registered public accounting firm provided to each Fund and to the Adviser and Adviser Entities (with respect to the operations and financial reporting of each Fund). None of the services rendered by the independent registered public accounting firm to each Fund or the Adviser or Adviser Entities were pre-approved by the audit committee pursuant to the pre-approval exception under Rule 2.01(c)(7)(i)(C) or Rule 2.01(c)(7)(ii) of Regulation S-X.
 
Additional Information
 

Appointment of the Independent Registered Public Accounting Firm
 
Each Board has appointed Ernst & Young LLP as independent registered public accounting firm to audit the books and records of each Fund for its current fiscal year. A representative of Ernst & Young LLP will be present at the Annual Meetings to make a statement, if such representative so desires, and to respond to shareholders’ questions. Ernst & Young LLP has informed each Fund that it has no direct or indirect material financial interest in the Funds, Nuveen, the Adviser or any other investment company sponsored by Nuveen.
 
Section 16(a) Beneficial Interest Reporting Compliance
 
Section 30(h) of the 1940 Act and Section 16(a) of the 1934 Act require Board Members and officers, the Adviser, affiliated persons of the Adviser and persons who own more than 10% of a registered class of a Fund’s equity securities to file forms reporting their affiliation with that Fund and reports of ownership and changes in ownership of that Fund’s shares with the SEC and the New York Stock Exchange or NYSE Amex, as applicable. These persons and entities are required by SEC regulation to furnish the Funds with copies of all Section 16(a) forms they file. Based on a review of these forms furnished to each Fund, each Fund believes that its Board Members and officers, Adviser and affiliated persons of the Adviser have complied with all applicable Section 16(a) filing requirements during its last fiscal year, except as follows: James F. Ruane, an officer of NAM and the Funds, made an amended filing on Form 3 with respect to Arizona Dividend Advantage, Arizona Dividend Advantage 2, Arizona Dividend Advantage 3, Arizona Premium Income, California Dividend Advantage, California Dividend Advantage 2, California Dividend Advantage 3, California Investment Quality, California Market Opportunity, California Value, California Performance Plus, California Premium Income, California Quality Income, California Select Quality, Insured California Dividend Advantage, Insured California Premium Income, Insured California Premium Income 2, Insured California Tax-Free Advantage


51


 

Connecticut Dividend Advantage, Connecticut Dividend Advantage 2, Connecticut Dividend Advantage 3, Connecticut Premium Income, Floating Rate Income, Floating Rate Income Opportunity, Georgia Dividend Advantage, Georgia Dividend Advantage 2, Georgia Premium Income Maryland Dividend Advantage 2 and Insured Massachusetts Tax-Free Advantage. To the knowledge of management of the Funds, no shareholder of a Fund owns more than 10% of a registered class of a Fund’s equity securities, except as provided in Appendix B.
 
Information About the Adviser
 
The Adviser, located at 333 West Wacker Drive, Chicago, Illinois 60606, serves as investment adviser and manager for each Fund. The Adviser is a wholly-owned subsidiary of Nuveen. Nuveen is a wholly-owned subsidiary of Windy City, a corporation formed by investors led by Madison Dearborn Partners, LLC (“MDP”), a private equity investment firm based in Chicago, Illinois. Windy City is controlled by MDP on behalf of the Madison Dearborn Capital Partner V funds.
 
Shareholder Proposals
 
To be considered for presentation at the annual meeting of shareholders of the Funds to be held in 2010, a shareholder proposal submitted pursuant to Rule 14a-8 of the 1934 Act must be received at the offices of that Fund, 333 West Wacker Drive, Chicago, Illinois 60606, not later than June 21, 2010. A shareholder wishing to provide notice in the manner prescribed by Rule 14a-4(c)(1) of a proposal submitted outside of the process of Rule 14a-8 must, pursuant to each Fund’s By-Laws, submit such written notice to the Fund not later than September 2, 2010 or prior to August 18, 2010. Timely submission of a proposal does not mean that such proposal will be included in a proxy statement.
 
Shareholder Communications
 
Fund shareholders who want to communicate with the Board or any individual Board Member should write to the attention of Lorna Ferguson, Manager of Fund Board Relations, Nuveen Investments, 333 West Wacker Drive, Chicago, Illinois 60606. The letter should indicate that you are a Fund shareholder and note the fund or funds that you own. If the communication is intended for a specific Board Member and so indicates it will be sent only to that Board Member. If a communication does not indicate a specific Board Member, it will be sent to the Independent Chairman and the outside counsel to the Independent Board Members for further distribution as deemed appropriate by such persons.
 
Expenses of Proxy Solicitation
 
With respect to routine items, the cost of preparing, printing and mailing the enclosed proxy, accompanying notice and proxy statement and all other costs in connection with the solicitation of proxies will be paid by the Funds pro rata based on the number of shareholder accounts. For non-routine items, the costs in connection with the solicitation of proxies will be paid by the Funds subject to such non-routine items based on the number of shareholder accounts. Additional solicitation may be made by letter or telephone by officers or employees of Nuveen or the Adviser, or by dealers and their representatives. Any additional costs of solicitation will be paid by the Fund that requires additional solicitation.


52


 

 
Fiscal Year
 
February 28, 2009 for California Dividend Advantage, California Dividend Advantage 2, California Dividend Advantage 3, California Investment Quality, California Market Opportunity, California Value, California Performance Plus, California Premium Income, California Quality Income, California Select Quality, Insured California Dividend Advantage, Insured California Premium Income, Insured California Premium Income 2, Insured California Tax-Free Advantage, Michigan Dividend Advantage, Michigan Premium Income, Michigan Quality Income, Ohio Dividend Advantage, Ohio Dividend Advantage 2, Ohio Dividend Advantage 3, Ohio Quality Income; April 30, 2009 for New Jersey Dividend Advantage, New Jersey Dividend Advantage 2, New Jersey Investment Quality, New Jersey Premium Income, Pennsylvania Dividend Advantage, Pennsylvania Dividend Advantage 2, Pennsylvania Investment Quality and Pennsylvania Premium Income 2; May 31, 2009 for Connecticut Dividend Advantage, Connecticut Dividend Advantage 2, Connecticut Dividend Advantage 3, Connecticut Premium Income, Georgia Dividend Advantage, Georgia Dividend Advantage 2, Georgia Premium Income, Maryland Dividend Advantage, Maryland Dividend Advantage 2, Maryland Dividend Advantage 3, Massachusetts Dividend Advantage, Massachusetts Premium Income, Insured Massachusetts Tax-Free Advantage, Missouri Premium Income, North Carolina Dividend Advantage, North Carolina Dividend Advantage 2, North Carolina Dividend Advantage 3, North Carolina Premium Income, Virginia Dividend Advantage, Virginia Dividend Advantage 2 and Virginia Premium Income; June 30, 2009 for Tax-Advantaged Floating Rate; and July 31, 2009 for Floating Rate Income, Floating Rate Income Opportunity, Senior Income, Arizona Dividend Advantage, Arizona Dividend Advantage 2, Arizona Dividend Advantage 3, Arizona Premium Income, and Texas Quality Income.
 
Annual Report Delivery
 
Annual reports will be sent to shareholders of record of each Fund following each Fund’s fiscal year end. Each Fund will furnish, without charge, a copy of its annual report and/or semi-annual report as available upon request. Such written or oral requests should be directed to such Fund at 333 West Wacker Drive, Chicago, Illinois 60606 or by calling 1-800-257-8787.
 
Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting To Be Held on November 30, 2009:
 
Each Fund’s Proxy Statement is available at www.nuveen.com/CEF/Info/Shareholder/ProxyStatements.aspx. For more information, shareholders may also contact the applicable Fund at the address and phone number set forth above.
 
Please note that only one annual report, semi-annual report or proxy statement may be delivered to two or more shareholders of a Fund who share an address, unless the Fund has received instructions to the contrary. To request a separate copy of an annual report, semi-annual report or proxy statement, or for instructions as to how to request a separate copy of such documents or as to how to request a single copy if multiple copies of such documents are received, shareholders should contact the applicable Fund at the address and phone number set forth above.


53


 

General
 
Management does not intend to present and does not have reason to believe that any other items of business will be presented at the Annual Meetings. However, if other matters are properly presented to the Annual Meetings for a vote, the proxies will be voted by the persons acting under the proxies upon such matters in accordance with their judgment of the best interests of the Fund.
 
A list of shareholders entitled to be present and to vote at each Annual Meeting will be available at the offices of the Funds, 333 West Wacker Drive, Chicago, Illinois, for inspection by any shareholder during regular business hours beginning ten days prior to the date of the Annual Meeting.
 
Failure of a quorum to be present at any Annual Meeting will necessitate adjournment and will subject that Fund to additional expense. The persons named in the enclosed proxy may also move for an adjournment of any Annual Meeting to permit further solicitation of proxies with respect to the proposal if they determine that adjournment and further solicitation is reasonable and in the best interests of the shareholders. Under each Fund’s By-Laws, an adjournment of a meeting with respect to a matter requires the affirmative vote of a majority of the shares entitled to vote on the matter present in person or represented by proxy at the meeting.
 
IF YOU CANNOT BE PRESENT AT THE MEETING, YOU ARE REQUESTED TO FILL IN, SIGN AND RETURN THE ENCLOSED PROXY PROMPTLY. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
 
Kevin J. McCarthy
Vice President and Secretary
 
October 26, 2009


54


 

APPENDIX A
 
Beneficial Ownership
 
The following table lists the dollar range of equity securities beneficially owned by each Board Member nominee in each Fund and in all Nuveen funds overseen by the Board Member nominee as of December 31, 2008.
 
                                                 
          Floating
          Tax-
             
    Floating
    Rate
          Advantaged
    Arizona
    Arizona
 
Board Member
  Rate
    Income
    Senior
    Floating
    Dividend
    Dividend
 
Nominees   Income     Opportunity     Income     Rate     Advantage     Advantage 2  
   
 
Board Members/Nominees who are not interested persons of the Funds
Robert P. Bremner
    $0       $0       $0       $0       $0       $0  
Jack B. Evans
    $1-$10,000       $0       $10,001-$50,000       $0       $0       $0  
William C. Hunter
    $0       $0       $0       $0       $0       $0  
David J. Kundert
    $0       $0       $0       $0       $0       $0  
William J. Schneider
    $0       $0       $0       $0       $0       $0  
Judith M. Stockdale
    $0       $0       $0       $0       $0       $0  
Carole E. Stone
    $0       $0       $0       $0       $0       $0  
Terence J. Toth
    $0       $0       $0       $0       $0       $0  
Board Member/Nominee who is an interested person of the Funds
John P. Amboian
    $0       $0       $0       $10,001-$50,000       $0       $0  
 
 
 
                                                 
    Arizona
    Arizona
    California
    California
    California
    California
 
Board Member
  Dividend
    Premium
    Premium
    Dividend
    Dividend
    Investment
 
Nominees   Advantage 3     Income     Advantage     Advantage 2     Advantage 3     Quality  
   
 
Board Members/Nominees who are not interested persons of the Funds
Robert P. Bremner
    $0       $0       $0       $0       $0       $0  
Jack B. Evans
    $0       $0       $0       $0       $0       $0  
William C. Hunter
    $0       $0       $0       $0       $0       $0  
David J. Kundert
    $0       $0       $0       $0       $0       $0  
William J. Schneider
    $0       $0       $0       $0       $0       $0  
Judith M. Stockdale
    $0       $0       $0       $0       $0       $0  
Carole E. Stone
    $0       $0       $0       $0       $0       $0  
Terence J. Toth
    $0       $0       $0       $0       $0       $0  
Board Member/Nominee who is an interested person of the Funds
John P. Amboian
    $0       $0       $0       $0       $0       $0  
 
 
 


A-1


 

                                                 
Dollar Range of Equity Securities  
    California
          California
    California
    California
    California
 
Board Member
  Market
    California
    Performance
    Premium
    Quality
    Select
 
Nominees   Opportunity     Value     Plus     Income     Income     Quality  
   
 
Board Members/Nominees who are not interested persons of the Funds
Robert P. Bremner
    $0       $0       $0       $0       $0       $0  
Jack B. Evans
    $0       $0       $0       $0       $0       $0  
William C. Hunter
    $0       $0       $0       $0       $0       $0  
David J. Kundert
    $0       $0       $0       $0       $0       $0  
William J. Schneider
    $0       $0       $0       $0       $0       $0  
Judith M. Stockdale
    $0       $0       $0       $0       $0       $0  
Carole E. Stone
    $0       $0       $0       $0       $0       $0  
Terence J. Toth
    $0       $0       $0       $0       $0       $0  
Board Member/Nominee who is an interested person of the Funds
John P. Amboian
    $0       $0       $0       $0       $0       $0  
 
 
 
                                                 
    Insured
    Insured
    Insured
    Insured
             
    California
    California
    California
    California
    Connecticut
    Connecticut
 
Board Member
  Dividend
    Premium
    Premium
    Tax-Free
    Dividend
    Dividend
 
Nominees   Advantage     Income     Income 2     Advantage     Advantage     Advantage 2  
   
 
Board Members/Nominees who are not interested persons of the Funds
Robert P. Bremner
    $0       $0       $0       $0       $0       $0  
Jack B. Evans
    $0       $0       $0       $0       $0       $0  
William C. Hunter
    $0       $0       $0       $0       $0       $0  
David J. Kundert
    $0       $0       $0       $0       $0       $0  
William J. Schneider
    $0       $0       $0       $0       $0       $0  
Judith M. Stockdale
    $0       $0       $0       $0       $0       $0  
Carole E. Stone
    $0       $0       $0       $0       $0       $0  
Terence J. Toth
    $0       $0       $0       $0       $0       $0  
Board Member/Nominee who is an interested person of the Funds
John P. Amboian
    $0       $0       $0       $0       $0       $0  
 
 
 

A-2