Investment Company Act file number 811-21157
Nuveen Arizona Dividend Advantage Municipal Fund 3
(Exact name of registrant as specified in charter)
333 West Wacker Drive, Chicago, Illinois 60606
(Address of principal executive offices) (Zip code)
Jessica R. DroegerVice President and Secretary
333 West Wacker Drive, Chicago, Illinois 60606
(Name and address of agent for service)
Registrant's telephone number, including area code: 312-917-7700
Date of fiscal year end: 07/31
Date of reporting period: 10/31/06
Form N-Q is to be used by management investment companies, other than small business investment companies registered on Form N-5 (§§ 239.24 and 274.5 of this chapter), to file reports with the Commission, not later than 60 days after the close of the first and third fiscal quarters, pursuant to rule 30b1-5 under the Investment Company Act of 1940 (17 CFR 270.30b1-5). The Commission may use the information provided on Form N-Q in its regulatory, disclosure review, inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-Q, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-Q unless the Form displays a currently valid Office of Management and Budget (OMB) control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to the Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.
Item 1. Schedule of Investments
Portfolio of Investments (Unaudited) | ||||||||
Nuveen Arizona Dividend Advantage Municipal Fund 3 (NXE) | ||||||||
October 31, 2006 | ||||||||
Principal | Optional Call | |||||||
Amount (000) | Description (1) | Provisions (2) | Ratings (3) | Value | ||||
| ||||||||
Consumer Staples 1.4% (0.9% of Total Investments) | ||||||||
$ 570 | Puerto Rico, The Childrens Trust Fund, Tobacco Settlement Asset-Backed Refunding Bonds, | 5/12 at 100.00 | BBB | $ | 598,905 | |||
Series 2002, 5.375%, 5/15/33 | ||||||||
| ||||||||
Education and Civic Organizations 16.0% (10.8% of Total Investments) | ||||||||
1,250 | Arizona State University, System Revenue Bonds, Series 2005, 5.000%, 7/01/20 AMBAC Insured | 7/15 at 100.00 | AAA | 1,345,938 | ||||
1,000 | Arizona Student Loan Acquisition Authority, Student Loan Revenue Refunding Bonds, Senior | 11/09 at 102.00 | Aaa | 1,064,430 | ||||
Series 1999A-1, 5.750%, 5/01/15 (Alternative Minimum Tax) | ||||||||
1,130 | Energy Management Services LLC, Arizona State University, Energy Conservation Revenue Bonds, | 7/12 at 100.00 | AAA | 1,216,049 | ||||
Main Campus Project, Series 2002, 5.250%, 7/01/18 MBIA Insured | ||||||||
270 | Glendale Industrial Development Authority, Arizona, Revenue Bonds, Midwestern University, | 5/08 at 101.00 | A | 277,147 | ||||
Series 1998A, 5.375%, 5/15/28 | ||||||||
540 | Pima County Industrial Development Authority, Arizona, Charter School Revenue Bonds, Noah | 12/14 at 100.00 | BBB | 571,768 | ||||
Webster Basic Schools Inc., Series 2004, 6.000%, 12/15/24 | ||||||||
565 | Tucson Industrial Development Authority, Arizona, Charter School Revenue Bonds, Arizona | 9/14 at 100.00 | BBB | 593,595 | ||||
Agribusiness and Equine Center Charter School, Series 2004A, 6.125%, 9/01/34 | ||||||||
2,000 | University of Arizona, Certificates of Participation, Series 2002B, 5.125%, 6/01/20 | 6/12 at 100.00 | AAA | 2,131,600 | ||||
AMBAC Insured | ||||||||
| ||||||||
6,755 | Total Education and Civic Organizations | 7,200,527 | ||||||
| ||||||||
Health Care 18.1% (12.2% of Total Investments) | ||||||||
300 | Arizona Health Facilities Authority, Hospital Revenue Bonds, Catholic Healthcare West, Series | 7/10 at 101.00 | A | 331,347 | ||||
1999A, 6.625%, 7/01/20 | ||||||||
Arizona Health Facilities Authority, Hospital System Revenue Bonds, Phoenix Childrens | ||||||||
Hospital, Series 1999A: | ||||||||
350 | 6.125%, 11/15/22 | 11/09 at 100.00 | Baa3 | 367,805 | ||||
520 | 6.250%, 11/15/29 | 11/09 at 100.00 | Baa3 | 547,680 | ||||
625 | Arizona Health Facilities Authority, Revenue Bonds, Blood Systems Inc., Series 2004, | 4/14 at 100.00 | A | 650,094 | ||||
5.000%, 4/01/20 | ||||||||
475 | Glendale Industrial Development Authority, Arizona, Revenue Bonds, John C. Lincoln Health | 12/15 at 100.00 | BBB | 486,547 | ||||
Network, Series 2005B, 5.000%, 12/01/37 | ||||||||
390 | Maricopa County Industrial Development Authority, Arizona, Health Facilities Revenue Bonds, | 5/16 at 100.00 | AA | 410,389 | ||||
Mayo Clinic, Series 2006, 5.000%, 11/15/36 | ||||||||
1,825 | Maricopa County Industrial Development Authority, Arizona, Health Facility Revenue Bonds, | 7/14 at 100.00 | A | 1,939,008 | ||||
Catholic Healthcare West, Series 2004A, 5.375%, 7/01/23 | ||||||||
2,000 | Maricopa County Industrial Development Authority, Arizona, Hospital Revenue Bonds, Mayo Clinic | 5/08 at 101.00 | AA | 2,060,880 | ||||
Hospital, Series 1998, 5.250%, 11/15/37 | ||||||||
270 | Maricopa County, Arizona, Hospital Revenue Bonds, Sun Health Corporation, Series 2005, | 4/15 at 100.00 | Baa1 | 282,636 | ||||
5.000%, 4/01/16 | ||||||||
1,000 | Yavapai County Industrial Development Authority, Arizona, Hospital Revenue Bonds, Yavapai | 8/13 at 100.00 | Baa2 | 1,087,310 | ||||
Regional Medical Center, Series 2003A, 6.000%, 8/01/33 | ||||||||
| ||||||||
7,755 | Total Health Care | 8,163,696 | ||||||
| ||||||||
Housing/Multifamily 4.6% (3.0% of Total Investments) | ||||||||
1,545 | Phoenix Industrial Development Authority, Arizona, GNMA Collateralized Multifamily Housing | 6/11 at 102.00 | Aaa | 1,629,960 | ||||
Revenue Bonds, Campaigne Place on Jackson, Series 2001, 5.600%, 6/20/21 (Alternative | ||||||||
Minimum Tax) | ||||||||
380 | Phoenix Industrial Development Authority, Arizona, GNMA Collateralized Multifamily Housing | 4/15 at 100.00 | Aaa | 388,584 | ||||
Revenue Bonds, Park Lee Apartments, Series 2004A, 5.050%, 10/20/44 (Alternative Minimum Tax) | ||||||||
| ||||||||
1,925 | Total Housing/Multifamily | 2,018,544 | ||||||
| ||||||||
Industrials 2.2% (1.4% of Total Investments) | ||||||||
945 | Yavapai County Industrial Development Authority, Arizona, Solid Waste Disposal Revenue Bonds, | 3/28 at 100.00 | BBB | 948,147 | ||||
Waste Management Inc., Series 2003B, 4.450%, 3/01/28 (Mandatory put 3/01/08) (Alternative | ||||||||
Minimum Tax) | ||||||||
| ||||||||
Tax Obligation/General 11.9% (8.0% of Total Investments) | ||||||||
660 | Chandler, Arizona, General Obligation Bonds, Series 2002, 5.000%, 7/01/18 | 7/12 at 100.00 | AAA | 701,210 | ||||
1,930 | Glendale, Arizona, General Obligation Refunding Bonds, Series 2002, 5.000%, 7/01/19 | 7/11 at 100.00 | AA | 2,034,413 | ||||
445 | Maricopa County Union High School District 210 Phoenix, Arizona, General Obligation Bonds, | 7/16 at 100.00 | AAA | 478,700 | ||||
Series 2006C, 5.000%, 7/01/24 MBIA Insured | ||||||||
1,575 | Maricopa County Union High School District 210, Phoenix, Arizona, General Obligation Bonds, | 7/14 at 100.00 | AAA | 1,689,314 | ||||
Series 2004A, 5.000%, 7/01/20 FSA Insured | ||||||||
440 | Tucson, Arizona, General Obligation Bonds, Series 2001B, 5.000%, 7/01/20 | 7/11 at 100.00 | AA | 463,804 | ||||
| ||||||||
5,050 | Total Tax Obligation/General | 5,367,441 | ||||||
| ||||||||
Tax Obligation/Limited 47.5% (32.1% of Total Investments) | ||||||||
3,000 | Arizona State Transportation Board, Highway Revenue Refunding Bonds, Series 2002A, | 7/12 at 102.00 | AAA | 3,283,527 | ||||
5.250%, 7/01/18 | ||||||||
2,660 | Arizona Tourism and Sports Authority, Tax Revenue Bonds, Multipurpose Stadium Facility | 7/13 at 100.00 | Aaa | 2,910,279 | ||||
Project, Series 2003A, 5.375%, 7/01/20 MBIA Insured | ||||||||
158 | Centerra Community Facilities District, Goodyear, Arizona, General Obligation Bonds, Series | 7/15 at 100.00 | N/R | 162,329 | ||||
2005, 5.500%, 7/15/29 | ||||||||
2,250 | DC Ranch Community Facilities District, Scottsdale, Arizona, General Obligation Bonds, Series | 7/13 at 100.00 | Aaa | 2,370,915 | ||||
2002, 5.000%, 7/15/27 AMBAC Insured | ||||||||
346 | Estrella Mountain Ranch Community Facilities District, Goodyear, Arizona, Special Assessment | 7/10 at 102.00 | N/R | 383,949 | ||||
Lien Bonds, Series 2001A, 7.875%, 7/01/25 | ||||||||
800 | Goodyear Community Facilities Utility District 1, Arizona, General Obligation Bonds, Series | 7/13 at 100.00 | A | 838,360 | ||||
2003, 5.350%, 7/15/28 ACA Insured | ||||||||
525 | Greater Arizona Development Authority, Infrastructure Revenue Bonds, Series 2006A, 5.000%, | 8/16 at 100.00 | AAA | 564,160 | ||||
8/01/23 MBIA Insured | ||||||||
2,000 | Mohave County, Arizona, Certificates of Participation, Series 2004, 5.250%, 7/01/19 | 7/14 at 100.00 | AAA | 2,188,420 | ||||
AMBAC Insured | ||||||||
640 | Palm Valley Community Facility District 3, Goodyear, Arizona, General Obligation Bonds, Series | 7/16 at 100.00 | N/R | 654,624 | ||||
2006, 5.300%, 7/15/31 | ||||||||
160 | Parkway Community Facilities District 1, Prescott Vallet, Arizona, General Obligation Bonds, | 7/16 at 100.00 | N/R | 161,251 | ||||
Series 2006, 5.350%, 7/15/31 | ||||||||
1,250 | Pinal County Industrial Development Authority, Arizona, Correctional Facilities Contract | No Opt. Call | A | 1,292,925 | ||||
Revenue Bonds, Florence West Prison LLC, Series 2002A, 5.000%, 10/01/18 ACA Insured | ||||||||
1,130 | San Luis Civic Improvement Corporation, Arizona, Municipal Facilities Excise Tax Revenue | 7/15 at 100.00 | AAA | 1,203,066 | ||||
Bonds, Series 2005, 5.000%, 7/01/25 XLCA Insured | ||||||||
2,770 | Tempe, Arizona, Excise Tax Revenue Refunding Bonds, Series 2003, 5.000%, 7/01/22 | 7/13 at 100.00 | AAA | 2,943,873 | ||||
1,250 | Vistancia Community Facilities District, Arizona, Restricted General Obligation Bonds, Series | 7/15 at 100.00 | N/R | 1,314,063 | ||||
2005, 5.750%, 7/15/24 | ||||||||
665 | Watson Road Community Facilities District, Arizona, Special Assessment Revenue Bonds, Series | 7/16 at 100.00 | N/R | 700,059 | ||||
2005, 6.000%, 7/01/30 | ||||||||
425 | Westpark Community Facilities District, Buckeye, Arizona, General Obligation Tax Increment | 7/16 at 100.00 | N/R | 429,960 | ||||
Bonds Series 2006, 5.250%, 7/15/31 | ||||||||
| ||||||||
20,029 | Total Tax Obligation/Limited | 21,401,760 | ||||||
| ||||||||
Transportation 13.4% (9.1% of Total Investments) | ||||||||
Phoenix, Arizona, Civic Improvement Corporation, Senior Lien Airport Revenue Bonds, | ||||||||
Series 2002B: | ||||||||
1,000 | 5.750%, 7/01/16 FGIC Insured (Alternative Minimum Tax) | 7/12 at 100.00 | AAA | 1,094,780 | ||||
2,300 | 5.250%, 7/01/21 FGIC Insured (Alternative Minimum Tax) | 7/12 at 100.00 | AAA | 2,419,347 | ||||
2,450 | Tucson Airport Authority Inc., Arizona, Revenue Refunding Bonds, Series 2001B, 5.000%, | 6/11 at 100.00 | AAA | 2,529,821 | ||||
6/01/20 AMBAC Insured (Alternative Minimum Tax) | ||||||||
| ||||||||
5,750 | Total Transportation | 6,043,948 | ||||||
| ||||||||
U.S. Guaranteed 9.9% (6.7% of Total Investments) (4) | ||||||||
1,000 | Arizona Health Facilities Authority, Hospital System Revenue Bonds, John C. Lincoln Health | 12/10 at 102.00 | BBB (4) | 1,138,530 | ||||
Network, Series 2000, 6.875%, 12/01/20 (Pre-refunded 12/01/10) | ||||||||
1,760 | Arizona State University, System Revenue Bonds, Series 2002, 5.750%, 7/01/27 (Pre-refunded | 7/12 at 100.00 | AAA | 1,953,741 | ||||
7/01/12) FGIC Insured | ||||||||
1,250 | Scottsdale Industrial Development Authority, Arizona, Hospital Revenue Bonds, Scottsdale | 12/11 at 101.00 | A3 (4) | 1,385,437 | ||||
Healthcare, Series 2001, 5.800%, 12/01/31 (Pre-refunded 12/01/11) | ||||||||
| ||||||||
4,010 | Total U.S. Guaranteed | 4,477,708 | ||||||
| ||||||||
Utilities 12.2% (8.3% of Total Investments) | ||||||||
1,250 | Maricopa County Pollution Control Corporation, Arizona, Revenue Bonds, Arizona Public Service | 11/12 at 100.00 | AAA | 1,304,688 | ||||
Company Palo Verde Project, Series 2002A, 5.050%, 5/01/29 AMBAC Insured | ||||||||
Puerto Rico Electric Power Authority, Power Revenue Bonds, Series 2005RR: | ||||||||
1,660 | 5.000%, 7/01/26 XLCA Insured | 7/15 at 100.00 | AAA | 1,774,839 | ||||
935 | 5.000%, 7/01/27 XLCA Insured | 7/15 at 100.00 | AAA | 997,570 | ||||
Salt River Project Agricultural Improvement and Power District, Arizona, Electric System | ||||||||
Revenue Bonds, Series 2002B: | ||||||||
360 | 5.000%, 1/01/22 | 1/13 at 100.00 | Aa1 | 381,096 | ||||
1,000 | 5.000%, 1/01/31 | 1/13 at 100.00 | Aa1 | 1,047,160 | ||||
| ||||||||
5,205 | Total Utilities | 5,505,353 | ||||||
| ||||||||
Water and Sewer 11.1% (7.5% of Total Investments) | ||||||||
405 | Oro Valley Municipal Property Corporation, Arizona, Senior Lien Water Revenue Bonds, Series | 7/13 at 100.00 | AAA | 430,422 | ||||
2003, 5.000%, 7/01/23 MBIA Insured | ||||||||
380 | Phoenix Civic Improvement Corporation, Arizona, Junior Lien Wastewater System Revenue Bonds, | 7/14 at 100.00 | AAA | 403,697 | ||||
Series 2004, 5.000%, 7/01/24 MBIA Insured | ||||||||
1,000 | Phoenix Civic Improvement Corporation, Arizona, Junior Lien Wastewater System Revenue | 7/11 at 100.00 | AAA | 1,059,410 | ||||
Refunding Bonds, Series 2001, 5.125%, 7/01/21 FGIC Insured | ||||||||
2,000 | Phoenix Civic Improvement Corporation, Arizona, Junior Lien Water System Revenue Bonds, Series | 7/12 at 100.00 | AAA | 2,124,880 | ||||
2002, 5.000%, 7/01/18 FGIC Insured | ||||||||
920 | Phoenix Civic Improvement Corporation, Arizona, Junior Lien Water System Revenue Bonds, Series | 7/15 at 100.00 | AAA | 985,725 | ||||
2005, 5.000%, 7/01/23 MBIA Insured | ||||||||
| ||||||||
4,705 | Total Water and Sewer | 5,004,134 | ||||||
| ||||||||
$ 62,699 | Total Investments (cost $64,236,246) 148.3% | 66,730,163 | ||||||
|
| |||||||
Other Assets Less Liabilities 0.6% | 281,401 | |||||||
| ||||||||
Preferred Shares, at Liquidation Value (48.9)% | (22,000,000) | |||||||
| ||||||||
Net Assets Applicable to Common Shares 100% | $ | 45,011,564 | ||||||
|
(1) | All percentages shown in the Portfolio of Investments are based on net assets applicable to Common | |
shares unless otherwise noted. | ||
(2) | Optional Call Provisions: Dates (month and year) and prices of the earliest optional call or redemption. | |
There may be other call provisions at varying prices at later dates. Certain mortgage-backed securities | ||
may be subject to periodic principal paydowns. | ||
(3) | Ratings: Using the higher of Standard & Poors or Moodys rating. Ratings below BBB by Standard & Poors | |
Group or Baa by Moodys Investor Service, Inc. are considered to be below investment grade. | ||
(4) | Backed by an escrow or trust containing sufficient U.S. Government or U.S. Government agency securities | |
which ensure the timely payment of principal and interest. Such investments are normally considered to | ||
be equivalent to AAA rated securities. | ||
N/R | Not rated. |
Income Tax Information
The following information is presented on an income tax basis. Differences between amounts for financial statement and federal income tax purposes are primarily due to the treatment of paydown gains and losses, timing differences in recognizing taxable market discount and timing differences in recognizing certain gains and losses on investment transactions.
At October 31, 2006, the cost of investments was $64,293,497.
Gross unrealized appreciation and gross unrealized depreciation of investments at October 31, 2006, were as follows:
| ||
Gross unrealized: | ||
Appreciation | $2,496,959 | |
Depreciation | (60,293) | |
| ||
Net unrealized appreciation (depreciation) of investments | $2,436,666 | |
|
Item 2. Controls and Procedures.
Item 3. Exhibits.
File as exhibits as part of this Form a separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the 1940 Act (17 CFR 270.30a-2(a)), exactly as set forth below: EX-99 CERT Attached hereto.
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Nuveen Arizona Dividend Advantage Municipal Fund 3
By (Signature and Title)* /s/ Jessica R. Droeger
Jessica R. Droeger
Vice President and Secretary
Date December 28, 2006
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By (Signature and Title)* /s/ Gifford R. Zimmerman
Gifford R. Zimmerman
Chief Administrative Officer (principal executive officer)
Date December 28, 2006
By (Signature and Title)* /s/ Stephen D. Foy
Stephen D. Foy
Vice President and Controller (principal financial
officer)
Date December 28, 2006
* Print the name and title of each signing officer under his or her signature.