N-Q 1 nq2.htm NKR_NQ Unassociated Document



 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM N-Q

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED MANAGEMENT INVESTMENT COMPANY
 
Investment Company Act file number 811-10553
 
Nuveen Arizona Dividend Advantage Municipal Fund 2
(Exact name of registrant as specified in charter)
 
Nuveen Investments
        333 West Wacker Drive, Chicago, Illinois 60606         
(Address of principal executive offices) (Zip code)
 

Kevin J. McCarthy
Vice 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:            2/28          
 
Date of reporting period:         5/31/11         
 
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 2 (NKR) 
     
   
   May 31, 2011 
     
Principal 
   
Optional Call 
   
Amount (000) 
 
Description (1) 
Provisions (2) 
Ratings (3) 
Value 
   
Education and Civic Organizations – 10.6% (7.0% of Total Investments) 
     
$     1,130 
 
Arizona Higher Education Loan Authority, Student Loan Revenue Bonds, Series 2007B, Auction 
9/11 at 100.00 
A
$    934,228 
   
Rate Securities, 0.630%, 11/01/41 (Alternative Minimum Tax) (4) 
     
450 
 
Glendale Industrial Development Authority, Arizona, Revenue Bonds, Midwestern University, 
5/22 at 100.00 
A– 
435,636 
   
Refunding Series 2007, 5.000%, 5/15/31 
     
775 
 
Glendale Industrial Development Authority, Arizona, Revenue Bonds, Midwestern University, 
5/20 at 100.00 
A– 
718,348 
   
Refunding Series 2010, 5.125%, 5/15/40 
     
485 
 
Pima County Industrial Development Authority, Arizona, Charter School Revenue Bonds, Noah 
12/14 at 100.00 
BBB– 
460,444 
   
Webster Basic Schools Inc., Series 2004, 6.000%, 12/15/24 
     
365 
 
Pima County Industrial Development Authority, Arizona, Educational Revenue Bonds, Valley 
7/18 at 100.00 
Baa3 
333,501 
   
Academy Charter School Project, Series 2008, 6.500%, 7/01/38 
     
290 
 
Puerto Rico Industrial, Tourist, Educational, Medical and Environmental Control Facilities 
8/11 at 100.00 
BBB– 
289,977 
   
Financing Authority, Higher Education Revenue Bonds, Ana G. Mendez University System, 
     
   
Series 1999, 5.375%, 2/01/19 
     
480 
 
Tucson Industrial Development Authority, Arizona, Charter School Revenue Bonds, Arizona 
9/14 at 100.00 
BB+ 
392,059 
   
Agribusiness and Equine Center Charter School, Series 2004A, 6.125%, 9/01/34 
     
   
University of Arizona, Certificates of Participation, Series 2002A: 
     
65 
 
5.500%, 6/01/18 – AMBAC Insured 
6/12 at 100.00 
AA– 
67,438 
40 
 
5.125%, 6/01/22 – AMBAC Insured 
6/12 at 100.00 
AA– 
41,024 
4,080 
 
Total Education and Civic Organizations 
   
3,672,655 
   
Health Care – 28.6% (19.0% of Total Investments) 
     
845 
 
Arizona Health Facilities Authority, Hospital Revenue Bonds, Banner Health Systems, Series 
1/17 at 100.00 
A+ 
847,822 
   
2007A, 5.000%, 1/01/25 
     
520 
 
Arizona Health Facilities Authority, Hospital Revenue Bonds, Banner Health Systems, Series 
1/17 at 100.00 
A+ 
357,682 
   
2007B, 1.013%, 1/02/37 
     
1,150 
 
Arizona Health Facilities Authority, Hospital Revenue Bonds, Banner Health Systems, Series 
1/18 at 100.00 
A+ 
1,148,344 
   
2008D, 5.500%, 1/01/38 
     
600 
 
Arizona Health Facilities Authority, Revenue Bonds, Blood Systems Inc., Series 2004, 
4/14 at 100.00 
A
616,992 
   
5.000%, 4/01/20 
     
400 
 
Glendale Industrial Development Authority, Arizona, Revenue Bonds, John C. Lincoln Health 
12/15 at 100.00 
BBB 
333,412 
   
Network, Series 2005B, 5.000%, 12/01/37 
     
655 
 
Glendale Industrial Development Authority, Arizona, Revenue Bonds, John C. Lincoln Health 
12/17 at 100.00 
BBB 
532,915 
   
Network, Series 2007, 5.000%, 12/01/42 
     
1,375 
 
Maricopa County Industrial Development Authority, Arizona, Health Facility Revenue Bonds, 
7/14 at 100.00 
A
1,404,260 
   
Catholic Healthcare West, Series 2004A, 5.375%, 7/01/23 
     
1,650 
 
Maricopa County Industrial Development Authority, Arizona, Health Facility Revenue Bonds, 
7/17 at 100.00 
A
1,588,851 
   
Catholic Healthcare West, Series 2007A, 5.250%, 7/01/32 
     
500 
 
Maricopa County Industrial Development Authority, Arizona, Hospital Revenue Bonds, Mayo Clinic 
11/11 at 100.00 
AA 
500,120 
   
Hospital, Series 1998, 5.250%, 11/15/37 
     
1,120 
 
Scottsdale Industrial Development Authority, Arizona, Hospital Revenue Bonds, Scottsdale 
9/20 at 100.00 
AA+ 
1,099,078 
   
Healthcare, Series 2006C. Re-offering, 5.000%, 9/01/35 – AGC Insured 
     
   
Show Low Industrial Development Authority, Arizona, Hospital Revenue Bonds, Navapache 
     
   
Regional Medical Center, Series 2005: 
     
315 
 
5.000%, 12/01/25 – RAAI Insured 
12/15 at 100.00 
BBB 
289,702 
260 
 
5.000%, 12/01/30 – RAAI Insured 
12/15 at 100.00 
BBB 
228,719 
1,000 
 
Yavapai County Industrial Development Authority, Arizona, Hospital Revenue Bonds, Yavapai 
8/13 at 100.00 
Baa2 
974,800 
   
Regional Medical Center, Series 2003A, 6.000%, 8/01/33 
     
10,390 
 
Total Health Care 
   
9,922,697 
   
Housing/Multifamily – 0.7% (0.5% of Total Investments) 
     
245 
 
Maricopa County Industrial Development Authority, Arizona, GNMA Collateralized Multifamily 
10/11 at 105.00 
AAA 
254,322 
   
Housing Revenue Refunding Bonds, Pine Ridge, Cambridge Court, Cove on 44th and Fountain Place 
     
   
Apartments, Series 2001A-1, 6.000%, 10/20/31 
     
   
Tax Obligation/General – 30.6% (20.3% of Total Investments) 
     
1,000 
 
Maricopa County Elementary School District 83 Cartwright, Arizona, General Obligation Bonds, 
7/21 at 100.00 
AA+ 
1,027,380 
   
School Improvement, Project 2010, Series 2011A, 5.375%, 7/01/30 – AGM Insured 
     
1,000 
 
Maricopa County School District 6, Arizona, General Obligation Refunding Bonds, Washington 
No Opt. Call 
AA+ 
1,173,700 
   
Elementary School, Series 2002A, 5.375%, 7/01/16 – AGM Insured 
     
775 
 
Maricopa County School District 79 Litchfield Elementary, Arizona, General Obligation Bonds, 
7/21 at 100.00 
Aa2 
877,959 
   
Series 2011, 5.000%, 7/01/23 
     
1,165 
 
Maricopa County Unified School District 69, Paradise Valley, Arizona, General Obligation 
No Opt. Call 
Aa2 
1,301,561 
   
Refunding Bonds, Series 2002A, 5.250%, 7/01/14 – FGIC Insured 
     
1,405 
 
Mesa, Arizona, General Obligation Bonds, Series 2002, 5.375%, 7/01/15 – FGIC Insured 
No Opt. Call 
AA 
1,621,356 
   
Phoenix, Arizona, Various Purpose General Obligation Bonds, Series 2002B: 
     
985 
 
5.000%, 7/01/22 
7/12 at 100.00 
AAA 
1,017,840 
290 
 
5.000%, 7/01/27 
7/12 at 100.00 
AAA 
293,634 
310 
 
Pima County Continental Elementary School District 39, Arizona, General Obligation Bonds, 
7/21 at 100.00 
AA+ 
320,242 
   
Series 2011A, 2.000%, 7/01/30 – AGM Insured 
     
500 
 
Pima County Unified School District 08 Flowing Wells, Arizona, General Obligation Bonds, 
7/21 at 100.00 
A+ 
514,485 
   
Series 2011B, 5.375%, 7/01/29 
     
1,000 
 
Pima County Unified School District 6, Marana, Arizona, General Obligation Bonds, School 
7/21 at 100.00 
A+ 
1,018,600 
   
Improvement Project 2010 Series 2011A, 5.000%, 7/01/25 
     
1,360 
 
Scottsdale, Arizona, General Obligation Bonds, Preserve Acquisition Series 1999, 
7/21 at 100.00 
AAA 
1,452,684 
   
5.000%, 7/01/33 
     
9,790 
 
Total Tax Obligation/General 
   
10,619,441 
   
Tax Obligation/Limited – 50.2% (33.3% of Total Investments) 
     
   
Arizona State, Certificates of Participation, Series 2002A: 
     
750 
 
5.000%, 11/01/17 – NPFG Insured 
5/12 at 100.00 
A+ 
760,620 
1,000 
 
5.000%, 11/01/18 – NPFG Insured 
5/12 at 100.00 
A+ 
1,012,420 
500 
 
5.000%, 11/01/20 – NPFG Insured 
5/12 at 100.00 
A+ 
504,555 
124 
 
Centerra Community Facilities District, Goodyear, Arizona, General Obligation Bonds, Series 
7/15 at 100.00 
N/R 
97,976 
   
2005, 5.500%, 7/15/29 
     
337 
 
Estrella Mountain Ranch Community Facilities District, Arizona, Special Assessment Bonds, 
1/17 at 100.00 
N/R 
239,786 
   
Montecito Assessment District, Series 2007, 5.800%, 7/01/32 
     
200 
 
Estrella Mountain Ranch Community Facilities District, Goodyear, Arizona, Special Assessment 
7/12 at 100.00 
N/R 
201,824 
   
Lien Bonds, Series 2001A, 7.875%, 7/01/25 
     
1,325 
 
Marana Municipal Property Corporation, Arizona, Municipal Facilities Revenue Bonds, Series 
7/11 at 100.00 
AA 
1,325,530 
   
2008B, 5.125%, 7/01/28 
     
834 
 
Marana, Arizona, Tangerine Farms Road Improvement District Revenue Bonds, Series 2006, 
7/16 at 100.00 
A2 
828,020 
   
4.600%, 1/01/26 
     
   
Maricopa County Stadium District, Arizona, Revenue Refunding Bonds, Series 2002: 
     
840 
 
5.375%, 6/01/18 – AMBAC Insured 
6/12 at 100.00 
N/R 
788,197 
2,645 
 
5.375%, 6/01/19 – AMBAC Insured 
6/12 at 100.00 
N/R 
2,464,291 
240 
 
Marley Park Community Facilities District, City of Surprise, Arizona, Limited Tax General 
7/17 at 100.00 
N/R 
200,431 
   
Obligation Bonds, Series 2008 (Bank Qualified), 6.100%, 7/15/32 
     
415 
 
Merrill Ranch Community Facilities District 1, Florence, Arizona, General Obligation Bonds, 
7/18 at 100.00 
N/R 
399,944 
   
Series 2008A, 7.400%, 7/15/33 
     
530 
 
Palm Valley Community Facility District 3, Goodyear, Arizona, General Obligation Bonds, Series 
7/16 at 100.00 
N/R 
403,086 
   
2006, 5.300%, 7/15/31 
     
350 
 
Palm Valley Community Facility District 3, Goodyear, Arizona, Limited Tax General Obligation 
7/17 at 100.00 
N/R 
281,418 
   
Bonds, Series 2007, 5.800%, 7/15/32 
     
140 
 
Parkway Community Facilities District 1, Prescott Valley, Arizona, General Obligation Bonds, 
7/16 at 100.00 
N/R 
107,188 
   
Series 2006, 5.350%, 7/15/31 
     
1,000 
 
Phoenix Industrial Development Authority, Arizona, Government Bonds, Capitol Mall LLC II, 
3/12 at 100.00 
A1 
1,027,580 
   
Series 2001, 5.250%, 9/15/16 – AMBAC Insured 
     
1,070 
 
Pinal County Industrial Development Authority, Arizona, Correctional Facilities Contract 
No Opt. Call 
BBB– 
1,062,157 
   
Revenue Bonds, Florence West Prison LLC, Series 2002A, 5.000%, 10/01/18 – ACA Insured 
     
270 
 
Puerto Rico Public Buildings Authority, Guaranteed Government Facilities Revenue Refunding 
7/12 at 100.00 
A3 
265,694 
   
Bonds, Series 2002D, 5.125%, 7/01/24 
     
250 
 
Puerto Rico Sales Tax Financing Corporation, Sales Tax Revenue Bonds, First Subordinate Series 
2/20 at 100.00 
A+ 
244,130 
   
2010A, 5.375%, 8/01/39 
     
960 
 
San Luis Civic Improvement Corporation, Arizona, Municipal Facilities Excise Tax Revenue 
7/15 at 100.00 
A+ 
975,360 
   
Bonds, Series 2005, 5.000%, 7/01/25 – SYNCORA GTY Insured 
     
1,000 
 
Scottsdale Municipal Property Corporation, Arizona, Excise Tax Revenue Bonds, Refunding Series 
No Opt. Call 
AAA 
1,173,600 
   
2006, 5.000%, 7/01/24 
     
1,000 
 
Scottsdale Municipal Property Corporation, Arizona, Excise Tax Revenue Bonds, Water & Sewer 
No Opt. Call 
AAA 
1,037,280 
   
Improvements Project, Series 2010, 5.000%, 7/01/36 
     
555 
 
Tartesso West Community Facility District, Buckeye, Arizona, Limited Tax General Obligation 
7/17 at 100.00 
N/R 
451,998 
   
Bonds, Series 2007, 5.900%, 7/15/32 
     
750 
 
Vistancia Community Facilities District, Arizona, Restricted General Obligation Bonds, Series 
7/15 at 100.00 
A1 
785,160 
   
2005, 5.750%, 7/15/24 
     
637 
 
Watson Road Community Facilities District, Arizona, Special Assessment Revenue Bonds, Series 
7/16 at 100.00 
N/R 
504,975 
   
2005, 6.000%, 7/01/30 
     
350 
 
Westpark Community Facilities District, Buckeye, Arizona, General Obligation Tax Increment 
7/16 at 100.00 
N/R 
264,404 
   
Bonds Series 2006, 5.250%, 7/15/31 
     
18,072 
 
Total Tax Obligation/Limited 
   
17,407,624 
   
Transportation – 2.9% (1.9% of Total Investments) 
     
1,000 
 
Phoenix Civic Improvement Corporation, Arizona, Senior Lien Airport Revenue Bonds, Series 
7/12 at 100.00 
AA– 
1,003,030 
   
2002B, 5.250%, 7/01/27 – FGIC Insured (Alternative Minimum Tax) 
     
   
U.S. Guaranteed – 4.6% (3.0% of Total Investments) (5) 
     
100 
 
Maricopa County Unified School District 89, Dysart, Arizona, General Obligation Bonds, Series 
7/14 at 100.00 
AA+ (5) 
114,069 
   
2004B, 5.250%, 7/01/20 (Pre-refunded 7/01/14) – AGM Insured 
     
375 
 
Maricopa County Union High School District 210 Phoenix, Arizona, General Obligation Bonds, 
7/16 at 100.00 
AA (5) 
447,004 
   
Series 2006C, 5.000%, 7/01/24 (Pre-refunded 7/01/16) – NPFG Insured 
     
225 
 
Maricopa County, Arizona, Hospital Revenue Bonds, Sun Health Corporation, Series 2005, 5.000%, 
4/15 at 100.00 
N/R (5) 
257,983 
   
4/01/16 (Pre-refunded 4/01/15) 
     
730 
 
Puerto Rico Public Buildings Authority, Guaranteed Government Facilities Revenue Refunding 
7/12 at 100.00 
A3 (5) 
767,778 
   
Bonds, Series 2002D, 5.125%, 7/01/24 (Pre-refunded 7/01/12) 
     
1,430 
 
Total U.S. Guaranteed 
   
1,586,834 
   
Utilities – 8.5% (5.7% of Total Investments) 
     
900 
 
Maricopa County Pollution Control Corporation, Arizona, Pollution Control Revenue Refunding 
6/20 at 100.00 
A1 
896,886 
   
Bonds, Southern California Edison Company, Series 2000A, 5.000%, 6/01/35 
     
665 
 
Pima County Industrial Development Authority, Arizona, Revenue Bonds, Tucson Electric Power 
1/15 at 100.00 
BBB– 
669,382 
   
Company, Refunding Series 2008, 5.750%, 9/01/29 
     
450 
 
Salt River Project Agricultural Improvement and Power District, Arizona, Electric System 
1/18 at 100.00 
Aa1 
500,202 
   
Revenue Bonds, Tender Option Bond Trust 09-9W, 17.211%, 1/01/38 (IF) (6) 
     
1,000 
 
Salt Verde Financial Corporation, Arizona, Senior Gas Revenue Bonds, Citigroup Energy Inc 
No Opt. Call 
A
883,780 
   
Prepay Contract Obligations, Series 2007, 5.000%, 12/01/37 
     
3,015 
 
Total Utilities 
   
2,950,250 
   
Water and Sewer – 14.0% (9.3% of Total Investments) 
     
500 
 
City of Goodyear, Arizona Subordinate Lien Water and Sewer Revenue Obligations, Series 2011, 
7/21 at 100.00 
AA+ 
509,080 
   
5.500%, 7/01/41 
     
500 
 
Maricopa County Industrial Development Authority, Arizona, Water System Improvement Revenue 
12/11 at 100.00 
N/R 
499,980 
   
Bonds, Chaparral City Water Company, Series 1997A, 5.400%, 12/01/22 – AMBAC Insured 
     
   
(Alternative Minimum Tax) 
     
360 
 
Oro Valley Municipal Property Corporation, Arizona, Senior Lien Water Revenue Bonds, Series 
7/13 at 100.00 
AA– 
368,345 
   
2003, 5.000%, 7/01/23 – NPFG Insured 
     
1,000 
 
Phoenix Civic Improvement Corporation, Arizona, Junior Lien Water System Revenue Refunding 
No Opt. Call 
AAA 
1,215,250 
   
Bonds, Series 2001, 5.500%, 7/01/22 – FGIC Insured 
     
   
Surprise Municipal Property Corporation, Arizona, Wastewater System Revenue Bonds, Series 2007: 
     
350 
 
4.700%, 4/01/22 
4/14 at 100.00 
N/R 
353,780 
410 
 
4.900%, 4/01/32 
4/17 at 100.00 
N/R 
374,843 
1,000 
 
Tucson, Arizona, Water System Revenue Refunding Bonds, Series 2002, 5.500%, 7/01/18 – 
7/12 at 102.00 
Aa2 
1,063,950 
   
FGIC Insured 
     
525 
 
Yuma County Industrial Development Authority, Arizona, Exempt Revenue Bonds, Far West Water & 
12/17 at 100.00 
N/R 
459,281 
   
Sewer Inc. Refunding, Series 2007A, 6.375%, 12/01/37 (Alternative Minimum Tax) 
     
4,645 
 
Total Water and Sewer 
   
4,844,509 
$ 52,667 
 
Total Investments (cost $52,106,196) – 150.7% 
   
52,261,362 
   
MuniFund Term Preferred Shares, at Liquidation Value – (54.0)% (7) 
   
(18,725,000)
   
Other Assets Less Liabilities – 3.3% 
   
1,134,512 
   
Net Assets Applicable to Common Shares – 100% 
   
$ 34,670,874 
 
 
 
 

 
 

 
Fair Value Measurements
 
 
Fair value is defined as the price that the Fund would receive upon selling an investment or transferring a liability in an orderly transaction to an independent buyer in the principal or most advantageous market of the investment. A three-tier hierarchy is used to maximize the use of observable market data and minimize the use of unobservable inputs and to establish classification of fair value measurements for disclosure purposes. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability. Observable inputs are based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability. Unobservable inputs are based on the best information available in the circumstances. The three-tier hierarchy of inputs is summarized in the three broad levels listed below:
 
 
Level 1 – Quoted prices in active markets for identical securities.
 
 
Level 2 – Other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.).
 
 
Level 3 – Significant unobservable inputs (including management’s assumptions in determining the fair value of investments).
 
 
The inputs or methodologies used for valuing securities are not an indication of the risk associated with investing in those securities. The following is a summary of the Fund’s fair value measurements as of May 31, 2011:
 
         
 
Level 1 
Level 2 
Level 3 
Total 
Investments: 
       
Municipal Bonds 
$ — 
$51,327,134 
$934,228 
$52,261,362 
 
 
The following is a reconciliation of the Fund’s Level 3 investments held at the beginning and end of the measurement period:
 
   
 
Level 3 
 
Municipal Bonds 
Balance at the beginning of period 
$844,223 
Gains (losses): 
 
Net realized gains (losses) 
—
Net change in unrealized appreciation (depreciation) 
90,005 
Purchases at cost 
—
Sales at proceeds 
—
Net discounts (premiums) 
—
Transfers in to 
—
Transfers out of 
—
Balance at the end of period 
$934,228 
 
 
During the period ended May 31, 2011, the Fund recognized no significant transfers to/from Level 1, Level 2 or Level 3.
 
 
Income Tax Information
 
 
The following information is presented on an income tax basis. Differences between amounts for financial statement and federal income tax purposes are primarily due to timing differences in recognizing taxable market discount, timing differences in recognizing certain gains and losses on investment transactions and the treatment of investments in inverse floating rate securities reflected as financing transactions, if any. To the extent that differences arise that are permanent in nature, such amounts are reclassified within the capital accounts on the Statement of Assets and Liabilities presented in the annual report, based on their federal tax basis treatment; temporary differences do not require reclassification. Temporary and permanent differences do not impact the net asset value of the Fund.
 
 
At May 31, 2011, the cost of investments was $52,077,735.
 
 
Gross unrealized appreciation and gross unrealized depreciation of investments at May 31, 2011, were as follows:
 
   
Gross unrealized: 
 
Appreciation 
$ 1,831,644 
Depreciation 
(1,648,017)
Net unrealized appreciation (depreciation) of investments 
$   183,627 
 
     
(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 highest of Standard & Poor’s Group (“Standard & Poor’s”), Moody’s Investor Service, 
   
Inc. (“Moody’s”) or Fitch, Inc. (“Fitch”) rating. Ratings below BBB by Standard & Poor’s, Baa by Moody’s 
   
or BBB by Fitch are considered to be below investment grade. Holdings designated N/R are not rated by 
   
any of these national rating agencies. 
(4) 
 
Investment valued at fair value using methods determined in good faith by, or at the discretion of, the 
   
Board of Trustees. For fair value measurement disclosure purposes, investment categorized as Level 3. 
(5) 
 
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. 
(6) 
 
Investment, or portion of investment, has been pledged to collateralize the net payment obligations for 
   
investments in inverse floating rate transactions. 
(7) 
 
MuniFund Term Preferred Shares, at Liquidation Value as a percentage of Total Investments is 35.8%. 
N/R 
 
Not rated. 
(IF) 
 
Inverse floating rate investment. 
 
 
 
 
 
 

 
Item 2. Controls and Procedures.

a.  
The registrant's principal executive and principal financial officers, or persons performing similar functions, have concluded that the registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the "1940 Act") (17 CFR 270.30a-3(c))) are effective, as of a date within 90 days of the filing date of this report that includes the disclosure required by this paragraph, based on their evaluation of the controls and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR 270.30a-3(b)) and Rule 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934 (17 CFR 240.13a-15(b) or 240.15d-15(b)).
 
 
b.  
There were no changes in the registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR 270.30a-3(d)) that occurred during the registrant's last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the registrant's internal control over financial reporting.
 
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: See EX-99 CERT attached hereto.

 
 
 

 
SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
(Registrant)  Nuveen Arizona Dividend Advantage Municipal Fund 2 
 
By (Signature and Title)     /s/ Kevin J. McCarthy                    
                                                   Kevin J. McCarthy
                                                   Vice President and Secretary
 
Date         July 29, 2011        
 
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         July 29, 2011        
 
By (Signature and Title)     /s/ Stephen D. Foy                              
                                                   Stephen D. Foy
                                                  Vice President and Controller (principal financial officer) 
 
Date         July 29, 2011