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Nuveen Dividend Advantage Municipal Fund 3 Completes Offering Of MuniFund Term Preferred Shares Fund To Issue At-Par Redemption Notice For Auction-Rate Preferred Securities

Nuveen Investments, a leading global provider of investment services to institutions and high-net-worth investors, today announced that the Nuveen Dividend Advantage Municipal Fund 3 (AMEX: NZF) has successfully completed the public offering of $65 million of MuniFund Term Preferred Shares (MTP). The net proceeds from this offering of MTP shares will be used to refinance a portion of the fund’s outstanding auction-rate preferred securities (ARPS). MTP shares are expected to trade on the New York Stock Exchange (NYSE) within 30 days of original issuance under the symbol NZF PrC.

Additionally, the fund has called for redemption at par a portion of its outstanding auction-rate preferred securities. This redemption will be funded by the above-mentioned proceeds received from the issuance of MuniFund Term Preferred Shares (MTP).

NZF is redeeming $63.625 million of its $236.95 million of currently outstanding ARPS.

                 
    Total Shares   Total Amount   Redemption
Series   Cusip #   Redeemed   Redeemed   Date
W   67070X200   848   $21,200,000   January 11, 2011
TH   67070X309   848   $21,200,000   January 12, 2011
F   67070X408   849   $21,225,000   January 13, 2011

MTP is a fixed rate form of preferred stock with a mandatory redemption period, in the case of this offering, of five years. By issuing MTP, the fund seeks to take advantage of the current historically low interest rate environment to lock in an attractive tax-exempt cost of leverage for a period as long as the term of the MTP. Issuing MTP helps the fund mitigate the risk of a significant increase in its cost of leverage should short-term interest rates rise.

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