UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-06383
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Nuveen Michigan Quality Income Municipal Fund, Inc.
--------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
Nuveen Investments
333 West Wacker Drive
Chicago, IL 60606
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(Address of principal executive offices) (Zip code)
Kevin J. McCarthy
Nuveen Investments
333 West Wacker Drive
Chicago, IL 60606
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(Name and address of agent for service)
Registrant's telephone number, including area code: (312) 917-7700
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Date of fiscal year end: July 31
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Date of reporting period: July 31, 2007
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Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
Annual Report
July 31, 2007
Nuveen Investments
MUNICIPAL CLOSED-END FUNDS
Photo of: Small child
NUVEEN MICHIGAN
QUALITY INCOME
MUNICIPAL FUND, INC.
NUM
NUVEEN MICHIGAN
PREMIUM INCOME
MUNICIPAL FUND, INC.
NMP
NUVEEN MICHIGAN
DIVIDEND ADVANTAGE
MUNICIPAL FUND
NZW
NUVEEN OHIO
QUALITY INCOME
MUNICIPAL FUND, INC.
NUO
NUVEEN OHIO
DIVIDEND ADVANTAGE
MUNICIPAL FUND
NXI
NUVEEN OHIO
DIVIDEND ADVANTAGE
MUNICIPAL FUND 2
NBJ
NUVEEN OHIO
DIVIDEND ADVANTAGE
MUNICIPAL FUND 3
NVJ
It's not what you earn, it's what you keep.(R)
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Chairman's
LETTER TO SHAREHOLDERS
Photo of: Timothy R. Schwertfeger
Timothy R. Schwertfeger
Chairman of the Board
Once again, I am pleased to report that over the twelve-month period covered by
this report your Fund continued to provide you with monthly tax-free income. For
more details about the management strategy and performance of your Fund, please
read the Portfolio Manager's Comments, the Dividend and Share Price Information,
and the Performance Overview sections of this report.
I also wanted to take this opportunity to report some important news about
Nuveen Investments. We have accepted a "buyout" offer from Madison Dearborn
Partners, LLC. While this will affect the corporate structure of Nuveen
Investments, it will have no impact on the investment objectives of the Funds,
portfolio management strategies or their dividend policies. We will provide you
with additional information about this transaction as more details become
available.
With the recent volatility in the stock market, many have begun to wonder which
way the market is headed, and whether they need to adjust their holdings of
investments. No one knows what the future will bring, which is why we think a
well-balanced portfolio that is structured and carefully monitored with the help
of an investment professional is an important component in achieving your
long-term financial goals. A well-diversified portfolio may actually help to
reduce your overall investment risk, and we believe that investments like your
Nuveen Investments Fund can be important building blocks in a portfolio crafted
to perform well through a variety of market conditions.
We also are pleased to be able to offer you a choice concerning how you receive
your shareholder reports and other Fund information. As an alternative to mailed
copies, you can sign up to receive future Fund reports and other Fund
information by e-mail and the internet. The inside front cover of this report
contains information on how you can sign up.
We are grateful that you have chosen us as a partner as you pursue your
financial goals and we look forward to continuing to earn your trust in the
months and years ahead. At Nuveen Investments, our mission continues to be to
assist you and your financial advisor by offering investment services and
products that can help you to secure your financial objectives.
Sincerely,
/s/ Timothy R. Schwertfeger
Timothy R. Schwertfeger
Chairman of the Board
September 14, 2007
Portfolio Manager's COMMENTS
Nuveen Investments Municipal Closed-End Funds
NUM, NMP, NZW, NUO,
NXI, NBJ, NVJ
Portfolio manager Daniel Close reviews national and state economic and municipal
market environments, key investment strategies, and the annual performance of
the Nuveen Michigan and Ohio Funds. Dan, who joined Nuveen in 2000, assumed
portfolio management responsibility for these seven Funds in March 2007.
WHAT FACTORS AFFECTED THE U.S. ECONOMY AND MUNICIPAL MARKET DURING THE ANNUAL
REPORTING PERIOD ENDED JULY 31, 2007?
Between August 1, 2006 and July 31, 2007, we saw interest rates at the short end
of the municipal bond yield curve hold relatively steady, while longer-term
rates declined during much of the period. For the entire 12-month period, the
yield on the benchmark 10-year U.S. Treasury note dropped more than 20 basis
points to end July 2007 at 4.77%. In the municipal market, the yield on the Bond
Buyer 25 Revenue Bond Index, a widely followed measure of longer-term municipal
market rates, fell to 4.63% at the end of July 2007, a decline of 50 basis
points from the end of July 2006. Over the reporting period as a whole, the
municipal bond yield curve continued to flatten as shorter rates remained steady
and longer rates fell. In this environment, longer duration1 bonds generally
outperformed those with shorter durations.
July 2006 marked the end of the Federal Reserve's unprecedented series of 17
consecutive 0.25% rate hikes that brought the fed funds rate to 5.25% over a
two-year span. Although many market observers expected the Fed to act on rates
in early 2007, the Fed stayed on the sidelines throughout this reporting period,
leaving monetary policy unchanged as it kept close tabs on the pace of economic
growth, a slumping housing market, and inflationary pressures, including higher
energy prices. Through much of this period, the U.S. gross domestic product
(GDP), a closely watched measure of economic growth, operated at below-trend
levels, expanding at a rate of 1.1% in the third quarter of 2006, 2.1% in the
fourth quarter of 2006, and 0.6% in the first quarter of 2007, the weakest
reading since 2002 (all GDP numbers annualized). However, in the second quarter
of 2007, increases in government and business spending and exports helped GDP
growth rebound sharply to 4.0%, overcoming the 12% decline in residential
investment and a noticeable deceleration in consumer spending. While the
Consumer Price Index registered a 2.4% year-over-year gain as of July 2007, the
increase in this inflation gauge for the first seven months of 2007 was 4.5%,
driven largely by gains in energy and food prices. By comparison, the core CPI
(which excludes food and energy prices) rose 2.3% between January and July 2007.
1 Duration is a measure of a bond's price sensitivity as interest rates change,
with longer duration bonds displaying more sensitivity to these changes than
bonds with shorter durations.
4
Over the 12 months ended July 2007, municipal bond issuance nationwide totaled
$439.6 billion, up more than 22% from the previous 12 months. This total
reflected increased supply during the first seven months of 2007, when $261.3
billion in new securities came to market, up 26% over the same period in 2006. A
major factor in 2007 volume was the 59% increase in advance refundings,2 driven
by attractive borrowing rates for issuers during the first half of the year. The
strength and diversity of demand for municipal bonds were as important as the
increase in supply, as the surge in issuance was easily absorbed by a
broad-based universe of buyers, including retail investors, institutional
investors such as hedge funds and arbitragers, and overseas investors.
HOW WERE THE ECONOMIC AND MARKET ENVIRONMENTS IN MICHIGAN AND OHIO DURING THIS
PERIOD?
Michigan and Ohio represented two of the slowest growing state economies in
2006. With GDP by state growth of 1.1%, Ohio ranked 47th in the nation, while
Michigan ranked 50th, falling into the negative column with growth of -0.5%,
compared with the national average of +3.4%. Michigan's economy continued to
rely heavily on the manufacturing sector, which lost thousands of jobs in recent
years, specifically in the struggling auto industry as well as paper and
furniture manufacturing. As of July 2007, Michigan's jobless rate was 7.2%, the
highest state unemployment rate in the nation, up from 6.9% a year ago.
Demographic trends remained poor, with population growth of 1.6% over the past
six years, compared with the national average of 6.4%. Rising expenditures and
lack of revenue growth have resulted in gaps in the $9.3 billion state budget
for fiscal 2007, leaving Michigan short of funding for important initiatives. In
January 2007, Fitch lowered its rating on Michigan general obligation debt to
AA- from AA, and in April 2007, Moody's downgraded Michigan GO debt to Aa3 from
Aa2. Moody's also revised its outlook for Michigan to negative based on the
state's weakening financial position and declining economic growth. Standard &
Poor's reconfirmed its AA- rating on Michigan bonds in June 2007. During the 12
months ended July 31, 2007, municipal issuance in Michigan totaled $9.2 billion,
a decrease of 9% from the previous 12 months. For the first seven months of
2007, issuance in the state also showed a decline, with $5.4 billion in new
paper, down 14% compared with the same period in 2006. According to Moody's,
Michigan ranked 26th in debt per capita and 28th in debt as a percentage of
personal income, representing an increased debt burden from the previous year.
Ohio continued to have a diverse but mature economy reliant largely on the
automotive, defense, and transportation industries. Like Michigan, Ohio
struggled with a weak manufacturing base, which impacted both economic and job
growth over this period. As of July 2007, Ohio's unemployment rate was 5.8%, up
from 5.6% in July 2006. The state's population growth also remained sluggish, at
just over 1% during the past six years, ranking the state 48th in the nation.
The $26.7 billion state budget for fiscal 2008 represented an increase of 4%
over the 2007 budget and included a projected 4% increase in personal income tax
collection. Moody's, S&P, and Fitch continued to rate Ohio general obligation
debt at Aa1, AA+, and AA+, respectively. However, Moody's posted a negative
outlook for the state in April 2007, reflecting the weak Ohio economy as well as
recent
2 Advance refundings, also known as pre-refundings or refinancings, occur when
an issuer sells new bonds and uses the proceeds to fund principal and interest
payments of older existing bonds. This process often results in lower borrowing
costs for bond issuers.
5
amendments to the state's tax code that restrict revenue production. For the 12
months ended July 31, 2007, municipal issuance in Ohio reached $13.4 billion, an
increase of 64% over the previous 12 months. During the first seven months of
2007, issuance in the state was up 18% compared with the same period in 2006, to
$6.1 billion. According to Moody's, measures of Ohio's indebtedness have risen
in recent years, although they remained at moderate levels. Ohio ranked 20th in
terms of tax-supported debt per capita and 21st in debt as a percentage of
personal income.
WHAT KEY STRATEGIES WERE USED TO MANAGE THE MICHIGAN AND OHIO FUNDS DURING THIS
REPORTING PERIOD?
In the municipal bond interest rate environment of the past 12 months, where the
flattening yield curve remained a dominant market factor, we continued to
emphasize a disciplined approach to duration management and yield curve
positioning. In all seven of the Michigan and Ohio Funds, our duration
management strategies during this period included the use of inverse floating
rate trusts,3 a type of derivative financial instrument. These inverse floaters
had the dual benefit of bringing the Funds' durations closer to our preferred
strategic target and increasing their distributable income.
As discussed in past shareholder reports, we have also used Treasury futures
contracts and forward interest rate swaps (additional types of derivative
instruments) as duration management tools when we believed this supported our
overall investment performance strategies. The goal of this strategy is to help
us manage net asset value (NAV) volatility without having a negative impact on
the Funds' income streams or common share dividends over the short term. During
this reporting period, we used futures contracts in NVJ as well as swaps in NMP,
NZW, NUO, NXI, NBJ, and NVJ. As of July 31, 2007, the swaps in NZW and NVJ had
been removed, while the futures contracts in NVJ and the swaps in NMP, NUO, NXI,
and NBJ remained in place.
During the reporting period, we also added zero coupon bonds to all of these
Funds as part of our efforts to lengthen fund duration and move the Funds closer
to our strategic target. Zero coupon bonds also can help to increase
distributable income. As we made progress toward our duration goals, our
purchases during the latter part of this period focused mainly on attractively
priced bonds maturing in 20 to 25 years.
In addition to duration strategies, we also continued to emphasize individual
credit selection. As previously mentioned, while Michigan experienced a decline
in supply, Ohio saw increased municipal issuance during this period. In both
states, new issuance as well as a number of advance refundings and debt
restructurings provided us with a variety of bonds and sectors from which to
choose. Since Michigan and Ohio are highly-rated states, much of the new supply
was highly rated and/or insured. However, we also found opportunities to
diversify our exposure to lower credit quality bonds by incrementally adding
credits that we considered attractive based on their strong performance and the
support they could provide for the Funds' income streams.
3 An inverse floating rate trust is a financial instrument designed to pay
long-term tax-exempt interest at a rate that varies inversely with a short-term
tax-exempt interest rate index. For the Nuveen Funds, the index typically used
is the Securities Industry and Financial Markets (SIFM) Municipal Swap Index
(previously referred to as the Bond Market Association Index or BMA). Inverse
floaters, including those inverse floating rate securities in which the Funds
invested during the 12-month period, are further defined within the "Notes to
Financial Statements" and "Glossary of Terms Used in This Report" sections of
this shareholder report.
6
During this period, the Michigan Funds added to their positions in tax-supported
bonds (i.e., general obligation, revenue, and appropriation bonds), all of which
were insured and/or highly rated; uninsured health care bonds and both insured
and lower-rated education bonds. In addition, NZW also added unrated charter
school and hospital issues.
In the Ohio Funds, we purchased tax-supported bonds, health care bonds (both
hospital and long-term/continuing care facility), and education bonds. NXI, NBJ,
and NVJ also added two new positions in industrial development revenue bonds.
To generate cash for purchases and to help maintain the Funds' durations within
our preferred strategic range, we selectively sold some of the Funds' holdings
with shorter durations, including pre-refunded bonds and short-dated paper.
HOW DID THE FUNDS PERFORM?
Individual results for these Michigan and Ohio Funds, as well as relevant index
and peer group information, are presented in the accompanying table.
Total Returns on Net Asset Value*
For periods ended 7/31/07
Fund 1-year 5-year 10-year
Michigan Funds
NUM 3.77% 5.62% 5.74%
NMP 3.59% 5.31% 5.79%
NZW 3.79% 6.29% NA
Lehman Brothers Municipal
Bond Index4 4.27% 4.50% 5.23%
Lipper Michigan Municipal
Debt Funds Average5 4.09% 5.55% 5.53%
Ohio Funds
NUO 3.56% 5.39% 5.60%
NXI 4.02% 6.12% NA
NBJ 3.80% 6.09% NA
NVJ 4.06% 5.92% NA
Lehman Brothers Municipal
Bond Index4 4.27% 4.50% 5.23%
Lipper Other States Municipal
Debt Funds Average6 3.92% 5.88% 5.75%
*Annualized.
Past performance is not predictive of future results. Current performance may be
higher or lower than the data shown. Returns do not reflect the deduction of
taxes that shareholders may have to pay on Fund distributions or upon the sale
of Fund shares.
For additional information, see the individual Performance Overview for your
Fund in this report.
4 The Lehman Brothers Municipal Bond Index is an unleveraged, unmanaged national
index comprising a broad range of investment-grade municipal bonds. Results for
the Lehman index do not reflect any expenses.
5 The Lipper Michigan Municipal Debt Funds category average is calculated using
the returns of all closed-end funds in this category for each period as follows:
1 year, 7; 5 years, 6; and 10 years, 4. Fund and Lipper returns assume
reinvestment of dividends.
6 The Lipper Other States Municipal Debt Funds category average is calculated
using the returns of all closed-end funds in this category for each period as
follows: 1 year, 46; 5 years, 37; and 10 years, 18. Fund and Lipper returns
assume reinvestment of dividends. Shareholders of the Ohio Funds should note
that the performance of the Lipper Other States category represents the overall
average of returns for funds from 10 different states with a wide variety of
municipal market conditions, making direct comparisons less meaningful.
7
For the 12 months ended July 31, 2007, the total returns on NAV for all the
funds trailed the Lehman Brothers Municipal Bond Index. All three of the
Michigan Funds lagged the average return for the Lipper Michigan peer group.
Among the Ohio Funds, NXI and NVJ exceeded the Lipper Other States Municipal
Debt Fund peer group average, while NBJ slightly trailed this return, and NUO
underperformed the peer group average. Shareholders should note that the
performance of the Lipper Other States category represents the overall average
of returns for funds from 10 different states with a wide variety of municipal
market conditions, making direct comparisons less meaningful.
Factors that influenced the Funds' returns during this period included yield
curve and duration positioning, individual security selection and sector
allocations, exposure to lower-rated credits, and advance refunding activity.
As the municipal bond yield curve continued to flatten over the course of this
period, municipal bonds with maturities of 10 years and longer, as measured by
the Lehman Brothers Municipal Bond Index, performed best, generally outpacing
municipal bonds with shorter maturities. While our strategies during this period
included adding longer bonds to our portfolios, the Funds remained slightly
short of our strategic portfolio duration target in terms of their holdings of
bonds in the longest part of the yield curve, which was negative for
performance. However, this was offset by the Funds' heavier exposure to the
intermediate part of the curve, which performed well, and their lower
allocations to the shorter part of the curve, which underperformed the general
market. Overall, the Funds' yield curve and duration positioning during this
period was a positive contributor to their performance.
Also among the holdings making positive contributions to the Michigan Funds'
returns for this period were tax-supported and utilities bonds. The Ohio Funds
also benefited from their positions in tax-supported credits. Other sectors of
the market that performed well during this reporting period included
transportation and education bonds.
In general, lower-rated credits, particularly below-investment-grade securities
and non-rated bonds, continued to outperform other credit quality sectors during
this period, and all of these Funds benefited from their weightings to these
lower rated credits. The outperformance of these credit sectors was largely the
result of investor demand for the higher yields typically associated with
lower-rated bonds. As Dividend Advantage Funds, NZW, NXI, NBJ, and NVJ can
invest up to 20% of their assets in below-investment-grade credits (bonds rated
BB or below) or in non-rated bonds judged to be in the same credit quality
category. The exposure of these four Funds to the subinvestment-grade sector,
together with a fee reimbursement agreement, was especially beneficial to their
performance.
8
We also continued to see positive contributions from advance refunding activity,
which benefited the Funds through price appreciation and enhanced credit
quality. At the same time, holdings of older, previously pre-refunded bonds
tended to underperform the general municipal market during this period, due
primarily to their shorter effective maturities. In addition, the health care
sector, which had ranked among the top performing revenue sectors in the Lehman
Brothers Municipal Bond Index over the past few years, underperformed the
general municipal market for this period, as interest rates rose and credit
spreads widened in June and July 2007. Among the Ohio Funds, NUO and NBJ had the
heaviest weightings of health care bonds, which hampered their performance.
9
Dividend and Share Price
INFORMATION
As previously noted, these seven Michigan and Ohio Funds use leverage to
potentially enhance opportunities for additional income for common shareholders.
Although the Funds' use of this strategy continued to provide incremental
income, the extent of this benefit was reduced during this period due to
short-term interest rates that remained relatively high, which--in turn--kept
the Funds' borrowing costs high. The Funds' income streams also impacted as the
proceeds from older, higher-yielding bonds that matured or called were
reinvested into bonds currently available in the market, which generally offered
lower yields during this period. The combination of these factors resulted in
one monthly dividend reduction in NUM, NMP, and NVJ and two in NZW, NUO, NXI,
and NBJ over the 12-month period ended July 31, 2007.
Due to normal portfolio activity, common shareholders of the Funds received
capital gains and net ordinary income distributions at the end of December 2006,
as follows:
Short-Term Capital Gains
Long-Term Capital Gains and/or Ordinary Income
(per share) (per share)
NUM $0.0734 --
NMP $0.0926 --
NZW $0.0078 --
NUO $0.0414 $0.0007
NXI $0.0311 --
NBJ $0.0435 $0.0004
NVJ $0.0283 $0.0073
All of the Funds in this report seek to pay stable dividends at rates that
reflect each Fund's past results and projected future performance. During
certain periods, each Fund may pay dividends at a rate that may be more or less
than the amount of net investment income actually earned by the Fund during the
period. If a Fund has cumulatively earned more than it has paid in dividends, it
holds the excess in reserve as undistributed net investment income (UNII) as
part of the Fund's NAV. Conversely, if a Fund has cumulatively paid dividends in
excess of its earnings, the excess constitutes negative UNII that is likewise
reflected in the Fund's NAV. Each Fund will, over time, pay all of its net
investment income as dividends to shareholders. As of July 31, 2007, all of the
Michigan and Ohio Funds in this report had positive UNII balances for tax
purposes and negative UNII balances for financial statement purposes.
10
As of July 31, 2007, the Funds' share prices were trading at premiums or
discounts to their NAVs as shown in the accompanying chart:
7/31/07 12-Month Average
Premium/Discount Premium/Discount
NUM -5.35% -4.68%
NMP -5.80% -3.00%
NZW +2.51% +3.07%
NUO -8.73% -3.11%
NXI -3.23% -0.67%
NBJ -5.74% -3.21%
NVJ -3.82% -1.74%
11
NUM
Performance
OVERVIEW
Nuveen Michigan
Quality Income
Municipal Fund, Inc.
as of July 31, 2007
Pie Chart:
Credit Quality (as a % of total investments)
AAA/U.S.
Guaranteed 85%
AA 7%
A 4%
BBB 3%
BB or Lower 1%
Bar Chart:
2006-2007 Monthly Tax-Free Dividends Per Share2
Aug 0.062
Sep 0.059
Oct 0.059
Nov 0.059
Dec 0.059
Jan 0.059
Feb 0.059
Mar 0.059
Apr 0.059
May 0.059
Jun 0.059
Jul 0.059
Line Chart:
Share Price Performance -- Weekly Closing Price
8/01/06 14.47
14.49
14.65
14.79
14.74
14.95
14.97
14.67
14.77
14.76
14.8
14.57
14.61
14.54
14.53
14.73
14.68
14.69
14.87
14.81
14.67
14.5
14.53
14.54
14.58
14.58
14.75
14.67
14.7
14.66
14.58
14.66
14.68
14.59
14.61
14.67
14.64
14.65
14.63
14.8
15
14.82
14.8
14.56
14.72
14.5501
14.1
14.18
14.21
14.33
14.19
14.26
14.21
7/31/07 14.16
FUND SNAPSHOT
------------------------------------
Common Share Price $14.16
------------------------------------
Common Share
Net Asset Value $14.96
------------------------------------
Premium/(Discount) to NAV -5.35%
------------------------------------
Market Yield 5.00%
------------------------------------
Taxable-Equivalent Yield1 7.23%
------------------------------------
Net Assets Applicable to
Common Shares ($000) $175,244
------------------------------------
Average Effective
Maturity on Securities (Years) 14.34
------------------------------------
Leverage-Adjusted Duration 9.19
------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 10/17/91)
------------------------------------
ON SHARE PRICE ON NAV
------------------------------------
1-Year 3.64% 3.77%
------------------------------------
5-Year 3.70% 5.62%
------------------------------------
10-Year 4.71% 5.74%
------------------------------------
INDUSTRIES
(as a % of total investments)
------------------------------------
Tax Obligation/General 34.2%
------------------------------------
U.S. Guaranteed 26.2%
------------------------------------
Tax Obligation/Limited 9.3%
------------------------------------
Health Care 8.5%
------------------------------------
Utilities 7.9%
------------------------------------
Water and Sewer 5.7%
------------------------------------
Other 8.2%
------------------------------------
1 Taxable-Equivalent Yield represents the yield that must be earned on a fully
taxable investment in order to equal the yield of the Fund on an after-tax
basis. It is based on a combined federal and state income tax rate of 30.8%.
When comparing this Fund to investments that generate qualified dividend income,
the Taxable-Equivalent Yield is lower.
2 The Fund paid shareholders a capital gains distribution in December 2006 of
$0.0734 per share.
12
NMP
Performance
OVERVIEW
Nuveen Michigan
Premium Income
Municipal Fund, Inc.
as of July 31, 2007
Pie Chart:
Credit Quality (as a % of total investments)
AAA/U.S.
Guaranteed 79%
AA 8%
A 10%
BBB 2%
BB or Lower 1%
Bar Chart:
2006-2007 Monthly Tax-Free Dividends Per Share2
Aug 0.0605
Sep 0.0605
Oct 0.0605
Nov 0.0605
Dec 0.0605
Jan 0.0605
Feb 0.0605
Mar 0.058
Apr 0.058
May 0.058
Jun 0.058
Jul 0.058
Line Chart:
Share Price Performance -- Weekly Closing Price
8/01/06 14.32
14.48
14.26
14.42
14.7
14.68
14.7
14.67
14.63
14.8
14.95
14.6
14.9
14.85
14.72
14.98
14.86
14.9
14.97
15.21
14.8
14.8
14.75
15.04
14.91
14.83
14.66
14.63
14.63
14.52
14.47
14.45
14.4
14.26
14.33
14.33
14.44
14.5
14.51
14.52
14.97
14.77
14.52
14.44
14.33
14.05
13.87
13.95
14
14
13.85
13.89
13.69
7/31/07 13.8
FUND SNAPSHOT
------------------------------------
Common Share Price $13.80
------------------------------------
Common Share
Net Asset Value $14.65
------------------------------------
Premium/(Discount) to NAV -5.80%
------------------------------------
Market Yield 5.04%
------------------------------------
Taxable-Equivalent Yield1 7.28%
------------------------------------
Net Assets Applicable to
Common Shares ($000) $113,558
------------------------------------
Average Effective
Maturity on Securities (Years) 15.09
------------------------------------
Leverage-Adjusted Duration 8.20
------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 12/17/92)
------------------------------------
ON SHARE PRICE ON NAV
------------------------------------
1-Year 2.16% 3.59%
------------------------------------
5-Year 4.45% 5.31%
------------------------------------
10-Year 6.23% 5.79%
------------------------------------
INDUSTRIES
(as a % of total investments)
------------------------------------
Tax Obligation/General 30.9%
------------------------------------
U.S. Guaranteed 21.0%
------------------------------------
Tax Obligation/Limited 13.9%
------------------------------------
Water and Sewer 10.2%
------------------------------------
Utilities 9.1%
------------------------------------
Health Care 5.8%
------------------------------------
Other 9.1%
------------------------------------
1 Taxable-Equivalent Yield represents the yield that must be earned on a fully
taxable investment in order to equal the yield of the Fund on an after-tax
basis. It is based on a combined federal and state income tax rate of 30.8%.
When comparing this Fund to investments that generate qualified dividend income,
the Taxable-Equivalent Yield is lower.
2 The Fund paid shareholders a capital gains distribution in December 2006 of
$0.0926 per share.
13
NZW
Performance
OVERVIEW
Nuveen Michigan
Dividend Advantage
Municipal Fund
as of July 31, 2007
Pie Chart:
Credit Quality (as a % of total investments)
AAA/U.S.
Guaranteed 73%
AA 6%
A 9%
BBB 6%
BB or Lower 2%
N/R 4%
Bar Chart:
2006-2007 Monthly Tax-Free Dividends Per Share2
Aug 0.0675
Sep 0.0645
Oct 0.0645
Nov 0.0645
Dec 0.0645
Jan 0.0645
Feb 0.0645
Mar 0.0645
Apr 0.0645
May 0.0645
Jun 0.0615
Jul 0.0615
Line Chart:
Share Price Performance -- Weekly Closing Price
8/01/06 15.92
15.84
15.68
15.78
15.85
15.9999
15.88
15.9
15.92
15.84
15.55
15.79
15.75
15.44
15.39
15.78
15.3301
15.25
15.33
15.55
15.53
15.38
15.54
15.7
15.64
15.64
15.31
15.2
15.18
15.32
15.255
15.22
15.3
15.45
15.3
15.14
15.6
15.57
15.69
16.05
16.17
16.85
16.65
16.16
15.8
15.65
15.15
15.25
15.05
15.17
15.1
14.8
14.65
7/31/07 15.1
FUND SNAPSHOT
------------------------------------
Common Share Price $15.10
------------------------------------
Common Share
Net Asset Value $14.73
------------------------------------
Premium/(Discount) to NAV 2.51%
------------------------------------
Market Yield 4.89%
------------------------------------
Taxable-Equivalent Yield1 7.07%
------------------------------------
Net Assets Applicable to
Common Shares ($000) $30,439
------------------------------------
Average Effective
Maturity on Securities (Years) 17.53
------------------------------------
Leverage-Adjusted Duration 9.00
------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 9/25/01)
------------------------------------
ON SHARE PRICE ON NAV
------------------------------------
1-Year 0.46% 3.79%
------------------------------------
5-Year 6.41% 6.29%
------------------------------------
Since
Inception 5.81% 6.27%
------------------------------------
INDUSTRIES
(AS A % OF TOTAL INVESTMENTS)
------------------------------------
Tax Obligation/General 28.3%
------------------------------------
U.S. Guaranteed 17.5%
------------------------------------
Health Care 14.6%
------------------------------------
Utilities 10.2%
------------------------------------
Water and Sewer 9.8%
------------------------------------
Tax Obligation/Limited 7.4%
------------------------------------
Other 12.2%
------------------------------------
1 Taxable-Equivalent Yield represents the yield that must be earned on a fully
taxable investment in order to equal the yield of the Fund on an after-tax
basis. It is based on a combined federal and state income tax rate of 30.8%.
When comparing this Fund to investments that generate qualified dividend income,
the Taxable-Equivalent Yield is lower.
2 The Fund paid shareholders a capital gains distribution in December 2006 of
$0.0078 per share.
14
NUO
Performance
OVERVIEW
Nuveen Ohio
Quality Income
Municipal Fund, Inc.
as of July 31, 2007
Pie Chart:
Credit Quality (as a % of total investments)
AAA/U.S.
Guaranteed 79%
AA 11%
A 5%
BBB 4%
N/R 1%
Bar Chart:
2006-2007 Monthly Tax-Free Dividends Per Share2
Aug 0.0655
Sep 0.0625
Oct 0.0625
Nov 0.0625
Dec 0.0595
Jan 0.0595
Feb 0.0595
Mar 0.0595
Apr 0.0595
May 0.0595
Jun 0.0595
Jul 0.0595
Line Chart:
Share Price Performance -- Weekly Closing Price
8/01/06 15.8401
16.13
16.03
15.97
16.04
16.2199
15.99
15.55
15.56
15.59
15.56
15.61
15.65
15.65
15.92
15.97
15.81
15.6
15.8
15.97
15.7
15.68
15.65
15.86
15.89
15.73
15.71
15.66
15.77
15.74
15.6
15.79
15.82
15.89
15.76
15.67
15.76
15.86
15.77
15.85
16.02
15.78
15.75
15.58
15.58
15.1
15.13
14.9
14.96
14.95
14.85
14.51
14.31
7/31/07 14.43
FUND SNAPSHOT
------------------------------------
Common Share Price $14.43
------------------------------------
Common Share
Net Asset Value $15.81
------------------------------------
Premium/(Discount) to NAV -8.73%
------------------------------------
Market Yield 4.95%
------------------------------------
Taxable-Equivalent Yield1 7.31%
------------------------------------
Net Assets Applicable to
Common Shares ($000) $154,052
------------------------------------
Average Effective
Maturity on Securities (Years) 14.70
------------------------------------
Leverage-Adjusted Duration 8.67
------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 10/17/91)
------------------------------------
ON SHARE PRICE ON NAV
------------------------------------
1-Year -4.25% 3.56%
------------------------------------
5-Year 0.68% 5.39%
------------------------------------
10-Year 3.93% 5.60%
------------------------------------
INDUSTRIES
(as a % of total investments)
------------------------------------
Tax Obligation/General 23.5%
------------------------------------
U.S. Guaranteed 22.7%
------------------------------------
Health Care 13.1%
------------------------------------
Education and Civic
Organizations 11.3%
------------------------------------
Tax Obligation/Limited 9.1%
------------------------------------
Utilities 4.7%
------------------------------------
Housing/Multifamily 4.1%
------------------------------------
Other 11.5%
------------------------------------
1 Taxable-Equivalent Yield represents the yield that must be earned on a fully
taxable investment in order to equal the yield of the Fund on an after-tax
basis. It is based on a combined federal and state income tax rate of 32.3%.
When comparing this Fund to investments that generate qualified dividend income,
the Taxable-Equivalent Yield is lower.
2 The Fund paid shareholders capital gains and net ordinary income distributions
in December 2006 of $0.0421 per share.
15
NXI
Performance
OVERVIEW
Nuveen Ohio
Dividend Advantage
Municipal Fund
as of July 31, 2007
Pie Chart:
Credit Quality (as a % of total investments)
AAA/U.S.
Guaranteed 75%
AA 11%
A 5%
BBB 6%
BB or Lower 1%
N/R 2%
Bar Chart:
2006-2007 Monthly Tax-Free Dividends Per Share2
Aug 0.0635
Sep 0.0605
Oct 0.0605
Nov 0.0605
Dec 0.0605
Jan 0.0605
Feb 0.0605
Mar 0.0605
Apr 0.0605
May 0.0605
Jun 0.057
Jul 0.057
Line Chart:
Share Price Performance -- Weekly Closing Price
8/01/06 15.12
15.42
15.6
15.35
14.94
14.98
14.57
14.74
15.1574
15.06
15
15.01
14.8
14.93
15.19
14.97
14.7
14.78
14.94
15.03
15
14.99
14.81
14.68
14.75
14.76
14.89
15.16
15.16
15.15
15.21
15.38
15.75
15.55
15.25
15.25
15.39
15.39
15.3
15.42
15.73
15.69
15.64
15.68
15.12
14.94
14.88
14.85
14.64
14.72
14.32
14.09
14.08
7/31/07 14.39
FUND SNAPSHOT
------------------------------------
Common Share Price $14.39
------------------------------------
Common Share
Net Asset Value $14.87
------------------------------------
Premium/(Discount) to NAV -3.23%
------------------------------------
Market Yield 4.75%
------------------------------------
Taxable-Equivalent Yield1 7.02%
------------------------------------
Net Assets Applicable to
Common Shares ($000) $63,114
------------------------------------
Average Effective
Maturity on Securities (Years) 13.78
------------------------------------
Leverage-Adjusted Duration 8.57
------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 3/27/01)
------------------------------------
ON SHARE PRICE ON NAV
------------------------------------
1-Year 0.52% 4.02%
------------------------------------
5-Year 4.82% 6.12%
------------------------------------
Since
Inception 5.11% 6.60%
------------------------------------
INDUSTRIES
(as a % of total investments)
------------------------------------
U.S. Guaranteed 32.6%
------------------------------------
Tax Obligation/General 16.4%
------------------------------------
Tax Obligation/Limited 10.2%
------------------------------------
Education and Civic
Organizations 9.8%
------------------------------------
Health Care 9.3%
------------------------------------
Utilities 5.7%
------------------------------------
Housing/Multifamily 3.7%
------------------------------------
Other 12.3%
------------------------------------
1 Taxable-Equivalent Yield represents the yield that must be earned on a fully
taxable investment in order to equal the yield of the Fund on an after-tax
basis. It is based on a combined federal and state income tax rate of 32.3%.
When comparing this Fund to investments that generate qualified dividend income,
the Taxable-Equivalent Yield is lower.
2 The Fund paid shareholders a capital gains distribution in December 2006 of
$0.0311 per share.
16
NBJ
Performance
OVERVIEW
Nuveen Ohio
Dividend Advantage
Municipal Fund 2
as of July 31, 2007
Pie Chart:
Credit Quality (as a % of total investments)
AAA/U.S.
Guaranteed 71%
AA 11%
A 8%
BBB 7%
BB or Lower 1%
N/R 2%
Bar Chart:
2006-2007 Monthly Tax-Free Dividends Per Share2
Aug 0.062
Sep 0.059
Oct 0.059
Nov 0.059
Dec 0.0565
Jan 0.0565
Feb 0.0565
Mar 0.0565
Apr 0.0565
May 0.0565
Jun 0.0565
Jul 0.0565
Line Chart:
Share Price Performance -- Weekly Closing Price
8/01/06 14.73
14.98
14.7
15.25
14.99
15.1
14.69
14.78
15
14.9943
14.66
14.59
14.67
14.8
14.67
14.71
14.51
14.58
14.53
14.65
14.48
14.49
14.54
14.4801
14.3
14.29
14.23
14.219
14.31
14.45
14.2
14.34
14.5
14.56
14.44
14.33
14.44
14.73
14.29
14.31
14.52
14.61
14.6
14.37
14.75
14.35
14.28
14.13
14.1
14.05
13.93
13.5
13.74
7/31/07 13.8
FUND SNAPSHOT
------------------------------------
Common Share Price $13.80
------------------------------------
Common Share
Net Asset Value $14.64
------------------------------------
Premium/(Discount) to NAV -5.74%
------------------------------------
Market Yield 4.91%
------------------------------------
Taxable-Equivalent Yield1 7.25%
------------------------------------
Net Assets Applicable to
Common Shares ($000) $45,694
------------------------------------
Average Effective
Maturity on Securities (Years) 15.42
------------------------------------
Leverage-Adjusted Duration 9.00
------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 9/25/01)
------------------------------------
ON SHARE PRICE ON NAV
------------------------------------
1-Year -1.26% 3.80%
------------------------------------
5-Year 4.57% 6.09%
------------------------------------
Since
Inception 4.23% 6.17%
------------------------------------
INDUSTRIES
(as a % of total investments)
------------------------------------
Tax Obligation/General 23.6%
------------------------------------
U.S. Guaranteed 20.1%
------------------------------------
Health Care 17.0%
------------------------------------
Tax Obligation/Limited 12.0%
------------------------------------
Education and Civic
Organizations 9.1%
------------------------------------
Utilities 5.8%
------------------------------------
Consumer Staples 5.5%
------------------------------------
Other 6.9%
------------------------------------
1 Taxable-Equivalent Yield represents the yield that must be earned on a fully
taxable investment in order to equal the yield of the Fund on an after-tax
basis. It is based on a combined federal and state income tax rate of 32.3%.
When comparing this Fund to investments that generate qualified dividend income,
the Taxable-Equivalent Yield is lower.
2 The Fund paid shareholders capital gains and net ordinary income distributions
in December 2006 of $0.0439 per share.
17
NVJ
Performance
OVERVIEW
Nuveen Ohio
Dividend Advantage
Municipal Fund 3
as of July 31, 2007
Pie Chart:
Credit Quality (as a % of total investments)
AAA/U.S.
Guaranteed 75%
AA 6%
A 10%
BBB 7%
BB or Lower 1%
N/R 1%
Bar Chart:
2006-2007 Monthly Tax-Free Dividends Per Share2
Aug 0.0615
Sep 0.0595
Oct 0.0595
Nov 0.0595
Dec 0.0595
Jan 0.0595
Feb 0.0595
Mar 0.0595
Apr 0.0595
May 0.0595
Jun 0.0595
Jul 0.0595
Line Chart:
SHARE PRICE PERFORMANCE
Weekly Closing Price
Past performance is not predictive of future results.
8/01/06 14.69
14.7
14.78
15.06
14.95
15.36
15.01
14.85
14.75
14.69
14.78
14.77
14.7
14.79
14.85
14.9
14.93
14.92
14.9
14.91
14.88
14.85
14.64
14.65
14.72
14.78
14.8
14.98
15.06
15.09
15.08
14.98
15.1
14.93
14.91
14.92
14.93
14.81
14.82
15.05
15.05
15.44
15.75
15.21
15.48
15.37
15.5
15.25
15.05
14.93
14.84
14.62
14.3
7/31/07 14.35
FUND SNAPSHOT
------------------------------------
Common Share Price $14.35
------------------------------------
Common Share
Net Asset Value $14.92
------------------------------------
Premium/(Discount) to NAV -3.82%
------------------------------------
Market Yield 4.98%
------------------------------------
Taxable-Equivalent Yield1 7.36%
------------------------------------
Net Assets Applicable to
Common Shares ($000) $32,194
------------------------------------
Average Effective
Maturity on Securities (Years) 12.62
------------------------------------
Leverage-Adjusted Duration 8.85
------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 3/25/02)
------------------------------------
ON SHARE PRICE ON NAV
------------------------------------
1-Year 2.32% 4.06%
------------------------------------
5-Year 4.48% 5.92%
------------------------------------
Since
Inception 4.85% 6.49%
------------------------------------
INDUSTRIES
(as a % of total investments)
------------------------------------
U.S. Guaranteed 33.1%
------------------------------------
Tax Obligation/Limited 16.3%
------------------------------------
Tax Obligation/General 16.3%
------------------------------------
Health Care 10.7%
------------------------------------
Education and Civic
Organizations 6.2%
------------------------------------
Consumer Staples 3.9%
------------------------------------
Other 13.5%
------------------------------------
1 Taxable-Equivalent Yield represents the yield that must be earned on a fully
taxable investment in order to equal the yield of the Fund on an after-tax
basis. It is based on a combined federal and state income tax rate of 32.3%.
When comparing this Fund to investments that generate qualified dividend income,
the Taxable-Equivalent Yield is lower.
2 The Fund paid shareholders capital gains and net ordinary income distributions
in December 2006, of $0.0356 per share.
18
Report of
INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
THE BOARDS OF DIRECTORS/TRUSTEES AND SHAREHOLDERS
NUVEEN MICHIGAN QUALITY INCOME MUNICIPAL FUND, INC.
NUVEEN MICHIGAN PREMIUM INCOME MUNICIPAL FUND, INC.
NUVEEN MICHIGAN DIVIDEND ADVANTAGE MUNICIPAL FUND
NUVEEN OHIO QUALITY INCOME MUNICIPAL FUND, INC.
NUVEEN OHIO DIVIDEND ADVANTAGE MUNICIPAL FUND
NUVEEN OHIO DIVIDEND ADVANTAGE MUNICIPAL FUND 2
NUVEEN OHIO DIVIDEND ADVANTAGE MUNICIPAL FUND 3
We have audited the accompanying statements of assets and liabilities, including
the portfolios of investments, of Nuveen Michigan Quality Income Municipal Fund,
Inc., Nuveen Michigan Premium Income Municipal Fund, Inc., Nuveen Michigan
Dividend Advantage Municipal Fund, Nuveen Ohio Quality Income Municipal Fund,
Inc., Nuveen Ohio Dividend Advantage Municipal Fund, Nuveen Ohio Dividend
Advantage Municipal Fund 2 and Nuveen Ohio Dividend Advantage Municipal Fund 3
(the "Funds"), as of July 31, 2007, and the related statements of operations for
the year then ended, the statements of changes in net assets for each of the two
years in the period then ended, and the financial highlights for each of the
five years in the period then ended. These financial statements and financial
highlights are the responsibility of the Funds' management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. We were
not engaged to perform an audit of the Funds' internal control over financial
reporting. Our audits included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Funds' internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall
financial statement presentation. Our procedures included confirmation of
securities owned as of July 31, 2007, by correspondence with the custodian and
brokers or by other appropriate auditing procedures where replies from brokers
were not received. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial positions of
Nuveen Michigan Quality Income Municipal Fund, Inc., Nuveen Michigan Premium
Income Municipal Fund, Inc., Nuveen Michigan Dividend Advantage Municipal Fund,
Nuveen Ohio Quality Income Municipal Fund, Inc., Nuveen Ohio Dividend Advantage
Municipal Fund, Nuveen Ohio Dividend Advantage Municipal Fund 2 and Nuveen Ohio
Dividend Advantage Municipal Fund 3 at July 31, 2007, the results of their
operations for the year then ended, the changes in their net assets for each of
the two years in the period then ended, and the financial highlights for each of
the five years in the period then ended in conformity with U.S. generally
accepted accounting principles.
/s/ Ernst & Young LLP
Chicago, Illinois
September 24, 2007
19
NUM
Nuveen Michigan Quality Income Municipal Fund, Inc.
Portfolio of INVESTMENTS
July 31, 2007
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 7.2% (4.7% OF TOTAL INVESTMENTS)
$ 700 Chandler Park Academy, Michigan, Public School Academy Charter 11/15 at 100.00 BBB- $ 677,621
School Revenue Bonds, Series 2005, 5.125%, 11/01/35
1,380 Ferris State College, Michigan, General Revenue Bonds, Series 1998, 4/08 at 100.00 AAA 1,388,349
5.000%, 10/01/23 - AMBAC Insured
435 Grand Traverse Academy, Michigan, Public School Academy 11/17 at 100.00 BBB- 400,174
Revenue Bonds, Series 2007, 4.750%, 11/01/32
1,685 Michigan Higher Education Facilities Authority, Limited Obligation 9/11 at 100.00 Aaa 1,787,954
Revenue Refunding Bonds, Kettering University, Series 2001,
5.500%, 9/01/17 - AMBAC Insured
1,500 Michigan Higher Education Student Loan Authority, Revenue Bonds, No Opt. Call AAA 1,541,610
Series 2000 XII-T, 5.300%, 9/01/10 - AMBAC Insured
(Alternative Minimum Tax)
1,000 Michigan Higher Education Student Loan Authority, Revenue Bonds, 9/12 at 100.00 AAA 1,027,520
Series 2002 XVII-G, 5.200%, 9/01/20 - AMBAC Insured
(Alternative Minimum Tax)
1,115 Michigan Technological University, General Revenue Bonds, 10/13 at 100.00 AAA 1,159,511
Series 2004A, 5.000%, 10/01/22 - MBIA Insured
Wayne State University, Michigan, General Revenue Bonds,
Series 1999:
3,430 5.250%, 11/15/19 - FGIC Insured 11/09 at 101.00 AAA 3,558,968
1,000 5.125%, 11/15/29 - FGIC Insured 11/09 at 101.00 AAA 1,028,080
------------------------------------------------------------------------------------------------------------------------------------
12,245 Total Education and Civic Organizations 12,569,787
------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE - 13.1% (8.5% OF TOTAL INVESTMENTS)
2,800 Michigan Hospital Financing Authority, Revenue Bonds, Oakwood 7/17 at 100.00 A 2,780,568
Obligated Group, Series 2007A, 5.000%, 7/15/37
2,700 Michigan State Hospital Finance Authority, Hospital Revenue Bonds, 8/08 at 101.00 BB- 2,604,987
Detroit Medical Center Obligated Group, Series 1998A,
5.250%, 8/15/28
1,000 Michigan State Hospital Finance Authority, Hospital Revenue 11/09 at 101.00 BBB+ 1,032,920
Refunding Bonds, Memorial Healthcare Center Obligated Group,
Series 1999, 5.875%, 11/15/21
500 Michigan State Hospital Finance Authority, Revenue Bonds, 5/15 at 100.00 BBB 486,005
Chelsea Community Hospital, Series 2005, 5.000%, 5/15/37
1,500 Michigan State Hospital Finance Authority, Revenue Bonds, 5/15 at 100.00 Baa1 1,495,365
Marquette General Hospital, Series 2005A, 5.000%, 5/15/26
5,800 Michigan State Hospital Finance Authority, Revenue Bonds, 5/15 at 100.00 AAA 5,971,100
Sparrow Obligated Group, Series 2005, 5.000%, 11/15/36 -
MBIA Insured (UB)
1,000 Monroe County Hospital Finance Authority, Michigan, Mercy 6/16 at 100.00 BBB- 1,019,640
Memorial Hospital Corporation Revenue Bonds, Series 2006,
5.375%, 6/01/26
5,500 Royal Oak Hospital Finance Authority, Michigan, Hospital Revenue 11/11 at 100.00 AAA 5,672,919
Bonds, William Beaumont Hospital, Series 2001M,
5.250%, 11/15/31 - MBIA Insured
2,195 University of Michigan, Medical Service Plan Revenue Bonds, No Opt. Call AA+ 1,929,207
Series 1991, 0.000%, 12/01/10
------------------------------------------------------------------------------------------------------------------------------------
22,995 Total Health Care 22,992,711
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 3.0% (1.9% OF TOTAL INVESTMENTS)
2,675 Michigan Housing Development Authority, FNMA Limited Obligation 12/20 at 101.00 AAA 2,812,014
Multifamily Housing Revenue Bonds, Parkview Place Apartments,
Series 2002A, 5.550%, 12/01/34 (Alternative Minimum Tax)
1,055 Michigan Housing Development Authority, Rental Housing Revenue 4/09 at 101.00 AAA 1,064,179
Bonds, Series 1999A, 5.300%, 10/01/37 - MBIA Insured
(Alternative Minimum Tax)
20
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY (continued)
$ 1,300 Michigan Housing Development Authority, Rental Housing 7/15 at 100.00 AAA $ 1,313,429
Revenue Bonds, Series 2006D, 5.125%, 4/01/31 - FSA Insured
(Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
5,030 Total Housing/Multifamily 5,189,622
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 0.2% (0.1% OF TOTAL INVESTMENTS)
365 Michigan Housing Development Authority, Single Family Mortgage 1/11 at 100.00 AAA 372,596
Revenue Bonds, Series 2001, 5.300%, 12/01/16 - MBIA Insured
(Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
LONG-TERM CARE - 0.7% (0.5% OF TOTAL INVESTMENTS)
1,000 Michigan State Hospital Finance Authority, Revenue Bonds, 5/15 at 100.00 N/R 1,006,590
Presbyterian Villages of Michigan Obligated Group, Series 2005,
5.250%, 11/15/25
200 Michigan Strategic Fund, Limited Obligation Revenue Refunding 7/08 at 101.00 BBB+ 201,236
Bonds, Porter Hills Presbyterian Village, Series 1998,
5.375%, 7/01/28
------------------------------------------------------------------------------------------------------------------------------------
1,200 Total Long-Term Care 1,207,826
------------------------------------------------------------------------------------------------------------------------------------
MATERIALS - 1.0% (0.6% OF TOTAL INVESTMENTS)
1,750 Dickinson County Economic Development Corporation, Michigan, 11/14 at 100.00 BBB 1,711,343
Pollution Control Revenue Bonds, International Paper Company,
Series 2004A, 4.800%, 11/01/18
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 52.6% (34.1% OF TOTAL INVESTMENTS)
1,000 Anchor Bay School District, Macomb and St. Clair Counties, 5/12 at 100.00 AA- 1,033,630
Michigan, General Obligation Refunding Bonds, Series 2002,
5.000%, 5/01/25
Anchor Bay School District, Macomb and St. Clair Counties,
Michigan, Unlimited Tax General Obligation Refunding Bonds,
Series 2001:
2,500 5.000%, 5/01/21 5/11 at 100.00 AA- 2,576,000
3,200 5.000%, 5/01/29 5/11 at 100.00 AA- 3,263,840
1,000 Belding School District, Ionia, Kent and Montcalm Counties, 5/08 at 100.00 AAA 1,006,150
Michigan, General Obligation Refunding Bonds, Series 1998,
5.000%, 5/01/26 - AMBAC Insured
1,200 Birmingham, Michigan, General Obligation Bonds, Series 2002, 10/12 at 100.50 AAA 1,251,492
5.000%, 10/01/20
1,320 Bridgeport Spaulding Community School District, Saginaw County, 5/12 at 100.00 AA- 1,406,381
Michigan, General Obligation Bonds, Series 2002, 5.500%, 5/01/16
1,405 Caledonia Community Schools, Kent County, Michigan, General 5/17 at 100.00 AAA 1,452,292
Obligation Bonds, Series 2007, Residuals 1018, 6.447%, 5/01/32 -
MBIA Insured (IF)
2,110 Caledonia Community Schools, Kent, Allegan and Barry Counties, 5/13 at 100.00 AA- 2,226,957
Michigan, General Obligation Bonds, Series 2003, 5.250%, 5/01/20
1,000 Caledonia Community Schools, Kent, Allegan and Barry Counties, 5/15 at 100.00 AAA 1,041,980
Michigan, General Obligation Bonds, Series 2005,
5.000%, 5/01/25 - MBIA Insured
2,000 Detroit City School District, Wayne County, Michigan, General No Opt. Call AAA 2,315,920
Obligation Bonds, Series 2002A, 6.000%, 5/01/19 - FGIC Insured
1,195 Detroit, Michigan, General Obligation Bonds, Series 2004A-1, 4/14 at 100.00 AAA 1,263,318
5.250%, 4/01/24 - AMBAC Insured
Grand Rapids and Kent County Joint Building Authority, Michigan,
Limited Tax General Obligation Bonds, Devos Place Project,
Series 2001:
8,900 0.000%, 12/01/25 No Opt. Call AAA 3,790,777
3,000 0.000%, 12/01/26 No Opt. Call AAA 1,212,780
5,305 0.000%, 12/01/29 No Opt. Call AAA 1,831,180
1,700 Grand Rapids, Michigan, General Obligation Bonds, Series 2007, 9/17 at 100.00 AAA 1,780,172
5.000%, 9/01/27 - MBIA Insured
1,400 Howell Public Schools, Livingston County, Michigan, General 11/13 at 100.00 AA- 1,462,874
Obligation Bonds, Series 2003, 5.000%, 5/01/21
1,065 Jackson Public Schools, Jackson County, Michigan, General 5/14 at 100.00 AAA 1,113,926
Obligation School Building and Site Bonds, Series 2004,
5.000%, 5/01/22 - FSA Insured
1,935 Kalamazoo Public Schools, Michigan, General Obligation Bonds, 5/16 at 100.00 AAA 2,027,745
Series 2006, 5.000%, 5/01/25 - FSA Insured
1,790 Lansing Building Authority, Michigan, General Obligation Bonds, 6/13 at 100.00 AAA 1,850,198
Series 2003A, 5.000%, 6/01/26 - MBIA Insured
21
NUM
Nuveen Michigan Quality Income Municipal Fund, Inc. (continued)
Portfolio of INVESTMENTS July 31, (2007)
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL (continued)
$ 2,505 Lincoln Consolidated School District, Washtenaw and Wayne 5/16 at 100.00 AAA $ 2,625,065
Counties, Michigan, General Obligation Bonds, Series 2006,
5.000%, 5/01/25 - MBIA Insured
2,810 Livonia Public Schools, Wayne County, Michigan, General 5/14 at 100.00 AAA 2,939,091
Obligation Bonds, Series 2004A, 5.000%, 5/01/21 -
MBIA Insured
1,500 Marshall Public Schools, Calhoun County, Michigan, General 5/17 at 100.00 AAA 1,568,820
Obligation Bonds, Series 2007, 5.000%, 5/01/30 - XLCA Insured
2,100 Michigan Municipal Bond Authority, General Obligation Bonds, 6/15 at 100.00 AAA 2,204,034
Detroit City School District, Series 2005, 5.000%, 6/01/18 -
FSA Insured
4,000 Michigan, General Obligation Bonds, Environmental Protection 5/13 at 100.00 AA- 4,225,920
Program, Series 2003A, 5.250%, 5/01/20
2,500 Montrose School District, Michigan, School Building and Site No Opt. Call AAA 2,934,650
Bonds, Series 1997, 6.000%, 5/01/22 - MBIA Insured
1,100 Muskegon County, Michigan, Limited Tax General Obligation 7/11 at 100.00 AAA 1,128,644
Wastewater Management System 2 Revenue Bonds,
Series 2002, 5.000%, 7/01/26 - FGIC Insured
1,000 Oakland County Building Authority, Michigan, General Obligation 9/11 at 100.00 AAA 1,036,620
Bonds, Series 2002, 5.125%, 9/01/22
2,250 Oakland Intermediate School District, Oakland County, Michigan, 5/17 at 100.00 AAA 2,342,363
General Obligation Bonds, Series 2007, 5.000%, 5/01/36 -
FSA Insured
1,595 Oakridge Public Schools, Muskegon County, Michigan, General 5/15 at 100.00 AAA 1,671,783
Obligation Bonds, Series 2005, 5.000%, 5/01/22 - MBIA Insured
Ottawa County, Michigan, Water Supply System, General Obligation
Bonds, Series 2007:
4,330 5.000%, 8/01/26 - MBIA Insured 8/17 at 100.00 Aaa 4,547,323
1,120 5.000%, 8/01/30 - MBIA Insured 8/17 at 100.00 Aaa 1,172,506
1,050 Parchment School District, Kalamazoo County, Michigan, General 5/17 at 100.00 AAA 1,075,484
Obligation Bonds, Series 2007, Residuals 07-1017,
6.445%, 5/01/36 - FSA Insured (IF)
4,340 Plymouth-Canton Community School District, Wayne and 5/14 at 100.00 AAA 4,496,761
Washtenaw Counties, Michigan, General Obligation Bonds,
Series 2004, 5.000%, 5/01/26 - FGIC Insured
4,200 Puerto Rico, General Obligation and Public Improvement Bonds, No Opt. Call AAA 4,742,136
Series 2001A, 5.500%, 7/01/20 - MBIA Insured
3,175 South Redford School District, Wayne County, Michigan, General 5/15 at 100.00 AAA 3,291,364
Obligation Bonds, School Building and Site, Series 2005,
5.000%, 5/01/30 - MBIA Insured
1,655 Southfield Library Building Authority, Michigan, General Obligation 5/15 at 100.00 AAA 1,722,259
Bonds, Series 2005, 5.000%, 5/01/26 - MBIA Insured
1,500 Thornapple Kellogg School District, Barry County, Michigan, 5/17 at 100.00 AAA 1,566,390
General Obligation Bonds, Series 2007, 5.000%, 5/01/32 -
MBIA Insured
2,275 Troy City School District, Oakland County, Michigan, General 5/16 at 100.00 AAA 2,410,727
Obligation Bonds, Series 2006, 5.000%, 5/01/19 - MBIA Insured
5,000 Wayne County, Michigan, Limited Tax General Obligation Airport 12/11 at 101.00 AAA 5,163,750
Hotel Revenue Bonds, Detroit Metropolitan Wayne County Airport,
Series 2001A, 5.000%, 12/01/21 - MBIA Insured
3,350 Wayne Westland Community Schools, Michigan, General Obligation 11/14 at 100.00 AAA 3,552,776
Bonds, Series 2004, 5.000%, 5/01/17 - FSA Insured
1,725 Williamston Community School District, Michigan, Unlimited Tax No Opt. Call AAA 1,947,818
General Obligation QSBLF Bonds, Series 1996, 5.500%, 5/01/25 -
MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
98,105 Total Tax Obligation/General 92,273,896
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 14.4% (9.3% OF TOTAL INVESTMENTS)
1,000 Grand Rapids Building Authority, Kent County, Michigan, Limited No Opt. Call AA 1,071,820
Tax General Obligation Bonds, Series 1998, 5.000%, 4/01/16
1,345 Grand Rapids Building Authority, Kent County, Michigan, Limited 10/11 at 100.00 AAA 1,390,461
Tax General Obligation Bonds, Series 2001, 5.125%, 10/01/26 -
MBIA Insured
4,440 Michigan Building Authority, Revenue Bonds, Series 2006IA, 10/16 at 100.00 AAA 4,614,004
5.000%, 10/15/36 - FGIC Insured
50 Michigan Municipal Bond Authority, Local Government Loan 11/07 at 100.00 Aa3 50,108
Program Revenue Sharing Bonds, Series 1992D, 6.650%, 5/01/12
22
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED (continued)
$ 2,135 Michigan State Building Authority, Revenue Bonds, Facilities 10/15 at 100.00 AAA $ 2,218,564
Program, Series 2005II, 5.000%, 10/15/33 - AMBAC Insured
Michigan State Building Authority, Revenue Refunding Bonds,
Facilities Program, Series 2003II:
5,100 5.000%, 10/15/22 - MBIA Insured 10/13 at 100.00 AAA 5,303,846
5,000 5.000%, 10/15/23 - MBIA Insured 10/13 at 100.00 AAA 5,197,099
3,500 Michigan State Trunk Line, Fund Refunding Bonds, Series 2002, 10/12 at 100.00 AAA 3,684,660
5.250%, 10/01/21 - FSA Insured
5,500 Puerto Rico Infrastructure Financing Authority, Special Tax Revenue No Opt. Call AAA 1,677,445
Bonds, Series 2005A, 0.000%, 7/01/32 - FGIC Insured
------------------------------------------------------------------------------------------------------------------------------------
28,070 Total Tax Obligation/Limited 25,208,007
------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 0.6% (0.4% OF TOTAL INVESTMENTS)
1,000 Capital Region Airport Authority, Michigan, Revenue Refunding 7/12 at 100.00 AAA 1,032,270
Bonds, Series 2002, 5.250%, 7/01/21 - MBIA Insured
(Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 40.4% (26.2% OF TOTAL INVESTMENTS) (4)
2,190 Anchor Bay School District, Macomb and St. Clair Counties, 5/09 at 100.00 AAA 2,273,023
Michigan, General Obligation Bonds, Series 1999I,
6.000%, 5/01/29 (Pre-refunded 5/01/09) - FGIC Insured
1,000 Charlotte Public School District, Easton County, Michigan, General 5/09 at 100.00 AAA 1,025,320
Obligation Bonds, Series 1999, 5.250%, 5/01/25
(Pre-refunded 5/01/09) - FGIC Insured
935 Detroit, Michigan, Senior Lien Sewerage Disposal System Revenue 7/13 at 100.00 Aaa 990,623
Bonds, Series 2003A, 5.000%, 7/01/17 (Pre-refunded 7/01/13) -
FSA Insured
Detroit, Michigan, Senior Lien Water Supply System Revenue
Bonds, Series 2001A:
3,400 5.750%, 7/01/28 (Pre-refunded 7/01/11) - FGIC Insured 7/11 at 101.00 AAA 3,660,032
770 5.250%, 7/01/33 (Pre-refunded 7/01/11) - FGIC Insured 7/11 at 100.00 AAA 808,392
730 5.250%, 7/01/33 (Pre-refunded 7/01/11) - FGIC Insured 7/11 at 100.00 AAA 768,296
Detroit, Michigan, Senior Lien Water Supply System Revenue
Bonds, Series 2003A:
4,025 5.000%, 7/01/24 (Pre-refunded 7/01/13) - MBIA Insured 7/13 at 100.00 AAA 4,264,447
1,500 5.000%, 7/01/25 (Pre-refunded 7/01/13) - MBIA Insured 7/13 at 100.00 Aaa 1,589,235
1,000 Detroit, Michigan, Sewerage Disposal System Revenue Bonds, 1/10 at 101.00 AAA 1,057,410
Series 1999A, 5.875%, 7/01/27 (Pre-refunded 1/01/10) -
FGIC Insured
2,000 East Grand Rapids Public Schools, Kent County, Michigan, 5/09 at 100.00 AAA 2,075,820
Unlimited Tax General Obligation School Building and Site Bonds,
Series 2000, 6.000%, 5/01/29 (Pre-refunded 5/01/09) -
FSA Insured
1,085 Freeland Community School District, Saginaw, Midland and Bay 5/10 at 100.00 AA- (4) 1,126,284
Counties, Michigan, General Obligation Bonds, Series 2000,
5.250%, 5/01/19 (Pre-refunded 5/01/10)
1,220 Hancock Hospital Finance Authority, Michigan, FHA-Insured 8/08 at 100.00 AAA 1,239,154
Mortgage Hospital Revenue Bonds, Portage Health System Inc.,
Series 1998, 5.450%, 8/01/47 (Pre-refunded 8/01/08) -
MBIA Insured
2,000 Lake Fenton Community Schools, Genesee County, Michigan, 5/12 at 100.00 AA- (4) 2,101,080
General Obligation Bonds, Series 2002, 5.000%, 5/01/24
(Pre-refunded 5/01/12)
3,880 Mayville Community Schools, Tuscola County, Michigan, 11/14 at 100.00 AAA 4,149,078
General Obligation Bonds, School Building and Site Project,
Series 2004, 5.000%, 5/01/34 (Pre-refunded 11/01/14) -
FGIC Insured
250 Michigan South Central Power Agency, Power Supply System No Opt. Call A3 (4) 267,688
Revenue Bonds, Series 2000, 6.000%, 5/01/12 (ETM)
Michigan State Hospital Finance Authority, Hospital Revenue
Bonds, Ascension Health Credit Group, Series 1999A:
1,000 6.125%, 11/15/23 (Pre-refunded 11/15/09) - MBIA Insured 11/09 at 101.00 AAA 1,058,370
500 6.125%, 11/15/26 (Pre-refunded 11/15/09) 11/09 at 101.00 AAA 529,525
5,000 Michigan State Hospital Finance Authority, Hospital Revenue 11/09 at 101.00 A1 (4) 5,285,049
Bonds, Henry Ford Health System, Series 1999A,
6.000%, 11/15/24 (Pre-refunded 11/15/09)
1,500 Michigan State Hospital Finance Authority, Hospital Revenue 3/13 at 100.00 A1 (4) 1,627,230
Refunding Bonds, Henry Ford Health System, Series 2003A,
5.625%, 3/01/17 (Pre-refunded 3/01/13)
1,700 Michigan State Hospital Finance Authority, Hospital Revenue 8/09 at 101.00 AAA 1,780,495
Refunding Bonds, Mercy Health Services Obligated Group,
Series 1999X, 5.750%, 8/15/19 (Pre-refunded 8/15/09) -
MBIA Insured
23
NUM
Nuveen Michigan Quality Income Municipal Fund, Inc. (continued)
Portfolio of INVESTMENTS July 31, (2007)
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED (4) (continued)
Michigan State Hospital Finance Authority, Hospital Revenue
Refunding Bonds, Mercy Mt. Clemens Corporation Obligated Group,
Series 1999A:
$ 3,385 5.750%, 5/15/17 (Pre-refunded 5/15/09) - MBIA Insured 5/09 at 101.00 AAA $ 3,530,724
500 5.750%, 5/15/29 (Pre-refunded 5/15/09) - MBIA Insured 5/09 at 101.00 AAA 521,525
1,000 Michigan State Hospital Finance Authority, Hospital Revenue 11/09 at 101.00 A (4) 1,059,050
Refunding Bonds, OSF Healthcare System, Series 1999,
6.125%, 11/15/19 (Pre-refunded 11/15/09)
3,460 Michigan State Hospital Finance Authority, Hospital Revenue No Opt. Call AAA 3,517,747
Refunding Bonds, St. John's Health System, Series 1998A,
5.000%, 5/15/28 - AMBAC Insured (ETM)
1,000 Michigan State Trunk Line, Fund Bonds, Series 2001A, 11/11 at 100.00 AAA 1,046,430
5.000%, 11/01/25 (Pre-refunded 11/01/11) - FSA Insured
1,100 Michigan Strategic Fund, Limited Obligation Revenue Refunding 7/08 at 101.00 BBB+ (4) 1,126,499
Bonds, Porter Hills Presbyterian Village, Series 1998,
5.375%, 7/01/28 (Pre-refunded 7/01/08)
2,000 Michigan, Certificates of Participation, Series 2000, 6/10 at 100.00 AAA 2,089,200
5.500%, 6/01/27 (Pre-refunded 6/01/10) - AMBAC Insured
2,875 Milan Area Schools, Washtenaw and Monroe Counties, Michigan, 5/10 at 100.00 AAA 3,021,568
General Obligation Bonds, Series 2000A, 5.750%, 5/01/24
(Pre-refunded 5/01/10) - FGIC Insured
700 Muskegon Heights, Muskegon County, Michigan, Water Supply 11/10 at 100.00 Aaa 738,773
System Revenue Bonds, Series 2000A, 5.625%, 11/01/30
(Pre-refunded 11/01/10) - MBIA Insured
400 Puerto Rico Electric Power Authority, Power Revenue Bonds, 7/10 at 101.00 AAA 420,292
Series 2000HH, 5.250%, 7/01/29 (Pre-refunded 7/01/10) -
FSA Insured
1,125 Puerto Rico Highway and Transportation Authority, Highway 7/10 at 101.00 BBB+ (4) 1,203,885
Revenue Bonds, Series 2000B, 6.000%, 7/01/39
(Pre-refunded 7/01/10)
Puerto Rico Public Finance Corporation, Commonwealth
Appropriation Bonds, Series 2002E:
85 6.000%, 8/01/26 (ETM) No Opt. Call BBB- (4) 102,698
915 6.000%, 8/01/26 (ETM) No Opt. Call BBB- (4) 1,105,512
4,100 Puerto Rico, Highway Revenue Bonds, Highway and 7/16 at 100.00 Aaa 4,571,951
Transportation Authority, Series 1996Y, 5.500%, 7/01/36
(Pre-refunded 7/01/16)
1,000 Rochester Community School District, Oakland and Macomb 5/10 at 100.00 AAA 1,050,980
Counties, Michigan, General Obligation Bonds, Series 2000I,
5.750%, 5/01/19 (Pre-refunded 5/01/10) - FGIC Insured
2,100 Romulus Community Schools, Wayne County, Michigan, 5/09 at 100.00 AAA 2,170,791
Unlimited Tax General Obligation School Building and Site
Bonds, Series 1999, 5.750%, 5/01/25 (Pre-refunded 5/01/09) -
FGIC Insured
1,050 Warren Consolidated School District, Macomb and Oakland 11/11 at 100.00 AAA 1,114,061
Counties, Michigan, General Obligation Bonds, Series 2001,
5.375%, 5/01/19 (Pre-refunded 11/01/11) - FSA Insured
1,980 Washtenaw County Building Authority, Michigan, Limited Tax 9/07 at 100.00 AAA 1,982,633
General Obligation Bonds, Series 1999, 5.400%, 9/01/17
(Pre-refunded 9/01/07) - FGIC Insured
2,600 West Bloomfield School District, Oakland County, Michigan, 5/10 at 100.00 AAA 2,742,662
Unlimited Tax General Obligation School Building and Site Bonds,
Series 2000, 5.900%, 5/01/18 (Pre-refunded 5/01/10) -
FGIC Insured
------------------------------------------------------------------------------------------------------------------------------------
67,060 Total U.S. Guaranteed 70,793,532
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 12.2% (7.9% OF TOTAL INVESTMENTS)
3,000 Michigan Public Power Agency, Revenue Bonds, Combustion 1/12 at 100.00 AAA 3,119,550
Turbine 1 Project, Series 2001A, 5.250%, 1/01/27 -
AMBAC Insured
3,225 Michigan South Central Power Agency, Power Supply System No Opt. Call A3 3,390,862
Revenue Bonds, Series 2000, 6.000%, 5/01/12
1,000 Michigan Strategic Fund, Collateralized Limited Obligation 9/09 at 102.00 AAA 1,041,590
Pollution Control Revenue Refunding Bonds, Detroit Edison
Company, Series 1999A, 5.550%, 9/01/29 - MBIA Insured
(Alternative Minimum Tax)
4,000 Michigan Strategic Fund, Collateralized Limited Obligation 9/11 at 100.00 A3 4,120,000
Pollution Control Revenue Refunding Bonds, Detroit Edison
Company, Series 2001C, 5.450%, 9/01/29
2,000 Michigan Strategic Fund, Limited Obligation Pollution Control 9/30 at 100.00 Aaa 2,058,460
Revenue Refunding Bonds, Detroit Edison Company,
Series 1995CC, 4.850%, 9/01/30 (Mandatory put 9/01/11) -
AMBAC Insured
3,630 Michigan Strategic Fund, Limited Obligation Revenue Refunding No Opt. Call AAA 4,589,119
Bonds, Detroit Edison Company, Series 1991BB,
7.000%, 5/01/21 - AMBAC Insured
24
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES (continued)
$ 3,000 Michigan Strategic Fund, Limited Obligation Revenue Refunding 12/12 at 100.00 AAA $ 3,139,890
Bonds, Detroit Edison Company, Series 2002C, 5.450%, 12/15/32 -
XLCA Insured (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
19,855 Total Utilities 21,459,471
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 8.7% (5.7% OF TOTAL INVESTMENTS)
5,500 Detroit Water Supply System, Michigan, Water Supply System 7/16 at 100.00 AAA 5,697,887
Revenue Bonds, Series 2006A, 5.000%, 7/01/34 - FSA Insured
1,500 Detroit, Michigan, Senior Lien Sewerage Disposal System Revenue No Opt. Call AAA 1,722,405
Bonds, Series 2001B, 5.500%, 7/01/29 - FGIC Insured
565 Detroit, Michigan, Senior Lien Sewerage Disposal System Revenue 7/13 at 100.00 AAA 594,945
Bonds, Series 2003A, 5.000%, 7/01/17 - FSA Insured
1,500 Detroit, Michigan, Senior Lien Water Supply System Revenue 7/13 at 100.00 AAA 1,547,565
Bonds, Series 2003A, 5.000%, 7/01/25 - MBIA Insured
4,210 Michigan Municipal Bond Authority, Clean Water Revolving Fund 10/14 at 100.00 AAA 4,437,635
Revenue Bonds, Series 2004, 5.000%, 10/01/19
1,150 Michigan Municipal Bond Authority, Drinking Water Revolving 10/14 at 100.00 AAA 1,203,832
Fund Revenue Bonds, Series 2004, 5.000%, 10/01/23
------------------------------------------------------------------------------------------------------------------------------------
14,425 Total Water and Sewer 15,204,269
------------------------------------------------------------------------------------------------------------------------------------
$ 272,100 Total Long-Term Investments (cost $260,034,307) - 154.1% 270,015,330
=============-----------------------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS - 0.1% (0.1% OF TOTAL INVESTMENTS)
$ 200 Puerto Rico Government Development Bank, Adjustable Refunding VMIG-1 200,000
Bonds, Variable Rate Demand Obligations, Series 1985,
3.490%, 12/01/15 - MBIA Insured (5)
=============-----------------------------------------------------------------------------------------------------------------------
Total Short-Term Investments (cost $200,000) 200,000
--------------------------------------------------------------------------------------------------------------------
Total Investments (cost $260,234,307) - 154.2% 270,215,330
--------------------------------------------------------------------------------------------------------------------
Floating Rate Obligations - (2.2)% (3,870,000)
--------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 1.6% 2,898,231
--------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (53.6)% (94,000,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 175,243,561
====================================================================================================================
The Fund may invest in "zero coupon" securities. A zero
coupon security does not pay a regular interest coupon to
its holders during the life of the security. Tax-exempt
income to the holder of the security comes from accretion of
the difference between the original purchase price of the
security at issuance and the par value of the security at
maturity and is effectively paid at maturity. Such
securities are included in the portfolio with a 0.00% coupon
rate in their description. The market prices of zero coupon
securities generally are more volatile than the market
prices of securities that pay interest periodically.
(1) All percentages shown in the Portfolio of Investments are
based on net assets applicable to Common shares unless
otherwise noted.
(2) Optional Call Provisions (not covered by the report of
independent registered public accounting firm): Dates (month
and year) and prices of the earliest optional call or
redemption. There may be other call provisions at varying
prices at later dates. Certain mortgage-backed securities
may be subject to periodic principal paydowns.
(3) Ratings (not covered by the report of independent registered
public accounting firm): Using the higher of Standard &
Poor's or Moody's rating. Ratings below BBB by Standard &
Poor's Group or Baa by Moody's 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.
(5) Investment has a maturity of more than one year, but has
variable rate and demand features which qualify it as a
short-term investment. The rate disclosed is that in effect
at the end of the reporting period. This rate changes
periodically based on market conditions or a specified
market index.
N/R Not rated.
(ETM) Escrowed to maturity.
(IF) Inverse floating rate investment.
(UB) Underlying bond of an inverse floating rate trust reflected
as a financing transaction pursuant to the provisions of
SFAS No. 140.
See accompanying notes to financial statements.
25
NMP
Nuveen Michigan Premium Income Municipal Fund, Inc.
Portfolio of INVESTMENTS
July 31, 2007
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 5.6% (3.6% OF TOTAL INVESTMENTS)
$ 440 Chandler Park Academy, Michigan, Public School Academy 11/15 at 100.00 BBB- $ 425,933
Charter School Revenue Bonds, Series 2005, 5.125%, 11/01/35
275 Grand Traverse Academy, Michigan, Public School Academy 11/17 at 100.00 BBB- 252,984
Revenue Bonds, Series 2007, 4.750%, 11/01/32
2,000 Michigan Higher Education Student Loan Authority, Revenue 9/12 at 100.00 AAA 2,055,040
Bonds, Series 2002 XVII-G, 5.200%, 9/01/20 - AMBAC Insured
(Alternative Minimum Tax)
3,500 Wayne State University, Michigan, General Revenue Bonds, 11/09 at 101.00 AAA 3,598,280
Series 1999, 5.125%, 11/15/29 - FGIC Insured
------------------------------------------------------------------------------------------------------------------------------------
6,215 Total Education and Civic Organizations 6,332,237
------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE - 9.0% (5.8% OF TOTAL INVESTMENTS)
1,700 Michigan Hospital Financing Authority, Revenue Bonds, Oakwood 7/17 at 100.00 A 1,688,202
Obligated Group, Series 2007A, 5.000%, 7/15/37
425 Michigan State Hospital Finance Authority, Revenue Bonds, 5/15 at 100.00 BBB 424,720
Chelsea Community Hospital, Series 2005, 5.000%, 5/15/25
1,005 Michigan State Hospital Finance Authority, Revenue Bonds, 5/15 at 100.00 Baa1 1,001,895
Marquette General Hospital, Series 2005A, 5.000%, 5/15/26
3,700 Michigan State Hospital Finance Authority, Revenue Bonds, 5/15 at 100.00 AAA 3,809,150
Sparrow Obligated Group, Series 2005, 5.000%, 11/15/36 -
MBIA Insured (UB)
Michigan State Hospital Finance Authority, Revenue Refunding
Bonds, Detroit Medical Center Obligated Group, Series 1993A:
2,000 6.250%, 8/15/13 8/07 at 100.00 BB- 2,000,940
500 6.500%, 8/15/18 8/07 at 100.00 BB- 500,290
800 Monroe County Hospital Finance Authority, Michigan, Mercy 6/16 at 100.00 BBB- 815,712
Memorial Hospital Corporation Revenue Bonds, Series 2006,
5.375%, 6/01/26
------------------------------------------------------------------------------------------------------------------------------------
10,130 Total Health Care 10,240,909
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 7.0% (4.5% OF TOTAL INVESTMENTS)
920 Michigan Housing Development Authority, GNMA Collateralized 4/12 at 102.00 Aaa 941,234
Limited Obligation Multifamily Housing Revenue Bonds,
Burkshire Pointe Apartments, Series 2002A, 5.400%, 10/20/32
(Alternative Minimum Tax)
1,500 Michigan Housing Development Authority, Limited Obligation 10/07 at 100.00 AAA 1,501,380
Revenue Bonds, Breton Village Green Project, Series 1993,
5.625%, 10/15/18 - FSA Insured
2,400 Michigan Housing Development Authority, Limited Obligation 10/07 at 100.00 AAA 2,457,432
Revenue Bonds, Walled Lake Villa Project, Series 1993,
6.000%, 4/15/18 - FSA Insured
800 Michigan Housing Development Authority, Rental Housing 7/15 at 100.00 AAA 808,264
Revenue Bonds, Series 2006D, 5.125%, 4/01/31 - FSA Insured
(Alternative Minimum Tax)
Mt. Clemens Housing Corporation, Michigan, FHA-Insured Section 8
Assisted Multifamily Housing Revenue Refunding Bonds, Clinton
Place Project, Series 1992A:
680 6.600%, 6/01/13 12/07 at 100.00 AAA 681,034
1,500 6.600%, 6/01/22 12/07 at 100.00 AAA 1,549,710
------------------------------------------------------------------------------------------------------------------------------------
7,800 Total Housing/Multifamily 7,939,054
------------------------------------------------------------------------------------------------------------------------------------
26
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
LONG-TERM CARE - 0.6% (0.4% OF TOTAL INVESTMENTS)
$ 665 Michigan State Hospital Finance Authority, Revenue Bonds, 5/15 at 100.00 N/R $ 669,382
Presbyterian Villages of Michigan Obligated Group, Series 2005,
5.250%, 11/15/25
------------------------------------------------------------------------------------------------------------------------------------
MATERIALS - 0.9% (0.6% OF TOTAL INVESTMENTS)
1,050 Dickinson County Economic Development Corporation, Michigan, 11/14 at 100.00 BBB 1,026,806
Pollution Control Revenue Bonds, International Paper Company,
Series 2004A, 4.800%, 11/01/18
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 47.6% (30.8% OF TOTAL INVESTMENTS)
1,475 Anchor Bay School District, Macomb and St. Clair Counties, 11/13 at 100.00 AA- 1,541,242
Michigan, General Obligation Bonds, Series 2003,
5.000%, 5/01/21
2,500 Anchor Bay School District, Macomb and St. Clair Counties, 5/11 at 100.00 AA- 2,576,000
Michigan, Unlimited Tax General Obligation Refunding Bonds,
Series 2001, 5.000%, 5/01/21
910 Caledonia Community Schools, Kent County, Michigan, General 5/17 at 100.00 AAA 940,631
Obligation Bonds, Series 2007, Residuals 1018, 6.447%, 5/01/32 -
MBIA Insured (IF)
2,250 Caledonia Community Schools, Kent, Allegan and Barry Counties, 5/15 at 100.00 AAA 2,341,440
Michigan, General Obligation Bonds, Series 2005,
5.000%, 5/01/26 - MBIA Insured
Detroit City School District, Wayne County, Michigan, General
Obligation Bonds, Series 2002A:
1,815 6.000%, 5/01/20 - FGIC Insured No Opt. Call AAA 2,116,254
750 6.000%, 5/01/21 - FGIC Insured No Opt. Call AAA 879,128
2,500 Detroit City School District, Wayne County, Michigan, General 5/13 at 100.00 AAA 2,594,600
Obligation Bonds, Series 2003B, 5.000%, 5/01/23 -
FGIC Insured
2,665 Detroit, Michigan, General Obligation Bonds, Series 2004A-1, 4/14 at 100.00 AAA 2,817,358
5.250%, 4/01/24 - AMBAC Insured
7,000 Detroit-Wayne County Stadium Authority, Michigan, Limited Tax 8/07 at 102.00 AAA 7,116,966
General Obligation Building Authority Stadium Bonds,
Series 1997, 5.250%, 2/01/27 - FGIC Insured
860 Grand Rapids, Michigan, General Obligation Bonds, Series 2007, 9/17 at 100.00 AAA 907,008
5.000%, 9/01/24 - MBIA Insured
1,650 Holly Area School District, Oakland County, Michigan, General 5/16 at 100.00 AAA 1,733,292
Obligation Bonds, Series 2006, 5.125%, 5/01/32 - MBIA Insured
2,000 Howell Public Schools, Livingston County, Michigan, General 11/13 at 100.00 AA- 2,078,340
Obligation Bonds, Series 2003, 5.000%, 5/01/22
1,250 Kalamazoo Public Schools, Michigan, General Obligation Bonds, 5/16 at 100.00 AAA 1,309,913
Series 2006, 5.000%, 5/01/25 - FSA Insured
500 Lansing School District, Ingham County, Michigan, General 5/14 at 100.00 AA- 522,970
Obligation Bonds, Series 2004, 5.000%, 5/01/22
1,000 Livonia Public Schools, Wayne County, Michigan, General 5/14 at 100.00 AAA 1,045,940
Obligation Bonds, Series 2004A, 5.000%, 5/01/21 -
MBIA Insured
Marshall Public Schools, Calhoun County, Michigan, General
Obligation Bonds, Series 2007:
425 5.000%, 5/01/30 - XLCA Insured 5/17 at 100.00 AAA 444,499
550 4.625%, 5/01/37 - XLCA Insured 5/17 at 100.00 AAA 544,698
1,000 Michigan Municipal Bond Authority, General Obligation Bonds, 6/15 at 100.00 AAA 1,049,540
Detroit City School District, Series 2005, 5.000%, 6/01/18 -
FSA Insured
Michigan, General Obligation Bonds, Environmental Protection
Program, Series 2003A:
1,000 5.250%, 5/01/20 5/13 at 100.00 AA- 1,056,480
2,000 5.250%, 5/01/21 5/13 at 100.00 AA- 2,112,960
1,450 Oakland Intermediate School District, Oakland County, Michigan, 5/17 at 100.00 AAA 1,509,523
General Obligation Bonds, Series 2007, 5.000%, 5/01/36 -
FSA Insured
3,500 Ottawa County, Michigan, Water Supply System, General Obligation 8/17 at 100.00 Aaa 3,664,080
Bonds, Series 2007, 5.000%, 8/01/30 - MBIA Insured
1,100 Oxford Area Community Schools, Oakland and Lapeer Counties, 5/14 at 100.00 AAA 1,142,339
Michigan, General Obligation Bonds, Series 2004,
5.000%, 5/01/25 - FSA Insured
680 Parchment School District, Kalamazoo County, Michigan, 5/17 at 100.00 AAA 696,504
General Obligation Bonds, Series 2007, Residuals 07-1017,
6.445%, 5/01/36 - FSA Insured (IF)
27
NMP
Nuveen Michigan Premium Income Municipal Fund, Inc. (continued)
Portfolio of INVESTMENTS July 31, (2007)
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL (continued)
$ 1,000 Rockford Public Schools, Kent County, Michigan, General 5/15 at 100.00 AAA $ 1,039,310
Obligation Bonds, Series 2005, 5.000%, 5/01/27 - FSA Insured
1,000 Thornapple Kellogg School District, Barry County, Michigan, 5/17 at 100.00 AAA 1,044,260
General Obligation Bonds, Series 2007, 5.000%, 5/01/32 -
MBIA Insured
2,830 Warren Consolidated School District, Macomb and Oakland 5/13 at 100.00 Aa2 2,986,867
Counties, Michigan, General Obligation Refunding Bonds,
Series 2003, 5.250%, 5/01/20
Wayne County, Michigan, Limited Tax General Obligation Airport
Hotel Revenue Bonds, Detroit Metropolitan Wayne County Airport,
Series 2001A:
1,500 5.500%, 12/01/18 - MBIA Insured 12/11 at 101.00 AAA 1,596,015
4,435 5.000%, 12/01/30 - MBIA Insured 12/11 at 101.00 AAA 4,579,181
------------------------------------------------------------------------------------------------------------------------------------
51,595 Total Tax Obligation/General 53,987,338
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 21.5% (13.9% OF TOTAL INVESTMENTS)
2,880 Michigan Building Authority, Revenue Bonds, Series 2006IA, 10/16 at 100.00 AAA 2,992,867
5.000%, 10/15/36 - FGIC Insured
Michigan State Building Authority, Revenue Bonds, Facilities
Program, Series 2001I:
2,570 5.500%, 10/15/19 10/11 at 100.00 A+ 2,713,123
6,500 5.000%, 10/15/24 10/11 at 100.00 A+ 6,678,749
1,600 Michigan State Building Authority, Revenue Bonds, Facilities 10/15 at 100.00 AAA 1,665,984
Program, Series 2005II, 5.000%, 10/15/30 - AMBAC Insured
Michigan State Building Authority, Revenue Refunding Bonds,
Facilities Program, Series 2003II:
5,000 5.000%, 10/15/22 - MBIA Insured (5) 10/13 at 100.00 AAA 5,199,849
2,480 5.000%, 10/15/23 - MBIA Insured 10/13 at 100.00 AAA 2,577,762
1,500 Michigan, Comprehensive Transportation Revenue Refunding 11/11 at 100.00 AAA 1,551,180
Bonds, Series 2001A, 5.000%, 11/01/19 - FSA Insured
3,500 Puerto Rico Infrastructure Financing Authority, Special Tax No Opt. Call AAA 1,067,465
Revenue Bonds, Series 2005A, 0.000%, 7/01/32 - FGIC Insured
------------------------------------------------------------------------------------------------------------------------------------
26,030 Total Tax Obligation/Limited 24,446,979
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 32.5% (21.0% OF TOTAL INVESTMENTS) (4)
1,000 Central Montcalm Public Schools, Montcalm and Ionia Counties, 5/09 at 100.00 AAA 1,033,710
Michigan, General Obligation Unlimited Tax School Building and
Site Bonds, Series 1999, 5.750%, 5/01/24 (Pre-refunded
5/01/09) - MBIA Insured
1,375 Chippewa Valley Schools, Macomb County, Michigan, General 5/11 at 100.00 AA- (4) 1,432,324
Obligation Bonds, Series 2001, 5.000%, 5/01/26
(Pre-refunded 5/01/11)
915 Detroit, Michigan, Second Lien Sewerage Disposal System 7/15 at 100.00 Aaa 979,416
Revenue Bonds, Series 2005A, 5.000%, 7/01/30
(Pre-refunded 7/01/15) - MBIA Insured
1,385 Detroit, Michigan, Senior Lien Water Supply System Revenue 7/11 at 100.00 AAA 1,454,056
Bonds, Series 2001A, 5.250%, 7/01/33 (Pre-refunded 7/01/11) -
FGIC Insured
2,000 Detroit, Michigan, Sewerage Disposal System Revenue Bonds, 1/10 at 101.00 AAA 2,114,820
Series 1999A, 5.875%, 7/01/27 (Pre-refunded 1/01/10) -
FGIC Insured
2,175 Hancock Hospital Finance Authority, Michigan, FHA-Insured 8/08 at 100.00 AAA 2,209,148
Mortgage Hospital Revenue Bonds, Portage Health System Inc.,
Series 1998, 5.450%, 8/01/47 (Pre-refunded 8/01/08) -
MBIA Insured
500 Lansing School District, Ingham County, Michigan, General 5/14 at 100.00 AA- (4) 532,795
Obligation Bonds, Series 2004, 5.000%, 5/01/22
(Pre-refunded 5/01/14)
75 Michigan South Central Power Agency, Power Supply System No Opt. Call A3 (4) 80,306
Revenue Bonds, Series 2000, 6.000%, 5/01/12 (ETM)
1,500 Michigan State Building Authority, Revenue Bonds, Facilities 10/10 at 100.00 A+ (4) 1,570,815
Program, Series 2000I, 5.375%, 10/15/20
(Pre-refunded 10/15/10)
2,500 Michigan State Hospital Finance Authority, Hospital Revenue 11/09 at 101.00 AAA 2,647,625
Bonds, Ascension Health Credit Group, Series 1999A,
6.125%, 11/15/26 (Pre-refunded 11/15/09)
28
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED (4) (continued)
$ 3,575 Michigan State Hospital Finance Authority, Hospital Revenue 11/09 at 101.00 A1 (4) $ 3,778,811
Bonds, Henry Ford Health System, Series 1999A,
6.000%, 11/15/24 (Pre-refunded 11/15/09)
1,500 Michigan State Hospital Finance Authority, Hospital Revenue 3/13 at 100.00 A1 (4) 1,627,230
Refunding Bonds, Henry Ford Health System, Series 2003A,
5.625%, 3/01/17 (Pre-refunded 3/01/13)
4,000 Michigan State Hospital Finance Authority, Hospital Revenue 5/09 at 101.00 AAA 4,172,200
Refunding Bonds, Mercy Mt. Clemens Corporation Obligated
Group, Series 1999A, 5.750%, 5/15/29 (Pre-refunded 5/15/09) -
MBIA Insured
500 Michigan State Hospital Finance Authority, Hospital Revenue 11/11 at 101.00 A+ (4) 538,480
Refunding Bonds, Sparrow Obligated Group, Series 2001,
5.625%, 11/15/31 (Pre-refunded 11/15/11)
3,000 Michigan State Hospital Finance Authority, Hospital Revenue 11/07 at 100.00 AAA 3,071,820
Refunding Bonds, St. John's Hospital, Series 1993A,
6.000%, 5/15/13 - AMBAC Insured (ETM)
1,240 Milan Area Schools, Washtenaw and Monroe Counties, Michigan, 5/10 at 100.00 AAA 1,299,210
General Obligation Bonds, Series 2000A, 5.625%, 5/01/16
(Pre-refunded 5/01/10) - FGIC Insured
1,000 Otsego Public Schools District, Allegan and Kalamazoo Counties, 5/14 at 100.00 AAA 1,065,590
Michigan, General Obligation Bonds, Series 2004,
5.000%, 5/01/25 (Pre-refunded 5/01/14) - FSA Insured
2,515 Plainwell Community Schools, Allegan County, Michigan, General 11/12 at 100.00 AA- (4) 2,654,205
Obligation Bonds, Series 2002, 5.000%, 5/01/28
(Pre-refunded 11/01/12)
1,425 Walled Lake Consolidated School District, Oakland County, 5/14 at 100.00 AAA 1,539,428
Michigan, General Obligation Bonds, Series 2004,
5.250%, 5/01/20 (Pre-refunded 5/01/14) - MBIA Insured
2,950 West Bloomfield School District, Oakland County, Michigan, 5/14 at 100.00 AAA 3,143,491
General Obligation Bonds, Series 2004, 5.000%, 5/01/22
(Pre-refunded 5/01/14) - FSA Insured
------------------------------------------------------------------------------------------------------------------------------------
35,130 Total U.S. Guaranteed 36,945,480
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 14.1% (9.1% OF TOTAL INVESTMENTS)
1,000 Michigan Public Power Agency, Revenue Bonds, Combustion 1/12 at 100.00 AAA 1,039,850
Turbine 1 Project, Series 2001A, 5.250%, 1/01/27 -
AMBAC Insured
925 Michigan South Central Power Agency, Power Supply System No Opt. Call A3 972,573
Revenue Bonds, Series 2000, 6.000%, 5/01/12
1,000 Michigan Strategic Fund, Collateralized Limited Obligation Pollution 9/09 at 102.00 AAA 1,041,590
Control Revenue Refunding Bonds, Detroit Edison Company,
Series 1999A, 5.550%, 9/01/29 - MBIA Insured (Alternative
Minimum Tax)
5,000 Michigan Strategic Fund, Collateralized Limited Obligation 9/11 at 100.00 A3 5,149,999
Pollution Control Revenue Refunding Bonds, Detroit Edison
Company, Series 2001C, 5.450%, 9/01/29
3,000 Michigan Strategic Fund, Limited Obligation Pollution Control 9/30 at 100.00 Aaa 3,087,690
Revenue Refunding Bonds, Detroit Edison Company,
Series 1995CC, 4.850%, 9/01/30 (Mandatory put 9/01/11) -
AMBAC Insured
3,000 Michigan Strategic Fund, Limited Obligation Revenue Refunding 12/12 at 100.00 AAA 3,139,890
Bonds, Detroit Edison Company, Series 2002C, 5.450%, 12/15/32 -
XLCA Insured (Alternative Minimum Tax)
1,500 Wyandotte, Michigan, Electric Revenue Refunding Bonds, 10/08 at 101.00 AAA 1,540,980
Series 2002, 5.375%, 10/01/17 - MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
15,425 Total Utilities 15,972,572
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 15.7% (10.2% OF TOTAL INVESTMENTS)
3,500 Detroit Water Supply System, Michigan, Water Supply System 7/16 at 100.00 AAA 3,625,930
Revenue Bonds, Series 2006A, 5.000%, 7/01/34 - FSA Insured
1,085 Detroit, Michigan, Second Lien Sewerage Disposal System 7/15 at 100.00 AAA 1,121,847
Revenue Bonds, Series 2005A, 5.000%, 7/01/30 - MBIA Insured
1,500 Detroit, Michigan, Senior Lien Sewerage Disposal System No Opt. Call AAA 1,722,405
Revenue Bonds, Series 2001B, 5.500%, 7/01/29 - FGIC Insured
1,120 Detroit, Michigan, Senior Lien Sewerage Disposal System 7/13 at 100.00 AAA 1,179,360
Revenue Bonds, Series 2003A, 5.000%, 7/01/17 - FSA Insured
29
NMP
Nuveen Michigan Premium Income Municipal Fund, Inc. (continued)
Portfolio of INVESTMENTS July 31, (2007)
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER (continued)
$ 1,330 Grand Rapids, Michigan, Sanitary Sewer System Revenue Bonds, 7/15 at 100.00 AAA $ 1,381,458
Series 2005, 5.000%, 1/01/30 - MBIA Insured
8,460 North Kent Sewer Authority, Michigan, Sewer Revenue Bonds, 11/16 at 100.00 AAA 8,825,473
Series 2006, 5.000%, 11/01/31 - MBIA Insured (UB)
------------------------------------------------------------------------------------------------------------------------------------
16,995 Total Water and Sewer 17,856,473
------------------------------------------------------------------------------------------------------------------------------------
$ 171,035 Total Long-Term Investments (cost $170,819,890) - 154.5% 175,417,230
=============-----------------------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS - 0.2% (0.1% OF TOTAL INVESTMENTS)
$ 200 Puerto Rico Government Development Bank, Adjustable Refunding VMIG-1 200,000
Bonds, Variable Rate Demand Obligations, Series 1985,
3.490%, 12/01/15 - MBIA Insured (6)
=============-----------------------------------------------------------------------------------------------------------------------
Total Short-Term Investments (cost $200,000) 200,000
--------------------------------------------------------------------------------------------------------------------
Total Investments (cost $171,019,890) - 154.7% 175,617,230
--------------------------------------------------------------------------------------------------------------------
Floating Rate Obligations - (7.1)% (8,105,000)
--------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 1.7% 2,045,331
--------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (49.3)% (56,000,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 113,557,561
====================================================================================================================
FORWARD SWAPS OUTSTANDING AT JULY 31, 2007:
FUND FIXED RATE UNREALIZED
NOTIONAL PAY/RECEIVE FLOATING RATE FIXED RATE PAYMENT EFFECTIVE TERMINATION APPRECIATION
COUNTERPARTY AMOUNT FLOATING RATE INDEX (ANNUALIZED) FREQUENCY DATE (7) DATE (DEPRECIATION)
------------------------------------------------------------------------------------------------------------------------------------
Goldman Sachs $3,500,000 Pay 3-Month USD-LIBOR 5.375% Semi-Annually 4/23/08 4/23/30 $(136,364)
====================================================================================================================================
USD-LIBOR (United States Dollar-London Inter-Bank Offered Rate)
The Fund may invest in "zero coupon" securities. A zero
coupon security does not pay a regular interest coupon to
its holders during the life of the security. Tax-exempt
income to the holder of the security comes from accretion of
the difference between the original purchase price of the
security at issuance and the par value of the security at
maturity and is effectively paid at maturity. Such
securities are included in the portfolio with a 0.00% coupon
rate in their description. The market prices of zero coupon
securities generally are more volatile than the market
prices of securities that pay interest periodically.
(1) All percentages shown in the Portfolio of Investments are
based on net assets applicable to Common shares unless
otherwise noted.
(2) Optional Call Provisions (not covered by the report of
independent registered public accounting firm): Dates (month
and year) and prices of the earliest optional call or
redemption. There may be other call provisions at varying
prices at later dates. Certain mortgage-backed securities
may be subject to periodic principal paydowns.
(3) Ratings (not covered by the report of independent registered
public accounting firm): Using the higher of Standard &
Poor's or Moody's rating. Ratings below BBB by Standard &
Poor's Group or Baa by Moody's 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.
(5) Portion of the investment, with an aggregate market value of
$311,991, has been pledged to collateralize the net payment
obligations under forward swap contracts.
(6) Investment has a maturity of more than one year, but has
variable rate and demand features which qualify it as a
short-term investment. The rate disclosed is that in effect
at the end of the reporting period. This rate changes
periodically based on market conditions or a specified
market index.
(7) Effective date represents the date on which both the Fund
and counterparty commence interest payment accruals on each
forward swap contract.
N/R Not rated.
(ETM) Escrowed to maturity.
(IF) Inverse floating rate investment.
(UB) Underlying bond of an inverse floating rate trust reflected
as a financing transaction pursuant to the provisions of
SFAS No. 140.
See accompanying notes to financial statements.
30
NZW
Nuveen Michigan Dividend Advantage Municipal Fund
Portfolio of INVESTMENTS
July 31, 2007
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 6.5% (4.2% OF TOTAL INVESTMENTS)
$ 230 Chandler Park Academy, Michigan, Public School Academy Charter 11/15 at 100.00 BBB- $ 222,647
School Revenue Bonds, Series 2005, 5.125%, 11/01/35
500 Concord Academy, Boyne City, Michigan, Certificates of 11/17 at 100.00 N/R 494,095
Participation, Series 2007, 5.450%, 11/01/22
75 Grand Traverse Academy, Michigan, Public School Academy Revenue 11/17 at 100.00 BBB- 68,996
Bonds, Series 2007, 4.750%, 11/01/32
1,150 Michigan Higher Education Facilities Authority, Limited Obligation 9/11 at 100.00 Aaa 1,181,108
Revenue Refunding Bonds, Kettering University, Series 2001,
5.000%, 9/01/26 - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
1,955 Total Education and Civic Organizations 1,966,846
------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE - 22.3% (14.6% OF TOTAL INVESTMENTS)
500 Allegan Hospital Finance Authority, Michigan, Revenue Bonds, 11/09 at 101.00 N/R 528,215
Allegan General Hospital, Series 1999, 7.000%, 11/15/21
500 Garden City Hsopital Finance Authority, Michigan, Revenue Bonds, 8/17 at 100.00 N/R 456,405
Garden City Hospital Obligated Group, Series 2007A,
5.000%, 8/15/38
600 Michigan Hospital Financing Authority, Revenue Bonds, Oakwood 7/17 at 100.00 A 595,836
Obligated Group, Series 2007A, 5.000%, 7/15/37
700 Michigan State Hospital Finance Authority, Hospital Revenue 1/08 at 100.00 Ba3 703,591
Refunding Bonds, Sinai Hospital, Series 1995, 6.625%, 1/01/16
Michigan State Hospital Finance Authority, Revenue Bonds, Chelsea
Community Hospital, Series 2005:
425 5.000%, 5/15/30 5/15 at 100.00 BBB 418,999
335 5.000%, 5/15/37 5/15 at 100.00 BBB 325,623
400 Michigan State Hospital Finance Authority, Revenue Bonds, 5/15 at 100.00 Baa1 398,764
Marquette General Hospital, Series 2005A, 5.000%, 5/15/26
1,075 Michigan State Hospital Finance Authority, Revenue Bonds, 5/15 at 100.00 AAA 1,106,713
Sparrow Obligated Group, Series 2005, 5.000%, 11/15/36 -
MBIA Insured (UB)
400 Monroe County Hospital Finance Authority, Michigan, Mercy 6/16 at 100.00 BBB- 407,856
Memorial Hospital Corporation Revenue Bonds, Series 2006,
5.375%, 6/01/26
1,800 Royal Oak Hospital Finance Authority, Michigan, Hospital Revenue 11/11 at 100.00 AAA 1,856,592
Bonds, William Beaumont Hospital, Series 2001M,
5.250%, 11/15/31 - MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
6,735 Total Health Care 6,798,594
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 6.4% (4.2% OF TOTAL INVESTMENTS)
1,700 Michigan Housing Development Authority, GNMA Collateralized 8/12 at 102.00 Aaa 1,740,953
Limited Obligation Multifamily Housing Revenue Bonds,
Cranbrook Apartments, Series 2001A, 5.400%, 2/20/31
(Alternative Minimum Tax)
200 Michigan Housing Development Authority, Rental Housing Revenue 7/15 at 100.00 AAA 202,066
Bonds, Series 2006D, 5.125%, 4/01/31 - FSA Insured
(Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
1,900 Total Housing/Multifamily 1,943,019
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 1.5% (1.0% OF TOTAL INVESTMENTS)
460 Michigan Housing Development Authority, Single Family Mortgage 1/11 at 100.00 AAA 469,573
Revenue Bonds, Series 2001, 5.300%, 12/01/16 - MBIA Insured
(Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
31
NZW
Nuveen Michigan Dividend Advantage Municipal Fund (continued)
Portfolio of INVESTMENTS July 31, (2007)
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
INDUSTRIALS - 1.6% (1.0% OF TOTAL INVESTMENTS)
$ 500 Michigan Strategic Fund, Limited Obligation Revenue Bonds, No Opt. Call BBB+ $ 488,480
Republic Services Inc., Series 2001, 4.250%, 8/01/31
(Mandatory put 4/01/14) (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
LONG-TERM CARE - 1.1% (0.7% OF TOTAL INVESTMENTS)
335 Michigan State Hospital Finance Authority, Revenue Bonds, 5/15 at 100.00 N/R 337,208
Presbyterian Villages of Michigan Obligated Group, Series 2005,
5.250%, 11/15/25
------------------------------------------------------------------------------------------------------------------------------------
MATERIALS - 1.6% (1.1% OF TOTAL INVESTMENTS)
500 Dickinson County Economic Development Corporation, Michigan, 11/14 at 100.00 BBB 488,955
Pollution Control Revenue Bonds, International Paper Company,
Series 2004A, 4.800%, 11/01/18
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 43.4% (28.3% OF TOTAL INVESTMENTS)
265 Caledonia Community Schools, Kent County, Michigan, General 5/17 at 100.00 AAA 273,920
Obligation Bonds, Series 2007, Residuals 1018, 6.447%, 5/01/32 -
MBIA Insured (IF)
300 Grand Rapids, Michigan, General Obligation Bonds, Series 2007, 9/17 at 100.00 AAA 314,148
5.000%, 9/01/27 - MBIA Insured
1,500 Huron Valley School District, Oakland and Livingston Counties, 11/11 at 100.00 AA- 1,534,725
Michigan, General Obligation Bonds, Series 2001,
5.000%, 5/01/27
500 Jackson Public Schools, Jackson County, Michigan, General 5/14 at 100.00 AAA 522,970
Obligation School Building and Site Bonds, Series 2004,
5.000%, 5/01/22 - FSA Insured
300 Kalamazoo Public Schools, Michigan, General Obligation Bonds, 5/16 at 100.00 AAA 314,379
Series 2006, 5.000%, 5/01/25 - FSA Insured
250 Marshall Public Schools, Calhoun County, Michigan, General 5/17 at 100.00 AAA 247,590
Obligation Bonds, Series 2007, 4.625%, 5/01/37 - XLCA Insured
400 Michigan Municipal Bond Authority, General Obligation Bonds, 6/15 at 100.00 AAA 419,816
Detroit City School District, Series 2005, 5.000%, 6/01/18 -
FSA Insured
1,150 Muskegon County, Michigan, Limited Tax General Obligation 7/11 at 100.00 AAA 1,179,946
Wastewater Management System 2 Revenue Bonds,
Series 2002, 5.000%, 7/01/26 - FGIC Insured
1,410 New Haven Community Schools, Macomb County, Michigan, 5/16 at 100.00 AAA 1,477,581
General Obligation Bonds, Series 2006, 5.000%, 5/01/25 -
FSA Insured
400 Oakland Intermediate School District, Oakland County, Michigan, 5/17 at 100.00 AAA 416,420
General Obligation Bonds, Series 2007, 5.000%, 5/01/36 -
FSA Insured
1,000 Ottawa County, Michigan, Water Supply System, General Obligation 8/17 at 100.00 Aaa 1,046,880
Bonds, Series 2007, 5.000%, 8/01/30 - MBIA Insured
200 Parchment School District, Kalamazoo County, Michigan, General 5/17 at 100.00 AAA 204,854
Obligation Bonds, Series 2007, Residuals 07-1017,
6.445%, 5/01/36 - FSA Insured (IF)
300 Thornapple Kellogg School District, Barry County, Michigan, 5/17 at 100.00 AAA 313,278
General Obligation Bonds, Series 2007, 5.000%, 5/01/32 -
MBIA Insured
Washtenaw County, Michigan, Limited Tax General Obligation
Bonds, Sylvan Township Water and Wastewater System, Series 2001:
500 5.000%, 5/01/19 - MBIA Insured 5/09 at 100.50 AAA 510,630
800 5.000%, 5/01/20 - MBIA Insured 5/09 at 100.50 AAA 817,008
1,690 Wayne County, Michigan, Limited Tax General Obligation Airport 12/11 at 101.00 AAA 1,744,942
Hotel Revenue Bonds, Detroit Metropolitan Wayne County Airport,
Series 2001A, 5.000%, 12/01/30 - MBIA Insured
500 Wayne Westland Community Schools, Michigan, General Obligation 11/14 at 100.00 AAA 530,265
Bonds, Series 2004, 5.000%, 5/01/17 - FSA Insured
1,300 Willow Run Community Schools, Washtenaw County, Michigan, 5/11 at 100.00 AA- 1,339,520
General Obligation Bonds, Series 2001, 5.000%, 5/01/21
------------------------------------------------------------------------------------------------------------------------------------
12,765 Total Tax Obligation/General 13,208,872
------------------------------------------------------------------------------------------------------------------------------------
32
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 11.3% (7.4% OF TOTAL INVESTMENTS)
$ 1,100 Grand Rapids Building Authority, Kent County, Michigan, Limited 10/11 at 100.00 AAA $ 1,137,180
Tax General Obligation Bonds, Series 2001, 5.125%, 10/01/26 -
MBIA Insured
720 Michigan Building Authority, Revenue Bonds, Series 2006IA, 10/16 at 100.00 AAA 748,217
5.000%, 10/15/36 - FGIC Insured
1,205 Michigan State Building Authority, Revenue Bonds, Facilities 10/11 at 100.00 A+ 1,238,138
Program, Series 2001I, 5.000%, 10/15/24
1,000 Puerto Rico Infrastructure Financing Authority, Special Tax No Opt. Call AAA 304,990
Revenue Bonds, Series 2005A, 0.000%, 7/01/32 - FGIC Insured
------------------------------------------------------------------------------------------------------------------------------------
4,025 Total Tax Obligation/Limited 3,428,525
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 26.8% (17.5% OF TOTAL INVESTMENTS) (4)
1,000 Detroit City School District, Wayne County, Michigan, General 5/13 at 100.00 AAA 1,077,290
Obligation Bonds, Series 2002A, 5.375%, 5/01/24
(Pre-refunded 5/01/13) - FGIC Insured
1,000 Detroit City School District, Wayne County, Michigan, Unlimited 5/12 at 100.00 AAA 1,072,060
Tax School Building and Site Improvement Bonds, Series 2001A,
5.500%, 5/01/21 (Pre-refunded 5/01/12) - FSA Insured
720 Detroit, Michigan, Senior Lien Sewerage Disposal System Revenue 7/13 at 100.00 Aaa 762,833
Bonds, Series 2003A, 5.000%, 7/01/17 (Pre-refunded 7/01/13) -
FSA Insured
1,000 Garden City School District, Wayne County, Michigan, General 5/11 at 100.00 AA- (4) 1,041,690
Obligation Refunding Bonds, Series 2001, 5.000%, 5/01/26
(Pre-refunded 5/01/11)
1,200 Huron School District, Wayne and Monroe Counties, Michigan, 5/11 at 100.00 AAA 1,266,912
General Obligation Bonds, Series 2001, 5.375%, 5/01/26
(Pre-refunded 5/01/11) - FSA Insured
1,000 Kent Hospital Finance Authority, Michigan, Revenue Bonds, 7/11 at 101.00 AA (4) 1,058,850
Spectrum Health, Series 2001A, 5.250%, 1/15/21
(Pre-refunded 7/15/11)
500 Puerto Rico Infrastructure Financing Authority, Special Obligation 10/10 at 101.00 AAA 526,100
Bonds, Series 2000A, 5.500%, 10/01/40 (ETM)
Puerto Rico Public Finance Corporation, Commonwealth
Appropriation Bonds, Series 2002E:
85 6.000%, 8/01/26 (ETM) No Opt. Call BBB- (4) 102,698
615 6.000%, 8/01/26 (ETM) No Opt. Call BBB- (4) 743,049
500 Warren Building Authority, Michigan, Limited Tax General 11/10 at 100.00 AAA 520,500
Obligation Bonds, Series 2001, 5.150%, 11/01/22
(Pre-refunded 11/01/10) - FGIC Insured
------------------------------------------------------------------------------------------------------------------------------------
7,620 Total U.S. Guaranteed 8,171,982
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 15.6% (10.2% OF TOTAL INVESTMENTS)
1,115 Lansing Board of Water and Light, Michigan, Steam and Electric 7/13 at 100.00 AAA 1,162,744
Utility System Revenue Bonds, Series 2003A, 5.000%, 7/01/21 -
FSA Insured
1,235 Michigan Public Power Agency, Revenue Bonds, Combustion 1/12 at 100.00 AAA 1,291,291
Turbine 1 Project, Series 2001A, 5.250%, 1/01/24 -
AMBAC Insured
2,215 Michigan Strategic Fund, Collateralized Limited Obligation 9/11 at 100.00 A3 2,295,248
Pollution Control Revenue Refunding Bonds, Fixed Rate
Conversion, Detroit Edison Company, Series 1999C,
5.650%, 9/01/29 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
4,565 Total Utilities 4,749,283
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 15.0% (9.8% OF TOTAL INVESTMENTS)
1,000 Detroit Water Supply System, Michigan, Water Supply System 7/16 at 100.00 AAA 1,035,980
Revenue Bonds, Series 2006A, 5.000%, 7/01/34 - FSA Insured
1,000 Detroit, Michigan, Senior Lien Sewerage Disposal System Revenue No Opt. Call AAA 1,148,270
Bonds, Series 2001B, 5.500%, 7/01/29 - FGIC Insured
280 Detroit, Michigan, Senior Lien Sewerage Disposal System Revenue 7/13 at 100.00 AAA 294,840
Bonds, Series 2003A, 5.000%, 7/01/17 - FSA Insured
33
NZW
Nuveen Michigan Dividend Advantage Municipal Fund (continued)
Portfolio of INVESTMENTS July 31, (2007)
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER (continued)
$ 1,000 Detroit, Michigan, Senior Lien Water Supply System Revenue 7/11 at 100.00 AAA $ 1,018,990
Bonds, Series 2001A, 5.000%, 7/01/30 - FGIC Insured
1,000 Michigan Municipal Bond Authority, Clean Water Revolving Fund 10/15 at 100.00 AAA 1,060,450
Revenue Bonds, Series 2005, 5.000%, 10/01/19
------------------------------------------------------------------------------------------------------------------------------------
4,280 Total Water and Sewer 4,558,530
------------------------------------------------------------------------------------------------------------------------------------
$ 45,640 Total Investments (cost $45,345,066) - 153.1% 46,609,867
=============-----------------------------------------------------------------------------------------------------------------------
Floating Rate Obligations - (2.3)% (715,000)
--------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 1.8% 544,127
--------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (52.6)% (16,000,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 30,438,994
====================================================================================================================
The Fund may invest in "zero coupon" securities. A zero
coupon security does not pay a regular interest coupon to
its holders during the life of the security. Tax-exempt
income to the holder of the security comes from accretion of
the difference between the original purchase price of the
security at issuance and the par value of the security at
maturity and is effectively paid at maturity. Such
securities are included in the portfolio with a 0.00% coupon
rate in their description. The market prices of zero coupon
securities generally are more volatile than the market
prices of securities that pay interest periodically.
(1) All percentages shown in the Portfolio of Investments are
based on net assets applicable to Common shares unless
otherwise noted.
(2) Optional Call Provisions (not covered by the report of
independent registered public accounting firm): Dates (month
and year) and prices of the earliest optional call or
redemption. There may be other call provisions at varying
prices at later dates. Certain mortgage-backed securities
may be subject to periodic principal paydowns.
(3) Ratings (not covered by the report of independent registered
public accounting firm): Using the higher of Standard &
Poor's or Moody's rating. Ratings below BBB by Standard &
Poor's Group or Baa by Moody's 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.
(IF) Inverse floating rate investment.
(UB) Underlying bond of an inverse floating rate trust reflected
as a financing transaction pursuant to the provisions of
SFAS No. 140.
See accompanying notes to financial statements.
34
NUO
Nuveen Ohio Quality Income Municipal Fund, Inc.
Portfolio of INVESTMENTS
July 31, 2007
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES - 1.7% (1.1% OF TOTAL INVESTMENTS)
$ 2,600 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 5/12 at 100.00 BBB $ 2,634,788
Asset-Backed Refunding Bonds, Series 2002, 5.375%, 5/15/33
------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 17.6% (11.3% OF TOTAL INVESTMENTS)
1,650 Ohio Higher Education Facilities Commission, General Revenue 7/16 at 100.00 A+ 1,685,046
Bonds, Kenyon College, Series 2006, 5.000%, 7/01/41
1,750 Ohio Higher Education Facilities Commission, General Revenue 10/13 at 100.00 AA 1,820,350
Bonds, Oberlin College, Series 2003, 5.125%, 10/01/24
1,000 Ohio Higher Education Facilities Commission, Revenue Bonds, 12/15 at 100.00 Baa2 1,008,750
Wittenberg University, Series 2005, 5.000%, 12/01/29
5,000 Ohio Higher Educational Facilities Commission, General Revenue 12/16 at 100.00 AAA 5,221,450
Bonds, University of Dayton, 2006 Project, Series 2006,
5.000%, 12/01/30 - AMBAC Insured
1,415 Ohio Higher Educational Facilities Commission, Revenue Bonds, 11/14 at 100.00 AA 1,476,496
Denison University, Series 2004, 5.000%, 11/01/21
1,320 Ohio Higher Educational Facilities Commission, Revenue Bonds, 12/14 at 100.00 AAA 1,370,358
University of Dayton, Series 2004, 5.000%, 12/01/25 -
AMBAC Insured
1,000 Ohio Higher Educational Facilities Commission, Revenue Bonds, 12/11 at 100.00 Baa2 1,043,710
Wittenberg University, Series 2001, 5.500%, 12/01/15
1,000 Ohio Higher Educational Facilities Commission, Revenue Bonds, 5/16 at 100.00 Aaa 1,045,710
Xavier University, Series 2006, 5.000%, 5/01/22 - CIFG Insured
1,500 Ohio State Higher Education Facilities, Revenue Bonds, Case 12/16 at 100.00 AAA 1,544,445
Western Reserve University, Series 2006, 5.000%, 12/01/44 -
MBIA Insured
1,200 Ohio State University, General Receipts Bonds, Series 2002A, 12/12 at 100.00 Aa2 1,247,820
5.125%, 12/01/31
3,000 Ohio State University, General Receipts Bonds, Series 2003B, 6/13 at 100.00 AA 3,166,050
5.250%, 6/01/22
1,510 University of Akron, Ohio, General Receipts Bonds, Series 2003A, 1/13 at 100.00 AAA 1,569,781
5.000%, 1/01/21 - AMBAC Insured
850 University of Cincinnati, Ohio, General Receipts Bonds, 6/13 at 100.00 AAA 882,581
Series 2003C, 5.000%, 6/01/22 - FGIC Insured
University of Cincinnati, Ohio, General Receipts Bonds, Series 2004D:
1,200 5.000%, 6/01/19 - AMBAC Insured 6/14 at 100.00 AAA 1,257,900
2,605 5.000%, 6/01/25 - AMBAC Insured 6/14 at 100.00 AAA 2,703,235
------------------------------------------------------------------------------------------------------------------------------------
26,000 Total Education and Civic Organizations 27,043,682
------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE - 20.5% (13.1% OF TOTAL INVESTMENTS)
2,000 Akron, Bath and Copley Joint Township Hospital District, Ohio, 11/09 at 101.00 Baa1 2,025,040
Hospital Facilities Revenue Bonds, Summa Health System,
Series 1998A, 5.375%, 11/15/24
Butler County, Ohio, Hospital Facilities Revenue Bonds, Cincinnati
Children's Medical Center Project, Series 2006K:
5,200 5.000%, 5/15/31 - FGIC Insured (UB) 5/16 at 100.00 AAA 5,379,036
4,140 4.375%, 5/15/32 - FGIC Insured (UB) 5/16 at 100.00 AAA 3,886,880
1,000 Cuyahoga County, Ohio, Hospital Revenue Refunding and 8/07 at 102.00 AAA 1,021,260
Improvement Bonds, MetroHealth System, Series 1997,
5.625%, 2/15/17 - MBIA Insured
2,000 Cuyahoga County, Ohio, Revenue Refunding Bonds, Cleveland 7/13 at 100.00 AA- 2,168,260
Clinic Health System, Series 2003A, 6.000%, 1/01/32
35
NUO
Nuveen Ohio Quality Income Municipal Fund, Inc. (continued)
Portfolio of INVESTMENTS July 31, (2007)
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE (continued)
$ 4,500 Erie County, Ohio, Hospital Facilities Revenue Bonds, Firelands 8/12 at 101.00 A $ 4,690,125
Regional Medical Center, Series 2002A, 5.625%, 8/15/32
2,455 Hamilton County, Ohio, Revenue Bonds, Children's Hospital 5/14 at 100.00 AAA 2,618,871
Medical Center, Series 2004J, 5.250%, 5/15/16 - FGIC Insured
785 Miami County, Ohio, Hospital Facilities Revenue Refunding Bonds, 5/16 at 100.00 A- 813,158
Upper Valley Medical Center Inc., Series 2006, 5.250%, 5/15/21
Montgomery County, Ohio, Revenue Bonds, Catholic Health
Initiatives, Series 2004A:
2,500 5.000%, 5/01/30 5/14 at 100.00 AA 2,519,025
2,500 5.000%, 5/01/32 No Opt. Call AA 2,514,750
830 Richland County, Ohio, Hospital Facilities Revenue Improvement 11/10 at 101.00 A- 881,435
Bonds, MedCentral Health System Obligated Group,
Series 2000B, 6.375%, 11/15/30
1,200 Richland County, Ohio, Hospital Revenue Bonds, MidCentral 11/16 at 100.00 A- 1,222,428
Health System Group, Series 2006, 5.250%, 11/15/36
1,705 Tuscarawas County, Ohio, Hospital Facilities Revenue Bonds, 10/11 at 101.00 AA 1,810,216
Union Hospital Project, Series 2001, 5.750%, 10/01/21 -
RAAI Insured
------------------------------------------------------------------------------------------------------------------------------------
30,815 Total Health Care 31,550,484
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 6.3% (4.1% OF TOTAL INVESTMENTS)
1,385 Clermont County, Ohio, GNMA Collateralized Mortgage Revenue 8/07 at 100.00 Aaa 1,386,163
Bonds, S.E.M. Villa II Project, Series 1994A, 5.950%, 2/20/30
940 Cuyahoga County, Ohio, GNMA Collateralized Multifamily Housing 9/12 at 102.00 Aaa 963,735
Mortgage Revenue Bonds, Livingston Park Apartments Project,
Series 2002A, 5.350%, 9/20/27 (Alternative Minimum Tax)
Cuyahoga County, Ohio, GNMA Collateralized Multifamily Housing
Mortgage Revenue Bonds, Longwood Phase One Associates LP, Series
2001A:
2,475 5.350%, 1/20/21 (Alternative Minimum Tax) 7/11 at 102.00 Aaa 2,528,782
2,250 5.450%, 1/20/31 (Alternative Minimum Tax) 7/11 at 102.00 Aaa 2,303,055
985 Franklin County, Ohio, FHA-Insured Multifamily Housing 1/08 at 100.00 Aa2 986,556
Mortgage Revenue Bonds, Hamilton Creek Apartments
Project, Series 1994A, 5.550%, 7/01/24 (Alternative
Minimum Tax)
Ohio Housing Finance Agency, FHA-Insured Multifamily Housing
Mortgage Revenue Bonds, Madonna Homes, Series 2006M:
800 4.450%, 10/01/09 (Alternative Minimum Tax) No Opt. Call Aaa 799,512
850 4.900%, 6/20/48 (Alternative Minimum Tax) 6/16 at 102.00 AAA 812,872
------------------------------------------------------------------------------------------------------------------------------------
9,685 Total Housing/Multifamily 9,780,675
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 4.1% (2.6% OF TOTAL INVESTMENTS)
1,195 Ohio Housing Finance Agency, GNMA Mortgage-Backed Securities 9/07 at 102.00 Aaa 1,204,500
Program Residential Mortgage Revenue Bonds, Series 1996B-3,
5.750%, 9/01/28 (Alternative Minimum Tax)
1,770 Ohio Housing Finance Agency, GNMA Mortgage-Backed Securities 9/08 at 102.00 Aaa 1,788,904
Program Residential Mortgage Revenue Bonds, Series 1997B,
5.400%, 9/01/29 (Alternative Minimum Tax)
1,240 Ohio Housing Finance Agency, GNMA Mortgage-Backed Securities 3/08 at 101.50 AAA 1,254,905
Program Residential Mortgage Revenue Bonds, Series 1998A-1,
5.300%, 9/01/19 - FSA Insured (Alternative Minimum Tax)
2,000 Ohio Housing Finance Agency, Single Family Mortgage Revenue 9/15 at 100.00 Aaa 1,992,980
Bonds, Series 2006H, 5.000%, 9/01/31 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
6,205 Total Housing/Single Family 6,241,289
------------------------------------------------------------------------------------------------------------------------------------
INDUSTRIALS - 1.4% (0.9% OF TOTAL INVESTMENTS)
530 Cleveland-Cuyahoga County Port Authority, Ohio, Bond Fund 11/14 at 100.00 N/R 546,080
Program Development Revenue Bonds, Myers University,
Series 2004E, 5.600%, 5/15/25
1,500 Dayton, Ohio, Special Facilities Revenue Refunding Bonds, 2/08 at 102.00 AAA 1,539,735
Emery Air Freight Corporation and Emery Worldwide Airlines Inc. -
Guarantors, Series 1998A, 5.625%, 2/01/18
------------------------------------------------------------------------------------------------------------------------------------
2,030 Total Industrials 2,085,815
------------------------------------------------------------------------------------------------------------------------------------
36
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
LONG-TERM CARE - 2.2% (1.4% OF TOTAL INVESTMENTS)
$ 3,440 Hamilton County, Ohio, Health Care Revenue Refunding Bonds, 1/17 at 100.00 BBB $ 3,354,482
Life Enriching Communities Project, Series 2006A,
5.000%, 1/01/37
------------------------------------------------------------------------------------------------------------------------------------
MATERIALS - 1.3% (0.8% OF TOTAL INVESTMENTS)
2,000 Toledo-Lucas County Port Authority, Ohio, Port Revenue Bonds, No Opt. Call A 2,032,140
Cargill Inc., Series 2004B, 4.500%, 12/01/15
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 36.3% (23.3% OF TOTAL INVESTMENTS)
1,000 Ansonia Local School District, Darke County, Ohio, General 12/10 at 102.00 Aaa 1,066,760
Obligation Bonds, Series 2000, 5.500%, 12/01/22 -
MBIA Insured
1,000 Bay Village City School District, Ohio, General Obligation 12/10 at 100.00 Aa2 1,023,960
Unlimited Tax School Improvement Bonds, Series 2001,
5.000%, 12/01/25
Butler County, Ohio, General Obligation Bonds, Series 2002:
1,345 5.000%, 12/01/21 - MBIA Insured 12/12 at 100.00 Aaa 1,406,117
1,200 5.000%, 12/01/22 - MBIA Insured 12/12 at 101.00 Aaa 1,248,300
1,500 Centerville City School District, Montgomery County, Ohio, 6/15 at 100.00 Aaa 1,558,500
General Obligation Bonds, Series 2005, 5.000%, 12/01/30 -
FSA Insured
1,000 Central Ohio Solid Waste Authority, General Obligation Bonds, 6/14 at 100.00 AAA 1,058,420
Series 2004A, 5.000%, 12/01/15 - AMBAC Insured
2,600 Cincinnati City School District, Hamilton County, Ohio, General 12/12 at 100.00 AAA 2,741,154
Obligation Bonds, Series 2002, 5.250%, 6/01/21 - FSA Insured
1,000 Cleveland Municipal School District, Cuyahoga County, Ohio, 6/14 at 100.00 AAA 1,046,430
General Obligation Bonds, Series 2004, 5.000%, 12/01/22 -
FSA Insured
1,200 Cuyahoga County, Ohio, General Obligation Bonds, Series 2004, 12/14 at 100.00 AA+ 1,259,208
5.000%, 12/01/21
1,000 Dayton, Ohio, General Obligation Bonds, Series 2004, 6/14 at 100.00 AAA 1,066,030
5.250%, 12/01/19 - AMBAC Insured
1,000 Dublin City School District, Franklin, Delaware and Union Counties, 12/13 at 100.00 AAA 1,040,250
Ohio, General Obligation Bonds, Series 2003, 5.000%, 12/01/22 -
FSA Insured
1,000 Dublin, Ohio, Unlimited Tax Various Purpose Improvement Bonds, 12/10 at 100.00 Aaa 1,028,500
Series 2000A, 5.000%, 12/01/20
1,195 Fairview Park City School District, Cuyahoga County, Ohio, 6/15 at 100.00 Aaa 1,250,472
General Obligation Bonds, Series 2005, 5.000%, 12/01/24 -
MBIA Insured
1,840 Franklin County, Ohio, General Obligation Bonds, Series 2007, 12/17 at 100.00 AAA 1,936,232
5.000%, 12/01/28
1,300 Franklin County, Ohio, Limited Tax General Obligation Refunding 12/08 at 102.00 AAA 1,350,609
Bonds, Series 1993, 5.375%, 12/01/20
6,650 Hamilton City School District, Ohio, General Obligation Bonds, 6/17 at 100.00 AAA 6,932,958
Series 2007, 5.000%, 12/01/34 - FSA Insured (UB)
125 Hamilton City School District, Ohio, General Obligation Bonds, 6/17 at 100.00 AAA 141,413
Series 2007, Drivers 1766, 7.230%, 12/01/34 - FSA Insured (IF)
1,850 Hilliard School District, Franklin County, Ohio, General Obligation 12/15 at 100.00 AAA 1,932,529
Bonds, School Construction, Series 2005, 5.000%, 12/01/26 -
MBIA Insured
3,000 Hilliard School District, Franklin County, Ohio, General Obligation 12/16 at 100.00 AAA 3,156,330
Bonds, Series 2006A, 5.000%, 12/01/25 - MBIA Insured
1,160 Kenston Local School District, Geauga County, Ohio, General 6/13 at 100.00 Aaa 1,204,463
Obligation Bonds, Series 2003, 5.000%, 12/01/22 -
MBIA Insured
800 Lakewood City School District, Cuyahoga County, Ohio, General 12/17 at 100.00 AAA 843,888
Obligation Bonds, Series 2007, 5.000%, 12/01/25 (WI/DD,
Settling 8/09/07) - FGIC Insured
2,000 Louisville City School District, Ohio, General Obligation Bonds, 12/11 at 100.00 Aaa 2,057,080
Series 2001, 5.000%, 12/01/29 - FGIC Insured
505 Marysville Exempted School District, Union County, Ohio, General 12/15 at 100.00 AAA 528,967
Obligation Bonds, Series 2006, 5.000%, 12/01/25 - FSA Insured
1,515 Massillon City School District, Ohio, General Obligation Bonds, 12/12 at 100.00 Aaa 1,597,249
Series 2003, 5.250%, 12/01/21 - MBIA Insured
37
NUO
Nuveen Ohio Quality Income Municipal Fund, Inc. (continued)
Portfolio of INVESTMENTS July 31, (2007)
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL (continued)
$ 640 New Albany Plain Local School District, Franklin County, Ohio, 6/12 at 100.00 Aaa $ 684,557
General Obligation Bonds, Series 2002, 5.500%, 12/01/17 -
FGIC Insured
1,000 Newark City School District, Licking County, Ohio, General 12/15 at 100.00 AAA 1,042,480
Obligation Bonds, Series 2005, 5.000%, 12/01/28 - FGIC Insured
3,000 Ohio, General Obligation Bonds, Infrastructure Improvements, 2/13 at 100.00 AA+ 3,109,320
Series 2003F, 5.000%, 2/01/23
1,510 Painesville City School District, Ohio, General Obligation Bonds, 12/14 at 100.00 AAA 1,584,503
Series 2004, 5.000%, 12/01/22 - FGIC Insured
1,155 Perry Local School District, Allen County, Ohio, General Obligation 12/11 at 101.00 AAA 1,222,059
Bonds, Series 2001, 5.250%, 12/01/25 - AMBAC Insured
280 Plain Local School District, Franklin and Licking Counties, Ohio, 6/11 at 100.00 Aaa 299,958
General Obligation Bonds, Series 2000, 6.000%, 12/01/20 -
FGIC Insured
1,445 Portage County, Ohio, General Obligation Bonds, Series 2001, 12/11 at 100.00 AAA 1,486,240
5.000%, 12/01/27 - FGIC Insured
2,000 Strongsville, Ohio, General Obligation Bonds, Series 2001, 12/11 at 100.00 Aaa 2,069,480
5.000%, 12/01/21 - FGIC Insured
70 Strongsville, Ohio, Limited Tax General Obligation Various 12/07 at 101.00 Aa1 71,517
Purpose Improvement Bonds, Series 1996, 5.950%, 12/01/21
Warren City School District, Trumbull County, Ohio, General
Obligation Bonds, Series 2004:
2,515 5.000%, 12/01/20 - FGIC Insured 6/14 at 100.00 AAA 2,631,771
1,170 5.000%, 12/01/22 - FGIC Insured 6/14 at 100.00 AAA 1,224,323
1,000 West Chester Township, Butler County, Ohio, General Obligation 12/13 at 100.00 Aaa 1,032,960
Bonds, Series 2003, 5.000%, 12/01/28 - MBIA Insured
1,000 Westlake, Ohio, Various Purpose General Obligation Improvement 12/08 at 101.00 Aaa 1,032,260
and Refunding Bonds, Series 1997, 5.550%, 12/01/17
------------------------------------------------------------------------------------------------------------------------------------
53,570 Total Tax Obligation/General 55,967,247
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 14.2% (9.1% OF TOTAL INVESTMENTS)
1,380 Columbus, Ohio, Tax Increment Financing Bonds, Easton Project, 6/14 at 100.00 AAA 1,427,914
Series 2004A, 5.000%, 12/01/25 - AMBAC Insured
3,000 Franklin County, Ohio, Excise Tax and Lease Revenue Anticipation 12/15 at 100.00 AAA 3,114,720
Bonds, Convention Facilities Authority, Series 2005,
5.000%, 12/01/27 - AMBAC Insured
Hamilton County Convention Facilities Authority, Ohio, First Lien
Revenue Bonds, Series 2004:
1,085 5.000%, 12/01/18 - FGIC Insured 6/14 at 100.00 AAA 1,138,404
2,600 5.000%, 12/01/33 - FGIC Insured 6/14 at 100.00 AAA 2,677,896
4,600 Hamilton County, Ohio, Sales Tax Bonds, Subordinate Series 2006, 12/16 at 100.00 Aaa 4,793,016
5.000%, 12/01/32 - AMBAC Insured
1,000 Hudson City School District, Ohio, Certificates of Participation, 6/14 at 100.00 Aaa 1,031,150
Series 2004, 5.000%, 6/01/26 - MBIA Insured
New Albany Community Authority, Ohio, Community Facilities
Revenue Refunding Bonds, Series 2001B:
1,000 5.500%, 10/01/15 - AMBAC Insured 4/12 at 100.00 AAA 1,066,640
1,000 5.500%, 10/01/17 - AMBAC Insured 4/12 at 100.00 AAA 1,062,700
800 Ohio State Building Authority, State Facilities Bonds, 4/15 at 100.00 AAA 834,344
Administrative Building Fund Projects, Series 2005A,
5.000%, 4/01/25 - FSA Insured
2,645 Ohio State Building Authority, State Facilities Bonds, Adult 4/14 at 100.00 AAA 2,843,058
Correctional Building Fund Project, Series 2004A,
5.250%, 4/01/15 - MBIA Insured
1,000 Ohio, State Appropriation Lease Bonds, Mental Health Capital 6/13 at 100.00 AA 1,052,900
Facilities, Series 2003B-II, 5.000%, 6/01/16
3,430 Puerto Rico Infrastructure Financing Authority, Special Tax Revenue No Opt. Call AAA 898,146
Bonds, Series 2005A, 0.000%, 7/01/35 - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
23,540 Total Tax Obligation/Limited 21,940,888
------------------------------------------------------------------------------------------------------------------------------------
38
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 4.1% (2.7% OF TOTAL INVESTMENTS)
$ 3,000 Dayton, Ohio, Airport Revenue Bonds, James M. Cox International 12/13 at 100.00 AA $ 3,079,350
Airport, Series 2003C, 5.250%, 12/01/23 - RAAI Insured
(Alternative Minimum Tax)
1,000 Dayton, Ohio, Airport Revenue Bonds, James M. Cox International No Opt. Call AAA 1,062,110
Airport, Series 2005B, 5.000%, 12/01/14 - XLCA Insured
2,000 Ohio Turnpike Commission, Revenue Refunding Bonds, No Opt. Call AAA 2,233,080
Series 1998A, 5.500%, 2/15/18 - FGIC Insured
------------------------------------------------------------------------------------------------------------------------------------
6,000 Total Transportation 6,374,540
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 35.4% (22.7% OF TOTAL INVESTMENTS) (4)
Butler County, Ohio, General Obligation Judgment Bonds, Series 2002:
2,030 5.250%, 12/01/21 (Pre-refunded 12/01/12) 12/12 at 101.00 Aa3 (4) 2,184,848
2,140 5.250%, 12/01/22 (Pre-refunded 12/01/12) 12/12 at 101.00 Aa3 (4) 2,303,239
Cincinnati, Ohio, Water System Revenue Bonds, Series 2001:
3,510 5.000%, 12/01/18 (Pre-refunded 6/01/11) 6/11 at 100.00 AA+ (4) 3,654,296
3,000 5.000%, 12/01/19 (Pre-refunded 6/01/11) 6/11 at 100.00 AA+ (4) 3,123,330
1,000 5.000%, 12/01/20 (Pre-refunded 6/01/11) 6/11 at 100.00 AA+ (4) 1,041,110
420 Cleveland, Ohio, Waterworks Revenue Refunding and Improvement 1/08 at 101.00 AAA 426,359
Bonds, Series 1998I, 5.000%, 1/01/28 (Pre-refunded 1/01/08) -
FSA Insured
1,210 Columbus, Ohio, Tax Increment Financing Bonds, Easton Project, 6/09 at 101.00 AAA 1,245,320
Series 1999, 4.875%, 12/01/24 (Pre-refunded 6/01/09) -
AMBAC Insured
800 Franklin County, Ohio, First Mortgage Revenue, OCLC Inc. Project, 12/07 at 100.00 AAA 822,344
Series 1979, 7.500%, 6/01/09 (ETM)
2,000 Garfield Heights City School District, Cuyahoga County, Ohio, 12/11 at 100.00 Aaa 2,095,340
General Obligation School Improvement Bonds, Series 2001,
5.000%, 12/15/26 (Pre-refunded 12/15/11) - MBIA Insured
1,000 Hamilton County, Ohio, Healthcare Facilities Improvement Revenue 10/08 at 101.00 BBB (4) 1,031,950
Bonds, Twin Towers, Series 1999A, 5.800%, 10/01/23
(Pre-refunded 10/01/08)
2,110 Hamilton County, Ohio, Sewer System Revenue and Improvement 6/10 at 101.00 AAA 2,239,427
Bonds, Metropolitan Sewer District of Greater Cincinnati,
Series 2000A, 5.750%, 12/01/25 (Pre-refunded 6/01/10) -
MBIA Insured
1,000 Hilliard School District, Ohio, General Obligation School 12/10 at 101.00 AAA 1,069,440
Improvement Bonds, Series 2000, 5.750%, 12/01/24
(Pre-refunded 12/01/10) - FGIC Insured
2,000 Lakota Local School District, Butler County, Ohio, Unlimited Tax 6/11 at 100.00 Aaa 2,093,960
General Obligation School Improvement and Refunding Bonds,
Series 2001, 5.125%, 12/01/26 (Pre-refunded 6/01/11) -
FGIC Insured
760 Middletown City School District, Butler County, Ohio, General 12/13 at 100.00 Aaa 808,009
Obligation Bonds, Series 2004, 5.000%, 12/01/25
(Pre-refunded 12/01/13) - FGIC Insured
3,000 Montgomery County, Ohio, Hospital Facilities Revenue Bonds, 4/10 at 101.00 A (4) 3,245,790
Kettering Medical Center, Series 1999, 6.750%, 4/01/18
(Pre-refunded 4/01/10)
1,260 Morgan Local School District, Morgan, Muskingum and Washington 12/10 at 101.00 AA (4) 1,349,536
Counties, Ohio, Unlimited Tax General Obligation School
Improvement Bonds, Series 2000, 5.750%, 12/01/22
(Pre-refunded 12/01/10)
460 New Albany Plain Local School District, Franklin County, Ohio, 6/12 at 100.00 Aaa 493,681
General Obligation Bonds, Series 2002, 5.500%, 12/01/17
(Pre-refunded 6/01/12) - FGIC Insured
4,315 Ohio Capital Corporation for Housing, FHA-Insured Section 8 2/09 at 102.00 N/R (4) 4,530,275
Assisted Mortgage Loan Revenue Refunding Bonds,
Series 1999G, 5.950%, 2/01/24 (Pre-refunded 2/01/09)
Olentangy Local School District, Delaware and Franklin Counties,
Ohio, General Obligation Bonds, Series 2004A:
1,315 5.250%, 12/01/23 (Pre-refunded 6/01/14) - FGIC Insured 6/14 at 100.00 AAA 1,421,752
3,380 5.250%, 12/01/24 (Pre-refunded 6/01/14) - FGIC Insured 6/14 at 100.00 AAA 3,654,388
6,000 Parma Community General Hospital Association, Ohio, Hospital 11/08 at 101.00 N/R (4) 6,172,500
Revenue Refunding and Improvement Bonds, Series 1998,
5.375%, 11/01/29 (Pre-refunded 11/01/08)
1,000 Princeton City School District, Butler County, Ohio, General 12/13 at 100.00 AAA 1,063,170
Obligation Bonds, Series 2003, 5.000%, 12/01/30
(Pre-refunded 12/01/13) - MBIA Insured
39
NUO
Nuveen Ohio Quality Income Municipal Fund, Inc. (continued)
Portfolio of INVESTMENTS July 31, (2007)
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED (4) (continued)
$ 1,670 Richland County, Ohio, Hospital Facilities Revenue Improvement 11/10 at 101.00 A- (4) $ 1,812,902
Bonds, MedCentral Health System Obligated Group, Series 2000B,
6.375%, 11/15/30 (Pre-refunded 11/15/10)
2,830 Springfield Township, Hamilton County, Ohio, Various Purpose 12/11 at 100.00 Aa3 (4) 2,991,791
Limited Tax General Obligation Bonds, Series 2002,
5.250%, 12/01/27 (Pre-refunded 12/01/11)
1,500 Steubenville, Ohio, Hospital Facilities Revenue Refunding and 10/10 at 100.00 A3 (4) 1,612,500
Improvement Bonds, Trinity Health System, Series 2000,
6.375%, 10/01/20 (Pre-refunded 10/01/10)
2,000 Westerville City School District, Franklin and Delaware Counties, 6/11 at 100.00 AAA 2,085,120
Ohio, Various Purpose General Obligation Bonds, Series 2001,
5.000%, 12/01/27 (Pre-refunded 6/01/11) - MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
51,710 Total U.S. Guaranteed 54,572,377
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 7.3% (4.7% OF TOTAL INVESTMENTS)
4,000 American Municipal Power Ohio Inc., Wadsworth, Electric System 2/12 at 100.00 Aaa 4,129,240
Improvement Revenue Bonds, Series 2002, 5.000%, 2/15/22 -
MBIA Insured
3,000 Ohio Air Quality Development Authority, Revenue Bonds, 10/07 at 102.00 Aaa 3,063,030
JMG Funding Limited Partnership Project, Series 1997,
5.625%, 1/01/23 - AMBAC Insured (Alternative Minimum Tax)
800 Ohio Municipal Electric Generation Agency, Beneficial Interest No Opt. Call AAA 289,216
Certificates, Belleville Hydroelectric Project - Joint Venture 5,
Series 2001, 0.000%, 2/15/29 - MBIA Insured
2,000 Ohio Municipal Electric Generation Agency, Beneficial Interest 2/14 at 100.00 AAA 2,083,080
Certificates, Belleville Hydroelectric Project - Joint Venture 5,
Series 2004, 5.000%, 2/15/20 - AMBAC Insured
1,600 Ohio Water Development Authority, Solid Waste Disposal Revenue 9/08 at 102.00 N/R 1,618,752
Bonds, Bay Shore Power, Series 1998A, 5.875%, 9/01/20
(Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
11,400 Total Utilities 11,183,318
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 3.0% (2.0% OF TOTAL INVESTMENTS)
1,000 Cleveland, Ohio, Waterworks First Mortgage Revenue Refunding No Opt. Call AAA 1,119,710
and Improvement Bonds, Series 1993G, 5.500%, 1/01/21 -
MBIA Insured
40 Cleveland, Ohio, Waterworks First Mortgage Revenue Refunding 1/08 at 100.00 AAA 40,295
and Improvement Bonds, Series 1996H, 5.750%, 1/01/26 -
MBIA Insured
580 Cleveland, Ohio, Waterworks Revenue Refunding and Improvement 1/08 at 101.00 AAA 587,702
Bonds, Series 1998I, 5.000%, 1/01/28 - FSA Insured
1,220 Hamilton, Ohio, Wastewater System Revenue Bonds, Series 2005, 10/15 at 100.00 Aaa 1,311,207
5.250%, 10/01/22 - FSA Insured
1,500 Ohio Water Development Authority, Water Pollution Control Loan 6/15 at 100.00 AAA 1,573,695
Fund Revenue Bonds, Water Quality Project, Series 2005B,
5.000%, 6/01/25
------------------------------------------------------------------------------------------------------------------------------------
4,340 Total Water and Sewer 4,632,609
------------------------------------------------------------------------------------------------------------------------------------
$ 233,335 Total Long-Term Investments (cost $233,545,636) - 155.4% 239,394,334
=============-----------------------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS - 0.5% (0.2% OF TOTAL INVESTMENTS)
$ 800 Puerto Rico Government Development Bank, Adjustable Refunding VMIG-1 800,000
Bonds, Variable Rate Demand Obligations, Series 1985,
3.490%, 12/01/15 - MBIA Insured (5)
=============-----------------------------------------------------------------------------------------------------------------------
Total Short-Term Investments (cost $800,000) 800,000
--------------------------------------------------------------------------------------------------------------------
Total Investments (cost $234,345,636) - 155.9% 240,194,334
--------------------------------------------------------------------------------------------------------------------
Floating Rate Obligations - (6.9)% (10,670,000)
--------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 1.0% 1,527,993
--------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (50.0)% (77,000,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 154,052,327
====================================================================================================================
40
FORWARD SWAPS OUTSTANDING AT JULY 31, 2007:
FUND FIXED RATE UNREALIZED
NOTIONAL PAY/RECEIVE FLOATING RATE FIXED RATE PAYMENT EFFECTIVE TERMINATION APPRECIATION
COUNTERPARTY AMOUNT FLOATING RATE INDEX (ANNUALIZED) FREQUENCY DATE (6) DATE (DEPRECIATION)
------------------------------------------------------------------------------------------------------------------------------------
Morgan Stanley $2,500,000 Pay 3-Month USD-LIBOR 5.227% Semi-Annually 2/21/08 2/21/30 $(141,307)
====================================================================================================================================
USD-LIBOR (United States Dollar-London Inter-Bank Offered Rate)
The Fund may invest in "zero coupon" securities. A zero
coupon security does not pay a regular interest coupon to
its holders during the life of the security. Tax-exempt
income to the holder of the security comes from accretion of
the difference between the original purchase price of the
security at issuance and the par value of the security at
maturity and is effectively paid at maturity. Such
securities are included in the portfolio with a 0.00% coupon
rate in their description. The market prices of zero coupon
securities generally are more volatile than the market
prices of securities that pay interest periodically.
(1) All percentages shown in the Portfolio of Investments are
based on net assets applicable to Common shares unless
otherwise noted.
(2) Optional Call Provisions (not covered by the report of
independent registered public accounting firm): Dates (month
and year) and prices of the earliest optional call or
redemption. There may be other call provisions at varying
prices at later dates. Certain mortgage-backed securities
may be subject to periodic principal paydowns.
(3) Ratings (not covered by the report of independent registered
public accounting firm): Using the higher of Standard &
Poor's or Moody's rating. Ratings below BBB by Standard &
Poor's Group or Baa by Moody's 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.
(5) Investment has a maturity of more than one year, but has
variable rate and demand features which qualify it as a
short-term investment. The rate disclosed is that in effect
at the end of the reporting period. This rate changes
periodically based on market conditions or a specified
market index.
(6) Effective date represents the date on which both the Fund
and counterparty commence interest payment accruals on each
forward swap contract.
N/R Not rated.
WI/DD Purchased on a when-issued or delayed delivery basis.
(ETM) Escrowed to maturity.
(IF) Inverse floating rate investment.
(UB) Underlying bond of an inverse floating rate trust reflected
as a financing transaction pursuant to SFAS No. 140.
See accompanying notes to financial statements.
41
NXI
Nuveen Ohio Dividend Advantage Municipal Fund
Portfolio of INVESTMENTS
July 31, 2007
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES - 1.7% (1.1% OF TOTAL INVESTMENTS)
$ 1,035 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 5/12 at 100.00 BBB $ 1,048,848
Asset-Backed Refunding Bonds, Series 2002, 5.375%, 5/15/33
------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 15.2% (9.8% OF TOTAL INVESTMENTS)
1,165 Cleveland-Cuyahoga County Port Authority, Ohio, Lease Revenue 8/15 at 100.00 AAA 1,210,517
Bonds, Euclid Avenue Housing Corporation - Fenn Tower Project,
Series 2005, 5.000%, 8/01/23 - AMBAC Insured
700 Ohio Higher Education Facilities Commission, General Revenue 7/16 at 100.00 A+ 714,868
Bonds, Kenyon College, Series 2006, 5.000%, 7/01/41
2,650 Ohio Higher Education Facilities Commission, Revenue Bonds, 5/12 at 100.00 A2 2,719,033
Ohio Northern University, Series 2002, 5.000%, 5/01/22
500 Ohio Higher Education Facilities Commission, Revenue Bonds, 12/15 at 100.00 Baa2 506,770
Wittenberg University, Series 2005, 5.000%, 12/01/24
2,000 Ohio Higher Educational Facilities Commission, General Revenue 12/16 at 100.00 AAA 2,088,580
Bonds, University of Dayton, 2006 Project, Series 2006,
5.000%, 12/01/30 - AMBAC Insured
500 Ohio Higher Educational Facilities Commission, Revenue Bonds, 5/16 at 100.00 Aaa 522,855
Xavier University, Series 2006, 5.000%, 5/01/22 - CIFG Insured
1,760 Ohio University at Athens, Subordinate Lien General Receipts 6/14 at 100.00 AAA 1,841,717
Bonds, Series 2004, 5.000%, 12/01/20 - MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
9,275 Total Education and Civic Organizations 9,604,340
------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE - 14.6% (9.3% OF TOTAL INVESTMENTS)
Butler County, Ohio, Hospital Facilities Revenue Bonds, Cincinnati
Children's Medical Center Project, Series 2006K:
2,100 4.375%, 5/15/32 - FGIC Insured (UB) 5/16 at 100.00 AAA 2,172,303
1,690 5.000%, 5/15/31 - FGIC Insured (UB) 5/16 at 100.00 AAA 1,586,673
1,100 Cuyahoga County, Ohio, Revenue Refunding Bonds, Cleveland 7/13 at 100.00 AA- 1,192,543
Clinic Health System, Series 2003A, 6.000%, 1/01/32
1,950 Lucas County, Ohio, Hospital Revenue Bonds, ProMedica 11/09 at 101.00 AAA 2,018,406
Healthcare Obligated Group, Series 1999, 5.375%, 11/15/29 -
AMBAC Insured
330 Miami County, Ohio, Hospital Facilities Revenue Refunding Bonds, 5/16 at 100.00 A- 341,837
Upper Valley Medical Center Inc., Series 2006, 5.250%, 5/15/21
1,000 Montgomery County, Ohio, Revenue Bonds, Catholic Health 5/14 at 100.00 AA 1,007,610
Initiatives, Series 2004A, 5.000%, 5/01/30
335 Richland County, Ohio, Hospital Facilities Revenue Improvement 11/10 at 101.00 A- 355,760
Bonds, MedCentral Health System Obligated Group, Series 2000B,
6.375%, 11/15/30
500 Richland County, Ohio, Hospital Revenue Bonds, MidCentral Health 11/16 at 100.00 A- 509,345
System Group, Series 2006, 5.250%, 11/15/36
------------------------------------------------------------------------------------------------------------------------------------
9,005 Total Health Care 9,184,477
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 5.7% (3.7% OF TOTAL INVESTMENTS)
2,885 Ohio Housing Finance Agency, FHA-Insured Mortgage Revenue 4/11 at 102.00 Aa2 2,990,327
Bonds, Asbury Woods Project, Series 2001A, 5.450%, 4/01/26
42
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY (continued)
Ohio Housing Finance Agency, FHA-Insured Multifamily Housing
Mortgage Revenue Bonds, Madonna
Homes, Series 2006M:
$ 310 4.450%, 10/01/09 (Alternative Minimum Tax) No Opt. Call Aaa $ 309,811
340 4.900%, 6/20/48 (Alternative Minimum Tax) 6/16 at 102.00 AAA 325,149
------------------------------------------------------------------------------------------------------------------------------------
3,535 Total Housing/Multifamily 3,625,287
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 3.0% (1.9% OF TOTAL INVESTMENTS)
380 Ohio Housing Finance Agency, GNMA Mortgage-Backed Securities 8/10 at 100.00 Aaa 391,617
Program Residential Mortgage Revenue Bonds, Series 2000C,
6.050%, 3/01/32 (Alternative Minimum Tax)
915 Ohio Housing Finance Agency, GNMA Mortgage-Backed Securities 8/10 at 100.00 Aaa 946,668
Program Residential Mortgage Revenue Bonds, Series 2000D,
5.450%, 9/01/31 (Alternative Minimum Tax)
45 Ohio Housing Finance Agency, GNMA Mortgage-Backed Securities 8/10 at 100.00 Aaa 45,072
Program Residential Mortgage Revenue Bonds, Series 2000F,
5.625%, 9/01/16
500 Ohio Housing Finance Agency, Single Family Mortgage Revenue 9/15 at 100.00 Aaa 498,245
Bonds, Series 2006H, 5.000%, 9/01/31 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
1,840 Total Housing/Single Family 1,881,602
------------------------------------------------------------------------------------------------------------------------------------
INDUSTRIALS - 4.9% (3.2% OF TOTAL INVESTMENTS)
390 Cleveland-Cuyahoga County Port Authority, Ohio, Development 11/15 at 100.00 N/R 389,423
Revenue Bonds, Bond Fund Program - Columbia National Group
Project, Series 2005D, 5.000%, 5/15/20 (Alternative Minimum Tax)
880 Ohio State Water Development Authority, Solid Waste Revenue 7/12 at 100.00 B+ 875,160
Bonds, Allied Waste Industries, Inc., Series 2007A,
5.150%, 7/15/15 (Alternative Minimum Tax)
1,000 Toledo-Lucas County Port Authority, Ohio, Revenue Refunding No Opt. Call Baa2 1,140,120
Bonds, CSX Transportation Inc., Series 1992, 6.450%, 12/15/21
700 Western Reserve Port Authority, Ohio, Solid Waste Facility Revenue 7/17 at 102.00 N/R 700,126
Bonds, Central Waste Inc., Series 2007A, 6.350%, 7/01/27
(Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
2,970 Total Industrials 3,104,829
------------------------------------------------------------------------------------------------------------------------------------
LONG-TERM CARE - 2.3% (1.5% OF TOTAL INVESTMENTS)
1,495 Hamilton County, Ohio, Health Care Revenue Refunding Bonds, 1/17 at 100.00 BBB 1,457,834
Life Enriching Communities Project, Series 2006A,
5.000%, 1/01/37
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 25.6% (16.4% OF TOTAL INVESTMENTS)
1,000 Bay Village City School District, Ohio, General Obligation Unlimited 12/10 at 100.00 Aa2 1,023,960
Tax School Improvement Bonds, Series 2001, 5.000%, 12/01/25
1,500 Centerville City School District, Montgomery County, Ohio, 6/15 at 100.00 Aaa 1,558,500
General Obligation Bonds, Series 2005, 5.000%, 12/01/30 -
FSA Insured
500 Cuyahoga County, Ohio, General Obligation Bonds, Series 2004, 12/14 at 100.00 AA+ 524,670
5.000%, 12/01/21
1,355 Franklin County, Ohio, General Obligation Bonds, Series 2007, 12/17 at 100.00 AAA 1,427,018
5.000%, 12/01/27
2,550 Hamilton City School District, Ohio, General Obligation Bonds, 6/17 at 100.00 AAA 2,658,503
Series 2007, 5.000%, 12/01/34 - FSA Insured (UB)
430 Lakewood City School District, Cuyahoga County, Ohio, General 12/17 at 100.00 AAA 450,666
Obligation Bonds, Series 2007, 5.000%, 12/01/30 (WI/DD,
Settling 8/09/07) - FGIC Insured
1,005 Marysville Exempted School District, Union County, Ohio, General 12/15 at 100.00 AAA 1,052,697
Obligation Bonds, Series 2006, 5.000%, 12/01/25 - FSA Insured
2,000 Ohio, General Obligation Higher Education Capital Facilities Bonds, 2/11 at 100.00 AA+ 2,057,160
Series 2001A, 5.000%, 2/01/20
1,275 Sycamore Community School District, Hamilton County, Ohio, 12/09 at 101.00 AAA 1,308,737
Unlimited Tax General Obligation School Improvement Bonds,
Series 1999, 5.000%, 12/01/23 - MBIA Insured
2,415 Troy City School District, Miami County, Ohio, General Obligation 12/14 at 100.00 Aaa 2,507,132
Bonds, Series 2005, 5.000%, 12/01/28 - FSA Insured
43
NXI
Nuveen Ohio Dividend Advantage Municipal Fund (continued)
Portfolio of INVESTMENTS July 31, (2007)
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL (continued)
$ 1,485 West Chester Township, Butler County, Ohio, Various Purpose 11/11 at 101.00 Aaa $ 1,591,668
Limited Tax General Obligation Refunding Bonds, Series 2001,
5.500%, 12/01/17 - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
15,515 Total Tax Obligation/General 16,160,711
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 15.8% (10.2% OF TOTAL INVESTMENTS)
2,000 Franklin County, Ohio, Excise Tax and Lease Revenue Anticipation 12/15 at 100.00 AAA 2,076,480
Bonds, Convention Facilities Authority, Series 2005,
5.000%, 12/01/27 - AMBAC Insured
Hamilton County Convention Facilities Authority, Ohio, First Lien
Revenue Bonds, Series 2004:
1,415 5.000%, 12/01/21 - FGIC Insured 6/14 at 100.00 AAA 1,476,001
1,000 5.000%, 12/01/33 - FGIC Insured 6/14 at 100.00 AAA 1,029,960
2,000 Hamilton County, Ohio, Sales Tax Bonds, Subordinate Series 2006, 12/16 at 100.00 Aaa 2,083,920
5.000%, 12/01/32 - AMBAC Insured
345 Ohio State Building Authority, State Facilities Bonds, 4/15 at 100.00 AAA 359,811
Administrative Building Fund Projects, Series 2005A,
5.000%, 4/01/25 - FSA Insured
1,000 Ohio State Building Authority, State Facilities Bonds, Adult 4/15 at 100.00 AAA 1,046,250
Correctional Building Fund Project, Series 2005A,
5.000%, 4/01/23 - FSA Insured
950 Puerto Rico Infrastructure Financing Authority, Special Tax Revenue No Opt. Call AAA 248,758
Bonds, Series 2005A, 0.000%, 7/01/35 - AMBAC Insured
400 Puerto Rico Infrastructure Financing Authority, Special Tax No Opt. Call AAA 150,204
Revenue Bonds, Series 2005C, 0.000%, 7/01/28 -
AMBAC Insured
1,400 Virgin Islands Public Finance Authority, Gross Receipts Taxes Loan 10/10 at 101.00 BBB+ 1,504,818
Note, Series 1999A, 6.375%, 10/01/19
------------------------------------------------------------------------------------------------------------------------------------
10,510 Total Tax Obligation/Limited 9,976,202
------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 3.3% (2.1% OF TOTAL INVESTMENTS)
2,000 Ohio Turnpike Commission, Revenue Bonds, Series 2001A, 2/11 at 100.00 AA 2,090,660
5.500%, 2/15/26
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 50.7% (32.6% OF TOTAL INVESTMENTS) (4)
1,700 Cincinnati, Ohio, Water System Revenue Bonds, Series 2001, 6/11 at 100.00 AA+ (4) 1,777,401
5.125%, 12/01/21 (Pre-refunded 6/01/11)
1,000 Columbus City School District, Franklin County, Ohio, General 12/14 at 100.00 AAA 1,101,610
Obligation Bonds, Series 2004, 5.500%, 12/01/15
(Pre-refunded 12/01/14) - FSA Insured
1,000 Franklin County, Ohio, Healthcare Facilities Revenue Bonds, 7/11 at 101.00 N/R (4) 1,121,540
Ohio Presbyterian Retirement Services, Series 2001A,
7.125%, 7/01/29 (Pre-refunded 7/01/11)
1,965 Franklin County, Worthington, Ohio, Various Purpose Unlimited Tax 12/11 at 100.00 AA (4) 2,087,066
General Obligation Bonds, Series 2001, 5.375%, 12/01/21
(Pre-refunded 12/01/11)
1,470 Hamilton County, Ohio, Healthcare Facilities Improvement Revenue 10/08 at 101.00 BBB (4) 1,516,129
Bonds, Twin Towers, Series 1999A, 5.750%, 10/01/19
(Pre-refunded 10/01/08)
1,000 Lakewood City School District, Cuyahoga County, Ohio, General 12/14 at 100.00 AAA 1,085,790
Obligation Bonds, Series 2004, 5.250%, 12/01/16
(Pre-refunded 12/01/14) - FSA Insured
2,000 Lakota Local School District, Butler County, Ohio, Unlimited Tax 6/11 at 100.00 Aaa 2,093,960
General Obligation School Improvement and Refunding Bonds,
Series 2001, 5.125%, 12/01/26 (Pre-refunded 6/01/11) -
FGIC Insured
910 Lebanon, Ohio, Electric System Mortgage Revenue Bonds, 12/10 at 101.00 AAA 966,129
Series 2001, 5.500%, 12/01/18 (Pre-refunded 12/01/10) -
AMBAC Insured
44
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED (4) (continued)
$ 1,000 Medina City School District, Medina County, Ohio, Unlimited Tax 12/09 at 100.00 AAA $ 1,033,050
General Obligation School Building Construction Bonds,
Series 1999, 5.250%, 12/01/28 (Pre-refunded 12/01/09) -
FGIC Insured
1,000 Middletown City School District, Butler County, Ohio, General 12/13 at 100.00 Aaa 1,063,170
Obligation Bonds, Series 2004, 5.000%, 12/01/25
(Pre-refunded 12/01/13) - FGIC Insured
1,000 Nordonia Hills City School District, Ohio, School Improvement 12/10 at 101.00 AAA 1,060,130
Bonds, Series 2000, 5.450%, 12/01/25 (Pre-refunded 12/01/10) -
AMBAC Insured
2,000 Ohio Higher Educational Facilities Commission, Revenue Bonds, 11/11 at 101.00 AA (4) 2,125,460
Denison University, Series 2001, 5.200%, 11/01/26
(Pre-refunded 11/01/11)
1,000 Ohio Higher Educational Facilities Commission, Revenue Bonds, 12/10 at 101.00 AAA 1,061,680
University of Dayton, Series 2000, 5.500%, 12/01/25
(Pre-refunded 12/01/10) - AMBAC Insured
1,900 Olentangy Local School District, Delaware and Franklin Counties, 6/14 at 100.00 AAA 2,054,242
Ohio, General Obligation Bonds, Series 2004A, 5.250%, 12/01/23
(Pre-refunded 6/01/14) - FGIC Insured
Parma Community General Hospital Association, Ohio, Hospital
Revenue Refunding and Improvement Bonds, Series 1998:
2,250 5.250%, 11/01/13 (Pre-refunded 11/01/08) 11/08 at 101.00 A- (4) 2,311,290
2,000 5.375%, 11/01/29 (Pre-refunded 11/01/08) 11/08 at 101.00 N/R (4) 2,057,500
2,000 Puerto Rico Municipal Finance Agency, Series 1999A, 8/09 at 101.00 AAA 2,108,540
6.000%, 8/01/16 (Pre-refunded 8/01/09) - FSA Insured
665 Richland County, Ohio, Hospital Facilities Revenue Improvement 11/10 at 101.00 A- (4) 721,904
Bonds, MedCentral Health System Obligated Group,
Series 2000B, 6.375%, 11/15/30 (Pre-refunded 11/15/10)
1,250 Swanton Local School District, Fulton County, Ohio, General 12/11 at 101.00 AAA 1,332,088
Obligation Bonds, Series 2001, 5.250%, 12/01/25
(Pre-refunded 12/01/11) - FGIC Insured
2,735 University of Cincinnati, Ohio, General Receipts Bonds, 6/12 at 100.00 A+ (4) 2,915,346
Series 2002F, 5.375%, 6/01/19 (Pre-refunded 6/01/12)
400 Westerville City School District, Franklin and Delaware Counties, 6/11 at 100.00 AAA 417,024
Ohio, Various Purpose General Obligation Bonds, Series 2001,
5.000%, 12/01/27 (Pre-refunded 6/01/11) - MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
30,245 Total U.S. Guaranteed 32,011,049
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 8.9% (5.7% OF TOTAL INVESTMENTS)
1,440 American Municipal Power Ohio Inc., Wadsworth, Electric 2/12 at 100.00 Aaa 1,512,130
System Improvement Revenue Bonds, Series 2002,
5.250%, 2/15/17 - MBIA Insured
2,000 Ohio Air Quality Development Authority, Revenue Refunding 5/09 at 101.00 AAA 2,051,220
Bonds, Ohio Power Company Project, Series 1999C,
5.150%, 5/01/26 - AMBAC Insured
1,000 Ohio Municipal Electric Generation Agency, Beneficial Interest 2/14 at 100.00 AAA 1,040,380
Certificates, Belleville Hydroelectric Project - Joint Venture 5,
Series 2004, 5.000%, 2/15/21 - AMBAC Insured
1,000 Ohio Water Development Authority, Solid Waste Disposal Revenue 9/08 at 102.00 N/R 1,011,720
Bonds, Bay Shore Power, Series 1998A, 5.875%, 9/01/20
(Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
5,440 Total Utilities 5,615,450
------------------------------------------------------------------------------------------------------------------------------------
45
NXI
Nuveen Ohio Dividend Advantage Municipal Fund (continued)
Portfolio of INVESTMENTS July 31, (2007)
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 3.9% (2.5% OF TOTAL INVESTMENTS)
$ 2,375 Ohio Water Development Authority, Revenue Bonds, Water 12/13 at 100.00 Aaa $ 2,469,121
Development Community Assistance Program, Series 2003,
5.000%, 12/01/23 - MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
$ 95,240 Total Investments (cost $95,591,814) - 155.6% 98,230,410
=============-----------------------------------------------------------------------------------------------------------------------
Floating Rate Obligations - (6.7)% (4,220,000)
--------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 0.2% 103,460
--------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (49.1)% (31,000,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 63,113,870
====================================================================================================================
FORWARD SWAPS OUTSTANDING AT JULY 31, 2007:
FUND FIXED RATE UNREALIZED
NOTIONAL PAY/RECEIVE FLOATING RATE FIXED RATE PAYMENT EFFECTIVE TERMINATION APPRECIATION
COUNTERPARTY AMOUNT FLOATING RATE INDEX (ANNUALIZED) FREQUENCY DATE (5) DATE (DEPRECIATION)
------------------------------------------------------------------------------------------------------------------------------------
Morgan Stanley $2,000,000 Pay 3-Month USD-LIBOR 5.227% Semi-Annually 2/21/08 2/21/30 $(113,046)
====================================================================================================================================
USD-LIBOR (United States Dollar-London Inter-Bank Offered Rate)
The Fund may invest in "zero coupon" securities. A zero
coupon security does not pay a regular interest coupon to
its holders during the life of the security. Tax-exempt
income to the holder of the security comes from accretion of
the difference between the original purchase price of the
security at issuance and the par value of the security at
maturity and is effectively paid at maturity. Such
securities are included in the portfolio with a 0.00% coupon
rate in their description. The market prices of zero coupon
securities generally are more volatile than the market
prices of securities that pay interest periodically.
(1) All percentages shown in the Portfolio of Investments are
based on net assets applicable to Common shares unless
otherwise noted.
(2) Optional Call Provisions (not covered by the report of
independent registered public accounting firm): Dates (month
and year) and prices of the earliest optional call or
redemption. There may be other call provisions at varying
prices at later dates. Certain mortgage-backed securities
may be subject to periodic principal paydowns.
(3) Ratings (not covered by the report of independent registered
public accounting firm): Using the higher of Standard &
Poor's or Moody's rating. Ratings below BBB by Standard &
Poor's Group or Baa by Moody's 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.
(5) Effective date represents the date on which both the Fund
and counterparty commence interest payment accruals on each
forward swap contract.
N/R Not rated.
WI/DD Purchased on a when-issued or delayed delivery basis.
(UB) Underlying bond of an inverse floating rate trust reflected
as a financing transaction pursuant to SFAS No. 140.
See accompanying notes to financial statements.
46
NBJ
Nuveen Ohio Dividend Advantage Municipal Fund 2
Portfolio of INVESTMENTS
July 31, 2007
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES - 8.8% (5.5% OF TOTAL INVESTMENTS)
$ 3,000 Ohio State Sewage and Solid Waste Disposal Facilities, Revenue 11/11 at 100.00 A $ 3,121,109
Bonds, Anheuser-Busch Project, Series 2001, 5.500%, 11/01/35
(Alternative Minimum Tax)
905 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 5/12 at 100.00 BBB 917,109
Asset-Backed Refunding Bonds, Series 2002, 5.375%, 5/15/33
------------------------------------------------------------------------------------------------------------------------------------
3,905 Total Consumer Staples 4,038,218
------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 14.5% (9.1% OF TOTAL INVESTMENTS)
1,345 Bowling Green State University, Ohio, General Receipts Bonds, 6/13 at 100.00 AAA 1,422,660
Series 2003, 5.250%, 6/01/18 - AMBAC Insured
450 Ohio Higher Education Facilities Commission, General Revenue 7/16 at 100.00 A+ 459,558
Bonds, Kenyon College, Series 2006, 5.000%, 7/01/41
1,000 Ohio Higher Educational Facilities Commission, General Revenue 12/16 at 100.00 AAA 1,044,290
Bonds, University of Dayton, 2006 Project, Series 2006,
5.000%, 12/01/30 - AMBAC Insured
1,050 Ohio Higher Educational Facilities Commission, Revenue Bonds, 12/11 at 100.00 Baa2 1,095,896
Wittenberg University, Series 2001, 5.500%, 12/01/15
250 Ohio Higher Educational Facilities Commission, Revenue Bonds, 5/16 at 100.00 Aaa 261,428
Xavier University, Series 2006, 5.000%, 5/01/22 - CIFG Insured
1,000 University of Cincinnati, Ohio, General Receipts Bonds, 6/13 at 100.00 AAA 1,038,330
Series 2003C, 5.000%, 6/01/22 - FGIC Insured
1,245 University of Cincinnati, Ohio, General Receipts Bonds, 6/14 at 100.00 AAA 1,305,071
Series 2004D, 5.000%, 6/01/19 - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
6,340 Total Education and Civic Organizations 6,627,233
------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE - 27.1% (17.0% OF TOTAL INVESTMENTS)
725 Akron, Bath and Copley Joint Township Hospital District, Ohio, No Opt. Call Baa1 727,777
Hospital Facilities Revenue Bonds, Summa Health System,
Series 1998A, 5.000%, 11/15/08
Butler County, Ohio, Hospital Facilities Revenue Bonds, Cincinnati
Children's Medical Center Project, Series 2006K:
1,600 4.375%, 5/15/32 - FGIC Insured (UB) 5/16 at 100.00 AAA 1,655,088
1,230 5.000%, 5/15/31 - FGIC Insured (UB) 5/16 at 100.00 AAA 1,154,798
1,000 Erie County, Ohio, Hospital Facilities Revenue Bonds, Firelands 8/12 at 101.00 A 1,040,020
Regional Medical Center, Series 2002A, 5.500%, 8/15/22
1,850 Lorain County, Ohio, Hospital Revenue Refunding and Improvement 10/11 at 101.00 AA- 1,922,798
Bonds, Catholic Healthcare Partners, Series 2001A,
5.400%, 10/01/21
225 Miami County, Ohio, Hospital Facilities Revenue Refunding Bonds, 5/16 at 100.00 A- 233,071
Upper Valley Medical Center Inc., Series 2006, 5.250%, 5/15/21
700 Montgomery County, Ohio, Revenue Bonds, Catholic Health 5/14 at 100.00 AA 705,327
Initiatives, Series 2004A, 5.000%, 5/01/30
665 Richland County, Ohio, Hospital Facilities Revenue Improvement 11/10 at 101.00 A- 706,210
Bonds, MedCentral Health System Obligated Group, Series 2000B,
6.375%, 11/15/30
350 Richland County, Ohio, Hospital Revenue Bonds, MidCentral Health 11/16 at 100.00 A- 356,542
System Group, Series 2006, 5.250%, 11/15/36
47
NBJ
Nuveen Ohio Dividend Advantage Municipal Fund 2 (continued)
Portfolio of INVESTMENTS July 31, (2007)
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE (continued)
$ 3,670 Tuscarawas County, Ohio, Hospital Facilities Revenue Bonds, Union 10/11 at 101.00 AA $ 3,880,657
Hospital Project, Series 2001, 5.750%, 10/01/26 - RAAI Insured
------------------------------------------------------------------------------------------------------------------------------------
12,015 Total Health Care 12,382,288
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 3.4% (2.1% OF TOTAL INVESTMENTS)
1,000 Franklin County, Ohio, GNMA Collateralized Multifamily Housing 5/12 at 102.00 Aaa 1,033,110
Mortgage Revenue Bonds, Agler Project, Series 2002A,
5.550%, 5/20/22 (Alternative Minimum Tax)
Ohio Housing Finance Agency, FHA-Insured Multifamily Housing
Mortgage Revenue Bonds, Madonna Homes, Series 2006M:
250 4.450%, 10/01/09 (Alternative Minimum Tax) No Opt. Call Aaa 249,848
250 4.900%, 6/20/48 (Alternative Minimum Tax) 6/16 at 102.00 AAA 239,080
------------------------------------------------------------------------------------------------------------------------------------
1,500 Total Housing/Multifamily 1,522,038
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 2.2% (1.4% OF TOTAL INVESTMENTS)
1,000 Ohio Housing Finance Agency, Single Family Mortgage Revenue 9/15 at 100.00 Aaa 996,490
Bonds, Series 2006H, 5.000%, 9/01/31 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
INDUSTRIALS - 2.5% (1.6% OF TOTAL INVESTMENTS)
640 Ohio State Water Development Authority, Solid Waste Revenue 7/12 at 100.00 B+ 636,480
Bonds, Allied Waste Industries, Inc., Series 2007A,
5.150%, 7/15/15 (Alternative Minimum Tax)
500 Western Reserve Port Authority, Ohio, Solid Waste Facility Revenue 7/17 at 102.00 N/R 500,090
Bonds, Central Waste Inc., Series 2007A, 6.350%, 7/01/27
(Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
1,140 Total Industrials 1,136,570
------------------------------------------------------------------------------------------------------------------------------------
LONG-TERM CARE - 2.2% (1.4% OF TOTAL INVESTMENTS)
1,045 Hamilton County, Ohio, Health Care Revenue Refunding Bonds, 1/17 at 100.00 BBB 1,019,021
Life Enriching Communities Project, Series 2006A,
5.000%, 1/01/37
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 37.6% (23.6% OF TOTAL INVESTMENTS)
1,700 Butler County, Hamilton, Ohio, Limited Tax General Obligation 11/11 at 101.00 Aaa 1,754,485
Bonds, One Renaissance Center Acquisition, Series 2001,
5.000%, 11/01/26 - AMBAC Insured
Cleveland Municipal School District, Cuyahoga County, Ohio,
General Obligation Bonds, Series 2004:
1,000 5.000%, 12/01/15 - FSA Insured 6/14 at 100.00 AAA 1,060,880
1,000 5.000%, 12/01/22 - FSA Insured 6/14 at 100.00 AAA 1,046,430
400 Cuyahoga County, Ohio, General Obligation Bonds, Series 2004, 12/14 at 100.00 AA+ 419,736
5.000%, 12/01/21
1,000 Franklin County, Ohio, General Obligation Bonds, Series 2007, 12/17 at 100.00 AAA 1,053,150
5.000%, 12/01/27
1,905 Hamilton City School District, Ohio, General Obligation Bonds, 6/17 at 100.00 AAA 1,986,058
Series 2007, 5.000%, 12/01/34 - FSA Insured (UB)
345 Lakewood City School District, Cuyahoga County, Ohio, General 12/17 at 100.00 AAA 361,581
Obligation Bonds, Series 2007, 5.000%, 12/01/30 (WI/DD,
Settling 8/09/07) - FGIC Insured
2,420 Lorain County, Ohio, Limited Tax General Obligation Justice Center 12/12 at 100.00 Aaa 2,583,059
Bonds, Series 2002, 5.500%, 12/01/22 - FGIC Insured
1,005 Marysville Exempted School District, Union County, Ohio, General 12/15 at 100.00 AAA 1,052,697
Obligation Bonds, Series 2006, 5.000%, 12/01/25 - FSA Insured
2,665 Newark City School District, Licking County, Ohio, General 12/15 at 100.00 AAA 2,778,208
Obligation Bonds, Series 2005, 5.000%, 12/01/28 - FGIC Insured
1,960 Portage County, Ohio, General Obligation Bonds, Series 2001, 12/11 at 100.00 AAA 2,022,994
5.000%, 12/01/25 - FGIC Insured
1,000 Powell, Ohio, General Obligation Bonds, Series 2002, 12/12 at 100.00 AAA 1,063,440
5.500%, 12/01/25 - FGIC Insured
------------------------------------------------------------------------------------------------------------------------------------
16,400 Total Tax Obligation/General 17,182,718
------------------------------------------------------------------------------------------------------------------------------------
48
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 19.0% (12.0% OF TOTAL INVESTMENTS)
$ 800 Hamilton County Convention Facilities Authority, Ohio, First Lien 6/14 at 100.00 AAA $ 823,968
Revenue Bonds, Series 2004, 5.000%, 12/01/33 - FGIC Insured
1,400 Hamilton County, Ohio, Sales Tax Bonds, Subordinate Series 2006, 12/16 at 100.00 Aaa 1,458,744
5.000%, 12/01/32 - AMBAC Insured
250 Ohio State Building Authority, State Facilities Bonds, 4/15 at 100.00 AAA 260,733
Administrative Building Fund Projects, Series 2005A,
5.000%, 4/01/25 - FSA Insured
1,000 Ohio State Building Authority, State Facilities Bonds, Adult 4/15 at 100.00 AAA 1,046,250
Correctional Building Fund Project, Series 2005A,
5.000%, 4/01/23 - FSA Insured
1,500 Ohio, State Appropriation Lease Bonds, Higher Education Capital No Opt. Call AAA 1,560,015
Facilities, Series 2002A-II, 5.500%, 12/01/09 - MBIA Insured
1,095 Ohio, State Appropriation Lease Bonds, Parks and Recreation 12/13 at 100.00 AA 1,147,867
Capital Facilities, Series 2004A-II, 5.000%, 12/01/18
1,000 Puerto Rico Highway and Transportation Authority, Highway 7/12 at 100.00 BBB+ 1,066,340
Revenue Refunding Bonds, Series 2002E, 5.750%, 7/01/24
620 Puerto Rico Infrastructure Financing Authority, Special Tax Revenue No Opt. Call AAA 162,347
Bonds, Series 2005A, 0.000%, 7/01/35 - AMBAC Insured
300 Puerto Rico Infrastructure Financing Authority, Special Tax Revenue No Opt. Call AAA 112,653
Bonds, Series 2005C, 0.000%, 7/01/28 - AMBAC Insured
1,000 Summit County Port Authority, Ohio, Revenue Bonds, Civic Theatre 12/11 at 100.00 AAA 1,055,410
Project, Series 2001, 5.500%, 12/01/26 - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
8,965 Total Tax Obligation/Limited 8,694,327
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 32.1% (20.1% OF TOTAL INVESTMENTS) (4)
2,345 Cleveland, Ohio, Airport System Revenue Bonds, Series 2001A, 1/10 at 101.00 AAA 2,446,070
5.250%, 1/01/18 (Pre-refunded 1/01/10) - FSA Insured
2,605 Columbus City School District, Franklin County, Ohio, General 12/14 at 100.00 AAA 2,869,693
Obligation Bonds, Series 2004, 5.500%, 12/01/15
(Pre-refunded 12/01/14) - FSA Insured
1,000 Greater Cleveland Regional Transit Authority, Ohio, General 12/11 at 100.00 Aaa 1,052,220
Obligation Capital Improvement Bonds, Series 2001A,
5.125%, 12/01/21 (Pre-refunded 12/01/11) - MBIA Insured
1,000 Hamilton County, Ohio, Healthcare Facilities Improvement Revenue 10/08 at 101.00 BBB (4) 1,031,950
Bonds, Twin Towers, Series 1999A, 5.800%, 10/01/23
(Pre-refunded 10/01/08)
1,065 Lakewood City School District, Cuyahoga County, Ohio, General 12/14 at 100.00 AAA 1,156,366
Obligation Bonds, Series 2004, 5.250%, 12/01/16
(Pre-refunded 12/01/14) - FSA Insured
2,250 Lebanon City School District, Warren County, Ohio, General 12/11 at 100.00 AAA 2,400,908
Obligation Bonds, Series 2001, 5.500%, 12/01/21
(Pre-refunded 12/01/11) - FSA Insured
1,710 Marysville Exempted Village School District, Ohio, Certificates 6/15 at 100.00 AAA 1,854,478
of Participation, School Facilities Project, Series 2005,
5.250%, 12/01/21 (Pre-refunded 6/01/15) - MBIA Insured
1,050 Olentangy Local School District, Delaware and Franklin Counties, 6/14 at 100.00 AAA 1,150,853
Ohio, General Obligation Bonds, Series 2004A,
5.500%, 12/01/15 (Pre-refunded 6/01/14) - FGIC Insured
635 Richland County, Ohio, Hospital Facilities Revenue Improvement 11/10 at 101.00 A- (4) 689,337
Bonds, MedCentral Health System Obligated Group,
Series 2000B, 6.375%, 11/15/30 (Pre-refunded 11/15/10)
------------------------------------------------------------------------------------------------------------------------------------
13,660 Total U.S. Guaranteed 14,651,875
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 9.2% (5.8% OF TOTAL INVESTMENTS)
2,500 Ohio Air Quality Development Authority, Revenue Refunding Bonds, 5/09 at 101.00 AAA 2,564,025
Ohio Power Company Project, Series 1999C, 5.150%, 5/01/26 -
AMBAC Insured
595 Ohio Municipal Electric Generation Agency, Beneficial Interest 2/14 at 100.00 AAA 619,716
Certificates, Belleville Hydroelectric Project - Joint Venture 5,
Series 2004, 5.000%, 2/15/20 - AMBAC Insured
49
NBJ
Nuveen Ohio Dividend Advantage Municipal Fund 2 (continued)
Portfolio of INVESTMENTS July 31, (2007)
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES (continued)
$ 1,000 Ohio Water Development Authority, Solid Waste Disposal Revenue 9/08 at 102.00 N/R $ 1,011,720
Bonds, Bay Shore Power, Series 1998A, 5.875%, 9/01/20
(Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
4,095 Total Utilities 4,195,461
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 0.6% (0.4% OF TOTAL INVESTMENTS)
270 Ohio Water Development Authority, Revenue Bonds, Fresh Water 12/11 at 100.00 AAA 279,381
Development, Series 2001A, 5.000%, 12/01/21 - FSA Insured
------------------------------------------------------------------------------------------------------------------------------------
$ 70,335 Total Investments (cost $71,389,017) - 159.2% 72,725,620
=============-----------------------------------------------------------------------------------------------------------------------
Floating Rate Obligations - (6.9)% (3,155,000)
--------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 0.2% 123,228
--------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (52.5)% (24,000,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 45,693,848
====================================================================================================================
FORWARD SWAPS OUTSTANDING AT JULY 31, 2007:
FUND FIXED RATE UNREALIZED
NOTIONAL PAY/RECEIVE FLOATING RATE FIXED RATE PAYMENT EFFECTIVE TERMINATION APPRECIATION
COUNTERPARTY AMOUNT FLOATING RATE INDEX (ANNUALIZED) FREQUENCY DATE (5) DATE (DEPRECIATION)
------------------------------------------------------------------------------------------------------------------------------------
Morgan Stanley $1,000,000 Pay 3-Month USD-LIBOR 5.227% Semi-Annually 2/21/08 2/21/30 $(56,523)
====================================================================================================================================
USD-LIBOR (United States Dollar-London Inter-Bank Offered Rate)
The Fund may invest in "zero coupon" securities. A zero
coupon security does not pay a regular interest coupon to
its holders during the life of the security. Tax-exempt
income to the holder of the security comes from accretion of
the difference between the original purchase price of the
security at issuance and the par value of the security at
maturity and is effectively paid at maturity. Such
securities are included in the portfolio with a 0.00% coupon
rate in their description. The market prices of zero coupon
securities generally are more volatile than the market
prices of securities that pay interest periodically.
(1) All percentages shown in the Portfolio of Investments are
based on net assets applicable to Common shares unless
otherwise noted.
(2) Optional Call Provisions (not covered by the report of
independent registered public accounting firm): Dates (month
and year) and prices of the earliest optional call or
redemption. There may be other call provisions at varying
prices at later dates. Certain mortgage-backed securities
may be subject to periodic principal paydowns.
(3) Ratings (not covered by the report of independent registered
public accounting firm): Using the higher of Standard &
Poor's or Moody's rating. Ratings below BBB by Standard &
Poor's Group or Baa by Moody's 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.
(5) Effective date represents the date on which both the Fund
and counterparty commence interest payment accruals on each
forward swap contract.
N/R Not rated.
WI/DD Purchased on a when-issued or delayed delivery basis.
(UB) Underlying bond of an inverse floating rate trust reflected
as a financing transaction pursuant to the provisions of
SFAS No. 140.
See accompanying notes to financial statements.
50
NVJ
Nuveen Ohio Dividend Advantage Municipal Fund 3
Portfolio of INVESTMENTS
July 31, 2007
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES - 6.1% (3.9% OF TOTAL INVESTMENTS)
$ 1,945 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 5/12 at 100.00 BBB $ 1,971,024
Asset-Backed Refunding Bonds, Series 2002, 5.375%, 5/15/33
------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 9.7% (6.2% OF TOTAL INVESTMENTS)
350 Ohio Higher Education Facilities Commission, General Revenue 7/16 at 100.00 A+ 357,434
Bonds, Kenyon College, Series 2006, 5.000%, 7/01/41
1,125 Ohio Higher Education Facilities Commission, Revenue Bonds, 5/12 at 100.00 A2 1,203,199
Ohio Northern University, Series 2002, 5.750%, 5/01/16
500 Ohio Higher Education Facilities Commission, Revenue Bonds, 12/15 at 100.00 Baa2 506,770
Wittenberg University, Series 2005, 5.000%, 12/01/24
1,000 Ohio Higher Educational Facilities Commission, General Revenue 12/16 at 100.00 AAA 1,044,290
Bonds, University of Dayton, 2006 Project, Series 2006,
5.000%, 12/01/30 - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
2,975 Total Education and Civic Organizations 3,111,693
------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE - 16.8% (10.7% OF TOTAL INVESTMENTS)
360 Akron, Bath and Copley Joint Township Hospital District, Ohio, No Opt. Call Baa1 361,379
Hospital Facilities Revenue Bonds, Summa Health System,
Series 1998A, 5.000%, 11/15/08
Butler County, Ohio, Hospital Facilities Revenue Bonds, Cincinnati
Children's Medical Center Project, Series 2006K:
1,100 4.375%, 5/15/32 - FGIC Insured (UB) 5/16 at 100.00 AAA 1,137,873
870 5.000%, 5/15/31 - FGIC Insured (UB) 5/16 at 100.00 AAA 816,808
1,750 Erie County, Ohio, Hospital Facilities Revenue Bonds, Firelands 8/12 at 101.00 A 1,820,035
Regional Medical Center, Series 2002A, 5.500%, 8/15/22
160 Miami County, Ohio, Hospital Facilities Revenue Refunding Bonds, 5/16 at 100.00 A- 165,739
Upper Valley Medical Center Inc., Series 2006, 5.250%, 5/15/21
500 Montgomery County, Ohio, Revenue Bonds, Catholic Health 5/14 at 100.00 AA 503,805
Initiatives, Series 2004A, 5.000%, 5/01/30
335 Richland County, Ohio, Hospital Facilities Revenue Improvement 11/10 at 101.00 A- 355,760
Bonds, MedCentral Health System Obligated Group, Series 2000B,
6.375%, 11/15/30
250 Richland County, Ohio, Hospital Revenue Bonds, MidCentral Health 11/16 at 100.00 A- 254,673
System Group, Series 2006, 5.250%, 11/15/36
------------------------------------------------------------------------------------------------------------------------------------
5,325 Total Health Care 5,416,072
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 1.1% (0.7% OF TOTAL INVESTMENTS)
Ohio Housing Finance Agency, FHA-Insured Multifamily Housing
Mortgage Revenue Bonds, Madonna Homes, Series 2006M:
150 4.450%, 10/01/09 (Alternative Minimum Tax) No Opt. Call Aaa 149,909
200 4.900%, 6/20/48 (Alternative Minimum Tax) 6/16 at 102.00 AAA 191,264
------------------------------------------------------------------------------------------------------------------------------------
350 Total Housing/Multifamily 341,173
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 4.1% (2.6% OF TOTAL INVESTMENTS)
180 Ohio Housing Finance Agency, GNMA Mortgage-Backed Securities 8/10 at 100.00 Aaa 185,503
Program Residential Mortgage Revenue Bonds, Series 2000C,
6.050%, 3/01/32 (Alternative Minimum Tax)
51
NVJ
Nuveen Ohio Dividend Advantage Municipal Fund 3 (continued)
Portfolio of INVESTMENTS July 31, (2007)
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY (continued)
$ 565 Ohio Housing Finance Agency, GNMA Mortgage-Backed Securities 8/10 at 100.00 Aaa $ 584,555
Program Residential Mortgage Revenue Bonds, Series 2000D,
5.450%, 9/01/31 (Alternative Minimum Tax)
45 Ohio Housing Finance Agency, GNMA Mortgage-Backed Securities 8/10 at 100.00 Aaa 45,072
Program Residential Mortgage Revenue Bonds, Series 2000F,
5.625%, 9/01/16
500 Ohio Housing Finance Agency, Single Family Mortgage Revenue 9/15 at 100.00 Aaa 498,245
Bonds, Series 2006H, 5.000%, 9/01/31 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
1,290 Total Housing/Single Family 1,313,375
------------------------------------------------------------------------------------------------------------------------------------
INDUSTRIALS - 2.7% (1.7% OF TOTAL INVESTMENTS)
480 Ohio State Water Development Authority, Solid Waste Revenue 7/12 at 100.00 B+ 477,360
Bonds, Allied Waste Industries, Inc., Series 2007A,
5.150%, 7/15/15 (Alternative Minimum Tax)
400 Western Reserve Port Authority, Ohio, Solid Waste Facility Revenue 7/17 at 102.00 N/R 400,072
Bonds, Central Waste Inc., Series 2007A, 6.350%, 7/01/27
(Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
880 Total Industrials 877,432
------------------------------------------------------------------------------------------------------------------------------------
LONG-TERM CARE - 2.2% (1.4% OF TOTAL INVESTMENTS)
745 Hamilton County, Ohio, Health Care Revenue Refunding Bonds, 1/17 at 100.00 BBB 726,479
Life Enriching Communities Project, Series 2006A,
5.000%, 1/01/37
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 24.8% (15.9% OF TOTAL INVESTMENTS)
300 Cuyahoga County, Ohio, General Obligation Bonds, Series 2004, 12/14 at 100.00 AA+ 314,802
5.000%, 12/01/21
1,000 Franklin County, Ohio, General Obligation Bonds, Series 2007, 12/17 at 100.00 AAA 1,053,150
5.000%, 12/01/27
1,275 Hamilton City School District, Ohio, General Obligation Bonds, 6/17 at 100.00 AAA 1,329,251
Series 2007, 5.000%, 12/01/34 - FSA Insured (UB)
1,000 Kenston Local School District, Geauga County, Ohio, General 6/13 at 100.00 Aaa 1,038,330
Obligation Bonds, Series 2003, 5.000%, 12/01/22 -
MBIA Insured
200 Lakewood City School District, Cuyahoga County, Ohio, General 12/17 at 100.00 AAA 210,972
Obligation Bonds, Series 2007, 5.000%, 12/01/25 (WI/DD,
Settling 8/09/07) - FGIC Insured
1,270 Lorain, Ohio, General Obligation Bonds, Series 2002, 12/12 at 100.00 Aaa 1,320,610
5.125%, 12/01/26 - AMBAC Insured
500 Marysville Exempted School District, Union County, Ohio, General 12/15 at 100.00 AAA 523,730
Obligation Bonds, Series 2006, 5.000%, 12/01/25 - FSA Insured
1,000 Ohio, Common Schools Capital Facilities, General Obligation 9/11 at 100.00 AA+ 1,033,200
Bonds, Series 2001B, 5.000%, 9/15/20
1,130 Solon, Ohio, General Obligation Refunding and Improvement 12/12 at 100.00 AA+ 1,176,839
Bonds, Series 2002, 5.000%, 12/01/18
------------------------------------------------------------------------------------------------------------------------------------
7,675 Total Tax Obligation/General 8,000,884
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 25.5% (16.3% OF TOTAL INVESTMENTS)
600 Hamilton County Convention Facilities Authority, Ohio, First Lien 6/14 at 100.00 AAA 617,976
Revenue Bonds, Series 2004, 5.000%, 12/01/33 - FGIC Insured
1,000 Hamilton County, Ohio, Sales Tax Bonds, Subordinate Series 2006, 12/16 at 100.00 Aaa 1,041,960
5.000%, 12/01/32 - AMBAC Insured
1,000 Midview Local School District, Lorain County, Ohio, Certificates 5/13 at 100.00 A 1,021,200
of Participation, Series 2003, 5.000%, 11/01/30
1,250 Ohio State Building Authority, State Facilities Bonds, Administrative 4/12 at 100.00 AAA 1,326,563
Building Fund Projects, Series 2002A, 5.500%, 4/01/18 -
FSA Insured
200 Ohio State Building Authority, State Facilities Bonds, Administrative 4/15 at 100.00 AAA 208,586
Building Fund Projects, Series 2005A, 5.000%, 4/01/25 -
FSA Insured
1,000 Ohio, State Appropriation Lease Bonds, Higher Education Capital No Opt. Call AAA 1,040,010
Facilities, Series 2002A-II, 5.500%, 12/01/09 - MBIA Insured
52
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED (continued)
$ 1,815 Puerto Rico Infrastructure Financing Authority, Special Tax Revenue No Opt. Call AAA $ 681,551
Bonds, Series 2005C, 0.000%, 7/01/28 - AMBAC Insured
2,000 Puerto Rico Public Buildings Authority, Guaranteed Government No Opt. Call AAA 2,266,177
Facilities Revenue Bonds, Series 1993L, 5.500%, 7/01/21 -
FSA Insured
------------------------------------------------------------------------------------------------------------------------------------
8,865 Total Tax Obligation/Limited 8,204,023
------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 5.4% (3.4% OF TOTAL INVESTMENTS)
1,550 Ohio Turnpike Commission, Revenue Refunding Bonds, No Opt. Call AAA 1,730,637
Series 1998A, 5.500%, 2/15/18 - FGIC Insured
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 51.9% (33.1% OF TOTAL INVESTMENTS) (4)
1,000 Canal Winchester Local School District, Franklin and Fairfield 12/08 at 102.00 AAA 1,039,250
Counties, Ohio, Unlimited Tax General Obligation School
Improvement Bonds, Series 1998, 5.300%, 12/01/25
(Pre-refunded 12/01/08) - FGIC Insured
1,475 Eaton City School District, Preble County, Ohio, General Obligation 12/12 at 101.00 Aaa 1,622,780
Bonds, Series 2002, 5.750%, 12/01/21 (Pre-refunded 12/01/12) -
FGIC Insured
1,300 Granville Exempt Village School District, Ohio, General Obligation 12/11 at 100.00 Aa2 (4) 1,389,869
Bonds, Series 2001, 5.500%, 12/01/28 (Pre-refunded 12/01/11)
500 Hamilton County, Ohio, Healthcare Facilities Improvement Revenue 10/08 at 101.00 BBB (4) 515,690
Bonds, Twin Towers, Series 1999A, 5.750%, 10/01/19
(Pre-refunded 10/01/08)
1,000 Hilliard, Ohio, General Obligation Bonds, Series 2002, 12/12 at 100.00 Aa2 (4) 1,074,090
5.375%, 12/01/22 (Pre-refunded 12/01/12)
1,190 Miami East Local School District, Miami County, Ohio, General 6/12 at 100.00 AAA 1,260,305
Obligation Bonds, Series 2002, 5.125%, 12/01/29
(Pre-refunded 6/01/12) - FSA Insured
1,000 Montgomery County, Ohio, Hospital Facilities Revenue Bonds, 4/10 at 101.00 A (4) 1,081,930
Kettering Medical Center, Series 1999, 6.750%, 4/01/18
(Pre-refunded 4/01/10)
1,000 Montgomery County, Ohio, Revenue Bonds, Catholic Health 9/11 at 100.00 AA (4) 1,062,070
Initiatives, Series 2001, 5.500%, 9/01/12 (Pre-refunded 9/01/11)
2,000 Ohio Higher Education Facilities Commission, Revenue Bonds, 10/12 at 100.00 AA- (4) 2,151,720
Case Western Reserve University, Series 2002B,
5.500%, 10/01/22 (Pre-refunded 10/01/12)
1,000 Ohio State University, General Receipts Bonds, Series 1999A, 12/09 at 101.00 AA (4) 1,054,390
5.800%, 12/01/29 (Pre-refunded 12/01/09)
1,000 Olentangy Local School District, Delaware and Franklin Counties, 6/14 at 100.00 AAA 1,081,180
Ohio, General Obligation Bonds, Series 2004A, 5.250%, 12/01/21
(Pre-refunded 6/01/14) - FGIC Insured
1,000 Parma Community General Hospital Association, Ohio, Hospital 11/08 at 101.00 N/R (4) 1,028,750
Revenue Refunding and Improvement Bonds, Series 1998,
5.375%, 11/01/29 (Pre-refunded 11/01/08)
1,535 Pickerington Local School District, Fairfield and Franklin 12/11 at 100.00 AAA 1,622,756
Counties, Ohio, General Obligation Bonds, School Facilities
Construction and Improvement, Series 2001, 5.250%, 12/01/20
(Pre-refunded 12/01/11) - FGIC Insured
665 Richland County, Ohio, Hospital Facilities Revenue Improvement 11/10 at 101.00 A- (4) 721,904
Bonds, MedCentral Health System Obligated Group,
Series 2000B, 6.375%, 11/15/30 (Pre-refunded 11/15/10)
------------------------------------------------------------------------------------------------------------------------------------
15,665 Total U.S. Guaranteed 16,706,684
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 4.9% (3.1% OF TOTAL INVESTMENTS)
1,500 American Municipal Power Ohio Inc., Wadsworth, Electric System 2/12 at 100.00 Aaa 1,575,135
Improvement Revenue Bonds, Series 2002, 5.250%, 2/15/17 -
MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
53
NVJ
Nuveen Ohio Dividend Advantage Municipal Fund 3 (continued)
Portfolio of INVESTMENTS July 31, (2007)
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 0.9% (0.6% OF TOTAL INVESTMENTS)
$ 270 Ohio Water Development Authority, Revenue Bonds, Fresh Water 12/11 at 100.00 AAA $ 279,380
Development, Series 2001A, 5.000%, 12/01/21 - FSA Insured
------------------------------------------------------------------------------------------------------------------------------------
$ 49,035 Total Long-Term Investments (cost $48,701,678) - 156.1% 50,253,991
=============-----------------------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS - 0.6% (0.4% OF TOTAL INVESTMENTS)
$ 200 Puerto Rico Government Development Bank, Adjustable Refunding VMIG-1 200,000
Bonds, Variable Rate Demand Obligations, Series 1985,
3.490% 12/01/015 - MBIA Insured
=============-----------------------------------------------------------------------------------------------------------------------
Total Short-Term Investments (cost $200,000) 200,000
--------------------------------------------------------------------------------------------------------------------
Total Investments (cost $48,901,678) - 156.7% 50,453,991
--------------------------------------------------------------------------------------------------------------------
Floating Rate Obligations - (6.7)% (2,165,000)
--------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 1.3% 404,684
--------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (51.3)% (16,500,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 32,193,675
====================================================================================================================
FUTURES CONTRACTS OUTSTANDING AT JULY 31, 2007:
UNREALIZED
CONTRACT NUMBER OF CONTRACT VALUE AT APPRECIATION
COUNTERPARTY POSITION CONTRACTS EXPIRATION JULY 31, 2007 (DEPRECIATION)
------------------------------------------------------------------------------------------------------------------------------------
U.S. 10-Year Treasury Note Long 16 9/07 $1,718,750 $11,702
====================================================================================================================================
The Fund may invest in "zero coupon" securities. A zero
coupon security does not pay a regular interest coupon to
its holders during the life of the security. Tax-exempt
income to the holder of the security comes from accretion of
the difference between the original purchase price of the
security at issuance and the par value of the security at
maturity and is effectively paid at maturity. Such
securities are included in the portfolio with a 0.00% coupon
rate in their description. The market prices of zero coupon
securities generally are more volatile than the market
prices of securities that pay interest periodically.
(1) All percentages shown in the Portfolio of Investments are
based on net assets applicable to Common shares unless
otherwise noted.
(2) Optional Call Provisions (not covered by the report of
independent registered public accounting firm): Dates (month
and year) and prices of the earliest optional call or
redemption. There may be other call provisions at varying
prices at later dates. Certain mortgage-backed securities
may be subject to periodic principal paydowns.
(3) Ratings (not covered by the report of independent registered
public accounting firm): Using the higher of Standard &
Poor's or Moody's rating. Ratings below BBB by Standard &
Poor's Group or Baa by Moody's 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.
(5) Investment has a maturity of more than one year, but has
variable rate and demand features which qualify it as a
short-term investment. The rate disclosed is that in effect
at the end of the reporting period. This rate changes
periodically based on market conditions or a specified
market index.
N/R Not rated.
WI/DD Purchased on a when-issued or delayed delivery basis.
(UB) Underlying bond of an inverse floating rate trust reflected
as a financing transaction pursuant to the provisions of
SFAS No. 140.
See accompanying notes to financial statements.
54
Statement of
ASSETS & LIABILITIES
July 31, 2007
MICHIGAN MICHIGAN MICHIGAN
QUALITY PREMIUM DIVIDEND
INCOME INCOME ADVANTAGE
(NUM) (NMP) (NZW)
------------------------------------------------------------------------------------------------------------------------------------
ASSETS
Investments, at value (cost $260,234,307,
$171,019,890 and $45,345,066, respectively) $270,215,330 $175,617,230 $46,609,867
Cash 676,851 458,944 157,533
Receivables:
Interest 3,046,876 2,222,535 541,314
Investments sold 15,000 25,000 --
Variation margin on futures contracts -- -- --
Other assets 26,422 10,731 2,602
------------------------------------------------------------------------------------------------------------------------------------
Total assets 273,980,479 178,334,440 47,311,316
------------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Cash overdraft -- -- --
Payable for investments purchased -- -- --
Floating rate obligations 3,870,000 8,105,000 715,000
Unrealized depreciation on forward swaps -- 136,364 --
Accrued expenses:
Management fees 142,353 90,254 15,039
Other 81,531 42,552 13,976
Common share dividends payable 604,803 386,913 121,204
Preferred share dividends payable 38,231 15,796 7,103
------------------------------------------------------------------------------------------------------------------------------------
Total liabilities 4,736,918 8,776,879 872,322
------------------------------------------------------------------------------------------------------------------------------------
Preferred shares, at liquidation value 94,000,000 56,000,000 16,000,000
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common shares $175,243,561 $113,557,561 $30,438,994
====================================================================================================================================
Common shares outstanding 11,714,953 7,751,048 2,066,391
====================================================================================================================================
Net asset value per Common share outstanding
(net assets applicable to Common shares,
divided by Common shares outstanding) $ 14.96 $ 14.65 $ 14.73
====================================================================================================================================
NET ASSETS APPLICABLE TO COMMON SHARES CONSIST OF:
------------------------------------------------------------------------------------------------------------------------------------
Common shares, $.01 par value per share $ 117,150 $ 77,510 $ 20,664
Paid-in surplus 163,945,766 108,391,489 29,267,587
Undistributed (Over-distribution of) net investment income (85,440) (133,697) (51,915)
Accumulated net realized gain (loss) from investments and
derivative transactions 1,285,062 761,283 (62,143)
Net unrealized appreciation (depreciation) of investments and
derivative transactions 9,981,023 4,460,976 1,264,801
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common shares $175,243,561 $113,557,561 $30,438,994
====================================================================================================================================
Authorized shares:
Common 200,000,000 200,000,000 Unlimited
Preferred 1,000,000 1,000,000 Unlimited
====================================================================================================================================
See accompanying notes to financial statements.
55
Statement of
ASSETS & LIABILITIES (continued)
July 31, 2007
OHIO OHIO OHIO OHIO
QUALITY DIVIDEND DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
(NUO) (NXI) (NBJ) (NVJ)
------------------------------------------------------------------------------------------------------------------------------------
ASSETS
Investments, at value (cost $234,345,636, $95,591,814,
$71,389,017 and $48,901,678, respectively) $240,194,334 $98,230,410 $72,725,620 $50,453,991
Cash 530,412 -- 15,198 199,210
Receivables:
Interest 2,601,688 1,090,004 725,792 572,034
Investments sold -- -- -- --
Variation margin on futures contracts -- -- -- 3,250
Other assets 21,541 7,649 2,646 7,565
------------------------------------------------------------------------------------------------------------------------------------
Total assets 243,347,975 99,328,063 73,469,256 51,236,050
------------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Cash overdraft -- 127,243 -- --
Payable for investments purchased 840,072 448,275 359,663 210,018
Floating rate obligations 10,670,000 4,220,000 3,155,000 2,165,000
Unrealized depreciation on forward swaps 141,307 113,046 56,523 --
Accrued expenses:
Management fees 122,585 34,471 22,582 15,768
Other 4,537 24,461 10,332 15,349
Common share dividends payable 486,612 228,246 166,602 124,848
Preferred share dividends payable 30,535 18,451 4,706 11,392
------------------------------------------------------------------------------------------------------------------------------------
Total liabilities 12,295,648 5,214,193 3,775,408 2,542,375
------------------------------------------------------------------------------------------------------------------------------------
Preferred shares, at liquidation value 77,000,000 31,000,000 24,000,000 16,500,000
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common shares $154,052,327 $63,113,870 $45,693,848 $32,193,675
====================================================================================================================================
Common shares outstanding 9,746,032 4,244,093 3,121,477 2,158,458
====================================================================================================================================
Net asset value per Common share outstanding
(net assets applicable to Common shares,
divided by Common shares outstanding) $ 15.81 $ 14.87 $ 14.64 $ 14.92
====================================================================================================================================
NET ASSETS APPLICABLE TO COMMON SHARES CONSIST OF:
------------------------------------------------------------------------------------------------------------------------------------
Common shares, $.01 par value per share $ 97,460 $ 42,441 $ 31,215 $ 21,585
Paid-in surplus 147,811,741 60,269,433 44,255,705 30,541,089
Undistributed (Over-distribution of) net investment income (293,613) (98,082) (125,378) (76,726)
Accumulated net realized gain (loss) from investments and
derivative transactions 729,348 374,528 252,226 143,712
Net unrealized appreciation (depreciation) of investments and
derivative transactions 5,707,391 2,525,550 1,280,080 1,564,015
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common shares $154,052,327 $63,113,870 $45,693,848 $32,193,675
====================================================================================================================================
Authorized shares:
Common 200,000,000 Unlimited Unlimited Unlimited
Preferred 1,000,000 Unlimited Unlimited Unlimited
====================================================================================================================================
See accompanying notes to financial statements.
56
Statement of
OPERATIONS
Year Ended July 31, 2007
MICHIGAN MICHIGAN MICHIGAN
QUALITY PREMIUM DIVIDEND
INCOME INCOME ADVANTAGE
(NUM) (NMP) (NZW)
------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME $13,245,512 $ 8,543,922 $2,265,532
------------------------------------------------------------------------------------------------------------------------------------
EXPENSES
Management fees 1,713,465 1,086,398 299,141
Preferred shares - auction fees 235,002 139,999 40,000
Preferred shares - dividend disbursing agent fees 20,000 20,000 20,000
Shareholders' servicing agent fees and expenses 20,949 15,962 671
Interest expense on floating rate obligations 63,023 191,126 11,644
Custodian's fees and expenses 63,276 56,060 17,130
Directors'/Trustees' fees and expenses 7,860 4,662 1,256
Professional fees 21,424 17,173 11,542
Shareholders' reports - printing and mailing expenses 39,036 21,785 11,215
Stock exchange listing fees 9,758 9,731 175
Investor relations expense 35,336 22,961 6,266
Other expenses 28,199 19,643 12,070
------------------------------------------------------------------------------------------------------------------------------------
Total expenses before custodian fee credit and expense reimbursement 2,257,328 1,605,500 431,110
Custodian fee credit (35,441) (13,877) (8,980)
Expense reimbursement -- -- (121,857)
------------------------------------------------------------------------------------------------------------------------------------
Net expenses 2,221,887 1,591,623 300,273
------------------------------------------------------------------------------------------------------------------------------------
Net investment income 11,023,625 6,952,299 1,965,259
------------------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) from:
Investments 2,021,802 1,318,366 397,159
Forward swaps -- -- (50,922)
Futures -- -- --
Change in net unrealized appreciation (depreciation) of:
Investments (3,145,750) (2,008,515) (641,385)
Forward swaps -- (136,364) 23,573
Futures -- -- --
------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) (1,123,948) (826,513) (271,575)
------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS
From net investment income (2,968,560) (1,756,872) (505,441)
From accumulated net realized gains (232,090) (174,588) (4,070)
------------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets applicable to Common shares
from distributions to Preferred shareholders (3,200,650) (1,931,460) (509,511)
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets applicable to Common shares
from operations $ 6,699,027 $ 4,194,326 $1,184,173
====================================================================================================================================
See accompanying notes to financial statements.
57
Statement of
OPERATIONS (continued)
Year Ended July 31, 2007
OHIO OHIO OHIO OHIO
QUALITY DIVIDEND DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
(NUO) (NXI) (NBJ) (NVJ)
------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME $11,363,977 $ 4,613,200 $3,350,839 $2,384,907
------------------------------------------------------------------------------------------------------------------------------------
EXPENSES
Management fees 1,472,694 604,775 448,660 313,054
Preferred shares - auction fees 192,501 77,500 59,999 41,249
Preferred shares - dividend disbursing agent fees 30,849 10,000 20,000 10,000
Shareholders' servicing agent fees and expenses 23,089 1,000 1,084 826
Interest expense on floating rate obligations 158,803 63,026 46,843 32,350
Custodian's fees and expenses 36,565 35,045 30,915 21,691
Directors'/Trustees' fees and expenses 6,276 2,685 2,158 1,378
Professional fees 19,738 13,717 12,549 11,778
Shareholders' reports - printing and mailing expenses 27,627 13,359 12,655 10,683
Stock exchange listing fees 9,816 361 265 183
Investor relations expense 29,411 12,267 9,743 6,698
Other expenses 16,513 14,826 13,191 12,903
------------------------------------------------------------------------------------------------------------------------------------
Total expenses before custodian fee credit and
expense reimbursement 2,023,882 848,561 658,062 462,793
Custodian fee credit (21,538) (9,628) (9,985) (8,870)
Expense reimbursement -- (222,582) (182,768) (139,898)
------------------------------------------------------------------------------------------------------------------------------------
Net expenses 2,002,344 616,351 465,309 314,025
------------------------------------------------------------------------------------------------------------------------------------
Net investment income 9,361,633 3,996,849 2,885,530 2,070,882
------------------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) from:
Investments 1,187,125 458,042 356,781 233,291
Forward swaps -- -- -- (32,854)
Futures -- -- -- 34,159
Change in net unrealized appreciation (depreciation) of:
Investments (2,229,443) (728,528) (612,925) (450,205)
Forward swaps (141,307) (113,046) (56,523) 15,013
Futures -- -- -- (11,622)
------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) (1,183,625) (383,532) (312,667) (212,218)
------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS
From net investment income (2,526,574) (1,023,335) (788,031) (530,895)
From accumulated net realized gains (109,526) (34,050) (39,456) (21,569)
------------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets applicable to Common shares
from distributions to Preferred shareholders (2,636,100) (1,057,385) (827,487) (552,464)
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets applicable to Common shares
from operations $ 5,541,908 $ 2,555,932 $1,745,376 $1,306,200
====================================================================================================================================
See accompanying notes to financial statements.
58
Statement of
CHANGES in NET ASSETS
MICHIGAN MICHIGAN MICHIGAN
QUALITY INCOME (NUM) PREMIUM INCOME (NMP) DIVIDEND ADVANTAGE (NZW)
------------------------------ ----------------------------- -----------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
7/31/07 7/31/06 7/31/07 7/31/06 7/31/07 7/31/06
------------------------------------------------------------------------------------------------------------------------------------
OPERATIONS
Net investment income $ 11,023,625 $ 11,188,131 $ 6,952,299 $ 7,082,116 $ 1,965,259 $ 1,998,909
Net realized gain (loss) from:
Investments 2,021,802 879,750 1,318,366 522,482 397,159 25,827
Forward swaps -- -- -- -- (50,922) 36,525
Futures -- -- -- -- -- --
Change in net unrealized appreciation
(depreciation) of:
Investments (3,145,750) (6,894,595) (2,008,515) (3,676,369) (641,385) (863,821)
Forward swaps -- -- (136,364) -- 23,573 (18,351)
Futures -- -- -- -- -- --
Distributions to
Preferred Shareholders:
From net investment income (2,968,560) (2,438,505) (1,756,872) (1,425,891) (505,441) (422,322)
From accumulated net
realized gains (232,090) (204,993) (174,588) (177,593) (4,070) --
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares
from operations 6,699,027 2,529,788 4,194,326 2,324,745 1,184,173 756,767
------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS
From net investment income (8,329,332) (9,516,815) (5,530,371) (6,136,157) (1,592,223) (1,790,433)
From accumulated net
realized gains (859,878) (1,317,932) (717,747) (1,135,132) (16,105) --
------------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets
applicable to Common shares
from distributions to
Common shareholders (9,189,210) (10,834,747) (6,248,118) (7,271,289) (1,608,328) (1,790,433)
------------------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Net proceeds from Common shares
issued to shareholders due to
reinvestment of distributions -- 139,063 -- 83,158 40,054 36,099
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares from
capital share transactions -- 139,063 -- 83,158 40,054 36,099
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets
applicable to Common shares (2,490,183) (8,165,896) (2,053,792) (4,863,386) (384,101) (997,567)
Net assets applicable to
Common shares at the
beginning of year 177,733,744 185,899,640 115,611,353 120,474,739 30,823,095 31,820,662
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common
shares at the end of year $175,243,561 $177,733,744 $113,557,561 $115,611,353 $30,438,994 $30,823,095
====================================================================================================================================
Undistributed (Over-distribution of)
net investment income at the end
of year $ (85,440) $ 209,079 $ (133,697) $ 220,559 $ (51,915) $ 80,490
====================================================================================================================================
See accompanying notes to financial statements.
59
Statement of
CHANGES in NET ASSETS (continued)
OHIO OHIO OHIO
QUALITY INCOME (NUO) DIVIDEND ADVANTAGE (NXI) DIVIDEND ADVANTAGE 2 (NBJ)
------------------------------ ----------------------------- -----------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
7/31/07 7/31/06 7/31/07 7/31/06 7/31/07 7/31/06
------------------------------------------------------------------------------------------------------------------------------------
OPERATIONS
Net investment income $ 9,361,633 $ 9,570,771 $ 3,996,849 $ 4,065,899 $ 2,885,530 $ 2,904,214
Net realized gain (loss) from:
Investments 1,187,125 61,521 458,042 104,619 356,781 135,984
Forward swaps -- -- -- -- -- --
Futures -- -- -- -- -- --
Change in net unrealized
appreciation (depreciation) of:
Investments (2,229,443) (4,237,619) (728,528) (1,806,156) (612,925) (1,423,071)
Forward swaps (141,307) -- (113,046) -- (56,523) --
Futures -- -- -- -- -- --
Distributions to
Preferred Shareholders:
From net investment income (2,526,574) (2,099,203) (1,023,335) (876,328) (788,031) (671,536)
From accumulated net
realized gains (109,526) (76,287) (34,050) (18,836) (39,456) (22,844)
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets
applicable to Common
shares from operations 5,541,908 3,219,183 2,555,932 1,469,198 1,745,376 922,747
------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS
From net investment income (7,105,832) (8,294,392) (3,063,555) (3,585,882) (2,156,940) (2,505,800)
From accumulated
net realized gains (409,333) (528,190) (131,955) (142,845) (137,033) (149,733)
------------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets
applicable to Common shares
from distributions to
Common shareholders (7,515,165) (8,822,582) (3,195,510) (3,728,727) (2,293,973) (2,655,533)
------------------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Net proceeds from Common shares
issued to shareholders due to
reinvestment of distributions -- 647,482 17,968 122,421 -- 38,062
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares from
capital share transactions -- 647,482 17,968 122,421 -- 38,062
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares (1,973,257) (4,955,917) (621,610) (2,137,108) (548,597) (1,694,724)
Net assets applicable to
Common shares at the
beginning of year 156,025,584 160,981,501 63,735,480 65,872,588 46,242,445 47,937,169
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common
shares at the end of year $154,052,327 $156,025,584 $63,113,870 $63,735,480 $45,693,848 $46,242,445
====================================================================================================================================
Undistributed (Over-distribution of)
net investment income at the end
of year $ (293,613) $ (13,360) $ (98,082) $ (7,440) $ (125,378) $ (59,814)
====================================================================================================================================
See accompanying notes to financial statements.
60
OHIO
DIVIDEND ADVANTAGE 3 (NVJ)
-----------------------------
YEAR ENDED YEAR ENDED
7/31/07 7/31/06
------------------------------------------------------------------------------------------------------------------------------------
OPERATIONS
Net investment income $ 2,070,882 $ 2,052,181
Net realized gain (loss) from:
Investments 233,291 (2,845)
Forward swaps (32,854) --
Futures 34,159 --
Change in net unrealized appreciation (depreciation) of:
Investments (450,205) (991,042)
Forward swaps 15,013 (15,013)
Futures (11,622) 23,324
Distributions to Preferred Shareholders:
From net investment income (530,895) (464,277)
From accumulated net realized gains (21,569) --
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares
from operations 1,306,200 602,328
------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS
From net investment income (1,545,319) (1,709,126)
From accumulated net realized gains (76,833) --
------------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets applicable to
Common shares from distributions
to Common shareholders (1,622,152) (1,709,126)
------------------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Net proceeds from Common shares
issued to shareholders due to
reinvestment of distributions 3,269 7,208
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares from
capital share transactions 3,269 7,208
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares (312,683) (1,099,590)
Net assets applicable to Common
shares at the beginning of year 32,506,358 33,605,948
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common
shares at the end of year $32,193,675 $32,506,358
====================================================================================================================================
Undistributed (Over-distribution of)
net investment income at the end
of year $ (76,726) $ (56,331)
====================================================================================================================================
See accompanying notes to financial statements.
61
Notes to
FINANCIAL STATEMENTS
1. GENERAL INFORMATION AND SIGNIFICANT ACCOUNTING POLICIES
The state funds (the "Funds") covered in this report and their corresponding
Common share stock exchange symbols are Nuveen Michigan Quality Income Municipal
Fund, Inc. (NUM), Nuveen Michigan Premium Income Municipal Fund, Inc. (NMP),
Nuveen Michigan Dividend Advantage Municipal Fund (NZW), Nuveen Ohio Quality
Income Municipal Fund, Inc. (NUO), Nuveen Ohio Dividend Advantage Municipal Fund
(NXI), Nuveen Ohio Dividend Advantage Municipal Fund 2 (NBJ) and Nuveen Ohio
Dividend Advantage Municipal Fund 3 (NVJ). Common shares of Michigan Quality
Income (NUM), Michigan Premium Income (NMP), and Ohio Quality Income (NUO) are
traded on the New York Stock Exchange while Common shares of Michigan Dividend
Advantage (NZW), Ohio Dividend Advantage (NXI), Ohio Dividend Advantage 2 (NBJ)
and Ohio Dividend Advantage 3 (NVJ) are traded on the American Stock Exchange.
The Funds are registered under the Investment Company Act of 1940, as amended,
as closed-end management investment companies.
Each Fund seeks to provide current income exempt from both regular federal and
designated state income taxes by investing primarily in a diversified portfolio
of municipal obligations issued by state and local government authorities within
a single state or certain U.S. territories.
The following is a summary of significant accounting policies followed by the
Funds in the preparation of their financial statements in accordance with U.S.
generally accepted accounting principles.
Investment Valuation
The prices of municipal bonds in each Fund's investment portfolio are provided
by a pricing service approved by the Fund's Board of Directors/Trustees. When
market price quotes are not readily available (which is usually the case for
municipal securities), the pricing service may establish fair value based on
yields or prices of municipal bonds of comparable quality, type of issue,
coupon, maturity and rating, indications of value from securities dealers,
evaluations of anticipated cash flows or collateral and general market
conditions. Prices of forward swap contracts are also provided by an independent
pricing service approved by each Fund's Board of Directors/Trustees. Futures
contracts are valued using the closing settlement price or, in the absence of
such a price, at the mean of the bid and asked prices. If the pricing service is
unable to supply a price for a municipal bond, forward swap contract or futures
contract, each Fund may use a market price or fair market value quote provided
by a major broker/dealer in such investments. If it is determined that the
market price or fair market value for an investment or derivative instrument is
unavailable or inappropriate, the Board of Directors/Trustees of the Funds, or
its designee, may establish a fair value for the investment. Temporary
investments in securities that have variable rate and demand features qualifying
them as short-term investments are valued at amortized cost, which approximates
market value.
Investment Transactions
Investment transactions are recorded on a trade date basis. Realized gains and
losses from transactions are determined on the specific identification method.
Investments purchased on a when-issued/delayed delivery basis may have extended
settlement periods. Any investments so purchased are subject to market
fluctuation during this period. The Funds have instructed the custodian to
segregate assets with a current value at least equal to the amount of the
when-issued/delayed delivery purchase commitments. At July 31, 2007, Ohio
Quality Income (NUO), Ohio Dividend Advantage (NXI), Ohio Dividend Advantage 2
(NBJ) and Ohio Dividend Advantage 3 (NVJ) had outstanding when-issued/delayed
delivery purchase commitments of $840,072, $448,275, $359,663 and $210,018,
respectively. There were no such outstanding purchase commitments in Michigan
Quality Income Municipal, (NUM), Michigan Premium Income (NMP) and Michigan
Dividend Advantage (NZW).
Investment Income
Interest income, which includes the amortization of premiums and accretion of
discounts for financial reporting purposes, is recorded on an accrual basis.
Investment income also includes paydown gains and losses, if any.
62
Income Taxes
Each Fund is a separate taxpayer for federal income tax purposes. Each Fund
intends to distribute substantially all net investment income and net capital
gains to shareholders and to otherwise comply with the requirements of
Subchapter M of the Internal Revenue Code applicable to regulated investment
companies. Therefore, no federal income tax provision is required. Furthermore,
each Fund intends to satisfy conditions which will enable interest from
municipal securities, which is exempt from regular federal and designated state
income taxes, to retain such tax-exempt status when distributed to shareholders
of the Funds. Net realized capital gains and ordinary income distributions paid
by the Funds are subject to federal taxation.
Dividends and Distributions to Common Shareholders
Dividends from tax-exempt net investment income are declared monthly. Net
realized capital gains and/or market discount from investment transactions, if
any, are distributed to shareholders not less frequently than annually.
Furthermore, capital gains are distributed only to the extent they exceed
available capital loss carryforwards.
Distributions to Common shareholders of tax-exempt net investment income, net
realized capital gains and/or market discount, if any, are recorded on the
ex-dividend date. The amount and timing of distributions are determined in
accordance with federal income tax regulations, which may differ from U.S.
generally accepted accounting principles.
Preferred Shares
The Funds have issued and outstanding Preferred shares, $25,000 stated value per
share, as a means of effecting financial leverage. Each Fund's Preferred shares
are issued in one or more Series. The dividend rate paid by the Funds on each
Series is determined every seven days, pursuant to a dutch auction process
overseen by the auction agent, and is payable at the end of each rate period.
The number of Preferred shares outstanding, by Series and in total, for each
Fund is as follows:
MICHIGAN MICHIGAN MICHIGAN
QUALITY PREMIUM DIVIDEND
INCOME INCOME ADVANTAGE
(NUM) (NMP) (NZW)
-------------------------------------------------------------------------------------------------------------------
Number of shares:
Series M -- 840 --
Series W -- -- 640
Series TH 3,200 1,400 --
Series F 560 -- --
-------------------------------------------------------------------------------------------------------------------
Total 3,760 2,240 640
===================================================================================================================
OHIO OHIO OHIO OHIO
QUALITY DIVIDEND DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
(NUO) (NXI) (NBJ) (NVJ)
-------------------------------------------------------------------------------------------------------------------
Number of shares:
Series M 680 -- -- --
Series T -- -- -- 660
Series W -- 1,240 -- --
Series TH 1,400 -- -- --
Series TH2 1,000 -- -- --
Series F -- -- 960 --
-------------------------------------------------------------------------------------------------------------------
Total 3,080 1,240 960 660
===================================================================================================================
Inverse Floating Rate Securities
Each Fund may invest in inverse floating rate securities. An inverse floating
rate security is created by depositing a municipal bond, typically with a fixed
interest rate, into a special purpose trust created by a broker-dealer. In turn,
this trust (a) issues floating rate certificates, in face amounts equal to some
fraction of the deposited bond's par amount or market value, that typically pay
short-term tax-exempt interest rates to third parties, and (b) issues to a
long-term investor (such as one of the Funds) an inverse floating rate
certificate (sometimes referred to as an "inverse floater") that represents all
remaining or residual interest in the trust. The income received by the inverse
floater holder varies inversely with the short-term rate paid to the floating
rate certificates' holders, and in most circumstances the inverse floater holder
bears substantially all of the underlying bond's downside investment risk and
also benefits disproportionately from any potential appreciation of the
underlying bond's value. The price of an inverse floating rate security will be
more volatile than that of the underlying bond because the interest rate is
dependent on not only the fixed coupon rate of the underlying bond but also on
the short-term interest paid on the floating rate certificates, and because the
inverse floating rate security essentially bears the risk of loss of the greater
face value of the underlying bond.
63
A Fund may purchase an inverse floating rate security in a secondary market
transaction without first owning the underlying bond (referred to as an
"externally-deposited inverse floater"), or instead by first selling a
fixed-rate bond to a broker-dealer for deposit into the special purpose trust
and receiving in turn the residual interest in the trust (referred to as a
"self-deposited inverse floater"). An investment in an externally-deposited
inverse floater is identified in the Portfolio of Investments as an "Inverse
floating rate investment". An investment in a self-deposited inverse floater is
accounted for as a financing transaction in accordance with Statement of
Financial Accounting Standards (SFAS) No. 140 "Accounting for Transfers and
Servicing of Financial Assets and Extinguishment of Liabilities". In such
instances, a fixed-rate bond deposited into a special purpose trust is
identified in the Portfolio of Investments as an "Underlying bond of an inverse
floating rate trust", with the Fund accounting for the short-term floating rate
certificates issued by the trust as "Floating rate obligations" on the Statement
of Assets and Liabilities. In addition, the Fund reflects in Investment Income
the entire earnings of the underlying bond and accounts for the related interest
paid to the holders of the short-term floating rate certificates as "Interest
expense on floating rate obligations" in the Statement of Operations.
During the fiscal year ended July 31, 2007, each Fund invested in externally
deposited inverse floaters and/or self-deposited inverse floaters.
The average floating rate obligations outstanding and average annual interest
rate and fees related to self-deposited inverse floaters during the fiscal year
ended July 31, 2007, were as follows:
MICHIGAN MICHIGAN MICHIGAN OHIO OHIO OHIO OHIO
QUALITY PREMIUM DIVIDEND QUALITY DIVIDEND DIVIDEND DIVIDEND
INCOME INCOME ADVANTAGE INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
(NUM) (NMP) (NZW) (NUO) (NXI) (NBJ) (NVJ)
----------------------------------------------------------------------------------------------------------------------------------
Average floating rate obligations $1,622,219 $4,927,192 $299,712 $4,072,603 $1,616,411 $1,201,397 $829,726
Average annual interest rate and fees 3.88% 3.88% 3.89% 3.90% 3.90% 3.90% 3.90%
==================================================================================================================================
Forward Swap Transactions
The Funds are authorized to invest in certain derivative financial instruments.
The Funds' use of forward interest rate swap transactions is intended to help
the Fund manage its overall interest rate sensitivity, either shorter or longer,
generally to more closely align the Fund's interest rate sensitivity with that
of the broader municipal market. Forward interest rate swap transactions involve
each Fund's agreement with a counterparty to pay, in the future, a fixed or
variable rate payment in exchange for the counterparty paying the Fund a
variable or fixed rate payment, the accruals for which would begin at a
specified date in the future (the "effective date"). The amount of the payment
obligation is based on the notional amount of the forward swap contract and the
termination date of the swap (which is akin to a bond's maturity). The value of
the Fund's swap commitment would increase or decrease based primarily on the
extent to which long-term interest rates for bonds having a maturity of the
swap's termination date increases or decreases. The Funds may terminate a swap
contract prior to the effective date, at which point a realized gain or loss is
recognized. When a forward swap is terminated, it ordinarily does not involve
the delivery of securities or other underlying assets or principal, but rather
is settled in cash on a net basis. Each Fund intends, but is not obligated, to
terminate its forward swaps before the effective date. Accordingly, the risk of
loss with respect to the swap counterparty on such transactions is limited to
the credit risk associated with a counterparty failing to honor its commitment
to pay any realized gain to the Fund upon termination. To reduce such credit
risk, all counterparties are required to pledge collateral daily (based on the
daily valuation of each swap) on behalf of each Fund with a value approximately
equal to the amount of any unrealized gain above a pre-determined threshold.
Reciprocally, when any of the Funds have an unrealized loss on a swap contract,
the Funds have instructed the custodian to pledge assets of the Funds as
collateral with a value approximately equal to the amount of the unrealized loss
above a pre-determined threshold. Collateral pledges are monitored and
subsequently adjusted if and when the swap valuations fluctuate, either up or
down, by at least the predetermined threshold amount.
Futures Contracts
The Funds are authorized to invest in futures contracts. Upon entering into a
futures contract, a Fund is required to deposit with the broker an amount of
cash or liquid securities equal to a specified percentage of the contract
amount. This is known as the "initial margin." Subsequent payments ("variation
margin") are made or received by a Fund each day, depending on the daily
fluctuation of the value of the contract.
During the period the futures contract is open, changes in the value of the
contract are recognized as an unrealized gain or loss by "marking-to-market" on
a daily basis to reflect the changes in market value of the contract. When the
contract is closed or expired, a Fund records a realized gain or loss equal to
the difference between the value of the contract on the closing date and value
of the contract when originally entered into. Cash held by the broker to cover
initial margin requirements on open futures contracts, if any, is recognized in
the Statement of Assets and Liabilities. Additionally, the Statement of Assets
and Liabilities reflects a receivable or payable for the variation margin when
applicable.
64
Risks of investments in futures contracts include the possible adverse movement
of the securities or indices underlying the contracts, the possibility that
there may not be a liquid secondary market for the contracts and/or that a
change in the value of the contract may not correlate with a change in the value
of the underlying securities or indices.
Custodian Fee Credit
Each Fund has an arrangement with the custodian bank whereby certain custodian
fees and expenses are reduced by net credits earned on each Fund's cash on
deposit with the bank. Such deposit arrangements are an alternative to overnight
investments. Credits for cash balances may be offset by charges for any days on
which the Fund overdraws its account at the custodian bank.
Indemnifications
Under the Funds' organizational documents, their Officers and Directors/Trustees
are indemnified against certain liabilities arising out of the performance of
their duties to the Funds. In addition, in the normal course of business, the
Funds enter into contracts that provide general indemnifications to other
parties. The Funds' maximum exposure under these arrangements is unknown as this
would involve future claims that may be made against the Funds that have not yet
occurred. However, the Funds have not had prior claims or losses pursuant to
these contracts and expect the risk of loss to be remote.
Use of Estimates
The preparation of financial statements in conformity with U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of increases and
decreases in net assets applicable to Common shares from operations during the
reporting period. Actual results may differ from those estimates.
2. FUND SHARES
Transactions in Common shares were as follows:
MICHIGAN QUALITY MICHIGAN PREMIUM MICHIGAN DIVIDEND
INCOME (NUM) INCOME (NMP) ADVANTAGE (NZW)
------------------------ ----------------------- ------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
7/31/07 7/31/06 7/31/07 7/31/06 7/31/07 7/31/06
------------------------------------------------------------------------------------------------------------------
Common shares issued to
shareholders due to
reinvestment of distributions -- 8,799 -- 5,425 2,587 2,278
==================================================================================================================
OHIO QUALITY OHIO DIVIDEND OHIO DIVIDEND
INCOME (NUO) ADVANTAGE (NXI) ADVANTAGE 2 (NBJ)
------------------------ ----------------------- ------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
7/31/07 7/31/06 7/31/07 7/31/06 7/31/07 7/31/06
------------------------------------------------------------------------------------------------------------------
Common shares issued to
shareholders due to
reinvestment of distributions -- 39,047 1,177 7,448 -- 2,436
==================================================================================================================
OHIO DIVIDEND
ADVANTAGE 3 (NVJ)
------------------------
YEAR ENDED YEAR ENDED
7/31/07 7/31/06
------------------------------------------------------------------------------------------------------------------
Common shares issued to
shareholders due to
reinvestment of distributions 219 458
==================================================================================================================
65
3. INVESTMENT TRANSACTIONS
Purchases and sales (including maturities but excluding short-term investments
and derivative transactions) during the fiscal year ended July 31, 2007, were as
follows:
MICHIGAN MICHIGAN MICHIGAN
QUALITY PREMIUM DIVIDEND
INCOME INCOME ADVANTAGE
(NUM) (NMP) (NZW)
-------------------------------------------------------------------------------------------------------------------
Purchases $34,535,031 $31,257,280 $ 8,839,306
Sales and maturities 36,677,503 26,855,613 9,053,232
===================================================================================================================
OHIO OHIO OHIO OHIO
QUALITY DIVIDEND DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
(NUO) (NXI) (NBJ) (NVJ)
-------------------------------------------------------------------------------------------------------------------
Purchases $43,575,138 $19,540,779 $13,780,870 $10,920,245
Sales and maturities 35,756,254 13,399,486 10,051,162 9,176,848
===================================================================================================================
4. INCOME TAX INFORMATION
The following information is presented on an income tax basis. Differences
between amounts for financial statement and federal income tax purposes are
primarily due to the treatment of paydown gains and losses, timing differences
in recognizing taxable market discount, timing differences in recognizing
certain gains and losses on investment transactions and the treatment of
investments in inverse floating rate transactions subject to SFAS No.140. To the
extent that differences arise that are permanent in nature, such amounts are
reclassified within the capital accounts on the Statement of Assets and
Liabilities presented in the annual report, based on their federal tax basis
treatment; temporary differences do not require reclassification. Temporary and
permanent differences do not impact the net asset values of the Funds.
At July 31, 2007, the cost of investments was as follows:
MICHIGAN MICHIGAN MICHIGAN
QUALITY PREMIUM DIVIDEND
INCOME INCOME ADVANTAGE
(NUM) (NMP) (NZW)
-------------------------------------------------------------------------------------------------------------------
Cost of investments $256,478,401 $162,891,237 $44,881,456
===================================================================================================================
OHIO OHIO OHIO OHIO
QUALITY DIVIDEND DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
(NUO) (NXI) (NBJ) (NVJ)
-------------------------------------------------------------------------------------------------------------------
Cost of investments $223,612,518 $91,278,315 $68,222,989 $46,753,490
===================================================================================================================
Gross unrealized appreciation and gross unrealized depreciation of investments
at July 31, 2007, were as follows:
MICHIGAN MICHIGAN MICHIGAN
QUALITY PREMIUM DIVIDEND
INCOME INCOME ADVANTAGE
(NUM) (NMP) (NZW)
-------------------------------------------------------------------------------------------------------------------
Gross unrealized:
Appreciation $10,955,579 $5,312,719 $1,513,568
Depreciation (1,088,945) (691,607) (500,010)
-------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments $ 9.866,634 $4,621,112 $1,013,558
===================================================================================================================
OHIO OHIO OHIO OHIO
QUALITY DIVIDEND DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
(NUO) (NXI) (NBJ) (NVJ)
-------------------------------------------------------------------------------------------------------------------
Gross unrealized:
Appreciation $6,961,045 $3,135,958 $1,662,953 $1,767,523
Depreciation (1,033,625) (399,673) (311,067) (229,438)
-------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments $5,927,420 $2,736,285 $1,351,886 $1,538,085
===================================================================================================================
66
The tax components of undistributed net tax-exempt income, net
ordinary income and net long-term capital gains at July 31,
2007, the Funds' tax year end, were as follows:
MICHIGAN MICHIGAN MICHIGAN
QUALITY PREMIUM DIVIDEND
INCOME INCOME ADVANTAGE
(NUM) (NMP) (NZW)
-------------------------------------------------------------------------------------------------------------------
Undistributed net tax-exempt income * $ 563,630 $307,896 $ 77,768
Undistributed net ordinary income ** 68,426 12,818 --
Undistributed net long-term capital gains 1,411,370 748,463 193,565
===================================================================================================================
OHIO OHIO OHIO OHIO
QUALITY DIVIDEND DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
(NUO) (NXI) (NBJ) (NVJ)
-------------------------------------------------------------------------------------------------------------------
Undistributed net tax-exempt income * $239,058 $ 64,598 $ 40,409 $ 54,736
Undistributed net ordinary income ** 8,990 1,814 3,297 217
Undistributed net long-term capital gains 720,358 372,714 248,931 177,780
===================================================================================================================
* Undistributed net tax-exempt income (on a tax basis) has not been reduced
for the dividend declared on July 2, 2007, paid on August 1, 2007.
** Net ordinary income consists of taxable market discount income and net
short-term capital gains, if any.
The tax character of distributions paid during the Funds' tax years ended July
31, 2007 and July 31, 2006, was designated for purposes of the dividends paid
deduction as follows:
MICHIGAN MICHIGAN MICHIGAN
QUALITY PREMIUM DIVIDEND
INCOME INCOME ADVANTAGE
2007 (NUM) (NMP) (NZW)
-------------------------------------------------------------------------------------------------------------------
Distributions from net tax-exempt income *** $11,324,987 $7,313,161 $2,109,139
Distributions from net ordinary income ** -- -- --
Distributions from net long-term capital gains **** 1,091,968 892,335 20,175
===================================================================================================================
OHIO OHIO OHIO OHIO
QUALITY DIVIDEND DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
2007 (NUO) (NXI) (NBJ) (NVJ)
-------------------------------------------------------------------------------------------------------------------
Distributions from net tax-exempt income *** $9,691,928 $4,111,327 $2,959,465 $2,078,890
Distributions from net ordinary income ** 8,612 -- 1,566 20,184
Distributions from net long-term capital gains **** 511,427 166,005 174,923 78,218
===================================================================================================================
MICHIGAN MICHIGAN MICHIGAN
QUALITY PREMIUM DIVIDEND
INCOME INCOME ADVANTAGE
2006 (NUM) (NMP) (NZW)
-------------------------------------------------------------------------------------------------------------------
Distributions from net tax-exempt income $12,059,759 $7,607,421 $2,223,571
Distributions from net ordinary income ** -- 20,208 --
Distributions from net long-term capital gains 1,522,925 1,313,082 --
===================================================================================================================
OHIO OHIO OHIO OHIO
QUALITY DIVIDEND DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
2006 (NUO) (NXI) (NBJ) (NVJ)
-------------------------------------------------------------------------------------------------------------------
Distributions from net tax-exempt income $10,480,603 $4,505,621 $3,209,643 $2,183,862
Distributions from net ordinary income ** 749 8,426 350 --
Distributions from net long-term capital gains 604,477 161,865 172,587 --
===================================================================================================================
** Net ordinary income consists of taxable market discount income and net
short-term capital gains, if any.
*** The Funds hereby designate these amounts paid during the fiscal year ended
July 31, 2007, as Exempt Interest Dividends.
**** The Funds hereby designate these amounts paid during the fiscal year ended
July 31, 2007, as long-term capital gain dividends pursuant to Internal
Revenue Code Section 852(b)(3).
67
5. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Each Fund's management fee is separated into two components - a complex-level
component, based on the aggregate amount of all fund assets managed by Nuveen
Asset Management (the "Adviser"), a wholly owned subsidiary of Nuveen
Investments, Inc. ("Nuveen"), and a specific fund-level component, based only on
the amount of assets within each individual Fund. This pricing structure enables
Nuveen fund shareholders to benefit from growth in the assets within each
individual fund as well as from growth in the amount of complex-wide assets
managed by the Adviser.
The annual fund-level fee, payable monthly, for each Fund is based upon the
average daily net assets (including net assets attributable to Preferred shares)
of each Fund as follows:
MICHIGAN QUALITY INCOME (NUM)
AVERAGE DAILY NET ASSETS MICHIGAN PREMIUM INCOME (NMP)
(INCLUDING NET ASSETS OHIO QUALITY INCOME (NUO)
ATTRIBUTABLE TO PREFERRED SHARES) FUND-LEVEL FEE RATE
--------------------------------------------------------------------------------
For the first $125 million .4500%
For the next $125 million .4375
For the next $250 million .4250
For the next $500 million .4125
For the next $1 billion .4000
For the next $3 billion .3875
For net assets over $5 billion .3750
================================================================================
MICHIGAN DIVIDEND ADVANTAGE (NZW)
OHIO DIVIDEND ADVANTAGE (NXI)
AVERAGE DAILY NET ASSETS OHIO DIVIDEND ADVANTAGE 2 (NBJ)
(INCLUDING NET ASSETS OHIO DIVIDEND ADVANTAGE 3 (NVJ)
ATTRIBUTABLE TO PREFERRED SHARES) FUND-LEVEL FEE RATE
--------------------------------------------------------------------------------
For the first $125 million .4500%
For the next $125 million .4375
For the next $250 million .4250
For the next $500 million .4125
For the next $1 billion .4000
For net assets over $2 billion .3750
================================================================================
68
The annual complex-level fee, payable monthly, which is additive to the
fund-level fee, for all Nuveen sponsored funds in the U.S., is based on the
aggregate amount of total fund assets managed as stated in the tables below. As
of July 31, 2007, the complex-level fee rate was .1831%.
Effective August 20, 2007, the complex-level fee schedule was as follows:
COMPLEX-LEVEL ASSETS BREAKPOINT LEVEL(1) EFFECTIVE RATE AT BREAKPOINT LEVEL
--------------------------------------------------------------------------------
$55 billion .2000%
$56 billion .1996
$57 billion .1989
$60 billion .1961
$63 billion .1931
$66 billion .1900
$71 billion .1851
$76 billion .1806
$80 billion .1773
$91 billion .1691
$125 billion .1599
$200 billion .1505
$250 billion .1469
$300 billion .1445
================================================================================
Prior to August 20, 2007, the complex-level fee schedule was as follows:
COMPLEX-LEVEL ASSETS BREAKPOINT LEVEL(1) EFFECTIVE RATE AT BREAKPOINT LEVEL
--------------------------------------------------------------------------------
$55 billion .2000%
$56 billion .1996
$57 billion .1989
$60 billion .1961
$63 billion .1931
$66 billion .1900
$71 billion .1851
$76 billion .1806
$80 billion .1773
$91 billion .1698
$125 billion .1617
$200 billion .1536
$250 billion .1509
$300 billion .1490
================================================================================
(1) The complex-level fee component of the management fee for the funds is
calculated based upon the aggregate Managed Assets ("Managed Assets" means
the average daily net assets of each fund including assets attributable to
preferred stock issued by or borrowings by the Nuveen funds) of Nuveen
sponsored funds in the U.S.
The management fee compensates the Adviser for overall investment advisory and
administrative services and general office facilities. The Funds pay no
compensation directly to those of its Directors/Trustees who are affiliated with
the Adviser or to its Officers, all of whom receive remuneration for their
services to the Funds from the Adviser or its affiliates. The Board of
Directors/Trustees has adopted a deferred compensation plan for independent
Directors/Trustees that enables Directors/Trustees to elect to defer receipt of
all or a portion of the annual compensation they are entitled to receive from
certain Nuveen advised funds. Under the plan, deferred amounts are treated as
though equal dollar amounts had been invested in shares of select Nuveen advised
funds.
69
For the first ten years of Ohio Dividend Advantage's (NXI) operations, the
Adviser has agreed to reimburse the Fund, as a percentage of average daily net
assets (including net assets attributable to Preferred shares), for fees and
expenses in the amounts and for the time periods set forth below:
YEAR ENDING YEAR ENDING
MARCH 31, MARCH 31,
--------------------------------------------------------------------------------
2001* .30% 2007 .25%
2002 .30 2008 .20
2003 .30 2009 .15
2004 .30 2010 .10
2005 .30 2011 .05
2006 .30
================================================================================
* From the commencement of operations.
The Adviser has not agreed to reimburse Ohio Dividend Advantage (NXI) for any
portion of its fees and expenses beyond March 31, 2011.
For the first ten years of Michigan Dividend Advantage's (NZW) and Ohio Dividend
Advantage 2's (NBJ) operations, the Adviser has agreed to reimburse the Funds,
as a percentage of average daily net assets (including net assets attributable
to Preferred shares), for fees and expenses in the amounts and for the time
periods set forth below:
YEAR ENDING YEAR ENDING
SEPTEMBER 30, SEPTEMBER 30,
--------------------------------------------------------------------------------
2001* .30% 2007 .25%
2002 .30 2008 .20
2003 .30 2009 .15
2004 .30 2010 .10
2005 .30 2011 .05
2006 .30
================================================================================
* From the commencement of operations.
The Adviser has not agreed to reimburse Michigan Dividend Advantage (NZW) and
Ohio Dividend Advantage 2 (NBJ) for any portion of their fees and expenses
beyond September 30, 2011.
For the first ten years of Ohio Dividend Advantage 3's (NVJ) operations, the
Adviser has agreed to reimburse the Fund, as a percentage of average daily net
assets (including net assets attributable to Preferred shares), for fees and
expenses in the amounts and for the time periods set forth below:
YEAR ENDING YEAR ENDING
MARCH 31, MARCH 31,
--------------------------------------------------------------------------------
2002* .30% 2008 .25%
2003 .30 2009 .20
2004 .30 2010 .15
2005 .30 2011 .10
2006 .30 2012 .05
2007 .30
================================================================================
* From the commencement of operations.
The Adviser has not agreed to reimburse Ohio Dividend Advantage 3 (NVJ) for any
portion of its fees and expenses beyond March 31, 2012.
Agreement and Plan of Merger
On June 20, 2007, Nuveen Investments announced that it had entered into a
definitive Agreement and Plan of Merger ("Merger Agreement") with Windy City
Investments, Inc. ("Windy City"), a corporation formed by investors led by
Madison Dearborn Partners, LLC, pursuant to which Windy City would acquire
Nuveen Investments. Madison Dearborn Partners, LLC is a private equity
investment firm based in Chicago, Illinois. The investors include an affiliate
of Merrill Lynch. It is anticipated that Merrill Lynch and its affiliates will
be indirect "affiliated persons" (as that term is defined in the Investment
Company Act of 1940) of the Funds upon and after the acquisition. One important
implication of this is that the Funds will not be able to buy securities from or
sell securities to Merrill Lynch, but the portfolio management teams and Fund
management do not expect that this will significantly impact the ability of the
Funds to pursue their investment objectives and policies. Under the terms of the
merger, each outstanding share of Nuveen Investments' common stock (other than
dissenting shares) will be converted into the right to receive a specified
amount of cash, without interest. The merger is expected to be completed by the
end of the year, subject to customary conditions,
70
including obtaining necessary fund and client consents sufficient to satisfy the
terms of the Merger Agreement. The obligations of Windy City to consummate the
merger are not conditioned on its obtaining financing.
The consummation of the merger will be deemed to be an "assignment" (as defined
in the 1940 Act) of the investment management agreement between each Fund and
the Adviser, and will result in the automatic termination of each Fund's
agreement. The Board of Directors/Trustees of each Fund has approved a new
investment management agreement with the Adviser. The agreement is being
presented to the Fund's shareholders for approval, and, if so approved by
shareholders, would take effect upon consummation of the merger. There can be no
assurance that the merger described above will be consummated as contemplated or
that necessary shareholder approvals will be obtained.
6. NEW ACCOUNTING PRONOUNCEMENTS
Financial Accounting Standards Board Interpretation No. 48
On July 13, 2006, the Financial Accounting Standards Board (FASB) released FASB
Interpretation No. 48 "Accounting for Uncertainty in Income Taxes" (FIN 48). FIN
48 provides guidance for how uncertain tax positions should be recognized,
measured, presented and disclosed in the financial statements. FIN 48 requires
the evaluation of tax positions taken or expected to be taken in the course of
preparing the Funds' tax returns to determine whether the tax positions are
"more-likely-than-not" of being sustained by the applicable tax authority. Tax
positions not deemed to meet the more-likely-than-not threshold would be
recorded as a tax benefit or expense in the current year. Adoption of FIN 48 is
required for fiscal years beginning after December 15, 2006, and is to be
applied to all open tax years as of the effective date. Recent SEC guidance
allows funds to delay implementing FIN 48 into NAV calculations until the fund's
last NAV calculation in the first required financial statement reporting period.
As a result, the Funds must begin to incorporate FIN 48 into their NAV
calculations by January 31, 2008. At this time, management is continuing to
evaluate the implications of FIN 48 and does not expect the adoption of FIN 48
will have a significant impact on the net assets or results of operations of the
Funds.
Financial Accounting Standards Board Statement of Financial Accounting Standards
No. 157
In September 2006, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 157, "Fair Value
Measurements." This standard establishes a single authoritative definition of
fair value, sets out a framework for measuring fair value and requires
additional disclosures about fair value measurements. SFAS No. 157 applies to
fair value measurements already required or permitted by existing standards.
SFAS No. 157 is effective for financial statements issued for fiscal years
beginning after November 15, 2007, and interim periods within those fiscal
years. The changes to current generally accepted accounting principles from the
application of this standard relate to the definition of fair value, the methods
used to measure fair value, and the expanded disclosures about fair value
measurements. As of July 31, 2007, management does not believe the adoption of
SFAS No. 157 will impact the financial statement amounts; however, additional
disclosures may be required about the inputs used to develop the measurements
and the effect of certain of the measurements included within the Statement of
Operations for the period.
7. SUBSEQUENT EVENTS
Distributions to Common Shareholders
The Funds declared Common share dividend distributions from their tax-exempt net
investment income which were paid on September 4, 2007, to shareholders of
record on August 15, 2007, as follows:
MICHIGAN MICHIGAN MICHIGAN
QUALITY PREMIUM DIVIDEND
INCOME INCOME ADVANTAGE
(NUM) (NMP) (NZW)
-------------------------------------------------------------------------------------------------------------------
Dividend per share $.0590 $.0580 $.0615
===================================================================================================================
OHIO OHIO OHIO OHIO
QUALITY DIVIDEND DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
(NUO) (NXI) (NBJ) (NVJ)
-------------------------------------------------------------------------------------------------------------------
Dividend per share $.0595 $.0570 $.0565 $.0595
===================================================================================================================
71
Financial
HIGHLIGHTS
Selected data for a Common share outstanding throughout each period:
Investment Operations Less Distributions
--------------------------------------------------------------- ----------------------------------
Distributions Distributions
from Net from Net
Beginning Investment Capital Investment Capital
Common Net Income to Gains to Income to Gains to
Share Net Realized/ Preferred Preferred Common Common
Net Asset Investment Unrealized Share- Share- Share- Share-
Value Income Gain (Loss) holders+ holders+ Total holders holders Total
------------------------------------------------------------------------------------------------------------------------------------
MICHIGAN QUALITY
INCOME (NUM)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 7/31:
2007 $15.17 $ .94 $(.10) $(.25) $(.02) $ .57 $(.71) $(.07) $ (.78)
2006 15.88 .96 (.52) (.21) (.02) .21 (.81) (.11) (.92)
2005 15.51 .98 .57 (.13) (.01) 1.41 (.93) (.11) (1.04)
2004 15.14 1.01 .49 (.06) (.01) 1.43 (.95) (.11) (1.06)
2003 15.48 1.04 (.27) (.08) (.01) .68 (.92) (.10) (1.02)
MICHIGAN PREMIUM
INCOME (NMP)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 7/31:
2007 14.92 .90 (.12) (.23) (.02) .53 (.71) (.09) (.80)
2006 15.55 .91 (.40) (.18) (.02) .31 (.79) (.15) (.94)
2005 15.19 .93 .50 (.11) -- 1.32 (.91) (.05) (.96)
2004 15.24 .97 .38 (.04) (.03) 1.28 (.94) (.39) (1.33)
2003 15.56 1.03 (.37) (.07) -- .59 (.91) -- (.91)
====================================================================================================================================
Total Returns
---------------------
Offering Based
Costs and Ending on
Preferred Common Based Common
Share Share Ending on Share Net
Underwriting Asset Market Market Asset
Discounts Value Value Value* Value*
-------------------------------------------------------------------------------
MICHIGAN QUALITY
INCOME (NUM)
-------------------------------------------------------------------------------
Year Ended 7/31:
2007 $ -- $14.96 $14.16 3.64% 3.77%
2006 -- 15.17 14.41 (2.28) 1.41
2005 -- 15.88 15.67 9.94 9.28
2004 -- 15.51 15.20 5.17 9.52
2003 -- 15.14 15.45 2.40 4.35
MICHIGAN PREMIUM
INCOME (NMP)
-------------------------------------------------------------------------------
Year Ended 7/31:
2007 -- 14.65 13.80 2.16 3.59
2006 -- 14.92 14.27 (3.12) 2.06
2005 -- 15.55 15.68 16.03 8.80
2004 -- 15.19 14.37 5.46 8.56
2003 -- 15.24 14.85 2.64 3.71
===============================================================================
Ratios/Supplemental Data
----------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets Ratios to Average Net Assets
Applicable to Common Shares Applicable to Common Shares
Before Credit/Reimbursement After Credit/Reimbursement**
-------------------------------------------- ----------------------------------------------
Ending
Net
Assets
Applicable Expenses Expenses Net Expenses Expenses Net Portfolio
to Common Including Excluding Investment Including Excluding Investment Turnover
Shares (000) Interest++(a) Interest++(a) Income++ Interest++(a) Interest++(a) Income++ Rate
------------------------------------------------------------------------------------------------------------------------------------
MICHIGAN QUALITY
INCOME (NUM)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 7/31:
2007 $175,244 1.26% 1.22% 6.12% 1.24% 1.20% 6.14% 13%
2006 177,734 1.23 1.23 6.17 1.22 1.22 6.19 18
2005 185,900 1.22 1.22 6.13 1.21 1.21 6.14 8
2004 181,114 1.22 1.22 6.44 1.22 1.22 6.45 15
2003 176,186 1.24 1.24 6.56 1.24 1.24 6.57 15
MICHIGAN PREMIUM
INCOME (NMP)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 7/31:
2007 113,558 1.38 1.22 5.97 1.37 1.21 5.98 15
2006 115,611 1.20 1.20 6.03 1.19 1.19 6.03 6
2005 120,475 1.19 1.19 5.97 1.17 1.17 5.98 11
2004 117,529 1.20 1.20 6.28 1.19 1.19 6.30 28
2003 117,418 1.21 1.21 6.49 1.20 1.20 6.50 18
====================================================================================================================================
Floating Rate Obligations
Preferred Shares at End of Period at End of Period
-------------------------------------- --------------------------
Aggregate Liquidation Aggregate
Amount and Market Asset Amount Asset
Outstanding Value Coverage Outstanding Coverage
(000) Per Share Per Share (000) Per $1,000
--------------------------------------------------------------------------------
MICHIGAN QUALITY
INCOME (NUM)
--------------------------------------------------------------------------------
Year Ended 7/31:
2007 $94,000 $25,000 $71,607 $3,870 $70,572
2006 94,000 25,000 72,270 -- --
2005 94,000 25,000 74,441 -- --
2004 94,000 25,000 73,169 -- --
2003 94,000 25,000 71,858 -- --
MICHIGAN PREMIUM
INCOME (NMP)
--------------------------------------------------------------------------------
Year Ended 7/31:
2007 56,000 25,000 75,695 8,105 21,920
2006 56,000 25,000 76,612 -- --
2005 56,000 25,000 78,783 -- --
2004 56,000 25,000 77,468 -- --
2003 56,000 25,000 77,419 -- --
================================================================================
* Total Return on Market Value is the combination of changes in the market
price per share and the effect of reinvested dividend income and reinvested
capital gains distributions, if any, at the average price paid per share at
the time of reinvestment. The last dividend declared in the period, which
is typically paid on the first business day of the following month, is
assumed to be reinvested at the ending market price. The actual
reinvestment for the last dividend declared in the period may take place
over several days, and in some instances may not be based on the market
price, so the actual reinvestment price may be different from the price
used in the calculation. Total returns are not annualized.
Total Return on Common Share Net Asset Value is the combination of changes
in Common share net asset value, reinvested dividend income at net asset
value and reinvested capital gains distributions at net asset value, if
any. The last dividend declared in the period, which is typically paid on
the first business day of the following month, is assumed to be reinvested
at the ending net asset value. The actual reinvest price for the last
dividend declared in the period may often be based on the Fund's market
price (and not its net asset value), and therefore may be different from
the price used in the calculation. Total returns are not annualized.
** After custodian fee credit and expense reimbursement, where applicable.
+ The amounts shown are based on Common share equivalents.
++ Ratios do not reflect the effect of dividend payments to Preferred
shareholders; income ratios reflect income earned on assets attributable to
Preferred shares.
(a) Interest expense arises from the application of SFAS No. 140 to certain
inverse floating rate transactions entered into by the Fund as more fully
described in Footnote 1 - Inverse Floating Rate Securities.
See accompanying notes to financial statements.
72-73 spread
Financial
HIGHLIGHTS (continued)
Selected data for a Common share outstanding throughout each period:
Investment Operations Less Distributions
--------------------------------------------------------------- -----------------------------------
Distributions Distributions
from Net from Net
Beginning Investment Capital Investment Capital
Common Net Income to Gains to Income to Gains to
Share Net Realized/ Preferred Preferred Common Common
Net Asset Investment Unrealized Share- Share- Share- Share-
Value Income Gain (Loss) holders+ holders+ Total holders holders Total
------------------------------------------------------------------------------------------------------------------------------------
MICHIGAN DIVIDEND
ADVANTAGE (NZW)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 7/31:
2007 $14.94 $.95 $(.14) $(.24) $ --*** $ .57 $(.77) $(.01) $(.78)
2006 15.44 .97 (.40) (.20) -- .37 (.87) -- (.87)
2005 14.82 .98 .63 (.11) -- 1.50 (.89) -- (.89)
2004 14.30 .99 .47 (.05) -- 1.41 (.89) -- (.89)
2003 14.42 .99 (.20) (.07) -- .72 (.86) -- (.86)
====================================================================================================================================
Total Returns
---------------------
Offering Based
Costs and Ending on
Preferred Common Based Common
Share Share Ending on Share Net
Underwriting Asset Market Market Asset
Discounts Value Value Value* Value*
----------------------------------------------------------------------------------
MICHIGAN DIVIDEND
ADVANTAGE (NZW)
----------------------------------------------------------------------------------
Year Ended 7/31:
2007 $ -- $14.73 $15.10 .46% 3.79%
2006 -- 14.94 15.81 (.47) 2.46
2005 .01 15.44 16.79 21.34 10.41
2004 -- 14.82 14.65 2.99 10.00
2003 .02 14.30 15.10 9.19 5.01
==================================================================================
Ratios/Supplemental Data
---------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets Ratios to Average Net Assets
Applicable to Common Shares Applicable to Common Shares
Before Credit/Reimbursement After Credit/Reimbursement**
--------------------------------------------- ----------------------------------------------
Ending
Net
Assets
Applicable Expenses Expenses Net Expenses Expenses Net Portfolio
to Common Including Excluding Investment Including Excluding Investment Turnover
Shares (000) Interest++(a) Interest++(a) Income++ Interest++(a) Interest++(a) Income++ Rate
------------------------------------------------------------------------------------------------------------------------------------
MICHIGAN DIVIDEND
ADVANTAGE (NZW)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 7/31:
2007 $30,439 1.38% 1.35% 5.89% .96% .93% 6.31% 19%
2006 30,823 1.31 1.31 5.92 .83 .83 6.40 8
2005 31,821 1.27 1.27 5.93 .81 .81 6.39 8
2004 30,538 1.28 1.28 6.13 .81 .81 6.60 9
2003 29,443 1.29 1.29 6.15 .82 .82 6.61 2
====================================================================================================================================
Floating Rate Obligations
Preferred Shares at End of Period at End of Period
-------------------------------------- --------------------------
Aggregate Liquidation Aggregate
Amount and Market Asset Amount Asset
Outstanding Value Coverage Outstanding Coverage
(000) Per Share Per Share (000) Per $1,000
--------------------------------------------------------------------------------
MICHIGAN DIVIDEND
ADVANTAGE (NZW)
--------------------------------------------------------------------------------
Year Ended 7/31:
2007 $16,000 $25,000 $72,561 $715 $65,950
2006 16,000 25,000 73,161 -- --
2005 16,000 25,000 74,720 -- --
2004 16,000 25,000 72,716 -- --
2003 16,000 25,000 71,005 -- --
================================================================================
* Total Return on Market Value is the combination of changes in the market
price per share and the effect of reinvested dividend income and reinvested
capital gains distributions, if any, at the average price paid per share at
the time of reinvestment. The last dividend declared in the period, which
is typically paid on the first business day of the following month, is
assumed to be reinvested at the ending market price. The actual
reinvestment for the last dividend declared in the period may take place
over several days, and in some instances may not be based on the market
price, so the actual reinvestment price may be different from the price
used in the calculation. Total returns are not annualized.
Total Return on Common Share Net Asset Value is the combination of changes
in Common share net asset value, reinvested dividend income at net asset
value and reinvested capital gains distributions at net asset value, if
any. The last dividend declared in the period, which is typically paid on
the first business day of the following month, is assumed to be reinvested
at the ending net asset value. The actual reinvest price for the last
dividend declared in the period may often be based on the Fund's market
price (and not its net asset value), and therefore may be different from
the price used in the calculation. Total returns are not annualized.
** After custodian fee credit and expense reimbursement, where applicable.
*** Distributions from Capital Gains to Preferred Shareholders rounds to less
than $0.01 per share.
+ The amounts shown are based on Common share equivalents.
++ Ratios do not reflect the effect of dividend payments to Preferred
shareholders; income ratios reflect income earned on assets attributable to
Preferred shares.
(a) Interest expense arises from the application of SFAS No. 140 to certain
inverse floating rate transactions entered into by the Fund as more fully
described in Footnote 1 - Inverse Floating Rate Securities.
See accompanying notes to financial statements.
74-75 spread
Financial
HIGHLIGHTS (continued)
Selected data for a Common share outstanding throughout each period:
Investment Operations Less Distributions
--------------------------------------------------------------- ----------------------------------
Distributions Distributions
from Net from Net
Beginning Investment Capital Investment Capital
Common Net Income to Gains to Income to Gains to
Share Net Realized/ Preferred Preferred Common Common
Net Asset Investment Unrealized Share- Share- Share- Share-
Value Income Gain (Loss) holders+ holders+ Total holders holders Total
---------------------------------------------------------------------------------------------------------------------------------
OHIO QUALITY
INCOME (NUO)
---------------------------------------------------------------------------------------------------------------------------------
Year Ended 7/31:
2007 $16.01 $ .96 $ (.12) $(.26) $(.01) $ .57 $ (.73) $(.04) $ (.77)
2006 16.58 .98 (.42) (.22) (.01) .33 (.85) (.05) (.90)
2005 16.21 1.02 .49 (.12) -- 1.39 (.98) (.04) (1.02)
2004 16.17 1.07 .25 (.06) (.01) 1.25 (1.00) (.21) (1.21)
2003 16.36 1.10 (.22) (.08) -- .80 (.99) -- (.99)
OHIO DIVIDEND
ADVANTAGE (NXI)
---------------------------------------------------------------------------------------------------------------------------------
Year Ended 7/31:
2007 15.02 .94 (.09) (.24) (.01) .60 (.72) (.03) (.75)
2006 15.55 .96 (.40) (.21) -- .35 (.85) (.03) (.88)
2005 15.05 1.00 .57 (.11) -- 1.46 (.96) -- (.96)
2004 14.66 1.04 .40 (.06) -- 1.38 (.97) (.02) (.99)
2003 14.83 1.05 (.23) (.07) -- .75 (.92) (.01) (.93)
=================================================================================================================================
Total Returns
---------------------
Offering Based
Costs and Ending on
Preferred Common Based Common
Share Share Ending on Share Net
Underwriting Asset Market Market Asset
Discounts Value Value Value* Value*
--------------------------------------------------------------------------------
OHIO QUALITY
INCOME (NUO)
--------------------------------------------------------------------------------
Year Ended 7/31:
2007 $ -- $15.81 $14.43 (4.25)% 3.56%
2006 -- 16.01 15.83 (1.36) 2.10
2005 -- 16.58 16.96 10.25 8.70
2004 -- 16.21 16.30 2.59 7.87
2003 -- 16.17 17.04 (3.15) 4.84
OHIO DIVIDEND
ADVANTAGE (NXI)
--------------------------------------------------------------------------------
Year Ended 7/31:
2007 -- 14.87 14.39 .52 4.02
2006 -- 15.02 15.05 (6.53) 2.32
2005 -- 15.55 17.00 21.79 9.87
2004 -- 15.05 14.80 10.70 9.54
2003 .01 14.66 14.26 (.04) 5.09
================================================================================
Ratios/Supplemental Data
--------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets Ratios to Average Net Assets
Applicable to Common Shares Applicable to Common Shares
Before Credit/Reimbursement After Credit/Reimbursement**
--------------------------------------------- ----------------------------------------------
Ending
Net
Assets
Applicable Expenses Expenses Net Expenses Expenses Net Portfolio
to Common Including Excluding Investment Including Excluding Investment Turnover
Shares (000) Interest++(a) Interest++(a) Income++ Interest++(a) Interest++(a) Income++ Rate
------------------------------------------------------------------------------------------------------------------------------------
OHIO QUALITY
INCOME (NUO)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 7/31:
2007 $154,052 1.29% 1.19% 5.94% 1.27% 1.17% 5.95% 15%
2006 156,026 1.20 1.20 6.05 1.19 1.19 6.06 9
2005 160,982 1.19 1.19 6.16 1.18 1.18 6.17 14
2004 156,634 1.20 1.20 6.46 1.19 1.19 6.47 31
2003 155,412 1.22 1.22 6.59 1.22 1.22 6.60 12
OHIO DIVIDEND
ADVANTAGE (NXI)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 7/31:
2007 63,114 1.32 1.22 5.85 .96 .86 6.21 14
2006 63,735 1.21 1.21 5.85 .76 .76 6.30 6
2005 65,873 1.21 1.21 6.00 .76 .76 6.46 14
2004 63,642 1.20 1.20 6.41 .75 .75 6.86 10
2003 61,924 1.23 1.23 6.52 .78 .78 6.97 6
====================================================================================================================================
Floating Rate Obligations
Preferred Shares at End of Period at End of Period
-------------------------------------- --------------------------
Aggregate Liquidation Aggregate
Amount and Market Asset Amount Asset
Outstanding Value Coverage Outstanding Coverage
(000) Per Share Per Share (000) Per $1,000
--------------------------------------------------------------------------------
OHIO QUALITY INCOME (NUO)
--------------------------------------------------------------------------------
Year Ended 7/31:
2007 $77,000 $25,000 $75,017 $10,670 $22,654
2006 77,000 25,000 75,658 -- --
2005 77,000 25,000 77,267 -- --
2004 77,000 25,000 75,855 -- --
2003 77,000 25,000 75,458 -- --
OHIO DIVIDEND ADVANTAGE (NXI)
--------------------------------------------------------------------------------
Year Ended 7/31:
2007 31,000 25,000 75,898 4,220 23,302
2006 31,000 25,000 76,400 -- --
2005 31,000 25,000 78,123 -- --
2004 31,000 25,000 76,324 -- --
2003 31,000 25,000 74,938 -- --
================================================================================
* Total Return on Market Value is the combination of changes in the market
price per share and the effect of reinvested dividend income and reinvested
capital gains distributions, if any, at the average price paid per share at
the time of reinvestment. The last dividend declared in the period, which
is typically paid on the first business day of the following month, is
assumed to be reinvested at the ending market price. The actual
reinvestment for the last dividend declared in the period may take place
over several days, and in some instances may not be based on the market
price, so the actual reinvestment price may be different from the price
used in the calculation. Total returns are not annualized.
Total Return on Common Share Net Asset Value is the combination of changes
in Common share net asset value, reinvested dividend income at net asset
value and reinvested capital gains distributions at net asset value, if
any. The last dividend declared in the period, which is typically paid on
the first business day of the following month, is assumed to be reinvested
at the ending net asset value. The actual reinvest price for the last
dividend declared in the period may often be based on the Fund's market
price (and not its net asset value), and therefore may be different from
the price used in the calculation. Total returns are not annualized.
** After custodian fee credit and expense reimbursement, where applicable.
+ The amounts shown are based on Common share equivalents.
++ Ratios do not reflect the effect of dividend payments to Preferred
shareholders; income ratios reflect income earned on assets attributable to
Preferred shares.
(a) Interest expense arises from the application of SFAS No. 140 to certain
inverse floating rate transactions entered into by the Fund as more fully
described in Footnote 1 - Inverse Floating Rate Securities.
See accompanying notes to financial statements.
76-77 spread
Financial
HIGHLIGHTS (continued)
Selected data for a Common share outstanding throughout each period:
Investment Operations Less Distributions
--------------------------------------------------------------- ----------------------------------
Distributions Distributions
from Net from Net
Beginning Investment Capital Investment Capital
Common Net Income to Gains to Income to Gains to
Share Net Realized/ Preferred Preferred Common Common
Net Asset Investment Unrealized Share- Share- Share- Share-
Value Income Gain (Loss) holders+ holders+ Total holders holders Total
---------------------------------------------------------------------------------------------------------------------------------
OHIO DIVIDEND
ADVANTAGE 2 (NBJ)
---------------------------------------------------------------------------------------------------------------------------------
Year Ended 7/31:
2007 $14.81 $ .92 $(.10) $(.25) $(.01) $ .56 $(.69) $(.04) $(.73)
2006 15.37 .93 (.41) (.22) (.01) .29 (.80) (.05) (.85)
2005 14.85 .95 .61 (.12) -- 1.44 (.90) (.02) (.92)
2004 14.31 .99 .53 (.06) -- 1.46 (.92) -- (.92)
2003 14.48 1.00 (.23) (.08) -- .69 (.87) -- (.87)
OHIO DIVIDEND
ADVANTAGE 3 (NVJ)
---------------------------------------------------------------------------------------------------------------------------------
Year Ended 7/31:
2007 15.06 .96 (.08) (.25) (.01) .62 (.72) (.04) (.76)
2006 15.57 .95 (.45) (.22) -- .28 (.79) -- (.79)
2005 14.93 .95 .69 (.11) -- 1.53 (.87) (.02) (.89)
2004 14.48 .96 .51 (.06) (.01) 1.40 (.88) (.07) (.95)
2003 14.83 .97 (.29) (.07) (.01) .60 (.88) (.06) (.94)
=================================================================================================================================
Total Returns
---------------------
Offering Based
Costs and Ending on
Preferred Common Based Common
Share Share Ending on Share Net
Underwriting Asset Market Market Asset
Discounts Value Value Value* Value*
---------------------------------------------------------------------------------
OHIO DIVIDEND
ADVANTAGE 2 (NBJ)
---------------------------------------------------------------------------------
Year Ended 7/31:
2007 $ -- $14.64 $13.80 (1.26)% 3.80%
2006 -- 14.81 14.70 .35 1.96
2005 -- 15.37 15.48 11.63 9.90
2004 -- 14.85 14.70 9.60 10.33
2003 .01 14.31 14.26 3.17 4.74
OHIO DIVIDEND
ADVANTAGE 3 (NVJ)
---------------------------------------------------------------------------------
Year Ended 7/31:
2007 -- 14.92 14.35 2.32 4.06
2006 -- 15.06 14.75 (2.33) 1.87
2005 -- 15.57 15.90 17.60 10.40
2004 -- 14.93 14.30 5.86 9.72
2003 (.01) 14.48 14.40 .09 3.81
=================================================================================
Ratios/Supplemental Data
--------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets Ratios to Average Net Assets
Applicable to Common Shares Applicable to Common Shares
Before Credit/Reimbursement After Credit/Reimbursement**
--------------------------------------------- ----------------------------------------------
Ending
Net
Assets
Applicable Expenses Expenses Net Expenses Expenses Net Portfolio
to Common Including Excluding Investment Including Excluding Investment Turnover
Shares (000) Interest++(a) Interest++(a) Income++ Interest++(a) Interest++(a) Income++ Rate
------------------------------------------------------------------------------------------------------------------------------------
OHIO DIVIDEND
ADVANTAGE 2 (NBJ)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 7/31:
2007 $45,694 1.41% 1.31% 5.76% 1.00% .90% 6.17% 14%
2006 46,242 1.27 1.27 5.71 .78 .78 6.19 8
2005 47,937 1.23 1.23 5.71 .77 .77 6.17 14
2004 46,268 1.25 1.25 6.13 .79 .79 6.60 15
2003 44,578 1.27 1.27 6.26 .81 .81 6.72 15
OHIO DIVIDEND
ADVANTAGE 3 (NVJ)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 7/31:
2007 32,194 1.41 1.31 5.85 .96 .86 6.30 19
2006 32,506 1.28 1.28 5.76 .81 .81 6.23 2
2005 33,606 1.27 1.27 5.68 .81 .81 6.14 3
2004 32,208 1.28 1.28 5.87 .81 .81 6.34 8
2003 31,245 1.28 1.28 5.89 .82 .82 6.35 16
====================================================================================================================================
Floating Rate Obligations
Preferred Shares at End of Period at End of Period
-------------------------------------- --------------------------
Aggregate Liquidation Aggregate
Amount and Market Asset Amount Asset
Outstanding Value Coverage Outstanding Coverage
(000) Per Share Per Share (000) Per $1,000
--------------------------------------------------------------------------------
OHIO DIVIDEND ADVANTAGE 2 (NBJ)
--------------------------------------------------------------------------------
Year Ended 7/31:
2007 $24,000 $25,000 $72,598 $3,155 $23,090
2006 24,000 25,000 73,169 -- --
2005 24,000 25,000 74,935 -- --
2004 24,000 25,000 73,196 -- --
2003 24,000 25,000 71,435 -- --
OHIO DIVIDEND ADVANTAGE 3 (NVJ)
--------------------------------------------------------------------------------
Year Ended 7/31:
2007 16,500 25,000 73,778 2,165 23,491
2006 16,500 25,000 74,252 -- --
2005 16,500 25,000 75,918 -- --
2004 16,500 25,000 73,800 -- --
2003 16,500 25,000 72,341 -- --
================================================================================
* Total Return on Market Value is the combination of changes in the market
price per share and the effect of reinvested dividend income and reinvested
capital gains distributions, if any, at the average price paid per share at
the time of reinvestment. The last dividend declared in the period, which
is typically paid on the first business day of the following month, is
assumed to be reinvested at the ending market price. The actual
reinvestment for the last dividend declared in the period may take place
over several days, and in some instances may not be based on the market
price, so the actual reinvestment price may be different from the price
used in the calculation. Total returns are not annualized.
Total Return on Common Share Net Asset Value is the combination of changes
in Common share net asset value, reinvested dividend income at net asset
value and reinvested capital gains distributions at net asset value, if
any. The last dividend declared in the period, which is typically paid on
the first business day of the following month, is assumed to be reinvested
at the ending net asset value. The actual reinvest price for the last
dividend declared in the period may often be based on the Fund's market
price (and not its net asset value), and therefore may be different from
the price used in the calculation. Total returns are not annualized.
** After custodian fee credit and expense reimbursement, where applicable.
+ The amounts shown are based on Common share equivalents.
++ Ratios do not reflect the effect of dividend payments to Preferred
shareholders; income ratios reflect income earned on assets attributable to
Preferred shares.
(a) Interest expense arises from the application of SFAS No. 140 to certain
inverse floating rate transactions entered into by the Fund as more fully
described in Footnote 1 - Inverse Floating Rate Securities.
See accompanying notes to financial statements.
78-79 spread
Board Members & OFFICERS
The management of the Funds, including general supervision of the duties
performed for the Funds by the Adviser, is the responsibility of the Board
Members of the Funds. The number of board members of the Fund is currently set
at nine. None of the board members who are not "interested" persons of the Funds
has ever been a director or employee of, or consultant to, Nuveen or its
affiliates. The names and business addresses of the board members and officers
of the Funds, their principal occupations and other affiliations during the past
five years, the number of portfolios each oversees and other directorships they
hold are set forth below.
NUMBER
NAME, POSITION(S) HELD YEAR FIRST OF PORTFOLIOS PRINCIPAL
BIRTHDATE WITH THE FUNDS ELECTED OR IN FUND OCCUPATION(S)
& ADDRESS APPOINTED COMPLEX INCLUDING OTHER
AND TERM(2) OVERSEEN BY DIRECTORSHIPS
BOARD MEMBER DURING PAST 5 YEARS
BOARD MEMBER WHO IS AN INTERESTED PERSON OF THE FUNDS:
[] TIMOTHY R. SCHWERTFEGER(1) Director (since 1994) and Chairman (since
3/28/49 Chairman of 1994 1996) and Non-Executive Chairman (since July
333 W. Wacker Drive the Board ANNUAL 176 1, 2007) formerly, Chief Executive Officer
Chicago, IL 60606 and Board Member (1996-June 30, 2007) of Nuveen Investments,
Inc. and Nuveen Asset Management and certain
other subsidiaries of Nuveen Investments,
Inc.; formerly, Director (1992-2006) of
Institutional Capital Corporation.
BOARD MEMBERS WHO ARE NOT INTERESTED PERSONS OF THE FUNDS:
[] ROBERT P. BREMNER Private Investor and Management Consultant.
8/22/40 Lead 1997
333 W. Wacker Drive Independent CLASS III 176
Chicago, IL 60606 Board member
[] JACK B. EVANS President, The Hall-Perrine Foundation, a
10/22/48 1999 private philanthropic corporation (since
333 W. Wacker Drive Board member CLASS III 176 1996); Director and Vice Chairman, United
Chicago, IL 60606 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.
[] WILLIAM C. HUNTER Dean, Tippie College of Business, University
3/6/48 2004 of Iowa (since July 2006); formerly, Dean
333 W. Wacker Drive Board member CLASS II 176 and Distinguished Professor of Finance,
Chicago, IL 60606 School of Business at the University of
Connecticut (2003-2006); previously, Senior
Vice President and Director of Research at
the Federal Reserve Bank of Chicago
(1995-2003); Director (since 1997), Credit
Research Center at Georgetown University;
Director (since 2004) of Xerox Corporation;
Director, SS&C Technologies, Inc. (May
2005-October 2005).
80
NUMBER
NAME, POSITION(S) HELD YEAR FIRST OF PORTFOLIOS PRINCIPAL
BIRTHDATE WITH THE FUNDS ELECTED OR IN FUND OCCUPATION(S)
& ADDRESS APPOINTED COMPLEX INCLUDING OTHER
AND TERM(2) OVERSEEN BY DIRECTORSHIPS
BOARD MEMBER DURING PAST 5 YEARS
BOARD MEMBERS WHO ARE NOT INTERESTED PERSONS OF THE FUNDS:
[] DAVID J. KUNDERT Director, Northwestern Mutual Wealth
10/28/42 2005 Management Company; Retired (since 2004) as
333 W. Wacker Drive Board member CLASS II 174 Chairman, JPMorgan Fleming Asset Management,
Chicago, IL 60606 President and CEO, Banc One Investment
Advisors Corporation, and President, One
Group Mutual Funds; prior thereto, Executive
Vice President, Banc One Corporation and
Chairman and CEO, Banc One Investment
Management Group; Board of Regents, Luther
College; member of the Wisconsin Bar
Association; member of Board of Directors,
Friends of Boerner Botanical Gardens; member
of Board of Directors, Milwaukee Repertory
Theater.
[] WILLIAM J. SCHNEIDER Chairman of Miller-Valentine Partners Ltd.,
9/24/44 1997 a real estate investment company; formerly,
333 W. Wacker Drive Board member ANNUAL 176 Senior Partner and Chief Operating Officer
Chicago, IL 60606 (retired, 2004) of Miller-Valentine Group;
formerly, Vice President, Miller-Valentine
Realty; Board Member, Chair of the Finance
Committee and member of the Audit Committee
of Premier Health Partners, the
not-for-profit company of Miami Valley
Hospital; Vice President, Dayton
Philharmonic Orchestra Association; Board
Member, Regional Leaders Forum, which
promotes cooperation on economic development
issues; Director, Dayton Development
Coalition; formerly, Member, Community
Advisory Board, National City Bank, Dayton,
Ohio and Business Advisory Council,
Cleveland Federal Reserve Bank.
[] JUDITH M. STOCKDALE Executive Director, Gaylord and Dorothy
12/29/47 1997 Donnelley Foundation (since 1994); prior
333 W. Wacker Drive Board member CLASS I 176 thereto, Executive Director, Great Lakes
Chicago, IL 60606 Protection Fund (from 1990 to 1994).
[] CAROLE E. STONE Director, Chicago Board Options Exchange
6/28/47 2007 (since 2006); Chair New York Racing
333 West Wacker Drive Board member CLASS I 176 Association Oversight Board (since 2005);
Chicago, IL 60606 Commissioner, New York State Commission on
Public Authority Reform (since 2005);
formerly Director, New York State Division
of the Budget (2000-2004), Chair, Public
Authorities Control Board (2000-2004) and
Director, Local Government Assistance
Corporation (2000-2004).
81
NUMBER
NAME, POSITION(S) HELD YEAR FIRST OF PORTFOLIOS PRINCIPAL
BIRTHDATE WITH THE FUNDS ELECTED OR IN FUND OCCUPATION(S)
AND ADDRESS APPOINTED(4) COMPLEX DURING PAST 5 YEARS
OVERSEEN
BY OFFICER
OFFICERS OF THE FUND:
[] GIFFORD R. ZIMMERMAN Managing Director (since 2002), Assistant
9/9/56 Chief Secretary and Associate General Counsel,
333 W. Wacker Drive Administrative 1988 176 formerly, Vice President and Assistant
Chicago, IL 60606 Officer General Counsel, of Nuveen Investments, LLC;
Managing Director (since 2002) and Assistant
Secretary and Associate General Counsel,
formerly, Vice President (since 1997), of
Nuveen Asset Management; Managing Director
(since 2004) and Assistant Secretary (since
1994) of Nuveen Investments, Inc.; Assistant
Secretary of NWQ Investment Management
Company, LLC. (since 2002); Vice President
and Assistant Secretary of Nuveen
Investments Advisers Inc. (since 2002);
Managing Director, Associate General Counsel
Assistant Secretary of Rittenhouse Asset
Management, Inc., Symphony Asset Management
LLC (since 2003), Tradewinds Global
Investors, LLC and Santa Barbara Asset
Management, LLC; (since 2006); formerly,
Managing Director (2002-2004), General
Counsel (1998-2004) and Assistant Secretary,
formerly, Vice President of Nuveen Advisory
Corp. and Nuveen Institutional Advisory
Corp.(3); Chartered Financial Analyst.
[] WILLIAMS ADAMS IV Executive Vice President, U.S. Structured
6/9/55 Products of Nuveen Investments, LLC, (since
333 West Wacker Drive Vice President 2007 119 1999), prior thereto, Managing Director of
Chicago, IL 60606 Structured Investments.
[] JULIA L. ANTONATOS Managing Director (since 2005), formerly
9/22/63 Vice President (since 2002) of Nuveen
333 W. Wacker Drive Vice President 2004 176 Investments, LLC; Chartered Financial
Chicago, IL 60606 Analyst.
[] CEDRIC H. ANTOSIEWICZ Managing Director, (since 2004) previously,
1/11/62 Vice President (1993-2004) of Nuveen
333 W. Wacker Drive Vice President 2007 119 Investments, LLC.
Chicago, IL 60606
[] MICHAEL T. ATKINSON Vice President (since 2002) of Nuveen
2/3/66 Vice President Investments, LLC.
333 W. Wacker Drive and Assistant 2000 176
Chicago, IL 60606 Secretary
[] PETER H. D'ARRIGO Vice President and Treasurer of Nuveen
11/28/67 Investments, LLC and of Nuveen Investments,
333 W. Wacker Drive Vice President 1999 176 Inc. (since 1999); Vice President and
Chicago, IL 60606 Treasurer of Nuveen Asset Management (since
2002) and of Nuveen Investments Advisers
Inc. (since 2002); Assistant Treasurer of
NWQ Investment Management Company, LLC.
(since 2002); Vice President and Treasurer
of Nuveen Rittenhouse Asset Management, Inc.
(since 2003); Treasurer of Symphony Asset
Management LLC (since 2003) and Santa
Barbara Asset Management, LLC (since 2006);
Assistant Treasurer, Tradewinds Global
Investors, LLC (since 2006); formerly, Vice
President and Treasurer (1999-2004) of
Nuveen Advisory Corp. and Nuveen
Institutional Advisory Corp.(3); Chartered
Financial Analyst.
[] LORNA C. FERGUSON
10/24/45 Managing Director (since 2004), formerly,
333 W. Wacker Drive Vice President 1998 176 Vice President of Nuveen Investments, LLC,
Chicago, IL 60606 Managing Director (2004) formerly, Vice
President (1998-2004) of Nuveen Advisory
Corp. and Nuveen Institutional Advisory
Corp.(3); Managing Director (since 2005) of
Nuveen Asset Management.
82
NUMBER
NAME, POSITION(S) HELD YEAR FIRST OF PORTFOLIOS PRINCIPAL
BIRTHDATE WITH THE FUNDS ELECTED OR IN FUND OCCUPATION(S)
AND ADDRESS APPOINTED(4) COMPLEX DURING PAST 5 YEARS
OVERSEEN
BY OFFICER
OFFICERS OF THE FUND:
[] WILLIAM M. FITZGERALD Managing Director (since 2002), formerly,
3/2/64 Vice President of Nuveen Investments, LLC;
333 W. Wacker Drive Vice President 1995 176 Managing Director (1997-2004) of Nuveen
Chicago, IL 60606 Advisory Corp. and Nuveen Institutional
Advisory Corp.(3); Managing Director (since
2001) of Nuveen Asset Management; Vice
President (since 2002) of Nuveen Investments
Advisers Inc.; Chartered Financial Analyst.
[] STEPHEN D. FOY Vice President (since 1993) and Funds
5/31/54 Vice President Controller (since 1998) of Nuveen
333 W. Wacker Drive and Controller 1998 176 Investments, LLC; formerly, Vice President
Chicago, IL 60606 and Funds Controller (1998-2004) of Nuveen
Investments, Inc.; Certified Public
Accountant.
[] WALTER M. KELLY Assistant Vice President and Assistant
2/24/70 Chief Compliance Secretary of the Nuveen Funds (2003-2006);
333 West Wacker Drive Officer and 2003 176 Vice President (since 2006) formerly,
Chicago, IL 60606 Vice President Assistant Vice President and Assistant
General Counsel (2003-2006) of Nuveen
Investments, LLC; previously, Associate
(2001-2003) at the law firm of Vedder,
Price, Kaufman & Kammholz.
[] DAVID J. LAMB Vice President (since 2000) of Nuveen
3/22/63 Investments, LLC; Certified Public Accountant.
333 W. Wacker Drive Vice President 2000 176
Chicago, IL 60606
[] TINA M. LAZAR Vice President of Nuveen Investments, LLC
8/27/61 (since 1999).
333 W. Wacker Drive Vice President 2002 176
Chicago, IL 60606
[] LARRY W. MARTIN Vice President, Assistant Secretary and
7/27/51 Vice President Assistant General Counsel of Nuveen
333 W. Wacker Drive and Assistant 1988 176 Investments, LLC; formerly, Vice President
Chicago, IL 60606 Secretary and Assistant Secretary of Nuveen Advisory
Corp. and Nuveen Institutional Advisory
Corp.(3); Vice President (since 2005) and
Assistant Secretary of Nuveen Investments,
Inc.; Vice President (since 2005) and
Assistant Secretary (since 1997) of Nuveen
Asset Management; Vice President (since
2000), Assistant Secretary and Assistant
General Counsel (since 1998) of Rittenhouse
Asset Management, Inc.; Vice President and
Assistant Secretary of Nuveen Investments
Advisers Inc. (since 2002); Assistant
Secretary of NWQ Investment Management
Company, LLC (since 2002), Symphony Asset
Management LLC (since 2003) and Tradewinds
Global Investors, LLC and Santa Barbara
Asset Management, LLC (since 2006).
[] KEVIN J. MCCARTHY Vice President and Assistant General
3/26/66 Vice President Counsel, Nuveen Investments, LLC (since
333 W. Wacker Drive and Secretary 2007 176 2007); Vice President, Nuveen Investments,
Chicago, IL 60606 LLC (since 2007); Vice President and
Assistant Secretary, Nuveen Asset Management
and Rittenhouse Asset Management, Inc.
(since 2007); prior thereto, Partner, Bell,
Boyd & Lloyd LLP (1997-2007)
[] JOHN V. MILLER Managing Director (since 2007), formerly,
4/10/67 Vice President (2002-2007) of Nuveen
333 W. Wacker Drive Vice President 2007 176 Investments, LLC; Chartered Financial
Chicago, IL 60606 Analyst.
(1) Mr. Schwertfeger is an "interested person" of the Funds, as defined in the
Investment Company Act of 1940, because he is an officer and board member of
the Adviser.
(2) Board Members serve three year terms, except for two board members who are
elected by the holders of Preferred Shares. The Board of Trustees is divided
into three classes, Class I, Class II, and Class III, with each being
elected to serve until the third succeeding annual shareholders' meeting
subsequent to its election or thereafter in each case when its respective
successors are duly elected or appointed, except two board members are
elected by the holders of Preferred Shares to serve until the next annual
shareholders' meeting subsequent to its election or thereafter in each case
when its respective successors are duly elected or appointed. The first year
elected or appointed represents the year in which the board member was first
elected or appointed to any fund in the Nuveen Complex.
(3) Nuveen Advisory Corp. and Nuveen Institutional Advisory Corp. were
reorganized into Nuveen Asset Management, effective January 1, 2005.
(4) Officers serve one year terms through July of each year. The year first
elected or appointed represents the year in which the Officer was first
elected or appointed to any fund in the Nuveen Complex.
83
Annual Investment
Management Agreement
Approval PROCESS
The Board Members are responsible for overseeing the performance of the
investment adviser to the Funds and determining whether to continue the advisory
arrangements. At the annual review meeting held on May 21, 2007 (the "May
Meeting"), the Board Members of the Funds, including the Independent Board
Members, unanimously approved the continuance of the Investment Management
Agreement between each Fund (a "Fund") and Nuveen Asset Management ("NAM"). The
foregoing Investment Management Agreements with NAM are hereafter referred to as
"Original Investment Management Agreements."
Subsequent to the May Meeting, Nuveen Investments, Inc. ("Nuveen"), the parent
company of NAM, entered into a merger agreement providing for the acquisition of
Nuveen by Windy City Investments, Inc., a corporation formed by investors led by
Madison Dearborn Partners, LLC ("MDP"), a private equity investment firm (the
"Transaction"). Each Original Investment Management Agreement, as required by
Section 15 of the Investment Company Act of 1940 (the "1940 Act") provides for
its automatic termination in the event of its "assignment" (as defined in the
1940 Act). Any change in control of the adviser is deemed to be an assignment.
The consummation of the Transaction will result in a change of control of NAM as
well as its affiliated sub-advisers and therefore cause the automatic
termination of each Original Investment Management Agreement, as required by the
1940 Act. Accordingly, in anticipation of the Transaction, at a meeting held on
July 31, 2007 (the "July Meeting"), the Board Members, including the Independent
Board Members, unanimously approved new Investment Management Agreements (the
"New Investment Management Agreements") with NAM on behalf of each Fund to take
effect immediately after the Transaction or shareholder approval of the new
advisory contracts, whichever is later. The 1940 Act also requires that each New
Investment Management Agreement be approved by the respective Fund's
shareholders in order for it to become effective. Accordingly, to ensure
continuity of advisory services, the Board Members, including the Independent
Board Members, unanimously approved Interim Investment Management Agreements to
take effect upon the closing of the Transaction if shareholders have not yet
approved the New Investment Management Agreements.
Because the information provided and considerations made at the annual review
continue to be relevant with respect to the evaluation of the New Investment
Management Agreements, the Board considered the foregoing as part of its
deliberations of the New Investment Management Agreements. Accordingly, as
indicated, the discussions immediately below outline the materials and
information presented to the Board in connection with the Board's prior annual
review and the analysis undertaken and the conclusions reached by Board Members
when determining to continue the Original Investment Management Agreements.
I. APPROVAL OF THE ORIGINAL INVESTMENT MANAGEMENT AGREEMENTS
During the course of the year, the Board received a wide variety of materials
relating to the services provided by NAM and the performance of the Funds. At
each of its quarterly meetings, the Board reviewed investment performance and
various matters relating to the operations of the Funds and other Nuveen funds,
including the compliance program, shareholder services, valuation, custody,
distribution and other information relating to the nature, extent and quality of
services provided by NAM. Between the regularly scheduled quarterly meetings,
the Board Members received information on particular matters as the need arose.
In preparation for their considerations at the May Meeting, the Independent
Board Members received extensive materials, well in advance of the meeting,
which outlined or are related to, among other things:
[] the nature, extent and quality of services provided by NAM;
[] the organization and business operations of NAM, including the
responsibilities of various departments an key personnel;
84
[] each Fund's past performance as well as the Fund's performance compared to
funds with similar investment objectives based on data and information
provided by an independent third party and to customized benchmarks;
[] the profitability of Nuveen and certain industry profitability analyses for
unaffiliated advisers;
[] the expenses of Nuveen in providing the various services;
[] the advisory fees and total expense ratios of each Fund, including
comparisons of such fees and expenses with those of comparable,
unaffiliated funds based on information and data provided by an independent
third party (the "Peer Universe") as well as compared to a subset of funds
within the Peer Universe (the "Peer Group") of the respective Fund (as
applicable);
[] the advisory fees NAM assesses to other types of investment products or
clients;
[] the soft dollar practices of NAM, if any; and
[] from independent legal counsel, a legal memorandum describing among other
things, applicable laws, regulations and duties in reviewing and approving
advisory contracts.
At the May Meeting, NAM made a presentation to, and responded to questions from,
the Board. Prior to and after the presentations and reviewing the written
materials, the Independent Board Members met privately with their legal counsel
to review the Boardduties in reviewing advisory contracts and considering the
renewal of the advisory contracts. The Independent Board Members, in
consultation with independent counsel, reviewed the factors set out in judicial
decisions and Securities and Exchange Commission ("SEC") directives relating to
the renewal of advisory contracts. As outlined in more detail below, the Board
Members considered all factors they believed relevant with respect to each Fund,
including, but not limited to, the following: (a) the nature, extent and quality
of the services to be provided by NAM; (b) the investment performance of the
Fund and NAM; (c) the costs of the services to be provided and profits to be
realized by Nuveen and its affiliates; (d) the extent to which economies of
scale would be realized; and (e) whether fee levels reflect those economies of
scale for the benefit of the Fund's investors. In addition, as noted, the Board
Members met regularly throughout the year to oversee the Funds. In evaluating
the Original Investment Management Agreements, the Board Members also relied
upon their knowledge of NAM, its services and the Funds resulting from their
meetings and other interactions throughout the year. It is with this background
that the Board Members considered each Original Investment Management Agreement.
A. NATURE, EXTENT AND QUALITY OF SERVICES
In considering the renewal of the Original Investment Management Agreements, the
Board Members considered the nature, extent and quality of NAM's services. The
Board Members reviewed materials outlining, among other things, Nuveen's
organization and business; the types of services that NAM or its affiliates
provide and are expected to provide to the Funds; the performance record of the
applicable Fund (as described in further detail below); and, any initiatives
Nuveen had taken for the municipal fund product line. As noted, at the annual
review, the Board Members were already familiar with the organization,
operations and personnel of NAM due to the Board Members' experience in
governing the respective Funds and working with NAM on matters relating to the
Funds. With respect to personnel, the Board Members recognized NAM's investment
in additional qualified personnel throughout the various groups in the
organization and recommended to NAM that it continue to review staffing needs as
necessary. In addition, the Board Members reviewed materials describing the
current status and, in particular, the developments in 2006 with respect to
NAM's investment process, investment strategies (including additional tools used
in executing such strategies), personnel (including portfolio management and
research teams), trading process, hedging activities, risk management operations
(e.g., reviewing credit quality, duration limits, and derivatives use, as
applicable), and investment operations (such as enhancements to trading
procedures, pricing procedures, and client services). The Board Members
recognized NAM's investment of resources and efforts to continue to enhance and
refine its investment process.
In addition to advisory services, the Independent Board Members considered the
quality of administrative and non-advisory services provided by NAM and noted
that NAM and its affiliates provide the Funds with a wide variety of services
and officers and other personnel as are necessary for the operations of the
Funds, including:
85
ANNUAL INVESTMENT MANAGEMENT AGREEMENT
APPROVAL PROCESS (continued)
[] product management;
[] fund administration;
[] oversight by shareholder services and other fund service providers;
[] administration of Board relations;
[] regulatory and portfolio compliance; and
[] legal support.
As the Funds operate in a highly regulated industry and given the importance of
compliance, the Board Members considered, in particular, Nuveen's compliance
activities for the Funds and enhancements thereto. In this regard, the Board
Members recognized the quality of Nuveen's compliance team. The Board Members
further noted Nuveen's negotiations with other service providers and the
corresponding reduction in certain service providers' fees at the May Meeting.
In addition to the foregoing services, the Board Members also noted the
additional services that NAM or its affiliates provide to Nuveen's closed-end
funds, including, in particular, its secondary market support activities. The
Board Members recognized Nuveen's continued commitment to supporting the
secondary market for the common shares of its closed-end funds through a variety
of programs designed to raise investor and analyst awareness and understanding
of closed-end funds. These efforts include:
[] maintaining shareholder communications;
[] providing advertising for the Nuveen closed-end funds;
[] maintaining its closed-end fund website;
[] maintaining continual contact with financial advisers;
[] providing educational symposia;
[] conducting research with investors and financial analysis regarding
closed-end funds; and
[] evaluating secondary market performance.
With respect to the Nuveen closed-end funds that utilize leverage through the
issuance of preferred shares ("Preferred Shares"), the Board Members noted
Nuveen's continued support for the holders of Preferred Shares by, among other
things:
[] maintaining an in-house trading desk;
[] maintaining a product manager for the Preferred Shares;
[] developing distribution for Preferred Shares with new market participants;
[] maintaining an orderly auction process;
[] managing leverage and risk management of leverage; and
[] maintaining systems necessary to test compliance with rating agency
criteria.
Based on their review, the Board Members found that, overall, the nature, extent
and quality of services provided (and expected to be provided) to the respective
Funds under the Original Investment Management Agreements were satisfactory.
B. THE INVESTMENT PERFORMANCE OF THE FUNDS AND NAM
At the May Meeting, the Board considered the investment performance for each
Fund, including the Fund's historic performance as well as its performance
compared to funds with similar investment objectives (the "Performance Peer
Group") based on data provided by an independent third party (as described
below). The Board Members also reviewed the respective Fund's portfolio level
performance (which does not reflect fund level fees and expenses, and leverage)
against customized benchmarks, described in further detail below.
86
In evaluating the performance information during the annual review at the May
Meeting, in certain instances, the Board Members noted that the closest
Performance Peer Group for a fund may not adequately reflect such fund's
investment objectives and strategies, thereby limiting the usefulness of the
comparisons of such fund's performance with that of the Performance Peer Group.
With respect to state-specific municipal funds, the Board Members also
recognized that certain funds do not have a corresponding state-specific
Performance Peer Group in which case their performance is measured against a
more general municipal category for various states. With respect to municipal
closed-end funds, funds that do not have corresponding state-specific
Performance Peer Groups are from states other than New York, California,
Florida, New Jersey, Michigan and Pennsylvania. However, with respect to funds
based in Florida, New Jersey, Michigan and Pennsylvania, the peer group may be
so small or the Nuveen funds may dominate the category to such an extent that
performance information for such funds was also compared to the more general
category for all states (other than New York and California).
The Board Members reviewed performance information including, among other
things, total return information compared with the Fund's Performance Peer Group
for the one-, three- and five-year periods (as applicable) ending December 31,
2006. The Board Members also reviewed the Fund's portfolio level performance
(which does not reflect fund level fees and expenses, and leverage) compared to
customized portfolio-level benchmarks for the one- and three-year periods ending
December 31, 2006 (as applicable). The analysis was used to assess the efficacy
of investment decisions against appropriate measures of risk and total return,
within specific market segments. This information supplemented the Fund
performance information provided to the Board at each of its quarterly meetings.
Based on their review, the Board Members determined that each Fund's investment
performance over time had been satisfactory, subject to the following. With
respect to various municipal closed-end funds, the Board Members noted relative
total return underperformance in recent years compared to peers. The Board
Members reviewed materials and discussed with NAM the factors contributing to
the shift in performance including, among other things, the degree of risk
undertaken by peers compared to the municipal closed-end funds (such as through
the increased use of leverage or taking concentrated positions in high risk
credits). In addition, the Board Members also considered a fund's dividend
performance and the extent of any secondary market discounts. The Board Members
noted NAM's efforts to evaluate the factors affecting performance and determine
whether modification to a fund's investment strategy is necessary or
appropriate, and concluded that they were satisfied with the steps being taken.
C. FEES, EXPENSES AND PROFITABILITY
1. FEES AND EXPENSES
During the annual review, in evaluating the management fees and expenses of
a Fund, the Board reviewed, among other things, the Fund's advisory fees
(net and gross management fees) and total expense ratios (before and after
expense reimbursements and/or waivers) in absolute terms as well as
comparisons to the gross management fees (before waivers), net management
fees (after waivers) and total expense ratios (before and after waivers) of
comparable funds in the Peer Universe and the Peer Group. In reviewing the
fee schedule for a Fund, the Board Members considered the fund-level and
complex-wide breakpoint schedules (described in further detail below) and
any fee waivers and reimbursements provided by Nuveen (applicable, in
particular, for certain funds launched since 1999). The Board Members
further reviewed data regarding the construction of Peer Groups as well as
the methods of measurement for the fee and expense analysis and the
performance analysis. In certain cases, due to the small number of peers in
the Peer Universe, the Peer Universe and Peer Group had significant overlap
or even consisted entirely of the same unaffiliated funds. In reviewing the
comparisons of fee and expense information, the Board Members recognized
that in certain cases, the fund size relative to peers, the small size and
odd composition of the Peer Group (including differences in objectives and
strategies), expense anomalies, timing of information used or other factors
impacting the comparisons thereby limited some of the usefulness of the
comparative data. The Board Members also considered the differences in the
use of leverage. Based on their review of the fee and expense information
provided, the Board Members determined that each Fund's net total expense
ratio was within an acceptable range compared to peers.
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ANNUAL INVESTMENT MANAGEMENT AGREEMENT
APPROVAL PROCESS (continued)
2. COMPARISONS WITH THE FEES OF OTHER CLIENTS
At the annual review, the Board Members further reviewed data comparing the
advisory fees of NAM with fees NAM charges to other clients. With respect
to municipal funds, such clients include NAM's municipal separately managed
accounts. In general, the advisory fees charged for separate accounts are
somewhat lower than the advisory fees assessed to the Funds. The Board
Members considered the differences in the product types, including, but not
limited to, the services provided, the structure and operations, product
distribution and costs thereof, portfolio investment policies, investor
profiles, account sizes and regulatory requirements. The Board Members
noted, in particular, that the range of services provided to the Funds (as
discussed above) is much more extensive than that provided to separately
managed accounts. As described in further detail above, such additional
services include, but are not limited to: product management, fund
administration, oversight of third party service providers, administration
of Board relations, and legal support. The Board Members noted that the
Funds operate in a highly regulated industry requiring extensive compliance
functions compared to other investment products. Given the inherent
differences in the products, particularly the extensive services provided
to the Funds, the Board Members believe such facts justify the different
levels of fees.
3. PROFITABILITY OF NUVEEN
In conjunction with its review of fees, the Board Members also considered
the profitability of Nuveen for its advisory activities (which incorporated
Nuveen's wholly-owned affiliated sub-advisers) and its financial condition.
At the annual review, the Board Members reviewed the revenues and expenses
of Nuveen's advisory activities for the last three years, the allocation
methodology used in preparing the profitability data as well as the 2006
Annual Report for Nuveen. The Board Members noted this information
supplemented the profitability information requested and received during
the year to help keep them apprised of developments affecting profitability
(such as changes in fee waivers and expense reimbursement commitments). In
this regard, the Board Members noted the enhanced dialogue and information
regarding profitability with NAM during the year, including more frequent
meetings and updates from Nuveen's corporate finance group. The Board
Members also reviewed data comparing Nuveen's profitability with other fund
sponsors prepared by three independent third party service providers as
well as comparisons of the revenues, expenses and profit margins of various
unaffiliated management firms with similar amounts of assets under
management prepared by Nuveen.
In reviewing profitability, the Board Members recognized the subjective
nature of determining profitability which may be affected by numerous
factors, including the allocation of expenses. Further, the Board Members
recognized the difficulties in making comparisons as the profitability of
other advisers generally is not publicly available and the profitability
information that is available for certain advisers or management firms may
not be representative of the industry and may be affected by, among other
things, the adviser's particular business mix, capital costs, types of
funds managed and expense allocations.
Notwithstanding the foregoing, the Board Members reviewed Nuveen's methodology
and assumptions for allocating expenses across product lines to determine
profitability. Last year, the Board Members also designated an Independent Board
Member as a point person for the Board to review the methodology determinations
during the year and any refinements thereto, which relevant information produced
from such process was reported to the full Board. In reviewing profitability,
the Board Members recognized Nuveen's increased investment in its fund business.
Based on its review, the Board Members concluded that Nuveen's level of
profitability for its advisory activities was reasonable in light of the
services provided.
In evaluating the reasonableness of the compensation, the Board Members also
considered other amounts paid to NAM by the Funds as well as any indirect
benefits (such as soft dollar arrangements, if any) NAM and its affiliates
receive, or are expected to receive, that are directly attributable to the
management of the Funds, if any. See Section E below for additional information
on indirect benefits NAM may receive as a result of its relationship with the
Funds. Based on their review of the overall fee arrangements of each Fund, the
Board Members determined that the advisory fees and expenses of the Funds were
reasonable.
88
D. ECONOMIES OF SCALE AND WHETHER FEE LEVELS REFLECT THESE ECONOMIES OF SCALE
With respect to economies of scale, the Board Members recognized the potential
benefits resulting from the costs of a Fund being spread over a larger asset
base. To help ensure the shareholders share in these benefits, the Board Members
reviewed and considered the breakpoints in the advisory fee schedules that
reduce advisory fees. In addition to advisory fee breakpoints, the Board also
approved a complex-wide fee arrangement in 2004. Pursuant to the complex-wide
fee arrangement, the fees of the funds in the Nuveen complex, including the
Funds, are reduced as the assets in the fund complex reach certain levels. In
evaluating the complex-wide fee arrangement, the Board Members noted that the
last complex-wide asset level breakpoint for the complex-wide fee schedule was
at $91 billion and that the Board Members anticipated further review and/or
negotiations prior to the assets of the Nuveen complex reaching such threshold.
Based on their review, the Board Members concluded that the breakpoint schedule
and complex-wide fee arrangement were acceptable and desirable in providing
benefits from economies of scale to shareholders, subject to further evaluation
of the complex-wide fee schedule as assets in the complex increase. See Section
II, Paragraph D - "Approval of the New Investment Management Agreements -
Economies of Scale and Whether Fee Levels Reflect These Economies of Scale" for
information regarding subsequent modifications to the complex-wide fee.
E. INDIRECT BENEFITS
In evaluating fees, the Board Members also considered any indirect benefits or
profits NAM or its affiliates may receive as a result of its relationship with
each Fund. With respect to closed-end funds, the Board Members considered the
revenues received by affiliates of NAM for serving as agent at Nuveen's
preferred trading desk and for serving as a co-manager in the initial public
offering of new closed-end exchange traded funds.
In addition to the above, the Board Members considered whether NAM received any
benefits from soft dollar arrangements whereby a portion of the commissions paid
by a Fund for brokerage may be used to acquire research that may be useful to
NAM in managing the assets of the Funds and other clients. With respect to NAM,
the Board Members noted that NAM does not currently have any soft dollar
arrangements; however, to the extent certain bona fide agency transactions that
occur on markets that traditionally trade on a principal basis and riskless
principal transactions are considered as generating "commissions," NAM intends
to comply with the applicable safe harbor provisions.
Based on their review, the Board Members concluded that any indirect benefits
received by NAM as a result of its relationship with the Funds were reasonable
and within acceptable parameters.
F. OTHER CONSIDERATIONS
The Board Members did not identify any single factor discussed previously as
all-important or controlling in their considerations to continue an advisory
contract. The Board Members, including the Independent Board Members,
unanimously concluded that the terms of the Original Investment Management
Agreements are fair and reasonable, that NAM's fees are reasonable in light of
the services provided to each Fund and that the renewal of the Original
Investment Management Agreements be approved.
II. APPROVAL OF THE NEW INVESTMENT MANAGEMENT AGREEMENTS
Following the May Meeting, the Board Members were advised of the potential
Transaction. As noted above, the completion of the Transaction would terminate
each of the Original Investment Management Agreements. Accordingly, at the July
Meeting, the Board of each Fund, including the Independent Board Members,
unanimously approved the New Investment Management Agreements on behalf of the
respective Funds. Leading up to the July Meeting, the Board Members had several
meetings and deliberations with and without Nuveen management present, and with
the advice of legal counsel, regarding the proposed Transaction as outlined
below.
On June 8, 2007, the Board Members held a special telephonic meeting to discuss
the proposed Transaction. At that meeting, the Board Members established a
special ad hoc committee comprised solely of Independent Board Members to focus
on the Transaction and to keep the Independent Board Members updated with
developments regarding the Transaction. On June 15, 2007, the ad hoc committee
discussed with representatives of NAM the Transaction and modifications to the
complex-wide fee schedule that
89
ANNUAL INVESTMENT MANAGEMENT AGREEMENT
APPROVAL PROCESS (continued)
would generate additional fee savings at specified levels of complex-wide asset
growth. Following the foregoing meetings and several subsequent telephonic
conferences among Independent Board Members and independent counsel, and between
Independent Board Members and representatives of Nuveen, the Board met on June
18, 2007 to further discuss the proposed Transaction. Immediately prior to and
then again during the June 18, 2007 meeting, the Independent Board Members met
privately with their independent legal counsel. At that meeting, the Board met
with representatives of MDP, of Goldman Sachs, Nuveen's financial adviser in the
Transaction, and of the Nuveen Board to discuss, among other things, the history
and structure of MDP, the terms of the proposed Transaction (including the
financing terms), and MDP's general plans and intentions with respect to Nuveen
(including with respect to management, employees, and future growth prospects).
On July 9, 2007, the Board also met to be updated on the Transaction as part of
a special telephonic Board meeting. The Board Members were further updated at a
special in-person Board meeting held on July 19, 2007 (one Independent Board
Member participated telephonically). Subsequently, on July 27, 2007, the ad hoc
committee held a telephonic conference with representatives of Nuveen and MDP to
further discuss, among other things, the Transaction, the financing of the
Transaction, retention and incentive plans for key employees, the effect of
regulatory restrictions on transactions with affiliates after the Transaction,
and current volatile market conditions and their impact on the Transaction.
In connection with their review of the New Investment Management Agreements, the
Independent Board Members, through their independent legal counsel, also
requested in writing and received additional information regarding the proposed
Transaction and its impact on the provision of services by NAM and its
affiliates.
The Independent Board Members received, well in advance of the July Meeting,
materials which outlined, among other things:
[] the structure and terms of the Transaction, including MDP's co-investor
entities and their expected ownership interests, and the financing
arrangements that will exist for Nuveen following the closing of the
Transaction;
[] the strategic plan for Nuveen following the Transaction;
[] the governance structure for Nuveen following the Transaction;
[] any anticipated changes in the operations of the Nuveen funds following the
Transaction, including changes to NAM's and Nuveen's day-to-day management,
infrastructure and ability to provide advisory, distribution or other
applicable services to the Funds;
[] any changes to senior management or key personnel who work on Fund related
matters (including portfolio management, investment oversight, and
legal/compliance) and any retention or incentive arrangements for such
persons;
[] any anticipated effect on each Fund's expense ratio (including advisory
fees) following the Transaction;
[] any benefits or undue burdens imposed on the Funds as a result of the
Transaction;
[] any legal issues for the Funds as a result of the Transaction;
[] the nature, quality and extent of services expected to be provided to the
Funds following the Transaction, changes to any existing services and
policies affecting the Funds, and cost-cutting efforts, if any, that may
impact such services or policies;
[] any conflicts of interest that may arise for Nuveen or MDP with respect to
the Funds;
[] the costs associated with obtaining necessary shareholder approvals and who
would bear those costs; and
[] from legal counsel, a memorandum describing the applicable laws,
regulations and duties in approving advisory contracts, including, in
particular, with respect to a change of control.
Immediately preceding the July Meeting, representatives of MDP met with the
Board to further respond to questions regarding the Transaction. After the
meeting with MDP, the Independent Board Members met with
90
independent legal counsel in executive session. At the July Meeting, Nuveen also
made a presentation and responded to questions. Following the presentations and
discussions of the materials presented to the Board, the Independent Board
Members met again in executive session with their counsel. As outlined in more
detail below, the Independent Board Members considered all factors they believed
relevant with respect to each Fund, including the impact that the Transaction
could be expected to have on the following: (a) the nature, extent and quality
of services to be provided; (b) the investment performance of the Funds; (c) the
costs of the services and profits to be realized by Nuveen and its affiliates;
(d) the extent to which economies of scale would be realized; and (e) whether
fee levels reflect those economies of scale for the benefit of investors. As
noted above, the Board Members had completed their annual review of the
respective Original Investment Management Agreements at the May Meeting and many
of the factors considered at the annual review were applicable to their
evaluation of the New Investment Management Agreements. Accordingly, in
evaluating the New Investment Management Agreements, the Board Members relied
upon their knowledge and experience with NAM and considered the information
received and their evaluations and conclusions drawn at the annual review. While
the Board reviewed many Nuveen funds at the July Meeting, the Independent Board
Members evaluated all information available to them on a fund-by-fund basis, and
their determinations were made separately in respect of each Fund.
A. NATURE, EXTENT AND QUALITY OF SERVICES
In evaluating the nature, quality and extent of the services expected to be
provided by NAM under the New Investment Management Agreements, the Independent
Board Members considered, among other things, the expected impact, if any, of
the Transaction on the operations, facilities, organization and personnel of
NAM; the potential implications of regulatory restrictions on the Funds
following the Transaction; the ability of NAM and its affiliates to perform
their duties after the Transaction; and any anticipated changes to the current
investment and other practices of the Funds.
The Board noted that the terms of each New Investment Management Agreement,
including the fees payable thereunder, are substantially identical to those of
the Original Investment Management Agreement relating to the same Fund (with
both reflecting reductions to fee levels in the complex-wide fee schedule for
complex-wide assets in excess of $80 billion that have an effective date of
August 20, 2007). The Board considered that the services to be provided and the
standard of care under the New Investment Management Agreements are the same as
the Original Investment Management Agreements. The Board Members further noted
that key personnel who have responsibility for the Funds in each area, including
portfolio management, investment oversight, fund management, fund operations,
product management, legal/compliance and board support functions, are expected
to be the same following the Transaction. The Board Members considered and are
familiar with the qualifications, skills and experience of such personnel. The
Board also considered certain information regarding anticipated retention or
incentive plans designed to retain key personnel. Further, the Board Members
noted that no changes to Nuveen's infrastructure or operations as a result of
the Transaction were anticipated other than potential enhancements as a result
of an expected increase in the level of investment in such infrastructure and
personnel. The Board noted MDP's representations that it does not plan to have a
direct role in the management of Nuveen, appointing new management personnel, or
directly impacting individual staffing decisions. The Board Members also noted
that there were not any planned "cost cutting" measures that could be expected
to reduce the nature, extent or quality of services. After consideration of the
foregoing, the Board Members concluded that no diminution in the nature, quality
and extent of services provided to the Funds and their shareholders is expected.
In addition to the above, the Board Members considered potential changes in the
operations of each Fund. In this regard, the Board Members considered the
potential effect of regulatory restrictions on the Funds' transactions with
future affiliated persons. During their deliberations, it was noted that, after
the Transaction, a subsidiary of Merrill Lynch is expected to have an ownership
interest in Nuveen at a level that will make Merrill Lynch an affiliated person
of Nuveen. The Board Members recognized that applicable law would generally
prohibit the Funds from engaging in securities transactions with Merrill Lynch
as principal, and would also impose restrictions on using Merrill Lynch for
agency transactions. They recognized that having MDP and Merrill Lynch as
affiliates may restrict the Nuveen funds' ability to invest in securities of
issuers controlled by MDP or issued by Merrill Lynch and its affiliates even if
not bought directly from MDP or Merrill Lynch as principal. They also recognized
that various regulations may require the Nuveen funds to apply
91
ANNUAL INVESTMENT MANAGEMENT AGREEMENT
APPROVAL PROCESS (continued)
investment limitations on a combined basis with affiliates of Merrill Lynch. The
Board Members considered information provided by NAM regarding the potential
impact on the Nuveen funds' operations as a result of these regulatory
restrictions. The Board Members considered, in particular, the Nuveen funds that
may be impacted most by the restricted access to Merrill Lynch, including:
municipal funds (particularly certain state-specific funds), senior loan funds,
taxable fixed income funds, preferred security funds and funds that heavily use
derivatives. The Board Members considered such funds' historic use of Merrill
Lynch as principal in their transactions and information provided by NAM
regarding the expected impact resulting from Merrill Lynch's affiliation with
Nuveen and available measures that could be taken to minimize such impact. NAM
informed the Board Members that, although difficult to determine with certainty,
its management did not believe that MDP's or Merrill Lynch's status as an
affiliate of Nuveen would have a material adverse effect on any Nuveen fund's
ability to pursue its investment objectives and policies.
In addition to the regulatory restrictions considered by the Board, the Board
Members also considered potential conflicts of interest that could arise between
the Nuveen funds and various parties to the Transaction and discussed possible
ways of addressing such conflicts.
Based on its review along with its considerations regarding services at the
annual review, the Board concluded that the Transaction was not expected to
adversely affect the nature, quality or extent of services provided by NAM and
that the expected nature, quality and extent of such services supported approval
of the New Investment Management Agreements.
B. PERFORMANCE OF THE FUNDS
With respect to the performance of the Funds, the Board considered that the
portfolio management personnel responsible for the management of the Funds'
portfolios were expected to continue to manage the portfolios following the
completion of the Transaction.
In addition, the Board Members recently reviewed Fund performance at the May
Meeting, as described above, and determined that Fund performance was
satisfactory or better, subject to the following. With respect to certain
municipal closed-end funds with relative short-term underperformance, the Board
Members concluded NAM was taking steps to evaluate the factors affecting
performance and those steps would continue following the Transaction. Further,
the investment policies and strategies were not expected to change as a result
of the Transaction.
In light of the foregoing factors, along with the prior findings regarding
performance at the annual review, the Board concluded that its findings with
respect to performance supported approval of the New Investment Management
Agreements.
C. FEES, EXPENSES AND PROFITABILITY
As described in more detail above, during the annual review, the Board Members
considered, among other things, the management fees and expenses of the Funds,
the breakpoint schedules, and comparisons of such fees and expenses with peers.
At the annual review, the Board Members determined that the respective Fund's
advisory fees and expenses were reasonable. In evaluating the costs of services
to be provided by NAM under the New Investment Management Agreements and the
profitability of Nuveen for its advisory activities, the Board Members
considered their prior conclusions at the annual review and whether the
management fees or other expenses would change as a result of the Transaction.
As described above, the investment management fee is composed of two
components--a fund-level component and complex-wide level component. The fee
schedule under the New Investment Management Agreements to be paid to NAM is
identical to that under the Original Investment Management Agreements, including
the modified complex-wide fee schedule. As noted above, the Board recently
approved a modified complex-wide fee schedule that would generate additional fee
savings on complex-wide assets above $80 billion. The modifications have an
effective date of August 20, 2007 and are part of the Original Investment
Management Agreements. Accordingly, the terms of the complex-wide component
under the New Investment Management Agreements are the same as under the
Original Investment Management Agreements. The Board Members also noted that
Nuveen has committed for a period of two years from the date of closing of the
Transaction that it will not increase gross management fees for any Nuveen fund
and
92
will not reduce voluntary expense reimbursement levels for any Nuveen fund from
their currently scheduled prospective levels. Based on the information provided,
the Board Members did not expect that overall Fund expenses would increase as a
result of the Transaction.
In addition, the Board Members considered that additional fund launches were
anticipated after the Transaction which would result in an increase in total
assets under management in the complex and a corresponding decrease in overall
management fees under the complex-wide fee schedule. Taking into consideration
the Board's prior evaluation of fees and expenses at the annual renewal, and the
modification to the complex-wide fee schedule, the Board determined that the
management fees and expenses were reasonable.
While it is difficult to predict with any degree of certainty the impact of the
Transaction on Nuveen's profitability, at the recent annual review, the Board
Members were satisfied that Nuveen's level of profitability for its advisory
activities was reasonable. During the year, the Board Members had noted the
enhanced dialogue regarding profitability and the appointment of an Independent
Board Member as a point person to review methodology determinations and
refinements in calculating profitability. Given their considerations at the
annual review and the modifications to the complex-wide fee schedule, the Board
Members were satisfied that Nuveen's level of profitability for its advisory
activities continues to be reasonable.
D. ECONOMIES OF SCALE AND WHETHER FEE LEVELS REFLECT THESE ECONOMIES OF SCALE
The Board Members have been cognizant of economies of scale and the potential
benefits resulting from the costs of a Fund being spread over a larger asset
base. To help ensure that shareholders share in the benefits derived from
economies of scale, the Board adopted the complex-wide fee arrangement in 2004.
At the May Meeting, the Board Members reviewed the complex-wide fee arrangements
and noted that additional negotiations may be necessary or appropriate as the
assets in the complex approached the $91 billion threshold. In light of this
assessment coupled with the upcoming Transaction, at the June 15, 2007 meeting,
the ad hoc committee met with representatives of Nuveen to further discuss
modifications to the complex-wide fee schedule that would generate additional
savings for shareholders as the assets of the complex grow. The proposed terms
for the complex-wide fee schedule are expressed in terms of targeted cumulative
savings at specified levels of complex-wide assets, rather than in terms of
targeted marginal complex-wide fee rates. Under the modified schedule, the
schedule would generate additional fee savings beginning at complex-wide assets
of $80 billion in order to achieve targeted cumulative annual savings at $91
billion of $28 million on a complex-wide level (approximately $0.6 million
higher than those generated under the then current schedule) and generate
additional fee savings for asset growth above complex-wide assets of $91 billion
in order to achieve targeted annual savings at $125 billion of assets of
approximately $50 million on a complex-wide level (approximately $2.2 million
higher annually than that generated under the then current schedule). At the
July Meeting, the Board approved the modified complex-wide fee schedule for the
Original Investment Management Agreements and these same terms will apply to the
New Investment Management Agreements. Accordingly, the Board Members believe
that the breakpoint schedules and revised complex-wide fee schedule are
appropriate and desirable in ensuring that shareholders participate in the
benefits derived from economies of scale.
E. INDIRECT BENEFITS
During their recent annual review, the Board Members considered any indirect
benefits that NAM may receive as a result of its relationship with the Funds, as
described above. As the policies and operations of Nuveen are not anticipated to
change significantly after the Transaction, such indirect benefits should remain
after the Transaction. The Board Members further considered any additional
indirect benefits to be received by NAM or its affiliates after the Transaction.
The Board Members noted that other than benefits from its ownership interest in
Nuveen and indirect benefits from fee revenues paid by the Funds under the
management agreements and other Board-approved relationships, it was currently
not expected that MDP or its affiliates would derive any benefit from the Funds
as a result of the Transaction or transact any business with or on behalf of the
Funds (other than perhaps potential Fund acquisitions, in secondary market
transactions, of securities issued by MDP portfolio companies); or that Merrill
Lynch or its affiliates would derive any benefits from the Funds as a result of
the Transaction (noting that, indeed, Merrill Lynch would stand to experience
the discontinuation of principal transaction activity with the Nuveen funds and
likely would experience a noticeable reduction in the volume of agency
transactions with the Nuveen funds).
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ANNUAL INVESTMENT MANAGEMENT AGREEMENT
APPROVAL PROCESS (continued)
F. OTHER CONSIDERATIONS
In addition to the factors above, the Board Members also considered the
following with respect to the Funds:
[] Nuveen would rely on the provisions of Section 15(f) of the 1940 Act.
Section 15(f) provides, in substance, that when a sale of a controlling
interest in an investment adviser occurs, the investment adviser or any of
its affiliated persons may receive any amount or benefit in connection with
the sale so long as (i) during the three-year period following the
consummation of a transaction, at least 75% of the investment company's
board of directors must not be "interested persons" (as defined in the 1940
Act) of the investment adviser or predecessor adviser and (ii) an "unfair
burden" (as defined in the 1940 Act, including any interpretations or
no-action letters of the SEC) must not be imposed on the investment company
as a result of the transaction relating to the sale of such interest, or
any express or implied terms, conditions or understanding applicable
thereto. In this regard, to help ensure that an unfair burden is not
imposed on the Nuveen funds, Nuveen has committed for a period of two years
from the date of the closing of the Transaction (i) not to increase gross
management fees for any Nuveen fund; (ii) not to reduce voluntary expense
reimbursement levels for any Nuveen fund from their currently scheduled
prospective levels during that period; (iii) that no Nuveen fund whose
portfolio is managed by a Nuveen affiliate shall use Merrill Lynch as a
broker with respect to portfolio transactions done on an agency basis,
except as may be approved in the future by the Compliance Committee of the
Board; and (iv) that NAM shall not cause the Funds and other municipal
funds that NAM manages, as a whole, to enter into portfolio transactions
with or through the other minority owners of Nuveen, on either a principal
or an agency basis, to a significantly greater extent than both what one
would expect an investment team to use such firm in the normal course of
business, and what NAM has historically done, without prior Board or
Compliance Committee approval (excluding the impact of proportionally
increasing the use of such other "minority owners" to fill the void
necessitated by not being able to use Merrill Lynch).
[] The Funds would not incur any costs in seeking the necessary shareholder
approvals for the New Investment Management Agreements (except for any
costs attributed to seeking shareholder approvals of Fund specific matters
unrelated to the Transaction, such as approval of Board Members, in which
case a portion of such costs will be borne by the applicable Funds).
[] The reputation, financial strength and resources of MDP.
[] The long-term investment philosophy of MDP and anticipated plans to grow
Nuveen's business to the benefit of the Nuveen funds.
[] The benefits to the Nuveen funds as a result of the Transaction including:
(i) as a private company, Nuveen may have more flexibility in making
additional investments in its business; (ii) as a private company, Nuveen
may be better able to structure compensation packages to attract and retain
talented personnel; (iii) as certain of Nuveen's distribution partners are
expected to be equity or debt investors in Nuveen, Nuveen may be able to
take advantage of new or enhanced distribution arrangements with such
partners; and (iv) MDP's experience, capabilities and resources that may
help Nuveen identify and acquire investment teams or firms and finance such
acquisitions.
[] The historic premium and discount levels at which the shares of the Nuveen
funds have traded at specified dates with particular focus on the premiums
and discounts after the announcement of the Transaction, taking into
consideration recent volatile market conditions and steps or initiatives
considered or undertaken by NAM to address discount levels.
94
G. CONCLUSION
The Board Members did not identify any single factor discussed previously as
all-important or controlling. The Board Members, including the Independent Board
Members, unanimously concluded that the terms of the New Investment Management
Agreements are fair and reasonable, that the fees therein are reasonable in
light of the services to be provided to each Fund and that the New Investment
Management Agreements should be approved and recommended to shareholders.
III. APPROVAL OF INTERIM CONTRACTS
As noted above, at the July Meeting, the Board Members, including the
Independent Board Members, unanimously approved the Interim Investment
Management Agreements. If necessary to assure continuity of advisory services,
the Interim Investment Management Agreements will take effect upon the closing
of the Transaction if shareholders have not yet approved the New Investment
Management Agreements. The terms of each Interim Investment Management Agreement
are substantially identical to those of the corresponding Original Investment
Management Agreement and New Investment Management Agreement, respectively,
except for certain term and escrow provisions. In light of the foregoing, the
Board Members, including the Independent Board Members, unanimously determined
that the scope and quality of services to be provided to the Funds under the
respective Interim Investment Management Agreement are at least equivalent to
the scope and quality of services provided under the applicable Original
Investment Management Agreement.
95
Reinvest Automatically
EASILY and CONVENIENTLY
NUVEEN MAKES REINVESTING EASY. A PHONE CALL IS ALL IT TAKES TO SET UP YOUR
REINVESTMENT ACCOUNT.
NUVEEN CLOSED-END FUNDS DIVIDEND REINVESTMENT PLAN
Your Nuveen Closed-End Fund allows you to conveniently reinvest dividends
and/or capital gains distributions in additional Fund shares.
By choosing to reinvest, you'll be able to invest money regularly and
automatically, and watch your investment grow through the power of tax-free
compounding. Just like dividends or distributions in cash, there may be
times when income or capital gains taxes may be payable on dividends or
distributions that are reinvested.
It is important to note that an automatic reinvestment plan does not ensure
a profit, nor does it protect you against loss in a declining market.
EASY AND CONVENIENT
To make recordkeeping easy and convenient, each month you'll receive a
statement showing your total dividends and distributions, the date of
investment, the shares acquired and the price per share, and the total
number of shares you own.
HOW SHARES ARE PURCHASED
The shares you acquire by reinvesting will either be purchased on the open
market or newly issued by the Fund. If the shares are trading at or above
net asset value at the time of valuation, the Fund will issue new shares at
the greater of the net asset value or 95% of the then-current market price.
If the shares are trading at less than net asset value, shares for your
account will be purchased on the open market. If the Plan Agent begins
purchasing Fund shares on the open market while shares are trading below
net asset value, but the Fund's shares subsequently trade at or above their
net asset value before the Plan Agent is able to complete its purchases,
the Plan Agent may cease open-market purchases and may invest the
uninvested portion of the distribution in newly-issued Fund shares at a
price equal to the greater of the shares' net asset value or 95% of the
shares' market value on the last business day immediately prior to the
purchase date. Dividends and distributions received to purchase shares in
the open market will normally be invested shortly after the dividend
payment date. No interest will be paid on dividends and distributions
awaiting reinvestment. Because the market price of the shares may increase
before purchases are completed, the average purchase price per share may
exceed the market price at the time of valuation, resulting in the
acquisition of fewer shares than if the dividend or distribution had been
paid in shares issued by the Fund. A pro rata portion of any applicable
brokerage commissions on open market purchases will be paid by Plan
participants. These commissions usually will be lower than those charged on
individual transactions.
96
FLEXIBLE
You may change your distribution option or withdraw from the Plan at any
time, should your needs or situation change. Should you withdraw, you can
receive a certificate for all whole shares credited to your reinvestment
account and cash payment for fractional shares, or cash payment for all
reinvestment account shares, less brokerage commissions and a $2.50 service
fee.
You can reinvest whether your shares are registered in your name, or in the
name of a brokerage firm, bank, or other nominee. Ask your investment
advisor if his or her firm will participate on your behalf. Participants
whose shares are registered in the name of one firm may not be able to
transfer the shares to another firm and continue to participate in the
Plan.
The Fund reserves the right to amend or terminate the Plan at any time.
Although the Fund reserves the right to amend the Plan to include a service
charge payable by the participants, there is no direct service charge to
participants in the Plan at this time.
CALL TODAY TO START REINVESTING DIVIDENDS AND/OR DISTRIBUTIONS
For more information on the Nuveen Automatic Reinvestment Plan or to enroll
in or withdraw from the Plan, speak with your financial advisor or call us
at (800) 257-8787.
97
Glossary of
TERMS USED in this REPORT
[] AVERAGE ANNUAL TOTAL RETURN: This is a commonly used method to express an
investment's performance over a particular, usually multi-year time period.
It expresses the return that would have been necessary each year to equal
the investment's actual cumulative performance (including change in NAV or
market price and reinvested dividends and capital gains distributions, if
any) over the time period being considered.
[] AVERAGE EFFECTIVE MATURITY: The average of the number of years to maturity
of the bonds in a Fund's portfolio, computed by weighting each bond's time
to maturity (the date the security comes due) by the market value of the
security. This figure does not account for the likelihood of prepayments or
the exercise of call provisions unless an escrow account has been
established to redeem the bond before maturity. The market value weighting
for an investment in an inverse floating rate security is the value of the
portfolio's residual interest in the inverse floating rate trust, and does
not include the value of the floating rate securities issued by the trust.
[] INVERSE FLOATERS: Inverse floating rate securities are created by
depositing a municipal bond, typically with a fixed interest rate, into a
special purpose trust created by a broker-dealer. This trust, in turn, (a)
issues floating rate certificates typically paying short-term tax-exempt
interest rates to third parties in amounts equal to some fraction of the
deposited bond's par amount or market value, and (b) issues an inverse
floating rate certificate (sometimes referred to as an "inverse floater")
to an investor (such as a Fund) interested in gaining investment exposure
to a long-term municipal bond. The income received by the holder of the
inverse floater varies inversely with the short-term rate paid to the
floating rate certificates' holders, and in most circumstances the holder
of the inverse floater bears substantially all of the underlying bond's
downside investment risk. The holder of the inverse floater typically also
benefits disproportionately from any potential appreciation of the
underlying bond's value. Hence, an inverse floater essentially represents
an investment in the underlying bond on a leveraged basis.
[] LEVERAGE-ADJUSTED DURATION: Duration is a measure of the expected period
over which a bond's principal and interest will be paid, and consequently
is a measure of the sensitivity of a bond's or bond Fund's value to changes
when market interest rates change. Generally, the longer a bond's or Fund's
duration, the more the price of the bond or Fund will change as interest
rates change. Leverage-adjusted duration takes into account the leveraging
process for a Fund and therefore is longer than the duration of the Fund's
portfolio of bonds.
[] MARKET YIELD (ALSO KNOWN AS DIVIDEND YIELD OR CURRENT YIELD): An
investment's current annualized dividend divided by its current market
price.
[] NET ASSET VALUE (NAV): A Fund's common share NAV per share is calculated by
subtracting the liabilities of the Fund (including any MuniPreferred shares
issued in order to leverage the Fund) from its total assets and then
dividing the remainder by the number of shares outstanding. Fund NAVs are
calculated at the end of each business day.
[] TAXABLE-EQUIVALENT YIELD: The yield necessary from a fully taxable
investment to equal, on an after-tax basis, the yield of a municipal bond
investment.
[] ZERO COUPON BOND: A zero coupon bond does not pay a regular interest coupon
to its holders during the life of the bond. Tax-exempt income to the holder
of the bond comes from accretion of the difference between the original
purchase price of the bond at issuance and the par value of the bond at
maturity and is effectively paid at maturity. The market prices of zero
coupon bonds generally are more volatile than the market prices of bonds
that pay interest periodically.
98
Other Useful INFORMATION
QUARTERLY PORTFOLIO OF INVESTMENTS AND PROXY VOTING INFORMATION
Each Fund's (i) quarterly portfolio of investments, (ii) information regarding
how the Funds voted proxies relating to portfolio securities held during the
12-month period ended June 30, 2007, and (iii) a description of the policies and
procedures that the Funds used to determine how to vote proxies relating to
portfolio securities are available without charge, upon request, by calling
Nuveen Investments toll-free at (800) 257-8787 or on Nuveen's website at
www.nuveen.com.
You may also obtain this and other Fund information directly from the Securities
and Exchange Commission ("SEC"). The SEC may charge a copying fee for this
information. Visit the SEC on-line at http://www.sec.gov or in person at the
SEC's Public Reference Room in Washington, D.C. Call the SEC at 1-202-942-8090
for room hours and operation. You may also request Fund information by sending
an e-mail request to publicinfo@sec.gov or by writing to the SEC's Public
References Section at 450 Fifth Street NW, Washington, D.C. 20549.
CEO CERTIFICATION DISCLOSURE
For Funds listed on the New York Stock Exchange, each Fund's Chief Executive
Officer has submitted to the Exchange the annual CEO certification as required
by Section 303A.12(a) of the NYSE Listed Company Manual.
Each Fund has filed with the Securities and Exchange Commission the
certification of its Chief Executive Officer and Chief Financial Officer
required by Section 302 of the Sarbanes-Oxley Act.
INVESTMENT POLICY CHANGES
In February 2007, the Board of Directors/Trustees voted to remove investment
policy restrictions that limited the territorial bond holdings of these Funds to
a maximum of 10 percent of net assets. This change will give the Funds'
portfolio managers greater flexibility to achieve its investment objectives.
In May 2007, the Funds' Board of Directors/Trustees voted to permit the Funds'
to make loans from Fund assets to certain bond issuers. The amounts of these
loans are subject to strict limits. This policy is designed to enhance the
Funds' ability to meet their funds' investment objectives by providing for
increased portfolio management flexibility, greater diversification potential,
and opportunities for increased capital appreciation over time.
BOARD OF TRUSTEES
Robert P. Bremner
Jack B. Evans
William C. Hunter
David J. Kundert
William J. Schneider
Timothy R. Schwertfeger
Judith M. Stockdale
Carol E. Stone
FUND MANAGER
Nuveen Asset Management
333 West Wacker Drive
Chicago, IL 60606
CUSTODIAN
State Street Bank & Trust Company
Boston, MA
TRANSFER AGENT AND
SHAREHOLDER SERVICES
State Street Bank & Trust Company
Nuveen Funds
P.O. Box 43071
Providence, RI 02940-3071
(800) 257-8787
LEGAL COUNSEL
Chapman and Cutler LLP
Chicago, IL
INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
Ernst & Young LLP
Chicago, IL
Each Fund intends to repurchase shares of its own common or preferred stock in
the future at such times and in such amounts as is deemed advisable. No shares
were repurchased during the period covered by this report. Any future
repurchases will be reported to shareholders in the next annual or semiannual
report.
99
Nuveen Investments:
--------------------------------------------------------------------------------
SERVING INVESTORS FOR GENERATIONS
Since 1898, financial advisors and their clients have relied on Nuveen
Investments to provide dependable investment solutions. For the past century,
Nuveen Investments has adhered to the belief that the best approach to investing
is to apply conservative risk-management principles to help minimize volatility.
Building on this tradition, we today offer a range of high quality equity and
fixed-income solutions that are integral to a well-diversified core portfolio.
Our clients have come to appreciate this diversity, as well as our continued
adherence to proven, long-term investing principles.
WE OFFER MANY DIFFERENT INVESTING SOLUTIONS FOR OUR CLIENTS' DIFFERENT NEEDS.
Managing approximately $172 billion in assets as of June 30, 2007, Nuveen
Investments offers access to a number of different asset classes and investing
solutions through a variety of products. Nuveen Investments markets its
capabilities under four distinct brands: Nuveen, a leader in fixed-income
investments; NWQ, a leader in value-style equities; Rittenhouse, a leader in
growth-style equities; and Symphony, a leading institutional manager of
market-neutral alternative investment portfolios.
FIND OUT HOW WE CAN HELP YOU REACH YOUR FINANCIAL GOALS.
To learn more about the products and services Nuveen Investments offers, talk to
your financial advisor, or call us at (800) 257-8787. Please read the
information provided carefully before you invest. Be sure to obtain a
prospectus, where applicable. Investors should consider the investment objective
and policies, risk considerations, charges and expenses of the Fund carefully
before investing. The prospectus contains this and other information relevant to
an investment in the Fund. For a prospectus, please contact your securities
representative or Nuveen Investments, 333 W. Wacker Dr., Chicago, IL 60606.
Please read the prospectus carefully before you invest or send money.
Learn more about Nuveen Funds at: www.nuveen.com/etf
Share prices
Fund details
Daily financial news
Investor education
Interactive planning tools
EAN-B-0707D
ITEM 2. CODE OF ETHICS.
As of the end of the period covered by this report, the registrant has adopted a
code of ethics that applies to the registrant's principal executive officer,
principal financial officer, principal accounting officer or controller, or
persons performing similar functions. There were no amendments to or waivers
from the Code during the period covered by this report. The registrant has
posted the code of ethics on its website at www.nuveen.com/etf. (To view the
code, click on the Investor Resources drop down menu box, click on Fund
Governance and then click on Code of Conduct.)
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The registrant's Board of Directors or Trustees determined that the registrant
has at least one "audit committee financial expert" (as defined in Item 3 of
Form N-CSR) serving on its Audit Committee. The registrant's audit committee
financial expert is Jack B. Evans, Chairman of the Audit Committee, who is
"independent" for purposes of Item 3 of Form N-CSR.
Mr. Evans was formerly President and Chief Operating Officer of SCI Financial
Group, Inc., a full service registered broker-dealer and registered investment
adviser ("SCI"). As part of his role as President and Chief Operating Officer,
Mr. Evans actively supervised the Chief Financial Officer (the "CFO") and
actively supervised the CFO's preparation of financial statements and other
filings with various regulatory authorities. In such capacity, Mr. Evans was
actively involved in the preparation of SCI's financial statements and the
resolution of issues raised in connection therewith. Mr. Evans has also served
on the audit committee of various reporting companies. At such companies, Mr.
Evans was involved in the oversight of audits, audit plans, and the preparation
of financial statements. Mr. Evans also formerly chaired the audit committee of
the Federal Reserve Bank of Chicago.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Nuveen Michigan Quality Income Municipal Fund, Inc.
The following tables show the amount of fees that Ernst & Young LLP, the Fund's
auditor, billed to the Fund during the Fund's last two full fiscal years. For
engagements with Ernst & Young LLP the Audit Committee approved in advance all
audit services and non-audit services that Ernst & Young LLP provided to the
Fund, except for those non-audit services that were subject to the pre-approval
exception under Rule 2-01 of Regulation S-X (the "pre-approval exception"). The
pre-approval exception for services provided directly to the Fund waives the
pre-approval requirement for services other than audit, review or attest
services if: (A) the aggregate amount of all such services provided constitutes
no more than 5% of the total amount of revenues paid by the Fund to its
accountant during the fiscal year in which the services are provided; (B) the
Fund did not recognize the services as non-audit services at the time of the
engagement; and (C) the services are promptly brought to the Audit Committee's
attention, and the Committee (or its delegate) approves the services before the
audit is completed.
The Audit Committee has delegated certain pre-approval responsibilities to its
Chairman (or, in his absence, any other member of the Audit Committee).
SERVICES THAT THE FUND'S AUDITOR BILLED TO THE FUND
AUDIT FEES BILLED AUDIT-RELATED FEES TAX FEES ALL OTHER FEES
FISCAL YEAR ENDED TO FUND (1) BILLED TO FUND (2) BILLED TO FUND (3) BILLED TO FUND (4)
--------------------------------------------------------------------------------------------------------------------------
July 31, 2007 $ 13,548 $ 0 $ 338 $ 3,100
--------------------------------------------------------------------------------------------------------------------------
Percentage approved 0% 0% 0% 0%
pursuant to
pre-approval
exception
--------------------------------------------------------------------------------------------------------------------------
July 31, 2006 $ 12,895 $ 0 $ 400 $ 2,900
--------------------------------------------------------------------------------------------------------------------------
Percentage approved 0% 0% 0% 0%
pursuant to
pre-approval
exception
--------------------------------------------------------------------------------------------------------------------------
(1) "Audit Fees" are the aggregate fees billed for professional services for
the audit of the Fund's annual financial statements and services provided
in connection with statutory and regulatory filings or engagements.
(2) "Audit Related Fees" are the aggregate fees billed for assurance and
related services reasonably related to the performance of the audit or
review of financial statements and are not reported under "Audit Fees".
(3) "Tax Fees" are the aggregate fees billed for professional services for tax
advice, tax compliance, and tax planning.
(4) "All Other Fees" are the aggregate fees billed for products and services
other than "Audit Fees", "Audit Related Fees", and "Tax Fees".
SERVICES THAT THE FUND'S AUDITOR BILLED TO THE
ADVISER AND AFFILIATED FUND SERVICE PROVIDERS
The following tables show the amount of fees billed by Ernst & Young LLP to
Nuveen Asset Management ("NAM" or the "Adviser"), and any entity controlling,
controlled by or under common control with NAM ("Control Affiliate") that
provides ongoing services to the Fund ("Affiliated Fund Service Provider"), for
engagements directly related to the Fund's operations and financial reporting,
during the Fund's last two full fiscal years.
The tables also show the percentage of fees subject to the pre-approval
exception. The pre-approval exception for services provided to the Adviser and
any Affiliated Fund Service Provider (other than audit, review or attest
services) waives the pre-approval requirement if: (A) the aggregate amount of
all such services provided constitutes no more than 5% of the total amount of
revenues paid to Ernst & Young LLP by the Fund, the Adviser and Affiliated Fund
Service Providers during the fiscal year in which the services are provided that
would have to be pre-approved by the Audit Committee; (B) the Fund did not
recognize the services as non-audit services at the time of the engagement; and
(C) the services are promptly brought to the Audit Committee's attention, and
the Committee (or its delegate) approves the services before the Fund's audit is
completed.
FISCAL YEAR ENDED AUDIT-RELATED FEES TAX FEES BILLED TO ALL OTHER FEES
BILLED TO ADVISER AND ADVISER AND BILLED TO ADVISER
AFFILIATED FUND AFFILIATED FUND AND AFFILIATED FUND
SERVICE PROVIDERS SERVICE PROVIDERS (1) SERVICE PROVIDERS
-------------------------------------------------------------------------------------------------------------
July 31, 2007 $ 0 $ 0 $ 0
-------------------------------------------------------------------------------------------------------------
Percentage approved 0% 0% 0%
pursuant to
pre-approval
exception
-------------------------------------------------------------------------------------------------------------
July 31, 2006 $ 0 $ 2,400 $ 0
-------------------------------------------------------------------------------------------------------------
Percentage approved 0% 0% 0%
pursuant to
pre-approval
exception
-------------------------------------------------------------------------------------------------------------
(1) The amounts reported for the Fund under the column heading "Tax Fees"
represents amounts billed to the Adviser exclusively for the preparation
for the Fund's tax return, the cost of which is borne by the Adviser. In
the aggregate, for all Nuveen funds for which Ernst & Young LLP serves as
independent registered public accounting firm, these fees amounted to
$161,400 in 2006. Beginning with fund fiscal years ending August 31, 2006,
Ernst & Young LLP will no longer prepare the fund tax returns.
NON-AUDIT SERVICES
The following table shows the amount of fees that Ernst & Young LLP billed
during the Fund's last two full fiscal years for non-audit services. The Audit
Committee is required to pre-approve non-audit services that Ernst & Young LLP
provides to the Adviser and any Affiliated Fund Services Provider, if the
engagement related directly to the Fund's operations and financial reporting
(except for those subject to the de minimis exception described above). The
Audit Committee requested and received information from Ernst & Young LLP about
any non-audit services that Ernst & Young LLP rendered during the Fund's last
fiscal year to the Adviser and any Affiliated Fund Service Provider. The
Committee considered this information in evaluating Ernst & Young LLP's
independence.
FISCAL YEAR ENDED TOTAL NON-AUDIT FEES
BILLED TO ADVISER AND
AFFILIATED FUND SERVICE TOTAL NON-AUDIT FEES
PROVIDERS (ENGAGEMENTS BILLED TO ADVISER AND
RELATED DIRECTLY TO THE AFFILIATED FUND SERVICE
TOTAL NON-AUDIT FEE OPERATIONS AND FINANCIAL PROVIDERS (ALL OTHER
BILLED TO FUND REPORTING OF THE FUND) ENGAGEMENTS) TOTAL
--------------------------------------------------------------------------------------------------------------------------
July 31, 2007 $ 3,438 $ 0 $ 0 $ 3,438
July 31, 2006 $ 3,300 $ 2,400 $ 0 $ 5,700
"Non-Audit Fees billed to Adviser" for both fiscal year ends represent "Tax
Fees" billed to Adviser in their respective amounts from the previous table.
Audit Committee Pre-Approval Policies and Procedures. Generally, the Audit
Committee must approve (i) all non-audit services to be performed for the Fund
by the Fund's independent accountants and (ii) all audit and non-audit services
to be performed by the Fund's independent accountants for the Affiliated Fund
Service Providers with respect to operations and financial reporting of the
Fund. Regarding tax and research projects conducted by the independent
accountants for the Fund and Affiliated Fund Service Providers (with respect to
operations and financial reports of the Fund) such engagements will be (i)
pre-approved by the Audit Committee if they are expected to be for amounts
greater than $10,000; (ii) reported to the Audit Committee chairman for his
verbal approval prior to engagement if they are expected to be for amounts under
$10,000 but greater than $5,000; and (iii) reported to the Audit Committee at
the next Audit Committee meeting if they are expected to be for an amount under
$5,000.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
The registrant's Board of Directors or Trustees has a separately designated
Audit Committee established in accordance with Section 3(a)(58)(A) of the
Securities Exchange Act of 1934, as amended (15 U.S.C. 78c(a)(58)(A)). The
members of the audit committee are Robert P. Bremner, Jack B. Evans, William J.
Schneider and David J. Kundert. Mr. Eugene S. Sunshine, who also served as a
member of the Committee during this reporting period, has resigned from the
Board of Directors. His resignation became effective at 1 p.m. on July 31, 2007.
ITEM 6. SCHEDULE OF INVESTMENTS.
See Portfolio of Investments in Item 1.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
The registrant invests its assets primarily in municipal bonds and cash
management securities. On rare occasions the registrant may acquire, directly or
through a special purpose vehicle, equity securities of a municipal bond issuer
whose bonds the registrant already owns when such bonds have deteriorated or are
expected shortly to deteriorate significantly in credit quality. The purpose of
acquiring equity securities generally will be to acquire control of the
municipal bond issuer and to seek to prevent the credit deterioration or
facilitate the liquidation or other workout of the distressed issuer's credit
problem. In the course of exercising control of a distressed municipal issuer,
NAM may pursue the registrant's interests in a variety of ways, which may entail
negotiating and executing consents, agreements and other arrangements, and
otherwise influencing the management of the issuer. NAM does not consider such
activities proxy voting for purposes of Rule 206(4)-6 under the 1940 Act, but
nevertheless provides reports to the registrant's Board of Trustees on its
control activities on a quarterly basis.
In the rare event that a municipal issuer were to issue a proxy or that the
registrant were to receive a proxy issued by a cash management security, NAM
would either engage an independent third party to determine how the proxy should
be voted or vote the proxy with the consent, or based on the instructions, of
the registrant's Board of Trustees or its representative. A member of NAM's
legal department would oversee the administration of the voting, and ensure that
records were maintained in accordance with Rule 206(4)-6, reports were filed
with the SEC on Form N-PX, and the results provided to the registrant's Board of
Trustees and made available to shareholders as required by applicable rules.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
THE PORTFOLIO MANAGER
The following individual has primary responsibility for the day-to-day
implementation of the registrant's investment strategies:
NAME FUND
Daniel J. Close Nuveen Michigan Quality Income Municipal Fund
Other Accounts Managed. In addition to managing the registrant, the portfolio
manager is also primarily responsible for the day-to-day portfolio management of
the following accounts:
TYPE OF ACCOUNT NUMBER OF
PORTFOLIO MANAGER MANAGED ACCOUNTS ASSETS*
--------------------------------------------------------------------------------
Daniel J. Close Registered Investment Company 26 $4.959 billion
Other Pooled Investment Vehicles 0 $0
Other Accounts 2 $.18 million
* Assets are as of July 31, 2007. None of the assets in these accounts are
subject to an advisory fee based on performance.
Compensation. Each portfolio manager's compensation consists of three basic
elements--base salary, cash bonus and long-term incentive compensation. The
compensation strategy is to annually compare overall compensation, including
these three elements, to the market in order to create a compensation structure
that is competitive and consistent with similar financial services companies. As
discussed below, several factors are considered in determining each portfolio
manager's total compensation. In any year these factors may include, among
others, the effectiveness of the investment strategies recommended by the
portfolio manager's investment team, the investment performance of the accounts
managed by the portfolio manager, and the overall performance of Nuveen
Investments, Inc. (the parent company of NAM). Although investment performance
is a factor in determining the portfolio manager's compensation, it is not
necessarily a decisive factor. The portfolio manager's performance is evaluated
in part by comparing manager's performance against a specified investment
benchmark. This fund-specific benchmark is a customized subset (limited to bonds
in each Fund's specific state and with certain maturity parameters) of the
S&P/Investortools Municipal Bond index, an index comprised of bonds held by
managed municipal bond fund customers of Standard & Poor's Securities Pricing,
Inc. that are priced daily and whose fund holdings aggregate at least $2
million. As of August 31, 2007, the S&P/Investortools Municipal Bond index was
comprised of 51,454 securities with an aggregate current market value of $ 999
billion.
Base salary. Each portfolio manager is paid a base salary that is set at a level
determined by NAM in accordance with its overall compensation strategy discussed
above. NAM is not under any current contractual obligation to increase a
portfolio manager's base salary.
Cash bonus. Each portfolio manager is also eligible to receive an annual cash
bonus. The level of this bonus is based upon evaluations and determinations made
by each portfolio manager's supervisors, along with reviews submitted by his
peers. These reviews and evaluations often take into account a number of
factors, including the effectiveness of the investment strategies recommended to
the NAM's investment team, the performance of the accounts for which he/she
serves as portfolio manager relative to any benchmarks established for those
accounts, his/her effectiveness in communicating investment performance to
stockholders and their representatives, and his/her contribution to the NAM
investment process and to the execution of investment strategies. The cash bonus
component is also impacted by the overall performance of Nuveen Investments,
Inc. in achieving its business objectives.
Long-term incentive compensation. Each portfolio manager is eligible to receive
bonus compensation in the form of equity-based awards issued in securities
issued by Nuveen Investments, Inc. The amount of such compensation is dependent
upon the same factors articulated for cash bonus awards but also factors in his
long-term potential with the firm.
Material Conflicts of Interest. Each portfolio manager's simultaneous management
of the registrant and the other accounts noted above may present actual or
apparent conflicts of interest with respect to the allocation and aggregation of
securities orders placed on behalf of the Registrant and the other account. NAM,
however, believes that such potential conflicts are mitigated by the fact that
the NAM has adopted several policies that address potential conflicts of
interest, including best execution and trade allocation policies that are
designed to ensure (1) that portfolio management is seeking the best price for
portfolio securities under the circumstances, (2) fair and equitable allocation
of investment opportunities among accounts over time and (3) compliance with
applicable regulatory requirements. All accounts are to be treated in a
non-preferential manner, such that allocations are not based upon account
performance, fee structure or preference of the portfolio manager, although the
allocation procedures may provide allocation preferences to funds with special
characteristics (such as favoring state funds versus national funds for
allocations of in-state bonds). In addition, NAM has adopted a Code of Conduct
that sets forth policies regarding conflicts of interest.
Beneficial Ownership of Securities. As of the July 31, 2007, the portfolio
manager beneficially owned the following dollar range of equity securities
issued by the Registrant and other Nuveen Funds managed by NAM's municipal
investment team.
DOLLAR RANGE OF
DOLLAR EQUITY SECURITIES
RANGE OF BENEFICIALLY OWNED
EQUITY IN THE REMAINDER OF
SECURITIES NUVEEN FUNDS
BENEFICIALLY MANAGED BY NAM'S
NAME OF PORTFOLIO OWNED IN MUNICIPAL
MANAGER FUND FUND INVESTMENT TEAM
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Daniel J. Close Nuveen Michigan Quality Income Municipal Fund $ 0 $0
PORTFOLIO MANAGER BIO:
Daniel J. Close, CFA, Assistant Vice President, Nuveen Asset Management. Mr.
Close joined Nuveen Investments in 2000 as a member of Nuveen's product
management and development team, where he was responsible for the oversight and
development of Nuveen's mutual fund product line. He then served as a research
analyst for Nuveen's municipal investing team, covering corporate-backed,
energy, transportation and utility credits. Currently, he manages investments
for 27 Nuveen-sponsored investment companies. He received his BS in Business
from Miami University, and his MBA from Northwestern University's Kellogg School
of Management.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which shareholders may
recommend nominees to the registrants Board implemented after the registrant
last provided disclosure in response to this item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive and principal financial officers,
or persons performing similar functions, have concluded that the
registrant's disclosure controls and procedures (as defined in Rule
30a-3(c) under the Investment Company Act of 1940, as amended (the
"1940 Act") (17 CFR 270.30a-3(c))) are effective, as of a date within
90 days of the filing date of this report that includes the disclosure
required by this paragraph, based on their evaluation of the controls
and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR
270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")
(17 CFR 240.13a-15(b) or 240.15d-15(b)).
(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act
(17 CFR 270.30a-3(d)) that occurred during the second fiscal quarter
of the period covered by this report that has materially affected, or
is reasonably likely to materially affect, the registrant's internal
control over financial reporting.
ITEM 12. EXHIBITS.
File the exhibits listed below as part of this Form. Letter or number the
exhibits in the sequence indicated.
(a)(1) Any code of ethics, or amendment thereto, that is the subject of the
disclosure required by Item 2, to the extent that the registrant intends to
satisfy the Item 2 requirements through filing of an exhibit: Not applicable
because the code is posted on registrant's website at www.nuveen.com/etf and
there were no amendments during the period covered by this report. (To view the
code, click on the Investor Resources drop down menu box, click on Fund
Governance and then Code of Conduct.)
(a)(2) A separate certification for each principal executive officer and
principal financial officer of the registrant as required by Rule 30a-2(a) under
the 1940 Act (17 CFR 270.30a-2(a)) in the exact form set forth below: Ex-99.CERT
Attached hereto.
(a)(3) Any written solicitation to purchase securities under Rule 23c-1 under
the 1940 Act (17 CFR 270.23c-1) sent or given during the period covered by the
report by or on behalf of the registrant to 10 or more persons. Not applicable.
(b) If the report is filed under Section 13(a) or 15(d) of the Exchange Act,
provide the certifications required by Rule 30a-2(b) under the 1940 Act (17 CFR
270.30a-2(b)); Rule 13a-14(b) or Rule 15d-14(b) under the Exchange Act (17 CFR
240.13a-14(b) or 240.15d-14(b)), and Section 1350 of Chapter 63 of Title 18 of
the United States Code (18 U.S.C. 1350) as an exhibit. A certification furnished
pursuant to this paragraph will not be deemed "filed" for purposes of Section 18
of the Exchange Act (15 U.S.C. 78r), or otherwise subject to the liability of
that section. Such certification will not be deemed to be incorporated by
reference into any filing under the Securities Act of 1933 or the Exchange Act,
except to the extent that the registrant specifically incorporates it by
reference. Ex-99.906 CERT attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Nuveen Michigan Quality Income Municipal Fund, Inc.
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By (Signature and Title)* /s/ Kevin J. McCarthy
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Kevin J. McCarthy
Vice President and Secretary
Date: October 5, 2007
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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
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Gifford R. Zimmerman
Chief Administrative Officer
(principal executive officer)
Date: October 5, 2007
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By (Signature and Title)* /s/ Stephen D. Foy
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Stephen D. Foy
Vice President and Controller
(principal financial officer)
Date: October 5, 2007
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* Print the name and title of each signing officer under his or her signature.