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.
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(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: February 28
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Date of reporting period: February 28, 2009
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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 | Nuveen Investments
February 28, 2009 | 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
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Chairman's
LETTER TO SHAREHOLDERS
[PHOTO OF ROBERT P. BREMNER] | Robert P. Bremner | Chairman of the Board
Dear Shareholders,
I write this letter in a time of continued uncertainty about the current state
of the U.S. financial system and pessimism about the future of the global
economy. Many have observed that the conditions that led to the crisis have
built up over time and will complicate and extend the course of recovery. At the
same time, government officials in the U.S. and abroad have implemented a wide
range of programs to restore stability to the financial system and encourage
economic recovery. It is believed that these efforts will moderate the extent of
the downturn and hasten the inevitable recovery, even though it is hard to
envision that outcome in the current environment.
As you will read in this report, the continuing financial and economic problems
are weighing heavily on the values of equities and fixed-income assets and
unfortunately the performance of your Nuveen Fund has been similarly affected.
In addition to the financial statements, I hope that you will carefully review
the Portfolio Manager's Comments, the Common Share Dividend and Share Price
Information and the Performance Overview sections of this report and please note
this is a seven-month annual report. During the current fiscal year period, the
Board of Directors/Trustees approved a change in the Funds' fiscal and tax year
end from July 31 to February 28/29. These comments highlight the manager's
pursuit of investment strategies that depend on thoroughly researched
securities, diversified portfolio holdings and well established investment
disciplines to achieve your Fund's investment goals. The Fund Board believes
that a consistent focus on long-term investment goals provides the basis for
successful investment over time and we monitor your Fund with that objective in
mind.
Nuveen continues to work on resolving the issues related to the auction rate
preferred shares situation, but the unsettled conditions in the credit markets
have slowed progress. Nuveen is actively pursuing a number of solutions, all
with the goal of providing liquidity for preferred shareholders while preserving
the potential benefits of leverage for common shareholders. We appreciate the
patience you have shown as we work through the many issues involved. Please
consult the Nuveen website: www.nuveen.com, for the most recent information.
On behalf of myself and the other members of your Fund's Board, we look forward
to continuing to earn your trust in the months and years ahead.
Sincerely,
/s/ Robert P. Bremner
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Robert P. Bremner
Chairman of the Nuveen Fund Board
April 9, 2009
Portfolio Manager's COMMENTS
Nuveen Investments Municipal Closed-End Funds | NUM, NMP, NZW, NUO, NXI, NBJ,
NVJ
During the current fiscal period, the Board of Directors/Trustees of the Funds
approved a change in the Funds' fiscal and tax year end from July 31 to February
28/29.
Portfolio manager Daniel Close discusses economic and municipal market
conditions at both the national and state levels, key investment strategies, and
the performance of the Nuveen Michigan and Ohio Funds. Dan, who joined Nuveen in
2000, assumed portfolio management responsibility for these seven Funds in 2007.
WHAT FACTORS AFFECTED THE U.S. ECONOMIC AND MUNICIPAL MARKET ENVIRONMENTS DURING
THE SEVEN-MONTH REPORTING PERIOD ENDED FEBRUARY 28, 2009?
During this period, downward pressure on the economy continued and stress in the
financial and credit markets led to increased price volatility for most
securities, reduced liquidity and a general flight to quality. In an effort to
improve overall economic conditions, the Federal Reserve (Fed) cut the fed funds
target interest rate to between zero and 0.25%, its lowest level on record. (On
March 18, 2009, following the end of this reporting period, the Fed announced
that, in addition to maintaining the fed funds rate at its current level, it
would buy $300 billion in Treasury securities over the next six months in an
effort to improve conditions in private credit markets and up to an additional
$750 billion of agency mortgage-backed securities to bolster the housing
market.)
After declining at an annual rate of 0.5% in the third quarter of 2008, GDP
contracted at an annual rate of 6.2% in the fourth quarter of 2008, the weakest
performance since 1982. Signs of a deepening housing recession continued to
trouble the economy, with the price of a single-family home falling a record
18.2% in 2008. In the labor markets, February 2009 marked the fourteenth
consecutive month of job losses and the third straight month when employment
losses topped 600,000, the first such occurrence since records began in 1939.
The national unemployment rate for February 2009 was 8.1%, its highest point in
more than 25 years. Fortunately, inflation remained largely in check. The
Consumer Price Index (CPI), reflecting large drops in energy and transportation
prices, registered a 0.2% year-over-year gain in February 2009, while the core
CPI (which excludes food and energy) rose 1.8%. Both numbers were within the
Fed's unofficial objective of 2.0% or lower.
Beginning in October, the nation's financial institutions and financial
markets-- including the municipal bond market--experienced significant turmoil.
Reductions in demand
Certain statements in this report are forward-looking statements. Discussions of
specific investments are for illustration only and are not intended as
recommendations of individual investments. The forward-looking statements and
other views expressed herein are those of the portfolio manager as of the date
of this report. Actual future results or occurrences may differ significantly
from those anticipated in any forward-looking statements and the views expressed
herein are subject to change at any time, due to numerous market and other
factors. The Funds disclaim any obligation to update publicly or revise any
forward-looking statements or views expressed herein.
4
decreased valuations of municipal bonds across all credit ratings, especially
those with lower credit ratings, and this generally reduced the Funds' common
share net asset values. The municipal market is one in which dealer firms make
markets in bonds on a principal basis using their proprietary capital, and
during the recent market turmoil these firms' capital was severely constrained.
As a result, some firms were unwilling to commit their capital to purchase and
to serve as a dealer for municipal bonds. This reduction in dealer involvement
in the market was accompanied by significant net selling pressure by investors,
particularly with respect to lower-rated municipal bonds, as institutional
investors generally removed money from the municipal bond market, at least in
part because of their need to reduce the leveraging of their municipal
investments. This deleveraging was in part driven by the overall reduction in
the amount of financing available for such leverage, the increased costs of such
leverage financing, and the need to reduce leverage levels that had recently
increased due to the decline in municipal bond prices.
Municipal bond prices were further negatively impacted by concerns that the need
for further deleveraging and a supply overhang (a large amount of new issues
that were postponed) would cause selling pressure to persist for a period of
time. In addition to falling prices, the following market conditions resulted in
greater price volatility of municipal bonds - wider credit spreads (i.e., lower
quality bonds fell in price more than higher quality bonds); significantly
reduced liquidity (i.e., the ability to sell bonds at a price close to their
carrying value), particularly for lower quality bonds; and a lack of price
transparency (i.e., the ability to accurately determine the price at which a
bond would likely trade). Reduced liquidity was most pronounced in mid-October,
although it improved considerably after that period.
In the municipal bond market, performance over this period was significantly
impacted by concerns about the credit markets, downgrades of municipal bond
insurers, and institutional investors' need to unwind various leveraging
strategies. These events created surges of selling pressure, as many municipal
bond owners tried to sell holdings of longer-maturity bonds into a market
already experiencing a lack of liquidity. Combined with the Fed rate cuts, this
produced a steepening of the municipal yield curve. In this environment, bonds
with shorter maturities generally outperformed longer maturity bonds, and higher
quality bonds tended to outperform lower quality credits.
Over the seven months ended February 28, 2009, municipal bond issuance
nationwide totaled $174.5 billion, a drop of 16% compared with the seven-month
period ended February 29, 2008. While market conditions during this period
impacted the demand for municipal bonds, we continued to see demand from
investors attracted by higher interest rates and yields relative to taxable
bonds.
5
HOW WERE THE ECONOMIC AND MARKET ENVIRONMENTS IN MICHIGAN AND OHIO DURING THIS
PERIOD?
Michigan's state economy, which ranks as one of the weakest in the nation,
continued to worsen during this period, due to sharp cutbacks in auto
production, the deepening recession nationwide and mounting job losses. State
employment trends declined across all sectors except education/health services,
with construction, manufacturing and information services posting the biggest
drops. Despite the financial woes of the major U.S. automakers and the thousands
of jobs lost in recent years, manufacturing still accounts for 14.5% of
employment in Michigan, compared with 10% nationally. In February 2009,
Michigan's jobless rate was 12.0%, the highest state unemployment rate in the
nation and the highest level for the state in more than 25 years. In addition to
employment concerns, Michigan continued to experience declining housing prices
and a high foreclosure rate. According to the Standard & Poor's
(S&P)/Case-Shiller home price index of 20 major metropolitan areas, housing
prices in Detroit fell 21.7% in 2008, compared with an average decline of 18.2%
nationwide. Lower home values have forced downward revisions to revenue
estimates by state and local governments. Michigan could receive as much as $18
billion from the American Recovery and Reinvestment Act of 2009, which amounts
to approximately 5% of its gross state product. The positive impact of this
money would likely be limited primarily to job retention, rather than job
creation, in 2009. Despite this, the state faces a projected budget shortfall of
$200 million for fiscal 2009. This gap is estimated to grow to as much as $1.5
billion in fiscal 2010. As of February 2009, Moody's, S&P and Fitch rated
Michigan general obligation debt at Aa3, AA-, and AA-, respectively. During the
seven months ended February 28, 2009, municipal issuance in Michigan totaled $3
billion, a decrease of 38% compared with the seven months ended February 29,
2008.
Although the Ohio economy has contracted steadily since mid-2006, continued job
losses and the national recession caused the state's economic decline to
intensify significantly during this period. Employment in Ohio has remained less
diversified than that of the nation as a whole, with heavier dependence on the
manufacturing sector, particularly the troubled auto industry, relative to the
national average. As of February 2009, Ohio's unemployment rate was 9.4%, the
highest since May 1984. The housing recession also continued to serve as a major
drag on the Ohio economy, with reduced home values negatively impacting consumer
and household spending. In February 2009, the foreclosure rate in Ohio was the
tenth highest in the nation. In the wake of growing job losses, slower consumer
spending, and weaker household balance sheets, state revenue collection has
deteriorated, particularly from non-auto sales and personal income taxes, the
state's largest tax sources. Ohio faces an estimated budget deficit of $7.3
billion in fiscal 2010-2011. As part of the American Recovery and Reinvestment
Act, Ohio expects to receive at least $8.2 billion and the state is counting on
$3.4 billion of that aid to cover part of its budget shortfall. As of February
2009, Moody's, S&P and Fitch rated Ohio general obligation debt at Aa1, AA+, and
AA+, respectively. For the
6
seven months ended February 28, 2009, municipal issuance in Ohio totaled $6.2
billion, a decrease of 42% compared with the seven months ended February 2008.
WHAT KEY STRATEGIES WERE USED TO MANAGE THE MICHIGAN AND OHIO FUNDS DURING THIS
REPORTING PERIOD?
During this seven-month period, we continued to focus on finding bonds that
offered relative value while seeking to preserve liquidity and invest for the
long term. Much of our investment activity was driven by the new issuance
municipal bond market, which provided opportunities to purchase bonds with
better structures (e.g., higher coupons, longer call protection) at attractive
prices. During periodic market dislocations, we found opportunities in various
sectors by using a fundamental approach to discover undervalued credits with the
potential to perform well over the long term. Many of the additions to our
portfolios were purchased at the longer end of the yield curve, which we
believed not only offered more value during this period, but also helped to
offset the natural shortening of the Funds' durations(1) and support and enhance
yields. In general, the bonds we purchased were uninsured, as the insurance
penetration of the new issuance municipal market declined dramatically during
2008 and early 2009.
During this period, all seven of these Funds purchased general obligation (GO)
bonds, including those issued for various school districts. In Michigan, our GO
purchases concentrated on the central and western parts of the state, as we
continued to de-emphasize issuers in the Detroit area. Dislocations in the
market, particularly during the last three months of 2008, provided
opportunities to add health care and tobacco credits that we believed
represented uncommon value to all of the Michigan and Ohio Funds, as well as
industrial development revenue bonds in the Ohio Funds. NUM and NMP also
purchased revenue bonds issued for Kent County airport and NXI added a tax
increment financing district credit.
To provide the liquidity we needed during this period, we sold pre-refunded(2)
bonds in the Michigan Funds and NBJ. In addition, we closed out our positions in
Detroit and Puerto Rico GOs across all of these Funds. In the Ohio Funds, the
proceeds from a substantial number of bond calls also supplied capital for
purchases.
Going into this period, all of the Michigan and Ohio Funds continued to use
inverse floating rate securities(3) as part of a disciplined approach to
duration management. Inverse floaters typically help to bring the Funds'
durations closer to our strategic target and to enhance their income-generation
capabilities. During this period, as previously described, we were able to
purchase longer maturity bonds offering attractive yields and better structures
that accomplished many of the same goals as the inverse floaters. This enabled
us to terminate the inverse floaters in the four Ohio Funds. However, the three
Michigan Funds continued to use inverse floaters as of February 28, 2009. NMP,
NUO, NXI, NBJ and NVJ also invested in additional types of derivatives(4) during
this period. The goal of this strategy was to help us manage net asset value
(NAV) volatility without having a negative impact on income streams or common
share dividends over the short term. As of February 28, 2009, all of these
derivatives had been removed.
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(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.
(2) Pre-refundings, also known as advance 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.
(3) An inverse floating rate security, also known as inverse floaters, 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 this reporting period, are
further defined within the Notes to Financial Statements and Glossary of Terms
Used in this Report sections of this shareholder report.
(4) Each Fund may invest in derivatives instruments such as forwards, futures,
option and swap transactions. For additional information on derivative
instruments in which each Fund was invested during and at the end of the
reporting period, see the Portfolio of Investments, Financial Statements and
Notes to Financial Statements sections of this shareholder report
7
HOW DID THE FUNDS PERFORM?
Individual results for these Nuveen Michigan and Ohio Funds, as well as relevant
index and peer group information, are presented in the accompanying table.
Average Annual Total Returns on Common Share Net Asset Value*
For periods ended 2/28/09
Seven-Month 1-Year 5-Year 10-Year
Michigan Funds
NUM -1.27% 3.66% 1.88% 4.56%
NMP -1.62% 2.53% 1.95% 4.50%
NZW -4.20% 0.31% 1.35% N/A
Lipper Michigan
Municipal Debt Funds
Average(5) -4.35% 0.10% 1.09% 4.04%
Barclays Capital
Municipal
Bond Index(6) 1.22% 5.18% 3.13% 4.61%
S&P National
Municipal Bond Index(7) -0.58% 3.09% 2.82% 4.43%
Ohio Funds
NUO -0.49% 3.66% 2.20% 4.39%
NXI -0.15% 3.99% 2.95% N/A
NBJ -3.01% 1.01% 1.82% N/A
NVJ 0.36% 4.18% 2.81% N/A
Lipper Other States
Municipal Debt Funds
Average(8) -4.35% 0.17% 1.41% 3.89%
Barclays Capital
Municipal Bond Index(6) 1.22% 5.18% 3.13% 4.61%
S&P National
Municipal Bond Index(7) -0.58% 3.09% 2.82% 4.43%
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*Seven-month returns are cumulative; returns for one year, five years, and ten
years are 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.
(5) The Lipper Michigan Municipal Debt Funds Average is calculated using the
returns of all closed-end funds in this category for each period as follows: 7
months, 7 funds; 1 year, 7 funds; 5 years, 7 funds; and 10 years, 4 funds. Fund
and Lipper returns assume reinvestment of dividends.
(6) The Barclays Capital (formerly Lehman Brothers) Municipal Bond Index is an
unleveraged, unmanaged national index comprising a broad range of
investment-grade municipal bonds. Results for the Barclays Capital Index do not
reflect any expenses.
(7) The Standard & Poor's National Municipal Bond Index is an unleveraged,
market value-weighted index designed to measure the performance of the
investment-grade U.S. municipal bond market.
(8) The Lipper Other States Municipal Debt Funds Average is calculated using the
returns of all closed-end funds in this category for each period as follows: 7
months, 46 funds; 1 year, 46 funds; 5 years, 27 funds; and 10 years, 18 funds.
Fund and Lipper returns assume reinvestment of dividends. 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.
Fund and Lipper returns assume reinvestment of dividends.
8
For the seven months ended February 28, 2009, the cumulative returns on common
share NAV for all of the Michigan and Ohio Funds exceeded the average returns
for the Lipper Michigan Municipal Debt Funds Average and the Lipper Other States
Municipal Debt Funds Average, respectively. NUO, NXI and NVJ outperformed the
Standard & Poor's (S&P) National Municipal Bond Index, while NUM, NMP, NZW and
NBJ trailed this index for the seven-month period. All of the Funds
underperformed the national Barclays Capital Municipal Bond Index. Shareholders
should note that the Barclays Capital Municipal Bond Index and the S&P National
Municipal Bond Index include bonds from other states in addition to Michigan and
Ohio, which may make direct comparisons between the Funds and these benchmarks
less meaningful.
Key management factors that influenced the Funds' returns during this period
included duration and yield curve positioning, the use of derivatives, credit
exposure, and sector allocations. In addition, the use of leverage was a
principal factor affecting each Fund's performance over this period. The impact
of leverage is discussed in more detail on page 11.
Over the course of this reporting period, the yield curve remained steep. Given
this interest rate environment, bonds in the Barclays Capital Municipal Bond
Index with maturities between two and eight years, especially those maturing in
approximately five years, benefited the most. Because they were less sensitive
to interest rate changes, these bonds generally outperformed credits with longer
maturities, with the biggest losses experienced by bonds with the longest
maturities (22 years and longer). While the Funds were relatively overweighted
in the underperforming longer part of the yield curve when compared with the
index, this was offset in NVJ by an over exposure to both the outperforming
shorter and intermediate parts of the yield curve. NUO, NXI and--to a lesser
extent--NUM and NMP also had good weightings in the intermediate area of the
curve. In general, NZW and NBJ were not as advantageously positioned in terms of
duration, particularly NBJ, which had less exposure to the short end of the
curve and greater exposure to the long end than the other Ohio Funds. This was a
factor in the underperformance of NZW and NBJ relative to the other Nuveen
Michigan and Ohio funds, respectively. Overall, duration positioning was a net
positive for the performances of NUO, NXI and NVJ and a comparative negative in
NUM, NMP, NZW and NBJ.
As mentioned earlier, NMP, NUO, NXI, NBJ and NVJ used derivative financial
instruments during this period to synthetically extend duration and move them
closer to our strategic duration target. Despite the fact that longer duration
municipal bonds
9
generally underperformed those with shorter durations, the use of these
derivatives had a positive impact on return performance, especially in NXI and
NVJ, which had greater derivative exposure. The positive impact was attributable
to the fact that these derivatives provided exposure to taxable markets during a
period when, in contrast to historical trends, the taxable markets and the
municipal market moved in the opposite directions. As municipal market
performance lagged the gains in the taxable markets, these derivatives performed
well. On the other hand, the inverse floaters used by the Funds had a negative
impact on performance. This resulted from the fact that the inverse floaters
effectively increased the Funds' exposure to longer maturity bonds during a
period when shorter maturities were in favor in the market.
Credit exposure also was an important factor in performance. Because risk-averse
investors generally sought higher quality investments as disruptions in the
financial markets deepened, bonds with higher credit quality typically performed
very well. At the same time, securities rated BBB or below and non-rated bonds
generally posted poor returns. As of February 28, 2009, NUM and NMP had
allocated approximately 6% and 7%, respectively, of their portfolios to bonds
rated BBB and lower, while NZW had an allocation of 14% to the lower credit
quality categories and non-rated bonds. Although lower-rated and non-rated bonds
accounted for approximately 12% to 13% of each of the Ohio Funds' portfolios,
NVJ's performance was boosted by its heavier exposure to bonds rated AAA, which
comprised more than half of its portfolio. We continue to believe that
lower-rated credits can offer attractive opportunities despite their generally
greater risks.
During this period, pre-refunded bonds, which are backed by U.S. Treasury
securities, were one of the top performing segments of the municipal market, due
primarily to their shorter effective maturities, higher credit quality and
perceived safety. Among these Funds, NUM, NXI and NVJ held the heaviest
weightings of pre-refunded bonds. Some of the Funds also saw positive
contributions from pre-refunded activity, which benefited them through price
appreciation and enhanced credit quality. Additional sectors of the market that
generally contributed to the Funds' returns included general obligation and
other tax-supported bonds, water and sewer, education, and housing credits,
particularly in Ohio where GNMA (Government National Mortgage Association)
housing bonds rated AAA and backed by the federal government performed well.
However, most of the Funds had lower weightings in tax-supported
10
bonds than the market as a whole, which lessened the positive contribution from
this sector.
Holdings that generally detracted from the Funds' performances included
Industrial Development Bonds (IDB) and health care (including continuing care
retirement community) bonds, which underperformed the overall municipal market,
posting negative returns for the period. Next to the IDB sector, zero coupon
bonds were among the worst performing categories in the municipal market, and
the Funds were negatively impacted by their holdings of longer maturity zero
coupon credits. The impact of the poor performance of lower-rated tobacco bonds
was somewhat mitigated by the Funds' relatively low exposures, which ranged from
less than 1% of the Michigan Funds' portfolios to approximately 2% to 4% of the
Ohio Funds as of February 28, 2009.
IMPACT OF THE FUNDS' CAPITAL STRUCTURES AND LEVERAGE STRATEGIES ON PERFORMANCE
In this generally unfavorable investment environment, the most significant
factor impacting the return of these Funds relative to the comparative indexes
was the Funds' use of financial leverage. The Funds use leverage because their
managers believe that, over time, leveraging provides opportunities for
additional income and total returns for common shareholders. However, use of
leverage also can expose common shareholders to additional risk--especially when
market conditions are as unfavorable as they were during this period. As the
prices of many securities held by these Funds declined during the this time
period, the negative impact of these valuation changes on common share net asset
value and common shareholder total return was magnified by the use of leverage.
RECENT DEVELOPMENTS REGARDING BOND INSURANCE COMPANIES
Another factor that had an impact on the performance of these Funds was their
position in bonds backed by municipal bond insurers that experienced downgrades
in their credit ratings. During the period covered by this report, AGC, AMBAC,
FGIC, FSA, MBIA, RAAI and SYNCORA (formerly XLCA) experienced one or more rating
reductions by at least one or more rating agencies. At the time this report was
prepared, at least one rating agency has placed each of these insurers except
AGC on "negative credit watch" or "credit watch developing," which may presage
one or more rating reductions for such insurer or insurers in the future. As
concern
11
increased about the balance sheets of these insurers, prices on bonds insured by
these companies - especially those bonds with weaker underlying credits -
declined, detracting from the Funds' performance. By the end of this period,
most insured bonds were being valued according to their fundamentals as if they
were uninsured. On the whole, the holdings of all of our Funds continued to be
well diversified not only between insured and uninsured bonds, but also within
the insured bond category. It is important to note that municipal bonds
historically have had a very low rate of default.
RECENT DEVELOPMENTS IN THE AUCTION RATE PREFERRED SECURITIES MARKETS
As noted in the last shareholder report, beginning in February 2008, more shares
were submitted for sale in the regularly scheduled auctions for the auction rate
preferred shares issued by these Funds than there were offers to buy. This meant
that these auctions "failed to clear," and that many or all of the Funds'
auction rate preferred shareholders who wanted to sell their shares in these
auctions were unable to do so. This decline in liquidity in auction rate
preferred shares did not lower the credit quality of these shares, and auction
rate preferred shareholders unable to sell their shares received distributions
at the "maximum rate" applicable to failed auctions, as calculated in accordance
with the pre-established terms of the auction rate preferred shares.
These developments generally have not affected the portfolio management or
investment policies of these Funds. However, one continuing implication for
common shareholders of these auction failures is that the Funds' cost of
leverage will likely be higher, at least temporarily, than it otherwise would
have been had the auctions continued to be successful. As a result, the Funds'
future common share earnings may be lower than they otherwise might have been.
As noted in the last shareholder report, the Funds' Board of Director's/Trustees
authorized a plan to use tender option bonds (TOBs), also known as floating rate
securities, to refinance a portion of the Funds' outstanding auction rate
preferred shares.
On January 8, 2009, thirty-five closed-end municipal funds called for redemption
at par a portion of their outstanding auction rate preferred securities. This
series of redemptions will collectively total $250.1 million. This new series of
redemptions brings the total amount of Nuveen's municipal closed-end funds'
12
auction rate preferred securities redemptions to nearly $2 billion of the
original $11 billion outstanding.
As of February 28, 2009, NUM, NZW and NBJ have redeemed $3,100,000, $1,075,000
and $900,000 auction rate preferred shares, respectively, (3.3%, 6.7% and 3.8%
of their original outstanding auction rate preferred shares of $94,000,000,
$16,000,000 and $24,000,000, respectively). While the Funds' Board of
Directors/Trustees and management continue to work to resolve this situation,
the Funds cannot provide any assurance on when the remaining outstanding auction
rate preferred shares might be redeemed.
For up-to-date information, please visit the Nuveen CEF Auction Rate Preferred
Resource Center at:
http://www.nuveen.com/ResourceCenter/AuctionRatePreferred.aspx.
13
Common Share
Dividend and Share Price
INFORMATION
During the seven-month reporting period ended February 28, 2009, NUO, NXI, NBJ
and NVJ each had one increase in their monthly dividends. The dividend of NUM
remained stable throughout the reporting period, while NMP and NZW each had one
dividend reduction.
Due to normal portfolio activity, common shareholders of NZW received a
long-term capital gains distributions of $0.0120 at the end of December 2008.
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 February 28, 2009, all of
the Funds in this report except NZW had a positive UNII balance for both tax and
financial statement purposes. NZW had a positive UNII balance for tax purposes
and a negative UNII balance for financial statement purposes.
COMMON SHARE REPURCHASES AND SHARE PRICE INFORMATION
On July 30, 2008, the Funds' Board of Directors/Trustees approved an open-market
share repurchase program under which each Fund may repurchase up to 10% of its
outstanding common shares. As of February 28, 2009, NMP, NXI and NVJ repurchased
26,700, 600 and 1,700 common shares, respectively, representing approximately
0.35%, 0.01% and 0.08%, respectively, of each Fund's total common shares
outstanding. Since the inception of this program, NMP, NXI, and NVJ repurchased
their common shares at a weighted average price of $10.58, $11.50 and $11.82,
respectively, and a weighted average discount per common share of 20.80%, 17.21%
and 16.10%, respectively.
14
As of February 28, 2009, the Funds' common share prices were trading at
discounts to their common share NAVs as shown in the accompanying chart:
2/28/09 Seven-Month Average
Discount Discount
NUM -21.70% -20.11%
NMP -21.27% -20.01%
NZW -15.13% -17.07%
NUO -11.40% -12.62%
NXI -12.51% -14.81%
NBJ -11.33% -14.80%
NVJ -14.46% -13.82%
15
NUM Performance OVERVIEW | Nuveen Michigan Quality Income Municipal Fund, Inc.
as of February 28, 2009
FUND SNAPSHOT
--------------------------------------------------------------------------------
Common Share Price $ 10.61
--------------------------------------------------------------------------------
Common Share Net Asset Value $ 13.55
--------------------------------------------------------------------------------
Premium/(Discount) to NAV -21.70%
--------------------------------------------------------------------------------
Market Yield 6.28%
--------------------------------------------------------------------------------
Taxable-Equivalent Yield(2) 9.11%
--------------------------------------------------------------------------------
Net Assets Applicable to Common Shares ($000) $ 158,717
--------------------------------------------------------------------------------
Average Effective Maturity on Securities (Years) 14.09
--------------------------------------------------------------------------------
Leverage-Adjusted Duration 10.84
--------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 10/17/91)
--------------------------------------------------------------------------------
ON SHARE PRICE ON NAV
--------------------------------------------------------------------------------
7-Month (Cumulative) -10.68% -1.27%
--------------------------------------------------------------------------------
1-Year -9.71% 3.66%
--------------------------------------------------------------------------------
5-Year -2.70% 1.88%
--------------------------------------------------------------------------------
10-Year 1.68% 4.56%
--------------------------------------------------------------------------------
INDUSTRIES
(as a % of total investments)
--------------------------------------------------------------------------------
Tax Obligation/General 36.7%
--------------------------------------------------------------------------------
U.S. Guaranteed 22.5%
--------------------------------------------------------------------------------
Tax Obligation/Limited 10.8%
--------------------------------------------------------------------------------
Utilities 9.9%
--------------------------------------------------------------------------------
Water and Sewer 6.3%
--------------------------------------------------------------------------------
Health Care 5.9%
--------------------------------------------------------------------------------
Other 7.9%
--------------------------------------------------------------------------------
[PIE CHART]
Credit Quality (as a % of total investments)(1)
AAA/U.S.
Guaranteed 45%
AA 41%
A 8%
BBB 5%
BB or Lower 1%
[BAR CHART]
2008-2009 Monthly Tax-Free Dividends Per Common Share
Mar $ 0.0555
Apr 0.0555
May 0.0555
Jun 0.0555
Jul 0.0555
Aug 0.0555
Sep 0.0555
Oct 0.0555
Nov 0.0555
Dec 0.0555
Jan 0.0555
Feb 0.0555
[LINE CHART]
Common Share Price Performance -- Weekly Closing Price
3/01/08 $ 12.67
12.86
12.67
12.49
12.799
12.99
13.1
13.07
13.14
13.2
13.3301
13.32
13.38
13.34
13.22
13.06
12.71
12.56
12.75
12.61
12.62
12.3601
12.34
12.27
12.31
12.22
12.36
12.46
12.25
11.56
11.29
10.666
8.23
9.46
10.835
10.64
10.64
9.958
9.2
9.69
9.01
8.47
9.1
9.47
10.09
11.15
10.84
10.57
11.05
11.23
11.23
10.52
2/28/09 10.61
(1) The percentages shown in the foregoing chart may reflect the ratings on
certain bonds insured by AGC, AMBAC, FGIC, FSA, MBIA, RAAI and SYNCORA as
of February 28, 2009. Please see the Portfolio Manager's Commentary for an
expanded discussion of the affect on the Fund of changes to the ratings of
certain bonds in the portfolio resulting from changes to the ratings of
the underlying insurers both during the period and after period end.
(2) 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 31.1%. When comparing this Fund to investments that generate
qualified dividend income, the Taxable-Equivalent Yield is lower.
16
NMP Performance OVERVIEW | Nuveen Michigan Premium Income Municipal Fund, Inc.
as of February 28, 2009
[PIE CHART]
Credit Quality (as a % of total investments)(1)
AAA/U.S.
Guaranteed 33%
AA 48%
A 12%
BBB 6%
BB or Lower 1%
[BAR CHART]
2008-2009 Monthly Tax-Free Dividends Per Common Share
Mar $ 0.055
Apr 0.055
May 0.055
Jun 0.055
Jul 0.055
Aug 0.055
Sep 0.055
Oct 0.053
Nov 0.053
Dec 0.053
Jan 0.053
Feb 0.053
[LINE CHART]
Common Share Price Performance -- Weekly Closing Price
3/01/08 $ 12.46
12.54
12.39
12.35
12.57
12.74
12.794
12.78
12.74
12.8
12.9599
12.9
13.08
13.05
13.03
12.88
12.46
12.52
12.63
12.7
12.58
12.21
12.37
12.49
12.34
12.14
12.32
12.38
12.192
11.34
11.1
10.55
7.95
9.49
10.25
10.25
10.54
9.91
9.2
9.14
8.79
8.35
8.73
9.24
9.94
11
10.55
10.3899
10.61
10.966
11.01
10.444
2/28/09 10.44
FUND SNAPSHOT
--------------------------------------------------------------------------------
Common Share Price $ 10.44
--------------------------------------------------------------------------------
Common Share Net Asset Value $ 13.26
--------------------------------------------------------------------------------
Premium/(Discount) to NAV -21.27%
--------------------------------------------------------------------------------
Market Yield 6.09%
--------------------------------------------------------------------------------
Taxable-Equivalent Yield(2) 8.84%
--------------------------------------------------------------------------------
Net Assets Applicable to Common Shares ($000) $ 102,434
--------------------------------------------------------------------------------
Average Effective Maturity on Securities (Years) 15.26
--------------------------------------------------------------------------------
Leverage-Adjusted Duration 11.20
--------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 12/17/92)
--------------------------------------------------------------------------------
ON SHARE PRICE ON NAV
--------------------------------------------------------------------------------
7-Month (Cumulative) -12.57% -1.62%
--------------------------------------------------------------------------------
1-Year -10.95% 2.53%
--------------------------------------------------------------------------------
5-Year -2.50% 1.95%
--------------------------------------------------------------------------------
10-Year 2.49% 4.50%
--------------------------------------------------------------------------------
INDUSTRIES
(as a % of total investments)
--------------------------------------------------------------------------------
Tax Obligation/General 36.2%
--------------------------------------------------------------------------------
U.S. Guaranteed 14.4%
--------------------------------------------------------------------------------
Tax Obligation/Limited 14.4%
--------------------------------------------------------------------------------
Water and Sewer 11.0%
--------------------------------------------------------------------------------
Utilities 10.8%
--------------------------------------------------------------------------------
Other 13.2%
--------------------------------------------------------------------------------
(1) The percentages shown in the foregoing chart may reflect the ratings on
certain bonds insured by AGC, AMBAC, FGIC, FSA, MBIA, RAAI and SYNCORA as
of February 28, 2009. Please see the Portfolio Manager's Commentary for an
expanded discussion of the affect on the Fund of changes to the ratings of
certain bonds in the portfolio resulting from changes to the ratings of
the underlying insurers both during the period and after period end.
(2) 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 31.1%. When comparing this Fund to investments that generate
qualified dividend income, the Taxable-Equivalent Yield is lower.
17
NZW Performance OVERVIEW | Nuveen Michigan Dividend Advantage Municipal Fund as
of February 28, 2009
FUND SNAPSHOT
--------------------------------------------------------------------------------
Common Share Price $ 10.77
--------------------------------------------------------------------------------
Common Share Net Asset Value $ 12.69
--------------------------------------------------------------------------------
Premium/(Discount) to NAV -15.13%
--------------------------------------------------------------------------------
Market Yield 6.18%
--------------------------------------------------------------------------------
Taxable-Equivalent Yield(2) 8.97%
--------------------------------------------------------------------------------
Net Assets Applicable to Common Shares ($000) $ 26,236
--------------------------------------------------------------------------------
Average Effective Maturity on Securities (Years) 16.41
--------------------------------------------------------------------------------
Leverage-Adjusted Duration 11.88
--------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 9/25/01)
--------------------------------------------------------------------------------
ON SHARE PRICE ON NAV
--------------------------------------------------------------------------------
7-Month (Cumulative) -14.48% -4.20%
--------------------------------------------------------------------------------
1-Year -8.21% 0.31%
--------------------------------------------------------------------------------
5-Year -1.97% 1.35%
--------------------------------------------------------------------------------
Since Inception 1.21% 4.02%
--------------------------------------------------------------------------------
INDUSTRIES
(as a % of total investments)
--------------------------------------------------------------------------------
Tax Obligation/General 33.6%
--------------------------------------------------------------------------------
U.S. Guaranteed 12.8%
--------------------------------------------------------------------------------
Utilities 12.3%
--------------------------------------------------------------------------------
Tax Obligation/Limited 10.5%
--------------------------------------------------------------------------------
Health Care 10.0%
--------------------------------------------------------------------------------
Water and Sewer 9.3%
--------------------------------------------------------------------------------
Other 11.5%
--------------------------------------------------------------------------------
[PIE CHART]
Credit Quality (as a % of total investments)(1)
AAA/U.S.
Guaranteed 41%
AA 33%
A 12%
BBB 9%
BB or Lower 1%
N/R 4%
[BAR CHART]
2008-2009 Monthly Tax-Free Dividends Per Common Share(3)
Mar 0.0585
Apr 0.0585
May 0.0585
Jun 0.0585
Jul 0.0585
Aug 0.0585
Sep 0.0585
Oct 0.0555
Nov 0.0555
Dec 0.0555
Jan 0.0555
Feb 0.0555
[LINE CHART]
Common Share Price Performance -- Weekly Closing Price
3/01/08 $ 12.5
12.82
12.7399
12.65
12.8
13.06
13.14
13.11
13.156
13.18
13.4
13.2
13.33
13.23
13.25
13.05
13
12.9
13.21
13.4
13.8
13.462
13.1
13.1
12.7
12.38
12.5
12.58
12.45
11.9
11.306
11.25
8.8
8.72
9.55
10.31
10.6001
9.84
8.82
9
8.8247
8.25
8.6
8.96
9.65
10.63
10.4
10.18
10.22
10.5499
10.57
10.32
2/28/09 10.77
(1) The percentages shown in the foregoing chart may reflect the ratings on
certain bonds insured by AGC, AMBAC, FGIC, FSA, MBIA, RAAI and SYNCORA as
of February 28, 2009. Please see the Portfolio Manager's Commentary for an
expanded discussion of the affect on the Fund of changes to the ratings of
certain bonds in the portfolio resulting from changes to the ratings of
the underlying insurers both during the period and after period end.
(2) 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 31.1%. When comparing this Fund to investments that generate
qualified dividend income, the Taxable-Equivalent Yield is lower.
(3) The Fund paid shareholders a capital gains distribution in December 2008
of $0.0120 per share.
18
NUO Performance OVERVIEW | Nuveen Ohio Quality Income Municipal Fund, Inc. as of
February 28, 2009
[PIE CHART]
Credit Quality (as a % of total investments)(1)
AAA/U.S.
Guaranteed 34%
AA 32%
A 21%
BBB 10%
N/R 3%
[BAR CHART]
2008-2009 Monthly Tax-Free Dividends Per Common Share
Mar $ 0.055
Apr 0.055
May 0.055
Jun 0.055
Jul 0.055
Aug 0.055
Sep 0.056
Oct 0.056
Nov 0.056
Dec 0.056
Jan 0.056
Feb 0.056
[LINE CHART]
Common Share Price Performance -- Weekly Closing Price
3/01/08 $ 13.9
13.827
13.75
13.5899
14.0499
14.08
13.95
14
13.92
13.89
13.9334
13.98
13.93
13.94
13.9
13.65
13.54
13.53
13.6901
13.58
13.43
13.41
13.41
13.44
13.52
13.5
13.62
13.57
13.39
13.0101
12.4101
12.01
8.47
10.71
11.71
11.67
12.132
11.79
11.3
12.33
11.4
10.7
12
11.6705
12.51
13.53
13.14
13.5
13.4
13.36
13.31
12.79
2/28/09 12.9
FUND SNAPSHOT
--------------------------------------------------------------------------------
Common Share Price $ 12.90
--------------------------------------------------------------------------------
Common Share Net Asset Value $ 14.56
--------------------------------------------------------------------------------
Premium/(Discount) to NAV -11.40%
--------------------------------------------------------------------------------
Market Yield 5.21%
--------------------------------------------------------------------------------
Taxable-Equivalent Yield(2) 7.65%
--------------------------------------------------------------------------------
Net Assets Applicable to Common Shares ($000) $ 141,883
--------------------------------------------------------------------------------
Average Effective Maturity on Securities (Years) 15.57
--------------------------------------------------------------------------------
Leverage-Adjusted Duration 9.81
--------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 10/17/91)
--------------------------------------------------------------------------------
ON SHARE PRICE ON NAV
--------------------------------------------------------------------------------
7-Month (Cumulative) -0.71% -0.49%
--------------------------------------------------------------------------------
1-Year -1.01% 3.66%
--------------------------------------------------------------------------------
5-Year -1.63% 2.20%
--------------------------------------------------------------------------------
10-Year 2.00% 4.39%
--------------------------------------------------------------------------------
INDUSTRIES
(as a % of total investments)
--------------------------------------------------------------------------------
Tax Obligation/General 26.6%
--------------------------------------------------------------------------------
U.S. Guaranteed 16.8%
--------------------------------------------------------------------------------
Health Care 12.0%
--------------------------------------------------------------------------------
Education and Civic Organizations 10.3%
--------------------------------------------------------------------------------
Tax Obligation/Limited 8.3%
--------------------------------------------------------------------------------
Utilities 7.3%
--------------------------------------------------------------------------------
Housing/Multifamily 4.9%
--------------------------------------------------------------------------------
Other 13.8%
--------------------------------------------------------------------------------
(1) The percentages shown in the foregoing chart may reflect the ratings on
certain bonds insured by AGC, AMBAC, FGIC, FSA, MBIA, RAAI and SYNCORA as
of February 28, 2009. Please see the Portfolio Manager's Commentary for an
expanded discussion of the affect on the Fund of changes to the ratings of
certain bonds in the portfolio resulting from changes to the ratings of
the underlying insurers both during the period and after period end.
(2) 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 31.9%. When comparing this Fund to investments that generate
qualified dividend income, the Taxable-Equivalent Yield is lower.
19
NXI Performance OVERVIEW | Nuveen Ohio Dividend Advantage Municipal Fund as of
February 28, 2009
FUND SNAPSHOT
--------------------------------------------------------------------------------
Common Share Price $ 12.10
--------------------------------------------------------------------------------
Common Share Net Asset Value $ 13.83
--------------------------------------------------------------------------------
Premium/(Discount) to NAV -12.51%
--------------------------------------------------------------------------------
Market Yield 5.45%
--------------------------------------------------------------------------------
Taxable-Equivalent Yield(2) 8.00%
--------------------------------------------------------------------------------
Net Assets Applicable to Common Shares ($000) $ 58,692
--------------------------------------------------------------------------------
Average Effective Maturity on Securities (Years) 14.70
--------------------------------------------------------------------------------
Leverage-Adjusted Duration 9.21
--------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 3/27/01)
--------------------------------------------------------------------------------
ON SHARE PRICE ON NAV
--------------------------------------------------------------------------------
7-Month (Cumulative) -2.08% -0.15%
--------------------------------------------------------------------------------
1-Year -2.87% 3.99%
--------------------------------------------------------------------------------
5-Year -0.94% 2.95%
--------------------------------------------------------------------------------
Since Inception 2.96% 5.34%
--------------------------------------------------------------------------------
INDUSTRIES
(as a % of total investments)
--------------------------------------------------------------------------------
U.S. Guaranteed 25.9%
--------------------------------------------------------------------------------
Tax Obligation/General 19.4%
--------------------------------------------------------------------------------
Tax Obligation/Limited 9.8%
--------------------------------------------------------------------------------
Health Care 9.0%
--------------------------------------------------------------------------------
Utilities 8.2%
--------------------------------------------------------------------------------
Housing/Multifamily 6.3%
--------------------------------------------------------------------------------
Education and Civic Organizations 6.2%
--------------------------------------------------------------------------------
Industrials 4.3%
--------------------------------------------------------------------------------
Other 10.9%
--------------------------------------------------------------------------------
[PIE CHART]
Credit Quality (as a % of total investments)(1)
AAA/U.S.
Guaranteed 39%
AA 33%
A 15%
BBB 8%
N/R 5%
[BAR CHART]
2008-2009 Monthly Tax-Free Dividends Per Common Share
Mar $ 0.054
Apr 0.054
May 0.054
Jun 0.054
Jul 0.054
Aug 0.054
Sep 0.055
Oct 0.055
Nov 0.055
Dec 0.055
Jan 0.055
Feb 0.055
[LINE CHART]
Common Share Price Performance -- Weekly Closing Price
3/01/08 $ 13.04
13.26
13.17
12.96
13.26
13.22
13.38
13.35
13.34
13.33
13.55
13.35
13.37
13.42
13.47
13.15
12.97
12.88
12.98
12.99
12.76
12.84
12.87
12.97
12.7
12.75
12.92
13
13.04
12.35
11.75
11.25
8.18
10.562
10.914
11.46
11.604
10.88
10.48
10.85
9.78
9.66
9.84
10.89
11.12
12.49
12.2699
12
12.15
12.264
12.05
11.57
2/28/09 12.1
(1) The percentages shown in the foregoing chart may reflect the ratings on
certain bonds insured by AGC, AMBAC, FGIC, FSA, MBIA, RAAI and SYNCORA as
of February 28, 2009. Please see the Portfolio Manager's Commentary for an
expanded discussion of the affect on the Fund of changes to the ratings of
certain bonds in the portfolio resulting from changes to the ratings of
the underlying insurers both during the period and after period end.
(2) 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 31.9%. When comparing this Fund to investments that generate
qualified dividend income, the Taxable-Equivalent Yield is lower.
20
NBJ Performance OVERVIEW | Nuveen Ohio Dividend Advantage Municipal Fund 2 as of
February 28, 2009
[PIE CHART]
Credit Quality (as a % of total investments)(1)
AAA/U.S.
Guaranteed 32%
AA 32%
A 23%
BBB 9%
N/R 4%
[BAR CHART]
2008-2009 Monthly Tax-Free Dividends Per Common Share
Mar $ 0.053
Apr 0.053
May 0.053
Jun 0.053
Jul 0.053
Aug 0.053
Sep 0.0545
Oct 0.0545
Nov 0.0545
Dec 0.0545
Jan 0.0545
Feb 0.0545
[LINE CHART]
Common Share Price Performance -- Weekly Closing Price
3/01/08 $ 13.08
13.12
12.89
12.67
13.04
12.9696
12.91
13.07
13.14
13.07
13.18
13.06
12.99
13.05
13.26
12.82
12.66
12.73
12.6
12.61
12.47
12.3699
12.41
12.37
12.242
12.33
12.4
12.33
12.17
11.7
11.1
10.6
7.66
9.64
9.92
10.47
10.9
10.87
9.8
11
9.6921
9.2
10.45
9.8
9.93
11.27
11.17
11.2
11.36
11.65
11.4326
11.15
2/28/09 11.58
FUND SNAPSHOT
--------------------------------------------------------------------------------
Common Share Price $ 11.58
--------------------------------------------------------------------------------
Common Share Net Asset Value $ 13.06
--------------------------------------------------------------------------------
Premium/(Discount) to NAV -11.33%
--------------------------------------------------------------------------------
Market Yield 5.65%
--------------------------------------------------------------------------------
Taxable-Equivalent Yield(2) 8.30%
--------------------------------------------------------------------------------
Net Assets Applicable to Common Shares ($000) $ 40,755
--------------------------------------------------------------------------------
Average Effective Maturity on Securities (Years) 15.84
--------------------------------------------------------------------------------
Leverage-Adjusted Duration 10.42
--------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 9/25/01)
--------------------------------------------------------------------------------
ON SHARE PRICE ON NAV
--------------------------------------------------------------------------------
7-Month (Cumulative) -3.09% -3.01%
--------------------------------------------------------------------------------
1-Year -5.51% 1.01%
--------------------------------------------------------------------------------
5-Year -0.87% 1.82%
--------------------------------------------------------------------------------
Since Inception 2.11% 4.32%
--------------------------------------------------------------------------------
INDUSTRIES
(as a % of total investments)
--------------------------------------------------------------------------------
Tax Obligation/General 30.2%
--------------------------------------------------------------------------------
U.S. Guaranteed 14.9%
--------------------------------------------------------------------------------
Health Care 14.5%
--------------------------------------------------------------------------------
Tax Obligation/Limited 10.2%
--------------------------------------------------------------------------------
Utilities 8.3%
--------------------------------------------------------------------------------
Education and Civic Organizations 8.2%
--------------------------------------------------------------------------------
Industrials 5.1%
--------------------------------------------------------------------------------
Other 8.6%
--------------------------------------------------------------------------------
(1) The percentages shown in the foregoing chart may reflect the ratings on
certain bonds insured by AGC, AMBAC, FGIC, FSA, MBIA, RAAI and SYNCORA as
of February 28, 2009. Please see the Portfolio Manager's Commentary for an
expanded discussion of the affect on the Fund of changes to the ratings of
certain bonds in the portfolio resulting from changes to the ratings of
the underlying insurers both during the period and after period end.
(2) 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 31.9%. When comparing this Fund to investments that generate
qualified dividend income, the Taxable-Equivalent Yield is lower.
21
NVJ Performance OVERVIEW | Nuveen Ohio Dividend Advantage Municipal Fund 3 as of
February 28, 2009
FUND SNAPSHOT
--------------------------------------------------------------------------------
Common Share Price $ 11.95
--------------------------------------------------------------------------------
Common Share Net Asset Value $ 13.97
--------------------------------------------------------------------------------
Premium/(Discount) to NAV -14.46%
--------------------------------------------------------------------------------
Market Yield 5.72%
--------------------------------------------------------------------------------
Taxable-Equivalent Yield(2) 8.40%
--------------------------------------------------------------------------------
Net Assets Applicable to Common Shares ($000) $ 30,127
--------------------------------------------------------------------------------
Average Effective Maturity on Securities (Years) 13.19
--------------------------------------------------------------------------------
Leverage-Adjusted Duration 9.83
--------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 3/25/02)
--------------------------------------------------------------------------------
ON SHARE PRICE ON NAV
--------------------------------------------------------------------------------
7-Month (Cumulative) -4.29% 0.36%
--------------------------------------------------------------------------------
1-Year -6.57% 4.18%
--------------------------------------------------------------------------------
5-Year -0.96% 2.81%
--------------------------------------------------------------------------------
Since Inception 2.29% 5.17%
--------------------------------------------------------------------------------
INDUSTRIES
(as a % of total investments)
--------------------------------------------------------------------------------
U.S. Guaranteed 28.4%
--------------------------------------------------------------------------------
Tax Obligation/General 21.6%
--------------------------------------------------------------------------------
Tax Obligation/Limited 14.1%
--------------------------------------------------------------------------------
Health Care 9.2%
--------------------------------------------------------------------------------
Utilities 6.2%
--------------------------------------------------------------------------------
Education and Civic Organizations 4.1%
--------------------------------------------------------------------------------
Transportation 3.9%
--------------------------------------------------------------------------------
Other 12.5%
--------------------------------------------------------------------------------
[PIE CHART]
Credit Quality (as a % of total investments)(1)
AAA/U.S.
Guaranteed 52%
AA 19%
A 17%
BBB 8%
N/R 4%
[BAR CHART]
2008-2009 Monthly Tax-Free Dividends Per Common Share
Mar $ 0.0555
Apr 0.0555
May 0.0555
Jun 0.0555
Jul 0.0555
Aug 0.0555
Sep 0.057
Oct 0.057
Nov 0.057
Dec 0.057
Jan 0.057
Feb 0.057
[LINE CHART]
Common Share Price Performance -- Weekly Closing Price
3/01/08 $ 13.99
13.78
13.48
13.178
13.5038
13.7
13.58
13.65
13.55
13.67
13.651
13.81
13.81
13.57
13.76
13.65
13.55
13.35
13.2499
13.18
12.9
12.83
12.99
12.85
12.95
12.95
13.188
13.12
12.85
12.24
11.96
11.8
8.5
10.37
11.15
12.1
11.34
11.35
11.7299
11.35
10.35
10.65
10.56
10.6
11
12.57
12.69
12.93
12.7499
12.418
12.23
11.75
2/28/09 11.95
(1) The percentages shown in the foregoing chart may reflect the ratings on
certain bonds insured by AGC, AMBAC, FGIC, FSA, MBIA, RAAI and SYNCORA as
of February 28, 2009. Please see the Portfolio Manager's Commentary for an
expanded discussion of the affect on the Fund of changes to the ratings of
certain bonds in the portfolio resulting from changes to the ratings of
the underlying insurers both during the period and after period end.
(2) 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 31.9%. When comparing this Fund to investments that generate
qualified dividend income, the Taxable-Equivalent Yield is lower.
22
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
THE BOARD 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 February 28, 2009, and the related statements of
operations, changes in net assets and the financial highlights for each of the
periods indicated therein. 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 February 28, 2009, by correspondence with the custodian.
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 February 28, 2009, the results of their
operations, the changes in their net assets and the financial highlights for
each of the periods indicated therein in conformity with US generally accepted
accounting principles.
/s/ Ernst & Young LLP
Chicago, Illinois
April 9, 2009
23
NUM | Nuveen Michigan Quality Income Municipal Fund, Inc.
| Portfolio of INVESTMENTS February 28, 2009
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES - 1.5% (1.0% OF TOTAL INVESTMENTS)
$ 3,500 Michigan Tobacco Settlement Finance Authority, Tobacco Settlement 6/18 at 100.00 Baa3 $ 2,402,400
Asset-Backed Revenue Bonds, Series 2008A, 6.875%, 6/01/42
------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 6.4% (4.1% OF TOTAL INVESTMENTS)
700 Chandler Park Academy, Michigan, Public School Academy Charter School 11/15 at 100.00 BBB 434,273
Revenue Bonds, Series 2005, 5.125%, 11/01/35
1,685 Michigan Higher Education Facilities Authority, Limited Obligation 9/11 at 100.00 Baa1 1,790,060
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 1,438,650
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 AA 848,400
Series 2002 XVII-G, 5.200%, 9/01/20 - AMBAC Insured (Alternative
Minimum Tax)
1,115 Michigan Technological University, General Revenue Bonds, Series 10/13 at 100.00 AA- 1,142,507
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 AA- 3,532,111
1,000 5.125%, 11/15/29 - FGIC Insured 11/09 at 101.00 AA- 995,500
------------------------------------------------------------------------------------------------------------------------------------
10,430 Total Education and Civic Organizations 10,181,501
------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE - 9.2% (5.9% OF TOTAL INVESTMENTS)
2,900 Michigan Hospital Financing Authority, Revenue Bonds, Oakwood 7/17 at 100.00 A 2,096,062
Obligated Group, Series 2007A, 5.000%, 7/15/37
2,700 Michigan State Hospital Finance Authority, Hospital Revenue Bonds, 8/09 at 100.00 BB- 1,563,489
Detroit Medical Center Obligated Group, Series 1998A, 5.250%,
8/15/28
1,000 Michigan State Hospital Finance Authority, Hospital Revenue Refunding 11/09 at 101.00 BBB+ 906,550
Bonds, Memorial Healthcare Center Obligated Group,
Series 1999, 5.875%, 11/15/21
Michigan State Hospital Finance Authority, Revenue Bonds, Chelsea
Community Hospital, Series 2005:
1,025 5.000%, 5/15/30 5/15 at 100.00 BBB 730,733
500 5.000%, 5/15/37 5/15 at 100.00 BBB 322,135
1,500 Michigan State Hospital Finance Authority, Revenue Bonds, Marquette 5/15 at 100.00 Baa3 1,089,195
General Hospital, Series 2005A, 5.000%, 5/15/26
1,150 Royal Oak Hospital Finance Authority, Michigan, Hospital Revenue 9/18 at 100.00 A1 1,225,187
Bonds, William Beaumont Hospital, Refunding
Series 2009V, 8.250%, 9/01/39
5,500 Royal Oak Hospital Finance Authority, Michigan, Hospital Revenue 11/11 at 100.00 AA- 4,455,110
Bonds, William Beaumont Hospital, Series 2001M, 5.250%,
11/15/31 - MBIA Insured
2,195 University of Michigan, Medical Service Plan Revenue Bonds, Series No Opt. Call AA+ 2,128,667
1991, 0.000%, 12/01/10
------------------------------------------------------------------------------------------------------------------------------------
18,470 Total Health Care 14,517,128
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 2.5% (1.6% OF TOTAL INVESTMENTS)
2,675 Michigan Housing Development Authority, FNMA Limited Obligation 12/20 at 101.00 AAA 2,561,767
Multifamily Housing Revenue Bonds, Parkview Place Apartments,
Series 2002A, 5.550%, 12/01/34 (Alternative Minimum Tax)
215 Michigan Housing Development Authority, Rental Housing Revenue Bonds, 4/09 at 101.00 AA 194,259
Series 1999A, 5.300%, 10/01/37 - MBIA Insured
(Alternative Minimum Tax)
24
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY (continued)
$ 1,300 Michigan Housing Development Authority, Rental Housing Revenue Bonds, 7/15 at 100.00 AAA $ 1,216,579
Series 2006D, 5.125%, 4/01/31 - FSA Insured
(Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
4,190 Total Housing/Multifamily 3,972,605
------------------------------------------------------------------------------------------------------------------------------------
LONG-TERM CARE - 0.5% (0.3% OF TOTAL INVESTMENTS)
1,000 Michigan State Hospital Finance Authority, Revenue Bonds, 5/15 at 100.00 N/R 641,530
Presbyterian Villages of Michigan Obligated Group,
Series 2005, 5.250%, 11/15/25
200 Michigan Strategic Fund, Limited Obligation Revenue Refunding Bonds, 7/09 at 100.00 BBB 155,678
Porter Hills Presbyterian Village, Series 1998, 5.375%, 7/01/28
------------------------------------------------------------------------------------------------------------------------------------
1,200 Total Long-Term Care 797,208
------------------------------------------------------------------------------------------------------------------------------------
MATERIALS - 0.6% (0.4% OF TOTAL INVESTMENTS)
1,250 Dickinson County Economic Development Corporation, Michigan, 11/14 at 100.00 BBB 910,188
Pollution Control Revenue Bonds, International Paper Company,
Series 2004A, 4.800%, 11/01/18
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 56.8% (36.7% OF TOTAL INVESTMENTS)
1,000 Anchor Bay School District, Macomb and St. Clair Counties, Michigan, 5/12 at 100.00 AA- 1,006,050
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 AAA 2,551,775
3,200 5.000%, 5/01/29 5/11 at 100.00 AAA 3,183,680
1,000 Ann Arbor, Michigan, General Obligation Bonds, Court & Police 5/18 at 100.00 AA+ 992,340
Facilities Capital Improvement Series 2008, 5.000%, 5/01/38
1,320 Bridgeport Spaulding Community School District, Saginaw County, 5/12 at 100.00 AA- 1,440,793
Michigan, General Obligation Bonds, Series 2002, 5.500%, 5/01/16
2,110 Caledonia Community Schools, Kent, Allegan and Barry Counties, 5/13 at 100.00 AA- 2,248,289
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 AA- 1,011,420
Michigan, General Obligation Bonds, Series 2005, 5.000%,
5/01/25 - MBIA Insured
2,319 Caledonia Community Schools, Kent, Allegan and Barry Counties, 5/17 at 100.00 AA- 2,080,955
Michigan, General Obligation Bonds, Tender Option Bond Trust
2008-1096, 7.067%, 5/01/32 - MBIA Insured (IF)
2,000 Detroit City School District, Wayne County, Michigan, General No Opt. Call AA- 2,172,000
Obligation Bonds, Series 2002A, 6.000%, 5/01/19 - FGIC Insured
285 East Grand Rapids Public Schools, County of Kent, State of Michigan, 5/11 at 100.00 AA 285,473
General Obligation Bonds, Series 2001, Refunding, 5.125%, 5/01/29
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 3,758,381
3,000 0.000%, 12/01/26 No Opt. Call AAA 1,180,650
5,305 0.000%, 12/01/29 No Opt. Call AAA 1,703,913
1,700 Grand Rapids, Michigan, General Obligation Bonds, Series 2007, 9/17 at 100.00 AA 1,728,271
5.000%, 9/01/27 - MBIA Insured
2,000 Hartland Consolidated School District, Livingston County, Michigan, 5/11 at 100.00 AA- 2,003,320
General Obligation Refunding Bonds, Series 2001, 5.125%, 5/01/29
1,400 Howell Public Schools, Livingston County, Michigan, General 11/13 at 100.00 AA- 1,448,846
Obligation Bonds, Series 2003, 5.000%, 5/01/21
1,065 Jackson Public Schools, Jackson County, Michigan, General Obligation 5/14 at 100.00 AAA 1,100,209
School Building and Site Bonds, Series 2004, 5.000%,
5/01/22 - FSA Insured
1,935 Kalamazoo Public Schools, Michigan, General Obligation Bonds, Series 5/16 at 100.00 AAA 1,986,142
2006, 5.000%, 5/01/25 - FSA Insured
200 L'Anse Creuse Public Schools, Macomb County, Michigan, General 5/15 at 100.00 AAA 194,858
Obligation Bonds, Series 2005, 5.000%, 5/01/35 - FSA Insured
25
NUM | Nuveen Michigan Quality Income Municipal Fund, Inc. (continued)
| Portfolio of INVESTMENTS February 28, 2009
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 Counties, 5/16 at 100.00 AA- $ 2,537,540
Michigan, General Obligation Bonds, Series 2006, 5.000%,
5/01/25 - MBIA Insured
2,810 Livonia Public Schools, Wayne County, Michigan, General Obligation 5/14 at 100.00 AA- 2,937,405
Bonds, Series 2004A, 5.000%, 5/01/21 - MBIA Insured
865 Lowell Area Schools, Counties of Ionia and Kent, Michigan, General 5/17 at 100.00 AAA 839,500
Obligation Bonds, Series 2007, 5.000%, 5/01/37 - FSA Insured
1,500 Marshall Public Schools, Calhoun County, Michigan, General Obligation 5/17 at 100.00 AA- 1,482,510
Bonds, Series 2007, 5.000%, 5/01/30 - SYNCORA GTY Insured
2,100 Michigan Municipal Bond Authority, General Obligation Bonds, Detroit 6/15 at 100.00 AAA 2,263,380
City School District, Series 2005, 5.000%, 6/01/18 - FSA Insured
4,000 Michigan, General Obligation Bonds, Environmental Protection Program, 5/13 at 100.00 AA- 4,079,240
Series 2003A, 5.250%, 5/01/20
2,500 Montrose School District, Michigan, School Building and Site Bonds, No Opt. Call AA- 2,935,850
Series 1997, 6.000%, 5/01/22 - MBIA Insured
1,100 Muskegon County, Michigan, Limited Tax General Obligation Wastewater 7/11 at 100.00 AA- 1,106,204
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 1,031,110
Bonds, Series 2002, 5.125%, 9/01/22
2,250 Oakland Intermediate School District, Oakland County, Michigan, 5/17 at 100.00 AAA 2,236,590
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 AA- 1,657,540
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 Aa1 4,429,677
1,120 5.000%, 8/01/30 - MBIA Insured 8/17 at 100.00 Aa1 1,124,547
1,245 Parchment School District, Kalamazoo County, Michigan, General 5/17 at 100.00 AAA 1,044,941
Obligation Bonds, Tender Option Bond Trust 2836, 10.052%,
5/01/36 - FSA Insured (IF)
4,340 Plymouth-Canton Community School District, Wayne and Washtenaw 5/14 at 100.00 AA- 4,366,648
Counties, Michigan, General Obligation Bonds, Series 2004, 5.000%,
5/01/26 - FGIC Insured
1,000 Rockford Public Schools, Kent County, Michigan, General Obligation 5/18 at 100.00 AAA 976,620
Bonds, Series 2008, 5.000%, 5/01/33 - FSA Insured
3,175 South Redford School District, Wayne County, Michigan, General 5/15 at 100.00 AA- 3,142,044
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 AA+ 1,684,525
Bonds, Series 2005, 5.000%, 5/01/26 - MBIA Insured
2,200 Thornapple Kellogg School District, Barry County, Michigan, General 5/17 at 100.00 AA- 2,152,568
Obligation Bonds, Series 2007, 5.000%, 5/01/32 - MBIA Insured
2,000 Trenton Public Schools District, Michigan, General Obligation Bonds, 5/18 at 100.00 AAA 1,952,280
Series 2008, 5.000%, 5/01/34 - FSA Insured
2,275 Troy City School District, Oakland County, Michigan, General 5/16 at 100.00 Aa2 2,477,339
Obligation Bonds, Series 2006, 5.000%, 5/01/19 - MBIA Insured
Van Dyke Public Schools, Macomb County, Michigan, General Obligation
Bonds, School Building and Site, Series 2008:
310 5.000%, 5/01/31 - FSA Insured 5/18 at 100.00 AAA 304,677
575 5.000%, 5/01/38 - FSA Insured 5/18 at 100.00 AAA 557,790
5,000 Wayne County, Michigan, Limited Tax General Obligation Airport Hotel 12/11 at 101.00 AA- 5,015,749
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 Bonds, 11/14 at 100.00 AAA 3,712,370
Series 2004, 5.000%, 5/01/17 - FSA Insured
26
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL (continued)
$ 1,725 Williamston Community School District, Michigan, Unlimited Tax No Opt. Call AA- $ 1,963,533
General Obligation QSBLF Bonds, Series 1996, 5.500%, 5/01/25 -
MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
98,764 Total Tax Obligation/General 90,089,542
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 16.7% (10.8% OF TOTAL INVESTMENTS)
1,000 Grand Rapids Building Authority, Kent County, Michigan, Limited Tax No Opt. Call AA 1,091,180
General Obligation Bonds, Series 1998, 5.000%, 4/01/16
1,345 Grand Rapids Building Authority, Kent County, Michigan, Limited Tax 10/11 at 100.00 AA 1,358,746
General Obligation Bonds, Series 2001, 5.125%, 10/01/26 - MBIA
Insured
Michigan Building Authority, Revenue Bonds, Series 2006IA:
7,000 0.000%, 10/15/27 - FGIC Insured 10/16 at 58.27 AAA 2,230,900
6,200 0.000%, 10/15/28 - FGIC Insured 10/16 at 55.35 AAA 1,826,086
4,440 5.000%, 10/15/36 - FGIC Insured 10/16 at 100.00 AA- 4,026,947
40 Michigan Municipal Bond Authority, Local Government Loan Program 5/09 at 100.00 A 40,174
Revenue Sharing Bonds, Series 1992D, 6.650%, 5/01/12
2,135 Michigan State Building Authority, Revenue Bonds, Facilities Program, 10/15 at 100.00 A+ 1,946,202
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 AA- 5,226,733
5,000 5.000%, 10/15/23 - MBIA Insured 10/13 at 100.00 AA- 5,080,249
3,500 Michigan State Trunk Line, Fund Refunding Bonds, Series 2002, 5.250%, 10/12 at 100.00 AAA 3,715,775
10/01/21 - FSA Insured
------------------------------------------------------------------------------------------------------------------------------------
35,760 Total Tax Obligation/Limited 26,542,992
------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 0.7% (0.5% OF TOTAL INVESTMENTS)
1,000 Capital Region Airport Authority, Michigan, Revenue Refunding Bonds, 7/12 at 100.00 AA- 940,570
Series 2002, 5.250%, 7/01/21 - MBIA Insured (Alternative
Minimum Tax)
200 Kent County, Michigan, Airport Revenue Bonds, Series 1999, 5.000%, 1/10 at 100.00 AAA 200,660
1/01/25
------------------------------------------------------------------------------------------------------------------------------------
1,200 Total Transportation 1,141,230
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 34.7% (22.5% OF TOTAL INVESTMENTS) (4)
690 Anchor Bay School District, Macomb and St. Clair Counties, Michigan, 5/09 at 100.00 AA- (4) 696,721
General Obligation Bonds, Series 1999I, 6.000%, 5/01/29
(Pre-refunded 5/01/09) - FGIC Insured
1,200 Birmingham, Michigan, General Obligation Bonds, Series 2002, 5.000%, 10/12 at 100.50 AAA 1,347,384
10/01/20 (Pre-refunded 10/01/12)
935 Detroit, Michigan, Senior Lien Sewerage Disposal System Revenue 7/13 at 100.00 AAA 1,055,091
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 A+ (4) 3,756,490
770 5.250%, 7/01/33 (Pre-refunded 7/01/11) - FGIC Insured 7/11 at 100.00 A+ (4) 834,495
730 5.250%, 7/01/33 (Pre-refunded 7/01/11) - FGIC Insured 7/11 at 100.00 A+ (4) 792,379
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 AA (4) 4,527,642
1,500 5.000%, 7/01/25 (Pre-refunded 7/01/13) - MBIA Insured 7/13 at 100.00 AA (4) 1,687,320
1,000 Detroit, Michigan, Sewerage Disposal System Revenue Bonds, Series 1/10 at 101.00 Aaa 1,053,120
1999A, 5.875%, 7/01/27 (Pre-refunded 1/01/10) - FGIC Insured
1,085 Freeland Community School District, Saginaw, Midland and Bay 5/10 at 100.00 AA- (4) 1,141,594
Counties, Michigan, General Obligation Bonds, Series 2000, 5.250%,
5/01/19 (Pre-refunded 5/01/10)
2,000 Lake Fenton Community Schools, Genesee County, Michigan, General 5/12 at 100.00 AA- (4) 2,210,800
Obligation Bonds, Series 2002, 5.000%, 5/01/24 (Pre-refunded
5/01/12)
1,790 Lansing Building Authority, Michigan, General Obligation Bonds, 6/13 at 100.00 AA+ (4) 2,024,526
Series 2003A, 5.000%, 6/01/26 (Pre-refunded 6/01/13) - MBIA Insured
27
NUM | Nuveen Michigan Quality Income Municipal Fund, Inc. (continued)
| Portfolio of INVESTMENTS February 28, 2009
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED (4) (continued)
$ 3,880 Mayville Community Schools, Tuscola County, Michigan, General 11/14 at 100.00 AA- (4) $ 4,467,510
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 Revenue No Opt. Call A3 (4) 272,988
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 Aa1 (4) 1,050,030
500 6.125%, 11/15/26 (Pre-refunded 11/15/09) 11/09 at 101.00 AAA 525,015
3,000 Michigan State Hospital Finance Authority, Hospital Revenue Bonds, 11/09 at 101.00 A1 (4) 3,141,600
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 Refunding 3/13 at 100.00 A1 (4) 1,720,755
Bonds, Henry Ford Health System, Series 2003A, 5.625%, 3/01/17
(Pre-refunded 3/01/13)
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 AA (4) 3,455,171
500 5.750%, 5/15/29 (Pre-refunded 5/15/09) - MBIA Insured 5/09 at 101.00 AA- (4) 510,365
1,000 Michigan State Hospital Finance Authority, Hospital Revenue Refunding 11/09 at 101.00 A (4) 1,048,090
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 Refunding 5/09 at 100.50 Aaa 3,503,112
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, 5.000%, 11/01/25 11/11 at 100.00 AAA 1,094,270
(Pre-refunded 11/01/11) - FSA Insured
2,000 Michigan, Certificates of Participation, Series 2000, 5.500%, 6/01/27 6/10 at 100.00 A (4) 2,111,200
(Pre-refunded 6/01/10) - AMBAC Insured
700 Muskegon Heights, Muskegon County, Michigan, Water Supply System 11/10 at 100.00 Baa1 (4) 752,598
Revenue Bonds, Series 2000A, 5.625%, 11/01/30 (Pre-refunded
11/01/10) - MBIA Insured
1,125 Puerto Rico Highway and Transportation Authority, Highway Revenue 7/10 at 101.00 BBB (4) 1,201,489
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) 98,876
915 6.000%, 8/01/26 (ETM) No Opt. Call AAA 1,064,374
4,100 Puerto Rico, Highway Revenue Bonds, Highway and Transportation 7/16 at 100.00 Aaa 4,943,369
Authority, Series 1996Y, 5.500%, 7/01/36 (Pre-refunded 7/01/16)
1,000 Rochester Community School District, Oakland and Macomb Counties, 5/10 at 100.00 AA- (4) 1,056,670
Michigan, General Obligation Bonds, Series 2000I, 5.750%, 5/01/19
(Pre-refunded 5/01/10) - FGIC Insured
800 Romulus Community Schools, Wayne County, Michigan, Unlimited Tax 5/09 at 100.00 AA- (4) 807,480
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 Counties, 11/11 at 100.00 AAA 1,159,295
Michigan, General Obligation Bonds, Series 2001, 5.375%, 5/01/19
(Pre-refunded 11/01/11) - FSA Insured
------------------------------------------------------------------------------------------------------------------------------------
50,375 Total U.S. Guaranteed 55,111,819
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 15.2% (9.9% OF TOTAL INVESTMENTS)
5,000 Lansing Board of Water and Light, Michigan, Steam and Electric 7/18 at 100.00 AA- 4,891,799
Utility System Revenue Bonds, Series 2008A, 5.000%, 7/01/32
3,000 Michigan Public Power Agency, Revenue Bonds, Combustion Turbine 1 1/12 at 100.00 A 3,012,360
Project, Series 2001A, 5.250%, 1/01/27 - AMBAC Insured
3,225 Michigan South Central Power Agency, Power Supply System Revenue No Opt. Call A3 3,279,954
Bonds, Series 2000, 6.000%, 5/01/12
1,000 Michigan Strategic Fund, Collateralized Limited Obligation Pollution 9/09 at 102.00 AA- 819,000
Control Revenue Refunding Bonds, Detroit Edison Company,
Series 1999A, 5.550%, 9/01/29 - MBIA Insured (Alternative
Minimum Tax)
28
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES (continued)
$ 4,000 Michigan Strategic Fund, Collateralized Limited Obligation Pollution 9/11 at 100.00 A- $ 3,782,920
Control Revenue Refunding Bonds, Detroit Edison Company,
Series 2001C, 5.450%, 9/01/29
2,050 Michigan Strategic Fund, Limited Obligation Pollution Control Revenue No Opt. Call Baa1 2,099,692
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 Bonds, No Opt. Call A 3,940,075
Detroit Edison Company, Series 1991BB, 7.000%, 5/01/21 - AMBAC
Insured
3,000 Michigan Strategic Fund, Limited Obligation Revenue Refunding Bonds, 12/12 at 100.00 Baa1 2,335,500
Detroit Edison Company, Series 2002C, 5.450%, 12/15/32 -
SYNCORA GTY Insured (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
24,905 Total Utilities 24,161,300
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 9.8% (6.3% OF TOTAL INVESTMENTS)
5,500 Detroit Water Supply System, Michigan, Water Supply System Revenue 7/16 at 100.00 AAA 4,683,305
Bonds, Series 2006A, 5.000%, 7/01/34 - FSA Insured
1,500 Detroit, Michigan, Senior Lien Sewerage Disposal System Revenue No Opt. Call AA- 1,362,510
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 588,097
Bonds, Series 2003A, 5.000%, 7/01/17 - FSA Insured
1,500 Detroit, Michigan, Senior Lien Water Supply System Revenue Bonds, 7/13 at 100.00 AA- 1,352,970
Series 2003A, 5.000%, 7/01/25 - MBIA Insured
675 Grand Rapids, Michigan, Sanitary Sewer System Revenue Bonds, Series 1/18 at 100.00 AA+ 669,857
2008, 5.000%, 1/01/38
4,210 Michigan Municipal Bond Authority, Clean Water Revolving Fund Revenue 10/14 at 100.00 AAA 4,634,663
Bonds, Series 2004, 5.000%, 10/01/19
1,150 Michigan Municipal Bond Authority, Drinking Water Revolving Fund 10/14 at 100.00 AAA 1,190,066
Revenue Bonds, Series 2004, 5.000%, 10/01/23
1,000 Michigan Municipal Bond Authority, Water Revolving Fund Revenue 10/17 at 100.00 AAA 1,042,150
Bonds, Series 2007, 5.000%, 10/01/24
------------------------------------------------------------------------------------------------------------------------------------
16,100 Total Water and Sewer 15,523,618
------------------------------------------------------------------------------------------------------------------------------------
$ 266,144 Total Investments (cost $248,570,756) - 154.6% 245,351,531
============------------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 2.7% 4,264,969
---------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (57.3)% (5) (90,900,000)
---------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $158,716,500
=====================================================================================================================
(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 Group ("Standard &
Poor's") or Moody's Investor Service, Inc. ("Moody's") rating. Ratings
below BBB by Standard & Poor's or Baa by Moody's are considered to be
below investment grade.
The Portfolio of Investments may reflect the ratings on certain bonds
insured by AGC, AMBAC, FGIC, FSA, MBIA, RAAI and SYNCORA as of February
28, 2009. Please see the Portfolio Manager's Commentary for an expanded
discussion of the affect on the Fund of changes to the ratings of certain
bonds in the portfolio resulting from changes to the ratings of the
underlying insurers both during the period and after period end.
(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) Preferred Shares, at Liquidation Value as a percentage of Total
Investments is 37.0%.
N/R Not rated.
(ETM) Escrowed to maturity.
(IF) Inverse floating rate investment.
See accompanying notes to financial statements.
29
NMP | Nuveen Michigan Premium Income Municipal Fund, Inc.
| Portfolio of INVESTMENTS February 28, 2009
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES - 1.1% (0.7% OF TOTAL INVESTMENTS)
$ 1,650 Michigan Tobacco Settlement Finance Authority, Tobacco Settlement 6/18 at 100.00 Baa3 $ 1,132,560
Asset-Backed Revenue Bonds, Series 2008A, 6.875%, 6/01/42
------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 5.3% (3.5% OF TOTAL INVESTMENTS)
440 Chandler Park Academy, Michigan, Public School Academy Charter School 11/15 at 100.00 BBB 272,972
Revenue Bonds, Series 2005, 5.125%, 11/01/35
2,000 Michigan Higher Education Student Loan Authority, Revenue Bonds, 9/12 at 100.00 AA 1,696,800
Series 2002 XVII-G, 5.200%, 9/01/20 - AMBAC Insured (Alternative
Minimum Tax)
3,500 Wayne State University, Michigan, General Revenue Bonds, Series 1999, 11/09 at 101.00 AA- 3,484,250
5.125%, 11/15/29 - FGIC Insured
------------------------------------------------------------------------------------------------------------------------------------
5,940 Total Education and Civic Organizations 5,454,022
------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE - 4.9% (3.3% OF TOTAL INVESTMENTS)
1,800 Michigan Hospital Financing Authority, Revenue Bonds, Oakwood 7/17 at 100.00 A 1,301,004
Obligated Group, Series 2007A, 5.000%, 7/15/37
Michigan State Hospital Finance Authority, Revenue Bonds, Chelsea
Community Hospital, Series 2005:
425 5.000%, 5/15/25 5/15 at 100.00 BBB 327,705
150 5.000%, 5/15/30 5/15 at 100.00 BBB 106,937
1,005 Michigan State Hospital Finance Authority, Revenue Bonds, Marquette 5/15 at 100.00 Baa3 729,761
General Hospital, Series 2005A, 5.000%, 5/15/26
Michigan State Hospital Finance Authority, Revenue Refunding Bonds,
Detroit Medical Center Obligated Group, Series 1993A:
2,000 6.250%, 8/15/13 8/09 at 100.00 BB- 1,912,700
500 6.500%, 8/15/18 8/09 at 100.00 BB- 420,745
250 Royal Oak Hospital Finance Authority, Michigan, Hospital Revenue 9/18 at 100.00 A1 266,345
Bonds, William Beaumont Hospital, Refunding Series 2009V,
8.250%, 9/01/39
------------------------------------------------------------------------------------------------------------------------------------
6,130 Total Health Care 5,065,197
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 7.2% (4.8% OF TOTAL INVESTMENTS)
895 Michigan Housing Development Authority, GNMA Collateralized Limited 4/12 at 102.00 Aaa 843,690
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 Revenue 4/09 at 100.00 AAA 1,501,605
Bonds, Breton Village Green Project, Series 1993, 5.625%,
10/15/18 - FSA Insured
2,235 Michigan Housing Development Authority, Limited Obligation Revenue 4/09 at 100.00 AAA 2,256,612
Bonds, Walled Lake Villa Project, Series 1993, 6.000%,
4/15/18 - FSA Insured
800 Michigan Housing Development Authority, Rental Housing Revenue Bonds, 7/15 at 100.00 AAA 748,664
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:
535 6.600%, 6/01/13 6/09 at 100.00 AAA 536,332
1,500 6.600%, 6/01/22 6/09 at 100.00 AAA 1,501,740
------------------------------------------------------------------------------------------------------------------------------------
7,465 Total Housing/Multifamily 7,388,643
------------------------------------------------------------------------------------------------------------------------------------
30
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
LONG-TERM CARE - 0.4% (0.3% OF TOTAL INVESTMENTS)
$ 665 Michigan State Hospital Finance Authority, Revenue Bonds, 5/15 at 100.00 N/R $ 426,617
Presbyterian Villages of Michigan Obligated Group,
Series 2005, 5.250%, 11/15/25
------------------------------------------------------------------------------------------------------------------------------------
MATERIALS - 0.8% (0.5% OF TOTAL INVESTMENTS)
1,050 Dickinson County Economic Development Corporation, Michigan, 11/14 at 100.00 BBB 764,558
Pollution Control Revenue Bonds, International Paper Company,
Series 2004A, 4.800%, 11/01/18
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 55.1% (36.2% OF TOTAL INVESTMENTS)
1,475 Anchor Bay School District, Macomb and St. Clair Counties, Michigan, 11/13 at 100.00 AA- 1,526,463
General Obligation Bonds, Series 2003, 5.000%, 5/01/21
2,500 Anchor Bay School District, Macomb and St. Clair Counties, Michigan, 5/11 at 100.00 AAA 2,551,775
Unlimited Tax General Obligation Refunding Bonds,
Series 2001, 5.000%, 5/01/21
1,000 Ann Arbor, Michigan, General Obligation Bonds, Court & Police 5/18 at 100.00 AA+ 992,340
Facilities Capital Improvement Series 2008, 5.000%, 5/01/38
2,250 Caledonia Community Schools, Kent, Allegan and Barry Counties, 5/15 at 100.00 AA- 2,267,325
Michigan, General Obligation Bonds, Series 2005, 5.000%, 5/01/26 -
MBIA Insured
1,501 Caledonia Community Schools, Kent, Allegan and Barry Counties, 5/17 at 100.00 AA- 1,346,922
Michigan, General Obligation Bonds, Tender Option Bond Trust
2008-1096, 7.067%, 5/01/32 - MBIA Insured (IF)
Detroit City School District, Wayne County, Michigan, General
Obligation Bonds, Series 2002A:
1,815 6.000%, 5/01/20 - FGIC Insured No Opt. Call AA- 2,037,537
750 6.000%, 5/01/21 - FGIC Insured No Opt. Call AA- 828,923
2,500 Detroit City School District, Wayne County, Michigan, General 5/13 at 100.00 AA 2,456,250
Obligation Bonds, Series 2003B, 5.000%, 5/01/23 - FGIC Insured
7,000 Detroit-Wayne County Stadium Authority, Michigan, Limited Tax General 8/09 at 100.00 AA- 6,919,640
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 AA 893,015
5.000%, 9/01/24 - MBIA Insured
1,500 Hartland Consolidated School District, Livingston County, Michigan, 5/11 at 100.00 AA- 1,502,490
General Obligation Refunding Bonds, Series 2001, 5.125%, 5/01/29
1,650 Holly Area School District, Oakland County, Michigan, General 5/16 at 100.00 AA- 1,642,113
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- 2,060,340
Obligation Bonds, Series 2003, 5.000%, 5/01/22
1,250 Kalamazoo Public Schools, Michigan, General Obligation Bonds, Series 5/16 at 100.00 AAA 1,283,038
2006, 5.000%, 5/01/25 - FSA Insured
500 Lansing School District, Ingham County, Michigan, General Obligation 5/14 at 100.00 AA- 516,530
Bonds, Series 2004, 5.000%, 5/01/22
1,000 Livonia Public Schools, Wayne County, Michigan, General Obligation 5/14 at 100.00 AA- 1,045,340
Bonds, Series 2004A, 5.000%, 5/01/21 - MBIA Insured
865 Lowell Area Schools, Counties of Ionia and Kent, Michigan, General 5/17 at 100.00 AAA 839,500
Obligation Bonds, Series2007, 5.000%, 5/01/37 - FSA Insured
425 Marshall Public Schools, Calhoun County, Michigan, General Obligation 5/17 at 100.00 AA- 420,045
Bonds, Series 2007, 5.000%, 5/01/30 - SYNCORA GTY Insured
1,000 Michigan Municipal Bond Authority, General Obligation Bonds, Detroit 6/15 at 100.00 AAA 1,077,800
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- 1,019,810
2,000 5.250%, 5/01/21 5/13 at 100.00 AA- 2,026,760
1,450 Oakland Intermediate School District, Oakland County, Michigan, 5/17 at 100.00 AAA 1,441,358
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 Aa1 3,514,210
Bonds, Series 2007, 5.000%, 8/01/30 - MBIA Insured
31
NMP | Nuveen Michigan Premium Income Municipal Fund, Inc. (continued)
| Portfolio of INVESTMENTS February 28, 2009
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL (continued)
$ 1,100 Oxford Area Community Schools, Oakland and Lapeer Counties, Michigan, 5/14 at 100.00 AAA $ 1,121,879
General Obligation Bonds, Series 2004, 5.000%, 5/01/25 - FSA Insured
805 Parchment School District, Kalamazoo County, Michigan, General 5/17 at 100.00 AAA 675,645
Obligation Bonds, Tender Option Bond Trust 2836, 10.052%,
5/01/36 - FSA Insured (IF)
1,000 Rockford Public Schools, Kent County, Michigan, General Obligation 5/15 at 100.00 AAA 1,004,150
Bonds, Series 2005, 5.000%, 5/01/27 - FSA Insured
1,000 Rockford Public Schools, Kent County, Michigan, General Obligation 5/18 at 100.00 AAA 976,620
Bonds, Series 2008, 5.000%, 5/01/33 - FSA Insured
1,100 Thornapple Kellogg School District, Barry County, Michigan, General 5/17 at 100.00 AA- 1,076,284
Obligation Bonds, Series 2007, 5.000%, 5/01/32 - MBIA Insured
1,500 Trenton Public Schools District, Michigan, General Obligation Bonds, 5/18 at 100.00 AAA 1,464,210
Series 2008, 5.000%, 5/01/34 - FSA Insured
1,350 Van Dyke Public Schools, Macomb County, Michigan, General Obligation 5/18 at 100.00 AAA 1,309,595
Bonds, School Building and Site, Series 2008, 5.000%, 5/01/38 -
FSA Insured
2,830 Warren Consolidated School District, Macomb and Oakland Counties, 5/13 at 100.00 AA 3,015,478
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 AA- 1,555,605
4,435 5.000%, 12/01/30 - MBIA Insured 12/11 at 101.00 AA- 3,999,173
------------------------------------------------------------------------------------------------------------------------------------
56,411 Total Tax Obligation/General 56,408,163
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 21.9% (14.4% OF TOTAL INVESTMENTS)
2,880 Michigan Building Authority, Revenue Bonds, Series 2006IA, 5.000%, 10/16 at 100.00 AA- 2,612,074
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+ 2,640,135
6,500 5.000%, 10/15/24 10/11 at 100.00 A+ 6,443,970
1,600 Michigan State Building Authority, Revenue Bonds, Facilities Program, 10/15 at 100.00 A+ 1,474,720
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 10/13 at 100.00 AA- 5,124,250
2,480 5.000%, 10/15/23 - MBIA Insured 10/13 at 100.00 AA- 2,519,804
1,500 Michigan, Comprehensive Transportation Revenue Refunding Bonds, 11/11 at 100.00 AAA 1,576,185
Series 2001A, 5.000%, 11/01/19 - FSA Insured
------------------------------------------------------------------------------------------------------------------------------------
22,530 Total Tax Obligation/Limited 22,391,138
------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 0.2% (0.1% OF TOTAL INVESTMENTS)
200 Kent County, Michigan, Airport Revenue Bonds, Series 1999, 5.000%, 1/10 at 100.00 AAA 200,660
1/01/25
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 21.9% (14.4% OF TOTAL INVESTMENTS) (4)
915 Detroit, Michigan, Second Lien Sewerage Disposal System Revenue 7/15 at 100.00 AA (4) 1,050,429
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 Bonds, 7/11 at 100.00 A+ (4) 1,501,008
Series 2001A, 5.250%, 7/01/33 (Pre-refunded 7/01/11) - FGIC Insured
2,000 Detroit, Michigan, Sewerage Disposal System Revenue Bonds, Series 1/10 at 101.00 Aaa 2,106,240
1999A, 5.875%, 7/01/27 (Pre-refunded 1/01/10) - FGIC Insured
500 Lansing School District, Ingham County, Michigan, General Obligation 5/14 at 100.00 AA- (4) 571,275
Bonds, Series 2004, 5.000%, 5/01/22 (Pre-refunded 5/01/14)
75 Michigan South Central Power Agency, Power Supply System Revenue No Opt. Call A3 (4) 81,896
Bonds, Series 2000, 6.000%, 5/01/12 (ETM)
32
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED (4) (continued)
$ 1,500 Michigan State Building Authority, Revenue Bonds, Facilities Program, 10/10 at 100.00 A+ (4) $ 1,602,150
Series 2000I, 5.375%, 10/15/20 (Pre-refunded 10/15/10)
2,500 Michigan State Hospital Finance Authority, Hospital Revenue Bonds, 11/09 at 101.00 AAA 2,625,075
Ascension Health Credit Group, Series 1999A, 6.125%, 11/15/26
(Pre-refunded 11/15/09)
3,075 Michigan State Hospital Finance Authority, Hospital Revenue Bonds, 11/09 at 101.00 A1 (4) 3,220,140
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 Refunding 3/13 at 100.00 A1 (4) 1,720,755
Bonds, Henry Ford Health System, Series 2003A, 5.625%, 3/01/17
(Pre-refunded 3/01/13)
1,500 Michigan State Hospital Finance Authority, Hospital Revenue Refunding 5/09 at 101.00 AA- (4) 1,531,095
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 Refunding 11/11 at 101.00 A+ (4) 560,080
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 Refunding 5/09 at 100.00 A (4) 3,067,560
Bonds, St. John's Hospital, Series 1993A, 6.000%, 5/15/13 - AMBAC
Insured (ETM)
1,000 Otsego Public Schools District, Allegan and Kalamazoo Counties, 5/14 at 100.00 AAA 1,142,550
Michigan, General Obligation Bonds, Series 2004, 5.000%, 5/01/25
(Pre-refunded 5/01/14) - FSA Insured
1,425 Walled Lake Consolidated School District, Oakland County, Michigan, 5/14 at 100.00 AA (4) 1,645,533
General Obligation Bonds, Series 2004, 5.250%, 5/01/20
(Pre-refunded 5/01/14) - MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
20,875 Total U.S. Guaranteed 22,425,786
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 16.5% (10.8% OF TOTAL INVESTMENTS)
2,500 Lansing Board of Water and Light, Michigan, Steam and Electric 7/18 at 100.00 AA- 2,445,900
Utility System Revenue Bonds, Series 2008A, 5.000%, 7/01/32
1,000 Michigan Public Power Agency, Revenue Bonds, Combustion Turbine 1 1/12 at 100.00 A 1,004,120
Project, Series 2001A, 5.250%, 1/01/27 - AMBAC Insured
925 Michigan South Central Power Agency, Power Supply System Revenue No Opt. Call A3 940,762
Bonds, Series 2000, 6.000%, 5/01/12
1,000 Michigan Strategic Fund, Collateralized Limited Obligation Pollution 9/09 at 102.00 AA- 819,000
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 Pollution 9/11 at 100.00 A- 4,728,650
Control Revenue Refunding Bonds, Detroit Edison Company,
Series 2001C, 5.450%, 9/01/29
3,000 Michigan Strategic Fund, Limited Obligation Pollution Control Revenue No Opt. Call Baa1 3,072,720
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 Bonds, 12/12 at 100.00 Baa1 2,335,500
Detroit Edison Company, Series 2002C, 5.450%, 12/15/32 -
SYNCORA GTY Insured (Alternative Minimum Tax)
1,500 Wyandotte, Michigan, Electric Revenue Refunding Bonds, Series 2002, 10/09 at 100.50 AA- 1,519,020
5.375%, 10/01/17 - MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
17,925 Total Utilities 16,865,672
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 16.7% (11.0% OF TOTAL INVESTMENTS)
3,500 Detroit Water Supply System, Michigan, Water Supply System Revenue 7/16 at 100.00 AAA 2,980,285
Bonds, Series 2006A, 5.000%, 7/01/34 - FSA Insured
1,085 Detroit, Michigan, Second Lien Sewerage Disposal System Revenue 7/15 at 100.00 AA- 912,203
Bonds, Series 2005A, 5.000%, 7/01/30 - MBIA Insured
1,500 Detroit, Michigan, Senior Lien Sewerage Disposal System Revenue No Opt. Call AA- 1,362,510
Bonds, Series 2001B, 5.500%, 7/01/29 - FGIC Insured
1,120 Detroit, Michigan, Senior Lien Sewerage Disposal System Revenue 7/13 at 100.00 AAA 1,165,786
Bonds, Series 2003A, 5.000%, 7/01/17 - FSA Insured
33
NMP | Nuveen Michigan Premium Income Municipal Fund, Inc. (continued)
| Portfolio of INVESTMENTS February 28, 2009
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, Series 7/15 at 100.00 AA+ $ 1,330,625
2005, 5.000%, 1/01/30 - MBIA Insured
450 Grand Rapids, Michigan, Sanitary Sewer System Revenue Bonds, Series 1/18 at 100.00 AA+ 446,571
2008, 5.000%, 1/01/38
1,000 Michigan Municipal Bond Authority, Water Revolving Fund Revenue 10/17 at 100.00 AAA 1,042,150
Bonds, Series 2007, 5.000%, 10/01/24
8,245 North Kent Sewer Authority, Michigan, Sewer Revenue Bonds, Series 11/16 at 100.00 AA- 7,899,201
2006, 5.000%, 11/01/31 - MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
18,230 Total Water and Sewer 17,139,331
------------------------------------------------------------------------------------------------------------------------------------
$ 159,071 Total Investments (cost $159,800,186) - 152.0% 155,662,347
============------------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 2.7% 2,772,100
---------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (54.7)% (5) (56,000,000)
---------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $102,434,447
=====================================================================================================================
(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 Group ("Standard &
Poor's") or Moody's Investor Service, Inc. ("Moody's") rating. Ratings
below BBB by Standard & Poor's or Baa by Moody's are considered to be
below investment grade.
The Portfolio of Investments may reflect the ratings on certain bonds
insured by AGC, AMBAC, FGIC, FSA, MBIA, RAAI and SYNCORA as of February
28, 2009. Please see the Portfolio Manager's Commentary for an expanded
discussion of the affect on the Fund of changes to the ratings of certain
bonds in the portfolio resulting from changes to the ratings of the
underlying insurers both during the period and after period end.
(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) Preferred Shares, at Liquidation Value as a percentage of Total
Investments is 36.0%.
N/R Not rated.
(ETM) Escrowed to maturity.
(IF) Inverse floating rate investment.
See accompanying notes to financial statements.
34
NZW | Nuveen Michigan Dividend Advantage Municipal Fund
| Portfolio of INVESTMENTS February 28, 2009
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES - 1.0% (0.7% OF TOTAL INVESTMENTS)
$ 400 Michigan Tobacco Settlement Finance Authority, Tobacco Settlement 6/18 at 100.00 Baa3 $ 274,560
Asset-Backed Revenue Bonds, Series 2008A, 6.875%, 6/01/42
------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 6.8% (4.4% OF TOTAL INVESTMENTS)
230 Chandler Park Academy, Michigan, Public School Academy Charter 11/15 at 100.00 BBB 142,690
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 365,810
Participation, Series 2007, 5.450%, 11/01/22
1,150 Michigan Higher Education Facilities Authority, Limited Obligation 9/11 at 100.00 Baa1 1,092,075
Revenue Refunding Bonds, Kettering University, Series 2001, 5.000%,
9/01/26 - AMBAC Insured
250 Michigan Public Educational Facilities Authority, Charter School 12/17 at 100.00 N/R 174,218
Revenue Bonds, American Montessori Academy, Series 2007,
6.500%, 12/01/37
------------------------------------------------------------------------------------------------------------------------------------
2,130 Total Education and Civic Organizations 1,774,793
------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE - 15.4% (10.0% OF TOTAL INVESTMENTS)
500 Allegan Hospital Finance Authority, Michigan, Revenue Bonds, Allegan 11/09 at 101.00 N/R 448,540
General Hospital, Series 1999, 7.000%, 11/15/21
500 Garden City Hospital Finance Authority, Michigan, Revenue Bonds, 8/17 at 100.00 N/R 257,480
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 433,668
Obligated Group, Series 2007A, 5.000%, 7/15/37
610 Michigan State Hospital Finance Authority, Hospital Revenue 7/09 at 100.00 Ba3 529,572
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 302,987
335 5.000%, 5/15/37 5/15 at 100.00 BBB 215,830
400 Michigan State Hospital Finance Authority, Revenue Bonds, Marquette 5/15 at 100.00 Baa3 290,452
General Hospital, Series 2005A, 5.000%, 5/15/26
100 Royal Oak Hospital Finance Authority, Michigan, Hospital Revenue 9/18 at 100.00 A1 106,538
Bonds, William Beaumont Hospital, Refunding Series 2009V,
8.250%, 9/01/39
1,800 Royal Oak Hospital Finance Authority, Michigan, Hospital Revenue 11/11 at 100.00 AA- 1,458,035
Bonds, William Beaumont Hospital, Series 2001M, 5.250%,
11/15/31 - MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
5,270 Total Health Care 4,043,102
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 6.9% (4.4% OF TOTAL INVESTMENTS)
1,700 Michigan Housing Development Authority, GNMA Collateralized Limited 8/12 at 102.00 Aaa 1,610,035
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 187,166
Bonds, Series 2006D, 5.125%, 4/01/31 - FSA Insured (Alternative
Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
1,900 Total Housing/Multifamily 1,797,201
------------------------------------------------------------------------------------------------------------------------------------
35
NZW | Nuveen Michigan Dividend Advantage Municipal Fund (continued)
| Portfolio of INVESTMENTS February 28, 2009
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
INDUSTRIALS - 1.7% (1.1% OF TOTAL INVESTMENTS)
$ 500 Michigan Strategic Fund, Limited Obligation Revenue Bonds, Republic No Opt. Call BBB $ 433,640
Services Inc., Series 2001, 4.250%, 8/01/31 (Mandatory put
4/01/14) (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
LONG-TERM CARE - 0.8% (0.5% OF TOTAL INVESTMENTS)
335 Michigan State Hospital Finance Authority, Revenue Bonds, 5/15 at 100.00 N/R 214,913
Presbyterian Villages of Michigan Obligated Group, Series 2005,
5.250%, 11/15/25
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 51.8% (33.6% OF TOTAL INVESTMENTS)
200 Ann Arbor, Michigan, General Obligation Bonds, Court & Police 5/18 at 100.00 AA+ 198,468
Facilities Capital Improvement Series 2008, 5.000%, 5/01/38
437 Caledonia Community Schools, Kent, Allegan and Barry Counties, 5/17 at 100.00 AA- 392,142
Michigan, General Obligation Bonds, Tender Option Bond Trust
2008-1096, 7.067%, 5/01/32 - MBIA Insured (IF)
300 Grand Rapids, Michigan, General Obligation Bonds, Series 2007, 9/17 at 100.00 AA 304,989
5.000%, 9/01/27 - MBIA Insured
940 Huron Valley School District, Oakland and Livingston Counties, 11/11 at 100.00 AA- 944,606
Michigan, General Obligation Bonds, Series 2001, 5.000%, 5/01/27
500 Jackson Public Schools, Jackson County, Michigan, General Obligation 5/14 at 100.00 AAA 516,530
School Building and Site Bonds, Series 2004, 5.000%, 5/01/22 -
FSA Insured
430 Lowell Area Schools, Counties of Ionia and Kent, Michigan, General 5/17 at 100.00 AAA 417,324
Obligation Bonds, Series 2007, 5.000%, 5/01/37 - FSA Insured
400 Michigan Municipal Bond Authority, General Obligation Bonds, Detroit 6/15 at 100.00 AAA 431,120
City School District, Series 2005, 5.000%, 6/01/18 - FSA Insured
1,150 Muskegon County, Michigan, Limited Tax General Obligation Wastewater 7/11 at 100.00 AA- 1,156,486
Management System 2 Revenue Bonds, Series 2002, 5.000%, 7/01/26 -
FGIC Insured
1,410 New Haven Community Schools, Macomb County, Michigan, General 5/16 at 100.00 AAA 1,428,315
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 397,616
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 Aa1 1,004,060
Bonds, Series 2007, 5.000%, 8/01/30 - MBIA Insured
235 Parchment School District, Kalamazoo County, Michigan, General 5/17 at 100.00 AAA 197,238
Obligation Bonds, Tender Option Bond Trust 2836,
10.052%, 5/01/36 - FSA Insured (IF)
750 Plainwell Community Schools, Allegan County, Michigan, General 5/18 at 100.00 AAA 749,948
Obligation Bonds, School Building & Site,
Series 2008, 5.000%, 5/01/28 - AGC Insured
100 Rockford Public Schools, Kent County, Michigan, General Obligation 5/18 at 100.00 AAA 97,662
Bonds, Series 2008, 5.000%, 5/01/33 - FSA Insured
330 Thornapple Kellogg School District, Barry County, Michigan, General 5/17 at 100.00 AA- 322,885
Obligation Bonds, Series 2007, 5.000%, 5/01/32 - MBIA Insured
100 Trenton Public Schools District, Michigan, General Obligation Bonds, 5/18 at 100.00 AAA 97,614
Series 2008, 5.000%, 5/01/34 - FSA Insured
225 Van Dyke Public Schools, Macomb County, Michigan, General Obligation 5/18 at 100.00 AAA 218,266
Bonds, School Building and Site, Series 2008, 5.000%, 5/01/38 -
FSA 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 AA+ 505,035
800 5.000%, 5/01/20 - MBIA Insured 5/09 at 100.50 AA+ 808,056
1,690 Wayne County, Michigan, Limited Tax General Obligation Airport Hotel 12/11 at 101.00 AA- 1,523,923
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 554,085
Bonds, Series 2004, 5.000%, 5/01/17 - FSA Insured
36
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL (continued)
$ 1,300 Willow Run Community Schools, Washtenaw County, Michigan, General 5/11 at 100.00 AA- $ 1,326,923
Obligation Bonds, Series 2001, 5.000%, 5/01/21
------------------------------------------------------------------------------------------------------------------------------------
13,697 Total Tax Obligation/General 13,593,291
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 16.2% (10.5% OF TOTAL INVESTMENTS)
1,100 Grand Rapids Building Authority, Kent County, Michigan, Limited Tax 10/11 at 100.00 AA 1,111,242
General Obligation Bonds, Series 2001, 5.125%, 10/01/26 -
MBIA Insured
905 Kalkaska County Hospital Authority, Michigan, Hospital Revenue No Opt. Call BBB 845,243
Bonds, Series 2007, 5.125%, 5/01/14
Michigan Building Authority, Revenue Bonds, Series 2006IA:
1,520 0.000%, 10/15/28 - FGIC Insured 10/16 at 55.35 AAA 447,686
720 5.000%, 10/15/36 - FGIC Insured 10/16 at 100.00 AA- 653,018
1,205 Michigan State Building Authority, Revenue Bonds, Facilities 10/11 at 100.00 A+ 1,194,613
Program, Series 2001I, 5.000%, 10/15/24
------------------------------------------------------------------------------------------------------------------------------------
5,450 Total Tax Obligation/Limited 4,251,802
------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 0.6% (0.4% OF TOTAL INVESTMENTS)
150 Kent County, Michigan, Airport Revenue Bonds, Series 1999, 5.000%, 1/10 at 100.00 AAA 150,495
1/01/25
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 19.8% (12.8% OF TOTAL INVESTMENTS) (4)
1,000 Detroit City School District, Wayne County, Michigan, Unlimited Tax 5/12 at 100.00 AAA 1,120,840
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 812,477
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) 1,079,150
Obligation Refunding Bonds, Series 2001, 5.000%, 5/01/26
(Pre-refunded 5/01/11)
1,000 Kent Hospital Finance Authority, Michigan, Revenue Bonds, Spectrum 7/11 at 101.00 AA (4) 1,096,490
Health, Series 2001A, 5.250%, 1/15/21 (Pre-refunded 7/15/11)
Puerto Rico Public Finance Corporation, Commonwealth Appropriation
Bonds, Series 2002E:
85 6.000%, 8/01/26 (ETM) No Opt. Call BBB- (4) 98,876
615 6.000%, 8/01/26 (ETM) No Opt. Call AAA 715,399
250 Warren Building Authority, Michigan, Limited Tax General Obligation 11/10 at 100.00 AA (4) 266,818
Bonds, Series 2001, 5.150%, 11/01/22 (Pre-refunded
11/01/10) - FGIC Insured
------------------------------------------------------------------------------------------------------------------------------------
4,670 Total U.S. Guaranteed 5,190,050
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 18.9% (12.3% OF TOTAL INVESTMENTS)
1,115 Lansing Board of Water and Light, Michigan, Steam and Electric 7/13 at 100.00 AAA 1,148,015
Utility System Revenue Bonds, Series 2003A, 5.000%,
7/01/21 - FSA Insured
750 Lansing Board of Water and Light, Michigan, Steam and Electric 7/18 at 100.00 AA- 733,770
Utility System Revenue Bonds, Series 2008A, 5.000%, 7/01/32
1,235 Michigan Public Power Agency, Revenue Bonds, Combustion Turbine 1 1/12 at 100.00 A 1,250,512
Project, Series 2001A, 5.250%, 1/01/24 - AMBAC Insured
2,215 Michigan Strategic Fund, Collateralized Limited Obligation Pollution 9/11 at 100.00 A3 1,837,541
Control Revenue Refunding Bonds, Fixed Rate Conversion, Detroit
Edison Company, Series 1999C, 5.650%, 9/01/29 - SYNCORA GTY Insured
(Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
5,315 Total Utilities 4,969,838
------------------------------------------------------------------------------------------------------------------------------------
37
NZW | Nuveen Michigan Dividend Advantage Municipal Fund (continued)
| Portfolio of INVESTMENTS February 28, 2009
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 14.4% (9.3% OF TOTAL INVESTMENTS)
$ 1,000 Detroit Water Supply System, Michigan, Water Supply System Revenue 7/16 at 100.00 AAA $ 851,510
Bonds, Series 2006A, 5.000%, 7/01/34 - FSA Insured
1,000 Detroit, Michigan, Senior Lien Sewerage Disposal System Revenue No Opt. Call AA- 908,340
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 291,446
Bonds, Series 2003A, 5.000%, 7/01/17 - FSA Insured
125 Grand Rapids, Michigan, Sanitary Sewer System Revenue Bonds, Series 1/18 at 100.00 AA+ 124,048
2008, 5.000%, 1/01/38
1,000 Michigan Municipal Bond Authority, Clean Water Revolving Fund 10/15 at 100.00 AAA 1,084,860
Revenue Bonds, Series 2005, 5.000%, 10/01/19
500 Michigan Municipal Bond Authority, Water Revolving Fund Revenue 10/17 at 100.00 AAA 525,200
Bonds, Series 2007, 5.000%, 10/01/23
------------------------------------------------------------------------------------------------------------------------------------
3,905 Total Water and Sewer 3,785,404
------------------------------------------------------------------------------------------------------------------------------------
$ 43,722 Total Investments (cost $42,925,644) - 154.3% 40,479,089
============------------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 2.6% 681,847
---------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (56.9)% (5) (14,925,000)
---------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 26,235,936
=====================================================================================================================
(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 Group ("Standard &
Poor's") or Moody's Investor Service, Inc. ("Moody's") rating. Ratings
below BBB by Standard & Poor's or Baa by Moody's are considered to be
below investment grade.
The Portfolio of Investments may reflect the ratings on certain bonds
insured by AGC, AMBAC, FGIC, FSA, MBIA, RAAI and SYNCORA as of February
28, 2009. Please see the Portfolio Manager's Commentary for an expanded
discussion of the affect on the Fund of changes to the ratings of certain
bonds in the portfolio resulting from changes to the ratings of the
underlying insurers both during the period and after period end.
(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) Preferred Shares, at Liquidation Value as a percentage of Total
Investments is 36.9%.
N/R Not rated.
(ETM) Escrowed to maturity.
(IF) Inverse floating rate investment.
See accompanying notes to financial statements.
38
NUO | Nuveen Ohio Quality Income Municipal Fund, Inc.
| Portfolio of INVESTMENTS February 28, 2009
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES - 6.3% (4.2% OF TOTAL INVESTMENTS)
Buckeye Tobacco Settlement Financing Authority, Ohio, Tobacco
Settlement Asset-Backed Revenue Bonds, Senior Lien, Series 2007A-2:
$ 4,735 5.875%, 6/01/30 6/17 at 100.00 BBB $ 3,002,984
1,650 5.750%, 6/01/34 6/17 at 100.00 BBB 984,275
8,450 5.875%, 6/01/47 6/17 at 100.00 BBB 4,805,260
125 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 5/12 at 100.00 BBB 89,590
Asset-Backed Refunding Bonds, Series 2002, 5.375%, 5/15/33
------------------------------------------------------------------------------------------------------------------------------------
14,960 Total Consumer Staples 8,882,109
------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 15.5% (10.3% OF TOTAL
INVESTMENTS)
1,650 Ohio Higher Education Facilities Commission, General Revenue Bonds, 7/16 at 100.00 A+ 1,482,377
Kenyon College, Series 2006, 5.000%, 7/01/41
1,750 Ohio Higher Education Facilities Commission, General Revenue Bonds, 10/13 at 100.00 AA 1,808,363
Oberlin College, Series 2003, 5.125%, 10/01/24
1,000 Ohio Higher Education Facilities Commission, Revenue Bonds, 12/15 at 100.00 Baa2 728,430
Wittenberg University, Series 2005, 5.000%, 12/01/29
2,420 Ohio Higher Educational Facilities Commission, General Revenue 12/16 at 100.00 A 2,235,596
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 1,449,866
Denison University, Series 2004, 5.000%, 11/01/21
1,320 Ohio Higher Educational Facilities Commission, Revenue Bonds, 12/14 at 100.00 A 1,286,274
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 950,910
Wittenberg University, Series 2001, 5.500%, 12/01/15
1,500 Ohio State Higher Education Facilities, Revenue Bonds, Case Western 12/16 at 100.00 AA- 1,460,895
Reserve University, Series 2006, 5.000%, 12/01/44 - MBIA Insured
1,200 Ohio State University, General Receipts Bonds, Series 2002A, 5.125%, 12/12 at 100.00 AA 1,204,584
12/01/31
3,000 Ohio State University, General Receipts Bonds, Series 2003B, 5.250%, 6/13 at 100.00 AA 3,168,270
6/01/22
1,510 University of Akron, Ohio, General Receipts Bonds, Series 2003A, 1/13 at 100.00 A 1,545,394
5.000%, 1/01/21 - AMBAC Insured
850 University of Cincinnati, Ohio, General Receipts Bonds, Series 6/13 at 100.00 AA- 857,557
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 A+ 1,238,472
2,605 5.000%, 6/01/25 - AMBAC Insured 6/14 at 100.00 A+ 2,587,625
------------------------------------------------------------------------------------------------------------------------------------
22,420 Total Education and Civic Organizations 22,004,613
------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE - 17.9% (12.0% OF TOTAL INVESTMENTS)
2,000 Akron, Bath and Copley Joint Township Hospital District, Ohio, 11/09 at 101.00 Baa1 1,726,320
Hospital Facilities Revenue Bonds, Summa Health System,
Series 1998A, 5.375%, 11/15/24
3,650 Butler County, Ohio, Hospital Facilities Revenue Bonds, Cincinnati 5/16 at 100.00 N/R 2,809,223
Children's Medical Center Project, Series 2006K, 5.000%,
5/15/31 - FGIC Insured
39
NUO | Nuveen Ohio Quality Income Municipal Fund, Inc. (continued)
| Portfolio of INVESTMENTS February 28, 2009
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE (continued)
$ 1,000 Cuyahoga County, Ohio, Hospital Revenue Refunding and Improvement 8/09 at 100.00 AA- $ 1,000,010
Bonds, MetroHealth System, Series 1997, 5.625%,
2/15/17 - MBIA Insured
2,000 Cuyahoga County, Ohio, Revenue Refunding Bonds, Cleveland Clinic 7/13 at 100.00 Aa2 2,013,080
Health System, Series 2003A, 6.000%, 1/01/32
4,500 Erie County, Ohio, Hospital Facilities Revenue Bonds, Firelands 8/12 at 101.00 A 3,640,005
Regional Medical Center, Series 2002A, 5.625%, 8/15/32
1,000 Franklin County, Ohio, Hospital Revenue Bonds, Nationwide Children's 11/18 at 100.00 Aa2 862,010
Hospital Project, Series 2005, 5.000%, 11/01/40
2,455 Hamilton County, Ohio, Revenue Bonds, Children's Hospital Medical 5/14 at 100.00 AA- 2,554,403
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- 673,632
Upper Valley Medical Center Inc., Series 2006, 5.250%, 5/15/21
Montgomery County, Ohio, Revenue Bonds, Catholic Health Initiatives,
Series 2004A:
1,500 5.000%, 5/01/30 5/14 at 100.00 AA 1,352,085
2,500 5.000%, 5/01/32 No Opt. Call AA 2,233,450
1,350 Montgomery County, Ohio, Revenue Bonds, Miami Valley Hospital, 11/14 at 100.00 AA- 1,352,727
Series 2009A, 6.250%, 11/15/39
1,315 Ohio Higher Educational Facilities Commission, Revenue Bonds, 1/18 at 100.00 Aa2 1,304,967
Cleveland Clinic Health System Obligated Group, Series 2008A,
5.000%, 1/01/25
830 Richland County, Ohio, Hospital Facilities Revenue Improvement 11/10 at 101.00 A- 800,635
Bonds, MedCentral Health System Obligated Group, Series 2000B,
6.375%, 11/15/30
1,200 Richland County, Ohio, Hospital Revenue Bonds, MidCentral Health 11/16 at 100.00 A- 943,824
System Group, Series 2006, 5.250%, 11/15/36
600 Ross County, Ohio, Hospital Revenue Refunding Bonds, Adena Health 12/18 at 100.00 A 557,148
System Series 2008, 5.750%, 12/01/35
1,705 Tuscarawas County, Ohio, Hospital Facilities Revenue Bonds, Union 10/11 at 101.00 A3 1,634,907
Hospital Project, Series 2001, 5.750%, 10/01/21 - RAAI Insured
------------------------------------------------------------------------------------------------------------------------------------
28,390 Total Health Care 25,458,426
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 7.3% (4.9% OF TOTAL INVESTMENTS)
1,385 Clermont County, Ohio, GNMA Collateralized Mortgage Revenue Bonds, 8/09 at 100.00 Aaa 1,385,319
S.E.M. Villa II Project, Series 1994A, 5.950%, 2/20/30
885 Cuyahoga County, Ohio, GNMA Collateralized Multifamily Housing 9/12 at 102.00 Aaa 854,680
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 2,515,516
2,250 5.450%, 1/20/31 (Alternative Minimum Tax) 7/11 at 102.00 Aaa 2,144,880
985 Franklin County, Ohio, FHA-Insured Multifamily Housing Mortgage 7/09 at 100.00 Aa2 983,917
Revenue Bonds, Hamilton Creek Apartments Project,
Series 1994A, 5.550%, 7/01/24 (Alternative Minimum Tax)
800 Montgomery County, Ohio, GNMA Guaranteed Multifamily Housing Revenue 10/18 at 101.00 Aaa 750,040
Bonds, Canterbury Court Project, Series 2007, 5.500%, 10/20/42
(Alternative Minimum Tax)
850 Ohio Housing Finance Agency, FHA-Insured Multifamily Housing 6/16 at 102.00 Aaa 702,789
Mortgage Revenue Bonds, Madonna Homes,
Series 2006M, 4.900%, 6/20/48 (Alternative Minimum Tax)
1,200 Summit County Port Authority, Ohio, Multifamily Housing Revenue 9/17 at 102.00 AAA 1,071,840
Bonds, Callis Tower Apartments Project, Series 2007, 5.250%,
9/20/47 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
10,830 Total Housing/Multifamily 10,408,981
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 2.7% (1.8% OF TOTAL INVESTMENTS)
1,315 Ohio Housing Finance Agency, GNMA Mortgage-Backed Securities Program 3/09 at 102.00 Aaa 1,261,493
Residential Mortgage Revenue Bonds, Series 1997B, 5.400%, 9/01/29
(Alternative Minimum Tax)
40
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY (continued)
$ 815 Ohio Housing Finance Agency, GNMA Mortgage-Backed Securities Program 3/09 at 100.75 AAA $ 801,667
Residential Mortgage Revenue Bonds, Series 1998A-1, 5.300%,
9/01/19 - FSA Insured (Alternative Minimum Tax)
1,995 Ohio Housing Finance Agency, Single Family Mortgage Revenue Bonds, 9/15 at 100.00 Aaa 1,766,074
Series 2006H, 5.000%, 9/01/31 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
4,125 Total Housing/Single Family 3,829,234
------------------------------------------------------------------------------------------------------------------------------------
INDUSTRIALS - 2.4% (1.6% OF TOTAL INVESTMENTS)
870 Cleveland-Cuyahoga County Port Authority, Ohio, Development Revenue 11/15 at 100.00 N/R 693,599
Bonds, Bond Fund Program - Columbia National Group Project,
Series 2005D, 5.000%, 5/15/20 (Alternative Minimum Tax)
1,420 Cleveland-Cuyahoga County Port Authority, Ohio, Development Revenue 5/09 at 101.00 N/R 1,212,723
Bonds, Jergens Inc., Series 1998A, 5.375%, 5/15/18
(Alternative Minimum Tax)
1,500 Dayton, Ohio, Special Facilities Revenue Refunding Bonds, Emery Air 8/09 at 101.00 AA- 1,512,690
Freight Corporation and Emery Worldwide Airlines Inc. - Guarantors,
Series 1998A, 5.625%, 2/01/18
------------------------------------------------------------------------------------------------------------------------------------
3,790 Total Industrials 3,419,012
------------------------------------------------------------------------------------------------------------------------------------
LONG-TERM CARE - 0.7% (0.5% OF TOTAL INVESTMENTS)
1,600 Hamilton County, Ohio, Health Care Revenue Refunding Bonds, Life 1/17 at 100.00 BBB 1,032,816
Enriching Communities Project, Series 2006A, 5.000%, 1/01/37
------------------------------------------------------------------------------------------------------------------------------------
MATERIALS - 1.5% (1.0% OF TOTAL INVESTMENTS)
2,000 Toledo-Lucas County Port Authority, Ohio, Port Revenue Bonds, Cargill No Opt. Call A 2,099,100
Inc., Series 2004B, 4.500%, 12/01/15
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 39.9% (26.6% OF TOTAL INVESTMENTS)
Butler County, Ohio, General Obligation Bonds, Series 2002:
1,345 5.000%, 12/01/21 - MBIA Insured 12/12 at 100.00 Aa2 1,401,517
1,200 5.000%, 12/01/22 - MBIA Insured 12/12 at 101.00 Aa2 1,252,536
1,500 Centerville City School District, Montgomery County, Ohio, General 6/15 at 100.00 Aa2 1,518,375
Obligation Bonds, Series 2005, 5.000%, 12/01/30 - FSA Insured
1,000 Central Ohio Solid Waste Authority, General Obligation Bonds, Series 6/14 at 100.00 AAA 1,107,970
2004A, 5.000%, 12/01/15 - AMBAC Insured
2,600 Cincinnati City School District, Hamilton County, Ohio, General 12/12 at 100.00 AAA 2,709,616
Obligation Bonds, Series 2002, 5.250%, 6/01/21 - FSA Insured
1,000 Cleveland Municipal School District, Cuyahoga County, Ohio, General 6/14 at 100.00 AAA 1,020,070
Obligation Bonds, Series 2004, 5.000%, 12/01/22 - FSA Insured
1,200 Cuyahoga County, Ohio, General Obligation Bonds, Series 2004, 5.000%, 12/14 at 100.00 AA+ 1,270,884
12/01/21
1,000 Dayton, Ohio, General Obligation Bonds, Series 2004, 5.250%, 12/01/19 - 6/14 at 100.00 A+ 1,096,970
AMBAC Insured
1,000 Dublin City School District, Franklin, Delaware and Union Counties, 12/13 at 100.00 AAA 1,045,860
Ohio, General Obligation Bonds, Series 2003, 5.000%,
12/01/22 - FSA Insured
1,000 Dublin, Ohio, Unlimited Tax Various Purpose Improvement Bonds, Series 12/10 at 100.00 Aaa 1,025,470
2000A, 5.000%, 12/01/20
1,195 Fairview Park City School District, Cuyahoga County, Ohio, General 6/15 at 100.00 A2 1,208,993
Obligation Bonds, Series 2005, 5.000%, 12/01/24 - MBIA Insured
1,840 Franklin County, Ohio, General Obligation Bonds, Series 2007, 5.000%, 12/17 at 100.00 AAA 1,907,234
12/01/28
1,500 Green, Ohio, General Obligation Bonds, Series 2008, 5.500%, 12/01/32 12/15 at 100.00 AA 1,541,595
7,020 Hamilton City School District, Ohio, General Obligation Bonds, Series 6/17 at 100.00 AAA 7,057,204
2007, 5.000%, 12/01/34 - FSA Insured
1,850 Hilliard School District, Franklin County, Ohio, General Obligation 12/15 at 100.00 Aa2 1,883,948
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 AA 3,081,510
Bonds, Series 2006A, 5.000%, 12/01/25 - MBIA Insured
41
NUO | Nuveen Ohio Quality Income Municipal Fund, Inc. (continued)
| Portfolio of INVESTMENTS February 28, 2009
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL (continued)
$ 2,580 Indian Lake Local School District, Logan and Auglaize Counties, Ohio, 6/17 at 100.00 AA- $ 2,454,328
School Facilities Improvement and Refunding Bonds, Series 2007,
5.000%, 12/01/34 - MBIA Insured
1,160 Kenston Local School District, Geauga County, Ohio, General 6/13 at 100.00 Aa3 1,207,734
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 AA- 821,704
Obligation Bonds, Series 2007, 5.000%, 12/01/25 - FGIC Insured
2,000 Louisville City School District, Ohio, General Obligation Bonds, 12/11 at 100.00 A3 1,876,960
Series 2001, 5.000%, 12/01/29 - FGIC Insured
505 Marysville Exempted School District, Union County, Ohio, General 12/15 at 100.00 AAA 513,681
Obligation Bonds, Series 2006, 5.000%, 12/01/25 - FSA Insured
500 Mason City School District, Counties of Warren and Butler, Ohio, 6/17 at 100.00 Aa1 504,680
General Obligation Bonds, Series 2007, 5.000%, 12/01/31
1,515 Massillon City School District, Ohio, General Obligation Bonds, 12/12 at 100.00 Baa1 1,609,294
Series 2003, 5.250%, 12/01/21 - MBIA Insured
1,350 Milford Exempted Village School District, Ohio, General Obligation 12/18 at 100.00 A2 1,330,479
Bonds, Series 2008, 5.250%, 12/01/36
640 New Albany Plain Local School District, Franklin County, Ohio, 6/12 at 100.00 Aa2 693,965
General Obligation Bonds, Series 2002, 5.500%,
12/01/17 - FGIC Insured
1,000 Newark City School District, Licking County, Ohio, General Obligation 12/15 at 100.00 AA- 980,240
Bonds, Series 2005, 5.000%, 12/01/28 - FGIC Insured
1,000 Northmor Local School District, Morrow County, Ohio, General 11/18 at 100.00 Aa2 992,520
Obligation School Facilities Construction and Improvement Bonds,
Series 2008, 5.000%, 11/01/36
3,000 Ohio, General Obligation Bonds, Infrastructure Improvements, Series 2/13 at 100.00 AA+ 3,090,030
2003F, 5.000%, 2/01/23
1,510 Painesville City School District, Ohio, General Obligation Bonds, 12/14 at 100.00 AA- 1,571,155
Series 2004, 5.000%, 12/01/22 - FGIC Insured
280 Plain Local School District, Franklin and Licking Counties, Ohio, 6/11 at 100.00 Aa2 300,698
General Obligation Bonds, Series 2000, 6.000%, 12/01/20 - FGIC
Insured
1,445 Portage County, Ohio, General Obligation Bonds, Series 2001, 5.000%, 12/11 at 100.00 AA 1,452,283
12/01/27 - FGIC Insured
2,000 Strongsville, Ohio, General Obligation Bonds, Series 2001, 5.000%, 12/11 at 100.00 Aa1 2,062,400
12/01/21 - FGIC Insured
70 Strongsville, Ohio, Limited Tax General Obligation Various Purpose 4/09 at 100.00 Aa1 70,267
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 AA 2,661,247
1,170 5.000%, 12/01/22 - FGIC Insured 6/14 at 100.00 AA 1,219,304
1,000 West Chester Township, Butler County, Ohio, General Obligation Bonds, 12/13 at 100.00 Aa1 1,002,020
Series 2003, 5.000%, 12/01/28 - MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
55,290 Total Tax Obligation/General 56,544,741
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 12.5% (8.3% OF TOTAL INVESTMENTS)
1,380 Columbus, Ohio, Tax Increment Financing Bonds, Easton Project, Series 6/14 at 100.00 A 1,304,956
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 3,047,910
Bonds, Convention Facilities Authority, Series 2005, 5.000%,
12/01/27 - AMBAC Insured
1,085 Hamilton County Convention Facilities Authority, Ohio, First Lien 6/14 at 100.00 AA- 1,143,265
Revenue Bonds, Series 2004, 5.000%, 12/01/18 - FGIC Insured
4,600 Hamilton County, Ohio, Sales Tax Bonds, Subordinate Lien, Series 12/16 at 100.00 A2 4,402,382
2006, 5.000%, 12/01/32 - AMBAC Insured
1,000 Hudson City School District, Ohio, Certificates of Participation, 6/14 at 100.00 A1 961,890
Series 2004, 5.000%, 6/01/26 - MBIA Insured
42
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED (continued)
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 A $ 1,017,040
1,000 5.500%, 10/01/17 - AMBAC Insured 4/12 at 100.00 A 1,024,040
800 Ohio State Building Authority, State Facilities Bonds, Administrative 4/15 at 100.00 AAA 818,936
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 AA 2,955,946
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 1,093,340
Facilities, Series 2003B-II, 5.000%, 6/01/16
------------------------------------------------------------------------------------------------------------------------------------
17,510 Total Tax Obligation/Limited 17,769,705
------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 3.6% (2.4% OF TOTAL INVESTMENTS)
3,000 Dayton, Ohio, Airport Revenue Bonds, James M. Cox International 12/13 at 100.00 BBB+ 2,737,500
Airport, Series 2003C, 5.250%, 12/01/23 - RAAI Insured
(Alternative Minimum Tax)
2,000 Ohio Turnpike Commission, Revenue Refunding Bonds, Series 1998A, No Opt. Call AA 2,323,080
5.500%, 2/15/18 - FGIC Insured
------------------------------------------------------------------------------------------------------------------------------------
5,000 Total Transportation 5,060,580
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 25.3% (16.8% 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 Aa2 (4) 2,315,926
2,140 5.250%, 12/01/22 (Pre-refunded 12/01/12) 12/12 at 101.00 Aa2 (4) 2,441,419
1,210 Columbus, Ohio, Tax Increment Financing Bonds, Easton Project, Series 6/09 at 101.00 A (4) 1,235,991
1999, 4.875%, 12/01/24 (Pre-refunded 6/01/09) - AMBAC Insured
1,000 Dayton, Ohio, Airport Revenue Bonds, James M. Cox International No Opt. Call BBB+ (4) 1,151,050
Airport, Series 2005B, 5.000%, 12/01/14 - SYNCORA GTY Insured (ETM)
385 Franklin County, Ohio, First Mortgage Revenue, OCLC Inc. Project, No Opt. Call AAA 392,038
Series 1979, 7.500%, 6/01/09 (ETM)
2,000 Garfield Heights City School District, Cuyahoga County, Ohio, General 12/11 at 100.00 Baa1 (4) 2,192,820
Obligation School Improvement Bonds, Series 2001, 5.000%, 12/15/26
(Pre-refunded 12/15/11) - MBIA Insured
1,500 Hamilton County, Ohio, Sewer System Revenue and Improvement Bonds, 6/10 at 101.00 AA (4) 1,605,660
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 Improvement 12/10 at 101.00 AA (4) 1,090,880
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 Aa1 (4) 2,169,920
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 N/R (4) 859,780
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, Kettering 4/10 at 101.00 A (4) 3,205,440
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) 1,375,441
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 Aa2 (4) 516,847
General Obligation Bonds, Series 2002, 5.500%, 12/01/17
(Pre-refunded 6/01/12) - FGIC Insured
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 AA+ (4) 1,512,973
3,380 5.250%, 12/01/24 (Pre-refunded 6/01/14) - FGIC Insured 6/14 at 100.00 AA+ (4) 3,888,857
43
NUO | Nuveen Ohio Quality Income Municipal Fund, Inc. (continued)
| Portfolio of INVESTMENTS February 28, 2009
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED (4) (continued)
$ 1,000 Princeton City School District, Butler County, Ohio, General 12/13 at 100.00 AAA $ 1,143,980
Obligation Bonds, Series 2003, 5.000%, 12/01/30
(Pre-refunded 12/01/13) - MBIA Insured
1,670 Richland County, Ohio, Hospital Facilities Revenue Improvement Bonds, 11/10 at 101.00 A- (4) 1,830,621
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 Limited 12/11 at 100.00 Aa3 (4) 3,120,613
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) 1,625,070
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 AA (4) 2,164,360
Ohio, Various Purpose General Obligation Bonds, Series 2001,
5.000%, 12/01/27 (Pre-refunded 6/01/11) - MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
32,440 Total U.S. Guaranteed 35,839,686
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 11.0% (7.3% OF TOTAL INVESTMENTS)
2,500 American Municipal Power Ohio Inc., General Revenue Bonds, Series 2/18 at 100.00 A1 2,466,400
2008, 5.250%, 2/15/43
4,000 American Municipal Power Ohio Inc., Wadsworth, Electric System 2/12 at 100.00 A2 4,052,998
Improvement Revenue Bonds, Series 2002, 5.000%, 2/15/22 - MBIA
Insured
Cleveland, Ohio, Public Power System Revenue Bonds, Series 2008B:
2,105 0.000%, 11/15/32 - MBIA Insured No Opt. Call AA 517,767
2,155 0.000%, 11/15/34 - MBIA Insured No Opt. Call AA 465,458
3,000 Ohio Air Quality Development Authority, Revenue Bonds, JMG Funding 4/09 at 100.00 Baa1 2,851,650
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 AA- 229,536
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 A1 2,011,400
Certificates, Belleville Hydroelectric Project - Joint Venture 5,
Series 2004, 5.000%, 2/15/20 - AMBAC Insured
3,900 Ohio Water Development Authority, Solid Waste Disposal Revenue Bonds, 3/09 at 102.00 N/R 3,043,209
Bay Shore Power, Series 1998A, 5.875%, 9/01/20
(Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
20,460 Total Utilities 15,638,418
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 3.5% (2.3% OF TOTAL INVESTMENTS)
430 City of Marysville, Ohio, Water System Mortgage Revenue Bonds, Series 12/17 at 100.00 A3 411,527
2007, 5.000%, 12/01/32 - AMBAC Insured
1,000 Cleveland, Ohio, Waterworks First Mortgage Revenue Refunding and No Opt. Call Aa2 1,104,530
Improvement Bonds, Series 1993G, 5.500%, 1/01/21 - MBIA Insured
40 Cleveland, Ohio, Waterworks First Mortgage Revenue Refunding and 7/09 at 100.00 Aa2 40,042
Improvement Bonds, Series 1996H, 5.750%, 1/01/26 - MBIA Insured
1,220 Hamilton, Ohio, Wastewater System Revenue Bonds, Series 2005, 5.250%, 10/15 at 100.00 Aa3 1,275,193
10/01/22 - FSA Insured
525 Ohio Water Development Authority, Revenue Bonds, Drinking Water 6/18 at 100.00 AAA 541,454
Assistance Fund, State Match, Series 2008, 5.000%, 6/01/28 -
FSA Insured
44
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER (continued)
$ 1,500 Ohio Water Development Authority, Water Pollution Control Loan Fund 6/15 at 100.00 AAA $ 1,563,690
Revenue Bonds, Water Quality Project, Series 2005B, 5.000%, 6/01/25
------------------------------------------------------------------------------------------------------------------------------------
4,715 Total Water and Sewer 4,936,436
------------------------------------------------------------------------------------------------------------------------------------
$ 223,530 Total Investments (cost $217,552,694) - 150.1% 212,923,857
============------------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 4.2% 5,958,928
---------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (54.3)% (5) (77,000,000)
---------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $141,882,785
=====================================================================================================================
(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 Group ("Standard &
Poor's") or Moody's Investor Service, Inc. ("Moody's") rating. Ratings
below BBB by Standard & Poor's or Baa by Moody's are considered to be
below investment grade.
The Portfolio of Investments may reflect the ratings on certain bonds
insured by AGC, AMBAC, FGIC, FSA, MBIA, RAAI and SYNCORA as of February
28, 2009. Please see the Portfolio Manager's Commentary for an expanded
discussion of the affect on the Fund of changes to the ratings of certain
bonds in the portfolio resulting from changes to the ratings of the
underlying insurers both during the period and after period end.
(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) Preferred Shares, at Liquidation Value as a percentage of Total
Investments is 36.2%.
N/R Not rated.
(ETM) Escrowed to maturity.
See accompanying notes to financial statements.
45
NXI | Nuveen Ohio Dividend Advantage Municipal Fund
| Portfolio of INVESTMENTS February 28, 2009
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES - 4.8% (3.2% OF TOTAL INVESTMENTS)
Buckeye Tobacco Settlement Financing Authority, Ohio, Tobacco
Settlement Asset-Backed Revenue Bonds, Senior Lien, Series 2007A-2:
$ 1,320 5.875%, 6/01/30 6/17 at 100.00 BBB $ 837,157
3,375 5.875%, 6/01/47 6/17 at 100.00 BBB 1,919,261
50 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 5/12 at 100.00 BBB 35,836
Asset-Backed Refunding Bonds, Series 2002, 5.375%, 5/15/33
------------------------------------------------------------------------------------------------------------------------------------
4,745 Total Consumer Staples 2,792,254
------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 9.4% (6.2% OF TOTAL INVESTMENTS)
700 Ohio Higher Education Facilities Commission, General Revenue Bonds, 7/16 at 100.00 A+ 628,887
Kenyon College, Series 2006, 5.000%, 7/01/41
2,650 Ohio Higher Education Facilities Commission, Revenue Bonds, Ohio 5/12 at 100.00 A2 2,618,359
Northern University, Series 2002, 5.000%, 5/01/22
500 Ohio Higher Education Facilities Commission, Revenue Bonds, 12/15 at 100.00 Baa2 388,400
Wittenberg University, Series 2005, 5.000%, 12/01/24
1,760 Ohio University at Athens, Subordinate Lien General Receipts Bonds, 6/14 at 100.00 AA- 1,865,266
Series 2004, 5.000%, 12/01/20 - MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
5,610 Total Education and Civic Organizations 5,500,912
------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE - 13.6% (9.0% OF TOTAL INVESTMENTS)
1,425 Butler County, Ohio, Hospital Facilities Revenue Bonds, Cincinnati 5/16 at 100.00 N/R 1,096,751
Children's Medical Center Project, Series 2006K, 5.000%,
5/15/31 - FGIC Insured
1,100 Cuyahoga County, Ohio, Revenue Refunding Bonds, Cleveland Clinic 7/13 at 100.00 Aa2 1,107,194
Health System, Series 2003A, 6.000%, 1/01/32
500 Franklin County, Ohio, Hospital Revenue Bonds, Nationwide Children's 11/18 at 100.00 Aa2 431,005
Hospital Project, Series 2005, 5.000%, 11/01/40
1,950 Lucas County, Ohio, Hospital Revenue Bonds, ProMedica Healthcare 11/09 at 101.00 A 1,701,980
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- 283,183
Upper Valley Medical Center Inc., Series 2006, 5.250%, 5/15/21
1,000 Montgomery County, Ohio, Revenue Bonds, Catholic Health Initiatives, 5/14 at 100.00 AA 901,390
Series 2004A, 5.000%, 5/01/30
375 Montgomery County, Ohio, Revenue Bonds, Miami Valley Hospital, Series 11/14 at 100.00 AA- 375,758
2009A, 6.250%, 11/15/39
1,050 Ohio Higher Educational Facilities Commission, Revenue Bonds, 1/18 at 100.00 Aa2 1,041,989
Cleveland Clinic Health System Obligated Group, Series 2008A,
5.000%, 1/01/25
335 Richland County, Ohio, Hospital Facilities Revenue Improvement Bonds, 11/10 at 101.00 A- 323,148
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- 393,260
System Group, Series 2006, 5.250%, 11/15/36
375 Ross County, Ohio, Hospital Revenue Refunding Bonds, Adena Health 12/18 at 100.00 A 348,218
System Series 2008, 5.750%, 12/01/35
------------------------------------------------------------------------------------------------------------------------------------
8,940 Total Health Care 8,003,876
------------------------------------------------------------------------------------------------------------------------------------
46
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 9.5% (6.3% OF TOTAL INVESTMENTS)
$ 1,165 Cleveland-Cuyahoga County Port Authority, Ohio, Lease Revenue Bonds, 8/15 at 100.00 A $ 1,168,134
Euclid Avenue Housing Corporation - Fenn Tower Project,
Series 2005, 5.000%, 8/01/23 - AMBAC Insured
350 Montgomery County, Ohio, GNMA Guaranteed Multifamily Housing Revenue 10/18 at 101.00 Aaa 328,143
Bonds, Canterbury Court Project, Series 2007, 5.500%, 10/20/42
(Alternative Minimum Tax)
2,885 Ohio Housing Finance Agency, FHA-Insured Mortgage Revenue Bonds, 4/11 at 102.00 Aa2 2,889,039
Asbury Woods Project, Series 2001A, 5.450%, 4/01/26
340 Ohio Housing Finance Agency, FHA-Insured Multifamily Housing 6/16 at 102.00 Aaa 281,115
Mortgage Revenue Bonds, Madonna Homes, Series 2006M, 4.900%,
6/20/48 (Alternative Minimum Tax)
1,000 Summit County Port Authority, Ohio, Multifamily Housing Revenue 9/17 at 102.00 AAA 893,200
Bonds, Callis Tower Apartments Project, Series 2007, 5.250%,
9/20/47 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
5,740 Total Housing/Multifamily 5,559,631
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 2.5% (1.7% OF TOTAL INVESTMENTS)
275 Ohio Housing Finance Agency, GNMA Mortgage-Backed Securities Program 8/10 at 100.00 Aaa 270,075
Residential Mortgage Revenue Bonds, Series 2000C, 6.050%, 3/01/32
(Alternative Minimum Tax)
720 Ohio Housing Finance Agency, GNMA Mortgage-Backed Securities Program 8/10 at 100.00 Aaa 713,088
Residential Mortgage Revenue Bonds, Series 2000D, 5.450%, 9/01/31
(Alternative Minimum Tax)
45 Ohio Housing Finance Agency, GNMA Mortgage-Backed Securities Program 8/10 at 100.00 Aaa 45,428
Residential Mortgage Revenue Bonds, Series 2000F, 5.625%, 9/01/16
500 Ohio Housing Finance Agency, Single Family Mortgage Revenue Bonds, 9/15 at 100.00 Aaa 442,625
Series 2006H, 5.000%, 9/01/31 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
1,540 Total Housing/Single Family 1,471,216
------------------------------------------------------------------------------------------------------------------------------------
INDUSTRIALS - 6.4% (4.3% OF TOTAL INVESTMENTS)
1,500 Cleveland-Cuyahoga County Port Authority, Ohio, Common Bond Fund 5/12 at 102.00 N/R 1,270,695
Revenue Bonds, Cleveland Christian Home Project,
Series 2002C, 5.950%, 5/15/22
360 Cleveland-Cuyahoga County Port Authority, Ohio, Development Revenue 11/15 at 100.00 N/R 287,006
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 Bonds, 7/12 at 100.00 BBB 785,778
Allied Waste Industries, Inc., Series 2007A, 5.150%, 7/15/15
(Alternative Minimum Tax)
1,000 Toledo-Lucas County Port Authority, Ohio, Revenue Refunding Bonds, No Opt. Call Baa3 933,000
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 496,426
Bonds, Central Waste Inc., Series 2007A, 6.350%, 7/01/27
(Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
4,440 Total Industrials 3,772,905
------------------------------------------------------------------------------------------------------------------------------------
LONG-TERM CARE - 0.6% (0.4% OF TOTAL INVESTMENTS)
550 Hamilton County, Ohio, Health Care Revenue Refunding Bonds, Life 1/17 at 100.00 BBB 355,031
Enriching Communities Project, Series 2006A, 5.000%, 1/01/37
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 29.3% (19.4% OF TOTAL INVESTMENTS)
1,500 Centerville City School District, Montgomery County, Ohio, General 6/15 at 100.00 Aa2 1,518,375
Obligation Bonds, Series 2005, 5.000%, 12/01/30 - FSA Insured
400 Columbus City School District, Franklin County, Ohio, General No Opt. Call AAA 141,716
Obligation Bonds, Series 2006, 0.000%, 12/01/27 - FSA Insured
500 Cuyahoga County, Ohio, General Obligation Bonds, Series 2004, 12/14 at 100.00 AA+ 529,535
5.000%, 12/01/21
1,355 Franklin County, Ohio, General Obligation Bonds, Series 2007, 12/17 at 100.00 AAA 1,411,490
5.000%, 12/01/27
470 Green, Ohio, General Obligation Bonds, Series 2008, 5.500%, 12/01/32 12/15 at 100.00 AA 483,033
2,550 Hamilton City School District, Ohio, General Obligation Bonds, 6/17 at 100.00 AAA 2,563,515
Series 2007, 5.000%, 12/01/34 - FSA Insured
47
NXI | Nuveen Ohio Dividend Advantage Municipal Fund (continued)
| Portfolio of INVESTMENTS February 28, 2009
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL (continued)
$ 2,000 Indian Lake Local School District, Logan and Auglaize Counties, 6/17 at 100.00 AA- $ 1,902,580
Ohio, School Facilities Improvement and Refunding Bonds,
Series 2007, 5.000%, 12/01/34 - MBIA Insured
430 Lakewood City School District, Cuyahoga County, Ohio, General 12/17 at 100.00 AA- 429,402
Obligation Bonds, Series 2007, 5.000%, 12/01/30 - FGIC Insured
1,005 Marysville Exempted School District, Union County, Ohio, General 12/15 at 100.00 AAA 1,022,276
Obligation Bonds, Series 2006, 5.000%, 12/01/25 - FSA Insured
200 Mason City School District, Counties of Warren and Butler, Ohio, 6/17 at 100.00 Aa1 201,872
General Obligation Bonds, Series 2007, 5.000%, 12/01/31
50 Milford Exempted Village School District, Ohio, General Obligation 12/18 at 100.00 A2 49,277
Bonds, Series 2008, 5.250%, 12/01/36
750 Northmor Local School District, Morrow County, Ohio, General 11/18 at 100.00 Aa2 744,390
Obligation School Facilities Construction and Improvement Bonds,
Series 2008, 5.000%, 11/01/36
2,000 Ohio, General Obligation Higher Education Capital Facilities Bonds, 2/11 at 100.00 AA+ 2,140,340
Series 2001A, 5.000%, 2/01/20
2,415 Troy City School District, Miami County, Ohio, General Obligation 12/14 at 100.00 Aa3 2,455,886
Bonds, Series 2005, 5.000%, 12/01/28 - FSA Insured
1,485 West Chester Township, Butler County, Ohio, Various Purpose Limited 11/11 at 101.00 Aa1 1,624,575
Tax General Obligation Refunding Bonds, Series 2001, 5.500%,
12/01/17 - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
17,110 Total Tax Obligation/General 17,218,262
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 14.8% (9.8% OF TOTAL INVESTMENTS)
2,000 Franklin County, Ohio, Excise Tax and Lease Revenue Anticipation 12/15 at 100.00 Aaa 2,031,940
Bonds, Convention Facilities Authority,
Series 2005, 5.000%, 12/01/27 - AMBAC Insured
1,415 Hamilton County Convention Facilities Authority, Ohio, First Lien 6/14 at 100.00 AA- 1,454,733
Revenue Bonds, Series 2004, 5.000%, 12/01/21 - FGIC Insured
2,000 Hamilton County, Ohio, Sales Tax Bonds, Subordinate Lien, Series 12/16 at 100.00 A2 1,914,080
2006, 5.000%, 12/01/32 - AMBAC Insured
500 New Albany Community Authority, Ohio, Community Facilities Revenue 4/12 at 100.00 A 508,520
Refunding Bonds, Series 2001B, 5.500%, 10/01/15 - AMBAC Insured
345 Ohio State Building Authority, State Facilities Bonds, 4/15 at 100.00 AAA 353,166
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 1,035,130
Correctional Building Fund Project, Series 2005A, 5.000%,
4/01/23 - FSA Insured
1,400 Virgin Islands Public Finance Authority, Gross Receipts Taxes Loan 10/10 at 101.00 BBB+ 1,404,424
Note, Series 1999A, 6.375%, 10/01/19
------------------------------------------------------------------------------------------------------------------------------------
8,660 Total Tax Obligation/Limited 8,701,993
------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 3.5% (2.3% OF TOTAL INVESTMENTS)
2,000 Ohio Turnpike Commission, Revenue Bonds, Series 2001A, 5.500%, 2/11 at 100.00 AA 2,045,900
2/15/26
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 39.1% (25.9% OF TOTAL INVESTMENTS) (4)
1,000 Bay Village City School District, Ohio, General Obligation Unlimited 12/10 at 100.00 Aa2 (4) 1,068,020
Tax School Improvement Bonds, Series 2001, 5.000%, 12/01/25
(Pre-refunded 12/01/10)
1,000 Columbus City School District, Franklin County, Ohio, General 12/14 at 100.00 AAA 1,175,600
Obligation Bonds, Series 2004, 5.500%, 12/01/15 (Pre-refunded
12/01/14) - FSA Insured
1,000 Lakewood City School District, Cuyahoga County, Ohio, General 12/14 at 100.00 AAA 1,164,510
Obligation Bonds, Series 2004, 5.250%, 12/01/16 (Pre-refunded
12/01/14) - FSA Insured
48
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED (4) (continued)
$ 2,000 Lakota Local School District, Butler County, Ohio, Unlimited Tax 6/11 at 100.00 Aa1 (4) $ 2,169,920
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, Series 2001, 12/10 at 101.00 A (4) 988,742
5.500%, 12/01/18 (Pre-refunded 12/01/10) - AMBAC Insured
1,000 Medina City School District, Medina County, Ohio, Unlimited Tax 12/09 at 100.00 Aa3 (4) 1,036,310
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 N/R (4) 1,131,290
Obligation Bonds, Series 2004, 5.000%, 12/01/25 (Pre-refunded
12/01/13) - FGIC Insured
1,000 Nordonia Hills Local School District, Ohio, General Obligation 12/10 at 101.00 AA (4) 1,085,660
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) 2,219,400
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 A (4) 1,083,030
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 AA+ (4) 2,186,045
Ohio, General Obligation Bonds, Series 2004A, 5.250%, 12/01/23
(Pre-refunded 6/01/14) - FGIC Insured
2,000 Puerto Rico Municipal Finance Agency, Series 1999A, 6.000%, 8/01/16 8/09 at 101.00 AAA 2,067,120
(Pre-refunded 8/01/09) - FSA Insured
665 Richland County, Ohio, Hospital Facilities Revenue Improvement 11/10 at 101.00 A- (4) 728,960
Bonds, MedCentral Health System Obligated Group,
Series 2000B, 6.375%, 11/15/30 (Pre-refunded 11/15/10)
1,275 Sycamore Community School District, Hamilton County, Ohio, Unlimited 12/09 at 101.00 AA (4) 1,331,572
Tax General Obligation School Improvement Bonds, Series 1999,
5.000%, 12/01/23 (Pre-refunded 12/01/09) - MBIA Insured
2,735 University of Cincinnati, Ohio, General Receipts Bonds, Series 6/12 at 100.00 A+ (4) 3,059,396
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 AA (4) 432,872
Ohio, Various Purpose General Obligation Bonds,
Series 2001, 5.000%, 12/01/27 (Pre-refunded 6/01/11) - MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
20,885 Total U.S. Guaranteed 22,928,447
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 12.4% (8.2% OF TOTAL INVESTMENTS)
1,000 American Municipal Power Ohio Inc., General Revenue Bonds, Series 2/18 at 100.00 A1 986,560
2008, 5.250%, 2/15/43
1,440 American Municipal Power Ohio Inc., Wadsworth, Electric System 2/12 at 100.00 A2 1,505,650
Improvement Revenue Bonds, Series 2002, 5.250%, 2/15/17 - MBIA
Insured
2,130 Cleveland, Ohio, Public Power System Revenue Bonds, Series 2008B, No Opt. Call AA 523,916
0.000%, 11/15/32 - MBIA Insured
2,000 Ohio Air Quality Development Authority, Revenue Refunding Bonds, 5/09 at 101.00 AA- 1,811,160
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 A1 994,020
Certificates, Belleville Hydroelectric Project - Joint Venture 5,
Series 2004, 5.000%, 2/15/21 - AMBAC Insured
1,900 Ohio Water Development Authority, Solid Waste Disposal Revenue 3/09 at 102.00 N/R 1,482,589
Bonds, Bay Shore Power, Series 1998A, 5.875%, 9/01/20
(Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
9,470 Total Utilities 7,303,895
------------------------------------------------------------------------------------------------------------------------------------
49
NXI | Nuveen Ohio Dividend Advantage Municipal Fund (continued)
| Portfolio of INVESTMENTS February 28, 2009
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 5.0% (3.3% OF TOTAL INVESTMENTS)
$ 175 City of Marysville, Ohio, Water System Mortgage Revenue Bonds, 12/17 at 100.00 A3 $ 167,482
Series 2007, 5.000%, 12/01/32 - AMBAC Insured
325 Ohio Water Development Authority, Revenue Bonds, Drinking Water 6/18 at 100.00 AAA 335,186
Assistance Fund, State Match, Series 2008, 5.000%, 6/01/28 - FSA
Insured
2,375 Ohio Water Development Authority, Revenue Bonds, Water Development 12/13 at 100.00 Aa2 2,414,021
Community Assistance Program, Series 2003, 5.000%, 12/01/23 -
MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
2,875 Total Water and Sewer 2,916,689
------------------------------------------------------------------------------------------------------------------------------------
$ 92,565 Total Investments (cost $90,233,019) - 150.9% 88,571,011
============------------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 1.9% 1,121,097
---------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (52.8)% (5) (31,000,000)
---------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 58,692,108
=====================================================================================================================
(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 Group ("Standard &
Poor's") or Moody's Investor Service, Inc. ("Moody's") rating. Ratings
below BBB by Standard & Poor's or Baa by Moody's are considered to be
below investment grade.
The Portfolio of Investments may reflect the ratings on certain bonds
insured by AGC, AMBAC, FGIC, FSA, MBIA, RAAI and SYNCORA as of February
28, 2009. Please see the Portfolio Manager's Commentary for an expanded
discussion of the affect on the Fund of changes to the ratings of certain
bonds in the portfolio resulting from changes to the ratings of the
underlying insurers both during the period and after period end.
(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) Preferred Shares, at Liquidation Value as a percentage of Total
Investments is 35.0%.
N/R Not rated.
See accompanying notes to financial statements.
50
NBJ | Nuveen Ohio Dividend Advantage Municipal Fund 2
| Portfolio of INVESTMENTS February 28, 2009
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES - 3.5% (2.3% OF TOTAL INVESTMENTS)
Buckeye Tobacco Settlement Financing Authority, Ohio, Tobacco
Settlement Asset-Backed Revenue Bonds, Senior Lien, Series 2007A-2:
$ 250 5.875%, 6/01/30 6/17 at 100.00 BBB $ 158,553
2,200 5.875%, 6/01/47 6/17 at 100.00 BBB 1,251,074
45 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 5/12 at 100.00 BBB 32,252
Asset-Backed Refunding Bonds, Series 2002, 5.375%, 5/15/33
------------------------------------------------------------------------------------------------------------------------------------
2,495 Total Consumer Staples 1,441,879
------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 12.6% (8.2% OF TOTAL INVESTMENTS)
1,345 Bowling Green State University, Ohio, General Receipts Bonds, Series 6/13 at 100.00 A 1,440,105
2003, 5.250%, 6/01/18 - AMBAC Insured
450 Ohio Higher Education Facilities Commission, General Revenue Bonds, 7/16 at 100.00 A+ 404,285
Kenyon College, Series 2006, 5.000%, 7/01/41
1,050 Ohio Higher Educational Facilities Commission, Revenue Bonds, 12/11 at 100.00 Baa2 998,456
Wittenberg University, Series 2001, 5.500%, 12/01/15
1,000 University of Cincinnati, Ohio, General Receipts Bonds, Series 6/13 at 100.00 AA- 1,008,890
2003C, 5.000%, 6/01/22 - FGIC Insured
1,245 University of Cincinnati, Ohio, General Receipts Bonds, Series 6/14 at 100.00 A+ 1,284,915
2004D, 5.000%, 6/01/19 - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
5,090 Total Education and Civic Organizations 5,136,651
------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE - 22.4% (14.5% OF TOTAL INVESTMENTS)
1,150 Butler County, Ohio, Hospital Facilities Revenue Bonds, Cincinnati 5/16 at 100.00 N/R 885,098
Children's Medical Center Project, Series 2006K, 5.000%,
5/15/31 - FGIC Insured
1,000 Erie County, Ohio, Hospital Facilities Revenue Bonds, Firelands 8/12 at 101.00 A 911,560
Regional Medical Center, Series 2002A, 5.500%, 8/15/22
250 Franklin County, Ohio, Hospital Revenue Bonds, Nationwide Children's 11/18 at 100.00 Aa2 215,503
Hospital Project, Series 2005, 5.000%, 11/01/40
1,850 Lorain County, Ohio, Hospital Revenue Refunding and Improvement 10/11 at 101.00 AA- 1,865,762
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- 193,079
Upper Valley Medical Center Inc., Series 2006, 5.250%, 5/15/21
700 Montgomery County, Ohio, Revenue Bonds, Catholic Health Initiatives, 5/14 at 100.00 AA 630,973
Series 2004A, 5.000%, 5/01/30
90 Montgomery County, Ohio, Revenue Bonds, Miami Valley Hospital, 11/14 at 100.00 AA- 90,182
Series 2009A, 6.250%, 11/15/39
35 Ohio Higher Educational Facilities Commission, Revenue Bonds, 1/18 at 100.00 Aa2 34,733
Cleveland Clinic Health System Obligated Group, Series 2008A,
5.000%, 1/01/25
665 Richland County, Ohio, Hospital Facilities Revenue Improvement 11/10 at 101.00 A- 641,472
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- 275,282
System Group, Series 2006, 5.250%, 11/15/36
90 Ross County, Ohio, Hospital Revenue Refunding Bonds, Adena Health 12/18 at 100.00 A 83,572
System Series 2008, 5.750%, 12/01/35
51
NBJ | Nuveen Ohio Dividend Advantage Municipal Fund 2 (continued)
| Portfolio of INVESTMENTS February 28, 2009
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 A3 $ 3,286,408
Hospital Project, Series 2001, 5.750%, 10/01/26 - RAAI Insured
------------------------------------------------------------------------------------------------------------------------------------
10,075 Total Health Care 9,113,624
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 5.2% (3.4% OF TOTAL INVESTMENTS)
1,000 Franklin County, Ohio, GNMA Collateralized Multifamily Housing 5/12 at 102.00 Aaa 1,020,810
Mortgage Revenue Bonds, Agler Project, Series 2002A, 5.550%,
5/20/22 (Alternative Minimum Tax)
250 Montgomery County, Ohio, GNMA Guaranteed Multifamily Housing Revenue 10/18 at 101.00 Aaa 234,388
Bonds, Canterbury Court Project, Series 2007, 5.500%, 10/20/42
(Alternative Minimum Tax)
250 Ohio Housing Finance Agency, FHA-Insured Multifamily Housing 6/16 at 102.00 Aaa 206,703
Mortgage Revenue Bonds, Madonna Homes, Series 2006M, 4.900%,
6/20/48 (Alternative Minimum Tax)
750 Summit County Port Authority, Ohio, Multifamily Housing Revenue 9/17 at 102.00 AAA 669,900
Bonds, Callis Tower Apartments Project, Series 2007, 5.250%,
9/20/47 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
2,250 Total Housing/Multifamily 2,131,801
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 2.2% (1.4% OF TOTAL INVESTMENTS)
995 Ohio Housing Finance Agency, Single Family Mortgage Revenue Bonds, 9/15 at 100.00 Aaa 880,824
Series 2006H, 5.000%, 9/01/31 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
INDUSTRIALS - 7.9% (5.1% OF TOTAL INVESTMENTS)
3,000 Ohio State Sewage and Solid Waste Disposal Facilities, Revenue 11/11 at 100.00 BBB+ 2,278,500
Bonds, Anheuser-Busch Project, Series 2001, 5.500%, 11/01/35
(Alternative Minimum Tax)
640 Ohio State Water Development Authority, Solid Waste Revenue Bonds, 7/12 at 100.00 BBB 571,475
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 354,590
Bonds, Central Waste Inc., Series 2007A, 6.350%, 7/01/27
(Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
4,140 Total Industrials 3,204,565
------------------------------------------------------------------------------------------------------------------------------------
LONG-TERM CARE - 0.8% (0.5% OF TOTAL INVESTMENTS)
475 Hamilton County, Ohio, Health Care Revenue Refunding Bonds, Life 1/17 at 100.00 BBB 306,617
Enriching Communities Project, Series 2006A, 5.000%, 1/01/37
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 46.3% (30.2% OF TOTAL INVESTMENTS)
1,700 Butler County, Hamilton, Ohio, Limited Tax General Obligation Bonds, 11/11 at 101.00 A2 1,707,803
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 1,107,970
1,000 5.000%, 12/01/22 - FSA Insured 6/14 at 100.00 AAA 1,020,070
300 Columbus City School District, Franklin County, Ohio, General No Opt. Call AAA 106,287
Obligation Bonds, Series 2006, 0.000%, 12/01/27 - FSA Insured
400 Cuyahoga County, Ohio, General Obligation Bonds, Series 2004, 12/14 at 100.00 AA+ 423,628
5.000%, 12/01/21
1,000 Franklin County, Ohio, General Obligation Bonds, Series 2007, 12/17 at 100.00 AAA 1,041,690
5.000%, 12/01/27
400 Green, Ohio, General Obligation Bonds, Series 2008, 5.500%, 12/01/32 12/15 at 100.00 AA 411,092
1,905 Hamilton City School District, Ohio, General Obligation Bonds, 6/17 at 100.00 AAA 1,915,097
Series 2007, 5.000%, 12/01/34 - FSA Insured
1,000 Indian Lake Local School District, Logan and Auglaize Counties, 6/17 at 100.00 AA- 951,290
Ohio, School Facilities Improvement and Refunding Bonds,
Series 2007, 5.000%, 12/01/34 - MBIA Insured
345 Lakewood City School District, Cuyahoga County, Ohio, General 12/17 at 100.00 AA- 344,520
Obligation Bonds, Series 2007, 5.000%, 12/01/30 - FGIC Insured
2,420 Lorain County, Ohio, Limited Tax General Obligation Justice Center 12/12 at 100.00 Aa3 2,558,424
Bonds, Series 2002, 5.500%, 12/01/22 - FGIC Insured
52
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL (continued)
$ 1,005 Marysville Exempted School District, Union County, Ohio, General 12/15 at 100.00 AAA $ 1,022,276
Obligation Bonds, Series 2006, 5.000%, 12/01/25 - FSA Insured
200 Mason City School District, Counties of Warren and Butler, Ohio, 6/17 at 100.00 Aa1 201,872
General Obligation Bonds, Series 2007, 5.000%, 12/01/31
50 Milford Exempted Village School District, Ohio, General Obligation 12/18 at 100.00 A2 49,277
Bonds, Series 2008, 5.250%, 12/01/36
2,665 Newark City School District, Licking County, Ohio, General 12/15 at 100.00 AA- 2,612,340
Obligation Bonds, Series 2005, 5.000%, 12/01/28 - FGIC Insured
400 Northmor Local School District, Morrow County, Ohio, General 11/18 at 100.00 Aa2 397,008
Obligation School Facilities Construction and Improvement Bonds,
Series 2008, 5.000%, 11/01/36
1,960 Portage County, Ohio, General Obligation Bonds, Series 2001, 5.000%, 12/11 at 100.00 AA 1,979,463
12/01/25 - FGIC Insured
1,000 Powell, Ohio, General Obligation Bonds, Series 2002, 5.500%, 12/12 at 100.00 AA+ 1,037,320
12/01/25 - FGIC Insured
------------------------------------------------------------------------------------------------------------------------------------
18,750 Total Tax Obligation/General 18,887,427
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 15.6% (10.2% OF TOTAL INVESTMENTS)
1,400 Hamilton County, Ohio, Sales Tax Bonds, Subordinate Lien, Series 12/16 at 100.00 A2 1,339,856
2006, 5.000%, 12/01/32 - AMBAC Insured
250 Ohio State Building Authority, State Facilities Bonds, 4/15 at 100.00 AAA 255,918
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 1,035,130
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 AA 1,555,800
Facilities, Series 2002A-II, 5.500%, 12/01/09 - MBIA Insured
1,095 Ohio, State Appropriation Lease Bonds, Parks and Recreation Capital 12/13 at 100.00 AA 1,178,844
Facilities, Series 2004A-II, 5.000%, 12/01/18
1,000 Summit County Port Authority, Ohio, Revenue Bonds, Civic Theatre 12/11 at 100.00 A 1,001,170
Project, Series 2001, 5.500%, 12/01/26 - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
6,245 Total Tax Obligation/Limited 6,366,718
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 22.9% (14.9% OF TOTAL INVESTMENTS) (4)
1,845 Cleveland, Ohio, Airport System Revenue Bonds, Series 2001A, 5.250%, 1/10 at 101.00 AAA 1,934,925
1/01/18 (Pre-refunded 1/01/10) - FSA Insured
605 Columbus City School District, Franklin County, Ohio, General 12/14 at 100.00 AAA 711,238
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 Aa3 (4) 1,099,320
Obligation Capital Improvement Bonds, Series 2001A, 5.125%,
12/01/21 (Pre-refunded 12/01/11) - MBIA Insured
2,250 Lebanon City School District, Warren County, Ohio, General 12/11 at 100.00 AAA 2,496,218
Obligation Bonds, Series 2001, 5.500%, 12/01/21 (Pre-refunded
12/01/11) - FSA Insured
1,000 Marysville Exempted Village School District, Ohio, Certificates of 6/15 at 100.00 A3 (4) 1,168,650
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 AA+ (4) 1,221,045
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) 696,074
Bonds, MedCentral Health System Obligated Group, Series 2000B,
6.375%, 11/15/30 (Pre-refunded 11/15/10)
------------------------------------------------------------------------------------------------------------------------------------
8,385 Total U.S. Guaranteed 9,327,470
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 12.8% (8.3% OF TOTAL INVESTMENTS)
1,000 American Municipal Power Ohio Inc., General Revenue Bonds, Series 2/18 at 100.00 A1 986,560
2008, 5.250%, 2/15/43
1,065 Cleveland, Ohio, Public Power System Revenue Bonds, Series 2008B, No Opt. Call AA 261,958
0.000%, 11/15/32 - MBIA Insured
53
NBJ | Nuveen Ohio Dividend Advantage Municipal Fund 2 (continued)
| Portfolio of INVESTMENTS February 28, 2009
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES (continued)
$ 2,500 Ohio Air Quality Development Authority, Revenue Refunding Bonds, 5/09 at 101.00 AA- $ 2,263,950
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 A1 598,392
Certificates, Belleville Hydroelectric Project - Joint Venture 5,
Series 2004, 5.000%, 2/15/20 - AMBAC Insured
1,400 Ohio Water Development Authority, Solid Waste Disposal Revenue 3/09 at 102.00 N/R 1,092,434
Bonds, Bay Shore Power, Series 1998A, 5.875%, 9/01/20
(Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
6,560 Total Utilities 5,203,294
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 1.5% (1.0% OF TOTAL INVESTMENTS)
130 City of Marysville, Ohio, Water System Mortgage Revenue Bonds, 12/17 at 100.00 A3 124,415
Series 2007, 5.000%, 12/01/32 - AMBAC Insured
210 Ohio Water Development Authority, Revenue Bonds, Drinking Water 6/18 at 100.00 AAA 216,581
Assistance Fund, State Match, Series 2008, 5.000%, 6/01/28 - FSA
Insured
270 Ohio Water Development Authority, Revenue Bonds, Fresh Water 12/11 at 100.00 AAA 279,742
Development, Series 2001A, 5.000%, 12/01/21 - FSA Insured
------------------------------------------------------------------------------------------------------------------------------------
610 Total Water and Sewer 620,738
------------------------------------------------------------------------------------------------------------------------------------
$ 66,070 Total Investments (cost $65,487,335) - 153.7% 62,621,608
============------------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 3.0% 1,232,892
---------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (56.7)% (5) (23,100,000)
---------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 40,754,500
=====================================================================================================================
(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 Group ("Standard &
Poor's") or Moody's Investor Service, Inc. ("Moody's") rating. Ratings
below BBB by Standard & Poor's or Baa by Moody's are considered to be
below investment grade.
The Portfolio of Investments may reflect the ratings on certain bonds
insured by AGC, AMBAC, FGIC, FSA, MBIA, RAAI and SYNCORA as of February
28, 2009. Please see the Portfolio Manager's Commentary for an expanded
discussion of the affect on the Fund of changes to the ratings of certain
bonds in the portfolio resulting from changes to the ratings of the
underlying insurers both during the period and after period end.
(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) Preferred Shares, at Liquidation Value as a percentage of Total
Investments is 36.9%.
N/R Not rated.
See accompanying notes to financial statements.
54
NVJ | Nuveen Ohio Dividend Advantage Municipal Fund 3
| Portfolio of INVESTMENTS February 28, 2009
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES - 5.5% (3.6% OF TOTAL INVESTMENTS)
Buckeye Tobacco Settlement Financing Authority, Ohio, Tobacco
Settlement Asset-Backed Revenue Bonds, Senior Lien, Series 2007A-2:
$ 1,100 5.875%, 6/01/30 6/17 at 100.00 BBB $ 697,631
1,670 5.875%, 6/01/47 6/17 at 100.00 BBB 949,679
20 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 5/12 at 100.00 BBB 14,334
Asset-Backed Refunding Bonds, Series 2002, 5.375%, 5/15/33
------------------------------------------------------------------------------------------------------------------------------------
2,790 Total Consumer Staples 1,661,644
------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 6.3% (4.1% OF TOTAL INVESTMENTS)
350 Ohio Higher Education Facilities Commission, General Revenue Bonds, 7/16 at 100.00 A+ 314,444
Kenyon College, Series 2006, 5.000%, 7/01/41
1,125 Ohio Higher Education Facilities Commission, Revenue Bonds, Ohio 5/12 at 100.00 A2 1,186,740
Northern University, Series 2002, 5.750%, 5/01/16
500 Ohio Higher Education Facilities Commission, Revenue Bonds, 12/15 at 100.00 Baa2 388,400
Wittenberg University, Series 2005, 5.000%, 12/01/24
------------------------------------------------------------------------------------------------------------------------------------
1,975 Total Education and Civic Organizations 1,889,584
------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE - 14.0% (9.2% OF TOTAL INVESTMENTS)
775 Butler County, Ohio, Hospital Facilities Revenue Bonds, Cincinnati 5/16 at 100.00 N/R 596,479
Children's Medical Center Project, Series 2006K, 5.000%,
5/15/31 - FGIC Insured
1,750 Erie County, Ohio, Hospital Facilities Revenue Bonds, Firelands 8/12 at 101.00 A 1,595,230
Regional Medical Center, Series 2002A, 5.500%, 8/15/22
250 Franklin County, Ohio, Hospital Revenue Bonds, Nationwide 11/18 at 100.00 Aa2 215,503
Children's Hospital Project, Series 2005, 5.000%, 11/01/40
160 Miami County, Ohio, Hospital Facilities Revenue Refunding Bonds, 5/16 at 100.00 A- 137,301
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 450,695
Initiatives, Series 2004A, 5.000%, 5/01/30
60 Montgomery County, Ohio, Revenue Bonds, Miami Valley Hospital, 11/14 at 100.00 AA- 60,121
Series 2009A, 6.250%, 11/15/39
600 Ohio Higher Educational Facilities Commission, Revenue Bonds, 1/18 at 100.00 Aa2 595,422
Cleveland Clinic Health System Obligated Group, Series 2008A,
5.000%, 1/01/25
335 Richland County, Ohio, Hospital Facilities Revenue Improvement 11/10 at 101.00 A- 323,148
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- 196,630
System Group, Series 2006, 5.250%, 11/15/36
60 Ross County, Ohio, Hospital Revenue Refunding Bonds, Adena Health 12/18 at 100.00 A 55,715
System Series 2008, 5.750%, 12/01/35
------------------------------------------------------------------------------------------------------------------------------------
4,740 Total Health Care 4,226,244
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 3.4% (2.2% OF TOTAL INVESTMENTS)
200 Montgomery County, Ohio, GNMA Guaranteed Multifamily Housing 10/18 at 101.00 Aaa 187,510
Revenue Bonds, Canterbury Court Project,
Series 2007, 5.500%, 10/20/42 (Alternative Minimum Tax)
200 Ohio Housing Finance Agency, FHA-Insured Multifamily Housing 6/16 at 102.00 Aaa 165,362
Mortgage Revenue Bonds, Madonna Homes,
Series 2006M, 4.900%, 6/20/48 (Alternative Minimum Tax)
55
NVJ | Nuveen Ohio Dividend Advantage Municipal Fund 3 (continued)
| Portfolio of INVESTMENTS February 28, 2009
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY (continued)
$ 750 Summit County Port Authority, Ohio, Multifamily Housing Revenue 9/17 at 102.00 AAA $ 669,900
Bonds, Callis Tower Apartments Project,
Series 2007, 5.250%, 9/20/47 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
1,150 Total Housing/Multifamily 1,022,772
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 3.5% (2.3% OF TOTAL INVESTMENTS)
130 Ohio Housing Finance Agency, GNMA Mortgage-Backed Securities Program 8/10 at 100.00 Aaa 127,672
Residential Mortgage Revenue Bonds, Series 2000C, 6.050%, 3/01/32
(Alternative Minimum Tax)
440 Ohio Housing Finance Agency, GNMA Mortgage-Backed Securities Program 8/10 at 100.00 Aaa 435,776
Residential Mortgage Revenue Bonds, Series 2000D, 5.450%, 9/01/31
(Alternative Minimum Tax)
45 Ohio Housing Finance Agency, GNMA Mortgage-Backed Securities Program 8/10 at 100.00 Aaa 45,428
Residential Mortgage Revenue Bonds, Series 2000F, 5.625%, 9/01/16
500 Ohio Housing Finance Agency, Single Family Mortgage Revenue Bonds, 9/15 at 100.00 Aaa 442,625
Series 2006H, 5.000%, 9/01/31 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
1,115 Total Housing/Single Family 1,051,501
------------------------------------------------------------------------------------------------------------------------------------
INDUSTRIALS - 3.9% (2.6% OF TOTAL INVESTMENTS)
555 Cleveland-Cuyahoga County Port Authority, Ohio, Common Bond Fund 5/12 at 102.00 N/R 470,157
Revenue Bonds, Cleveland Christian Home Project, Series 2002C,
5.950%, 5/15/22
480 Ohio State Water Development Authority, Solid Waste Revenue Bonds, 7/12 at 100.00 BBB 428,606
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 283,672
Bonds, Central Waste Inc., Series 2007A, 6.350%, 7/01/27
(Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
1,435 Total Industrials 1,182,435
------------------------------------------------------------------------------------------------------------------------------------
LONG-TERM CARE - 0.9% (0.6% OF TOTAL INVESTMENTS)
400 Hamilton County, Ohio, Health Care Revenue Refunding Bonds, Life 1/17 at 100.00 BBB 258,204
Enriching Communities Project, Series 2006A, 5.000%, 1/01/37
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 33.0% (21.6% OF TOTAL INVESTMENTS)
1,815 Columbus City School District, Franklin County, Ohio, General No Opt. Call AAA 643,036
Obligation Bonds, Series 2006, 0.000%, 12/01/27 - FSA Insured
300 Cuyahoga County, Ohio, General Obligation Bonds, Series 2004, 12/14 at 100.00 AA+ 317,721
5.000%, 12/01/21
1,000 Franklin County, Ohio, General Obligation Bonds, Series 2007, 12/17 at 100.00 AAA 1,041,690
5.000%, 12/01/27
250 Green, Ohio, General Obligation Bonds, Series 2008, 5.500%, 12/01/32 12/15 at 100.00 AA 256,933
1,275 Hamilton City School District, Ohio, General Obligation Bonds, 6/17 at 100.00 AAA 1,281,758
Series 2007, 5.000%, 12/01/34 - FSA Insured
1,000 Indian Lake Local School District, Logan and Auglaize Counties, 6/17 at 100.00 AA- 951,290
Ohio, School Facilities Improvement and Refunding Bonds,
Series 2007, 5.000%, 12/01/34 - MBIA Insured
1,000 Kenston Local School District, Geauga County, Ohio, General 6/13 at 100.00 Aa3 1,041,150
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 AA- 205,426
Obligation Bonds, Series 2007, 5.000%, 12/01/25 - FGIC Insured
1,270 Lorain, Ohio, General Obligation Bonds, Series 2002, 5.125%, 12/12 at 100.00 Baa1 1,144,346
12/01/26 - AMBAC Insured
500 Marysville Exempted School District, Union County, Ohio, General 12/15 at 100.00 AAA 508,595
Obligation Bonds, Series 2006, 5.000%, 12/01/25 - FSA Insured
100 Mason City School District, Counties of Warren and Butler, Ohio, 6/17 at 100.00 Aa1 100,936
General Obligation Bonds, Series 2007, 5.000%, 12/01/31
50 Milford Exempted Village School District, Ohio, General Obligation 12/18 at 100.00 A2 49,277
Bonds, Series 2008, 5.250%, 12/01/36
56
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL (continued)
$ 150 Northmor Local School District, Morrow County, Ohio, General 11/18 at 100.00 Aa2 $ 148,878
Obligation School Facilities Construction and Improvement Bonds,
Series 2008, 5.000%, 11/01/36
1,000 Ohio, Common Schools Capital Facilities, General Obligation Bonds, 9/11 at 100.00 AA+ 1,051,770
Series 2001B, 5.000%, 9/15/20
1,130 Solon, Ohio, General Obligation Refunding and Improvement Bonds, 12/12 at 100.00 AAA 1,216,852
Series 2002, 5.000%, 12/01/18
------------------------------------------------------------------------------------------------------------------------------------
11,040 Total Tax Obligation/General 9,959,658
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 21.5% (14.1% OF TOTAL INVESTMENTS)
1,000 Hamilton County, Ohio, Sales Tax Bonds, Subordinate Lien, Series 12/16 at 100.00 A2 957,040
2006, 5.000%, 12/01/32 - AMBAC Insured
1,000 Midview Local School District, Lorain County, Ohio, Certificates of 5/13 at 100.00 A 915,750
Participation, Series 2003, 5.000%, 11/01/30
1,250 Ohio State Building Authority, State Facilities Bonds, 4/12 at 100.00 AAA 1,344,338
Administrative Building Fund Projects, Series 2002A, 5.500%,
4/01/18 - FSA Insured
200 Ohio State Building Authority, State Facilities Bonds, 4/15 at 100.00 AAA 204,734
Administrative 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 AA 1,037,200
Facilities, Series 2002A-II, 5.500%, 12/01/09 - MBIA Insured
2,000 Puerto Rico Public Buildings Authority, Guaranteed Government No Opt. Call AAA 2,013,220
Facilities Revenue Bonds, Series 1993L, 5.500%, 7/01/21 - FSA
Insured
------------------------------------------------------------------------------------------------------------------------------------
6,450 Total Tax Obligation/Limited 6,472,282
------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 6.0% (3.9% OF TOTAL INVESTMENTS)
1,550 Ohio Turnpike Commission, Revenue Refunding Bonds, Series 1998A, No Opt. Call AA 1,800,387
5.500%, 2/15/18 - FGIC Insured
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 43.3% (28.4% OF TOTAL INVESTMENTS) (4)
725 Eaton City School District, Preble County, Ohio, General Obligation 12/12 at 101.00 A1 (4) 840,282
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) 1,442,259
Bonds, Series 2001, 5.500%, 12/01/28 (Pre-refunded 12/01/11)
1,000 Hilliard, Ohio, General Obligation Bonds, Series 2002, 5.375%, 12/12 at 100.00 Aa2 (4) 1,135,980
12/01/22 (Pre-refunded 12/01/12)
500 Miami East Local School District, Miami County, Ohio, General 6/12 at 100.00 AAA 556,535
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) 1,068,480
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) 1,102,250
Initiatives, Series 2001, 5.500%, 9/01/12 (Pre-refunded 9/01/11)
2,000 Ohio Higher Education Facilities Commission, Revenue Bonds, Case 10/12 at 100.00 AA- (4) 2,268,738
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) 1,050,440
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 AA+ (4) 1,150,550
Ohio, General Obligation Bonds, Series 2004A, 5.250%, 12/01/21
(Pre-refunded 6/01/14) - FGIC Insured
1,535 Pickerington Local School District, Fairfield and Franklin 12/11 at 100.00 AA- (4) 1,692,629
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) 728,960
Bonds, MedCentral Health System
Obligated Group, Series 2000B, 6.375%, 11/15/30 (Pre-refunded
11/15/10)
------------------------------------------------------------------------------------------------------------------------------------
11,725 Total U.S. Guaranteed 13,037,103
------------------------------------------------------------------------------------------------------------------------------------
57
NVJ | Nuveen Ohio Dividend Advantage Municipal Fund 3 (continued)
| Portfolio of INVESTMENTS February 28, 2009
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 9.4% (6.2% OF TOTAL INVESTMENTS)
$ 500 American Municipal Power Ohio Inc., General Revenue Bonds, Series 2/18 at 100.00 A1 $ 493,280
2008, 5.250%, 2/15/43
1,500 American Municipal Power Ohio Inc., Wadsworth, Electric System 2/12 at 100.00 A2 1,568,385
Improvement Revenue Bonds, Series 2002, 5.250%, 2/15/17 - MBIA
Insured
1,595 Cleveland, Ohio, Public Power System Revenue Bonds, Series 2008B, No Opt. Call AA 392,322
0.000%, 11/15/32 - MBIA Insured
500 Ohio Water Development Authority, Solid Waste Disposal Revenue 3/09 at 102.00 N/R 390,155
Bonds, Bay Shore Power, Series 1998A, 5.875%, 9/01/20
(Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
4,095 Total Utilities 2,844,142
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 1.9% (1.2% OF TOTAL INVESTMENTS)
130 City of Marysville, Ohio, Water System Mortgage Revenue Bonds, 12/17 at 100.00 A3 124,415
Series 2007, 5.000%, 12/01/32 - AMBAC Insured
160 Ohio Water Development Authority, Revenue Bonds, Drinking Water 6/18 at 100.00 AAA 165,014
Assistance Fund, State Match, Series 2008, 5.000%, 6/01/28 - FSA
Insured
270 Ohio Water Development Authority, Revenue Bonds, Fresh Water 12/11 at 100.00 AAA 279,742
Development, Series 2001A, 5.000%, 12/01/21 - FSA Insured
------------------------------------------------------------------------------------------------------------------------------------
560 Total Water and Sewer 569,171
------------------------------------------------------------------------------------------------------------------------------------
$ 49,025 Total Investments (cost $46,425,514) - 152.6% 45,975,127
============------------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 2.2% 652,141
---------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (54.8)% (5) (16,500,000)
---------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 30,127,268
=====================================================================================================================
(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 Group ("Standard &
Poor's") or Moody's Investor Service, Inc. ("Moody's") rating. Ratings
below BBB by Standard & Poor's or Baa by Moody's are considered to be
below investment grade.
The Portfolio of Investments may reflect the ratings on certain bonds
insured by AGC, AMBAC, FGIC, FSA, MBIA, RAAI and SYNCORA as of February
28, 2009. Please see the Portfolio Manager's Commentary for an expanded
discussion of the affect on the Fund of changes to the ratings of certain
bonds in the portfolio resulting from changes to the ratings of the
underlying insurers both during the period and after period end.
(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) Preferred Shares, at Liquidation Value as a percentage of Total
Investments is 35.9%.
N/R Not rated.
See accompanying notes to financial statements.
58
| Statement of ASSETS & LIABILITIES February 28, 2009
MICHIGAN MICHIGAN MICHIGAN
QUALITY PREMIUM DIVIDEND
INCOME INCOME ADVANTAGE
(NUM) (NMP) (NZW)
------------------------------------------------------------------------------------------------------------------------------------
ASSETS
Investments, at value (cost $248,570,756, $159,800,186 and $42,925,644,
respectively) $ 245,351,531 $ 155,662,347 $ 40,479,089
Cash 1,325,728 740,310 216,601
Receivables:
Interest 3,715,047 2,553,244 617,111
Investments sold -- -- --
Other assets 18,290 5,528 284
------------------------------------------------------------------------------------------------------------------------------------
Total assets 250,410,596 158,961,429 41,313,085
------------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Payables:
Common shares repurchased -- 34,744 --
Common share dividends 580,306 359,237 110,478
Preferred share dividends 5,844 4,352 9,588
Accrued expenses:
Management fees 124,353 79,476 15,934
Other 83,593 49,173 16,149
------------------------------------------------------------------------------------------------------------------------------------
Total liabilities 794,096 526,982 152,149
------------------------------------------------------------------------------------------------------------------------------------
Preferred shares, at liquidation value 90,900,000 56,000,000 14,925,000
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common shares $ 158,716,500 $ 102,434,447 $ 26,235,936
====================================================================================================================================
Common shares outstanding 11,714,953 7,724,348 2,066,986
====================================================================================================================================
Net asset value per Common share outstanding (net assets applicable to
Common shares, divided by Common shares outstanding) $ 13.55 $ 13.26 $ 12.69
====================================================================================================================================
NET ASSETS APPLICABLE TO COMMON SHARES CONSIST OF:
------------------------------------------------------------------------------------------------------------------------------------
Common shares, $.01 par value per share $ 117,150 $ 77,243 $ 20,670
Paid-in surplus 163,942,156 108,108,662 29,276,195
Undistributed (Over-distribution of) net investment income 210,824 73,500 (16,421)
Accumulated net realized gain (loss) from investments and derivative
transactions (2,334,405) (1,687,119) (597,953)
Net unrealized appreciation (depreciation) of investments and derivative
transactions (3,219,225) (4,137,839) (2,446,555)
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common shares $ 158,716,500 $ 102,434,447 $ 26,235,936
====================================================================================================================================
Authorized shares:
Common 200,000,000 200,000,000 Unlimited
Preferred 1,000,000 1,000,000 Unlimited
====================================================================================================================================
See accompanying notes to financial statements.
59
| Statement of ASSETS & LIABILITIES (continued) February 28, 2009
OHIO OHIO OHIO OHIO
QUALITY DIVIDEND DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
(NUO) (NXI) (NBJ) (NVJ)
------------------------------------------------------------------------------------------------------------------------------------
ASSETS
Investments, at value (cost $217,552,694, $90,233,019,
$65,487,335 and $46,425,514, respectively) $ 212,923,857 $ 88,571,011 $ 62,621,608 $ 45,975,127
Cash 2,097,131 77,472 472,485 91,791
Receivables:
Interest 2,936,840 1,248,811 973,155 661,407
Investments sold 1,572,351 75,000 -- 45,000
Other assets 1,336 2,036 324 4,850
------------------------------------------------------------------------------------------------------------------------------------
Total assets 219,531,515 89,974,330 64,067,572 46,778,175
------------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Payables:
Common shares repurchased -- -- -- --
Common share dividends 468,098 221,050 161,884 118,447
Preferred share dividends 5,082 2,407 3,467 1,751
Accrued expenses:
Management fees 108,647 34,513 24,577 16,197
Other 66,903 24,252 23,144 14,512
------------------------------------------------------------------------------------------------------------------------------------
Total liabilities 648,730 282,222 213,072 150,907
------------------------------------------------------------------------------------------------------------------------------------
Preferred shares, at liquidation value 77,000,000 31,000,000 23,100,000 16,500,000
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common shares $ 141,882,785 $ 58,692,108 $ 40,754,500 $ 30,127,268
====================================================================================================================================
Common shares outstanding 9,746,032 4,243,493 3,121,477 2,156,758
====================================================================================================================================
Net asset value per Common share outstanding (net assets
applicable to Common shares, divided by Common shares
outstanding) $ 14.56 $ 13.83 $ 13.06 $ 13.97
====================================================================================================================================
NET ASSETS APPLICABLE TO COMMON SHARES CONSIST OF:
------------------------------------------------------------------------------------------------------------------------------------
Common shares, $.01 par value per share $ 97,460 $ 42,435 $ 31,215 $ 21,568
Paid-in surplus 147,811,741 60,263,805 44,255,705 30,521,415
Undistributed (Over-distribution of) net investment income 355,545 250,348 65,127 87,202
Accumulated net realized gain (loss) from investments and
derivative transactions (1,753,124) (202,472) (731,820) (52,530)
Net unrealized appreciation (depreciation) of investments
and derivative transactions (4,628,837) (1,662,008) (2,865,727) (450,387)
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common shares $ 141,882,785 $ 58,692,108 $ 40,754,500 $ 30,127,268
====================================================================================================================================
Authorized shares:
Common 200,000,000 Unlimited Unlimited Unlimited
Preferred 1,000,000 Unlimited Unlimited Unlimited
====================================================================================================================================
See accompanying notes to financial statements.
60
| Statement of OPERATIONS
MICHIGAN MICHIGAN MICHIGAN
QUALITY INCOME (NUM) PREMIUM INCOME (NMP) DIVIDEND ADVANTAGE (NZW)
---------------------------- ---------------------------- ----------------------------
SEVEN SEVEN SEVEN
MONTHS ENDED YEAR ENDED MONTHS ENDED YEAR ENDED MONTHS ENDED YEAR ENDED
2/28/09 7/31/08 2/28/09 7/31/08 2/28/09 7/31/08
----------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME $ 7,504,985 $ 13,055,842 $ 4,808,284 $ 8,439,692 $ 1,295,893 $ 2,264,968
----------------------------------------------------------------------------------------------------------------------------------
EXPENSES
Management fees 929,123 1,672,600 589,333 1,061,252 157,837 290,376
Preferred shares - auction fees 135,863 235,594 81,315 140,353 23,005 40,101
Preferred shares - dividend disbursing
agent fees 11,616 20,000 11,616 20,000 5,801 10,000
Shareholders' servicing agent fees and
expenses 9,776 20,771 7,694 15,756 350 820
Interest expense on floating rate
obligations -- 70,020 -- 160,686 -- 12,937
Custodian's fees and expenses 31,686 60,538 21,832 37,107 7,912 15,898
Directors'/Trustees' fees and expenses 2,769 6,577 1,812 4,376 459 1,269
Professional fees 20,911 25,401 16,417 20,225 9,277 10,598
Shareholders' reports - printing and
mailing expenses 33,141 51,006 23,132 36,480 8,905 12,520
Stock exchange listing fees 5,345 9,404 5,345 9,408 169 244
Investor relations expense 13,090 30,527 8,441 19,863 2,390 5,785
Other expenses 17,218 27,563 10,702 16,974 9,476 12,005
----------------------------------------------------------------------------------------------------------------------------------
Total expenses before custodian fee
credit and expense reimbursement 1,210,538 2,230,001 777,639 1,542,480 225,581 412,553
Custodian fee credit (3,416) (22,051) (2,043) (16,783) (2,600) (4,952)
Expense reimbursement -- -- -- -- (40,346) (95,272)
----------------------------------------------------------------------------------------------------------------------------------
Net expenses 1,207,122 2,207,950 775,596 1,525,697 182,635 312,329
----------------------------------------------------------------------------------------------------------------------------------
Net investment income 6,297,863 10,847,892 4,032,688 6,913,995 1,113,258 1,952,639
----------------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) from:
Investments (1,757,557) (263,137) (1,285,668) (512,989) (206,695) (97,468)
Forward swaps -- -- 69,797 (6,970) -- --
Futures -- -- 41,405 -- -- --
Change in net unrealized appreciation
(depreciation) of:
Investments (5,268,940) (7,931,308) (3,725,846) (5,009,333) (1,840,743) (1,870,613)
Forward swaps -- -- (71,362) 207,726 -- --
Futures -- -- (13,813) 13,813 -- --
----------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) (7,026,497) (8,194,445) (4,985,487) (5,307,753) (2,047,438) (1,968,081)
----------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS
From net investment income (1,528,357) (2,850,189) (911,943) (1,775,079) (265,934) (491,691)
From accumulated net realized gains -- (431,262) -- (187,020) (8,429) (48,339)
----------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets applicable to
Common shares from distributions to
Preferred shareholders (1,528,357) (3,281,451) (911,943) (1,962,099) (274,363) (540,030)
----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares from
operations $ (2,256,991) $ (628,004) $ (1,864,742) $ (355,857) $ (1,208,543) $ (555,472)
==================================================================================================================================
See accompanying notes to financial statements.
61
| Statement of OPERATIONS (continued)
OHIO OHIO
QUALITY INCOME (NUO) DIVIDEND ADVANTAGE (NXI)
---------------------------- ----------------------------
SEVEN SEVEN
MONTHS ENDED YEAR ENDED MONTHS ENDED YEAR ENDED
2/28/09 7/31/08 2/28/09 7/31/08
----------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME $ 6,537,075 $ 11,401,219 $ 2,666,579 $ 4,650,740
----------------------------------------------------------------------------------------------------------------------------------
EXPENSES
Management fees 802,703 1,440,999 332,007 593,332
Preferred shares - auction fees 111,809 192,987 45,014 77,696
Preferred shares - dividend disbursing agent fees 17,425 29,151 5,808 10,000
Shareholders' servicing agent fees and expenses 10,858 22,659 621 1,107
Interest expense on floating rate obligations 32,715 239,395 12,540 94,080
Custodian's fees and expenses 29,223 96,078 14,557 30,610
Directors'/Trustees' fees and expenses 2,724 5,787 1,085 2,321
Professional fees 19,001 23,666 11,454 13,003
Shareholders' reports - printing and mailing expenses 29,949 49,745 13,650 23,492
Stock exchange listing fees 5,345 9,440 348 501
Investor relations expense 13,132 28,491 4,287 10,361
Other expenses 12,452 19,208 10,075 13,509
----------------------------------------------------------------------------------------------------------------------------------
Total expenses before custodian fee credit and expense
reimbursement 1,087,336 2,157,606 451,446 870,012
Custodian fee credit (6,090) (14,572) (2,690) (7,191)
Expense reimbursement -- -- (77,084) (171,421)
----------------------------------------------------------------------------------------------------------------------------------
Net expenses 1,081,246 2,143,034 371,672 691,400
----------------------------------------------------------------------------------------------------------------------------------
Net investment income 5,455,829 9,258,185 2,294,907 3,959,340
----------------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) from:
Investments (963,174) (894,117) (160,768) (240,447)
Forward swaps -- (113,636) 104,696 (31,726)
Futures 348,303 (8,573) 276,060 (8,580)
Change in net unrealized appreciation (depreciation) of:
Investments (4,408,974) (6,068,561) (2,005,025) (2,295,579)
Forward swaps -- 141,307 (107,042) 220,088
Futures (101,622) 101,622 (41,291) 41,291
----------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) (5,125,467) (6,841,958) (1,933,370) (2,314,953)
----------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS
From net investment income (1,253,559) (2,439,092) (507,674) (974,550)
From accumulated net realized gains -- (235,804) -- (133,387)
----------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets applicable to Common shares from
distributions to Preferred shareholders (1,253,559) (2,674,896) (507,674) (1,107,937)
----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets applicable to
Common shares from operations $ (923,197) $ (258,669) $ (146,137) $ 536,450
==================================================================================================================================
See accompanying notes to financial statements.
62
OHIO OHIO
DIVIDEND ADVANTAGE 2 (NBJ) DIVIDEND ADVANTAGE 3 (NVJ)
---------------------------- ----------------------------
SEVEN SEVEN
MONTHS ENDED YEAR ENDED MONTHS ENDED YEAR ENDED
2/28/09 7/31/08 2/28/09 7/31/08
----------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME $ 1,952,373 $ 3,393,532 $ 1,390,993 $ 2,404,109
----------------------------------------------------------------------------------------------------------------------------------
EXPENSES
Management fees 240,426 437,799 173,067 307,644
Preferred shares - auction fees 34,676 60,150 23,958 41,353
Preferred shares - dividend disbursing agent fees 5,801 10,000 5,808 10,000
Shareholders' servicing agent fees and expenses 616 1,195 490 935
Interest expense on floating rate obligations 9,368 70,334 6,270 48,021
Custodian's fees and expenses 11,463 21,586 8,789 17,878
Directors'/Trustees' fees and expenses 921 1,400 559 1,275
Professional fees 10,565 11,578 9,459 10,503
Shareholders' reports - printing and mailing expenses 11,343 17,814 9,406 13,707
Stock exchange listing fees 256 368 177 255
Investor relations expense 5,696 9,195 4,742 6,569
Other expenses 8,768 12,736 8,454 12,058
----------------------------------------------------------------------------------------------------------------------------------
Total expenses before custodian fee credit and expense
reimbursement 339,899 654,155 251,179 470,198
Custodian fee credit (1,285) (7,350) (890) (6,018)
Expense reimbursement (61,443) (143,623) (53,575) (113,089)
----------------------------------------------------------------------------------------------------------------------------------
Net expenses 277,171 503,182 196,714 351,091
----------------------------------------------------------------------------------------------------------------------------------
Net investment income 1,675,202 2,890,350 1,194,279 2,053,018
----------------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) from:
Investments (424,412) (326,158) (55,182) (272,641)
Forward swaps -- (45,455) 104,696 --
Futures 64,124 -- 173,467 23,859
Change in net unrealized appreciation (depreciation) of:
Investments (2,249,194) (1,953,136) (958,880) (1,043,820)
Forward swaps -- 56,523 (107,042) 107,042
Futures (19,976) 19,976 (21,252) 9,550
----------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) (2,629,458) (2,248,250) (864,193) (1,176,010)
----------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS
From net investment income (391,035) (790,428) (265,893) (496,884)
From accumulated net realized gains -- (67,354) -- (45,494)
----------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets applicable to Common shares from
distributions to Preferred shareholders (391,035) (857,782) (265,893) (542,378)
----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets applicable to
Common shares from operations $ (1,345,291) $ (215,682) $ 64,193 $ 334,630
==================================================================================================================================
See accompanying notes to financial statements.
63
| Statement of CHANGES in NET ASSETS
MICHIGAN MICHIGAN
QUALITY INCOME (NUM) PREMIUM INCOME (NMP)
------------------------------------------- -------------------------------------------
SEVEN SEVEN
MONTHS ENDED YEAR ENDED YEAR ENDED MONTHS ENDED YEAR ENDED YEAR ENDED
2/28/09 7/31/08 7/31/07 2/28/09 7/31/08 7/31/07
-----------------------------------------------------------------------------------------------------------------------------------
OPERATIONS
Net investment income $ 6,297,863 $ 10,847,892 $ 11,023,625 $ 4,032,688 $ 6,913,995 $ 6,952,299
Net realized gain (loss) from:
Investments (1,757,557) (263,137) 2,021,802 (1,285,668) (512,989) 1,318,366
Forward swaps -- -- -- 69,797 (6,970) --
Futures -- -- -- 41,405 -- --
Change in net unrealized appreciation
(depreciation) of:
Investments (5,268,940) (7,931,308) (3,145,750) (3,725,846) (5,009,333) (2,008,515)
Forward swaps -- -- -- (71,362) 207,726 (136,364)
Futures -- -- -- (13,813) 13,813 --
Distributions to Preferred Shareholders:
From net investment income (1,528,357) (2,850,189) (2,968,560) (911,943) (1,775,079) (1,756,872)
From accumulated net realized gains -- (431,262) (232,090) -- (187,020) (174,588)
-----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares from
operations (2,256,991) (628,004) 6,699,027 (1,864,742) (355,857) 4,194,326
-----------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS
From net investment income (4,551,261) (7,897,051) (8,329,332) (2,906,120) (5,138,948) (5,530,371)
From accumulated net realized gains -- (1,193,754) (859,878) -- (574,353) (717,747)
-----------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets applicable to
Common shares from distributions to
Common shareholders (4,551,261) (9,090,805) (9,189,210) (2,906,120) (5,713,301) (6,248,118)
-----------------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Common shares:
Net proceeds from shares issued to
shareholders due to reinvestment
of distributions -- -- -- -- -- --
Repurchased -- -- -- (283,094) -- --
-----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares from
capital share transactions -- -- -- (283,094) -- --
-----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares (6,808,252) (9,718,809) (2,490,183) (5,053,956) (6,069,158) (2,053,792)
Net assets applicable to Common shares
at the beginning of period 165,524,752 175,243,561 177,733,744 107,488,403 113,557,561 115,611,353
-----------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common shares
at the end of period $ 158,716,500 $ 165,524,752 $ 175,243,561 $ 102,434,447 $ 107,488,403 $ 113,557,561
===================================================================================================================================
Undistributed (Over-distribution of) net
investment income at the end of
period $ 210,824 $ (7,421) $ (85,440) $ 73,500 $ (141,120) $ (133,697)
===================================================================================================================================
See accompanying notes to financial statements.
64
MICHIGAN OHIO
DIVIDEND ADVANTAGE (NZW) QUALITY INCOME (NUO)
------------------------------------------- -------------------------------------------
SEVEN SEVEN
MONTHS ENDED YEAR ENDED YEAR ENDED MONTHS ENDED YEAR ENDED YEAR ENDED
2/28/09 7/31/08 7/31/07 2/28/09 7/31/08 7/31/07
-----------------------------------------------------------------------------------------------------------------------------------
OPERATIONS
Net investment income $ 1,113,258 $ 1,952,639 $ 1,965,259 $ 5,455,829 $ 9,258,185 $ 9,361,633
Net realized gain (loss) from:
Investments (206,695) (97,468) 397,159 (963,174) (894,117) 1,187,125
Forward swaps -- -- (50,922) -- (113,636) --
Futures -- -- -- 348,303 (8,573) --
Change in net unrealized appreciation
(depreciation) of:
Investments (1,840,743) (1,870,613) (641,385) (4,408,974) (6,068,561) (2,229,443)
Forward swaps -- -- 23,573 -- 141,307 (141,307)
Futures -- -- -- (101,622) 101,622 --
Distributions to Preferred Shareholders:
From net investment income (265,934) (491,691) (505,441) (1,253,559) (2,439,092) (2,526,574)
From accumulated net realized gains (8,429) (48,339) (4,070) -- (235,804) (109,526)
-----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares from
operations (1,208,543) (555,472) 1,184,173 (923,197) (258,669) 5,541,908
-----------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS
From net investment income (815,426) (1,457,223) (1,592,223) (3,810,698) (6,520,095) (7,105,832)
From accumulated net realized gains (24,804) (150,270) (16,105) -- (656,883) (409,333)
-----------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets applicable to
Common shares from distributions to
Common shareholders (840,230) (1,607,493) (1,608,328) (3,810,698) (7,176,978) (7,515,165)
-----------------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Common shares:
Net proceeds from shares issued to
shareholders due to reinvestment of
distributions -- 8,680 40,054 -- -- --
Repurchased -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares from
capital share transactions -- 8,680 40,054 -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares (2,048,773) (2,154,285) (384,101) (4,733,895) (7,435,647) (1,973,257)
Net assets applicable to Common shares
at the beginning of period 28,284,709 30,438,994 30,823,095 146,616,680 154,052,327 156,025,584
-----------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common shares
at the end of period $ 26,235,936 $ 28,284,709 $ 30,438,994 $ 141,882,785 $ 146,616,680 $ 154,052,327
===================================================================================================================================
Undistributed (Over-distribution of) net
investment income at the end of
period $ (16,421) $ (48,259) $ (51,915) $ 355,545 $ 3,336 $ (293,613)
===================================================================================================================================
See accompanying notes to financial statements.
65
| Statement of CHANGES in NET ASSETS (continued)
OHIO OHIO
DIVIDEND ADVANTAGE (NXI) DIVIDEND ADVANTAGE 2 (NBJ)
------------------------------------------- -------------------------------------------
SEVEN SEVEN
MONTHS ENDED YEAR ENDED YEAR ENDED MONTHS ENDED YEAR ENDED YEAR ENDED
2/28/09 7/31/08 7/31/07 2/28/09 7/31/08 7/31/07
-----------------------------------------------------------------------------------------------------------------------------------
OPERATIONS
Net investment income $ 2,294,907 $ 3,959,340 $ 3,996,849 $ 1,675,202 $ 2,890,350 $ 2,885,530
Net realized gain (loss) from:
Investments (160,768) (240,447) 458,042 (424,412) (326,158) 356,781
Forward swaps 104,696 (31,726) -- -- (45,455) --
Futures 276,060 (8,580) -- 64,124 -- --
Change in net unrealized appreciation
(depreciation) of:
Investments (2,005,025) (2,295,579) (728,528) (2,249,194) (1,953,136) (612,925)
Forward swaps (107,042) 220,088 (113,046) -- 56,523 (56,523)
Futures (41,291) 41,291 -- (19,976) 19,976 --
Distributions to Preferred Shareholders:
From net investment income (507,674) (974,550) (1,023,335) (391,035) (790,428) (788,031)
From accumulated net realized gains -- (133,387) (34,050) -- (67,354) (39,456)
-----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares from
operations (146,137) 536,450 2,555,932 (1,345,291) (215,682) 1,745,376
-----------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS
From net investment income (1,629,732) (2,775,637) (3,063,555) (1,186,161) (2,007,110) (2,156,940)
From accumulated net realized gains -- (399,794) (131,955) -- (185,104) (137,033)
-----------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets applicable to
Common shares from distributions to
Common shareholders (1,629,732) (3,175,431) (3,195,510) (1,186,161) (2,192,214) (2,293,973)
-----------------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Common shares:
Net proceeds from shares issued to
shareholders due to reinvestment
of distributions -- -- 17,968 -- -- --
Repurchased (6,912) -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares from
capital share transactions (6,912) -- 17,968 -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares (1,782,781) (2,638,981) (621,610) (2,531,452) (2,407,896) (548,597)
Net assets applicable to Common shares
at the beginning of period 60,474,889 63,113,870 63,735,480 43,285,952 45,693,848 46,242,445
-----------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common shares
at the end of period $ 58,692,108 $ 60,474,889 $ 63,113,870 $ 40,754,500 $ 43,285,952 $ 45,693,848
===================================================================================================================================
Undistributed (Over-distribution of) net
investment income at the end of
period $ 250,348 $ 108,618 $ (98,082) $ 65,127 $ (32,879) $ (125,378)
===================================================================================================================================
See accompanying notes to financial statements.
66
OHIO
DIVIDEND ADVANTAGE 3 (NVJ)
-------------------------------------------
SEVEN
MONTHS ENDED YEAR ENDED YEAR ENDED
2/28/09 7/31/08 7/31/07
-----------------------------------------------------------------------------------------------------------------------------------
OPERATIONS
Net investment income $ 1,194,279 $ 2,053,018 $ 2,070,882
Net realized gain (loss) from:
Investments (55,182) (272,641) 233,291
Forward swaps 104,696 -- (32,854)
Futures 173,467 23,859 34,159
Change in net unrealized appreciation (depreciation) of:
Investments (958,880) (1,043,820) (450,205)
Forward swaps (107,042) 107,042 15,013
Futures (21,252) 9,550 (11,622)
Distributions to Preferred Shareholders:
From net investment income (265,893) (496,884) (530,895)
From accumulated net realized gains -- (45,494) (21,569)
-----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets applicable to Common shares from operations 64,193 334,630 1,306,200
-----------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS
From net investment income (857,987) (1,454,801) (1,545,319)
From accumulated net realized gains -- (132,313) (76,833)
-----------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets applicable to Common shares from distributions to Common
shareholders (857,987) (1,587,114) (1,622,152)
-----------------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Common shares:
Net proceeds from shares issued to shareholders due to reinvestment of
distributions -- -- 3,269
Repurchased (20,129) -- --
-----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets applicable to Common shares from capital share
transactions (20,129) -- 3,269
-----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets applicable to Common shares (813,923) (1,252,484) (312,683)
Net assets applicable to Common shares at the beginning of period 30,941,191 32,193,675 32,506,358
-----------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common shares at the end of period $ 30,127,268 $ 30,941,191 $ 32,193,675
===================================================================================================================================
Undistributed (Over-distribution of) net investment income at the end of period $ 87,202 $ 24,308 $ (76,726)
===================================================================================================================================
See accompanying notes to financial statements.
67
| Notes to FINANCIAL STATEMENTS
1. GENERAL INFORMATION AND SIGNIFICANT ACCOUNTING POLICIES
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) (collectively, the "Funds"). 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 NYSE
Alternext US (formerly 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.
During the current fiscal period, the Board of Directors/Trustees of the Funds
approved a change in the Funds' fiscal and tax year end from July 31 to February
28/29.
The following is a summary of significant accounting policies followed by the
Funds in the preparation of their financial statements in accordance with US
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. 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. When market price quotes are not
readily available (which is usually the case for municipal securities), the
pricing service or, in the absence of a pricing service for a particular
investment or derivative instrument, the Board of Directors/Trustees of the
Fund, or its designee, may establish fair value using a wide variety of market
data including yields or prices of investments of comparable quality, type of
issue, coupon, maturity and rating, market quotes or indications of value from
security dealers, evaluations of anticipated cash flows or collateral, general
market conditions and other information and analysis, including the obligor's
credit characteristics considered relevant. Temporary investments in securities
that have variable rate and demand features qualifying them as short-term
investments are valued at amortized cost, which approximates 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 February 28, 2009, there
were no such outstanding purchase commitments in any of the Funds.
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.
Income Taxes
Each Fund is a separate taxpayer for federal income tax purposes. Each Fund
intends to distribute substantially all of its 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.
68
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.
For all open tax years and all major taxing jurisdictions, management of the
Funds has concluded that there are no significant uncertain tax positions that
would require recognition in the financial statements. Open tax years are those
that are open for examination by taxing authorities (i.e., generally the last
four tax year ends and the interim tax period since then). Further, management
of the Funds is also not aware of any tax positions for which it is reasonably
possible that the total amounts of unrecognized tax benefits will significantly
change in the next twelve months.
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 at least 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 US
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. As
of February 28, 2009, 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 -- -- 597
Series TH 3,094 1,400 --
Series F 542 -- --
--------------------------------------------------------------------------------
Total 3,636 2,240 597
================================================================================
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 -- -- 924 --
--------------------------------------------------------------------------------
Total 3,080 1,240 924 660
================================================================================
Beginning in February 2008, more shares for sale were submitted in the regularly
scheduled auctions for the Preferred shares issued by the Funds than there were
offers to buy. This meant that these auctions "failed to clear," and that many
Preferred shareholders who wanted to sell their shares in these auctions were
unable to do so. Preferred shareholders unable to sell their shares received
distributions at the "maximum rate" applicable to failed auctions as calculated
in accordance with the pre-established terms of the Preferred shares.
69
| Notes to FINANCIAL STATEMENTS (continued)
These developments have generally not affected the portfolio management or
investment policies of the Funds. However, one implication of these auction
failures for Common shareholders is that the Funds' cost of leverage will likely
be higher, at least temporarily, than it otherwise would have been had the
auctions continued to be successful. As a result, the Funds' future Common share
earnings may be lower than they otherwise would have been.
As of February 28, 2009, Michigan Quality Income (NUM), Michigan Dividend
Advantage (NZW) and Ohio Dividend Advantage 2 (NBJ) redeemed $3,100,000,
$1,075,000 and $900,000 of their outstanding Preferred shares, respectively, at
liquidation value. There were no Preferred share redemptions in any of the other
Funds.
Inverse Floating Rate Securities
Each Fund is authorized to 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.
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"). The inverse floater held by a Fund gives the
Fund the right (a) to cause the holders of the floating rate certificates to
tender their notes at par, and (b) to have the broker transfer the fixed-rate
bond held by the trust to the Fund, thereby collapsing the trust. 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 No. 140 (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 the related interest paid to the holders of the short-term floating rate
certificates is recognized as "Interest expense on floating rate obligations" on
the Statement of Operations.
During the seven months ended February 28, 2009, each Fund invested in
externally deposited inverse floaters and/or self-deposited inverse floaters.
Each Fund may also enter into shortfall and forbearance agreements (sometimes
referred to as a "recourse trust" or "credit recovery swap") (such agreements
referred to herein as "Recourse Trusts") with a broker-dealer by which a Fund
agrees to reimburse the broker-dealer, in certain circumstances, for the
difference between the liquidation value of the fixed-rate bond held by the
trust and the liquidation value of the floating rate certificates issued by the
trust plus any shortfalls in interest cash flows. Under these agreements, a
Fund's potential exposure to losses related to or on inverse floaters may
increase beyond the value of a Fund's inverse floater investments as a Fund may
potentially be liable to fulfill all amounts owed to holders of the floating
rate certificates. At period end, any such shortfall is recognized as
"Unrealized depreciation on Recourse Trusts" on the Statement of Assets and
Liabilities.
70
At February 28, 2009, the Funds were not invested in any externally-deposited
Recourse Trusts.
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)
--------------------------------------------------------------------------------------------------------
Maximum exposure $ -- $ -- $ -- $ -- $ -- $ -- $ --
========================================================================================================
The average floating rate obligations outstanding and average annual interest
rate and fees related to self-deposited inverse floaters during the seven months
ended February 28, 2009, were as follows:
OHIO OHIO OHIO OHIO
QUALITY DIVIDEND DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
(NUO) (NXI) (NBJ) (NVJ)
--------------------------------------------------------------------------------------------------
Average floating rate obligations $ 1,610,825 $ 617,453 $ 461,274 $ 308,726
Average annual interest rate and fees 3.50% 3.50% 3.50% 3.50%
==================================================================================================
Forward Swap Transactions
Each Fund is authorized to invest in forward interest rate swap transactions.
Each Fund's 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. Michigan Premium Income
(NMP), Ohio Dividend Advantage (NXI) and Ohio Dividend Advantage 3 (NVJ) were
the only Funds to invest in forward interest rate swap transactions during the
seven months ended February 28, 2009.
Futures Contracts
Each Fund is 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 on
the Statement of Assets and Liabilities. Additionally, the Statement of Assets
and Liabilities reflects a receivable or payable for the variation margin, when
applicable. Michigan Quality Income (NUM) and Michigan Dividend Advantage (NZW)
were the only Funds that did not invest in futures contracts during the seven
months ended February 28, 2009.
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.
Market and Credit Risk
In the normal course of business each Fund may invest in financial instruments
and enter into financial transactions where risk of potential loss exists due to
changes in the market (market risk) or failure of the other party to the
transaction to perform (credit risk). Similar to credit risk, each Fund may be
exposed to counterparty risk, or the risk that an institution or other entity
with which the Fund has unsettled or open transactions will default. The
potential loss could exceed the value of the financial assets recorded on the
financial statements. Financial assets, which potentially expose each Fund to
credit risk, consist principally of cash due from counterparties on forward,
option and swap transactions. The extent of each Fund's exposure to credit and
counterparty risks in respect to these financial assets approximates their
carrying value as recorded on the Statement of Assets and Liabilities.
71
| Notes to FINANCIAL STATEMENTS (continued)
Each Fund helps manage credit risk by entering into agreements only with
counterparties Nuveen Asset Management (the "Adviser"), a wholly owned
subsidiary of Nuveen Investments Inc. ("Nuveen") believes have the financial
resources to honor their obligations and by having the Adviser monitor the
financial stability of the counterparties. Additionally, counterparties may be
required to pledge collateral daily (based on the daily valuation of the
financial asset) on behalf of each Fund with a value approximately equal to the
amount of any unrealized gain above a pre-determined threshold. Reciprocally,
when each Fund has an unrealized loss, 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 valuations
fluctuate, either up or down, by at least the predetermined threshold amount.
Zero Coupon Securities
Each Fund is authorized to 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 Portfolios of Investments
with a 0.000% 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.
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 a 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 US 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.
72
2. FAIR VALUE MEASUREMENTS
During the current fiscal period, the Funds adopted the provisions of Statement
of Financial Accounting Standards No. 157 (SFAS No. 157) "Fair Value
Measurements." SFAS No. 157 defines fair value, establishes a framework for
measuring fair value in generally accepted accounting principles, and expands
disclosure about fair value measurements. In determining the value of each
Fund's investments various inputs are used. These inputs are summarized in the
three broad levels listed below:
Level 1 - Quoted prices in active markets for identical securities.
Level 2 - Other significant observable inputs (including quoted prices for
similar securities, interest rates, prepayment speeds, credit
risk, etc.).
Level 3 - Significant unobservable inputs (including management's
assumptions in determining the fair value of investments).
The inputs or methodology used for valuing securities are not an indication of
the risk associated with investing in those securities.
The following is a summary of each Fund's fair value measurements as of February
28, 2009:
MICHIGAN QUALITY INCOME (NUM) LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
----------------------------------------------------------------------------------------------
Investments $ -- $ 245,351,531 $ -- $ 245,351,531
==============================================================================================
MICHIGAN PREMIUM INCOME (NMP) LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
----------------------------------------------------------------------------------------------
Investments $ -- $ 155,662,347 $ -- $ 155,662,347
==============================================================================================
MICHIGAN DIVIDEND ADVANTAGE (NZW) LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
----------------------------------------------------------------------------------------------
Investments $ -- $ 40,479,089 $ -- $ 40,479,089
==============================================================================================
OHIO QUALITY INCOME (NUO) LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
----------------------------------------------------------------------------------------------
Investments $ -- $ 212,923,857 $ -- $ 212,923,857
==============================================================================================
OHIO DIVIDEND ADVANTAGE (NXI) LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
----------------------------------------------------------------------------------------------
Investments $ -- $ 88,571,011 $ -- $ 88,571,011
==============================================================================================
OHIO DIVIDEND ADVANTAGE 2 (NBJ) LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
----------------------------------------------------------------------------------------------
Investments $ -- $ 62,621,608 $ -- $ 62,621,608
==============================================================================================
OHIO DIVIDEND ADVANTAGE 3 (NVJ) LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
----------------------------------------------------------------------------------------------
Investments $ -- $ 45,975,127 $ -- $ 45,975,127
==============================================================================================
73
| Notes to FINANCIAL STATEMENTS (continued)
3. FUND SHARES
Common Shares
On July 30, 2008, the Funds' Board of Directors/Trustees approved an open market
share repurchase program under which each Fund may repurchase an aggregate of up
to approximately 10% of its outstanding Common shares. Transactions in Common
shares were as follows:
MICHIGAN QUALITY MICHIGAN PREMIUM
INCOME (NUM) INCOME (NMP)
------------------------------------------- ---------------------------------------------
SEVEN MONTHS SEVEN MONTHS
ENDED YEAR ENDED YEAR ENDED ENDED YEAR ENDED YEAR ENDED
2/28/09 7/31/08 7/31/07 2/28/09 7/31/08 7/31/07
----------------------------------------------------------------------------------------------------------------------------------
Common shares:
Issued to shareholders due to
reinvestment of distributions -- -- -- -- -- --
Repurchased -- -- -- (26,700) -- --
----------------------------------------------------------------------------------------------------------------------------------
Weighted average Common share:
Price per share repurchased -- -- -- $ 10.58 -- --
Discount per share repurchased -- -- -- 20.80% -- --
==================================================================================================================================
MICHIGAN DIVIDEND OHIO QUALITY
ADVANTAGE (NZW) INCOME (NUO)
------------------------------------------- ---------------------------------------------
SEVEN MONTHS SEVEN MONTHS
ENDED YEAR ENDED YEAR ENDED ENDED YEAR ENDED YEAR ENDED
2/28/09 7/31/08 7/31/07 2/28/09 7/31/08 7/31/07
----------------------------------------------------------------------------------------------------------------------------------
Common shares:
Issued to shareholders due to
reinvestment of distributions -- 595 2,587 -- -- --
Repurchased -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
Weighted average Common share:
Price per share repurchased -- -- -- -- -- --
Discount per share repurchased -- -- -- -- -- --
==================================================================================================================================
OHIO DIVIDEND OHIO DIVIDEND
ADVANTAGE (NXI) ADVANTAGE 2 (NBJ)
------------------------------------------- ---------------------------------------------
SEVEN MONTHS SEVEN MONTHS
ENDED YEAR ENDED YEAR ENDED ENDED YEAR ENDED YEAR ENDED
2/28/09 7/31/08 7/31/07 2/28/09 7/31/08 7/31/07
----------------------------------------------------------------------------------------------------------------------------------
Common shares:
Issued to shareholders due to
reinvestment of distributions -- -- 1,177 -- -- --
Repurchased (600) -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
Weighted average Common share:
Price per share repurchased $ 11.50 -- -- -- -- --
Discount per share repurchased 17.21% -- -- -- -- --
==================================================================================================================================
74
OHIO DIVIDEND
ADVANTAGE 3 (NVJ)
---------------------------------------------
SEVEN MONTHS
ENDED YEAR ENDED YEAR ENDED
2/28/09 7/31/08 7/31/07
----------------------------------------------------------------------------------------------------------------------------------
Common shares:
Issued to shareholders due to
reinvestment of distributions -- -- 219
Repurchased (1,700) -- --
----------------------------------------------------------------------------------------------------------------------------------
Weighted average Common share:
Price per share repurchased $ 11.82 -- --
Discount per share repurchased 16.10% -- --
==================================================================================================================================
Preferred Shares
Transactions in Preferred shares were as follows:
MICHIGAN QUALITY INCOME (NUM)
------------------------------------------------------------------------------------------
SEVEN MONTHS
ENDED YEAR ENDED YEAR ENDED
2/28/09 7/31/08 7/31/07
-------------------------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
----------------------------------------------------------------------------------------------------------------------------------
Preferred shares redeemed:
Series TH 106 $ 2,650,000 -- $ -- -- $ --
Series F 18 450,000 -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
Total 124 $ 3,100,000 -- $ -- -- $ --
==================================================================================================================================
MICHIGAN DIVIDEND ADVANTAGE (NZW)
------------------------------------------------------------------------------------------
SEVEN MONTHS
ENDED YEAR ENDED YEAR ENDED
2/28/09 7/31/08 7/31/07
-------------------------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
----------------------------------------------------------------------------------------------------------------------------------
Preferred shares redeemed:
Series W 43 $ 1,075,000 -- $ -- -- $ --
==================================================================================================================================
OHIO DIVIDEND ADVANTAGE 2 (NBJ)
------------------------------------------------------------------------------------------
SEVEN MONTHS
ENDED YEAR ENDED YEAR ENDED
2/28/09 7/31/08 7/31/07
-------------------------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
----------------------------------------------------------------------------------------------------------------------------------
Preferred shares redeemed:
Series F 36 $ 900,000 -- $ -- -- $ --
==================================================================================================================================
75
| Notes to FINANCIAL STATEMENTS (continued)
4. INVESTMENT TRANSACTIONS
Purchases and sales (including maturities but excluding short-term investments
and derivative transactions) during the seven months ended February 28, 2009,
were as follows:
MICHIGAN MICHIGAN MICHIGAN
QUALITY PREMIUM DIVIDEND
INCOME INCOME ADVANTAGE
(NUM) (NMP) (NZW)
----------------------------------------------------------------------------------------------------------------------------------
Purchases $ 8,361,874 $ 4,804,213 $ 1,756,867
Sales and maturities 11,647,349 3,996,571 2,827,176
==================================================================================================================================
OHIO OHIO OHIO OHIO
QUALITY DIVIDEND DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
(NUO) (NXI) (NBJ) (NVJ)
----------------------------------------------------------------------------------------------------------------------------------
Purchases $ 21,246,447 $ 9,059,856 $ 3,009,447 $ 3,984,725
Sales and maturities 26,975,977 9,665,532 5,048,482 4,549,351
==================================================================================================================================
5. INCOME TAX INFORMATION
The following information is presented on an income tax basis. Differences
between amounts for financial statement and federal income tax purposes are
primarily due to timing differences in recognizing taxable market discount,
timing differences in recognizing certain gains and losses on investment
transactions and the treatment of investments in inverse floating rate
transactions subject to SFAS No. 140, if any. To the extent that differences
arise that are permanent in nature, such amounts are reclassified within the
capital accounts on the Statement of Assets and Liabilities presented in the
annual report, based on their federal tax basis treatment; temporary differences
do not require reclassification. Temporary and permanent differences do not
impact the net asset values of the Funds.
At February 28, 2009, the cost of investments was as follows:
MICHIGAN MICHIGAN MICHIGAN
QUALITY PREMIUM DIVIDEND
INCOME INCOME ADVANTAGE
(NUM) (NMP) (NZW)
----------------------------------------------------------------------------------------------------------------------------------
Cost of investments $ 248,672,011 $ 159,776,175 $ 42,917,320
==================================================================================================================================
OHIO OHIO OHIO OHIO
QUALITY DIVIDEND DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
(NUO) (NXI) (NBJ) (NVJ)
----------------------------------------------------------------------------------------------------------------------------------
Cost of investments $ 217,470,339 $ 90,177,164 $ 65,463,411 $ 46,414,323
==================================================================================================================================
76
Gross unrealized appreciation and gross unrealized depreciation of investments
at February 28, 2009, were as follows:
MICHIGAN MICHIGAN MICHIGAN
QUALITY PREMIUM DIVIDEND
INCOME INCOME ADVANTAGE
(NUM) (NMP) (NZW)
----------------------------------------------------------------------------------------------------------------------------------
Gross unrealized:
Appreciation $ 8,668,619 $ 2,931,059 $ 811,267
Depreciation (11,989,099) (7,044,887) (3,249,498)
----------------------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments $ (3,320,480) $ (4,113,828) $ (2,438,231)
==================================================================================================================================
OHIO OHIO OHIO OHIO
QUALITY DIVIDEND DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
(NUO) (NXI) (NBJ) (NVJ)
----------------------------------------------------------------------------------------------------------------------------------
Gross unrealized:
Appreciation $ 6,135,461 $ 2,750,416 $ 1,349,649 $ 1,979,372
Depreciation (10,681,943) (4,356,569) (4,191,452) (2,418,568)
----------------------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments $ (4,546,482) $ (1,606,153) $ (2,841,803) $ (439,196)
==================================================================================================================================
The tax components of undistributed net tax-exempt income, net ordinary income
and net long-term capital gains at February 28, 2009, 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 * $ 791,183 $ 464,129 $ 99,521
Undistributed net ordinary income ** -- -- --
Undistributed net long-term capital gains -- -- --
==================================================================================================================================
OHIO OHIO OHIO OHIO
QUALITY DIVIDEND DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
(NUO) (NXI) (NBJ) (NVJ)
----------------------------------------------------------------------------------------------------------------------------------
Undistributed net tax-exempt income * $ 822,568 $ 378,027 $ 214,793 $ 200,792
Undistributed net ordinary income ** 1,478 52,302 -- --
Undistributed net long-term capital gains -- -- -- --
==================================================================================================================================
* Undistributed net tax-exempt income (on a tax basis) has not been reduced
for the dividend declared on February 3, 2009, paid on March 2, 2009.
** 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 seven months ended February
28, 2009, and during the tax years ended July 31, 2008 and July 31, 2007, was
designated for purposes of the dividends paid deduction as follows:
MICHIGAN MICHIGAN MICHIGAN
QUALITY PREMIUM DIVIDEND
INCOME INCOME ADVANTAGE
SEVEN MONTHS ENDED FEBRUARY 28, 2009 (NUM) (NMP) (NZW)
----------------------------------------------------------------------------------------------------------------------------------
Distributions from net tax-exempt income*** $ 6,134,177 $ 3,859,940 $ 1,079,536
Distributions from net ordinary income ** -- -- --
Distributions from net long-term capital gains**** -- -- 33,173
==================================================================================================================================
OHIO OHIO OHIO OHIO
QUALITY DIVIDEND DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
SEVEN MONTHS ENDED FEBRUARY 28, 2009 (NUO) (NXI) (NBJ) (NVJ)
----------------------------------------------------------------------------------------------------------------------------------
Distributions from net tax-exempt income*** $ 5,095,614 $ 2,133,665 $ 1,578,459 $ 1,122,076
Distributions from net ordinary income ** -- -- -- --
Distributions from net long-term capital gains**** -- -- -- --
==================================================================================================================================
** 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 seven months
ended February 28, 2009, as Exempt Interest Dividends.
**** The Funds designated as a long-term capital gain dividend, pursuant to the
Internal Revenue Code Section 852(b)(3), the amount necessary to reduce
earnings and profits of the Funds related to net capital gain to zero for
the seven months ended February 28, 2009.
77
| Notes to FINANCIAL STATEMENTS (continued)
MICHIGAN MICHIGAN MICHIGAN
QUALITY PREMIUM DIVIDEND
INCOME INCOME ADVANTAGE
2008 (NUM) (NMP) (NZW)
----------------------------------------------------------------------------------------------------------------------------------
Distributions from net tax-exempt income $ 10,748,540 $ 6,922,965 $ 1,960,679
Distributions from net ordinary income ** 68,426 12,818 --
Distributions from net long-term capital gains 1,574,122 748,463 198,609
==================================================================================================================================
OHIO OHIO OHIO OHIO
QUALITY DIVIDEND DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
2008 (NUO) (NXI) (NBJ) (NVJ)
----------------------------------------------------------------------------------------------------------------------------------
Distributions from net tax-exempt income $ 8,988,444 $ 3,778,712 $ 2,803,986 $ 1,968,527
Distributions from net ordinary income ** 10,212 -- 3,297 --
Distributions from net long-term capital gains 882,398 532,929 248,931 177,807
==================================================================================================================================
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
==================================================================================================================================
** Net ordinary income consists of taxable market discount income and net
short-term capital gains, if any.
At February 28, 2009, the Funds' tax year end, the Funds had unused capital loss
carryforwards available for federal income tax purposes to be applied against
future capital gains, if any. If not applied, the carryforwards will expire as
follows:
MICHIGAN MICHIGAN MICHIGAN
QUALITY PREMIUM DIVIDEND
INCOME INCOME ADVANTAGE
(NUM) (NMP) (NZW)
----------------------------------------------------------------------------------------------------------------------------------
Expiration:
February 28, 2016 $ -- $ 34,858 $ --
February 28, 2017 337,855 336,297 457,422
----------------------------------------------------------------------------------------------------------------------------------
Total $ 337,855 $ 371,155 $ 457,422
==================================================================================================================================
78
OHIO OHIO OHIO OHIO
QUALITY DIVIDEND DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
(NUO) (NXI) (NBJ) (NVJ)
----------------------------------------------------------------------------------------------------------------------------------
Expiration:
February 28, 2016 $ -- $ -- $ 14,045 $ --
February 28, 2017 1,309,059 40,911 522,972 52,530
----------------------------------------------------------------------------------------------------------------------------------
Total $ 1,309,059 $ 40,911 $ 537,017 $ 52,530
==================================================================================================================================
The Funds have elected to defer net realized losses from investments incurred
from November 1, 2008 through February 28, 2009, the Funds' tax year end,
("post-October losses") in accordance with federal income tax regulations.
Post-October losses are treated as having arisen on the first day of the
following fiscal year:
MICHIGAN MICHIGAN MICHIGAN
QUALITY PREMIUM DIVIDEND
INCOME INCOME ADVANTAGE
(NUM) (NMP) (NZW)
----------------------------------------------------------------------------------------------------------------------------------
Post-October capital losses $ 1,819,630 $ 1,315,963 $ 140,530
==================================================================================================================================
OHIO OHIO OHIO OHIO
QUALITY DIVIDEND DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
(NUO) (NXI) (NBJ) (NVJ)
----------------------------------------------------------------------------------------------------------------------------------
Post-October capital losses $ 444,066 $ 161,562 $ 194,805 $ --
==================================================================================================================================
6. 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 the
Adviser, 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)
MICHIGAN PREMIUM INCOME (NMP)
OHIO QUALITY INCOME (NUO)
AVERAGE DAILY NET ASSETS (INCLUDING NET ASSETS 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)
OHIO DIVIDEND ADVANTAGE 2 (NBJ)
OHIO DIVIDEND ADVANTAGE 3 (NVJ)
AVERAGE DAILY NET ASSETS (INCLUDING NET ASSETS 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
====================================================================================================================
79
| Notes to FINANCIAL STATEMENTS (continued)
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 following table.
As of February 28, 2009, the complex-level fee rate was .2000%.
The complex-level fee schedule is 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
================================================================================
(1) The complex-level component of the management fee for the funds is
calculated based upon the aggregate daily net assets of all Nuveen funds,
with such daily net assets to include assets attributable to preferred
stock issued by or borrowings by such funds but to exclude assets
attributable to investments in other Nuveen funds.
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.
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.
80
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.
7. NEW ACCOUNTING PRONOUNCEMENTS
Financial Accounting Standards Board Statement of Financial Accounting Standards
No. 161 (SFAS 161)
In March 2008, the FASB issued SFAS No. 161, "Disclosures about Derivative
Instruments and Hedging Activities." This standard is intended to enhance
financial statement disclosures for derivative instruments and hedging
activities and enable investors to understand: a) how and why a fund uses
derivative instruments, b) how derivative instruments and related hedge items
are accounted for, and c) how derivative instruments and related hedge items
affect a fund's financial position, results of operations and cash flows. SFAS
No. 161 is effective for financial statements issued for fiscal years and
interim periods beginning after November 15, 2008. As of February 28, 2009,
management does not believe the adoption of SFAS No. 161 will impact the
financial statement amounts; however, additional footnote disclosures may be
required about the use of derivative instruments and hedging items.
8. SUBSEQUENT EVENTS
Distributions to Common Shareholders
The Funds declared Common share dividend distributions from their tax-exempt net
investment income which were paid on April 1, 2009, to shareholders of record on
March 15, 2009, as follows:
MICHIGAN MICHIGAN MICHIGAN
QUALITY PREMIUM DIVIDEND
INCOME INCOME ADVANTAGE
(NUM) (NMP) (NZW)
--------------------------------------------------------------------------------
Dividend per share $ .0555 $ .0530 $ .0555
================================================================================
OHIO OHIO OHIO OHIO
QUALITY DIVIDEND DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
(NUO) (NXI) (NBJ) (NVJ)
--------------------------------------------------------------------------------
Dividend per share $ .0575 $ .0570 $ .0545 $ .0590
================================================================================
81
| Financial HIGHLIGHTS
Selected data for a Common share outstanding throughout each period:
Investment Operations
--------------------------------------------------------------------------------
Distributions Distributions
Beginning from Net from
Common Net Investment Capital
Share Net Realized/ Income to Gains to
Net Asset Investment Unrealized Preferred Preferred
Value Income Gain (Loss) Shareholders+ Shareholders+ Total
------------------------------------------------------------------------------------------------------------------------------------
MICHIGAN QUALITY INCOME (NUM)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 2/28:
2009(b) $ 14.13 $ .54 $ (.60) $ (.13) $ -- $ (.19)
Year Ended 7/31:
2008 14.96 .93 (.71) (.24) (.04) (.06)
2007 15.17 .94 (.10) (.25) (.02) .57
2006 15.88 .96 (.52) (.21) (.02) .21
2005 15.51 .98 .57 (.13) (.01) 1.41
2004 15.14 1.01 .49 (.06) (.01) 1.43
MICHIGAN PREMIUM INCOME (NMP)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 2/28:
2009(b) 13.87 .52 (.63) (.12) -- (.23)
Year Ended 7/31:
2008 14.65 .89 (.69) (.23) (.02) (.05)
2007 14.92 .90 (.12) (.23) (.02) .53
2006 15.55 .91 (.40) (.18) (.02) .31
2005 15.19 .93 .50 (.11) -- 1.32
2004 15.24 .97 .38 (.04) (.03) 1.28
====================================================================================================================================
Less Distributions
------------------------------------------- Offering
Net Costs and Ending
Investment Capital Preferred Common
Income to Gains to Share Share Ending
Common Common Underwriting Net Asset Market
Shareholders Shareholders Total Discounts Value Value
------------------------------------------------------------------------------------------------------------------------------
MICHIGAN QUALITY INCOME (NUM)
------------------------------------------------------------------------------------------------------------------------------
Year Ended 2/28:
2009(b) $ (.39) $ -- $ (.39) $ -- $ 13.55 $ 10.61
Year Ended 7/31:
2008 (.67) (.10) (.77) -- 14.13 12.32
2007 (.71) (.07) (.78) -- 14.96 14.16
2006 (.81) (.11) (.92) -- 15.17 14.41
2005 (.93) (.11) (1.04) -- 15.88 15.67
2004 (.95) (.11) (1.06) -- 15.51 15.20
MICHIGAN PREMIUM INCOME (NMP)
------------------------------------------------------------------------------------------------------------------------------
Year Ended 2/28:
2009(b) (.38) -- (.38) -- 13.26 10.44
Year Ended 7/31:
2008 (.66) (.07) (.73) -- 13.87 12.38
2007 (.71) (.09) (.80) -- 14.65 13.80
2006 (.79) (.15) (.94) -- 14.92 14.27
2005 (.91) (.05) (.96) -- 15.55 15.68
2004 (.94) (.39) (1.33) -- 15.19 14.37
==============================================================================================================================
Preferred Shares at End of Period
-------------------------------------------------
Aggregate Liquidation
Amount and Market Asset
Outstanding Value Coverage
(000) Per Share Per Share
---------------------------------------------------------------------------------------------------------------
MICHIGAN QUALITY INCOME (NUM)
---------------------------------------------------------------------------------------------------------------
Year Ended 2/28:
2009(b) $ 90,900 $ 25,000 $ 68,651
Year Ended 7/31:
2008 94,000 25,000 69,023
2007 94,000 25,000 71,607
2006 94,000 25,000 72,270
2005 94,000 25,000 74,441
2004 94,000 25,000 73,169
MICHIGAN PREMIUM INCOME (NMP)
---------------------------------------------------------------------------------------------------------------
Year Ended 2/28:
2009(b) 56,000 25,000 70,730
Year Ended 7/31:
2008 56,000 25,000 72,986
2007 56,000 25,000 75,695
2006 56,000 25,000 76,612
2005 56,000 25,000 78,783
2004 56,000 25,000 77,468
===============================================================================================================
82
Ratios/Supplemental Data
----------------------------------------------------------------
Ratios to Average Net Assets
Applicable to Common Shares
Total Returns Before Credit/Reimbursement
---------------------- ----------------------------------------------
Based Ending
on Net
Based Common Assets
on Share Net Applicable Expenses Expenses Net
Market Asset to Common Including Excluding Investment
Value* Value* Shares (000) Interest++(a) Interest++(a) Income++
------------------------------------------------------------------------------------------------------------------------------------
MICHIGAN QUALITY INCOME (NUM)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 2/28:
2009(b) (10.68)% (1.27)% $ 158,717 1.33%*** 1.33%*** 6.92%***
Year Ended 7/31:
2008 (7.77) (.43) 165,525 1.29 1.25 6.28
2007 3.64 3.77 175,244 1.26 1.22 6.12
2006 (2.28) 1.41 177,734 1.23 1.23 6.17
2005 9.94 9.28 185,900 1.22 1.22 6.13
2004 5.17 9.52 181,114 1.22 1.22 6.44
MICHIGAN PREMIUM INCOME (NMP)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 2/28:
2009(b) (12.57) (1.62) 102,434 1.32*** 1.32*** 6.83***
Year Ended 7/31:
2008 (5.09) (.36) 107,488 1.38 1.23 6.16
2007 2.16 3.59 113,558 1.38 1.22 5.97
2006 (3.12) 2.06 115,611 1.20 1.20 6.03
2005 16.03 8.80 120,475 1.19 1.19 5.97
2004 5.46 8.56 117,529 1.20 1.20 6.28
====================================================================================================================================
Ratios/Supplemental Data
------------------------------------------------------------------
Ratios to Average Net Assets
Applicable to Common Shares
After Credit/Reimbursement**
----------------------------------------------
Expenses Expenses Net Portfolio
Including Excluding Investment Turnover
Interest++(a) Interest++(a) Income++ Rate
------------------------------------------------------------------------------------------------------------------------
MICHIGAN QUALITY INCOME (NUM)
------------------------------------------------------------------------------------------------------------------------
Year Ended 2/28:
2009(b) 1.33%*** 1.33%*** 6.93%*** 3%
Year Ended 7/31:
2008 1.28 1.24 6.29 18
2007 1.24 1.20 6.14 13
2006 1.22 1.22 6.19 18
2005 1.21 1.21 6.14 8
2004 1.22 1.22 6.45 15
MICHIGAN PREMIUM INCOME (NMP)
------------------------------------------------------------------------------------------------------------------------
Year Ended 2/28:
2009(b) 1.31*** 1.31*** 6.83*** 3
Year Ended 7/31:
2008 1.36 1.22 6.18 20
2007 1.37 1.21 5.98 15
2006 1.19 1.19 6.03 6
2005 1.17 1.17 5.98 11
2004 1.19 1.19 6.30 28
========================================================================================================================
* Total Return Based 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 Based 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.
*** Annualized.
+ 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.
(b) For the seven months ended February 28, 2009.
See accompanying notes to financial statements.
83
| Financial HIGHLIGHTS (continued)
Selected data for a Common share outstanding throughout each period:
Investment Operations
-------------------------------------------------------------------------
Distributions Distributions
Beginning from Net from
Common Net Investment Capital
Share Net Realized/ Income to Gains to
Net Asset Investment Unrealized Preferred Preferred
Value Income Gain (Loss) Shareholders+ Shareholders+ Total
-----------------------------------------------------------------------------------------------------------------------------------
MICHIGAN DIVIDEND ADVANTAGE (NZW)
-----------------------------------------------------------------------------------------------------------------------------------
Year Ended 2/28:
2009(b) $ 13.68 $ .54 $ (1.00) $ (.13) $ --**** $ (.59)
Year Ended 7/31:
2008 14.73 .94 (.95) (.24) (.02) (.27)
2007 14.94 .95 (.14) (.24) --**** .57
2006 15.44 .97 (.40) (.20) -- .37
2005 14.82 .98 .63 (.11) -- 1.50
2004 14.30 .99 .47 (.05) -- 1.41
===================================================================================================================================
Less Distributions
---------------------------------------------- Offering
Net Costs and Ending
Investment Capital Preferred Common
Income to Gains to Share Share Ending
Common Common Underwriting Net Asset Market
Shareholders Shareholders Total Discounts Value Value
------------------------------------------------------------------------------------------------------------------------------------
MICHIGAN DIVIDEND ADVANTAGE (NZW)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 2/28:
2009(b) $ (.39) $ (.01) $ (.40) $ -- $ 12.69 $ 10.77
Year Ended 7/31:
2008 (.71) (.07) (.78) -- 13.68 13.10
2007 (.77) (.01) (.78) -- 14.73 15.10
2006 (.87) -- (.87) -- 14.94 15.81
2005 (.89) -- (.89) .01 15.44 16.79
2004 (.89) -- (.89) -- 14.82 14.65
====================================================================================================================================
Preferred Shares at End of Period
-------------------------------------------------
Aggregate Liquidation
Amount and Market Asset
Outstanding Value Coverage
(000) Per Share Per Share
----------------------------------------------------------------------------------------------------
MICHIGAN DIVIDEND ADVANTAGE (NZW)
----------------------------------------------------------------------------------------------------
Year Ended 2/28:
2009(b) $ 14,925 $ 25,000 $ 68,946
Year Ended 7/31:
2008 16,000 25,000 69,195
2007 16,000 25,000 72,561
2006 16,000 25,000 73,161
2005 16,000 25,000 74,720
2004 16,000 25,000 72,716
====================================================================================================
84
Ratios/Supplemental Data
------------------------------------------------------------------
Ratios to Average Net Assets
Applicable to Common Shares
Total Returns Before Credit/Reimbursement
------------------- -------------------------------------------------
Based Ending
on Net
Based Common Assets
on Share Net Applicable Expenses Expenses Net
Market Asset to Common Including Excluding Investment
Value* Value* Shares (000) Interest++(a) Interest++(a) Income++
------------------------------------------------------------------------------------------------------------------------------------
MICHIGAN DIVIDEND ADVANTAGE (NZW)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 2/28:
2009(b) (14.48)% (4.20)% $ 26,236 1.48%*** 1.48%*** 7.03%***
Year Ended 7/31:
2008 (8.10) (1.95) 28,285 1.39 1.34 6.23
2007 .46 3.79 30,439 1.38 1.35 5.89
2006 (.47) 2.46 30,823 1.31 1.31 5.92
2005 21.34 10.41 31,821 1.27 1.27 5.93
2004 2.99 10.00 30,538 1.28 1.28 6.13
====================================================================================================================================
Ratios/Supplemental Data
--------------------------------------------------------------------
Ratios to Average Net Assets
Applicable to Common Shares
After Credit/Reimbursement**
-------------------------------------------------
Expenses Expenses Net Portfolio
Including Excluding Investment Turnover
Interest++(a) Interest++(a) Income++ Rate
--------------------------------------------------------------------------------------------------------------------
MICHIGAN DIVIDEND ADVANTAGE (NZW)
--------------------------------------------------------------------------------------------------------------------
Year Ended 2/28:
2009(b) 1.20%*** 1.20%*** 7.31%*** 4%
Year Ended 7/31:
2008 1.05 1.01 6.57 18
2007 .96 .93 6.31 19
2006 .83 .83 6.40 8
2005 .81 .81 6.39 8
2004 .81 .81 6.60 9
====================================================================================================================
* Total Return Based 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 Based 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.
*** Annualized.
**** Rounds to less than $.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.
(b) For the seven months ended February 28, 2009.
See accompanying notes to financial statements.
85
| Financial HIGHLIGHTS (continued)
Selected data for a Common share outstanding throughout each period:
Investment Operations
----------------------------------------------------------------------------
Distributions Distributions
Beginning from Net from
Common Net Investment Capital
Share Net Realized/ Income to Gains to
Net Asset Investment Unrealized Preferred Preferred
Value Income Gain (Loss) Shareholders+ Shareholders+ Total
------------------------------------------------------------------------------------------------------------------------------------
OHIO QUALITY INCOME (NUO)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 2/28:
2009(b) $ 15.04 $ .56 $ (.52) $ (.13) $ -- $ (.09)
Year Ended 7/31:
2008 15.81 .95 (.71) (.25) (.02) (.03)
2007 16.01 .96 (.12) (.26) (.01) .57
2006 16.58 .98 (.42) (.22) (.01) .33
2005 16.21 1.02 .49 (.12) -- 1.39
2004 16.17 1.07 .25 (.06) (.01) 1.25
OHIO DIVIDEND ADVANTAGE (NXI)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 2/28:
2009(b) 14.25 .54 (.46) (.12) -- (.04)
Year Ended 7/31:
2008 14.87 .93 (.55) (.23) (.03) .12
2007 15.02 .94 (.09) (.24) (.01) .60
2006 15.55 .96 (.40) (.21) -- .35
2005 15.05 1.00 .57 (.11) -- 1.46
2004 14.66 1.04 .40 (.06) -- 1.38
====================================================================================================================================
Less Distributions
------------------------------------------- Offering
Net Costs and Ending
Investment Capital Preferred Common
Income to Gains to Share Share Ending
Common Common Underwriting Net Asset Market
Shareholders Shareholders Total Discounts Value Value
-----------------------------------------------------------------------------------------------------------------------------
OHIO QUALITY INCOME (NUO)
-----------------------------------------------------------------------------------------------------------------------------
Year Ended 2/28:
2009(b) $ (.39) $ -- $ (.39) $ -- $ 14.56 $ 12.90
Year Ended 7/31:
2008 (.67) (.07) (.74) -- 15.04 13.40
2007 (.73) (.04) (.77) -- 15.81 14.43
2006 (.85) (.05) (.90) -- 16.01 15.83
2005 (.98) (.04) (1.02) -- 16.58 16.96
2004 (1.00) (.21) (1.21) -- 16.21 16.30
OHIO DIVIDEND ADVANTAGE (NXI)
-----------------------------------------------------------------------------------------------------------------------------
Year Ended 2/28:
2009(b) (.38) -- (.38) -- 13.83 12.10
Year Ended 7/31:
2008 (.65) (.09) (.74) -- 14.25 12.77
2007 (.72) (.03) (.75) -- 14.87 14.39
2006 (.85) (.03) (.88) -- 15.02 15.05
2005 (.96) -- (.96) -- 15.55 17.00
2004 (.97) (.02) (.99) -- 15.05 14.80
=============================================================================================================================
Preferred Shares at End of Period
-------------------------------------------------
Aggregate Liquidation
Amount and Market Asset
Outstanding Value Coverage
(000) Per Share Per Share
-------------------------------------------------------------------------------------------------------
OHIO QUALITY INCOME (NUO)
-------------------------------------------------------------------------------------------------------
Year Ended 2/28:
2009(b) $ 77,000 $ 25,000 $ 71,066
Year Ended 7/31:
2008 77,000 25,000 72,603
2007 77,000 25,000 75,017
2006 77,000 25,000 75,658
2005 77,000 25,000 77,267
2004 77,000 25,000 75,855
OHIO DIVIDEND ADVANTAGE (NXI)
-------------------------------------------------------------------------------------------------------
Year Ended 2/28:
2009(b) 31,000 25,000 72,332
Year Ended 7/31:
2008 31,000 25,000 73,770
2007 31,000 25,000 75,898
2006 31,000 25,000 76,400
2005 31,000 25,000 78,123
2004 31,000 25,000 76,324
=======================================================================================================
86
Ratios/Supplemental Data
----------------------------------------------------------------
Ratios to Average Net Assets
Applicable to Common Shares
Total Returns Before Credit/Reimbursement
---------------------- ----------------------------------------------
Based Ending
on Net
Based Common Assets
on Share Net Applicable Expenses Expenses Net
Market Asset to Common Including Excluding Investment
Value* Value* Shares (000) Interest++(a) Interest++(a) Income++
------------------------------------------------------------------------------------------------------------------------------------
OHIO QUALITY INCOME (NUO)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 2/28:
2009(b) (0.71)% (0.49)% $ 141,883 1.35%*** 1.31%*** 6.77%***
Year Ended 7/31:
2008 (2.18) (.26) 146,617 1.42 1.26 6.08
2007 (4.25) 3.56 154,052 1.29 1.19 5.94
2006 (1.36) 2.10 156,026 1.20 1.20 6.05
2005 10.25 8.70 160,982 1.19 1.19 6.16
2004 2.59 7.87 156,634 1.20 1.20 6.46
OHIO DIVIDEND ADVANTAGE (NXI)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 2/28:
2009(b) (2.08) (0.15) 58,692 1.35*** 1.31*** 6.64***
Year Ended 7/31:
2008 (6.21) .83 60,475 1.39 1.24 6.06
2007 .52 4.02 63,114 1.32 1.22 5.85
2006 (6.53) 2.32 63,735 1.21 1.21 5.85
2005 21.79 9.87 65,873 1.21 1.21 6.00
2004 10.70 9.54 63,642 1.20 1.20 6.41
====================================================================================================================================
Ratios/Supplemental Data
-------------------------------------------------------------------
Ratios to Average Net Assets
Applicable to Common Shares
After Credit/Reimbursement**
-------------------------------------------------
Expenses Expenses Net Portfolio
Including Excluding Investment Turnover
Interest++(a) Interest++(a) Income++ Rate
-------------------------------------------------------------------------------------------------------------------
OHIO QUALITY INCOME (NUO)
-------------------------------------------------------------------------------------------------------------------
Year Ended 2/28:
2009(b) 1.34%*** 1.30%*** 6.78%*** 10%
Year Ended 7/31:
2008 1.41 1.25 6.09 14
2007 1.27 1.17 5.95 15
2006 1.19 1.19 6.06 9
2005 1.18 1.18 6.17 14
2004 1.19 1.19 6.47 31
OHIO DIVIDEND ADVANTAGE (NXI)
-------------------------------------------------------------------------------------------------------------------
Year Ended 2/28:
2009(b) 1.11*** 1.08*** 6.88*** 10
Year Ended 7/31:
2008 1.11 .96 6.34 17
2007 .96 .86 6.21 14
2006 .76 .76 6.30 6
2005 .76 .76 6.46 14
2004 .75 .75 6.86 10
===================================================================================================================
* Total Return Based 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 Based 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.
*** Annualized.
+ 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.
(b) For the seven months ended February 28, 2009.
See accompanying notes to financial statements.
87
| Financial HIGHLIGHTS (continued)
Selected data for a Common share outstanding throughout each period:
Investment Operations
--------------------------------------------------------------------------
Distributions Distributions
Beginning from Net from
Common Net Investment Capital
Share Net Realized/ Income to Gains to
Net Asset Investment Unrealized Preferred Preferred
Value Income Gain (Loss) Shareholders+ Shareholders+ Total
------------------------------------------------------------------------------------------------------------------------------------
OHIO DIVIDEND ADVANTAGE 2 (NBJ)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 2/28:
2009(b) $ 13.87 $ .54 $ (.84) $ (.13) $ -- $ (.43)
Year Ended 7/31:
2008 14.64 .93 (.73) (.25) (.02) (.07)
2007 14.81 .92 (.10) (.25) (.01) .56
2006 15.37 .93 (.41) (.22) (.01) .29
2005 14.85 .95 .61 (.12) -- 1.44
2004 14.31 .99 .53 (.06) -- 1.46
OHIO DIVIDEND ADVANTAGE 3 (NVJ)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 2/28:
2009(b) 14.33 .55 (.39) (.12) -- .04
Year Ended 7/31:
2008 14.92 .95 (.56) (.23) (.02) .14
2007 15.06 .96 (.08) (.25) (.01) .62
2006 15.57 .95 (.45) (.22) -- .28
2005 14.93 .95 .69 (.11) -- 1.53
2004 14.48 .96 .51 (.06) (.01) 1.40
====================================================================================================================================
Less Distributions
--------------------------------------------- Offering
Net Costs and Ending
Investment Capital Preferred Common
Income to Gains to Share Share Ending
Common Common Underwriting Net Asset Market
Shareholders Shareholders Total Discounts Value Value
--------------------------------------------------------------------------------------------------------------------------------
OHIO DIVIDEND ADVANTAGE 2 (NBJ)
--------------------------------------------------------------------------------------------------------------------------------
Year Ended 2/28:
2009(b) $ (.38) $ -- $ (.38) $ -- $ 13.06 $ 11.58
Year Ended 7/31:
2008 (.64) (.06) (.70) -- 13.87 12.37
2007 (.69) (.04) (.73) -- 14.64 13.80
2006 (.80) (.05) (.85) -- 14.81 14.70
2005 (.90) (.02) (.92) -- 15.37 15.48
2004 (.92) -- (.92) -- 14.85 14.70
OHIO DIVIDEND ADVANTAGE 3 (NVJ)
--------------------------------------------------------------------------------------------------------------------------------
Year Ended 2/28:
2009(b) (.40) -- (.40) -- 13.97 11.95
Year Ended 7/31:
2008 (.67) (.06) (.73) -- 14.33 12.91
2007 (.72) (.04) (.76) -- 14.92 14.35
2006 (.79) -- (.79) -- 15.06 14.75
2005 (.87) (.02) (.89) -- 15.57 15.90
2004 (.88) (.07) (.95) -- 14.93 14.30
================================================================================================================================
Preferred Shares at End of Period
-------------------------------------------------
Aggregate Liquidation
Amount and Market Asset
Outstanding Value Coverage
(000) Per Share Per Share
--------------------------------------------------------------------------------------------------------
OHIO DIVIDEND ADVANTAGE 2 (NBJ)
--------------------------------------------------------------------------------------------------------
Year Ended 2/28:
2009(b) $ 23,100 $ 25,000 $ 69,107
Year Ended 7/31:
2008 24,000 25,000 70,090
2007 24,000 25,000 72,598
2006 24,000 25,000 73,169
2005 24,000 25,000 74,935
2004 24,000 25,000 73,196
OHIO DIVIDEND ADVANTAGE 3 (NVJ)
--------------------------------------------------------------------------------------------------------
Year Ended 2/28:
2009(b) 16,500 25,000 70,647
Year Ended 7/31:
2008 16,500 25,000 71,881
2007 16,500 25,000 73,778
2006 16,500 25,000 74,252
2005 16,500 25,000 75,918
2004 16,500 25,000 73,800
========================================================================================================
88
Ratios/Supplemental Data
----------------------------------------------------------------
Ratios to Average Net Assets
Applicable to Common Shares
Total Returns Before Credit/Reimbursement
--------------------- ---------------------------------------------
Based Ending
on Net
Based Common Assets
on Share Net Applicable Expenses Expenses Net
Market Asset to Common Including Excluding Investment
Value* Value* Shares (000) Interest++(a) Interest++(a) Income++
----------------------------------------------------------------------------------------------------------------------------------
OHIO DIVIDEND ADVANTAGE 2 (NBJ)
----------------------------------------------------------------------------------------------------------------------------------
Year Ended 2/28:
2009(b) (3.09)% (3.01)% $ 40,755 1.46%*** 1.42%*** 6.91%***
Year Ended 7/31:
2008 (5.46) (.51) 43,286 1.46 1.30 6.10
2007 (1.26) 3.80 45,694 1.41 1.31 5.76
2006 .35 1.96 46,242 1.27 1.27 5.71
2005 11.63 9.90 47,937 1.23 1.23 5.71
2004 9.60 10.33 46,268 1.25 1.25 6.13
OHIO DIVIDEND ADVANTAGE 3 (NVJ)
----------------------------------------------------------------------------------------------------------------------------------
Year Ended 2/28:
2009(b) (4.29) .36 30,127 1.46*** 1.42*** 6.63***
Year Ended 7/31:
2008 (5.13) .95 30,941 1.47 1.32 6.05
2007 2.32 4.06 32,194 1.41 1.31 5.85
2006 (2.33) 1.87 32,506 1.28 1.28 5.76
2005 17.60 10.40 33,606 1.27 1.27 5.68
2004 5.86 9.72 32,208 1.28 1.28 5.87
=================================================================================================================================
Ratios/Supplemental Data
-------------------------------------------------------------------
Ratios to Average Net Assets
Applicable to Common Shares
After Credit/Reimbursement**
-------------------------------------------------
Expenses Expenses Net Portfolio
Including Excluding Investment Turnover
Interest++(a) Interest++(a) Income++ Rate
--------------------------------------------------------------------------------------------------------------
OHIO DIVIDEND ADVANTAGE 2 (NBJ)
--------------------------------------------------------------------------------------------------------------
Year Ended 2/28:
2009(b) 1.19%*** 1.15%*** 7.18%*** 5%
Year Ended 7/31:
2008 1.12 .96 6.43 16
2007 1.00 .90 6.17 14
2006 .78 .78 6.19 8
2005 .77 .77 6.17 14
2004 .79 .79 6.60 15
OHIO DIVIDEND ADVANTAGE 3 (NVJ)
--------------------------------------------------------------------------------------------------------------
Year Ended 2/28:
2009(b) 1.14*** 1.11*** 6.94*** 9
Year Ended 7/31:
2008 1.10 .95 6.43 19
2007 .96 .86 6.30 19
2006 .81 .81 6.23 2
2005 .81 .81 6.14 3
2004 .81 .81 6.34 8
==============================================================================================================
* Total Return Based 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 Based 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.
*** Annualized.
+ 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.
(b) For the seven months ended February 28, 2009.
See accompanying notes to financial statements.
89
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
(referred to herein as "independent board members") 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 PRINCIPAL
YEAR FIRST OF PORTFOLIOS OCCUPATION(S)
NAME, ELECTED OR IN FUND COMPLEX INCLUDING OTHER
BIRTHDATE POSITION(S) HELD APPOINTED OVERSEEN BY DIRECTORSHIPS
& ADDRESS WITH THE FUNDS AND TERM(1) BOARD MEMBER DURING PAST 5 YEARS
------------------------------------------------------------------------------------------------------------------------------------
INDEPENDENT BOARD MEMBERS:
o ROBERT P. BREMNER Private Investor and Management
8/22/40 Chairman of Consultant; Treasurer and Director,
333 W. Wacker Drive the Board 1997 193 Humanities Council of Washington D.C.
Chicago, IL 60606 and Board member
o JACK B. EVANS President, The Hall-Perrine Foundation,
10/22/48 a private philanthropic corporation
333 W. Wacker Drive Board member 1999 193 (since 1996); Director and Vice
Chicago, IL 60606 Chairman, United Fire Group, a publicly
held company; Member of the Board of
Regents for the State of Iowa University
System; Director, Gazette Companies; Life
Trustee of Coe College and Iowa College
Foundation; Member of the Advisory Council
of the Department of Finance in the Tippie
College of Business, University of Iowa;
formerly, Director, Alliant Energy;
formerly, Director, Federal Reserve Bank
of Chicago; formerly, President and Chief
Operating Officer, SCI Financial Group,
Inc., a regional financial services firm.
o WILLIAM C. HUNTER Dean, Tippie College of Business,
3/6/48 University of Iowa (since July 2006);
333 W. Wacker Drive Board member 2004 193 formerly, Dean and Distinguished
Chicago, IL 60606 Professor of Finance, 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 2004) of
Xerox Corporation; Director (since 2005),
Beta Gamma Sigma International Honor
Society; Director, SS&C Technologies, Inc.
(May 2005-October 2005); formerly Director
(1997-2007), Credit Research Center at
Georgetown University.
o DAVID J. KUNDERT Director, Northwestern Mutual Wealth
10/28/42 Management Company; Retired (since
333 W. Wacker Drive Board member 2005 193 2004) as Chairman, JPMorgan Fleming
Chicago, IL 60606 Asset Management, 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;
Member, Board of Regents, Luther College;
member of the Wisconsin Bar Association;
member of Board of Directors, Friends of
Boerner Botanical Gardens; member of
Investment Committee, Greater Milwaukee
Foundation.
o WILLIAM J. SCHNEIDER Chairman of Miller-Valentine Partners
9/24/44 Ltd., a real estate investment company;
333 W. Wacker Drive Board member 1997 193 Senior Partner and Chief Operating
Chicago, IL 60606 Officer (retired, 2004) of
Miller-Valentine Group; Member, University
of Dayton Business School Advisory
Council; member, Dayton Philharmonic
Orchestra Board; formerly, member,
Business Advisory Council, Cleveland
Federal Reserve Bank; formerly, Director,
Dayton Development Coalition.
90
NUMBER PRINCIPAL
YEAR FIRST OF PORTFOLIOS OCCUPATION(S)
NAME, ELECTED OR IN FUND COMPLEX INCLUDING OTHER
BIRTHDATE POSITION(S) HELD APPOINTED OVERSEEN BY DIRECTORSHIPS
& ADDRESS WITH THE FUNDS AND TERM(1) BOARD MEMBER DURING PAST 5 YEARS
------------------------------------------------------------------------------------------------------------------------------------
INDEPENDENT BOARD MEMBERS:
o JUDITH M. STOCKDALE Executive Director, Gaylord and
12/29/47 Dorothy Donnelley Foundation (since
333 W. Wacker Drive Board member 1997 193 1994); prior thereto, Executive
Chicago, IL 60606 Director, Great Lakes Protection Fund
(from 1990 to 1994).
o CAROLE E. STONE Director, Chicago Board Options
6/28/47 Exchange (since 2006); Commissioner,
333 W. Wacker Drive Board member 2007 193 New York State Commission on Public
Chicago, IL 60606 Authority Reform (since 2005);
formerly, Chair New York Racing
Association Oversight Board
(2005-2007); 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).
o TERENCE J. TOTH
9/29/59 Director, Legal & General Investment
333 W. Wacker Drive Board Member 2008 193 Management America, Inc. (since 2008);
Chicago, IL 60606 Managing Partner, Musso Capital
Management (since 2008); Private
Investor (since 2007); CEO and
President, Northern Trust Investments
(2004-2007); Executive Vice President,
Quantitative Management & Securities
Lending (2004-2007); prior thereto,
various positions with Northern Trust
Company (since 1994); Member: Goodman
Theatre Board (Since 2004); Chicago
Fellowship Boards (since 2005),
University of Illinois Leadership
Council Board (since 2007) and
Catalyst Schools of Chicago Board
(since 2008); formerly Member:
Northern Trust Mutual Funds Board
(2005-2007), Northern Trust
Investments Board (2004-2007),
Northern Trust Japan Board
(2004-2007), Northern Trust Securities
Inc. Board (2003-2007) and Northern
Trust Hong Kong Board (1997-2004).
INTERESTED BOARD MEMBER:
o JOHN P. AMBOIAN Chief Executive Officer (since July
6/14/61 2007) and Director (since 1999) of
333 W. Wacker Drive Board Member 2008 193 Nuveen Investments, Inc.; Chief
Chicago, IL 60606 Executive Officer (since 2007) of
Nuveen Asset Management, Rittenhouse
Asset Management, Nuveen Investments
Advisors, Inc. formerly, President
(1999-2004) of Nuveen Advisory Corp.
and Nuveen Institutional Advisory
Corp.(3)
91
NUMBER
OF PORTFOLIOS
NAME, YEAR FIRST IN FUND COMPLEX PRINCIPAL
BIRTHDATE POSITION(S) HELD ELECTED OR OVERSEEN BY OCCUPATION(S)
& ADDRESS WITH THE FUNDS APPOINTED(4) OFFICER DURING PAST 5 YEARS
------------------------------------------------------------------------------------------------------------------------------------
OFFICERS OF THE FUNDS:
o GIFFORD R. ZIMMERMAN Managing Director (since 2002),
9/9/56 Chief Assistant Secretary and Associate
333 W. Wacker Drive Administrative 1988 193 General Counsel of Nuveen Investments,
Chicago, IL 60606 Officer LLC; Managing Director (since 2002),
Associate General Counsel and
Assistant Secretary, of Nuveen Asset
Management; Vice President and
Assistant Secretary of NWQ Investment
Management Company, LLC. (since 2002),
Nuveen Investments Advisers Inc.
(since 2002), Symphony Asset
Management LLC, and NWQ Investment
Management Company, LLC (since 2003),
Tradewinds Global Investors, LLC, and
Santa Barbara Asset Management, LLC
(since 2006), Nuveen HydePark Group
LLC and Nuveen Investment Solutions,
Inc. (since 2007); Managing Director
(since 2004) and Assistant Secretary
(since 1994) of Nuveen Investments,
Inc.; formerly, Managing Director
(2002-2004), General Counsel
(1998-2004) and Assistant Secretary of
Nuveen Advisory Corp. and Nuveen
Institutional Advisory Corp.(3);
Chartered Financial Analyst.
o WILLIAM ADAMS IV Executive Vice President of Nuveen
6/9/55 Investments, Inc.; Executive Vice
333 W. Wacker Drive Vice President 2007 121 President, U.S. Structured Products of
Chicago, IL 60606 Nuveen Investments, LLC, (since 1999),
prior thereto, Managing Director of
Structured Investments.
o MARK J.P. ANSON President and Executive Director of
6/10/59 Nuveen Investments, Inc. (since 2007);
333 W. Wacker Drive Vice President 2009 193 President of Nuveen Investments
Chicago, IL 60606 Institutional Services Group LLC
(since 2007); previously, Chief
Executive Officer of the British
Telecom Pension Scheme (2006-2007) and
Chief Investment Officer of Calpers
(1999-2006); PhD, Chartered Financial
Analyst, Chartered Alternative
Investment Analyst, Certified Public
Accountant, Certified Management
Accountant and Certified Internal
Auditor.
o CEDRIC H. ANTOSIEWICZ Managing Director, (since 2004)
1/11/62 previously, Vice President (1993-2004)
333 W. Wacker Drive Vice President 2007 121 of Nuveen Investments, LLC.
Chicago, IL 60606
o NIZIDA ARRIAGA Vice President of Nuveen Investments,
6/1/68 LLC (since 2007); previously,
333 W. Wacker Drive Vice President 2009 193 Portfolio Manager, Allstate
Chicago, IL 60606 Investments, LLC (1996-2006);
Chartered Financial Analyst.
o MICHAEL T. ATKINSON Vice President (since 2002) of Nuveen
2/3/66 Vice President Investments, LLC.; Vice President of
333 W. Wacker Drive and Assistant 2000 193 Nuveen Asset Management (since 2005).
Chicago, IL 60606 Secretary
o MARGO L. COOK Executive Vice President (since Oct
4/11/64 2008) of Nuveen Investments, Inc.;
333 W. Wacker Drive Vice President 2009 193 previously, Head of Institutional
Chicago, IL 60606 Asset Management (2007-2008) of Bear
Stearns Asset Management; Head of
Institutional Asset Mgt (1986-2007) of
Bank of NY Mellon; Chartered Financial
Analyst.
o LORNA C. FERGUSON Managing Director (since 2004),
10/24/45 formerly, Vice President of Nuveen
333 W. Wacker Drive Vice President 1998 193 Investments, LLC; Managing Director
Chicago, IL 60606 (since 2005) of Nuveen Asset
Management; Managing Director
(2004-2005), formerly, Vice President
(1998-2004) of Nuveen Advisory Corp.
and Nuveen Institutional Advisory
Corp.(3)
92
NUMBER
OF PORTFOLIOS
NAME, YEAR FIRST IN FUND COMPLEX PRINCIPAL
BIRTHDATE POSITION(S) HELD ELECTED OR OVERSEEN BY OCCUPATION(S)
& ADDRESS WITH THE FUNDS APPOINTED(4) OFFICER DURING PAST 5 YEARS
------------------------------------------------------------------------------------------------------------------------------------
OFFICERS OF THE FUNDS:
o 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 193 Investments, LLC; Vice President
Chicago, IL 60606 (since 2005) of Nuveen Asset
Management; Certified Public
Accountant.
o WILLIAM T. HUFFMAN Chief Operating Officer, Municipal
5/7/69 Fixed Income (since 2008) of Nuveen
333 W. Wacker Drive Vice President 2009 193 Asset Management; previously,
Chicago, IL 60606 Chairman, President and Chief
Executive Officer (2002 - 2007) of
Northern Trust Global Advisors, Inc.
and Chief Executive Officer (2007) of
Northern Trust Global Investments
Limited; CPA.
o WALTER M. KELLY Senior Vice President (since 2008),
2/24/70 Chief Compliance Vice President (2006-2008) formerly,
333 W. Wacker Drive Officer and 2003 193 Assistant Vice President and Assistant
Chicago, IL 60606 Vice President General Counsel (2003-2006) of Nuveen
Investments, LLC; Vice President
(since 2006) and Assistant Secretary
(since 2008) of Nuveen Asset
Management.
o DAVID J. LAMB Senior Vice President (since 2009),
3/22/63 formerly Vice President (2000-2009) of
333 W. Wacker Drive Vice President 2000 193 Nuveen Investments, LLC; Vice
Chicago, IL 60606 President of Nuveen Asset Management
(since 2005); Certified Public
Accountant.
o TINA M. LAZAR Senior Vice President (since 2009),
8/27/61 formerly, Vice President of Nuveen
333 W. Wacker Drive Vice President 2002 193 Investments, LLC (1999-2009); Vice
Chicago, IL 60606 President of Nuveen Asset Management
(since 2005).
o LARRY W. MARTIN Vice President, Assistant Secretary
7/27/51 Vice President and Assistant General Counsel of
333 W. Wacker Drive and Assistant 1988 193 Nuveen Investments, LLC; Vice
Chicago, IL 60606 Secretary 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 and Assistant Secretary of
Nuveen Investments Advisers Inc.
(since 2002); NWQ Investment
Management Company, LLC (since 2002),
Symphony Asset Management LLC (since
2003), Tradewinds Global Investors,
LLC, Santa Barbara Asset Management
LLC (since 2006) and of Nuveen
HydePark Group, LLC and Nuveen
Investment Solutions, Inc. (since
2007); formerly, Vice President and
Assistant Secretary of Nuveen Advisory
Corp. and Nuveen Institutional
Advisory Corp.(3)
o KEVIN J. MCCARTHY Managing Director (since 2008),
3/26/66 Vice President formerly, Vice President (2007-2008),
333 W. Wacker Drive and Secretary 2007 193 Nuveen Investments, LLC; Vice
Chicago, IL 60606 President, and Assistant Secretary,
Nuveen Asset Management, Rittenhouse
Asset Management, Inc., Nuveen
Investment Advisers Inc., Nuveen
Investment Institutional Services
Group LLC, NWQ Investment Management
Company, LLC, Tradewinds Global
Investors LLC, NWQ Holdings, LLC,
Symphony Asset Management LLC, Santa
Barbara Asset Management LLC, Nuveen
HydePark Group, LLC and Nuveen
Investment Solutions, Inc. (since
2007); prior thereto, Partner, Bell,
Boyd & Lloyd LLP (1997-2007).
93
NUMBER
OF PORTFOLIOS
NAME, YEAR FIRST IN FUND COMPLEX PRINCIPAL
BIRTHDATE POSITION(S) HELD ELECTED OR OVERSEEN BY OCCUPATION(S)
& ADDRESS WITH THE FUNDS APPOINTED(4) OFFICER DURING PAST 5 YEARS
------------------------------------------------------------------------------------------------------------------------------------
OFFICERS OF THE FUNDS:
o JOHN V. MILLER Managing Director (since 2007),
4/10/67 Vice President 2007 193 formerly, Vice President (2002-2007) of
333 W. Wacker Drive Nuveen Asset Management and Nuveen
Chicago, IL 60606 Investments, LLC; Chartered Financial
Analyst.
o GREGORY MINO Vice President of Nuveen Investments,
1/4/71 Vice President 2009 193 LLC (since 2008); previously, Director
333 W. Wacker Drive (2004-2007) and Executive Director
Chicago, IL 60606 (2007-2008) of UBS Global Asset
Management; previously, Vice President
(2000-2003) and Director (2003-2004) of
Merrill Lynch Investment Managers;
Chartered Financial Analyst.
o CHRISTOPHER M. ROHRBACHER Vice President, Nuveen Investments, LLC
8/1/71 Vice President (since 2008); Vice President and
333 W. Wacker Drive and Assistant 2008 193 Assistant Secretary, Nuveen Asset
Chicago, IL 60606 Secretary Management (since 2008); prior thereto,
Associate, Skadden, Arps, Slate Meagher
& Flom LLP (2002-2008).
o JAMES F. RUANE Vice President, Nuveen Investments, LLC
7/3/62 Vice President (since 2007); prior thereto, Partner,
333 W. Wacker Drive and Assistant 2007 193 Deloitte & Touche USA LLP (2005-2007),
Chicago, IL 60606 Secretary formerly, senior tax manager
(2002-2005); Certified Public
Accountant.
o MARK L. WINGET Vice President, Nuveen Investments, LLC
12/21/68 Vice President (since 2008); Vice President and
333 W. Wacker Drive and Assistant 2008 193 Assistant Secretary, Nuveen Asset
Chicago, IL 60606 Secretary Management (since 2008); prior thereto,
Counsel, Vedder Price P.C. (1997-2007).
(1) 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.
(2) Mr. Amboian is an interested trustee because of his position with Nuveen
Investments, Inc. and certain of its subsidiaries, which are affiliates of
the Nuveen Funds.
(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.
94
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.
95
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.
96
NOTES
97
Glossary of NOTES TERMS USED in this REPORT
o AUCTION RATE BOND: An auction rate bond is a security whose interest
payments are adjusted periodically through an auction process, which
process typically also serves as a means for buying and selling the bond.
Auctions that fail to attract enough buyers for all the shares offered for
sale are deemed to have "failed", with current holders receiving a
formula-based interest rate until the next scheduled auction.
o 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 common share NAV or market price and reinvested dividends and capital
gains distributions, if any) over the time period being considered.
o 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.
o 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.
o 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.
o MARKET YIELD (ALSO KNOWN AS DIVIDEND YIELD OR CURRENT YIELD): An
investment's current annualized dividend divided by its current market
price.
o NET ASSET VALUE (NAV): A Fund's NAV per common share is calculated by
subtracting the liabilities of the Fund (including any Preferred shares
issued in order to leverage the Fund) from its total assets and then
dividing the remainder by the number of common shares outstanding. Fund
NAVs are calculated at the end of each business day.
o 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.
o 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
You may obtain (i) each Fund's quarterly portfolio of investments, (ii)
information regarding how the Funds voted proxies relating to portfolio
securities held during the twelve-month period ended June 30, 2008, and (iii) a
description of the policies and procedures that the Funds used to determine how
to vote proxies relating to portfolio securities 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 (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 100 F Street NE, Washington, D.C. 20549.
CEO CERTIFICATION DISCLOSURE
Each Fund's Chief Executive Officer has submitted to the New York Stock Exchange
(NYSE) 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.
BOARD OF DIRECTORS/TRUSTEES
John P. Amboian
Robert P. Bremner
Jack B. Evans
William C. Hunter
David J. Kundert
William J.Schneider
Judith M. Stockdale
Carole E. Stone
Terence J. Toth
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 and/or redeem shares of its own common or
preferred stock in the future at such times and in such amounts as is deemed
advisable. During the period covered by this report, NMP, NXI and NVJ
repurchased 26,700, 600 and 1,700 shares of their common stock, respectively,
and NUM, NZW and NBJ redeemed 124, 43 and 36 shares of their preferred stock,
respectively. Any future repurchases and/or redemptions will be reported to
shareholders in the next annual or semi-annual 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.
Nuveen Investments is a global investment management firm that seeks to help
secure the long-term goals of institutions and high net worth investors as well
as the consultants and financial advisors who serve them. Nuveen Investments
markets its growing range of specialized investment solutions under the
high-quality brands of HydePark, NWQ, Nuveen, Santa Barbara, Symphony,
Tradewinds and Winslow Capital. In total, the Company managed $119 billion of
assets on December 31, 2008.
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/cef
Share prices
Fund details
Daily financial news
Investor education
Interactive planning tools
EAN-C-0209D
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/CEF/Info/
Shareholder/. (To view the code, 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 ("Board") 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, 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)
-----------------------------------------------------------------------------------------------------------------------------
February 28, 2009(5) $ 15,986 $ 0 $ 0 $ 1,700
-----------------------------------------------------------------------------------------------------------------------------
Percentage approved 0% 0% 0% 0%
pursuant to
pre-approval
exception
-----------------------------------------------------------------------------------------------------------------------------
July 31, 2008 $ 15,368 $ 0 $ 500 $ 3,300
-----------------------------------------------------------------------------------------------------------------------------
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
for agreed upon procedures engagements performed for leveraged funds.
(5) Fund changed fiscal year from July to February starting in 2009.
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 SERVICE PROVIDERS
-----------------------------------------------------------------------------------------------------
February 28, 2009(1) $ 0 $ 0 $ 0
-----------------------------------------------------------------------------------------------------
Percentage approved 0% 0% 0%
pursuant to
pre-approval
exception
-----------------------------------------------------------------------------------------------------
July 31, 2008 $ 0 $ 0 $ 0
-----------------------------------------------------------------------------------------------------
Percentage approved 0% 0% 0%
pursuant to
pre-approval
exception
-----------------------------------------------------------------------------------------------------
(1) Fund changed fiscal year from July to February starting in 2009.
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 pre-approval 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 FEES OPERATIONS AND FINANCIAL PROVIDERS (ALL OTHER
BILLED TO FUND REPORTING OF THE FUND) ENGAGEMENTS) TOTAL
----------------------------------------------------------------------------------------------------------------------
February 28, 2009(1) $ 1,700 $ 0 $ 0 $ 1,700
July 31, 2008 $ 3,800 $ 0 $ 0 $ 3,800
"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.
(1) Fund changed fiscal year from July to February starting in 2009.
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 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, Terence J. Toth, William J. Schneider and
David J. Kundert.
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 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 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 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, Inc.
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 $4.56 billion
Other Pooled Investment Vehicles 1 $1.5 million
Other Accounts 3 $.20 million
* Assets are as of February 28, 2009. 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 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 February 28, 2009, the
S&P/Investortools Municipal Bond index was comprised of 51,571 securities with
an aggregate current market value of $1,024 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 serves
as portfolio manager relative to any benchmarks established for those accounts,
his effectiveness in communicating investment performance to stockholders and
their representatives, and his contribution to the NAM's 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. In connection with the acquisition of Nuveen
Investments, Inc., by a group of investors led by Madison Dearborn Partners in
November 2007, certain employees, including portfolio managers, received profit
interests in Nuveen's parent. These profit interests entitle the holders to
participate in the appreciation in the value of Nuveen beyond the issue date and
vest over five to seven years, or earlier in the case of a liquidity event.
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 February 28, 2009, 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
EQUITY SECURITIES
DOLLAR BENEFICIALLY OWNED
RANGE OF IN THE REMAINDER OF
EQUITY NUVEEN FUNDS
SECURITIES MANAGED BY NAM'S
BENEFICIALLY MUNICIPAL
NAME OF PORTFOLIO OWNED IN INVESTMENT
MANAGER FUND FUND TEAM
-------------------------------------------------------------------------------------------------------------
Daniel J. Close Nuveen Michigan Quality Income Municipal Fund, Inc. $0 $1--$10,000
PORTFOLIO MANAGER BIO:
Daniel J. Close, CFA, 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 registrant's 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/CEF/Info/
Shareholder and there were no amendments during the period covered by this
report. (To view the code, 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.
-----------------------------------------------------------
By (Signature and Title) /s/ Kevin J. McCarthy
----------------------------------------------
Kevin J. McCarthy
Vice President and Secretary
Date: April 24, 2009
-------------------------------------------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title) /s/ Gifford R. Zimmerman
----------------------------------------------
Gifford R. Zimmerman
Chief Administrative Officer
(principal executive officer)
Date: April 24, 2009
-------------------------------------------------------------------
By (Signature and Title) /s/ Stephen D. Foy
----------------------------------------------
Stephen D. Foy
Vice President and Controller
(principal financial officer)
Date: April 24, 2009
-------------------------------------------------------------------