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 811-09453
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Nuveen Michigan Dividend Advantage Municipal Fund
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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: July 31
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Date of reporting period: July 31, 2008
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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,
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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
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unless the Form displays a currently valid Office of Management and Budget
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burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
ANNUAL REPORT
July 31, 2008
Nuveen Investments
MUNICIPAL CLOSED-END FUNDS
NUVEEN MICHIGAN
QUALITY INCOME
MUNICIPAL FUND, INC.
NUM
NUVEEN MICHIGAN
PREMIUM INCOME
MUNICIPAL FUND, INC.
NMP
NUVEEN MICHIGAN
DIVIDEND ADVANTAGE
MUNICIPAL FUND
NZW
NUVEEN OHIO
QUALITY INCOME
MUNICIPAL FUND, INC.
NUO
NUVEEN OHIO
DIVIDEND ADVANTAGE
MUNICIPAL FUND
NXI
NUVEEN OHIO
DIVIDEND ADVANTAGE
MUNICIPAL FUND 2
NBJ
NUVEEN OHIO
DIVIDEND ADVANTAGE
MUNICIPAL FUND 3
NVJ
IT'S NOT WHAT YOU EARN, IT'S WHAT YOU KEEP.(R)
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Chairman's
LETTER TO SHAREHOLDERS
Photo of: Robert P. Bremner
Robert P. Bremner | Chairman of the Board
Dear Shareholders:
I'd like to use my initial letter to you to accomplish several things. First, I
want to report that after fourteen years of service on your Fund's Board,
including the last twelve as chairman, Tim Schwertfeger retired from the Board
in June. The Board has elected me to replace him as the chairman, the first time
this role has been filled by someone who is not an employee of Nuveen
Investments. Electing an independent chairman marks a significant milestone in
the management of your Fund, and it aligns us with what is now considered a
"best practice" in the fund industry. Further, it demonstrates the independence
with which your Board has always acted on your behalf.
Following Tim will not be easy. During my eleven previous years on the Nuveen
Fund Board, I found that Tim always set a very high standard by combining
insightful industry and market knowledge and sound, clear judgment. While the
Board will miss his wise counsel, I am certain we will retain the primary
commitment Tim shared with all of us - an unceasing dedication to creating and
retaining value for Nuveen Fund shareholders. This focus on value over time is a
touchstone that I and all the other Board members will continue to use when
making decisions on your behalf.
Second, I also want to report that we are very fortunate to be welcoming two new
Board members to our team. John Amboian, the current chairman and CEO of Nuveen
Investments, has agreed to replace Tim as Nuveen's representative on the Board.
John's presence will allow the independent Board members to benefit not only
from his leadership role at Nuveen but also his broad understanding of the fund
industry and Nuveen's role within it. We also are adding Terry Toth as an
independent director. A former CEO of the Northern Trust Company's asset
management group, Terry will bring extensive experience in the fund industry to
our deliberations.
Third, on behalf of the entire Board, I would like to acknowledge the effort the
whole Nuveen organization is making to resolve the auction rate preferred share
situation in a satisfactory manner. As you know, we are actively pursuing a
number of possible 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've worked
through the many details involved.
Finally, I urge you to take the time to review the Portfolio Manager's Comments,
the Common Share Distribution and Share Price Information, and the Performance
Overview sections of this report. All of us are grateful that you have chosen
Nuveen Investments as a partner as you pursue your financial goals, and, on
behalf of myself and the other members of your Fund's Board, let me say we look
forward to continuing to earn your trust in the months and years ahead.
Sincerely,
/s/ Robert P. Bremner
Robert P. Bremner
Chairman of the Board
September 19, 2008
Portfolio Manager's COMMENTS
Nuveen Investments Municipal Closed-End Funds | NUM, NMP, NZW, NUO,
NXI, NBJ, NVJ
Portfolio manager Daniel Close reviews economic and municipal market conditions
at both the national and state levels, key investment strategies, and the annual
performance of the Nuveen Michigan and Ohio Funds. Dan, who joined Nuveen in
2000, assumed portfolio management responsibility for these seven Funds in March
2007.
WHAT FACTORS AFFECTED THE U.S. ECONOMIC AND MUNICIPAL MARKET ENVIRONMENTS DURING
THE TWELVE-MONTH REPORTING PERIOD ENDED JULY 31, 2008?
During this period, developments in the credit markets led to increased price
volatility and tightening liquidity, causing a general flight to quality. In
September 2007, the Federal Reserve (Fed) responded to credit market volatility
by launching a series of interest rate cuts that lowered the fed funds rate by
325 basis points--from 5.25% to 2.00%--in eight months, including reductions of
125 basis points in January 2008 alone. Since April 2008, the Fed has left the
fed funds rate unchanged.
The Fed's rate-cutting actions also were a response to signs of slower growth in
the U.S. economy, as evidenced by changes in the U.S. gross domestic product
(GDP), a closely watched measure of economic performance. Although GDP expanded
at 4.8% in the third quarter of 2007, this measure fell into negative territory
(-0.2%) in the fourth quarter of 2007 before climbing 0.9% in the first quarter
of 2008 (all GDP numbers annualized). During the second quarter of 2008, GDP
grew at an annual rate of 3.3%, boosted by a surge in exports but still
reflecting a 16% decline in residential investment. The economy continued to be
strained by the troubled housing market as well as higher inflation. Driven
largely by increased energy, transportation and food prices, the Consumer Price
Index (CPI) registered a 5.6% year-over-year gain as of July 2008, including
July's 0.8%, the biggest one-month jump in 17 years. The core CPI (which
excludes food and energy prices) rose 2.5% between August 2007 and July 2008,
well above the Fed's unofficial target of 2.0% or lower. In the labor markets,
January 2008 marked the first decline in new job creation since 2003, breaking
the longest string of employment growth (52 months) in U.S. history. The
national unemployment rate for July 2008 was 5.7%, its highest level since March
2004, up from 4.7% in July 2007.
In the municipal bond market, factors related to the sub-prime mortgage crisis
had an indirect, but important, influence on performance. General concerns about
the credit markets as well as more specific concerns about municipal bond
insurers with exposure to sub-prime mortgages caused some investors to curtail
purchases. In addition, hedge funds and other non-traditional buyers of
municipal bonds began to
Discussions of specific investments are for illustrative purposes only and are
not intended as recommendations of individual investments. The views expressed
in this commentary represent those of the portfolio manager as of the date of
this report and are subject to change at any time, based on market conditions
and other factors. The Funds disclaim any obligation to advise shareholders of
such changes.
4
sell holdings of longer-maturity bonds into a market already experiencing a lack
of liquidity. Combined with the Fed rate cuts, this selling produced a sharp
steepening of the municipal yield curve, as longer-term interest rates rose and
short-term interest rates declined. Between August 1, 2007, and July 31, 2008,
the yield on the Bond Buyer 25 Revenue Bond Index, a widely followed measure of
longer-term municipal market rates, rose 57 basis points to 5.20%. By
comparison, the yield on the 10-year U.S. Treasury note dropped almost 80 basis
points to end the reporting period at 3.98%. In this environment, bonds with
shorter maturities generally outperformed longer-maturity bonds, and higher
quality bonds tended to outperform lower quality credits.
Also of note in the municipal market, the U.S. Supreme Court in May 2008 ruled
that individual states could continue to offer their residents special tax
treatment on municipal bonds issued within their borders. The high court's
decision in Department of Revenue of the Commonwealth of Kentucky vs. Davis
preserved tax rules in forty-two states, allowing them to continue to exempt
from taxation the income their residents earn on in-state municipal bonds while
taxing the income earned on municipal bonds issued in other states.
Over the twelve months ended July 2008, municipal bond issuance nationwide
totaled $461.9 billion, a decrease of less than 1% from the previous twelve
months. As of July 31, 2008, insured bonds comprised 23% of new supply, compared
with the recent historical figure of approximately 50%. Despite disruptions in
the markets, new municipal issuance continued to be met with solid demand by
institutional and retail investors as well as non-traditional buyers returning
to the market over the last few months.
HOW WERE THE ECONOMIC AND MARKET ENVIRONMENTS IN MICHIGAN AND OHIO DURING THIS
PERIOD?
Michigan, which has one of the weakest state economies in the nation, continued
to face serious challenges. In 2007, the state saw its economy contract, posting
negative growth of -1.2%, compared with the national average of 2.0%. This
ranked Michigan 49th in the nation in terms of GDP by state, ahead of only
Delaware. The weakness of the state's GDP was mainly due to declines in
construction, finance, and real estate. According to the Standard & Poor's (S&P)
Case-Shiller home price index of 20 major metropolitan areas, housing prices in
Detroit fell 16.3% between July 2007 and June 2008. This compared with an
average decline of 15.4% nationwide. Michigan also continued to rely heavily on
the manufacturing sector, which has lost thousands of jobs in recent years,
especially in the beleaguered auto industry. However, job growth in the
education, health care, and leisure and hospitality industries appeared more
promising. In July 2008, Michigan's jobless rate was 8.5%, the highest state
unemployment rate in the nation and the highest level for the state in almost 16
years, up from 7.1% a year ago. As of July 2008, Moody's, S&P, and Fitch rated
Michigan general obligation debt at Aa3, AA-, and A+, respectively. During the
twelve months ended July 31, 2008, municipal issuance in Michigan totaled $11.4
billion, an increase of 9% from the
5
previous twelve months. According to Moody's medians, which compare the 50
states, Michigan ranked 7th in terms of gross tax-supported debt (with $21.9
billion outstanding) and 26th in debt per capita.
With GDP growth of 0.4%, Ohio fell into the bottom quintile of economic growth
by state in 2007, ranking 42nd. Like Michigan, Ohio's heavy dependence on the
manufacturing sector, particularly the declining auto industry, impacted both
economic and job growth in the state. Employment in Ohio remained less
diversified than that of the nation as a whole, with manufacturing accounting
for 15% of jobs, compared with the national average of 10%. Gains in education,
health care, and leisure and hospitality employment helped to offset some of the
manufacturing job losses. As of July 2008, Ohio's unemployment rate was 7.2%,
the highest since 1992, up from 5.6% in July 2007. Although mortgage
delinquencies and foreclosures have risen, Ohio's housing market has been more
stable than that in some other parts of the country. In June 2008, the
S&P/Case-Shiller home price index reported that housing prices in Cleveland had
fallen 7.3% since July 2007, compared with an average decline of 15.4%
nationwide. As of July 2008, Moody's, S&P, and Fitch rated Ohio general
obligation debt at Aa1, AA+, and AA+, respectively. S&P listed the outlook for
Ohio as stable, while Moody's maintained a negative outlook, citing the weak
Ohio economy as well as recent tax restructuring. For the twelve months ended
July 31, 2008, municipal issuance in Ohio reached $17.9 billion, an increase of
31% over the previous twelve months. According to Moody's, Ohio ranks 15th in
the nation in terms of gross tax-supported debt (with $11.1 billion outstanding)
and 21st in terms of tax-supported debt per capita.
WHAT KEY STRATEGIES WERE USED TO MANAGE THE MICHIGAN AND OHIO FUNDS DURING THIS
REPORTING PERIOD?
During this twelve-month period, as the municipal market was characterized by
volatility and a steepening yield curve, we sought to capitalize on the
turbulent environment by continuing to focus on relative value, using a
fundamental approach to find undervalued sectors and individual credits with the
potential to perform well over the long term.
Among the issues we added to the Michigan and Ohio Funds were health care bonds,
including some uninsured, lower-rated hospital credits. As periodic dislocations
in the municipal market provided attractive opportunities to selectively invest
in lower-quality, higher-yielding bonds, we used the resources of our research
team to find those health care bonds that we believed represented the best
values. All of the Ohio Funds also participated in the $5.5 billion Buckeye
Tobacco Settlement Financing Authority offering in October 2007. The Michigan
Funds also purchased tobacco bonds.
6
In addition, we purchased a number of higher-quality water and sewer bonds and
general obligation (GO) issues in both states. In Michigan, the GOs centered on
school districts that we considered good underlying credits, mainly in the
central and western areas of Michigan, as we continued to deemphasize issuers in
the Detroit area. NUM and NZW also added a tax appropriation issue. In the Ohio
Funds, we purchased an electric utility offering and several AAA rated housing
credits backed by the Government National Mortgage Association (GNMA).
The Funds also added exposure to the short end of the yield curve by purchasing
small positions in auction rate bonds. Because of their extremely short
durations, auction rate securities traditionally have been far more popular with
money market fund managers than with municipal bond fund managers. However,
demand for these issues evaporated when the credit markets became relatively
illiquid, and their yields rose to unprecedented levels. As a result, we saw an
opportunity to buy these bonds at attractive yields.
To generate cash for purchases, we selectively sold holdings with shorter
durations(1), including shorter-dated pre-refunded(2) bonds. Selling shorter
duration bonds and reinvesting further out on the yield curve also helped to
improve the Funds' overall call protection profiles. We also took advantage of
strong bids to sell bonds that were attractive to the retail market. In
addition, some of our new purchases were funded with proceeds from bond calls.
The Ohio Funds also found opportunities to sell holdings that were purchased
when yields were lower and replace them with similar, newer credits that yielded
comparatively more. This process allowed us to maintain the Funds' current
portfolio characteristics while strengthening their future income streams.
As part of our disciplined approach to duration management, we used inverse
floating rate securities(3), a type of derivative financial instrument, in all
of the Michigan and Ohio Funds. Inverse floaters typically provide the dual
benefit of bringing the Funds' durations closer to our strategic target and
enhancing their income-generation capabilities. During this period, we found it
advantageous to terminate some of the inverse floating rate securities in each
of these Funds, although all of the Funds continued to use inverse floaters as
of July 31, 2008.
NMP, NUO, NXI, NBJ and NVJ also used additional types of derivative financial
instruments to help us manage their common share net asset value (NAV)
volatility without having a negative impact on their income streams or common
share dividends over the short term and to lengthen duration.
(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) Advance refundings, also known as pre-refundings or refinancings, occur
when an issuer sells new bonds and uses the proceeds to fund principal and
interest payments of older existing bonds. This process often results in
lower borrowing costs for bond issuers.
(3) An inverse floating rate security is a financial instrument designed to pay
long-term tax-exempt interest at a rate that varies inversely with a
short-term tax-exempt interest rate index. For the Nuveen Funds, the index
typically used is the Securities Industry and Financial Markets (SIFM)
Municipal Swap Index (previously referred to as the Bond Market Association
Index or BMA). Inverse floaters, including those inverse floating rate
securities in which the Funds invested during the reporting period, are
further defined within the Notes to Financial Statements and Glossary of
Terms Used in This Report 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.
Total Returns on Common Share Net Asset Value*
For periods ended 7/31/08
Michigan Funds 1-Year 5-Year 10-Year
NUM -0.43% 4.63% 5.09%
NMP -0.36% 4.47% 5.08%
NZW -1.95% 4.84% N/A
Lipper Michigan
Municipal Debt Funds
Average(4) -2.32% 4.46% 5.09%
Lehman Brothers
Municipal
Bond Index(5) 2.83% 4.34% 4.91%
Ohio Funds
NUO -0.26% 4.34% 4.90%
NXI 0.83% 5.25% N/A
NBJ -0.51% 5.01% N/A
NVJ 0.95% 5.33% N/A
Lipper Other States
Municipal Debt Funds
Average(6) -1.16% 4.76% 4.92%
Lehman Brothers
Municipal
Bond Index(5) 2.83% 4.34% 4.91%
For the twelve months ended July 31, 2008, the total returns on common share NAV
for all three of the Michigan Funds as well as the four Ohio Funds exceeded the
average returns for the Lipper Michigan peer group and the Lipper Other States
peer group, respectively. At the same time, the Funds underperformed the return
on the national Lehman Brothers Municipal Bond Index. Shareholders should note
the Lipper Other States Municipal Debt Funds Average and the Lehman Brothers
Municipal Bond Index include bonds from states not covered in this report, which
may make direct comparisons between the funds and these benchmarks less
meaningful.
One of the factors impacting the performance of these Funds relative to that of
the unleveraged Lehman Brothers Municipal Bond Index was the use of financial
leverage. While leverage offers opportunities for additional income and total
returns for common shareholders, the benefits provided by leveraging are
influenced by the general price movements of the bonds in each Fund's portfolio.
During this period, as the yields on
*Annualized.
Past performance is not
predictive of future results. Current performance may be higher or lower than
the data shown. Returns do not reflect the deduction of taxes that shareholders
may have to pay on Fund distributions or upon the sale of Fund shares.
For additional information, see the individual Performance Overview for your
Fund in this report.
(4) The Lipper Michigan Municipal Debt Funds Average is calculated using the
returns of all closed-end funds in this category for each period as
follows: 1 year, 7; 5 years, 7; and 10 years, 4. Fund and Lipper returns
assume reinvestment of dividends.
(5) The Lehman Brothers Municipal Bond Index is an unleveraged, unmanaged
national index comprising a broad range of investment-grade municipal
bonds. Results for the Lehman index do not reflect any expenses.
(6) The Lipper Other State Municipal Debt Funds Average is calculated using the
returns of all closed-end funds in this category for each period as
follows: 1 year, 46; 5 years, 46; and 10 years, 18. Fund and Lipper returns
assume reinvestment of dividends. Shareholders of the Ohio Funds should
note that the performance of the Lipper Other States category represents
the overall average of returns for funds from ten different states with a
wide variety of municipal market conditions, making direct comparisons less
meaningful.
8
longer-term bonds rose and their prices correspondingly fell, declining
valuations had a negative effect on performance that was magnified by the use of
leverage. In addition, the Funds' borrowing costs remained relatively high,
negatively impacting their common share total returns. In the turbulent market
environment of the past twelve months, the impact of any valuation change in the
Funds' holdings - whether positive or negative - was magnified by the use of
leverage.
Other key factors that influenced the Funds' returns included yield curve and
duration positioning, the use of derivatives, credit exposure and sector
allocations and holdings of bonds backed by lower-rated municipal bond insurers.
Given the changes in the interest rate environment, bonds in the Lehman Brothers
Municipal Bond Index with maturities of less than ten years, especially those
maturing in approximately three to five years, benefited the most. As a result,
these bonds generally outperformed credits with longer maturities, with bonds
having the longest maturities (twenty-two years and longer) posting the worst
returns. Overall, the duration positioning of the four Ohio Funds was a net
positive for performance during this period. Although the Funds were
underexposed to the outperforming shorter maturity categories, this was
generally offset by their heavier allocations to the intermediate part of the
yield curve, which performed relatively well, and lower weightings in the
underperforming long part of the curve. Among the Michigan Funds, the duration
story for NMP was generally the same as that for the four Ohio Funds. However,
both NUM and especially NZW had less exposure to intermediate maturity bonds
than NMP, which hurt their performances.
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 generally underperformed those with shorter durations, the use
of these derivatives had a positive impact on the return performance of these
five Funds, especially NXI and NVJ, which had established larger derivative
positions. This positive impact was attributable to the fact that the
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 very well.
On the other hand, the inverse floaters used by the Michigan and Ohio Funds
generally 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. All of the inverse floaters benefited these Funds by helping to support
their income streams.
Because risk-averse investors generally sought higher quality investments as the
disruptions in the financial and housing markets deepened, bonds rated BBB or
below
9
typically posted poor returns. As of July 31, 2008, 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 12% to the lower credit quality
categories and non-rated bonds. Among the Ohio Funds, exposures to the
lower-rated bonds ranged from approximately 9% and 8% in NUO and NVJ,
respectively, to 11% in NXI and 16% in NBJ.
In general, bonds that carried any credit risk, regardless of sector, tended to
perform poorly. Revenue bonds as a whole, and especially the industrial
development and health care sectors that had ranked among the top performers in
the Lehman Brothers Municipal Bond Index over the past few years, underperformed
the general municipal market. Next to the industrial development revenue 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 housing sector also performed poorly, as did
lower-rated bonds backed by the 1998 master tobacco settlement agreement, which
comprised less than 1% of the Michigan Funds' portfolios and approximately 3% of
the Ohio Funds as of July 31, 2008.
Sectors of the market that generally made positive contributions to the Funds'
performances included general obligation bonds, water and sewer, electric
utilities and special tax issues. Pre-refunded bonds also performed
exceptionally well, due primarily to their shorter effective maturities and
higher credit quality. Among these Funds, NUM, NXI, and NVJ held the heaviest
weightings of advance refunded bonds. Some of the Funds also continued to see
positive contributions from pre-refunding activity, which benefited them through
price appreciation and enhanced credit quality.
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, AMBAC, FGIC,
MBIA, RAAI and 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 on "negative outlook" or "negative
credit watch", which may presage one or more rating reductions for such insurer
or insurers in the future. As concern 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. However, 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, and it is important to note that municipal
bonds historically have had a very low rate of default.
10
RECENT DEVELOPMENTS IN THE AUCTION RATE PREFERRED SECURITIES (ARPS) MARKETS
Beginning in February 2008, more shares for sale were submitted in the regularly
scheduled auctions for the 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 auction preferred shareholders who wanted to sell their shares in
these auctions were unable to do so. This decline in liquidity in auction
preferred shares did not lower the credit quality of these shares, and auction
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 preferred shares. At the time this
report was prepared, the Funds' managers could not predict when future auctions
might succeed in attracting sufficient buyers for the shares offered, if ever.
The Funds' managers are working diligently to refund the auction preferred
shares, and have made progress in these efforts, but at present there is no
assurance that these efforts will succeed. These developments generally do not
affect the management or investment policies of these 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.
On June 11, 2008, Nuveen announced the Fund Board's approval of plans to use
tender option bonds (TOBs), also known as floating rate securities, to refinance
a portion of the municipal funds' outstanding ARPS, whose auctions have been
failing for several months, including an initial phase of approximately $1
billion in forty-one funds. On June 26, 2008, thirteen municipal funds (none of
which are included in this shareholder report) issued par redemption notices for
a portion of their auction-rate securities aggregating approximately $580
million.
On August 7, 2008, four municipal funds (none of which are included in this
shareholder report) issued par redemption notices for all outstanding shares of
their ARPS totaling $569.9 million. These redemptions were achieved through the
issuance of Variable Rate Demand Preferred shares (VRDP) in conjunction with the
proceeds from the creation of TOBs.
For current, up-to-date information, please visit the Nuveen CEF Auction Rate
Preferred Resource Center at:
http://www.nuveen.com/ResourceCenter/AuctionRatePreferred.aspx.
11
Common Share
Dividend and Share Price
INFORMATION
As previously noted, all of the Funds in this report use leverage to potentially
enhance opportunities for additional income for common shareholders. While this
strategy continued to provide incremental income, the extent of this benefit was
reduced to some degree by the borrowing costs associated with leverage, which
remained relatively high. The Funds' income streams were also impacted as the
proceeds from older, higher-yielding bonds that matured or were called were
reinvested into bonds currently available in the market, which generally offered
lower yields than the maturing or called bonds. These factors resulted in one
monthly dividend reduction in each of the Michigan and Ohio Funds over the
twelve-month period ended July 31, 2008.
Due to normal portfolio activity, common shareholders of the following Funds
received capital gains and net ordinary income distributions at the end of
December 2007 as follows:
Short-Term Capital Gains
Long-Term Capital Gains and/or Ordinary Income
(per share) (per share)
NUM $0.0987 $0.0043
NMP $0.0729 $0.0012
NZW $0.0727 --
NUO $0.0666 $0.0008
NXI $0.0942 --
NBJ $0.0585 $0.0008
NVJ $0.0613 --
12
All of the Funds in this report seek to pay stable dividends at rates that
reflect each Fund's past results and projected future performance. During
certain periods, each Fund may pay dividends at a rate that may be more or less
than the amount of net investment income actually earned by the Fund during the
period. If a Fund has cumulatively earned more than it has paid in dividends, it
holds the excess in reserve as undistributed net investment income (UNII) as
part of the Fund's NAV. Conversely, if a Fund has cumulatively paid dividends in
excess of its earnings, the excess constitutes negative UNII that is likewise
reflected in the Fund's NAV. Each Fund will, over time, pay all of its net
investment income as dividends to shareholders. As of July 31, 2008, all of the
Michigan and Ohio Funds in this report had positive UNII balances for tax
purposes. NUO, NXI and NVJ had positive UNII balances while all of the Michigan
Funds and NBJ had negative UNII balances for financial statement purposes.
COMMON SHARE REPURCHASES AND SHARE PRICE INFORMATION
On July 30, 2008, the Board of Directors/Trustees for each of Nuveen's 120
closed-end funds approved a program, under which each fund may repurchase up to
10% of its common shares. No common shares were repurchased during the
twelve-month reporting period.
As of July 31, 2008, the Funds' common share prices were trading at discounts to
their common share NAVs as shown in the accompanying chart:
7/31/08 Twelve-Month Average
Discount Discount
NUM -12.81% -10.07%
NMP -10.74% -9.88%
NZW -4.24% -5.61%
NUO -10.90% -9.93%
NXI -10.39% -8.64%
NBJ -10.81% -8.60%
NVJ -9.91% -6.88%
13
NUM
Performance
OVERVIEW
Nuveen Michigan
Quality Income
Municipal Fund, Inc.
as of July 31, 2008
Pie Chart:
Credit Quality (as a % of total investments)(1)
AAA/U.S. Guaranteed 42%
AA 46%
A 6%
BBB 4%
BB or Lower 1%
N/R 1%
Bar Chart:
2007-2008 Monthly Tax-Free Dividends Per Common Share(3)
Aug 0.059
Sep 0.059
Oct 0.0555
Nov 0.0555
Dec 0.0555
Jan 0.0555
Feb 0.0555
Mar 0.0555
Apr 0.0555
May 0.0555
Jun 0.0555
Jul 0.0555
Line Chart:
Common Share Price Performance -- Weekly Closing Price
8/01/07 14.03
14.11
13.88
13.4
13.66
13.799
14.4
14.132
13.7
13.8
13.5875
13.5
13.57
13.49
13.32
13.05
12.64
12.76
12.95
13.24
12.76
12.8
12.89
13.46
13.55
13.4
13.53
13.66
13.65
13.02
12.88
12.45
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
12.6
12.75
12.61
12.62
12.3601
7/31/08 12.32
FUND SNAPSHOT
- ------------------------------------
Common Share Price $12.32
- ------------------------------------
Common Share
Net Asset Value $14.13
- ------------------------------------
Premium/(Discount) to NAV -12.81%
- ------------------------------------
Market Yield 5.41%
- ------------------------------------
Taxable-Equivalent Yield(2) 7.85%
- ------------------------------------
Net Assets Applicable to
Common Shares ($000) $165,525
- ------------------------------------
Average Effective
Maturity on Securities (Years) 14.32
- ------------------------------------
Leverage-Adjusted Duration 10.49
- ------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 10/17/91)
- ------------------------------------
ON SHARE PRICE ON NAV
- ------------------------------------
1-Year -7.77% -0.43%
- ------------------------------------
5-Year 1.55% 4.63%
- ------------------------------------
10-Year 2.86% 5.09%
- ------------------------------------
INDUSTRIES
(as a % of total investments)
- ------------------------------------
Tax Obligation/General 35.7%
- ------------------------------------
U.S. Guaranteed 23.1%
- ------------------------------------
Tax Obligation/Limited 11.2%
- ------------------------------------
Utilities 9.9%
- ------------------------------------
Water and Sewer 6.4%
- ------------------------------------
Health Care 6.3%
- ------------------------------------
Other 7.4%
- ------------------------------------
(1) The percentages shown in the foregoing chart may reflect the ratings on
certain bonds insured by AMBAC, FGIC, MBIA, RAAI and XLCA as of July 31,
2008. 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 capital gains and net ordinary income
distributions in December 2007 of $0.1030 per share.
14
NMP
Performance
OVERVIEW
Nuveen Michigan Premium
Income Municipal
Fund, Inc.
as of July 31, 2008
Pie Chart:
Credit Quality (as a % of total investments)(1)
AAA/U.S. Guaranteed 31%
AA 44%
A 18%
BBB 4%
BB or Lower 2%
N/R 1%
Bar Chart:
2007-2008 Monthly Tax-Free Dividends Per Common Share(4)
Aug 0.058
Sep 0.055
Oct 0.055
Nov 0.055
Dec 0.055
Jan 0.055
Feb 0.055
Mar 0.055
Apr 0.055
May 0.055
Jun 0.055
Jul 0.055
Line Chart:
Common Share Price Performance -- Weekly Closing Price
8/01/07 13.88
13.75
13.34
13.3
13.4
13.5
13.87
13.75
13.57
13.61
13.61
13.6
13.54
13.4
13.19
12.9
12.49
12.51
12.75
12.94
12.73
12.6
12.72
13.36
13.3999
13.239
13.39
13.349
13.39
12.7601
12.68
12.42
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
12.62
12.63
12.7
12.58
12.21
7/31/08 12.38
FUND SNAPSHOT
- ------------------------------------
Common Share Price $12.38
- ------------------------------------
Common Share
Net Asset Value $13.87
- ------------------------------------
Premium/(Discount) to NAV -10.74%
- ------------------------------------
Market Yield 5.33%
- ------------------------------------
Taxable-Equivalent Yield(2) 7.74%
- ------------------------------------
Net Assets Applicable to
Common Shares ($000) $107,488
- ------------------------------------
Average Effective
Maturity on Securities (Years) 15.65
- ------------------------------------
Leverage-Adjusted Duration 10.22
- ------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 12/17/92)
- ------------------------------------
ON SHARE PRICE ON NAV
- ------------------------------------
1-Year -5.09% -0.36%
- ------------------------------------
5-Year 2.82% 4.47%
- ------------------------------------
10-Year 4.32% 5.08%
- ------------------------------------
INDUSTRIES
(as a % of total investments)(3)
- ------------------------------------
Tax Obligation/General 35.1%
- ------------------------------------
Tax Obligation/Limited 14.8%
- ------------------------------------
U.S. Guaranteed 14.6%
- ------------------------------------
Water and Sewer 11.5%
- ------------------------------------
Utilities 11.1%
- ------------------------------------
Other 12.9%
- ------------------------------------
(1) The percentages shown in the foregoing chart may reflect the ratings on
certain bonds insured by AMBAC, FGIC, MBIA, RAAI and XLCA as of July 31,
2008. 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) Excluding derivative transactions.
(4) The Fund paid shareholders capital gains and net ordinary income
distributions in December 2007 of $0.0741 per share.
15
NZW
Performance
OVERVIEW
Nuveen Michigan
Dividend Advantage
Municipal Fund
as of July 31, 2008
Pie Chart:
Credit Quality (as a % of total investments)(1)
AAA/U.S. Guaranteed 40%
AA 33%
A 15%
BBB 4%
BB or Lower 2%
N/R 6%
Bar Chart:
2007-2008 Monthly Tax-Free Dividends Per Common Share(3)
Aug 0.0615
Sep 0.0585
Oct 0.0585
Nov 0.0585
Dec 0.0585
Jan 0.0585
Feb 0.0585
Mar 0.0585
Apr 0.0585
May 0.0585
Jun 0.0585
Jul 0.0585
Line Chart:
Common Share Price Performance -- Weekly Closing Price
8/01/07 15.1
15.01
15.15
15.15
15.19
15.15
14.74
14.41
14.01
14.14
14
14.09
13.76
13.87
13.66
13.327
12.98
13.01
13.2
13.44
13.36
13
12.99
13.71
13.68
13.76
13.8
13.61
13.94
13.5
12.99
12.48
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
12.98
13.21
13.4
13.8
13.462
7/31/08 13.0999
FUND SNAPSHOT
- ------------------------------------
Common Share Price $13.10
- ------------------------------------
Common Share
Net Asset Value $13.68
- ------------------------------------
Premium/(Discount) to NAV -4.24%
- ------------------------------------
Market Yield 5.36%
- ------------------------------------
Taxable-Equivalent Yield(2) 7.78%
- ------------------------------------
Net Assets Applicable to
Common Shares ($000) $28,285
- ------------------------------------
Average Effective
Maturity on Securities (Years) 17.00
- ------------------------------------
Leverage-Adjusted Duration 10.88
- ------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 9/25/01)
- ------------------------------------
ON SHARE PRICE ON NAV
- ------------------------------------
1-Year -8.10% -1.95%
- ------------------------------------
5-Year 2.81% 4.84%
- ------------------------------------
Since
Inception 3.66% 5.03%
- ------------------------------------
INDUSTRIES
(as a % of total investments)
- ------------------------------------
Tax Obligation/General 29.4%
- ------------------------------------
U.S. Guaranteed 14.8%
- ------------------------------------
Utilities 11.9%
- ------------------------------------
Water and Sewer 11.4%
- ------------------------------------
Health Care 11.2%
- ------------------------------------
Tax Obligation/Limited 10.6%
- ------------------------------------
Other 10.7%
- ------------------------------------
(1) The percentages shown in the foregoing chart may reflect the ratings on
certain bonds insured by AMBAC, FGIC, MBIA, RAAI and XLCA as of July 31,
2008. 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 2007 of
$0.0727 per share.
16
NUO
Performance
OVERVIEW
Nuveen Ohio
Quality Income
Municipal Fund, Inc.
as of July 31, 2008
Pie Chart:
Credit Quality (as a % of total investments)(1)
AAA/U.S. Guaranteed 39%
AA 37%
A 15%
BBB 5%
N/R 4%
Bar Chart:
2007-2008 Monthly Tax-Free Dividends Per Common Share(4)
Aug 0.0595
Sep 0.0595
Oct 0.055
Nov 0.055
Dec 0.055
Jan 0.055
Feb 0.055
Mar 0.055
Apr 0.055
May 0.055
Jun 0.055
Jul 0.055
Line Chart:
Common Share Price Performance -- Weekly Closing Price
8/01/07 14.5
14.57
14.43
14.14
14.65
14.54
14.76
14.68
14.56
14.4
14.44
14.27
14.27
14.24
14.22
13.79
13.73
13.63
13.79
14.1
13.62
13.48
13.64
14.34
14.43
14.3534
14.464
14.61
14.7
13.88
13.82
13.71
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
13.53
13.6901
13.58
13.43
13.41
7/31/08 13.4
FUND SNAPSHOT
- ------------------------------------
Common Share Price $13.40
- ------------------------------------
Common Share
Net Asset Value $15.04
- ------------------------------------
Premium/(Discount) to NAV -10.90%
- ------------------------------------
Market Yield 4.93%
- ------------------------------------
Taxable-Equivalent Yield(2) 7.26%
- ------------------------------------
Net Assets Applicable to
Common Shares ($000) $146,617
- ------------------------------------
Average Effective
Maturity on Securities (Years) 15.11
- ------------------------------------
Leverage-Adjusted Duration 9.43
- ------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 10/17/91)
- ------------------------------------
ON SHARE PRICE ON NAV
- ------------------------------------
1-Year -2.18% -0.26%
- ------------------------------------
5-Year 0.88% 4.34%
- ------------------------------------
10-Year 2.70% 4.90%
- ------------------------------------
INDUSTRIES
(as a % of total investments)(3)
- ------------------------------------
Tax Obligation/General 26.2%
- ------------------------------------
U.S. Guaranteed 20.9%
- ------------------------------------
Health Care 11.4%
- ------------------------------------
Education and Civic
Organizations 10.1%
- ------------------------------------
Tax Obligation/Limited 8.3%
- ------------------------------------
Utilities 6.4%
- ------------------------------------
Housing/Multifamily 4.9%
- ------------------------------------
Other 11.8%
- ------------------------------------
(1) The percentages shown in the foregoing chart may reflect the ratings on
certain bonds insured by AMBAC, FGIC, MBIA, RAAI and XLCA as of July 31,
2008. 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 32.1%. When comparing this Fund to investments that generate
qualified dividend income, the Taxable-Equivalent Yield is lower.
(3) Excluding derivative transactions.
(4) The Fund paid shareholders capital gains and net ordinary income
distributions in December 2007 of $0.0674 per share.
17
NXI
Performance
OVERVIEW
Nuveen Ohio
Dividend Advantage
Municipal Fund
as of July 31, 2008
Pie Chart:
Credit Quality (as a % of total investments)(1)
AAA/U.S. Guaranteed 49%
AA 31%
A 9%
BBB 7%
BB or Lower 1%
N/R 3%
Bar Chart:
2007-2008 Monthly Tax-Free Dividends Per Common Share(4)
Aug 0.057
Sep 0.057
Oct 0.054
Nov 0.054
Dec 0.054
Jan 0.054
Feb 0.054
Mar 0.054
Apr 0.054
May 0.054
Jun 0.054
Jul 0.054
Line Chart:
Common Share Price Performance -- Weekly Closing Price
8/01/07 14.2
14.352
13.88
13.43
13.714
13.78
14.19
14.2701
13.78
14
13.73
13.74
13.66
13.75
13.7
13.39
12.93
12.922
13.21
13.55
12.9901
12.9
13.18
13.66
13.72
13.55
13.82
13.76
13.85
13.26
13.544
13.14
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
13
12.98
12.99
12.76
12.84
7/31/08 12.77
FUND SNAPSHOT
- ------------------------------------
Common Share Price $12.77
- ------------------------------------
Common Share
Net Asset Value $14.25
- ------------------------------------
Premium/(Discount) to NAV -10.39%
- ------------------------------------
Market Yield 5.07%
- ------------------------------------
Taxable-Equivalent Yield(2) 7.47%
- ------------------------------------
Net Assets Applicable to
Common Shares ($000) $60,475
- ------------------------------------
Average Effective
Maturity on Securities (Years) 14.20
- ------------------------------------
Leverage-Adjusted Duration 8.95
- ------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 3/27/01)
- ------------------------------------
ON SHARE PRICE ON NAV
- ------------------------------------
1-Year -6.21% 0.83%
- ------------------------------------
5-Year 3.50% 5.25%
- ------------------------------------
Since
Inception 3.49% 5.80%
- ------------------------------------
INDUSTRIES
(as a % of total investments)(3)
- ------------------------------------
U.S. Guaranteed 31.0%
- ------------------------------------
Tax Obligation/General 18.0%
- ------------------------------------
Tax Obligation/Limited 9.3%
- ------------------------------------
Utilities 7.7%
- ------------------------------------
Health Care 7.5%
- ------------------------------------
Education and Civic
Organizations 7.4%
- ------------------------------------
Housing/Multifamily 5.2%
- ------------------------------------
Other 13.9%
- ------------------------------------
(1) The percentages shown in the foregoing chart may reflect the ratings on
certain bonds insured by AMBAC, FGIC, MBIA, RAAI and XLCA as of July 31,
2008. 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 32.1%. When comparing this Fund to investments that generate
qualified dividend income, the Taxable-Equivalent Yield is lower.
(3) Excluding derivative transactions.
(4) The Fund paid shareholders a capital gains distribution in December 2007 of
$0.0942 per share.
18
NBJ
Performance
OVERVIEW
Nuveen Ohio
Dividend Advantage
Municipal Fund 2
as of July 31, 2008
Pie Chart:
Credit Quality (as a % of total investments)(1)
AAA/U.S. Guaranteed 32%
AA 36%
A 16%
BBB 11%
BB or Lower 1%
N/R 4%
Bar Chart:
2007-2008 Monthly Tax-Free Dividends Per Common Share(4)
Aug 0.0565
Sep 0.0565
Oct 0.053
Nov 0.053
Dec 0.053
Jan 0.053
Feb 0.053
Mar 0.053
Apr 0.053
May 0.053
Jun 0.053
Jul 0.053
Line Chart:
Common Share Price Performance -- Weekly Closing Price
8/01/07 13.5
13.75
13.54
13.11
13.3
13.38
13.99
13.63
13.6
13.39
13.42
13.8
13.56
13.36
13.4
13.25
12.55
12.65
13.25
13.21
12.69
12.51
12.72
13.3
13.42
13.78
13.4
13.6
13.66
12.89
13
12.95
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
12.61
12.6
12.61
12.47
12.3699
7/31/08 12.37
FUND SNAPSHOT
- ------------------------------------
Common Share Price $12.37
- ------------------------------------
Common Share
Net Asset Value $13.87
- ------------------------------------
Premium/(Discount) to NAV -10.81%
- ------------------------------------
Market Yield 5.14%
- ------------------------------------
Taxable-Equivalent Yield(2) 7.57%
- ------------------------------------
Net Assets Applicable to
Common Shares ($000) $43,286
- ------------------------------------
Average Effective
Maturity on Securities (Years) 15.98
- ------------------------------------
Leverage-Adjusted Duration 9.92
- ------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 9/25/01)
- ------------------------------------
ON SHARE PRICE ON NAV
- ------------------------------------
1-Year -5.46% -0.51%
- ------------------------------------
5-Year 2.76% 5.01%
- ------------------------------------
Since
Inception 2.76% 5.16%
- ------------------------------------
INDUSTRIES
(as a % of total investments)(3)
- ------------------------------------
Tax Obligation/General 27.5%
- ------------------------------------
U.S. Guaranteed 15.8%
- ------------------------------------
Health Care 14.9%
- ------------------------------------
Tax Obligation/Limited 11.3%
- ------------------------------------
Utilities 7.9%
- ------------------------------------
Education and Civic
Organizations 7.8%
- ------------------------------------
Industrials 5.8%
- ------------------------------------
Other 9.0%
- ------------------------------------
(1) The percentages shown in the foregoing chart may reflect the ratings on
certain bonds insured by AMBAC, FGIC, MBIA, RAAI and XLCA as of July 31,
2008. 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 32.1%. When comparing this Fund to investments that generate
qualified dividend income, the Taxable-Equivalent Yield is lower.
(3) Excluding derivative transactions.
(4) The Fund paid shareholders capital gains and net ordinary income
distributions in December 2007 of $0.0593 per share.
19
NVJ
Performance
OVERVIEW
Nuveen Ohio
Dividend Advantage
Municipal Fund 3
as of July 31, 2008
Pie Chart:
Credit Quality (as a % of total investments)(1)
AAA/U.S. Guaranteed 55%
AA 22%
A 15%
BBB 5%
BB or Lower 1%
N/R 2%
Bar Chart:
2007-2008 Monthly Tax-Free Dividends Per Common Share(4)
Aug 0.0595
Sep 0.0595
Oct 0.0555
Nov 0.0555
Dec 0.0555
Jan 0.0555
Feb 0.0555
Mar 0.0555
Apr 0.0555
May 0.0555
Jun 0.0555
Jul 0.0555
Line Chart:
Common Share Price Performance -- Weekly Closing Price
8/01/07 14.45
14.55
14.34
14
13.8433
14.35
14.45
14.29
14.1
14.16
14.15
14.03
14.06
13.93
14
13.88
13.5
13.7
13.45
13.76
13.6
13.1999
13.4
13.9
14.12
14.23
14.13
14.4
14.42
13.85
13.7
13.5
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
13.35
13.2499
13.18
12.9
12.83
7/31/08 12.91
FUND SNAPSHOT
- ------------------------------------
Common Share Price $12.91
- ------------------------------------
Common Share
Net Asset Value $14.33
- ------------------------------------
Premium/(Discount) to NAV -9.91%
- ------------------------------------
Market Yield 5.16%
- ------------------------------------
Taxable-Equivalent Yield(2) 7.60%
- ------------------------------------
Net Assets Applicable to
Common Shares ($000) $30,941
- ------------------------------------
Average Effective
Maturity on Securities (Years) 12.87
- ------------------------------------
Leverage-Adjusted Duration 10.10
- ------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 3/25/02)
- ------------------------------------
ON SHARE PRICE ON NAV
- ------------------------------------
1-Year -5.13% 0.95%
- ------------------------------------
5-Year 3.37% 5.33%
- ------------------------------------
Since
Inception 3.21% 5.60%
- ------------------------------------
INDUSTRIES
(as a % of total investments)(3)
- ------------------------------------
U.S. Guaranteed 32.2%
- ------------------------------------
Tax Obligation/General 20.8%
- ------------------------------------
Tax Obligation/Limited 14.1%
- ------------------------------------
Health Care 8.6%
- ------------------------------------
Utilities 5.2%
- ------------------------------------
Education and Civic
Organizations 4.2%
- ------------------------------------
Other 14.9%
- ------------------------------------
(1) The percentages shown in the foregoing chart may reflect the ratings on
certain bonds insured by AMBAC, FGIC, MBIA, RAAI and XLCA as of July 31,
2008. 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 32.1%. When comparing this Fund to investments that generate
qualified dividend income, the Taxable-Equivalent Yield is lower.
(3) Excluding derivative transactions.
(4) The Fund paid shareholders a capital gains distribution in December 2007 of
$0.0613 per share.
20
Report of
INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
THE BOARDS OF DIRECTORS/TRUSTEES AND SHAREHOLDERS
NUVEEN MICHIGAN QUALITY INCOME MUNICIPAL FUND, INC.
NUVEEN MICHIGAN PREMIUM INCOME MUNICIPAL FUND, INC.
NUVEEN MICHIGAN DIVIDEND ADVANTAGE MUNICIPAL FUND
NUVEEN OHIO QUALITY INCOME MUNICIPAL FUND, INC.
NUVEEN OHIO DIVIDEND ADVANTAGE MUNICIPAL FUND
NUVEEN OHIO DIVIDEND ADVANTAGE MUNICIPAL FUND 2
NUVEEN OHIO DIVIDEND ADVANTAGE MUNICIPAL FUND 3
We have audited the accompanying statements of assets and liabilities, including
the portfolios of investments, of Nuveen Michigan Quality Income Municipal Fund,
Inc., Nuveen Michigan Premium Income Municipal Fund, Inc., Nuveen Michigan
Dividend Advantage Municipal Fund, Nuveen Ohio Quality Income Municipal Fund,
Inc., Nuveen Ohio Dividend Advantage Municipal Fund, Nuveen Ohio Dividend
Advantage Municipal Fund 2 and Nuveen Ohio Dividend Advantage Municipal Fund 3
(the "Funds"), as of July 31, 2008, and the related statements of operations for
the year then ended, the statements of changes in net assets for each of the two
years in the period then ended, and the financial highlights for each of the
five years in the period then ended. These financial statements and financial
highlights are the responsibility of the Funds' management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. We were
not engaged to perform an audit of the Funds' internal control over financial
reporting. Our audits included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Funds' internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall
financial statement presentation. Our procedures included confirmation of
securities owned as of July 31, 2008, by correspondence with the custodian and
brokers or by other appropriate auditing procedures where replies from brokers
were not received. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial positions of
Nuveen Michigan Quality Income Municipal Fund, Inc., Nuveen Michigan Premium
Income Municipal Fund, Inc., Nuveen Michigan Dividend Advantage Municipal Fund,
Nuveen Ohio Quality Income Municipal Fund, Inc., Nuveen Ohio Dividend Advantage
Municipal Fund, Nuveen Ohio Dividend Advantage Municipal Fund 2 and Nuveen Ohio
Dividend Advantage Municipal Fund 3 at July 31, 2008, the results of their
operations for the year then ended, the changes in their net assets for each of
the two years in the period then ended, and the financial highlights for each of
the five years in the period then ended in conformity with U.S. generally
accepted accounting principles.
/s/ Ernst & Young LLP
Chicago, Illinois
September 22, 2008
21
NUM
Nuveen Michigan Quality Income Municipal Fund, Inc.
Portfolio of INVESTMENTS
July 31, 2008
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES - 0.9% (0.6% OF TOTAL INVESTMENTS)
$ 1,500 Michigan Tobacco Settlement Finance Authority, Tobacco Settlement 6/18 at 100.00 N/R $ 1,421,985
Asset-Backed Revenue Bonds, Series 2008A, 6.875%, 6/01/42
- ------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 6.3% (4.1% OF TOTAL INVESTMENTS)
700 Chandler Park Academy, Michigan, Public School Academy Charter 11/15 at 100.00 BBB 578,914
School Revenue Bonds, Series 2005, 5.125%, 11/01/35
1,685 Michigan Higher Education Facilities Authority, Limited Obligation 9/11 at 100.00 Aa3 1,789,066
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 AA 1,519,770
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 910,700
Series 2002 XVII-G, 5.200%, 9/01/20 - AMBAC Insured
(Alternative Minimum Tax)
1,115 Michigan Technological University, General Revenue Bonds, 10/13 at 100.00 AA 1,142,964
Series 2004A, 5.000%, 10/01/22 - MBIA Insured
Wayne State University, Michigan, General Revenue Bonds,
Series 1999:
3,430 5.250%, 11/15/19 - FGIC Insured 11/09 at 101.00 AA- 3,563,050
1,000 5.125%, 11/15/29 - FGIC Insured 11/09 at 101.00 AA- 1,006,030
- ------------------------------------------------------------------------------------------------------------------------------------
10,430 Total Education and Civic Organizations 10,510,494
- ------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE - 9.7% (6.3% OF TOTAL INVESTMENTS)
2,900 Michigan Hospital Financing Authority, Revenue Bonds, Oakwood 7/17 at 100.00 A 2,528,858
Obligated Group, Series 2007A, 5.000%, 7/15/37
2,700 Michigan State Hospital Finance Authority, Hospital Revenue Bonds, 8/08 at 101.00 BB- 2,283,417
Detroit Medical Center Obligated Group, Series 1998A,
5.250%, 8/15/28
1,000 Michigan State Hospital Finance Authority, Hospital Revenue 11/09 at 101.00 BBB+ 1,012,090
Refunding 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 881,152
500 5.000%, 5/15/37 5/15 at 100.00 BBB 410,665
1,500 Michigan State Hospital Finance Authority, Revenue Bonds, 5/15 at 100.00 Baa3 1,317,810
Marquette General Hospital, Series 2005A, 5.000%, 5/15/26
5,500 Royal Oak Hospital Finance Authority, Michigan, Hospital Revenue 11/11 at 100.00 AA 5,511,053
Bonds, William Beaumont Hospital, Series 2001M,
5.250%, 11/15/31 - MBIA Insured
2,195 University of Michigan, Medical Service Plan Revenue Bonds, No Opt. Call AA+ 2,058,383
Series 1991, 0.000%, 12/01/10
- ------------------------------------------------------------------------------------------------------------------------------------
17,320 Total Health Care 16,003,428
- ------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 2.3% (1.5% OF TOTAL INVESTMENTS)
2,675 Michigan Housing Development Authority, FNMA Limited Obligation 12/20 at 101.00 AAA 2,523,167
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 4/09 at 101.00 AA 193,014
Bonds, Series 1999A, 5.300%, 10/01/37 - MBIA Insured
(Alternative Minimum Tax)
22
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY (continued)
$ 1,300 Michigan Housing Development Authority, Rental Housing Revenue 7/15 at 100.00 AAA $ 1,165,580
Bonds, Series 2006D, 5.125%, 4/01/31 - FSA Insured
(Alternative Minimum Tax)
- ------------------------------------------------------------------------------------------------------------------------------------
4,190 Total Housing/Multifamily 3,881,761
- ------------------------------------------------------------------------------------------------------------------------------------
LONG-TERM CARE - 0.6% (0.4% OF TOTAL INVESTMENTS)
1,000 Michigan State Hospital Finance Authority, Revenue Bonds, 5/15 at 100.00 N/R 848,190
Presbyterian Villages of Michigan Obligated Group, Series 2005,
5.250%, 11/15/25
200 Michigan Strategic Fund, Limited Obligation Revenue Refunding 7/09 at 100.00 BBB 183,402
Bonds, Porter Hills Presbyterian Village, Series 1998,
5.375%, 7/01/28
- ------------------------------------------------------------------------------------------------------------------------------------
1,200 Total Long-Term Care 1,031,592
- ------------------------------------------------------------------------------------------------------------------------------------
MATERIALS - 0.7% (0.4% OF TOTAL INVESTMENTS)
1,250 Dickinson County Economic Development Corporation, Michigan, 11/14 at 100.00 BBB 1,120,425
Pollution Control Revenue Bonds, International Paper Company,
Series 2004A, 4.800%, 11/01/18
- ------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 55.0% (35.7% OF TOTAL INVESTMENTS)
1,000 Anchor Bay School District, Macomb and St. Clair Counties, 5/12 at 100.00 AA- 1,015,630
Michigan, General Obligation Refunding Bonds, Series 2002,
5.000%, 5/01/25
Anchor Bay School District, Macomb and St. Clair Counties,
Michigan, Unlimited Tax General Obligation Refunding Bonds,
Series 2001:
2,500 5.000%, 5/01/21 5/11 at 100.00 AA- 2,553,500
3,200 5.000%, 5/01/29 5/11 at 100.00 AA- 3,211,968
1,320 Bridgeport Spaulding Community School District, Saginaw County, 5/12 at 100.00 AA- 1,426,748
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- 2,227,801
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 1,015,370
Michigan, General Obligation Bonds, Series 2005, 5.000%, 5/01/25 -
MBIA Insured
1,054 Caledonia Community Schools, Kent, Allegan and Barry Counties, 5/17 at 100.00 AA 840,755
Michigan, General Obligation Bonds, Tender Option Bond
Trust 2008-1096, 8.326%, 5/01/32 - MBIA Insured (IF)
2,000 Detroit City School District, Wayne County, Michigan, General No Opt. Call AA- 2,274,720
Obligation Bonds, Series 2002A, 6.000%, 5/01/19 - FGIC Insured
1,195 Detroit, Michigan, General Obligation Bonds, Series 2004A-1, 4/14 at 100.00 AA 1,187,352
5.250%, 4/01/24 - AMBAC Insured
Grand Rapids and Kent County Joint Building Authority, Michigan,
Limited Tax General Obligation Bonds, Devos Place Project,
Series 2001:
8,900 0.000%, 12/01/25 No Opt. Call AAA 3,667,868
3,000 0.000%, 12/01/26 No Opt. Call AAA 1,164,270
5,305 0.000%, 12/01/29 No Opt. Call AAA 1,730,756
1,700 Grand Rapids, Michigan, General Obligation Bonds, Series 2007, 9/17 at 100.00 AA 1,728,475
5.000%, 9/01/27 - MBIA Insured
1,400 Howell Public Schools, Livingston County, Michigan, General 11/13 at 100.00 AA- 1,441,216
Obligation Bonds, Series 2003, 5.000%, 5/01/21
1,065 Jackson Public Schools, Jackson County, Michigan, General 5/14 at 100.00 AAA 1,094,362
Obligation School Building and Site Bonds, Series 2004,
5.000%, 5/01/22 - FSA Insured
1,935 Kalamazoo Public Schools, Michigan, General Obligation Bonds, 5/16 at 100.00 AAA 1,983,569
Series 2006, 5.000%, 5/01/25 - FSA Insured
2,505 Lincoln Consolidated School District, Washtenaw and Wayne 5/16 at 100.00 AA 2,548,286
Counties, Michigan, General Obligation Bonds, Series 2006,
5.000%, 5/01/25 - MBIA Insured
2,810 Livonia Public Schools, Wayne County, Michigan, General 5/14 at 100.00 AA 2,902,561
Obligation 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 862,319
Obligation Bonds, Series 2007, 5.000%, 5/01/37 - FSA Insured
23
NUM
Nuveen Michigan Quality Income Municipal Fund, Inc. (continued)
Portfolio of INVESTMENTS July 31, 2008
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL (continued)
$ 1,500 Marshall Public Schools, Calhoun County, Michigan, General 5/17 at 100.00 AA- $ 1,495,935
Obligation Bonds, Series 2007, 5.000%, 5/01/30 - XLCA Insured
2,100 Michigan Municipal Bond Authority, General Obligation Bonds, 6/15 at 100.00 AAA 2,202,333
Detroit City School District, Series 2005, 5.000%, 6/01/18 -
FSA Insured
4,000 Michigan, General Obligation Bonds, Environmental Protection 5/13 at 100.00 AA- 4,230,600
Program, Series 2003A, 5.250%, 5/01/20
2,500 Montrose School District, Michigan, School Building and Site No Opt. Call AA 2,847,225
Bonds, Series 1997, 6.000%, 5/01/22 - MBIA Insured
1,100 Muskegon County, Michigan, Limited Tax General Obligation 7/11 at 100.00 AA- 1,108,558
Wastewater Management System 2 Revenue Bonds, Series 2002,
5.000%, 7/01/26 - FGIC Insured
1,000 Oakland County Building Authority, Michigan, General Obligation 9/11 at 100.00 AAA 1,037,880
Bonds, Series 2002, 5.125%, 9/01/22
2,250 Oakland Intermediate School District, Oakland County, Michigan, 5/17 at 100.00 AAA 2,256,165
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 1,649,310
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 4,418,072
1,120 5.000%, 8/01/30 - MBIA Insured 8/17 at 100.00 Aa1 1,125,645
785 Parchment School District, Kalamazoo County, Michigan, General 5/17 at 100.00 AAA 627,058
Obligation Bonds, Tender Option Bond Trust 2836,
10.116%, 5/01/36 - FSA Insured (IF)
4,340 Plymouth-Canton Community School District, Wayne and 5/14 at 100.00 AA- 4,380,666
Washtenaw Counties, Michigan, General Obligation Bonds,
Series 2004, 5.000%, 5/01/26 - FGIC Insured
4,200 Puerto Rico, General Obligation and Public Improvement Bonds, No Opt. Call AA 4,327,638
Series 2001A, 5.500%, 7/01/20 - MBIA Insured
1,000 Rockford Public Schools, Kent County, Michigan, General 5/18 at 100.00 AAA 1,001,450
Obligation Bonds, Series 2008, 5.000%, 5/01/33 - FSA Insured
3,175 South Redford School District, Wayne County, Michigan, 5/15 at 100.00 AA 3,178,366
General Obligation Bonds, School Building and Site, Series 2005,
5.000%, 5/01/30 - MBIA Insured
1,655 Southfield Library Building Authority, Michigan, General 5/15 at 100.00 AA+ 1,681,397
Obligation Bonds, Series 2005, 5.000%, 5/01/26 - MBIA Insured
2,200 Thornapple Kellogg School District, Barry County, Michigan, 5/17 at 100.00 AA 2,187,724
General Obligation Bonds, Series 2007, 5.000%, 5/01/32 -
MBIA Insured
2,000 Trenton Public Schools District, Michigan, General Obligation 5/18 at 100.00 AAA 1,999,840
Bonds, Series 2008, 5.000%, 5/01/34 - FSA Insured
2,275 Troy City School District, Oakland County, Michigan, General 5/16 at 100.00 AA 2,387,590
Obligation Bonds, Series 2006, 5.000%, 5/01/19 - MBIA Insured
1,575 Van Dyke Public Schools, Macomb County, Michigan, General 5/18 at 100.00 AAA 1,570,039
Obligation Bonds, School Building and Site, Series 2008,
5.000%, 5/01/38 - FSA Insured
5,000 Wayne County, Michigan, Limited Tax General Obligation Airport 12/11 at 101.00 AA 5,062,150
Hotel Revenue Bonds, Detroit Metropolitan Wayne County Airport,
Series 2001A, 5.000%, 12/01/21 - MBIA Insured
3,350 Wayne Westland Community Schools, Michigan, General Obligation 11/14 at 100.00 AAA 3,556,662
Bonds, Series 2004, 5.000%, 5/01/17 - FSA Insured
1,725 Williamston Community School District, Michigan, Unlimited Tax No Opt. Call AA 1,892,705
General Obligation QSBLF Bonds, Series 1996,
5.500%, 5/01/25 - MBIA Insured
- ------------------------------------------------------------------------------------------------------------------------------------
99,639 Total Tax Obligation/General 91,102,534
- ------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 17.3% (11.2% OF TOTAL INVESTMENTS)
1,000 Grand Rapids Building Authority, Kent County, Michigan, Limited No Opt. Call AA 1,085,000
Tax General Obligation Bonds, Series 1998, 5.000%, 4/01/16
24
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED (continued)
$ 1,345 Grand Rapids Building Authority, Kent County, Michigan, Limited 10/11 at 100.00 AA $ 1,364,395
Tax 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 2,345,490
6,200 0.000%, 10/15/28 - FGIC Insured 10/16 at 55.35 AAA 1,944,444
4,440 5.000%, 10/15/36 - FGIC Insured 10/16 at 100.00 A+ 4,283,579
40 Michigan Municipal Bond Authority, Local Government Loan 11/08 at 100.00 Aa3 40,144
Program Revenue Sharing Bonds, Series 1992D, 6.650%, 5/01/12
2,135 Michigan State Building Authority, Revenue Bonds, Facilities 10/15 at 100.00 AA 2,101,758
Program, Series 2005II, 5.000%, 10/15/33 - AMBAC Insured
Michigan State Building Authority, Revenue Refunding Bonds,
Facilities Program, Series 2003II:
5,100 5.000%, 10/15/22 - MBIA Insured 10/13 at 100.00 AA 5,228,724
5,000 5.000%, 10/15/23 - MBIA Insured 10/13 at 100.00 AA 5,112,200
3,500 Michigan State Trunk Line, Fund Refunding Bonds, Series 2002, 10/12 at 100.00 AAA 3,687,075
5.250%, 10/01/21 - FSA Insured
5,500 Puerto Rico Infrastructure Financing Authority, Special Tax No Opt. Call BBB+ 1,348,820
Revenue Bonds, Series 2005A, 0.000%, 7/01/32 - FGIC Insured
- ------------------------------------------------------------------------------------------------------------------------------------
41,260 Total Tax Obligation/Limited 28,541,629
- ------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 0.6% (0.4% OF TOTAL INVESTMENTS)
1,000 Capital Region Airport Authority, Michigan, Revenue Refunding 7/12 at 100.00 AA 972,100
Bonds, Series 2002, 5.250%, 7/01/21 - MBIA Insured
(Alternative Minimum Tax)
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 35.7% (23.1% OF TOTAL INVESTMENTS) (4)
2,190 Anchor Bay School District, Macomb and St. Clair Counties, 5/09 at 100.00 AA- (4) 2,261,898
Michigan, 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, 10/12 at 100.50 AAA 1,302,276
5.000%, 10/01/20 (Pre-refunded 10/01/12)
935 Detroit, Michigan, Senior Lien Sewerage Disposal System Revenue 7/13 at 100.00 AAA 1,015,634
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) 3,711,814
770 5.250%, 7/01/33 (Pre-refunded 7/01/11) - FGIC Insured 7/11 at 100.00 A+ (4) 822,799
730 5.250%, 7/01/33 (Pre-refunded 7/01/11) - FGIC Insured 7/11 at 100.00 A+ (4) 782,604
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) 4,372,116
1,500 5.000%, 7/01/25 (Pre-refunded 7/01/13) - MBIA Insured 7/13 at 100.00 AA (4) 1,629,360
1,000 Detroit, Michigan, Sewerage Disposal System Revenue Bonds, 1/10 at 101.00 Aaa 1,062,330
Series 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) 1,141,181
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, 5/12 at 100.00 AA- (4) 2,149,460
General 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) 1,942,508
Series 2003A, 5.000%, 6/01/26 (Pre-refunded 6/01/13) -
MBIA Insured
3,880 Mayville Community Schools, Tuscola County, Michigan, 11/14 at 100.00 AA- (4) 4,246,815
General Obligation Bonds, School Building and Site Project,
Series 2004, 5.000%, 5/01/34 (Pre-refunded 11/01/14) -
FGIC Insured
250 Michigan South Central Power Agency, Power Supply System No Opt. Call A3 (4) 270,600
Revenue Bonds, Series 2000, 6.000%, 5/01/12 (ETM)
Michigan State Hospital Finance Authority, Hospital Revenue
Bonds, Ascension Health Credit Group, Series 1999A:
1,000 6.125%, 11/15/23 (Pre-refunded 11/15/09) - MBIA Insured 11/09 at 101.00 AAA 1,056,800
500 6.125%, 11/15/26 (Pre-refunded 11/15/09) 11/09 at 101.00 AAA 528,400
25
NUM
Nuveen Michigan Quality Income Municipal Fund, Inc. (continued)
Portfolio of INVESTMENTS July 31, 2008
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED (4) (continued)
$ 5,000 Michigan State Hospital Finance Authority, Hospital Revenue Bonds, 11/09 at 101.00 A1 (4) $ 5,276,100
Henry Ford Health System, Series 1999A, 6.000%, 11/15/24
(Pre-refunded 11/15/09)
1,500 Michigan State Hospital Finance Authority, Hospital Revenue 3/13 at 100.00 A1 (4) 1,648,650
Refunding 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) 3,514,205
500 5.750%, 5/15/29 (Pre-refunded 5/15/09) - MBIA Insured 5/09 at 101.00 AA (4) 519,085
1,000 Michigan State Hospital Finance Authority, Hospital Revenue 11/09 at 101.00 A (4) 1,056,800
Refunding Bonds, OSF Healthcare System, Series 1999,
6.125%, 11/15/19 (Pre-refunded 11/15/09)
3,460 Michigan State Hospital Finance Authority, Hospital Revenue 9/08 at 101.00 Aaa 3,479,722
Refunding Bonds, St. John's Health System, Series 1998A,
5.000%, 5/15/28 - AMBAC Insured (ETM)
1,000 Michigan State Trunk Line, Fund Bonds, Series 2001A, 11/11 at 100.00 AAA 1,070,450
5.000%, 11/01/25 (Pre-refunded 11/01/11) - FSA Insured
2,000 Michigan, Certificates of Participation, Series 2000, 6/10 at 100.00 AA (4) 2,116,600
5.500%, 6/01/27 (Pre-refunded 6/01/10) - AMBAC Insured
700 Muskegon Heights, Muskegon County, Michigan, Water Supply 11/10 at 100.00 A2 (4) 750,421
System 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 7/10 at 101.00 BBB+ (4) 1,210,376
Revenue Bonds, Series 2000B, 6.000%, 7/01/39
(Pre-refunded 7/01/10)
Puerto Rico Public Finance Corporation, Commonwealth
Appropriation Bonds, Series 2002E:
85 6.000%, 8/01/26 (ETM) No Opt. Call BBB- (4) 97,258
915 6.000%, 8/01/26 (ETM) No Opt. Call AAA 1,046,952
4,100 Puerto Rico, Highway Revenue Bonds, Highway and 7/16 at 100.00 Aaa 4,679,330
Transportation Authority, Series 1996Y, 5.500%, 7/01/36
(Pre-refunded 7/01/16)
1,000 Rochester Community School District, Oakland and Macomb 5/10 at 100.00 AA- (4) 1,060,310
Counties, Michigan, General Obligation Bonds, Series 2000I,
5.750%, 5/01/19 (Pre-refunded 5/01/10) - FGIC Insured
2,100 Romulus Community Schools, Wayne County, Michigan, 5/09 at 100.00 AA- (4) 2,165,058
Unlimited Tax General Obligation School Building and Site Bonds,
Series 1999, 5.750%, 5/01/25 (Pre-refunded 5/01/09) -
FGIC Insured
1,050 Warren Consolidated School District, Macomb and Oakland 11/11 at 100.00 AAA 1,136,142
Counties, Michigan, General Obligation Bonds, Series 2001,
5.375%, 5/01/19 (Pre-refunded 11/01/11) - FSA Insured
- ------------------------------------------------------------------------------------------------------------------------------------
55,175 Total U.S. Guaranteed 59,124,054
- ------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 15.3% (9.9% OF TOTAL INVESTMENTS)
5,000 Lansing Board of Water and Light, Michigan, Steam and Electric 7/18 at 100.00 AA- 5,019,200
Utility System Revenue Bonds, Series 2008A, 5.000%, 7/01/32
3,000 Michigan Public Power Agency, Revenue Bonds, Combustion 1/12 at 100.00 AA 3,031,590
Turbine 1 Project, Series 2001A, 5.250%, 1/01/27 - AMBAC Insured
3,225 Michigan South Central Power Agency, Power Supply System No Opt. Call A3 3,361,160
Revenue Bonds, Series 2000, 6.000%, 5/01/12
1,000 Michigan Strategic Fund, Collateralized Limited Obligation 9/09 at 102.00 AA 906,600
Pollution Control Revenue Refunding Bonds, Detroit Edison
Company, Series 1999A, 5.550%, 9/01/29 - MBIA Insured
(Alternative Minimum Tax)
4,000 Michigan Strategic Fund, Collateralized Limited Obligation 9/11 at 100.00 A- 4,020,040
Pollution Control Revenue Refunding Bonds, Detroit Edison
Company, Series 2001C, 5.450%, 9/01/29
2,000 Michigan Strategic Fund, Limited Obligation Pollution Control No Opt. Call Aa3 2,031,200
Revenue Refunding Bonds, Detroit Edison Company,
Series 1995CC, 4.850%, 9/01/30 (Mandatory put 9/01/11) -
AMBAC Insured
3,630 Michigan Strategic Fund, Limited Obligation Revenue Refunding No Opt. Call AA 4,288,010
Bonds, Detroit Edison Company, Series 1991BB,
7.000%, 5/01/21 - AMBAC Insured
26
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
UTILITIES (continued)
$ 3,000 Michigan Strategic Fund, Limited Obligation Revenue Refunding 12/12 at 100.00 Baa1 $ 2,705,610
Bonds, Detroit Edison Company, Series 2002C, 5.450%, 12/15/32 -
XLCA Insured (Alternative Minimum Tax)
- ------------------------------------------------------------------------------------------------------------------------------------
24,855 Total Utilities 25,363,410
- ------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 9.9% (6.4% OF TOTAL INVESTMENTS)
5,500 Detroit Water Supply System, Michigan, Water Supply System 7/16 at 100.00 AAA 5,397,865
Revenue Bonds, Series 2006A, 5.000%, 7/01/34 - FSA Insured
1,500 Detroit, Michigan, Senior Lien Sewerage Disposal System Revenue No Opt. Call A 1,558,845
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 587,159
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 1,484,745
Series 2003A, 5.000%, 7/01/25 - MBIA Insured
675 Grand Rapids, Michigan, Sanitary Sewer System Revenue Bonds, 1/18 at 100.00 AA+ 677,484
Series 2008, 5.000%, 1/01/38 (WI/DD, Settling 8/06/08)
4,210 Michigan Municipal Bond Authority, Clean Water Revolving Fund 10/14 at 100.00 AAA 4,440,413
Revenue Bonds, Series 2004, 5.000%, 10/01/19
1,150 Michigan Municipal Bond Authority, Drinking Water Revolving Fund 10/14 at 100.00 AAA 1,188,732
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 1,044,030
Bonds, Series 2007, 5.000%, 10/01/24
- ------------------------------------------------------------------------------------------------------------------------------------
16,100 Total Water and Sewer 16,379,273
- ------------------------------------------------------------------------------------------------------------------------------------
$ 273,919 Total Investments (cost $253,402,970) - 154.3% 255,452,685
=============-----------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 2.5% 4,072,067
--------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (56.8)% (5) (94,000,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $165,524,752
====================================================================================================================
(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 AMBAC, FGIC, MBIA, RAAI and XLCA as
of July 31, 2008. 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 (36.8)%.
N/R Not rated.
WI/DD Purchased on a when-issued or delayed delivery basis.
(ETM) Escrowed to maturity.
(IF) Inverse floating rate investment.
See accompanying notes to financial statements.
27
NMP
Nuveen Michigan Premium Income Municipal Fund, Inc.
Portfolio of INVESTMENTS
July 31, 2008
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES - 0.6% (0.3% OF TOTAL INVESTMENTS)
$ 650 Michigan Tobacco Settlement Finance Authority, Tobacco 6/18 at 100.00 N/R $ 616,193
Settlement Asset-Backed Revenue Bonds, Series 2008A,
6.875%, 6/01/42
- ------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 5.3% (3.6% OF TOTAL INVESTMENTS)
440 Chandler Park Academy, Michigan, Public School Academy 11/15 at 100.00 BBB 363,889
Charter School Revenue Bonds, Series 2005, 5.125%, 11/01/35
2,000 Michigan Higher Education Student Loan Authority, Revenue 9/12 at 100.00 AA 1,821,400
Bonds, Series 2002 XVII-G, 5.200%, 9/01/20 - AMBAC Insured
(Alternative Minimum Tax)
3,500 Wayne State University, Michigan, General Revenue Bonds, 11/09 at 101.00 AA- 3,521,105
Series 1999, 5.125%, 11/15/29 - FGIC Insured
- ------------------------------------------------------------------------------------------------------------------------------------
5,940 Total Education and Civic Organizations 5,706,394
- ------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE - 5.1% (3.4% OF TOTAL INVESTMENTS)
1,800 Michigan Hospital Financing Authority, Revenue Bonds, Oakwood 7/17 at 100.00 A 1,569,636
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 378,318
150 5.000%, 5/15/30 5/15 at 100.00 BBB 128,949
1,005 Michigan State Hospital Finance Authority, Revenue Bonds, 5/15 at 100.00 Baa3 882,933
Marquette 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 8/08 at 100.00 BB- 2,001,340
500 6.500%, 8/15/18 8/08 at 100.00 BB- 500,110
- ------------------------------------------------------------------------------------------------------------------------------------
5,880 Total Health Care 5,461,286
- ------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 6.9% (4.7% OF TOTAL INVESTMENTS)
905 Michigan Housing Development Authority, GNMA Collateralized 4/12 at 102.00 Aaa 842,573
Limited Obligation Multifamily Housing Revenue Bonds, Burkshire
Pointe Apartments, Series 2002A, 5.400%, 10/20/32
(Alternative Minimum Tax)
1,500 Michigan Housing Development Authority, Limited Obligation 10/08 at 100.00 AAA 1,501,530
Revenue Bonds, Breton Village Green Project, Series 1993,
5.625%, 10/15/18 - FSA Insured
2,235 Michigan Housing Development Authority, Limited Obligation 10/08 at 100.00 AAA 2,280,214
Revenue Bonds, Walled Lake Villa Project, Series 1993,
6.000%, 4/15/18 - FSA Insured
800 Michigan Housing Development Authority, Rental Housing Revenue 7/15 at 100.00 AAA 717,280
Bonds, Series 2006D, 5.125%, 4/01/31 - FSA Insured
(Alternative Minimum Tax)
Mt. Clemens Housing Corporation, Michigan, FHA-Insured Section 8
Assisted Multifamily Housing Revenue Refunding Bonds, Clinton
Place Project, Series 1992A:
585 6.600%, 6/01/13 12/08 at 100.00 AAA 586,129
1,500 6.600%, 6/01/22 12/08 at 100.00 AAA 1,541,025
- ------------------------------------------------------------------------------------------------------------------------------------
7,525 Total Housing/Multifamily 7,468,751
- ------------------------------------------------------------------------------------------------------------------------------------
28
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
LONG-TERM CARE - 0.5% (0.3% OF TOTAL INVESTMENTS)
$ 665 Michigan State Hospital Finance Authority, Revenue Bonds, 5/15 at 100.00 N/R $ 564,046
Presbyterian Villages of Michigan Obligated Group, Series 2005,
5.250%, 11/15/25
- ------------------------------------------------------------------------------------------------------------------------------------
MATERIALS - 0.8% (0.6% OF TOTAL INVESTMENTS)
1,050 Dickinson County Economic Development Corporation, Michigan, 11/14 at 100.00 BBB 941,157
Pollution Control Revenue Bonds, International Paper Company,
Series 2004A, 4.800%, 11/01/18
- ------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 52.2% (35.1% OF TOTAL INVESTMENTS)
1,475 Anchor Bay School District, Macomb and St. Clair Counties, 11/13 at 100.00 AA- 1,518,424
Michigan, General Obligation Bonds, Series 2003,
5.000%, 5/01/21
2,500 Anchor Bay School District, Macomb and St. Clair Counties, 5/11 at 100.00 AA- 2,553,500
Michigan, Unlimited Tax General Obligation Refunding Bonds,
Series 2001, 5.000%, 5/01/21
2,250 Caledonia Community Schools, Kent, Allegan and Barry Counties, 5/15 at 100.00 AA 2,279,408
Michigan, General Obligation Bonds, Series 2005,
5.000%, 5/01/26 - MBIA Insured
682 Caledonia Community Schools, Kent, Allegan and Barry Counties, 5/17 at 100.00 AA 544,018
Michigan, General Obligation Bonds, Tender Option Bond
Trust 2008-1096, 8.326%, 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- 2,067,793
750 6.000%, 5/01/21 - FGIC Insured No Opt. Call AA- 854,033
2,500 Detroit City School District, Wayne County, Michigan, General 5/13 at 100.00 AA 2,515,550
Obligation Bonds, Series 2003B, 5.000%, 5/01/23 - FGIC Insured
2,665 Detroit, Michigan, General Obligation Bonds, Series 2004A-1, 4/14 at 100.00 AA 2,647,944
5.250%, 4/01/24 - AMBAC Insured
7,000 Detroit-Wayne County Stadium Authority, Michigan, Limited 8/08 at 101.00 A 6,806,310
Tax General Obligation Building Authority Stadium Bonds,
Series 1997, 5.250%, 2/01/27 - FGIC Insured
860 Grand Rapids, Michigan, General Obligation Bonds, Series 2007, 9/17 at 100.00 AA 884,630
5.000%, 9/01/24 - MBIA Insured
1,650 Holly Area School District, Oakland County, Michigan, General 5/16 at 100.00 AA 1,658,778
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- 2,056,520
Obligation Bonds, Series 2003, 5.000%, 5/01/22
1,250 Kalamazoo Public Schools, Michigan, General Obligation Bonds, 5/16 at 100.00 AAA 1,281,375
Series 2006, 5.000%, 5/01/25 - FSA Insured
500 Lansing School District, Ingham County, Michigan, General 5/14 at 100.00 AA- 515,320
Obligation Bonds, Series 2004, 5.000%, 5/01/22
1,000 Livonia Public Schools, Wayne County, Michigan, General 5/14 at 100.00 AA 1,032,940
Obligation Bonds, Series 2004A, 5.000%, 5/01/21 -
MBIA Insured
865 Lowell Area Schools, Counties of Ionia and Kent, Michigan, 5/17 at 100.00 AAA 862,319
General Obligation Bonds, Series 2007, 5.000%, 5/01/37 -
FSA Insured
425 Marshall Public Schools, Calhoun County, Michigan, General 5/17 at 100.00 AA- 423,848
Obligation Bonds, Series 2007, 5.000%, 5/01/30 -
XLCA Insured
1,000 Michigan Municipal Bond Authority, General Obligation Bonds, 6/15 at 100.00 AAA 1,048,730
Detroit City School District, Series 2005, 5.000%, 6/01/18 -
FSA Insured
Michigan, General Obligation Bonds, Environmental Protection
Program, Series 2003A:
1,000 5.250%, 5/01/20 5/13 at 100.00 AA- 1,057,650
2,000 5.250%, 5/01/21 5/13 at 100.00 AA- 2,104,660
1,450 Oakland Intermediate School District, Oakland County, 5/17 at 100.00 AAA 1,453,973
Michigan, General Obligation Bonds, Series 2007,
5.000%, 5/01/36 - FSA Insured
3,500 Ottawa County, Michigan, Water Supply System, General 8/17 at 100.00 Aa1 3,517,640
Obligation Bonds, Series 2007, 5.000%, 8/01/30 - MBIA Insured
1,100 Oxford Area Community Schools, Oakland and Lapeer Counties, 5/14 at 100.00 AAA 1,121,373
Michigan, General Obligation Bonds, Series 2004,
5.000%, 5/01/25 - FSA Insured
29
NMP
Nuveen Michigan Premium Income Municipal Fund, Inc. (continued)
Portfolio of INVESTMENTS July 31, 2008
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL (continued)
$ 510 Parchment School District, Kalamazoo County, Michigan, General 5/17 at 100.00 AAA $ 407,388
Obligation Bonds, Tender Option Bond Trust 2836,
10.116%, 5/01/36 - FSA Insured (IF)
1,000 Rockford Public Schools, Kent County, Michigan, General Obligation 5/15 at 100.00 AAA 1,014,220
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 1,001,450
Bonds, Series 2008, 5.000%, 5/01/33 - FSA Insured
1,100 Thornapple Kellogg School District, Barry County, Michigan, 5/17 at 100.00 AA 1,093,862
General Obligation Bonds, Series 2007, 5.000%, 5/01/32 -
MBIA Insured
1,500 Trenton Public Schools District, Michigan, General Obligation 5/18 at 100.00 AAA 1,499,880
Bonds, Series 2008, 5.000%, 5/01/34 - FSA Insured
1,350 Van Dyke Public Schools, Macomb County, Michigan, General 5/18 at 100.00 AAA 1,345,748
Obligation Bonds, School Building and Site, Series 2008,
5.000%, 5/01/38 - FSA Insured
2,830 Warren Consolidated School District, Macomb and Oakland 5/13 at 100.00 AA- 2,987,999
Counties, Michigan, General Obligation Refunding Bonds,
Series 2003, 5.250%, 5/01/20
Wayne County, Michigan, Limited Tax General Obligation Airport
Hotel Revenue Bonds, Detroit Metropolitan Wayne County Airport,
Series 2001A:
1,500 5.500%, 12/01/18 - MBIA Insured 12/11 at 101.00 AA 1,592,280
4,435 5.000%, 12/01/30 - MBIA Insured 12/11 at 101.00 AA 4,364,350
- ------------------------------------------------------------------------------------------------------------------------------------
55,462 Total Tax Obligation/General 56,113,913
- ------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 22.1% (14.8% OF TOTAL INVESTMENTS)
2,880 Michigan Building Authority, Revenue Bonds, Series 2006IA, 10/16 at 100.00 A+ 2,778,538
5.000%, 10/15/36 - FGIC Insured
Michigan State Building Authority, Revenue Bonds, Facilities
Program, Series 2001I:
2,570 5.500%, 10/15/19 10/11 at 100.00 A+ 2,720,833
6,500 5.000%, 10/15/24 10/11 at 100.00 A+ 6,582,030
1,600 Michigan State Building Authority, Revenue Bonds, Facilities 10/15 at 100.00 AA 1,572,496
Program, Series 2005II, 5.000%, 10/15/30 - AMBAC Insured
Michigan State Building Authority, Revenue Refunding Bonds,
Facilities Program, Series 2003II:
5,000 5.000%, 10/15/22 - MBIA Insured 10/13 at 100.00 AA 5,126,200
2,480 5.000%, 10/15/23 - MBIA Insured 10/13 at 100.00 AA 2,535,651
1,500 Michigan, Comprehensive Transportation Revenue Refunding 11/11 at 100.00 AAA 1,566,360
Bonds, Series 2001A, 5.000%, 11/01/19 - FSA Insured
3,500 Puerto Rico Infrastructure Financing Authority, Special Tax No Opt. Call BBB+ 858,340
Revenue Bonds, Series 2005A, 0.000%, 7/01/32 - FGIC Insured
- ------------------------------------------------------------------------------------------------------------------------------------
26,030 Total Tax Obligation/Limited 23,740,448
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 21.7% (14.6% OF TOTAL INVESTMENTS) (4)
915 Detroit, Michigan, Second Lien Sewerage Disposal System 7/15 at 100.00 AA (4) 1,004,826
Revenue Bonds, Series 2005A, 5.000%, 7/01/30
(Pre-refunded 7/01/15) - MBIA Insured
1,385 Detroit, Michigan, Senior Lien Water Supply System Revenue 7/11 at 100.00 A+ (4) 1,479,969
Bonds, Series 2001A, 5.250%, 7/01/33 (Pre-refunded 7/01/11) -
FGIC Insured
2,000 Detroit, Michigan, Sewerage Disposal System Revenue Bonds, 1/10 at 101.00 Aaa 2,124,660
Series 1999A, 5.875%, 7/01/27 (Pre-refunded 1/01/10) -
FGIC Insured
500 Lansing School District, Ingham County, Michigan, General 5/14 at 100.00 AA- (4) 544,845
Obligation Bonds, Series 2004, 5.000%, 5/01/22
(Pre-refunded 5/01/14)
75 Michigan South Central Power Agency, Power Supply System No Opt. Call A3 (4) 81,180
Revenue Bonds, Series 2000, 6.000%, 5/01/12 (ETM)
1,500 Michigan State Building Authority, Revenue Bonds, Facilities 10/10 at 100.00 A+ (4) 1,595,385
Program, Series 2000I, 5.375%, 10/15/20 (Pre-refunded 10/15/10)
2,500 Michigan State Hospital Finance Authority, Hospital Revenue 11/09 at 101.00 AAA 2,642,000
Bonds, Ascension Health Credit Group, Series 1999A,
6.125%, 11/15/26 (Pre-refunded 11/15/09)
30
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED (4) (continued)
$ 3,575 Michigan State Hospital Finance Authority, Hospital Revenue Bonds, 11/09 at 101.00 A1 (4) $ 3,772,412
Henry Ford Health System, Series 1999A, 6.000%, 11/15/24
(Pre-refunded 11/15/09)
1,500 Michigan State Hospital Finance Authority, Hospital Revenue 3/13 at 100.00 A1 (4) 1,648,650
Refunding Bonds, Henry Ford Health System, Series 2003A,
5.625%, 3/01/17 (Pre-refunded 3/01/13)
2,000 Michigan State Hospital Finance Authority, Hospital Revenue 5/09 at 101.00 AA (4) 2,076,340
Refunding Bonds, Mercy Mt. Clemens Corporation Obligated
Group, Series 1999A, 5.750%, 5/15/29 (Pre-refunded 5/15/09) -
MBIA Insured
500 Michigan State Hospital Finance Authority, Hospital Revenue 11/11 at 101.00 A+ (4) 546,395
Refunding Bonds, Sparrow Obligated Group, Series 2001,
5.625%, 11/15/31 (Pre-refunded 11/15/11)
3,000 Michigan State Hospital Finance Authority, Hospital Revenue 10/08 at 100.00 AA (4) 3,115,110
Refunding 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 1,089,690
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, 5/14 at 100.00 AA (4) 1,571,333
Michigan, General Obligation Bonds, Series 2004,
5.250%, 5/01/20 (Pre-refunded 5/01/14) - MBIA Insured
- ------------------------------------------------------------------------------------------------------------------------------------
21,875 Total U.S. Guaranteed 23,292,795
- ------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 16.5% (11.1% OF TOTAL INVESTMENTS)
2,500 Lansing Board of Water and Light, Michigan, Steam and 7/18 at 100.00 AA- 2,509,600
Electric Utility System Revenue Bonds, Series 2008A,
5.000%, 7/01/32
1,000 Michigan Public Power Agency, Revenue Bonds, Combustion 1/12 at 100.00 AA 1,010,530
Turbine 1 Project, Series 2001A, 5.250%, 1/01/27 -
AMBAC Insured
925 Michigan South Central Power Agency, Power Supply System No Opt. Call A3 964,054
Revenue Bonds, Series 2000, 6.000%, 5/01/12
1,000 Michigan Strategic Fund, Collateralized Limited Obligation 9/09 at 102.00 AA 906,600
Pollution Control Revenue Refunding Bonds, Detroit Edison
Company, Series 1999A, 5.550%, 9/01/29 - MBIA Insured
(Alternative Minimum Tax)
5,000 Michigan Strategic Fund, Collateralized Limited Obligation 9/11 at 100.00 A- 5,025,050
Pollution Control Revenue Refunding Bonds, Detroit Edison
Company, Series 2001C, 5.450%, 9/01/29
3,000 Michigan Strategic Fund, Limited Obligation Pollution Control No Opt. Call Aa3 3,046,800
Revenue Refunding Bonds, Detroit Edison Company, Series 1995CC,
4.850%, 9/01/30 (Mandatory put 9/01/11) - AMBAC Insured
3,000 Michigan Strategic Fund, Limited Obligation Revenue Refunding 12/12 at 100.00 Baa1 2,705,610
Bonds, Detroit Edison Company, Series 2002C, 5.450%, 12/15/32 -
XLCA Insured (Alternative Minimum Tax)
1,500 Wyandotte, Michigan, Electric Revenue Refunding Bonds, 10/08 at 101.00 AA 1,521,495
Series 2002, 5.375%, 10/01/17 - MBIA Insured
- ------------------------------------------------------------------------------------------------------------------------------------
17,925 Total Utilities 17,689,739
- ------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 17.1% (11.5% OF TOTAL INVESTMENTS)
3,500 Detroit Water Supply System, Michigan, Water Supply System 7/16 at 100.00 AAA 3,435,005
Revenue 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 1,047,144
Bonds, Series 2005A, 5.000%, 7/01/30 - MBIA Insured
1,500 Detroit, Michigan, Senior Lien Sewerage Disposal System Revenue No Opt. Call A 1,558,845
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 1,163,926
Bonds, Series 2003A, 5.000%, 7/01/17 - FSA Insured (5)
1,330 Grand Rapids, Michigan, Sanitary Sewer System Revenue Bonds, 7/15 at 100.00 AA+ 1,335,347
Series 2005, 5.000%, 1/01/30 - MBIA Insured
450 Grand Rapids, Michigan, Sanitary Sewer System Revenue Bonds, 1/18 at 100.00 AA+ 451,656
Series 2008, 5.000%, 1/01/38 (WI/DD, Settling 8/06/08)
31
NMP
Nuveen Michigan Premium Income Municipal Fund, Inc. (continued)
Portfolio of INVESTMENTS July 31, 2008
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER (continued)
$ 1,000 Michigan Municipal Bond Authority, Water Revolving Fund 10/17 at 100.00 AAA $ 1,044,030
Revenue Bonds, Series 2007, 5.000%, 10/01/24
8,460 North Kent Sewer Authority, Michigan, Sewer Revenue Bonds, 11/16 at 100.00 AA 8,356,280
Series 2006, 5.000%, 11/01/31 - MBIA Insured
- ------------------------------------------------------------------------------------------------------------------------------------
18,445 Total Water and Sewer 18,392,233
- ------------------------------------------------------------------------------------------------------------------------------------
$ 161,447 Total Investments (cost $160,398,948) - 148.8% 159,986,955
=============-----------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 3.3% 3,501,448
--------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (52.1)% (6) (56,000,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $107,488,403
====================================================================================================================
FORWARD SWAPS OUTSTANDING AT JULY 31, 2008:
FUND FIXED RATE UNREALIZED
NOTIONAL PAY/RECEIVE FLOATING RATE FIXED RATE PAYMENT EFFECTIVE TERMINATION APPRECIATION
COUNTERPARTY AMOUNT FLOATING RATE INDEX (ANNUALIZED) FREQUENCY DATE (7) DATE (DEPRECIATION)
- ------------------------------------------------------------------------------------------------------------------------------------
Royal Bank
of Canada $1,000,000 Pay SIFM 4.335% Quarterly 8/06/08 8/06/37 $71,362
====================================================================================================================================
SIFM - The daily arithmetic average of the weekly Securities Industry and
Financial Markets (SIFM) Municipal Swap Index, previously referred to as
the Bond Market Association or BMA.
FUTURES CONTRACTS OUTSTANDING AT JULY 31, 2008:
UNREALIZED
CONTRACT NUMBER OF CONTRACT VALUE AT APPRECIATION
TYPE POSITION CONTRACTS EXPIRATION JULY 31, 2008 (DEPRECIATION)
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Bond Long 5 9/08 $577,500 $13,813
====================================================================================================================================
(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 AMBAC, FGIC, MBIA, RAAI and XLCA as
of July 31, 2008. 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) Portion of investment, with an aggregate market value of
$15,588, has been pledged to collateralize the net payment
obligations under futures contracts.
(6) Preferred Shares, at Liquidation Value as a percentage of
total investments is (35.0)%.
(7) Effective date represents the date on which both the Fund
and counterparty commence interest payment accruals on each
forward swap contract.
N/R Not rated.
WI/DD Purchased on a when-issued or delayed delivery basis.
(ETM) Escrowed to maturity.
(IF) Inverse floating rate investment.
See accompanying notes to financial statements.
32
NZW
Nuveen Michigan Dividend Advantage Municipal Fund
Portfolio of INVESTMENTS
July 31, 2008
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES - 0.4% (0.2% OF TOTAL INVESTMENTS)
$ 100 Michigan Tobacco Settlement Finance Authority, Tobacco Settlement 6/18 at 100.00 N/R $ 94,799
Asset-Backed Revenue Bonds, Series 2008A, 6.875%, 6/01/42
- ------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 7.2% (4.7% OF TOTAL INVESTMENTS)
230 Chandler Park Academy, Michigan, Public School Academy 11/15 at 100.00 BBB 190,215
Charter 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 452,285
Participation, Series 2007, 5.450%, 11/01/22
1,150 Michigan Higher Education Facilities Authority, Limited 9/11 at 100.00 Aa3 1,154,186
Obligation 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 231,428
Revenue Bonds, American Montessori Academy, Series 2007,
6.500%, 12/01/37
- ------------------------------------------------------------------------------------------------------------------------------------
2,130 Total Education and Civic Organizations 2,028,114
- ------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE - 17.3% (11.2% OF TOTAL INVESTMENTS)
500 Allegan Hospital Finance Authority, Michigan, Revenue Bonds, 11/09 at 101.00 N/R 514,935
Allegan 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 354,960
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 523,212
Obligated Group, Series 2007A, 5.000%, 7/15/37
700 Michigan State Hospital Finance Authority, Hospital Revenue 1/09 at 100.00 Ba3 699,902
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 365,356
335 5.000%, 5/15/37 5/15 at 100.00 BBB 275,146
400 Michigan State Hospital Finance Authority, Revenue Bonds, 5/15 at 100.00 Baa3 351,416
Marquette General Hospital, Series 2005A, 5.000%, 5/15/26
1,800 Royal Oak Hospital Finance Authority, Michigan, Hospital Revenue 11/11 at 100.00 AA 1,803,618
Bonds, William Beaumont Hospital, Series 2001M,
5.250%, 11/15/31 - MBIA Insured
- ------------------------------------------------------------------------------------------------------------------------------------
5,260 Total Health Care 4,888,545
- ------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 6.2% (4.1% OF TOTAL INVESTMENTS)
1,700 Michigan Housing Development Authority, GNMA Collateralized 8/12 at 102.00 Aaa 1,586,678
Limited Obligation Multifamily Housing Revenue Bonds,
Cranbrook Apartments, Series 2001A, 5.400%, 2/20/31
(Alternative Minimum Tax)
200 Michigan Housing Development Authority, Rental Housing Revenue 7/15 at 100.00 AAA 179,320
Bonds, Series 2006D, 5.125%, 4/01/31 - FSA Insured
(Alternative Minimum Tax)
- ------------------------------------------------------------------------------------------------------------------------------------
1,900 Total Housing/Multifamily 1,765,998
- ------------------------------------------------------------------------------------------------------------------------------------
INDUSTRIALS - 1.6% (1.0% OF TOTAL INVESTMENTS)
500 Michigan Strategic Fund, Limited Obligation Revenue Bonds, No Opt. Call BBB+ 455,645
Republic Services Inc., Series 2001, 4.250%, 8/01/31
(Mandatory put 4/01/14) (Alternative Minimum Tax)
- ------------------------------------------------------------------------------------------------------------------------------------
33
NZW
Nuveen Michigan Dividend Advantage Municipal Fund (continued)
Portfolio of INVESTMENTS July 31, 2008
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
LONG-TERM CARE - 1.0% (0.7% OF TOTAL INVESTMENTS)
$ 335 Michigan State Hospital Finance Authority, Revenue Bonds, 5/15 at 100.00 N/R $ 284,144
Presbyterian Villages of Michigan Obligated Group, Series 2005,
5.250%, 11/15/25
- ------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 45.3% (29.4% OF TOTAL INVESTMENTS)
199 Caledonia Community Schools, Kent, Allegan and Barry Counties, 5/17 at 100.00 AA 158,738
Michigan, General Obligation Bonds, Tender Option Bond
Trust 2008-1096, 8.326%, 5/01/32 - MBIA Insured (IF)
300 Grand Rapids, Michigan, General Obligation Bonds, Series 2007, 9/17 at 100.00 AA 305,025
5.000%, 9/01/27 - MBIA Insured
940 Huron Valley School District, Oakland and Livingston Counties, 11/11 at 100.00 AA- 945,809
Michigan, General Obligation Bonds, Series 2001, 5.000%, 5/01/27
500 Jackson Public Schools, Jackson County, Michigan, General 5/14 at 100.00 AAA 513,785
Obligation School Building and Site Bonds, Series 2004,
5.000%, 5/01/22 - FSA Insured
300 Kalamazoo Public Schools, Michigan, General Obligation Bonds, 5/16 at 100.00 AAA 307,530
Series 2006, 5.000%, 5/01/25 - FSA Insured
430 Lowell Area Schools, Counties of Ionia and Kent, Michigan, 5/17 at 100.00 AAA 428,667
General Obligation Bonds, Series 2007, 5.000%, 5/01/37 -
FSA Insured
400 Michigan Municipal Bond Authority, General Obligation Bonds, 6/15 at 100.00 AAA 419,492
Detroit City School District, Series 2005, 5.000%, 6/01/18 -
FSA Insured
1,150 Muskegon County, Michigan, Limited Tax General Obligation 7/11 at 100.00 AA- 1,158,947
Wastewater Management System 2 Revenue Bonds,
Series 2002, 5.000%, 7/01/26 - FGIC Insured
1,410 New Haven Community Schools, Macomb County, Michigan, 5/16 at 100.00 AAA 1,440,780
General Obligation Bonds, Series 2006, 5.000%, 5/01/25 -
FSA Insured
400 Oakland Intermediate School District, Oakland County, Michigan, 5/17 at 100.00 AAA 401,096
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 1,005,040
Bonds, Series 2007, 5.000%, 8/01/30 - MBIA Insured
150 Parchment School District, Kalamazoo County, Michigan, General 5/17 at 100.00 AAA 119,820
Obligation Bonds, Tender Option Bond Trust 2836,
10.116%, 5/01/36 - FSA Insured (IF)
100 Rockford Public Schools, Kent County, Michigan, General Obligation 5/18 at 100.00 AAA 100,145
Bonds, Series 2008, 5.000%, 5/01/33 - FSA Insured
330 Thornapple Kellogg School District, Barry County, Michigan, 5/17 at 100.00 AA 328,159
General Obligation Bonds, Series 2007, 5.000%, 5/01/32 -
MBIA Insured
100 Trenton Public Schools District, Michigan, General Obligation 5/18 at 100.00 AAA 99,992
Bonds, Series 2008, 5.000%, 5/01/34 - FSA Insured
225 Van Dyke Public Schools, Macomb County, Michigan, General 5/18 at 100.00 AAA 224,291
Obligation 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+ 510,140
800 5.000%, 5/01/20 - MBIA Insured 5/09 at 100.50 AA+ 812,896
1,690 Wayne County, Michigan, Limited Tax General Obligation Airport 12/11 at 101.00 AA 1,663,078
Hotel Revenue Bonds, Detroit Metropolitan Wayne County
Airport, Series 2001A, 5.000%, 12/01/30 - MBIA Insured
500 Wayne Westland Community Schools, Michigan, General Obligation 11/14 at 100.00 AAA 530,845
Bonds, Series 2004, 5.000%, 5/01/17 - FSA Insured
1,300 Willow Run Community Schools, Washtenaw County, Michigan, 5/11 at 100.00 AA- 1,330,329
General Obligation Bonds, Series 2001, 5.000%, 5/01/21
- ------------------------------------------------------------------------------------------------------------------------------------
12,724 Total Tax Obligation/General 12,804,604
- ------------------------------------------------------------------------------------------------------------------------------------
34
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 16.4% (10.6% OF TOTAL INVESTMENTS)
$ 1,100 Grand Rapids Building Authority, Kent County, Michigan, Limited 10/11 at 100.00 AA $ 1,115,862
Tax General Obligation Bonds, Series 2001, 5.125%, 10/01/26 -
MBIA Insured
905 Kalkaska County Hospital Authority, Michigan, Hospital Revenue No Opt. Call N/R 889,036
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 476,702
720 5.000%, 10/15/36 - FGIC Insured 10/16 at 100.00 A+ 694,634
1,205 Michigan State Building Authority, Revenue Bonds, Facilities 10/11 at 100.00 A+ 1,220,207
Program, Series 2001I, 5.000%, 10/15/24
1,000 Puerto Rico Infrastructure Financing Authority, Special Tax No Opt. Call BBB+ 245,240
Revenue Bonds, Series 2005A, 0.000%, 7/01/32 - FGIC Insured
- ------------------------------------------------------------------------------------------------------------------------------------
6,450 Total Tax Obligation/Limited 4,641,681
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 22.8% (14.8% OF TOTAL INVESTMENTS) (4)
1,000 Detroit City School District, Wayne County, Michigan, Unlimited Tax 5/12 at 100.00 AAA 1,092,380
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 782,093
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) 1,062,030
Obligation Refunding Bonds, Series 2001, 5.000%, 5/01/26
(Pre-refunded 5/01/11)
560 Huron Valley School District, Oakland and Livingston Counties, 11/11 at 100.00 AA- (4) 599,452
Michigan, General Obligation Bonds, Series 2001,
5.000%, 5/01/27 (Pre-refunded 11/01/11)
1,000 Kent Hospital Finance Authority, Michigan, Revenue Bonds, 7/11 at 101.00 AA (4) 1,075,830
Spectrum Health, Series 2001A, 5.250%, 1/15/21
(Pre-refunded 7/15/11)
500 Puerto Rico Infrastructure Financing Authority, Special Obligation 10/10 at 101.00 AAA 517,550
Bonds, Series 2000A, 5.500%, 10/01/40
Puerto Rico Public Finance Corporation, Commonwealth
Appropriation Bonds, Series 2002E:
85 6.000%, 8/01/26 (ETM) No Opt. Call BBB- (4) 97,258
615 6.000%, 8/01/26 (ETM) No Opt. Call AAA 703,689
500 Warren Building Authority, Michigan, Limited Tax General 11/10 at 100.00 AA- (4) 530,840
Obligation Bonds, Series 2001, 5.150%, 11/01/22
(Pre-refunded 11/01/10) - FGIC Insured
- ------------------------------------------------------------------------------------------------------------------------------------
5,980 Total U.S. Guaranteed 6,461,122
- ------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 18.4% (11.9% OF TOTAL INVESTMENTS)
1,115 Lansing Board of Water and Light, Michigan, Steam and Electric 7/13 at 100.00 AAA 1,146,978
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- 752,880
Utility System Revenue Bonds, Series 2008A, 5.000%, 7/01/32
1,235 Michigan Public Power Agency, Revenue Bonds, Combustion 1/12 at 100.00 AA 1,256,551
Turbine 1 Project, Series 2001A, 5.250%, 1/01/24 -
AMBAC Insured
2,215 Michigan Strategic Fund, Collateralized Limited Obligation 9/11 at 100.00 A3 2,050,557
Pollution Control Revenue Refunding Bonds, Fixed Rate
Conversion, Detroit Edison Company, Series 1999C,
5.650%, 9/01/29 - XLCA Insured (Alternative Minimum Tax)
- ------------------------------------------------------------------------------------------------------------------------------------
5,315 Total Utilities 5,206,966
- ------------------------------------------------------------------------------------------------------------------------------------
35
NZW
Nuveen Michigan Dividend Advantage Municipal Fund (continued)
Portfolio of INVESTMENTS July 31, 2008
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 17.6% (11.4% OF TOTAL INVESTMENTS)
$ 1,000 Detroit Water Supply System, Michigan, Water Supply System 7/16 at 100.00 AAA $ 981,430
Revenue Bonds, Series 2006A, 5.000%, 7/01/34 - FSA Insured
1,000 Detroit, Michigan, Senior Lien Sewerage Disposal System Revenue No Opt. Call A 1,039,230
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 290,982
Bonds, Series 2003A, 5.000%, 7/01/17 - FSA Insured
1,000 Detroit, Michigan, Senior Lien Water Supply System Revenue 7/11 at 100.00 A+ 953,860
Bonds, Series 2001A, 5.000%, 7/01/30 - FGIC Insured
125 Grand Rapids, Michigan, Sanitary Sewer System Revenue 1/18 at 100.00 AA+ 125,460
Bonds, Series 2008, 5.000%, 1/01/38 (WI/DD, Settling 8/06/08)
1,000 Michigan Municipal Bond Authority, Clean Water Revolving Fund 10/15 at 100.00 AAA 1,057,250
Revenue Bonds, Series 2005, 5.000%, 10/01/19
500 Michigan Municipal Bond Authority, Water Revolving Fund 10/17 at 100.00 AAA 523,555
Revenue Bonds, Series 2007, 5.000%, 10/01/23
- ------------------------------------------------------------------------------------------------------------------------------------
4,905 Total Water and Sewer 4,971,767
- ------------------------------------------------------------------------------------------------------------------------------------
$ 45,599 Total Investments (cost $44,209,197) - 154.2% 43,603,385
=============-----------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 2.4% 681,324
--------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (56.6)% (5) (16,000,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 28,284,709
====================================================================================================================
(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 AMBAC, FGIC, MBIA, RAAI and XLCA as
of July 31, 2008. 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 (36.7)%. N/R Not rated.
WI/DD Purchased on a when-issued or delayed delivery basis.
(ETM) Escrowed to maturity.
(IF) Inverse floating rate investment.
See accompanying notes to financial statements.
36
NUO
Nuveen Ohio Quality Income Municipal Fund, Inc.
Portfolio of INVESTMENTS
July 31, 2008
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES - 4.8% (3.1% OF TOTAL INVESTMENTS)
$ 8,450 Buckeye Tobacco Settlement Financing Authority, Ohio, Tobacco 6/17 at 100.00 BBB $ 6,865,115
Settlement Asset-Backed Revenue Bonds, Senior Lien,
Series 2007A-2, 5.875%, 6/01/47
125 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 5/12 at 100.00 BBB 115,429
Asset-Backed Refunding Bonds, Series 2002, 5.375%, 5/15/33
- ------------------------------------------------------------------------------------------------------------------------------------
8,575 Total Consumer Staples 6,980,544
- ------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 15.4% (10.1% OF TOTAL INVESTMENTS)
1,650 Ohio Higher Education Facilities Commission, General Revenue 7/16 at 100.00 A+ 1,600,698
Bonds, Kenyon College, Series 2006, 5.000%, 7/01/41
1,750 Ohio Higher Education Facilities Commission, General Revenue 10/13 at 100.00 AA 1,789,288
Bonds, Oberlin College, Series 2003, 5.125%, 10/01/24
1,000 Ohio Higher Education Facilities Commission, Revenue Bonds, 12/15 at 100.00 Baa2 890,940
Wittenberg University, Series 2005, 5.000%, 12/01/29
2,420 Ohio Higher Educational Facilities Commission, General Revenue 12/16 at 100.00 AA 2,378,279
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 1,455,398
Denison University, Series 2004, 5.000%, 11/01/21
1,320 Ohio Higher Educational Facilities Commission, Revenue Bonds, 12/14 at 100.00 AA 1,326,310
University of Dayton, Series 2004, 5.000%, 12/01/25 -
AMBAC Insured
1,000 Ohio Higher Educational Facilities Commission, Revenue Bonds, 12/11 at 100.00 Baa2 1,014,950
Wittenberg University, Series 2001, 5.500%, 12/01/15
1,500 Ohio State Higher Education Facilities, Revenue Bonds, Case 12/16 at 100.00 AA 1,465,500
Western Reserve University, Series 2006, 5.000%, 12/01/44 -
MBIA Insured
1,200 Ohio State University, General Receipts Bonds, Series 2002A, 12/12 at 100.00 Aa2 1,212,216
5.125%, 12/01/31
3,000 Ohio State University, General Receipts Bonds, Series 2003B, 6/13 at 100.00 AA 3,167,220
5.250%, 6/01/22
1,510 University of Akron, Ohio, General Receipts Bonds, Series 2003A, 1/13 at 100.00 AA 1,537,150
5.000%, 1/01/21 - AMBAC Insured
850 University of Cincinnati, Ohio, General Receipts Bonds, 6/13 at 100.00 A+ 864,901
Series 2003C, 5.000%, 6/01/22 - FGIC Insured
University of Cincinnati, Ohio, General Receipts Bonds, Series 2004D:
1,200 5.000%, 6/01/19 - AMBAC Insured 6/14 at 100.00 AA 1,243,176
2,605 5.000%, 6/01/25 - AMBAC Insured 6/14 at 100.00 AA 2,620,526
- ------------------------------------------------------------------------------------------------------------------------------------
22,420 Total Education and Civic Organizations 22,566,552
- ------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE - 17.4% (11.4% OF TOTAL INVESTMENTS)
2,000 Akron, Bath and Copley Joint Township Hospital District, Ohio, 11/09 at 101.00 Baa1 1,973,160
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 3,166,886
Children's Medical Center Project, Series 2006K, 5.000%, 5/15/31 -
FGIC Insured
1,000 Cuyahoga County, Ohio, Hospital Revenue Refunding and Improvement 8/08 at 101.00 AA 1,012,450
Bonds, MetroHealth System, Series 1997, 5.625%, 2/15/17 -
MBIA Insured
2,000 Cuyahoga County, Ohio, Revenue Refunding Bonds, Cleveland 7/13 at 100.00 AA- 2,084,360
Clinic Health System, Series 2003A, 6.000%, 1/01/32
37
NUO
Nuveen Ohio Quality Income Municipal Fund, Inc. (continued)
Portfolio of INVESTMENTS July 31, 2008
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE (continued)
$ 4,500 Erie County, Ohio, Hospital Facilities Revenue Bonds, Firelands 8/12 at 101.00 A $ 4,508,684
Regional Medical Center, Series 2002A, 5.625%, 8/15/32
1,000 Franklin County, Ohio, Hospital Revenue Bonds, Nationwide 11/18 at 100.00 Aa2 963,060
Children's Hospital Project, Series 2005, 5.000%, 11/01/40
2,455 Hamilton County, Ohio, Revenue Bonds, Children's Hospital 5/14 at 100.00 N/R 2,468,429
Medical Center, Series 2004J, 5.250%, 5/15/16 - FGIC Insured
785 Miami County, Ohio, Hospital Facilities Revenue Refunding Bonds, 5/16 at 100.00 A- 761,474
Upper Valley Medical Center Inc., Series 2006, 5.250%, 5/15/21
Montgomery County, Ohio, Revenue Bonds, Catholic Health
Initiatives, Series 2004A:
2,500 5.000%, 5/01/30 5/14 at 100.00 AA 2,460,725
2,500 5.000%, 5/01/32 No Opt. Call AA 2,438,725
830 Richland County, Ohio, Hospital Facilities Revenue Improvement 11/10 at 101.00 A- 850,684
Bonds, MedCentral Health System Obligated Group,
Series 2000B, 6.375%, 11/15/30
1,200 Richland County, Ohio, Hospital Revenue Bonds, MidCentral 11/16 at 100.00 A- 1,094,736
Health System Group, Series 2006, 5.250%, 11/15/36
1,705 Tuscarawas County, Ohio, Hospital Facilities Revenue Bonds, 10/11 at 101.00 A 1,707,114
Union Hospital Project, Series 2001, 5.750%, 10/01/21 -
RAAI Insured
- ------------------------------------------------------------------------------------------------------------------------------------
26,125 Total Health Care 25,490,487
- ------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 7.5% (4.9% OF TOTAL INVESTMENTS)
1,385 Clermont County, Ohio, GNMA Collateralized Mortgage Revenue 8/08 at 100.00 Aaa 1,385,776
Bonds, S.E.M. Villa II Project, Series 1994A, 5.950%, 2/20/30
915 Cuyahoga County, Ohio, GNMA Collateralized Multifamily Housing 9/12 at 102.00 Aaa 874,832
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 2,466,041
2,250 5.450%, 1/20/31 (Alternative Minimum Tax) 7/11 at 102.00 Aaa 2,114,168
985 Franklin County, Ohio, FHA-Insured Multifamily Housing Mortgage 1/09 at 100.00 Aa2 966,590
Revenue Bonds, Hamilton Creek Apartments Project,
Series 1994A, 5.550%, 7/01/24 (Alternative Minimum Tax)
800 Montgomery County, Ohio, GNMA Guaranteed Multifamily Housing 10/18 at 101.00 Aaa 734,504
Revenue Bonds, Canterbury Court Project, Series 2007,
5.500%, 10/20/42 (Alternative Minimum Tax)
Ohio Housing Finance Agency, FHA-Insured Multifamily Housing
Mortgage Revenue Bonds, Madonna Homes, Series 2006M:
800 4.450%, 10/01/09 (Alternative Minimum Tax) No Opt. Call Aaa 810,312
850 4.900%, 6/20/48 (Alternative Minimum Tax) 6/16 at 102.00 AAA 681,488
1,200 Summit County Port Authority, Ohio, Multifamily Housing 9/17 at 102.00 AAA 1,043,700
Revenue Bonds, Callis Tower Apartments Project, Series 2007,
5.250%, 9/20/47 (Alternative Minimum Tax)
- ------------------------------------------------------------------------------------------------------------------------------------
11,660 Total Housing/Multifamily 11,077,411
- ------------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 2.9% (1.9% OF TOTAL INVESTMENTS)
1,535 Ohio Housing Finance Agency, GNMA Mortgage-Backed 9/08 at 102.00 Aaa 1,453,630
Securities Program Residential Mortgage Revenue Bonds,
Series 1997B, 5.400%, 9/01/29 (Alternative Minimum Tax)
1,045 Ohio Housing Finance Agency, GNMA Mortgage-Backed 9/08 at 101.50 Aaa 1,046,317
Securities Program Residential Mortgage Revenue Bonds,
Series 1998A-1, 5.300%, 9/01/19 - FSA Insured
(Alternative Minimum Tax)
2,000 Ohio Housing Finance Agency, Single Family Mortgage Revenue 9/15 at 100.00 Aaa 1,758,520
Bonds, Series 2006H, 5.000%, 9/01/31 (Alternative Minimum Tax)
- ------------------------------------------------------------------------------------------------------------------------------------
4,580 Total Housing/Single Family 4,258,467
- ------------------------------------------------------------------------------------------------------------------------------------
38
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
INDUSTRIALS - 1.4% (0.9% OF TOTAL INVESTMENTS)
$ 530 Cleveland-Cuyahoga County Port Authority, Ohio, Bond Fund 11/14 at 100.00 N/R $ 510,692
Program Development Revenue Bonds, Myers University,
Series 2004E, 5.600%, 5/15/25
1,500 Dayton, Ohio, Special Facilities Revenue Refunding Bonds, 8/08 at 102.00 AA- 1,532,025
Emery Air Freight Corporation and Emery Worldwide Airlines
Inc. - Guarantors, Series 1998A, 5.625%, 2/01/18
- ------------------------------------------------------------------------------------------------------------------------------------
2,030 Total Industrials 2,042,717
- ------------------------------------------------------------------------------------------------------------------------------------
LONG-TERM CARE - 0.9% (0.6% OF TOTAL INVESTMENTS)
1,600 Hamilton County, Ohio, Health Care Revenue Refunding Bonds, 1/17 at 100.00 BBB 1,315,520
Life Enriching Communities Project, Series 2006A,
5.000%, 1/01/37
- ------------------------------------------------------------------------------------------------------------------------------------
MATERIALS - 1.4% (0.9% OF TOTAL INVESTMENTS)
2,000 Toledo-Lucas County Port Authority, Ohio, Port Revenue Bonds, No Opt. Call A 2,059,460
Cargill Inc., Series 2004B, 4.500%, 12/01/15
- ------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 40.0% (26.2% OF TOTAL INVESTMENTS)
1,000 Ansonia Local School District, Darke County, Ohio, General 12/10 at 102.00 A2 1,060,970
Obligation Bonds, Series 2000, 5.500%, 12/01/22 - MBIA Insured
Butler County, Ohio, General Obligation Bonds, Series 2002:
1,345 5.000%, 12/01/21 - MBIA Insured 12/12 at 100.00 Aa2 1,386,453
1,200 5.000%, 12/01/22 - MBIA Insured 12/12 at 101.00 Aa2 1,234,404
1,500 Centerville City School District, Montgomery County, Ohio, 6/15 at 100.00 Aaa 1,525,065
General Obligation Bonds, Series 2005, 5.000%, 12/01/30 -
FSA Insured
1,000 Central Ohio Solid Waste Authority, General Obligation Bonds, 6/14 at 100.00 AA+ 1,069,600
Series 2004A, 5.000%, 12/01/15 - AMBAC Insured
2,600 Cincinnati City School District, Hamilton County, Ohio, General 12/12 at 100.00 AAA 2,736,552
Obligation Bonds, Series 2002, 5.250%, 6/01/21 - FSA Insured
1,000 Cleveland Municipal School District, Cuyahoga County, Ohio, 6/14 at 100.00 AAA 1,027,920
General Obligation Bonds, Series 2004, 5.000%, 12/01/22 -
FSA Insured
1,200 Cuyahoga County, Ohio, General Obligation Bonds, Series 2004, 12/14 at 100.00 AA+ 1,248,168
5.000%, 12/01/21
1,000 Dayton, Ohio, General Obligation Bonds, Series 2004, 6/14 at 100.00 AA 1,060,880
5.250%, 12/01/19 - AMBAC Insured
1,000 Dublin City School District, Franklin, Delaware and Union 12/13 at 100.00 AAA 1,029,620
Counties, Ohio, General Obligation Bonds, Series 2003,
5.000%, 12/01/22 - FSA Insured
1,000 Dublin, Ohio, Unlimited Tax Various Purpose Improvement Bonds, 12/10 at 100.00 Aaa 1,032,130
Series 2000A, 5.000%, 12/01/20
1,195 Fairview Park City School District, Cuyahoga County, Ohio, 6/15 at 100.00 A2 1,211,491
General Obligation Bonds, Series 2005, 5.000%, 12/01/24 -
MBIA Insured
1,840 Franklin County, Ohio, General Obligation Bonds, Series 2007, 12/17 at 100.00 AAA 1,902,284
5.000%, 12/01/28
1,300 Franklin County, Ohio, Limited Tax General Obligation Refunding 12/08 at 102.00 AAA 1,337,440
Bonds, Series 1993, 5.375%, 12/01/20
1,500 Green, Ohio, General Obligation Bonds, Series 2008, 12/15 at 100.00 AA 1,560,390
5.500%, 12/01/32 (WI/DD, Settling 8/06/08)
6,650 Hamilton City School District, Ohio, General Obligation Bonds, 6/17 at 100.00 AAA 6,754,006
Series 2007, 5.000%, 12/01/34 - FSA Insured (UB)
125 Hamilton City School District, Ohio, General Obligation Bonds, 6/17 at 100.00 AAA 130,865
Series 2007, Drivers 1766, 9.043%, 12/01/34 - FSA Insured (IF)
1,850 Hilliard School District, Franklin County, Ohio, General 12/15 at 100.00 AA 1,881,672
Obligation Bonds, School Construction, Series 2005,
5.000%, 12/01/26 - MBIA Insured
3,000 Hilliard School District, Franklin County, Ohio, General 12/16 at 100.00 AA 3,065,430
Obligation Bonds, Series 2006A, 5.000%, 12/01/25 -
MBIA Insured
2,580 Indian Lake Local School District, Logan and Auglaize Counties, 6/17 at 100.00 AA 2,542,667
Ohio, 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 1,190,450
Obligation Bonds, Series 2003, 5.000%, 12/01/22 -
MBIA Insured
39
NUO
Nuveen Ohio Quality Income Municipal Fund, Inc. (continued)
Portfolio of INVESTMENTS July 31, 2008
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL (continued)
$ 800 Lakewood City School District, Cuyahoga County, Ohio, General 12/17 at 100.00 AA- $ 813,072
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 1,999,860
Series 2001, 5.000%, 12/01/29 - FGIC Insured
505 Marysville Exempted School District, Union County, Ohio, 12/15 at 100.00 AAA 521,231
General 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 508,900
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 A2 1,584,539
Series 2003, 5.250%, 12/01/21 - MBIA Insured
640 New Albany Plain Local School District, Franklin County, Ohio, 6/12 at 100.00 N/R 684,992
General Obligation Bonds, Series 2002, 5.500%, 12/01/17 -
FGIC Insured
1,000 Newark City School District, Licking County, Ohio, General 12/15 at 100.00 A 1,001,150
Obligation Bonds, Series 2005, 5.000%, 12/01/28 - FGIC Insured
3,000 Ohio, General Obligation Bonds, Infrastructure Improvements, 2/13 at 100.00 AA+ 3,081,630
Series 2003F, 5.000%, 2/01/23
1,510 Painesville City School District, Ohio, General Obligation Bonds, 12/14 at 100.00 A 1,555,315
Series 2004, 5.000%, 12/01/22 - FGIC Insured
1,155 Perry Local School District, Allen County, Ohio, General Obligation 12/11 at 101.00 AA 1,208,407
Bonds, Series 2001, 5.250%, 12/01/25 - AMBAC Insured
280 Plain Local School District, Franklin and Licking Counties, Ohio, 6/11 at 100.00 Aa2 298,592
General Obligation Bonds, Series 2000, 6.000%, 12/01/20 -
FGIC Insured
1,445 Portage County, Ohio, General Obligation Bonds, Series 2001, 12/11 at 100.00 AA 1,457,702
5.000%, 12/01/27 - FGIC Insured
2,000 Strongsville, Ohio, General Obligation Bonds, Series 2001, 12/11 at 100.00 Aa1 2,040,120
5.000%, 12/01/21 - FGIC Insured
70 Strongsville, Ohio, Limited Tax General Obligation Various 12/08 at 100.00 Aa1 70,773
Purpose Improvement Bonds, Series 1996, 5.950%, 12/01/21
Warren City School District, Trumbull County, Ohio, General
Obligation Bonds, Series 2004:
2,515 5.000%, 12/01/20 - FGIC Insured 6/14 at 100.00 AA 2,610,746
1,170 5.000%, 12/01/22 - FGIC Insured 6/14 at 100.00 AA 1,206,305
1,000 West Chester Township, Butler County, Ohio, General Obligation 12/13 at 100.00 Aa1 1,008,310
Bonds, Series 2003, 5.000%, 12/01/28 - MBIA Insured
1,000 Westlake, Ohio, Various Purpose General Obligation Improvement 12/08 at 101.00 Aaa 1,020,670
and Refunding Bonds, Series 1997, 5.550%, 12/01/17
- ------------------------------------------------------------------------------------------------------------------------------------
57,150 Total Tax Obligation/General 58,660,771
- ------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 12.8% (8.3% OF TOTAL INVESTMENTS)
1,380 Columbus, Ohio, Tax Increment Financing Bonds, Easton Project, 6/14 at 100.00 AA 1,370,423
Series 2004A, 5.000%, 12/01/25 - AMBAC Insured
3,000 Franklin County, Ohio, Excise Tax and Lease Revenue Anticipation 12/15 at 100.00 Aaa 3,032,820
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 A+ 1,117,214
Revenue Bonds, Series 2004, 5.000%, 12/01/18 - FGIC Insured
4,600 Hamilton County, Ohio, Sales Tax Bonds, Subordinate Lien, 12/16 at 100.00 Aa3 4,580,449
Series 2006, 5.000%, 12/01/32 - AMBAC Insured
1,000 Hudson City School District, Ohio, Certificates of Participation, 6/14 at 100.00 A1 988,310
Series 2004, 5.000%, 6/01/26 - MBIA Insured
New Albany Community Authority, Ohio, Community Facilities
Revenue Refunding Bonds, Series 2001B:
1,000 5.500%, 10/01/15 - AMBAC Insured 4/12 at 100.00 AA 1,065,200
1,000 5.500%, 10/01/17 - AMBAC Insured 4/12 at 100.00 AA 1,065,200
40
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED (continued)
$ 800 Ohio State Building Authority, State Facilities Bonds, Administrative 4/15 at 100.00 AAA $ 819,528
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 2,864,667
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 1,067,730
Facilities, Series 2003B-II, 5.000%, 6/01/16
3,430 Puerto Rico Infrastructure Financing Authority, Special Tax No Opt. Call AA 724,999
Revenue Bonds, Series 2005A, 0.000%, 7/01/35 -
AMBAC Insured
- ------------------------------------------------------------------------------------------------------------------------------------
20,940 Total Tax Obligation/Limited 18,696,540
- ------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 3.4% (2.2% OF TOTAL INVESTMENTS)
3,000 Dayton, Ohio, Airport Revenue Bonds, James M. Cox International 12/13 at 100.00 A 2,793,300
Airport, Series 2003C, 5.250%, 12/01/23 - RAAI Insured
(Alternative Minimum Tax)
2,000 Ohio Turnpike Commission, Revenue Refunding Bonds, No Opt. Call AA 2,208,540
Series 1998A, 5.500%, 2/15/18 - FGIC Insured
- ------------------------------------------------------------------------------------------------------------------------------------
5,000 Total Transportation 5,001,840
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 31.9% (20.9% 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) 2,236,857
2,140 5.250%, 12/01/22 (Pre-refunded 12/01/12) 12/12 at 101.00 Aa2 (4) 2,358,066
1,210 Columbus, Ohio, Tax Increment Financing Bonds, Easton Project, 6/09 at 101.00 AA (4) 1,254,843
Series 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) 1,092,930
Airport, Series 2005B, 5.000%, 12/01/14 - XLCA Insured (ETM)
385 Franklin County, Ohio, First Mortgage Revenue, OCLC Inc. Project, 12/08 at 100.00 AAA 401,817
Series 1979, 7.500%, 6/01/09 (ETM)
2,000 Garfield Heights City School District, Cuyahoga County, Ohio, 12/11 at 100.00 A2 (4) 2,144,720
General Obligation School Improvement Bonds, Series 2001,
5.000%, 12/15/26 (Pre-refunded 12/15/11) - MBIA Insured
1,000 Hamilton County, Ohio, Healthcare Facilities Improvement Revenue 10/08 at 101.00 BBB (4) 1,016,450
Bonds, Twin Towers, Series 1999A, 5.800%, 10/01/23
(Pre-refunded 10/01/08)
1,500 Hamilton County, Ohio, Sewer System Revenue and Improvement 6/10 at 101.00 AA (4) 1,608,540
Bonds, Metropolitan Sewer District of Greater Cincinnati,
Series 2000A, 5.750%, 12/01/25 (Pre-refunded 6/01/10) -
MBIA Insured
1,000 Hilliard School District, Ohio, General Obligation School 12/10 at 101.00 AA (4) 1,086,380
Improvement Bonds, Series 2000, 5.750%, 12/01/24
(Pre-refunded 12/01/10) - FGIC Insured
2,000 Lakota Local School District, Butler County, Ohio, Unlimited 6/11 at 100.00 Aa2 (4) 2,133,900
Tax 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) 817,980
Obligation Bonds, Series 2004, 5.000%, 12/01/25
(Pre-refunded 12/01/13) - FGIC Insured
3,000 Montgomery County, Ohio, Hospital Facilities Revenue Bonds, 4/10 at 101.00 A (4) 3,246,600
Kettering Medical Center, Series 1999, 6.750%, 4/01/18
(Pre-refunded 4/01/10)
1,260 Morgan Local School District, Morgan, Muskingum and Washington 12/10 at 101.00 AA (4) 1,369,746
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 N/R (4) 503,286
General Obligation Bonds, Series 2002, 5.500%, 12/01/17
(Pre-refunded 6/01/12) - FGIC Insured
4,315 Ohio Capital Corporation for Housing, FHA-Insured Section 8 2/09 at 102.00 N/R (4) 4,492,130
Assisted Mortgage Loan Revenue Refunding Bonds,
Series 1999G, 5.950%, 2/01/24 (Pre-refunded 2/01/09)
41
NUO
Nuveen Ohio Quality Income Municipal Fund, Inc. (continued)
Portfolio of INVESTMENTS July 31, 2008
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED (4) (continued)
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) $ 1,451,458
3,380 5.250%, 12/01/24 (Pre-refunded 6/01/14) - FGIC Insured 6/14 at 100.00 AA+ (4) 3,730,743
6,000 Parma Community General Hospital Association, Ohio, Hospital 11/08 at 101.00 N/R (4) 6,112,859
Revenue Refunding and Improvement Bonds, Series 1998,
5.375%, 11/01/29 (Pre-refunded 11/01/08)
1,000 Princeton City School District, Butler County, Ohio, General 12/13 at 100.00 AAA 1,089,510
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 11/10 at 101.00 A- (4) 1,827,214
Bonds, MedCentral Health System Obligated Group,
Series 2000B, 6.375%, 11/15/30 (Pre-refunded 11/15/10)
2,830 Springfield Township, Hamilton County, Ohio, Various Purpose 12/11 at 100.00 Aa3 (4) 3,055,466
Limited Tax General Obligation Bonds, Series 2002,
5.250%, 12/01/27 (Pre-refunded 12/01/11)
1,500 Steubenville, Ohio, Hospital Facilities Revenue Refunding and 10/10 at 100.00 A3 (4) 1,627,245
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) 2,127,120
Ohio, Various Purpose General Obligation Bonds, Series 2001,
5.000%, 12/01/27 (Pre-refunded 6/01/11) - MBIA Insured
- ------------------------------------------------------------------------------------------------------------------------------------
43,755 Total U.S. Guaranteed 46,785,860
- ------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 9.7% (6.4% OF TOTAL INVESTMENTS)
2,500 American Municipal Power Ohio Inc., General Revenue Bonds, 2/18 at 100.00 A1 2,465,400
Series 2008, 5.250%, 2/15/43
4,000 American Municipal Power Ohio Inc., Wadsworth, Electric System 2/12 at 100.00 A2 4,066,000
Improvement Revenue Bonds, Series 2002, 5.000%, 2/15/22 -
MBIA Insured (5)
Cleveland, Ohio, Public Power System Revenue Bonds, Series 2008B:
2,105 0.000%, 11/15/32 - MBIA Insured No Opt. Call AA 551,678
2,155 0.000%, 11/15/34 - MBIA Insured No Opt. Call AA 501,943
3,000 Ohio Air Quality Development Authority, Revenue Bonds, 10/08 at 101.00 Aa3 3,002,760
JMG Funding Limited Partnership Project, Series 1997,
5.625%, 1/01/23 - AMBAC Insured (Alternative Minimum Tax)
800 Ohio Municipal Electric Generation Agency, Beneficial Interest No Opt. Call AA 248,216
Certificates, Belleville Hydroelectric Project - Joint Venture 5,
Series 2001, 0.000%, 2/15/29 - MBIA Insured
2,000 Ohio Municipal Electric Generation Agency, Beneficial Interest 2/14 at 100.00 AA 2,028,340
Certificates, Belleville Hydroelectric Project - Joint Venture 5,
Series 2004, 5.000%, 2/15/20 - AMBAC Insured
1,500 Ohio Water Development Authority, Solid Waste Disposal Revenue 9/08 at 102.00 N/R 1,418,055
Bonds, Bay Shore Power, Series 1998A, 5.875%, 9/01/20
(Alternative Minimum Tax)
- ------------------------------------------------------------------------------------------------------------------------------------
18,060 Total Utilities 14,282,392
- ------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 3.4% (2.2% OF TOTAL INVESTMENTS)
430 City of Marysville, Ohio, Water System Mortgage Revenue Bonds, 12/17 at 100.00 Aa3 428,173
Series 2007, 5.000%, 12/01/32 - AMBAC Insured
1,000 Cleveland, Ohio, Waterworks First Mortgage Revenue Refunding No Opt. Call AA 1,099,300
and Improvement Bonds, Series 1993G, 5.500%, 1/01/21 -
MBIA Insured
40 Cleveland, Ohio, Waterworks First Mortgage Revenue Refunding 1/09 at 100.00 AA 40,070
and Improvement Bonds, Series 1996H, 5.750%, 1/01/26 -
MBIA Insured
1,220 Hamilton, Ohio, Wastewater System Revenue Bonds, Series 2005, 10/15 at 100.00 Aaa 1,277,730
5.250%, 10/01/22 - FSA Insured
525 Ohio Water Development Authority, Revenue Bonds, Drinking 6/18 at 100.00 AAA 541,427
Water Assistance Fund, State Match, Series 2008,
5.000%, 6/01/28 - FSA Insured
42
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 6/15 at 100.00 AAA $ 1,549,845
Fund Revenue Bonds, Water Quality Project, Series 2005B,
5.000%, 6/01/25
- ------------------------------------------------------------------------------------------------------------------------------------
4,715 Total Water and Sewer 4,936,545
- ------------------------------------------------------------------------------------------------------------------------------------
$ 228,610 Total Investments (cost $224,374,969) - 152.9% 224,155,106
=============-----------------------------------------------------------------------------------------------------------------------
Floating Rate Obligations - (3.0)% (4,435,000)
--------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 2.6% 3,896,574
--------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (52.5)% (6) (77,000,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $146,616,680
====================================================================================================================
FUTURES CONTRACTS OUTSTANDING AT JULY 31, 2008:
UNREALIZED
CONTRACT NUMBER OF CONTRACT VALUE AT APPRECIATION
TYPE POSITION CONTRACTS EXPIRATION JULY 31, 2008 (DEPRECIATION)
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Bond Long 48 9/08 $5,544,000 $101,622
====================================================================================================================================
(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 AMBAC, FGIC, MBIA, RAAI and XLCA as
of July 31, 2008. 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) Portion of investment, with an aggregate market value of
$101,650, has been pledged to collateralize the net payment
obligations under futures contracts.
(6) Preferred Shares, at Liquidation Value as a percentage of
total investments is (34.4)%.
N/R Not rated.
WI/DD Purchased on a when-issued or delayed delivery basis.
(ETM) Escrowed to maturity.
(IF) Inverse floating rate investment.
(UB) Underlying bond of an inverse floating rate trust reflected
as a financing transaction pursuant to the provisions of
SFAS No. 140.
See accompanying notes to financial statements.
43
NXI
Nuveen Ohio Dividend Advantage Municipal Fund
Portfolio of INVESTMENTS
July 31, 2008
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES - 4.6% (3.0% OF TOTAL INVESTMENTS)
$ 3,375 Buckeye Tobacco Settlement Financing Authority, Ohio, Tobacco 6/17 at 100.00 BBB $ 2,741,985
Settlement Asset-Backed Revenue Bonds, Senior Lien,
Series 2007A-2, 5.875%, 6/01/47
50 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 5/12 at 100.00 BBB 46,172
Asset-Backed Refunding Bonds, Series 2002, 5.375%, 5/15/33
- ------------------------------------------------------------------------------------------------------------------------------------
3,425 Total Consumer Staples 2,788,157
- ------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 11.2% (7.4% OF TOTAL INVESTMENTS)
1,165 Cleveland-Cuyahoga County Port Authority, Ohio, Lease Revenue 8/15 at 100.00 AA 1,171,839
Bonds, Euclid Avenue Housing Corporation - Fenn Tower Project,
Series 2005, 5.000%, 8/01/23 - AMBAC Insured
700 Ohio Higher Education Facilities Commission, General Revenue 7/16 at 100.00 A+ 679,084
Bonds, Kenyon College, Series 2006, 5.000%, 7/01/41
2,650 Ohio Higher Education Facilities Commission, Revenue Bonds, 5/12 at 100.00 A2 2,655,167
Ohio Northern University, Series 2002, 5.000%, 5/01/22
500 Ohio Higher Education Facilities Commission, Revenue Bonds, 12/15 at 100.00 Baa2 457,855
Wittenberg University, Series 2005, 5.000%, 12/01/24
1,760 Ohio University at Athens, Subordinate Lien General Receipts 6/14 at 100.00 AA 1,827,003
Bonds, Series 2004, 5.000%, 12/01/20 - MBIA Insured
- ------------------------------------------------------------------------------------------------------------------------------------
6,775 Total Education and Civic Organizations 6,790,948
- ------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE - 11.3% (7.5% OF TOTAL INVESTMENTS)
1,425 Butler County, Ohio, Hospital Facilities Revenue Bonds, 5/16 at 100.00 N/R 1,236,387
Cincinnati Children's Medical Center Project, Series 2006K,
5.000%, 5/15/31 - FGIC Insured
1,100 Cuyahoga County, Ohio, Revenue Refunding Bonds, Cleveland 7/13 at 100.00 AA- 1,146,398
Clinic Health System, Series 2003A, 6.000%, 1/01/32
500 Franklin County, Ohio, Hospital Revenue Bonds, Nationwide 11/18 at 100.00 Aa2 481,530
Children's Hospital Project, Series 2005, 5.000%, 11/01/40
1,950 Lucas County, Ohio, Hospital Revenue Bonds, ProMedica 11/09 at 101.00 AA 1,853,807
Healthcare Obligated Group, Series 1999, 5.375%, 11/15/29 -
AMBAC Insured
330 Miami County, Ohio, Hospital Facilities Revenue Refunding Bonds, 5/16 at 100.00 A- 320,110
Upper Valley Medical Center Inc., Series 2006, 5.250%, 5/15/21
1,000 Montgomery County, Ohio, Revenue Bonds, Catholic Health 5/14 at 100.00 AA 984,290
Initiatives, Series 2004A, 5.000%, 5/01/30
335 Richland County, Ohio, Hospital Facilities Revenue Improvement 11/10 at 101.00 A- 343,348
Bonds, MedCentral Health System Obligated Group, Series 2000B,
6.375%, 11/15/30
500 Richland County, Ohio, Hospital Revenue Bonds, MidCentral 11/16 at 100.00 A- 456,140
Health System Group, Series 2006, 5.250%, 11/15/36
- ------------------------------------------------------------------------------------------------------------------------------------
7,140 Total Health Care 6,822,010
- ------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 7.8% (5.2% OF TOTAL INVESTMENTS)
350 Montgomery County, Ohio, GNMA Guaranteed Multifamily Housing 10/18 at 101.00 Aaa 321,346
Revenue Bonds, Canterbury Court Project, Series 2007,
5.500%, 10/20/42 (Alternative Minimum Tax)
2,885 Ohio Housing Finance Agency, FHA-Insured Mortgage Revenue 4/11 at 102.00 Aa2 2,956,548
Bonds, Asbury Woods Project, Series 2001A, 5.450%, 4/01/26
44
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY (continued)
Ohio Housing Finance Agency, FHA-Insured Multifamily Housing
Mortgage Revenue Bonds, Madonna Homes, Series 2006M:
$ 310 4.450%, 10/01/09 (Alternative Minimum Tax) No Opt. Call Aaa $ 313,996
340 4.900%, 6/20/48 (Alternative Minimum Tax) 6/16 at 102.00 AAA 272,595
1,000 Summit County Port Authority, Ohio, Multifamily Housing 9/17 at 102.00 AAA 869,750
Revenue Bonds, Callis Tower Apartments Project, Series 2007,
5.250%, 9/20/47 (Alternative Minimum Tax)
- ------------------------------------------------------------------------------------------------------------------------------------
4,885 Total Housing/Multifamily 4,734,235
- ------------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 2.7% (1.8% OF TOTAL INVESTMENTS)
315 Ohio Housing Finance Agency, GNMA Mortgage-Backed Securities 8/10 at 100.00 Aaa 328,095
Program Residential Mortgage Revenue Bonds, Series 2000C,
6.050%, 3/01/32 (Alternative Minimum Tax)
810 Ohio Housing Finance Agency, GNMA Mortgage-Backed Securities 8/10 at 100.00 Aaa 815,022
Program Residential Mortgage Revenue Bonds, Series 2000D,
5.450%, 9/01/31 (Alternative Minimum Tax)
45 Ohio Housing Finance Agency, GNMA Mortgage-Backed Securities 8/10 at 100.00 Aaa 45,550
Program Residential Mortgage Revenue Bonds, Series 2000F,
5.625%, 9/01/16
500 Ohio Housing Finance Agency, Single Family Mortgage Revenue 9/15 at 100.00 Aaa 439,630
Bonds, Series 2006H, 5.000%, 9/01/31 (Alternative Minimum Tax)
- ------------------------------------------------------------------------------------------------------------------------------------
1,670 Total Housing/Single Family 1,628,297
- ------------------------------------------------------------------------------------------------------------------------------------
INDUSTRIALS - 4.7% (3.1% OF TOTAL INVESTMENTS)
370 Cleveland-Cuyahoga County Port Authority, Ohio, Development 11/15 at 100.00 N/R 341,521
Revenue Bonds, Bond Fund Program - Columbia National
Group Project, Series 2005D, 5.000%, 5/15/20
(Alternative Minimum Tax)
880 Ohio State Water Development Authority, Solid Waste Revenue 7/12 at 100.00 B+ 816,429
Bonds, Allied Waste Industries, Inc., Series 2007A,
5.150%, 7/15/15 (Alternative Minimum Tax)
1,000 Toledo-Lucas County Port Authority, Ohio, Revenue Refunding No Opt. Call Baa3 1,048,880
Bonds, CSX Transportation Inc., Series 1992, 6.450%, 12/15/21
700 Western Reserve Port Authority, Ohio, Solid Waste Facility 7/17 at 102.00 N/R 629,545
Revenue Bonds, Central Waste Inc., Series 2007A,
6.350%, 7/01/27 (Alternative Minimum Tax)
- ------------------------------------------------------------------------------------------------------------------------------------
2,950 Total Industrials 2,836,375
- ------------------------------------------------------------------------------------------------------------------------------------
LONG-TERM CARE - 0.7% (0.5% OF TOTAL INVESTMENTS)
550 Hamilton County, Ohio, Health Care Revenue Refunding Bonds, 1/17 at 100.00 BBB 452,210
Life Enriching Communities Project, Series 2006A,
5.000%, 1/01/37
- ------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 27.2% (18.0% OF TOTAL INVESTMENTS)
1,500 Centerville City School District, Montgomery County, Ohio, 6/15 at 100.00 Aaa 1,525,065
General Obligation Bonds, Series 2005, 5.000%, 12/01/30 -
FSA Insured
400 Columbus City School District, Franklin County, Ohio, General No Opt. Call AAA 143,292
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+ 520,070
5.000%, 12/01/21
1,355 Franklin County, Ohio, General Obligation Bonds, Series 2007, 12/17 at 100.00 AAA 1,405,040
5.000%, 12/01/27
470 Green, Ohio, General Obligation Bonds, Series 2008, 12/15 at 100.00 AA 488,922
5.500%, 12/01/32 (WI/DD, Settling 8/06/08)
2,550 Hamilton City School District, Ohio, General Obligation Bonds, 6/17 at 100.00 AAA 2,589,882
Series 2007, 5.000%, 12/01/34 - FSA Insured (UB)
2,000 Indian Lake Local School District, Logan and Auglaize Counties, 6/17 at 100.00 AA 1,971,060
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- 428,822
Obligation Bonds, Series 2007, 5.000%, 12/01/30 - FGIC Insured
1,005 Marysville Exempted School District, Union County, Ohio, 12/15 at 100.00 AAA 1,037,301
General Obligation Bonds, Series 2006, 5.000%, 12/01/25 -
FSA Insured
45
NXI
Nuveen Ohio Dividend Advantage Municipal Fund (continued)
Portfolio of INVESTMENTS July 31, 2008
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL (continued)
$ 200 Mason City School District, Counties of Warren and Butler, Ohio, 6/17 at 100.00 Aa1 $ 203,560
General Obligation Bonds, Series 2007, 5.000%, 12/01/31
2,000 Ohio, General Obligation Higher Education Capital Facilities 2/11 at 100.00 AA+ 2,068,400
Bonds, Series 2001A, 5.000%, 2/01/20
2,415 Troy City School District, Miami County, Ohio, General Obligation 12/14 at 100.00 Aaa 2,463,421
Bonds, Series 2005, 5.000%, 12/01/28 - FSA Insured
1,485 West Chester Township, Butler County, Ohio, Various Purpose 11/11 at 101.00 Aa1 1,598,320
Limited Tax General Obligation Refunding Bonds, Series 2001,
5.500%, 12/01/17 - AMBAC Insured
- ------------------------------------------------------------------------------------------------------------------------------------
16,310 Total Tax Obligation/General 16,443,155
- ------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 14.1% (9.3% OF TOTAL INVESTMENTS)
2,000 Franklin County, Ohio, Excise Tax and Lease Revenue Anticipation 12/15 at 100.00 Aaa 2,021,880
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 A+ 1,429,306
Revenue Bonds, Series 2004, 5.000%, 12/01/21 - FGIC Insured
2,000 Hamilton County, Ohio, Sales Tax Bonds, Subordinate Lien, 12/16 at 100.00 Aa3 1,991,500
Series 2006, 5.000%, 12/01/32 - AMBAC Insured
345 Ohio State Building Authority, State Facilities Bonds, 4/15 at 100.00 AAA 353,421
Administrative Building Fund Projects, Series 2005A,
5.000%, 4/01/25 - FSA Insured
1,000 Ohio State Building Authority, State Facilities Bonds, 4/15 at 100.00 AAA 1,028,460
Adult Correctional Building Fund Project, Series 2005A,
5.000%, 4/01/23 - FSA Insured
950 Puerto Rico Infrastructure Financing Authority, Special Tax No Opt. Call AA 200,802
Revenue Bonds, Series 2005A, 0.000%, 7/01/35 -
AMBAC Insured
1,400 Virgin Islands Public Finance Authority, Gross Receipts Taxes 10/10 at 101.00 BBB+ 1,476,020
Loan Note, Series 1999A, 6.375%, 10/01/19
- ------------------------------------------------------------------------------------------------------------------------------------
9,110 Total Tax Obligation/Limited 8,501,389
- ------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 3.4% (2.3% OF TOTAL INVESTMENTS)
2,000 Ohio Turnpike Commission, Revenue Bonds, Series 2001A, 2/11 at 100.00 AA 2,071,700
5.500%, 2/15/26
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 46.9% (31.0% OF TOTAL INVESTMENTS) (4)
1,000 Bay Village City School District, Ohio, General Obligation Unlimited 12/10 at 100.00 Aa2 (4) 1,059,980
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 1,123,670
Obligation Bonds, Series 2004, 5.500%, 12/01/15
(Pre-refunded 12/01/14) - FSA Insured
1,470 Hamilton County, Ohio, Healthcare Facilities Improvement Revenue 10/08 at 101.00 BBB (4) 1,494,049
Bonds, Twin Towers, Series 1999A, 5.750%, 10/01/19
(Pre-refunded 10/01/08)
1,000 Lakewood City School District, Cuyahoga County, Ohio, General 12/14 at 100.00 AAA 1,107,090
Obligation Bonds, Series 2004, 5.250%, 12/01/16
(Pre-refunded 12/01/14) - FSA Insured
2,000 Lakota Local School District, Butler County, Ohio, Unlimited Tax 6/11 at 100.00 Aa2 (4) 2,133,900
General Obligation School Improvement and Refunding Bonds,
Series 2001, 5.125%, 12/01/26 (Pre-refunded 6/01/11) -
FGIC Insured
910 Lebanon, Ohio, Electric System Mortgage Revenue Bonds, 12/10 at 101.00 AA (4) 983,473
Series 2001, 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) 1,044,060
General Obligation School Building Construction Bonds,
Series 1999, 5.250%, 12/01/28 (Pre-refunded 12/01/09) -
FGIC Insured
46
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED (4) (continued)
$ 1,000 Middletown City School District, Butler County, Ohio, General 12/13 at 100.00 N/R (4) $ 1,076,290
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) 1,079,610
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) 2,171,580
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 AA (4) 1,080,740
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) 2,097,163
Ohio, General Obligation Bonds, Series 2004A, 5.250%, 12/01/23
(Pre-refunded 6/01/14) - FGIC Insured
Parma Community General Hospital Association, Ohio, Hospital
Revenue Refunding and Improvement Bonds, Series 1998:
2,250 5.250%, 11/01/13 (Pre-refunded 11/01/08) 11/08 at 101.00 A- (4) 2,291,625
2,000 5.375%, 11/01/29 (Pre-refunded 11/01/08) 11/08 at 101.00 N/R (4) 2,037,620
2,000 Puerto Rico Municipal Finance Agency, Series 1999A, 8/09 at 101.00 AAA 2,105,980
6.000%, 8/01/16 (Pre-refunded 8/01/09) - FSA Insured
665 Richland County, Ohio, Hospital Facilities Revenue Improvement 11/10 at 101.00 A- (4) 727,603
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, 12/09 at 101.00 AA (4) 1,339,439
Unlimited 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 2002F, 6/12 at 100.00 A+ (4) 2,975,899
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) 425,424
Ohio, Various Purpose General Obligation Bonds, Series 2001,
5.000%, 12/01/27 (Pre-refunded 6/01/11) - MBIA Insured
- ------------------------------------------------------------------------------------------------------------------------------------
26,605 Total U.S. Guaranteed 28,355,195
- ------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 11.6% (7.7% OF TOTAL INVESTMENTS)
1,000 American Municipal Power Ohio Inc., General Revenue Bonds, 2/18 at 100.00 A1 986,160
Series 2008, 5.250%, 2/15/43
1,440 American Municipal Power Ohio Inc., Wadsworth, Electric 2/12 at 100.00 A2 1,521,115
System Improvement Revenue Bonds, Series 2002,
5.250%, 2/15/17 - MBIA Insured
2,130 Cleveland, Ohio, Public Power System Revenue Bonds, No Opt. Call AA 558,230
Series 2008B, 0.000%, 11/15/32 - MBIA Insured
2,000 Ohio Air Quality Development Authority, Revenue Refunding Bonds, 5/09 at 101.00 AA 2,014,100
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 AA 1,008,440
Certificates, Belleville Hydroelectric Project - Joint Venture 5,
Series 2004, 5.000%, 2/15/21 - AMBAC Insured
1,000 Ohio Water Development Authority, Solid Waste Disposal 9/08 at 102.00 N/R 945,370
Revenue Bonds, Bay Shore Power, Series 1998A, 5.875%, 9/01/20
(Alternative Minimum Tax)
- ------------------------------------------------------------------------------------------------------------------------------------
8,570 Total Utilities 7,033,415
- ------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 4.9% (3.2% OF TOTAL INVESTMENTS)
175 City of Marysville, Ohio, Water System Mortgage Revenue Bonds, 12/17 at 100.00 Aa3 174,256
Series 2007, 5.000%, 12/01/32 - AMBAC Insured
325 Ohio Water Development Authority, Revenue Bonds, Drinking 6/18 at 100.00 AAA 335,169
Water Assistance Fund, State Match, Series 2008,
5.000%, 6/01/28 - FSA Insured
47
NXI
Nuveen Ohio Dividend Advantage Municipal Fund (continued)
Portfolio of INVESTMENTS July 31, 2008
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER (continued)
$ 2,375 Ohio Water Development Authority, Revenue Bonds, Water 12/13 at 100.00 Aa2 $ 2,429,482
Development Community Assistance Program, Series 2003,
5.000%, 12/01/23 - MBIA Insured (5)
2,875 Total Water and Sewer 2,938,907
- ------------------------------------------------------------------------------------------------------------------------------------
$ 92,865 Total Investments (cost $91,052,976) - 151.1% 91,395,993
=============-----------------------------------------------------------------------------------------------------------------------
Floating Rate Obligations - (2.8)% (1,700,000)
--------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 3.0% 1,778,896
--------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (51.3)% (6) (31,000,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 60,474,889
====================================================================================================================
FORWARD SWAPS OUTSTANDING AT JULY 31, 2008:
FUND FIXED RATE UNREALIZED
NOTIONAL PAY/RECEIVE FLOATING RATE FIXED RATE PAYMENT EFFECTIVE TERMINATION APPRECIATION
COUNTERPARTY AMOUNT FLOATING RATE INDEX (ANNUALIZED) FREQUENCY DATE (7) DATE (DEPRECIATION)
- ------------------------------------------------------------------------------------------------------------------------------------
Royal Bank
of Canada $1,500,000 Pay SIFM 4.335% Quarterly 8/06/08 8/06/37 $107,042
====================================================================================================================================
SIFM - The daily arithmetic average of the weekly Securities Industry and
Financial Markets (SIFM) Municipal Swap Index, previously referred to as
the Bond Market Association or BMA.
FUTURES CONTRACTS OUTSTANDING AT JULY 31, 2008:
UNREALIZED
CONTRACT NUMBER OF CONTRACT VALUE AT APPRECIATION
TYPE POSITION CONTRACTS EXPIRATION JULY 31, 2008 (DEPRECIATION)
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Bond Long 20 9/08 $2,310,000 $41,291
====================================================================================================================================
(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 AMBAC, FGIC, MBIA, RAAI and XLCA as
of July 31, 2008. 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) Portion of investment, with an aggregate market value of
$40,918, has been pledged to collateralize the net payment
obligations under futures contracts.
(6) Preferred Shares, at Liquidation Value as a percentage of
total investments is (33.9)%.
(7) Effective date represents the date on which both the Fund
and counterparty commence interest payment accruals on each
forward swap contract.
N/R Not rated.
WI/DD Purchased on a when-issued or delayed delivery basis.
(UB) Underlying bond of an inverse floating rate trust reflected
as a financing transaction pursuant to the provisions of
SFAS No. 140.
See accompanying notes to financial statements.
48
NBJ
Nuveen Ohio Dividend Advantage Municipal Fund 2
Portfolio of INVESTMENTS
July 31, 2008
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES - 4.2% (2.7% OF TOTAL INVESTMENTS)
$ 2,200 Buckeye Tobacco Settlement Financing Authority, Ohio, Tobacco 6/17 at 100.00 BBB $ 1,787,368
Settlement Asset-Backed Revenue Bonds, Senior Lien,
Series 2007A-2, 5.875%, 6/01/47
45 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 5/12 at 100.00 BBB 41,554
Asset-Backed Refunding Bonds, Series 2002, 5.375%, 5/15/33
- ------------------------------------------------------------------------------------------------------------------------------------
2,245 Total Consumer Staples 1,828,922
- ------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 12.1% (7.8% OF TOTAL INVESTMENTS)
1,345 Bowling Green State University, Ohio, General Receipts Bonds, 6/13 at 100.00 AA 1,411,214
Series 2003, 5.250%, 6/01/18 - AMBAC Insured
450 Ohio Higher Education Facilities Commission, General Revenue 7/16 at 100.00 A+ 436,554
Bonds, Kenyon College, Series 2006, 5.000%, 7/01/41
1,050 Ohio Higher Educational Facilities Commission, Revenue Bonds, 12/11 at 100.00 Baa2 1,065,698
Wittenberg University, Series 2001, 5.500%, 12/01/15
1,000 University of Cincinnati, Ohio, General Receipts Bonds, 6/13 at 100.00 A+ 1,017,530
Series 2003C, 5.000%, 6/01/22 - FGIC Insured
1,245 University of Cincinnati, Ohio, General Receipts Bonds, 6/14 at 100.00 AA 1,289,795
Series 2004D, 5.000%, 6/01/19 - AMBAC Insured
- ------------------------------------------------------------------------------------------------------------------------------------
5,090 Total Education and Civic Organizations 5,220,791
- ------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE - 23.3% (14.9% OF TOTAL INVESTMENTS)
370 Akron, Bath and Copley Joint Township Hospital District, No Opt. Call Baa1 371,861
Ohio, Hospital Facilities Revenue Bonds, Summa Health System,
Series 1998A, 5.000%, 11/15/08
1,150 Butler County, Ohio, Hospital Facilities Revenue Bonds, Cincinnati 5/16 at 100.00 N/R 997,786
Children's Medical Center Project, Series 2006K,
5.000%, 5/15/31 - FGIC Insured
1,000 Erie County, Ohio, Hospital Facilities Revenue Bonds, 8/12 at 101.00 A 1,009,600
Firelands Regional Medical Center, Series 2002A,
5.500%, 8/15/22
250 Franklin County, Ohio, Hospital Revenue Bonds, Nationwide 11/18 at 100.00 Aa2 240,765
Children's 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- 1,895,307
Bonds, Catholic Healthcare Partners, Series 2001A,
5.400%, 10/01/21
225 Miami County, Ohio, Hospital Facilities Revenue Refunding 5/16 at 100.00 A- 218,257
Bonds, Upper Valley Medical Center Inc., Series 2006,
5.250%, 5/15/21
700 Montgomery County, Ohio, Revenue Bonds, Catholic 5/14 at 100.00 AA 689,003
Health Initiatives, Series 2004A, 5.000%, 5/01/30
665 Richland County, Ohio, Hospital Facilities Revenue Improvement 11/10 at 101.00 A- 681,572
Bonds, MedCentral Health System Obligated Group,
Series 2000B, 6.375%, 11/15/30
350 Richland County, Ohio, Hospital Revenue Bonds, MidCentral 11/16 at 100.00 A- 319,298
Health System Group, Series 2006, 5.250%, 11/15/36
3,670 Tuscarawas County, Ohio, Hospital Facilities Revenue Bonds, 10/11 at 101.00 A 3,653,298
Union Hospital Project, Series 2001, 5.750%, 10/01/26 -
RAAI Insured
- ------------------------------------------------------------------------------------------------------------------------------------
10,230 Total Health Care 10,076,747
- ------------------------------------------------------------------------------------------------------------------------------------
49
NBJ
Nuveen Ohio Dividend Advantage Municipal Fund 2 (continued)
Portfolio of INVESTMENTS July 31, 2008
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 5.4% (3.5% OF TOTAL INVESTMENTS)
$ 1,000 Franklin County, Ohio, GNMA Collateralized Multifamily Housing 5/12 at 102.00 Aaa $ 1,006,800
Mortgage Revenue Bonds, Agler Project, Series 2002A,
5.550%, 5/20/22 (Alternative Minimum Tax)
250 Montgomery County, Ohio, GNMA Guaranteed Multifamily 10/18 at 101.00 Aaa 229,533
Housing Revenue Bonds, Canterbury Court Project,
Series 2007, 5.500%, 10/20/42 (Alternative Minimum Tax)
Ohio Housing Finance Agency, FHA-Insured Multifamily Housing
Mortgage Revenue Bonds, Madonna Homes, Series 2006M:
250 4.450%, 10/01/09 (Alternative Minimum Tax) No Opt. Call Aaa 253,223
250 4.900%, 6/20/48 (Alternative Minimum Tax) 6/16 at 102.00 AAA 200,438
750 Summit County Port Authority, Ohio, Multifamily Housing 9/17 at 102.00 AAA 652,313
Revenue Bonds, Callis Tower Apartments Project, Series 2007,
5.250%, 9/20/47 (Alternative Minimum Tax)
- ------------------------------------------------------------------------------------------------------------------------------------
2,500 Total Housing/Multifamily 2,342,307
- ------------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 2.0% (1.3% OF TOTAL INVESTMENTS)
1,000 Ohio Housing Finance Agency, Single Family Mortgage 9/15 at 100.00 Aaa 879,260
Revenue Bonds, Series 2006H, 5.000%, 9/01/31
(Alternative Minimum Tax)
- ------------------------------------------------------------------------------------------------------------------------------------
INDUSTRIALS - 9.0% (5.8% OF TOTAL INVESTMENTS)
3,000 Ohio State Sewage and Solid Waste Disposal Facilities, 11/11 at 100.00 BBB+ 2,869,290
Revenue Bonds, Anheuser-Busch Project, Series 2001,
5.500%, 11/01/35 (Alternative Minimum Tax)
640 Ohio State Water Development Authority, Solid Waste 7/12 at 100.00 B+ 593,766
Revenue Bonds, Allied Waste Industries, Inc., Series 2007A,
5.150%, 7/15/15 (Alternative Minimum Tax)
500 Western Reserve Port Authority, Ohio, Solid Waste Facility 7/17 at 102.00 N/R 449,675
Revenue Bonds, Central Waste Inc., Series 2007A,
6.350%, 7/01/27 (Alternative Minimum Tax)
- ------------------------------------------------------------------------------------------------------------------------------------
4,140 Total Industrials 3,912,731
- ------------------------------------------------------------------------------------------------------------------------------------
LONG-TERM CARE - 0.9% (0.6% OF TOTAL INVESTMENTS)
475 Hamilton County, Ohio, Health Care Revenue Refunding 1/17 at 100.00 BBB 390,545
Bonds, Life Enriching Communities Project, Series 2006A,
5.000%, 1/01/37
- ------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 42.9% (27.5% OF TOTAL INVESTMENTS)
1,700 Butler County, Hamilton, Ohio, Limited Tax General Obligation 11/11 at 101.00 Aa3 1,714,756
Bonds, One Renaissance Center Acquisition, Series 2001,
5.000%, 11/01/26 - AMBAC Insured
Cleveland Municipal School District, Cuyahoga County, Ohio,
General Obligation Bonds, Series 2004:
1,000 5.000%, 12/01/15 - FSA Insured 6/14 at 100.00 AAA 1,070,690
1,000 5.000%, 12/01/22 - FSA Insured 6/14 at 100.00 AAA 1,027,920
300 Columbus City School District, Franklin County, Ohio, General No Opt. Call AAA 107,469
Obligation Bonds, Series 2006, 0.000%, 12/01/27 - FSA Insured
400 Cuyahoga County, Ohio, General Obligation Bonds, 12/14 at 100.00 AA+ 416,056
Series 2004, 5.000%, 12/01/21
1,000 Franklin County, Ohio, General Obligation Bonds, Series 2007, 12/17 at 100.00 AAA 1,036,930
5.000%, 12/01/27
400 Green, Ohio, General Obligation Bonds, Series 2008, 12/15 at 100.00 AA 416,104
5.500%, 12/01/32 (WI/DD, Settling 8/06/08)
1,905 Hamilton City School District, Ohio, General Obligation Bonds, 6/17 at 100.00 AAA 1,934,794
Series 2007, 5.000%, 12/01/34 - FSA Insured (UB)
1,000 Indian Lake Local School District, Logan and Auglaize Counties, 6/17 at 100.00 AA 985,530
Ohio, School Facilities Improvement and Refunding Bonds,
Series 2007, 5.000%, 12/01/34 - MBIA Insured
345 Lakewood City School District, Cuyahoga County, Ohio, 12/17 at 100.00 AA- 344,055
General Obligation Bonds, Series 2007, 5.000%, 12/01/30 -
FGIC Insured
2,420 Lorain County, Ohio, Limited Tax General Obligation Justice 12/12 at 100.00 Aa3 2,558,037
Center Bonds, Series 2002, 5.500%, 12/01/22 - FGIC Insured
1,005 Marysville Exempted School District, Union County, Ohio, 12/15 at 100.00 AAA 1,037,301
General Obligation Bonds, Series 2006, 5.000%, 12/01/25 -
FSA Insured
50
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL (continued)
$ 200 Mason City School District, Counties of Warren and Butler, Ohio, 6/17 at 100.00 Aa1 $ 203,560
General Obligation Bonds, Series 2007, 5.000%, 12/01/31
2,665 Newark City School District, Licking County, Ohio, General 12/15 at 100.00 A 2,668,065
Obligation Bonds, Series 2005, 5.000%, 12/01/28 - FGIC Insured
1,960 Portage County, Ohio, General Obligation Bonds, Series 2001, 12/11 at 100.00 AA 1,987,479
5.000%, 12/01/25 - FGIC Insured
1,000 Powell, Ohio, General Obligation Bonds, Series 2002, 12/12 at 100.00 AA+ 1,047,970
5.500%, 12/01/25 - FGIC Insured
- ------------------------------------------------------------------------------------------------------------------------------------
18,300 Total Tax Obligation/General 18,556,716
- ------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 17.5% (11.3% OF TOTAL INVESTMENTS)
1,400 Hamilton County, Ohio, Sales Tax Bonds, Subordinate Lien, 12/16 at 100.00 Aa3 1,394,050
Series 2006, 5.000%, 12/01/32 - AMBAC Insured
250 Ohio State Building Authority, State Facilities Bonds, Administrative 4/15 at 100.00 AAA 256,103
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 1,028,460
Correctional Building Fund Project, Series 2005A,
5.000%, 4/01/23 - FSA Insured
1,500 Ohio, State Appropriation Lease Bonds, Higher Education No Opt. Call AA 1,570,500
Capital Facilities, Series 2002A-II, 5.500%, 12/01/09 -
MBIA Insured
1,095 Ohio, State Appropriation Lease Bonds, Parks and Recreation 12/13 at 100.00 AA 1,154,327
Capital Facilities, Series 2004A-II, 5.000%, 12/01/18
1,000 Puerto Rico Highway and Transportation Authority, Highway 7/12 at 100.00 BBB+ 1,022,050
Revenue Refunding Bonds, Series 2002E, 5.750%, 7/01/24
620 Puerto Rico Infrastructure Financing Authority, Special Tax No Opt. Call AA 131,049
Revenue Bonds, Series 2005A, 0.000%, 7/01/35 -
AMBAC Insured
1,000 Summit County Port Authority, Ohio, Revenue Bonds, Civic 12/11 at 100.00 AA 1,028,880
Theatre Project, Series 2001, 5.500%, 12/01/26 - AMBAC Insured
- ------------------------------------------------------------------------------------------------------------------------------------
7,865 Total Tax Obligation/Limited 7,585,419
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 24.6% (15.8% OF TOTAL INVESTMENTS) (4)
2,345 Cleveland, Ohio, Airport System Revenue Bonds, Series 2001A, 1/10 at 101.00 AAA 2,463,704
5.250%, 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 679,820
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) 1,075,710
Obligation Capital Improvement Bonds, Series 2001A,
5.125%, 12/01/21 (Pre-refunded 12/01/11) - MBIA Insured
1,000 Hamilton County, Ohio, Healthcare Facilities Improvement 10/08 at 101.00 BBB (4) 1,016,450
Revenue Bonds, Twin Towers, Series 1999A,
5.800%, 10/01/23 (Pre-refunded 10/01/08)
2,250 Lebanon City School District, Warren County, Ohio, 12/11 at 100.00 AAA 2,447,055
General Obligation Bonds, Series 2001, 5.500%, 12/01/21
(Pre-refunded 12/01/11) - FSA Insured (5)
1,000 Marysville Exempted Village School District, Ohio, Certificates 6/15 at 100.00 AAA 1,112,240
of Participation, School Facilities Project, Series 2005,
5.250%, 12/01/21 (Pre-refunded 6/01/15) - MBIA Insured
1,050 Olentangy Local School District, Delaware and Franklin Counties, 6/14 at 100.00 AA+ (4) 1,172,798
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) 694,779
Bonds, MedCentral Health System Obligated Group,
Series 2000B, 6.375%, 11/15/30 (Pre-refunded 11/15/10)
- ------------------------------------------------------------------------------------------------------------------------------------
9,885 Total U.S. Guaranteed 10,662,556
- ------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 12.3% (7.9% OF TOTAL INVESTMENTS)
1,000 American Municipal Power Ohio Inc., General Revenue Bonds, 2/18 at 100.00 A1 986,160
Series 2008, 5.250%, 2/15/43
1,065 Cleveland, Ohio, Public Power System Revenue Bonds, No Opt. Call AA 279,115
Series 2008B, 0.000%, 11/15/32 - MBIA Insured
51
NBJ
Nuveen Ohio Dividend Advantage Municipal Fund 2 (continued)
Portfolio of INVESTMENTS July 31, 2008
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
UTILITIES (continued)
$ 2,500 Ohio Air Quality Development Authority, Revenue Refunding 5/09 at 101.00 AA $ 2,517,625
Bonds, 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 AA 603,431
Certificates, Belleville Hydroelectric Project - Joint Venture 5,
Series 2004, 5.000%, 2/15/20 - AMBAC Insured
1,000 Ohio Water Development Authority, Solid Waste Disposal Revenue 9/08 at 102.00 N/R 945,370
Bonds, Bay Shore Power, Series 1998A, 5.875%, 9/01/20
(Alternative Minimum Tax)
- ------------------------------------------------------------------------------------------------------------------------------------
6,160 Total Utilities 5,331,701
- ------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 1.5% (0.9% OF TOTAL INVESTMENTS)
130 City of Marysville, Ohio, Water System Mortgage Revenue Bonds, 12/17 at 100.00 Aa3 129,448
Series 2007, 5.000%, 12/01/32 - AMBAC Insured
210 Ohio Water Development Authority, Revenue Bonds, Drinking 6/18 at 100.00 AAA 216,571
Water Assistance Fund, State Match, Series 2008,
5.000%, 6/01/28 - FSA Insured
270 Ohio Water Development Authority, Revenue Bonds, Fresh 12/11 at 100.00 AAA 276,537
Water Development, Series 2001A, 5.000%, 12/01/21 -
FSA Insured
- ------------------------------------------------------------------------------------------------------------------------------------
610 Total Water and Sewer 622,556
- ------------------------------------------------------------------------------------------------------------------------------------
$ 68,500 Total Investments (cost $68,026,784) - 155.7% 67,410,251
=============-----------------------------------------------------------------------------------------------------------------------
Floating Rate Obligations - (2.9)% (1,270,000)
--------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 2.6% 1,145,701
--------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (55.4)% (6) (24,000,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 43,285,952
====================================================================================================================
FUTURES CONTRACTS OUTSTANDING AT JULY 31, 2008:
UNREALIZED
CONTRACT NUMBER OF CONTRACT VALUE AT APPRECIATION
TYPE POSITION CONTRACTS EXPIRATION JULY 31, 2008 (DEPRECIATION)
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Bond Long 8 9/08 $924,000 $19,976
====================================================================================================================================
(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 AMBAC, FGIC, MBIA, RAAI and XLCA as
of July 31, 2008. 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) Portion of investment, with an aggregate market value of
$21,752, has been pledged to collateralize the net payment
obligations under futures contracts.
(6) Preferred Shares, at Liquidation Value as a percentage of
total investments is (35.6)%.
N/R Not rated.
WI/DD Purchased on a when-issued or delayed delivery basis.
(UB) Underlying bond of an inverse floating rate trust reflected
as a financing transaction pursuant to the provisions of
SFAS No. 140.
See accompanying notes to financial statements.
52
NVJ
Nuveen Ohio Dividend Advantage Municipal Fund 3
Portfolio of INVESTMENTS
July 31, 2008
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES - 4.4% (2.9% OF TOTAL INVESTMENTS)
$ 1,670 Buckeye Tobacco Settlement Financing Authority, Ohio, Tobacco 6/17 at 100.00 BBB $ 1,356,775
Settlement Asset-Backed Revenue Bonds, Senior Lien,
Series 2007A-2, 5.875%, 6/01/47
20 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 5/12 at 100.00 BBB 18,469
Asset-Backed Refunding Bonds, Series 2002, 5.375%, 5/15/33
- ------------------------------------------------------------------------------------------------------------------------------------
1,690 Total Consumer Staples 1,375,244
- ------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 6.4% (4.2% OF TOTAL INVESTMENTS)
350 Ohio Higher Education Facilities Commission, General Revenue 7/16 at 100.00 A+ 339,542
Bonds, Kenyon College, Series 2006, 5.000%, 7/01/41
1,125 Ohio Higher Education Facilities Commission, Revenue Bonds, 5/12 at 100.00 A2 1,180,463
Ohio Northern University, Series 2002, 5.750%, 5/01/16
500 Ohio Higher Education Facilities Commission, Revenue Bonds, 12/15 at 100.00 Baa2 457,855
Wittenberg University, Series 2005, 5.000%, 12/01/24
- ------------------------------------------------------------------------------------------------------------------------------------
1,975 Total Education and Civic Organizations 1,977,860
- ------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE - 13.2% (8.6% OF TOTAL INVESTMENTS)
185 Akron, Bath and Copley Joint Township Hospital District, Ohio, No Opt. Call Baa1 185,931
Hospital Facilities Revenue Bonds, Summa Health System,
Series 1998A, 5.000%, 11/15/08
775 Butler County, Ohio, Hospital Facilities Revenue Bonds, Cincinnati 5/16 at 100.00 N/R 672,421
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 1,766,800
Regional Medical Center, Series 2002A, 5.500%, 8/15/22
250 Franklin County, Ohio, Hospital Revenue Bonds, Nationwide 11/18 at 100.00 Aa2 240,765
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- 155,205
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 492,145
Initiatives, Series 2004A, 5.000%, 5/01/30
335 Richland County, Ohio, Hospital Facilities Revenue Improvement 11/10 at 101.00 A- 343,348
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- 228,070
System Group, Series 2006, 5.250%, 11/15/36
- ------------------------------------------------------------------------------------------------------------------------------------
4,205 Total Health Care 4,084,685
- ------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 3.7% (2.4% OF TOTAL INVESTMENTS)
200 Montgomery County, Ohio, GNMA Guaranteed Multifamily Housing 10/18 at 101.00 Aaa 183,626
Revenue Bonds, Canterbury Court Project, Series 2007,
5.500%, 10/20/42 (Alternative Minimum Tax)
Ohio Housing Finance Agency, FHA-Insured Multifamily Housing
Mortgage Revenue Bonds, Madonna Homes, Series 2006M:
150 4.450%, 10/01/09 (Alternative Minimum Tax) No Opt. Call Aaa 151,933
200 4.900%, 6/20/48 (Alternative Minimum Tax) 6/16 at 102.00 AAA 160,350
750 Summit County Port Authority, Ohio, Multifamily Housing Revenue 9/17 at 102.00 AAA 652,312
Bonds, Callis Tower Apartments Project, Series 2007,
5.250%, 9/20/47 (Alternative Minimum Tax)
- ------------------------------------------------------------------------------------------------------------------------------------
1,300 Total Housing/Multifamily 1,148,221
- ------------------------------------------------------------------------------------------------------------------------------------
53
NVJ
Nuveen Ohio Dividend Advantage Municipal Fund 3 (continued)
Portfolio of INVESTMENTS July 31, 2008
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 3.7% (2.4% OF TOTAL INVESTMENTS)
$ 150 Ohio Housing Finance Agency, GNMA Mortgage-Backed 8/10 at 100.00 Aaa $ 156,236
Securities Program Residential Mortgage Revenue Bonds,
Series 2000C, 6.050%, 3/01/32 (Alternative Minimum Tax)
500 Ohio Housing Finance Agency, GNMA Mortgage-Backed Securities 8/10 at 100.00 Aaa 503,100
Program Residential Mortgage Revenue Bonds, Series 2000D,
5.450%, 9/01/31 (Alternative Minimum Tax)
45 Ohio Housing Finance Agency, GNMA Mortgage-Backed Securities 8/10 at 100.00 Aaa 45,550
Program Residential Mortgage Revenue Bonds, Series 2000F,
5.625%, 9/01/16
500 Ohio Housing Finance Agency, Single Family Mortgage Revenue 9/15 at 100.00 Aaa 439,630
Bonds, Series 2006H, 5.000%, 9/01/31 (Alternative Minimum Tax)
- ------------------------------------------------------------------------------------------------------------------------------------
1,195 Total Housing/Single Family 1,144,516
- ------------------------------------------------------------------------------------------------------------------------------------
INDUSTRIALS - 2.6% (1.7% OF TOTAL INVESTMENTS)
480 Ohio State Water Development Authority, Solid Waste Revenue 7/12 at 100.00 B+ 445,325
Bonds, Allied Waste Industries, Inc., Series 2007A,
5.150%, 7/15/15 (Alternative Minimum Tax)
400 Western Reserve Port Authority, Ohio, Solid Waste Facility 7/17 at 102.00 N/R 359,740
Revenue Bonds, Central Waste Inc., Series 2007A,
6.350%, 7/01/27 (Alternative Minimum Tax)
- ------------------------------------------------------------------------------------------------------------------------------------
880 Total Industrials 805,065
- ------------------------------------------------------------------------------------------------------------------------------------
LONG-TERM CARE - 1.1% (0.7% OF TOTAL INVESTMENTS)
400 Hamilton County, Ohio, Health Care Revenue Refunding Bonds, 1/17 at 100.00 BBB 328,880
Life Enriching Communities Project, Series 2006A, 5.000%, 1/01/37
- ------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 32.0% (20.8% OF TOTAL INVESTMENTS)
1,815 Columbus City School District, Franklin County, Ohio, General No Opt. Call AAA 650,187
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+ 312,042
5.000%, 12/01/21
1,000 Franklin County, Ohio, General Obligation Bonds, Series 2007, 12/17 at 100.00 AAA 1,036,930
5.000%, 12/01/27
250 Green, Ohio, General Obligation Bonds, Series 2008, 12/15 at 100.00 AA 260,065
5.500%, 12/01/32 (WI/DD, Settling 8/06/08)
1,275 Hamilton City School District, Ohio, General Obligation Bonds, 6/17 at 100.00 AAA 1,294,941
Series 2007, 5.000%, 12/01/34 - FSA Insured (UB)
1,000 Indian Lake Local School District, Logan and Auglaize Counties, 6/17 at 100.00 AA 985,530
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 1,026,250
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- 203,268
Obligation Bonds, Series 2007, 5.000%, 12/01/25 - FGIC Insured
1,270 Lorain, Ohio, General Obligation Bonds, Series 2002, 12/12 at 100.00 Aa3 1,282,433
5.125%, 12/01/26 - AMBAC Insured
500 Marysville Exempted School District, Union County, Ohio, 12/15 at 100.00 AAA 516,070
General 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 101,780
General Obligation Bonds, Series 2007, 5.000%, 12/01/31
1,000 Ohio, Common Schools Capital Facilities, General Obligation 9/11 at 100.00 AA+ 1,035,660
Bonds, Series 2001B, 5.000%, 9/15/20
1,130 Solon, Ohio, General Obligation Refunding and Improvement 12/12 at 100.00 AAA 1,185,257
Bonds, Series 2002, 5.000%, 12/01/18
- ------------------------------------------------------------------------------------------------------------------------------------
10,840 Total Tax Obligation/General 9,890,413
- ------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 21.6% (14.1% OF TOTAL INVESTMENTS)
1,000 Hamilton County, Ohio, Sales Tax Bonds, Subordinate Lien, 12/16 at 100.00 Aa3 995,750
Series 2006, 5.000%, 12/01/32 - AMBAC Insured
1,000 Midview Local School District, Lorain County, Ohio, Certificates 5/13 at 100.00 A 986,710
of Participation, Series 2003, 5.000%, 11/01/30
54
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED (continued)
$ 1,250 Ohio State Building Authority, State Facilities Bonds, Administrative 4/12 at 100.00 AAA $ 1,327,075
Building Fund Projects, Series 2002A, 5.500%, 4/01/18 -
FSA Insured
200 Ohio State Building Authority, State Facilities Bonds, Administrative 4/15 at 100.00 AAA 204,882
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 1,047,000
Facilities, Series 2002A-II, 5.500%, 12/01/09 - MBIA Insured
2,000 Puerto Rico Public Buildings Authority, Guaranteed Government No Opt. Call AAA 2,138,500
Facilities Revenue Bonds, Series 1993L, 5.500%, 7/01/21 -
FSA Insured
- ------------------------------------------------------------------------------------------------------------------------------------
6,450 Total Tax Obligation/Limited 6,699,917
- ------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 5.5% (3.6% OF TOTAL INVESTMENTS)
1,550 Ohio Turnpike Commission, Revenue Refunding Bonds, No Opt. Call AA 1,711,618
Series 1998A, 5.500%, 2/15/18 - FGIC Insured
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 49.6% (32.2% OF TOTAL INVESTMENTS) (4)
1,000 Canal Winchester Local School District, Franklin and Fairfield 12/08 at 102.00 A3 (4) 1,031,720
Counties, Ohio, Unlimited Tax General Obligation School
Improvement Bonds, Series 1998, 5.300%, 12/01/25 (Pre-refunded
12/01/08) - FGIC Insured
725 Eaton City School District, Preble County, Ohio, General Obligation 12/12 at 101.00 A1 (4) 813,523
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) 1,413,854
Bonds, Series 2001, 5.500%, 12/01/28 (Pre-refunded 12/01/11)
500 Hamilton County, Ohio, Healthcare Facilities Improvement Revenue 10/08 at 101.00 BBB (4) 508,180
Bonds, Twin Towers, Series 1999A, 5.750%, 10/01/19
(Pre-refunded 10/01/08)
1,000 Hilliard, Ohio, General Obligation Bonds, Series 2002, 12/12 at 100.00 Aa2 (4) 1,098,140
5.375%, 12/01/22 (Pre-refunded 12/01/12)
500 Miami East Local School District, Miami County, Ohio, General 6/12 at 100.00 AAA 540,860
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) 1,082,200
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) 1,081,290
Initiatives, Series 2001, 5.500%, 9/01/12 (Pre-refunded 9/01/11)
2,000 Ohio Higher Education Facilities Commission, Revenue 10/12 at 100.00 AA- (4) 2,197,260
Bonds, Case Western Reserve University, Series 2002B,
5.500%, 10/01/22 (Pre-refunded 10/01/12) (5)
1,000 Ohio State University, General Receipts Bonds, Series 1999A, 12/09 at 101.00 AA (4) 1,061,020
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) 1,103,770
Ohio, General Obligation Bonds, Series 2004A, 5.250%, 12/01/21
(Pre-refunded 6/01/14) - FGIC Insured
1,000 Parma Community General Hospital Association, Ohio, Hospital 11/08 at 101.00 N/R (4) 1,018,810
Revenue Refunding and Improvement Bonds, Series 1998,
5.375%, 11/01/29 (Pre-refunded 11/01/08)
1,535 Pickerington Local School District, Fairfield and Franklin Counties, 12/11 at 100.00 AA- (4) 1,655,252
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) 727,603
Bonds, MedCentral Health System Obligated Group,
Series 2000B, 6.375%, 11/15/30 (Pre-refunded 11/15/10)
- ------------------------------------------------------------------------------------------------------------------------------------
14,225 Total U.S. Guaranteed 15,333,482
- ------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 8.1% (5.2% OF TOTAL INVESTMENTS)
500 American Municipal Power Ohio Inc., General Revenue Bonds, 2/18 at 100.00 A1 493,080
Series 2008, 5.250%, 2/15/43
1,500 American Municipal Power Ohio Inc., Wadsworth, Electric System 2/12 at 100.00 A2 1,584,495
Improvement Revenue Bonds, Series 2002, 5.250%, 2/15/17 -
MBIA Insured
1,595 Cleveland, Ohio, Public Power System Revenue Bonds, No Opt. Call AA 418,018
Series 2008B, 0.000%, 11/15/32 - MBIA Insured
- ------------------------------------------------------------------------------------------------------------------------------------
3,595 Total Utilities 2,495,593
- ------------------------------------------------------------------------------------------------------------------------------------
55
NVJ
Nuveen Ohio Dividend Advantage Municipal Fund 3 (continued)
Portfolio of INVESTMENTS July 31, 2008
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 1.8% (1.2% OF TOTAL INVESTMENTS)
$ 130 City of Marysville, Ohio, Water System Mortgage Revenue Bonds, 12/17 at 100.00 Aa3 $ 129,447
Series 2007, 5.000%, 12/01/32 - AMBAC Insured
160 Ohio Water Development Authority, Revenue Bonds, Drinking 6/18 at 100.00 AAA 165,006
Water Assistance Fund, State Match, Series 2008,
5.000%, 6/01/28 - FSA Insured
270 Ohio Water Development Authority, Revenue Bonds, Fresh 12/11 at 100.00 AAA 276,537
Water Development, Series 2001A, 5.000%, 12/01/21 -
FSA Insured
- ------------------------------------------------------------------------------------------------------------------------------------
560 Total Water and Sewer 570,990
- ------------------------------------------------------------------------------------------------------------------------------------
$ 48,865 Total Investments (cost $47,057,991) - 153.7% 47,566,484
=============-----------------------------------------------------------------------------------------------------------------------
Floating Rate Obligations - (2.7)% (850,000)
--------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 2.3% 724,707
--------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (53.3)% (6) (16,500,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 30,941,191
====================================================================================================================
FORWARD SWAPS OUTSTANDING AT JULY 31, 2008:
FUND FIXED RATE UNREALIZED
NOTIONAL PAY/RECEIVE FLOATING RATE FIXED RATE PAYMENT EFFECTIVE TERMINATION APPRECIATION
COUNTERPARTY AMOUNT FLOATING RATE INDEX (ANNUALIZED) FREQUENCY DATE (7) DATE (DEPRECIATION)
- ------------------------------------------------------------------------------------------------------------------------------------
Royal Bank
of Canada $1,500,000 Pay SIFM 4.335% Quarterly 8/06/08 8/06/37 $107,042
====================================================================================================================================
SIFM - The daily arithmetic average of the weekly Securities Industry and
Financial Markets (SIFM) Municipal Swap Index, previously referred to as
the Bond Market Association or BMA.
FUTURES CONTRACTS OUTSTANDING AT JULY 31, 2008:
UNREALIZED
CONTRACT NUMBER OF CONTRACT VALUE AT APPRECIATION
TYPE POSITION CONTRACTS EXPIRATION JULY 31, 2008 (DEPRECIATION)
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Bond Long 10 9/08 $1,155,000 $21,252
====================================================================================================================================
(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 AMBAC, FGIC,
MBIA, RAAI and XLCA as of July 31, 2008. 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) Portion of investment, with an aggregate market value of
$21,973, has been pledged to collateralize the net payment
obligations under futures contracts.
(6) Preferred Shares, at Liquidation Value as a percentage of
total investments is (34.7)%.
(7) Effective date represents the date on which both the Fund
and counterparty commence interest payment accruals on each
forward swap contract.
N/R Not rated.
WI/DD Purchased on a when-issued or delayed delivery basis.
(UB) Underlying bond of an inverse floating rate trust reflected
as a financing transaction pursuant to the provisions of
SFAS No. 140.
See accompanying notes to financial statements.
56
Statement of
ASSETS & LIABILITIES
July 31, 2008
MICHIGAN MICHIGAN MICHIGAN
QUALITY PREMIUM DIVIDEND
INCOME INCOME ADVANTAGE
(NUM) (NMP) (NZW)
- ------------------------------------------------------------------------------------------------------------------------------------
ASSETS
Investments, at value (cost $253,402,970, $160,398,948
and $44,209,197, respectively) $255,452,685 $159,986,955 $43,603,385
Cash 1,433,961 17,545 399,843
Unrealized appreciation on forward swaps -- 71,362 --
Receivables:
Interest 2,942,611 2,237,260 550,022
Investments sold 1,200,000 2,140,000 --
Variation margin on futures contracts -- 3,359 --
Other assets 26,900 10,545 2,644
- ------------------------------------------------------------------------------------------------------------------------------------
Total assets 261,056,157 164,467,026 44,555,894
- ------------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Floating rate obligations -- -- --
Payable for investments purchased 666,765 444,510 123,475
Accrued expenses:
Management fees 139,669 88,658 16,593
Other 87,100 45,594 13,550
Common share dividends payable 577,469 369,659 116,065
Preferred share dividends payable 60,402 30,202 1,502
- ------------------------------------------------------------------------------------------------------------------------------------
Total liabilities 1,531,405 978,623 271,185
- ------------------------------------------------------------------------------------------------------------------------------------
Preferred shares, at liquidation value 94,000,000 56,000,000 16,000,000
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common shares $165,524,752 $107,488,403 $28,284,709
====================================================================================================================================
Common shares outstanding 11,714,953 7,751,048 2,066,986
====================================================================================================================================
Net asset value per Common share outstanding
(net assets applicable to Common shares,
divided by Common shares outstanding) $ 14.13 $ 13.87 $ 13.68
====================================================================================================================================
NET ASSETS APPLICABLE TO COMMON SHARES CONSIST OF:
- ------------------------------------------------------------------------------------------------------------------------------------
Common shares, $.01 par value per share $ 117,150 $ 77,510 $ 20,670
Paid-in surplus 163,942,156 108,391,489 29,275,661
Undistributed (Over-distribution of) net investment income (7,421) (141,120) (48,259)
Accumulated net realized gain (loss) from investments
and derivative transactions (576,848) (512,658) (357,551)
Net unrealized appreciation (depreciation) of investments
and derivative transactions 2,049,715 (326,818) (605,812)
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common shares $165,524,752 $107,488,403 $28,284,709
====================================================================================================================================
Authorized shares:
Common 200,000,000 200,000,000 Unlimited
Preferred 1,000,000 1,000,000 Unlimited
====================================================================================================================================
See accompanying notes to financial statements.
57
Statement of
ASSETS & LIABILITIES (continued)
July 31, 2008
OHIO OHIO OHIO OHIO
QUALITY DIVIDEND DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
(NUO) (NXI) (NBJ) (NVJ)
- ------------------------------------------------------------------------------------------------------------------------------------
ASSETS
Investments, at value (cost $224,374,969, $91,052,976,
$68,026,784 and $47,057,991, respectively) $224,155,106 $91,395,993 $67,410,251 $47,566,484
Cash 3,512,695 1,314,925 1,024,279 429,167
Unrealized appreciation on forward swaps -- 107,042 -- 107,042
Receivables:
Interest 2,556,064 1,098,049 731,591 579,520
Investments sold -- -- -- --
Variation margin on futures contracts 32,250 13,437 5,375 6,719
Other assets 22,173 7,767 2,712 7,616
- ------------------------------------------------------------------------------------------------------------------------------------
Total assets 230,278,288 93,937,213 69,174,208 48,696,548
- ------------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Floating rate obligations 4,435,000 1,700,000 1,270,000 850,000
Payable for investments purchased 1,540,755 482,770 410,868 256,793
Accrued expenses:
Management fees 120,554 37,943 25,118 17,675
Other 62,746 23,543 16,335 12,101
Common share dividends payable 456,369 215,159 156,523 115,603
Preferred share dividends payable 46,184 2,909 9,412 3,185
- ------------------------------------------------------------------------------------------------------------------------------------
Total liabilities 6,661,608 2,462,324 1,888,256 1,255,357
- ------------------------------------------------------------------------------------------------------------------------------------
Preferred shares, at liquidation value 77,000,000 31,000,000 24,000,000 16,500,000
====================================================================================================================================
Net assets applicable to Common shares $146,616,680 $60,474,889 $43,285,952 $30,941,191
====================================================================================================================================
Common shares outstanding 9,746,032 4,244,093 3,121,477 2,158,458
====================================================================================================================================
Net asset value per Common share outstanding
(net assets applicable to Common shares,
divided by Common shares outstanding) $ 15.04 $ 14.25 $ 13.87 $ 14.33
====================================================================================================================================
NET ASSETS APPLICABLE TO COMMON SHARES CONSIST OF:
- ------------------------------------------------------------------------------------------------------------------------------------
Common shares, $.01 par value per share $ 97,460 $ 42,441 $ 31,215 $ 21,585
Paid-in surplus 147,811,741 60,270,619 44,255,705 30,541,212
Undistributed (Over-distribution of) net investment income 3,336 108,618 (32,879) 24,308
Accumulated net realized gain (loss) from investments
and derivative transactions (1,177,616) (438,139) (371,532) (282,701)
Net unrealized appreciation (depreciation) of investments
and derivative transactions (118,241) 491,350 (596,557) 636,787
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common shares $146,616,680 $60,474,889 $43,285,952 $30,941,191
====================================================================================================================================
Authorized shares:
Common 200,000,000 Unlimited Unlimited Unlimited
Preferred 1,000,000 Unlimited Unlimited Unlimited
====================================================================================================================================
See accompanying notes to financial statements.
58
Statement of
OPERATIONS
Year Ended July 31, 2008
MICHIGAN MICHIGAN MICHIGAN
QUALITY PREMIUM DIVIDEND
INCOME INCOME ADVANTAGE
(NUM) (NMP) (NZW)
- -----------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME $13,055,842 $ 8,439,692 $ 2,264,968
- -----------------------------------------------------------------------------------------------------------------------------------
EXPENSES
Management fees 1,672,600 1,061,252 290,376
Preferred shares - auction fees 235,594 140,353 40,101
Preferred shares - dividend disbursing agent fees 20,000 20,000 10,000
Shareholders' servicing agent fees and expenses 20,771 15,756 820
Interest expense on floating rate obligations 70,020 160,686 12,937
Custodian's fees and expenses 60,538 37,107 15,898
Directors'/Trustees' fees and expenses 6,577 4,376 1,269
Professional fees 25,401 20,225 10,598
Shareholders' reports - printing and mailing expenses 51,006 36,480 12,520
Stock exchange listing fees 9,404 9,408 244
Investor relations expense 30,527 19,863 5,785
Other expenses 27,563 16,974 12,005
- ------------------------------------------------------------------------------------------------------------------------------------
Total expenses before custodian fee credit and expense reimbursement 2,230,001 1,542,480 412,553
Custodian fee credit (22,051) (16,783) (4,952)
Expense reimbursement -- -- (95,272)
- ------------------------------------------------------------------------------------------------------------------------------------
Net expenses 2,207,950 1,525,697 312,329
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income 10,847,892 6,913,995 1,952,639
- ------------------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) from:
Investments (263,137) (512,989) (97,468)
Forward swaps -- (6,970) --
Futures -- -- --
Change in net unrealized appreciation (depreciation) of:
Investments (7,931,308) (5,009,333) (1,870,613)
Forward swaps -- 207,726 --
Futures -- 13,813 --
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) (8,194,445) (5,307,753) (1,968,081)
- ------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS
From net investment income (2,850,189) (1,775,079) (491,691)
From accumulated net realized gains (431,262) (187,020) (48,339)
- ------------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets applicable to Common shares
from distributions to Preferred shareholders (3,281,451) (1,962,099) (540,030)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets applicable to Common shares
from operations $ (628,004) $ (355,857) $ (555,472)
====================================================================================================================================
See accompanying notes to financial statements.
59
Statement of
OPERATIONS (continued)
Year Ended July 31, 2008
OHIO OHIO OHIO OHIO
QUALITY DIVIDEND DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
(NUO) (NXI) (NBJ) (NVJ)
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME $11,401,219 $ 4,650,740 $ 3,393,532 $ 2,404,109
- ------------------------------------------------------------------------------------------------------------------------------------
EXPENSES
Management fees 1,440,999 593,332 437,799 307,644
Preferred shares - auction fees 192,987 77,696 60,150 41,353
Preferred shares - dividend disbursing agent fees 29,151 10,000 10,000 10,000
Shareholders' servicing agent fees and expenses 22,659 1,107 1,195 935
Interest expense on floating rate obligations 239,395 94,080 70,334 48,021
Custodian's fees and expenses 96,078 30,610 21,586 17,878
Directors'/Trustees' fees and expenses 5,787 2,321 1,400 1,275
Professional fees 23,666 13,003 11,578 10,503
Shareholders' reports - printing and mailing expenses 49,745 23,492 17,814 13,707
Stock exchange listing fees 9,440 501 368 255
Investor relations expense 28,491 10,361 9,195 6,569
Other expenses 19,208 13,509 12,736 12,058
- ------------------------------------------------------------------------------------------------------------------------------------
Total expenses before custodian fee credit and expense reimbursement 2,157,606 870,012 654,155 470,198
Custodian fee credit (14,572) (7,191) (7,350) (6,018)
Expense reimbursement -- (171,421) (143,623) (113,089)
- ------------------------------------------------------------------------------------------------------------------------------------
Net expenses 2,143,034 691,400 503,182 351,091
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income 9,258,185 3,959,340 2,890,350 2,053,018
- ------------------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) from:
Investments (894,117) (240,447) (326,158) (272,641)
Forward swaps (113,636) (31,726) (45,455) --
Futures (8,573) (8,580) -- 23,859
Change in net unrealized appreciation (depreciation) of:
Investments (6,068,561) (2,295,579) (1,953,136) (1,043,820)
Forward swaps 141,307 220,088 56,523 107,042
Futures 101,622 41,291 19,976 9,550
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) (6,841,958) (2,314,953) (2,248,250) (1,176,010)
- ------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS
From net investment income (2,439,092) (974,550) (790,428) (496,884)
From accumulated net realized gains (235,804) (133,387) (67,354) (45,494)
- ------------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets applicable to Common shares
from distributions to Preferred shareholders (2,674,896) (1,107,937) (857,782) (542,378)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets applicable to Common shares
from operations $ (258,669) $ 536,450 $ (215,682) $ 334,630
====================================================================================================================================
See accompanying notes to financial statements.
60
Statement of
CHANGES in NET ASSETS
MICHIGAN MICHIGAN MICHIGAN
QUALITY INCOME (NUM) PREMIUM INCOME (NMP) DIVIDEND ADVANTAGE (NZW)
------------------------------ ---------------------------- ----------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
7/31/08 7/31/07 7/31/08 7/31/07 7/31/08 7/31/07
- ------------------------------------------------------------------------------------------------------------------------------------
OPERATIONS
Net investment income $ 10,847,892 $ 11,023,625 $ 6,913,995 $ 6,952,299 $ 1,952,639 $ 1,965,259
Net realized gain (loss) from:
Investments (263,137) 2,021,802 (512,989) 1,318,366 (97,468) 397,159
Forward swaps -- -- (6,970) -- -- (50,922)
Futures -- -- -- -- -- --
Change in net unrealized
appreciation (depreciation) of:
Investments (7,931,308) (3,145,750) (5,009,333) (2,008,515) (1,870,613) (641,385)
Forward swaps -- -- 207,726 (136,364) -- 23,573
Futures -- -- 13,813 -- -- --
Distributions to
Preferred Shareholders:
From net investment income (2,850,189) (2,968,560) (1,775,079) (1,756,872) (491,691) (505,441)
From accumulated
net realized gains (431,262) (232,090) (187,020) (174,588) (48,339) (4,070)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares
from operations (628,004) 6,699,027 (355,857) 4,194,326 (555,472) 1,184,173
- ------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS
From net investment income (7,897,051) (8,329,332) (5,138,948) (5,530,371) (1,457,223) (1,592,223)
From accumulated net
realized gains (1,193,754) (859,878) (574,353) (717,747) (150,270) (16,105)
- ------------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets applicable to
Common shares from distributions
to Common shareholders (9,090,805) (9,189,210) (5,713,301) (6,248,118) (1,607,493) (1,608,328)
- ------------------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Net proceeds from Common shares
issued to shareholders due to
reinvestment of distributions -- -- -- -- 8,680 40,054
- ------------------------------------------------------------------------------------------------------------------------------------
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 (9,718,809) (2,490,183) (6,069,158) (2,053,792) (2,154,285) (384,101)
Net assets applicable to Common
shares at the
beginning of year 175,243,561 177,733,744 113,557,561 115,611,353 30,438,994 30,823,095
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common
shares at the end of year $165,524,752 $175,243,561 $107,488,403 $113,557,561 $28,284,709 $30,438,994
====================================================================================================================================
Undistributed (Over-distribution of)
net investment income at the end
of year $ (7,421) $ (85,440) $ (141,120) $ (133,697) $ (48,259) $ (51,915)
====================================================================================================================================
See accompanying notes to financial statements.
61
Statement of
CHANGES in NET ASSETS (continued)
OHIO OHIO OHIO
QUALITY INCOME (NUO) DIVIDEND ADVANTAGE (NXI) DIVIDEND ADVANTAGE 2 (NBJ)
------------------------------ ---------------------------- ----------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
7/31/08 7/31/07 7/31/08 7/31/07 7/31/08 7/31/07
- ------------------------------------------------------------------------------------------------------------------------------------
OPERATIONS
Net investment income $ 9,258,185 $ 9,361,633 $ 3,959,340 $ 3,996,849 $ 2,890,350 $ 2,885,530
Net realized gain (loss) from:
Investments (894,117) 1,187,125 (240,447) 458,042 (326,158) 356,781
Forward swaps (113,636) -- (31,726) -- (45,455) --
Futures (8,573) -- (8,580) -- -- --
Change in net unrealized
appreciation (depreciation) of:
Investments (6,068,561) (2,229,443) (2,295,579) (728,528) (1,953,136) (612,925)
Forward swaps 141,307 (141,307) 220,088 (113,046) 56,523 (56,523)
Futures 101,622 -- 41,291 -- 19,976 --
Distributions to
Preferred Shareholders:
From net investment income (2,439,092) (2,526,574) (974,550) (1,023,335) (790,428) (788,031)
From accumulated
net realized gains (235,804) (109,526) (133,387) (34,050) (67,354) (39,456)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares
from operations (258,669) 5,541,908 536,450 2,555,932 (215,682) 1,745,376
- ------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS
From net investment income (6,520,095) (7,105,832) (2,775,637) (3,063,555) (2,007,110) (2,156,940)
From accumulated
net realized gains (656,883) (409,333) (399,794) (131,955) (185,104) (137,033)
- ------------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets applicable to
Common shares from distributions
to Common shareholders (7,176,978) (7,515,165) (3,175,431) (3,195,510) (2,192,214) (2,293,973)
- ------------------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Net proceeds from Common shares
issued to shareholders due to
reinvestment of distributions -- -- -- 17,968 -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares from
capital share transactions -- -- -- 17,968 -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares (7,435,647) (1,973,257) (2,638,981) (621,610) (2,407,896) (548,597)
Net assets applicable to Common
shares at the
beginning of year 154,052,327 156,025,584 63,113,870 63,735,480 45,693,848 46,242,445
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common
shares at the end of year $146,616,680 $154,052,327 $60,474,889 $63,113,870 $43,285,952 $45,693,848
====================================================================================================================================
Undistributed
(Over-distribution of)
net investment income
at the end of year $ 3,336 $ (293,613) $ 108,618 $ (98,082) $ (32,879) $ (125,378)
====================================================================================================================================
See accompanying notes to financial statements.
62
OHIO
DIVIDEND ADVANTAGE 3 (NVJ)
----------------------------
YEAR ENDED YEAR ENDED
7/31/08 7/31/07
- ------------------------------------------------------------------------------------------------------------------------------------
OPERATIONS
Net investment income $ 2,053,018 $ 2,070,882
Net realized gain (loss) from:
Investments (272,641) 233,291
Forward swaps -- (32,854)
Futures 23,859 34,159
Change in net unrealized appreciation (depreciation) of:
Investments (1,043,820) (450,205)
Forward swaps 107,042 15,013
Futures 9,550 (11,622)
Distributions to Preferred Shareholders:
From net investment income (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 334,630 1,306,200
- ------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS
From net investment income (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 (1,587,114) (1,622,152)
- ------------------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Net proceeds from Common shares
issued to shareholders due to
reinvestment of distributions -- 3,269
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares from
capital share transactions -- 3,269
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares (1,252,484) (312,683)
Net assets applicable to Common
shares at the beginning of year 32,193,675 32,506,358
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common
shares at the end of year $30,941,191 $32,193,675
====================================================================================================================================
Undistributed (Over-distribution of)
net investment income at the end
of year $ 24,308 $ (76,726)
====================================================================================================================================
See accompanying notes to financial statements.
63
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 "). Common shares of
Michigan Quality Income (NUM), Michigan Premium Income (NMP), and Ohio Quality
Income (NUO) are traded on the New York Stock Exchange while Common shares of
Michigan Dividend Advantage (NZW), Ohio Dividend Advantage (NXI), Ohio Dividend
Advantage 2 (NBJ) and Ohio Dividend Advantage 3 (NVJ) are traded on the American
Stock Exchange. The Funds are registered under the Investment Company Act of
1940, as amended, as closed-end management investment companies.
Each Fund seeks to provide current income exempt from both regular federal and
designated state income taxes by investing primarily in a diversified portfolio
of municipal obligations issued by state and local government authorities within
a single state or certain U.S. territories.
The following is a summary of significant accounting policies followed by the
Funds in the preparation of their financial statements in accordance with U.S.
generally accepted accounting principles.
Investment Valuation
The prices of municipal bonds in each Fund's investment portfolio are provided
by a pricing service approved by the Fund's Board of Directors/Trustees. When
market price quotes are not readily available (which is usually the case for
municipal securities), the pricing service may establish fair value based on
yields or prices of municipal bonds of comparable quality, type of issue,
coupon, maturity and rating, indications of value from securities dealers,
evaluations of anticipated cash flows or collateral and general market
conditions. Prices of forward swap contracts are also provided by an independent
pricing service approved by each Fund's Board of Directors/Trustees. Futures
contracts are valued using the closing settlement price or, in the absence of
such a price, at the mean of the bid and asked prices. If the pricing service is
unable to supply a price for an investment or derivative instrument, each Fund
may use market quotes provided by major broker/dealers in such investments. If
it is determined that the market price for an investment or derivative
instrument is unavailable or inappropriate, the Board of Directors/Trustees of
the Funds, or its designee, may establish fair value in accordance with
procedures established in good faith by the Board of Directors/Trustees.
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 July 31, 2008, Michigan
Quality Income (NUM), Michigan Premium Income (NMP), Michigan Dividend Advantage
(NZW), Ohio Quality Income (NUO), Ohio Dividend Advantage (NXI), Ohio Dividend
Advantage 2 (NBJ) and Ohio Dividend Advantage 3 (NVJ) each had outstanding
when-issued/delayed delivery purchase commitments of $666,765, $444,510,
$123,475, $1,540,755, $482,770, $410,868 and $256,793, respectively.
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.
64
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. 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.
Effective January 31, 2008, the Funds adopted Financial Accounting Standards
Board (FASB) Interpretation No. 48 `'Accounting for Uncertainty in Income Taxes"
(FIN 48). FIN 48 provides guidance for how uncertain tax positions should be
recognized, measured, presented and disclosed in the financial statements. FIN
48 requires the affirmative evaluation of tax positions taken or expected to be
taken in the course of preparing the Funds' tax returns to determine whether it
is `'more-likely-than-not" (i.e., a greater than 50 percent likelihood) of being
sustained by the applicable tax authority. Tax positions not deemed to meet the
more-likely-than-not threshold may result in a tax expense in the current year.
Implementation of FIN 48 required management of the Funds to analyze all open
tax years, as defined by the statute of limitations, for all major
jurisdictions, which includes federal and certain states. 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). The Funds have
no examinations in progress.
For all open tax years and all major taxing jurisdictions through the end of the
reporting period, management of the Funds has reviewed all tax positions taken
or expected to be taken in the preparation of the Funds' tax returns and
concluded that the adoption of FIN 48 resulted in no impact to the Funds' net
assets or results of operations as of and during the fiscal year ended July 31,
2008.
The Funds are 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 U.S.
generally accepted accounting principles.
Preferred Shares
The Funds have issued and outstanding Preferred shares, $25,000 stated value per
share, as a means of effecting financial leverage. Each Fund's Preferred shares
are issued in one or more Series. The dividend rate paid by the Funds on each
Series is determined every seven days, pursuant to a dutch auction process
overseen by the auction agent, and is payable at the end of each rate period.
The number of Preferred shares outstanding, by Series and in total, for each
Fund is as follows:
MICHIGAN MICHIGAN MICHIGAN
QUALITY PREMIUM DIVIDEND
INCOME INCOME ADVANTAGE
(NUM) (NMP) (NZW)
- --------------------------------------------------------------------------------
Number of shares:
Series M -- 840 --
Series W -- -- 640
Series TH 3,200 1,400 --
Series F 560 -- --
- --------------------------------------------------------------------------------
Total 3,760 2,240 640
================================================================================
65
Notes to
FINANCIAL STATEMENTS (continued)
OHIO OHIO OHIO OHIO
QUALITY DIVIDEND DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
(NUO) (NXI) (NBJ) (NVJ)
- --------------------------------------------------------------------------------
Number of shares:
Series M 680 -- -- --
Series T -- -- -- 660
Series W -- 1,240 -- --
Series TH 1,400 -- -- --
Series TH2 1,000 -- -- --
Series F -- -- 960 --
- --------------------------------------------------------------------------------
Total 3,080 1,240 960 660
================================================================================
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.
These developments generally do not affect the 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.
On June 11, 2008, Nuveen Investments, Inc. ("Nuveen") announced the Fund Board's
approval of plans to use tender option bonds (TOBs), also known as floating rate
securities, to refinance a portion of the municipal funds' outstanding
auction-rate preferred securities, whose auctions have been failing for several
months, including an initial phase of approximately $1 billion in forty-one
funds. On June 26, 2008, thirteen municipal funds (none of which are included in
this shareholder report) issued par redemption notices for a portion of their
auction-rate securities aggregating approximately $580 million.
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"). A Fund may also enter into shortfall and
forbearance agreements (sometimes referred to as a "recourse trust" or "credit
recovery
66
swap") 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, as well as any shortfalls in interest
cash flows. 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, recourse trust or credit recovery swap is
accounted for as a financing transaction in accordance with Statement of
Financial Accounting Standards (SFAS) No. 140 "Accounting for Transfers and
Servicing of Financial Assets and Extinguishment of Liabilities". In such
instances, a fixed-rate bond deposited into a special purpose trust is
identified in the Portfolio of Investments as an "Underlying bond of an inverse
floating rate trust", with the Fund accounting for the short-term floating rate
certificates issued by the trust as "Floating rate obligations" on the Statement
of Assets and Liabilities. In addition, the Fund reflects in Investment Income
the entire earnings of the underlying bond and accounts for the related interest
paid to the holders of the short-term floating rate certificates as "Interest
expense on floating rate obligations" on the Statement of Operations.
During the fiscal year ended July 31, 2008, each Fund invested in externally
deposited inverse floaters and/or self-deposited inverse floaters.
The average floating rate obligations outstanding and average annual interest
rate and fees related to self-deposited inverse floaters during the fiscal year
ended July 31, 2008, were as follows:
MICHIGAN MICHIGAN MICHIGAN OHIO OHIO OHIO OHIO
QUALITY PREMIUM DIVIDEND QUALITY DIVIDEND DIVIDEND DIVIDEND
INCOME INCOME ADVANTAGE INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
(NUM) (NMP) (NZW) (NUO) (NXI) (NBJ) (NVJ)
- ---------------------------------------------------------------------------------------------------------------------------------
Average floating rate obligations $2,019,590 $4,661,134 $373,128 $7,507,090 $2,941,639 $2,199,057 $1,497,992
Average annual interest rate and fees 3.47% 3.45% 3.47% 3.19% 3.20% 3.20% 3.21%
=================================================================================================================================
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. Accordingly, the risk of
loss with respect to the swap counterparty on such transactions is limited to
the credit risk associated with a counterparty failing to honor its commitment
to pay any realized gain to the Fund upon termination. To reduce such credit
risk, all counterparties are required to pledge collateral daily (based on the
daily valuation of each swap) on behalf of each Fund with a value approximately
equal to the amount of any unrealized gain above a pre-determined threshold.
Reciprocally, when any of the Funds have an unrealized loss on a swap contract,
the Funds have instructed the custodian to pledge assets of the Funds as
collateral with a value approximately equal to the amount of the unrealized loss
above a pre-determined threshold. Collateral pledges are monitored and
subsequently adjusted if and when the swap valuations fluctuate, either up or
down, by at least the predetermined threshold amount. Michigan Quality Income
(NUM) and Michigan Dividend Advantage (NZW) were the only Funds that did not
invest in forward interest rate swap transactions during the fiscal year ended
July 31, 2008.
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.
67
Notes to
FINANCIAL STATEMENTS (continued)
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 fiscal
year ended July 31, 2008.
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.
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 U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of increases and
decreases in net assets applicable to Common shares from operations during the
reporting period. Actual results may differ from those estimates.
2. FUND SHARES
Common Share Repurchases
On July 30, 2008, the Board of Directors/Trustees for each of Nuveen's 120
closed-end funds approved a program under which each fund may repurchase up to
10% of its common shares. No common shares were repurchased during the fiscal
year ended July 31, 2008.
68
Transactions in Common shares were as follows:
MICHIGAN QUALITY MICHIGAN PREMIUM MICHIGAN DIVIDEND
INCOME (NUM) INCOME (NMP) ADVANTAGE (NZW)
------------------------ ----------------------- -----------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
7/31/08 7/31/07 7/31/08 7/31/07 7/31/08 7/31/07
- ------------------------------------------------------------------------------------------------------------------
Common shares issued to
shareholders due to
reinvestment of distributions -- -- -- -- 595 2,587
==================================================================================================================
OHIO QUALITY OHIO DIVIDEND OHIO DIVIDEND
INCOME (NUO) ADVANTAGE (NXI) ADVANTAGE 2 (NBJ)
------------------------ ----------------------- -----------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
7/31/08 7/31/07 7/31/08 7/31/07 7/31/08 7/31/07
- ------------------------------------------------------------------------------------------------------------------
Common shares issued to
shareholders due to
reinvestment of distributions -- -- -- 1,177 -- --
==================================================================================================================
OHIO DIVIDEND
ADVANTAGE 3 (NVJ)
- ------------------------------------------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED
7/31/08 7/31/07
- ------------------------------------------------------------------------------------------------------------------
Common shares issued to
shareholders due to
reinvestment of distributions -- 219
==================================================================================================================
3. INVESTMENT TRANSACTIONS
Purchases and sales (including maturities but excluding short-term investments
and derivative transactions) during the fiscal year ended July 31, 2008, were as
follows:
MICHIGAN MICHIGAN MICHIGAN
QUALITY PREMIUM DIVIDEND
INCOME INCOME ADVANTAGE
(NUM) (NMP) (NZW)
- ------------------------------------------------------------------------------------------------------------------
Purchases $47,007,129 $33,274,334 $7,975,024
Sales and maturities 53,553,227 43,009,478 8,980,107
==================================================================================================================
OHIO OHIO OHIO OHIO
QUALITY DIVIDEND DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
(NUO) (NXI) (NBJ) (NVJ)
- ------------------------------------------------------------------------------------------------------------------
Purchases $33,148,486 $15,724,093 $11,407,019 $9,175,952
Sales and maturities 41,044,369 19,860,897 14,262,087 10,480,855
==================================================================================================================
4. INCOME TAX INFORMATION
The following information is presented on an income tax basis. Differences
between amounts for financial statement and federal income tax purposes are
primarily due to timing differences in recognizing taxable market discount,
timing differences in recognizing certain gains and losses on investment
transactions and the treatment of investments in inverse floating rate
transactions subject to SFAS No.140. To the extent that differences arise that
are permanent in nature, such amounts are reclassified within the capital
accounts on the Statement of Assets and Liabilities presented in the annual
report, based on their federal tax basis treatment; temporary differences do not
require reclassification. Temporary and permanent differences do not impact the
net asset values of the Funds.
At July 31, 2008, the cost of investments was as follows:
MICHIGAN MICHIGAN MICHIGAN
QUALITY PREMIUM DIVIDEND
INCOME INCOME ADVANTAGE
(NUM) (NMP) (NZW)
- --------------------------------------------------------------------------------
Cost of investments $253,522,989 $160,377,831 $44,203,031
================================================================================
69
Notes to
FINANCIAL STATEMENTS (continued)
OHIO OHIO OHIO OHIO
QUALITY DIVIDEND DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
(NUO) (NXI) (NBJ) (NVJ)
- --------------------------------------------------------------------------------
Cost of investments $219,844,414 $89,237,200 $66,737,712 $46,195,798
================================================================================
Gross unrealized appreciation and gross unrealized depreciation of investments
at July 31, 2008, were as follows:
MICHIGAN MICHIGAN MICHIGAN
QUALITY PREMIUM DIVIDEND
INCOME INCOME ADVANTAGE
(NUM) (NMP) (NZW)
- ---------------------------------------------------------------------------------------------------------------------
Gross unrealized:
Appreciation $ 7,802,502 $3,107,215 $ 823,417
Depreciation (5,872,806) (3,498,091) (1,423,063)
- ---------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments $ 1,929,696 $ (390,876) $ (599,646)
=====================================================================================================================
OHIO OHIO OHIO OHIO
QUALITY DIVIDEND DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
(NUO) (NXI) (NBJ) (NVJ)
- ---------------------------------------------------------------------------------------------------------------------
Gross unrealized:
Appreciation $ 5,379,584 $ 2,594,210 $ 1,020,047 $ 1,531,738
Depreciation (5,503,970) (2,135,417) (1,617,508) (1,011,052)
- ---------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments $ (124,386) $ 458,793 $ (597,461) $ 520,686
=====================================================================================================================
The tax components of undistributed net tax-exempt income, net ordinary income
and net long-term capital gains at July 31, 2008, 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 * $646,261 $294,280 $67,957
Undistributed net ordinary income ** -- -- 628
Undistributed net long-term capital gains -- -- 33,173
====================================================================================================================
OHIO OHIO OHIO OHIO
QUALITY DIVIDEND DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
(NUO) (NXI) (NBJ) (NVJ)
- --------------------------------------------------------------------------------------------------------------------
Undistributed net tax-exempt income * $490,072 $224,937 $122,901 $135,092
Undistributed net ordinary income ** -- -- -- --
Undistributed net long-term capital gains -- -- -- 484
====================================================================================================================
* Undistributed net tax-exempt income (on a tax basis) has not been reduced
for the dividend declared on July 1, 2008, paid on August 1, 2008.
** Net ordinary income consists of taxable market discount income and net
short-term capital gains, if any.
70
The tax character of distributions paid during the Funds' 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
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.
*** The Funds hereby designate these amounts paid during the fiscal year ended
July 31, 2008, 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 tax year ended July 31, 2008.
At July 31, 2008, the Funds' tax year end, the following 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 OHIO
PREMIUM DIVIDEND
INCOME ADVANTAGE 2
(NMP) (NBJ)
- --------------------------------------------------------------------------------
Expiration: July 31, 2016 $ 34,858 $ 14,045
================================================================================
The following Funds have elected to defer net realized losses from investments
incurred from November 1, 2007 through July 31, 2008, 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 $399,928 $463,986 $391,351
================================================================================
71
Notes to
FINANCIAL STATEMENTS (continued)
OHIO OHIO OHIO OHIO
QUALITY DIVIDEND DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
(NUO) (NXI) (NBJ) (NVJ)
- --------------------------------------------------------------------------------
Post-October capital losses $1,075,995 $396,849 $337,513 $261,935
================================================================================
5. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Each Fund's management fee is separated into two components - a complex-level
component, based on the aggregate amount of all fund assets managed by Nuveen
Asset Management (the "Adviser"), a wholly owned subsidiary of Nuveen, and a
specific fund-level component, based only on the amount of assets within each
individual Fund. This pricing structure enables Nuveen fund shareholders to
benefit from growth in the assets within each individual fund as well as from
growth in the amount of complex-wide assets managed by the Adviser.
The annual fund-level fee, payable monthly, for each Fund is based upon the
average daily net assets (including net assets attributable to Preferred shares)
of each Fund as follows:
MICHIGAN QUALITY INCOME (NUM)
AVERAGE DAILY NET ASSETS MICHIGAN PREMIUM INCOME (NMP)
(INCLUDING NET ASSETS OHIO QUALITY INCOME (NUO)
ATTRIBUTABLE TO PREFERRED SHARES) FUND-LEVEL FEE RATE
- --------------------------------------------------------------------------------
For the first $125 million .4500%
For the next $125 million .4375
For the next $250 million .4250
For the next $500 million .4125
For the next $1 billion .4000
For the next $3 billion .3875
For net assets over $5 billion .3750
================================================================================
MICHIGAN DIVIDEND ADVANTAGE (NZW)
OHIO DIVIDEND ADVANTAGE (NXI)
AVERAGE DAILY NET ASSETS OHIO DIVIDEND ADVANTAGE 2 (NBJ)
(INCLUDING NET ASSETS OHIO DIVIDEND ADVANTAGE 3 (NVJ)
ATTRIBUTABLE TO PREFERRED SHARES) FUND-LEVEL FEE RATE
- --------------------------------------------------------------------------------
For the first $125 million .4500%
For the next $125 million .4375
For the next $250 million .4250
For the next $500 million .4125
For the next $1 billion .4000
For net assets over $2 billion .3750
================================================================================
The annual complex-level fee, payable monthly, which is additive to the
fund-level fee, for all Nuveen sponsored funds in the U.S., is based on the
aggregate amount of total fund assets managed as stated in the tables below. As
of July 31, 2008, the complex-level fee rate was .1878%.
72
Effective August 20, 2007, 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
================================================================================
Prior to August 20, 2007, the complex-level fee schedule was as follows:
COMPLEX-LEVEL ASSETS BREAKPOINT LEVEL (1) EFFECTIVE RATE AT BREAKPOINT LEVEL
- --------------------------------------------------------------------------------
$55 billion .2000%
$56 billion .1996
$57 billion .1989
$60 billion .1961
$63 billion .1931
$66 billion .1900
$71 billion .1851
$76 billion .1806
$80 billion .1773
$91 billion .1698
$125 billion .1617
$200 billion .1536
$250 billion .1509
$300 billion .1490
================================================================================
(1) The complex-level fee component of the management fee for the funds is
calculated based upon the aggregate Managed Assets ("Managed Assets" means
the average daily net assets of each fund including assets attributable to
preferred stock issued by or borrowings by the Nuveen funds) of Nuveen
sponsored funds in the U.S.
The management fee compensates the Adviser for overall investment advisory and
administrative services and general office facilities. The Funds pay no
compensation directly to those of its Directors/Trustees who are affiliated with
the Adviser or to its Officers, all of whom receive remuneration for their
services to the Funds from the Adviser or its affiliates. The Board of
Directors/Trustees has adopted a deferred compensation plan for independent
Directors/Trustees that enables Directors/Trustees to elect to defer receipt of
all or a portion of the annual compensation they are entitled to receive from
certain Nuveen advised funds. Under the plan, deferred amounts are treated as
though equal dollar amounts had been invested in shares of select Nuveen advised
funds.
73
Notes to
FINANCIAL STATEMENTS (continued)
For the first ten years of Ohio Dividend Advantage's (NXI) operations, the
Adviser has agreed to reimburse the Fund, as a percentage of average daily net
assets (including net assets attributable to Preferred shares), for fees and
expenses in the amounts and for the time periods set forth below:
YEAR ENDING YEAR ENDING
MARCH 31, MARCH 31,
- --------------------------------------------------------------------------------
2001* .30% 2007 .25%
2002 .30 2008 .20
2003 .30 2009 .15
2004 .30 2010 .10
2005 .30 2011 .05
2006 .30
================================================================================
* From the commencement of operations.
The Adviser has not agreed to reimburse Ohio Dividend Advantage (NXI) for any
portion of its fees and expenses beyond March 31, 2011.
For the first ten years of Michigan Dividend Advantage's (NZW) and Ohio Dividend
Advantage 2's (NBJ) operations, the Adviser has agreed to reimburse the Funds,
as a percentage of average daily net assets (including net assets attributable
to Preferred shares), for fees and expenses in the amounts and for the time
periods set forth below:
YEAR ENDING YEAR ENDING
SEPTEMBER 30, SEPTEMBER 30,
- --------------------------------------------------------------------------------
2001* .30% 2007 .25%
2002 .30 2008 .20
2003 .30 2009 .15
2004 .30 2010 .10
2005 .30 2011 .05
2006 .30
================================================================================
* From the commencement of operations.
The Adviser has not agreed to reimburse Michigan Dividend Advantage (NZW) and
Ohio Dividend Advantage 2 (NBJ) for any portion of their fees and expenses
beyond September 30, 2011.
For the first ten years of Ohio Dividend Advantage 3's (NVJ) operations, the
Adviser has agreed to reimburse the Fund, as a percentage of average daily net
assets (including net assets attributable to Preferred shares), for fees and
expenses in the amounts and for the time periods set forth below:
YEAR ENDING YEAR ENDING
MARCH 31, MARCH 31,
- --------------------------------------------------------------------------------
2002* .30% 2008 .25%
2003 .30 2009 .20
2004 .30 2010 .15
2005 .30 2011 .10
2006 .30 2012 .05
2007 .30
================================================================================
* From the commencement of operations.
74
The Adviser has not agreed to reimburse Ohio Dividend Advantage 3 (NVJ) for any
portion of its fees and expenses beyond March 31, 2012.
Agreement and Plan of Merger
On June 20, 2007, Nuveen announced that it had entered into a definitive
Agreement and Plan of Merger ("Merger Agreement") with Windy City Investments,
Inc. ("Windy City"), a corporation formed by investors led by Madison Dearborn
Partners, LLC ("Madison Dearborn"), pursuant to which Windy City would acquire
Nuveen. Madison Dearborn is a private equity investment firm based in Chicago,
Illinois. The merger was consummated on November 13, 2007.
The consummation of the merger was deemed to be an "assignment" (as that term is
defined in the Investment Company Act of 1940) of the investment management
agreement between each Fund and the Adviser, and resulted in the automatic
termination of each Fund's agreement. The Board of Directors/Trustees of each
Fund considered and approved a new investment management agreement with the
Adviser on the same terms as the previous agreements. Each new ongoing
investment management agreement, was approved by the shareholders of each Fund
and took effect on November 13, 2007.
The investors led by Madison Dearborn includes an affiliate of Merrill Lynch. As
a result, Merrill Lynch is an indirect "affiliated person" (as that term is
defined in the Investment Company Act of 1940) of each Fund. Certain conflicts
of interest may arise as a result of such indirect affiliation. For example, the
Funds are generally prohibited from entering into principal transactions with
Merrill Lynch and its affiliates. The Adviser does not believe that any such
prohibitions or limitations as a result of Merrill Lynch's affiliation will
significantly impact the ability of the Funds to pursue their investment
objectives and policies.
6. NEW ACCOUNTING PRONOUNCEMENTS
Financial Accounting Standards Board Statement of Financial Accounting
Standards No. 157
In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements." This
standard establishes a single authoritative definition of fair value, sets out a
framework for measuring fair value and requires additional disclosures about
fair value measurements. SFAS No. 157 applies to fair value measurements already
required or permitted by existing standards. SFAS No. 157 is effective for
financial statements issued for fiscal years beginning after November 15, 2007,
and interim periods within those fiscal years. The changes to current generally
accepted accounting principles from the application of this standard relate to
the definition of fair value, the methods used to measure fair value, and the
expanded disclosures about fair value measurements. As of July 31, 2008,
management does not believe the adoption of SFAS No. 157 will impact the
financial statement amounts; however, additional disclosures may be required
about the inputs used to develop the measurements and the effect of certain of
the measurements included within the Statement of Operations for the period.
Financial Accounting Standards Board Statement of Financial Accounting
Standards No. 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 July 31, 2008,
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.
7. SUBSEQUENT EVENTS
Distributions to Common Shareholders
The Funds declared Common share dividend distributions from their tax-exempt net
investment income which were paid on September 2, 2008, to shareholders of
record on August 15, 2008, as follows:
MICHIGAN MICHIGAN MICHIGAN
QUALITY PREMIUM DIVIDEND
INCOME INCOME ADVANTAGE
(NUM) (NMP) (NZW)
- --------------------------------------------------------------------------------
Dividend per share $.0555 $.0550 $.0585
================================================================================
OHIO OHIO OHIO OHIO
QUALITY DIVIDEND DIVIDEND DIVIDEND
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3
(NUO) (NXI) (NBJ) (NVJ)
- --------------------------------------------------------------------------------
Dividend per share $.0550 $.0540 $.0530 $.0555
================================================================================
75
Financial
HIGHLIGHTS
Selected data for a Common share outstanding throughout each period:
Investment Operations Less Distributions
---------------------------------------------------------------- -----------------------------
Distributions Distributions
from Net from Net
Beginning Investment Capital Investment Capital
Common Net Income to Gains to Income to Gains to
Share Net Realized/ Preferred Preferred Common Common
Net Asset Investment Unrealized Share- Share- Share- Share-
Value Income Gain (Loss) holders+ holders+ Total holders holders Total
- -------------------------------------------------------------------------------------------------------------------------------
MICHIGAN QUALITY INCOME (NUM)
- -------------------------------------------------------------------------------------------------------------------------------
Year Ended 7/31:
2008 $14.96 $ .93 $(.71) $(.24) $(.04) $ (.06) $(.67) $(.10) $ (.77)
2007 15.17 .94 (.10) (.25) (.02) .57 (.71) (.07) (.78)
2006 15.88 .96 (.52) (.21) (.02) .21 (.81) (.11) (.92)
2005 15.51 .98 .57 (.13) (.01) 1.41 (.93) (.11) (1.04)
2004 15.14 1.01 .49 (.06) (.01) 1.43 (.95) (.11) (1.06)
MICHIGAN PREMIUM INCOME (NMP)
- -------------------------------------------------------------------------------------------------------------------------------
Year Ended 7/31:
2008 14.65 .89 (.69) (.23) (.02) (.05) (.66) (.07) (.73)
2007 14.92 .90 (.12) (.23) (.02) .53 (.71) (.09) (.80)
2006 15.55 .91 (.40) (.18) (.02) .31 (.79) (.15) (.94)
2005 15.19 .93 .50 (.11) -- 1.32 (.91) (.05) (.96)
2004 15.24 .97 .38 (.04) (.03) 1.28 (.94) (.39) (1.33)
===============================================================================================================================
Total Returns
---------------------
Offering Based
Costs and Ending on
Preferred Common Based Common
Share Share Ending on Share Net
Underwriting Asset Market Market Asset
Discounts Value Value Value* Value*
- -------------------------------------------------------------------------------
MICHIGAN QUALITY INCOME (NUM)
- -------------------------------------------------------------------------------
Year Ended 7/31:
2008 $ -- $14.13 $12.32 (7.77)% (.43)%
2007 -- 14.96 14.16 3.64 3.77
2006 -- 15.17 14.41 (2.28) 1.41
2005 -- 15.88 15.67 9.94 9.28
2004 -- 15.51 15.20 5.17 9.52
MICHIGAN PREMIUM INCOME (NMP)
- -------------------------------------------------------------------------------
Year Ended 7/31:
2008 -- 13.87 12.38 (5.09) (.36)
2007 -- 14.65 13.80 2.16 3.59
2006 -- 14.92 14.27 (3.12) 2.06
2005 -- 15.55 15.68 16.03 8.80
2004 -- 15.19 14.37 5.46 8.56
===============================================================================
Ratios/Supplemental Data
-----------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets Ratios to Average Net Assets
Applicable to Common Shares Applicable to Common Shares
Before Credit/Reimbursement After Credit/Reimbursement**
------------------------------------------ ------------------------------------------
Ending
Net
Assets
Applicable Expenses Expenses Net Expenses Expenses Net Portfolio
to Common Including Excluding Investment Including Excluding Investment Turnover
Shares (000) Interest++(a) Interest++(a) Income++ Interest++(a) Interest++(a) Income++ Rate
- ------------------------------------------------------------------------------------------------------------------------------------
MICHIGAN QUALITY INCOME (NUM)
- ------------------------------------------------------------------------------------------------------------------------------------
Year Ended 7/31:
2008 $165,525 1.29% 1.25% 6.28% 1.28% 1.24% 6.29% 18%
2007 175,244 1.26 1.22 6.12 1.24 1.20 6.14 13
2006 177,734 1.23 1.23 6.17 1.22 1.22 6.19 18
2005 185,900 1.22 1.22 6.13 1.21 1.21 6.14 8
2004 181,114 1.22 1.22 6.44 1.22 1.22 6.45 15
MICHIGAN PREMIUM INCOME (NMP)
- ------------------------------------------------------------------------------------------------------------------------------------
Year Ended 7/31:
2008 107,488 1.38 1.23 6.16 1.36 1.22 6.18 20
2007 113,558 1.38 1.22 5.97 1.37 1.21 5.98 15
2006 115,611 1.20 1.20 6.03 1.19 1.19 6.03 6
2005 120,475 1.19 1.19 5.97 1.17 1.17 5.98 11
2004 117,529 1.20 1.20 6.28 1.19 1.19 6.30 28
====================================================================================================================================
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 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 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
====================================================
* 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.
+ The amounts shown are based on Common share equivalents.
++ Ratios do not reflect the effect of dividend payments to Preferred
shareholders; income ratios reflect income earned on assets attributable to
Preferred shares.
(a) Interest expense arises from the application of SFAS No. 140 to certain
inverse floating rate transactions entered into by the Fund as more fully
described in Footnote 1 - Inverse Floating Rate Securities.
See accompanying notes to financial statements.
76-77 spread
Financial
HIGHLIGHTS (continued)
Selected data for a Common share outstanding throughout each period:
Investment Operations Less Distributions
------------------------------------------------------------------ -----------------------------
Distributions Distributions
from Net from Net
Beginning Investment Capital Investment Capital
Common Net Income to Gains to Income to Gains to
Share Net Realized/ Preferred Preferred Common Common
Net Asset Investment Unrealized Share- Share- Share- Share-
Value Income Gain (Loss) holders+ holders+ Total holders holders Total
- --------------------------------------------------------------------------------------------------------------------------------
MICHIGAN DIVIDEND ADVANTAGE (NZW)
- --------------------------------------------------------------------------------------------------------------------------------
Year Ended 7/31:
2008 $14.73 $.94 $(.95) $(.24) $(.02) $ (.27) $(.71) $(.07) $(.78)
2007 14.94 .95 (.14) (.24) --*** .57 (.77) (.01) (.78)
2006 15.44 .97 (.40) (.20) -- .37 (.87) -- (.87)
2005 14.82 .98 .63 (.11) -- 1.50 (.89) -- (.89)
2004 14.30 .99 .47 (.05) -- 1.41 (.89) -- (.89)
================================================================================================================================
Total Returns
---------------------
Offering Based
Costs and Ending on
Preferred Common Based Common
Share Share Ending on Share Net
Underwriting Asset Market Market Asset
Discounts Value Value Value* Value*
- ------------------------------------------------------------------------------
MICHIGAN DIVIDEND ADVANTAGE (NZW)
- ------------------------------------------------------------------------------
Year Ended 7/31:
2008 $ -- $13.68 $13.10 (8.10)% (1.95)%
2007 -- 14.73 15.10 .46 3.79
2006 -- 14.94 15.81 (.47) 2.46
2005 .01 15.44 16.79 21.34 10.41
2004 -- 14.82 14.65 2.99 10.00
==============================================================================
Ratios/Supplemental Data
----------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets Ratios to Average Net Assets
Applicable to Common Shares Applicable to Common Shares
Before Credit/Reimbursement After Credit/Reimbursement**
------------------------------------------ ----------------------------------------
Ending
Net
Assets
Applicable Expenses Expenses Net Expenses Expenses Net Portfolio
to Common Including Excluding Investment Including Excluding Investment Turnover
Shares (000) Interest++(a) Interest++(a) Income++ Interest++(a) Interest++(a) Income++ Rate
- ------------------------------------------------------------------------------------------------------------------------------------
MICHIGAN DIVIDEND ADVANTAGE (NZW)
- ------------------------------------------------------------------------------------------------------------------------------------
Year Ended 7/31:
2008 $28,285 1.39% 1.34% 6.23% 1.05% 1.01% 6.57% 18%
2007 30,439 1.38 1.35 5.89 .96 .93 6.31 19
2006 30,823 1.31 1.31 5.92 .83 .83 6.40 8
2005 31,821 1.27 1.27 5.93 .81 .81 6.39 8
2004 30,538 1.28 1.28 6.13 .81 .81 6.60 9
====================================================================================================================================
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 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
====================================================
* 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.
*** 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.
See accompanying notes to financial statements.
78-79 spread
Financial
HIGHLIGHTS (continued)
Selected data for a Common share outstanding throughout each period:
Investment Operations Less Distributions
---------------------------------------------------------------- -----------------------------
Distributions Distributions
from Net from Net
Beginning Investment Capital Investment Capital
Common Net Income to Gains to Income to Gains to
Share Net Realized/ Preferred Preferred Common Common
Net Asset Investment Unrealized Share- Share- Share- Share-
Value Income Gain (Loss) holders+ holders+ Total holders holders Total
- -------------------------------------------------------------------------------------------------------------------------------
OHIO QUALITY INCOME (NUO)
- -------------------------------------------------------------------------------------------------------------------------------
Year Ended 7/31:
2008 $15.81 $ .95 $(.71) $(.25) $(.02) $ (.03) $ (.67) (.07) $ (.74)
2007 16.01 .96 (.12) (.26) (.01) .57 (.73) (.04) (.77)
2006 16.58 .98 (.42) (.22) (.01) .33 (.85) (.05) (.90)
2005 16.21 1.02 .49 (.12) -- 1.39 (.98) (.04) (1.02)
2004 16.17 1.07 .25 (.06) (.01) 1.25 (1.00) (.21) (1.21)
OHIO DIVIDEND ADVANTAGE (NXI)
- -------------------------------------------------------------------------------------------------------------------------------
Year Ended 7/31:
2008 14.87 .93 (.55) (.23) (.03) .12 (.65) (.09) (.74)
2007 15.02 .94 (.09) (.24) (.01) .60 (.72) (.03) (.75)
2006 15.55 .96 (.40) (.21) -- .35 (.85) (.03) (.88)
2005 15.05 1.00 .57 (.11) -- 1.46 (.96) -- (.96)
2004 14.66 1.04 .40 (.06) -- 1.38 (.97) (.02) (.99)
===============================================================================================================================
Total Returns
---------------------
Offering Based
Costs and Ending on
Preferred Common Based Common
Share Share Ending on Share Net
Underwriting Asset Market Market Asset
Discounts Value Value Value* Value*
- --------------------------------------------------------------------------------
OHIO QUALITY INCOME (NUO)
- --------------------------------------------------------------------------------
Year Ended 7/31:
2008 $ -- $15.04 $13.40 (2.18)% (.26)%
2007 -- 15.81 14.43 (4.25) 3.56
2006 -- 16.01 15.83 (1.36) 2.10
2005 -- 16.58 16.96 10.25 8.70
2004 -- 16.21 16.30 2.59 7.87
OHIO DIVIDEND ADVANTAGE (NXI)
- --------------------------------------------------------------------------------
Year Ended 7/31:
2008 -- 14.25 12.77 (6.21) .83
2007 -- 14.87 14.39 .52 4.02
2006 -- 15.02 15.05 (6.53) 2.32
2005 -- 15.55 17.00 21.79 9.87
2004 -- 15.05 14.80 10.70 9.54
================================================================================
Ratios/Supplemental Data
------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets Ratios to Average Net Assets
Applicable to Common Shares Applicable to Common Shares
Before Credit/Reimbursement After Credit/Reimbursement**
----------------------------------------- ------------------------------------------
Ending
Net
Assets
Applicable Expenses Expenses Net Expenses Expenses Net Portfolio
to Common Including Excluding Investment Including Excluding Investment Turnover
Shares (000) Interest++(a) Interest++(a) Income++ Interest++(a) Interest++(a) Income++ Rate
- ------------------------------------------------------------------------------------------------------------------------------------
OHIO QUALITY INCOME (NUO)
- ------------------------------------------------------------------------------------------------------------------------------------
Year Ended 7/31:
2008 $146,617 1.42% 1.26% 6.08% 1.41% 1.25% 6.09% 14%
2007 154,052 1.29 1.19 5.94 1.27 1.17 5.95 15
2006 156,026 1.20 1.20 6.05 1.19 1.19 6.06 9
2005 160,982 1.19 1.19 6.16 1.18 1.18 6.17 14
2004 156,634 1.20 1.20 6.46 1.19 1.19 6.47 31
OHIO DIVIDEND ADVANTAGE (NXI)
- ------------------------------------------------------------------------------------------------------------------------------------
Year Ended 7/31:
2008 60,475 1.39 1.24 6.06 1.11 .96 6.34 17
2007 63,114 1.32 1.22 5.85 .96 .86 6.21 14
2006 63,735 1.21 1.21 5.85 .76 .76 6.30 6
2005 65,873 1.21 1.21 6.00 .76 .76 6.46 14
2004 63,642 1.20 1.20 6.41 .75 .75 6.86 10
====================================================================================================================================
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 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 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
====================================================
* 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.
+ The amounts shown are based on Common share equivalents.
++ Ratios do not reflect the effect of dividend payments to Preferred
shareholders; income ratios reflect income earned on assets attributable to
Preferred shares.
(a) Interest expense arises from the application of SFAS No. 140 to certain
inverse floating rate transactions entered into by the Fund as more fully
described in Footnote 1 - Inverse Floating Rate Securities.
See accompanying notes to financial statements.
80-81 spread
Financial
HIGHLIGHTS (continued)
Selected data for a Common share outstanding throughout each period:
Investment Operations Less Distributions
---------------------------------------------------------------- -----------------------------
Distributions Distributions
from Net from Net
Beginning Investment Capital Investment Capital
Common Net Income to Gains to Income to Gains to
Share Net Realized/ Preferred Preferred Common Common
Net Asset Investment Unrealized Share- Share- Share- Share-
Value Income Gain (Loss) holders+ holders+ Total holders holders Total
===============================================================================================================================
OHIO DIVIDEND ADVANTAGE 2 (NBJ)
- -------------------------------------------------------------------------------------------------------------------------------
Year Ended 7/31:
2008 $14.64 $ .93 $(.73) $(.25) $(.02) $ (.07) $(.64) $(.06) $(.70)
2007 14.81 .92 (.10) (.25) (.01) .56 (.69) (.04) (.73)
2006 15.37 .93 (.41) (.22) (.01) .29 (.80) (.05) (.85)
2005 14.85 .95 .61 (.12) -- 1.44 (.90) (.02) (.92)
2004 14.31 .99 .53 (.06) -- 1.46 (.92) -- (.92)
OHIO DIVIDEND ADVANTAGE 3 (NVJ)
- -------------------------------------------------------------------------------------------------------------------------------
Year Ended 7/31:
2008 14.92 .95 (.56) (.23) (.02) .14 (.67) (.06) (.73)
2007 15.06 .96 (.08) (.25) (.01) .62 (.72) (.04) (.76)
2006 15.57 .95 (.45) (.22) -- .28 (.79) -- (.79)
2005 14.93 .95 .69 (.11) -- 1.53 (.87) (.02) (.89)
2004 14.48 .96 .51 (.06) (.01) 1.40 (.88) (.07) (.95)
===============================================================================================================================
Total Returns
---------------------
Offering Based
Costs and Ending on
Preferred Common Based Common
Share Share Ending on Share Net
Underwriting Asset Market Market Asset
Discounts Value Value Value* Value*
===============================================================================
OHIO DIVIDEND ADVANTAGE 2 (NBJ)
- -------------------------------------------------------------------------------
Year Ended 7/31:
2008 $ -- $13.87 $12.37 (5.46)% (.51)%
2007 -- 14.64 13.80 (1.26) 3.80
2006 -- 14.81 14.70 .35 1.96
2005 -- 15.37 15.48 11.63 9.90
2004 -- 14.85 14.70 9.60 10.33
OHIO DIVIDEND ADVANTAGE 3 (NVJ)
- -------------------------------------------------------------------------------
Year Ended 7/31:
2008 -- 14.33 12.91 (5.13) .95
2007 -- 14.92 14.35 2.32 4.06
2006 -- 15.06 14.75 (2.33) 1.87
2005 -- 15.57 15.90 17.60 10.40
2004 -- 14.93 14.30 5.86 9.72
===============================================================================
Ratios/Supplemental Data
----------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets Ratios to Average Net Assets
Applicable to Common Shares Applicable to Common Shares
Before Credit/Reimbursement After Credit/Reimbursement**
------------------------------------------ ------------------------------------------
Ending
Net
Assets
Applicable Expenses Expenses Net Expenses Expenses Net Portfolio
to Common Including Excluding Investment Including Excluding Investment Turnover
Shares (000) Interest++(a) Interest++(a) Income++ Interest++(a) Interest++(a) Income++ Rate
====================================================================================================================================
OHIO DIVIDEND
ADVANTAGE 2 (NBJ)
- ------------------------------------------------------------------------------------------------------------------------------------
Year Ended 7/31:
2008 43,286 1.46% 1.30% 6.10% 1.12% .96% 6.43% 16%
2007 45,694 1.41 1.31 5.76 1.00 .90 6.17 14
2006 46,242 1.27 1.27 5.71 .78 .78 6.19 8
2005 47,937 1.23 1.23 5.71 .77 .77 6.17 14
2004 46,268 1.25 1.25 6.13 .79 .79 6.60 15
OHIO DIVIDEND
ADVANTAGE 3 (NVJ)
- ------------------------------------------------------------------------------------------------------------------------------------
Year Ended 7/31:
2008 30,941 1.47 1.32 6.05 1.10 .95 6.43 19%
2007 32,194 1.41 1.31 5.85 .96 .86 6.30 19
2006 32,506 1.28 1.28 5.76 .81 .81 6.23 2
2005 33,606 1.27 1.27 5.68 .81 .81 6.14 3
2004 32,208 1.28 1.28 5.87 .81 .81 6.34 8
====================================================================================================================================
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 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 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
====================================================
* 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.
+ The amounts shown are based on Common share equivalents.
++ Ratios do not reflect the effect of dividend payments to Preferred
shareholders; income ratios reflect income earned on assets attributable to
Preferred shares.
(a) Interest expense arises from the application of SFAS No. 140 to certain
inverse floating rate transactions entered into by the Fund as more fully
described in Footnote 1 - Inverse Floating Rate Securities.
See accompanying notes to financial statements.
82-83 spread
Board Members & Officers
The management of the Funds, including general supervision of the duties
performed for the Funds by the Adviser, is the responsibility of the Board
Members of the Funds. The number of board members of the Fund is currently set
at nine. None of the board members who are not "interested" persons of the Funds
(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.
NAME, POSITION(S) HELD YEAR FIRST NUMBER PRINCIPAL
BIRTHDATE WITH THE FUNDS ELECTED OR OF PORTFOLIOS OCCUPATION(S)
& ADDRESS APPOINTED IN FUND COMPLEX INCLUDING OTHER
AND TERM(1) OVERSEEN BY DIRECTORSHIPS
BOARD MEMBER DURING PAST 5 YEARS
INDEPENDENT BOARD MEMBERS:
[] ROBERT P. BREMNER Private Investor and Management Consultant.
8/22/40 Chairman of 1997
333 W. Wacker Drive the Board CLASS III 186
Chicago, IL 60606 and Board member
[] JACK B. EVANS President, The Hall-Perrine Foundation, a
10/22/48 1999 private philanthropic corporation (since
333 W. Wacker Drive Board member CLASS III 186 1996); Director and Vice Chairman, United
Chicago, IL 60606 Fire Group, a publicly held company; Member
of the Board of Regents for the State of
Iowa University System; Director, Gazette
Companies; Life Trustee of Coe College and
Iowa College Foundation; Member of the
Advisory Council of the Department of
Finance in the Tippie College of Business,
University of Iowa; formerly, Director,
Alliant Energy; formerly, Director, Federal
Reserve Bank of Chicago; formerly, President
and Chief Operating Officer, SCI Financial
Group, Inc., a regional financial services
firm.
[] WILLIAM C. HUNTER Dean, Tippie College of Business, University
3/6/48 2004 of Iowa (since July 2006); formerly, Dean
333 W. Wacker Drive Board member ANNUAL 186 and Distinguished Professor of Finance,
Chicago, IL 60606 School of Business at the University of
Connecticut (2003-2006); previously, Senior
Vice President and Director of Research at
the Federal Reserve Bank of Chicago
(1995-2003); Director (since 1997), Credit
Research Center at Georgetown University;
Director (since 2004) of Xerox Corporation;
Director (since 2005), Beta Gamma Sigma
International Honor Society; Director, SS&C
Technologies, Inc. (May 2005-October 2005).
[] DAVID J. KUNDERT Director, Northwestern Mutual Wealth
10/28/42 2005 Management Company; Retired (since 2004) as
333 W. Wacker Drive Board member CLASS II 186 Chairman, JPMorgan Fleming Asset Management,
Chicago, IL 60606 President and CEO, Banc One Investment
Advisors Corporation, and President, One
Group Mutual Funds; prior thereto, Executive
Vice President, Banc One Corporation and
Chairman and CEO, Banc One Investment
Management Group; 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.
[] WILLIAM J. SCHNEIDER Chairman, formerly, Senior Partner and Chief
9/24/44 1997 Operating Officer (retired, 2004) of
333 W. Wacker Drive Board member ANNUAL 186 Miller-Valentine Partners Ltd., a real
Chicago, IL 60606 estate investment company; Director, Dayton
Development Coalition; formerly, member,
Business Advisory Council, Cleveland Federal
Reserve Bank.
84
NAME, POSITION(S) HELD YEAR FIRST NUMBER PRINCIPAL
BIRTHDATE WITH THE FUNDS ELECTED OR OF PORTFOLIOS OCCUPATION(S)
& ADDRESS APPOINTED IN FUND COMPLEX INCLUDING OTHER
AND TERM(1) OVERSEEN BY DIRECTORSHIPS
BOARD MEMBER DURING PAST 5 YEARS
INDEPENDENT BOARD MEMBERS:
[] JUDITH M. STOCKDALE Executive Director, Gaylord and Dorothy
12/29/47 1997 Donnelley Foundation (since 1994); prior
333 W. Wacker Drive Board member CLASS I 186 thereto, Executive Director, Great Lakes
Chicago, IL 60606 Protection Fund (from 1990 to 1994).
[] CAROLE E. STONE Director, Chicago Board Options Exchange
6/28/47 2007 (since 2006); Commissioner, New York State
333 W. Wacker Drive Board member CLASS I 186 Commission on Public Authority Reform (since
Chicago, IL 60606 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).
[] TERENCE J. TOTH(2)
9/29/59 2008 Private Investor (since 2007); CEO and
333 W. Wacker Drive Board Member CLASS II 186 President, Northern Trust Investments
Chicago, IL 60606 (2004-2007); Executive Vice President,
Quantitative Management & Securities Lending
(2007-2004); 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 Japan
Board (2004-2007), Northern Trust Securities
Inc. Board (2003-2007) and Northern Trust
Hong Kong Board (1997-2004).
INTERESTED BOARD MEMBER:
[] JOHN P. AMBOIAN(2)(3) Chief Executive Officer (since July 2007)
6/14/61 2008 and Director (since 1999) of Nuveen
333 W. Wacker Drive Board Member CLASS II 186 Investments, Inc.; Chief Executive Officer
Chicago, IL 60606 (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.(4)
OFFICERS OF THE FUND:
[] GIFFORD R. ZIMMERMAN Managing Director (since 2002), Assistant
9/9/56 Chief Secretary and Associate General Counsel,
333 W. Wacker Drive Administrative 1988 186 formerly, Vice President and Assistant
Chicago, IL 60606 Officer General Counsel, of Nuveen Investments, 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
Richards & Tierney, Inc. (since 2007);
Managing Director, Associate General Counsel
and Assistant Secretary of Rittenhouse Asset
Management, Inc. (since 2003); 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.(4); Chartered
Financial Analyst.
[] WILLIAM ADAMS IV Executive Vice President, U.S. Structured
6/9/55 Products of Nuveen Investments, LLC, (since
333 W. Wacker Drive Vice President 2007 120 1999), prior thereto, Managing Director of
Chicago, IL 60606 Structured Investments.
85
NAME, POSITION(S) HELD YEAR FIRST NUMBER PRINCIPAL
BIRTHDATE WITH THE FUNDS ELECTED OR OF PORTFOLIOS OCCUPATION(S)
AND ADDRESS APPOINTED(5) IN FUND COMPLEX DURING PAST 5 YEARS
OVERSEEN
BY OFFICER
OFFICERS OF THE FUND:
[] CEDRIC H. ANTOSIEWICZ Managing Director, (since 2004) previously,
1/11/62 Vice President (1993-2004) of Nuveen
333 W. Wacker Drive Vice President 2007 120 Investments, LLC.
Chicago, IL 60606
[] MICHAEL T. ATKINSON Vice President (since 2002) of Nuveen
2/3/66 Vice President Investments, LLC.
333 W. Wacker Drive and Assistant 2000 186
Chicago, IL 60606 Secretary
[] LORNA C. FERGUSON Managing Director (since 2004), formerly,
10/24/45 Vice President of Nuveen Investments, LLC,
333 W. Wacker Drive Vice President 1998 186 Managing Director (2004) formerly, Vice
Chicago, IL 60606 President (1998-2004) of Nuveen Advisory
Corp. and Nuveen Institutional Advisory
Corp.(4); Managing Director (since 2005) of
Nuveen Asset Management.
[] 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 186 Investments, LLC; formerly, Vice President
Chicago, IL 60606 and Funds Controller (1998-2004) of Nuveen
Investments, Inc.; Certified Public
Accountant.
[] WALTER M. KELLY Senior Vice President (since 2008), Vice
2/24/70 Chief Compliance President (2006-2008) formerly, Assistant
333 W. Wacker Drive Officer and 2003 186 Vice President and Assistant General Counsel
Chicago, IL 60606 Vice President (2003-2006) of Nuveen Investments, LLC; Vice
President (since 2006) and Assistant
Secretary (since 2008) of Nuveen Asset
Management.
[] DAVID J. LAMB Vice President (since 2000) of Nuveen
3/22/63 Investments, LLC; Certified Public
333 W. Wacker Drive Vice President 2000 186 Accountant.
Chicago, IL 60606
[] TINA M. LAZAR Vice President of Nuveen Investments, LLC
8/27/61 (since 1999).
333 W. Wacker Drive Vice President 2002 186
Chicago, IL 60606
[] LARRY W. MARTIN Vice President, Assistant Secretary and
7/27/51 Vice President Assistant General Counsel of Nuveen
333 W. Wacker Drive and Assistant 1988 186 Investments, LLC; Vice President (since
Chicago, IL 60606 Secretary 2005) and Assistant Secretary of Nuveen
Investments, Inc.; Vice President (since
2005) and Assistant Secretary (since 1997)
of Nuveen Asset Management; Vice President
(since 2000), Assistant Secretary and
Assistant General Counsel (since 1998) of
Rittenhouse Asset Management, Inc.; Vice
President and Assistant Secretary of Nuveen
Investments Advisers Inc. (since 2002); 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
Richards &Tierney, Inc. (since 2007);
formerly, Vice President and Assistant
Secretary of Nuveen Advisory Corp. and
Nuveen Institutional Advisory Corp.(4)
86
NAME, POSITION(S) HELD YEAR FIRST NUMBER PRINCIPAL
BIRTHDATE WITH THE FUNDS ELECTED OR OF PORTFOLIOS OCCUPATION(S)
AND ADDRESS APPOINTED(5) IN FUND COMPLEX DURING PAST 5 YEARS
OVERSEEN
BY OFFICER
OFFICERS OF THE FUND:
[] KEVIN J. MCCARTHY Managing Director (since 2008), formerly,
3/26/66 Vice President Vice President (2007-2008), Nuveen
333 W. Wacker Drive and Secretary 2007 186 Investments, LLC; Vice President, and
Chicago, IL 60606 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, NWQHoldings, LLC, Symphony Asset
Management LLC, Santa Barbara Asset
Management LLC, Nuveen HydePark Group, LLC
and Richards &Tierney, Inc. (since 2007);
Managing Director (since 2008), formerly,
Vice President (2007-2008) and Assistant
General Counsel, Nuveen Investments, Inc.
prior thereto, Partner, Bell, Boyd & Lloyd
LLP (1997-2007).
[] JOHN V. MILLER Managing Director (since 2007), formerly,
4/10/67 Vice President Vice President (2002-2007) of Nuveen
333 W. Wacker Drive 2007 186 Investments, LLC; Chartered Financial
Chicago, IL 60606 Analyst.
[] CHRISTOPHER M. ROHRBACHER Vice President, Nuveen Investments, LLC
8/1/71 Vice President (since 2008); Vice President and Assistant
333 W. Wacker Drive and Assistant 2008 186 Secretary, Nuveen Asset Management (since
Chicago, IL 60606 Secretary 2008); Vice President and Assistant General
Counsel, Nuveen Investment, Inc. (since
2008); prior thereto, Associate, Skadden,
Arps, Slate Meagher & Flom LLP (2002-2008).
[] JAMES F. RUANE Vice President, Nuveen Investments since
7/3/62 Vice President 2007; prior thereto, Partner, Deloitte &
333 W. Wacker Drive and Assistant 2007 186 Touche USA LLP (since 2005), formerly,
Chicago, IL 60606 Secretary senior tax manager (since 2002); Certified
Public Accountant.
[] MARK L. WINGET Vice President, Nuveen Investments, LLC
12/21/68 Vice President (since 2008); Vice President and Assistant
333 W. Wacker Drive and Assistant 2008 186 Secretary, Nuveen Asset Management (since
Chicago, IL 60606 Secretary 2008); Vice President and Assistant General
Counsel, Nuveen Investments Inc. (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 and Mr. Toth were appointed to the Board of Trustees of certain
Nuveen Funds, effective July 1, 2008, and were subsequently elected to the
Boards of the remaining Nuveen Funds on July 28, 2008. In connection with
the appointment of Mr. Amboian as trustee, Timothy R. Schwertfeger, an
interested trustee, resigned from the Board of Trustees, effective July 1,
2008.
(3) 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.
(4) Nuveen Advisory Corp. and Nuveen Institutional Advisory Corp. were
reorganized into Nuveen Asset Management, effective January 1, 2005.
(5) 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.
87
Annual Investment
Management Agreement
APPROVAL PROCESS
The Investment Company Act of 1940, as amended (the "1940 Act"), provides, in
substance, that each investment advisory agreement between a fund and its
investment adviser will continue in effect from year to year only if its
continuance is approved at least annually by the fund's board members, including
by a vote of a majority of the board members who are not parties to the advisory
agreement or "interested persons" of any parties (the "Independent Board
Members"), cast in person at a meeting called for the purpose of considering
such approval. In connection with such approvals, the fund's board members must
request and evaluate, and the investment adviser is required to furnish, such
information as may be reasonably necessary to evaluate the terms of the advisory
agreement. Accordingly, at a meeting held on May 28-29, 2008 (the "May
Meeting"), the Boards of Trustees or Directors (as the case may be)(each, a
"Board" and each Trustee or Director, a "Board Member") of the Funds, including
a majority of the Independent Board Members, considered and approved the
continuation of the advisory agreement (each, an "Advisory Agreement") between
each Fund and Nuveen Asset Management ("NAM") for an additional one-year period.
In preparation for their considerations at the May Meeting, the Board also held
a separate meeting on April 23, 2008 (the "April Meeting"). Accordingly, the
factors considered and determinations made regarding the renewals by the
Independent Board Members include those made at the April Meeting.
In addition, in evaluating the Advisory Agreements, as described in further
detail below, the Independent Board Members reviewed a broad range of
information relating to the Funds and NAM, including absolute performance, fee
and expense information for the Funds as well as comparative performance, fee
and expense information for a comparable peer group of funds, the performance
information of recognized benchmarks (as applicable), the profitability of
Nuveen for its advisory activities (which includes its wholly owned
subsidiaries), and other information regarding the organization, personnel, and
services provided by NAM. The Independent Board Members also met quarterly as
well as at other times as the need arose during the year and took into account
the information provided at such meetings and the knowledge gained therefrom.
Prior to approving the renewal of the Advisory Agreements, the Independent Board
Members reviewed the foregoing information with their independent legal counsel
and with management, reviewed materials from independent legal counsel
describing applicable law and their duties in reviewing advisory contracts, and
met with independent legal counsel in private sessions without management
present. The Independent Board Members considered the legal advice provided by
independent legal counsel and relied upon their knowledge of NAM, its services
and the Funds resulting from their meetings and other interactions throughout
the year and their own business judgment in determining the factors to be
considered in evaluating the Advisory Agreements. Each Board Member may have
accorded different weight to the various factors in reaching his or her
conclusions with respect to a Fund's Advisory Agreement. The Independent Board
Members did not identify any single factor as all-important or controlling. The
Independent Board Members' considerations were instead based on a comprehensive
consideration of all the information presented. The principal factors considered
by the Board and its conclusions are described below.
88
A. NATURE, EXTENT AND QUALITY OF SERVICES
In considering renewal of the Advisory Agreements, the Independent Board Members
considered the nature, extent and quality of NAM's services, including advisory
services and administrative services. The Independent Board Members reviewed
materials outlining, among other things, NAM's organization and business; the
types of services that NAM or its affiliates provide and are expected to provide
to the Funds; the performance record of the applicable Fund (as described in
further detail below); and any initiatives Nuveen had taken for the applicable
fund product line. With respect to personnel, the Independent Board Members
evaluated the background, experience and track record of NAM's investment
personnel. In this regard, the Independent Board Members considered the
additional investment in personnel to support Nuveen fund advisory activities,
including in operations, product management and marketing as well as related
fund support functions, including sales, executive, finance, human resources and
information technology. The Independent Board Members also reviewed information
regarding portfolio manager compensation arrangements to evaluate NAM's ability
to attract and retain high quality investment personnel.
In evaluating the services of NAM, the Independent Board Members also considered
NAM's ability to supervise the Funds' other service providers and given the
importance of compliance, NAM's compliance program. Among other things, the
Independent Board Members considered the report of the chief compliance officer
regarding the Funds' compliance policies and procedures.
In addition to advisory services, the Independent Board Members considered the
quality of administrative services provided by NAM and its affiliates including
product management, fund administration, oversight of service providers,
shareholder services, administration of Board relations, regulatory and
portfolio compliance and legal support.
In addition to the foregoing services, the Independent Board Members also noted
the additional services that NAM or its affiliates provide to closed-end funds,
including, in particular, its secondary market support activities and the costs
of such activities. The Independent Board Members recognized Nuveen's continued
commitment to supporting the secondary market for the common shares of its
closed-end funds through a variety of programs designed to raise investor and
analyst awareness and understanding of closed-end funds. These efforts include
maintaining an investor relations program to timely provide information and
education to financial advisers and investors; providing advertising and
marketing for the closed-end funds; maintaining its closed-end fund website; and
providing educational seminars. With respect to closed-end funds that utilize
leverage through the issuance of auction rate preferred securities ("ARPS"), the
Board has recognized the unprecedented market conditions in the auction rate
market industry with the failure of the auction process. The Independent Board
Members noted Nuveen's efforts and the resources and personnel employed to
analyze the situation, explore potential alternatives and develop and implement
solutions that serve the interests of the affected funds and all of their
respective shareholders. The Independent Board Members further noted Nuveen's
commitment and efforts to keep investors and financial advisers informed as to
its progress in addressing the ARPS situation through, among other things,
conference calls, press releases, and information posted on its website as well
as its refinancing activities. The Independent Board Members also noted Nuveen's
continued support for holders of preferred shares of its closed-end funds by,
among other things, seeking distribution for preferred shares with new market
participants, managing relations with remarketing agents and the broker
community, maintaining the leverage and risk management of leverage and
maintaining systems necessary to test compliance with rating agency criteria.
89
ANNUAL INVESTMENT MANAGEMENT AGREEMENT
APPROVAL PROCESS (continued)
Based on their review, the Independent Board Members found that, overall, the
nature, extent and quality of services provided (and expected to be provided) to
the respective Funds under the Advisory Agreements were satisfactory.
B. THE INVESTMENT PERFORMANCE OF THE FUNDS AND NAM
The Board considered the investment performance of each Fund, including the
Fund's historic performance as well as its performance compared to funds with
similar investment objectives (the "Performance Peer Group") based on data
provided by an independent third party (as described below). The Independent
Board Members also reviewed portfolio level performance (which does not reflect
fund level fees, expenses and leverage), as described in further detail below.
In evaluating the performance information, the Board considered whether the Fund
has operated within its investment objectives and parameters and the impact that
the investment mandates may have had on performance. In addition, in comparing a
Fund's performance with that of its Performance Peer Group, the Independent
Board Members took into account that the closest Performance Peer Group in
certain instances may not adequately reflect the respective fund's investment
objectives and strategies thereby hindering a meaningful comparison of the
fund's performance with that of the Performance Peer Group.
The Independent Board Members also recognized that certain funds lack comparable
peers in which case their performance is measured against a more general
municipal category for various states. The closed-end municipal funds that do
not have corresponding state-specific Performance Peer Groups are from states
other than New York, California, Florida, New Jersey, Michigan, and
Pennsylvania.
The Independent Board Members reviewed performance information including, among
other things, total return information compared with the Fund's Performance Peer
Group and recognized benchmarks for the one-, three- and five-year periods (as
applicable) ending December 31, 2007 and with the Performance Peer Group for the
quarter and same yearly periods ending March 31, 2008 (as applicable). The
Independent Board Members also reviewed the Fund's portfolio level performance
(which does not reflect fund level fees and expenses (and leverage for
closed-end funds)) compared to recognized benchmarks for the one- three, and
five-year periods ending December 31, 2007 (as applicable). The analysis was
used to assess the efficacy of investment decisions against appropriate measures
of risk and total return, within specific market segments. This information
supplemented the Fund performance information provided to the Board at each of
its quarterly meetings. Based on their review, the Independent Board Members
determined that each Fund's investment performance over time had been
satisfactory.
C. FEES, EXPENSES AND PROFITABILITY
1. FEES AND EXPENSES
The Board evaluated the management fees and expenses of each Fund
reviewing, among other things, such Fund's gross management fees
(which take into account breakpoints), net management fees (which take
into account fee waivers or reimbursements) and total expense ratios
(before and after expense reimbursements and/or waivers) in absolute
terms as well as compared to the gross management fees, net management
fees (after waivers and/or reimbursements) and total expense ratios
(before and after waivers) of a comparable universe of unaffiliated
funds based on data provided by an independent data provider (the
"Peer Universe") and/or a more focused subset of funds therein (the
"Peer Group"). The
90
Independent Board Members further reviewed data regarding the
construction of Peer Groups as well as the methods of measurement for
the fee and expense analysis and the performance analysis. In
reviewing the comparisons of fee and expense information, the
Independent Board Members took into account that in certain instances
various factors such as the size of the Fund relative to peers, the
size and particular composition of the Peer Group, the investment
objectives of the peers, expense anomalies, and the timing of
information used may impact the comparative data, thereby limiting the
ability to make a meaningful comparison. The Independent Board Members
also considered, among other things, the differences in the use of
leverage and the differences in the use of insurance as well as the
states reflected in a respective Peer Group for the state municipal
funds (such as the use of a general "other states" category for
closed-end state funds (other than New York and California)). In
reviewing the fee schedule for a Fund, the Independent Board Members
also considered the fund-level and complex-wide breakpoint schedules
(described in further detail below) and any fee waivers and
reimbursements provided by Nuveen (applicable, in particular, for
certain closed-end funds launched since 1999). Based on their review
of the fee and expense information provided, the Independent Board
Members determined that each Fund's management fees and net total
expense ratio were reasonable in light of the nature, extent and
quality of services provided to the Fund.
2. COMPARISONS WITH THE FEES OF OTHER CLIENTS
The Independent Board Members further reviewed information regarding
the nature of services and fee rates offered by NAM to other clients.
Such other clients include NAM's municipal separately managed
accounts. In evaluating the comparisons of fees, the Independent Board
Members noted that the fee rates charged to the Funds and other
clients vary, among other things, because of the different services
involved and the additional regulatory and compliance requirements
associated with registered investment companies, such as the Funds.
Accordingly, the Independent Board Members considered the differences
in the product types, including, but not limited to, the services
provided, the structure and operations, product distribution and costs
thereof, portfolio investment policies, investor profiles, account
sizes and regulatory requirements. The Independent Board Members
noted, in particular, that the range of services provided to the Funds
(as discussed above) is much more extensive than that provided to
separately managed accounts. Given the inherent differences in the
products, particularly the extensive services provided to the Funds,
the Independent Board Members believe such facts justify the different
levels of fees.
3. PROFITABILITY OF NUVEEN
In conjunction with its review of fees, the Independent Board Members
also considered the profitability of Nuveen for its advisory
activities (which incorporated Nuveen's wholly-owned affiliated
sub-advisers) and its financial condition. The Independent Board
Members reviewed the revenues and expenses of Nuveen's advisory
activities for the last two years and the allocation methodology used
in preparing the profitability data. The Independent Board Members
noted this information supplemented the profitability information
requested and received during the year to help keep them apprised of
developments affecting profitability (such as changes in fee waivers
and expense reimbursement commitments). In this regard, the
Independent Board Members noted that they had also appointed an
Independent Board Member as a point person to review and keep them
apprised of changes to the profitability analysis and/or methodologies
during the year. The Independent Board Members considered Nuveen's
profitability compared with other fund sponsors prepared by two
independent third party service providers as well as comparisons of
the revenues, expenses and profit margins of various unaffiliated
management firms with similar amounts of assets under management
prepared by Nuveen.
91
ANNUAL INVESTMENT MANAGEMENT AGREEMENT
APPROVAL PROCESS (continued)
In reviewing profitability, the Independent Board Members recognized
the subjective nature of determining profitability which may be
affected by numerous factors including the allocation of expenses.
Further, the Independent Board Members recognized the difficulties in
making comparisons as the profitability of other advisers generally is
not publicly available and the profitability information that is
available for certain advisers or management firms may not be
representative of the industry and may be affected by, among other
things, the adviser's particular business mix, capital costs, types of
funds managed and expense allocations.
Notwithstanding the foregoing, the Independent Board Members reviewed Nuveen's
methodology and assumptions for allocating expenses across product lines to
determine profitability. In reviewing profitability, the Independent Board
Members recognized Nuveeninvestment in its fund business.
Based on its review, the Independent Board Members concluded that Nuveen's level
of profitability for its advisory activities was reasonable in light of the
services provided.
In evaluating the reasonableness of the compensation, the Independent Board
Members also considered other amounts paid to NAM by the Funds as well as any
indirect benefits (such as soft dollar arrangements, if any) NAM and its
affiliates receive, or are expected to receive, that are directly attributable
to the management of the Funds, if any. See Section E below for additional
information on indirect benefits NAM may receive as a result of its relationship
with the Funds. Based on their review of the overall fee arrangements of each
Fund, the Independent Board Members determined that the advisory fees and
expenses of the respective Fund were reasonable.
D. ECONOMIES OF SCALE AND WHETHER FEE LEVELS REFLECT THESE ECONOMIES OF SCALE
With respect to economies of scale, the Independent Board Members recognized the
potential benefits resulting from the costs of a fund being spread over a larger
asset base. The Independent Board Members therefore considered whether the Funds
have appropriately benefited from any economies of scale and whether there is
potential realization of any further economies of scale. In considering
economies of scale, the Independent Board Members have recognized that economies
of scale are difficult to measure and predict with precision, particularly on a
fund-by-fund basis. Notwithstanding the foregoing, one method to help ensure the
shareholders share in these benefits is to include breakpoints in the advisory
fee schedule. Accordingly, the Independent Board Members reviewed and considered
the fund-level breakpoints in the advisory fee schedules that reduce advisory
fees. In this regard, given that the Funds are closed-end funds, the Independent
Board Members recognized that although the Funds may from time to time make
additional share offerings, the growth in their assets will occur primarily
through appreciation of each Fund's investment portfolio.
In addition to fund-level advisory fee breakpoints, the Board also considered
the Funds' complex-wide fee arrangement. Pursuant to the complex-wide fee
arrangement, the fees of the funds in the Nuveen complex, including the Funds,
are reduced as the assets in the fund complex reach certain levels. In
evaluating the complex-wide fee arrangement, the Independent Board Members
recognized that the complex-wide fee schedule was recently revised in 2007 to
provide for additional fee savings to shareholders and considered the amended
schedule. The Independent Board Members further considered that the complex-wide
fee arrangement seeks to provide the benefits of economies of scale to fund
shareholders when total fund
92
complex assets increase, even if assets of a particular fund are unchanged or
have decreased. The approach reflects the notion that some of Nuveen's costs are
attributable to services provided to all its funds in the complex and therefore
all funds benefit if these costs are spread over a larger asset base. Based on
their review, the Independent Board Members concluded that the breakpoint
schedule and complex-wide fee arrangement were acceptable and desirable in
providing benefits from economies of scale to shareholders.
E. INDIRECT BENEFITS
In evaluating fees, the Independent Board Members received and considered
information regarding potential "fall out" or ancillary benefits NAM or its
affiliates may receive as a result of its relationship with each Fund. In this
regard, the Independent Board Members considered revenues received by affiliates
of NAM for serving as agent at Nuveen's preferred trading desk and for serving
as a co-manager in the initial public offering of new closed-end exchange traded
funds.
In addition to the above, the Independent Board Members considered whether NAM
received any benefits from soft dollar arrangements whereby a portion of the
commissions paid by a Fund for brokerage may be used to acquire research that
may be useful to NAM in managing the assets of the Funds and other clients. The
Independent Board Members noted that NAM does not currently have any soft dollar
arrangements; however, to the extent certain bona fide agency transactions that
occur on markets that traditionally trade on a principal basis and riskless
principal transactions are considered as generating "commissions," NAM intends
to comply with the applicable safe harbor provisions.
Based on their review, the Independent Board Members concluded that any indirect
benefits received by NAM as a result of its relationship with the Funds were
reasonable and within acceptable parameters.
F. OTHER CONSIDERATIONS
The Independent Board Members did not identify any single factor discussed
previously as all-important or controlling. The Board Members, including the
Independent Board Members, unanimously concluded that the terms of the Advisory
Agreements are fair and reasonable, that NAM's fees are reasonable in light of
the services provided to each Fund and that the Advisory Agreements be renewed.
93
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.
94
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.
95
NOTES
96
NOTES
97
Glossary of
TERMS USED in this REPORT
[] 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.
[] 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.
[] AVERAGE EFFECTIVE MATURITY: The average of the number of years to maturity
of the bonds in a Fund's portfolio, computed by weighting each bond's time
to maturity (the date the security comes due) by the market value of the
security. This figure does not account for the likelihood of prepayments or
the exercise of call provisions unless an escrow account has been
established to redeem the bond before maturity. The market value weighting
for an investment in an inverse floating rate security is the value of the
portfolio's residual interest in the inverse floating rate trust, and does
not include the value of the floating rate securities issued by the trust.
[] INVERSE FLOATERS: Inverse floating rate securities are created by
depositing a municipal bond, typically with a fixed interest rate, into a
special purpose trust created by a broker-dealer. This trust, in turn, (a)
issues floating rate certificates typically paying short-term tax-exempt
interest rates to third parties in amounts equal to some fraction of the
deposited bond's par amount or market value, and (b) issues an inverse
floating rate certificate (sometimes referred to as an "inverse floater")
to an investor (such as a Fund) interested in gaining investment exposure
to a long-term municipal bond. The income received by the holder of the
inverse floater varies inversely with the short-term rate paid to the
floating rate certificates' holders, and in most circumstances the holder
of the inverse floater bears substantially all of the underlying bond's
downside investment risk. The holder of the inverse floater typically also
benefits disproportionately from any potential appreciation of the
underlying bond's value. Hence, an inverse floater essentially represents
an investment in the underlying bond on a leveraged basis.
[] LEVERAGE-ADJUSTED DURATION: Duration is a measure of the expected period
over which a bond's principal and interest will be paid, and consequently
is a measure of the sensitivity of a bond's or bond Fund's value to changes
when market interest rates change. Generally, the longer a bond's or Fund's
duration, the more the price of the bond or Fund will change as interest
rates change. Leverage-adjusted duration takes into account the leveraging
process for a Fund and therefore is longer than the duration of the Fund's
portfolio of bonds.
[] MARKET YIELD (ALSO KNOWN AS DIVIDEND YIELD OR CURRENT YIELD): An
investment's current annualized dividend divided by its current market
price.
[] NET ASSET VALUE (NAV): A Fund's common share NAV per share is calculated by
subtracting the liabilities of the Fund (including any Preferred shares
issued in order to leverage the Fund) from its total assets and then
dividing the remainder by the number of shares outstanding. Fund NAVs are
calculated at the end of each business day.
[] TAXABLE-EQUIVALENT YIELD: The yield necessary from a fully taxable
investment to equal, on an after-tax basis, the yield of a municipal bond
investment.
[] ZERO COUPON BOND: A zero coupon bond does not pay a regular interest coupon
to its holders during the life of the bond. Tax-exempt income to the holder
of the bond comes from accretion of the difference between the original
purchase price of the bond at issuance and the par value of the bond at
maturity and is effectively paid at maturity. The market prices of zero
coupon bonds generally are more volatile than the market prices of bonds
that pay interest periodically.
98
Other Useful INFORMATION
QUARTERLY PORTFOLIO OF INVESTMENTS AND PROXY VOTING INFORMATION
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 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 or redeem shares of its own common or preferred
stock in the future at such times and in such amounts as is deemed advisable. No
common or preferred shares were repurchased or redeemed during the period
covered by this report. Any future repurchases 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, Rittenhouse, Santa Barbara,
Symphony and Tradewinds. In total, the Company managed $152 billion of assets on
June 30, 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/etf
Share prices
Fund details
Daily financial news
Investor education
Interactive planning tools
EAN-B-0708D
ITEM 2. CODE OF ETHICS.
As of the end of the period covered by this report, the registrant has adopted a
code of ethics that applies to the registrant's principal executive officer,
principal financial officer, principal accounting officer or controller, or
persons performing similar functions. There were no amendments to or waivers
from the Code during the period covered by this report. The registrant has
posted the code of ethics on its website at www.nuveen.com/etf. (To view the
code, click on the Shareholder Resources drop down menu box, click on Fund
Governance and then click on Code of Conduct.)
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The registrant's Board of Directors or Trustees determined that the registrant
has at least one "audit committee financial expert" (as defined in Item 3 of
Form N-CSR) serving on its Audit Committee. The registrant's audit committee
financial expert is Jack B. Evans, 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 Dividend Advantage Municipal Fund
The following tables show the amount of fees that Ernst & Young LLP, the Fund's
auditor, billed to the Fund during the Fund's last two full fiscal years. For
engagements with Ernst & Young LLP the Audit Committee approved in advance all
audit services and non-audit services that Ernst & Young LLP provided to the
Fund, except for those non-audit services that were subject to the pre-approval
exception under Rule 2-01 of Regulation S-X (the "pre-approval exception"). The
pre-approval exception for services provided directly to the Fund waives the
pre-approval requirement for services other than audit, review or attest
services if: (A) the aggregate amount of all such services provided constitutes
no more than 5% of the total amount of revenues paid by the Fund to its
accountant during the fiscal year in which the services are provided; (B) the
Fund did not recognize the services as non-audit services at the time of the
engagement; and (C) the services are promptly brought to the Audit Committee's
attention, and the Committee (or its delegate) approves the services before the
audit is completed.
The Audit Committee has delegated certain pre-approval responsibilities to its
Chairman (or, in his absence, any other member of the Audit Committee).
SERVICES THAT THE FUND'S AUDITOR BILLED TO THE FUND
AUDIT FEES BILLED AUDIT-RELATED FEES TAX FEES ALL OTHER FEES
FISCAL YEAR ENDED TO FUND (1) BILLED TO FUND (2) BILLED TO FUND (3) BILLED TO FUND (4)
- -------------------------------------------------------------------------------------------------------------------------------
July 31, 2008 $ 8,603 $ 0 $ 500 $ 800
- -------------------------------------------------------------------------------------------------------------------------------
Percentage approved 0% 0% 0% 0%
pursuant to
pre-approval
exception
- -------------------------------------------------------------------------------------------------------------------------------
July 31, 2007 $ 7,599 $ 0 $ 0 1,500
- -------------------------------------------------------------------------------------------------------------------------------
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.
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
- --------------------------------------------------------------------------------------------------------------
July 31, 2008 $ 0 $ 0 $ 0
- --------------------------------------------------------------------------------------------------------------
Percentage approved 0% 0% 0%
pursuant to
pre-approval
exception
- --------------------------------------------------------------------------------------------------------------
July 31, 2007 $ 0 $ 0 $ 0
- --------------------------------------------------------------------------------------------------------------
Percentage approved 0% 0% 0%
pursuant to
pre-approval
exception
- --------------------------------------------------------------------------------------------------------------
NON-AUDIT SERVICES
The following table shows the amount of fees that Ernst & Young LLP billed
during the Fund's last two full fiscal years for non-audit services. The Audit
Committee is required to pre-approve non-audit services that Ernst & Young LLP
provides to the Adviser and any Affiliated Fund Services Provider, if the
engagement related directly to the Fund's operations and financial reporting
(except for those subject to the de minimis exception described above). The
Audit Committee requested and received information from Ernst & Young LLP about
any non-audit services that Ernst & Young LLP rendered during the Fund's last
fiscal year to the Adviser and any Affiliated Fund Service Provider. The
Committee considered this information in evaluating Ernst & Young LLP's
independence.
FISCAL YEAR ENDED TOTAL NON-AUDIT FEES
BILLED TO ADVISER AND
AFFILIATED FUND SERVICE TOTAL NON-AUDIT FEES
PROVIDERS (ENGAGEMENTS BILLED TO ADVISER AND
RELATED DIRECTLY TO THE AFFILIATED FUND SERVICE
TOTAL NON-AUDIT FEES OPERATIONS AND FINANCIAL PROVIDERS (ALL OTHER
BILLED TO FUND REPORTING OF THE FUND) ENGAGEMENTS) TOTAL
- ---------------------------------------------------------------------------------------------------------------------
July 31, 2008 $ 1,300 $ 0 $ 0 $ 1,300
July 31, 2007 $ 1,500 $ 0 $ 0 $ 1,500
"Non-Audit Fees billed to Adviser" for both fiscal year ends represent "Tax
Fees" billed to Adviser in their respective amounts from the previous table.
Audit Committee Pre-Approval Policies and Procedures. Generally, the Audit
Committee must approve (i) all non-audit services to be performed for the Fund
by the Fund's independent accountants and (ii) all audit and non-audit services
to be performed by the Fund's independent accountants for the Affiliated Fund
Service Providers with respect to operations and financial reporting of the
Fund. Regarding tax and research projects conducted by the independent
accountants for the Fund and Affiliated Fund Service Providers (with respect to
operations and financial reports of the Fund) such engagements will be (i)
pre-approved by the Audit Committee if they are expected to be for amounts
greater than $10,000; (ii) reported to the Audit Committee chairman for his
verbal approval prior to engagement if they are expected to be for amounts under
$10,000 but greater than $5,000; and (iii) reported to the Audit Committee at
the next Audit Committee meeting if they are expected to be for an amount under
$5,000.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
The registrant's Board of Directors or Trustees has a separately designated
Audit Committee established in accordance with Section 3(a)(58)(A) of the
Securities Exchange Act of 1934, as amended (15 U.S.C. 78c(a)(58)(A)). The
members of the audit committee are Robert P. Bremner, Jack B. Evans,
William J. Schneider and David J. Kundert.
ITEM 6. SCHEDULE OF INVESTMENTS.
See Portfolio of Investments in Item 1.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
The registrant invests its assets primarily in municipal bonds and cash
management securities. On rare occasions the registrant may acquire, directly or
through a special purpose vehicle, equity securities of a municipal bond issuer
whose bonds the registrant already owns when such bonds have deteriorated or are
expected shortly to deteriorate significantly in credit quality. The purpose of
acquiring equity securities generally will be to acquire control of the
municipal bond issuer and to seek to prevent the credit deterioration or
facilitate the liquidation or other workout of the distressed issuer's credit
problem. In the course of exercising control of a distressed municipal issuer,
NAM may pursue the registrant's interests in a variety of ways, which may entail
negotiating and executing consents, agreements and other arrangements, and
otherwise influencing the management of the issuer. NAM does not consider such
activities proxy voting for purposes of Rule 206(4)-6 under the 1940 Act, but
nevertheless provides reports to the registrant's Board of Trustees on its
control activities on a quarterly basis.
In the rare event that a municipal issuer were to issue a proxy or that the
registrant were to receive a proxy issued by a cash management security, NAM
would either engage an independent third party to determine how the proxy should
be voted or vote the proxy with the consent, or based on the instructions, of
the registrant's Board of Trustees or its representative. A member of NAM's
legal department would oversee the administration of the voting, and ensure that
records were maintained in accordance with Rule 206(4)-6, reports were filed
with the SEC on Form N-PX, and the results provided to the registrant's Board of
Trustees and made available to shareholders as required by applicable rules.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
THE PORTFOLIO MANAGER
The following individual has primary responsibility for the day-to-day
implementation of the registrant's investment strategies:
NAME FUND
Daniel J. Close Nuveen Michigan Dividend Advantage Municipal Fund
Other Accounts Managed. In addition to managing the registrant, the portfolio
manager is also primarily responsible for the day-to-day portfolio management of
the following accounts:
TYPE OF ACCOUNT NUMBER OF
PORTFOLIO MANAGER MANAGED ACCOUNTS ASSETS*
- --------------------------------------------------------------------------------
Daniel J. Close Registered Investment Company 26 $5.054 billion
Other Pooled Investment Vehicles 1 $.45 million
Other Accounts 3 $.16 million
* Assets are as of July 31, 2008. 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 August 31, 2008, the
S&P/Investortools Municipal Bond index was comprised of 52,711 securities with
an aggregate current market value of $1,041 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 lead 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 July 31, 2008, the portfolio manager
beneficially owned the following dollar range of equity securities issued by the
Registrant and other Nuveen Funds managed by NAM's municipal investment team.
DOLLAR RANGE OF
DOLLAR EQUITY SECURITIES
RANGE OF BENEFICIALLY OWNED
EQUITY IN THE REMAINDER
SECURITIES OF NUVEEN FUNDS
BENEFICIALLY MANAGED BY
NAME OF PORTFOLIO OWNED IN NAM'S MUNICIPAL
MANAGER FUND FUND INVESTMENT TEAM
- -----------------------------------------------------------------------------------------------------------
Daniel J. Close Nuveen Michigan Dividend Advantage Municipal Fund $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 registrants Board implemented after the registrant
last provided disclosure in response to this item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive and principal financial officers,
or persons performing similar functions, have concluded that the
registrant's disclosure controls and procedures (as defined in Rule
30a-3(c) under the Investment Company Act of 1940, as amended (the
"1940 Act") (17 CFR 270.30a-3(c))) are effective, as of a date within
90 days of the filing date of this report that includes the disclosure
required by this paragraph, based on their evaluation of the controls
and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR
270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")
(17 CFR 240.13a-15(b) or 240.15d-15(b)).
(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act
(17 CFR 270.30a-3(d)) that occurred during the second fiscal quarter
of the period covered by this report that has materially affected, or
is reasonably likely to materially affect, the registrant's internal
control over financial reporting.
ITEM 12. EXHIBITS.
File the exhibits listed below as part of this Form. Letter or number the
exhibits in the sequence indicated.
(a)(1) Any code of ethics, or amendment thereto, that is the subject of the
disclosure required by Item 2, to the extent that the registrant intends to
satisfy the Item 2 requirements through filing of an exhibit: Not applicable
because the code is posted on registrant's website at www.nuveen.com/etf and
there were no amendments during the period covered by this report. (To view the
code, click on the Investor Resources drop down menu box, click on Fund
Governance and then Code of Conduct.)
(a)(2) A separate certification for each principal executive officer and
principal financial officer of the registrant as required by Rule 30a-2(a) under
the 1940 Act (17 CFR 270.30a-2(a)) in the exact form set forth below: Ex-99.CERT
Attached hereto.
(a)(3) Any written solicitation to purchase securities under Rule 23c-1 under
the 1940 Act (17 CFR 270.23c-1) sent or given during the period covered by the
report by or on behalf of the registrant to 10 or more persons. Not applicable.
(b) If the report is filed under Section 13(a) or 15(d) of the Exchange Act,
provide the certifications required by Rule 30a-2(b) under the 1940 Act (17 CFR
270.30a-2(b)); Rule 13a-14(b) or Rule 15d-14(b) under the Exchange Act (17 CFR
240.13a-14(b) or 240.15d-14(b)), and Section 1350 of Chapter 63 of Title 18 of
the United States Code (18 U.S.C. 1350) as an exhibit. A certification furnished
pursuant to this paragraph will not be deemed "filed" for purposes of Section 18
of the Exchange Act (15 U.S.C. 78r), or otherwise subject to the liability of
that section. Such certification will not be deemed to be incorporated by
reference into any filing under the Securities Act of 1933 or the Exchange Act,
except to the extent that the registrant specifically incorporates it by
reference. Ex-99.906 CERT attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Nuveen Michigan Dividend Advantage Municipal Fund
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By (Signature and Title) /s/ Kevin J. McCarthy
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Kevin J. McCarthy
Vice President and Secretary
Date: October 8, 2008
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Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title) /s/ Gifford R. Zimmerman
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Gifford R. Zimmerman
Chief Administrative Officer
(principal executive officer)
Date: October 8, 2008
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By (Signature and Title) /s/ Stephen D. Foy
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Stephen D. Foy
Vice President and Controller
(principal financial officer)
Date: October 8, 2008
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