-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, L9Av3DwEz/XRaDFK2gJLfx+w42Ky4ljSCj9rQV3uJAA4ZN+2/HlgE3qKgGK9wHw8 aEY+n4VvbvVMd5bfkOTjcw== 0000891804-06-003151.txt : 20061006 0000891804-06-003151.hdr.sgml : 20061006 20061006081811 ACCESSION NUMBER: 0000891804-06-003151 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20060731 FILED AS OF DATE: 20061006 DATE AS OF CHANGE: 20061006 EFFECTIVENESS DATE: 20061006 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NUVEEN MICHIGAN DIVIDEND ADVANTAGE MUNICIPAL FUND CENTRAL INDEX KEY: 0001087785 IRS NUMBER: 364460816 STATE OF INCORPORATION: MA FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-09453 FILM NUMBER: 061132457 BUSINESS ADDRESS: STREET 1: JOHN NUVEEN & CO STREET 2: 333 W WACKER DR CITY: CHICAGO STATE: IL ZIP: 60606 BUSINESS PHONE: 3129178146 MAIL ADDRESS: STREET 1: JOHN NUVEEN & CO STREET 2: 333 W WACKER DR CITY: CHICAGO STATE: IL ZIP: 60606 N-CSR 1 file001.txt NUVEEN MICHIGAN DIVIDEND ADVANTAGE MUNICIPAL FUND 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 --------------------- Nuveen Michigan Dividend Advantage Municipal Fund ------------------------------------------------------------------------------ (Exact name of registrant as specified in charter) Nuveen Investments 333 West Wacker Drive Chicago, IL 60606 - ------------------------------------------------------------------------------ (Address of principal executive offices) (Zip code) Jessica R. Droeger Nuveen Investments 333 West Wacker Drive Chicago, IL 60606 - ------------------------------------------------------------------------------ (Name and address of agent for service) Registrant's telephone number, including area code: (312) 917-7700 ------------------- Date of fiscal year end: July 31 ------------------ Date of reporting period: July 31, 2006 ------------------ Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles. A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget ("OMB") control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. ss. 3507. ITEM 1. REPORTS TO STOCKHOLDERS. ANNUAL REPORT July 31, 2006 Nuveen Investments Municipal Exchange-Traded 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 Photo of: Man, woman and child at the beach. Photo of: A child. DEPENDABLE, TAX-FREE INCOME BECAUSE IT'S NOT WHAT YOU EARN, IT'S WHAT YOU KEEP.(R) Logo: NUVEEN Investments Photo of: Woman Photo of: Woman Photo of: Man and child NOW YOU CAN RECEIVE YOUR NUVEEN FUND REPORTS FASTER. NO MORE WAITING. SIGN UP TODAY TO RECEIVE NUVEEN FUND INFORMATION BY E-MAIL. It only takes a minute to sign up for E-Reports. Once enrolled, you'll receive an e-mail as soon as your Nuveen Investments Fund information is ready -- no more waiting for delivery by regular mail. Just click on the link within the e-mail to see the report, and save it on your computer if you wish. ------------------------------ DELIVERY DIRECT TO YOUR E-MAIL INBOX ------------------------------ IT'S FAST, EASY & FREE: WWW.INVESTORDELIVERY.COM if you get your Nuveen Fund dividends and statements from your financial advisor or brokerage account. OR WWW.NUVEEN.COM/ACCOUNTACCESS if you get your Nuveen Fund dividends and statements directly from Nuveen. (Be sure to have the address sheet that accompanied this report handy. You'll need it to complete the enrollment process.) Logo: NUVEEN Investments Photo: Timothy R. Schwertfeger Timothy R. Schwertfeger Chairman of the Board Chairman's LETTER TO SHAREHOLDERS Once again, I am pleased to report that over the twelve- month period covered by this report your Fund continued to provide you with attractive monthly tax-free income. For more details about the management strategy and performance of your Fund, please read the Portfolio Manager's Comments, the Dividend and Share Price Information, and the Performance Overview sections of this report. For some time, I've used these letters to remind you that municipal bonds can be an important building block in a well balanced investment portfolio. In addition to providing attractive tax-free monthly income, a municipal bond investment like your Fund may help you achieve and benefit from greater portfolio diversification. Portfolio diversification is a recognized way to try to reduce some of the risk that comes with investing. For more information about this important investment strategy, I encourage you to contact your personal financial advisor. "IN ADDITION TO PROVIDING ATTRACTIVE TAX-FREE MONTHLY INCOME, A MUNICIPAL BOND INVESTMENT LIKE YOUR FUND MAY HELP YOU ACHIEVE AND BENEFIT FROM GREATER PORTFOLIO DIVERSIFICATION." We also are pleased to be able to offer you a choice concerning how you receive your shareholder reports and other Fund information. As an alternative to mailed copies, you can sign up to receive future Fund reports and other Fund information by e-mail and the Internet. The inside front cover of this report contains information on how you can sign up. We are grateful that you have chosen us as a partner as you pursue your financial goals, and we look forward to continuing to earn your trust in the months and years ahead. At Nuveen Investments, our mission continues to be to assist you and your financial advisor by offering investment services and products that can help you to secure your financial objectives. Sincerely, /s/ Timothy R. Schwertfeger Timothy R. Schwertfeger Chairman of the Board September 15, 2006 Nuveen Investments Michigan and Ohio Municipal Exchange-Traded Closed-End Funds (NUM, NMP, NZW, NUO, NXI, NBJ, NVJ) Portfolio Manager's COMMENTS Portfolio manager Cathryn Steeves discusses economic and municipal market conditions at both the national and state levels, key investment strategies, and the annual performance of these seven Nuveen Funds. Cathryn, who joined Nuveen in 1996, has managed the Ohio Funds since 2004 and the Michigan Funds since 2005. WHAT FACTORS AFFECTED THE U.S. ECONOMY AND MUNICIPAL MARKET DURING THE ANNUAL REPORTING PERIOD ENDED JULY 31, 2006? During this reporting period, we saw an increase in interest rates (and a corresponding drop in bond prices) across virtually the entire yield curve, although during much of the period rates at the longer end of the curve generally remained more stable than short-term rates. Between August 1, 2005 and July 31, 2006, the Federal Reserve announced eight increases of 0.25% each in the fed funds rate, raising this short-term benchmark by 200 basis points from 3.25% to 5.25%. By comparison, the yield on the benchmark 10-year U.S. Treasury note ended July 2006 at 4.98%, up 70 basis points from 12 months earlier. This resulted in a yield curve flattening as shorter-term rates approached or exceeded the levels of longer-term rates. In the municipal market, the Bond Buyer 25 Revenue Bond Index, a widely followed measure of longer-term municipal market rates, stood at 5.13% at the end of July 2006, an increase of just 27 basis points from the beginning of August 2005. Despite rising interest rates, record energy prices, and a softening housing market, the overall economy remained resilient. After expanding at an annual rate of 4.2% in the third quarter of 2005, the U.S. gross domestic product (GDP) growth rate slowed to 1.8% (annualized) in the fourth quarter of 2005, then rebounded sharply to 5.6% (annualized) in the first quarter of 2006. In the second quarter of 2006, GDP growth moderated to 2.9% (annualized), with the deceleration reflecting a downturn in federal spending as well as the largest decline in residential investment in 11 years. Despite sluggish payroll growth, the overall jobs picture remained positive, with national unemployment at 4.8% in July 2006, down from 5.0% in July 2005. However, the markets continued to keep a close eye on inflation trends, with the year-over-year increase in the Consumer Price Index register- 4 ing 4.1% as of July 2006. During the first seven months of 2006, the increase in inflation was driven mainly by higher energy and transportation costs, rising at a rate of 4.8% (annualized), compared with 3.4% for all of 2005. Over the 12 months ended July 2006, municipal bond supply nationwide remained strong, as $403.6 billion in new securities came to market, up 3% from the previous 12 months. However, following record levels of municipal issuance in calendar year 2005, we saw a drop-off in new supply during the first seven months of 2006, when issuance totaled $205.2 billion, off 16% from the same period in 2005. A major factor in 2006's decline in supply was the sharp reduction in pre-refunding volume, which dropped 57% from last year's levels, as rising interest rates made advance refundings less economically attractive. In the month of July 2006 alone, pre-refunding volume was down 85% compared with July 2005. Overall, demand for municipal bonds, especially those offering higher yields, continued to be strong and broad-based, with retail investors, property and casualty insurance companies, and hedge funds all participating in the market. HOW WERE THE ECONOMIC AND MARKET ENVIRONMENTS IN MICHIGAN AND OHIO DURING THIS PERIOD? Michigan and Ohio were among the slowest growing state economies in the nation in 2005, with Michigan ranking 49th with a gross state product (GSP) growth of $0.1 billion and Ohio ranking 47th with a GSP growth of $1.0 billion, compared with the national average of $3.5 billion. Michigan's economy continued to rely heavily on the manufacturing sector, which has lost thousands of jobs in recent years, and specifically on the auto industry, with General Motors, Ford, and Chrysler comprising the top three employers in the state. Although international auto parts makers have continued to move to Michigan, ongoing layoffs by auto-related industries leave the state vulnerable to further employment declines. As of July 2006, Michigan's jobless rate was 7.0%, higher than the 6.7% posted a year earlier and up from the four-year low of 6.0% registered in May 2006. This represented the second highest state unemployment rate in the nation for July 2006. As of July 31, 2006, Michigan general obligation bonds were rated Aa2/AA/AA by Moody's, Standard & Poor's, and Fitch, respectively. For the 12 months ended July 31, 2006, municipal issuance in Michigan totaled $14.3 billion, an increase of 7% over the previous 12 months, making Michigan the 6th largest state issuer in the nation. 5 During the first seven months of 2006, however, issuance in the state declined sharply, with $6.6 billion in new paper, down 41% compared with the same period in 2005. Ohio also continued to have high exposure to the manufacturing sector, including the auto industry, which impacted both economic and job growth in the state. However, the education, health care, and leisure and hospitality sectors helped to provide some recovery. As of July 2006, Ohio's unemployment rate stood at 5.8%, down from 5.9% in July 2005 but higher than the 52-month low of 5.0% reached in March 2006. Moody's, S&P, and Fitch continued to rate Ohio general obligation debt at Aa1, AA+, and AA+, respectively. For the 12 months ended July 31, 2006, municipal issuance in Ohio reached $12.0 billion, an increase of 7% over the previous 12 months, ranking Ohio 9th among state issuers. During the first seven months of 2006, issuance in the state fell 24% compared with the same period in 2005, to $5.1 billion. WHAT KEY STRATEGIES WERE USED TO MANAGE THE MICHIGAN AND OHIO FUNDS DURING THIS REPORTING PERIOD? As interest rates rose and the yield curve flattened during this 12-month period, we continued to emphasize careful management of the Funds' underlying portfolios in line with our established targets. This included a disciplined approach to duration1 management and yield curve positioning. In selecting new additions for the portfolios, we focused mainly on attractively priced, premium coupon2 bonds maturing in 20 to 30 years for the Michigan Funds and in 20 to 25 years for the Ohio Funds, depending on their differing needs. Overall, we believed that bonds in these parts of the curve offered strong performance potential, better value, and attractive reward opportunities without excessive risk. To help maintain the Funds' durations within our preferred strategic range, we selectively sold holdings with shorter durations, including pre-refunded bonds with short call or maturity dates. Selling these shorter-term bonds and reinvesting further out on the yield curve also helped to improve the Funds' overall call protection profile. With yields rising during this period, we also found some opportunities to sell a few of our holdings that were purchased when yields were lower and we replaced them with similar, newer 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 Premium coupon bonds are credits that are trading above their par values because their coupons are higher than current coupon levels. Historically, these bonds have held their value better than current coupon bonds when interest rates rise. 6 credits that yielded comparatively more. This process allowed us to maintain the Funds' current portfolio characteristics while strengthening their future income streams. In looking for potential purchase candidates, we kept an opportunistic eye toward all types of issuance that we believed could add value to the Funds' portfolios. As previously mentioned, while issuance in Michigan and Ohio was up for the 12-month period as a whole, both states saw declines in municipal supply during the first seven months of 2006, with Michigan experiencing the sharper drop-off. In general, however, these declines did not have a major impact on the implementation of strategies we had planned for these Funds. Since Michigan and Ohio are relatively high-quality states, much of the new supply was highly rated and/or insured, and the majority of our new purchases were higher-rated credits. For the Michigan Funds, we purchased insured Detroit water and sewer bonds that offered the longer maturities we were seeking for these Funds. We also continued to emphasize maintaining the Funds' weightings of BBB rated and non-rated bonds. As municipal supply tightened in 2006, we generally found fewer interesting lower-rated credit opportunities in the Michigan and Ohio markets. As a result, several of these Funds, particularly the Michigan Funds, had less exposure to lower quality bonds than we would have liked. However, we did take advantage of opportunities when they presented themselves, adding a lower-rated charter school issue and healthcare bonds to the Michigan Funds. In NZW and NVJ, our duration management strategies over the past 12 months included the use of forward interest rate swaps, a type of derivative financial instrument. We also purchased a small number of U.S. Treasury note futures contracts for NVJ. These hedging strategies were not an attempt to profit from correctly predicting the timing and direction of interest rate movements. Instead, our sole objective was to manage the Funds' durations (and price sensitivity) without having a negative impact on their income streams or common share dividends over the short term. During this reporting period, the hedges in NZW and NVJ performed as expected. 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 NET ASSET VALUE* For periods ended 7/31/06 MICHIGAN FUNDS 1-YEAR 5-YEAR 10-YEAR - -------------------------------------------------------------------------------- NUM 1.41% 6.40% 6.48% - -------------------------------------------------------------------------------- NMP 2.06% 6.07% 6.71% - -------------------------------------------------------------------------------- NZW 2.46% NA NA - -------------------------------------------------------------------------------- Lehman Brothers Municipal Bond Index3 2.55% 4.99% 5.82% - -------------------------------------------------------------------------------- Lipper Michigan Municipal Debt Funds Average4 2.21% 6.13% 6.32% - -------------------------------------------------------------------------------- OHIO FUNDS - -------------------------------------------------------------------------------- NUO 2.10% 6.20% 6.44% - -------------------------------------------------------------------------------- NXI 2.32% 6.93% NA - -------------------------------------------------------------------------------- NBJ 1.96% NA NA - -------------------------------------------------------------------------------- NVJ 1.87% NA NA - -------------------------------------------------------------------------------- Lehman Brothers Municipal Bond Index3 2.55% 4.99% 5.82% - -------------------------------------------------------------------------------- Lipper Other States Municipal Debt Funds Average5 2.46% 6.53% 6.69% - -------------------------------------------------------------------------------- *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. For the 12 months ended July 31, 2006, the total returns on net asset value (NAV) for all of these Funds underperformed the return on the unmanaged Lehman Brothers Municipal Bond Index. NZW outperformed the average return for the Lipper Michigan peer group, while NMP and NUM underperformed the peer average. All of the Ohio Funds underperformed the Lipper Other States peer group average over this period. Shareholders of the Ohio Funds should note that the performance of the Lipper Other States category represents the overall average of returns for funds from 10 different 3 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 indexes do not reflect any expenses. 4 The Lipper Michigan Municipal Debt Funds category average is calculated using the returns of all exchange-traded closed-end funds in this category for each period as follows: 1 year, 7 funds; 5 years, 5 funds; and 10 years, 4 funds. Fund and Lipper returns assume reinvestment of dividends. 5 The Lipper Other States Municipal Debt Funds category average is calculated using the returns of all exchange-traded closed-end funds in this category for each period as follows: 1 year, 46 funds; 5 years, 27 funds; and 10 years, 18 funds. Fund and Lipper returns assume reinvestment of dividends. 8 states with a wide variety of municipal market conditions, making direct comparisons less meaningful. The major factor impacting the annual performance of these Funds, especially in relation to the return for the unleveraged Lehman Brothers Municipal Bond Index, was the Funds' use of financial leverage. Although leveraging provides opportunities for additional income and total returns for common shareholders when interest rates fall or remain consistently low, this benefit is reduced when interest rates rise. With the increases in interest rates during this period, the decline in value of the bonds in the underlying portfolios of these Funds was exacerbated by the effects of leveraging. In addition, the benefits of leveraging are tied in part to the short-term rates leveraged Funds pay their MuniPreferred(R) shareholders. During periods of low short-term rates, these Funds generally pay lower dividends to their MuniPreferred shareholders, which can leave more earnings to support common share dividends. Conversely, when short-term interest rates rise, as they did during this reporting period, the Funds' borrowing costs also rise, impacting the Funds' income streams and total returns. Despite the rise in short-term rates over this one-year period, the Funds' leveraging strategy continued to benefit common shareholders, and we remain convinced that, over the long term, these benefits should continue. This is demonstrated by the five-year and ten-year return performance--both absolute and relative to the Lehman index--of NUM, NMP and NUO. Other factors influencing the Funds' returns during this period included yield curve positioning and duration management, allocations to lower-rated credits (or credit risk), sector weightings, and pre-refunding activity. As the yield curve continued to flatten over the course of this period, bonds in the Lehman municipal index with maturities between two and six years generally were the most adversely impacted, and they generally underperformed long-intermediate bonds (those with maturities between 17 and 22 years) and long-term bonds (those with maturities of at least 22 years). In general, the Ohio Funds were well positioned across the yield curve during this period, with good exposure to the long-intermediate segment, but slightly underexposed to the longest part of the curve. Yield curve positioning was less of a factor in the performance of the Michigan Funds. 9 With bonds rated BBB or lower and non-rated bonds generally outperforming other credit quality sectors during this period, all of these Funds benefited from their allocations of lower-quality credits. The performance of this sector was largely the result of investor demand for the higher yields typically associated with lower-quality bonds. As of July 31, 2006, the Michigan Funds had weightings of BBB, below-investment-grade, and non-rated bonds ranging from 4% in NMP and 6% in NUM to 10% in NZW, while the Ohio Funds' allocations totaled 4% in NUO, 7% in NVJ, and 8% in NXI and NBJ. The heavier weightings of lower credit quality securities in NZW and NXI, helped the performances of these two Funds during this period. However, as noted earlier, the lack of lower-rated supply in Michigan and Ohio resulted in the Funds having less than optimal exposures to lower quality sectors, which hampered their performances. Among the lower-rated holdings making positive contributions to the Funds' total returns for this period were health care (including hospitals) credits and industrial development bonds, both of which ranked among the top performing revenue sectors in the Lehman Brothers municipal index, as well as bonds backed by the 1998 master tobacco settlement agreement (which comprised between 1% and 4% of the Ohio Funds' portfolios). Housing bonds were also among some of the best performing credits in the Funds' portfolios, as rising interest rates lessened the incidence and impact of prepayments and bond calls. Both multi-family and single-family housing bonds were positive contributors across all of these Funds. Holdings of higher education credits also helped the performance of the Ohio Funds. During this period, we continued to see a number of advance refundings,6 which benefit the Funds through price appreciation and enhanced credit quality. With 18% of its portfolio holdings advance-refunded during this period, NXI in particular was positively impacted by these refinancings, while NBJ, NUO, and NVJ had 4%, 7%, and 11%, respectively, of their portfolios pre-refunded. Among the three Michigan Funds, pre-refundings during this period ranged from 6% in NMP and NZW to 9% in NUM. While advance refundings generally enhanced performance for this 12-month period, the rising interest rate environment meant that the Funds' holdings of previously pre-refunded bonds tended to underperform the general municipal market. Among these seven Funds, 6 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. 10 NUM had the heaviest allocation of these bonds going into this period. In addition, a bond call affecting one of NUM's multi-family housing holdings--credits issued by Michigan Housing Development Authority for Renaissance Court Apartments--adversely impacted this Fund's performance. NUM also had heavier exposure to non-callable bonds, which underperformed during this period. HOW WERE THE FUNDS POSITIONED IN TERMS OF CREDIT QUALITY AND BOND CALLS AS OF JULY 31, 2006? We continued to believe that maintaining strong credit quality was an important requirement. As of July 31, 2006, all of these Funds continued to offer excellent credit quality, with allocations of bonds rated AAA/U.S. guaranteed and AA ranging from 82% in NBJ and NVJ, 83% in NZW, and 84% in NXI to 91% in NUMand NUO, and 92% in NMP. As of July 31, 2006, potential call exposure for the period August 2006 through the end of 2008 ranged from 2% in NZW, 3% in NBJ, 7% in NXI, 8% in NUM, and 9% in NVJ to 14% in NMP and 16% in NUO. The number of actual bond calls in all of these Funds depends largely on future market interest rates. 11 Dividend and Share Price INFORMATION As previously noted, all of these Funds use leverage to potentially enhance opportunities for additional income for common shareholders. During periods of rising short-term interest rates, as was the case during this reporting period, the Funds' borrowing costs also rise, reducing the extent of the benefits of leveraging. 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. These factors resulted in two monthly dividend reductions in NZW, NBJ, and NVJ, three in NUM, NMP and NUO, and four in NXI over the 12-month period ended July 31, 2006. Due to capital gains generated by normal portfolio activity, common shareholders of the following Funds received capital gains and net ordinary income distributions at the end of December 2005 as follows: LONG-TERM CAPITAL GAINS ORDINARY INCOME (PER SHARE) (PER SHARE) - -------------------------------------------------------------------------------- NUM $0.1125 -- - -------------------------------------------------------------------------------- NMP $0.1465 $0.0023 - -------------------------------------------------------------------------------- NUO $0.0543 $0.0001 - -------------------------------------------------------------------------------- NXI $0.0337 $0.0018 - -------------------------------------------------------------------------------- NBJ $0.0480 $0.0001 - -------------------------------------------------------------------------------- These distributions, which represented an important part of these Funds' total returns for this period, were generated by bond calls and the sale of appreciated securities. This had a slight negative impact on the Funds' earning power per common share and was a minor factor in the per share dividend reductions noted above. 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, 2006, all of the 12 Michigan Funds had positive UNII balances for both financial statement and tax purposes. All of the Ohio Funds had negative UNII balances for financial statement purposes, and positive UNII balances for tax purposes as of July 31, 2006. At the end of the reporting period, the Funds' share prices were trading at premiums or discounts to their NAVs as shown in the accompanying chart: 7/31/06 12-MONTH AVERAGE PREMIUM/DISCOUNT PREMIUM/DISCOUNT - -------------------------------------------------------------------------------- NUM -5.01% -1.59% - -------------------------------------------------------------------------------- NMP -4.36% -1.85% - -------------------------------------------------------------------------------- NZW +5.82% +3.06% - -------------------------------------------------------------------------------- NUO -1.12% +0.71% - -------------------------------------------------------------------------------- NXI +0.20% +5.65% - -------------------------------------------------------------------------------- NBJ -0.74% +1.58% - -------------------------------------------------------------------------------- NVJ -2.06% +0.37% - -------------------------------------------------------------------------------- 13 Nuveen Michigan Quality Income Municipal Fund, Inc. NUM Performance OVERVIEW As of July 31, 2006 Pie Chart: CREDIT QUALITY (as a % of total investments) AAA/U.S. Guaranteed 83% AA 8% A 3% BBB 4% BB or Lower 1% N/R 1% Bar Chart: 2005-2006 MONTHLY TAX-FREE DIVIDENDS PER SHARE2 Aug 0.072 Sep 0.072 Oct 0.072 Nov 0.072 Dec 0.0685 Jan 0.0685 Feb 0.0685 Mar 0.065 Apr 0.065 May 0.065 Jun 0.062 Jul 0.062 Line Chart: SHARE PRICE PERFORMANCE Weekly Closing Price Past performance is not predictive of future results. 8/01/05 15.72 15.7 15.61 15.78 15.75 16.07 16.1 15.84 15.82 16.05 16.08 15.96 15.7 15.65 15.59 15.48 15.25 15.1 14.99 14.91 14.56 14.7 14.68 14.92 15.06 15.07 15.12 15.28 15.18 15.29 15.42 15.45 15.65 15.5 15.28 15.11 15.1 14.9 14.77 14.72 15.1 15 14.75 14.87 15 14.76 14.47 14.24 14.29 14.69 14.38 14.25 14.35 7/31/06 14.41 FUND SNAPSHOT - ------------------------------------ Common Share Price $14.41 - ------------------------------------ Common Share Net Asset Value $15.17 - ------------------------------------ Premium/(Discount) to NAV -5.01% - ------------------------------------ Market Yield 5.16% - ------------------------------------ Taxable-Equivalent Yield1 7.48% - ------------------------------------ Net Assets Applicable to Common Shares ($000) $177,734 - ------------------------------------ Average Effective Maturity on Securities (Years) 14.01 - ------------------------------------ Leverage-Adjusted Duration 8.47 - ------------------------------------ AVERAGE ANNUAL TOTAL RETURN (Inception 10/17/91) - ------------------------------------ ON SHARE PRICE ON NAV - ------------------------------------ 1-Year -2.28% 1.41% - ------------------------------------ 5-Year 5.17% 6.40% - ------------------------------------ 10-Year 5.72% 6.48% - ------------------------------------ INDUSTRIES (as a % of total investments) - ------------------------------------ Tax Obligation/General 31.0% - ------------------------------------ U.S. Guaranteed 28.5% - ------------------------------------ Tax Obligation/Limited 9.5% - ------------------------------------ Health Care 8.0% - ------------------------------------ Utilities 8.0% - ------------------------------------ Water and Sewer 5.9% - ------------------------------------ Education and Civic Organizations 5.3% - ------------------------------------ Other 3.8% - ------------------------------------ 1 Taxable-Equivalent Yield represents the yield that must be earned on a fully taxable investment in order to equal the yield of the Fund on an after-tax basis. It is based on a combined federal and state income tax rate of 31%. When comparing this Fund to investments that generate qualified dividend income, the Taxable-Equivalent Yield is lower. 2 The Fund paid shareholders a capital gains distribution in December 2005 of $0.1125 per share. 14 Nuveen Michigan Premium Income Municipal Fund, Inc. NMP Performance OVERVIEW As of July 31, 2006 Pie Chart: CREDIT QUALITY (as a % of total investments) AAA/U.S. Guaranteed 76% AA 16% A 4% BBB 2% BB or Lower 1% N/R 1% Bar Chart: 2005-2006 MONTHLY TAX-FREE DIVIDENDS PER SHARE2 Aug 0.07 Sep 0.07 Oct 0.07 Nov 0.07 Dec 0.0665 Jan 0.0665 Feb 0.0665 Mar 0.063 Apr 0.063 May 0.063 Jun 0.0605 Jul 0.0605 Line Chart: SHARE PRICE PERFORMANCE Weekly Closing Price Past performance is not predictive of future results. 8/01/05 15.67 15.71 15.8 15.66 15.59 15.59 15.59 15.35 15.16 14.96 14.92 14.8 14.85 14.81 14.81 14.44 14.24 14.37 14.52 14.34 14.4 14.52 14.75 15.33 15.55 14.9 15.35 15.07 15.16 15.04 15.1 15.37 14.73 15.01 15 14.62 14.45 14.43 14.3 14.86 14.83 14.94 14.9 14.82 15.11 14.73 14.5 14.26 14.66 14.84 14.45 14.19 14.2 7/31/06 14.27 FUND SNAPSHOT - ------------------------------------ Common Share Price $14.27 - ------------------------------------ Common Share Net Asset Value $14.92 - ------------------------------------ Premium/(Discount) to NAV -4.36% - ------------------------------------ Market Yield 5.09% - ------------------------------------ Taxable-Equivalent Yield1 7.38% - ------------------------------------ Net Assets Applicable to Common Shares ($000) $115,611 - ------------------------------------ Average Effective Maturity on Securities (Years) 15.56 - ------------------------------------ Leverage-Adjusted Duration 7.04 - ------------------------------------ AVERAGE ANNUAL TOTAL RETURN (Inception 12/17/92) - ------------------------------------ ON SHARE PRICE ON NAV - ------------------------------------ 1-Year -3.12% 2.06% - ------------------------------------ 5-Year 6.10% 6.07% - ------------------------------------ 10-Year 7.48% 6.71% - ------------------------------------ INDUSTRIES (as a % of total investments) - ------------------------------------ Tax Obligation/General 35.0% - ------------------------------------ U.S. Guaranteed 18.0% - ------------------------------------ Tax Obligation/Limited 11.9% - ------------------------------------ Utilities 9.3% - ------------------------------------ Water and Sewer 9.0% - ------------------------------------ Health Care 7.6% - ------------------------------------ Other 9.2% - ------------------------------------ 1 Taxable-Equivalent Yield represents the yield that must be earned on a fully taxable investment in order to equal the yield of the Fund on an after-tax basis. It is based on a combined federal and state income tax rate of 31%. When comparing this Fund to investments that generate qualified dividend income, the Taxable-Equivalent Yield is lower. 2 The Fund paid shareholders capital gains and net ordinary income distributions in December 2005 of $0.1488 per share. 15 Nuveen Michigan Dividend Advantage Municipal Fund NZW Performance OVERVIEW As of July 31, 2006 Pie Chart: CREDIT QUALITY (as a % of total investments) AAA/U.S. Guaranteed 72% AA 11% A 7% BBB 6% BB or Lower 2% N/R 2% Bar Chart: 2005-2006 MONTHLY TAX-FREE DIVIDENDS PER SHARE Aug 0.0745 Sep 0.0745 Oct 0.0745 Nov 0.0745 Dec 0.0745 Jan 0.0745 Feb 0.0745 Mar 0.0705 Apr 0.0705 May 0.0705 Jun 0.0675 Jul 0.0675 Line Chart: SHARE PRICE PERFORMANCE Weekly Closing Price Past performance is not predictive of future results. 8/01/05 16.79 16.35 16 15.92 15.9 15.94 15.95 15.74 15.78 15.65 15.71 15.7 15.42 15.23 15.9 15.05 14.91 14.8 14.8 14.57 14.8 14.87 15.12 15.2 15.32 15.38 15.8 15.95 16.15 16.2 16.11 16.25 16 15.86 15.32 15.73 15.76 15.8 16 16.06 16 15.4 15.25 15.39 15.65 15.41 15.36 15.4 15.59 15.48 15.37 15.5 15.8 7/31/06 15.81 FUND SNAPSHOT - ------------------------------------ Common Share Price $15.81 - ------------------------------------ Common Share Net Asset Value $14.94 - ------------------------------------ Premium/(Discount) to NAV 5.82% - ------------------------------------ Market Yield 5.12% - ------------------------------------ Taxable-Equivalent Yield1 7.42% - ------------------------------------ Net Assets Applicable to Common Shares ($000) $30,823 - ------------------------------------ Average Effective Maturity on Securities (Years) 15.57 - ------------------------------------ Leverage-Adjusted Duration 7.99 - ------------------------------------ AVERAGE ANNUAL TOTAL RETURN (Inception 9/25/01) - ------------------------------------ ON SHARE PRICE ON NAV - ------------------------------------ 1-Year -0.47% 2.46% - ------------------------------------ Since Inception 6.95% 6.79% - ------------------------------------ INDUSTRIES (as a % of total investments) - ------------------------------------ U.S. Guaranteed 28.0% - ------------------------------------ Tax Obligation/General 21.0% - ------------------------------------ Water and Sewer 11.3% - ------------------------------------ Health Care 10.4% - ------------------------------------ Utilities 10.1% - ------------------------------------ Tax Obligation/Limited 6.5% - ------------------------------------ Other 12.7% - ------------------------------------ 1 Taxable-Equivalent Yield represents the yield that must be earned on a fully taxable investment in order to equal the yield of the Fund on an after-tax basis. It is based on a combined federal and state income tax rate of 31%. When comparing this Fund to investments that generate qualified dividend income, the Taxable-Equivalent Yield is lower. 16 Nuveen Ohio Quality Income Municipal Fund, Inc. NUO Performance OVERVIEW As of July 31, 2006 Pie Chart: CREDIT QUALITY (as a % of total investments) AAA/U.S. Guaranteed 69% AA 22% A 5% BBB 3% N/R 1% Bar Chart: 2005-2006 MONTHLY TAX-FREE DIVIDENDS PER SHARE2 Aug 0.0765 Sep 0.073 Oct 0.073 Nov 0.073 Dec 0.073 Jan 0.073 Feb 0.073 Mar 0.069 Apr 0.069 May 0.069 Jun 0.0655 Jul 0.0655 Line Chart: SHARE PRICE PERFORMANCE Weekly Closing Price Past performance is not predictive of future results. 8/01/05 16.98 16.96 16.78 16.75 16.99 16.8 16.79 16.77 16.75 16.74 16.74 16.55 16.44 16.49 16.49 16.23 16.01 16.16 16.39 16.2 16.01 16.21 16.25 16.49 17 16.95 17.01 16.8 17.1 17.15 17.12 16.35 16.38 16.5 16.27 16.37 16.1 16.09 16.11 16.27 16.1 15.6 16.1 16.3 16.15 15.8 15.43 15.04 15.22 15.37 15.31 15.66 15.9 7/31/06 15.83 FUND SNAPSHOT - ------------------------------------ Common Share Price $15.83 - ------------------------------------ Common Share Net Asset Value $16.01 - ------------------------------------ Premium/(Discount) to NAV -1.12% - ------------------------------------ Market Yield 4.97% - ------------------------------------ Taxable-Equivalent Yield1 7.36% - ------------------------------------ Net Assets Applicable to Common Shares ($000) $156,026 - ------------------------------------ Average Effective Maturity on Securities (Years) 14.98 - ------------------------------------ Leverage-Adjusted Duration 7.32 - ------------------------------------ AVERAGE ANNUAL TOTAL RETURN (Inception 10/17/91) - ------------------------------------ ON SHARE PRICE ON NAV - ------------------------------------ 1-Year -1.36% 2.10% - ------------------------------------ 5-Year 4.80% 6.20% - ------------------------------------ 10-Year 5.82% 6.44% - ------------------------------------ INDUSTRIES (as a % of total investments) - ------------------------------------ Tax Obligation/General 30.6% - ------------------------------------ U.S. Guaranteed 18.4% - ------------------------------------ Health Care 11.7% - ------------------------------------ Education and Civic Organizations 8.3% - ------------------------------------ Water and Sewer 6.7% - ------------------------------------ Tax Obligation/Limited 5.9% - ------------------------------------ Utilities 4.7% - ------------------------------------ Other 13.7% - ------------------------------------ 1 Taxable-Equivalent Yield represents the yield that must be earned on a fully taxable investment in order to equal the yield of the Fund on an after-tax basis. It is based on a combined federal and state income tax rate of 32.5%. When comparing this Fund to investments that generate qualified dividend income, the Taxable-Equivalent Yield is lower. 2 The Fund paid shareholders capital gains and net ordinary income distributions in December 2005 of $0.0544 per share. 17 Nuveen Ohio Dividend Advantage Municipal Fund NXI Performance OVERVIEW As of July 31, 2006 Pie Chart: CREDIT QUALITY (as a % of total investments) AAA/U.S. Guaranteed 63% AA 21% A 8% BBB 6% N/R 2% Bar Chart: 2005-2006 MONTHLY TAX-FREE DIVIDENDS PER SHARE2 Aug 0.078 Sep 0.0745 Oct 0.0745 Nov 0.0745 Dec 0.071 Jan 0.071 Feb 0.071 Mar 0.0675 Apr 0.0675 May 0.0675 Jun 0.0635 Jul 0.0635 Line Chart: SHARE PRICE PERFORMANCE Weekly Closing Price Past performance is not predictive of future results. 8/01/05 16.93 16.52 16.12 16.2 16.3 16.32 16.3 16.32 16.72 16.87 16.8 16.71 16.59 16.25 16.15 16.32 16.5 16.32 16.52 16.47 16.34 16.85 16.85 16.63 16.08 16.75 17.5 16.55 16.4 16.77 16.75 16.6 16.24 16.3 16 16.4 15.97 16.23 15.85 15.8 15.6 15.45 15.6 15.66 15.52 15.23 14.95 14.48 14.38 14.5 14.48 14.7 15.1 7/31/06 15.05 FUND SNAPSHOT - ------------------------------------ Common Share Price $15.05 - ------------------------------------ Common Share Net Asset Value $15.02 - ------------------------------------ Premium/(Discount) to NAV 0.20% - ------------------------------------ Market Yield 5.06% - ------------------------------------ Taxable-Equivalent Yield1 7.50% - ------------------------------------ Net Assets Applicable to Common Shares ($000) $63,735 - ------------------------------------ Average Effective Maturity on Securities (Years) 14.27 - ------------------------------------ Leverage-Adjusted Duration 7.18 - ------------------------------------ AVERAGE ANNUAL TOTAL RETURN (Inception 3/27/01) - ------------------------------------ ON SHARE PRICE ON NAV - ------------------------------------ 1-Year -6.53% 2.32% - ------------------------------------ 5-Year 5.64% 6.93% - ------------------------------------ Since Inception 5.99% 7.09% - ------------------------------------ INDUSTRIES (as a % of total investments) - ------------------------------------ Tax Obligation/General 27.8% - ------------------------------------ U.S. Guaranteed 22.7% - ------------------------------------ Education and Civic Organizations 12.9% - ------------------------------------ Utilities 7.0% - ------------------------------------ Tax Obligation/Limited 6.9% - ------------------------------------ Health Care 6.0% - ------------------------------------ Water and Sewer 4.5% - ------------------------------------ Other 12.2% - ------------------------------------ 1 Taxable-Equivalent Yield represents the yield that must be earned on a fully taxable investment in order to equal the yield of the Fund on an after-tax basis. It is based on a combined federal and state income tax rate of 32.5%. When comparing this Fund to investments that generate qualified dividend income, the Taxable-Equivalent Yield is lower. 2 The Fund paid shareholders capital gains and net ordinary income distributions in December 2005 of $0.0355 per share. 18 Nuveen Ohio Dividend Advantage Municipal Fund 2 NBJ Performance OVERVIEW As of July 31, 2006 Pie Chart: CREDIT QUALITY (as a % of total investments) AAA/U.S. Guaranteed 70% AA 12% A 10% BBB 7% N/R 1% Bar Chart: 2005-2006 MONTHLY TAX-FREE DIVIDENDS PER SHARE2 Aug 0.07 Sep 0.07 Oct 0.07 Nov 0.07 Dec 0.0665 Jan 0.0665 Feb 0.0665 Mar 0.0665 Apr 0.0665 May 0.0665 Jun 0.062 Jul 0.062 Line Chart: SHARE PRICE PERFORMANCE Weekly Closing Price Past performance is not predictive of future results. 8/01/05 15.41 15.12 14.98 15.1 15.17 15.38 15.67 15.18 15.37 15.25 15.08 14.79 14.85 14.82 15.08 14.8 15.45 15.37 15.75 15.84 15.75 15.35 15.68 15.3 15.6 15.5 16.4 16.3 16.21 16.16 15.76 15.1 15.5 15.45 15.3 15.11 15.05 15.32 15.5 15.46 15.18 15.44 15.5 15.4 15.15 14.83 14.49 14.7 14.3 14.01 14.1 14.45 14.7 7/31/06 14.7 FUND SNAPSHOT - ------------------------------------ Common Share Price $14.70 - ------------------------------------ Common Share Net Asset Value $14.81 - ------------------------------------ Premium/(Discount) to NAV -0.74% - ------------------------------------ Market Yield 5.06% - ------------------------------------ Taxable-Equivalent Yield1 7.50% - ------------------------------------ Net Assets Applicable to Common Shares ($000) $46,242 - ------------------------------------ Average Effective Maturity on Securities (Years) 15.00 - ------------------------------------ Leverage-Adjusted Duration 7.64 - ------------------------------------ AVERAGE ANNUAL TOTAL RETURN (Inception 9/25/01) - ------------------------------------ ON SHARE PRICE ON NAV - ------------------------------------ 1-Year 0.35% 1.96% - ------------------------------------ Since Inception 5.40% 6.66% - ------------------------------------ INDUSTRIES (as a % of total investments) - ------------------------------------ Tax Obligation/General 30.9% - ------------------------------------ Health Care 15.7% - ------------------------------------ U.S. Guaranteed 11.8% - ------------------------------------ Tax Obligation/Limited 10.3% - ------------------------------------ Education and Civic Organizations 7.6% - ------------------------------------ Utilities 6.0% - ------------------------------------ Consumer Staples 5.8% - ------------------------------------ Transportation 5.2% - ------------------------------------ Other 6.7% - ------------------------------------ 1 Taxable-Equivalent Yield represents the yield that must be earned on a fully taxable investment in order to equal the yield of the Fund on an after-tax basis. It is based on a combined federal and state income tax rate of 32.5%. When comparing this Fund to investments that generate qualified dividend income, the Taxable-Equivalent Yield is lower. 2 The Fund paid shareholders capital gains and net ordinary income distributions in December 2005 of $0.0481 per share. 19 Nuveen Ohio Dividend Advantage Municipal Fund 3 NVJ Performance OVERVIEW As of July 31, 2006 Pie Chart: CREDIT QUALITY (as a % of total investments) AAA/U.S. Guaranteed 65% AA 17% A 11% BBB 7% Bar Chart: 2005-2006 MONTHLY TAX-FREE DIVIDENDS PER SHARE Aug 0.069 Sep 0.069 Oct 0.069 Nov 0.069 Dec 0.0655 Jan 0.0655 Feb 0.0655 Mar 0.0655 Apr 0.0655 May 0.0655 Jun 0.0615 Jul 0.0615 Line Chart: SHARE PRICE PERFORMANCE Weekly Closing Price Past performance is not predictive of future results. 8/01/05 15.7 16.07 15.93 15.98 15.72 15.79 15.78 15.48 15.32 15.1 15.38 15.07 15.1 15.2 15.75 15.7 15.13 15.1 15.16 15.38 15.12 14.98 15.1 15.09 15.18 15.35 15.82 15.8 15.81 15.91 15.58 15.35 15.35 15.18 15.45 15.65 15.65 15.38 15.67 16.05 15.83 15.87 15.55 15.4 15.4 15.01 14.49 14.46 14.38 14.02 14.05 14.1 14.67 7/31/06 14.75 FUND SNAPSHOT - ------------------------------------ Common Share Price $14.75 - ------------------------------------ Common Share Net Asset Value $15.06 - ------------------------------------ Premium/(Discount) to NAV -2.06% - ------------------------------------ Market Yield 5.00% - ------------------------------------ Taxable-Equivalent Yield1 7.41% - ------------------------------------ Net Assets Applicable to Common Shares ($000) $32,506 - ------------------------------------ Average Effective Maturity on Securities (Years) 13.70 - ------------------------------------ Leverage-Adjusted Duration 7.37 - ------------------------------------ AVERAGE ANNUAL TOTAL RETURN (Inception 3/25/02) - ------------------------------------ ON SHARE PRICE ON NAV - ------------------------------------ 1-Year -2.33% 1.87% - ------------------------------------ Since Inception 5.44% 7.06% - ------------------------------------ INDUSTRIES (as a % of total investments) - ------------------------------------ Tax Obligation/General 27.8% - ------------------------------------ U.S. Guaranteed 18.5% - ------------------------------------ Tax Obligation/Limited 14.2% - ------------------------------------ Health Care 10.6% - ------------------------------------ Education and Civic Organizations 8.2% - ------------------------------------ Transportation 6.0% - ------------------------------------ Other 14.7% - ------------------------------------ 1 Taxable-Equivalent Yield represents the yield that must be earned on a fully taxable investment in order to equal the yield of the Fund on an after-tax basis. It is based on a combined federal and state income tax rate of 32.5%. When comparing this Fund to investments that generate qualified dividend income, the Taxable-Equivalent Yield is lower. 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, 2006, 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 periods indicated therein. These financial statements and financial highlights are the responsibility of the Funds' management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Funds' internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds' internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of July 31, 2006, 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, 2006, 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 periods indicated therein in conformity with U.S. generally accepted accounting principles. /s/ Ernst & Young LLP Chicago, Illinois September 21, 2006 21 Nuveen Michigan Quality Income Municipal Fund, Inc. (NUM) Portfolio of INVESTMENTS July 31, 2006
PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ EDUCATION AND CIVIC ORGANIZATIONS - 8.2% (5.3% OF TOTAL INVESTMENTS) $ 700 Chandler Park Academy, Michigan, Public School Academy 11/15 at 100.00 BBB- $ 685,909 Charter School Revenue Bonds, Series 2005, 5.125%, 11/01/35 1,380 Ferris State College, Michigan, General Revenue Bonds, 4/08 at 100.00 AAA 1,397,733 Series 1998, 5.000%, 10/01/23 - AMBAC Insured 1,685 Michigan Higher Education Facilities Authority, Limited 9/11 at 100.00 Aaa 1,801,922 Obligation Revenue Refunding Bonds, Kettering University, Series 2001, 5.500%, 9/01/17 - AMBAC Insured 1,500 Michigan Higher Education Student Loan Authority, Revenue No Opt. Call AAA 1,554,945 Bonds, Series 2000 XII-T, 5.300%, 9/01/10 - AMBAC Insured (Alternative Minimum Tax) 1,000 Michigan Higher Education Student Loan Authority, Revenue 9/12 at 100.00 AAA 1,033,310 Bonds, Series 2002 XVII-G, 5.200%, 9/01/20 - AMBAC Insured (Alternative Minimum Tax) Michigan Technological University, General Revenue Bonds, Series 2004A: 1,115 5.000%, 10/01/22 - MBIA Insured 10/13 at 100.00 AAA 1,159,009 1,170 5.000%, 10/01/23 - MBIA Insured 10/13 at 100.00 AAA 1,213,840 Wayne State University, Michigan, General Revenue Bonds, Series 1999: 3,430 5.250%, 11/15/19 - FGIC Insured 11/09 at 101.00 AAA 3,596,012 1,000 5.125%, 11/15/29 - FGIC Insured 11/09 at 101.00 AAA 1,031,540 1,000 Western Michigan University, General Revenue Refunding 11/13 at 100.00 AAA 1,044,930 Bonds, Series 2003, 5.000%, 11/15/20 - MBIA Insured - ------------------------------------------------------------------------------------------------------------------------------------ 13,980 Total Education and Civic Organizations 14,519,150 - ------------------------------------------------------------------------------------------------------------------------------------ HEALTH CARE - 12.4% (8.0% OF TOTAL INVESTMENTS) 2,900 Dearborn Hospital Finance Authority, Michigan, Hospital 11/06 at 101.00 AAA 2,962,495 Revenue Bonds, Oakwood Obligated Group, Series 1995A, 5.875%, 11/15/25 - FGIC Insured 1,235 Hancock Hospital Finance Authority, Michigan, FHA-Insured 8/08 at 100.00 AAA 1,264,319 Mortgage Hospital Revenue Bonds, Portage Health System Inc., Series 1998, 5.450%, 8/01/47 - MBIA Insured 601 Michigan State Hospital Finance Authority, Collateralized Loan, No Opt. Call N/R 602,850 Detroit Medical Center, Series 2001, 7.360%, 3/01/07 2,700 Michigan State Hospital Finance Authority, Hospital Revenue 8/08 at 101.00 BB- 2,547,882 Bonds, 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+ 1,041,840 Refunding Bonds, Memorial Healthcare Center Obligated Group, Series 1999, 5.875%, 11/15/21 Michigan State Hospital Finance Authority, Hospital Revenue Refunding Bonds, Mercy Mt. Clemens Corporation Obligated Group, Series 1999A: 3,385 5.750%, 5/15/17 - MBIA Insured 5/09 at 101.00 AAA 3,561,494 500 5.750%, 5/15/29 - MBIA Insured 5/09 at 101.00 AAA 526,165 500 Michigan State Hospital Finance Authority, Revenue Bonds, 5/15 at 100.00 BBB 491,550 Chelsea Community Hospital, Series 2005, 5.000%, 5/15/37 500 Michigan State Hospital Finance Authority, Revenue Bonds, 5/15 at 100.00 Baa1 495,315 Marquette General Hospital, Series 2005A, 5.000%, 5/15/26 1,000 Monroe County Hospital Finance Authority, Michigan, 6/16 at 100.00 BBB- 1,016,340 Mercy Memorial Hospital Corporation Revenue Bonds, Series 2006, 5.375%, 6/01/26 5,500 Royal Oak Hospital Finance Authority, Michigan, Hospital 11/11 at 100.00 AAA 5,685,298 Revenue Bonds, William Beaumont Hospital, Series 2001M, 5.250%, 11/15/31 - MBIA Insured 2,195 University of Michigan, Medical Service Plan Revenue Bonds, No Opt. Call AA+ 1,851,197 Series 1991, 0.000%, 12/01/10 - ------------------------------------------------------------------------------------------------------------------------------------ 22,016 Total Health Care 22,046,745 - ------------------------------------------------------------------------------------------------------------------------------------ 22 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ HOUSING/MULTIFAMILY - 2.9% (1.9% OF TOTAL INVESTMENTS) $ 2,675 Michigan Housing Development Authority, FNMA Limited 12/20 at 101.00 AAA $ 2,840,796 Obligation Multifamily Housing Revenue Bonds, Parkview Place Apartments, Series 2002A, 5.550%, 12/01/34 (Alternative Minimum Tax) 1,055 Michigan Housing Development Authority, Rental Housing 4/09 at 101.00 AAA 1,063,630 Revenue Bonds, Series 1999A, 5.300%, 10/01/37 - MBIA Insured (Alternative Minimum Tax) 1,300 Michigan Housing Development Authority, Rental Housing 7/15 at 100.00 AAA 1,317,589 Revenue Bonds, Series 2006D, 5.125%, 4/01/31 - FSA Insured (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ 5,030 Total Housing/Multifamily 5,222,015 - ------------------------------------------------------------------------------------------------------------------------------------ HOUSING/SINGLE FAMILY - 0.5% (0.4% OF TOTAL INVESTMENTS) 1,000 Michigan Housing Development Authority, Single Family 1/11 at 100.00 AAA 1,022,800 Mortgage Revenue Bonds, Series 2001, 5.300%, 12/01/16 - MBIA Insured (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ LONG-TERM CARE - 0.7% (0.5% OF TOTAL INVESTMENTS) 1,000 Michigan State Hospital Finance Authority, Revenue Bonds, 5/15 at 100.00 N/R 1,010,860 Presbyterian Villages of Michigan Obligated Group, Series 2005, 5.250%, 11/15/25 200 Michigan Strategic Fund, Limited Obligation Revenue Refunding 7/08 at 101.00 BBB+ 201,572 Bonds, Porter Hills Presbyterian Village, Series 1998, 5.375%, 7/01/28 - ------------------------------------------------------------------------------------------------------------------------------------ 1,200 Total Long-Term Care 1,212,432 - ------------------------------------------------------------------------------------------------------------------------------------ MATERIALS - 1.0% (0.6% OF TOTAL INVESTMENTS) 1,750 Dickinson County Economic Development Corporation, 11/14 at 100.00 BBB 1,722,350 Michigan, Pollution Control Revenue Bonds, International Paper Company, Series 2004A, 4.800%, 11/01/18 - ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/GENERAL - 47.0% (30.4% OF TOTAL INVESTMENTS) 1,000 Anchor Bay School District, Macomb and St. Clair Counties, 5/12 at 100.00 AA 1,033,000 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 2,589,500 3,200 5.000%, 5/01/29 5/11 at 100.00 AA 3,264,096 1,000 Belding School District, Ionia, Kent and Montcalm Counties, 5/08 at 100.00 AAA 1,009,430 Michigan, General Obligation Refunding Bonds, Series 1998, 5.000%, 5/01/26 - AMBAC Insured 1,200 Birmingham, Michigan, General Obligation Bonds, Series 2002, 10/12 at 100.50 AAA 1,251,276 5.000%, 10/01/20 1,320 Bridgeport Spaulding Community School District, Saginaw 5/12 at 100.00 AA 1,425,151 County, Michigan, General Obligation Bonds, Series 2002, 5.500%, 5/01/16 2,110 Caledonia Community Schools, Kent, Allegan and Barry 5/13 at 100.00 AA 2,251,687 Counties, Michigan, General Obligation Bonds, Series 2003, 5.250%, 5/01/20 1,000 Caledonia Community Schools, Kent, Allegan and Barry 5/15 at 100.00 AAA 1,039,800 Counties, Michigan, General Obligation Bonds, Series 2005, 5.000%, 5/01/25 - MBIA Insured 2,000 Detroit City School District, Wayne County, Michigan, General No Opt. Call AAA 2,329,820 Obligation Bonds, Series 2002A, 6.000%, 5/01/19 - FGIC Insured 1,195 Detroit, Michigan, General Obligation Bonds, Series 2004A-1, 4/14 at 100.00 AAA 1,258,431 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 3,564,094 3,000 0.000%, 12/01/26 No Opt. Call AAA 1,139,010 1,400 Howell Public Schools, Livingston County, Michigan, General 11/13 at 100.00 AA 1,456,588 Obligation Bonds, Series 2003, 5.000%, 5/01/21 1,065 Jackson Public Schools, Jackson County, Michigan, General 5/14 at 100.00 AAA 1,108,282 Obligation School Building and Site Bonds, Series 2004, 5.000%, 5/01/22 - FSA Insured 1,935 Kalamazoo Public Schools, Michigan, General Obligation 5/16 at 100.00 AAA 2,019,095 Bonds, Series 2006, 5.000%, 5/01/25 - FSA Insured 2,000 Lake Fenton Community Schools, Genesee County, Michigan, 5/12 at 100.00 AA 2,068,660 General Obligation Bonds, Series 2002, 5.000%, 5/01/24 23 Nuveen Michigan Quality Income Municipal Fund, Inc. (NUM) (continued) Portfolio of INVESTMENTS July 31, 2006 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/GENERAL (continued) $ 1,790 Lansing Building Authority, Michigan, General Obligation 6/13 at 100.00 AAA $ 1,845,758 Bonds, Series 2003A, 5.000%, 6/01/26 - MBIA Insured 2,505 Lincoln Consolidated School District, Washtenaw and Wayne 5/16 at 100.00 AAA 2,613,867 Counties, Michigan, General Obligation Bonds, Series 2006, 5.000%, 5/01/25 - MBIA Insured 2,810 Livonia Public Schools, Wayne County, Michigan, General 5/14 at 100.00 AAA 2,929,818 Obligation Bonds, Series 2004A, 5.000%, 5/01/21 - MBIA Insured 3,880 Mayville Community Schools, Tuscola County, Michigan, 11/14 at 100.00 AAA 3,994,693 General Obligation Bonds, School Building and Site Project, Series 2004, 5.000%, 5/01/34 - FGIC Insured 2,100 Michigan Municipal Bond Authority, General Obligation Bonds, 6/15 at 100.00 AAA 2,201,451 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 4,274,680 Program, Series 2003A, 5.250%, 5/01/20 2,500 Montrose School District, Michigan, School Building and Site No Opt. Call AAA 2,961,850 Bonds, Series 1997, 6.000%, 5/01/22 - MBIA Insured 1,100 Muskegon County, Michigan, Limited Tax General Obligation 7/11 at 100.00 AAA 1,125,685 Wastewater Management System 2 Revenue Bonds, Series 2002, 5.000%, 7/01/26 - FGIC Insured 1,000 Oakland County Building Authority, Michigan, General 9/11 at 100.00 AAA 1,045,170 Obligation Bonds, Series 2002, 5.125%, 9/01/22 Oakridge Public Schools, Muskegon County, Michigan, General Obligation Bonds, Series 2005: 1,535 5.000%, 5/01/20 - MBIA Insured 5/15 at 100.00 AAA 1,611,996 1,595 5.000%, 5/01/22 - MBIA Insured 5/15 at 100.00 AAA 1,666,727 4,340 Plymouth-Canton Community School District, Wayne and 5/14 at 100.00 AAA 4,490,424 Washtenaw Counties, Michigan, General Obligation Bonds, Series 2004, 5.000%, 5/01/26 - FGIC Insured 4,200 Puerto Rico, General Obligation and Public Improvement Bonds, No Opt. Call AAA 4,740,036 Series 2001A, 5.500%, 7/01/20 - MBIA Insured 3,175 South Redford School District, Wayne County, Michigan, 5/15 at 100.00 AAA 3,273,489 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 AAA 1,718,436 Obligation Bonds, Series 2005, 5.000%, 5/01/26 - MBIA Insured 2,275 Troy City School District, Oakland County, Michigan, General 5/16 at 100.00 AAA 2,407,109 Obligation Bonds, Series 2006, 5.000%, 5/01/19 - MBIA Insured 1,050 Warren Consolidated School District, Macomb and Oakland 11/11 at 100.00 AAA 1,117,589 Counties, Michigan, General Obligation Bonds, Series 2001, 5.375%, 5/01/19 - FSA Insured 5,000 Wayne County, Michigan, Limited Tax General Obligation 12/11 at 101.00 AAA 5,159,800 Airport 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 11/14 at 100.00 AAA 3,544,133 Obligation Bonds, Series 2004, 5.000%, 5/01/17 - FSA Insured 1,725 Williamston Community School District, Michigan, Unlimited No Opt. Call AAA 1,964,240 Tax General Obligation QSBLF Bonds, Series 1996, 5.500%, 5/01/25 - MBIA Insured - ------------------------------------------------------------------------------------------------------------------------------------ 86,410 Total Tax Obligation/General 83,494,871 - ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/LIMITED - 14.7% (9.5% OF TOTAL INVESTMENTS) 1,000 Grand Rapids Building Authority, Kent County, Michigan, No Opt. Call AA 1,071,010 Limited Tax General Obligation Bonds, Series 1998, 5.000%, 4/01/16 1,345 Grand Rapids Building Authority, Kent County, Michigan, 10/11 at 100.00 AAA 1,386,910 Limited Tax General Obligation Bonds, Series 2001, 5.125%, 10/01/26 - MBIA Insured 60 Michigan Municipal Bond Authority, Local Government Loan 11/06 at 100.00 Aa3 60,133 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 AAA 2,208,892 Program, Series 2005II, 5.000%, 10/15/33 - AMBAC Insured 24 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/LIMITED (continued) Michigan State Building Authority, Revenue Refunding Bonds, Facilities Program, Series 2003II: $ 5,100 5.000%, 10/15/22 - MBIA Insured 10/13 at 100.00 AAA $ 5,301,909 5,000 5.000%, 10/15/23 - MBIA Insured 10/13 at 100.00 AAA 5,187,600 3,500 Michigan State Trunk Line, Fund Refunding Bonds, Series 2002, 10/12 at 100.00 AAA 3,711,295 5.250%, 10/01/21 - FSA Insured 915 Puerto Rico Public Finance Corporation, Commonwealth No Opt. Call BBB- 1,054,519 Appropriation Bonds, Series 2002E, 6.000%, 8/01/26 4,100 Puerto Rico, Highway Revenue Bonds, Highway and 7/16 at 100.00 BBB+ 4,372,527 Transportation Authority, Series 1996Y, 5.500%, 7/01/36 1,800 Wayne County, Dearborn Heights, Michigan, Tax Increment 10/10 at 100.00 AAA 1,838,538 Financing Authority, Limited Tax General Obligation Bonds, Police and Courthouse Facility, Series 2001A, 5.000%, 10/01/26 - MBIA Insured - ------------------------------------------------------------------------------------------------------------------------------------ 24,955 Total Tax Obligation/Limited 26,193,333 - ------------------------------------------------------------------------------------------------------------------------------------ TRANSPORTATION - 0.6% (0.4% OF TOTAL INVESTMENTS) 1,000 Capital Region Airport Authority, Michigan, Revenue Refunding 7/12 at 100.00 AAA 1,034,600 Bonds, Series 2002, 5.250%, 7/01/21 - MBIA Insured (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ U.S. GUARANTEED - 44.1% (28.5% OF TOTAL INVESTMENTS) (4) 1,850 Allegan County Public School District, Michigan, General 5/10 at 100.00 AAA 1,966,236 Obligation Bonds, Series 2000, 5.600%, 5/01/20 (Pre-refunded 5/01/10) - FSA Insured 2,190 Anchor Bay School District, Macomb and St. Clair Counties, 5/09 at 100.00 AAA 2,316,998 Michigan, General Obligation Bonds, Series 1999I, 6.000%, 5/01/29 (Pre-refunded 5/01/09) - FGIC Insured 1,000 Charlotte Public School District, Easton County, Michigan, 5/09 at 100.00 AAA 1,038,580 General Obligation Bonds, Series 1999, 5.250%, 5/01/25 (Pre-refunded 5/01/09) - FGIC Insured 2,000 Detroit, Michigan, Senior Lien Water Supply System Revenue 1/10 at 101.00 AAA 2,142,380 Bonds, Series 1999A, 5.750%, 7/01/26 (Pre-refunded 1/01/10) - FGIC Insured Detroit, Michigan, Senior Lien Water Supply System Revenue Bonds, Series 2001A: 3,400 5.750%, 7/01/28 (Pre-refunded 7/01/11) - FGIC Insured 7/11 at 101.00 AAA 3,723,714 770 5.250%, 7/01/33 (Pre-refunded 7/01/11) - FGIC Insured 7/11 at 100.00 AAA 819,796 730 5.250%, 7/01/33 (Pre-refunded 7/01/11) - FGIC Insured 7/11 at 100.00 AAA 777,209 Detroit, Michigan, Senior Lien Water Supply System Revenue Bonds, Series 2003A: 4,025 5.000%, 7/01/24 (Pre-refunded 7/01/13) - MBIA Insured 7/13 at 100.00 AAA 4,294,796 3,000 5.000%, 7/01/25 (Pre-refunded 1/01/13) - MBIA Insured 1/13 at 100.00 AAA 3,100,260 Detroit, Michigan, Sewerage Disposal System Revenue Bonds, Series 1997A: 950 5.500%, 7/01/20 (Pre-refunded 7/01/07) - MBIA Insured 7/07 at 101.00 AAA 974,909 1,000 5.000%, 7/01/22 (Pre-refunded 7/01/07) - MBIA Insured 7/07 at 101.00 AAA 1,021,750 1,000 Detroit, Michigan, Sewerage Disposal System Revenue Bonds, 1/10 at 101.00 AAA 1,075,160 Series 1999A, 5.875%, 7/01/27 (Pre-refunded 1/01/10) - FGIC Insured 1,000 East China School District, St. Clair County, Michigan, General 11/11 at 100.00 AA (4) 1,079,760 Obligation Bonds, Series 2001, 5.500%, 5/01/20 (Pre-refunded 11/01/11) 2,000 East Grand Rapids Public Schools, Kent County, Michigan, 5/09 at 100.00 AAA 2,115,980 Unlimited Tax General Obligation School Building and Site Bonds, Series 2000, 6.000%, 5/01/29 (Pre-refunded 5/01/09) - FSA Insured 340 Ferris State College, Michigan, General Revenue Bonds, 4/08 at 100.00 AAA 347,092 Series 1998, 5.000%, 10/01/23 (Pre-refunded 4/01/08) - AMBAC Insured 1,085 Freeland Community School District, Saginaw, Midland and 5/10 at 100.00 AA (4) 1,140,020 Bay Counties, Michigan, General Obligation Bonds, Series 2000, 5.250%, 5/01/19 (Pre-refunded 5/01/10) 1,500 Huron Valley School District, Oakland and Livingston Counties, 11/11 at 100.00 AA (4) 1,619,640 Michigan, General Obligation Bonds, Series 2001, 5.500%, 5/01/17 (Pre-refunded 11/01/11) 3,500 Kent Hospital Finance Authority, Michigan, Revenue Bonds, 7/11 at 101.00 AA (4) 3,748,535 Spectrum Health, Series 2001A, 5.250%, 1/15/21 (Pre-refunded 7/15/11) 250 Michigan South Central Power Agency, Power Supply System No Opt. Call A3 (4) 272,625 Revenue Bonds, Series 2000, 6.000%, 5/01/12 (ETM) 25 Nuveen Michigan Quality Income Municipal Fund, Inc. (NUM) (continued) Portfolio of INVESTMENTS July 31, 2006 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ U.S. GUARANTEED (4) (continued) 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 $ 1,080,500 500 6.125%, 11/15/26 (Pre-refunded 11/15/09) 11/09 at 101.00 AAA 540,250 5,000 Michigan State Hospital Finance Authority, Hospital Revenue 11/09 at 101.00 A1 (4) 5,383,350 Bonds, Henry Ford Health System, Series 1999A, 6.000%, 11/15/24 (Pre-refunded 11/15/09) 3,300 Michigan State Hospital Finance Authority, Hospital Revenue 1/07 at 102.00 N/R (4) 3,400,320 Bonds, Presbyterian Villages of Michigan Obligated Group, Series 1997, 6.375%, 1/01/25 (Pre-refunded 1/01/07) 1,500 Michigan State Hospital Finance Authority, Hospital Revenue 3/13 at 100.00 A1 (4) 1,643,625 Refunding Bonds, Henry Ford Health System, Series 2003A, 5.625%, 3/01/17 (Pre-refunded 3/01/13) 1,700 Michigan State Hospital Finance Authority, Hospital Revenue 8/09 at 101.00 AAA 1,810,177 Refunding Bonds, Mercy Health Services Obligated Group, Series 1999X, 5.750%, 8/15/19 (Pre-refunded 8/15/09) - MBIA Insured 1,000 Michigan State Hospital Finance Authority, Hospital Revenue 11/09 at 101.00 A (4) 1,079,210 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 5/08 at 101.00 AAA 3,529,511 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 1,056,180 5.000%, 11/01/25 (Pre-refunded 11/01/11) - FSA Insured 1,100 Michigan Strategic Fund, Limited Obligation Revenue 7/08 at 101.00 BBB+ (4) 1,142,658 Refunding Bonds, Porter Hills Presbyterian Village, Series 1998, 5.375%, 7/01/28 (Pre-refunded 7/01/08) 1,000 Michigan, Certificates of Participation, New Center 9/11 at 100.00 AAA 1,067,770 Development Inc., Series 2001, 5.375%, 9/01/21 (Pre-refunded 9/01/11) - MBIA Insured Michigan, Certificates of Participation, Series 2000: 2,000 5.500%, 6/01/19 (Pre-refunded 6/01/10) - AMBAC Insured 6/10 at 100.00 AAA 2,116,820 2,000 5.500%, 6/01/27 (Pre-refunded 6/01/10) - AMBAC Insured 6/10 at 100.00 AAA 2,116,820 2,875 Milan Area Schools, Washtenaw and Monroe Counties, 5/10 at 100.00 AAA 3,070,586 Michigan, General Obligation Bonds, Series 2000A, 5.750%, 5/01/24 (Pre-refunded 5/01/10) - FGIC Insured Muskegon Heights, Muskegon County, Michigan, Water Supply System Revenue Bonds, Series 2000A: 1,040 5.625%, 11/01/25 (Pre-refunded 11/01/10) - MBIA Insured 11/10 at 100.00 Aaa 1,114,277 1,160 5.625%, 11/01/30 (Pre-refunded 11/01/10) - MBIA Insured 11/10 at 100.00 Aaa 1,242,847 1,125 Puerto Rico Highway and Transportation Authority, Highway 7/10 at 101.00 BBB+ (4) 1,224,157 Revenue Bonds, Series 2000B, 6.000%, 7/01/39 (Pre-refunded 7/01/10) 85 Puerto Rico Public Finance Corporation, Commonwealth No Opt. Call BBB- (4) 103,414 Appropriation Bonds, Series 2002E, 6.000%, 8/01/26 (ETM) 185 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 7/10 at 100.00 AAA 193,286 Asset-Backed Bonds, Series 2000, 5.750%, 7/01/20 (Pre-refunded 7/01/10) 1,000 Rochester Community School District, Oakland and Macomb 5/10 at 100.00 AAA 1,068,030 Counties, Michigan, General Obligation Bonds, Series 2000I, 5.750%, 5/01/19 (Pre-refunded 5/01/10) - FGIC Insured 2,100 Romulus Community Schools, Wayne County, Michigan, 5/09 at 100.00 AAA 2,208,192 Unlimited Tax General Obligation School Building and Site Bonds, Series 1999, 5.750%, 5/01/25 (Pre-refunded 5/01/09) - FGIC Insured 2,500 Taylor Building Authority, Wayne, Michigan, Limited Tax General 3/10 at 100.00 AAA 2,611,200 Obligation Bonds, Series 2000, 5.125%, 3/01/17 (Pre-refunded 3/01/10) - AMBAC Insured 1,980 Washtenaw County Building Authority, Michigan, Limited Tax 9/07 at 100.00 AAA 2,016,234 General Obligation Bonds, Series 1999, 5.400%, 9/01/17 (Pre-refunded 9/01/07) - FGIC Insured 26 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ U.S. GUARANTEED (4) (continued) $ 2,600 West Bloomfield School District, Oakland County, Michigan, 5/10 at 100.00 AAA $ 2,790,398 Unlimited Tax General Obligation School Building and Site Bonds, Series 2000, 5.900%, 5/01/18 (Pre-refunded 5/01/10) - FGIC Insured 1,125 Whitehall District Schools, Muskegon County, Michigan, 11/11 at 100.00 AA (4) 1,214,730 General Obligation Bonds, Series 2001, 5.500%, 5/01/17 (Pre-refunded 11/01/11) - ------------------------------------------------------------------------------------------------------------------------------------ 73,925 Total U.S. Guaranteed 78,399,982 - ------------------------------------------------------------------------------------------------------------------------------------ UTILITIES - 12.4% (8.0% OF TOTAL INVESTMENTS) 3,000 Michigan Public Power Agency, Revenue Bonds, Combustion 1/12 at 100.00 AAA 3,133,350 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 3,439,688 Revenue Bonds, Series 2000, 6.000%, 5/01/12 1,000 Michigan Strategic Fund, Collateralized Limited Obligation 9/09 at 102.00 AAA 1,047,600 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 A3 4,146,720 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 Aaa 2,072,320 Revenue Refunding Bonds, Detroit Edison Company, Series 1995CC, 4.850%, 9/01/30 (Mandatory put 9/01/11) - AMBAC Insured 3,630 Michigan Strategic Fund, Limited Obligation Revenue Refunding No Opt. Call AAA 4,620,663 Bonds, Detroit Edison Company, Series 1991BB, 7.000%, 5/01/21 - AMBAC Insured 3,000 Michigan Strategic Fund, Limited Obligation Revenue Refunding 12/12 at 100.00 AAA 3,138,630 Bonds, Detroit Edison Company, Series 2002C, 5.450%, 12/15/32 - XLCA Insured (Alternative Minimum Tax) 400 Puerto Rico Electric Power Authority, Power Revenue Bonds, 7/10 at 101.00 AAA 419,488 Series 2000HH, 5.250%, 7/01/29 - FSA Insured - ------------------------------------------------------------------------------------------------------------------------------------ 20,255 Total Utilities 22,018,459 - ------------------------------------------------------------------------------------------------------------------------------------ WATER AND SEWER - 9.2% (5.9% OF TOTAL INVESTMENTS) 5,500 Detroit Water Supply System, Michigan, Water Supply System 7/16 at 100.00 AAA 5,666,760 Revenue Bonds, Series 2006A, 5.000%, 7/01/34 (WI/DD, Settling 8/16/06) - FSA Insured 1,500 Detroit, Michigan, Senior Lien Sewerage Disposal System No Opt. Call AAA 1,714,215 Revenue Bonds, Series 2001B, 5.500%, 7/01/29 - FGIC Insured 2,000 Detroit, Michigan, Senior Lien Sewerage Disposal System 7/13 at 100.00 AAA 2,109,720 Revenue Bonds, Series 2003A, 5.000%, 7/01/17 - FSA Insured 4,210 Michigan Municipal Bond Authority, Clean Water Revolving 10/14 at 100.00 AAA 4,442,055 Fund Revenue Bonds, Series 2004, 5.000%, 10/01/19 1,100 Michigan Municipal Bond Authority, Clean Water Revolving 10/12 at 100.00 AAA 1,171,027 Fund Revenue Refunding Bonds, Series 2002, 5.250%, 10/01/18 1,150 Michigan Municipal Bond Authority, Drinking Water Revolving 10/14 at 100.00 AAA 1,204,475 Fund Revenue Bonds, Series 2004, 5.000%, 10/01/23 - ------------------------------------------------------------------------------------------------------------------------------------ 15,460 Total Water and Sewer 16,308,252 - ------------------------------------------------------------------------------------------------------------------------------------ $ 266,981 Total Long-Term Investments (cost $260,068,216) - 153.7% 273,194,989 =============----------------------------------------------------------------------------------------------------------------------- 27 Nuveen Michigan Quality Income Municipal Fund, Inc. (NUM) (continued) Portfolio of INVESTMENTS July 31, 2006 PRINCIPAL AMOUNT (000) DESCRIPTION (1) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ SHORT-TERM INVESTMENTS - 0.9% (0.6% OF TOTAL INVESTMENTS) $ 1,650 Puerto Rico Government Development Bank, Adjustable A-1 $ 1,650,000 Refunding Bonds, Variable Rate Demand Obligations, Series 1985, 3.530%, 12/01/15 - MBIA Insured (5) - ------------------------------------------------------------------------------------------------------------------------------------ $ 1,650 Total Short-Term Investments (cost $1,650,000) 1,650,000 =============----------------------------------------------------------------------------------------------------------------------- Total Investments (cost $261,718,216) - 154.6% 274,844,989 -------------------------------------------------------------------------------------------------------------------- Other Assets Less Liabilities - (1.7)% (3,111,245) -------------------------------------------------------------------------------------------------------------------- Preferred Shares, at Liquidation Value - (52.9)% (94,000,000) -------------------------------------------------------------------------------------------------------------------- Net Assets Applicable to Common Shares - 100% $ 177,733,744 ====================================================================================================================
(1) All percentages shown in the Portfolio of Investments are based on net assets applicable to Common shares unless otherwise noted. (2) Optional Call Provisions (not covered by the report of independent registered public accounting firm): Dates (month and year) and prices of the earliest optional call or redemption. There may be other call provisions at varying prices at later dates. Certain mortgage-backed securities may be subject to periodic principal paydowns. (3) Ratings (not covered by the report of independent registered public accounting firm): Using the higher of Standard & Poor's or Moody's rating. Ratings below BBB by Standard & Poor's Group or Baa by Moody's Investor Service, Inc. are considered to be below investment grade. (4) Backed by an escrow or trust containing sufficient U.S. Government or U.S. Government agency securities which ensure the timely payment of principal and interest. Such investments are normally considered to be equivalent to AAA rated securities. (5) Investment has a maturity of more than one year, but has variable rate and demand features which qualify it as a short-term investment. The rate disclosed is that in effect at the end of the reporting period. This rate changes periodically based on market conditions or a specified market index. N/R Not rated. WI/DD Purchased on a when-issued or delayed delivery basis. (ETM) Escrowed to maturity. See accompanying notes to financial statements. 28 Nuveen Michigan Premium Income Municipal Fund, Inc. (NMP) Portfolio of INVESTMENTS July 31, 2006
PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ EDUCATION AND CIVIC ORGANIZATIONS - 5.3% (3.5% OF TOTAL INVESTMENTS) $ 440 Chandler Park Academy, Michigan, Public School Academy 11/15 at 100.00 BBB- $ 431,143 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 AAA 2,066,620 Bonds, Series 2002 XVII-G, 5.200%, 9/01/20 - AMBAC Insured (Alternative Minimum Tax) 3,500 Wayne State University, Michigan, General Revenue Bonds, 11/09 at 101.00 AAA 3,610,390 Series 1999, 5.125%, 11/15/29 - FGIC Insured - ------------------------------------------------------------------------------------------------------------------------------------ 5,940 Total Education and Civic Organizations 6,108,153 - ------------------------------------------------------------------------------------------------------------------------------------ HEALTH CARE - 11.4% (7.6% OF TOTAL INVESTMENTS) 2,050 Dearborn Hospital Finance Authority, Michigan, Hospital 11/06 at 101.00 AAA 2,094,178 Revenue Bonds, Oakwood Obligated Group, Series 1995A, 5.875%, 11/15/25 - FGIC Insured 2,200 Hancock Hospital Finance Authority, Michigan, FHA-Insured 8/08 at 100.00 AAA 2,252,228 Mortgage Hospital Revenue Bonds, Portage Health System Inc., Series 1998, 5.450%, 8/01/47 - MBIA Insured 4,000 Michigan State Hospital Finance Authority, Hospital Revenue 5/09 at 101.00 AAA 4,209,320 Refunding Bonds, Mercy Mt. Clemens Corporation Obligated Group, Series 1999A, 5.750%, 5/15/29 - MBIA Insured 500 Michigan State Hospital Finance Authority, Hospital Revenue 11/11 at 101.00 A+ 522,815 Refunding Bonds, Sparrow Obligated Group, Series 2001, 5.625%, 11/15/31 425 Michigan State Hospital Finance Authority, Revenue Bonds, 5/15 at 100.00 BBB 422,459 Chelsea Community Hospital, Series 2005, 5.000%, 5/15/25 325 Michigan State Hospital Finance Authority, Revenue Bonds, 5/15 at 100.00 Baa1 321,955 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 8/06 at 100.00 BB- 2,000,760 500 6.500%, 8/15/18 8/06 at 100.00 BB- 500,250 800 Monroe County Hospital Finance Authority, Michigan, 6/16 at 100.00 BBB- 813,072 Mercy Memorial Hospital Corporation Revenue Bonds, Series 2006, 5.375%, 6/01/26 - ------------------------------------------------------------------------------------------------------------------------------------ 12,800 Total Health Care 13,137,037 - ------------------------------------------------------------------------------------------------------------------------------------ HOUSING/MULTIFAMILY - 7.0% (4.7% OF TOTAL INVESTMENTS) 935 Michigan Housing Development Authority, GNMA Collateralized 4/12 at 102.00 Aaa 960,619 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 10/06 at 100.00 AAA 1,503,330 Revenue Bonds, Breton Village Green Project, Series 1993, 5.625%, 10/15/18 - FSA Insured 2,400 Michigan Housing Development Authority, Limited Obligation 10/06 at 101.00 AAA 2,457,696 Revenue Bonds, Walled Lake Villa Project, Series 1993, 6.000%, 4/15/18 - FSA Insured 800 Michigan Housing Development Authority, Rental Housing 7/15 at 100.00 AAA 810,824 Revenue Bonds, Series 2006D, 5.125%, 4/01/31 - FSA Insured (Alternative Minimum Tax) Mt. Clemens Housing Corporation, Michigan, FHA-Insured Section 8 Assisted Multifamily Housing Revenue Refunding Bonds, Clinton Place Project, Series 1992A: 765 6.600%, 6/01/13 12/06 at 100.00 AAA 765,949 1,500 6.600%, 6/01/22 12/06 at 100.00 AAA 1,551,615 - ------------------------------------------------------------------------------------------------------------------------------------ 7,900 Total Housing/Multifamily 8,050,033 - ------------------------------------------------------------------------------------------------------------------------------------ LONG-TERM CARE - 0.6% (0.4% OF TOTAL INVESTMENTS) 665 Michigan State Hospital Finance Authority, Revenue Bonds, 5/15 at 100.00 N/R 672,222 Presbyterian Villages of Michigan Obligated Group, Series 2005, 5.250%, 11/15/25 - ------------------------------------------------------------------------------------------------------------------------------------ 29 Nuveen Michigan Premium Income Municipal Fund, Inc. (NMP) (continued) Portfolio of INVESTMENTS July 31, 2006 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ MATERIALS - 0.9% (0.6% OF TOTAL INVESTMENTS) $ 1,050 Dickinson County Economic Development Corporation, 11/14 at 100.00 BBB $ 1,033,410 Michigan, Pollution Control Revenue Bonds, International Paper Company, Series 2004A, 4.800%, 11/01/18 - ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/GENERAL - 51.8% (34.7% OF TOTAL INVESTMENTS) 1,475 Anchor Bay School District, Macomb and St. Clair Counties, 11/13 at 100.00 AA 1,534,620 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 2,589,500 Michigan, Unlimited Tax General Obligation Refunding Bonds, Series 2001, 5.000%, 5/01/21 2,250 Caledonia Community Schools, Kent, Allegan and Barry 5/15 at 100.00 AAA 2,336,243 Counties, Michigan, General Obligation Bonds, Series 2005, 5.000%, 5/01/26 - MBIA Insured 1,375 Chippewa Valley Schools, Macomb County, Michigan, General 5/11 at 100.00 AA 1,406,075 Obligation Bonds, Series 2001, 5.000%, 5/01/26 Detroit City School District, Wayne County, Michigan, General Obligation Bonds, Series 2002A: 1,815 6.000%, 5/01/20 - FGIC Insured No Opt. Call AAA 2,127,489 750 6.000%, 5/01/21 - FGIC Insured No Opt. Call AAA 883,178 2,500 Detroit City School District, Wayne County, Michigan, General 5/13 at 100.00 AAA 2,592,075 Obligation Bonds, Series 2003B, 5.000%, 5/01/23 - FGIC Insured 2,665 Detroit, Michigan, General Obligation Bonds, Series 2004A-1, 4/14 at 100.00 AAA 2,806,458 5.250%, 4/01/24 - AMBAC Insured 7,000 Detroit-Wayne County Stadium Authority, Michigan, Limited 2/07 at 102.00 AAA 7,176,748 Tax General Obligation Building Authority Stadium Bonds, Series 1997, 5.250%, 2/01/27 - FGIC Insured 1,350 Gull Lake Community Schools, Barry and Calhoun Counties, 5/14 at 100.00 AAA 1,402,164 Kalamazoo, Michigan, General Obligation Bonds, Series 2004, 5.000%, 5/01/23 - FSA Insured 1,650 Holly Area School District, Oakland County, Michigan, General 5/16 at 100.00 AAA 1,726,313 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 2,077,700 Obligation Bonds, Series 2003, 5.000%, 5/01/22 1,250 Kalamazoo Public Schools, Michigan, General Obligation Bonds, 5/16 at 100.00 AAA 1,304,325 Series 2006, 5.000%, 5/01/25 - FSA Insured 1,000 Lansing School District, Ingham County, Michigan, General 5/14 at 100.00 AA 1,040,640 Obligation Bonds, Series 2004, 5.000%, 5/01/22 1,000 Livonia Public Schools, Wayne County, Michigan, General 5/14 at 100.00 AAA 1,042,640 Obligation Bonds, Series 2004A, 5.000%, 5/01/21 - MBIA Insured 1,000 Michigan Municipal Bond Authority, General Obligation Bonds, 6/15 at 100.00 AAA 1,048,310 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 1,068,670 2,000 5.250%, 5/01/21 5/13 at 100.00 AA 2,124,600 1,000 Otsego Public Schools District, Allegan and Kalamazoo 5/14 at 100.00 AAA 1,035,980 Counties, Michigan, General Obligation Bonds, Series 2004, 5.000%, 5/01/25 - FSA Insured 1,100 Oxford Area Community Schools, Oakland and Lapeer Counties, 5/14 at 100.00 AAA 1,139,578 Michigan, General Obligation Bonds, Series 2004, 5.000%, 5/01/25 - FSA Insured 2,515 Plainwell Community Schools, Allegan County, Michigan, 11/12 at 100.00 AA 2,581,974 General Obligation Bonds, Series 2002, 5.000%, 5/01/28 1,000 Rockford Public Schools, Kent County, Michigan, General 5/15 at 100.00 AAA 1,036,130 Obligation Bonds, Series 2005, 5.000%, 5/01/27 - FSA Insured South Lyon Community Schools, Oakland, Washtenaw and Livingston Counties, Michigan, General Obligation Bonds, Series 2003: 2,350 5.250%, 5/01/19 - FGIC Insured 11/12 at 100.00 AAA 2,503,526 1,575 5.250%, 5/01/22 - FGIC Insured 11/12 at 100.00 AAA 1,671,201 1,425 Walled Lake Consolidated School District, Oakland County, 5/14 at 100.00 AAA 1,523,012 Michigan, General Obligation Bonds, Series 2004, 5.250%, 5/01/20 - MBIA Insured 2,830 Warren Consolidated School District, Macomb and Oakland 5/13 at 100.00 AA 3,020,035 Counties, Michigan, General Obligation Refunding Bonds, Series 2003, 5.250%, 5/01/20 30 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/GENERAL (continued) Wayne County, Michigan, Limited Tax General Obligation Airport Hotel Revenue Bonds, Detroit Metropolitan Wayne County Airport, Series 2001A: $ 1,500 5.500%, 12/01/18 - MBIA Insured 12/11 at 101.00 AAA $ 1,612,950 4,270 5.000%, 12/01/30 - MBIA Insured 12/11 at 101.00 AAA 4,382,728 2,950 West Bloomfield School District, Oakland County, Michigan, 5/14 at 100.00 AAA 3,069,888 General Obligation Bonds, Series 2004, 5.000%, 5/01/22 - FSA Insured - ------------------------------------------------------------------------------------------------------------------------------------ 57,095 Total Tax Obligation/General 59,864,750 - ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/LIMITED - 17.7% (11.9% OF TOTAL INVESTMENTS) Michigan State Building Authority, Revenue Bonds, Facilities Program, Series 2001I: 2,570 5.500%, 10/15/19 10/11 at 100.00 AA- 2,746,765 6,500 5.000%, 10/15/24 10/11 at 100.00 AA- 6,694,219 1,600 Michigan State Building Authority, Revenue Bonds, Facilities 10/15 at 100.00 AAA 1,657,808 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 AAA 5,197,949 2,480 5.000%, 10/15/23 - MBIA Insured 10/13 at 100.00 AAA 2,573,050 1,500 Michigan, Comprehensive Transportation Revenue Refunding 11/11 at 100.00 AAA 1,565,115 Bonds, Series 2001A, 5.000%, 11/01/19 - FSA Insured - ------------------------------------------------------------------------------------------------------------------------------------ 19,650 Total Tax Obligation/Limited 20,434,906 - ------------------------------------------------------------------------------------------------------------------------------------ U.S. GUARANTEED - 26.8% (18.0% OF TOTAL INVESTMENTS) (4) 1,000 Central Montcalm Public Schools, Montcalm and Ionia Counties, 5/09 at 100.00 AAA 1,051,520 Michigan, General Obligation Unlimited Tax School Building and Site Bonds, Series 1999, 5.750%, 5/01/24 (Pre-refunded 5/01/09) - MBIA Insured 500 Detroit City School District, Wayne County, Michigan, Unlimited 5/12 at 100.00 AAA 542,560 Tax School Building and Site Improvement Bonds, Series 2001A, 5.500%, 5/01/21 (Pre-refunded 5/01/12) - FSA Insured 4,000 Detroit, Michigan, Senior Lien Water Supply System Revenue 1/10 at 101.00 AAA 4,284,760 Bonds, Series 1999A, 5.750%, 7/01/26 (Pre-refunded 1/01/10) - FGIC Insured Detroit, Michigan, Senior Lien Water Supply System Revenue Bonds, Series 2001A: 1,385 5.250%, 7/01/33 (Pre-refunded 7/01/11) - FGIC Insured 7/11 at 100.00 AAA 1,474,568 1,315 5.250%, 7/01/33 (Pre-refunded 7/01/11) - FGIC Insured 7/11 at 100.00 AAA 1,400,041 2,000 Detroit, Michigan, Sewerage Disposal System Revenue Bonds, 1/10 at 101.00 AAA 2,150,320 Series 1999A, 5.875%, 7/01/27 (Pre-refunded 1/01/10) - FGIC Insured Eastern Michigan University, General Revenue Bonds, Series 2003: 1,000 5.000%, 6/01/28 (Pre-refunded 6/01/13) - FGIC Insured 6/13 at 100.00 AAA 1,066,300 1,450 5.000%, 6/01/33 (Pre-refunded 6/01/13) - FGIC Insured 6/13 at 100.00 AAA 1,546,135 75 Michigan South Central Power Agency, Power Supply System No Opt. Call A3 (4) 81,788 Revenue Bonds, Series 2000, 6.000%, 5/01/12 (ETM) 1,500 Michigan State Building Authority, Revenue Bonds, Facilities 10/10 at 100.00 AA- (4) 1,591,710 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 2,701,250 Bonds, Ascension Health Credit Group, Series 1999A, 6.125%, 11/15/26 (Pre-refunded 11/15/09) 4,300 Michigan State Hospital Finance Authority, Hospital Revenue 11/09 at 101.00 A1 (4) 4,629,681 Bonds, Henry Ford Health System, Series 1999A, 6.000%, 11/15/24 (Pre-refunded 11/15/09) 1,500 Michigan State Hospital Finance Authority, Hospital Revenue 3/13 at 100.00 A1 (4) 1,643,625 Refunding Bonds, Henry Ford Health System, Series 2003A, 5.625%, 3/01/17 (Pre-refunded 3/01/13) 3,000 Michigan State Hospital Finance Authority, Hospital Revenue 11/06 at 100.00 AAA 3,135,240 Refunding Bonds, St. John's Hospital, Series 1993A, 6.000%, 5/15/13 - AMBAC Insured (ETM) 1,000 Michigan, Certificates of Participation, New Center 9/11 at 100.00 AAA 1,067,770 Development Inc., Series 2001, 5.375%, 9/01/21 (Pre-refunded 9/01/11) - MBIA Insured 31 Nuveen Michigan Premium Income Municipal Fund, Inc. (NMP) (continued) Portfolio of INVESTMENTS July 31, 2006 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ U.S. GUARANTEED (4) (continued) $ 1,240 Milan Area Schools, Washtenaw and Monroe Counties, 5/10 at 100.00 AAA $ 1,318,988 Michigan, General Obligation Bonds, Series 2000A, 5.625%, 5/01/16 (Pre-refunded 5/01/10) - FGIC Insured 265 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 7/10 at 100.00 AAA 276,869 Asset-Backed Bonds, Series 2000, 5.750%, 7/01/20 (Pre-refunded 7/01/10) 1,000 Rochester Community School District, Oakland and Macomb 5/10 at 100.00 AAA 1,068,030 Counties, Michigan, General Obligation Bonds, Series 2000I, 5.750%, 5/01/19 (Pre-refunded 5/01/10) - FGIC Insured - ------------------------------------------------------------------------------------------------------------------------------------ 29,030 Total U.S. Guaranteed 31,031,155 - ------------------------------------------------------------------------------------------------------------------------------------ UTILITIES - 13.9% (9.3% OF TOTAL INVESTMENTS) 1,000 Michigan Public Power Agency, Revenue Bonds, Combustion 1/12 at 100.00 AAA 1,044,450 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 986,577 Revenue Bonds, Series 2000, 6.000%, 5/01/12 1,000 Michigan Strategic Fund, Collateralized Limited Obligation 9/09 at 102.00 AAA 1,047,600 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 A3 5,183,399 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 Aaa 3,108,480 Revenue Refunding Bonds, Detroit Edison Company, Series 1995CC, 4.850%, 9/01/30 (Mandatory put 9/01/11) - AMBAC Insured 3,000 Michigan Strategic Fund, Limited Obligation Revenue Refunding 12/12 at 100.00 AAA 3,138,630 Bonds, Detroit Edison Company, Series 2002C, 5.450%, 12/15/32 - XLCA Insured (Alternative Minimum Tax) 1,500 Wyandotte, Michigan, Electric Revenue Refunding Bonds, 10/08 at 101.00 AAA 1,559,955 Series 2002, 5.375%, 10/01/17 - MBIA Insured - ------------------------------------------------------------------------------------------------------------------------------------ 15,425 Total Utilities 16,069,091 - ------------------------------------------------------------------------------------------------------------------------------------ WATER AND SEWER - 13.4% (9.0% OF TOTAL INVESTMENTS) 3,500 Detroit Water Supply System, Michigan, Water Supply 7/16 at 100.00 AAA 3,606,120 System Revenue Bonds, Series 2006A, 5.000%, 7/01/34 (WI/DD, Settling 8/16/06) - FSA Insured 2,000 Detroit, Michigan, Second Lien Sewerage Disposal System 7/15 at 100.00 AAA 2,060,120 Revenue Bonds, Series 2005A, 5.000%, 7/01/30 - MBIA Insured 1,500 Detroit, Michigan, Senior Lien Sewerage Disposal System No Opt. Call AAA 1,714,215 Revenue Bonds, Series 2001B, 5.500%, 7/01/29 - FGIC Insured 4,960 Detroit, Michigan, Senior Lien Sewerage Disposal System 7/13 at 100.00 AAA 5,232,105 Revenue Bonds, Series 2003A, 5.000%, 7/01/17 - FSA Insured 2,800 Michigan Municipal Bond Authority, Drinking Water Revolving 10/14 at 100.00 AAA 2,932,636 Fund Revenue Bonds, Series 2004, 5.000%, 10/01/23 - ------------------------------------------------------------------------------------------------------------------------------------ 14,760 Total Water and Sewer 15,545,196 - ------------------------------------------------------------------------------------------------------------------------------------ $ 164,315 Total Long-Term Investments (cost $165,340,098) - 148.8% 171,945,953 =============----------------------------------------------------------------------------------------------------------------------- 32 PRINCIPAL AMOUNT (000) DESCRIPTION (1) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ SHORT-TERM INVESTMENTS - 0.4% (0.3% OF TOTAL INVESTMENTS) $ 500 Puerto Rico Government Development Bank, Adjustable Refunding A-1 $ 500,000 Bonds, Variable Rate Demand Obligations, Series 1985, 3.530%, 12/01/15 - MBIA Insured (5) - ------------------------------------------------------------------------------------------------------------------------------------ $ 500 Total Short-Term Investments (cost $500,000) 500,000 =============----------------------------------------------------------------------------------------------------------------------- Total Investments (cost $165,840,098) - 149.2% 172,445,953 -------------------------------------------------------------------------------------------------------------------- Other Assets Less Liabilities - (0.8)% (834,600) -------------------------------------------------------------------------------------------------------------------- Preferred Shares, at Liquidation Value - (48.4)% (56,000,000) -------------------------------------------------------------------------------------------------------------------- Net Assets Applicable to Common Shares - 100% $ 115,611,353 ====================================================================================================================
(1) All percentages shown in the Portfolio of Investments are based on net assets applicable to Common shares unless otherwise noted. (2) Optional Call Provisions (not covered by the report of independent registered public accounting firm): Dates (month and year) and prices of the earliest optional call or redemption. There may be other call provisions at varying prices at later dates. Certain mortgage-backed securities may be subject to periodic principal paydowns. (3) Ratings (not covered by the report of independent registered public accounting firm): Using the higher of Standard & Poor's or Moody's rating. Ratings below BBB by Standard & Poor's Group or Baa by Moody's Investor Service, Inc. are considered to be below investment grade. (4) Backed by an escrow or trust containing sufficient U.S. Government or U.S. Government agency securities which ensure the timely payment of principal and interest. Such investments are normally considered to be equivalent to AAA rated securities. (5) Investment has a maturity of more than one year, but has variable rate and demand features which qualify it as a short-term investment. The rate disclosed is that in effect at the end of the reporting period. This rate changes periodically based on market conditions or a specified market index. N/R Not rated. WI/DD Purchased on a when-issued or delayed delivery basis. (ETM) Escrowed to maturity. See accompanying notes to financial statements. 33 Nuveen Michigan Dividend Advantage Municipal Fund (NZW) Portfolio of INVESTMENTS July 31, 2006
PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ EDUCATION AND CIVIC ORGANIZATIONS - 4.6% (3.0% OF TOTAL INVESTMENTS) $ 230 Chandler Park Academy, Michigan, Public School Academy 11/15 at 100.00 BBB- $ 225,370 Charter School Revenue Bonds, Series 2005, 5.125%, 11/01/35 1,150 Michigan Higher Education Facilities Authority, Limited 9/11 at 100.00 Aaa 1,177,658 Obligation Revenue Refunding Bonds, Kettering University, Series 2001, 5.000%, 9/01/26 - AMBAC Insured - ------------------------------------------------------------------------------------------------------------------------------------ 1,380 Total Education and Civic Organizations 1,403,028 - ------------------------------------------------------------------------------------------------------------------------------------ HEALTH CARE - 16.0% (10.4% OF TOTAL INVESTMENTS) 500 Allegan Hospital Finance Authority, Michigan, Revenue Bonds, 11/09 at 101.00 N/R 536,270 Allegan General Hospital, Series 1999, 7.000%, 11/15/21 700 Michigan State Hospital Finance Authority, Hospital Revenue 1/07 at 101.00 Ba3 711,207 Refunding Bonds, Sinai Hospital, Series 1995, 6.625%, 1/01/16 750 Michigan State Hospital Finance Authority, Hospital Revenue 11/11 at 101.00 A+ 784,223 Refunding Bonds, Sparrow Obligated Group, Series 2001, 5.625%, 11/15/31 425 Michigan State Hospital Finance Authority, Revenue Bonds, 5/15 at 100.00 BBB 419,437 Chelsea Community Hospital, Series 2005, 5.000%, 5/15/30 200 Michigan State Hospital Finance Authority, Revenue Bonds, 5/15 at 100.00 Baa1 198,126 Marquette General Hospital, Series 2005A, 5.000%, 5/15/26 400 Monroe County Hospital Finance Authority, Michigan, 6/16 at 100.00 BBB- 406,536 Mercy Memorial Hospital Corporation Revenue Bonds, Series 2006, 5.375%, 6/01/26 1,800 Royal Oak Hospital Finance Authority, Michigan, Hospital 11/11 at 100.00 AAA 1,860,642 Revenue Bonds, William Beaumont Hospital, Series 2001M, 5.250%, 11/15/31 - MBIA Insured - ------------------------------------------------------------------------------------------------------------------------------------ 4,775 Total Health Care 4,916,441 - ------------------------------------------------------------------------------------------------------------------------------------ HOUSING/MULTIFAMILY - 6.4% (4.2% OF TOTAL INVESTMENTS) 1,700 Michigan Housing Development Authority, GNMA Collateralized 8/12 at 102.00 Aaa 1,755,148 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 7/15 at 100.00 AAA 202,706 Revenue Bonds, Series 2006D, 5.125%, 4/01/31 - FSA Insured (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ 1,900 Total Housing/Multifamily 1,957,854 - ------------------------------------------------------------------------------------------------------------------------------------ HOUSING/SINGLE FAMILY - 4.1% (2.7% OF TOTAL INVESTMENTS) 1,250 Michigan Housing Development Authority, Single Family 1/11 at 100.00 AAA 1,278,500 Mortgage Revenue Bonds, Series 2001, 5.300%, 12/01/16 - MBIA Insured (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ INDUSTRIALS - 1.6% (1.0% OF TOTAL INVESTMENTS) 500 Michigan Strategic Fund, Limited Obligation Revenue Bonds, No Opt. Call BBB+ 485,160 Republic Services Inc., Series 2001, 4.250%, 8/01/31 (Mandatory put 4/01/14) (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ LONG-TERM CARE - 1.0% (0.8% OF TOTAL INVESTMENTS) 335 Michigan State Hospital Finance Authority, Revenue Bonds, 5/15 at 100.00 N/R 338,638 Presbyterian Villages of Michigan Obligated Group, Series 2005, 5.250%, 11/15/25 - ------------------------------------------------------------------------------------------------------------------------------------ MATERIALS - 1.6% (1.0% OF TOTAL INVESTMENTS) 500 Dickinson County Economic Development Corporation, 11/14 at 100.00 BBB 492,100 Michigan, Pollution Control Revenue Bonds, International Paper Company, Series 2004A, 4.800%, 11/01/18 - ------------------------------------------------------------------------------------------------------------------------------------ 34 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/GENERAL - 32.1% (21.0% OF TOTAL INVESTMENTS) $ 1,000 Garden City School District, Wayne County, Michigan, General 5/11 at 100.00 AA $ 1,022,600 Obligation Refunding Bonds, Series 2001, 5.000%, 5/01/26 1,500 Huron Valley School District, Oakland and Livingston Counties, 11/11 at 100.00 AA 1,534,965 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 520,320 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 313,038 Series 2006, 5.000%, 5/01/25 - FSA Insured 400 Michigan Municipal Bond Authority, General Obligation Bonds, 6/15 at 100.00 AAA 419,324 Detroit City School District, Series 2005, 5.000%, 6/01/18 - FSA Insured 1,150 Muskegon County, Michigan, Limited Tax General Obligation 7/11 at 100.00 AAA 1,176,852 Wastewater Management System 2 Revenue Bonds, Series 2002, 5.000%, 7/01/26 - FGIC Insured Washtenaw County, Michigan, Limited Tax General Obligation Bonds, Sylvan Township Water and Wastewater System, Series 2001: 500 5.000%, 5/01/19 - MBIA Insured 5/09 at 100.50 AAA 514,295 800 5.000%, 5/01/20 - MBIA Insured 5/09 at 100.50 AAA 822,664 1,650 Wayne County, Michigan, Limited Tax General Obligation 12/11 at 101.00 AAA 1,693,560 Airport Hotel Revenue Bonds, Detroit Metropolitan Wayne County Airport, Series 2001A, 5.000%, 12/01/30 - MBIA Insured 500 Wayne Westland Community Schools, Michigan, General 11/14 at 100.00 AAA 528,975 Obligation 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 1,346,540 General Obligation Bonds, Series 2001, 5.000%, 5/01/21 - ------------------------------------------------------------------------------------------------------------------------------------ 9,600 Total Tax Obligation/General 9,893,133 - ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/LIMITED - 10.0% (6.5% OF TOTAL INVESTMENTS) 1,100 Grand Rapids Building Authority, Kent County, Michigan, 10/11 at 100.00 AAA 1,134,276 Limited Tax General Obligation Bonds, Series 2001, 5.125%, 10/01/26 - MBIA Insured 1,205 Michigan State Building Authority, Revenue Bonds, Facilities 10/11 at 100.00 AA- 1,241,005 Program, Series 2001I, 5.000%, 10/15/24 615 Puerto Rico Public Finance Corporation, Commonwealth No Opt. Call BBB- 708,775 Appropriation Bonds, Series 2002E, 6.000%, 8/01/26 - ------------------------------------------------------------------------------------------------------------------------------------ 2,920 Total Tax Obligation/Limited 3,084,056 - ------------------------------------------------------------------------------------------------------------------------------------ U.S. GUARANTEED - 42.8% (28.0% OF TOTAL INVESTMENTS) (4) 1,000 Detroit City School District, Wayne County, Michigan, General 5/13 at 100.00 AAA 1,087,660 Obligation Bonds, Series 2002A, 5.375%, 5/01/24 (Pre-refunded 5/01/13) - FGIC Insured 1,000 Detroit City School District, Wayne County, Michigan, Unlimited 5/12 at 100.00 AAA 1,085,120 Tax School Building and Site Improvement Bonds, Series 2001A, 5.500%, 5/01/21 (Pre-refunded 5/01/12) - FSA Insured Detroit, Michigan, Senior Lien Water Supply System Revenue Bonds, Series 2001A: 515 5.250%, 7/01/33 (Pre-refunded 7/01/11) - FGIC Insured 7/11 at 100.00 AAA 548,305 485 5.250%, 7/01/33 (Pre-refunded 7/01/11) - FGIC Insured 7/11 at 100.00 AAA 516,365 2,200 Huron School District, Wayne and Monroe Counties, Michigan, 5/11 at 100.00 AAA 2,349,644 General Obligation Bonds, Series 2001, 5.375%, 5/01/26 (Pre-refunded 5/01/11) - FSA Insured 1,000 Kent Hospital Finance Authority, Michigan, Revenue Bonds, 7/11 at 101.00 AA (4) 1,071,010 Spectrum Health, Series 2001A, 5.250%, 1/15/21 (Pre-refunded 7/15/11) 1,000 Michigan Municipal Bond Authority, Drinking Water Revolving 10/10 at 101.00 AAA 1,087,550 Fund Revenue Bonds, Series 2000, 5.875%, 10/01/17 (Pre-refunded 10/01/10) 2,000 Michigan State Trunk Line, Fund Bonds, Series 2001A, 11/11 at 100.00 AAA 2,112,360 5.000%, 11/01/25 (Pre-refunded 11/01/11) - FSA Insured 1,000 Oxford Area Community Schools, Oakland and Lapeer Counties, 11/11 at 100.00 AA (4) 1,079,760 Michigan, General Obligation Bonds, Series 2001, 5.500%, 5/01/17 (Pre-refunded 11/01/11) 35 Nuveen Michigan Dividend Advantage Municipal Fund (NZW) (continued) Portfolio of INVESTMENTS July 31, 2006 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ U.S. GUARANTEED (4) (continued) $ 500 Puerto Rico Infrastructure Financing Authority, Special 10/10 at 101.00 AAA $ 532,455 Obligation Bonds, Series 2000A, 5.500%, 10/01/40 85 Puerto Rico Public Finance Corporation, Commonwealth No Opt. Call BBB- (4) 103,414 Appropriation Bonds, Series 2002E, 6.000%, 8/01/26 (ETM) 1,000 Rochester Community School District, Oakland and Macomb 11/11 at 100.00 AA (4) 1,079,760 Counties, Michigan, General Obligation Bonds, Series 2001II, 5.500%, 5/01/22 (Pre-refunded 11/01/11) 500 Warren Building Authority, Michigan, Limited Tax General 11/10 at 100.00 AAA 526,470 Obligation Bonds, Series 2001, 5.150%, 11/01/22 (Pre-refunded 11/01/10) - FGIC Insured - ------------------------------------------------------------------------------------------------------------------------------------ 12,285 Total U.S. Guaranteed 13,179,873 - ------------------------------------------------------------------------------------------------------------------------------------ UTILITIES - 15.5% (10.1% OF TOTAL INVESTMENTS) 1,115 Lansing Board of Water and Light, Michigan, Steam and 7/13 at 100.00 AAA 1,160,414 Electric Utility System Revenue Bonds, Series 2003A, 5.000%, 7/01/21 - FSA Insured 1,235 Michigan Public Power Agency, Revenue Bonds, Combustion 1/12 at 100.00 AAA 1,301,480 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 2,319,149 Pollution Control Revenue Refunding Bonds, Fixed Rate Conversion, Detroit Edison Company, Series 1999C, 5.650%, 9/01/29 (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ 4,565 Total Utilities 4,781,043 - ------------------------------------------------------------------------------------------------------------------------------------ WATER AND SEWER - 17.2% (11.3% OF TOTAL INVESTMENTS) 1,000 Detroit Water Supply System, Michigan, Water Supply System 7/16 at 100.00 AAA 1,030,320 Revenue Bonds, Series 2006A, 5.000%, 7/01/34 (WI/DD, Settling 8/16/06) - FSA Insured 1,000 Detroit, Michigan, Senior Lien Sewerage Disposal System No Opt. Call AAA 1,142,810 Revenue Bonds, Series 2001B, 5.500%, 7/01/29 - FGIC Insured 1,000 Detroit, Michigan, Senior Lien Sewerage Disposal System 7/13 at 100.00 AAA 1,054,860 Revenue 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 AAA 1,016,720 Bonds, Series 2001A, 5.000%, 7/01/30 - FGIC Insured 1,000 Michigan Municipal Bond Authority, Clean Water Revolving 10/15 at 100.00 AAA 1,060,681 Fund Revenue Bonds, Series 2005, 5.000%, 10/01/19 - ------------------------------------------------------------------------------------------------------------------------------------ 5,000 Total Water and Sewer 5,305,391 - ------------------------------------------------------------------------------------------------------------------------------------ $ 45,010 Total Investments (cost $45,209,031) - 152.9% 47,115,217 =============----------------------------------------------------------------------------------------------------------------------- Other Assets Less Liabilities - (1.0)% (292,122) -------------------------------------------------------------------------------------------------------------------- Preferred Shares, at Liquidation Value - (51.9)% (16,000,000) -------------------------------------------------------------------------------------------------------------------- Net Assets Applicable to Common Shares - 100% $ 30,823,095 ====================================================================================================================
36
- ------------------------------------------------------------------------------------------------------------------------------------ FORWARD SWAPS OUTSTANDING AT JULY 31, 2006: FIXED RATE FLOATING RATE PAID FIXED RATE RECEIVED FLOATING RATE UNREALIZED NOTIONAL BY THE FUND PAYMENT BY THE FUND PAYMENT EFFECTIVE TERMINATION APPRECIATION COUNTERPARTY AMOUNT (ANNUALIZED) FREQUENCY BASED ON FREQUENCY DATE (5) DATE (DEPRECIATION) -------------------------------------------------------------------------------------------------------------------------------- Goldman Sachs $5,600,000 5.682% Semi-Annually 3 month USD-LIBOR Quarterly 7/10/07 7/10/12 $(57,231) Goldman Sachs 1,700,000 5.803 Semi-Annually 3 month USD-LIBOR Quarterly 7/10/07 7/10/37 33,658 -------------------------------------------------------------------------------------------------------------------------------- $(23,573) ================================================================================================================================
USD-LIBOR (United States Dollar-London Inter-Bank Offered Rates) (1) All percentages shown in the Portfolio of Investments are based on net assets applicable to Common shares unless otherwise noted. (2) Optional Call Provisions (not covered by the report of independent registered public accounting firm): Dates (month and year) and prices of the earliest optional call or redemption. There may be other call provisions at varying prices at later dates. Certain mortgage-backed securities may be subject to periodic principal paydowns. (3) Ratings (not covered by the report of independent registered public accounting firm): Using the higher of Standard & Poor's or Moody's rating. Ratings below BBB by Standard & Poor's Group or Baa by Moody's Investor Service, Inc. are considered to be below investment grade. (4) Backed by an escrow or trust containing sufficient U.S. Government or U.S. Government agency securities which ensure the timely payment of principal and interest. Such investments are normally considered to be equivalent to AAA rated securities. (5) Effective date represents the date on which both the Fund and counterparty commence interest payment accruals on each forward swap contract. N/R Not rated. WI/DD Purchased on a when-issued or delayed delivery basis. (ETM) Escrowed to maturity. See accompanying notes to financial statements. 37 Nuveen Ohio Quality Income Municipal Fund, Inc. (NUO) Portfolio of INVESTMENTS July 31, 2006
PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ CONSUMER STAPLES - 1.8% (1.2% OF TOTAL INVESTMENTS) $ 2,675 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 5/12 at 100.00 BBB $ 2,738,852 Asset-Backed Refunding Bonds, Series 2002, 5.375%, 5/15/33 - ------------------------------------------------------------------------------------------------------------------------------------ EDUCATION AND CIVIC ORGANIZATIONS - 12.4% (8.3% OF TOTAL INVESTMENTS) 700 Ohio Higher Education Facilities Commission, General Revenue 7/16 at 100.00 A+ 708,267 Bonds, Kenyon College, Series 2006, 5.000%, 7/01/41 (WI/DD, Settling 8/09/06) 1,750 Ohio Higher Education Facilities Commission, General Revenue 10/13 at 100.00 AA 1,821,487 Bonds, Oberlin College, Series 2003, 5.125%, 10/01/24 1,000 Ohio Higher Education Facilities Commission, Revenue Bonds, 12/15 at 100.00 Baa1 999,250 Wittenberg University, Series 2005, 5.000%, 12/01/29 1,415 Ohio Higher Educational Facilities Commission, Revenue Bonds, 11/14 at 100.00 AA 1,477,600 Denison University, Series 2004, 5.000%, 11/01/21 1,320 Ohio Higher Educational Facilities Commission, Revenue Bonds, 12/14 at 100.00 AAA 1,366,754 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 Baa1 1,053,030 Wittenberg University, Series 2001, 5.500%, 12/01/15 1,000 Ohio Higher Educational Facilities Commission, Revenue Bonds, 5/16 at 100.00 Aaa 1,041,850 Xavier University, Series 2006, 5.000%, 5/01/22 - CIFG Insured 1,200 Ohio State University, General Receipts Bonds, Series 2002A, 12/12 at 100.00 AA 1,238,724 5.125%, 12/01/31 3,000 Ohio State University, General Receipts Bonds, Series 2003B, 6/13 at 100.00 AA 3,192,600 5.250%, 6/01/22 1,510 University of Akron, Ohio, General Receipts Bonds, Series 2003A, 1/13 at 100.00 AAA 1,569,962 5.000%, 1/01/21 - AMBAC Insured 850 University of Cincinnati, Ohio, General Receipts Bonds, 6/13 at 100.00 AAA 883,074 Series 2003C, 5.000%, 6/01/22 - FGIC Insured University of Cincinnati, Ohio, General Receipts Bonds, Series 2004D: 1,200 5.000%, 6/01/19 - AMBAC Insured 6/14 at 100.00 AAA 1,257,324 2,605 5.000%, 6/01/25 - AMBAC Insured 6/14 at 100.00 AAA 2,697,868 - ------------------------------------------------------------------------------------------------------------------------------------ 18,550 Total Education and Civic Organizations 19,307,790 - ------------------------------------------------------------------------------------------------------------------------------------ HEALTH CARE - 17.4% (11.7% OF TOTAL INVESTMENTS) 2,000 Akron, Bath and Copley Joint Township Hospital District, Ohio, 11/09 at 101.00 Baa1 2,024,080 Hospital Facilities Revenue Bonds, Summa Health System, Series 1998A, 5.375%, 11/15/24 1,000 Cuyahoga County, Ohio, Hospital Revenue Refunding and 2/07 at 102.00 AAA 1,028,490 Improvement Bonds, MetroHealth System, Series 1997, 5.625%, 2/15/17 - MBIA Insured 2,000 Cuyahoga County, Ohio, Revenue Refunding Bonds, Cleveland 7/13 at 100.00 Aa3 2,190,200 Clinic Health System, Series 2003A, 6.000%, 1/01/32 4,500 Erie County, Ohio, Hospital Facilities Revenue Bonds, Firelands 8/12 at 101.00 A 4,731,795 Regional Medical Center, Series 2002A, 5.625%, 8/15/32 Franklin County, Ohio, Hospital Revenue Refunding and Improvement Bonds, Children's Hospital Project, Series 1996A: 1,000 5.750%, 11/01/20 11/06 at 101.00 Aa2 1,012,860 1,500 5.875%, 11/01/25 11/06 at 101.00 Aa2 1,519,440 2,455 Hamilton County, Ohio, Revenue Bonds, Children's Hospital 5/14 at 100.00 AAA 2,637,750 Medical Center, Series 2004J, 5.250%, 5/15/16 - FGIC Insured 785 Miami County, Ohio, Hospital Facilities Revenue Refunding 5/16 at 100.00 A- 816,510 Bonds, Upper Valley Medical Center Inc., Series 2006, 5.250%, 5/15/21 38 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ HEALTH CARE (continued) Montgomery County, Ohio, Revenue Bonds, Catholic Health Initiatives, Series 2004A: $ 2,500 5.000%, 5/01/30 5/14 at 100.00 AA $ 2,550,500 2,500 5.000%, 5/01/32 No Opt. Call AA 2,549,375 2,500 Richland County, Ohio, Hospital Facilities Revenue Improvement 11/10 at 101.00 A- 2,688,775 Bonds, MedCentral Health System Obligated Group, Series 2000B, 6.375%, 11/15/30 1,500 Steubenville, Ohio, Hospital Facilities Revenue Refunding and 10/10 at 100.00 A3 1,605,780 Improvement Bonds, Trinity Health System, Series 2000, 6.375%, 10/01/20 1,705 Tuscarawas County, Ohio, Hospital Facilities Revenue Bonds, 10/11 at 101.00 AA 1,830,795 Union Hospital Project, Series 2001, 5.750%, 10/01/21 - RAAI Insured - ------------------------------------------------------------------------------------------------------------------------------------ 25,945 Total Health Care 27,186,350 - ------------------------------------------------------------------------------------------------------------------------------------ HOUSING/MULTIFAMILY - 5.9% (4.0% OF TOTAL INVESTMENTS) 1,385 Clermont County, Ohio, GNMA Collateralized Mortgage Revenue 8/06 at 100.00 Aaa 1,386,122 Bonds, S.E.M. Villa II Project, Series 1994A, 5.950%, 2/20/30 1,000 Cuyahoga County, Ohio, GNMA Collateralized Multifamily 9/12 at 102.00 Aaa 1,029,630 Housing 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 2,552,270 2,250 5.450%, 1/20/31 (Alternative Minimum Tax) 7/11 at 102.00 Aaa 2,315,453 965 Cuyahoga County, Ohio, GNMA Collateralized Multifamily 9/10 at 102.00 Aaa 982,447 Housing Mortgage Revenue Bonds, West Tech Apartments Project, Series 2002A, 5.350%, 3/20/33 (Alternative Minimum Tax) 985 Franklin County, Ohio, FHA-Insured Multifamily Housing 1/07 at 101.00 Aa2 992,447 Mortgage Revenue Bonds, Hamilton Creek Apartments Project, Series 1994A, 5.550%, 7/01/24 (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ 9,060 Total Housing/Multifamily 9,258,369 - ------------------------------------------------------------------------------------------------------------------------------------ HOUSING/SINGLE FAMILY - 4.3% (2.9% OF TOTAL INVESTMENTS) 1,195 Ohio Housing Finance Agency, GNMA Mortgage-Backed 9/07 at 102.00 Aaa 1,220,155 Securities Program Residential Mortgage Revenue Bonds, Series 1996B-3, 5.750%, 9/01/28 (Alternative Minimum Tax) 1,920 Ohio Housing Finance Agency, GNMA Mortgage-Backed 9/08 at 102.00 Aaa 1,952,429 Securities Program Residential Mortgage Revenue Bonds, Series 1997B, 5.400%, 9/01/29 (Alternative Minimum Tax) 1,445 Ohio Housing Finance Agency, GNMA Mortgage-Backed 3/08 at 101.50 AAA 1,469,941 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 2,016,620 Bonds, Series 2006H, 5.000%, 9/01/31 (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ 6,560 Total Housing/Single Family 6,659,145 - ------------------------------------------------------------------------------------------------------------------------------------ INDUSTRIALS - 1.3% (0.9% OF TOTAL INVESTMENTS) 530 Cleveland-Cuyahoga County Port Authority, Ohio, Bond Fund 11/14 at 100.00 N/R 543,186 Program Development Revenue Bonds, Myers University, Series 2004E, 5.600%, 5/15/25 1,500 Dayton, Ohio, Special Facilities Revenue Refunding Bonds, 2/08 at 102.00 AAA 1,561,065 Emery Air Freight Corporation and Emery Worldwide Airlines Inc. - Guarantors, Series 1998A, 5.625%, 2/01/18 - ------------------------------------------------------------------------------------------------------------------------------------ 2,030 Total Industrials 2,104,251 - ------------------------------------------------------------------------------------------------------------------------------------ LONG-TERM CARE - 0.6% (0.3% OF TOTAL INVESTMENTS) 1,000 Hamilton County, Ohio, Healthcare Facilities Improvement 10/08 at 102.00 BBB 1,030,780 Revenue Bonds, Twin Towers, Series 1999A, 5.800%, 10/01/23 - ------------------------------------------------------------------------------------------------------------------------------------ MATERIALS - 1.3% (0.9% OF TOTAL INVESTMENTS) 2,000 Toledo-Lucas County Port Authority, Ohio, Port Revenue Bonds, No Opt. Call A+ 2,019,180 Cargill Inc., Series 2004B, 4.500%, 12/01/15 - ------------------------------------------------------------------------------------------------------------------------------------ 39 Nuveen Ohio Quality Income Municipal Fund, Inc. (NUO) (continued) Portfolio of INVESTMENTS July 31, 2006 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/GENERAL - 45.7% (30.6% OF TOTAL INVESTMENTS) $ 1,000 Ansonia Local School District, Darke County, Ohio, General 12/10 at 102.00 Aaa $ 1,081,000 Obligation Bonds, Series 2000, 5.500%, 12/01/22 - MBIA Insured 1,000 Bay Village City School District, Ohio, General Obligation 12/10 at 100.00 Aa2 1,022,980 Unlimited Tax School Improvement Bonds, Series 2001, 5.000%, 12/01/25 270 Berea City School District, Ohio, General Obligation Unlimited 12/06 at 100.00 AAA 270,829 Tax School Improvement Bonds, Series 1993, 7.500%, 12/15/06 - AMBAC Insured Butler County, Ohio, General Obligation Bonds, Series 2002: 1,345 5.000%, 12/01/21 - MBIA Insured 12/12 at 100.00 Aaa 1,400,858 1,200 5.000%, 12/01/22 - MBIA Insured 12/12 at 101.00 Aaa 1,247,772 Butler County, Ohio, General Obligation Judgment Bonds, Series 2002: 2,030 5.250%, 12/01/21 12/12 at 101.00 Aa3 2,170,882 2,140 5.250%, 12/01/22 12/12 at 101.00 Aa3 2,288,516 1,560 Canal Winchester Local School District, Franklin and Fairfield 12/11 at 100.00 Aaa 1,596,894 Counties, Ohio, School Facilities Construction and Improvement Bonds, Series 2001B, 5.000%, 12/01/28 - FGIC Insured 1,500 Centerville City School District, Montgomery County, Ohio, 6/15 at 100.00 Aaa 1,553,520 General Obligation Bonds, Series 2005, 5.000%, 12/01/30 - FSA Insured 1,000 Central Ohio Solid Waste Authority, General Obligation Bonds, 6/14 at 100.00 AAA 1,060,280 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 2,760,680 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 1,040,340 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+ 1,256,952 5.000%, 12/01/21 1,000 Dayton, Ohio, General Obligation Bonds, Series 2004, 6/14 at 100.00 AAA 1,070,100 5.250%, 12/01/19 - AMBAC Insured 1,000 Dublin City School District, Franklin, Delaware and Union 12/13 at 100.00 AAA 1,039,810 Counties, Ohio, General Obligation Bonds, Series 2003, 5.000%, 12/01/22 - FSA Insured 1,000 Dublin, Ohio, Unlimited Tax Various Purpose Improvement 12/10 at 100.00 Aaa 1,036,430 Bonds, Series 2000A, 5.000%, 12/01/20 1,195 Fairview Park City School District, Cuyahoga County, Ohio, 6/15 at 100.00 Aaa 1,247,389 General Obligation Bonds, Series 2005, 5.000%, 12/01/24 - MBIA Insured 1,300 Franklin County, Ohio, Limited Tax General Obligation Refunding 12/08 at 102.00 AAA 1,368,354 Bonds, Series 1993, 5.375%, 12/01/20 2,000 Garfield Heights City School District, Cuyahoga County, Ohio, 12/11 at 100.00 Aaa 2,053,380 General Obligation School Improvement Bonds, Series 2001, 5.000%, 12/15/26 - MBIA Insured 1,850 Hilliard School District, Franklin County, Ohio, General 12/15 at 100.00 AAA 1,929,069 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 AAA 3,144,180 Obligation Bonds, Series 2006A, 5.000%, 12/01/25 - MBIA Insured 1,160 Kenston Local School District, Geauga County, Ohio, General 6/13 at 100.00 Aaa 1,206,110 Obligation Bonds, Series 2003, 5.000%, 12/01/22 - MBIA Insured 2,000 Louisville City School District, Ohio, General Obligation Bonds, 12/11 at 100.00 Aaa 2,046,360 Series 2001, 5.000%, 12/01/29 - FGIC Insured 505 Marysville Exempted School District, Union County, Ohio, 12/15 at 100.00 AAA 527,366 General Obligation Bonds, Series 2006, 5.000%, 12/01/25 - FSA Insured 1,515 Massillon City School District, Ohio, General Obligation Bonds, 12/12 at 100.00 Aaa 1,608,627 Series 2003, 5.250%, 12/01/21 - MBIA Insured 760 Middletown City School District, Butler County, Ohio, General 12/13 at 100.00 Aaa 786,349 Obligation Bonds, Series 2004, 5.000%, 12/01/25 - FGIC Insured 1,000 Newark City School District, Licking County, Ohio, General 12/15 at 100.00 AAA 1,039,640 Obligation Bonds, Series 2005, 5.000%, 12/01/28 - FGIC Insured 3,000 Ohio, General Obligation Bonds, Infrastructure Improvements, 2/13 at 100.00 AA+ 3,109,380 Series 2003F, 5.000%, 2/01/23 5,000 Ohio, General Obligation Bonds, Series 2005A, 5.000%, 9/01/20 3/15 at 100.00 AA+ 5,258,000 40 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/GENERAL (continued) Olentangy Local School District, Delaware and Franklin Counties, Ohio, General Obligation Bonds, Series 2004A: $ 1,315 5.250%, 12/01/23 - FGIC Insured 6/14 at 100.00 AAA $ 1,405,380 3,380 5.250%, 12/01/24 - FGIC Insured 6/14 at 100.00 AAA 3,609,975 1,510 Painesville City School District, Ohio, General Obligation Bonds, 12/14 at 100.00 AAA 1,578,448 Series 2004, 5.000%, 12/01/22 - FGIC Insured 1,155 Perry Local School District, Allen County, Ohio, General 12/11 at 101.00 AAA 1,234,164 Obligation Bonds, Series 2001, 5.250%, 12/01/25 - AMBAC Insured 280 Plain Local School District, Franklin and Licking Counties, 6/11 at 100.00 Aaa 304,718 Ohio, General Obligation Bonds, Series 2000, 6.000%, 12/01/20 - FGIC Insured 1,100 Plain Local School District, Franklin and Licking Counties, 6/12 at 100.00 Aaa 1,183,545 Ohio, General Obligation Bonds, Series 2002, 5.500%, 12/01/17 - FGIC Insured 1,445 Portage County, Ohio, General Obligation Bonds, Series 2001, 12/11 at 100.00 AAA 1,479,174 5.000%, 12/01/27 - FGIC Insured 1,000 Princeton City School District, Butler County, Ohio, General 12/13 at 100.00 AAA 1,031,820 Obligation Bonds, Series 2003, 5.000%, 12/01/30 - MBIA Insured 2,000 Strongsville, Ohio, General Obligation Bonds, Series 2001, 12/11 at 100.00 Aaa 2,079,500 5.000%, 12/01/21 - FGIC Insured 70 Strongsville, Ohio, Limited Tax General Obligation Various 12/06 at 102.00 Aa2 71,869 Purpose Improvement Bonds, Series 1996, 5.950%, 12/01/21 2,000 Sugarcreek Local School District, Athens County, Ohio, General 12/13 at 100.00 Aaa 2,106,980 Obligation Bonds, Series 2003, 5.250%, 12/01/27 - MBIA Insured Warren City School District, Trumbull County, Ohio, General Obligation Bonds, Series 2004: 2,515 5.000%, 12/01/20 - FGIC Insured 6/14 at 100.00 AAA 2,635,142 1,170 5.000%, 12/01/22 - FGIC Insured 6/14 at 100.00 AAA 1,220,357 1,000 West Chester Township, Butler County, Ohio, General Obligation 12/13 at 100.00 Aaa 1,032,450 Bonds, Series 2003, 5.000%, 12/01/28 - MBIA Insured 2,000 Westerville City School District, Franklin and Delaware 6/11 at 100.00 AAA 2,043,320 Counties, Ohio, Various Purpose General Obligation Bonds, Series 2001, 5.000%, 12/01/27 - MBIA Insured 1,000 Westlake, Ohio, Various Purpose General Obligation 12/08 at 101.00 Aaa 1,046,610 Improvement and Refunding Bonds, Series 1997, 5.550%, 12/01/17 - ------------------------------------------------------------------------------------------------------------------------------------ 68,070 Total Tax Obligation/General 71,285,499 - ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/LIMITED - 8.8% (5.9% OF TOTAL INVESTMENTS) 1,380 Columbus, Ohio, Tax Increment Financing Bonds, Easton 6/14 at 100.00 AAA 1,424,588 Project, 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 3,118,920 Bonds, Convention Facilities Authority, Series 2005, 5.000%, 12/01/27 - AMBAC Insured 1,085 Hamilton County Convention Facilities Authority, Ohio, First 6/14 at 100.00 AAA 1,138,306 Lien Revenue Bonds, Series 2004, 5.000%, 12/01/18 - FGIC Insured 1,000 Hudson City School District, Ohio, Certificates of Participation, 6/14 at 100.00 Aaa 1,030,980 Series 2004, 5.000%, 6/01/26 - MBIA Insured New Albany Community Authority, Ohio, Community Facilities Revenue Refunding Bonds, Series 2001B: 1,000 5.500%, 10/01/15 - AMBAC Insured 4/12 at 100.00 AAA 1,080,320 1,000 5.500%, 10/01/17 - AMBAC Insured 4/12 at 100.00 AAA 1,074,010 90 Ohio Department of Transportation, Certificates of Participation, 10/06 at 100.00 AA 90,112 Rickenbacker International Airport Improvements, Series 1996, 6.125%, 4/15/15 (Alternative Minimum Tax) 800 Ohio State Building Authority, State Facilities Bonds, 4/15 at 100.00 AAA 832,184 Administrative Building Fund Projects, Series 2005A, 5.000%, 4/01/25 - FSA Insured 41 Nuveen Ohio Quality Income Municipal Fund, Inc. (NUO) (continued) Portfolio of INVESTMENTS July 31, 2006 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/LIMITED (continued) $ 2,645 Ohio State Building Authority, State Facilities Bonds, 4/14 at 100.00 AAA $ 2,855,859 Adult Correctional Building Fund Project, Series 2004A, 5.250%, 4/01/15 - MBIA Insured 1,000 Ohio, State Appropriation Lease Bonds, Mental Health 6/13 at 100.00 AA 1,060,630 Capital Facilities, Series 2003B-II, 5.000%, 6/01/16 - ------------------------------------------------------------------------------------------------------------------------------------ 13,000 Total Tax Obligation/Limited 13,705,909 - ------------------------------------------------------------------------------------------------------------------------------------ TRANSPORTATION - 5.3% (3.5% OF TOTAL INVESTMENTS) 1,780 Cleveland, Ohio, Airport System Revenue Bonds, Series 2000A, 1/10 at 101.00 AAA 1,861,809 5.250%, 1/01/16 - FSA Insured 3,000 Dayton, Ohio, Airport Revenue Bonds, James M. Cox International 12/13 at 100.00 AA 3,079,620 Airport, Series 2003C, 5.250%, 12/01/23 - RAAI Insured (Alternative Minimum Tax) 1,000 Dayton, Ohio, Airport Revenue Bonds, James M. Cox International No Opt. Call AAA 1,059,100 Airport, Series 2005B, 5.000%, 12/01/14 - XLCA Insured 2,000 Ohio Turnpike Commission, Revenue Bonds, Series 1998A, No Opt. Call AAA 2,242,620 5.500%, 2/15/18 - FGIC Insured - ------------------------------------------------------------------------------------------------------------------------------------ 7,780 Total Transportation 8,243,149 - ------------------------------------------------------------------------------------------------------------------------------------ U.S. GUARANTEED - 27.5% (18.4% OF TOTAL INVESTMENTS) (4) 1,000 Cincinnati City School District, Hamilton County, Ohio, General 12/11 at 100.00 AAA 1,075,230 Obligation Bonds, Series 2001, 5.375%, 12/01/15 (Pre-refunded 12/01/11) - MBIA Insured 3,430 Cleveland, Ohio, Parking Facilities Revenue Refunding Bonds, 9/06 at 102.00 AAA 3,504,603 Series 1996, 5.500%, 9/15/22 (Pre-refunded 9/15/06) - MBIA Insured 420 Cleveland, Ohio, Waterworks Revenue Refunding and 1/08 at 101.00 AAA 431,647 Improvement Bonds, Series 1998I, 5.000%, 1/01/28 (Pre-refunded 1/01/08) - FSA Insured 1,210 Columbus, Ohio, Tax Increment Financing Bonds, Easton Project, 6/09 at 101.00 AAA 1,256,706 Series 1999, 4.875%, 12/01/24 (Pre-refunded 6/01/09) - AMBAC Insured 1,135 Franklin County, Ohio, First Mortgage Revenue, OCLC Inc. Project, 12/06 at 100.00 AAA 1,187,210 Series 1979, 7.500%, 6/01/09 (ETM) 2,110 Hamilton County, Ohio, Sewer System Revenue and 6/10 at 101.00 AAA 2,274,812 Improvement Bonds, Metropolitan Sewer District of Greater Cincinnati, Series 2000A, 5.750%, 12/01/25 (Pre-refunded 6/01/10) - MBIA Insured 1,000 Hilliard School District, Ohio, General Obligation School 12/10 at 101.00 AAA 1,086,300 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 Aaa 2,117,260 Tax General Obligation School Improvement and Refunding Bonds, Series 2001, 5.125%, 12/01/26 (Pre-refunded 6/01/11) - FGIC Insured 1,000 London City School District, Ohio, General Obligation School 12/11 at 100.00 Aaa 1,057,290 Facilities Construction and Improvement Bonds, Series 2001, 5.000%, 12/01/29 (Pre-refunded 12/01/11) - FGIC Insured 3,000 Montgomery County, Ohio, Hospital Facilities Revenue Bonds, 4/10 at 101.00 A (4) 3,320,190 Kettering Medical Center, Series 1999, 6.750%, 4/01/18 (Pre-refunded 4/01/10) 1,260 Morgan Local School District, Morgan, Muskingum and 12/10 at 101.00 AA (4) 1,371,371 Washington Counties, Ohio, Unlimited Tax General Obligation School Improvement Bonds, Series 2000, 5.750%, 12/01/22 (Pre-refunded 12/01/10) 4,315 Ohio Capital Corporation for Housing, FHA-Insured Section 8 2/09 at 102.00 N/R (4) 4,612,606 Assisted Mortgage Loan Revenue Refunding Bonds, Series 1999G, 5.950%, 2/01/24 (Pre-refunded 2/01/09) 1,200 Ohio Higher Educational Facilities Commission, Revenue Bonds, 9/06 at 101.00 Ba1 (4) 1,214,196 University of Findlay, Series 1996, 6.125%, 9/01/16 (Pre-refunded 9/01/06) 6,000 Parma Community General Hospital Association, Ohio, Hospital 11/08 at 101.00 A- (4) 6,263,576 Revenue Refunding and Improvement Bonds, Series 1998, 5.375%, 11/01/29 (Pre-refunded 11/01/08) 42 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ U.S. GUARANTEED (4) (continued) $ 2,720 Pickerington Local School District, Fairfield and Franklin 12/11 at 100.00 AAA $ 2,875,829 Counties, Ohio, General Obligation Bonds, School Facilities Construction and Improvement, Series 2001, 5.000%, 12/01/28 (Pre-refunded 12/01/11) -FGIC Insured 1,220 Plain Local School District, Franklin and Licking Counties, 6/11 at 100.00 Aaa 1,338,267 Ohio, General Obligation Bonds, Series 2000, 6.000%, 12/01/20 (Pre-refunded 6/01/11) - FGIC Insured 1,730 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 7/10 at 100.00 AAA 1,807,487 Asset-Backed Bonds, Series 2000, 5.750%, 7/01/20 (Pre-refunded 7/01/10) 2,830 Springfield Township, Hamilton County, Ohio, Various Purpose 12/11 at 100.00 Aa3 (4) 3,025,978 Limited Tax General Obligation Bonds, Series 2002, 5.250%, 12/01/27 (Pre-refunded 12/01/11) 1,000 Upper Arlington City School District, Ohio, General Obligation 12/06 at 101.00 AAA 1,015,190 Improvement Bonds, Series 1996, 5.250%, 12/01/22 (Pre-refunded 12/01/06) - MBIA Insured 2,000 Wayne Local School District, Warren County, Ohio, Unlimited 12/06 at 101.00 AAA 2,036,140 Tax General Obligation School Improvement Bonds, Series 1996, 6.100%, 12/01/24 (Pre-refunded 12/01/06) - AMBAC Insured - ------------------------------------------------------------------------------------------------------------------------------------ 40,580 Total U.S. Guaranteed 42,871,888 - ------------------------------------------------------------------------------------------------------------------------------------ UTILITIES - 7.1% (4.7% OF TOTAL INVESTMENTS) 4,000 American Municipal Power Ohio Inc., Wadsworth, Electric 2/12 at 100.00 Aaa 4,153,200 System Improvement Revenue Bonds, Series 2002, 5.000%, 2/15/22 - MBIA Insured 3,000 Ohio Air Quality Development Authority, Revenue Bonds, 4/07 at 102.00 AAA 3,088,110 JMG Funding Limited Partnership Project, Series 1997, 5.625%, 1/01/23 - AMBAC Insured (Alternative Minimum Tax) 2,000 Ohio Municipal Electric Generation Agency, Beneficial Interest 2/14 at 100.00 AAA 2,083,420 Certificates, Belleville Hydroelectric Project - Joint Venture 5, Series 2004, 5.000%, 2/15/20 - AMBAC Insured 1,700 Ohio Water Development Authority, Solid Waste Disposal 9/08 at 102.00 N/R 1,713,804 Revenue Bonds, Bay Shore Power, Series 1998A, 5.875%, 9/01/20 (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ 10,700 Total Utilities 11,038,534 - ------------------------------------------------------------------------------------------------------------------------------------ WATER AND SEWER - 10.0% (6.7% OF TOTAL INVESTMENTS) Cincinnati, Ohio, Water System Revenue Bonds, Series 2001: 1,000 5.500%, 12/01/17 6/11 at 100.00 AA+ 1,065,590 3,510 5.000%, 12/01/18 6/11 at 100.00 AA+ 3,648,119 3,000 5.000%, 12/01/19 6/11 at 100.00 AA+ 3,116,730 1,000 5.000%, 12/01/20 6/11 at 100.00 AA+ 1,040,240 2,000 Cincinnati, Ohio, Water System Revenue Bonds, Series 2003, 6/11 at 100.00 AA+ 2,069,220 5.000%, 12/01/22 1,000 Cleveland, Ohio, Waterworks First Mortgage Revenue No Opt. Call AAA 1,123,890 Refunding and Improvement Bonds, Series 1993G, 5.500%, 1/01/21 - MBIA Insured 40 Cleveland, Ohio, Waterworks First Mortgage Revenue 1/07 at 101.00 AAA 40,857 Refunding and Improvement Bonds, Series 1996H, 5.750%, 1/01/26 - MBIA Insured 580 Cleveland, Ohio, Waterworks Revenue Refunding and 1/08 at 101.00 AAA 589,680 Improvement Bonds, Series 1998I, 5.000%, 1/01/28 - FSA Insured 43 Nuveen Ohio Quality Income Municipal Fund, Inc. (NUO) (continued) Portfolio of INVESTMENTS July 31, 2006 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ WATER AND SEWER (continued) $ 1,220 Hamilton, Ohio, Wastewater System Revenue Bonds, 10/15 at 100.00 Aaa $ 1,309,353 Series 2005, 5.250%, 10/01/22 - FSA Insured 1,500 Ohio Water Development Authority, Water Pollution Control 6/15 at 100.00 AAA 1,572,465 Loan Fund Revenue Bonds, Water Quality Project, Series 2005B, 5.000%, 6/01/25 - ------------------------------------------------------------------------------------------------------------------------------------ 14,850 Total Water and Sewer 15,576,144 - ------------------------------------------------------------------------------------------------------------------------------------ $ 222,800 Total Investments (cost $224,947,699) - 149.4% 233,025,840 =============----------------------------------------------------------------------------------------------------------------------- Other Assets Less Liabilities - (0.0)% (256) -------------------------------------------------------------------------------------------------------------------- Preferred Shares, at Liquidation Value - (49.4)% (77,000,000) -------------------------------------------------------------------------------------------------------------------- Net Assets Applicable to Common Shares - 100% $ 156,025,584 ====================================================================================================================
(1) All percentages shown in the Portfolio of Investments are based on net assets applicable to Common shares unless otherwise noted. (2) Optional Call Provisions (not covered by the report of independent registered public accounting firm): Dates (month and year) and prices of the earliest optional call or redemption. There may be other call provisions at varying prices at later dates. Certain mortgage-backed securities may be subject to periodic principal paydowns. (3) Ratings (not covered by the report of independent registered public accounting firm): Using the higher of Standard & Poor's or Moody's rating. Ratings below BBB by Standard & Poor's Group or Baa by Moody's Investor Service, Inc. are considered to be below investment grade. (4) Backed by an escrow or trust containing sufficient U.S. Government or U.S. Government agency securities which ensure the timely payment of principal and interest. Such investments are normally considered to be equivalent to AAA rated securities. N/R Not rated. WI/DD Purchased on a when-issued or delayed delivery basis. (ETM) Escrowed to maturity. See accompanying notes to financial statements. 44 Nuveen Ohio Dividend Advantage Municipal Fund (NXI) Portfolio of INVESTMENTS July 31, 2006
PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ CONSUMER STAPLES - 1.8% (1.3% OF TOTAL INVESTMENTS) $ 1,065 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 5/12 at 100.00 BBB $ 1,090,422 Asset-Backed Refunding Bonds, Series 2002, 5.375%, 5/15/33 - ------------------------------------------------------------------------------------------------------------------------------------ EDUCATION AND CIVIC ORGANIZATIONS - 18.9% (12.9% OF TOTAL INVESTMENTS) 1,165 Cleveland-Cuyahoga County Port Authority, Ohio, Lease Revenue 8/15 at 100.00 AAA 1,208,152 Bonds, Euclid Avenue Housing Corporation - Fenn Tower Project, Series 2005, 5.000%, 8/01/23 - AMBAC Insured 300 Ohio Higher Education Facilities Commission, General Revenue 7/16 at 100.00 A+ 303,543 Bonds, Kenyon College, Series 2006, 5.000%, 7/01/41 (WI/DD, Settling 8/09/06) 2,650 Ohio Higher Education Facilities Commission, Revenue Bonds, 5/12 at 100.00 A2 2,721,020 Ohio Northern University, Series 2002, 5.000%, 5/01/22 500 Ohio Higher Education Facilities Commission, Revenue Bonds, 12/15 at 100.00 Baa1 503,115 Wittenberg University, Series 2005, 5.000%, 12/01/24 2,000 Ohio Higher Educational Facilities Commission, Revenue Bonds, 11/11 at 101.00 AA 2,088,680 Denison University, Series 2001, 5.200%, 11/01/26 500 Ohio Higher Educational Facilities Commission, Revenue Bonds, 5/16 at 100.00 Aaa 520,925 Xavier University, Series 2006, 5.000%, 5/01/22 - CIFG Insured 1,760 Ohio University at Athens, Subordinate Lien General Receipts 6/14 at 100.00 AAA 1,841,699 Bonds, Series 2004, 5.000%, 12/01/20 - MBIA Insured 2,735 University of Cincinnati, Ohio, General Receipts Bonds, 6/12 at 100.00 A+ 2,887,257 Series 2002F, 5.375%, 6/01/19 - ------------------------------------------------------------------------------------------------------------------------------------ 11,610 Total Education and Civic Organizations 12,074,391 - ------------------------------------------------------------------------------------------------------------------------------------ HEALTH CARE - 8.9% (6.0% OF TOTAL INVESTMENTS) 1,100 Cuyahoga County, Ohio, Revenue Refunding Bonds, Cleveland 7/13 at 100.00 Aa3 1,204,610 Clinic Health System, Series 2003A, 6.000%, 1/01/32 1,950 Lucas County, Ohio, Hospital Revenue Bonds, ProMedica 11/09 at 101.00 AAA 2,032,914 Healthcare Obligated Group, Series 1999, 5.375%, 11/15/29 - AMBAC Insured 330 Miami County, Ohio, Hospital Facilities Revenue Refunding 5/16 at 100.00 A- 343,246 Bonds, Upper Valley Medical Center Inc., Series 2006, 5.250%, 5/15/21 1,000 Montgomery County, Ohio, Revenue Bonds, Catholic Health 5/14 at 100.00 AA 1,020,200 Initiatives, Series 2004A, 5.000%, 5/01/30 1,000 Richland County, Ohio, Hospital Facilities Revenue Improvement 11/10 at 101.00 A- 1,075,510 Bonds, MedCentral Health System Obligated Group, Series 2000B, 6.375%, 11/15/30 - ------------------------------------------------------------------------------------------------------------------------------------ 5,380 Total Health Care 5,676,480 - ------------------------------------------------------------------------------------------------------------------------------------ HOUSING/MULTIFAMILY - 4.7% (3.2% OF TOTAL INVESTMENTS) 2,885 Ohio Housing Finance Agency, FHA-Insured Mortgage Revenue 4/11 at 102.00 Aa2 2,987,533 Bonds, Asbury Woods Project, Series 2001A, 5.450%, 4/01/26 - ------------------------------------------------------------------------------------------------------------------------------------ HOUSING/SINGLE FAMILY - 3.3% (2.2% OF TOTAL INVESTMENTS) 460 Ohio Housing Finance Agency, GNMA Mortgage-Backed 8/10 at 100.00 Aaa 461,017 Securities Program Residential Mortgage Revenue Bonds, Series 2000C, 6.050%, 3/01/32 (Alternative Minimum Tax) 1,070 Ohio Housing Finance Agency, GNMA Mortgage-Backed 8/10 at 100.00 Aaa 1,085,248 Securities Program Residential Mortgage Revenue Bonds, Series 2000D, 5.450%, 9/01/31 (Alternative Minimum Tax) 45 Ohio Housing Finance Agency, GNMA Mortgage-Backed 8/10 at 100.00 Aaa 45,629 Securities 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 504,155 Bonds, Series 2006H, 5.000%, 9/01/31 (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ 2,075 Total Housing/Single Family 2,096,049 - ------------------------------------------------------------------------------------------------------------------------------------ 45 Nuveen Ohio Dividend Advantage Municipal Fund (NXI) (continued) Portfolio of INVESTMENTS July 31, 2006 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ INDUSTRIALS - 2.4% (1.7% OF TOTAL INVESTMENTS) $ 410 Cleveland-Cuyahoga County Port Authority, Ohio, Development 11/15 at 100.00 N/R $ 406,384 Revenue Bonds, Bond Fund Program - Columbia National Group Project, Series 2005D, 5.000%, 5/15/20 (Alternative Minimum Tax) 1,000 Toledo-Lucas County Port Authority, Ohio, Revenue Refunding No Opt. Call Baa2 1,136,250 Bonds, CSX Transportation Inc., Series 1992, 6.450%, 12/15/21 - ------------------------------------------------------------------------------------------------------------------------------------ 1,410 Total Industrials 1,542,634 - ------------------------------------------------------------------------------------------------------------------------------------ LONG-TERM CARE - 2.4% (1.6% OF TOTAL INVESTMENTS) 1,470 Hamilton County, Ohio, Healthcare Facilities Improvement 10/08 at 102.00 BBB 1,517,025 Revenue Bonds, Twin Towers, Series 1999A, 5.750%, 10/01/19 - ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/GENERAL - 38.9% (26.4% OF TOTAL INVESTMENTS) 1,090 Akron, Ohio, General Obligation Bonds, Series 2005, 12/15 at 100.00 AAA 1,136,587 5.000%, 12/01/26 - AMBAC Insured 1,000 Bay Village City School District, Ohio, General Obligation 12/10 at 100.00 Aa2 1,022,980 Unlimited Tax School Improvement Bonds, Series 2001, 5.000%, 12/01/25 1,500 Centerville City School District, Montgomery County, Ohio, 6/15 at 100.00 Aaa 1,553,520 General Obligation Bonds, Series 2005, 5.000%, 12/01/30 - FSA Insured 1,000 Centerville, Ohio, General Obligation Limited Tax Bonds, 12/11 at 100.00 Aa3 1,032,060 Capital Facilities Improvement, Series 2001, 5.125%, 12/01/26 1,000 Columbus City School District, Franklin County, Ohio, General 12/14 at 100.00 AAA 1,104,460 Obligation Bonds, Series 2004, 5.500%, 12/01/15 - FSA Insured 500 Cuyahoga County, Ohio, General Obligation Bonds, 12/14 at 100.00 AA+ 523,730 Series 2004, 5.000%, 12/01/21 2,965 Franklin County, Worthington, Ohio, Various Purpose Unlimited 12/11 at 100.00 AA 3,148,652 Tax General Obligation Bonds, Series 2001, 5.375%, 12/01/21 1,000 Lakewood City School District, Cuyahoga County, Ohio, General 12/14 at 100.00 AAA 1,081,680 Obligation Bonds, Series 2004, 5.250%, 12/01/16 - FSA Insured 1,005 Marysville Exempted School District, Union County, Ohio, 12/15 at 100.00 AAA 1,049,511 General Obligation Bonds, Series 2006, 5.000%, 12/01/25 - FSA Insured 1,000 Middletown City School District, Butler County, Ohio, General 12/13 at 100.00 Aaa 1,034,670 Obligation Bonds, Series 2004, 5.000%, 12/01/25 - FGIC Insured 1,000 Ohio, General Obligation Bonds, Series 2005A, 5.000%, 9/01/16 3/15 at 100.00 AA+ 1,066,400 2,000 Ohio, General Obligation Higher Education Capital Facilities 2/11 at 100.00 AA+ 2,076,040 Bonds, Series 2001A, 5.000%, 2/01/20 1,900 Olentangy Local School District, Delaware and Franklin 6/14 at 100.00 AAA 2,030,587 Counties, Ohio, General Obligation Bonds, Series 2004A, 5.250%, 12/01/23 - FGIC Insured 1,275 Sycamore Community School District, Hamilton County, Ohio, 12/09 at 101.00 AAA 1,316,591 Unlimited Tax General Obligation School Improvement Bonds, Series 1999, 5.000%, 12/01/23 - MBIA Insured 2,415 Troy City School District, Miami County, Ohio, General Obligation 12/14 at 100.00 Aaa 2,502,230 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 Aaa 1,602,820 Limited Tax General Obligation Refunding Bonds, Series 2001, 5.500%, 12/01/17 - AMBAC Insured 1,500 Westerville City School District, Franklin and Delaware 6/11 at 100.00 AAA 1,532,490 Counties, Ohio, Various Purpose General Obligation Bonds, Series 2001, 5.000%, 12/01/27 - MBIA Insured - ------------------------------------------------------------------------------------------------------------------------------------ 23,635 Total Tax Obligation/General 24,815,008 - ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/LIMITED - 10.2% (6.9% OF TOTAL INVESTMENTS) 2,000 Franklin County, Ohio, Excise Tax and Lease Revenue 12/15 at 100.00 AAA 2,079,280 Anticipation Bonds, Convention Facilities Authority, Series 2005, 5.000%, 12/01/27 - AMBAC Insured 1,415 Hamilton County Convention Facilities Authority, Ohio, 6/14 at 100.00 AAA 1,472,081 First Lien Revenue Bonds, Series 2004, 5.000%, 12/01/21 - FGIC Insured 345 Ohio State Building Authority, State Facilities Bonds, 4/15 at 100.00 AAA 358,879 Administrative Building Fund Projects, Series 2005A, 5.000%, 4/01/25 - FSA Insured 46 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/LIMITED (continued) $ 1,000 Ohio State Building Authority, State Facilities Bonds, 4/15 at 100.00 AAA $ 1,043,150 Adult Correctional Building Fund Project, Series 2005A, 5.000%, 4/01/23 - FSA Insured 1,400 Virgin Islands Public Finance Authority, Gross Receipts Taxes 10/10 at 101.00 BBB 1,528,646 Loan Note, Series 1999A, 6.375%, 10/01/19 - ------------------------------------------------------------------------------------------------------------------------------------ 6,160 Total Tax Obligation/Limited 6,482,036 - ------------------------------------------------------------------------------------------------------------------------------------ TRANSPORTATION - 3.3% (2.2% OF TOTAL INVESTMENTS) 2,000 Ohio Turnpike Commission, Revenue Bonds, Series 2001A, 2/11 at 100.00 AA 2,104,700 5.500%, 2/15/26 - ------------------------------------------------------------------------------------------------------------------------------------ U.S. GUARANTEED - 33.5% (22.7% OF TOTAL INVESTMENTS) (4) 1,000 Franklin County, Ohio, Healthcare Facilities Revenue Bonds, 7/11 at 101.00 BBB (4) 1,145,210 Ohio Presbyterian Retirement Services, Series 2001A, 7.125%, 7/01/29 (Pre-refunded 7/01/11) Jackson City School District, Jackson County, Ohio, Unlimited Tax General Obligation School Improvement Bonds, Series 2001: 880 5.500%, 12/01/22 (Pre-refunded 6/01/11) - MBIA Insured 6/11 at 100.00 Aaa 947,654 935 5.500%, 12/01/23 (Pre-refunded 6/01/11) - MBIA Insured 6/11 at 100.00 Aaa 1,006,883 2,000 Lakota Local School District, Butler County, Ohio, Unlimited 6/11 at 100.00 Aaa 2,117,260 Tax General Obligation School Improvement and Refunding Bonds, Series 2001, 5.125%, 12/01/26 (Pre-refunded 6/01/11) - FGIC Insured 1,000 Medina City School District, Medina County, Ohio, Unlimited 12/09 at 100.00 AAA 1,046,060 Tax General Obligation School Building Construction Bonds, Series 1999, 5.250%, 12/01/28 (Pre-refunded 12/01/09) - FGIC Insured 1,000 Nordonia Hills City School District, Ohio, School Improvement 12/10 at 101.00 AAA 1,074,410 Bonds, Series 2000, 5.450%, 12/01/25 (Pre-refunded 12/01/10) - AMBAC Insured 1,000 Ohio Higher Educational Facilities Commission, Revenue Bonds, 12/10 at 101.00 AAA 1,076,400 University of Dayton, Series 2000, 5.500%, 12/01/25 (Pre-refunded 12/01/10) - AMBAC 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) 2,342,835 2,000 5.375%, 11/01/29 (Pre-refunded 11/01/08) 11/08 at 101.00 A- (4) 2,087,860 4,000 Puerto Rico Municipal Finance Agency, Series 1999A, 8/09 at 101.00 AAA 4,293,040 6.000%, 8/01/16 (Pre-refunded 8/01/09) - FSA Insured 1,850 Swanton Local School District, Fulton County, Ohio, General 12/11 at 101.00 AAA 1,993,245 Obligation Bonds, Series 2001, 5.250%, 12/01/25 (Pre-refunded 12/01/11) - FGIC Insured 2,000 University of Cincinnati, Ohio, General Receipts Bonds, 6/11 at 101.00 AAA 2,188,680 Series 2001A, 5.750%, 6/01/17 (Pre-refunded 6/01/11) - FGIC Insured - ------------------------------------------------------------------------------------------------------------------------------------ 19,915 Total U.S. Guaranteed 21,319,537 - ------------------------------------------------------------------------------------------------------------------------------------ UTILITIES - 10.4% (7.0% OF TOTAL INVESTMENTS) 1,440 American Municipal Power Ohio Inc., Wadsworth, Electric 2/12 at 100.00 Aaa 1,524,571 System Improvement Revenue Bonds, Series 2002, 5.250%, 2/15/17 - MBIA Insured 910 Lebanon, Ohio, Electric System Mortgage Revenue Bonds, 12/10 at 101.00 AAA 973,937 Series 2001, 5.500%, 12/01/18 - AMBAC Insured 2,000 Ohio Air Quality Development Authority, Revenue Refunding 5/09 at 101.00 AAA 2,064,460 Bonds, Ohio Power Company Project, Series 1999C, 5.150%, 5/01/26 - AMBAC Insured 1,000 Ohio Municipal Electric Generation Agency, Beneficial Interest 2/14 at 100.00 AAA 1,039,100 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 1,008,120 Revenue Bonds, Bay Shore Power, Series 1998A, 5.875%, 9/01/20 (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ 6,350 Total Utilities 6,610,188 - ------------------------------------------------------------------------------------------------------------------------------------ 47 Nuveen Ohio Dividend Advantage Municipal Fund (NXI) (continued) Portfolio of INVESTMENTS July 31, 2006 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ WATER AND SEWER - 6.6% (4.5% OF TOTAL INVESTMENTS) $ 1,700 Cincinnati, Ohio, Water System Revenue Bonds, Series 2001, 6/11 at 100.00 AA+ $ 1,771,825 5.125%, 12/01/21 2,375 Ohio Water Development Authority, Revenue Bonds, Water 12/13 at 100.00 Aaa 2,464,561 Development Community Assistance Program, Series 2003, 5.000%, 12/01/23 - MBIA Insured - ------------------------------------------------------------------------------------------------------------------------------------ 4,075 Total Water and Sewer 4,236,386 - ------------------------------------------------------------------------------------------------------------------------------------ $ 88,030 Total Long-Term Investments (cost $89,185,265) - 145.3% 92,552,389 =============----------------------------------------------------------------------------------------------------------------------- SHORT-TERM INVESTMENTS - 2.0% (1.4% OF TOTAL INVESTMENTS) 1,300 Puerto Rico Government Development Bank, Adjustable A-1 1,300,000 Refunding Bonds, Variable Rate Demand Obligations, Series 1985, 3.530%, 12/01/15 - MBIA Insured (5) $ 1,300 Total Short-Term Investments (cost $1,300,000) 1,300,000 =============----------------------------------------------------------------------------------------------------------------------- Total Investments (cost $90,485,265) - 147.3% 93,852,389 -------------------------------------------------------------------------------------------------------------------- Other Assets Less Liabilities - 1.3% 883,091 -------------------------------------------------------------------------------------------------------------------- Preferred Shares, at Liquidation Value - (48.6)% (31,000,000) -------------------------------------------------------------------------------------------------------------------- Net Assets Applicable to Common Shares - 100% $ 63,735,480 ====================================================================================================================
(1) All percentages shown in the Portfolio of Investments are based on net assets applicable to Common shares unless otherwise noted. (2) Optional Call Provisions (not covered by the report of independent registered public accounting firm): Dates (month and year) and prices of the earliest optional call or redemption. There may be other call provisions at varying prices at later dates. Certain mortgage-backed securities may be subject to periodic principal paydowns. (3) Ratings (not covered by the report of independent registered public accounting firm): Using the higher of Standard & Poor's or Moody's rating. Ratings below BBB by Standard & Poor's Group or Baa by Moody's Investor Service, Inc. are considered to be below investment grade. (4) Backed by an escrow or trust containing sufficient U.S. Government or U.S. Government agency securities which ensure the timely payment of principal and interest. Such investments are normally considered to be equivalent to AAA rated securities. (5) Investment has a maturity of more than one year, but has variable rate and demand features which qualify it as a short-term investment. The rate disclosed is that in effect at the end of the reporting period. This rate changes periodically based on market conditions or a specified market index. N/R Not rated. WI/DD Purchased on a when-issued or delayed delivery basis. See accompanying notes to financial statements. 48 Nuveen Ohio Dividend Advantage Municipal Fund 2 (NBJ) Portfolio of INVESTMENTS July 31, 2006
PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ CONSUMER STAPLES - 8.8% (5.8% OF TOTAL INVESTMENTS) $ 3,000 Ohio State Sewage and Solid Waste Disposal Facilities, 11/11 at 100.00 A+ $ 3,114,810 Revenue Bonds, Anheuser-Busch Project, Series 2001, 5.500%, 11/01/35 (Alternative Minimum Tax) 930 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 5/12 at 100.00 BBB 952,199 Asset-Backed Refunding Bonds, Series 2002, 5.375%, 5/15/33 - ------------------------------------------------------------------------------------------------------------------------------------ 3,930 Total Consumer Staples 4,067,009 - ------------------------------------------------------------------------------------------------------------------------------------ EDUCATION AND CIVIC ORGANIZATIONS - 11.6% (7.6% OF TOTAL INVESTMENTS) 1,345 Bowling Green State University, Ohio, General Receipts Bonds, 6/13 at 100.00 AAA 1,438,356 Series 2003, 5.250%, 6/01/18 - AMBAC Insured 200 Ohio Higher Education Facilities Commission, General Revenue 7/16 at 100.00 A+ 202,362 Bonds, Kenyon College, Series 2006, 5.000%, 7/01/41 (WI/DD, Settling 8/09/06) 1,050 Ohio Higher Educational Facilities Commission, Revenue Bonds, 12/11 at 100.00 Baa1 1,105,682 Wittenberg University, Series 2001, 5.500%, 12/01/15 250 Ohio Higher Educational Facilities Commission, Revenue Bonds, 5/16 at 100.00 Aaa 260,463 Xavier University, Series 2006, 5.000%, 5/01/22 - CIFG Insured 1,000 University of Cincinnati, Ohio, General Receipts Bonds, 6/13 at 100.00 AAA 1,038,910 Series 2003C, 5.000%, 6/01/22 - FGIC Insured 1,245 University of Cincinnati, Ohio, General Receipts Bonds, 6/14 at 100.00 AAA 1,304,474 Series 2004D, 5.000%, 6/01/19 - AMBAC Insured - ------------------------------------------------------------------------------------------------------------------------------------ 5,090 Total Education and Civic Organizations 5,350,247 - ------------------------------------------------------------------------------------------------------------------------------------ HEALTH CARE - 24.0% (15.7% OF TOTAL INVESTMENTS) 1,060 Akron, Bath and Copley Joint Township Hospital District, No Opt. Call Baa1 1,065,109 Ohio, Hospital Facilities Revenue Bonds, Summa Health System, Series 1998A, 5.000%, 11/15/08 1,000 Erie County, Ohio, Hospital Facilities Revenue Bonds, Firelands 8/12 at 101.00 A 1,044,590 Regional Medical Center, Series 2002A, 5.500%, 8/15/22 1,850 Lorain County, Ohio, Hospital Revenue Refunding and 10/11 at 101.00 AA- 1,944,165 Improvement 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- 234,032 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 714,140 Health Initiatives, Series 2004A, 5.000%, 5/01/30 2,000 Richland County, Ohio, Hospital Facilities Revenue 11/10 at 101.00 A- 2,151,020 Improvement Bonds, MedCentral Health System Obligated Group, Series 2000B, 6.375%, 11/15/30 3,670 Tuscarawas County, Ohio, Hospital Facilities Revenue Bonds, 10/11 at 101.00 AA 3,930,203 Union Hospital Project, Series 2001, 5.750%, 10/01/26 - RAAI Insured - ------------------------------------------------------------------------------------------------------------------------------------ 10,505 Total Health Care 11,083,259 - ------------------------------------------------------------------------------------------------------------------------------------ HOUSING/MULTIFAMILY - 2.3% (1.5% OF TOTAL INVESTMENTS) 1,000 Franklin County, Ohio, GNMA Collateralized Multifamily 5/12 at 102.00 Aaa 1,045,280 Housing Mortgage Revenue Bonds, Agler Project, Series 2002A, 5.550%, 5/20/22 (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ HOUSING/SINGLE FAMILY - 2.3% (1.5% OF TOTAL INVESTMENTS) 50 Ohio Housing Finance Agency, GNMA Mortgage-Backed 9/10 at 100.00 Aaa 50,939 Securities Program Residential Mortgage Revenue Bonds, Series 2001A, 5.500%, 9/01/34 (Alternative Minimum Tax) 1,000 Ohio Housing Finance Agency, Single Family Mortgage 9/15 at 100.00 Aaa 1,008,310 Revenue Bonds, Series 2006H, 5.000%, 9/01/31 (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ 1,050 Total Housing/Single Family 1,059,249 - ------------------------------------------------------------------------------------------------------------------------------------ 49 Nuveen Ohio Dividend Advantage Municipal Fund 2 (NBJ) (continued) Portfolio of INVESTMENTS July 31, 2006 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ LONG-TERM CARE - 2.1% (1.5% OF TOTAL INVESTMENTS) $ 1,000 Hamilton County, Ohio, Healthcare Facilities Improvement 10/08 at 102.00 BBB $ 1,030,780 Revenue Bonds, Twin Towers, Series 1999A, 5.800%, 10/01/23 - ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/GENERAL - 45.1% (29.6% OF TOTAL INVESTMENTS) 1,700 Butler County, Hamilton, Ohio, Limited Tax General Obligation 11/11 at 101.00 Aaa 1,751,816 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 1,062,340 1,000 5.000%, 12/01/22 - FSA Insured 6/14 at 100.00 AAA 1,040,340 2,605 Columbus City School District, Franklin County, Ohio, General 12/14 at 100.00 AAA 2,877,118 Obligation Bonds, Series 2004, 5.500%, 12/01/15 - FSA Insured 400 Cuyahoga County, Ohio, General Obligation Bonds, Series 2004, 12/14 at 100.00 AA+ 418,984 5.000%, 12/01/21 1,750 Fairfield City School District, Ohio, General Obligation Refunding 12/11 at 100.00 AAA 1,864,188 Bonds, Series 2001, 5.375%, 12/01/19 - FGIC Insured 1,065 Lakewood City School District, Cuyahoga County, Ohio, General 12/14 at 100.00 AAA 1,151,989 Obligation Bonds, Series 2004, 5.250%, 12/01/16 - FSA Insured 2,420 Lorain County, Ohio, Limited Tax General Obligation Justice 12/12 at 100.00 Aaa 2,607,163 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 1,049,511 General Obligation Bonds, Series 2006, 5.000%, 12/01/25 - FSA Insured 2,665 Newark City School District, Licking County, Ohio, General 12/15 at 100.00 AAA 2,770,641 Obligation Bonds, Series 2005, 5.000%, 12/01/28 - FGIC Insured 1,050 Olentangy Local School District, Delaware and Franklin 6/14 at 100.00 AAA 1,154,076 Counties, Ohio, General Obligation Bonds, Series 2004A, 5.500%, 12/01/15 - FGIC Insured 1,960 Portage County, Ohio, General Obligation Bonds, Series 2001, 12/11 at 100.00 AAA 2,025,797 5.000%, 12/01/25 - FGIC Insured 1,000 Powell, Ohio, General Obligation Bonds, Series 2002, 12/12 at 100.00 AAA 1,072,210 5.500%, 12/01/25 - FGIC Insured - ------------------------------------------------------------------------------------------------------------------------------------ 19,620 Total Tax Obligation/General 20,846,173 - ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/LIMITED - 15.6% (10.3% OF TOTAL INVESTMENTS) 250 Ohio State Building Authority, State Facilities Bonds, 4/15 at 100.00 AAA 260,058 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 1,043,150 Adult Correctional Building Fund Project, Series 2005A, 5.000%, 4/01/23 - FSA Insured 2,500 Ohio, State Appropriation Lease Bonds, Higher Education No Opt. Call AAA 2,636,950 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 1,154,469 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+ 1,069,080 Revenue Refunding Bonds, Series 2002E, 5.750%, 7/01/24 1,000 Summit County Port Authority, Ohio, Revenue Bonds, Civic 12/11 at 100.00 AAA 1,061,480 Theatre Project, Series 2001, 5.500%, 12/01/26 - AMBAC Insured - ------------------------------------------------------------------------------------------------------------------------------------ 6,845 Total Tax Obligation/Limited 7,225,187 - ------------------------------------------------------------------------------------------------------------------------------------ TRANSPORTATION - 7.9% (5.2% OF TOTAL INVESTMENTS) 3,495 Cleveland, Ohio, Airport System Revenue Bonds, Series 2000A, 1/10 at 101.00 AAA 3,649,968 5.250%, 1/01/18 - FSA Insured - ------------------------------------------------------------------------------------------------------------------------------------ U.S. GUARANTEED - 18.0% (11.8% OF TOTAL INVESTMENTS) (4) 1,000 Cleveland, Ohio, General Obligation Bonds, Series 2003, 8/13 at 100.00 AAA 1,083,600 5.250%, 8/01/18 (Pre-refunded 8/01/13) - FGIC Insured 1,000 Greater Cleveland Regional Transit Authority, Ohio, General 12/11 at 100.00 Aaa 1,063,270 Obligation Capital Improvement Bonds, Series 2001A, 5.125%, 12/01/21 (Pre-refunded 12/01/11) - MBIA Insured 50 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ U.S. GUARANTEED (4) (continued) $ 4,000 Lebanon City School District, Warren County, Ohio, General 12/11 at 100.00 AAA $ 4,324,879 Obligation Bonds, Series 2001, 5.500%, 12/01/21 (Pre-refunded 12/01/11) - FSA Insured 1,710 Marysville Exempted Village School District, Ohio, 6/15 at 100.00 AAA 1,864,328 Certificates of Participation, School Facilities Project, Series 2005, 5.250%, 12/01/21 (Pre-refunded 6/01/15) - MBIA Insured - ------------------------------------------------------------------------------------------------------------------------------------ 7,710 Total U.S. Guaranteed 8,336,077 - ------------------------------------------------------------------------------------------------------------------------------------ UTILITIES - 9.1% (6.0% OF TOTAL INVESTMENTS) 2,500 Ohio Air Quality Development Authority, Revenue Refunding 5/09 at 101.00 AAA 2,580,575 Bonds, Ohio Power Company Project, Series 1999C, 5.150%, 5/01/26 - AMBAC Insured 595 Ohio Municipal Electric Generation Agency, Beneficial 2/14 at 100.00 AAA 619,817 Interest 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 9/08 at 102.00 N/R 1,008,120 Revenue Bonds, Bay Shore Power, Series 1998A, 5.875%, 9/01/20 (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ 4,095 Total Utilities 4,208,512 - ------------------------------------------------------------------------------------------------------------------------------------ WATER AND SEWER - 3.4% (2.2% OF TOTAL INVESTMENTS) 1,500 Ohio Water Development Authority, Revenue Bonds, 12/11 at 100.00 AAA 1,559,625 Fresh Water Development, Series 2001A, 5.000%, 12/01/21 - FSA Insured - ------------------------------------------------------------------------------------------------------------------------------------ $ 65,840 Total Long-Term Investments (cost $67,511,838) - 150.2% 69,461,366 =============----------------------------------------------------------------------------------------------------------------------- SHORT-TERM INVESTMENTS - 2.1% (1.3% OF TOTAL INVESTMENTS) 950 Puerto Rico Government Development Bank, Adjustable No Opt. Call A-1 950,000 Refunding Bonds, Variable Rate Demand Obligations, Series 1985, 3.530%, 12/01/15 - MBIA Insured (5) - ------------------------------------------------------------------------------------------------------------------------------------ $ 950 Total Short-Term Investments (cost $950,000) 950,000 =============----------------------------------------------------------------------------------------------------------------------- Total Investments (cost $68,461,838) - 152.3% 70,411,366 -------------------------------------------------------------------------------------------------------------------- Other Assets Less Liabilities - (0.4)% (168,921) -------------------------------------------------------------------------------------------------------------------- Preferred Shares, at Liquidation Value - (51.9)% (24,000,000) -------------------------------------------------------------------------------------------------------------------- Net Assets Applicable to Common Shares - 100% $ 46,242,445 ====================================================================================================================
(1) All percentages shown in the Portfolio of Investments are based on net assets applicable to Common shares unless otherwise noted. (2) Optional Call Provisions (not covered by the report of independent registered public accounting firm): Dates (month and year) and prices of the earliest optional call or redemption. There may be other call provisions at varying prices at later dates. Certain mortgage-backed securities may be subject to periodic principal paydowns. (3) Ratings (not covered by the report of independent registered public accounting firm): Using the higher of Standard & Poor's or Moody's rating. Ratings below BBB by Standard & Poor's Group or Baa by Moody's Investor Service, Inc. are considered to be below investment grade. (4) Backed by an escrow or trust containing sufficient U.S. Government or U.S. Government agency securities which ensure the timely payment of principal and interest. (5) Investment has a maturity of more than one year, but has variable rate and demand features which qualify it as a short-term investment. The rate disclosed is that in effect at the end of the reporting period. This rate changes periodically based on market conditions or a specified market index. N/R Not rated. WI/DD Purchased on a when-issued or delayed delivery basis. See accompanying notes to financial statements. 51 Nuveen Ohio Dividend Advantage Municipal Fund 3 (NVJ) Portfolio of INVESTMENTS July 31, 2006
PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ CONSUMER STAPLES - 6.3% (4.2% OF TOTAL INVESTMENTS) $ 2,000 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 5/12 at 100.00 BBB $ 2,047,740 Asset-Backed Refunding Bonds, Series 2002, 5.375%, 5/15/33 - ------------------------------------------------------------------------------------------------------------------------------------ EDUCATION AND CIVIC ORGANIZATIONS - 12.4% (8.2% OF TOTAL INVESTMENTS) 150 Ohio Higher Education Facilities Commission, General 7/16 at 100.00 A+ 151,772 Revenue Bonds, Kenyon College, Series 2006, 5.000%, 7/01/41 (WI/DD, Settling 8/09/06) 2,000 Ohio Higher Education Facilities Commission, Revenue 10/12 at 100.00 AA- 2,148,840 Bonds, Case Western Reserve University, Series 2002B, 5.500%, 10/01/22 1,125 Ohio Higher Education Facilities Commission, Revenue 5/12 at 100.00 A2 1,217,239 Bonds, Ohio Northern University, Series 2002, 5.750%, 5/01/16 500 Ohio Higher Education Facilities Commission, Revenue 12/15 at 100.00 Baa1 503,115 Bonds, Wittenberg University, Series 2005, 5.000%, 12/01/24 - ------------------------------------------------------------------------------------------------------------------------------------ 3,775 Total Education and Civic Organizations 4,020,966 - ------------------------------------------------------------------------------------------------------------------------------------ HEALTH CARE - 15.9% (10.6% OF TOTAL INVESTMENTS) 530 Akron, Bath and Copley Joint Township Hospital District, No Opt. Call Baa1 532,555 Ohio, Hospital Facilities Revenue Bonds, Summa Health System, Series 1998A, 5.000%, 11/15/08 1,750 Erie County, Ohio, Hospital Facilities Revenue Bonds, 8/12 at 101.00 A 1,828,033 Firelands Regional Medical Center, Series 2002A, 5.500%, 8/15/22 160 Miami County, Ohio, Hospital Facilities Revenue Refunding 5/16 at 100.00 A- 166,422 Bonds, Upper Valley Medical Center Inc., Series 2006, 5.250%, 5/15/21 1,000 Montgomery County, Ohio, Revenue Bonds, Catholic Health 9/11 at 100.00 AA 1,066,360 Initiatives, Series 2001, 5.500%, 9/01/12 500 Montgomery County, Ohio, Revenue Bonds, Catholic Health 5/14 at 100.00 AA 510,100 Initiatives, Series 2004A, 5.000%, 5/01/30 1,000 Richland County, Ohio, Hospital Facilities Revenue 11/10 at 101.00 A- 1,075,510 Improvement Bonds, MedCentral Health System Obligated Group, Series 2000B, 6.375%, 11/15/30 - ------------------------------------------------------------------------------------------------------------------------------------ 4,940 Total Health Care 5,178,980 - ------------------------------------------------------------------------------------------------------------------------------------ HOUSING/SINGLE FAMILY - 4.4% (2.9% OF TOTAL INVESTMENTS) 220 Ohio Housing Finance Agency, GNMA Mortgage-Backed 8/10 at 100.00 Aaa 220,486 Securities Program Residential Mortgage Revenue Bonds, Series 2000C, 6.050%, 3/01/32 (Alternative Minimum Tax) 655 Ohio Housing Finance Agency, GNMA Mortgage-Backed 8/10 at 100.00 Aaa 664,334 Securities Program Residential Mortgage Revenue Bonds, Series 2000D, 5.450%, 9/01/31 (Alternative Minimum Tax) 45 Ohio Housing Finance Agency, GNMA Mortgage-Backed 8/10 at 100.00 Aaa 45,629 Securities Program Residential Mortgage Revenue Bonds, Series 2000F, 5.625%, 9/01/16 500 Ohio Housing Finance Agency, Single Family Mortgage 9/15 at 100.00 Aaa 504,155 Revenue Bonds, Series 2006H, 5.000%, 9/01/31 (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ 1,420 Total Housing/Single Family 1,434,604 - ------------------------------------------------------------------------------------------------------------------------------------ LONG-TERM CARE - 1.7% (1.1% OF TOTAL INVESTMENTS) 500 Hamilton County, Ohio, Healthcare Facilities Improvement 10/08 at 102.00 BBB 515,995 Revenue Bonds, Twin Towers, Series 1999A, 5.750%, 10/01/19 - ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/GENERAL - 41.7% (27.8% OF TOTAL INVESTMENTS) 2,000 Canal Winchester Local School District, Franklin and Fairfield 12/08 at 102.00 AAA 2,084,740 Counties, Ohio, Unlimited Tax General Obligation School Improvement Bonds, Series 1998, 5.300%, 12/01/25 - FGIC Insured 300 Cuyahoga County, Ohio, General Obligation Bonds, 12/14 at 100.00 AA+ 314,238 Series 2004, 5.000%, 12/01/21 52 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/GENERAL (continued) $ 1,475 Eaton City School District, Preble County, Ohio, General 12/12 at 101.00 Aaa $ 1,624,580 Obligation Bonds, Series 2002, 5.750%, 12/01/21 - FGIC Insured 2,000 Granville Exempt Village School District, Ohio, General 12/11 at 100.00 Aa2 2,118,060 Obligation Bonds, Series 2001, 5.500%, 12/01/28 1,000 Kenston Local School District, Geauga County, Ohio, General 6/13 at 100.00 Aaa 1,039,750 Obligation Bonds, Series 2003, 5.000%, 12/01/22 - MBIA Insured 1,270 Lorain, Ohio, General Obligation Bonds, Series 2002, 12/12 at 100.00 Aaa 1,320,190 5.125%, 12/01/26 - AMBAC Insured 500 Marysville Exempted School District, Union County, Ohio, 12/15 at 100.00 AAA 522,145 General Obligation Bonds, Series 2006, 5.000%, 12/01/25 - FSA Insured 1,190 Miami East Local School District, Miami County, Ohio, 12/12 at 100.00 AAA 1,239,230 General Obligation Bonds, Series 2002, 5.125%, 12/01/29 - FSA Insured 1,000 Ohio, Common Schools Capital Facilities, General Obligation 9/11 at 100.00 AA+ 1,042,140 Bonds, Series 2001B, 5.000%, 9/15/20 1,000 Olentangy Local School District, Delaware and Franklin 6/14 at 100.00 AAA 1,069,410 Counties, Ohio, General Obligation Bonds, Series 2004A, 5.250%, 12/01/21 - FGIC Insured 1,130 Solon, Ohio, General Obligation Refunding and Improvement 12/12 at 100.00 AA+ 1,189,054 Bonds, Series 2002, 5.000%, 12/01/18 - ------------------------------------------------------------------------------------------------------------------------------------ 12,865 Total Tax Obligation/General 13,563,537 - ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/LIMITED - 21.3% (14.2% OF TOTAL INVESTMENTS) 1,000 Midview Local School District, Lorain County, Ohio, 5/13 at 100.00 A 1,017,980 Certificates of Participation, Series 2003, 5.000%, 11/01/30 1,250 Ohio State Building Authority, State Facilities Bonds, 4/12 at 100.00 AAA 1,341,213 Administrative Building Fund Projects, Series 2002A, 5.500%, 4/01/18 - FSA Insured 200 Ohio State Building Authority, State Facilities Bonds, 4/15 at 100.00 AAA 208,046 Administrative Building Fund Projects, Series 2005A, 5.000%, 4/01/25 - FSA Insured 2,000 Ohio, State Appropriation Lease Bonds, Higher Education No Opt. Call AAA 2,109,560 Capital Facilities, Series 2002A-II, 5.500%, 12/01/09 - MBIA Insured 2,000 Puerto Rico Public Buildings Authority, Guaranteed No Opt. Call AAA 2,253,920 Government Facilities Revenue Bonds, Series 1993L, 5.500%, 7/01/21 - FSA Insured - ------------------------------------------------------------------------------------------------------------------------------------ 6,450 Total Tax Obligation/Limited 6,930,719 - ------------------------------------------------------------------------------------------------------------------------------------ TRANSPORTATION - 9.0% (6.0% OF TOTAL INVESTMENTS) 1,140 Columbus Municipal Airport Authority, Ohio, Airport No Opt. Call AAA 1,202,084 Improvement Revenue Bonds, Port Columbus International Airport Project, Series 1998B, 5.250%, 1/01/11 - AMBAC Insured 1,550 Ohio Turnpike Commission, Revenue Bonds, Series 1998A, No Opt. Call AAA 1,738,031 5.500%, 2/15/18 - FGIC Insured - ------------------------------------------------------------------------------------------------------------------------------------ 2,690 Total Transportation 2,940,115 - ------------------------------------------------------------------------------------------------------------------------------------ U.S. GUARANTEED - 27.8% (18.5% OF TOTAL INVESTMENTS) (4) 1,000 Akron, Ohio, Sanitary Sewer System Revenue Refunding 12/06 at 101.00 AAA 1,016,170 Bonds, Series 1997, 5.550%, 12/01/16 (Pre-refunded 12/01/06) - MBIA Insured 1,500 Hamilton County, Ohio, Sewer System Revenue Refunding 12/11 at 100.00 AAA 1,603,875 and Improvement Bonds, Metropolitan Sewer District of Greater Cincinnati, Series 2001A, 5.250%, 12/01/18 (Pre-refunded 12/01/11) - MBIA Insured 1,000 Hilliard, Ohio, General Obligation Bonds, Series 2002, 12/12 at 100.00 AA- (4) 1,086,400 5.375%, 12/01/22 (Pre-refunded 12/01/12) 1,425 Montgomery County, Ohio, Hospital Facilities Revenue Bonds, 4/10 at 101.00 A (4) 1,577,090 Kettering Medical Center, Series 1999, 6.750%, 4/01/18 (Pre-refunded 4/01/10) 1,000 Ohio State University, General Receipts Bonds, Series 1999A, 12/09 at 101.00 AA (4) 1,071,960 5.800%, 12/01/29 (Pre-refunded 12/01/09) 1,000 Parma Community General Hospital Association, Ohio, Hospital 11/08 at 101.00 A- (4) 1,043,930 Revenue Refunding and Improvement Bonds, Series 1998, 5.375%, 11/01/29 (Pre-refunded 11/01/08) 53 Nuveen Ohio Dividend Advantage Municipal Fund 3 (NVJ) (continued) Portfolio of INVESTMENTS July 31, 2006 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ U.S. GUARANTEED (4) (continued) $ 1,535 Pickerington Local School District, Fairfield and Franklin 12/11 at 100.00 AAA $ 1,641,299 Counties, Ohio, General Obligation Bonds, School Facilities Construction and Improvement, Series 2001, 5.250%, 12/01/20 (Pre-refunded 12/01/11) -FGIC Insured - ------------------------------------------------------------------------------------------------------------------------------------ 8,460 Total U.S. Guaranteed 9,040,724 - ------------------------------------------------------------------------------------------------------------------------------------ UTILITIES - 4.9% (3.3% OF TOTAL INVESTMENTS) 1,500 American Municipal Power Ohio Inc., Wadsworth, Electric 2/12 at 100.00 Aaa 1,588,095 System Improvement Revenue Bonds, Series 2002, 5.250%, 2/15/17 - MBIA Insured - ------------------------------------------------------------------------------------------------------------------------------------ WATER AND SEWER - 4.8% (3.2% OF TOTAL INVESTMENTS) 1,500 Ohio Water Development Authority, Revenue Bonds, Fresh 12/11 at 100.00 AAA 1,559,623 Water Development, Series 2001A, 5.000%, 12/01/21 - FSA Insured - ------------------------------------------------------------------------------------------------------------------------------------ $ 46,100 Total Investments (cost $46,818,581) - 150.2% 48,821,098 =============----------------------------------------------------------------------------------------------------------------------- Other Assets Less Liabilities - 0.6% 185,260 -------------------------------------------------------------------------------------------------------------------- Preferred Shares, at Liquidation Value - (50.8)% (16,500,000) -------------------------------------------------------------------------------------------------------------------- Net Assets Applicable to Common Shares - 100% $ 32,506,358 ====================================================================================================================
FORWARD SWAPS OUTSTANDING AT JULY 31, 2006:
FIXED RATE FLOATING RATE PAID FIXED RATE RECEIVED FLOATING RATE UNREALIZED NOTIONAL BY THE FUND PAYMENT BY THE FUND PAYMENT EFFECTIVE TERMINATION APPRECIATION COUNTERPARTY AMOUNT (ANNUALIZED) FREQUENCY BASED ON FREQUENCY DATE (5) DATE (DEPRECIATION) -------------------------------------------------------------------------------------------------------------------------------- Goldman Sachs $3,600,000 5.682% Semi-Annually 3 month USD-LIBOR Quarterly 7/10/07 7/10/12 $(36,792) Goldman Sachs 1,100,000 5.803 Semi-Annually 3 month USD-LIBOR Quarterly 7/10/07 7/10/37 21,779 -------------------------------------------------------------------------------------------------------------------------------- $(15,013) ================================================================================================================================ USD-LIBOR (United States Dollar-London Inter-Bank Offered Rates)
FUTURES CONTRACTS OUTSTANDING AT JULY 31, 2006: UNREALIZED CONTRACT NUMBER OF CONTRACT ORIGINAL VALUE AT APPRECIATION TYPE POSITION CONTRACTS EXPIRATION VALUE JULY 31, 2006 (DEPRECIATION) -------------------------------------------------------------------------------------------------------------------------------- U.S 10-Year Treasury Notes Long 17 9/06 $1,779,207 $1,802,531 $23,324 ================================================================================================================================
(1) All percentages shown in the Portfolio of Investments are based on net assets applicable to Common shares unless otherwise noted. (2) Optional Call Provisions (not covered by the report of independent registered public accounting firm): Dates (month and year) and prices of the earliest optional call or redemption. There may be other call provisions at varying prices at later dates. Certain mortgage-backed securities may be subject to periodic principal paydowns. (3) Ratings (not covered by the report of independent registered public accounting firm): Using the higher of Standard & Poor's or Moody's rating. Ratings below BBB by Standard & Poor's Group or Baa by Moody's Investor Service, Inc. are considered to be below investment grade. (4) Backed by an escrow or trust containing sufficient U.S. Government or U.S. Government agency securities which ensure the timely payment of principal and interest. Such investments are normally considered to be equivalent to AAA rated securities. (5) Effective date represents the date on which both the Fund and counterparty commence interest payment accruals on each forward swap contract. WI/DD Purchased on a when-issued or delayed delivery basis. See accompanying notes to financial statements. 54 Statement of ASSETS AND LIABILITIES July 31, 2006
MICHIGAN MICHIGAN MICHIGAN QUALITY PREMIUM DIVIDEND INCOME INCOME ADVANTAGE (NUM) (NMP) (NZW) - ------------------------------------------------------------------------------------------------------------------------------------ ASSETS Investments, at value (cost $261,718,216, $165,840,098 and $45,209,031, respectively) $274,844,989 $172,445,953 $47,115,217 Cash -- 696,658 227,984 Deposits with brokers for open futures contracts -- -- -- Receivables: Interest 3,085,736 2,181,089 547,711 Investments sold 488,480 -- -- Variation margin on futures contracts -- -- -- Other assets 20,939 10,820 2,603 - ------------------------------------------------------------------------------------------------------------------------------------ Total assets 278,440,144 175,334,520 47,893,515 - ------------------------------------------------------------------------------------------------------------------------------------ LIABILITIES Cash overdraft 856,149 -- -- Payable for investments purchased 5,607,030 3,568,110 1,019,460 Unrealized depreciation on forward swaps -- -- 23,573 Accrued expenses: Management fees 144,705 92,083 13,385 Other 68,334 40,638 7,648 Preferred share dividends payable 30,182 22,336 6,354 - ------------------------------------------------------------------------------------------------------------------------------------ Total liabilities 6,706,400 3,723,167 1,070,420 - ------------------------------------------------------------------------------------------------------------------------------------ Preferred shares, at liquidation value 94,000,000 56,000,000 16,000,000 - ------------------------------------------------------------------------------------------------------------------------------------ Net assets applicable to Common shares $177,733,744 $115,611,353 $30,823,095 ==================================================================================================================================== Common shares outstanding 11,714,953 7,751,048 2,063,804 ==================================================================================================================================== Net asset value per Common share outstanding (net assets applicable to Common shares, divided by Common shares outstanding) $ 15.17 $ 14.92 $ 14.94 ==================================================================================================================================== NET ASSETS APPLICABLE TO COMMON SHARES CONSIST OF: - ------------------------------------------------------------------------------------------------------------------------------------ Common shares, $.01 par value per share $ 117,150 $ 77,510 $ 20,638 Paid-in surplus 163,946,943 108,392,808 29,227,559 Undistributed (Over-distribution of) net investment income 209,079 220,559 80,490 Accumulated net realized gain (loss) from investments and derivative transactions 333,799 314,621 (388,205) Net unrealized appreciation (depreciation) of investments and derivative transactions 13,126,773 6,605,855 1,882,613 - ------------------------------------------------------------------------------------------------------------------------------------ Net assets applicable to Common shares $177,733,744 $115,611,353 $30,823,095 ==================================================================================================================================== Authorized shares: Common 200,000,000 200,000,000 Unlimited Preferred 1,000,000 1,000,000 Unlimited ====================================================================================================================================
See accompanying notes to financial statements. 55 Statement of ASSETS AND LIABILITIES July 31, 2006 (continued)
OHIO OHIO OHIO OHIO QUALITY DIVIDEND DIVIDEND DIVIDEND INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3 (NUO) (NXI) (NBJ) (NVJ) - ------------------------------------------------------------------------------------------------------------------------------------ ASSETS Investments, at value (cost $224,947,699, $90,485,265, $68,461,838 and $46,818,581, respectively) $233,025,840 $93,852,389 $70,411,366 $48,821,098 Cash -- 98,947 -- -- Deposits with brokers for open futures contracts -- -- -- 43,735 Receivables: Interest 2,710,518 1,148,061 736,996 587,433 Investments sold 15,000 -- -- -- Variation margin on futures contracts -- -- -- 531 Other assets 22,488 169 2,645 88 - ------------------------------------------------------------------------------------------------------------------------------------ Total assets 235,773,846 95,099,566 71,151,007 49,452,885 - ------------------------------------------------------------------------------------------------------------------------------------ LIABILITIES Cash overdraft 1,824,791 -- 676,702 245,738 Payable for investments purchased 705,397 302,313 201,542 151,157 Unrealized depreciation on forward swaps -- -- -- 15,013 Accrued expenses: Management fees 124,575 31,104 20,078 14,009 Other 59,765 15,294 8,208 10,845 Preferred share dividends payable 33,734 15,375 2,032 9,765 - ------------------------------------------------------------------------------------------------------------------------------------ Total liabilities 2,748,262 364,086 908,562 446,527 - ------------------------------------------------------------------------------------------------------------------------------------ Preferred shares, at liquidation value 77,000,000 31,000,000 24,000,000 16,500,000 - ------------------------------------------------------------------------------------------------------------------------------------ Net assets applicable to Common shares $156,025,584 $63,735,480 $46,242,445 $32,506,358 ==================================================================================================================================== Common shares outstanding 9,746,032 4,242,916 3,121,477 2,158,239 ==================================================================================================================================== Net asset value per Common share outstanding (net assets applicable to Common shares, divided by Common shares outstanding) $ 16.01 $ 15.02 $ 14.81 $ 15.06 ==================================================================================================================================== NET ASSETS APPLICABLE TO COMMON SHARES CONSIST OF: - ------------------------------------------------------------------------------------------------------------------------------------ Common shares, $.01 par value per share $ 97,460 $ 42,429 $ 31,215 $ 21,582 Paid-in surplus 147,811,741 60,251,477 44,255,652 30,537,824 Undistributed (Over-distribution of) net investment income (13,360) (7,440) (59,814) (56,331) Accumulated net realized gain (loss) from investments and derivative transactions 51,602 81,890 65,864 (7,545) Net unrealized appreciation (depreciation) of investments and derivative transactions 8,078,141 3,367,124 1,949,528 2,010,828 - ------------------------------------------------------------------------------------------------------------------------------------ Net assets applicable to Common shares $156,025,584 $63,735,480 $46,242,445 $32,506,358 ==================================================================================================================================== Authorized shares: Common 200,000,000 Unlimited Unlimited Unlimited Preferred 1,000,000 Unlimited Unlimited Unlimited ====================================================================================================================================
See accompanying notes to financial statements. 56 Statement of OPERATIONS Year Ended July 31, 2006
MICHIGAN MICHIGAN MICHIGAN QUALITY PREMIUM DIVIDEND INCOME INCOME ADVANTAGE (NUM) (NMP) (NZW) - ------------------------------------------------------------------------------------------------------------------------------------ INVESTMENT INCOME $13,389,422 $ 8,478,869 $2,259,229 - ------------------------------------------------------------------------------------------------------------------------------------ EXPENSES Management fees 1,735,268 1,102,239 301,964 Preferred shares - auction fees 233,172 138,924 39,693 Preferred shares - dividend disbursing agent fees 20,849 20,493 10,000 Shareholders' servicing agent fees and expenses 27,404 20,660 923 Custodian's fees and expenses 81,439 45,249 17,129 Directors'/Trustees' fees and expenses 5,742 3,675 1,051 Professional fees 19,231 15,598 11,123 Shareholders' reports - printing and mailing expenses 36,901 19,166 9,392 Stock exchange listing fees 10,158 10,125 175 Investor relations expense 29,903 18,042 7,308 Other expenses 25,398 12,778 11,085 - ------------------------------------------------------------------------------------------------------------------------------------ Total expenses before custodian fee credit and expense reimbursement 2,225,465 1,406,949 409,843 Custodian fee credit (24,174) (10,196) (7,817) Expense reimbursement -- -- (141,706) - ------------------------------------------------------------------------------------------------------------------------------------ Net expenses 2,201,291 1,396,753 260,320 - ------------------------------------------------------------------------------------------------------------------------------------ Net investment income 11,188,131 7,082,116 1,998,909 - ------------------------------------------------------------------------------------------------------------------------------------ REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) from investments 879,750 522,482 25,827 Net realized gain (loss) from forward swaps -- -- 36,525 Change in net unrealized appreciation (depreciation) of investments (6,894,595) (3,676,369) (863,821) Change in net unrealized appreciation (depreciation) of futures -- -- -- Change in net unrealized appreciation (depreciation) of forward swaps -- -- (18,351) - ------------------------------------------------------------------------------------------------------------------------------------ Net realized and unrealized gain (loss) (6,014,845) (3,153,887) (819,820) - ------------------------------------------------------------------------------------------------------------------------------------ DISTRIBUTIONS TO PREFERRED SHAREHOLDERS From net investment income (2,438,505) (1,425,891) (422,322) From accumulated net realized gains (204,993) (177,593) -- - ------------------------------------------------------------------------------------------------------------------------------------ Decrease in net assets applicable to Common shares from distributions to Preferred shareholders (2,643,498) (1,603,484) (422,322) - ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets applicable to Common shares from operations $ 2,529,788 $ 2,324,745 $ 756,767 ====================================================================================================================================
See accompanying notes to financial statements. 57 Statement of OPERATIONS Year Ended July 31, 2006 (continued)
OHIO OHIO OHIO OHIO QUALITY DIVIDEND DIVIDEND DIVIDEND INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3 (NUO) (NXI) (NBJ) (NVJ) - ------------------------------------------------------------------------------------------------------------------------------------ INVESTMENT INCOME $11,448,549 $ 4,559,679 $ 3,271,728 $2,319,886 - ------------------------------------------------------------------------------------------------------------------------------------ EXPENSES Management fees 1,487,460 610,911 453,346 316,083 Preferred shares - auction fees 191,022 76,861 59,497 40,932 Preferred shares - dividend disbursing agent fees 30,000 10,000 10,000 10,000 Shareholders' servicing agent fees and expenses 29,979 1,496 1,372 1,137 Custodian's fees and expenses 69,629 26,575 22,781 15,217 Directors'/Trustees' fees and expenses 4,688 2,053 1,552 1,080 Professional fees 16,585 12,791 11,956 11,244 Shareholders' reports - printing and mailing expenses 16,854 14,686 12,086 9,464 Stock exchange listing fees 10,204 360 265 184 Investor relations expense 24,267 13,478 8,878 6,478 Other expenses 17,379 13,015 12,571 10,859 - ------------------------------------------------------------------------------------------------------------------------------------ Total expenses before custodian fee credit and expense reimbursement 1,898,067 782,226 594,304 422,678 Custodian fee credit (20,289) (17,570) (14,044) (6,641) Expense reimbursement -- (270,876) (212,746) (148,332) - ------------------------------------------------------------------------------------------------------------------------------------ Net expenses 1,877,778 493,780 367,514 267,705 - ------------------------------------------------------------------------------------------------------------------------------------ Net investment income 9,570,771 4,065,899 2,904,214 2,052,181 - ------------------------------------------------------------------------------------------------------------------------------------ REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) from investments 61,521 104,619 135,984 (2,845) Net realized gain (loss) from forward swaps -- -- -- -- Change in net unrealized appreciation (depreciation) of investments (4,237,619) (1,806,156) (1,423,071) (991,042) Change in net unrealized appreciation (depreciation) of futures -- -- -- 23,324 Change in net unrealized appreciation (depreciation) of forward swaps -- -- -- (15,013) - ------------------------------------------------------------------------------------------------------------------------------------ Net realized and unrealized gain (loss) (4,176,098) (1,701,537) (1,287,087) (985,576) - ------------------------------------------------------------------------------------------------------------------------------------ DISTRIBUTIONS TO PREFERRED SHAREHOLDERS From net investment income (2,099,203) (876,328) (671,536) (464,277) From accumulated net realized gains (76,287) (18,836) (22,844) -- - ------------------------------------------------------------------------------------------------------------------------------------ Decrease in net assets applicable to Common shares from distributions to Preferred shareholders (2,175,490) (895,164) (694,380) (464,277) - ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets applicable to Common shares from operations $ 3,219,183 $ 1,469,198 $ 922,747 $ 602,328 ====================================================================================================================================
See accompanying notes to financial statements. 58 Statement of CHANGES IN NET ASSETS
MICHIGAN MICHIGAN MICHIGAN QUALITY INCOME (NUM) PREMIUM INCOME (NMP) DIVIDEND ADVANTAGE (NZW) ------------------------------ ----------------------------- --------------------------- YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED 7/31/06 7/31/05 7/31/06 7/31/05 7/31/06 7/31/05 - ------------------------------------------------------------------------------------------------------------------------------------ OPERATIONS Net investment income $ 11,188,131 $ 11,434,474 $ 7,082,116 $ 7,216,850 $ 1,998,909 $ 2,018,904 Net realized gain (loss) from investments 879,750 1,581,756 522,482 1,197,250 25,827 129,220 Net realized gain (loss) from forward swaps -- -- -- -- 36,525 (496,596) Change in net unrealized appreciation (depreciation) of investments (6,894,595) 4,992,452 (3,676,369) 2,658,205 (863,821) 1,604,711 Change in net unrealized appreciation (depreciation) of futures -- -- -- -- -- -- Change in net unrealized appreciation (depreciation) of forward swaps -- -- -- -- (18,351) 59,406 Distributions to Preferred Shareholders: From net investment income (2,438,505) (1,477,435) (1,425,891) (885,902) (422,322) (229,801) From accumulated net realized gains (204,993) (81,692) (177,593) (11,575) -- -- - ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets applicable to Common shares from operations 2,529,788 16,449,555 2,324,745 10,174,828 756,767 3,085,844 - ------------------------------------------------------------------------------------------------------------------------------------ DISTRIBUTIONS TO COMMON SHAREHOLDERS From net investment income (9,516,815) (10,880,505) (6,136,157) (7,012,719) (1,790,433) (1,842,204) From accumulated net realized gains (1,317,932) (1,296,599) (1,135,132) (357,099) -- -- - ------------------------------------------------------------------------------------------------------------------------------------ Decrease in net assets applicable to Common shares from distributions to Common shareholders (10,834,747) (12,177,104) (7,271,289) (7,369,818) (1,790,433) (1,842,204) - ------------------------------------------------------------------------------------------------------------------------------------ CAPITAL SHARE TRANSACTIONS Net proceeds from Common shares issued to shareholders due to reinvestment of distributions 139,063 513,084 83,158 140,855 36,099 24,803 Preferred shares offering costs -- -- -- -- -- 13,775 - ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets applicable to Common shares from capital share transactions 139,063 513,084 83,158 140,855 36,099 38,578 - ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets applicable to Common shares (8,165,896) 4,785,535 (4,863,386) 2,945,865 (997,567) 1,282,218 Net assets applicable to Common shares at the beginning of year 185,899,640 181,114,105 120,474,739 117,528,874 31,820,662 30,538,444 - ------------------------------------------------------------------------------------------------------------------------------------ Net assets applicable to Common shares at the end of year $177,733,744 $185,899,640 $115,611,353 $120,474,739 $30,823,095 $31,820,662 ==================================================================================================================================== Undistributed (Over-distribution of) net investment income at the end of year $ 209,079 $ 990,736 $ 220,559 $ 703,684 $ 80,490 $ 294,336 ====================================================================================================================================
See accompanying notes to financial statements. 59 Statement of CHANGES IN NET ASSETS (continued)
OHIO OHIO OHIO QUALITY INCOME (NUO) DIVIDEND ADVANTAGE (NXI) DIVIDEND ADVANTAGE 2 (NBJ) ------------------------------ ----------------------------- --------------------------- YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED 7/31/06 7/31/05 7/31/06 7/31/05 7/31/06 7/31/05 - ------------------------------------------------------------------------------------------------------------------------------------ OPERATIONS Net investment income $ 9,570,771 $ 9,930,851 $ 4,065,899 $ 4,243,742 $ 2,904,214 $ 2,953,831 Net realized gain (loss) from investments 61,521 795,602 104,619 285,990 135,984 218,487 Net realized gain (loss) from forward swaps -- -- -- -- -- -- Change in net unrealized appreciation (depreciation) of investments (4,237,619) 3,879,996 (1,806,156) 2,106,549 (1,423,071) 1,685,657 Change in net unrealized appreciation (depreciation) of futures -- -- -- -- -- -- Change in net unrealized appreciation (depreciation) of forward swaps -- -- -- -- -- -- Distributions to Preferred Shareholders: From net investment income (2,099,203) (1,186,754) (876,328) (473,047) (671,536) (377,637) From accumulated net realized gains (76,287) (14,809) (18,836) -- (22,844) (3,841) - ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets applicable to Common shares from operations 3,219,183 13,404,886 1,469,198 6,163,234 922,747 4,476,497 - ------------------------------------------------------------------------------------------------------------------------------------ DISTRIBUTIONS TO COMMON SHAREHOLDERS From net investment income (8,294,392) (9,486,568) (3,585,882) (4,050,053) (2,505,800) (2,813,531) From accumulated net realized gains (528,190) (345,280) (142,845) -- (149,733) (65,438) - ------------------------------------------------------------------------------------------------------------------------------------ Decrease in net assets applicable to Common shares from distributions to Common shareholders (8,822,582) (9,831,848) (3,728,727) (4,050,053) (2,655,533) (2,878,969) - ------------------------------------------------------------------------------------------------------------------------------------ CAPITAL SHARE TRANSACTIONS Net proceeds from Common shares issued to shareholders due to reinvestment of distributions 647,482 774,356 122,421 117,890 38,062 56,222 Preferred shares offering costs -- -- -- -- -- 14,942 - ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets applicable to Common shares from capital share transactions 647,482 774,356 122,421 117,890 38,062 71,164 - ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets applicable to Common shares (4,955,917) 4,347,394 (2,137,108) 2,231,071 (1,694,724) 1,668,692 Net assets applicable to Common shares at the beginning of year 160,981,501 156,634,107 65,872,588 63,641,517 47,937,169 46,268,477 - ------------------------------------------------------------------------------------------------------------------------------------ Net assets applicable to Common shares at the end of year $156,025,584 $160,981,501 $63,735,480 $65,872,588 $46,242,445 $47,937,169 ==================================================================================================================================== Undistributed (Over-distribution of) net investment income at the end of year $ (13,360) $ 810,186 $ (7,440) $ 390,102 $ (59,814) $ 214,557 ====================================================================================================================================
See accompanying notes to financial statements. 60
OHIO DIVIDEND ADVANTAGE 3 (NVJ) ---------------------------- YEAR ENDED YEAR ENDED 7/31/06 7/31/05 - ------------------------------------------------------------------------------------------------------------------------------------ OPERATIONS Net investment income $ 2,052,181 $ 2,057,495 Net realized gain (loss) from investments (2,845) (4,849) Net realized gain (loss) from forward swaps -- -- Change in net unrealized appreciation (depreciation) of investments (991,042) 1,502,016 Change in net unrealized appreciation (depreciation) of futures 23,324 -- Change in net unrealized appreciation (depreciation) of forward swaps (15,013) -- Distributions to Preferred Shareholders: From net investment income (464,277) (245,582) From accumulated net realized gains -- (2,521) - ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets applicable to Common shares from operations 602,328 3,306,559 - ------------------------------------------------------------------------------------------------------------------------------------ DISTRIBUTIONS TO COMMON SHAREHOLDERS From net investment income (1,709,126) (1,872,857) From accumulated net realized gains -- (39,484) - ------------------------------------------------------------------------------------------------------------------------------------ Decrease in net assets applicable to Common shares from distributions to Common shareholders (1,709,126) (1,912,341) - ------------------------------------------------------------------------------------------------------------------------------------ CAPITAL SHARE TRANSACTIONS Net proceeds from Common shares issued to shareholders due to reinvestment of distributions 7,208 3,478 Preferred shares offering costs -- -- - ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets applicable to Common shares from capital share transactions 7,208 3,478 - ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets applicable to Common shares (1,099,590) 1,397,696 Net assets applicable to Common shares at the beginning of year 33,605,948 32,208,252 - ------------------------------------------------------------------------------------------------------------------------------------ Net assets applicable to Common shares at the end of year $32,506,358 $33,605,948 ==================================================================================================================================== Undistributed (Over-distribution of) net investment income at the end of year $ (56,331) $ 64,974 ====================================================================================================================================
See accompanying notes to financial statements. 61 Notes to FINANCIAL STATEMENTS 1. GENERAL INFORMATION AND SIGNIFICANT ACCOUNTING POLICIES The state funds (the "Funds") covered in this report and their corresponding Common share stock exchange symbols are Nuveen Michigan Quality Income Municipal Fund, Inc. (NUM), Nuveen Michigan Premium Income Municipal Fund, Inc. (NMP), Nuveen Michigan Dividend Advantage Municipal Fund (NZW), Nuveen Ohio Quality Income Municipal Fund, Inc. (NUO), Nuveen Ohio Dividend Advantage Municipal Fund (NXI), Nuveen Ohio Dividend Advantage Municipal Fund 2 (NBJ) and Nuveen Ohio Dividend Advantage Municipal Fund 3 (NVJ). Common shares of Michigan Quality Income (NUM), Michigan Premium Income (NMP), and Ohio Quality Income (NUO) are traded on the New York Stock Exchange while Common shares of Michigan Dividend Advantage (NZW), Ohio Dividend Advantage (NXI), Ohio Dividend Advantage 2 (NBJ) and Ohio Dividend Advantage 3 (NVJ) are traded on the American Stock Exchange. The Funds are registered under the Investment Company Act of 1940, as amended, as closed-end management investment companies. Each Fund seeks to provide current income exempt from both regular federal and designated state income taxes by investing primarily in a diversified portfolio of municipal obligations issued by state and local government authorities within a single state or certain U.S. territories. The following is a summary of significant accounting policies followed by the Funds in the preparation of their financial statements in accordance with U.S. generally accepted accounting principles. Investment Valuation The prices of municipal bonds in each Fund's investment portfolio are provided by a pricing service approved by the Fund's Board of Directors/Trustees. When market price quotes are not readily available (which is usually the case for municipal securities), the pricing service establishes 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. 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. Prices of forward swap contracts are also provided by an independent pricing service approved by each Fund's Board of Directors/Trustees. If the pricing service is unable to supply a price for a municipal bond, future contract or a forward swap contract, each Fund may use a market price or fair market value quote provided by a major broker/dealer in such investments. If it is determined that the market price or fair market value for an investment is unavailable or inappropriate, the Board of Directors/Trustees of the Funds, or its designee, may establish a fair value for the investment. Temporary investments in securities that have variable rate and demand features qualifying them as short-term investments are valued at amortized cost, which approximates market value. Investment Transactions Investment transactions are recorded on a trade date basis. Realized gains and losses from transactions are determined on the specific identification method. Investments purchased on a when-issued or 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, 2006, 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) had outstanding when-issued/delayed delivery purchase commitments of $5,607,030, $3,568,110, $1,019,460, $705,397, $302,313, $201,542 and $151,157, 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. Income Taxes Each Fund is a separate taxpayer for federal income tax purposes. Each Fund intends to distribute substantially all net investment income and net capital gains to shareholders and to otherwise comply with the requirements of Subchapter M of the Internal Revenue Code applicable to regulated investment companies. Therefore, no federal income tax provision is required. Furthermore, each Fund intends to satisfy conditions which will enable interest from municipal securities, which is exempt from regular federal and designated state income taxes, to retain such tax-exempt status when distributed to shareholders of the Funds. All monthly tax-exempt income dividends paid during the fiscal year ended July 31, 2006, have been designated Exempt Interest Dividends. Net realized capital gains and ordinary income distributions paid by the Funds are subject to federal taxation. 62 Dividends and Distributions to Common Shareholders Dividends from tax-exempt net investment income are declared monthly. Net realized capital gains and/or market discount from investment transactions, if any, are distributed to shareholders not less frequently than annually. Furthermore, capital gains are distributed only to the extent they exceed available capital loss carryforwards. Distributions to Common shareholders of tax-exempt net investment income, net realized capital gains and/or market discount, if any, are recorded on the ex-dividend date. The amount and timing of distributions are determined in accordance with federal income tax regulations, which may differ from U.S. generally accepted accounting principles. Preferred Shares The Funds have issued and outstanding Preferred shares, $25,000 stated value per share, as a means of effecting financial leverage. Each Fund's Preferred shares are issued in one or more Series. The dividend rate paid by the Funds on each Series is determined every seven days, pursuant to a dutch auction process overseen by the auction agent, and is payable at the end of each rate period. The number of Preferred shares outstanding, by Series and in total, for each Fund is as follows: MICHIGAN MICHIGAN MICHIGAN QUALITY PREMIUM DIVIDEND INCOME INCOME ADVANTAGE (NUM) (NMP) (NZW) - -------------------------------------------------------------------------------- Number of shares: Series M -- 840 -- Series W -- -- 640 Series TH 3,200 1,400 -- Series F 560 -- -- - -------------------------------------------------------------------------------- Total 3,760 2,240 640 ================================================================================ OHIO OHIO OHIO OHIO QUALITY DIVIDEND DIVIDEND DIVIDEND INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3 (NUO) (NXI) (NBJ) (NVJ) - -------------------------------------------------------------------------------- Number of shares: Series M 680 -- -- -- Series T -- -- -- 660 Series W -- 1,240 -- -- Series TH 1,400 -- -- -- Series TH2 1,000 -- -- -- Series F -- -- 960 -- - -------------------------------------------------------------------------------- Total 3,080 1,240 960 660 ================================================================================ Forward Swap Transactions The Funds are authorized to invest in certain derivative financial instruments. The Funds' use of forward interest rate swap transactions is intended to mitigate the negative impact that an increase in long-term interest rates could have on Common share net asset value. Forward interest rate swap transactions involve each Fund's agreement with the counterparty to pay, in the future, a fixed rate payment in exchange for the counterparty paying the Fund a variable 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 would increase or decrease in value based primarily on the extent to which long-term interest rates for bonds having a maturity of the swap's termination date were to increase or decrease. The Funds may close out a contract prior to the effective date, at which point a realized gain or loss would be 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 minimize 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 pre-determined threshold amount. Futures Contracts The Funds are authorized to invest in futures contracts for the purposes of hedging against changes in values of the Fund's securities or changes in the prevailing levels of interest rates, as a substitute for a position in the underlying asset, or to enhance the portfolio's return. Upon entering into a futures contract, a Fund is required to deposit with the broker an amount of cash or liquid securities equal to a specified percentage of the contract amount. This is known as the "initial margin." Subsequent payments ("variation margin") are made or received by a Fund each day, depending on the daily fluctuation of the value of the contract. During the period the futures contract is open, changes in the value of the contract are recognized as an unrealized gain or loss by "marking-to-market" on a daily basis to reflect the changes in market value of the contract. When the contract is closed, a Fund 63 Notes to FINANCIAL STATEMENTS (continued) records realized gains or losses equal to the difference between the value of the contract on the closing date and value of the contract when originally entered into. 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. Custodian Fee Credit Each Fund has an arrangement with the custodian bank whereby certain custodian fees and expenses are reduced by credits earned on each Fund's cash on deposit with the bank. Such deposit arrangements are an alternative to overnight investments. Indemnifications Under the Funds' organizational documents, their Officers and Directors/Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Funds. In addition, in the normal course of business, the Funds enter into contracts that provide general indemnifications to other parties. The Funds' maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Funds that have not yet occurred. However, the Funds have not had prior claims or losses pursuant to these contracts and expect the risk of loss to be remote. Use of Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets applicable to Common shares from operations during the reporting period. Actual results may differ from those estimates. 2. FUND SHARES Transactions in Common shares were as follows:
MICHIGAN QUALITY MICHIGAN PREMIUM MICHIGAN DIVIDEND INCOME (NUM) INCOME (NMP) ADVANTAGE (NZW) ----------------------- ----------------------- ----------------------- YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED 7/31/06 7/31/05 7/31/06 7/31/05 7/31/06 7/31/05 - --------------------------------------------------------------------------------------------------------------- Common shares issued to shareholders due to reinvestment of distributions 8,799 31,281 5,425 8,960 2,278 1,581 =============================================================================================================== 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 7/31/06 7/31/05 7/31/06 7/31/05 7/31/06 7/31/05 - --------------------------------------------------------------------------------------------------------------- Common shares issued to shareholders due to reinvestment of distributions 39,047 44,115 7,448 7,184 2,436 3,544 =============================================================================================================== OHIO DIVIDEND ADVANTAGE 3 (NVJ) ----------------------- YEAR ENDED YEAR ENDED 7/31/06 7/31/05 - --------------------------------------------------------------------------------------------------------------- Common shares issued to shareholders due to reinvestment of distributions 458 217 ===============================================================================================================
64 3. INVESTMENT TRANSACTIONS Purchases and sales (including maturities but excluding short-term investments and derivative transactions) during the fiscal year ended July 31, 2006, were as follows: MICHIGAN MICHIGAN MICHIGAN QUALITY PREMIUM DIVIDEND INCOME INCOME ADVANTAGE (NUM) (NMP) (NZW) - -------------------------------------------------------------------------------- Purchases $51,589,494 $11,122,640 $4,041,366 Sales and maturities 48,195,233 10,549,889 3,749,236 ================================================================================ OHIO OHIO OHIO OHIO QUALITY DIVIDEND DIVIDEND DIVIDEND INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3 (NUO) (NXI) (NBJ) (NVJ) - -------------------------------------------------------------------------------- Purchases $23,796,274 $5,386,436 $5,543,417 $1,347,827 Sales and maturities 21,361,295 6,178,340 5,688,380 780,000 ================================================================================ 4. INCOME TAX INFORMATION The following information is presented on an income tax basis. Differences between amounts for financial statement and federal income tax purposes are primarily due to the treatment of paydown gains and losses, timing differences in recognizing taxable market discount and timing differences in recognizing certain gains and losses on investment transactions. 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, based on their Federal tax basis treatment and had no impact on the net asset value of the Funds. Temporary differences do not require reclassification. At July 31, 2006, the cost of investments was as follows: MICHIGAN MICHIGAN MICHIGAN QUALITY PREMIUM DIVIDEND INCOME INCOME ADVANTAGE (NUM) (NMP) (NZW) - -------------------------------------------------------------------------------- Cost of investments $261,806,809 $165,801,965 $45,511,781 ================================================================================ OHIO OHIO OHIO OHIO QUALITY DIVIDEND DIVIDEND DIVIDEND INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3 (NUO) (NXI) (NBJ) (NVJ) - -------------------------------------------------------------------------------- Cost of investments $224,876,886 $90,405,755 $68,447,286 $46,806,290 ================================================================================ Gross unrealized appreciation and gross unrealized depreciation of investments at July 31, 2006, were as follows: MICHIGAN MICHIGAN MICHIGAN QUALITY PREMIUM DIVIDEND INCOME INCOME ADVANTAGE (NUM) (NMP) (NZW) - -------------------------------------------------------------------------------- Gross unrealized: Appreciation $13,386,712 $6,748,058 $1,941,268 Depreciation (348,532) (104,070) (337,832) - -------------------------------------------------------------------------------- Net unrealized appreciation (depreciation) of investments $13,038,180 $6,643,988 $1,603,436 ================================================================================ OHIO OHIO OHIO OHIO QUALITY DIVIDEND DIVIDEND DIVIDEND INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3 (NUO) (NXI) (NBJ) (NVJ) - -------------------------------------------------------------------------------- Gross unrealized: Appreciation $8,408,812 $3,666,814 $2,114,847 $2,072,857 Depreciation (259,858) (220,180) (150,767) (58,049) - -------------------------------------------------------------------------------- Net unrealized appreciation (depreciation) of investments $8,148,954 $3,446,634 $1,964,080 $2,014,808 ================================================================================ 65 Notes to FINANCIAL STATEMENTS (continued) The tax components of undistributed net tax-exempt income, net ordinary income and net long-term capital gains at July 31, 2006, were as follows: MICHIGAN MICHIGAN MICHIGAN QUALITY PREMIUM DIVIDEND INCOME INCOME ADVANTAGE (NUM) (NMP) (NZW) - -------------------------------------------------------------------------------- Undistributed net tax-exempt income * $877,261 $673,707 $222,544 Undistributed net ordinary income ** -- -- -- Undistributed net long-term capital gains 510,719 314,618 -- ================================================================================ OHIO OHIO OHIO OHIO QUALITY DIVIDEND DIVIDEND DIVIDEND INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3 (NUO) (NXI) (NBJ) (NVJ) - -------------------------------------------------------------------------------- Undistributed net tax-exempt income * $587,921 $197,856 $121,200 $73,873 Undistributed net ordinary income ** -- -- 1,429 -- Undistributed net long-term capital gains 51,601 81,890 64,434 -- ================================================================================ * Undistributed net tax-exempt income (on a tax basis) has not been reduced for the dividend declared on July 3, 2006, paid on August 1, 2006. ** Net ordinary income consists of taxable market discount income and net short-term capital gains, if any. The tax character of distributions paid during the tax years ended July 31, 2006 and July 31, 2005, was designated for purposes of the dividends paid deduction as follows: MICHIGAN MICHIGAN MICHIGAN QUALITY PREMIUM DIVIDEND INCOME INCOME ADVANTAGE 2006 (NUM) (NMP) (NZW) - -------------------------------------------------------------------------------- Distributions from net tax-exempt income $12,059,759 $7,607,421 $2,223,571 Distributions from net ordinary income ** -- 20,208 -- Distributions from net long-term capital gains*** 1,522,925 1,313,082 -- ================================================================================ OHIO OHIO OHIO OHIO QUALITY DIVIDEND DIVIDEND DIVIDEND INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3 2006 (NUO) (NXI) (NBJ) (NVJ) - -------------------------------------------------------------------------------- Distributions from net tax-exempt income $10,480,603 $4,505,621 $3,209,643 $2,183,862 Distributions from net ordinary income ** 749 8,426 350 -- Distributions from net long-term capital gains*** 604,477 161,865 172,587 -- ================================================================================ 66 MICHIGAN MICHIGAN MICHIGAN QUALITY PREMIUM DIVIDEND INCOME INCOME ADVANTAGE 2005 (NUM) (NMP) (NZW) - -------------------------------------------------------------------------------- Distributions from net tax-exempt income $12,353,910 $7,901,622 $2,070,374 Distributions from net ordinary income ** 68,743 44,066 -- Distributions from net long-term capital gains 1,378,291 363,651 -- ================================================================================ OHIO OHIO OHIO OHIO QUALITY DIVIDEND DIVIDEND DIVIDEND INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3 2005 (NUO) (NXI) (NBJ) (NVJ) - -------------------------------------------------------------------------------- Distributions from net tax-exempt income $10,725,327 $4,531,442 $3,201,799 $2,124,939 Distributions from net ordinary income ** 59,986 -- 4,973 -- Distributions from net long-term capital gains 300,638 -- 69,279 41,879 ================================================================================ ** Net ordinary income consists of taxable market discount income and net short-term capital gains, if any. *** 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 the earnings and profits of the Funds related to net capital gain to zero for the tax year ended July 31, 2006. At July 31, 2006, 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 DIVIDEND DIVIDEND ADVANTAGE ADVANTAGE 3 (NZW) (NVJ) - -------------------------------------------------------------------------------- Expiration Year: 2011 $45,364 $ -- 2012 -- -- 2013 8,281 1,451 2014 -- 3,804 - -------------------------------------------------------------------------------- Total $53,645 $5,255 ================================================================================ The following Funds have elected to defer net realized losses from investments incurred from November 1, 2005 through July 31, 2006 ("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 OHIO DIVIDEND DIVIDEND ADVANTAGE ADVANTAGE 3 (NZW) (NVJ) - -------------------------------------------------------------------------------- Total $28,241 $2,290 ================================================================================ 5. MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES Each Fund's management fee is separated into two components - a complex-level component, based on the aggregate amount of all fund assets managed by Nuveen Asset Management (the "Adviser"), a wholly owned subsidiary of Nuveen Investments, Inc. ("Nuveen"), and a specific fund-level component, based only on the amount of assets within each individual fund. This pricing structure enables Nuveen fund shareholders to benefit from growth in the assets within each individual fund as well as from growth in the amount of complex-wide assets managed by the Adviser. The annual fund-level fee, payable monthly, for each Fund is based upon the average daily net assets (including net assets attributable to Preferred shares) of each Fund as follows: MICHIGAN QUALITY INCOME (NUM) AVERAGE DAILY NET ASSETS MICHIGAN PREMIUM INCOME (NMP) (INCLUDING NET ASSETS OHIO QUALITY INCOME (NUO) ATTRIBUTABLE TO PREFERRED SHARES) FUND-LEVEL FEE RATE - -------------------------------------------------------------------------------- For the first $125 million .4500% For the next $125 million .4375 For the next $250 million .4250 For the next $500 million .4125 For the next $1 billion .4000 For the next $3 billion .3875 For net assets over $5 billion .3750 ================================================================================ 67 Notes to FINANCIAL STATEMENTS (continued) 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 table below. As of July 31, 2006, the complex-level fee rate was .1875%. COMPLEX-LEVEL ASSETS(1) COMPLEX-LEVEL FEE RATE - -------------------------------------------------------------------------------- For the first $55 billion .2000% For the next $1 billion .1800 For the next $1 billion .1600 For the next $3 billion .1425 For the next $3 billion .1325 For the next $3 billion .1250 For the next $5 billion .1200 For the next $5 billion .1175 For the next $15 billion .1150 For Managed Assets over $91 billion (2) .1400 ================================================================================ (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 all types of leverage used by the Nuveen funds) of Nuveen-sponsored funds in the U.S. (2) With respect to the complex-wide Managed Assets over $91 billion, the fee rate or rates that will apply to such assets will be determined at a later date. In the unlikely event that complex-wide Managed Assets reach $91 billion prior to a determination of the complex-level fee rate or rates to be applied to Managed Assets in excess of $91 billion, the complex-level fee rate for such complex-wide Managed Assets shall be .1400% until such time as a different rate or rates is determined. The management fee compensates the Adviser for overall investment advisory and administrative services and general office facilities. The Funds pay no compensation directly to those of its Directors/Trustees who are affiliated with the Adviser or to its Officers, all of whom receive remuneration for their services to the Funds from the Adviser or its affiliates. The Board of Directors/Trustees has adopted a deferred compensation plan for independent Directors/Trustees that enables Directors/Trustees to elect to defer receipt of all or a portion of the annual compensation they are entitled to receive from certain Nuveen advised Funds. Under the plan, deferred amounts are treated as though equal dollar amounts had been invested in shares of select Nuveen advised Funds. For the first ten years of Ohio Dividend Advantage's (NXI) operations, the Adviser has agreed to reimburse the Fund, as a percentage of average daily net assets (including net assets attributable to Preferred shares), for fees and expenses in the amounts and for the time periods set forth below: YEAR ENDING YEAR ENDING MARCH 31, MARCH 31, - -------------------------------------------------------------------------------- 2001* .30% 2007 .25% 2002 .30 2008 .20 2003 .30 2009 .15 2004 .30 2010 .10 2005 .30 2011 .05 2006 .30 ================================================================================ * From the commencement of operations. 68 The Adviser has not agreed to reimburse Ohio Dividend Advantage (NXI) for any portion of its fees and expenses beyond March 31, 2011. For the first ten years of Michigan Dividend Advantage's (NZW) and Ohio Dividend Advantage 2's (NBJ) operations, the Adviser has agreed to reimburse the Funds, as a percentage of average daily net assets (including net assets attributable to Preferred shares), for fees and expenses in the amounts and for the time periods set forth below: YEAR ENDING YEAR ENDING SEPTEMBER 30, SEPTEMBER 30, - -------------------------------------------------------------------------------- 2001* .30% 2007 .25% 2002 .30 2008 .20 2003 .30 2009 .15 2004 .30 2010 .10 2005 .30 2011 .05 2006 .30 ================================================================================ * From the commencement of operations. The Adviser has not agreed to reimburse Michigan Dividend Advantage (NZW) and Ohio Dividend Advantage 2 (NBJ) for any portion of their fees and expenses beyond September 30, 2011. For the first ten years of Ohio Dividend Advantage 3's (NVJ) operations, the Adviser has agreed to reimburse the Fund, as a percentage of average daily net assets (including net assets attributable to Preferred shares), for fees and expenses in the amounts and for the time periods set forth below: YEAR ENDING YEAR ENDING MARCH 31, MARCH 31, - -------------------------------------------------------------------------------- 2002* .30% 2008 .25% 2003 .30 2009 .20 2004 .30 2010 .15 2005 .30 2011 .10 2006 .30 2012 .05 2007 .30 ================================================================================ * From the commencement of operations. The Adviser has not agreed to reimburse Ohio Dividend Advantage 3 (NVJ) for any portion of its fees and expenses beyond March 31, 2012. 6. NEW ACCOUNTING PRONOUNCEMENT Financial Accounting Standards Board Interpretation No. 48 On July 13, 2006, the Financial Accounting Standards Board (FASB) released FASB Interpretation No. 48 Accounting for Uncertainty in Income Taxes (FIN 48). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. FIN 48 requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Fund's tax returns to determine whether the tax positions are "more-likely-than-not" of being sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax benefit or expense in the current year. Adoption of FIN 48 is required for fiscal years beginning after December 15, 2006 and is to be applied to all open tax years as of the effective date. At this time, management is evaluating the implications of FIN 48 and does not expect the adoption of FIN 48 will have a significant impact on the net assets or results of operations of the Funds. 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 1, 2006, to shareholders of record on August 15, 2006, as follows: MICHIGAN MICHIGAN MICHIGAN QUALITY PREMIUM DIVIDEND INCOME INCOME ADVANTAGE (NUM) (NMP) (NZW) - -------------------------------------------------------------------------------- Dividend per share $.0620 $.0605 $.0675 ================================================================================ OHIO OHIO OHIO OHIO QUALITY DIVIDEND DIVIDEND DIVIDEND INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3 (NUO) (NXI) (NBJ) (NVJ) - -------------------------------------------------------------------------------- Dividend per share $.0655 $.0635 $.0620 $.0615 ================================================================================ 69 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: 2006 $15.88 $ .96 $(.52) $(.21) $(.02) $ .21 $(.81) $(.11) $ (.92) 2005 15.51 .98 .57 (.13) (.01) 1.41 (.93) (.11) (1.04) 2004 15.14 1.01 .49 (.06) (.01) 1.43 (.95) (.11) (1.06) 2003 15.48 1.04 (.27) (.08) (.01) .68 (.92) (.10) (1.02) 2002 15.32 1.11 .15 (.11) (.02) 1.13 (.90) (.07) (.97) MICHIGAN PREMIUM INCOME (NMP) - ------------------------------------------------------------------------------------------------------------------------------------ Year Ended 7/31: 2006 15.55 .91 (.40) (.18) (.02) .31 (.79) (.15) (.94) 2005 15.19 .93 .50 (.11) -- 1.32 (.91) (.05) (.96) 2004 15.24 .97 .38 (.04) (.03) 1.28 (.94) (.39) (1.33) 2003 15.56 1.03 (.37) (.07) -- .59 (.91) -- (.91) 2002 15.31 1.05 .16 (.11) -- 1.10 (.85) -- (.85) MICHIGAN DIVIDEND ADVANTAGE (NZW) - ------------------------------------------------------------------------------------------------------------------------------------ Year Ended 7/31: 2006 15.44 .97 (.40) (.20) -- .37 (.87) -- (.87) 2005 14.82 .98 .63 (.11) -- 1.50 (.89) -- (.89) 2004 14.30 .99 .47 (.05) -- 1.41 (.89) -- (.89) 2003 14.42 .99 (.20) (.07) -- .72 (.86) -- (.86) 2002(a) 14.33 .76 .22 (.07) -- .91 (.63) -- (.63) ==================================================================================================================================== Total Returns --------------------- Based Offering on Costs and Ending Common Preferred Common Based Share Share Share Ending on Net Underwriting Net Asset Market Market Asset Discounts Value Value Value** Value** ============================================================================================ MICHIGAN QUALITY INCOME (NUM) - -------------------------------------------------------------------------------------------- Year Ended 7/31: 2006 $ -- $15.17 $14.41 (2.28)% 1.41% 2005 -- 15.88 15.67 9.94 9.28 2004 -- 15.51 15.20 5.17 9.52 2003 -- 15.14 15.45 2.40 4.35 2002 -- 15.48 16.10 11.18 7.68 MICHIGAN PREMIUM INCOME (NMP) - -------------------------------------------------------------------------------------------- Year Ended 7/31: 2006 -- 14.92 14.27 (3.12) 2.06 2005 -- 15.55 15.68 16.03 8.80 2004 -- 15.19 14.37 5.46 8.56 2003 -- 15.24 14.85 2.64 3.71 2002 -- 15.56 15.35 10.52 7.40 MICHIGAN DIVIDEND ADVANTAGE (NZW) - -------------------------------------------------------------------------------------------- Year Ended 7/31: 2006 -- 14.94 15.81 (.47) 2.46 2005 .01 15.44 16.79 21.34 10.41 2004 -- 14.82 14.65 2.99 10.00 2003 .02 14.30 15.10 9.19 5.01 2002(a) (.19) 14.42 14.65 2.00 5.21 ============================================================================================ Ratios/Supplemental Data ---------------------------------------------------------------------------------------------- Before Credit/Reimbursement After Credit/Reimbursement*** ------------------------------- ------------------------------ Ratio of Net Ratio of Net Ratio of Investment Ratio of Investment Ending Expenses Income to Expenses Income to Net to Average Average to Average Average Assets Net Assets Net Assets Net Assets Net Assets Applicable Applicable Applicable Applicable Applicable Portfolio to Common to Common to Common to Common to Common Turnover Shares (000) Shares++ Shares++ Shares++ Shares++ Rate ======================================================================================================================= MICHIGAN QUALITY INCOME (NUM) - ----------------------------------------------------------------------------------------------------------------------- Year Ended 7/31: 2006 $177,734 1.23% 6.17% 1.22% 6.19% 18% 2005 185,900 1.22 6.13 1.21 6.14 8 2004 181,114 1.22 6.44 1.22 6.45 15 2003 176,186 1.24 6.56 1.24 6.57 15 2002 179,630 1.28 7.29 1.27 7.29 19 MICHIGAN PREMIUM INCOME (NMP) - ----------------------------------------------------------------------------------------------------------------------- Year Ended 7/31: 2006 115,611 1.20 6.03 1.19 6.03 6 2005 120,475 1.19 5.97 1.17 5.98 11 2004 117,529 1.20 6.28 1.19 6.30 28 2003 117,418 1.21 6.49 1.20 6.50 18 2002 119,820 1.25 6.82 1.24 6.83 9 MICHIGAN DIVIDEND ADVANTAGE (NZW) - ----------------------------------------------------------------------------------------------------------------------- Year Ended 7/31: 2006 30,823 1.31 5.92 .83 6.40 8 2005 31,821 1.27 5.93 .81 6.39 8 2004 30,538 1.28 6.13 .81 6.60 9 2003 29,443 1.29 6.15 .82 6.61 2 2002(a) 29,679 1.35* 6.00* .90* 6.45* 21 ======================================================================================================================= 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: 2006 $94,000 $25,000 $72,270 2005 94,000 25,000 74,441 2004 94,000 25,000 73,169 2003 94,000 25,000 71,858 2002 94,000 25,000 72,774 MICHIGAN PREMIUM INCOME (NMP) - ----------------------------------------------------------------- Year Ended 7/31: 2006 56,000 25,000 76,612 2005 56,000 25,000 78,783 2004 56,000 25,000 77,468 2003 56,000 25,000 77,419 2002 56,000 25,000 78,491 MICHIGAN DIVIDEND ADVANTAGE (NZW) - ----------------------------------------------------------------- Year Ended 7/31: 2006 16,000 25,000 73,161 2005 16,000 25,000 74,720 2004 16,000 25,000 72,716 2003 16,000 25,000 71,005 2002(a) 16,000 25,000 71,374 =================================================================
* Annualized. ** Total Return on Market Value is the combination of changes in the market price per share and the effect of reinvested dividend income and reinvested capital gains distributions, if any, at the average price paid per share at the time of reinvestment. Total Return on Common Share Net Asset Value is the combination of changes in Common share net asset value, reinvested dividend income at net asset value and reinvested capital gains distributions at net asset value, if any. 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) For the period September 25, 2001 (commencement of operations) through July 31, 2002. See accompanying notes to financial statements. 70-71 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: 2006 $16.58 $ .98 $(.42) $(.22) $(.01) $ .33 $ (.85) $(.05) $ (.90) 2005 16.21 1.02 .49 (.12) -- 1.39 (.98) (.04) (1.02) 2004 16.17 1.07 .25 (.06) (.01) 1.25 (1.00) (.21) (1.21) 2003 16.36 1.10 (.22) (.08) -- .80 (.99) -- (.99) 2002 16.10 1.14 .18 (.13) -- 1.19 (.93) -- (.93) OHIO DIVIDEND ADVANTAGE (NXI) - ------------------------------------------------------------------------------------------------------------------------------------ Year Ended 7/31: 2006 15.55 .96 (.40) (.21) -- .35 (.85) (.03) (.88) 2005 15.05 1.00 .57 (.11) -- 1.46 (.96) -- (.96) 2004 14.66 1.04 .40 (.06) -- 1.38 (.97) (.02) (.99) 2003 14.83 1.05 (.23) (.07) -- .75 (.92) (.01) (.93) 2002 14.57 1.06 .19 (.12) -- 1.13 (.87) -- (.87) OHIO DIVIDEND ADVANTAGE 2 (NBJ) - ------------------------------------------------------------------------------------------------------------------------------------ Year Ended 7/31: 2006 15.37 .93 (.41) (.22) (.01) .29 (.80) (.05) (.85) 2005 14.85 .95 .61 (.12) -- 1.44 (.90) (.02) (.92) 2004 14.31 .99 .53 (.06) -- 1.46 (.92) -- (.92) 2003 14.48 1.00 (.23) (.08) -- .69 (.87) -- (.87) 2002(a) 14.33 .78 .23 (.08) -- .93 (.62) -- (.62) OHIO DIVIDEND ADVANTAGE 3 (NVJ) - ------------------------------------------------------------------------------------------------------------------------------------ Year Ended 7/31: 2006 15.57 .95 (.45) (.22) -- .28 (.79) -- (.79) 2005 14.93 .95 .69 (.11) -- 1.53 (.87) (.02) (.89) 2004 14.48 .96 .51 (.06) (.01) 1.40 (.88) (.07) (.95) 2003 14.83 .97 (.29) (.07) (.01) .60 (.88) (.06) (.94) 2002(b) 14.33 .25 .65 (.02) -- .88 (.22) -- (.22) ==================================================================================================================================== Total Returns --------------------- Based Offering on Costs and Ending Common Preferred Common Based Share Share Share Ending on Net Underwriting Net Asset Market Market Asset Discounts Value Value Value** Value** ============================================================================================= OHIO QUALITY INCOME (NUO) - --------------------------------------------------------------------------------------------- Year Ended 7/31: 2006 $ -- $16.01 $15.83 (1.36)% 2.10% 2005 -- 16.58 16.96 10.25 8.70 2004 -- 16.21 16.30 2.59 7.87 2003 -- 16.17 17.04 (3.15) 4.84 2002 -- 16.36 18.62 17.00 7.63 OHIO DIVIDEND ADVANTAGE (NXI) - --------------------------------------------------------------------------------------------- Year Ended 7/31: 2006 -- 15.02 15.05 (6.53) 2.32 2005 -- 15.55 17.00 21.79 9.87 2004 -- 15.05 14.80 10.70 9.54 2003 .01 14.66 14.26 (.04) 5.09 2002 -- 14.83 15.15 4.48 8.02 OHIO DIVIDEND ADVANTAGE 2 (NBJ) - --------------------------------------------------------------------------------------------- Year Ended 7/31: 2006 -- 14.81 14.70 .35 1.96 2005 -- 15.37 15.48 11.63 9.90 2004 -- 14.85 14.70 9.60 10.33 2003 .01 14.31 14.26 3.17 4.74 2002(a) (.16) 14.48 14.65 1.91 5.58 OHIO DIVIDEND ADVANTAGE 3 (NVJ) - --------------------------------------------------------------------------------------------- Year Ended 7/31: 2006 -- 15.06 14.75 (2.33) 1.87 2005 -- 15.57 15.90 17.60 10.40 2004 -- 14.93 14.30 5.86 9.72 2003 (.01) 14.48 14.40 .09 3.81 2002(b) (.16) 14.83 15.30 3.47 5.05 ============================================================================================= Ratios/Supplemental Data ---------------------------------------------------------------------------------------------- Before Credit/Reimbursement After Credit/Reimbursement*** ------------------------------- ------------------------------ Ratio of Net Ratio of Net Ratio of Investment Ratio of Investment Ending Expenses Income to Expenses Income to Net to Average Average to Average Average Assets Net Assets Net Assets Net Assets Net Assets Applicable Applicable Applicable Applicable Applicable Portfolio to Common to Common to Common to Common to Common Turnover Shares (000) Shares++ Shares++ Shares++ Shares++ Rate ========================================================================================================================= OHIO QUALITY INCOME (NUO) - ------------------------------------------------------------------------------------------------------------------------- Year Ended 7/31: 2006 $156,026 1.20% 6.05% 1.19% 6.06% 9% 2005 160,982 1.19 6.16 1.18 6.17 14 2004 156,634 1.20 6.46 1.19 6.47 31 2003 155,412 1.22 6.59 1.22 6.60 12 2002 156,351 1.26 7.10 1.24 7.12 26 OHIO DIVIDEND ADVANTAGE (NXI) - ------------------------------------------------------------------------------------------------------------------------- Year Ended 7/31: 2006 63,735 1.21 5.85 .76 6.30 6 2005 65,873 1.21 6.00 .76 6.46 14 2004 63,642 1.20 6.41 .75 6.86 10 2003 61,924 1.23 6.52 .78 6.97 6 2002 62,548 1.24 6.79 .78 7.25 18 OHIO DIVIDEND ADVANTAGE 2 (NBJ) - ------------------------------------------------------------------------------------------------------------------------- Year Ended 7/31: 2006 46,242 1.27 5.71 .78 6.19 8 2005 47,937 1.23 5.71 .77 6.17 14 2004 46,268 1.25 6.13 .79 6.60 15 2003 44,578 1.27 6.26 .81 6.72 15 2002(a) 45,073 1.25* 6.12* .80* 6.57* 39 OHIO DIVIDEND ADVANTAGE 3 (NVJ) - ------------------------------------------------------------------------------------------------------------------------- Year Ended 7/31: 2006 32,506 1.28 5.76 .81 6.23 2 2005 33,606 1.27 5.68 .81 6.14 3 2004 32,208 1.28 5.87 .81 6.34 8 2003 31,245 1.28 5.89 .82 6.35 16 2002(b) 31,995 1.22* 4.72* .80* 5.15* 7 ========================================================================================================================= 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: 2006 $77,000 $25,000 $75,658 2005 77,000 25,000 77,267 2004 77,000 25,000 75,855 2003 77,000 25,000 75,458 2002 77,000 25,000 75,763 OHIO DIVIDEND ADVANTAGE (NXI) - --------------------------------------------------------------------- Year Ended 7/31: 2006 31,000 25,000 76,400 2005 31,000 25,000 78,123 2004 31,000 25,000 76,324 2003 31,000 25,000 74,938 2002 31,000 25,000 75,442 OHIO DIVIDEND ADVANTAGE 2 (NBJ) - --------------------------------------------------------------------- Year Ended 7/31: 2006 24,000 25,000 73,169 2005 24,000 25,000 74,935 2004 24,000 25,000 73,196 2003 24,000 25,000 71,435 2002(a) 24,000 25,000 71,951 OHIO DIVIDEND ADVANTAGE 3 (NVJ) - --------------------------------------------------------------------- Year Ended 7/31: 2006 16,500 25,000 74,252 2005 16,500 25,000 75,918 2004 16,500 25,000 73,800 2003 16,500 25,000 72,341 2002(b) 16,500 25,000 73,477 =====================================================================
* Annualized. ** Total Return on Market Value is the combination of changes in the market price per share and the effect of reinvested dividend income and reinvested capital gains distributions, if any, at the average price paid per share at the time of reinvestment. Total Return on Common Share Net Asset Value is the combination of changes in Common share net asset value, reinvested dividend income at net asset value and reinvested capital gains distributions at net asset value, if any. 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) For the period September 25, 2001 (commencement of operations) through July 31, 2002. (b) For the period March 25, 2002 (commencement of operations) through July 31, 2002. See accompanying notes to financial statements. 72-73 spread Board Members AND OFFICERS The management of the Funds, including general supervision of the duties performed for the Funds by the Adviser, is the responsibility of the Board Members of the Funds. The number of board members of the Fund is currently set at nine. None of the board members who are not "interested" persons of the Funds has ever been a director or employee of, or consultant to, Nuveen or its affiliates. The names and business addresses of the board members and officers of the Funds, their principal occupations and other affiliations during the past five years, the number of portfolios each oversees and other directorships they hold are set forth below.
NUMBER OF PORTFOLIOS IN POSITION(S) YEAR FIRST PRINCIPAL OCCUPATION(S) FUND COMPLEX NAME, BIRTHDATE HELD WITH ELECTED OR INCLUDING OTHER DIRECTORSHIPS OVERSEEN BY AND ADDRESS THE FUNDS APPOINTED(2) DURING PAST 5 YEARS BOARD MEMBER - ------------------------------------------------------------------------------------------------------------------------------------ BOARD MEMBER WHO IS AN INTERESTED PERSON OF THE FUNDS: - ------------------------------------------------------------------------------------------------------------------------------------ Timothy R. Schwertfeger(1) Chairman of 1994 Chairman (since 1996) and Director of Nuveen Investments, 167 3/28/49 the Board Inc., Nuveen Investments, LLC, Nuveen Advisory Corp. and 333 W. Wacker Drive and Board Nuveen Institutional Advisory Corp.(3); formerly, Director Chicago, IL 60606 Member (1996-2006) of Institutional Capital Corporation; Chairman and Director (since 1997) of Nuveen Asset Management; Chairman and Director of Rittenhouse Asset Management, Inc. (since 1999); Chairman of Nuveen Investments Advisers Inc. (since 2002). BOARD MEMBERS WHO ARE NOT INTERESTED PERSONS OF THE FUNDS: - ------------------------------------------------------------------------------------------------------------------------------------ Robert P. Bremner Lead Independent 1997 Private Investor and Management Consultant. 167 8/22/40 Board member 333 W. Wacker Drive Chicago, IL 60606 - ------------------------------------------------------------------------------------------------------------------------------------ Lawrence H. Brown Board member 1993 Retired (since 1989) as Senior Vice President of The 167 7/29/34 Northern Trust Company; Director (since 2002) Community 333 W. Wacker Drive Advisory Board for Highland Park and Highwood, United Chicago, IL 60606 Way of the North Shore. - ------------------------------------------------------------------------------------------------------------------------------------ Jack B. Evans Board member 1999 President, The Hall-Perrine Foundation, a private philanthropic 167 10/22/48 corporation (since 1996); Director and Vice Chairman, United 333 W. Wacker Drive Fire Group, a publicly held company; Adjunct Faculty Member, Chicago, IL 60606 University of Iowa; Director, Gazette Companies; Life Trustee of Coe College and Iowa College Foundation; 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 Board member 2004 Dean, Tippie College of Business, University of Iowa (since 167 3/6/48 June 2006); formerly, Dean and Distinguished Professor of Finance, 333 W. Wacker Drive School of Business at the University of Connecticut (2003-2006); Chicago, IL 60606 previously, Senior Vice President and Director of Research at the Federal Reserve Bank of Chicago (1995-2003); Director (since 1997), Credit Research Center at Georgetown University; Director (since 2004) of Xerox Corporation; Director, SS&C Technologies, Inc. (May 2005 - October 2005). - ------------------------------------------------------------------------------------------------------------------------------------ David J. Kundert Board member 2005 Retired (since 2004) as Chairman, JPMorgan Fleming Asset 165 10/28/42 Management, President and CEO, Banc One Investment 333 W. Wacker Drive Advisors Corporation, and President, One Group Mutual Chicago, IL 60606 Funds; prior thereto, Executive Vice President, Banc One Corporation and Chairman and CEO, Banc One Investment Management Group; Board of Regents, Luther College; member of the Wisconsin Bar Association; member of Board of Directors, Friends of Boerner Botanical Gardens. 74 NUMBER OF PORTFOLIOS IN POSITION(S) YEAR FIRST PRINCIPAL OCCUPATION(S) FUND COMPLEX NAME, BIRTHDATE HELD WITH ELECTED OR INCLUDING OTHER DIRECTORSHIPS OVERSEEN BY AND ADDRESS THE FUNDS APPOINTED(2) DURING PAST 5 YEARS BOARD MEMBER - ------------------------------------------------------------------------------------------------------------------------------------ BOARD MEMBERS WHO ARE NOT INTERESTED PERSONS OF THE FUNDS (CONTINUED): - ------------------------------------------------------------------------------------------------------------------------------------ William J. Schneider Board member 1997 Chairman of Miller-Valentine Partners Ltd., a real estate 167 9/24/44 investment company; formerly, Senior Partner and Chief 333 W. Wacker Drive Operating Officer (retired, 2004) of Miller-Valentine Chicago, IL 60606 Group; formerly, Vice President, Miller-Valentine Realty; Board Member, Chair of the Finance Committee and member of the Audit Committee of Premier Health Partners, the not-for-profit company of Miami Valley Hospital; Vice President, Dayton Philharmonic Orchestra Association; Board Member, Regional Leaders Forum, which promotes cooperation on economic development issues; Director, Dayton Development Coalition; formerly, Member, Community Advisory Board, National City Bank, Dayton, Ohio and Business Advisory Council, Cleveland Federal Reserve Bank. - ------------------------------------------------------------------------------------------------------------------------------------ Judith M. Stockdale Board member 1997 Executive Director, Gaylord and Dorothy Donnelley 167 12/29/47 Foundation (since 1994); prior thereto, Executive Director, 333 W. Wacker Drive Great Lakes Protection Fund (from 1990 to 1994). Chicago, IL 60606 - ------------------------------------------------------------------------------------------------------------------------------------ Eugene S. Sunshine Board member 2005 Senior Vice President for Business and Finance, 167 1/22/50 Northwestern University (since 1997); Director (since 2003), 333 W. Wacker Drive Chicago Board Options Exchange; formerly, Director Chicago, IL 60606 National Mentor Holdings, a privately-held, national provider of home and community-based services; Chairman (since 1997), Board of Directors, Rubicon, a pure captive insurance company owned by Northwestern University; Director (since 1997), Evanston Chamber of Commerce and Evanston Inventure, a business development organization. NUMBER OF PORTFOLIOS IN POSITION(S) YEAR FIRST FUND COMPLEX NAME, BIRTHDATE HELD WITH ELECTED OR PRINCIPAL OCCUPATION(S) OVERSEEN BY AND ADDRESS THE FUNDS APPOINTED(4) DURING PAST 5 YEARS OFFICER - ------------------------------------------------------------------------------------------------------------------------------------ OFFICERS OF THE FUND: - ------------------------------------------------------------------------------------------------------------------------------------ Gifford R. Zimmerman Chief 1988 Managing Director (since 2002), Assistant Secretary and 167 9/9/56 Administrative Associate General Counsel, formerly, Vice President and 333 W. Wacker Drive Officer Assistant General Counsel, of Nuveen Investments, LLC; Chicago, IL 60606 Managing Director (2002-2004), General Counsel (1998-2004) and Assistant Secretary, formerly, Vice President of Nuveen Advisory Corp. and Nuveen Institutional Advisory Corp.(3); Managing Director (since 2002) and Assistant Secretary and Associate General Counsel, formerly, Vice President (since 1997), of Nuveen Asset Management; Managing Director (since 2004) and Assistant Secretary (since 1994) of Nuveen Investments, Inc.; Assistant Secretary of NWQ Investment Management Company, LLC. (since 2002); Vice President and Assistant Secretary of Nuveen Investments Advisers Inc. (since 2002); Managing Director, Associate General Counsel and Assistant Secretary of Rittenhouse Asset Management, Inc. and Symphony Asset Management LLC (since 2003); Assistant Secretary of Tradewinds NWQ Global Investors, LLC (since 2006); Chartered Financial Analyst. 75 Board Members AND OFFICERS (CONTINUED) NUMBER OF PORTFOLIOS IN POSITION(S) YEAR FIRST FUND COMPLEX NAME, BIRTHDATE HELD WITH ELECTED OR PRINCIPAL OCCUPATION(S) OVERSEEN BY AND ADDRESS THE FUNDS APPOINTED(4) DURING PAST 5 YEARS OFFICER - ------------------------------------------------------------------------------------------------------------------------------------ OFFICERS OF THE FUNDS (CONTINUED): - ------------------------------------------------------------------------------------------------------------------------------------ Julia L. Antonatos Vice President 2004 Managing Director (since 2005), formerly Vice President 167 9/22/63 (since 2002); formerly, Assistant Vice President (since 2000) 333 W. Wacker Drive of Nuveen Investments, LLC; Chartered Financial Analyst. Chicago, IL 60606 - ------------------------------------------------------------------------------------------------------------------------------------ Michael T. Atkinson Vice President 2000 Vice President (since 2002), formerly, Assistant Vice 167 2/3/66 and Assistant President (since 2000) of Nuveen Investments, LLC. 333 W. Wacker Drive Secretary Chicago, IL 60606 - ------------------------------------------------------------------------------------------------------------------------------------ Peter H. D'Arrigo Vice President 1999 Vice President and Treasurer of Nuveen Investments, LLC 167 11/28/67 and of Nuveen Investments, Inc. (since 1999); Vice President 333 W. Wacker Drive and Treasurer of Nuveen Asset Management (since 2002) Chicago, IL 60606 and of Nuveen Investments Advisers Inc. (since 2002); Assistant Treasurer of NWQ Investment Management Company, LLC. (since 2002); Vice President and Treasurer of Nuveen Rittenhouse Asset Management, Inc. and Symphony Asset Management LLC (since 2003); Treasurer, Tradewinds NWQ Global Investors, LLC (since 2006); formerly, Vice President and Treasurer (1999-2004) of Nuveen Advisory Corp. and Nuveen Institutional Advisory Corp.(3); Chartered Financial Analyst. - ------------------------------------------------------------------------------------------------------------------------------------ John N. Desmond Vice President 2005 Vice President, Director of Investment Operations, Nuveen 167 8/24/61 Investments, LLC (since January 2005); formerly, Director, 333 W. Wacker Drive Business Manager, Deutsche Asset Management (2003-2004), Chicago, IL 60606 Director, Business Development and Transformation, Deutsche Trust Bank Japan (2002-2003); previously, Senior Vice President, Head of Investment Operations and Systems, Scudder Investments Japan, (2000-2002), Senior Vice President, Head of Plan Administration and Participant Services, Scudder Investments (1995-2002). - ------------------------------------------------------------------------------------------------------------------------------------ Jessica R. Droeger Vice President 1998 Vice President (since 2002), Assistant Secretary and 167 9/24/64 and Secretary Assistant General Counsel (since 1998) formerly, Assistant 333 W. Wacker Drive Vice President (since 1998) of Nuveen Investments, LLC; Chicago, IL 60606 Vice President (2002-2004) and Assistant Secretary (1998-2004) formerly, Assistant Vice President of Nuveen Advisory Corp. and Nuveen Institutional Advisory Corp.(3); Vice President and Assistant Secretary (since 2005) of Nuveen Asset Management. - ------------------------------------------------------------------------------------------------------------------------------------ Lorna C. Ferguson Vice President 1998 Managing Director (since 2004), formerly, Vice President of 167 10/24/45 Nuveen Investments, LLC, Managing Director (2004) formerly, 333 W. Wacker Drive Vice President (1998-2004) of Nuveen Advisory Corp. and Chicago, IL 60606 Nuveen Institutional Advisory Corp.(3); Managing Director (since 2005) of Nuveen Asset Management. - ------------------------------------------------------------------------------------------------------------------------------------ William M. Fitzgerald Vice President 1995 Managing Director (since 2002), formerly, Vice President of 167 3/2/64 Nuveen Investments; Managing Director (1997-2004) of 333 W. Wacker Drive Nuveen Advisory Corp. and Nuveen Institutional Advisory Chicago, IL 60606 Corp.(3); Managing Director (since 2001) of Nuveen Asset Management; Vice President (since 2002) of Nuveen Investments Advisers Inc.; Chartered Financial Analyst. 76 NUMBER OF PORTFOLIOS IN POSITION(S) YEAR FIRST FUND COMPLEX NAME, BIRTHDATE HELD WITH ELECTED OR PRINCIPAL OCCUPATION(S) OVERSEEN BY AND ADDRESS THE FUNDS APPOINTED(4) DURING PAST 5 YEARS OFFICER - ------------------------------------------------------------------------------------------------------------------------------------ OFFICERS OF THE FUNDS (CONTINUED): - ------------------------------------------------------------------------------------------------------------------------------------ Stephen D. Foy Vice President 1998 Vice President (since 1993) and Funds Controller (since 1998) 167 5/31/54 and Controller of Nuveen Investments, LLC; formerly, Vice President and 333 W. Wacker Drive Funds Controller (1998-2004) of Nuveen Investments, Inc.; Chicago, IL 60606 Certified Public Accountant. - ------------------------------------------------------------------------------------------------------------------------------------ David J. Lamb Vice President 2000 Vice President (since 2000) of Nuveen Investments, 167 3/22/63 LLC; Certified Public Accountant. 333 W. Wacker Drive Chicago, IL 60606 - ------------------------------------------------------------------------------------------------------------------------------------ Tina M. Lazar Vice President 2002 Vice President of Nuveen Investments, LLC (since 1999). 167 8/27/61 333 W. Wacker Drive Chicago, IL 60606 - ------------------------------------------------------------------------------------------------------------------------------------ Larry W. Martin Vice President 1988 Vice President, Assistant Secretary and Assistant General 167 7/27/51 and Assistant Counsel of Nuveen Investments, LLC; formerly, Vice President 333 W. Wacker Drive Secretary and Assistant Secretary of Nuveen Advisory Corp. and Nuveen Chicago, IL 60606 Institutional Advisory Corp.(3); Vice President (since 2005) and Assistant Secretary of Nuveen Investments, Inc.; Vice President (since 2005) and Assistant Secretary (since 1997) of Nuveen Asset Management; Vice President (since 2000), Assistant Secretary and Assistant General Counsel (since 1998) of Rittenhouse Asset Management, Inc.; Vice President and Assistant Secretary of Nuveen Investments Advisers Inc. (since 2002); Assistant Secretary of NWQ Investment Management Company, LLC (since 2002), Symphony Asset Management LLC (since 2003) and Tradewinds NWQ Global Investors, LLC (since 2006).
(1) Mr. Schwertfeger is an "interested person" of the Funds, as defined in the Investment Company Act of 1940, because he is an officer and board member of the Adviser. (2) Board members serve an indefinite term until his/her successor is elected. The year first elected or appointed represents the year in which the board member was first elected or appointed to any fund in the Nuveen Complex. (3) Nuveen Advisory Corp. and Nuveen Institutional Advisory Corp. were reorganized into Nuveen Asset Management, effective January 1, 2005. (4) Officers serve one year terms through July of each year. The year first elected or appointed represents the year in which the Officer was first elected or appointed to any fund in the Nuveen Complex. 77 ANNUAL INVESTMENT MANAGEMENT AGREEMENT APPROVAL PROCESS The Board of Trustees is responsible for overseeing the performance of the investment adviser to the Funds and determining whether to continue the advisory arrangements. At a meeting held on May 23-25, 2006 (the "May Meeting"), the Board of Trustees of the Funds, including the independent Trustees, unanimously approved the continuance of the Investment Management Agreement between each Fund and NAM (the "Fund Adviser"). THE APPROVAL PROCESS During the course of the year, the Board received a wide variety of materials relating to the services provided by the Fund Adviser and the performance of each Fund. To assist the Board in its evaluation of the advisory contract with the Fund Adviser at the May Meeting, the independent Trustees received extensive materials in advance of their meeting which outlined, among other things: o the nature, extent and quality of services provided by the Fund Adviser; o the organization and business operations of the Fund Adviser, including the responsibilities of various departments and key personnel; o the Fund's past performance, the Fund's performance compared to funds of similar investment objectives compiled by an independent third party and to customized benchmarks; o the profitability of the Fund Adviser and certain industry profitability analyses for unaffiliated advisers; o the expenses of the Fund Adviser in providing the various services; o the advisory fees (gross and net management fees) and total expense ratios of the Fund, including comparisons of such fees and expenses with those of comparable, unaffiliated funds based on information and data provided by Lipper (the "Peer Universe") as well as compared to a subset of funds within the Peer Universe (the "Peer Group") to the respective Fund (as applicable); o the advisory fees the Fund Adviser assesses to other types of investment products or clients; o the soft dollar practices of the Fund Adviser, if any; and o from independent legal counsel, a legal memorandum describing, among other things, the duties of the Trustees under the Investment Company Act of 1940 (the "1940 Act") as well as the general principles of relevant state law in reviewing and approving advisory contracts; the requirements of the 1940 Act in such matters; an adviser's fiduciary duty with respect to advisory agreements and compensation; the standards used by courts in determining whether investment company boards of directors have fulfilled their duties; and factors to be considered by the Board in voting on advisory agreements. At the May Meeting, the Fund Adviser made a presentation to and responded to questions from the Board. After the presentations and after reviewing the written materials, the independent Trustees met privately with their legal counsel to review the Board's duties in reviewing advisory contracts and consider the renewal of the advisory contracts. It is with this background that the Trustees con sidered the advisory contract with the Fund Adviser. The independent Trustees, in consultation with independent counsel, reviewed the factors set out in judicial decisions and SEC directives relating to the renewal of advisory contracts. As outlined in more detail below, the Trustees considered all factors they believed relevant with respect to each Fund, including the following: (a) the nature, extent and quality of the services to be provided by the Fund Adviser; (b) the investment performance of the Fund and the Fund Adviser; (c) the costs of the services to be provided and profitability of the Fund Adviser and its affiliates; (d) the extent to which economies of scale would be realized as the Fund grows; and (e) whether fee levels reflect these economies of scale for the benefit of Fund investors. A. NATURE, EXTENT AND QUALITY OF SERVICES In reviewing the Fund Adviser, the Trustees considered the nature, extent and quality of the Fund Adviser's services. The Trustees reviewed materials outlining, among other things, the Fund Adviser's organization and business; the types of services that the Fund Adviser 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 and enhancements Nuveen has taken for its municipal fund product line. In connection with their continued service as Trustees, the Trustees also have a good understanding of the Fund Adviser's organization, operations and personnel. In this regard, the Trustees are familiar with and have evaluated the professional experience, qualifications and credentials of the Fund Adviser's personnel. The Trustees further reviewed materials describing, among other things, the teams and 78 personnel involved in the investment, research, risk-management and operational processes involved in managing municipal funds and their respective functions. Given the Trustees' experience with the Funds and Fund Adviser, the Trustees recognized the demonstrated history of care and depth of experience of the respective personnel in managing these Funds. In this regard, the Trustees considered the continued quality of the Fund Adviser's investment process in making portfolio management decisions as well as additional refinements and improvements adopted to the portfolio management processes noted below. With respect to the services provided to municipal funds, including the Funds, the Trustees noted that the Fund Adviser continues to make refinements to its portfolio management process including, among other things, the increased use of derivatives to enhance management of risk, additional analytical software for research staff and improved municipal pricing processes. In addition to advisory services, the independent Trustees considered the quality of any administrative or non-advisory services provided. The Fund Adviser provides the Funds with such administrative and other services (exclusive of, and in addition to, any such services provided by others for the Funds) and officers and other personnel as are necessary for the operations of the respective Fund. In connection with the review of the Investment Management Agreement, the Trustees considered the extent and quality of these other services which include, among other things, providing: product management (e.g., product positioning, performance benchmarking, risk management); fund administration (e.g., daily net asset value pricing and reconciliation, tax reporting, fulfilling regulatory filing requirements); oversight of third party service providers; administration of board relations (e.g., organizing board meetings and preparing related materials); compliance (e.g., monitoring compliance with investment policies and guidelines and regulatory requirements); and legal support (e.g., helping prepare and file registration statements, amendments thereto, proxy statements and responding to regulatory requests and/or inquiries). As the Funds operate in a highly regulated industry and given the importance of compliance, the Trustees considered, in particular, the additions of experienced personnel to the compliance teams and the enhancements to technology and related systems to support the compliance activities for the Funds (including a new reporting system for quarterly portfolio holdings). In addition to the foregoing, the Trustees also noted the additional services that the Fund Adviser or its affiliates provide to closed-end funds, including, in particular, secondary market support activities. The Trustees recognized Nuveen's continued commitment to supporting the secondary market for the common shares of its closed-end funds through a variety of initiatives designed to raise investor and analyst awareness and understanding of closed-end funds. These efforts include providing advertising and other media relations programs, continued contact with analysts, maintaining and enhancing its website for closed-end funds, and targeted advisor communication programs. With respect to funds that utilize leverage through the issuance of preferred shares, the Trustees noted Nuveen's continued support for the preferred shares by maintaining, among other things, an in-house preferred trading desk; designating a product manager whose responsibilities include creating and disseminating product information and managing relations in connection with the preferred share auction; and maintaining systems necessary to test compliance with rating agency requirements. Based on their review, the Trustees found that, overall, the nature, extent and quality of services provided (and expected to be provided) to the respective Funds under the Investment Management Agreement were of a high level and were satisfactory. B. THE INVESTMENT PERFORMANCE OF THE FUND AND FUND ADVISER The Board considered the investment performance for each Fund, including the Fund's historic performance as well as its performance compared to funds with similar investment objectives identified by an independent third party (the "Performance Peer Group") and portfolio level performance against customized benchmarks, as described below. In evaluating the performance information, in certain instances, the Trustees noted that the closest Performance Peer Group for a Fund still may not adequately reflect such Fund's investment objectives, strategies and portfolio duration, thereby limiting the usefulness of the comparisons of such Fund's performance with that of the Performance Peer Group. With respect to state specific municipal funds, the Trustees recognized that certain state municipal funds do not have a corresponding state specific Performance Peer Group in which case their performance is measured against a more general municipal category for various states. The closed-end state municipal funds that do not have corresponding state-specific Performance Peer Groups are from Arizona, Connecticut, Georgia, Maryland, Massachusetts, Missouri, North Carolina, Ohio, Texas, and Virginia. Further, due to a lack of state-specific unleveraged categories, certain unleveraged state municipal funds are included in their leveraged state category (such as, the Nuveen California Select Tax-Free Income Fund, Nuveen California Municipal Value Fund, Nuveen New York Select Tax-Free Income Fund and Nuveen New York Municipal Value Fund). In reviewing performance, the Trustees reviewed performance information including, among other things, total return information compared with the Fund's Performance Peer Group for the one-, three- and five-year periods (as applicable) ending December 31, 2005. The Trustees also reviewed the Fund's portfolio level performance (which does not reflect fund level fees and expenses) compared to customized portfolio-level benchmarks for the one- and three-year periods ending December 31, 2005 (as applicable). This analysis is designed to assess the efficacy of investment decisions against appropriate measures of risk and total return, within specific market segments. This information supplements the Fund performance information provided to the Board at each of their quarterly meetings. Based on their review, the Trustees determined that the respective Fund's absolute and relative investment performance over time had been satisfactory C. FEES, EXPENSES AND PROFITABILITY 1. FEES AND EXPENSES In evaluating the management fees and expenses of a Fund, the Board reviewed, among other things, the Fund's advisory fees (net and gross management fees) and total expense ratios (before and after expense reimbursements and/or waivers) in absolute terms as well as comparisons to the gross management fees (before waivers), net management fees (after waivers) and total expense ratios (before and after waivers) of comparable funds in the Peer Universe and the Peer Group. The Trustees reviewed data regarding the construction of Peer Groups as well as the methods of measurement for the fee and expense analysis and the performance analysis. In certain cases, due to the small number of peers in the Peer Universe, the Peer Universe and Peer Group 79 ANNUAL INVESTMENT MANAGEMENT AGREEMENT APPROVAL PROCESS (continued) may be the same. Further, the Trustees recognized that in certain cases the closest Peer Universe and/or Peer Group did not adequately reflect the Fund's investment objectives and strategies limiting the usefulness of comparisons. In reviewing comparisons, the Trustees also considered the size of the Peer Universe and/or Peer Group, the composition of the Peer Group (including differences in the use of leverage and insurance) as well as differing levels of fee waivers and/or expense reimbursements. In this regard, the Trustees considered the fund-level and complex-wide breakpoint schedules (described in further detail below) and any fee waivers and reimbursements provided by Nuveen (applicable, in particular, for certain funds launched since 1999). Based on their review of the fee and expense information provided, the Trustees determined that each Fund's net total expense ratio was within an acceptable range compared to peers. 2. COMPARISONS WITH THE FEES OF OTHER CLIENTS The Trustees further reviewed data comparing the advisory fees of the Fund Adviser with fees the Fund Adviser charges to other clients, including municipal managed accounts. In general, the fees charged for separate accounts are somewhat lower than the fees assessed to the Funds. The Trustees recognized that the differences in fees are attributable to a variety of factors, including the differences in services provided, product distribution, portfolio investment policies, investor profiles, account sizes and regulatory requirements. The Trustees noted, in particular, that the range of services provided to the Funds is more extensive than that provided to managed separate accounts. As described in further detail above, such additional services include, but are not limited to, providing: product management, fund administration, oversight of third party service providers, administration of board relations, and legal support. Funds further operate in a highly regulated industry requiring extensive compliance functions compared to the other investment products. In addition to the costs of the additional services, administrative costs may also be greater for funds as the average account size for separate accounts is notably larger than the retail accounts of funds. Given the differences in the product structures, particularly the extensive services provided to closed-end municipal funds, the Trustees believe such facts justify the different levels of fees. 3. PROFITABILITY OF FUND ADVISER In conjunction with its review of fees, the Trustees also considered the profitability of Nuveen Investments for advisory activities (which incorporated Nuveen's wholly-owned affiliated sub-advisers). The Trustees reviewed data comparing Nuveen's profitability with other fund sponsors prepared by three independent third party service providers as well as comparisons of the revenues, expenses and profits margins of various unaffiliated management firms with similar amounts of assets under management prepared by Nuveen. The Trustees further reviewed the 2005 Annual Report for Nuveen Investments. In considering profitability, the Trustees recognized the inherent limitations in determining profitability as well as the difficulties in comparing the profitability of other unaffiliated advisers. Profitability may be affected by numerous factors, including the methodology for allocating expenses, the adviser's business mix, the types of funds managed, the adviser's capital structure and cost of capital. Further, individual fund or product line profitability of other sponsors is generally not publicly available. Accordingly, the profitability information that is publicly available from various investment advisory or management firms may not be representative of the industry. Notwithstanding the foregoing, in reviewing profitability, the Trustees reviewed Nuveen's methodology and assumptions for allocating expenses across product lines to determine profitability. In this regard, the methods of allocation used appeared reasonable. The Trustees also, to the extent available, compared Nuveen's profitability margins (including pre- and post-marketing profit margins) with the profitability of various unaffiliated management firms. The Trustees noted that Nuveen's profitability is enhanced due to its efficient internal business model. The Trustees also recognized that while a number of factors affect profitability, Nuveen's profitability may change as fee waivers and/or expense reimbursement commitments of Nuveen to various funds in the Nuveen complex expire. To keep apprised of profitability and developments that may affect profitability, the Trustees have requested profitability analysis be provided periodically during the year. Based on their review, the Trustees were satisfied that the Fund Adviser's level of profitability was reasonable in light of the services provided. In evaluating the reasonableness of the compensation, the Trustees also considered any other revenues paid to the Fund Adviser as well as any indirect benefits (such as soft dollar arrangements, if any) the Fund Adviser and its affiliates are expected to receive that are directly attributable to their management of the Funds, if any. See Section E below for additional information. Based on their review of the overall fee arrangements of the applicable Fund, the Trustees determined that the advisory fees and expenses of the respective Fund were reasonable. 80 D. ECONOMIES OF SCALE AND WHETHER FEE LEVELS REFLECT THESE ECONOMIES OF SCALE With respect to economies of scale, the Trustees recognized the potential benefits resulting from the costs of a fund being spread over a larger asset base as a fund grows. To help ensure the shareholders share in these benefits, the Trustees have reviewed and considered the breakpoints in the advisory fee schedules that reduce advisory fees as the applicable Fund's assets grow. In addition to advisory fee breakpoints as assets in a respective Fund rise, after lengthy discussions with management, the Board also approved a complex-wide fee arrangement that was introduced on August 1, 2004. Pursuant to the complex-wide fee arrangement, the fees of the funds in the Nuveen complex, including the Funds, are reduced as the assets in the fund complex reach certain levels. In evaluating the complex-wide fee arrangement, the Trustees considered, among other things, the historic and expected fee savings to shareholders as assets grow, the amount of fee reductions at various asset levels, and that the arrangement would extend to all funds in the Nuveen complex. The Trustees noted that 2005 was the first full year to reflect the fee reductions from the complex wide fee arrangement. The Trustees also considered the impact, if any, the complex-wide fee arrangement may have on the level of services provided. Based on their review, the Trustees concluded that the breakpoint schedule and complex-wide fee arrangement currently was acceptable and desirable in providing benefits from economies of scale to shareholders. E. INDIRECT BENEFITS In evaluating fees, the Trustees also considered any indirect benefits or profits the Fund Adviser or its affiliates may receive as a result of its relationship with each Fund. In this regard, the Trustees considered revenues received by affiliates of the Fund Adviser 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 Trustees considered whether the Fund Adviser received any benefits from soft dollar arrangements. With respect to NAM, the Trustees noted that NAM does not currently have any soft dollar arrangements and does not pay excess brokerage commissions (or spreads on principal transactions) in order to receive research services; however, the Fund Adviser may from time to time receive and have access to research generally provided to institutional clients. The Trustees did not identify any single factor discussed previously as all-important or controlling. The Trustees, including a majority of independent Trustees, concluded that the terms of the Investment Management Agreements were fair and reasonable, that the Fund Adviser's fees are reasonable in light of the services provided to each Fund, and that the renewal of the Investment Management Agreements should be approved. 81 Reinvest Automatically EASILY AND CONVENIENTLY Sidebar text: NUVEEN MAKES REINVESTING EASY. A PHONE CALL IS ALL IT TAKES TO SET UP YOUR REINVESTMENT ACCOUNT. NUVEEN EXCHANGE-TRADED CLOSED-END FUNDS DIVIDEND REINVESTMENT PLAN Your Nuveen Exchange-Traded 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 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. 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. 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. 82 Other Useful INFORMATION QUARTERLY PORTFOLIO OF INVESTMENTS AND PROXY VOTING INFORMATION Each Fund's (i) quarterly portfolio of investments, (ii) information regarding how the Funds voted proxies relating to portfolio securities held during the 12-month period ended June 30, 2006, and (iii) a description of the policies and procedures that the Funds used to determine how to vote proxies relating to portfolio securities are available without charge, upon request, by calling Nuveen Investments toll-free at (800) 257-8787 or on Nuveen's website at www.nuveen.com. You may also obtain this and other Fund information directly from the Securities and Exchange Commission ("SEC"). The SEC may charge a copying fee for this information. Visit the SEC on-line at http://www.sec.gov or in person at the SEC's Public Reference Room in Washington, D.C. Call the SEC at 1-202-942-8090 for room hours and operation. You may also request Fund information by sending an e-mail request to publicinfo@sec.gov or by writing to the SEC's Public References Section at 450 Fifth Street NW, Washington, D.C. 20549. CEO CERTIFICATION DISCLOSURE Each Fund's Chief Executive Officer has submitted to the New York Stock Exchange the annual CEO certification as required by Section 303A.12(a) of the NYSE Listed Company Manual. Each Fund has filed with the Securities and Exchange Commission the certification of its Chief Executive Officer and Chief Financial Officer required by Section 302 of the Sarbanes-Oxley Act. GLOSSARY OF TERMS USED IN THIS REPORT AVERAGE ANNUAL TOTAL RETURN: This is a commonly used method to express an investment's performance over a particular, usually multi-year time period. It expresses the return that would have been necessary each year to equal the investment's actual cumulative performance (including change in NAV or market price and reinvested dividends and capital gains distributions, if any) over the time period being considered. AVERAGE EFFECTIVE MATURITY: The average of all the maturities of the bonds in a Fund's portfolio, computed by weighting each maturity date (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. LEVERAGE-ADJUSTED DURATION: Duration is a measure of the expected period over which a bond's principal and interest will be paid, and consequently is a measure of the sensitivity of a bond's or bond Fund's value to changes when market interest rates change. Generally, the longer a bond's or Fund's duration, the more the price of the bond or Fund will change as interest rates change. Leverage-adjusted duration takes into account the leveraging process for a Fund and therefore is longer than the duration of the Fund's portfolio of bonds. MARKET YIELD (ALSO KNOWN AS DIVIDEND YIELD OR CURRENT YIELD): An investment's current annualized dividend divided by its current market price. NET ASSET VALUE (NAV): A Fund's common share NAV per share is calculated by subtracting the liabilities of the Fund (including any MuniPreferred shares issued in order to leverage the Fund) from its total assets and then dividing the remainder by the number of shares outstanding. Fund NAVs are calculated at the end of each business day. TAXABLE-EQUIVALENT YIELD: The yield necessary from a fully taxable investment to equal, on an after-tax basis, the yield of a municipal bond investment. BOARD OF TRUSTEES Robert P. Bremner Lawrence H. Brown Jack B. Evans William C. Hunter David J. Kundert William J. Schneider Timothy R. Schwertfeger Judith M. Stockdale Eugene S. Sunshine FUND MANAGER Nuveen Asset Management 333 West Wacker Drive Chicago, IL 60606 CUSTODIAN State Street Bank & Trust Company Boston, MA TRANSFER AGENT AND SHAREHOLDER SERVICES State Street Bank & Trust Company Nuveen Funds P.O. Box 43071 Providence, RI 02940-3071 (800) 257-8787 LEGAL COUNSEL Chapman and Cutler LLP Chicago, IL INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Ernst & Young LLP Chicago, IL Each Fund intends to repurchase shares of its own common or preferred stock in the future at such times and in such amounts as is deemed advisable. No shares were repurchased during the period covered by this report. Any future repurchases will be reported to shareholders in the next annual or semiannual report. 83 Photo of: 2 women looking at a photo album. Nuveen Investments: SERVING Investors For GENERATIONS Since 1898, financial advisors and their clients have relied on Nuveen Investments to provide dependable investment solutions. For the past century, Nuveen Investments has adhered to the belief that the best approach to investing is to apply conservative risk-management principles to help minimize volatility. Building on this tradition, we today offer a range of high quality equity and fixed-income solutions that are integral to a well-diversified core portfolio. Our clients have come to appreciate this diversity, as well as our continued adherence to proven, long-term investing principles. WE OFFER MANY DIFFERENT INVESTING SOLUTIONS FOR OUR CLIENTS' DIFFERENT NEEDS. Managing more than $145 billion in assets, Nuveen Investments offers access to a number of different asset classes and investing solutions through a variety of products. Nuveen Investments markets its capabilities under four distinct brands: Nuveen, a leader in fixed-income investments; NWQ, a leader in value-style equities; Rittenhouse, a leader in growth-style equities; and Symphony, a leading institutional manager of market-neutral alternative investment portfolios. FIND OUT HOW WE CAN HELP YOU REACH YOUR FINANCIAL GOALS. To learn more about the products and services Nuveen Investments offers, talk to your financial advisor, or call us at (800) 257-8787. Please read the information provided carefully before you invest. Be sure to obtain a prospectus, where applicable. Investors should consider the investment objective and policies, risk considerations, charges and expenses of the Fund carefully before investing. The prospectus contains this and other information relevant to an investment in the Fund. For a prospectus, please contact your securities representative or Nuveen Investments, 333 W. Wacker Dr., Chicago, IL 60606. Please read the prospectus carefully before you invest or send money. o Share prices o Fund details Learn more o Daily financial news about Nuveen Funds at o Investor education WWW.NUVEEN.COM/CEF o Interactive planning tools Logo: NUVEEN Investments EAN-B-0706D ITEM 2. CODE OF ETHICS. As of the end of the period covered by this report, the registrant has adopted a code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. There were no amendments to or waivers from the Code during the period covered by this report. The registrant has posted the code of ethics on its website at www.nuveen.com/etf. (To view the code, click on the Investor Resources drop down menu box, click on Fund Governance and then click on Code of Conduct.) ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. The registrant's Board of Directors or Trustees determined that the registrant has at least one "audit committee financial expert" (as defined in Item 3 of Form N-CSR) serving on its Audit Committee. The registrant's audit committee financial expert is Jack B. Evans, Chairman of the Audit Committee, who is "independent" for purposes of Item 3 of Form N-CSR. Mr. Evans was formerly President and Chief Operating Officer of SCI Financial Group, Inc., a full service registered broker-dealer and registered investment adviser ("SCI"). As part of his role as President and Chief Operating Officer, Mr. Evans actively supervised the Chief Financial Officer (the "CFO") and actively supervised the CFO's preparation of financial statements and other filings with various regulatory authorities. In such capacity, Mr. Evans was actively involved in the preparation of SCI's financial statements and the resolution of issues raised in connection therewith. Mr. Evans has also served on the audit committee of various reporting companies. At such companies, Mr. Evans was involved in the oversight of audits, audit plans, and the preparation of financial statements. Mr. Evans also formerly chaired the audit committee of the Federal Reserve Bank of Chicago. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. Nuveen Michigan 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, 2006 $ 7,220 $ 0 $ 437 $ 2,900 - -------------------------------------------------------------------------------------------------------------------------- Percentage approved 0% 0% 0% 0% pursuant to pre-approval exception - -------------------------------------------------------------------------------------------------------------------------- July 31, 2005 $ 6,790 $ 0 $ 590 $ 2,700 - -------------------------------------------------------------------------------------------------------------------------- Percentage approved 0% 0% 0% 0% pursuant to pre-approval exception - --------------------------------------------------------------------------------------------------------------------------
(1) "Audit Fees" are the aggregate fees billed for professional services for the audit of the Fund's annual financial statements and services provided in connection with statutory and regulatory filings or engagements. (2) "Audit Related Fees" are the aggregate fees billed for assurance and related services reasonably related to the performance of the audit or review of financial statements and are not reported under "Audit Fees". (3) "Tax Fees" are the aggregate fees billed for professional services for tax advice, tax compliance, and tax planning. (4) "All Other Fees" are the aggregate fees billed for products and services other than "Audit Fees", "Audit Related Fees", and "Tax Fees". SERVICES THAT THE FUND'S AUDITOR BILLED TO THE ADVISER AND AFFILIATED FUND SERVICE PROVIDERS The following tables show the amount of fees billed by Ernst & Young LLP to Nuveen Asset Management ("NAM" or the "Adviser"), and any entity controlling, controlled by or under common control with NAM ("Control Affiliate") that provides ongoing services to the Fund ("Affiliated Fund Service Provider"), for engagements directly related to the Fund's operations and financial reporting, during the Fund's last two full fiscal years. The tables also show the percentage of fees subject to the pre-approval exception. The pre-approval exception for services provided to the Adviser and any Affiliated Fund Service Provider (other than audit, review or attest services) waives the pre-approval requirement if: (A) the aggregate amount of all such services provided constitutes no more than 5% of the total amount of revenues paid to Ernst & Young LLP by the Fund, the Adviser and Affiliated Fund Service Providers during the fiscal year in which the services are provided that would have to be pre-approved by the Audit Committee; (B) the Fund did not recognize the services as non-audit services at the time of the engagement; and (C) the services are promptly brought to the Audit Committee's attention, and the Committee (or its delegate) approves the services before the Fund's audit is completed.
FISCAL YEAR ENDED AUDIT-RELATED FEES TAX FEES BILLED TO ALL OTHER FEES BILLED TO ADVISER AND ADVISER AND BILLED TO ADVISER AFFILIATED FUND AFFILIATED FUND AND AFFILIATED FUND SERVICE PROVIDERS SERVICE PROVIDERS (1) SERVICE PROVIDERS - -------------------------------------------------------------------------------------------------- July 31, 2006 $ 0 $ 2,200 $ 0 - -------------------------------------------------------------------------------------------------- Percentage approved 0% 0% 0% pursuant to pre-approval exception - -------------------------------------------------------------------------------------------------- July 31, 2005 $ 0 $ 2,200 $ 0 - -------------------------------------------------------------------------------------------------- Percentage approved 0% 0% 0% pursuant to pre-approval exception - --------------------------------------------------------------------------------------------------
(1) The amounts reported for the Fund under the column heading "Tax Fees" represents amounts billed to the Adviser exclusively for the preparation for the Fund's tax return, the cost of which is borne by the Adviser. In the aggregate, for all Nuveen funds for which Ernst & Young LLP serves as independent registered public accounting firm, these fees amounted to $275,000 in 2006 and $282,575 in 2005. NON-AUDIT SERVICES The following table shows the amount of fees that Ernst & Young LLP billed during the Fund's last two full fiscal years for non-audit services. The Audit Committee is required to pre-approve non-audit services that Ernst & Young LLP provides to the Adviser and any Affiliated Fund Services Provider, if the engagement related directly to the Fund's operations and financial reporting (except for those subject to the de minimis exception described above). The Audit Committee requested and received information from Ernst & Young LLP about any non-audit services that Ernst & Young LLP rendered during the Fund's last fiscal year to the Adviser and any Affiliated Fund Service Provider. The Committee considered this information in evaluating Ernst & Young LLP's independence.
FISCAL YEAR ENDED TOTAL NON-AUDIT FEES BILLED TO ADVISER AND AFFILIATED FUND SERVICE TOTAL NON-AUDIT FEES PROVIDERS (ENGAGEMENTS BILLED TO ADVISER AND RELATED DIRECTLY TO THE AFFILIATED FUND SERVICE TOTAL NON-AUDIT FEE OPERATIONS AND FINANCIAL PROVIDERS (ALL OTHER BILLED TO FUND REPORTING OF THE FUND) ENGAGEMENTS) TOTAL - -------------------------------------------------------------------------------------------------------------------- July 31, 2006 $ 3,337 $ 2,200 $ 0 $ 5,537 July 31, 2005 $ 3,290 $ 2,200 $ 0 $ 5,490
"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, Lawrence H. Brown, Jack B. Evans, William J. Schneider and Eugene S. Sunshine. 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 Cathryn Steeves 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* - -------------------------------------------------------------------------------- Cathryn Steeves Registered Investment Company 67 $13.31 billion Other Pooled Investment Vehicles 0 $0 Other Accounts 0 $0 * Assets are as of July 31, 2006. None of the assets in these accounts are subject to an advisory fee based on performance. Compensation. Each portfolio manager's compensation consists of three basic elements--base salary, cash bonus and long-term incentive compensation. The compensation strategy is to annually compare overall compensation, including these three elements, to the market in order to create a compensation structure that is competitive and consistent with similar financial services companies. As discussed below, several factors are considered in determining each portfolio manager's total compensation. In any year these factors may include, among others, the effectiveness of the investment strategies recommended by the portfolio manager's investment team, the investment performance of the accounts managed by the portfolio manager, and the overall performance of Nuveen Investments, Inc. (the parent company of NAM). Although investment performance is a factor in determining the portfolio manager's compensation, it is not necessarily a decisive factor. The portfolio manager's performance is evaluated in part by comparing manager's performance against a specified investment benchmark. This fund-specific benchmark is a customized subset (limited to bonds in each Fund's specific state and with certain maturity parameters) of the S&P/Investortools Municipal Bond index, an index comprised of bonds held by managed municipal bond fund customers of Standard & Poor's Securities Pricing, Inc. that are priced daily and whose fund holdings aggregate at least $2 million. As of August 30, 2006, the S&P/Investortools Municipal Bond index was comprised of 47,346 securities with an aggregate current market value of $879 billion. Base salary. Each portfolio manager is paid a base salary that is set at a level determined by NAM in accordance with its overall compensation strategy discussed above. NAM is not under any current contractual obligation to increase a portfolio manager's base salary. Cash bonus. Each portfolio manager is also eligible to receive an annual cash bonus. The level of this bonus is based upon evaluations and determinations made by each portfolio manager's supervisors, along with reviews submitted by his peers. These reviews and evaluations often take into account a number of factors, including the effectiveness of the investment strategies recommended to the NAM's investment team, the performance of the accounts for which he/she serves as portfolio manager relative to any benchmarks established for those accounts, his/her effectiveness in communicating investment performance to stockholders and their representatives, and his/her contribution to the NAM investment process and to the execution of investment strategies. The cash bonus component is also impacted by the overall performance of Nuveen Investments, Inc. in achieving its business objectives. Long-term incentive compensation. Each portfolio manager is eligible to receive bonus compensation in the form of equity-based awards issued in securities issued by Nuveen Investments, Inc. The amount of such compensation is dependent upon the same factors articulated for cash bonus awards but also factors in his long-term potential with the firm. Material Conflicts of Interest. Each portfolio manager's simultaneous management of the registrant and the other accounts noted above may present actual or apparent conflicts of interest with respect to the allocation and aggregation of securities orders placed on behalf of the Registrant and the other account. NAM, however, believes that such potential conflicts are mitigated by the fact that the NAM has adopted several policies that address potential conflicts of interest, including best execution and trade allocation policies that are designed to ensure (1) that portfolio management is seeking the best price for portfolio securities under the circumstances, (2) fair and equitable allocation of investment opportunities among accounts over time and (3) compliance with applicable regulatory requirements. All accounts are to be treated in a non-preferential manner, such that allocations are not based upon account performance, fee structure or preference of the portfolio manager. In addition, NAM has adopted a Code of Conduct that sets forth policies regarding conflicts of interest. Beneficial Ownership of Securities. As of the July 31, 2006, 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 RANGE OF SECURITIES EQUITY BENEFICIALLY SECURITIES OWNED IN BENEFICIALLY THE OWNED IN REMAINDER FUND OF NUVEEN FUNDS MANAGED BY NAM'S MUNICIPAL INVESTMENT NAME OF PORTFOLIO MANAGER FUND TEAM - ------------------------------------------------------------------------------------------------------------------------- Cathryn Steeves Nuveen Michigan Dividend Advantage Municipal Fund $0 $10,001-$50,000 - -------------------------------------------------------------------------------------------------------------------------
PORTFOLIO MANAGER BIO: Cathryn Steeves, PhD is currently a portfolio manager for 68 state-specific municipal bond funds. She joined Nuveen in 1996 and worked as a senior analyst in the healthcare sector. Cathryn has an undergraduate degree from Wake Forest University, an MA, MPhil and a PhD from Columbia University. 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. During this reporting period, the registrant's Board of Trustees implemented a change to the procedures by which shareholders may recommend nominees to the registrant's board of trustees by amending the registrant's by-laws to include a provision specifying the date by which shareholder nominations for election as trustee at a subsequent meeting must be submitted to the registrant. Shareholders must deliver or mail notice to the registrant not less than forty-five days nor more than sixty days prior to the first anniversary date of the date on which the registrant first mailed its proxy materials for the prior year's annual meeting; provided, however, if and only if the annual meeting is not scheduled to be held within a period that commences thirty days before the first anniversary date of the annual meeting for the preceding year and ends thirty days after such anniversary date (an annual meeting date outside such period being referred to as an "Other Annual Meeting Date" hereafter), the shareholder notice must be given no later than the close of business on the date forty-five days prior to such Other Annual Meeting Date or the tenth business day following the date such Other Annual Meeting Date is first publicly announced or disclosed. The shareholder's notice must be in writing and set forth the name, age, date of birth, business address, residence address and nationality of the person(s) being nominated and the class or series, number of all shares of the registrant owned of record or beneficially be each such person(s), any other information regarding such person required by Item 401 of Regulation S-K or Item 22 of Rule 14a-101 (Schedule 14A) under the Securities Exchange Act of 1934, as amended, any other information regarding the person(s) to be nominated that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitation of proxies for election of trustees, and whether such shareholder believes any nominee is or will be an "interested person" (as that term is defined in the Investment Company Act of 1940, as amended) of the registrant or sufficient information to enable the registrant to make that determination and the written and signed consent of the person(s) to be nominated. 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 ----------------------------------------------------------- By (Signature and Title)* /s/ Jessica R. Droeger ---------------------------------------------- Jessica R. Droeger Vice President and Secretary Date: October 6, 2006 ------------------------------------------------------------------- Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By (Signature and Title)* /s/ Gifford R. Zimmerman ---------------------------------------------- Gifford R. Zimmerman Chief Administrative Officer (principal executive officer) Date: October 6, 2006 ------------------------------------------------------------------- By (Signature and Title)* /s/ Stephen D. Foy ---------------------------------------------- Stephen D. Foy Vice President and Controller (principal financial officer) Date: October 6, 2006 ------------------------------------------------------------------- * Print the name and title of each signing officer under his or her signature. EX-99.CERT 2 file002.txt CERTIFICATIONS CERTIFICATION I, Gifford R. Zimmerman, certify that: 1. I have reviewed this report on Form N-CSR of Nuveen Michigan Dividend Advantage Municipal Fund; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: (a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (d) disclosed in this report any change in the registrant's internal control over financial reporting 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; and 5. The registrant's other certifying officer and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: October 6, 2006 /s/ Gifford R. Zimmerman ------------------------- -------------------------------- Gifford R. Zimmerman Chief Administrative Officer (principal executive officer) CERTIFICATION I, Stephen D. Foy, certify that: 1. I have reviewed this report on Form N-CSR of Nuveen Michigan Dividend Advantage Municipal Fund; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: (a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (d) disclosed in this report any change in the registrant's internal control over financial reporting 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; and 5. The registrant's other certifying officer and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: October 6, 2006 /s/ Stephen D. Foy ------------------------- -------------------------------- Stephen D. Foy Vice President and Controller (principal financial officer) EX-99.906CERT 3 file003.txt CERTIFICATIONS Certification Pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002; provided by the Chief Executive Officer and Chief Financial Officer, based on each such officer's knowledge and belief. The undersigned officers of Nuveen Michigan Dividend Advantage Municipal Fund (the "Fund"), certify that, to the best of each such officer's knowledge and belief: 1. The Form N-CSR of the Fund for the period ended July 31, 2006 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Fund. Date: October 6, 2006 ----------------------- /s/ Gifford R. Zimmerman --------------------------------- Gifford R. Zimmerman Chief Administrative Officer (principal executive officer) /s/ Stephen D. Foy --------------------------------- Stephen D. Foy Vice President, Controller (principal financial officer) -----END PRIVACY-ENHANCED MESSAGE-----