NUVEEN Exchange-Traded Funds
JULY 31, 1998
ANNUAL REPORT
DEPENDABLE, TAX-FREE INCOME TO HELP YOU KEEP MORE OF WHAT YOU EARN.
NAZ
Arizona
NUM
NMP
Michigan
NUO
Ohio
NTX
Texas
<PAGE>
Highlights
As of July 31, 1998
CREDIT QUALITY PERFORMANCE HIGHLIGHTS
================================================================================
Nuveen Arizona Premium Income Municipal Fund, Inc. (NAZ)
Pie Chart:
AAA/Pre-refunded 63%
AA 22%
A 6%
BBB/NR 9%
o Taxable-equivalent yield of 7.67%*
o One-year total return on net asset value
of 6.14%
o Steady dividend for 18 consecutive months
Nuveen Michigan Quality Income Municipal Fund, Inc. (NUM)
Pie Chart:
AAA/Pre-refunded 58%
AA 32%
A 7%
BBB/NR 3%
o Taxable-equivalent yield of 8.35%*
o One-year total return on net asset value
of 5.97%
o Steady dividend for 38 consecutive months
Nuveen Michigan Premium Income Municipal Fund, Inc. (NMP)
Pie Chart:
AAA/Pre-refunded 53%
AA 34%
A 10%
BBB/NR 3%
o Taxable-equivalent yield of 8.24%*
o One-year total return on net asset value
of 6.62%
o Steady dividend for 12 consecutive months
Nuveen Ohio Quality Income Municipal Fund, Inc. (NUO)
Pie Chart:
AAA/Pre-refunded 65%
AA 17%
A 7%
BBB/NR 11%
o Taxable-equivalent yield of 8.38%*
o One-year total return on net asset value
of 6.53%
o Steady dividend for 12 consecutive months
Nuveen Texas Quality Income Municipal Fund (NTX)
Pie Chart:
AAA/Pre-refunded 61%
AA 16%
A 14%
BBB/NR 9%
o Taxable-equivalent yield of 8.32%*
o One-year total return on net asset value
of 6.27%
o Outperformed Lehman Brothers Municipal
Bond Index for the one-year period**
*For investors in the 31% federal and applicable state income tax bracket. See
your funds' performance overview in this report for more information.
**The Lehman Brothers Municipal Bond Index is an unleveraged index comprised of
a broad range of investment-grade municipal bonds, and does not reflect any
initial or ongoing expenses.
CONTENTS
1 Dear Shareholder
4 NAZ Commentary & Overview
6 NUM Commentary & Overview
8 NMP Commentary & Overview
10 NUO Commentary & Overview
12 NTX Commentary & Overview
14 Report of Independent Auditors
15 Portfolio of Investments
34 Statement of Net Assets
35 Statement of Operations
36 Statement of Changes in Net Assets
38 Notes to Financial Statements
42 Financial Highlights
44 Building Better Portfolios
45 Fund Information
<PAGE>
Photo of:
TIMOTHY R. SCHWERTFEGER
CHAIRMAN OF THE BOARD
Sidebar text: Wealth takes a lifetime to build. Once achieved, it should
be preserved.
CHART OF:
BOND BUYER 40 CHART
Dear Shareholder
I'm pleased to share with you this performance report for your Nuveen municipal
bond fund. Over the past 12 months, each of the funds in this report continued
to perform well and meet its primary objective of providing you with competitive
levels of tax-free income. The funds benefited from the strong market in fixed
income securities, as investor demand for quality, high-yielding investments
such as the Nuveen exchange-traded funds led to higher share prices over the
past year. As of July 31, 1998, all of the funds covered in this report were
trading near or above their net asset values. Competitive tax-free income,
enhanced by strong share price performance, illustrates once again that
municipal bonds provide an excellent investment for income-oriented investors.
THE ECONOMY IN REVIEW
Over the past year, the markets have endured periods of volatility, largely due
to aftershocks from the Asian financial crisis. Investors responded by seeking a
haven from the ongoing uncertainty in more conservative investments such as
municipal bond funds. The funds' competitive yields have stimulated additional
interest in these investments in a market where interest rates continue to trend
downward.
During this period, the market for exchange-traded municipal bond funds has been
exceptionally strong. Closed-end funds continue to represent a bright spot among
fixed-income funds due to several factors. First, these funds have paid
competitive current market yields in a market that places a high premium on
yield. In addition, the funds have maintained excellent levels of call
protection, resulting in stable income streams. The very nature of
exchange-traded funds helps them retain call protection and competitive yields
because, unlike mutual funds, the portfolio managers of exchange-traded funds
can focus on maintaining a fully invested portfolio with no worries about
raising cash for redemption requirements. As a result of these qualities, demand
for the funds has remained strong.
A review of the economic picture for the past 12 months shows that much of the
decline in interest rates resulted from expectations that the financial turmoil
in Asia would restrain the prices of imported goods and reduce foreign demand
for U.S. products and services, thereby keeping inflation at moderate levels.
Thanks to a strong dollar and weak commodity prices, these inflation
expectations were largely fulfilled, as the Consumer Price Index rose only 1.7%
for the 12 months ended July 1998, among its lowest levels in years.
Currently, the fundamentals of the bond market - inflation, economic growth,
interest rates, and supply - are all at levels conducive to continued strong
demand for U.S. bonds. This should keep prices high and rates relatively low,
helping to prolong the U.S. economic expansion. In coming months, we will
continue to watch several key factors affecting the future of the economy,
including the demand for goods and services, the availability of qualified
employees, and indications from the Federal Reserve. We expect that these
factors will influence the tone of the fixed-income markets during the remainder
of the year.
<PAGE>
MUNICIPAL MARKET REVIEW
While the declining interest rate environment drove yields on 30-year Treasuries
to historic lows, the story in the municipal market was quite different. Over
the past year, as yields on the long bond reached their lowest levels since the
U.S. government began selling these bonds in 1977, the yield on the Bond Buyer
40, an unmanaged index of long-term municipal bonds, fell only 19 basis points -
from 5.45% to 5.26% - compared with a dramatic 74-point drop in the Treasury
yield. Although muni rates have continued to fall in recent months, they still
provide an attractive opportunity for income-seeking investors. As you can see
in the accompanying chart, municipal bonds have offered very attractive
taxable-equivalent yields when compared with Treasury bonds, especially for
investors in the higher income tax brackets.
One of the main factors in the steep decline in Treasury yields was the strong
interest in these investments by both international and conservative investors.
As problems in Asia continued to mount and the dollar strengthened against Asian
currencies, the demand for U.S.-dollar denominated Treasury securities increased
overseas. Similarly, conservative investors made a "flight to quality" in search
of shelter from Asian concerns by moving assets into high-quality U.S. Treasury
Bonds. In addition, the federal budget surplus has caused a cutback in issuance
at that level, leaving fewer bonds to meet the strong demand.
In the municipal market, the continued strength of the U.S. economy helped boost
the credit quality of many municipal bonds over the past 12 months. With the
improvements in the fundamental financial health of many municipalities, bond
credit upgrades by major credit rating agencies exceeded downgrades by
significant margins. This enhanced credit quality also contributed to the funds'
performance, as the upgraded bonds increased in value.
The combination of low interest rates and a strong economy stimulated a robust
pace in new municipal issuance and a dramatic increase in the refinancing of
existing bonds as issuers sought to lower their interest costs. The first six
months of 1998 saw $146 billion of new municipal issuance, up 51% over the same
period in 1997, and $42 billion in refunding activity, an increase of 118% from
last year. Although the nationwide supply of municipal bonds remained heavy, the
supply of bonds in each state varied according to local economic conditions. The
high level of recent issuance highlights the value of Nuveen's expertise in the
municipal market, as our portfolio management teams carefully analyzed the flood
of issues to select those undervalued securities that they believe will help the
funds achieve their investment objectives.
DIVERSIFICATION: THE KEY TO A BETTER PORTFOLIO
In the months ahead, we believe that investors will find diversification to be
an increasingly important investment strategy. An appropriately diversified
portfolio - one that balances different types of investments, risk levels, and
tax management - can help cushion your investments against volatility and
enhance your return potential.
Many investors select Nuveen's municipal bond funds because their emphasis on
dependable tax-free income and attractive after-tax returns makes them ideal for
building and sustaining long-term financial security. The funds also work well
with other Nuveen investments, creating the foundation for a diversified,
well-balanced portfolio. Recent studies by Nuveen's research team have found
that portfolios combining municipal bonds and stocks generated higher after-tax
returns with lower levels of risk than similar portfolios combining stocks and
Treasury or corporate bonds.
We encourage you to talk to your financial adviser about diversifying your
portfolio with equity and balanced funds from Nuveen's ever-expanding selection
of products and services. Today, more than ever, you can count on Nuveen for a
wide range of investments that can help you build a well-balanced, tax-efficient
portfolio designed to achieve your financial goals.
When seeking quality investment solutions that withstand the test of time, we
hope that you continue to think of Nuveen. We thank you for your continued
confidence in us and our family of investments.
Sincerely,
TIMOTHY R. SCHWERTFEGER
Chairman of the Board
September 15, 1998
Sidebar text: "Competitive levels of tax-free income, enhanced by strong share
price performance, illustrate once again that municipal bonds provide an
excellent investment for income-oriented investors."
Sidebar text: "Today, more than ever, you can count on Nuveen for a wide range
of investments that can help you build a well-balanced, tax-efficient portfolio
designed to achieve your financial goals."
<PAGE>
Nuveen Arizona Premium Income Municipal Fund, Inc.
Portfolio Manager's Comments
PORTFOLIO MANAGER MIKE DAVERN DISCUSSES THE MUNICIPAL MARKET, FUND PERFORMANCE,
AND KEY INVESTMENT STRATEGIES FOR THE NUVEEN ARIZONA PREMIUM INCOME MUNICIPAL
FUND. MIKE ASSUMED PORTFOLIO MANAGEMENT RESPONSIBILITIES FOR THE FUND
ON JULY 1, 1998, AS PART OF NUVEEN'S EFFORT TO MAKE MORE EFFICIENT USE OF STAFF
RESOURCES AND PORTFOLIO MANAGER EXPERTISE. MIKE IS A SEVEN-YEAR VETERAN OF
NUVEEN WITH 16 YEARS OF EXPERIENCE AS AN INVESTMENT PROFESSIONAL. HE HAS MANAGED
A RANGE OF OTHER STATE MUNICIPAL BOND FUNDS.
ARIZONA STATE UPDATE
In response to high population growth and low interest rates, municipal bond
issuance in the state for the first six months of 1998 increased by 40% over the
same period in 1997. Even though supply has been heavy, it still has not managed
to keep pace with the extremely strong demand for municipal debt in Arizona.
High demand has, in turn, driven prices for Arizona municipal bonds higher.
FUND PERFORMANCE
For the year ended July 31, 1998, the Nuveen Arizona Premium Income Municipal
Fund (NAZ) produced a total return on net asset value of 6.14%, outperforming
the Lehman Brothers Municipal Bond Index's annual return of 5.99% and providing
a taxable-equivalent total return of 9.03% for investors in the combined 34.3%
federal and state income tax bracket. The majority of the Arizona fund's
outperformance can be attributed to its longer leverage-adjusted duration of
8.29 years, compared with the unleveraged index's 7.16 years. Duration measures
a bond fund's price volatility, or reaction to interest rate movements. The
longer the duration, the more sensitive the fund is to changes in interest
rates. During a period of falling interest rates and market rallies, longer
duration enabled NAZ to participate more fully in market gains. However, when
rates rise, longer duration can make the fund more vulnerable to potential price
declines.
Despite the low interest rate environment of the past year, good call protection
helped support the fund's dividend and protect income from erosion. This fund
has now provided shareholders with 18 consecutive months of steady income. As of
July 31, 1998, the fund offered a very competitive current market yield of
5.04%, which translates to 7.67% on a taxable-equivalent basis for investors in
the combined 34.3% federal and state income tax bracket.
As Tim mentioned in his letter to shareholders, share price performance among
the Nuveen exchange-traded funds has been strong over the past 12 months. As
interest rates fell, active demand for high-quality, high-yielding funds such as
NAZ benefited the fund's share price, increasing its premium dramatically - by
approximately 590 basis points - over the year. As of July 31, the fund was
trading at a premium of 6.53% above its net asset value.
KEY STRATEGIES
The credit quality of most of the bonds available in the Arizona market is
relatively high, and bonds rated AAA and AA constitute more than 85% of the
fund's portfolio. Over the past year, we maintained this high standard, adding
lower-rated bonds only when they offered exceptional value. In addition, the
continued population growth in Arizona has resulted in heavy issuance in the
essential services sector, affording us more opportunities to find value. We
were also able to buy insured bonds at relatively low prices because of the
competitive insurance environment in the state.
We also focused on extending the duration and call protection of the fund by
selling selected pre-refunded bonds. These bonds, which naturally have a shorter
duration, were scheduled to be called from the portfolio within the next few
years. Replacing them with bonds offering longer call protection helped support
the strength of the dividend.
OUTLOOK FOR THE FUTURE
Over the coming months, our focus will be on maintaining the fund's call
protection, reinvesting proceeds from bond calls and sales into attractive
bonds, and further strengthening support for the dividend. Given a continuation
of the current interest rate environment, we expect supply to remain heavy,
although even a slight increase in rates could slow both new issuance and
pre-refunding volume. Current market conditions - including continued volatility
in the equity markets and the excellent municipal-to-Treasury ratio - all favor
increased investor demand for municipal bonds in the months ahead.
<PAGE>
Nuveen Arizona Premium Income Municipal Fund, Inc.
Performance Overview
As of July 31, 1998
NAZ
PORTFOLIO STATISTICS
==================================================
Inception Date 11/92
- --------------------------------------------------
Share Price 16 7/16
- --------------------------------------------------
Net Asset Value Per Share $15.43
- --------------------------------------------------
Current Market Yield 5.04%
- --------------------------------------------------
Taxable-Equivalent Yield
(Federal Only)(1) 7.30%
- --------------------------------------------------
Taxable-Equivalent Yield
(Federal and State)(1) 7.67%
- --------------------------------------------------
Fund Net Assets ($000) $96,546
- --------------------------------------------------
Average Weighted Maturity (Years) 18.99
- --------------------------------------------------
Leverage-Adjusted Duration (Years) 8.29
- --------------------------------------------------
ANNUALIZED TOTAL RETURN
==================================================
ON SHARE PRICE ON NAV
- --------------------------------------------------
1-Year 12.18% 6.14%
- --------------------------------------------------
3-Year 12.53% 8.76%
- --------------------------------------------------
5-Year 6.77% 7.10%
- --------------------------------------------------
Since Inception 7.34% 7.33%
- --------------------------------------------------
TAXABLE-EQUIVALENT TOTAL RETURN(2)
==================================================
ON SHARE PRICE ON NAV
- --------------------------------------------------
1-Year 15.05% 9.03%
- --------------------------------------------------
3-Year 15.58% 11.74%
- --------------------------------------------------
5-Year 9.78% 10.08%
- --------------------------------------------------
Since Inception 10.25% 10.24%
- --------------------------------------------------
TOP FIVE SECTORS
==================================================
U.S. Guaranteed 22%
- --------------------------------------------------
Utilities 12%
- --------------------------------------------------
Health Care 12%
- --------------------------------------------------
Tax Obligation (Limited) 11%
- --------------------------------------------------
Water and Sewer 10%
- --------------------------------------------------
1 Taxable-equivalent yield represents the yield on a taxable investment
necessary to equal the yield of the Nuveen fund on an after-tax basis. The
federal only rate is based on the current market yield and a federal income
tax rate of 31%. The rate shown for federal and state highlights the added
value of owning shares that are also exempt from state income taxes. It is
based on a combined federal and state income tax rate of 34.3%.
2 Taxable-equivalent total return is based on the annualized total return and a
combined federal and state income tax rate of 34.3%. It represents the return
on a taxable investment necessary to equal the return of the Nuveen fund on an
after-tax basis.
BAR CHART:
1997-1998 Monthly Tax-Free Dividends Per Share
Aug 97 0.069
Sep 97 0.069
Oct 97 0.069
Nov 97 0.069
Dec 97 0.069
Jan 98 0.069
Feb 98 0.069
Mar 98 0.069
Apr 98 0.069
May 98 0.069
Jun 98 0.069
Jul 98 0.069
MOUNTAIN CHART:
SHARE PRICE PERFORMANCE
WEEKLY CLOSING PRICE
7/25/97 15
15.313
15.438
15.563
15.563
15.688
15.313
15.625
15.75
15.938
15.813
15.313
15.563
15.313
15.438
15.563
15.5
15.625
15.688
15.5
15.688
15.625
15.688
16.313
16.438
16.25
16.375
16.063
16.125
16.375
16.25
16
15.813
15.75
16.063
15.75
15.875
15.063
14.875
14.875
16
16
16.063
16.125
15.938
15.938
16.188
16.25
16.313
16.688
16.625
7/31/98 16.438
Past Performance is not predictive of future results.
<PAGE>
Nuveen Michigan Quality Income Municipal Fund, Inc.
Portfolio Manager's Comments
PORTFOLIO MANAGER MIKE DAVERN DISCUSSES THE MUNICIPAL MARKET, FUND PERFORMANCE,
AND KEY INVESTMENT STRATEGIES FOR THE NUVEEN MICHIGAN QUALITY INCOME MUNICIPAL
FUND. MIKE ASSUMED PORTFOLIO MANAGEMENT RESPONSIBILITIES FOR THE FUND ON JULY 1,
1998, AS PART OF NUVEEN'S EFFORT TO MAKE MORE EFFICIENT USE OF STAFF RESOURCES
AND PORTFOLIO MANAGER EXPERTISE. MIKE IS A SEVEN-YEAR VETERAN OF NUVEEN WITH 16
YEARS OF EXPERIENCE AS AN INVESTMENT PROFESSIONAL. HE HAS MANAGED A RANGE OF
OTHER STATE MUNICIPAL BOND FUNDS.
MICHIGAN STATE UPDATE
Michigan's economy has improved significantly over the past two years, and all
three major agencies upgraded the state's general obligation bonds. These
upgrades were justified in part by the state's accumulated budget stabilization
fund reserves, which topped $1.2 billion in 1997. Since Michigan's economy
remains dependent on the cyclical automobile manufacturing industry, these
reserves provide an important cushion against future economic downturns.
Michigan's overall debt burden is manageable, despite a doubling of new issuance
volume during the first half of 1998.
FUND PERFORMANCE
For the year ended July 31, 1998, the Nuveen Michigan Quality Income Fund (NUM)
produced a total return on net asset value of 5.97%, providing a
taxable-equivalent total return of 9.14% for investors in the combined 34%
federal and state income tax bracket. The total return compares with an annual
return of 5.99% for the Lehman Brothers Municipal Bond Index. The slight
difference in performance between the Michigan fund and the Lehman Index can be
attributed to the fund's shorter leverage-adjusted duration of 7.10 years,
compared with the unleveraged index's 7.16 years. Duration measures a bond
fund's price volatility, or reaction to interest rate movements. The longer the
duration, the more sensitive the fund is to changes in interest rates. During a
period of falling interest rates and market rallies, longer duration enables a
fund to participate more fully in market gains. However, when rates rise, longer
duration can make the fund more vulnerable to potential price declines.
Despite the low interest rate environment of the past year, good call protection
helped support the fund's dividend and protect income from erosion. This fund
has now provided shareholders with 38 consecutive months of steady income. As of
July 31, 1998, the fund offered a competitive current market yield of 5.51%,
which translates to 8.35% on a taxable-equivalent basis for investors in the
combined 34% federal and state income tax bracket.
As Tim mentioned in his letter to shareholders, share price performance among
the Nuveen exchange-traded funds has been strong over the past 12 months. As
interest rates declined, active demand for high-quality, high-yielding funds
such as NUM benefited the fund's share price, increasing its premium
dramatically - by almost 460 basis points - over the year. As of July 31, the
fund was trading at a premium of 8.82% above its net asset value.
KEY STRATEGIES
Over the past year, we continued to stress quality, as the current market
offered little compensation for taking on the additional credit risk of
lower-quality issues. In addition, we have continued to emphasize bonds in the
utility sector, where the scarcity of supply has enhanced the value of these
bonds.
An important factor for the fund over the past year has been the successful
comeback of the City of Detroit. A few years ago, all Detroit-issued bonds
automatically offered 5-10 extra basis points of yield to compensate for the
perceived added risk of investing in any of the city's projects. At that time,
we worked with Nuveen's research team to gain an in-depth understanding of the
city's situation and concluded that Detroit was not only stronger than its
ratings suggested, but was also trending in the right direction. As a result, we
proceeded with the purchase of a large number of Detroit bonds from every
sector, using careful analysis of each issue to support our investment decision.
Today Detroit is one of the most successful economic recovery stories among the
major metropolitan areas, illustrating once again how the partnership between
our research analysts and portfolio managers benefits shareholders through
successful value investing.
OUTLOOK FOR THE FUTURE
Our focus going forward will be on lengthening the fund's duration while
maintaining its yield and excellent level of call protection. We plan to
accomplish this by reinvesting the proceeds from shorter-term bonds into bonds
with longer maturities, providing more protection from bond calls.
<PAGE>
Nuveen Michigan Quality Income Municipal Fund, Inc.
Performance Overview
As of July 31, 1998
NUM
PORTFOLIO STATISTICS
==================================================
Inception Date 10/91
- --------------------------------------------------
Share Price 17 5/16
- --------------------------------------------------
Net Asset Value Per Share $15.91
- --------------------------------------------------
Current Market Yield 5.51%
- --------------------------------------------------
Taxable-Equivalent Yield
(Federal Only)(1) 7.99%
- --------------------------------------------------
Taxable-Equivalent Yield
(Federal and State)(1) 8.35%
- --------------------------------------------------
Fund Net Assets ($000) $261,259
- --------------------------------------------------
Average Weighted Maturity (Years) 21.28
- --------------------------------------------------
Leverage-Adjusted Duration (Years) 7.10
- --------------------------------------------------
ANNUALIZED TOTAL RETURN
==================================================
ON SHARE PRICE ON NAV
- --------------------------------------------------
1-Year 10.27% 5.97%
- --------------------------------------------------
3-Year 11.86% 8.39%
- --------------------------------------------------
5-Year 8.34% 6.86%
- --------------------------------------------------
Since Inception 8.63% 8.50%
- --------------------------------------------------
TAXABLE-EQUIVALENT TOTAL RETURN(2)
==================================================
ON SHARE PRICE ON NAV
- --------------------------------------------------
1-Year 13.31% 9.14%
- --------------------------------------------------
3-Year 15.10% 11.67%
- --------------------------------------------------
5-Year 11.68% 10.24%
- --------------------------------------------------
Since Inception 11.86% 11.80%
- --------------------------------------------------
TOP FIVE SECTORS
==================================================
U.S. Guaranteed 31%
- --------------------------------------------------
Tax Obligation (General) 20%
- --------------------------------------------------
Utilities 16%
- --------------------------------------------------
Health Care 9%
- --------------------------------------------------
Education and Civic Organizations 7%
- --------------------------------------------------
1 Taxable-equivalent yield represents the yield on a taxable investment
necessary to equal the yield of the Nuveen fund on an after-tax basis. The
federal only rate is based on the current market yield and a federal income
tax rate of 31%. The rate shown for federal and state highlights the added
value of owning shares that are also exempt from state income taxes. It is
based on a combined federal and state income tax rate of 34%.
2 Taxable-equivalent total return is based on the annualized total return and a
combined federal and state income tax rate of 34%. It represents the return on
a taxable investment necessary to equal the return of the Nuveen fund on an
after-tax basis.
3 The fund also paid shareholders taxable distributions of $0.0101 per share in
December.
BAR CHART:
1997-1998 Monthly Tax-Free Dividends Per Share(3)
Aug 97 0.795
Sep 97 0.795
Oct 97 0.795
Nov 97 0.795
Dec 97 0.795
Jan 98 0.795
Feb 98 0.795
Mar 98 0.795
Apr 98 0.795
May 98 0.795
Jun 98 0.795
Jul 98 0.795
MOUNTAIN CHART:
SHARE PRICE PERFORMANCE
Weekly Closing Price
7/25/97 16.563
16.25
16.125
16.688
16.688
16.5
16.375
16.375
16.625
16.563
16.188
16
16.063
16
16.188
16.313
16.25
16.625
16.75
16.75
17.125
17.25
17.25
16.938
17.25
17.125
17.25
17.125
17.125
17
16.875
16.875
17.313
16.875
16.5
17
16.938
16.875
16.813
16.875
17
16.875
16.875
17.313
17.375
17.188
17.063
17.188
17.125
17.188
17
17.375
Past performance is not predictive of future results.
<PAGE>
Nuveen Michigan Premium Income Municipal Fund, Inc.
Portfolio Manager's Comments
PORTFOLIO MANAGER MIKE DAVERN DISCUSSES THE MUNICIPAL MARKET, FUND PERFORMANCE,
AND KEY INVESTMENT STRATEGIES FOR THE NUVEEN MICHIGAN PREMIUM INCOME MUNICIPAL
FUND. MIKE ASSUMED PORTFOLIO MANAGEMENT RESPONSIBILITIES FOR THE FUND ON JULY 1,
1998, AS PART OF NUVEEN'S EFFORT TO MAKE MORE EFFICIENT USE OF STAFF RESOURCES
AND PORTFOLIO MANAGER EXPERTISE. MIKE IS A SEVEN-YEAR VETERAN OF NUVEEN WITH 16
YEARS OF EXPERIENCE AS AN INVESTMENT PROFESSIONAL. HE HAS MANAGED A RANGE OF
OTHER STATE MUNICIPAL BOND FUNDS.
MICHIGAN STATE UPDATE
Michigan's economy has improved significantly over the past two years, as all
three major agencies upgraded the state's general obligation bonds. These
upgrades were justified in part by the state's accumulated budget stabilization
fund reserves, which topped $1.2 billion in 1997. Since Michigan's economy
remains dependent on the cyclical automobile manufacturing industry, these
reserves provide an important cushion against future economic downturns.
Michigan's overall debt burden is manageable, despite a doubling of new issuance
volume during the first half of 1998. Investors can expect additional debt
issuance to fund the Michigan Department of Transportation's Build Michigan II
program, which is designed to rebuild the state's roads and bridges.
FUND PERFORMANCE
For the year ended July 31, 1998, the Nuveen Michigan Premium Income Municipal
Fund (NMP) produced a total return on net asset value of 6.62%, outperforming
the Lehman Brothers Municipal Bond Index's annual return of 5.99% and providing
a taxable-equivalent total return of 9.47% for investors in the combined 34%
federal and state income tax bracket. The majority of the Michigan fund's
outperformance can be attributed to its longer leverage-adjusted duration of
8.19 years, compared with the unleveraged index's 7.16 years. Duration measures
a bond fund's price volatility, or reaction to interest rate movements. The
longer the duration, the more sensitive the fund to changes in interest rates.
During a period of falling interest rates and market rallies, longer duration
enabled NMP to participate more fully in market gains. However, when rates rise,
longer duration can make the fund more vulnerable to potential price declines.
Despite the low interest rate environment of the past year, good call protection
helped support the fund's dividend and protect income from erosion. The fund has
now provided shareholders with 12 consecutive months of steady income. As of
July 31, 1998, the fund offered a competitive current market yield of 5.44%,
which translates to 8.24% on a taxable-equivalent basis for investors in the
combined 34% federal and state income tax bracket.
As Tim mentioned in his letter to shareholders, share price performance among
the Nuveen exchange-traded funds has been strong over the past 12 months. As
interest rates declined, active demand for high-quality, high-yielding funds
such as NMP benefited the fund's share price, narrowing its discount
dramatically - by almost 600 basis points - over the year. As of July 31, the
fund was trading at a discount of 1.96% to its net asset value, presenting an
excellent opportunity for investors to purchase shares at a good value.
KEY STRATEGIES
Over the past year, we worked to extend the duration of the Michigan fund to
take advantage of the value in the longer end of the market. In addition, we
have continued to emphasize bonds in the utility and housing sectors, where the
scarcity of supply has enhanced the value of these bonds. Another key strategy
over the past year has been to use the fund's tax loss carry-forwards to
capitalize on short-term trading opportunities without subjecting shareholders
to taxable capital gains.
An important factor for the fund over the past year has been the successful
comeback of the City of Detroit. A few years ago, all Detroit-issued bonds
automatically offered 5-10 extra basis points of yield to compensate for the
perceived added risk of investing in any of the city's projects. At that time,
we worked with Nuveen's research team to gain an in-depth understanding of the
city's situation and concluded that Detroit was not only stronger than its
ratings suggested, but was also trending in the right direction. As a result, we
proceeded with the purchase of a large number of Detroit bonds from every
sector, using careful analysis of each issue to support our investment decision.
Today Detroit is one of the most successful economic recovery stories among the
major metropolitan areas, illustrating once again how the partnership between
our research analysts and portfolio managers benefits shareholders through
successful value investing.
OUTLOOK FOR THE FUTURE
Over the coming months, our focus will be on maintaining the fund's call
protection, reinvesting proceeds from bond calls and sales into attractive
bonds, and further strengthening support for the dividend - emphasizing income
as a major component of total return. Given a continuation of the current
interest rate environment, we expect supply to remain heavy, although an
increase in rates could slow both new issuance and pre-refunding volume. Current
market conditions - including continued volatility in the equity markets, asset
rebalancing of investor portfolios, and the excellent municipal-to-Treasury
ratio - all favor increased investor demand for municipal bonds in the months
ahead.
<PAGE>
Nuveen Michigan Premium Income Municipal Fund, Inc.
Performance Overview
As of July 31, 1998
NMP
PORTFOLIO STATISTICS
==================================================
Inception Date 12/92
- --------------------------------------------------
Share Price 15
- --------------------------------------------------
Net Asset Value Per Share $15.30
- --------------------------------------------------
Current Market Yield 5.44%
- --------------------------------------------------
Taxable-Equivalent Yield
(Federal Only)(1) 7.88%
- --------------------------------------------------
Taxable-Equivalent Yield
(Federal and State)(1) 8.24%
- --------------------------------------------------
Fund Net Assets ($000) $173,451
- --------------------------------------------------
Average Weighted Maturity (Years) 17.06
- --------------------------------------------------
Leverage-Adjusted Duration (Years) 8.19
- --------------------------------------------------
ANNUALIZED TOTAL RETURN
==================================================
ON SHARE PRICE ON NAV
- --------------------------------------------------
1-Year 13.74% 6.62%
- --------------------------------------------------
3-Year 14.23% 9.46%
- --------------------------------------------------
5-Year 6.24% 7.03%
- --------------------------------------------------
Since Inception 5.95% 7.24%
- --------------------------------------------------
TAXABLE-EQUIVALENT TOTAL RETURN(2)
==================================================
ON SHARE PRICE ON NAV
- --------------------------------------------------
1-Year 16.83% 9.47%
- --------------------------------------------------
3-Year 17.50% 12.40%
- --------------------------------------------------
5-Year 9.45% 10.02%
- --------------------------------------------------
Since Inception 9.02% 10.13%
- --------------------------------------------------
TOP FIVE SECTORS
==================================================
Utilities 21%
- --------------------------------------------------
Health Care 18%
- --------------------------------------------------
Tax Obligation (General) 14%
- --------------------------------------------------
Tax Obligation (Limited) 11%
- --------------------------------------------------
Housing (Multifamily) 10%
- --------------------------------------------------
1 Taxable-equivalent yield represents the yield on a taxable investment
necessary to equal the yield of the Nuveen fund on an after-tax basis. The
federal only rate is based on the current market yield and a federal income
tax rate of 31%. The rate shown for federal and state highlights the added
value of owning shares that are also exempt from state income taxes. It is
based on a combined federal and state income tax rate of 34%.
2 Taxable-equivalent total return is based on the annualized total return and a
combined federal and state income tax rate of 34%. It represents the return on
a taxable investment necessary to equal the return of the Nuveen fund on an
after-tax basis.
BAR CHART:
1997-1998 Monthly Tax-Free Dividends Per Share
Aug 97 0.680
Sep 97 0.680
Oct 97 0.680
Nov 97 0.680
Dec 97 0.680
Jan 98 0.680
Feb 98 0.680
Mar 98 0.680
Apr 98 0.680
May 98 0.680
Jun 98 0.680
Jul 98 0.680
MOUNTAIN CHART:
SHARE PRICE PERFORMANCE
Weekly Closing Price
7/25/97 13.938
14
14.063
13.875
13.938
13.938
14
14.25
14.563
14.688
14.25
14.375
14.188
14.125
14.125
14.438
14.563
14.75
14.625
14.625
14.813
14.688
14.813
14.938
15
15.313
15.063
15
15.188
15.063
15
14.75
14.875
14.688
14.625
14.688
14.813
14.75
14.625
15
14.313
14.438
14.625
14.625
14.688
14.625
14.563
15.188
14.875
14.875
14.813
7/31/98 15
Past performance is not predictive of future results.
<PAGE>
Nuveen Ohio Quality Income Municipal Fund, Inc.
Portfolio Manager's Comments
PORTFOLIO MANAGER TOM FUTRELL DISCUSSES THE STATE MUNICIPAL MARKET AS WELL AS
PERFORMANCE AND STRATEGIES FOR THE NUVEEN OHIO QUALITY INCOME MUNICIPAL FUND.
TOM ASSUMED PORTFOLIO MANAGEMENT RESPONSIBILITIES FOR THE FUND ON JULY 1, 1998,
AS PART OF NUVEEN'S EFFORT TO MAKE MORE EFFICIENT USE OF STAFF RESOURCES AND
PORTFOLIO MANAGER EXPERTISE. TOM IS A 15-YEAR VETERAN OF NUVEEN AND AN
EXPERIENCED INVESTMENT PROFESSIONAL WHO HAS MANAGED A RANGE OF OTHER STATE
MUNICIPAL BOND FUNDS.
OHIO STATE UPDATE
Ohio's municipal market remains solid, with $5.4 billion of new bonds issued in
the first seven months of the year, an increase of 52% over the same period in
1997. General purpose, health care, and education offerings continue to dominate
new issue volume, representing approximately 60% of issuance. Ohio school
district financing continues to occupy the attention of municipal market
participants, as voters in May rejected a 1% sales tax increase proposal
designed to provide additional school funding. Also rejected was a proposal that
would have allowed the legislature to issue general obligation bonds for school
projects. Ongoing uncertainty about state funding for individual districts
continues to provide opportunities for value investing.
FUND PERFORMANCE
For the year ended July 31, 1998, the Nuveen Ohio Quality Income Municipal Fund
(NUO) produced a total return on net asset value of 6.53%, outperforming the
Lehman Brothers Municipal Bond Index's annual return of 5.99% and providing
taxable-equivalent total return of 9.89% for investors in the combined 35.8%
federal and state income tax bracket. The majority of the Ohio fund's
outperformance can be attributed to its longer leverage-adjusted duration of
7.51 years, compared with the unleveraged index's 7.16 years. Duration measures
a bond fund's price volatility, or reaction to interest rate movements. The
longer the duration, the more sensitive the fund to changes in interest rates.
During a period of falling interest rates and market rallies, longer duration
enabled NUO to participate more fully in market gains. However, when rates rise,
longer duration can make the fund more vulnerable to potential price declines.
Despite the low interest rate environment of the past year, good call protection
helped to support the fund's dividend and protect income from erosion. This fund
has now provided shareholders with 12 consecutive months of steady income. As of
July 31, 1998, the fund offered a competitive current market yield of 5.38%,
which translates to 8.38% on a taxable-equivalent basis for investors in the
combined 35.8% federal and state income tax bracket.
As Tim mentioned in his letter to shareholders, share price performance among
the Nuveen exchange-traded funds has been very strong over the past 12 months.
As interest rates declined, active demand for high-quality, high-yielding funds
such as NUO benefited the fund's share price, increasing its premium
dramatically - by 400 basis points - over the year. As of July 31, the fund was
trading at a premium of 8.48% above its net asset value.
KEY STRATEGIES
The Ohio market is well-diversified, offering a broad array of bonds. Over the
past few years, we took advantage of value investing opportunities across a
range of sectors, including health care, essential services, and housing. The
selections we made, reflecting the market's diversity in our allocation mix,
positioned the fund to perform well in the current market. Credit quality
remains high, with more than 80% of the fund's assets invested in bonds rated
AAA or AA. We have also worked to maintain strong call protection to avoid the
risk of reinvesting in a lower interest rate environment. Our efforts have been
enhanced by the relationships we have built with small local bond dealers in the
Ohio market, which helped us find value opportunities for the portfolio and also
provided additional venues when we were selling.
OUTLOOK FOR THE FUTURE
Our primary goal for NUO over the next year will be to maintain the income level
and credit quality of the fund. We also plan to focus on ensuring that the fund
remains a tax-efficient investment vehicle for our shareholders. Given a
continuation of the current interest rate environment, we expect supply to
remain heavy, although even a slight increase in rates could slow both new
issuance and pre-refunding volume. Current market conditions - including
continued volatility in the equity markets, asset rebalancing of investor
portfolios, and the excellent municipal-to-Treasury ratio - all favor increased
investor demand for municipal bonds in the months ahead.
<PAGE>
Nuveen Ohio Quality Income Municipal Fund, Inc.
Performance Overview
As of July 31, 1998
NUO
PORTFOLIO STATISTICS
==================================================
Inception Date 10/91
- --------------------------------------------------
Share Price 18 1/16
- --------------------------------------------------
Net Asset Value Per Share $16.65
- --------------------------------------------------
Current Market Yield 5.38%
- --------------------------------------------------
Taxable-Equivalent Yield
(Federal Only)(1) 7.80%
- --------------------------------------------------
Taxable-Equivalent Yield
(Federal and State)(1) 8.38%
- --------------------------------------------------
Fund Net Assets ($000) $232,940
- --------------------------------------------------
Average Weighted Maturity (Years) 19.79
- --------------------------------------------------
Leverage-Adjusted Duration (Years) 7.51
- --------------------------------------------------
ANNUALIZED TOTAL RETURN
==================================================
ON SHARE PRICE ON NAV
- --------------------------------------------------
1-Year 10.14% 6.53%
- --------------------------------------------------
3-Year 12.40% 9.09%
- --------------------------------------------------
5-Year 9.24% 7.64%
- --------------------------------------------------
Since Inception 9.02% 8.93%
- --------------------------------------------------
TAXABLE-EQUIVALENT TOTAL RETURN2
==================================================
ON SHARE PRICE ON NAV
- --------------------------------------------------
1-Year 13.35% 9.89%
- --------------------------------------------------
3-Year 15.82% 12.57%
- --------------------------------------------------
5-Year 12.76% 11.21%
- --------------------------------------------------
Since Inception 12.42% 12.40%
- --------------------------------------------------
TOP FIVE SECTORS
==================================================
U.S. Guaranteed 20%
- --------------------------------------------------
Tax Obligation (General) 15%
- --------------------------------------------------
Health Care 12%
- --------------------------------------------------
Education and Civic Organizations 11%
- --------------------------------------------------
Water and Sewer 11%
- --------------------------------------------------
1 Taxable-equivalent yield represents the yield on a taxable investment
necessary to equal the yield of the Nuveen fund on an after-tax basis. The
federal only rate is based on the current market yield and a federal income
tax rate of 31%. The rate shown for federal and state highlights the added
value of owning shares that are also exempt from state income taxes. It is
based on a combined federal and state income tax rate of 35.8%.
2 Taxable-equivalent total return is based on the annualized total return and a
combined federal and state income tax rate of 35.8%. It represents the return
on a taxable investment necessary to equal the return of the Nuveen fund on an
after-tax basis.
BAR CHART:
1997-1998 Monthly Tax-Free Dividends Per Share
Aug 97 0.810
Sep 97 0.810
Oct 97 0.810
Nov 97 0.810
Dec 97 0.810
Jan 98 0.810
Feb 98 0.810
Mar 98 0.810
Apr 98 0.810
May 98 0.810
Jun 98 0.810
Jul 98 0.810
MOUNTAIN CHART:
SHARE PRICE PERFORMANCE
Weekly Closing Price
7/25/97 17.313
17.5
17.438
17.5
17.5
17.688
17.5
17.563
17.5
17.688
17.625
17.5
17.5
17.438
17.5
17.688
17.688
17.625
17.875
18.063
18.313
18.375
18.25
18.75
19.063
18.25
18.625
18.563
18.75
18.75
18.688
18.688
18.313
18.25
17.875
17.875
17.75
17.438
17.25
17.375
17.938
18.063
18.125
18.25
18.375
18.063
18.188
18.438
18.5
18.375
18.25
7/31/98 18.063
Past performance is not predictive of future results.
<PAGE>
Nuveen Texas Quality Income Municipal Fund
Portfolio Manager's Comments
PORTFOLIO MANAGER MIKE DAVERN DISCUSSES THE TEXAS MARKET, FUND PERFORMANCE AND
STRATEGIES, AND THE OUTLOOK FOR THE NUVEEN TEXAS QUALITY INCOME MUNICIPAL FUND.
MIKE ASSUMED PORTFOLIO MANAGEMENT RESPONSIBILITIES FOR THE FUND ON JULY 1, 1998,
AS PART OF NUVEEN'S EFFORT TO MAKE MORE EFFICIENT USE OF STAFF RESOURCES AND
PORTFOLIO MANAGER EXPERTISE. MIKE IS A SEVEN-YEAR VETERAN OF NUVEEN WITH 16
YEARS OF EXPERIENCE AS AN INVESTMENT PROFESSIONAL. HE HAS MANAGED A RANGE OF
OTHER STATE MUNICIPAL BOND FUNDS.
TEXAS STATE UPDATE
The state's economy continues to improve due to low operating costs for
businesses, increases in high-technology manufacturing and favorable
international trade characteristics. In response to the strong economic growth
and low interest rate environment, municipal bond issuance within the state for
the first six months of 1998 increased by almost 20% over the same period in
1997, with approximately half of the issuance coming to market as insured. Among
the largest issuers in the state are the Texas Permanent School Fund and the
health care sector, where insured hospital bonds accounted for the majority of
new supply.
FUND PERFORMANCE
For the year ended July 31, 1998, the Nuveen Texas Quality Income Fund (NTX)
produced a total return on net asset value of 6.27%, outperforming the Lehman
Brothers Municipal Bond Index's annual return of 5.99% and providing a
taxable-equivalent total return of 8.96% for investors in the 31% federal income
tax bracket. The majority of the Texas fund's outperformance can be attributed
to its longer leverage-adjusted duration of 8.63 years, compared with the
unleveraged index's 7.16 years. Duration measures a bond fund's price
volatility, or reaction to interest rate movements. The longer the duration, the
more sensitive the fund to changes in interest rates. During a period of falling
interest rates and market rallies, longer duration enabled NTX to participate
more fully in market gains. However, when rates rise, longer duration could make
the fund more vulnerable to potential price declines.
The declining interest rate environment of the past year played a role in
reducing the income level of this fund, as proceeds from higher-yielding bonds
called or sold from the portfolio were reinvested in bonds paying today's lower
interest rates. In May, the change in income level earned by the portfolio
necessitated a dividend reduction. Despite this adjustment, the fund continues
to provide a competitive current market yield of 5.74%, which translates to
8.32% on a taxable-equivalent basis for investors in the 31% federal income tax
bracket.
As Tim mentioned in his letter to shareholders, share price performance among
the Nuveen exchange-traded funds has been very strong over the past 12 months.
As interest rates declined, active demand for high-quality, high-yielding funds
such as NTX benefited the fund's share price, narrowing its discount by 15 basis
points over the year. As of July 31, the fund was trading at a discount of 1.34%
to its net asset value, presenting an excellent opportunity for investors to
purchase shares at a good value.
KEY STRATEGIES
Because of value opportunities in the longer end of the market, one of our main
strategies over the past year was to enhance the performance of the Texas fund
by extending maturity and duration through the purchase of bonds with maturities
in the range of 25-30 years. We also focused on the health care sector,
particularly insured hospital issues that offered higher yields. Heavy issuance
in the hospital sector during the past 12 months provided several opportunities
to purchase bonds offering three key criteria: good structure, favorable income,
and good protection from bond calls. Given the high quality of Texas issuance,
the majority of the bonds we bought over the past year were rated AAA.
OUTLOOK FOR THE FUTURE
Over the coming months, our focus will be on maintaining the fund's call
protection, reinvesting proceeds into structurally attractive bonds, and further
strengthening support for the dividend - emphasizing income as a major component
of total return. Given a continuation of the current interest rate environment,
we expect supply to remain heavy, although an increase in interest rates could
slow both new issuance and pre-refunding volume. Current market conditions -
including continued volatility in the equity markets, asset rebalancing of
investor portfolios, and the excellent municipal-to-Treasury ratio - all favor
increased investor demand for municipal bonds in the months ahead.
<PAGE>
Nuveen Texas Quality Income Municipal Fund
Performance Overview
As of July 31, 1998
NTX
PORTFOLIO STATISTICS
==================================================
Inception Date 10/91
- --------------------------------------------------
Share Price 15 11/16
- --------------------------------------------------
Net Asset Value Per Share $15.90
- --------------------------------------------------
Current Market Yield 5.74%
- --------------------------------------------------
Taxable-Equivalent Yield(1) 8.32%
- --------------------------------------------------
Fund Net Assets ($000) $218,669
- --------------------------------------------------
Average Weighted Maturity (Years) 21.12
- --------------------------------------------------
Leverage-Adjusted Duration (Years) 8.63
- --------------------------------------------------
ANNUALIZED TOTAL RETURN
==================================================
ON SHARE PRICE ON NAV
- --------------------------------------------------
1-Year 6.45% 6.27%
- --------------------------------------------------
3-Year 10.88% 8.61%
- --------------------------------------------------
5-Year 6.56% 7.35%
- --------------------------------------------------
Since Inception 7.25% 8.45%
- --------------------------------------------------
TAXABLE-EQUIVALENT TOTAL RETURN(1)
==================================================
ON SHARE PRICE ON NAV
- --------------------------------------------------
1-Year 9.19% 8.96%
- --------------------------------------------------
3-Year 13.81% 11.45%
- --------------------------------------------------
5-Year 9.56% 10.32%
- --------------------------------------------------
Since Inception 10.13% 11.34%
- --------------------------------------------------
TOP 5 SECTORS
==================================================
U.S. Guaranteed 18%
- --------------------------------------------------
Health Care 17%
- --------------------------------------------------
Tax Obligation (General) 14%
- --------------------------------------------------
Transportation 11%
- --------------------------------------------------
Utilities 11%
- --------------------------------------------------
1 A taxable-equivalent represents the yield or return on a taxable investment
necessary to equal that of the Nuveen fund on an after-tax basis. Taxable
equivalent yield is based on current market yield and a federal income tax
rate of 31%. Taxable equivalent total return is based on the annualized total
return and a federal income tax rate of 31%.
BAR CHART:
1997-1998 Monthly Tax-Free Dividends Per Share
Aug 97 0.780
Sep 97 0.780
Oct 97 0.780
Nov 97 0.780
Dec 97 0.780
Jan 98 0.780
Feb 98 0.780
Mar 98 0.780
Apr 98 0.780
May 98 0.750
Jun 98 0.750
Jul 98 0.750
MOUNTAIN CHART:
SHARE PRICE PERFORMANCE
Weekly Closing Price
7/25/97 15.438
15.625
15.5
15.625
15.625
15.75
15.563
15.625
15.625
15.688
15.75
15.688
15.563
15.125
15.375
15.5
15.688
15.563
15.938
16.188
15.875
15.938
16
16.063
16.188
16.188
16
16.25
16.688
16.563
16.5
16.125
16.375
16.125
15.5
15.938
15.688
15.438
15.75
16.125
15.875
15.875
15.688
15.75
15.625
15.563
15.625
15.938
16.125
15.75
15.688
7/31/98 15.688
Past performance is not predictive of future results.
<PAGE>
REPORT OF INDEPENDENT AUDITORS
THE BOARDS OF DIRECTORS, TRUSTEES AND SHAREHOLDERS
NUVEEN ARIZONA PREMIUM INCOME MUNICIPAL FUND, INC.
NUVEEN MICHIGAN QUALITY INCOME MUNICIPAL FUND, INC.
NUVEEN MICHIGAN PREMIUM INCOME MUNICIPAL FUND, INC.
NUVEEN OHIO QUALITY INCOME MUNICIPAL FUND, INC.
NUVEEN TEXAS QUALITY INCOME MUNICIPAL FUND
We have audited the accompanying statements of net assets, including the
portfolios of investments, of Nuveen Arizona Premium Income Municipal Fund,
Inc., Nuveen Michigan Quality Income Municipal Fund, Inc., Nuveen Michigan
Premium Income Municipal Fund, Inc., Nuveen Ohio Quality Income Municipal Fund,
Inc. and Nuveen Texas Quality Income Municipal Fund as of July 31, 1998, and the
related statements of operations, changes in net assets and the financial
highlights for 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 generally accepted auditing
standards. 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. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of investments owned as of July
31, 1998, by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. 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 Arizona Premium Income Municipal Fund, Inc., Nuveen Michigan Quality
Income Municipal Fund, Inc., Nuveen Michigan Premium Income Municipal Fund,
Inc., Nuveen Ohio Quality Income Municipal Fund, Inc. and Nuveen Texas Quality
Income Municipal Fund at July 31, 1998, and the results of their operations,
changes in their net assets and financial highlights for the periods indicated
therein in conformity with generally accepted accounting principles.
/s/ Ernst & Young LLP
Chicago, Illinois
September 11, 1998
<PAGE>
<TABLE>
PORTFOLIO OF INVESTMENTS
NUVEEN ARIZONA PREMIUM INCOME MUNICIPAL FUND, INC. (NAZ)
July 31, 1998
<CAPTION>
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
BASIC MATERIALS - 5.2%
$ 5,000,000 The Industrial Development Authority of the County of Gila, Arizona, Environmental Revenue Refunding
Bonds (ASARCO Incorporated Project), Series 1998, 5.500%, 1/01/27 1/08 at 102 BBB $ 5,050,300
- ------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 3.1%
1,750,000 Student Loan Acquisition Authority of Arizona (A nonprofit corporation organized pursuant to the laws
of the State of Arizona), Student Loan Revenue Bonds, Series 1994, 6.600%, 5/01/10
(Alternative Minimum Tax) 5/04 at 102 Aa 1,898,575
1,000,000 Arizona Board of Regents, University of Arizona, System Revenue Refunding Bonds, Series 1992,
6.250%, 6/01/11 6/02 at 102 AA 1,083,310
- ------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE - 11.7%
1,500,000 The Industrial Development Authority of the County of Maricopa (Arizona), Insured Health Facility
Revenue Bonds (Catholic Healthcare West), 1992 Series A, 5.750%, 7/01/11 7/02 at 102 Aaa 1,596,240
3,500,000 The Industrial Development Authority of the County of Maricopa (Arizona), Samaritan Health Services,
Hospital System Revenue Refunding Bonds, Series 1990A, 7.000%, 12/01/16 No Opt. Call Aaa 4,352,880
600,000 The Industrial Development Authority of the County of Maricopa, Arizona, Baptist Hospital System
Revenue Refunding Bonds, Series 1995, 5.500%, 9/01/16 9/05 at 101 Aaa 618,786
400,000 Mesa Industrial Development Authority Health Care Facilities, Refunding Revenue Bonds (Western
Health Network, Inc.), Series 1988B-1, 7.500%, 1/01/04 1/99 at 102 Aaa 414,060
2,000,000 Hospital District No. One, Mohave County, Arizona, Refunding General Obligation Bonds (Kingman
Regional Medical Center Project), Series 1992, 6.500%, 6/01/15 6/02 at 101 Aaa 2,159,780
2,000,000 University Medical Center Corporation (Tucson, Arizona), Hospital Revenue Refunding Bonds,
Series 1992, 6.250%, 7/01/16 7/02 at 102 Aaa 2,161,660
- ------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 4.4%
4,000,000 The Industrial Development Authority of the City of Tucson, Arizona, Tax-Exempt Multifamily Housing
Revenue Refunding Bonds, Series 1996, 5.900%, 12/20/31 12/06 at 102 AAA 4,215,680
- ------------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 3.3%
470,000 The Industrial Development Authority of the City of Phoenix, Arizona, Statewide Single Family Mortgage
Revenue Bonds, Series 1995, 6.150%, 6/01/08 (Alternative Minimum Tax) 6/05 at 102 AAA 488,640
370,000 The Industrial Development Authority of the County of Pima (Arizona), Single Family Mortgage Revenue
Refunding Bonds, Series 1995A, 6.500%, 2/01/17 8/05 at 102 A 394,098
2,205,000 The Industrial Development Authority of the County of Pima, Single Family Mortgage Revenue Bonds,
Series 1997A, 6.250%, 11/01/30 (Alternative Minimum Tax) 5/07 at 102 AAA 2,343,165
- ------------------------------------------------------------------------------------------------------------------------------------
LONG TERM CARE - 1.1%
1,000,000 The Industrial Development Authority of the County of Mohave, Health Care Revenue Refunding Bonds,
Series 1996 (GNMA Collateralized - Chris Ridge and Silver Ridge Village Projects),
6.375%, 11/01/31 5/06 at 103 AAA 1,087,910
- ------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 9.8%
1,400,000 Maricopa Rural Road Improvement District of Pinal County, Arizona, Refunding Bonds, Series 1994,
7.000%, 7/01/07 7/99 at 101 N/R 1,441,958
1,500,000 Paradise Valley Unified School District No. 69 of Maricopa County, Arizona, School Improvement Bonds,
Project of 1990, Series D (1993), 5.875%, 7/01/12 7/03 at 102 Aaa 1,616,865
1,400,000 Chandler Unified School District No. 80 of Maricopa County, Arizona, General Obligation
Refunding Bonds, Series 1993, 5.950%, 7/01/10 7/03 at 101 Aaa 1,507,534
<PAGE>
<CAPTION>
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
TAX OBLIGATION/GENERAL (continued)
$ 2,500,000 City of Phoenix, Arizona, General Obligation Refunding Bonds, Series 1992,
6.375%, 7/01/13 7/02 at 102 Aa1 $ 2,733,550
2,000,000 Tempe Union High School District No. 213 of Maricopa County, Arizona, School Improvement and
Refunding Bonds, Series 1994, 6.000%, 7/01/12 7/04 at 101 Aaa 2,172,860
- ------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 10.8%
City of Bullhead, Bullhead Parkway Improvement District Improvement Bonds:
910,000 6.100%, 1/01/08 1/03 at 103 Baa 980,571
970,000 6.100%, 1/01/09 1/03 at 103 Baa 1,045,224
1,600,000 City of Lake Havasu Municipal Property Corporation, Municipal Facilities Revenue Bonds, Series 1993,
6.000%, 6/01/08 6/02 at 101 Aaa 1,713,360
2,000,000 Hospital District No. One, Maricopa County, Arizona General Obligation Bonds, Series 1998,
5.000%, 6/01/21 6/08 at 102 Aaa 1,961,160
2,150,000 Phoenix Civic Plaza Building Corporation, Senior Lien Excise Tax Revenue Bonds, Series 1994,
6.000%, 7/01/14 7/05 at 101 AA+ 2,324,279
1,510,000 Metropolitan Domestic Water Improvement District of Pima County, Arizona, Special Assessment and
Water Revenue Bonds, Series 1992, 6.200%, 1/01/12 1/03 at 101 Aaa 1,629,788
725,000 City of Tucson, Arizona, Certificates of Participation, Series 1994,
6.375%, 7/01/09 7/04 at 100 AA 793,708
- ------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 5.5%
5,000,000 Tucson Airport Authority, Inc. (Arizona), Airport Revenue Bonds,
Refunding Series 1993, 5.700%, 6/01/13 6/03 at 102 Aaa 5,309,100
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 21.6%
3,195,000 Kyrene Elementary School District No. 28 of Maricopa County, Arizona, School Improvement Bonds,
Project of 1990, Series E (1993), 6.000%, 7/01/12
(Pre-refunded to 7/01/02) 7/02 at 100 Aaa 3,417,851
The Industrial Development Authority of the County of Mohave, Hospital System Revenue Refunding
Bonds (Medical Environments, Inc. and Phoenix Baptist Hospital and Medical Center, Inc.), Series 1993:
5,000,000 6.750%, 7/01/08 (Pre-refunded to 7/01/03) 7/03 at 102 Aaa 5,657,900
1,000,000 7.000%, 7/01/16 (Pre-refunded to 7/01/03) 7/03 at 102 Aaa 1,142,600
3,700,000 City of Phoenix (Arizona), Civic Improvement Corporation, Wastewater System Lease Revenue Bonds,
Series 1993, 6.125%, 7/01/23 (Pre-refunded to 7/01/03) 7/03 at 102 AAA 4,090,165
3,000,000 City of Tucson, Arizona, General Obligation Bonds, Series 1984-G (1994), 6.250%, 7/01/18
(Pre-refunded to 7/01/04) 7/04 at 101 Aaa 3,341,730
1,290,000 City of Tucson, Arizona, General Obligation Bonds, Series 1994-B (1996), 5.750%, 7/01/18
(Pre-refunded to 7/01/06) 7/06 at 101 AA*** 1,420,355
1,500,000 City of Tucson, Arizona, Water System Revenue Bonds, Series 1994-A (1996), 6.000%, 7/01/21
(Pre-refunded to 7/01/06) 7/06 at 101 Aaa 1,679,685
- ------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 12.2%
2,000,000 The Industrial Development Authority of the County of Mohave (Arizona), Industrial Development
Revenue Bonds, 1994 Series (Citizens Utilities Company Projects), 6.600%, 5/01/29
(Alternative Minimum Tax) 11/03 at 101 AA+ 2,146,080
1,000,000 Navajo County, Arizona, Pollution Control Corporation, Pollution Control Revenue Refunding Bonds
(Arizona Public Service Company), 1993 Series A, 5.875%, 8/15/28 8/03 at 102 A 1,026,310
1,855,000 The Industrial Development Authority of the County of Pima (Arizona), Industrial Development Lease
Obligation Refunding Revenue Bonds, 1988 Series A (Irvington Project),
7.250%, 7/15/10 1/02 at 103 Aaa 2,063,409
2,030,000 Salt River Project Agricultural Improvement and Power District, Arizona, Salt River Project Electric
System Revenue Bonds, 1992 Series D, 5.750%, 1/01/19 1/02 at 100 AA 2,090,981
2,400,000 Salt River Project Agricultural Improvement and Power District, Electric System Revenue Refunding
Bonds, 1993 Series C, 5.000%, 1/01/16 1/04 at 102 AA 2,368,320
100,000 University of Arizona Telecommunications System, Certificates of Participation, Series 1991,
6.500%, 7/15/12 7/02 at 102 A+ 109,172
2,000,000 Yavapai County Industrial Development Authority Industrial Development Revenue Bonds, Citizens
Utility Company Project, 1988, 5.450%, 6/01/33 (Alternative Minimum Tax) 6/07 at 101 AA- 1,998,280
<CAPTION>
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
WATER AND SEWER - 9.9%
$ 2,150,000 Arizona Municipal Financing Program of 1992 Refunding Certificates of Participation, Series 1,
6.000%, 8/01/17 8/02 at 101 Aaa $ 2,295,018
500,000 Wastewater Management Authority of Arizona, Wastewater Treatment Financial Assistance Revenue
Bonds, Series 1995, 5.750%, 7/01/15 7/05 at 102 Aaa 532,425
500,000 The Industrial Development Authority of the County of Maricopa, Water System Improvement
Bonds (Chaparral City Water Company Project), Series 1997A, 5.400%, 12/01/22 (Alternative
Minimum Tax) 12/07 at 102 Aaa 506,095
2,500,000 City of Phoenix Civic Improvement Corporation (Arizona), Wastewater System Lease Revenue
Refunding Bonds, Series 1993, 5.000%, 7/01/10 7/04 at 102 Aa3 2,541,575
3,500,000 City of Tucson, Arizona, Water System Revenue Refunding Bonds, Series 1992A,
5.750%, 7/01/18 7/02 at 102 A1 3,659,250
- ------------------------------------------------------------------------------------------------------------------------------------
$ 88,680,000 Total Investments - (cost $87,728,741) - 98.6% 95,182,242
=============
Other Assets Less Liabilities - 1.4% 1,363,782
--------------------------------------------------------------------------------------------------------------------
Net Assets - 100% $96,546,024
====================================================================================================================
* Optional Call Provisions (not covered by the report of independent
auditors): 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.
** Ratings (not covered by the report of independent auditors): Using the higher
of Standard & Poor's or Moody's rating.
*** Security is backed by an escrow or trust containing sufficient U.S.
government or U.S. government agency securities which ensures the timely
payment of principal and interest. Security is normally considered to be
equivalent to AAA rated securities.
N/R Investment is not rated.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
PORTFOLIO OF INVESTMENTS
NUVEEN MICHIGAN QUALITY INCOME MUNICIPAL FUND, INC. (NUM)
July 31, 1998
<CAPTION>
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CAPITAL GOODS - 0.4%
$ 1,000,000 Michigan Strategic Fund, Limited Obligation Revenue Bonds (WMX Technologies, Inc. Project),
Series 1993, 6.000%, 12/01/13 (Alternative Minimum Tax) 12/03 at 102 Baa1 $ 1,049,730
- ------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 6.4%
Michigan Higher Education Student Loan Authority, Student Loan
and Refunding Revenue Bonds, Series XV-A:
1,000,000 6.800%, 10/01/07 (Alternative Minimum Tax) 10/02 at 102 A 1,071,220
1,250,000 6.800%, 10/01/08 (Alternative Minimum Tax) 10/02 at 102 A 1,336,600
990,000 6.800%, 10/01/09 (Alternative Minimum Tax) 10/02 at 102 A 1,056,667
1,930,000 Central Michigan University, Revenue Bonds, Series 1997, 5.500%, 10/01/17 4/07 at 101 Aaa 1,994,887
6,020,000 Ferris State University, General Obligation Revenue Bonds, Series 1998,
5.000%, 10/01/23 4/08 at 100 Aaa 5,855,774
2,000,000 Board of Trustees of Oakland University, Michigan, General Revenue Bonds, Series 1995,
5.750%, 5/15/15 5/05 at 102 Aaa 2,123,720
2,000,000 Puerto Rico Industrial, Tourist, Educational, Medical & Environmental Control Facilities Financing
Authority, Higher Education Revenue Bonds, 1998 Series A (Inter American University of
Puerto Rico Project), 5.000%, 10/01/22 10/08 at 101 Aaa 1,960,000
1,450,000 Board of Trustees of Western Michigan University, General Revenue Bonds, Series 1993A,
5.000%, 7/15/21 7/03 at 102 Aaa 1,412,300
- ------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE - 9.2%
410,000 Michigan State Hospital Finance Authority, Hospital Revenue and Refunding Bonds (The Detroit
Medical Center Obligated Group), Series 1988B, 8.125%, 8/15/08 8/98 at 102 A 419,533
8,800,000 Michigan State Hospital Finance Authority, Hospital Revenue Bonds (Mercy Mount Clemens
Corporation), Series 1992, 6.000%, 5/15/17 5/01 at 100 Aa 9,103,160
2,235,000 Hancock Hospital Finance Authority, FHA-Insured Mortgage Hospital Revenue Bonds (Portage Health
System, Inc.), 5.450%, 8/01/47 8/08 at 100 Aaa 2,258,177
1,000,000 City of Kalamazoo Hospital Finance Authority, Hospital Revenue Refunding and Improvement Bonds
(Bronson Methodist Hospital), Series 1998, 5.250%, 5/15/18 5/08 at 101 Aaa 998,090
Regents of the University of Michigan, Medical Service Plan Revenue Bonds, Series 1991:
2,195,000 0.000%, 12/01/10 No Opt. Call Aa2 1,216,952
9,250,000 6.500%, 12/01/21 12/01 at 102 Aa2 10,112,748
- ------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 4.9%
5,250,000 Michigan State Housing Development Authority, Limited Obligation Revenue Bonds (Parkway Meadows
Project), Series 1991, 6.850%, 10/15/18 10/02 at 103 Aaa 5,629,470
5,625,000 Michigan State Housing Development Authority, Rental Housing Revenue Bonds, 1991 Series B,
7.100%, 4/01/21 1/02 at 102 AA- 6,029,550
1,135,000 Michigan State Housing Development Authority, Rental Housing Revenue Bonds, 1991 Series A,
7.150%, 4/01/10 (Alternative Minimum Tax) 1/02 at 102 AA- 1,222,077
- ------------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 2.2%
3,715,000 Michigan State Housing Development Authority, Single-Family Mortgage Revenue Bonds, 1991
Series B, 6.950%, 12/01/20 12/01 at 102 AA+ 3,925,826
1,820,000 Michigan State Housing Development Authority, Single-Family Mortgage Revenue Bonds, 1992 Series A,
6.875%, 6/01/23 6/02 at 102 AA+ 1,918,316
<PAGE>
<CAPTION>
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
LONG TERM CARE - 2.7%
$ 1,250,000 Michigan State Hospital Finance Authority, Revenue Bonds (Presbyterian Villages of Michigan
Obligated Group), Series 1997, 6.375%, 1/01/25 1/07 at 102 N/R $ 1,334,763
5,280,000 The Economic Development Corporation of the City of Warren, Nursing Home Revenue Refunding Bonds
(GNMA Mortgage-Backed Security-Autumn Woods Project), Series 1992,
6.900%, 12/20/22 3/02 at 101 Aaa 5,603,558
- ------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 19.7%
3,935,000 Anchor Bay School District, Counties of Macomb and St. Clair, State of Michigan, 1993 School
Building and Site Bonds (General Obligation Unlimited Tax),
5.550%, 5/01/19 5/03 at 101 1/2 Aaa 4,051,673
1,000,000 Belding Area Schools, General Obligation Refunding Bonds, Series 1998,
5.000%, 5/01/26 5/08 at 100 Aaa 971,430
1,200,000 Berkley School District, County of Oakland, State of Michigan, 1995 School Building and Site Bonds
(General Obligation-Unlimited Tax), 6.000%, 1/01/19 1/05 at 101 Aaa 1,290,612
6,680,000 Chippewa Valley Schools, County of Macomb, State of Michigan, 1993 Refunding Bonds (General
Obligation-Unlimited Tax), 5.000%, 5/01/21 5/03 at 102 Aaa 6,506,788
2,000,000 School District of the City of Detroit, Wayne County, Michigan, School Building and Site Improvement
Bonds (Unlimited Tax General Obligation), Series 1996A, 5.700%, 5/01/25 5/06 at 102 Aaa 2,106,040
1,000,000 Essexville-Hampton Public Schools, County of Bay, State of Michigan, 1997 School Building and Site
Bonds (General Obligation-Unlimited Tax), 5.500%, 5/01/17 5/07 at 100 Aaa 1,033,210
3,000,000 Grand Rapids Community College, Community College Bonds, Series 1993 (General Obligation Limited
Tax), 5.000%, 5/01/21 5/03 at 102 AA- 2,922,210
1,000,000 Huron Valley School District, Counties of Oakland and Livingston, State of Michigan, 1996 School
Building and Site Bonds (General Obligation-Unlimited Tax),
5.875%, 5/01/16 5/07 at 100 Aaa 1,068,990
3,725,000 Lake Orion Community School District, County of Oakland, State of Michigan, 1995 Refunding Bonds
(General Obligation-Unlimited Tax), 5.500%, 5/01/20 5/05 at 101 Aaa 3,829,896
1,000,000 School District of the City of Lincoln Park, County of Wayne, State of Michigan 1997 Refunding Bonds
(Unlimited Tax), 5.000%, 5/01/17 5/07 at 100 Aaa 986,160
1,000,000 Mancelona Public School District, General Obligation Bonds, Series 1997 (Antrim & Kalkaska Counties),
5.200%, 5/01/17 5/06 at 100 Aaa 1,004,030
6,650,000 Mattawan Consolidated School, Counties of Van Buren and Kalamazoo, State of Michigan, 1992
Refunding Bonds (General Obligation-Unlimited Tax), 6.300%, 5/01/17 5/02 at 102 AA+ 7,196,032
2,500,000 Montrose Township School District, Michigan, School Building and Site Bonds, Series 1997,
6.000%, 5/01/22 No Opt. Call Aaa 2,826,200
1,045,000 Nice Community School District, Counties of Marquette and Baraga, State of Michigan, 1995 School
Building and Site Bonds (General Obligation-Unlimited Tax), 5.250% 5/01/205/04 at 101 Aaa 1,046,557
1,225,000 North Branch Area Schools, County of Lapeer, State of Michigan, 1993 Refunding Bonds (General
Obligation-Unlimited Tax), 5.375%, 5/01/21) 5/03 at 101 1/2 Aaa 1,241,489
685,000 Reeths-Puffer Schools, County of Muskegon, State of Michigan, 1995 School Building and Site and
Refunding Bonds, 5.750%, 5/01/15 5/05 at 101 Aaa 724,018
875,000 Western Townships Utilities Authority, Sewage Disposal System Bonds,
Series 1989, 8.300%, 1/01/19 1/99 at 102 BBB+ 908,434
Western Townships Utilities Authority, Sewage Disposal System Refunding Bonds, Series 1991:
1,500,000 6.750%, 1/01/15 1/02 at 100 Aaa 1,613,580
6,250,000 6.500%, 1/01/19 1/02 at 100 Aaa 6,674,125
1,725,000 Williamston Community School District, General Obligation-Unlimited Tax, Series 1996 (Q-SBLF),
5.500%, 5/01/25 No Opt. Call Aaa 1,832,813
1,500,000 School District of Ypsilanti, County of Washenaw, State of Michigan, 1996 School Building and Site
and Refunding Bonds (General Obligation-Unlimited Tax), 5.375%, 5/01/26 5/07 at 100 Aaa 1,527,105
- ------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 3.8%
2,000,000 Michigan Municipal Bond Authority, Local Government Loan Program Revenue Bonds, Series 1992D,
6.650%, 5/01/12 5/02 at 102 A 2,172,940
3,505,000 State Building Authority, State of Michigan, 1991 Revenue Bonds, Series II,
6.800%, 10/01/21 10/01 at 102 AA 3,807,026
3,800,000 State Building Authority, State of Michigan, 1991 Revenue Refunding Bonds,
Series I, 6.250%, 10/01/20 10/01 at 102 AA 4,054,714
<PAGE>
<CAPTION>
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
TRANSPORTATION - 1.0%
$ 2,505,000 Charter County of Wayne, Michigan, Airport Revenue Bonds (Detroit Metropolitan Wayne County
Airport), Subordinate Lien, Series 1991B, 6.750%, 12/01/21
(Alternative Minimum Tax) 12/01 at 102 Aaa $ 2,717,399
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 30.3%
3,100,000 Michigan Municipal Bond Authority, State Revolving Fund Reserve Bonds, Series 1992A,
6.600%, 10/01/18 (Pre-refunded to 10/01/02) 10/02 at 102 Aa1*** 3,444,317
1,450,000 Michigan State Hospital Finance Authority, Hospital Revenue Bonds (McLaren Obligated Group),
Series 1991A, 7.500%, 9/15/21 (Pre-refunded to 9/15/01) 9/01 at 102 Aaa 1,621,970
5,090,000 Michigan State Hospital Finance Authority, Hospital Revenue and Refunding Bonds (The Detroit
Medical Center Obligated Group), Series 1988B, 8.125%, 8/15/08
(Pre-refunded to 8/15/98) 8/98 at 102 A*** 5,200,351
10,355,000 Michigan State Hospital Finance Authority, Hospital Revenue Bonds (Daughters of Charity National
Health System-Providence Hospital), Series 1991, 7.000%, 11/01/21
(Pre-refunded to 11/01/01) 11/01 at 102 Aa2*** 11,459,050
3,035,000 Michigan State Hospital Finance Authority, Hospital Revenue Bonds (Mid-Michigan Obligated Group),
Series 1992, 6.900%, 12/01/24 (Pre-refunded to 12/01/02) 12/02 at 102 Aaa 3,418,017
7,200,000 State of Michigan, State Trunk Line Fund Bonds, Series 1989A, 7.000%, 8/15/17
(Pre-refunded to 8/15/99) 8/99 at 102 AAA 7,585,488
355,000 City of Detroit, County of Wayne, Michigan, Sewage Disposal System Revenue Bonds (1979 Series),
6.900%, 12/15/99 No Opt. Call Aaa 364,528
1,600,000 Gaylord Community Schools, Counties of Ostego and Antrim, State of Michigan, 1992 School
Building and Site and Refunding Bonds, 6.600%, 5/01/21
(Pre-refunded to 5/01/02) 5/02 at 102 AA+*** 1,764,608
3,075,000 Goodrich Area Schools, Counties of Genesee, Oakland and Lapeer, State of Michigan, 1995 School
Building and Site and Refunding Bonds (General Obligation-Unlimited Tax), 5.875%, 5/01/24
(Pre-refunded to 5/01/05) 5/05 at 102 Aaa 3,406,823
1,325,000 Greenville Public Schools, Counties of Montcalm, Kent and Ionia, State of Michigan, 1995 School
Building and Site Bonds (General Obligation-Unlimited Tax), 5.750%, 5/01/14
(Pre-refunded to 5/01/04) 5/04 at 101 Aaa 1,437,519
1,000,000 Grosse Ile Township School District, School Improvement Refunding Bonds, General Obligation,
Series 1996, 6.000%, 5/01/22 (Pre-refunded to 5/01/07) 5/07 at 100 Aaa 1,116,240
1,250,000 Gull Lake Community Schools, Counties of Kalamazoo, Barry and Calhoun, State of Michigan, 1991
School Building and Site Bonds, 6.800%, 5/01/21 (Pre-refunded to 5/01/01) 5/01 at 102 Aaa 1,363,463
3,100,000 Hemlock Public School District Counties of Saginaw and Midland, State of Michigan, 1992 School
Building and Site and Refunding Bonds, 6.750%, 5/01/21
(Pre-refunded to 5/01/02) 5/02 at 102 AA+*** 3,441,806
2,000,000 Lincoln Park School District, General Obligation Bonds, Series 1996, 5.900%, 5/01/26
(Pre-refunded to 5/01/06) 5/06 at 101 Aaa 2,219,760
1,000,000 Marquette Area Public Schools, County of Marquette, State of
Michigan, 1991 School Building and Site Bonds, Series B
(General Obligation-Unlimited Tax), 6.700%, 5/01/21
(Pre-refunded to 5/01/01) 5/01 at 102 Aaa 1,088,190
2,150,000 North Branch Area Schools, County of Lapeer, State of Michigan,
1992 School Building and Site and Refunding Bonds (General
Obligation-Unlimited Tax), 6.600%, 5/01/17
(Pre-refunded to 5/01/02) 5/02 at 102 AA+*** 2,371,192
1,500,000 Perry Public Schools, Counties of Shiawassee and Ingham, State of Michigan, 1992 School Building
and Site Bonds (General Obligation-Unlimited Tax), 6.375%, 5/01/22
(Pre-refunded to 5/01/02) 5/02 at 101 1/2 Aaa 1,637,910
4,650,000 Plymouth-Canton Community Schools, Counties of Wayne and Washtenaw, State of Michigan, 1991
School Building and Site and Refunding Bonds, Series B, 6.800%, 5/01/11
(Pre-refunded to 5/01/01) 5/01 at 101 AA+*** 5,026,557
1,120,000 Reeths-Puffer Schools, County of Muskegon, State of Michigan, 1995 School Building and Site and
Refunding Bonds, 5.750%, 5/01/15 (Pre-refunded to 5/01/05) 5/05 at 101 Aaa 1,224,317
6,385,000 City of Royal Oak Hospital Finance Authority (Michigan), Hospital Revenue Bonds (William Beaumont
Hospital), Series 1991D, 6.750%, 1/01/20 (Pre-refunded to 1/01/01) 1/01 at 102 Aaa 6,900,653
4,845,000 Saginaw-Midland Municipal Water Supply Corporation, State of Michigan, Water Supply Revenue
Bonds (Limited Tax General Obligation), Series 1992, 6.875%, 9/01/16
(Pre-refunded to 9/01/04) 9/04 at 102 A2*** 5,593,843
2,400,000 Three Rivers Community Schools, Counties of Cass and St. Joseph, State of Michigan, 1996 School
Building and Site Bonds (General Obligation-Unlimited Tax), 6.000%, 5/01/23
(Pre-refunded to 5/01/06) 5/06 at 102 Aaa 2,679,360
4,200,000 Warren Consolidated Schools, Counties of Macomb and Oakland, State of Michigan, 1991 School
Building and Site and Refunding Bonds (General Obligation-Unlimited Tax), 6.700%, 5/01/21
(Pre-refunded to 5/01/01) 5/01 at 102 Aa*** 4,566,954
<PAGE>
<CAPTION>
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
UTILITIES - 15.8%
$ 2,390,000 Michigan South Central Power Agency, Power Supply System Revenue Refunding Bonds, 1991 Series
6.750%, 11/01/10 11/01 at 102 Baa1 $ 2,566,071
3,630,000 Michigan Strategic Fund, Limited Obligation Refunding Revenue Bonds (The Detroit Edison Company
Pollution Control Bonds Project), Series 1991BB, 7.000%, 5/01/21 No Opt. Call Aaa 4,546,211
4,330,000 Michigan Strategic Fund, Limited Obligation Refunding Revenue Bonds (The Detroit Edison Company
Pollution Control Bonds Project), Collateralized Series 1991CC,
6.950%, 9/01/21 9/01 at 102 Aaa 4,708,831
7,600,000 Michigan Strategic Fund Limited Obligation Refunding Revenue Bonds (The Detroit Edison Company
Pollution Control Bonds Project), Collateralized Series 1991DD,
6.875%, 12/01/21 12/01 at 102 Aaa 8,285,823
6,425,000 The Economic Development Corporation of the City of Detroit, Resource Recovery Revenue Bonds,
Series 1991A, 6.875%, 5/01/09 (Alternative Minimum Tax) 5/01 at 102 Aaa 6,929,876
7,000,000 County of Monroe, Michigan, Pollution Control Revenue Bonds (The Detroit Edison Company Monroe
and Fermi Plants Project), Collateralized Series I-1992,
6.875%, 9/01/22 (Alternative Minimum Tax) 9/02 at 102 Aaa 7,702,660
1,000,000 Puerto Rico Electric Power Authority, Power Revenue Bonds, Series X,
5.500%, 7/01/25 7/05 at 100 Baa1 1,019,810
5,000,000 City of Wyandotte, County of Wayne, State of Michigan, 1992 Electric Revenue Refunding Bonds,
6.250%, 10/01/17 10/02 at 102 Aaa 5,441,700
- ------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 2.2%
6,000,000 City of Detroit, Michigan, Water Supply System Revenue and Revenue Refunding Bonds, Series 1993,
5.000%, 7/01/23 7/04 at 102 Aaa 5,837,280
- ------------------------------------------------------------------------------------------------------------------------------------
$ 242,470,000 Total Investments - (cost $236,085,226) - 98.6% 257,717,767
=============
Other Assets Less Liabilities - 1.4% 3,541,481
--------------------------------------------------------------------------------------------------------------------
Net Assets - 100% $261,259,248
====================================================================================================================
* Optional Call Provisions (not covered by the report of independent
auditors): 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.
** Ratings (not covered by the report of independent auditors): Using the
higher of Standard & Poor's or Moody's rating.
*** Securities are backed by an escrow or trust containing sufficient U.S.
government or U.S. government agency securities which ensures the timely
payment of principal and interest. Securities are normally considered to be
equivalent to AAA rated securities.
N/R Investment is not rated.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
PORTFOLIO OF INVESTMENTS
NUVEEN MICHIGAN PREMIUM INCOME MUNICIPAL FUND, INC. (NMP)
July 31, 1998
<CAPTION>
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CAPITAL GOODS - 2.7%
$ 3,050,000 Michigan Strategic Fund, Limited Obligation Revenue Bonds (Waste Management, Inc. Project),
Series 1992, 6.625%, 12/01/12 (Alternative Minimum Tax) 12/02 at 102 Baa1 $ 3,305,499
1,370,000 Michigan Strategic Fund, Limited Obligation Revenue Bonds (WMX Technologies, Inc. Project),
Series 1993, 6.000%, 12/01/13 (Alternative Minimum Tax) 12/03 at 102 Baa1 1,438,130
- ------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 6.0%
1,250,000 Michigan Higher Education Student Loan Authority, Student Loan and Refunding Revenue Bonds,
Series XV-A, 6.700%, 10/01/05 (Alternative Minimum Tax) 10/02 at 102 A 1,335,375
1,950,000 Board of Regents of Eastern Michigan University, General Revenue Bonds, Series 1997,
5.500%, 6/01/17 12/06 at 101 Aaa 2,023,808
1,130,000 Board of Trustees of Oakland University, Michigan, General Revenue Bonds, Series 1995,
5.750%, 5/15/15 5/05 at 102 Aaa 1,199,902
2,530,000 Saginaw Valley State University, General Revenue Bonds, Series 1998,
5.250%, 7/01/19 7/08 at 102 Aaa 2,537,666
3,250,000 Board of Trustees of Western Michigan University, General Revenue Bonds, Series 1993A,
5.500%, 7/15/16 7/03 at 102 Aaa 3,337,685
- ------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE - 17.2%
4,000,000 Michigan State Hospital Finance Authority, Hospital Revenue and Refunding Bonds (Henry Ford Health
System), Series 1992A, 5.750%, 9/01/17 9/02 at 102 AA 4,156,560
3,000,000 Michigan State Hospital Finance Authority (Michigan), Hospital Revenue Refunding Bonds (St. John
Hospital), Series 1993A, 6.000%, 5/15/13 5/03 at 102 Aaa 3,217,320
Michigan State Hospital Finance Authority, Revenue and Refunding
Bonds (The Detroit Medical Center Obligated Group), Series
1993A:
3,000,000 6.250%, 8/15/13 8/03 at 102 A 3,247,560
3,200,000 6.500%, 8/15/18 8/03 at 102 A 3,485,984
4,000,000 Michigan State Hospital Finance Authority, Hospital Revenue Refunding Bonds (Oakwood Hospital
Obligated Group), Series 1993A, 5.500%, 11/01/13 11/03 at 102 Aaa 4,123,720
2,000,000 Michigan State Hospital Finance Authority, Hospital Revenue and Refunding Bonds (Otsego Memorial
Hospital Gaylord, Michigan), Series 1995, 6.250%, 1/01/20 1/05 at 102 AA- 2,170,000
2,200,000 Hancock Hospital Finance Authority, FHA-Insured Mortgage, Hospital Revenue Bonds (Portage Health
System, Inc.), 5.450%, 8/01/47 8/08 at 100 Aaa 2,222,814
4,000,000 City of Kalamazoo Hospital Finance Authority, Hospital Revenue Refunding and Improvement Bonds
(Bronson Methodist Hospital), Series 1996, 5.750%, 5/15/16 5/06 at 102 Aaa 4,228,080
3,000,000 Regents of the University of Michigan, Hospital Revenue Refunding Bonds, Series 1993A,
5.500%, 12/01/21 12/02 at 102 AA 3,055,080
- ------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 9.6%
2,400,000 Michigan State Housing Development Authority, Limited Obligation Revenue Bonds (Walled Lake Villa
Project), Series 1993, 6.000%, 4/15/18 4/04 at 103 Aaa 2,505,528
1,500,000 Michigan State Housing Development Authority, Limited Obligation Revenue Bonds (Brenton Village
Green Project), Series 1993, 5.625%, 10/15/18 10/03 at 103 Aaa 1,525,980
Michigan State Housing Development Authority, Rental Housing Revenue Bonds, 1992 Series A:
4,000,000 6.500%, 4/01/06 10/02 at 102 AA- 4,325,680
4,300,000 6.600%, 4/01/12 10/02 at 102 AA- 4,645,806
1,000,000 Michigan State Housing Development Authority, Rental Housing Revenue Bonds, 1993 Series A,
5.875%, 10/01/17 4/03 at 102 Aaa 1,043,260
<PAGE>
<CAPTION>
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
HOUSING/MULTIFAMILY (continued)
Mount Clemens Housing Corporation, Multifamily Housing Refunding
Revenue Bonds, Series 1992A (FHAInsured Mortgage Loan-Section 8
Assisted Project):
$ 1,000,000 6.600%, 6/01/13 6/03 at 102 AAA $ 1,062,740
1,500,000 6.600%, 6/01/22 6/03 at 102 AAA 1,584,060
- ------------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 3.3%
5,250,000 Michigan State Housing Development Authority, Single Family Mortgage Revenue Bonds,
1995 Series A, 6.800%, 12/01/16 6/05 at 102 AA+ 5,640,968
- ------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 13.3%
2,400,000 Chippewa Valley Schools, County of Macomb, State of Michigan, 1993 Refunding Bonds (General
Obligation-Unlimited Tax), 5.000%, 5/01/21 5/03 at 102 Aaa 2,337,768
3,000,000 Clarkston Community Schools, County of Oakland, State of Michigan, 1993 School Building and Site
and Refunding Bonds, 5.900%, 5/01/16 5/03 at 102 AA+ 3,216,000
2,500,000 School District of the City of Detroit, Wayne County, Michigan, School Building and Site Bonds
(General Obligation - Unlimited Tax), Series 1992, 6.250%, 5/01/12 5/01 at 102 AA+ 2,664,400
3,000,000 Dexter Community Schools, Counties of Washtenaw and Livingston, State of Michigan, 1993
School Building and Site and Refunding Bonds (General Obligation Unlimited Tax),
5.000%, 5/01/17 5/03 at 102 AA 2,958,480
5,625,000 Commonwealth of Puerto Rico, Public Improvement Refunding Bonds, Series 1993 (General Obligation
Bonds), 5.375%, 7/01/06 No Opt. Call Aaa 5,997,769
4,100,000 Commonwealth of Puerto Rico, Public Improvement Refunding Bonds, Series 1997 (General Obligation
Bonds), 5.750%, 7/01/17 7/07 at 101 1/2 A 4,368,550
380,000 Reeths-Puffer Schools, County of Muskegon, State of Michigan, 1995 School Building and Site and
Refunding Bonds, 5.750%, 5/01/15 5/05 at 101 Aaa 401,645
1,000,000 Western Townships Utilities Authority, Sewage Disposal System Refunding Bonds, Series 1991,
6.500%, 1/01/10 1/02 at 100 Aaa 1,067,860
- ------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 10.5%
1,000,000 State Building Authority, State of Michigan, 1991 Revenue Bonds,
Series II, 6.250%, 10/01/20 10/01 at 102 AA 1,067,030
3,250,000 State Building Authority, State of Michigan, 1991 Revenue Refunding Bonds,
Series I, 6.250%, 10/01/20 10/01 at 102 AA 3,467,848
3,275,000 State of Michigan, Comprehensive Transportation Bonds, Series 1992A,
5.750%, 5/15/12 5/02 at 100 AA- 3,409,537
6,500,000 City of Detroit, Michigan, Convention Facility Limited Tax Revenue Refunding Bonds (Cobo Hall
Expansion Project), Series 1993, 5.250%, 9/30/12 9/03 at 102 Aaa 6,590,545
3,615,000 Saginaw-Midland Municipal Water Supply Corporation, State of Michigan, Water Supply System
Revenue Bonds (Limited Tax General Obligation), Series 1993,
5.250%, 9/01/16 9/02 at 101 1/2 A 3,694,205
- ------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 0.6%
1,000,000 Puerto Rico Ports Authority, Special Facilities Revenue Bonds, 1993 Series A (American Airlines, Inc.
Project), 6.300%, 6/01/23 (Alternative Minimum Tax) 6/03 at 102 BBB- 1,061,340
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 7.3%
1,950,000 Michigan Municipal Bond Authority, State Revolving Fund Revenue Bonds,
Series 1994, 7.000%, 10/01/03 No Opt. Call Aa1 2,204,456
2,500,000 Michigan State Hospital Finance Authority, Hospital Revenue Bonds (Daughters of
Charity National Health System-Providence Hospital), Series 1991, 7.000%, 11/01/21
(Pre-refunded to 11/01/01) 11/01 at 102 Aa2*** 2,766,550
1,750,000 State of Michigan, State Trunk Line Fund Bonds, Series 1994A, 5.700%, 11/15/15
(Pre-refunded to 11/15/04) 11/04 at 102 AA-*** 1,918,035
2,000,000 Board of Control of Ferris State University, General Revenue Bonds, Series 1993, 6.250%, 10/01/19
(Pre-refunded to 10/01/03) 10/03 at 102 Aaa 2,227,220
620,000 Reeths-Puffer Schools, County of Muskegon, State of Michigan, 1995 School Building and Site and
Refunding Bonds, 5.750%, 5/01/15 (Pre-refunded to 5/01/05) 5/05 at 101 Aaa 677,747
2,650,000 Regents of the University of Michigan, Hospital Revenue Bonds,
Series 1990, 6.375%, 12/01/24 (Pre-refunded to 12/01/00) 12/00 at 100 AA*** 2,792,464
<PAGE>
<CAPTION>
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
UTILITIES - 20.9%
$ 4,020,000 Michigan Public Power Agency, Belle River Project Refunding Revenue Bonds, 1993 Series A,
5.250%, 1/01/18 1/03 at 102 AA- $ 4,020,884
1,500,000 Michigan Public Power Agency, Belle River Project, Refunding Revenue,
1993 Series B, 5.000%, 1/01/19 1/03 at 100 AA- 1,457,880
1,775,000 Michigan South Central Power Agency, Power Supply System Revenue Refunding Bonds,
1992 Series, 5.700%, 11/01/04 No Opt. Call Aaa 1,914,337
8,500,000 Michigan Strategic Fund, Limited Obligation Refunding Revenue Bonds (Consumers Power Company
Project), Collateralized Series 1993B, 5.800%, 6/15/10 6/03 at 102 Aaa 9,111,150
6,750,000 The City of Grand Haven, Michigan, Electric System Revenue Refunding Bonds, 1993 Series,
5.250%, 7/01/16 7/03 at 102 Aaa 6,794,414
2,000,000 City of Lansing, Board of Water and Light, Ingham and Easton Counties, State of Michigan, Water
Supply and Electric Utility System Revenue Bonds, Series 1994A, 4.900%, 7/01/117/01 at 100 Aa 2,000,840
6,000,000 County of Monroe, Michigan, Pollution Control Revenue Bonds (The Detroit Edison Company Project),
Series A-1994, 6.350%, 12/01/04 (Alternative Minimum Tax) No Opt. Call Aaa 6,612,660
County of Monroe, Michigan, Pollution Control Revenue Bonds (The
Detroit Edison Company Project), Series CC-1992:
2,500,000 6.550%, 6/01/24 (Alternative Minimum Tax) 6/03 at 102 Aaa 2,732,524
1,500,000 6.550%, 9/01/24 (Alternative Minimum Tax) 9/03 at 103 Aaa 1,644,584
- ------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 7.1%
1,500,000 City of Ann Arbor, County of Washtenaw, State of Michigan, Water Supply System Revenue Bonds,
Series T, 5.500%, 2/01/13 2/03 at 101 1/2 Aaa 1,554,360
4,550,000 City of Detroit, Michigan, Sewage Disposal System Revenue and Revenue Refunding Bonds,
Series 1993-A, 5.700%, 7/01/13 7/03 at 102 Aaa 4,807,576
1,730,000 City of Detroit, Michigan, Sewage Disposal System Revenue Bonds,
Series 1997-A, 5.000%, 7/01/22 7/07 at 101 Aaa 1,684,034
4,500,000 City of Detroit, Michigan, Water Supply System Revenue and Revenue Refunding Bonds,
Series 1993, 4.750%, 7/01/19 7/04 at 102 Aaa 4,268,205
- ------------------------------------------------------------------------------------------------------------------------------------
$ 162,820,000 Total Investments - (cost $158,490,369) - 98.5% 170,912,102
=============
TEMPORARY INVESTMENTS IN SHORT-TERM MUNICIPAL SECURITIES - 0.6%
400,000 The Economic Development Corporation of the County of Delta, Michigan, Environmental Improvement
Revenue Refunding Bonds, 1985 Series D (Mead-Escanaba Paper Company Project), Variable Rate
Demand Bonds, 3.750%, 12/01/23+ P-1 400,000
300,000 Regents of The University of Michigan, Adjustable Rate Demand Hospital Revenue Refunding Bonds,
Series 1992A, Variable Rate Demand Bonds, 3.700%, 12/01/19+ VMIG-1 300,000
400,000 Regents of The University of Michigan, Hospital Revenue Bonds, Series 1995A (Adjustable Rate
Demand), Variable Rate Demand Bonds, 3.700%, 12/01/27+ VMIG-1 400,000
- ------------------------------------------------------------------------------------------------------------------------------------
$ 1,100,000 Total Temporary Investments - 0.6% 1,100,000
=============
Other Assets Less Liabilities - 0.9% 1,438,616
--------------------------------------------------------------------------------------------------------------------
Net Assets - 100% $173,450,718
====================================================================================================================
* Optional Call Provisions (not covered by the report of independent
auditors): 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.
** Ratings (not covered by the report of independent auditors): Using the higher
of Standard & Poor's or Moody's rating.
***Securities are backed by an escrow or trust containing sufficient
U.S. government or U.S. government agency securities which ensures the timely
payment of principal and interest. Securities are normally considered to be
equivalent to AAA rated securities.
+The security has a maturity of more than one year, but has variable
rate and demand features which qualify it as a short-term security. The rate
disclosed is that currently in effect. This rate changes periodically based on
market conditions or a specified market index. See accompanying notes to
financial statements.
</TABLE>
<PAGE>
<TABLE>
PORTFOLIO OF INVESTMENTS
NUVEEN OHIO QUALITY INCOME MUNICIPAL FUND, INC. (NUO)
July 31, 1998
<CAPTION>
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CAPITAL GOODS - 1.4%
$ 3,040,000 Ohio Water Development Authority, Revenue Bonds, USA Waste Services, Series 1992,
7.750%, 9/01/07 (Alternative Minimum Tax) 3/02 at 102 N/R $ 3,289,128
- ------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 11.0%
2,400,000 State of Ohio (Ohio Educational Facility Commission), Higher Educational Facility Mortgage Revenue
Bonds (University of Dayton 1992 Project), 6.600%, 12/01/17 12/03 at 102 Aaa 2,685,240
1,000,000 State of Ohio (Ohio Higher Educational Facility Commission), Higher Educational Facility Revenue
Bonds (University of Dayton 1994 Project), 5.800%, 12/01/14 12/04 at 102 Aaa 1,066,600
1,200,000 State of Ohio (Ohio Higher Educational Facility Commission), Higher Educational Facility Revenue
Bonds (The University of Findlay 1996 Project), 6.125%, 9/01/16 9/06 at 101 N/R 1,256,052
1,500,000 State of Ohio (Ohio Higher Educational Facility Commission), Higher Educational Facility Revenue
Bonds (Case Western Reserve University 1997 Series D), 6.250%, 7/01/14 No Opt. Call AA 1,730,970
1,000,000 State of Ohio (Ohio Higher Educational Facility Commission), Higher Educational Facility Revenue
Bonds, Series 1992 (Case Western Reserve University Project), 6.000%, 10/01/2210/02 at 102 Aa 1,063,320
3,665,000 State of Ohio, Educational Loan Revenue Bonds, Series 1997A (Supplemental Student Loan Program),
1997A1, 5.850%, 12/01/19 (Alternative Minimum Tax) 6/07 at 102 Aaa 3,797,087
1,575,000 The Ohio State University (A State University of Ohio), General Receipts Bonds,Series 1992 A1,
5.875%, 12/01/12 12/02 at 102 Aa 1,674,036
825,000 Bowling Green State University, Ohio, General Receipts Bonds, Series 1991,
6.700%, 6/01/07 6/01 at 102 A 891,272
3,000,000 Kent State University (A State University of Ohio), General Receipts Bonds,Series 1992,
6.500%, 5/01/22 5/02 at 102 Aaa 3,300,540
2,000,000 Puerto Rico Industrial, Tourist, Educational, Medical and Environmental Control Facilities Financing
Authority, Higher Education Revenue Bonds, 1998 Series A (Inter American University of Puerto Rico
Project), 5.000%, 10/01/22 10/08 at 101 Aaa 1,960,000
3,500,000 The Student Loan Funding Corporation, Cincinnati, Ohio, Student Loan Subordinated Revenue Refunding
Bonds, Series 1992 D, 6.600%, 7/01/05 (Alternative Minimum Tax) 7/02 at 100 A 3,694,880
1,400,000 University of Cincinnati, General Receipts Revenue Bonds, Series 1997-AB,
5.375%, 6/01/20 6/07 at 100 Aaa 1,425,508
1,000,000 The University of Toledo (A State University of Ohio), General Receipts Bonds, Series 1992B,
5.900%, 6/01/20 12/02 at 102 Aaa 1,069,760
- ------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE - 11.8%
1,300,000 Akron, Bath and Copley Joint Township Hospital District, Ohio, Hospital Facilities Revenue Bonds,
Series 1993A (Summa Health System Project), 5.500%, 11/15/13 11/03 at 202 A 1,315,041
1,000,000 County of Butler, Ohio, Hospital Facilities Revenue Refunding and Improvement Bonds, Series 1991
(Fort Hamilton-Hughes Memorial Hospital Center), 7.500%, 1/01/10 1/02 at 102 BBB- 1,082,800
345,000 City of Hamilton and County of Butler, Hospital Facilities Revenue Refunding, Fort Hamilton-Hughes
Memorial Hospital Center, 7.250%, 1/01/01 No Opt. Call BBB- 354,988
City of Cambridge, Ohio, Hospital Revenue Refunding Bonds,
Series 1991 (Guernsey Memorial Hospital Project):
1,680,000 8.000%, 12/01/06 12/01 at 102 BBB 1,862,952
750,000 8.000%, 12/01/11 12/01 at 102 BBB 830,940
2,675,000 County of Clermont, Ohio, Hospital Facilities Revenue Refunding Bonds, Series 1993 A (Mercy
Health System), 5.875%, 1/01/15 1/03 at 102 Aaa 2,822,259
1,500,000 County of Cuyhoga, Ohio, Hospital Improvement Revenue Bonds, Series 1992 (University Hospitals
Health System, Inc. Project), 6.500%, 1/15/19 1/02 at 102 Aa 1,618,455
1,170,000 County of Cuyahoga, Ohio, Hospital Facilities Revenue Bonds, Series 1993, Health Cleveland, Inc.
(Fairview General Hospital Project), 6.300%, 8/15/15 2/03 at 102 A1 1,263,893
<PAGE>
<CAPTION>
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
HEALTH CARE (continued)
$ 1,000,000 County of Cuyahoga, Ohio, Hospital Improvement and Refunding Revenue Bonds, Series 1997 (The
MetroHealth System Project), 5.625%, 2/15/17 2/07 at 102 Aaa $ 1,046,110
1,500,000 County of Franklin, Ohio, Hospital Revenue Refunding and Improvement Bonds, 1992 Series A (The
Children's Hospital Project), 6.600%, 5/01/13 11/02 at 102 Aa 1,644,405
County of Franklin, Ohio, Hospital Refunding and Improvement
Revenue Bonds, 1996 Series A (The Children's Hospital Project):
1,000,000 5.750%, 11/01/20 11/06 at 101 Aa 1,052,270
1,500,000 5.875%, 11/01/25 11/06 at 101 Aa 1,592,130
3,250,000 City of Garfield Heights, Ohio, Hospital Improvement and Refunding Revenue Bonds, Series 1992B
(Marymount Hospital Project), 6.650%, 11/15/11 11/02 at 102 A 3,540,583
2,500,000 County of Marion, Ohio, Hospital Refunding and Improvement Revenue Bonds, Series 1996 (The
Community Hospital), 6.375%, 5/15/11 5/06 at 102 BBB+ 2,736,325
1,500,000 County of Montgomery, Ohio, Hospital Facilities Revenue Refunding and Improvement Bonds,
Series 1996 (Kettering Medical Center), 5.625%, 4/01/16 4/06 at 102 Aaa 1,565,790
2,325,000 City of Mount Vernon, Ohio, Hospital Refunding Revenue Bonds, Series 1986A (Knox Community
Hospital), 7.875%, 6/01/12 6/02 at 100 N/R 2,377,220
750,000 County of Tuscarawas, Ohio, Hospital Facilities Revenue Bonds, Series 1993A (Union Hospital Project),
6.500%, 10/01/21 10/03 at 102 Baa3 799,838
- ------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 8.0%
2,885,000 Ohio Capital Corporation for Housing Mortgage Revenue Refunding Bonds (FHA Insured Mortgage-
Section 8), 5.700%, 1/01/24 1/02 at 100 Aaa 2,913,302
1,385,000 County of Clermont, Ohio, Mortgage Revenue Bonds (GNMA Collateralized-S.E.M. Villa IIProject),
Series 1994-A, 5.950%, 2/20/30 8/03 at 103 Aaa 1,432,339
1,435,000 County of Cuyahoga, Ohio, Multifamily Housing Revenue Bonds (Water Street Associates PJ),
Series 1997, 6.150%, 12/20/26 (Alternative Minimum Tax) 6/08 at 105 Aaa 1,524,357
990,000 County of Franklin, Ohio, Multifamily Housing Mortgage Revenue Bonds, Series 1994A (FHA
Insured Mortgage Loan-Hamilton Creek Apartments Project), 5.550%, 7/01/24
(Alternative Minimum Tax) 1/05 at 103 Aa 991,386
6,170,000 County of Franklin, Ohio, Mortgage Revenue Bonds, Series 1992A (FHA Insured Mortgage Loan-
Kensington Place Project), 6.750%, 1/01/34 1/02 at 103 Aa 6,517,124
5,200,000 Hamilton County, Multi-Family Housing Revenue Bonds (Huntington Meadows Project), Series 1997,
5.700%, 7/01/27 (Alternative Minimum Tax) 7/07 at 102 AAA 5,348,772
- ------------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 4.9%
4,000,000 Ohio Housing Finance Agency, Residential Mortgage Revenue Bonds, 1996 Series B-3
(Mortgage-Backed Securities Program), 5.750%, 9/01/28 (Alternative Minimum Tax)9/07 at 102 AAA 4,115,400
6,965,000 Ohio Housing Finance Agency, Single Family Mortgage Revenue Bonds (GNMA Mortgage-Backed
Securities Program), 1989 Series A, 7.650%, 3/01/29 (Alternative Minimum Tax)9/99 at 102 AAA 7,280,932
- ------------------------------------------------------------------------------------------------------------------------------------
LONG TERM CARE - 1.1%
1,365,000 County of Franklin, Ohio, Health Care Facilities Revenue Bonds, Series 1993 (Ohio Presbyterian
Retirement Services), 6.500%, 7/01/23 7/03 at 102 N/R 1,386,431
1,000,000 County of Marion, Ohio, Health Care Facilities Refunding and Improvement Revenue Bonds, Series 1993,
(United Church Homes, Inc. Project), 6.300%, 11/15/15 11/03 at 102 BBB- 1,054,150
- ------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 14.4%
Berea City School District, Ohio, School Improvement Bonds,
Series 1993 (General Obligation Unlimited Tax Bonds):
650,000 7.500%, 12/15/06 12/03 at 102 Aaa 760,500
680,000 7.450%, 12/15/07 12/03 at 102 Aaa 793,982
1,750,000 Brecksville-Broadview Heights City School District, Ohio, School Improvement Bonds, Series 1996
(General Obligation Unlimited Tax Bonds), 6.500%, 12/01/16 12/06 at 102 Aaa 1,993,968
2,000,000 City of Columbus, Ohio, General Obligation Refunding Bonds, Series 1992B,
6.500%, 1/01/10 1/02 at 102 Aaa 2,171,920
<PAGE>
<CAPTION>
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
TAX OBLIGATION/GENERAL (continued)
$ 1,300,000 County of Franklin, Ohio, Refunding Bonds, Series 1993 (Limited Tax General Obligation Bonds),
5.375%, 12/01/20 12/08 at 102 Aaa $ 1,335,334
1,505,000 Greater Cleveland Regional Transit Authority, General Obligation, Capital Improvement Bonds,
Series 1996, 5.650%, 12/01/16 12/06 at 101 Aaa 1,586,857
North Canton City School District, Ohio, School Improvement
Bonds, Series 1994 (General Obligation Unlimited Tax):
650,000 9.750%, 12/01/03 No Opt. Call Aaa 818,578
715,000 9.700%, 12/01/04 No Opt. Call Aaa 924,474
1,260,000 Oak Hills Local School District School Facilities and Improvement Bonds (General Obligation-Unlimited
Tax), 6.900%, 12/01/13 No Opt. Call Aaa 1,540,741
2,000,000 Commonwealth of Puerto Rico, Public Improvement Bonds of 1996 (General Obligation Bonds),
5.400%, 7/01/25 7/06 at 101 1/2 A 2,037,580
1,300,000 Commonwealth of Puerto Rico, Public Improvement Refunding Bonds, Series 1997 (General
Obligation Bonds), 5.750%, 7/01/17 7/07 at 101 1/2 A 1,385,150
2,400,000 Commonwealth of Puerto Rico, Public Improvement Bonds of 1998, 5.000%, 7/01/277/08 at 101 A 2,312,880
1,000,000 Revere Local School District, Ohio, School Improvement Bonds, Series 1993 (General Obligation
Unlimited Tax Bonds), 6.000%, 12/01/16 12/03 at 102 Aaa 1,087,870
2,870,000 City of Strongsville, Ohio, Various Purpose Improvement Bonds, Series 1996 (General Obligation-Limited
Tax), 5.950%, 12/01/21 12/06 at 102 Aa 3,086,513
1,000,000 Sylvania City School District, General Obligation (Unlimited Tax)
Series 1995, 5.800%, 12/01/15 12/05 at 101 Aaa 1,066,740
1,135,000 City of Toledo, Ohio, General Obligation (Limited Tax), Various Purpose Improvement Bonds, Series 1994,
7.000%, 12/01/03 No Opt. Call Aaa 1,285,070
1,000,000 Upper Arlington City School District, General Obligation Bonds,
Series 1996, 5.250%, 12/01/22 12/06 at 102 Aaa 1,001,020
2,000,000 Board of Education, Wayne Local School District, County of Warren, Ohio, School Improvement Bonds,
Series 1996 (Unlimited Tax General Obligation), 6.100%, 12/01/24 12/06 at 102 Aaa 2,200,300
3,000,000 Board of Education, West Clermont Local School District, County
of Clermont, Ohio, School Improvement Bonds, Series 1995
(Unlimited Tax General Obligation), 6.000%, 12/01/18 12/05 at 100 Aaa 3,225,870
1,000,000 City of Westlake, Ohio, General Obligation, Various Purpose Improvement and Refunding Bonds,
Series 1997, 5.550%, 12/01/17 12/08 at 101 Aa1 1,044,940
1,820,000 Worthington City School District, Franklin County, Ohio, General Obligation Refunding Bonds (Unlimited
Tax), 6.375%, 12/01/12 6/02 at 102 Aaa 1,977,885
- ------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 3.0%
1,500,000 State of Ohio (OPFC), Higher Education Capital Facilities Bonds,
Series II-1992A, 5.500%, 12/01/06 12/01 at 102 AA- 1,575,300
1,090,000 State of Ohio Department of Transportation, Certificates of Participation (Richenbacker Port Authority
Improvements), 6.125%, 4/15/15 (Alternative Minimum Tax) 10/02 at 100 AA- 1,114,546
1,000,000 State of Ohio (Ohio Building Authority), State Facilities Bonds (Juvenile Correctional Building Fund
Projects), 1992 Series B, 6.000%, 10/01/12 10/02 at 102 AA- 1,064,490
3,000,000 State of Ohio (Ohio Building Authority) State Facilities Bonds (Adult Correctional Building Fund
Projects), 1993 Series A, 6.125%, 10/01/12 10/03 at 102 AA- 3,253,320
- ------------------------------------------------------------------------------------------------------------------------------------
TECHNOLOGY - 0.7%
500,000 County of Franklin, Ohio, Revenue Bonds, Series 1993 (OCLC Online Computer Library Center,
Incorporated Project), 6.000%, 4/15/13 4/03 at 100 N/R 515,725
1,000,000 Puerto Rico Industrial, Medical and Environmental Pollution Control Facilities Financing Authority,
Adjustable Rate Industrial Revenue Bonds, 1983 Series A (Motorola, Inc. Project),
6.750%, 1/01/14 1/02 at 103 AA 1,101,790
- ------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 2.4%
3,430,000 City of Cleveland, Ohio, Parking Facilities Revenue Bonds, Series 1996,
5.500%, 9/15/22 9/06 at 102 Aaa 3,557,836
<PAGE>
<CAPTION>
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
TRANSPORTATION (continued)
Columbus Municipal Airport Authority, Airport Improvement
Revenue Bonds, Series 1994 (Port Columbus International Airport
Project):
$ 830,000 5.950%, 1/01/08 (Alternative Minimum Tax) 1/04 at 102 Aaa $ 892,184
1,000,000 6.000%, 1/01/14 (Alternative Minimum Tax) 1/04 at 102 Aaa 1,070,820
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 19.2%
360,000 Ohio Water Development Authority, State of Ohio, Water Development Revenue Refunding Bonds,
Refunding and Improvement Series, 8.000%, 12/01/18 (Pre-refunded to 12/01/00)12/00 at 100 AAA 387,046
1,500,000 City of Akron, Ohio, Waterworks System Mortgage Revenue Improvement Bonds, Series 1991,
6.550%, 3/01/12 (Pre-refunded to 3/01/01) 3/01 at 102 Aaa 1,620,585
2,000,000 City of Barberton, Ohio Hospital Facilities Revenue Bonds, Series 1992 (The Barberton Citizens
Hospital Company Project), 7.250%, 1/01/12 (Pre-refunded to 1/01/02) 1/02 at 102 N/R*** 2,227,900
2,000,000 County of Carroll, Ohio, Hospital Improvement Revenue Bonds, Series 1991 (Timken Mercy Medical
Center), 7.125%, 12/01/18 (Pre-refunded to 12/01/01) 12/01 at 102 AAA 2,226,800
2,500,000 County of Clermont, Ohio, Waterworks System Revenue Bonds, Series 1991, Clermont County Sewer
District, 6.625%, 12/01/14 (Pre-refunded to 12/01/01) 12/01 at 102 Aaa 2,747,775
2,075,000 City of Cleveland, Ohio, Airport System Revenue Bonds, 1990 Series A, 7.400%, 1/01/20
(Alternative Minimum Tax) (Pre-refunded to 1/01/00) 1/00 at 102 Aaa 2,216,308
2,000,000 City of Cleveland, Ohio, Public Power System First Mortgage Revenue Bonds, Series 1994A,
7.000%, 11/15/24 (Pre-refunded to 11/15/04) 11/04 at 102 Aaa 2,333,080
1,000,000 City of Cleveland, Ohio, Regional Sewer District, 6.750%, 4/01/07
(Pre-refunded to 5/15/04) 5/04 at 100 Aaa 1,127,840
1,575,000 City of Cleveland, Ohio, Waterworks Improvement First Mortgage Revenue Bonds, Series F, 1992 A,
6.500%, 1/01/21 (Pre-refunded to 1/01/02) 1/02 at 102 Aaa 1,722,515
35,000 City of Cleveland, Ohio, First Mortgage Revenue Refunding Bonds, Series F, 1992-B, 6.500%, 1/01/11
(Pre-refunded to 1/01/02) 1/02 at 102 Aaa 38,278
1,950,000 City School District of Columbus, Franklin County, Ohio, School Building Renovation and Improvement
Bonds, Series 1992 (General Obligation-Unlimited Tax), 6.650%, 12/01/12
(Pre-refunded to 12/01/02) 12/02 at 102 Aaa 2,178,578
3,250,000 County of Cuyahoga, Ohio, Hospital Revenue Bonds (Meridia Health System), Series 1991,
7.000%, 8/15/23 (Pre-refunded to 8/15/01) 8/01 at 102 AAA 3,585,432
2,000,000 Dublin City School District, Franklin, Delaware and Union Counties, Ohio, Various Purpose School
Building Construction and Improvement Bonds (General Obligation-Unlimited Tax),
6.200%, 12/01/19 (Pre-refunded to 12/01/02) 12/02 at 102 Aaa 2,199,040
3,100,000 County of Franklin, Ohio, First Mortgage Revenue, Series 1979
(OCLC Inc Project), 7.500%, 6/01/09 No Opt. Call Aaa 3,560,566
1,000,000 Hamilton County, Ohio, Sewer System Improvement and Refunding Revenue Bonds, 1991 Series A
(The Metropolitan Sewer District of Greater Cincinnati), 6.700%, 12/01/13
(Pre-refunded to 6/01/01) 6/01 at 102 AAA 1,089,880
1,000,000 City of Lakewood, Ohio, Various Purpose General Obligation Bonds, Series 1992 (Limited Tax
Obligation), 6.500%, 12/01/12 (Pre-refunded to 12/01/02) 12/02 at 102 Aa3*** 1,110,050
2,100,000 Lakota Local School District, County of Butler, Ohio, School Improvement Unlimited Tax General
Obligation Bonds, Series 1994, 6.250%, 12/01/14
(Pre-refunded to 12/01/05) 12/05 at 100 Aaa 2,357,186
1,400,000 City of Middleburg Heights, Ohio, Hospital Improvement Revenue Bonds, Series 1991 (Southwest
General Hospital Project), 6.750%, 8/15/21 (Pre-refunded to 8/15/01) 8/01 at 102 AAA 1,533,294
1,000,000 City of Newark, Ohio, Water System Improvement Bonds (Limited Tax General Obligation),
6.000%, 12/01/18 (Pre-refunded to 12/01/03) 12/03 at 102 Aaa 1,103,950
2,500,000 Commonwealth of Puerto Rico, Public Improvement Bonds of 1992 (General Obligation Bonds),
6.600%, 7/01/13 (Pre-refunded to 7/01/02) 7/02 at 101 1/2 Aaa 2,762,125
1,400,000 Reynoldsburg City School District, Franklin, Fairfield and Licking Counties, Ohio, General Obligation
Bonds (Unlimited Tax), For School Building Construction and Improvement), 6.550%, 12/01/17
(Pre-refunded to 12/01/02) 12/02 at 102 Aaa 1,558,592
1,000,000 Solon City School District, Ohio, School Improvement Bonds, Series 1990, General Obligation Unlimited
Tax Bonds, 7.150%, 12/01/13 (Pre-refunded to 12/01/01) 12/01 at 102 N/R*** 1,112,150
3,500,000 University of Cincinnati, General Receipts Bonds, Series O, 6.300%, 6/01/12
(Pre-refunded to 12/01/02) 12/02 at 102 AA*** 3,857,665
<PAGE>
<CAPTION>
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
UTILITIES - 10.1%
$ 2,250,000 Ohio Air Quality Development Authority, State of Ohio, Air Quality Development Refunding Revenue
Bonds, Series 1992 (Ashland Oil, Inc. Project), 6.850%, 4/01/10 4/01 at 102 Baa1 $ 2,384,595
4,000,000 Ohio Air Quality Development Authority, State of Ohio, Collateralized Pollution Control Revenue
Refunding Bonds, Series 1992 (The Cleveland Electric Illuminating Company Project),
8.000%, 12/01/13 6/02 at 103 Aaa 4,582,560
Ohio Air Quality Development Authority, Air Quality Development
Revenue Refunding Bonds (JMG Funding Limited Partnership
Project), Series 1994:
2,000,000 6.375%, 1/01/29 (Alternative Minimum Tax) 10/04 at 102 Aaa 2,180,960
4,000,000 6.375%, 4/01/29 (Alternative MinimumTax) 10/04 at 102 Aaa 4,361,920
3,000,000 State of Ohio, Ohio Air Quality Development Authority, Air Quality Development Revenue Bonds
(JMG Funding, Limited Partnership Project),Series 1997, 5.625%, 1/01/23
(Alternative Minimum Tax) 4/07 at 102 Aaa 3,119,340
2,000,000 County of Ashtabula, Ohio, Industrial Development Refunding Revenue Bonds, 1992 Series A (Ashland
Oil, Inc. Project), 6.900%, 5/01/10 5/02 at 102 Baa1 2,158,160
3,000,000 City of Cleveland, Ohio, Public Power System Improvement First Mortgage Revenue Bonds, Series 1991B,
7.000%, 11/15/17 11/01 at 102 Aaa 3,293,970
1,250,000 City of Hamilton, Ohio, Electric System Mortgage Revenue Bonds,
1992 Series B, 6.300%, 10/15/25 10/02 at 102 Aaa 1,363,525
- ------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 10.3%
1,000,000 Ohio Water Development Authority, State of Ohio, Water Development Revenue Bonds, 1995 Fresh
Water Series, 5.900%, 12/01/21 6/05 at 102 Aaa 1,068,340
City of Cleveland, Ohio, Waterworks Improvement First Mortgage
Revenue Refunding Bonds, Series F, 1992B:
2,965,000 6.500%, 1/01/11 1/02 at 102 Aaa 3,216,432
3,720,000 6.250%, 1/01/16 1/02 at 102 Aaa 4,006,216
1,000,000 City of Cleveland, Ohio, Waterworks Improvement First Mortgage Refunding Revenue Bonds, Series G,
1993, 5.500%, 1/01/21 No Opt. Call Aaa 1,064,100
4,000,000 City of Cleveland, Waterworks Improvement and Refunding Revenue Bonds, 1st Mortgage
Series 1996-H, 5.750%, 1/01/26 1/06 at 102 Aaa 4,230,640
2,500,000 City of Columbus, Ohio, Sewerage System Revenue Refunding Bonds, Series 1992,
6.250%, 6/01/08 6/02 at 102 AA- 2,717,075
1,000,000 Greene County Sewer System Revenue Bonds, Series 1998 (Governmental Enterprise Revenue Bonds),
5.250%, 12/01/25 12/08 at 102 Aaa 1,003,980
1,000,000 County of Montgomery, Ohio, Water Revenue Bonds, Greater Moraine-Beavercreek Sewer District,
Series 1992, 6.250%, 11/15/17 11/02 at 102 Aaa 1,090,160
2,000,000 Northeast Ohio Regional Sewer District, Wastewater Improvement Revenue Refunding Bonds,
Series 1995, 5.600%, 11/15/16 11/05 at 101 Aaa 2,091,200
1,250,000 City of Oxford, Ohio, Water Supply System Mortgage Revenue Refunding Bonds, Series 1992,
6.000%, 12/01/14 12/02 at 102 Aaa 1,351,325
2,000,000 Southwest Regional Water District, Ohio, Waterworks System Revenue Bonds, Series 1995,
6.000%, 12/01/20 12/05 at 101 Aaa 2,167,960
- ------------------------------------------------------------------------------------------------------------------------------------
$ 212,810,000 Total Investments - (cost $213,367,393) - 98.3% 228,867,861
=============
TEMPORARY INVESTMENTS IN SHORT-TERM MUNICIPAL SECURITIES - 0.3%
$ 700,000 Port Authority of Cincinnati and Hamilton County, Daily Adjustable Economic Development Revenue
============= Bonds (Kenwood Office Associates Project), Series 1985, Variable Rate Demand Bonds,
3.700%, 9/01/25+ A-2 700,000
--------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 1.4% 3,372,545
--------------------------------------------------------------------------------------------------------------------
Net Assets - 100% $232,940,406
====================================================================================================================
* Optional Call Provisions (not covered by the report of independent
auditors): 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.
** Ratings (not covered by the report of independent auditors): Using the higher
of Standard & Poor's or Moody's rating.
***Securities are backed by an escrow or trust containing sufficient
U.S. government or U.S. government agency securities which ensures the timely
payment of principal and interest. Securities are normally considered to be
equivalent to AAA rated securities.
N/R Investment is not rated.
+The security has a maturity of more than one year, but has variable
rate and demand features which qualify it as a short-term security. The rate
disclosed is that currently in effect. This rate changes periodically based on
market conditions or a specified market index. See accompanying notes to
financial statements.
</TABLE>
<PAGE>
<TABLE>
PORTFOLIO OF INVESTMENTS
NUVEEN TEXAS QUALITY INCOME MUNICIPAL FUND (NTX)
July 31, 1998
<CAPTION>
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
BASIC MATERIALS - 1.5%
$ 3,000,000 Guadalupe Blance River Authority, Sewage and Solid Waste Disposal Facility Bonds (E.I. du Pont
de Nemours and Company Project), Series 1996, 6.400%, 4/01/26
(Alternative Minimum Tax) 4/06 at 102 AA- $ 3,304,590
- ------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 6.3%
2,300,000 Brazos Higher Education Authority, Inc., Student Loan Revenue Refunding Bonds, Series 1992-A,
6.875%, 9/01/04 (Alternative Minimum Tax) 3/02 at 102 A 2,492,119
1,055,000 Brazos Higher Education Authority, Inc., Student Loan Revenue Refunding Bonds, Series 1992C-1,
6.650%, 11/01/04 (Alternative MinimumTax) No Opt. Call Aa 1,165,205
205,000 Brazos Higher Education Authority, Inc. Student Loan Revenue Refunding Bonds, Subordinate
Series 1993A-2, 6.800%, 12/01/04 (Alternative Minimum Tax) No Opt. Call A 226,863
1,000,000 City of Georgetown Higher Education, Finance Corporation, Higher Education Revenue Bonds,
Series 1994 (Southwestern University Project), 6.300%, 2/15/14 2/04 at 100 A1 1,066,920
2,500,000 North Texas Higher Educational Authority, Inc. Student Loan Revenue Bonds, Series 1993C,
6.100%, 4/01/08 (Alternative MinimumTax) 4/03 at 102 Aa 2,611,600
2,500,000 City of Terrell Hills, Texas, Higher Education Facilities
Corporation, Higher Education Revenue and Refunding Bonds
(Incarnate Word College Project), Series 1993, 5.750%,
3/15/133/03 at 101 1/2 AAA 2,603,575
1,445,000 Tyler Junior College District (Smith and Van Zanlt Counties, Texas), Combined Fee Improvement
Revenue and Refunding Bonds, Series 1994, 5.900%, 8/15/13 8/04 at 100 Aaa 1,545,861
2,000,000 Board of Regents of The University of Houston System, Consolidated Revenue Bonds, Series 1995,
6.000%, 2/15/17 2/05 at 100 Aaa 2,136,760
- ------------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE - 16.5%
1,500,000 Texas Health Facilities Development Corporation, Hospital Revenue Bonds (All Saints Episcopal
Hospitals of Fort Worth Project), Series 1993B, 6.250%, 8/15/22 8/03 at 102 Aaa 1,636,845
3,500,000 Abilene Health Facilities Development Corporation, Hospital Revenue Refunding and Improvement
Bonds (Hendrick Medical Center Project), Series 1995C, 6.150%, 9/01/25 9/05 at 102 Aaa 3,845,170
4,500,000 Amarillo Health Facilities Corporation Hospital Revenue Bonds (High Plains Baptist Hospital Project),
Series 1992C, 6.500%, 1/01/07 1/02 at 102 Aaa 4,916,970
2,325,000 Amarillo Health Facilities Corporation, Baptist St. Anthony's Hospital Corporation, Series 1998,
Revenue Bonds, 5.000%, 1/01/28 1/08 at 101 Aaa 2,229,884
2,000,000 Bexar County Health Facilities Development Corporation, Health System Revenue Bonds (Baptist
Health System), Series 1997-B, 5.250%, 11/15/31 11/07 at 102 Aaa 1,982,720
6,000,000 Brazos County Health Facilities, Development Corporation, Franciscan Services Corporation, Obligated
Group, Revenue Bonds, Series 1997 A, 5.375%, 1/01/28 7/07 at 102 Aaa 6,078,840
1,850,000 Lubbock Health Facilities Development Corporation, Hospital Revenue Bonds (Methodist Hospital,
Lubbock, Texas Project), 5.500%, 12/01/14 12/03 at 102 Aaa 1,885,039
5,750,000 Midland County Hospital District, Hospital Revenue Bonds,
Series 1992, 0.000%, 6/01/11 No Opt. Call A- 2,867,008
4,500,000 Port of Corpus Christi Authority of Nueces County (Texas), Pollution Control Revenue Bonds (Hoechst
Celanese Corporation), Series 1992, 6.875%, 4/01/17
(Alternative Minimum Tax) 4/02 at 102 A+ 4,901,670
5,400,000 Travis County Health Facilities Development Corporation, Hospital Revenue Bonds (Daughters of
Charity National Health System - Daughters of Charity Health Services of Austin), Series 1993B,
6.000%, 11/15/22 11/03 at 102 Aa2 5,777,406
- ------------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 8.8%
4,690,000 Texas Department of Housing and Community Affairs, Single Family Mortgage Revenue Bonds,
1996 Series E, 6.000%, 9/01/17 9/06 at 102 Aaa 4,947,387
<PAGE>
<CAPTION>
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
HOUSING/SINGLE FAMILY (continued)
$ 1,475,000 Baytown Housing Finance Corporation, Single Family Mortgage Revenue Refunding Bonds,
Series 1992-A, 8.500%, 9/01/11 9/02 at 103 A1 $ 1,658,756
1,300,000 El Paso Housing Finance Corporation, Single Family Mortgage Revenue Refunding Bonds,
Series 1991A, 8.750%, 10/01/11 4/01 at 103 A2 1,446,874
960,000 City of Galveston Property Finance Authority, Inc., Single Family Mortgage Revenue Bonds,
Series 1991A, 8.500%, 9/01/11 9/01 at 103 A 1,037,213
2,630,000 The Harrison County Finance Corporation, Single Family Mortgage Revenue Refunding Bonds,
Series 1991, 8.875%, 12/01/11 12/01 at 103 A 2,791,140
1,520,000 Houston Housing Finance Corporation, Single Family Mortgage Revenue Refunding Bonds,
Series 1993A, 5.950%, 12/01/10 6/03 at 102 Aaa 1,591,850
940,000 Port Arthur Housing Finance Corporation, Single Family Mortgage Revenue Refunding Bonds,
Series 1992, 8.700%, 3/01/12 9/02 at 103 A 1,032,731
2,910,000 Travis County Housing Finance Corporation (Texas), Residential Mortgage Bonds (GNMA and FNMA
Mortgage-Backed Securities Program), Senior Bonds, Series 1991A,
7.050%, 12/01/25 12/01 at 103 AAA 3,108,084
1,385,000 Victoria Housing Finance Corporation, Single Family Mortgage Revenue Refunding Bonds,
Series 1995, 8.125%, 1/01/11 No Opt. Call Aaa 1,526,062
- ------------------------------------------------------------------------------------------------------------------------------------
LONG TERM CARE - 2.0%
4,000,000 Tarrant County Health Facilities Development Corporation, Tax-Exempt Mortgage Revenue Bonds
(South Central Nursing Homes, Inc. Project), Series 1997A, 6.000%, 1/01/37
(Mandatory put 1/01/26) 1/08 at 105 Aaa 4,366,280
- ------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 13.7%
8,290,000 State of Texas, College Student Loan Bonds, Series 1997, 5.000%, 8/01/22
(Alternative Minimum Tax) 8/10 at 100 AA 7,820,289
4,405,000 State of Texas, Veterans' Housing Assistance Bonds, Series 1993, General Obligation Bonds,
6.800%, 12/01/23 (Alternative Minimum Tax) 12/03 at 102 AA 4,740,617
2,000,000 State of Texas, Veteran's Land Bonds, Series 1994, General Obligation Bonds, 6.400%, 12/01/24
(Alternative Minimum Tax) 12/04 at 100 AA 2,175,660
1,000,000 Caddo Mills Independent School District (Hunt County, Texas), Unlimited Tax School Building and
Refunding Bonds, Series 1995, 6.375%, 8/15/25 2/05 at 100 AAA 1,090,690
4,130,000 Coppell Independent School District (Dallas County, Texas), Unlimited Tax School Building and
Refunding Bonds, Series 1992, 0.000%, 8/15/14 8/09 at 75 11/32 Aaa 1,707,631
1,475,000 City of Corpus Christi, Texas, General Improvement and Refunding Bonds, Series 1992,
6.700%, 3/01/08 3/02 at 100 Aaa 1,596,275
Desoto Independent School District (Dallas County, Texas), Unlimited Tax Refunding Bonds, Series 1998:
1,145,000 4.900%, 8/15/14 8/99 at 100 AAA 1,116,054
2,000,000 5.125%, 8/15/23 8/99 at 100 AAA 1,972,200
2,800,000 City of Ennis, Texas (Ennis County), General Obligation Refunding and Improvement Bonds, Series 1992,
6.500%, 8/01/13 8/02 at 100 Aaa 3,019,912
1,545,000 Montgomery County (A political subdivision of the State of Texas), Refunding Bonds, Series 1997,
0.000%, 3/01/14 9/07 at 72 12/32 Aaa 693,211
1,825,000 Socorro Independent School District (El Pasco, County, Texas), Unlimited Tax School Building Bonds,
Series 1996, 5.750%, 2/15/21 2/06 at 100 Aaa 1,911,797
1,225,000 Weslaco Independent School District (Hidalgo County, Texas), Unlimited Tax School Building and
Refunding Bonds, Series 1996, 5.700%, 2/15/15 2/06 at 100 Aaa 1,286,985
West Independent School District (McLennan and Hill Counties),
Unlimited Tax School Building and Refunding Bonds, Series 1998,
PSF:
1,000,000 0.000%, 8/15/22 8/13 at 61 7/32 AAA 276,260
1,000,000 0.000%, 8/15/23 8/13 at 57 31/32 AAA 261,360
1,000,000 0.000%, 8/15/24 8/13 at 54 7/8 AAA 247,270
- ------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 5.6%
4,035,000 City of Bryan, Texas (Brazos County), Lease Revenue Bonds (Blinn College Project), Series 1995,
5.300%, 10/01/16 10/05 at 100 Aaa 4,081,927
<PAGE>
<CAPTION>
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
TAX OBLIGATION/LIMITED (continued)
$ 1,450,000 Industrial Development Corporation of The City of Galveston, Sales Tax Revenue Bonds, Series 1995,
5.750%, 9/01/15 9/05 at 100 Aaa $ 1,523,385
1,575,000 Harris County, Texas, Toll Road Unlimited Tax and Subordinate Lien, Revenue Refunding Bonds,
Series 1992A, 6.500%, 8/15/15 8/02 at 102 AA 1,719,491
4,580,000 City of San Antonio, Texas, Hotel Occupancy Tax Revenue Bonds (Henry B Gonzalez Convention Center
Project), 5.700%, 8/15/26 8/06 at 102 Aaa 4,828,694
- ------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 11.1%
5,295,000 Alliance Airport Authority, Inc., Special Facilities Revenue Bonds, Series 1990 (American Airlines, Inc.
Project), 7.500%, 12/01/29 (Alternative Minimum Tax) 12/00 at 102 Baa2 5,708,645
5,020,000 Dallas-Fort Worth International Airport, Facility Improvement Corporation, United Parcel Service, Inc.
Revenue Bonds, Series 1992, 6.600%, 5/01/32 (Alternative Minimum Tax) 5/02 at 102 Aaa 5,428,327
320,000 Harris County, Texas, Toll Road Senior Lien Revenue Refunding Bonds, Series 1992A,
6.500%, 8/15/17 8/02 at 102 Aaa 350,605
320,000 Harris County, Texas, Toll Road Senior Lien Revenue Refunding Bonds, Series 1992B,
6.625%, 8/15/17 8/99 at 100 Aaa 323,917
3,600,000 Harris County, Texas, Toll Road Senior Lien, Revenue Refunding Bonds, Series 1994,
5.375%, 8/15/20 8/04 at 102 Aaa 3,656,232
5,000,000 City of Houston, Texas, Airport System Subordinate Lien Revenue Bonds, Series 1991A,
6.750%, 7/01/21 (Alternative Minimum Tax) 7/01 at 102 Aaa 5,386,150
3,300,000 City of Houston, Texas Airport System Special Facilities Revenue Bonds (Automated People Mover
Project), Series 1997A, 5.500%, 7/15/17 (Alternative Minimum Tax) 7/07 at 100 Aaa 3,380,751
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 17.1%
3,500,000 City of Austin, Texas, Combined Utility Systems Revenue Refunding Bonds, Series 1991,
6.750%, 5/15/12 (Pre-refunded to 5/15/01) 5/01 at 102 A*** 3,808,665
1,000,000 The City of Beaumont, Texas, Public Improvement Bonds, Series 1992, 6.250%, 3/01/10
(Pre-refunded to 3/01/02) 3/02 at 100 Aaa 1,071,450
2,000,000 City of Brownsville, Texas, General Obligation Refunding Bonds, Series 1991, 6.750%, 2/15/12
(Pre-refunded to 2/15/01) 2/01 at 100 Aaa 2,132,240
3,500,000 City of Brownsville, Texas Utilities System Priority Revenue Bonds, Series 1990, 6.500%, 9/01/17
(Pre-refunded to 9/01/00) 9/00 at 102 Aaa 3,747,835
1,975,000 City of Corpus Christi, Texas, General Improvement and Refunding Bonds, Series 1992, 6.700%, 3/01/08
(Pre-refunded to 3/01/02) 3/02 at 100 Aaa 2,145,462
1,500,000 City of Dallas, Texas (Dallas, Denton and Collin Counties), Combination Tax and Surplus Revenue,
Certificates of Obligation, Series 1992, 6.250%, 1/01/20
(Pre-refunded to 1/01/02) 1/02 at 100 Aaa 1,602,525
1,185,000 Fort Bend County Levee Improvement District No. 11 (A Political Subdivision of the State of Texas,
located within Fort Bend County), Unlimited Tax Levee Improvement Bonds, Series 1994,
6.900%, 9/01/17 (Pre-refunded to 9/01/04) 9/04 at 100 Aaa 1,354,111
1,780,000 Harris County, Texas, Toll Road Senior Lien Revenue Refunding Bonds, Series 1992A,
6.500%, 8/15/17 (Pre-refunded to 8/15/02) 8/02 at 102 Aaa 1,968,057
425,000 Harris County, Texas, Toll Road Unlimited Tax and Subordinate Lien, Revenue Refunding Bonds,
Series 1992, 6.500%, 8/15/15 (Pre-refunded to 8/15/02) 8/02 at 102 AA*** 469,400
4,000,000 Harris County Health Facilities Development Corporation, Hospital Revenue Bonds (Texas Children's
Hospital Project), Series 1989A, 7.000%, 10/01/19
(Pre-refunded to 10/01/99) 10/99 at 102 Aaa 4,227,880
6,110,000 Harris County Health Facilities Development Corporation (Texas), Hospital Revenue Bonds (Memorial
Hospital System Project), Series 1992, 7.125%, 6/01/15
(Pre-refunded to 6/01/02) 6/02 at 102 N/R*** 6,852,793
250,000 City of Houston, Texas, Water and Sewer System, Junior Lien Revenue Refunding Bonds, Series 1991C,
6.375%, 12/01/17 (Pre-refunded to 12/01/01) 12/01 at 102 Aaa 272,845
1,000,000 North Central Texas Health Facilities Development Corporation, Hospital Revenue Bonds (Presbyterian
Healthcare System Project), Series 1996-A, 5.750%, 6/01/26 No Opt. Call Aaa 1,081,780
1,000,000 North Central Texas Health Facilities Development Corporation, Hospital Revenue Bonds (Presbyterian
Healthcare System Project), Series 1996-B, 5.500%, 6/01/21 No Opt. Call Aaa 1,054,060
<PAGE>
<CAPTION>
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. GUARANTEED (continued)
$ 2,500,000 Ratama Development Corporation, Special Facilities Revenue Bonds (Ratama Park Racetrack
Project), Series 1993, 8.750%, 12/15/17 No Opt. Call Aaa $ 3,630,400
City of San Antonio, Texas, Water System Revenue and Refunding Bonds, Series 1992:
1,310,000 6.500%, 5/15/10 (Pre-refunded to 5/15/02) 5/02 at 102 Aaa 1,442,140
665,000 6.500%, 5/15/10 No Opt. Call Aaa 769,777
- ------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 10.4%
1,225,000 Brazos River Authority (Texas), Collateralized Pollution Control Revenue Bonds (Texas Utilities Electric
Company Project), Series 1990A, 8.125%, 2/01/20 (Alternative MinimumTax) 2/00 at 102 Baa1 1,311,142
2,000,000 Brazos River Authority (Texas), Collateralized Pollution Control Revenue Bonds (Texas Utilities Electric
Company Project), Series 1994A, 7.875%, 3/01/21 (Alternative Minimum Tax) 3/01 at 102 Baa1 2,188,800
1,500,000 Brazos River Authority (Texas), Collateralized Pollution, Control Revenue Refunding Bonds (Texas
Utilities Electric Company Project), Series 1992, 6.500%, 12/01/27
(Alternative Minimum Tax) 12/02 at 102 Aaa 1,638,120
4,000,000 Brazos River Authority Pollution Control Revenue Bonds, Texas Utilities, Series 1998A, 5.550%, 5/01/33
(Alternative Minimum Tax) 5/08 at 102 Aaa 4,109,160
5,500,000 Brazos River Authority (Texas), Collateralized Revenue Refunding Bonds (Houston Lighting and Power
Company Project), Series 1988D, 7.750%, 10/01/15 10/98 at 102 A- 5,640,195
1,200,000 Brazos River Authority (Texas), Collateralized Revenue Refunding Bonds (Houston Lighting and Power
Company Project), Series 1993, 5.600%, 12/01/17 12/03 at 102 Aaa 1,242,096
3,000,000 Gulf Coast Waste Disposal Authority (Valero Energy Corporation Project), Series 1998,
5.600%, 4/01/32 (Alternative Minimum Tax) 4/08 at 102 BBB- 2,987,130
1,500,000 Matagorda County Navigation District Number One (Texas), Pollution Control Revenue Refunding Bonds
(Central Power and Light CompanyProject), Series 1993, 6.000%, 7/01/28 7/03 at 102 A- 1,566,675
2,000,000 City of San Antonio, Texas, Electric and Gas Systems Revenue Refunding Bonds, New Series 1992,
5.000%, 2/01/17 2/02 at 101 Aa1 1,972,700
- ------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 4.9%
2,130,000 City of Dallas, Texas (Dallas, Denton and Collin Counties), Waterworks and Sewer System Revenue
Refunding and Improvement Bonds, Series 1995, 4.500%, 4/01/14 2/02 at 101 Aa1 1,972,700
3,750,000 City of Houston, Texas, Water and Sewer System, Junior Lien Revenue Refunding Bonds, Series 1991C,
6.375%, 12/01/17 12/01 at 102 Aaa 4,037,024
1,000,000 City of Houston, Texas, Water and Sewer System, Prior Lien Revenue Refunding Bonds, Series 1992B,
6.375%, 12/01/14 12/02 at 102 A 1,087,880
800,000 City of Laredo, Texas (Webb County) Combination Tax and Waterworks System, Revenue Certificates
of Obligation, Series 1994, 5.625%, 8/15/11 8/04 at 100 Aaa 842,360
2,525,000 City of San Antonio, Texas, Water System Revenue Refunding Bonds, Series 1992,
6.500%, 5/15/10 5/02 at 102 Aaa 2,748,967
- ------------------------------------------------------------------------------------------------------------------------------------
$ 210,305,000 Total Investments - (cost $198,615,103) - 97.9% 214,088,026
=============
TEMPORARY INVESTMENTS IN SHORT-TERM MUNICIPAL SECURITIES - 0.7%
400,000 Matagorda County Navigation District Number One (Texas), Collateralized Revenue Refunding Bonds
(Houston Lighting and Power Company Project), Variable Rate Demand Bonds, Series 1997,
3.800%, 11/01/28+ (Alternative MinimumTax) VMIG-1 400,000
1,100,000 Sabine River Authority of Texas Collateralized Pollution Control, Variable Rate Demand Bonds (Texas
Utilities Electric Company), 3.750%, 4/01/30+ (Alternative Minimum Tax) A-1+ 1,100,000
- ------------------------------------------------------------------------------------------------------------------------------------
$ 1,500,000 Total Temporary Investments - 0.7% 1,500,000
=============
Other Assets Less Liabilities - 1.4% 3,081,090
--------------------------------------------------------------------------------------------------------------------
Net Assets - 100% $218,669,116
====================================================================================================================
* Optional Call Provisions (not covered by the report of independent
auditors): 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.
** Ratings (not covered by the report of independent auditors): Using the higher
of Standard & Poor's or Moody's rating.
***Securities are backed by an escrow or trust containing sufficient
U.S. government or U.S. government agency securities which ensures the timely
payment of principal and interest. Securities are normally considered to be
equivalent to AAA rated securities.
+The security has a maturity of more than one year, but has variable
rate and demand features which qualify it as a short-term security. The rate
disclosed is that currently in effect. This rate changes periodically based on
market conditions or a specified market index.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENT OF NET ASSETS
July 31, 1998
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
ARIZONA MICHIGAN MICHIGAN OHIO TEXAS
PREMIUM QUALITY PREMIUM QUALITY QUALITY
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments in municipal securities, at market
value (note 1) $95,182,242 $257,717,767 $170,912,102 $228,867,861 $214,088,026
Temporary investments in short-term municipal
securities, at amortized cost, which approximates
market value (note 1) -- -- 1,100,000 700,000 1,500,000
Cash 457,496 688,287 82,250 1,659,587 61,406
Receivables:
Interest 730,083 3,976,795 2,099,282 2,727,378 3,605,057
Investments sold 573,516 -- -- -- 337,652
Other assets 14,730 22,034 5,569 18,863 16,330
- ------------------------------------------------------------------------------------------------------------------------------------
Total assets 96,958,067 262,404,883 174,199,203 233,973,689 219,608,471
- ------------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Accrued expenses:
Management fees (note 6) 53,346 142,725 95,282 127,498 119,826
Other 59,084 89,647 122,239 137,094 101,486
Preferred share dividends payable 1,973 7,671 8,881 10,149 12,185
Common share dividends payable 297,640 905,592 522,083 758,542 705,858
- ------------------------------------------------------------------------------------------------------------------------------------
Total liabilities 412,043 1,145,635 748,485 1,033,283 939,355
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets (note 7) $96,546,024 $261,259,248 $173,450,718 $232,940,406 $218,669,116
- ------------------------------------------------------------------------------------------------------------------------------------
Preferred shares, at liquidation value $30,000,000 $ 80,000,000 $ 56,000,000 $ 77,000,000 $ 69,000,000
====================================================================================================================================
Preferred shares outstanding 1,200 3,200 2,240 3,080 2,760
====================================================================================================================================
Common shares outstanding 4,313,620 11,391,092 7,677,686 9,364,719 9,411,435
====================================================================================================================================
Netasset value per Common share outstanding
(net assets less Preferred shares at
liquidation value, divided by
Common shares outstanding) $ 15.43 $ 15.91 $ 15.30 $ 16.65 $ 15.90
====================================================================================================================================
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENT OF OPERATIONS
Year Ended July 31, 1998
<CAPTION>
ARIZONA MICHIGAN MICHIGAN OHIO TEXAS
PREMIUM QUALITY PREMIUM QUALITY QUALITY
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME (NOTE 1) $5,365,688 $15,386,382 $9,501,212 $13,396,171 $12,862,200
- -----------------------------------------------------------------------------------------------------------------------------------
EXPENSES
Management fees (note 6) 624,025 1,673,154 1,115,263 1,493,250 1,406,372
Preferred shares - auction fees 75,000 200,002 139,999 192,501 172,499
Preferred shares - dividend disbursing agent fees 11,535 11,535 21,198 34,111
22,603
Shareholders' servicing agent fees and expenses 8,829 39,533 27,498 40,197
19,776
Custodian's fees and expenses 37,064 51,433 45,729 56,340 51,616
Directors'/Trustees' fees and expenses (note 6) -- 831 310 745
662
Professional fees 17,212 16,229 22,599 17,004 23,170
Shareholders' reports - printing and mailing expenses 36,012 74,732 73,251 88,971
74,200
Stock exchange listing fees 16,247 24,669 20,292 23,298 19,535
Investor relations expense 7,572 23,435 16,215 21,551 16,803
Other expenses 12,345 23,984 17,796 29,111 13,772
- -----------------------------------------------------------------------------------------------------------------------------------
Total expenses 845,841 2,139,537 1,500,150 1,997,079 1,821,008
- -----------------------------------------------------------------------------------------------------------------------------------
Net investment income 4,519,847 13,246,845 8,001,062 11,399,092 11,041,192
- -----------------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENTS
Net realized gain from
investment transactions
(notes 1 and 4) 469,613 444,027 134,148 295,006 905,750
Net change in unrealized appreciation or depreciation
of investments (84,432) (591,805) 1,238,827 471,590 (363,610)
- -----------------------------------------------------------------------------------------------------------------------------------
Net gain (loss) from investments 385,181 (147,778) 1,372,975 766,596 542,140
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $4,905,028 $13,099,067 $9,374,037 $12,165,688 $11,583,332
===================================================================================================================================
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<CAPTION>
ARIZONA PREMIUM MICHIGAN QUALITY MICHIGAN PREMIUM
- -----------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
7/31/98 7/31/97 7/31/98 7/31/97 7/31/98 7/31/97
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS
Net investment income $ 4,519,847 $ 4,521,266 $ 13,246,845 $ 13,273,646 $ 8,001,062 $ 8,049,998
Net realized gain (loss) from investment
transactions (notes 1 and 4) 469,613 107,716 444,027 191,099 134,148 58,728
Net change in unrealized appreciation
or depreciation of investments (84,432) 3,426,284 (591,805) 7,824,042 1,238,827 7,429,576
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets
from operations 4,905,028 8,055,266 13,099,067 21,288,787 9,374,037 15,538,302
- -----------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 1)
From undistributed net investment income:
Common shareholders (3,560,162) (3,505,995) (10,831,644) (10,753,701) (6,264,993) (6,126,793)
Preferred shareholders (1,004,753) (959,751) (2,682,487) (2,664,110) (1,933,132) (1,824,440)
From accumulated net realized gains
from investment transactions:
Common shareholders -- -- (111,138) (270,793) -- --
Preferred shareholders -- -- (27,488) (65,600) -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets from
distributions to shareholders (4,564,915) (4,465,746) (13,652,757) (13,754,204) (8,198,125) (7,951,233)
- -----------------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (NOTE 2)
Net proceeds from Common shares
issued to shareholders due to
reinvestment of distributions 474,596 47,204 1,566,072 1,679,295 -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets 814,709 3,636,724 1,012,382 9,213,878 1,175,912 7,587,069
Net assets at beginning of year 95,731,315 92,094,591 260,246,866 251,032,988 172,274,806 164,687,737
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets at end of year $96,546,024 $95,731,315 $261,259,248 $260,246,866 $173,450,718 $172,274,806
===================================================================================================================================
Balance of undistributed net
investment income at end of year $ 211,647 $ 256,715 $ 181,352 $ 448,638 $ 306,548 $ 503,611
===================================================================================================================================
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENT OF CHANGES IN NET ASSETS (continued)
<CAPTION>
OHIO QUALITY TEXAS QUALITY
- -----------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
7/31/98 7/31/97 7/31/98 7/31/97
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS
Net investment income $ 11,399,092 $ 11,417,190 $ 11,041,192 $ 11,215,305
Net realized gain (loss) from investment
transactions (notes 1 and 4) 295,006 658,154 905,750 (4,927)
Net change in unrealized appreciation
or depreciation of investments 471,590 7,424,361 (363,610) 7,599,310
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations 12,165,688 19,499,705 11,583,332 18,809,688
- -----------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 1)
From undistributed net investment income:
Common shareholders (9,077,395) (8,909,679) (8,716,618) (8,791,315)
Preferred shareholders (2,397,864) (2,471,778) (2,498,267) (2,442,360)
From accumulated net realized gains
from investment transactions:
Common shareholders -- -- -- --
Preferred shareholders -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets from distributions to shareholders (11,475,259) (11,381,457) (11,214,885) (11,233,675)
- -----------------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (NOTE 2)
Net proceeds from Common shares issued to shareholders due to
reinvestment of distributions 1,018,376 962,543 301,838 --
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets 1,708,805 9,080,791 670,285 7,576,013
Net assets at beginning of year 231,231,601 222,150,810 217,998,831 210,422,818
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets at end of year $232,940,406 $231,231,601 $218,669,116 $217,998,831
===================================================================================================================================
Balance of undistributed net investment income
at end of year $ 636,928 $ 713,095 $ 99,662 $ 273,355
===================================================================================================================================
See accompanying notes to financial statements.
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. GENERAL INFORMATION AND SIGNIFICANT ACCOUNTING POLICIES
The state Funds (the "Funds") covered in this report and their corresponding
New York Stock Exchange symbols are Nuveen Arizona Premium Income Municipal
Fund, Inc. (NAZ), Nuveen Michigan Quality Income Municipal Fund, Inc. (NUM),
Nuveen Michigan Premium Income Municipal Fund, Inc. (NMP), Nuveen Ohio Quality
Income Municipal Fund, Inc. (NUO) and Nuveen Texas Quality Income Municipal
Fund (NTX).
Each Fund invests primarily in a diversified portfolio of municipal obligations
issued by state and local government authorities within a single state. The
Funds are registered under the Investment Company Act of 1940 as closed-end,
diversified management investment companies.
The following is a summary of significant accounting policies followed by the
Funds in the preparation of their financial statements in accordance with
generally accepted accounting principles.
Securities 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
price quotes are not readily available (which is usually the case for municipal
securities), the pricing service establishes fair market 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 and general
market conditions. Temporary investments in securities that have variable rate
and demand features qualifying them as short-term securities are valued at
amortized cost, which approximates market value.
Securities Transactions
Securities transactions are recorded on a trade date basis. Realized gains and
losses from such transactions are determined on the specific identification
method. Securities purchased or sold on a when-issued or delayed delivery basis
may have extended settlement periods. The securities so purchased are subject to
market fluctuation during this period. The Funds have instructed the custodian
to segregate assets in a separate account with a current value at least equal to
the amount of the when-issued and delayed delivery purchase commitments. At July
31, 1998, there were no such outstanding purchase commitments in any of the
Funds.
Investment Income
Interest income is determined on the basis of interest accrued, adjusted for
amortization of premiums and accretion of discounts on long-term debt securities
when required for federal income tax purposes.
Income Taxes
Each Fund is a separate taxpayer for federal income tax purposes. Each Fund
intends to comply with the requirements of the Internal Revenue Code applicable
to regulated investment companies and to distribute all of its tax-exempt net
investment income, in addition to any significant amounts of net realized
capital gains and/or market discount realized from investment transactions. The
Funds currently consider significant net realized capital gains and/or market
discount as amounts in excess of $.01 per Common share. 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, 1998, have been designated Exempt Interest Dividends. Net realized
capital gain and market discount distributions are subject to federal taxation.
Dividends and Distributions to Shareholders
Tax-exempt net investment income is declared as a dividend monthly and payment
is made or reinvestment is credited to shareholder accounts after month-end. 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 shareholders of tax-exempt net investment income, net realized
capital gains and/or market discount 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 generally accepted accounting
principles. Accordingly, temporary over-distributions as a result of these
differences may occur and will be classified as either distributions in excess
of net investment income, distributions in excess of net realized gains and/or
distributions in excess of net ordinary taxable income from investment
transactions, where applicable.
<PAGE>
Preferred Shares
The Funds have issued and outstanding $25,000 stated value Preferred shares.
Each Fund's Preferred shares are issued in one or more Series. The dividend rate
on each Series may change every seven days, as set by the auction agent. The
number of shares outstanding, by Series and in total, for each Fund is as
follows:
<TABLE>
<CAPTION>
ARIZONA MICHIGAN MICHIGAN OHIO TEXAS
PREMIUM QUALITY PREMIUM QUALITY QUALITY
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Number of shares:
Series M -- -- 840 680 760
Series Th 1,200 3,200 1,400 1,400 2,000
Series Th2 -- -- -- 1,000 --
- ---------------------------------------------------------------------------------------------------------
Total 1,200 3,200 2,240 3,080 2,760
=========================================================================================================
</TABLE>
Derivative Financial Instruments
The Funds may invest in transactions in certain derivative financial instruments
including futures, forward, swap, and option contracts, and other financial
instruments with similar characteristics. Although the Funds are authorized to
invest in such financial instruments, and may do so in the future, they did not
make any such investments during the fiscal year ended July 31, 1998.
Use of Estimates
The preparation of financial statements in conformity with 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 from operations during the reporting period.
2. FUND SHARES
Transactions in Common shares were as follows:
<TABLE>
<CAPTION>
ARIZONA PREMIUM MICHIGAN QUALITY
- ----------------------------------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
7/31/98 7/31/97 7/31/98 7/31/97
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares issued to shareholders
due to reinvestment of distributions 29,905 3,160 93,557 105,844
==========================================================================================================
<CAPTION>
MICHIGAN PREMIUM OHIO QUALITY
- ----------------------------------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
7/31/98 7/31/97 7/31/98 7/31/97
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares issued to shareholders
due to reinvestment of distributions -- -- 57,107 58,958
==========================================================================================================
<CAPTION>
TEXAS QUALITY
- ----------------------------------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED
7/31/98 7/31/97
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Shares issued to shareholders
due to reinvestment of distributions 19,003 --
==========================================================================================================
</TABLE>
3. DISTRIBUTIONS TO COMMON SHAREHOLDERS
The Funds declared Common share dividend distributions from their tax-exempt net
investment income which were paid September 1, 1998, to shareholders of record
on August 12, 1998, as follows:
<TABLE>
<CAPTION>
ARIZONA MICHIGAN MICHIGAN OHIO TEXAS
PREMIUM QUALITY PREMIUM QUALITY QUALITY
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Dividend per share $.0690 $.0765 $.0680 $.0820 $.0750
=========================================================================================================
</TABLE>
<PAGE>
<TABLE>
4. SECURITIES TRANSACTIONS
Purchases and sales (including maturities) of investments in municipal
securities and temporary municipal investments during the fiscal year ended July
31, 1998, were as follows:
<CAPTION>
ARIZONA MICHIGAN MICHIGAN OHIO TEXAS
PREMIUM QUALITY PREMIUM QUALITY QUALITY
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Purchases:
Investments in municipal securities $17,261,710 $21,926,492 $11,477,675 $20,446,025 $39,052,358
Temporary municipal investments 2,900,000 8,300,000 5,400,000 9,300,000 17,000,000
Sales and Maturities:
Investments in municipal securities 16,145,732 19,590,897 10,032,178 19,497,054 36,637,282
Temporary municipal investments 4,100,000 10,100,000 6,600,000 8,600,000 17,500,000
- ---------------------------------------------------------------------------------------------------------
</TABLE>
At January 31, 1998, the identified cost of investments owned for federal income
tax purposes was the same as the cost for financial reporting purposes for each
Fund.
At July 31, 1998, 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:
<TABLE>
<CAPTION>
ARIZONA MICHIGAN OHIO
PREMIUM PREMIUM QUALITY
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Expiration year:
2002 $ -- $ 154,548 $ 856,869
2003 846,663 627,148 16,493
2004 -- 1,807,234 622,243
2005 -- -- --
- ---------------------------------------------------------------------------------------------------------
Total $846,663 $2,588,930 $1,495,605
=========================================================================================================
</TABLE>
5. UNREALIZED APPRECIATION (DEPRECIATION)
Gross unrealized appreciation and gross unrealized depreciation of investments
at July 31, 1998, were as follows:
<TABLE>
<CAPTION>
ARIZONA MICHIGAN MICHIGAN OHIO TEXAS
PREMIUM QUALITY PREMIUM QUALITY QUALITY
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Gross unrealized:
appreciation $7,455,221 $21,632,541 $12,421,733 $15,500,468 $15,472,923
depreciation (1,720) -- -- -- --
- ---------------------------------------------------------------------------------------------------------
Net unrealized appreciation $7,453,501 $21,632,541 $12,421,733 $15,500,468 $15,472,923
=========================================================================================================
</TABLE>
<PAGE>
6. MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Under the Funds' investment management agreements with Nuveen Advisory Corp.
(the "Adviser"), a wholly owned subsidiary of The John Nuveen Company, each Fund
pays an annual management fee, payable monthly, at the rates set forth below,
which are based upon the average daily net asset value of each Fund as follows:
AVERAGE DAILY NET ASSET VALUE MANAGEMENT FEE
- -------------------------------------------------------------------------------
For the first $125 million .6500 of 1%
For the next $125 million .6375 of 1
For the next $250 million .6250 of 1
For the next $500 million .6125 of 1
For the next $1 billion .6000 of 1
For net assets over $2 billion .5875 of 1
===============================================================================
The fee compensates the Adviser for overall investment advisory and
administrative services and general office facilities. The Funds pay no
compensation directly to those Directors/Trustees who are affiliated with the
Adviser or to their officers, all of whom receive remuneration for their
services to the Funds from the Adviser.
7. COMPOSITION OF NET ASSETS
At July 31, 1998, net assets consisted of:
<TABLE>
<CAPTION>
ARIZONA MICHIGAN MICHIGAN
PREMIUM QUALITY PREMIUM
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Preferred shares, $25,000 stated value per share,
at liquidation value $30,000,000 $ 80,000,000 $ 56,000,000
Common shares, $.01 par value per share 43,136 113,911 76,777
Paid-in surplus 59,684,403 158,963,361 107,234,590
Balance of undistributed net investment income 211,647 181,352 306,548
Accumulated net realized gain (loss) from investment transactions (846,663) 368,083 (2,588,930)
Net unrealized appreciation of investments 7,453,501 21,632,541 12,421,733
- -----------------------------------------------------------------------------------------------------------
Net assets $96,546,024 $261,259,248 $173,450,718
===========================================================================================================
Authorized shares:
Common 200,000,000 200,000,000 200,000,000
Preferred 1,000,000 1,000,000 1,000,000
===========================================================================================================
<CAPTION>
OHIO TEXAS
QUALITY QUALITY
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Preferred shares, $25,000 stated value per share,
at liquidation value $ 77,000,000 $ 69,000,000
Common shares, $.01 par value per share 93,647 94,114
Paid-in surplus 141,217,536 133,304,803
Balance of undistributed net investment income 636,928 99,662
Accumulated net realized gain (loss) from investment transactions (1,508,173) 697,614
Net unrealized appreciation of investments 15,500,468 15,472,923
- -----------------------------------------------------------------------------------------------------------
Net assets $232,940,406 $218,669,116
===========================================================================================================
Authorized shares:
Common 200,000,000 Unlimited
Preferred 1,000,000 Unlimited
===========================================================================================================
</TABLE>
<PAGE>
<TABLE>
Financial Highlights
Selected data for a Common share outstanding throughout each period is
as follows:
<CAPTION>
Investment Operations
--------------------------------
Net
Realized/
Beginning Net Unrealized
Net Asset Investment Investment
Value Income Gain (Loss) Total
<S> <C> <C> <C> <C>
Arizona Premium
Year Ended 7/31:
1998 $15.34 $1.05 $ .10 $ 1.15
1997 14.51 1.06 .81 1.87
1996 14.12 1.05 .38 1.43
1995 13.61 1.07 .49 1.56
1994 14.49 1.07 (.84) .23
<CAPTION>
Michigan Quality
<S> <C> <C> <C> <C>
Year Ended 7/31:
1998 15.95 1.17 (.01) 1.16
1997 15.28 1.18 .72 1.90
1996 15.10 1.19 .27 1.46
1995 15.02 1.21 .19 1.40
1994 15.85 1.21 (.82) .39
<CAPTION>
Michigan Premium
<S> <C> <C> <C> <C>
Year Ended 7/31:
1998 15.14 1.04 .19 1.23
1997 14.16 1.05 .97 2.02
1996 13.73 1.05 .41 1.46
1995 13.46 1.04 .31 1.35
1994 14.47 1.03 (1.01) .02
<CAPTION>
Ohio Quality
<S> <C> <C> <C> <C>
Year Ended 7/31:
1998 16.57 1.22 .09 1.31
1997 15.69 1.23 .88 2.11
1996 15.33 1.23 .35 1.58
1995 14.84 1.22 .52 1.74
1994 15.72 1.19 (.82) .37
<CAPTION>
Texas Quality
<S> <C> <C> <C> <C>
Year Ended 7/31:
1998 15.86 1.17 .07 1.24
1997 15.06 1.19 .81 2.00
1996 14.91 1.21 .21 1.42
1995 14.53 1.22 .42 1.64
1994 15.41 1.21 (.83) .38
<PAGE>
<CAPTION>
Less Distributions
-----------------------------------------------------------
Net Net
Investment Investment Capital Capital
Income Income Gains Gains
To Common To Preferred To Common To Preferred
Shareholders Shareholders+ Shareholders Shareholders+ Total
<S> <C> <C> <C> <C> <C>
Arizona Premium
Year Ended 7/31:
1998 $(.83) $(.23) $-- $-- $(1.06)
1997 (.82) (.22) -- -- (1.04)
1996 (.80) (.24) -- -- (1.04)
1995 (.78) (.27) -- -- (1.05)
1994 (.79) (.26) (.05) (.01) (1.11)
<CAPTION>
Michigan Quality
<S> <C> <C> <C> <C> <C>
Year Ended 7/31:
1998 (.95) (.24) (.01) -- (1.20)
1997 (.95) (.24) (.03) (.01) (1.23)
1996 (.95) (.24) (.07) (.02) (1.28)
1995 (1.00) (.26) (.05) (.01) (1.32)
1994 (1.05) (.17) -- -- (1.22)
<CAPTION>
Michigan Premium
<S> <C> <C> <C> <C> <C>
Year Ended 7/31:
1998 (.82) (.25) -- -- (1.07)
1997 (.80) (.24) -- -- (1.04)
1996 (.78) (.25) -- -- (1.03)
1995 (.80) (.28) -- -- (1.08)
1994 (.81) (.17) (.04) (.01) (1.03)
<CAPTION>
Ohio Quality
<S> <C> <C> <C> <C> <C>
Year Ended 7/31:
1998 (.97) (.26) -- -- (1.23)
1997 (.96) (.27) -- -- (1.23)
1996 (.95) (.27) -- -- (1.22)
1995 (.95) (.30) -- -- (1.25)
1994 (1.03) (.18) (.03) (.01) (1.25)
<CAPTION>
Texas Quality
<S> <C> <C> <C> <C> <C>
Year Ended 7/31:
1998 (.93) (.27) -- -- (1.20)
1997 (.94) (.26) -- -- (1.20)
1996 (.95) (.27) (.04)+++ (.01)+++ (1.27)
1995 (.98) (.28) -- -- (1.26)
1994 (1.06) (.17) (.03) -- (1.26)
<PAGE>
<CAPTION>
Total Returns
---------------------------
Ending
Net Asset Ending Based on Based on Net
Value Market Value Market Value* Asset Value*
<S> <C> <C> <C> <C>
Arizona Premium
Year Ended 7/31:
1998 $15.43 $16.4375 12.18% 6.14%
1997 15.34 15.4375 17.81 11.74
1996 14.51 13.8750 7.83 8.48
1995 14.12 13.6250 10.42 9.98
1994 13.61 13.1250 (11.66) (.43)
<CAPTION>
Michigan Quality
<S> <C> <C> <C> <C>
Year Ended 7/31:
1998 15.91 17.3125 10.27 5.97
1997 15.95 16.6250 14.02 11.19
1996 15.28 15.5000 11.32 8.07
1995 15.10 14.8750 4.77 8.02
1994 15.02 15.2500 1.82 1.33
<CAPTION>
Michigan Premium
<S> <C> <C> <C> <C>
Year Ended 7/31:
1998 15.30 15.0000 13.74 6.62
1997 15.14 13.9375 14.95 12.97
1996 14.16 12.8750 14.00 8.88
1995 13.73 12.0000 2.59 8.45
1994 13.46 12.5000 (11.43) (1.27)
<CAPTION>
Ohio Quality
<S> <C> <C> <C> <C>
Year Ended 7/31:
1998 16.65 18.0625 10.14 6.53
1997 16.57 17.3125 14.70 12.14
1996 15.69 16.0000 12.39 8.68
1995 15.33 15.1250 6.80 10.16
1994 14.84 15.1250 2.72 1.06
<CAPTION>
Texas Quality
<S> <C> <C> <C> <C>
Year Ended 7/31:
1998 15.90 15.6875 6.45 6.27
1997 15.86 15.6250 11.76 11.93
1996 15.06 14.8750 14.60 7.72
1995 14.91 13.8750 1.14 9.89
1994 14.53 14.7500 (.27) 1.28
<PAGE>
<CAPTION>
Ratios/Supplemental Data
Ratio of Net
Ratio of Investment
Ending Expenses to Income to Portfolio
Net Assets Average Average Turnover
(000) Net Assets++ Net Assets++ Rate
<S> <C> <C> <C> <C>
Arizona Premium
Year Ended 7/31:
1998 $ 96,546 .88% 4.71% 17%
1997 95,731 .87 4.86 11
1996 92,095 .90 4.88 15
1995 90,434 .86 5.21 11
1994 88,263 .84 4.97 21
<CAPTION>
Michigan Quality
<S> <C> <C> <C> <C>
Year Ended 7/31:
1998 261,259 .82 5.09 8
1997 260,247 .83 5.23 11
1996 251,033 .83 5.29 15
1995 247,907 .84 5.54 18
1994 246,082 .85 5.27 4
<CAPTION>
Michigan Premium
<S> <C> <C> <C> <C>
Year Ended 7/31:
1998 173,451 .87 4.64 6
1997 172,275 .86 4.83 4
1996 164,688 .87 4.87 17
1995 161,414 1.01 5.02 32
1994 100,888 .94 4.82 17
<CAPTION>
Ohio Quality
<S> <C> <C> <C> <C>
Year Ended 7/31:
1998 232,940 .86 4.92 9
1997 231,232 .85 5.08 25
1996 222,151 .87 5.09 19
1995 218,335 .94 5.24 19
1994 101,335 .94 5.09 2
<CAPTION>
Texas Quality
<S> <C> <C> <C> <C>
Year Ended 7/31:
1998 218,669 .83 5.06 17
1997 217,999 .83 5.27 13
1996 210,423 .83 5.36 17
1995 208,924 .91 5.54 8
1994 153,724 .86 5.43 10
* Total Investment Return on Market Value is the combination of reinvested
dividend income, reinvested capital gains distributions, if any, and
changes in stock price per share. Total Return on Net Asset Value is the
combination of reinvested dividend income, reinvested capital gains
distributions, if any, and changes in net asset value per share.
Total returns are not annualized.
+ The amounts shown are based on Common share equivalents.
++ Ratios do not reflect the effect of dividend payments to Preferred
shareholders.
+++ The amounts shown include distributions in excess of capital gains of $.008
for Common shareholders and $.002 for Preferred shareholders.
</TABLE>
<PAGE>
Building a Better Portfolio Can Make You a Successful Investor
NUVEEN FAMILY OF MUTUAL FUNDS
Nuveen offers a variety of funds designed to help you reach your financial
goals.
GROWTH
Nuveen Rittenhouse
Growth Fund
GROWTH AND INCOME
European Value Fund
Growth and Income Stock Fund
Balanced Stock and Bond Fund
Balanced Municipal and Stock Fund
TAX-FREE INCOME
NATIONAL FUNDS
Long-Term
Insured
Intermediate-Term
Limited-Term
STATE FUNDS
Arizona
California
Colorado
Connecticut
Florida
Georgia
Kansas
Kentucky
Louisiana
Maryland
Massachusetts
Michigan
Missouri
New Jersey
New Mexico
New York
North Carolina
Ohio
Pennsylvania
Tennessee
Virginia
Wisconsin
Successful investors know that a well-diversified portfolio - one that balances
different types of investments, levels of risk and tax management - can be the
foundation for building and sustaining wealth. That's why Nuveen offers you and
your financial adviser a wide range of quality investments that can help you
build a better portfolio in the pursuit of your financial goals
Exchange-Traded Funds
Nuveen Exchange-Traded Funds offer investors actively managed portfolios of
investment-grade quality municipal bonds. The fund shares are listed and traded
on the New York and American stock exchanges. Exchange-traded funds provide the
investment convenience, price visibility and liquidity of common stocks.
MuniPreferred(R)
Nuveen MuniPreferred offers investors a AAA rated investment with an attractive
tax-free yield for the cash reserves portion of an investment portfolio.
MuniPreferred shares are backed 2-to-1 by the long-term portfolios of Nuveen
dual-class exchange-traded funds and are available for national as well as a
wide variety of state-specific portfolios.
Mutual Funds
Nuveen offers a family of equity, balanced and municipal bond funds featuring
Premier AdvisersSM including Institutional Capital Corporation, Rittenhouse
Financial Services, and Nuveen Advisory Corp. Each brings a specialized
expertise in a particular investment style or asset class, time-tested
investment strategies and a focus on consistent, long-term performance. With
Nuveen's Premier Adviser funds, you have all the advantages of a family of funds
plus the benefits of specialized investment expertise.
Private Asset Management
Rittenhouse Financial Services and Nuveen Asset Management offer comprehensive,
customized investment management solutions to investors with assets of $250,000
or more to invest. A range of actively managed growth, balanced and municipal
income-oriented portfolios are available, all based upon a disciplined
investment philosophy.
Defined Portfolios
Nuveen Defined Portfolios are fixed portfolios of quality securities that are a
convenient, attractive alternative to purchasing individual securities. They
provide low-cost diversification to reduce risk, experienced, professional
security selection and surveillance and daily liquidity at that day's net asset
value for quick access to your assets.
<PAGE>
Fund Information
BOARD OF TRUSTEES
Robert P. Bremner
Lawrence H. Brown
Anthony T. Dean
Anne E. Impellizzeri
Peter R. Sawers
William J. Schneider
Timothy R. Schwertfeger
Judith M. Stockdale
FUND MANAGER
Nuveen Advisory Corp.
333 West Wacker Drive
Chicago, IL 60606
CUSTODIAN, TRANSFER AGENT
AND SHAREHOLDER SERVICES
The Chase Manhattan Bank
4 New York Plaza
New York, NY 10004-2413
(800) 257-8787
LEGAL COUNSEL
Morgan, Lewis &
Bockius LLP
Washington, D.C.
INDEPENDENT AUDITORS
Ernst & Young LLP
Chicago, IL
YEAR 2000
The concern that computer systems may have problems processing date-related
information in the year 2000 and beyond has challenged businesses and
organizations to thoroughly review all aspects of their operations. We have
undertaken just such an approach at Nuveen in preparation for the millennium.
Over the last 10 years, our trading, fund management and pricing systems at
Nuveen - the systems that directly affect our investors and their financial
advisers - have been updated or replaced to address the Year 2000 concerns. We
continue to work closely with our transfer agent, custodian and other service
partners to monitor readiness and address other remaining systems issues. Our
initial testing indicates we are on schedule, and we have targeted year-end 1998
to complete verification of vendor compliance and service partner readiness.
However, we can give no complete assurance at this time that the steps we have
taken will be sufficient to prevent any problems that would impact the Nuveen
Exchange-Traded Funds.
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 12-month period ended July 31, 1998. Any future
repurchases will be reported to shareholders in the next annual or semiannual
report.
<PAGE>
Serving Investors for Generations
PHOTO OF: JOHN NUVEEN, SR.
Since our founding in 1898, John Nuveen & Co. has been synonymous with
investments that withstand the test of time. Today we offer a broad range of
quality investments designed for individuals seeking to build and sustain
wealth. In fact, more than 1.3 million investors have trusted Nuveen to help
them pursue their financial goals.
The cornerstone of Nuveen's investment philosophy is a commitment to disciplined
long-term investment strategies focused on providing consistent, attractive
performance over time - with moderated risk. We emphasize quality securities
carefully chosen through in-depth research, and we follow those securities
closely over time to ensure that they continue to meet our exacting standards.
Whether your focus is long-term growth, dependable current income or sustaining
accumulated wealth, Nuveen offers a wide variety of investments and services to
help meet your unique circumstances and financial planning needs. Our equity,
balanced, and tax-free income funds, along with our defined portfolios and
private asset management, can help you build a better, well-diversified
portfolio.
Talk with your financial adviser to learn more about how Nuveen investment
products and services can help you. Or call us at (800) 257-8787 for more
information, including a prospectus where applicable. Please read that
information carefully before investing.
LOGO:
1898 - 1998
NUVEEN
OUR SECOND CENTURY
helping investors sustain the wealth of a lifetime.(tm)
John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, IL 60606-1286
www.nuveen.com
FAN-1-7-98
