NUVEEN Exchange-Traded Funds
July 31, 1999
Annual Report
Dependable, tax-free income to help you keep more of what you earn.
NAZ
Arizona
NUM
NMP
Michigan
NUO
Ohio
NTX
Texas
Photo of: People looking into canyon.
<PAGE>
Highlights
As of July 31, 1999
Contents
1 Dear Shareholder
4 NAZ's Portfolio Manager's Comments & Performance Overview
7 NUM and NMP'sPortfolio Manager's Comments & Performance Overview
11 NUO's Portfolio Manager's Comments & Performance Overview
14 NTX'sPortfolio Manager's Comments & Performance Overview
17 Report of Independent Auditors 18 Portfolio of Investments
39 Statement of Net Assets
40 Statement of Operations
41 Statement of Changes in Net Assets
43 Notes to Financial Statements
49 Financial Highlights
52 Build Your Wealth Automatically
53 Fund Information
Credit Quality Performance Highlights
Nuveen Arizona Premium Income Municipal Fund, Inc. (NAZ)
o Outperformed the one-year total return of its Lipper
Peer Group*
o Has provided steady or increasing dividends for 69
consecutive months
Pie Chart:
AAA/U.S. Guaranteed 66%
AA 19%
A 7%
BBB/NR 8%
Nuveen Michigan Quality Income Municipal Fund, Inc. (NUM)
o Outperformed the one-year total return of its Lipper
Peer Group*
o Ranked first out of five funds in its Lipper Peer Group
for one-year total return performance
Pie Chart:
AAA/U.S. Guaranteed 80%
AA 12%
A 4%
BBB/NR 4%
Nuveen Michigan Premium Income Municipal Fund, Inc. (NMP)
o Outperformed the one-year total return of its Lipper
Peer Group*
o Has provided steady or increasing dividends for 51
consecutive months
Pie Chart:
AAA/U.S. Guaranteed 61%
AA 25%
A 7%
BBB/NR 7%
Nuveen Ohio Quality Income Municipal Fund, Inc. (NUO)
o Outperformed the one-year total return of its Lipper
Peer Group* and paralleled the performance of the
Lehman Brothers Municipal Bond Index ** over the same
period
o HHHH Four-star Morningstar RatingTM***
Pie Chart:
AAA/U.S. Guaranteed 70%
AA 14%
A 4%
BBB/NR 12%
Nuveen Texas Quality Income Municipal Fund (NTX)
o Increased its dividend in May 1999
o Taxable-equivalent yield of 8.70%****
Pie Chart:
AAA/U.S. Guaranteed 60%
AA 13%
A 12%
BBB/NR 15%
* The Lipper Peer Group return represents the average annualized return of
the funds in the appropriate Lipper Municipal Debt category. The return
assumes reinvestment of dividends and does not reflect any applicable sales
charge.
** The Lehman Brothers Municipal Bond Index is an unleveraged index covering a
broad range of investment grade municipal bonds. The return for the index
does not reflect any initial or ongoing expenses.
*** Morningstar proprietary ratings reflect historical risk-adjusted
performance as of July 31, 1999. The ratings are subject to change every
month. Past performance is no guarantee of future results. Morningstar
ratings are calculated from the Fund's three-, five-, and 10-year average
annual returns (if applicable) in excess of 90-day Treasury bill returns
with appropriate fee adjustments, and a risk factor that reflects fund
performance below 90-day T-bill returns. NUO received 3 stars for the
three-year period and four stars for the five-year period, respectively.
The top 10% of the funds in a broad asset class receive 5 stars, the next
22.5% receive 4 stars, and the next 35% receive 3 stars. The Fund was rated
among 194 funds for the three-year period, 193 funds for the five-year
period, and 30 funds for the 10-year period.
**** For investors in the 31% federal income tax bracket. See your fund's
performance overview in this report for more 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.
Dear Shareholder
I am pleased to report to you on the annual performance of your Nuveen
Exchange-Traded Fund. Providing an attractive tax-free dividend is the Fund's
main objective, and over the past year, your Fund has continued to achieve this
goal, especially in comparison with taxable fixed-income investments. During the
period covered by this report, we have seen some shifts in U.S. economic trends
and the fixed-income environment in which your Nuveen Exchange-Traded Fund
operates. I appreciate the opportunity to discuss these changes with you, as
does the portfolio manager of your fund, who reviews fund performance later in
this report.
A Challenging Investment Environment
Over the past 12 months, the U.S. economy continued to be characterized by
robust growth, generally low interest rates, and unemployment levels that
remained among the lowest in three decades. However, concerns about the
persistent pace of the economy's expansion tested the new paradigm that holds
that improvements in productivity enable us to have both economic growth and low
inflation at the same time. With investors and the various markets watching and
reacting to every announcement concerning economic statistics, volatility
increased, especially in the equity markets, and the spectre of inflation seemed
to lurk behind every report.
In an effort to pre-empt this threat of inflation, the Federal Reserve moved to
raise interest rates by a quarter-point at the end of June and again in late
August. This brought the federal funds rate, which represents the amount banks
charge one another on overnight loans, from 4.75% to 5.25%, reversing two of the
three rate cuts made by the Fed in the fall of 1998. Despite the Fed's statement
that it would return to a neutral bias concerning future interest rate action,
comments by Fed Chairman Alan Greenspan about the need for closer attention to
activity in the financial markets kept open the possibility of additional rate
hikes.
<PAGE>
Municipal Bond Performance
Over the past year, our exchange-traded municipal bond funds continued to offer
attractive, stable income in a market that places a high premium on yield. At
the end of July 1999, the ratio between long-term municipal yields and 30-year
Treasury yields stood at 93%, compared with the historical average of 86% for
the period 1986-1999. For investors, this meant that quality long-term municipal
bonds offered yields comparable to those of long Treasury bonds - even before
the tax advantages of municipals were taken into account. On an after-tax basis,
municipal bonds continued to present an exceptionally attractive investment
option relative to Treasuries.
In the coming months, we expect to see a good supply of new municipal bonds,
although total volume is expected to drop from the near-record levels of 1998.
This is due to the dramatic decrease in refundings, as interest rates moved
above last year's levels and removed much of the incentive for issuers to refund
existing bonds. To date, municipal supply has declined by approximately 25% from
the levels of a year ago. This, in turn, has enhanced the attractiveness of the
municipal bonds that are brought to market, as demand especially from individual
investors - remains strong. We anticipate that this demand will continue to
strengthen as investors increasingly look at rebalancing their portfolios. With
the outlook for tighter supply and continued demand in the months ahead,
Nuveen's established market position as the leading sponsor of exchange-traded
municipal bond funds ensures that we will have excellent access to the bond
offerings that have the potential to add value for our shareholders.
A Balanced Portfolio: Enhanced Growth with Reduced Risk
Like most investors in the marketplace today, one of your goals for tax-free
investing is probably to capture high after-tax total returns while moderating
risk. Using the appropriate securities' indices and tax rates, Nuveen compared
the hypothetical investment performance of a balanced portfolio consisting of
equities and municipal bonds with that of a balanced portfolio composed of
equities and taxable bonds.
<PAGE>
Our research showed that, over the past 20 years, the pairing of equities with
municipal bonds had provided both superior after-tax total returns and lower
levels of risk than the combination of equities and taxable bonds. Incorporating
even a 20% allocation of municipal bonds into an all-equity portfolio cut risk
substantially, with only a small reduction in after-tax total return. Purchasing
shares of a Nuveen Exchange-Traded Municipal Bond Fund provides an easy way to
incorporate the benefits of municipal bonds into a balanced portfolio.
Nuveen Funds: An Answer to Your Investment Needs
In light of the recent shifts in the economic environment, your financial
adviser can serve as a valuable resource in helping you determine if adjustments
are needed in your current asset allocation plan. By investing in other Nuveen
funds, you can bring balance to your portfolio and give yourself proper exposure
to the different types of investments needed to enhance your potential for
success.
In addition, if you are satisfied with the performance of your Nuveen
Exchange-Traded Fund, your adviser can set up a reinvestment plan designed to
purchase additional shares of that fund. For more information on all of Nuveen's
funds, contact your financial adviser for a prospectus containing all charges
and expenses, or call Nuveen at (800) 621-7227. Please read the prospectus
carefully before you invest or send money.
Since 1898, Nuveen has been synonymous with investments that stand the test of
time. As we look ahead to a new millennium, we are committed to maintaining that
reputation and finding the best ways to serve your evolving investment needs.
Thank you for your continued confidence.
Sincerely,
/s/Timothy R. Schwertfeger
Timothy R. Schwertfeger
Chairman of the Board
September 15, 1999
sidebar text: "The solid track record of a proven investment manager plays an
important role in taking advantage of the exceptional value currently available
in the municipal markets."
<PAGE>
Nuveen Arizona Premium Income Municipal Fund, Inc. (NAZ)
Portfolio Manager's Comments
Portfolio manager Mike Davern reviews the Arizona municipal market, fund
performance, and key strategies for the Nuveen Arizona Premium Income Municipal
Fund, Inc. (NAZ). With 17 years of experience as an investment professional,
including eight years with Nuveen, Mike has managed NAZ since July 1998.
WHAT FACTORS CONTRIBUTED TO THE PERFORMANCE OF THE ARIZONA MUNICIPAL MARKET
DURING THE PAST 12 MONTHS?
The Arizona economy continued to perform well, with most key indicators
accelerating at a strong pace. With a job growth rate of 4.7% in 1998, Arizona
can boast about having the highest employment growth in the nation. In July
1999, unemployment in the state was 4.4%, which was slightly higher than the
national average of 4.3%. Population growth over the past 12 months - at 2.5% -
also continued, although at a slightly slower pace than in previous years. The
strong population growth of the past decade resulted in increased housing starts
and rising retail sales. Continued growth, low business costs, and the state's
favorable economic climate are helping Arizona diversify away from the state's
historically dominant industries - agriculture, mining, and real estate - into
the services and manufacturing sectors. As a result of the state's strong growth
patterns, Arizona has an ongoing need for both infrastructure financing for
housing, schools, hospitals, and other municipal projects and effective planning
to maintain its current momentum.
Like the national market, the Arizona municipal market saw supply decline over
the past year as interest rates rose. During the first seven months of 1999, new
state issuance fell 41% from 1998's January-July levels, compared with a 23%
drop in the national supply. Over the past year, we saw a resurgence in the
demand for Arizona municipal bond funds, however, as state residents continued
to seek tax-free income even as municipal supply declined. Both the tighter
supply scenario and the increased demand worked to support prices and help fund
performance.
HOW DID NAZ PERFORM IN THIS ENVIRONMENT?
For the 12 months ended July 31, 1999, NAZ produced a total return on net
asset value (NAV) of 1.92%, providing a taxable-equivalent total return(1) of
4.85% for share-holders in the combined 34.5% federal and state income tax
bracket. While the Fund underperformed the Lehman Brothers Municipal Bond
Index's(2) annual total return of 2.88%, it outpaced the average total return of
1.55% for its Lipper peer group(3).
The underperformance of the Fund's total return on NAV relative to the Lehman
index can be attributed to its fund duration(4). As of July 31, 1999, NAZ had a
fund duration of 8.95, compared with 7.30 for the Lehman index. Duration
measures a bond fund's price volatility, or reaction to interest rate movements.
The longer the duration, the more sensitive the fund's NAV is to changes in
interest rates. During a period of falling interest rates, longer duration
enables a fund's NAV to participate more fully in market gains. However, when
interest rates rise, longer duration can make the Fund's NAV more vulnerable to
price declines. Between August 1, 1998, and July 31, 1999, the yield on the Bond
Buyer Revenue Bond Index(5) rose from 5.36% to 5.65%. This meant that funds with
longer fund durations, like NAZ, were more likely to underperform in the rising
interest rate environment of the past year.
Over the past year, active demand for NAZ - bolstered by the Fund's recent
dividend increase and outstanding record of dividend stability - resulted in
solid share price performance. At the same time, the prevailing interest rate
environment, which was generally higher than that of July 1998, led to a decline
in the Fund's NAV. As a result of these factors, NAZ saw its premium (share
price above NAV) widen by more than 7.5% over the past 12 months.
Total Return
Market Yield Premium(6) on Share Price
- --------------------------------------------------------------------------------
Taxable- 1-Year Ended Taxable-
7/31/99 Equivalent(1) 7/31/98 7/31/99 7/31/99 Equivalent(1)
- --------------------------------------------------------------------------------
NAZ 4.98% 7.60% 6.53% 14.09% 8.67% 11.42%
- --------------------------------------------------------------------------------
HOW WAS THE FUND'S DIVIDEND AFFECTED?
During the past 12 months, good call protection helped support NAZ's dividend
and shield the Fund's income from erosion. In addition, excellent dividend
management strategies, including the prudent use of leverage, enabled us to
increase NAZ's dividend effective February 1999. As of July 31, 1999, the Fund
had provided shareholders with steady or increasing dividends for 69 consecutive
months.
<PAGE>
As a leveraged fund, NAZ issues preferred shares that pay short-term interest
rates to investors seeking short-term liquidity. The proceeds from the preferred
shares are used to buy additional long-term bonds for the Fund's portfolio,
which may increase volatility. When short-term interest rates remain below
long-term rates, common shareholders can potentially earn extra income from the
difference between the rate earned on the Fund's long-term portfolio and the
short-term rate paid to preferred shareholders.
WHAT KEY STRATEGIES WERE USED TO MANAGE NAZ DURING THE PAST 12 MONTHS?
The market environment of the past 12 months enabled us to work on several goals
for the Fund, including increasing the tax-exempt income earned by the Fund's
portfolio; increasing call protection, which we were able to do at attractive
prices; and taking advantage of opportunities to enhance the Fund's tax
efficiency by trading bonds that offset capital gains.
Another focus was lengthening the Fund's duration, which had shortened during
the previous market rally. As mentioned earlier, NAZ's fund duration was 8.95 as
of July 31, 1999, up from 8.29 in July 1998. This longer duration should help
position the Fund to regain net asset value as the bond market recovers.
Nuveen Research, which was instrumental in helping to identify the bonds that
could accomplish these goals, also assisted in monitoring events in the
municipal market and analyzing the effect of those events on national as well as
individual state markets. Based on our research and in anticipation of current
market conditions, we increased our exposure in the multifamily housing sector,
which offered the potential for higher yields. Our position in this sector,
which had been underweighted at 4% as of July 31, 1998, stood at 8% as of the
end of July 1999. As interest rates went up and municipal bond prices dropped in
recent months, this sector has performed well.
Overall, the Fund continued to offer excellent credit quality. At the end of
July 1999, NAZ had 85% of its portfolio invested in bonds rated AAA/U.S.
guaranteed and AA. The Fund also had an 8% allocation in BBB and non-rated
bonds, which have generally provided enhanced levels of yield. In the area of
bond calls, NAZ currently offers excellent levels of call protection, with no
calls scheduled prior to 2002. This should provide additional protection for the
Fund's dividend over this period.
WHAT IS NUVEEN'S OUTLOOK FOR NAZ?
Our focus in the coming months will be on taking advantage of market conditions
to purchase well-structured bonds that offer more aggressive yields at
attractive prices. Our goals in making these purchases will continue to be
increasing tax-free income, extending call protection, and enhancing tax
efficiency by offsetting potential capital gains with capital losses. We will
continue to watch all sectors of the market for opportunities and situations
that offer higher yields.
The ability to implement strategies like these demonstrates the value that can
be added by an active bond manager such as Nuveen. As an experienced investment
manager knowledgeable about the unique aspects of the Arizona municipal market,
we are in the marketplace every day, monitoring market dynamics, looking for
opportunities, and capitalizing on them to the benefit of our shareholders.
1 The taxable-equivalent yield/total return represents the yield/total return
that must be earned on a taxable investment in order to equal the
yield/total return of the Nuveen fund on an after-tax basis. The
taxable-equivalent yield is based on the Fund's market yield and the
combined federal and state income tax rate of 34.5%. The taxable-equivalent
total return is based on the annualized total return and the 34.5% federal
and state income tax rate.
2 NAZ is compared with the Lehman Brothers Municipal Bond Index, an
unleveraged index comprising a broad range of investment-grade municipal
bonds. The return for the Lehman index does not reflect any initial or
ongoing expenses.
3 The Lipper Peer Group return represents the average annualized return of
the 18 funds in the Lipper Other States Municipal Debt category. The return
assumes reinvestment of dividends and does not reflect any applicable sales
charges.
4 Fund duration, also known as leverage-adjusted duration, takes into account
the leveraging process for the Fund and therefore differs from the duration
of the actual portfolio of individual bonds that make up the Fund. Unless
otherwise noted, references to duration in this commentary are intended to
indicate fund duration.
5 The Bond Buyer Revenue Bond Index is an unmanaged index of long-term
municipal revenue bonds.
6 A fund's premium represents the percentage difference between the fund's
share price and its NAV.
<PAGE>
Nuveen Arizona Premium Income Municipal Fund, Inc.
Performance Overview
As of July 31, 1999
NAZ
Portfolio Statistics
Inception Date 11/92
- --------------------------------------------------
Share Price $17
- --------------------------------------------------
Net Asset Value $14.90
- --------------------------------------------------
Market Yield 4.98%
- --------------------------------------------------
Taxable-Equivalent Yield
(Federal Tax Rate)(1) 7.22%
- --------------------------------------------------
Taxable-Equivalent Yield
(Federal and State Tax Rate)(1) 7.60%
- --------------------------------------------------
Fund Net Assets ($000) $94,775
- --------------------------------------------------
Average Effective Maturity (Years) 16.09
- --------------------------------------------------
Leverage-Adjusted Duration 8.95
- --------------------------------------------------
Annualized Total Return
On Share Price On NAV
- --------------------------------------------------
1-Year 8.67% 1.92%
- --------------------------------------------------
5-Year 11.29% 7.59%
- --------------------------------------------------
Since Inception 7.54% 6.50%
- --------------------------------------------------
Taxable-Equivalent Total Return(2)
On Share Price On NAV
- --------------------------------------------------
1-Year 11.42% 4.85%
- --------------------------------------------------
5-Year 14.33% 10.59%
- --------------------------------------------------
Since Inception 10.45% 9.44%
- --------------------------------------------------
Top Five Sectors (as a % of total investments)
U.S. Guaranteed 25%
- --------------------------------------------------
Healthcare 12%
- --------------------------------------------------
Tax Obligation/Limited 12%
- --------------------------------------------------
Utilities 11%
- --------------------------------------------------
Housing/Multifamily 8%
- --------------------------------------------------
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 34.5%.
2 Taxable-equivalent total return is based on the annualized total return and
a combined federal and state income tax rate of 34.5%. It represents the
return on a taxable investment necessary to equal the return of the Nuveen
fund on an after-tax basis.
Bar Chart:
1998-1999 Monthly Tax-Free Dividends
8/98 0.069
9/98 0.069
10/98 0.069
11/98 0.069
12/98 0.069
1/99 0.069
2/99 0.0705
3/99 0.0705
4/99 0.0705
5/99 0.0705
6/99 0.0705
7/99 0.0705
Line Chart:
Share Price Performance
Weekly Closing Price
Past performance is not predictive of future results.
8/7/98 16.313
16.438
16.625
16.563
16.625
16.375
16.563
16.5
16.625
16.563
16.75
16.75
16.69
16.81
16.94
17.06
16.81
16.88
17.06
17.13
16.69
16.25
16.31
16.31
16.75
16.56
16.69
16.5
16.69
16.81
16.75
17.06
17.31
17.25
17.56
17.69
17.44
17.31
17.13
17.19
17.19
16.88
17.25
17.06
17.06
17.13
16.94
16.94
7/31/99 17
Weekly Closing Price
Past performance is not predictive of future results.
<PAGE>
Nuveen Michigan Exchange-Traded Funds (NUM) (NMP)
Portfolio Manager's Comments
Portfolio manager Mike Davern talks about the Michigan municipal market, recent
fund performance, and the outlook for the Nuveen Michigan Quality Income
Municipal Fund, Inc. (NUM) and the Nuveen Michigan Premium Income Municipal
Fund, Inc. (NMP). Mike has 17 years of experience as an investment professional,
including eight years with Nuveen, and has managed NUM and NMP since July 1998.
WHAT FACTORS CONTRIBUTED TO THE PERFORMANCE OF THE MICHIGAN MUNICIPAL MARKET
DURING THE PAST 12 MONTHS?
The Michigan economy continues to expand, with a brisk job growth of 4.2% over
the past 12 months, primarily in the services sector. Unemployment in the state
was 3.4% as of July 1999, well below the national average of 4.3%. While
improving auto sales have recently had a positive impact on the state's economy,
Michigan continues to reduce its reliance on its traditional manufacturing base,
including the auto sector. In recent years, state residents have seen personal
income grow significantly. The strength of Michigan's economy is reflected in
ratings of Aa1 by Moody's and AA+ by Standard & Poor's and Fitch.
As interest rates rose over the past 12 months, the Michigan municipal market
experienced a dramatic decline in issuance. A comparison between the first seven
months of 1999 and the same period in 1998 showed that new state supply had
fallen by 53%, more than twice the 23% drop in the national supply. Given the
tighter supply, demand for in-state municipal bonds remained generally strong.
HOW DID NUM AND NMP PERFORM IN THIS ENVIRONMENT?
For the 12 months ended July 31, 1999, NUM and NMP produced total returns on
net asset value (NAV) of 1.62% and 1.23%, respectively, providing
taxable-equivalent total returns(1) of 4.67% and 4.06% for shareholders in the
combined 34% federal and state income tax bracket. While both funds
underperformed the Lehman Brothers Municipal Bond Index's(2) annual total return
of 2.88%, they outpaced the average total return of 0.94% for the Lipper
Michigan Municipal Debt category(3) by a wide margin, ranking as the top two
funds in their Lipper peer group.
The underperformance of the Funds' total returns on NAV relative to the
Lehman index can be attributed to their fund durations(4). As of July 31, 1999,
NUM and NMP had fund durations of 9.46 and 9.88, respectively, compared with
7.30 for the Lehman index. Duration measures a bond fund's price volatility, or
reaction to interest rate movements. The longer the duration, the more sensitive
the fund's NAV is to changes in interest rates. During a period of falling
interest rates, longer duration enables a fund's NAV to participate more fully
in market gains. However, when interest rates rise, longer duration can make the
fund's NAV more vulnerable to price declines. Between August 1, 1998, and July
31, 1999, the yield on the Bond Buyer Revenue Bond Index(5) rose from 5.36% to
5.65%. This meant that funds with longer fund durations, like NUM and NMP, were
more likely to underperform the market, as represented by the unleveraged Lehman
index.
Over the past year, active demand for NMP - bolstered by the Fund's recent
dividend increase and outstanding record of dividend stability - resulted in
solid share price performance. The demand for NUM, however, was impacted by a
dividend cut in August 1998, and the Fund experienced a decline in share price.
At the same time, the prevailing interest rate environment, which was generally
higher than that of July 1998, led to a decline in the NAVs of both funds. As a
result of these factors, NMP moved from trading at a discount (share price below
NAV) to a premium, while NUM's premium (share price above NAV) widened by almost
1% over the past 12 months.
Total Return
Market Yield Premium/Discount(6) on Share Price
- --------------------------------------------------------------------------------
Taxable- 1-Year Ended Taxable-
7/31/99 Equivalent(1) 7/31/98 7/31/99 7/31/99 Equivalent(1)
- --------------------------------------------------------------------------------
NUM 5.50% 8.33% 8.82% 9.79% 2.18% 4.98%
- --------------------------------------------------------------------------------
NMP 5.50% 8.33% -1.96% 2.61% 5.95% 8.84%
- --------------------------------------------------------------------------------
HOW WERE THE FUNDS' DIVIDENDS AFFECTED?
During the past 12 months, good call protection helped support the dividend of
NMP and shield the income of this fund from erosion. In addition, excellent
dividend management strategies, including the prudent use of leverage, enabled
us to increase NMP's dividend effective February 1999. As of July 31, 1999, this
fund had provided shareholders with steady or increasing dividends for 51
consecutive months. For NUM, however, the income-eroding effect of a small
number of bond calls led to a dividend reduction in August 1998. Even with this
single dividend adjustment, NUM continued to provide an attractive market yield.
As leveraged funds, both NUM and NMP issue preferred shares that pay short-term
interest rates to investors seeking short-term liquidity. The proceeds from the
preferred shares are used to buy additional long-term bonds for the Funds'
portfolios, which may increase volatility. When short-term interest rates remain
below long-term rates, common shareholders can potentially earn extra income
from the difference between the rate earned on the Fund's long-term portfolio
and the short-term rate paid to preferred shareholders. Though leveraged funds
carry higher risk than non-leveraged funds, they are compensated for this
additional risk in the form of higher yields.
In June, new MuniPreferred shares were issued for NUM due to the fact that the
leverage ratio for the Fund had fallen below its Nuveen guideline of 35%. Nuveen
re-leveraged the Fund both to restore the original leverage ratio of 35% and to
provide the potential for increased incremental tax-free income for common
shareholders. NMP was not affected because its leverage ratio remained in line
with expectations.
WHAT KEY STRATEGIES WERE USED TO MANAGE THE NUVEEN MICHIGAN FUNDS DURING THE
PAST 12 MONTHS?
The focus of our management strategies over the past year was on taking
advantage of the present market environment to purchase well-structured bonds
that could help us achieve our current goals for the Michigan funds: increasing
tax-exempt income, increasing call protection at attractive prices, enhancing
tax efficiency, and adding bonds with longer durations to counteract the effects
of the previous market rally. As mentioned earlier, NUM's fund duration was 9.46
as of July 31, 1999, up from 7.10 in July 1998. For NMP, the July 31, 1999,
duration was 9.88, compared with 8.19 12 months earlier. These longer durations
should help position the Funds to regain net asset value as the bond market
recovers.
Overall, the Funds continued to offer excellent credit quality. At the end of
July 1999, NUM and NMP had 80% and 61%, respectively, of their portfolios
invested in bonds rated AAA/U.S. guaranteed. This represented an increase of 22%
and 8%, respectively, over the July 1998 allocation of AAA/U.S. guaranteed
bonds. The increase was due to two factors: First, the high number of
prerefunded bonds (bonds backed by U.S. government securities) during 1998,
which also helped the Funds' performance, and second, the greater availability
of AAA bonds in the marketplace, with insured bonds making up the majority of
new Michigan supply.
The two funds also had allocations of 4% and 7%, respectively, in BBB and
non-rated bonds, which generally provide enhanced levels of yield. As yield
spreads (or the difference between higher credit quality securities and those of
lower credit quality) widened in recent months, lower-rated securities became
more attractive on a risk-adjusted basis. With interest rates at a higher level,
and the widening differential among credit sectors, we took the opportunity to
investigate lower-rated new issues, though they were scarce, as they became
available in the market. Using the expertise of Nuveen Research, we were able to
discover those bonds that offered adequate compensation for their risk levels.
For example, in NUM, we purchased bonds issued by Michigan Memorial Healthcare
for Owosso Hospital. These bonds, which are rated Baa1/BBB+ with a maturity date
of 2021, offered an above-market 6% yield, thereby adding incremental income to
the Fund as well as lengthening the Fund's duration and enhancing call
protection.
Another strategy was to move out of sectors with abundant supply, such as
schools, and buy when prices were attractive in sectors where supply was scarce,
which enhances the value of the bonds. We were able to purchase a number of such
bonds for NUM, especially in the water and sewer sector.
Both funds continue to hold substantial allocations of bonds issued by the
Michigan State Hospital Finance Authority for the Detroit Medical Center, which
were downgraded from A3/A- to Baa2/BBB in December 1998. The medical center,
which encountered larger-than-expected operational losses in the process of
merging and closing excess facilities, subsequently called in an outside
healthcare consultant to help reverse the situation and stem losses. The
downgrade of these bonds had an impact on the performance of the healthcare
sector not only in Michigan, but across the country. However, in view of the
cost-cutting measures put into place and the improvements in operational costs
already experienced, we have maintained our position in the belief that these
bonds still represent value for our shareholders and that any impact on the
Funds, to this point, has been negligible. In addition, we continue to have
confidence in the issuer's ability to resolve the situation and achieve a
positive outcome. As of July 31, 1999, NUM held $4.5 million of these bonds
(representing 1.4% of the fund's net assets), while NMP had a $7.7 million
investment (4.4% of assets).
In the area of bond calls, both NUM and NMP currently offer good levels of call
protection. NUM has no bond calls scheduled prior to 2001, while less than 7% of
NMP's portfolio is subject to calls before 2002. This should provide additional
protection for the Funds' dividends over this period. As NUM and NMP, which were
assembled in 1991 and 1992, respectively, approach the 10-year mark, they are
also approaching the normal part of the bond market cycle when bond calls are
more likely to occur. To minimize the effect of calls, we are already at work on
strategies for managing through this period. Currently, we plan to hold
high-yielding bonds for as long as possible to maximize income. We refer to
these bonds as "museum pieces" based on their high yields and good quality,
which place them at a premium in today's market. As these bonds approach their
call dates, we will look at selling selected bonds and reinvesting the proceeds
into bonds that have the potential to support the Funds' dividends and enhance
portfolio structure.
WHAT IS NUVEEN'S OUTLOOK FOR NUM AND NMP?
Looking ahead, our focus in both funds will remain on taking advantage of
attractive prices to purchase well-structured bonds offering attractive yields.
These bonds will support the Funds' dividends while extending call protection
and enhancing tax efficiency by offsetting potential capital gains with capital
losses. From a sector perspective, we plan to watch all market sectors for
opportunities where scarcity can be used to the Funds' advantage.
Implementing these strategies demonstrates the value that can be added by an
active bond manager such as Nuveen. As an experienced investment manager
knowledgeable about the unique aspects of the Michigan municipal market, we are
in the marketplace every day, monitoring market dynamics, looking for
opportunities, and capitalizing on them to the benefit of shareholders.
1 The taxable-equivalent yield/total return represents the yield/total return
that must be earned on a taxable investment in order to equal the
yield/total return of the Nuveen fund on an after-tax basis. The
taxable-equivalent yield is based on the Fund's market yield and the
combined federal and state income tax rate of 34%. The taxable-equivalent
total return is based on the annualized total return and the 34% federal
and state income tax rate.
2 NUM and NMP are compared with the Lehman Brothers Bond Index, an
unleveraged index comprising a broad range of investment-grade municipal
bonds. The return for the Lehman index does not reflect any initial or
ongoing expenses.
3 The Lipper Michigan Peer Group return represents the average annualized
return of the five funds in the Lipper Michigan Municipal Debt category.
The return assumes reinvestment of dividends and does not reflect any
applicable sales charges.
4 Fund duration, also known as leverage-adjusted duration, takes into account
the leveraging process for each fund and therefore differs from the
duration of the actual portfolio of individual bonds that make up the
Funds. Unless otherwise noted, references to duration in this commentary
are intended to indicate fund duration.
5 The Bond Buyer Revenue Bond Index is an unmanaged index of long-term
municipal revenue bonds.
6 A fund's premium or discount represents the percentage difference between
the Fund's share price and its NAV.
<PAGE>
Nuveen Michigan Quality Income Municipal Fund, Inc.
Performance Overview
As of July 31, 1999
NUM
Portfolio Statistics
Inception Date 10/91
- --------------------------------------------------
Share Price $16 11/16
- --------------------------------------------------
Net Asset Value $15.20
- --------------------------------------------------
Market Yield 5.50%
- --------------------------------------------------
Taxable-Equivalent Yield
(Federal Tax Rate)(1) 7.97%
- --------------------------------------------------
Taxable-Equivalent Yield
(Federal and State Tax Rate)(1) 8.33%
- --------------------------------------------------
Fund Net Assets ($000) $268,591
- --------------------------------------------------
Average Effective Maturity (Years) 16.58
- --------------------------------------------------
Leverage-Adjusted Duration 9.46
- --------------------------------------------------
Annualized Total Return
On Share Price On NAV
- --------------------------------------------------
1-Year 2.18% 1.62%
- --------------------------------------------------
5-Year 8.42% 6.92%
- --------------------------------------------------
Since Inception 7.78% 7.59%
- --------------------------------------------------
Taxable-Equivalent Total Return(2)
On Share Price On NAV
- --------------------------------------------------
1-Year 4.98% 4.67%
- --------------------------------------------------
5-Year 11.62% 10.20%
- --------------------------------------------------
Since Inception 10.95% 10.86%
- --------------------------------------------------
Top Five Sectors (as a % of total investments)
U.S. Guaranteed 30%
- --------------------------------------------------
Tax Obligation/General 18%
- --------------------------------------------------
Utilities 15%
- --------------------------------------------------
Healthcare 7%
- --------------------------------------------------
Water and Sewer 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 capital gains distributions in December of
$0.0611 per share.
Bar Chart:
8/98 0.0765
9/98 0.0765
10/89 0.0765
11/98 0.0765
12/98 0.0765
1/99 0.0765
2/99 0.0765
3/99 0.0765
4/99 0.0765
5/99 0.0765
6/99 0.0765
7/99 0.0765
Line Chart:
Share Price Performance
8/7/98 17.188
17
17.125
17
16.625
16.438
16.313
16.188
17
16.5
16.625
16.56
16.75
17.06
17.13
17.25
17.25
17.44
17.5
17.63
16.94
16.56
16.06
16.44
16.81
16.88
16.75
16.75
16.75
16.5
16.69
16.75
16.63
16.56
16.5
16.56
16.94
16.75
16.75
16.94
16.94
16.38
16.44
16.38
16.56
16.63
16.75
16.69
7/31/99 16.69
Weekly Closing Price
Past performance is not predictive of future results.
<PAGE>
Nuveen Michigan Premium Income Municipal Fund, Inc.
Performance Overview
As of July 31, 1999
NMP
Portfolio Statistics
Inception Date 12/92
- --------------------------------------------------
Share Price $15 1/16
- --------------------------------------------------
Net Asset Value $14.68
- --------------------------------------------------
Market Yield 5.50%
- --------------------------------------------------
Taxable-Equivalent Yield
(Federal Tax Rate)(1) 7.97%
- --------------------------------------------------
Taxable-Equivalent Yield
(Federal and State Tax Rate)(1) 8.33%
- --------------------------------------------------
Fund Net Assets ($000) $168,851
- --------------------------------------------------
Average Effective Maturity (Years) 15.55
- --------------------------------------------------
Leverage-Adjusted Duration 9.88
- --------------------------------------------------
Annualized Total Return
On Share Price On NAV
- --------------------------------------------------
1-Year 5.95% 1.23%
- --------------------------------------------------
5-Year 10.11% 7.56%
- --------------------------------------------------
Since Inception 5.95% 6.31%
- --------------------------------------------------
Taxable-Equivalent Total Return(2)
On Share Price On NAV
- --------------------------------------------------
1-Year 8.84% 4.06%
- --------------------------------------------------
5-Year 13.34% 10.52%
- --------------------------------------------------
Since Inception 9.00% 9.19%
- --------------------------------------------------
Top Five Sectors (as a % of total investments)
Healthcare 20%
- --------------------------------------------------
Utilities 19%
- --------------------------------------------------
Tax Obligation/General 12%
- --------------------------------------------------
Tax Obligation/Limited 12%
- --------------------------------------------------
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::
1998-1999 Monthly Tax-Free Dividends
8/98 0.068
9/98 0.068
10/98 0.068
11/98 0.068
12/98 0.068
1/99 0.068
2/99 0.069
3/99 0.069
4/99 0.069
5/99 0.069
6/99 0.069
7/99 0.069
Line Chart:
Share Price Performance
8/7/98 15.188
15.188
15.188
15
15
15.063
14.938
14.938
15.25
15.375
15.188
15.31
15.63
15.69
15.69
15.63
15.88
15.69
15.94
15.63
15.5
15.19
14.75
14.75
15.19
15.13
15.25
15.19
15.19
15.25
15
15.38
15.25
15.19
15.31
15.38
15.56
15.19
15.13
15.19
15.38
15.06
15.19
15
15.31
15.31
15.38
15.19
7/31/99 15.06
Weekly Closing Price
Past performance is not predictive of future results.
<PAGE>
Nuveen Ohio Quality Income Municipal Fund, Inc. (NUO)
Portfolio Manager's Comments
Portfolio manager Tom Futrell reviews the Ohio municipal market, fund
performance, and key strategies for the Nuveen Ohio Quality Income Municipal
Fund, Inc. (NUO). A 16-year veteran of Nuveen, Tom has managed NUO since July
1998.
WHAT FACTORS CONTRIBUTED TO THE PERFORMANCE OF THE OHIO MUNICIPAL MARKET DURING
THE PAST 12 MONTHS?
Although Ohio is still heavily reliant on manufacturing, especially in the auto
and steel sectors, the state's economy continues to diversify, with job growth
concentrated in construction, services, and technology, particularly in the
northern part of the state. Employ-ment growth, however, lags the national rate,
due to the state's tight labor markets and sluggish population growth, which
ranks as the slowest in the Great Lakes region. As of July 1999, Ohio's
unemployment rate was 4.6%, down from 4.8% in July 1998 and above the national
average of 4.3%. Job growth forecasts indicate that the state will continue to
trail the nation - although not significantly with the technology, healthcare,
and retail sectors providing the greatest growth.
The importance of industrial exports to the Ohio economy has increased the
state's exposure to the global economy. While the improved outlook in Southeast
Asia erased many of the concerns experienced during 1998's Asian financial
crisis, analysts continue to watch the state's export activity closely.
Recently, for example, steel exports experienced declines in the face of stiff
competition abroad, and lower priced imports of steel continue to place pressure
on U.S. prices.
Like the national municipal market, the Ohio market experienced a decline in
supply over the past year, although the state remains ninth in the nation in
terms of total new issuance. A comparison between the 12 months ended July 1999
and the previous 12-month period showed that new state issuance fell 21%,
mirroring the 23% drop in the national new-issue supply. Overall, demand for
Ohio-issued municipal bonds remains strong, especially from individual
investors.
HOW DID NUO PERFORM IN THIS ENVIRONMENT?
For the 12 months ended July 31, 1999, NUO produced a total return on net
asset value (NAV) of 2.74%, providing a taxable-equivalent total return(1) of
6.16% for shareholders in the combined 36% federal and state income tax bracket.
NUO's total return performance was slightly lower than the annual total return
of 2.88% posted by the Lehman Brothers Municipal Bond Index(2). This slight
underperformance can be attributed to the fact that NUO is state specific while
the Lehman index focuses on bonds issued throughout the country. When compared
to other funds, NUO outpaced the average total return of 1.55% for the Lipper
Other States Municipal Debt category(3). For the year, NUO ranked first among
the 18 funds in its Lipper peer group. In recognition of its strong
risk-adjusted performance, the Fund was awarded four stars by Morningstar(4),
which is an overall rating among 194 funds as of July 31, 1999.
Over the past year, increasing concerns about the pace of U.S. economic growth
and its implications for higher inflation and interest rates negatively impacted
the demand for NUO. This, in turn, hampered the Fund's share price performance.
At the same time, the prevailing interest rate environment, which was generally
higher than that of July 1998, led to a decline in the Fund's NAV. As a result
of these factors, NUO saw its premium (share price above NAV) widen by more than
3% over the past 12 months.
Total Return
Market Yield Premium(5) on Share Price
- --------------------------------------------------------------------------------
Taxable- 1-Year Ended Taxable-
7/31/99 Equivalent(1) 7/31/98 7/31/99 7/31/99 Equivalent(1)
- --------------------------------------------------------------------------------
NUO 5.47% 8.55% 8.48% 11.59% 5.09% 8.23%
- --------------------------------------------------------------------------------
HOW WAS THE FUND'S DIVIDEND AFFECTED?
During the past 12 months, good call protection helped support the dividend of
NUO and shield the income of this fund from erosion. In addition, excellent
dividend management strategies, including the prudent use of leverage, enabled
us to increase NUO's dividend effective August 1998. As of July 31, 1999, this
fund had provided shareholders with steady or increasing dividends each month
since its inception in October 1991.
In addition, as a leveraged fund, NUO issues preferred shares that pay
short-term interest rates to investors seeking short-term liquidity. The
proceeds from the preferred shares are used to buy additional long-term bonds
for the Fund's portfolio, which may increase volatility. When short-term
interest rates remain below long-term rates, common shareholders can potentially
earn extra income from the difference between the rate earned on the Fund's
long-term portfolio and the short-term rate paid to preferred shareholders.
WHAT KEY STRATEGIES WERE USED TO MANAGE NUO DURING THE PAST 12 MONTHS?
NUO is a well-structured leveraged fund that continued to achieve its goal of
generating dependable tax-free income for shareholders. Because the Fund was
assembled in the higher interest rate environment of 1991, the yields on the
bonds currently held in the portfolio exceed the yields that can be purchased in
the market today. As a result, the market environment of the past year did not
provide many opportunities to purchase bonds that would have further enhanced
the Fund's yield. The focus of our management strategies remained on maintaining
the Fund's structure, including its relatively short fund duration(6). As of
July 31, 1999, NUO had a fund duration of 7.49, compared with 7.51 in July 1998.
Overall, the Fund continued to offer excellent credit quality. At the end of
July 1999, NUO had 84% of its portfolio invested in bonds rated AAA/U.S.
guaranteed and AA. The Fund also had a 12% allocation in BBB and non-rated
bonds, which generally provide enhanced levels of yield.
In the area of bond calls, NUO currently offers good levels of call protection,
with only 4% of its portfolio subject to calls before 2001. This should provide
additional protection for the Fund's dividend over this period. At that time,
NUO will enter the normal part of the bond market cycle where we begin to see
the potential for increased bond calls. To minimize the effect of these calls,
we are already at work on strategies for managing through this period.
Currently, we plan to hold high-yielding bonds for as long as possible to
maximize income. We call these bonds "museum pieces" due to their high yields
and good quality, which place them at a premium in today's market. As these
bonds approach their call dates, we will look at selling selected bonds and
reinvesting the proceeds into bonds that have the potential to support the
Fund's dividend and enhance portfolio structure.
WHAT IS NUVEEN'S OUTLOOK FOR NUO?
Our focus in NUO will remain on supporting the income stream of this fund at the
highest levels consistent with capital preservation. As one strategy for
achieving this, we will consider increasing the Fund's exposure to the
healthcare and housing sectors, especially in lower-rated investment-grade
issues that provide the opportunity to add incremental yield. The Fund's current
12% weighting in BBB and non-rated bonds gives us the flexibility to explore
this option. We will continue to watch both the new issuance and secondary
markets for opportunities to purchase bonds that offer higher income and
stronger long-term total return potential. Enhancing the Fund's tax efficiency
will also continue to be a goal in the months ahead as we look to offset
potential capital gains with capital losses.
Implementing strategies like these demonstrates the value that can be added by
an active bond manager such as Nuveen. As an experienced investment manager
knowledgeable about the unique aspects of the Ohio municipal market, we are in
the marketplace every day, monitoring market dynamics, looking for
opportunities, and capitalizing on them to the benefit of shareholders.
1 The taxable-equivalent yield/total return represents the yield/total return
that must be earned on a taxable investment in order to equal the
yield/total return of the Nuveen fund on an after-tax basis. The
taxable-equivalent yield is based on the Fund's market yield and the
combined federal and state income tax rate of 36%. The taxable-equivalent
total return is based on the annualized total return and the 36% federal
and state income tax rate.
2 NUO is compared with the Lehman Brothers Municipal Bond Index, an
unleveraged index comprising a broad range of investment-grade municipal
bonds. The return for the Lehman index does not reflect any initial or
ongoing expenses.
3 The Lipper Peer Group return represents the average annualized return of
the 18 funds in the Lipper Other States Municipal Debt category. The return
assumes reinvestment of dividends and does not reflect any applicable sales
charges.
4 Overall rating within the Morningstar Municipal Bond Category for the
period ended July 31, 1999. Morningstar proprietary ratings reflect
historical risk-adjusted performance. The ratings are subject to change
every month. Past performance is no guarantee of future results.
Morningstar ratings are calculated using a fund's three-, five-, and
ten-year average annual returns (if applicable) in excess of 90-day
Treasury bill returns with appropriate fee adjustments and a risk factor
that reflects fund performance below 90-day T-bill returns. NUO received 3
stars for the three-year period and 4 stars for the five-year period. The
top 10% of the funds in an investment class receive 5 stars, and the next
22.5% receive 4 stars. The Fund was rated among 194 funds for the
three-year period, 193 funds for the five-year period, and 30 funds for the
10-year period.
5 A fund's premium represents the percentage difference between the Fund's
share price and its NAV.
6 Fund duration, also known as leverage-adjusted duration, takes into account
the leveraging process for each fund and therefore differs from the
duration of the actual portfolio of individual bonds that make up the
Funds. Unless otherwise noted, references to duration in this commentary
are intended to indicate fund duration.
<PAGE>
Nuveen Ohio Quality Income Municipal Fund, Inc.
Performance Overview
As of July 31, 1999
NUO
Portfolio Statistics
Inception Date 10/91
- --------------------------------------------------
Share Price $18
- --------------------------------------------------
Net Asset Value $16.13
- --------------------------------------------------
Market Yield 5.47%
- --------------------------------------------------
Taxable-Equivalent Yield
(Federal Tax Rate)(1) 7.93%
- --------------------------------------------------
Taxable-Equivalent Yield
(Federal and State Tax Rate)(1) 8.55%
- --------------------------------------------------
Fund Net Assets ($000) $228,961
- --------------------------------------------------
Average Effective Maturity (Years) 15.53
- --------------------------------------------------
Leverage-Adjusted Duration 7.49
- --------------------------------------------------
Annualized Total Return
On Share Price On NAV
- --------------------------------------------------
1-Year 5.09% 2.74%
- --------------------------------------------------
5-Year 9.75% 7.99%
- --------------------------------------------------
Since Inception 8.51% 8.12%
- --------------------------------------------------
Taxable-Equivalent Total Return(2)
On Share Price On NAV
- --------------------------------------------------
1-Year 8.23% 6.16%
- --------------------------------------------------
5-Year 13.17% 11.52%
- --------------------------------------------------
Since Inception 11.90% 11.61%
- --------------------------------------------------
Top Five Sectors (as a % of total investments)
U.S. Guaranteed 25%
- --------------------------------------------------
Tax Obligation/General 14%
- --------------------------------------------------
Utilities 10%
- --------------------------------------------------
Healthcare 9%
- --------------------------------------------------
Education and Civic Organizations 9%
- --------------------------------------------------
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 36%.
2 Taxable-equivalent total return is based on the annualized total return and
a combined federal and state income tax rate of 36%. It represents the
return on a taxable investment necessary to equal the return of the Nuveen
fund on an after-tax basis.
Bar Chart:
1998-1999 Monthly Tax-Free Dividends
8/98 0.082
9/98 0.082
10/98 0.082
11/98 0.082
12/98 0.082
1/99 0.082
2/99 0.082
3/99 0.082
4/99 0.082
5/99 0.082
6/99 0.082
7/99 0.082
Line Chart:
Share Price Performance
8/7/98 18.313
18.438
18.5
18.75
18.375
18.438
18.313
18.375
19
19.125
19.125
18.81
19
19.06
19.5
19.31
19.63
19.69
19.81
19.75
19.38
18.69
18.25
18.19
18.5
18.5
18.69
18.63
19
18.69
18.63
18.56
18.69
18.56
18.69
18.56
18.56
18.63
18.5
18.25
17.5
17.44
17.44
17.5
17.5
17.31
17.69
17.81
17.81
18
7/31/99 18
Weekly Closing Price
Past performance is not predictive of future results.
<PAGE>
Nuveen Texas Quality Income Municipal Fund (NTX)
Portfolio Manager's Comments
Portfolio manager Mike Davern discusses the Texas municipal market, recent fund
performance, and key strategies for the Nuveen Texas Quality Income Municipal
Fund (NTX). With 17 years of experience as an investment professional, including
eight years with Nuveen, Mike has managed NTX since July 1998.
WHAT FACTORS CONTRIBUTED TO THE PERFORMANCE OF THE TEXAS MUNICIPAL MARKET DURING
THE PAST 12 MONTHS?
Texas continued to demonstrate strong economic performance, as the state's
reliance on the oil and gas sector diminished and the economy continued to
diversify into services, construction, and manufacturing. Most of the growth in
manufacturing is concentrated in the high-tech sector, which benefits from the
state's central location and status as a major trading partner with Mexico. One
indication of the reduced role of the oil and gas industry in the state's
economy can be garnered from statistics showing that, in the 1980s, oil and gas
accounted for 25% of the state's tax revenues, while that contribution is now
less than 4%. Unemployment in the state was 4.5% in July 1999, compared with the
national average of 4.3%. In June, Texas-issued bonds were upgraded to Aa1 from
Aa2 by Moody's, which cited the state's strong economy, balanced financial
operations, sizable cash balances, and maintenance of moderate debt levels.
Unlike the national and most state markets, the Texas municipal market enjoyed
stable supply over the past year. A comparison for the first seven months of
1999 with the same period in 1998 showed that new state supply rose 4%, compared
with a 23% decline in the national supply. This can be attributed in part to the
fact that, despite higher interest rates, Texas issuers continued to bring large
deals to market. The relative strength of the Texas municipal supply served to
depress the prices of state paper slightly.
HOW DID NTX PERFORM IN THIS ENVIRONMENT?
For the 12 months ended July 31, 1999, NTX produced a total return on net asset
value (NAV) of 1.21%, providing a taxable-equivalent total return(1) of 3.83%
for shareholders in the 31% federal income tax bracket. The total return trails
the Lehman Brothers Municipal Bond Index's(2) annual total return of 2.88% and
an average total return of 1.55% for the Fund's Lipper peer group(3).
The underperformance of the Fund's total return on NAV relative to the Lehman
index can be attributed to its fund duration(4). As of July 31, 1999, NTX had a
fund duration of 9.73, compared with 7.30 for the Lehman index. Duration
measures a bond fund's price volatility, or reaction to interest rate movements.
The longer the duration, the more sensitive the fund's NAV is to changes in
interest rates. During a period of falling interest rates, longer duration
enables a fund's NAV to participate more fully in market gains. However, when
interest rates rise, longer duration can make the fund's NAV more vulnerable to
price declines. Between August 1, 1998 and July 31, 1999, the yield on the Bond
Buyer Revenue Bond Index(5) rose from 5.36% to 5.65%. This meant that funds with
longer fund durations, like NTX, were more likely to underperform the market, as
represented by the unleveraged Lehman index.
Over the past year, demand for NTX was hampered by rising interest rates and the
relatively strong supply of municipal bonds in the Texas market. This, in turn,
impacted share price performance. Although the Fund increased its dividend in
May 1999, two months before the Fund's fiscal year end, the positive effect of
such an increase takes longer to be seen in share price performance. The
prevailing interest rate environment also led to a decline in the Fund's NAV. As
a result of these factors, NTX moved from trading at a discount (share price
below NAV) to a slight premium (share price above NAV).
Total Return
Market Yield Premium/Discount(6) on Share Price
- --------------------------------------------------------------------------------
Taxable- 1-Year Ended Taxable-
7/31/99 Equivalent(1) 7/31/98 7/31/99 7/31/99 Equivalent(1)
- --------------------------------------------------------------------------------
NTX 6.00% 8.70% -1.34% 0.38% 2.97% 5.63%
- --------------------------------------------------------------------------------
HOW WAS THE FUND'S DIVIDEND AFFECTED?
During the past 12 months, good call protection helped support the dividend of
NTX and shield the income of this fund from erosion. In addition, excellent
dividend management strategies, including the prudent use of leverage, enabled
us to increase NTX's dividend, effective May 1999. As of July 31, 1999, this
fund had provided shareholders with steady or increasing dividends for 15
consecutive months.
In addition, as a leveraged fund, NTX issues preferred shares that pay
short-term interest rates to investors seeking short-term liquidity. The
proceeds from the preferred shares are used to buy additional long-term bonds
for the Fund's portfolio, which may increase volatility. When short-term
interest rates remain below long-term rates, common shareholders can potentially
earn extra income from the difference between the rate earned on the Fund's
long-term portfolio and the short-term rate paid to preferred shareholders.
WHAT KEY STRATEGIES WERE USED TO MANAGE NTX DURING THE PAST 12 MONTHS?
NTX is well-structured and has continued to meet its objective of generating
high levels of tax-free income for shareholders. As a result, the main strategy
for NTX focused on taking advantage of the current market environment to enhance
various aspects of the Fund's structure, such as: working to increase the level
of tax-exempt income earned by the Fund, increasing call protection at
attractive prices, and improving the Fund's tax efficiency.
Another strategy focused on duration, which we worked to extend after it had
shortened during the previous market rally. As mentioned earlier, NTX's fund
duration was 9.73 as of July 31, 1999, up from 8.63 in July 1998. This longer
duration should help position the Fund to regain net asset value as the bond
market recovers. Nuveen Research was instrumental in helping us identify the
bonds that have the potential to achieve these goals.
We reduced our exposure in the healthcare sector, where supply was abundant, and
increased our exposure in areas of the Texas municipal market where less paper
was issued, such as the education and civic organizations sector. This strategy
helps to enhance the value of the bonds in our portfolio.
Overall, the Fund continued to offer excellent credit quality. At the end of
July 1999, NTX had 73% of its portfolio invested in bonds rated AAA/U.S.
guaranteed and AA. The Fund also had a 15% allocation in BBB and non-rated
bonds, which have generally provided enhanced levels of yield. As the yield
spread, or the difference between higher credit quality securities and those of
lower credit quality, widened in recent months, lower-rated securities became
more attractive on a risk-adjusted basis. With interest rates at a higher level,
and the widening differential in yield between credit sectors, we took the
opportunity to investigate lower-rated issues. Using the expertise of Nuveen
Research, we were able to discover those bonds that offered adequate
compensation for their risk level. An example of the types of securities we
bought during the past year to take advantage of this situation was our purchase
of $5 million in bonds issued by the Gulf Coast Waste Disposal Authority for the
Valero Energy Corporation Project. These BBB- rated bonds, which have a maturity
date of 2031, offered an above-market yield and also helped us achieve our goals
of lengthening the Fund's duration and enhancing call protection.
In the area of call protection, only 6% of NTX's portfolio is currently subject
to bond calls prior to 2001. This should provide additional protection for the
Fund's dividend over this period.
WHAT IS NUVEEN'S OUTLOOK FOR NTX?
Over the next 12 months, our focus for NTX will be on taking advantage of market
conditions to purchase well-structured bonds offering attractive yields that
help support the Fund's dividend. Our goals in making these purchases will
continue to be increasing tax-free income, extending call protection, and
increasing tax efficiency by offsetting potential capital gains with capital
losses. We will continue to watch all sectors of the market for opportunities
and situations that offer higher yields at attractive prices.
The implementation of these strategies demonstrates the value that can be added
by an active bond manager such as Nuveen. As an experienced investment manager
knowledgeable about the unique aspects of the Texas municipal market, we are in
the marketplace every day, monitoring market dynamics, looking for
opportunities, and capitalizing on them to the benefit of shareholders.
1 The taxable-equivalent yield/total return represents the yield/total return
that must be earned on a taxable investment in order to equal the
yield/total return of the Nuveen fund on an after-tax basis. The
taxable-equivalent yield is based on the Fund's market yield and the
federal income tax rate of 31%. The taxable-equivalent total return is
based on the annualized total return and the 31% federal income tax rate.
2 NTX is compared with the Lehman Brothers Municipal Bond Index, an
unleveraged index comprising a broad range of investment-grade Texas
municipal bonds. The return for the Lehman index does not reflect any
initial or ongoing expenses.
3 The Lipper Peer Group return represents the average annualized return of
the 18 funds in the Lipper Other States Municipal Debt category. The return
assumes reinvestment of dividends and does not reflect any applicable sales
charges.
4 Fund duration, also known as leverage-adjusted duration, takes into account
the leveraging process for the Fund and therefore differs from the duration
of the actual portfolio of individual bonds that make up the Fund. Unless
otherwise noted, references to duration in this commentary are intended to
indicate fund duration.
5 The Bond Buyer Revenue Bond Index is an unmanaged index of long-term
municipal revenue bonds.
6 A fund's premium or discount represents the percentage difference between
the Fund's share price and its NAV.
<PAGE>
Nuveen Texas Quality Income Municipal Fund
Performance Overview
As of July 31, 1999
NTX
Portfolio Statistics
Inception Date 10/91
- --------------------------------------------------
Share Price $15 3/16
- --------------------------------------------------
Net Asset Value $15.13
- --------------------------------------------------
Market Yield 6.00%
- --------------------------------------------------
Taxable-Equivalent Yield(1) 8.70%
- --------------------------------------------------
Fund Net Assets ($000) $211,784
- --------------------------------------------------
Average Effective Maturity (Years) 18.63
- --------------------------------------------------
Leverage-Adjusted Duration 9.73
- --------------------------------------------------
Annualized Total Return
On Share Price On NAV
- --------------------------------------------------
1-Year 2.97% 1.21%
- --------------------------------------------------
5-Year 7.23% 7.33%
- --------------------------------------------------
Since Inception 6.69% 7.49%
- --------------------------------------------------
Taxable-Equivalent Total Return(1)
On Share Price On NAV
- --------------------------------------------------
1-Year 5.63% 3.83%
- --------------------------------------------------
5-Year 10.14% 10.18%
- --------------------------------------------------
Since Inception 9.55% 10.35%
- --------------------------------------------------
Top Five Sectors (as a % of total investments)
U.S. Guaranteed 19%
- --------------------------------------------------
Healthcare 13%
- --------------------------------------------------
Transportation 11%
- --------------------------------------------------
Tax Obligation/General 11%
- --------------------------------------------------
Education and Civic Organizations 9%
- --------------------------------------------------
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%.
2 The Fund also paid shareholders capital gains distributions in December of
$0.0745 per share.
Bar Chart:
1998-1999 Monthly Tax-Free Dividends(2)
8/98 0.075
9/98 0.075
10/98 0.075
11/98 0.075
12/98 0.075
1/99 0.075
2/99 0.075
3/99 0.075
4/99 0.075
5/99 0.076
6/99 0.076
7/99 0.076
Line Chart:
Share Price Performance
8/7/98 15.75
15.688
15.75
15.875
15.625
15.5
15.625
15.625
16
15.875
15.813
15.88
15.94
15.94
16.25
16.13
16.44
16.44
16.25
16.06
15.75
15.63
15.44
15.69
15.88
15.94
16.06
16.06
16.06
16.06
15.88
15.81
15.81
15.38
15.5
15.5
15.69
15.44
15.25
15.38
15.38
15.25
15.5
15.13
15.38
15.5
15.44
15.31
7/31/99 15.19
Weekly Closing Price
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, 1999, 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, 1999, 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, 1999, 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, 1999
<PAGE>
<TABLE>
<CAPTION>
Portfolio of Investments
Nuveen Arizona Premium Income Municipal Fund, Inc. (NAZ)
July 31, 1999
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Basic Materials - 4.9%
$ 5,000,000 The Industrial Development Authority of the County of Gila, Arizona, 1/08 at 102 Baa2 $4,676,600
Environmental Revenue Refunding Bonds (ASARCO Incorporated
Project), Series 1998, 5.550%, 1/01/27
- ---------------------------------------------------------------------------------------------------------------------------------
Education and Civic Organizations - 3.2%
1,750,000 Student Loan Acquisition Authority of Arizona, Student Loan 5/04 at 102 Aa 1,857,538
Revenue Bonds, Series 1994B, Subordinated Fixed Rate Bonds,
6.600%, 5/01/10 (Alternative Minimum Tax)
100,000 University of Arizona Telecommunications System, Certificates of 7/02 at 102 A+ 106,902
Participation, Series 1991, 6.500%, 7/15/12
1,000,000 Arizona Board of Regents, University of Arizona, System Revenue 6/02 at 102 AA 1,065,600
Refunding Bonds, Series 1992, 6.250%, 6/01/11
- ---------------------------------------------------------------------------------------------------------------------------------
Health Care - 12.3%
1,500,000 The Industrial Development Authority of the County of Maricopa, 7/02 at 102 AAA 1,568,400
Arizona, Insured Health Facility Revenue Bonds (Catholic Healthcare
West), Series 1992A, 5.750%, 7/01/11
3,500,000 The Industrial Development Authority of the County of Maricopa, No Opt. Call AAA 4,202,415
Arizona, Samaritan Health Services Hospital System Revenue
Refunding Bonds, Series 1990A, 7.000%, 12/01/16
600,000 The Industrial Development Authority of the County of Maricopa, 9/05 at 101 AAA 602,106
Arizona, Baptist Hospital System Revenue Refunding Bonds,
Series 1995, 5.500%, 9/01/16
2,000,000 Hospital District No. One, Mohave County, Arizona, Refunding 6/02 at 101 AAA 2,119,300
General Obligation Bonds (Kingman Regional Medical Center
Project), Series 1992, 6.500%, 6/01/15
2,000,000 University Medical Center Corporation, Tucson, Arizona, 7/02 at 102 AAA 2,120,460
Hospital Revenue Refunding Bonds, Series 1992, 6.250%, 7/01/16
1,055,000 The Industrial Development Authority of the City of Winslow, Arizona, 6/08 at 101 N/R 987,543
Hospital Revenue Bonds (Winslow Memorial Hospital Project),
Series 1998, 5.500%, 6/01/22
- ---------------------------------------------------------------------------------------------------------------------------------
Housing/Multifamily - 7.6%
1,500,000 The Industrial Authority of the County of Maricopa, Arizona, 10/09 at 102 Aaa 1,420,020
Multifamily Housing Revenue Bonds (Arborwood Apartments Project),
Series 1999A, 5.050%, 10/01/29
1,670,000 The Industrial Development Authority of the City of Phoenix, Arizona, 12/05 at 103 AAA 1,612,101
Multifamily Housing Revenue Bonds, Series 1998A (Heather
Ridge Apartments Project), 5.200%, 12/15/21
(Alternative Minimum Tax)
4,000,000 The Industrial Development Authority of the City of Tucson, 12/06 at 102 AAA 4,160,440
Arizona, Tax-Exempt Multifamily Housing Revenue Refunding
Bonds, Series 1996, 5.900%, 12/20/31
- ---------------------------------------------------------------------------------------------------------------------------------
Housing/Single Family - 3.3%
415,000 The Industrial Development Authority of the City of Phoenix, 6/05 at 102 AAA 428,114
Arizona, Statewide Single Family Mortgage Revenue Bonds,
Series 1995, 6.150%, 6/01/08 (Alternative Minimum Tax)
335,000 The Industrial Development Authority of the County of Pima, 8/05 at 102 A 351,810
Arizona, Single Family Mortgage Revenue Refunding Bonds,
Series 1995A, 6.500%, 2/01/17
2,205,000 The Industrial Development Authority of the County of Pima, 5/07 at 102 AAA 2,313,045
Arizona, Single Family Mortgage Revenue Bonds, Series 1997A,
6.250%, 11/01/30 (Alternative Minimum Tax)
- ---------------------------------------------------------------------------------------------------------------------------------
Long-Term Care - 1.1%
1,000,000 The Industrial Development Authority of the County of Mohave, 5/06 at 103 AAA 1,054,370
Arizona, Health Care Revenue Refunding Bonds, Series 1996
(GNMA Collateralized - Chris Ridge and Silver Ridge Village Projects),
6.375%, 11/01/31
- ---------------------------------------------------------------------------------------------------------------------------------
Tax Obligation/General - 6.7%
1,500,000 Paradise Valley Unified School District No. 69 of Maricopa 7/03 at 102 AAA 1,612,245
County, Arizona, School Improvement Bonds, Project of 1990,
Series 1993D, 5.875%, 7/01/12
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Tax Obligation/General (continued)
$ 1,400,000 Chandler Unified School District No. 80 of Maricopa County, 7/03 at 101 AAA $1,480,794
Arizona, General Obligation Refunding Bonds, Series 1993,
5.950%, 7/01/10
2,500,000 City of Phoenix, Arizona, General Obligation Refunding Bonds, 7/02 at 102 AA+ 2,671,400
Series 1992, 6.375%, 7/01/13
585,000 Tempe Union High School District No. 213 of Maricopa County, 7/04 at 101 AAA 619,644
Arizona, School Improvement and Refunding Bonds,
Series 1994, 6.000%, 7/01/12
- ---------------------------------------------------------------------------------------------------------------------------------
Tax Obligation/Limited - 11.9%
City of Bullhead, Bullhead Parkway Improvement District
Improvement Bonds:
910,000 6.100%, 1/01/08 1/03 at 103 Baa2 952,652
970,000 6.100%, 1/01/09 1/03 at 103 Baa2 1,015,464
1,600,000 City of Lake Havasu, City Municipal Property Corporation 6/02 at 101 AAA 1,693,664
Facilities Revenue Bonds, Series 1993, 6.000%, 6/01/08
2,000,000 Hospital District No. One, Maricopa County, Arizona, 6/08 at 102 AAA 1,896,760
General Obligation Bonds, Series 1998, 5.000%, 6/01/21
2,150,000 Phoenix Civic Plaza Building Corporation, Senior Lien Excise 7/05 at 101 AA+ 2,289,148
Tax Revenue Bonds, Series 1994, 6.000%, 7/01/14
1,750,000 City of Phoenix Civic Improvement Corporation, Arizona, 7/09 at 101 AA+ 1,721,773
Senior Lien Excise Tax Revenue Bonds, Series 1999A (Phoenix
Municipal Courthouse Project), 5.375%, 7/01/29
1,000,000 Puerto Rico Highway and Transportation Authority, Transportation 7/08 at 101 A 910,420
Revenue Bonds, Series A, 5.000%, 7/01/38
725,000 City of Tucson, Arizona, Certificates of Participation, 7/04 at 100 AA 776,765
Series 1994, 6.375%, 7/01/09
- ---------------------------------------------------------------------------------------------------------------------------------
Transportation - 5.4%
5,000,000 Tucson Airport Authority, Inc. (Arizona), Airport Revenue Bonds, 6/03 at 102 AAA 5,145,600
Refunding Series 1993, 5.700%, 6/01/13
- ---------------------------------------------------------------------------------------------------------------------------------
U.S. Guaranteed - 24.8%
3,195,000 Kyrene Elementary School District No. 28 of Maricopa County, 7/02 at 100 AAA 3,358,073
Arizona, School Improvement Bonds, Project of 1990,
Series 1993-E, 6.000%, 7/01/12 (Pre-refunded to 7/01/02)
The Industrial Development Authority of the County of Mohave, Arizona,
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 5,522,900
1,000,000 7.000%, 7/01/16 (Pre-refunded to 7/01/03) 7/03 at 102 Aaa 1,113,510
3,700,000 City of Phoenix, Arizona, Civic Improvement Corporation, 7/03 at 102 AAA 4,009,949
Wastewater System Lease Revenue Bonds, Series 1993,
6.125%, 7/01/23 (Pre-refunded to 7/01/03)
1,510,000 Metropolitan Domestic Water Improvement District of Pima 1/03 at 101 AAA 1,616,062
County, Arizona, Special Assessment and Water Revenue
Bonds, Series 1992, 6.200%, 1/01/12 (Pre-refunded to 1/01/03)
1,415,000 Tempe Union High School District No. 213 of Maricopa County, 7/04 at 101 AAA 1,528,469
Arizona, School Improvement and Refunding Bonds, Series 1994,
6.000%, 7/01/12 (Pre-refunded to 7/01/04)
3,000,000 City of Tucson, Arizona, General Obligation Bonds, 7/04 at 101 AAA 3,273,450
Series 1984-G, 6.250%, 7/01/18 (Pre-refunded to 7/01/04)
1,290,000 City of Tucson, Arizona, General Obligation Bonds, Series 1994-B, 7/06 at 101 AA*** 1,387,627
5.750%, 7/01/18 (Pre-refunded to 7/01/06)
1,500,000 City of Tucson, Arizona, Water System Revenue Bonds, 7/06 at 101 AAA 1,639,260
Series 1994-A, 6.000%, 7/01/21 (Pre-refunded to 7/01/06)
- ---------------------------------------------------------------------------------------------------------------------------------
Utilities - 11.2%
2,000,000 The Industrial Development Authority of the County of Mohave, 11/03 at 101 A-1 2,112,460
Arizona, Industrial Development Revenue Bonds, 1994 Series
(Citizen Utilities Company Projects), 6.600%, 5/01/29
(Alternative Minimum Tax)
1,000,000 Navajo County, Arizona, Pollution Control Corporation, Pollution 8/03 at 102 A- 1,009,570
Control Revenue Refunding Bonds (Arizona Public Service
Company), 1993 Series A, 5.875%, 8/15/28
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Utilities (continued)
$ 1,710,000 The Industrial Development Authority of the County of Pima, 1/02 at 103 AAA $1,858,770
Arizona, Industrial Development Lease Obligation Refunding
Revenue Bonds, 1988 Series A (Irvington Project),
7.250%, 7/15/10
2,030,000 Salt River Project, Agricultural Improvement and Power District, 1/02 at 100 AA 2,067,677
Arizona, Salt River Project Electric System Revenue Bonds,
1992 Series D, 5.750%, 1/01/19
1,650,000 Salt River Project, Agricultural Improvement and Power District, 1/04 at 102 AA 1,588,224
Arizona, Electric System Revenue Refunding Bonds,
1993 Series C, 5.000%, 1/01/16
2,000,000 The Industrial Development Authority of the County of Yavapai, 6/07 at 101 A-1 1,997,940
Arizona, Industrial Development Revenue Bonds, 1998 Series
(Citizens Utilities Company Project), 5.450%, 6/01/33
(Alternative Minimum Tax)
- ---------------------------------------------------------------------------------------------------------------------------------
Water and Sewer - 7.2%
2,150,000 Arizona Municipal Financing Program of 1992, Refunding Certificates 8/02 at 101 AAA 2,238,472
of Participation, Series 1, 6.000%, 8/01/17
500,000 Wastewater Management Authority of Arizona, Wastewater 7/05 at 102 AAA 518,790
Treatment Financial Assistance Revenue Bonds, Series 1995,
5.750%, 7/01/15
500,000 The Industrial Development Authority of the County of Maricopa, 12/07 at 102 AAA 483,550
Arizona, Water System Improvement Revenue Bonds (Chaparral
City Water Company Project), Series 1997A,
5.400%, 12/01/22 (Alternative Minimum Tax)
3,500,000 City of Tucson, Arizona, Water System Revenue Refunding Bonds, 7/02 at 102 A+ 3,600,030
Series 1992A, 5.750%, 7/01/18
- ---------------------------------------------------------------------------------------------------------------------------------
$ 90,370,000 Total Investments - (cost $89,730,530) - 99.6% 94,357,876
=============
Other Assets Less Liabilities - 0.4% 417,071
-----------------------------------------------------------------------------------------------------------------
Net Assets - 100% $94,774,947
=================================================================================================================
* 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 Quality Income Municipal Fund, Inc. (NUM)
July 31, 1999
<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 12/03 at 102 BBB $1,038,540
(WMX Technologies, Inc. Project), Series 1993,
6.000%, 12/01/13 (Alternative Minimum Tax)
- ---------------------------------------------------------------------------------------------------------------------------------
Education and Civic Organizations - 5.0%
Board of Trustees of Ferris State University, Michigan, General
Revenue Bonds, Series 1998:
5,020,000 5.000%, 10/01/23 4/08 at 100 AAA 4,683,058
2,000,000 5.000%, 10/01/28 No Opt. Call AAA 1,851,280
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 1,059,030
1,250,000 6.800%, 10/01/08 (Alternative Minimum Tax) 10/02 at 102 A 1,323,788
990,000 6.800%, 10/01/09 (Alternative Minimum Tax) 10/02 at 102 A 1,046,955
2,000,000 Board of Trustees of Oakland University, Michigan, General 5/05 at 102 AAA 2,071,500
Revenue Bonds, Series 1995, 5.750%, 5/15/15
1,450,000 Board of Trustees of Western Michigan University, General 7/03 at 102 AAA 1,355,562
Revenue Bonds, Series 1993A, 5.000%, 7/15/21
- ---------------------------------------------------------------------------------------------------------------------------------
Health Care - 6.7%
2,235,000 City of Hancock Hospital Finance Authority, FHA-Insured Mortgage 8/08 at 100 AAA 2,237,347
Hospital Revenue Bonds (Portage Health System, Inc.),
Series 1998, 5.450%, 8/01/47
8,800,000 Michigan State Hospital Finance Authority, Hospital Revenue 5/01 at 100 AA- 8,914,400
Bonds (Mercy Mount Clemens Corporation),
Series 1992, 6.000%, 5/15/17
4,500,000 Michigan State Hospital Finance Authority, Hospital Revenue 8/08 at 101 BBB 3,841,965
Bonds (The Detroit Medical Center Obligated Group),
Series 1998A, 5.250%, 8/15/28
1,000,000 Michigan State Hospital Finance Authority, Hospital Revenue 5/09 at 101 AA+ 911,440
Bonds (Charity Obligated Group), Series 1999A,
5.125%, 11/01/29
1,000,000 Michigan State Hospital Finance Authority, Revenue and 11/09 at 101 BBB+ 994,370
Refunding Bonds (Memorial Healthcare Center Obligated
Group), Series 1999, 5.875%, 11/15/21
2,195,000 Regents of the University of Michigan, Medical Service No Opt. Call Aa2 1,223,888
Plan Revenue Bonds, Series 1991, 0.000%, 12/01/10
- ---------------------------------------------------------------------------------------------------------------------------------
Housing/Multifamily - 6.3%
5,250,000 Michigan State Housing Development Authority, Limited 10/02 at 103 AAA 5,597,235
Obligation Revenue Bonds (Parkway Meadows Project),
Series 1991, 6.850%, 10/15/18
760,000 Michigan State Housing Development Authority, Rental 1/02 at 102 AA- 808,275
Housing Revenue Bonds, 1991 Series A, 7.150%, 4/01/10
(Alternative Minimum Tax)
3,695,000 Michigan State Housing Development Authority, Rental 1/02 at 102 AA- 3,903,878
Housing Revenue Bonds, 1991 Series B, 7.100%, 4/01/21
6,795,000 Michigan State Housing Development Authority, Rental 4/09 at 101 AAA 6,526,258
Housing Revenue Bonds, 1999 Series A, 5.300%, 10/01/37
(Alternative Minimum Tax)
- ---------------------------------------------------------------------------------------------------------------------------------
Housing/Single Family - 1.1%
2,160,000 Michigan State Housing Development Authority, Single 12/01 at 102 AA+ 2,253,528
Family Mortgage Revenue Bonds, 1991 Series B,
6.950%, 12/01/20
740,000 Michigan State Housing Development Authority, Single Family 6/02 at 102 AA+ 754,704
Mortgage Revenue Bonds, 1992 Series A, 6.875%, 6/01/23
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Long-Term Care - 3.7%
$ 2,000,000 The Economic Development Corporation of the Charter Township 7/09 at 101 A $1,838,760
of Grand Rapids (Michigan), Limited Obligation Revenue Bonds
(Porter Hills Obligated Group, Cook Valley Estates Project),
Series 1999, 5.450%, 7/01/29
1,250,000 Michigan State Hospital Finance Authority, Revenue Bonds 1/07 at 102 N/R 1,296,013
(Presbyterian Villages of Michigan Obligated Group),
Series 1997, 6.375%, 1/01/25
1,300,000 Michigan Strategic Fund, Limited Obligation Revenue Bonds 7/08 at 101 A 1,211,730
(Porter Hills Presbyterian Village Inc. Project), Series 1998,
5.375%, 7/01/28
5,280,000 The Economic Development Corporation of the City of Warren, 3/02 at 101 Aaa 5,487,926
Nursing Home Revenue Refunding Bonds (GNMA
Mortgage-Backed Security - Autumn Woods Project), Series 1992,
6.900%, 12/20/22
- ---------------------------------------------------------------------------------------------------------------------------------
Tax Obligation/General - 18.0%
1,000,000 Belding Area Schools, Counties of Ionia, Kent and Montcalm, 5/08 at 100 AAA 928,320
State of Michigan, 1998 Refunding Bonds (General
Obligation - Unlimited Tax), 5.000%, 5/01/26
1,200,000 Berkley School District, County of Oakland, State of Michigan, 1/05 at 101 AAA 1,296,600
1995 School Building and Site Bonds (General
Obligation - Unlimited Tax), 6.000%, 1/01/19
1,000,000 Chippewa Valley Schools, County of Macomb, State of Michigan, 5/03 at 102 AAA 935,130
1993 Refunding Bonds (General Obligation - Unlimited
Tax), 5.000%, 5/01/21
2,250,000 Clarkston Community Schools, County of Oakland, State of 5/07 at 100 AAA 2,168,505
Michigan, 1997 School Building and Site Bonds (General
Obligation - Unlimited Tax), 5.250%, 5/01/23
1,250,000 Coopersville Area Public Schools, Counties of Ottawa and 5/09 at 100 AAA 1,154,588
Muskegon, State of Michigan, 1999 School Building and
Site Bonds (General Obligation - Unlimited Tax),
5.000%, 5/01/29
5,720,000 School District of the City of Detroit, Wayne County, 5/09 at 101 AAA 5,032,399
State of Michigan, School Building and Site Improvement
Bonds (General Obligation - Unlimited Tax), Series 1998A,
4.750%, 5/01/28
1,355,000 Township of Blair, County of Grand Traverse, State of Michigan, 11/10 at 100 AAA 1,296,423
1998 Water System Improvements Project (General
Obligation - Unlimited Tax), 5.200%, 11/01/23
3,725,000 Lake Orion Community School District, County of Oakland, 5/05 at 101 AAA 3,704,140
State of Michigan, 1995 Refunding Bonds (General
Obligation - Unlimited Tax), 5.500%, 5/01/20
1,000,000 School District of the City of Lincoln Park, County of Wayne, 5/07 at 100 AAA 959,570
State of Michigan, 1997 Refunding Bonds
(Unlimited Tax), 5.000%, 5/01/17
1,000,000 Mancelona Public School District, General Obligation Bonds, 5/06 at 100 AAA 982,300
Series 1997 (Antrim and Kalkaska Counties), 5.200%, 5/01/17
6,650,000 Mattawan Consolidated School, Counties of Van Buren and 5/02 at 102 AA+ 7,067,554
Kalamazoo, State of Michigan, 1992 Refunding Bonds
(General Obligation - Unlimited Tax), 6.300%, 5/01/17
2,500,000 Montrose Township School District, State of Michigan, No Opt. Call AAA 2,700,050
School Building and Site Bonds, Series 1997, 6.000%, 5/01/22
1,045,000 Nice Community School District, Counties of Marquette and 5/04 at 101 AAA 1,008,425
Baraga, State of Michigan, 1995 School Building and
Site Bonds (General Obligation - Unlimited Tax),
5.250%, 5/01/20
1,225,000 North Branch Area Schools, County of Lapeer, State of Michigan, 5/03 at 101 1/2 AAA 1,200,280
1993 Refunding Bonds (General Obligation - Unlimited
Tax), 5.375%, 5/01/21
1,470,000 Parchment School District, County of Kalamazoo, State of Michigan, No Opt. Call AAA 1,391,531
1998 School Building and Site Bonds (General
Obligation - Unlimited Tax), 5.000%, 5/01/25
685,000 Reeths-Puffer Schools, County of Muskegon, State of 5/05 at 101 AAA 709,078
Michigan, 1995 School Building and Site Refunding Bonds,
5.750%, 5/01/15
600,000 Rockford Public Schools, Kent County, 1997 School Building and 5/07 at 100 AAA 575,844
Site Bonds (General Obligation - Unlimited Tax), 5.250%, 5/01/27
Western Townships Utilities Authority, Sewage Disposal System
Refunding Bonds, Series 1991:
1,500,000 6.750%, 1/01/15 1/02 at 100 AAA 1,575,960
5,040,000 6.500%, 1/01/19 1/02 at 100 AAA 5,266,649
1,725,000 Williamston Community School District (General No Opt. Call AAA 1,745,079
Obligation - Unlimited Tax), Series 1996, 5.500%, 5/01/25
1,000,000 Wyoming Public Schools, County of Kent, State of Michigan, 5/09 at 100 AAA 934,840
1999 Refunding Bonds (General Obligation - Unlimited
Tax), 5.000%, 5/01/22
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Tax Obligation/General (continued)
Zeeland Public Schools, Counties of Ottawa and Allegan, State of
Michigan, 1999 School Building and Site Bonds (General
Obligation - Unlimited Tax):
$ 3,000,000 5.250%, 5/01/22 (WI) 5/09 at 100 AAA $2,889,870
3,000,000 5.375%, 5/01/25 (DD) 5/09 at 100 AAA 2,930,250
- ---------------------------------------------------------------------------------------------------------------------------------
Tax Obligation/Limited - 4.3%
2,000,000 Michigan Municipal Bond Authority, Local Government 5/02 at 102 A 2,126,860
Loan Program Revenue Bonds, Series 1992D, 6.650%, 5/01/12
3,800,000 State Building Authority, State of Michigan, 1991 Revenue 10/01 at 102 AA 3,992,166
Refunding Bonds, Series I, 6.250%, 10/01/20
1,825,000 State Building Authority, State of Michigan, 1991 Revenue Bonds, 10/01 at 102 AA 1,934,464
Series II, 6.800%, 10/01/21
1,000,000 State Building Authority, State of Michigan, 1998 Revenue 10/09 at 100 AA 894,410
Bonds, Series I (Facilities Program), 4.750%, 10/15/21
State of Michigan, State Trunk Line Fund Refunding Bonds,
Series 1998A:
1,350,000 4.750%, 11/01/20 11/08 at 101 AAA 1,216,863
1,500,000 5.000%, 11/01/26 11/08 at 101 AAA 1,391,595
- ---------------------------------------------------------------------------------------------------------------------------------
Transportation - 1.0%
2,505,000 Charter County of Wayne, Michigan, Airport Revenue Bonds 12/01 at 102 AAA 2,668,602
(Detroit Metropolitan Wayne County Airport), Subordinate Lien,
Series 1991B, 6.750%, 12/01/21 (Alternative Minimum Tax)
- ---------------------------------------------------------------------------------------------------------------------------------
U.S. Guaranteed - 29.8%
3,935,000 Anchor Bay School District, Counties of Macomb and 5/03 at 101 1/2 AAA 4,157,328
St. Clair, State of Michigan, 1993 School Building and
Site Bonds (General Obligation - Unlimited Tax),
5.550%, 5/01/19 (Pre-refunded to 5/01/03)
1,930,000 Central Michigan University, Revenue Bonds, Series 1997, 4/07 at 101 AAA 2,046,321
5.500%, 10/01/17 (Pre-refunded to 4/01/07)
2,000,000 School District of the City of Detroit, Wayne County, 5/06 at 102 AAA 2,155,120
State of Michigan, School Building and Site Improvement
Bonds (General Obligation - Unlimited Tax), Series 1996A,
5.700%, 5/01/25 (Pre-refunded to 5/01/06)
180,000 City of Detroit, County of Wayne, State of Michigan, Sewage No Opt. Call Aaa 182,360
Disposal System Revenue Bonds, Series 1979, 6.900%, 12/15/99
1,000,000 Essexville-Hampton Public Schools, County of Bay, State of 5/07 at 100 AAA 1,053,720
Michigan, 1997 School Building and Site Bonds (General
Obligation - Unlimited Tax), 5.500%, 5/01/17
(Pre-refunded to 5/01/07)
1,600,000 Gaylord Community Schools, Counties of Ostego and Antrim, 5/02 at 102 AA+*** 1,727,904
State of Michigan, 1992 School Building and Site
Refunding Bonds, 6.600%, 5/01/21 (Pre-refunded to 5/01/02)
1,325,000 Greenville Public Schools, Counties of Montcalm, Kent and Ionia, 5/04 at 101 AAA 1,413,099
State of Michigan, 1995 School Building and Site Bonds
(General Obligation - Unlimited Tax), 5.750%, 5/01/14
(Pre-refunded to 5/01/04)
1,000,000 Grosse Ile Township School District, School Improvement 5/07 at 100 AAA 1,085,930
Refunding Bonds, General Obligation, Series 1996,
6.000%, 5/01/22 (Pre-refunded to 5/01/07)
1,250,000 Gull Lake Community Schools, Counties of Kalamazoo, Barry and 5/01 at 102 AAA 1,332,162
Calhoun, State of Michigan, 1991 School Building and Site
Bonds, 6.800%, 5/01/21 (Pre-refunded to 5/01/01)
3,100,000 Hemlock Public School District, Counties of Saginaw and Midland, 5/02 at 102 AA+*** 3,365,701
State of Michigan, 1992 School Building and Site Refunding
Bonds, 6.750%, 5/01/21 (Pre-refunded to 5/01/02)
1,000,000 Huron Valley School District, Counties of Oakland and Livingston, 5/07 at 100 AAA 1,077,880
State of Michigan, 1996 School Building and Site Bonds
(General Obligation - Unlimited Tax), 5.875%, 5/01/16
(Pre-refunded to 5/01/07)
2,000,000 Lincoln Park School District, General Obligation Bonds, 5/06 at 101 AAA 2,168,240
Series 1996, 5.900%, 5/01/26 (Pre-refunded to 5/01/06)
1,000,000 Marquette Area Public Schools, County of Marquette, 5/01 at 102 AAA 1,064,060
State of Michigan, 1991 School Building and Site Bonds,
Series B (General Obligation - Unlimited Tax), 6.700%, 5/01/21
(Pre-refunded 5/01/01)
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Guaranteed (continued)
$ 3,100,000 Michigan Municipal Bond Authority, State Revolving Fund Revenue 10/02 at 102 AA+*** $3,373,730
Bonds, Series 1992A, 6.600%, 10/01/18 (Pre-refunded to 10/01/02)
3,035,000 Michigan State Hospital Finance Authority, Hospital Revenue 12/02 at 102 AAA 3,340,928
Bonds (Mid-Michigan Obligated Group), Series 1992,
6.900%, 12/01/24 (Pre-refunded to 12/01/02)
1,450,000 Michigan State Hospital Finance Authority, Hospital Revenue 9/01 at 102 Aaa 1,577,760
Bonds (McLaren Obligated Group), Series 1991A,
7.500%, 9/15/21 (Pre-refunded to 9/15/01)
9,355,000 Michigan State Hospital Finance Authority, Hospital Revenue 11/01 at 102 Aa2*** 10,106,86
Bonds (Daughters of Charity National Health System-
Providence Hospital), Series 1991, 7.000%, 11/01/21
(Pre-refunded to 11/01/01)
2,150,000 North Branch Area Schools, County of Lapeer, State of Michigan, 5/02 at 102 AA+*** 2,321,871
1992 School Building and Site Refunding Bonds
(General Obligation - Unlimited Tax), 6.600%, 5/01/17
(Pre-refunded to 5/01/02)
1,500,000 Perry Public Schools, Counties of Shiawassee and Ingham, 5/02 at 101 1/2 AAA 1,606,155
State of Michigan, 1992 School Building and Site Bonds
(General Obligation - Unlimited Tax), 6.375%, 5/01/22
(Pre-refunded to 5/01/02)
4,650,000 Plymouth-Canton Community Schools, Counties of Wayne and 5/01 at 101 AA+*** 4,909,005
Washtenaw, State of Michigan, 1991 School Building and
Site Refunding Bonds, Series B, 6.800%, 5/01/11
(Pre-refunded to 5/01/01)
620,000 Reeths-Puffer Schools, County of Muskegon, State of Michigan, 5/05 at 101 AAA 664,460
1995 School Building and Site Refunding Bonds, 5.750%, 5/01/15
(Pre-refunded to 5/01/05)
6,385,000 City of Royal Oak Hospital Finance Authority, State of Michigan, 1/01 at 102 Aaa 6,747,668
Hospital Revenue Bonds (William Beaumont Hospital),
Series 1991D, 6.750%, 1/01/20 (Pre-refunded to 1/01/01)
4,845,000 Saginaw-Midland Municipal Water Supply Corporation, 9/04 at 102 A*** 5,460,024
State of Michigan, Water Supply Revenue Bonds
(General Obligation - Unlimited Tax), Series 1992,
6.875%, 9/01/16 (Pre-refunded to 9/01/04)
2,400,000 Three Rivers Community Schools, Counties of Cass and 5/06 at 102 AAA 2,615,712
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)
9,250,000 Regents of the University of Michigan, Medical Service 12/01 at 102 Aa2*** 9,911,005
Plan Revenue Bonds, Series 1991, 6.500%, 12/01/21
(Pre-refunded to 12/01/01)
4,200,000 Warren Consolidated Schools, Counties of Macomb and Oakland, 5/01 at 102 Aa*** 4,466,070
State of Michigan, 1991 School Building and Site Refunding
Bonds (General Obligation - Unlimited Tax), 6.700%, 5/01/21
(Pre-refunded to 5/01/01)
- ---------------------------------------------------------------------------------------------------------------------------------
Utilities - 15.0%
6,425,000 The Economic Development Corporation of the City of Detroit, 5/01 at 102 AAA 6,790,968
Resource Recovery Revenue Bonds, Series 1991A,
6.875%, 5/01/09 (Alternative Minimum Tax)
2,390,000 Michigan South Central Power Agency, Power Supply System Revenue 11/01 at 102 Baa1 2,517,172
Refunding Bonds, 1991 Series, 6.750%, 11/01/10
3,630,000 Michigan Strategic Fund, Adjustable Rate Demand Limited No Opt. Call AAA 4,365,002
Obligation Refunding Revenue Bonds (The Detroit Edison
Company Pollution Control Bonds Project), Series 1990BB,
7.000%, 5/01/21
4,330,000 Michigan Strategic Fund, Limited Obligation Refunding Revenue 9/01 at 102 AAA 4,616,603
Bonds (The Detroit Edison Company Pollution Control Bonds
Project), Collateralized Series 1991CC, 6.950%, 9/01/21
7,600,000 Michigan Strategic Fund Limited Obligation Refunding Revenue 12/01 at 102 AAA 8,125,920
Bonds (The Detroit Edison Company Pollution Control Bonds
Project), Collateralized Series 1991DD, 6.875%, 12/01/21
7,000,000 County of Monroe, Michigan, Pollution Control Revenue Bonds 9/02 at 102 AAA 7,550,410
(The Detroit Edison Company Monroe and Fermi Plants Project),
Collateralized Series 1992-1, 6.875%, 9/01/22
(Alternative Minimum Tax)
1,000,000 Puerto Rico Electric Power Authority, Power Revenue Bonds, 7/05 at 100 BBB+ 993,800
Series X, 5.500%, 7/01/25
5,000,000 City of Wyandotte, County of Wayne, State of Michigan, 10/02 at 102 AAA 5,324,650
1992 Electric Revenue Refunding Bonds, 6.250%, 10/01/17
- ---------------------------------------------------------------------------------------------------------------------------------
Water and Sewer - 6.6%
5,250,000 City of Detroit, Michigan, Sewage Disposal System Revenue 7/05 at 100 AAA 4,872,364
Refunding Bonds, Series 1995-B, 5.000%, 7/01/25
7,000,000 City of Detroit, Michigan, Sewage Disposal System Revenue 7/07 at 101 AAA 6,489,140
Bonds, Series 1997-A, 5.000%, 7/01/27
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Water and Sewer (continued)
$ 6,000,000 City of Detroit, Michigan, Water Supply System Revenue and 7/04 at 102 AAA $5,591,940
Revenue Refunding Bonds, Series 1993, 5.000%, 7/01/23
1,000,000 City of Grand Rapids, Michigan, Sanitary Sewer System 7/08 at 101 AAA 885,580
Improvement and Refunding Revenue Bonds, Series 1998-A,
4.750%, 1/01/28
- ---------------------------------------------------------------------------------------------------------------------------------
$ 257,475,000 Total Investments - (cost $250,417,617) - 97.9% 262,964,398
=============
Short-Term Investments - 0.4%
$ 1,000,000 The Economic Development Corporation of the County of P-1 1,000,000
============= Delta, Michigan, Environmental Improvement Revenue Refunding
Bonds, 1985 Series E (Mead-Escanaba Paper Company Project),
Variable Rate Demand Bonds, 3.400%, 12/01/23+
-----------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 1.7% 4,626,759
-----------------------------------------------------------------------------------------------------------------
Net Assets - 100% $268,591,157
=================================================================================================================
* 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.
(DD) Security purchased on a delayed delivery basis
(note 1).
(WI) Security purchased on a when-issued basis (note 1).
+ 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 Michigan Premium Income Municipal Fund, Inc. (NMP)
July 31, 1999
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Capital Goods - 2.8%
$ 3,050,000 Michigan Strategic Fund, Limited Obligation Revenue Bonds (Waste 12/02 at 102 BBB $3,235,074
Management, Inc. Project), Series 1992, 6.625%, 12/01/12
(Alternative Minimum Tax)
1,370,000 Michigan Strategic Fund, Limited Obligation Revenue Bonds 12/03 at 102 BBB 1,422,800
(WMX Technologies, Inc. Project), Series 1993,
6.000%, 12/01/13 (Alternative Minimum Tax)
- ---------------------------------------------------------------------------------------------------------------------------------
Education and Civic Organizations - 6.0%
1,950,000 Board of Regents of Eastern Michigan University, General 12/06 at 101 AAA 1,970,417
Revenue Bonds, Series 1997, 5.500%, 6/01/17
1,250,000 Michigan Higher Education Student Loan Authority, Student Loan 10/02 at 102 A 1,300,850
and Refunding Revenue Bonds, Series XV-A, 6.700%, 10/01/05
(Alternative Minimum Tax)
1,130,000 Board of Trustees of Oakland University, Michigan, General Revenue 5/05 at 102 AAA 1,170,398
Bonds, Series 1995, 5.750%, 5/15/15
2,530,000 Board of Control of Saginaw Valley University, General Revenue 7/08 at 102 AAA 2,479,375
Bonds, Series 1998, 5.250%, 7/01/19
3,250,000 Board of Trustees of Western Michigan University, General 7/03 at 102 AAA 3,272,035
Revenue Bonds, Series 1993A, 5.500%, 7/15/16
- ---------------------------------------------------------------------------------------------------------------------------------
Health Care - 19.4%
2,200,000 City of Hancock Hospital Finance Authority, FHA-Insured 8/08 at 100 AAA 2,202,310
Mortgage Hospital Revenue Bonds (Portage Health System, Inc.),
Series 1998, 5.450%, 8/01/47
4,000,000 City of Kalamazoo Hospital Finance Authority Hospital Revenue 5/06 at 102 AAA 4,067,200
Refunding and Improvement Bonds (Bronson Methodist Hospital),
Series 1996, 5.750%, 5/15/16
3,000,000 Michigan State Hospital Finance Authority, Hospital Revenue 5/03 at 102 AAA 3,146,670
Refunding Bonds (St. John's Hospital), Series 1993A,
6.000%, 5/15/13
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 BBB 2,969,550
3,200,000 6.500%, 8/15/18 8/03 at 102 BBB 3,222,048
1,500,000 Michigan State Hospital Finance Authority, Hospital Revenue 8/08 at 101 BBB 1,280,655
Bonds (The Detroit Medical Center Obligated Group),
Series 1998A, 5.250%, 8/15/28
4,000,000 Michigan State Hospital Finance Authority, Hospital Revenue 11/03 at 102 AAA 4,023,800
Refunding Bonds (Oakwood Hospital Obligated Group),
Series 1993A, 5.500%, 11/01/13
4,000,000 Michigan State Hospital Finance Authority, Hospital 9/02 at 102 AA- 4,048,040
Revenue and Refunding Bonds (Henry Ford Health System),
Series 1992A, 5.750%, 9/01/17
2,000,000 Michigan State Hospital Finance Authority (Gaylord, Michigan), 1/05 at 102 AA- 2,113,320
Hospital Revenue and Refunding Bonds (Otsego Memorial
Hospital), Series 1995, 6.250%, 1/01/20
2,000,000 Michigan State Hospital Finance Authority, Hospital Revenue 5/09 at 101 AA+ 1,822,880
Bonds (Charity Obligated Group), Series 1999A, 5.125%, 11/01/29
1,000,000 City of Saginaw Hospital Finance Authority (Michigan), 7/09 at 101 AAA 984,340
Hospital Revenue and Refunding Bonds (Covenant Medical
Center, Inc.), Series 1999E, 5.375%, 7/01/19
3,000,000 Regents of the University of Michigan, Hospital Revenue Refunding 12/02 at 102 AA 2,941,170
Bonds, Series 1993A, 5.500%, 12/01/21
- ---------------------------------------------------------------------------------------------------------------------------------
Housing/Multifamily - 9.5%
2,400,000 Michigan State Housing Development Authority, Limited 4/04 at 103 AAA 2,489,592
Obligation Revenue Bonds (Walled Lake Villa Project),
Series 1993, 6.000%, 4/15/18
1,500,000 Michigan State Housing Development Authority, Limited 10/03 at 103 AAA 1,520,685
Obligation Revenue Bonds (Brenton Village Green Project),
Series 1993, 5.625%, 10/15/18
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- 4,256,480
4,075,000 6.600%, 4/01/12 10/02 at 102 AA- 4,333,274
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Housing/Multifamily (continued)
$ 790,000 Michigan State Housing Development Authority, Rental Housing 4/03 at 102 AAA $ 820,541
Revenue Bonds, 1993 Series A, 5.875%,10/01/17
Mount Clemens Housing Corporation, Multifamily Housing Refunding
Revenue Bonds, Series 1992A (FHA-Insured Mortgage Loan -
Section 8 Assisted Project):
1,000,000 6.600%, 6/01/13 6/03 at 102 AAA 1,056,570
1,500,000 6.600%, 6/01/22 6/03 at 102 AAA 1,579,515
- ---------------------------------------------------------------------------------------------------------------------------------
Housing/Single Family - 1.7%
2,695,000 Michigan State Housing Development Authority, Single Family 6/05 at 102 AA+ 2,800,132
Mortgage Revenue Bonds, 1995 Series A, 6.800%, 12/01/16
- ---------------------------------------------------------------------------------------------------------------------------------
Tax Obligation/General - 11.4%
730,000 Clarkston Community Schools, County of Oakland, State of Michigan, 5/03 at 102 AA+ 758,331
1993 School Building and Site Refunding Bonds, 5.900%, 5/01/16
2,500,000 School District of the City of Detroit, Wayne County, State of 5/01 at 102 AA+ 2,641,300
Michigan, School Building and Site Bonds (General Obligation -
Unlimited Tax), Series 1992, 6.250%, 5/01/12
1,500,000 School District of the City of Detroit, Wayne County, State of 5/09 at 101 AAA 1,319,685
Michigan, School Building and Site Improvement Bonds (General
Obligation - Unlimited Tax), Series 1998A, 4.750%, 5/01/28
3,000,000 Dexter Community Schools, Counties of Washtenaw and 5/03 at 102 AA+ 2,865,480
Livingston, State of Michigan, 1993 School Building and Site and
Refunding Bonds (General Obligation - Unlimited Tax),
5.000%, 5/01/17
4,100,000 Commonwealth of Puerto Rico, Public Improvement Bonds 7/07 at 101 1/2 A 4,268,018
of 1997, 5.750%, 7/01/17
5,625,000 Commonwealth of Puerto Rico, Public Improvement Refunding No Opt. Call AAA 5,936,906
Bonds, Series 1993 (General Obligation Bonds), 5.375%, 7/01/06
380,000 Reeths-Puffer Schools, County of Muskegon, State of Michigan, 5/05 at 101 AAA 393,357
1995 School Building and Site Refunding Bonds, 5.750%, 5/01/15
1,000,000 Western Townships Utilities Authority, Sewage Disposal System 1/02 at 100 AAA 1,046,250
Refunding Bonds, Series 1991, 6.500%, 1/01/10
- ---------------------------------------------------------------------------------------------------------------------------------
Tax Obligation/Limited - 11.6%
6,500,000 City of Detroit, State of Michigan, Convention Facility Limited 9/03 at 102 AAA 6,472,050
Tax Revenue Refunding Bonds (Cobo Hall Expansion Project),
Series 1993, 5.250%, 9/30/12
1,400,000 City of Detroit, State of Michigan, Downtown Development 7/08 at 100 AAA 1,239,084
Authority, Tax Increment Refunding Bonds (Development Area
No. 1 Projects), Series 1998A, 4.750%, 7/01/25
2,750,000 State Building Authority, State of Michigan, 1991 Revenue 10/01 at 102 AA 2,889,068
Refunding Bonds, Series I, 6.250%, 10/01/20
1,000,000 State Building Authority, State of Michigan, 1991 Revenue 10/01 at 102 AA 1,050,570
Bonds, Series II, 6.250%, 10/01/20
3,275,000 State of Michigan, Comprehensive Transportation Bonds, 5/02 at 100 AA- 3,377,115
Series 1992A, 5.750%, 5/15/12
1,000,000 Puerto Rico Highway and Transportation Authority, Highway 7/16 at 100 A 1,004,880
Revenue Bonds, Series 1996Y, 5.500%, 7/01/36
3,615,000 Saginaw-Midland Municipal Water Supply Corporation, 9/02 at 101 1/2 A 3,541,001
State of Michigan, Water Supply System Revenue Bonds
(General Obligation - Limited Tax), Series 1993, 5.250%, 9/01/16
- ---------------------------------------------------------------------------------------------------------------------------------
Transportation - 1.7%
1,000,000 Puerto Rico Port Authority, Special Facilities Revenue Bonds, 6/03 at 102 BBB- 1,041,410
Series 1993A (American Airlines, Inc. Project), 6.300%, 6/01/23
(Alternative Minimum Tax)
2,000,000 Charter County of Wayne, Michigan, Detroit Metropolitan Wayne 12/08 at 101 AAA 1,810,660
County Airport, Airport Revenue Bonds, Series 1998A,
5.000%, 12/01/28 (Alternative Minimum Tax)
- ---------------------------------------------------------------------------------------------------------------------------------
U.S. Guaranteed - 8.7%
2,270,000 Clarkston Community Schools, County of Oakland, State of Michigan, 5/03 at 102 AA+** 2,431,942
1993 School Building and Site Refunding Bonds,
5.900%, 5/01/16 (Pre-refunded to 5/01/03)
2,000,000 Board of Control of Ferris State University, General Revenue Bonds, 10/03 at 102 AAA 2,182,780
Series 1993, 6.250%, 10/01/19 (Pre-refunded to 10/01/03)
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Guaranteed (continued)
$ 1,950,000 Michigan Municipal Bond Authority, State Revolving Fund Revenue No Opt. Call AA+*** $2,147,691
Bonds, Series 1994, 7.000%, 10/01/03
2,500,000 Michigan State Hospital Finance Authority, Hospital Revenue 11/01 at 102 Aa2*** 2,700,925
Bonds (Daughters of Charity National Health System-Providence
Hospital), Series 1991, 7.000%, 11/01/21 (Pre-refunded to 11/01/01)
1,750,000 State of Michigan, State Trunk Line Fund Bonds, Series 1994A, 11/04 at 102 AAA 1,886,185
5.700%, 11/15/15 (Pre-refunded to 11/15/04)
620,000 Reeths-Puffer Schools, County of Muskegon, State of Michigan, 5/05 at 101 AAA 664,460
1995 School Building and Site Refunding Bonds, 5.750%, 5/01/15
(Pre-refunded to 5/01/05)
2,650,000 Regents of the University of Michigan, Hospital Revenue Bonds, 12/00 at 100 AA*** 2,737,874
Series 1990, 6.375%, 12/01/24 (Pre-refunded to 12/01/00)
- ---------------------------------------------------------------------------------------------------------------------------------
Utilities - 18.7%
6,750,000 The City of Grand Haven, Michigan, Electric System Revenue Refunding 7/03 at 102 AAA 6,664,073
Bonds, 1993 Series, 5.250%, 7/01/16
4,020,000 Michigan Public Power Agency, Belle River Project Refunding Revenue 1/03 at 102 AA- 3,897,551
Bonds, 1993 Series A, 5.250%, 1/01/18
1,500,000 Michigan Public Power Agency, Belle River Project Refunding Revenue 1/03 at 100 AA- 1,405,170
Bonds, 1993 Series B, 5.000%, 1/01/19
8,500,000 Michigan Strategic Fund, Limited Obligation Refunding Revenue 6/03 at 102 AAA 8,902,645
Bonds (Consumers Power Company Project), Collateralized
Series 1993B, 5.800%, 6/15/10
County of Monroe, Michigan, Pollution Control Revenue Bonds (The
Detroit Edison Company Project), 1992 Series CC:
2,500,000 6.550%, 6/01/24 (Alternative Minimum Tax) 6/03 at 102 AAA 2,687,175
1,500,000 6.550%, 9/01/24 (Alternative Minimum Tax) 9/03 at 102 AAA 1,617,210
6,000,000 County of Monroe, Michigan, Pollution Control Revenue Bonds No Opt. Call AAA 6,461,100
(The Detroit Edison Company Project), 1994 Series A,
6.350%, 12/01/04 (Alternative Minimum Tax)
- ---------------------------------------------------------------------------------------------------------------------------------
Water and Sewer - 7.4%
1,500,000 City of Ann Arbor, County of Washtenaw, Michigan, Water 2/03 at 101 1/2 AAA 1,527,450
Supply System Revenue Bonds, Series T, 5.500%, 2/01/13
1,730,000 City of Detroit, Michigan, Sewage Disposal System Revenue 7/07 at 101 AAA 1,616,927
Bonds, Series 1997-A, 5.000%, 7/01/22
3,755,000 City of Detroit, Michigan, Sewage Disposal System Revenue 7/03 at 102 AAA 3,846,546
Refunding Bonds, Series 1993-A, 5.700%, 7/01/13
4,500,000 City of Detroit, Michigan, Water Supply System Revenue Refunding 7/04 at 102 AAA 4,076,684
Bonds, Series 1993, 4.750%, 7/01/19
1,600,000 City of Grand Rapids, Michigan, Sanitary Sewer System Improvement 7/08 at 101 AAA 1,416,927
and Refunding Revenue Bonds, Series 1998-A, 4.750%, 1/01/28
- ---------------------------------------------------------------------------------------------------------------------------------
$ 164,360,000 Total Investments - (cost $160,112,154) - 98.9% 167,056,201
=============
Other Assets Less Liabilities - 1.1% 1,795,290
-----------------------------------------------------------------------------------------------------------------
Net Assets - 100% $168,851,491
=================================================================================================================
* 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.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
Portfolio of Investments
Nuveen Ohio Quality Income Municipal Fund, Inc. (NUO)
July 31, 1999
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Capital Goods - 1.2%
$ 2,655,000 Ohio Water Development Authority, Revenue Bonds, USA Waste 3/02 at 102 N/R $2,806,786
Services, Series 1992, 7.750%, 9/01/07 (Alternative Minimum Tax)
- ---------------------------------------------------------------------------------------------------------------------------------
Education and Civic Organizations - 8.9%
825,000 Bowling Green State University, Ohio, General Receipts Bonds, 6/01 at 102 A 872,834
Series 1991, 6.700%, 6/01/07
3,665,000 State of Ohio, Education Loan Revenue Bonds, Series 1997A 6/07 at 102 AAA 3,720,781
(Supplemental Student Loan Program), 1997A1, 5.850%, 12/01/19
(Alternative Minimum Tax)
1,000,000 State of Ohio (Ohio Higher Educational Facility Commission), Higher 12/04 at 102 AAA 1,035,820
Educational Facility Revenue Bonds (University of Dayton,
1994 Project), 5.800%, 12/01/14
2,400,000 State of Ohio (Ohio Higher Educational Facility Commission), Higher 12/03 at 102 AAA 2,624,472
Educational Facility Revenue Bonds (University of Dayton,
1992 Project), 6.600%, 12/01/17
1,200,000 State of Ohio (Ohio Higher Educational Facility Commission), 9/06 at 101 N/R 1,226,364
Higher Educational Facility Revenue Bonds (The University of
Findlay, 1996 Project), 6.125%, 9/01/16
1,500,000 State of Ohio (Ohio Higher Educational Facility Commission), No Opt. Call AA 1,682,790
Higher Educational Facility Revenue Bonds (Case Western
Reserve University Project), 1997 Series D, 6.250%, 7/01/14
1,000,000 State of Ohio (Ohio Higher Educational Facility Commission), 10/02 at 102 AA 1,047,060
Higher Educational Facility Revenue Bonds (Case Western
Reserve University Project), Series 1992, 6.000%, 10/01/22
1,575,000 The Ohio State University, General Receipts Bonds, 12/02 at 102 AA 1,662,649
Series 1992 A1, 5.875%, 12/01/12
2,000,000 Puerto Rico Industrial, Tourist, Educational, Medical and 10/08 at 101 AAA 1,903,680
Environmental Control Facilities Financing Authority, Higher
Education Revenue Bonds, 1998 Series A (Inter American
University of Puerto Rico Project), 5.000%, 10/01/22
3,185,000 The Student Loan Funding Corporation, Cincinnati, Ohio, Student 7/02 at 100 A 3,233,157
Loan Subordinated Revenue Refunding Bonds, Series 1992 D,
6.600%, 7/01/05 (Alternative Minimum Tax)
1,400,000 University of Cincinnati, Ohio, General Receipts Bonds, 6/07 at 100 AAA 1,384,334
Series AB, 5.375%, 6/01/20
- ---------------------------------------------------------------------------------------------------------------------------------
Energy - 2.0%
2,000,000 County of Ashtabula, Ohio, Industrial Development Refunding 5/02 at 102 Baa2 2,125,180
Revenue Bonds, 1992 Series A (Ashland Oil, Inc. Project),
6.900%, 5/01/10
2,250,000 Ohio Air Quality Development Authority, Air Quality Development 4/01 at 102 Baa1 2,367,878
Refunding Revenue Bonds, Series 1992 (Ashland Oil, Inc.
Project), 6.850%, 4/01/10
- ---------------------------------------------------------------------------------------------------------------------------------
Health Care - 9.1%
1,300,000 Akron, Bath and Copley Joint Township Hospital District, Ohio, 11/03 at 102 Baa1 1,258,777
Hospital Facilities Revenue Bonds, Series 1993A (Summa
Health System Project), 5.500%, 11/15/13
County of Butler, Ohio, Hospital Facilities Revenue Refunding and
Improvement Bonds, Series 1991 (Fort Hamilton-Hughes Memorial
Hospital Center):
240,000 7.250%, 1/01/01 No Opt. Call Baa1 243,120
1,000,000 7.500%, 1/01/10 1/02 at 102 Baa1 1,057,880
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 1,804,522
750,000 8.000%, 12/01/11 12/01 at 102 BBB 801,405
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Health Care (continued)
$ 2,675,000 County of Clermont, Ohio, Hospital Facilities Revenue Refunding 1/03 at 102 AAA $2,744,604
Bonds, Series 1993A (Mercy Health System), 5.875%, 1/01/15
1,000,000 County of Cuyahoga, Ohio, Hospital Improvement and Refunding 2/07 at 102 AAA 1,009,520
Revenue Bonds, Series 1997 (The MetroHealth System Project),
5.625%, 2/15/17
1,500,000 County of Cuyahoga, Ohio, Hospital Improvement Revenue Bonds, 1/02 at 102 AA- 1,608,405
Series 1992 (University Hospitals Health System, Inc. Project),
6.500%, 1/15/19
1,170,000 County of Cuyahoga, Ohio, Hospital Facilities Revenue Bonds, 2/03 at 102 AA- 1,229,647
Series 1993, Health Cleveland, Inc. (Fairview General
Hospital Project), 6.300%, 8/15/15
County of Franklin, Ohio, Hospital Refunding and Improvement
Revenue Bonds, Series 1996A (The Children's Hospital Project):
1,000,000 5.750%, 11/01/20 11/06 at 101 Aa 1,012,010
1,500,000 5.875%, 11/01/25 11/06 at 101 Aa 1,536,270
1,500,000 County of Franklin, Ohio, Hospital Revenue Refunding and Improvement 11/02 at 102 Aa 1,619,445
Bonds, Series 1992A (The Children's Hospital Project),
6.600%, 5/01/13
2,500,000 County of Marion, Ohio, Hospital Refunding and Improvement 5/06 at 102 BBB+ 2,559,625
Revenue Bonds, Series 1996 (The Community Hospital),
6.375%, 5/15/11
1,500,000 County of Montgomery, Ohio, Hospital Facilities Revenue Refunding 4/06 at 102 AAA 1,515,240
and Improvement Bonds, Series 1996 (Kettering Medical Center),
5.625%, 4/01/16
750,000 County of Tuscarawas, Ohio, Hospital Facilities Revenue Bonds, 10/03 at 102 Baa2 781,560
Series 1993A (Union Hospital Project), 6.500%, 10/01/21
- ---------------------------------------------------------------------------------------------------------------------------------
Housing/Multifamily - 8.1%
1,385,000 County of Clermont, Ohio, Mortgage Revenue Bonds, Series 1994 8/03 at 103 Aaa 1,417,741
(GNMA Collateralized - S.E.M. Villa II Project), Series 1994-A,
5.950%, 2/20/30
1,435,000 County of Cuyahoga, Ohio, Multifamily Housing Revenue Bonds 6/08 at 105 Aaa 1,520,368
(Water Street Associates Project), Series 1997, 6.150%, 12/20/26
(Alternative Minimum Tax)
990,000 County of Franklin, Ohio, Multifamily Housing Mortgage Revenue 1/05 at 103 Aa 975,497
Bonds, Series 1994A (FHA-Insured Mortgage Loan - Hamilton Creek
Apartments Project), 5.550%, 7/01/24 (Alternative Minimum Tax)
6,170,000 County of Franklin, Ohio, Mortgage Revenue Bonds, Series 1992A 1/02 at 103 Aa 6,510,214
(FHA-Insured Mortgage Loan - Kensington Place Project),
6.750%, 1/01/34
5,200,000 Hamilton County, Multifamily Housing Revenue Bonds (Huntington 1/07 at 102 AAA 5,278,416
Meadows Project), Series 1997, 5.700%, 1/01/27
(Alternative Minimum Tax)
2,885,000 Ohio Capital Corporation for Housing, Mortgage Revenue Refunding 1/02 at 100 AAA 2,899,050
Bonds, FHA-Insured Section 8 Assisted Project, Series 1997C,
5.700%, 1/01/24
- ---------------------------------------------------------------------------------------------------------------------------------
Housing/Single Family - 5.5%
3,980,000 Ohio Housing Finance Agency, Residential Mortgage Revenue 9/07 at 102 AAA 4,022,268
Bonds, 1996 Series B3 (Mortgage-Backed Securities Program),
5.750%, 9/01/28 (Alternative Minimum Tax)
3,000,000 Ohio Housing Finance Agency, Residential Mortgage Revenue 9/08 at 101 AAA 2,841,810
Bonds, 1999 Series A1 (Mortgage-Backed Securities Program),
5.250%, 9/01/30 (Alternative Minimum Tax)
5,580,000 Ohio Housing Finance Agency, Single Family Mortgage Revenue 9/99 at 102 N/R 5,710,907
Bonds (GNMA Mortgage-Backed Securities Program),
1989 Series A, 7.650%, 3/01/29 (Alternative Minimum Tax)
- ---------------------------------------------------------------------------------------------------------------------------------
Long-Term Care - 1.0%
1,365,000 County of Franklin, Ohio, Health Care Facilities Revenue Bonds, 7/03 at 102 N/R 1,354,107
Series 1993 (Ohio Presbyterian Retirement Services),
6.500%, 7/01/23
1,000,000 County of Marion, Ohio, Health Care Facilities Refunding and 11/03 at 102 BBB- 1,029,120
Improvement Revenue Bonds, Series 1993 (United Church
Homes, Inc. Project), 6.300%, 11/15/15
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Tax Obligation/General - 13.6%
Berea City School District, Ohio, School Improvement Bonds,
Series 1993 (General Obligation - Unlimited Tax):
$ 650,000 7.500%, 12/15/06 12/03 at 102 AAA $ 738,979
680,000 7.450%, 12/15/07 12/03 at 102 AAA 771,752
1,750,000 Brecksville-Broadview Heights City School District, Ohio, School 12/06 at 102 AAA 1,921,850
Improvement Bonds, Series 1996 (General Obligation - Unlimited Tax),
6.500%, 12/01/16
2,000,000 City of Columbus, Ohio, General Obligation Refunding Bonds, 1/02 at 102 Aaa 2,137,040
Series 1992B, 6.500%, 1/01/10
1,300,000 County of Franklin, Ohio, Refunding Bonds, Series 1993 12/08 at 102 AAA 1,298,258
(General Obligation - Limited Tax), 5.375%, 12/01/20
1,505,000 Greater Cleveland Regional Transit Authority, General Obligation, 12/06 at 101 Aaa 1,617,514
Capital Improvement Bonds, Series 1996, 5.650%, 12/01/16
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 786,136
715,000 9.700%, 12/01/04 No Opt. Call AAA 889,367
2,000,000 Commonwealth of Puerto Rico, Public Improvement Bonds of 1996 7/06 at 101 1/2 A 1,954,900
(General Obligation Bonds), 5.400%, 7/01/25
1,300,000 Commonwealth of Puerto Rico, Public Improvement Bonds of 1997 7/07 at 101 1/2 A 1,353,274
(General Obligation Bonds), 5.750%, 7/01/17
2,400,000 Commonwealth of Puerto Rico, Public Improvement Bonds of 1998 7/08 at 101 A 2,221,632
(General Obligation Bonds), 5.000%, 7/01/27
1,000,000 Revere Local School District, Ohio, School Improvement Bonds, 12/03 at 102 AAA 1,047,300
Series 1993 (General Obligation - Unlimited Tax),
6.000%, 12/01/16
2,870,000 City of Strongsville, Ohio, Various Purpose Improvement 12/06 at 102 Aa3 2,998,232
Bonds, Series 1996 (General Obligation - Limited Tax),
5.950%, 12/01/21
1,000,000 Sylvania City School District (General Obligation - Unlimited Tax), 12/05 at 101 AAA 1,040,640
Series 1995, 5.800%, 12/01/15
1,135,000 City of Toledo, Ohio (General Obligation - Limited Tax), Various No Opt. Call AAA 1,254,254
Purpose Improvement Bonds, Series 1994, 7.000%, 12/01/03
1,000,000 Upper Arlington City School District, General Obligation Bonds, 12/06 at 101 AAA 973,050
Series 1996, Improvement Bonds, 5.250%, 12/01/22
2,000,000 Board of Education, Wayne Local School District, County 12/06 at 101 AAA 2,121,040
of Warren, Ohio, School Improvement Bonds, Series 1996
(General Obligation - Unlimited Tax), 6.100%, 12/01/24
3,000,000 Board of Education, West Clermont Local School District, 12/05 at 100 AAA 3,138,600
County of Clermont, Ohio, School Improvement Bonds,
Series 1995 (General Obligation - Unlimited Tax),
6.000%, 12/01/18
1,000,000 City of Westlake, Ohio, General Obligation, Various Purpose 12/08 at 101 Aaa 1,025,050
Improvement and Refunding Bonds (Series 1997), 5.550%, 12/01/17
1,820,000 Worthington City School District, Franklin County, Ohio, General 6/02 at 102 AAA 1,939,847
Obligation Refunding Bonds (Unlimited Tax), 6.375%, 12/01/12
- ---------------------------------------------------------------------------------------------------------------------------------
Tax Obligation/Limited - 3.5%
1,250,000 City of Columbus, Ohio, Tax Increment Financing Bonds, Series 1999 6/09 at 101 AAA 1,144,587
(Easton Project), 4.875%, 12/01/24
1,000,000 State of Ohio, Ohio Building Authority, State Facilities Bonds 10/02 at 102 Aa2 1,071,290
(Juvenile Correctional Building Fund Projects), 1992 Series B,
6.000%, 10/01/12
3,000,000 State of Ohio, Ohio Building Authority, State Facilities Bonds 10/03 at 102 Aa2 3,189,960
(Adult Correctional Building Fund Projects), 1993 Series A,
6.125%, 10/01/12
1,040,000 State of Ohio, Department of Transportation, Certificates of 10/99 at 103 AA- 1,054,050
Participation (Rickenbacker Port Authority Improvements),
6.125%, 4/15/15 (Alternative Minimum Tax)
1,500,000 State of Ohio (OPFC), Higher Education Capital Facilities Bonds, 12/01 at 102 Aa2 1,556,625
Series II-1992A, 5.500%, 12/01/06
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Technology - 0.7%
$ 500,000 County of Franklin, Ohio, Revenue Bonds, Series 1993 (Online 4/03 at 100 N/R $ 505,730
Computer Library Center, Incorporated Project),
6.000%, 4/15/13
1,000,000 Puerto Rico Industrial, Medical and Environmental Pollution 1/02 at 103 Aa3 1,077,560
Control Facilities Financing Authority, Adjustable Rate Industrial
Revenue Bonds, 1983 Series A (Motorola Inc. Project),
6.750%, 1/01/14
- ---------------------------------------------------------------------------------------------------------------------------------
Transportation - 3.0%
3,430,000 City of Cleveland, Ohio, Parking Facilities Refunding Revenue Bonds, 9/06 at 102 AAA 3,438,301
Series 1996, 5.500%, 9/15/22
Columbus Municipal Airport Authority, Airport Improvement
Revenue Bonds, Series 1994A (Port Columbus International Airport
Project):
830,000 5.950%, 1/01/08 (Alternative Minimum Tax) 1/04 at 102 AAA 873,500
1,000,000 6.000%, 1/01/14 (Alternative Minimum Tax) 1/04 at 102 AAA 1,038,450
1,500,000 City of Dayton, Ohio, Special Facilities Revenue Refunding Bonds, 2/08 at 102 BBB 1,457,205
Series 1998A (Emery Air Freight Corporation and Emery
Worldwide Airlines, Inc., Guarantors), 5.625%, 2/01/18
- ---------------------------------------------------------------------------------------------------------------------------------
U.S. Guaranteed - 25.0%
1,500,000 City of Akron, Ohio, Waterworks System Mortgage Revenue 3/01 at 102 AAA 1,587,570
Improvement Bonds, Series 1991, 6.550%, 3/01/12
(Pre-refunded to 3/01/01)
2,000,000 City of Barberton, Ohio, Hospital Facilities Revenue Bonds, 1/02 at 102 N/R*** 2,172,840
Series 1992 (The Barberton Citizens Hospital Company Project),
7.250%, 1/01/12 (Pre-refunded to 1/01/02)
2,000,000 County of Carroll, Ohio, Hospital Improvement Revenue Bonds, 12/01 at 102 AAA 2,173,320
Series 1991 (Timken Mercy Medical Center), 7.125%, 12/01/18
(Pre-refunded to 12/01/01)
2,500,000 County of Clermont, Ohio, Waterworks System Revenue Bonds, 12/01 at 102 AAA 2,691,375
Series 1991, Clermont County Sewer District, 6.625%, 12/01/14
(Pre-refunded to 12/01/01)
2,075,000 City of Cleveland, Ohio, Airport System Revenue Bonds, 1/00 at 102 AAA 2,150,655
Series 1990A, 7.400%, 1/01/20 (Alternative Minimum Tax)
(Pre-refunded to 1/01/00)
2,000,000 City of Cleveland, Ohio, Public Power System First Mortgage 11/04 at 102 AAA 2,278,260
Revenue Bonds, Series 1994A, 7.000%, 11/15/24
(Pre-refunded to 11/15/04)
1,575,000 City of Cleveland, Ohio, Waterworks Improvement First Mortgage 1/02 at 102 AAA 1,689,140
Revenue Bonds, Series F, 1992 A, 6.500%, 1/01/21
(Pre-refunded to 1/01/02)
2,745,000 City of Cleveland, Ohio, First Mortgage Revenue Refunding Bonds, 1/02 at 102 AAA 2,943,930
Series F, 1992-B, 6.500%, 1/01/11 (Pre-refunded to 1/01/02)
3,960,000 City of Cleveland, Ohio, Waterworks Improvement and Refunding 1/06 at 102 AAA 4,280,008
First Mortgage Revenue Bonds, Series 1996H, 5.750%, 1/01/26
(Pre-refunded to 1/01/06)
1,950,000 City School District of Columbus, Franklin County, Ohio, School 12/02 at 102 AAA 2,135,387
Building Renovation and Improvement Bonds, Series 1992
(General Obligation - Unlimited Tax), 6.650%, 12/01/12
(Pre-refunded to 12/01/02)
3,250,000 County of Cuyahoga, Ohio, Hospital Revenue Bonds, Series 1991 8/01 at 102 AAA 3,500,738
(Meridia Health System), 7.000%, 8/15/23 (Pre-refunded to 8/15/01)
2,000,000 Dublin City School District, Franklin, Delaware and Union Counties, 12/02 at 102 AAA 2,159,760
Ohio, Various Purpose School Building Construction and
Improvement Bonds (General Obligation - Unlimited Tax),
6.200%, 12/01/19 (Pre-refunded to 12/01/02)
2,905,000 County of Franklin, Ohio, First Mortgage Revenue Bonds, No Opt. Call AAA 3,252,699
Series 1979 (Online Computer Library Center, Incorporated Project),
7.500%, 6/01/09
3,250,000 City of Garfield Heights, Ohio, Hospital Improvement and Refunding 11/02 at 102 AA-*** 3,547,570
Revenue Bonds, Series 1992B (Marymount Hospital Project),
6.650%, 11/15/11 (Pre-refunded to 11/15/02)
1,000,000 Hamilton County, Ohio, Sewer System Improvement and Refunding 6/01 at 102 AAA 1,066,380
Revenue Bonds, Series 1991A (The Metropolitan Sewer District
of Greater Cincinnati), 6.700%, 12/01/13 (Pre-refunded to 6/01/01)
3,000,000 Kent State University (A State University of Ohio), General 5/02 at 102 AAA 3,237,000
Receipts Bonds, Series 1992, 6.500%, 5/01/22
(Pre-refunded to 5/01/02)
1,000,000 City of Lakewood, Ohio, Various Purpose General Obligation Bonds, 12/02 at 102 Aa3*** 1,089,130
Series 1992 (Limited Tax Obligation Bonds), 6.500%, 12/01/12
(Pre-refunded to 12/01/02)
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Guaranteed (continued)
$ 2,100,000 Lakota Local School District, County of Butler, Ohio, School 12/05 at 100 AAA $2,304,729
Improvement Unlimited Tax General Obligation Bonds, Series 1994,
6.250%, 12/01/14 (Pre-refunded to 12/01/05)
1,400,000 City of Middleburg Heights, Ohio, Hospital Improvement Revenue 8/01 at 102 AAA 1,498,924
Bonds, Series 1991 (Southwest General Hospital Project),
6.750%, 8/15/21 (Pre-refunded to 8/15/01)
1,000,000 City of Newark, Ohio, Water System Improvement Bonds 12/03 at 102 AAA 1,084,610
(General Obligation - Limited Tax), 6.000%, 12/01/18
(Pre-refunded to 12/01/03)
205,000 Ohio Water Development Authority, Water Development 12/00 at 100 AAA 215,129
Revenue Refunding Bonds, Refunding and Improvement Series,
8.000%, 12/01/18 (Pre-refunded to 12/01/00)
2,500,000 Commonwealth of Puerto Rico, Public Improvement Bonds of 1992 7/02 at 101 1/2 AAA 2,711,100
(General Obligation Bonds), 6.600%, 7/01/13
(Pre-refunded to 7/01/02)
1,400,000 Reynoldsburg City School District, Ohio, General Obligation Bonds, 12/02 at 102 AAA 1,528,772
School Building Construction and Improvement,
6.550%, 12/01/17 (Pre-refunded to 12/01/02)
1,000,000 Solon City School District, Ohio, School Improvement Bonds, 12/01 at 102 N/R*** 1,085,100
Series 1990, General Obligation-Unlimited Tax Bonds,
7.150%, 12/01/13 (Pre-refunded to 12/01/01)
3,500,000 University of Cincinnati, General Receipts Bonds, Series O, 12/02 at 102 AA*** 3,790,360
6.300%, 6/01/12 (Pre-refunded to 12/01/02)
1,000,000 University of Toledo, Ohio, General Receipts Bonds, Series B, 12/02 at 102 AAA 1,071,920
5.900%, 6/01/20 (Pre-refunded to 12/01/02)
- ---------------------------------------------------------------------------------------------------------------------------------
Utilities - 9.6%
3,000,000 City of Cleveland, Ohio, Public Power System Improvement 11/01 at 102 AAA 3,225,600
First Mortgage Revenue Bonds, Series 1991B, 7.000%, 11/15/17
2,000,000 City of Cleveland, Ohio, Public Power System Revenue Bonds, 11/08 at 101 AAA 1,992,260
Series 1998, 5.250%, 11/15/15
1,250,000 City of Hamilton, Ohio, Electric System Mortgage Revenue Bonds, 10/02 at 102 AAA 1,339,450
Series 1992B, 6.300%, 10/15/25
4,000,000 State of Ohio, Ohio Air Quality Development Authority, Collateralized 6/02 at 103 AAA 4,455,440
Pollution Control Revenue Refunding Bonds, Series 1992 (The
Cleveland Electric Illuminating Company Project),
8.000%, 12/01/13
State of Ohio, 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 2,142,900
4,000,000 6.375%, 4/01/29 (Alternative Minimum Tax) 10/04 at 102 AAA 4,285,800
3,000,000 State of Ohio, Ohio Air Quality Development Authority, Air Quality 4/07 at 102 AAA 3,006,390
Development Revenue Bonds (JMG Funding, Limited Partnership
Project), Series 1997, 5.625%, 1/01/23 (Alternative Minimum Tax)
1,500,000 Puerto Rico Electric Power Authority, Power Revenue Refunding 7/09 at 101 1/2 AAA 1,521,855
Bonds, Series FF, 5.250%, 7/01/13
- ---------------------------------------------------------------------------------------------------------------------------------
Water and Sewer - 8.0%
1,000,000 City of Cleveland, Ohio, Waterworks Improvement First Mortgage No Opt. Call AAA 1,020,870
Refunding Revenue Bonds, Series G of 1993, 5.500%, 1/01/21
City of Cleveland, Ohio, Waterworks Improvement First Mortgage
Revenue Refunding Bonds, Series F of 1992B:
255,000 6.500%, 1/01/11 1/02 at 102 AAA 272,473
3,720,000 6.250%, 1/01/16 1/02 at 102 AAA 3,928,580
2,000,000 City of Cleveland, Ohio, Waterworks Improvement and Refunding 1/08 at 101 AAA 1,863,780
Revenue Bonds, Series I of 1998, 5.000%, 1/01/28
40,000 City of Cleveland, Ohio, Waterworks Improvement and Refunding 1/06 at 102 AAA 40,846
First Mortgage Revenue Bonds, Series H of 1996, 5.750%, 1/01/26
2,500,000 City of Columbus, Ohio, Sewerage System Revenue Refunding Bonds, 6/02 at 102 Aa2 2,659,375
Series 1992, 6.250%, 6/01/08
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Water and Sewer (continued)
$ 1,000,000 Greene County, Ohio, Sewer System Revenue Bonds, Series 1998 12/08 at 102 AAA $ 968,730
(Governmental Enterprise Revenue Bonds), 5.250%, 12/01/25
1,000,000 County of Montgomery, Ohio, Water Revenue Bonds, Greater Moraine 11/02 at 102 AAA 1,068,110
Beavercreek Sewer District, Series 1992, 6.250%, 11/15/17
2,000,000 Northeast Ohio Regional Sewer District, Wastewater Improvement 11/05 at 101 AAA 2,044,640
Revenue Refunding Bonds, Series 1995, 5.600%, 11/15/16
1,000,000 Ohio Water Development Authority, Water Development Revenue 6/05 at 102 AAA 1,033,910
Bonds, 1995 Fresh Water Series, 5.900%, 12/01/21
1,250,000 City of Oxford, Ohio, Water Supply System Mortgage Revenue 12/02 at 102 AAA 1,325,135
Refunding Bonds, Series 1992, 6.000%, 12/01/14
2,000,000 Southwest Regional Water District, Ohio, Waterworks System 12/05 at 101 AAA 2,103,240
Revenue Bonds, Series 1995, 6.000%, 12/01/20
- ---------------------------------------------------------------------------------------------------------------------------------
$ 216,865,000 Total Investments - (cost $216,709,830) - 99.2% 227,217,076
=============
Other Assets Less Liabilities - 0.8% 1,743,715
-----------------------------------------------------------------------------------------------------------------
Net Assets - 100% $228,960,791
=================================================================================================================
* 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 Texas Quality Income Municipal Fund (NTX)
July 31, 1999
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Basic Materials - 1.5%
$ 3,000,000 Guadalupe-Blanco River Authority, Sewage and Solid Waste Disposal 4/06 at 102 AA- $3,116,640
Facility Bonds (E.I. du Pont de Nemours and Company Project),
Series 1996, 6.400%, 4/01/26 (Alternative Minimum Tax)
- ---------------------------------------------------------------------------------------------------------------------------------
Education and Civic Organizations - 8.7%
2,255,000 Brazos Higher Education Authority, Inc., Student Loan Revenue 3/02 at 102 A 2,399,636
Refunding Bonds, Series 1992A, 6.875%, 9/01/04
(Alternative Minimum Tax)
1,055,000 Brazos Higher Education Authority, Inc., Student Loan Revenue No Opt. Call Aa 1,133,534
Refunding Bonds, Series 1992C-1, 6.650%, 11/01/04
(Alternative Minimum Tax)
205,000 Brazos Higher Education Authority, Inc. Student Loan Revenue Refunding No Opt. Call A 220,984
Bonds, Subordinate Series 1993A-2, 6.800%, 12/01/04
(Alternative Minimum Tax)
4,035,000 City of Bryan, Brazos County, Texas, Lease Revenue Bonds (Blinn 10/05 at 100 AAA 3,999,250
College Project), Series 1995, 5.300%, 10/01/16
1,000,000 City of Georgetown Higher Education Finance Corporation, Higher 2/04 at 100 A+ 1,045,400
Education Revenue Bonds, Series 1994 (Southwestern University
Project), 6.300%, 2/15/14
2,500,000 North Texas Higher Educational Authority, Inc., Student Loan 4/03 at 102 Aa 2,545,825
Revenue Bonds, Series 1993C, 6.100%, 4/01/08
(Alternative Minimum Tax)
1,000,000 Southwest Higher Education Authority, Texas, Higher Educational 10/08 at 101 A+ 920,750
Facilities Revenue Bonds (Southern Methodist University),
Series 1998D, 5.000%, 10/01/22
2,500,000 City of Terrell Hills, Texas, Higher Education Facilities Corporation, 3/03 at 101 1/2 AAA 2,654,825
Higher Education Revenue and Refunding Bonds (Incarnate
Word College Project), Series 1993, 5.750%, 3/15/13
1,445,000 Tyler Junior College District, Smith and Van Zanlt Counties, 8/04 at 100 AAA 1,509,678
Texas, Combined Fee Improvement Revenue and Refunding
Bonds, Series 1994, 5.900%, 8/15/13
2,000,000 Board of Regents of The University of Houston System, 2/05 at 100 AAA 2,082,460
Consolidated Revenue Bonds, Series 1995, 6.000%, 2/15/17
- ---------------------------------------------------------------------------------------------------------------------------------
Energy - 5.8%
5,000,000 Gulf Coast Waste Disposal Authority (Valero Energy Corporation 4/08 at 102 BBB- 4,697,550
Project), Series 1998, 5.600%, 4/01/32 (Alternative Minimum Tax)
5,000,000 Gulf Coast Industrial Development Authority, Waste Disposal Revenue 6/08 at 102 BBB- 4,695,200
Bonds (Valero Refining and Marketing Company Project),
Series 1997, 5.600%, 12/01/31 (Alternative Minimum Tax)
3,000,000 Gulf Coast Waste Disposal Authority (Texas), Waste Disposal 4/09 at 101 BBB- 2,856,240
Revenue Bonds (Valero Energy Corporation Project),
Series 1999, 5.700%, 4/01/32 (Alternative Minimum Tax)
- ---------------------------------------------------------------------------------------------------------------------------------
Health Care - 12.9%
3,500,000 Abilene Health Facilities Development Corporation (Texas), 9/05 at 102 AAA 3,675,805
Hospital Revenue Refunding and Improvement Bonds (Hendrick
Medical Center Project), Series 1995C, 6.150%, 9/01/25
2,000,000 Brazos County (Texas), Health Facilities Development Corporation, 7/07 at 102 AAA 1,923,900
Franciscan Services Corporation Obligated Group Revenue Bonds,
Series 1997 B, 5.375%, 1/01/28
1,000,000 Harris County Health Facilities Development Corporation 10/09 at 101 AA 928,010
(Texas Children's Hospital Project), Hospital Revenue Bonds,
Series 1999A, 5.250%, 10/01/29
5,750,000 Midland County Hospital District, Hospital Revenue Bonds, No Opt. Call A- 2,916,228
Series 1992, 0.000%, 6/01/11
4,500,000 Port of Corpus Christi Authority of Nueces County (Texas), 4/02 at 102 A+ 4,804,965
Pollution Control Revenue Bonds (Hoechst Celanese Corporation),
Series 1992, 6.875%, 4/01/17 (Alternative Minimum Tax)
5,350,000 Richardson Hospital Authority (Texas), Hospital Revenue Refunding 12/08 at 101 BBB+ 4,990,587
and Improvement Bonds (Baylor/Richardson Medical Center
Project), Series 1998, 5.625%, 12/01/28
1,050,000 Tarrant County Health Facilities Development Corporation (Texas), 11/08 at 101 A- 958,073
Hospital Revenue Bonds, Series 1998 (Adventist Health
System / Sunbelt Obligated Group), 5.375%, 11/15/20
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Health Care (continued)
$ 1,500,000 Texas Health Facilities Development Corporation, Hospital Revenue 8/03 at 102 AAA $1,608,645
Bonds (All Saints Episcopal Hospitals of Fort Worth Project),
Series 1993B, 6.250%, 8/15/22
5,400,000 Travis County Health Facilities Development Corporation, 11/03 at 102 Aa 5,579,604
Hospital Revenue Bonds (Daughters of Charity Health Services
of Austin), Series 1993B, 6.000%, 11/15/22
- ---------------------------------------------------------------------------------------------------------------------------------
Housing/Multifamily - 1.9%
4,115,000 San Antonio Housing Finance Corporation (Texas), Multifamily 12/05 at 103 AAA 3,978,094
Housing Revenue Bonds (Harbor Cove Apartments Project),
Series 1991 (Remarketing), 5.250%, 12/15/21
(Alternative Minimum Tax)
- ---------------------------------------------------------------------------------------------------------------------------------
Housing/Single Family - 7.7%
1,235,000 Baytown Housing Finance Corporation, Single Family Mortgage 9/02 at 103 Aa2 1,357,537
Revenue Refunding Bonds, Series 1992A, 8.500%, 9/01/11
1,025,000 El Paso Housing Finance Corporation, Single Family Mortgage 4/01 at 103 A2 1,099,415
Revenue Refunding Bonds, Series 1991A, 8.750%, 10/01/11
785,000 City of Galveston Property Finance Authority, Inc., Single Family 9/01 at 103 A3 833,929
Mortgage Revenue Bonds, Series 1991A, 8.500%, 9/01/11
1,990,000 Harrison County Finance Corporation, Single Family Mortgage 12/01 at 103 A1 2,088,684
Revenue Refunding Bonds, Series 1991, 8.875%, 12/01/11
1,285,000 Houston Housing Finance Corporation, Single Family Mortgage 6/03 at 102 AAA 1,329,602
Revenue Refunding Bonds, Series 1993A, 5.950%, 12/01/10
780,000 Port Arthur Housing Finance Corporation, Single Family Mortgage 9/02 at 103 A 841,932
Revenue Refunding Bonds, Series 1992, 8.700%, 3/01/12
4,595,000 Texas Department of Housing and Community Affairs, 9/06 at 102 AAA 4,783,992
Single Family Mortgage Revenue Bonds, Series 1996E,
6.000%, 9/01/17
2,565,000 Travis County Housing Finance Corporation (Texas), Residential 12/01 at 103 AAA 2,704,639
Mortgage Bonds (GNMA and FNMA Mortgage-Backed
Securities Program), Senior Bonds, Series 1991A,
7.050%, 12/01/25
1,135,000 Victoria Housing Finance Corporation, Single Family Mortgage No Opt. Call Aaa 1,231,362
Revenue Refunding Bonds, Series 1995, 8.125%, 1/01/11
- ---------------------------------------------------------------------------------------------------------------------------------
Long-Term Care - 3.4%
3,400,000 Bell County Health Facilities Development Corporation, Retirement 11/08 at 101 A- 3,097,162
Facility Revenue Bonds (Buckner Retirement Services, Inc.,
Obligated Group Project), Series 1998, 5.250%, 11/15/19
4,000,000 Tarrant County Health Facilities Development Corporation, 1/08 at 105 AAA 4,197,560
Tax-Exempt Mortgage Revenue Bonds (South Central Nursing
Homes, Inc. Project), Series 1997A, 6.000%, 1/01/37
(Mandatory put 1/01/26)
- ---------------------------------------------------------------------------------------------------------------------------------
Tax Obligation/General - 11.1%
1,000,000 Caddo Mills Independent School District (Hunt County, Texas), 2/05 at 100 AAA 1,072,550
Unlimited Tax School Building and Refunding Bonds,
Series 1995, 6.375%, 8/15/25
4,130,000 Coppell Independent School District (Dallas County, Texas), 8/09 at 75 11/32 AAA 1,816,044
Unlimited Tax School Building and Refunding Bonds,
Series 1992, 0.000%, 8/15/14
1,475,000 City of Corpus Christi (Texas), General Improvement and 3/02 at 100 AAA 1,560,329
Refunding Bonds, Series 1992, 6.700%, 3/01/08
2,800,000 City of Ennis (Ennis County, Texas), General Obligation Refunding 8/02 at 100 AAA 2,954,448
and Improvement Bonds, Series 1992, 6.500%, 8/01/13
1,545,000 Montgomery County (A Political Subdivision of the State of Texas), 9/07 at 72 3/8 AAA 697,228
Refunding Bonds, Series 1997, 0.000%, 3/01/14
1,825,000 Socorro Independent School District (El Pasco County, Texas), 2/06 at 100 Aaa 1,851,225
Unlimited Tax School Building Bonds, Series 1996,
5.750%, 2/15/21
2,000,000 State of Texas, Veterans Land Bonds, Series 1994, General 12/04 at 100 Aa1 2,111,840
Obligation Bonds, 6.400%, 12/01/24 (Alternative Minimum Tax)
3,490,000 State of Texas, Veterans Housing Assistance Bonds, Series 1993, 12/03 at 102 Aa1 3,702,471
General Obligation Bonds, 6.800%, 12/01/23
(Alternative Minimum Tax)
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Tax Obligation/General (continued)
$ 6,290,000 State of Texas, College Student Loan Bonds, Series 1997, 8/10 at 100 Aa1 $5,725,850
5.000%, 8/01/22 (Alternative Minimum Tax)
1,225,000 Weslaco Independent School District (Hidalgo County, Texas), 2/06 at 100 Aaa 1,256,581
Unlimited Tax School Building and Refunding Bonds,
Series 1996, 5.700%, 2/15/15
West Independent School District (McLennan and Hill Counties,
Texas), Unlimited Tax School Building and Refunding Bonds,
Series 1998:
1,000,000 0.000%, 8/15/22 8/13 at 61 7/32 AAA 269,450
1,000,000 0.000%, 8/15/23 8/13 at 57 31/32 AAA 254,070
1,000,000 0.000%, 8/15/24 8/13 at 54 7/8 AAA 239,530
- ---------------------------------------------------------------------------------------------------------------------------------
Tax Obligation/Limited - 4.1%
1,450,000 Industrial Development Corporation of the City of Galveston, 9/05 at 100 AAA 1,496,038
Sales Tax Revenue Bonds, Series 1995, 5.750%, 9/01/15
1,575,000 Harris County, Texas, Toll Road Unlimited Tax and Subordinate 8/02 at 102 AA 1,688,054
Lien Revenue Refunding Bonds, Series 1992A, 6.500%, 8/15/15
800,000 City of Laredo, Webb County, Texas, Combination Tax and Waterworks 8/04 at 100 AAA 844,792
System, Revenue Certificates of Obligation, Series 1994,
5.625%, 8/15/11
4,580,000 City of San Antonio, Texas, Hotel Occupancy Tax Revenue 8/06 at 102 AAA 4,659,784
Bonds (Henry B. Gonzalez Convention Center Project),
5.700%, 8/15/26
- ---------------------------------------------------------------------------------------------------------------------------------
Transportation - 11.1%
5,295,000 Alliance Airport Authority, Inc., Special Facilities Revenue 12/00 at 102 Baa2 5,587,390
Bonds, Series 1990 (American Airlines, Inc. Project),
7.500%, 12/01/29 (Alternative Minimum Tax)
5,020,000 Dallas-Fort Worth International Airport, Facility Improvement 5/02 at 102 AAA 5,336,059
Corporation Revenue Bonds, United Parcel Service, Inc.,
Series 1992, 6.600%, 5/01/32 (Alternative Minimum Tax)
3,600,000 Harris County, Texas, Toll Road Senior Lien Revenue Refunding 8/04 at 102 AAA 3,507,012
Bonds, Series 1994, 5.375%, 8/15/20
220,000 Harris County, Texas, Toll Road Senior Lien Revenue Refunding 8/02 at 102 AAA 236,117
Bonds, Series 1992A, 6.500%, 8/15/17
320,000 Harris County, Texas, Toll Road Senior Lien Revenue Refunding 8/99 at 100 AAA 320,742
Bonds, Series 1992B, 6.625%, 8/15/17
5,000,000 City of Houston, Texas, Airport System Subordinate Lien 7/01 at 102 AAA 5,291,950
Revenue Bonds, Series 1991A, 6.750%, 7/01/21
(Alternative Minimum Tax)
3,300,000 City of Houston, Texas, Airport System Special Facilities Revenue 7/07 at 100 AAA 3,286,866
Bonds (Automated People Mover Project), Series 1997A,
5.500%, 7/15/17 (Alternative Minimum Tax)
- ---------------------------------------------------------------------------------------------------------------------------------
U.S. Guaranteed - 18.8%
295,000 Abilene Housing Development Corporation, First Lien Revenue No Opt. Call N/R*** 319,503
Bonds, Series 1978, 7.000%, 7/01/08
4,500,000 Amarillo Health Facilities Corporation, Hospital Revenue Bonds 1/02 at 102 AAA 4,819,635
(High Plains Baptist Hospital Project), Series 1992C,
6.500%, 1/01/07 (Pre-refunded to 1/01/02)
3,500,000 City of Austin, Texas, Combined Utility Systems Revenue 5/01 at 102 A*** 3,725,330
Refunding Bonds, Series 1991, 6.750%, 5/15/12
(Pre-refunded to 5/15/01)
1,000,000 The City of Beaumont, Texas, Public Improvement Bonds, 3/02 at 100 AAA 1,051,150
Series 1992, 6.250%, 3/01/10 (Pre-refunded to 3/01/02)
2,000,000 City of Brownsville, Texas, General Obligation Refunding Bonds, 2/01 at 100 AAA 2,082,620
Series 1991, 6.750%, 2/15/12 (Pre-refunded to 2/15/01)
1,500,000 City of Brownsville, Texas, Utilities System Priority Revenue 9/00 at 102 AAA 1,574,790
Bonds, Series 1990, 6.500%, 9/01/17 (Pre-refunded to 9/01/00)
1,975,000 City of Corpus Christi, Texas, General Improvement and 3/02 at 100 AAA 2,097,608
Refunding Bonds, Series 1992, 6.700%, 3/01/08
(Pre-refunded to 3/01/02)
1,500,000 City of Dallas, Texas (Dallas, Denton and Collin Counties), 1/02 at 100 AAA 1,572,270
Combination Tax and Surplus Revenue, Certificates of Obligation,
Series 1992, 6.250%, 1/01/20 (Pre-refunded to 1/01/02)
1,185,000 Fort Bend County, Levee Improvement District No. 11 (A Political 9/04 at 100 AAA 1,321,204
Subdivision of the State of Texas), Unlimited Tax Levee
Improvement Bonds, Series 1994, 6.900%, 9/01/17
(Pre-refunded to 9/01/04)
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Guaranteed (continued)
$ 1,780,000 Harris County, Texas, Toll Road Senior Lien Revenue Refunding Bonds, 8/02 at 102 AAA $1,929,912
Series 1992A, 6.500%, 8/15/17 (Pre-refunded to 8/15/02)
425,000 Harris County, Texas, Toll Road Unlimited Tax and Subordinate Lien 8/02 at 102 AA*** 460,284
Revenue Refunding Bonds, Series 1992, 6.500%, 8/15/15
(Pre-refunded to 8/15/02)
4,000,000 Harris County Health Facilities Development Corporation, Hospital 10/99 at 102 AAA 4,103,280
Revenue Bonds (Texas Children's Hospital Project), Series 1989A,
7.000%, 10/01/19 (Pre-refunded to 10/01/99)
6,110,000 Harris County Health Facilities Development Corporation, Hospital 6/02 at 102 A3*** 6,701,937
Revenue Bonds (Memorial Hospital System Project), Series 1992,
7.125%, 6/01/15 (Pre-refunded to 6/01/02)
250,000 City of Houston, Texas, Water and Sewer System, Junior Lien Revenue 12/01 at 102 AAA 267,640
Refunding Bonds, Series 1991C, 6.375%, 12/01/17
(Pre-refunded to 12/01/01)
North Central Texas Health Facilities Development Corporation,
Hospital Revenue Bonds (Presbyterian Healthcare System Project),
Series 1996B:
1,000,000 5.500%, 6/01/21 6/06 at 102 AAA 1,016,300
1,000,000 5.750%, 6/01/26 No Opt. Call AAA 1,040,460
2,500,000 Retama Development Corporation, Special Facilities Revenue No Opt. Call AAA 3,507,700
Bonds (Retama Park Racetrack Project), Series 1993,
8.750%, 12/15/17
City of San Antonio, Texas, Water System Revenue Refunding Bonds,
Series 1992:
1,310,000 6.500%, 5/15/10 (Pre-refunded to 5/15/02) 5/02 at 102 AAA 1,413,804
665,000 6.500%, 5/15/10 No Opt. Call AAA 748,850
- ---------------------------------------------------------------------------------------------------------------------------------
Utilities - 7.4%
1,225,000 Brazos River Authority (Texas), Collateralized Pollution Control 2/00 at 102 BBB+ 1,267,630
Revenue Bonds (Texas Utilities Electric Company Project),
Series 1990A, 8.125%, 2/01/20 (Alternative Minimum Tax)
2,000,000 Brazos River Authority (Texas), Collateralized Pollution Control 3/01 at 102 BBB+ 2,136,340
Revenue Bonds (Texas Utilities Electric Company Project),
Series 1994A, 7.875%, 3/01/21 (Alternative Minimum Tax)
1,500,000 Brazos River Authority (Texas), Collateralized Pollution Control 12/02 at 102 AAA 1,602,510
Revenue Refunding Bonds (Texas Utilities Electric Company
Project), Series 1992, 6.500%, 12/01/27
(Alternative Minimum Tax)
4,000,000 Brazos River Authority (Texas), Pollution Control Revenue Refunding 5/08 at 102 AAA 3,878,120
Bonds (Texas Utilities Electric Company Project), Series 1998A,
5.550%, 5/01/33 (Alternative Minimum Tax)
5,500,000 Brazos River Authority (Texas), Revenue Refunding Bonds 4/09 at 101 BBB+ 5,208,885
(Reliant Energy, Incorporated Project), Series 1999A,
5.375%, 4/01/19
1,500,000 Matagorda County Navigation District Number One (Texas), 7/03 at 102 A- 1,534,725
Pollution Control Revenue Refunding Bonds (Central Power and
Light Company Project), Series 1993, 6.000%, 7/01/28
- ---------------------------------------------------------------------------------------------------------------------------------
Water and Sewer - 4.3%
7,000,000 City of Houston, Texas, Water and Sewer System, Junior Lien No Opt. Call AAA 1,410,150
Revenue Refunding Bonds, Series 1998A, 0.000%, 12/01/27
1,000,000 City of Houston, Texas, Water and Sewer System, Prior Lien 12/02 at 102 A+ 1,063,740
Revenue Refunding Bonds, Series 1992B, 6.375%, 12/01/14
3,750,000 City of Houston, Texas, Water and Sewer System, Junior Lien 12/01 at 102 AAA 3,975,260
Revenue Refunding Bonds, Series 1991C, 6.375%, 12/01/17
2,525,000 City of San Antonio, Texas, Water System Revenue Refunding 5/02 at 102 AAA 2,699,803
Bonds, Series 1992, 6.500%, 5/15/10
- ---------------------------------------------------------------------------------------------------------------------------------
$ 217,390,000 Total Investments - (cost $201,604,912) - 98.7% 209,105,557
=============
Other Assets Less Liabilities - 1.3% 2,678,838
-----------------------------------------------------------------------------------------------------------------
Net Assets - 100% $211,784,395
=================================================================================================================
* 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>
Statement of Net Assets
July 31, 1999
<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) $94,357,876 $262,964,398 $167,056,201 $227,217,076 $209,105,557
Temporary investments in short-term municipal
securities, at amortized cost, which approximates
market value (note 1) -- 1,000,000 -- -- --
Cash 104,461 4,689 520,643 -- 129,596
Receivables:
Interest 751,670 4,034,741 2,100,275 2,752,588 3,447,663
Investments sold 20,051 7,754,000 -- 195,000 116,917
Other assets 15,982 22,892 7,181 11,228 18,415
- ------------------------------------------------------------------------------------------------------------------------------------
Total assets 95,250,040 275,780,720 169,684,300 230,175,892 212,818,148
- ------------------------------------------------------------------------------------------------------------------------------------
Liabilities
Cash overdraft -- -- -- 116,801 --
Payable for investments purchased -- 5,885,895 -- -- --
Accrued expenses:
Management fees (note 6) 52,435 147,047 93,020 125,571 116,336
Other 111,870 257,362 195,968 183,690 183,186
Preferred share dividends payable 4,440 20,396 13,328 16,725 17,100
Common share dividends payable 306,348 878,863 530,493 772,314 717,131
- ------------------------------------------------------------------------------------------------------------------------------------
Total liabilities 475,093 7,189,563 832,809 1,215,101 1,033,753
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets (note 7) $94,774,947 $268,591,157 $168,851,491 $228,960,791 $211,784,395
====================================================================================================================================
Preferred shares, at liquidation value $30,000,000 $ 94,000,000 $ 56,000,000 $ 77,000,000 $ 69,000,000
====================================================================================================================================
Preferred shares outstanding 1,200 3,760 2,240 3,080 2,760
====================================================================================================================================
Common shares outstanding 4,345,893 11,489,013 7,688,505 9,418,648 9,436,537
====================================================================================================================================
Net asset value per Common share outstanding
(net assets less Preferred shares
at liquidation value,
divided by Common shares outstanding) $ 14.90 $ 15.20 $ 14.68 $ 16.13 $ 15.13
====================================================================================================================================
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
Statement of Operations
Year Ended July 31, 1999
<CAPTION>
Arizona Michigan Michigan Ohio Texas
Premium Quality Premium Quality Quality
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment Income (note 1) $ 5,479,853 $15,359,296 $ 9,552,076 $13,374,325 $12,742,461
- -----------------------------------------------------------------------------------------------------------------------------------
Expenses
Management fees (note 6) 631,087 1,688,463 1,123,639 1,507,488 1,406,583
Preferred shares - auction fees 75,000 200,002 139,999 192,501 172,499
Preferred shares - dividend disbursing agent fees 10,001 10,001 19,998 29,999 19,998
Shareholders' servicing agent fees and expenses 7,563 34,415 25,177 37,033 18,126
Custodian's fees and expenses 38,211 76,436 52,824 60,575 53,875
Directors'/Trustees' fees and expenses (note 6) 916 2,486 1,646 2,212 2,084
Professional fees 17,236 17,707 17,448 17,619 17,590
Shareholders' reports - printing and mailing expenses 54,817 82,841 93,046 70,020 93,226
Stock exchange listing fees 16,170 24,623 16,170 16,378 16,191
Investor relations expense 7,767 22,765 15,644 20,816 16,596
Other expenses 8,607 18,576 12,484 17,754 16,070
- -----------------------------------------------------------------------------------------------------------------------------------
Total expenses before custodian fee credit 867,375 2,178,315 1,518,075 1,972,395 1,832,838
Custodian fee credit (note 1) (1,258) (22,219) (7,944) (6,365) (2,779)
- -----------------------------------------------------------------------------------------------------------------------------------
Net expenses 866,117 2,156,096 1,510,131 1,966,030 1,830,059
- -----------------------------------------------------------------------------------------------------------------------------------
Net investment income 4,613,736 13,203,200 8,041,945 11,408,295 10,912,402
- -----------------------------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss) from Investments
Net realized gain from
investment transactions
(notes 1 and 4) 430,224 1,597,218 629,510 76,311 1,295,649
Change in net unrealized appreciation or depreciation
of investments (2,826,155) (9,085,760) (5,477,686) (4,993,222) (7,972,278)
- -----------------------------------------------------------------------------------------------------------------------------------
Net gain (loss) from investments (2,395,931) (7,488,542) (4,848,176) (4,916,911) (6,676,629)
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $ 2,217,805 $ 5,714,658 $ 3,193,769 $ 6,491,384 $ 4,235,773
===================================================================================================================================
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
7/31/99 7/31/98 7/31/99 7/31/98 7/31/99 7/31/98
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Operations
Net investment income $ 4,613,736 $ 4,519,847 $ 13,203,200 $ 13,246,845 $ 8,041,945 $ 8,001,062
Net realized gain from investment
transactions (notes 1 and 4) 430,224 469,613 1,597,218 444,027 629,510 134,148
Change in net unrealized
appreciation or depreciation
of investments (2,826,155) (84,432) (9,085,760) (591,805) (5,477,686) 1,238,827
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets
from operations 2,217,805 4,905,028 5,714,658 13,099,067 3,193,769 9,374,037
- -----------------------------------------------------------------------------------------------------------------------------------
Distributions to Shareholders (note 1)
From undistributed
net investment income:
Common shareholders (3,625,685) (3,560,162) (10,504,407) (10,831,644) (6,315,050) (6,264,993)
Preferred shareholders (905,767) (1,004,753) (2,399,721) (2,682,487) (1,644,995) (1,933,132)
From accumulated net realized
gains from investment transactions:
Common shareholders -- -- (698,100) (111,138) -- --
Preferred shareholders -- -- (176,288) (27,488) -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets from
distributions to shareholders (4,531,452) (4,564,915) (13,778,516) (13,652,757) (7,960,045) (8,198,125)
- -----------------------------------------------------------------------------------------------------------------------------------
Capital Share Transactions (note 2)
Net proceeds from Common shares
issued to shareholders due to
reinvestment of distributions 542,570 474,596 1,645,159 1,566,072 167,049 --
Preferred shares - net proceeds from
sale of shares -- -- 13,750,608 -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from
capital share transactions 542,570 474,596 15,395,767 1,566,072 167,049 --
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets (1,771,077) 814,709 7,331,909 1,012,382 (4,599,227) 1,175,912
Net assets at the
beginning of year 96,546,024 95,731,315 261,259,248 260,246,866 173,450,718 172,274,806
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets at the end of year $94,774,947 $96,546,024 $268,591,157 $261,259,248 $168,851,491 $173,450,718
===================================================================================================================================
Balance of undistributed net
investment income at the
end of year $ 293,931 $ 211,647 $ 480,424 $ 181,352 $ 388,448 $ 306,548
===================================================================================================================================
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
7/31/99 7/31/98 7/31/99 7/31/98
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operations
Net investment income $ 11,408,295 $ 11,399,092 $ 10,912,402 $ 11,041,192
Net realized gain from investment transactions
(notes 1 and 4) 76,311 295,006 1,295,649 905,750
Change in net unrealized appreciation or
depreciation of investments (4,993,222) 471,590 (7,972,278) (363,610)
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations 6,491,384 12,165,688 4,235,773 11,583,332
- -----------------------------------------------------------------------------------------------------------------------------------
Distributions to Shareholders (note 1)
From undistributed net investment income:
Common shareholders (9,243,823) (9,077,395) (8,508,627) (8,716,618)
Preferred shareholders (2,225,720) (2,397,864) (2,109,132) (2,498,267)
From accumulated net realized gains
from investment transactions:
Common shareholders -- -- (701,466) --
Preferred shareholders -- -- (203,285) --
- -----------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets from distributions to shareholders (11,469,543) (11,475,259) (11,522,510) (11,214,885)
- -----------------------------------------------------------------------------------------------------------------------------------
Capital Share Transactions (note 2)
Net proceeds from Common shares issued to shareholders
due to reinvestment of distributions 998,544 1,018,376 402,016 301,838
Preferred shares - net proceeds from sale of shares -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from
capital share transactions 998,544 1,018,376 402,016 301,838
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets (3,979,615) 1,708,805 (6,884,721) 670,285
Net assets at the beginning of year 232,940,406 231,231,601 218,669,116 217,998,831
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets at the end of year $228,960,791 $232,940,406 $211,784,395 $218,669,116
===================================================================================================================================
Balance of undistributed net investment
income at the end of year $ 575,680 $ 636,928 $ 394,305 $ 99,662
===================================================================================================================================
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, 1999, Michigan Quality had outstanding when-issued and delayed delivery
purchase commitments of $5,885,895. There were no such outstanding purchase
commitments in any of the other 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, 1999, have been designated Exempt Interest Dividends. Net realized
capital gain and market discount distributions are subject to federal taxation.
<PAGE>
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.
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 --
Series F -- 560 -- -- --
- --------------------------------------------------------------------------------
Total 1,200 3,760 2,240 3,080 2,760
================================================================================
Effective June 25, 1999, Michigan Quality issued 560 Series F $25,000 stated
value Preferred shares.
</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, 1999.
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. Actual results may differ
from those estimates.
Custodian Fee Credit
Each Fund has an arrangement with the custodian bank whereby the custodian fees
and expenses are reduced by credits earned on each Fund's cash on deposit with
the bank. Such deposit arrangements are an alternative to overnight investments.
<PAGE>
2. Fund Shares
Transactions in Common shares were as follows:
<TABLE>
<CAPTION>
Arizona Premium Michigan Quality
- ----------------------------------------------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended
7/31/99 7/31/98 7/31/99 7/31/98
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares issued to shareholders
due to reinvestment of distributions 32,273 29,905 97,921 93,557
==========================================================================================================
<CAPTION>
Michigan Premium Ohio Quality
- ----------------------------------------------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended
7/31/99 7/31/98 7/31/99 7/31/98
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares issued to shareholders
due to reinvestment of distributions 10,819 -- 53,929 57,107
==========================================================================================================
<CAPTION>
Texas Quality
- ----------------------------------------------------------------------------------------------------------
Year Ended Year Ended
7/31/99 7/31/98
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Shares issued to shareholders
due to reinvestment of distributions 25,102 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 August 2, 1999, to shareholders of record on
July 15, 1999, as follows:
<TABLE>
<CAPTION>
Arizona Michigan Michigan Ohio Texas
Premium Quality Premium Quality Quality
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Dividend per share $.0705 $.0765 $.0690 $.0820 $.0760
================================================================================
</TABLE>
<PAGE>
4. Securities Transactions
Purchases and sales (including maturities) of investments in long-term municipal
securities and short-term municipal securities during the fiscal year ended July
31, 1999, were as follows:
<TABLE>
<CAPTION>
Arizona Michigan Michigan Ohio Texas
Premium Quality Premium Quality Quality
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Purchases:
Long-term municipal securities $6,857,073 $66,296,388 $16,383,185 $11,238,365 $41,498,865
Short-term municipal securities 4,100,000 10,900,000 4,900,000 8,700,000 6,800,000
Sales and maturities:
Long-term municipal securities 5,368,968 53,742,342 15,427,773 7,692,770 40,121,493
Short-term municipal securities 4,100,000 9,900,000 6,000,000 9,400,000 8,300,000
=========================================================================================================
</TABLE>
At July 31, 1999, the identified cost of investments owned for federal income
tax purposes were as follows:
<TABLE>
<CAPTION>
Arizona Michigan Michigan Ohio Texas
Premium Quality Premium Quality Quality
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$89,730,530 $251,432,114 $160,112,154 $216,722,398 $201,604,912
=========================================================================================================
</TABLE>
At July 31, 1999, 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 $ -- $ -- $ 780,558
2003 415,901 152,186 16,493
2004 -- 1,807,234 622,243
- -------------------------------------------------------------------------------
Total $415,901 $1,959,420 $1,419,294
================================================================================
</TABLE>
<PAGE>
5. Unrealized Appreciation (Depreciation)
Gross unrealized appreciation and gross unrealized depreciation of investments
for federal income tax purposes at July 31, 1999, were as follows:
<TABLE>
<CAPTION>
Arizona Michigan Michigan Ohio Texas
Premium Quality Premium Quality Quality
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Gross unrealized:
appreciation $5,226,815 $14,767,428 $7,760,515 $11,101,230 $ 9,747,400
depreciation (599,469) (2,235,144) (816,468) (606,552) (2,246,755)
- ---------------------------------------------------------------------------------------------------------
Net unrealized appreciation $4,627,346 $12,532,284 $6,944,047 $10,494,678 $ 7,500,645
=========================================================================================================
</TABLE>
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 assets of each Fund as follows:
Average Daily Net Assets 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 of its 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.
<PAGE>
7. Composition of Net Assets
At July 31, 1999, 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 $ 94,000,000 $ 56,000,000
Common shares, $.01 par value per share 43,459 114,890 76,885
Paid-in surplus 60,226,112 160,358,915 107,401,531
Balance of undistributed net investment income 293,931 480,424 388,448
Accumulated net realized gain (loss) from investment transactions (415,901) 1,090,147 (1,959,420)
Net unrealized appreciation of investments 4,627,346 12,546,781 6,944,047
- ---------------------------------------------------------------------------------------------------------
Net assets $94,774,947 $268,591,157 $168,851,491
=========================================================================================================
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 94,186 94,365
Paid-in surplus 142,215,541 133,706,568
Balance of undistributed net investment income 575,680 394,305
Accumulated net realized gain (loss) from investment transactions (1,431,862) 1,088,512
Net unrealized appreciation of investments 10,507,246 7,500,645
- ---------------------------------------------------------------------------------------------------------
Net assets $228,960,791 $211,784,395
=========================================================================================================
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 year:
<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:
1999 $15.43 $1.07 $ (.55) $ .52
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
<CAPTION>
Michigan Quality
<S> <C> <C> <C> <C>
Year Ended 7/31:
1999 15.91 1.15 (.65) .50
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
<CAPTION>
Michigan Premium
<S> <C> <C> <C> <C>
Year Ended 7/31:
1999 15.30 1.05 (.64) .41
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
<CAPTION>
Ohio Quality
<S> <C> <C> <C> <C>
Year Ended 7/31:
1999 16.65 1.21 (.51) .70
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
<CAPTION>
Texas Quality
<S> <C> <C> <C> <C>
Year Ended 7/31:
1999 15.90 1.16 (.72) .44
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
<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:
1999 $ (.84) $(.21) $-- $-- $(1.05)
1998 (.83) (.23) -- -- (1.06)
1997 (.82) (.22) -- -- (1.04)
1996 (.80) (.24) -- -- (1.04)
1995 (.78) (.27) -- -- (1.05)
<CAPTION>
Michigan Quality
<S> <C> <C> <C> <C> <C>
Year Ended 7/31:
1999 (.92) (.21) (.06) (.02) (1.21)
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)
<CAPTION>
Michigan Premium
<S> <C> <C> <C> <C> <C>
Year Ended 7/31:
1999 (.82) (.21) -- -- (1.03)
1998 (.82) (.25) -- -- (1.07)
1997 (.80) (.24) -- -- (1.04)
1996 (.78) (.25) -- -- (1.03)
1995 (.80) (.28) -- -- (1.08)
<CAPTION>
Ohio Quality
<S> <C> <C> <C> <C> <C>
Year Ended 7/31:
1999 (.98) (.24) -- -- (1.22)
1998 (.97) (.26) -- -- (1.23)
1997 (.96) (.27) -- -- (1.23)
1996 (.95) (.27) -- -- (1.22)
1995 (.95) (.30) -- -- (1.25)
<CAPTION>
Texas Quality
<S> <C> <C> <C> <C> <C>
Year Ended 7/31:
1999 (.90) (.22) (.07) (.02) (1.21)
1998 (.93) (.27) -- -- (1.20)
1997 (.94) (.26) -- -- (1.20)
1996 (.95) (.27) (.04)+++ (.01)+++ (1.27)
1995 (.98) (.28) -- -- (1.26)
<PAGE>
<CAPTION>
Total Returns
---------------
Based
Ending Based on Ending
Net Ending on Net Net
Asset Market Market Asset Assets
Value Value Value* Value* (000)
<S> <C> <C> <C> <C> <C>
Arizona Premium
Year Ended 7/31:
1999 $14.90 $17.0000 8.67% 1.92% $ 94,775
1998 15.43 16.4375 12.18 6.14 96,546
1997 15.34 15.4375 17.81 11.74 95,731
1996 14.51 13.8750 7.83 8.48 92,095
1995 14.12 13.6250 10.42 9.98 90,434
<CAPTION>
Michigan Quality
<S> <C> <C> <C> <C> <C>
Year Ended 7/31:
1999 15.20 16.6875 2.18 1.62 268,591
1998 15.91 17.3125 10.27 5.97 261,259
1997 15.95 16.6250 14.02 11.19 260,247
1996 15.28 15.5000 11.32 8.07 251,033
1995 15.10 14.8750 4.77 8.02 247,907
<CAPTION>
Michigan Premium
<S> <C> <C> <C> <C> <C>
Year Ended 7/31:
1999 14.68 15.0625 5.95 1.23 168,851
1998 15.30 15.0000 13.74 6.62 173,451
1997 15.14 13.9375 14.95 12.97 172,275
1996 14.16 12.8750 14.00 8.88 164,688
1995 13.73 12.0000 2.59 8.45 161,414
<CAPTION>
Ohio Quality
<S> <C> <C> <C> <C> <C>
Year Ended 7/31:
1999 16.13 18.0000 5.09 2.74 228,961
1998 16.65 18.0625 10.14 6.53 232,940
1997 16.57 17.3125 14.70 12.14 231,232
1996 15.69 16.0000 12.39 8.68 222,151
1995 15.33 15.1250 6.80 10.16 218,335
<CAPTION>
Texas Quality
<S> <C> <C> <C> <C> <C>
Year Ended 7/31:
1999 15.13 15.1875 2.97 1.21 211,784
1998 15.90 15.6875 6.45 6.27 218,669
1997 15.86 15.6250 11.76 11.93 217,999
1996 15.06 14.8750 14.60 7.72 210,423
1995 14.91 13.8750 1.14 9.89 208,924
<PAGE>
<CAPTION>
Ratios/Supplemental Data
---------------------------------------------------------
Before Credit
---------------------------------------------------------
Ratio of Net Ratio of Net
Ratio of Investment Ratio of Investment
Expenses Income to Expenses Income to
to Average Average to Average Average
Net Assets Net Assets Total Total
Applicable Applicable Net Assets Net Assets
to Common to Common Including Including
Shares++ Shares++ Preferred++ Preferred++
<S> <C> <C> <C> <C>
Arizona Premium
Year Ended 7/31:
1999 1.29% 6.88% .89% 4.75%
1998 1.28 6.85 .88 4.71
1997 1.29 7.18 .87 4.86
1996 1.33 7.22 .90 4.88
1995 1.30 7.92 .86 5.21
<CAPTION>
Michigan Quality
<S> <C> <C> <C> <C>
Year Ended 7/31:
1999 1.20 7.27 .83 5.02
1998 1.19 7.35 .82 5.09
1997 1.21 7.64 .83 5.23
1996 1.21 7.77 .83 5.29
1995 1.26 8.26 .84 5.54
<CAPTION>
Michigan Premium
<S> <C> <C> <C> <C>
Year Ended 7/31:
1999 1.29 6.82 .87 4.63
1998 1.29 6.87 .87 4.64
1997 1.29 7.27 .86 4.83
1996 1.32 7.38 .87 4.87
1995 1.57 7.83 1.01 5.02
<CAPTION>
Ohio Quality
<S> <C> <C> <C> <C>
Year Ended 7/31:
1999 1.26 7.26 .84 4.88
1998 1.29 7.37 .86 4.92
1997 1.30 7.73 .85 5.08
1996 1.32 7.79 .87 5.09
1995 1.47 8.20 .94 5.24
<CAPTION>
Texas Quality
<S> <C> <C> <C> <C>
Year Ended 7/31:
1999 1.23 7.32 .84 5.00
1998 1.22 7.40 .83 5.06
1997 1.22 7.81 .83 5.27
1996 1.23 7.95 .83 5.36
1995 1.38 8.35 .91 5.54
<PAGE>
<CAPTION>
Ratios/Supplemental Data
---------------------------------------------------------------------
After Credit**
---------------------------------------------------------
Ratio of Net Ratio of Net
Ratio of Investment Ratio of Investment
Expenses Income to Expenses Income to
to Average Average to Average Average
Net Assets Net Assets Total Total
Applicable Applicable Net Assets Net Assets Portfolio
to Common to Common Including Including Turnover
Shares++ Shares++ Preferred++ Preferred++ Rate
<S> <C> <C> <C> <C> <C>
Arizona Premium
Year Ended 7/31:
1999 1.29% 6.88% .89% 4.75% 6%
1998 1.28 6.85 .88 4.71 17
1997 1.29 7.18 .87 4.86 11
1996 1.33 7.22 .90 4.88 15
1995 1.30 7.92 .86 5.21 11
<CAPTION>
Michigan Quality
<S> <C> <C> <C> <C> <C>
Year Ended 7/31:
1999 1.19 7.28 .82 5.03 21
1998 1.19 7.35 .82 5.09 8
1997 1.21 7.64 .83 5.23 11
1996 1.21 7.77 .83 5.29 15
1995 1.26 8.26 .84 5.54 18
<CAPTION>
Michigan Premium
<S> <C> <C> <C> <C> <C>
Year Ended 7/31:
1999 1.28 6.83 .87 4.63 9
1998 1.29 6.87 .87 4.64 6
1997 1.29 7.27 .86 4.83 4
1996 1.32 7.38 .87 4.87 17
1995 1.57 7.83 1.01 5.02 32
<CAPTION>
Ohio Quality
<S> <C> <C> <C> <C> <C>
Year Ended 7/31:
1999 1.25 7.27 .84 4.88 3
1998 1.29 7.37 .86 4.92 9
1997 1.30 7.73 .85 5.08 25
1996 1.32 7.79 .87 5.09 19
1995 1.47 8.20 .94 5.24 19
<CAPTION>
Texas Quality
<S> <C> <C> <C> <C> <C>
Year Ended 7/31:
1999 1.23 7.32 .84 5.00 19
1998 1.22 7.40 .83 5.06 17
1997 1.22 7.81 .83 5.27 13
1996 1.23 7.95 .83 5.36 17
1995 1.38 8.35 .91 5.54 8
* 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.
** After custodian fee credit, where applicable (note 1).
+ The amounts shown are based on Common share equivalents.
++ Ratios do not reflect the effect of dividend payments to Preferred
shareholders; income ratios reflect income earned on assets attributable to
Preferred shares.
+++ The amounts shown include distributions in excess of capital gains of $.008
for Common shareholders and $.002 for Preferred shareholders.
</TABLE>
<PAGE>
Build Your Wealth Automatically
Sidebar text: Nuveen offers a number of convenient ways to add to your portfolio
and earn the tax-free income you need to achieve your financial goals.
Nuveen makes reinvesting easy. A phone call is all it takes to set up your
reinvestment account.
NUVEEN EXCHANGE-TRADED FUNDS DIVIDEND REINVESTMENT PLAN
Your Nuveen Exchange-Traded Fund allows you to conveniently reinvest dividends
and/or capital gains distributions in additional fund shares. If you do not
elect to reinvest distributions, all distributions are paid by check or can be
deposited directly into your bank or brokerage account.
By choosing to reinvest, you'll be able to invest money regularly and
automatically, and watch your investment grow through the power of tax-free
compounding. You'll also benefit from dollar-cost averaging, a technique of
investing at regular intervals, which allows you to build a high-quality,
tax-free portfolio conveniently and cost effectively over time.
EASY AND CONVENIENT
To make recordkeeping easy and convenient, each month you'll receive a statement
showing your total dividends and distributions, the date of investment, the
shares acquired and the price per share, and the total number of shares you own.
Income or capital gains taxes may be payable on dividends or distributions that
are reinvested.
HOW SHARES ARE PURCHASED
The shares you acquire by reinvesting will either be purchased on the open
market or newly issued by the Fund. If the shares are trading at or above net
asset value at the time of valuation, the Fund will issue new shares at the
then-current market price. If the shares are trading at less than net asset
value, shares for your account will be purchased on the open market. Dividends
and distributions received to purchase shares in the open market will normally
be invested shortly after the dividend payment date. No interest will be paid on
dividends and distributions awaiting reinvestment. Because the market price of
shares may increase before purchases are completed, the average purchase price
per share may exceed the market price at the time of valuation, resulting in the
acquisition of fewer shares than if the dividend or distribution had been paid
in shares issued by the fund. A pro rata portion of any applicable brokerage
commissions on open market purchases will be paid by Plan participants. These
commissions usually will be lower than those charged on individual transactions.
FLEXIBILITY
You may, of course, change your distribution option or withdraw from the Plan at
any time, should your needs or situation change. Should you withdraw, you can
receive a certificate for all whole shares credited to your reinvestment account
and cash payment for fractional shares, or cash payment for all reinvestment
account shares, less brokerage commissions and a $2.50 service fee.
You can also reinvest if your shares are registered in the name of a brokerage
firm, bank, or other nominee. Just ask your investment adviser if the firm will
participate on your behalf. If not, it's easy to have the shares registered in
your name and to apply for a reinvestment account directly. Participants whose
shares are registered in the name of one firm may not be able to transfer the
shares to another firm and continue to participate in the Plan.
The Fund reserves the right to amend or terminate the Plan at any time. Although
the Fund reserves the right to amend the Plan to include a service charge
payable by the participants, there is no direct service charge to participants
in the Plan at this time.
For more information on the Nuveen Automatic Reinvestment Plan or to enroll in
or withdraw from the Plan, speak with your financial adviser or call us at (800)
257-8787.
<PAGE>
Fund Information
BOARD OF DIRECTORS/TRUSTEES
Robert P. Bremner
Lawrence H. Brown
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, we have updated or replaced our trading, fund
management, and pricing systems at Nuveen - systems that directly affect our
investors and their financial advisers - to address Year 2000 concerns.
We continue to work closely with our transfer agent, custodian, firms through
whom we buy and sell portfolio securities, and other service partners to monitor
the Year 2000 readiness of their systems, while addressing other remaining
systems issues.
In addition, the Funds hold securities of issuers whose business operations
leave them susceptible to Year 2000 concerns. We seek to evaluate an issuer's
Year 2000 readiness as part of our initial and ongoing research of these
issuers. This is only one of the many factors considered in determining whether
to buy, sell, or continue holding a particular security.
Our Year 2000 review, repair, and testing program has been substantially
completed. This program included industry-wide testing of critical systems and
receipt of satisfactory assurances from critical service providers, vendors, and
issuers regarding their Year 2000 readiness. We will continue more refined
testing of our systems and their relationships with other parties' systems and
will regularly discuss the results of this testing with those parties. We are
also making Year 2000 contingency plans to guide recovery efforts in the event
that, despite our remediation attempts, Year 2000 issues adversely affect the
Funds. Although we can never have complete assurance that the steps we take will
be sufficient to prevent any problems that would impact the Nuveen
Exchange-Traded Funds, we can assure you that we will take all reasonable steps
to prevent disruption of the services provided by your Fund.
FUND POLICIES
The Board of Trustees of your Fund recently modified certain investment policies
of the Fund. The Fund was formerly not permitted to invest more than 5% of its
total assets in Municipal Leases that contain "non-appropriation" clauses. In
addition, your Fund was not permitted to invest more than 10% of its total
assets in Municipal Leases and securities that are unmarketable, illiquid or not
readily marketable. The Municipal Lease market has matured since the Fund's
inception, and non-appropriation leases have become more liquid and widely
accepted. The Nuveen Exchange-Traded Fund Board has eliminated the restrictions
noted above, replacing them with requirements that the Funds limit investments
in non-appropriation Municipal Leases to those that meet one or more of six
criteria that indicate that the issuer will be motivated to continue to
appropriate monies to make the payments under the Municipal Lease.
The Board also eliminated the Fund's policy not to invest more than 5% of its
total assets in unsecured obligations of issuers which, together with their
predecessors, have been in operation for less than three years.
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, 1999. Any future
repurchases will be reported to shareholders in the next annual or semiannual
report.
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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: NUVEEN
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-1-7-99
