NUVEEN Exchange-Traded Funds
OCTOBER 31, 1997
Annual Report
DEPENDABLE, TAX-FREE INCOME TO HELP YOU KEEP MORE OF WHAT YOU EARN.
NPI
Premium Income
NPM
Premium Income 2
NPT
Premium Income 4
Photo of: Man fishing.
<PAGE>
Build Your Wealth Automatically
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 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
(continued on inside back cover)
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Blow-in copy:
BUILD A BETTER PORTFOLIO WITH NUVEEN
Your financial adviser can show you how you can combine this Nuveen fund with
other Nuveen stock and bond investments to build a portfolio that will help you
meet your short- and longer-term goals.
Together, you can craft an investment portfolio that provides the income you
need today and is positioned for the growth you need for tomorrow, while
simultaneously offering tax-efficiency and moderated overall risk.
Talk with your adviser about putting Nuveen's full family of funds and trusts
to work for you.
NUVEEN INVESTMENTS CAN HELP
YOU SUSTAIN THE WEALTH OF A LIFETIME
MUTUAL FUNDS
Nuveen Rittenhouse Growth Fund (available February 1998)
Growth and Income Stock Fund
Balanced Stock and Bond Fund
Balanced Municipal and Stock Fund
National Municipal Bond Funds
State-Specific Municipal Bond Funds
UNIT TRUSTS
Equity
Corporate Bond
Municipal Bond
EXCHANGE-TRADED FUNDS
MUNI PREFFERED(R)
PRIVATE ASSET MANAGEMENT
For more information about any of these Nuveen products, including charges and
expenses, call your financial adviser for a prospectus where available, or call
Nuveen at (800) 621-7227. Please read it carefully before you invest.
<PAGE>
Contents
2 DEAR SHAREHOLDER
4 ANSWERING YOUR QUESTIONS
7 NPI PERFORMANCE OVERVIEW
8 NPM PERFORMANCE OVERVIEW
9 NPT PERFORMANCE OVERVIEW
10 SHAREHOLDER MEETING REPORT
11 INDEPENDENT AUDITOR'S REPORT
12 PORTFOLIO OF INVESTMENTS
42 STATEMENT OF NET ASSETS
43 STATEMENT OF OPERATIONS
44 STATEMENT OF CHANGES IN NET ASSETS
45 NOTES TO FINANCIAL STATEMENTS
50 FINANCIAL HIGHLIGHTS
52 FUND INFORMATION
GHOSTED IMAGE OF: MAN FISHING.
<PAGE>
Dear Shareholder
Photo of: Timothy R. Schwertfeger
Chairman of the Board
Wealth takes a lifetime to build. Once achieved, it should be preserved.
It's a pleasure to report to you on the performance of your Nuveen
exchange-traded funds. Over the past 12 months, the funds have performed well,
rewarding investors with dependable tax-free income and attractive returns.
Investors continued to enjoy solid dividend yields generated by each fund's
portfolio of municipal bonds. As of October 31, 1997, new shareholders were
receiving current market yields that ranged from 5.96% to 6.28%. To match these
yields, investors in the 31% federal tax bracket would have had to earn at least
8.64% on taxable alternatives. Dividend stability continues to be a hallmark of
the Nuveen exchange-traded funds, as the dividends for the three funds in this
report were declared a total of 36 times over the past year with only one
adjustment.
For the fiscal year ended October 31, 1997, the total return on net asset value
of the funds ranged from 8.89% to 10.72%, providing taxable-equivalent returns
of 11.79% to 13.55% for investors in the 31% federal income tax bracket. For
shareholders in higher tax brackets, the tax-adjusted returns were even more
attractive. You will find additional details on the individual performance of
each fund on pages 7-9.
As the year draws to a close, it seems appropriate to take a moment to look back
over what has been an exceptional time for the American economy, the financial
markets--and the investors in those markets. 1997 has been distinguished by
continued economic strength, the lowest unemployment rates in more than two
decades, and progress on fiscal issues, including a reduction in the federal
deficit. While much of investors' attention has remained focused on the stock
market, the achievements of the bond market should not be overlooked. During
1997, the environment for bond performance was enhanced by a substantial decline
in interest rates, reflecting investors' confidence that inflation can remain
near its current annual rate of 2.2%, one of the lowest levels for the Consumer
Price Index in 30 years.
<PAGE>
The events of 1997 have also focused renewed attention on the need for
diversification and asset allocation. Stock market volatility, especially in
late October, provided a vivid illustration of the steadying effect that fixed
income investments can provide in a well- constructed investment portfolio.
Nuveen exchange-traded funds provide an excellent balance to other stock and
bond investments, and their current yields make them very attractive.
You already know you can rely on Nuveen to provide the tax-advantaged
investments you need to achieve your investment goals. Your financial adviser
can introduce you to a variety of other Nuveen products and services to round
out your portfolio of core investments, including the Nuveen Growth and Income
Stock Fund and two balanced stock and bond funds. We have also expanded our
private asset management capabilities through the acquisition of Rittenhouse
Financial Services, a well-respected growth investment manager. We encourage you
to talk to your financial adviser about ways to complement your current Nuveen
investment by taking advantage of these additional products and services.
We at Nuveen remain committed to providing you with quality investment solutions
that withstand the test of time. We thank you for your confidence in us and our
family of investments, and we look forward to our next report to you.
Sincerely,
TIMOTHY R. SCHWERTFEGER
Chairman of the Board
December 12, 1997
"The funds have performed well, rewarding investors with dependable tax-free
income and attractive returns."
<PAGE>
Answering Your Questions
Photo of: Ted Neild
Ted Neild, managing director of Nuveen's portfolio management team, talks about
the municipal bond market and offers insights into factors that affected the
performance of the funds over the past year.
WHAT ECONOMIC AND MARKET FACTORS INFLUENCED THE PERFORMANCE OF MUNICIPAL BONDS
OVER THE PAST YEAR?
Over the past 12 months, the performance of the municipal bond market was
influenced by three major factors: the continued strength of the U.S. economy,
minimal inflation (both of which are reflected in the steady-to-declining
interest rates evident during the year), and volatility in the equity markets.
During 1997, these factors contributed to a positive environment for
fixed-income investments, including municipal issues.
Between November 1996 and October 1997, the yield on the 30-year Treasury bond
dropped from 6.68% to 6.15%, and the municipal market followed suit, as the
yield on the Bond Buyer 40 declined from 5.80% to 5.40%. The spread between
tax-free municipal bonds and taxable Treasury bonds remained tight, making
municipal bonds very attractive. The total returns produced in this environment
were somewhat muted by a heavy supply of newly issued municipal bonds that
temporarily impacted bond prices. The increased supply worked to our advantage,
however, as it expanded opportunities to find value in the marketplace.
HOW HAVE THESE FUNDS PERFORMED DURING THIS PERIOD?
As Tim mentioned in his letter to shareholders, total returns for these funds
ranged from 8.89% to 10.72% for the 12 months ended October 31, 1997.
The performance of the Nuveen funds covered in this report is especially
noteworthy in view of the fact that they were originally constructed in a higher
interest rate environment. This means that a large number of bonds in the
portfolios are currently valued at substantial premiums. These bonds offer the
benefit of additional price stability in volatile markets, but their upside
potential during market rallies can be limited.
<PAGE>
Over the past year we have held the bonds in these portfolios, with their
emphasis on current income and price stability, rather than selling them in an
effort to extend duration. In this way, we were able to maintain attractive
yields, reduce price volatility, and limit capital gains distributions to
shareholders, resulting in more tax-efficient funds.
HOW DOES THE USE OF LEVERAGE IMPACT THE FUNDS' DIVIDENDS?
All the funds in this report use leverage as an additional way to enhance income
for common shareholders. Leveraged funds issue short-term preferred shares,
which is similar to borrowing money at short-term rates and then investing the
proceeds into long-term bonds. The difference in rates boosts the dividend for
common shareholders. The dividends of leveraged funds also can be affected by a
sudden or prolonged rise in short-term interest rates. As short-term rates
increase, preferred shareholders enjoy higher dividends and less income is
available for common shareholders.
WHAT ARE YOUR KEY STRATEGIES FOR THE COMING YEAR?
We are currently pursuing several strategies aimed at enhancing the structure of
the portfolios. Specifically, we will be focusing on upgrading the call
protection of the Nuveen exchange-traded funds. By selling bonds with shorter
call protection to retail buyers, we can redeploy assets into the institutional
and new offering markets, extending call protection while supporting the funds'
dividend yields. We will also be exploring opportunities to purchase discount
bonds, which offer the potential for price appreciation as well as longer
duration and added income stability if interest rates continue to decline.
Secondly, while credit spreads are tight, we will continue to take advantage of
opportunities to purchase bonds with good credit quality at yields that are
similar to bonds with lower ratings. During the past year, as the yield
differentials between AAA and BBB bonds narrowed, we were able to buy the more
highly rated bonds without sacrificing much yield, thereby enhancing the credit
quality of our portfolios. We believe that as credit spreads widen again, these
high-quality issues will increase in value relative to lower-rated bonds.
We will also continue to look for bonds that are underpriced or undervalued by
the market. We believe that by concentrating on identifying individual bonds
with current yields, prices, credit quality and future prospects that are
exceptionally attractive in relation to other bonds in the market, the portfolio
will be positioned to deliver above-market performance.
<PAGE>
We also plan to leverage the supply-and-demand opportunities created by new
issues and explore bonds that may be overlooked in the secondary markets as
attention focuses on new issues. Excess supply, particularly in New York and the
Sunbelt states, should create buying opportunities. In New York, the supply of
newly issued bonds rose 36% in the first nine months of 1997, compared with a
17% increase in municipal supply nationally. Typically, such heavy supply
temporarily depresses bond prices, enabling us to inexpensively purchase
longer-term bonds, which have the potential to outperform comparable investment
candidates.
WHAT IS YOUR OUTLOOK FOR THE MUNICIPAL MARKET?
Looking at the year ahead, we believe the overall market will continue to strike
a good balance between supply and demand. We expect supply to increase as new
issuers continue to enter the market. On the demand side, volatility in the
equity markets, plus the potential for a weakening of the economy, could spark
increased interest in bonds of all types.
Over the past year, we have seen the number of advance refundings by bond
issuers rise. If the lower interest rate environment continues, we can expect
more issuers to follow their example. In an advance refunding, the proceeds of a
new bond issue are invested in U.S. government or agency securities, with the
loan secured by project revenues or general tax receipts. The cash from the
escrow account is used to pay off the debt on the original bond issue. Because
the coupon rate of the original bond is typically higher than that of the new
issue, which is now secured by the federal government and rated AAA, the
refunded bonds will appreciate in value.
Overall, we expect our portfolios to continue to benefit from tight credit
spreads, as we take advantage of opportunities to enhance quality, yield and the
potential for price appreciation.
"We believe that by concentrating on identifying individual bonds with current
yields, prices, credit quality and future prospects that are exceptionally
attractive in relation to other bonds in the market, the portfolio will be
positioned to deliver above-market performance."
<PAGE>
Nuveen Premium Income Municipal Fund, Inc.
Performance Overview
As of October 31, 1997
NPI
Fund Highlights
- ---------------------------------------------------------
Inception Date 7/88
- ---------------------------------------------------------
Share Price 14 5/8
- ---------------------------------------------------------
Net Asset Value $15.28
- ---------------------------------------------------------
Average Weighted Duration (Years) 6.02
- ---------------------------------------------------------
Average Weighted Maturity (Years) 23.07
- ---------------------------------------------------------
Net Assets ($000) $1,449,660
- ---------------------------------------------------------
Current Market Yield 6.28%
- ---------------------------------------------------------
Taxable Equivalent Yield(1) 9.10%
- ---------------------------------------------------------
Annualized Total Return (at NAV)
- ---------------------------------------------------------
1-Year 8.89%
- ---------------------------------------------------------
3-Year 9.80%
- ---------------------------------------------------------
5-Year 6.95%
- ---------------------------------------------------------
Since Inception 8.49%
- ---------------------------------------------------------
Taxable Equivalent Total Return(2)
- ---------------------------------------------------------
1-Year 11.79%
- ---------------------------------------------------------
3-Year 12.91%
- ---------------------------------------------------------
5-Year 10.30%
- ---------------------------------------------------------
Since Inception 11.84%
- ---------------------------------------------------------
1 Taxable equivalent rate represents the yield on a taxable investment necessary
to equal the yield of the Nuveen fund on an after-tax basis. It is based on
the current market yield and a federal tax rate of 31%.
2 Taxable equivalent total return is based on the annualized total return and a
federal income tax rate of 31%. 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 paid shareholders a capital gains distribution in December of
$0.0292 per share.
PIE CHARTS:
Credit Quality
BBB/NR 13%
A 16%
AA 16%
AAA 55%
Diversification
Pollution Control 7%
Other 10%
Health Care 7%
Transportation 8%
Water & Sewer 5%
Utilities 10%
Education 5%
General Obligation 10%
Industrial Development 3%
Housing 15%
Escrowed Bonds 20%
Bar Chart:
Dividend History(3)
11/96 0.0795
12/96 0.0795
1/97 0.0795
2/97 0.0795
3/97 0.0795
4/97 0.0795
5/97 0.0765
6/97 0.0765
7/97 0.0765
8/97 0.0765
9/97 0.0765
10/97 0.0765
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Nuveen Premium Income Municipal Fund 2, Inc.
Performance Overview
As of October 31, 1997
NPM
Fund Highlights
- ---------------------------------------------------------
Inception Date 7/92
- ---------------------------------------------------------
Share Price 15 1/2
- ---------------------------------------------------------
Net Asset Value $15.80
- ---------------------------------------------------------
Average Weighted Duration (Years) 6.03
- ---------------------------------------------------------
Average Weighted Maturity (Years) 21.50
- ---------------------------------------------------------
Net Assets ($000) $943,587
- ---------------------------------------------------------
Current Market Yield 6.00%
- ---------------------------------------------------------
Taxable Equivalent Yield(1) 8.70%
- ---------------------------------------------------------
Annualized Total Return (at NAV)
- ---------------------------------------------------------
1-Year 10.72%
- ---------------------------------------------------------
3-Year 13.50%
- ---------------------------------------------------------
5-Year 9.82%
- ---------------------------------------------------------
Since Inception 8.69%
- ---------------------------------------------------------
Taxable Equivalent Total Return(2)
- ---------------------------------------------------------
1-Year 13.55%
- ---------------------------------------------------------
3-Year 16.48%
- ---------------------------------------------------------
5-Year 12.80%
- ---------------------------------------------------------
Since Inception 11.53%
- ---------------------------------------------------------
1 Taxable equivalent rate represents the yield on a taxable investment necessary
to equal the yield of the Nuveen fund on an after-tax basis. It is based on
the current market yield and a federal tax rate of 31%.
2 Taxable equivalent total return is based on the annualized total return and a
federal income tax rate of 31%. 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 paid shareholders a capital gains distribution in December of $0.0026
per share.
PIE CHARTS:
BBB/NR 24%
A 17%
AA 15%
AAA 44%
Diversification
Health Care 7%
Pollution Control 5%
Other 13%
Lease Rental 5%
Transportation 9%
Escrowed Bonds 19%
General Obligation 20%
Housing 22%
Bar Chart:
Dividend History(3)
11/96 0.0775
12/96 0.0775
1/97 0.0775
2/97 0.0775
3/97 0.0775
4/97 0.0775
5/97 0.0775
6/97 0.0775
7/97 0.0775
8/97 0.0775
9/97 0.0775
10/97 0.0775
<PAGE>
Nuveen Premium Income Municipal Fund 4, Inc.
Performance Overview
As of October 31, 1997
NPT
Morningstar Rating(1)
Graphic: 4 stars
Fund Highlights
- -----------------------------------------------------------
Inception Date 2/93
- -----------------------------------------------------------
Share Price 13 11/16
- -----------------------------------------------------------
Net Asset Value $14.64
- -----------------------------------------------------------
Average Weighted Duration (Years) 6.64
- -----------------------------------------------------------
Average Weighted Maturity (Years) 19.67
- -----------------------------------------------------------
Net Assets ($000) $905,764
- -----------------------------------------------------------
Current Market Yield 5.96%
- -----------------------------------------------------------
Taxable Equivalent Yield(2) 8.64%
- -----------------------------------------------------------
Annualized Total Return (at NAV)
- -----------------------------------------------------------
1-Year 10.20%
- -----------------------------------------------------------
3-Year 13.17%
- -----------------------------------------------------------
Since Inception 6.93%
- -----------------------------------------------------------
Taxable Equivalent Total Return(3)
- -----------------------------------------------------------
1-Year 12.87%
- -----------------------------------------------------------
3-Year 16.03%
- -----------------------------------------------------------
Since Inception 9.62%
- -----------------------------------------------------------
1 Overall rating within the municipal bond category for the period ended October
31, 1997. Morningstar proprietary ratings reflect historical risk-adjusted
performance and are subject to change every month. Ratings are calculated from
a fund's three-, five- and 10-year average annual returns in excess of 90-day
Treasury bill returns, with appropriate fee adjustments and a risk factor that
reflects fund performance below 90-day Treasury bill returns. NPT earned four
stars for the three year period ended October 31, 1997. In an investment
category, 10% of funds receive five stars and 22.5% receive four stars. For
the period ending October 31, 1997, 197 municipal bond funds were rated for
the three-year period, 121 for the five-year period, and eight for the 10-year
period.
2 Taxable equivalent rate represents the yield on a taxable investment necessary
to equal the yield of the Nuveen fund on an after-tax basis. It is based on
the current market yield and a federal tax rate of 31%.
3 Taxable equivalent total return is based on the annualized total return and a
federal income tax rate of 31%. It represents the return on a taxable
investment necessary to equal the return of the Nuveen fund on an after-tax
basis.
4 The fund paid shareholders a capital gains distribution in December of $0.0035
per share.
PIE CHARTS:
Credit Quality
BBB/NR 15%
A 22%
AA 20%
AAA 43%
Diversification
Transportation 9%
Water & Sewer 7%
Utilities 12%
Education 6%
Health Care 12%
Pollution Control 4%
Escrowed Bonds 13%
Other 4%
General Obligation 13%
Housing 20%
Bar Chart:
Dividend History(3)
11/96 0.068
12/96 0.068
1/97 0.068
2/97 0.068
3/97 0.068
4/97 0.068
5/97 0.068
6/97 0.068
7/97 0.068
8/97 0.068
9/97 0.068
10/97 0.068
<PAGE>
<TABLE>
Shareholder
Meeting Report
Annual Meeting Date: July 30, 1997
<CAPTION>
Premium Income Premium Income 2 Premium Income 4
<S> <C> <C> <C>
Total Shares Outstanding: 63,785,430.9980 40,731,118.9990 40,808,464.9990
=======================================================================================================
Total Shares Voted: 51,108,377.9060 31,879,157.8600 34,461,853.8080
=======================================================================================================
Robert P. Bremner For 49,983,483.6590 31,521,099.2430 34,062,606.3080
Withhold 1,124,894.2470 358,058.6170 399,247.5000
- -------------------------------------------------------------------------------------------------------
Total 51,108,377.9060 31,879,157.8600 34,461,853.8080
=======================================================================================================
Lawrence H. Brown For 49,999,481.7700 31,539,275.2430 34,102,830.4340
Withhold 1,108,896.1360 339,882.6170 359,023.3740
- -------------------------------------------------------------------------------------------------------
Total 51,108,377.9060 31,879,157.8600 34,461,853.8080
=======================================================================================================
Anthony T. Dean For 49,996,328.9910 31,539,275.2430 34,104,176.7280
Withhold 1,112,048.9150 339,882.6170 357,677.0800
- -------------------------------------------------------------------------------------------------------
Total 51,108,377.9060 31,879,157.8600 34,461,853.8080
=======================================================================================================
Anne E. Impellizzeri For 49,987,039.8690 31,535,085.2430 34,088,391.9280
Withhold 1,121,338.0370 344,072.6170 373,461.8800
- -------------------------------------------------------------------------------------------------------
Total 51,108,377.9060 31,879,157.8600 34,461,853.8080
=======================================================================================================
Peter R. Sawers For 49,998,167.7700 31,539,279.1100 34,103,565.4340
Withhold 1,110,210.1360 339,878.7500 358,288.3740
- -------------------------------------------------------------------------------------------------------
Total 51,108,377.9060 31,879,157.8600 34,461,853.8080
=======================================================================================================
Judith M. Stockdale For 49,948,172.4970 31,500,141.3870 34,063,614.3490
Withhold 1,160,205.4090 379,016.4730 398,239.4590
- -------------------------------------------------------------------------------------------------------
Total 51,108,377.9060 31,879,157.8600 34,461,853.8080
=======================================================================================================
Ratification of Auditors For 49,796,445.6960 31,446,794.1380 34,021,554.4110
Against 423,113.8950 93,071.2100 102,606.4850
Abstain 888,818.3150 339,292.5120 337,692.9120
- -------------------------------------------------------------------------------------------------------
Total 51,108,377.9060 31,879,157.8600 34,461,853.8080
=======================================================================================================
Municipal Preferred For 34,205,354.7920
Update Against 1,536,833.0450
Abstain 2,330,756.0690
- -------------------------------------------------------------------------------------------------------
Total 38,072,943.9060
=======================================================================================================
</TABLE>
<PAGE>
Independent Auditor's Report
THE BOARDS OF DIRECTORS AND SHAREHOLDERS
NUVEEN PREMIUM INCOME MUNICIPAL FUND, INC.
NUVEEN PREMIUM INCOME MUNICIPAL FUND 2, INC.
NUVEEN PREMIUM INCOME MUNICIPAL FUND 4, INC.
We have audited the accompanying statements of net assets, including the
portfolios of investments, of Nuveen Premium Income Municipal Fund, Inc., Nuveen
Premium Income Municipal Fund 2, Inc. and Nuveen Premium Income Municipal Fund
4, Inc. as of October 31, 1997, 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
October 31, 1997, 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 Premium Income Municipal Fund, Inc., Nuveen Premium Income Municipal Fund
2, Inc. and Nuveen Premium Income Municipal Fund 4, Inc. at October 31, 1997,
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.
Ernst & Young LLP
Chicago, Illinois
December 12, 1997
<PAGE>
<TABLE>
Portfolio of Investments
Nuveen Premium Income
Municipal Fund, Inc. (NPI)
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
<S> <C> <C> <C> <C>
ALASKA - 0.5%
$ 555,000 Alaska State Housing Finance Corporation, Collateralized Home Mortgage Bonds, 1987
Series B, 8.750%, 12/01/16 6/98 at 102 Aaa $ 568,709
6,000,000 North Slope Borough, Alaska, General Obligation Refunding Bonds of 1988, Series G,
8.350%, 6/30/98 No Opt. Call A- 6,173,520
ARIZONA - 1.4%
2,835,000 The Industrial Development Authority of the City of Phoenix, Arizona, Home Purchase
Mortgage Revenue Bonds (GNMA Mortgage-Backed Securities Program), Series 1988B,
8.200%, 4/01/22 (Alternative Minimum Tax) 10/98 at 102 AAA 2,936,436
12,465,000 The Industrial Development Authority of the County of Pima (Arizona), Industrial
Development Lease Obligation Refunding Revenue Bonds, 1988 Series A (Irvington
Project), 7.250%, 7/15/10 1/02 at 103 Aaa 13,946,091
3,595,000 The Industrial Development Authority of the County of Pima, Single Family Mortgage
Revenue Bonds (GNMA Mortgage-Backed Securities Program), Series 1988,
8.125%, 9/01/20 (Alternative Minimum Tax) 3/99 at 102 AAA 3,733,587
ARKANSAS - 0.4%
5,250,000 Arkansas Development Finance Authority Drivers' License Revenue Bonds (Arkansas
State Police - Headquarters and Wireless Data Equipment),
Series 1997, 5.400%, 6/01/18 6/07 at 100 Aaa 5,280,975
CALIFORNIA - 15.0%
17,000,000 California Health Facilities Financing Authority, Kaiser Permanente, Medical Care
Program, Semiannual Tender Revenue Bonds, 1985 Tender Bonds,
5.550%, 8/15/25 2/02 at 101 AA 16,926,900
14,650,000 California Health Facilities Financing Authority, Hospital Revenue Bonds (Childrens
Hospital of Los Angeles), 1991 Series A, 7.125%, 6/01/21
(Pre-refunded to 6/01/01) 6/01 at 102 Aaa 16,363,025
23,725,000 State Public Works Board of the State of California, Lease Revenue Refunding Bonds
(The Regents of the University of California), 1993 Series A (Various University of
California Projects), 5.500%, 6/01/21 6/03 at 102 A1 23,692,734
11,395,000 State Public Works Board of the State of California, Lease Revenue Bonds (Department
of Corrections), 1993 Series E (California State Prison-Madera County (II)),
5.500%, 6/01/15 No Opt. Call A 11,725,569
15,975,000 State of California Department of Transportation, East Bay State Building Authority,
Certificates of Participation, Series 1991A, 6.500%, 3/01/16
(Pre-refunded to 3/01/01) 3/01 at 102 A 17,444,061
13,000,000 State of California, Various Purpose General Obligation Refunding Bonds,
5.150%, 10/01/19 10/03 at 102 A1 12,682,540
15,285,000 Los Angeles Convention and Exhibition Center Authority, Lease Revenue Bonds, 1993
Refunding Series A, The City of Los Angeles (California), 5.375%, 8/15/18 8/03 at 102 Aaa 15,317,404
5,000,000 Department of Water and Power of The City of Los Angeles, California, Electric Plant
Refunding Revenue Bonds, Second Issue of 1993, 4.750%, 11/15/19 11/03 at 102 Aaa 4,602,150
12,250,000 Los Angeles County Transportation Commission (California), Sales Tax Revenue Refunding
Bonds, Series 1991-B, 5.750%, 7/01/18 7/01 at 100 AA- 12,410,108
1,285,000 City of Martinez (California), Home Mortgage Revenue Bonds, 1983 Issue A,
10.750%, 2/01/16 No Opt. Call Aaa 1,995,142
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
<S> <C> <C> <C> <C>
CALIFORNIA - continued
$ 4,125,000 Redevelopment Agency of the City of Moorpark, Moorpark Redevelopment Project,
1993 Tax Allocation Bonds, 6.125%, 10/01/18 10/03 at 102 A- $ 4,285,751
20,000,000 City of Pomona, California, Single Family Mortgage Revenue Refunding Bonds (GNMA
and FNMA Mortgage-Backed Securities), Series 1990A, 7.600%, 5/01/23 No Opt. Call Aaa 26,277,000
5,000,000 Sacramento, California, Municipal Utility District, Electric Revenue Refunding Bonds, 1993
Series D, 5.250%, 11/15/20 11/03 at 102 Aaa 4,914,600
San Bernardino Joint Powers Financing Authority, Tax Allocation Refunding Bonds,
Series 1995A:
6,675,000 5.750%, 10/01/15 10/05 at 102 Aaa 6,967,899
12,500,000 5.750%, 10/01/25 10/05 at 102 Aaa 12,919,125
3,000,000 San Diego Public Facilities Financing Authority, Sewer Revenue Bonds, Series 1993,
5.250%, 5/15/20 5/03 at 102 Aaa 2,941,680
10,000,000 San Joaquin Hills Transportation Corridor Agency, Toll Road Refunding Revenue Bonds,
Series 1997A, 5.250%, 1/15/30 1/07 at 102 Aaa 9,861,500
17,540,000 The Regents of the University of California, Refunding Revenue Bonds (Multiple Purpose
Projects), Series B, 4.750%, 9/01/21 9/03 at 102 Aaa 15,998,585
COLORADO - 3.2%
3,000,000 Colorado Housing and Finance Authority, Single Family Program, 1997 Series B-2 Senior
Bonds, 7.000%, 5/01/26 (Alternative Minimum Tax) 5/07 at 105 Aa2 3,337,110
4,500,000 Colorado Housing and Finance Authority, Single Family Program, 1997 Series C-2 Senior
Bonds, 6.875%, 11/01/28 (Alternative Minimum Tax) 11/07 at 105 Aa2 4,957,695
City and County of Denver, Colorado, Airport System Revenue Bonds, Series 1991D:
9,450,000 7.750%, 11/15/13 (Alternative Minimum Tax) No Opt. Call Baa1 11,835,936
1,725,000 7.750%, 11/15/21 (Alternative Minimum Tax) (Pre-refunded to 11/15/01) 11/01 at 102 Baa1 1,977,023
6,550,000 7.750%, 11/15/21 (Alternative Minimum Tax) 11/01 at 102 Baa1 7,339,210
City and County of Denver, Colorado, Airport System Revenue Bonds, Series 1992C:
1,830,000 6.750%, 11/15/22 (Alternative Minimum Tax) (Pre-refunded to 11/15/02) 11/02 at 102 Baa1 2,059,354
6,870,000 6.750%, 11/15/22 (Alternative Minimum Tax) 11/02 at 102 Baa1 7,429,905
City and County of Denver, Colorado, Airport System Revenue Bonds, Series 1992B:
715,000 7.250%, 11/15/23 (Alternative Minimum Tax) (Pre-refunded to 11/15/02) 11/02 at 102 Baa1 820,641
2,785,000 7.250%, 11/15/23 (Alternative Minimum Tax) 11/02 at 102 Baa1 3,107,085
2,800,000 Colorado Local Single Family Mortgage Revenue Bonds (City and County of Denver,
Colorado - Issuer; GNMA Mortgage-Backed Securities Program), Series 1988A,
8.125%, 12/01/20 (Alternative Minimum Tax) 12/98 at 102 AAA 2,899,848
962,193 El Paso County, Colorado, Single Family Mortgage Revenue Tax-Exempt Refunding Bonds,
Series 1992A Class A-2, 8.750%, 6/01/11 No Opt. Call Aaa 1,054,467
DISTRICT OF COLUMBIA - 1.9%
10,740,000 District of Columbia, Hospital Revenue Refunding Bonds (Providence Hospital Issue),
Series 1988A, 7.875%, 12/01/15 12/98 at 102 AA+ 11,358,517
14,800,000 District of Columbia, Housing Finance Agency, Collateralized Single Family Mortgage
Revenue Bonds, Series 1988E-4, 6.375%, 6/01/26 (Alternative Minimum Tax) 12/04 at 103 AAA 15,487,904
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
<S> <C> <C> <C> <C>
FLORIDA - 3.9%
$ 8,875,000 Florida Housing Finance Agency, GNMA Collateralized Home Ownership Mortgage
Revenue Bonds, 1988 Series G1 Bonds, 8.300%, 6/01/20
(Alternative Minimum Tax) 12/98 at 103 Aaa $ 9,242,780
9,290,000 State of Florida, Full Faith and Credit Department of Transportation, Right-of-Way
Acquisition and Bridge Construction Bonds, Series 1995, 5.800%, 7/01/21 7/05 at 101 AA+ 9,615,243
Greater Orlando Aviation Authority, Airport Facilities Revenue
Bonds, Series 1988 of the City of Orlando, Florida:
1,470,000 8.375%, 10/01/16 (Alternative Minimum Tax) (Pre-refunded to 10/01/98) 10/98 at 102 A1 1,557,862
13,530,000 8.375%, 10/01/16 (Alternative Minimum Tax) 10/98 at 102 A1 14,260,349
City of Pensacola Health Facilities Authority, Health Facilities Revenue Refunding Bonds,
Series 1988 (Daughters of Charity National Health System Sacred Heart Hospital of
Pensacola Florida):
11,655,000 7.875%, 1/01/08 (Pre-refunded to 1/01/98) 1/98 at 101 1/2 Aaa 11,906,398
9,435,000 7.875%, 1/01/11 (Pre-refunded to 1/01/98) 1/98 at 101 1/2 Aaa 9,638,513
GEORGIA - 2.8%
7,700,000 Municipal Electric Authority of Georgia, Power Revenue Bonds, Series Q,
8.375%, 1/01/16 1/98 at 102 A 7,907,438
5,850,000 Municipal Electric Authority of Georgia, Power Revenue Bonds, Series O,
8.125%, 1/01/17 1/98 at 102 A 6,005,259
2,065,000 Urban Residential Finance Authority of the City of Atlanta, Georgia, Single Family
Mortgage Revenue Bonds (GNMA Collateralized Home Mortgage Program), Series
1988, in cooperation with the Housing Authority of Fulton County, Georgia,
10/01/21 (Alternative Minimum Tax) 10/98 at 103 AAA 2,149,107
23,420,000 Development Authority of Monroe County (Georgia), Pollution Control Revenue Bonds
(Georgia Power Company Plant Scherer Project), Second Series 1994,
6.750%, 10/01/24 10/99 at 102 A1 24,602,710
ILLINOIS - 6.6%
8,230,000 Illinois Development Finance Authority, Pollution Control Refunding Revenue Bonds,
1994 Series A (Illinois Power Company Project), 5.700%, 2/01/24 2/04 at 102 Aaa 8,419,372
8,500,000 Illinois Educational Facilities Authority, Revenue Refunding Bonds, The University of
Chicago, Series 1993B, 5.600%, 7/01/24 7/03 at 102 Aa1 8,583,640
5,000,000 Illinois Health Facilities Authority, Revenue Bonds, Series 1992 (Highland Park Hospital),
6.200%, 10/01/22 10/02 at 102 Aaa 5,296,050
2,000,000 Illinois Health Facilities Authority Revenue Bonds, Series 1997A (Highland Park Hospital
Project), 5.750%, 10/01/26 10/07 at 102 Aaa 2,046,700
17,545,000 Illinois Health Facilities Authority Revenue Bonds, Series 1997 (Sherman Health Systems),
5.250%, 8/01/27 8/07 at 101 Aaa 16,954,435
12,700,000 Illinois Health Facilities Authority, Revenue Bonds, Series 1988B (Evangelical Hospitals
Corporation), 8.100%, 1/01/08 (Pre-refunded to 1/01/99) 1/99 at 102 Aaa 13,656,564
1,295,000 Illinois Housing Development Authority, Residential Mortgage Revenue Bonds, 1988
Series C, 8.100%, 2/01/22 (Alternative Minimum Tax) 8/98 at 102 Aa2 1,334,433
10,815,000 City of Chicago, Chicago-O'Hare International Airport Special Facility Revenue Bonds
(United Air Lines, Inc. Project), Series 1988A, 8.400%, 5/01/18
(Alternative Minimum Tax) 5/99 at 103 Baa2 11,655,001
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
<S> <C> <C> <C> <C>
ILLINOIS - continued
$ 6,180,000 City of Chicago (Illinois), Chicago-O'Hare International Airport, General Airport Second
Lien, Revenue Refunding Bonds, 1993 Series C, 5.000%, 1/01/18 1/04 at 102 Aaa $ 5,936,755
4,860,000 City of Chicago, Collateralized Single Family Mortgage Revenue Bonds, Series 1996-A,
7.000%, 9/01/27 (Alternative Minimum Tax) 3/06 at 105 Aaa 5,395,280
10,000,000 The County of Cook, Illinois, General Obligation Bonds, Series 1993A,
5.000%, 11/15/23 11/03 at 100 Aaa 9,457,300
785,000 Regional Transportation Authority, Cook, DuPage, Kane, Lake, McHenry and Will Counties,
Illinois, General Obligation Bonds, Series 1992B, 9.000%, 6/01/06 No Opt. Call Aaa 1,025,657
4,925,000 Regional Transportation Authority, Cook, DuPage, Kane, Lake, McHenry and Will Counties,
Illinois, General Obligation Bonds, Series 1992A, 9.000%, 6/01/06 No Opt. Call Aaa 6,434,857
INDIANA - 3.4%
4,300,000 Indiana State Office Building Commission, Correctional Facilities Program Revenue Bonds,
Series 1995A, 5.500%, 7/01/20 7/05 at 102 Aaa 4,328,466
30,000,000 The Indianapolis Local Public Improvement Bond Bank, Series 1988 D Bonds,
8.500%, 2/01/18 (Pre-refunded to 2/01/98) 2/98 at 102 N/R 30,937,500
8,000,000 Metropolitan School District of Steuben County Middle School Building Corporation, First
Mortgage Bonds, Series 1995, Steuben County, Indiana, 6.375%, 7/15/16 7/05 at 102 Aaa 8,772,560
5,300,000 Whitley County Middle School Building Corporation, First Mortgage Bonds, Series 1994,
Columbia City, Indiana, 6.250%, 7/15/15 1/04 at 102 Aaa 5,739,105
IOWA - 0.7%
3,000,000 Iowa Finance Authority, Private College Refunding Revenue Bonds (Drake University
Project), Series 1996, 5.400%, 12/01/16 12/05 at 102 Aaa 3,027,720
5,680,000 Iowa Finance Authority, Variable Rate Demand Industrial Revenue Refunding Bonds,
Series A 1989 (Urbandale Hotel Corporation Project No. 00475), 8.500%, 8/01/16
(Alternative Minimum Tax)(Pre-refunded to 7/15/14)(Mandatory put 7/15/14) 7/14 at 100 AAA 7,726,902
KANSAS - 0.6%
8,540,000 Sedgwick County, Kansas and Shawnee County, Kansas, GNMA Collateralized Mortgage
Revenue Bonds, 1988 Series E, 8.250%, 11/01/20 (Alternative Minimum Tax) 11/98 at 103 AAA 8,901,071
LOUISIANA - 1.6%
7,660,000 Louisiana Public Facilities Authority, Extended Care Facilities Revenue Bonds (Comm-Care
Corporation Project), Series 1994, 11.000%, 2/01/14 No Opt. Call BBB 10,744,682
11,860,000 Louisiana Stadium and Exposition District, Hotel Occupancy Tax Bonds, Series 1995-B,
6.375%, 7/01/25 7/05 at 102 Aaa 13,089,408
MASSACHUSETTS - 1.9%
3,000,000 Massachusetts Industrial Finance Agency, Resource Recovery Revenue Bonds, Semass
Project, Series 1991B, 9.250%, 7/01/15 (Alternative Minimum Tax) 7/01 at 103 N/R 3,385,830
15,000,000 Massachusetts Industrial Finance Agency, General Obligation Bonds, Suffolk University,
Series 1997, 5.250%, 7/01/27 7/07 at 102 Aaa 14,799,000
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
<S> <C> <C> <C> <C>
MASSACHUSETTS - continued
$ 8,800,000 Massachusetts Water Resources Authority, General Revenue Bonds, 1992 Series A,
5.500%, 7/15/22 7/02 at 100 A $ 8,799,208
MICHIGAN - 1.5%
4,000,000 School District of the City of Detroit, Wayne County, Michigan, School Building and Site
Improvement and Refunding Bonds (Unlimited Tax General Obligation), Series 1993,
5.400%, 5/01/13 5/03 at 102 AA 4,051,640
8,870,000 City of Detroit, Michigan, Sewage Disposal System Revenue Bonds, Series 1995-A,
5.000%, 7/01/25 7/05 at 100 Aaa 8,399,269
9,625,000 Livonia Public Schools School District, County of Wayne, State of Michigan, 1993
Refunding Bonds, 5.500%, 5/01/21 5/03 at 102 Aaa 9,683,713
MINNESOTA - 2.8%
2,945,000 The Minneapolis/Saint Paul Housing Finance Board, Single Family Mortgage
Revenue Bonds (Minneapolis/Saint Paul Family Housing Program, Phase X,
FNMA and GNMA Mortgage-Backed Securities Program), Series 1994,
7.500%, 11/01/27 (Alternative Minimum Tax) 11/04 at 102 AAA 3,147,439
21,680,000 The Housing and Redevelopment Authority of the City of Saint Paul, Minnesota, Sales
Tax Revenue Refunding Bonds (Civic Center Project), Series 1996,
7.100%, 11/01/23 11/15 at 103 Aaa 25,986,082
2,900,000 Housing and Redevelopment Authority of the City of Saint Paul, Minnesota, Single Family
Mortgage Revenue Bonds, Refunding Series 1991-B, 7.250%, 9/01/11 No Opt. Call Aa 3,109,844
8,175,000 Port Authority of the City of Saint Paul, Energy Park Tax Increment Revenue Refunding
Bonds, Series 1988, 8.000%, 12/01/07 (Pre-refunded to 12/01/98) 12/98 at 102 AAA 8,681,687
MISSOURI - 1.5%
6,955,000 Missouri Housing Development Commission, Single Family Mortgage Revenue Bonds
(Homeownership Loan Program), 1996 Series C, 7.450%, 9/01/27 (Alternative
Minimum Tax) 3/07 at 105 AAA 7,858,037
11,120,000 Francis Howell School District, St. Charles County, Missouri, General Obligation
Refunding Bonds, Series 1994A, 7.800%, 3/01/08 No Opt. Call Aaa 13,956,712
NEVADA - 2.2%
21,000,000 State of Nevada, Colorado River Commission General Obligation (Limited Tax), Revenue
Supported Bonds, Series 1994, 5.500%, 7/01/27 7/04 at 101 AA 21,084,420
10,000,000 Clark County School District, Nevada, General Obligation, School Improvement Bonds,
Series 1988A, 8.000%, 3/01/08 (Pre-refunded to 3/01/98) 3/98 at 102 N/R 10,334,100
NEW HAMPSHIRE - 2.1%
10,000,000 Business Finance Authority of the State of New Hampshire, Pollution Control Refunding
Revenue Bonds (The United Illuminating Company Project-1993 Series A),
5.875%, 10/01/33 10/03 at 102 BBB- 10,042,100
11,000,000 New Hampshire Housing Finance Authority, Single Family Mortgage Revenue Bonds,
1993 Series B, 6.050%, 7/01/25 7/03 at 102 Aa 11,331,760
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
<S> <C> <C> <C> <C>
NEW HAMPSHIRE - continued
$ 9,025,000 New Hampshire Housing Finance Authority Single Family Mortgage Acquisition Revenue
Bonds, 1996 Series B, 6.400%, 1/01/27 (Alternative Minimum Tax) 7/06 at 102 Aa3 $ 9,457,659
NEW JERSEY - 1.1%
15,000,000 New Jersey Housing and Mortgage Finance Agency Home Buyer Revenue Bonds, 1997
Series U, 5.850%, 4/01/29 (Alternative Minimum Tax) 10/07 at 101 1/2 Aaa 15,322,050
NEW MEXICO - 0.4%
5,290,000 New Mexico Mortgage Finance Authority, Single Family Mortgage Purchase Refunding
Senior Bonds, 1992 Series A, 6.900%, 7/01/24 7/02 at 102 Aa1 5,583,489
NEW YORK - 8.2%
10,000,000 New York Local Government Assistance Corporation, Series 1993 B, Refunding Bonds,
5.000%, 4/01/23 4/04 at 100 A+ 9,397,400
12,365,000 New York State Energy Research and Development Authority, Facilities Revenue Bonds,
Series 1993 A (Consolidated Edison Company of New York, Inc. Project),
6.000%, 3/15/28 (Alternative Minimum Tax) 3/03 at 102 A1 12,779,969
19,610,000 New York State Medical Care Facilities Finance Agency, Hospital and Nursing Home
FHA-Insured Mortgage Revenue Bonds, 1993 Series B, 5.500%, 2/15/22 2/04 at 102 AAA 19,621,178
18,000,000 Metropolitan Transportation Authority (New York), Commuter Facilities 1987 Service
Contract Bonds, Series 2, 8.000%, 7/01/18 (Pre-refunded to 7/01/98) 7/98 at 102 Aaa 18,852,480
7,500,000 The City of New York, General Obligation Bonds, Fiscal 1991 Series B,
9.500%, 6/01/03 No Opt. Call Baa1 9,230,775
10,000,000 The City of New York, General Obligation Bonds, Fiscal 1996 Series G,
5.750%, 2/01/07 2/06 at 101 1/2 Baa1 10,541,600
10,000,000 The City of New York, General Obligation Bonds, Fiscal 1997 Series G,
6.000%, 10/15/26 10/07 at 101 Baa1 10,398,000
12,930,000 New York City Municipal Water Finance Authority, Water and Sewer Revenue Bonds,
Fiscal 1993 Series A, 5.500%, 6/15/20 6/02 at 100 A2 12,797,080
16,000,000 New York City Municipal Water Finance Authority, Water and Sewer System Revenue
Bonds, Fiscal 1996 Series B, 5.750%, 6/15/26 6/06 at 101 Aaa 16,511,840
NORTH CAROLINA - 1.2%
14,575,000 North Carolina Eastern Municipal Power Agency, Power System Revenue Bonds,
Refunding Series 1988 A, 8.000%, 1/01/21 (Pre-refunded to 1/01/98) 1/98 at 102 Aaa 14,966,047
1,840,000 North Carolina Eastern Municipal Power Agency, Power System Revenue Bonds,
Refunding Series 1988 A, 8.000%, 1/01/21 (Pre-refunded to 1/01/98) 1/98 at 102 Aaa 1,889,367
OHIO - 1.4%
6,535,000 Ohio Housing Finance Agency, Single Family Mortgage Revenue Bonds (GNMA
Mortgage-Backed Securities Program), 1998 Series B, 8.250%, 12/15/19 (Alternative
Minimum Tax) 12/98 at 102 AAA 6,881,616
12,360,000 State of Ohio, Turnpike Revenue Bonds, 1994 Series A, Issued by the Ohio Turnpike
Commission, 5.750%, 2/15/24 2/04 at 102 AA- 12,778,386
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
<S> <C> <C> <C> <C>
OKLAHOMA - 1.3%
$ 11,130,000 Oklahoma Housing Finance Agency, GNMA Collateralized Single Family Mortgage
Revenue Bonds, Series 1988A, 8.250%, 12/01/20 (Alternative Minimum Tax) 12/98 at 102 AAA $ 11,601,578
6,750,000 Washington County Medical Authority (Bartlesville, Oklahoma), Hospital Revenue Bonds
(Jane Phillips Episcopal Hospital), Series 1989A, 8.500%, 11/01/10 (Pre-refunded
to 5/01/99) 5/99 at 102 N/R 7,307,955
PENNSYLVANIA - 3.8%
10,000,000 Pennsylvania Housing Finance Agency, Single Family Mortgage Revenue Bonds, Series
1993 - 37A, 5.450%, 10/01/17 10/03 at 102 AA+ 10,050,500
14,500,000 County of Allegheny, Pennsylvania, Airport Revenue Bonds, Series 1988C (Greater
Pittsburgh International Airport), 8.250%, 1/01/16 (Alternative Minimum Tax)
(Pre-refunded to 1/01/98) 1/98 at 102 Aaa 14,893,240
12,875,000 Allegheny County Hospital Development Authority (Pennsylvania), Health Center Revenue
Bonds, Series 1992A (Presbyterian University Health System, Inc. Project),
6.250%, 11/01/23 11/02 at 100 Aaa 13,509,738
5,000,000 The School District of Philadelphia, Pennsylvania, General Obligation Bonds, Series B of
1995, 5.500%, 9/01/25 9/05 at 101 Aaa 5,037,350
10,180,000 City of Philadelphia, Pennsylvania, Water and Sewer Revenue Bonds, Sixteenth Series,
7.500%, 8/01/10 (Pre-refunded to 8/01/01) 8/01 at 102 AAA 11,520,910
SOUTH CAROLINA - 1.2%
17,250,000 South Carolina Jobs-Economic Development Authority, Hospital Revenue Bonds
(Anderson Area Medical Center, Inc.), Series 1996, 5.250%, 2/01/26 2/06 at 102 Aaa 16,851,180
TEXAS - 8.1%
10,305,000 Alliance Airport Authority, Inc., Special Facilities Revenue Bonds, Series 1990 (American
Airlines, Inc. Project), 7.500%, 12/01/29 (Alternative Minimum Tax) 12/00 at 102 Baa2 11,233,893
11,020,000 Brazos River Authority (Texas), Collateralized Pollution Control Revenue Bonds (Texas
Utilities Electric Company Project), Series 1994A, 7.875%, 3/01/21 (Alternative
Minimum Tax) 3/01 at 102 Baa1 12,186,577
10,095,000 Brazos River Authority (Texas), Collateralized Revenue Refunding Bonds (Houston
Lighting &Power Company Project), Series 1988A, 8.250%, 5/01/19 5/98 at 102 A2 10,474,168
5,590,000 Dallas-Fort Worth International Airport Facility Improvement Corporation, American
Airlines, Inc. Revenue Bonds, Series 1990, 7.500%, 11/01/25
(Alternative Minimum Tax) 11/00 at 102 Baa2 6,084,380
40,000,000 Harris County Health Facilities Development Corporation, Adjustable Convertible
Extendable Securities (Greater Houston Pooled Health Care Loan Program), Series
1985B, 7.375%, 12/01/25 (Mandatory put 12/01/98) 11/97 at 100 A1 40,407,200
12,700,000 Harris County, Texas, Toll Road Multiple Mode Senior Lien Revenue Bonds, Series 1985-D,
8.300%, 8/15/17 (Pre-refunded to 8/15/98) 8/98 at 103 AAA 13,511,276
15,000,000 Harris County, Texas, Toll Road Senior Lien Revenue Refunding Bonds, Series 1994,
5.300%, 8/15/13 8/04 at 102 Aaa 15,204,900
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
<S> <C> <C> <C> <C>
TEXAS - continued
$ 4,750,000 Matagorda County Navigation, District Number One (Texas), Pollution Control Revenue
Refunding Bonds (Central Power and Light Company Project), Series 1995,
6.100%, 7/01/28 7/00 at 102 Aaa $ 4,960,615
4,500,000 Tyler Health Facilities Development Corporation, Hospital Refunding Revenue Bonds
(East Texas Hospital Foundation Project), Series 1988A, 8.250%, 11/01/06
(Pre-refunded to 11/01/98) 11/98 at 102 N/R 4,774,320
UTAH - 0.6%
8,000,000 Utah Housing Finance Agency, Single Family Mortgage Bonds, 1997 Series F,
5.750%, 7/01/28 (Alternative Minimum Tax) 7/07 at 101 1/2 Aaa 8,033,040
VERMONT - 1.4%
20,330,000 Vermont Housing Finance Agency, Single Family Housing Bonds, Series 9,
5.900%, 5/01/29 (Alternative Minimum Tax) 6/07 at 101 1/2 Aaa 20,721,962
VIRGINIA - 0.7%
1,000,000 Virginia Housing Development Authority, Commonwealth Mortgage Bonds, 1987
Series C, Subseries C-7, 8.375%, 1/01/28 (Alternative MinimumTax) 1/99 at 102 Aa1 1,006,540
10,000,000 Prince William County Service Authority (Virginia), Water and Sewer System Refunding
Revenue Bonds, Series 1993, 5.000%, 7/01/21 7/03 at 102 Aaa 9,571,400
WASHINGTON - 12.1%
12,950,000 Washington Public Power Supply System, Nuclear Project No. 1, Refunding Revenue
Bonds, Series 1993A, 5.700%, 7/01/17 7/03 at 102 Aaa 13,163,416
23,370,000 Washington Public Power Supply System, Nuclear Project No. 1, Refunding Revenue
Bonds, Series 1993B, 5.600%, 7/01/15 7/03 at 102 Aaa 23,684,560
4,300,000 Washington Public Power Supply System, Nuclear Project No. 1, Refunding Revenue
Bonds, Series 1989B, 7.250%, 7/01/15 (Pre-refunded to 1/01/00) 1/00 at 102 Aaa 4,656,040
15,960,000 Washington Public Power Supply System, Nuclear Project No. 1, Refunding Revenue
Bonds, Series 1989A, 7.500%, 7/01/15 (Pre-refunded to 7/01/99) 7/99 at 102 Aaa 17,150,935
7,500,000 Washington Public Power Supply System, Nuclear Project No. 2, Refunding Revenue
Bonds, Series 1991A, 6.000%, 7/01/12 7/01 at 100 Aa1 7,752,900
14,440,000 Washington Public Power Supply System, Nuclear Project No. 2 Refunding Revenue
Bonds, Series 1993A, 5.750%, 7/01/12 7/03 at 102 Aa1 14,935,725
6,770,000 Washington Public Power Supply System, Nuclear Project No. 2 Refunding Revenue
Bonds, Series 1993B, 5.625%, 7/01/12 7/03 at 102 Aa1 6,859,770
21,530,000 Washington Public Power Supply System, Nuclear Project No. 3 Refunding Revenue
Bonds, Series 1993C, 5.375%, 7/01/15 7/03 at 102 Aa1 21,274,439
13,500,000 Washington Public Power Supply System, Nuclear Project No. 3 Refunding Revenue
Bonds, Series 1989B, 7.250%, 7/01/15 (Pre-refunded to 1/01/00) 1/00 at 102 Aaa 14,617,800
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
<S> <C> <C> <C> <C>
WASHINGTON - continued
$ 19,820,000 Public Utility District No. 1 of Chelan County, Washington, Chelan Hydro Consolidated
System Revenue Bonds, Series 1997A, 5.650%, 7/01/32 (Alternative Minimum Tax)
(Mandatory put 7/01/07) 7/07 at 102 AA $ 19,970,232
17,050,000 Municipality of Metropolitan Seattle (Seattle, Washington), Sewer Refunding Revenue
Bonds, Series Z, 5.500%, 1/01/33 1/03 at 102 Aaa 17,058,525
6,360,000 Public Utility District No. 1 of Snohomish County, Washington, Generation System
Revenue Bonds, Series 1993, 5.500%, 1/01/14 1/03 at 100 Aaa 6,436,384
7,000,000 City of Spokane, Washington, Regional Solid Waste Management System Revenue
Bonds, Series 1989B, 7.750%, 1/01/11 (Alternative Minimum Tax) 1/99 at 102 Aaa 7,382,270
WEST VIRGINIA - 1.1%
15,000,000 West Virginia Housing Development Fund, Housing Finance Bonds, 1992 Series D,
7.050%, 11/01/24 5/02 at 102 Aaa 15,953,100
PUERTO RICO - 0.4%
5,250,000 Puerto Rico Electric Power Authority, Power Revenue Bonds,Series X,
5.500%, 7/01/25 7/05 at 100 Baa1 5,252,835
$1,344,172,193 Total Investments - (cost $1,339,830,578) - 97.0% 1,406,730,333
==============
Temporary Investments in Short-Term Municipal Securities - 1.9%
District of Columbia (Washington, D.C.), General Obligation
General Fund Recovery Bonds, Series 1991B, Variable Rate Demand
Bonds:
$ 7,500,000 3.950%, 6/01/03+ A-1+ 7,500,000
13,000,000 3.950%, 6/01/03+ VMIG-1 13,000,000
3,500,000 Maricopa County, Arizona Pollution Control Corporation, Pollution Control Revenue
Refunding Bonds (Arizona Public Service Company Palo Verde Project), 1994 Series F,
Variable Rate Demand Bonds, 4.000%, 5/01/29+ A-1+ 3,500,000
4,000,000 University Athletic Association Inc. Capital Improvement Revenue, Series 1990
(University of Florida Refunding Proj.), Variable Rate Demand Bonds, 3.800%, 2/01/20+ VMIG-1 4,000,000
$ 28,000,000 Total Temporary Investments - 1.9% 28,000,000
============
Other Assets Less Liabilities - 1.1% 14,929,229
------------------------------------------------------------------------------------------------------------------
Net Assets - 100% $1,449,659,562
==================================================================================================================
<FN>
* 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.
N/R - Investment is not rated.
+ The security has a maturity of more than one year, but has variable rate and
demand features which qualify it as a short-term security. The rate disclosed is
that currently in effect. This rate changes periodically based on market
conditions or a specified market index.
</FN>
</TABLE>
<PAGE>
<TABLE>
Portfolio of Investments
Nuveen Premium Income
Municipal Fund 2, Inc. (NPM)
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
<S> <C> <C> <C> <C>
ALASKA - 0.5%
$ 3,500,000 Anchorage Parking Authority, Lease Revenue Refunding Bonds, Series 1993 (5th Avenue
Garage Project), 6.750%, 12/01/08 12/02 at 102 Baa1 $ 3,813,040
935,000 City of Valdez, Alaska, Home Mortgage Revenue Refunding Bonds, 1992 Series,
7.900%, 2/01/10 8/02 at 102 A1 1,008,940
ARIZONA - 3.2%
The Industrial Development Authority of the County of Mohave, Hospital System, Revenue
Refunding Bonds (Medical Environments, Inc. and Phoenix Baptist Hospital and Medical
Center, Inc.), Series 1993:
5,705,000 6.250%, 7/01/03 No Opt. Call Aaa 6,233,340
3,000,000 6.750%, 7/01/08 (Pre-refunded to 7/01/03) 7/03 at 102 Aaa 3,402,510
City of Phoenix (Arizona), Civic Improvement Corporation,
Wastewater System, Lease Revenue Bonds, Series 1993:
9,000,000 6.125%, 7/01/14 (Pre-refunded to 7/01/03) 7/03 at 102 AAA 9,951,840
4,380,000 4.750%, 7/01/23 7/04 at 102 Aa3 4,003,758
5,410,000 The Industrial Development Authority of the County of Pima (Arizona), Industrial
Development, Lease Obligation Refunding Revenue Bonds, 1988 Series A (Irvington
Project), 7.250%, 7/15/10 1/02 at 103 Aaa 6,052,816
CALIFORNIA - 13.1%
7,150,000 State Public Works Board of the State of California, Lease Revenue Bonds (The Trustees
of The California State University), 1994 Series A (Various California State University
Projects), 6.375%, 10/01/19 10/04 at 102 A 7,798,219
17,500,000 State Public Works Board of the State of California, Lease Revenue Bonds (Department
of Corrections), 1994 Series A (California State of Prison-Monterey County
(Soledad II)), 6.875%, 11/01/14 (Pre-refunded to 11/01/04) 11/04 at 102 Aaa 20,476,400
State Public Works Board of the State of California, Lease
Revenue Bonds (The Trustees of The California State University),
1992 Series A (Various California State University Projects):
15,480,000 6.625%, 10/01/10 (Pre-refunded to 10/01/02) 10/02 at 102 Aaa 17,380,015
10,500,000 6.700%, 10/01/17 (Pre-refunded to 10/01/02) 10/02 at 102 Aaa 11,858,490
30,000,000 Foothill/Eastern Transportation Corridor Agency, Toll Road Revenue Bonds, Series 1995A,
0.000%, 1/01/21 No Opt. Call Baa 8,113,500
5,000,000 City of Loma Linda, California, Hospital Revenue Bonds (Loma Linda University Medical
Center Project), Series 1993-A, 6.500%, 12/01/18 12/03 at 102 BBB 5,291,050
5,480,000 Los Angeles Community College District, Refunding Certificates of Participation, 1992
Series A, Laacd Improvement Corporation, 6.000%, 8/15/20 2/02 at 102 Aaa 5,741,780
3,605,000 Community Redevelopment Financing Authority of the Community Redevelopment Agency
of the City of Los Angeles, California Pooled Financing Bonds, Series D (Crenshaw
Redevelopment Project), 7.000%, 9/01/14 9/02 at 102 Ba1 3,804,068
7,000,000 Los Angeles State Building Authority, Lease Revenue Refunding Bonds (State of
California, Department of General Services Lease), 1993 Series A,
5.625%, 5/01/11 No Opt. Call A 7,418,740
5,000,000 Los Angeles County Public Works Finance Authority, Revenue Bonds, Series 1994A (Los
Angeles County Regional Park and Open Space District), 6.125%, 10/01/10 10/04 at 102 AA 5,443,900
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
<S> <C> <C> <C> <C>
CALIFORNIA - continued
$ 10,000,000 Los Angeles County Transportation Commission (California), Proposition C, Sales Tax
Revenue Bonds, Second Senior Bonds, Series 1992-A, 6.750%, 7/01/19 (Pre-refunded
to 7/01/02) 7/02 at 102 Aaa $ 11,264,000
2,035,000 Parlier Redevelopment Agency (Parlier Redevelopment Project), 1992 Tax Allocation
Bonds, Series A, 6.750%, 8/01/22 8/02 at 102 BBB 2,179,241
Redevelopment Agency of the City and County of San Francisco
(California), Hotel Tax Revenue Bonds, Series 1994:
2,390,000 6.750%, 7/01/15 7/04 at 102 Aaa 2,712,817
6,865,000 6.750%, 7/01/25 7/04 at 102 Aaa 7,792,256
5,605,000 County of San Joaquin, California, Certificates of Participation (1994 Solid Waste System
Facilities Project), 6.600%, 4/01/19 4/04 at 102 A 6,016,519
COLORADO - 10.1%
9,870,000 Colorado Health Facilities Authority, Insured Hospital Revenue Bonds (PSL Healthcare
System Project), Series 1991A, 6.250%, 2/15/21 (Pre-refunded to 2/15/01) 2/01 at 102 Aaa 10,664,831
2,035,000 Colorado Housing and Finance Authority, Single Family Program, Senior Bonds, 1994
Series E, 8.125%, 12/01/24 (Alternative MinimumTax) 12/04 at 105 Aa2 2,252,908
Colorado Housing and Finance Authority, General Obligation Bonds, 1994 Series A:
6,070,000 6.850%, 8/01/24 8/02 at 102 A 6,396,870
2,405,000 6.875%, 8/01/30 8/02 at 102 A 2,530,998
4,990,000 Colorado Housing and Finance Authority, Single Family Program, Senior Bonds, 1995
Series D, 7.375%, 6/01/26 12/05 at 105 Aa2 5,574,279
8,500,000 City and County of Denver, Colorado, Airport System Revenue Bonds, Series 1997E,
5.250%, 11/15/23 11/07 at 101 Aaa 8,381,085
Denver City and County Airport Revenue Bonds Series 1991D:
3,155,000 7.750%, 11/15/21 (Alternative Minimum Tax) (Pre-refunded to 11/15/01) 11/01 at 102 Baa1 3,615,946
12,115,000 7.750%, 11/15/21 (Alternative Minimum Tax) 11/01 at 102 Baa1 13,574,736
City and County of Denver, Colorado, Airport System, Revenue Bonds, Series 1992C:
2,125,000 6.750%, 11/15/13 (Alternative Minimum Tax) (Pre-refunded to 11/15/02) 11/02 at 102 Baa1 2,391,326
16,120,000 6.750%, 11/15/13 (Alternative Minimum Tax) 11/02 at 102 Baa1 17,545,975
City and County of Denver, Colorado, Airport System, Revenue Bonds, Series 1992B:
1,445,000 7.250%, 11/15/23 (Alternative Minimum Tax) (Pre-refunded to 11/15/02) 11/02 at 102 Baa1 1,658,499
5,635,000 7.250%, 11/15/23 (Alternative MinimumTax) 11/02 at 102 Baa1 6,286,688
City and County of Denver, Colorado, Airport System, Revenue Bonds, Series 1991A:
1,925,000 8.000%, 11/15/25 (Alternative Minimum Tax) (Pre-refunded to 11/15/01) 11/01 at 100 Baa1 2,191,420
5,315,000 8.000%, 11/15/25 (Alternative Minimum Tax) 11/01 at 100 Baa1 5,916,073
Denver City and County (FHA Insured), Boston Lofts Projects, Series 1997A:
1,700,000 5.750%, 10/01/27 (Alternative Minimum Tax) 10/07 at 102 AAA 1,717,442
4,795,000 5.850%, 10/01/38 (Alternative Minimum Tax) 10/07 at 102 AAA 4,843,909
CONNECTICUT - 0.4%
3,170,000 Connecticut Housing Finance Authority, Housing Mortgage Finance, Program Bonds,
1996 Series C-2, 6.250%, 11/15/18 5/06 at 102 Aa 3,352,972
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
<S> <C> <C> <C> <C>
FLORIDA - 2.6%
$ 2,850,000 State of Florida, Full Faith and Credit, Department of Transportation Right-of-Way
Acquisition and Bridge Construction Bonds, Series 1995, 5.875%, 7/01/24 7/05 at 101 Aaa $ 2,972,522
1,750,000 Alachua County Health Facilities Authority, Health Facilities Revenue Bonds, Series 1992
(Santa Fe Healthcare Facilities Project), 7.600%, 11/15/13
(Pre-refunded to 11/15/00) 11/00 at 102 AAA 1,956,640
5,000,000 Dade County, Florida, Aviation Bonds, Series 1996A, 5.750%, 10/01/18
(Alternative Minimum Tax) 10/06 at 102 Aaa 5,138,500
12,500,000 City of Tampa, Florida, Revenue Bonds (The Florida Aquarium Project), Series 1992,
7.750%, 5/01/27 (Pre-refunded to 5/01/02) 5/02 at 102 N/R 14,417,750
GEORGIA - 3.3%
Georgia Housing and Finance Authority, Single Family Mortgage Bonds, 1994 Series B:
5,485,000 6.650%, 12/01/20 (Alternative Minimum Tax) 9/04 at 102 AA+ 5,834,340
5,500,000 6.700%, 12/01/25 (Alternative MinimumTax) 9/04 at 102 AA+ 5,845,620
10,000,000 Atlanta Water and Sewerage System, 4.500%, 1/01/18 1/04 at 100 Aaa 8,913,000
7,000,000 Development Authority of Burke County, Georgia, Pollution Control Revenue Bonds
(Oglethorpe Power Corporation Vogtle Project), Series 1992, 8.000%, 1/01/15
(Pre-refunded to 1/01/03) 1/03 at 103 Aaa 8,343,790
2,000,000 Housing Authority of Fulton County, Georgia, Single Family Mortgage Revenue
Refunding Bonds (GNMA Mortgage-Backed Securities Program), Series 1996A,
6.200%, 9/01/27 (Alternative Minimum Tax) 9/06 at 102 AAA 2,079,820
IDAHO - 0.3%
2,335,000 Idaho Housing and Finance Association, Single Family Mortgage Bonds, 1996 Series G,
6.350%, 7/01/26 (Alternative Minimum Tax) 7/06 at 102 Aaa 2,447,220
ILLINOIS - 9.1%
3,000,000 Illinois Health Facilities Authority, Revenue Refunding Bonds, Series 1993C (Lutheran
General HealthSystem), 6.000%, 4/01/18 No Opt. Call A1 3,240,300
6,900,000 Illinois Health Facilities Authority, Revenue Refunding Bonds, Series 1993 (Illinois
Masonic Medical Center), 5.500%, 10/01/19 10/03 at 102 A- 6,830,310
11,510,000 The Illinois State Toll Highway Authority, Toll Highway Priority Revenue Bonds, 1992
Series A, 6.375%, 1/01/15 1/03 at 102 A1 12,280,595
17,000,000 City of Chicago, General Obligation Bonds, Project Series A of 1992,
6.250%, 1/01/12 1/02 at 102 Aaa 18,305,770
5,000,000 City of Chicago, General Obligation Bonds (Emergency Telephone System), Series 1993,
5.625%, 1/01/23 1/03 at 102 Aaa 5,059,800
8,270,000 City of Chicago, Illinois, Mortgage Revenue Bonds, Series 1992 (FHA Insured Mortgage
Loan-Lakeview Towers Project), 6.650%, 12/01/33 6/02 at 102 AAA 8,668,035
1,175,000 City of Chicago, Multifamily Housing Revenue Bonds, Series 1997 (GNMA Collateralized-
Bryn Mawr/Belle Shores Project), 5.800%, 6/01/23 (Alternative Minimum Tax)6/09 at 102 Aaa 1,190,381
5,500,000 Chicago Park District, Illinois, General Obligation Capital Improvement Bonds and
Aquarium and Museum Bonds, Series 1991, 6.700%, 1/01/11 1/02 at 102 AA- 6,054,840
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
<S> <C> <C> <C> <C>
ILLINOIS - continued
$ 10,900,000 Public Building Commission of Chicago (Illinois), Building Revenue Bonds, Series A of
1993 (Board of Education of the City of Chicago), 5.750%, 12/01/18 12/03 at 102 Aaa $ 11,211,304
4,535,000 City of Chicago, Illinois, Tax Increment Allocation Bonds (Dunning Redevelopment
Project), Series 1996B, 7.250%, 1/01/14 1/07 at 102 N/R 4,775,763
3,530,000 City of Chicago, Illinois, Tax Increment, Finance Bonds (Sanitary Drainage &Ship
Canal), Series 1997A, 7.750%, 1/01/14 1/07 at 102 N/R 3,783,525
2,850,000 City of East Louis, Illinois, Mortgage Revenue Refunding Bonds, Series 1994A (FHA
Insured Mortgage Loan-Dawson Manor Apartments Section 8 Assisted Project),
6.500% 7/01/24 7/03 at 102 Aaa 2,998,770
1,445,000 Village of Wheeling, Cook and Lake Counties, Illinois, Single Family, Mortgage Revenue
Refunding Bonds, Series 1992, 6.850%, 11/01/09 11/02 at 102 Aaa 1,540,124
INDIANA - 7.6%
8,200,000 Indiana Bond Bank, State Revolving Fund, Program Bonds, Series 1993A, Guarantee
Revenue Bonds, 6.250%, 2/01/09 2/03 at 102 AAA 8,865,184
2,875,000 Indiana Bond Bank, State Revolving Fund, Program Bonds, Series 1994B, Guarantee
Revenue Bonds, 6.750%, 2/01/17 2/05 at 102 AAA 3,259,129
6,000,000 Indiana Development Finance Authority, Environmental Revenue Bonds, Series 1993B
(PSI Energy, Inc.), 5.750%, 2/15/28 (Alternative Minimum Tax) 2/03 at 102 Aaa 6,066,960
5,250,000 Indiana Transportation Finance Authority, Aviation Technology Center, Lease Revenue
Bonds, Series A, 6.500%, 3/01/18 3/03 at 102 A 5,646,270
8,000,000 East Chicago Elementary School Building Corporation (Lake County, Indiana), First
Mortgage Bonds, Series 1992, 7.000%, 1/15/16 (Pre-refunded to 1/15/03) 1/03 at 102 A 9,091,200
13,630,000 Hospital Authority of the City of Fort Wayne, Indiana, Revenue Bonds, Series 1992
(Parkview Memorial Hospital, Inc. Project), 6.400%, 11/15/22 11/02 at 102 A1 14,459,931
6,031,000 City of Greenfield, Indiana, Multifamily Housing Revenue Bonds, Series 1996 A
(Pedcor Investments-1988-V, L.P. Project), 6.200%, 12/01/28 (Alternative
Minimum Tax) 12/05 at 105 Aaa 6,306,074
10,675,000 Highland School Building Corporation (Highland, Indiana), First Mortgage Bonds,
Series 1992A, 6.750%, 1/15/20 (Pre-refunded to 1/15/02) 1/02 at 102 AAA 11,873,055
5,905,000 Muncie School Building Corporation, First Mortgage Bonds, Series 1992,
6.625%, 7/15/14 (Pre-refunded to 7/15/01) 7/01 at 102 N/R 6,480,678
IOWA - 0.2%
1,675,000 Polk County, Iowa, Health Facilities Revenue Bonds, Catholic Health Corporation
(Mercy Health Center of Central Iowa Project), Series 1991,
6.750%, 11/01/15 11/01 at 101 Aaa 1,817,894
KANSAS - 0.6%
2,495,000 Johnson County, Kansas, Single Family Mortgage, Revenue Refunding Bonds,
Series 1994, 7.100%, 5/01/12 5/04 at 103 A 2,717,354
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
<S> <C> <C> <C> <C>
KANSAS - continued
$ 2,550,000 Sedgwick County, Kansas and Shawnee County, Kansas, Collateralized Single Family
Mortgage, Refunding Revenue Bonds (GNMA Certificates), Series 1994A-I,
7.900%, 5/01/24 (Alternative Minimum Tax) No Opt. Call Aaa $ 2,936,529
KENTUCKY - 1.4%
7,000,000 Kentucky Housing Corporation, Housing Revenue Bonds, 1996 Series A, 6.375%, 7/01/28
(Alternative Minimum Tax) 7/06 at 102 Aaa 7,367,360
5,000,000 Pendleton County, Kentucky, County Lease Revenue Bonds, Kentucky Associated Counties
Leasing Trust Program, Series 1993-A, 6.500%, 3/01/19 3/03 at 102 A 5,285,600
LOUISIANA - 2.9%
4,000,000 Bossier Public Trust Financing Authority, Single Family Mortgage, Revenue Refunding
Bonds, Series 1995B, 6.125%, 8/01/28 8/05 at 102 AAA 4,113,360
12,750,000 East Baton Rouge Mortgage Finance Authority, Single Family Mortgage Revenue Bonds
(GNMA and FNMA Mortgage Backed Securities Program), Series 1994C,
6.350%, 10/01/28 (Alternative Minimum Tax) 10/05 at 102 Aaa 13,335,353
4,980,000 New Orleans Home Mortgage Authority, Single Family Mortgage Revenue Bonds,
Series 1995A, 6.300%, 6/01/28 (Alternative Minimum Tax) 6/05 at 102 Aaa 5,201,759
4,650,000 Orleans Levee District (APolitical Subdivision of the State of Louisiana), Public
Improvement Bonds, Series 1986, 5.950%, 11/01/15 12/05 at 103 Aaa 4,928,675
MAINE - 1.0%
7,925,000 Maine State Housing Authority, Mortgage Purchase Bonds, 1990 Series A-4,
6.400%, 11/15/24 (Alternative Minimum Tax) 8/02 at 102 Aa2 8,230,033
1,250,000 Maine State Housing Authority Mortgage Purchase Bonds, 1995 Series B-2,
6.300%, 11/15/26 (Alternative Minimum Tax) 11/05 at 102 AA 1,309,613
MARYLAND - 0.3%
2,560,000 Community Development Administration, Department of Housing and Community
Development, State of Maryland, Multi-Family Housing Revenue Bonds (Insured
Mortgage Loans), 1993 Series C, 6.625%, 5/15/23 5/03 at 102 Aa3 2,690,611
MASSACHUSETTS - 1.0%
3,080,000 Massachusetts Industrial Finance Agency, Revenue Bonds (College of the Holy Cross-
1996 Issue), 5.625%, 3/01/26 3/06 at 102 Aaa 3,148,776
6,900,000 Massachusetts Water Resources Authority, General Revenue Bonds, 1993 Series C,
5.250%, 12/01/20 12/04 at 102 Aaa 6,755,100
MICHIGAN - 3.0%
8,000,000 Michigan State Hospital Finance Authority, Hospital Revenue Refunding Bonds (Oakwood
Hospital Obligated Group), Series 1993A, 5.625%, 11/01/18 11/03 at 102 Aaa 8,136,480
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
<S> <C> <C> <C> <C>
MICHIGAN - continued
Michigan State Housing Development Authority, Rental Housing Revenue Bonds,
1992 Series A:
$ 9,200,000 6.600%, 4/10/12 10/02 at 102 A+ $ 9,719,984
6,185,000 6.650%, 4/01/23 10/02 at 102 A+ 6,480,643
4,500,000 Chippewa Valley Schools, County of Macomb, State of Michigan, 1993 Refunding Bonds
(General Obligation-Unlimited Tax), 5.000%, 5/01/21 5/03 at 102 Aaa 4,279,185
MINNESOTA - 2.7%
3,570,000 Minnesota Housing Finance Agency, Rental Housing Bonds, 1995 Series D (Non-AMT),
5.950%, 2/01/18 2/05 at 102 Aaa 3,684,918
5,500,000 Minnesota Housing Finance Agency, Single Family Mortgage Bonds, 1996 Series G,
6.250%, 7/01/26 (Alternative Minimum Tax) 1/06 at 102 AA+ 5,747,720
3,560,000 Housing and Redevelopment Authority of the City of Saint Paul, Minnesota and City of
Minneapolis, Minnesota, Health Care Facility Revenue Bonds, Series 1992 (Group
Health Plan, Inc. Project), 6.900%, 10/15/22 12/02 at 102 A 3,915,502
2,000,000 Southern Minnesota Municipal Power Agency, Power Supply System Revenue Bonds,
Series 1992B, 5.750%, 1/01/11 1/03 at 102 Aaa 2,110,800
4,000,000 Washington County Housing and Redevelopment Authority, Pooled Housing and
Redevelopment, Limited Annual Appropriation Tax and Revenue Bonds (Pooled
Refunding Project), Series 1992, 7.200%, 1/01/22 1/03 at 102 BBB 4,221,080
5,170,000 Washington County Housing and Redevelopment Authority, Lease Revenue Bonds
(South Washington County Schools Project), Series 1992, 7.400%, 12/01/14 12/02 at 100 A3 5,655,153
MISSISSIPPI - 0.4%
4,000,000 Mississippi Hospital Equipment and Facilities Authority, Revenue Bonds, Series 1992A
(Wesley Health Systems), 6.050%, 4/01/12 10/02 at 102 AAA 4,224,200
MISSOURI - 1.8%
5,500,000 The Industrial Development Authority of the City of St. Louis, Missouri, Industrial
Revenue Refunding Bonds (Kiel Center Multipurpose Arena Project), Series 1992,
7.625%, 12/01/09 (Alternative Minimum Tax) 12/02 at 102 N/R 5,961,615
11,000,000 St. Louis Municipal Finance Corporation, Leasehold Revenue Refunding Bonds,
6.000%, 7/15/13 7/03 at 102 Aa3 11,403,480
NEVADA - 0.5%
4,000,000 Clark County, Nevada, Industrial Development Revenue Bonds (Nevada Power Company
Project), Series 1992A, 6.700%, 6/01/22 (Alternative Minimum Tax) 6/02 at 102 Aaa 4,351,080
NEW HAMPSHIRE - 0.6%
5,215,000 New Hampshire Higher Educational and Health Facilities Authority, Hospital Revenue
Bonds, Catholic Medical Center Issue, Series 1989, 8.000%, 7/01/04 7/99 at 102 BBB+ 5,553,454
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
<S> <C> <C> <C> <C>
NEW JERSEY - 1.5%
$ 4,500,000 New Jersey Economic Development Authority, Insured Revenue Bonds (Educational
Testing Service Issue), Series 1995A, 6.000%, 5/15/25 5/05 at 102 Aaa $ 4,788,810
7,425,000 New Jersey Housing and Mortgage Finance Agency, Housing Revenue Refunding Bonds,
1992 Series One, 6.700%, 11/01/28 11/02 at 102 A+ 7,966,951
1,000,000 Toms River Board of Education, General Obligation Bonds, Series 1997,
5.750%, 7/15/21 7/07 at 100 Aaa 1,037,400
NEW MEXICO - 0.4%
3,990,000 New Mexico Mortgage Finance Authority, Single Family Mortgage Program Bonds,
1995 Series E, 6.300%, 7/01/17 (Alternative Minimum Tax) 7/05 at 102 AAA 4,162,647
NEW YORK - 14.6%
2,500,000 Dormitory Authority of the State of New York City University System, Consolidated
Revenue Bonds, 1996 Series 2, 6.000%, 7/01/20 7/06 at 102 Baa1 2,616,075
2,465,000 New York State Urban Development Corporation Correctional Capital Facilities, Series 6,
Empire Development Corporation Revenue Bonds, 5.375%, 1/01/25 1/06 at 102 Aaa 2,465,764
16,200,000 New York State Energy Research and Development Authority, Facilities Revenue Bonds,
Series 1992B (Consolidated Edison Company of New York, Inc. Project),
6.375%, 12/01/27 (Alternative Minimum Tax) 12/01 at 101 Aaa 17,219,142
3,500,000 New York State Medical Care Facilities Finance Agency, Mental Health Services
Facilities Improvement Revenue Bonds, 1994 Series A, 5.250%, 8/15/23 2/04 at 102 Aaa 3,417,575
7,635,000 New York State Medical Care Facilities Finance Agency, Mercy Medical Center
Project, Revenue Bonds, 1995 Series A, 5.875%, 11/01/15 5/05 at 102 AA- 7,982,545
2,500,000 New York State Urban Development Corporation, Correctional Facilities Revenue Bonds,
1993A Refunding Series, 5.250%, 1/01/21 1/04 at 102 Aaa 2,447,325
10,750,000 The City of New York, General Obligation Bonds, Fiscal 1995 Series D,
6.600%, 2/01/03 No Opt. Call Baa1 11,710,405
7,695,000 The City of New York, General Obligation Bonds, Fiscal 1995 Series E,
6.600%, 8/01/03 No Opt. Call Baa1 8,439,722
The City of New York, General Obligation Bonds, Fiscal 1993 Series A:
10,000,000 6.375%, 8/01/08 8/02 at 101 1/2 Baa1 10,710,200
2,000,000 6.500%, 8/01/11 8/02 at 101 1/2 Baa1 2,148,100
17,365,000 The City of New York, General Obligation Bonds, Fiscal 1996 Series F,
7.000%, 2/01/06 No Opt. Call Baa1 19,712,748
11,130,000 The City of New York, General Obligation Bonds, Fiscal 1996 Series I,
5.875%, 3/15/18 3/06 at 101 1/2 Baa1 11,411,478
9,000,000 The City of New York, General Obligation Bonds, Fiscal 1996 Series J (Subseries J-1),
5.875%, 2/15/19 2/06 at 101 1/2 Baa1 9,211,950
8,000,000 The City of New York, General Obligation Bonds, Fiscal 1997, Series F,
5.875%, 8/01/24 8/06 at 101 1/2 Baa1 8,188,080
12,020,000 The City of New York, General Obligation Bonds, Fiscal 1997 Series I,
6.250%, 4/15/27 4/07 at 101 Baa1 12,749,374
3,150,000 New York City, New York, Municipal Water Finance Authority, Water and Sewer System
Revenue Bonds, Fiscal 1996 Series A, 5.875%, 6/15/25 6/05 at 101 Aaa 3,279,276
4,000,000 The Trust for Cultural Resources of The City of New York, Revenue Bonds, Series 1997A
(American Museum of Natural History), 5.650%, 4/01/27 4/07 at 101 Aaa 4,108,200
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
<S> <C> <C> <C> <C>
NORTH CAROLINA - 0.8%
$ 1,970,000 North Carolina Housing Finance Authority, Single Family, Revenue Bonds, Series JJ
(1985 Resolution), 6.450%, 9/01/27 (Alternative Minimum Tax) 3/06 at 102 Aa $ 2,088,732
5,210,000 City of Durham Urban Redevelopment Mortgage Revenue Bonds (Durham Hosiery Mill
Project) (FHA Insured LN), Series 1987, 7.500%, 8/01/29
(Alternative Minimum Tax) 8/07 at 105 AAA 5,745,328
NORTH DAKOTA - 0.5%
4,195,000 Mercer County, North Dakota, Pollution Control Revenue Bonds (Basin Electric Power
Cooperative-Antelope Valley Station), 1984 Series B, 7.000%, 1/01/19 1/99 at 103 A 4,416,454
OKLAHOMA - 0.5%
Tulsa County Industrial Authority (Tulsa, Oklahoma), Recreational Facilities Refunding Revenue
Bonds, Series 1992:
1,000,000 6.600%, 9/01/08 9/02 at 102 A- 1,075,560
2,990,000 6.600%, 11/01/08 11/02 at 102 A- 3,233,625
OREGON - 2.6%
13,350,000 State of Oregon, General Obligation, Elderly & Disabled Housing Bonds, 1992 Series B,
6.375%, 8/01/24 8/02 at 102 AA 14,469,264
6,585,000 State of Oregon, General Obligation, Veterans' Welfare Bonds, Series 75,
6.000%, 4/01/27 10/05 at 102 AA 6,843,922
3,380,000 City of Portland, Oregon, Limited Tax Improvement Bonds, 1996 Series A,
5.550%, 6/01/16 6/06 at 100 Aa 3,465,142
PENNSYLVANIA - 0.1%
1,000,000 Delaware Valley Regional Finance Authority, Local Government Revenue Bonds, Series 1997B,
5.700%, 7/01/27 No Opt. Call Aaa 1,067,210
SOUTH CAROLINA - 0.2%
2,135,000 School District No. 4 of Lexington County, South Carolina, Certificates of Participation, Series
1994, 7.000%, 7/01/12 7/04 at 102 Baa 2,352,578
SOUTH DAKOTA - 1.3%
10,370,000 South Dakota Building Authority, Revenue Bonds, Series 1992,
6.700%, 9/01/17 No Opt. Call Aaa 11,872,406
TEXAS - 1.8%
9,870,000 State of Texas, Veterans' Housing Assistance Bonds, Series 1993, General Obligation Bonds,
6.800%, 12/01/23 (Alternative Minimum Tax) 12/03 at 102 AA 10,505,628
1,670,000 Baytown Housing Finance Corporation, Single Family Mortgage Revenue Refunding Bonds,
Series 1992-A, 8.500%, 9/01/11 9/02 at 103 A1 1,893,363
1,520,000 Hidalgo County Housing Finance Corporation, Single Family Mortgage Revenue Bonds (GNMA
and FNMA Collateralized), Series 1994A, 7.000%, 10/01/27
(Alternative Minimum Tax) 4/04 at 102 Aaa 1,614,042
2,680,000 Port Arthur Housing Finance Corporation, Single Family Mortgage Revenue Refunding Bonds,
Series 1992, 8.700%, 3/01/12 9/02 at 103 A 3,000,421
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
<S> <C> <C> <C> <C>
UTAH - 1.5%
$ 3,230,000 Utah Housing Finance Agency, Single Family Mortgage Bonds, 1994 Issue B (Federally
Insured or Guaranteed Mortgage Loans), 6.450%, 7/01/14 7/04 at 102 Aa2 $ 3,413,916
1,245,000 Utah Housing Finance, Single Family Mortgage Bonds, 1997 Series E2 Class I,
5.875%, 1/01/19 (Alternative Minimum Tax) 7/07 at 101 1/2 Aaa 1,271,120
6,000,000 Redevelopment Agency of Salt Lake County, Utah, Central Business District Neighborhood
Redevelopment, Junior Lien Tax Increment Bonds, Series 1992A,
5.800%, 3/01/15 3/02 at 102 A 6,101,040
3,000,000 Municipal Building Authority of Weber County, Utah, Lease Revenue Bonds, Series 1994,
7.500%, 12/15/19 (Pre-refunded to 12/15/04) 12/04 at 102 Aaa 3,606,120
VERMONT - 0.9%
1,085,000 Vermont Educational and Health Buildings Finance Agency, Revenue Refunding Bonds,
Series 1994 (Saint Johnsbury Academy Project), 7.300%, 4/15/18 4/02 at 102 BBB 1,200,032
6,620,000 Vermont Housing Finance Agency, Single Family Housing Bonds, Series 4,
6.400%, 11/01/25 5/02 at 102 A1 6,857,392
WASHINGTON - 0.6%
2,000,000 Washington Public Power Supply System, Nuclear Project No. 3, Refunding Revenue
Bonds, Series 1989A, 6.000%, 7/01/18 7/99 at 100 Aaa 2,036,880
3,000,000 Washington Public Power Supply System, Nuclear Project No. 3, Refunding Revenue
Bonds, Series 1990B, 7.375%, 7/01/04 7/00 at 102 Aa1 3,272,640
WEST VIRGINIA - 0.8%
7,000,000 The County Commission of Harrison County, West Virginia, Solid Waste Disposal Revenue
Bonds (The Potomac Edison Company Harrison Station Project), Series B,
6.250%, 5/01/23 (Alternative Minimum Tax) 5/03 at 102 Aaa 7,438,270
WISCONSIN - 1.8%
16,180,000 Wisconsin Housing and Economic Development Authority, Home Ownership Revenue
Bonds, 1995 Series B, 7.100%, 9/01/15 (Alternative Minimum Tax) 1/05 at 102 AA 17,336,707
PUERTO RICO - 0.1%
1,375,000 Puerto Rico Electric Power Authority, Power Revenue Bonds, Series X,
5.500%, 7/01/25 7/05 at 100 Baa1 1,375,742
$873,211,000 Total Investments - (cost $839,738,117) - 96.6% 911,201,008
============
Temporary Investments in Short-Term Municipal Securities - 1.7%
$ 3,200,000 East Baton Rouge Parish (Exxon), Pollution Control Revenue Refunding, Variable Rate
Demand Bonds, 4.000%, 3/01/22+ A-1+ 3,200,000
10,800,000 Harris County Health Facilities Development Corporation, Hospital Revenue Bonds (The
Methodist Hospital), Series 1994, Variable Rate Demand Bonds, 4.000%, 12/01/25+ A-1+ 10,800,000
1,000,000 Massachusetts Health and Educational Facilities Authority (Capital Asset Program),
Variable Rate Demand Bonds, 4.150%, 1/01/35+ VMIG-1 1,000,000
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
<S> <C> <C> <C> <C>
Temporary Investments in Short-Term Municipal Securities - continued
$ 800,000 New York City Trust for Cultural Resources (Guggenheim Foundation), Variable Rate
Demand Bonds, 4.000%, 12/01/15+ VMIG-1 $ 800,000
$ 15,800,000 Total Temporary Investments - 1.7% 15,800,000
============
Other Assets Less Liabilities - 1.7% $ 16,586,240
------------------------------------------------------------------------------------------------------------------
Net Assets - 100% $943,587,248
==================================================================================================================
<FN>
* 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.
N/R - Investment is not rated.
+ The security has a maturity of more than one year, but has variable rate and
demand features which qualify it as a short-term security. The rate disclosed is
that currently in effect. This rate changes periodically based on market
conditions or a specified market index.
</FN>
</TABLE>
<PAGE>
<TABLE>
Portfolio of Investments
Nuveen Premium Income
Municipal Fund 4, Inc. (NPT)
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
<S> <C> <C> <C> <C>
ALABAMA - 5.0%
$ 8,000,000 Alabama Higher Education Loan Corporation, Student Loan Revenue Refunding Bonds,
Series 1994-D, 5.850%, 9/01/04 (Alternative Minimum Tax) No Opt. Call Aaa $ 8,524,640
27,445,000 Alabama Special Care Facilities Financing Authority of Birmingham, Hospital Revenue
Bonds (Daughters of Charity National Health System - Providence Hospital and
St. Vincent's Hospital), Series 1995, 5.000%, 11/01/25 11/05 at 101 Aa 25,681,659
11,000,000 The DCH Health Care Authority, Health Care Facilities Revenue Bonds, Series 1993-B,
5.750%, 6/01/23 12/02 at 102 A1 11,193,930
ARIZONA - 0.8%
6,700,000 Kyrene Elementary School District No. 28 of Maricopa County, Arizona, School
Improvement Bonds, Project of 1993, Series A (1993), 5.200%, 7/01/13
(Pre-refunded to 7/01/03) 7/03 at 100 Aaa 7,013,359
ARKANSAS - 0.3%
700,000 Arkansas Development Finance Authority, Single Family Mortgage Revenue Refunding
Bonds, 1991 Series A (FHA Insured or VA Guaranteed Mortgage Loans),
8.000%, 8/15/11 8/01 at 103 AA 752,878
521,051 City of Jacksonville, Arkansas, Residential Housing Facilities Board, Single Family
Mortgage Revenue Refunding Bonds, Series 1993A, 7.900%, 1/01/11 7/03 at 103 Aaa 569,712
894,185 Residential Housing Facilities Board of Lonoke County, Arkansas, Single Family Mortgage
Revenue Refunding Bonds, Series 1993A, 7.900%, 4/01/11 4/05 at 103 Aaa 976,388
CALIFORNIA - 3.6%
5,000,000 California Health Facilities Financing Authority, Kaiser Permanente, Revenue Bonds,
1990 Series A, 6.500%, 12/01/20 12/00 at 102 AA 5,373,350
4,780,000 Foothill, Eastern Transportation Corridor Agency, Toll Road Revenue Bonds Series 1995A,
0.000%, 1/01/14 No Opt. Call Baa 1,934,323
Community Redevelopment Financing Authority of the Community Redevelopment Agency
of the City of Los Angeles, California, Grand Central Square, Multifamily Housing
Bonds, 1993 A:
500,000 5.750%, 12/01/13 (Alternative Minimum Tax) 6/03 at 102 Ba 488,195
3,900,000 5.900%, 12/01/26 (Alternative Minimum Tax) No Opt. Call A 3,900,819
4,500,000 Los Angeles County Transportation Commission (California), Proposition C Sales Tax
Revenue Bonds, Second Senior Bonds, Series 1992-A, 6.750%, 7/01/09
(Pre-refunded to 7/01/02) 7/02 at 102 Aaa 5,068,800
1,715,000 Housing Authority of the County of Merced (California), Multifamily Housing Refunding
Revenue Bonds, Series 1993A (Belmont Park Apartments Project),
5.875%, 7/01/19 1/04 at 102 Aaa 1,751,049
2,500,000 Transmission Agency of Northern California, California-Oregon Transmission Project,
Revenue Bonds, 1992 Series A, 6.500%, 5/01/16 5/02 at 102 Aaa 2,745,800
5,000,000 Airports Commission, City and County of San Francisco, California, San Francisco
International Airport, Second Series Revenue Bonds, Issue 8, 6.300%, 5/01/25
(Alternative Minimum Tax) 5/04 at 101 Aaa 5,306,150
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
<S> <C> <C> <C> <C>
CALIFORNIA - continued
$ 3,545,000 Redevelopment Agency of the City of San Leandro, Plaza 1 and Plaza 2 Redevelopment
Projects, 1993 Tax Allocation Bonds, Series A, 6.125%, 6/01/23 6/03 at 102 A- $ 3,689,601
1,945,000 South Gate Public Financing Authority (Los Angeles County, California), Water Revenue
Refunding Bonds, 1996 Series A, 6.000%, 10/01/12 No Opt. Call Aaa 2,163,988
COLORADO- 5.0%
City and County of Denver, Colorado, Airport System Revenue Bonds, Series 1990A:
405,000 8.500%, 11/15/23 (Alternative MinimumTax) (Pre-refunded to 11/15/00) 11/00 at 102 Baa1 462,077
3,695,000 8.500%, 11/15/23 (Alternative Minimum Tax) 11/00 at 102 Baa1 4,160,237
115,000 8.000%, 11/15/25 (Alternative Minimum Tax) (Pre-refunded to 11/15/00) 11/00 at 102 Baa1 129,634
1,190,000 8.000%, 11/15/25 (Alternative MinimumTax) 11/00 at 102 Baa1 1,317,770
City and County of Denver, Colorado, Airport System Revenue Bonds, Series 1991A:
315,000 8.750%, 11/15/23 (Alternative MinimumTax) (Pre-refunded to 11/15/01) 11/01 at 102 Baa1 372,317
885,000 8.750%, 11/15/23 (Alternative Minimum Tax) 11/01 at 102 Baa1 1,027,264
City and County of Denver, Colorado, Airport System Revenue Bonds, Series 1991D:
6,000,000 7.500%, 11/15/02 (Alternative Minimum Tax) 11/01 at 102 Baa1 6,679,080
3,040,000 7.750%, 11/15/13 (Alternative MinimumTax) No Opt. Call Baa1 3,807,539
865,000 7.750%, 11/15/21 (Alternative Minimum Tax) (Pre-refunded to 11/15/01) 11/01 at 102 Baa1 991,377
3,280,000 7.750%, 11/15/21 (Alternative Minimum Tax) 11/01 at 102 Baa1 3,675,207
210,000 7.000%, 11/15/25 (Alternative Minimum Tax) (Pre-refunded to 11/15/01) 11/01 at 100 Baa1 231,344
790,000 7.000%, 11/15/25 (Alternative Minimum Tax) 11/01 at 100 Baa1 851,604
City and County of Denver, Colorado, Airport System Revenue Bonds, Series 1992C:
1,100,000 6.750%, 11/15/22 (Alternative Minimum Tax) (Pre-refunded to 11/15/02) 11/02 at 102 Baa1 1,237,863
4,140,000 6.750%, 11/15/22 (Alternative Minimum Tax) 11/02 at 102 Baa1 4,477,410
16,000,000 City and County of Denver, Colorado, Airport System Revenue Bonds, Series 1997E,
5.250%, 11/15/23 11/01 at 101 Aaa 15,776,160
CONNECTICUT - 1.4%
2,400,000 Connecticut Development Authority, Water Facilities Revenue Refunding Bonds (The
Connecticut Water Company Project - 1993 Series), 6.650%, 12/15/20 12/03 at 102 Aaa 2,687,904
3,000,000 Connecticut Housing Finance Authority, Housing Mortgage Finance Program Bonds,
1996 Series C-2, 6.250%, 11/15/18 5/06 at 102 Aa 3,173,160
6,500,000 State of Connecticut Health and Educational Facilities Authority, Revenue Bonds, Yale-
New Haven Hospital Issue, Series F, 7.100%, 7/01/25
(Pre-refunded to 7/01/00)7/00 at 102 Aaa 7,103,135
DISTRICT OF COLUMBIA - 5.4%
9,500,000 District of Columbia (Washington, D.C.), General Obligation Refunding Bonds, Series 1993A,
6.000%, 6/01/07 No Opt.Call Aaa 10,389,960
6,000,000 District of Columbia (Washington, D.C.), General Obligation Refunding Bonds, Series 1993 B,
5.500%, 6/01/10 No Opt. Call Aaa 6,277,440
5,000,000 District of Columbia (Washington D.C.), General Obligation Bonds, Series 1993 E,
6.000%, 6/01/09 6/03 at 102 Aaa 5,346,950
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
<S> <C> <C> <C> <C>
DISTRICT OF COLUMBIA - continued
$ 3,890,000 District of Columbia (Washington, D.C.), General Obligation Bonds, Series 1993-A3,
5.500%, 6/01/06 No Opt. Call Aaa $ 4,104,767
3,240,000 District of Columbia, Hospital Revenue Refunding Bonds (Medlantic Healthcare Group,
Inc. Issue), Series 1992B, 6.750%, 8/15/07 8/02 at 102 Baa1 3,482,222
4,250,000 District of Columbia, Hospital Revenue Refunding Bonds (Medlantic Healthcare Group,
Inc. Issue), Series 1993A, 5.750%, 8/15/14 8/06 at 102 AAA 4,430,073
5,575,000 District of Columbia Housing Finance Agency, Collateralized Single Family Mortgage
Revenue Bonds, Series 1988F-1, 5.850%, 12/01/14 (Alternative Minimum Tax)12/04 at 103 AAA 5,680,981
3,930,000 District of Columbia, Revenue Bonds (The American College of Obstetricians and
Gynecologists Issue), Series 1991, 6.500%, 8/15/18 8/01 at 102 Aaa 4,271,399
4,500,000 District of Columbia, University Revenue Refunding Bonds (The Howard University
Issue), Series 1992A, 6.750%, 10/01/12 10/02 at 102 A+ 4,949,235
FLORIDA - 0.5%
2,500,000 State of Florida, Hillsborough County Expressway Bonds, Series 1971, Division of Bond
Finance of the Department of General Services, 5.500%, 10/01/08 4/05 at 100 Aa 2,538,975
2,000,000 Jacksonville Health Facilities Authority, Hospital Revenue Bonds (New Children's
Hospital at Baptist Medical Center Project), Series 1991, 7.000%, 6/01/21 6/01 at 102 Aaa 2,221,340
GEORGIA - 2.1%
2,880,000 Municipal Electric Authority of Georgia, General Power Revenue Bonds, 1992B Series,
8.250%, 1/01/11 No Opt. Call A 3,712,810
4,185,000 Municipal Electric Authority of Georgia, Power Revenue Bonds, Series EE,
7.250%, 1/01/24 No Opt. Call Aaa 5,366,593
5,500,000 Municipal Electric Authority of Georgia, General Power Revenue Bonds, Series 1993B,
5.700%, 1/01/19 No Opt. Call Aaa 5,842,650
3,400,000 Development Authority of Burke County, Georgia, Pollution Control Revenue Bonds
(Oglethorpe Power Corporation Vogtle Project), Series 1992,
7.500%, 1/01/03 No Opt. Call Aaa 3,765,500
HAWAII - 0.7%
1,500,000 State of Hawaii, Airports System Revenue Bonds, Series 1990 (Payable Solely from the
Receipts of the Aviation Fuel Tax and the Revenues of the State of Hawaii Airports
System), 7.300%, 7/01/20 (Alternative Minimum Tax) 7/00 at 102 Aaa 1,624,620
5,000,000 Honolulu, Hawaii, City and County Refunding and Improvement Bonds, Series 1993B,
5.000%, 10/01/13 No Opt. Call Aa 4,959,150
ILLINOIS - 13.0%
3,530,000 Illinois Development Finance Authority, Child Care Facility Revenue Bonds, Series 1992
(Illinois Facilities Fund Project), 7.400%, 9/01/04 9/02 at 102 N/R 3,764,180
2,240,000 Illinois Educational Facilities Authority Revenue Bonds, Chicago College of Osteopathic
Medicine, Series A, 8.750%, 7/01/05 No Opt. Call Aaa 2,664,189
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
<S> <C> <C> <C> <C>
ILLINOIS - continued
Illinois Educational Facilities Authority, Revenue Refunding Bonds, Loyola University
of Chicago, Series 1991-A:
$ 10,360,000 7.125%, 7/01/21 (Pre-refunded to 7/01/01) 7/01 at 102 A1 $ 11,543,837
6,190,000 7.125%, 7/01/21 (Pre-refunded to 7/01/01) 7/01 at 102 A+ 6,897,331
Illinois Health Facilities Authority, Revenue Refunding Bonds, Series 1993C (Lutheran
General Healthsystem):
5,705,000 7.000%, 4/01/08 No Opt. Call A1 6,688,314
4,075,000 7.000%, 4/01/14 No Opt. Call A2 4,867,995
3,000,000 Illinois Health Facilities Authority Revenue Refunding Bonds, Series 1993 (Illinois
Masonic Medical Center), 5.500%, 10/01/19 10/03 at 102 A- 2,969,700
2,000,000 Illinois Health Facilities Authority, Revenue Bonds, Series 1992 (Trinity Medical Center),
7.000%, 7/01/12 7/02 at 102 BBB 2,129,860
5,000,000 Illinois Health Facilities Authority, Revenue Bonds, Series 1990 (Riverside Senior Living
Center Project), 7.500%, 11/01/20 (Pre-refunded to 11/01/00) 11/00 at 102 A3 5,557,100
11,980,000 Illinois Health Facilities Authority, Refunding Revenue Bonds, Series 1990-B (Hinsdale
Hospital), 9.000%, 11/15/15 11/00 at 102 Baa1 14,094,949
8,190,000 Illinois Housing Development Authority, Multi-Family Program Bonds, Series 5,
6.650%, 9/01/14 9/04 at 102 A1 8,641,924
3,410,000 Illinois Housing Development Authority, Section 8 Elderly Housing Revenue Revenue
Bonds (Skyline Towers Apartments), Series 1992B, 6.875%, 11/01/17 11/02 at 102 A 3,586,468
3,665,000 Illinois Housing Development Authority Section 8 Elderly Housing Revenue Bonds,
(Morningside North Development), Series 1992D, 6.600%, 1/01/07 1/03 at 102 A 3,896,152
4,000,000 Board of Education of the City of Chicago, General Obligation Lease Certificates,
1992 Series A, 6.250%, 1/01/15 No Opt. Call Aaa 4,475,160
Cook County School District 99 (Cicero), General Obligation School Bonds, Series 1997:
1,345,000 8.500%, 12/01/12 No Opt. Call Aaa 1,834,163
1,455,000 8.500%, 12/01/13 No Opt. Call Aaa 1,999,272
1,685,000 8.500%, 12/01/15 No Opt. Call Aaa 2,338,965
2,025,000 Long Creek Township, Macon County, Illinois, Waterworks Refunding Revenue Bonds,
Series 1993, 7.250%, 5/01/23 5/03 at 100 N/R 2,067,262
3,050,000 Regional Transportation Authority, Cook, DuPage, Kane, Lake, McHenry and Will
Counties, Illinois, General Obligation Bonds, Series 1990A,
7.200%, 11/01/20 No Opt. Call Aaa 3,823,633
14,375,000 Village of Wheeling, Illinois, Multifamily Housing Revenue Bonds, Series 1993A (FHA
Insured Mortgage Loan - Arlington Club Project), 6.400%, 2/01/40 2/03 at 100 AAA 14,772,038
4,850,000 Town of Wood River, Wood River Township Hospital, Madison County, Illinois, General
Obligation Bonds (Alternate Revenue Source), Series 1993, 6.625%, 2/01/14 2/04 at 102 BBB 5,284,657
4,620,000 Town of Wood River, Wood River Township Hospital, Madison County, Illinois, General
Obligation Tort Immunity Bonds, Series 1993, 6.500%, 2/01/14 2/04 at 102 BBB 5,006,140
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
<S> <C> <C> <C> <C>
INDIANA - 3.4%
$ 2,100,000 City of Indianapolis, Indiana, Economic Development Revenue Bonds, Series 1993A (The
Meadows-Section 8 Assisted Project), 6.000%, 7/01/23
(Alternative Minimum Tax) 7/03 at 103 B2 $ 2,070,054
2,250,000 Indiana Bond Bank, Special Program Bonds, Series 1992B, 6.750%, 8/01/12 2/03 at 102 A 2,497,433
3,200,000 Indiana Health Facility Financing Authority, Hospital Revenue Refunding Bonds, Series
1992, (The Methodist Hospitals, Inc.), 6.750%, 9/15/09 9/02 at 102 A 3,489,568
2,000,000 Hospital Authority of the City of Kokomo (Indiana), Hospital Revenue Refunding Bonds,
Series 1993 (Saint Joseph Hospital & Health Center of Kokomo),
6.250%, 8/15/05 No Opt. Call BBB 2,136,460
3,615,000 Mooresville Consolidated School Building Corporation, First Mortgage Bonds, Series
1994A (Morgan County, Indiana), 6.200%, 7/15/15 1/04 at 101 A 3,876,292
5,900,000 Muncie School Building Corporation, First Mortgage Bonds, Series 1992,
6.625%, 7/15/14 (Pre-refunded to 7/15/01) 7/01 at 102 N/R 6,475,191
9,500,000 City of Petersburg, Indiana, Pollution Control Refunding Revenue Bonds, Series 1993A
(Indianapolis Power &Light Company Project), 6.100%, 1/01/16 1/03 at 102 Aa2 10,029,720
IOWA - 0.6%
3,810,000 Iowa Finance Authority, Hospital Revenue Bonds (Trinity Regional Hospital Project),
Series 1993, 7.000%, 7/01/12 (Pre-refunded to 7/01/02) 7/02 at 102 N/R 4,288,269
1,000,000 City of Davenport, Iowa, Home Ownership Mortgage Revenue Refunding Bonds,
Series 1994, 7.900%, 3/01/10 9/04 at 102 A1 1,070,710
KANSAS - 0.4%
1,855,000 Johnson County, Kansas, Single Family Mortgage Revenue Refunding Bonds, Series
1994, 7.100%, 5/01/12 5/04 at 103 A 2,020,318
1,550,000 Labette County, Kansas, Single Family Mortgage Revenue Refunding Bonds, 1993
Series A, 8.400%, 12/01/11 6/03 at 103 A1 1,657,276
KENTUCKY - 0.8%
7,000,000 Kentucky Housing Corporation, Housing Revenue Bonds, 1996 Series A, 6.375%, 7/01/28
(Alternative Minimum Tax) 7/06 at 102 Aaa 7,367,360
LOUISIANA - 1.2%
3,500,000 Clover Dale Housing Corporation, 1995 Multifamily Mortgage Revenue Refunding Bonds
(Clover Dale Plaza-FHA Insured Mortgage, Section 8 Assisted Project), Series A,
6.550%, 2/01/22 4/01 at 100 AA- 3,573,220
6,770,000 Orleans Levee District (A Political Subdivision of the State of Louisiana), Public
Improvement Bonds, Series 1986, 5.950%, 11/01/14 12/05 at 102 Aaa 7,233,948
MAINE - 1.0%
8,000,000 Maine Educational Loan Marketing Corporation, Subordinate Student Loan Revenue
Bonds, Series 1994-2, 6.250%, 11/01/06 (Alternative Minimum Tax) No Opt. Call A 8,705,600
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
<S> <C> <C> <C> <C>
MARYLAND 2.1%
$ 5,000,000 Community Development Administration Maryland Department of Housing and
Community Development, Housing Revenue Bonds, Series 1996A,
5.875%, 7/01/16 1/07 at 102 Aa2 $ 5,209,600
2,000,000 Maryland Health and Higher Educational Facilities Authority, Project and Refunding
Revenue Bonds, Doctors Community Hospital Issue, Series 1993,
5.750%, 7/01/13 7/03 at 102 Baa2 2,018,320
3,620,000 Maryland Transportation Authority, Special Obligation Revenue Bonds, Baltimore/
Washington International Airport Projects, Series 1994-A (Qualified Airport Bonds),
6.400%, 7/01/19 (Alternative Minimum Tax) 7/04 at 102 Aaa 3,844,440
6,800,000 Housing Opportunities Commission of Montgomery County (Montgomery County, Maryland),
Multifamily Housing Revenue Bonds, 1996 Series B, 6.400%, 7/01/28 7/06 at 102 Aa 7,159,176
1,000,000 Prince George's County, Maryland, Project and Refunding Revenue Bonds (Dimensions
Health Corporation Issue), Series 1994, 5.375%, 7/01/14 7/04 at 102 A 1,004,390
MASSACHUSETTS - 1.7%
4,500,000 Massachusetts Health and Educational Facilities Authority Revenue Bonds, Series 1991-C
(New England Deaconess Hospital), 7.200%, 4/01/22 4/01 at 102 A 4,905,450
4,195,000 Massachusetts Health and Educational, Facilities Authority, Revenue Refunding Bonds,
Youville Hospital Issue (FHA Insured Project), Series B, 6.000%, 2/15/34 2/04 at 102 Aa 4,329,072
2,000,000 Massachusetts Housing Finance Agency, Housing Project Revenue Bonds, 6.300%, 10/01/134/03 at 102A1 2,112,440
3,300,000 Massachusetts Industrial Finance Agency, Resource Recovery Revenue Bonds, Semass
Project, Series 1991B, 9.250%, 7/01/15 (Alternative MinimumTax) 7/01 at 103 N/R 3,724,413
MICHIGAN - 4.2%
2,000,000 Michigan State Hospital Finance Authority, Hospital Revenue and Refunding Bonds (The
Detroit Medical Center Obligated Group), Series 1993B, 5.000%, 8/15/03 No Opt. Call A 2,048,800
3,750,000 Michigan Strategic Fund, Limited Obligation Refunding Revenue Bonds (Consumers
Power Company Project), Collateralized Series 1993B, 5.800%, 6/15/10 6/03 at 102 Aaa 3,969,150
5,000,000 City of Detroit, Michigan, Convention Facility Limited Tax Revenue Refunding Bonds
(Cobo Hall Expansion Project), Series 1993, 5.250%, 9/30/12 9/03 at 102 Aaa 4,999,750
3,585,000 City of Detroit, Michigan, Sewage Disposal System Revenue Refunding Bonds,
Series 1995-B, 5.250%, 7/01/21 7/05 at 101 Aaa 3,513,372
10,225,000 City of Detroit, Michigan, Water Supply System Revenue, Senior Lien Bonds,
Series 1997-A, 5.000%, 7/01/27 7/07 at 101 Aaa 9,782,769
4,260,000 County of Jackson Hospital Finance Authority, Hospital Revenue Refunding Bonds (W.A.
Foote Memorial Hospital, Jackson Michigan), Series 1993A,
4.750%, 6/01/15 6/03 at 102 Aaa 3,929,765
1,000,000 City of Kalamazoo Hospital Finance Authority, Hospital Revenue Refunding and
Improvement Bonds (Bronson Methodist Hospital), Series 1996,
5.750%, 5/15/16 5/06 at 102 Aaa 1,034,320
6,000,000 County of Monroe, Michigan, Pollution Control Revenue Bonds (The Detroit Edison
Company Project), Series CC-1992, 6.550%, 9/01/24
(Alternative Minimum Tax) 9/03 at 103 Aaa 6,548,580
2,000,000 Oakland County Economic Development Corporation, Limited Obligation Revenue Bonds,
Series 1997B (Cranbook Educational Community Project), 5.000%, 11/01/17 11/07 at 102 Aa2 1,931,340
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
<S> <C> <C> <C> <C>
MINNESOTA - 1.4%
$ 5,000,000 Minneapolis/St. Paul, Minnesota, Housing Finance Board Single Family Mortgage
Revenue Bonds, FNMA/GNMA Backed Program, Phase XI-AB, 5.800%, 11/01/30
(Alternative Minimum Tax) 11/07 at 102 AAA $ 5,060,350
4,000,000 Minneapolis Community Development Agency, Limited Tax Supported Development
Revenue Bonds, Common Bond Fund Series 1992G-3, 7.375%, 12/01/12 12/02 at 102 A- 4,439,960
2,720,000 City of Minnetonka, Minnesota, Multifamily Housing Revenue Refunding Bonds,
Series 1994A (GNMA Collateralized Mortgage Loan-Brier Creek Project),
6.450%, 6/20/24 6/04 at 102 AAA 2,875,394
MISSISSIPPI - 1.2%
1,875,000 Mississippi Educational Facilities Authority, For Private Nonprofit Institutions of Higher
Learning, Educational Facilities Revenue Bonds (Tougaloo College Project), 1993
Series A, 6.500%, 6/01/18 6/03 at 102 Baa3 1,991,063
2,000,000 Mississippi Higher Education Assistance Corporation, Student Loan Revenue Bonds,
Senior Series 1993-B, 5.800%, 9/01/06 (Alternative Minimum Tax) 9/02 at 102 Aaa 2,076,260
3,000,000 Mississippi Home Corporation, Single Family Mortgage Revenue Bonds, Series 1995B,
6.550%, 4/01/21 (Alternative Minimum Tax) 4/05 at 102 Aaa 3,159,090
1,775,000 Mississippi Housing Finance Corporation, Single Family Mortgage Purchase Revenue Bonds,
Series 1989 (GNMA Mortgage-Backed Securities Program), 8.250%, 10/15/18
(Alternative Minimum Tax) 10/99 at 102 Aaa 1,874,223
1,695,000 Mississippi Regional Housing Authority No. V, Multifamily Housing Revenue Refunding
Bonds, Series 1993A (FHA Insured Mortgage Loan - Deville Apartments Section 8
Assisted Project), 7.050%, 7/01/21 7/00 at 105 AAA 1,807,192
NEBRASKA - 2.0%
9,000,000 Nebraska Higher Education Loan Program, Inc., 1993-1 Series A-2 Senior Notes,
6.250%, 6/01/18 (Alternative Minimum Tax) No Opt. Call Aa 9,515,970
1,090,000 Nebraska Investment Finance Authority, Single Family Mortgage Revenue Bonds,
1988 Series 1, 8.125%, 8/15/38 (Alternative Minimum Tax) 8/98 at 102 Aaa 1,128,532
Airport Authority of the City of Omaha (Nebraska), Airport
Facilities Revenue Refunding Bonds, Series 1991:
1,665,000 8.375%, 1/01/14 (Pre-refunded to 1/01/02) 1/02 at 102 A1 1,947,234
5,075,000 8.375%, 1/01/14 1/02 at 102 A1 5,831,429
NEVADA - 0.8%
1,725,000 Nevada Housing Division, Single Family Program Senior Bonds, 1993 Issue B,
6.200%, 10/01/15 4/04 at 102 Aa2 1,792,430
4,500,000 Clark County School District, Nevada, General Obligation (Limited Tax), School
Improvement Bonds (Current Coupon Bonds), Series 1991A, 7.000%, 6/01/10 No Opt. Call Aaa 5,398,335
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
<S> <C> <C> <C> <C>
NEW HAMPSHIRE - 0.7%
$ 3,660,000 New Hampshire Housing Finance Authority, Single Family Residential Mortgage
Bonds, 1990 Series A, 7.950%, 7/01/22 (Alternative Minimum Tax) 7/00 at 102 Aa $ 3,869,059
1,950,000 New Hampshire Housing Finance Authority, Single Family Mortgage Acquisition
Revenue Bonds, 1996 Series C, 6.200%, 7/01/16 (Alternative Minimum Tax) 1/07 at 102 Aa3 2,032,817
NEW MEXICO - 0.4%
570,000 New Mexico Educational Assistance Foundation, Student Loan Revenue Bonds,
1992 Series One, Student Loan Revenue Bonds, Subordinate 1992 Series One-B,
6.850%, 12/01/05 (Alternative Minimum Tax) 12/02 at 101 A 609,319
2,660,000 New Mexico Mortgage Finance Authority, Single Family Mortgage Purchase
Refunding Senior Bonds, 1992 Series A, 6.900%, 7/01/24 7/02 at 102 Aaa1 2,807,577
NEW YORK - 8.8%
10,500,000 New York State Medical Care Facilities Finance Agency, Hospital and Nursing
Home FHA-Insured Mortgage Revenue Bonds, 1992 Series B, 6.200%, 8/15/22 8/02 at 102 AAA 11,158,560
8,240,000 New York State Medical Care Facilities Finance Agency, Hospital and Nursing Home
FHA-Insured Mortgage Revenue Bonds, 1994 Series A, 6.200%, 2/15/21 2/04 at 102 AAA 8,864,839
7,500,000 New York State Thruway Authority, General Revenue Bonds, Series C,
6.000%, 1/01/15 1/05 at 102 Aaa 7,983,075
1,000,000 The City of New York, General Obligation Bonds, Fiscal 1995 Series A,
7.000%, 8/01/04 No Opt. Call Baa1 1,126,700
3,500,000 The City of New York, General Obligation Bonds, Fiscal 1996 Series B,
6.750%, 8/15/03 No Opt. Call Baa1 3,867,115
14,310,000 The City of New York, General Obligation Bonds, Fiscal 1996 Series F,
6.500%, 2/01/05 No Opt. Call Baa1 15,728,264
The City of New York, General Obligation Bonds, Fiscal 1991 Series D:
2,360,000 9.500%, 8/01/02 (Pre-refunded to 8/01/01) 8/01 at 101 1/2 Aaa 2,823,457
2,040,000 9.500%, 8/01/02 8/01 at 101 1/2 Baa1 2,403,548
25,000,000 New York City Municipal Water Finance Authority, Water and Sewer System Revenue
Bonds, Fiscal 1997 Series B, 5.750%, 6/15/29 (DD) 6/07 at 101 A2 25,678,250
NORTH CAROLINA - 0.2%
2,000,000 North Carolina Municipal Power Agency Number 1, Catawaba Electric Revenue
Bonds, Series 1992, 6.000%, 1/01/11 No Opt. Call Aaa 2,209,400
NORTH DAKOTA - 1.1%
8,245,000 Mercer County, North Dakota, Pollution Control Revenue Bonds (Basin Electric
Power Cooperative-Antelope Valley Station), 1984 Series B, 7.000%, 1/01/191/99 at 103 A 8,680,254
1,245,000 City of Minot, North Dakota, Single Family Mortgage Revenue Refunding Bonds,
Series 1993, 7.700%, 8/01/10 8/03 at 102 Aa 1,341,363
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
<S> <C> <C> <C> <C>
OHIO - 5.1%
$ 3,960,000 Ohio Housing Finance Agency, Residential Mortgage Revenue Bonds (GNMA
Mortgage-Backed Securities Programs), 1995 Series A-1, 6.300%, 9/01/17 3/05 at 102 AAA $ 4,200,372
12,745,000 Ohio Housing Financing Agency, Single Family Mortgage Revenue Bonds (GNMA
Mortgage-Backed Securities Program), 1989 Series A, 7.650%, 3/01/29
(Alternative Minimum Tax) 9/99 at 102 AAA 13,382,505
4,500,000 Akron, Bath and Copley Joint Township Hospital District, Ohio, Hospital Facilities
Revenue Bonds, Series 1992 (Summa Health System Project),
6.250%, 11/15/07 11/02 at 102 A3 4,834,575
9,625,112 Bella Vista Housing Incorporated First Mortgage Revenue Bonds, Series 1981-A (FHA
Insured, Section 8 Assisted Project), 10.875%, 6/15/23 7/98 at 105 N/R 10,434,199
1,995,000 County of Franklin, Ohio, Multifamily Housing Mortgage Revenue Bonds, Series 1994A
(FHA Insured Mortgage Loan-Hamilton Creek Apartments Project), 5.550%, 7/01/24
(Alternative Minimum Tax) 1/05 at 103 Aa 1,956,736
6,215,000 The Student Loan Funding Corporation, Cincinnati, Ohio, Student Loan Revenue Bonds,
Series 1986A, 5.500%, 12/01/01 (Alternative Minimum Tax) No Opt. Call A1 6,359,312
4,370,000 City of Toledo, Ohio, General Obligation (Limited Tax), Various Purpose Improvement
Bonds, Series 1994, 5.750%, 12/01/09 12/04 at 102 Aaa 4,689,185
OKLAHOMA - 0.4%
3,340,000 Tulsa Industrial Authority Hospital Revenue and Refunding Bonds (Hillcrest Medical
Center Project), Series 1996, 6.500%, 6/01/09 No Opt.Call AAA 3,784,187
OREGON - 0.3%
State of Oregon Department of Administrative Services,
Certificates of Participation, 1996 Series C:
1,000,000 5.350%, 5/01/08 5/06 at 101 Aaa 1,047,550
1,500,000 5.400%, 5/01/09 5/06 at 101 Aaa 1,564,065
PENNSYLVANIA - 1.2%
5,000,000 The Harrisburg Authority, Dauphin County, Pennsylvania, Water Revenue Bonds, Series
of 1991, 7.000%, 7/15/10 (Pre-refunded to 7/15/01) 7/01 at 100 Aaa 5,481,650
5,400,000 City of Philadelphia, Pennsylvania, Water and Wastewater Revenue Bonds, Series 1995,
5.300%, 8/01/06 No Opt. Call Aaa 5,665,410
SOUTH DAKOTA - 0.7%
5,845,000 South Dakota Student Loan Assistance Corporation, 7.625%, 8/01/06 (Alternative
Minimum Tax) 8/99 at 102 Aaa 6,144,089
TENNESSEE - 0.3%
2,400,000 Tennessee Housing Development Agency, Mortgage Finance Program Bonds, 1994 Series A,
6.900%, 7/01/25 (Alternative Minimum Tax) 7/04 at 102 A1 2,559,072
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
<S> <C> <C> <C> <C>
TEXAS - 5.0%
$ 4,765,517 General Services Commission (an Agency of the State of Texas), as Lessee, Participation
Interests, 7.500%, 9/01/22 9/99 at 101 1/2 A $ 5,133,367
8,500,000 Texas Turnpike Authority, Dallas North Tollway Revenue Bonds, Series 1990,
7.250%, 1/01/10 (Pre-refunded to 1/01/99) 1/99 at 102 Aaa 8,989,005
1,000,000 Alliance Airport Authority, Inc., Special Facilities Revenue Bonds, Series 1990,
(American Airlines, Inc. Project), 7.500%, 12/01/29
(Alternative Minimum Tax) 12/00 at 102 Baa2 1,090,140
6,000,000 Dallas-Fort Worth International Airport Facility Improvement Corporation, American
Airlines, Inc. Revenue Bonds, Series 1990, 7.500%, 11/01/25 (Alternative
Minimum Tax) 11/00 at 102 Baa2 6,530,640
City of Houston, Texas, Airport System Subordinate Lien Revenue Bonds, Series 1991A:
2,500,000 6.750%, 7/01/08 (Alternative Minimum Tax) 7/01 at 102 Aaa 2,725,125
2,500,000 6.750%, 7/01/21 (Alternative Minimum Tax) 7/01 at 102 Aaa 2,702,175
1,878,112 The Midland Housing Finance Corporation (Midland, Texas), Single Family Mortgage
Revenue Refunding, Series 1992A, 8.450%, 12/01/11 11/05 at 103 Aaa 2,039,930
2,215,000 North Texas Higher Educational Authority, Inc., Student Loan Revenue Bonds, Series
1993D, 6.300%, 4/01/09 (Alternative Minimum Tax) 4/03 at 102 A 2,314,764
3,410,000 Retama Development Corporation, Special Facilities Revenue Bonds (Retama Park
Racetrack Project), Series 1993, 8.750%, 12/15/12 No Opt. Call Aaa 4,706,175
8,500,000 Travis County Health Facilities Development Corporation, Hospital Revenue Bonds
(Daughters of Charity National Health System - Daughters of Charity Health
Services of Austin), Series 1993B, 6.000%, 11/15/22 11/03 at 102 Aa2 8,974,555
UTAH - 1.6%
8,000,000 Intermountain Power Agency (Utah), Power Supply Revenue Bonds, Series 1996A,
6.150%, 7/01/14 7/06 at 102 A1 8,595,200
6,000,000 Intermountain Power Agency, Power Supply Revenue Refunding Bonds, 1997 Series B,
5.750%, 7/01/19 7/07 at 102 Aaa 6,232,200
VIRGINIA - 0.3%
2,645,000 Suffolk Redevelopment and Housing Authority, Multifamily Housing Revenue Refunding
Bonds, Series 1994 (Chase Heritage at Dulles Project), 7.000%, 7/01/24
(Mandatory put 7/01/04) 7/02 at 104 Baa2 2,896,063
WASHINGTON - 9.6%
4,500,000 Washington Public Power Supply System, Nuclear Project No. 1 Refunding Revenue
Bonds, Series 1993A, 5.750%, 7/01/13 7/03 at 102 Aa1 4,625,865
23,000,000 Washington Public Power Supply System, Nuclear Project No. 1 Refunding Revenue
Bonds, Series 1993C, 5.375%, 7/01/15 7/03 at 102 Aa1 22,778,280
4,845,000 Washington Public Power Supply System, Nuclear Project No. 1, Refunding Revenue
Bonds, Series 1989A, 7.500%, 7/01/15 (Pre-refunded to 7/01/99) 7/99 at 102 Aaa 5,206,534
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
<S> <C> <C> <C> <C>
WASHINGTON - continued
$ 3,580,000 Washington Public Power Supply System, Nuclear Project No. 2 Refunding Revenue
Bonds, Series 1990C, 7.625%, 7/01/10 (Pre-refunded to 1/01/01) 1/01 at 102 Aaa $ 4,000,793
7,250,000 Washington Public Power Supply System Nuclear Project No. 2 Refunding Revenue
Bonds, Series 1992A, 6.250%, 7/01/12 7/02 at 102 Aa1 7,781,570
6,475,000 Washington Public Power Supply System, Nuclear Project No. 2 Refunding Revenue,
Series 1990-A, 7.250%, 7/01/06 No Opt. Call Aa1 7,598,413
10,000,000 Washington Public Power Supply System, Nuclear Project No. 3 Refunding Revenue
Bonds, Series 1993B, 7.000%, 7/01/09 No Opt. Call Aa1 11,765,400
2,380,000 Washington Public Power Supply System, Nuclear Project No. 3 Refunding Revenue
Bonds, Series 1989B, 5.500%, 7/01/17 1/00 at 100 Aa1 2,354,439
9,655,000 Washington Public Power Supply System, Nuclear Project No. 3 Refunding Revenue
Bonds, Series 1993C, 5.000%, 7/01/05 No Opt. Call Aaa 9,870,210
4,705,000 City of Tacoma, Washington, Sewer Revenue Refunding Bonds, 1994 Series B,
8.000%, 12/01/08 No Opt.Call Aaa 6,038,868
5,505,000 Housing Authority of the City of Vancouver Revenue Bonds, 1993 Series B, (Fishers Mill
Project), (Junior Lien Bonds), 6.000%, 3/01/23 No Opt. Call Aa 5,739,568
WEST VIRGINIA - 0.1%
610,000 West Virginia Housing Development Fund, Housing Finance Bonds, 1990 Series A,
7.950%, 5/01/17 (Alternative Minimum Tax) 11/00 at 102 Aaa 619,351
WISCONSIN - 0.1%
635,000 Wisconsin Housing and Economic Development Authority, Home Improvement Revenue
Bonds, 1992 Series A, 7.000%, 5/01/10 (Alternative Minimum Tax) 5/02 at 102 A1 671,208
PUERTO RICO - 1.6%
12,390,000 Commonwealth of Puerto Rico, Public Improvement Bonds of 1997 (General Obligation
Bonds), 6.500%, 7/01/13 No Opt. Call Aaa 14,442,891
$815,698,977 Total Investments - (cost $821,277,102) - 96.1% 870,326,938
============
Other Assets Less Liabilities - 3.9% 35,437,225
------------------------------------------------------------------------------------------------------------------
Net Assets - 100% $905,764,163
==================================================================================================================
<FN>
* 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.
N/R - Investment is not rated.
(DD) Portion of security was purchased on a delayed delivery basis (note 1).
</FN>
</TABLE>
<PAGE>
<TABLE>
Statement of Net Assets
October 31, 1997
<CAPTION>
Premium Income Premium Income 2 Premium Income 4
<S> <C> <C> <C>
ASSETS
Investments in municipal securities, at market
value (note 1) $1,406,730,333 $ 911,201,008 $ 870,326,938
Temporary investments in short-term municipal
securities, at amortized cost, which
approximates market value (note 1) 28,000,000 15,800,000 --
Cash 169,353 19,449 2,185,872
Receivables:
Interest 27,351,287 17,088,000 17,336,811
Investments sold 1,529,736 3,483,663 35,437,115
Other assets 562,383 10,418 31,810
-------------- -------------- --------------
Total assets 1,464,343,092 947,602,538 925,318,546
-------------- -------------- --------------
LIABILITIES
Payable for investments purchased 8,748,955 -- 15,839,718
Accrued expenses:
Management fees (note 6) 749,724 498,001 478,551
Other 158,099 277,547 363,216
Preferred share dividends payable 147,167 83,080 97,922
Common share dividends payable 4,879,585 3,156,662 2,774,976
-------------- -------------- --------------
Total liabilities 14,683,530 4,015,290 19,554,383
-------------- -------------- --------------
Net assets (note 7) $1,449,659,562 $ 943,587,248 $ 905,764,163
============== ============== ==============
Preferred shares, at liquidation value $ 475,000,000 $ 300,000,000 $ 308,400,000
============== ============== ==============
Preferred shares outstanding 19,000 12,000 12,336
============== ============== ==============
Common shares outstanding 63,785,431 40,731,119 40,808,465
============== ============== ==============
Netasset value per Common share outstanding (net assets
less Preferred shares at liquidation
value, divided by Common shares outstanding) $ 15.28 $ 15.80 $ 14.64
============== ============== ==============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
Statement of Operations
Year ended October 31, 1997
<CAPTION>
Premium Income Premium Income 2 Premium Income 4
<S> <C> <C> <C>
INVESTMENT INCOME
Tax-exempt interest income (note 1) $82,598,381 $55,515,353 $51,252,546
----------- ----------- -----------
EXPENSES
Management fees (note 6) 8,134,838 5,775,980 5,551,306
Preferred shares - auction fees 848,896 751,883 772,937
Preferred shares - dividend disbursing agent fees 33,654 56,148 97,535
Shareholders' servicing agent fees and expenses 244,753 82,030 119,514
Custodian's fees and expenses 157,844 122,597 123,947
Directors' fees and expenses (note 6) 31,633 6,649 6,391
Professional fees 77,046 23,348 23,015
Shareholders' reports - printing and mailing expenses 220,563 180,754 188,176
Stock exchange listing fees 53,793 35,537 35,600
Investor relations expense 113,372 68,838 71,897
Other expenses 102,592 45,860 40,384
----------- ----------- -----------
Total expenses 10,018,984 7,149,624 7,030,702
----------- ----------- -----------
Net investment income 72,579,397 48,365,729 44,221,844
----------- ----------- -----------
REALIZED AND UNREALIZED GAIN FROM INVESTMENTS
Net realized gain from investment
transactions (notes 1 and 4) 4,421,843 4,884,470 3,879,483
Net change in unrealized appreciation or
depreciation of investments 19,245,861 21,383,160 19,479,315
----------- ----------- -----------
Net gain from investments 23,667,704 26,267,630 23,358,798
----------- ----------- -----------
Net increase in net assets from operations $96,247,101 $74,633,359 $67,580,642
=========== =========== ===========
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
Statement of Changes in Net Assets
<CAPTION>
Premium Income Premium Income 2
Year ended Year ended Year ended Year ended
10/31/97 10/31/96 10/31/97 10/31/96
<S> <C> <C> <C> <C>
OPERATIONS
Net investment income $ 72,579,397 $ 73,868,581 $ 48,365,729 $ 48,572,138
Net realized gain from investment
transactions (notes 1 and 4) 4,421,843 1,864,659 4,884,470 4,115,140
Net change in unrealized appreciation or
depreciation of investments 19,245,861 (8,027,802) 21,383,160 6,744,631
--------------- --------------- --------------- ---------------
Net increase in net assets from operations 96,247,101 67,705,438 74,633,359 59,431,909
--------------- --------------- --------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 1)
From undistributed net investment income:
Common shareholders (59,703,177) (61,521,076) (38,015,000) (37,757,770)
Preferred shareholders (12,807,342) (12,507,980) (10,633,759) (10,618,502)
From accumulated net realized gains from
investment transactions:
Common shareholders (1,862,537) (3,157,383) -- --
Preferred shareholders -- -- -- --
--------------- --------------- --------------- ---------------
Decrease in net assets from distributions
to shareholders (74,373,056) (77,186,439) (48,648,759) (48,376,272)
--------------- --------------- --------------- ---------------
CAPITAL SHARE TRANSACTIONS (NOTE 2)
Preferred shares -- net proceeds from
sale of shares 123,593,750 -- -- --
--------------- --------------- --------------- ---------------
Net increase in net assets from capital
share transactions 123,593,750 -- -- --
--------------- --------------- --------------- ---------------
Net increase (decrease) in net assets 145,467,795 (9,481,001) 25,984,600 11,055,637
Net assets at beginning of year 1,304,191,767 1,313,672,768 917,602,648 906,547,011
--------------- --------------- --------------- ---------------
Net assets at end of year $ 1,449,659,562 $ 1,304,191,767 $ 943,587,248 $ 917,602,648
=============== =============== =============== ===============
Balance of undistributed net investment
income at end of year $ 756,402 $ 687,524 $ 2,076,316 $ 2,359,346
=============== =============== =============== ===============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Premium Income 4
Year ended Year ended
10/31/97 10/31/96
<S> <C> <C>
OPERATIONS
Net investment income $ 44,221,844 $ 44,783,671
Net realized gain from investment
transactions (notes 1 and 4) 3,879,483 3,382,309
Net change in unrealized appreciation or
depreciation of investments 19,479,315 4,202,791
------------- -------------
Net increase in net assets from operations 67,580,642 52,368,771
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 1)
From undistributed net investment income:
Common shareholders (33,488,322) (33,267,660)
Preferred shareholders (10,890,755) (10,875,395)
From accumulated net realized gains from
investment transactions:
Common shareholders -- --
Preferred shareholders -- --
------------- -------------
Decrease in net assets from distributions
to shareholders (44,379,077) (44,143,055)
------------- -------------
CAPITAL SHARE TRANSACTIONS (NOTE 2)
Preferred shares -- net proceeds from
sale of shares -- --
------------- -------------
Net increase in net assets from capital
share transactions -- --
------------- -------------
Net increase (decrease) in net assets 23,201,565 8,225,716
Net assets at beginning of year 882,562,598 874,336,882
------------- -------------
Net assets at end of year $ 905,764,163 $ 882,562,598
============= =============
Balance of undistributed net investment
income at end of year $ 1,473,421 $ 1,630,654
============= =============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
Notes to Financial Statements
1. GENERAL INFORMATION AND SIGNI1/2CANT ACCOUNTING POLICIES
The National Funds (the "Funds") covered in this report and their corresponding
New York Stock Exchange symbols are Nuveen Premium Income Municipal Fund, Inc.
(NPI), Nuveen Premium Income Municipal Fund 2, Inc. (NPM) and Nuveen Premium
Income Municipal Fund 4, Inc. (NPT).
Each Fund invests primarily in a diversified portfolio of municipal obligations
issued by state and local government authorities. 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. 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 their when-issued and delayed delivery purchase commitments. At
October 31, 1997, Premium Income 4 had a delayed delivery purchase commitment of
$5,279,407. There were no such purchase commitments in either of the other two
funds.
Interest 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.
Federal 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 income tax, to retain such
tax-exempt status when distributed to shareholders of the Funds. All income
dividends paid during the fiscal year ended October 31, 1997, 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 on the first
business day 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 more than one 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 of the Funds
is as follows:
<TABLE>
<CAPTION>
Premium Income Premium Income 2 Premium Income 4
<S> <C> <C> <C>
Number of shares:
Series M 3,800 2,000 2,200
Series T 3,800 3,000 2,000
Series T2 -- -- 1,328
Series W 3,800 2,000 1,680
Series Th 3,800 3,000 2,000
Series F 3,800 2,000 1,800
Series F2 -- -- 1,328
------ ------ ------
Total 19,000 12,000 12,336
====== ====== ======
</TABLE>
Effective August 12, 1997, the terms of Premium Income's preferred stock were
amended, whereby the Fund's preferred shares were converted from Remarketed
Preferred (dividend rates established primarily every 28 days by a remarketing
process) to MuniPreferred (dividend rates established every seven days by a
"Dutch auction" process), as approved by shareholders on August 6, 1997. In
addition, the fund issued an additional 5,000 preferred shares, comprising 1,000
shares each of Series M, T, W, Th and F between September 30, 1997 and October
6, 1997.
Derivative Financial Instruments
The Funds may invest in transactions in certain derivative financial instruments
including futures, forward, swap, 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 October 31, 1997.
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.
<PAGE>
2. FUND SHARES
There were no common share transactions during the fiscal years ended October
31, 1997, or October 31, 1996, in any of the Funds. Premium Income issued 5,000
additional preferred shares, comprising 1,000 shares of each Series M, T, W, Th
and F, during the fiscal year ended October 31, 1997.
3. DISTRIBUTIONS TO COMMON SHAREHOLDERS
On November 3, 1997, the Funds declared Common share dividend distributions from
their tax-exempt net investment income which were paid December 1, 1997, to
shareholders of record on November 15, 1997, as follows:
<TABLE>
<CAPTION>
Premium Income Premium Income 2 Premium Income 4
<S> <C> <C> <C>
Dividend per share $.0740 $.0775 $.0680
====== ====== ======
</TABLE>
4. SECURITIES TRANSACTIONS
Purchases and sales (including maturities) of investments in municipal
securities and temporary municipal investments during the fiscal year ended
October 31, 1997, were as follows:
<TABLE>
<CAPTION>
Premium Income Premium Income 2 Premium Income 4
<S> <C> <C> <C>
Purchases:
Investments in municipal securities $239,260,877 $171,878,322 $230,810,572
Temporary municipal investments 205,475,000 87,900,000 62,540,000
Sales and Maturities:
Investments in municipal securities 134,857,047 186,769,225 247,967,668
Temporary municipal investments 177,575,000 75,100,000 62,540,000
============ ============ ============
</TABLE>
At October 31, 1997, the identified cost of investments owned for federal income
tax purposes was the same as the cost for financial reporting purposes for each
Fund.
At October 31, 1997, Premium Income 4 had unused capital loss carryforwards of
$17,365,717 available for federal income tax purposes to be applied against
future capital gains, if any. If not applied, $16,344 of the carryforwards will
expire in the year 2001, $12,137,697 will expire in the year 2002 and $5,211,676
will expire in the year 2003.
5. UNREALIZED APPRECIATION (DEPRECIATION)
Gross unrealized appreciation and gross unrealized depreciation of investments
at October 31, 1997, were as follows:
<TABLE>
<CAPTION>
Premium Income Premium Income 2 Premium Income 4
<S> <C> <C> <C>
Gross unrealized:
appreciation $66,911,783 $71,462,891 $49,121,192
depreciation (12,028) -- (71,356)
----------- ----------- -----------
Net unrealized appreciation $66,899,755 $71,462,891 $49,049,836
=========== =========== ===========
</TABLE>
<PAGE>
6. MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Under the Funds' investment management agreements with Nuveen Advisory Corp.
(the "Adviser"), a wholly owned subsidiary of The John Nuveen Company, each Fund
pays an annual management fee, payable monthly, at the rates set forth below,
which are based upon the average daily net asset value of each Fund as follows:
<TABLE>
<CAPTION>
Average daily net asset value Management fee
<S> <C>
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
</TABLE>
The fee compensates the Adviser for overall investment advisory and
administrative services and general office facilities. The Funds pay no
compensation directly to those Directors who are affiliated with the Adviser or
to their officers, all of whom receive remuneration for their services to the
Funds from the Adviser.
7. COMPOSITION OF NET ASSETS
At October 31, 1997, net assets consisted of:
<TABLE>
<CAPTION>
Premium Income Premium Income 2 Premium Income 4
<S> <C> <C> <C>
Preferred shares, $25,000 stated value per
share, at liquidation value $ 475,000,000 $ 300,000,000 $ 308,400,000
Common shares, $.01 par value per share 637,854 407,311 408,085
Paid-in surplus 901,946,522 565,414,366 563,798,538
Balance of undistributed net investment income 756,402 2,076,316 1,473,421
Accumulated net realized gain (loss) from
investment transactions 4,419,029 4,226,364 (17,365,717)
Net unrealized appreciation of investments 66,899,755 71,462,891 49,049,836
-------------- -------------- --------------
Net assets $1,449,659,562 $ 943,587,248 $ 905,764,163
============== ============== ==============
Authorized shares:
Common 200,000,000 200,000,000 200,000,000
Preferred 1,000,000 1,000,000 1,000,000
============== ============== ==============
</TABLE>
<PAGE>
8. INVESTMENT COMPOSITION
Each Fund invests in municipal securities which include general obligation,
escrowed and rev -enue bonds. At October 31, 1997, the revenue sources by
municipal purpose for these investments, expressed as a percent of total
investments, were as follows:
<TABLE>
<CAPTION>
Premium Income Premium Income 2 Premium Income 4
<S> <C> <C> <C>
Revenue Bonds:
Housing Facilities 15% 22% 20%
Utilities 10 1 12
Health Care Facilities 7 7 12
Transportation 8 9 9
Pollution Control Facilities 7 5 4
Water / Sewer Facilities 5 2 7
Educational Facilities 5 2 6
Lease Rental Facilities 2 5 1
Industrial Development 3 -- 1
Other 8 8 2
General Obligation Bonds 10 20 13
Escrowed Bonds 20 19 13
--- --- ---
100% 100% 100%
=== === ===
</TABLE>
Certain long-term and intermediate-term investments owned by the Funds are
either covered by insurance issued by several private insurers or are backed by
an escrow or trust containing U.S. Government or U.S. Government agency
securities, both of which ensure the timely payment of principal and interest in
the event of default (52% for Premium Income, 39% for Premium Income 2, and 39%
for Premium Income 4). Such insurance or escrow, however, does not guarantee the
market value of the municipal securities or the value of any of the Funds'
shares.
All of the temporary investments in short-term municipal securities have credit
enhancements (letters of credit, guarantees or insurance) issued by third party
domestic or foreign banks or other institutions.
For additional information regarding each investment security, refer to the
Portfolio of Investments of each Fund.
9. OTHER MATTERS
In June 1997, the federal district court in Chicago approved the settlement of
litigation pending and a similar lawsuit (dismissed in December 1996) which was
pending in state court in Hennepin County, Minnesota, against John Nuveen & Co.,
Incorporated, Nuveen Advisory Corp., current and former directors of two of the
Nuveen exchange-traded investment companies, Nuveen Municipal Value Fund, Inc.
and Nuveen Premium Income Municipal Fund, Inc., inside counsel to Nuveen & Co.
(collectively the "Nuveen Defendants") and the two Funds' former outside legal
counsel, making various allegations with respect to the two Funds' January 1994
rights offerings. The settlement, which in no way constitutes an admission of
liability by any defendant, was approved by the court in July 1997.
<PAGE>
<TABLE>
Financial Highlights
Selected data for a common share outstanding throughout each period is as
follows:
<CAPTION>
Dividends from tax-exempt
Operating performance net investment income
------------------------------- --------------------------
Net asset Net realized
value Net and unrealized
beginning investment gain (loss) To Common To Preferred
of period income from investments Shareholders Shareholders+
<S> <C> <C> <C> <C> <C>
Premium Income
Year ended 10/31:
1997 $14.96 $1.14 $ .37 $ (.94) $(.20)
1996 15.11 1.16 (.09) (.97) (.20)
1995 14.14 1.24 1.01 (1.06) (.22)
1994 16.30 1.26 (2.02)*** (1.17) (.16)
1993 15.79 1.43 .61 (1.36) (.17)
Five months ended
10/31/92 15.76 .60 .03 (.52) (.08)
Year ended 5/31:
1992 15.18 1.49 .50 (1.14) (.27)
1991 14.60 1.50 .54 (1.08) (.38)
1990 14.72 1.51 (.12) (1.08) (.43)
7/18/88 to
5/31/89 14.05 1.10 .75 (.75) (.27)
<CAPTION>
Premium Income 2
<S> <C> <C> <C> <C> <C>
Year ended 10/31:
1997 15.16 1.18 .65 (.93) (.26)
1996 14.89 1.19 .27 (.93) (.26)
1995 13.03 1.20 1.88 (.92) (.30)
1994 15.60 1.18 (2.53) (.94) (.24)
1993 13.57 1.14 2.19 (.91) (.25)
7/23/92 to
10/31/92 14.05 .16 (.54) (.08) --
<CAPTION>
Premium Income 4
<S> <C> <C> <C> <C> <C>
Year ended 10/31:
1997 14.07 1.08 .58 (.82) (.27)
1996 13.87 1.10 .19 (.82) (.27)
1995 12.09 1.10 1.81 (.84) (.29)
1994 14.87 1.07 (2.76) (.84) (.20)
2/19/93 to
10/31/93 14.05 .51 .97 (.42) (.07)
<PAGE>
<CAPTION>
Distributions from
capital gains
--------------------------
Organization and
offering costs and Per common
Preferred share Net asset share
To Common To Preferred underwriting value market value
Shareholders Shareholders+ discounts end of period end of period
<S> <C> <C> <C> <C> <C>
Premium Income
Year ended 10/31:
1997 $(.03) $-- $(.02) $15.28 $14.6250
1996 (.05) -- -- 14.96 14.5000
1995 -- -- -- 15.11 14.3750
1994 (.07) -- -- 14.14 13.2500
1993 -- -- -- 16.30 17.7500
Five months ended
10/31/92 -- -- -- 15.79 15.8750
Year ended 5/31:
1992 -- -- -- 15.76 16.2500
1991 -- -- -- 15.18 15.3750
1990 -- -- -- 14.60 15.0000
7/18/88 to
5/31/89 -- -- (.16) 14.72 14.8750
<CAPTION>
Premium Income 2
<S> <C> <C> <C> <C> <C>
Year ended 10/31:
1997 -- -- -- 15.80 15.5000
1996 -- -- -- 15.16 14.1250
1995 -- -- -- 14.89 13.1250
1994 (.03) (.01) -- 13.03 11.3750
1993 -- -- (.14) 15.60 14.8750
7/23/92 to
10/31/92 -- -- (.02) 13.57 13.3750
<CAPTION>
Premium Income 4
<S> <C> <C> <C> <C> <C>
Year ended 10/31:
1997 -- -- -- 14.64 13.6875
1996 -- -- -- 14.07 12.6880
1995 -- -- -- 13.87 12.1250
1994 (.03) (.01) (.01) 12.09 10.7500
2/19/93 to
10/31/93 -- -- (.17) 14.87 14.2500
<PAGE>
<CAPTION>
Ratios/Supplemental data
--------------------------------------------------------
Ratio of net
Total Ratio of investment
investment Total return Net assets expenses to income to Portfolio
return on on net end of period average average turnover
market value** asset value** (in thousands) net assets++ net assets++ rate
<S> <C> <C> <C> <C> <C> <C>
Premium Income
Year ended 10/31:
1997 7.81% 8.89% $1,449,660 .76% 5.51% 10%
1996 8.24 5.92 1,304,192 .75 5.67 16
1995 16.88 14.84 1,313,673 .76 6.13 12
1994 (19.13) (5.88) 1,252,208 .77 6.08 15
1993 20.96 12.33 1,213,064 .79 6.28 11
Five months ended
10/31/92 .73 3.46 1,173,329 .78* 6.33* 2
Year ended 5/31:
1992 13.32 11.72 1,167,042 .66 6.71 2
1991 10.14 11.88 1,127,103 .65 6.97 1
1990 8.39 6.74 1,090,365 .65 6.98 4
7/18/88 to
5/31/89 4.38 10.44 1,089,152 .62* 6.92* 7
<CAPTION>
Premium Income 2
<S> <C> <C> <C> <C> <C> <C>
Year ended 10/31:
1997 16.76 10.72 943,587 .77 5.23 19
1996 14.94 8.28 917,603 .77 5.34 24
1995 24.22 22.06 906,547 .77 5.60 27
1994 (17.76) (10.64) 830,600 .76 5.41 26
1993 18.47 22.31 835,582 .73 5.19 20
7/23/92 to
10/31/92 (10.38) (2.89) 552,570 .73* 4.77* 12
<CAPTION>
Premium Income 4
<S> <C> <C> <C> <C> <C> <C>
Year ended 10/31:
1997 14.70 10.20 905,764 .79 4.98 26
1996 11.57 7.53 882,563 .79 5.11 20
1995 21.32 22.41 874,337 .80 5.35 32
1994 (19.12) (13.29) 801,617 .88 5.15 47
2/19/93 to
10/31/93 (2.13) 8.94 431,437 .82* 4.04* 10
<FN>
* Annualized.
** Total Investment Return on Market Value is the combination of reinvested
dividend income, reinvested capital gains distributions, if any, and changes in
stock price per share. Total Return on Net Asset Value is the combination of
reinvested dividend income, reinvested capital gains distributions, if any, and
changes in net asset value per share. Total returns are not annualized.
*** Includes ($.187) effect of the Fund's Rights Offering of shares at a price
below NAV and costs of the offering.
+ The amounts shown are based on Common share equivalents.
++ Ratios do not reflect the effect of dividend payments to Preferred
shareholders.
</FN>
</TABLE>
<PAGE>
FUND INFORMATION
BOARD OF DIRECTORS
Robert P. Bremner
Lawrence H. Brown
Anthony T. Dean
Anne E. Impellizzeri
Peter R. Sawers
William J. Schneider
Timothy R. Schwertfeger
Judith M. Stockdale
FUND MANAGER
Nuveen Advisory Corp.
333 West Wacker Drive
Chicago, IL 60606
CUSTODIAN
The Chase Manhattan Bank
4 New York Plaza
New York, NY 10004-2413
(800) 257-8787
LEGAL COUNSEL
Fried, Frank, Harris,
Shriver & Jacobson
Washington, D.C.
INDEPENDENT AUDITORS
Ernst & Young LLP
Chicago, Illinois
<PAGE>
Nuveen makes reinvesting easy. A phone call is all it takes to set up your
reinvestment account.
(continued from inside front cover)
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
toll-free at (800) 257-8787.
<PAGE>
Serving Investors for Generations
Photo of: John Nuveen, Sr.
Since our founding in 1898, John Nuveen &Co. has been synonymous with
investments that withstand the test of time. Today, we offer a broad range of
investments designed for investors whose portfolios are the principal source of
their ongoing financial security. More than 1.3 million investors have trusted
Nuveen to help them maintain the lifestyle they currently enjoy.
The cornerstone of Nuveen's investment philosophy is a commitment to disciplined
long-term investment strategies whose aim is to provide 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 help ensure that they continue to meet our exacting
standards.
Whether your focus is long-term growth, dependable current income or
preservation of capital, Nuveen offers a wide array of equity and fixed-income
mutual funds, unit trusts, exchange-traded funds, individual managed account
services, and cash management products, including many that generate tax-free
income.
To find out more about how Nuveen investment products and services can help you
preserve your financial security, talk with your financial adviser, or call us
at (800) 257-8787 for more information, including a prospectus where applicable.
Please read that information carefully before you invest.
NUVEEN
John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, IL 60606-1286
(800) 257-8787
www.nuveen.com
FAN-5.10.97
