NUVEEN
Exchange-Traded Funds
October 31, 1998
Dependable, tax-free income
to help you keep more of
what you earn.
NPI
Premium Income
NPM
Premium Income 2
NPT
Premium Income 4
<PAGE>
Highlights
As of October 31, 1998
Contents
1 Dear Shareholder
3 Portfolio Manager Roundtable
5 NPI's Performance Overview
6 NPM's Performance Overview
7 NPT's Performance Overview
8 Shareholder Meeting Report
11 Report of Independent Auditors
12 Portfolio of Investments
35 Statement of Net Assets
36 Statement of Operations
37 Statement of Changes in Net Assets
38 Notes to Financial Statements
42 Financial Highlights
44 Building Better Portfolios
45 Fund Information
===============================================================================
Credit Quality Performance Highlights
Nuveen Premium Income Municipal Fund, Inc. (NPI)
o Competitive taxable-equivalent yield of
8.13% for investors in the 31% federal income
tax bracket
o One-year taxable-equivalent total return on
shareprice of 13.38% for investors in the 31%
federal income tax bracket
o Outperformed the Lehman Brothers Municipal
Bond Index and Lipper's peer group average*
pie chart
AAA/U.S. Guaranteed 61%
AA 22%
A 10%
BBB/NR 7%
Nuveen Premium Income Municipal Fund 2, Inc. (NPM)
o Competitive taxable-equivalent yield of
7.99% for investors in the 31% federal income
tax bracket
o One-year taxable-equivalent total return on
share price of 18.76% for investors in the 31%
federal income tax bracket
o Outperformed the Lehman Brothers Municipal
Bond Index and Lipper's peer group average*
pie chart
AAA/U.S. Guaranteed 57%
AA 12%
A 21%
BBB/NR 10%
Nuveen Premium Income Municipal Fund 4, Inc. (NPT)
o Competitive taxable-equivalent yield of
7.99% for investors in the 31% federal income
tax bracket
o One-year taxable-equivalent total return on
share price of 17.29% for investors in the 31%
federal income tax bracket
o Outperformed the Lehman Brothers Municipal
Bond Index and Lipper's peer group average*
pie chart
AAA/U.S. Guaranteed 51%
AA 19%
A 19%
BBB/NR 11%
* The Lehman Brothers Municipal Bond Index is an unleveraged index comprised of
a broad range of investment-grade municipal bonds and does not reflect any
initial or ongoing expenses.
The Lipper Peer Group returns represent the average annualized returns of the
funds in the Lipper National Leveraged Municipal Debt category. Returns assume
reinvestment of dividends and do not reflect any applicable sales charge.
<PAGE>
Dear Shareholder
Photo of: Timothy R. Schwertfeger
Timothy R. Schwertfeger
Chairman of the Board
Wealth takes a lifetime to build. Once achieved, it should be preserved.
I'm pleased to report that over the past 12 months, the Nuveen Premium Income
Funds, Inc. (NPI, NPM, and NPT) have continued to perform well, meeting their
primary objective of providing you with attractive levels of tax-free income and
after-tax total returns. The strong market for fixed-income securities,
bolstered by investor demand for quality investments, benefited these three
funds and led to higher share prices than those posted a year ago. Attractive
tax-free income, enhanced by strong share price performance, illustrates once
again that Nuveen's Exchange-Traded Funds can provide an excellent investment
option for income-oriented investors.
The Year in Review
Over the past year, the markets endured bouts of volatility, as the Asian
financial crisis spilled over into emerging markets and affected economies
around the globe. Investors responded by seeking a haven from the uncertainty in
more conservative investments, such as municipal bond funds. As interest rates
continued to trend downward, the competitive yields offered by our
exchange-traded funds stimulated additional investor interest and demand, which
led to improved share prices overall.
In this environment, the market for exchange-traded municipal bond funds has
been exceptionally strong. These funds continue to represent a bright spot among
fixed-income investments, offering attractive income in a market that places a
high premium on yield. In addition, the funds have generally maintained good
levels of call protection, resulting in relatively stable income streams. In the
coming months, we will continue to watch several key factors affecting the
future of the economy, including corporate earnings reports, wage and employment
figures, U.S. consumer confidence levels, the continuing impact of foreign
financial turmoil, and any further interest rate indications from the Federal
Reserve. These factors will influence the outlook for fixed-income markets into
the coming year.
Municipals Very Attractively Priced
Over the past year, rising prices drove yields on 30-year Treasuries to their
lowest levels since 1977. The story in the municipal market, however, was quite
different. With yields on the long Treasury bond pushing below 5% at times, the
yield on the Bond Buyer 40, an unmanaged index of long-term municipal bonds,
fell just 27 basis points - from 5.40% to 5.13% - compared with the 100-basis
point drop in Treasury yields over the past 12 months. As of October 31, 1998,
the ratio of municipal yields to Treasury yields stood at 98.8%, compared with
the more typical range of 86-87%. Over the past few months, this ratio has
ranged as high as 100.6%. For investors, this means that quality municipal bonds
currently offer about the same yield as Treasury bonds with comparable
maturities - even before the tax advantages of municipal bonds are taken into
account. On an after-tax basis in today's market, municipal bonds present an
exceptionally attractive investment option relative to Treasuries.
One of the main factors in the steep decline in Treasury yields during the past
year was the strong interest in these investments by international investors. As
the financial turmoil in Asia continued to spread to economies worldwide and the
dollar strengthened against foreign currencies, the demand for U.S.
dollar-denominated Treasury securities increased. In the municipal market, where
foreign demand was limited by an inability to benefit from the tax advantages of
munis, low interest rates and a strong economy combined to generate high levels
of new issuance and a dramatic increase in the refinancing of existing bonds.
The first ten months of 1998 saw $234 billion of municipal issuance, up 32% over
the same period in 1997. In terms of total municipal issuance, this puts 1998 on
pace to be the second largest year on record.
In addition, the continued strength of the U.S. economy has brought about
improvements in the fundamental financial health of many municipalities and
boosted the overall credit quality of municipal bonds. In the third quarter of
1998, upgraded issues by the two major rating agencies outnumbered downgrades by
a margin of 7 to 2.
"The key to taking advantage of the exceptional values currently available in
the municipal market is the expertise of a proven investment manager."
Nuveen Expertise Is Key
The key to taking advantage of the exceptional values currently available in the
municipal market is the expertise of a proven investment manager. At Nuveen, we
recognize the value of time-tested expertise. The high level of recent
municipal issuance, for example, highlights the value of Nuveen's in-depth
knowledge of the municipal market, as our portfolio management teams carefully
analyze the flood of issues to select those securities best suited to help the
funds achieve their investment objectives.
As a further enhancement to our management capabilities, Nuveen has assembled a
strong core of Premier Advisers(SM), managers who are experts in their
particular area of the market who can provide time-tested experience and
insight. In addition to Nuveen Advisory Corp., our Premier Adviser for tax-free
investing, you can rely on other Nuveen Premier Advisers(SM) to share their
wisdom in the equity market, including Institutional Capital Corporation for
equity value investing and Rittenhouse Financial Services for equity growth
investing. For more information about our funds, including charges and expenses,
contact your financial adviser for a prospectus, or call Nuveen at
(800) 621-7227. Please read the prospectus carefully before you invest or
send money.
We encourage you to talk with your financial adviser about the ways Nuveen's
expanding selection of investments can assist you in establishing a diversified
portfolio designed to help you build and sustain long-term financial security.
For more than 100 years, investors have known they can count on Nuveen. We are
grateful for the confidence you have shown in us, and we intend to continue
earning your trust in the years ahead.
Sincerely,
/s/ Timothy R. Schwertfeger
Timothy R. Schwertfeger
Chairman of the Board
December 15, 1998
<PAGE>
Nuveen Exchange-Traded Funds
Portfolio Manager Roundtable
Portfolio managers Tom Futrell, Steve Peterson, and Ted Neild discuss the
current municipal market environment, fund performance, and the outlook for the
Nuveen Premium Income Municipal Funds.
What outside factors influenced the municipal bond market the most over the past
year?
The third quarter of 1998 saw an acceleration of trends that have been apparent
in the fixed-income markets over the past 12 months: declining interest rates
and an increased ratio of municipal to Treasury yields. The cause in both cases
was heightened concern about the condition of the global financial system. While
the U.S. economy exhibited continued growth, the impact of the financial turmoil
in Southeast Asia, Russia, and other emerging markets was felt in the U.S.
equity market.
A desire to cushion this impact and avert a domestic credit crunch prompted the
Federal Reserve to ease short-term interest rates in late September, the first
rate cut in almost three years. In response to concerns that the initial
quarter-point cut might not be sufficient, the Fed reduced rates again in
October and November, bringing the federal funds rate to 4.75%. The Fed
indicated that this accommodative stance was intended to sustain U.S. economic
growth going forward, while also adding some stability to global markets.
How have these outside factors affected municipal bond issuance?
In response to an environment of low interest rates and continued economic
growth, municipal bond issuance over the past year has been among the heaviest
in years. As of the end of October, total issuance in 1998 - both new deals and
refundings - was on pace to become the second largest year on record. Another
point concerns the level of insured bonds that have been brought to market. For
the month of September, insured bonds made up 56% of all issuance. Most notable
among the flood of new bonds was the $7 billion Long Island Power Authority
(LIPA) offering. The first part of the LIPA issuance, which exceeded $3.5
billion, the largest issuance in municipal bond history, came to market in May,
and another segment was brought out in October. Increased municipal supply has
been met with strong investor demand, due in part to recent volatility in the
equity markets. Demand from institutional buyers such as insurance companies has
also increased, as these investors recognize the exceptionally attractive values
currently offered by municipal bonds.
What were the funds' total returns for the past year?
For the fiscal year ending October 31, 1998, the Nuveen Exchange-Traded Funds
covered in this report produced the following total returns on net asset value
(NAV), compared to the total return of the Lehman Brothers Municipal Bond
Index*:
Taxable- Lehman Brothers
Total Equivalent Municipal Bond
Fund Return Total ReturnIndex Total Return
- ------------------------------------------------------------------
NPI 8.86% 11.52% 8.02%
- ------------------------------------------------------------------
NPM 8.93% 11.66% 8.02%
- ------------------------------------------------------------------
NPT 8.58% 11.15% 8.02%
- ------------------------------------------------------------------
Along with outperforming the Lehman Index, all three of the funds had better
total returns than their Lipper Peer Group average **, which had a total return
of 8.43%. The funds' durations played a significant role in the solid
performance of the funds.
* The Lehman Brothers Municipal Bond Index is an unleveraged index comprised of
a broad range of investment-grade municipal bonds, and does not reflect any
initial or ongoing expenses. **The Lipper Peer Group returns represent the
average annualized returns of the funds in the Lipper National Leveraged
Municipal Debt category. Returns assume reinvestment of dividends and do not
reflect any applicable sales charge.
What were the funds' durations, and what role does duration play regarding
investment risk?
The following chart illustrates the funds' durations compared to the duration of
the Lehman Index, as of October 31, 1998.
Fund Fund Duration* Lehman Brothers Duration
- ---------------------------------------------------------
NPI 9.47 years 7.30 years
- ---------------------------------------------------------
NPM 7.90 years 7.30 years
- ---------------------------------------------------------
NPT 9.30 years 7.30 years
- ---------------------------------------------------------
* The fund duration listed in the chart takes into account the leveraging
process for each fund and therefore differs from the duration of the actual
portfolio of individual bonds that comprise the fund. Fund duration is also
known as leverage adjusted duration. Any future reference to duration, unless
otherwise noted, will be to fund duration.
Fund duration measures a bond fund's price volatility, or reaction to interest
rate movements. The longer the duration, the more sensitive the fund is to
changes in interest rates. During a period of falling interest rates, longer
duration enables a fund to participate more fully in market gains. However, when
rates rise, longer duration can make the fund more vulnerable to potential price
declines. As interest rates trended downward over the past year, funds with
durations longer than that of the index generally tended to outperform the
market.
<PAGE>
How have dividends been affected?
In the current low interest rate environment, good call protection helped
support the dividends of NPM and NPT and protect the income of these funds from
erosion. As of October 31, 1998, these two funds have provided shareholders with
33 and 42 consecutive months of steady income, respectively. However, the
combination of declining interest rates and a significant number of bond calls
acted to reduce the income level of NPI, the oldest fund in this report. Brought
to market in July 1998, NPI's portfolio is undergoing an anticipated
restructuring as higher-yielding bonds purchased when the fund was first
assembled reach their call dates. The high level of single-family mortgage
revenue bonds (12%) in this portfolio also contributed to the number of calls
when interest rates fell and these bonds were prepaid. As proceeds from the
called bonds were reinvested in bonds paying relatively lower current interest
rates, the change in income level earned by NPI over the past year necessitated
a dividend reduction. Despite this adjustment to NPI, all of the Nuveen Premium
Income funds continue to provide very attractive current market yields. The
following chart highlights the three funds' market yields and their taxable-
equivalent yields at the 31% federal income tax bracket, as of October 31, 1998.
Fund Market Yield Taxable-Equivalent Yield
- -----------------------------------------------------------
NPI 5.61% 8.13%
- -----------------------------------------------------------
NPM 5.51% 7.99%
- -----------------------------------------------------------
NPT 5.51% 7.99%
- -----------------------------------------------------------
What effect was there to the funds' share price performance?
Share price performance among many of the Nuveen Exchange-Traded Funds has been
strong over the past 12 months. All three funds posted higher closing share
prices as of October 31, 1998, than they did a year ago. In addition, strong
bond market performance boosted all three of the funds' net asset values. The
accompanying chart is as of October 31, 1998.
Fund Share Price Net Asset Value Premium (+)
(NAV) Discount (-)
- ----------------------------------------------------------------
NPI $15.1875 $15.66 -3.02%
- ----------------------------------------------------------------
NPM $16.875 $16.15 + 4.49%
- ----------------------------------------------------------------
NPT $14.8125 $15.05 -1.58%
- ----------------------------------------------------------------
Were there any particular sectors where Nuveen searched for undervalued
securities?
Over the past year, we found value in the healthcare and utilities sectors,
currently the two largest issuers in the municipal market, by taking advantage
of the competitive environment created by deregulation and consolidation. Within
the utilities sector, we concentrated on public power issues, where Nuveen's
excellent surveillance and research helped point out the unique aspects of these
credits. The heavy volume in these two sectors also created additional
opportunities to find value, as hospital and utility bonds often offered
above-market yields and special call provisions to attract buyers.
What key strategies were used over the course of the year?
In NPI, we continued to buy high-quality, investment-grade revenue bonds that we
believe are undervalued when analyzed from the perspective of credit quality,
yield curve position, or sector. Most of these bonds were in the 20-to 30-year
maturity range.
When reinvesting the proceeds from bonds called from NPM, we looked for bonds
with longer maturities to increase the fund's duration as well as bonds that we
anticipate will be refunded in order to realize the gain in price. The fund
continues to be well diversified across sectors and states.
Over the past year, we further enhanced the call protection of NPT by buying
noncallable bonds. Overall, the fund has very high credit quality (70% in bonds
rated AAA and AA), with 11% in the BBB-rated or non-rated categories. Even
though the difference in yield between higher quality (AAA-rated) and lower
quality bonds (at least BBB-rated) narrowed over the past year, we were still
able to find value among the lower quality, investment grade bonds. As this
difference widens and we are compensated with higher yields, we may increase our
allocation in this category.
What is Nuveen's outlook for the future?
Looking ahead for the Nuveen Premium Income funds, our focus will continue to be
on supporting the stability of the funds' income streams, especially if we
remain in a lower interest rate environment. NPI has already entered into a
period where bond calls have affected the portfolio, while NPM and NPT will
begin to face bond calls over the next two to three years. Our goal is to manage
through this call risk by improving the structure of the portfolios, that is,
investing in bonds with longer durations, high yields, and good call protection.
We also will attempt to preemptsome of these calls by selling bonds prior to
their call dates and replacing them with high-quality bonds offering attractive
yields. If credit spreads continue to widen, we will look for opportunities to
assume some additional credit risk, especially in healthcare and utility bonds,
in order to enhance the funds' yields. Nuveen's expertise as an experienced
investment manager knowledgeable about the unique aspects of the municipal bond
market is key to our ability to select the right securities for our funds and
add value for our investors.
The current market environment--influenced by declining interest rates, benign
inflation, and strong municipal supply--has helped to position municipal bonds
as one of the most compelling values in today's marketplace. We expect that the
excellent municipal-to-Treasury ratio, combined with continued volatility in the
equity markets and investors' increasing awareness of the need for asset
allocation rebalancing, will result in growing demand for these bonds. Investors
who take advantage of current opportunities in the municipal market should be
rewarded with healthy returns and attractive yields in the months ahead, as the
market recognizes the value of these quality investments.
<PAGE>
Nuveen Premium Income Municipal Fund, Inc.
Performance Overview
As of October 31, 1998
NPI
Portfolio Statistics
====================================================================
Inception Date 7/88
- --------------------------------------------------------------------
Share Price $15 3/16
- --------------------------------------------------------------------
Net Asset Value $15.66
- --------------------------------------------------------------------
Current Market Yield Per Share 5.61%
- --------------------------------------------------------------------
Taxable-Equivalent Yield (Federal Only)(1) 8.13%
- --------------------------------------------------------------------
Fund Net Assets ($000) $1,473,755
- --------------------------------------------------------------------
Effective Maturity (Years) 20.41
- --------------------------------------------------------------------
Fund Duration (Years) 9.47
- --------------------------------------------------------------------
Annualized Total Return
====================================================================
On Share Price On NAV
- --------------------------------------------------------------------
1-Year 10.60% 8.86%
- --------------------------------------------------------------------
5-Year 4.02% 6.30%
- --------------------------------------------------------------------
10-Year 7.58% 8.42%
- --------------------------------------------------------------------
Taxable-Equivalent Total Return (2)
====================================================================
On Share Price On NAV
- --------------------------------------------------------------------
1-Year 13.38% 11.52%
- --------------------------------------------------------------------
5-Year 7.18% 9.38%
- --------------------------------------------------------------------
10-Year 10.92% 11.75%
- --------------------------------------------------------------------
Top Five Sectors (as a % of total investments)
====================================================================
Utilities 21%
- --------------------------------------------------------------------
Tax Obligation (General) 13%
- --------------------------------------------------------------------
Tax Obligation (Limited) 13%
- --------------------------------------------------------------------
U.S. Guaranteed 12%
- --------------------------------------------------------------------
Housing (Single Family) 12%
- --------------------------------------------------------------------
BarChart:
1997-1998 Monthly Tax-Free Dividends Per Share (3)
====================================================================
NOV 0.074
DEC 0.074
JAN 0.074
FEB 0.074
MAR 0.074
APR 0.074
MAY 0.074
JUN 0.074
JUL 0.074
AUG 0.071
SEP 0.071
OCT 0.071
LineChart:
Share Price Performance
====================================================================
11/7/97 14.563
14.063
14.25
14.313
14.438
14.438
14.563
14.688
14.75
15.125
15.063
15
15.188
15.125
14.75
14.813
14.875
14.813
14.75
14.75
14.5
14.813
14.75
14.688
14.563
14.438
14.438
14.438
14.563
14.813
14.813
14.813
14.813
14.875
15
14.938
15
15
14.875
14.625
14.625
14.688
14.563
14.625
14.688
14.938
15.25
15
15.25
15.13
10/31/91 15.19
Weekly Closing Price
Past performance is not predictive of future results.
1 Taxable-equivalent yield represents the yield on a taxable investment
necessary to equal the yield of the Nuveen fund on an after-tax basis.The
federal only rate is based on the current market yield and a federal income
tax rate of 31%.
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 also paid shareholders taxable distributions in December of $0.0577
per share.
<PAGE>
Nuveen Premium Income Municipal Fund 2, Inc.
Performance Overview
As of October 31, 1998
NPM
Portfolio Statistics
=============================================================
Inception Date 7/92
- -------------------------------------------------------------
Share Price $16 7/8
- -------------------------------------------------------------
Net Asset Value $16.15
- -------------------------------------------------------------
Current Market Yield Per Share 5.51%
- -------------------------------------------------------------
Taxable-Equivalent Yield (Federal Only)(1) 7.99%
- -------------------------------------------------------------
Fund Net Assets ($000) $959,840
- -------------------------------------------------------------
Effective Maturity (Years) 17.17
- -------------------------------------------------------------
Fund Duration (Years) 7.90
- -------------------------------------------------------------
Annualized Total Return
=============================================================
On Share Price On NAV
- -------------------------------------------------------------
1-Year 15.98% 8.93%
- -------------------------------------------------------------
3-Year 15.89% 9.30%
- -------------------------------------------------------------
5-Year 9.67% 7.32%
- -------------------------------------------------------------
Since Inception 8.66% 8.73%
- -------------------------------------------------------------
Taxable-Equivalent Total Return (2)
=============================================================
On Share Price On NAV
- -------------------------------------------------------------
1-Year 18.76% 11.66%
- -------------------------------------------------------------
3-Year 18.92% 12.12%
- -------------------------------------------------------------
5-Year 12.84% 10.22%
- -------------------------------------------------------------
Since Inception 11.66% 11.55%
- -------------------------------------------------------------
Top Five Sectors (as a % of total investments)
=============================================================
U.S. Guaranteed 26%
- -------------------------------------------------------------
Tax Obligation (General) 16%
- -------------------------------------------------------------
Housing (Single Family) 12%
- -------------------------------------------------------------
Tax Obligation (Limited) 9%
- -------------------------------------------------------------
Transportation 8%
- -------------------------------------------------------------
BarChart:
1997-1998 Monthly Tax-Free Dividends Per Share (3)
=============================================================
NOV 0.0775
DEC 0.0775
JAN 0.0775
FEB 0.0775
MAR 0.0775
APR 0.0775
MAY 0.0775
JUN 0.0775
JUL 0.0775
AUG 0.0775
SEP 0.0775
OCT 0.0775
LineChart:
Share Price Performance
=============================================================
11/7/97 15.5
15.5
15.625
15.75
15.875
15.75
15.75
15.875
16.125
16.375
16.063
16.063
16.313
16.25
16.125
16.313
16.375
16.313
15.938
15.938
15.875
15.875
15.75
15.75
15.438
15.625
15.438
15.375
15.438
15.813
15.688
15.938
15.938
15.875
16.188
16.25
16.125
16.063
15.875
15.75
15.875
16.188
16.25
16.25
16.063
16.375
17.063
16.438
16.875
16.81
10/31/98 16.88
Weekly Closing Price
Past performance is not predictive of future results.
1 Taxable-equivalent yield represents the yield on a taxable investment
necessary to equal the yield of the Nuveen fund on an after-tax basis.The
federal only rate is based on the current market yield and a federal income
tax rate of 31%.
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 also paid shareholders taxable distributions in December of $0.0891
per share.
<PAGE>
Nuveen Premium Income Municipal Fund 4, Inc.
Performance Overview
As of October 31, 1998
NPT
Portfolio Statistics
====================================================================
Inception Date 2/93
- --------------------------------------------------------------------
Share Price $14 13/16
- --------------------------------------------------------------------
Net Asset Value Per Share $15.05
- --------------------------------------------------------------------
Current Market Yield 5.51%
- --------------------------------------------------------------------
Taxable-Equivalent Yield (Federal Only)1 7.99%
- --------------------------------------------------------------------
Fund Net Assets ($000) $923,004
- --------------------------------------------------------------------
Effective Maturity (Years) 17.24
- --------------------------------------------------------------------
Fund Duration (Years) 9.30
- --------------------------------------------------------------------
Annualized Total Return
====================================================================
On Share Price On NAV
- --------------------------------------------------------------------
1-Year 14.54% 8.58%
- --------------------------------------------------------------------
3-Year 13.59% 8.76%
- --------------------------------------------------------------------
5-Year 7.50% 6.43%
- --------------------------------------------------------------------
Since Inception 6.15% 7.22%
- --------------------------------------------------------------------
Taxable-Equivalent Total Return (2)
====================================================================
On Share Price On NAV
- --------------------------------------------------------------------
1-Year 17.29% 11.15%
- --------------------------------------------------------------------
3-Year 16.54% 11.42%
- --------------------------------------------------------------------
5-Year 10.54% 9.18%
- --------------------------------------------------------------------
Since Inception 9.03% 9.89%
- --------------------------------------------------------------------
Top Five Sectors (as a % of total investments)
====================================================================
Health Care 17%
- --------------------------------------------------------------------
Utilities 17%
- --------------------------------------------------------------------
U.S. Guaranteed 15%
- --------------------------------------------------------------------
Tax Obligation (General) 10%
- --------------------------------------------------------------------
Housing (Multifamily) 8%
- --------------------------------------------------------------------
BarChart:
1997-1998 Monthly Tax-Free Dividends Per Share
====================================================================
NOV 0.0680
DEC 0.0680
JAN 0.0680
FEB 0.0680
MAR 0.0680
APR 0.0680
MAY 0.0680
JUN 0.0680
JUL 0.0680
AUG 0.0680
SEP 0.0680
OCT 0.0680
LineChart:
Share Price Performance
====================================================================
11/7/97 13.688
13.813
13.938
13.938
13.938
13.75
13.875
13.938
14.063
14.938
14.75
14.688
14.875
14.813
14.938
14.875
14.875
14.688
14.625
14.625
14.313
14.625
14.313
14
14
13.75
13.625
13.5
13.563
13.813
13.813
13.938
13.938
14.188
14.625
14.313
14.25
14.375
14.375
14.25
14.313
14.5
14.313
14.125
14.25
14.5
14.875
14.75
14.875
14.69
10/31/98 14.81
Weekly Closing Price
Past performance is not predictive of future results.
1 Taxable-equivalent yield represents the yield on a taxable investment
necessary to equal the yield of the Nuveen fund on an after-tax basis.The
federal only rate is based on the current market yield and a federal income
tax rate of 31%.
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.
<PAGE>
Shareholder Meeting Report
NPI
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Approval of the Directors was reached as follows:
Preferred Preferred Preferred Preferred Preferred
Common Shares Shares Shares Shares Shares
Shares Series-M Series-T Series-W Series-TH Series-F
<S> <C> <C> <C> <C> <C> <C>
====================================================================================================================================
Robert P. Bremner
For 53,318,929 3,272 3,248 2,982 3,379 2,557
Withhold 536,164 38 2 50 4 7
- ------------------------------------------------------------------------------------------------------------------------------------
Total 53,855,093 3,310 3,250 3,032 3,383 2,564
====================================================================================================================================
Lawrence H. Brown
For 53,323,070 3,272 3,248 2,982 3,379 2,557
Withhold 532,023 38 2 50 4 7
- ------------------------------------------------------------------------------------------------------------------------------------
Total 53,855,093 3,310 3,250 3,032 3,383 2,564
====================================================================================================================================
Anthony T. Dean
For 53,331,313 3,272 3,248 2,982 3,379 2,557
Withhold 523,780 38 2 50 4 7
- ------------------------------------------------------------------------------------------------------------------------------------
Total 53,855,093 3,310 3,250 3,032 3,383 2,564
====================================================================================================================================
Anne E. Impellizzeri
For 53,297,812 3,272 3,248 2,982 3,379 2,556
Withhold 557,281 38 2 50 4 8
- ------------------------------------------------------------------------------------------------------------------------------------
Total 53,855,093 3,310 3,250 3,032 3,383 2,564
====================================================================================================================================
Peter R. Sawers
For 53,324,045 3,272 3,228 2,982 3,379 2,556
Withhold 531,048 38 22 50 4 8
- ------------------------------------------------------------------------------------------------------------------------------------
Total 53,855,093 3,310 3,250 3,032 3,383 2,564
====================================================================================================================================
William J. Schneider
For -- 3,272 3,248 2,982 3,379 2,557
Withhold -- 38 2 50 4 7
- ------------------------------------------------------------------------------------------------------------------------------------
Total -- 3,310 3,250 3,032 3,383 2,564
====================================================================================================================================
Timothy R. Schwertfeger
For -- 3,272 3,248 2,982 3,379 2,557
Withhold -- 38 2 50 4 7
- ------------------------------------------------------------------------------------------------------------------------------------
Total -- 3,310 3,250 3,032 3,383 2,564
====================================================================================================================================
Judith M. Stockdale
For 53,251,659 3,272 3,228 2,982 3,379 2,557
Withhold 603,434 38 22 50 4 7
- ------------------------------------------------------------------------------------------------------------------------------------
Total 53,855,093 3,310 3,250 3,032 3,383 2,564
====================================================================================================================================
Ratification of auditors was reached as follows:
For 52,803,486 3,252 3,229 3,021 3,380 2,435
Against 164,742 1 6 2 3 125
Abstain 886,865 57 15 9 -- 4
- ------------------------------------------------------------------------------------------------------------------------------------
Total 53,855,093 3,310 3,250 3,032 3,383 2,564
====================================================================================================================================
</TABLE>
<PAGE>
Shareholder Meeting Report
NPM
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Approval of the Directors was reached as follows:
Preferred Preferred Preferred Preferred Preferred
Common Shares Shares Shares Shares Shares
Shares Series-M Series-T Series-W Series-TH Series-F
<S> <C> <C> <C> <C> <C> <C>
====================================================================================================================================
Robert P. Bremner
For 37,763,321 1,546 2,718 1,684 2,692 1,749
Withhold 289,938 41 89 2 14 22
- ------------------------------------------------------------------------------------------------------------------------------------
Total 38,053,259 1,587 2,807 1,686 2,706 1,771
====================================================================================================================================
Lawrence H. Brown
For 37,779,299 1,586 2,718 1,684 2,692 1,770
Withhold 273,960 1 89 2 14 1
- ------------------------------------------------------------------------------------------------------------------------------------
Total 38,053,259 1,587 2,807 1,686 2,706 1,771
====================================================================================================================================
Anthony T. Dean
For 37,782,809 1,586 2,718 1,684 2,692 1,770
Withhold 270,450 1 89 2 14 1
- ------------------------------------------------------------------------------------------------------------------------------------
Total 38,053,259 1,587 2,807 1,686 2,706 1,771
====================================================================================================================================
Anne E. Impellizzeri
For 37,754,163 1,586 2,718 1,684 2,692 1,770
Withhold 299,096 1 89 2 14 1
- ------------------------------------------------------------------------------------------------------------------------------------
Total 38,053,259 1,587 2,807 1,686 2,706 1,771
====================================================================================================================================
Peter R. Sawers
For 37,776,559 1,586 2,718 1,684 2,692 1,770
Withhold 276,700 1 89 2 14 1
- ------------------------------------------------------------------------------------------------------------------------------------
Total 38,053,259 1,587 2,807 1,686 2,706 1,771
====================================================================================================================================
William J. Schneider
For -- 1,546 2,718 1,684 2,692 1,749
Withhold -- 41 89 2 14 22
- ------------------------------------------------------------------------------------------------------------------------------------
Total -- 1,587 2,807 1,686 2,706 1,771
====================================================================================================================================
Timothy R. Schwertfeger
For -- 1,586 2,718 1,684 2,692 1,770
Withhold -- 1 89 2 14 1
- ------------------------------------------------------------------------------------------------------------------------------------
Total -- 1,587 2,807 1,686 2,706 1,771
====================================================================================================================================
Judith M. Stockdale
For 37,717,898 1,541 2,718 1,684 2,692 1,749
Withhold 335,361 46 89 2 14 22
- ------------------------------------------------------------------------------------------------------------------------------------
Total 38,053,259 1,587 2,807 1,686 2,706 1,771
====================================================================================================================================
Ratification of auditors was reached as follows:
For 37,673,117 1,584 2,721 1,686 2,700 1,770
Against 57,461 1 80 -- 2 --
Abstain 322,681 2 6 -- 4 1
- ------------------------------------------------------------------------------------------------------------------------------------
Total 38,053,259 1,587 2,807 1,686 2,706 1,771
====================================================================================================================================
</TABLE>
<PAGE>
Shareholder Meeting Report
NPT
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Approval of the Directors was reached as follows:
Preferred Preferred Preferred Preferred Preferred Preferred Preferred
Common Shares Shares Shares Shares Shares Shares Shares
Shares Series-M Series-T Series-T2 Series-W Series-TH Series-F Series-F2
<S> <C> <C> <C> <C> <C> <C> <C> <C>
====================================================================================================================================
Robert P. Bremner
For 36,677,153 1,815 1,753 1,011 1,459 1,758 1,758 1,282
Withhold 379,645 -- 2 -- 1 1 2 7
- ------------------------------------------------------------------------------------------------------------------------------------
Total 37,056,798 1,815 1,755 1,011 1,460 1,759 1,760 1,289
====================================================================================================================================
Lawrence H. Brown
For 36,689,341 1,815 1,753 1,011 1,459 1,758 1,758 1,282
Withhold 367,457 -- 2 -- 1 1 2 7
- ------------------------------------------------------------------------------------------------------------------------------------
Total 37,056,798 1,815 1,755 1,011 1,460 1,759 1,760 1,289
====================================================================================================================================
Anthony T. Dean
For 36,692,312 1,815 1,753 1,011 1,459 1,758 1,758 1,282
Withhold 364,486 -- 2 - 1 1 2 7
- ------------------------------------------------------------------------------------------------------------------------------------
Total 37,056,798 1,815 1,755 1,011 1,460 1,759 1,760 1,289
====================================================================================================================================
Anne E. Impellizzeri
For 36,664,146 1,815 1,753 1,011 1,459 1,758 1,758 1,282
Withhold 392,652 -- 2 -- 1 1 2 7
- ------------------------------------------------------------------------------------------------------------------------------------
Total 37,056,798 1,815 1,755 1,011 1,460 1,759 1,760 1,289
====================================================================================================================================
Peter R. Sawers
For 36,680,367 1,815 1,753 1,011 1,459 1,758 1,758 1,282
Withhold 376,341 -- 2 -- 1 1 2 7
- ------------------------------------------------------------------------------------------------------------------------------------
Total 37,056,708 1,815 1,755 1,011 1,460 1,759 1,760 1,289
====================================================================================================================================
William J. Schneider
For -- 1,815 1,753 1,011 1,459 1,758 1,758 1,282
Withhold -- -- 2 -- 1 1 2 7
- ------------------------------------------------------------------------------------------------------------------------------------
Total -- 1,815 1,755 1,011 1,460 1,759 1,760 1,289
====================================================================================================================================
Timothy R. Schwertfeger
For -- 1,815 1,753 1,011 1,459 1,758 1,758 1,282
Withhold -- -- 2 -- 1 1 2 7
- ------------------------------------------------------------------------------------------------------------------------------------
Total -- 1,815 1,755 1,011 1,460 1,759 1,760 1,289
====================================================================================================================================
Judith M. Stockdale
For 36,652,547 1,815 1,753 1,011 1,459 1,758 1,758 1,282
Withhold 404,252 -- 2 -- 1 1 2 7
- ------------------------------------------------------------------------------------------------------------------------------------
Total 37,056,798 1,815 1,755 1,011 1,460 1,759 1,760 1,289
====================================================================================================================================
Ratification of auditors was reached as follows:
For 36,688,052 1,815 1,755 978 1,460 1,755 1,753 1,278
Against 165,291 -- -- -- -- -- -- 1
Abstain 203,455 -- -- 33 -- 4 7 10
- ------------------------------------------------------------------------------------------------------------------------------------
Total 37,056,798 1,815 1,755 1,011 1,460 1,759 1,760 1,289
====================================================================================================================================
</TABLE>
<PAGE>
Report of Independent Auditors
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, 1998, and the related statements of operations,
changes in net assets and the financial highlights for the periods indicated
therein. These financial statements and financial highlights are the
responsibility of the Funds' management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of investments owned as of
October 31, 1998, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial positions of
Nuveen Premium Income Municipal Fund, Inc., Nuveen Premium Income Municipal Fund
2, Inc. and Nuveen Premium Income Municipal Fund 4, Inc. at October 31, 1998,
and the results of their operations, changes in their net assets and financial
highlights for the periods indicated therein in conformity with generally
accepted accounting principles.
Ernst & Young LLP
Chicago, Illinois
December 11, 1998
<PAGE>
Portfolio of Investments
Nuveen Premium Income Municipal Fund, Inc. (NPI)
October 31, 1998
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Arizona - 1.1%
$ 11,630,000 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 $ 13,010,365
2,900,000 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 2,974,037
- ------------------------------------------------------------------------------------------------------------------------------------
Arkansas - 0.4%
5,250,000 Arkansas Development Finance Authority, Driver's License
Revenue Bonds (Arkansas State Police -
Headquarters and Wireless Data Equipment),
Series 1997, 5.400%, 6/01/18 6/07 at 100 AAA 5,447,978
- ------------------------------------------------------------------------------------------------------------------------------------
California - 14.0%
13,000,000 State of California, Various Purpose General Obligation
Refunding Bonds, 5.150%, 10/01/19 10/03 at 102 Aa3 13,138,840
State of California, Veterans General Obligation Bonds,
Series BH:
10,250,000 5.250%, 12/01/12 (Alternative Minimum Tax) 12/08 at 101 AAA 10,395,858
6,000,000 5.600%, 12/01/32 (Alternative Minimum Tax) 12/03 at 102 Aa3 6,194,220
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 A1*** 17,361,950
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 Aa3 24,726,907
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 12,306,372
15,420,000 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 15,870,881
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 4,822,550
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- 12,650,453
1,285,000 City of Martinez (California), Home Mortgage
Revenue Bonds, 1983 Issue A, 10.750%, 2/01/16 No Opt. Call AAA 2,012,143
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- 4,403,685
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 26,766,800
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 5,101,550
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 7,270,477
12,500,000 5.750%, 10/01/25 10/05 at 102 AAA 13,515,625
3,000,000 San Diego Public Facilities Financing Authority,
Sewer Revenue Bonds, Series 1993, 5.250%, 5/15/20 5/03 at 102 AAA 3,057,240
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 10,249,500
17,540,000 University of California, 4.750%, 9/01/21 9/03 at 102 AAA 16,888,038
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Colorado - 3.1%
$ 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 $ 3,372,210
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 5,083,200
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 12,090,330
1,725,000 7.750%, 11/15/21 (Pre-refunded to 11/15/01)
(Alternative Minimum Tax) 11/01 at 102 Aaa 1,957,202
6,550,000 7.750%, 11/15/21 (Alternative Minimum Tax) 11/01 at 102 Baa1 7,281,897
City and County of Denver, Colorado, Airport
System Revenue Bonds, Series 1992B:
715,000 7.250%, 11/15/23 (Pre-refunded to 11/15/02)
(Alternative Minimum Tax) 11/02 at 102 Aaa 821,735
2,785,000 7.250%, 11/15/23 (Alternative Minimum Tax) 11/02 at 102 Baa1 3,105,581
City and County of Denver, Colorado, Airport
System Revenue Bonds, Series 1992C:
1,830,000 6.750%, 11/15/22 (Pre-refunded to 11/15/02)
(Alternative Minimum Tax) 11/02 at 102 Aaa 2,067,644
6,870,000 6.750%, 11/15/22 (Alternative Minimum Tax) 11/02 at 102 Baa1 7,521,963
2,050,000 Colorado Local Single Family Mortgage
Revenue Bonds (City and County of Denver,
Colorado, GNMA Mortgage-Backed Securities Program),
Series 1988A,
8.125%, 12/01/20 (Alternative Minimum Tax) 12/98 at 102 AAA 2,093,809
742,859 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 827,768
- ------------------------------------------------------------------------------------------------------------------------------------
District of Columbia - 2.8%
10,470,000 District of Columbia, Hospital Revenue
Refunding Bonds (Providence Hospital Issue),
Series 1988A, 7.875%, 12/01/15 (Pre-refunded to 12/01/98) 12/98 at 102 Aa2*** 10,720,757
7,505,000 District of Columbia (Washington, D.C.),
General Obligation Bonds, Series 1998B,
6.000%, 6/01/20 No Opt. Call AAA 8,526,355
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 15,802,700
5,750,000 District of Columbia Revenue Bonds (Association
of American Medical Colleges Issue),
Series 1997A, 5.375%, 2/15/27 8/07 at 102 AAA 5,930,148
- ------------------------------------------------------------------------------------------------------------------------------------
Florida - 1.2%
7,465,000 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 7,696,415
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+ 10,033,665
- ------------------------------------------------------------------------------------------------------------------------------------
Georgia - 1.6%
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 A+ 24,316,283
- ------------------------------------------------------------------------------------------------------------------------------------
Illinois - 7.8%
19,220,000 Chicago School Reform Board of Trustees of the
Board of Education of the City of Chicago, Illinois,
Unlimited Tax General Obligation Bonds (Dedicated
Tax Revenues), Series 1997A, 5.250%, 12/01/27 12/07 at 102 AAA 19,501,573
10,595,000 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 11,110,023
6,280,000 City of Chicago, 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 6,268,068
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 5,451,899
10,000,000 The County of Cook, Illinois, General Obligation
Bonds, Series 1993A, 5.000%, 11/15/23 11/03 at 100 AAA 9,783,100
8,740,000 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 9,311,334
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Illinois (continued)
$ 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 $ 8,861,420
5,000,000 Illinois Health Facilities Authority, Revenue Bonds,
Series 1992 (Highland Park Hospital),
6.200%, 10/01/22 10/02 at 102 AAA 5,455,050
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 2,141,480
17,545,000 Illinois Health Facilities Authority, Revenue Bonds,
Series 1997 (Sherman Health Systems),
5.250%, 8/01/27 8/07 at 101 AAA 17,650,972
11,900,000 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 12,233,676
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 6,486,373
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 1,033,869
- ------------------------------------------------------------------------------------------------------------------------------------
Indiana - 1.3%
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 4,522,009
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 (Pre-refunded to 7/15/05) 7/05 at 102 AAA 9,243,120
5,300,000 Whitley County Middle School Building Corporation, First
Mortgage Bonds, Series 1994, Columbia City, Indiana,
6.250%, 7/15/15 (Pre-refunded to 1/15/04) 1/04 at 102 AAA 5,966,899
- ------------------------------------------------------------------------------------------------------------------------------------
Iowa - 1.3%
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 3,126,900
5,565,000 Iowa Finance Authority, Variable Rate Demand
Industrial Revenue Refunding Bonds, Series A 1989
(Urbandale Hotel Corporation Project), 8.500%,
8/01/16 (Pre-refunded to 7/15/14)
(Alternative Minimum Tax) 7/14 at 100 AAA 7,834,574
8,000,000 Iowa Finance Authority, Hospital Facilities Revenue
Bonds, Series 1998 A (Iowa Health System),
5.125%, 1/01/28 7/08 at 102 AAA 7,939,520
- ------------------------------------------------------------------------------------------------------------------------------------
Kentucky - 0.4%
5,890,000 Kentucky Development Finance Authority
(St. Elizabeth Medical Center), 9.000%, 11/01/00 No Opt. Call AAA 6,245,108
- ------------------------------------------------------------------------------------------------------------------------------------
Louisiana - 2.5%
9,000,000 Louisiana Public Facilities Authority, Hospital
Revenue Bonds (Franciscan Missionaries of Our
Lady Health System Project), Series 1998C, 5.000%, 7/01/28 7/08 at 101 AAA 8,828,730
4,000,000 Louisiana Public Facilities Authority, Hospital Revenue
Refunding Bonds (Louisiana Health System
Corporation Project), Series 1998, 5.000%, 10/01/22 10/08 at 102 AAA 3,931,360
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 13,470,114
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 11,027,106
- ------------------------------------------------------------------------------------------------------------------------------------
Massachusetts - 2.2%
2,900,000 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 3,227,613
15,000,000 Massachusetts Industrial Finance Agency,
General Obligation Bonds, Suffolk University,
Series 1997, 5.250%, 7/01/27 7/07 at 102 AAA 15,262,650
5,000,000 Massachusetts Turnpike Authority, Metropolitan
Highway System Revenue Bonds, 1997 Series C
(Senior), 5.000%, 1/01/37 1/07 at 102 AAA 4,887,150
8,800,000 Massachusetts Water Resources Authority,
General Revenue Bonds, 1992 Series A, 5.500%, 7/15/22
(Pre-refunded to 7/15/02) 7/02 at 100 Aaa 9,354,312
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Michigan - 2.9%
$ 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+ $ 4,238,520
10,550,000 City of Detroit, Michigan, Sewage Disposal System Revenue
Refunding Bonds, Series 1995-B,
5.000%, 7/01/25 7/05 at 100 AAA 10,403,988
Hudsonville Public Schools, Counties of Ottawa and Allegan,
State of Michigan, 1997 School Building and Site and
Refunding Bonds (General Obligation Unlimited Tax):
10,510,000 5.150%, 5/01/22 5/08 at 100 Aaa 10,576,739
8,145,000 5.150%, 5/01/27 5/08 at 100 Aaa 8,190,612
9,625,000 Livonia Public School District, General Obligation Bonds,
5.500%, 5/01/21 5/03 at 102 AAA 10,065,825
- ------------------------------------------------------------------------------------------------------------------------------------
Minnesota - 2.8%
2,910,000 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
(Alternative Minimum Tax) 11/04 at 102 AAA 3,136,049
21,375,000 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 26,909,843
2,877,000 The 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 Aaa 3,144,043
7,675,000 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 7,860,198
- ------------------------------------------------------------------------------------------------------------------------------------
Missouri - 1.5%
6,540,000 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 7,472,669
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 14,181,558
- ------------------------------------------------------------------------------------------------------------------------------------
Nevada - 2.1%
29,410,000 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 30,562,284
- ------------------------------------------------------------------------------------------------------------------------------------
New Hampshire - 2.1%
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 11,520,300
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- 10,206,500
8,560,000 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 9,130,952
- ------------------------------------------------------------------------------------------------------------------------------------
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 15,842,250
- ------------------------------------------------------------------------------------------------------------------------------------
New Mexico - 0.3%
4,780,000 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 5,084,056
- ------------------------------------------------------------------------------------------------------------------------------------
New York - 9.7%
10,650,000 Long Island Power Authority (New York), Electric System
General Revenue Bonds, Series 1998A, 5.250%, 12/01/26 6/08 at 101 A- 10,829,985
7,500,000 The City of New York, General Obligation Bonds, Fiscal 1991
Series B, 9.500%, 6/01/03 No Opt. Call A- 9,189,450
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 A- 10,979,500
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
New York (continued)
The City of New York, General Obligation Bonds, Fiscal 1997
Series G:
$ 100,000 6.000%, 10/15/26 (Pre-refunded to 10/15/07) 10/07 at 101 A-*** $ 115,021
9,900,000 6.000%, 10/15/26 10/07 at 101 A- 10,787,238
16,000,000 New York City (New York), Municipal Water Finance Authority,
Water and Sewer System Revenue Bonds, Fiscal 1996 Series B,
5.750%, 6/15/26 6/06 at 101 AAA 17,216,960
New York City Transitional Finance Authority, Future Tax
Secured Bonds, Fiscal 1998 Series C:
31,625,000 4.750%, 5/01/23 5/08 at 101 AA 30,364,111
11,000,000 5.000%, 5/01/26 5/08 at 101 AA 10,814,320
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 A+ 13,126,808
10,000,000 New York Local Government Assistance Corporation,
Series 1993 B, Refunding Bonds, 5.000%, 4/01/23 4/04 at 100 A+ 9,785,700
18,735,000 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 19,340,328
- ------------------------------------------------------------------------------------------------------------------------------------
Ohio - 1.3%
5,095,000 Ohio Housing Finance Agency, Single Family Mortgage Revenue
Bonds (GNMA Mortgage-Backed Securities Program),
1988 Series B, 8.250%, 12/15/19 (Alternative Minimum Tax) 12/98 at 102 AA+ 5,271,440
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 13,641,361
- ------------------------------------------------------------------------------------------------------------------------------------
Oklahoma - 1.1%
9,560,000 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 9,769,651
6,455,000 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*** 6,756,836
- ------------------------------------------------------------------------------------------------------------------------------------
Pennsylvania - 2.0%
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 (Pre-refunded to 11/01/02) 11/02 at 100 AAA 14,085,121
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+ 10,219,000
5,295,000 The School District of Philadelphia, Pennsylvania, General
Obligation Bonds, Series B of 1995, 5.500%, 9/01/25 9/05 at 101 AAA 5,560,968
- ------------------------------------------------------------------------------------------------------------------------------------
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 BBB+ 5,413,433
- ------------------------------------------------------------------------------------------------------------------------------------
Rhode Island - 0.9%
13,200,000 Rhode Island Health and Educational Building Corporation,
Hospital Financing Revenue Bonds, Lifespan Obligated Group
Issue, Series 1996, 5.250%, 5/15/26 5/07 at 102 AAA 13,279,332
- ------------------------------------------------------------------------------------------------------------------------------------
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 17,393,175
- ------------------------------------------------------------------------------------------------------------------------------------
Texas - 7.7%
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 11,049,948
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 BBB+ 11,993,286
23,000,000 Brazos River Authority (Texas), Revenue Refunding Bonds
(Houston Industries Incorporated Project),
Series 1998C, 5.125%, 5/01/19 5/08 at 102 AAA 23,059,570
5,615,000 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 6,012,261
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Texas (continued)
$ 40,000,000 Harris County (Texas), Health Facilities Development
Corporation, Adjustable Convertible Extendable Securities
(Greater Houston Pooled Health Care Loan Program),
Series 1985B, 7.375%, 12/01/25 12/98 at 100 A1 $ 40,136,400
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 15,900,600
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 5,009,635
- ------------------------------------------------------------------------------------------------------------------------------------
Utah - 1.9%
15,000,000 Intermountain Power Agency (Utah), Power Supply Revenue
Refunding Bonds, 1998 Series A, 5.000%, 7/01/20 7/08 at 101 AAA 14,832,600
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 8,296,480
4,780,000 Utah Housing Finance Agency, Single Family Mortgage Senior
Bonds, Series 1998F2, 5.100%, 7/01/28
(Alternative Minimum Tax) (DD) 7/08 at 101 1/2 AAA 4,743,529
- ------------------------------------------------------------------------------------------------------------------------------------
Vermont - 0.9%
12,510,000 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 13,246,714
- ------------------------------------------------------------------------------------------------------------------------------------
Virginia - 0.7%
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 9,872,400
1,000,000 Virginia Housing Development Authority, Commonwealth
Mortgage Bonds, 1987 Series C, Subseries C-7,
8.375%, 1/01/28 (Alternative Minimum Tax) 1/99 at 102 AA+ 1,007,940
- ------------------------------------------------------------------------------------------------------------------------------------
Washington - 16.9%
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) 7/07 at 102 AA 20,748,567
8,525,000 King County, Washington, Limited Tax General Obligation
Refunding Bonds (Payable from Sewer Revenues), Series 1998B,
4.750%, 1/01/18 1/08 at 101 AA+ 8,371,891
17,050,000 Municipality of Metropolitan Seattle, Washington, Sewer
Refunding Revenue Bonds, Series Z, 5.500%, 1/01/33 1/03 at 102 AAA 17,721,088
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 6,676,537
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 7,193,550
10,000,000 Washington Health Care Facilities Authority, Revenue Bonds,
Series 1998 (Swedish Health Services), 5.125%, 11/15/22 11/08 at 101 Aaa 9,877,200
11,000,000 Washington Health Care Facilities Authority, Revenue Bonds,
Series 1998 (Harrison Memorial Hospital),
5.000%, 8/15/28 (DD) 8/13 at 102 AAA 10,643,490
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 4,570,341
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 13,504,778
29,870,000 Washington Public Power Supply System, Nuclear Project
No. 1, Refunding Revenue Bonds, Series 1993B,
5.600%, 7/01/15 7/03 at 102 AAA 31,257,760
Washington Public Power Supply System, Nuclear Project
No. 1, Refunding Revenue Bonds, Series 1989A:
4,060,000 7.500%, 7/01/15 (Pre-refunded to 7/01/99) 7/99 at 102 AAA 4,262,472
11,900,000 7.500%, 7/01/15 (Pre-refunded to 7/01/99) 7/99 at 102 Aaa 12,491,073
7,500,000 Washington Public Power Supply System, Nuclear Project
No. 2, Refunding Revenue Bonds, Series 1991A,
6.000%, 7/01/12 (Pre-refunded to 7/01/01) 7/01 at 100 Aa1*** 7,944,975
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Washington (continued)
$ 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 $ 15,530,798
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 7,079,186
14,500,000 Washington Public Power Supply System, Nuclear Project
No. 2, Refunding Revenue Bonds, Series 1998A,
5.000%, 7/01/12 7/08 at 102 Aa1 14,736,349
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 14,348,744
22,880,000 Washington Public Power Supply System, Nuclear Project
No. 3, Refunding Revenue Bonds, Series 1993C,
5.375%, 7/01/15 7/03 at 102 Aa1 23,379,469
9,350,000 Washington Public Power Supply System, Nuclear Project
No. 3, Refunding Revenue Bonds, Series 1997A,
5.250%, 7/01/15 7/07 at 102 Aa1 9,536,906
7,275,000 Washington Public Power Supply System, Nuclear Project
No. 3, Refunding Revenue Bonds, Series 1998A,
5.125%, 7/01/18 7/08 at 102 Aa1 7,221,019
- ------------------------------------------------------------------------------------------------------------------------------------
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 16,180,499
- ------------------------------------------------------------------------------------------------------------------------------------
$ 1,370,784,859 Total Investments - (cost $1,359,473,254) - 98.3% 1,448,475,312
================ ---------------------------------------------------------------------------------------------------------------
Temporary Investments in Short-Term Municipal Securities - 0.1%
1,000,000 Industrial Development Authority of the City of Roanoke,
Virginia, Hospital Revenue Bonds (Carilion Health System
Obligated Group), Series 1997A, Variable Rate Demand Bonds,
3.700%, 7/01/27+ VMIG-1 1,000,000
1,000,000 Roanoke Industrial Development Authority, Hospital Revenue
Demand Bonds, Series 1995A (Carilion Health System),
Variable Rate Demand Bonds, 3.700%, 7/01/19+ VMIG-1 1,000,000
- ------------------------------------------------------------------------------------------------------------------------------------
$ 2,000,000 Total Temporary Investments - 0.1% 2,000,000
================ ---------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 1.6% 23,280,105
---------------------------------------------------------------------------------------------------------------
Net Assets - 100% $1,473,755,417
===============================================================================================================
* Optional Call Provisions (not covered by the report of independent auditors):
Dates (month and year) and prices of the earliest optional call or redemption.
There may be other call provisions at varying prices at later dates.
** Ratings (not covered by the report of independent auditors):
Using the higher of Standard & Poor's or Moody's rating.
*** Security is backed by an escrow or trust containing sufficient U.S. government
or U.S. government agency securities which ensures the timely payment of principal
and interest. Security is normally considered to be equivalent to AAA rated securities.
+ 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.
N/R Investment is not rated.
(DD) Security purchased on a delayed delivery basis (note 1).
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Portfolio of Investments
Nuveen Premium Income Municipal Fund 2, Inc. (NPM)
October 31, 1998
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
<S> <C> <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%, 12/1/08 12/02 at 102 Baa1 $ 3,838,800
725,000 City of Valdez, Alaska, Home Mortgage Revenue Refunding
Bonds, 1992 Series, 7.900%, 2/01/10 8/02 at 102 A1 781,151
- ------------------------------------------------------------------------------------------------------------------------------------
Arizona - 3.1%
The Industrial Development Authority of the County of Mohave,
Hospital System Revenue Refunding Bonds (Medical Environments,
Inc., Phoenix Baptist Hospital and Medical Center Inc),
Series 1993:
5,705,000 6.250%, 7/01/03 No Opt. Call Aaa 6,198,483
6.750%, 7/01/08 (Pre-refunded to 7/01/03) 7/03 at 102 Aaa 3,427,620
9,000,000 City of Phoenix (Arizona), Civic Improvement Corporation,
Wastewater System Lease Revenue Bonds, Series 1993,
6.125%, 7/01/14 (Pre-refunded to 7/01/03) 7/03 at 102 AAA 10,052,370
4,380,000 City of Phoenix Civic Improvement Corporation (Arizona),
Wastewater System Lease Revenue Refunding Bonds,
Series 1993, 4.750%, 7/01/23 7/04 at 102 Aa3 4,240,541
5,045,000 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 5,643,791
- ------------------------------------------------------------------------------------------------------------------------------------
California - 13.3%
7,710,000 State of California Veterans, General Obligation A Bonds,
Series BH, 5.250%, 12/01/12 (Alternative Minimum Tax) 12/08 at 101 AAA 7,819,713
State Public Works Board of the State of California, Lease
Revenue Bonds (The Trustees of 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 17,507,106
10,500,000 6.700%, 10/01/17 (Pre-refunded to 10/01/02) 10/02 at 102 AAA 11,903,535
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
(Pre-refunded to 10/01/04) 10/04 at 102 A+*** 8,258,751
17,500,000 State Public Works Board of the State of California, Lease
Revenue Bonds (Department of Corrections), 1994 Series A
(California State Prison-Monterey County (Soledad II)),
6.875%, 11/01/14 (Pre-refunded to 11/01/04) 11/04 at 102 Aaa 20,736,800
30,000,000 Foothill/Eastern Transportation Corridor Agency (California),
Toll Road Revenue Bonds, Series 1995A, 0.000%, 1/01/21 No Opt. Call Baa 9,326,700
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 5,403,650
3,490,000 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 (Pre-refunded to 9/01/02) 9/02 at 102 N/R*** 3,747,143
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 A1 7,850,150
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
(Pre-refunded to 10/01/04) 10/04 at 102 AA*** 5,709,550
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 11,287,400
2,035,000 Parlier Redevelopment Agency (Parlier Redevelopment Project),
1992 Tax Allocation Bonds, Series A, 6.750%, 8/01/22
(Pre-refunded to 8/01/02) 8/02 at 102 BBB*** 2,293,832
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 (Pre-refunded to 7/01/04) 7/04 at 102 AAA 2,797,734
5,905,000 6.750%, 7/01/25 (Pre-refunded to 7/01/04) 7/04 at 102 AAA 6,912,393
960,000 6.750%, 7/01/25 7/04 at 102 AAA 1,097,722
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
California (continued)
$ 5,605,000 County of San Joaquin, California, Certificates of
Participation (1994 Solid Waste System System Facilities
Project), 6.600%, 4/01/19 4/04 at 102 A $ 6,113,037
- ------------------------------------------------------------------------------------------------------------------------------------
Colorado - 9.0%
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 10,627,325
1,335,000 Colorado Housing and Finance Authority, Single Family
Program Senior Bonds, 1994 Series E, 8.125%, 12/01/24
(Alternative Minimum Tax) 12/04 at 105 Aa2 1,479,674
Colorado Housing and Finance Authority, General Obligation
Bonds, 1994 Series A:
5,785,000 6.850%, 8/01/24 8/02 at 102 A 6,197,355
2,295,000 6.875%, 8/01/30 8/02 at 102 A 2,448,352
4,595,000 Colorado Housing and Finance Authority, Single Family
Program Senior Bonds, 1995 Series D,
7.375%, 6/01/26 12/05 at 105 Aa2 5,036,625
City and County of Denver, Colorado, Airport System Revenue
Bonds, Series 1992B:
1,445,000 7.250%, 11/15/23 (Pre-refunded to 11/15/02)
(Alternative Minimum Tax) 11/02 at 102 Aaa 1,660,710
5,635,000 7.250%, 11/15/23 (Alternative Minimum Tax) 11/02 at 102 Baa1 6,283,645
City and County of Denver, Colorado, Airport System Revenue
Bonds, Series 1992C:
2,125,000 6.750%, 11/15/13 (Pre-refunded to 11/15/02)
(Alternative Minimum Tax) 11/02 at 102 Aaa 2,400,953
16,120,000 6.750%, 11/15/13 (Alternative Minimum Tax) 11/02 at 102 Baa1 17,743,929
City and County of Denver, Colorado, Airport System Revenue
Bonds, Series 1991A,
1,925,000 8.000%, 11/15/25 (Pre-refunded to 11/15/01)
(Alternative Minimum Tax) 11/01 at 100 Aaa 2,163,373
5,315,000 8.000%, 11/15/25 (Alternative Minimum Tax) 11/01 at 100 Baa1 5,845,278
City and County of Denver, Colorado, Airport System Revenue
Bonds, Series 1991D:
400,000 7.750%, 11/15/13 (Alternative Minimum Tax) No Opt. Call Baa1 511,760
3,155,000 7.750%, 11/15/21 (Pre-refunded to 11/15/01)
(Alternative Minimum Tax) 11/01 at 102 Aaa 3,579,695
12,115,000 7.750%, 11/15/21 (Alternative Minimum Tax) 11/01 at 102 Baa1 13,468,730
City and County of Denver (FHA Insured), Boston Lofts
Projects, Series 1997A:
1,700,000 5.750%, 10/01/27 (Alternative Minimum Tax) 10/07 at 102 AAA 1,769,887
4,795,000 5.850%, 10/01/38 (Alternative Minimum Tax) 10/07 at 102 AAA 4,991,116
- ------------------------------------------------------------------------------------------------------------------------------------
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 3,420,272
- ------------------------------------------------------------------------------------------------------------------------------------
Florida - 2.6%
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 1,925,683
5,000,000 Dade County, Florida, Aviation Bonds, Series 1996A,
5.750%, 10/01/18 (Alternative Minimum Tax) 10/06 at 102 AAA 5,320,400
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 3,095,813
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*** 14,299,750
- ------------------------------------------------------------------------------------------------------------------------------------
Georgia - 3.2%
10,000,000 City of Atlanta (Georgia), Water and Sewerage Revenue Bonds,
Series 1993, 4.500%, 1/01/18 1/04 at 100 AAA 9,452,300
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 8,304,240
650,000 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 691,776
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 AAA 5,924,239
5,500,000 6.700%, 12/01/25 (Alternative Minimum Tax) 9/04 at 102 AAA 5,939,670
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Idaho - 0.3%
$ 2,335,000 Idaho Housing and Finance Association, Single Family
Mortgage Bonds, 1996 Series G, 6.350%, 7/01/26
(Alternative MinimumTax) 7/06 at 102 Aaa $ 2,503,821
- ------------------------------------------------------------------------------------------------------------------------------------
Illinois - 10.3%
5,000,000 City of Chicago, General Obligation Bonds (Emergency
Telephone System), Series 1993, 5.625%, 1/01/23 1/03 at 102 AAA 5,279,100
17,000,000 City of Chicago, General Obligation Bonds, Project Series A
of 1992, 6.250%, 1/01/12
(Pre-refunded to 1/01/02) 1/02 at 102 AAA 18,514,700
1,000,000 City of Chicago, General Obligation Bonds, Project and
Refunding Series 1998, 5.250%, 1/01/20 7/08 at 102 AAA 1,015,200
36,300,000 Chicago School Reform Board of Trustees of the Board of
Education of the City of Chicago, Illinois, Unlimited Tax
General Obligation Bonds (Dedicated Tax Revenues),
Series 1998A, 0.000%, 12/01/21 No Opt. Call AAA 11,092,191
8,270,000 City of Chicago, Mortgage Revenue Bonds, Series 1992
(FHA Insured Mortgage Loan-Lakeview Towers Project),
6.650%, 12/01/33 6/02 at 102 AAA 8,772,485
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 1,249,530
5,500,000 Chicago Park District, Illinois, General Obligation Capital
Improvement Bonds and Aquarium and Museum Bonds,
Series 1991, 6.700%, 1/01/11 (Pre-refunded to 1/01/02) 1/02 at 102 AA-*** 6,089,380
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 11,674,772
4,535,000 City of Chicago, Tax Increment Allocation Bonds (Dunning
Redevelopment Project), Series 1996B, 7.250%, 1/01/14 1/07 at 102 N/R 4,948,320
3,530,000 City of Chicago, Tax Increment Finance Bonds (Sanitary
Drainage and Ship Canal), Series 1997A, 7.750%, 1/01/14 1/07 at 102 N/R 3,883,353
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 3,042,774
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- 7,077,123
3,000,000 Illinois Health Facilities Authority, Revenue Refunding
Bonds, Series 1993C (Lutheran General Health System),
6.000%, 4/01/18 No Opt. Call A+ 3,379,920
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 A+ 12,546,936
985,000 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 1,052,049
- ------------------------------------------------------------------------------------------------------------------------------------
Indiana - 7.6%
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*** 9,114,480
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 A+ 14,744,116
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 6,482,662
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 11,848,396
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 9,042,714
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 3,273,360
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 6,284,340
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+ 5,735,835
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*** 6,453,220
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Kansas - 0.5%
$ 1,970,000 Johnson County, Kansas, Single Family Mortgage Revenue
Refunding Bonds, Series 1994, 7.100%, 5/01/12 5/04 at 103 A $ 2,156,835
2,310,000 Sedgwick County, Kansas and Shawnee County, Kansas,
Collateralized Single Family Mortgage Refunding Revenue
Bonds (GNMA Certificates), Series 1994A1, 7.900%, 5/01/24
(Alternative Minimum Tax) No Opt. Call Aaa 2,698,242
- ------------------------------------------------------------------------------------------------------------------------------------
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 7,519,120
- ------------------------------------------------------------------------------------------------------------------------------------
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 4,199,760
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 13,533,615
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 5,390,701
4,510,000 Orleans Levee District (A Political Subdivision of the State
of Louisiana), Public Improvement Bonds, Series 1986,
5.950%, 11/01/15 12/05 at 103 AAA 4,971,012
- ------------------------------------------------------------------------------------------------------------------------------------
Maine - 1.0%
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 1,332,375
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 8,308,412
- ------------------------------------------------------------------------------------------------------------------------------------
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 Aa2 2,749,594
- ------------------------------------------------------------------------------------------------------------------------------------
Massachusetts - 1.1%
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 3,277,520
6,900,000 Massachusetts Water Resources Authority, General Revenue
Bonds, 1993 Series C, 5.250%, 12/01/20 12/04 at 102 AAA 7,010,952
- ------------------------------------------------------------------------------------------------------------------------------------
Michigan - 1.5%
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 8,386,160
5,470,000 Michigan State Housing Development Authority, Rental Housing
Revenue Bonds, 1992 Series A, 6.650%, 4/01/23 10/02 at 102 AA- 5,883,587
- ------------------------------------------------------------------------------------------------------------------------------------
Minnesota - 2.4%
3,560,000 Housing and Redevelopment Authority of the City of Saint
Paul, Minnesota and the 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- 3,897,737
3,460,000 Minnesota Housing Finance Agency, Rental Housing Bonds,
1995 Series D, 5.950%, 2/01/18 2/05 at 102 AAA 3,660,542
5,090,000 Minnesota Housing Finance Agency, Single Family Mortgage
Bonds, 1996 Series G, 6.250%, 7/01/26
(Alternative Minimum Tax) 1/06 at 102 AA 5,414,335
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 2,130,400
2,350,000 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 10 BBB 2,492,716
5,170,000 Washington County Housing and Redevelopment Authority, Lease
Revenue Bonds (South Washington County Schools Project),
Series 1992, 7.400%, 12/01/14 (Pre-refunded to 12/01/02) 12/02 at 100 A3*** 5,875,808
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Mississippi - 0.5%
$ 4,000,000 Mississippi Hospital Equipment and Facilities Authority,
Revenue Bonds, Series 1992A (Wesley Health Systems),
6.050%, 4/01/12 (Pre-refunded to 10/01/02) 10/02 at 102 AAA $ 4,409,200
- ------------------------------------------------------------------------------------------------------------------------------------
Missouri - 2.8%
9,000,000 Missouri State Health and Educational Facilities Authority,
Revenue Bonds (SSM Health Care), Series 1998A,
5.000%, 6/01/22 6/08 at 101 AAA 8,846,640
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 5,984,935
11,000,000 St. Louis Municipal Finance Corporation, Leasehold Revenue
Refunding Bonds, 6.000%, 7/15/13 7/03 at 102 A1 11,809,820
- ------------------------------------------------------------------------------------------------------------------------------------
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 MinimumTax) 6/02 at 102 AAA 4,386,480
- ------------------------------------------------------------------------------------------------------------------------------------
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 A 5,442,739
- ------------------------------------------------------------------------------------------------------------------------------------
New Jersey - 2.7%
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 5,062,095
8,720,000 New Jersey Housing and Mortgage Finance Agency, Multi-Family
Housing Revenue Bonds, 1997 Series A, 5.650%, 5/01/40
(Alternative Minimum Tax) 11/07 at 101 AAA 9,045,605
4,145,000 New Jersey Housing and Mortgage Finance Agency, Housing
Revenue Refunding Bonds, 1992 Series One, 6.700%, 11/1/28 11/02 at 102 A+ 4,468,932
1,000,000 Toms River Board of Education, General Obligation Bonds,
Series 1997, 5.750%, 7/15/21 7/07 at 100 AAA 1,075,290
6,000,000 The Union County Utilities Authority (New Jersey), Solid
Waste Bonds, County Deficiency Agreement, Series 1998A,
5.350%, 6/01/23 (Alternative Minimum Tax) 6/08 at 101 AAA 6,100,800
- ------------------------------------------------------------------------------------------------------------------------------------
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 4,261,240
- ------------------------------------------------------------------------------------------------------------------------------------
New York - 15.0%
10,750,000 The City of New York, General Obligation Bonds, Fiscal 1995
Series D, 6.600%, 2/01/03 No Opt. Call A- 11,834,460
7,695,000 The City of New York, General Obligation Bonds, Fiscal 1995
Series E, 6.600%, 8/01/03 No Opt. Call A- 8,554,685
17,365,000 The City of New York, General Obligation Bonds, Fiscal 1996
Series F, 7.000%, 2/01/06 No Opt. Call A- 20,264,087
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 A- 11,936,035
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 A- 9,646,740
8,000,000 The City of New York, General Obligation Bonds, Fiscal 1997
Series E, 5.875%, 8/01/24 8/06 at 101 1/2 A- 8,582,560
The City of New York, General Obligation Bonds, Fiscal 1993
Series A:
2,625,000 6.375%, 8/01/08 (Pre-refunded to 8/01/02) 8/02 at 101 1/2 Aaa 2,905,298
7,375,000 6.375%, 8/01/08 8/02 at 101 1/2 A- 8,076,731
660,000 6.500%, 8/01/11 (Pre-refunded to 8/01/02) 8/02 at 101 1/2 Aaa 733,346
1,340,000 6.500%, 8/01/11 8/02 at 101 1/2 A- 1,471,655
The City of New York, General Obligation Bonds, Fiscal 1997
Series I:
5,675,000 6.250%, 4/15/27 (Pre-refunded to 4/15/07) 4/07 at 101 A-*** 6,590,888
6,345,000 6.250%, 4/15/27 4/07 at 101 A- 6,976,645
1,370,000 New York City (New York), Municipal Water Finance Authority,
Water and Sewer System Revenue Bonds, Fiscal 1997 Series B,
5.500%, 6/15/27 6/07 at 101 AAA 1,448,022
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 3,420,333
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
New York (continued)
$ 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 $ 4,269,880
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 BBB+ 2,696,600
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 17,393,130
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 3,557,995
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- 8,198,768
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 2,540,850
2,465,000 Empire Development Corporation, New York State Urban
Development Corporation, Correctional Capital Facilities
Revenue Bonds, Series 6, 5.375%, 1/01/25 1/06 at 102 AAA 2,545,877
- ------------------------------------------------------------------------------------------------------------------------------------
North Carolina - 0.8%
5,185,000 City of Durham, Urban Redevelopment Mortgage Revenue Bonds
(Durham Hosiery Mill Project) (FHA Insured), Series 1987,
7.500%, 8/01/29 (Alternative Minimum Tax) 8/07 at 105 AAA 5,820,370
1,945,000 North Carolina Housing Finance Agency, Single Family Revenue
Bonds, Series JJ (1985 Resolution), 6.450%, 9/01/27
(Alternative Minimum Tax) 3/06 at 102 AA 2,095,951
- ------------------------------------------------------------------------------------------------------------------------------------
North Dakota - 0.4%
4,150,000 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 4,290,602
- ------------------------------------------------------------------------------------------------------------------------------------
Ohio - 1.5%
2,000,000 Ohio Housing Finance Agency, Multifamily Housing Mortgage
Revenue Bonds, Series 1998B-1 (FHA Insured Mortgage Loan-
Courtyards of Kettering Project), 5.550%, 1/01/40
(Alternative Minimum Tax) 1/08 at 102 Aa2 2,036,520
5,250,000 State of Ohio, Ohio Air Quality Development Authority, Air
Quality Development Revenue Bonds (JMG Funding, Limited
Partnership Project), Series 1997, 5.625%, 1/01/23
(Alternative Minimum Tax) 4/07 at 102 AAA 5,485,515
6,750,000 State of Ohio, Ohio Water Development Authority, Solid Waste
Disposal Revenue Bonds (Bay Shore Power Project), Tax Exempt
Series 1998A, 5.875%, 9/01/20 (Alternative Minimum Tax) 9/08 at 102 N/R 6,826,883
- ------------------------------------------------------------------------------------------------------------------------------------
Oklahoma - 0.5%
1,000,000 Tulsa County Industrial Authority (Tulsa, Oklahoma),
Recreational Facilities Revenue Bonds, Refunding Series 1992,
6.600%, 9/01/08 9/02 at 102 A- 1,098,090
2,990,000 Tulsa County Public Facilities Authority (Tulsa, Oklahoma),
Recreational Facility Refunding Revenue Bonds, Series 1992,
6.600%, 11/01/08 11/02 at 102 A- 3,292,379
- ------------------------------------------------------------------------------------------------------------------------------------
Oregon - 2.8%
13,350,000 State of Oregon, General Obligation, Elderly and Disabled
Housing Bonds, 1992 Series B, 6.375%, 8/01/24 8/02 at 102 AA 14,597,825
6,160,000 State of Oregon, General Obligation, Veterans Welfare Bonds,
Series 75, 6.000%, 4/01/27 10/05 at 102 AA 6,516,849
1,750,000 State of Oregon, Housing and Community Services Department,
Mortgage Revenue Bonds (Single-Family Mortgage Program),
1997 Series H, 5.650%, 7/01/28 (Alternative Minimum Tax) 7/07 at 101 1 Aa2 1,810,830
3,380,000 City of Portland, Oregon, Limited Tax Improvement Bonds,
1996 Series A, 5.550%, 6/01/16 6/06 at 100 Aa 3,581,076
- ------------------------------------------------------------------------------------------------------------------------------------
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 1,119,940
- ------------------------------------------------------------------------------------------------------------------------------------
Puerto Rico - 0.1%
1,375,000 Puerto Rico Electric Power Authority, Power Revenue Bonds,
Series X, 5.500%, 7/1/25 7/05 at 100 BBB+ 1,417,804
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
South Carolina - 0.2%
$ 2,135,000 School District No. 4 of Lexington County, South Carolina,
Certificates of Participation, Series 1994, 7.000%, 7/1/12 7/04 at 102 Baa $ 2,379,543
- ------------------------------------------------------------------------------------------------------------------------------------
South Dakota - 1.2%
10,370,000 South Dakota Building Authority, Revenue Bonds, Series 1992,
6.700%, 9/01/17 No Opt.Call AAA 11,963,869
- ------------------------------------------------------------------------------------------------------------------------------------
Texas - 2.4%
1,415,000 Baytown Housing Finance Corporation, Single Family Mortgage
Revenue Refunding Bonds, Series 1992-A, 8.500%, 9/1/11 9/02 at 103 A1 1,591,267
1,435,000 Hidalgo County Housing Finance Corporation (Texas), Single
Family Mortgage Revenue Bonds (GNMA and FNMA Collateralized),
Series 1994A, 7.000%, 10/01/27 (Alternative Minimum Tax) 4/04 at 102 Aaa 1,536,455
1,385,000 Houston Independent School District Public Facility
Corporation (Harris County, Texas), Lease Revenue Bonds
(Cesar E. Chavez High School), Series 1998A,
0.000%, 9/15/13 No Opt. Call AAA 677,030
6,630,000 Houston Independent School District Public Facility
Corporation (Harris County, Texas), Lease Revenue Bonds
(West Side High School), Series 1998B, 0.000%, 9/15/13 No Opt. Call AAA 3,240,943
1,000,000 Humble Independent School District (Harris County, Texas),
Unlimited Tax Schoolhouse Bonds, Series II 1997,
3.500%, 2/15/18 2/10 at 100 AAA 821,609
1,985,000 Lufkin Health Facilities Development Corporation (Texas),
Health System Revenue and Refunding Bonds (Memorial Health
System of East Texas), Series 1995, 6.875%, 2/15/26 2/06 at 102 BBB 2,197,672
2,390,000 Port Arthur Housing Finance Corporation, Single Family
Mortgage Revenue Refunding Bonds, Series 1992,
8.700%, 3/01/12 9/02 at 103 A 2,628,880
9,465,000 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 10,226,458
- ------------------------------------------------------------------------------------------------------------------------------------
Utah - 1.6%
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 6,286,259
2,735,000 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 Aaa 2,922,155
1,245,000 Utah Housing Finance Agency, Single Family Mortgage Bonds,
1997 Series E2 Class I, 5.875%, 1/01/19
(Alternative Minimum Tax) 7/07 at 101 1/2 AAA 1,314,097
1,560,000 Utah Housing Finance Agency, Single Family Mortgage Bonds,
1997 Series C, 5.600%, 7/01/18 (Alternative Minimum Tax) 1/09 at 101 1/2 AAA 1,595,832
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 3,627,809
- ------------------------------------------------------------------------------------------------------------------------------------
Vermont - 0.7%
6,620,000 Vermont Housing Finance Agency, Single Family Housing Bonds,
Series 4, 6.400%, 11/1/25 5/02 at 102 A+ 6,976,354
- ------------------------------------------------------------------------------------------------------------------------------------
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 7,631,329
- ------------------------------------------------------------------------------------------------------------------------------------
Wisconsin - 2.1%
15,075,000 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 16,289,441
3,215,000 Wisconsin Health and Educational Facilities Authority,
Revenue Bonds, Series 1997 (Marshfield Clinic Project),
5.625%, 2/15/17 2/07 at 102 AAA 3,410,728
- ------------------------------------------------------------------------------------------------------------------------------------
$ 920,581,000 Total Investments - (cost $857,604,906) - 98.5% 945,367,447
================ ---------------------------------------------------------------------------------------------------------------
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Temporary Investments in Short-Term Municipal Securities - 0.1%
$ 800,000 County of Cuyahoga, Ohio, Hospital Revenue Bonds (Cleveland
================ Clinic Foundation), Series 1997D, Variable Rate Demand Bonds,
3.700%, 1/01/26+ VMGI-1 $ 800,000
---------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 1.4% 13,672,448
---------------------------------------------------------------------------------------------------------------
Net Assets - 100% $ 959,839,895
===============================================================================================================
* Optional Call Provisions (not covered by the report of independent auditors):
Dates (month and year) and prices of the earliest optional call or redemption.
There may be other call provisions at varying prices at later dates.
** Ratings (not covered by the report of independent auditors):
Using the higher of Standard & Poor's or Moody's rating.
*** Securities are backed by an escrow or trust containing sufficient U.S. government
or U.S. government agency securities which ensures the timely payment of principal
and interest. Securities are normally considered to be equivalent to AAA rated securities.
+ The security has a maturity of more than one year, but has variable rate and demand
features which qualify it as a short-term security. The rate disclosed is that currently
in effect. This rate changes periodically based on market conditions or a specified
market index.
N/R Investment is not rated.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Portfolio of Investments
Nuveen Premium Income Municipal Fund 4, Inc. (NPT)
October 31, 1998
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Alabama - 4.6%
$ 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 $ 8,610,400
20,745,000 Alabama Special Care Facilities Financing Authority of
Birmingham, Hospital Revenue Bonds (Daughters of Charity
National Health System - Providence Hospital and St.
Vincents Hospital), Series 1995, 5.000%, 11/01/25 11/05 at 101 AA+ 20,249,402
2,000,000 The Governmental Utility Services Corporation of the City of
Bessemer (Alabama), Water Supply Revenue Bonds, Series 1998,
5.250%, 6/01/32 6/08 at 102 AAA 2,033,800
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 A+ 11,600,050
- ------------------------------------------------------------------------------------------------------------------------------------
Arkansas - 0.2%
565,000 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 600,770
445,463 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 487,973
752,362 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 827,471
- ------------------------------------------------------------------------------------------------------------------------------------
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 A 5,337,250
4,780,000 Foothill/Eastern Transportation Corridor Agency (California),
Toll Road Revenue Bonds, Series 1995A, 0.000%, 1/01/14 No Opt. Call Baa 2,190,722
Community Redevelopment Financing Authority of the Community
Redevelopment Agency of the City of Los Angeles, California,
Grand Central Square Multifamily Housing Bonds, 1993 Series A:
500,000 5.750%, 12/01/13 (Alternative Minimum Tax) 6/03 at 102 BB 503,780
3,900,000 5.900%, 12/01/26 (Alternative Minimum Tax) 12/98 at 100 A 3,901,794
4,500,000 Los Angeles County Transportation Commission (California),
Proposition C Sales Tax Revenue Bonds, Second Senior Bonds,
Series 1992-A , 6.750%, 7/01/19 (Pre-refunded to 7/01/02) 7/02 at 102 Aaa 5,079,330
1,715,000 Housing Authority of the County of Merced (California),
Multifamily Housing Refunding Revenue Bonds, Series 1993A
(Belmont Park Apartments Project), 5.875%, 1/01/19 1/04 at 102 Aaa 1,779,244
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 2,750,675
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 5,479,950
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- 3,771,277
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 2,276,272
- ------------------------------------------------------------------------------------------------------------------------------------
Colorado - 3.2%
City and County of Denver, Colorado, Airport System Revenue
Bonds, Series 1992C:
1,100,000 6.750%, 11/15/22 (Pre-refunded to 11/15/02)
(Alternative Minimum Tax) 11/02 at 102 Aaa 1,242,846
4,140,000 6.750%, 11/15/22 (Alternative Minimum Tax) 11/02 at 102 Baa1 4,532,886
City and County of Denver, Colorado, Airport System Revenue
Bonds, Series 1990A:
405,000 8.500%, 11/15/23 (Pre-refunded to 11/15/00)
(Alternative Minimum Tax) 11/00 at 102 Aaa 452,276
3,695,000 8.500%, 11/15/23 (Alternative Minimum Tax) 11/00 at 102 Baa1 4,062,505
115,000 8.000%, 11/15/25 (Pre-refunded to 11/15/00) 11/00 at 102 Aaa 127,300
1,190,000 8.000%, 11/15/25 (Alternative Minimum Tax) 11/00 at 102 Baa1 1,294,399
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Colorado (continued)
City and County of Denver, Colorado, Airport System Revenue
Bonds, Series 1991A:
$ 315,000 8.750%, 11/15/23 (Pre-refunded to 11/15/01)
(Alternative Minimum Tax) 11/01 at 102 Aaa $ 366,389
885,000 8.750%, 11/15/23 (Alternative Minimum Tax) 11/01 at 102 Baa1 1,009,095
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 6,650,880
3,040,000 7.750%, 11/15/13 (Alternative Minimum Tax) No Opt. Call Baa1 3,889,376
865,000 7.750%, 11/15/21 (Pre-refunded to 11/15/01)
(Alternative Minimum Tax) 11/01 at 102 Aaa 981,438
3,280,000 7.750%, 11/15/21 (Alternative Minimum Tax) 11/01 at 102 Baa1 3,646,507
210,000 7.000%, 11/15/25 (Pre-refunded to 11/15/01) 11/01 at 100 Aaa 230,076
790,000 7.000%, 11/15/25 (Alternative Minimum Tax) 11/01 at 100 Baa1 847,741
- ------------------------------------------------------------------------------------------------------------------------------------
Connecticut - 1.4%
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 7,010,120
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 3,236,850
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 2,720,952
- ------------------------------------------------------------------------------------------------------------------------------------
District of Columbia - 5.1%
5,000,000 District of Columbia, (Washington, D.C.), General Obligation
Bonds, 6.000%, 6/01/09 6/03 at 102 AAA 5,480,750
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 6,522,720
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 A3 3,495,247
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 4,610,273
3,890,000 District of Columbia (Washington, D.C.), General Obligation
Bonds, Series 1993-A3, 5.500%, 6/01/06 No Opt. Call AAA 4,223,341
9,500,000 District of Columbia (Washington, D.C.), General Obligation
Refunding Bonds, Series 1993A, 6.000%, 6/01/07 No Opt. Call AAA 10,675,051
5,000,000 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 5,171,600
2,000,000 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 2,173,440
4,500,000 District of Columbia, University Revenue Refunding Bonds
(The Howard University Issue), Series 1992A, 6.750%, 10/01/12
(Pre-refunded to 10/01/02) 10/02 at 102 AAA 5,068,980
- ------------------------------------------------------------------------------------------------------------------------------------
Florida - 0.9%
8,000,000 City of Sunrise, Florida, Utility System Revenue Refunding
Bonds, Series 1998, 5.000%, 10/01/28 10/18 at 100 AAA 8,085,440
- ------------------------------------------------------------------------------------------------------------------------------------
Georgia - 2.0%
2,930,000 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 3,166,568
2,880,000 Municipal Electric Authority of Georgia, General Power
Revenue Bonds, 1992B Series, 8.250%, 1/01/11 No Opt. Call A 3,807,965
4,185,000 Municipal Electric Authority of Georgia, General Power
Revenue Bonds, Series EE, 7.250%, 1/01/24 No Opt. Call AAA 5,572,244
5,500,000 Municipal Electric Authority of Georgia, General Power
Revenue Bonds, 1993B Series, 5.700%, 1/01/19 No Opt. Call AAA 6,025,800
- ------------------------------------------------------------------------------------------------------------------------------------
Hawaii - 0.7%
1,500,000 State of Hawaii, Airports System Revenue Bonds, Series of
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 1,609,545
5,000,000 Honolulu, Hawaii, City and County Refunding and Improvement
Bonds, Series 1993B, 5.000%, 10/01/13 No Opt. Call AA 5,178,400
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Illinois - 12.7%
$ 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 $ 4,669,080
5,000,000 City of Chicago, Illinois, Sales Tax Revenue Bonds,
Series 1998, 5.250%, 1/01/28 7/08 at 102 AAA 5,076,000
Cook County School District 99 (Cicero), General Obligation
School Bonds, Series 1997:
1,345,000 8.500%, 12/01/12 No Opt. Call Aaa 1,882,597
1,455,000 8.500%, 12/01/13 No Opt. Call Aaa 2,051,521
1,685,000 8.500%, 12/01/15 No Opt. Call Aaa 2,401,209
3,140,000 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 3,356,629
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 2,659,933
10,360,000 Illinois Educational Facilities Authority, Revenue
Refunding Bonds, Loyola University of Chicago, Series 1991-A,
7.125%, 7/01/21 (Pre-refunded to 7/01/01) 7/01 at 102 A1*** 11,452,358
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- 3,077,010
2,000,000 Illinois Health Facilities Authority, Revenue Bonds, Series
1992 (Trinity Medical Center), 7.000%, 7/01/12 7/02 at 102 BBB 2,165,080
Illinois Health Facilities Authority, Revenue Refunding
Bonds, Series 1993C (Lutheran General Healthsystem):
5,705,000 7.000%, 4/01/08 No Opt. Call A+ 6,788,037
4,075,000 7.000%, 4/01/14 No Opt. Call A+ 5,040,612
8,190,000 Illinois Housing Development Authority, Multi-Family
Program Bonds, Series 5, 6.650%, 9/01/14 9/04 at 102 A+ 8,897,534
3,410,000 Illinois Housing Development Authority, Section 8 Elderly
Housing Revenue Bonds (Skyline Tower Apartments),
Series 1992B, 6.875%, 11/01/17 11/02 at 102 A 3,607,337
3,400,000 Illinois Housing Development Authority, Section 8 Elderly
Housing Revenue Bonds (Morningside North Development),
Series 1992D, 6.600%, 1/01/07 (Pre-refunded to 1/01/03) 1/03 at 102 A*** 3,801,472
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*** 5,471,950
11,690,000 Illinois Health Facilities Authority, Refunding Revenue
Bonds, Series 1990-B (Hinsdale Hospital), 9.000%, 11/15/15 11/00 at 102 AAA 13,175,448
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 2,126,108
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 3,980,769
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 14,952,013
4,685,000 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 5,144,692
4,460,000 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 4,858,992
- ------------------------------------------------------------------------------------------------------------------------------------
Indiana - 3.4%
2,250,000 Indiana Bond Bank, Special Program Bonds, Series 1992B,
6.750%, 8/01/12 2/03 at 102 A+ 2,511,180
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 3,537,952
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 N/R 2,115,183
2,000,000 Hospital Authority of the City of Kokomo (Indiana), Hospital
Revenue Refunding Bonds, Series 1993 (Saint Joseph Hospital
and Health Center of Kokomo), 6.250%, 8/15/05 No Opt. Call N/R 2,208,020
3,615,000 Mooresville Consolidated School Building Corporation, First
Mortgage Bonds, Series 1994A (Morgan County, Indiana),
6.200%, 7/15/15 (Pre-refunded to 1/15/04) 1/04 at 101 A*** 4,021,037
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*** 6,447,756
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Indiana (continued)
$ 9,500,000 City of Petersburg, Indiana, Pollution Control Refunding
Revenue Bonds, Series 1993A (Indianapolis Power and Light
Company Project), 6.100%, 1/01/16 1/03 at 102 Aa2 $ 10,212,215
- ------------------------------------------------------------------------------------------------------------------------------------
Iowa - 0.6%
780,000 City of Davenport, Iowa, Home Ownership Mortgage Revenue
Refunding Bonds, Series 1994, 7.900%, 3/01/10 9/04 at 102 A1 838,399
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*** 4,285,107
- ------------------------------------------------------------------------------------------------------------------------------------
Kansas - 0.3%
1,475,000 Johnson County, Kansas, Single Family Mortgage Revenue
Refunding Bonds, Series 1994, 7.100%, 5/01/12 5/04 at 103 A 1,614,889
1,200,000 Labette County, Kansas, Single Family Mortgage Revenue
Refunding Bonds, 1993 Series A, 8.400%, 12/01/11 6/03 at 103 Aa2 1,292,352
- ------------------------------------------------------------------------------------------------------------------------------------
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 7,519,120
- ------------------------------------------------------------------------------------------------------------------------------------
Louisiana - 1.2%
3,415,000 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- 3,491,325
6,555,000 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 7,280,049
- ------------------------------------------------------------------------------------------------------------------------------------
Maine - 0.9%
8,000,000 Corporation, Subordinate Student Loan Revenue Bonds,
Series 1994-2, 6.250%, 11/01/06 (Alternative Minimum Tax) No Opt. Call A 8,413,280
- ------------------------------------------------------------------------------------------------------------------------------------
Maryland - 1.8%
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 5,336,850
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 Baa1 2,049,280
1,790,000 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 1,908,194
6,800,000 Housing Opportunities Commission of Montgomery County
(Montgomery County, Maryland), Multifamily Housing Revenue
Bonds, 1996 Series B, 6.400%, 7/01/28
(Alternative Minimum Tax) 7/06 at 102 Aa 7,317,004
- ------------------------------------------------------------------------------------------------------------------------------------
Massachusetts - 1.8%
4,500,000 Massachusetts Health and Educational Facilities Authority,
Revenue Bonds, Series 1991-C (New England Deaconess Hospital),
7.200%, 4/01/22 (Pre-refunded to 4/01/01) 4/01 at 102 AAA 4,953,105
2,000,000 Massachusetts Health and Educational Facilities Authority,
Revenue Bonds, Faulkner Hospital Issue, Series C,
6.000%, 7/01/13 7/03 at 102 Baa1 2,089,040
2,000,000 Massachusetts Housing Finance Agency, Housing Project Revenue
Bonds, 6.300%, 10/01/13 4/03 at 102 A+ 2,126,640
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 4,381,132
3,300,000 Massachusetts Industrial Finance Agency, Resource Recovery
Revenue Bonds, SEMASS Project, 7/01 at 103 N/R 3,672,801
Series 1991B, 9.250%, 7/01/15 (Alternative Minimum Tax)
- ------------------------------------------------------------------------------------------------------------------------------------
Michigan - 5.6%
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 5,219,050
10,000,000 City of Detroit, Michigan, Sewage Disposal System Revenue
Bonds, Series 1997-A, 5.000%, 7/01/27 7/07 at 101 AAA 9,871,800
10,225,000 City of Detroit, Michigan, Water Supply System Revenue Bonds
(Senior Lien), Series 1997-A, 5.000%, 7/01/27 7/07 at 101 AAA 10,078,680
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Michigan (continued)
$ 2,545,000 City of Hancock Hospital Finance Authority, FHA-Insured
Mortgage Hospital Revenue Bonds (Portage Health System, Inc.),
Series 1998, 4.625%, 8/01/18 8/08 at 100 AAA $ 2,509,166
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 1,067,680
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- 2,096,520
3,200,000 Michigan State Hospital Finance Authority, Hospital Revenue
and Refunding Bonds, Series 1992 (Bon Secours Health System
Project), 6.100%, 8/15/22 8/02 at 102 AAA 3,373,664
7,000,000 Michigan State Hospital Finance Authority, Hospital Revenue
Bonds (The Detroit Medical Center), Series 1998A,
5.250%, 8/15/23 8/08 at 101 A- 6,842,850
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 4,073,100
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 10 AAA 6,674,100
- ------------------------------------------------------------------------------------------------------------------------------------
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 10 AAA 5,168,500
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- 4,458,760
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 2,924,299
- ------------------------------------------------------------------------------------------------------------------------------------
Mississippi - 1.1%
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 2,067,200
1,415,000 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 1,477,119
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 3,207,750
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 1,808,209
1,830,000 Mississippi Educational Facilities Authority, For Private,
Nonprofit Institutions of Higher Learning, Educational
Facilities Revenue Bonds (Tougaloo College Project), Series
1993A, 6.500%, 6/01/18 6/03 at 102 N/R 1,912,917
- ------------------------------------------------------------------------------------------------------------------------------------
Nebraska - 3.0%
10,000,000 Energy America (Nebraska), Natural Gas Revenue Note
(Metropolitan Utility District Project), Series 1997B,
5.700%, 7/01/08 No Opt. Call N/R 10,164,800
9,000,000 Nebraska Higher Education Loan Program Inc., Senior
Subordinate Bonds, Series A-5A, 6.250%, 6/01/18
(Alternative Minimum Tax) No Opt. Call AAA 9,667,620
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*** 1,922,842
5,075,000 8.375%, 1/01/14 1/02 at 102 A1 5,790,220
- ------------------------------------------------------------------------------------------------------------------------------------
Nevada - 0.8%
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 5,573,745
1,725,000 Nevada Housing Division, Single Family Program Senior Bonds,
1993 Issue B, 6.200%, 10/01/15 4/04 at 102 A1 1,824,550
- ------------------------------------------------------------------------------------------------------------------------------------
New Hampshire - 0.5%
2,700,000 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 2,830,410
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
New Hampshire (continued)
$ 1,815,000 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 $ 1,930,234
- ------------------------------------------------------------------------------------------------------------------------------------
New Mexico - 0.3%
455,000 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 481,781
2,400,000 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 2,552,664
- ------------------------------------------------------------------------------------------------------------------------------------
New York - 13.1%
14,000,000 Long Island Power Authority (New York), Electric System
General Revenue Bonds, Series 1998A, 5.500%, 12/01/29 6/03 at 101 A- 14,467,320
1,000,000 The City of New York, General Obligation Bonds, Fiscal 1995
Series A, 7.000%, 8/01/04 No Opt.Call A- 1,146,370
3,500,000 The City of New York, General Obligation Bonds, Fiscal 1996
Series B, 6.750%, 8/15/03 No Opt. Call A- 3,916,780
14,310,000 The City of New York, General Obligation Bonds, Fiscal 1996
Series F, 6.500%, 2/01/05 No Opt. Call A- 16,098,178
The City of New York, General Obligation Bonds, Fiscal 1991
Series D:
4,240,000 9.500%, 8/01/02 (Pre-refunded to 8/01/01) 8/01 at 101 1/2 Aaa 4,946,893
160,000 9.500%, 8/01/02 8/01 at 101 1/2 A- 185,018
16,915,000 New York City Transitional Finance Authority, Future Tax
Secured Bonds, Fiscal 1998 Series C, 5.000%, 5/01/26 5/08 at 101 AA 16,629,475
Dormitory Authority of the State of New York, The New York and
Presbyterian Hospital, FHA-Insured Mortgage Hospital Revenue
Bonds, Series 1998:
5,000,000 5.500%, 2/01/09 No Opt. Call AAA 5,473,350
6,450,000 5.500%, 8/01/09 No Opt. Call AAA 7,084,100
4,350,000 5.500%, 8/01/10 No Opt. Call AAA 4,774,647
5,000,000 5.500%, 8/01/11 No Opt. Call AAA 5,483,350
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 11,214,525
4,200,000 New York State Medical Care Facilities Finance Agency,
FHA-Insured Mortgage Project Revenue Bonds, 1995 Series B,
6.150%, 2/15/35 2/05 at 102 AA 4,565,526
New York State Medical Care Facilities Finance Agency, Hospital
and Nursing Home FHA-Insured Mortgage Revenue Bonds, 1994
Series A:
4,875,000 6.200%, 2/15/21 (Pre-refunded to 2/15/04) 2/04 at 102 AAA 5,491,834
3,365,000 6.200%, 2/15/21 2/04 at 102 AAA 3,729,194
7,500,000 New York State Thruway Authority, General Revenue Bonds,
Series C, 6.000%, 1/01/15 (Pre-refunded to 1/01/05) 1/05 at 102 AAA 8,454,075
6,500,000 New York State Thruway Authority, General Revenue Refunding
Bonds, Series E, 5.250%, 1/01/12 1/08 at 101 AA- 6,883,110
- ------------------------------------------------------------------------------------------------------------------------------------
North Carolina - 0.6%
3,000,000 North Carolina Medical Care Commission, Health Care Revenue
Bonds (Duke University Health System), Series 1998B,
5.000%, 6/01/28 6/08 at 101 AA 2,934,120
2,000,000 North Carolina Municipal Power Agency, Number 1 Catawba
Electric Revenue Bonds, Series 1992, 6.000%, 1/01/11 No Opt. Call AAA ,291,780
- ------------------------------------------------------------------------------------------------------------------------------------
North Dakota - 1.0%
8,150,000 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 8,426,122
995,000 City of Minot, North Dakota, Single Family Mortgage Revenue
Refunding Bonds, Series 1993, 7.700%, 8/01/10 8/03 at 102 Aa 1,074,988
- ------------------------------------------------------------------------------------------------------------------------------------
Ohio - 3.4%
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 4,881,420
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 2,017,683
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Ohio (continued)
$ 3,800,000 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 $ 4,101,302
11,215,000 Ohio Housing Finance Agency, Single Family Mortgage Revenue
Bonds (GNMA Mortgage-Backed Securities Program),
1989 Series A, 7.650%, 3/01/29 (Alternative Minimum Tax) 9/99 at 102 AAA 11,537,880
4,215,000 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 4,364,464
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 4,813,031
- ------------------------------------------------------------------------------------------------------------------------------------
Oklahoma - 1.5%
Oklahoma County Finance Authority, Multifamily Housing First
Mortgage Revenue Bonds, Series 1998A (Multiple Apartments
Project):
3,000,000 7.000%, 4/01/18 4/06 at 102 N/R 3,043,080
7,000,000 7.125%, 4/01/28 4/06 at 102 N/R 7,102,340
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 3,920,592
- ------------------------------------------------------------------------------------------------------------------------------------
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 15,066,488
- ------------------------------------------------------------------------------------------------------------------------------------
South Carolina - 0.3%
2,460,000 Piedmont Municipal Power Agency (South Carolina), Electric
Revenue Bonds, 1998A Refunding Series, 5.500%, 1/01/13 No Opt. Call AAA 2,692,495
- ------------------------------------------------------------------------------------------------------------------------------------
South Dakota - 0.7%
5,845,000 South Dakota Student Loan Assistance Corporation, 7.625%,
8/01/06 (Pre-refunded to 8/01/99) (Alternative Minimum Tax) 8/99 at 102 AAA 6,153,090
- ------------------------------------------------------------------------------------------------------------------------------------
Tennessee - 0.8%
5,000,000 The Metropolitan Government of Nashville and Davidson County (Tennessee), Electric System Revenue
Bonds, 1998 Series A, 5.200%, 5/15/23 5/08 at 102 AA 5,080,200
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 A+ 2,590,704
- ------------------------------------------------------------------------------------------------------------------------------------
Texas - 5.7%
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 1,072,290
6,000,000 Dallas-Fort Worth International Airport Facility Improvement
Corporation, American Airlines, Inc. Revenue Bonds, Serie
1990, 7.500%, 11/01/25 (Alternative Minimum Tax) 11/00 at 102 Baa2 6,424,500
2,500,000 City of Houston, Texas, Airport System Subordinate Lien
Revenue Bonds, Series 1991A, 6.750%, 7/01/21
(Alternative Minimum Tax) 7/01 at 102 AAA 2,710,575
5,000,000 City of Houston, Texas, Water and Sewer System, Junior Lien
Revenue Refunding Bonds, Series 1997D, 5.000%, 12/01/25 12/07 at 102 AAA 4,930,400
5,000,000 Lower Neches Valley Authority Industrial Development
Corporation (Texas), Refunding Revenue Bonds, Series 1998
(Mobil Oil Refining Corporation Project), 5.550%, 3/01/33 3/08 at 101 AA 5,189,350
1,450,850 The Midland Housing Finance Corporation (Midland, Texas),
Single Family Mortgage Revenue Refunding, Series 1992A,
8.450%, 12/01/11 11/05 at 103 Aaa 1,591,002
2,215,000 North Texas Higher Education Authority Inc., Student Loan
Revenue Bonds, Series 1993D, 6.300%, 4/01/09
(Alternative Minimum Tax) 4/03 at 102 A 2,352,064
3,410,000 Ratama Development Corporation, Special Facilities Revenue
Bonds (Retama Park Racetrack Project), Series 1993,
8.750%, 12/15/12 No Opt. Call AAA 4,881,176
4,694,827 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 5,332,056
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Texas (continued)
$ 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 $ 8,728,480
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 Aa 9,155,860
- ------------------------------------------------------------------------------------------------------------------------------------
Utah - 2.1%
3,595,000 City of Bountiful, Davis County, Utah, Hospital Revenue
Refunding Bonds (South Davis Community Hospital Project),
Series 1998, 5.750%, 12/15/18 12/08 at 101 N/R 3,571,417
8,000,000 Intermountain Power Agency (Utah), Power Supply Revenue Bonds,
Series 1996A, 6.150%, 7/01/14 7/06 at 102 A+ 8,864,880
6,000,000 Intermountain Power Agency (Utah), Power Supply Revenue
Refunding Bonds, 1997 Series B, 5.750%, 7/01/19 7/07 at 102 AAA 6,505,080
- ------------------------------------------------------------------------------------------------------------------------------------
Virginia - 1.8%
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 7/02 at 104 Baa2 2,942,589
14,405,000 Upper Occoquan Sewage Authority (Virginia), Regional Sewerage
System Revenue Bonds, Series of 1995A, 4.750%, 7/01/29 7/06 at 100 AAA 13,744,531
- ------------------------------------------------------------------------------------------------------------------------------------
Washington - 7.7%
4,705,000 City of Tacoma, Washington, Sewer Revenue Refunding Bonds,
1994 Series B, 8.000%, 12/01/08 No Opt. Call AAA 6,133,062
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 4,839,930
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 5,086,620
23,000,000 Washington Public Power Supply System (Bonneville), Nuclear
Project No. 1, Refunding Revenue Bonds, Series 1993C,
5.375%, 7/01/15 7/03 at 102 Aa1 23,633,190
Washington Public Power Supply System, Nuclear Project No. 2,
Refunding Revenue Bonds, Series 1992A:
5,710,000 6.250%, 7/01/12 (Pre-refunded to 7/01/02) 7/02 at 102 Aa1*** 6,297,502
1,540,000 6.250%, 7/01/12 7/02 at 102 Aa1 1,673,486
6,475,000 Washington Public Power Supply System, Nuclear Project No. 2,
Refunding Revenue, Series 1990A, 7.250%, 7/01/06 No Opt. Call Aa1 7,715,803
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 12,075,499
3,700,000 Washington Public Power Supply System, Nuclear Project No. 3,
Refunding Revenue Bonds, Series 1998A, 5.125%, 7/01/18 7/08 at 102 Aa1 3,672,545
- ------------------------------------------------------------------------------------------------------------------------------------
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 672,140
- ------------------------------------------------------------------------------------------------------------------------------------
$ 842,153,502 Total Investments - (cost $845,052,695) - 98.3% 906,909,232
============= ---------------------------------------------------------------------------------------------------------------
Temporary Investments in Short-Term Municipal Securities - 0.2%
$ 2,000,000 Geisinger Authority Health System, Variable Rate Demand
============= Revenue Bonds, Series 1998B, 3.700%, 8/15/28+ VMIG-1 2,000,000
---------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 1.5% 14,094,443
---------------------------------------------------------------------------------------------------------------
Net Assets - 100% $ 923,003,675
===============================================================================================================
</TABLE>
* Optional Call Provisions (not covered by the report
of independent auditors): Dates (month and year) and
prices of the earliest optional call or redemption.
There may be other call provisions at varying prices
at later dates.
** Ratings (not covered by the report of independent
auditors): Using the higher of Standard & Poor's or
Moody's rating.
*** Securities are backed by an escrow or trust
containing sufficient U.S. government or U.S.
government agency securities which ensures the
timely payment of principal and interest.
Securities are normally considered to
be equivalent to AAA rated securities.
+ The security has a maturity of more than one year,
but has variable rate and demand features which
qualify it as a short-term security. The rate
disclosed is that currently in effect. This rate
changes periodically based on market conditions or
a specified market index.
N/R Investment is not rated.
See accompanying notes to financial statements.
<PAGE>
Statement of Net Assets
October 31, 1998
<TABLE>
<CAPTION>
Premium Income Premium Income 2 Premium Income 4
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Assets
Investments in municipal securities, at market value (note 1) $1,448,475,312 $945,367,447 $906,909,232
Temporary investments in short-term municipal securities,
at amortized cost, which approximates market value (note 1) 2,000,000 800,000 2,000,000
Cash 82,256 -- 82,347
Receivables:
Interest 28,864,254 17,112,680 17,102,193
Investments sold 14,837,228 559,737 580,000
Other assets 715,561 18,422 53,732
- ------------------------------------------------------------------------------------------------------------------------------------
Total assets 1,494,974,611 963,858,286 926,727,504
- ------------------------------------------------------------------------------------------------------------------------------------
Liabilities
Cash overdraft -- 614 --
Payable for investments purchased 15,434,819 -- --
Accrued expenses:
Management fees (note 6) 774,443 510,147 491,486
Other 306,363 239,347 342,260
Preferred share dividends payable 174,804 100,994 112,440
Common share dividends payable 4,528,765 3,167,289 2,777,643
- ------------------------------------------------------------------------------------------------------------------------------------
Total liabilities 21,219,194 4,018,391 3,723,829
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets (note 7) $1,473,755,417 $959,839,895 $923,003,675
====================================================================================================================================
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 40,868,247 40,847,681
====================================================================================================================================
Net asset value per Common share outstanding (net assets less Preferred shares
at liquidation value,
divided by Common shares outstanding) $ 15.66 $ 16.15 $ 15.05
====================================================================================================================================
</TABLE>
See accompanying notes to financial statements.
<PAGE>
Statement of Operations
Year Ended October 31, 1998
<TABLE>
<CAPTION>
Premium Income Premium Income 2 Premium Income 4
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Investment Income (note 1) $ 84,351,074 $55,123,603 $51,010,547
- ------------------------------------------------------------------------------------------------------------------------------------
Expenses
Management fees (note 6) 9,000,100 5,931,563 5,712,194
Preferred shares - auction fees 1,187,498 749,998 771,000
Preferred shares - dividend disbursing agent fees 50,001 46,383 70,000
Shareholders' servicing agent fees and expenses 231,194 76,753 114,505
Custodian's fees and expenses 165,221 121,193 120,757
Directors' fees and expenses (note 6) 13,966 8,792 8,445
Professional fees 26,586 21,160 21,225
Shareholders' reports - printing and mailing expenses 312,275 214,315 215,337
Stock exchange listing fees 54,582 35,449 35,511
Investor relations expense 123,848 74,399 76,291
Other expenses 72,035 51,037 45,741
- ------------------------------------------------------------------------------------------------------------------------------------
Total expenses 11,237,306 7,331,042 7,191,006
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income 73,113,768 47,792,561 43,819,541
- ------------------------------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain from Investments
Net realized gain from investment transactions (notes 1 and 4) 5,695,107 2,300,084 4,094,161
Net change in unrealized appreciation or depreciation of investments 22,102,303 16,299,650 12,806,701
- ------------------------------------------------------------------------------------------------------------------------------------
Net gain from investments 27,797,410 18,599,734 16,900,862
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $100,911,178 $66,392,295 $60,720,403
====================================================================================================================================
</TABLE>
See accompanying notes to financial statements.
<PAGE>
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Premium Income Premium Income 2 Premium Income 4
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended
10/31/98 10/31/97 10/31/98 10/31/97 10/31/98 10/31/97
- ------------------------------------------------------------------------------------------------------------------------------------
Operations
Net investment income $ 73,113,768 $ 72,579,397 $ 47,792,561 $ 48,365,729 $ 43,819,541 $ 44,221,844
Net realized gain from
investment transactions
(notes 1 and 4) 5,695,107 4,421,843 2,300,084 4,884,470 4,094,161 3,879,483
Net change in unrealized
appreciation or depreciation
of investments 22,102,303 19,245,861 16,299,650 21,383,160 12,806,701 19,479,315
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets
from operations 100,911,178 96,247,101 66,392,295 74,633,359 60,720,403 67,580,642
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions to Shareholders
(note 1) From undistributed
net investment income:
Common shareholders (56,136,763) (59,703,177) (37,981,891) (38,015,000) (33,322,374) (33,488,322)
Preferred shareholders (16,253,788) (12,807,342) (9,776,494) (10,633,759) (10,741,953) (10,890,755)
From accumulated net realized
gains from investment
transactions:
Common shareholders (3,623,618) (1,862,537) (3,704,032) -- -- --
Preferred shareholders (801,154) -- (896,110) -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets from
distributions to shareholders (76,815,323) (74,373,056) (52,358,527) (48,648,759) (44,064,327) (44,379,077)
- ------------------------------------------------------------------------------------------------------------------------------------
Capital Share Transactions (note 2)
Common shares - net proceeds
from shares issued to shareholders
due to reinvestment of distributions -- -- 2,218,879 -- 583,436 --
Preferred shares - net proceeds
from sale of shares -- 123,593,750 -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from
capital share transactions -- 123,593,750 2,218,879 -- 583,436 --
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets 24,095,855 145,467,795 16,252,647 25,984,600 17,239,512 23,201,565
Net assets at beginning
of year 1,449,659,562 1,304,191,767 943,587,248 917,602,648 905,764,163 882,562,598
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of year $1,473,755,417 $1,449,659,562 $959,839,895 $943,587,248 $923,003,675 $905,764,163
- ------------------------------------------------------------------------------------------------------------------------------------
Balance of undistributed net
investment income at end
of year $ 1,479,619 $ 756,402 $ 2,110,492 $ 2,076,316 $ 1,228,635 $ 1,473,421
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
<PAGE>
Notes to Financial Statements
1. General Information and Significant 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 the when-issued and delayed delivery purchase commitments. At
October 31, 1998, Premium Income had outstanding delayed delivery purchase
commitments of $15,434,819. There were no such outstanding purchase commitments
in either of the other two funds.
Investment Income
Interest income is determined on the basis of interest accrued, adjusted for
amortization of premiums and accretion of discounts on long-term debt securities
when required for federal income tax purposes.
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 monthly
tax-exempt income dividends paid during the fiscal year ended October 31, 1998,
have been designated Exempt Interest Dividends. Net realized capital gain and
market discount distributions are subject to federal taxation.
Dividends and Distributions to Shareholders
Tax-exempt net investment income is declared as a dividend monthly and payment
is made or reinvestment is credited to shareholder accounts 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.
<PAGE>
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:
Premium Premium Premium
Income Income 2 Income 4
- --------------------------------------------------------------------------------
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
================================================================================
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 and option contracts, and other financial
instruments with similar characteristics. Although the Funds are authorized to
invest in such financial instruments, and may do so in the future, they did not
make any such investments during the fiscal year ended October 31, 1998.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of increases and decreases in net
assets from operations during the reporting period. Actual results may differ
from those estimates.
2. Fund Shares
Transactions in Common and Preferred shares were as follows:
<TABLE>
<CAPTION>
Premium Income Premium Income 2
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended
10/31/98 10/31/97 10/31/98 10/31/97
- -----------------------------------------------------------------------------------------------------------------------------------
Common shares issued to shareholders
due to reinvestment of distributions -- -- 137,128 --
====================================================================================================================================
Premium Income 4
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended Year Ended
10/31/98 10/31/97
- -----------------------------------------------------------------------------------------------------------------------------------
Common shares issued to shareholders
due to reinvestment of distributions 39,216 --
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Premium Income issued 5,000 additional preferred shares, comprising 1,000
shares of each M, T, W, Th and F, during the fiscal year ended
October 31, 1997.
3. Distributions to Common Shareholders
The Funds declared Common share dividend distributions from their tax-exempt net
investment income which were paid on December 1, 1998, to shareholders of record
on November 15, 1998, as follows:
<TABLE>
<CAPTION>
Premium Premium Premium
Income Income 2 Income 4
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Dividend per share $.0710 $.0775 $.0680
================================================================================
</TABLE>
<PAGE>
Notes to Financial Statements (continued)
4. Securities Transactions
Purchases and sales (including maturities) of investments in municipal
securities and temporary municipal investments for the fiscal year ended October
31, 1998, were as follows:
<TABLE>
<CAPTION>
Premium Premium Premium
Income Income 2 Income 4
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Purchases:
Investments in municipal securities $290,272,414 $80,762,778 $211,191,134
Temporary municipal investments 216,380,000 39,500,000 133,450,000
Sales and Maturities:
Investments in municipal securities 274,000,685 64,982,754 188,925,826
Temporary municipal investments 242,380,000 54,500,000 131,450,000
====================================================================================================================================
</TABLE>
At October 31, 1998, the identified cost of investments owned for federal income
tax purposes was the same as the cost for financial reporting purposes for each
Fund.
At October 31, 1998, Premium Income 4 had unused capital loss carryforwards of
$13,256,518 available for federal income tax purposes to be applied against
future capital gains, if any. If not applied, $8,044,841 of the carryforwards
will expire in the year 2002 and $5,211,677 will expire in the year 2003.
5. Unrealized Appreciation (Depreciation)
Gross unrealized appreciation and gross unrealized depreciation of investments
at October 31, 1998, were as follows:
<TABLE>
<CAPTION>
Premium Premium Premium
Income Income 2 Income 4
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Gross unrealized:
appreciation $89,049,157 $87,820,980 $61,908,128
depreciation (47,099) (58,439) (51,591)
- --------------------------------------------------------------------------------
Net unrealized appreciation $89,002,058 $87,762,541 $61,856,537
================================================================================
</TABLE>
6. Management Fee and Other Transactions with Affiliates
Under the Funds' investment management agreements with Nuveen Advisory Corp.
(the "Adviser"), a wholly owned subsidiary of The John Nuveen Company, each Fund
pays an annual management fee, payable monthly, at the rates set forth below,
which are based upon the average daily net asset value of each Fund as follows:
Average Daily Net Asset Value Management Fee
- --------------------------------------------------------------------------------
For the first $125 million .6500 of 1%
For the next $125 million .6375 of 1
For the next $250 million .6250 of 1
For the next $500 million .6125 of 1
For the next $1 billion .6000 of 1
For net assets over $2 billion .5875 of 1
================================================================================
The fee compensates the Adviser for overall investment advisory and
administrative services and general office facilities. The Funds pay no
compensation directly to those of its 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.
<PAGE>
7. Composition of Net Assets At October 31, 1998, net assets consisted of:
<TABLE>
<CAPTION>
Premium Premium Premium
Income Income 2 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 637,854 408,682 408,477
Paid-in surplus 901,946,522 567,631,874 564,371,822
Balance of undistributed net investment income 1,479,619 2,110,492 1,228,635
Accumulated net realized gain (loss) from investment transactions 5,689,364 1,926,306 (13,261,796)
Net unrealized appreciation of investments 89,002,058 87,762,541 61,856,537
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets $1,473,755,417 $959,839,895 $923,003,675
====================================================================================================================================
Authorized shares:
Common 200,000,000 200,000,000 200,000,000
Preferred 1,000,000 1,000,000 1,000,000
====================================================================================================================================
8. Investment Composition
At October 31, 1998, the revenue sources by municipal purpose, expressed as a
percent of total investments, were as follows:
Premium Premium Premium
Income Income 2 Income 4
- ------------------------------------------------------------------------------------------------------------------------------------
Education and Civic Organizations 5% 2% 4%
Financials 3 -- --
Health Care 8 7 17
Housing/Multifamily -- 8 8
Housing/Single Family 12 12 7
Tax Obligation/General 13 16 10
Tax Obligation/Limited 13 9 7
Transportation 8 8 7
U.S. Guaranteed 12 26 15
Utilities 21 8 17
Water and Sewer 4 3 7
Other 1 1 1
- ------------------------------------------------------------------------------------------------------------------------------------
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 (53% for Premium Income, 46% for Premium Income 2 and 43%
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 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.
<PAGE>
Financial Highlights
Selected data for a Common share outstanding
throughout each period is as follows:
<TABLE>
<CAPTION>
Investment Operations
- --------------------------------------------------------------------------------
Net Realized/
Beginning Net Unrealized
Net Asset Investment Investment
Value Income Gain (Loss) Total
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------
Premium Income
Year Ended 10/31:
1998 $15.28 $1.15 $ .43 $1.58
1997 14.96 1.14 .37 1.51
1996 15.11 1.16 (.09) 1.07
1995 14.14 1.24 1.01 2.25
1994 16.30 1.26 (2.02)** (.76)
Premium Income 2
Year Ended 10/31:
1998 15.80 1.17 .46 1.63
1997 15.16 1.18 .65 1.83
1996 14.89 1.19 .27 1.46
1995 13.03 1.20 1.88 3.08
1994 15.60 1.18 (2.53) (1.35)
Premium Income 4
Year Ended 10/31:
1998 14.64 1.07 .42 1.49
1997 14.07 1.08 .58 1.66
1996 13.87 1.10 .19 1.29
1995 12.09 1.10 1.81 2.91
1994 14.87 1.07 (2.76) (1.69)
================================================================================
</TABLE>
<TABLE>
<CAPTION>
Less Distributions
- --------------------------------------------------------------------------------
Net Net
Investment Investment Capital Capital
Income Income Gains Gains
To Common To Preferred To Common To Preferred
Shareholders Shareholders+ Shareholders Shareholders+ Total
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------
Premium Income
Year Ended 10/31:
1998 $ (.88) $(.25) $(.06) $(.01) $(1.20)
1997 (.94) (.20) (.03) -- (1.17)
1996 (.97) (.20) (.05) -- (1.22)
1995 (1.06) (.22) -- -- (1.28)
1994 (1.17) (.16) (.07) -- (1.40)
Premium Income 2
Year Ended 10/31:
1998 (.93) (.24) (.09) (.02) (1.28)
1997 (.93) (.26) -- -- (1.19)
1996 (.93) (.26) -- -- (1.19)
1995 (.92) (.30) -- -- (1.22)
1994 (.94) (.24) (.03) (.01) (1.22)
Premium Income 4
Year Ended 10/31:
1998 (.82) (.26) -- -- (1.08)
1997 (.82) (.27) -- -- (1.09)
1996 (.82) (.27) -- -- (1.09)
1995 (.84) (.29) -- -- (1.13)
1994 (.84) (.20) (.03) (.01) (1.08)
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Total Returns
Organization and
Offering Costs and
Preferred Share Ending
Underwriting Net Asset Ending Based on Based on Net
Discounts Value Market Value Market Value* Asset Value*
<S> <C> <C> <C> <C> <C>
--------------------------------------------------------------------------------
Premium Income
Year Ended 10/31:
1998 $ -- $15.66 $15.1875 10.60% 8.86%
1997 (.02) 15.28 14.6250 7.81 8.89
1996 -- 14.96 14.5000 8.24 5.92
1995 -- 15.11 14.3750 16.88 14.84
1994 -- 14.14 13.2500 (19.13) (5.88)
Premium Income 2
Year Ended 10/31:
1998 -- 16.15 16.8750 15.98 8.93
1997 -- 15.80 15.5000 16.76 10.72
1996 -- 15.16 14.1250 14.94 8.28
1995 -- 14.89 13.1250 24.22 22.06
1994 -- 13.03 11.3750 (17.76) (10.64)
Premium Income 4
Year Ended 10/31:
1998 -- 15.05 14.8125 14.54 8.58
1997 -- 14.64 13.6875 14.70 10.20
1996 -- 14.07 12.6880 11.57 7.53
1995 -- 13.87 12.1250 21.32 22.41
1994 (.01) 12.09 10.7500 (19.12) (13.29)
- -------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Ratios/Supplemental Data
Ratio of Net
Ratio of Investment
Ending Expenses to Income to Portfolio
Net Assets Average Average Turnover
(000) Net Assets++ Net Assets++ Rate
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------
Premium Income
Year Ended 10/31:
1998 $1,473,755 .77% 5.00% 19%
1997 1,449,660 .76 5.51 10
1996 1,304,192 .75 5.67 16
1995 1,313,673 .76 6.13 12
1994 1,252,208 .77 6.08 15
Premium Income 2
Year Ended 10/31:
1998 959,840 .77 5.03 7
1997 943,587 .77 5.23 19
1996 917,603 .77 5.34 24
1995 906,547 .77 5.60 27
1994 830,600 .76 5.41 26
Premium Income 4
Year Ended 10/31:
1998 923,004 .79 4.79 21
1997 905,764 .79 4.98 26
1996 882,563 .79 5.11 20
1995 874,337 .80 5.35 32
1994 801,617 .88 5.15 47
</TABLE>
* Total 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 $(.19) 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.
<PAGE>
Building a Better Portfolio
Can Make You a Successful Investor
Nuveen Family
of Mutual Funds
Nuveen offers a variety of funds designed to help you reach your financial
goals.
Growth
Nuveen Rittenhouse Growth Fund
Growth and
Income
European Value Fund
Growth and
Income Stock Fund
Balanced Stock
and Bond Fund
Balanced Municipal
and Stock Fund
Tax-Free Income
National Funds
Long-Term
Insured
Intermediate-Term
Limited-Term
State Funds
Arizona
California
Colorado
Connecticut
Florida
Georgia
Kansas
Kentucky
Louisiana
Maryland
Massachusetts
Michigan
Missouri
New Jersey
New Mexico
New York
North Carolina
Ohio
Pennsylvania
Tennessee
Virginia
Wisconsin
Successful investors know that a well-diversified portfolio - one that balances
different types of investments, levels of risk and tax management - can be the
foundation for building and sustaining wealth. That's why Nuveen offers you and
your financial adviser a wide range of quality investments that can help you
build a better portfolio in the pursuit of your financial goals
Exchange-Traded Funds
Nuveen Exchange-Traded Funds offer investors actively managed portfolios of
investment-grade quality municipal bonds. The fund shares are listed and traded
on the New York and American stock exchanges. Exchange-traded funds provide the
investment convenience, price visibility and liquidity of common stocks.
MuniPreferred(R)
Nuveen MuniPreferred offers investors a AAA rated investment with an attractive
tax-free yield for the cash reserves portion of an investment portfolio.
MuniPreferred shares are backed 2-to-1 by the long-term portfolios of Nuveen
dual-class exchange-traded funds and are available for national as well as a
wide variety of state-specific portfolios.
Mutual Funds
Nuveen offers a family of equity, balanced and municipal bond funds featuring
Premier Advisers(SM) including Institutional Capital Corporation, Rittenhouse
Financial Services, and Nuveen Advisory Corp. Each brings a specialized
expertise in a particular investment style or asset class, time-tested
investment strategies and a focus on consistent, long-term performance. With
Nuveen's Premier Adviser funds, you have all the advantages of a family of funds
plus the benefits of specialized investment expertise.
Private Asset Management
Rittenhouse Financial Services and Nuveen Asset Management offer comprehensive,
customized investment management solutions to investors with assets of $250,000
or more to invest. A range of actively managed growth, balanced and municipal
income-oriented portfolios are available, all based upon a disciplined
investment philosophy.
Defined Portfolios
Nuveen Defined Portfolios are fixed portfolios of quality securities that are a
convenient, attractive alternative to purchasing individual securities. They
provide low-cost diversification to reduce risk, while also offering
experienced, professional security selection and surveillance. In addition,
Nuveen Defined Portfolios provide daily liquidity at that day's net asset value
for quick access to your assets.
<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, Transfer Agent
and Shareholder Services
The Chase Manhattan Bank
4 New York Plaza
New York, NY 10004-2413
(800) 257-8787
Legal Counsel
Morgan, Lewis &
Bockius LLP
Washington, D.C.
Independent Auditors
Ernst & Young LLP
Chicago, IL
Year 2000
The concern that computer systems may have problems processing date-related
information in the year 2000 and beyond has challenged businesses and
organizations to thoroughly review all aspects of their operations. We have
undertaken just such an approach at Nuveen in preparation for the millennium.
Over the last 10 years, our trading, fund management and pricing systems at
Nuveen - the systems that directly affect our investors and their financial
advisers - have been updated or replaced to address the Year 2000 concerns.
We continue to work closely with our transfer agent, custodian and other service
partners to monitor readiness and address other remaining systems issues. Our
initial testing indicates we are on schedule, and we have targeted year-end 1998
to complete verification of vendor compliance and service partner readiness.
However, we can give no complete assurance at this time that the steps we have
taken will be sufficient to prevent any problems that would impact the Nuveen
Exchange-Traded Funds.
Each fund intends to repurchase shares of its own common or preferred stock in
the future at such times and in such amounts as is deemed advisable. No shares
were repurchased during the 12-month period ended October 31, 1998. Any future
repurchases will be reported to shareholders in the next annual or semiannual
report.
<PAGE>
Serving Investors for Generations Photo of:
John Nuveen, Sr.
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 risk-sensitive individuals seeking to build and sustain
wealth. In fact, 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 focused on providing consistent, attractive
performance over time - with moderated risk. We emphasize quality securities
carefully chosen through in-depth research, and we follow those securities
closely over time to ensure that they continue to meet our exacting standards.
Whether your focus is long-term growth, dependable current income or sustaining
accumulated wealth, Nuveen offers a wide variety of products and services to
help meet your unique circumstances and financial planning needs. Our equity,
balanced, and income funds, along with our unit trusts and private asset
management, can form the foundation of a tax-efficient and risk-resistant
portfolio.
Talk with your financial adviser to learn more about how Nuveen investment
products and services can help you build and sustain your long-term financial
security. Or call us at (800) 257-8787 for more information, including a
prospectus where applicable. Please read that information carefully before you
invest.
1898 - 1998
NUVEEN
OUR SECOND CENTURY
helping investors sustain the wealth of a lifetime(tm)
John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, IL60606-1286
www.nuveen.com
FAN-5-10-98
<PAGE>
