ANNUAL REPORT October 31, 2002
Nuveen
Municipal Closed-End
Exchange-Traded
Funds
PREMIUM INCOME
NPI
NPM
NPT
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tax-free income
because
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Dear
SHAREHOLDER
Once again, I am pleased to state that during the period covered by this report
your Nuveen Fund continued to meet its objective of providing attractive
tax-free monthly income. Detailed information on your Fund's performance can be
found in the Portfolio Manager's Comments and on the Performance Overview pages
within this report. Please take the time to read them.
In addition to providing regular tax-free income, we believe that a municipal
bond investment like your Nuveen Fund also may offer opportunities to reduce the
risk of your overall investment portfolio. This is because the prices of
municipal bonds may move differently than the prices of the common stocks,
mutual funds or other investments you may own. Since one part of your portfolio
may be going up when another is going down, portfolio diversification may reduce
your overall risk. Your financial advisor can explain the advantages of
portfolio diversification in more detail. I urge you to contact him or her soon
for more information on this important investment strategy.
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For more than 100 years, Nuveen has specialized in offering quality investments
such as your Nuveen Fund to those seeking to accumulate and preserve wealth. Our
commitment to careful research, constant surveillance and judicious trading by
our seasoned portfolio management team has never been stronger. Our mission
continues to be to assist you and your financial advisor by offering the
investment solutions and services that can help you meet your financial
objectives. We thank you for choosing us as a partner as you work toward that
goal.
Sincerely,
/s/ Timothy R. Schwertfeger
Timothy R. Schwertfeger
Chairman of the Board
December 16, 2002
1
Nuveen National Municipal Closed-End Exchange-Traded Funds
(NPI, NPM, NPT)
Portfolio Manager's
COMMENTS
Portfolio manager Tom Futrell discusses U.S. economic conditions, key investment
strategies, and the recent performance of the Nuveen Premium Income Funds. With
19 years of investment management experience at Nuveen, Tom assumed portfolio
management responsibility for NPI in 1988 and for NPM and NPT in 2001.
WHAT WERE THE MAJOR FACTORS AFFECTING THE U.S. ECONOMY AND THE MUNICIPAL MARKET
DURING THIS REPORTING PERIOD?
In a number of ways, market conditions have not changed significantly since our
last shareholder report.
We believe the most influential factors affecting the economy and the municipal
market continued to be the slow pace of economic growth and the relatively low
levels of interest rates. In addition, the ongoing threat of terrorism and the
current uncertain geopolitical climate also had an impact on the economy and the
markets over this reporting period.
Looking more closely at the municipal market, the sluggish economic recovery and
lack of inflationary pressures helped many bonds perform well during most of the
twelve-month period that ended October 31, 2002. However, during the month of
October 2002, the market environment for all fixed-income investments soured as
a rally in the equity markets seemingly caused some investors to sell
fixed-income products and purchase common stocks.
In the first ten months of 2002, new municipal bond issuance nationwide reached
$289.4 billion, an increase of 30% over January-October 2001. Demand for
municipal bonds also remained strong over most of this period, as many
individual investors continued to seek investments offering diversification for
their portfolios and tax-free income. In addition, institutional investors,
especially traditional municipal bond purchasers such as property/casualty
insurance companies, have been active buyers in the municipal market.
HOW DID THESE FUNDS PERFORM OVER THE TWELVE MONTHS ENDED OCTOBER 31, 2002?
Individual results for the Premium Income Funds, as well as for relevant
benchmarks, are presented in the accompanying table.
TOTAL RETURN LEHMAN LIPPER
MARKET YIELD ON NAV TOTAL RETURN1 AVERAGE2
--------------------------------------------------------------------------------
1 YEAR 1 YEAR 1 YEAR
TAXABLE- ENDED ENDED ENDED
10/31/02 EQUIVALENT3 10/31/02 10/31/02 10/31/02
--------------------------------------------------------------------------------
NPI 6.68% 9.54% 3.47% 5.87% 4.93%
--------------------------------------------------------------------------------
NPM 6.79% 9.70% 5.03% 5.87% 4.93%
--------------------------------------------------------------------------------
NPT 6.57% 9.39% 0.76% 5.87% 4.93%
--------------------------------------------------------------------------------
Past performance is not predictive of future results.
For additional information, see the individual Performance Overview for your
Fund in this report.
NPM reported a total return for the period that was roughly in line with the
performance of its Lipper leveraged fund peer group average and the unleveraged,
unmanaged Lehman index.
The relative underperformance of NPI and NPT, when compared with both their
Lipper peer group
1 The total annual returns on common share net asset value for these Nuveen
Funds are compared with the total annual return of the Lehman Brothers
Municipal Bond Index, an unleveraged index comprising a broad range of
investment-grade municipal bonds. Results for the Lehman index do not
reflect any expenses.
2 The total returns of these Funds are compared with the average annualized
return of the 56 funds in the Lipper General Leveraged Municipal Debt Funds
category. Fund and Lipper returns assume reinvestment of dividends.
3 The taxable-equivalent yield represents the yield that must be earned on a
taxable investment in order to equal the yield of the Nuveen Fund on an
after-tax basis. The taxable-equivalent yield is based on the Fund's market
yield on the indicated date and a federal income tax rate of 30%.
2
and the Lehman index, resulted primarily from specific issues affecting a small
number of individual holdings, as well as from exposure to some underperforming
sectors of the municipal market. For example, both Funds continued to hold bonds
issued to support the terminal or maintenance facilities of private air
carriers. The value of these bonds fell over the past year, in part due to the
general decline in passenger volume that affected many airlines and in part due
to the possibility of a bankruptcy declaration by United Air Lines. (United
filed for bankruptcy protection on December 9, 2002.) Since most of the bonds we
hold support ongoing operations, we believe United has every intention of
continuing to honor the obligations underlying these facilities. Over the
longer-term, we believe air travel will remain a major component of
transportation in this country, and we think these airline-backed bonds, at
their current depressed levels, are positioned to appreciate in value as the
outlook for these companies improves.
NPT's performance also was negatively impacted by its holdings of several
distressed credits. These included parking revenue bonds issued for the River
Park Square project in Spokane, Washington; Wood River Township Hospital
(Illinois) general obligation bonds; industrial development bonds issued by Erie
County (New York) for the CanFibre of Lackawanna project; and multifamily
housing bonds for projects in Oklahoma, Texas, and Indiana. These holdings
accounted for about 6% of the Fund's net assets. We were disappointed that
several unrelated credit issues occurred more or less simultaneously within the
portfolio of this one particular Fund. We have reviewed our research and
surveillance procedures, and are convinced they remain fundamentally sound. All
of the distressed bonds are in various stages of workout, and we are monitoring
each situation carefully. In each case, we intend to pursue our rights
vigorously and will be guided by what we believe is in the best long-term
interest of the Fund's shareholders.
The performance of NPI was affected by one credit in the multifamily housing
sector, Harris County (TX) HFC Housing Finance Corp. [Coolwood Oaks], which from
the start of this reporting period lost more than 30% of its market value before
we sold this position in July 2002. At the start of the reporting period, this
holding equaled about 1% of the Fund's net assets.
3
HOW DID THE MARKET ENVIRONMENT AFFECT THE FUNDS' DIVIDENDS AND SHARE PRICES?
As the Fed continued to keep short-term interest rates relatively low, the
dividend-payment capabilities of all these Funds benefited from their use of
leverage, a strategy that can potentially enhance the dividends paid to common
shareholders. The amount of this benefit is tied, in part, to the short-term
rates the Funds pay their MuniPreferred, shareholders. Low short-term rates,
such as those currently in effect, can enable the Funds to reduce the amount of
income they pay preferred shareholders, which can leave more earnings to support
common share dividends.
During the fiscal year ended October 31, 2002, steady or falling short-term
interest rates enabled us to implement four dividend increases in NPI, three in
NPM, and one in NPT.
Over the course of the entire reporting period, the share prices and NAVs of
each of these Funds declined modestly. As of October 31, 2002, the Funds
continued to trade at discounts to their common share net asset values (see
charts on individual Performance Overview pages).
WHAT KEY STRATEGIES WERE USED TO MANAGE THE FUNDS DURING THE FISCAL YEAR ENDED
OCTOBER 31, 2002?
Over the twelve-month period, our strategic focus continued to be on working to
diversify Fund holdings, enhance call protection, and position the Funds for
potential changes in the interest rate environment. Specifically, that included
selling some bonds with current coupons and short call dates and reinvesting the
proceeds in bonds from the 15- to 20-year part of the yield curve. We believe
these bonds should help moderate the Funds' durations4 over time (making the
portfolios less sensitive to interest rate changes), while still allowing the
Funds to provide competitive yields and returns. In our opinion, bonds in the
15- to 20-year range offered excellent opportunities for price appreciation and
should perform relatively well if and when interest rates rise.
Looking at market sectors, we judiciously purchased single-family housing bonds
for all three Funds. We believe these bonds, as well as the Funds' holdings of
U.S. guaranteed, pre-refunded bonds, should perform relatively well if interest
rates rise. During the past year, we also found attractive opportunities in
tobacco settlement bonds and the healthcare sector.
4 Duration is a measure of a Fund's NAV volatility in reaction to interest
rate movements. Fund duration, also known as leverage-adjusted duration,
takes into account the leveraging process for a Fund and therefore is
generally longer than the duration of the actual portfolio of individual
bonds that make up the Fund. References to duration in this commentary are
intended to indicate Fund duration unless otherwise noted.
4
Given the current geopolitical and economic climate, maintaining strong credit
quality remained a key requirement for the Funds. As of October 31, 2002, each
of these Funds continued to offer excellent credit quality, with allocations of
bonds rated AAA/U.S. guaranteed and AA ranging from 74% to 86%.
WHAT IS YOUR OUTLOOK FOR THE MUNICIPAL MARKET IN GENERAL AND THESE FUNDS IN
PARTICULAR?
In general, our outlook for the fixed income markets over the coming months
remains positive. We believe the U.S. economy is headed for an eventual
recovery, but one that may be slower to arrive and less robust than some are now
predicting. We expect inflation and interest rates to remain relatively low over
the near term, while new municipal volume should continue to be strong as
issuers take advantage of the low rate environment for both new issues and
refinancings. Currently, national issuance totals are on pace to surpass $300
billion in 2002, eclipsing the record of $292 billion set in 1993. We also
expect demand for tax-exempt municipal bonds to remain solid as investors
continue to look for ways to rebalance their portfolios and reduce their overall
investment risk.
Over the next two years, each of the Funds will continue to face some call
exposure. Potential calls during 2003 and 2004 represent about 20% of all three
Funds. As in the past we will continue to work through these calls on a
case-by-case basis, holding some bonds until their call dates and selling others
before their calls if we can get attractive prices. In all cases, we will be
looking to reinvest the proceeds in the 20+ year portion of the yield curve in
an effort to maintain diversity and enhance the future income stream and
dividend-paying capabilities of the Funds. While the number of actual calls
experienced by these Funds will depend largely on market interest rates over
this time, we believe these potential call exposures are very manageable, and,
given the expected abundant supply of municipal bonds, we foresee no problems in
working through this period.
Additional specific areas of concentration in the months ahead will include
managing duration by seeking to purchase more bonds in the 15- to 20-year part
of the yield curve and working through the credit issues noted earlier. In
general, our focus will remain on strategies that can add value for our
shareholders and provide support for the Funds' dividends over time. Overall, we
believe the attractive tax-free income, portfolio diversification, and risk
reduction potential (for equity-dominated portfolios) represented by these Funds
will continue to make them potentially valuable components in your long-term
financial plans.
5
Nuveen Premium Income Municipal Fund, Inc.
Performance
OVERVIEW As of October 31, 2002
NPI
PIE CHART:
CREDIT QUALITY
AAA/U.S. GUARANTEED 70%
AA 16%
A 11%
BBB 1%
NR 1%
BB OR LOWER 1%
PORTFOLIO STATISTICS
--------------------------------------------------
Share Price $14.11
--------------------------------------------------
Common Share Net Asset Value $14.87
--------------------------------------------------
Market Yield 6.68%
--------------------------------------------------
Taxable-Equivalent Yield
(Federal Income Tax Rate)1 9.54%
--------------------------------------------------
Net Assets Applicable to
Common Shares ($000) $948,726
--------------------------------------------------
Average Effective Maturity (Years) 19.78
--------------------------------------------------
Leverage-Adjusted Duration 9.03
--------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN (Inception 7/88)
--------------------------------------------------
ON SHARE PRICE ON NAV
--------------------------------------------------
1-Year 5.51% 3.47%
--------------------------------------------------
5-Year 5.74% 5.48%
--------------------------------------------------
10-Year 5.82% 6.21%
--------------------------------------------------
TOP FIVE SECTORS (as a % of total investments)
--------------------------------------------------
Tax Obligation/Limited 16%
--------------------------------------------------
Tax Obligation/General 16%
--------------------------------------------------
Utilities 13%
--------------------------------------------------
Housing/Single Family 10%
--------------------------------------------------
U.S. Guaranteed 10%
--------------------------------------------------
BAR CHART:
2001-2002 MONTHLY TAX-FREE DIVIDENDS PER SHARE2
11/01 0.0705
12/01 0.073
1/02 0.073
2/02 0.073
3/02 0.0755
4/02 0.0755
5/02 0.0755
6/02 0.0775
7/02 0.0775
8/02 0.0775
9/02 0.0785
10/02 0.0785
LINE CHART:
SHARE PRICE PERFORMANCE
WEEKLY CLOSING PRICE
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS.
11/1/01 14.48
14.26
13.98
13.97
14.04
13.73
13.59
13.6
13.61
13.9
13.95
14.22
14.15
14.15
14.12
14.08
14.2
14.25
13.85
13.63
13.56
13.73
13.72
13.77
13.7
13.87
14.09
14.07
13.88
13.93
13.98
13.98
14.07
14.29
14.5
14.47
14.42
14.4
14.35
14.6
14.63
14.54
14.5
14.64
14.6
14.63
14.74
14.85
14.99
14.72
13.98
10/31/02 13.87
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. It
is calculated using the current market yield and a federal income tax rate
of 30%.
2 The Fund also paid shareholders a net ordinary income distribution in
December 2001 of $0.0013 per share.
6
Nuveen Premium Income Municipal Fund 2, Inc.
Performance
OVERVIEW As of October 31, 2002
NPM
PIE CHART:
CREDIT QUALITY
AAA/U.S. GUARANTEED 65%
AA 11%
A 19%
BBB 2%
NR 3%
PORTFOLIO STATISTICS
--------------------------------------------------
Share Price $14.40
--------------------------------------------------
Common Share Net Asset Value $15.27
--------------------------------------------------
Market Yield 6.79%
--------------------------------------------------
Taxable-Equivalent Yield
(Federal Income Tax Rate)1 9.70%
--------------------------------------------------
Net Assets Applicable to
Common Shares ($000) $627,659
--------------------------------------------------
Average Effective Maturity (Years) 15.84
--------------------------------------------------
Leverage-Adjusted Duration 10.19
--------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN (Inception 7/92)
--------------------------------------------------
ON SHARE PRICE ON NAV
--------------------------------------------------
1-Year 5.59% 5.03%
--------------------------------------------------
5-Year 5.16% 5.79%
--------------------------------------------------
10-Year 7.61% 7.79%
--------------------------------------------------
TOP FIVE SECTORS (as a % of total investments)
--------------------------------------------------
Tax Obligation/General 26%
--------------------------------------------------
U.S. Guaranteed 21%
--------------------------------------------------
Tax Obligation/Limited 10%
--------------------------------------------------
Housing/Single Family 8%
--------------------------------------------------
Healthcare 7%
--------------------------------------------------
BAR CHART:
2001-2002 MONTHLY TAX-FREE DIVIDENDS PER SHARE2
11/01 0.0765
12/01 0.078
1/02 0.078
2/02 0.078
3/02 0.0805
4/02 0.0805
5/02 0.0805
6/02 0.0815
7/02 0.0815
8/02 0.0815
9/02 0.0815
10/02 0.0815
LINE CHART:
SHARE PRICE PERFORMANCE
WEEKLY CLOSING PRICE
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS.
11/1/01 14.68
14.88
14.51
14.4
14.46
14.14
13.84
13.75
13.89
14.07
14.38
14.4
14.32
14.65
14.73
14.7
14.67
14.72
14.42
14.12
14
14.11
14.29
14.28
14.05
14.23
14.42
14.48
14.55
14.5
14.58
14.55
14.54
14.54
14.71
15.01
14.78
14.84
14.7
14.89
15.16
14.98
14.88
15.09
15.2
15.05
15.07
15.2
15.16
14.95
14.3
10/31/02 14.25
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. It
is calculated using the current market yield and a federal income tax rate
of 30%.
2 The Fund also paid shareholders capital gains and net ordinary income
distributions in December 2001 of $0.0478 per share.
7
Nuveen Premium Income Municipal Fund 4, Inc.
Performance
OVERVIEW As of October 31, 2002
NPT
PIE CHART:
CREDIT QUALITY
AAA/U.S. GUARANTEED 56%
AA 18%
A 15%
BBB 3%
NR 7%
BB OR LOWER 1%
PORTFOLIO STATISTICS
--------------------------------------------------
Share Price $12.97
--------------------------------------------------
Common Share Net Asset Value $13.46
--------------------------------------------------
Market Yield 6.57%
--------------------------------------------------
Taxable-Equivalent Yield
(Federal Income Tax Rate)1 9.39%
--------------------------------------------------
Net Assets Applicable to
Common Shares ($000) $581,961
--------------------------------------------------
Average Effective Maturity (Years) 17.90
--------------------------------------------------
Leverage-Adjusted Duration 9.95
--------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN (Inception 2/93)
--------------------------------------------------
ON SHARE PRICE ON NAV
--------------------------------------------------
1-Year 0.52% 0.76%
--------------------------------------------------
5-Year 5.19% 4.27%
--------------------------------------------------
Since Inception 4.83% 5.55%
--------------------------------------------------
TOP FIVE SECTORS (as a % of total investments)
--------------------------------------------------
Tax Obligation/General 16%
--------------------------------------------------
Utilities 14%
--------------------------------------------------
U.S. Guaranteed 13%
--------------------------------------------------
Housing/Multifamily 12%
--------------------------------------------------
Healthcare 11%
--------------------------------------------------
BAR CHART:
2001-2002 MONTHLY TAX-FREE DIVIDENDS PER SHARE
11/01 0.07
12/01 0.071
1/02 0.071
2/02 0.071
3/02 0.071
4/02 0.071
5/02 0.071
6/02 0.071
7/02 0.071
8/02 0.071
9/02 0.071
10/02 0.071
LINE CHART:
SHARE PRICE PERFORMANCE
WEEKLY CLOSING PRICE
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS.
11/1/01 13.86
13.79
13.56
13.44
13.75
13.33
12.91
13.1
13.08
13.4
13.27
13.45
13.27
13.4
13.67
13.58
13.61
13.69
13.05
12.92
12.8
12.9
12.75
12.83
12.73
12.87
13.1
13.02
12.92
12.99
13.25
13.2
13.11
13.3
13.55
13.76
13.47
13.62
13.4
13.55
13.41
13.27
13.27
13.4
13.59
13.66
13.66
13.57
13.8
13.46
12.53
10/31/02 12.61
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. It
is calculated using the current market yield and a federal income tax rate
of 30%.
8
Shareholder
MEETING REPORT
The annual shareholder meeting was held on July 31, 2002, at the Northern Trust
Bank, Chicago, Illinois.
NPI
------------------------------------------------------------------------------------------------------------------------------------
APPROVAL OF THE BOARD MEMBERS WAS REACHED AS FOLLOWS:
Preferred Preferred Preferred Preferred Preferred Preferred
Common Shares Shares Shares Shares Shares Shares
Shares Series-M Series-M2 Series-T Series-W Series-TH Series-F
====================================================================================================================================
Robert P. Bremner
For 55,936,228 3,376 1,895 2,843 3,247 3,396 3,004
Withhold 822,321 16 22 4 1 -- --
------------------------------------------------------------------------------------------------------------------------------------
Total 56,758,549 3,392 1,917 2,847 3,248 3,396 3,004
====================================================================================================================================
Lawrence H. Brown
For 55,971,027 3,376 1,895 2,843 3,247 3,396 3,004
Withhold 787,522 16 22 4 1 -- --
------------------------------------------------------------------------------------------------------------------------------------
Total 56,758,549 3,392 1,917 2,847 3,248 3,396 3,004
====================================================================================================================================
Anne E. Impellizzeri
For 55,887,713 3,376 1,895 2,843 3,247 3,396 3,004
Withhold 870,836 16 22 4 1 -- --
------------------------------------------------------------------------------------------------------------------------------------
Total 56,758,549 3,392 1,917 2,847 3,248 3,396 3,004
====================================================================================================================================
Peter R. Sawers
For 55,941,223 3,376 1,895 2,843 3,247 3,396 3,004
Withhold 817,326 16 22 4 1 -- --
------------------------------------------------------------------------------------------------------------------------------------
Total 56,758,549 3,392 1,917 2,847 3,248 3,396 3,004
====================================================================================================================================
Judith M. Stockdale
For 55,941,631 3,376 1,895 2,843 3,247 3,396 3,004
Withhold 816,918 16 22 4 1 -- --
------------------------------------------------------------------------------------------------------------------------------------
Total 56,758,549 3,392 1,917 2,847 3,248 3,396 3,004
====================================================================================================================================
William J. Schneider
For -- 3,376 1,895 2,843 3,247 3,396 3,004
Withhold -- 16 22 4 1 -- --
------------------------------------------------------------------------------------------------------------------------------------
Total -- 3,392 1,917 2,847 3,248 3,396 3,004
====================================================================================================================================
Timothy R. Schwertfeger
For -- 3,376 1,895 2,843 3,247 3,396 3,004
Withhold -- 16 22 4 1 -- --
------------------------------------------------------------------------------------------------------------------------------------
Total -- 3,392 1,917 2,847 3,248 3,396 3,004
====================================================================================================================================
9
Shareholder MEETING REPORT (continued)
NPM
------------------------------------------------------------------------------------------------------------------------------------
APPROVAL OF THE BOARD MEMBERS WAS REACHED AS FOLLOWS:
Preferred Preferred Preferred Preferred Preferred Preferred
Common Shares Shares Shares Shares Shares Shares
Shares Series-M Series-T Series-W Series-TH Series-F Series-F2
====================================================================================================================================
Robert P. Bremner
For 37,710,871 1,956 2,980 1,647 2,872 1,707 1,866
Withhold 324,666 1 5 1 45 6 --
------------------------------------------------------------------------------------------------------------------------------------
Total 38,035,537 1,957 2,985 1,648 2,917 1,713 1,866
====================================================================================================================================
Lawrence H. Brown
For 37,711,104 1,956 2,982 1,647 2,912 1,710 1,866
Withhold 324,433 1 3 1 5 3 --
------------------------------------------------------------------------------------------------------------------------------------
Total 38,035,537 1,957 2,985 1,648 2,917 1,713 1,866
====================================================================================================================================
Anne E. Impellizzeri
For 37,686,228 1,956 2,978 1,647 2,911 1,706 1,866
Withhold 349,309 1 7 1 6 7 --
------------------------------------------------------------------------------------------------------------------------------------
Total 38,035,537 1,957 2,985 1,648 2,917 1,713 1,866
====================================================================================================================================
Peter R. Sawers
For 37,710,396 1,956 2,982 1,647 2,912 1,710 1,866
Withhold 325,141 1 3 1 5 3 --
------------------------------------------------------------------------------------------------------------------------------------
Total 38,035,537 1,957 2,985 1,648 2,917 1,713 1,866
====================================================================================================================================
Judith M. Stockdale
For 37,703,251 1,956 2,978 1,647 2,871 1,706 1,866
Withhold 332,286 1 7 1 46 7 --
------------------------------------------------------------------------------------------------------------------------------------
Total 38,035,537 1,957 2,985 1,648 2,917 1,713 1,866
====================================================================================================================================
William J. Schneider
For -- 1,956 2,982 1,647 2,911 1,710 1,866
Withhold -- 1 3 1 6 3 --
------------------------------------------------------------------------------------------------------------------------------------
Total -- 1,957 2,985 1,648 2,917 1,713 1,866
====================================================================================================================================
Timothy R. Schwertfeger
For -- 1,956 2,982 1,647 2,912 1,710 1,866
Withhold -- 1 3 1 5 3 --
------------------------------------------------------------------------------------------------------------------------------------
Total -- 1,957 2,985 1,648 2,917 1,713 1,866
====================================================================================================================================
10
NPT
------------------------------------------------------------------------------------------------------------------------------------
APPROVAL OF THE BOARD MEMBERS WAS REACHED AS FOLLOWS:
Preferred Preferred Preferred Preferred Preferred Preferred Preferred Preferred
Common Shares Shares Shares Shares Shares Shares Shares Shares
Shares Series-M Series-T Series-T2 Series-W Series-W2 Series-TH Series-F Series-F2
====================================================================================================================================
Robert P. Bremner
For 39,340,273 2,071 1,809 1,216 1,637 510 2,586 1,721 1,283
Withhold 482,067 1 2 -- -- 1 6 11 1
------------------------------------------------------------------------------------------------------------------------------------
Total 39,822,340 2,072 1,811 1,216 1,637 511 2,592 1,732 1,284
====================================================================================================================================
Lawrence H. Brown
For 39,364,897 2,070 1,809 1,216 1,637 510 2,586 1,721 1,283
Withhold 457,443 2 2 -- -- 1 6 11 1
------------------------------------------------------------------------------------------------------------------------------------
Total 39,822,340 2,072 1,811 1,216 1,637 511 2,592 1,732 1,284
====================================================================================================================================
Anne E. Impellizzeri
For 39,340,820 2,070 1,809 1,216 1,637 510 2,586 1,721 1,283
Withhold 481,520 2 2 -- -- 1 6 11 1
------------------------------------------------------------------------------------------------------------------------------------
Total 39,822,340 2,072 1,811 1,216 1,637 511 2,592 1,732 1,284
====================================================================================================================================
Peter R. Sawers
For 39,357,711 2,070 1,809 1,216 1,637 510 2,586 1,721 1,283
Withhold 464,629 2 2 -- -- 1 6 11 1
------------------------------------------------------------------------------------------------------------------------------------
Total 39,822,340 2,072 1,811 1,216 1,637 511 2,592 1,732 1,284
====================================================================================================================================
Judith M. Stockdale
For 39,362,141 2,071 1,809 1,216 1,637 510 2,586 1,721 1,283
Withhold 460,199 1 2 -- -- 1 6 11 1
------------------------------------------------------------------------------------------------------------------------------------
Total 39,822,340 2,072 1,811 1,216 1,637 511 2,592 1,732 1,284
====================================================================================================================================
William J. Schneider
For -- 2,071 1,809 1,216 1,637 510 2,586 1,721 1,283
Withhold -- 1 2 -- -- 1 6 11 1
------------------------------------------------------------------------------------------------------------------------------------
Total -- 2,072 1,811 1,216 1,637 511 2,592 1,732 1,284
====================================================================================================================================
Timothy R. Schwertfeger
For -- 2,071 1,809 1,216 1,637 510 2,586 1,721 1,283
Withhold -- 1 2 -- -- 1 6 11 1
------------------------------------------------------------------------------------------------------------------------------------
Total -- 2,072 1,811 1,216 1,637 511 2,592 1,732 1,284
====================================================================================================================================
11
Report of
INDEPENDENT AUDITORS
THE BOARD 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 assets and liabilities, 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, 2002, and the related statements of operations
for the year then ended, the statements of changes in net assets for each of the
two years in the period then ended, and the financial highlights for each of the
five years in the period then ended. 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 auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our procedures included
confirmation of investments owned as of October 31, 2002, by correspondence with
the custodian and brokers or by other appropriate auditing procedures where
replies from brokers were not received. 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, 2002,
the results of their operations for the year then ended, the changes in their
net assets for each of the two years in the period then ended, and the financial
highlights for each of the five years in the period then ended in conformity
with accounting principles generally accepted in the United States.
Ernst & Young LLP
Chicago, Illinois
December 11, 2002
12
Nuveen Premium Income Municipal Fund, Inc. (NPI)
Portfolio of
INVESTMENTS October 31, 2002
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
-----------------------------------------------------------------------------------------------------------------------------------
ALABAMA - 1.0%
$ 9,050 Alabama 21st Century Authority, Tobacco Settlement Revenue Bonds, 6/10 at 102.00 Aa1 $ 9,504,310
Series 2000, 6.125%, 12/01/16
-----------------------------------------------------------------------------------------------------------------------------------
ALASKA - 1.1%
10,000 Northern Tobacco Securitization Corporation, Alaska, Tobacco 6/10 at 100.00 Aa3 10,103,400
Settlement Asset-Backed Bonds, Series 2000, 6.500%, 6/01/31
-----------------------------------------------------------------------------------------------------------------------------------
ARIZONA - 0.9%
8,350 Pima County Industrial Development Authority, Arizona, Industrial 1/03 at 102.50 AAA 8,783,783
Development Lease Obligation Refunding Revenue Bonds (Irvington
Project), 1988 Series A, 7.250%, 7/15/10
-----------------------------------------------------------------------------------------------------------------------------------
ARKANSAS - 1.1%
3,500 Arkansas Development Finance Authority, Drivers License Revenue 6/07 at 100.00 AAA 3,700,830
Bonds (Arkansas State Police - Headquarters and Wireless Data
Equipment), Series 1997, 5.400%, 6/01/18
480 City of Paragould, Arkansas, Water, Sewer and Electric Revenue 12/10 at 100.00 AAA 506,357
Bonds, Series 2000, 5.650%, 12/01/25
1,000 Community Junior College District, Sebastian County, Arkansas, 4/09 at 100.00 AAA 1,158,790
General Obligation Improvement Bonds, Series 1999,
5.950%, 4/01/29 (Pre-refunded to 4/01/09)
5,245 Board of Trustees of the University of Arkansas, Athletic 9/09 at 100.00 Aaa 5,343,763
Facilities Revenue Bonds (Razorback Stadium Project),
Series 1999, 5.050%, 9/15/20
-----------------------------------------------------------------------------------------------------------------------------------
CALIFORNIA - 12.4%
10,250 State of California, General Obligation Veterans Welfare Bonds, 12/08 at 101.00 AAA 10,790,790
Series 1997BH, 5.250%, 12/01/12 (Alternative Minimum Tax)
23,725 State Public Works Board of California, Lease Revenue Refunding 6/03 at 102.00 Aa2 24,102,702
Bonds (The Regents of the University of California - Various
University of California Projects), 1993 Series A, 5.500%, 6/01/21
11,395 State Public Works Board of California, Madera County, Lease No Opt. Call A 12,765,819
Revenue Bonds (Department of Corrections - California State
Prison (II)), 1993 Series E, 5.500%, 6/01/15
15,420 Los Angeles Convention and Exhibition Center Authority, California, 8/03 at 102.00 AAA 15,987,148
Lease Revenue Bonds, 1993 Refunding Series A, 5.375%, 8/15/18
1,265 City of Martinez, California, Home Mortgage Revenue Bonds, No Opt. Call AAA 1,857,071
1983 Issue A, 10.750%, 2/01/16
4,125 Moorpark Redevelopment Agency, California, 1993 Tax Allocation 10/03 at 102.00 N/R*** 4,374,934
Bonds, Moorpark Redevelopment Project, 6.125%, 10/01/18
(Pre-refunded to 10/01/03)
20,000 City of Pomona, California, Single Family Mortgage Revenue No Opt. Call AAA 26,472,200
Refunding Bonds (GNMA and FNMA Mortgage-Backed Securities),
Series 1990A, 7.600%, 5/01/23
3,000 Sacramento Municipal Utility District, California, Electric Revenue 11/03 at 102.00 AAA 3,054,240
Refunding Bonds, 1993 Series D, 5.250%, 11/15/20
San Bernardino Joint Powers Financing Authority, California, Tax
Allocation Refunding Bonds, Series 1995A:
6,675 5.750%, 10/01/15 10/05 at 102.00 AAA 7,346,705
10,000 5.750%, 10/01/25 10/05 at 102.00 AAA 10,760,000
-----------------------------------------------------------------------------------------------------------------------------------
COLORADO - 6.5%
3,185 Colorado Housing and Finance Authority, Single Family Program 4/10 at 105.00 AA 3,414,766
Senior Bonds, 2000 Series B-2, 7.250%, 10/01/31 (Alternative
Minimum Tax)
2,925 Colorado Housing and Finance Authority, Single Family Program 5/07 at 105.00 Aa2 2,992,363
Senior Bonds, 1997 Series B-2, 7.000%, 5/01/26 (Alternative
Minimum Tax)
2,025 Colorado Housing and Finance Authority, Single Family Program 11/07 at 105.00 Aa2 2,066,614
Senior Bonds, 1997 Series C-2, 6.875%, 11/01/28 (Alternative
Minimum Tax)
13
Nuveen Premium Income Municipal Fund, Inc. (NPI) (continued)
Portfolio of INVESTMENTS October 31, 2002
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
-----------------------------------------------------------------------------------------------------------------------------------
COLORADO (continued)
$ 9,450 City and County of Denver, Colorado, Airport System Revenue Bonds, No Opt. Call A $ 11,664,797
Series 1991D, 7.750%, 11/15/13 (Alternative Minimum Tax)
2,785 City and County of Denver, Colorado, Airport System Revenue Bonds, 11/02 at 102.00 A 2,846,437
Series 1992B, 7.250%, 11/15/23 (Alternative Minimum Tax)
(Pre-refunded to 11/15/02)
6,870 City and County of Denver, Colorado, Airport System Revenue 11/02 at 102.00 A 7,020,247
Bonds, Series 1992C, 6.750%, 11/15/22 (Alternative Minimum Tax)
(Pre-refunded to 11/15/02)
4,630 City and County of Denver, Colorado, Airport System Revenue Bonds, 11/08 at 101.00 AAA 4,620,462
Series 1998B, 5.000%, 11/15/25
19,810 City and County of Denver, Colorado, Excise Tax Revenue Bonds, 3/11 at 100.00 AAA 21,365,481
Colorado Convention Center Project, Series 2001A, 5.500%, 9/01/18
13,315 City and County of Denver, Colorado, Special Facilities Airport 4/03 at 102.00 CCC 5,109,498
Revenue Bonds (United Air Lines, Inc. Project), Series 1992A,
6.875%, 10/01/32 (Alternative Minimum Tax)#
303 El Paso County, Colorado, Single Family Mortgage Revenue Refunding No Opt. Call Aaa 326,957
Bonds, Series 1992A, Class A-2, 8.750%, 6/01/11
-----------------------------------------------------------------------------------------------------------------------------------
CONNECTICUT - 0.2%
1,930 State of Connecticut, General Obligation Bonds, Series 2001C, No Opt. Call AA 2,207,341
5.500%, 12/15/16
-----------------------------------------------------------------------------------------------------------------------------------
DISTRICT OF COLUMBIA - 4.8%
9,505 District of Columbia, General Obligation Bonds, Series 1998B, No Opt. Call AAA 11,103,456
6.000%, 6/01/20
14,675 District of Columbia Housing Finance Agency, Collateralized Single 12/04 at 103.00 AAA 15,138,583
Family Mortgage Revenue Bonds, Series 1988E-4,
6.375%, 6/01/26 (Alternative Minimum Tax)
10,350 District of Columbia, Revenue Bonds (Association of American 8/07 at 102.00 AAA 10,578,632
Medical Colleges Issue), Series 1997A, 5.375%, 2/15/27
16,665 District of Columbia, University Revenue Bonds, Georgetown 4/11 at 29.23 AAA 2,966,870
University Issue, Series 2001A, 0.000%, 4/01/32
5,370 District of Columbia Tobacco Settlement Financing Corporation, No Opt. Call A1 5,409,040
Tobacco Settlement Asset-Backed Bonds, Series 2001,
6.500%, 5/15/33
-----------------------------------------------------------------------------------------------------------------------------------
FLORIDA - 1.6%
9,290 State of Florida, Full Faith and Credit, Department of 7/05 at 101.00 AAA 10,278,549
Transportation, Right-of-Way Acquisition and Bridge Construction
Bonds, Series 1995, 5.800%, 7/01/21 (Pre-refunded to 7/01/05)
5,000 Orange County Health Facilities Authority, Florida, Hospital 11/10 at 101.00 A- 5,358,550
Revenue Bonds (Adventist Health System - Sunbelt Obligated Group),
Series 2000, 6.500%, 11/15/30
-----------------------------------------------------------------------------------------------------------------------------------
GEORGIA - 0.9%
4,560 Metropolitan Atlanta Rapid Transit Authority, Georgia, Sales No Opt. Call AAA 5,478,338
Tax Revenue Bonds, Refunding Series P, 6.250%, 7/01/20
2,750 Savannah Housing Authority, Georgia, Mortgage Revenue 5/08 at 103.00 Aaa 2,942,308
Bonds (Plantation Oak - GNMA Collateralized), Series 2000
Refunding, 6.350%, 11/20/39
-----------------------------------------------------------------------------------------------------------------------------------
IDAHO - 0.5%
5,000 Boise City, Idaho, Airport Revenue Certificates of Participation, 9/10 at 100.00 Aaa 5,161,650
Series 2000, 5.500%, 9/01/25 (Alternative Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
ILLINOIS - 9.7%
10,000 City of Chicago, Illinois, General Obligation Bonds, Project 1/11 at 101.00 AAA 9,902,300
and Refunding Series 2001A, 5.000%, 1/01/31
9,220 Chicago School Reform Board of Trustees of the Board of 12/07 at 102.00 AAA 9,361,158
Education, Illinois, Unlimited Tax General Obligation Bonds
(Dedicated Tax Revenues), Series 1997A, 5.250%, 12/01/27
9,000 Chicago-O'Hare International Airport, Illinois, Special Facility No Opt. Call Ca 1,260,540
Revenue Bonds, United Air Lines, Inc. Project, Series 2001A,
6.375%, 11/01/35 (Alternative Minimum Tax) (Mandatory
put 5/01/13)#
4,530 Chicago-O'Hare International Airport, Illinois, General Airport 1/04 at 102.00 AAA 4,589,887
Second Lien, Revenue Refunding Bonds, 1993 Series C,
5.000%, 1/01/18
14
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
-----------------------------------------------------------------------------------------------------------------------------------
ILLINOIS (continued)
$ 1,655 City of Chicago, Illinois, Collateralized Single Family Mortgage 3/06 at 105.00 Aaa $ 1,684,095
Revenue Bonds, Series 1996-A, 7.000%, 9/01/27 (Alternative
Minimum Tax)
3,430 City of Chicago, Illinois, Collateralized Single Family Mortgage 9/07 at 105.00 Aaa 3,612,750
Revenue Bonds, Series 1997-B, 6.950%, 9/01/28 (Alternative
Minimum Tax)
8,740 Illinois Development Finance Authority, Pollution Control Refunding 2/04 at 102.00 AAA 8,993,810
Revenue Bonds (Illinois Power Company Project), 1994 Series A,
5.700%, 2/01/24
8,500 Illinois Educational Facilities Authority, Revenue Refunding Bonds, 7/03 at 102.00 Aa1 8,665,325
University of Chicago, Series 1993B, 5.600%, 7/01/24
1,500 Illinois Health Facilities Authority, Revenue Bonds (Highland 10/07 at 102.00 AAA 1,732,200
Park Hospital Project), Series 1997A, 5.750%, 10/01/26
(Pre-refunded to 10/01/07)
13,545 Illinois Health Facilities Authority, Revenue Bonds (Sherman Health 8/07 at 101.00 AAA 13,565,995
Systems), Series 1997, 5.250%, 8/01/27
5,000 Illinois Health Facilities Authority, Revenue Bonds (Edward 2/11 at 101.00 AAA 5,048,650
Hospital Obligation Group), Series 2001B, 5.250%, 2/15/34
9,200 Metropolitan Pier and Exposition Authority, Illinois, McCormick 12/09 at 101.00 AAA 9,612,896
Place Expansion Project Bonds, Series 1999A, 5.500%, 12/15/24
3,000 Metropolitan Pier and Exposition Authority, Illinois, McCormick No Opt. Call AAA 3,889,140
Place Hospitality Facilities Revenue Bonds, Series 1996A,
7.000%, 7/01/26
4,925 Regional Transportation Authority, Cook, DuPage, Kane, Lake, No Opt. Call AAA 6,003,821
McHenry and Will Counties, Illinois, General Obligation Bonds,
Series 1992A, 9.000%, 6/01/06
785 Regional Transportation Authority, Cook, DuPage, Kane, Lake, No Opt. Call AAA 956,954
McHenry and Will Counties, Illinois, General Obligation Bonds,
Series 1992B, 9.000%, 6/01/06
3,000 Upper Illinois River Valley Development Authority, Illinois, 12/11 at 101.00 BBB+ 3,124,110
Morris Hospital Healthcare Facilities Revenue Bonds, Series 2001,
6.625%, 12/01/31
-----------------------------------------------------------------------------------------------------------------------------------
INDIANA - 3.5%
5,000 Center Grove 2000 Building Corporation, Indiana, First Mortgage 7/11 at 100.00 AAA 5,204,750
Bonds, Series 2001, 5.500%, 1/15/26
4,300 Indiana State Office Building Commission, Correctional Facilities 7/05 at 102.00 AAA 4,510,227
Program Revenue Bonds, Series 1995A, 5.500%, 7/01/20
8,000 Metropolitan School District, Middle School Building Corporation, 7/05 at 102.00 AAA 9,058,400
Steuben County, Indiana, First Mortgage Bonds, Series 1995,
6.375%, 7/15/16 (Pre-refunded to 7/15/05)
7,965 Wawasee Community School Corporation, New Elementary and 1/12 at 101.00 AA- 8,572,570
Remodeling Building Corporation, Indiana, First Mortgage Bonds,
Series 2000, 5.750%, 1/15/20
5,300 Whitley County Middle School Building Corporation, Columbia City, 1/04 at 102.00 AAA 5,689,391
Indiana, First Mortgage Bonds, Series 1994, 6.250%, 7/15/15
(Pre-refunded to 1/15/04)
-----------------------------------------------------------------------------------------------------------------------------------
IOWA - 1.4%
City of Des Moines, Iowa, General Obligation Bonds, Series 2000D:
1,215 5.750%, 6/01/17 6/08 at 100.00 AAA 1,339,246
1,410 5.800%, 6/01/18 6/08 at 100.00 AAA 1,552,636
3,000 Iowa Finance Authority, Private College Refunding Revenue Bonds 12/05 at 102.00 AAA 3,256,350
(Drake University Project), Series 1996, 5.400%, 12/01/16
4,970 Iowa Finance Authority, Industrial Revenue Refunding Bonds, No Opt. Call AAA 6,993,237
Urbandale Hotel Corporation Project, 1989 Series A, Remarketed,
8.500%, 8/01/16 (Alternative Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
KANSAS - 1.3%
11,000 Sedgwick and Shawnee Counties, Kansas, Single Family Mortgage 6/08 at 105.00 Aaa 12,210,990
Revenue Bonds (Mortgaged-Backed Securities Program),
1998 Series A-1, 6.500%, 12/01/22 (Alternative Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
LOUISIANA - 3.9%
2,100 Louisiana Housing Finance Agency, Single Family Mortgage Revenue 9/09 at 101.00 Aaa 2,249,898
Bonds (Home Ownership Program), Series 2000A, 7.450%, 12/01/31
(Alternative Minimum Tax)
11,860 Louisiana Stadium and Exposition District, Hotel Occupancy Tax 7/05 at 102.00 AAA 13,410,458
Bonds, Series 1995-B, 6.375%, 7/01/25 to 7/01/05)
15
Nuveen Premium Income Municipal Fund, Inc. (NPI) (continued)
Portfolio of INVESTMENTS October 31, 2002
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
-----------------------------------------------------------------------------------------------------------------------------------
LOUISIANA (continued)
$ 7,660 Louisiana Public Facilities Authority, Extended Care Facilities No Opt. Call BBB $ 9,714,029
Revenue Bonds (Comm-Care Corporation Project), Series 1994,
11.000%, 2/01/14
13,160 Tobacco Settlement Financing Corporation, Louisiana, 5/11 at 101.00 A1 11,923,750
Asset-Backed Bonds, Series 2001B, 5.875%, 5/15/39
-----------------------------------------------------------------------------------------------------------------------------------
MARYLAND - 0.4%
3,600 Housing Opportunities Commission of Montgomery County, 7/10 at 100.00 Aaa 3,827,268
Maryland, Multifamily Housing Development Bonds, Series 2000B,
6.200%, 7/01/30 (Alternative Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
MASSACHUSETTS - 6.1%
10,000 Massachusetts Bay Transportation Authority, Assessment Bonds, 7/10 at 100.00 AAA 10,192,000
2000 Series A, 5.250%, 7/01/30
13,000 Commonwealth of Massachusetts, General Obligation Bonds, 6/10 at 100.00 Aa2*** 15,143,050
Consolidated Loan of 2000, Series B, 6.000%, 6/01/16
(Pre-refunded to 6/01/10)
4,790 Massachusetts Development Finance Agency, Assisted Living 9/10 at 105.00 AAA 5,707,285
Facility Revenue Bonds (The Monastery at West Springfield
Project) (GNMA Collateralized), Series 1999A, 7.625%, 3/20/41
(Alternative Minimum Tax)
2,825 Massachusetts Industrial Finance Agency, Resource Recovery 12/08 at 102.00 BBB 2,572,812
Revenue Refunding Bonds (Ogden Haverhill Project), Series 1998A,
5.450%, 12/01/12 (Alternative Minimum Tax)
14,750 Massachusetts Industrial Finance Agency, General Obligation Bonds, 7/07 at 102.00 AAA 15,042,050
Suffolk University, Series 1997, 5.250%, 7/01/27
8,750 Massachusetts Housing Finance Agency, Rental Housing Mortgage 1/11 at 100.00 AAA 9,121,438
Revenue Bonds, Series 2001A, 5.850%, 7/01/35 (Alternative
Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
MICHIGAN - 6.0%
4,000 Detroit School District, Wayne County, Michigan, School Building 5/03 at 102.00 AAA 4,102,200
and Site Improvement and Refunding Bonds (Unlimited Tax
General Obligation), Series 1993, 5.400%, 5/01/13
10,550 City of Detroit, Michigan, Sewage Disposal System Revenue 7/05 at 100.00 AAA 10,550,528
Refunding Bonds, Series 1995B, 5.000%, 7/01/25
Hudsonville Public Schools, Ottawa and Allegan Counties,
Michigan, 1997 School Building and Site and Refunding Bonds
(Unlimited Tax General Obligation):
10,510 5.150%, 5/01/22 5/08 at 100.00 AAA 10,634,859
8,045 5.150%, 5/01/27 5/08 at 100.00 AAA 8,116,681
9,625 Livonia Public Schools District, Wayne County, Michigan, 1993 5/03 at 102.00 AAA 9,823,949
Refunding Bonds (Unlimited Tax General Obligation),
5.500%, 5/01/21
6,600 Michigan State Housing Development Authority, Limited Obligation 7/07 at 102.00 AAA 6,751,404
Multifamily Mortgage Revenue Refunding Bonds (Forest Hills
Regency Square Project), Series 1999A, 5.750%, 7/01/29
6,390 Charter County of Wayne, Michigan, Airport Revenue Bonds, 12/12 at 100.00 AAA 6,658,316
Detroit Metropolitan Airport, Series 2002D, 5.500%, 12/01/19
(Alternative Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
MINNESOTA - 4.0%
City of Eden Prairie, Minnesota, Multifamily Housing Revenue
Bonds, GNMA Collateralized Mortgage Loan - Rolling Hills
Project, Series 2001A:
1,000 6.150%, 8/20/31 8/11 at 105.00 Aa2 1,103,680
2,000 6.200%, 2/20/43 8/11 at 105.00 Aa2 2,207,680
1,510 Minneapolis-St. Paul Housing Finance Board, Minnesota, 11/04 at 102.00 AAA 1,561,914
Single Family Mortgage Revenue Bonds (Minneapolis-St. Paul
Family Housing Program - Phase X) (FNMA and GNMA
Mortgage-Backed Securities Program), Series 1994,
7.500%, 11/01/27 (Alternative Minimum Tax)
3,000 Minneapolis-St. Paul Metropolitan Airports Commission, 1/08 at 101.00 AAA 3,016,860
Minnesota, Airport Revenue Bonds, Series 1998A,
5.000%, 1/01/22
5,000 Minnesota Agricultural and Economic Development Board, 11/07 at 102.00 AAA 5,312,950
Healthcare System Revenue Bonds (Fairview Hospital and
Healthcare Services), Series 1997A, 5.750%, 11/15/26
19,900 St. Paul Housing and Redevelopment Authority, Minnesota, 11/15 at 103.00 AAA 24,524,760
Sales Tax Revenue Refunding Bonds (Civic Center Project),
Series 1996, 7.100%, 11/01/23
16
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
-----------------------------------------------------------------------------------------------------------------------------------
MISSOURI - 5.5%
$ 4,470 Missouri Housing Development Commission, Single Family Mortgage 3/07 at 105.00 AAA $ 4,782,811
Revenue Bonds (Homeownership Loan Program), 1996 Series C,
7.450%, 9/01/27 (Alternative Minimum Tax)
Health and Educational Facilities Authority, Missouri, Revenue
Bonds, SSM Health Care, Series 2001A:
3,000 5.250%, 6/01/21 6/11 at 101.00 AAA 3,064,440
14,150 5.250%, 6/01/28 6/11 at 101.00 AAA 14,384,890
15,105 Missouri Housing Development Commission, Single Family Mortgage 3/09 at 103.00 AAA 16,592,843
Revenue Bonds (Homeownership Loan Program), 1999 Series B-1,
6.700%, 9/01/30 (Alternative Minimum Tax)
11,120 Francis Howell School District, St. Charles County, Missouri, General No Opt. Call AAA 13,214,563
Obligation Bonds, Series 1994A Refunding, 7.800%, 3/01/08
-----------------------------------------------------------------------------------------------------------------------------------
NEBRASKA - 1.1%
8,500 Omaha, Nebraska, General Obligation Bonds, Convention Center No Opt. Call AAA 10,646,165
Project, Series 2000A, 6.500%, 12/01/30
-----------------------------------------------------------------------------------------------------------------------------------
NEVADA - 8.9%
15,000 Clark County, Nevada, General Obligation Bond Bank, Southern 6/11 at 100.00 AAA 15,347,850
Nevada Water Authority Loan, Series 2001, 5.250%, 6/01/26
14,810 Clark County School District, Nevada, General Obligation Bonds, 12/11 at 100.00 AAA 16,016,719
Series 2001F, 5.500%, 6/15/18
10,410 Clark County School District, Nevada, General Obligation Bonds, 6/12 at 100.00 AAA 11,295,683
Series 2002C, 5.500%, 6/15/18
12,000 Director of the State of Nevada, Department of Business and 1/10 at 100.00 AAA 12,270,960
Industry, Las Vegas Monorail Project Revenue Bonds, 1st Tier
Series 2000, 5.375%, 1/01/40
29,410 State of Nevada, Colorado River Commission General Obligation 7/04 at 101.00 AA 29,977,319
Bonds (Limited Tax Revenue Supported), Series 1994,
5.500%, 7/01/27
-----------------------------------------------------------------------------------------------------------------------------------
NEW HAMPSHIRE - 2.0%
8,120 New Hampshire Housing Finance Authority, Single Family Mortgage 7/03 at 102.00 Aa2 8,299,452
Revenue Bonds, 1993 Series B, 6.050%, 7/01/25
6,500 Business Finance Authority, New Hampshire, Pollution Control 10/03 at 102.00 A3 6,528,080
Refunding Revenue Bonds (The United Illuminating Company
Project), 1993 Series A, 5.875%, 10/01/33
4,215 New Hampshire Housing Finance Authority, Single Family Mortgage 7/06 at 102.00 Aa2 4,376,814
Acquisition Revenue Bonds, 1996 Series B, 6.400%, 1/01/27
(Alternative Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
NEW JERSEY - 5.4%
10,000 Delaware River Port Authority, New Jersey and Pennsylvania, 1/10 at 100.00 AAA 10,597,200
Port District Project Bonds, Series 1999B, 5.625%, 1/01/26
10,000 Essex County Improvement Authority, New Jersey, General 10/10 at 100.00 Aaa 11,105,300
Obligation Guaranteed Lease Revenue Bonds (County Correctional
Facility Project), Series 2000, 6.000%, 10/01/25
15,000 New Jersey Housing and Mortgage Finance Agency, Home Buyer 10/07 at 101.50 AAA 15,617,850
Revenue Bonds, 1997 Series U, 5.850%, 4/01/29 (Alternative
Minimum Tax)
11,500 New Jersey Turnpike Authority, Turnpike Revenue Bonds, No Opt. Call AAA 13,537,340
Series 2000A, 6.000%, 1/01/14
-----------------------------------------------------------------------------------------------------------------------------------
NEW MEXICO - 1.1%
795 New Mexico Mortgage Finance Authority, Single Family Mortgage 1/03 at 102.00 AAA 809,882
Purchase Refunding Senior Bonds, 1992 Series A-2,
6.900%, 7/01/24
2,740 New Mexico Mortgage Finance Authority, Single Family Mortgage 3/10 at 102.50 AAA 3,102,529
Program Bonds, 2000 Series D-2, 6.850%, 9/01/31 (Alternative
Minimum Tax)
5,585 Santa Fe County, New Mexico, Correctional System Revenue No Opt. Call AAA 6,533,445
Bonds, Series 1997, 6.000%, 2/01/27
-----------------------------------------------------------------------------------------------------------------------------------
NEW YORK - 9.9%
15,500 Erie Tobacco Asset Securitization Corporation, Erie County, 7/10 at 101.00 A1 16,376,370
New York, Tobacco Settlement Asset- Backed Bonds,
Series 2000, Senior, 6.250%, 7/15/40
13,700 Long Island Power Authority, New York, Electric System General 6/08 at 101.00 A- 13,823,026
Revenue Bonds, Series 1998A, 5.250%, 12/01/26
10,000 New York Counties Tobacco Trust I, Tobacco Settlement 6/10 at 101.00 A1 10,746,500
Pass-Through Bonds, Series 2000, 6.500%, 6/01/35
17
Nuveen Premium Income Municipal Fund, Inc. (NPI) (continued)
Portfolio of INVESTMENTS October 31, 2002
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
-----------------------------------------------------------------------------------------------------------------------------------
NEW YORK (continued)
$ 10,000 City of New York, New York, General Obligation Bonds, 2/06 at 101.50 A $ 10,901,600
Fiscal 1996 Series G, 5.750%, 2/01/07
City of New York, New York, General Obligation Bonds, Fiscal
1997 Series G:
100 6.000%, 10/15/26 (Pre-refunded to 10/15/07) 10/07 at 101.00 Aaa 116,211
5,900 6.000%, 10/15/26 10/07 at 101.00 A 6,227,391
City of New York, New York, General Obligation Bonds, Fiscal
1991 Series B:
6,020 9.500%, 6/01/03 No Opt. Call A2*** 6,291,984
1,480 9.500%, 6/01/03 No Opt. Call A 1,546,866
16,000 New York City Municipal Water Finance Authority, New York, 6/06 at 101.00 AAA 17,409,280
Water and Sewer System Revenue Bonds, Fiscal 1996 Series B,
5.750%, 6/15/26
2,000 Dormitory Authority of the State of New York, Revenue Bonds, 7/06 at 102.00 AAA 2,095,360
Department of Health Issue, Series 1996, 5.500%, 7/01/25
4,000 New York State Energy Research and Development Authority, 3/03 at 102.00 A+ 4,094,440
Facilities Revenue Bonds, Consolidated Edison Company of
New York, Inc. Project, Series 1993A, 6.000%, 3/15/28
(Alternative Minimum Tax)
4,010 New York State Medical Care Facilities Finance Agency, Hospital 2/04 at 102.00 AAA 4,263,031
and Nursing Home FHA-Insured Mortgage Revenue Bonds,
1993 Series B, 5.500%, 2/15/22
-----------------------------------------------------------------------------------------------------------------------------------
NORTH DAKOTA - 1.2%
9,650 Dickinson, North Dakota, Healthcare Facilities Revenue Bonds, 2/10 at 102.00 AA 11,488,422
BHS Long-Term Care, Inc., Series 1990, 7.625%, 2/15/20
-----------------------------------------------------------------------------------------------------------------------------------
OHIO - 2.9%
4,265 Franklin County, Ohio, Hospital Improvement Revenue Bonds, 5/11 at 101.00 Aaa 4,463,450
The Children's Hospital Project, Series 2001, 5.500%, 5/01/28
12,360 Ohio Turnpike Commission, Turnpike Revenue Bonds, 2/04 at 102.00 Aaa 13,231,998
1994 Series A, 5.750%, 2/15/24 (Pre-refunded to 2/15/04)
2,000 Richland County, Ohio, Hospital Facilities Revenue Refunding 11/10 at 101.00 A- 2,143,000
Bonds, MedCentral Health System Obligated Group, Series 2000A,
6.125%, 11/15/16
7,000 City of Steubenville, Ohio, Hospital Facilities Revenue Refunding 10/10 at 100.00 A3 7,404,880
and Improvement Bonds, Trinity Health System, Series 2000,
6.500%, 10/01/30
-----------------------------------------------------------------------------------------------------------------------------------
PENNSYLVANIA - 4.2%
14,650 Delaware Valley Regional Finance Authority, Pennsylvania, No Opt. Call AAA 15,924,697
Local Government Revenue Bonds, Series 1998A,
5.500%, 8/01/28
10,000 Pennsylvania Housing Finance Agency, Single Family Mortgage 10/03 at 102.00 AA+ 10,210,200
Revenue Bonds, Series 37A, 5.450%, 10/01/17
8,405 Philadelphia Redevelopment Authority, Pennsylvania, Multifamily 4/08 at 103.00 N/R 7,783,030
Housing Mortgage Revenue Bonds (Cricket Court Commons
Project), Series 1998A, 6.200%, 4/01/25 (Alternative Minimum Tax)
5,295 School District of Philadelphia, Pennsylvania, General Obligation 9/05 at 101.00 AAA 5,465,711
Bonds, Series 1995B, 5.500%, 9/01/25
-----------------------------------------------------------------------------------------------------------------------------------
PUERTO RICO - 0.6%
5,250 Puerto Rico Electric Power Authority, Power Revenue Bonds, 7/05 at 100.00 A- 5,462,520
Series X, 5.500%, 7/01/25
-----------------------------------------------------------------------------------------------------------------------------------
RHODE ISLAND - 1.1%
10,000 Rhode Island Housing and Mortgage Finance Corporation, 10/09 at 100.00 AA+ 10,278,900
Homeownership Opportunity Bonds, Series 35-A,
5.800%, 10/01/32 (Alternative Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
SOUTH CAROLINA - 1.3%
12,500 Tobacco Settlement Revenue Management Authority, 5/11 at 101.00 A1 12,283,125
South Carolina, Tobacco Settlement Asset-Backed Bonds,
Series 2001B, 6.375%, 5/15/28
-----------------------------------------------------------------------------------------------------------------------------------
TENNESSEE - 0.3%
3,285 Memphis and Shelby Counties Sports Authority, Inc., 11/12 at 100.00 AAA 3,313,645
Tennessee, Revenue Bonds, Memphis Arena Project,
2002 Series B, 5.125%, 11/01/29
18
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
-----------------------------------------------------------------------------------------------------------------------------------
TEXAS - 15.0%
$ 10,305 Alliance Airport Authority, Inc., Texas, Special Facilities Revenue 12/02 at 100.00 BB- $ 2,782,350
Bonds (American Airlines, Inc. Project), Series 1990,
7.500%, 12/01/29 (Alternative Minimum Tax)
3,289 Austin Housing Finance Corporation, Texas, Multifamily Housing 12/10 at 105.00 Aaa 3,765,445
Revenue Bonds (GNMA Collateralized Mortgage Loan - Fairway
Village Project), Series 2000A, 7.375%, 6/20/35 (Alternative
Minimum Tax)
5,025 Clear Creek Independent School District, Galveston and Harris 2/10 at 100.00 AAA 5,625,990
Counties, Texas, Unlimited Tax Schoolhouse and Refunding
Bonds, Series 2000, 6.000%, 2/15/16
865 Harlingen Housing Finance Corporation, Texas, Single Family 9/10 at 105.00 AAA 943,386
Mortgage Revenue Bonds, Series 2000A, 6.700%, 9/01/33
(Alternative Minimum Tax)
20,000 Houston Sports Authority, Harris County, Texas, Junior Lien Revenue 11/11 at 100.00 AAA 20,352,400
Refunding Bonds, Series 2001B, 5.250%, 11/15/40
15,000 Harris County, Texas, Toll Road Senior Lien Revenue Refunding 8/04 at 102.00 AAA 16,062,600
Bonds, Series 1994, 5.300%, 8/15/13
Harris County Hospital District, Texas, Refunding Revenue Bonds,
Series 1990:
4,205 7.400%, 2/15/10 No Opt. Call AAA 4,873,973
6,670 7.400%, 2/15/10 No Opt. Call AAA 7,844,654
19,125 Harris County Hospital District, Texas, Refunding Revenue Bonds, 8/10 at 100.00 AAA 21,222,821
Series 2000, 6.000%, 2/15/15
1,343 Heart of Texas Housing Finance Corporation, Texas, Multifamily 9/10 at 105.00 Aaa 1,537,802
Housing Revenue Bonds (GNMA Collateralized Mortgage
Loan - Parkside Village Project), Series 2000A, 7.400%, 9/20/35
(Alternative Minimum Tax)
6,000 City of Houston, Texas, General Obligation Public Improvement 3/11 at 100.00 AAA 6,576,420
Bonds, Series 2001B, 5.500%, 3/01/15
9,250 City of Houston, Texas, Airport System Subordinate Lien Revenue 7/10 at 100.00 AAA 9,597,523
Bonds, Series 2000B, 5.500%, 7/01/30
4,000 Tarrant County Health Facilities Development Corporation, 11/10 at 101.00 A- 4,272,680
Texas, Hospital Revenue Bonds, Series 2000, Adventist Health
System/Sunbelt Obligated Group, 6.700%, 11/15/30
12,020 Tarrant County Health Facilities Development Corporation, Texas, 12/10 at 105.00 Aaa 14,314,979
Mortgage Revenue Bonds (GNMA Collateralized Mortgage
Loan - Eastview Nursing Home, Ebony Lake Nursing Center,
Ft. Stockton Nursing Center, Lynnhaven Nursing Center and
Mission Oaks Manor), Series 2000A-1, 7.625%, 12/20/32
10,000 Board of Regents of the Texas A&M University, Texas, Revenue 5/09 at 100.00 AAA 10,465,000
Financing System Bonds, Series 1999, 5.550%, 5/15/29
11,680 Texas Department of Housing and Community Affairs, Residential 1/09 at 101.00 AAA 11,760,475
Mortgage Revenue Bonds, Series , 5.350%, 7/01/30
(Alternative Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
UTAH - 0.6%
5,950 Utah Housing Finance Agency, Single Family Mortgage Bonds, 7/07 at 101.50 AAA 6,121,777
1997 Series F, 5.750%, 7/01/28 (Alternative Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
VERMONT - 1.0%
9,465 Vermont Housing Finance Agency, Single Family Housing Bonds, 6/07 at 101.50 AAA 9,810,662
Series 9, 5.900%, 5/01/29 (Alternative Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
VIRGINIA - 0.5%
4,925 Virginia Beach Development Authority, Virginia, Multifamily 10/14 at 100.00 N/R 4,881,906
Residential Rental Housing Revenue Bonds, Mayfair I and
Mayfair II Apartments Project, Series 1999, 7.500%, 10/01/39
(Alternative Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
WASHINGTON - 18.6%
Public Utility District No.1 of Chelan County, Washington,
Chelan Hydro Consolidated System Revenue Bonds, Series 1997A:
11,820 5.650%, 7/01/32 (Alternative Minimum Tax) (Optional 7/07 at 102.00 AA 11,923,425
put 7/01/09) (Mandatory put 7/01/24)
8,000 5.650%, 7/01/32 (Alternative Minimum Tax) (Optional 7/07 at 102.00 AA 8,060,240
put 7/01/09) (Mandatory put 7/01/27)
5,000 Snohomish County, Washington, Limited Tax General Obligation 12/11 at 100.00 AAA 5,102,950
Bonds, Series 2001, 5.250%, 12/01/26
6,360 Public Utility District No. 1, Snohomish County, Washington, 1/03 at 100.00 AAA 6,395,044
Generation System Revenue Bonds, Series 1993,
5.500%, 1/01/14
4,750 Washington Health Care Facilities Authority, Revenue Bonds 11/08 at 101.00 Aaa 4,768,525
(Swedish Health Services), Series 1998, 5.125%, 11/15/22
19
Nuveen Premium Income Municipal Fund, Inc. (NPI) (continued)
Portfolio of INVESTMENTS October 31, 2002
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
-----------------------------------------------------------------------------------------------------------------------------------
WASHINGTON (continued)
$ 11,000 Washington Health Care Facilities Authority, Revenue Bonds 8/13 at 102.00 AAA $ 10,853,150
(Harrison Memorial Hospital), Series 1998, 5.000%, 8/15/28
Washington Public Power Supply System, Nuclear Project No. 1
Refunding Revenue Bonds, Series 1993B:
80 5.600%, 7/01/15 (Pre-refunded to 7/01/03) 7/03 at 102.00 AAA 83,692
29,790 5.600%, 7/01/15 7/03 at 102.00 AAA 30,976,238
12,950 Washington Public Power Supply System, Nuclear Project No. 1 7/03 at 102.00 AAA 13,476,029
Refunding Revenue Bonds, Series 1993A, 5.700%, 7/01/17
Washington Public Power Supply System, Nuclear Project No. 2
Refunding Revenue Bonds, Series 1993A:
10,775 5.750%, 7/01/12 (Pre-refunded to 7/01/03) 7/03 at 102.00 Aa1*** 11,282,179
3,665 5.750%, 7/01/12 7/03 at 102.00 Aa1 3,774,620
6,770 Washington Public Power Supply System, Nuclear Project No. 2 7/03 at 102.00 Aa1*** 7,083,113
Refunding Revenue Bonds, Series 1993B, 5.625%, 7/01/12
(Pre-refunded to 7/01/03)
14,500 Washington Public Power Supply System, Nuclear Project No. 2 7/08 at 102.00 Aa1 15,316,060
Refunding Revenue Bonds, Series 1998A, 5.000%, 7/01/12
22,880 Washington Public Power Supply System, Nuclear Project No. 3 7/03 at 102.00 Aa1 23,402,350
Refunding Revenue Bonds, Series 1993C, 5.375%, 7/01/15
Washington Public Power Supply System, Nuclear Project No. 3
Refunding Revenue Bonds, Series 1997A:
5,220 5.250%, 7/01/14 7/07 at 102.00 AAA 5,634,050
9,350 5.250%, 7/01/15 7/07 at 102.00 Aa1 9,763,082
7,775 Washington Public Power Supply System, Nuclear Project No. 3 7/08 at 102.00 Aa1 7,937,493
Refunding Revenue Bonds, Series 1998A, 5.125%, 7/01/18
-----------------------------------------------------------------------------------------------------------------------------------
WISCONSIN - 0.2%
2,175 Wisconsin Health and Educational Facilities Authority, Revenue 10/11 at 100.00 BBB 2,219,760
Bonds, Carroll College Inc. Project, Series 2001, 6.125%, 10/01/16
-----------------------------------------------------------------------------------------------------------------------------------
$ 1,360,465 Total Long-Term Investments (cost $1,355,963,360) - 148.7% 1,410,637,643
=============----------------------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS - 2.3%
2,000 California Statewide Communities Development Authority, Variable A-1 2,000,000
Rate Demand Revenue Bonds, Fremont-Rideout Health Group,
Series 2001A, 1.900%, 1/01/31+
3,400 Illinois Health Facilities Authority, Variable Rate Demand Revenue VMIG-1 3,400,000
Bonds, Resurrection Health Care System, Series 1999A,
2.000%, 5/15/29+
3,450 Indiana Educational Facilities Authority, Educational Facilities VMIG-1 3,450,000
Revenue Bonds, DePauw University Project, Series 2002,
Variable Rate Demand Obligations, 1.950%, 7/01/32+
2,000 Michigan Strategic Fund, Variable Rate Demand Limited Obligation A-1 2,000,000
Revenue Bonds, Detroit Symphony Orchestra Project,
Series 2001A, 1.950%, 6/01/31+
10,980 New York City, New York, Unlimited Tax General Obligation Bonds, VMIG-1 10,980,000
Variable Rate Demand Bonds, 1993 Series B, 1.900%, 10/01/22+
-----------------------------------------------------------------------------------------------------------------------------------
$ 21,830 Total Short-Term Investments (cost $21,830,000) 21,830,000
=============----------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 4.3% 41,257,868
-------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (55.3)% (525,000,000)
-------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $948,725,511
===================================================================================================================
(1) All percentages shown in the Portfolio of Investments
are based on net assets applicable to Common shares.
* 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. Such securities are normally
considered to be equivalent to AAA rated securities.
# On December 9, 2002, UALCorporation, the holding
company of United Air Lines, Inc., filed for federal
bankruptcy protection. The Adviser believes United will
remain current on their interest payment obligations
with respect to these bonds, which relate to essential
operating facilities.
N/R Investment is not rated.
+ Security has a maturity of more than one year, but has
variable rate and demand features which qualify it as a
short-term security. The rate disclosed is that
currently in effect. This rate changes periodically
based on market conditions or a specified market index.
See accompanying notes to financial statements.
20
Nuveen Premium Income Municipal Fund 2, Inc. (NPM)
Portfolio of
INVESTMENTS October 31, 2002
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
-----------------------------------------------------------------------------------------------------------------------------------
ALABAMA - 0.7%
$ 4,150 Birmingham Waterworks and Sewer Board, Alabama, Water and 1/13 at 100.00 AAA $ 4,119,456
Sewer Revenue Bonds, Series 2002B, 5.000%, 1/01/37
-----------------------------------------------------------------------------------------------------------------------------------
ALASKA - 0.6%
3,500 Anchorage Parking Authority, Alaska, Lease Revenue Refunding 12/02 at 102.00 A+*** 3,584,595
Bonds, Series 1993 (5th Avenue Garage Project),
6.750%, 12/01/08 (Pre-refunded to 12/01/02)
-----------------------------------------------------------------------------------------------------------------------------------
ARIZONA - 3.5%
2,850 Industrial Development Authority of the County of Maricopa, 1/07 at 102.00 AAA 3,349,719
Arizona, Multifamily Housing Revenue Bonds, Place Five and the
Greenery Apartments Projects, Series 1996A, 6.625%, 1/01/27
Industrial Development Authority of the County of Mohave,
Arizona, Hospital System Revenue Refunding Bonds (Medical
Environments, Inc. and Phoenix Baptist Hospital and Medical
Center Inc.), Series 1993:
2,030 6.250%, 7/01/03 No Opt. Call Aaa
3,000 6.750%, 7/01/08 (Pre-refunded to 7/01/03) 7/03 at 102.00 Aaa 3,161,010
9,000 City of Phoenix Civic Improvement Corporation, Arizona, 7/03 at 102.00 AAA 9,446,490
Wastewater System Lease Revenue Bonds, Series 1993,
6.125%, 7/01/14 (Pre-refunded to 7/01/03)
3,625 Industrial Development Authority of the County of Pima, Arizona, 1/03 at 102.50 AAA 3,813,319
Industrial Development Lease Obligation Refunding Revenue
Bonds, Irvington Project, Series 1998A, 7.250%, 7/15/10
-----------------------------------------------------------------------------------------------------------------------------------
CALIFORNIA - 12.8%
California Educational Facilities Authority, Loyola Marymount
University Revenue Bonds, Series 2001A Refunding:
3,255 0.000%, 10/01/23 No Opt. Call Aaa 1,073,336
5,890 0.000%, 10/01/24 No Opt. Call Aaa 1,830,141
7,615 0.000%, 10/01/25 No Opt. Call Aaa 2,238,201
7,710 State of California, General Obligation Veterans Welfare Bonds, 12/08 at 101.00 AAA 8,116,780
Series 1997BH, 5.250%, 12/01/12 (Alternative Minimum Tax)
5,690 Department of Veterans Affairs of California, Home Purchase 6/12 at 101.00 AAA 5,949,180
Revenue Bonds, Series 2002A, 5.300%, 12/01/21
7,150 State Public Works Board of California, Lease Revenue Bonds 10/04 at 102.00 A*** 7,921,771
(Trustees of the California State University - Various California
State University Projects), 1994 Series A, 6.375%, 10/01/19
(Pre-refunded to 10/01/04)
17,500 State Public Works Board of California, Lease Revenue Bonds 11/04 at 102.00 Aaa 19,628,525
(Department of Corrections - California State Prison - Monterey
County (Soledad II)), 1994 Series A, 6.875%, 11/01/14
(Pre-refunded to 11/01/04)
30,000 Foothill-Eastern Transportation Corridor Agency, California, No Opt. Call AAA 12,048,900
Toll Road Revenue Bonds, Series 1995A, 0.000%, 1/01/21
5,000 Los Angeles County Public Works Finance Authority, 10/04 at 102.00 Aa3*** 5,516,250
California, Revenue Bonds (Los Angeles County Regional
Park and Open Space District), Series 1994A,
6.125%, 10/01/10 (Pre-refunded to 10/01/04)
Redevelopment Agency of the City and County of San Francisco,
California, Hotel Tax Revenue Bonds, Series 1994:
2,390 6.750%, 7/01/15 (Pre-refunded to 7/01/04) 7/04 at 102.00 AAA 2,636,218
5,905 6.750%, 7/01/25 (Pre-refunded to 7/01/04) 7/04 at 102.00 AAA 6,513,333
960 6.750%, 7/01/25 7/04 at 102.00 AAA 1,052,323
5,605 County of San Joaquin, California, Certificates of Participation 4/04 at 102.00 A 5,832,339
(1994 Solid Waste System Facilities Project), 6.600%, 4/01/19
21
Nuveen Premium Income Municipal Fund 2, Inc. (NPM) (continued)
Portfolio of INVESTMENTS October 31, 2002
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
-----------------------------------------------------------------------------------------------------------------------------------
COLORADO - 4.2%
$ 185 Colorado Housing and Finance Authority, Single Family Program 12/04 at 105.00 Aa2 $ 193,734
Senior Bonds, 1994 Series E, 8.125%, 12/01/24 (Alternative
Minimum Tax)
1,615 Colorado Housing and Finance Authority, Single Family Program 12/05 at 105.00 Aa2 1,700,934
Senior Bonds, 1995 Series D, 7.375%, 6/01/26 (Alternative
Minimum Tax)
400 City and County of Denver, Colorado, Airport System Revenue No Opt. Call A 493,748
Bonds, Series 1991D, 7.750%, 11/15/13 (Alternative Minimum Tax)
5,635 City and County of Denver, Colorado, Airport System Revenue 11/02 at 102.00 A 5,759,308
Bonds, Series 1992B, 7.250%, 11/15/23 (Alternative Minimum Tax)
(Pre-refunded to 11/15/02)
16,120 City and County of Denver, Colorado, Airport System Revenue 11/02 at 102.00 A 16,472,544
Bonds, Series 1992C, 6.750%, 11/15/13 (Alternative Minimum Tax)
(Pre-refunded to 11/15/02)
1,700 City and County of Denver, Colorado, Multifamily Housing Revenue 10/07 at 102.00 AAA 1,745,713
Bonds (FHA-Insured Mortgage Loan - The Boston Lofts Project),
Series 1997A, 5.750%, 10/01/27 (Alternative Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
CONNECTICUT - 0.5%
3,170 Connecticut Housing Finance Authority, Housing Mortgage 5/06 at 102.00 AAA 3,372,024
Finance Program Bonds, 1996 Series C-2, 6.250%, 11/15/18
-----------------------------------------------------------------------------------------------------------------------------------
DISTRICT OF COLUMBIA - 1.5%
District of Columbia, University Revenue Bonds, Georgetown
University Issue, Series 2001A:
11,720 0.000%, 4/01/27 4/11 at 39.61 AAA 2,839,522
13,780 0.000%, 4/01/28 4/11 at 37.21 AAA 3,131,505
15,855 0.000%, 4/01/29 4/11 at 35.07 AAA 3,390,433
-----------------------------------------------------------------------------------------------------------------------------------
FLORIDA - 1.8%
1,700 Beacon Tradeport Community Development District, Miami-Dade 5/12 at 102.00 AA 1,774,222
County, Florida, Special Assessment Bonds, Commercial Project,
Series 2002A, 5.625%, 5/01/32
5,000 Dade County, Florida, Aviation Revenue Bonds, Series 1996A, 10/06 at 102.00 AAA 5,266,900
5.750%, 10/01/18 (Alternative Minimum Tax)
1,285 Florida Housing Finance Corporation, Homeowner Mortgage 1/10 at 100.00 AAA 1,343,712
Revenue Bonds, 2000 Series 11, 5.850%, 1/01/22 (Alternative
Minimum Tax)
2,850 State of Florida, Full Faith and Credit, Department of 7/05 at 101.00 AAA 3,158,798
Transportation, Right-of-Way Acquisition and Bridge Construction
Bonds, Series 1995, 5.875%, 7/01/24 (Pre-refunded to 7/01/05)
-----------------------------------------------------------------------------------------------------------------------------------
GEORGIA - 2.2%
5,500 City of Atlanta, Georgia, Water and Sewerage Revenue Bonds, 1/04 at 100.00 AAA 5,677,375
Series 1993, 4.500%, 1/01/18 (Pre-refunded to 1/01/04)
7,000 Development Authority of Burke County, Georgia, Pollution Control 1/03 at 103.00 AAA 7,283,010
Revenue Bonds (Oglethorpe Power Corporation Vogtle Project),
Series 1992, 8.000%, 1/01/15 (Pre-refunded to 1/01/03)
580 Housing Authority of Fulton County, Georgia, Single Family Mortgage 9/06 at 102.00 AAA 606,146
Revenue Refunding Bonds (GNMA Mortgage-Backed Securities
Program), Series 1996A, 6.200%, 9/01/27 (Alternative Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
IDAHO - 2.5%
1,505 Idaho Housing Finance Agency, Single Family Mortgage Revenue 7/05 at 102.00 Aaa 1,571,491
Bonds, Series F, 6.450%, 7/01/27 (Alternative Minimum Tax)
3,260 Idaho Housing Finance Agency, Housing Revenue Bonds 6/05 at 102.00 Aa2 3,369,275
(FHA-Insured Mortgage - Park Place Project), 1995 Series A,
6.500%, 12/01/36 (Alternative Minimum Tax)
3,160 Idaho Housing and Finance Association, Wedgewood Terrace 3/12 at 105.00 Aaa 3,733,382
Project Refunding Bonds, GNMA Enhanced, Series 2002A-1,
7.250%, 3/20/37
1,985 Idaho Housing and Finance Association, Single Family Mortgage 7/06 at 102.00 Aaa 2,167,342
Bonds, 1996 Series G, 6.350%, 7/01/26 (Alternative Minimum Tax)
1,995 Idaho Housing and Finance Association, Single Family Mortgage 1/10 at 100.00 Aa2 2,096,905
Bonds, 2000 Series B, 6.250%, 7/01/22 (Alternative Minimum Tax)
2,375 Idaho Housing and Finance Association, Single Family Mortgage 7/10 at 100.00 Aaa 2,501,588
Bonds, 2000 Series E, 5.950%, 7/01/20 (Alternative Minimum Tax)
22
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
-----------------------------------------------------------------------------------------------------------------------------------
ILLINOIS - 17.5%
$ 5,000 City of Chicago, Illinois, General Obligation Bonds (Emergency 1/03 at 102.00 AAA $ 5,132,800
Telephone System), Series 1993, 5.625%, 1/01/23 (Pre-refunded
to 1/01/03)
16,200 City of Chicago, Illinois, General Obligation Project Bonds, 1/06 at 102.00 AAA 16,258,644
Series 1995A-1, 5.125%, 1/01/25
1,000 City of Chicago, Illinois, General Obligation Project and Refunding 7/08 at 102.00 AAA 1,032,070
Bonds, Series 1998, 5.250%, 1/01/20
22,670 City of Chicago, Illinois, General Obligation Bonds (City Colleges No Opt. Call AAA 6,751,126
of Chicago Capital Improvement Project), Series 1999,
0.000%, 1/01/25
5,000 Chicago School Reform Board of Trustees of the Board of Education No Opt. Call AAA 1,938,150
of Chicago, Illinois, Unlimited Tax General Obligation Bonds
(Dedicated Tax Revenues), Series 1999A, 0.000%, 12/01/20
1,175 City of Chicago, Illinois, Multifamily Housing Revenue Bonds 6/09 at 102.00 Aaa 1,207,536
(GNMA Collateralized - Bryn Mawr-Belle Shores Project),
Series 1997, 5.800%, 6/01/23 (Alternative Minimum Tax)
1,650 City of Chicago, Illinois, Multifamily Housing Revenue Bonds, 9/13 at 101.00 AAA 1,610,186
Indiana Manor Townhomes Project (FHA-Insured/GNMA),
Series 2002A, 5.100%, 3/20/44
10,900 Public Building Commission of Chicago, Illinois, Building Revenue 12/03 at 102.00 AAA 11,594,548
Bonds (Board of Education of Chicago), Series 1993A,
5.750%, 12/01/18 (Pre-refunded to 12/01/03)
4,010 City of Chicago, Illinois, Tax Increment Allocation Bonds 1/07 at 102.00 N/R 4,198,590
(Read-Dunning Redevelopment Project), Series 1996B,
7.250%, 1/01/14
3,530 City of Chicago, Illinois, Tax Increment Allocation Bonds 1/07 at 102.00 N/R 3,753,731
(Sanitary Drainage and Ship Canal Redevelopment Project),
Series 1997A, 7.750%, 1/01/14
4,865 Cook County Community Consolidated School District No. 15, No Opt. Call Aaa 1,885,820
Palatine, Illinois, General Obligation Bonds, Series 2001,
0.000%, 12/01/20
6,190 Community High School District No. 219, Niles Township, No Opt. Call Aaa 2,407,910
Cook County, Illinois, General Obligation Capital Appreciation
Bonds, Series 2001, 0.000%, 12/01/20
2,850 City of East St. Louis, Illinois, Mortgage Revenue Refunding 7/03 at 102.00 AAA 2,926,238
Bonds (FHA-Insured Mortgage Loan - Dawson Manor
Apartments - Section 8 Assisted), Series 1994A, 6.500%, 7/01/24
6,900 Illinois Health Facilities Authority, Revenue Refunding Bonds 10/03 at 102.00 A-*** 7,272,462
(Illinois Masonic Medical Center), Series 1993,
5.500%, 10/01/19 (Pre-refunded to 10/01/03)
3,000 Illinois Health Facilities Authority, Revenue Refunding Bonds No Opt. Call A+ 3,257,190
(Lutheran General Health System), Series 1993C,
6.000%, 4/01/18
Illinois Housing Development Authority, Housing Finance Bonds,
2000 Series A:
1,105 5.750%, 9/01/10 (Alternative Minimum Tax) 3/10 at 100.00 AA 1,153,200
1,245 6.200%, 9/01/20 (Alternative Minimum Tax) 3/10 at 100.00 AA 1,296,132
11,000 State of Illinois, General Obligation Bonds (Illinois FIRST Program), No Opt. Call AAA 12,860,430
Series 2001, 6.000%, 11/01/26
State of Illinois, General Obligation Bonds (Illinois FIRST Program),
Series 2002:
9,000 5.250%, 8/01/12 No Opt. Call AAA 10,050,570
2,000 5.500%, 2/01/18 2/12 at 100.00 AAA 2,163,180
4,020 Community Unit School District No. 220, Lake, Cook, Kane, and No Opt. Call AAA 4,351,208
McHenry Counties, Illinois, General Obligation Bonds,
Series 2002, 5.250%, 12/01/20
Community Unit School District No. 60, Waukegan, Lake County,
Illinois, General Obligation Bonds, Series 2001B Refunding:
3,230 0.000%, 11/01/19 No Opt. Call Aaa 1,347,330
1,740 0.000%, 11/01/21 No Opt. Call Aaa 631,063
2,910 Community High School District No. 154, McHenry County, Illinois, No Opt. Call Aaa 1,103,385
Capital Appreciation School Bonds, Series 2001, 0.000%, 1/01/21
4,540 Metropolitan Pier and Exposition Authority, Illinois, McCormick 6/12 at 101.00 AAA 4,536,459
Place Expansion Project Revenue Bonds, Series 2002A,
5.000%, 12/15/28
-----------------------------------------------------------------------------------------------------------------------------------
INDIANA - 6.6%
1,000 Ball State University Board of Trustees, Indiana, Ball State 1/12 at 100.00 AAA 1,091,010
University Student Fee Revenue Bonds, Series 2002K,
5.750%, 7/01/20
8,000 East Chicago Elementary School Building Corporation, Lake County, 1/03 at 102.00 A*** 8,247,200
Indiana, First Mortgage Bonds, Series 1992, 7.000%, 1/15/16
(Pre-refunded to 1/15/03)
6,031 City of Greenfield, Indiana, Multifamily Housing Revenue Bonds 12/05 at 105.00 Aaa 6,303,179
(Pedcor Investments L.P. Project), Series 1996A, 6.200%, 12/01/28
(Alternative Minimum Tax)
23
Nuveen Premium Income Municipal Fund 2, Inc. (NPM) (continued)
Portfolio of INVESTMENTS October 31, 2002
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
-----------------------------------------------------------------------------------------------------------------------------------
INDIANA (continued)
$ 8,200 Indiana Bond Bank, State Revolving Fund Program Bonds, 2/03 at 102.00 AAA $ 8,448,296
Guarantee Revenue Bonds, Series 1993A, 6.250%, 2/01/09
2,875 Indiana Bond Bank, State Revolving Fund Program Bonds, Guarantee 2/05 at 102.00 AAA 3,183,861
Revenue Bonds, Series 1995A, 6.750%, 2/01/17
3,500 Indiana Bond Bank, Special Program Bonds (City of East Chicago 2/10 at 101.00 AAA 3,838,310
Facilities Building Corporation Project), Series 2000A,
6.125%, 2/01/25
5,250 Indiana Transportation Finance Authority, Aviation Technology 3/03 at 102.00 A1*** 5,439,158
Center Lease Revenue Bonds, Series A, 6.500%, 3/01/18
(Pre-refunded to 3/01/03)
5,000 Indiana Transportation Finance Authority, Highway Revenue Bonds, 12/10 at 100.00 AA 5,138,250
Series 2000, 5.375%, 12/01/25
-----------------------------------------------------------------------------------------------------------------------------------
IOWA - 2.0%
Tobacco Settlement Authority, Iowa, Tobacco Settlement
Asset-Backed Revenue Bonds, Series 2001B:
7,000 5.300%, 6/01/25 6/11 at 101.00 A1 6,196,820
7,300 5.600%, 6/01/35 6/11 at 101.00 A1 6,374,798
-----------------------------------------------------------------------------------------------------------------------------------
KANSAS - 0.3%
860 Johnson County, Kansas, Single Family Mortgage Revenue Refunding 5/04 at 103.00 Aa2 898,760
Bonds, Series 1994, 7.100%, 5/01/12
675 Sedgwick and Shawnee Counties, Kansas, Collateralized Single No Opt. Call Aaa 682,196
Family Mortgage Refunding Revenue Bonds (GNMA Certificates),
Series 1994A1, 7.900%, 5/01/24 (Alternative Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
KENTUCKY - 0.2%
1,020 Kentucky Housing Corporation, Housing Revenue Bonds, 7/06 at 102.00 AAA 1,072,214
1996 Series A, 6.375%, 7/01/28 (Alternative Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
LOUISIANA - 3.4%
2,265 Bossier Public Trust Financing Authority, Louisiana, Single Family 8/05 at 102.00 AAA 2,309,983
Mortgage Revenue Refunding Bonds, Series 1995B,
6.125%, 8/01/28
8,820 East Baton Rouge Mortgage Finance Authority, Louisiana, 10/05 at 102.00 Aaa 9,114,059
Single Family Mortgage Revenue Bonds (GNMA and
FNMA Mortgage-Backed Securities Program), Series 1994C,
6.350%, 10/01/28 (Alternative Minimum Tax)
4,980 New Orleans Home Mortgage Authority, Louisiana, Single Family 6/05 at 102.00 Aaa 5,179,997
Mortgage Revenue Bonds, Series 1995A, 6.300%, 6/01/28
(Alternative Minimum Tax)
4,035 Orleans Levee District (A Political Subdivision of the State 12/05 at 103.00 AAA 4,528,844
of Louisiana), Levee Improvement Bonds, Series 1986,
5.950%, 11/01/15
-----------------------------------------------------------------------------------------------------------------------------------
MAINE - 0.1%
680 Maine State Housing Authority, Mortgage Purchase Bonds, 11/05 at 102.00 AA+ 711,661
1995 Series B-2, 6.300%, 11/15/26 (Alternative Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
MARYLAND - 0.2%
965 Community Development Administration, Department of Housing 5/03 at 102.00 Aa2 991,219
and Community Development, Maryland, Multifamily Housing
Revenue Bonds (Insured Mortgage Loans), 1993 Series C,
6.625%, 5/15/23
-----------------------------------------------------------------------------------------------------------------------------------
MASSACHUSETTS - 2.7%
3,325 Massachusetts Development Finance Agency, Pioneer Valley No Opt. Call N/R 3,623,851
Resource Recovery Revenue Bonds, Eco/Springfield, LLC Project,
Series 2000A, 8.375%, 7/01/14 (Alternative Minimum Tax)
9,000 Massachusetts Health and Educational Facilities Authority, Revenue 10/11 at 101.00 AA 9,491,040
Bonds, Berkshire Health System Issue, Series 2001E,
5.700%, 10/01/25
3,605 Massachusetts Water Resources Authority, General Revenue 12/04 at 102.00 AAA 3,681,102
Bonds, 1993 Series C, 5.250%, 12/01/20
24
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
-----------------------------------------------------------------------------------------------------------------------------------
MICHIGAN - 3.4%
Grand Rapids and Kent County Joint Building Authority, Michigan,
Devos Place Project, Limited Tax General Obligation Bonds,
Series 2001:
$ 7,660 0.000%, 12/01/21 No Opt. Call AAA $ 2,796,819
7,955 0.000%, 12/01/22 No Opt. Call AAA 2,712,337
8,260 0.000%, 12/01/23 No Opt. Call AAA 2,647,578
8,575 0.000%, 12/01/24 No Opt. Call AAA 2,587,421
8,900 0.000%, 12/01/25 No Opt. Call AAA 2,538,013
8,000 Michigan State Hospital Finance Authority, Hospital Revenue 11/03 at 102.00 AAA 8,277,200
Refunding Bonds (Oakwood Hospital Obligated Group),
Series 1993A, 5.625%, 11/01/18
-----------------------------------------------------------------------------------------------------------------------------------
MINNESOTA - 6.3%
3,085 Bemidji, Minnesota, Health Care Facilities First Mortgage Revenue 9/12 at 100.00 AA 3,018,611
Bonds, North Country Health Services, Series 2002,
5.000%, 9/01/24
6,995 Champlin, Minnesota, Senior Housing Revenue Bonds, Champlin 6/12 at 105.00 Aaa 6,966,111
Shores Senior Living Center, GNMA Guaranteed, Series 2002A,
3.000%, 12/20/43
3,560 Housing and Redevelopment Authority of Minneapolis and St. Paul, 12/02 at 102.00 BBB+ 3,614,041
Minnesota, Health Care Facility Revenue Bonds (Group Health
Plan, Inc. Project), Series 1992, 6.900%, 10/15/22
3,000 Minneapolis-St. Paul Metropolitan Airports Commission, 1/11 at 100.00 AAA 3,062,670
Minnesota, Subordinate Airport Revenue Bonds, Series 2001C,
5.250%, 1/01/26
2,400 Minneapolis-St. Paul Metropolitan Airports Commission, 1/11 at 100.00 AAA 2,450,136
Minnesota, Airport Revenue Bonds, Series 2001A,
5.250%, 1/01/25
2,270 Minnesota Housing Finance Agency, Single Family Mortgage 7/09 at 100.00 AA+ 2,361,640
Bonds, 2000 Series C, 6.100%, 7/01/30 (Alternative Minimum Tax)
2,700 Minnesota Housing Finance Agency, Rental Housing Bonds, 2/05 at 102.00 AAA 2,790,504
1995 Series D, 5.950%, 2/01/18
3,005 Minnesota Housing Finance Agency, Single Family Mortgage 1/06 at 102.00 AA+ 3,128,175
Bonds, 1996 Series G, 6.250%, 7/01/26 (Alternative Minimum Tax)
2,435 Minnesota Housing Finance Agency, Single Family Mortgage 1/11 at 101.00 AA+ 2,591,497
Bonds, 1998 Series H-2, Remarketed, 6.050%, 7/01/31
(Alternative Minimum Tax)
2,000 Southern Minnesota Municipal Power Agency, Power Supply 1/03 at 102.00 Aaa 2,053,440
System Revenue Bonds, Series 1992B, 5.750%, 1/01/11
2,350 Washington County Housing and Redevelopment Authority, 1/03 at 102.00 BBB 2,417,892
Minnesota, Pooled Housing and Redevelopment Limited Annual
Appropriation Tax and Revenue Bonds (Pooled Refunding
Project), Series 1992, 7.200%, 1/01/22 (Pre-refunded to 1/01/03)
5,170 Washington County Housing and Redevelopment Authority, 12/02 at 100.00 A3*** 5,194,454
Minnesota, Lease Revenue Bonds (South Washington County
Schools Project), Series 1992, 7.400%, 12/01/14
(Pre-refunded to 12/01/02)
-----------------------------------------------------------------------------------------------------------------------------------
MISSOURI - 5.9%
6,445 State of Missouri, General Obligation Bonds, Water Pollution 10/12 at 100.00 AAA 6,771,375
Control Refunding, Series 2002B, 5.000%, 10/01/18
4,095 State of Missouri, General Obligation Bonds, Fourth State 10/12 at 100.00 AAA 4,302,371
Building Refunding, Series 2002A, 5.000%, 10/01/18
Health and Educational Facilities Authority of Missouri, Revenue
Bonds, SSM Health Care Series 2001A:
2,500 5.250%, 6/01/21 6/11 at 101.00 AAA 2,553,700
2,000 5.250%, 6/01/28 6/11 at 101.00 AAA 2,033,200
5,500 Industrial Development Authority of St. Louis, Missouri, Industrial 12/02 at 102.00 N/R 5,593,115
Revenue Refunding Bonds (Kiel Center Multipurpose Arena
Project), Series 1992, 7.625%, 12/01/09 (Alternative
Minimum Tax)
City of St. Louis, Missouri, Airport Revenue Bonds, Airport
Development Program, Series 2001A:
2,000 5.125%, 7/01/22 7/11 at 100.00 AAA 2,029,500
2,500 5.000%, 7/01/26 7/11 at 100.00 AAA 2,502,450
11,000 City of St. Louis Municipal Finance Authority, Missouri, Leasehold 7/03 at 102.00 AAA 11,494,890
Revenue Bonds, Series 1993A, 6.000%, 7/15/13
25
Nuveen Premium Income Municipal Fund 2, Inc. (NPM) (continued)
Portfolio of INVESTMENTS October 31, 2002
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
-----------------------------------------------------------------------------------------------------------------------------------
NEVADA - 2.5%
$ 4,000 Clark County, Nevada, Industrial Development Revenue Bonds 12/02 at 102.00 AAA $ 4,138,800
(Nevada Power Company Project), Series 1992A, 6.700%, 6/01/22
(Alternative Minimum Tax)
10,410 Clark County School District, Nevada, General Obligation Bonds, 6/12 at 100.00 AAA 11,295,683
Series 2002C, 5.500%, 6/15/18
-----------------------------------------------------------------------------------------------------------------------------------
NEW HAMPSHIRE - 0.3%
2,010 New Hampshire Higher Educational and Health Facilities Authority, 1/03 at 100.00 BBB+ 2,018,080
Hospital Revenue Bonds, Catholic Medical Center Issue,
Series 1989, 8.000%, 7/01/04
-----------------------------------------------------------------------------------------------------------------------------------
NEW JERSEY - 3.8%
4,500 New Jersey Economic Development Authority, Insured Revenue 5/05 at 102.00 AAA 5,024,745
Bonds (Educational Testing Service Issue), Series 1995A,
6.000%, 5/15/25 (Pre-refunded to 5/15/05)
4,310 New Jersey Housing and Mortgage Finance Agency, Multifamily 11/07 at 101.50 AAA 4,454,213
Housing Revenue Bonds, 1997 Series A, 5.650%, 5/01/40
(Alternative Minimum Tax)
10,000 Tobacco Settlement Financing Corporation, New Jersey, Tobacco 6/12 at 100.00 A1 9,542,300
Settlement Asset-Backed Bonds, Series 2002, 5.750%, 6/01/32
1,000 Toms River Board of Education, New Jersey, General Obligation 7/07 at 100.00 AAA 1,134,590
Bonds, Series 1997, 5.750%, 7/15/21 (Pre-refunded to 7/15/07)
3,685 Union County Utilities Authority, New Jersey, Solid Waste 6/08 at 101.00 AAA 3,690,491
Facility Subordinated Lease Revenue Bonds, Ogden Martin
Systems of Union, Inc. Lessee, Series 1998A, 5.350%, 6/01/23
(Alternative Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
NEW MEXICO - 0.5%
3,195 New Mexico Mortgage Finance Authority, Single Family Mortgage 7/05 at 102.00 AAA 3,339,350
Program Bonds, 1995 Series E, 6.300%, 7/01/17 (Alternative
Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
NEW YORK - 16.5%
1,800 Long Island Power Authority, New York, Electric System General 6/08 at 101.00 AAA 1,823,616
Revenue Bonds, Series 1998A, 5.125%, 12/01/22
7,695 City of New York, New York, General Obligation Bonds, No Opt. Call A 7,950,089
Fiscal 1995 Series E, 6.600%, 8/01/03
17,365 City of New York, New York, General Obligation Bonds, No Opt. Call A 19,424,142
Fiscal 1996 Series F, 7.000%, 2/01/06
11,130 City of New York, New York, General Obligation Bonds, 3/06 at 101.50 A 11,620,499
Fiscal 1996 Series I, 5.875%, 3/15/18
City of New York, New York, General Obligation Bonds, Fiscal
1996 Series J1:
9,000 5.875%, 2/15/19 2/06 at 101.50 A 9,379,350
3,820 5.500%, 2/15/26 2/06 at 101.50 A 3,888,836
City of New York, New York, General Obligation Bonds, Fiscal
1997 Series I:
7,505 6.250%, 4/15/27 (Pre-refunded to 4/15/07) 4/07 at 101.00 Aaa 8,691,465
4,515 6.250%, 4/15/27 4/07 at 101.00 A 4,845,408
City of New York, New York, General Obligation Bonds, Fiscal
1995 Series D:
285 6.600%, 2/01/03 No Opt. Call A2*** 288,520
10,465 6.600%, 2/01/03 No Opt. Call A 10,581,894
1,370 New York City Municipal Water Finance Authority, New York, 6/07 at 101.00 AAA 1,434,198
Water and Sewer System Revenue Bonds, Fiscal 1997 Series B,
5.500%, 6/15/27
3,150 New York City Municipal Water Finance Authority, New York, 6/05 at 101.00 AAA 3,488,846
Water and Sewer System Revenue Bonds, Fiscal 1996 Series A,
5.875%, 6/15/25 (Pre-refunded to 6/15/05)
4,000 Trust for Cultural Resources of the City of New York, New York, 4/07 at 101.00 AAA 4,269,920
Revenue Bonds (American Museum of Natural History),
Series 1997A, 5.650%, 4/01/27
2,500 Dormitory Authority of the State of New York, City University 7/06 at 102.00 AA- 2,672,575
System Consolidated Third General Resolution Bonds,
1996 Series 2, 6.000%, 7/01/20
26
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
-----------------------------------------------------------------------------------------------------------------------------------
NEW YORK (continued)
Dormitory Authority of the State of New York, Marymount
Manhattan College Insured Revenue Bonds, Series 1999:
$ 1,975 6.375%, 7/01/16 7/09 at 101.00 AA $ 2,246,622
2,080 6.375%, 7/01/17 7/09 at 101.00 AA 2,356,952
7,635 New York State Medical Care Facilities Finance Agency, Mercy 5/05 at 102.00 AA-*** 8,493,250
Medical Center Project Revenue Bonds, 1995 Series A,
5.875%, 11/01/15 (Pre-refunded to 5/01/05)
-----------------------------------------------------------------------------------------------------------------------------------
NORTH CAROLINA - 1.1%
2,550 County of Cumberland, North Carolina, Hospital Facility Revenue 10/09 at 101.00 A- 2,563,413
Bonds (Cumberland County Hospital System Inc. - Cape Fear
Valley Health System), Series 1999, 5.250%, 10/01/19
2,480 City of Durham, North Carolina, Urban Redevelopment Mortgage 8/07 at 105.00 AAA 2,697,818
Revenue Bonds (Durham Hosiery Mill Project - FHA-Insured LN),
Series 1987, 7.500%, 8/01/29 (Alternative Minimum Tax)
1,440 North Carolina Housing Finance Agency, Single Family Revenue 3/06 at 102.00 AA 1,504,109
Bonds (1985 Resolution), Series JJ, 6.450%, 9/01/27
(Alternative Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
NORTH DAKOTA - 1.0%
4,760 North Dakota Housing Finance Agency, Mortgage Revenue Bonds, 7/10 at 100.00 Aa3 4,975,200
Housing Finance Program, Series 2000C, 6.150%, 7/01/31
(Alternative Minimum Tax)
965 North Dakota Housing Finance Agency, Housing Finance Program 1/07 at 102.00 Aa2 1,008,888
Bonds, Home Mortgage Finance Program, 1996 Series B,
6.400%, 1/01/28 (Alternative Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
OHIO - 3.2%
2,000 Ohio Housing Finance Agency, Multifamily Housing Mortgage 1/08 at 102.00 Aa2 2,030,280
Revenue Bonds (FHA-Insured Mortgage Loan - Courtyards
of Kettering Project), Series 1998B-1, 5.550%, 1/01/40
(Alternative Minimum Tax)
5,000 Ohio Water Development Authority, Collateralized Water 2/03 at 102.00 A2 5,095,500
Development Revenue Refunding Bonds (Dayton Power and
Light Company Project), 1992 Series A, 6.400%, 8/15/27
6,750 Ohio Water Development Authority, Solid Waste Disposal 9/08 at 102.00 N/R 6,151,883
Revenue Bonds, Bay Shore Power Project, Convertible
Series 1998A, 5.875%, 9/01/20 (Alternative Minimum Tax)
6,900 Ohio Water Development Authority, Solid Waste Disposal 9/09 at 102.00 N/R 6,844,386
Revenue Bonds, Bay Shore Power Project, Convertible
Series 1998B, 6.625%, 9/01/20 (Alternative Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
OKLAHOMA - 1.3%
5,000 Oklahoma Student Loan Authority, Student Loan Revenue Bonds, 6/11 at 102.00 AAA 5,097,600
Senior Lien Series 2001-A1, 5.625%, 6/01/31
(Alternative Minimum Tax)
2,990 Tulsa County Public Facilities Authority, Oklahoma, Recreational 11/02 at 102.00 AA 3,105,115
Facility Refunding Revenue Bonds, Series 1992, 6.600%, 11/01/08
-----------------------------------------------------------------------------------------------------------------------------------
OREGON - 2.2%
2,865 State of Oregon, General Obligation Elderly and Disabled Housing 2/03 at 102.00 AA 2,931,611
Bonds, 1992 Series B, 6.375%, 8/01/24
3,800 State of Oregon, General Obligation Veterans Welfare Bonds, 10/05 at 102.00 AA 3,946,034
Series 75, 6.000%, 4/01/27
4,645 Oregon Housing and Community Services Department, Mortgage 1/10 at 100.00 Aa2 4,885,100
Revenue Bonds (Single Family Mortgage Program), Series 2000F,
6.250%, 7/01/28 (Alternative Minimum Tax)
2,165 Portland, Oregon, Limited Tax Improvement Bonds, 6/06 at 100.00 Aa2 2,334,368
1996 Series A, 5.550%, 6/01/16
-----------------------------------------------------------------------------------------------------------------------------------
PENNSYLVANIA - 0.6%
2,400 Beaver County Industrial Development Authority, Pennsylvania, 7/05 at 102.00 A 2,584,944
Collateralized Pollution Control Revenue Refunding Bonds
(The Cleveland Electric Illuminating Company Beaver Valley Project),
Series 1995-A, 7.750%, 7/15/25
1,050 Delaware Valley Regional Finance Authority, Pennsylvania, No Opt. Call AAA 1,161,384
Local Government Revenue Bonds, Series 1997B, 5.700%, 7/01/27
27
Nuveen Premium Income Municipal Fund 2, Inc. (NPM) (continued)
Portfolio of INVESTMENTS October 31, 2002
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
-----------------------------------------------------------------------------------------------------------------------------------
PUERTO RICO - 0.2%
$ 1,375 Puerto Rico Electric Power Authority, Power Revenue Bonds, 7/05 at 100.00 A- $ 1,430,660
Series X, 5.500%, 7/01/25
-----------------------------------------------------------------------------------------------------------------------------------
RHODE ISLAND - 1.8%
12,000 Tobacco Settlement Financing Corporation of Rhode Island, 6/12 at 100.00 A1 11,602,080
Asset-Backed Bonds, Series 2002A, 6.125%, 6/01/32
-----------------------------------------------------------------------------------------------------------------------------------
SOUTH CAROLINA - 6.4%
15,445 Greenville County School District, South Carolina, Installment 12/12 at 101.00 AA- 16,758,134
Purchase Revenue Bonds, Series 2002, 5.875%, 12/01/17
2,135 School District No. 4 of Lexington County, South Carolina, 7/04 at 102.00 Baa2 2,321,193
Certificates of Participation, Series 1994, 7.000%, 7/01/12
7,600 Piedmont Municipal Power Agency, South Carolina, Electric 1/03 at 100.00 AAA 6,567,008
Revenue Refunding Bonds, Series 1991, 4.000%, 1/01/23
15,000 Tobacco Settlement Revenue Management Authority, 5/11 at 101.00 A1 14,821,200
South Carolina, Tobacco Settlement Asset-Backed Bonds,
Series 2001B, 6.000%, 5/15/22
-----------------------------------------------------------------------------------------------------------------------------------
SOUTH DAKOTA - 2.6%
5,830 South Dakota Housing Development Authority, Homeownership 5/07 at 102.00 AAA 5,962,166
Mortgage Bonds, 1997 Series F, 5.800%, 5/01/28 (Alternative
Minimum Tax)
9,860 South Dakota Building Authority, Revenue Bonds, Series 1992, 3/03 at 102.00 AAA 10,216,636
6.700%, 9/01/17
-----------------------------------------------------------------------------------------------------------------------------------
TENNESSEE - 0.3%
1,500 Memphis-Shelby County Airport Authority, Tennessee, Airport 3/10 at 101.00 AAA 1,627,905
Revenue Bonds, Series 1999D, 6.000%, 3/01/19
(Alternative Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
TEXAS - 13.1%
5,000 Brazos River Authority, Texas, Pollution Control Revenue Bonds, 5/08 at 102.00 AAA 5,651,900
Texas Utilities Electric Company Project, Series 1998A Refunding,
5.550%, 5/01/33 (Alternative Minimum Tax) (Pre-refunded
to 5/01/08)
5,000 Brazos River Authority, Texas, Pollution Control Revenue Bonds, 4/08 at 102.00 AAA 5,644,100
Texas Utilities Electric Company Project, Series 1995C,
5.550%, 6/01/30 (Alternative Minimum Tax) (Pre-refunded
to 4/01/08)
10,000 Brazos River Harbor Navigation District, Braoria County, Texas, 5/12 at 101.00 A 9,868,300
Environmental Facilities Revenue Bonds, Dow Chemical
Company Project, 2002 Series A-6, 6.250%, 5/15/33
(Alternative Minimum Tax) (Mandatory put 5/15/17)
10,000 Coppell Independent School District, Dallas County, Texas, No Opt. Call AAA 2,427,300
Unlimited Tax School Building and Refunding Bonds, Series 2001,
0.000%, 8/15/28
3,345 City of Fort Worth, Texas, Water and Sewer Revenue Bonds, 2/12 at 100.00 AA 3,626,549
Series 2001, 5.625%, 2/15/19
1,635 Garland Independent School District, Dallas County, Texas, 2/07 at 100.00 AAA 1,587,716
School Building Unlimited Tax Bonds, Series 1997-A,
4.000%, 2/15/15
5,000 Gulf Coast Industrial Development Authority, Texas, Waste 6/08 at 102.00 Baa2 4,444,750
Disposal Revenue Bonds (Valero Refining and Marketing
Company Project), Series 1997, 5.600%, 12/01/31 (Alternative
Minimum Tax)
2,800 Harris County-Houston Sports Authority, Texas, Senior Lien 11/11 at 100.00 AAA 2,857,484
Revenue Bonds, Series 2001G, 5.250%, 11/15/30
790 Hidalgo County Housing Finance Corporation, Texas, Single Family 4/04 at 102.00 Aaa 816,031
Mortgage Revenue Bonds (GNMA and FNMA Collateralized),
Series 1994A, 7.000%, 10/01/27 (Alternative Minimum Tax)
City of Houston, Texas, Hotel Occupancy Tax and Special Revenue
Bonds, Convention Project, Series 2001B:
25,850 0.000%, 9/01/25 No Opt. Call AAA 7,406,284
26,610 0.000%, 9/01/26 No Opt. Call AAA 7,201,198
1,000 Humble Independent School District, Harris County, Texas, 2/10 at 100.00 AAA 873,610
Unlimited Tax Schoolhouse Bonds, Series II 1997,
3.500%, 2/15/18
29
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
-----------------------------------------------------------------------------------------------------------------------------------
TEXAS (continued)
$ 6,185 Keller Independent School District, Tarrant County, Texas, 8/11 at 100.00 AAA $ 6,317,668
Unlimited Tax General Obligation Refunding Bonds, Series 2001,
5.250%, 8/15/26
1,760 City of Laredo, Texas, Sports Venue Sales Tax Revenue Bonds, 3/09 at 100.00 AAA 1,938,411
Series 2001, 5.750%, 3/15/16
2,000 Pearland Independent School District, Brazoria County, Texas, 2/11 at 100.00 AAA 2,049,120
Unlimited Tax Schoolhouse Bonds, 2001 Series A, 5.250%, 2/15/22
3,935 Spring Branch Independent School District, Harris County, 2/11 at 100.00 AAA 3,966,834
Texas, Limited Tax Schoolhouse and Refunding Bonds,
Series 2001, 5.125%, 2/01/26
7,490 State of Texas, General Obligation Bonds, Veterans Housing 12/03 at 102.00 Aa1 7,831,244
Assistance Program Fund, Series 1993, 6.800%, 12/01/23
(Alternative Minimum Tax)
3,900 State of Texas, General Obligation Bonds, Veterans Housing 12/11 at 101.00 Aa1 3,874,182
Assistance Program Fund II, Series 2001C-1, 5.200%, 12/01/21
(Alternative Minimum Tax)
Weatherford Independent School District, Parker County, Texas,
Unlimited Tax School Building and Refunding Bonds, Series 2001:
6,945 0.000%, 2/15/25 2/11 at 44.73 AAA 1,941,753
6,945 0.000%, 2/15/27 2/11 at 39.75 AAA 1,723,888
-----------------------------------------------------------------------------------------------------------------------------------
UTAH - 1.2%
1,520 Utah Housing Finance Agency, Single Family Mortgage Bonds 7/04 at 102.00 AAA 1,563,153
(Federally Insured or Guaranteed Mortgage Loans), 1994 Issue B,
6.450%, 7/01/14
995 Utah Housing Finance, Single Family Mortgage Bonds, 7/07 at 101.50 AAA 1,032,631
1997 Series E2, Class I, 5.875%, 1/01/19 (Alternative Minimum Tax)
1,355 Utah Housing Finance Agency, Single Family Mortgage Bonds, 1/09 at 101.50 AAA 1,405,000
1997 Series C, 5.600%, 7/01/18 (Alternative Minimum Tax)
3,000 Municipal Building Authority of Weber County, Utah, Lease 12/04 at 102.00 AAA 3,412,710
Revenue Bonds, Series 1994, 7.500%, 12/15/19 (Pre-refunded
to 12/15/04)
-----------------------------------------------------------------------------------------------------------------------------------
VERMONT - 1.1%
6,620 Vermont Housing Finance Agency, Single Family Housing Bonds, 11/02 at 102.00 A+ 6,715,127
Series 4, 6.400%, 11/01/25
-----------------------------------------------------------------------------------------------------------------------------------
WASHINGTON - 3.0%
7,635 Public Hospital District No. 2, King County, Washington, Limited 6/11 at 101.00 AAA 7,572,010
Tax General Obligation Bonds, Evergreen Healthcare,
Series 2001A, 5.000%, 12/01/30
10,080 King County School District No. 401, Highline, Washington, 6/12 at 100.00 AAA 11,042,232
General Obligation Bonds, Series 2002, 5.500%, 12/01/16
-----------------------------------------------------------------------------------------------------------------------------------
WEST VIRGINIA - 1.3%
7,000 County Commission of Harrison County, West Virginia, Solid 5/03 at 102.00 AAA 7,264,460
Waste Disposal Revenue Bonds (The Potomac Edison
Company - Harrison Station Project), Series B, 6.250%, 5/01/23
(Alternative Minimum Tax)
1,000 County Commission of Pleasants County, West Virginia, Pollution 4/09 at 101.00 AAA 1,029,060
Control Revenue Bonds (West Penn Power Company - Pleasants
Station Project), 1999 Series E, 5.500%, 4/01/29 (Alternative
Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
WISCONSIN - 0.5%
3,215 Wisconsin Health and Educational Facilities Authority, Revenue 2/07 at 102.00 AAA 3,393,850
Bonds (Marshfield Clinic Project), Series 1997, 5.625%, 2/15/17
-----------------------------------------------------------------------------------------------------------------------------------
$ 1,042,191 Total Long-Term Investments (cost $855,770,471) - 143.4% 900,123,466
=============----------------------------------------------------------------------------------------------------------------------
29
Nuveen Premium Income Municipal Fund 2, Inc. (NPM) (continued)
Portfolio of INVESTMENTS October 31, 2002
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
-----------------------------------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS - 5.7%
$ 4,000 Harris County Health Facilities Development Corporation, Texas, A-1+ $ 4,000,000
Variable Rate Demand Bonds, St. Luke's Episcopal Hospital
Refunding, Series 2001B, 2.000%, 2/15/31+
8,465 Illinois Health Facilities Authority, Revenue Bonds, University VMIG-1 8,465,000
of Chicago Hospitals, Series 1994C, Variable Rate Demand
Obligations, 2.000%, 8/15/26+
3,355 Lower Neches Valley Authority, Texas, Industrial Development VMIG-1 3,355,000
Corporation Exempt Facilities Revenue Bonds, Exxon Mobil
Project, Series 2001B, Variable Rate Demand Obligations,
1.900%, 11/01/29+
4,400 New Jersey Educational Facilities Authority, Revenue Bonds, VMIG-1 4,400,000
Princeton University, Variable Rate Demand Obligations,
Series 2002B, 1.700%, 7/01/22+
13,550 North Central Texas Health Facilities Development Corporation, A-1+ 13,550,000
Hospital Revenue Bonds (Methodist Hospitals of Dallas),
Series 1985-B, Variable Rate Demand Bonds, 2.000%, 10/01/15+
2,000 Ohio Higher Educational Facilities Revenue Bonds, Case Western VMIG-1 2,000,000
Reserve University Project, Series 2002A, Variable Rate
Demand Obligations, 1.850%, 10/01/31+
-----------------------------------------------------------------------------------------------------------------------------------
$ 35,770 Total Short-Term Investments (cost $35,770,000) 35,770,000
=============----------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 6.2% 38,765,798
-------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (55.3)% (347,000,000)
-------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $627,659,264
===================================================================================================================
(1) All percentages shown in the Portfolio of Investments
are based on net assets applicable to Common shares.
* 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. Such securities are normally
considered to be equivalent to AAA rated securities.
N/R Investment is not rated.
+ Security has a maturity of more than one year, but has
variable rate and demand features which qualify it as a
short-term security. The rate disclosed is that
currently in effect. This rate changes periodically
based on market conditions or a specified market index.
See accompanying notes to financial statements.
30
Nuveen Premium Income Municipal Fund 4, Inc. (NPT)
Portfolio of
INVESTMENTS October 31, 2002
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
-----------------------------------------------------------------------------------------------------------------------------------
ALABAMA - 6.0%
$ 4,000 Alabama Higher Education Loan Corporation, Student Loan No Opt. Call AAA $ 4,214,760
Revenue Bonds, Series 1994D Refunding, 5.850%, 9/01/04
(Alternative Minimum Tax)
2,500 Alabama Housing Finance Authority, Multifamily Housing Revenue 2/11 at 102.00 AAA 2,627,350
Bonds, South Bay Apartments Project, 2000 Series K,
5.950%, 2/01/33 (Alternative Minimum Tax)
11,745 Alabama Special Care Facilities Financing Authority of Birmingham, 11/05 at 101.00 Aaa 11,814,648
Hospital Revenue Bonds (Daughters of Charity National
Health System - Providence Hospital and St. Vincent's Hospital),
Series 1995, 5.000%, 11/01/25
5,150 Alabama 21st Century Authority, Tobacco Settlement Revenue 12/11 at 101.00 Aa1 5,287,763
Bonds, Series 2001, 5.750%, 12/01/16
11,000 DCH Health Care Authority, Alabama, Health Care Facilities 12/02 at 102.00 A+ 11,084,810
Revenue Bonds, Series 1993-B, 5.750%, 6/01/23
-----------------------------------------------------------------------------------------------------------------------------------
ARKANSAS - 0.1%
205 Arkansas Development Finance Authority, Single Family Mortgage 2/03 at 102.00 AA 209,613
Revenue Refunding Bonds (FHA-Insured or VA Guaranteed
Mortgage Loans), 1991 Series A, 8.000%, 8/15/11
198 City of Jacksonville, Arkansas, Residential Housing Facilities 7/03 at 103.00 Aaa 205,568
Board, Single Family Mortgage Revenue Refunding Bonds,
Series 1993A, 7.900%, 1/01/11
325 Residential Housing Facilities Board of Lonoke County, Arkansas, 4/05 at 103.00 Aaa 343,168
Single Family Mortgage Revenue Refunding Bonds, Series 1993A,
7.900%, 4/01/11
-----------------------------------------------------------------------------------------------------------------------------------
CALIFORNIA - 2.8%
4,780 Foothill-Eastern Transportation Corridor Agency, California, No Opt. Call AAA 2,944,910
Toll Road Revenue Bonds, Series 1995A, 0.000%, 1/01/14
1,715 Housing Authority of Merced County, California, Multifamily 1/04 at 102.00 Aaa 1,768,199
Housing Refunding Revenue Bonds (Belmont Park Apartments
Project), Series 1993A, 5.875%, 1/01/19
5,000 Airports Commission of the City and County of San Francisco, 5/04 at 101.00 AAA 5,327,850
California, San Francisco International Airport Second Series
Revenue Bonds, Issue 8A, 6.300%, 5/01/25 (Alternative
Minimum Tax)
3,545 Redevelopment Agency of San Leandro, California, Tax 6/03 at 102.00 A- 3,677,760
Allocation Bonds, Plaza 1 and Plaza 2 Redevelopment Projects,
1993 Series A, 6.125%, 6/01/23
1,945 South Gate Public Financing Authority, Los Angeles County, No Opt. Call AAA 2,305,467
California, Water Revenue Refunding Bonds, 1996 Series A,
6.000%, 10/01/12
-----------------------------------------------------------------------------------------------------------------------------------
COLORADO - 2.7%
2,810 Colorado Housing and Finance Authority, Single Family Program 10/09 at 105.00 Aa2 2,999,366
Senior Bonds, 1999 Series C-3, 6.750%, 10/01/21
3,040 City and County of Denver, Colorado, Airport System Revenue No Opt. Call A 3,752,485
Bonds, Series 1991D, 7.750%, 11/15/13 (Alternative Minimum Tax)
4,140 City and County of Denver, Colorado, Airport System Revenue 11/02 at 102.00 A 4,230,542
Bonds, Series 1992C, 6.750%, 11/15/22 (Alternative Minimum
Tax) (Pre-refunded to 11/15/02)
4,345 El Paso County School District No. 20, Academy, Colorado, 12/12 at 100.00 AAA 4,678,826
General Obligation Bonds, Series 2002, 5.250%, 12/15/17
-----------------------------------------------------------------------------------------------------------------------------------
CONNECTICUT - 0.5%
3,000 Connecticut Housing Finance Authority, Housing Mortgage 5/06 at 102.00 AAA 3,191,190
Finance Program Bonds, 1996 Series C-2, 6.250%, 11/15/18
31
Nuveen Premium Income Municipal Fund 4, Inc. (NPT) (continued)
Portfolio of INVESTMENTS October 31, 2002
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
-----------------------------------------------------------------------------------------------------------------------------------
DISTRICT OF COLUMBIA - 5.9%
$ 6,000 District of Columbia, General Obligation Bonds, Series 1993B-2, No Opt. Call AAA $ 6,739,920
5.500%, 6/01/10
1,975 District of Columbia, Hospital Revenue Refunding Bonds 2/03 at 102.00 A-*** 2,062,493
(Medlantic Healthcare Group, Inc. Issue), Series 1992B,
6.750%, 8/15/07
4,250 District of Columbia, Hospital Revenue Refunding Bonds 8/06 at 102.00 AAA 4,799,695
(Medlantic Healthcare Group, Inc. Issue), Series 1993A,
5.750%, 8/15/14
5 District of Columbia, General Obligation Bonds, Series 1993E, 6/03 at 102.00 AAA 5,210
6.000%, 6/01/09
District of Columbia, General Obligation Refunding Bonds,
Series 1993A:
1,585 6.000%, 6/01/07 No Opt. Call AAA 1,807,930
7,215 6.000%, 6/01/07 No Opt. Call AAA 8,185,490
District of Columbia, General Obligation Bonds, Series 1993E:
325 6.000%, 6/01/09 (Pre-refunded to 6/01/03) 6/03 at 102.00 AAA 339,615
4,485 6.000%, 6/01/09 6/03 at 102.00 AAA 4,678,348
District of Columbia, University Revenue Bonds, Georgetown
University Issue, Series 2001A:
9,670 0.000%, 4/01/26 4/11 at 42.15 AAA 2,492,539
15,235 0.000%, 4/01/30 4/11 at 32.93 AAA 3,056,903
-----------------------------------------------------------------------------------------------------------------------------------
FLORIDA - 4.4%
9,000 Jacksonville Electric Authority, Florida, Water and Sewer System 10/05 at 100.00 Aa3 9,128,070
Revenue Bonds, 2001 Series A, 5.200%, 10/01/20
5,000 Martin County Industrial Development Authority, Florida, Industrial 12/04 at 102.00 BBB- 5,149,200
Development Revenue Bonds, Indiantown Cogeneration,
L.P. Project, Series 1994A, 7.875%, 12/15/25 (Alternative
Minimum Tax)
1,380 Miami-Dade County Housing Finance Authority, Florida, 1/11 at 102.00 AAA 1,472,488
Multifamily Revenue Bonds, Sunset Bay Apartments Project,
Series 2000-5A, 5.850%, 7/01/20 (Alternative Minimum Tax)
9,500 City of Sunrise, Florida, Utility System Revenue Refunding 10/18 at 100.00 AAA 9,654,280
Bonds, Series 1998, 5.000%, 10/01/28
-----------------------------------------------------------------------------------------------------------------------------------
GEORGIA - 2.5%
3,400 City of Atlanta, Georgia, Water and Wastewater Revenue Bonds, No Opt. Call AAA 3,715,350
Series 1999A, 5.500%, 11/01/22
670 Development Authority of Burke County, Georgia, Pollution Control No Opt. Call AAA 676,499
Revenue Bonds (Oglethorpe Power Corporation - Vogtle
Project), Series 1992, 7.500%, 1/01/03
2,880 Municipal Electric Authority of Georgia, General Power Revenue No Opt. Call A+ 3,735,878
Bonds, Series 1992B, 8.250%, 1/01/11
5,500 Municipal Electric Authority of Georgia, General Power Revenue No Opt. Call AAA 6,237,000
Bonds, Series 1993B, 5.700%, 1/01/19
-----------------------------------------------------------------------------------------------------------------------------------
HAWAII - 0.9%
City and County of Honolulu, Hawaii, Refunding and Improvement
General Obligation Bonds, Series 1993B:
1,580 5.000%, 10/01/13 No Opt. Call Aaa 1,747,338
3,420 5.000%, 10/01/13 No Opt. Call AA- 3,743,771
-----------------------------------------------------------------------------------------------------------------------------------
ILLINOIS - 17.0%
4,000 Chicago Board of Education, Illinois, General Obligation Lease No Opt. Call AAA 4,776,760
Certificates, 1992 Series A, 6.250%, 1/01/15
5,550 City of Chicago, Illinois, Midway Airport Revenue Bonds, 1/11 at 101.00 AAA 5,534,682
Series 2001A, 5.125%, 1/01/26 (Alternative Minimum Tax)
5,000 City of Chicago, Illinois, Sales Tax Revenue Bonds, Series 1998, 7/08 at 102.00 AAA 5,081,600
5.250%, 1/01/28
Cook County School District 99, Cicero, Illinois, General
Obligation School Bonds, Series 1997:
1,455 8.500%, 12/01/13 No Opt. Call Aaa 2,022,144
1,685 8.500%, 12/01/15 No Opt. Call Aaa 2,390,577
6,205 Illinois Development Finance Authority, Revenue Bonds (Greek 4/11 at 105.00 Aaa 7,412,121
American Nursing Home Project), Series 2000A, 7.600%, 4/20/40
1,140 Illinois Development Finance Authority, Child Care Facility Revenue 3/03 at 102.00 N/R 1,164,647
Bonds (Illinois Facilities Fund Project), Series 1992,
7.400%, 9/01/04
1,255 Illinois Educational Facilities Authority, Revenue Bonds, Chicago 1/03 at 100.00 AAA 1,389,021
College of Osteopathic Medicine, Series A, 8.750%, 7/01/05
32
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
-----------------------------------------------------------------------------------------------------------------------------------
ILLINOIS (continued)
$ 3,000 Illinois Health Facilities Authority, Revenue Refunding Bonds 10/03 at 102.00 A-*** $ 3,161,940
(Illinois Masonic Medical Center), Series 1993, 5.500%, 10/01/19
(Pre-refunded to 10/01/03)
Illinois Health Facilities Authority, Revenue Refunding Bonds
(Lutheran General Health System), Series 1993C:
5,705 7.000%, 4/01/08 No Opt. Call A+ 6,562,633
4,075 7.000%, 4/01/14 No Opt. Call A+ 4,970,441
8,190 Illinois Housing Development Authority, Multifamily Program 9/04 at 102.00 A+ 8,517,846
Bonds, Series 5, 6.650%, 9/01/14
3,410 Illinois Housing Development Authority, Section 8 Elderly Housing 11/02 at 102.00 A 3,481,030
Revenue Bonds (Skyline Towers Apartments), Series 1992B,
6.875%, 11/01/17
1,130 Illinois Housing Development Authority, Section 8 Elderly Housing 1/03 at 102.00 A*** 1,161,516
Revenue Bonds (Morningside North Development), Series 1992D,
6.600%, 1/01/07 (Pre-refunded to 1/01/03)
9,795 Community Unit School District No. 220, Lake, Cook, Kane and No Opt. Call AAA 10,645,500
McHenry Counties, Illinois, General Obligation Bonds,
Series 2002, 5.250%, 12/01/19
2,025 Long Creek Township, Macon County, Illinois, Waterworks 5/03 at 100.00 N/R 2,040,896
Refunding Revenue Bonds, Series 1993, 7.250%, 5/01/23
4,540 Metropolitan Pier and Exposition Authority, Illinois, 6/12 at 101.00 AAA 4,536,459
McCormick Place Expansion Project Revenue Bonds,
Series 2002A, 5.000%, 12/15/28
3,050 Regional Transportation Authority, Cook, DuPage, Kane, Lake, No Opt. Call AAA 3,967,989
McHenry and Will Counties, Illinois, General Obligation Bonds,
Series 1990A, 7.200%, 11/01/20
14,375 Village of Wheeling, Illinois, Multifamily Housing Revenue 2/03 at 100.00 AAA 14,410,938
Bonds (FHA-Insured Mortgage Loan - Arlington Club Project),
Series 1993A, 6.400%, 2/01/40
3,735 Wood River Township Hospital, Madison County, Illinois, 2/04 at 102.00 N/R 3,105,540
General Obligation Bonds (Alternate Revenue Source),
Series 1993, 6.625%, 2/01/14
3,725 Wood River Township Hospital, Madison County, Illinois, 2/04 at 102.00 N/R 3,064,781
General Obligation Tort Immunity Bonds, Series 1993,
6.500%, 2/01/14
-----------------------------------------------------------------------------------------------------------------------------------
INDIANA - 6.5%
2,250 Indiana Bond Bank, Special Program Bonds, Series 1992B, 2/03 at 102.00 A+*** 2,323,440
6.750%, 8/01/12 (Pre-refunded to 2/01/03)
22,000 Indiana Health Facility Financing Authority, Hospital Revenue 8/10 at 101.50 AAA 22,733,260
Bonds, Clarian Health Obligated Group, Series 2000A,
5.500%, 2/15/30
2,100 City of Indianapolis, Indiana, Economic Development Revenue 7/03 at 103.00 Caa 1,617,672
Bonds (The Meadows - Section 8 Assisted Project),
Series 1993A, 6.000%, 7/01/23 (Alternative Minimum Tax)
2,000 Hospital Authority of Kokomo, Indiana, Hospital Revenue 8/03 at 102.00 N/R*** 2,144,740
Refunding Bonds (St. Joseph Hospital and Health Center of
Kokomo), Series 1993, 6.250%, 8/15/05
5,000 M.S.D. of Warren Township, Vision 2005 School Building 1/11 at 100.00 AAA 5,271,100
Corporation, Marion County, Indiana, First Mortgage Bonds,
Series 2000, 5.500%, 7/15/20
3,615 Mooresville Consolidated School Building Corporation, Morgan 1/04 at 101.00 N/R*** 3,838,515
County, Indiana, First Mortgage Bonds, Series 1994A,
6.200%, 7/15/15 (Pre-refunded to 1/15/04)
-----------------------------------------------------------------------------------------------------------------------------------
IOWA - 0.0%
225 City of Davenport, Iowa, Home Ownership Mortgage Revenue 9/04 at 102.00 Aa2 233,123
Refunding Bonds, Series 1994, 7.900%, 3/01/10
-----------------------------------------------------------------------------------------------------------------------------------
KANSAS - 3.2%
635 Johnson County, Kansas, Single Family Mortgage Revenue 5/04 at 103.00 Aa2 663,619
Refunding Bonds, Series 1994, 7.100%, 5/01/12
Kansas Development Finance Authority, Multifamily Housing
Refunding Revenue Bonds (First Kansas State Partnership, L.P.
Project), Series 1998Y:
7,910 6.000%, 12/01/20 (Alternative Minimum Tax) 12/08 at 101.00 N/R 7,180,303
2,460 6.125%, 12/01/28 (Alternative Minimum Tax) 12/08 at 101.00 N/R 2,176,756
33
Nuveen Premium Income Municipal Fund 4, Inc. (NPT) (continued)
Portfolio of INVESTMENTS October 31, 2002
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
-----------------------------------------------------------------------------------------------------------------------------------
KANSAS (continued)
$ 485 Labette County, Kansas, Single Family Mortgage Revenue 6/03 at 103.00 Aa2 $ 502,222
Refunding Bonds, 1993 Series A, 8.400%, 12/01/11
2,000 City of Olathe, Kansas, Health Facilities Revenue Bonds, Olathe 9/10 at 100.00 AAA 2,072,540
Medical Center Project, Series 2000A, 5.500%, 9/01/25
6,825 Sedgwick County Unified School District No. 259, Wichita, Kansas, 9/10 at 100.00 AA 6,189,934
General Obligation Bonds, Series 2000, 3.500%, 9/01/16
-----------------------------------------------------------------------------------------------------------------------------------
KENTUCKY - 0.2%
1,015 Kentucky Housing Corporation, Housing Revenue Bonds, 1996 7/06 at 102.00 AAA 1,066,958
Series A, 6.375%, 7/01/28 (Alternative Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
LOUISIANA - 1.7%
3,170 Clover Dale Housing Corporation, Louisiana, Multifamily Mortgage 4/03 at 100.00 AA- 3,184,962
Revenue Refunding Bonds (Clover Dale Plaza - FHA-Insured
Mortgage - Section 8 Assisted Project), 1995 Series A,
6.550%, 2/01/22
5,815 Orleans Levee District (A Political Subdivision of the State 12/05 at 103.00 AAA 6,536,002
of Louisiana), Levee Improvement Bonds, Series 1986,
5.950%, 11/01/14
-----------------------------------------------------------------------------------------------------------------------------------
MAINE - 3.7%
7,520 Maine Educational Loan Marketing Corporation, Subordinate No Opt. Call A2 8,065,050
Student Loan Revenue Bonds, Series 1994-B2, 6.250%, 11/01/06
(Alternative Minimum Tax)
12,720 Maine State Housing Authority, Mortgage Purchase Bonds, 5/10 at 100.00 AA+ 13,298,251
2000 Series C-1, 6.050%, 11/15/31 (Alternative Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
MARYLAND - 3.0%
4,365 Community Development Administration, Maryland Department 1/07 at 102.00 Aa2 4,634,626
of Housing and Community Development, Housing Revenue
Bonds, Series 1996A, 5.875%, 7/01/16
2,900 Community Development Administration, Maryland Department 7/07 at 102.00 Aa2 3,031,544
of Housing and Community Development, Housing Revenue
Bonds, Series 1997A, 6.000%, 7/01/39 (Alternative Minimum Tax)
6,800 Housing Opportunities Commission of Montgomery County, 7/06 at 102.00 Aa2 7,177,060
Maryland, Multifamily Housing Revenue Bonds, 1996 Series B,
6.400%, 7/01/28 (Alternative Minimum Tax)
2,315 Housing Opportunities Commission of Montgomery County, 7/10 at 100.00 Aaa 2,469,110
Maryland, Multifamily Housing Development Bonds,
Series 2000B, 6.125%, 7/01/20 (Alternative Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
MASSACHUSETTS - 0.4%
2,000 Massachusetts Housing Finance Agency, Housing Project Revenue 4/03 at 102.00 A+ 2,077,540
Bonds, Series 1993A Refunding, 6.300%, 10/01/13
-----------------------------------------------------------------------------------------------------------------------------------
MICHIGAN - 8.1%
5,000 City of Detroit, Michigan, Convention Facility Limited Tax Revenue 9/03 at 102.00 AAA 5,238,150
Refunding Bonds (Cobo Hall Expansion Project), Series 1993,
5.250%, 9/30/12
10,225 City of Detroit, Michigan, Water Supply System Revenue Senior 7/07 at 101.00 AAA 10,214,264
Lien Bonds, Series 1997-A, 5.000%, 7/01/27
Hancock Hospital Finance Authority, Michigan, FHA-Insured
Mortgage Hospital Revenue Bonds (Portage Health System, Inc.),
Series 1998:
2,545 4.625%, 8/01/18 8/08 at 100.00 AAA 2,634,177
4,400 5.450%, 8/01/47 8/08 at 100.00 AAA 4,484,304
2,000 Michigan State Hospital Finance Authority, Hospital Revenue No Opt. Call BBB- 2,006,560
and Refunding Bonds (The Detroit Medical Center Obligated
Group), Series 1993B, 5.000%, 8/15/03
3,150 Michigan State Hospital Finance Authority, Hospital Revenue 2/03 at 102.00 AAA 3,222,482
and Refunding Bonds (Bon Secours Health System Project),
Series 1992, 6.100%, 8/15/22
10,500 Michigan State Hospital Finance Authority, Hospital Revenue 8/08 at 101.00 BBB- 8,987,265
Bonds (The Detroit Medical Center Obligated Group),
Series 1998A, 5.250%, 8/15/23
34
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
-----------------------------------------------------------------------------------------------------------------------------------
MICHIGAN (continued)
$ 3,750 Michigan Strategic Fund, Limited Obligation Refunding Revenue 6/03 at 102.00 AAA $ 3,907,200
Bonds (Consumers Power Company Project), Collateralized
Series 1993B, 5.800%, 6/15/10
6,000 County of Monroe, Michigan, Pollution Control Revenue Bonds 9/03 at 102.00 AAA 6,314,100
(The Detroit Edison Company Project), Series CC-1992,
6.550%, 9/01/24 (Alternative Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
MINNESOTA - 2.6%
4,670 Minneapolis-St. Paul Housing Finance Board, Minnesota, 11/07 at 102.00 AAA 4,804,543
Single Family Mortgage Revenue Bonds, FNMA/GNMA Backed
Program, Phase XI-AB, 5.800%, 11/01/30 (Alternative Minimum Tax)
3,500 Minneapolis-St. Paul Metropolitan Airports Commission, 1/11 at 100.00 AAA 3,573,115
Minnesota, Airport Revenue Bonds, Series 2001A,
5.250%, 1/01/25
4,000 Minneapolis Community Development Agency, Minnesota, 12/02 at 102.00 A- 4,108,760
Limited Tax Supported Development Revenue Bonds,
Common Bond Fund, Series 1992-G3, 7.375%, 12/01/12
2,720 City of Minnetonka, Minnesota, Multifamily Housing Revenue 12/04 at 102.00 AAA 2,836,144
Refunding Bonds (GNMA Collateralized Mortgage Loan - Brier
Creek Project), Series 1994A, 6.450%, 6/20/24
-----------------------------------------------------------------------------------------------------------------------------------
MISSISSIPPI - 1.4%
2,000 Mississippi Higher Education Assistance Corporation, Student 3/03 at 102.00 Aaa 2,043,940
Loan Revenue Bonds, Senior Series 1993-B, 5.800%, 9/01/06
(Alternative Minimum Tax)
5,180 State of Mississippi, General Obligation Bonds, Series 2002A No Opt. Call AA 5,834,907
Refunding, 5.500%, 12/01/18
-----------------------------------------------------------------------------------------------------------------------------------
MISSOURI - 0.3%
2,000 City of St. Louis, Missouri, Airport Revenue Bonds, Airport 7/11 at 100.00 AAA 2,001,960
Development Program, Series 2001A, 5.000%, 7/01/26
-----------------------------------------------------------------------------------------------------------------------------------
NEBRASKA - 2.3%
9,000 Nebraska Higher Education Loan Program Inc., Senior Subordinate No Opt. Call AAA 9,929,070
Bonds, Series A-5A, 6.250%, 6/01/18 (Alternative Minimum Tax)
3,360 Nebraska Investment Finance Authority, Single Family Housing 3/07 at 101.50 AAA 3,449,712
Revenue Bonds, 1998 Series F, 5.600%, 9/01/20 (Alternative
Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
NEVADA - 3.2%
10,420 Clark County School District, Nevada, General Obligation Bonds, 6/12 at 100.00 AAA 11,306,534
Series 2002C, 5.500%, 6/15/18
4,500 Clark County School District, Nevada, General Obligation School No Opt. Call AAA 5,505,615
Improvement Bonds, Series 1991A, 7.000%, 6/01/10
1,510 Nevada Housing Division, Single Family Mortgage Bonds, 4/04 at 102.00 A1 1,565,070
1992 Senior Series B, 6.200%, 10/01/15
-----------------------------------------------------------------------------------------------------------------------------------
NEW HAMPSHIRE - 0.2%
835 New Hampshire Housing Finance Authority, Single Family 1/07 at 102.00 Aa2 886,444
Mortgage Acquisition Revenue Bonds, 1996 Series C,
6.200%, 7/01/16 (Alternative Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
NEW JERSEY - 2.9%
2,000 New Jersey Turnpike Authority, Turnpike Revenue Bonds, No Opt. Call AAA 2,433,960
Series 1991 C, 6.500%, 1/01/16
15,000 Tobacco Settlement Financing Corporation, New Jersey, Tobacco 6/12 at 100.00 A1 14,313,450
Settlement Asset-Backed Bonds, Series 2002, 5.750%, 6/01/32
-----------------------------------------------------------------------------------------------------------------------------------
NEW MEXICO - 0.1%
130 New Mexico Educational Assistance Foundation, Student Loan 12/02 at 101.00 A2 131,736
Revenue Bonds, Student Loan Revenue Bonds, Subordinate
1992 Series One B, 6.850%, 12/01/05 (Alternative Minimum Tax)
400 New Mexico Mortgage Finance Authority, Single Family Mortgage 1/03 at 102.00 AAA 407,488
Purchase Refunding Senior Bonds, 1992 Series A-2,
6.900%, 7/01/24
35
Nuveen Premium Income Municipal Fund 4, Inc. (NPT) (continued)
Portfolio of INVESTMENTS October 31, 2002
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
-----------------------------------------------------------------------------------------------------------------------------------
NEW YORK - 12.7%
$ 10,000 Erie County Industrial Development Agency, New York, Solid 12/10 at 103.00 N/R $ 2,212,500
Waste Disposal Facility Revenue Bonds (1998 CanFibre of
Lackawanna Project), 9.050%, 12/01/25 (Alternative
Minimum Tax)##
1,000 City of New York, New York, General Obligation Bonds, No Opt. Call A 1,077,390
Fiscal 1995 Series A, 7.000%, 8/01/04
3,500 City of New York, New York, General Obligation Bonds, No Opt. Call A 3,625,615
Fiscal 1996 Series B, 6.750%, 8/15/03
14,310 City of New York, New York, General Obligation Bonds, No Opt. Call A 15,480,129
Fiscal 1996 Series F, 6.500%, 2/01/05
New York City Transitional Finance Authority, New York, Future
Tax Secured Bonds, Fiscal 1998 Series C:
1,350 5.000%, 5/01/26 (Pre-refunded to 5/01/08) 5/08 at 101.00 AA+*** 1,498,514
15,565 5.000%, 5/01/26 5/08 at 101.00 AA+ 15,608,426
New York City Transitional Finance Authority, New York, Future
Tax Secured Bonds, Fiscal 2000 Series C:
3,630 5.875%, 11/01/16 (Pre-refunded to 5/01/10) 5/10 at 101.00 AA+*** 4,243,325
220 5.500%, 11/01/16 5/10 at 101.00 AA+ 248,593
5,000 5.500%, 11/01/24 5/10 at 101.00 AA+ 5,313,350
2,655 New York State Medical Care Facilities Finance Agency, Hospital 2/03 at 102.00 AAA 2,713,569
and Nursing Home FHA-Insured Mortgage Revenue Bonds,
1992 Series B, 6.200%, 8/15/22
4,200 New York State Medical Care Facilities Finance Agency, 2/05 at 102.00 AA 4,507,440
FHA-Insured Mortgage Project Revenue Bonds, 1995 Series B,
6.150%, 2/15/35
New York State Medical Care Facilities Finance Agency, Hospital
and Nursing Home FHA-Insured Mortgage Revenue Bonds, 1994 Series
A:
4,875 6.200%, 2/15/21 (Pre-refunded to 2/15/04) 2/04 at 102.00 AA*** 5,238,236
3,365 6.200%, 2/15/21 2/04 at 102.00 AA 3,579,351
7,500 New York State Thruway Authority, General Revenue Bonds, 1/05 at 102.00 AAA 8,282,400
Series C, 6.000%, 1/01/15 (Pre-refunded to 1/01/05)
-----------------------------------------------------------------------------------------------------------------------------------
NORTH CAROLINA - 0.4%
2,000 North Carolina Municipal Power Agency Number 1, Catawba No Opt. Call AAA 2,320,800
Electric Revenue Bonds, Series 1992, 6.000%, 1/01/11
-----------------------------------------------------------------------------------------------------------------------------------
NORTH DAKOTA - 0.0%
245 City of Minot, North Dakota, Single Family Mortgage Revenue 8/03 at 102.00 Aa2 252,149
Refunding Bonds, Series 1993, 7.700%, 8/01/10
-----------------------------------------------------------------------------------------------------------------------------------
OHIO - 4.3%
4,500 Akron, Bath and Copley Joint Township Hospital District, 11/02 at 102.00 Baa1 4,595,670
Ohio, Hospital Facilities Revenue Bonds (Summa Health
System Project), Series 1992, 6.250%, 11/15/07
9,000 City of Cleveland, Ohio, Airport System Revenue Bonds, 1/10 at 101.00 AAA 9,020,340
Series 2000A, 5.000%, 1/01/31
3,000 County of Franklin, Ohio, Development Revenue Bonds, American 10/09 at 101.00 A 3,242,070
Chemical Society Project, Series 1999, 5.800%, 10/01/14
1,000 County of Franklin, Ohio, Multifamily Housing Mortgage 1/05 at 103.00 Aa 1,010,640
Revenue Bonds (FHA-Insured Mortgage Loan - Hamilton Creek
Apartments Project), Series 1994A, 5.550%, 7/01/24 (Alternative
Minimum Tax)
2,360 Ohio Housing Finance Agency, Residential Mortgage Revenue 3/05 at 102.00 Aaa 2,479,912
Bonds (GNMA Mortgage-Backed Securities Programs),
1995 Series A-1, 6.300%, 9/01/17
4,370 City of Toledo, Ohio, General Obligation Bonds, Series 1994, 12/04 at 102.00 AAA 4,807,437
5.750%, 12/01/09 (Pre-refunded to 12/01/04)
-----------------------------------------------------------------------------------------------------------------------------------
OKLAHOMA - 3.5%
905 Oklahoma Housing Finance Agency, Single Family Mortgage 3/10 at 101.00 Aaa 957,345
Revenue Bonds (Homeownership Loan Program), 2000 Series C-2,
6.200%, 9/01/28 (Alternative Minimum Tax)
Oklahoma County Finance Authority, Multifamily Housing First
Mortgage Revenue Bonds (Multiple Apartments Project), Series
1998A:
3,495 7.000%, 4/01/18# 4/06 at 102.00 N/R 873,750
7,000 7.125%, 4/01/28# 4/06 at 102.00 N/R 1,750,000
7,265 Southwest Rural Development Authority, Oklahoma, Multifamily 6/09 at 100.00 N/R 3,923,100
Housing Revenue Bonds, Series 1999, 7.250%, 6/01/34#
9,895 Tulsa County Industrial Authority, Oklahoma, First Mortgage 3/11 at 101.00 N/R 8,700,278
Multifamily Housing Revenue Bonds (Stoneridge Apartments
Project), Series 1999, 6.125%, 3/01/39 (Alternative Minimum Tax)
36
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
-----------------------------------------------------------------------------------------------------------------------------------
OKLAHOMA (continued)
$ 3,340 Tulsa Industrial Authority, Oklahoma, Revenue and Refunding No Opt. Call AAA $ 3,960,104
Bonds, Hillcrest Medical Center Project, Series 1996,
6.500%, 6/01/09
-----------------------------------------------------------------------------------------------------------------------------------
PENNSYLVANIA - 0.9%
5,000 Pennsylvania Economic Development Finance Authority, Resource 1/04 at 102.00 BBB- 5,102,200
Recovery Revenue Bonds (Northampton Generating Project),
Senior Series 1994A, 6.400%, 1/01/09 (Alternative Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
PUERTO RICO - 2.6%
12,390 Commonwealth of Puerto Rico, Public Improvement Refunding No Opt. Call AAA 15,318,872
Bonds (General Obligation Bonds), Series 1997, 6.500%, 7/01/13
-----------------------------------------------------------------------------------------------------------------------------------
RHODE ISLAND - 3.3%
20,000 Tobacco Settlement Financing Corporation of Rhode Island, 6/12 at 100.00 A1 19,140,400
Asset-Backed Bonds, Series 2002A, 6.250%, 6/01/42
-----------------------------------------------------------------------------------------------------------------------------------
SOUTH CAROLINA - 2.8%
Piedmont Municipal Power Agency, South Carolina, Electric
Revenue Refunding Bonds, Series 1991:
5,000 6.250%, 1/01/21 No Opt. Call AAA 5,841,900
5,750 4.000%, 1/01/23 1/03 at 100.00 AAA 4,968,460
5,085 Piedmont Municipal Power Agency, South Carolina, Electric No Opt. Call AAA 5,691,946
Revenue Bonds, 1998A Refunding Series, 5.500%, 1/01/13
-----------------------------------------------------------------------------------------------------------------------------------
TENNESSEE - 0.6%
1,500 Metropolitan Government of Nashville and Davidson County, 5/08 at 102.00 AA 1,527,285
Tennessee, Electric System Revenue Bonds, 1998 Series A,
5.200%, 5/15/23
2,080 Tennessee Housing Development Agency, Mortgage Finance 7/04 at 102.00 AA 2,163,221
Program Bonds, 1994 Series A, 6.900%, 7/01/25 (Alternative
Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
TEXAS - 16.1%
4,500 Alliance Airport Authority, Inc., Texas, Special Facilities Revenue 12/02 at 100.00 BB- 1,215,000
Bonds (American Airlines, Inc. Project), Series 1990,
7.500%, 12/01/29 (Alternative Minimum Tax)
6,060 Alliance Airport Authority, Inc., Texas, Special Facilities Revenue No Opt. Call BB- 1,818,000
Bonds (American Airlines, Inc. Project), Series 1991,
7.000%, 12/01/11 (Alternative Minimum Tax)
3,345 Columbia-Brazoria Independent School District, Brazoria 2/09 at 100.00 AAA 3,222,372
County, Texas, Unlimited Tax School Building Bonds,
Series 1999, 4.750%, 2/01/25
8,000 Cities of Dallas and Fort Worth, Texas, Dallas-Fort Worth 11/11 at 100.00 AAA 8,636,480
International Airport, Joint Revenue Refunding and Improvement
Bonds, Series 2001A, 5.875%, 11/01/19 (Alternative Minimum Tax)
6,000 Garland Housing Finance Corporation, Texas, Multifamily 12/11 at 101.00 N/R 6,200,100
Housing Mortgage Revenue Bonds (Edgewood Drive
Apartments), Series 2000, 7.500%, 6/01/40 (Alternative
Minimum Tax)
8,345 Hillsboro Housing Finance Corporation, Texas, Multifamily Housing 6/09 at 100.00 N/R 5,340,800
Revenue Bonds, Series 1999, 7.250%, 6/01/34#
28,305 City of Houston, Texas, Hotel Occupancy Tax and Special No Opt. Call AAA 6,834,808
Revenue Bonds, Convention Project, Series 2001B,
0.000%, 9/01/28
7,500 City of Houston Water and Sewer System, Texas, Junior Lien No Opt. Call AAA 8,529,675
Revenue Refunding Bonds, Series 2002A, 5.750%, 12/01/32
5,000 City of Houston Water and Sewer System, Texas, Junior Lien 12/07 at 102.00 AAA 4,982,800
Revenue Refunding Bonds, Series 1997D, 5.000%, 12/01/25
7,195 Liberty County Housing Development Corporation, Texas, 6/09 at 100.00 N/R 6,619,400
Multifamily Housing Revenue Bonds, Series 1999,
7.250%, 6/01/34
583 Midland Housing Finance Corporation, Texas, Single Family 11/05 at 103.00 Aaa 631,423
Mortgage Revenue Refunding Bonds, Series 1992A,
8.450%, 12/01/11
Montgomery Independent School District, Montgomery County,
Texas, Unlimited Tax School Building and Refunding Bonds, Series
2001:
2,300 5.500%, 2/15/21 2/11 at 100.00 AAA 2,417,691
2,400 5.500%, 2/15/23 2/11 at 100.00 AAA 2,504,424
37
Nuveen Premium Income Municipal Fund 4, Inc. (NPT) (continued)
Portfolio of INVESTMENTS October 31, 2002
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
-----------------------------------------------------------------------------------------------------------------------------------
TEXAS (continued)
Mount Pleasant Independent School District, Titus County, Texas,
General Obligation Bonds, Series 2001 Refunding:
$ 3,025 5.000%, 2/15/26 8/11 at 100.00 Aaa $ 3,022,701
3,000 5.125%, 2/15/31 8/11 at 100.00 Aaa 3,021,300
2,215 North Texas Higher Education Authority, Inc., Texas, Student 4/03 at 102.00 A2 2,274,916
Loan Revenue Bonds, Series 1993D, 6.300%, 4/01/09
(Alternative Minimum Tax)
3,410 Retama Development Corporation, Texas, Special Facilities No Opt. Call AAA 4,832,038
Revenue Bonds (Retama Park Racetrack Project), Series 1993,
8.750%, 12/15/12
4,700 Spring Branch Independent School District, Harris County, Texas, 2/11 at 100.00 AAA 4,738,023
Limited Tax Schoolhouse and Refunding Bonds, Series 2001,
5.125%, 2/01/26
4,359 Texas General Services Commission, Participation Interests, 9/03 at 100.50 A 4,426,571
Series 1992, 7.500%, 9/01/22
8,500 Travis County Health Facilities Development Corporation, Texas, 11/03 at 102.00 Aaa 9,017,140
Hospital Revenue Bonds (Daughters of Charity National Health
System - Daughters of Charity Health Services of Austin),
Series 1993B, 6.000%, 11/15/22
7,295 Wilbarger County Housing Finance Corporation, Texas, Multifamily 6/09 at 100.00 N/R 3,939,300
Housing Revenue Bonds, Series 1999, 7.250%, 6/01/34#
-----------------------------------------------------------------------------------------------------------------------------------
UTAH - 6.4%
4,845 City of Bountiful, Davis County, Utah, Hospital Revenue 12/08 at 101.00 N/R 4,172,466
Refunding Bonds (South Davis Community Hospital Project),
Series 1998, 5.750%, 12/15/18
17,570 Intermountain Power Agency, Utah, Power Supply Revenue 7/07 at 102.00 AAA 19,407,998
Refunding Bonds, 1997 Series B, 5.750%, 7/01/19
Intermountain Power Agency, Utah, Power Supply Revenue Bonds,
Series 1996A:
5,065 6.150%, 7/01/14 7/06 at 102.00 A+*** 5,754,245
2,935 6.150%, 7/01/14 7/06 at 102.00 A+ 3,162,404
1,040 Utah Housing Finance Agency, Single Family Mortgage Bonds, 7/10 at 100.00 AA 1,095,453
2000 Series G, 5.875%, 7/01/27 (Alternative Minimum Tax)
Utah Housing Finance Agency, Single Family Mortgage Bonds,
2001 Series C:
2,445 5.500%, 1/01/18 (Alternative Minimum Tax) 1/11 at 100.00 AA- 2,512,433
980 5.650%, 1/01/21 (Alternative Minimum Tax) 1/11 at 100.00 Aa2 1,011,262
-----------------------------------------------------------------------------------------------------------------------------------
VIRGINIA - 0.5%
2,645 Suffolk Redevelopment and Housing Authority, Virginia, 1/03 at 103.00 Baa2 2,713,029
Multifamily Housing Revenue Refunding Bonds (Chase Heritage
at Dulles Project), Series 1994, 7.000%, 7/01/24
(Mandatory put 7/01/04)
-----------------------------------------------------------------------------------------------------------------------------------
WASHINGTON - 15.8%
1,050 City of Bellevue, King County, Washington, Water and Sewer 7/04 at 100.00 Aa2 1,112,150
Revenue Refunding Bonds, 1994, 5.875%, 7/01/09
1,855 Public Utility District No. 1 of Chelan County, Washington, 7/09 at 101.00 AA 1,979,062
Chelan Hydro Consolidated System Revenue Bonds, Series 1999A,
6.200%, 7/01/34 (Alternative Minimum Tax)
1,035 Covington Water District, King County, Washington, Water 3/05 at 100.00 AAA 1,129,371
Improvement and Refunding Revenue Bonds, Series 1995,
6.050%, 3/01/20 (Pre-refunded to 3/01/05)
1,655 Everett, Washington, General Obligation Bonds, Series 1997, 9/07 at 100.00 Aaa 1,720,290
Limited Tax, 5.125%, 9/01/17
1,000 Seattle Indian Services Commission, Washington, Special 11/04 at 100.00 AAA 1,069,590
Obligation Bonds, Series 1994, 6.000%, 11/01/16
1,640 Housing Authority of Skagit County, Washington, Low-Income 11/04 at 104.00 AAA 1,750,290
Housing Assistance Revenue Bonds (GNMA Collateralized
Mortgage Loan - Sea Mar Project), Series 1993,
7.000%, 6/20/35
1,500 Mukilteo School District No. 6, Snohomish County, Washington, No Opt. Call AAA 1,734,780
Unlimited Tax General Obligation and Refunding Bonds,
Series 1993, 5.700%, 12/01/12
1,570 Spokane Downtown Foundation, Washington, Parking Revenue 8/08 at 102.00 D 847,800
Bonds (River Park Square Project), Series 1998, 5.600%, 8/01/19
8,155 City of Tacoma, Washington, Electric System Revenue Bonds, 1/11 at 101.00 AAA 8,875,087
Series 2001A Refunding, 5.750%, 1/01/20
4,705 City of Tacoma, Washington, Sewer Revenue Bonds, No Opt. Call AAA 5,929,100
Series 1994B Refunding, 8.000%, 12/01/08
38
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
-----------------------------------------------------------------------------------------------------------------------------------
WASHINGTON (continued)
$ 5,000 Tobacco Settlement Authority, Washington, Tobacco 6/13 at 100.00 A1 $ 4,972,800
Settlement Asset-Backed Revenue Bonds, Series 2002,
6.500%, 6/01/26 (WI, settling 11/05/02)
State of Washington, General Obligation Bonds, Series 1994B:
45 6.000%, 5/01/19 (Pre-refunded to 5/01/04) 5/04 at 100.00 AA+*** 47,809
1,955 6.000%, 5/01/19 (Pre-refunded to 5/01/04) 5/04 at 100.00 AA+ 2,077,031
2,000 Washington Health Care Facilities Authority, Revenue Bonds 8/08 at 102.00 AA 1,939,420
(Highline Community Hospital), Series 1998, 5.000%, 8/15/21
1,000 Washington Health Care Facilities Authority, Revenue Bonds 8/13 at 102.00 AAA 986,650
(Harrison Memorial Hospital), Series 1998, 5.000%, 8/15/28
4,500 Washington Public Power Supply System, Nuclear Project No. 1 7/03 at 102.00 Aa1*** 4,711,815
Refunding Revenue Bonds, Series 1993A, 5.750%, 7/01/13
(Pre-refunded to 7/01/03)
23,000 Washington Public Power Supply System, Nuclear Project No. 1 7/03 at 102.00 Aa1 23,525,090
Refunding Revenue Bonds, Series 1993C, 5.375%, 7/01/15
Washington Public Power Supply System, Nuclear Project No. 2
Refunding Revenue Bonds, Series 1990A:
6,080 7.250%, 7/01/06 No Opt. Call Aa1*** 7,114,694
395 7.250%, 7/01/06 No Opt. Call Aa1 456,051
11,000 Washington Public Power Supply System, Nuclear Project No. 3 No Opt. Call Aa1 13,137,300
Refunding Revenue Bonds, Series 1993B, 7.000%, 7/01/09
4,700 Washington Public Power Supply System, Nuclear Project No. 3 7/08 at 102.00 Aa1 4,798,230
Refunding Revenue Bonds, Series 1998A, 5.125%, 7/01/18
1,400 Washington State University, Housing and Dining System 10/04 at 101.00 AAA 1,534,484
Revenue and Refunding Bonds, Series 1994, 6.375%, 10/01/18
(Pre-refunded to 10/01/04)
1,000 Yakima-Tieton Irrigation District, Yakima County, Washington, 6/03 at 102.00 AAA 1,042,590
Refunding Revenue Bonds, Series 1992, 6.125%, 6/01/13
-----------------------------------------------------------------------------------------------------------------------------------
WISCONSIN - 2.6%
7,000 Wisconsin Housing and Economic Development Authority, 7/10 at 100.00 AA 7,348,460
Home Ownership Revenue Bonds, 2000 Series E,
6.100%, 3/01/27 (Alternative Minimum Tax)
7,500 Wisconsin Health and Educational Facilities Authority, Revenue 2/12 at 101.00 AAA 7,584,970
Bonds, Ministry Health Care Inc., Series 2002A, 5.250%, 2/15/32
-----------------------------------------------------------------------------------------------------------------------------------
$ 937,135 Total Long-Term Investments (cost $892,154,305) - 155.1% 902,876,513
=============----------------------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS - 0.9%
5,000 New Jersey Educational Facilities Authority, Revenue Bonds, VMIG-1 5,000,000
Princeton University, Variable Rate Demand Obligations,
Series 2002B, 1.700%, 7/01/22+
-----------------------------------------------------------------------------------------------------------------------------------
$ 5,000 Total Short-Term Investments (cost $5,000,000) 5,000,000
=============----------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 2.1% 12,484,388
-------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (58.1)% (338,400,000)
-------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $581,960,901
===================================================================================================================
(1) All percentages shown in the Portfolio of Investments
are based on net assets applicable to Common shares.
* 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. Such securities are normally
considered to be equivalent to AAA rated securities.
N/R Investment is not rated.
(WI) Security purchased on a when-issued basis.
# Non-income producing security, in the case of a bond,
generally denotes that issuer has defaulted on the
payment of principal or interest or has filed for
bankruptcy.
## Non-income producing security. In September of 2002,
the Erie County Acquisition Corporation, Inc. (an
entity formed by Nuveen for the benefit of the Nuveen
Funds owning various interests in CanFibre of
Lackawanna) took possession of the CanFibre of
Lackawanna assets on behalf of the various Nuveen
Funds. Erie County Acquisition Corporation, Inc. has
determined that a sale of the facility is in the best
interests of shareholders and is proceeding
accordingly.
+ Security has a maturity of more than one year, but has
variable rate and demand features which qualify it as a
short-term security. The rate disclosed is that
currently in effect. This rate changes periodically
based on market conditions or a specified market index.
See accompanying notes to financial statements.
39
Statement of
ASSETS AND LIABILITIES October 31, 2002
PREMIUM INCOME PREMIUM INCOME 2 PREMIUM INCOME 4
(NPI) (NPM) (NPT)
------------------------------------------------------------------------------------------------------------------------------------
ASSETS
Investments in municipal securities, at market value $1,410,637,643 $900,123,466 $902,876,513
Temporary investments in short-term securities, at
amortized cost, which approximates market value 21,830,000 35,770,000 5,000,000
Receivables:
Interest 26,518,423 15,896,042 16,939,752
Investments sold 20,819,697 28,883,753 2,585,000
Other assets 31,843 24,611 78,715
------------------------------------------------------------------------------------------------------------------------------------
Total assets 1,479,837,606 980,697,872 927,479,980
------------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Cash overdraft 4,892,621 5,192,077 1,455,229
Payable for investments purchased -- -- 4,911,000
Accrued expenses:
Management fees 775,876 519,485 491,116
Other 378,138 281,076 212,873
Preferred share dividends payable 65,460 45,970 48,861
------------------------------------------------------------------------------------------------------------------------------------
Total liabilities 6,112,095 6,038,608 7,119,079
------------------------------------------------------------------------------------------------------------------------------------
Preferred shares, at liquidation value 525,000,000 347,000,000 338,400,000
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common shares $ 948,725,511 $627,659,264 $581,960,901
====================================================================================================================================
Common shares outstanding 63,785,430 41,093,661 43,236,703
====================================================================================================================================
Net asset value per Common share outstanding
(net assets applicable to Common shares,
divided by Common shares outstanding) $ 14.87 $ 15.27 $ 13.46
====================================================================================================================================
NET ASSETS APPLICABLE TO COMMON SHARES CONSIST OF:
------------------------------------------------------------------------------------------------------------------------------------
Common shares, $.01 par value per share $ 637,854 $ 410,937 $ 432,367
Paid-in surplus 901,299,603 570,816,192 592,382,263
Undistributed net investment income 10,662,888 7,533,957 4,620,896
Accumulated net realized gain (loss) from investments (18,549,117) 4,545,183 (26,196,833)
Net unrealized appreciation of investments 54,674,283 44,352,995 10,722,208
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common shares $ 948,725,511 $627,659,264 $581,960,901
====================================================================================================================================
Authorized shares:
Common 200,000,000 200,000,000 200,000,000
Preferred 1,000,000 1,000,000 1,000,000
====================================================================================================================================
See accompanying notes to financial statements.
40
Statement of
OPERATIONS Year Ended October 31, 2002
PREMIUM INCOME PREMIUM INCOME 2 PREMIUM INCOME 4
(NPI) (NPM) (NPT)
------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME $ 81,927,234 $ 55,880,536 $ 51,316,647
------------------------------------------------------------------------------------------------------------------------------------
EXPENSES
Management fees 9,093,668 6,069,796 5,785,156
Preferred shares - auction fees 1,312,500 867,500 846,000
Preferred shares - dividend disbursing agent fees 60,000 60,000 80,000
Shareholders' servicing agent fees and expenses 258,388 93,545 129,143
Custodian's fees and expenses 368,016 220,455 242,876
Directors' fees and expenses 15,003 9,712 10,216
Professional fees 49,642 30,311 586,857
Shareholders' reports - printing and mailing expenses 148,252 83,054 116,586
Stock exchange listing fees 30,204 19,782 20,766
Investor relations expense 187,082 128,633 142,930
Other expenses 79,311 59,106 53,312
------------------------------------------------------------------------------------------------------------------------------------
Total expenses before custodian fee credit 11,602,066 7,641,894 8,013,842
Custodian fee credit (29,262) (54,526) (60,463)
------------------------------------------------------------------------------------------------------------------------------------
Net expenses 11,572,804 7,587,368 7,953,379
------------------------------------------------------------------------------------------------------------------------------------
Net investment income 70,354,430 48,293,168 43,363,268
------------------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENTS
Net realized gain (loss) from investments (6,201,951) 4,919,255 (18,076,293)
Change in net unrealized appreciation (depreciation) of investments (24,711,552) (17,479,447) (16,827,256)
------------------------------------------------------------------------------------------------------------------------------------
Net gain (loss) from investments (30,913,503) (12,560,192) (34,903,549)
------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS
From net investment income (7,145,600) (4,488,225) (4,693,924)
From accumulated net realized gains from investments -- (556,725) --
------------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets applicable to Common shares from distributions
to Preferred shareholders (7,145,600) (5,044,950) (4,693,924)
------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets applicable to Common shares from operations $ 32,295,327 $ 30,688,026 $ 3,765,795
====================================================================================================================================
See accompanying notes to financial statements.
41
Statement of
CHANGES IN NET ASSETS
PREMIUM INCOME (NPI) PREMIUM INCOME 2 (NPM) PREMIUM INCOME 4 (NPT)
----------------------------- ------------------------------ ----------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
10/31/02 10/31/01 10/31/02 10/31/01 10/31/02 10/31/01
-----------------------------------------------------------------------------------------------------------------------------------
OPERATIONS
Net investment income $ 70,354,430 $ 71,292,185 $ 48,293,168 $ 49,652,261 $ 43,363,268 $ 46,679,576
Net realized gain (loss) from
investments (6,201,951) 4,799,904 4,919,255 3,225,861 (18,076,293) 2,478,890
Change in net unrealized
appreciation (depreciation)
of investments (24,711,552) 58,098,521 (17,479,447) 27,191,816 (16,827,256) 26,239,764
Distributions to
Preferred Shareholders:
From net investment income (7,145,600) (16,366,471) (4,488,225) (10,989,373) (4,693,924) (10,725,951)
From accumulated net realized
gains from investments -- -- (556,725) -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets
applicable to Common shares
from operations 32,295,327 117,824,139 30,688,026 69,080,565 3,765,795 64,672,279
-----------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO
COMMON SHAREHOLDERS
From net investment income (57,842,053) (51,191,446) (39,520,479) (36,688,826) (36,793,968) (35,070,055)
From accumulated net
realized gains
from investments -- -- (1,872,949) -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets
applicable to
Common shares from
distributions
to Common shareholders (57,842,053) (51,191,446) (41,393,428) (36,688,826) (36,793,968) (35,070,055)
-----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets
applicable to Common shares (25,546,726) 66,632,693 (10,705,402) 32,391,739 (33,028,173) 29,602,224
Net assets applicable to
Common shares at the
beginning of year 974,272,237 907,639,544 638,364,666 605,972,927 614,989,074 585,386,850
-----------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common
shares at the end of year $948,725,511 $974,272,237 $627,659,264 $638,364,666 $581,960,901 $614,989,074
===================================================================================================================================
Undistributed net investment
income at the end of year $ 10,662,888 $ 4,183,239 $ 7,533,957 $ 2,439,961 $ 4,620,896 $ 1,661,078
===================================================================================================================================
See accompanying notes to financial statements.
42
Notes to
FINANCIAL STATEMENTS
1. GENERAL INFORMATION AND SIGNIFICANT ACCOUNTING POLICIES
The National Funds (the "Funds") covered in this report and their corresponding
Common share 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 seeks to provide current income exempt from regular federal income tax
by investing 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
accounting principles generally accepted in the United States.
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. If it is determined that market prices for a security are
unavailable or inappropriate, the Board of Directors of the Funds or its
designee may establish a fair value for the security. 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, 2002, Premium Income 4 (NPT) had an outstanding when-issued purchase
commitment of $4,911,000. There were no such outstanding purchase commitments in
Premium Income (NPI) or Premium Income 2 (NPM).
Investment Income
Interest income, which includes the amortization of premiums and accretion of
discounts for financial reporting purposes, is recorded on an accrual basis.
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 net investment
income to its shareholders. Therefore, no federal income tax provision is
required. Furthermore, each Fund intends to satisfy conditions which will enable
interest from municipal securities, which is exempt from regular federal 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, 2002, have been designated Exempt Interest Dividends.
Dividends and Distributions to Common Shareholders
Dividends from tax-exempt net investment income are declared and paid monthly.
Net realized capital gains and/or market discount from investment transactions,
if any, are distributed to shareholders not less frequently than annually.
Furthermore, capital gains are distributed only to the extent they exceed
available capital loss carryforwards.
43
Notes to
FINANCIAL STATEMENTS (continued)
Distributions to Common shareholders of tax-exempt net investment income, net
realized capital gains and/or market discount, if any, are recorded on the
ex-dividend date. The amount and timing of distributions are determined in
accordance with federal income tax regulations, which may differ from accounting
principles generally accepted in the United States. Accordingly, temporary
over-distributions as a result of these differences may occur and will be
classified as either distributions in excess of net investment income,
distributions in excess of net realized gains and/or distributions in excess of
net ordinary taxable income from investment transactions, where applicable.
Preferred Shares
The Funds have issued and outstanding $25,000 stated value Preferred shares.
Each Fund's Preferred shares are issued in more than one Series. The dividend
rate on each Series may change every seven days, as set pursuant to a dutch
auction process by the auction agent, and is payable at or near the end of each
rate period. 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
(NPI) (NPM) (NPT)
--------------------------------------------------------------------------------
Number of shares:
Series M 3,800 2,000 2,200
Series M2 2,000 -- --
Series T 3,800 3,000 2,000
Series T2 -- -- 1,328
Series W 3,800 2,000 1,680
Series W2 -- -- 520
Series TH 3,800 3,000 2,680
Series F 3,800 2,000 1,800
Series F2 -- 1,880 1,328
--------------------------------------------------------------------------------
Total 21,000 13,880 13,536
================================================================================
Derivative Financial Instruments
The Funds may invest 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, 2002.
Custodian Fee Credit
Each Fund has an arrangement with the custodian bank whereby certain custodian
fees and expenses are reduced by credits earned on each Fund's cash on deposit
with the bank. Such deposit arrangements are an alternative to overnight
investments.
Use of Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of increases and
decreases in net assets applicable to Common shares from operations during the
reporting period. Actual results may differ from those estimates.
44
Change in Accounting Policy
As required, effective November 1, 2001, the Funds have adopted the provisions
of the new AICPA Audit and Accounting Guide for Investment Companies and began
accreting taxable market discount on debt securities. Prior to November 1, 2001,
the Funds did not accrete taxable market discount on debt securities until they
were sold. The cumulative effect of this accounting change had no impact on the
total net assets applicable to Common shares or the Common share net asset
values of the Funds, but resulted in an increase in the cost of securities and a
corresponding decrease in net unrealized appreciation based on securities held
by the Funds on November 1, 2001, as follows:
PREMIUM PREMIUM PREMIUM
INCOME INCOME 2 INCOME 4
(NPI) (NPM) (NPT)
--------------------------------------------------------------------------------
$1,166,961 $922,484 $1,266,321
================================================================================
The Statement of Changes in Net Assets and Financial Highlights for the prior
periods have not been restated to reflect this change in presentation.
The net effect of this change for the fiscal year ended October 31, 2002, was to
increase investment income with a corresponding decrease in net unrealized
appreciation as follows:
PREMIUM PREMIUM PREMIUM
INCOME INCOME 2 INCOME 4
(NPI) (NPM) (NPT)
--------------------------------------------------------------------------------
$183,475 $148,591 $197,521
================================================================================
Classification and Measurement of Redeemable Securities
The Funds have adopted the classification requirement of EITF D-98,
Classification and Measurement of Redeemable Securities. EITF D-98 requires that
Preferred shares, at liquidation value, be presented separately in the Statement
of Assets and Liabilities. Accordingly, certain reclassifications have been made
to the financial statements and financial highlights for all prior periods
presented. The adoption of EITF D-98 had no impact on the Funds' Common share
net asset values.
2. FUND SHARES
There were no share transactions during the fiscal year ended October 31, 2002,
nor during the fiscal year ended October 31, 2001, in any of the Funds.
3. SECURITIES TRANSACTIONS
Purchases and sales (including maturities) of investments in long-term municipal
securities and short-term securities for the fiscal year ended October 31, 2002,
were as follows:
PREMIUM PREMIUM PREMIUM
INCOME INCOME 2 INCOME 4
(NPI) (NPM) (NPT)
--------------------------------------------------------------------------------
Purchases:
Long-term municipal securities $ 61,150,050 $198,405,985 $140,795,016
Short-term securities 55,830,000 122,170,000 62,100,000
Sales and maturities:
Long-term municipal securities 100,941,185 272,932,357 143,793,478
Short-term securities 40,175,000 86,400,000 57,100,000
================================================================================
45
Notes to
FINANCIAL STATEMENTS (continued)
4. INCOME TAX INFORMATION
The following information is presented on an income tax basis as of October 31,
2002. Differences between amounts for financial statement and federal income tax
purposes are primarily due to timing differences in recognizing income on
taxable market discount securities and timing differences in recognizing certain
gains and losses on security transactions.
PREMIUM PREMIUM PREMIUM
INCOME INCOME 2 INCOME 4
(NPI) (NPM) (NPT)
--------------------------------------------------------------------------------
Cost of Investments $1,376,491,946 $890,643,367 $895,805,011
================================================================================
PREMIUM PREMIUM PREMIUM
INCOME INCOME 2 INCOME 4
(NPI) (NPM) (NPT)
--------------------------------------------------------------------------------
Gross unrealized:
Appreciation $ 82,015,555 $48,548,426 $ 52,670,629
Depreciation (26,039,858) (3,298,327) (40,599,127)
--------------------------------------------------------------------------------
Net unrealized appreciation
on investments $ 55,975,697 $45,250,099 $ 12,071,502
================================================================================
The tax components of undistributed net investment income and realized gains at
October 31, 2002, were as follows:
PREMIUM PREMIUM PREMIUM
INCOME INCOME 2 INCOME 4
(NPI) (NPM) (NPT)
--------------------------------------------------------------------------------
Undistributed tax-exempt income $14,392,462 $9,881,002 $6,292,473
Undistributed ordinary income * 31,042 150,954 97,805
Undistributed net long-term
capital gains -- 4,545,182 --
================================================================================
The tax character of distributions paid during the fiscal year ended October 31,
2002, were designated for purposes of the dividends paid deduction as follows:
PREMIUM PREMIUM PREMIUM
INCOME INCOME 2 INCOME 4
(NPI) (NPM) (NPT)
--------------------------------------------------------------------------------
Distributions from tax-exempt income $64,402,305 $43,699,555 $41,452,859
Distributions from ordinary income * 108,695 118,526 --
Distributions from net long-term
capital gains -- 2,429,675 --
================================================================================
* Ordinary income consists of taxable market discount income and net
short-term capital gains, if any.
46
At October 31, 2002, the following Funds had unused capital loss carryforwards
available for federal income tax purposes to be applied against future capital
gains, if any. If not applied, the carryforwards will expire as follows:
PREMIUM PREMIUM
INCOME INCOME 4
(NPI) (NPT)
--------------------------------------------------------------------------------
Expiration year:
2003 $ -- $ 5,281,759
2004 -- --
2005 -- --
2006 -- --
2007 -- --
2008 12,335,442 2,835,520
2009 -- --
2010 6,203,091 18,079,554
--------------------------------------------------------------------------------
Total $18,538,533 $26,196,833
================================================================================
5. MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Under the Funds' investment management agreements with Nuveen Advisory Corp.
(the "Adviser"), a wholly owned subsidiary of The John Nuveen Company, each Fund
pays an annual management fee, payable monthly, at the rates set forth below,
which are based upon the average daily net assets (including net assets
attributable to Preferred shares) of each Fund as follows:
AVERAGE DAILY NET ASSETS (INCLUDING NET ASSETS
ATTRIBUTABLE TO PREFERRED SHARES) MANAGEMENT FEE
--------------------------------------------------------------------------------
For the first $125 million .6500%
For the next $125 million .6375
For the next $250 million .6250
For the next $500 million .6125
For the next $1 billion .6000
For the next $3 billion .5875
For net assets over $5 billion .5750
================================================================================
The management fee compensates the Adviser for overall investment advisory and
administrative services and general office facilities. The Funds pay no
compensation directly to those of its Directors who are affiliated with the
Adviser or to their officers, all of whom receive remuneration for their
services to the Funds from the Adviser.
6. INVESTMENT COMPOSITION
At October 31, 2002, the revenue sources by municipal purpose, expressed as a
percent of total investments, were as follows:
PREMIUM PREMIUM PREMIUM
INCOME INCOME 2 INCOME 4
(NPI) (NPM) (NPT)
--------------------------------------------------------------------------------
Consumer Staples 5% 5% 5%
Education and Civic Organizations 6 5 4
Healthcare 9 7 11
Housing/Multifamily 3 5 12
Housing/Single Family 10 8 5
Tax Obligation/General 16 26 16
Tax Obligation/Limited 16 10 8
Transportation 8 4 5
U.S. Guaranteed 10 21 13
Utilities 13 6 14
Water and Sewer 2 1 6
Other 2 2 1
--------------------------------------------------------------------------------
100% 100% 100%
================================================================================
47
Notes to
FINANCIAL STATEMENTS (continued)
Certain 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 (59% for Premium
Income (NPI), 53% for Premium Income 2 (NPM) and 48% for Premium Income 4
(NPT)). Such insurance or escrow, however, does not guarantee the market value
of the municipal securities or the value of any of the Funds' shares.
For additional information regarding each investment security, refer to the
Portfolio of Investments of each Fund.
7. SUBSEQUENT EVENT - DISTRIBUTIONS TO COMMON SHAREHOLDERS
The Funds declared Common share dividend distributions from their tax-exempt net
investment income which were paid on December 2, 2002, to shareholders of record
on November 15, 2002, as follows:
PREMIUM PREMIUM PREMIUM
INCOME INCOME 2 INCOME 4
(NPI) (NPM) (NPT)
--------------------------------------------------------------------------------
Dividend per share $.0785 $.0815 $.0710
================================================================================
48
Financial
HIGHLIGHTS
49
Financial
Highlights
Selected data for a Common share outstanding throughout each year:
Investment Operations Less Distributions
--------------------------------------------------------------- --------------------------------
Distributions Distributions
from Net from Net
Beginning Net Investment Capital Investment Capital
Common Realized/ Income to Gains to Income to Gains to
Share Net Unrealized Preferred Preferred Common Common
Net Asset Investment Investment Share- Share- Share- Share-
Value Income Gain (Loss) holders+ holders+ Total holders holders Total
====================================================================================================================================
PREMIUM INCOME (NPI)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 10/31:
2002(a) $15.27 $1.10 $ (.48) $(.11) $-- $ .51 $(.91) $-- $ (.91)
2001 14.23 1.12 .98 (.26) -- 1.84 (.80) -- (.80)
2000 13.46 1.11 .78 (.33) -- 1.56 (.79) -- (.79)
1999 15.66 1.09 (2.10) (.24) (.02) (1.27) (.85) (.07) (.92)
1998 15.28 1.15 .43 (.25) (.01) 1.32 (.88) (.06) (.94)
PREMIUM INCOME 2 (NPM)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 10/31:
2002(a) 15.53 1.17 (.30) (.11) (.01) .75 (.96) (.05) (1.01)
2001 14.75 1.21 .73 (.27) -- 1.67 (.89) -- (.89)
2000 14.61 1.22 .20 (.34) -- 1.08 (.92) (.02) (.94)
1999 16.15 1.18 (1.48) (.24) (.01) (.55) (.94) (.04) (.98)
1998 15.80 1.17 .46 (.24) (.02) 1.37 (.93) (.09) (1.02)
PREMIUM INCOME 4 (NPT)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 10/31:
2002(a) 14.22 1.00 (.80) (.11) -- .09 (.85) -- (.85)
2001 13.54 1.08 .66 (.25) -- 1.49 (.81) -- (.81)
2000 13.50 1.11 .07 (.32) -- .86 (.82) -- (.82)
1999 15.05 1.09 (1.56) (.24) -- (.71) (.83) -- (.83)
1998 14.64 1.07 .42 (.26) -- 1.23 (.82) -- (.82)
====================================================================================================================================
Total Returns
-----------------
Offering Based
Costs and Ending on
Preferred Common Based Common
Share Share Ending on Share Net
Underwriting Net Asset Market Market Asset
Discounts Value Value Value* Value*
================================================================================
PREMIUM INCOME (NPI)
--------------------------------------------------------------------------------
Year Ended 10/31:
2002(a) $ -- $14.87 $14.1100 5.51% 3.47%
2001 -- 15.27 14.2500 26.60 13.22
2000 -- 14.23 11.9375 4.10 12.03
1999 (.01) 13.46 12.2500 (14.03) (8.59)
1998 -- 15.66 15.1875 10.60 8.86
PREMIUM INCOME 2
(NPM)
--------------------------------------------------------------------------------
Year Ended 10/31:
2002(a) -- 15.27 14.4000 5.59 5.03
2001 -- 15.53 14.6100 17.31 11.63
2000 -- 14.75 13.2500 (2.03) 7.71
1999 (.01) 14.61 14.5000 (8.59) (3.66)
1998 -- 16.15 16.8750 15.98 8.93
PREMIUM INCOME 4
(NPT)
--------------------------------------------------------------------------------
Year Ended 10/31:
2002(a) -- 13.46 12.9700 .52 .76
2001 -- 14.22 13.7500 18.68 11.28
2000 -- 13.54 12.3125 3.28 6.58
1999 (.01) 13.50 12.7500 (8.77) (5.03)
1998 -- 15.05 14.8125 14.54 8.58
================================================================================
Ratios/Supplemental Data
------------------------------------------------------------------------------------------
Before Credit After Credit**
-------------------------- ---------------------------
Ratio of Net Ratio of Net
Ratio of Investment Ratio of Investment
Ending Expenses Income to Expenses Income to
Net to Average Average to Average Average
Assets Net Assets Net Assets Net Assets Net Assets
Applicable Applicable Applicable Applicable Applicable Portfolio
to Common to Common to Common to Common to Common Turnover
Shares (000) Shares++ Shares++ Shares++ Shares++ Rate
===============================================================================================================
PREMIUM INCOME (NPI)
---------------------------------------------------------------------------------------------------------------
Year Ended 10/31:
2002(a) $948,726 1.22% 7.39% 1.22% 7.39% 4%
2001 974,272 1.22 7.49 1.21 7.50 20
2000 907,640 1.28 8.09 1.27 8.10 18
1999 858,491 1.18 7.28 1.17 7.29 15
1998 998,755 1.14 7.41 1.14 7.41 19
PREMIUM INCOME 2
(NPM)
---------------------------------------------------------------------------------------------------------------
Year Ended 10/31:
2002(a) 627,659 1.22 7.70 1.21 7.71 21
2001 638,365 1.23 7.93 1.21 7.95 12
2000 605,973 1.23 8.38 1.22 8.39 7
1999 600,481 1.15 7.60 1.15 7.60 5
1998 659,840 1.13 7.35 1.13 7.35 7
PREMIUM INCOME 4
(NPT)
---------------------------------------------------------------------------------------------------------------
Year Ended 10/31:
2002(a) 581,961 1.36 7.36 1.35 7.37 16
2001 614,989 1.34 7.73 1.33 7.74 10
2000 585,387 1.27 8.22 1.26 8.23 14
1999 583,541 1.20 7.51 1.20 7.51 14
1998 614,604 1.19 7.23 1.19 7.23 21
===============================================================================================================
Preferred Shares at End of Year
----------------------------------------------
Aggregate Liquidation
Amount and Market Asset
Outstanding Value Coverage
(000) Per Share Per Share
========================================================================
PREMIUM INCOME (NPI)
------------------------------------------------------------------------
Year Ended 10/31:
2002(a) $525,000 $25,000 $70,177
2001 525,000 25,000 71,394
2000 525,000 25,000 68,221
1999 525,000 25,000 65,881
1998 475,000 25,000 77,566
PREMIUM INCOME 2
(NPM)
------------------------------------------------------------------------
Year Ended 10/31:
2002(a) 347,000 25,000 70,220
2001 347,000 25,000 70,992
2000 347,000 25,000 68,658
1999 347,000 25,000 68,262
1998 300,000 25,000 79,987
PREMIUM INCOME 4
(NPT)
------------------------------------------------------------------------
Year Ended 10/31:
2002(a) 338,400 25,000 67,983
2001 338,400 25,000 70,434
2000 338,400 25,000 68,247
1999 338,400 25,000 68,110
1998 308,400 25,000 74,822
========================================================================
* Total Investment Return on Market Value is the combination of reinvested
dividend income, reinvested capital gains distributions, if any, and
changes in stock price per share. Total Return on Common Share Net Asset
Value is the combination of reinvested dividend income, reinvested capital
gains distributions, if any, and changes in Common share net asset value
per share. Total returns are not annualized.
** After custodian fee credit, where applicable.
+ The amounts shown are based on Common share equivalents.
++ Ratios do not reflect the effect of dividend payments to Preferred
shareholders; income ratios reflect income earned on assets attributable to
Preferred shares.
(a) As required, effective November 1, 2001, the Funds have adopted the
provisions of the new AICPA Audit and Accounting Guide for Investment
Companies and began accreting taxable market discount on debt securities.
The effect of this change for the fiscal year ended October 31, 2002, was
to increase net investment income per share with a corresponding decrease
in net realized/unrealized investment gain (loss) per share and increase
each ratio of net investment income to average net assets applicable to
Common shares as follows:
PREMIUM PREMIUM PREMIUM
INCOME INCOME 2 INCOME 4
(NPI) (NPM) (NPT)
--------------------------------------
2002 per share impact ($) -- -- --
2002 income ratio impact (%) .02 .02 .03
The Financial Highlights for the prior periods have not been restated to reflect
this change in presentation.
See accompanying notes to financial statements.
Spread 50-51
Directors
AND OFFICERS
The management of the Funds, including general supervision of the duties
performed for the Funds under the Management Agreement, is the responsibility of
the Board of Directors of the Funds. The number of directors of the Funds is
currently set at seven, one of whom is an "interested person" (as the term is
defined in the Investment Company Act of 1940) and six of whom are not
interested persons. None of the directors who are not interested persons of the
Funds have ever been a director or employee of, or consultant to, Nuveen or its
affiliates. The names and business addresses of the directors and officers of
the Funds, their principal occupations and other affiliations during the past
five years, the number of portfolios each oversees and other directorships they
hold are set forth below.
YEAR FIRST
ELECTED OR NUMBER OF FUNDS
APPOINTED AND PRINCIPAL OCCUPATION(S) IN NUVEEN COMPLEX
NAME, BIRTHDATE POSITION(S) HELD TERM OF INCLUDING OTHER DIRECTORSHIPS OVERSEEN BY
AND ADDRESS WITH THE FUND OFFICE (a) DURING PAST 5 YEARS DIRECTOR
------------------------------------------------------------------------------------------------------------------------------------
DIRECTOR WHO IS AN INTERESTED PERSON OF THE FUNDS:
------------------------------------------------------------------------------------------------------------------------------------
TIMOTHY R. SCHWERTFEGER (1) Chairman of the 1994 Chairman and Director (since 1996) of The John 141
3/28/1949 Board and Term: Nuveen Company, Nuveen Investments, Nuveen
333 W. Wacker Drive Director one year (2) Advisory Corp. and Nuveen Institutional Advisory
Chicago, IL 60606 Corp.; Chairman and Director (since 1997) of
Nuveen Asset Management Inc.; Director (since
1996) of Institutional Capital Corporation;
Chairman and Director (since 1999) of Rittenhouse
Financial Services Inc.
DIRECTORS WHO ARE NOT INTERESTED PERSONS OF THE FUNDS:
------------------------------------------------------------------------------------------------------------------------------------
ROBERT P. BREMNER Director 1997 Private Investor and Management Consultant. 122
8/22/1940 Term:
333 W. Wacker Drive one year (2)
Chicago, IL 60606
------------------------------------------------------------------------------------------------------------------------------------
LAWRENCE H. BROWN Director 1993 Retired (1989) as Senior Vice President of The 122
7/29/1934 Term: Northern Trust Company.
333 W. Wacker Drive one year (2)
Chicago, IL 60606
------------------------------------------------------------------------------------------------------------------------------------
ANNE E. IMPELLIZZERI Director 1994 Retired (2002); formerly, Executive Director 122
1/26/1933 Term: (since 1998) of Manitoga (Center for Russel
333 W. Wacker Drive one year (2) Wright's Design with Nature); prior thereto,
Chicago, IL 60606 President and Chief Executive Officer of
Blanton-Peale Institutes of Religion and Health;
prior thereto, Vice President, Metropolitan Life
Insurance Co.
------------------------------------------------------------------------------------------------------------------------------------
PETER R. SAWERS Director 1991 Adjunct Professor of Business and Economics, 122
4/3/1933 Term: University of Dubuque, Iowa; Director, Executive
333 W. Wacker Drive one year (2) Service Corps of Chicago (not-for-profit); Director,
Chicago, IL 60606 Hadley School for the Blind (not-for-profit);
formerly (1991-2000) Adjunct Professor, Lake Forest
Graduate School of Management, Lake Forest,
Illinois; prior thereto, Executive Director,
Towers Perrin Australia, a management consulting
firm; Chartered Financial Analyst; Certified
Management Consultant.
52
YEAR FIRST
ELECTED OR NUMBER OF FUNDS
APPOINTED AND PRINCIPAL OCCUPATION(S) IN NUVEEN COMPLEX
NAME, BIRTHDATE POSITION(S) HELD TERM OF INCLUDING OTHER DIRECTORSHIPS OVERSEEN BY
AND ADDRESS WITH THE FUND OFFICE (a) DURING PAST 5 YEARS DIRECTOR
------------------------------------------------------------------------------------------------------------------------------------
DIRECTORS WHO ARE NOT INTERESTED PERSONS OF THE FUNDS (CONTINUED):
------------------------------------------------------------------------------------------------------------------------------------
WILLIAM J. SCHNEIDER Director 1997 Senior Partner and Chief Operating Officer, 122
9/24/1944 Term: Miller-Valentine Group, Vice President,
333 W. Wacker Drive one year (2) Miller-Valentine Realty, a construction company;
Chicago, IL 60606 Chair, Miami Valley Hospital; Vice Chair, Dayton
Development Coalition; formerly, Member,
Community Advisory Board, National City Bank,
Dayton, Ohio; and Business Advisory Council,
Cleveland Federal Reserve Bank.
------------------------------------------------------------------------------------------------------------------------------------
JUDITH M. STOCKDALE Director 1997 Executive Director, Gaylord and Dorothy 122
12/29/1947 Term: Donnelley Foundation (since 1994); prior
333 W. Wacker Drive one year (2) thereto, Executive Director, Great Lakes
Chicago, IL 60606 Protection Fund (from 1990 to 1994).
NUMBER OF FUNDS
YEAR FIRST PRINCIPAL OCCUPATION(S) IN NUVEEN COMPLEX
NAME, BIRTHDATE POSITION(S) HELD ELECTED OR INCLUDING OTHER DIRECTORSHIPS OVERSEEN BY
AND ADDRESS WITH THE FUND APPOINTED (b) DURING PAST 5 YEARS OFFICER
------------------------------------------------------------------------------------------------------------------------------------
OFFICERS OF THE FUNDS:
------------------------------------------------------------------------------------------------------------------------------------
MICHAEL T. ATKINSON Vice President 2002 Vice President (since January 2002), formerly, 141
2/3/1966 Assistant Vice President (since 2000), previously,
333 W. Wacker Drive Associate of Nuveen Investments.
Chicago, IL 60606
------------------------------------------------------------------------------------------------------------------------------------
PAUL L. BRENNAN Vice President 2002 Vice President (since January 2002), formerly, 135
11/10/1966 Assistant Vice President of Nuveen
333 W. Wacker Drive Advisory Corp.
Chicago, IL 60606
------------------------------------------------------------------------------------------------------------------------------------
PETER H. D'ARRIGO Vice President and 1999 Vice President of Nuveen Investments (since 141
11/28/1967 Treasurer 1999), prior thereto, Assistant Vice President
333 W. Wacker Drive (from 1997); Chartered Financial Analyst.
Chicago, IL 60606
------------------------------------------------------------------------------------------------------------------------------------
SUSAN M. DESANTO Vice President 2001 Vice President of Nuveen Advisory Corp. (since 141
9/8/1954 2001); previously, Vice President of Van Kampen
333 W. Wacker Drive Investment Advisory Corp. (since 1998); prior
Chicago, IL 60606 thereto, Assistant Vice President of Van Kampen
Investment Advisory Corp.
------------------------------------------------------------------------------------------------------------------------------------
JESSICA R. DROEGER Vice President 2002 Vice President (since January 2002), Assistant 141
9/24/1964 and Secretary General Counsel and Assistant Secretary (since
333 W. Wacker Drive 1998), formerly Assistant Vice President of Nuveen
Chicago, IL 60606 Investments; Vice President (since January 2002)
and Assistant Secretary (since 1998), formerly
Assistant Vice President of Nuveen Advisory Corp.
and Nuveen Institutional Advisory Corp.; prior
thereto, Associate at the law firm D'Ancona
Partners LLC.
53
Directors
AND OFFICERS (CONTINUED)
NUMBER OF FUNDS
YEAR FIRST PRINCIPAL OCCUPATION(S) IN NUVEEN COMPLEX
NAME, BIRTHDATE POSITION(S) HELD ELECTED OR INCLUDING OTHER DIRECTORSHIPS OVERSEEN BY
AND ADDRESS WITH THE FUND APPOINTED (b) DURING PAST 5 YEARS OFFICER
------------------------------------------------------------------------------------------------------------------------------------
OFFICERS OF THE FUNDS (CONTINUED):
------------------------------------------------------------------------------------------------------------------------------------
LORNA C. FERGUSON Vice President 1998 Vice President of Nuveen Investments; Vice 141
10/24/1945 President (since 1998) of Nuveen Advisory Corp.
333 W. Wacker Drive and Nuveen Institutional Advisory Corp.
Chicago, IL 60606
------------------------------------------------------------------------------------------------------------------------------------
WILLIAM M. FITZGERALD Vice President 1995 Managing Director (since January 2002) of Nuveen 141
3/2/1964 Investments; Managing Director of NuveenAdvisory
333 W. Wacker Drive Corp. and Nuveen Institutional Advisory Corp. (since
Chicago, IL 60606 2001); prior thereto, Vice President of Nuveen
Advisory Corp.; Chartered Financial Analyst.
------------------------------------------------------------------------------------------------------------------------------------
STEPHEN D. FOY Vice President and 1998 Vice President of Nuveen Investments and 141
5/31/1954 Controller (since 1998) The John Nuveen Company;
333 W. Wacker Drive Certified Public Accountant.
Chicago, IL 60606
------------------------------------------------------------------------------------------------------------------------------------
J. THOMAS FUTRELL Vice President 1992 Vice President of Nuveen Advisory Corp.; 135
7/5/1955 Chartered Financial Analyst.
333 W. Wacker Drive
Chicago, IL 60606
------------------------------------------------------------------------------------------------------------------------------------
RICHARD A. HUBER Vice President 1997 Vice President of Nuveen Institutional Advisory 135
3/26/1963 Corp. (since 1998) and Nuveen Advisory Corp.
333 W. Wacker Drive
Chicago, IL 60606
------------------------------------------------------------------------------------------------------------------------------------
STEVEN J. KRUPA Vice President 1990 Vice President of Nuveen Advisory Corp. 135
8/21/1957
333 W. Wacker Drive
Chicago, IL 60606
------------------------------------------------------------------------------------------------------------------------------------
DAVID J. LAMB Vice President 2000 Vice President (since 2000) of Nuveen Investments, 141
3/22/1963 previously Assistant Vice President (since 1999);
333 W. Wacker Drive prior thereto, Associate of Nuveen Investments;
Chicago, IL 60606 Certified Public Accountant.
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TINA M. LAZAR Vice President 2002 Vice President (since 1999), previously, 141
8/27/1961 Assistant Vice President (since 1993) of
333 W. Wacker Drive Nuveen Investments.
Chicago, IL 60606
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LARRY W. MARTIN Vice President and 1992 Vice President, Assistant Secretary and 141
7/27/1951 Assistant Secretary Assistant General Counsel of Nuveen
333 W. Wacker Drive Investments; Vice President and Assistant
Chicago, IL 60606 Secretary of Nuveen Advisory Corp. and Nuveen
Institutional Advisory Corp.; Vice President and
Assistant Secretary of The John Nuveen
Company and Nuveen Asset Management, Inc.
54
NUMBER OF FUNDS
YEAR FIRST PRINCIPAL OCCUPATION(S) IN NUVEEN COMPLEX
NAME, BIRTHDATE POSITION(S) HELD ELECTED OR INCLUDING OTHER DIRECTORSHIPS OVERSEEN BY
AND ADDRESS WITH THE FUND APPOINTED (b) DURING PAST 5 YEARS OFFICER
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OFFICERS OF THE FUNDS (CONTINUED):
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EDWARD F. NEILD, IV Vice President 1996 Managing Director (since January 2002) of Nuveen 141
7/7/1965 Investments; Managing Director (since 1997) of
333 W. Wacker Drive Nuveen Advisory Corp. and Nuveen Institutional
Chicago, IL 60606 Advisory Corp.; Chartered Financial Analyst.
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THOMAS J. O'SHAUGHNESSY Vice President 2002 Vice President (since January 2002), formerly, 135
9/4/1960 Assistant Vice President (since 1998) of Nuveen
333 W. Wacker Drive Advisory Corp.; prior thereto, Portfolio Manager.
Chicago, IL 60606
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THOMAS C. SPALDING Vice President 1988 Vice President of Nuveen Advisory Corp. and 135
7/31/1951 Nuveen Institutional Advisory Corp.; Chartered
333 W. Wacker Drive Financial Analyst.
Chicago, IL 60606
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GIFFORD R. ZIMMERMAN Chief 1992 Managing Director (since January 2002, formerly 141
9/9/1956 Administrative Vice President), Assistant Secretary and Associate
333 W. Wacker Drive Officer General Counsel (formerly Assistant General Counsel)
Chicago, IL 60606 of Nuveen Investments; Managing Director (since
January 2002, formerly Vice President) and
Assistant Secretary of Nuveen Advisory Corp. and
Nuveen Institutional Advisory Corp.; Vice President
and Assistant Secretary of The John Nuveen
Company; Chartered Financial Analyst.
(a) Year First Elected or Appointed is the year presented or each Fund's
respective inception date if later.
(b) Year First Elected or Appointed is the year presented or each Fund's
respective inception date if later. Officers serve one year terms through
July of each year.
(1) Mr. Schwertfeger is an "interested person" of the Funds, as defined in the
Investment Company Act of 1940, because he is an officer and director of
Nuveen Advisory Corp.
(2) Directors are elected each year by shareholders and serve a one year term
until his/her successor is elected.
55
Build Your Wealth
AUTOMATICALLY
SIDEBAR TEXT: NUVEEN MAKES REINVESTING EASY. A PHONE CALL IS ALL IT TAKES TO SET
UP YOUR REINVESTMENT ACCOUNT.
NUVEEN CLOSED-END EXCHANGE-TRADED FUNDS DIVIDEND REINVESTMENT PLAN
Your Nuveen Closed-End Exchange-Traded Fund allows you to conveniently reinvest
dividends and/or capital gains distributions in additional fund shares.
By choosing to reinvest, you'll be able to invest money regularly and
automatically, and watch your investment grow through the power of tax-free
compounding. Just like dividends or distributions in cash, there may be times
when income or capital gains taxes may be payable on dividends or distributions
that are reinvested.
It is important to note that an automatic reinvestment plan does not ensure a
profit, nor does it protect you against loss in a declining market.
EASY AND CONVENIENT
To make recordkeeping easy and convenient, each month you'll receive a statement
showing your total dividends and distributions, the date of investment, the
shares acquired and the price per share, and the total number of shares you own.
HOW SHARES ARE PURCHASED
The shares you acquire by reinvesting will either be purchased on the open
market or newly issued by the Fund. If the shares are trading at or above net
asset value at the time of valuation, the Fund will issue new shares at the
then-current market price. If the shares are trading at less than net asset
value, shares for your account will be purchased on the open market. Dividends
and distributions received to purchase shares in the open market will normally
be invested shortly after the dividend payment date. No interest will be paid on
dividends and distributions awaiting reinvestment. Because the market price of
shares may increase before purchases are completed, the average purchase price
per share may exceed the market price at the time of valuation, resulting in the
acquisition of fewer shares than if the dividend or distribution had been paid
in shares issued by the Fund. A pro rata portion of any applicable brokerage
commissions on open market purchases will be paid by Plan participants. These
commissions usually will be lower than those charged on individual transactions.
FLEXIBILITY
You may change your distribution option or withdraw from the Plan at any time,
should your needs or situation change. Should you withdraw, you can receive a
certificate for all whole shares credited to your reinvestment account and cash
payment for fractional shares, or cash payment for all reinvestment account
shares, less brokerage commissions and a $2.50 service fee.
You can reinvest whether your shares are registered in your name, or in the name
of a brokerage firm, bank, or other nominee. Ask your investment advisor if his
or her firm will participate on your behalf. Participants whose shares are
registered in the name of one firm may not be able to transfer the shares to
another firm and continue to participate in the Plan.
The Fund reserves the right to amend or terminate the Plan at any time. Although
the Fund reserves the right to amend the Plan to include a service charge
payable by the participants, there is no direct service charge to participants
in the Plan at this time.
For more information on the Nuveen Automatic Reinvestment Plan or to enroll in
or withdraw from the Plan, speak with your financial advisor or call us at (800)
257-8787.
56
Fund
INFORMATION
BOARD OF DIRECTORS
Robert P. Bremner
Lawrence H. Brown
Anne E. Impellizzeri
Peter R. Sawers
William J. Schneider
Timothy R. Schwertfeger
Judith M. Stockdale
FUND MANAGER
Nuveen Advisory Corp.
333 West Wacker Drive
Chicago, IL 60606
CUSTODIAN
State Street Bank & Trust
Boston, MA
TRANSFER AGENT AND
SHAREHOLDER SERVICES
State Street Bank &Trust
Nuveen Funds
P.O. Box 43071
Providence, RI 02940-3071
(800) 257-8787
LEGAL COUNSEL
Morgan, Lewis &
Bockius LLP
Washington, D.C.
INDEPENDENT AUDITORS
Ernst & Young LLP
Chicago, IL
GLOSSARY OF TERMS USED IN THIS REPORT
AVERAGE ANNUAL TOTAL RETURN: This is a commonly used method to express an
investment's performance over a particular, usually multi-year time period. It
expresses the return (including change in NAV and reinvested dividends) that
would have been necessary on an annual basis to equal the investment's actual
performance over the time period being considered.
AVERAGE EFFECTIVE MATURITY: The average of all the maturities of the bonds in a
fund's portfolio, computed by weighting each maturity date (the date the
security comes due) by the market value of the security. This figure does not
account for the likelihood of prepayments or the exercise of call provisions.
LEVERAGE-ADJUSTED DURATION: Duration is a measure of a bond or bond fund's
sensitivity to changes in interest rates. Generally, the longer a bond or fund's
duration, the more the price of the bond or fund will change as interest rates
change. Leverage-adjusted duration takes into account the leveraging process for
a Fund and therefore is generally longer than the duration of the actual
portfolio of individual bonds that make up the Fund
MARKET YIELD (ALSO KNOWN AS DIVIDEND YIELD OR CURRENT YIELD): An investment's
current annualized dividend divided by its current market price.
NET ASSET VALUE (NAV): A fund's NAV is calculated by subtracting the liabilities
of the fund from its total assets and then dividing the remainder by the number
of shares outstanding. Fund NAVs are calculated at the end of each business day.
TAXABLE-EQUIVALENT YIELD: The yield necessary from a fully taxable investment to
equal, on an after-tax basis, the yield of a municipal bond investment.
---------
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 twelve-month period ended October 31, 2002. Any
future repurchases will be reported to shareholders in the next annual or
semiannual report.
57
Serving Investors
FOR GENERATIONS
PHOTO OF: John Nuveen, Sr.
For over a century, generations of Americans have relied on Nuveen Investments
to help them grow and keep the money they've earned. Financial advisors,
investors and their families have associated Nuveen Investments with quality,
expertise and dependability since 1898. That is why financial advisors have
entrusted the assets of more than 1.3 million investors to Nuveen.
With the know-how that comes from a century of experience, Nuveen continues to
build upon its reputation for quality. Now, financial advisors and investors can
count on Nuveen Investments to help them design customized solutions that meet
the far-reaching financial goals unique to family wealth strategies - solutions
that can translate into legacies.
To find out more about how Nuveen Investments' products and services can help
you preserve your financial security, talk with your financial advisor, or call
us at (800) 257-8787 for more information, including a prospectus where
applicable. Please read that information carefully before you invest.
Logo: NUVEEN Investments
Nuveen Investments o 333 West Wacker Drive
Chicago, IL 60606 o www.nuveen.com EAN-E-1002D