UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-05570
---------------------
Nuveen Premium Income Municipal Fund, Inc.
--------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
Nuveen Investments
333 West Wacker Drive
Chicago, IL 60606
--------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
Kevin J. McCarthy
Nuveen Investments
333 West Wacker Drive
Chicago, IL 60606
--------------------------------------------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: (312) 917-7700
-------------------
Date of fiscal year end: October 31
------------------
Date of reporting period: October 31, 2008
------------------
Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
ANNUAL REPORT | Nuveen Investments
October 31, 2008 | MUNICIPAL CLOSED-END FUNDS
Photo of: Small child
NUVEEN PREMIUM
INCOME MUNICIPAL
FUND, INC.
NPI
NUVEEN PREMIUM
INCOME MUNICIPAL
FUND 2, INC.
NPM
NUVEEN PREMIUM
INCOME MUNICIPAL
FUND 4, INC.
NPT
IT'S NOT WHAT YOU EARN, IT'S WHAT YOU KEEP.(R)
Logo: NUVEEN Investments
Photo of: Man working on computer
LIFE IS COMPLEX.
NUVEEN
MAKES THINGS
E-simple.
It only takes a minute to sign up for e-Reports. Once enrolled,
you'll receive an e-mail as soon as your Nuveen Investments Fund
information is ready--no more waiting for delivery by regular
mail. Just click on the link within the e-mail to see the report
and save it on your computer if you wish.
FREE E-REPORTS RIGHT TO YOUR E-MAIL!
www.investordelivery.com
If you receive your Nuveen Fund
dividends and statements from your
financial advisor or brokerage account.
OR
www.nuveen.com/accountaccess
If you receive your Nuveen Fund dividends
and statements directly from Nuveen.
Logo: NUVEEN Investments
Photo of: Robert P. Bremner
Chairman's
LETTER TO SHAREHOLDERS
| Robert P. Bremner | Chairman of the Board
Dear Shareholders,
I'd like to use my initial letter to you to accomplish several things. First, I
want to report that after fourteen years of service on your Fund's Board,
including the last twelve as chairman, Tim Schwertfeger retired from the Board
in June. The Board has elected me to replace him as the chairman, the first time
this role has been filled by someone who is not an employee of Nuveen
Investments. Electing an independent chairman marks a significant milestone in
the management of your Fund, and it aligns us with what is now considered a
"best practice" in the fund industry. Further, it demonstrates the independence
with which your Board has always acted on your behalf.
Following Tim will not be easy. During my eleven previous years on the Nuveen
Fund Board, I found that Tim always set a very high standard by combining
insightful industry and market knowledge and sound, clear judgment. While the
Board will miss his wise counsel, I am certain we will retain the primary
commitment Tim shared with all of us - an unceasing dedication to creating and
retaining value for Nuveen Fund shareholders. This focus on value over time is a
touchstone that I and all the other Board members will continue to use when
making decisions on your behalf.
Second, I also want to report that we are very fortunate to welcome two new
Board members to our team. John Amboian, the current chairman and CEO of Nuveen
Investments, has replaced Tim as Nuveen's representative on the Board. John's
presence will allow the independent Board members to benefit not only from his
leadership role at Nuveen but also his broad understanding of the fund industry
and Nuveen's role within it. We also added Terry Toth as an independent
director. A former CEO of the Northern Trust Company's asset management group,
Terry will bring extensive experience in the fund industry to our deliberations.
Third, on behalf of the entire Board, I would like you to know that we are
closely monitoring the unprecedented market developments and their distressing
impact on the Funds. We believe that these Funds continue to be actively and
constructively managed for the long term and at the same time we are very aware
that these are trying times for our investors. We appreciate the patience you
have shown with the Board and with Nuveen Investments as they manage your
investment through this extremely difficult period.
Fourth, again on behalf of the entire Board, I would like to acknowledge the
effort the whole Nuveen organization is making to resolve the auction rate
preferred share situation in a satisfactory manner. As you know, we are actively
pursuing a number of possible solutions, all with the goal of providing
liquidity for preferred shareholders while preserving the potential benefits of
leverage for common shareholders. We appreciate the patience you have shown as
we've worked through the many difficulties involved.
Finally, I urge you to take the time to review the Portfolio Manager's Comments,
the Common Share Dividend and Share Price Information, and the Performance
Overview sections of this report. All of us are grateful that you have chosen
Nuveen Investments as a partner as you pursue your financial goals, and, on
behalf of myself and the other members of your Fund's Board, let me say we look
forward to continuing to earn your trust in the months and years ahead.
Sincerely,
/s/ Robert P. Bremner
Robert P. Bremner
Chairman of the Board
December 23, 2008
Portfolio Manager's COMMENTS
Nuveen Investments Municipal Closed-End Funds | NPI, NPM, NPT
Portfolio manager Paul Brennan discusses U.S. economic and municipal market
conditions, key investment strategies, and the twelve-month performance of these
three national Funds. With nineteen years of investment experience, including
eleven years at Nuveen, Paul assumed portfolio management responsibility for
NPI, NPM and NPT in 2006.
WHAT FACTORS AFFECTED THE U.S. ECONOMY AND MUNICIPAL MARKET DURING THE
TWELVE-MONTH REPORTING PERIOD ENDED OCTOBER 31, 2008?
During this period, stress in the financial and credit markets led to increased
price volatility for many securities, reduced liquidity and a general flight to
quality. The Federal Reserve (Fed) began in September 2007 a series of interest
rate cuts that lowered the fed funds rate by 325 basis points--from 5.25% to
2.00%--over an eight-month period ending April 2008. In October 2008, the Fed
announced two additional reductions of 50 basis points each, bringing the fed
funds rate to 1.00%, its lowest level since 2003. (On December 16, after the end
of this twelve-month period, the Fed reduced the fed funds rate target to 0.25%
or less.)
The Fed's rate-cutting actions also were a response to concerns about the pace
of U.S. economic growth, as measured by the U.S. gross domestic product (GDP).
After declining at an annual rate of 0.2% in the fourth quarter of 2007, GDP
improved to a positive 0.9% in the first quarter of 2008 and posted growth of
2.8% in the second quarter of 2008 (all GDP numbers annualized). During the
third quarter of 2008, however, GDP contracted at an annual rate of 0.5%, the
biggest decrease since 2001, mainly as the result of the first decline in
consumer spending since 1991 and an 18% drop in residential investment. The
Consumer Price Index (CPI), driven largely by increased energy, food, and
transportation prices, registered a 3.7% year-over-year gain as of October 2008,
while the core CPI (which excludes food and energy) rose 2.2% over this same
period, above the Fed's unofficial target of 2.0% or lower. In the labor
markets, October 2008 marked the tenth consecutive month of job losses. The
national unemployment rate for October 2008 was 6.5%, its highest point in more
than fourteen years, up from 4.8% in October 2007.
In the municipal bond market, performance was significantly impacted by concerns
about the credit markets, downgrades of municipal bond insurers, failed auctions
of preferred shares, and institutional investors' need to unwind various
leveraging strategies. These events created surges of selling pressure,
especially in late September and early October 2008. While some investors
curtailed purchases, non-traditional buyers of municipal bonds such as hedge
funds, traditional buyers
Discussions of specific investments are for illustrative purposes only and are
not intended as recommendations of individual investments. The views expressed
in this commentary represent those of the portfolio manager as of the date of
this report and are subject to change at any time, based on market conditions
and other factors. The Funds disclaim any obligation to advise shareholders of
such changes.
4
such as tax-exempt money market funds, and muni market broker/dealers were
forced to sell holdings of longer-maturity bonds into a market already
experiencing reduced liquidity.
Combined with the Fed rate cuts, this selling produced a sharp steepening of the
municipal yield curve, as longer-term interest rates rose and short-term rates
declined over this period. In this environment, bonds with shorter maturities
generally outperformed longer maturity bonds, and higher quality bonds tended to
outperform lower quality credits.
Another item of note in the municipal market was the U.S. Supreme Court's May
2008 ruling that individual states could continue to offer their residents
special tax treatment on municipal bonds issued within their borders. The high
court's decision preserved tax rules in forty-two states, allowing them to
continue to exempt from taxation the income their residents earn on in-state
municipal bonds while taxing the income earned on municipal bonds issued in
other states.
Over the twelve months ended October 31, 2008, municipal bond issuance
nationwide totaled $450.3 billion, a drop of 8% from the previous twelve months.
In 2008, insured bonds comprised less than 20% of new supply, compared with the
recent historical figure of approximately 50%. While market conditions during
this period impacted the demand for municipal bonds, we continued to see demand
from investors attracted by higher interest rates and yields relative to taxable
bonds.
WHAT KEY STRATEGIES WERE USED TO MANAGE THESE FUNDS?
During this twelve-month period, with the municipal market characterized by
volatility and a relatively steep yield curve, we sought to capitalize on a
turbulent environment by continuing to focus on relative value and investing for
the long term, preserving and enhancing liquidity, and managing duration(1)
risk.
As events in the general financial markets unfolded, we found attractive
opportunities in various sectors of the municipal market, using a fundamental
approach to identify undervalued sectors and individual credits with the
potential to perform well over the long term. In addition, some portfolio
activity was driven by our efforts to boost liquidity or cash reserves.
Especially during the commotion of September and October, we believed that it
was prudent to take defensive measures that would reduce the Funds' exposure to
market risk. These measures included pre-emptively selling some holdings and
raising the Funds' cash reserves.
Throughout the period, we selectively sold holdings with shorter durations,
including pre-refunded(2) bonds. We also took advantage of strong bids to sell
bonds that were attractive to the retail market. Given the market environment,
retail demand was often strongest for higher credit quality bonds. At all times,
we were careful to balance
(1) Duration is a measure of a bond's price sensitivity as interest rates
change, with longer duration bonds displaying more sensitivity to these
changes than bonds with shorter durations.
(2) Pre-refundings, also known as advance refundings or refinancings, occur
when an issuer sells new bonds and uses the proceeds to fund principal and
interest payments of older existing bonds. This process often results in
lower borrowing costs for bond issuers.
5
our efforts to enhance liquidity through sales to the retail market with our
focus on maintaining the credit quality of our portfolios in an uncertain
market.
As a key dimension of risk management, a disciplined approach to duration
positioning remained an important component of our management strategies. As
part of this approach, we used inverse floating rate securities(3), in all three
of these Funds. Inverse floaters typically provide the dual benefit of bringing
the Funds' durations closer to our strategic target and enhancing their
income-generation capabilities. NPI and NPM also invested in certain derivative
instruments during this period in an effort to help us manage common share net
asset value (NAV) volatility while trying to minimize any negative impact on
income streams or common share dividends over the short term. As of October 31,
2008, we continued to use inverse floaters in all of these Funds. The
derivatives also remained in place in NPI, while the derivative positions were
removed from NPM during the first half of this period.
HOW DID THE FUNDS PERFORM?
Individual results for these Funds, as well as relevant index and peer group
information, are presented in the accompanying table.
Annualized Total Returns on Common Share Net Asset Value
For periods ended 10/31/08
1-Year 5-Year 10-Year
NPI -15.39% 0.93% 2.96%
NPM -16.96% 0.60% 2.89%
NPT -15.97% 1.10% 2.24%
Lipper General
Leveraged
Municipal Debt
Funds Average(4) -19.05% 0.29% 2.87%
Barclays Capital
Municipal
Bond Index(5) -3.30% 2.73% 4.14%
S&P National
Municipal Bond Index(6) -4.15% 2.75% N/A
For the twelve months ended October 31, 2008, the total returns on common share
NAV for all three of the Funds in this report exceeded the average return for
the Lipper General Leveraged Municipal Debt Funds Average. The Funds
underperformed the Barclays Capital Municipal Bond Index and the Standard &
Poor's (S&P) National Municipal Bond Index.
Key management factors that influenced the Funds' returns included duration
positioning, the use of derivatives, credit exposure and sector allocations. In
addition, a major factor affecting each Fund's performance over this period was
the use of leverage. The impact of leverage is discussed in more detail on page
8.
Past performance is not predictive of future results. Current performance may be
higher or lower than the data shown. Returns do not reflect the deduction of
taxes that shareholders may have to pay on Fund distributions or upon the sale
of Fund shares.
For additional information, see the individual Performance Overview for your
Fund in this report.
(3) An inverse floating rate security is a financial instrument designed to pay
long-term tax-exempt interest at a rate that varies inversely with a
short-term tax-exempt interest rate index. For the Nuveen Funds, the index
typically used is the Securities Industry and Financial Markets (SIFM)
Municipal Swap Index (previously referred to as the Bond Market Association
Index or BMA). Inverse floaters, including those inverse floating rate
securities in which the Funds invested during this reporting period, are
further defined within the Notes to Financial Statements and Glossary of
Terms Used in this Report sections of this shareholder report.
(4) The Lipper General Leveraged Municipal Debt Funds Average is calculated
using the returns of all closed-end funds in this category for each period
as follows: 1 year, 54 funds; 5 years, 52 funds; and 10 years, 38 funds.
Fund and Lipper returns assume reinvestment of dividends.
(5) The Barclays Capital (formerly Lehman Brothers) Municipal Bond Index is an
unleveraged, unmanaged national index comprising a broad range of
investment-grade municipal bonds. Results for the Barclays Capital index do
not reflect any expenses.
(6) The Standard & Poor's (S&P) National Municipal Bond Index is an
unleveraged, market value-weighted index designed to measure the
performance of the investment-grade U.S. municipal bond market.
6
Given the changes in the interest rate environment during this period, bonds in
the Barclays Capital Municipal Bond Index with maturities of ten years or less
outperformed the market as a whole, with bonds maturing in one to six years
benefiting the most. Because they were less sensitive to interest rate changes,
these shorter bonds generally outperformed credits with longer maturities, with
the biggest losses posted by bonds with the longest maturities (twenty-two years
and longer). During this period, the Funds' exposure to the underperforming
longer part of the yield curve had a negative influence on their performance.
Overall, NPM was more heavily weighted in the longer part of the curve than NPI
or NPT.
As mentioned earlier, NPI used derivatives positions throughout this period to
synthetically shorten duration and move it closer to our strategic duration
target. Over this time, in contrast to historical trends, the taxable markets
and the municipal market moved in opposite directions. As a result, the
derivative positions used in NPI, which reduced duration in the outperforming
taxable markets, detracted the Fund's performance.
In addition, the inverse floaters used by all three of these Funds generally had
a negative impact on performance. This resulted from the fact that the inverse
floaters effectively increased the Funds' exposure to longer maturity bonds at a
time when shorter maturities were in favor in the market.
Credit exposure, including exposure to bonds backed by municipal bond insurers,
also was a factor in performance during this period. Because risk-averse
investors generally sought higher quality investments as disruptions in the
financial markets deepened, bonds with higher credit quality ratings typically
performed very well. However, insured bonds with underlying credits that were
rated BBB or non-rated, originally purchased because of the higher yields they
offered, experienced a disproportionately negative impact (compared with bonds
with underlying credits rated AA or A) if the insurer backing the bond was
downgraded from AAA. As many investors avoided high-yield securities, bonds
rated BBB or below and non-rated bonds generally posted poor returns. As of
October 31, 2008, allocations of bonds rated BBB and lower and non-rated bonds
accounted for approximately 10% of NPI's portfolio, 16% of NPM, and 11% of NPT.
This lower-rated credit exposure was a negative influence on Funds' performances
for this period. Conversely, the Funds' weightings in bonds rated AAA were
generally positive for performance.
Sectors of the market that generally contributed positively to the Funds'
performances included general obligation bonds, resource recovery, water and
sewer and utilities. Pre-refunded bonds, which are usually backed by U.S.
Treasury securities, were one of the top performing segments of the market, due
primarily to their shorter effective maturities, higher credit quality and
perceived safety. Holdings of pre-refunded bonds ranged from 19% to 26% among
these Funds, with NPI having the heaviest weighting of pre-refunded issues and
NPM the smallest.
In general, bonds that carried any credit risk, regardless of sector, posted
weak performance. Revenue bonds as a whole, and the industrial development
sector in particular, underperformed the general municipal market. Next to the
industrial development sector, zero coupon bonds were among the worst performing
categories. The health care and housing sectors also performed very poorly, as
did lower-rated bonds backed by the 1998 master tobacco settlement agreement.
7
IMPACT OF THE FUNDS' CAPITAL STRUCTURES AND LEVERAGE STRATEGIES ON PERFORMANCE
In addition to the factors mentioned above, one of the primary factors
negatively impacting the annual returns of these Funds relative to those of the
unleveraged indexes was the Funds' use of financial leverage. While leverage
offers opportunities to generate additional income and total returns for common
shareholders, the benefits provided by leveraging are influenced by the price
movements of the bonds in each Fund's portfolio. During this period, as yields
on longer-term bonds rose and their prices correspondingly fell, declining
valuations had a negative effect on performance that was magnified by the use of
leverage. In addition, at various points during the twelve-month period, the
Funds' borrowing costs were relatively high, negatively impacting their total
returns. In the turbulent market environment of the past twelve months, the
impact of any valuation change in the Funds' holdings--whether positive or
negative--was magnified by the use of leverage.
RECENT DEVELOPMENTS IN THE MARKET ENVIRONMENT
Beginning in October, the nation's financial institutions and financial
markets--including the municipal bond market--experienced significant turmoil.
Reductions in demand decreased valuations of municipal bonds across all credit
ratings, especially those with lower credit ratings, and this generally reduced
the Funds' net asset values. The municipal market is one in which dealer firms
make markets in bonds on a principal basis using their proprietary capital, and
during the recent market turmoil these firms' capital was severely constrained.
As a result, some firms were unwilling to commit their capital to purchase and
to serve as a dealer for municipal bonds. This reduction in dealer involvement
in the market was accompanied by significant net selling pressure by investors,
particularly with respect to lower-rated municipal bonds, as institutional
investors generally removed money from the municipal bond market, at least in
part because of their need to reduce the leveraging of their municipal
investments. This de-leveraging was in part driven by the overall reduction in
the amount of financing available for such leverage, the increased costs of such
leverage financing, and the need to reduce leverage levels that had recently
increased due to the decline in municipal bond prices.
Municipal bond prices were further negatively impacted by concerns that the need
for further de-leveraging and a supply overhang as a large amount of new issues
were postponed would cause selling pressure to persist for a period of time. In
addition to falling prices, these market conditions resulted in greater price
volatility of municipal bonds; wider credit spreads (i.e., lower quality bonds
fell in price more than higher quality bonds); significantly reduced liquidity
(i.e., the ability to sell bonds at a price close to their carrying value),
particularly for lower quality bonds; and a lack of price transparency (i.e.,
the ability to accurately determine the price at which a bond would likely
trade). Reduced liquidity was most pronounced in mid-October, and although
liquidity improved considerably over ensuing weeks, it may reoccur if financial
turmoil persists or worsens.
8
RECENT DEVELOPMENTS REGARDING BOND INSURANCE COMPANIES
As mentioned earlier, another factor that had an impact on the performance of
these Funds was their position in bonds backed by municipal bond insurers that
experienced downgrades in their credit ratings. During the period covered by
this report, ACA, AMBAC, CIFG, FGIC, MBIA, RAAI and SYNCORA (formerly XLCA)
experienced one or more rating reductions by at least one or more rating
agencies. Subsequent to the reporting period, AMBAC, MBIA and SYNCORA
experienced further rating reductions while FSA received its first rating
reduction by at least one rating agency. At the time this report was prepared,
at least one rating agency has placed each of these insurers on "negative
outlook" or "negative credit watch," which may presage one or more rating
reductions for such insurer or insurers in the future. As concern increased
about the balance sheets of these insurers, prices on bonds insured by these
companies - especially those bonds with weaker underlying credits - declined,
detracting from the Funds' performance. By the end of this period, most insured
bond's were being valued according to their fundamentals as if they were
insured. On the whole, the holdings of all of our Funds continued to be well
diversified not only between insured and uninsured bonds, but also within the
insured bond category. It is important to note that municipal bonds historically
have had a very low rate of default.
RECENT DEVELOPMENTS IN THE AUCTION RATE PREFERRED SECURITIES MARKETS
Beginning in February 2008, more shares for sale were submitted in the regularly
scheduled auctions for the auction rate preferred shares issued by these Funds
than there were offers to buy. This meant that these auctions "failed to clear''
and that many or all auction rate preferred shareholders who wanted to sell
their shares in these auctions were unable to do so. This decline in liquidity
in auction rate preferred shares did not lower the credit quality of these
shares, and auction rate preferred shareholders unable to sell their shares
received distributions at the "maximum rate'' applicable to failed auctions as
calculated in accordance with the pre-established terms of the auction rate
preferred shares.
On June 11, 2008, Nuveen announced the Fund Board's approval of plans to use
tender option bonds (TOBs), also known as floating rate securities, to refinance
a portion of the municipal Funds' outstanding auction rate preferred shares, for
which auctions have been failing for several months. This plan included an
initial phase of approximately $1 billion in forty-one funds. During the
twelve-month reporting period, NPI, NPM and NPT redeemed $109,550,000,
$63,450,000 and $36,200,000 of their outstanding auction rate preferred shares,
respectively, at liquidation value, using the proceeds from the issuance of
TOBs.
On August 7, 2008, four Nuveen municipal Funds (none of which are included in
this shareholder report) issued par redemption notices for all outstanding
shares of their auction rate preferred shares totaling $569.9 million. These
redemptions were achieved through the issuance of variable rate demand preferred
shares (VRDP) in conjunction with the proceeds from the creation of TOBs.
For current, up-to-date information, please visit the Nuveen CEF Auction Rate
Preferred Resource Center at:
http://www.nuveen.com/ResourceCenter/AuctionRatePreferred.aspx.
9
Common Share
Dividend and Share Price
INFORMATION
During the twelve-month period ended October 31, 2008, there was one dividend
increase in both NPI and NPT, while the dividend of NPM remained stable
throughout the reporting period.
Due to capital gains generated by normal portfolio activity, common shareholders
of the Funds received capital gains and/or net ordinary income distributions at
the end of December 2007 as follows:
Short-Term Capital Gains
Long-Term Capital Gains and/or Ordinary Income
(per share) (per share)
NPI -- $0.0009
NPM $0.0215 $0.0040
NPT -- $0.0036
All of the Funds in this report seek to pay stable dividends at rates that
reflect each Fund's past results and projected future performance. During
certain periods, each Fund may pay dividends at a rate that may be more or less
than the amount of net investment income actually earned by the Fund during the
period. If a Fund has cumulatively earned more than it has paid in dividends, it
holds the excess in reserve as undistributed net investment income (UNII) as
part of the Fund's NAV. Conversely, if a Fund has cumulatively paid dividends in
excess of its earnings, the excess constitutes negative UNII that is likewise
reflected in the Fund's NAV. Each Fund will, over time, pay all of its net
investment income as dividends to shareholders. As of October 31, 2008, all
three Funds in this report had positive UNII balances for tax purposes, while
NPI and NPT had positive UNII balances and NPM had a negative UNII balance for
financial statement purposes.
10
The Funds' Board of Directors approved an open-market share repurchase program
on July 10, 2007, for NPM and on July 30, 2008, for NPI and NPT under which each
Fund may repurchase up to 10% of its common shares. As of October 31, 2008, NPM
had cumulatively repurchased 297,500 common shares, representing approximately
0.7% of the Fund's total common shares outstanding.
As of October 31, 2008, the Funds' common share prices were trading at discounts
to their common share NAVs as shown in the accompanying chart:
10/31/08 Twelve-Month
Discount Average Discount
NPI -7.84% -8.32%
NPM -12.21% -9.57%
NPT -12.75% -12.40%
11
NPI
Performance
OVERVIEW
Nuveen Premium
Income Municipal
Fund, Inc.
as of October 31, 2008
Pie Chart:
Credit Quality (as a % of total investments)(1),(2)
AAA/U.S. Guaranteed 41%
AA 37%
A 12%
BBB 8%
N/R 2%
Bar Chart:
2007-2008 Monthly Tax-Free Dividends Per Common Share(4)
Nov 0.059
Dec 0.059
Jan 0.059
Feb 0.059
Mar 0.059
Apr 0.059
May 0.059
Jun 0.059
Jul 0.059
Aug 0.059
Sep 0.06
Oct 0.06
Line Chart:
Common Share Price Performance -- Weekly Closing Price
11/01/07 13.27
13.3
12.8
12.55
12.82
13.12
13.21
12.9
12.71
13.17
13.66
13.87
13.63
13.94
13.79
13.99
13.17
12.68
12.41
13.04
12.96
13.08
13.18
13.22
13.32
13.36
13.26
13.22
13.26
13.33
13.23
13.25
13.29
13.04
12.75
12.73
12.92
12.96
12.71
12.77
12.65
12.85
12.76
12.71
12.92
13.05
12.79
12.55
11.39
11.24
8.22
9.85
10.98
10/31/08 10.93
FUND SNAPSHOT
------------------------------------
Common Share Price $10.93
------------------------------------
Common Share
Net Asset Value $11.86
------------------------------------
Premium/(Discount) to NAV -7.84%
------------------------------------
Market Yield 6.59%
------------------------------------
Taxable-Equivalent Yield(3) 9.15%
------------------------------------
Net Assets Applicable to
Common Shares ($000) $756,782
------------------------------------
Average Effective Maturity
on Securities (Years) 14.56
------------------------------------
Leverage-Adjusted Duration 13.97
------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 7/18/88)
------------------------------------
ON SHARE PRICE ON NAV
------------------------------------
1-Year -13.10% -15.39%
------------------------------------
5-Year 0.79% 0.93%
------------------------------------
10-Year 2.84% 2.96%
------------------------------------
STATES
(as a % of total investments)(2)
------------------------------------
California 13.1%
------------------------------------
Texas 10.3%
------------------------------------
New York 8.2%
------------------------------------
New Jersey 6.2%
------------------------------------
Illinois 5.9%
------------------------------------
South Carolina 4.2%
------------------------------------
Florida 3.6%
------------------------------------
Colorado 3.3%
------------------------------------
Minnesota 3.1%
------------------------------------
Pennsylvania 3.0%
------------------------------------
Massachusetts 3.0%
------------------------------------
Nevada 2.8%
------------------------------------
Washington 2.6%
------------------------------------
Michigan 2.6%
------------------------------------
District of Columbia 2.5%
------------------------------------
Louisiana 2.4%
------------------------------------
Wisconsin 2.4%
------------------------------------
Alabama 2.3%
------------------------------------
Other 18.5%
------------------------------------
INDUSTRIES
(as a % of total investments)(2)
------------------------------------
U.S. Guaranteed 26.0%
------------------------------------
Health Care 15.0%
------------------------------------
Tax Obligation/Limited 14.2%
------------------------------------
Tax Obligation/General 11.5%
------------------------------------
Transportation 11.1%
------------------------------------
Utilities 5.8%
------------------------------------
Education and Civic
Organizations 4.0%
------------------------------------
Other 12.4%
------------------------------------
(1) The percentages shown in the foregoing chart may reflect the ratings on
certain bonds insured by ACA, AMBAC, CIFG, FGIC, FSA, MBIA, RAAI and
SYNCORA as of October 31, 2008. Please see the Portfolio Manager's
Commentary for an expanded discussion of the affect on the Fund of changes
to the ratings of certain bonds in the portfolio resulting from changes to
the ratings of the underlying insurers both during the period and after
period end.
(2) Excluding derivative transactions.
(3) Taxable-Equivalent Yield represents the yield that must be earned on a
fully taxable investment in order to equal the yield of the Fund on an
after-tax basis. It is based on a federal income tax rate of 28%. When
comparing this Fund to investments that generate qualified dividend income,
the Taxable-Equivalent Yield is lower.
(4) The Fund paid shareholders net ordinary income distributions in December
2007 of $0.0009 per share.
12
NPM
Performance
OVERVIEW
Nuveen Premium
Income Municipal
Fund 2, Inc.
as of October 31, 2008
Pie Chart:
Credit Quality (as a % of total investments)(1)
AAA/U.S. Guaranteed 32%
AA 37%
A 15%
BBB 11%
BB or Lower 1%
N/R 4%
Bar Chart:
2007-2008 Monthly Tax-Free Dividends Per Common Share(3)
Nov 0.0575
Dec 0.0575
Jan 0.0575
Feb 0.0575
Mar 0.0575
Apr 0.0575
May 0.0575
Jun 0.0575
Jul 0.0575
Aug 0.0575
Sep 0.0575
Oct 0.0575
Line Chart:
Common Share Price Performance -- Weekly Closing Price
11/01/07 13.21
13.24
12.86
12.53
13.16
13.17
13.41
13.15
13.16
13.45
13.97
14.01
13.81
13.99
14
14.14
13.27
13.01
12.59
13.09
12.61
12.72
13.01
12.99
13
13.17
13.26
13.23
13.44
13.41
13.24
13.53
13.51
13.32
12.88
12.45
12.56
12.72
12.55
12.72
12.67
12.85
12.62
12.6
12.67
12.73
12.35
11.89
10.6
10.87
7.73
9.53
10.7
10/31/08 10.28
FUND SNAPSHOT
------------------------------------
Common Share Price $10.28
------------------------------------
Common Share
Net Asset Value $11.71
------------------------------------
Premium/(Discount) to NAV -12.21%
------------------------------------
Market Yield 6.71%
------------------------------------
Taxable-Equivalent Yield(2) 9.32%
------------------------------------
Net Assets Applicable to
Common Shares ($000) $477,603
------------------------------------
Average Effective Maturity
on Securities (Years) 14.16
------------------------------------
Leverage-Adjusted Duration 15.51
------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 7/23/92)
------------------------------------
ON SHARE PRICE ON NAV
------------------------------------
1-Year -17.95% -16.96%
------------------------------------
5-Year -0.42% 0.60%
------------------------------------
10-Year 1.47% 2.89%
------------------------------------
STATES
(as a % of total investments)
------------------------------------
California 10.4%
------------------------------------
Illinois 8.9%
------------------------------------
Texas 8.3%
------------------------------------
South Carolina 6.9%
------------------------------------
New York 6.7%
------------------------------------
Washington 6.5%
------------------------------------
Massachusetts 4.7%
------------------------------------
New Jersey 4.3%
------------------------------------
Louisiana 3.7%
------------------------------------
Ohio 2.9%
------------------------------------
Missouri 2.8%
------------------------------------
Minnesota 2.7%
------------------------------------
Alabama 2.7%
------------------------------------
Oklahoma 2.6%
------------------------------------
Michigan 2.6%
------------------------------------
Nevada 2.6%
------------------------------------
Wisconsin 2.0%
------------------------------------
Other 18.7%
------------------------------------
INDUSTRIES
(as a % of total investments)
------------------------------------
U.S. Guaranteed 19.2%
------------------------------------
Health Care 17.2%
------------------------------------
Tax Obligation/Limited 15.4%
------------------------------------
Tax Obligation/General 15.0%
------------------------------------
Utilities 11.1%
------------------------------------
Transportation 5.5%
------------------------------------
Education and Civic
Organizations 4.9%
------------------------------------
Other 11.7%
------------------------------------
(1) The percentages shown in the foregoing chart may reflect the ratings on
certain bonds insured by ACA, AMBAC, CIFG, FGIC, FSA, MBIA, RAAI and
SYNCORA as of October 31, 2008. Please see the Portfolio Manager's
Commentary for an expanded discussion of the affect on the Fund of changes
to the ratings of certain bonds in the portfolio resulting from changes to
the ratings of the underlying insurers both during the period and after
period end.
(2) Taxable-Equivalent Yield represents the yield that must be earned on a
fully taxable investment in order to equal the yield of the Fund on an
after-tax basis. It is based on a federal income tax rate of 28%. When
comparing this Fund to investments that generate qualified dividend income,
the Taxable-Equivalent Yield is lower.
(3) The Fund paid shareholders capital gains and net ordinary income
distributions in December 2007 of $0.0255 per share.
13
NPT
Performance
OVERVIEW
Nuveen Premium
Income Municipal
Fund 4, Inc.
as of October 31, 2008
Pie Chart:
Credit Quality (as a % of total investments)(1)
AAA/U.S. Guaranteed 38%
AA 38%
A 13%
BBB 6%
BB or Lower 2%
N/R 3%
Bar Chart:
2007-2008 Monthly Tax-Free Dividends Per Common Share(3)
Nov 0.0485
Dec 0.0485
Jan 0.0485
Feb 0.0485
Mar 0.0485
Apr 0.0485
May 0.0485
Jun 0.0485
Jul 0.0485
Aug 0.0485
Sep 0.0515
Oct 0.0515
Line Chart:
Common Share Price Performance -- Weekly Closing Price
11/01/07 11.74
11.77
11.35
11.21
11.39
11.63
11.51
11.47
11.39
11.56
12.01
12.03
11.98
12.1
11.98
12.1
11.54
11.32
10.96
11.46
11.08
11.13
11.31
11.45
11.42
11.54
11.45
11.49
11.5
11.6
11.53
11.63
11.62
11.29
11.09
11.11
11.19
11.07
10.8499
10.85
10.87
10.89
11
10.96
10.98
11.07
10.97
10.52
9.57
9.54
7.74
8.49
9.3
10/31/08 9.24
FUND SNAPSHOT
------------------------------------
Common Share Price $9.24
------------------------------------
Common Share
Net Asset Value $10.59
------------------------------------
Premium/(Discount) to NAV -12.75%
------------------------------------
Market Yield 6.69%
------------------------------------
Taxable-Equivalent Yield(2) 9.29%
------------------------------------
Net Assets Applicable to
Common Shares ($000) $457,866
------------------------------------
Average Effective Maturity
on Securities (Years) 15.01
------------------------------------
Leverage-Adjusted Duration 15.50
------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 2/19/93)
------------------------------------
ON SHARE PRICE ON NAV
------------------------------------
1-Year -17.19% -15.97%
------------------------------------
5-Year -0.23% 1.10%
------------------------------------
10-Year 1.37% 2.24%
------------------------------------
STATES
(as a % of total investments)
------------------------------------
Texas 12.1%
------------------------------------
Illinois 9.2%
------------------------------------
California 8.8%
------------------------------------
Indiana 6.1%
------------------------------------
Washington 6.1%
------------------------------------
New York 5.3%
------------------------------------
Louisiana 4.1%
------------------------------------
Michigan 4.0%
------------------------------------
Florida 3.9%
------------------------------------
New Jersey 3.1%
------------------------------------
Colorado 3.0%
------------------------------------
Alabama 3.0%
------------------------------------
South Carolina 2.7%
------------------------------------
Ohio 2.0%
------------------------------------
North Carolina 1.9%
------------------------------------
Rhode Island 1.8%
------------------------------------
Wisconsin 1.8%
------------------------------------
Pennsylvania 1.7%
------------------------------------
Other 19.4%
------------------------------------
INDUSTRIES
(as a % of total investments)
------------------------------------
U.S. Guaranteed 21.4%
------------------------------------
Tax Obligation/Limited 15.6%
------------------------------------
Health Care 15.2%
------------------------------------
Tax Obligation/General 13.1%
------------------------------------
Utilities 9.0%
------------------------------------
Transportation 7.0%
------------------------------------
Water and Sewer 5.6%
------------------------------------
Other 13.1%
------------------------------------
(1) The percentages shown in the foregoing chart may reflect the ratings on
certain bonds insured by ACA, AMBAC, CIFG, FGIC, FSA, MBIA, RAAI and
SYNCORA as of October 31, 2008. Please see the Portfolio Manager's
Commentary for an expanded discussion of the affect on the Fund of changes
to the ratings of certain bonds in the portfolio resulting from changes to
the ratings of the underlying insurers both during the period and after
period end.
(2) Taxable-Equivalent Yield represents the yield that must be earned on a
fully taxable investment in order to equal the yield of the Fund on an
after-tax basis. It is based on a federal income tax rate of 28%. When
comparing this Fund to investments that generate qualified dividend income,
the Taxable-Equivalent Yield is lower.
(3) The Fund paid shareholders net ordinary income distributions in December
2007 of $0.0036 per share.
14
NPI
NPM
NPT
Shareholder MEETING REPORT
The annual meeting of shareholders was held on July 29, 2008, at The Northern
Trust Company, 50 South a Salle Street, Chicago, IL 60675; at this meeting the
shareholders were asked to vote on the election of Board Members, the
elimination of Fundamental Investment Policies and the approval of new
Fundamental Investment Policies. The meeting was subsequently adjourned to
August 29, 2008, and additionally adjourned to September 30, 2008, October 28,
2008 and November 25, 2008.
NPI NPM NPT
------------------------------------------------------------------------------------------------------------------------------------
Common and Common and Common and
Preferred Preferred Preferred Preferred Preferred Preferred
shares voting shares voting shares voting shares voting shares voting shares voting
together together together together together together
as a class as a class as a class as a class as a class as a class
====================================================================================================================================
TO APPROVE THE ELIMINATION OF THE FUND'S
FUNDAMENTAL POLICY RELATING TO INVESTMENTS
IN MUNICIPAL SECURITIES AND BELOW INVESTMENT
GRADE SECURITIES.
For 32,486,062 3,973 19,162,094 3,218 22,123,453 2,954
Against 2,304,118 829 1,364,811 520 2,058,177 386
Abstain 1,199,485 125 644,829 179 825,332 165
Broker Non-Votes 10,550,299 11,669 5,840,427 8,071 6,899,268 8,302
------------------------------------------------------------------------------------------------------------------------------------
Total 46,539,964 16,596 27,012,161 11,988 31,906,230 11,807
====================================================================================================================================
TO APPROVE THE NEW FUNDAMENTAL POLICY RELATING
TO INVESTMENTS IN MUNICIPAL SECURITIES FOR
THE FUND.
For 32,686,225 4,158 19,246,953 3,363 22,184,144 3,058
Against 2,052,573 659 1,274,613 378 1,940,047 283
Abstain 1,250,867 110 650,168 176 882,771 164
Broker Non-Votes 10,550,299 11,669 5,840,427 8,071 6,899,268 8,302
------------------------------------------------------------------------------------------------------------------------------------
Total 46,539,964 16,596 27,012,161 11,988 31,906,230 11,807
====================================================================================================================================
TO APPROVE THE ELIMINATION OF THE
FUNDAMENTAL POLICY RELATING TO INVESTING IN
OTHER INVESTMENT COMPANIES.
For 32,340,936 4,133 19,076,745 3,334 21,792,708 3,034
Against 2,282,901 690 1,397,958 407 2,330,331 301
Abstain 1,365,828 104 697,031 176 883,923 170
Broker Non-Votes 10,550,299 11,669 5,840,427 8,071 6,899,268 8,302
------------------------------------------------------------------------------------------------------------------------------------
Total 46,539,964 16,596 27,012,161 11,988 31,906,230 11,807
====================================================================================================================================
TO APPROVE THE ELIMINATION OF THE FUNDAMENTAL
POLICY RELATING TO DERIVATIVES AND SHORT SALES.
For 32,119,814 3,940 19,028,570 3,159 21,727,935 2,959
Against 2,525,662 868 1,406,219 552 2,404,022 397
Abstain 1,344,189 119 736,945 206 875,005 149
Broker Non-Votes 10,550,299 11,669 5,840,427 8,071 6,899,268 8,302
------------------------------------------------------------------------------------------------------------------------------------
Total 46,539,964 16,596 27,012,161 11,988 31,906,230 11,807
====================================================================================================================================
TO APPROVE THE ELIMINATION OF THE FUNDAMENTAL
POLICY RELATING TO COMMODITIES.
For 32,130,877 3,948 18,969,653 3,181 21,438,602 2,959
Against 2,490,475 847 1,482,706 533 2,651,920 394
Abstain 1,368,313 132 719,375 203 916,440 152
Broker Non-Votes 10,550,299 11,669 5,840,427 8,071 6,899,268 8,302
------------------------------------------------------------------------------------------------------------------------------------
Total 46,539,964 16,596 27,012,161 11,988 31,906,230 11,807
====================================================================================================================================
15
NPI
NPM
NPT
Shareholder MEETING REPORT (continued)
NPI NPM NPT
------------------------------------------------------------------------------------------------------------------------------------
Common and Common and Common and
Preferred Preferred Preferred Preferred Preferred Preferred
shares voting shares voting shares voting shares voting shares voting shares voting
together together together together together together
as a class as a class as a class as a class as a class as a class
====================================================================================================================================
TO APPROVE THE NEW FUNDAMENTAL POLICY
RELATING TO COMMODITIES.
For 32,236,711 4,005 18,967,381 3,303 21,480,076 2,987
Against 2,395,532 803 1,489,999 483 2,646,851 371
Abstain 1,357,422 119 714,354 131 880,035 147
Broker Non-Votes 10,550,299 11,669 5,840,427 8,071 6,899,268 8,302
------------------------------------------------------------------------------------------------------------------------------------
Total 46,539,964 16,596 27,012,161 11,988 31,906,230 11,807
====================================================================================================================================
APPROVAL OF THE BOARD MEMBERS
WAS REACHED AS FOLLOWS:
John P. Amboian
For 44,554,451 -- 25,865,281 -- 29,902,663 --
Withhold 1,985,270 -- 1,146,854 -- 2,001,260 --
------------------------------------------------------------------------------------------------------------------------------------
Total 46,539,721 -- 27,012,135 -- 31,903,923 --
====================================================================================================================================
Robert P. Bremner
For 44,532,645 -- 25,842,212 -- 29,906,777 --
Withhold 2,007,076 -- 1,169,923 -- 1,997,146 --
------------------------------------------------------------------------------------------------------------------------------------
Total 46,539,721 -- 27,012,135 -- 31,903,923 --
====================================================================================================================================
Jack B. Evans
For 44,549,539 -- 25,836,629 -- 29,905,751 --
Withhold 1,990,182 -- 1,175,506 -- 1,998,172 --
------------------------------------------------------------------------------------------------------------------------------------
Total 46,539,721 -- 27,012,135 -- 31,903,923 --
====================================================================================================================================
William C. Hunter
For -- 15,725 -- 11,580 -- 11,414
Withhold -- 828 -- 382 -- 386
------------------------------------------------------------------------------------------------------------------------------------
Total -- 16,553 -- 11,962 -- 11,800
====================================================================================================================================
David J. Kundert
For 44,539,857 -- 25,834,078 -- 29,899,070 --
Withhold 1,999,864 -- 1,178,057 -- 2,004,853 --
------------------------------------------------------------------------------------------------------------------------------------
Total 46,539,721 -- 27,012,135 -- 31,903,923 --
====================================================================================================================================
William J. Schneider
For -- 15,725 -- 11,580 -- 11,410
Withhold -- 828 -- 382 -- 390
------------------------------------------------------------------------------------------------------------------------------------
Total -- 16,553 -- 11,962 -- 11,800
====================================================================================================================================
Judith M. Stockdale
For 44,531,026 -- 25,853,740 -- 29,906,876 --
Withhold 2,008,695 -- 1,158,395 -- 1,997,047 --
------------------------------------------------------------------------------------------------------------------------------------
Total 46,539,721 -- 27,012,135 -- 31,903,923 --
====================================================================================================================================
Carole E. Stone
For 44,524,443 -- 25,869,062 -- 29,894,432 --
Withhold 2,015,278 -- 1,143,073 -- 2,009,491 --
------------------------------------------------------------------------------------------------------------------------------------
Total 46,539,721 -- 27,012,135 -- 31,903,923 --
====================================================================================================================================
Terence J. Toth
For 44,538,235 -- 25,860,896 -- 29,903,977 --
Withhold 2,001,486 -- 1,151,239 -- 1,999,946 --
------------------------------------------------------------------------------------------------------------------------------------
Total 46,539,721 -- 27,012,135 -- 31,903,923 --
====================================================================================================================================
16
Report of
INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
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. (the "Funds") as of October 31, 2008, and the related
statements of operations and cash flows 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 the standards of the Public Company
Accounting Oversight Board (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. We were
not engaged to perform an audit of the Funds' internal control over financial
reporting. Our audits included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Funds' internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall
financial statement presentation. Our procedures included confirmation of
securities owned as of October 31, 2008, by correspondence with the custodian
and brokers or by other appropriate auditing procedures where replies from
brokers were not received. 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, 2008,
the results of their operations and cash flows for the year then ended, 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 U.S. generally accepted accounting principles.
/s/ Ernst & Young LLP
Chicago, Illinois
December 23, 2008
17
NPI
Nuveen Premium Income Municipal Fund, Inc.
Portfolio of INVESTMENTS
October 31, 2008
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
ALABAMA - 3.7% (2.3% OF TOTAL INVESTMENTS)
$ 4,050 Alabama 21st Century Authority, Tobacco Settlement Revenue 6/10 at 102.00 A- $ 3,829,437
Bonds, Series 2000, 6.125%, 12/01/16
Alabama Special Care Facilities Financing Authority, Revenue Bonds,
Ascension Health, Series 2006C-2:
1,435 5.000%, 11/15/36 (UB) 11/16 at 100.00 AA 1,186,028
4,000 5.000%, 11/15/39 (UB) 11/16 at 100.00 AA 3,269,960
6,000 Alabama Special Care Facilities Financing Authority, Revenue Bonds, 11/16 at 100.00 AA 4,904,940
Ascension Health, Series 2006D, 5.000%, 11/15/39 (UB)
Birmingham Special Care Facilities Financing Authority, Alabama,
Revenue Bonds, Baptist Health System Inc., Series 2005A:
6,000 5.250%, 11/15/20 11/15 at 100.00 Baa1 5,134,841
1,300 5.000%, 11/15/30 11/15 at 100.00 Baa1 937,885
4,000 Birmingham Waterworks And Sewer Board, Alabama, Water and 1/17 at 100.00 A3 1,203,040
Sewer Revenue Bonds, Tender Option Bond Trust 2707,
0.596%, 1/01/43 - AMBAC Insured (IF)
2,890 Courtland Industrial Development Board, Alabama, Pollution 6/15 at 100.00 BBB 2,006,961
Control Revenue Bonds, International Paper Company,
Series 2005A, 5.000%, 6/01/25
5,020 DCH Health Care Authority, Alabama, Healthcare Facilities 6/12 at 101.00 A+ 4,801,881
Revenue Bonds, Series 2002, 5.250%, 6/01/18
1,000 Montgomery BMC Special Care Facilities Financing Authority, 11/14 at 100.00 A3 (4) 1,087,690
Alabama, Revenue Bonds, Baptist Medical Center, Series 2004C,
5.250%, 11/15/29 (Pre-refunded 11/15/14)
------------------------------------------------------------------------------------------------------------------------------------
35,695 Total Alabama 28,362,663
------------------------------------------------------------------------------------------------------------------------------------
ALASKA - 2.1% (1.3% OF TOTAL INVESTMENTS)
Anchorage, Alaska, General Obligation Refunding Bonds, Series 2003A:
2,000 5.250%, 9/01/17 (Pre-refunded 9/01/13) - FGIC Insured (5) 9/13 at 100.00 AA (4) 2,178,620
2,035 5.250%, 9/01/18 (Pre-refunded 9/01/13) - FGIC Insured 9/13 at 100.00 AA (4) 2,216,746
5,000 Northern Tobacco Securitization Corporation, Alaska, Tobacco 6/10 at 100.00 AAA 5,295,700
Settlement Asset-Backed Bonds, Series 2000, 6.500%, 6/01/31
(Pre-refunded 6/01/10)
10,500 Northern Tobacco Securitization Corporation, Alaska, Tobacco 6/14 at 100.00 Baa3 6,193,530
Settlement Asset-Backed Bonds, Series 2006A, 5.000%, 6/01/32
------------------------------------------------------------------------------------------------------------------------------------
19,535 Total Alaska 15,884,596
------------------------------------------------------------------------------------------------------------------------------------
ARIZONA - 1.4% (0.8% OF TOTAL INVESTMENTS)
Glendale Industrial Development Authority, Arizona, Revenue Bonds,
John C. Lincoln Health Network, Series 2005B:
500 5.250%, 12/01/24 12/15 at 100.00 BBB 405,505
660 5.250%, 12/01/25 12/15 at 100.00 BBB 526,878
2,910 Pima County Industrial Development Authority, Arizona, Lease 1/09 at 100.00 Aaa 2,924,521
Obligation Revenue Refunding Bonds, Tucson Electric Power
Company, Series 1988A, 7.250%, 7/15/10 - FSA Insured
4,100 Salt Verde Financial Corporation, Arizona, Senior Gas Revenue No Opt. Call AA- 2,482,427
Bonds, Series 2007, 5.000%,12/01/37
4,130 University of Arizona, Certificates of Participation, Series 2002B, 6/12 at 100.00 AA 4,169,483
5.125%, 6/01/18 - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
12,300 Total Arizona 10,508,814
------------------------------------------------------------------------------------------------------------------------------------
18
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
ARKANSAS - 1.0% (0.6% OF TOTAL INVESTMENTS)
$ 480 Paragould, Arkansas, Water, Sewer and Electric Revenue Bonds, 12/10 at 100.00 AA (4) $ 511,517
Series 2000, 5.650%, 12/01/25 (Pre-refunded 12/01/10) -
AMBAC Insured
5,245 University of Arkansas, Fayetteville, Athletic Facilities Revenue 9/09 at 100.00 Aa3 5,134,750
Bonds, Razorback Stadium, Series 1999, 5.050%, 9/15/20 -
AMBAC Insured
2,000 Washington County, Arkansas, Hospital Revenue Bonds, Washington 2/15 at 100.00 Baa1 1,553,440
Regional Medical Center, Series 2005B, 5.000%, 2/01/25
------------------------------------------------------------------------------------------------------------------------------------
7,725 Total Arkansas 7,199,707
------------------------------------------------------------------------------------------------------------------------------------
CALIFORNIA - 21.7% (13.1% OF TOTAL INVESTMENTS)
9,200 Alameda Corridor Transportation Authority, California, Subordinate No Opt. Call AA 4,603,772
Lien Revenue Bonds, Series 2004A, 0.000%, 10/01/20 -
AMBAC Insured
10,000 Anaheim Public Finance Authority, California, Public Improvement 9/17 at 100.00 AA 7,391,000
Project Lease Bonds, Series 2007A-1, 4.375%, 3/01/37 -
FGIC Insured
4,000 California Department of Water Resources, Power Supply Revenue 5/12 at 101.00 Aaa 4,448,160
Bonds, Series 2002A, 6.000%, 5/01/15 (Pre-refunded 5/01/12)
5,400 California Educational Facilities Authority, Revenue Bonds, 10/15 at 100.00 Aa1 4,913,352
University of Southern California, Series 2005,
4.750%, 10/01/28 (UB)
1,500 California Educational Facilities Authority, Revenue Bonds, 11/15 at 100.00 A2 1,331,475
University of the Pacific, Series 2006, 5.000%, 11/01/30
California Health Facilities Financing Authority, Health Facility
Revenue Bonds, Adventist Health System/West, Series 2003A:
3,700 5.000%, 3/01/28 3/13 at 100.00 A 3,068,854
7,000 5.000%, 3/01/33 3/13 at 100.00 A 5,524,400
5,425 California Health Facilities Financing Authority, Revenue Bonds, No Opt. Call A 5,252,811
Catholic Healthcare West, Series 2004I, 4.950%, 7/01/26
(Mandatory put 7/01/14)
8,560 California Health Facilities Financing Authority, Revenue Bonds, 11/15 at 100.00 A2 7,251,604
Cedars-Sinai Medical Center, Series 2005, 5.000%, 11/15/27
8,570 California Health Facilities Financing Authority, Revenue Bonds, 4/16 at 100.00 A+ 6,792,668
Kaiser Permanante System, Series 2006, 5.000%, 4/01/37
955 California Health Facilities Financing Authority, Revenue Bonds, 11/16 at 100.00 AA- 551,695
Sutter Health, Tender Option Bond Trust 3175,
11.475%, 11/15/42 (IF)
11,395 California State Public Works Board, Lease Revenue Bonds, No Opt. Call A 11,857,751
Department of Corrections, Series 1993E, 5.500%, 6/01/15
California Statewide Community Development Authority, Revenue
Bonds, Daughters of Charity Health System, Series 2005A:
1,640 5.250%, 7/01/30 7/15 at 100.00 BBB 1,192,346
2,730 5.000%, 7/01/39 7/15 at 100.00 BBB 1,769,914
5,000 California Statewide Community Development Authority, Revenue 7/18 at 100.00 AA- 4,451,400
Bonds, St. Joseph Health System, Series 2007A, 5.750%, 7/01/47 -
FGIC Insured
6,605 California Statewide Community Development Authority, Revenue 5/18 at 100.00 AA- 4,414,614
Bonds, Sutter Health, Tender Option Bond Trust 3175,
11.640%, 11/15/48 (IF)
4,000 California, Economic Recovery Revenue Bonds, Series 2004A, No Opt. Call AA+ 4,276,160
5.250%, 7/01/14
California, General Obligation Bonds, Series 2004:
2,000 5.125%, 2/01/25 2/14 at 100.00 A+ 1,924,080
10,000 5.125%, 2/01/26 2/14 at 100.00 A+ 9,563,300
3,575 Chula Vista, California, Industrial Development Revenue Bonds, 6/14 at 102.00 A2 3,271,697
San Diego Gas and Electric Company, Series 1996A,
5.300%, 7/01/21
4,890 Clovis Unified School District, Fresno County, California, General No Opt. Call AA 1,688,028
Obligation Bonds, Series 2006B, 0.000%, 8/01/26 -
MBIA Insured
19
NPI
Nuveen Premium Income Municipal Fund, Inc. (continued)
Portfolio of INVESTMENTS October 31, 2008
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
CALIFORNIA (continued)
Golden State Tobacco Securitization Corporation, California,
Enhanced Tobacco Settlement Asset-Backed Bonds, Series 2007A-1:
$ 7,000 5.000%, 6/01/33 6/17 at 100.00 BBB $ 4,364,920
3,000 5.125%, 6/01/47 6/17 at 100.00 BBB 1,771,500
2,000 5.750%, 6/01/47 6/17 at 100.00 BBB 1,316,560
5,000 Kern Community College District, California, General Obligation No Opt. Call AAA 1,961,100
Bonds, Series 2006, 0.000%, 11/01/24 - FSA Insured
5,470 Los Angeles Harbors Department, California, Revenue Bonds, 8/16 at 102.00 AA 4,642,334
Series 2006A, 5.000%, 8/01/22 - FGIC Insured (Alternative
Minimum Tax)
930 Martinez, California, Home Mortgage Revenue Bonds, No Opt. Call AAA 1,170,135
Series 1983A, 10.750%, 2/01/16 (ETM)
18,140 Pomona, California, GNMA/FNMA Collateralized Securities Program No Opt. Call AAA 22,039,207
Single Family Mortgage Revenue Bonds, Series 1990A,
7.600%, 5/01/23 (ETM)
5,000 Rancho Mirage Joint Powers Financing Authority, California, 7/14 at 100.00 A3 (4) 5,549,700
Revenue Bonds, Eisenhower Medical Center, Series 2004,
5.875%, 7/01/26 (Pre-refunded 7/01/14)
2,000 Redwood City School District, San Mateo County, California, 7/12 at 100.00 A+ 1,855,240
General Obligation Bonds, Series 2002, 5.000%, 7/15/27 -
FGIC Insured
3,700 Sacramento Municipal Utility District, California, Electric Revenue 8/13 at 100.00 AA 3,532,834
Bonds, Series 2003R, 5.000%, 8/15/22 - MBIA Insured
San Diego County, California, Certificates of Participation,
Burnham Institute, Series 2006:
400 5.000%, 9/01/21 9/15 at 102.00 Baa3 331,008
445 5.000%, 9/01/23 9/15 at 102.00 Baa3 356,774
3,500 San Diego Unified Port District, California, Revenue Bonds, 9/14 at 100.00 AA 3,267,845
Series 2004B, 5.000%, 9/01/29 - MBIA Insured
San Joaquin Hills Transportation Corridor Agency, Orange County,
California, Toll Road Revenue Refunding Bonds, Series 1997A:
10,450 0.000%, 1/15/31 - MBIA Insured No Opt. Call AA 2,336,934
7,150 0.000%, 1/15/32 - MBIA Insured No Opt. Call AA 1,491,347
50,400 0.000%, 1/15/34 - MBIA Insured No Opt. Call AA 9,116,856
24,025 0.000%, 1/15/36 - MBIA Insured No Opt. Call AA 3,774,568
------------------------------------------------------------------------------------------------------------------------------------
264,755 Total California 164,417,943
------------------------------------------------------------------------------------------------------------------------------------
COLORADO - 5.4% (3.3% OF TOTAL INVESTMENTS)
2,500 Centennial Water and Sanitation District, Colorado, Water and 12/14 at 100.00 AA 2,452,850
Sewerage Revenue Bonds, Series 2004, 5.000%, 12/01/21 -
FGIC Insured
690 Colorado Educational and Cultural Facilities Authority, Charter 9/15 at 100.00 A 671,598
School Revenue Bonds, Bromley School, Series 2005,
5.125%, 9/15/20 - SYNCORA GTY Insured
2,125 Colorado Health Facilities Authority, Revenue Bonds, Evangelical 6/16 at 100.00 A- 1,604,715
Lutheran Good Samaritan Society, Series 2005, 5.000%, 6/01/29
1,000 Colorado Health Facilities Authority, Revenue Bonds, Parkview 9/14 at 100.00 A3 833,390
Medical Center, Series 2004, 5.000%, 9/01/25
800 Colorado Health Facilities Authority, Revenue Bonds, Poudre Valley 3/15 at 100.00 BBB+ 586,144
Health Care, Series 2005F, 5.000%, 3/01/25
70 Colorado Housing Finance Authority, Single Family Program Senior 11/08 at 105.00 Aaa 70,993
Bonds, Series 1997B-2, 7.000%, 5/01/26 (Alternative Minimum Tax)
95 Colorado Housing Finance Authority, Single Family Program Senior 11/08 at 105.00 Aaa 96,111
Bonds, Series 1997C-2, 6.875%, 11/01/28 (Alternative
Minimum Tax)
445 Colorado Housing Finance Authority, Single Family Program Senior 4/10 at 105.00 AA 466,133
Bonds, Series 2000B-2, 7.250%, 10/01/31 (Alternative
Minimum Tax)
20
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
COLORADO (continued)
$ 8,385 Denver City and County, Colorado, Airport System Revenue Bonds, No Opt. Call A+ $ 8,927,929
Series 1991D, 7.750%, 11/15/13 (Alternative Minimum Tax)
19,810 Denver, Colorado, Excise Tax Revenue Bonds, Convention Center, 3/11 at 100.00 AAA 21,068,331
Series 2001A, 5.500%, 9/01/18 (Pre-refunded 3/01/11) -
FSA Insured
20,500 E-470 Public Highway Authority, Colorado, Senior Revenue Bonds, No Opt. Call AA 3,851,335
Series 2000B, 0.000%, 9/01/32 - MBIA Insured
24 El Paso County, Colorado, FNMA Mortgage-Backed Single Family No Opt. Call Aaa 25,663
Revenue Refunding Bonds, Series 1992A-2, 8.750%, 6/01/11
------------------------------------------------------------------------------------------------------------------------------------
56,444 Total Colorado 40,655,192
------------------------------------------------------------------------------------------------------------------------------------
CONNECTICUT - 0.6% (0.3% OF TOTAL INVESTMENTS)
1,930 Connecticut, General Obligation Bonds, Series 2001C, No Opt. Call AA 2,118,175
5.500%, 12/15/16
2,310 Greater New Haven Water Pollution Control Authority, Connecticut, 11/15 at 100.00 AA 2,166,272
Regional Wastewater System Revenue Bonds, Series 2005A,
5.000%, 11/15/30 - MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
4,240 Total Connecticut 4,284,447
------------------------------------------------------------------------------------------------------------------------------------
DISTRICT OF COLUMBIA - 4.1% (2.5% OF TOTAL INVESTMENTS)
4,460 District of Columbia Housing Finance Agency, GNMA Collateralized 12/08 at 100.00 AAA 4,499,293
Single Family Mortgage Revenue Bonds, Series 1988E-4,
6.375%, 6/01/26 (Alternative Minimum Tax)
9,505 District of Columbia, General Obligation Bonds, Series 1998B, No Opt. Call AA 10,261,408
6.000%, 6/01/20 - MBIA Insured
District of Columbia, Revenue Bonds, Georgetown University,
Series 2001A:
14,105 0.000%, 4/01/24 (Pre-refunded 4/01/11) - MBIA Insured 4/11 at 47.66 AA (4) 6,213,676
7,625 0.000%, 4/01/25 (Pre-refunded 4/01/11) - MBIA Insured 4/11 at 44.82 AA (4) 3,159,419
16,665 0.000%, 4/01/32 (Pre-refunded 4/01/11) - MBIA Insured 4/11 at 29.23 AA (4) 4,503,550
2,130 Washington Convention Center Authority, District of Columbia, 10/16 at 100.00 AA 1,001,334
Senior Lien Dedicated Tax Revenue Bonds, Series 2007,
Residuals 1606, 1.947%, 10/01/30 - AMBAC Insured (IF)
3,335 Washington DC Convention Center Authority, Dedicated Tax 10/16 at 100.00 AA 1,567,817
Revenue Bonds, Residual Series 1730,1731, 1736,
0.469%, 10/01/30 - AMBAC Insured (IF)
------------------------------------------------------------------------------------------------------------------------------------
57,825 Total District of Columbia 31,206,497
------------------------------------------------------------------------------------------------------------------------------------
FLORIDA - 5.9% (3.6% OF TOTAL INVESTMENTS)
4,225 Brevard County Health Facilities Authority, Florida, Revenue Bonds, 4/16 at 100.00 A2 3,047,704
Health First Inc. Project, Series 2005, 5.000%, 4/01/24
8,000 Hillsborough County Aviation Authority, Florida, Revenue Bonds, 10/13 at 100.00 AA 7,596,320
Tampa International Airport, Series 2003A, 5.375%, 10/01/16 -
MBIA Insured (Alternative Minimum Tax)
5,400 Hillsborough County Industrial Development Authority, Florida, 4/10 at 101.00 N/R 3,623,670
Exempt Facilities Remarketed Revenue Bonds, National Gypsum
Company, Apollo Beach Project, Series 2000B, 7.125%, 4/01/30
(Alternative Minimum Tax)
19,750 Miami-Dade County Expressway Authority, Florida, Toll System 7/16 at 100.00 AA 15,567,543
Revenue Bonds, Series 2006, 4.500%, 7/01/33 - AMBAC Insured
5,000 Orange County Health Facilities Authority, Florida, Hospital Revenue 11/10 at 101.00 A1 (4) 5,434,250
Bonds, Adventist Health System/Sunbelt Obligated Group,
Series 2000, 6.500%, 11/15/30 (Pre-refunded 11/15/10)
6,910 South Miami Health Facilities Authority, Florida, Hospital 8/17 at 100.00 AA- 5,436,443
Revenue, Baptist Health System Obligation Group, Series 2007,
5.000%, 8/15/42 (UB)
1,785 Tallahassee, Florida, Energy System Revenue Bonds, Series 2005, 10/15 at 100.00 AA 1,694,268
5.000%, 10/01/28 - MBIA Insured
2,375 Volusia County School Board, Florida, Certificates of Participation, 8/15 at 100.00 Aaa 2,264,373
Series 2005B, 5.000%, 8/01/22 - FSA Insured
------------------------------------------------------------------------------------------------------------------------------------
53,445 Total Florida 44,664,571
------------------------------------------------------------------------------------------------------------------------------------
21
NPI
Nuveen Premium Income Municipal Fund, Inc. (continued)
Portfolio of INVESTMENTS October 31, 2008
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
GEORGIA - 1.9% (1.1% OF TOTAL INVESTMENTS)
$ 2,625 Fulton County Development Authority, Georgia, Revenue Bonds, 5/14 at 100.00 AA $ 2,594,865
Georgia Tech Molecular Science Building, Series 2004,
5.250%, 5/01/24 - MBIA Insured
6,025 Fulton-DeKalb Hospital Authority, Georgia, Revenue Refunding 1/14 at 100.00 AAA 6,139,053
Certificates, Series 2003, 5.250%, 1/01/20 - FSA Insured
4,845 Metropolitan Atlanta Rapid Transit Authority, Georgia, Sales Tax No Opt. Call AA 5,302,271
Revenue Refunding Bonds, Series 1992P, 6.250%, 7/01/20 -
AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
13,495 Total Georgia 14,036,189
------------------------------------------------------------------------------------------------------------------------------------
HAWAII - 1.3% (0.8% OF TOTAL INVESTMENTS)
10,000 Hawaii, General Obligation Bonds, Series 2003DA, 9/13 at 100.00 AA 10,105,500
5.250%, 9/01/21 - MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
IDAHO - 0.8% (0.5% OF TOTAL INVESTMENTS)
5,000 Boise City, Idaho, Airport Revenue Certificates of Participation, 9/10 at 100.00 A1 4,273,350
Series 2000, 5.500%, 9/01/25 - FGIC Insured
(Alternative Minimum Tax)
2,185 Madison County, Idaho, Hospital Revenue Certificates of 9/16 at 100.00 BBB- 1,585,043
Participation, Madison Memorial Hospital, Series 2006,
5.250%, 9/01/30
------------------------------------------------------------------------------------------------------------------------------------
7,185 Total Idaho 5,858,393
------------------------------------------------------------------------------------------------------------------------------------
ILLINOIS - 9.8% (5.9% OF TOTAL INVESTMENTS)
Chicago Board of Education, Illinois, Unlimited Tax General
Obligation Bonds, Dedicated Tax Revenues, Series 1998B-1:
8,890 0.000%, 12/01/16 - FGIC Insured No Opt. Call AA 6,013,018
10,000 0.000%, 12/01/20 - FGIC Insured No Opt. Call AA 5,143,900
10,130 0.000%, 12/01/24 - FGIC Insured No Opt. Call AA 4,026,169
Chicago Board of Education, Illinois, Unlimited Tax General
Obligation Bonds, Dedicated Tax Revenues, Series 1999A:
15,000 0.000%, 12/01/21 - FGIC Insured No Opt. Call AA 7,245,300
10,000 0.000%, 12/01/23 - FGIC Insured No Opt. Call AA 4,246,400
110 Chicago, Illinois, FNMA/GNMA Collateralized Single Family 3/09 at 104.00 Aaa 112,486
Mortgage Revenue Bonds, Series 1997B, 6.950%, 9/01/28
(Alternative Minimum Tax)
8,740 Illinois Development Finance Authority, Pollution Control Revenue 2/09 at 100.00 AA 8,403,597
Refunding Bonds, Illinois Power Company, Series 1994A,
5.700%, 2/01/24 - MBIA Insured
Illinois Finance Authority, Revenue Bonds, OSF Healthcare
System, Series 2004:
1,050 5.250%, 11/15/22 5/14 at 100.00 A 890,715
3,000 5.250%, 11/15/23 5/14 at 100.00 A 2,509,290
985 Illinois Finance Authority, Revenue Bonds, Proctor Hospital, 1/16 at 100.00 BBB- 762,459
Series 2006, 5.125%, 1/01/25
1,225 Illinois Health Facilities Authority, Revenue Bonds, Condell Medical 5/12 at 100.00 Baa3 944,953
Center, Series 2002, 5.500%, 5/15/32
9,820 Illinois Health Facilities Authority, Revenue Bonds, Sherman Health 2/09 at 100.50 AA 9,951,195
Systems, Series 1997, 5.250%, 8/01/27 - AMBAC Insured
1,000 Lombard Public Facilities Corporation, Illinois, Second Tier 1/16 at 100.00 AA 901,820
Conference Center and Hotel Revenue Bonds, Series 2005B,
5.250%, 1/01/30
10,040 Metropolitan Pier and Exposition Authority, Illinois, Revenue Bonds, No Opt. Call AA 7,432,512
McCormick Place Expansion Project, Series 1992A,
0.000%, 6/15/15 - FGIC Insured
9,200 Metropolitan Pier and Exposition Authority, Illinois, Revenue Bonds, 12/09 at 101.00 AAA 9,291,172
McCormick Place Expansion Project, Series 1999A,
5.500%, 12/15/24 - FGIC Insured
3,000 Metropolitan Pier and Exposition Authority, Illinois, Revenue Bonds, No Opt. Call AAA 3,529,710
McCormick Place Hospitality Facility, Series 1996A,
7.000%, 7/01/26 (ETM)
3,000 Upper Illinois River Valley Development Authority, Healthcare 12/11 at 101.00 BBB+ 2,803,800
Facilities Revenue Bonds, Morris Hospital, Series 2001,
6.625%, 12/01/31
------------------------------------------------------------------------------------------------------------------------------------
105,190 Total Illinois 74,208,496
------------------------------------------------------------------------------------------------------------------------------------
22
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
INDIANA - 1.4% (0.9% OF TOTAL INVESTMENTS)
$ 2,005 Hamilton County Public Building Corporation, Indiana, First Mortgage 8/14 at 100.00 AAA $ 1,996,559
Bonds, Series 2004, 5.000%, 8/01/22 - FSA Insured
7,965 Wawasee Community School Corporation, Indiana, First Mortgage 1/12 at 101.00 AA+ (4) 8,701,683
Bonds, New Elementary and Remodeling Building Corporation,
Series 2000, 5.750%, 1/15/20 (Pre-refunded 1/15/12)
------------------------------------------------------------------------------------------------------------------------------------
9,970 Total Indiana 10,698,242
------------------------------------------------------------------------------------------------------------------------------------
IOWA - 1.6% (1.0% OF TOTAL INVESTMENTS)
2,000 Iowa Finance Authority, Healthcare Revenue Bonds, Genesis 7/10 at 100.00 A1 2,001,340
Medical Center, Series 2000, 6.250%, 7/01/25
3,570 Iowa Finance Authority, Industrial Remarketed Revenue Refunding No Opt. Call AAA 4,265,329
Bonds, Urbandale Hotel Corporation, Series 1989A,
8.500%, 8/01/16 (Alternative Minimum Tax) (ETM)
10,000 Iowa Tobacco Settlement Authority, Asset Backed Settlement 6/15 at 100.00 BBB 5,880,100
Revenue Bonds, Series 2005C, 5.500%, 6/01/42
------------------------------------------------------------------------------------------------------------------------------------
15,570 Total Iowa 12,146,769
------------------------------------------------------------------------------------------------------------------------------------
KANSAS - 0.8% (0.5% OF TOTAL INVESTMENTS)
6,000 Kansas Department of Transportation, Highway Revenue Bonds, 3/14 at 100.00 AAA 6,041,460
Series 2004A, 5.000%, 3/01/21 (UB)
------------------------------------------------------------------------------------------------------------------------------------
KENTUCKY - 0.4% (0.3% OF TOTAL INVESTMENTS)
Marshall County School District Finance Corporation, Kentucky,
School Building Revenue Bonds, Series 2004:
1,210 5.000%, 6/01/19 - AMBAC Insured 6/14 at 100.00 Aa3 1,198,190
1,270 5.000%, 6/01/20 - AMBAC Insured 6/14 at 100.00 Aa3 1,238,352
1,335 5.000%, 6/01/21 - AMBAC Insured 6/14 at 100.00 Aa3 1,283,095
------------------------------------------------------------------------------------------------------------------------------------
3,815 Total Kentucky 3,719,637
------------------------------------------------------------------------------------------------------------------------------------
LOUISIANA - 4.0% (2.4% OF TOTAL INVESTMENTS)
2,915 Jefferson Sales Tax District, Jefferson Parish, Louisiana, Special 12/12 at 100.00 AA (4) 3,146,830
Sales Tax Revenue Refunding Bonds, Series 2002,
5.250%, 12/01/19 (Pre-refunded 12/01/12) - AMBAC Insured
170 Louisiana Housing Finance Agency, Single Family Mortgage Revenue 9/09 at 101.00 Aaa 174,406
Bonds, Series 2000A, 7.450%, 12/01/31 (Alternative Minimum Tax)
Louisiana Public Facilities Authority, Extended Care Facilities
Revenue Bonds, Comm-Care Corporation Project, Series 1994:
555 11.000%, 2/01/14 (ETM) No Opt. Call N/R (4) 667,543
4,950 11.000%, 2/01/14 (ETM) No Opt. Call N/R (4) 5,953,019
2,000 Louisiana Public Facilities Authority, Hospital Revenue Bonds, 8/15 at 100.00 A+ 1,581,140
Franciscan Missionaries of Our Lady Health System,
Series 2005A, 5.250%, 8/15/31
5,800 Louisiana Public Facilities Authority, Revenue Bonds, Ochsner 5/17 at 100.00 A3 4,519,418
Clinic Foundation Project, Series 2007A, 5.500%, 5/15/47
Louisiana State, Gasoline and Fuels Tax Revenue Bonds, Series 2005A:
1,200 5.000%, 5/01/25 - FGIC Insured 5/15 at 100.00 AA 1,150,536
2,210 5.000%, 5/01/26 - FGIC Insured 5/15 at 100.00 AA 2,110,727
2,500 5.000%, 5/01/27 - FGIC Insured 5/15 at 100.00 AA 2,369,925
Louisiana State, Gasoline and Fuels Tax Revenue Bonds, Series 2006:
930 4.750%,5/01/39 - FSA Insured (UB) 5/16 at 100.00 AAA 754,946
10,105 4.500%, 5/01/41 - FGIC Insured (UB) 5/16 at 100.00 AA 7,747,402
------------------------------------------------------------------------------------------------------------------------------------
33,335 Total Louisiana 30,175,892
------------------------------------------------------------------------------------------------------------------------------------
23
NPI
Nuveen Premium Income Municipal Fund, Inc. (continued)
Portfolio of INVESTMENTS October 31, 2008
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
MARYLAND - 1.0% (0.6% OF TOTAL INVESTMENTS)
$ 2,200 Baltimore, Maryland, Senior Lien Convention Center Hotel Revenue 9/16 at 100.00 BBB- $ 1,855,062
Bonds, Series 2006A, 5.250%, 9/01/27 - SYNCORA GTY Insured
3,560 Maryland Health and Higher Educational Facilities Authority, 7/16 at 100.00 AA 2,468,112
Revenue Bonds, Western Maryland Health, Series 2006A,
4.750%, 7/01/36 - MBIA Insured
3,600 Montgomery County Housing Opportunities Commission, Maryland, 7/10 at 100.00 Aaa 3,303,252
Multifamily Housing Development Bonds, Series 2000B,
6.200%, 7/01/30 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
9,360 Total Maryland 7,626,426
------------------------------------------------------------------------------------------------------------------------------------
MASSACHUSETTS - 5.0% (3.0% OF TOTAL INVESTMENTS)
840 Massachusetts Bay Transportation Authority, Assessment Bonds, 7/10 at 100.00 AAA 812,507
Series 2000A, 5.250%, 7/01/30
Massachusetts Bay Transportation Authority, Assessment Bonds,
Series 2000A:
7,900 5.250%, 7/01/30 (Pre-refunded 7/01/10) 7/10 at 100.00 Aa1 (4) 8,285,994
1,260 5.250%, 7/01/30 (Pre-refunded 7/01/10) 7/10 at 100.00 Aa1 (4) 1,321,564
8,505 Massachusetts Housing Finance Agency, Rental Housing Mortgage 1/11 at 100.00 AA 7,212,920
Revenue Bonds, Series 2001A, 5.850%, 7/01/35 - AMBAC Insured
(Alternative Minimum Tax)
2,825 Massachusetts Industrial Finance Agency, Resource Recovery 12/08 at 102.00 BBB 2,643,098
Revenue Refunding Bonds, Ogden Haverhill Project, Series 1998A,
5.450%, 12/01/12 (Alternative Minimum Tax)
5,625 Massachusetts Water Pollution Abatement Trust, Pooled Loan 8/16 at 100.00 AAA 2,967,075
Program Bonds, Tender Option Bond Trust 2847,
7.405%, 8/01/36 (IF)
5,960 Massachusetts Water Resources Authority, General Revenue 8/17 at 100.00 AA 6,013,580
Bonds, Series 2005A, 5.250%, 8/01/25 - MBIA Insured
5,535 Massachusetts Water Resources Authority, General Revenue 2/17 at 100.00 AAA 4,270,086
Bonds, Series 2007A, 4.500%, 8/01/46 - FSA Insured (UB)
3,820 Massachusetts, Special Obligation Dedicated Tax Revenue Bonds, 1/14 at 100.00 A (4) 3,972,838
Series 2004, 5.250%, 1/01/24 (Pre-refunded 1/01/14) -
FGIC Insured
------------------------------------------------------------------------------------------------------------------------------------
42,270 Total Massachusetts 37,499,662
------------------------------------------------------------------------------------------------------------------------------------
MICHIGAN - 4.3% (2.6% OF TOTAL INVESTMENTS)
Detroit, Michigan, General Obligation Bonds, Series 2003A:
3,565 5.250%, 4/01/22 - SYNCORA GTY Insured 4/13 at 100.00 BBB 3,317,696
1,275 5.250%, 4/01/23 - SYNCORA GTY Insured 4/13 at 100.00 BBB 1,175,423
3,000 Kent Hospital Finance Authority, Michigan, Revenue Bonds, 7/15 at 100.00 BBB 2,369,490
Metropolitan Hospital, Series 2005A, 6.000%, 7/01/35
6,600 Michigan Housing Development Authority, Limited Obligation 1/09 at 101.00 AAA 6,175,818
Multifamily Mortgage Revenue Refunding Bonds, Forest Hills
Regency Square Project, Series 1999A, 5.750%, 7/01/29
10,000 Michigan State Building Authority, Revenue Refunding Bonds, 10/13 at 100.00 AA 9,682,500
Facilities Program, Series 2003II, 5.000%, 10/15/23 -
MBIA Insured
4,000 Michigan State Hospital Finance Authority, Revenue Bonds, 12/16 at 100.00 Aa2 3,427,800
Trinity Health Care Group, Series 2006A,
5.000%, 12/01/31 (UB)
850 Monroe County Hospital Finance Authority, Michigan, 6/16 at 100.00 Baa3 535,322
Mercy Memorial Hospital Corporation Revenue Bonds,
Series 2006, 5.500%, 6/01/35
6,390 Wayne County, Michigan, Airport Revenue Bonds, Detroit 12/12 at 100.00 AA 5,803,845
Metropolitan Airport, Series 2002D, 5.500%, 12/01/19 -
FGIC Insured (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
35,680 Total Michigan 32,487,894
------------------------------------------------------------------------------------------------------------------------------------
24
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
MINNESOTA - 5.1% (3.1% OF TOTAL INVESTMENTS)
$ 13,650 Cohasset, Minnesota, Pollution Control Revenue Bonds, 7/14 at 100.00 A- $11,696,276
Allete Inc., Series 2004, 4.950%, 7/01/22
2,000 Duluth Economic Development Authority, Minnesota, Healthcare 2/14 at 100.00 A- (4) 2,152,500
Facilities Revenue Bonds, Benedictine Health System -
St. Mary's Duluth Clinic, Series 2004, 5.375%, 2/15/22
(Pre-refunded 2/15/14)
Eden Prairie, Minnesota, GNMA Collateralized Multifamily Housing
Revenue Bonds, Rolling Hills Project, Series 2001A:
1,000 6.150%, 8/20/31 8/11 at 105.00 Aaa 1,003,550
2,000 6.200%, 2/20/43 8/11 at 105.00 Aaa 1,971,800
90 Minnesota Agricultural and Economic Development Board, 11/08 at 101.00 AAA 79,324
Healthcare System Revenue Bonds, Fairview Hospital and
Healthcare Services, Series 1997A, 5.750%, 11/15/26 -
MBIA Insured
1,500 Minnesota Municipal Power Agency, Electric Revenue Bonds, 10/14 at 100.00 A3 1,366,950
Series 2004A, 5.250%, 10/01/24
1,545 St. Paul Housing and Redevelopment Authority, Minnesota, 11/15 at 100.00 Baa3 1,245,363
Revenue Bonds, Healtheast Inc., Series 2005,
6.000%, 11/15/25
16,750 St. Paul Housing and Redevelopment Authority, Minnesota, 11/15 at 103.00 AAA 18,980,095
Sales Tax Revenue Refunding Bonds, Civic Center Project,
Series 1996, 7.100%, 11/01/23 - FSA Insured
------------------------------------------------------------------------------------------------------------------------------------
38,535 Total Minnesota 38,495,858
------------------------------------------------------------------------------------------------------------------------------------
MISSISSIPPI - 0.8% (0.5% OF TOTAL INVESTMENTS)
6,875 Mississippi Hospital Equipment and Facilities Authority, 9/14 at 100.00 AA 6,075,163
Revenue Bonds, Baptist Memorial Healthcare, 2004B-1,
5.000%, 9/01/24 (UB)
------------------------------------------------------------------------------------------------------------------------------------
MISSOURI - 1.8% (1.1% OF TOTAL INVESTMENTS)
2,000 Cole County Industrial Development Authority, Missouri, 2/14 at 100.00 N/R 1,713,420
Revenue Bonds, Lutheran Senior Services - Heisinger Project,
Series 2004, 5.250%, 2/01/24
500 Hannibal Industrial Development Authority, Missouri, Health 3/16 at 100.00 BBB+ 424,600
Facilities Revenue Bonds, Hannibal Regional Hospital,
Series 2006, 5.000%, 3/01/22
Missouri Development Finance Board, Infrastructure Facilities
Revenue Bonds, Branson Landing Project, Series 2005A:
1,565 6.000%, 6/01/20 No Opt. Call BBB+ 1,407,655
1,260 5.000%, 6/01/35 6/15 at 100.00 BBB+ 847,148
1,500 Missouri Health and Educational Facilities Authority, Revenue 6/11 at 101.00 AA 1,412,385
Bonds, SSM Healthcare System, Series 2001A, 5.250%, 6/01/21 -
AMBAC Insured
Missouri Health and Educational Facilities Authority, Revenue
Bonds, SSM Healthcare System, Series 2001A:
1,500 5.250%, 6/01/21 (Pre-refunded 6/01/11) - AMBAC Insured 6/11 at 101.00 AA (4) 1,605,210
4,150 5.250%, 6/01/28 (Pre-refunded 6/01/11) - AMBAC Insured 6/11 at 101.00 AA (4) 4,428,175
115 Missouri Housing Development Commission, GNMA/FNMA Single 3/09 at 103.00 AAA 116,601
Family Mortgage Revenue Bonds, Homeownership Loan Program,
Series 1996C, 7.450%, 9/01/27 (Alternative Minimum Tax)
2,005 Missouri Housing Development Commission, Single Family 3/09 at 103.00 AAA 2,016,549
Mortgage Revenue Bonds, Homeownership Loan Program,
Series 1999B-1, 6.700%, 9/01/30 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
14,595 Total Missouri 13,971,743
------------------------------------------------------------------------------------------------------------------------------------
NEBRASKA - 0.1% (0.1% OF TOTAL INVESTMENTS)
1,620 Omaha Public Power District, Nebraska, Separate Electric System 2/17 at 100.00 AAA 1,439,597
Revenue Bonds, Nebraska City 2, Series 2006A, Trust 11673,
14.495%, 2/01/49 - AMBAC Insured (IF)
------------------------------------------------------------------------------------------------------------------------------------
25
NPI
Nuveen Premium Income Municipal Fund, Inc. (continued)
Portfolio of INVESTMENTS October 31, 2008
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
NEVADA - 4.7% (2.8% OF TOTAL INVESTMENTS)
$ 10,410 Clark County School District, Nevada, General Obligation Bonds, 6/12 at 100.00 AA (4) $11,277,986
Series 2002C, 5.500%, 6/15/18 (Pre-refunded 6/15/12) -
MBIA Insured
15,000 Clark County, Nevada, General Obligation Bank Bonds, Southern 6/11 at 100.00 AA+ (4) 15,912,450
Nevada Water Authority Loan, Series 2001, 5.250%, 6/01/26
(Pre-refunded 6/01/11) - FGIC Insured
Director of Nevada State Department of Business and Industry,
Revenue Bonds, Las Vegas Monorail Project, First Tier, Series
2000:
6,425 0.000%, 1/01/29 - AMBAC Insured No Opt. Call AA 832,359
12,000 5.375%, 1/01/40 - AMBAC Insured 1/10 at 100.00 AA 7,213,680
------------------------------------------------------------------------------------------------------------------------------------
43,835 Total Nevada 35,236,475
------------------------------------------------------------------------------------------------------------------------------------
NEW HAMPSHIRE - 0.1% (0.1% OF TOTAL INVESTMENTS)
405 New Hampshire Housing Finance Authority, Single Family 1/09 at 100.00 Aa2 408,637
Mortgage Acquisition Revenue Bonds, Series 1996B,
6.400%, 1/01/27 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
NEW JERSEY - 10.2% (6.2% OF TOTAL INVESTMENTS)
10,150 Delaware River Port Authority, Pennsylvania and New Jersey, 1/10 at 100.00 AAA 10,153,045
Revenue Bonds, Port District Project, Series 1999B,
5.625%, 1/01/26 - FSA Insured
8,000 Essex County Improvement Authority, New Jersey, General 10/10 at 100.00 A1 (4) 8,524,480
Obligation Guaranteed Lease Revenue Bonds, County
Correctional Facility Project, Series 2000, 6.000%, 10/01/25
(Pre-refunded 10/01/10) - FGIC Insured
500 Middlesex County Improvement Authority, New Jersey, Senior No Opt. Call N/R 423,695
Revenue Bonds, Heldrich Center Hotel/Conference Center
Project, Series 2005A, 5.000%, 1/01/15
New Jersey Economic Development Authority, School Facilities
Construction Bonds, Series 2005P:
3,655 5.250%, 9/01/24 9/15 at 100.00 AA- 3,658,874
2,000 5.250%, 9/01/26 9/15 at 100.00 AA- 1,986,120
800 New Jersey Health Care Facilities Financing Authority, 7/18 at 100.00 Baa2 622,040
New Jersey, Revenue Bonds, Saint Peters University Hospital,
Series 2007, 5.750%, 7/01/37
3,820 New Jersey Housing and Mortgage Finance Agency, Home Buyer 4/09 at 100.75 Aaa 3,388,531
Program Revenue Bonds, Series 1997U, 5.850%, 4/01/29 -
MBIA Insured (Alternative Minimum Tax)
New Jersey Transportation Trust Fund Authority, Transportation
System Bonds, Series 2003C:
5,410 5.500%, 6/15/20 (Pre-refunded 6/15/13) 6/13 at 100.00 AAA 5,935,582
9,250 5.500%, 6/15/23 (Pre-refunded 6/15/13) 6/13 at 100.00 AAA 10,148,638
3,850 New Jersey Transportation Trust Fund Authority, Transportation No Opt. Call AA- 3,894,891
System Bonds, Series 2006A, 5.250%, 12/15/20
New Jersey Turnpike Authority, Revenue Bonds, Series 2000A:
3,915 6.000%, 1/01/14 - MBIA Insured (ETM) No Opt. Call AA (4) 4,378,614
7,585 6.000%, 1/01/14 - MBIA Insured (ETM) No Opt. Call AA (4) 8,483,216
2,500 New Jersey Turnpike Authority, Revenue Bonds, Series 2003A, 7/13 at 100.00 AA 2,470,425
5.000%, 1/01/19 - FGIC Insured
9,130 New Jersey Turnpike Authority, Revenue Bonds, Series 2005A, 1/15 at 100.00 AAA 9,134,200
5.000%, 1/01/25 - FSA Insured (UB)
5,000 Tobacco Settlement Financing Corporation, New Jersey, Tobacco 6/17 at 100.00 BBB 4,046,200
Settlement Asset-Backed Bonds, Series 2007-1A, 4.500%, 6/01/23
------------------------------------------------------------------------------------------------------------------------------------
75,565 Total New Jersey 77,248,551
------------------------------------------------------------------------------------------------------------------------------------
NEW MEXICO - 0.8% (0.5% OF TOTAL INVESTMENTS)
525 New Mexico Mortgage Finance Authority, Single Family Mortgage 3/10 at 102.50 AAA 528,728
Program Bonds, Series 2000D-2, 6.850%, 9/01/31
(Alternative Minimum Tax)
5,585 Santa Fe County, New Mexico, Correctional System Gross No Opt. Call AAA 5,848,891
Receipts Tax Revenue Bonds, Series 1997, 6.000%, 2/01/27 -
FSA Insured
------------------------------------------------------------------------------------------------------------------------------------
6,110 Total New Mexico 6,377,619
------------------------------------------------------------------------------------------------------------------------------------
26
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
NEW YORK - 13.6% (8.2% OF TOTAL INVESTMENTS)
Dormitory Authority of the State of New York, Revenue Bonds,
University of Rochester, Series 2004A:
$ 1,000 5.250%, 7/01/22 7/14 at 100.00 Aa3 $ 1,003,080
500 5.250%, 7/01/24 7/14 at 100.00 Aa3 497,850
1,025 Dormitory Authority of the State of New York, Revenue Bonds, 7/14 at 100.00 AAA 1,122,221
University of Rochester, Series 2004A, 5.250%, 7/01/20
(Pre-refunded 7/01/14)
1,995 Dormitory Authority of the State of New York, State and Local 7/14 at 100.00 AA- 2,019,698
Appropriation Lease Bonds, Upstate Community Colleges,
Series 2004B, 5.250%, 7/01/20
2,335 Dormitory Authority of the State of New York, State Personal 3/15 at 100.00 AAA 2,312,631
Income Tax Revenue Bonds, Series 2005F, 5.000%, 3/15/24 -
AMBAC Insured
6,915 Hudson Yards Infrastructure Corporation, New York, Revenue 2/17 at 100.00 AA 4,921,198
Bonds, 2006A, 4.500%, 2/15/47 - MBIA Insured (UB)
6,000 Liberty Development Corporation, New York, Goldman Sachs No Opt. Call AA- 4,891,500
Headquarter Revenue Bonds, Series 2005, 5.250%, 10/01/35
5,100 Long Island Power Authority, New York, Electric System 11/16 at 100.00 AA 3,791,391
Revenue Bonds, Series 2006F, 4.250%, 5/01/33 -
MBIA Insured (UB)
Long Island Power Authority, New York, Electric System Revenue
Bonds, Series 2006A:
7,000 5.000%, 12/01/23 - FGIC Insured 6/16 at 100.00 A- 6,508,250
5,000 5.000%, 12/01/24 - FGIC Insured 6/16 at 100.00 A- 4,604,700
3,900 Metropolitan Transportation Authority, New York, Transportation 11/15 at 100.00 AA 3,448,224
Revenue Bonds, Series 2005B, 5.000%, 11/15/30 -
AMBAC Insured
5,780 Metropolitan Transportation Authority, New York, Transportation 11/15 at 100.00 A 5,255,523
Revenue Bonds, Series 2005F, 5.000%, 11/15/30
3,000 Metropolitan Transportation Authority, New York, Transportation 11/12 at 100.00 AA 2,865,300
Revenue Refunding Bonds, Series 2002A, 5.125%, 11/15/21 -
FGIC Insured
New York City Industrial Development Agency, New York, Civic
Facility Revenue Bonds, United Jewish Appeal - Federation of
Jewish Philanthropies of New York Inc., Series 2004A:
2,185 5.250%, 7/01/20 7/14 at 100.00 Aa1 2,226,624
2,050 5.250%, 7/01/21 7/14 at 100.00 Aa1 2,074,867
2,420 5.250%, 7/01/22 4/14 at 100.00 Aa1 2,451,145
1,370 5.250%, 7/01/24 4/14 at 100.00 Aa1 1,380,576
12,500 New York City, New York, General Obligation Bonds, 10/13 at 100.00 AA 12,380,500
Fiscal Series 2003D, 5.250%,10/15/22 (UB)
525 New York City, New York, General Obligation Bonds, 6/13 at 100.00 AAA 527,714
Fiscal Series 2003J, 5.500%, 6/01/23
4,475 New York City, New York, General Obligation Bonds, 6/13 at 100.00 AAA 4,940,132
Fiscal Series 2003J, 5.500%, 6/01/23 (Pre-refunded 6/01/13)
7,960 New York City, New York, General Obligation Bonds, 4/15 at 100.00 AA 7,573,383
Fiscal Series 2005M, 5.000%, 4/01/24 (UB)
1,500 New York City, New York, General Obligation Bonds, 8/14 at 100.00 AA 1,483,170
Series 2008, Trust 3217, 13.994%, 8/15/20 (IF)
2,880 New York Convention Center Development Corporation, 11/15 at 100.00 A 1,716,422
Hotel Fee Revenue Bonds, Trust 2364, 8.714%, 11/15/44 -
AMBAC Insured (IF)
650 New York Counties Tobacco Trust I, Tobacco Settlement 6/10 at 101.00 BBB 582,004
Pass-Through Bonds, Series 2000B, 6.500%, 6/01/35
1,350 New York Counties Tobacco Trust I, Tobacco Settlement 6/10 at 101.00 AAA 1,432,364
Pass-Through Bonds, Series 2000B, 6.500%, 6/01/35
(Pre-refunded 6/01/10)
7,400 New York State Tobacco Settlement Financing Corporation, 6/10 at 100.00 AA- 7,463,122
Tobacco Settlement Asset-Backed and State Contingency
Contract-Backed Bonds, Series 2003A-1, 5.500%, 6/01/16
6,460 New York State Urban Development Corporation, State 3/14 at 100.00 AAA 6,284,159
Personal Income Tax Revenue Bonds, Series 2004A-1,
5.000%, 3/15/26 - FGIC Insured
27
NPI
Nuveen Premium Income Municipal Fund, Inc. (continued)
Portfolio of INVESTMENTS October 31, 2008
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
NEW YORK (continued)
$ 4,750 Port Authority of New York and New Jersey, Consolidated 3/14 at 101.00 AA- $ 4,531,025
Revenue Bonds, One Hundred Thirty-Fifth Series 2004,
5.000%, 9/15/28 - SYNCORA GTY Insured
2,720 Rensselaer County Industrial Development Agency, New York, 3/16 at 100.00 A 2,528,838
Civic Facility Revenue Bonds, Rensselaer Polytechnic Institute,
Series 2006, 5.000%, 3/01/26
------------------------------------------------------------------------------------------------------------------------------------
110,745 Total New York 102,817,611
------------------------------------------------------------------------------------------------------------------------------------
NORTH CAROLINA - 1.8% (1.1% OF TOTAL INVESTMENTS)
Charlotte, North Carolina, Certificates of Participation,
Governmental Facilities Projects, Series 2003G:
5,785 5.250%, 6/01/22 (UB) 6/13 at 100.00 AA+ 5,832,032
3,475 5.250%, 6/01/23 (UB) 6/13 at 100.00 AA+ 3,497,344
5,130 Charlotte-Mecklenberg Hospital Authority, North Carolina, 1/18 at 100.00 AA- 3,154,540
Carolinas Health Care System Revenue Bonds, Series 2008,
Trust 1149, 6.780%, 1/15/47 (IF)
1,050 Charlotte-Mecklenburg Hospital Authority, North Carolina, 1/17 at 100.00 AA- 897,929
Health Care System Revenue Bonds, Carolinas Health Care,
Series 2007A, 5.000%, 1/15/31
1,000 Gaston County Industrial Facilities and Pollution Control 8/15 at 100.00 N/R 589,320
Financing Authority, North Carolina, National Gypsum Company
Project Exempt Facilities Revenue Bonds, Series 2005,
5.750%, 8/01/35 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
16,440 Total North Carolina 13,971,165
------------------------------------------------------------------------------------------------------------------------------------
NORTH DAKOTA - 1.4% (0.8% OF TOTAL INVESTMENTS)
9,650 Dickinson, North Dakota, Health Care Facilities Revenue Bonds, 2/10 at 102.00 Aa2 (4) 10,484,532
BHS Long-Term Care Inc., Series 1990, 7.625%, 2/15/20
(Pre-refunded 2/15/10) - RAAI Insured
------------------------------------------------------------------------------------------------------------------------------------
OHIO - 3.3% (2.0% OF TOTAL INVESTMENTS)
Buckeye Tobacco Settlement Financing Authority, Ohio, Tobacco
Settlement Asset-Backed Revenue Bonds, Senior Lien, Series
2007A-2:
275 5.125%, 6/01/24 6/17 at 100.00 BBB 215,545
2,850 5.875%, 6/01/30 6/17 at 100.00 BBB 1,997,879
2,745 5.750%, 6/01/34 6/17 at 100.00 BBB 1,828,170
6,285 5.875%, 6/01/47 6/17 at 100.00 BBB 3,931,959
4,265 Franklin County, Ohio, Hospital Revenue and Improvement 5/11 at 101.00 Aa2 (4) 4,580,098
Bonds, Children's Hospital Project, Series 2001,
5.500%, 5/01/28 (Pre-refunded 5/01/11) - AMBAC Insured
2,720 Ohio State University, General Receipts Bonds, Series 2003B, 6/13 at 100.00 AA 2,763,003
5.250%, 6/01/20
665 Richland County, Ohio, Hospital Facilities Revenue Refunding 11/10 at 101.00 A- 670,639
Bonds, MedCentral Health System Obligated Group,
Series 2000A, 6.125%, 11/15/16
1,335 Richland County, Ohio, Hospital Facilities Revenue Refunding 11/10 at 101.00 A- (4) 1,441,066
Bonds, MedCentral Health System Obligated Group,
Series 2000A, 6.125%, 11/15/16 (Pre-refunded 11/15/10)
7,000 Steubenville, Ohio, Hospital Facilities Revenue Refunding and 10/10 at 100.00 A3 (4) 7,535,010
Improvement Bonds, Trinity Health System, Series 2000,
6.500%, 10/01/30 (Pre-refunded 10/01/10)
------------------------------------------------------------------------------------------------------------------------------------
28,140 Total Ohio 24,963,369
------------------------------------------------------------------------------------------------------------------------------------
OKLAHOMA - 2.7% (1.6% OF TOTAL INVESTMENTS)
Norman Regional Hospital Authority, Oklahoma, Hospital Revenue
Bonds, Series 2005:
500 5.375%, 9/01/29 9/16 at 100.00 BBB 384,080
1,050 5.375%, 9/01/36 9/16 at 100.00 BBB 765,944
3,500 Oklahoma Capitol Improvement Authority, State Facilities Revenue 7/15 at 100.00 AA 3,385,305
Bonds, Series 2005F, 5.000%, 7/01/24 - AMBAC Insured
28
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
OKLAHOMA (continued)
Oklahoma Development Finance Authority, Revenue Bonds,
Saint John Health System, Series 2007:
$ 8,150 5.000%, 2/15/37 2/17 at 100.00 AA- $ 6,739,806
1,335 5.000%, 2/15/42 2/17 at 100.00 AA- 1,078,707
10,035 Tulsa County Industrial Authority, Oklahoma, Health Care 12/16 at 100.00 AA 7,804,120
Revenue Bonds, Saint Francis Health System, Series 2006,
5.000%, 12/15/36 (UB)
143 Tulsa County Industrial Authority, Oklahoma, Health Care Revenue 12/16 at 100.00 AA 79,418
Bonds, Saint Francis Health System, Series 2006, Trust 3500,
7.262%, 12/15/36 (IF)
------------------------------------------------------------------------------------------------------------------------------------
24,713 Total Oklahoma 20,237,380
------------------------------------------------------------------------------------------------------------------------------------
OREGON - 0.5% (0.3% OF TOTAL INVESTMENTS)
1,060 Oregon Department of Administrative Services, Certificates of 5/15 at 100.00 AAA 1,034,327
Participation, Series 2005A, 5.000%, 5/01/24 - FSA Insured
2,500 Oregon State Department of Transportation, Highway User Tax 11/14 at 100.00 AAA 2,691,225
Revenue Bonds, Series 2004A, 5.000%, 11/15/21
(Pre-refunded 11/15/14)
------------------------------------------------------------------------------------------------------------------------------------
3,560 Total Oregon 3,725,552
------------------------------------------------------------------------------------------------------------------------------------
PENNSYLVANIA - 5.0% (3.0% OF TOTAL INVESTMENTS)
980 Bucks County Industrial Development Authority, Pennsylvania, 3/17 at 100.00 BBB 634,305
Charter School Revenue Bonds, School Lane Charter School,
Series 2007A, 5.000%, 3/15/37
Lancaster Higher Education Authority, Pennsylvania, Revenue
Bonds, Franklin and Marshall College, Series 2003C:
1,340 5.250%, 4/15/15 4/13 at 100.00 A+ 1,382,920
1,960 5.250%, 4/15/17 4/13 at 100.00 A+ 1,995,437
1,000 Pennsylvania State University, General Revenue Bonds, 9/15 at 100.00 AA 953,870
Series 2005, 5.000%, 9/01/29
2,625 Pennsylvania Turnpike Commission, Turnpike Revenue Bonds, 6/16 at 100.00 AA 2,507,531
Series 2006A, 5.000%, 12/01/26 - AMBAC Insured
Philadelphia Gas Works, Pennsylvania, Revenue Bonds, General
Ordinance, Fifth Series 2004A-1:
4,505 5.000%, 9/01/21 - FSA Insured (UB) 9/14 at 100.00 AAA 4,332,594
4,735 5.000%, 9/01/22 - FSA Insured (UB) 9/14 at 100.00 AAA 4,510,561
8,405 Philadelphia Redevelopment Authority, Pennsylvania, 4/09 at 102.00 N/R 6,616,500
Multifamily Housing Mortgage Revenue Bonds, Cricket Court
Apartments, Series 1998A, 6.200%, 4/01/25
(Alternative Minimum Tax)
14,000 State Public School Building Authority, Pennsylvania, Lease 6/13 at 100.00 AAA 15,087,100
Revenue Bonds, Philadelphia School District, Series 2003,
5.250%, 6/01/24 (Pre-refunded 6/01/13) - FSA Insured
------------------------------------------------------------------------------------------------------------------------------------
39,550 Total Pennsylvania 38,020,818
------------------------------------------------------------------------------------------------------------------------------------
PUERTO RICO - 0.3% (0.2% OF TOTAL INVESTMENTS)
2,500 Puerto Rico Sales Tax Financing Corporation, Sales Tax Revenue 8/17 at 100.00 A+ 2,173,450
Bonds, Series 2007A, 5.250%, 8/01/57
------------------------------------------------------------------------------------------------------------------------------------
SOUTH CAROLINA - 7.0% (4.2% OF TOTAL INVESTMENTS)
8,610 Dorchester County School District 2, South Carolina, Installment 12/14 at 100.00 AA- 8,213,854
Purchase Revenue Bonds, GROWTH, Series 2004,
5.250%, 12/01/24
Greenville County School District, South Carolina, Installment
Purchase Revenue Bonds, Series 2008, Trust 3219:
1,275 13.987%, 12/01/18 (IF) 12/13 at 100.00 AA 1,327,530
895 14.059%, 12/01/20 (IF) 12/13 at 100.00 AA 881,879
465 14.041%, 12/01/21 (IF) 12/13 at 100.00 AA 446,047
Lexington County Health Service District, South Carolina, Hospital
Revenue Bonds, Series 2004:
1,805 6.000%, 5/01/19 (Pre-refunded 5/01/14) 5/14 at 100.00 A+ (4) 1,998,731
2,400 5.500%, 5/01/24 (Pre-refunded 5/01/14) 5/14 at 100.00 A+ (4) 2,598,576
29
NPI
Nuveen Premium Income Municipal Fund, Inc. (continued)
Portfolio of INVESTMENTS October 31, 2008
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
SOUTH CAROLINA (continued)
South Carolina JOBS Economic Development Authority, Hospital
Refunding and Improvement Revenue Bonds, Palmetto Health
Alliance, Series 2003C:
$ 13,345 6.375%, 8/01/34 (Pre-refunded 8/01/13) 8/13 at 100.00 BBB+ (4) $14,798,938
1,655 6.375%, 8/01/34 (Pre-refunded 8/01/13) 8/13 at 100.00 BBB+ (4) 1,862,074
4,150 Tobacco Settlement Revenue Management Authority, No Opt. Call BBB (4) 4,544,997
South Carolina, Tobacco Settlement Asset-Backed Bonds,
Series 2001B, 6.375%, 5/15/30 (ETM)
Tobacco Settlement Revenue Management Authority, South Carolina,
Tobacco Settlement Asset-Backed Bonds, Series 2001B:
7,975 6.000%, 5/15/22 (Pre-refunded 5/15/12) 5/12 at 100.00 BBB (4) 8,294,239
7,500 6.375%, 5/15/28 (Pre-refunded 5/15/16) 5/16 at 100.00 BBB (4) 8,037,075
------------------------------------------------------------------------------------------------------------------------------------
50,075 Total South Carolina 53,003,940
------------------------------------------------------------------------------------------------------------------------------------
TENNESSEE - 1.4% (0.8% OF TOTAL INVESTMENTS)
6,400 Johnson City Health and Educational Facilities Board, 7/16 at 100.00 BBB+ 4,509,440
Tennessee, Revenue Bonds, Mountain States Health Alliance,
Series 2006A, 5.500%, 7/01/36
6,100 Knox County Health, Educational and Housing Facilities Board, 1/17 at 31.68 A- 572,058
Tennessee, Hospital Revenue Refunding Bonds, Covenant
Health, Series 2006, 0.000%, 1/01/40
410 Sullivan County Health Educational and Housing Facilities Board, 9/16 at 100.00 BBB+ 269,571
Tennessee, Revenue Bonds, Wellmont Health System,
Series 2006C, 5.250%, 9/01/36
Sumner County Health, Educational, and Housing Facilities Board,
Tennessee, Revenue Refunding Bonds, Sumner Regional
Health System Inc., Series 2007:
1,300 5.500%, 11/01/37 11/17 at 100.00 N/R 964,184
3,000 5.500%, 11/01/46 11/17 at 100.00 N/R 2,158,230
1,965 Tennessee Housing Development Agency, Homeownership Program 7/13 at 100.00 AA 1,770,052
Bonds, Series 2004, 5.000%, 7/01/34 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
19,175 Total Tennessee 10,243,535
------------------------------------------------------------------------------------------------------------------------------------
TEXAS - 17.1% (10.3% OF TOTAL INVESTMENTS)
5,000 Alliance Airport Authority, Texas, Special Facilities Revenue 12/12 at 100.00 CCC+ 1,706,000
Bonds, American Airlines Inc., Series 2007, 5.250%, 12/01/29
(Alternative Minimum Tax)
3,203 Austin Housing Finance Corporation, Texas, GNMA Collateralized 12/10 at 105.00 Aaa 3,182,245
Multifamily Housing Revenue Bonds, Fairway Village Project,
Series 2000A, 7.375%, 6/20/35 (Alternative Minimum Tax)
8,840 Board of Regents, University of Texas System, Financing System 2/17 at 100.00 AAA 6,817,850
Revenue Bonds, Series 2006F, 4.250%, 8/15/36 (UB)
2,150 Brazos River Authority, Texas, Pollution Control Revenue Bonds, 10/13 at 101.00 Caa1 1,384,622
TXU Energy Company LLC Project, Series 2003C,
6.750%, 10/01/38 (Alternative Minimum Tax)
175 Clear Creek Independent School District, Galveston and Harris 2/10 at 100.00 AAA 181,388
Counties, Texas, Unlimited Tax Schoolhouse and Refunding Bonds,
Series 2000, 6.000%, 2/15/16
650 Harlingen Housing Finance Corporation, Texas, GNMA/FNMA Single 9/10 at 105.00 AAA 664,073
Family Mortgage Revenue Bonds, Series 2000A, 6.700%, 9/01/33
(Alternative Minimum Tax)
2,395 Harris County Hospital District, Texas, Revenue Refunding Bonds, No Opt. Call AA 2,471,808
Series 1990, 7.400%, 2/15/10 - AMBAC Insured
580 Harris County Hospital District, Texas, Revenue Refunding Bonds, No Opt. Call AA (4) 595,521
Series 1990, 7.400%, 2/15/10 - AMBAC Insured (ETM)
19,125 Harris County Hospital District, Texas, Revenue Refunding Bonds, 8/10 at 100.00 AA (4) 20,046,443
Series 2000, 6.000%, 2/15/15 (Pre-refunded 8/15/10) -
MBIA Insured
4,000 Harris County-Houston Sports Authority, Texas, Junior Lien Revenue 11/11 at 100.00 AA 3,239,000
Refunding Bonds, Series 2001B, 5.250%, 11/15/40 -
MBIA Insured
30
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
TEXAS (continued)
$ 5,000 Houston, Texas, First Lien Combined Utility System Revenue Bonds, 5/14 at 100.00 AA $ 4,865,250
Series 2004A, 5.250%, 5/15/25 - MBIA Insured
6,000 Houston, Texas, General Obligation Public Improvement Bonds, 3/11 at 100.00 AAA 6,260,040
Series 2001B, 5.500%, 3/01/15 - FSA Insured
13,975 Hutto Independent School District, Williamson County, Texas, 8/16 at 100.00 AAA 11,790,847
General Obligation Bonds, Series 2007A, 4.750%, 8/01/43
Kerrville Health Facilities Development Corporation, Texas, Revenue
Bonds, Sid Peterson Memorial Hospital Project, Series 2005:
2,000 5.250%, 8/15/21 No Opt. Call BBB- 1,705,680
2,800 5.125%, 8/15/26 No Opt. Call BBB- 2,194,696
1,505 Lower Colorado River Authority, Texas, Contract Revenue Refunding 5/13 at 100.00 AA 1,495,895
Bonds, Transmission Services Corporation, Series 2003C,
5.250%, 5/15/23 - AMBAC Insured
245 Lower Colorado River Authority, Texas, Revenue Refunding and 5/13 at 100.00 AA (4) 265,950
Improvement Bonds, Series 2003, 5.250%, 5/15/24
(Pre-refunded 5/15/13) - AMBAC Insured
3,155 Lower Colorado River Authority, Texas, Revenue Refunding and 5/13 at 100.00 AA 3,105,561
Improvement Bonds, Series 2003, 5.250%, 5/15/24 -
AMBAC Insured
5,650 North Texas Thruway Authority, Second Tier System Revenue 1/18 at 100.00 A3 4,769,956
Refunding Bonds, Series 2008, 5.750%, 1/01/38
11,000 Pearland Independent School District, Brazoria County, Texas, 2/17 at 100.00 AAA 7,788,660
General Obligation Bonds, Tender Option Bond Trust 1124,
6.314%, 2/15/32 (IF)
2,000 Sabine River Authority, Texas, Pollution Control Revenue Bonds, 11/15 at 100.00 Caa1 1,133,080
TXU Electric Company, Series 2001C, 5.200%, 5/01/28
12,130 Tarrant County Cultural & Educational Facilities Financing 2/17 at 100.00 AA- 9,858,051
Corporation, Texas, Revenue Bonds, Series 2007A,
5.000%, 2/15/36 (UB)
10,810 Tarrant County Health Facilities Development Corporation, Texas, 12/10 at 105.00 Aaa 10,893,994
GNMA Collateralized Mortgage Loan Revenue Bonds, 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
4,000 Tarrant County Health Facilities Development Corporation, Texas, 11/10 at 101.00 A+ (4) 4,373,240
Hospital Revenue Bonds, Adventist Health System - Sunbelt
Obligated Group, Series 2000, 6.700%, 11/15/30
(Pre-refunded 11/15/10)
5,000 Tarrant Regional Water District, Texas, Water Revenue Refunding 3/13 at 100.00 AAA 5,221,850
and Improvement Bonds, Series 1999, 5.250%, 3/01/17 -
FSA Insured
2,985 Texas State, General Obligation Bonds, Series 2008, 4/17 at 100.00 Aa1 2,461,998
Trust 3213, 10.466%, 4/01/33 (IF)
25,000 Texas Turnpike Authority, First Tier Revenue Bonds, Central No Opt. Call AA 8,698,000
Texas Turnpike System, Series 2002A, 0.000%, 8/15/24 -
AMBAC Insured
2,500 Tomball Hospital Authority, Texas, Hospital Revenue Bonds, 7/15 at 100.00 Baa3 2,071,425
Tomball Regional Hospital, Series 2005, 5.000%, 7/01/20
------------------------------------------------------------------------------------------------------------------------------------
161,873 Total Texas 129,243,123
------------------------------------------------------------------------------------------------------------------------------------
UTAH - 0.1% (0.1% OF TOTAL INVESTMENTS)
470 Utah Housing Finance Agency, Single Family Mortgage Bonds, 1/09 at 101.00 AAA 467,876
Series 1997F, 5.750%, 7/01/28 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
VIRGINIA - 0.6% (0.4% OF TOTAL INVESTMENTS)
4,725 Virginia Beach Development Authority, Virginia, Multifamily 10/14 at 100.00 N/R 4,174,018
Residential Rental Housing Revenue Bonds, Mayfair Apartments I
and II, Series 1999, 7.500%, 10/01/39 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
31
NPI
Nuveen Premium Income Municipal Fund, Inc. (continued)
Portfolio of INVESTMENTS October 31, 2008
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
WASHINGTON - 3.3% (2.0% OF TOTAL INVESTMENTS)
$ 2,500 Energy Northwest, Washington, Electric Revenue Refunding Bonds, 7/12 at 100.00 Aaa $ 2,645,500
Columbia Generating Station - Nuclear Project 2, Series 2002C,
5.750%, 7/01/17 - MBIA Insured
3,125 Skagit County Public Hospital District 1, Washington, General 6/14 at 100.00 A2 3,092,031
Obligation Bonds, Series 2004A, 5.375%, 12/01/20 -
MBIA Insured
5,000 Snohomish County, Washington, Limited Tax General Obligation 12/11 at 100.00 AA 4,936,550
Bonds, Series 2001, 5.250%, 12/01/26 - MBIA Insured
4,750 Washington State Healthcare Facilities Authority, Revenue Bonds, 11/08 at 101.00 Aa3 3,945,065
Swedish Health Services, Series 1998, 5.125%, 11/15/22 -
AMBAC Insured
1,770 Washington State Tobacco Settlement Authority, Tobacco Settlement 6/13 at 100.00 BBB 1,574,840
Asset-Backed Revenue Bonds, Series 2002, 6.500%, 6/01/26
6,480 Washington State, Motor Vehicle Fuel Tax General Obligation Bonds, No Opt. Call AA+ 2,707,214
Series 2002-03C, 0.000%, 6/01/24 - MBIA Insured
11,000 Washington, General Obligation Bonds, Series 2000S-5, No Opt. Call AA+ 6,060,560
0.000%, 1/01/20 - FGIC Insured
------------------------------------------------------------------------------------------------------------------------------------
34,625 Total Washington 24,961,760
------------------------------------------------------------------------------------------------------------------------------------
WISCONSIN - 3.9% (2.4% OF TOTAL INVESTMENTS)
Milwaukee Redevelopment Authority, Wisconsin, Lease Revenue
Bonds, Public Schools, Series 2003A:
1,000 5.125%, 8/01/22 (Pre-refunded 8/01/13) - AMBAC Insured 8/13 at 100.00 AA (4) 1,081,310
750 5.125%, 8/01/23 (Pre-refunded 8/01/13) - AMBAC Insured 8/13 at 100.00 AA (4) 810,983
1,000 Wisconsin Health and Educational Facilities Authority, Revenue 7/11 at 100.00 A- 972,290
Bonds, Agnesian Healthcare Inc., Series 2001, 6.000%, 7/01/21
9,000 Wisconsin Health and Educational Facilities Authority, Revenue 4/13 at 100.00 BBB+ 8,001,990
Bonds, Aurora Healthcare Inc., Series 2003, 6.400%, 4/15/33
2,175 Wisconsin Health and Educational Facilities Authority, Revenue 10/11 at 100.00 BBB 2,116,493
Bonds, Carroll College Inc., Series 2001, 6.125%, 10/01/16
790 Wisconsin Health and Educational Facilities Authority, Revenue 5/16 at 100.00 BBB 563,886
Bonds, Divine Savior Healthcare, Series 2006, 5.000%, 5/01/32
6,025 Wisconsin Health and Educational Facilities Authority, Revenue 9/13 at 100.00 BBB+ (4) 6,732,275
Bonds, Franciscan Sisters of Christian Charity Healthcare
Ministry, Series 2003A, 6.000%, 9/01/22 (Pre-refunded 9/01/13)
4,995 Wisconsin Health and Educational Facilities Authority, Revenue 9/17 at 100.00 BBB+ 3,511,235
Bonds, Franciscan Sisters of Christian Charity Healthcare
Ministry, Series 2007, 5.000%, 9/01/33
2,000 Wisconsin Health and Educational Facilities Authority, Revenue 8/16 at 100.00 A- 1,252,460
Bonds, Wheaton Franciscan Healthcare System, Series 2006,
5.250%, 8/15/34
2,000 Wisconsin Health and Educational Facilities Authority, Revenue 8/13 at 100.00 A- 1,400,560
Bonds, Wheaton Franciscan Services Inc., Series 2003A,
5.250%, 8/15/25
Wisconsin, General Obligation Bonds, Series 2004-3:
175 5.250%, 5/01/19 - FGIC Insured 5/14 at 100.00 Aa3 179,702
1,265 5.250%, 5/01/21 - FGIC Insured 5/14 at 100.00 AA 1,280,041
1,545 Wisconsin, General Obligation Bonds, Series 2004-3, 5/14 at 100.00 Aa3 (4) 1,680,172
5.250%, 5/01/19 (Pre-refunded 5/01/14) - FGIC Insured
------------------------------------------------------------------------------------------------------------------------------------
32,720 Total Wisconsin 29,583,397
------------------------------------------------------------------------------------------------------------------------------------
WYOMING - 0.3% (0.2% OF TOTAL INVESTMENTS)
3,900 Sweetwater County, Wyoming, Solid Waste Disposal Revenue 12/15 at 100.00 BBB 2,548,182
Bonds, FMC Corporation, Series 2005, 5.600%, 12/01/35
(Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
$ 1,534,235 Total Long-Term Investments (cost $1,361,823,561) - 164.1% 1,241,662,341
=============-----------------------------------------------------------------------------------------------------------------------
32
PRINCIPAL
AMOUNT (000) DESCRIPTION (1) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS - 1.0% (0.6% OF TOTAL INVESTMENTS)
$ 7,751 King County, Washington, Sewer Revenue Bonds, Series 2001, AA+ $ 7,778,372
Trust 554, Variable Rate Demand Obligations, 3.000%, 1/01/19 -
FGIC Insured (6)
=============-----------------------------------------------------------------------------------------------------------------------
Total Short-Term Investments (cost $7,778,372) 7,778,372
--------------------------------------------------------------------------------------------------------------------
Total Investments (cost $1,369,601,933) - 165.1% 1,249,440,713
--------------------------------------------------------------------------------------------------------------------
Floating Rate Obligations - (13.1)% (98,904,000)
--------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 2.9% 21,695,289
--------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (54.9)% (7) (415,450,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 756,782,002
====================================================================================================================
FORWARD SWAPS OUTSTANDING AT OCTOBER 31, 2008:
FUND FIXED RATE UNREALIZED
NOTIONAL PAY/RECEIVE FLOATING RATE FIXED RATE PAYMENT EFFECTIVE TERMINATION APPRECIATION
COUNTERPARTY AMOUNT FLOATING RATE INDEX (ANNUALIZED) FREQUENCY DATE (8) DATE (DEPRECIATION)
------------------------------------------------------------------------------------------------------------------------------------
Royal Bank $23,000,000 Receive 3-Month USD-LIBOR 5.320% Semi-Annually 1/15/09 1/15/38 $(3,082,340)
of Canada
====================================================================================================================================
USD-LIBOR - (United States Dollar-London Inter-Bank Offered Rate).
(1) All percentages shown in the Portfolio of Investments are
based on net assets applicable to Common shares unless
otherwise noted.
(2) Optional Call Provisions (not covered by the report of
independent registered public accounting firm): 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. Certain mortgage-backed securities
may be subject to periodic principal paydowns.
(3) Ratings (not covered by the report of independent registered
public accounting firm): Using the higher of Standard &
Poor's Group ("Standard & Poor's") or Moody's Investor
Service, Inc. ("Moody's") rating. Ratings below BBB by
Standard & Poor's or Baa by Moody's are considered to be
below investment grade.
The Portfolio of Investments may reflect the ratings on
certain bonds insured by ACA, AMBAC, CIFG, FGIC, FSA, MBIA,
RAAI and SYNCORA as of October 31, 2008. Please see the
Portfolio Manager's Commentary for an expanded discussion of
the affect on the Fund of changes to the ratings of certain
bonds in the portfolio resulting from changes to the ratings
of the underlying insurers both during the period and after
period end.
(4) Backed by an escrow or trust containing sufficient U.S.
Government or U.S. Government agency securities which ensure
the timely payment of principal and interest. Such
investments are normally considered to be equivalent to AAA
rated securities.
(5) Portion of investment has been pledged to collateralize the
net payment obligations under forward swap contracts.
(6) Investment has a maturity of more than one year, but has
variable rate and demand features which qualify it as a
short-term investment. The rate disclosed is that in effect
at the end of the reporting period. This rate changes
periodically based on market conditions or a specified
market index.
(7) Preferred Shares, at Liquidation Value as a percentage of
Total Investments is 33.3%.
(8) Effective Date represents the date on which both the Fund
and counterparty commence interest payment accruals on each
forward swap contract.
N/R Not rated.
(ETM) Escrowed to maturity.
(IF) Inverse floating rate investment.
(UB) Underlying bond of an inverse floating rate trust reflected
as a financing transaction pursuant to the provisions of
SFAS No. 140.
See accompanying notes to financial statements.
33
NPM
Nuveen Premium Income Municipal Fund 2, Inc.
Portfolio of INVESTMENTS
October 31, 2008
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
ALABAMA - 4.6% (2.7% OF TOTAL INVESTMENTS)
$ 6,995 Alabama Special Care Facilities Financing Authority, Revenue 11/16 at 100.00 AA $ 5,718,343
Bonds, Ascension Health, Series 2006C-2, 5.000%, 11/15/39 (UB)
Birmingham Special Care Facilities Financing Authority, Alabama,
Revenue Bonds, Baptist Health System Inc., Series 2005A:
3,600 5.250%, 11/15/20 11/15 at 100.00 Baa1 3,080,916
1,000 5.000%, 11/15/30 11/15 at 100.00 Baa1 721,450
4,000 Birmingham Waterworks And Sewer Board, Alabama, Water and 1/17 at 100.00 A+ 1,527,360
Sewer Revenue Bonds, Tender Option Bond Trust 2707,
0.596%, 1/01/39 - AMBAC Insured (IF)
1,960 Courtland Industrial Development Board, Alabama, Pollution 6/15 at 100.00 BBB 1,361,122
Control Revenue Bonds, International Paper Company,
Series 2005A, 5.000%, 6/01/25
1,690 Montgomery BMC Special Care Facilities Financing Authority, 11/14 at 100.00 A3 (4) 1,838,196
Alabama, Revenue Bonds, Baptist Medical Center, Series 2004C,
5.250%, 11/15/29 (Pre-refunded 11/15/14)
8,255 University of South Alabama, Student Tuition Revenue Bonds, 3/14 at 100.00 A1 7,937,595
Series 2004, 5.000%, 3/15/24 - FGIC Insured
------------------------------------------------------------------------------------------------------------------------------------
27,500 Total Alabama 22,184,982
------------------------------------------------------------------------------------------------------------------------------------
ARIZONA - 0.7% (0.4% OF TOTAL INVESTMENTS)
Glendale Industrial Development Authority, Arizona, Revenue Bonds,
John C. Lincoln Health Network, Series 2005B:
200 5.250%, 12/01/24 12/15 at 100.00 BBB 162,202
265 5.250%, 12/01/25 12/15 at 100.00 BBB 211,550
1,265 Pima County Industrial Development Authority, Arizona, Lease 1/09 at 100.00 Aaa 1,271,312
Obligation Revenue Refunding Bonds, Tucson Electric Power
Company, Series 1988A, 7.250%, 7/15/10 - FSA Insured
2,750 Salt Verde Financial Corporation, Arizona, Senior Gas Revenue No Opt. Call AA- 1,665,043
Bonds, Series 2007, 5.000%,12/01/37
------------------------------------------------------------------------------------------------------------------------------------
4,480 Total Arizona 3,310,107
------------------------------------------------------------------------------------------------------------------------------------
ARKANSAS - 0.2% (0.1% OF TOTAL INVESTMENTS)
1,000 Washington County, Arkansas, Hospital Revenue Bonds, Washington 2/15 at 100.00 Baa1 776,720
Regional Medical Center, Series 2005B, 5.000%, 2/01/25
------------------------------------------------------------------------------------------------------------------------------------
CALIFORNIA - 17.8% (10.4% OF TOTAL INVESTMENTS)
5,690 California Department of Veterans Affairs, Home Purchase Revenue 6/12 at 101.00 AA 5,680,668
Bonds, Series 2002A, 5.300%, 12/01/21 - AMBAC Insured
California Department of Water Resources, Power Supply Revenue
Bonds, Series 2002A:
4,000 6.000%, 5/01/15 (Pre-refunded 5/01/12) 5/12 at 101.00 Aaa 4,448,160
5,500 5.375%, 5/01/21 (Pre-refunded 5/01/12) 5/12 at 101.00 Aaa 6,002,590
California Educational Facilities Authority, Revenue Refunding Bonds,
Loyola Marymount University, Series 2001A:
3,255 0.000%, 10/01/23 - MBIA Insured No Opt. Call A2 1,343,729
5,890 0.000%, 10/01/24 - MBIA Insured No Opt. Call A2 2,270,359
7,615 0.000%, 10/01/25 - MBIA Insured No Opt. Call A2 2,742,009
3,740 California Health Facilities Financing Authority, Revenue Bonds, 11/15 at 100.00 A2 3,168,341
Cedars-Sinai Medical Center, Series 2005, 5.000%, 11/15/27
34
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
CALIFORNIA (continued)
$ 795 California Health Facilities Financing Authority, Revenue Bonds, 11/16 at 100.00 AA- $ 459,264
Sutter Health, Tender Option Bond Trust 3175,
11.475%, 11/15/42 (IF)
2,055 California Infrastructure Economic Development Bank, 10/14 at 100.00 AA+ 2,048,136
Infrastructure State Revolving Fund Revenue Bonds, Series 2004,
5.000%, 10/01/21
1,000 California Statewide Community Development Authority, Revenue 7/15 at 100.00 BBB 648,320
Bonds, Daughters of Charity Health System, Series 2005A,
5.000%, 7/01/39
4,955 California Statewide Community Development Authority, Revenue 5/18 at 100.00 AA- 3,311,796
Bonds, Sutter Health, Tender Option Bond Trust 3175,
11.640%, 11/15/48 (IF)
2,500 California, Economic Recovery Revenue Bonds, Series 2004A, No Opt. Call AA+ 2,672,600
5.250%, 7/01/14
8,000 California, General Obligation Bonds, Series 2004, 5.125%, 2/01/25 2/14 at 100.00 A+ 7,696,323
1,900 Chula Vista, California, Industrial Development Revenue Bonds, 6/14 at 102.00 A2 1,738,807
San Diego Gas and Electric Company, Series 1996A,
5.300%, 7/01/21
2,500 Fontana Public Financing Authority, California, Tax Allocation 10/15 at 100.00 AA 2,330,378
Revenue Bonds, North Fontana Redevelopment Project,
Series 2005A, 5.000%, 10/01/23 - AMBAC Insured
30,000 Foothill/Eastern Transportation Corridor Agency, California, No Opt. Call AAA 15,912,898
Toll Road Revenue Bonds, Series 1995A, 0.000%, 1/01/21 (ETM)
1,385 Fullerton Public Financing Authority, California, Tax Allocation 9/15 at 100.00 AA 1,250,117
Revenue Bonds, Series 2005, 5.000%, 9/01/27 - AMBAC Insured
1,000 Golden State Tobacco Securitization Corporation, California, 6/17 at 100.00 BBB 658,280
Enhanced Tobacco Settlement Asset-Backed Bonds,
Series 2007A-1, 5.750%, 6/01/47
Perris, California, Special Tax Bonds, Community Facilities
District 2001-1, May Farms Improvement Area 4, Series 2005A:
1,420 5.000%, 9/01/25 9/15 at 102.00 N/R 1,047,491
435 5.100%, 9/01/30 9/15 at 102.00 N/R 308,828
San Diego County, California, Certificates of Participation,
Burnham Institute, Series 2006:
250 5.000%, 9/01/21 9/15 at 102.00 Baa3 206,880
275 5.000%, 9/01/23 9/15 at 102.00 Baa3 220,479
2,220 San Diego Redevelopment Agency, California, Subordinate Lien 9/14 at 100.00 A3 2,158,040
Tax Allocation Bonds, Centre City Project, Series 2004A,
5.000%, 9/01/20 - SYNCORA GTY Insured
960 San Francisco Redevelopment Agency, California, Hotel Tax 1/09 at 100.00 AAA 976,090
Revenue Bonds, Series 1994, 6.750%, 7/01/25 - FSA Insured
San Joaquin Hills Transportation Corridor Agency, Orange County,
California, Toll Road Revenue Refunding Bonds, Series 1997A:
4,595 0.000%, 1/15/32 - MBIA Insured No Opt. Call AA 958,425
32,400 0.000%, 1/15/34 - MBIA Insured No Opt. Call AA 5,860,836
6,000 San Jose Redevelopment Agency, California, Tax Allocation Bonds, 8/14 at 100.00 AA 5,979,540
Merged Area Redevelopment Project, Series 2004A,
5.250%, 8/01/19 - MBIA Insured
3,000 Walnut Energy Center Authority, California, Electric Revenue 1/14 at 100.00 AA 2,720,880
Bonds, Turlock Irrigation District, Series 2004A, 5.000%, 1/01/34 -
AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
143,335 Total California 84,820,264
------------------------------------------------------------------------------------------------------------------------------------
COLORADO - 2.4% (1.4% OF TOTAL INVESTMENTS)
1,700 Centennial Water and Sanitation District, Colorado, Water and 12/14 at 100.00 AA 1,656,344
Sewerage Revenue Bonds, Series 2004, 5.000%, 12/01/22 -
FGIC Insured
Colorado Health Facilities Authority, Revenue Bonds, Evangelical
Lutheran Good Samaritan Society, Series 2005:
1,745 5.250%, 6/01/23 6/16 at 100.00 A- 1,473,670
475 5.000%, 6/01/29 6/16 at 100.00 A- 358,701
400 Colorado Health Facilities Authority, Revenue Bonds, Poudre Valley 3/15 at 100.00 BBB+ 293,072
Health Care, Series 2005F, 5.000%, 3/01/25
35
NPM
Nuveen Premium Income Municipal Fund 2, Inc. (continued)
Portfolio of INVESTMENTS October 31, 2008
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
COLORADO (continued)
$ 15 Colorado Housing Finance Authority, Single Family Program Senior 12/08 at 103.50 Aaa $ 15,387
Bonds, Series 1995D, 7.375%, 6/01/26 (Alternative Minimum Tax)
355 Denver City and County, Colorado, Airport System Revenue Bonds, No Opt. Call A+ 377,986
Series 1991D, 7.750%, 11/15/13 (Alternative Minimum Tax)
6,925 Denver Convention Center Hotel Authority, Colorado, Senior 11/16 at 100.00 BBB- 5,775,312
Revenue Bonds, Convention Center Hotel, Series 2006,
5.125%, 12/01/25 - SYNCORA GTY Insured
1,700 Denver, Colorado, FHA-Insured Multifamily Housing Revenue Bonds, 4/09 at 101.00 AA 1,513,136
Boston Lofts Project, Series 1997A, 5.750%, 10/01/27
(Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
13,315 Total Colorado 11,463,608
------------------------------------------------------------------------------------------------------------------------------------
CONNECTICUT - 1.0% (0.6% OF TOTAL INVESTMENTS)
5,000 Connecticut, Special Tax Obligation Transportation Infrastructure 1/14 at 100.00 AA 4,999,650
Purpose Bonds, Series 2003B, 5.000%, 1/01/21 - FGIC Insured
------------------------------------------------------------------------------------------------------------------------------------
DISTRICT OF COLUMBIA - 3.1% (1.8% OF TOTAL INVESTMENTS)
District of Columbia, Revenue Bonds, Georgetown University,
Series 2001A:
11,720 0.000%, 4/01/27 (Pre-refunded 4/01/11) - MBIA Insured 4/11 at 39.61 AA (4) 4,291,278
13,780 0.000%, 4/01/28 (Pre-refunded 4/01/11) - MBIA Insured 4/11 at 37.21 AA (4) 4,740,182
15,855 0.000%, 4/01/29 (Pre-refunded 4/01/11) - MBIA Insured 4/11 at 35.07 AA (4) 5,139,874
1,335 Washington Convention Center Authority, District of Columbia, 10/16 at 100.00 AA 627,597
Senior Lien Dedicated Tax Revenue Bonds, Series 2007,
Residuals 1606, 1.947%, 10/01/30 - AMBAC Insured (IF)
------------------------------------------------------------------------------------------------------------------------------------
42,690 Total District of Columbia 14,798,931
------------------------------------------------------------------------------------------------------------------------------------
FLORIDA - 2.4% (1.4% OF TOTAL INVESTMENTS)
4,230 Brevard County Health Facilities Authority, Florida, Revenue Bonds, 4/16 at 100.00 A2 3,051,311
Health First Inc. Project, Series 2005, 5.000%, 4/01/24
2,500 Escambia County Health Facilities Authority, Florida, Health 10/10 at 100.00 Baa1 2,144,450
Facility Revenue Refunding Bonds, Baptist Hospital and Baptist Manor,
Series 1998, 5.125%, 10/01/19
555 Florida Housing Finance Corporation, Homeowner Mortgage Revenue 1/10 at 100.00 AAA 521,484
Bonds, Series 2000-11, 5.850%, 1/01/22 - FSA Insured
(Alternative Minimum Tax)
3,600 Hillsborough County Industrial Development Authority, Florida, 4/10 at 101.00 N/R 2,415,780
Exempt Facilities Remarketed Revenue Bonds, National Gypsum
Company, Apollo Beach Project, Series 2000B,
7.125%, 4/01/30 (Alternative Minimum Tax)
1,700 Miami-Dade County, Florida, Beacon Tradeport Community 5/12 at 102.00 BBB+ 1,461,966
Development District, Special Assessment Bonds, Commercial
Project, Series 2002A, 5.625%, 5/01/32 - RAAI Insured
2,455 South Miami Health Facilities Authority, Florida, Hospital Revenue, 8/17 at 100.00 AA- 1,931,471
Baptist Health System Obligation Group, Series 2007,
5.000%, 8/15/42 (UB)
------------------------------------------------------------------------------------------------------------------------------------
15,040 Total Florida 11,526,462
------------------------------------------------------------------------------------------------------------------------------------
GEORGIA - 2.0% (1.1% OF TOTAL INVESTMENTS)
500 Chatham County Hospital Authority, Savannah, Georgia, Hospital 1/14 at 100.00 BBB 332,595
Revenue Bonds, Memorial Health University Medical Center Inc.,
Series 2004A, 5.375%, 1/01/26
10 Municipal Electric Authority of Georgia, Combustion Turbine 11/13 at 100.00 AAA 10,914
Revenue Bonds, Series 2003A, 5.250%, 11/01/15
(Pre-refunded 11/01/13) - MBIA Insured
Municipal Electric Authority of Georgia, Combustion Turbine
Revenue Bonds, Series 2003A:
3,405 5.250%, 11/01/15 - MBIA Insured 11/13 at 100.00 AA 3,565,205
3,365 5.000%, 11/01/18 - MBIA Insured 11/13 at 100.00 AA 3,402,049
2,235 Richmond County Development Authority, Georgia, Revenue Bonds, 12/14 at 100.00 AA 2,031,771
Medical College of Georgia, Cancer Research Center Project,
Series 2004A, 5.000%, 12/15/24 - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
9,515 Total Georgia 9,342,534
------------------------------------------------------------------------------------------------------------------------------------
36
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
IDAHO - 1.0% (0.6% OF TOTAL INVESTMENTS)
$ 150 Idaho Housing Agency, Senior Lien Single Family Mortgage Bonds, 1/09 at 100.00 Aaa $ 152,594
Series 1995F, 6.450%, 7/01/27 (Alternative Minimum Tax)
3,150 Idaho Housing and Finance Association, GNMA Housing Revenue 3/12 at 105.00 Aaa 3,050,460
Refunding Bonds, Wedgewood Terrace Project, Series 2002A-1,
7.250%, 3/20/37
200 Idaho Housing and Finance Association, Single Family Mortgage 1/09 at 100.00 Aa1 203,480
Bonds, Series 1996G, 6.350%, 7/01/26 (Alternative Minimum Tax)
165 Idaho Housing and Finance Association, Single Family Mortgage 1/10 at 100.00 Aa2 167,643
Bonds, Series 2000B, 6.250%, 7/01/22 (Alternative Minimum Tax)
295 Idaho Housing and Finance Association, Single Family Mortgage 7/10 at 100.00 Aaa 295,074
Bonds, Series 2000E, 5.950%, 7/01/20 (Alternative Minimum Tax)
1,000 Madison County, Idaho, Hospital Revenue Certificates of 9/16 at 100.00 BBB- 725,420
Participation, Madison Memorial Hospital, Series 2006,
5.250%, 9/01/30
------------------------------------------------------------------------------------------------------------------------------------
4,960 Total Idaho 4,594,671
------------------------------------------------------------------------------------------------------------------------------------
ILLINOIS - 15.3% (8.9% OF TOTAL INVESTMENTS)
5,000 Chicago Board of Education, Illinois, Unlimited Tax General No Opt. Call AA 2,571,950
Obligation Bonds, Dedicated Tax Revenues, Series 1999A,
0.000%, 12/01/20 - FGIC Insured
22,670 Chicago, Illinois, General Obligation Bonds, City Colleges, No Opt. Call AA 8,981,401
Series 1999, 0.000%, 1/01/25 - FGIC Insured
1,175 Chicago, Illinois, GNMA Collateralized Multifamily Housing 6/09 at 102.00 Aaa 1,079,508
Revenue Bonds, Bryn Mawr-Belle Shores Project, Series 1997,
5.800%, 6/01/23 (Alternative Minimum Tax)
2,875 Chicago, Illinois, Tax Increment Allocation Bonds, Read-Dunning 1/09 at 100.00 N/R 2,876,495
Redevelopment Project, Series 1996B, 7.250%, 1/01/14
2,815 Chicago, Illinois, Tax Increment Allocation Bonds, Sanitary 1/09 at 100.00 N/R 2,818,744
Drainage and Ship Canal Redevelopment Project, Series 1997A,
7.750%, 1/01/14
4,865 Cook County Community Consolidated School District 15, Palatine, No Opt. Call Aa3 (4) 2,404,526
Illinois, General Obligation Bonds, Series 2001,
0.000%, 12/01/20 - FGIC Insured (ETM)
2,575 Cook County Community High School District 219, Niles Township, No Opt. Call A2 1,272,694
Illinois, General Obligation Capital Appreciation Bonds,
Series 2001, 0.000%, 12/01/20 - MBIA Insured
3,615 Cook County Community High School District 219, Niles Township, No Opt. Call A2 (4) 1,933,121
Illinois, General Obligation Capital Appreciation Bonds,
Series 2001, 0.000%, 12/01/20 - MBIA Insured (ETM)
Illinois Finance Authority, Revenue Bonds, OSF Healthcare
System, Series 2004:
2,000 5.250%, 11/15/14 5/14 at 100.00 A 1,929,780
4,420 5.250%, 11/15/15 5/14 at 100.00 A 4,196,083
395 Illinois Finance Authority, Revenue Bonds, Proctor Hospital, 1/16 at 100.00 BBB- 305,758
Series 2006, 5.125%, 1/01/25
1,000 Illinois Health Facilities Authority, Revenue Bonds, Condell Medical 5/12 at 100.00 Baa3 771,390
Center, Series 2002, 5.500%, 5/15/32
3,090 Illinois Health Facilities Authority, Revenue Bonds, Lake Forest 7/13 at 100.00 A- 2,795,987
Hospital, Series 2003, 6.000%, 7/01/33
3,000 Illinois Health Facilities Authority, Revenue Refunding Bonds, No Opt. Call Aa3 3,177,210
Lutheran General Health System, Series 1993C,
6.000%, 4/01/18
Illinois Housing Development Authority, Housing Finance Bonds,
Series 2000A:
260 5.750%, 9/01/10 (Alternative Minimum Tax) 3/10 at 100.00 AA 264,917
1,245 6.200%, 9/01/20 (Alternative Minimum Tax) 3/10 at 100.00 AA 1,164,648
11,000 Illinois, General Obligation Bonds, Illinois FIRST Program, No Opt. Call AA 11,472,010
Series 2001, 6.000%, 11/01/26 - FGIC Insured
2,000 Illinois, General Obligation Bonds, Illinois FIRST Program, 2/12 at 100.00 AA 2,051,480
Series 2002, 5.500%, 2/01/18 - FGIC Insured
37
NPM
Nuveen Premium Income Municipal Fund 2, Inc. (continued)
Portfolio of INVESTMENTS October 31, 2008
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
ILLINOIS (continued)
Lake County Community Unit School District 60, Waukegan,
Illinois, General Obligation Refunding Bonds, Series 2001B:
$ 3,230 0.000%, 11/01/19 - FSA Insured No Opt. Call Aaa $ 1,790,324
1,740 0.000%, 11/01/21 - FSA Insured No Opt. Call Aaa 844,370
4,020 Lake, Cook, Kane and McHenry Counties Community Unit School No Opt. Call AAA 4,207,573
District 220, Barrington, Illinois, School Refunding Bonds,
Series 2002, 5.250%, 12/01/20 - FSA Insured (UB)
Lombard Public Facilities Corporation, Illinois, Second Tier
Conference Center and Hotel Revenue Bonds, Series 2005B:
855 5.250%, 1/01/25 1/16 at 100.00 AA 793,320
1,750 5.250%, 1/01/30 1/16 at 100.00 AA 1,578,185
17,945 McHenry and Kane Counties Community Consolidated School No Opt. Call N/R 7,809,126
District 158, Huntley, Illinois, General Obligation Bonds,
Series 2003, 0.000%, 1/01/22 - FGIC Insured
2,910 McHenry County Community High School District 154, Marengo, No Opt. Call A1 1,420,837
Illinois, Capital Appreciation School Bonds, Series 2001,
0.000%, 1/01/21 - FGIC Insured
2,540 Metropolitan Pier and Exposition Authority, Illinois, Revenue Bonds, 6/12 at 101.00 AAA 2,431,110
McCormick Place Expansion Project, Series 2002A,
5.000%, 12/15/28 - MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
108,990 Total Illinois 72,942,547
------------------------------------------------------------------------------------------------------------------------------------
INDIANA - 3.3% (1.9% OF TOTAL INVESTMENTS)
1,000 Ball State University, Indiana, Student Fee Revenue Bonds, 1/12 at 100.00 A+ (4) 1,082,600
Series 2002K, 5.750%, 7/01/20 (Pre-refunded 1/01/12) -
FGIC Insured
3,500 Indiana Bond Bank, Special Program Bonds, East Chicago 2/10 at 101.00 AA (4) 3,702,300
Facilities Building Corporation, Series 2000A, 6.125%, 2/01/25
(Pre-refunded 2/01/10) - AMBAC Insured
Indiana Transportation Finance Authority, Highway Revenue Bonds,
Series 2000:
805 5.375%, 12/01/25 (Pre-refunded 12/01/10) 12/10 at 100.00 AA+ (4) 851,529
4,195 5.375%, 12/01/25 (Pre-refunded 12/01/10) 12/10 at 100.00 AA+ (4) 4,437,471
Indiana University, Student Fee Revenue Bonds, Series 2004P:
2,750 5.000%, 8/01/22 - AMBAC Insured 8/14 at 100.00 Aa1 2,727,670
1,600 5.000%, 8/01/24 - AMBAC Insured 8/14 at 100.00 Aa1 1,567,440
1,550 St. Joseph County Hospital Authority, Indiana, Revenue Bonds, 2/15 at 100.00 BBB- 1,261,173
Madison Center Inc., Series 2005, 5.250%, 2/15/23
------------------------------------------------------------------------------------------------------------------------------------
15,400 Total Indiana 15,630,183
------------------------------------------------------------------------------------------------------------------------------------
IOWA - 1.8% (1.1% OF TOTAL INVESTMENTS)
2,000 Iowa Finance Authority, Healthcare Revenue Bonds, Genesis 7/10 at 100.00 A1 2,001,340
Medical Center, Series 2000, 6.250%, 7/01/25
8,000 Iowa Tobacco Settlement Authority, Asset Backed Settlement 6/15 at 100.00 BBB 4,704,080
Revenue Bonds, Series 2005C, 5.500%, 6/01/42
2,000 Iowa Tobacco Settlement Authority, Tobacco Settlement 6/11 at 101.00 AAA 2,114,960
Asset-Backed Revenue Bonds, Series 2001B, 5.300%, 6/01/25
(Pre-refunded 6/01/11)
------------------------------------------------------------------------------------------------------------------------------------
12,000 Total Iowa 8,820,380
------------------------------------------------------------------------------------------------------------------------------------
KANSAS - 0.0% (0.0% OF TOTAL INVESTMENTS)
95 Sedgwick and Shawnee Counties, Kansas, GNMA Collateralized No Opt. Call Aaa 96,720
Single Family Mortgage Revenue Refunding Bonds,
Series 1994A-1, 7.900%, 5/01/24 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
LOUISIANA - 6.4% (3.7% OF TOTAL INVESTMENTS)
275 Bossier Public Trust Financing Authority, Louisiana, Single 2/09 at 100.00 AAA 282,189
Family Mortgage Revenue Refunding Bonds, Series 1995B,
6.125%, 8/01/28
2,105 East Baton Rouge Parish Mortgage Finance Authority, Louisiana, 4/09 at 100.50 Aaa 2,123,061
GNMA/FNMA Mortgage-Backed Securities Program Single
Family Mortgage Revenue Bonds, Series 1994C, 6.350%, 10/01/28
(Alternative Minimum Tax)
38
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
LOUISIANA (continued)
$ 4,350 Louisiana Citizens Property Insurance Corporation, Assessment 6/16 at 100.00 AA $ 4,092,002
Revenue Bonds, Series 2006, 5.000%, 6/01/22 - AMBAC Insured
4,000 Louisiana Public Facilities Authority, Hospital Revenue Bonds, 8/15 at 100.00 A+ 3,162,280
Franciscan Missionaries of Our Lady Health System, Series 2005A,
5.250%, 8/15/31
2,700 Louisiana Public Facilities Authority, Revenue Bonds, Ochsner 5/17 at 100.00 A3 2,103,867
Clinic Foundation Project, Series 2007A, 5.500%, 5/15/47
Louisiana State, Gasoline and Fuels Tax Revenue Bonds,
Series 2006A:
14,550 4.750%, 5/01/39 - FSA Insured (UB) 5/16 at 100.00 AAA 11,811,254
5,920 4.500%, 5/01/41 - FGIC Insured (UB) 5/16 at 100.00 Aa3 4,538,804
2,485 Orleans Levee District, Louisiana, Levee District General Obligation 12/08 at 100.00 AAA 2,488,131
Bonds, Series 1986, 5.950%, 11/01/15 - FSA Insured
------------------------------------------------------------------------------------------------------------------------------------
36,385 Total Louisiana 30,601,588
------------------------------------------------------------------------------------------------------------------------------------
MARYLAND - 0.9% (0.5% OF TOTAL INVESTMENTS)
1,865 Baltimore, Maryland, Senior Lien Convention Center Hotel Revenue 9/16 at 100.00 BBB- 1,585,810
Bonds, Series 2006A, 5.250%, 9/01/26 - SYNCORA GTY Insured
1,205 Maryland Economic Development Corporation, Student Housing 6/16 at 100.00 Baa2 1,006,320
Revenue Refunding Bonds, University of Maryland College Park
Projects, Series 2006, 5.000%, 6/01/28 - CIFG Insured
1,390 Maryland Health and Higher Educational Facilities Authority, Revenue 7/14 at 100.00 A2 (4) 1,494,375
Bonds, LifeBridge Health System, Series 2004A,
5.250%, 7/01/19 (Pre-refunded 7/01/14)
------------------------------------------------------------------------------------------------------------------------------------
4,460 Total Maryland 4,086,505
------------------------------------------------------------------------------------------------------------------------------------
MASSACHUSETTS - 8.0% (4.7% OF TOTAL INVESTMENTS)
1,920 Massachusetts Development Finance Agency, Pioneer Valley No Opt. Call N/R 1,816,608
Resource Recovery Revenue Bonds, Eco/Springfield LLC,
Series 2000A, 8.375%, 7/01/14 (Alternative Minimum Tax)
1,595 Massachusetts Development Finance Agency, Pioneer Valley No Opt. Call N/R 1,392,770
Resource Recovery Revenue Bonds, Eco/Springfield LLC,
Series 2006, 5.875%, 7/01/14 (Alternative Minimum Tax)
1,000 Massachusetts Development Finance Authority, Revenue Bonds, 10/14 at 100.00 BBB 777,570
Hampshire College, Series 2004, 5.700%, 10/01/34
9,175 Massachusetts Health and Educational Facilities Authority, 10/11 at 101.00 BBB+ 7,369,360
Revenue Bonds, Berkshire Health System, Series 2001E,
5.700%, 10/01/25 - RAAI Insured
1,100 Massachusetts Health and Educational Facilities Authority, 1/09 at 101.00 BBB 967,450
Revenue Bonds, Caritas Christi Obligated Group, Series 1999A,
5.625%, 7/01/20
2,645 Massachusetts Health and Educational Facilities Authority, 5/12 at 100.00 N/R 2,158,267
Revenue Bonds, New England Medical Center Hospitals,
Series 2002H, 5.000%, 5/15/25 - FGIC Insured
105 Massachusetts Health and Educational Facilities Authority, Revenue 5/12 at 100.00 N/R (4) 111,927
Bonds, New England Medical Center Hospitals, Series 2002H,
5.000%, 5/15/25 (Pre-refunded 5/15/12) - FGIC Insured
3,795 Massachusetts Water Resources Authority, General Revenue Bonds, 2/17 at 100.00 AAA 2,927,729
Series 2007A, 4.500%, 8/01/46 - FSA Insured (UB)
Massachusetts, General Obligation Bonds, Consolidated Loan,
Series 2002E:
11,400 5.250%, 1/01/21 (Pre-refunded 1/01/13) - FSA Insured 1/13 at 100.00 AAA 12,064,618
1,850 5.250%, 1/01/21 (Pre-refunded 1/01/13) - FSA Insured 1/13 at 100.00 AAA 1,957,855
Massachusetts, Special Obligation Dedicated Tax Revenue Bonds,
Series 2004:
2,250 5.250%, 1/01/21 (Pre-refunded 1/01/14) - FGIC Insured 1/14 at 100.00 A (4) 2,340,023
4,000 5.250%, 1/01/24 (Pre-refunded 1/01/14) - FGIC Insured 1/14 at 100.00 A (4) 4,160,040
------------------------------------------------------------------------------------------------------------------------------------
40,835 Total Massachusetts 38,044,217
------------------------------------------------------------------------------------------------------------------------------------
39
NPM
Nuveen Premium Income Municipal Fund 2, Inc. (continued)
Portfolio of INVESTMENTS October 31, 2008
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
MICHIGAN - 4.5% (2.6% OF TOTAL INVESTMENTS)
Grand Rapids and Kent County Joint Building Authority, Michigan,
Limited Tax General Obligation Bonds, Devos Place Project,
Series 2001:
$ 7,660 0.000%, 12/01/21 No Opt. Call AAA $ 3,756,924
7,955 0.000%, 12/01/22 No Opt. Call AAA 3,659,539
8,260 0.000%, 12/01/23 No Opt. Call AAA 3,564,520
8,575 0.000%, 12/01/24 No Opt. Call AAA 3,456,411
1,200 Kent Hospital Finance Authority, Michigan, Revenue Bonds, 7/15 at 100.00 BBB 947,796
Metropolitan Hospital, Series 2005A, 6.000%, 7/01/35
1,500 Michigan State Hospital Finance Authority, Revenue Bonds, 12/16 at 100.00 Aa2 1,285,425
Trinity Health Care Group, Series 2006A,
5.000%, 12/01/31 (UB)
1,220 Michigan State Hospital Finance Authority, Revenue Refunding 2/09 at 100.00 BB 1,211,875
Bonds, Detroit Medical Center Obligated Group, Series 1993A,
6.375%, 8/15/09
340 Monroe County Hospital Finance Authority, Michigan, Mercy 6/16 at 100.00 Baa3 214,129
Memorial Hospital Corporation Revenue Bonds, Series 2006,
5.500%, 6/01/35
3,270 Romulus Community Schools, Wayne County, Michigan, General 5/13 at 100.00 AA- 3,254,141
Obligation Bonds, Series 2003, 5.000%, 5/01/22
------------------------------------------------------------------------------------------------------------------------------------
39,980 Total Michigan 21,350,760
------------------------------------------------------------------------------------------------------------------------------------
MINNESOTA - 4.7% (2.7% OF TOTAL INVESTMENTS)
8,165 Cohasset, Minnesota, Pollution Control Revenue Bonds, Allete Inc., 7/14 at 100.00 A- 6,996,344
Series 2004, 4.950%, 7/01/22
Minneapolis-St. Paul Housing and Redevelopment Authority,
Minnesota, Revenue Bonds, HealthPartners Inc., Series 2003:
1,000 6.000%, 12/01/18 12/13 at 100.00 Baa1 960,660
1,050 5.875%, 12/01/29 12/13 at 100.00 Baa1 897,162
2,400 Minneapolis-St. Paul Metropolitan Airports Commission, 1/11 at 100.00 AAA 2,529,672
Minnesota, Airport Revenue Bonds, Series 2001A,
5.250%, 1/01/25 (Pre-refunded 1/01/11) - FGIC Insured
3,000 Minneapolis-St. Paul Metropolitan Airports Commission, 1/11 at 100.00 A (4) 3,162,090
Minnesota, Subordinate Airport Revenue Bonds, Series 2001C,
5.250%, 1/01/26 (Pre-refunded 1/01/11) - FGIC Insured
310 Minnesota Housing Finance Agency, Rental Housing Bonds, 2/09 at 100.00 Aa1 310,766
Series 1995D, 5.950%, 2/01/18 - MBIA Insured
530 Minnesota Housing Finance Agency, Single Family Mortgage 1/09 at 100.00 AA+ 534,240
Bonds, Series 1996G, 6.250%, 7/01/26 (Alternative Minimum Tax)
810 Minnesota Housing Finance Agency, Single Family Mortgage 7/09 at 100.00 AA+ 813,645
Revenue Bonds, Series 2000C, 6.100%, 7/01/30
(Alternative Minimum Tax)
1,015 Minnesota Housing Finance Agency, Single Family Remarketed 1/11 at 101.00 AA+ 1,022,937
Mortgage Bonds, Series 1998H-2, 6.050%, 7/01/31
(Alternative Minimum Tax)
1,000 Minnesota Municipal Power Agency, Electric Revenue Bonds, 10/14 at 100.00 A3 966,500
Series 2004A, 5.250%, 10/01/19
1,540 Southern Minnesota Municipal Power Agency, Power Supply System 1/09 at 100.00 Aaa 1,581,087
Revenue Bonds, Series 1992B, 5.750%, 1/01/11 (ETM)
1,620 St. Louis Park, Minnesota, Revenue Bonds, Park Nicollet Health 7/14 at 100.00 N/R (4) 1,779,473
Services, Series 2003B, 5.500%, 7/01/25 (Pre-refunded 7/01/14)
1,000 St. Paul Housing and Redevelopment Authority, Minnesota, 11/15 at 100.00 Baa3 806,060
Revenue Bonds, Healtheast Inc., Series 2005, 6.000%, 11/15/25
------------------------------------------------------------------------------------------------------------------------------------
23,440 Total Minnesota 22,360,636
------------------------------------------------------------------------------------------------------------------------------------
MISSISSIPPI - 0.7% (0.4% OF TOTAL INVESTMENTS)
3,675 Mississippi Hospital Equipment and Facilities Authority, Revenue 9/14 at 100.00 AA 3,247,451
Bonds, Baptist Memorial Healthcare, Series 2004B-1,
5.000%, 9/01/24 (UB)
------------------------------------------------------------------------------------------------------------------------------------
40
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
MISSOURI - 4.8% (2.8% OF TOTAL INVESTMENTS)
$ 2,000 Cole County Industrial Development Authority, Missouri, Revenue 2/14 at 100.00 N/R $ 1,713,420
Bonds, Lutheran Senior Services - Heisinger Project,
Series 2004, 5.250%, 2/01/24
200 Hannibal Industrial Development Authority, Missouri, Health 3/16 at 100.00 BBB+ 169,840
Facilities Revenue Bonds, Hannibal Regional Hospital,
Series 2006, 5.000%, 3/01/22
2,885 Joplin Industrial Development Authority, Missouri, Health Facilities 2/15 at 102.00 BBB+ 2,487,245
Revenue Bonds, Freeman Health System, Series 2004,
5.500%, 2/15/24
9,000 Kansas City, Missouri, Airport Revenue Bonds, General 9/12 at 100.00 A+ 9,054,180
Improvement Projects, Series 2003B, 5.250%, 9/01/17 -
FGIC Insured
Missouri Development Finance Board, Infrastructure Facilities
Revenue Bonds, Branson Landing Project, Series 2005A:
780 6.000%, 6/01/20 No Opt. Call BBB+ 701,579
1,225 5.000%, 6/01/35 6/15 at 100.00 BBB+ 823,617
2,500 Missouri Health and Educational Facilities Authority, Revenue 5/13 at 100.00 AA 2,227,425
Bonds, BJC Health System, Series 2003, 5.125%, 5/15/24
1,200 Missouri Health and Educational Facilities Authority, Revenue 2/14 at 100.00 BBB+ 1,087,560
Bonds, Lake Regional Health System, Series 2003,
5.125%, 2/15/18
1,250 Missouri Health and Educational Facilities Authority, Revenue 6/11 at 101.00 AA 1,176,988
Bonds, SSM Healthcare System, Series 2001A, 5.250%, 6/01/21 -
AMBAC Insured
Missouri Health and Educational Facilities Authority, Revenue
Bonds, SSM Healthcare System, Series 2001A:
1,250 5.250%, 6/01/21 (Pre-refunded 6/01/11) - AMBAC Insured 6/11 at 101.00 AA (4) 1,337,675
2,000 5.250%, 6/01/28 (Pre-refunded 6/01/11) - AMBAC Insured 6/11 at 101.00 AA (4) 2,134,060
------------------------------------------------------------------------------------------------------------------------------------
24,290 Total Missouri 22,913,589
------------------------------------------------------------------------------------------------------------------------------------
NEBRASKA - 0.5% (0.3% OF TOTAL INVESTMENTS)
1,470 Municipal Energy Agency of Nebraska, Power Supply System 4/13 at 100.00 AAA 1,455,285
Revenue Bonds, Series 2003A, 5.250%, 4/01/23 - FSA Insured
1,050 Omaha Public Power District, Nebraska, Separate Electric System 2/17 at 100.00 AAA 933,072
Revenue Bonds, Nebraska City 2, Series 2006A, Trust 11673,
14.495%, 2/01/49 - AMBAC Insured (IF)
------------------------------------------------------------------------------------------------------------------------------------
2,520 Total Nebraska 2,388,357
------------------------------------------------------------------------------------------------------------------------------------
NEVADA - 4.4% (2.6% OF TOTAL INVESTMENTS)
10,410 Clark County School District, Nevada, General Obligation Bonds, 6/12 at 100.00 AA (4) 11,277,986
Series 2002C, 5.500%, 6/15/18 (Pre-refunded 6/15/12) -
MBIA Insured
5,795 Clark County, Nevada, Motor Vehicle Fuel Tax Highway Improvement 7/13 at 100.00 AA 5,613,095
Revenue Bonds, Series 2003, 5.000%, 7/01/23 - AMBAC Insured
4,000 Clark County, Nevada, Subordinate Lien Airport Revenue Bonds, 7/14 at 100.00 Aa3 3,677,600
Series 2004A-2, 5.125%, 7/01/25 - FGIC Insured
1,000 Director of Nevada State Department of Business and Industry, 1/10 at 100.00 AA 601,140
Revenue Bonds, Las Vegas Monorail Project, First Tier,
Series 2000, 5.375%, 1/01/40 - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
21,205 Total Nevada 21,169,821
------------------------------------------------------------------------------------------------------------------------------------
NEW JERSEY - 7.3% (4.3% OF TOTAL INVESTMENTS)
5,480 Essex County Improvement Authority, New Jersey, Lease Revenue 12/13 at 100.00 Aaa 5,544,828
Bonds, Series 2003, 5.125%, 12/15/20 - FSA Insured
135 Essex County Improvement Authority, New Jersey, Lease Revenue 12/13 at 100.00 Aaa 146,718
Bonds, Series 2003, 5.125%, 12/15/20 (Pre-refunded 12/15/13) -
FSA Insured
New Jersey Economic Development Authority, School Facilities
Construction Bonds, Series 2005P:
1,325 5.250%, 9/01/24 9/15 at 100.00 AA- 1,326,405
1,000 5.250%, 9/01/26 9/15 at 100.00 AA- 993,060
41
NPM
Nuveen Premium Income Municipal Fund 2, Inc. (continued)
Portfolio of INVESTMENTS October 31, 2008
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
NEW JERSEY (continued)
$ 520 New Jersey Health Care Facilities Financing Authority, New Jersey, 7/18 at 100.00 Baa2 $ 404,326
Revenue Bonds, Saint Peters University Hospital, Series 2007,
5.750%, 7/01/37
3,675 New Jersey Housing and Mortgage Finance Agency, Multifamily 11/08 at 100.75 Aaa 3,091,925
Housing Revenue Bonds, Series 1997A, 5.650%, 5/01/40 -
AMBAC Insured (Alternative Minimum Tax)
3,400 New Jersey Transportation Trust Fund Authority, Transportation 6/13 at 100.00 AAA 3,730,310
System Bonds, Series 2003C, 5.500%, 6/15/22
(Pre-refunded 6/15/13)
3,425 New Jersey Transportation Trust Fund Authority, Transportation No Opt. Call AA- 3,464,936
System Bonds, Series 2006A, 5.250%, 12/15/20
4,000 New Jersey Turnpike Authority, Revenue Bonds, Series 2003A, 7/13 at 100.00 AA 3,952,680
5.000%, 1/01/19 - FGIC Insured
3,000 New Jersey Turnpike Authority, Revenue Bonds, Series 2005A, 1/15 at 100.00 AAA 3,009,270
5.000%, 1/01/24 - FSA Insured (UB)
10,500 Tobacco Settlement Financing Corporation, New Jersey, Tobacco 6/17 at 100.00 BBB 6,594,735
Settlement Asset-Backed Bonds, Series 2007-1A, 5.000%, 6/01/29
3,185 Union County Utilities Authority, New Jersey, Solid Waste Facility 12/08 at 101.00 AA 2,735,883
Subordinate Lease Revenue Bonds, Ogden Martin Systems of
Union Inc., Series 1998A, 5.350%, 6/01/23 - AMBAC Insured
(Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
39,645 Total New Jersey 34,995,076
------------------------------------------------------------------------------------------------------------------------------------
NEW YORK - 11.5% (6.7% OF TOTAL INVESTMENTS)
5,000 Dormitory Authority of the State of New York, FHA-Insured Revenue 2/15 at 100.00 AA 4,265,500
Bonds, Montefiore Medical Center, Series 2005, 5.000%, 2/01/28 -
FGIC Insured
Dormitory Authority of the State of New York, Revenue Bonds,
Marymount Manhattan College, Series 1999:
1,975 6.375%, 7/01/16 - RAAI Insured 7/09 at 101.00 BBB+ 2,035,001
2,080 6.375%, 7/01/17 - RAAI Insured 7/09 at 101.00 BBB+ 2,143,190
1,500 Dormitory Authority of the State of New York, State and Local 7/14 at 100.00 AA- 1,528,935
Appropriation Lease Bonds, Upstate Community Colleges,
Series 2004B, 5.250%, 7/01/19
1,250 Hempstead Town Industrial Development Agency, New York, 10/15 at 100.00 A 1,133,963
Revenue Bonds, Adelphi University, Civic Facility Project,
Series 2005, 5.000%, 10/01/30
150 Hudson Yards Infrastructure Corporation, New York, Revenue 2/17 at 100.00 AA 61,782
Bonds, Driver Trust 1649, 2006, 4.745%, 2/15/47 -
MBIA Insured (IF)
4,580 Hudson Yards Infrastructure Corporation, New York, Revenue 2/17 at 100.00 AA 3,259,449
Bonds, Series 2006A, 4.500%, 2/15/47 - MBIA Insured (UB)
3,300 Long Island Power Authority, New York, Electric System General 11/16 at 100.00 AA 2,453,253
Revenue Bonds, Series 2006F, 4.250%, 5/01/33 -
MBIA Insured (UB)
2,500 New York City Transitional Finance Authority, New York, Future Tax 2/14 at 100.00 AAA 2,504,400
Secured Bonds, Fiscal Series 2004C, 5.000%, 2/01/22 (UB)
New York City Transitional Finance Authority, New York, Future
Tax Secured Bonds, Tender Option Bond Trust 3218:
1,720 12.996%, 8/01/23 (IF) 8/13 at 100.00 AAA 1,708,132
1,815 13.003%, 8/01/24 (IF) 8/13 at 100.00 AAA 1,767,592
35 New York City, New York, General Obligation Bonds, No Opt. Call AA 35,543
Fiscal Series 1996J, 5.500%, 2/15/26
2,150 New York City, New York, General Obligation Bonds, 3/15 at 100.00 AA 2,032,739
Fiscal Series 2005J, 5.000%, 3/01/25
5,000 New York City, New York, General Obligation Bonds, 4/15 at 100.00 AA 4,757,150
Fiscal Series 2005M, 5.000%, 4/01/24 (UB)
1,000 New York City, New York, General Obligation Bonds, Series 2008, 8/14 at 100.00 AA 988,780
Trust 3217, 13.994%, 8/15/20 (IF)
1,855 New York Convention Center Development Corporation, Hotel Fee 11/15 at 100.00 A2 1,105,543
Revenue Bonds, Trust 2364, 8.714%, 11/15/44 -
AMBAC Insured (IF)
42
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
NEW YORK (continued)
New York State Municipal Bond Bank Agency, Special School Purpose
Revenue Bonds, Series 2003C:
$ 6,000 5.250%, 6/01/20 6/13 at 100.00 A+ $ 6,014,220
5,100 5.250%, 6/01/21 6/13 at 100.00 A+ 5,076,540
New York State Tobacco Settlement Financing Corporation, Tobacco
Settlement Asset-Backed and State Contingency Contract-Backed
Bonds, Series 2003A-1:
3,400 5.500%, 6/01/16 6/10 at 100.00 AA- 3,429,002
2,000 5.500%, 6/01/19 6/13 at 100.00 AA- 2,015,180
6,250 Port Authority of New York and New Jersey, Special Project Bonds, No Opt. Call AA 5,907,313
JFK International Air Terminal LLC, Sixth Series 1997,
6.250%, 12/01/15 - MBIA Insured (Alternative Minimum Tax)
1,000 Rensselaer County Industrial Development Agency, New York, 3/16 at 100.00 A 929,720
Civic Facility Revenue Bonds, Rensselaer Polytechnic Institute,
Series 2006, 5.000%, 3/01/26
------------------------------------------------------------------------------------------------------------------------------------
59,660 Total New York 55,152,927
------------------------------------------------------------------------------------------------------------------------------------
NORTH CAROLINA - 1.7% (1.0% OF TOTAL INVESTMENTS)
3,195 Charlotte-Mecklenberg Hospital Authority, North Carolina, 1/18 at 100.00 AA- 1,964,669
Carolinas Healthcare System Revenue Bonds, Series 2008,
Trust 1149, 6.780%, 1/15/47 (IF)
2,105 Durham Urban Redevelopment Authority, North Carolina, 2/09 at 104.00 AAA 2,017,327
FHA-Insured Mortgage Loan Revenue Bonds, Durham Hosiery Mill,
Series 1987, 7.500%, 8/01/29 (Alternative Minimum Tax)
470 North Carolina Housing Finance Agency, Single Family Revenue 3/09 at 100.00 AA 474,376
Bonds, Series 1996JJ, 6.450%, 9/01/27 (Alternative Minimum Tax)
North Carolina Infrastructure Finance Corporation, Certificates
of Participation, Correctional Facilities, Series 2004A:
1,250 5.000%, 2/01/21 2/14 at 100.00 AA+ 1,254,138
2,445 5.000%, 2/01/22 2/14 at 100.00 AA+ 2,437,298
------------------------------------------------------------------------------------------------------------------------------------
9,465 Total North Carolina 8,147,808
------------------------------------------------------------------------------------------------------------------------------------
NORTH DAKOTA - 0.1% (0.1% OF TOTAL INVESTMENTS)
610 North Dakota Housing Finance Agency, Home Mortgage Finance 7/10 at 100.00 Aa1 619,931
Program Bonds, Series 2000C, 6.150%, 7/01/31
(Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
OHIO - 4.9% (2.9% OF TOTAL INVESTMENTS)
Buckeye Tobacco Settlement Financing Authority, Ohio, Tobacco
Settlement Asset-Backed Revenue Bonds, Senior Lien,
Series 2007A-2:
90 5.125%, 6/01/24 6/17 at 100.00 BBB 70,542
900 5.875%, 6/01/30 6/17 at 100.00 BBB 630,909
845 5.750%, 6/01/34 6/17 at 100.00 BBB 562,770
1,965 5.875%, 6/01/47 6/17 at 100.00 BBB 1,229,324
3,000 Columbus City School District, Franklin County, Ohio, General 12/14 at 100.00 AAA 3,285,000
Obligation Bonds, Series 2004, 5.250%, 12/01/24
(Pre-refunded 12/01/14) - FSA Insured
Franklin County, Ohio, Hospital Revenue Bonds, OhioHealth
Corporation, Series 2003C:
2,330 5.250%, 5/15/17 - MBIA Insured 5/13 at 100.00 AA 2,334,777
4,105 5.250%, 5/15/18 - MBIA Insured 5/13 at 100.00 AA 4,079,056
2,000 Ohio Housing Finance Agency, FHA-Insured Multifamily Housing 1/09 at 101.00 Aa2 1,602,340
Mortgage Revenue Bonds, Courtyards of Kettering,
Series 1998B-1, 5.550%, 1/01/40 (Alternative Minimum Tax)
5,550 Ohio Water Development Authority, Solid Waste Disposal 3/09 at 102.00 N/R 4,448,769
Revenue Bonds, Bay Shore Power, Series 1998A,
5.875%, 9/01/20 (Alternative Minimum Tax)
6,000 Ohio Water Development Authority, Solid Waste Disposal 9/09 at 102.00 N/R 5,145,420
Revenue Bonds, Bay Shore Power, Series 1998B,
6.625%, 9/01/20 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
26,785 Total Ohio 23,388,907
------------------------------------------------------------------------------------------------------------------------------------
43
NPM
Nuveen Premium Income Municipal Fund 2, Inc. (continued)
Portfolio of INVESTMENTS October 31, 2008
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
OKLAHOMA - 4.5% (2.6% OF TOTAL INVESTMENTS)
Norman Regional Hospital Authority, Oklahoma, Hospital Revenue
Bonds, Series 2005:
$ 500 5.375%, 9/01/29 9/16 at 100.00 BBB $ 384,080
750 5.375%, 9/01/36 9/16 at 100.00 BBB 547,103
Oklahoma Development Finance Authority, Revenue Bonds,
Saint John Health System, Series 2007:
5,020 5.000%, 2/15/37 2/17 at 100.00 AA- 4,151,389
1,020 5.000%, 2/15/42 2/17 at 100.00 AA- 824,180
10,000 Oklahoma Municipal Power Authority, Power Supply System 1/17 at 100.00 AA 7,147,400
Revenue Bonds, Series 2007, 4.500%, 1/01/47 - FGIC Insured
5,000 Oklahoma State Student Loan Authority, Senior Lien Revenue 6/11 at 102.00 AAA 4,195,450
Bonds, Series 2001A-1, 5.625%, 6/01/31
(Alternative Minimum Tax)
99 Tulsa County Industrial Authority, Oklahoma, Health Care 12/16 at 100.00 AA 54,982
Revenue Bonds, Saint Francis Health System, Series 2006,
Trust 3500, 7.261%, 12/15/36 (IF)
5,460 Tulsa County Industrial Authority, Oklahoma, Health Care 12/16 at 100.00 AA 4,246,187
Revenue Bonds, Saint Francis Health System, Series 2006,
5.000%, 12/15/36 (UB)
------------------------------------------------------------------------------------------------------------------------------------
27,849 Total Oklahoma 21,550,771
------------------------------------------------------------------------------------------------------------------------------------
OREGON - 1.6% (1.0% OF TOTAL INVESTMENTS)
7,860 Multnomah County Hospital Facilities Authority, Oregon, Revenue 10/14 at 100.00 AA 7,566,586
Bonds, Sisters of Providence Health System, Series 2004,
5.500%, 10/01/21 (UB)
------------------------------------------------------------------------------------------------------------------------------------
PENNSYLVANIA - 2.7% (1.6% OF TOTAL INVESTMENTS)
3,500 Allegheny County Sanitary Authority, Pennsylvania, Sewerage 12/15 at 100.00 AA 3,214,260
Revenue Bonds, Series 2005A, 5.000%, 12/01/23 - MBIA Insured
1,500 Annville-Cleona School District, Lebanon County, Pennsylvania, 3/15 at 100.00 Aaa 1,554,105
General Obligation Bonds, Series 2005, 6.000%, 3/01/28 -
FSA Insured
500 Bucks County Industrial Development Authority, Pennsylvania, 3/17 at 100.00 BBB 323,625
Charter School Revenue Bonds, School Lane Charter School,
Series 2007A, 5.000%, 3/15/37
1,050 Delaware Valley Regional Finance Authority, Pennsylvania, No Opt. Call AA 1,006,856
Local Government Revenue Bonds, Series 1997B,
5.700%, 7/01/27 - AMBAC Insured
5,850 Pennsylvania Public School Building Authority, Lease Revenue 12/16 at 100.00 AAA 4,650,341
Bonds, School District of Philadelphia, Series 2006B,
4.500%, 6/01/32 - FSA Insured (UB)
1,000 Pennsylvania State University, General Revenue Bonds, 9/15 at 100.00 AA 953,870
Series 2005, 5.000%, 9/01/29
1,050 Pennsylvania Turnpike Commission, Turnpike Revenue Bonds, 6/16 at 100.00 AA 1,003,013
Series 2006A, 5.000%, 12/01/26 - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
14,450 Total Pennsylvania 12,706,070
------------------------------------------------------------------------------------------------------------------------------------
RHODE ISLAND - 2.8% (1.6% OF TOTAL INVESTMENTS)
Rhode Island Tobacco Settlement Financing Corporation,
Tobacco Settlement Asset-Backed Bonds, Series 2002A:
9,710 6.000%, 6/01/23 6/12 at 100.00 BBB 8,682,294
6,000 6.125%, 6/01/32 6/12 at 100.00 BBB 4,683,660
------------------------------------------------------------------------------------------------------------------------------------
15,710 Total Rhode Island 13,365,954
------------------------------------------------------------------------------------------------------------------------------------
44
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
SOUTH CAROLINA - 11.9% (6.9% OF TOTAL INVESTMENTS)
$ 14,000 Berkeley County School District, South Carolina, Installment 12/13 at 100.00 A- $13,313,298
Purchase Revenue Bonds, Securing Assets for Education,
Series 2003, 5.250%, 12/01/24
15,445 Greenville County School District, South Carolina, Installment 12/12 at 101.00 AA (4) 17,220,397
Purchase Revenue Bonds, Series 2002, 5.875%, 12/01/17
(Pre-refunded 12/01/12)
2,500 Greenville, South Carolina, Hospital Facilities Revenue Refunding 5/13 at 100.00 AA 2,209,325
Bonds, Series 2003A, 5.000%, 5/01/25 - AMBAC Insured
7,600 Piedmont Municipal Power Agency, South Carolina, Electric 1/09 at 100.00 AA 6,528,248
Revenue Bonds, Series 1991, 4.000%, 1/01/23 - MBIA Insured
1,250 South Carolina JOBS Economic Development Authority, Economic 11/12 at 100.00 A- (4) 1,366,200
Development Revenue Bonds, Bon Secours Health System Inc.,
Series 2002A, 5.625%, 11/15/30 (Pre-refunded 11/15/12)
4,750 South Carolina JOBS Economic Development Authority, 11/12 at 100.00 A- 4,054,648
Economic Development Revenue Bonds, Bon Secours Health
System Inc., Series 2002B, 5.625%, 11/15/30
South Carolina JOBS Economic Development Authority, Hospital
Refunding and Improvement Revenue Bonds, Palmetto Health
Alliance, Series 2003C:
1,335 6.875%, 8/01/27 (Pre-refunded 8/01/13) 8/13 at 100.00 BBB+ (4) 1,508,857
165 6.875%, 8/01/27 (Pre-refunded 8/01/13) 8/13 at 100.00 BBB+ (4) 189,187
4,450 6.375%, 8/01/34 (Pre-refunded 8/01/13) 8/13 at 100.00 BBB+ (4) 4,934,828
550 6.375%, 8/01/34 (Pre-refunded 8/01/13) 8/13 at 100.00 BBB+ (4) 618,816
4,475 Tobacco Settlement Revenue Management Authority, 5/12 at 100.00 BBB (4) 4,654,134
South Carolina, Tobacco Settlement Asset-Backed Bonds,
Series 2001B, 6.000%, 5/15/22 (Pre-refunded 5/15/12)
------------------------------------------------------------------------------------------------------------------------------------
56,520 Total South Carolina 56,597,938
------------------------------------------------------------------------------------------------------------------------------------
TENNESSEE - 1.1% (0.6% OF TOTAL INVESTMENTS)
3,200 Johnson City Health and Educational Facilities Board, Tennessee, 7/16 at 100.00 BBB+ 2,254,720
Revenue Bonds, Mountain States Health Alliance,
Series 2006A, 5.500%, 7/01/36
1,500 Memphis-Shelby County Airport Authority, Tennessee, Airport 3/10 at 101.00 AA 1,453,770
Revenue Bonds, Series 1999D, 6.000%, 3/01/19 -
AMBAC Insured (Alternative Minimum Tax)
Sumner County Health, Educational, and Housing Facilities Board,
Tennessee, Revenue Refunding Bonds, Sumner Regional Health
System Inc., Series 2007:
800 5.500%, 11/01/37 11/17 at 100.00 N/R 593,344
1,000 5.500%, 11/01/46 11/17 at 100.00 N/R 719,410
------------------------------------------------------------------------------------------------------------------------------------
6,500 Total Tennessee 5,021,244
------------------------------------------------------------------------------------------------------------------------------------
TEXAS - 13.6% (7.9% OF TOTAL INVESTMENTS)
5,810 Board of Regents, University of Texas System, Financing System 2/17 at 100.00 AAA 4,480,963
Revenue Bonds, Series 2006F, 4.250%, 8/15/36 (UB)
5,110 Brazos River Authority, Texas, Pollution Control Revenue 4/13 at 101.00 Caa1 3,801,993
Refunding Bonds, TXU Electric Company, Series 1999C,
7.700%, 3/01/32 (Alternative Minimum Tax)
10,000 Brazos River Harbor Navigation District, Brazoria County, Texas, 5/12 at 101.00 A- 8,790,900
Environmental Facilities Revenue Bonds, Dow Chemical
Company Project, Series 2002A-6, 6.250%, 5/15/33
(Mandatory put 5/15/17) (Alternative Minimum Tax)
3,345 Fort Worth, Texas, Water and Sewerage Revenue Bonds, 2/12 at 100.00 AA (4) 3,616,781
Series 2001, 5.625%, 2/15/19 (Pre-refunded 2/15/12)
5,000 Gulf Coast Industrial Development Authority, Texas, Waste 6/10 at 100.00 BBB 3,204,250
Disposal Revenue Bonds, Valero Refining and Marketing
Company Project, Series 1997, 5.600%, 12/01/31
(Alternative Minimum Tax)
Harris County Health Facilities Development Corporation, Texas,
Hospital Revenue Bonds, Memorial Hermann Healthcare System,
Series 2004A:
1,000 5.000%, 12/01/20 12/14 at 100.00 A 869,800
1,000 5.000%, 12/01/21 12/14 at 100.00 A 851,010
2,500 5.125%, 12/01/22 12/14 at 100.00 A 2,134,300
45
NPM
Nuveen Premium Income Municipal Fund 2, Inc. (continued)
Portfolio of INVESTMENTS October 31, 2008
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
TEXAS (continued)
$ 2,800 Harris County-Houston Sports Authority, Texas, Senior Lien Revenue 11/11 at 100.00 AA $ 2,416,400
Bonds, Series 2001G, 5.250%, 11/15/30 - MBIA Insured
4,000 Houston, Texas, First Lien Combined Utility System Revenue 5/14 at 100.00 AA 3,726,200
Bonds, Series 2004A, 5.250%, 5/15/24 - FGIC Insured
10,850 Houston, Texas, Hotel Occupancy Tax and Special Revenue Bonds, No Opt. Call AA 3,875,620
Convention and Entertainment Project, Series 2001B,
0.000%, 9/01/25 - AMBAC Insured
725 Keller Independent School District, Tarrant County, Texas, 8/11 at 100.00 AAA 727,175
Unlimited Tax General Obligation Refunding Bonds, Series 2001,
5.250%, 8/15/26
Kerrville Health Facilities Development Corporation, Texas,
Revenue Bonds, Sid Peterson Memorial Hospital Project, Series
2005:
800 5.250%, 8/15/21 No Opt. Call BBB- 682,272
1,250 5.125%, 8/15/26 No Opt. Call BBB- 979,775
3,100 North Texas Thruway Authority, Second Tier System Revenue 1/18 at 100.00 A3 2,617,144
Refunding Bonds, Series 2008, 5.750%, 1/01/38
2,000 Pearland Independent School District, Brazoria County, Texas, 2/11 at 100.00 AAA 2,110,560
Unlimited Tax Schoolhouse Bonds, Series 2001A, 5.250%, 2/15/22
(Pre-refunded 2/15/11)
1,000 Sabine River Authority, Texas, Pollution Control Revenue Bonds, 11/15 at 100.00 Caa1 566,540
TXU Electric Company, Series 2001C, 5.200%, 5/01/28
3,935 Spring Branch Independent School District, Harris County, Texas, 2/11 at 100.00 AAA 4,141,981
Limited Tax Schoolhouse and Refunding Bonds, Series 2001,
5.125%, 2/01/26 (Pre-refunded 2/01/11)
7,100 Tarrant County Cultural & Educational Facilities Financing 2/17 at 100.00 AA- 5,770,170
Corporation, Texas, Revenue Bonds, Series 2007A,
5.000%, 2/15/36 (UB)
3,755 Texas State, General Obligation Bonds, Series 2008, 4/17 at 100.00 Aa1 3,097,086
Trust 3213, 10.466%, 4/01/33 (IF)
3,900 Texas, General Obligation Bonds, Veterans Housing Assistance 12/11 at 101.00 Aa1 3,548,844
Program Fund II, Series 2001C-1, 5.200%, 12/01/21
(Alternative Minimum Tax)
2,905 Weatherford Independent School District, Parker County, Texas, 2/11 at 44.73 AAA 1,066,048
Unlimited Tax School Building and Refunding Bonds, Series 2001,
0.000%, 2/15/25
4,040 Weatherford Independent School District, Parker County, Texas, 2/11 at 44.73 AAA 1,680,761
Unlimited Tax School Building and Refunding Bonds, Series 2001,
0.000%, 2/15/25 (Pre-refunded 2/15/11)
------------------------------------------------------------------------------------------------------------------------------------
85,925 Total Texas 64,756,573
------------------------------------------------------------------------------------------------------------------------------------
UTAH - 0.0% (0.0% OF TOTAL INVESTMENTS)
170 Utah Housing Finance Agency, Single Family Mortgage Bonds, 1/09 at 101.50 AAA 167,977
Series 1997C, 5.600%, 7/01/18 (Alternative Minimum Tax)
95 Utah Housing Finance Agency, Single Family Mortgage Bonds, 1/09 at 101.00 AAA 94,869
Series 1997E-2, 5.875%, 1/01/19 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
265 Total Utah 262,846
------------------------------------------------------------------------------------------------------------------------------------
46
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
WASHINGTON - 11.1% (6.5% OF TOTAL INVESTMENTS)
$ 15,000 Chelan County Public Utility District 1, Washington, Hydro 7/12 at 100.00 AA $11,763,748
Consolidated System Revenue Bonds, Series 2002A,
5.450%, 7/01/37 - AMBAC Insured (Alternative Minimum Tax)
7,500 Energy Northwest, Washington, Electric Revenue Refunding Bonds, 7/12 at 100.00 Aaa 7,936,500
Columbia Generating Station - Nuclear Project 2, Series 2002C,
5.750%, 7/01/17 - MBIA Insured
5,000 Energy Northwest, Washington, Electric Revenue Refunding Bonds, 7/13 at 100.00 Aaa 5,257,450
Nuclear Project 1, Series 2003A, 5.500%, 7/01/16 (UB)
10,080 King County School District 401, Highline, Washington, General 6/12 at 100.00 AA+ 10,610,006
Obligation Bonds, Series 2002, 5.500%, 12/01/16 - FGIC Insured
6,965 Port of Seattle, Washington, Revenue Bonds, Series 1999A, 9/12 at 100.00 AA 6,648,023
5.250%, 9/01/22 - FGIC Insured
2,820 Skagit County Public Hospital District 1, Washington, General 12/14 at 100.00 A2 2,825,809
Obligation Bonds, Series 2004A, 5.375%, 12/01/19 -
MBIA Insured
2,500 Snohomish County, Washington, Limited Tax General Obligation 12/11 at 100.00 AA 2,505,175
Bonds, Series 2001, 5.125%, 12/01/22 - MBIA Insured
1,000 Washington State Health Care Facilities Authority, Revenue Bonds, No Opt. Call N/R 712,520
Northwest Hospital and Medical Center of Seattle, Series 2007,
5.700%, 12/01/32
4,905 Washington, Various Purpose General Obligation Bonds, 1/09 at 100.00 AA+ 4,916,821
Series 1999B, 5.000%, 1/01/19
------------------------------------------------------------------------------------------------------------------------------------
55,770 Total Washington 53,176,052
------------------------------------------------------------------------------------------------------------------------------------
WEST VIRGINIA - 1.5% (1.0% OF TOTAL INVESTMENTS)
5,000 Mason County, West Virginia, Pollution Control Revenue Bonds, 10/11 at 100.00 BBB 4,303,600
Appalachian Power Company, Series 2003L, 5.500%, 10/01/22
1,000 Pleasants County, West Virginia, Pollution Control Revenue Bonds, 4/09 at 101.00 Aa3 839,190
West Penn Power Company Pleasants Station Project,
Series 1999E, 5.500%, 4/01/29 - AMBAC Insured (Alternative
Minimum Tax)
2,355 West Virginia University, Unlimited Tax General Revenue Bonds, 10/14 at 100.00 A+ 2,257,574
Student Fees, Series 2004C, 5.000%, 10/01/24 - FGIC Insured
------------------------------------------------------------------------------------------------------------------------------------
8,355 Total West Virginia 7,400,364
------------------------------------------------------------------------------------------------------------------------------------
WISCONSIN - 3.4% (2.0% OF TOTAL INVESTMENTS)
5,105 Wisconsin Health and Educational Facilities Authority, Revenue 2/09 at 101.00 BBB+ 4,138,675
Bonds, Aurora Health Care Inc., Series 1999A, 5.600%, 2/15/29
315 Wisconsin Health and Educational Facilities Authority, 5/16 at 100.00 BBB 224,841
Revenue Bonds, Divine Savior Healthcare, Series 2006,
5.000%, 5/01/32
1,000 Wisconsin Health and Educational Facilities Authority, Revenue 5/14 at 100.00 BBB+ 882,040
Bonds, Fort Healthcare Inc., Series 2004, 5.750%, 5/01/24
3,215 Wisconsin Health and Educational Facilities Authority, Revenue 2/09 at 100.00 AA 3,068,203
Bonds, Marshfield Clinic, Series 1997, 5.625%, 2/15/17 -
MBIA Insured
4,530 Wisconsin Health and Educational Facilities Authority, Revenue 8/16 at 100.00 A- 2,836,822
Bonds, Wheaton Franciscan Healthcare System, Series 2006,
5.250%, 8/15/34
5,300 Wisconsin State, General Obligation Bonds, Series 2006A, 5/16 at 100.00 AA 5,021,114
4.750%, 5/01/25 - FGIC Insured (UB)
------------------------------------------------------------------------------------------------------------------------------------
19,465 Total Wisconsin 16,171,695
------------------------------------------------------------------------------------------------------------------------------------
47
NPM
Nuveen Premium Income Municipal Fund 2, Inc. (continued)
Portfolio of INVESTMENTS October 31, 2008
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
WYOMING - 0.3% (0.2% OF TOTAL INVESTMENTS)
$ 2,750 Sweetwater County, Wyoming, Solid Waste Disposal Revenue 12/15 at 100.00 BBB $ 1,796,795
Bonds, FMC Corporation, Series 2005, 5.600%, 12/01/35
(Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
$ 1,037,694 Total Long-Term Investments (cost $893,839,233) - 170.5% 814,148,220
=============-----------------------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS - 0.6% (0.4% OF TOTAL INVESTMENTS)
$ 3,000 Red River Authority, Texas, Pollution Control Revenue Bonds, VMIG-1 3,000,000
Southwestern Public Service Company, Series 1996, Variable
Rate Demand Obligations, 8.300%, 7/01/16 -
AMBAC Insured (5)
=============-----------------------------------------------------------------------------------------------------------------------
Total Short-Term Investments (cost $3,000,000) 3,000,000
--------------------------------------------------------------------------------------------------------------------
Total Investments (cost $896,839,233) - 171.1% 817,148,220
--------------------------------------------------------------------------------------------------------------------
Floating Rate Obligations - (14.5)% (69,424,000)
--------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 2.8% 13,428,400
--------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (59.4)% (6) (283,550,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $477,602,620
====================================================================================================================
(1) All percentages shown in the Portfolio of Investments are
based on net assets applicable to Common shares unless
otherwise noted.
(2) Optional Call Provisions (not covered by the report of
independent registered public accounting firm): 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. Certain mortgage-backed securities
may be subject to periodic principal paydowns.
(3) Ratings (not covered by the report of independent registered
public accounting firm): Using the higher of Standard &
Poor's Group ("Standard & Poor's") or Moody's Investor
Service, Inc. ("Moody's") rating. Ratings below BBB by
Standard & Poor's or Baa by Moody's are considered to be
below investment grade.
The Portfolio of Investments may reflect the ratings on
certain bonds insured by ACA, AMBAC, CIFG, FGIC, FSA, MBIA,
RAAI and SYNCORA as of October 31, 2008. Please see the
Portfolio Manager's Commentary for an expanded discussion of
the affect on the Fund of changes to the ratings of certain
bonds in the portfolio resulting from changes to the ratings
of the underlying insurers both during the period and after
period end.
(4) Backed by an escrow or trust containing sufficient U.S.
Government or U.S. Government agency securities which ensure
the timely payment of principal and interest. Such
investments are normally considered to be equivalent to AAA
rated securities.
(5) Investment has a maturity of more than one year, but has
variable rate and demand features which qualify it as a
short-term investment. The rate disclosed is that in effect
at the end of the reporting period. This rate changes
periodically based on market conditions or a specified
market index.
(6) Preferred Shares, at Liquidation Value as a percentage of
Total Investments is 34.7%.
N/R Not rated.
(ETM) Escrowed to maturity.
(IF) Inverse floating rate investment.
(UB) Underlying bond of an inverse floating rate trust reflected
as a financing transaction pursuant to the provisions of
SFAS No. 140.
See accompanying notes to financial statements.
48
NPT
Nuveen Premium Income Municipal Fund 4, Inc.
Portfolio of INVESTMENTS
October 31, 2008
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
ALABAMA - 5.3% (3.0% OF TOTAL INVESTMENTS)
$ 5,150 Alabama 21st Century Authority, Tobacco Settlement Revenue 12/11 at 101.00 A- $ 4,751,957
Bonds, Series 2001, 5.750%, 12/01/16
2,395 Alabama Housing Finance Authority, FNMA Multifamily Housing 2/11 at 102.00 AAA 2,095,649
Revenue Bonds, South Bay Apartments, Series 2000K,
5.950%, 2/01/33 (Alternative Minimum Tax)
11,895 Alabama Special Care Facilities Financing Authority, Birmingham, 11/08 at 100.00 Aaa 11,841,116
Hospital Revenue Bonds, Daughters of Charity National Health
System - Providence Hospital and St. Vincent's Hospital,
Series 1995, 5.000%, 11/01/25 (ETM)
5,000 Alabama Special Care Facilities Financing Authority, Revenue 11/16 at 100.00 Aa1 4,087,450
Bonds, Ascension Health, Series 2006C-2, 5.000%, 11/15/39 (UB)
1,000 Birmingham Special Care Facilities Financing Authority, Alabama, 11/15 at 100.00 Baa1 721,450
Revenue Bonds, Baptist Health System Inc., Series 2005A,
5.000%, 11/15/30
1,000 Courtland Industrial Development Board, Alabama, Pollution 6/15 at 100.00 BBB 694,450
Control Revenue Bonds, International Paper Company,
Series 2005A, 5.000%, 6/01/25
------------------------------------------------------------------------------------------------------------------------------------
26,440 Total Alabama 24,192,072
------------------------------------------------------------------------------------------------------------------------------------
ALASKA - 1.1% (0.6% OF TOTAL INVESTMENTS)
1,665 Alaska Housing Finance Corporation, General Housing Purpose 12/14 at 100.00 AA 1,533,282
Bonds, Series 2005A, 5.000%, 12/01/30 - FGIC Insured
3,065 Alaska Municipal Bond Bank Authority, General Obligation Bonds, 12/13 at 100.00 AA (4) 3,347,777
Series 2003E, 5.250%, 12/01/26 (Pre-refunded 12/01/13) -
MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
4,730 Total Alaska 4,881,059
------------------------------------------------------------------------------------------------------------------------------------
ARIZONA - 1.2% (0.7% OF TOTAL INVESTMENTS)
5,000 Arizona Tourism and Sports Authority, Tax Revenue Bonds, 7/13 at 100.00 A2 4,378,850
Multipurpose Stadium Facility Project, Series 2003A,
5.000%, 7/01/31 - MBIA Insured
2,000 Salt Verde Financial Corporation, Arizona, Senior Gas Revenue No Opt. Call AA- 1,210,940
Bonds, Series 2007, 5.000%, 12/01/37
------------------------------------------------------------------------------------------------------------------------------------
7,000 Total Arizona 5,589,790
------------------------------------------------------------------------------------------------------------------------------------
ARKANSAS - 0.0% (0.0% OF TOTAL INVESTMENTS)
28 Lonoke County Residential Housing Facilities Board, Arkansas, 4/09 at 100.00 Aaa 28,287
FNMA Mortgage-Backed Securities Program Single Family
Mortgage Revenue Refunding Bonds, Series 1993A,
7.900%, 4/01/11
------------------------------------------------------------------------------------------------------------------------------------
CALIFORNIA - 15.4% (8.8% OF TOTAL INVESTMENTS)
10,000 Anaheim Public Finance Authority, California, Public Improvement 9/17 at 100.00 AA 7,391,000
Project Lease Bonds, Series 2007A-1, 4.375%, 3/01/37 -
FGIC Insured
17,000 California Health Facilities Financing Authority, Health Facility 3/13 at 100.00 A 13,416,398
Revenue Bonds, Adventist Health System/West, Series 2003A,
5.000%, 3/01/33
5,000 California Health Facilities Financing Authority, Revenue Bonds, 4/16 at 100.00 A+ 3,963,050
Kaiser Permanante System, Series 2006, 5.000%, 4/01/37
920 California Health Facilities Financing Authority, Revenue Bonds, 11/16 at 100.00 AA- 531,476
Sutter Health, Tender Option Bond Trust 3175,
11.475%, 11/15/42 (IF)
49
NPT
Nuveen Premium Income Municipal Fund 4, Inc. (continued)
Portfolio of INVESTMENTS October 31, 2008
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
CALIFORNIA (continued)
$ 2,000 California Infrastructure Economic Development Bank, Revenue 8/11 at 102.00 A+ $ 1,749,120
Bonds, Kaiser Hospital Assistance LLC, Series 2001A,
5.550%, 8/01/31
1,560 California Statewide Community Development Authority, Revenue 5/18 at 100.00 AA- 1,042,664
Bonds, Sutter Health, Tender Option Bond Trust 3175,
11.640%, 11/15/48 (IF)
19,545 California, General Obligation Bonds, Series 2005, 6/15 at 100.00 A+ 17,627,438
5.000%, 6/01/33 - CIFG Insured
4,780 Foothill/Eastern Transportation Corridor Agency, California, No Opt. Call AAA 3,903,348
Toll Road Revenue Bonds, Series 1995A, 0.000%, 1/01/14 (ETM)
Golden State Tobacco Securitization Corporation, California,
Enhanced Tobacco Settlement Asset-Backed Bonds,
Series 2007A-1:
610 5.125%, 6/01/47 6/17 at 100.00 BBB 360,205
1,000 5.750%, 6/01/47 6/17 at 100.00 BBB 658,280
1,000 Golden State Tobacco Securitization Corporation, California, 6/13 at 100.00 AAA 1,129,930
Tobacco Settlement Asset-Backed Bonds, Series 2003A-1,
6.750%, 6/01/39 (Pre-refunded 6/01/13)
3,190 Hillsborough City School District, San Mateo County, California, No Opt. Call AAA 1,060,675
General Obligation Bonds, Series 2006B, 0.000%, 9/01/27
11,310 San Francisco Bay Area Rapid Transit District, California, Sales 7/16 at 100.00 AAA 8,909,792
Tax Revenue Bonds, Refunding Series 2006A, 4.250%, 7/01/31 -
FSA Insured (UB)
San Joaquin Hills Transportation Corridor Agency, Orange County,
California, Toll Road Revenue Refunding Bonds, Series 1997A:
4,430 0.000%, 1/15/32 - MBIA Insured No Opt. Call AA 924,009
31,300 0.000%, 1/15/34 - MBIA Insured No Opt. Call AA 5,661,857
1,945 South Gate Public Financing Authority, California, Water Revenue No Opt. Call AA 2,022,781
Refunding Bonds, Series 1996A, 6.000%, 10/01/12 -
FGIC Insured
------------------------------------------------------------------------------------------------------------------------------------
115,590 Total California 70,352,023
------------------------------------------------------------------------------------------------------------------------------------
COLORADO - 5.3% (3.0% OF TOTAL INVESTMENTS)
2,000 Colorado Health Facilities Authority, Revenue Refunding Bonds, 9/11 at 100.00 AA (4) 2,123,000
Catholic Health Initiatives, Series 2001, 5.250%, 9/01/21
(Pre-refunded 9/01/11)
425 Colorado Housing Finance Authority, Single Family Program 10/09 at 105.00 Aa2 447,636
Senior Bonds, Series 1999C-3, 6.750%, 10/01/21
2,695 Denver City and County, Colorado, Airport System Revenue Bonds, No Opt. Call A+ 2,869,501
Series 1991D, 7.750%, 11/15/13 (Alternative Minimum Tax)
Denver Convention Center Hotel Authority, Colorado, Senior
Revenue Bonds, Convention Center Hotel, Series 2003A:
2,940 5.000%, 12/01/20 (Pre-refunded 12/01/13) - SYNCORA GTY Insured 12/13 at 100.00 N/R (4) 3,121,839
10,000 5.000%, 12/01/33 (Pre-refunded 12/01/13) - SYNCORA GTY Insured 12/13 at 100.00 N/R (4) 10,618,500
4,345 El Paso County School District 20, Academy, Colorado, General 12/12 at 100.00 Aa3 4,449,541
Obligation Bonds, Series 2002, 5.250%, 12/15/17 - FGIC Insured
755 Jefferson County School District R1, Colorado, General Obligation 12/14 at 100.00 AAA 743,698
Bonds, Series 2004, 5.000%, 12/15/22 - FSA Insured (UB)
------------------------------------------------------------------------------------------------------------------------------------
23,160 Total Colorado 24,373,715
------------------------------------------------------------------------------------------------------------------------------------
DISTRICT OF COLUMBIA - 1.8% (1.0% OF TOTAL INVESTMENTS)
5 District of Columbia, General Obligation Bonds, Series 1993E, 12/08 at 100.00 AAA 5,016
6.000%, 6/01/09 - CAPMAC Insured
District of Columbia, Revenue Bonds, Georgetown University,
Series 2001A:
9,670 0.000%, 4/01/26 (Pre-refunded 4/01/11) - MBIA Insured 4/11 at 42.15 AA (4) 3,767,239
15,235 0.000%, 4/01/30 (Pre-refunded 4/01/11) - MBIA Insured 4/11 at 32.93 AA (4) 4,637,382
------------------------------------------------------------------------------------------------------------------------------------
24,910 Total District of Columbia 8,409,637
------------------------------------------------------------------------------------------------------------------------------------
50
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
FLORIDA - 6.8% (3.9% OF TOTAL INVESTMENTS)
$ 5,000 Broward County School Board, Florida, Certificates of Participation, 7/13 at 100.00 AA $ 4,458,600
Series 2003, 5.000%, 7/01/28 - MBIA Insured
5,000 Hillsborough County Aviation Authority, Florida, Revenue Bonds, 10/13 at 100.00 AA 4,561,700
Tampa International Airport, Series 2003A, 5.250%, 10/01/18 -
MBIA Insured (Alternative Minimum Tax)
5,000 Martin County Industrial Development Authority, Florida, Industrial 12/08 at 100.00 BB+ 4,510,250
Development Revenue Bonds, Indiantown Cogeneration LP,
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 1,299,339
Multifamily Housing Revenue Bonds, Sunset Bay Apartments,
Series 2000-5A, 5.850%, 7/01/20 - FSA Insured
(Alternative Minimum Tax)
3,385 Miami-Dade County, Florida, Aviation Revenue Bonds, 10/15 at 100.00 A2 2,439,874
Miami International Airport, Series 2005A, 5.000%, 10/01/37 -
SYNCORA GTY Insured (Alternative Minimum Tax)
5,455 South Miami Health Facilities Authority, Florida, Hospital 8/17 at 100.00 AA- 4,291,721
Revenue, Baptist Health System Obligation Group, Series 2007,
5.000%, 8/15/42 (UB)
11,000 Sunrise, Florida, Utility System Revenue Refunding Bonds, 10/18 at 100.00 AA 9,603,770
Series 1998, 5.000%, 10/01/28 - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
36,220 Total Florida 31,165,254
------------------------------------------------------------------------------------------------------------------------------------
GEORGIA - 2.9% (1.7% OF TOTAL INVESTMENTS)
4,400 Atlanta, Georgia, Water and Wastewater Revenue Bonds, No Opt. Call AA 4,165,700
Series 1999A, 5.500%, 11/01/22 - FGIC Insured
2,880 Georgia Municipal Electric Authority, General Power Revenue No Opt. Call A+ 3,145,795
Bonds, Series 1992B, 8.250%, 1/01/11
5,500 Georgia Municipal Electric Authority, General Power Revenue No Opt. Call AAA 5,908,320
Bonds, Series 1993B, 5.700%, 1/01/19 - FGIC Insured (ETM)
------------------------------------------------------------------------------------------------------------------------------------
12,780 Total Georgia 13,219,815
------------------------------------------------------------------------------------------------------------------------------------
HAWAII - 1.2% (0.7% OF TOTAL INVESTMENTS)
3,720 Honolulu City and County, Hawaii, General Obligation Refunding No Opt. Call AA 3,954,360
and Improvement Bonds, Series 1993B, 5.000%, 10/01/13
1,580 Honolulu City and County, Hawaii, General Obligation Refunding No Opt. Call Aaa 1,705,784
and Improvement Bonds, Series 1993B, 5.000%, 10/01/13 (ETM)
------------------------------------------------------------------------------------------------------------------------------------
5,300 Total Hawaii 5,660,144
------------------------------------------------------------------------------------------------------------------------------------
IDAHO - 0.1% (0.1% OF TOTAL INVESTMENTS)
750 Madison County, Idaho, Hospital Revenue Certificates of 9/16 at 100.00 BBB- 517,088
Participation, Madison Memorial Hospital, Series 2006,
5.250%, 9/01/37
------------------------------------------------------------------------------------------------------------------------------------
ILLINOIS - 16.2% (9.2% OF TOTAL INVESTMENTS)
4,000 Chicago Board of Education, Illinois, General Obligation Lease No Opt. Call AA 4,251,080
Certificates, Series 1992A, 6.250%, 1/01/15 - MBIA Insured
5,550 Chicago, Illinois, Revenue Bonds, Midway Airport, Series 2001A, 1/11 at 101.00 AAA 4,543,119
5.125%, 1/01/26 - FSA Insured (Alternative Minimum Tax)
5,000 Chicago, Illinois, Sales Tax Revenue Bonds, Series 1998, 1/09 at 101.50 AAA 4,904,900
5.250%, 1/01/28 - FGIC Insured
1,665 Chicago, Illinois, Third Lien General Airport Revenue Bonds, 1/16 at 100.00 A1 1,436,778
O'Hare International Airport, Series 2005A, 5.000%, 1/01/33 -
FGIC Insured
Cook County School District 99, Cicero, Illinois, General Obligation
School Bonds, Series 1997:
1,455 8.500%, 12/01/13 - FGIC Insured No Opt. Call N/R 1,740,835
1,685 8.500%, 12/01/15 - FGIC Insured No Opt. Call N/R 2,117,455
6,010 Illinois Development Finance Authority, GNMA Collateralized 4/11 at 105.00 Aaa 6,657,698
Mortgage Revenue Bonds, Greek American Nursing Home
Committee, Series 2000A, 7.600%, 4/20/40
51
NPT
Nuveen Premium Income Municipal Fund 4, Inc. (continued)
Portfolio of INVESTMENTS October 31, 2008
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
ILLINOIS (continued)
$ 1,385 Illinois Finance Authority, General Obligation Debt Certificates, 12/14 at 100.00 Aa3 $ 1,366,303
Local Government Program - Kankakee County, Series 2005B,
5.000%, 12/01/18 - AMBAC Insured
2,515 Illinois Finance Authority, Revenue Bonds, Northwestern 8/14 at 100.00 AA+ (4) 2,717,684
Memorial Hospital, Series 2004A, 5.250%, 8/15/34
(Pre-refunded 8/15/14)
5,565 Illinois Finance Authority, Revenue Bonds, Sherman Health 8/17 at 100.00 A- 3,850,090
Systems, Series 2007A, 5.500%, 8/01/37
4,000 Illinois Health Facilities Authority, FHA-Insured Mortgage 8/13 at 100.00 AAA 3,514,800
Revenue Refunding Bonds, Sinai Health System, Series 2003,
5.150%, 2/15/37
4,000 Illinois Health Facilities Authority, Revenue Bonds, Condell 5/12 at 100.00 Baa3 3,085,560
Medical Center, Series 2002, 5.500%, 5/15/32
4,075 Illinois Health Facilities Authority, Revenue Refunding Bonds, No Opt. Call Aa3 4,524,799
Lutheran General Health System, Series 1993C, 7.000%, 4/01/14
9,795 Lake, Cook, Kane and McHenry Counties Community Unit School No Opt. Call AAA 10,354,001
District 220, Barrington, Illinois, School Refunding Bond,
Series 2002, 5.250%, 12/01/19 - FSA Insured (UB)
Metropolitan Pier and Exposition Authority, Illinois, Revenue
Bonds, McCormick Place Expansion Project, Series 2002A:
9,500 0.000%, 6/15/24 - MBIA Insured 6/22 at 101.00 AAA 5,902,350
4,540 5.000%, 12/15/28 - MBIA Insured 6/12 at 101.00 AAA 4,345,370
36,040 0.000%, 6/15/40 - MBIA Insured No Opt. Call AAA 5,291,393
3,050 Regional Transportation Authority, Cook, DuPage, Kane, Lake, No Opt. Call AA 3,499,967
McHenry and Will Counties, Illinois, General Obligation Bonds,
Series 1990A, 7.200%, 11/01/20 - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
109,830 Total Illinois 74,104,182
------------------------------------------------------------------------------------------------------------------------------------
INDIANA - 10.7% (6.1% OF TOTAL INVESTMENTS)
Carmel Redevelopment Authority, Indiana, Lease Rent Revenue
Bonds, Series 2005:
1,950 0.000%, 2/01/24 No Opt. Call AA 758,336
2,705 0.000%, 2/01/25 No Opt. Call AA 1,001,337
3,000 Hospital Authority of Delaware County, Indiana, Hospital Revenue 8/16 at 100.00 Baa2 2,003,220
Bonds, Cardinal Health System, Series 2006, 5.250%, 8/01/36
3,965 Indiana Educational Facilities Authority, Revenue Bonds, 2/11 at 100.00 AA 3,857,073
Butler University, Series 2001, 5.500%, 2/01/26 -
MBIA Insured
1,500 Indiana Educational Facilities Authority, Revenue Bonds, 10/09 at 101.00 AAA 1,545,180
University of Indianapolis, Series 1999, 5.750%, 10/01/19 -
FSA Insured
22,000 Indiana Health Facility Financing Authority, Hospital Revenue 8/10 at 101.50 AA (4) 23,505,014
Bonds, Clarian Health Obligated Group, Series 2000A,
5.500%, 2/15/30 (Pre-refunded 8/15/10) - MBIA Insured
3,000 Indiana Health Facility Financing Authority, Hospital Revenue No Opt. Call AAA 3,309,030
Refunding Bonds, Columbus Regional Hospital, Series 1993,
7.000%, 8/15/15 - FSA Insured
2,800 Indiana Health Facility Financing Authority, Revenue Bonds, 5/15 at 100.00 AA 2,324,504
Community Hospitals of Indiana, Series 2005A, 5.000%, 5/01/35 -
AMBAC Insured
4,000 Indiana Transportation Finance Authority, Highway Revenue 6/13 at 100.00 AAA 3,959,040
Bonds, Series 2003A, 5.000%, 6/01/23 - FSA Insured
6,000 Indiana Transportation Finance Authority, Highway Revenue 6/13 at 100.00 AAA 6,452,880
Bonds, Series 2003A, 5.000%, 6/01/24 (Pre-refunded 6/01/13) -
FSA Insured
420 Marion County Convention and Recreational Facilities 6/09 at 100.00 AA 371,167
Authority, Indiana, Excise Tax Lease Rental Revenue Bonds,
Series 1997A, 5.000%, 6/01/27 - MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
51,340 Total Indiana 49,086,781
------------------------------------------------------------------------------------------------------------------------------------
52
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
IOWA - 0.2% (0.1% OF TOTAL INVESTMENTS)
$ 1,000 Iowa Finance Authority, Health Facility Revenue Bonds, 7/16 at 100.00 BBB- $ 782,430
Care Initiatives Project, Series 2006A, 5.000%, 7/01/20
------------------------------------------------------------------------------------------------------------------------------------
KANSAS - 2.1% (1.2% OF TOTAL INVESTMENTS)
2,000 Olathe, Kansas, Health Facilities Revenue Bonds, Olathe 9/10 at 100.00 AA 1,793,180
Medical Center, Series 2000A, 5.500%, 9/01/25 -
AMBAC Insured
6,825 Sedgwick County Unified School District 259, Wichita, Kansas, 9/10 at 100.00 AA 6,453,106
General Obligation Bonds, Series 2000, 3.500%, 9/01/16
1,750 Wamego, Kansas, Pollution Control Revenue Bonds, Kansas 6/14 at 100.00 AA 1,515,255
Gas and Electric Company, Series 2004, 5.300%, 6/01/31 -
MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
10,575 Total Kansas 9,761,541
------------------------------------------------------------------------------------------------------------------------------------
LOUISIANA - 7.2% (4.1% OF TOTAL INVESTMENTS)
1,750 Louisiana Local Government Environmental Facilities and 6/12 at 105.00 Aaa 1,786,365
Community Development Authority, GNMA Collateralized
Mortgage Revenue Refunding Bonds, Sharlo Apartments,
Series 2002A, 6.500%, 6/20/37
5,150 Louisiana Public Facilities Authority, Hospital Revenue Bonds, 8/15 at 100.00 A+ 4,043,111
Franciscan Missionaries of Our Lady Health System,
Series 2005A, 5.250%, 8/15/32
10,000 Louisiana Public Facilities Authority, Revenue Bonds, Archdiocese 7/17 at 100.00 Baa2 6,933,900
of New Orleans, Series 2007, 4.500%, 7/01/37 - CIFG Insured
3,800 Louisiana Public Facilities Authority, Revenue Bonds, Ochsner 5/17 at 100.00 A3 2,960,998
Clinic Foundation Project, Series 2007A, 5.500%, 5/15/47
Louisiana State, Gasoline and Fuels Tax Revenue Bonds,
Series 2006:
1,480 4.750%, 5/01/39 - FSA Insured (UB) 5/16 at 100.00 AAA 1,201,420
15,820 4.500%, 5/01/41 - FGIC Insured (UB) 5/16 at 100.00 Aa3 12,129,036
170 Louisiana State, Gasoline Tax Revenue Bonds, Series 2006, 5/16 at 100.00 Aa3 11,349
Residuals 660-1, 10.855%, 5/01/41 - FGIC Insured (IF)
3,795 Orleans Levee District, Louisiana, Levee District General 12/08 at 100.00 AAA 3,800,465
Obligation Bonds, Series 1986, 5.950%, 11/01/14 - FSA Insured
------------------------------------------------------------------------------------------------------------------------------------
41,965 Total Louisiana 32,866,644
------------------------------------------------------------------------------------------------------------------------------------
MARYLAND - 2.2% (1.3% OF TOTAL INVESTMENTS)
2,015 Maryland Community Development Administration, Housing 1/09 at 100.00 Aa2 2,015,907
Revenue Bonds, Series 1996A, 5.875%, 7/01/16
2,900 Maryland Community Development Administration, Housing 1/09 at 101.00 Aa2 2,503,251
Revenue Bonds, Series 1997A, 6.000%, 7/01/39
(Alternative Minimum Tax)
50 Maryland Health and Higher Educational Facilities Authority, 8/14 at 100.00 A- 42,645
Revenue Bonds, MedStar Health, Series 2004, 5.375%, 8/15/24
2,210 Maryland Health and Higher Educational Facilities Authority, 7/16 at 100.00 AA 1,532,171
Revenue Bonds, Western Maryland Health, Series 2006A,
4.750%, 7/01/36 - MBIA Insured
1,935 Montgomery County Housing Opportunities Commission, 1/09 at 100.00 Aa2 1,962,400
Maryland, GNMA/FHA-Insured Multifamily Housing Revenue
Bonds, Series 1996B, 6.400%, 7/01/28 (Alternative Minimum Tax)
2,315 Montgomery County Housing Opportunities Commission, 7/10 at 100.00 Aaa 2,245,434
Maryland, Multifamily Housing Development Bonds,
Series 2000B, 6.125%, 7/01/20 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
11,425 Total Maryland 10,301,808
------------------------------------------------------------------------------------------------------------------------------------
53
NPT
Nuveen Premium Income Municipal Fund 4, Inc. (continued)
Portfolio of INVESTMENTS October 31, 2008
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
MASSACHUSETTS - 1.4% (0.8% OF TOTAL INVESTMENTS)
$ 3,585 Massachusetts Development Finance Agency, Revenue Bonds, 3/15 at 100.00 BBB $ 2,499,462
Curry College, Series 2005A, 5.000%, 3/01/35 - ACA Insured
1,000 Massachusetts Development Finance Agency, Revenue Bonds, 10/12 at 102.00 BB- 653,690
Orchard Cove, Series 2007, 5.250%, 10/01/26
1,000 Massachusetts Health and Educational Facilities Authority, 7/15 at 100.00 BBB- 694,160
Revenue Bonds, Milton Hospital Project, Series 2005D,
5.375%, 7/01/35
3,465 Massachusetts Water Resources Authority, General Revenue 2/17 at 100.00 AAA 2,673,144
Bonds, 4.500%, 8/01/46 - FSA Insured (UB)
------------------------------------------------------------------------------------------------------------------------------------
9,050 Total Massachusetts 6,520,456
------------------------------------------------------------------------------------------------------------------------------------
MICHIGAN - 7.0% (4.0% OF TOTAL INVESTMENTS)
6,000 Detroit, Michigan, Second Lien Sewerage Disposal System 7/15 at 100.00 AA 5,128,440
Revenue Bonds, Series 2005A, 5.000%, 7/01/35 - MBIA Insured
8,915 Detroit, Michigan, Senior Lien Water Supply System Revenue 7/27 at 100.00 AA 8,051,047
Bonds, Series 1997A, 5.000%, 7/01/27 - MBIA Insured
5,400 Detroit, Michigan, Sewer Disposal System Revenue Bonds, 7/16 at 100.00 AA 4,299,426
Second Lien, Series 2006B, 4.625%, 7/01/34 - FGIC Insured
5,000 Michigan State Building Authority, Revenue Refunding Bonds, 10/13 at 100.00 AA 4,667,550
Facilities Program, Series 2003II, 5.000%, 10/15/29 -
MBIA Insured
10,500 Michigan State Hospital Finance Authority, Hospital Revenue 2/09 at 101.00 BB 7,492,485
Bonds, Detroit Medical Center Obligated Group, Series 1998A,
5.250%, 8/15/23
1,000 Michigan State Hospital Finance Authority, Revenue Bonds, 5/15 at 100.00 BBB 732,350
Chelsea Community Hospital, Series 2005, 5.000%, 5/15/30
2,000 Michigan State Hospital Finance Authority, Revenue Bonds, 12/16 at 100.00 AA 1,713,900
Trinity Health Care Group, Series 2006A, 5.000%, 12/01/31 (UB)
------------------------------------------------------------------------------------------------------------------------------------
38,815 Total Michigan 32,085,198
------------------------------------------------------------------------------------------------------------------------------------
MINNESOTA - 1.3% (0.8% OF TOTAL INVESTMENTS)
650 Minneapolis-St. Paul Housing Finance Board, Minnesota, 11/08 at 101.00 AAA 648,479
FNMA/GNMA Mortgage-Backed Securities Program Single
Family Mortgage Revenue Bonds, Series 1997, 5.800%, 11/01/30
(Alternative Minimum Tax)
3,500 Minneapolis-St. Paul Metropolitan Airports Commission, 1/11 at 100.00 AAA 3,689,105
Minnesota, Airport Revenue Bonds, Series 2001A,
5.250%, 1/01/25 (Pre-refunded 1/01/11) - FGIC Insured
2,875 Saint Paul Port Authority, Minnesota, Lease Revenue Bonds, 8/16 at 100.00 N/R 1,739,001
Regions Hospital Parking Ramp Project, Series 2007-1,
5.000%, 8/01/36
------------------------------------------------------------------------------------------------------------------------------------
7,025 Total Minnesota 6,076,585
------------------------------------------------------------------------------------------------------------------------------------
MISSISSIPPI - 1.9% (1.1% OF TOTAL INVESTMENTS)
2,975 Mississippi Hospital Equipment and Facilities Authority, Revenue 9/14 at 100.00 AA 2,628,889
Bonds, Baptist Memorial Healthcare, Series 2004B-1,
5.000%, 9/01/24 (UB)
5,180 Mississippi, General Obligation Refunding Bonds, Series 2002A, No Opt. Call AA 5,541,771
5.500%, 12/01/18
1,000 Warren County, Mississippi, Gulf Opportunity Zone Revenue Bonds, 8/11 at 100.00 BBB 628,100
International Paper Company, Series 2006A, 4.800%, 8/01/30
------------------------------------------------------------------------------------------------------------------------------------
9,155 Total Mississippi 8,798,760
------------------------------------------------------------------------------------------------------------------------------------
54
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
MISSOURI - 0.8% (0.5% OF TOTAL INVESTMENTS)
$ 1,450 Cape Girardeau County Industrial Development Authority, 6/17 at 100.00 N/R $ 1,009,708
Missouri, Health Facilities Revenue Bonds, Southeast Missouri
Hospital Association, Series 2007, 5.000%, 6/01/36
3,000 Missouri Health and Educational Facilities Authority, Revenue 5/13 at 100.00 AA 2,672,910
Bonds, BJC Health System, Series 2003, 5.125%, 5/15/24
------------------------------------------------------------------------------------------------------------------------------------
4,450 Total Missouri 3,682,618
------------------------------------------------------------------------------------------------------------------------------------
NEBRASKA - 1.9% (1.1% OF TOTAL INVESTMENTS)
9,000 NebHelp Inc., Nebraska, Senior Subordinate Bonds, Student No Opt. Call A2 8,920,890
Loan Program, Series 1993A-5A, 6.250%, 6/01/18 -
MBIA Insured (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
NEVADA - 2.8% (1.6% OF TOTAL INVESTMENTS)
4,500 Clark County School District, Nevada, General Obligation No Opt. Call AA 4,800,690
School Improvement Bonds, Series 1991A, 7.000%, 6/01/10 -
MBIA Insured
7,000 Clark County, Nevada, Motor Vehicle Fuel Tax Highway 7/13 at 100.00 AA 6,780,270
Improvement Revenue Bonds, Series 2003, 5.000%, 7/01/23 -
AMBAC Insured
5,425 Director of Nevada State Department of Business and Industry, No Opt. Call AA 1,062,269
Revenue Bonds, Las Vegas Monorail Project, First Tier,
Series 2000, 0.000%, 1/01/25 - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
16,925 Total Nevada 12,643,229
------------------------------------------------------------------------------------------------------------------------------------
NEW JERSEY - 5.4% (3.1% OF TOTAL INVESTMENTS)
500 Burlington County Bridge Commission, New Jersey, Economic 1/18 at 100.00 N/R 338,525
Development Revenue Bonds, The Evergreens Project,
Series 2007, 5.625%, 1/01/38
1,100 New Jersey Health Care Facilities Financing Authority, 7/10 at 101.00 BBB- (4) 1,199,638
Revenue Bonds, Trinitas Hospital Obligated Group, Series 2000,
7.500%, 7/01/30 (Pre-refunded 7/01/10)
880 New Jersey Turnpike Authority, Revenue Bonds, Series 1991C, No Opt. Call AA 999,997
6.500%, 1/01/16 - MBIA Insured
New Jersey Turnpike Authority, Revenue Bonds, Series 1991C:
300 6.500%, 1/01/16 - MBIA Insured (ETM) No Opt. Call AA (4) 350,688
2,345 6.500%, 1/01/16 - MBIA Insured (ETM) No Opt. Call AA (4) 2,616,950
11,070 Tobacco Settlement Financing Corporation, New Jersey, Tobacco 6/12 at 100.00 AAA 11,806,266
Settlement Asset-Backed Bonds, Series 2002, 5.750%, 6/01/32
(Pre-refunded 6/01/12)
3,995 Tobacco Settlement Financing Corporation, New Jersey, Tobacco 6/13 at 100.00 AAA 4,572,118
Settlement Asset-Backed Bonds, Series 2003, 6.750%, 6/01/39
(Pre-refunded 6/01/13)
5,000 Tobacco Settlement Financing Corporation, New Jersey, Tobacco 6/17 at 100.00 BBB 2,753,100
Settlement Asset-Backed Bonds, Series 2007-1A, 4.750%, 6/01/34
------------------------------------------------------------------------------------------------------------------------------------
25,190 Total New Jersey 24,637,282
------------------------------------------------------------------------------------------------------------------------------------
NEW YORK - 9.3% (5.3% OF TOTAL INVESTMENTS)
855 Albany Industrial Development Agency, New York, Revenue 4/17 at 100.00 N/R 580,690
Bonds, Brighter Choice Charter Schools, Series 2007A,
5.000%, 4/01/32
1,200 Hempstead Industrial Development Agency, New York, Resource No Opt. Call Baa3 1,165,860
Recovery Revenue Refunding Bonds, American Ref-Fuel
Company of Hempstead LP, Series 2001, 5.000%, 12/01/10
(Mandatory put 6/01/10)
4,070 Hudson Yards Infrastructure Corporation, New York, Revenue 2/17 at 100.00 A3 2,896,497
Bonds, 2006A, 4.500%, 2/15/47 - MBIA Insured (UB)
3,300 Long Island Power Authority, New York, Electric System General 11/16 at 100.00 AA 2,453,253
Revenue Bonds, Series 2006F, 4.250%, 5/01/33 -
MBIA Insured (UB)
55
NPT
Nuveen Premium Income Municipal Fund 4, Inc. (continued)
Portfolio of INVESTMENTS October 31, 2008
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
NEW YORK (continued)
$ 6,740 New York City Transitional Finance Authority, New York, Future 5/10 at 100.00 AAA $ 6,578,779
Tax Secured Bonds, Fiscal Series 1998C, 5.000%, 5/01/26
New York City Transitional Finance Authority, New York, Future
Tax Secured Bonds, Fiscal Series 2000C:
3,630 5.875%, 11/01/16 (Pre-refunded 5/01/10) 5/10 at 101.00 AAA 3,858,073
220 5.875%, 11/01/16 (Pre-refunded 5/01/10) 5/10 at 101.00 AAA 233,823
5,000 5.500%, 11/01/24 (Pre-refunded 5/01/10) 5/10 at 101.00 AAA 5,286,650
New York State Tobacco Settlement Financing Corporation, Tobacco
Settlement Asset-Backed and State Contingency Contract-Backed
Bonds, Series 2003A-1:
10,800 5.500%, 6/01/16 6/10 at 100.00 AA- 10,892,124
2,500 5.500%, 6/01/18 6/12 at 100.00 AA- 2,521,675
6,250 Port Authority of New York and New Jersey, Special Project No Opt. Call AA 5,907,313
Bonds, JFK International Air Terminal LLC, Sixth Series 1997,
6.250%, 12/01/15 - MBIA Insured (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
44,565 Total New York 42,374,737
------------------------------------------------------------------------------------------------------------------------------------
NORTH CAROLINA - 3.3% (1.9% OF TOTAL INVESTMENTS)
750 Charlotte-Mecklenburg Hospital Authority, North Carolina, 1/17 at 100.00 AA- 641,378
Health Care System Revenue Bonds, Carolinas Health Care,
Series 2007A, 5.000%, 1/15/31
2,445 North Carolina Infrastructure Finance Corporation, Certificates 2/14 at 100.00 AA+ 2,453,093
of Participation, Correctional Facilities, Series 2004A,
5.000%, 2/01/21
2,000 North Carolina Municipal Power Agency 1, Catawba Electric No Opt. Call AA 2,085,060
Revenue Bonds, Series 1992, 6.000%, 1/01/11 - MBIA Insured
10,000 North Carolina Municipal Power Agency 1, Catawba Electric 1/13 at 100.00 AA 9,949,000
Revenue Bonds, Series 2003A, 5.250%, 1/01/18 - MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
15,195 Total North Carolina 15,128,531
------------------------------------------------------------------------------------------------------------------------------------
OHIO - 3.5% (2.0% OF TOTAL INVESTMENTS)
5,890 Buckeye Tobacco Settlement Financing Authority, Ohio, Tobacco 6/17 at 100.00 BBB 4,616,582
Settlement Asset-Backed Revenue Bonds, Senior Lien,
Series 2007A-2, 5.125%, 6/01/24
8,065 Cleveland, Ohio, Airport System Revenue Bonds, Series 2001A, 1/10 at 101.00 AAA 7,311,810
5.000%, 1/01/31 - FSA Insured
3,000 Franklin County, Ohio, Development Revenue Bonds, American 10/09 at 101.00 A+ 3,057,210
Chemical Society, Series 1999, 5.800%, 10/01/14
1,000 Franklin County, Ohio, FHA-Insured Multifamily Housing 1/09 at 100.00 Aa2 884,950
Mortgage Revenue Bonds, Hamilton Creek Apartments Project,
Series 1994A, 5.550%, 7/01/24 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
17,955 Total Ohio 15,870,552
------------------------------------------------------------------------------------------------------------------------------------
OKLAHOMA - 1.8% (1.0% OF TOTAL INVESTMENTS)
260 Oklahoma Housing Finance Agency, Single Family Mortgage 3/10 at 101.00 Aaa 242,052
Revenue Bonds, Homeownership Loan Program, Series 2000C-2,
6.200%, 9/01/28 (Alternative Minimum Tax)
5,615 Tulsa County Industrial Authority, Oklahoma, Health Care 12/16 at 100.00 AA 4,366,730
Revenue Bonds, Saint Francis Health System, Series 2006,
5.000%, 12/15/36 (UB)
88 Tulsa County Industrial Authority, Oklahoma, Health Care 12/16 at 100.00 AA 48,873
Revenue Bonds, Saint Francis Health System, Series 2006,
Trust 3500, 7.262%, 12/15/36 (IF)
3,340 Tulsa Industrial Authority, Oklahoma, Hospital Revenue Refunding No Opt. Call AA (4) 3,433,253
Bonds, Hillcrest Medical Center, Series 1996, 6.500%, 6/01/09 -
CONNIE LEE/AMBA Insured (ETM)
------------------------------------------------------------------------------------------------------------------------------------
9,303 Total Oklahoma 8,090,908
------------------------------------------------------------------------------------------------------------------------------------
56
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
PENNSYLVANIA - 2.9% (1.7% OF TOTAL INVESTMENTS)
$ 500 Bucks County Industrial Development Authority, Pennsylvania, 3/17 at 100.00 BBB $ 323,625
Charter School Revenue Bonds, School Lane Charter School,
Series 2007A, 5.000%, 3/15/37
1,800 Pennsylvania Economic Development Financing Authority, 12/08 at 100.00 B- 1,779,192
Senior Lien Resource Recovery Revenue Bonds, Northampton
Generating Project, Series 1994A, 6.400%, 1/01/09
(Alternative Minimum Tax)
5,410 Pennsylvania Housing Finance Agency, Single Family Mortgage 10/17 at 100.00 AA+ 4,238,519
Revenue Bonds, Tender Option Bond Trust 3212,
11.325%, 10/01/38 (IF)
5,490 Pennsylvania Public School Building Authority, Lease Revenue 12/16 at 100.00 AAA 4,364,165
Bonds, School District of Philadelphia, Series 2006B,
4.500%, 6/01/32 - FSA Insured (UB)
2,600 Pennsylvania Turnpike Commission, Turnpike Revenue Bonds, 12/14 at 100.00 AA 2,605,200
Series 2004A, 5.500%, 12/01/31 - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
15,800 Total Pennsylvania 13,310,701
------------------------------------------------------------------------------------------------------------------------------------
PUERTO RICO - 2.9% (1.6% OF TOTAL INVESTMENTS)
12,390 Puerto Rico, General Obligation and Public Improvement Refunding No Opt. Call AA 13,143,434
Bonds, Series 1997, 6.500%, 7/01/13 - MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
RHODE ISLAND - 3.2% (1.8% OF TOTAL INVESTMENTS)
20,000 Rhode Island Tobacco Settlement Financing Corporation, 6/12 at 100.00 BBB 14,605,798
Tobacco Settlement Asset-Backed Bonds, Series 2002A,
6.250%, 6/01/42
------------------------------------------------------------------------------------------------------------------------------------
SOUTH CAROLINA - 4.8% (2.7% OF TOTAL INVESTMENTS)
4,120 Medical University Hospital Authority, South Carolina, 8/14 at 100.00 AA 4,050,619
FHA-Insured Mortgage Revenue Bonds, Series 2004A,
5.250%, 2/15/23 - MBIA Insured
3,000 Myrtle Beach, South Carolina, Hospitality and Accommodation 6/14 at 100.00 A+ 2,459,040
Fee Revenue Bonds, Series 2004A, 5.000%, 6/01/36 -
FGIC Insured
Piedmont Municipal Power Agency, South Carolina, Electric
Revenue Bonds, Series 1991:
5,000 6.250%, 1/01/21 - FGIC Insured No Opt. Call AA 5,202,800
5,750 4.000%, 1/01/23 - MBIA Insured 1/09 at 100.00 AA 4,939,135
5,085 Piedmont Municipal Power Agency, South Carolina, Electric No Opt. Call AA 5,266,128
Revenue Refunding Bonds, Series 1998A, 5.500%, 1/01/13 -
MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
22,955 Total South Carolina 21,917,722
------------------------------------------------------------------------------------------------------------------------------------
SOUTH DAKOTA - 0.4% (0.2% OF TOTAL INVESTMENTS)
1,750 South Dakota Health and Educational Facilities Authority, 11/14 at 100.00 AA- 1,600,935
Revenue Bonds, Sioux Valley Hospitals, Series 2004A,
5.500%, 11/01/31
------------------------------------------------------------------------------------------------------------------------------------
TENNESSEE - 0.6% (0.3% OF TOTAL INVESTMENTS)
5,075 Knox County Health, Educational and Housing Facilities Board, 1/17 at 30.07 A- 441,271
Tennessee, Hospital Revenue Refunding Bonds, Covenant Health,
Series 2006, 0.000%, 1/01/41
680 Sullivan County Health Educational and Housing Facilities Board, 9/16 at 100.00 BBB+ 447,093
Tennessee, Revenue Bonds, Wellmont Health System,
Series 2006C, 5.250%, 9/01/36
Sumner County Health, Educational, and Housing Facilities Board,
Tennessee, Revenue Refunding Bonds, Sumner Regional
Health System Inc., Series 2007:
860 5.500%, 11/01/37 11/17 at 100.00 N/R 637,845
1,500 5.500%, 11/01/46 11/17 at 100.00 N/R 1,079,115
------------------------------------------------------------------------------------------------------------------------------------
8,115 Total Tennessee 2,605,324
------------------------------------------------------------------------------------------------------------------------------------
57
NPT
Nuveen Premium Income Municipal Fund 4, Inc. (continued)
Portfolio of INVESTMENTS October 31, 2008
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
TEXAS - 21.1% (12.1% OF TOTAL INVESTMENTS)
$ 3,000 Alliance Airport Authority, Texas, Special Facilities Revenue 12/12 at 100.00 CCC+ $ 1,023,600
Bonds, American Airlines Inc., Series 2007, 5.250%, 12/01/29
(Alternative Minimum Tax)
5,440 Board of Regents, University of Texas System, Financing System 2/17 at 100.00 AAA 4,195,600
Revenue Bonds, Series 2006F, 4.250%, 8/15/36 (UB)
4,000 Central Texas Regional Mobility Authority, Travis and Williamson 1/15 at 100.00 AA 3,157,400
Counties, Toll Road Revenue Bonds, Series 2005,
5.000%, 1/01/35 - FGIC Insured
2,250 Dallas-Ft. Worth International Airport, Texas, Joint Revenue 11/14 at 100.00 AAA 1,779,075
Bonds, Series 2004B, 5.000%, 11/01/27 - FSA Insured
(Alternative Minimum Tax)
8,000 Dallas-Ft. Worth International Airport, Texas, Joint Revenue 11/11 at 100.00 A+ 7,484,400
Refunding and Improvement Bonds, Series 2001A,
5.875%, 11/01/19 - FGIC Insured (Alternative Minimum Tax)
6,000 Garland Housing Finance Corporation, Texas, Multifamily 12/11 at 101.00 N/R 5,721,660
Housing Revenue Bonds, Legacy Pointe Apartments,
Series 2000, 7.500%, 6/01/40 (Alternative Minimum Tax)
7,000 Harris County Health Facilities Development Corporation, 11/13 at 100.00 AA 6,292,090
Texas, Thermal Utility Revenue Bonds, TECO Project,
Series 2003, 5.000%, 11/15/30 - MBIA Insured
28,305 Houston, Texas, Hotel Occupancy Tax and Special Revenue No Opt. Call AA 8,239,869
Bonds, Convention and Entertainment Project, Series 2001B,
0.000%, 9/01/28 - AMBAC Insured
7,500 Houston, Texas, Junior Lien Water and Sewerage System No Opt. Call AAA 7,939,875
Revenue Refunding Bonds, Series 2002A, 5.750%, 12/01/32 -
FSA Insured (ETM)
33,505 Leander Independent School District, Williamson and Travis 8/14 at 25.08 AAA 4,731,241
Counties, Texas, General Obligation Bonds, Series 2006,
0.000%, 8/15/39
54 Midland Housing Finance Corporation, Texas, Single Family 11/08 at 100.00 Aaa 55,154
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:
730 5.500%, 2/15/21 2/11 at 100.00 AAA 739,760
760 5.500%, 2/15/23 2/11 at 100.00 AAA 768,064
Montgomery Independent School District, Montgomery County,
Texas, Unlimited Tax School Building and Refunding Bonds, Series
2001:
1,570 5.500%, 2/15/21 (Pre-refunded 2/15/11) 2/11 at 100.00 Aaa 1,667,952
1,640 5.500%, 2/15/23 (Pre-refunded 2/15/11) 2/11 at 100.00 Aaa 1,742,320
Mt. Pleasant Independent School District, Titus County, Texas,
General Obligation Refunding Bonds, Series 2001:
3,025 5.000%, 2/15/26 8/11 at 100.00 Aaa 2,980,049
2,300 5.125%, 2/15/31 8/11 at 100.00 Aaa 2,207,471
700 Mt. Pleasant Independent School District, Titus County, Texas, 8/11 at 100.00 Aaa 741,811
General Obligation Refunding Bonds, Series 2001,
5.125%, 2/15/31 (Pre-refunded 8/15/11)
2,500 North Texas Thruway Authority, Second Tier System Revenue 1/18 at 100.00 A3 2,110,600
Refunding Bonds, Series 2008, 5.750%, 1/01/38
6,000 Raven Hills Higher Education Corporation, Texas, Student Housing 8/12 at 100.00 A2 (4) 6,393,360
Revenue Bonds, Angelo State University - Texan Hall LLC,
Series 2002A, 5.000%, 8/01/25 (Pre-refunded 8/01/12) -
MBIA Insured
3,410 Retama Development Corporation, Texas, Special Facilities 12/12 at 100.00 AAA 3,921,807
Revenue Bonds, Retama Park Racetrack, Series 1993,
8.750%, 12/15/18 (Pre-refunded 12/15/12) (5)
1,800 Sam Rayburn Municipal Power Agency, Texas, Power Supply 10/12 at 100.00 A3 1,708,704
System Revenue Refunding Bonds, Series 2002A,
5.750%, 10/01/21 - RAAI Insured
58
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
TEXAS (continued)
$ 4,700 Spring Branch Independent School District, Harris County, 2/11 at 100.00 AAA $ 4,947,220
Texas, Limited Tax Schoolhouse and Refunding Bonds,
Series 2001, 5.125%, 2/01/26 (Pre-refunded 2/01/11)
550 Tarrant County Cultural and Educational Facilities Finance 2/17 at 100.00 AA- 362,511
Corporation, Texas, Revenue Bonds, Texas Health Resources
Project, Trust 1031, 7.369%, 2/15/36 (IF)
5,200 Tarrant County Cultural & Educational Facilities Financing 2/17 at 100.00 AA- 4,226,040
Corporation, Texas, Revenue Bonds, Series 2007A,
5.000%, 2/15/36 (UB)
3,395 Texas State, General Obligation Bonds, Series 2008, 4/17 at 100.00 Aa1 2,800,162
Trust 3213, 10.466%, 4/01/33 (IF)
8,500 Travis County Health Facilities Development Corporation, 11/08 at 100.00 Aaa 8,701,705
Texas, Hospital Revenue Bonds, Daughters of Charity National
Health System, Series 1993B, 6.000%, 11/15/22 (ETM)
------------------------------------------------------------------------------------------------------------------------------------
151,834 Total Texas 96,639,500
------------------------------------------------------------------------------------------------------------------------------------
UTAH - 2.4% (1.4% OF TOTAL INVESTMENTS)
4,845 Bountiful, Davis County, Utah, Hospital Revenue Refunding 12/08 at 101.00 N/R 3,908,025
Bonds, South Davis Community Hospital Project, Series 1998,
5.750%, 12/15/18
4,995 Intermountain Power Agency, Utah, Power Supply Revenue 1/09 at 100.00 Aa3 (4) 5,055,140
Bonds, Series 1996A, 6.150%, 7/01/14 (ETM)
490 Utah Housing Finance Agency, Single Family Mortgage Bonds, 7/10 at 100.00 AA 489,971
Series 2000G, 5.875%, 7/01/27 (Alternative Minimum Tax)
Utah Housing Finance Agency, Single Family Mortgage Bonds,
Series 2001C:
1,285 5.500%, 1/01/18 (Alternative Minimum Tax) 1/11 at 100.00 AA- 1,264,671
475 5.650%, 1/01/21 (Alternative Minimum Tax) 1/11 at 100.00 Aaa 435,005
------------------------------------------------------------------------------------------------------------------------------------
12,090 Total Utah 11,152,812
------------------------------------------------------------------------------------------------------------------------------------
VIRGINIA - 1.6% (0.9% OF TOTAL INVESTMENTS)
8,190 Hampton, Virginia, Revenue Bonds, Convention Center Project, 1/13 at 100.00 AA 7,383,285
Series 2002, 5.000%, 1/15/35 - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
WASHINGTON - 10.7% (6.1% OF TOTAL INVESTMENTS)
1,855 Chelan County Public Utility District 1, Washington, Hydro 7/09 at 101.00 AA 1,802,652
Consolidated System Revenue Bonds, Series 1999A,
6.200%, 7/01/34 (Alternative Minimum Tax)
2,500 Energy Northwest, Washington, Electric Revenue Refunding 7/12 at 100.00 Aaa 2,645,500
Bonds, Columbia Generating Station - Nuclear Project 2,
Series 2002C, 5.750%, 7/01/17 - MBIA Insured
220 Grant County Public Utility District 2, Washington, Revenue 1/15 at 100.00 Aa2 (4) 237,202
Bonds, Wanapum Hydroelectric Development, Series 2005A,
5.000%, 1/01/34 (Pre-refunded 1/01/15) - FGIC Insured
5,780 Grant County Public Utility District 2, Washington, Revenue 1/15 at 100.00 Aa2 5,157,378
Bonds, Wanapum Hydroelectric Development, Series 2005A,
5.000%, 1/01/34 - FGIC Insured
1,500 Snohomish County School District 6, Mukilteo, Washington, No Opt. Call AA 1,615,801
Unlimited Tax General Obligation and Refunding Bonds,
Series 1993, 5.700%, 12/01/12 - FGIC Insured
8,155 Tacoma, Washington, Electric System Revenue Refunding Bonds, 1/11 at 101.00 AAA 8,757,900
Series 2001A, 5.750%, 1/01/20 (Pre-refunded 1/01/11) -
FSA Insured
4,705 Tacoma, Washington, Sewerage Revenue Refunding Bonds, No Opt. Call AA 4,724,997
Series 1994B, 8.000%, 12/01/08 - FGIC Insured
11,000 Washington Public Power Supply System, Revenue Refunding No Opt. Call Aaa 11,374,771
Bonds, Nuclear Project 3, Series 1993B, 7.000%, 7/01/09
59
NPT
Nuveen Premium Income Municipal Fund 4, Inc. (continued)
Portfolio of INVESTMENTS October 31, 2008
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
WASHINGTON (continued)
$ 2,000 Washington State Healthcare Facilities Authority, Revenue Bonds, No Opt. Call N/R $ 1,425,041
Northwest Hospital and Medical Center of Seattle, Series 2007,
5.700%, 12/01/32
1,000 Washington State Healthcare Facilities Authority, Revenue Bonds, 8/13 at 102.00 AA 760,211
Harrison Memorial Hospital, Series 1998, 5.000%, 8/15/28 -
AMBAC Insured
5,500 Washington State Healthcare Facilities Authority, Revenue Bonds, 11/08 at 101.00 Aa3 5,387,526
Swedish Health Services, Series 1998, 5.500%, 11/15/14 -
AMBAC Insured
1,460 Washington State Healthcare Facilities Authority, Revenue Bonds, 8/17 at 100.00 BBB 1,075,495
Virginia Mason Medical Center, Series 2007B, 5.750%, 8/15/37 -
ACA Insured
4,305 Washington State Tobacco Settlement Authority, Tobacco Settlement 6/13 at 100.00 BBB 3,830,332
Asset-Backed Revenue Bonds, Series 2002, 6.500%, 6/01/26
------------------------------------------------------------------------------------------------------------------------------------
49,980 Total Washington 48,794,806
------------------------------------------------------------------------------------------------------------------------------------
WISCONSIN - 3.1% (1.8% OF TOTAL INVESTMENTS)
500 Wisconsin Health and Educational Facilities Authority, Revenue 12/08 at 100.00 AA 497,146
Bonds, Medical College of Wisconsin Inc., Series 1996,
5.500%, 12/01/26 - MBIA Insured
7,500 Wisconsin Health and Educational Facilities Authority, Revenue 2/12 at 101.00 AA 6,584,626
Bonds, Ministry Healthcare Inc., Series 2002A, 5.250%, 2/15/32 -
MBIA Insured
4,000 Wisconsin Health and Educational Facilities Authority, Revenue 8/16 at 100.00 A- 2,504,921
Bonds, Wheaton Franciscan Healthcare System, Series 2006,
5.250%, 8/15/34
5,000 Wisconsin State, General Obligation Bonds, Series 2006A, 5/16 at 100.00 AA 4,736,900
4.750%, 5/01/25 - FGIC Insured (UB)
------------------------------------------------------------------------------------------------------------------------------------
17,000 Total Wisconsin 14,323,593
------------------------------------------------------------------------------------------------------------------------------------
$ 1,009,775 Total Long-Term Investments (cost $868,421,745) - 173.8% 795,599,926
=============-----------------------------------------------------------------------------------------------------------------------
60
PRINCIPAL
AMOUNT (000) DESCRIPTION (1) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS - 1.3% (0.7% OF TOTAL INVESTMENTS)
2,000 Maryland Health and Higher Educational Facilities Authority, A-1+ 2,000,000
Goucher College, Series 2007, Variable Rate Demand Obligations,
1.450%, 7/01/37 (6)
4,000 Virginia Resources Authority, Clean Water State Revolving Fund A-1 4,000,000
Revenue Bonds, Series 2008, Trust 2917, Variable Rate
Demand Obligations, 5.690%, 10/01/28 (6)
------------------------------------------------------------------------------------------------------------------------------------
$ 6,000 Total Short-Term Investments (cost $6,000,000) 6,000,000
=============-----------------------------------------------------------------------------------------------------------------------
Total Investments (cost $874,421,745) - 175.1% 801,599,926
--------------------------------------------------------------------------------------------------------------------
Floating Rate Obligations - (13.1)% (60,118,000)
--------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 4.0% 18,584,301
--------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (66.0)% (7) (302,200,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $457,866,227
====================================================================================================================
(1) All percentages shown in the Portfolio of Investments are
based on net assets applicable to Common shares unless
otherwise noted.
(2) Optional Call Provisions (not covered by the report of
independent registered public accounting firm): 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. Certain mortgage-backed securities
may be subject to periodic principal paydowns.
(3) Ratings (not covered by the report of independent registered
public accounting firm): Using the higher of Standard &
Poor's Group ("Standard & Poor's") or Moody's Investor
Service, Inc. ("Moody's") rating. Ratings below BBB by
Standard & Poor's or Baa by Moody's are considered to be
below investment grade.
The Portfolio of Investments may reflect the ratings on
certain bonds insured by ACA, AMBAC, CIFG, FGIC, FSA, MBIA,
RAAI and SYNCORA as of October 31, 2008. Please see the
Portfolio Manager's Commentary for an expanded discussion of
the affect on the Fund of changes to the ratings of certain
bonds in the portfolio resulting from changes to the ratings
of the underlying insurers both during the period and after
period end.
(4) Backed by an escrow or trust containing sufficient U.S.
Government or U.S. Government agency securities which ensure
the timely payment of principal and interest. Such
investments are normally considered to be equivalent to AAA
rated securities.
(5) The issuer has received a formal adverse determination from
the Internal Revenue Service (the "IRS") regarding the
tax-exempt status of the bonds' coupon payments. The Fund
will continue to treat coupon payments as tax-exempt income
until such time that it is formally determined that the
interest on the bonds should be treated as taxable.
(6) Investment has a maturity of more than one year, but has
variable rate and demand features which qualify it as a
short-term investment. The rate disclosed is that in effect
at the end of the reporting period. This rate changes
periodically based on market conditions or a specified
market index.
(7) Preferred Shares, at Liquidation Value as a percentage of
Total Investments is 37.7%.
N/R Not rated.
(ETM) Escrowed to maturity.
(IF) Inverse floating rate investment.
(UB) Underlying bond of an inverse floating rate trust reflected
as a financing transaction pursuant to the provisions of
SFAS No. 140.
See accompanying notes to financial statements.
61
Statement of
ASSETS & LIABILITIES
October 31, 2008
PREMIUM PREMIUM PREMIUM
INCOME INCOME 2 INCOME 4
(NPI) (NPM) (NPT)
------------------------------------------------------------------------------------------------------------------------------------
ASSETS
Investments, at value (cost $1,369,601,933,
$896,839,233, and $874,421,745, respectively) $1,249,440,713 $817,148,220 $801,599,926
Cash 6,940,478 1,923,437 6,848,909
Receivables:
Interest 21,249,020 14,010,261 14,320,501
Investments sold 1,035,000 280,153 40,908
Other assets 137,708 84,917 118,762
------------------------------------------------------------------------------------------------------------------------------------
Total assets 1,278,802,919 833,446,988 822,929,006
------------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Floating rate obligations 98,904,000 69,424,000 60,118,000
Unrealized depreciation on forward swaps 3,082,340 -- --
Payables:
Common share dividends 3,238,256 2,051,500 2,010,543
Preferred share dividends 144,146 78,741 82,146
Accrued expenses:
Management fees 614,189 404,657 404,311
Other 587,986 335,470 247,779
------------------------------------------------------------------------------------------------------------------------------------
Total liabilities 106,570,917 72,294,368 62,862,779
------------------------------------------------------------------------------------------------------------------------------------
Preferred shares, at liquidation value 415,450,000 283,550,000 302,200,000
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common shares $ 756,782,002 $477,602,620 $457,866,227
====================================================================================================================================
Common shares outstanding 63,785,430 40,796,161 43,236,703
====================================================================================================================================
Net asset value per Common share outstanding
(net assets applicable to Common shares,
divided by Common shares outstanding) $ 11.86 $ 11.71 $ 10.59
====================================================================================================================================
NET ASSETS APPLICABLE TO COMMON SHARES CONSIST OF:
------------------------------------------------------------------------------------------------------------------------------------
Common shares, $.01 par value per share $ 637,854 $ 407,962 $ 432,367
Paid-in surplus 901,373,271 566,753,019 586,866,480
Undistributed (Over-distribution of) net investment income 175,312 (287,678) 659,055
Accumulated net realized gain (loss) from investments and derivative transactions (22,160,875) (9,579,670) (57,269,856)
Net unrealized appreciation (depreciation) of investments and
derivative transactions (123,243,560) (79,691,013) (72,821,819)
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common shares $ 756,782,002 $477,602,620 $457,866,227
====================================================================================================================================
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.
62
Statement of
OPERATIONS
Year Ended October 31, 2008
PREMIUM PREMIUM PREMIUM
INCOME INCOME 2 INCOME 4
(NPI) (NPM) (NPT)
------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME $ 75,183,816 $ 48,566,161 $ 47,913,957
------------------------------------------------------------------------------------------------------------------------------------
EXPENSES
Management fees 8,366,121 5,512,651 5,336,511
Preferred shares - auction fees 1,234,958 822,579 820,387
Preferred shares - dividend disbursing agent fees 60,000 60,000 80,000
Shareholders' servicing agent fees and expenses 124,266 51,501 61,947
Interest expense on floating rate obligations 2,775,047 1,964,810 2,004,389
Custodian's fees and expenses 229,882 150,028 155,153
Directors' fees and expenses 28,407 18,745 18,241
Professional fees 85,450 60,512 58,728
Shareholders' reports - printing and mailing expenses 157,603 107,079 112,602
Stock exchange listing fees 22,053 14,122 14,948
Investor relations expense 173,474 114,280 114,436
Other expenses 46,713 47,191 46,086
------------------------------------------------------------------------------------------------------------------------------------
Total expenses before custodian fee credit 13,303,974 8,923,498 8,823,428
Custodian fee credit (185,299) (120,607) (72,605)
------------------------------------------------------------------------------------------------------------------------------------
Net expenses 13,118,675 8,802,891 8,750,823
------------------------------------------------------------------------------------------------------------------------------------
Net investment income 62,065,141 39,763,270 39,163,134
------------------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) from:
Investments (11,854,156) (6,788,025) (7,460,410)
Forward swaps (526,200) (2,800,000) --
Change in net unrealized appreciation (depreciation) of:
Investments (167,308,446) (117,638,815) (107,428,586)
Forward swaps (3,340,935) 791,405 --
------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) (183,029,737) (126,435,435) (114,888,996)
------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS
From net investment income (18,128,385) (11,883,074) (12,256,484)
From accumulated net realized gains -- (408,199) --
------------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets applicable to Common shares
from distributions to Preferred shareholders (18,128,385) (12,291,273) (12,256,484)
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets applicable to Common shares
from operations $(139,092,981) $ (98,963,438) $ (87,982,346)
====================================================================================================================================
See accompanying notes to financial statements.
63
Statement of
CHANGES in NET ASSETS
PREMIUM INCOME (NPI) PREMIUM INCOME 2 (NPM) PREMIUM INCOME 4 (NPT)
------------------------------- ------------------------------ -------------------------------
YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
10/31/08 10/31/07 10/31/08 10/31/07 10/31/08 10/31/07
------------------------------------------------------------------------------------------------------------------------------------
OPERATIONS
Net investment income $ 62,065,141 $ 62,570,194 $ 39,763,270 $ 40,002,526 $ 39,163,134 $ 38,765,346
Net realized gain (loss) from:
Investments (11,854,156) 1,507,533 (6,788,025) 195,490 (7,460,410) 1,759,555
Forward swaps (526,200) -- (2,800,000) -- -- --
Futures -- -- -- 1,150,416 -- --
Change in net unrealized
appreciation (depreciation) of:
Investments (167,308,446) (36,823,378) (117,638,815) (24,279,042) (107,428,586) (21,333,407)
Forward swaps (3,340,935) 258,595 791,405 (791,405) -- --
Distributions to
Preferred Shareholders:
From net investment income (18,128,385) (18,733,665) (11,883,074) (12,176,545) (12,256,484) (12,206,944)
From accumulated net
realized gains -- -- (408,199) (242,538) -- --
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares
from operations (139,092,981) 8,779,279 (98,963,438) 3,858,902 (87,982,346) 6,984,550
------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS
From net investment income (45,345,066) (45,160,091) (28,251,619) (28,315,494) (25,578,850) (27,498,549)
From accumulated net realized gains -- -- (938,312) (706,808) -- --
------------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets applicable to
Common shares from distributions
to Common shareholders (45,345,066) (45,160,091) (29,189,931) (29,022,302) (25,578,850) (27,498,549)
------------------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Common shares repurchased -- -- (60,864) (4,000,767) -- --
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares
from capital share transactions -- -- (60,864) (4,000,767) -- --
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets
applicable to
Common shares (184,438,047) (36,380,812) (128,214,233) (29,164,167) (113,561,196) (20,513,999
Net assets applicable to
Common shares at
the beginning of year 941,220,049 977,600,861 605,816,853 634,981,020 571,427,423 591,941,422
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common
shares at the end of year $ 756,782,002 $941,220,049 $ 477,602,620 $605,816,853 $ 457,866,227 $571,427,423
====================================================================================================================================
Undistributed (Over-distribution of)
net investment income at the
end of year $ 175,312 $ 1,696,530 $ (287,678) $ 95,004 $ 659,055 $ (637,865)
====================================================================================================================================
See accompanying notes to financial statements.
64
Statement of
CASH FLOWS
Year Ended October 31, 2008
PREMIUM PREMIUM PREMIUM
INCOME INCOME 2 INCOME 4
(NPI) (NPM) (NPT)
------------------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCREASE (DECREASE) IN NET ASSETS APPLICABLE TO COMMON SHARES FROM OPERATIONS $(139,092,981) $ (98,963,438) $ (87,982,346)
Adjustments to reconcile the net increase (decrease) in net assets applicable to
Common shares from operations to net cash provided by (used in) operating
activities:
Purchases of investments (161,616,744) (71,896,636) (93,598,412)
Proceeds from sales and maturities of investments 284,798,833 129,747,899 152,587,972
Proceeds from (Purchases of) short-term investments, net (7,778,372) (3,000,000) (6,000,000)
Proceeds from terminated forward swaps (526,200) (2,800,000) --
Amortization (Accretion) of premiums and discounts, net (1,677,015) (2,837,950) (1,277,935)
(Increase) Decrease in receivable for interest 1,327,194 551,881 574,514
(Increase) Decrease in receivable for investments sold 1,185,621 7,708,946 1,483,841
(Increase) Decrease in other assets 5,564 3,820 3,433
Increase (Decrease) in payable for investments purchased (1,480,711) (2,057,093) --
Increase (Decrease) in payable for Preferred share dividends (23,889) (36,300) (30,789)
Increase (Decrease) in accrued management fees (133,319) (87,631) (65,913)
Increase (Decrease) in accrued other liabilities 117,045 155,576 46,394
Net realized (gain) loss from investments 11,854,156 6,788,025 7,460,410
Net realized (gain) loss from forward swaps 526,200 2,800,000 --
Net realized (gain) loss from paydowns 520 -- 766
Change in net unrealized (appreciation) depreciation of investments 167,308,446 117,638,815 107,428,586
Change in net unrealized (appreciation) depreciation of forward swaps 3,340,935 (791,405) --
------------------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) operating activities 158,135,283 82,924,509 80,630,521
------------------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (Decrease) in cash overdraft balance (182,572) -- --
Increase (Decrease) in floating rate obligations 3,780,000 6,774,000 (12,305,000)
Cash distributions paid to Common shareholders (45,242,233) (29,201,347) (25,444,162)
Increase (Decrease) in Preferred shares (109,550,000) (63,450,000) (36,200,000)
Cost of Common share repurchases -- (60,864) --
------------------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities (151,194,805) (85,938,211) (73,949,162)
------------------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH 6,940,478 (3,013,702) 6,681,359
Cash at the beginning of year -- 4,937,139 167,550
------------------------------------------------------------------------------------------------------------------------------------
CASH AT THE END OF YEAR $ 6,940,478 $ 1,923,437 $ 6,848,909
====================================================================================================================================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest on floating rate obligations was $2,775,047, $1,964,810,
and $2,004,389 for Premium Income (NPI), Premium Income 2 (NPM) and Premium
Income 4 (NPT), respectively.
See accompanying notes to financial statements.
65
Notes to
FINANCIAL STATEMENTS
1. GENERAL INFORMATION AND SIGNIFICANT ACCOUNTING POLICIES
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) (collectively, the "Funds"). The Funds are
registered under the Investment Company Act of 1940, as amended, as closed-end,
diversified management investment companies.
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 or certain U.S. territories.
The following is a summary of significant accounting policies followed by the
Funds in the preparation of their financial statements in accordance with U.S.
generally accepted accounting principles.
Investment 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 market
price quotes are not readily available (which is usually the case for municipal
securities), the pricing service may establish fair 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, evaluations of
anticipated cash flows or collateral and general market conditions. Prices of
forward swap contracts are also provided by an independent pricing service
approved by each Fund's Board of Directors. Futures contracts are valued using
the closing settlement price, or in the absence of such a price, at the mean of
the bid and asked prices. If the pricing service is unable to supply a price for
an investment or derivative investment, each Fund may use market quotes provided
by major broker/dealers in such investments. If it is determined that the market
price for an investment or derivative instrument is unavailable or
inappropriate, the Board of Directors of the Funds, or its designee, may
establish fair value in accordance with procedures established in good faith by
the Board of Directors. Temporary investments in securities that have variable
rate and demand features qualifying them as short-term investments are valued at
amortized cost, which approximates value.
Investment Transactions
Investment transactions are recorded on a trade date basis. Realized gains and
losses from transactions are determined on the specific identification method.
Investments purchased on a when-issued/delayed delivery basis may have extended
settlement periods. Any investments so purchased are subject to market
fluctuation during this period. The Funds have instructed the custodian to
segregate assets with a current value at least equal to the amount of the
when-issued/delayed delivery purchase commitments. At October 31, 2008, there
were no such outstanding purchase commitments in any of the Funds.
Investment Income
Interest income, which includes the amortization of premiums and accretion of
discounts for financial reporting purposes, is recorded on an accrual basis.
Investment income also includes paydown gains and losses, if any.
Income Taxes
Each Fund is a separate taxpayer for federal income tax purposes. Each Fund
intends to distribute substantially all of its net investment income and net
capital gains to shareholders and to otherwise comply with the requirements of
Subchapter M of the Internal Revenue Code applicable to regulated investment
companies. 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. Net
realized capital gains and ordinary income distributions paid by the Funds are
subject to federal taxation.
66
Effective April 30, 2008, the Funds adopted Financial Accounting Standards Board
(FASB) Interpretation No. 48 "Accounting for Uncertainty in Income Taxes" (FIN
48). FIN 48 provides guidance for how uncertain tax positions should be
recognized, measured, presented and disclosed in the financial statements. FIN
48 requires the affirmative evaluation of tax positions taken or expected to be
taken in the course of preparing the Funds' tax returns to determine whether it
is "more-likely-than-not" (i.e., a greater than 50-percent likelihood) of being
sustained by the applicable tax authority. Tax positions not deemed to meet the
more-likely-than-not threshold may result in a tax expense in the current year.
Implementation of FIN 48 required management of the Funds to analyze all open
tax years, as defined by the statute of limitations, for all major
jurisdictions, which includes federal and certain states. Open tax years are
those that are open for examination by taxing authorities (i.e., generally the
last four tax year ends and the interim tax period since then). The Funds have
no examinations in progress.
For all open tax years and all major taxing jurisdictions through the end of the
reporting period, management of the Funds has reviewed all tax positions taken
or expected to be taken in the preparation of the Funds' tax returns and
concluded the adoption of FIN 48 resulted in no impact to the Funds' net assets
or results of operations as of and during the fiscal year ended October 31,
2008.
The Funds are also not aware of any tax positions for which it is reasonably
possible that the total amounts of unrecognized tax benefits will significantly
change in the next twelve months.
Dividends and Distributions to Common Shareholders
Dividends from tax-exempt net investment income are declared monthly. Net
realized capital gains and/or market discount from investment transactions, if
any, are distributed to shareholders at least annually. Furthermore, capital
gains are distributed only to the extent they exceed available capital loss
carryforwards.
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 U.S.
generally accepted accounting principles.
Preferred Shares
The Funds have issued and outstanding Preferred shares, $25,000 stated value per
share, as a means of effecting financial leverage. Each Fund's Preferred shares
are issued in more than one Series. The dividend rate paid by the Funds on each
Series is determined every seven days, pursuant to a dutch auction process
overseen by the auction agent, and is payable at the end of each rate period. As
of October 31, 2008, the number of Preferred shares outstanding, by Series and
in total, for each Fund is as follows:
PREMIUM PREMIUM PREMIUM
INCOME INCOME 2 INCOME 4
(NPI) (NPM) (NPT)
--------------------------------------------------------------------------------
Number of shares:
Series M 3,007 1,634 1,965
Series M2 1,582 -- --
Series T 3,007 2,451 1,787
Series T2 -- -- 1,186
Series W 3,007 1,634 1,501
Series W2 -- -- 464
Series TH 3,008 2,452 2,393
Series F 3,007 1,635 1,607
Series F2 -- 1,536 1,185
--------------------------------------------------------------------------------
Total 16,618 11,342 12,088
================================================================================
Beginning in February 2008, more shares for sale were submitted in the regularly
scheduled auctions for the Preferred shares issued by the Funds than there were
offers to buy. This meant that these auctions "failed to clear,'' and that many
Preferred shareholders who wanted to sell their shares in these auctions were
unable to do so. Preferred shareholders unable to sell their shares received
distributions at the "maximum rate'' applicable to failed auctions as calculated
in accordance with the pre-established terms of the Preferred shares.
These developments generally do not affect the management or investment policies
of the Funds. However, one implication of these auction failures for Common
shareholders is that the Funds' cost of leverage will likely be higher, at least
temporarily, than it otherwise would have been had the auctions continued to be
successful. As a result, the Funds' future Common share earnings may be lower
than they otherwise would have been.
67
Notes to
FINANCIAL STATEMENTS (continued)
On June 11, 2008, Nuveen Investments, Inc. ("Nuveen") announced the Fund Board's
approval of plans to use tender option bonds (TOBs), also known as "floaters" or
floating rate obligations, to refinance a portion of the municipal funds'
outstanding Preferred shares, whose auctions have been failing for several
months. The plan included an initial phase of approximately $1 billion in
forty-one funds. During the fiscal year ended October 31, 2008 Premium Income
(NPI), Premium Income 2 (NPM) and Premium Income 4 (NPT) redeemed $109,550,000,
$63,450,000 and $36,200,000 of their outstanding Preferred shares, respectively,
at liquidation value, using the proceeds from the issuance of TOBs.
Inverse Floating Rate Securities
Each Fund is authorized to invest in inverse floating rate securities. An
inverse floating rate security is created by depositing a municipal bond,
typically with a fixed interest rate, into a special purpose trust created by a
broker-dealer. In turn, this trust (a) issues floating rate certificates, in
face amounts equal to some fraction of the deposited bond's par amount or market
value, that typically pay short-term tax-exempt interest rates to third parties,
and (b) issues to a long-term investor (such as one of the Funds) an inverse
floating rate certificate (sometimes referred to as an "inverse floater") that
represents all remaining or residual interest in the trust. The income received
by the inverse floater holder varies inversely with the short-term rate paid to
the floating rate certificates' holders, and in most circumstances the inverse
floater holder bears substantially all of the underlying bond's downside
investment risk and also benefits disproportionately from any potential
appreciation of the underlying bond's value. The price of an inverse floating
rate security will be more volatile than that of the underlying bond because the
interest rate is dependent on not only the fixed coupon rate of the underlying
bond but also on the short-term interest paid on the floating rate certificates,
and because the inverse floating rate security essentially bears the risk of
loss of the greater face value of the underlying bond.
A Fund may purchase an inverse floating rate security in a secondary market
transaction without first owning the underlying bond (referred to as an
"externally-deposited inverse floater"), or instead by first selling a
fixed-rate bond to a broker-dealer for deposit into the special purpose trust
and receiving in turn the residual interest in the trust (referred to as a
"self-deposited inverse floater"). The inverse floater held by a Fund gives the
Fund the right (a) to cause the holders of the floating rate certificates to
tender their notes at par, and (b) to have the broker transfer the fixed-rate
bond held by the trust to the Fund, thereby collapsing the trust. An investment
in an externally-deposited inverse floater is identified in the Portfolio of
Investments as an "Inverse floating rate investment". An investment in a
self-deposited inverse floater is accounted for as a financing transaction in
accordance with Statement of Financial Accounting Standards No. 140 (SFAS No.
140) "Accounting for Transfers and Servicing of Financial Assets and
Extinguishment of Liabilities". In such instances, a fixed-rate bond deposited
into a special purpose trust is identified in the Portfolio of Investments as an
"Underlying bond of an inverse floating rate trust", with the Fund accounting
for the short-term floating rate certificates issued by the trust as "Floating
rate obligations" on the Statement of Assets and Liabilities. In addition, the
Fund reflects in Investment Income the entire earnings of the underlying bond
and the related interest paid to the holders of the short-term floating rate
certificates is included as "Interest expense on floating rate obligations" on
the Statement of Operations.
Each Fund may also enter into shortfall and forbearance agreements (sometimes
referred to as a "recourse trust" or "credit recovery swap") (such agreements
referred to herein as "Recourse Trusts") with a broker-dealer by which a Fund
agrees to reimburse the broker-dealer, in certain circumstances, for the
difference between the liquidation value of the fixed-rate bond held by the
trust and the liquidation value of the floating rate certificates issued by the
trust plus any shortfalls in interest cash flows. Under these agreements, a
Fund's potential exposure to losses related to or on inverse floaters may
increase beyond the value of a Fund's inverse floater investments as a Fund may
potentially be liable to fulfill all amounts owed to holders of the floating
rate certificates. At period end, any such shortfall is included as "Unrealized
depreciation on Recourse Trusts" on the Statement of Assets and Liabilities.
During the fiscal year ended October 31, 2008, each Fund invested in externally
deposited inverse floaters and/or self-deposited inverse floaters.
68
At October 31, 2008, each Fund's maximum exposure to externally-deposited
Recourse Trusts, if any, is as follows:
PREMIUM PREMIUM PREMIUM
INCOME INCOME 2 INCOME 4
(NPI) (NPM) (NPT)
--------------------------------------------------------------------------------
Maximum exposure $16,635,000 $13,570,000 $ --
================================================================================
The average floating rate obligations outstanding and average annual interest
rate and fees related to self-deposited inverse floaters during the fiscal year
ended October 31, 2008, were as follows:
PREMIUM PREMIUM PREMIUM
INCOME INCOME 2 INCOME 4
(NPI) (NPM) (NPT)
--------------------------------------------------------------------------------
Average floating rate
obligations $97,116,660 $68,897,498 $71,322,092
Average annual interest rate
and fees 2.86% 2.85% 2.81%
================================================================================
Forward Swap Transactions
Each Fund is authorized to invest in forward interest rate swap transactions.
Each Fund's use of forward interest rate swap transactions is intended to help
the Fund manage its overall interest rate sensitivity, either shorter or longer,
generally to more closely align the Fund's interest rate sensitivity with that
of the broader municipal market. Forward interest rate swap transactions involve
each Fund's agreement with a counterparty to pay, in the future, a fixed or
variable rate payment in exchange for the counterparty paying the Fund a
variable or fixed rate payment, the accruals for which would begin at a
specified date in the future (the "effective date"). The amount of the payment
obligation is based on the notional amount of the forward swap contract and the
termination date of the swap (which is akin to a bond's maturity). The value of
the Fund's swap commitment would increase or decrease based primarily on the
extent to which long-term interest rates for bonds having a maturity of the
swap's termination date increases or decreases. The Funds may terminate a swap
contract prior to the effective date, at which point a realized gain or loss is
recognized. When a forward swap is terminated, it ordinarily does not involve
the delivery of securities or other underlying assets or principal, but rather
is settled in cash on a net basis. Each Fund intends, but is not obligated, to
terminate its forward swaps before the effective date. Accordingly, the risk of
loss with respect to the swap counterparty on such transactions is limited to
the credit risk associated with a counterparty failing to honor its commitment
to pay any realized gain to the Fund upon termination. To reduce such credit
risk, all counterparties are required to pledge collateral daily (based on the
daily valuation of each swap) on behalf of each Fund with a value approximately
equal to the amount of any unrealized gain above a pre-determined threshold.
Reciprocally, when any of the Funds have an unrealized loss on a swap contract,
the Funds have instructed the custodian to pledge assets of the Funds as
collateral with a value approximately equal to the amount of the unrealized loss
above a pre-determined threshold. Collateral pledges are monitored and
subsequently adjusted if and when the swap valuations fluctuate, either up or
down, by at least the predetermined threshold amount. Premium Income (NPI) and
Premium Income 2 (NPM) were the only Funds to invest in forward interest rate
swap transactions during the fiscal year ended October 31, 2008.
Futures Contracts
Each Fund is authorized to invest in futures contracts. Upon entering into a
futures contract, a Fund is required to deposit with the broker an amount of
cash or liquid securities equal to a specified percentage of the contract
amount. This is known as the "initial margin." Subsequent payments ("variation
margin") are made or received by a Fund each day, depending on the daily
fluctuation of the value of the contract.
During the period the futures contract is open, changes in the value of the
contract are recognized as an unrealized gain or loss by "marking-to-market" on
a daily basis to reflect the changes in market value of the contract. When the
contract is closed or expired, a Fund records a realized gain or loss equal to
the difference between the value of the contract on the closing date and value
of the contract when originally entered into. Cash held by the broker to cover
initial margin requirements on open futures contracts, if any, is recognized on
the Statement of Assets and Liabilities. Additionally, the Statement of Assets
and Liabilities reflects a receivable or payable for the variation margin, when
applicable. None of the Funds invested in futures contracts during the fiscal
year ended October 31, 2008.
Risks of investments in futures contracts include the possible adverse movement
of the securities or indices underlying the contracts, the possibility that
there may not be a liquid secondary market for the contracts and/or that a
change in the value of the contract may not correlate with a change in the value
of the underlying securities or indices.
Zero Coupon Securities
Each Fund is authorized to invest in zero coupon securities. A zero coupon
security does not pay a regular interest coupon to its holders during the life
of the security. Tax-exempt income to the holder of the security comes from
accretion of the difference between the original purchase price of the security
at issuance and the par value of the security at maturity and is effectively
paid at maturity. Such securities are included in the Portfolios of Investments
with a 0.000% coupon rate in their description. The market prices of zero coupon
securities generally are more volatile than the market prices of securities that
pay interest periodically.
69
Notes to
FINANCIAL STATEMENTS (continued)
Custodian Fee Credit
Each Fund has an arrangement with the custodian bank whereby certain custodian
fees and expenses are reduced by net credits earned on each Fund's cash on
deposit with the bank. Such deposit arrangements are an alternative to overnight
investments. Credits for cash balances may be offset by charges for any days on
which a Fund overdraws its account at the custodian bank.
Indemnifications
Under the Funds' organizational documents, their Officers and Directors are
indemnified against certain liabilities arising out of the performance of their
duties to the Funds. In addition, in the normal course of business, the Funds
enter into contracts that provide general indemnifications to other parties. The
Funds' maximum exposure under these arrangements is unknown as this would
involve future claims that may be made against the Funds that have not yet
occurred. However, the Funds have not had prior claims or losses pursuant to
these contracts and expect the risk of loss to be remote.
Use of Estimates
The preparation of financial statements in conformity with U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of increases and
decreases in net assets applicable to Common shares from operations during the
reporting period. Actual results may differ from those estimates.
2. FUND SHARES
Common Shares
The Funds' Board of Directors approved an open-market share repurchase program
on July 10, 2007, for Premium Income 2 (NPM) and on July 30, 2008, for Premium
Income (NPI) and Premium Income 4 (NPT) under which each Fund may repurchase an
aggregate of up to approximately 10% of its outstanding Common shares.
Transactions in Common shares were as follows:
PREMIUM PREMIUM PREMIUM
INCOME (NPI) INCOME 2 (NPM) INCOME 4 (NPT)
------------------------ ----------------------- -----------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
10/31/08 10/31/07 10/31/08 10/31/07 10/31/08 10/31/07
------------------------------------------------------------------------------------------------------------------
Common shares repurchased -- -- (4,800) (292,700) -- --
------------------------------------------------------------------------------------------------------------------
Weighted average price per
Common share repurchased -- -- $12.66 $13.65 -- --
Weighted average discount per
Common share repurchased -- -- 12.81% 7.30% -- --
==================================================================================================================
Preferred Shares
Transactions in Preferred shares were as follows:
PREMIUM PREMIUM
INCOME (NPI) INCOME 2 (NPM)
-------------------------------------------- -----------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
10/31/08 10/31/07 10/31/08 10/31/07
--------------------------------------------------------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
--------------------------------------------------------------------------------------------------------------------------
Preferred shares redeemed:
Series M 793 $ 19,825,000 -- $ -- 366 $ 9,150,000 -- $ --
Series M2 418 10,450,000 -- -- -- -- -- --
Series T 793 19,825,000 -- -- 549 13,725,000 -- --
Series W 793 19,825,000 -- -- 366 9,150,000 -- --
Series TH 792 19,800,000 -- -- 548 13,700,000 -- --
Series F 793 19,825,000 -- -- 365 9,125,000 -- --
Series F2 -- -- -- -- 344 8,600,000 -- --
--------------------------------------------------------------------------------------------------------------------------
Total 4,382 $109,550,000 -- $ -- 2,538 $63,450,000 -- $ --
==========================================================================================================================
70
PREMIUM
INCOME 4 (NPT)
-----------------------------------------
YEAR ENDED YEAR ENDED
10/31/08 10/31/07
--------------------------------------------------------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------------------------------------------------------------------------------------------------------------------
Preferred shares redeemed:
Series M 235 $ 5,875,000 -- $ --
Series T 213 5,325,000 -- --
Series T2 142 3,550,000 -- --
Series W 179 4,475,000 -- --
Series W2 56 1,400,000 -- --
Series TH 287 7,175,000 -- --
Series F 193 4,825,000 -- --
Series F2 143 3,575,000 -- --
--------------------------------------------------------------------------------------------------------------------------
Total 1,448 $36,200,000 -- $ --
==========================================================================================================================
3. INVESTMENT TRANSACTIONS
Purchases and sales (including maturities but excluding short-term investments
and derivative transactions) during the fiscal year ended October 31, 2008, were
as follows:
PREMIUM PREMIUM PREMIUM
INCOME INCOME 2 INCOME 4
(NPI) (NPM) (NPT)
--------------------------------------------------------------------------------
Purchases $161,616,744 $ 71,896,636 $ 93,598,412
Sales and maturities 284,798,833 129,747,899 152,587,972
================================================================================
4. INCOME TAX INFORMATION
The following information is presented on an income tax basis. Differences
between amounts for financial statement and federal income tax purposes are
primarily due to timing differences in recognizing taxable market discount,
timing differences in recognizing certain gains and losses on investment
transactions and the treatment of investments in inverse floating rate
transactions subject to SFAS No. 140. To the extent that differences arise that
are permanent in nature, such amounts are reclassified within the capital
accounts on the Statement of Assets and Liabilities presented in the annual
report, based on their federal tax basis treatment; temporary differences do not
require reclassification. Temporary and permanent differences do not impact the
net asset values of the Funds.
At October 31, 2008, the cost of investments was as follows:
PREMIUM PREMIUM PREMIUM
INCOME INCOME 2 INCOME 4
(NPI) (NPM) (NPT)
--------------------------------------------------------------------------------
Cost of investments $1,270,131,999 $827,189,072 $814,189,276
================================================================================
Gross unrealized appreciation and gross unrealized depreciation of investments
at October 31, 2008, were as follows:
PREMIUM PREMIUM PREMIUM
INCOME INCOME 2 INCOME 4
(NPI) (NPM) (NPT)
--------------------------------------------------------------------------------
Gross unrealized:
Appreciation $ 28,325,602 $ 14,054,633 $ 15,091,968
Depreciation (148,033,146) (93,574,465) (87,765,691)
--------------------------------------------------------------------------------
Net unrealized appreciation
(depreciation)
of investments $(119,707,544) $(79,519,832) $(72,673,723)
================================================================================
The tax components of undistributed net tax-exempt income, net ordinary income
and net long-term capital gains at October 31, 2008, the Funds' tax year end,
were as follows:
PREMIUM PREMIUM PREMIUM
INCOME INCOME 2 INCOME 4
(NPI) (NPM) (NPT)
--------------------------------------------------------------------------------
Undistributed net
tax-exempt income * $2,961,599 $1,706,806 $2,485,185
Undistributed net
ordinary income ** 860 -- 18,210
Undistributed net
long-term capital gains -- -- --
================================================================================
* Undistributed net tax-exempt income (on a tax basis) has not been reduced
for the dividend declared on October 1, 2008, paid on November 3, 2008.
** Net ordinary income consists of taxable market discount income and net
short-term capital gains, if any.
71
Notes to
FINANCIAL STATEMENTS (continued)
The tax character of distributions paid during the Funds' tax years ended
October 31, 2008 and October 31, 2007, was designated for purposes of the
dividends paid deduction as follows:
PREMIUM PREMIUM PREMIUM
INCOME INCOME 2 INCOME 4
2008 (NPI) (NPM) (NPT)
---------------------------------------------------------------------------------------------
Distributions from net tax-exempt income*** $63,352,587 $40,025,218 $37,511,796
Distributions from net ordinary income ** 80,967 234,668 224,617
Distributions from net long-term capital gains**** -- 1,257,894 --
=============================================================================================
PREMIUM PREMIUM PREMIUM
INCOME INCOME 2 INCOME 4
2007 (NPI) (NPM) (NPT)
---------------------------------------------------------------------------------------------
Distributions from net tax-exempt income $63,910,797 $40,521,587 $39,978,752
Distributions from net ordinary income ** -- -- --
Distributions from net long-term capital gains -- 949,346 --
=============================================================================================
** Net ordinary income consists of taxable market discount income and net
short-term capital gains, if any.
*** The Funds hereby designate these amounts paid during the fiscal year ended
October 31, 2008, as Exempt Interest Dividends.
**** The Funds designated as a long-term capital gain dividend, pursuant to the
Internal Revenue Code Section 852(b)(3), the amount necessary to reduce
earnings and profits of the Funds related to net capital gain to zero for
the tax year ended October 31, 2008.
At October 31, 2008, the Funds' tax year end, 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 PREMIUM
INCOME INCOME 2 INCOME 4
(NPI) (NPM) (NPT)
--------------------------------------------------------------------------------
Expiration:
October 31, 2010 $ -- $ -- $18,079,555
October 31, 2011 5,278,912 -- 24,792,603
October 31, 2013 -- -- 6,161,830
October 31, 2014 4,614,516 -- 806,337
October 31, 2016 11,536,998 9,320,812 7,113,122
--------------------------------------------------------------------------------
Total $21,430,426 $9,320,812 $56,953,447
================================================================================
Premium Income 4 (NPT) had $355,272 of its capital loss carryforward expire on
October 31, 2008.
5. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Each Fund's management fee is separated into two components - a complex-level
component, based on the aggregate amount of all fund assets managed by Nuveen
Asset Management (the "Adviser"), a wholly owned subsidiary of Nuveen, and a
specific fund-level component, based only on the amount of assets within each
individual Fund. This pricing structure enables Nuveen fund shareholders to
benefit from growth in the assets within each individual fund as well as from
growth in the amount of complex-wide assets managed by the Adviser.
72
The annual fund-level fee, payable monthly, for each Fund is 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) FUND-LEVEL FEE RATE
--------------------------------------------------------------------------------
For the first $125 million .4500%
For the next $125 million .4375
For the next $250 million .4250
For the next $500 million .4125
For the next $1 billion .4000
For the next $3 billion .3875
For net assets over $5 billion .3750
================================================================================
The annual complex-level fee, payable monthly, which is additive to the
fund-level fee, for all Nuveen sponsored funds in the U.S., is based on the
aggregate amount of total fund assets managed as stated in the following table.
As of October 31, 2008, the complex-level fee rate was .1998%.
The complex-level fee schedule is as follows:
COMPLEX-LEVEL ASSET BREAKPOINT LEVEL (1) EFFECTIVE RATE AT BREAKPOINT LEVEL
--------------------------------------------------------------------------------
$55 billion .2000%
$56 billion .1996
$57 billion .1989
$60 billion .1961
$63 billion .1931
$66 billion .1900
$71 billion .1851
$76 billion .1806
$80 billion .1773
$91 billion .1691
$125 billion .1599
$200 billion .1505
$250 billion .1469
$300 billion .1445
================================================================================
(1) The complex-level component of the management fee for the Funds is
calculated based upon the aggregate daily net assets of all Nuveen funds,
with such daily net assets to include assets attributable to preferred
stock issued by or borrowings by such Funds but to exclude assets
attributable to investments in other Nuveen funds.
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 its Officers, all of whom receive remuneration for their services
to the Funds from the Adviser or its affiliates. The Board of Directors has
adopted a deferred compensation plan for independent Directors that enables
Directors to elect to defer receipt of all or a portion of the annual
compensation they are entitled to receive from certain Nuveen advised funds.
Under the plan, deferred amounts are treated as though equal dollar amounts had
been invested in shares of select Nuveen advised funds.
6. NEW ACCOUNTING PRONOUNCEMENTS
Financial Accounting Standards Board Statement on Financial Accounting
Standards No. 157 (SFAS No. 157)
In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements." This
standard establishes a single authoritative definition of fair value, sets out a
framework for measuring fair value and requires additional disclosures about
fair value measurements. SFAS No. 157 applies to fair value measurements already
required or permitted by existing standards. SFAS No. 157 is effective for
financial statements issued for fiscal years beginning after November 15, 2007,
and interim periods within those fiscal years. The changes to current generally
accepted accounting principles from the application of this standard relate to
the definition of fair value, the methods used to measure fair value, and the
expanded disclosures about fair value measurements. As of October 31, 2008,
management does not believe the adoption of SFAS No. 157 will impact the
financial statement amounts; however, additional disclosures may be required
about the inputs used to develop the measurements and the effect of certain of
the measurements included within the Statement of Operations for the period.
73
Notes to
FINANCIAL STATEMENTS (continued)
Financial Accounting Standards Board Statement of Financial Accounting
Standards No. 161 (SFAS No. 161)
In March 2008, the FASB issued SFAS No. 161, "Disclosures about Derivative
Instruments and Hedging Activities." This standard is intended to enhance
financial statement disclosures for derivative instruments and hedging
activities and enable investors to understand: a) how and why a fund uses
derivative instruments, b) how derivative instruments and related hedge items
are accounted for, and c) how derivative instruments and related hedge items
affect a fund's financial position, results of operations and cash flows. SFAS
No. 161 is effective for financial statements issued for fiscal years and
interim periods beginning after November 15, 2008. As of October 31, 2008,
management does not believe the adoption of SFAS No. 161 will impact the
financial statement amounts; however, additional footnote disclosures may be
required about the use of derivative instruments and hedging items.
7. SUBSEQUENT EVENTS
Distributions to Common Shareholders
The Funds declared Common share dividend distributions from their tax-exempt net
investment income which were paid on December 1, 2008, to shareholders of record
on November 15, 2008, as follows:
PREMIUM PREMIUM PREMIUM
INCOME INCOME 2 INCOME 4
(NPI) (NPM) (NPT)
--------------------------------------------------------------------------------
Dividend per share $.0600 $.0575 $.0515
================================================================================
74
Financial
HIGHLIGHTS
75
Financial
HIGHLIGHTS
Selected data for a Common share outstanding throughout each period:
Investment Operations Less Distributions
---------------------------------------------------------------- -----------------------------
Distributions Distributions
from Net from Net
Beginning Investment Capital Investment Capital
Common Net Income to Gains to Income to Gains to
Share Net Realized/ Preferred Preferred Common Common
Net Asset Investment Unrealized Share- Share- Share- Share-
Value Income Gain (Loss) holders+ holders+ Total holders holders Total
================================================================================================================================
PREMIUM INCOME (NPI)
--------------------------------------------------------------------------------------------------------------------------------
Year Ended 10/31:
2008 $14.76 $ .97 $(2.88) $(.28) $ -- $(2.19) $(.71) $ -- $ (.71)
2007 15.33 .98 (.55) (.29) -- .14 (.71) -- (.71)
2006 14.85 1.00 .49 (.26) -- 1.23 (.75) -- (.75)
2005 15.20 .98 (.26) (.16) -- .56 (.91) -- (.91)
2004 14.87 1.01 .36 (.08) -- 1.29 (.96) -- (.96)
PREMIUM INCOME 2 (NPM)
--------------------------------------------------------------------------------------------------------------------------------
Year Ended 10/31:
2008 14.85 .97 (3.10) (.29) (.01) (2.43) (.69) (.02) (.71)
2007 15.45 .97 (.55) (.30) (.01) .11 (.69) (.02) (.71)
2006 15.07 .97 .49 (.25) (.01) 1.20 (.76) (.06) (.82)
2005 15.53 .98 (.24) (.16) (.01) .57 (.93) (.10) (1.03)
2004 15.09 1.02 .48 (.08) -- 1.42 (.98) -- (.98)
================================================================================================================================
Total Returns
-------------------
Based
Ending on
Common Based Common
Share Ending on Share Net
Net Asset Market Market Asset
Value Value Value* Value*
=========================================================================
PREMIUM INCOME (NPI)
-------------------------------------------------------------------------
Year Ended 10/31:
2008 $11.86 $10.93 (13.10)% (15.39)%
2007 14.76 13.30 (1.02) .93
2006 15.33 14.13 7.52 8.53
2005 14.85 13.87 3.37 3.71
2004 15.20 14.30 8.82 9.00
PREMIUM INCOME 2 (NPM)
-------------------------------------------------------------------------
Year Ended 10/31:
2008 11.71 10.28 (17.95) (16.96)
2007 14.85 13.25 (.81) .71
2006 15.45 14.05 6.71 8.24
2005 15.07 13.97 2.98 3.71
2004 15.53 14.57 9.48 9.77
=========================================================================
Ratios/Supplemental Data
---------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets Ratios to Average Net Assets
Applicable to Common Shares Applicable to Common Shares
Before Credit/Refund After Credit/Refund**
---------------------------------------- -----------------------------------------
Ending
Net
Assets
Applicable Expenses Expenses Net Expenses Expenses Net Portfolio
to Common Including Excluding Investment Including Excluding Investment Turnover
Shares (000) Interest++(a) Interest++(a) Income++ Interest++(a) Interest++(a) Income++ Rate
===================================================================================================================================
PREMIUM INCOME (NPI)
-----------------------------------------------------------------------------------------------------------------------------------
Year Ended 10/31:
2008 $756,782 1.49% 1.18% 6.95% 1.47% 1.16% 6.97% 11%
2007 941,220 1.56 1.17 6.52 1.54 1.16 6.54 14
2006 977,601 1.19 1.19 6.64 1.16 1.16 6.68 15
2005 947,446 1.19 1.19 6.44 1.18 1.18 6.45 20
2004 969,539 1.21 1.21 6.76 1.20 1.20 6.76 17
PREMIUM INCOME 2 (NPM)
-----------------------------------------------------------------------------------------------------------------------------------
Year Ended 10/31:
2008 477,603 1.56 1.22 6.93 1.54 1.20 6.95 8
2007 605,817 1.62 1.19 6.44 1.60 1.18 6.45 12
2006 634,981 1.20 1.20 6.42 1.20 1.20 6.43 15
2005 619,282 1.20 1.20 6.40 1.19 1.19 6.40 15
2004 637,981 1.21 1.21 6.75 1.21 1.21 6.76 23
===================================================================================================================================
Preferred Shares at End of Period
--------------------------------------
Aggregate Liquidation
Amount and Market Asset
Outstanding Value Coverage
(000) Per Share Per Share
====================================================
PREMIUM INCOME (NPI)
----------------------------------------------------
Year Ended 10/31:
2008 $415,450 $25,000 $70,540
2007 525,000 25,000 69,820
2006 525,000 25,000 71,552
2005 525,000 25,000 70,116
2004 525,000 25,000 71,169
PREMIUM INCOME 2 (NPM)
----------------------------------------------------
Year Ended 10/31:
2008 283,550 25,000 67,109
2007 347,000 25,000 68,647
2006 347,000 25,000 70,748
2005 347,000 25,000 69,617
2004 347,000 25,000 70,964
====================================================
* Total Return Based on Market Value is the combination of changes in the
market price per share and the effect of reinvested dividend income and
reinvested capital gains distributions, if any, at the average price paid
per share at the time of reinvestment. The last dividend declared in the
period, which is typically paid on the first business day of the following
month, is assumed to be reinvested at the ending market price. The actual
reinvestment for the last dividend declared in the period may take place
over several days, and in some instances may not be based on the market
price, so the actual reinvestment price may be different from the price
used in the calculation. Total returns are not annualized.
Total Return Based on Common Share Net Asset Value is the combination of
changes in Common share net asset value, reinvested dividend income at net
asset value and reinvested capital gains distributions at net asset value,
if any. The last dividend declared in the period, which is typically paid
on the first business day of the following month, is assumed to be
reinvested at the ending net asset value. The actual reinvest price for the
last dividend declared in the period may often be based on the Fund's
market price (and not its net asset value), and therefore may be different
from the price used in the calculation. Total returns are not annualized.
** After custodian fee credit and legal fee refund, 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) Interest expense arises from the application of SFAS No. 140 to certain
inverse floating rate transactions entered into by the Fund as more fully
described in Footnote 1- Inverse Floating Rate Securities.
See accompanying notes to financial statements.
76-77 spread
Financial
HIGHLIGHTS (continued)
Selected data for a Common share outstanding throughout each period:
Investment Operations Less Distributions
---------------------------------------------------------------- -----------------------------
Distributions Distributions
from Net from Net
Beginning Investment Capital Investment Capital
Common Net Income to Gains to Income to Gains to
Share Net Realized/ Preferred Preferred Common Common
Net Asset Investment Unrealized Share- Share- Share- Share-
Value Income Gain (Loss) holders+ holders+ Total holders holders Total
================================================================================================================================
PREMIUM INCOME 4 (NPT)
--------------------------------------------------------------------------------------------------------------------------------
Year Ended 10/31:
2008 $13.22 $.91 $(2.67) $(.28) $ -- $(2.04) $(.59) $ -- $(.59)
2007 13.69 .90 (.45) (.28) -- .17 (.64) -- (.64)
2006 13.38 .90 .35 (.25) -- 1.00 (.69) -- (.69)
2005 13.54 .91 (.10) (.16) -- .65 (.81) -- (.81)
2004 13.15 .94 .40 (.08) -- 1.26 (.87) -- (.87)
================================================================================================================================
Total Returns
-------------------
Based
Ending on
Common Based Common
Share Ending on Share Net
Net Asset Market Market Asset
Value Value Value* Value*
=========================================================================
PREMIUM INCOME 4 (NPT)
-------------------------------------------------------------------------
Year Ended 10/31:
2008 $10.59 $ 9.24 (17.19)% (15.97)%
2007 13.22 11.77 (3.30) 1.25
2006 13.69 12.80 9.89 7.72
2005 13.38 12.31 3.07 4.87
2004 13.54 12.74 8.98 9.90
=========================================================================
Ratios/Supplemental Data
---------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets Ratios to Average Net Assets
Applicable to Common Shares Applicable to Common Shares
Before Credit/Refund After Credit/Refund**
---------------------------------------- -----------------------------------------
Ending
Net
Assets
Applicable Expenses Expenses Net Expenses Expenses Net Portfolio
to Common Including Excluding Investment Including Excluding Investment Turnover
Shares (000) Interest++(a) Interest++(a) Income++ Interest++(a) Interest++(a) Income++ Rate
====================================================================================================================================
PREMIUM INCOME 4 (NPT)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 10/31:
2008 $457,866 1.62% 1.25% 7.19% 1.61% 1.24% 7.21% 10%
2007 571,427 1.69 1.23 6.68 1.68 1.22 6.69 14
2006 591,941 1.25 1.25 6.70 1.23 1.23 6.71 9
2005 578,517 1.26 1.26 6.63 1.22 1.22 6.66 7
2004 585,284 1.30 1.30 7.10 1.29 1.29 7.10 6
====================================================================================================================================
Preferred Shares at End of Period
--------------------------------------
Aggregate Liquidation
Amount and Market Asset
Outstanding Value Coverage
(000) Per Share Per Share
====================================================
PREMIUM INCOME 4 (NPT)
----------------------------------------------------
Year Ended 10/31:
2008 $302,200 $25,000 $62,878
2007 338,400 25,000 67,215
2006 338,400 25,000 68,731
2005 338,400 25,000 67,739
2004 338,400 25,000 68,239
====================================================
* Total Return Based on Market Value is the combination of changes in the
market price per share and the effect of reinvested dividend income and
reinvested capital gains distributions, if any, at the average price paid
per share at the time of reinvestment. The last dividend declared in the
period, which is typically paid on the first business day of the following
month, is assumed to be reinvested at the ending market price. The actual
reinvestment for the last dividend declared in the period may take place
over several days, and in some instances may not be based on the market
price, so the actual reinvestment price may be different from the price
used in the calculation. Total returns are not annualized.
Total Return Based on Common Share Net Asset Value is the combination of
changes in Common share net asset value, reinvested dividend income at net
asset value and reinvested capital gains distributions at net asset value,
if any. The last dividend declared in the period, which is typically paid
on the first business day of the following month, is assumed to be
reinvested at the ending net asset value. The actual reinvest price for the
last dividend declared in the period may often be based on the Fund's
market price (and not its net asset value), and therefore may be different
from the price used in the calculation. Total returns are not annualized.
** After custodian fee credit and legal fee refund, 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) Interest expense arises from the application of SFAS No. 140 to certain
inverse floating rate transactions entered into by the Fund as more fully
described in Footnote 1- Inverse Floating Rate Securities.
See accompanying notes to financial statements.
78-79 spread
Board Members & Officers
The management of the Funds, including general supervision of the duties
performed for the Funds by the Adviser, is the responsibility of the Board
Members of the Funds. The number of board members of the Fund is currently set
at nine. None of the board members who are not "interested" persons of the Funds
(referred to herein as "independent board members") has ever been a director or
employee of, or consultant to, Nuveen or its affiliates. The names and business
addresses of the board members 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.
NAME, POSITION(S) HELD YEAR FIRST NUMBER PRINCIPAL
BIRTHDATE WITH THE FUNDS ELECTED OR OF PORTFOLIOS OCCUPATION(S)
& ADDRESS APPOINTED IN FUND COMPLEX INCLUDING OTHER
AND TERM(1) OVERSEEN BY DIRECTORSHIPS
BOARD MEMBER DURING PAST 5 YEARS
INDEPENDENT BOARD MEMBERS:
[] ROBERT P. BREMNER Private Investor and Management Consultant.
8/22/40 Chairman of
333 W. Wacker Drive the Board 1997 186
Chicago, IL 60606 and Board member
[] JACK B. EVANS President, The Hall-Perrine Foundation, a
10/22/48 private philanthropic corporation (since
333 W. Wacker Drive Board member 1999 186 1996); Director and Vice Chairman, United
Chicago, IL 60606 Fire Group, a publicly held company;
Member of the Board of Regents for the
State of Iowa University System;
Director, Gazette Companies; Life Trustee
of Coe College and Iowa College
Foundation; Member of the Advisory
Council of the Department of Finance in
the Tippie College of Business,
University of Iowa; formerly, Director,
Alliant Energy; formerly, Director,
Federal Reserve Bank of Chicago;
formerly, President and Chief Operating
Officer, SCI Financial Group, Inc., a
regional financial services firm.
[] WILLIAM C. HUNTER Dean, Tippie College of Business,
3/6/48 University of Iowa (since July 2006);
333 W. Wacker Drive Board member 2004 186 formerly, Dean and Distinguished
Chicago, IL 60606 Professor of Finance, School of Business
at the University of Connecticut
(2003-2006); previously, Senior Vice
President and Director of Research at the
Federal Reserve Bank of Chicago
(1995-2003); Director (since 1997),
Credit Research Center at Georgetown
University; Director (since 2004) of
Xerox Corporation; Director (since 2005),
Beta Gamma Sigma International Honor
Society; Director, SS&C Technologies,
Inc. (May 2005-October 2005).
[] DAVID J. KUNDERT Director, Northwestern Mutual Wealth
10/28/42 Management Company; Retired (since 2004)
333 W. Wacker Drive Board member 2005 186 as Chairman, JPMorgan Fleming Asset
Chicago, IL 60606 Management, President and CEO, Banc One
Investment Advisors Corporation, and
President, One Group Mutual Funds; prior
thereto, Executive Vice President, Banc
One Corporation and Chairman and CEO,
Banc One Investment Management Group;
Member, Board of Regents, Luther College;
member of the Wisconsin Bar Association;
member of Board of Directors, Friends of
Boerner Botanical Gardens; member of
Investment Committee, Greater Milwaukee
Foundation.
[] WILLIAM J. SCHNEIDER Chairman, formerly, Senior Partner and
9/24/44 Chief Operating Officer (retired, 2004)
333 W. Wacker Drive Board member 1997 186 of Miller-Valentine Partners Ltd., a real
Chicago, IL 60606 estate investment company; Director,
Dayton Development Coalition; formerly,
member, Business Advisory Council,
Cleveland Federal Reserve Bank.
80
NAME, POSITION(S) HELD YEAR FIRST NUMBER PRINCIPAL
BIRTHDATE WITH THE FUNDS ELECTED OR OF PORTFOLIOS OCCUPATION(S)
& ADDRESS APPOINTED IN FUND COMPLEX INCLUDING OTHER
AND TERM(1) OVERSEEN BY DIRECTORSHIPS
BOARD MEMBER DURING PAST 5 YEARS
INDEPENDENT BOARD MEMBERS:
[] JUDITH M. STOCKDALE Executive Director, Gaylord and Dorothy
12/29/47 Donnelley Foundation (since 1994); prior
333 W. Wacker Drive Board member 1997 186 thereto, Executive Director, Great Lakes
Chicago, IL 60606 Protection Fund (from 1990 to 1994).
[] CAROLE E. STONE Director, Chicago Board Options Exchange
6/28/47 (since 2006); Commissioner, New York
333 W. Wacker Drive Board member 2007 186 State Commission on Public Authority
Chicago, IL 60606 Reform (since 2005); formerly, Chair New
York Racing Association Oversight Board
(2005-2007); formerly, Director, New York
State Division of the Budget (2000-2004),
Chair, Public Authorities Control Board
(2000-2004) and Director, Local
Government Assistance Corporation
(2000-2004).
[] TERENCE J. TOTH
9/29/59 Director, Legal & General Investment
333 W. Wacker Drive Board Member 2008 186 Management (since 2008); Private Investor
Chicago, IL 60606 (since 2007); CEO and President, Northern
Trust Investments (2004-2007); Executive
Vice President, Quantitative Management &
Securities Lending (2007-2004); prior
thereto, various positions with Northern
Trust Company (since 1994); Member:
Goodman Theatre Board (Since 2004);
Chicago Fellowship Boards (since 2005),
University of Illinois Leadership Council
Board (since 2007) and Catalyst Schools
of Chicago Board (since 2008); formerly
Member: Northern Trust Mutual Funds Board
(2005-2007), Northern Trust Japan Board
(2004-2007), Northern Trust Securities
Inc. Board (2003-2007) and Northern Trust
Hong Kong Board (1997-2004).
INTERESTED BOARD MEMBER:
[] JOHN P. AMBOIAN(2)(3) Chief Executive Officer (since July 2007)
6/14/61 and Director (since 1999) of Nuveen
333 W. Wacker Drive Board Member 2008 186 Investments, Inc.; Chief Executive
Chicago, IL 60606 Officer (since 2007) of Nuveen Asset
Management, Rittenhouse Asset Management,
Nuveen Investments Advisors, Inc.
formerly, President (1999-2004) of Nuveen
Advisory Corp. and Nuveen Institutional
Advisory Corp.(3)
81
NAME, POSITION(S) HELD YEAR FIRST NUMBER PRINCIPAL
BIRTHDATE WITH THE FUNDS ELECTED OR OF PORTFOLIOS OCCUPATION(S)
AND ADDRESS APPOINTED(4) IN FUND COMPLEX DURING PAST 5 YEARS
OVERSEEN
BY OFFICER
OFFICERS OF THE FUNDS:
[] GIFFORD R. ZIMMERMAN Managing Director (since 2002), Assistant
9/9/56 Chief Secretary and Associate General Counsel
333 W. Wacker Drive Administrative 1988 186 of Nuveen Investments, LLC; Managing
Chicago, IL 60606 Officer Director (since 2002), Associate General
Counsel and Assistant Secretary, of
Nuveen Asset Management; Vice President
and Assistant Secretary of NWQ Investment
Management Company, LLC. (since 2002),
Nuveen Investments Advisers Inc. (since
2002), Symphony Asset Management LLC, and
NWQ Investment Management Company, LLC
(since 2003), Tradewinds Global
Investors, LLC, and Santa Barbara Asset
Management, LLC (since 2006), Nuveen
HydePark Group LLC and Nuveen Investment
Solutions, Inc. (since 2007); Managing
Director, Associate General Counsel and
Assistant Secretary of Rittenhouse Asset
Management, Inc. (since 2003); Managing
Director (since 2004) and Assistant
Secretary (since 1994) of Nuveen
Investments, Inc.; formerly, Managing
Director (2002-2004), General Counsel
(1998-2004) and Assistant Secretary of
Nuveen Advisory Corp. and Nuveen
Institutional Advisory Corp.(3);
Chartered Financial Analyst.
[] WILLIAM ADAMS IV Executive Vice President of Nuveen
6/9/55 Investments, Inc.; Executive Vice
333 W. Wacker Drive Vice President 2007 120 President, U.S. Structured Products of
Chicago, IL 60606 Nuveen Investments, LLC, (since 1999),
prior thereto, Managing Director of
Structured Investments.
[] CEDRIC H. ANTOSIEWICZ Managing Director, (since 2004)
1/11/62 previously, Vice President (1993-2004) of
333 W. Wacker Drive Vice President 2007 120 Nuveen Investments, LLC.
Chicago, IL 60606
[] MICHAEL T. ATKINSON Vice President (since 2002) of Nuveen
2/3/66 Vice President Investments, LLC.
333 W. Wacker Drive and Assistant 2000 186
Chicago, IL 60606 Secretary
[] LORNA C. FERGUSON Managing Director (since 2004), formerly,
10/24/45 Vice President of Nuveen Investments,
333 W. Wacker Drive Vice President 1998 186 LLC; Managing Director (since 2005) of
Chicago, IL 60606 Nuveen Asset Management; Managing
Director (2004-2005), formerly, Vice
President (1998-2004) of Nuveen Advisory
Corp. and Nuveen Institutional Advisory
Corp.(3)
[] STEPHEN D. FOY Vice President (since 1993) and Funds
5/31/54 Vice President Controller (since 1998) of Nuveen
333 W. Wacker Drive and Controller 1998 186 Investments, LLC; formerly, Vice
Chicago, IL 60606 President and Funds Controller
(1998-2004) of Nuveen Investments, Inc.;
Certified Public Accountant.
[] WALTER M. KELLY Senior Vice President (since 2008), Vice
2/24/70 Chief Compliance President (2006-2008) formerly, Assistant
333 W. Wacker Drive Officer and 2003 186 Vice President and Assistant General
Chicago, IL 60606 Vice President Counsel (2003-2006) of Nuveen
Investments, LLC; Vice President (since
2006) and Assistant Secretary (since
2008) of Nuveen Asset Management.
[] DAVID J. LAMB Vice President (since 2000) of Nuveen
3/22/63 Investments, LLC; Certified Public
333 W. Wacker Drive Vice President 2000 186 Accountant.
Chicago, IL 60606
82
NAME, POSITION(S) HELD YEAR FIRST NUMBER PRINCIPAL
BIRTHDATE WITH THE FUNDS ELECTED OR OF PORTFOLIOS OCCUPATION(S)
AND ADDRESS APPOINTED(4) IN FUND COMPLEX DURING PAST 5 YEARS
OVERSEEN
BY OFFICER
OFFICERS OF THE FUNDS:
[] TINA M. LAZAR Vice President of Nuveen Investments, LLC
8/27/61 (since 1999).
333 W. Wacker Drive Vice President 2002 186
Chicago, IL 60606
[] LARRY W. MARTIN Vice President, Assistant Secretary and
7/27/51 Vice President Assistant General Counsel of Nuveen
333 W. Wacker Drive and Assistant 1988 186 Investments, LLC; Vice President (since
Chicago, IL 60606 Secretary 2005) and Assistant Secretary of Nuveen
Investments, Inc.; Vice President (since
2005) and Assistant Secretary (since
1997) of Nuveen Asset Management; Vice
President (since 2000), Assistant
Secretary and Assistant General Counsel
(since 1998) of Rittenhouse Asset
Management, Inc.; Vice President and
Assistant Secretary of Nuveen Investments
Advisers Inc. (since 2002); NWQ
Investment Management Company, LLC (since
2002), Symphony Asset Management LLC
(since 2003), Tradewinds Global
Investors, LLC, Santa Barbara Asset
Management LLC (since 2006) and of Nuveen
HydePark LLC and Nuveen Investment
Solutions, Inc. (since 2007); formerly,
Vice President and Assistant Secretary of
Nuveen Advisory Corp. and Nuveen
Institutional Advisory Corp.(3)
[] KEVIN J. MCCARTHY Managing Director (since 2008), formerly,
3/26/66 Vice President Vice President (2007-2008), Nuveen
333 W. Wacker Drive and Secretary 2007 186 Investments, LLC; Vice President, and
Chicago, IL 60606 Assistant Secretary, Nuveen Asset
Management, Rittenhouse Asset Management,
Inc., Nuveen Investment Advisers Inc.,
Nuveen Investment Institutional Services
Group LLC, NWQ Investment Management
Company, LLC, Tradewinds Global Investors
LLC, NWQHoldings, LLC, Symphony Asset
Management LLC, Santa Barbara Asset
Management LLC, Nuveen HydePark Group,
LLC and Nuveen Investment Solutions, Inc.
(since 2007); prior thereto, Partner,
Bell, Boyd & Lloyd LLP (1997-2007).
[] JOHN V. MILLER Managing Director (since 2007), formerly,
4/10/67 Vice President 2007 186 Vice President (2002-2007) of Nuveen
333 W. Wacker Drive Asset Management and Nuveen Investments,
Chicago, IL 60606 LLC; Chartered Financial Analyst.
[] CHRISTOPHER M. ROHRBACHER Vice President, Nuveen Investments, LLC
8/1/71 Vice President (since 2008); Vice President and
333 W. Wacker Drive and Assistant 2008 186 Assistant Secretary, Nuveen Asset
Chicago, IL 60606 Secretary Management (since 2008); prior thereto,
Associate, Skadden, Arps, Slate Meagher &
Flom LLP (2002-2008).
[] JAMES F. RUANE Vice President, Nuveen Investments, LLC
7/3/62 Vice President (since 2007); prior thereto, Partner,
333 W. Wacker Drive and Assistant 2007 186 Deloitte & Touche USA LLP (2005-2007),
Chicago, IL 60606 Secretary formerly, senior tax manager (2002-2005);
Certified Public Accountant.
[] MARK L. WINGET Vice President, Nuveen Investments, LLC
12/21/68 Vice President (since 2008); Vice President and
333 W. Wacker Drive and Assistant 2008 186 Assistant Secretary, Nuveen Asset
Chicago, IL 60606 Secretary Management (since 2008); prior thereto,
Counsel, Vedder Price P.C. (1997-2007).
(1) Board Members serve a one year term to serve until the next annual meeting
or until their successors shall have been duly elected and qualified. The
first year elected or appointed represents the year in which the board
member was first elected or appointed to any fund in the Nuveen Complex.
(2) Mr. Amboian is an interested trustee because of his position with Nuveen
Investments, Inc. and certain of its subsidiaries, which are affiliates of
the Nuveen Funds.
(3) Nuveen Advisory Corp. and Nuveen Institutional Advisory Corp. were
reorganized into Nuveen Asset Management, effective January 1, 2005.
(4) Officers serve one year terms through July of each year. The year first
elected or appointed represents the year in which the Officer was first
elected or appointed to any fund in the Nuveen Complex.
83
Annual Investment
Management Agreement
APPROVAL PROCESS
The Investment Company Act of 1940, as amended (the "1940 Act"), provides, in
substance, that each investment advisory agreement between a fund and its
investment adviser will continue in effect from year to year only if its
continuance is approved at least annually by the fund's board members, including
by a vote of a majority of the board members who are not parties to the advisory
agreement or "interested persons" of any parties (the "Independent Board
Members"), cast in person at a meeting called for the purpose of considering
such approval. In connection with such approvals, the fund's board members must
request and evaluate, and the investment adviser is required to furnish, such
information as may be reasonably necessary to evaluate the terms of the advisory
agreement. Accordingly, at a meeting held on May 28-29, 2008 (the "May
Meeting"), the Boards of Trustees or Directors (as the case may be)(each, a
"Board" and each Trustee or Director, a "Board Member") of the Funds, including
a majority of the Independent Board Members, considered and approved the
continuation of the advisory agreement (each, an "Advisory Agreement") between
each Fund and Nuveen Asset Management ("NAM") for an additional one-year period.
In preparation for their considerations at the May Meeting, the Board also held
a separate meeting on April 23, 2008 (the "April Meeting"). Accordingly, the
factors considered and determinations made regarding the renewals by the
Independent Board Members include those made at the April Meeting.
In addition, in evaluating the Advisory Agreements, as described in further
detail below, the Independent Board Members reviewed a broad range of
information relating to the Funds and NAM, including absolute performance, fee
and expense information for the Funds as well as comparative performance, fee
and expense information for a comparable peer group of funds, the performance
information of recognized benchmarks (as applicable), the profitability of
Nuveen for its advisory activities (which includes its wholly owned
subsidiaries), and other information regarding the organization, personnel, and
services provided by NAM. The Independent Board Members also met quarterly as
well as at other times as the need arose during the year and took into account
the information provided at such meetings and the knowledge gained therefrom.
Prior to approving the renewal of the Advisory Agreements, the Independent Board
Members reviewed the foregoing information with their independent legal counsel
and with management, reviewed materials from independent legal counsel
describing applicable law and their duties in reviewing advisory contracts, and
met with independent legal counsel in private sessions without management
present. The Independent Board Members considered the legal advice provided by
independent legal counsel and relied upon their knowledge of NAM, its services
and the Funds resulting from their meetings and other interactions throughout
the year and their own business judgment in determining the factors to be
considered in evaluating the Advisory Agreements. Each Board Member may have
accorded different weight to the various factors in reaching his or her
conclusions with respect to a Fund's Advisory Agreement. The Independent Board
Members did not identify any single factor as all-important or controlling. The
Independent Board Members' considerations were instead based on a comprehensive
consideration of all the information presented. The principal factors considered
by the Board and its conclusions are described below.
A. NATURE, EXTENT AND QUALITY OF SERVICES
In considering renewal of the Advisory Agreements, the Independent Board Members
considered the nature, extent and quality of NAM's services, including advisory
services and administrative services. The Independent Board Members reviewed
materials outlining, among other things, NAM's organization and business; the
types of services that NAM or its affiliates provide and are expected to provide
to the Funds; the performance record of the applicable Fund (as described in
further detail below); and any initiatives Nuveen had taken for the applicable
fund product line. With respect to personnel, the Independent Board Members
evaluated the background, experience and track record of NAM's
84
investment personnel. In this regard, the Independent Board Members considered
the additional investment in personnel to support Nuveen fund advisory
activities, including in operations, product management and marketing as well as
related fund support functions, including sales, executive, finance, human
resources and information technology. The Independent Board Members also
reviewed information regarding portfolio manager compensation arrangements to
evaluate NAM's ability to attract and retain high quality investment personnel.
In evaluating the services of NAM, the Independent Board Members also considered
NAM's ability to supervise the Funds' other service providers and given the
importance of compliance, NAM's compliance program. Among other things, the
Independent Board Members considered the report of the chief compliance officer
regarding the Funds' compliance policies and procedures.
In addition to advisory services, the Independent Board Members considered the
quality of administrative services provided by NAM and its affiliates including
product management, fund administration, oversight of service providers,
shareholder services, administration of Board relations, regulatory and
portfolio compliance and legal support.
In addition to the foregoing services, the Independent Board Members also noted
the additional services that NAM or its affiliates provide to closed-end funds,
including, in particular, its secondary market support activities and the costs
of such activities. The Independent Board Members recognized Nuveen's continued
commitment to supporting the secondary market for the common shares of its
closed-end funds through a variety of programs designed to raise investor and
analyst awareness and understanding of closed-end funds. These efforts include
maintaining an investor relations program to timely provide information and
education to financial advisers and investors; providing advertising and
marketing for the closed-end funds; maintaining its closed-end fund website; and
providing educational seminars. With respect to closed-end funds that utilize
leverage through the issuance of auction rate preferred securities ("ARPS"), the
Board has recognized the unprecedented market conditions in the auction rate
market industry with the failure of the auction process. The Independent Board
Members noted Nuveen's efforts and the resources and personnel employed to
analyze the situation, explore potential alternatives and develop and implement
solutions that serve the interests of the affected funds and all of their
respective shareholders. The Independent Board Members further noted Nuveen's
commitment and efforts to keep investors and financial advisers informed as to
its progress in addressing the ARPS situation through, among other things,
conference calls, press releases, and information posted on its website as well
as its refinancing activities. The Independent Board Members also noted Nuveen's
continued support for holders of preferred shares of its closed-end funds by,
among other things, seeking distribution for preferred shares with new market
participants, managing relations with remarketing agents and the broker
community, maintaining the leverage and risk management of leverage and
maintaining systems necessary to test compliance with rating agency criteria.
Based on their review, the Independent Board Members found that, overall, the
nature, extent and quality of services provided (and expected to be provided) to
the respective Funds under the Advisory Agreements were satisfactory.
B. THE INVESTMENT PERFORMANCE OF THE FUNDS AND NAM
The Board considered the investment performance of each Fund, including the
Fund's historic performance as well as its performance compared to funds with
similar investment objectives (the "Performance Peer Group") based on data
provided by an independent third party (as described below). The Independent
Board Members also reviewed portfolio level performance (which does not reflect
fund level fees, expenses and leverage), as described in further detail below.
In evaluating the performance information, the Board considered whether the Fund
has operated within its investment objectives and parameters and the impact that
the investment mandates may have had on performance. In addition, in comparing a
Fund's performance with that of its Performance Peer Group, the Independent
Board Members took into account that the closest Performance Peer Group in
certain
85
ANNUAL INVESTMENT MANAGEMENT AGREEMENT
APPROVAL PROCESS (continued)
instances may not adequately reflect the respective fund's investment objectives
and strategies thereby hindering a meaningful comparison of the fund's
performance with that of the Performance Peer Group.
The Independent Board Members reviewed performance information including, among
other things, total return information compared with the Fund's Performance Peer
Group and recognized benchmarks for the one-, three-, and five-year periods (as
applicable) ending December 31, 2007 and with the Performance Peer Group for the
quarter and same yearly periods ending March 31, 2008 (as applicable). The
Independent Board Members also reviewed the Fund's portfolio level performance
(which does not reflect fund level fees and expenses (and leverage for
closed-end funds)) compared to recognized benchmarks for the one-, three-, and
five-year periods ending December 31, 2007 (as applicable). The analysis was
used to assess the efficacy of investment decisions against appropriate measures
of risk and total return, within specific market segments. This information
supplemented the Fund performance information provided to the Board at each of
its quarterly meetings. Based on their review, the Independent Board Members
determined that each Fund's investment performance over time had been
satisfactory.
C. FEES, EXPENSES AND PROFITABILITY
1. FEES AND EXPENSES
The Board evaluated the management fees and expenses of each Fund
reviewing, among other things, such Fund's gross management fees (which
take into account breakpoints), net management fees (which take into
account fee waivers or reimbursements) and total expense ratios (before and
after expense reimbursements and/or waivers) in absolute terms as well as
compared to the gross management fees, net management fees (after waivers
and/or reimbursements) and total expense ratios (before and after waivers)
of a comparable universe of unaffiliated funds based on data provided by an
independent data provider (the "Peer Universe") and/or a more focused
subset of funds therein (the "Peer Group"). The Independent Board Members
further reviewed data regarding the construction of Peer Groups as well as
the methods of measurement for the fee and expense analysis and the
performance analysis. In reviewing the comparisons of fee and expense
information, the Independent Board Members took into account that in
certain instances various factors such as the size of the Fund relative to
peers, the size and particular composition of the Peer Group, the
investment objectives of the peers, expense anomalies, and the timing of
information used may impact the comparative data, thereby limiting the
ability to make a meaningful comparison. The Independent Board Members also
considered, among other things, the differences in the use of leverage and
the differences in the use of insurance, if any. In reviewing the fee
schedule for a Fund, the Independent Board Members also considered the
fund-level and complex-wide breakpoint schedules (described in further
detail below) and any fee waivers and reimbursements provided by Nuveen
(applicable, in particular, for certain closed-end funds launched since
1999). Based on their review of the fee and expense information provided,
the Independent Board Members determined that each Fund's management fees
and net total expense ratio were reasonable in light of the nature, extent
and quality of services provided to the Fund.
2. COMPARISONS WITH THE FEES OF OTHER CLIENTS
The Independent Board Members further reviewed information regarding the
nature of services and fee rates offered by NAM to other clients. Such
other clients include NAM's municipal separately managed accounts. In
evaluating the comparisons of fees, the Independent Board Members noted
that the fee rates charged to the Funds and other clients vary, among other
things, because of the different services involved and the additional
regulatory and compliance requirements associated with registered
investment companies, such as the Funds. Accordingly, the Independent Board
Members considered the differences in the product types, including, but not
limited to, the services provided, the structure and operations, product
distribution and costs thereof, portfolio investment policies, investor
profiles, account sizes and regulatory requirements. The Independent Board
Members noted, in particular, that
86
the range of services provided to the Funds (as discussed above) is much
more extensive than that provided to separately managed accounts. Given the
inherent differences in the products, particularly the extensive services
provided to the Funds, the Independent Board Members believe such facts
justify the different levels of fees.
3. PROFITABILITY OF NUVEEN
In conjunction with its review of fees, the Independent Board Members also
considered the profitability of Nuveen for its advisory activities (which
incorporated Nuveen's wholly-owned affiliated sub-advisers) and its
financial condition. The Independent Board Members reviewed the revenues
and expenses of Nuveen's advisory activities for the last two years and the
allocation methodology used in preparing the profitability data. The
Independent Board Members noted this information supplemented the
profitability information requested and received during the year to help
keep them apprised of developments affecting profitability (such as changes
in fee waivers and expense reimbursement commitments). In this regard, the
Independent Board Members noted that they had also appointed an Independent
Board Member as a point person to review and keep them apprised of changes
to the profitability analysis and/or methodologies during the year. The
Independent Board Members considered Nuveen's profitability compared with
other fund sponsors prepared by two independent third party service
providers as well as comparisons of the revenues, expenses and profit
margins of various unaffiliated management firms with similar amounts of
assets under management prepared by Nuveen.
In reviewing profitability, the Independent Board Members recognized the
subjective nature of determining profitability which may be affected by
numerous factors including the allocation of expenses. Further, the
Independent Board Members recognized the difficulties in making comparisons
as the profitability of other advisers generally is not publicly available
and the profitability information that is available for certain advisers or
management firms may not be representative of the industry and may be
affected by, among other things, the adviser's particular business mix,
capital costs, types of funds managed and expense allocations.
Notwithstanding the foregoing, the Independent Board Members reviewed Nuveen's
methodology and assumptions for allocating expenses across product lines to
determine profitability. In reviewing profitability, the Independent Board
Members recognized Nuveen's investment in its fund business.
Based on its review, the Independent Board Members concluded that Nuveen's level
of profitability for its advisory activities was reasonable in light of the
services provided.
In evaluating the reasonableness of the compensation, the Independent Board
Members also considered other amounts paid to NAM by the Funds as well as any
indirect benefits (such as soft dollar arrangements, if any) NAM and its
affiliates receive, or are expected to receive, that are directly attributable
to the management of the Funds, if any. See Section E below for additional
information on indirect benefits NAM may receive as a result of its relationship
with the Funds. Based on their review of the overall fee arrangements of each
Fund, the Independent Board Members determined that the advisory fees and
expenses of the respective Fund were reasonable.
D. ECONOMIES OF SCALE AND WHETHER FEE LEVELS REFLECT THESE ECONOMIES OF SCALE
With respect to economies of scale, the Independent Board Members recognized the
potential benefits resulting from the costs of a fund being spread over a larger
asset base. The Independent Board Members therefore considered whether the Funds
have appropriately benefited from any economies of scale and whether there is
potential realization of any further economies of scale. In considering
economies of scale, the Independent Board Members have recognized that economies
of scale are difficult to measure and predict with precision, particularly on a
fund-by-fund basis. Notwithstanding the foregoing, one method to help ensure the
shareholders share in these benefits is to include breakpoints in the advisory
fee schedule. Accordingly, the Independent Board Members reviewed and considered
the fund-level breakpoints in the
87
ANNUAL INVESTMENT MANAGEMENT AGREEMENT
APPROVAL PROCESS (continued)
advisory fee schedules that reduce advisory fees. In this regard, given that the
Funds are closed-end funds, the Independent Board Members recognized that
although the Funds may from time to time make additional share offerings, the
growth in their assets will occur primarily through appreciation of each Fund's
investment portfolio.
In addition to fund-level advisory fee breakpoints, the Board also considered
the Funds' complex-wide fee arrangement. Pursuant to the complex-wide fee
arrangement, the fees of the funds in the Nuveen complex, including the Funds,
are reduced as the assets in the fund complex reach certain levels. In
evaluating the complex-wide fee arrangement, the Independent Board Members
recognized that the complex-wide fee schedule was recently revised in 2007 to
provide for additional fee savings to shareholders and considered the amended
schedule. The Independent Board Members further considered that the complex-wide
fee arrangement seeks to provide the benefits of economies of scale to fund
shareholders when total fund complex assets increase, even if assets of a
particular fund are unchanged or have decreased. The approach reflects the
notion that some of Nuveen's costs are attributable to services provided to all
its funds in the complex and therefore all funds benefit if these costs are
spread over a larger asset base. Based on their review, the Independent Board
Members concluded that the breakpoint schedule and complex-wide fee arrangement
were acceptable and desirable in providing benefits from economies of scale to
shareholders.
E. INDIRECT BENEFITS
In evaluating fees, the Independent Board Members received and considered
information regarding potential "fall out" or ancillary benefits NAM or its
affiliates may receive as a result of its relationship with each Fund. In this
regard, the Independent Board Members considered revenues received by affiliates
of NAM for serving as agent at Nuveen's preferred trading desk and for serving
as a co-manager in the initial public offering of new closed-end exchange traded
funds.
In addition to the above, the Independent Board Members considered whether NAM
received any benefits from soft dollar arrangements whereby a portion of the
commissions paid by a Fund for brokerage may be used to acquire research that
may be useful to NAM in managing the assets of the Funds and other clients. The
Independent Board Members noted that NAM does not currently have any soft dollar
arrangements; however, to the extent certain bona fide agency transactions that
occur on markets that traditionally trade on a principal basis and riskless
principal transactions are considered as generating "commissions," NAM intends
to comply with the applicable safe harbor provisions.
Based on their review, the Independent Board Members concluded that any indirect
benefits received by NAM as a result of its relationship with the Funds were
reasonable and within acceptable parameters.
F. OTHER CONSIDERATIONS
The Independent Board Members did not identify any single factor discussed
previously as all-important or controlling. The Board Members, including the
Independent Board Members, unanimously concluded that the terms of the Advisory
Agreements are fair and reasonable, that NAM's fees are reasonable in light of
the services provided to each Fund and that the Advisory Agreements be renewed.
88
Reinvest Automatically
EASILY and CONVENIENTLY
NUVEEN MAKES REINVESTING EASY. A PHONE CALL IS ALL IT TAKES TO SET UP YOUR
REINVESTMENT ACCOUNT.
NUVEEN CLOSED-END FUNDS DIVIDEND REINVESTMENT PLAN
Your Nuveen Closed-End 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
greater of the net asset value or 95% of 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. If the Plan Agent begins purchasing Fund shares on
the open market while shares are trading below net asset value, but the Fund's
shares subsequently trade at or above their net asset value before the Plan
Agent is able to complete its purchases, the Plan Agent may cease open-market
purchases and may invest the uninvested portion of the distribution in
newly-issued Fund shares at a price equal to the greater of the shares' net
asset value or 95% of the shares' market value on the last business day
immediately prior to the purchase date. 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 the 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.
89
FLEXIBLE
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.
CALL TODAY TO START REINVESTING DIVIDENDS AND/OR DISTRIBUTIONS
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.
90
NOTES
91
NOTES
92
NOTES
93
Glossary of
TERMS USED in this REPORT
[] AUCTION RATE BOND: An auction rate bond is a security whose interest
payments are adjusted periodically through an auction process, which
process typically also serves as a means for buying and selling the bond.
Auctions that fail to attract enough buyers for all the shares offered for
sale are deemed to have "failed", with current holders receiving a
formula-based interest rate until the next scheduled auction.
[] 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 that would have been necessary each year to equal
the investment's actual cumulative performance (including change in NAV or
market price and reinvested dividends and capital gains distributions, if
any) over the time period being considered.
[] AVERAGE EFFECTIVE MATURITY: The average of the number of years to maturity
of the bonds in a Fund's portfolio, computed by weighting each bond's time
to maturity (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 unless an escrow account has been
established to redeem the bond before maturity. The market value weighting
for an investment in an inverse floating rate security is the value of the
portfolio's residual interest in the inverse floating rate trust, and does
not include the value of the floating rate securities issued by the trust.
[] INVERSE FLOATERS: Inverse floating rate securities are created by
depositing a municipal bond, typically with a fixed interest rate, into a
special purpose trust created by a broker-dealer. This trust, in turn, (a)
issues floating rate certificates typically paying short-term tax-exempt
interest rates to third parties in amounts equal to some fraction of the
deposited bond's par amount or market value, and (b) issues an inverse
floating rate certificate (sometimes referred to as an "inverse floater")
to an investor (such as a Fund) interested in gaining investment exposure
to a long-term municipal bond. The income received by the holder of the
inverse floater varies inversely with the short-term rate paid to the
floating rate certificates' holders, and in most circumstances the holder
of the inverse floater bears substantially all of the underlying bond's
downside investment risk. The holder of the inverse floater typically also
benefits disproportionately from any potential appreciation of the
underlying bond's value. Hence, an inverse floater essentially represents
an investment in the underlying bond on a leveraged basis.
[] LEVERAGE-ADJUSTED DURATION: Duration is a measure of the expected period
over which a bond's principal and interest will be paid, and consequently
is a measure of the sensitivity of a bond's or bond Fund's value to changes
when market interest rates change. Generally, the longer a bond's 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 longer than the duration of the Fund's
portfolio of bonds.
[] 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 per common share is calculated by
subtracting the liabilities of the Fund (including any Preferred shares
issued in order to leverage the Fund) from its total assets and then
dividing the remainder by the number of common 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.
[] ZERO COUPON BOND: A zero coupon bond does not pay a regular interest coupon
to its holders during the life of the bond. Tax-exempt income to the holder
of the bond comes from accretion of the difference between the original
purchase price of the bond at issuance and the par value of the bond at
maturity and is effectively paid at maturity. The market prices of zero
coupon bonds generally are more volatile than the market prices of bonds
that pay interest periodically.
94
Other Useful INFORMATION
QUARTERLY PORTFOLIO OF INVESTMENTS AND PROXY VOTING INFORMATION
You may obtain (i) each Fund's quarterly portfolio of investments, (ii)
information regarding how the Funds voted proxies relating to portfolio
securities held during the twelve-month period ended June 30, 2008, and (iii) a
description of the policies and procedures that the Funds used to determine how
to vote proxies relating to portfolio securities without charge, upon request,
by calling Nuveen Investments toll-free at (800) 257-8787 or on Nuveen's website
at www.nuveen.com.
You may also obtain this and other Fund information directly from the Securities
and Exchange Commission ("SEC"). The SEC may charge a copying fee for this
information. Visit the SEC on-line at http://www.sec.gov or in person at the
SEC's Public Reference Room in Washington, D.C. Call the SEC at (202) 942-8090
for room hours and operation. You may also request Fund information by sending
an e-mail request to publicinfo@sec.gov or by writing to the SEC's Public
References Section at 100 F Street NE, Washington, D.C. 20549.
CEO CERTIFICATION DISCLOSURE
Each Fund's Chief Executive Officer has submitted to the New York Stock Exchange
(NYSE) the annual CEO certification as required by Section 303A.12(a) of the
NYSE Listed Company Manual.
Each Fund has filed with the Securities and Exchange Commission the
certification of its Chief Executive Officer and Chief Financial Officer
required by Section 302 of the Sarbanes-Oxley Act.
BOARD OF DIRECTORS
John P. Amboian
Robert P. Bremner
Jack B. Evans
William C. Hunter
David J. Kundert
William J. Schneider
Judith M. Stockdale
Carole E. Stone
Terence J. Toth
FUND MANAGER
Nuveen Asset Management
333 West Wacker Drive
Chicago, IL 60606
CUSTODIAN
State Street Bank & Trust Company
Boston, MA
TRANSFER AGENT AND
SHAREHOLDER SERVICES
State Street Bank & Trust Company
Nuveen Funds
P.O. Box 43071
Providence, RI 02940-3071
(800) 257-8787
LEGAL COUNSEL
Chapman and Cutler LLP
Chicago, IL
INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
Ernst & Young LLP
Chicago, IL
Each Fund intends to repurchase and/or redeem shares of its own common or
preferred stock in the future at such times and in such amounts as is deemed
advisable. During the period covered by this report, NPM repurchased 4,800
common shares and redeemed 2,538 preferred shares, and NPI and NPT redeemed
4,328 and 1,448 preferred shares, respectively. Any future repurchases and/or
redemptions will be reported to shareholders in the next annual or semi-annual
report.
95
Nuveen Investments:
-------------------
SERVING INVESTORS FOR GENERATIONS
Since 1898, financial advisors and their clients have relied on Nuveen
Investments to provide dependable investment solutions. For the past century,
Nuveen Investments has adhered to the belief that the best approach to investing
is to apply conservative risk-management principles to help minimize volatility.
Building on this tradition, we today offer a range of high quality equity and
fixed-income solutions that are integral to a well-diversified core portfolio.
Our clients have come to appreciate this diversity, as well as our continued
adherence to proven, long-term investing principles.
We offer many different investing solutions for our clients' different needs.
Nuveen Investments is a global investment management firm that seeks to help
secure the long-term goals of institutions and high net worth investors as well
as the consultants and financial advisors who serve them. Nuveen Investments
markets its growing range of specialized investment solutions under the
high-quality brands of HydePark, NWQ, Nuveen, Rittenhouse, Santa Barbara,
Symphony and Tradewinds. In total, the Company managed $134 billion of assets on
September 30, 2008.
Find out how we can help you reach your financial goals.
To learn more about the products and services Nuveen Investments offers, talk to
your financial advisor, or call us at (800) 257-8787. Please read the
information provided carefully before you invest. Be sure to obtain a
prospectus, where applicable. Investors should consider the investment objective
and policies, risk considerations, charges and expenses of the Fund carefully
before investing. The prospectus contains this and other information relevant to
an investment in the Fund. For a prospectus, please contact your securities
representative or Nuveen Investments, 333 W. Wacker Dr., Chicago, IL 60606.
Please read the prospectus carefully before you invest or send money.
Learn more about Nuveen Funds at: www.nuveen.com/etf
Share prices
Fund details
Daily financial news
Investor education
Interactive planning tools
EAN-E-1008D
ITEM 2. CODE OF ETHICS.
As of the end of the period covered by this report, the registrant has adopted a
code of ethics that applies to the registrant's principal executive officer,
principal financial officer, principal accounting officer or controller, or
persons performing similar functions. There were no amendments to or waivers
from the Code during the period covered by this report. The registrant has
posted the code of ethics on its website at www.nuveen.com/etf. (To view the
code, click on the Shareholder Resources drop down menu box, click on Fund
Governance and then click on Code of Conduct.)
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The registrant's Board of Directors or Trustees determined that the registrant
has at least one "audit committee financial expert" (as defined in Item 3 of
Form N-CSR) serving on its Audit Committee. The registrant's audit committee
financial expert is Jack B. Evans, who is "independent" for purposes of Item 3
of Form N-CSR.
Mr. Evans was formerly President and Chief Operating Officer of SCI Financial
Group, Inc., a full service registered broker-dealer and registered investment
adviser ("SCI"). As part of his role as President and Chief Operating Officer,
Mr. Evans actively supervised the Chief Financial Officer (the "CFO") and
actively supervised the CFO's preparation of financial statements and other
filings with various regulatory authorities. In such capacity, Mr. Evans was
actively involved in the preparation of SCI's financial statements and the
resolution of issues raised in connection therewith. Mr. Evans has also served
on the audit committee of various reporting companies. At such companies, Mr.
Evans was involved in the oversight of audits, audit plans, and the preparation
of financial statements. Mr. Evans also formerly chaired the audit committee of
the Federal Reserve Bank of Chicago.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Nuveen Premium Income Municipal Fund, Inc.
The following tables show the amount of fees that Ernst & Young LLP, the Fund's
auditor, billed to the Fund during the Fund's last two full fiscal years. For
engagements with Ernst & Young LLP the Audit Committee approved in advance all
audit services and non-audit services that Ernst & Young LLP provided to the
Fund, except for those non-audit services that were subject to the pre-approval
exception under Rule 2-01 of Regulation S-X (the "pre-approval exception"). The
pre-approval exception for services provided directly to the Fund waives the
pre-approval requirement for services other than audit, review or attest
services if: (A) the aggregate amount of all such services provided constitutes
no more than 5% of the total amount of revenues paid by the Fund to its
accountant during the fiscal year in which the services are provided; (B) the
Fund did not recognize the services as non-audit services at the time of the
engagement; and (C) the services are promptly brought to the Audit Committee's
attention, and the Committee (or its delegate) approves the services before the
audit is completed.
The Audit Committee has delegated certain pre-approval responsibilities to its
Chairman (or, in his absence, any other member of the Audit Committee).
SERVICES THAT THE FUND'S AUDITOR BILLED TO THE FUND
AUDIT FEES BILLED AUDIT-RELATED FEES TAX FEES ALL OTHER FEES
FISCAL YEAR ENDED TO FUND (1) BILLED TO FUND (2) BILLED TO FUND (3) BILLED TO FUND (4)
------------------------------------------------------------------------------------------------------------------------------------
October 31, 2008 $ 51,660 $ 0 $ 0 $ 3,350
------------------------------------------------------------------------------------------------------------------------------------
Percentage approved 0% 0% 0% 0%
pursuant to
pre-approval
exception
------------------------------------------------------------------------------------------------------------------------------------
October 31, 2007 $ 45,546 $ 0 $ 500 $ 2,350
------------------------------------------------------------------------------------------------------------------------------------
Percentage approved 0% 0% 0% 0%
pursuant to
pre-approval
exception
------------------------------------------------------------------------------------------------------------------------------------
(1) "Audit Fees" are the aggregate fees billed for professional services for
the audit of the Fund's annual financial statements and services provided
in connection with statutory and regulatory filings or engagements.
(2) "Audit Related Fees" are the aggregate fees billed for assurance and
related services reasonably related to the performance of the audit or
review of financial statements and are not reported under "Audit Fees".
(3) "Tax Fees" are the aggregate fees billed for professional services for tax
advice, tax compliance, and tax planning.
(4) "All Other Fees" are the aggregate fees billed for products and services
for agreed upon procedures engagements performed for leveraged funds.
SERVICES THAT THE FUND'S AUDITOR BILLED TO THE
ADVISER AND AFFILIATED FUND SERVICE PROVIDERS
The following tables show the amount of fees billed by Ernst & Young LLP to
Nuveen Asset Management ("NAM" or the "Adviser"), and any entity controlling,
controlled by or under common control with NAM ("Control Affiliate") that
provides ongoing services to the Fund ("Affiliated Fund Service Provider"), for
engagements directly related to the Fund's operations and financial reporting,
during the Fund's last two full fiscal years.
The tables also show the percentage of fees subject to the pre-approval
exception. The pre-approval exception for services provided to the Adviser and
any Affiliated Fund Service Provider (other than audit, review or attest
services) waives the pre-approval requirement if: (A) the aggregate amount of
all such services provided constitutes no more than 5% of the total amount of
revenues paid to Ernst & Young LLP by the Fund, the Adviser and Affiliated Fund
Service Providers during the fiscal year in which the services are provided that
would have to be pre-approved by the Audit Committee; (B) the Fund did not
recognize the services as non-audit services at the time of the engagement; and
(C) the services are promptly brought to the Audit Committee's attention, and
the Committee (or its delegate) approves the services before the Fund's audit is
completed.
FISCAL YEAR ENDED AUDIT-RELATED FEES TAX FEES BILLED TO ALL OTHER FEES
BILLED TO ADVISER AND ADVISER AND BILLED TO ADVISER
AFFILIATED FUND AFFILIATED FUND AND AFFILIATED FUND
SERVICE PROVIDERS SERVICE PROVIDERS SERVICE PROVIDERS
--------------------------------------------------------------------------------------------------------------
October 31, 2008 $ 0 $ 0 $ 0
--------------------------------------------------------------------------------------------------------------
Percentage approved 0% 0% 0%
pursuant to
pre-approval
exception
--------------------------------------------------------------------------------------------------------------
October 31, 2007 $ 0 $ 0 $ 0
--------------------------------------------------------------------------------------------------------------
Percentage approved 0% 0% 0%
pursuant to
pre-approval
exception
--------------------------------------------------------------------------------------------------------------
NON-AUDIT SERVICES
The following table shows the amount of fees that Ernst & Young LLP billed
during the Fund's last two full fiscal years for non-audit services. The Audit
Committee is required to pre-approve non-audit services that Ernst & Young LLP
provides to the Adviser and any Affiliated Fund Services Provider, if the
engagement related directly to the Fund's operations and financial reporting
(except for those subject to the de minimis exception described above). The
Audit Committee requested and received information from Ernst & Young LLP about
any non-audit services that Ernst & Young LLP rendered during the Fund's last
fiscal year to the Adviser and any Affiliated Fund Service Provider. The
Committee considered this information in evaluating Ernst & Young LLP's
independence.
FISCAL YEAR ENDED TOTAL NON-AUDIT FEES
BILLED TO ADVISER AND
AFFILIATED FUND SERVICE TOTAL NON-AUDIT FEES
PROVIDERS (ENGAGEMENTS BILLED TO ADVISER AND
RELATED DIRECTLY TO THE AFFILIATED FUND SERVICE
TOTAL NON-AUDIT FEES OPERATIONS AND FINANCIAL PROVIDERS (ALL OTHER
BILLED TO FUND REPORTING OF THE FUND) ENGAGEMENTS) TOTAL
-----------------------------------------------------------------------------------------------------------------------------
October 31, 2008 $ 3,350 $ 0 $ 0 $ 3,350
October 31, 2007 $ 2,850 $ 0 $ 0 $ 2,850
"Non-Audit Fees billed to Adviser" for both fiscal year ends represent "Tax
Fees" billed to Adviser in their respective amounts from the previous table.
Audit Committee Pre-Approval Policies and Procedures. Generally, the Audit
Committee must approve (i) all non-audit services to be performed for the Fund
by the Fund's independent accountants and (ii) all audit and non-audit services
to be performed by the Fund's independent accountants for the Affiliated Fund
Service Providers with respect to operations and financial reporting of the
Fund. Regarding tax and research projects conducted by the independent
accountants for the Fund and Affiliated Fund Service Providers (with respect to
operations and financial reports of the Fund) such engagements will be (i)
pre-approved by the Audit Committee if they are expected to be for amounts
greater than $10,000; (ii) reported to the Audit Committee chairman for his
verbal approval prior to engagement if they are expected to be for amounts under
$10,000 but greater than $5,000; and (iii) reported to the Audit Committee at
the next Audit Committee meeting if they are expected to be for an amount under
$5,000.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
The registrant's Board of Directors or Trustees has a separately designated
Audit Committee established in accordance with Section 3(a)(58)(A) of the
Securities Exchange Act of 1934, as amended (15 U.S.C. 78c(a)(58)(A)). The
members of the audit committee are Robert P. Bremner, Jack B. Evans, Terence J.
Toth, William J. Schneider and David J. Kundert.
ITEM 6. SCHEDULE OF INVESTMENTS.
See Portfolio of Investments in Item 1.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
The registrant invests its assets primarily in municipal bonds and cash
management securities. On rare occasions the registrant may acquire, directly or
through a special purpose vehicle, equity securities of a municipal bond issuer
whose bonds the registrant already owns when such bonds have deteriorated or are
expected shortly to deteriorate significantly in credit quality. The purpose of
acquiring equity securities generally will be to acquire control of the
municipal bond issuer and to seek to prevent the credit deterioration or
facilitate the liquidation or other workout of the distressed issuer's credit
problem. In the course of exercising control of a distressed municipal issuer,
NAM may pursue the registrant's interests in a variety of ways, which may entail
negotiating and executing consents, agreements and other arrangements, and
otherwise influencing the management of the issuer. NAM does not consider such
activities proxy voting for purposes of Rule 206(4)-6 under the 1940 Act, but
nevertheless provides reports to the registrant's Board of Trustees on its
control activities on a quarterly basis.
In the rare event that a municipal issuer were to issue a proxy or that the
registrant were to receive a proxy issued by a cash management security, NAM
would either engage an independent third party to determine how the proxy should
be voted or vote the proxy with the consent, or based on the instructions, of
the registrant's Board of Trustees or its representative. A member of NAM's
legal department would oversee the administration of the voting, and ensure that
records were maintained in accordance with Rule 206(4)-6, reports were filed
with the SEC on Form N-PX, and the results provided to the registrant's Board of
Trustees and made available to shareholders as required by applicable rules.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
THE PORTFOLIO MANAGER
The following individual has primary responsibility for the day-to-day
implementation of the registrant's investment strategies:
NAME FUND
PAUL BRENNAN Nuveen Premium Income Municipal Fund, Inc
Other Accounts Managed. In addition to managing the registrant, the portfolio
manager is also primarily responsible for the day-to-day portfolio management of
the following accounts:
NUMBER OF
PORTFOLIO MANAGER TYPE OF ACCOUNT MANAGED ACCOUNTS ASSETS
--------------------------------------------------------------------------------
Paul Brennan Registered Investment Company 15 $11.80 billion
Other Pooled Investment Vehicles 0 $0
Other Accounts 1 $.859 million
* Assets are as of October 31, 2008. None of the assets in these accounts are
subject to an advisory fee based on performance.
Compensation. Each portfolio manager's compensation consists of three basic
elements--base salary, cash bonus and long-term incentive compensation. The
compensation strategy is to annually compare overall compensation, including
these three elements, to the market in order to create a compensation structure
that is competitive and consistent with similar financial services companies. As
discussed below, several factors are considered in determining each portfolio
manager's total compensation. In any year these factors may include, among
others, the effectiveness of the investment strategies recommended by the
portfolio manager's investment team, the investment performance of the accounts
managed by the portfolio manager, and the overall performance of Nuveen
Investments, Inc. (the parent company of NAM). Although investment performance
is a factor in determining the portfolio manager's compensation, it is not
necessarily a decisive factor. The portfolio manager's performance is evaluated
in part by comparing manager's performance against a specified investment
benchmark. This fund-specific benchmark is a customized subset (limited to bonds
in each Fund's specific state and with certain maturity parameters) of the
S&P/Investortools Municipal Bond index, an index comprised of bonds held by
managed municipal bond fund customers of Standard & Poor's Securities Pricing,
Inc. that are priced daily and whose fund holdings aggregate at least $2
million. As of October 31, 2008, the S&P/Investortools Municipal Bond index was
comprised of 52,959 securities with an aggregate current market value of $1,009
billion.
Base salary. Each portfolio manager is paid a base salary that is set at a level
determined by NAM in accordance with its overall compensation strategy discussed
above. NAM is not under any current contractual obligation to increase a
portfolio manager's base salary.
Cash bonus. Each portfolio manager is also eligible to receive an annual cash
bonus. The level of this bonus is based upon evaluations and determinations made
by each portfolio manager's supervisors, along with reviews submitted by his
peers. These reviews and evaluations often take into account a number of
factors, including the effectiveness of the investment strategies recommended to
the NAM's investment team, the performance of the accounts for which he serves
as portfolio manager relative to any benchmarks established for those accounts,
his effectiveness in communicating investment performance to stockholders and
their representatives, and his contribution to the NAM's investment process and
to the execution of investment strategies. The cash bonus component is also
impacted by the overall performance of Nuveen Investments, Inc. in achieving its
business objectives.
Long-term incentive compensation. In connection with the acquisition of Nuveen
Investments, Inc., by a group of investors lead by Madison Dearborn Partners in
November 2007, certain employees, including portfolio managers, received profit
interests in Nuveen's parent. These profit interests entitle the holders to
participate in the appreciation in the value of Nuveen beyond the issue date and
vest over five to seven years, or earlier in the case of a liquidity event.
Material Conflicts of Interest. Each portfolio manager's simultaneous management
of the registrant and the other accounts noted above may present actual or
apparent conflicts of interest with respect to the allocation and aggregation of
securities orders placed on behalf of the Registrant and the other account. NAM,
however, believes that such potential conflicts are mitigated by the fact that
the NAM has adopted several policies that address potential conflicts of
interest, including best execution and trade allocation policies that are
designed to ensure (1) that portfolio management is seeking the best price for
portfolio securities under the circumstances, (2) fair and equitable allocation
of investment opportunities among accounts over time and (3) compliance with
applicable regulatory requirements. All accounts are to be treated in a
non-preferential manner, such that allocations are not based upon account
performance, fee structure or preference of the portfolio manager, although the
allocation procedures may provide allocation preferences to funds with special
characteristics (such as favoring state funds versus national funds for
allocations of in-state bonds). In addition, NAM has adopted a Code of Conduct
that sets forth policies regarding conflicts of interest.
Beneficial Ownership of Securities. As of October 31, 2008, the portfolio
manager beneficially owned the following dollar range of equity securities
issued by the Registrant and other Nuveen Funds managed by NAM's municipal
investment team.
DOLLAR RANGE OF
EQUITY SECURITIES
DOLLAR RANGE OF BENEFICIALLY OWNED
EQUITY IN THE REMAINDER OF
SECURITIES NUVEEN FUNDS MANAGED
BENEFICIALLY BY NAM'S MUNICIPAL
NAME OF PORTFOLIO MANAGER FUND OWNED IN FUND INVESTMENT TEAM
-------------------------------------------------------------------------------------------------------------------
Paul Brennan Nuveen Premium Income Municipal Fund, Inc $10,001-$50,000 $100,001-$500,000
PORTFOLIO MANAGER BIO:
Paul Brennan, CFA, CPA, became a portfolio manager of Flagship Financial Inc. in
1994, and subsequently became an Assistant Vice President of NAM upon the
acquisition of Flagship Resources Inc. by Nuveen in 1997. He became Vice
President of NAM in 2002. He currently manages investments for 16
Nuveen-sponsored investment companies.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Period* (a) (b) (c) (d)*
TOTAL NUMBER OF AVERAGE TOTAL NUMBER OF SHARES MAXIMUM NUMBER (OR
SHARES (OR PRICE (OR UNITS) PURCHASED AS APPROXIMATE DOLLAR VALUE) OF
UNITS) PAID PER PART OF PUBLICLY SHARES (OR UNITS) THAT MAY YET
PURCHASED SHARE (OR ANNOUNCED PLANS OR BE PURCHASED UNDER THE PLANS OR
UNIT) PROGRAMS PROGRAMS
AUGUST 7-31, 2008 0 $0 0 6,380,000
SEPTEMBER 1-30, 2008 0 $0 0 6,380,000
OCTOBER 1-31, 2008 0 $0 0 6,380,000
TOTAL 0
* The registrant's repurchase program, which authorized the repurchase of
6,380,000 shares, was announced August 7, 2008. Any repurchases made by the
registrant pursuant to the program were made through open-market
transactions.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which shareholders may
recommend nominees to the registrant's Board implemented after the registrant
last provided disclosure in response to this item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive and principal financial officers,
or persons performing similar functions, have concluded that the
registrant's disclosure controls and procedures (as defined in Rule
30a-3(c) under the Investment Company Act of 1940, as amended (the
"1940 Act") (17 CFR 270.30a-3(c))) are effective, as of a date within
90 days of the filing date of this report that includes the disclosure
required by this paragraph, based on their evaluation of the controls
and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR
270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")
(17 CFR 240.13a-15(b) or 240.15d-15(b)).
(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act
(17 CFR 270.30a-3(d)) that occurred during the second fiscal quarter
of the period covered by this report that has materially affected, or
is reasonably likely to materially affect, the registrant's internal
control over financial reporting.
ITEM 12. EXHIBITS.
File the exhibits listed below as part of this Form. Letter or number the
exhibits in the sequence indicated.
(a)(1) Any code of ethics, or amendment thereto, that is the subject of the
disclosure required by Item 2, to the extent that the registrant intends to
satisfy the Item 2 requirements through filing of an exhibit: Not applicable
because the code is posted on registrant's website at www.nuveen.com/etf and
there were no amendments during the period covered by this report. (To view the
code, click on the Investor Resources drop down menu box, click on Fund
Governance and then Code of Conduct.)
(a)(2) A separate certification for each principal executive officer and
principal financial officer of the registrant as required by Rule 30a-2(a) under
the 1940 Act (17 CFR 270.30a-2(a)) in the exact form set forth below: Ex-99.CERT
Attached hereto.
(a)(3) Any written solicitation to purchase securities under Rule 23c-1 under
the 1940 Act (17 CFR 270.23c-1) sent or given during the period covered by the
report by or on behalf of the registrant to 10 or more persons. Not applicable.
(b) If the report is filed under Section 13(a) or 15(d) of the Exchange Act,
provide the certifications required by Rule 30a-2(b) under the 1940 Act (17 CFR
270.30a-2(b)); Rule 13a-14(b) or Rule 15d-14(b) under the Exchange Act (17 CFR
240.13a-14(b) or 240.15d-14(b)), and Section 1350 of Chapter 63 of Title 18 of
the United States Code (18 U.S.C. 1350) as an exhibit. A certification furnished
pursuant to this paragraph will not be deemed "filed" for purposes of Section 18
of the Exchange Act (15 U.S.C. 78r), or otherwise subject to the liability of
that section. Such certification will not be deemed to be incorporated by
reference into any filing under the Securities Act of 1933 or the Exchange Act,
except to the extent that the registrant specifically incorporates it by
reference. Ex-99.906 CERT attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Nuveen Premium Income Municipal Fund, Inc.
-----------------------------------------------------------
By (Signature and Title) /s/ Kevin J. McCarthy
----------------------------------------------
Kevin J. McCarthy
Vice President and Secretary
Date: January 9, 2009
-------------------------------------------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title) /s/ Gifford R. Zimmerman
----------------------------------------------
Gifford R. Zimmerman
Chief Administrative Officer
(principal executive officer)
Date: January 9, 2009
-------------------------------------------------------------------
By (Signature and Title) /s/ Stephen D. Foy
----------------------------------------------
Stephen D. Foy
Vice President and Controller
(principal financial officer)
Date: January 9, 2009
-------------------------------------------------------------------