-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BfiIR6W6oomAGRKsWpGsu/XNeNMjJTriK8weYFZIbi6o2Tds9G1aEQ718vK058fu GwG0TNoCmOZ+qWh8YNJIJw== 0000891804-99-000450.txt : 19990305 0000891804-99-000450.hdr.sgml : 19990305 ACCESSION NUMBER: 0000891804-99-000450 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990304 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NUVEEN PENNSYLVANIA INVESTMENT QUALITY MUNICIPAL FUND INC CENTRAL INDEX KEY: 0000870780 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 363743025 STATE OF INCORPORATION: MA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-06265 FILM NUMBER: 99557016 BUSINESS ADDRESS: STREET 1: 333 W WACKER DRIVE CITY: CHICAGO STATE: IL ZIP: 60606 BUSINESS PHONE: 3129178200 MAIL ADDRESS: STREET 1: 333 W WACKER CITY: CHICAGO STATE: IL ZIP: 60606 N-30D 1 NUVEEN PENNSYLVANIA INVEST QUALITY MUNI FUND(NQP) NUVEEN Exchange-Traded Funds December 31, 1998 Semiannual Report Dependable, tax-free income to help you keep more of what you earn. NQJ NNJ New Jersey NQP NPY Pennsylvania Photo of: Couple gardening. Highlights As of December 31, 1998 Contents 1 Dear Shareholder 3 New Jersey Portfolio Manager's Comments 5 NQJ Performance Overview 6 NNJ Performance Overview 7 Pennsylvania Portfolio Manager's Comments 9 NQP Performance Overview 10 NPY Performance Overview 11 Shareholder Meeting Report 15 Portfolio of Investments 34 Statement of Net Assets 35 Statement of Operations 36 Statement of Changes in Net Assets 37 Notes to Financial Statements 41 Financial Highlights 44 Building Better Portfolios 45 Fund Information Credit Quality Performance Highlights ================================================================================ Nuveen New Jersey Investment Quality Municipal Fund, Inc. (NQJ) o Taxable-equivalent yield of 8.39%* o Taxable-equivalent one-year total return on share price of 11.05%* o Good credit quality, with 80% of the fund's investments rated AA or higher Pie Chart: AAA/U.S. Guaranteed 64% AA 16% A 5% BBB/NR 13% Other 2% Nuveen New Jersey Premium Income Municipal Fund, Inc. (NNJ) o Outperformed Lehman Brothers Municipal Bond Index** for the one-year period o Steady dividend for 16 consecutive months o Taxable-equivalent one-year total return on share price of 17.76%* Pie Chart: AAA/U.S. Guaranteed 60% AA 10% A 16% BBB/NR 9% Other 5% Nuveen Pennsylvania Investment Quality Municipal Fund (NQP)Taxable-equivalent yield of 8.32%* o Steady dividend for 28 consecutive months o Taxable-equivalent one-year total return on share price of 14.32%* Pie Chart: AAA/U.S. Guaranteed 76% AA 14% A 6% BBB/NR 4% Nuveen Pennsylvania Premium Income Municipal Fund 2 (NPY) o Outperformed Lehman Brothers Municipal Bond Index's** total return and its Lipper Peer Group's*** average total return for the one-year period o One-year total return performance ranked the fund #1 out of 8 funds in its Lipper Peer Group o Taxable-equivalent yield of 7.81%* Pie Chart: AAA/U.S. Guaranteed 76% AA 11% A 5% BBB/NR 8% * For investors in the 31% federal and applicable state income tax bracket. See your fund's performance overview in this report for more information. ** The Lehman Brothers Municipal Bond Index is an unleveraged index comprised of a broad range of municipal bonds and does not reflect any initial or ongoing expenses. ***The Lipper Peer Group return represents the average annualized return of the 8 funds in the Lipper Pennsylvania Municipal Debt category.The return assumes reinvestment of dividends and does not reflect any applicable sales charges. Photo of: Timothy R. Schwertfeger Chairman of the Board Sideline text: Wealth takes a lifetime to build. Once achieved, it should be preserved. Dear Shareholder I'm pleased to report that over the past 12 months, the Nuveen Exchange-Traded Funds covered in this report have continued to perform well, meeting their primary objectives of providing you with attractive levels of tax-free income and after-tax total returns. The year's strong market for fixed-income securities, bolstered by investor demand for quality investments, benefited these funds and led to solid share price performances. The combination of attractive tax-free income and after-tax total returns illustrates once again that Nuveen's municipal bond funds can serve as excellent investment options for income-oriented investors. The Year in Review Over the past year, the markets endured bouts of volatility, as the Asian financial crisis spilled over into emerging markets and affected economies around the globe. Investors responded by seeking a haven from the uncertainty in more conservative investments, such as municipal bond funds. To avert a potential domestic credit crunch and bring some stability to global markets, the Federal Reserve moved to ease short-term interest rates for the first time in almost three years. Between the end of September and mid-November, three successive cuts brought the federal funds rate to 4.75%. As interest rates continued to trend downward, the competitive yields offered by our exchange-traded funds stimulated additional investor interest and demand. In this environment, the market for exchange-traded municipal bond funds was exceptionally strong. These funds continued to represent bright spots among fixed-income investments, offering attractive income in a market that places a high premium on yield. In addition, the funds generally maintained good levels of call protection, resulting in relatively stable income streams. Throughout 1998, the U.S. economy exhibited more strength than had been expected at the outset, and current conditions indicate that this momentum could continue in 1999. In the coming months, we will continue to watch several key factors affecting the economy's future, including corporate earnings reports, wage and employment statistics, the strength of the U.S. dollar, events in international markets, and any further interest rate indications from the Federal Reserve. These factors will influence the outlook for fixed-income markets well into 1999. Municipal Bonds: A Compelling Value Over the past year, rising bond prices drove yields on 30-year Treasuries to historic lows. With yields on long Treasury bonds pushing below 5% at times, the yield on the Bond Buyer 40, an unmanaged index of long-term municipal bonds, fell just 15 basis points - from 5.41% to 5.26% - compared with the 82-point drop in Treasury yields over the past 12 months. As of December 31, 1998, the ratio of long-term municipal yields to 30-year Treasury yields stood at more than 103%, compared with the more typical range of 86-87%. Over the past few months, this ratio has reached as high as 104%. For investors, this means that quality long-term municipal bonds currently offer approximately the same yield as Treasury bonds with comparable maturities - even before the tax advantages of municipal bonds are taken into account. On an after-tax basis in today's market, municipal bonds present an exceptionally attractive investment option relative to Treasuries. In the municipal market, where foreign demand was limited by foreign investors' inability to benefit from the tax advantages of municipals, low interest rates and the strong economy combined to generate high levels of new issuance and a dramatic increase in the refinancing of existing bonds. In 1998, there was $284 billion of municipal issuance, up 29% over 1997. In terms of total municipal issuance, 1998 ranked as the second largest year on record, next to 1993's $292 billion. The continued strength of the U.S. economy also produced improvements in the fundamental financial health of many municipalities and boosted the overall credit quality of municipal bonds. In 1998, issues upgraded by Moody's outnumbered downgrades by a margin of 4 to 1. At Standard & Poor's, the ratio was more than 2 to 1. Nuveen Expertise Is Key The key to taking advantage of the exceptional values currently available in the municipal market is the ability of a proven investment manager. At Nuveen, we recognize the value of time-tested expertise. The high level of municipal issuance in 1998, for example, highlighted the value of Nuveen's in-depth knowledge of the municipal market, as our portfolio management teams carefully analyzed the flood of issues to select those securities best suited to help the funds achieve their investment objectives. As a further enhancement to our management capabilities, Nuveen has assembled a strong core of Premier AdvisersSM, a group of managers who are experts in their particular areas of the market, to provide their experience and insights. In addition to Nuveen Investment Advisory Services, our Premier Adviser for tax-free investing, you can rely on other Premier Advisers for equity investments, including Institutional Capital Corporation for value investing and Rittenhouse Financial Services, Inc. for growth investing. For more information about the funds managed by these Premier Advisers, including charges and expenses, contact your financial adviser for a prospectus, or call Nuveen at (800) 621-7227. Please read the prospectus carefully before you invest or send money. We encourage you to talk with your financial adviser about the ways Nuveen's expanding selection of investments can help you establish a diversified portfolio designed to build and sustain long-term financial security. We are grateful for the confidence you have placed in us, and we intend to continue earning your trust in the years ahead. Sincerely, Timothy R. Schwertfeger Chairman of the Board February 15, 1999 Graphic of: Bond Buyer 40 Line Chart. Sideline text: "The key to taking advantage of the exceptional values currently available in the municipal market is the ability of a proven investment manager." New Jersey Portfolio Manager's Comments Portfolio manager Tom Futrell discusses the market environment, fund performance, and the outlook for the New Jersey funds. Tom, a 15-year veteran of Nuveen with management responsibility for a range of national and state municipal bond funds, assumed management of NQJ and NNJ on July 1, 1998, as part of Nuveen's efforts to maximize the efficient use of staff resources and portfolio manager expertise. What economic factors have affected the municipal market in New Jersey? New Jersey is a heavily populated state with one of the highest resident wealth levels in the nation. With a prime East Coast location, the state provides an ideal site for corporations and enables residents to take advantage of employment opportunities in New York and Pennsylvania, as well as New Jersey. This, in turn, benefits the state by providing strong levels of business and personal income taxes. The state has one of the most diverse economies in the U.S., with representation from the chemical/pharmaceutical industry, the communications sector, and the financial services industry. The state economy continued to do well, as evidenced by solid job growth and lower unemployment statistics. As a mature economy, New Jersey lagged national growth averages, but its regional economic status was above average, mostly due to job growth. In line with national trends, New Jersey's economy is expected to moderate somewhat in 1999. Total municipal issuance in the state in 1998 was $8.6 billion, which ranked New Jersey ninth in the nation. However, contrary to the national average, which was up 29% for the year, issuance in New Jersey fell 5% from 1997 levels. This resulted not so much from an actual decrease in issuance, but from the fact that the state's level for 1997 had been inflated by one of the largest municipal issues ever brought to market: the New Jersey Economic Development Authority State Pension Funding Bonds. In 1998, the largest issuers in the state were general tax obligation bonds from the state of New Jersey, the New Jersey Economic Development Authority, and the New Jersey Health Care Financing Authority. The state continues to enjoy strong demand, in both primary new issuance and the secondary market. How did the New Jersey funds perform over the past year? For the 12 months ended December 31, 1998, NQJ and NNJ produced the following total returns on net asset value (NAV), compared to the total return of the Lehman Brothers Municipal Bond Index(1).
Lehman Brothers Total Return Taxable-Equivalent Municipal Bond Fund on NAV Total Return on NAV* Index Total Return(1) - -------------------------------------------------------------------------------- NQJ 5.97% 9.36% 6.48% - -------------------------------------------------------------------------------- NNJ 6.73% 9.89% 6.48% - --------------------------------------------------------------------------------
* Taxable-equivalent total return is based on the annualized total return and a combined federal and state income tax rate of 35.4%. It represents the return on a taxable investment necessary to equal the return of the Nuveen fund on an after-tax basis. See your fund's performance overview in this report, on pages 5-6, for more complete information. Much of the funds' performance over the past 12 months can be tied to duration. As of December 31, 1998, NQJ and NNJ had fund durations2 of 6.24 and 9.16 years, respectively, compared with the unleveraged Lehman index's duration of 7.30 years. Duration measures a bond fund's price volatility, or reaction to interest rate movements. The longer the duration, the more sensitive the fund's NAV is to changes in interest rates. During a period of falling interest rates, longer duration enables a fund's NAV to participate more fully in market gains. However, when rates rise, longer duration can make the fund's NAV more vulnerable to potential price declines. As interest rates trended downward during 1998, funds with durations longer than that of the index, like NNJ, tended to outperform the market, while funds with shorter durations, like NQJ, generally underperformed. One contribution to the underperformance of NQJ was our decision to maintain the funds' higher imbedded yields for as long as possible by holding bonds purchased during periods of higher interest rates. In the current low interest rate environment, if we had sold these bonds in an attempt to capture slightly higher total returns, we would have had to replace the bonds with issues offering lower yields, which could have led to even greater dividend reductions than those declared last year. Selling these bonds also leads to the recognition of capital gains and the payment of taxable distributions, which effectively reduces the amount of assets working to earn income for the fund. Adding to our hold decision was the fact that many of the bonds in these portfolios were irreplaceable given market conditions, offering a combination of purchase price and yield that would been impossible to duplicate. 1 The Lehman Brothers Municipal Bond Index is an unleveraged index comprising a broad range of investment-grade municipal bonds; results for the index do not reflect any initial or ongoing expenses. 2 Fund duration, also known as leverage-adjusted duration, takes into account the leveraging process for each fund and therefore differs from the duration of the actual portfolio of individual bonds that make up the fund. Unless otherwise noted, references to duration in this commentary are intended to indicate fund duration. How were the funds' dividends and share prices affected by the interest rate volatility of the past year? In the current low interest rate environment, good call protection helped support NNJ's dividend and protect the income of this fund from erosion. As of December 31, 1998, the fund had provided shareholders with 62 consecutive months of steady or increasing dividends. However, the combination of bond calls and declining interest rates contributed to a reduction in the income level of NQJ, necessitating a dividend cut in November 1998. As bonds were called from the portfolio, proceeds had to be reinvested in bonds paying relatively lower current interest rates, which reduced the income earned by the fund. Despite the single dividend adjustment to NQJ, both funds continued to provide competitive current market yields. As Tim mentioned in his letter to shareholders, share price performance among the Nuveen exchange-traded funds has been strong over the past 12 months. As interest rates fell, active demand for these funds resulted in increased share prices. The strong demand for individual bonds by retail investors in New Jersey also contributed to these funds' improved positions. As of December 31, 1998, both New Jersey funds were trading at premiums to their net asset values.
Current Premium/ Total Return Market Yield Discount on Share Price - -------------------------------------------------------------------------------- Taxable 1 Year Ending Taxable 12/31/98 Equivalent* 12/31/97 12/31/98 12/31/98 Equivalent* - -------------------------------------------------------------------------------- NQJ 5.42% 8.39% 5.62% 8.02% 7.84% 11.05% - -------------------------------------------------------------------------------- NNJ 5.20% 8.05% -.37% 7.19% 14.59% 17.76% - -------------------------------------------------------------------------------- *35.4% federal and state income tax bracket See your fund's performance overview in this report, on pages 5-6, for more complete information.
What key strategies were used to manage the funds during the past year? Over the past year, our primary focus was on the higher end of the credit spectrum as well as on the longer end of the yield curve (20 to 30 years). With the Federal Reserve's easing of interest rates, the yield curve steepened somewhat in the final quarter of 1998, meaning that the difference between yields of lower-rated and higher-rated bonds widened. Lower-rated bonds tend to pay higher interest rates due to the credit risk involved in purchasing them. Nuveen does buy lower-rated bonds, but they have to be at least investment grade quality (comparable to BBB or better). We believe the funds are being compensated for taking on this additional risk. Overall, the credit quality of the New Jersey funds continues to be high, with 80% of NQJ and 70% of NNJ invested in bonds rated AAA and AA. The relatively high percentages of lower and non-rated bonds in these portfolios reflect the greater diversity of New Jersey issuance compared with other states. Two interesting additions to both portfolios that were purchased over the past year were the private placement of an insured Bergen County lease offering as well as a non-rated private placement for a small, well-established private school (The Gill/St. Bernard's School). Another example of Nuveen's institutional buying power and exceptional access to the market was our purchase of a large position in a Puerto Rico housing issue for NQJ. This GNMA-collateralized issue offered very attractive yields as well as high credit quality and can potentially provide us with exceptional value in secondary market trading. As of December 31, 1998 NNJ had an allocation of 24% in the transportation sector. Many of these transportation bonds were purchased when the portfolio was assembled in 1992, and based on their purchase price, yields, and outstanding performance, we continue to hold them. What is Nuveen's outlook for the future? Looking ahead for the New Jersey funds, our goal will be to continue purchasing securities that provide incremental yield to support the income streams of these funds. We plan to employ a variety of methods to find such bonds: using credit quality plays, taking advantage of oversupply in the market or specific sectors, or investing in special issues, such as private placements, that Nuveen's detailed surveillance and research enable us to find. If the interest rate environment remains at its current low levels through 1999, we anticipate that NQJ will face continued pressure from bond calls. This, in turn, may put pressure on the dividend. Over the next three years, approximately 38% of NQJ's portfolio will be subject to calls. We consider this a very manageable number and will use it as an opportunity to improve the fund's general structure. This will be accomplished by investing in bonds with market-neutral durations, attractive yields, and good call protection. Selecting bonds that enhance the funds' performance is an area where Nuveen's expertise - as an experienced investment manager knowledgeable about the unique aspects of the New Jersey municipal market - can result in added value for our investors. The current market environment - influenced by declining interest rates, benign inflation, and strong municipal supply has helped to position municipal bonds as one of the most compelling values in today's marketplace. We expect that the excellent municipal-to-Treasury ratio (municipal yields are currently higher than Treasury yields even before the tax advantage of municipals is accounted for), combined with continued volatility in the equity markets and investors' increasing awareness of the need for asset allocation rebalancing, will result in growing demand for municipal bond funds. We believe that investors who take advantage of current opportunities in the municipal market should be rewarded with healthy returns and attractive yields in the months ahead, as the market recognizes the value of these quality investments. Nuveen New Jersey Investment Quality Municipal Fund, Inc. Performance Overview As of December 31, 1998 NQJ Portfolio Statistics ============================================================ Inception Date 2/91 - ------------------------------------------------------------ Share Price $16 15/16 - ------------------------------------------------------------ Net Asset Value Per Share $15.68 - ------------------------------------------------------------ Current Market Yield 5.42% - ------------------------------------------------------------ Taxable-Equivalent Yield (Federal Only)(1) 7.86% - ------------------------------------------------------------ Taxable-Equivalent Yield (Federal and State)(1) 8.39% - ------------------------------------------------------------ Fund Net Assets ($000) $440,620 - ------------------------------------------------------------ Average Weighted Maturity (Years) 15.78 - ------------------------------------------------------------ Leverage-Adjusted Duration (Years) 6.24 - ------------------------------------------------------------ Annualized Total Return ============================================================ On Share Price On NAV - ------------------------------------------------------------ 1-Year 7.84% 5.97% - ------------------------------------------------------------ 3-Year 9.03% 6.49% - ------------------------------------------------------------ 5-Year 6.88% 6.13% - ------------------------------------------------------------ Since Inception 8.01% 8.13% - ------------------------------------------------------------ Taxable-Equivalent Total Return(2) ============================================================ On Share Price On NAV - ------------------------------------------------------------ 1-Year 11.05% 9.36% - ------------------------------------------------------------ 3-Year 12.39% 9.92% - ------------------------------------------------------------ 5-Year 10.47% 9.71% - ------------------------------------------------------------ Since Inception 11.52% 11.70% - ------------------------------------------------------------ Top 5 Sectors ============================================================ U.S. Guaranteed 19% - ------------------------------------------------------------ Housing (Multifamily) 11% - ------------------------------------------------------------ Transportation 11% - ------------------------------------------------------------ Health Care 11% - ------------------------------------------------------------ Tax Obligation (General) 10% - ------------------------------------------------------------ Bar Chart: 1998 Monthly Tax-Free Dividends Per Share(3) Jan 98 0.0795 Feb 98 0.0795 Mar 98 0.0795 Apr 98 0.0795 May 98 0.0795 Jun 98 0.0795 Jul 98 0.0795 Aug 98 0.0795 Sep 98 0.0795 Oct 98 0.0795 Nov 98 0.0765 Dec 98 0.0765 Line Chart: Share Price Performance 1/2/98 16.625 17 17.625 17.313 17.125 17.313 17.063 16.625 17.063 17 17.375 17.063 17.125 17.438 16.875 16.563 16.438 16.938 16.313 16.375 16.813 17.188 17 17.125 17.188 17.125 17.5 17.313 17.313 17.375 17.938 17.875 17.563 17.75 17.625 17.938 17 17.563 18.313 17.188 17.375 17.81 18.06 17.75 16.75 16.88 17 16.81 16.88 16.94 12/31/98 16.9375 Weekly Closing Price Past performance is not predictive of future results. 1 A taxable-equivalent represents the yield on a taxable investment necessary to equal that of the Nuveen fund on an after-tax basis. The federal only rate is based on the current market yield and a federal income tax rate of 31%. The rate shown for federal and state highlights the added value of owning shares that are also exempt from state taxes. It is based on a combined federal and state income tax rate of 35.4%. 2 Taxable-equivalent total return is based on the annualized total return and a combined federal and state income tax rate of 35.4%. It represents the return on a taxable investment necessary to equal the return of the Nuveen fund on an after-tax basis. 3 The Fund also paid shareholders taxable distributions in December of $0.0253 per share. Nuveen New Jersey Premium Income Municipal Fund, Inc. Performance Overview As of December 31, 1998 NNJ Portfolio Statistics ======================================================== Inception Date 12/92 - -------------------------------------------------------- Share Price $16 5/8 - -------------------------------------------------------- Net Asset Value Per Share $15.51 - -------------------------------------------------------- Current Market Yield 5.20% - -------------------------------------------------------- Taxable-Equivalent Yield (Federal Only)(1) 7.54% - -------------------------------------------------------- Taxable-Equivalent Yield (Federal and State)(1) 8.05% - -------------------------------------------------------- Fund Net Assets ($000) $276,869 - -------------------------------------------------------- Average Weighted Maturity (Years) 17.93 - -------------------------------------------------------- Leverage-Adjusted Duration (Years) 9.16 - -------------------------------------------------------- Annualized Total Return ======================================================== On Share Price On NAV - -------------------------------------------------------- 1-Year 14.59% 6.73% - -------------------------------------------------------- 3-Year 14.23% 7.14% - -------------------------------------------------------- 5-Year 10.25% 6.64% - -------------------------------------------------------- Since Inception 7.71% 7.46% - -------------------------------------------------------- Taxable-Equivalent Total Return(2) ======================================================== On Share Price On NAV - -------------------------------------------------------- 1-Year 17.76% 9.89% - -------------------------------------------------------- 3-Year 17.64% 10.33% - -------------------------------------------------------- 5-Year 13.77% 9.86% - -------------------------------------------------------- Since Inception 11.04% 10.58% - -------------------------------------------------------- Top 5 Sectors ======================================================== Transportation 24% - -------------------------------------------------------- Housing (Multifamily) 11% - -------------------------------------------------------- Education and Civic Organizations 11% - -------------------------------------------------------- Tax Obligation (Limited) 11% - -------------------------------------------------------- Tax Obligation (General) 10% - -------------------------------------------------------- Bar Chart: 1998 Monthly Tax-Free Dividends Per Share(3) Jan 98 0.072 Feb 98 0.072 Mar 98 0.072 Apr 98 0.072 May 98 0.072 Jun 98 0.072 Jul 98 0.072 Aug 98 0.072 Sep 98 0.072 Oct 98 0.072 Nov 98 0.072 Dec 98 0.072 Line Chart: Share Price Performance 1/2/98 15.375 15.5 15.688 15.5 15.875 15.875 16 15.938 15.75 15.438 15.875 15.938 15.875 15.875 15.688 15.063 15 15.125 14.875 15 15.25 15.563 15.688 15.688 15.625 15.875 16.625 16.125 16.063 16.25 16.188 16.125 16.313 15.688 15.875 15.938 16.063 16.125 16.563 16.25 16.25 16.44 16.5 16.69 16.69 16.56 16.75 16.75 16.81 16.75 12/31/98 16.625 Weekly Closing Price Past performance is not predictive of future results. 1 A taxable-equivalent represents the yield on a taxable investment necessary to equal that of the Nuveen fund on an after-tax basis. The federal only rate is based on the current market yield and a federal income tax rate of 31%. The rate shown for federal and state highlights the added value of owning shares that are also exempt from state taxes. It is based on a combined federal and state income tax rate of 35.4%. 2 Taxable-equivalent total return is based on the annualized total return and a combined federal and state income tax rate of 35.4%. It represents the return on a taxable investment necessary to equal the return of the Nuveen fund on an after-tax basis. 3 The Fund also paid shareholders taxable distributions in December of $0.0038 per share. Pennsylvania Portfolio Manager's Comments Portfolio manager Tom O'Shaughnessy talks about fund performance, key investment strategies, and the outlook for the Pennsylvania funds. Tom, a 15-year veteran of Nuveen with responsibility for a range of state municipal bond funds, has managed NQP since its inception in 1991 and NPY since March 1995. What economic factors have affected the municipal market in Pennsylvania? The Pennsylvania economy has continued to improve in terms of diversity, but as a mature economy, it is limited in the amount of growth that can be expected. Over the past year, the state has seen its strongest employment growth in business services, healthcare, and consumer services, with continued job losses in the mining and manufacturing sectors. The state's unemployment and per capita income statistics reflect national averages. In 1998, Pennsylvania issued a total of $15.6 billion in municipal bonds, an increase of 33% over 1997, placing it slightly ahead of the national average increase of 29%. In terms of total issuance, the state ranked fourth in the nation. Philadelphia's sale of $1.3 billion in taxable pension obligation bonds in mid-January got 1999 off to a good start. The heavy supply over the past year has been met with steady demand, as individual investors in the state continued to demonstrate a high level of loyalty to purchasing Pennsylvania issues. Since July 1998, much of the municipal market's attention has been focused on the impact of the bankruptcy declaration by a group of Philadelphia hospitals under the umbrella of the Allegheny Health and Education Research Foundation (AHERF). This situation has highlighted concerns in the healthcare sector, as medical costs outpace inflation and hospitals face pressure from health insurers and the government. To maintain patient volume, hospital systems have felt compelled to purchase physician group practices, which have generally produced losses. In addition to the still-unresolved court test of indenture provisions, the bankruptcy prompted MBIA, a large municipal bond insurance company, to stop underwriting hospital issues that are rated less than A- and to require mortgages on less secure issues. In the coming year, healthcare issuers will continue to require close attention. As bond insurers become more cautious, we may see a widening of spreads between lower-rated and higher-rated bonds, that is, a greater difference in yield between lower-rated and higher-rated bonds. It is important to note that the Nuveen Pennsylvania funds do not hold any AHERF bonds. How did the Pennsylvania funds perform over the past year? For the 12 months ended December 31, 1998, NQP and NPY produced the following total returns on net asset value (NAV) and share price, compared to the total return of the Lehman Brothers Municipal Bond Index(1). Lehman Brothers Total Return Taxable-Equivalent Municipal Bond Fund on NAV Total Return on NAV* Index Total Return(1) - -------------------------------------------------------------------------------- NQP 5.53% 8.69% 6.48% - -------------------------------------------------------------------------------- NPY 6.96% 9.52% 6.48% - -------------------------------------------------------------------------------- * Taxable-equivalent total return is based on the annualized total return and a combined federal and state income tax rate of 32.9%. It represents the return on a taxable investment necessary to equal the return of the Nuveen fund on an after-tax basis. See your fund's performance overview in this report, on pages 9-10, for more complete information. Much of the funds' performance over the past 12 months can be tied to duration. As of December 31, 1998, NQP and NPY had fund durations(2) of 5.93 and 9.48 years, respectively, compared with the unleveraged Lehman index's duration of 7.30 years. Duration measures a bond fund's price volatility, or reaction to interest rate movements. The longer the duration, the more sensitive the fund's net asset value (NAV) is to changes in interest rates. During a period of falling interest rates, longer duration enables a fund's NAV to participate more fully in market gains. However, when rates rise, longer duration can make the fund's NAV more vulnerable to potential price declines. As interest rates trended downward during 1998, funds with durations longer than that of the index, like NPY, tended to outperform the market, while funds with shorter durations, like NQP, generally underperformed. Contributing to the underperformance of NQP was our decision to maintain the fund's higher imbedded yield for as long as possible by holding bonds purchased during periods of higher interest rates. In the current low interest rate environment, if we had sold these bonds in an attempt to capture slightly higher total returns, we would have had to replace the bonds with issues offering lower yields, which could have negatively impacted the monthly dividend. Selling these bonds also leads to the recognition of capital gains and the payment of taxable distributions, which effectively reduces the amount of assets working to earn income for the fund. Adding to our hold decision was the fact that many of the bonds in this portfolio were irreplaceable given market conditions, offering a combination of purchase price and yield that would have been impossible to duplicate. 1 The Lehman Brothers Municipal Bond Index is an unleveraged index comprising a broad range of investment-grade municipal bonds; results for the index do not reflect any initial or ongoing expenses. 2 Fund duration, also known as leverage-adjusted duration, takes into account the leveraging process for each fund and therefore differs from the duration of the actual portfolio of individual bonds that make up the fund. Unless otherwise noted, references to duration in this commentary are intended to indicate fund duration. How were the funds' dividends and share prices affected by the interest rate volatility of the past year? In the current low interest rate environment, good call protection helped support the dividend of NQP and protect the income of this fund from erosion. As of December 31, 1998, NQP had provided shareholders with 29 consecutive months of steady income. After having its dividend lowered earlier in 1998, NPY has paid shareholders the same dividend since June. Both funds continued to provide competitive market yields. As Tim mentioned in his letter to shareholders, share price performance among the Nuveen exchange-traded funds has been strong over the past 12 months. As interest rates fell, active demand for these funds generally resulted in strong share price performance. As of December 31, 1998, NQP was trading at a premium of 13.32% to its net asset value. However, for NPY, the dividend cut in May impacted demand for the fund and led to a decline in share price, while strong bond market performance boosted the fund's net asset value. As a result, the discount on the fund widened over the year.
Current Premium/ Total Return Market Yield Discount on Share Price - -------------------------------------------------------------------------------- Taxable 1 Year Ending Taxable 12/31/98 Equivalent* 12/31/97 12/31/98 12/31/98 Equivalent* - -------------------------------------------------------------------------------- NQP 5.58% 8.32% 6.82% 13.32% 11.37% 14.32% - -------------------------------------------------------------------------------- NPY 5.24% 7.81% -3.78% -5.79% 5.06% 7.73% - -------------------------------------------------------------------------------- *32.9% federal and state income tax bracket See your fund's performance overview in this report, on pages 9-10, for more complete information.
What key strategies were used to manage the funds during the past year? NQP offered strong risk-adjusted performance, exceptionally steady income, and lower duration, which helped to protect its share price during the market volatility of the past 12 months. The credit quality of this fund continued to be extremely high, with 90% of its holdings rated AAA and AA and almost half of the fund invested in U.S. Guaranteed bonds as of December 31, 1998. With the declining interest rate environment of the past year, the issue for older funds such as NQP becomes one of maintaining above-market income streams for as long as possible. This fund was assembled in 1991, and its average call protection extends to 2001. We are now carefully balancing the need for eventual changes in the fund against the goal of maintaining high levels of tax-free income for shareholders. Both funds saw very little activity in terms of new investments in 1998 due to the fact that the bonds currently held in these portfolios offer higher income streams than bonds that can be bought in the market today. The bonds we did purchase were at the long end of yield curve. With the Federal Reserve's easing of interest rates, the yield curve steepened somewhat in the final quarter of 1998, meaning that the difference in yields between lower-rated and higher-rated bonds widened. Lower-rated bonds tend to pay higher interest rates due to the credit risk involved in purchasing them. Nuveen does buy lower-rated bonds, but they have to be at least investment grade quality (comparable to BBB or better). We believe the funds are being compensated for taking on this additional risk. Concerning the AHERF situation, we continue to closely monitor the hospital sector in Pennsylvania. Eighteen months ago, NPY owned several issues that would have been affected by the bankruptcy, but Nuveen's detailed surveillance and research enabled us to identify those bonds as declining credits. Consequently, we were able to sell our positions far in advance of the default. While NPY currently has an allocation of 15% in healthcare, we have continued to reduce our position in lower-rated Pennsylvania hospitals, selling bonds such as those issued for Temple and Crozer-Chester (Delaware County) hospitals. However, the current situation has resulted in a large number of hospital bonds being put out for bid, and we continue to watch the market for opportunities to find good bonds at bargain prices. What is Nuveen's outlook for the future? Looking ahead for the Pennsylvania funds, our focus will remain on strategies that support the income streams of these funds. Given current market conditions, we plan to use the proceeds from bond calls and interest payments to maintain the durations of these funds relative to the market. If we remain in the current low inflation environment, we will also consider buying longer bonds to further lengthen the duration of NQP and enable this fund to participate more fully in market gains because, as mentioned earlier, funds with longer durations generally tend to outperform the market. We are currently seeing a large amount of Philadelphia issuance, especially in gas, water, and sewer bonds, which provides us with the opportunity to buy while prices are inexpensive due to the heavy supply and then sell at higher prices when the supply is lower. Selecting bonds that will enhance the funds' performance is an area where Nuveen's expertise - as an experienced investment manager knowledgeable about the unique aspects of the Pennsylvania municipal market - can result in added value for our investors. The current market environment - influenced by declining interest rates, benign inflation, and strong municipal supply has helped to position municipal bonds as one of the most compelling values in today's marketplace. We expect that the excellent municipal-to-Treasury ratio (municipal yields are currently higher than Treasury yields even before the tax advantage of municipals is accounted for), combined with continued volatility in the equity markets and investors' increasing awareness of the need for asset allocation rebalancing, will result in growing demand for municipal bond funds. We believe that investors who take advantage of current opportunities in the municipal market should be rewarded with healthy returns and attractive yields in the months ahead, as the market recognizes the value of these quality investments. Nuveen Pennsylvania Investment Quality Municipal Fund Performance Overview As of December 31, 1998 NQP Portfolio Statistics ================================================== Inception Date 2/91 - -------------------------------------------------- Share Price $18 1/16 - -------------------------------------------------- Net Asset Value Per Share $15.94 - -------------------------------------------------- Current Market Yield 5.58% - -------------------------------------------------- Taxable-Equivalent Yield (Federal Only)(1) 8.09% - -------------------------------------------------- Taxable-Equivalent Yield (Federal and State)(1) 8.32% - -------------------------------------------------- Fund Net Assets ($000) $364,115 - -------------------------------------------------- Average Weighted Maturity (Years) 11.93 - -------------------------------------------------- Leverage-Adjusted Duration (Years) 5.93 - -------------------------------------------------- Annualized Total Return ================================================== On Share Price On NAV - -------------------------------------------------- 1-Year 11.37% 5.53% - -------------------------------------------------- 3-Year 8.26% 5.89% - -------------------------------------------------- 5-Year 7.06% 5.74% - -------------------------------------------------- Since Inception 9.13% 8.61% - -------------------------------------------------- Taxable-Equivalent Total Return(2) ================================================== On Share Price On NAV - -------------------------------------------------- 1-Year 14.32% 8.69% - -------------------------------------------------- 3-Year 11.32% 9.07% - -------------------------------------------------- 5-Year 10.31% 9.04% - -------------------------------------------------- Since Inception 12.37% 11.95% - -------------------------------------------------- Top 5 Sectors ================================================== U.S. Guaranteed 47% - -------------------------------------------------- Education and Civic Organizations 14% - -------------------------------------------------- Housing (Single Family) 14% - -------------------------------------------------- Utilities 11% - -------------------------------------------------- Tax Obligation (General) 4% - -------------------------------------------------- Bar Chart: 1998 Monthly Tax-Free Dividends Per Share(3) Jan 98 0.084 Feb 98 0.084 Mar 98 0.084 Apr 98 0.084 May 98 0.084 Jun 98 0.084 Jul 98 0.084 Aug 98 0.084 Sep 98 0.084 Oct 98 0.084 Nov 98 0.084 Dec 98 0.084 Line Chart: Share Price Performance 1/2/98 17.25 18.063 18 17.688 17.688 17.875 18.125 17.313 17.125 17.313 17.625 17.938 17.625 17.813 17.688 17.688 17.125 17 17.188 17.375 17.438 17.438 17.563 17.125 17.375 17.688 18 17.375 17.125 17.188 17.375 17.25 17.813 17.563 17.375 17.438 17.25 17.375 17.813 17.313 17.563 17.81 17.81 18 17.31 17.31 17.75 18 18 17.94 12/31/98 18.0625 Weekly Closing Price Past performance is not predictive of future results. 1 A taxable-equivalent represents the yield on a taxable investment necessary to equal that of the Nuveen fund on an after-tax basis. The federal only rate is based on the current market yield and a federal income tax rate of 31%. The rate shown for federal and state highlights the added value of owning shares that are also exempt from state taxes. It is based on a combined federal and state income tax rate of 32.9%. 2 Taxable-equivalent total return is based on the annualized total return and a combined federal and state income tax rate of 32.9%. It represents the return on a taxable investment necessary to equal the return of the Nuveen fund on an after-tax basis. 3 The Fund also paid shareholders taxable distributions in December of $0.0045 per share. Nuveen Pennsylvania Premium Income Municipal Fund 2 Performance Overview As of December 31, 1998 NPY Portfolio Statistics ================================================== Inception Date 3/93 - -------------------------------------------------- Share Price $14 3/16 - -------------------------------------------------- Net Asset Value Per Share $15.06 - -------------------------------------------------- Current Market Yield 5.24% - -------------------------------------------------- Taxable-Equivalent Yield (Federal Only)(1) 7.59% - -------------------------------------------------- Taxable-Equivalent Yield (Federal and State)(1) 7.81% - -------------------------------------------------- Fund Net Assets ($000) $355,303 - -------------------------------------------------- Average Weighted Maturity (Years) 17.87 - -------------------------------------------------- Leverage-Adjusted Duration (Years) 9.48 - -------------------------------------------------- Annualized Total Return ================================================== On Share Price On NAV - -------------------------------------------------- 1-Year 5.06% 6.96% - -------------------------------------------------- 3-Year 10.86% 7.54% - -------------------------------------------------- 5-Year 6.91% 6.47% - -------------------------------------------------- Since Inception 4.92% 6.88% - -------------------------------------------------- Taxable-Equivalent Total Return(2) ================================================== On Share Price On NAV - -------------------------------------------------- 1-Year 7.73% 9.52% - -------------------------------------------------- 3-Year 13.84% 10.23% - -------------------------------------------------- 5-Year 10.05% 9.33% - -------------------------------------------------- Since Inception 7.88% 9.64% - -------------------------------------------------- Top 5 Sectors ================================================== U.S. Guaranteed 15% - -------------------------------------------------- Health Care 15% - -------------------------------------------------- Education and Civic Organizations 15% - -------------------------------------------------- Utilities 13% - -------------------------------------------------- Tax Obligation (Limited) 11% - -------------------------------------------------- Bar Chart: 1998 Monthly Tax-Free Dividends Per Share(3) Jan 98 0.065 Feb 98 0.065 Mar 98 0.065 Apr 98 0.065 May 98 0.062 Jun 98 0.062 Jul 98 0.062 Aug 98 0.062 Sep 98 0.062 Oct 98 0.062 Nov 98 0.062 Dec 98 0.062 Line Chart: Share Price Performance 1/2/98 14.063 14.375 14.313 14.125 14.25 14.188 14.125 13.938 13.938 13.875 13.813 13.813 13.813 14 14 14 13.938 13.938 13.813 13.813 13.688 13.813 13.688 13.438 13.5 13.625 13.813 13.75 13.875 13.813 13.75 13.625 13.688 13.75 13.75 13.75 13.75 13.813 14.188 14.125 14.188 14.25 14.25 14.31 14.44 14.44 14.44 14.5 14.38 14.25 12/31/98 14.1875 Weekly Closing Price Past performance is not predictive of future results. 1 A taxable-equivalent represents the yield on a taxable investment necessary to equal that of the Nuveen fund on an after-tax basis. The federal only rate is based on the current market yield and a federal income tax rate of 31%. The rate shown for federal and state highlights the added value of owning shares that are also exempt from state taxes. It is based on a combined federal and state income tax rate of 32.9%. 2 Taxable-equivalent total return is based on the annualized total return and a combined federal and state income tax rate of 32.9%. It represents the return on a taxable investment necessary to equal the return of the Nuveen fund on an after-tax basis. Shareholder Meeting Report
NQJ - ------------------------------------------------------------------------------------------------------------------------------------ Approval of the Directors was reached as follows: Preferred Preferred Common Shares Shares Shares Series-M Series-TH ==================================================================================================================================== Robert P. Bremner For 17,920,541 3,160 1,947 Withhold 199,389 8 -- - ------------------------------------------------------------------------------------------------------------------------------------ Total 18,119,930 3,168 1,947 ==================================================================================================================================== Lawrence H. Brown For 17,923,446 3,160 1,947 Withhold 196,484 8 -- - ------------------------------------------------------------------------------------------------------------------------------------ Total 18,119,930 3,168 1,947 ==================================================================================================================================== Anthony T. Dean For 17,925,546 3,160 1,947 Withhold 194,384 8 -- - ------------------------------------------------------------------------------------------------------------------------------------ Total 18,119,930 3,168 1,947 ==================================================================================================================================== Anne E. Impellizzeri For 17,917,053 3,160 1,947 Withhold 202,877 8 -- - ------------------------------------------------------------------------------------------------------------------------------------ Total 18,119,930 3,168 1,947 ==================================================================================================================================== Peter R. Sawers For 17,922,957 3,160 1,947 Withhold 196,973 8 -- - ------------------------------------------------------------------------------------------------------------------------------------ Total 18,119,930 3,168 1,947 ==================================================================================================================================== William J. Schneider For -- 3,160 1,947 Withhold -- 8 -- - ------------------------------------------------------------------------------------------------------------------------------------ Total -- 3,168 1,947 ==================================================================================================================================== Timothy R. Schwertfeger For -- 3,160 1,947 Withhold -- 8 -- - ------------------------------------------------------------------------------------------------------------------------------------ Total -- 3,168 1,947 ==================================================================================================================================== Judith M. Stockdale For 17,924,386 3,160 1,947 Withhold 195,544 8 -- - ------------------------------------------------------------------------------------------------------------------------------------ Total 18,119,930 3,168 1,947 ==================================================================================================================================== Ratification of auditors was reached as follows: For 17,863,620 3,155 1,946 Against 99,827 13 -- Abstain 156,483 -- 1 - ------------------------------------------------------------------------------------------------------------------------------------ Total 18,119,930 3,168 1,947 ====================================================================================================================================
Shareholder Meeting Report
NNJ - ------------------------------------------------------------------------------------------------------------------------------------ Approval of the Directors was reached as follows: Preferred Preferred Preferred Common Shares Shares Shares Shares Series-T Series-W Series-TH ==================================================================================================================================== Robert P. Bremner For 10,976,855 466 1,254 1,558 Withhold 113,171 1 179 1 - ------------------------------------------------------------------------------------------------------------------------------------ Total 11,090,026 467 1,433 1,559 ==================================================================================================================================== Lawrence H. Brown For 10,977,529 466 1,254 1,558 Withhold 112,497 1 179 1 - ------------------------------------------------------------------------------------------------------------------------------------ Total 11,090,026 467 1,433 1,559 ==================================================================================================================================== Anthony T. Dean For 10,978,729 466 1,254 1,558 Withhold 111,297 1 179 1 - ------------------------------------------------------------------------------------------------------------------------------------ Total 11,090,026 467 1,433 1,559 ==================================================================================================================================== Anne E. Impellizzeri For 10,971,722 466 1,254 1,558 Withhold 118,304 1 179 1 - ------------------------------------------------------------------------------------------------------------------------------------ Total 11,090,026 467 1,433 1,559 ==================================================================================================================================== Peter R. Sawers For 10,977,729 466 1,254 1,558 Withhold 112,297 1 179 1 - ------------------------------------------------------------------------------------------------------------------------------------ Total 11,090,026 467 1,433 1,559 ==================================================================================================================================== William J. Schneider For -- 466 1,254 1,558 Withhold -- 1 179 1 - ------------------------------------------------------------------------------------------------------------------------------------ Total -- 467 1,433 1,559 ==================================================================================================================================== Timothy R. Schwertfeger For -- 466 1,254 1,558 Withhold -- 1 179 1 - ------------------------------------------------------------------------------------------------------------------------------------ Total -- 467 1,433 1,559 ==================================================================================================================================== Judith M. Stockdale For 10,974,947 466 1,254 1,558 Withhold 115,079 1 179 1 - ------------------------------------------------------------------------------------------------------------------------------------ Total 11,090,026 467 1,433 1,559 ==================================================================================================================================== Ratification of auditors was reached as follows: For 10,967,098 460 1,376 1,534 Against 29,237 -- -- -- Abstain 93,691 7 57 25 - ------------------------------------------------------------------------------------------------------------------------------------ Total 11,090,026 467 1,433 1,559 ====================================================================================================================================
Shareholder Meeting Report
NQP - ------------------------------------------------------------------------------------------------------------------------------------ Approval of the Trustees was reached as follows: Preferred Preferred Common Shares Shares Shares Series-W Series-TH - ------------------------------------------------------------------------------------------------------------------------------------ Robert P. Bremner For 14,105,671 2,374 1,957 Withhold 152,407 17 4 - ------------------------------------------------------------------------------------------------------------------------------------ Total 14,258,078 2,391 1,961 ==================================================================================================================================== Lawrence H. Brown For 14,102,067 2,375 1,957 Withhold 156,011 16 4 - ------------------------------------------------------------------------------------------------------------------------------------ Total 14,258,078 2,391 1,961 ==================================================================================================================================== Anthony T. Dean For 14,104,901 2,375 1,957 Withhold 153,177 16 4 - ------------------------------------------------------------------------------------------------------------------------------------ Total 14,258,078 2,391 1,961 ==================================================================================================================================== Anne E. Impellizzeri For 14,092,099 2,375 1,957 Withhold 165,979 16 4 - ------------------------------------------------------------------------------------------------------------------------------------ Total 14,258,078 2,391 1,961 ==================================================================================================================================== Peter R. Sawers For 14,098,296 2,375 1,957 Withhold 159,782 16 4 - ------------------------------------------------------------------------------------------------------------------------------------ Total 14,258,078 2,391 1,961 ==================================================================================================================================== William J. Schneider For -- 2,375 1,957 Withhold -- 16 4 - ------------------------------------------------------------------------------------------------------------------------------------ Total -- 2,391 1,961 ==================================================================================================================================== Timothy R. Schwertfeger For -- 2,375 1,957 Withhold -- 16 4 - ------------------------------------------------------------------------------------------------------------------------------------ Total -- 2,391 1,961 ==================================================================================================================================== Judith M. Stockdale For 14,098,982 2,374 1,957 Withhold 159,096 17 4 - ------------------------------------------------------------------------------------------------------------------------------------ Total 14,258,078 2,391 1,961 ==================================================================================================================================== Ratification of auditors was reached as follows: For 14,121,253 2,376 1,957 Against 53,609 -- -- Abstain 83,216 15 4 - ------------------------------------------------------------------------------------------------------------------------------------ Total 14,258,078 2,391 1,961 ====================================================================================================================================
Shareholder Meeting Report
NPY - ------------------------------------------------------------------------------------------------------------------------------------ Approval of the Trustees was reached as follows: Preferred Preferred Preferred Common Shares Shares Shares Shares Series-M Series-TH Series-F ==================================================================================================================================== Robert P. Bremner For 14,263,609 756 1,887 1,630 Withhold 158,040 12 17 12 - ------------------------------------------------------------------------------------------------------------------------------------ Total 14,421,649 768 1,904 1,642 ==================================================================================================================================== Lawrence H. Brown For 14,264,237 756 1,887 1,631 Withhold 157,412 12 17 11 - ------------------------------------------------------------------------------------------------------------------------------------ Total 14,421,649 768 1,904 1,642 ==================================================================================================================================== Anthony T. Dean For 14,265,472 756 1,887 1,631 Withhold 156,177 12 17 11 - ------------------------------------------------------------------------------------------------------------------------------------ Total 14,421,649 768 1,904 1,642 ==================================================================================================================================== Anne E. Impellizzeri For 14,253,619 756 1,887 1,631 Withhold 168,030 12 17 11 - ------------------------------------------------------------------------------------------------------------------------------------ Total 14,421,649 768 1,904 1,642 ==================================================================================================================================== Peter R. Sawers For 14,256,178 756 1,887 1,631 Withhold 165,471 12 17 11 - ------------------------------------------------------------------------------------------------------------------------------------ Total 14,421,649 768 1,904 1,642 ==================================================================================================================================== William J. Schneider For -- 756 1,887 1,631 Withhold -- 12 17 11 - ------------------------------------------------------------------------------------------------------------------------------------ Total -- 768 1,904 1,642 ==================================================================================================================================== Timothy R. Schwertfeger For -- 756 1,887 1,631 Withhold -- 12 17 11 - ------------------------------------------------------------------------------------------------------------------------------------ Total -- 768 1,904 1,642 ==================================================================================================================================== Judith M. Stockdale For 14,262,216 756 1,887 1,630 Withhold 159,433 12 17 12 - ------------------------------------------------------------------------------------------------------------------------------------ Total 14,421,649 768 1,904 1,642 ==================================================================================================================================== Ratification of auditors was reached as follows: For 14,296,336 753 1,888 1,631 Against 30,944 1 1 -- Abstain 94,369 14 15 11 - ------------------------------------------------------------------------------------------------------------------------------------ Total 14,421,649 768 1,904 1,642 ====================================================================================================================================
Portfolio of Investments Nuveen New Jersey Investment Quality Municipal Fund, Inc. (NQJ) December 31, 1998 (Unaudited)
Principal Optional Call Market Amount Description Provisions* Ratings** Value - ------------------------------------------------------------------------------------------------------------------------------------ Basic Materials - 1.5% $ 6,250,000 The Pollution Control Financing Authority of Salem County (New Jersey), 11/01 at 102 AA- $6,724,688 Waste Disposal Revenue Bonds (E.I. du Pont de Nemours and Company - Chambers Works Project), 1991 Series A, 6.500%, 11/15/21 (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ Capital Goods - 0.2% 1,000,000 New Jersey Economic Development Authority, Economic Development No Opt. Call N/R 950,000 Bonds, Bridgewater ResourcesInc., Series 1991, 9.500%, 2/01/01 (Alternative Minimum Tax)+ - ------------------------------------------------------------------------------------------------------------------------------------ Consumer Staples - 1.2% 5,000,000 New Jersey Economic Development Authority, Economic Development 12/01 at 100 N/R 5,154,250 Revenue Bonds (J &J Snack Foods Corporation of New Jersey Project), Series 1991, 7.250%, 12/01/05 (Alternative MinimumTax) - ------------------------------------------------------------------------------------------------------------------------------------ Education and Civic Organizations - 4.9% 3,000,000 New Jersey Economic Development Authority, School Revenue Bonds 2/08 at 101 N/R 3,017,910 (Gill/St. Bernard School), Series 1998, 6.000%, 2/01/25 (DD) New Jersey Educational Facilities Authority, Seton Hall University Project Revenue Bonds, 1991 Series, Project D: 500,000 6.875%, 7/01/10 7/01 at 102 A- 536,670 2,500,000 7.000%, 7/01/21 7/01 at 102 A- 2,681,425 New Jersey Educational Facilities Authority, Revenue Bonds, Saint Peters College Issue, 1998, Series B: 1,000,000 5.375%, 7/01/18 7/08 at 102 BBB 1,014,570 1,750,000 5.500%, 7/01/27 7/08 at 102 BBB 1,784,685 1,250,000 New Jersey Educational Facilities Authority, Seton Hall University 7/08 at 101 AAA 1,252,538 Project Revenue Refunding Bonds, 1998 Series, Project F, 5.000%, 7/01/21 265,000 New Jersey Educational Assistance Authority, Senior Student 7/01 at 102 A 280,688 Loan Revenue Bonds, 1991 Series A, 7.200%, 7/01/09 (Alternative Minimum Tax) 5,735,000 New Jersey Educational Assistance Authority, Student Loan Revenue 6/07 at 102 AAA 6,181,011 Bonds, NJ Class Loan Program, Series 1997 A, 5.800%, 6/01/16 (Alternative Minimum Tax) Rutgers, The State University (The State University of New Jersey), General Obligation Refunding Bonds, 1992 Series A: 2,900,000 6.500%, 5/01/13 5/02 at 102 AA 3,175,645 1,725,000 6.500%, 5/01/18 5/02 at 102 AA 1,879,094 - ------------------------------------------------------------------------------------------------------------------------------------ Energy - 2.0% 8,000,000 Pollution Control Financing Authority of Middlesex County 12/02 at 102 N/R 8,686,400 (New Jersey), Pollution Control Revenue Refunding Bonds, Series 1992 (Amerada Hess Corporation Project), 6.875%, 12/01/22 - ------------------------------------------------------------------------------------------------------------------------------------ Health Care - 10.8% 250,000 Camden County Improvement Authority (New Jersey), Health System 5/08 at 102 AAA 263,698 Revenue Bonds, Catholic Health East Issue, Series 1998B, 5.000%, 11/15/08 300,000 New Jersey Health Care Facilities Financing Authority, Revenue Bonds, 7/00 at 102 AAA 319,563 Community Medical Center/Kensington Manor Care Center Issue, Series E, 7.000%, 7/01/20 New Jersey Health Care Facilities Financing Authority, Refunding Revenue Bonds, Barnert Hospital (FHA Insured Mortgage), Series B: 540,000 6.750%, 8/01/11 2/01 at 102 AAA 580,689 2,845,000 6.800%, 8/01/19 2/01 at 102 AAA 3,039,883 9,300,000 New Jersey Health Care Facilities Financing Authority, Revenue 7/01 at 102 AAA 9,968,019 Bonds, Centrastate Medical Center Issue, Series 1991A, 6.625%, 7/01/11 3,000,000 New Jersey Health Care Facilities Financing Authority, Revenue 7/99 at 100 AAA 3,042,120 Bonds, Beth Israel Hospital Association of Passaic Issue, Series B, 6.250%, 7/01/14 Principal Optional Call Market Amount Description Provisions* Ratings** Value - ------------------------------------------------------------------------------------------------------------------------------------ Health Care (continued) $ 2,070,000 New Jersey Health Care Facilities Financing Authority, Revenue Bonds, 7/01 at 102 AAA $2,236,325 Robert Wood Johnson University Hospital, Series B, 6.625%, 7/01/16 4,350,000 New Jersey Health Care Facilities Financing Authority, Revenue Bonds, 7/01 at 102 AAA 4,691,606 Mercer Medical Center Issue, Series 1991, 6.500%, 7/01/10 5,025,000 New Jersey Health Care Facilities Financing Authority, Revenue Bonds, 7/01 at 102 N/R 5,315,897 Pascack Valley Hospital Association Issue, Series 1991, 6.700%, 7/01/11 3,800,000 New Jersey Health Care Facilities Financing Authority, Revenue Bonds, 7/02 at 102 N/R 4,063,606 Palisades Medical Center Obligated Group Issue, Series 1992, 7.500%, 7/01/06 New Jersey Health Care Facilities Financing Authority, Refunding Revenue Bonds, Atlantic City Medical Center Issue, Series C: 3,600,000 6.800%, 7/01/05 7/02 at 102 A- 3,975,156 2,800,000 6.800%, 7/01/11 7/02 at 102 A- 3,081,652 2,535,000 New Jersey Health Care Facilities Financing Authority, Revenue Bonds, 7/03 at 102 Baa2 2,648,467 Deborah Heart and Lung Center Issue, Series of 1993, 6.200%, 7/01/13 4,320,000 New Jersey Health Care Facilities Financing Authority, Revenue and 7/08 at 101 Aaa 4,298,832 Refunding Bonds (Saint Barnabas Medical Center/West Hudson Hospital Obligated Group), Series 1998A, 5.000%, 7/01/23 - ------------------------------------------------------------------------------------------------------------------------------------ Housing/Multifamily - 11.2% 3,790,000 The Hudson County Improvement Authority Multifamily Housing 6/04 at 100 AAA 4,085,014 Revenue Bonds, Series 1992 A , (Conduit Financing - Observer Park Project), 6.900%, 6/01/22 (Alternative Minimum Tax) 1,445,000 Housing Finance Corporation of the City of Long Branch, Long Branch, 10/99 at 100 N/R 1,452,731 New Jersey, Section 8 Assisted Housing Revenue Bonds, Washington Manor Associates Ltd., 1980 Elderly Project, 10.000%, 10/01/11 12,000,000 New Jersey Housing and Mortgage Finance Agency, Multifamily 11/01 at 102 AAA 13,091,040 Housing Revenue Refunding Bonds (Presidential Plaza at Newport Project - FHA Insured Mortgage), 1991 Series 1, 7.000%, 5/01/30 1,500,000 New Jersey Housing and Mortgage Finance Agency, Multifamily 5/05 at 102 AAA 1,608,330 Housing Revenue Bonds, 1995 Series A, 6.000%, 11/01/14 4,500,000 New Jersey Housing and Mortgage Finance Agency, Multifamily 5/06 at 102 AAA 4,855,005 Housing Revenue Bonds, 1996 Series A, 6.250%, 5/01/28 (Alternative Minimum Tax) New Jersey Housing and Mortgage Finance Agency, Section 8 Bonds, 1991 Series A: 3,000,000 6.800%, 11/01/05 11/02 at 102 AA+ 3,204,420 2,500,000 6.900%, 11/01/07 11/01 at 103 AA+ 2,672,775 4,700,000 6.950%, 11/01/08 11/01 at 103 AA+ 5,024,488 1,000,000 7.100%, 11/01/11 11/01 at 103 AA+ 1,068,840 9,650,000 New Jersey Housing and Mortgage Finance Agency, Housing 5/02 at 102 A+ 10,387,067 Revenue Bonds, 1992 Series A, 6.950%, 11/01/13 1,810,000 New Jersey Housing and Mortgage Finance Agency, Housing Revenue 11/02 at 102 A+ 1,948,556 Refunding Bonds, 1992 Series One, 6.700%, 11/01/28 - ------------------------------------------------------------------------------------------------------------------------------------ Housing/Single Family - 9.4% 5,500,000 New Jersey Housing and Mortgage Finance Agency, Home Buyer 10/00 at 102 AAA 5,709,330 Revenue Bonds, 1990 Series F-2, 6.300%, 4/01/25 (Alternative Minimum Tax) 3,255,000 New Jersey Housing and Mortgage Finance Agency, Home Buyer 10/99 at 102 AAA 3,365,930 Revenue Bonds, 1989 Series D, 7.600%, 10/01/09 (Alternative Minimum Tax) 2,605,000 New Jersey Housing and Mortgage Finance Agency, Home Buyer 10/05 at 101 1/2 AAA 2,807,252 Revenue Bonds, 1995 Series O, 6.350%, 10/01/27 (Alternative Minimum Tax) 5,000,000 New Jersey Housing and Mortgage Finance Agency, Home Buyer 4/07 at 101 1/2 AAA 5,344,700 Revenue Bonds, 1996 Series S, 6.050%, 10/01/28 (Alternative Minimum Tax) 10,000,000 New Jersey Housing and Mortgage Finance Agency Home Buyer 10/07 at 101 1/2 AAA 10,554,500 Revenue Bonds, 1997 Series U, 5.850%, 4/01/29 (Alternative Minimum Tax) 13,000,000 Puerto Rico Housing Finance Corporation, Homeownership Mortgage 12/08 at 101 AAA 13,069,420 Revenue Bonds (GNMA Guaranteed Mortgage Loans), 1998 Series A, 5.200%, 12/01/32 (Alternative Minimum Tax) (DD) 710,000 Puerto Rico Housing Finance Corporation, Single Family Mortgage 10/01 at 102 AAA 750,903 Revenue Bonds, Portfolio One, Series C, 6.750%, 10/15/13 Principal Optional Call Market Amount Description Provisions* Ratings** Value - ------------------------------------------------------------------------------------------------------------------------------------ Industrial/Other - 0.4% $ 1,750,000 New Jersey Economic Development Authority, Insured Revenue 5/08 at 101 AAA $1,687,438 Refunding Bonds (Educational Testing Service Issue), Series 1998A, 4.750%, 5/15/25 - ------------------------------------------------------------------------------------------------------------------------------------ Tax Obligation/General - 9.9% 1,265,000 Township of East Brunswick, In the County of Middlesex, New Jersey, 4/03 at 101 Aa2 1,301,394 General Obligation Refunding Bonds, Series 1993, 5.125%, 4/01/13 County of Essex, New Jersey, General Obligation Refunding Bonds of 1996, Tax-Exempt Bonds, Series A-1: 3,000,000 6.000%, 11/15/07 No Opt. Call Aaa 3,412,080 1,000,000 5.000%, 11/15/11 8/07 at 101 Aaa 1,043,990 2,320,000 City of Hoboken, Fiscal Year Adjustment General Obligation Bonds, No Opt. Call AAA 3,036,555 Series 1991, 8.900%, 8/01/06 5,250,000 Township of Howell, In the County of Monmouth, New Jersey, 1/02 at 102 AAA 5,760,405 General Obligation Refunding Bonds, Series 1991, 6.800%, 1/01/14 3,675,000 The City of New Jersey (Hudson County, New Jersey), Fiscal Year No Opt. Call AAA 4,649,169 Adjustment Bonds, Series B 1991, 8.400%, 5/15/06 1,000,000 The Monmouth County Improvement Authority (Monmouth County, 7/07 at 101 AAA 1,090,270 New Jersey), Revenue Bonds, Series 1997 (Howell Township Board of Education Project), 5.800%, 7/15/17 2,000,000 Town of Morristown, In the County of Morris, New Jersey, 8/05 at 102 AAA 2,282,320 General Obligation Refunding Bonds, Series 1995, 6.500%, 8/01/19 5,000,000 State of New Jersey, General Obligation Bonds, Various Series, 8/02 at 101 1/2 AA+ 5,474,500 6.375%, 8/01/11 State of New Jersey, General Obligation Bonds, Series D: 8,000,000 5.750%, 2/15/06 No Opt. Call AA+ 8,861,360 5,000,000 6.000%, 2/15/11 No Opt. Call AA+ 5,772,650 1,000,000 Township of West Deptford, County of Gloucester, New Jersey, 3/06 at 102 AAA 1,046,810 General Obligation Bonds, Series of 1996, 5.250%, 3/01/14 - ------------------------------------------------------------------------------------------------------------------------------------ Tax Obligation/Limited - 7.1% The Bergen County Utilities Authority, 1998 Water Pollution Control System Revenue Bonds, Series A: 2,760,000 5.000%, 12/15/13 12/07 at 101 AAA 2,835,127 3,400,000 5.000%, 12/15/14 12/07 at 101 AAA 3,470,788 1,000,000 The Board of Education of the Town of Dover, in the County of Morris, 12/01 at 100 AAA 1,070,270 New Jersey, as Lessee, Certificates of Participation, 6.600%, 6/01/11 2,535,000 The Board of Education of the Township of Mansfield, in the County of 3/06 at 102 AAA 2,759,778 Warren, New Jersey, Certificates of Participation, 5.900%, 3/01/15 The State of New Jersey, as Lessee, and The Mercer County Improvement Authority, as Lessor, Relating to the Richard J. Hughes Justice Complex: 3,000,000 6.050%, 1/01/09 7/99 at 100 Aa 3,006,690 1,585,000 6.050%, 1/01/13 7/99 at 100 Aa 1,588,630 1,000,000 6.050%, 1/01/14 7/99 at 100 Aa 1,002,250 1,720,000 6.050%, 1/01/16 7/99 at 100 Aa 1,723,784 2,000,000 6.050%, 1/01/17 7/99 at 100 Aa 2,004,320 4,000,000 New Jersey Economic Development Authority, Lease Revenue Bonds, 11/08 at 101 Aaa 3,835,760 Series 1998 (Bergen County Administration Complex), 4.750%, 11/15/26 2,445,000 New Jersey Sports and Exposition Authority, State Contract Bonds, 3/02 at 102 AA- 2,673,608 1992 Series A, 6.500%, 3/01/19 1,895,000 North Bergen Township Municipal Utility Authority, Sewer Revenue No Opt. Call AAA 2,491,262 Refunding Bonds, Series 1993, 7.875%, 12/15/09 1,180,000 The Raritan Township Municipal Utilities Authority, Hunterdon County, 5/02 at 102 A+ 1,281,669 New Jersey (Secured by a Service Contract with the Township of Raritan), Revenue Bonds, Series 1992 (Bank Qualified), 6.450%, 5/01/12 1,325,000 The South Toms River Sewerage Authority, Ocean County, 11/02 at 102 N/R 1,414,530 New Jersey, Sewer Refunding Revenue Bonds, Series 1992 (Bank-Qualified), 7.400%, 11/01/05 - ------------------------------------------------------------------------------------------------------------------------------------ Transportation - 10.8% 3,000,000 New Jersey Economic Development Authority, Economic Development 11/01 at 102 Baa2 3,252,090 Bonds (American Airlines, Inc. Project), 7.100%, 11/01/31 (Alternative Minimum Tax) Principal Optional Call Market Amount Description Provisions* Ratings** Value - ------------------------------------------------------------------------------------------------------------------------------------ Transportation (continued) $ 3,500,000 New Jersey Highway Authority (Garden State Parkway), Senior Parkway 1/02 at 102 AA- $3,769,780 Revenue Refunding Bonds, 1992 Series, 6.250%, 1/01/14 5,000,000 New Jersey Turnpike Authority, Turnpike Revenue Bonds, 1/99 at 100 BBB+ 5,007,900 Series 1991 A (Refunding Bonds), 6.900%, 1/01/14 New Jersey Turnpike Authority, Turnpike Revenue Bonds, Series 1991C: 9,000,000 6.500%, 1/01/08 No Opt. Call AAA 10,541,790 1,950,000 6.500%, 1/01/16 No Opt. Call BBB+ 2,300,903 3,150,000 The Port Authority of New York and New Jersey, Consolidated Bonds, 7/04 at 101 AA- 3,407,765 Ninety-Fifth Series, 6.125%, 7/15/29 (Alternative Minimum Tax) 4,300,000 The Port Authority of New York and New Jersey, Special Project Bonds, 6/02 at 102 BBB- 4,624,349 Series 1R Delta Air Lines, Inc. Project, LaGuardia Airport Passenger Terminal, 6.950%, 6/01/08 4,500,000 The Port Authority of New York and New Jersey, Consolidated Bonds, 1/03 at 101 AA- 4,776,570 Eighty-Fourth Series, 6.000%, 1/15/28 (Alternative Minimum Tax) 5,000,000 The Port Authority of New York and New Jersey, Consolidated Bonds, 10/02 at 101 AAA 5,361,800 One Hundred Second Series (Revenue Bonds), Non-AMT Bonds, 5.875%, 10/15/27 4,350,000 The Port Authority of New York and New Jersey, Special Project 12/07 at 100 AAA 4,596,602 Bonds, Series 6, JFK International Air Terminal LLC Project, 5.750%, 12/01/25 (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ U.S. Guaranteed - 18.5% 1,500,000 The Board of Education of the Township of Bedminster, Certificates 3/01 at 102 A1*** 1,637,295 of Participation, In the County of Somerset, New Jersey, 7.125%, 9/01/10 (Pre-refunded to 3/01/01) 7,000,000 The Bergen County Utilities Authority, 1992 Water Pollution 6/02 at 102 AAA 7,757,610 Control System Revenue Bonds, Series A, 6.500%, 12/15/12 (Pre-refunded to 6/15/02) 7,800,000 County of Essex, New Jersey, Fiscal Year Adjustment Bonds, 12/01 at 101 AAA 8,496,618 Series 1991, 6.500%, 12/01/11 (Pre-refunded to 12/01/01) 4,095,000 The Board of Education of the Township of Evesham, in the County 9/01 at 102 AAA 4,510,069 of Burlington, New Jersey, Certificates of Participation, 6.875%, 9/01/11 (Pre-refunded to 9/01/01) 8,200,000 The City of Jersey City (Hudson County, New Jersey), Fiscal Year 5/01 at 102 AAA 8,910,694 Adjustment Bonds, Series A 1991, 6.600%, 5/15/11 (Pre-refunded to 5/15/01) 950,000 The Mercer County Improvement Authority, Mercer County, 11/00 at 102 Aa2*** 1,022,314 New Jersey, Revenue Bonds (County Courthouse Project), Series 1991, 6.600%, 11/01/14 (Pre-refunded to 11/01/00) 3,500,000 The Monmouth County Improvement Authority (Monmouth County, 2/01 at 102 AAA 3,791,165 New Jersey), Sewage Facilities Revenue Refunding Bonds, Series 1991, 6.750%, 2/01/13 (Pre-refunded to 2/01/01) 5,600,000 New Jersey Economic Development Authority, Lease Rental Bonds, 3/02 at 102 AAA 6,225,520 1992 Series (Liberty State Park Project), 6.800%, 3/15/22 (Pre-refunded to 3/15/02) New Jersey Health Care Facilities Financing Authority, Refunding Revenue Bonds, Barnert Hospital (FHA Insured Mortgage), Series B: 90,000 6.750%, 8/01/11 (Pre-refunded to 2/01/01) 2/01 at 100 AAA 97,449 355,000 6.800%, 8/01/19 (Pre-refunded to 2/01/01) 2/01 at 102 AAA 384,738 4,875,000 New Jersey Health Care Facilities Financing Authority, Revenue Bonds, 7/01 at 102 AAA 5,343,244 St. Peters Medical Center Issue, Series E, 6.875%, 7/01/11 (Pre-refunded to 7/01/01) 7,500,000 New Jersey Health Care Facilities Financing Authority, Revenue 7/01 at 102 AAA 8,171,475 Bonds, JFK Health Systems Obligated Group Issue, Series 1991, 6.600%, 7/01/08 (Pre-refunded to 7/01/01) New Jersey Economic Development Authority, Revenue Bonds (New Jersey Performing Arts Center Site Acquisition Project), 1991 Series: 610,000 6.600%, 6/15/04 (Pre-refunded to 6/15/01) 6/01 at 102 Aaa 664,211 3,800,000 6.750%, 6/15/12 (Pre-refunded to 6/15/01) 6/01 at 102 Aaa 4,151,006 State of New Jersey, General Obligation Bonds (Various Bonds): 8,200,000 6.750%, 9/15/07 (Pre-refunded to 9/15/01) 9/01 at 101 1/2 AA+*** 8,972,440 850,000 6.800%, 9/15/10 (Pre-refunded to 9/15/01) 9/01 at 101 1/2 AA+*** 931,158 1,200,000 County of Passaic, New Jersey, General Improvement Bonds, 9/99 at 102 N/R*** 1,251,636 6.700%, 9/01/10 (Pre-refunded to 9/01/99) Principal Optional Call Market Amount Description Provisions* Ratings** Value - ------------------------------------------------------------------------------------------------------------------------------------ U.S. Guaranteed (continued) $ 6,000,000 Puerto Rico Electric Power Authority, Power Revenue Bonds, Series P, 7/01 at 102 Aaa $6,612,360 7.000%, 7/01/11 (Pre-refunded to 7/01/01) 2,450,000 University of Medicine and Dentistry of New Jersey Bonds, Series E, 12/01 at 102 AA-*** 2,689,488 6.500%, 12/01/18 (Pre-refunded to 12/01/01) - ------------------------------------------------------------------------------------------------------------------------------------ Utilities - 4.3% 3,700,000 Pollution Control Financing Authority of Camden County (Camden 12/01 at 102 B2 3,689,566 County, New Jersey), Solid Waste Disposal and Resource Recovery System Revenue Bonds, Series 1991B, 7.500%, 12/01/09 (Alternative Minimum Tax) 3,500,000 Pollution Control Financing Authority of Camden County (Camden 12/01 at 102 B2 3,490,410 County, New Jersey), Solid Waste Disposal and Resource Recovery System Revenue Bonds, Series 1991A, 7.500%, 12/01/10 (Alternative Minimum Tax) 400,000 New Jersey Economic Development Authority, Adjustable - Fixed 7/01 at 103 Baa1 434,672 Rate Pollution Control Revenue Bonds, 1985 Series (Jersey Central Power and Light Company Project), 7.100%, 7/01/15 6,000,000 Puerto Rico Electric Power Authority, Power Revenue Refunding Bonds, No Opt. Call AAA 7,235,820 Series Y, 7.000%, 7/01/07 4,000,000 The Union County Utilities Authority (New Jersey), Solid Waste 6/08 at 101 AAA 3,941,600 Facility Senior Lease Revenue Bonds (Ogden Martin Systems of Union, Inc. Lessee- Series 1998 A), 5.000%, 6/01/23 (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ Water and Sewer - 7.8% Cape May County (New Jersey), Municipal Utilities Authority, Sewer Revenue Refunding Bonds, Series 1992-A: 2,000,000 6.000%, 1/01/11 1/03 at 102 AAA 2,174,819 7,600,000 5.750%, 1/01/16 1/03 at 102 AAA 8,055,619 5,000,000 New Jersey Economic Development Authority, Water Facilities Revenue No Opt. Call N/R 5,146,299 Bonds (New Jersey-American Water Company, Inc. Project), Series 1991 7.400%, 11/01/01 (Alternative Minimum Tax) 7,500,000 New Jersey Economic Development Authority, Water Facilities Revenue 5/06 at 102 AAA 8,168,399 Bonds (New Jersey-American Water Company, Inc. Project), Series 1996, 6.000%, 5/01/36 (Alternative Minimum Tax) 6,250,000 New Jersey Economic Development Authority, Water Facilities 7/08 at 102 AAA 6,284,874 Revenue Bonds (New Jersey-American Water Company, Inc. Project), Series 1998A, 5.250%, 7/01/38 (Alternative Minimum Tax) 4,000,000 Passaic Valley Sewerage Commissioners (State of New Jersey), 12/02 at 102 AAA 4,328,039 Sewer System Bonds, Series D, 5.800%, 12/01/18 - ------------------------------------------------------------------------------------------------------------------------------------ $ 409,955,000 Total Investments - (cost $409,486,401) - 100.0% 440,632,951 ============= Other Assets Less Liabilities - 0.0% (12,531) -------------------------------------------------------------------------------------------------------------------- Net Assets - 100% $440,620,420 ==================================================================================================================== * Optional Call Provisions: Dates (month and year) and prices of the earliest optional call or redemption. There may be other call provisions at varying prices at later dates. ** Ratings: Using the higher of Standard & Poor's or Moody's rating. *** Securities are backed by an escrow or trust containing sufficient U.S. government or U.S. government agency securities which ensures the timely payment of principal and interest. Securities are normally considered to be equivalent to AAA rated securities. N/R Investment is not rated. (DD) Security purchased on a delayed delivery basis (note 1). + The Fund has not received the last two semi-annual interest coupon payments on these bonds. The issuer is in the process of attempting to re-structure the debt by bringing to market new obligations whose proceeds will be used to call the current defaulted bonds at 102% of par, plus accrued interest. See accompanying notes to financial statements.
Portfolio of Investments Nuveen New Jersey Premium Income Municipal Fund, Inc. (NNJ) December 31, 1998 (Unaudited)
Principal Optional Call Market Amount Description Provisions* Ratings** Value - ------------------------------------------------------------------------------------------------------------------------------------ Capital Goods - 1.7% $ 4,880,000 New Jersey Economic Development Authority, Economic Development No Opt. Call N/R $4,636,000 Bonds (Bridgewater Resources Inc. Project), 1994 Series A, 8.375%, 11/01/04 (Alternative Minimum Tax)+ - ------------------------------------------------------------------------------------------------------------------------------------ Education and Civic Organizations - 11.3% 3,530,000 New Jersey Economic Development Authority, Economic Development No Opt. Call N/R 4,448,082 Bonds (Yeshiva Ktana of Passaic-1992 Project), 8.000%, 9/15/18 3,000,000 New Jersey Economic Development Authority, School Revenue Bonds 2/08 at 101 N/R 3,017,910 (Gill/St. Bernard School), Series 1998, 6.000%, 2/01/25 (DD) 890,000 New Jersey Educational Facilities Authority, Trenton State College 7/99 at 100 A+ 892,350 Issue, Revenue Bonds, Series 1976 D, 6.750%, 7/01/08 2,095,000 New Jersey Educational Facilities Authority, Refunding Revenue Bonds, 7/02 at 102 AAA 2,280,722 Trenton State College Issue, Series 1992E, 6.000%, 7/01/09 1,000,000 New Jersey Educational Facilities Authority, Revenue Bonds, New 7/04 at 102 AAA 1,102,200 Jersey Institute of Technology Issue, Series 1994A, 6.000%, 7/01/24 New Jersey Educational Facilities Authority, Revenue Bonds, Trenton State College Issue, Series 1996 A: 4,000,000 5.100%, 7/01/21 7/06 at 101 AAA 4,013,440 3,750,000 5.125%, 7/01/24 7/06 at 101 AAA 3,766,800 3,330,000 New Jersey Educational Facilities Authority, Revenue Bonds, 7/06 at 101 AAA 3,550,746 Montclair State University, Series 1996 C (Dormitory/Cafeteria Facility), 5.400%, 7/01/12 2,500,000 New Jersey Educational Facilities Authority, Revenue Bonds, Rowan 7/06 at 101 AAA 2,741,000 College of New Jersey Issue, Series 1996 E, 6.000%, 7/01/21 745,000 New Jersey Educational Facilities Authority, Student Loan Revenue 7/02 at 102 A+ 797,433 Bonds, 1992 Series A, NJ Class Loan Program, 6.125%, 7/01/09 (Alternative Minimum Tax) 4,595,000 New Jersey Educational Facilities Authority, Student Loan Revenue 7/03 at 102 A+ 4,756,974 Bonds, 1993 Series A, NJ Class Loan Program, 5.300%, 7/01/10 (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ Forest and Paper Products - 0.4% 1,035,000 New Jersey Economic Development Authority, Economic Growth Bonds, 12/03 at 102 Aa3 1,099,305 Composite Issue-1992 Second Series T, 5.300%, 12/01/07 (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ Health Care - 4.4% 45,000 New Jersey Health Care Facilities Financing Authority, Revenue Bonds, 7/03 at 102 AAA 46,332 St. Peters Medical Center Issue, Series 1993F, 5.000%, 7/01/11 860,000 New Jersey Health Care Facilities Financing Authority, Refunding 8/04 at 102 AAA 953,104 Revenue Bonds, Wayne General Hospital Corp. Issue (FHA Insured Mortgage), Series B, 5.750%, 8/01/11 2,000,000 New Jersey Health Care Facilities Financing Authority, Revenue Bonds, 7/04 at 102 AAA 2,263,520 Monmouth Medical Center Issue, Series C, 6.250%, 7/01/16 New Jersey Health Care Facilities Financing Authority, Revenue Bonds, Dover General Hospital and Medical Center Issue, Series 1994: 1,015,000 7.000%, 7/01/03 No Opt. Call AAA 1,143,946 800,000 7.000%, 7/01/04 No Opt. Call AAA 917,656 7,000,000 Puerto Rico Industrial, Medical, Educational, and Environmental 12/03 at 103 A2 6,926,360 Pollution Control Facilities Financing Authority, Adjustable Rate Industrial Revenue Bonds, 1983 Series A (American Home Products Corporation), 5.100%, 12/01/18 - ------------------------------------------------------------------------------------------------------------------------------------ Housing/Multifamily - 11.4% 885,000 Housing Finance Corporation of the City of Long Branch, Long Branch, 10/99 at 100 N/R 889,735 New Jersey, Section 8 Assisted Housing Revenue Bonds, Washington Manor Associates Ltd., 1980 Elderly Project, 10.000%, 10/01/11 Principal Optional Call Market Amount Description Provisions* Ratings** Value - ------------------------------------------------------------------------------------------------------------------------------------ Housing/Multifamily (continued) $ 4,000,000 New Jersey Housing and Mortgage Finance Agency, Multifamily 11/01 at 102 AAA $4,363,680 (Presidential Plaza at Newport Project - FHA Insured Mortgages), 1991 Series 1, 7.000%, 5/01/30 2,875,000 New Jersey Housing and Mortgage Finance Agency, Multifamily 5/05 at 102 AAA 3,082,633 Housing Revenue Bonds, 1995 Series A, 6.000%, 11/01/14 7,000,000 New Jersey Housing and Mortgage Finance Agency, Multifamily 11/07 at 101 1/2 AAA 7,217,980 Housing Revenue Bonds, 1997 Series A, 5.550%, 5/01/27 (Alternative Minimum Tax) 2,250,000 New Jersey Housing Finance Agency, Special Pledge Revenue 11/99 at 100 A+ 2,317,500 Obligations, 1975 Series One, 9.000%, 11/01/18 New Jersey Housing and Mortgage Finance Agency, Housing Revenue Bonds, 1992 Series A: 2,365,000 6.700%, 5/01/05 5/02 at 102 A+ 2,536,013 8,000,000 6.950%, 11/01/13 5/02 at 102 A+ 8,611,040 2,370,000 New Jersey Housing and Mortgage Finance Agency, Housing 11/02 at 102 A+ 2,551,424 Revenue Refunding Bonds, 1992 Series One, 6.700%, 11/01/28 - ------------------------------------------------------------------------------------------------------------------------------------ Housing/Single Family - 3.3% 1,000,000 New Jersey Housing and Mortgage Finance Agency, Home Buyer 10/05 at 101 1/2 AAA 1,074,820 Revenue Bonds, 1995 Series O, 6.300%, 10/01/23 (Alternative Minimum Tax) 525,000 New Jersey Housing and Mortgage Finance Agency, Home Buyer 4/06 at 101 1/2 AAA 553,560 Revenue Bonds, 1996 Series P, 5.650%, 4/01/14 1,000,000 New Jersey Housing and Mortgage Finance Agency, Home Buyer 4/06 at 101 1/2 AAA 1,058,010 Revenue Bonds, 1996 Series Q, 5.875%, 4/01/17 (Alternative Minimum Tax) 2,500,000 New Jersey Housing and Mortgage Finance Agency, Home Buyer 4/07 at 101 1/2 AAA 2,672,350 Revenue Bonds, 1996 Series S, 6.050%, 10/01/28 (Alternative Minimum Tax) New Jersey Housing and Mortgage Finance Agency, Home Buyer Revenue Bonds, 1997 Series U: 1,965,000 5.700%, 10/01/14 (Alternative Minimum Tax) 10/07 at 101 1/2 AAA 2,073,134 1,500,000 5.850%, 4/01/29 (Alternative Minimum Tax) 10/07 at 101 1/2 AAA 1,583,175 - ------------------------------------------------------------------------------------------------------------------------------------ Industrial/Other - 1.2% 895,000 New Jersey Economic Development Authority, Economic Growth Bonds, 10/03 at 102 A+ 939,866 Richard L Tauber Composite Issue, 1993 Series H-2, 5.000%, 10/01/05 (Alternative Minimum Tax) 2,315,000 New Jersey Economic Development Authority, Economic Growth 12/03 at 102 Aa3 2,458,831 Bonds, Composite Issue, 1992 Second Series H, 5.300%, 12/01/07 (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ Long Term Care - 1.3% 3,255,000 New Jersey Economic Development Authority (Morris Hall/ St. Lawrence, Inc. Project), Series 1993A, 6.150%, 4/01/13 4/03 at 102 A+ 3,536,297 - ------------------------------------------------------------------------------------------------------------------------------------ Tax Obligation/General - 9.7% 785,000 County of Morris, New Jersey, General Improvement Bonds of 1993, No Opt. Call AAA 845,869 5.125%, 5/13/11 State of New Jersey, General Obligation Bonds, Series D: 2,760,000 5.750%, 2/15/06 No Opt. Call AA+ 3,057,169 4,000,000 5.800%, 2/15/07 No Opt. Call AA+ 4,478,120 2,500,000 6.000%, 2/15/11 No Opt. Call AA+ 2,886,325 1,560,000 6.000%, 2/15/13 No Opt. Call AA+ 1,797,931 4,000,000 County of Passaic, State of New Jersey, General Obligation Refunding No Opt. Call AAA 4,264,680 Bonds, Series 1993, 5.125%, 9/01/12 5,000,000 Commonwealth of Puerto Rico, Public Improvement Bonds of 1995 7/05 at 101 1/2 AAA 5,363,150 (General Obligation Bonds), 5.750%, 7/01/24 650,000 The Board of Education of the Southern Gloucester County, Regional No Opt. Call AAA 677,898 High School District, Gloucester County, New Jersey, School District Bonds, Series 1993, 5.000%, 10/01/14 Sparta Township School District, General Obligation Bonds (Unlimited Tax): 1,100,000 5.800%, 9/01/19 9/06 at 100 AAA 1,176,252 1,100,000 5.800%, 9/01/20 9/06 at 100 AAA 1,174,800 1,100,000 5.800%, 9/01/21 9/06 at 100 AAA 1,173,271 Principal Optional Call Market Amount Description Provisions* Ratings** Value - ------------------------------------------------------------------------------------------------------------------------------------ Tax Obligation/Limited - 10.9% $ 1,275,000 Camden County Improvement Authority (Camden County, New Jersey), 10/05 at 102 AAA $1,365,041 County Guaranteed Lease Bonds, Series of 1995, 5.625%, 10/01/15 1,000,000 Hudson County Improvement Authority (State of New Jersey), Utility 1/08 at 101 1/2 AAA 1,035,760 System Revenue Bonds, Series 1997 (Harrison Franchise Acquisition Project), 5.350%, 1/01/27 1,000,000 The Jersey City Sewerage Authority (Hudson County, New Jersey), No Opt. Call AAA 1,175,580 Sewer Revenue Refunding Bonds, Series 1993, 6.250%, 1/01/14 The State of New Jersey, as Lessee, and The Mercer County Improvement Authority, as Lessor, Relating to the Richard J. Hughes Justice Complex: 750,000 6.050%, 1/01/11 7/99 at 100 Aa 751,718 1,000,000 6.050%, 1/01/12 7/99 at 100 Aa 1,002,290 1,500,000 6.050%, 1/01/16 7/99 at 100 Aa 1,503,300 2,000,000 New Jersey Economic Development Authority, Lease Revenue Bonds, 11/08 at 101 Aaa 1,917,880 Series 1998 (Bergen County Administration Complex), 4.750%, 11/15/26 1,000,000 New Jersey Economic Development Authority, Revenue Bonds (Public 8/03 at 102 AAA 1,060,610 Schools Small Project Loan Program), Series 1993, 5.400%, 8/15/12 1,500,000 New Jersey Economic Development Authority, Market Transition No Opt. Call AAA 1,722,195 Facility Senior Lien Revenue Bonds, Series 1994A, 7.000%, 7/01/04 New Jersey Transportation Trust Fund Authority, Transportation System Bonds, 1995 Series A: 750,000 5.500%, 6/15/12 6/05 at 102 AAA 805,478 5,000,000 5.000%, 6/15/15 6/05 at 102 AAA 5,072,200 1,100,000 New Jersey Transportation Trust Fund Authority, Transportation System 6/05 at 102 AAA 1,164,724 Bonds, 1995 Series B, 5.500%, 6/15/15 510,000 The Board of Education of the Township of Piscataway in the County 6/03 at 102 AAA 540,335 of Middlesex, New Jersey, Certificates of Participation, 1993 Series, 5.375%, 12/15/10 8,160,000 Puerto Rico Public Buildings Authority, Public Education and Health 7/03 at 101 1/2 A 8,659,555 Facilities Refunding Bonds, Series M, Guaranteed by the Commonwealth of Puerto Rico, 5.750%, 7/01/15 2,250,000 Western Monmouth Utilities Authority (Monmouth County, 2/05 at 102 AAA 2,413,913 New Jersey), Revenue Refunding Bonds, 1995 Series A, 5.600%, 2/01/14 - ------------------------------------------------------------------------------------------------------------------------------------ Transportation - 23.8% 5,000,000 Delaware River Port Authority (New Jersey), Port District Project 1/08 at 101 AAA 5,005,850 Bonds, Series B of 1998, 5.000%, 1/01/19 4,245,000 Delaware River Port Authority (New Jersey and Pennsylvania), 1/06 at 102 AAA 4,423,884 Revenue Bonds, Series of 1995, 5.500%, 1/01/26 New Jersey Turnpike Authority, Turnpike Revenue Bonds, Series 1991C: 1,000,000 6.500%, 1/01/08 No Opt. Call BBB+ 1,153,480 7,920,000 6.500%, 1/01/16 No Opt. Call BBB+ 9,345,204 4,700,000 6.500%, 1/01/16 No Opt. Call AAA 5,655,087 3,000,000 The Port Authority of New York and New Jersey, Consolidated Bonds, 10/04 at 101 AAA 3,366,570 Ninety-Sixth Series, 6.600%, 10/01/23 (Alternative Minimum Tax) The Port Authority of New York and New Jersey, Consolidated Bonds, Ninety-Ninth Series: 1,200,000 5.750%, 11/01/09 (Alternative Minimum Tax) 5/05 at 101 AAA 1,303,476 2,500,000 5.750%, 11/01/14 (Alternative Minimum Tax) 5/05 at 101 AAA 2,678,825 1,500,000 The Port Authority of New York and New Jersey, Consolidated Bonds, 7/06 at 101 AA- 1,641,600 One Hundred and Sixth Series, 6.000%, 7/01/16 (Alternative Minimum Tax) 2,500,000 The Port Authority of New York and New Jersey, One Hundredth 6/05 at 101 AAA 2,667,050 Series, 5.750%, 12/15/20 6,000,000 The Port Authority of New York and New Jersey, Consolidated Bonds, 6/05 at 101 AA- 6,227,280 One Hundred-Twelfth Series, 5.250%, 12/01/13 (Alternative Minimum Tax) The Port Authority of New York and New Jersey, Special Project Bonds, Series 6, JFK International Air Terminal LLC Project: 10,000,000 5.750%, 12/01/22 (Alternative Minimum Tax) 12/07 at 102 AAA 10,663,700 11,000,000 5.750%, 12/01/25 (Alternative Minimum Tax) 12/07 at 100 AAA 11,623,590 Principal Optional Call Market Amount Description Provisions* Ratings** Value - ------------------------------------------------------------------------------------------------------------------------------------ U.S. Guaranteed - 4.5% $ 250,000 The Board of Education of the Township of Franklin, in the County of 6/99 at 100 AAA $ 259,058 Somerset, New Jersey, Certificates of Participation, Series 1989, 6.900%, 12/15/00 (Pre-refunded to 6/15/99) 2,000,000 New Jersey Health Care Facilities Financing Authority, Revenue Bonds, 7/99 at 102 A-*** 2,083,180 Newton Memorial Hospital Issue, Series A, 7.500%, 7/01/19 (Pre-refunded to 7/01/99) State of New Jersey, General Obligation Bonds (Various Bonds): 1,300,000 6.800%, 9/15/10 (Pre-refunded to 9/15/01) 9/01 at 101 1/2 AA+*** 1,424,124 2,385,000 6.800%, 9/15/11 (Pre-refunded to 9/15/01) 9/01 at 101 1/2 AA+*** 2,612,720 2,030,000 New Jersey Turnpike Authority, Turnpike Revenue Bonds, 1984 Series, No Opt. Call AAA 2,310,343 10.375%, 1/01/03 3,500,000 Puerto Rico Electric Power Authority, Power Revenue Bonds, Series R, 7/02 at 101 1/2 BBB+*** 3,848,180 6.250%, 7/01/17 (Pre-refunded to 7/01/02) - ------------------------------------------------------------------------------------------------------------------------------------ Utilities - 6.8% 6,600,000 Pollution Control Financing Authority of Camden County (Camden County, No Opt. Call B2 6,539,676 New Jersey), Solid Waste Disposal and Resource Recovery System Revenue Bonds, Series 1991 C, 7.125%, 12/01/01 (Alternative Minimum Tax) 6,500,000 Pollution Control Financing Authority of Camden County (Camden 12/01 at 102 B2 6,523,855 County, New Jersey), Solid Waste Disposal and Resource Recovery System Revenue Bonds, Series 1991 D, 7.250%, 12/01/10 1,000,000 The Essex County Utilities Authority (Essex County, New Jersey), Solid 4/06 at 102 AAA 1,069,830 Waste System Revenue Bonds (Secured by a County Deficiency Agreement with the County of Essex), Solid Waste System Revenue Bonds, Tax Exempt), 5.600%, 4/01/16 1,000,000 Puerto Rico Electric Power Authority, Power Revenue Refunding Bonds, 7/05 at 100 AAA 1,014,560 Series Z, 5.250%, 7/01/21 3,500,000 Puerto Rico Electric Power Authority, Power Revenue Bonds, Series X, 7/05 at 100 AAA 3,644,340 5.500%, 7/01/25 - ------------------------------------------------------------------------------------------------------------------------------------ Water and Sewer - 8.5% 5,250,000 Cape May County (New Jersey), Municipal Utilities Authority, Sewer 1/03 at 102 AAA 5,564,738 Revenue Refunding Bonds, Series 1992-A, 5.750%, 1/01/16 1,485,000 New Jersey Economic Development Authority, Water Facilities 8/01 at 102 A 1,592,692 Refunding Bonds (Elizabeth Water Company Project), 1991 Series A, 6.700%, 8/01/21 (Alternative Minimum Tax) 3,100,000 New Jersey Economic Development Authority, Water Facilities 3/04 at 102 AAA 3,293,874 Revenue Refunding Bonds (Hackensack Water Company Project), 1994 Series B, 5.900%, 3/01/24 (Alternative Minimum Tax) 6,250,000 New Jersey Economic Development Authority, Water Facilities 7/08 at 102 AAA 6,284,874 Revenue Bonds (New Jersey-American Water Company, Inc. Project), Series 1998A, 5.250%, 7/01/38 (Alternative Minimum Tax) 3,000,000 The North Hudson Sewerage Authority (New Jersey), Sewer Revenue 8/06 at 101 AAA 3,013,409 Bonds, Series 1996, 5.125%, 8/01/22 1,040,000 Passaic Valley Sewerage Commissioners (State of New Jersey), 12/02 at 102 AAA 1,124,728 Sewer System Bonds, Series D, 5.750%, 12/01/10 1,000,000 The Stony Brook Regional Sewerage Authority (Princeton, New Jersey), No Opt. Call Aa 1,099,169 Revenue Refunding Bonds, 1993 Series B, 5.450%, 12/01/12 1,500,000 The Wanaque Valley Regional Sewerage Authority (Passaic County, No Opt. Call AAA 1,671,389 New Jersey), Sewer Revenue Refunding Bonds, 1993 Series B (Insured), 5.750%, 9/01/18 - ------------------------------------------------------------------------------------------------------------------------------------ $ 258,375,000 Total Investments - (cost $257,612,273) - 99.2% 274,690,307 ============= Other Assets Less Liabilities - 0.8% 2,179,087 -------------------------------------------------------------------------------------------------------------------- Net Assets - 100% $276,869,394 ==================================================================================================================== * Optional Call Provisions: Dates (month and year) and prices of the earliest optional call or redemption. There may be other call provisions at varying prices at later dates. ** Ratings: Using the higher of Standard & Poor's or Moody's rating. *** Securities are backed by an escrow or trust containing sufficient U.S. government or U.S. government agency securities which ensures the timely payment of principal and interest. Securities are normally considered to be equivalent to AAA rated securities. N/R Investment is not rated. (DD) Security purchased on a delayed delivery basis (note 1). + The Fund has not received the last two semi-annual interest coupon payments on these bonds. The issuer is in the process of attempting to re-structure the debt by bringing to market new obligations whose proceeds will be used to call the current defaulted bonds at 102% of par, plus accrued interest. See accompanying notes to financial statements.
Portfolio of Investments Nuveen Pennsylvania Investment Quality Municipal Fund (NQP) December 31, 1998 (Unaudited)
Principal Optional Call Market Amount Description Provisions* Ratings** Value - ------------------------------------------------------------------------------------------------------------------------------------ Education and Civic Organizations - 13.9% $ 2,000,000 Allegheny County Higher Education Building Authority (Commonwealth 9/08 at 102 BBB $1,960,220 of Pennsylvania), College Revenue Bonds, Series A of 1998 (Chatham College), 5.250%, 9/01/18 4,500,000 Delaware County Authority (Commonwealth of Pennsylvania), 8/01 at 100 AAA 4,828,050 University Revenue Bonds, Series of 1991 (Villanova University), 6.900%, 8/01/16 3,400,000 Lehigh County General Purpose Authority, College Revenue Bonds, 6/02 at 100 AAA 3,681,996 Series of 1992 (Allentown College of St. Francis de Sales Project), 6.750%, 12/15/12 4,970,000 Pennsylvania Higher Education Assistance Agency, Student Loan No Opt. Call AAA 5,246,481 Adjustable Rate Tender Revenue Refunding Bonds, 1985 Series A, 6.800%, 12/01/00 4,000,000 Pennsylvania Higher Education Assistance Agency, Student Loan 9/01 at 102 AAA 4,294,960 Revenue Bonds, Fixed Rate Bonds, 1991 Series C, 7.150%, 9/01/21 (Alternative Minimum Tax) 3,000,000 Pennsylvania Higher Education Assistance Agency, Student Loan 9/02 at 102 AAA 3,120,030 Revenue Bonds, Fixed Rate Bonds, 1992 Series C, 6.400%, 3/01/22 (Alternative Minimum Tax) 10,580,000 Pennsylvania Higher Educational Facilities Authority, Revenue Bonds 7/99 at 102 AAA 10,923,533 (Thomas Jefferson University - Life Sciences Building Project), 1989 Series A, 6.000%, 7/01/19 3,825,000 The Pennsylvania State University, Refunding Bonds, Series 1992, 3/01 at 102 AA- 4,135,934 6.250%, 3/01/11 2,900,000 Scranton - Lackawanna Health and Welfare Authority, City of 3/02 at 102 A- 3,105,755 Scranton, Lackawanna County, Pennsylvania, University Revenue Bonds (University of Scranton Project), 1992 Series A, 6.500%, 3/01/13 8,445,000 Swarthmore Borough Authority, Pennsylvania, Swarthmore College 9/08 at 100 Aaa 8,246,374 Revenue Bonds, Series of 1998, 5.000%, 9/15/28 495,000 The General Municipal Authority of the City of Wilkes - Barre, 12/02 at 102 N/R 542,381 College Misericordia Revenue Bonds Refunding, Series B of 1992, 7.750%, 12/01/12 645,000 The General Municipal Authority of the City of Wilkes - Barre, 12/00 at 100 N/R 706,739 College Misericordia Revenue Bonds, Refunding Series A of 1992, 7.750%, 12/01/12 - ------------------------------------------------------------------------------------------------------------------------------------ Health Care - 2.7% 3,520,000 The Hospitals and Higher Education Facilities Authority of 12/01 at 102 AAA 3,867,670 Philadelphia, Hospital Revenue Refunding Bonds, Series of 1991 (Magee Rehabilitation Hospital Project), 7.000%, 12/01/10 5,500,000 Health Care Facilities Authority of Sayre, Variable Rate Hospital 12/01 at 103 AAA 6,045,105 Revenue Bonds (VHA of Pennsylvania, Inc. Capital Asset Financing Program), Series of 1985E (Guthrie Healthcare System Conversion), 7.200%, 12/01/20 - ------------------------------------------------------------------------------------------------------------------------------------ Housing/Multifamily - 0.3% 995,000 Urban Redevelopment Authority of Pittsburgh, Redevelopment 8/02 at 102 A 1,048,352 Mortgage Revenue Bonds, 1992 Series C, 7.125%, 8/01/13 (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ Housing/Single Family - 13.7% 2,000,000 Allegheny County Residential Finance Authority, Single Family 11/08 at 102 Aaa 2,022,520 Mortgage Revenue Bonds, 1998 Series DD-2, 5.400%, 11/01/29 (Alternative Minimum Tax) 11,855,000 Allegheny County Residential Finance Authority, Single Family No Opt. Call Aaa 1,857,441 Mortgage Revenue Bonds, 1994 Series Y, 0.000%, 5/01/27 (Alternative Minimum Tax) 210,000 Redevelopment Authority of the City of Altoona (Altoona, 12/01 at 102 A3 222,443 Pennsylvania), Home Improvement Loan Revenue Bonds, Series of 1991 (Cities of Altoona and Meadville Program) (FHA Title 1 Insured Loans), 7.150%, 12/01/09 (Alternative Minimum Tax) 2,060,000 Redevelopment Authority of the County of Berks (Pennsylvania), No Opt. Call A+ 2,285,323 Senior Single Family Mortgage Bonds, 1986 Series A, 8.000%, 12/01/17 (Alternative Minimum Tax) Principal Optional Call Market Amount Description Provisions* Ratings** Value - ------------------------------------------------------------------------------------------------------------------------------------ Housing/Single Family (continued) $ 4,725,000 Pennsylvania Housing Finance Agency, Single Family Mortgage 4/02 at 102 AA+ $5,022,817 Revenue Bonds, Series 1992-33, 6.900%, 4/01/17 1,000,000 Pennsylvania Housing Finance Agency, Single Family Mortgage 4/02 at 102 AA+ 1,046,440 Revenue Bonds, Series 1992-34B, 7.000%, 4/01/24 (Alternative Minimum Tax) 5,000,000 Pennsylvania Housing Finance Agency, Single Family Mortgage 10/99 at 102 AA+ 5,160,200 Revenue Bonds, Series W, 7.625%, 10/01/10 (Alternative Minimum Tax) 2,000,000 Pennsylvania Housing Finance Agency, Single Family Mortgage 10/05 at 102 AA+ 2,130,300 Revenue Bonds, Series 1995-46, 6.200%, 10/01/14 (Alternative Minimum Tax) 1,000,000 Pennsylvania Housing Finance Agency, Single Family Mortgage 4/06 at 102 AA+ 1,057,670 Revenue Bonds, Series 1996-48, 6.150%, 4/01/25 (Alternative Minimum Tax) 5,725,000 Pennsylvania Housing Finance Agency, Single Family Mortgage 4/06 at 102 AA+ 6,166,054 Revenue Bonds, Series 1996-49, 6.450%, 4/01/25 (Alternative Minimum Tax) 4,000,000 Pennsylvania Housing Finance Agency, Single Family Mortgage 4/06 at 102 AA+ 4,282,440 Revenue Bonds, Series 1996-50B, 6.350%, 10/01/27 (Alternative Minimum Tax) 5,000,000 Pennsylvania Housing Finance Agency, Single Family Mortgage 4/06 at 102 AA+ 5,324,450 Revenue Bonds, Series 1996-52B, 6.250%, 10/01/24 (Alternative Minimum Tax) 5,000,000 Pennsylvania Housing Finance Agency, Single Family Mortgage 10/07 at 101 1/2 AA+ 5,178,000 Revenue Bonds, Series 1997-59A, 5.750%, 10/01/23 (Alternative Minimum Tax) 2,000,000 Pennsylvania Housing Finance Agency, Single Family Mortgage 10/08 at 101 AA+ 1,983,800 Revenue Bonds, Series 1998-64A Bonds, 4.500%, 4/01/28 (Alternative Minimum Tax) 1,620,000 Urban Redevelopment Authority of Pittsburgh, Mortgage Revenue 4/06 at 102 AAA 1,743,071 Bonds, 1996 Series C, 6.550%, 4/01/28 (Alternative Minimum Tax) 1,110,000 Urban Redevelopment Authority of Pittsburgh, Mortgage Revenue 10/07 at 102 AAA 1,187,023 Bonds, 1997 Series A, 6.250%, 10/01/28 (Alternative Minimum Tax) 2,865,000 Urban Redevelopment Authority of Pittsburgh, Mortgage Revenue 10/01 at 102 AAA 3,020,655 Bonds, 1991 Series G, 7.050%, 4/01/23 (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ Industrial/Other - 0.4% 1,250,000 Philadelphia Authority for Industrial Development, Revenue Bonds, 5/02 at 102 A+ 1,359,763 Series of 1992 (National Board of Medical Examiners Project), 6.750%, 5/01/12 - ------------------------------------------------------------------------------------------------------------------------------------ Long Term Care - 1.1% 3,225,000 Montgomery County Higher Education and Health Authority, Mortgage 1/06 at 101 BBB 3,429,465 Revenue Bonds, Series of 1996 (Waverly Heights Project), 6.375%, 1/01/26 630,000 The Hospitals and Higher Education Facilities Authority of Philadelphia, 8/02 at 102 A- 692,672 Hospital Revenue Bonds (Childrens Seashore House), Series 1992A, 7.000%, 8/15/03 - ------------------------------------------------------------------------------------------------------------------------------------ Tax Obligation/General - 4.4% 1,355,000 Bensalem Township School District, Bucks County, Pennsylvania 7/06 at 100 AAA 1,490,080 General Obligation Bonds, Series of 1996, 5.850%, 7/15/12 Redevelopment Authority of the City of Harrisburg, Dauphin County, Pennsylvania, Guaranteed Revenue Bonds, Series B of 1998: 2,750,000 0.000%, 5/01/24 (DD) 5/16 at 103 AAA 739,338 2,750,000 0.000%, 11/01/24 (DD) 5/16 at 103 AAA 720,060 5,160,000 0.000%, 5/01/25 (DD) 5/16 at 103 AAA 1,315,697 6,000,000 Commonwealth of Pennsylvania, General Obligation Bonds, 3/02 at 101 1/2 AA 6,515,880 First Series of 1992, 6.375%, 9/15/11 5,000,000 State Public School Building Authority (Commonwealth of 3/01 at 100 AAA 5,285,500 First Series of 1992, 6.375%, 9/15/11 (Hazelton Area School District Project), Series J of 1991, 6.500%, 3/01/08 - ------------------------------------------------------------------------------------------------------------------------------------ Tax Obligation/Limited - 0.3% 1,000,000 York County Solid Waste and Refuse Authority (Commonwealth of No Opt. Call AAA 1,098,850 Pennsylvania), Solid Waste System Refunding Revenue Bonds (County Guaranteed), Series of 1997, 5.500%, 12/01/12 Principal Optional Call Market Amount Description Provisions* Ratings** Value - ------------------------------------------------------------------------------------------------------------------------------------ Transportation - 3.4% $ 2,500,000 County of Allegheny, Pennsylvania, Airport Revenue Bonds, 1/02 at 102 AAA $2,715,200 Series 1992A and 1992B (Greater Pittsburgh International Airport), 6.625%, 1/01/22 (Alternative Minimum Tax) 1,650,000 Pennsylvania Turnpike Commission, Pennsylvania Turnpike Revenue 12/01 at 102 Aa3 1,793,220 Bonds, Series N of 1991, 6.500%, 12/01/13 735,000 Pennsylvania Turnpike Commission, Pennsylvania Turnpike Revenue 12/02 at 102 AAA 759,512 Bonds, Series O of 1992, 5.500%, 12/01/17 7,315,000 Philadelphia Authority for Industrial Development, Airport Revenue 7/08 at 101 AAA 7,128,468 Bonds, Series 1998A (Philadelphia Airport System Project), 5.000%, 7/01/23 (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ U.S. Guaranteed - 46.6% 6,300,000 Allegheny County Hospital Development Authority, Hospital 10/01 at 100 BBB+*** 6,858,747 Revenue Bonds, Series 1991 A (St. Margaret Memorial Hospital), 7.125%, 10/01/21 (Pre-refunded to 10/01/01) Bethlehem Authority, Northampton and Lehigh Counties, Pennsylvania, Water Revenue Bonds, Series of 1992: 3,045,000 6.250%, 11/15/11 (Pre-refunded to 11/15/01) 11/01 at 100 AAA 3,264,453 4,000,000 6.250%, 11/15/21 (Pre-refunded to 11/15/01) 11/01 at 100 AAA 4,288,280 8,250,000 Blair County Hospital Authority, Hospital First Mortgage Revenue 2/99 at 102 N/R*** 8,447,918 Bonds, Series of 1989 (Mercy Hospital, Sublessee), 8.125%, 2/01/14 (Pre-refunded to 2/01/99) 5,000,000 Butler County Hospital Authority (Butler County, Pennsylvania), 6/01 at 102 AAA 5,481,400 Hospital Revenue Bonds, Series 1991 A (North Hills Passavant Hospital), 7.000%, 6/01/22 (Pre-refunded to 6/01/01) 3,400,000 Erie County Hospital Authority, Pennsylvania, Hospital Revenue Bonds 2/01 at 102 AAA 3,707,258 (Hamot Medical Center), 1991 Series A, 7.100%, 2/15/10 (Pre-refunded to 2/15/01) 2,875,000 Franklin County Industrial Development Authority, Hospital Revenue 7/99 at 102 AAA 2,983,819 Refunding Bonds (The Chambersburg Hospital), Series of 1991, 6.700%, 7/01/08 (Pre-refunded to 7/01/99) 2,000,000 Hampton Township School District (Allegheny County, Pennsylvania), 11/04 at 100 AAA 2,298,500 General Obligation Bonds, Series of 1995, 6.750%, 11/15/21 (Pre-refunded to 11/15/04) 4,000,000 Lower Pottsgrove Township Authority, Montgomery County, 11/99 at 100 AAA 4,120,080 Pennsylvania, Guaranteed Sewer Revenue Bonds, Series of 1991 (Guaranteed by the Township of Lower Pottsgrove), 6.700%, 11/01/16 (Pre-refunded to 11/01/99) 3,130,000 McKean County Solid Waste Authority (McKean County, 1/02 at 100 AAA 3,398,711 Pennsylvania), Guaranteed Solid Waste Revenue Bonds, Series of 1992, 6.650%, 1/01/12 (Pre-refunded to 1/01/02) 4,500,000 Pennsylvania Turnpike Commission, Pennsylvania Turnpike Revenue 12/01 at 102 AAA 5,019,930 Bonds, Series I of 1986, 7.200%, 12/01/17 (Pre-refunded to 12/01/01) 1,000,000 Philadelphia Authority for Industrial Development, Convertible 7/99 at 102 AAA 1,039,330 Project Revenue Bonds (PGH Development Corporation), Series of 1989, 7.000%, 7/01/17 (Pre-refunded to 7/01/99) 4,885,000 Philadelphia Authority for Industrial Development, Convertible 7/99 at 102 AA*** 5,079,276 Project Revenue Bonds (PGH/CHDC Parking Facilities), Series of 1989, 7.125%, 7/01/17 (Pre-refunded to 7/01/99) 4,270,000 City of Philadelphia, Pennsylvania, Gas Works Revenue Bonds, 6/01 at 102 AAA 4,756,823 Thirteenth Series, 7.700%, 6/15/21 (Pre-refunded to 6/15/01) 8,530,000 The Hospitals and Higher Education Facilities Authority of 8/01 at 102 Aa*** 9,450,387 Philadelphia, Refunding Revenue Bonds, Saint Agnes Medical Center Project (FHA Insured Mortgage), Series 1991, 7.250%, 8/15/31 (Pre-refunded to 8/15/01) 1,850,000 The School District of Philadelphia, Pennsylvania, General 5/02 at 100 3/4 AAA 2,025,584 Obligation Bonds, Series A of 1992, 6.500%, 5/15/05 (Pre-refunded to 5/15/02) 3,250,000 The School District of Philadelphia, Pennsylvania, General Obligation 7/01 at 102 AAA 3,531,093 Bonds, Series B of 1991, 7.000%, 7/01/05 (Pre-refunded to 7/01/01) 10,625,000 City of Philadelphia, Pennsylvania, Water and Sewer Revenue Bonds, 8/01 at 100 AAA 11,512,188 Sixteenth Series, 7.000%, 8/01/18 (Pre-refunded to 8/01/01) 8,800,000 The Hospitals and Higher Education Facilities Authority of Philadelphia, 12/01 at 102 N/R*** 9,812,704 Hospital Revenue Bonds, Series of 1991 (Presbyterian Medical Center of Philadelphia), 7.250%, 12/01/21 (Pre-refunded to 12/01/01) Principal Optional Call Market Amount Description Provisions* Ratings** Value - ------------------------------------------------------------------------------------------------------------------------------------ U.S. Guaranteed (continued) $ 6,110,000 The Hospitals and Higher Education Facilities Authority of Philadelphia, 2/02 at 102 Aaa $6,720,633 Hospital Revenue Bonds (The Childrens Hospital of Philadelphia Project), Series A of 1992, 6.500%, 2/15/21 (Pre-refunded to 2/15/02) The Philadelphia Municipal Authority, Pennsylvania, Justice Lease Revenue Bonds, 1991 Series B: 1,500,000 7.100%, 11/15/11 (Pre-refunded to 11/15/01) 11/01 at 102 AAA 1,669,515 9,900,000 7.125%, 11/15/18 (Pre-refunded to 11/15/01) 11/01 at 102 AAA 11,025,234 3,000,000 The Pittsburgh Water and Sewer Authority (Pennsylvania), Water No Opt. Call AAA 3,470,490 and Sewer System Revenue Refunding Bonds, Series of 1986, 7.625%, 9/01/04 7,065,000 The Pittsburgh Water and Sewer Authority (Pennsylvania), Water and 9/01 at 102 AAA 7,712,437 Sewer System Revenue Refunding Bonds, Series A of 1991, 6.500%, 9/01/14 (Pre-refunded to 9/01/01) 2,500,000 Saint Mary Hospital Authority, Hospital Revenue Bonds, 7/02 at 102 AAA 2,769,625 Series 1992A (Franciscan Health System/Saint Mary Hospital Of Langhorne Inc.), 6.500%, 7/01/12 (Pre-refunded to 7/01/02) 3,730,000 Scranton - Lackawanna Health and Welfare Authority, City of 6/00 at 102 N/R*** 4,009,340 Scranton, Lackawanna County, Pennsylvania, University Revenue Bonds, Series of 1990 (University of Scranton Project), 1990 Series A, 7.400%, 6/15/10 (Pre-refunded to 6/15/00) 8,475,000 Somerset County General Authority, Commonwealth of 10/01 at 100 AAA 9,235,970 Pennsylvania, Commonwealth Lease Revenue Bonds, Series of 1991, 7.000%, 10/15/13 (Pre-refunded to 10/15/01) 3,500,000 Upper Merion Area School District, Montgomery County, 9/01 at 100 Aa2*** 3,790,500 Pennsylvania, General Obligation Bonds, Series of 1993, 6.900%, 9/01/16 (Pre-refunded to 9/01/01) 3,000,000 Warrington Township Municipal Authority, Bucks County, 11/15 at 100 AAA 3,622,620 Pennsylvania, Water and Sewer Revenue Bonds, Series of 1991, 7.100%, 12/01/21 (Pre-refunded to 11/15/15) 5,000,000 West Chester Area School District, Chester and Delaware Counties, 1/01 at 100 Aa1*** 5,310,200 Pennsylvania, General Obligation Bonds, Series A of 1991, 6.700%, 1/15/11 (Pre-refunded to 1/15/01) 5,450,000 The Municipal Authority of the Borough of West View (Allegheny No Opt. Call AAA 7,756,713 County, Pennsylvania,) Special Obligation Bonds, Series of 1985A, 9.500%, 11/15/14 5,000,000 County of Westmoreland, Commonwealth of Pennsylvania, 8/01 at 100 AAA 5,378,250 General Obligation Bonds, Series 1992, 6.700%, 8/01/09 (Pre-refunded to 8/01/01) - ------------------------------------------------------------------------------------------------------------------------------------ Utilities - 11.3% 5,000,000 Beaver County Industrial Development Authority (Pennsylvania), 9/99 at 102 Baa3 5,192,550 Pollution Control Revenue Refunding Bonds, 1989 Series A (Ohio Edison Company, Beaver Valley Project), 7.750%, 9/01/24 3,750,000 Delaware County Industrial Development Authority, Pollution 4/01 at 102 BBB+ 4,017,300 Control Revenue Refunding Bonds, 1991 Series A (Philadelphia Electric Company Project), 7.375%, 4/01/21 400,000 Greater Lebanon Refuse Authority, Lebanon County, Pennsylvania, 11/02 at 100 A- 426,080 Solid Waste Revenue Bonds, Series of 1992, 7.000%, 11/15/04 Lancaster County Solid Waste Management Authority, Resource Recovery System Revenue Bonds, 1998 Series A: 3,780,000 5.250%, 12/15/07 (Alternative Minimum Tax) No Opt. Call AAA 4,049,136 3,900,000 5.250%, 12/15/08 (Alternative Minimum Tax) No Opt. Call AAA 4,183,023 4,000,000 Lehigh County Industrial Development Authority, Pollution Control 8/05 at 102 AAA 4,477,720 Revenue Refunding Bonds, 1995 Series A (Pennsylvania Power and Light Company Project), 6.150%, 8/01/29 3,000,000 Luzerne County Industrial Development Authority, Exempt Facilities 10/02 at 102 A 3,325,830 Revenue Refunding Bonds, 1992 Series A (Pennsylvania Gas and Water Company Project), 7.200%, 10/01/17 (Alternative Minimum Tax) 3,550,000 Luzerne County Industrial Development Authority, Exempt Facilities 12/02 at 102 A- 3,937,837 Revenue Bonds, 1992 Series B (Pennsylvania Gas and Water Company Project), 7.125%, 12/01/22 (Alternative Minimum Tax) 5,000,000 Luzerne County Industrial Development Authority, Exempt Facilities 12/04 at 102 AAA 5,738,449 Revenue Refunding Bonds, 1994 Series A (Pennsylvania Gas and Water Company Project), 7.000%, 12/01/17 (Alternative Minimum Tax) 5,500,000 Montgomery County Industrial Development Authority (Pennsylvania), 1/03 at 100 A 5,846,664 Resource Recovery Revenue Bonds (Montgomery County Project), Series 1989, 7.500%, 1/01/12 Principal Optional Call Market Amount Description Provisions* Ratings** Value - ------------------------------------------------------------------------------------------------------------------------------------ Water and Sewer - 1.3% $ 4,390,000 Fairview Township Authority, York County, Pennsylvania, Guaranteed 11/01 at 100 AAA $4,714,332 Sewer Revenue Bonds, Series of 1991 (Guaranteed by the Township of Fairview, York County, Pennsylvania), 6.700%, 11/01/21 - ------------------------------------------------------------------------------------------------------------------------------------ $ 353,475,000 Total Investments - (cost $333,909,421) - 99.4% 361,944,861 ============= Other Assets Less Liabilities - 0.6% 2,170,233 -------------------------------------------------------------------------------------------------------------------- Net Assets - 100% $364,115,094 ==================================================================================================================== * Optional Call Provisions: Dates (month and year) and prices of the earliest optional call or redemption. There may be other call provisions at varying prices at later dates. ** Ratings: Using the higher of Standard & Poor's or Moody's rating. *** Securities are backed by an escrow or trust containing sufficient U.S. government or U.S. government agency securities which ensures the timely payment of principal and interest. Securities are normally considered to be equivalent to AAA rated securities. N/R Investment is not rated. (DD) Security purchased on a delayed delivery basis (note 1). See accompanying notes to financial statements.
Portfolio of Investments Nuveen Pennsylvania Premium Income Municipal Fund 2 (NPY) December 31, 1998 (Unaudited)
Principal Optional Call Market Amount Description Provisions* Ratings** Value - ------------------------------------------------------------------------------------------------------------------------------------ Capital Goods - 0.6% $ 2,000,000 New Morgan Industrial Development Authority (Pennsylvania), Solid 4/04 at 102 A2 $2,167,700 Waste Disposal Revenue Bonds (New Morgan Landfill Company, Inc. Project), Series 1994, 6.500%, 4/01/19 (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ Education and Civic Organizations - 14.9% 3,000,000 Chester County Health and Education Facilities Authority 10/08 at 102 BBB- 3,025,470 (Pennsylvania), College Revenue Bonds, Series of 1998 (Immaculata College), 5.625%, 10/15/27 5,000,000 Gettysburg Municipal Authority (Pennsylvania), College Revenue 8/08 at 101 AAA 4,926,600 Bonds (Gettysburg College), Series 1998, 5.000%, 8/15/23 1,350,000 Lancaster Higher Education Authority, City of Lancaster, Pennsylvania, 4/03 at 100 AAA 1,437,399 College Revenue Bonds, Series of 1993 (Franklin and Marshall College Project), 5.700%, 4/15/13 10,000,000 Pennsylvania Higher Education Assistance Agency, Student Loan 1/03 at 102 AAA 10,714,700 Revenue Bonds, 1988 Series D, 6.050%, 1/01/19 (Alternative Minimum Tax) 10,000,000 Pennsylvania Higher Education Assistance Agency, Student Loan No Opt. Call AAA 10,113,900 Revenue Bonds, 1984 Series A, 4.625%, 12/01/00 3,250,000 Pennsylvania Higher Education Facility Authority, College 11/03 at 102 AAA 3,602,235 Revenue Refunding Bonds (Allegheny College), Series 1993A, 6.100%, 11/01/08 Pennsylvania Higher Educational Facilities Authority (Commonwealth of Pennsylvania), LaSalle University Revenue Bonds, Series of 1998, 500,000 5.250%, 5/01/18 5/08 at 101 Aaa 513,695 1,000,000 5.250%, 5/01/23 5/08 at 101 Aaa 1,017,090 6,365,000 Pennsylvania Higher Educational Facilities Authority, Revenue Bonds 7/99 at 102 AAA 6,571,672 (Thomas Jefferson University - Life Sciences Building Project), 1989 Series A, 6.000%, 7/01/19 4,615,000 Pennsylvania Higher Educational Facilities Authority (Commonwealth 7/03 at 102 AAA 4,823,460 of Pennsylvania), Revenue Bonds (Widener University), 1993 Series A, 5.250%, 7/15/11 1,005,000 The Hospitals and Higher Education Facilities Authority of Philadelphia, 5/04 at 102 AAA 1,107,520 Community College Revenue Bonds (Community College of Philadelphia), Series of 1994, 6.100%, 5/01/10 3,340,000 State Public School Building Authority (Commonwealth of 3/03 at 100 AAA 3,558,803 Pennsylvania), College Revenue Bonds (Northampton County Area Community College Project), Series U of 1993, 5.850%, 3/15/15 1,275,000 The General Municipal Authority of the City of Wilkes-Barre 12/02 at 102 N/R 1,397,043 (Pennsylvania), College Misericordia Revenue Bonds, Refunding Series B of 1992, 7.750%, 12/01/12 - ------------------------------------------------------------------------------------------------------------------------------------ Health Care - 14.8% 8,500,000 Allegheny County Hospital Development Authority (Pennsylvania), 5/06 at 102 AAA 9,110,895 Hospital Revenue Bonds, Series A of 1996 (South Hills Health System), 5.875%, 5/01/26 14,000,000 Allegheny County Hospital Development Authority (Pennsylvania), 4/07 at 102 AAA 14,745,640 Health Center Revenue Bonds, Series 1997A (University of Pittsburgh Medical Center System), 5.625%, 4/01/27 2,100,000 Delaware County Authority (Commonwealth of Pennsylvania), 12/03 at 102 AAA 2,197,545 Hospital Revenue Bonds, Series of 1994 (Crozer-Chester Medical Center), 5.300%, 12/15/11 Franklin County Industrial Development Authority, Hospital Revenue Refunding Bonds (The Chambersburg Hospital), Series of 1998: 2,030,000 5.000%, 7/01/08 No Opt. Call Aaa 2,121,330 2,300,000 5.000%, 7/01/18 7/08 at 100 Aaa 2,274,585 1,000,000 Montgomery County Higher Education and Health Authority 10/07 at 101 AAA 1,009,330 (Pennsylvania), Health Care Revenue Bonds, 1997 Series A (Holy Redeemer Health System), 5.250%, 10/01/27 Principal Optional Call Market Amount Description Provisions* Ratings** Value - ------------------------------------------------------------------------------------------------------------------------------------ Health Care (continued) $ 8,400,000 Montgomery County Higher Education and Health Authority, 1/09 at 101 AAA $8,220,324 Revenue Bonds, Series 1998 (Pottstown Healthcare Corporation), 5.000%, 1/01/27 485,000 Montgomery County Higher Education and Health Authority, 6/03 at 102 AAA 527,850 Hospital Revenue Bonds, Series A of 1993 (Abington Memorial Hospital), 6.000%, 6/01/22 4,700,000 Pennsylvania Higher Education Facilities Authority (Commonwealth 1/06 at 101 AA 4,943,601 of Pennsylvania), The University of Pennsylvania Health Services Revenue Bonds, Series A of 1996, 5.750%, 1/01/22 The Hospitals and Higher Education Facilities Authority of Philadelphia (Pennsylvania), Health System Revenue Bonds, Series 1997A (Jefferson Health System): 1,400,000 5.500%, 5/15/07 No Opt. Call AA- 1,514,744 1,000,000 5.500%, 5/15/08 No Opt. Call AA- 1,083,520 City of Pottsville Hospital Authority, Hospital Revenue Bonds (The Pottsville Hospital and Warne Clinic), Series of 1998: 2,000,000 5.500%, 7/01/18 7/08 at 100 BBB 1,996,200 2,000,000 5.625%, 7/01/24 7/08 at 100 BBB 2,008,040 1,000,000 Washington County Hospital Authority (Pennsylvania), Hospital 7/08 at 101 AAA 1,001,550 Revenue Bonds, Series 1998 (The Washington Hospital Project), 5.100%, 7/01/18 - ------------------------------------------------------------------------------------------------------------------------------------ Housing/Multifamily - 3.9% 4,345,000 Bucks County Redevelopment Authority, Pennsylvania, Second Lien 8/03 at 100 Baa2 4,464,748 Multifamily Mortgage Revenue Bonds, Section 8 Assisted (Country Commons Apartments), Series 1993A, 6.200%, 8/01/14 (Alternative Minimum Tax) 1,725,000 Luzerne County Housing Corporation, Mortgage Revenue Refunding 7/03 at 100 Aaa 1,790,222 Bonds, Series 1993 (FHA Insured Mortgage Loan - Freeland Apartments Section 8 Assisted Project), 6.125%, 7/15/23 5,000,000 Pennsylvania Housing Finance Agency, Rental Housing Refunding 7/02 at 102 AAA 5,348,000 Bonds, Issue 1992, 6.400%, 7/01/12 2,345,000 Swissvale Housing Development Corporation (an Instrumentality 7/03 at 100 Aa 2,416,405 of the Allegheny County Housing Authority), Multifamily Mortgage Revenue Refunding Bonds, Series 1993C (FHA Insured Mortgage Loan - Section 8 Assisted Swissvale Project), 6.100%, 7/01/22 - ------------------------------------------------------------------------------------------------------------------------------------ Housing/Single Family - 9.0% 1,130,000 Allegheny County Residential Finance Authority, Single Family 11/08 at 102 Aaa 1,142,758 Mortgage Revenue Bonds, 1998 Series DD-1, 5.350%, 11/01/19 (Alternative Minimum Tax) 2,000,000 Pennsylvania Housing Finance Agency, Single Family Mortgage 10/03 at 102 AA+ 2,042,820 Revenue Bonds, Series 1993-37A, 5.450%, 10/01/17 1,120,000 Pennsylvania Housing Finance Agency, Single Family Mortgage No Opt. Call AA+ 1,291,954 Revenue Bonds, Series 1996-47, 6.750%, 10/01/06 (Alternative Minimum Tax) 3,305,000 Pennsylvania Housing Finance Agency, Single Family Mortgage 4/06 at 102 AA+ 3,541,836 Revenue Bonds, Series 1996-51, 6.375%, 4/01/28 (Alternative Minimum Tax) 2,750,000 Pennsylvania Housing Finance Agency, Single Family Mortgage 10/06 at 102 AA+ 2,915,165 Revenue Bonds, Series 1997-54A, 6.150%, 10/01/22 (Alternative Minimum Tax) Pennsylvania Housing Finance Agency, Single Family Mortgage Revenue Bonds, Series 1997-56A: 1,500,000 6.050%, 10/01/16 (Alternative Minimum Tax) 4/07 at 102 AA+ 1,594,050 4,000,000 6.150%, 10/01/27 (Alternative Minimum Tax) 4/07 at 102 AA+ 4,249,560 1,650,000 Pennsylvania Housing Finance Agency, Single Family Mortgage 4/07 at 101 1/2 AA+ 1,740,503 Revenue Bonds, Series 1997-58A, 5.950%, 10/01/28 (Alternative Minimum Tax) 1,645,000 Pennsylvania Housing Finance Agency, Single Family Mortgage 10/07 at 101 1/2 AA+ 1,689,283 Revenue Bonds, Series 1997-59A, 5.700%, 4/01/17 (Alternative Minimum Tax) 1,700,000 Pennsylvania Housing Finance Agency, Single Family Mortgage 4/08 at 101 1/2 AA+ 1,735,615 Revenue Bonds, Series 1998-62A, 5.500%, 10/01/22 (Alternative Minimum Tax) 2,000,000 Pennsylvania Housing Finance Agency, Single Family Mortgage 10/08 at 101 AA+ 1,983,800 Revenue Bonds, Series 1998-64A, 4.500%, 4/01/28 (Alternative Minimum Tax) 1,500,000 Urban Redevelopment Authority of Pittsburgh, Mortgage Revenue 4/06 at 102 AAA 1,618,140 Bonds, 1996 Series C, 6.500%, 10/01/23 (Alternative Minimum Tax) Principal Optional Call Market Amount Description Provisions* Ratings** Value - ------------------------------------------------------------------------------------------------------------------------------------ Housing/Single Family (continued) Urban Redevelopment Authority of Pittsburgh Mortgage Revenue Bonds, 1997 Series A: $ 845,000 6.150%, 10/01/16 (Alternative Minimum Tax) 10/07 at 102 AAA $ 903,922 765,000 6.200%, 10/01/21 (Alternative Minimum Tax) 10/07 at 102 AAA 816,966 1,375,000 Urban Redevelopment Authority of Pittsburgh, Mortgage Revenue 4/03 at 102 AAA 1,455,699 Bonds, 1992 Series D, 6.500%, 4/01/17 2,460,000 Urban Redevelopment Authority of Pittsburgh, Mortgage Revenue 4/03 at 102 AAA 2,621,425 Bonds, 1992 Series C-1, 6.800%, 10/01/25 (Alternative Minimum Tax) 615,000 Urban Redevelopment Authority of Pittsburgh, Mortgage Revenue 4/04 at 102 AAA 671,734 Bonds, 1994 Series B, 6.950%, 10/01/10 (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ Industrial/Other - 0.7% 2,165,000 Montgomery County Industrial Development Authority, Health 6/03 at 102 N/R 2,296,740 Facilities Revenue Bonds, Series of 1993 (ECRI Project), 6.850%, 6/01/13 - ------------------------------------------------------------------------------------------------------------------------------------ Long Term Care - 2.4% 1,230,000 Pennsylvania Economic Development Financing Authority, 6/08 at 100 A 1,187,971 Revenue Bonds, Series A of 1998 (Northwestern Human Services, Inc. Project), 5.250%, 6/01/28 Philadelphia Authority for Industrial Development (Pennsylvania), Health Care Facilities Revenue Bonds, Series 1998A (Pauls Run): 1,350,000 5.750%, 5/15/18 5/08 at 102 N/R 1,343,034 1,650,000 5.875%, 5/15/28 5/08 at 102 N/R 1,649,868 4,000,000 Philadelphia Hospital and Higher Educational Facilities Authority 8/03 at 102 BBB+ 4,274,360 of Philadelphia, Revenue Refunding Bonds, Series 1992 (Philadelphia MR Project), 5.625%, 8/01/04 - ------------------------------------------------------------------------------------------------------------------------------------ Tax Obligation/General - 9.8% 2,000,000 Bangor Area School District, Northampton County, Pennsylvania, 3/06 at 100 AAA 2,072,560 General Obligation Bonds, Series B of 1996, 5.500%, 3/15/18 2,500,000 Bensalem Township School District, Bucks County, Pennsylvania, 7/06 at 100 AAA 2,692,825 General Obligation Bonds, Series of 1996, 5.875%, 7/15/16 Redevelopment Authority of the City of Harrisburg, Dauphin County, Pennsylvania, Guaranteed Revenue Bonds, Series B of 1998: 1,750,000 0.000%, 5/01/22 (DD) 5/16 at 75 9/16 AAA 522,865 2,750,000 0.000%, 11/01/22 (DD) 5/16 at 103 AAA 800,278 2,750,000 0.000%, 5/01/23 (DD) 5/16 at 103 AAA 779,433 2,750,000 0.000%, 11/01/23 (DD) 5/16 at 103 AAA 759,138 4,305,000 County of Montgomery, Pennsylvania, General Obligation Bonds, 10/06 at 100 Aaa 4,409,138 Series B of 1996, 5.375%, 10/15/21 7,800,000 North Penn School District, Montgomery and Bucks Counties, 3/06 at 100 Aa3 7,878,624 Pennsylvania, General Obligation Bonds, Series of 1996, 5.125%, 3/01/17 2,000,000 The School District of Philadelphia, Pennsylvania, General Obligation No Opt. Call AAA 2,317,340 Refunding Bonds, Series A of 1995, 6.250%, 9/01/09 9,050,000 The School District of Philadelphia, Pennsylvania, General Obligation 4/09 at 100 AAA 8,571,527 Bonds, Series A of 1999, 4.750%, 4/01/27 (WI) 4,000,000 Wallenpaupack Area School District, Wayne and Pike Counties, 4/01 at 100 AAA 4,137,480 Pennsylvania, General Obligation Bonds, Series of 1993, 5.500%, 4/01/11 - ------------------------------------------------------------------------------------------------------------------------------------ Tax Obligation/Limited - 10.9% 10,000,000 Dauphin County General Authority, School Revenue Bonds, No Opt. Call Aaa 10,155,900 Series of 1997 (School District Pooled Financing Program II), 4.450%, 9/01/32 4,060,000 Delaware Valley Regional Finance Authority, Local Government 4/06 at 100 AAA 4,466,853 Revenue Bonds, Series A, 6.000%, 4/15/26 17,900,000 The Harrisburg Authority, Dauphin County, Pennsylvania Tax-Exempt 9/07 at 100 AAA 18,841,719 Revenue Bonds (The City of Harrisburg Project), Series II of 1997, 5.625%, 9/15/22 Principal Optional Call Market Amount Description Provisions* Ratings** Value - ------------------------------------------------------------------------------------------------------------------------------------ Tax Obligation/Limited (continued) Pennsylvania Industrial Development Authority, Economic Development Revenue Bonds, Series 1994: $ 2,000,000 7.000%, 7/01/06 No Opt. Call AAA $2,345,160 2,550,000 7.000%, 1/01/07 No Opt. Call AAA 3,013,773 - ------------------------------------------------------------------------------------------------------------------------------------ Transportation - 0.3% 1,000,000 The Philadelphia Parking Authority, Airport Parking Revenue Bonds, No Opt. Call AAA 1,107,120 Series of 1997, 5.750%, 9/01/07 - ------------------------------------------------------------------------------------------------------------------------------------ U.S. Guaranteed - 15.7% 750,000 Allegheny County Hospital Development Authority (Pennsylvania), 6/02 at 102 N/R*** 839,325 Health and Education Revenue Bonds, Series 1992 (The Rehabilitation Institute of Pittsburg Project), 7.000%, 6/01/22 (Pre-refunded to 6/01/02) 3,000,000 Allegheny County Hospital Development Authority (Pennsylvania), 11/02 at 100 AAA 3,268,080 Health Center Revenue Bonds, Series 1992A (Presbyterian University Health System, Inc. Project), 6.250%, 11/01/23 (Pre-refunded to 11/01/02) 9,065,000 Bethlehem Area School District, Northampton and Lehigh Counties, 3/01 at 100 AAA 9,449,900 Pennsylvania, General Obligation Bonds, Series of 1993, 5.600%, 9/01/12 (Pre-refunded to 3/01/01) Bethlehem Authority, Northampton and Lehigh Counties, Pennsylvania, Water Revenue Bonds, Series A of 1992: 3,785,000 6.100%, 11/15/18 (Pre-refunded to 11/15/02) 11/02 at 100 AAA 4,110,434 3,100,000 6.100%, 11/15/21 (Pre-refunded to 11/15/02) 11/02 at 100 AAA 3,366,538 1,500,000 Fort LeBoeuf School District (Erie County, Pennsylvania), General 1/03 at 100 AAA 1,613,520 Obligation Bonds, Series A of 1993, 5.800%, 1/01/16 (Pre-refunded to 1/01/03) 3,500,000 Hollidaysburg Sewer Authority (Pennsylvania), Guaranteed Sewer 1/03 at 100 AAA 3,803,555 Revenue Bonds, Series of 1993, 6.100%, 1/01/23 (Pre-refunded to 1/01/03) 1,500,000 Ligonier Valley School District (Westmoreland County, 3/04 at 100 AAA 1,648,380 Pennsylvania), General Obligation Bonds, Series of 1994, 6.000%, 3/01/23 (Pre-refunded to 3/01/04) 2,015,000 Montgomery County Higher Educational and Health Authority 6/03 at 102 AAA 2,225,829 (Pennsylvania), Hospital Revenue Bonds, Series A of 1993 (Abington Memorial Hospital), 6.000%, 6/01/22 (Pre-refunded to 6/01/03) 1,670,000 Pennsylvania Higher Educational Facilities Authority, College and University Revenue Bonds, 9th Series, 7.625%, 7/01/15 No Opt. Call Aaa 2,051,879 1,300,000 City of Philadelphia, Pennsylvania, Water and Sewer Revenue Bonds, 8/01 at 102 AAA 1,447,823 Sixteenth Series, 7.500%, 8/01/10 (Pre-refunded to 8/01/01) The Hospitals and Higher Education Facilities Authority of Philadelphia (Pennsylvania), Hospital Revenue Bonds, Series of 1993 (Presbyterian Medical Center of Philadelphia): 1,000,000 6.500%, 12/01/11 12/03 at 102 AAA 1,171,240 3,690,000 6.650%, 12/01/19 12/03 at 102 AAA 4,475,601 1,750,000 Pine - Richland School District (Allegheny County, Pennsylvania), 9/03 at 100 AAA 1,920,923 General Obligation Bonds, Series A of 1993, 6.100%, 9/01/18 (Pre-refunded to 9/01/03) 5,000,000 The Pittsburgh (Pennsylvania), Water and Sewer Authority, Water 9/05 at 100 AAA 5,511,000 and Sewer System Subordinate Revenue Bonds, Series B of 1995, 5.750%, 9/01/25 (Pre-refunded to 9/01/05) 3,660,000 Rose Tree Media School District, Delaware County, Pennsylvania, 9/01 at 100 AAA 3,951,226 General Obligation Bonds, Series of 1993, 6.700%, 3/15/12 (Pre-refunded to 9/15/01) 2,500,000 Schuylkill Valley School District, Berks County, Pennsylvania, 4/03 at 100 AAA 2,702,250 General Obligation Bonds, Series of 1993, 5.850%, 4/15/13 (Pre-refunded to 4/15/03) 1,650,000 The Municipal Authority of the Borough of West View (Allegheny No Opt. Call AAA 2,348,363 County, Pennsylvania), Special Obligation Bonds, Series of 1985A, 9.500%, 11/15/14 - ------------------------------------------------------------------------------------------------------------------------------------ Utilities - 13.5% 6,000,000 Beaver County Industrial Development Authority, Pennsylvania, 6/08 at 102 AAA 6,078,960 Exempt Facilities Revenue Bonds, 1998 Series A (Shippingport Project), 5.375%, 6/01/28 (Alternative Minimum Tax) 7,590,000 Indiana County Industrial Development Authority (Pennsylvania), 5/07 at 102 AAA 8,175,341 Pollution Control Revenue Bonds, 1997 Series A (Metropolitan Edison Company Project), 5.950%, 5/01/27 (Alternative Minimum Tax) 15,000,000 Lehigh County Industrial Development Authority, Pollution Control 11/02 at 102 AAA 16,528,950 Revenue Refunding Bonds, 1992 Series A (Pennsylvania Power and Light Company Project), 6.400%, 11/01/21 Principal Optional Call Market Amount Description Provisions* Ratings** Value - ------------------------------------------------------------------------------------------------------------------------------------ Utilities (continued) $ 7,350,000 Luzerne County Industrial Development Authority, Exempt Facilities 10/02 at 102 A $8,148,284 Revenue Refunding Bonds, 1992 Series A (Pennsylvania Gas and Water Company Project), 7.200%, 10/01/17 (Alternative Minimum Tax) 4,500,000 Luzerne County Industrial Development Authority, Exempt Facilities 12/02 at 102 A- 4,991,625 Revenue Bonds, 1992 Series B (Pennsylvania Gas and Water Company Project), 7.125%, 12/01/22 (Alternative Minimum Tax) 3,575,000 Montgomery County Industrial Development Authority (Pennsylvania), 12/01 at 102 AAA 3,884,095 Pollution Control Revenue Refunding Bonds, 1991 Series B (Philadelphia Electric Company Project), 6.700%, 12/01/21 - ------------------------------------------------------------------------------------------------------------------------------------ Water and Sewer - 5.5% 1,975,000 Delaware County Industrial Development Authority, Water Facilities 6/02 at 102 AAA 2,159,860 Revenue Refunding Bonds (Philadelphia Suburban Water Company Project), Series of 1992, 6.500%, 6/01/10 5,500,000 Northumberland County Industrial Development Authority, Exempt 10/03 at 102 N/R 5,686,339 Facilities Revenue Bonds, 1993 Series (Roaring Creek Water Company Project), 6.375%, 10/15/23 (Alternative Minimum Tax) City of Philadelphia, Pennsylvania, Water and Wastewater Revenue Bonds, Series 1993: 2,335,000 5.750%, 6/15/13 6/03 at 102 AAA 2,521,612 2,300,000 5.500%, 6/15/14 6/03 at 102 AAA 2,430,984 City of Philadelphia, Pennsylvania, Water and Wastewater Revenue Bonds, Series 1995: 3,000,000 6.750%, 8/01/05 No Opt. Call AAA 3,443,879 2,730,000 6.250%, 8/01/10 No Opt. Call AAA 3,170,621 - ------------------------------------------------------------------------------------------------------------------------------------ $ 349,240,000 Total Investments - (cost $341,100,257) - 102.0% 362,517,168 ============= Other Assets Less Liabilities - (2.0)% (7,214,164) -------------------------------------------------------------------------------------------------------------------- Net Assets - 100% $355,303,004 ==================================================================================================================== * Optional Call Provisions: Dates (month and year) and prices of the earliest optional call or redemption. There may be other call provisions at varying prices at later dates. ** Ratings: Using the higher of Standard & Poor's or Moody's rating. *** Securities are backed by an escrow or trust containing sufficient U.S. government or U.S. government agency securities which ensures the timely payment of principal and interest. Securities are normally considered to be equivalent to AAA rated securities. N/R Investment is not rated. (DD) Security purchased on a delayed delivery basis (note 1). (WI) Security purchased on a when-issued basis (note 1). See accompanying notes to financial statements.
Statement of Net Assets December 31, 1998 (Unaudited)
New Jersey New Jersey Pennsylvania Pennsylvania Investment Quality Premium Income Investment Quality Premium Income 2 - ------------------------------------------------------------------------------------------------------------------------------------ Assets Investments in municipal securities, at market value (note 1) $440,632,951 $274,690,307 $361,944,861 $362,517,168 Cash -- 220,688 -- 10,075 Receivables: Interest 7,974,838 5,116,126 6,064,503 5,473,488 Investments sold 9,486,000 390,000 360,558 512,563 Other assets 11,056 25,392 11,431 23,953 - ------------------------------------------------------------------------------------------------------------------------------------ Total assets 458,104,845 280,442,513 368,381,353 368,537,247 - ------------------------------------------------------------------------------------------------------------------------------------ Liabilities Payable for investments purchased 16,162,437 3,100,470 2,776,875 11,538,358 Accrued expenses: Management fees (note 6) 238,262 151,446 197,448 192,844 Other 1,083,726 321,203 1,291,936 1,503,041 - ------------------------------------------------------------------------------------------------------------------------------------ Total liabilities 17,484,425 3,573,119 4,266,259 13,234,243 - ------------------------------------------------------------------------------------------------------------------------------------ Net assets (note 7) $440,620,420 $276,869,394 $364,115,094 $355,303,004 ==================================================================================================================================== Preferred shares, at liquidation value $130,000,000 $ 91,600,000 $110,000,000 $118,100,000 ==================================================================================================================================== Preferred shares outstanding 5,200 3,664 4,400 4,724 ==================================================================================================================================== Common shares outstanding 19,804,656 11,945,059 15,942,228 15,747,463 ==================================================================================================================================== Netasset value per Common share outstanding (net assets less Preferred shares at liquidation value, divided by Common shares outstanding) $ 15.68 $ 15.51 $ 15.94 $ 15.06 ==================================================================================================================================== See accompanying notes to financial statements.
Statement of Operations Six Months ended December 31, 1998 (Unaudited)
New Jersey New Jersey Pennsylvania Pennsylvania Investment Quality Premium Income Investment Quality Premium Income 2 - ------------------------------------------------------------------------------------------------------------------------------------ Investment Income (note1) $13,034,076 $7,602,417 $11,136,376 $ 9,592,779 - ------------------------------------------------------------------------------------------------------------------------------------ Expenses Management fees (note 6) 1,411,898 894,980 1,171,288 1,141,069 Preferred shares - auction fees 163,835 115,442 138,629 148,838 Preferred shares - dividend disbursing agent fees 10,081 15,123 10,081 15,123 Shareholders' servicing agent fees and expenses 24,814 12,721 29,142 26,728 Custodian's fees and expenses 36,647 28,540 32,358 31,757 Directors'/Trustees' fees and expenses (note 6) 2,120 1,312 1,765 1,682 Professional fees 9,187 8,939 9,086 9,044 Shareholders' reports - printing and mailing expenses 61,085 40,601 42,719 53,436 Stock exchange listing fees 12,484 12,230 12,560 12,230 Investor relations expense 19,035 11,831 17,007 15,988 Other expenses 13,403 9,716 10,679 8,519 - ------------------------------------------------------------------------------------------------------------------------------------ Total expenses 1,764,589 1,151,435 1,475,314 1,464,414 - ------------------------------------------------------------------------------------------------------------------------------------ Net investment income 11,269,487 6,450,982 9,661,062 8,128,365 - ------------------------------------------------------------------------------------------------------------------------------------ Realized and Unrealized Gain (Loss) from Investments Net realized gain (loss) from investment transactions (notes 1 and 4) 33,519 (384,786) 72,124 1,357 Net change in unrealized appreciation or depreciation of investments 1,157,389 2,549,638 80,789 2,692,910 - ------------------------------------------------------------------------------------------------------------------------------------ Net gain from investments 1,190,908 2,164,852 152,913 2,694,267 - ------------------------------------------------------------------------------------------------------------------------------------ Net increase in net assets from operations $12,460,395 $8,615,834 $ 9,813,975 $10,822,632 ==================================================================================================================================== See accompanying notes to financial statements.
Statement of Changes in Net Assets (Unaudited)
New Jersey Investment Quality New Jersey Premium Income Six Months Ended Year Ended Six Months Ended Year Ended 12/31/98 6/30/98 12/31/98 6/30/98 - ------------------------------------------------------------------------------------------------------------------------------------ Operations Net investment income $ 11,269,487 $ 22,760,040 $ 6,450,982 $ 13,081,889 Net realized gain (loss) from investment transactions (notes 1 and 4) 33,519 1,145,279 (384,786) 1,139,335 Net change in unrealized appreciation or depreciation of investments 1,157,389 4,551,886 2,549,638 6,532,010 - ------------------------------------------------------------------------------------------------------------------------------------ Net increase in net assets from operations 12,460,395 28,457,205 8,615,834 20,753,234 - ------------------------------------------------------------------------------------------------------------------------------------ Distributions to Shareholders (note 1) From undistributed net investment income: Common shareholders (9,375,634) (18,755,870) (5,212,648) (10,251,340) Preferred shareholders (2,066,200) (4,393,050) (1,419,832) (3,059,919) From accumulated net realized gains from investment transactions: Common shareholders (501,059) (592,823) -- -- Preferred shareholders (56,968) (132,888) -- -- - ------------------------------------------------------------------------------------------------------------------------------------ Decrease in net assets from distributions to shareholders (11,999,861) (23,874,631) (6,632,480) (13,311,259) - ------------------------------------------------------------------------------------------------------------------------------------ Capital Share Transactions (note 2) Net proceeds from Common shares issued to shareholders due to reinvestment of distributions 1,281,937 2,673,402 610,250 760,188 - ------------------------------------------------------------------------------------------------------------------------------------ Net increase in net assets 1,742,471 7,255,976 2,593,604 8,202,163 Net assets at beginning of period 438,877,949 431,621,973 274,275,790 266,073,627 - ------------------------------------------------------------------------------------------------------------------------------------ Net assets at end of period $ 440,620,420 $ 438,877,949 $ 276,869,394 $ 274,275,790 ==================================================================================================================================== Balance of undistributed net investment income at end of period $ 387,710 $ 560,057 $ 426,456 $ 607,954 ==================================================================================================================================== Pennsylvania Investment Quality Pennsylvania Premium Income 2 Six Months Ended Year Ended Six Months Ended Year Ended 12/31/98 6/30/98 12/31/98 6/30/98 - ----------------------------------------------------------------------------------------------------------------------------------- Operations Net investment income $ 9,661,062 $ 19,406,751 $ 8,128,365 $ 16,145,833 Net realized gain (loss) from investment transactions (notes 1 and 4) 72,124 736,176 1,357 2,190,521 Net change in unrealized appreciation or depreciation of investments 80,789 670,433 2,692,910 8,353,368 - ------------------------------------------------------------------------------------------------------------------------------------ Net increase in net assets from operations 9,813,975 20,813,360 10,822,632 26,689,722 - ------------------------------------------------------------------------------------------------------------------------------------ Distributions to Shareholders (note 1) From undistributed net investment income: Common shareholders (8,036,842) (15,952,202) (5,858,055) (12,188,569) Preferred shareholders (1,738,047) (3,634,806) (1,784,927) (4,129,260) From accumulated net realized gains from investment transactions: Common shareholders (71,740) (828,412) -- -- Preferred shareholders (2,148) (192,317) -- -- - ------------------------------------------------------------------------------------------------------------------------------------ Decrease in net assets from distributions to shareholders (9,848,777) (20,607,737) (7,642,982) (16,317,829) - ------------------------------------------------------------------------------------------------------------------------------------ Capital Share Transactions (note 2) Net proceeds from Common shares issued to shareholders due to reinvestment of distributions 1,010,848 2,184,617 -- -- - ------------------------------------------------------------------------------------------------------------------------------------ Net increase in net assets 976,046 2,390,240 3,179,650 10,371,893 Net assets at beginning of period 363,139,048 360,748,808 352,123,354 341,751,461 - ------------------------------------------------------------------------------------------------------------------------------------ Net assets at end of period $ 364,115,094 $ 363,139,048 $ 355,303,004 $ 352,123,354 - ------------------------------------------------------------------------------------------------------------------------------------ Balance of undistributed net investment income at end of period $ 416,001 $ 529,828 $ 626,973 $ 141,590 - ------------------------------------------------------------------------------------------------------------------------------------ See accompanying notes to financial statements.
Notes to Financial Statements (Unaudited) 1. General Information and Significant Accounting Policies The state Funds (the "Funds") covered in this report and their corresponding New York Stock Exchange symbols are Nuveen New Jersey Investment Quality Municipal Fund, Inc. (NQJ), Nuveen New Jersey Premium Income Municipal Fund, Inc. (NNJ), Nuveen Pennsylvania Investment Quality Municipal Fund (NQP) and Nuveen Pennsylvania Premium Income Municipal Fund 2 (NPY). Each Fund invests primarily in a diversified portfolio of municipal obligations issued by state and local government authorities within a single state. The Funds are registered under the Investment Company Act of 1940 as closed-end, diversified management investment companies. The following is a summary of significant accounting policies followed by the Funds in the preparation of their financial statements in accordance with generally accepted accounting principles. Securities Valuation The prices of municipal bonds in each Fund's investment portfolio are provided by a pricing service approved by the Fund's Board of Directors/Trustees. When price quotes are not readily available (which is usually the case for municipal securities), the pricing service establishes fair market value based on yields or prices of municipal bonds of comparable quality, type of issue, coupon, maturity and rating, indications of value from securities dealers and general market conditions. Temporary investments in securities that have variable rate and demand features qualifying them as short-term securities are valued at amortized cost, which approximates market value. Securities Transactions Securities transactions are recorded on a trade date basis. Realized gains and losses from such transactions are determined on the specific identification method. Securities purchased or sold on a when-issued or delayed delivery basis may have extended settlement periods. The securities so purchased are subject to market fluctuation during this period. The Funds have instructed the custodian to segregate assets in a separate account with a current value at least equal to the amount of the when-issued and delayed delivery purchase commitments. At December 31, 1998, New Jersey Investment Quality, New Jersey Premium Income, Pennsylvania Investment Quality and Pennsylvania Premium Income 2 had when-issued and delayed delivery purchase commit ments of $16,162,437, $3,100,470, $2,776,875 and $11,538,358, respectively. Investment Income Interest income is determined on the basis of interest accrued, adjusted for amortization of premiums and accretion of discounts on long-term debt securities when required for federal income tax purposes. Income Taxes Each Fund is a separate taxpayer for federal income tax purposes. Each Fund intends to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its tax-exempt net investment income, in addition to any significant amounts of net realized capital gains and/or market discount realized from investment transactions. The Funds currently consider significant net realized capital gains and/or market discount as amounts in excess of $.01 per Common share. Furthermore, each New Jersey Fund intends to satisfy conditions which will enable interest from municipal securities, which is exempt from regular federal and New Jersey state income taxes, to retain such tax-exempt status when distributed to the shareholders of the New Jersey Funds. Each Pennsylvania Fund intends to satisfy conditions which will enable interest from municipal securities, which is exempt from regular federal, Pennsylvania state personal income and the Philadelphia School District Investment Income taxes, to retain such tax-exempt status when distributed to shareholders of the Pennsylvania Funds. Net realized capital gain and market discount distributions are subject to federal taxation. Dividends and Distributions to Shareholders Tax-exempt net investment income is declared as a dividend monthly and payment is made or reinvestment is credited to shareholder accounts on the first business day after month end. Net realized capital gains and/or market discount from investment transactions, if any, are distributed to shareholders not less frequently than annually. Furthermore, capital gains are distributed only to the extent they exceed available capital loss carryforwards. Distributions to shareholders of tax-exempt net investment income, net realized capital gains and/or market discount are recorded on the ex-dividend date. The amount and timing of such distributions are determined in accordance with federal income tax regulations, which may differ from generally accepted accounting principles. Accordingly, temporary over-distributions as a result of these differences may occur and will be classified as either distributions in excess of net investment income, distributions in excess of net realized gains and/or distributions in excess of net ordinary taxable income from investment transactions, where applicable. Preferred Shares The Funds have issued and outstanding $25,000 stated value Preferred shares. Each Fund's Preferred shares are issued in more than one Series. The dividend rate on each Series may change every seven days, as set by the auction agent. The number of shares outstanding, by Series and in total, were as follows:
New Jersey New Jersey Pennsylvania Pennsylvania Investment Premium Investment Premium Quality Income Quality Income 2 - --------------------------------------------------------------------------------------------------------- Number of Shares: Series M 3,200 -- -- 844 Series T -- 624 -- -- Series W -- 1,440 2,400 -- Series Th 2,000 1,600 2,000 2,080 Series F -- -- -- 1,800 - --------------------------------------------------------------------------------------------------------- Total 5,200 3,664 4,400 4,724 =========================================================================================================
Derivative Financial Instruments The Funds may invest in transactions in certain derivative financial instruments including futures, forward, swap and option contracts, and other financial instruments with similar characteristics. Although the Funds are authorized to invest in such financial instruments, and may do so in the future, they did not make any such investments during the six months ended December 31, 1998. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results may differ from those estimates. 2. Fund Shares Transactions in Common shares were as follows:
New Jersey Investment Quality New Jersey Premium Income Six Months Ended Year Ended Six Months Ended Year Ended 12/31/98 6/30/98 12/31/98 6/30/98 - --------------------------------------------------------------------------------------------------------------- Shares issued to shareholders due to reinvestment of distributions 73,582 161,805 37,519 49,041 =============================================================================================================== Pennsylvania Pennsylvania Investment Quality Premium Income 2 - --------------------------------------------------------------------------------------------------------------- Six Months Ended Year Ended Six Months Ended Year Ended 12/31/98 6/30/98 12/31/98 6/30/98 - --------------------------------------------------------------------------------------------------------------- Shares issued to shareholders due to reinvestment of distributions 58,149 128,464 -- -- =========================================================================================================
3. Distributions to Common Shareholders The Funds declared Common share dividend distributions from their tax-exempt net investment income which were paid February 1, 1999, to shareholders of record on January 15, 1999, as follows:
New Jersey New Jersey Pennsylvania Pennsylvania Investment Premium Investment Premium Quality Income Quality Income 2 - --------------------------------------------------------------------------------------------------------- Dividend per share $ .0765 $ .0720 $ .0840 $ .0620 =========================================================================================================
4. Securities Transactions Purchases and sales (including maturities) of investments in municipal securities and temporary municipal investments during the six months ended December 31, 1998, were as follows:
New Jersey New Jersey Pennsylvania Pennsylvania Investment Premium Investment Premium Quality Income Quality Income 2 - --------------------------------------------------------------------------------------------------------- Purchases: Investments in municipal securities $36,103,382 $16,217,094 $15,703,058 $15,142,088 Temporary municipal investments 12,900,000 5,400,000 9,195,000 14,905,000 Sales and Maturities: Investments in municipal securities 26,767,540 17,648,202 20,050,740 695,000 Temporary municipal investments 12,900,000 5,400,000 9,995,000 17,305,000 =========================================================================================================
At December 31, 1998, the identified cost of investments owned for federal income tax purposes was the same as the cost for financial reporting purposes for each Fund. At June 30, 1998, the Funds' last fiscal 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:
New Jersey Pennsylvania Premium Premium Income Income 2 - --------------------------------------------------------------------------------------------------------- Expiration year: 2002 $3,583,548 $ -- 2003 129,409 67,894 2004 650,143 40,999 2005 174,583 169,168 - --------------------------------------------------------------------------------------------------------- Total $4,537,683 $278,061 =========================================================================================================
5. Unrealized Appreciation (Depreciation) Gross unrealized appreciation and gross unrealized depreciation of investments at December 31, 1998, were as follows:
New Jersey New Jersey Pennsylvania Pennsylvania Investment Premium Investment Premium Quality Income Quality Income 2 - --------------------------------------------------------------------------------------------------------- Gross unrealized: appreciation $31,246,486 $17,704,578 $28,053,730 $21,511,960 depreciation (99,936) (626,544) (18,290) (95,049) - --------------------------------------------------------------------------------------------------------- Net unrealized appreciation $31,146,550 $17,078,034 $28,035,440 $21,416,911 =========================================================================================================
6. Management Fee and Other Transactions with Affiliates Under the Funds' investment management agreements with Nuveen Advisory Corp. (the "Adviser"), a wholly owned subsidiary of The John Nuveen Company, each Fund pays an annual management fee, payable monthly, at the rates set forth below, which are based upon the average daily net asset value of each Fund: Average Daily Net Asset Value Management Fee - -------------------------------------------------------------------------------- For the first $125 million .6500 of 1% For the next $125 million .6375 of 1 For the next $250 million .6250 of 1 For the next $500 million .6125 of 1 For the next $1 billion .6000 of 1 For net assets over $2 billion .5875 of 1 ================================================================================ The fee compensates the Adviser for overall investment advisory and administrative services and general office facilities. The Funds pay no compensation directly to those of its Directors/Trustees who are affiliated with the Adviser or to their officers, all of whom receive remuneration for their services to the Funds from the Adviser. 7. Composition of Net Assets At December 31, 1998, net assets consisted of:
New Jersey New Jersey Pennsylvania Pennsylvania Investment Premium Investment Premium Quality Income Quality Income 2 - --------------------------------------------------------------------------------------------------------- Preferred shares, $25,000 stated value per share, at liquidation value $ 130,000,000 $ 91,600,000 $110,000,000 $118,100,000 Common shares, $.01 par value per share 198,047 119,451 159,422 157,475 Paid-in surplus 278,811,071 172,572,553 225,453,689 215,275,700 Balance of undistributed net investment income 387,710 426,456 416,001 626,973 Accumulated net realized gain (loss) from investment transactions 77,042 (4,927,100) 50,542 (274,055) Net unrealized appreciation of investments 31,146,550 17,078,034 28,035,440 21,416,911 - --------------------------------------------------------------------------------------------------------- Net assets $440,620,420 $276,869,394 $364,115,094 $355,303,004 - --------------------------------------------------------------------------------------------------------- Authorized shares: Common 200,000,000 200,000,000 Unlimited Unlimited Preferred 1,000,000 1,000,000 Unlimited Unlimited =========================================================================================================
Financial Highlights (Unaudited) Selected data for a Common share outstanding throughout each period is as follows:
Investment Operations ------------------------------------- Net Realized/ Beginning Net Unrealized Net Asset Investment Investment Value Income Gain (Loss) Total New Jersey Investment Quality Year Ended 6/30: 1999 (a) $ 15.65 $ .57 $ .06 $ .63 1998 15.41 1.16 .29 1.45 1997 15.05 1.18 .34 1.52 1996 15.06 1.17 (.01) 1.16 1995 14.73 1.20 .40 1.60 1994 15.88 1.20 (1.07) .13 New Jersey Premium Income Year Ended 6/30: 1999 (a) 15.34 .54 .19 .73 1998 14.71 1.10 .65 1.75 1997 14.18 1.09 .51 1.60 1996 13.97 1.08 .20 1.28 1995 13.46 1.06 .55 1.61 11 mos. ended 6/30/94 14.52 .94 (1.12) (.18) Pennsylvania Investment Quality Year Ended 6/30: 1999 (a) 15.94 .61 -- .61 1998 15.91 1.23 .10 1.33 1997 15.72 1.26 .22 1.48 1996 15.86 1.28 (.08) 1.20 1995 15.49 1.29 .41 1.70 1994 16.42 1.30 (.86) .44 Pennsylvania Premium Income 2 Year Ended 6/30: 1999 (a) 14.86 .52 .16 .68 1998 14.20 1.02 .67 1.69 1997 13.57 1.04 .63 1.67 1996 13.25 1.04 .33 1.37 1995 12.53 1.05 .77 1.82 1994 14.35 1.00 (1.71) (.71) Less Distributions ------------------------------------------------------------- Net Net Investment Investment Capital Capital Income Income Gain Gain To Common To Preferred To Common To Preferred Shareholders Shareholders+ Shareholders Shareholders+ Total New Jersey Investment Quality Year Ended 6/30: 1999 (a) $ (.47) $ (.10) $ (.03) $ -- $ (.60) 1998 (.95) (.22) (.03) (.01) (1.21) 1997 (.95) (.21) -- -- (1.16) 1996 (.94) (.23) -- -- (1.17) 1995 (1.01) (.24) (.02) -- (1.27) 1994 (1.07) (.14) (.06) (.01) (1.28) New Jersey Premium Income Year Ended 6/30: 1999 (a) (.44) (.12) -- -- (.56) 1998 (.86) (.26) -- -- (1.12) 1997 (.84) (.23) -- -- (1.07) 1996 (.81) (.26) -- -- (1.07) 1995 (.81) (.28) (.01) -- (1.10) 11 mos. ended 6/30/94 (.71) (.17) -- -- (.88) Pennsylvania Investment Quality Year Ended 6/30: 1999 (a) (.50) (.11) -- -- (.61) 1998 (1.01) (.23) (.05) (.01) (1.30) 1997 (1.01) (.24) (.03) (.01) (1.29) 1996 (1.05) (.25) (.03) (.01) (1.34) 1995 (1.07) (.26) -- -- (1.33) 1994 (1.16) (.16) (.04) (.01) (1.37) Pennsylvania Premium Income 2 Year Ended 6/30: 1999 (a) (.37) (.11) -- -- (.48) 1998 (.77) (.26) -- -- (1.03) 1997 (.78) (.26) -- -- (1.04) 1996 (.78) (.27) -- -- (1.05) 1995 (.81) (.29) -- -- (1.10) 1994 (.79) (.18) -- -- (.97) Total Returns ----------------------------------- Organization and Offering Costs and Preferred Share Ending Underwriting Net Asset Ending Based on Based on Net Discounts Value Market Value Market Value** Asset Value** New Jersey Investment Quality Year Ended 6/30: 1999 (a) $-- $ 15.68 $ 16.9375 1.77% 3.39% 1998 -- 15.65 17.1250 11.38 8.12 1997 -- 15.41 16.3125 16.50 8.92 1996 -- 15.05 14.8750 8.17 6.28 1995 -- 15.06 14.6250 3.03 9.71 1994 -- 14.73 15.2500 (4.63) (.27) New Jersey Premium Income Year Ended 6/30: 1999 (a) -- 15.51 16.6250 9.71 3.98 1998 -- 15.34 15.5625 11.12 10.35 1997 -- 14.71 14.8125 20.95 9.94 1996 -- 14.18 13.0000 4.24 7.37 1995 -- 13.97 13.2500 14.60 10.39 11 mos. ended 6/30/94 -- 13.46 12.3750 (13.16) (2.61) Pennsylvania Investment Quality Year Ended 6/30: 1999 (a) -- 15.94 18.0625 7.79 3.22 1998 -- 15.94 17.2500 8.77 7.02 1997 -- 15.91 16.8750 9.75 8.01 1996 -- 15.72 16.3750 12.74 6.00 1995 -- 15.86 15.5000 2.32 9.77 1994 -- 15.49 16.2500 (.39) 1.23 Pennsylvania Premium Income 2 Year Ended 6/30: 1999 (a) -- 15.06 14.1875 8.38 3.87 1998 -- 14.86 13.4375 6.27 10.29 1997 -- 14.20 13.3750 14.82 10.61 1996 -- 13.57 12.3750 2.21 8.39 1995 -- 13.25 12.8750 11.50 12.87 1994 (.14) 12.53 12.3750 (10.29) (7.60) Ratios/Supplemental Data ---------------------------------------------------------------------------------------- Ratio of Net Ratio of Net Ratio of Investment Ratio of Investment Expenses to Income to Expenses to Income to Average Average Average Total Average Total Ending Net Assets Net Assets Net Assets Net Assets Portfolio Net Assets Applicable to Applicable to Including Including Turnover (000) Common Shares++ Common Shares++ Preferred++ Preferred++ Rate New Jersey Investment Quality Year Ended 6/30: 1999 (a) $ 440,620 1.13%* 7.20%* .79%* 5.07%* 6% 1998 438,878 1.13 7.40 .79 5.20 6 1997 431,622 1.14 7.70 .80 5.36 15 1996 422,338 1.16 7.67 .81 5.33 16 1995 420,944 1.23 8.06 .85 5.57 13 1994 259,718 1.16 7.67 .82 5.39 5 New Jersey Premium Income Year Ended 6/30: 1999 (a) 276,869 1.23* 6.92* .83* 4.63* 6 1998 274,276 1.25 7.24 .83 4.81 13 1997 266,074 1.27 7.53 .83 4.91 18 1996 259,708 1.32 7.53 .86 4.90 32 1995 257,251 1.46 7.89 .94 5.08 15 11 mos. ended 6/30/94 113,458 1.38* 7.12* .91* 4.72* 12 Pennsylvania Investment Quality Year Ended 6/30: 1999 (a) 364,115 1.15* 7.54* .80* 5.26* 4 1998 363,139 1.15 7.65 .80 5.34 9 1997 360,749 1.17 7.96 .81 5.52 8 1996 355,823 1.18 7.98 .82 5.53 12 1995 355,831 1.27 8.28 .87 5.70 9 1994 191,718 1.21 7.95 .84 5.54 3 Pennsylvania Premium Income 2 Year Ended 6/30: 1999 (a) 355,303 1.23* 6.82* .82* 4.55* -- 1998 352,123 1.24 6.99 .82 4.63 32 1997 341,751 1.27 7.47 .83 4.85 29 1996 331,863 1.30 7.59 .84 4.90 19 1995 326,771 1.46 8.23 .92 5.20 5 1994 139,053 1.36 7.11 .90 4.70 11 * Annualized. ** Total Return on Market Value is the combination of reinvested dividend income, reinvested capital gains distributions, if any, and changes in stock price per share. Total Return on Net Asset Value is the combination of reinvested dividend income, reinvested capital gains distributions, if any, and changes in net asset value per share. Total returns are not annualized. + 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) For the six months ended December 31, 1998.
Building a Better Portfolio Can Make You a Successful Investor Nuveen Family of Mutual Funds Nuveen offers a variety of funds designed to help you reach your financial goals. Growth Nuveen Rittenhouse Growth Fund Growth and Income European Value Fund Growth and Income Stock Fund Balanced Stock and Bond Fund Balanced Municipal and Stock Fund Tax-Free Income National Funds Long-Term Insured Intermediate-Term Limited-Term State Funds Arizona California Colorado Connecticut Florida Georgia Kansas Kentucky Louisiana Maryland Massachusetts Michigan Missouri New Jersey New Mexico New York North Carolina Ohio Pennsylvania Tennessee Virginia Wisconsin Successful investors know that a well-diversified portfolio - one that balances different types of investments, levels of risk and tax management - can be the foundation for building and sustaining wealth. That's why Nuveen offers you and your financial adviser a wide range of quality investments that can help you build a better portfolio in the pursuit of your financial goals Exchange-Traded Funds Nuveen Exchange-Traded Funds offer investors actively managed portfolios of investment-grade quality municipal bonds. The fund shares are listed and traded on the New York and American stock exchanges. Exchange-traded funds provide the investment convenience, price visibility and liquidity of common stocks. MuniPreferred(R) Nuveen MuniPreferred offers investors a AAA rated investment with an attractive tax-free yield for the cash reserves portion of an investment portfolio. MuniPreferred shares are backed 2-to-1 by the long-term portfolios of Nuveen dual-class exchange-traded funds and are available for national as well as a wide variety of state-specific portfolios. Mutual Funds Nuveen offers a family of equity, balanced and municipal bond funds featuring Premier AdvisersSM including Institutional Capital Corporation, Rittenhouse Financial Services, and Nuveen Advisory Corp. Each brings a specialized expertise in a particular investment style or asset class, time-tested investment strategies and a focus on consistent, long-term performance. With Nuveen's Premier Adviser funds, you have all the advantages of a family of funds plus the benefits of specialized investment expertise. Private Asset Management Rittenhouse Financial Services and Nuveen Asset Management offer comprehensive, customized investment management solutions to investors with assets of $250,000 or more to invest. A range of actively managed growth, balanced and municipal income-oriented portfolios are available, all based upon a disciplined investment philosophy. Defined Portfolios Nuveen Defined Portfolios are fixed portfolios of quality securities that are a convenient, attractive alternative to purchasing individual securities. They provide low-cost diversification to reduce risk, while also offering experienced, professional security selection and surveillance. In addition, Nuveen Defined Portfolios provide daily liquidity at that day's net asset value for quick access to your assets. Fund Information Board of Directors/Trustees Robert P. Bremner Lawrence H. Brown Anthony T. Dean Anne E. Impellizzeri Peter R. Sawers William J. Schneider Timothy R. Schwertfeger Judith M. Stockdale Fund Manager Nuveen Advisory Corp. 333 West Wacker Drive Chicago, IL 60606 Custodian, Transfer Agent and Shareholder Services The Chase Manhattan Bank 4 New York Plaza New York, NY 10004-2413 (800) 257-8787 Legal Counsel Morgan, Lewis & Bockius LLP Washington, D.C. Independent Auditors Ernst & Young LLP Chicago, IL Year 2000 The concern that computer systems may have problems processing date-related information in the year 2000 and beyond has challenged businesses and organizations to thoroughly review all aspects of their operations. We have undertaken just such an approach at Nuveen in preparation for the millennium. Over the last 10 years, our trading, fund management and pricing systems at Nuveen - the systems that directly affect our investors and their financial advisers - have been updated or replaced to address the Year 2000 concerns. We continue to work closely with our transfer agent, custodian and other service partners to monitor readiness and address other remaining systems issues. Our initial testing indicates we are on schedule, and we have targeted year-end 1998 to complete verification of vendor compliance and service partner readiness. However, we can give no complete assurance at this time that the steps we have taken will be sufficient to prevent any problems that would impact the Nuveen Exchange-Traded Funds. Each fund intends to repurchase shares of its own common or preferred stock in the future at such times and in such amounts as is deemed advisable. No shares were repurchased during the six-months ended December 31, 1998. Any future repurchases will be reported to shareholders in the next annual or semiannual report. Serving Investors for Generations Photo of: John Nuveen, Sr. Since our founding in 1898, John Nuveen & Co. has been synonymous with investments that withstand the test of time. Today we offer a broad range of quality investments designed for individuals seeking to build and sustain wealth. In fact, more than 1.3 million investors have trusted Nuveen to help them pursue their financial goals. The cornerstone of Nuveen's investment philosophy is a commitment to disciplined long-term investment strategies focused on providing consistent, attractive performance over time - with moderated risk. We emphasize quality securities carefully chosen through in-depth research, and we follow those securities closely over time to ensure that they continue to meet our exacting standards. Whether your focus is long-term growth, dependable current income or sustaining accumulated wealth, Nuveen offers a wide variety of investments and services to help meet your unique circumstances and financial planning needs. Our equity, balanced, and tax-free income funds, along with our defined portfolios and private asset management, can help you build a better, well-diversified portfolio. Talk with your financial adviser to learn more about how Nuveen investment products and services can help you. Or call us at (800) 257-8787 for more information, including a prospectus where applicable. Please read that information carefully before investing. LOGO: NUVEEN 1898 1998 OUR SECOND CENTURY helping investors sustain the wealth of a lifetime(TM). John Nuveen & Co. Incorporated 333 West Wacker Drive Chicago, IL 60606-1286 www.nuveen.com FSA-2-12-98 -----END PRIVACY-ENHANCED MESSAGE-----