-----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, IYWYXeiZG5TUrIQRRlIp3hBTPk9jq6g/EJkrtyE2HAyIde4cyCJgUJnA2vwgiNoK 9d6q/6NOiztOgUKuX/m4KQ== 0000891804-99-001880.txt : 19990901 0000891804-99-001880.hdr.sgml : 19990901 ACCESSION NUMBER: 0000891804-99-001880 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19990630 FILED AS OF DATE: 19990831 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: 99703263 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 JUNE 30, 1999 ANNUAL REPORT DEPENDABLE, TAX-FREE INCOME TO HELP YOU KEEP MORE OF WHAT YOU EARN. NQJ NNJ New Jersey NQP NPY Pennsylvania Photo of: People gardening. Highlights As of June 30, 1999 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 Report of Independent Auditors 12 Portfolio of Investments 31 Statement of Net Assets 32 Statement of Operations 33 Statement of Changes in Net Assets 34 Notes to Financial Statements 38 Financial Highlights 40 Build Your Wealth Automatically 41 Fund Information ================================================================================ Nuveen New Jersey Investment Quality Municipal Fund, Inc. (NQJ) o Outperformed the one-year total return of its Lipper Peer Group, which ranked the Fund second out of nine funds, and the Lehman Brothers Municipal Bond Index * o **** Four-star Morningstar RatingTM ** Pie Chart: AAA/U.S. Guaranteed 67% AA 15% A 5% BBB/NR/Other 13% Nuveen New Jersey Premium Income Municipal Fund, Inc. (NNJ) o Outperformed the one-year total return of its Lipper Peer Group, which ranked the Fund first out of nine funds, and the Lehman Brothers Municipal Bond Index * o Has provided stable or increasing tax-free income for 68 consecutive months Pie Chart: AAA/U.S. Guaranteed 62% AA 10% A 16% BBB/NR/Other 12% Nuveen Pennsylvania Investment Quality Municipal Fund (NQP) o Outperformed the one-year total return of its Lipper Peer Group * o **** Four-star Morningstar RatingTM ** Pie Chart: AAA/U.S. Guaranteed 73% AA 13% A 7% BBB/NR/Other 7% Nuveen Pennsylvania Premium Income Municipal Fund 2 (NPY) o Has provided stable or increasing income for 14 consecutive months o Taxable-equivalent yield on share price of 8.79% *** Pie Chart: AAA/U.S. Guaranteed 75% AA 11% A 6% BBB/NR/Other 8% * The Lipper Peer Group return represents the average annualized returns of the funds in the appropriate Lipper Municipal Debt category. The return assumes reinvestment of dividends and does not reflect any applicable sales charge. The Lehman Brothers Municipal Bond Index is an unleveraged index covering a broad range of investment grade municipal bonds. The return for the index does not reflect any initial or ongoing expenses. ** Morningstar proprietary ratings reflect historical risk-adjusted performance as of June 30, 1999. The ratings are subject to change every month. Past performance is no guarantee of future results. Morningstar ratings are calculated from the Fund's three-, five-, and 10-year average annual returns (if applicable) in excess of 90-day Treasury bill returns with appropriate fee adjustments, and a risk factor that reflects fund performance below 90-day T-bill returns. NQJ received 4 stars for the three and five-year periods, respectively. NQP received 3 stars for the three-year period and 4 stars for the five-year period. The top 10% of the funds in a broad asset class receive 5 stars and the next 22.5% receive 4 stars. The funds were rated among 194 funds for the three-year period, 192 funds for the five-year period, and 29 funds for the 10-year period. *** For investors in the combined 31% federal and applicable state income tax bracket. See your fund's Performance Overview in this report for more information. Photo of: TIMOTHY R. SCHWERTFEGER CHAIRMAN OF THE BOARD SIDEBAR TEXT: WEALTH TAKES A LIFETIME TO BUILD. ONCE ACHIEVED, IT SHOULD BE PRESERVED. Dear Shareholder It is my pleasure to inform you about the performance of your Nuveen Exchange-Traded Fund. Providing an attractive tax-free dividend is the Fund's main objective, and your Fund achieved this goal, especially when compared to a taxable investment. During the period covered by this report, we have seen some shifts in U.S. economic trends and the fixed-income market in which your Nuveen Exchange-Traded Fund operates. I appreciate the opportunity to discuss these changes with you, as does the portfolio manager of your fund, who will discuss fund performance later in this report. A CHALLENGING INVESTMENT ENVIRONMENT Over the past 12 months, the U.S. economy has continued to be characterized by robust growth, generally low interest rates, and unemployment levels that remain among the lowest in three decades. However, concerns about the continued persistent pace of the economy's expansion have tested the new paradigm that holds that improvements in productivity enable us to have both economic growth and low inflation at the same time. With investors and the various markets watching - and reacting to - every announcement concerning economic statistics, volatility has increased, especially in the equity markets. In an effort to pre-empt the threat of inflation, the Federal Reserve moved to raise interest rates by a quarter-point - to 5.0% - at the end of June. This upward adjustment to the federal funds rate, which represents the amount banks charge one another on overnight loans, marks the first increase since March 1997 and stands in sharp contrast to the three reductions made last fall. Despite this minimal increase and the Fed's announcement that it would shift to a neutral bias concerning future interest rate actions, uncertainty about the board's next move - which was not diminished by Chairman Greenspan's Congressional testimony in late July - continues. MUNICIPAL BOND PERFORMANCE Over the past year, our exchange-traded municipal bond funds continued to offer attractive, stable income in a market that places a high premium on yield. At the end of June 1999, the ratio between long-term municipal yields and 30-year Treasury yields stood at 94%, compared with the historical average of 86% over the period 1986-1999. For investors, this meant that quality long-term municipal bonds offered yields comparable to those of long Treasury bonds - even before the tax advantages of municipals were taken into account. On an after-tax basis, municipal bonds continued to present an exceptionally attractive investment option relative to Treasuries. In the coming months, we expect to see a healthy supply of new municipal bonds, although total volume is expected to drop from the near-record levels of 1998. This is due to the dramatic decrease in the refunding of existing bonds in the wake of higher interest rates compared to last June. To date, municipal supply has declined by approximately 25% from the levels of a year ago. This, in turn, enhances the attractiveness of the municipal bonds that are brought to market, as demand - especially from individual investors - remains strong. We anticipate that this demand will continue to strengthen as investors increasingly look at rebalancing their portfolios. With the outlook for tighter supply and continued demand in the months ahead, Nuveen's established market position as the leading sponsor of exchange-traded municipal bond funds ensures that we will have exceptional access to the bond offerings that have the potential to add value for our shareholders. BALANCED PORTFOLIO: ENHANCED GROWTH WITH REDUCED RISK Like most investors in the marketplace today, your tax-free investing goal is to capture high after-tax total returns while moderating risk. Using the appropriate securities' indices and tax rates, Nuveen compared the hypothetical investment performance of a balanced portfolio consisting of equities and municipal bonds to that of a balanced portfolio consisting of equities and taxable bonds. Our research showed that for the last 20 years, the pairing of equities with municipal bonds had provided both superior after-tax total returns and lower levels of risk than the combination of equities and taxable bonds. Incorporating even a 20% allocation of municipal bonds into an all-equity portfolio cut risk substantially, with only a small reduction in after-tax total return. Purchasing shares of a Nuveen Exchange-Traded Municipal Bond Fund provides an easy way to incorporate the benefits of municipal bonds into a balanced portfolio. NUVEEN FUNDS: AN ANSWER TO YOUR INVESTMENT NEEDS In light of the recent shifts in the economic environment, your financial adviser can serve as a valuable resource in helping you determine if adjustments are needed in your current asset allocation plan. As part of this process, your adviser can set up a reinvestment plan designed to purchase additional shares of your Nuveen Exchange-Traded Fund. Additionally, your financial adviser can help you invest in other Nuveen funds to give you the proper exposure to different types of investments needed to enhance your potential for success. For more information on any of Nuveen's funds, 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. Since 1898, Nuveen has been synonymous with investments that stand the test of time. As we look ahead to the new millennium, we are committed to maintaining that reputation and finding the best ways to serve your evolving investment needs. Thank you for your continued confidence. Sincerely, /s/TIMOTHY R. SCHWERTFEGER TIMOTHY R. SCHWERTFEGER Chairman of the Board August 16, 1999 SIDEBAR TEXT: "PURCHASING SHARES OF A NUVEEN EXCHANGE-TRADED MUNICIPAL BOND FUND PROVIDES AN EASY WAY TO INCORPORATE THE BENEFITS OF MUNICIPAL BONDS INTO A BALANCED PORTFOLIO." Nuveen New Jersey Exchange-Traded Funds Portfolio Manager's Comments PORTFOLIO MANAGER TOM FUTRELL REVIEWS THE NEW JERSEY MUNICIPAL MARKET, FUND PERFORMANCE, AND KEY STRATEGIES FOR THE NUVEEN NEW JERSEY EXCHANGE-TRADED FUNDS. A 16-YEAR VETERAN OF NUVEEN WITH PORTFOLIO MANAGEMENT RESPONSIBILITY FOR A RANGE OF NATIONAL AND STATE MUNICIPAL BOND FUNDS, TOM HAS MANAGED NQJ AND NNJ SINCE JULY 1998. WHAT FACTORS CONTRIBUTED TO THE PERFORMANCE OF THE NEW JERSEY MUNICIPAL MARKET DURING THE PAST 12 MONTHS? The New Jersey state economy is one of the most diverse in the nation, with a broad mix of sectors including chemical, pharmaceutical, communications, and financial services. The state's residents enjoy a level of per capita income that ranks among the top five in the country. Over the past year, New Jersey continued to lead the region in employment growth, although the state's growth rate lagged the national average. New Jersey's unemployment level rose slightly, reaching 4.9% in June 1999, compared with 4.7% 12 months ago and the current national average of 4.3%. One of the more significant events in the New Jersey market over the past several years has been the uncertainty in the solid waste sector created by a United States Supreme Court decision ruling that the state's dumping regulations were unconstitutional. This ongoing situation has created problems for solid waste facilities as well as for county governments faced with finding new ways to dispose of solid waste. For the 12 months ended June 30, 1999, the New Jersey market saw an ample supply of municipal bonds, as issuance in the state rose 17% over that of the previous 12-month period, compared with a decline of 9% nationally. The majority of the state's new supply was concentrated in the July-December 1998 period. In the past six months, issuance declined, reflecting tighter supply in the overall municipal market. Demand for New Jersey paper, especially from individual investors, remains strong, due largely to the high level of state and local income taxes. HOW DID THE NUVEEN NEW JERSEY EXCHANGE-TRADED FUNDS PERFORM IN THIS ENVIRONMENT? For the 12 months ended June 30, 1999, the Nuveen New Jersey Investment Quality Municipal Fund, Inc. (NQJ) and the Nuveen New Jersey Premium Income Municipal Fund, Inc. (NNJ) produced total returns on net asset value (NAV) as shown in the accompanying table. For comparison purposes, the annual total return for the Funds' benchmark - the Lehman Brothers Municipal Bond Index(1) - and the average total return for the Lipper New Jersey Municipal Debt category(2) are also provided. The Funds' performance over the past year placed them first (NNJ) and second (NQJ) among the nine funds in their Lipper peer group. LEHMAN LIPPER NEW JERSEY TOTAL RETURN ON NAV TOTAL RETURN AVERAGE TOTAL RETURN 1-Year Ended Taxable- 1-Year Ended 1-Year Ended 6/30/99 Equivalent(3) 6/30/99 6/30/99 - --------------------------------------------------------------------------- NQJ 2.82% 6.18% 2.77% 1.49% - --------------------------------------------------------------------------- NNJ 2.87% 6.05% 2.77% 1.49% - --------------------------------------------------------------------------- Over the past year, active demand for NNJ - bolstered by the Fund's outstanding dividend record - resulted in solid share price performance. NQJ, however, experienced a decline in share price. At the same time, the prevailing interest rate environment, which was generally higher than that of June 1998, led to a decline in the NAVs of both funds. As a result of these factors, NNJ's premium (share price above NAV) widened by more than 4.5% over the past 12 months, while NQJ saw its premium narrow by almost 5%. CURRENT PREMIUM/ TOTAL RETURN MARKET YIELD DISCOUNT(4) ON SHARE PRICE - -------------------------------------------------------------------------------- TAXABLE 1-YEAR ENDED TAXABLE- 6/30/99 EQUIVALENT(3) 6/30/98 6/30/99 6/30/99 EQUIVALENT(3) - -------------------------------------------------------------------------------- NQJ 5.81% 9.01% 9.42% 4.44% -2.33% 0.73% - -------------------------------------------------------------------------------- NNJ 5.46% 8.47% 1.45% 5.98% 7.17% 10.30% - -------------------------------------------------------------------------------- For additional information, see the individual Performance Overview for your fund in this report. HOW WERE THE FUNDS' DIVIDENDS AFFECTED? During the past 12 months, good call protection and the prudent use of leverage helped support the dividend of NNJ and shield the income of this fund from erosion. As of the end of June 1999, NNJ had provided shareholders with 68 consecutive months of steady or increasing income. For NQJ, however, the incomeeroding effect of a small number of bond calls led to a dividend cut in November 1998. Even with this single dividend adjustment, NQJ continued to provide an extremely attractive market yield. In addition, as leveraged funds, the Nuveen New Jersey funds issue preferred shares that pay short-term interest rates to investors seeking short-term liquidity. The proceeds from the preferred shares are used to buy additional long-term bonds for the Funds' portfolio. When short-term interest rates remain below long-term rates, common shareholders can potentially earn extra income from the difference between the rate earned on the Funds' long-term portfolio and the short-term rate paid to preferred shareholders. WHAT KEY STRATEGIES WERE USED TO MANAGE THE NUVEEN NEW JERSEY FUNDS DURING THE PAST 12 MONTHS? The focus of our management strategies over the past year was on taking advantage of every market opportunity to purchase well-structured bonds that supported the yields of these funds. We also bought insured bonds to enhance the Funds' overall quality. Over the past year, we increased the allocation of AAA rated bonds by 7% in NQJ and by 9% in NNJ. At the end of June 1999, NQJ and NNJ had a total of 82% and 72% of their portfolios, respectively, invested in bonds rated AAA and AA. Nuveen Research, which is instrumental in helping us identify the bonds that we believe will add value to our portfolios, also assists us with monitoring events in the municipal market and analyzing the effect of those events on national as well as individual state markets. For example, when the Philadelphia-based hospitals of the Allegheny Health Education and Research Foundation (AHERF) declared bankruptcy last year, the impact was most pronounced in the healthcare sector of the Pennsylvania municipal market. However, the ramifications of the event were still felt, to a lesser extent, throughout the municipal market, as the uncertainty created by the situation prompted investors across the country to demand higher yields for lower-rated issues. This caused the yield spread, or the difference between higher credit quality securities and those of lower credit quality, to widen. Prior to the AHERF bankruptcy, this spread had been relatively narrow, suggesting that investors were not being adequately compensated for taking on additional credit risk. As spreads have widened, lower-rated securities have become more attractive on a risk-adjusted basis. With interest rates at a higher level, and the widening differential among credit sectors, we took the opportunity to investigate lower-rated issues. Using the expertise of Nuveen Research, we were able to determine those bonds that offered adequate compensation for their risk level before making any purchases for the Funds. As of June 30, 1999, NQJ had a 13% allocation of BBB, non-rated and other bonds, while NNJ had 12% allocated to this credit sector. In the area of bond calls, NNJ currently offers very good levels of call protection, with only 5% of its portfolio subject to calls prior to 2002. This should provide additional protection for the Fund's dividend over this period. As NQJ, which was assembled in 1991, approaches the 10-year mark, it is also approaching the normal part of the bond market cycle when bond calls are more likely to occur. Between now and 2003, approximately half of the bonds in this portfolio will be subject to calls. To minimize the effect of these calls, we are already at work on strategies for managing through this period, including taking advantage of opportunities to add bonds with longer call protection to the portfolio. WERE THERE ANY OTHER NOTABLE EVENTS THAT OCCURRED DURING THE FISCAL YEAR? In June, new MuniPreferred shares were issued for NQJ because the leverage ratio for the Fund fell below 35%. Nuveen re-leveraged the Fund to restore its original leverage ratio to 35% and potentially to provide more incremental tax-free income to you. NNJ was not affected because its leverage ratio remained in line with expectations. WHAT IS NUVEEN'S OUTLOOK FOR THESE FUNDS? In the coming months, our focus will remain on supporting the tax-exempt income streams of these funds at the highest level consistent with capital preservation. As part of our strategies for achieving this goal, we will continue to explore opportunities for purchasing attractive investments that add incremental yield. The ability to identify and leverage such opportunities demonstrates the value that can be added by an active bond manager such as Nuveen. As an experienced investment manager knowledgeable about the unique aspects of the New Jersey municipal market, we are in the marketplace every day, monitoring market dynamics, looking for opportunities, and capitalizing on them to the benefit of shareholders. 1 NQJ and NNJ are compared with the Lehman Brothers Municipal Bond Index, an unleveraged index comprising a broad range of investment-grade municipal bonds. The result for the Lehman index does not reflect any initial or ongoing expenses. 2 The Lipper New Jersey Peer Group return represents the average annualized returns of the nine funds in the Lipper New Jersey Municipal Debt category. The return assumes reinvestment of dividends and does not reflect any applicable sales charges. 3 Taxable-equivalent total return represents the return on a taxable investment necessary to equal the return of the Nuveen fund on an after-tax basis. Taxable-equivalent total return is based on the annualized total return and a combined federal income tax rate of 35.5%. 4 A fund's premium or discount represents the percentage difference between the Fund's share price and its NAV. Nuveen New Jersey Investment Quality Municipal Fund, Inc. Performance Overview As of June 30, 1999 NQJ PORTFOLIO STATISTICS Inception Date 2/91 - -------------------------------------------------- Share Price $15 13/16 - -------------------------------------------------- Net Asset Value $15.14 - -------------------------------------------------- Market Yield 5.81% - -------------------------------------------------- Taxable-Equivalent Yield (Federal Tax Rate)(1) 8.42% - -------------------------------------------------- Taxable-Equivalent Yield (Federal and State Tax Rate)(1) 9.01% - -------------------------------------------------- Fund Net Assets ($000) $463,329 - -------------------------------------------------- Average Weighted Maturity (Years) 15.65 - -------------------------------------------------- Leverage-Adjusted Duration (Years) 7.43 - -------------------------------------------------- ANNUALIZED TOTAL RETURN ON SHARE PRICE ON NAV - -------------------------------------------------- 1-Year -2.33% 2.82% - -------------------------------------------------- 5-Year 7.12% 7.13% - -------------------------------------------------- Since Inception 6.99% 7.55% - -------------------------------------------------- TAXABLE-EQUIVALENT TOTAL RETURN(2) ON SHARE PRICE ON NAV - -------------------------------------------------- 1-Year 0.73% 6.18% - -------------------------------------------------- 5-Year 10.60% 10.70% - -------------------------------------------------- Since Inception 10.44% 11.15% - -------------------------------------------------- TOP 5 SECTORS (AS A % OF TOTAL INVESTMENTS) U.S. Guaranteed 18% - -------------------------------------------------- Transportation 12% - -------------------------------------------------- Housing/Multifamily 11% - -------------------------------------------------- Tax Obligation/General 10% - -------------------------------------------------- Healthcare 10% - -------------------------------------------------- Bar Chart: 1998-1999 Monthly Tax-Free Dividends Per Share(3) 7/98 0.0795 8/98 0.0795 9/98 0.0795 10/98 0.0795 11/98 0.0765 12/98 0.0765 1/99 0.0765 2/99 0.0765 3/99 0.0765 4/99 0.0765 5/99 0.0765 6/99 0.0765 Line Chart: Share Price Performance 7/2/98 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 17 16.19 16.25 16.38 16.69 16.94 17 17 17.19 17.31 17.25 17.13 17.38 17.44 17.19 17 16.75 16.13 16 16.13 16.19 16.13 16.19 15.81 6/30/99 15.8125 Weekly Closing Price Past performance is not predictive of future results. 1 A taxable-equivalent yield 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 tax rate of 35.5%. 2 Taxable-equivalent total return is based on the annualized total return and a combined federal and state income tax rate of 35.5%. 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 capital gains distributions in December of $0.0253 per share. Nuveen New Jersey Premium Income Municipal Fund, Inc. Performance Overview As of June 30, 1999 NNJ PORTFOLIO STATISTICS Inception Date 12/92 - -------------------------------------------------- Share Price $15 13/16 - -------------------------------------------------- Net Asset Value $14.92 - -------------------------------------------------- Market Yield 5.46% - -------------------------------------------------- Taxable-Equivalent Yield (Federal Tax Rate)(1) 7.91% - -------------------------------------------------- Taxable-Equivalent Yield (Federal and State Tax Rate)(1) 8.47% - -------------------------------------------------- Fund Net Assets ($000) $270,304 - -------------------------------------------------- Maturity (Years) 17.24 - -------------------------------------------------- Leverage-Adjusted Duration 10.36 - -------------------------------------------------- ANNUALIZED TOTAL RETURN ON SHARE PRICE ON NAV - -------------------------------------------------- 1-Year 7.17% 2.87% - -------------------------------------------------- 5-Year 11.42% 8.13% - -------------------------------------------------- Since Inception 6.68% 6.65% - -------------------------------------------------- TAXABLE-EQUIVALENT TOTAL RETURN(2) ON SHARE PRICE ON NAV - -------------------------------------------------- 1-Year 10.30% 6.05% - -------------------------------------------------- 5-Year 14.87% 11.43% - -------------------------------------------------- Since Inception 9.91% 9.82% - -------------------------------------------------- TOP 5 SECTORS (AS A % OF TOTAL INVESTMENTS) Transportation 24% - -------------------------------------------------- Housing/Multifamily 12% - -------------------------------------------------- Tax Obligation/Limited 11% - -------------------------------------------------- Water and Sewer 10% - -------------------------------------------------- Education and Civic Organizations 9% - -------------------------------------------------- Bar Chart: 1998-1999 Monthly Tax-Free Dividends Per Share(3) 7/98 0.072 8/98 0.072 9/98 0.072 10/98 0.072 11/98 0.072 12/98 0.072 1/99 0.072 2/99 0.072 3/99 0.072 4/99 0.072 5/99 0.072 6/99 0.072 Line Chart: Share Price Performance 7/2/98 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 16.06 15.94 15.88 15.5 15.81 16 16 16.25 16.44 16.69 16.63 16.56 16.6875 16.5 16.56 16.56 16.75 16.38 16.38 16.31 16.19 16.19 16.13 15.88 6/30/99 15.8125 Weekly Closing Price Past performance is not predictive of future results. 1 A taxable-equivalent yield 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 tax rate of 35.5%. 2 Taxable-equivalent total return is based on the annualized total return and a combined federal and state income tax rate of 35.5%. 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 net ordinary income distributions in December of $0.0038 per share. Nuveen Pennsylvania Exchange-Traded Funds Portfolio Manager's Comments PORTFOLIO MANAGER TOM O'SHAUGHNESSY DISCUSSES THE PENNSYLVANIA MUNICIPAL MARKET, RECENT FUND PERFORMANCE, AND THE OUTLOOK FOR THE NUVEEN PENNSYLVANIA EXCHANGE-TRADED FUNDS. A 16-YEAR VETERAN OF NUVEEN WITH PORTFOLIO MANAGEMENT RESPONSIBILITY FOR A RANGE OF OTHER NUVEEN STATE MUNICIPAL BOND FUNDS, TOM HAS MANAGED NQP SINCE ITS INCEPTION IN 1991 AND NPY SINCE MARCH 1995. WHAT FACTORS CONTRIBUTED TO THE PERFORMANCE OF THE PENNSYLVANIA MUNICIPAL MARKET DURING THE PAST 12 MONTHS? Pennsylvania experienced steady economic growth over the past year. However, the commonwealth's slow population growth and loss of manufacturing jobs caused Pennsylvania's growth rate to continue lagging the national average. The commonwealth is benefiting as its economy diversifies away from manufacturing into sectors such as biotechnology, software, tourism, and business services. Unemployment levels in the commonwealth remain near the 25-year low of 4.2% reached in May 1999, with a June jobless rate of 4.3%. This matches the current national rate and compares with last June's figure of 4.6%. Pennsylvania residents enjoy per capita income levels that are slightly higher than the national average. One of the more significant recent events in the Pennsylvania market was last summer's bankruptcy of the Philadelphia-based hospitals of the Allegheny Health Education and Research Foundation (AHERF). Because of AHERF, whose affected bonds were not held by either of the Nuveen Pennsylvania Exchange-Traded Funds, Pennsylvania's healthcare sector remains the focus of lingering concerns, and many investors continue to avoid the sector entirely. Unlike the national market, the Pennsylvania municipal market enjoyed good supply over the past year. For the 12 months ended June 30, 1999, a number of large deals from several issuers produced a 13% increase in new state supply, compared with a 9% drop in the national supply during this period. For the most recent six months, Pennsylvania saw municipal supply increase 6%, while the nationwide supply declined 23%. Supply was also increased by the actions of arbitrageurs who trade between the municipal and U.S. Treasury markets in an attempt to capture pricing differences between the two markets. Arbitrageurs find the Pennsylvania municipal market particularly attractive due to its high quality paper and liquidity. As municipals outperformed Treasuries during the first half of 1999, the arbitrageurs sold municipal bonds to lock in their profits, increasing the number of these bonds in the marketplace. Because arbitrage accounts typically trade in blocks of $10 million or more, the ability to take advantage of this supply source was generally limited to larger institutional traders, providing another example of the benefits of Nuveen's actively managed exchange-traded funds. Despite ample supply, the commonwealth's delay in bringing issues to market - e.g., an $800 million Pennsylvania Turnpike issue was delayed for eight months - has often made it difficult to implement sector strategies. Although income tax rates in the commonwealth are lower than those of many other states, the demand for Pennsylvania bonds remains steady, due in part to residents' strong support for state and local bond issuance. HOW DID THE NUVEEN PENNSYLVANIA EXCHANGE-TRADED FUNDS PERFORM IN THIS ENVIRONMENT? For the 12 months ended June 30, 1999, the Nuveen Pennsylvania Investment Quality Municipal Fund (NQP) and the Nuveen Pennsylvania Premium Income Municipal Fund 2 (NPY) produced total returns on net asset value (NAV) as shown in the accompanying table. For comparison purposes, the annual total return for the Funds' benchmark - the Lehman Brothers Municipal Bond Index(1) - and the average total return for the Lipper Pennsylvania Municipal Debt category(2) are also provided. LEHMAN LIPPER PENNSYLVANIA TOTAL RETURN ON NAV TOTAL RETURN AVERAGE TOTAL RETURN 1-Year Ended Taxable- 1-Year Ended 1-Year Ended 6/30/99 Equivalent(3) 6/30/99 6/30/99 - -------------------------------------------------------------------------- NQP 2.50% 5.70% 2.77% 1.63% - -------------------------------------------------------------------------- NPY 1.27% 3.86% 2.77% 1.63% - -------------------------------------------------------------------------- Over the past year, active demand for NPY - bolstered by the recent increases in the Fund's dividend - resulted in solid share price performance. NQP, however, experienced a decline in share price. At the same time, the prevailing interest rate environment, which was generally higher than that of June 1998, led to a decline in the NAVs of both funds. As a result of these factors, NPY's discount (share price below NAV) narrowed by 5.72% over the past 12 months, while NQP saw its premium (share price above NAV) widen slightly. CURRENT PREMIUM/ TOTAL RETURN MARKET YIELD DISCOUNT(4) ON SHARE PRICE - -------------------------------------------------------------------------------- TAXABLE- 1-YEAR ENDED TAXABLE- 6/30/99 EQUIVALENT(3) 6/30/98 6/30/99 6/30/99 EQUIVALENT(3) - -------------------------------------------------------------------------------- NQP 6.04% 9.01% 8.22% 8.86% 2.56% 5.52% - -------------------------------------------------------------------------------- NPY 5.89% 8.79% -9.57% -3.85% 7.98% 10.85% - -------------------------------------------------------------------------------- For additional information, seethe individual Performance Overview for your fund in this report. HOW WERE THE FUNDS' DIVIDENDS AFFECTED? During the past 12 months, good call protection and the prudent use of leverage helped support the dividends of NQP and NPY and shield the income of these funds from erosion. As of June 30, 1999, NQP had provided shareholders with 35 consecutive months of steady income and offered the highest dividend among the eight funds in its Lipper peer group. In addition, excellent dividend management strategies enabled us to make two increases in NPY's dividend, effective in February and May 1999, enhancing the competitiveness of its market yield. In addition, as leveraged funds, the Nuveen Pennsylvania funds issue preferred shares that pay short-term interest rates to investors seeking short-term liquidity. The proceeds from the preferred shares are used to buy additional long-term bonds for the Funds' portfolios. When short-term interest rates remain below long-term rates, common shareholders can potentially earn extra income from the difference between the rate earned on the Funds' long-term portfolio and the short-term rate paid to preferred shareholders. WHAT KEY STRATEGIES WERE USED TO MANAGE THE NUVEEN PENNSYLVANIA FUNDS DURING THE PAST 12 MONTHS? The focus of our management strategies over the past year was on purchasing well-structured bonds that added yield to the portfolio. As larger issues came to market, we also took advantage of opportunities to make additions to our sector positions at attractive prices. Nuveen Research, which is instrumental in helping us identify the bonds that we believe will add value to our portfolios, also assists us with monitoring events in the municipal market and analyzing the effect of those events on national as well as individual state markets. For example, when AHERF declared bankruptcy last year, the impact was most pronounced in the healthcare sector of the Pennsylvania municipal market. However, the ramifications of the event were felt to a lesser extent throughout the municipal market, as the uncertainty created by the situation prompted investors across the country to demand higher yields for lower-rated issues. This caused the yield spread, or the difference between higher credit quality securities and those of lower credit quality, to widen. Prior to the AHERF bankruptcy, this spread had been relatively narrow, suggesting that investors were not being adequately compensated for taking on additional credit risk. As spreads have widened, lower-rated securities have become more attractive on a risk-adjusted basis. With interest rates at a higher level, and the widening differential among credit sectors, we took the opportunity to investigate lower-rated issues. Using the expertise of Nuveen Research, we were able to determine those bonds that offered adequate compensation for their risk level before making any purchases for the Funds. Overall, the Pennsylvania Exchange-Traded Funds continued to offer excellent credit quality. At the end of June 1999, NQP and NPY each had 86% of their portfolios invested in bonds rated AAA and AA. Both funds also had allocations of BBB and non-rated bonds, 7% in NQP and 8% in NPY, which provided enhanced levels of yield. In the area of bond calls, NPY currently offers very good levels of call protection, with only 5% of its portfolio subject to calls prior to 2002. This should provide additional protection for the Fund's dividend over this period. As NQP, which was assembled in 1991, approaches the 10-year mark, it is also approaching the normal part of the bond market cycle when bond calls are more likely to occur. Over the next 3 1/2 years, approximately 60% of the bonds in this portfolio will be subject to calls. To minimize the effect of these calls, we are already at work on strategies for managing through this period, balancing the need for eventual changes in the Fund against the goal of maintaining high levels of tax-free income for shareholders. Beginning in 2003, NQP will again offer good levels of call protection. WERE THERE ANY OTHER NOTABLE EVENTS THAT OCCURRED DURING THE FISCAL YEAR? In June, new MuniPreferred shares were issued for NQP because the leverage ratio for the Fund fell below 35%. Nuveen re-leveraged the Fund to restore its original leverage ratio to 35% and potentially to provide more incremental tax-free income to you. NPY was not affected because its leverage ratio remained in line with expectations. WHAT IS NUVEEN'S OUTLOOK FOR THESE FUNDS? Looking ahead, our focus will remain on supporting the income stream of these funds at the highest levels consistent with capital preservation. In NPY, we will look for additional opportunities to enhance the competitiveness of the Fund's market yield. As NQP begins to face scheduled bond calls, we will continue to work on devising strategies aimed at maintaining the above-market income stream currently provided by the Fund for as long as possible. This focus on income demonstrates the value that can be added by an active bond manager such as Nuveen. As an experienced investment manager knowledgeable about the unique aspects of the Pennsylvania municipal market, we are in the marketplace every day, monitoring market dynamics, looking for opportunities, and capitalizing on them to the benefit of shareholders. 1 NQP and NPY are compared with the Lehman Brothers Municipal Bond Index, an unleveraged index comprising a broad range of investment-grade municipal bonds. The result for the Lehman index does not reflect any initial or ongoing expenses. 2 The Lipper Pennsylvania Peer Group return represents the average annualized returns of the eight funds in the Lipper Pennsylvania Municipal Debt category. The return assumes reinvestment of dividends and does not reflect any applicable sales charges. 3 Taxable-equivalent total return represents the return on a taxable investment necessary to equal the return of the Nuveen fund on an after-tax basis. Taxable-equivalent total return is based on the annualized total return and a combined federal and state income tax rate of 33%. 4 A fund's premium or discount represents the percentage difference between the Fund's share price and its NAV. Nuveen Pennsylvania Investment Quality Municipal Fund Performance Overview As of June 30, 1999 NQP PORTFOLIO STATISTICS Inception Date 2/91 - -------------------------------------------------- Share Price $16 11/16 - -------------------------------------------------- Net Asset Value $15.33 - -------------------------------------------------- Market Yield 6.04% - -------------------------------------------------- Taxable-Equivalent Yield (Federal Tax Rate)(1) 8.75% - -------------------------------------------------- Taxable-Equivalent Yield (Federal and State Tax Rate)(1) 9.01% - -------------------------------------------------- Fund Net Assets ($000) $377,468 - -------------------------------------------------- Effective Maturity (Years) 13.58 - -------------------------------------------------- Leverage-Adjusted Duration 7.57 - -------------------------------------------------- ANNUALIZED TOTAL RETURN ON SHARE PRICE ON NAV - -------------------------------------------------- 1-Year 2.56% 2.50% - -------------------------------------------------- 5-Year 7.14% 6.62% - -------------------------------------------------- Since Inception 7.92% 7.99% - -------------------------------------------------- TAXABLE-EQUIVALENT TOTAL RETURN(2) ON SHARE PRICE ON NAV - -------------------------------------------------- 1-Year 5.52% 5.70% - -------------------------------------------------- 5-Year 10.32% 9.93% - -------------------------------------------------- Since Inception 11.12% 11.35% - -------------------------------------------------- TOP 5 SECTORS (AS A % OF TOTAL INVESTMENTS) U.S. Guaranteed 43% - -------------------------------------------------- Housing/Single Family 13% - -------------------------------------------------- Education and Civic Organizations 10% - -------------------------------------------------- Utilities 9% - -------------------------------------------------- Tax Obligation/General 6% - -------------------------------------------------- Bar Chart: 1998-1999 Monthly Tax-Free Dividends Per Share(3) 7/98 0.084 8/98 0.084 9/98 0.084 10/98 0.084 11/98 0.084 12/98 0.084 1/99 0.084 2/99 0.084 3/99 0.084 4/99 0.084 5/99 0.084 6/99 0.084 Share Price Performance 7/2/98 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 17.813 17.563 17.81 17.81 18 17.31 17.31 17.75 18 18 17.94 17.94 17.44 17.06 16.94 17.31 17.06 17.13 17.13 17.13 17.19 17.25 17.25 17.44 17.5 17.5 17.63 17.5 17.25 17 17 17.06 16.94 17.19 16.63 6/30/99 16.6875 Weekly Closing Price Past performance is not predictive of future results. 1 A taxable-equivalent yield 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 tax rate of 33%. 2 Taxable-equivalent total return is based on the annualized total return and a combined federal and state income tax rate of 33%. 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 capital gains distributions in December of $0.0045 per share. Nuveen Pennsylvania Premium Income Municipal Fund 2 Performance Overview As of June 30, 1999 NPY PORTFOLIO STATISTICS Inception Date 3/93 - -------------------------------------------------- Share Price $13 3/4 - -------------------------------------------------- Net Asset Value $14.30 - -------------------------------------------------- Market Yield 5.89% - -------------------------------------------------- Taxable-Equivalent Yield (Federal Tax Rate)(1) 8.54% - -------------------------------------------------- Taxable-Equivalent Yield (Federal and State Tax Rate)(1) 8.79% - -------------------------------------------------- Fund Net Assets ($000) $343,335 - -------------------------------------------------- Effective Maturity (Years) 18.35 - -------------------------------------------------- Leverage-Adjusted Duration 10.40 - -------------------------------------------------- ANNUALIZED TOTAL RETURN ON SHARE PRICE ON NAV - -------------------------------------------------- 1-Year 7.98% 1.27% - -------------------------------------------------- 5-Year 8.43% 8.60% - -------------------------------------------------- Since Inception 4.46% 5.89% - -------------------------------------------------- TAXABLE-EQUIVALENT TOTAL RETURN2 ON SHARE PRICE ON NAV - -------------------------------------------------- 1-Year 10.85% 3.86% - -------------------------------------------------- 5-Year 11.50% 11.49% - -------------------------------------------------- Since Inception 7.36% 8.68% - -------------------------------------------------- TOP 5 SECTORS (AS A % OF TOTAL INVESTMENTS) U.S. Guaranteed 15% - -------------------------------------------------- Education and Civic Organizations 14% - -------------------------------------------------- Utilities 14% - -------------------------------------------------- Healthcare 14% - -------------------------------------------------- Tax Obligation/Limited 11% - -------------------------------------------------- Bar Chart: 1998-1999 Monthly Tax-Free Dividends Per Share(3) 7/98 0.084 8/98 0.084 9/98 0.084 10/98 0.084 11/98 0.084 12/98 0.084 1/99 0.084 2/99 0.084 3/99 0.084 4/99 0.084 5/99 0.084 6/99 0.084 Line Chart: Share Price Performance 7/2/98 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 17.813 17.563 17.81 17.81 18 17.31 17.31 17.75 18 18 17.94 17.94 17.44 17.06 16.94 17.31 17.06 17.13 17.13 17.13 17.19 17.25 17.25 17.44 17.5 17.5 17.63 17.5 17.25 17 17 17.06 16.94 17.19 16.63 6/30/99 16.6875 1 A taxable-equivalent yield 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 tax rate of 33%. 2 Taxable-equivalent total return is based on the annualized total return and a combined federal and state income tax rate of 33%. It represents the return on a taxable investment necessary to equal the return of the Nuveen fund on an after-tax basis. REPORT OF INDEPENDENT AUDITORS THE BOARDS OF DIRECTORS, TRUSTEES AND SHAREHOLDERS NUVEEN NEW JERSEY INVESTMENT QUALITY MUNICIPAL FUND, INC. NUVEEN NEW JERSEY PREMIUM INCOME MUNICIPAL FUND, INC. NUVEEN PENNSYLVANIA INVESTMENT QUALITY MUNICIPAL FUND NUVEEN PENNSYLVANIA PREMIUM INCOME MUNICIPAL FUND 2 We have audited the accompanying statements of net assets, including the portfolios of investments, of Nuveen New Jersey Investment Quality Municipal Fund, Inc., Nuveen New Jersey Premium Income Municipal Fund, Inc., Nuveen Pennsylvania Investment Quality Municipal Fund and Nuveen Pennsylvania Premium Income Municipal Fund 2 as of June 30, 1999, and the related statements of operations, changes in net assets and the financial highlights for the periods indicated therein. These financial statements and financial highlights are the responsibility of the Funds' management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of investments owned as of June 30, 1999, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial positions of Nuveen New Jersey Investment Quality Municipal Fund, Inc., Nuveen New Jersey Premium Income Municipal Fund, Inc., Nuveen Pennsylvania Investment Quality Municipal Fund and Nuveen Pennsylvania Premium Income Municipal Fund 2 at June 30, 1999, and the results of their operations, changes in their net assets and financial highlights for the periods indicated therein in conformity with generally accepted accounting principles. /s/ Ernst & Young LLP Chicago, Illinois August 13, 1999 PORTFOLIO OF INVESTMENTS NUVEEN NEW JERSEY INVESTMENT QUALITY MUNICIPAL FUND, INC. (NQJ) JUNE 30, 1999
PRINCIPAL OPTIONAL CALL MARKET AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE - --------------------------------------------------------------------------------------------------------------------------------- BASIC MATERIALS - 1.4% $ 6,250,000 The Pollution Control Financing Authority of Salem County (New Jersey), 11/01 at 102 AA- $6,605,625 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) - --------------------------------------------------------------------------------------------------------------------------------- CONSUMER STAPLES - 1.1% 5,000,000 New Jersey Economic Development Authority, Economic Development 12/01 at 100 N/R 5,115,350 Revenue Bonds (J & J Snack Foods Corporation of New Jersey Project), Series 1991, 7.250%, 12/01/05 (Alternative Minimum Tax) - --------------------------------------------------------------------------------------------------------------------------------- EDUCATION AND CIVIC ORGANIZATIONS - 4.2% 3,000,000 New Jersey Economic Development Authority, School Revenue 2/08 at 101 N/R 2,900,940 Bonds (Gill/St. Bernard School) 1998 Series, 6.000%, 2/01/25 1,575,000 New Jersey Educational Facilities Authority, Seton Hall University 7/01 at 102 A- 1,665,185 Project Revenue Bonds, 1991 Series D, 7.000%, 7/01/21 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 963,140 1,750,000 5.500%, 7/01/27 7/08 at 102 BBB 1,685,933 1,250,000 New Jersey Educational Facilities Authority, Seton Hall University 7/08 at 101 AAA 1,210,300 Project Revenue Refunding Bonds, 1998 Series F, 5.000%, 7/01/21 245,000 Higher Education Assistance Authority (State of New Jersey), 7/01 at 102 A 259,445 Senior Student Loan Revenue Bonds, 1991 Series A, 7.200%, 7/01/09 (Alternative Minimum Tax) 5,675,000 New Jersey Higher Educational Assistance Authority, Student Loan 6/07 at 102 AAA 5,911,421 Revenue Bonds, New Jersey 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 3,097,693 1,725,000 6.500%, 5/01/18 5/02 at 102 AA 1,842,593 - --------------------------------------------------------------------------------------------------------------------------------- ENERGY - 1.9% 8,000,000 Pollution Control Financing Authority of Middlesex County 12/02 at 102 N/R 8,608,720 (New Jersey), Pollution Control Revenue Refunding Bonds, Series 1992 (Amerada Hess Corporation Project), 6.875%, 12/01/22 - --------------------------------------------------------------------------------------------------------------------------------- HEALTH CARE - 9.6% 250,000 Camden County Improvement Authority (New Jersey), Health System 5/08 at 102 AAA 250,990 Revenue Bonds, Catholic Health East Issue, Series 1998B, 5.000%, 11/15/08 300,000 New Jersey Health Care Facilities Financing Authority, Revenue 7/00 at 102 AAA 314,172 Bonds, 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 572,481 2,845,000 6.800%, 8/01/19 2/01 at 102 AAA 3,018,289 9,300,000 New Jersey Health Care Facilities Financing Authority, Revenue 7/01 at 102 AAA 9,930,726 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 3,005,910 Bonds, Beth Israel Hospital Association of Passaic Issue, Series B, 6.250%, 7/01/14 2,070,000 New Jersey Health Care Facilities Financing Authority, Revenue 7/01 at 102 AAA 2,195,318 Bonds, Robert Wood Johnson University Hospital, Series B, 6.625%, 7/01/16 4,350,000 New Jersey Health Care Facilities Financing Authority, Revenue 7/01 at 102 AAA 4,603,910 Bonds, Mercer Medical Center Issue, Series 1991, 6.500%, 7/01/10 PRINCIPAL OPTIONAL CALL MARKET AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE - --------------------------------------------------------------------------------------------------------------------------------- HEALTH CARE (continued) $ 5,025,000 New Jersey Health Care Facilities Financing Authority, Revenue 7/01 at 102 N/R $5,357,856 Bonds, Pascack Valley Hospital Association Issue, Series 1991, 6.700%, 7/01/11 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- 3,876,264 2,800,000 6.800%, 7/01/11 7/02 at 102 A- 2,993,676 2,535,000 New Jersey Health Care Facilities, Financing Authority, Revenue 7/03 at 102 Baa2 2,594,142 Bonds, Deborah Heart and Lung Center Issue, Series 1993, 6.200%, 7/01/13 4,320,000 New Jersey Health Care Facilities Financing Authority, Revenue 7/08 at 101 Aaa 4,142,318 Refunding Bonds (Saint Barnabas Medical Center/West Hudson Hospital Obligated Group), Series 1998A, 5.000%, 7/01/23 1,355,000 New Jersey Health Care Facilities Financing Authority, Revenue 7/02 at 102 Baa3 1,453,658 Bonds, Palisades Medical Center Obligated Group Issue, Series 1992, 7.500%, 7/01/06 - --------------------------------------------------------------------------------------------------------------------------------- HOUSING/MULTIFAMILY - 10.5% 3,790,000 The Hudson County Improvement Authority, Multifamily Housing 6/04 at 100 AA+ 4,024,146 Revenue Bonds (Conduit Financing - Observer Park Project), Series 1992 A, 6.900%, 6/01/22 (Alternative Minimum Tax) 1,445,000 Housing Finance Corporation of the City of Long Branch, 10/99 at 100 N/R 1,452,442 New Jersey, Section 8 Assisted Housing Revenue Bonds, Washington Manor Associates Ltd., Series 1980, Elderly Project, 10.000%, 10/01/11 12,000,000 New Jersey Housing and Mortgage Finance Agency, Multifamily 11/01 at 102 AAA 12,826,440 Housing Revenue Refunding Bonds (Presidential Plaza at Newport Project-FHA Insured Mortgages), 1991 Series One, 7.000%, 5/01/30 1,500,000 New Jersey Housing and Mortgage Finance Agency, Multifamily 5/05 at 102 AAA 1,580,250 Housing Revenue Bonds, 1995 Series A, 6.000%, 11/01/14 4,500,000 New Jersey Housing Mortgage Finance Agency, Multifamily Housing 5/06 at 102 AAA 4,742,955 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 11/01 at 102 AA+ 3,164,730 2,500,000 6.900%, 11/01/07 11/01 at 102 AA+ 2,639,300 4,700,000 6.950%, 11/01/08 11/01 at 102 AA+ 4,961,649 1,000,000 7.100%, 11/01/11 11/01 at 102 AA+ 1,055,530 9,650,000 New Jersey Housing and Mortgage Finance Agency, Housing 5/02 at 102 A+ 10,375,198 Revenue Bonds, 1992 Series A, 6.950%, 11/01/13 1,810,000 New Jersey Housing and Mortgage Finance Agency, Housing 11/02 at 102 A+ 1,923,089 Revenue Refunding Bonds, 1992 Series One, 6.700%, 11/01/28 - --------------------------------------------------------------------------------------------------------------------------------- HOUSING/SINGLE FAMILY - 8.7% 5,500,000 New Jersey Housing and Mortgage Finance Agency, Home Buyer 10/00 at 102 AAA 5,656,860 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 3,333,218 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 2,764,009 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 5,247,300 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 10,389,700 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 12,273,560 Revenue Bonds (GNMA-Guaranteed Mortgage Loans), 1998 Series A, 5.200%, 12/01/32 (Alternative Minimum Tax) 710,000 Puerto Rico Housing Finance Corporation, Single Family 10/01 at 102 AAA 742,788 Mortgage Revenue Bonds, Series C, 6.750%, 10/15/13 - --------------------------------------------------------------------------------------------------------------------------------- INDUSTRIAL/OTHER - 0.3% 1,500,000 New Jersey Economic Development Authority, Insured Revenue 5/08 at 101 AAA 1,373,625 Refunding Bonds (Educational Testing Service Issue), Series 1998A, 4.750%, 5/15/25 PRINCIPAL OPTIONAL CALL MARKET AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE - --------------------------------------------------------------------------------------------------------------------------------- TAX OBLIGATION/GENERAL - 10.1% $ 1,265,000 Township of East Brunswick, County of Middlesex, New Jersey, 4/03 at 101 Aa2 $1,267,328 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 3,244,590 1,000,000 5.000%, 11/15/11 11/07 at 101 Aaa 995,840 2,320,000 City of Hoboken, Fiscal Year Adjustment General Obligation Bonds, No Opt. Call AAA 2,897,541 Series 1991, 8.900%, 8/01/06 5,250,000 Township of Howell, County of Monmouth, New Jersey, General 1/02 at 102 AAA 5,617,028 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 4,437,085 Adjustment Bonds, Series 1991B, 8.400%, 5/15/06 1,000,000 The Monmouth County Improvement Authority, Monmouth County, 7/07 at 101 AAA 1,050,990 New Jersey, Revenue Bonds, Series 1997 (Howell Township Board of Education Project), 5.800%, 7/15/17 2,000,000 Town of Morristown, County of Morris, New Jersey, General 8/05 at 102 AAA 2,191,340 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+ 5,338,450 6.375%, 8/01/11 State of New Jersey, General Obligation Bonds, Series D: 4,000,000 5.750%, 2/15/06 No Opt. Call AA+ 4,261,080 5,000,000 6.000%, 2/15/11 No Opt. Call AA+ 5,438,750 10,000,000 Commonwealth of Puerto Rico, Public Improvement Refunding Bonds, 7/08 at 101 AAA 8,827,800 Series 1998 (General Obligation Bonds), 4.500%, 7/01/23 1,000,000 Township of West Deptford, County of Gloucester, New Jersey, General 3/06 at 102 AAA 1,007,200 Obligation Bonds, Series 1996, 5.250%, 3/01/14 - --------------------------------------------------------------------------------------------------------------------------------- TAX OBLIGATION/LIMITED - 6.7% 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 2,722,243 3,400,000 5.000%, 12/15/14 12/07 at 101 AAA 3,333,598 1,000,000 The Board of Education of the Town of Dover, County of Morris, 12/01 at 100 AAA 1,048,990 New Jersey, as Lessee, Certificates of Participation, 6.600%, 6/01/11 2,535,000 The Board of Education of the Township of Mansfield, County 3/06 at 102 AAA 2,679,292 of Warren, New Jersey, Certificates of Participation, 5.900%, 3/01/15 The State of New Jersey, as Lessee, 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 3,005,880 1,585,000 6.050%, 1/01/13 7/99 at 100 Aa 1,587,932 1,000,000 6.050%, 1/01/14 7/99 at 100 Aa 1,001,850 1,720,000 6.050%, 1/01/16 7/99 at 100 Aa 1,723,096 2,000,000 6.050%, 1/01/17 7/99 at 100 Aa 2,003,520 4,000,000 New Jersey Economic Development Authority, Lease Revenue 11/08 at 101 Aaa 3,664,920 Bonds (Bergen County Administration Complex), Series 1998, 4.750%, 11/15/26 2,045,000 New Jersey Sports and Exposition Authority, State Contract Bonds, 3/02 at 102 AA- 2,176,289 Series 1992A, 6.500%, 3/01/19 1,895,000 North Bergen Township Municipal Utility Authority, Sewer Revenue No Opt. Call AAA 2,336,573 Refunding Bonds, Series 1993, 7.875%, 12/15/09 1,250,000 The Ocean County Utilities Authority, New Jersey, Wastewater 1/11 at 101 Aa2 1,149,350 Revenue Refunding Bonds, Series 2000, 5.000%, 1/01/18 (WI, settling 12/08/00) 1,180,000 The Raritan Township Municipal Utilities Authority, Hunterdon 5/02 at 102 A+ 1,255,968 County, 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 1,395,106 New Jersey, Sewer Refunding Revenue Bonds, Series 1992 (Bank-Qualified), 7.400%, 11/01/05 PRINCIPAL OPTIONAL CALL MARKET AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE - --------------------------------------------------------------------------------------------------------------------------------- TRANSPORTATION - 11.7% $ 3,000,000 New Jersey Economic Development Authority, Economic Development 11/01 at 102 Baa2 $3,206,970 Bonds (American Airlines, Inc. Project), 7.100%, 11/01/31 (Alternative Minimum Tax) 3,500,000 New Jersey Highway Authority (Garden State Parkway), Senior 1/02 at 102 AA- 3,707,375 Parkway Revenue Refunding Bonds, Series 1992, 6.250%, 1/01/14 5,000,000 New Jersey Turnpike Authority, Turnpike Revenue Refunding Bonds, 7/99 at 100 BBB+ 5,005,500 Series 1991A, 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 9,968,490 2,100,000 6.500%, 1/01/16 No Opt. Call BBB+ 2,348,010 3,150,000 The Port Authority of New York and New Jersey Consolidated Bonds, 7/04 at 101 AA- 3,329,960 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 6/02 at 102 BBB- 4,590,895 Bonds, LaGuardia Airport Passenger Terminal, Series 1R, Delta Air Lines, Inc. Project, 6.950%, 6/01/08 4,500,000 The Port Authority of New York and New Jersey Consolidated Bonds, 1/03 at 101 AA- 4,682,790 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 5,143,450 One Hundred Second Series, 5.875%, 10/15/27 12,130,000 The Port Authority of New York and New Jersey, Special Project 12/07 at 100 AAA 12,401,227 Bonds, JFK International Air Terminal LLC Project, Series 6, 5.750%, 12/01/25 (Alternative Minimum Tax) - --------------------------------------------------------------------------------------------------------------------------------- U.S. GUARANTEED - 17.9% 1,500,000 The Board of Education of the Township of Bedminster, County 3/01 at 102 A1*** 1,600,620 of Somerset, New Jersey, Certificates of Participation, 7.125%, 9/01/10 (Pre-refunded to 3/01/01) 7,000,000 The Bergen County Utilities Authority, 1992 Water Pollution Control 6/02 at 102 AAA 7,576,310 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 8,318,778 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, County 9/01 at 102 AAA 4,413,509 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 8,735,542 Adjustment Bonds, Series 1991A, 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*** 1,003,846 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 2/01 at 102 AAA 3,713,290 County, 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 3/02 at 102 AAA 6,075,776 Bonds (Liberty State Park Project), Series 1992, 6.800%, 3/15/22 (Pre-refunded to 3/15/02) 4,875,000 New Jersey Health Care Facilities Financing Authority, Revenue 7/01 at 102 AAA 5,228,828 Bonds, 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, 7/01 at 102 AAA 8,005,050 Revenue Bonds, JFK Health Systems Obligated Group Issue, Series 1991, 6.600%, 7/01/08 (Pre-refunded to 7/01/01) New Jersey Health Care Facilities Financing Authority, Refunding Revenue Bonds, Barnett Hospital (FHA Insured Mortgage), Series B: 90,000 6.750%, 8/01/11 (Pre-refunded to 2/01/01) 2/01 at 100 AAA 93,723 355,000 6.800%, 8/01/19 (Pre-refunded to 2/01/01) 2/01 at 102 AAA 369,956 2,080,000 New Jersey Health Care Facilities Financing Authority, Revenue 7/02 at 102 Baa3*** 2,234,211 Bonds, Palisades Medical Center Obligated Group Issue, Series 1992, 7.500%, 7/01/06 (Pre-refunded to 7/01/02) New Jersey Economic Development Authority Revenue Bonds (New Jersey Performing Arts Center Site Acquisition Project), Series 1991: 610,000 6.600%, 6/15/04 (Pre-refunded to 6/15/01) 6/01 at 102 Aaa 651,047 3,800,000 6.750%, 6/15/12 (Pre-refunded to 6/15/01) 6/01 at 102 Aaa 4,066,304 PRINCIPAL OPTIONAL CALL MARKET AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE - --------------------------------------------------------------------------------------------------------------------------------- U.S. GUARANTEED (continued) 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+*** $8,777,854 850,000 6.800%, 9/15/10 (Pre-refunded to 9/15/01) 9/01 at 101 1/2 AA+*** 910,784 400,000 New Jersey Sports and Exposition Authority, State Contract Bonds, 3/02 at 102 AA-*** 430,112 Series 1992A, 6.500%, 3/01/19 (Pre-refunded to 3/01/02) New Jersey Educational Facilities Authority, Seton Hall University Project Revenue Bonds, Series 1991D: 500,000 6.875%, 7/01/10 (Pre-refunded to 7/01/01) 7/01 at 102 A-*** 535,285 925,000 7.000%, 7/01/21 (Pre-refunded to 7/01/01) 7/01 at 102 A-*** 993,413 6,000,000 Puerto Rico Electric Power Authority, Power Revenue Bonds, 7/01 at 102 Aaa 6,463,080 Series P, 7.000%, 7/01/11 (Pre-refunded to 7/01/01) 2,450,000 University of Medicine and Dentistry of New Jersey, Series E, 12/01 at 102 AA-*** 2,632,280 6.500%, 12/01/18 (Pre-refunded to 12/01/01) - --------------------------------------------------------------------------------------------------------------------------------- UTILITIES - 5.7% 3,700,000 Pollution Control Financing Authority of Camden County (Camden 12/01 at 102 B2 3,670,733 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 3,470,915 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 427,248 Rate Pollution Control Revenue Bonds (Jersey Central Power and Light Company Project), Series 1985, 7.100%, 7/01/15 8,950,000 Puerto Rico Electric Power Authority Power Revenue Refunding 7/09 at 101 1/2 AAA 9,073,421 Bonds, Series FF, 5.250%, 7/01/13 (DD) 6,000,000 Puerto Rico Electric Power Authority, Power Revenue Refunding No Opt. Call AAA 6,905,160 Bonds, Series Y, 7.000%, 7/01/07 3,000,000 The Union County Utilities Authority (New Jersey), Solid Waste Facility 6/08 at 101 AAA 2,861,070 Senior Lease Revenue Bonds (Ogden Martin Systems of Union, Inc.) Lessee, Series 1998A, 5.000%, 6/01/23 (Alternative Minimum Tax) - --------------------------------------------------------------------------------------------------------------------------------- WATER AND SEWER - 7.1% Cape May County (New Jersey), Municipal Utilities Authority, Sewer Revenue Refunding Bonds, 1992A: 2,000,000 6.000%, 1/01/11 1/03 at 102 AAA 2,123,080 7,600,000 5.750%, 1/01/16 1/03 at 102 AAA 7,839,932 5,000,000 New Jersey Economic Development Authority, Water Facilities No Opt. Call N/R 5,086,800 Revenue 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 5/06 at 102 AAA 7,847,100 Revenue 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 6,053,682 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 4,103,360 Sewer System Bonds, Series D, 5.800%, 12/01/18 - --------------------------------------------------------------------------------------------------------------------------------- $ 430,190,000 Total Investments - (cost $428,930,190) - 96.9% 449,039,239 =============-------------------------------------------------------------------------------------------------------------------- Other Assets Less Liabilities - 3.1% 14,289,968 ----------------------------------------------------------------------------------------------------------------- Net Assets - 100% $463,329,207 ================================================================================================================= * Optional Call Provisions (not covered by the report of independent auditors): Dates (month and year) and prices of the earliest optional call or redemption. There may be other call provisions at varying prices at later dates. ** Ratings (not covered by the report of independent auditors): Using the higher of Standard & Poor's or Moody's rating. *** Securities are backed by an escrow or trust containing sufficient U.S. government or U.S. government agency securities which ensures the timely payment of principal and interest. Securities are normally considered to be equivalent to AAA rated securities. 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.
PORTFOLIO OF INVESTMENTS NUVEEN NEW JERSEY PREMIUM INCOME MUNICIPAL FUND, INC. (NNJ) JUNE 30,1999
PRINCIPAL OPTIONAL CALL MARKET AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE - --------------------------------------------------------------------------------------------------------------------------------- EDUCATION AND CIVIC ORGANIZATIONS - 9.2% $ 3,530,000 New Jersey Economic Development Authority, Economic Development No Opt. Call N/R $4,228,622 Bonds (Yeshiva Ktana of Passaic-1992 Project), 8.000%, 9/15/18 3,000,000 New Jersey Economic Development Authority, School Revenue 2/08 at 101 N/R 2,900,940 Bonds (Gill/St. Bernard School), Series 1998, 6.000%, 2/01/25 825,000 New Jersey Educational Facilities Authority, Trenton State 7/99 at 100 A+ 826,955 College Issue, Revenue Bonds, Series 1976D, 6.750%, 7/01/08 2,095,000 New Jersey Educational Facilities Authority, Refunding Revenue 7/02 at 102 AAA 2,227,530 Bonds, Trenton State College Issue, Series 1992E, 6.000%, 7/01/09 1,000,000 New Jersey Educational Facilities Authority, Revenue Bonds, 7/04 at 102 AAA 1,048,550 New Jersey Institute of Technology Issue, Series 1994A, 6.000%, 7/01/24 3,330,000 New Jersey Educational Facilities Authority, Revenue Bonds, 7/06 at 101 AAA 3,408,388 Montclair State University, Series 1996C (Dormitory/Cafeteria Facility), 5.400%, 7/01/12 2,500,000 New Jersey Educational Facilities Authority, Revenue Bonds, 7/06 at 101 AAA 2,614,875 Rowan College of New Jersey Issue, Series 1996E, 6.000%, 7/01/21 710,000 Higher Education Assistance Authority (State of New Jersey), 7/02 at 102 A+ 737,811 Student Loan Revenue Bonds, Series 1992A, NJ Class Loan Program, 6.125%, 7/01/09 (Alternative Minimum Tax) 4,460,000 Higher Education Assistance Authority (State of New Jersey), 7/03 at 102 A+ 4,506,785 Student Loan Revenue Bonds, Series 1993A, NJ Class Loan Program, 5.300%, 7/01/10 (Alternative Minimum Tax) 2,250,000 Higher Education Assistance Authority (State of New Jersey), 6/09 at 101 AAA 2,233,913 Student Loan Revenue Bonds, Series 1999A, 5.250%, 6/01/18 (Alternative Minimum Tax) - --------------------------------------------------------------------------------------------------------------------------------- FOREST AND PAPER PRODUCTS - 0.4% 1,035,000 New Jersey Economic Development Authority, Economic Growth 12/03 at 102 Aaa3 1,060,099 Bonds, 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 7/03 at 102 AAA 44,659 Bonds, St. Peter's 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 923,898 Revenue Bonds, Wayne General Hospital Corporation Issue (FHA Insured Mortgage), Series B, 5.750%, 8/01/11 2,000,000 New Jersey Health Care Facilities Financing Authority, Revenue 7/04 at 102 AAA 2,191,500 Bonds, 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 1,107,203 800,000 7.000%, 7/01/04 No Opt. Call AAA 884,368 7,000,000 Puerto Rico Industrial, Medical, Educational, and Environmental 12/03 at 103 A2 6,654,480 Pollution Control Facilities Financing Authority, Adjustable Rate Industrial Revenue Bonds, Series 1983A (American Home Products Corporation), 5.100%, 12/01/18 - --------------------------------------------------------------------------------------------------------------------------------- HOUSING/MULTIFAMILY - 11.5% 885,000 Housing Finance Corporation of the City of Long Branch, 10/99 at 100 N/R 889,558 New Jersey, Section 8 Assisted Housing Revenue Bonds, Washington Manor Associates Ltd., 1980 Elderly Project, 10.000%, 10/01/11 4,000,000 New Jersey Housing and Mortgage Finance Agency, Multifamily 11/01 at 102 AAA 4,275,480 Housing Revenue Refunding Bonds (Presidential Plaza at Newport Project-FHA Insured Mortgages), 1991 Series One, 7.000%, 5/01/30 2,875,000 New Jersey Housing and Mortgage Finance Agency, Multifamily 5/05 at 102 AAA 3,028,813 Housing Revenue Bonds, 1995 Series A, 6.000%, 11/01/14 PRINCIPAL OPTIONAL CALL MARKET AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE - --------------------------------------------------------------------------------------------------------------------------------- HOUSING/MULTIFAMILY (continued) $ 7,000,000 New Jersey Housing and Mortgage Finance Agency, Multifamily 11/07 at 101 1/2 AAA $7,076,230 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+ 2,272,500 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+ 2,510,991 8,000,000 6.950%, 11/01/13 5/02 at 102 A+ 8,601,200 2,370,000 New Jersey Housing and Mortgage Finance Agency, Housing 11/02 at 102 A+ 2,518,078 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 1,058,420 Revenue Bonds, 1995 Series O, 6.300%, 10/01/23 (Alternative Minimum Tax) 525,000 New Jersey Housing and Mortgage Finance Agency, 4/06 at 101 1/2 AAA 544,010 Home Buyer Revenue Bonds, 1996 Series P, 5.650%, 4/01/14 1,000,000 New Jersey Housing and Mortgage Finance Agency, 4/06 at 101 1/2 AAA 1,039,050 Home Buyer Revenue Bonds, 1996 Series Q, 5.875%, 4/01/17 (Alternative Minimum Tax) 2,500,000 New Jersey Housing and Mortgage Finance Agency, 4/07 at 101 1/2 AAA 2,623,650 Home Buyer 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 2,032,675 1,500,000 5.850%, 4/01/29 (Alternative Minimum Tax) 10/07 at 101 1/2 AAA - --------------------------------------------------------------------------------------------------------------------------------- INDUSTRIAL/OTHER - 1.2% 895,000 New Jersey Economic Development Authority, Economic Growth 10/03 at 102 A+ 908,219 Bonds, 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 2,371,139 Bond, 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 4/03 at 103 A+ 3,406,813 (Morris Hall/St. Lawrence, Inc. Project), Series 1993A, 6.150%, 4/01/13 - --------------------------------------------------------------------------------------------------------------------------------- TAX OBLIGATION/GENERAL - 8.7% 785,000 County of Morris, New Jersey, General Improvement Bonds of 1993, No Opt. Call AAA 797,529 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+ 2,940,145 4,000,000 5.800%, 2/15/07 No Opt. Call AA+ 4,277,680 2,500,000 6.000%, 2/15/11 No Opt. Call AA+ 2,719,375 1,560,000 6.000%, 2/15/13 No Opt. Call AA+ 1,702,194 4,000,000 County of Passaic, State of New Jersey, General Obligation Refunding No Opt. Call AAA 4,022,560 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 5,134,400 General Obligation Bonds, 5.750%, 7/01/24 1,800,000 The Township of Woodbridge, County of Middlesex, State of 7/09 at 102 Aaa 1,806,498 New Jersey, Sewer Utility Bonds, Series 1999, 5.300%, 7/01/20 (WI) - --------------------------------------------------------------------------------------------------------------------------------- TAX OBLIGATION/LIMITED - 11.2% 1,275,000 Camden County Improvement Authority (Camden County, 10/05 at 102 AAA 1,311,299 New Jersey), County Guaranteed Lease Revenue Bonds, Series 1995, 5.625%, 10/01/15 1,000,000 Hudson County Improvement Authority (New Jersey), Utility 1/08 at 101 1/2 AAA 1,012,420 System Revenue Bonds, Series 1997 (Harrison Franchise Acquisition Project), 5.350%, 1/01/27 PRINCIPAL OPTIONAL CALL MARKET AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE - --------------------------------------------------------------------------------------------------------------------------------- TAX OBLIGATION/LIMITED (continued) $ 1,000,000 The Jersey City Sewerage Authority (Hudson County, New Jersey), No Opt. Call AAA $1,111,960 Sewer Revenue Refunding Bonds, Series 1993, 6.250%, 1/01/14 The State of New Jersey, as Lessee, 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 751,440 1,000,000 6.050%, 1/01/12 7/99 at 100 Aa 1,001,850 1,500,000 6.050%, 1/01/16 7/99 at 100 Aa 1,502,700 2,000,000 New Jersey Economic Development Authority, Lease Revenue 11/08 at 101 Aaa 1,832,460 Bonds (Bergen County Administration Complex), Series 1998, 4.750%, 11/15/26 1,000,000 New Jersey Economic Development Authority, Revenue Bonds 8/03 at 102 AAA 1,021,080 (Public 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 1,658,895 Facility Senior Lien Revenue Bonds, Series 1994A, 7.000%, 7/01/04 New Jersey Transportation Trust Fund Authority, Transportation System Bonds, Series 1995A: 750,000 5.500%, 6/15/12 6/05 at 102 AAA 769,650 5,000,000 5.000%, 6/15/15 6/05 at 102 AAA 4,900,300 1,100,000 New Jersey Transportation Trust Fund Authority, Transportation 6/05 at 102 AAA 1,125,212 System Bonds, Series 1995B, 5.500%, 6/15/15 510,000 The Board of Education of the Township of Piscataway (County 6/03 at 102 AAA 520,134 of Middlesex, New Jersey), Certificates of Participation, Series 1993, 5.375%, 12/15/10 8,160,000 Puerto Rico Public Buildings Authority, Public Education and 7/03 at 101 1/2 A 8,505,658 Health Facilities Refunding Bonds, Series M, Guaranteed by the Commonwealth of Puerto Rico, 5.750%, 7/01/15 1,000,000 The Stony Brook Regional Sewerage Authority (Princeton, No Opt. Call AA- 1,034,160 New Jersey), Revenue Refunding Bonds, Series 1993B, 5.450%, 12/01/12 2,250,000 Western Monmouth Utilities Authority (Monmouth County, 2/05 at 102 AAA 2,323,215 New Jersey), Revenue Refunding Bonds, Series 1995A, 5.600%, 2/01/14 - --------------------------------------------------------------------------------------------------------------------------------- TRANSPORTATION - 23.3% 5,000,000 Delaware River Port Authority (New Jersey), Port District 1/08 at 101 AAA 4,845,600 Project Bonds, Series 1998B, 5.000%, 1/01/19 4,245,000 Delaware River Port Authority (New Jersey and Pennsylvania), 1/06 at 102 AAA 4,280,828 Revenue Bonds, Series 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+ 1,093,810 7,920,000 6.500%, 1/01/16 No Opt. Call BBB+ 8,855,352 4,860,000 6.500%, 1/01/16 No Opt. Call AAA 5,530,340 3,000,000 The Port Authority of New York and New Jersey, Consolidated Bonds, 10/04 at 101 AAA 3,247,260 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 1,249,332 2,500,000 5.750%, 11/01/14 (Alternative Minimum Tax) 5/05 at 101 AAA 2,573,625 1,500,000 Port Authority of New York and New Jersey, Consolidated Bonds, 7/06 at 101 AA- 1,579,695 One Hundred and Sixth Series, 6.000%, 7/01/16 (Alternative Minimum Tax) 2,500,000 Port Authority of New York and New Jersey, Consolidated Bonds, 6/05 at 101 AAA 2,576,650 One Hundredth 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- 5,960,760 One Hundred and 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 10,263,600 11,000,000 5.750%, 12/01/25 (Alternative Minimum Tax) 12/07 at 100 AAA 11,245,960 PRINCIPAL OPTIONAL CALL MARKET AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE - --------------------------------------------------------------------------------------------------------------------------------- U.S. GUARANTEED - 7.9% $ 1,000,000 The Essex County Utilities Authority (Essex County, New Jersey), 4/06 at 102 AAA $1,071,810 Solid 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 (Pre-refunded to 4/01/06) 2,385,000 State of New Jersey, General Obligation Bonds (Various Series), 9/01 at 101 1/2 AA+*** 2,555,551 6.800%, 9/15/11 (Pre-refunded to 9/15/01) New Jersey Educational Facilities Authority, Revenue Bonds, Trenton State College Issue, Series 1996 A: 4,000,000 5.100%, 7/01/21 (Pre-refunded to 7/01/06) 7/06 at 101 AAA 4,146,440 3,750,000 5.125%, 7/01/24 (Pre-refunded to 7/01/06) 7/06 at 101 AAA 3,892,875 2,030,000 New Jersey Turnpike Authority, Turnpike Revenue Bonds, No Opt. Call AAA 2,276,747 1984 Series, 10.375%, 1/01/03 3,500,000 Puerto Rico Electric Power Authority, Power Revenue Bonds, 7/02 at 101 1/2 BBB+*** 3,749,340 Series R, 6.250%, 7/01/17 (Pre-refunded to 7/01/02) Sparta Township School District, General Obligation Bonds, (Unlimited Tax): 1,100,000 5.800%, 9/01/19 (Pre-refunded to 9/01/06) 9/06 at 100 AAA 1,179,409 1,100,000 5.800%, 9/01/20 (Pre-refunded to 9/01/06) 9/06 at 100 AAA 1,179,409 1,100,000 5.800%, 9/01/21 (Pre-refunded to 9/01/06) 9/06 at 100 AAA 1,179,409 - --------------------------------------------------------------------------------------------------------------------------------- UTILITIES - 7.2% 6,600,000 Pollution Control Financing Authority of Camden County (New Jersey), No Opt. Call B2 6,543,438 Solid Waste Disposal and Resource Recovery System Revenue Bonds, Series 1991C, 7.125%, 12/01/01 (Alternative Minimum Tax) 6,500,000 Pollution Control Financing Authority of Camden County 12/01 at 102 B2 6,473,025 (New Jersey), Solid Waste Disposal and Resource Recovery System Revenue Bonds, Series 1991D, 7.250%, 12/01/10 2,000,000 Puerto Rico Electric Power Authority, Power Revenue Refunding 7/09 at 101 1/2 AAA 2,027,580 Bonds, Series FF, 5.250%, 7/01/13 1,000,000 Puerto Rico Electric Power Authority, Power Revenue Refunding 7/05 at 100 AAA 990,350 Bonds, Series Z, 5.250%, 7/01/21 3,500,000 Puerto Rico Electric Power Authority, Power Revenue Bonds, 7/05 at 100 AAA 3,529,330 Series X, 5.500%, 7/01/25 - --------------------------------------------------------------------------------------------------------------------------------- WATER AND SEWER - 9.5% 5,250,000 Cape May County (New Jersey), Municipal Utilities Authority, 1/03 at 102 AAA 5,415,743 Sewer Revenue Refunding Bonds, Series 1992A, 5.750%, 1/01/16 1,485,000 New Jersey Economic Development Authority, Water Facilities 8/01 at 102 A 1,564,611 Refunding Bonds (Elizabeth Water Company Project), Series 1991A, 6.700%, 8/01/21 (Alternative Minimum Tax) 3,100,000 New Jersey Economic Development Authority, Water Facilities 3/04 at 102 AAA 3,184,692 Revenue Refunding Bonds (Hackensack Water Company Project), Series 1994B, 5.900%, 3/01/24 (Alternative Minimum Tax) 6,250,000 New Jersey Economic Development Authority, Water Facilities 7/08 at 102 AAA 6,053,688 Revenue Bonds (New Jersey-American Water Company, Inc. Project), Series 1998A, 5.250%, 7/01/38 (Alternative Minimum Tax) 7,000,000 The North Hudson Sewerage Authority, New Jersey, Sewer 8/06 at 101 AAA 6,842,150 Revenue Bonds, Series 1996, 5.125%, 8/01/22 1,040,000 Passaic Valley Sewerage Commissioners, New Jersey, Sewer 12/02 at 102 AAA 1,091,158 System Bonds, Series D, 5.750%, 12/01/10 1,500,000 The Wanaque Valley Regional Sewerage Authority, Passaic No Opt. Call AAA 1,596,401 County, New Jersey, Sewer Revenue Refunding Bonds, Series 1993B, 5.750%, 9/01/18 - --------------------------------------------------------------------------------------------------------------------------------- $ 259,270,000 Total Investments - (cost $258,254,862) - 99.1% 267,944,639 =============-------------------------------------------------------------------------------------------------------------------- Other Assets Less Liabilities - 0.9% 2,359,379 ----------------------------------------------------------------------------------------------------------------- Net Assets - 100% $270,304,018 ================================================================================================================= * Optional Call Provisions (not covered by the report of independent auditors): Dates (month and year) and prices of the earliest optional call or redemption. There may be other call provisions at varying prices at later dates. ** Ratings (not covered by the report of independent auditors): Using the higher of Standard & Poor's or Moody's rating. *** Securities are backed by an escrow or trust containing sufficient U.S. government or U.S. government agency securities which ensures the timely payment of principal and interest. Securities are normally considered to be equivalent to AAA rated securities. N/R Investment is not rated. (WI) Security purchased on a when-issued basis (note 1). SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
PORTFOLIO OF INVESTMENTS NUVEEN PENNSYLVANIA INVESTMENT QUALITY MUNICIPAL FUND (NQP) JUNE 30,1999
PRINCIPAL OPTIONAL CALL MARKET AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE - --------------------------------------------------------------------------------------------------------------------------------- CONSUMER CYCLICAL - 3.2% $ 12,150,000 Pennsylvania Economic Development Finance Authority, Solid Waste 6/09 at 102 BBB+ $12,150,000 Disposal Revenue Bonds (USG Corporation Project), Series 1999, 6.000%, 6/01/31 (Alternative Minimum Tax) (WI) - --------------------------------------------------------------------------------------------------------------------------------- EDUCATION AND CIVIC ORGANIZATIONS - 9.4% 2,000,000 Allegheny County Higher Education Building Authority 9/08 at 102 BBB 1,859,360 (Commonwealth of Pennsylvania), College Revenue Bonds, Series 1998A (Chatham College), 5.250%, 9/01/18 4,500,000 Delaware County Authority (Commonwealth of Pennsylvania), 8/01 at 100 AAA 4,743,810 University Revenue Bonds (Villanova University), Series of 1991, 6.900%, 8/01/16 4,970,000 Pennsylvania Higher Education Assistance Agency, Student Loan No Opt. Call AAA 5,155,977 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 4,449,240 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 3,253,350 Revenue Bonds, Fixed Rate Bonds, 1992 Series C, 6.400%, 3/01/22 (Alternative Minimum Tax) 3,825,000 The Pennsylvania State University Refunding Bonds, Series 1992, 3/01 at 102 AA- 4,046,315 6.250%, 3/01/11 2,900,000 Scranton-Lackawanna Health and Welfare Authority, City 3/02 at 102 A- 3,052,424 of 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 9/08 at 100 Aaa 7,805,207 College 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 527,814 Pennsylvania, College of Misericordia Revenue Bonds, Refunding 1992 Series B, 7.750%, 12/01/12 645,000 The General Municipal Authority of the City of Wilkes-Barre, 12/00 at 100 N/R 687,757 Pennsylvania, College of Misericordia Revenue Bonds, Refunding 1992 Series A, 7.750%, 12/01/12 - --------------------------------------------------------------------------------------------------------------------------------- HEALTH CARE - 2.6% 3,520,000 The Hospitals and Higher Education Facilities Authority of 12/01 at 102 AAA 3,785,162 Philadelphia, Hospital Revenue Refunding Bonds (Magee Rehabilitation Hospital Project), Series of 1991, 7.000%, 12/01/10 5,500,000 Health Care Facilities Authority of Sayre, Variable Rate 6/01 at 103 AAA 5,927,625 Hospital Revenue Bonds (VHA of Pennsylvania, Inc., Capital Asset Financing Program), Guthrie Healthcare System Conversion, Series of 1985E, 7.200%, 12/01/20 - --------------------------------------------------------------------------------------------------------------------------------- HOUSING/MULTIFAMILY - 0.3% 995,000 Urban Redevelopment Authority of Pittsburgh, Redevelopment 2/02 at 102 A 1,037,725 Mortgage Revenue Bonds, 1992 Series C, 7.125%, 8/01/13 (Alternative Minimum Tax) - --------------------------------------------------------------------------------------------------------------------------------- HOUSING/SINGLE FAMILY - 12.3% 2,000,000 Allegheny County Residential Finance Authority, Single Family 11/08 at 102 Aaa 1,950,320 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 1,803,738 Mortgage Revenue Bonds, 1994 Series Y, 0.000%, 5/01/27 (Alternative Minimum Tax) 210,000 Redevelopment Authority of the City of Altoona (Pennsylvania), 12/01 at 102 A3 220,007 Home Improvement Loan Revenue Bonds, Cities of Altoona and Meadville Program (FHA Title 1 Insured Loans), Series of 1991, 7.150%, 12/01/09 (Alternative Minimum Tax) 1,945,000 Redevelopment Authority of the County of Berks (Pennsylvania), No Opt. Call A+ 2,104,082 Senior Single Family Mortgage Revenue 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) $ 4,415,000 Pennsylvania Housing Finance Agency, Single Family Mortgage 4/02 at 102 AA+ $4,639,503 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+ 1,032,780 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+ 5,150,550 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+ 2,091,660 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+ 1,038,240 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+ 6,049,379 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+ 4,202,080 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+ 5,225,450 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+ 5,065,200 Revenue Bonds, Series 1997-59A, 5.750%, 10/01/23 (Alternative Minimum Tax) 1,620,000 Urban Redevelopment Authority of Pittsburgh, Mortgage Revenue 4/06 at 102 AAA 1,711,400 Bonds, 1996 Series C, 6.550%, 4/01/28 (Alternative Minimum Tax) 1,110,000 Urban Redevelopment Authority of Pittsburgh, Mortgage 4/07 at 102 AAA 1,165,234 Revenue Bonds, 1997 Series A, 6.250%, 10/01/28 (Alternative Minimum Tax) 2,865,000 Urban Redevelopment Authority of Pittsburgh, Mortgage 10/01 at 102 AAA 2,989,628 Revenue Bonds, 1991 Series G, 7.050%, 4/01/23 (Alternative Minimum Tax) - --------------------------------------------------------------------------------------------------------------------------------- LONG-TERM CARE - 1.1% 3,225,000 Montgomery County Higher Education and Health Authority, 1/06 at 101 BBB 3,350,936 Mortgage Revenue Bonds (Waverly Heights Project), Series 1996, 6.375%, 1/01/26 630,000 The Hospitals and Higher Education Facilities Authority of Philadelphia, 8/02 at 102 A- 672,840 Hospital Revenue Bonds (Children's Seashore House), Series 1992A, 7.000%, 8/15/03 - --------------------------------------------------------------------------------------------------------------------------------- TAX OBLIGATION/GENERAL - 6.0% 1,355,000 Bensalem Township School District, Bucks County, Pennsylvania 7/06 at 100 AAA 1,414,051 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 5/16 at 68 1/32 AAA 676,033 2,750,000 0.000%, 11/01/24 5/16 at 66 5/16 AAA 656,728 5,160,000 0.000%, 5/01/25 5/16 at 64 9/16 AAA 1,197,017 7,500,000 County of Montgomery, Pennsylvania, General Obligation Bonds, 7/09 at 100 Aaa 7,066,050 Series 1999, 5.000%, 7/15/24 (WI) 6,000,000 Commonwealth of Pennsylvania, General Obligation Bonds, 3/02 at 101 1/2 AA 6,358,380 First Series of 1992, 6.375%, 9/15/11 5,000,000 State Public School Building Authority (Commonwealth of 3/01 at 100 AAA 5,180,950 Pennsylvania), School Revenue Bonds (Hazelton Area School District Project), Series J of 1991, 6.500%, 3/01/08 - --------------------------------------------------------------------------------------------------------------------------------- TAX OBLIGATION/LIMITED - 4.9% 4,390,000 Fairview Township Authority, York County, Pennsylvania, 11/01 at 100 AAA 4,617,797 Guaranteed Sewer Revenue Bonds, Series of 1991 (Guaranteed by the Township of Fairview, York County, Pennsylvania), 6.700%, 11/01/21 9,225,000 Pennsylvania Intergovernmental Cooperation Authority, Special 6/09 at 100 AAA 8,247,611 Tax Revenue Refunding Bonds (City of Philadelphia Funding Program), Series of 1999, 4.750%, 6/15/23 6,500,000 Southeastern Pennsylvania Transportation Authority, Special 3/09 at 101 AAA 5,777,395 Revenue Bonds, Series A of 1999, 4.750%, 3/01/29 PRINCIPAL OPTIONAL CALL MARKET AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE - --------------------------------------------------------------------------------------------------------------------------------- TRANSPORTATION - 4.0% $ 2,500,000 County of Allegheny, Pennsylvania, Airport Revenue Bonds 1/02 at 102 AAA $2,652,325 (Greater Pittsburgh International Airport), Series 1992A and 1992B, 6.625%, 1/01/22 (Alternative Minimum Tax) 1,650,000 Pennsylvania Turnpike Commission, Pennsylvania Turnpike Revenue 12/01 at 102 AA- 1,758,339 Bonds, Series N of 1991, 6.500%, 12/01/13 735,000 Pennsylvania Turnpike Commission, Pennsylvania Turnpike Revenue 12/02 at 102 AAA 740,263 Bonds, Series O of 1992, 5.500%, 12/01/17 7,315,000 Philadelphia Authority for Industrial Development, Airport Revenue Bonds 7/08 at 101 AAA 6,771,203 (Philadelphia Airport System Project), Series A of 1998, 5.000%, 7/01/23 (Alternative Minimum Tax) 3,250,000 The Philadelphia Parking Authority, Airport Parking Revenue Bonds, 9/09 at 101 AAA 3,133,065 Series of 1999, 5.250%, 9/01/29 (WI) - --------------------------------------------------------------------------------------------------------------------------------- U.S. GUARANTEED - 40.5% 6,300,000 Allegheny County Hospital Development Authority, Hospital 10/01 at 100 BBB+*** 6,695,073 Revenue Bonds (St. Margaret Memorial Hospital), Series A of 1991, 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 3,197,524 4,000,000 6.250%, 11/15/21 (Pre-refunded to 11/15/01) 11/01 at 100 AAA 4,200,360 5,000,000 Butler County Hospital Authority, Butler County, Pennsylvania, Hospital 6/01 at 102 AAA 5,360,950 Revenue Bonds, Series A of 1991 (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 2/01 at 102 AAA 3,624,536 Bonds (Hamot Medical Center), Series A of 1991, 7.100%, 2/15/10 (Pre-refunded to 2/15/01) 2,000,000 Hampton Township School District, Allegheny County, Pennsylvania, 11/04 at 100 AAA 2,217,120 General Obligation Bonds, Series of 1995, 6.750%, 11/15/21 (Pre-refunded to 11/15/04) 3,400,000 Lehigh County General Purpose Authority, College Revenue Bonds 6/02 at 100 AAA 3,637,286 (Allentown College of St. Francis de Sales Project), Series of 1992, 6.750%, 12/15/12 (Pre-refunded to 6/15/02) 4,000,000 Lower Pottsgrove Township Authority, Montgomery County, 11/99 at 100 AAA 4,044,840 Pennsylvania, Guaranteed Sewer Revenue Bonds (Guaranteed by the Township of Lower Pottsgrove), Series of 1991, 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 3,310,006 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 12/01 at 102 AAA 4,896,180 Revenue Bonds, Series I of 1986, 7.200%, 12/01/17 (Pre-refunded to 12/01/01) 1,250,000 Philadelphia Authority for Industrial Development Revenue Bonds, 5/02 at 102 N/R*** 1,349,000 Series of 1992 (National Board of Medical Examiners Project), 6.750%, 5/01/12 (Pre-refunded to 5/01/02) 4,270,000 City of Philadelphia, Pennsylvania, Gas Works Revenue Bonds, 6/01 at 102 AAA 4,640,892 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*** 9,218,030 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 Obligation 5/02 at 100 3/4 AAA 1,975,523 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 3,454,263 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 8/01 at 100 AAA 11,253,150 Bonds, Sixteenth Series, 7.000%, 8/01/18 (Pre-refunded to 8/01/01) 8,800,000 The Hospitals and Higher Education Facilities Authority of 12/01 at 102 N/R*** 9,573,344 Philadelphia, Hospital Revenue Bonds, Series of 1991 (Presbyterian Medical Center of Philadelphia), 7.250%, 12/01/21 (Pre-refunded to 12/01/01) 6,110,000 The Hospitals and Higher Education Facilities Authority of 2/02 at 102 Aaa 6,555,541 Philadelphia, Pennsylvania, Hospital Revenue Bonds (The Children's Hospital of Philadelphia Project), Series A of 1992, 6.500%, 2/15/21 (Pre-refunded to 2/15/02) PRINCIPAL OPTIONAL CALL MARKET AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE - --------------------------------------------------------------------------------------------------------------------------------- U.S. GUARANTEED (continued) The Philadelphia Municipal Authority, Philadelphia, Pennsylvania, Justice Lease Revenue Bonds, Series B of 1991: $ 1,500,000 7.100%, 11/15/11 (Pre-refunded to 11/15/01) 11/01 at 102 AAA $ 1,630,755 9,900,000 7.125%, 11/15/18 (Pre-refunded to 11/15/01) 11/01 at 102 AAA 10,768,032 3,000,000 The Pittsburgh Water and Sewer Authority, Water and Sewer No Opt. Call AAA 3,356,520 System Revenue Refunding Bonds, Series of 1986, 7.625%, 9/01/04 7,065,000 The Pittsburgh Water and Sewer Authority, Water and 9/01 at 102 AAA 7,555,382 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 2,699,975 (Franciscan Health System/Saint Mary Hospital of Langhorne Inc.), Series A of 1992, 6.500%, 7/01/12 (Pre-refunded to 7/01/02) 3,730,000 Scranton-Lackawanna Health and Welfare Authority, City 6/00 at 102 N/R*** 3,934,814 of Scranton, Lackawanna County, Pennsylvania, University Revenue Bonds (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 Pennsylvania, 10/01 at 100 AAA 9,022,909 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, Pennsylvania, 9/01 at 100 Aa2*** 3,703,805 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 3,549,870 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 1/01 at 100 Aa1*** 5,196,200 Counties, 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, No Opt. Call AAA 7,330,740 Allegheny County, Pennsylvania, Special Obligation Bonds, Series A of 1985, 9.500%, 11/15/14 5,000,000 County of Westmoreland, Commonwealth of Pennsylvania, 8/01 at 100 AAA 5,260,750 General Obligation Bonds, Series of 1992, 6.700%, 8/01/09 (Pre-refunded to 8/01/01) - --------------------------------------------------------------------------------------------------------------------------------- UTILITIES - 8.5% 5,000,000 Beaver County Industrial Development Authority (Pennsylvania), 9/99 at 102 Baa3 5,134,300 Pollution Control Revenue Refunding Bonds (Ohio Edison Company, Beaver Valley Project), 1989 Series A, 7.750%, 9/01/24 3,750,000 Delaware County Industrial Development Authority, Pollution 4/01 at 102 A 3,959,250 Control Revenue Refunding Bonds (Philadelphia Electric Company Project), 1991 Series A, 7.375%, 4/01/21 400,000 Greater Lebanon Refuse Authority, Lebanon County, Pennsylvania 11/02 at 100 A- 418,220 Solid Waste Revenue Bonds, Series of 1992, 7.000%, 11/15/04 4,000,000 Lehigh County Industrial Development Authority, Pollution 8/05 at 102 AAA 4,254,840 Control Revenue Refunding Bonds (Pennsylvania Power and Light Company Project), 1995 Series A, 6.150%, 8/01/29 3,000,000 Luzerne County Industrial Development Authority, Exempt 10/02 at 102 A 3,239,580 Facilities Revenue Refunding Bonds (Pennsylvania Gas and Water Company Project), 1992 Series A, 7.200%, 10/01/17 (Alternative Minimum Tax) 3,550,000 Luzerne County Industrial Development Authority, Exempt 12/02 at 102 A- 3,835,456 Facilities Revenue Bonds (Pennsylvania Gas and Water Company Project), 1992 Series B, 7.125%, 12/01/22 (Alternative Minimum Tax) 5,000,000 Luzerne County Industrial Development Authority, Exempt 12/04 at 102 AAA 5,539,550 Facilities Revenue Refunding Bonds (Pennsylvania Gas and Water Company Project), 1994 Series A, 7.000%, 12/01/17 (Alternative Minimum Tax) 5,500,000 Montgomery County Industrial Development Authority (Pennsylvania), 1/03 at 100 A 5,746,620 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 - 0.9% Municipal Authority of Westmoreland County (Westmoreland County, Pennsylvania), Municipal Service Revenue Bonds, Series of 1999A: $ 5,000,000 0.000%, 8/15/22 No Opt. Call AAA $1,366,150 7,625,000 0.000%, 8/15/23 No Opt. Call AAA 1,966,940 - --------------------------------------------------------------------------------------------------------------------------------- $ 366,030,000 Total Investments - (cost 336,716,317) - 93.7% 353,866,276 =============-------------------------------------------------------------------------------------------------------------------- Other Assets Less Liabilities - 6.3% 23,602,139 ----------------------------------------------------------------------------------------------------------------- Net Assets - 100% $377,468,415 ================================================================================================================= * Optional Call Provisions (not covered by the report of independent auditors): Dates (month and year) and prices of the earliest optional call or redemption. There may be other call provisions at varying prices at later dates. ** Ratings (not covered by the report of independent auditors): Using the higher of Standard & Poor's or Moody's rating. *** Securities are backed by an escrow or trust containing sufficient U.S. government or U.S. government agency securities which ensures the timely payment of principal and interest. Securities are normally considered to be equivalent to AAA rated securities. N/R Investment is not rated. (WI) Security purchased on a when-issued basis (note 1). SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
PORTFOLIO OF INVESTMENTS NUVEEN PENNSYLVANIA PREMIUM INCOME MUNICIPAL FUND 2 (NPY) JUNE 30,1999
PRINCIPAL OPTIONAL CALL MARKET AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE - --------------------------------------------------------------------------------------------------------------------------------- CAPITAL GOODS - 0.6% $ 2,000,000 New Morgan Industrial Development Authority (Pennsylvania), 4/04 at 102 A- $2,069,180 Solid Waste Disposal Revenue Bonds (New Morgan Landfill Company, Inc. Project), Series 1994, 6.500%, 4/01/19 (Alternative Minimum Tax) - --------------------------------------------------------------------------------------------------------------------------------- EDUCATION AND CIVIC ORGANIZATIONS - 13.7% 4,000,000 Allegheny County Higher Education Building Authority 11/09 at 102 A 3,777,280 (Commonwealth of Pennsylvania), College Revenue Bonds (Thiel College), Series A of 1999, 5.375%, 11/15/29 3,000,000 Chester County Health and Education Facilities Authority 10/08 at 102 BBB- 2,884,860 (Pennsylvania), College Revenue Bonds (Immaculata College), Series of 1998, 5.625%, 10/15/27 5,000,000 Gettysburg Municipal Authority (Adams County, Pennsylvania), 8/08 at 101 AAA 4,702,850 Gettysburg College Revenue Bonds, Series of 1998, 5.000%, 8/15/23 1,350,000 Lancaster Higher Education Authority, City of Lancaster, 4/03 at 100 AAA 1,381,928 Pennsylvania, College Revenue Bonds, (Franklin and Marshall College Project), Series of 1993, 5.700%, 4/15/13 10,000,000 Pennsylvania Higher Education Assistance Agency, Student Loan 1/03 at 102 AAA 10,358,000 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 10,116,300 Revenue Bonds, 1984 Series A, 4.625%, 12/01/00 3,250,000 Pennsylvania Higher Education Facility Authority, College Revenue 11/03 at 102 AAA 3,498,138 Refunding Bonds (Allegheny College), Series 1993A, 6.100%, 11/01/08 1,000,000 Pennsylvania Higher Educational Facilities Authority 5/08 at 101 Aaa 970,170 (Commonwealth of Pennsylvania), LaSalle University Revenue Bonds, Series of 1998, 5.250%, 5/01/23 4,615,000 Pennsylvania Higher Educational Facilities Authority 7/03 at 102 AAA 4,635,029 (Commonwealth of Pennsylvania), (Widener University), Series A of 1993, 5.250%, 7/15/11 3,340,000 State Public School Building Authority (Commonwealth 3/03 at 100 AAA 3,437,561 of Pennsylvania), College Revenue Bonds (Northamption 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 1,359,520 (Pennsylvania), College Misericordia Revenue Refunding Bonds, Series B of 1992, 7.750%, 12/01/12 - --------------------------------------------------------------------------------------------------------------------------------- HEALTH CARE - 13.5% 8,500,000 Allegheny County Hospital Development Authority (Pennsylvania), 5/06 at 102 AAA 8,711,055 Hospital Revenue Bonds (South Hills Health System), Series A of 1996, 5.875%, 5/01/26 14,000,000 Allegheny County Hospital Development Authority (Pennsylvania), 4/07 at 102 AAA 14,103,180 Health Center Revenue Bonds (University of Pittsburgh Medical Center System), Series A of 1997, 5.625%, 4/01/27 2,100,000 Delaware County Authority (Commonwealth of Pennsylvania), 12/03 at 102 AAA 2,113,062 Hospital Revenue Bonds (Crozer-Chester Medical Center), Series of 1994, 5.300%, 12/15/11 2,300,000 Franklin County Industrial Development Authority, Hospital 7/08 at 100 Aaa 2,159,033 Revenue Refunding Bonds (The Chambersburg Hospital), Series of 1998, 5.000%, 7/01/18 8,400,000 Montgomery County Higher Education and Health Authority 1/09 at 101 AAA 7,768,908 Revenue Bonds (Pottstown Healthcare Corporation), Series of 1998, 5.000%, 1/01/27 485,000 Montgomery County Higher Education and Health Authority 6/03 at 102 AAA 505,908 (Pennsylvania), Hospital Revenue Bonds, Series A of 1993 (Abington Memorial Hospital), 6.000%, 6/01/22 4,700,000 Pennsylvania Higher Educational Facilities Authority 1/06 at 101 AA 4,621,416 (Commonwealth 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 A of 1997 (Jefferson Health System): 1,400,000 5.500%, 5/15/07 No Opt. Call AA- 1,444,562 1,000,000 5.500%, 5/15/08 No Opt. Call AA- 1,027,840 PRINCIPAL OPTIONAL CALL MARKET AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE - --------------------------------------------------------------------------------------------------------------------------------- HEALTH CARE (continued) 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 $1,868,200 2,000,000 5.625%, 7/01/24 7/08 at 100 BBB 1,869,220 - --------------------------------------------------------------------------------------------------------------------------------- HOUSING/MULTIFAMILY - 4.0% 4,345,000 Bucks County Redevelopment Authority, Pennsylvania, Second Lien 8/03 at 100 Baa2 4,416,606 Multifamily Mortgage Revenue Bonds, Section 8 Assisted (Country Commons Apartments), Series 1993A, 6.200%, 8/01/14 (Alternative Minimum Tax) 1,710,000 Luzerne County Housing Corporation, Mortgage Revenue Refunding 7/03 at 100 Aaa 1,755,589 Bonds (FHA-Insured Mortgage Loan-Freeland Apartments, Section 8 Assisted Project), Series 1993, 6.125%, 7/15/23 5,000,000 Pennsylvania Housing Finance Agency, Rental Housing Refunding 7/02 at 102 AAA 5,282,050 Bonds, Issue 1992, 6.400%, 7/01/12 2,345,000 Swissvale Housing Development Corporation (An Instrumentality of 7/03 at 100 Aa 2,388,195 the Allegheny County Housing Authority), Multifamily Mortgage Revenue Refunding Bonds (FHA-Insured Mortgage Loan - Section 8 Assisted Swissvale Project), Series 1993C, 6.100%, 7/01/22 - --------------------------------------------------------------------------------------------------------------------------------- HOUSING/SINGLE FAMILY - 8.5% 1,000,000 Allegheny County Residential Finance Authority, Single Family 11/08 at 102 Aaa 979,300 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 Revenue 10/03 at 102 AA+ 2,002,960 Bonds, Series 1993-37A, 5.450%, 10/01/17 1,120,000 Pennsylvania Housing Finance Agency, Single Family Mortgage Revenue No Opt. Call AA+ 1,257,435 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+ 3,475,307 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+ 2,859,780 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+ 1,562,625 4,000,000 6.150%, 10/01/27 (Alternative Minimum Tax) 4/07 at 102 AA+ 4,166,240 1,650,000 Pennsylvania Housing Finance Agency, Single Family Mortgage 4/07 at 101 1/2 AA+ 1,695,276 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+ 1,660,101 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+ 1,693,217 Revenue Bonds, Series 1998-62A, 5.500%, 10/01/22 (Alternative Minimum Tax) 1,500,000 Urban Redevelopment Authority of Pittsburgh, Mortgage 4/06 at 102 AAA 1,589,055 Revenue Bonds, 1996 Series C, 6.500%, 10/01/23 (Alternative Minimum Tax) Urban Redevelopment Authority of Pittsburgh, Mortgage Revenue Bonds, 1997 Series A: 845,000 6.150%, 10/01/16 (Alternative Minimum Tax) 4/07 at 102 AAA 887,250 765,000 6.200%, 10/01/21 (Alternative Minimum Tax) 4/07 at 102 AAA 801,980 1,375,000 Urban Redevelopment Authority of Pittsburgh, Mortgage Revenue 4/03 at 102 AAA 1,436,366 Bonds, 1992 Series D, 6.500%, 4/01/17 2,460,000 Urban Redevelopment Authority of Pittsburgh, Mortgage Revenue 4/03 at 102 AAA 2,589,814 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 663,972 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 2,251,492 Facilities Revenue Bonds, Series of 1993 (ECRI Project), 6.850%, 6/01/13 PRINCIPAL OPTIONAL CALL MARKET AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE - --------------------------------------------------------------------------------------------------------------------------------- LONG-TERM CARE - 2.3% $ 1,230,000 Pennsylvania Economic Development Financing Authority 6/08 at 100 BBB $1,111,785 (Northwestern Human Services, Inc. Project), Series 1998A, 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 1,261,521 1,650,000 5.875%, 5/15/28 5/08 at 102 N/R 1,536,464 4,000,000 Philadelphia Hospital and Higher Educational Facilities Authority 8/03 at 102 BBB+ 4,138,960 of Philadelphia, Revenue Refunding Bonds (Philadelphia MR Project), Series 1992, 5.625%, 8/01/04 - --------------------------------------------------------------------------------------------------------------------------------- TAX OBLIGATION/GENERAL - 9.1% 2,500,000 Bensalem Township School District, Bucks County, Pennsylvania, 7/06 at 100 AAA 2,603,600 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 5/16 at 75 9/16 AAA 482,948 2,750,000 0.000%, 11/01/22 5/16 at 73 5/8 AAA 737,330 2,750,000 0.000%, 5/01/23 5/16 at 71 23/32 AAA 716,320 2,750,000 0.000%, 11/01/23 5/16 at 69 7/8 AAA 695,915 4,305,000 County of Montgomery, Pennsylvania, General Obligation Bonds, 10/06 at 100 Aaa 4,255,019 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 7,596,108 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 2,188,040 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 8,059,568 Bonds, Series A of 1999, 4.750%, 4/01/27 4,000,000 Wallenpaupack Area School District, Wayne and Pike Counties, 4/01 at 100 AAA 4,079,240 Pennsylvania, General Obligation Bonds, Series of 1993, 5.500%, 4/01/11 - --------------------------------------------------------------------------------------------------------------------------------- TAX OBLIGATION/LIMITED - 11.3% 4,000,000 The County of Allegheny, Pennsylvania, Certificates of Participation, 12/09 at 101 Aaa 3,712,600 Sublease Purchase Agreement, 5.000%, 12/01/28 4,060,000 Delaware Valley Regional Finance Authority, Local Government 4/06 at 100 AAA 4,200,070 Revenue Bonds, Series A, 6.000%, 4/15/26 17,900,000 The Harrisburg Authority, Dauphin County, Pennsylvania, 9/07 at 100 AAA 18,121,244 Tax-Exempt Revenue Bonds (The City of Harrisburg Project), Series II of 1997, 5.625%, 9/15/22 Pennsylvania Industrial Development Authority, Economic Development Revenue Bonds, Series 1994: 2,000,000 7.000%, 7/01/06 No Opt. Call AAA 2,253,380 1,550,000 7.000%, 1/01/07 No Opt. Call AAA 1,747,641 1,000,000 7.000%, 7/01/07 No Opt. Call AAA 1,134,460 8,520,000 Pennsylvania Turnpike Commission, Oil Franchise Tax Subordinated 12/08 at 100 AAA 7,623,270 Revenue Bonds, Series B of 1998, 4.750%, 12/01/27 - --------------------------------------------------------------------------------------------------------------------------------- U.S. GUARANTEED - 15.2% 750,000 Allegheny County Hospital Development Authority (Pennsylvania), 6/02 at 102 N/R*** 816,810 Health and Education Revenue Bonds (The Rehabilitation Institute of Pittsburgh Project), Series of 1992, 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 3,183,150 Health Center Revenue Bonds, (Presbyterian University Health System, Inc. Project), Series A of 1992, 6.250%, 11/01/23 (Pre-refunded to 11/01/02) 2,000,000 Bangor Area School District, Northampton County (Pennsylvania), 3/06 at 100 AAA 2,096,280 General Obligation Bonds, Series B of 1996, 5.500%, 3/15/18 (Pre-refunded to 3/15/06) PRINCIPAL OPTIONAL CALL MARKET AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE - --------------------------------------------------------------------------------------------------------------------------------- U.S. GUARANTEED (continued) $ 9,065,000 Bethlehem Area School District, Northampton and Lehigh Counties 3/01 at 100 AAA $9,296,158 (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: 3,100,000 6.100%, 11/15/21 (Pre-refunded to 11/15/02) 11/02 at 100 AAA 3,281,877 3,785,000 6.100%, 11/15/18 (Pre-refunded to 11/15/02) 11/02 at 100 AAA 4,007,066 1,500,000 Fort LeBoeuf School District (Erie County, Pennsylvania), 1/03 at 100 AAA 1,570,710 General 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 3,698,765 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 1,596,630 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 2,164,191 (Pennsylvania), Hospital Revenue Bonds (Abington Memorial Hospital), Series A of 1993, 6.000%, 6/01/22 (Pre-refunded to 6/01/03) 1,620,000 Pennsylvania Higher Educational Facilities Authority, College No Opt. Call Aaa 1,889,941 and University Revenue Bonds, 9th Series, 7.625%, 7/01/15 1,005,000 The Hospitals and Higher Education Facilities Authority of 5/04 at 102 AAA 1,090,093 Philadelphia, Community College Revenue Bonds (Community College of Philadelphia), Series of 1994, 6.100%, 5/01/10 (Pre-refunded to 5/01/04) 1,000,000 City of Philadelphia (Pennsylvania), Water and Sewer Revenue 8/01 at 102 AAA 1,087,010 Bonds, 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 (Presbyterian Medical Center of Philadelphia), Series of 1993: 1,000,000 6.500%, 12/01/11 12/03 at 102 AAA 1,107,860 3,690,000 6.650%, 12/01/19 12/03 at 102 AAA 4,255,124 1,750,000 Pine-Richland School District (Allegheny County, Pennsylvania), 9/03 at 100 AAA 1,865,850 General Obligation Bonds, Series A of 1993, 6.100%, 9/01/18 (Pre-refunded to 9/01/03) 3,660,000 Rose Tree Media School District (Delaware County, Pennsylvania), 9/01 at 100 AAA 3,865,399 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 2,630,050 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 2,219,398 County, Pennsylvania), Special Obligation Bonds, Series A of 1985 9.500%, 11/15/14 - --------------------------------------------------------------------------------------------------------------------------------- UTILITIES - 13.5% 6,000,000 Beaver County Industrial Development Authority (Pennsylvania), 6/08 at 102 AAA 5,770,080 Exempt Facilities Revenue Bonds (Shippingport Project), 1998 Series A, 5.375%, 6/01/28 (Alternative Minimum Tax) 7,590,000 Indiana County Industrial Development Authority (Pennsylvania), 5/07 at 102 AAA 7,779,522 Pollution Control Revenue Bonds (Metropolitan Edison Company Project), 1997 Series A, 5.950%, 5/01/27 (Alternative Minimum Tax) 15,000,000 Lehigh County Industrial Development Authority, Pollution Control 11/02 at 102 AAA 16,094,850 Revenue Refunding Bonds (Pennsylvania Power and Light Company Project), 1992 Series A, 6.400%, 11/01/21 7,350,000 Luzerne County Industrial Development Authority, Exempt 10/02 at 102 A 7,936,971 Facilities Revenue Refunding Bonds (Pennsylvania Gas and Water Company Project), 1992 Series A, 7.200%, 10/01/17 (Alternative Minimum Tax) 4,500,000 Luzerne County Industrial Development Authority, Exempt 12/02 at 102 A- 4,861,845 Facilities Revenue Bonds (Pennsylvania Gas and Water Company Project), 1992 Series B, 7.125%, 12/01/22 (Alternative Minimum Tax) 3,575,000 Montgomery County Industrial Development Authority 12/01 at 102 AAA 3,809,270 (Pennsylvania), Pollution Control Revenue Refunding Bonds (Philadelphia Electric Company Project), 1991 Series B, 6.700%, 12/01/21 PRINCIPAL OPTIONAL CALL MARKET AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE - --------------------------------------------------------------------------------------------------------------------------------- WATER AND SEWER - 6.0% $ 1,975,000 Delaware County Industrial Development Authority, Water 6/02 at 102 AAA $2,108,846 Facilities Revenue Refunding Bonds (Philadelphia Suburban Water Company Project), Series 1992, 6.500%, 6/01/10 5,500,000 Northumberland County Industrial Development Authority, 10/03 at 102 N/R 5,579,970 Exempt Facilities Revenue Bonds (Roaring Creek Water Company Project), Series 1993, 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 2,412,685 2,300,000 5.500%, 6/15/14 6/03 at 102 AAA 2,303,979 City of Philadelphia, Pennsylvania, Water and Wastewater Revenue Bonds, Series 1995, 3,000,000 6.750%, 8/01/05 No Opt. Call AAA 3,317,910 2,730,000 6.250%, 8/01/10 No Opt. Call AAA 3,001,714 10,000,000 The Pittsburgh Water and Sewer Authority, Water and Sewer No Opt. Call AAA 1,953,700 System First Lien Revenue Bonds, Series B of 1998, 0.000%, 9/01/28 - --------------------------------------------------------------------------------------------------------------------------------- $ 346,370,000 Total Investments - (cost $329,085,844) - 98.4% 337,706,997 =============-------------------------------------------------------------------------------------------------------------------- Other Assets Less Liabilities - 1.6% 5,627,613 - --------------------------------------------------------------------------------------------------------------------------------- Net Assets - 100% $343,334,610 ================================================================================================================= * Optional Call Provisions (not covered by the report of independent auditors): Dates (month and year) and prices of the earliest optional call or redemption. There may be other call provisions at varying prices at later dates. ** Ratings (not covered by the report of independent auditors): Using the higher of Standard & Poor's or Moody's rating. *** Securities are backed by an escrow or trust containing sufficient U.S. government or U.S. government agency securities which ensures the timely payment of principal and interest. Securities are normally considered to be equivalent to AAA rated securities. N/R Investment is not rated. SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF NET ASSETS JUNE 30, 1999
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) $449,039,239 $267,944,639 $353,866,276 $337,706,997 Cash 18,713,535 -- 22,405,121 -- Receivables: Interest 7,655,562 4,739,832 5,905,826 5,340,697 Investments sold 365,000 2,355,000 19,726,800 6,557,300 Other assets 23,778 37,252 30,737 38,160 - ------------------------------------------------------------------------------------------------------------------------------------ Total assets 475,797,114 275,076,723 401,934,760 349,643,154 - ------------------------------------------------------------------------------------------------------------------------------------ LIABILITIES Cash overdraft -- 1,684,898 -- 4,710,975 Payable for investments purchased 10,274,204 1,786,464 22,486,540 -- Accrued expenses: Management fees (note 6) 228,241 143,323 188,459 181,332 Other 394,759 255,044 376,222 304,408 Preferred share dividends payable 48,285 40,415 70,019 48,874 Common share dividends payable 1,522,418 862,561 1,345,105 1,062,955 - ------------------------------------------------------------------------------------------------------------------------------------ Total liabilities 12,467,907 4,772,705 24,466,345 6,308,544 - ------------------------------------------------------------------------------------------------------------------------------------ Net assets (note 7) $463,329,207 $270,304,018 $377,468,415 $343,334,610 ==================================================================================================================================== Preferred shares, at liquidation value $162,000,000 $ 91,600,000 $132,000,000 $118,100,000 ==================================================================================================================================== Preferred shares outstanding 6,480 3,664 5,280 4,724 ==================================================================================================================================== Common shares outstanding 19,901,771 11,980,697 16,013,769 15,747,463 ==================================================================================================================================== Net asset value per Common share outstanding (net assets less Preferred shares at liquidation value, divided by Common shares outstanding) $ 15.14 $ 14.92 $ 15.33 $ 14.30 ==================================================================================================================================== SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF OPERATIONS YEAR ENDED JUNE 30, 1999
NEW JERSEY NEW JERSEY PENNSYLVANIA PENNSYLVANIA INVESTMENT QUALITY PREMIUM INCOME INVESTMENT QUALITY PREMIUM INCOME 2 INVESTMENT INCOME (NOTE1) $26,041,479 $15,206,594 $22,189,561 $19,231,019 - ----------------------------------------------------------------------------------------------------------------------------------- EXPENSES Management fees (note 6) 2,797,888 1,773,015 2,317,666 2,256,821 Preferred shares - auction fees 325,000 229,001 274,998 295,249 Preferred shares - dividend disbursing agent fees 19,998 29,999 19,998 29,999 Shareholders' servicing agent fees and expenses 48,455 24,850 57,062 52,331 Custodian's fees and expenses 77,166 63,124 87,427 78,295 Directors'/Trustees' fees and expenses (note 6) 4,205 2,602 3,500 3,336 Professional fees 18,224 17,732 18,024 17,940 Shareholders' reports - printing and mailing expenses 133,266 88,123 99,823 123,447 Stock exchange listing fees 24,765 24,262 24,915 24,262 Investor relations expense 37,759 23,470 33,737 31,715 Other expenses 24,309 16,922 19,097 15,908 - ----------------------------------------------------------------------------------------------------------------------------------- Total expenses before custodian fee credit 3,511,035 2,293,100 2,956,247 2,929,303 Custodian fee credit (note 1) (4,469) (6,509) (23,238) (15,300) - ----------------------------------------------------------------------------------------------------------------------------------- Net expenses 3,506,566 2,286,591 2,933,009 2,914,003 - ----------------------------------------------------------------------------------------------------------------------------------- Net investment income 22,534,913 12,920,003 19,256,552 16,317,016 - ----------------------------------------------------------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENTS Net realized gain (loss) from investment transactions (notes 1 and 4) 255,510 (244,178) 1,496,625 580,091 Net change in unrealized appreciation or depreciation of investments (9,880,112) (4,838,620) (10,804,691) (10,102,849) - ----------------------------------------------------------------------------------------------------------------------------------- Net gain (loss) from investments (9,624,602) (5,082,798) (9,308,066) (9,522,758) - ----------------------------------------------------------------------------------------------------------------------------------- Net increase in net assets from operations $12,910,311 $ 7,837,205 $ 9,948,486 $ 6,794,258 =================================================================================================================================== SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF CHANGES IN NET ASSETS
NEW JERSEY INVESTMENT QUALITY NEW JERSEY PREMIUM INCOME YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED 6/30/99 6/30/98 6/30/99 6/30/98 - ----------------------------------------------------------------------------------------------------------------------------------- OPERATIONS Net investment income $ 22,534,913 $ 22,760,040 $ 12,920,003 $ 13,081,889 Net realized gain (loss) from investment transactions (notes 1 and 4) 255,510 1,145,279 (244,178) 1,139,335 Net change in unrealized appreciation or depreciation of investments (9,880,112) 4,551,886 (4,838,620) 6,532,010 - ----------------------------------------------------------------------------------------------------------------------------------- Net increase in net assets from operations 12,910,311 28,457,205 7,837,205 20,753,234 - ----------------------------------------------------------------------------------------------------------------------------------- DISTRIBUTIONS TO SHAREHOLDERS (NOTE 1) From undistributed net investment income: Common shareholders (18,431,006) (18,755,870) (10,381,899) (10,251,340) Preferred shareholders (3,894,310) (4,393,050) (2,619,427) (3,059,919) From accumulated net realized gains from investment transactions: Common shareholders (501,058) (592,823) -- -- Preferred shareholders (118,996) (132,888) -- -- - ----------------------------------------------------------------------------------------------------------------------------------- Decrease in net assets from distributions to shareholders (22,945,370) (23,874,631) (13,001,326) (13,311,259) - ----------------------------------------------------------------------------------------------------------------------------------- CAPITAL SHARE TRANSACTIONS (NOTE 2) Net proceeds from Common shares issued to shareholders due to reinvestment of distributions 2,911,713 2,673,402 1,192,349 760,188 Net proceeds from sale of Preferred shares 31,574,604 -- -- -- - ----------------------------------------------------------------------------------------------------------------------------------- Net increase in net assets from capital share transactions 34,486,317 2,673,402 1,192,349 760,188 - ----------------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets 24,451,258 7,255,976 (3,971,772) 8,202,163 Net assets at the beginning of year 438,877,949 431,621,973 274,275,790 266,073,627 - ----------------------------------------------------------------------------------------------------------------------------------- Net assets at the end of year $463,329,207 $438,877,949 $270,304,018 $274,275,790 =================================================================================================================================== Balance of undistributed net investment income at the end of year $ 769,654 $ 560,057 $ 526,631 $ 607,954 =================================================================================================================================== PENNSYLVANIA INVESTMENT QUALITY PENNSYLVANIA PREMIUM INCOME 2 YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED 6/30/99 6/30/98 6/30/99 6/30/98 - ----------------------------------------------------------------------------------------------------------------------------------- OPERATIONS Net investment income $ 19,256,552 $ 19,406,751 $ 16,317,016 $ 16,145,833 Net realized gain (loss) from investment transactions (notes 1 and 4) 1,496,625 736,176 580,091 2,190,521 Net change in unrealized appreciation or depreciation of investments (10,804,691) 670,433 (10,102,849) 8,353,368 - ----------------------------------------------------------------------------------------------------------------------------------- Net increase in net assets from operations 9,948,486 20,813,360 6,794,258 26,689,722 - ----------------------------------------------------------------------------------------------------------------------------------- DISTRIBUTIONS TO SHAREHOLDERS (NOTE 1) From undistributed net investment income: Common shareholders (16,078,764) (15,952,202) (12,031,069) (12,188,569) Preferred shareholders (3,372,586) (3,634,806) (3,551,933) (4,129,260) From accumulated net realized gains from investment transactions: Common shareholders (71,740) (828,412) -- -- Preferred shareholders (16,220) (192,317) -- -- - ----------------------------------------------------------------------------------------------------------------------------------- Decrease in net assets from distributions to shareholders (19,539,310) (20,607,737) (15,583,002) (16,317,829) - ----------------------------------------------------------------------------------------------------------------------------------- CAPITAL SHARE TRANSACTIONS (NOTE 2) Net proceeds from Common shares issued to shareholders due to reinvestment of distributions 2,247,807 2,184,617 -- -- Net proceeds from sale of Preferred shares 21,672,384 -- -- -- - ----------------------------------------------------------------------------------------------------------------------------------- Net increase in net assets from capital share transactions 23,920,191 2,184,617 -- -- - ----------------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets 14,329,367 2,390,240 (8,788,744) 10,371,893 Net assets at the beginning of year 363,139,048 360,748,808 352,123,354 341,751,461 - ----------------------------------------------------------------------------------------------------------------------------------- Net assets at the end of year $377,468,415 $363,139,048 $343,334,610 $352,123,354 =================================================================================================================================== Balance of undistributed net investment income at the end of year $ 335,030 $ 529,828 $ 875,604 $ 141,590 =================================================================================================================================== SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
NOTES TO FINANCIAL STATEMENTS 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 a 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 June 30, 1999, New Jersey Investment Quality, New Jersey Premium Income and Pennsylvania Investment Quality had when-issued and delayed delivery purchase commit ments of $10,274,204, $1,786,464 and $22,486,540, respectively. There were no such purchase commitments in Pennsylvania Premium Income 2. 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. All monthly tax-exempt income dividends paid during the fiscal year ended June 30, 1999, have been designated Exempt Interest Dividends. Net realized capital gain and market discount distributions are subject to federal taxation. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS Tax-exempt net investment income is declared monthly as a dividend 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 -- 624 880 -- Series W -- 1,440 2,400 -- Series Th 2,000 1,600 2,000 2,080 Series F 1,280 -- -- 1,800 - ----------------------------------------------------------------------------- Total 6,480 3,664 5,280 4,724 ============================================================================= Effective June 25, 1999, New Jersey Investment Quality issued 1,280 Series F $25,000 stated value Preferred shares. Effective June 25, 1999, Pennsylvania Investment Quality issued 880 Series T $25,000 stated value Preferred shares. DERIVATIVE FINANCIAL INSTRUMENTS The Funds may invest in transactions in certain derivative financial instruments including futures, forward, swap and option contracts, and other financial instruments with similar characteristics. Although the Funds are authorized to invest in such financial instruments, and may do so in the future, they did not make any such investments during the fiscal year ended June 30, 1999. 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. CUSTODIAN FEE CREDIT Each Fund has an arrangement with the custodian bank whereby the custodian fees and expenses are reduced by credits earned on each Fund's cash on deposit with the bank. Such deposit arrangements are an alternative to overnight investments. 2. FUND SHARES Transactions in Common shares were as follows:
NEW JERSEY NEW JERSEY INVESTMENT QUALITY PREMIUM INCOME YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED 6/30/99 6/30/98 6/30/99 6/30/98 - --------------------------------------------------------------------------------------------------------- Shares issued to shareholders due to reinvestment of distributions 170,697 161,805 73,157 49,041 ========================================================================================================= PENNSYLVANIA PENNSYLVANIA INVESTMENT QUALITY PREMIUM INCOME 2 YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED 6/30/99 6/30/98 6/30/99 6/30/98 - --------------------------------------------------------------------------------------------------------- Shares issued to shareholders due to reinvestment of distributions 129,690 128,464 -- -- =========================================================================================================
3. DISTRIBUTIONS TO COMMON SHAREHOLDERS The Funds declared Common share dividend distributions from their tax-exempt net investment income which were paid August 2, 1999, to shareholders of record on July 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 $ .0675 ================================================================================ 4. SECURITIES TRANSACTIONS Purchases and sales (including maturities) of investments in long-term municipal securities and short-term municipal securities during the fiscal year ended June 30, 1999, were as follows:
NEW JERSEY NEW JERSEY PENNSYLVANIA PENNSYLVANIA INVESTMENT PREMIUM INVESTMENT PREMIUM QUALITY INCOME QUALITY INCOME 2 - --------------------------------------------------------------------------------------------------------- Purchases: Long-term municipal securities $63,718,967 $26,379,580 $56,707,813 $32,996,331 Short-term municipal securities 13,900,000 5,400,000 17,595,000 26,705,000 Sales and maturities: Long-term municipal securities 35,072,525 27,148,295 59,724,366 31,133,534 Short-term municipal securities 13,900,000 5,400,000 18,395,000 29,105,000 =========================================================================================================
At June 30, 1999, 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, 1999, New Jersey Premium Income 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 PREMIUM INCOME - -------------------------------------------------------------------------------- Expiration year: 2002 $3,583,548 2003 129,409 2004 650,143 2005 174,583 2006 -- 2007 244,178 - -------------------------------------------------------------------------------- Total $4,781,861 ================================================================================ 5. UNREALIZED APPRECIATION (DEPRECIATION) Gross unrealized appreciation and gross unrealized depreciation of investments at June 30, 1999, were as follows:
NEW JERSEY NEW JERSEY PENNSYLVANIA PENNSYLVANIA INVESTMENT PREMIUM INVESTMENT PREMIUM QUALITY INCOME QUALITY INCOME 2 - --------------------------------------------------------------------------------------------------------- Gross unrealized: appreciation $22,077,293 $10,723,609 $19,551,567 $11,513,560 depreciation (1,968,244) (1,033,832) (2,401,608) (2,892,407) - --------------------------------------------------------------------------------------------------------- Net unrealized appreciation $20,109,049 $ 9,689,777 $17,149,959 $ 8,621,153 =========================================================================================================
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 assets of each Fund as follows: AVERAGE DAILY NET ASSETS 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 June 30, 1999, 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 $162,000,000 $91,600,000 $132,000,000 $118,100,000 Common shares, $.01 par value per share 199,018 119,807 160,138 157,475 Paid-in surplus 280,014,481 173,154,295 226,233,596 215,275,699 Balance of undistributed net investment income 769,654 526,631 463,751 875,604 Accumulated net realized gain (loss) from investment transactions 237,005 (4,786,492) 1,460,971 304,679 Net unrealized appreciation of investments 20,109,049 9,689,777 17,149,959 8,621,153 - --------------------------------------------------------------------------------------------------------- Net assets $463,329,207$270,304,018 $377,468,415 $343,334,610 ========================================================================================================= Authorized shares: Common 200,000,000 200,000,000 Unlimited Unlimited Preferred 1,000,000 1,000,000 Unlimited Unlimited =========================================================================================================
Financial Highlights Selected data for a Common share outstanding throughout each fiscal year 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 $15.65 $1.14 $(.48) $ .66 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 New Jersey Premium Income Year Ended 6/30: 1999 15.34 1.08 (.41) .67 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 Pennsylvania Investment Quality Year Ended 6/30: 1999 15.94 1.22 (.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 Pennsylvania Premium Income 2 Year Ended 6/30: 1999 14.86 1.04 (.61) .43 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 Less Distributions -------------------------------------------------------------------------- Net Net Investment Investment Capital Capital Income Income Gains Gains To Common To Preferred To Common To Preferred Shareholders Shareholders+ Shareholders Shareholders+ Total New Jersey Investment Quality Year Ended 6/30: 1999 $ (.93) $(.20) $(.03) $(.01) $(1.17) 1998 (.95) (.22) (.03) (.01) (1.21) 1997 (.95) (.21) -- -- (1.16) 1996 (.94) (.23) -- -- (1.17) 1995 (1.01) (.24) (.02) -- (1.27) New Jersey Premium Income Year Ended 6/30: 1999 (.87) (.22) -- -- (1.09) 1998 (.86) (.26) -- -- (1.12) 1997 (.84) (.23) -- -- (1.07) 1996 (.81) (.26) -- -- (1.07) 1995 (.81) (.28) (.01) -- (1.10) Pennsylvania Investment Quality Year Ended 6/30: 1999 (1.01) (.21) -- -- (1.22) 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) Pennsylvania Premium Income 2 Year Ended 6/30: 1999 (.76) (.23) -- -- (.99) 1998 (.77) (.26) -- -- (1.03) 1997 (.78) (.26) -- -- (1.04) 1996 (.78) (.27) -- -- (1.05) 1995 (.81) (.29) -- -- (1.10) Total Returns ---------------------- Based Ending Based on Net Ending on Net Asset Market Market Asset Value Value Value* Value* New Jersey Investment Quality Year Ended 6/30: 1999 $15.14 $15.8125 (2.33)% 2.82% 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 New Jersey Premium Income Year Ended 6/30: 1999 14.92 15.8125 7.17 2.87 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 Pennsylvania Investment Quality Year Ended 6/30: 1999 15.33 16.6875 2.56 2.50 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 Pennsylvania Premium Income 2 Year Ended 6/30: 1999 14.30 13.7500 7.98 1.27 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 Ratios/Supplemental Data ------------------------------------------------------------------------------------------ Before Credit ------------------------------------------------------------------------------------------ Ratio of Net Ratio of Net Ratio of Investment Ratio of Investment Expenses Income to Expenses Income to to Average Average to Average Average Ending Net Assets Net Assets Total Total Net Applicable Applicable Net Assets Net Assets Assets to Common to Common Including Including (000) Shares++ Shares++ Preferred++ Preferred++ New Jersey Investment Quality Year Ended 6/30: 1999 $463,329 1.13% 7.27% .80% 5.12% 1998 438,878 1.13 7.40 .79 5.20 1997 431,622 1.14 7.70 .80 5.36 1996 422,338 1.16 7.67 .81 5.33 1995 420,944 1.23 8.06 .85 5.57 New Jersey Premium Income Year Ended 6/30: 1999 270,304 1.24 7.00 .83 4.68 1998 274,276 1.25 7.24 .83 4.81 1997 266,074 1.27 7.53 .83 4.91 1996 259,708 1.32 7.53 .86 4.90 1995 257,251 1.46 7.89 .94 5.08 Pennsylvania Investment Quality Year Ended 6/30: 1999 377,468 1.17 7.60 .81 5.30 1998 363,139 1.15 7.65 .80 5.34 1997 360,749 1.17 7.96 .81 5.52 1996 355,823 1.18 7.98 .82 5.53 1995 355,831 1.27 8.28 .87 5.70 Pennsylvania Premium Income 2 Year Ended 6/30: 1999 343,335 1.24 6.93 .83 4.61 1998 352,123 1.24 6.99 .82 4.63 1997 341,751 1.27 7.47 .83 4.85 1996 331,863 1.30 7.59 .84 4.90 1995 326,771 1.46 8.23 .92 5.20 Ratios/Supplemental Data -------------------------------------------------------------------------------------- After Credit** ------------------------------------------------------------------- Ratio of Net Ratio of Net Ratio of Investment Ratio of Investment Expenses Income to Expenses Income to to Average Average to Average Average Net Assets Net Assets Total Total Applicable Applicable Net Assets Net Assets Portfolio to Common to Common Including Including Turnover Shares++ Shares++ Preferred++ Preferred++ Rate New Jersey Investment Quality Year Ended 6/30: 1999 1.13% 7.27% .80% 5.12% 8% 1998 1.13 7.40 .79 5.20 6 1997 1.14 7.70 .80 5.36 15 1996 1.16 7.67 .81 5.33 16 1995 1.23 8.06 .85 5.57 13 New Jersey Premium Income Year Ended 6/30: 1999 1.24 7.00 .83 4.68 10 1998 1.25 7.24 .83 4.81 13 1997 1.27 7.53 .83 4.91 18 1996 1.32 7.53 .86 4.90 32 1995 1.46 7.89 .94 5.08 15 Pennsylvania Investment Quality Year Ended 6/30: 1999 1.16 7.61 .81 5.30 16 1998 1.15 7.65 .80 5.34 9 1997 1.17 7.96 .81 5.52 8 1996 1.18 7.98 .82 5.53 12 1995 1.27 8.28 .87 5.70 9 Pennsylvania Premium Income 2 Year Ended 6/30: 1999 1.24 6.93 .82 4.62 9 1998 1.24 6.99 .82 4.63 32 1997 1.27 7.47 .83 4.85 29 1996 1.30 7.59 .84 4.90 19 1995 1.46 8.23 .92 5.20 5 * 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. ** After custodian fee credit, where applicable (note 1). + 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.
Build Your Wealth Automatically SIDEBAR TEXT: NUVEEN OFFERS A NUMBER OF CONVENIENT WAYS TO ADD TO YOUR PORTFOLIO AND EARN THE TAX-FREE INCOME YOU NEED TO ACHIEVE YOUR FINANCIAL GOALS. SIDEBAR TEXT: NUVEEN MAKES REINVESTING EASY. A PHONE CALL IS ALL IT TAKES TO SET UP YOUR REINVESTMENT ACCOUNT. Nuveen Exchange-Traded Funds Dividend Reinvestment Plan Your Nuveen Exchange-Traded Fund allows you to conveniently reinvest dividends and/or capital gains distributions in additional fund shares. If you do not elect to reinvest distributions, all distributions are paid by check or can be deposited directly into your bank or brokerage account. By choosing to reinvest, you'll be able to invest money regularly and automatically, and watch your investment grow through the power of tax-free compounding. You'll also benefit from dollar-cost averaging, a technique of investing at regular intervals, which allows you to build a high-quality, tax-free portfolio conveniently and cost effectively over time. Easy and convenient To make recordkeeping easy and convenient, each month you'll receive a statement showing your total dividends and distributions, the date of investment, the shares acquired and the price per share, and the total number of shares you own. Income or capital gains taxes may be payable on dividends or distributions that are reinvested. How shares are purchased The shares you acquire by reinvesting will either be purchased on the open market or newly issued by the Fund. If the shares are trading at or above net asset value at the time of valuation, the Fund will issue new shares at the then-current market price. If the shares are trading at less than net asset value, shares for your account will be purchased on the open market. Dividends and distributions received to purchase shares in the open market will normally be invested shortly after the dividend payment date. No interest will be paid on dividends and distributions awaiting reinvestment. Because the market price of shares may increase before purchases are completed, the average purchase price per share may exceed the market price at the time of valuation, resulting in the acquisition of fewer shares than if the dividend or distribution had been paid in shares issued by the fund. A pro rata portion of any applicable brokerage commissions on open market purchases will be paid by Plan participants. These commissions usually will be lower than those charged on individual transactions. Flexibility You may, of course, change your distribution option or withdraw from the Plan at any time, should your needs or situation change. Should you withdraw, you can receive a certificate for all whole shares credited to your reinvestment account and cash payment for fractional shares, or cash payment for all reinvestment account shares, less brokerage commissions and a $2.50 service fee. You can also reinvest if your shares are registered in the name of a brokerage firm, bank, or other nominee. Just ask your investment adviser if the firm will participate on your behalf. If not, it's easy to have the shares registered in your name and to apply for a reinvestment account directly. Participants whose shares are registered in the name of one firm may not be able to transfer the shares to another firm and continue to participate in the Plan. The Fund reserves the right to amend or terminate the Plan at any time. Although the Fund reserves the right to amend the Plan to include a service charge payable by the participants, there is no direct service charge to participants in the Plan at this time. For more information on the Nuveen Automatic Reinvestment Plan or to enroll in or withdraw from the Plan, speak with your financial adviser or call us at (800) 257-8787. Fund Information BOARD OF DIRECTORS/TRUSTEES Robert P. Bremner Lawrence H. Brown Anne E. Impellizzeri Peter R. Sawers William J. Schneider Timothy R. Schwertfeger Judith M. Stockdale FUND MANAGER Nuveen Advisory Corp. 333 West Wacker Drive Chicago, IL 60606 CUSTODIAN, 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, we have updated or replaced our trading, fund management, and pricing systems at Nuveen - systems that directly affect our investors and their financial advisers - to address Year 2000 concerns. We continue to work closely with our transfer agent, custodian, firms through whom we buy and sell portfolio securities, and other service partners to monitor the Year 2000 readiness of their systems, while addressing other remaining systems issues. In addition, the Funds hold securities of issuers whose business operations leave them susceptible to Year 2000 concerns. We seek to evaluate an issuer's Year 2000 readiness as part of our initial and ongoing research of these issuers. This is only one of the many factors considered in determining whether to buy, sell, or continue holding a particular security. Our Year 2000 review, repair, and testing program has been substantially completed. This program included industry-wide testing of critical systems and receipt of satisfactory assurances from critical service providers, vendors, and issuers regarding their Year 2000 readiness. We will continue more refined testing of our systems and their relationships with other parties' systems and will regularly discuss the results of this testing with those parties. We are also making Year 2000 contingency plans to guide recovery efforts in the event that, despite our remediation attempts, Year 2000 issues adversely affect the Funds. Although we can never have complete assurance that the steps we take will be sufficient to prevent any problems that would impact the Nuveen Exchange-Traded Funds, we can assure you that we will take all reasonable steps to prevent disruption of the services provided by your Fund. THE BOARD OF TRUSTEES OF YOUR FUND RECENTLY MODIFIED CERTAIN INVESTMENT POLICIES OF THE FUND. The Fund was formerly not permitted to invest more than 5% of its total assets in Municipal Leases that contain "non-appropriation" clauses. In addition, your Fund was not permitted to invest more than 10% of its total assets in Municipal Leases and securities that are unmarketable, illiquid or not readily marketable. The Municipal Lease market has matured since the Fund's inception, and non-appropriation leases have become more liquid and widely accepted. The Nuveen Exchange-Traded Fund Board has eliminated the restrictions noted above, replacing them with requirements that the Funds limit investments in non-appropriation Municipal Leases to those that meet one or more of six criteria that indicate that the issuer will be motivated to continue to appropriate monies to make the payments under the Municipal Lease. The Board also eliminated the Fund's policy not to invest more than 5% of its total assets in unsecured obligations of issuers which, together with their predecessors, have been in operation for less than three years. Each fund intends to repurchase shares of its own common or preferred stock in the future at such times and in such amounts as is deemed advisable. No shares were repurchased during the 12-month period ended June 30, 1999. 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 helping investors sustain the wealth of a lifetime(tm). John Nuveen &Co. Incorporated 333 West Wacker Drive Chicago, IL 60606-1286 www.nuveen.com FAN-2-6-99 -----END PRIVACY-ENHANCED MESSAGE-----