NUVEEN Exchange-Traded Funds
JUNE 30, 1998
Annual Report
DEPENDABLE, TAX-FREE INCOME TO HELP YOU KEEP MORE OF WHAT YOU EARN.
NQJ
NNJ
New Jersey
NQP
NPY
Pennsylvania
Photo of: couple gardening.
<PAGE>
Highlights
As of June 30, 1998
*For investors in the 31% federal and applicable state income tax bracket.
See your fund's performance overview in this report for more information.
**Overall rating within the municipal bond category for the period ended
June 30, 1998. Morningstar proprietary ratings reflect historical
risk-adjusted performance and are subject to change every month. Ratings are
calculated from a fund's three-, five-, and 10-year average annual returns in
excess of 90-day Treasury bill returns, with appropriate fee adjustments and
a risk factor that reflects fund performance below 90-day Treasury bill
returns. NQJ earned four stars for the three- and five-year periods ended
June 30, 1998. NQP earned three stars for the three-year period and four
stars for the five-year period, each ended June 30, 1998. In an investment
category, 10% of the funds receive five stars, 22.5% receive four stars and
35% receive three stars. 195 municipal bond funds were rated for the
three-year period and 175 for the five-year period, each ended June 30, 1998.
***The Lehman Brothers Municipal Bond Index is an unleveraged index comprised of
a broad range of investment-grade municipal bonds, and does not reflect any
initial or ongoing expenses.
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 Building Better Portfolios
41 Fund Information
Credit Quality Performance Highlights
Nuveen New Jersey Investment Quality Municipal Fund, Inc. (NQJ)
AAA/Pre-refunded 60%
AA 19%
A 7%
BBB/NR 14%
o Taxable-equivalent yield of 8.62%*
o Steady dividend for 20 consecutive months
o HHHH Four-star rating by Morningstar**
Nuveen New Jersey Premium Income Municipal Fund, Inc. (NNJ)
AAA/Pre-refunded 53%
AA 12%
A 18%
BBB/NR 17%
o Taxable-equivalent yield of 8.59%*
o Steady or increasing dividend for 56 consecutive
months
o Outperformed Lehman Brothers Municipal Bond
Index for the one year period***
Nuveen Pennsylvania Investment Quality Municipal Fund (NQP)
AAA/Pre-refunded 59%
AA 22%
A 7%
BBB/NR 12%
o Taxable-equivalent yield of 8.70%*
o Steady dividend for 23 consecutive months
o HHHH Four-star rating by Morningstar**
Nuveen Pennsylvania Premium Income Municipal Fund 2 (NPY)
AAA/Pre-refunded 74%
AA 13%
A 4%
BBB/NR 9%
o Taxable-equivalent yield of 8.26%*
o Outperformed Lehman Brothers Municipal Bond
Index for the one-year period***
o One-year total return on net asset value of
10.29%
================================================================================
A New Benefit for Nuveen Exchange-Traded Fund Shareholders
The benefits of your Nuveen Exchange-Traded Fund just got better. Now investors
with at least $50,000 in Nuveen holdings - including Exchange-Traded Funds - are
eligible for a reduction in the sales charge on purchases of Class A shares of
any Nuveen Mutual Fund.
This program is available for any of Nuveen's collection of Premier AdviserSM
equity and municipal bond investments. Now you can diversify your portfolio with
the quality investments you count on from Nuveen and get the benefit of reduced
rates.
For more information, contact your financial adviser and ask for a prospectus.
Or call Nuveen Investor Services at (800) 257-8787. Please read it carefully
before you invest.
<PAGE>
Photo of: Timothy R. Schwertfeger
Chairman of the Board
Sideline text:
Wealth takes a lifetime to build. Once achieved, it should be preserved.
Dear Shareholder
I'm pleased to share with you this performance report on the Nuveen New Jersey
and Pennsylvania Exchange-Traded Funds. Over the past 12 months, each of the
funds in this report continued to perform well and meet its objectives of
providing you with competitive tax-free income and strong after-tax total
returns. The funds benefited from the strong market for fixed-income securities,
as investor demand for competitive-yielding investments like the Nuveen
Exchange-Traded Funds led to rising share prices over the past year. The
combination of higher share prices and competitive tax-free income provided
investors with an attractive total return for the year.
The Economy in Review
Over the past year, fixed-income investments enjoyed bullish performance, as
declining interest rates and low inflation spurred a bond market rally. The
equity markets also exhibited continued strength despite recent volatility
sparked by Asia's financial problems. Although interest rates have trended
slightly upward in recent months, a year-to-year comparison shows that today's
rates are significantly lower than those of a year ago. As indicated in the
accompanying chart, between June 1997 and June 1998, the yield on the Bond Buyer
40, an unmanaged index of long-term municipal bonds, fell from 5.69% to 5.22%.
Much of the decline in interest rates resulted from expectations that the
financial crisis in Asia would restrain the prices of imported goods and reduce
foreign demand for U.S. products and services, thereby keeping inflation at
moderate levels. Thanks to a strong dollar and weak commodity prices, these
inflation expectations were largely fulfilled, as the Consumer Price Index rose
only 1.7% for the 12 months ended June 30, 1998, among its lowest levels in
years. The bond market rally gained additional strength from the "flight to
quality," as investors sought a haven from ongoing Asian uncertainty by moving
assets into high-quality U.S. bonds. Currently, bond market fundamentals -
inflation, economic growth, interest rates, and supply - are all at levels
conducive to continued strong demand for U.S. bonds. This should keep prices
high and rates relatively low, helping to prolong the U.S. economic expansion.
In coming months, we will continue to watch several key factors affecting the
future of the economy, including the demand for goods and services, the
availability of qualified employees, and indications from the Federal Reserve.
We expect that these factors will continue to influence the tone of the
fixed-income markets during the remainder of the year.
Chart: Bond Buyer 40
<PAGE>
Municipal Market Review
As interest rates continued to decline over the past year, bond prices rose.
This price appreciation for the bonds in our portfolios contributed to strong
total returns for the year.
Another major factor in bond performance over the past 12 months was the
continued strength of the U.S. economy, which helped boost the credit quality of
many municipal bonds. With the improvements in the fundamental financial health
of many municipalities, bond credit upgrades by major credit rating agencies
exceeded downgrades by significant margins. This enhanced credit quality also
contributed to the funds' performance, as the upgraded bonds increased in value.
The combination of low interest rates and a strong economy stimulated a robust
pace in new issuance and a dramatic increase in the refinancing of existing
bonds as issuers sought to lower their interest costs. The first six months of
1998 saw $146 billion of new municipal issuance, up 51% over the same period in
1997, and $42 billion in refunding activity, an increase of 118% from last year.
Although the nationwide supply of municipal bonds remained heavy, the supply of
bonds in each state varied according to local economic conditions. The high
level of recent issuance highlights the value of Nuveen's expertise in the
municipal market, as our portfolio management teams carefully analyzed the flood
of issues to select those undervalued securities that would help the funds
achieve their investment objectives.
Diversification: The Key to a Better Portfolio
In the months ahead, we believe that investors will find diversification to be
an increasingly important investment strategy. An appropriately diversified
portfolio - one that balances different types of investments, risk levels, and
tax management - can help cushion your portfolio against volatility and enhance
your return potential.
Many investors select Nuveen's municipal bond funds because their emphasis on
dependable tax-free income and attractive after-tax returns makes them ideal for
building and sustaining long-term financial security. The funds also work well
with other Nuveen investments, creating the foundation for a diversified,
well-balanced portfolio. Recent studies by Nuveen's research team have found
that portfolios combining municipal bonds and stocks generated higher after-tax
returns with lower levels of risk than similar portfolios combining stocks and
Treasury or corporate bonds.
We encourage you to talk to your financial adviser about diversifying your
portfolio with Nuveen's equity and balanced funds, including the Nuveen European
Value Fund. This new equity mutual fund offers a portfolio of quality European
company stocks for investors seeking long-term growth potential and
international diversification. Today, more than ever, you can count on Nuveen
for a wide range of investments and services that can help you build a
well-balanced, tax-efficient portfolio designed to achieve your financial goals.
When seeking quality investment solutions that withstand the test of time, we
hope that you continue to think of Nuveen. We thank you for your continued
confidence in us and our family of investments.
Sincerely,
TIMOTHY R. SCHWERTFEGER
Chairman of the Board
August 17, 1998
Sideline text: "Today, more than ever, you can count on Nuveen for a wide range
of investments and services that can help you build a well-balanced,
tax-efficient portfolio."
<PAGE>
Nuveen New Jersey Exchange-Traded Funds
Portfolio Manager's Comments
Portfolio Managers Tom O'Shaughnessy and Steve Peterson discuss the state
municipal market, its impact on performance and strategies for the Nuveen New
Jersey Exchange-Traded Funds.
On July 1, 1998, Nuveen made several changes in the management of its funds to
make more efficient use of staff resources and portfolio manager expertise. As a
result, Tom Futrell assumed management responsibilities for the New Jersey
Investment Quality and New Jersey Premium Income Municipal Funds. Tom is a
15-year veteran of Nuveen and an experienced investment professional who has
managed a number of other state municipal bond funds.
New Jersey State Update
New Jersey's high credit ratings for general obligation debt recognize the
state's diverse economic base and strong financial management. As corporate
restructurings and downsizings have slowed, state unemployment figures have
stabilized. Stronger-than-anticipated business and personal income tax receipts
have enabled New Jersey to build financial reserves, which should ease the
state's burden in funding the $250 million court-mandated increase in education
spending. The state has also earmarked funds for preventing solid waste
facilities from defaulting on debt service payments. Although New Jersey has
stated that it will not allow any solid waste projects to go under, all of these
facilities continue to struggle in their search for ways to cut costs, as the
various political entities involved each hope that another will step up and
solve the problem. In the electric utilities arena, a plan for deregulation has
been approved and a phase-in of competition could begin as early as April 1999.
Health care deregulation has led to a number of mergers and affiliations among
providers, as has been common in other parts of the country.
With intense investor interest spurred by high state and local taxes and backed
by high levels of per capita wealth, the New Jersey municipal market is trading
at one of the most attractive levels in the country. Demand for New Jersey
municipal bonds continues to outstrip supply, and we anticipate that this
situation will continue for at least the next 12 months.
Fund Performance
Total Returns
For the year ended June 30, 1998, the total return on net asset value for the
Nuveen New Jersey Investment Quality Municipal Fund, Inc. (NQJ) was 8.12%, while
the Nuveen New Jersey Premium Income Municipal Fund, Inc. (NNJ) produced a total
return on net asset value of 10.35%. These returns are equivalent to taxable
returns of 11.62% and 13.65%, respectively, for investors in the combined 35.4%
federal and state income tax bracket. The funds' total returns compare with the
unleveraged Lehman Brothers Municipal Bond Index's annual return of 8.66%.
The differences in performance between the Nuveen New Jersey funds and the
Lehman Index over the past year can be attributed to the relative length of the
funds' leverage-adjusted durations - 5.82 years for NQJ and 9.77 years for NNJ -
compared with the index's average duration of 7.13 years. Over the past 12
months, municipal bond yields, as measured by the Bond Buyer 40, fell almost 50
basis points, while the yield on 30-year Treasury bonds closed out the second
quarter of 1998 just six basis points above its all-time low. In this
environment, longer duration proved to be beneficial to performance.
Duration measures a bond fund's price volatility, or reaction to interest rate
movements. The longer the duration, the more sensitive the fund is to changes in
interest rates. During a period of falling interest rates and market rallies,
such as that of the past year, longer duration enabled NNJ to participate more
fully in market gains, but can make the fund more vulnerable to potential price
declines when rates rise. Shorter duration results in a more defensive fund,
providing NQJ with lower volatility and a cushion from price declines during
periods of rising interest rates, but potentially limiting gains during market
rallies.
The performance of NQJ was also impacted by a large number of pre-refundings,
which can be seen in the fund's high proportion (20%) of U.S. guaranteed bonds.
In a pre-refunding, bonds are essentially repaid early and secured by U.S.
government or agency securities until they can be called by the issuer,
typically resulting in price appreciation. Because these pre-refunded bonds have
already achieved significant price appreciation, they were less able to
participate in the market rally, but benefit the portfolio through lower
volatility and enhanced credit quality.
Income
Despite the low interest rate environment of the past year, good call protection
helped support the dividends of both funds and protect income from erosion. NQJ
has now provided shareholders with 20 consecutive months of steady income. For
shareholders in NNJ, the accumulation of income from higher-yielding bonds
purchased over the past several years allowed us to increase the dividend in
August 1997. The fund has now provided shareholders with steady or increasing
dividends for 56 consecutive months. As of June 30, 1998, NQJ and NNJ offered
very competitive current market yields of 5.57% and 5.55%, respectively, which
translate to 8.62% and 8.59% on a taxable-equivalent basis for investors in the
combined 35.4% federal and state income tax bracket.
Key Strategies
The strong demand for New Jersey municipal debt as well as the state's cyclical
flow of issuance can create a challenging environment for municipal bond
investors, restricting opportunities to find value in the state. We have
continued to focus on maximizing the funds' tax efficiency by carefully
considering the impact of each trade on capital gains and preservation of
capital. Over the past year, we continued to focus on housing debt in our search
for value because of these bonds' low volatility, low risk of pre-payment, and
ability to produce more yield on a risk-adjusted basis than any other sector in
the market. Nuveen's diligent research team helps us find the undervalued bonds
in this sector that we feel provide competitive yields and have strong potential
for price appreciation. In the health care sector, hospitals offered several
attractive opportunities, as industry consolidation resulted in both the
issuance of new debt as well as debt restructuring.
Another key strategy over the past year was to increase the income levels of the
funds. We have been able to accomplish this through bond swaps, that is, selling
one bond and reinvesting the proceeds in a very similar bond with a higher
yield. The efforts of Nuveen's research analysts again were instrumental in
finding higher-yielding bonds that are undervalued by the market and have the
potential for price appreciation. In addition, we found that bonds in the
maturity range of 20-30 years seldom offered enough incremental yield for
assuming the additional interest rate risk associated with these longer maturity
bonds. Instead, we discovered attractive opportunities among bonds with
maturities of 15-20 years, which provided the best values given their historical
levels of volatility.
Outlook for the Future
Looking ahead, we expect the U.S. economy to remain in its current growth mode,
although progress should come at a more modest pace. The Asian financial crisis
will continue to impact U.S. growth, and expectations over the next six months
include a slowdown in corporate earnings, a strengthening dollar, especially
versus Asian currencies, and the continuation of low inflation despite tight
labor markets. This should inspire the Federal Reserve to continue its neutral
position rather than raising interest rates in the second half of 1998. We view
the economic slowdown and the current direction of the dollar as positive
indicators for the fixed-income markets, including municipal bonds, and much of
our outlook is contingent upon the continuation of these factors.
Our primary goal for both of the New Jersey funds will be to continue to
generate strong after-tax total returns and a high level of tax-exempt income
consistent with the structure of the portfolios. This objective will be balanced
with our additional goals for the portfolios, including improving protection
from bond calls. As both funds near the point at which some holdings will begin
to be called away, we will work to replace bonds that are nearing their call
dates with longer duration bonds when it benefits the funds. As always, we
continue to look for bonds that provide excellent levels of income to meet the
needs of our shareholders and improve the funds' prospects for long-term total
returns.
<PAGE>
Nuveen New Jersey Investment Quality Municipal Fund, Inc.
Performance Overview
As of June 30, 1998
NQJ
Portfolio Statistics
==================================================
Inception Date 2/91
- --------------------------------------------------
Share Price 17 1/8
- --------------------------------------------------
Net Asset Value Per Share $15.65
- --------------------------------------------------
Current Market Yield 5.57%
- --------------------------------------------------
Taxable-Equivalent Yield (Federal Only)(1) 8.07%
- --------------------------------------------------
Taxable-Equivalent Yield
(Federal and State)(1) 8.62%
- --------------------------------------------------
Fund Net Assets ($000) $438,878
- --------------------------------------------------
Average Weighted Maturity (Years) 17.03
- --------------------------------------------------
Leverage-Adjusted Duration (Years) 5.82
- --------------------------------------------------
Annualized Total Return
==================================================
On Share Price On NAV
- --------------------------------------------------
1-Year 11.38% 8.12%
- --------------------------------------------------
3-Year 11.96% 7.77%
- --------------------------------------------------
5-Year 6.63% 6.48%
- --------------------------------------------------
Since Inception 8.32% 8.21%
- --------------------------------------------------
Taxable-Equivalent Total Return(2)
==================================================
On Share Price On NAV
- --------------------------------------------------
1-Year 14.67% 11.62%
- --------------------------------------------------
3-Year 15.48% 11.30%
- --------------------------------------------------
5-Year 10.20% 10.14%
- --------------------------------------------------
Since Inception 11.81% 11.82%
- --------------------------------------------------
Top 5 Sectors
==================================================
U.S. Guaranteed 20%
- --------------------------------------------------
Health Care 12%
- --------------------------------------------------
Housing (Multifamily) 12%
- --------------------------------------------------
Transportation 11%
- --------------------------------------------------
Tax Obligation (General) 10%
- --------------------------------------------------
1 Taxable-equivalent yield represents the yield on a taxable investment
necessary to equal the yield of the Nuveen fund on an after-tax basis. The
federal only rate is based on the current market yield and a federal income
tax rate of 31%. The rate shown for federal and state highlights the added
value of owning shares that are also exempt from state income taxes. It is
based on a combined federal and state income tax rate of 35.4%.
2 Taxable-equivalent total return is based on the annualized total return and
a combined federal and state income tax rate of 35.4%. It represents the
return on a taxable investment necessary to equal the return of the Nuveen
fund on an after-tax basis.
3 The fund also paid shareholders taxable distributions in December of $0.0303
per share.
Chart
1997-1998 Monthly Tax-Free Dividends Per Share(3)
Jul 0.0795
Aug 0.0795
Sep 0.0795
Oct 0.0795
Nov 0.0795
Dec 0.0795
Jan 0.0795
Feb 0.0795
Mar 0.0795
Apr 0.0795
May 0.0795
Jun 0.0795
<PAGE>
Nuveen New Jersey Premium Income Municipal Fund, Inc.
Performance Overview
As of June 30, 1998
NNJ
Portfolio Statistics
==================================================
Inception Date 12/92
- --------------------------------------------------
Share Price 15 9/16
- --------------------------------------------------
Net Asset Value Per Share $15.34
- --------------------------------------------------
Current Market Yield 5.55%
- --------------------------------------------------
Taxable-Equivalent Yield (Federal Only)(1) 8.04%
- --------------------------------------------------
Taxable-Equivalent Yield
(Federal and State)(1) 8.59%
- --------------------------------------------------
Fund Net Assets ($000) $274,276
- --------------------------------------------------
Average Weighted Maturity (Years) 18.02
- --------------------------------------------------
Leverage-Adjusted Duration (Years) 9.77
- --------------------------------------------------
Annualized Total Return
==================================================
On Share Price On NAV
- --------------------------------------------------
1-Year 11.12% 10.35%
- --------------------------------------------------
3-Year 11.89% 9.21%
- --------------------------------------------------
5-Year 6.94% 6.97%
- --------------------------------------------------
Since Inception 6.59% 7.35%
- --------------------------------------------------
Taxable-Equivalent Total Return(2)
==================================================
On Share Price On NAV
- --------------------------------------------------
1-Year 14.40% 13.65%
- --------------------------------------------------
3-Year 15.36% 12.52%
- --------------------------------------------------
5-Year 10.33% 10.22%
- --------------------------------------------------
Since Inception 9.83% 10.50%
- --------------------------------------------------
Top 5 Sectors
==================================================
Transportation 22%
- --------------------------------------------------
Housing (Multifamily) 12%
- --------------------------------------------------
Tax Obligation (Limited) 11%
- --------------------------------------------------
Education and Civic Organizations 11%
- --------------------------------------------------
Tax Obligation (General) 10%
- --------------------------------------------------
1 Taxable-equivalent yield represents the yield on a taxable investment
necessary to equal the yield of the Nuveen fund on an after-tax basis. The
federal only rate is based on the current market yield and a federal income
tax rate of 31%. The rate shown for federal and state highlights the added
value of owning shares that are also exempt from state income taxes. It is
based on a combined federal and state income tax rate of 35.4%.
2 Taxable-equivalent total return is based on the annualized total return and
a combined federal and state income tax rate of 35.4%. It represents the
return on a taxable investment necessary to equal the return of the Nuveen
fund on an after-tax basis.
Chart
1997-1998 Monthly Tax-Free Dividends Per Share
Jul 0.071
Aug 0.072
Sep 0.072
Oct 0.072
Nov 0.072
Dec 0.072
Jan 0.072
Feb 0.072
Mar 0.072
Apr 0.072
May 0.072
Jun 0.072
<PAGE>
Nuveen Pennsylvania Exchange-Traded Funds
Portfolio Manager's Comments
Portfolio Manager Tom O'Shaughnessy discusses the Pennsylvania market, fund
performance, and the outlook for the Nuveen Pennsylvania Exchange-Traded Funds.
Pennsylvania State Update
Pennsylvania's highly cyclical economy is growing more diverse, moving from a
largely industrial make-up toward a more service-oriented one. In an attempt to
take advantage of the national economic upswing - and to help counteract its
reputation as an anti-business state - Pennsylvania has been cutting certain
business taxes over the past several years to encourage businesses to remain in
or relocate to the state. While growth in the service industries has offset
losses in manufacturing sectors, sluggish performance is expected from the
finance, transportation, and utility sectors due to deregulation and the ongoing
consolidation of those industries.
Reflecting the broader municipal bond marketplace, the supply of Pennsylvania
bonds generally improved over the last year. The benefits of this strong supply,
however, were partially offset by a narrow spread between the yields on higher-
and lower-quality bonds, which made it more difficult to identify value in the
market. Pennsylvania's education and health care sectors provided the greatest
number of issues, and therefore offered some of the year's most attractive
buying opportunities.
Fund Performance
For the year ended June 30, 1998, the total return on net asset value for the
Nuveen Pennsylvania Investment Quality Municipal Fund (NQP) was 7.02%, while the
Nuveen Pennsylvania Premium Income Municipal Fund 2 (NPY) produced a total
return on net asset value of 10.29%. These returns are equivalent to taxable
returns of 10.22% and 13.03%, respectively, for investors in the combined 32.9%
federal and state income tax bracket. The funds' total returns compare with the
unleveraged Lehman Brothers Municipal Bond Index's annual return of 8.66%.
The differences in performance between the Nuveen Pennsylvania funds and the
Lehman Index over the past year can be attributed to the relative length of the
funds' leverage-adjusted durations - 5.62 years for NQP and 9.18 years for NPY -
compared with the index's average duration of 7.13 years. Over the past 12
months, municipal bond yields, as measured by the Bond Buyer 40, fell almost 50
basis points, while the yield on 30-year Treasury bonds closed out the second
quarter of 1998 just six basis points above its all-time low. In this
environment, longer duration proved to be beneficial to performance.
Duration measures a bond fund's price volatility, or reaction to interest rate
movements. The longer the duration, the more sensitive the fund is to changes in
interest rates. During a period of falling interest rates and market rallies,
such as that of the past year, longer duration enabled NPY to participate more
fully in market gains, but can make the fund more vulnerable to potential price
declines when rates rise. Shorter duration results in a more defensive fund,
providing NQP with lower volatility and a cushion from price declines during
periods of rising interest rates, but potentially limiting gains during market
rallies.
NQP
The performance of NQP was also impacted by a large number of pre-refundings,
which can be seen in the fund's high proportion (48%) of U.S. guaranteed bonds.
In a pre-refunding, bonds are essentially repaid early and secured by U.S.
government or agency securities until they can be called by the issuer,
typically resulting in price appreciation. Because these pre-refunded bonds have
already achieved significant price appreciation, they were less able to
participate in the market rally, but benefit the portfolio through lower
volatility and enhanced credit quality. Over the past year, good call protection
helped support the dividend of NQP and protect income from erosion. The fund has
now provided shareholders with 23 consecutive months of steady income. As of
June 30, 1998, the fund offered a current market yield of 5.84%, which
translates to 8.70% on a taxable-equivalent basis for investors in the combined
32.9% federal and state income tax bracket.
NPY
Over the past year, we found value in a number of intermediate-term municipal
bonds, which offered somewhat lower yields, but strong price appreciation
potential. The resulting lower level of current income being earned by the
portfolio necessitated a dividend reduction in May of this year. Despite the
adjustment, the fund continues to provide a very competitive current market
yield of 5.54%, which translates to 8.26% on a taxable-equivalent basis for
investors in the 32.9% combined federal and state income tax bracket.
Key Strategies
As of June 30, 1998, both funds held a high proportion of their assets in AAA
rated bonds: 59% for NQP and 74% for NPY. We focused on these high-quality bonds
because we feel that in the current market environment, lower-rated bonds
provide little compensation for taking on additional credit risk. However, NQP
has a relatively high allocation of BBB bonds that were purchased when the fund
was assembled in 1991. This highlights Nuveen's value investing approach to
finding undervalued securities, as we purchased BBB bonds that provided very
competitive yields, and were backed by healthy financial positions but were out
of favor at the time. In NPY, a key strategy over the past year has been to use
the fund's tax-loss carry-forwards to sell bonds that have appreciated in value
without having to distribute taxable capital gains to shareholders. This allowed
us to take advantage of short-term opportunities in the market, such as when a
large issuance comes to market and temporarily depresses prices.
Over the past year, we found that bonds in the maturity range of 20-30 years
seldom offered enough incremental yield for assuming the additional interest
rate risk associated with these longer maturity bonds. Instead, we discovered
attractive opportunities among bonds with maturities of 15-20 years, which
provided the best values given their historical levels of volatility.
Outlook for the Future
Looking ahead, we expect the U.S. economy to remain in its current growth mode,
although progress should come at a more modest pace. The Asian financial crisis
will continue to impact U.S. growth, and expectations over the next six months
include a slowdown in corporate earnings, a strengthening dollar, especially
versus Asian currencies, and the continuation of low inflation despite tight
labor markets. This should inspire the Federal Reserve to continue its neutral
position rather than raising interest rates in the second half of 1998. We view
the economic slowdown and the current direction of the dollar as positive
indicators for the fixed-income markets, including municipal bonds, and much of
our outlook is contingent upon the continuation of these factors.
Over the coming months, our focus for NQP will be on capital preservation and
maintaining the fund's income stream. This fund will see approximately $10
million of bond calls over the next 12 months, and we plan to reinvest the
proceeds from those calls in bonds with competitive yields to try to avoid
impacting the fund's income level to the extent possible. In NPY, we will
continue to use tax-loss carry-forwards to maximize the fund's assets and
enhance its income stream. At the state level, the continued
merger-and-acquisition turmoil in the health care sector requires close
monitoring of the fund's hospital bonds, and we will rely on Nuveen's research
team for expert fundamental analysis on these holdings.
<PAGE>
Nuveen Pennsylvania Investment Quality Municipal Fund
Performance Overview
As of June 30, 1998
NQP
Portfolio Statistics
==================================================
Inception Date 2/91
- --------------------------------------------------
Share Price 17 1/4
- --------------------------------------------------
Net Asset Value Per Share $15.94
- --------------------------------------------------
Current Market Yield 5.84%
- --------------------------------------------------
Taxable-Equivalent Yield (Federal Only)(1) 8.46%
- --------------------------------------------------
Taxable-Equivalent Yield
(Federal and State)(1) 8.70%
- --------------------------------------------------
Fund Net Assets ($000) $363,139
- --------------------------------------------------
Average Weighted Maturity (Years) 18.61
- --------------------------------------------------
Leverage-Adjusted Duration (Years) 5.62
- --------------------------------------------------
Annualized Total Return
==================================================
On Share Price On NAV
- --------------------------------------------------
1-Year 8.77% 7.02%
- --------------------------------------------------
3-Year 10.41% 7.01%
- --------------------------------------------------
5-Year 6.52% 6.41%
- --------------------------------------------------
Since Inception 8.67% 8.76%
- --------------------------------------------------
Taxable-Equivalent Total Return(2)
==================================================
On Share Price On NAV
- --------------------------------------------------
1-Year 11.78% 10.22%
- --------------------------------------------------
3-Year 13.59% 10.27%
- --------------------------------------------------
5-Year 9.77% 9.78%
- --------------------------------------------------
Since Inception 11.89% 12.13%
- --------------------------------------------------
Top 5 Sectors
==================================================
U.S. Guaranteed 48%
- --------------------------------------------------
Education and Civic Organizations 13%
- --------------------------------------------------
Housing (Single-Family) 13%
- --------------------------------------------------
Utilities 11%
- --------------------------------------------------
Tax Obligation (General) 6%
- --------------------------------------------------
1 Taxable-equivalent yield represents the yield on a taxable investment
necessary to equal the after-tax yield of the Nuveen fund. 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 income taxes. It is based on a combined
federal and state income tax rate of 32.9%.
2 Taxable-equivalent total return is based on the annualized total return and
a combined federal and state income tax rate of 32.9%. It represents the
return on a taxable investment necessary to equal the return of the Nuveen
fund on an after-tax basis.
3 The fund also paid shareholders taxable distributions in December of $0.0524
per share.
Chart:
1997-1998 Monthly Tax-Free Dividends Per Share 3
Jul 0.084
Aug 0.084
Sep 0.084
Oct 0.084
Nov 0.084
Dec 0.084
Jan 0.084
Feb 0.084
Mar 0.084
Apr 0.084
May 0.084
Jun 0.084
<PAGE>
Nuveen Pennsylvania Premium Income Municipal Fund 2
Performance Overview
As of June 30, 1998
NPY
Portfolio Statistics
==================================================
Inception Date 3/93
- --------------------------------------------------
Share Price 13 7/16
- --------------------------------------------------
Net Asset Value Per Share $14.86
- --------------------------------------------------
Current Market Yield 5.54%
- --------------------------------------------------
Taxable-Equivalent Yield (Federal Only)(1) 8.03%
- --------------------------------------------------
Taxable-Equivalent Yield
(Federal and State)(1) 8.26%
- --------------------------------------------------
Fund Net Assets ($000) $352,123
- --------------------------------------------------
Average Weighted Maturity (Years) 20.96
- --------------------------------------------------
Leverage-Adjusted Duration (Years) 9.18
- --------------------------------------------------
Annualized Total Return
==================================================
On Share Price On NAV
- --------------------------------------------------
1-Year 6.27% 10.29%
- --------------------------------------------------
3-Year 7.63% 9.76%
- --------------------------------------------------
5-Year 4.47% 6.64%
- --------------------------------------------------
Since Inception 3.81% 6.79%
- --------------------------------------------------
Taxable-Equivalent Total Return(2)
==================================================
On Share Price On NAV
- --------------------------------------------------
1-Year 9.18% 13.03%
- --------------------------------------------------
3-Year 10.68% 12.62%
- --------------------------------------------------
5-Year 7.50% 9.56%
- --------------------------------------------------
Since Inception 6.70% 9.60%
- --------------------------------------------------
Top 5 Sectors
==================================================
Health Care 16%
- --------------------------------------------------
Education and Civic Organizations 15%
- --------------------------------------------------
U.S. Guaranteed 15%
- --------------------------------------------------
Utilities 14%
- --------------------------------------------------
Tax Obligation (Limited) 11%
- --------------------------------------------------
1 Taxable-equivalent yield represents the yield on a taxable investment
necessary to equal the after-tax yield of the Nuveen fund. 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 income taxes. It is based on a combined
federal and state income tax rate of 32.9%.
2 Taxable-equivalent total return is based on the annualized total return and a
combined federal and state income tax rate of 32.9%. It represents the return
on a taxable investment necessary to equal the return of the Nuveen fund on an
after-tax basis.
Chart
1997-1998 Monthly Tax-Free Dividends Per Share
Jul 0.065
Aug 0.065
Sep 0.065
Oct 0.065
Nov 0.065
Dec 0.065
Jan 0.065
Feb 0.065
Mar 0.065
Apr 0.065
Jun 0.062
Jul 0.062
<PAGE>
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, 1998, and the related statements of
operations, changes in net assets and the financial highlights for the periods
indicated therein. These financial statements and financial highlights are the
responsibility of the Funds' management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of investments owned as of June
30, 1998, by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial positions of
Nuveen 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, 1998, and the results of their operations, changes in their net assets and
financial highlights for the periods indicated therein in conformity with
generally accepted accounting principles.
/s/ Ernst & Young LLP
Chicago, Illinois
August 14, 1998
<PAGE>
Portfolio of Investments
NUVEEN NEW JERSEY INVESTMENT QUALITY MUNICIPAL FUND, INC. (NQJ)
June 30, 1998
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Basic Materials - 1.5%
$ 6,250,000 The Pollution Control Financing Authority of Salem County (New Jersey),
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) 11/01 at 102 AA- $6,705,813
- ------------------------------------------------------------------------------------------------------------------------------------
Capital Goods - 0.2%
1,000,000 New Jersey Economic Development Authority, Economic Development Bonds,
Bridgewater Resources Inc., Series 1991,
9.500%, 2/01/01 (Alternative Minimum Tax) No Opt. Call N/R 1,030,000
- ------------------------------------------------------------------------------------------------------------------------------------
Consumer Staples - 1.2%
5,000,000 New Jersey Economic Development Authority, Economic Development Revenue
Bonds (J &J Snack Foods Corporation of New Jersey Project), Series 91,
7.250%, 12/01/05 (Alternative Minimum Tax) 12/98 at 103 N/R 5,204,050
- ------------------------------------------------------------------------------------------------------------------------------------
Education and Civic Organizations - 4.3%
295,000 Higher Education Assistance Authority (State of New Jersey), Senior
Student Loan Revenue Bonds, 1991 Series A,
7.200%, 7/01/09 (Alternative Minimum Tax) 7/01 at 102 A 315,712
New Jersey Educational Facilities Authority, Revenue Bonds, Saint
Peter's College, Issue 1998, Series B:
1,000,000 5.375%, 7/01/18 7/08 at 102 BBB 1,002,630
1,750,000 5.500%, 7/01/27 7/08 at 102 BBB 1,756,860
1,250,000 New Jersey Educational Facilities Authority, Seton Hall University
Project Revenue Bonds, Series F,
5.000%, 7/01/21 (DD) 7/08 at 101 Aaa 1,228,863
New Jersey Educational Facilities Authority, Seton Hall
University Project Revenue Bonds, 1991 Series, Project D:
500,000 6.875%, 7/01/10 7/01 at 102 A- 539,045
2,500,000 7.000%, 7/01/21 7/01 at 102 A- 2,692,200
6,000,000 New Jersey Higher Educational Assistance Authority, Student Loan Revenue
Bonds, New Jersey Class Loan Program, Series 1997 A,
5.800%, 6/01/16 (Alternative Minimum Tax) 6/07 at 102 Aaa 6,401,940
Rutgers, The State University (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 3,157,926
1,725,000 6.500%, 5/01/18 5/02 at 102 AA 1,875,869
- ------------------------------------------------------------------------------------------------------------------------------------
Health Care - 11.8%
300,000 New Jersey Health Care Facilities Financing Authority, Revenue Bonds,
Community Medical Center/Kensington Manor Care Center Issue, Series E,
7.000%, 7/01/20 7/00 at 102 Aaa 320,955
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- 3,980,736
2,800,000 6.800%, 7/01/11 7/02 at 102 A- 3,085,236
7,500,000 New Jersey Health Care Facilities Financing Authority, Revenue Bonds,
JFK Health Systems, Obligated Group Issue, Series 1991,
6.600%, 7/01/08 7/01 at 102 Aaa 8,161,950
9,300,000 New Jersey Health Care Facilities Financing Authority, Revenue Bonds,
Centrastate Medical Center Issue, Series A,
6.625%, 7/01/11 7/01 at 102 Aaa 10,042,047
3,000,000 New Jersey Health Care Facilities Financing Authority, Revenue Bonds, Beth
Israel Hospital Association of Passaic Issue, Series B,
6.250%, 7/01/14 7/99 at 100 Aaa 3,062,730
2,070,000 New Jersey Health Care Facilities Financing Authority, Revenue Bonds,
Robert Wood Johnson University Hospital, Series B,
6.625%, 7/01/16 7/01 at 102 Aaa 2,235,165
4,350,000 New Jersey Health Care Facilities Financing Authority, Revenue Bonds,
Mercer Medical Center Issue, Series 1991,
6.500%, 7/01/10 7/01 at 102 Aaa 4,696,043
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Health Care (continued)
$ 5,025,000 New Jersey Health Care Facilities Financing Authority, Revenue Bonds,
Pascack Valley Hospital Association Issue, Series 1991,
6.700%, 7/01/11 7/01 at 102 BBB $ 5,345,645
New Jersey Health Care Facilities Financing Authority, Refunding
Revenue Bonds, Barnert Hospital (FHA Insured Mortgage), Series B:
610,000 6.750%, 8/01/11 2/01 at 102 AAA 657,342
2,845,000 6.800%, 8/01/19 2/01 at 102 AAA 3,051,092
3,800,000 New Jersey Health Care Facilities Financing Authority, Revenue Bonds,
Palisades Medical Center, Obligated Group Issue, Series 1992,
7.500%, 7/01/06 7/02 at 102 Ba1 4,081,922
2,535,000 New Jersey Health Care Facilities Financing Authority, Revenue Bonds,
Deborah Heart and Lung Center Issue, Series of 1993,
6.200%, 7/01/13 7/03 at 102 Baa2 2,649,709
250,000 Catholic East Health System, Revenue Bonds, Series 1998 A,
5.000%, 11/15/08 No Opt. Call Aaa 259,523
- ------------------------------------------------------------------------------------------------------------------------------------
Housing/Multifamily - 11.5%
4,500,000 New Jersey Housing Mortgage Finance Agency, Multi-Family Housing Revenue
Bonds, 1996 Series A,
6.250%, 5/01/28 (Alternative Minimum Tax) 5/06 at 102 Aaa 4,813,335
12,000,000 New Jersey Housing and Mortgage Finance Agency, Multifamily Housing Revenue
Bonds (Presidential Plaza at Newport Project-FHA Insured Mortgage),
1991 Series 1, 7.000%, 5/01/30 11/01 at 102 AAA 12,989,400
1,500,000 New Jersey Housing and Mortgage Finance Agency, Multi-Family Housing
Revenue Bonds, 1995 Series A, 6.000%, 11/01/14 5/05 at 102 Aaa 1,597,140
New Jersey Housing and Mortgage Finance Agency, Section 8 Bonds,
1991 Series A:
3,000,000 6.800%, 11/01/05 11/02 at 102 AA+ 3,210,840
2,500,000 6.900%, 11/01/07 11/01 at 103 AA+ 2,678,475
4,700,000 6.950%, 11/01/08 11/01 at 103 AA+ 5,035,204
1,000,000 7.100%, 11/01/11 11/01 at 103 AA+ 1,071,080
9,650,000 New Jersey Housing and Mortgage Finance Agency, Housing Revenue Bonds,
1992 Series A, 6.950%, 11/01/13 5/02 at 102 A+ 10,398,551
2,920,000 New Jersey Housing and Mortgage Finance Agency, Housing Revenue Refunding
Bonds, 1992 Series One, 6.700%, 11/01/28 11/02 at 102 A+ 3,127,495
3,790,000 The Hudson County Improvement Authority, Multifamily Housing Revenue Bonds,
Series 1992 A, (Conduit Financing-Observer Park Project),
6.900%, 6/01/22 (Alternative Minimum Tax) 6/04 at 100 AAA 4,062,691
1,495,000 Housing Finance Corporation of the City of Long Branch, New Jersey,
Section 8 Assisted Housing Revenue Bonds, Washington Manor Associates,
Ltd., 1980 Elderly Project,
10.000%, 10/01/11 10/98 at 100 N/R 1,517,664
- ------------------------------------------------------------------------------------------------------------------------------------
Housing/Single Family - 6.5%
3,255,000 New Jersey Housing and Mortgage Finance Agency, Home Buyer Revenue Bonds,
1989 Series D,
7.600%, 10/01/09 (Alternative Minimum Tax) 10/99 at 102 Aaa 3,389,464
5,500,000 New Jersey Housing and Mortgage Finance Agency, Home Buyer Revenue Bonds,
1990 Series F-2,
6.300%, 4/01/25 (Alternative Minimum Tax) 10/00 at 102 Aaa 5,668,465
2,605,000 New Jersey Housing and Mortgage Finance Agency, Home Buyer Revenue Bonds,
1995 Series O,
6.350%, 10/01/27 (Alternative Minimum Tax) 10/05 at 101 1/2 Aaa 2,791,153
10,000,000 New Jersey Housing and Mortgage Finance Agency, Home Buyer Revenue Bonds,
1997 Series U,
5.850%, 4/01/29 (Alternative Minimum Tax) 10/07 at 101 1/2 Aaa 10,417,700
5,000,000 New Jersey Housing and Mortgage Finance Agency, Home Buyer Revenue Bonds,
1996 Series S,
6.050%, 10/01/28 (Alternative Minimum Tax) 4/07 at 101 1/2 Aaa 5,295,500
710,000 Puerto Rico Housing Finance Corporation, Single Family Mortgage Revenue Bonds,
Portfolio One, Series C, 6.750%, 10/15/13 10/01 at 102 Aaa 751,613
- ------------------------------------------------------------------------------------------------------------------------------------
Tax Obligation/General - 9.9%
5,000,000 State of New Jersey, General Obligation Bonds, Various Series,
6.375%, 8/01/11 8/02 at 101 1/2 Aaa1 5,450,750
State of New Jersey, General Obligation Bonds, Series D:
8,000,000 5.750%, 2/15/06 No Opt. Call Aa1 8,755,040
5,000,000 6.000%, 2/15/11 No Opt. Call Aa1 5,651,600
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Tax Obligation/General (continued)
$ 1,265,000 Township of East Brunswick, in the County of Middlesex, New Jersey,
General Obligation Refunding Bonds, Series 1993,
5.125%, 4/01/13 4/03 at 101 Aa2 $1,281,609
County of Essex, New Jersey, General Obligation Refunding Bonds
of 1996, Tax-Exempt Bonds of 1996, Series A-1:
3,000,000 6.000%, 11/15/07 No Opt. Call Aaa 3,361,650
1,000,000 5.000%, 11/15/11 8/07 at 101 Aaa 1,016,550
2,320,000 City of Hoboken, Fiscal Year Adjustment General Obligation Bonds, Series 1991,
8.900%, 8/01/06 No Opt. Call Aaa 3,023,030
5,250,000 Township of Howell, In the County of Monmouth, New Jersey, General
Obligation Refunding Bonds, Series 1991,
6.800%, 1/01/04 1/02 at 102 Aaa 5,755,838
3,675,000 The City of New Jersey (Hudson County, New Jersey), Fiscal Year Adjustment
Bonds, Series B 1991,
8.400%, 5/15/06 1/02 at 102 Aaa 4,625,980
1,000,000 The Monmouth County Improvement Authority (Monmouth County, New Jersey),
Revenue Bonds, Series 1997 (Howell Township Board of Education Project),
5.800%, 7/15/17 7/07 at 101 Aaa 1,070,930
2,000,000 Town of Morristown, In the County of Morris, New Jersey, General Obligation
Refunding Bonds, Series 1995,
6.500%, 8/01/19 8/05 at 102 Aaa 2,266,880
1,000,000 Township of West Deptford, County of Gloucester, New Jersey, General
Obligation Bonds, Series of 1996,
5.250%, 3/01/14 3/06 at 102 Aaa 1,026,240
- ------------------------------------------------------------------------------------------------------------------------------------
Tax Obligation/Limited - 6.2%
2,445,000 New Jersey Sports and Exposition Authority, State Contract Bonds,
1992 Series A,
6.500%, 3/01/19 3/02 at 102 Aa 2,672,263
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 2,767,756
3,400,000 5.000%, 12/15/14 12/07 at 101 Aaa 3,401,292
1,000,000 The Board of Education of the Town of Dover, in the County of Morris,
New Jersey, as Lessee, Certificates of Participation,
6.600%, 6/01/11 12/01 at 100 Aaa 1,069,420
2,535,000 The Board of Education of the Township of Mansfield, in the County of Warren,
New Jersey, Certificates of Participation,
5.900%, 3/01/15 3/06 at 102 Aaa 2,726,773
The State of New Jersey, as Lessee, and The Mercer County Improvement
Authority, as Lessor, Relating to the Richard J. Hughes Justice Complex:
3,000,000 6.050%, 1/01/09 No Opt. Call Aa 3,004,320
1,585,000 6.050%, 1/01/13 No Opt. Call Aa 1,587,282
1,000,000 6.050%, 1/01/14 No Opt. Call Aa 1,001,440
1,720,000 6.050%, 1/01/16 No Opt. Call Aa 1,722,477
2,000,000 6.050%, 1/01/17 No Opt. Call Aa 2,002,840
1,895,000 North Bergen Township Municipal Utility Authority, Sewer Revenue Refunding
Bonds, Series 1993
7.875%, 12/15/09 No Opt. Call Aa 2,461,662
1,180,000 The Raritan Township Municipal Utilities Authority (Hunterdon County,
New Jersey) (Secured by a Service Contract with the Township of Raritan),
Revenue Bonds, Series 1992 (Bank Qualified),
6.450%, 5/01/12 5/02 at 102 A+ 1,268,996
1,465,000 The South Toms River Sewerage Authority (Ocean County, New Jersey), Sewer
Refunding Revenue Bonds, Series 1992 (Bank Qualified),
7.400%, 11/01/05 11/02 at 102 N/R 1,569,733
- ------------------------------------------------------------------------------------------------------------------------------------
Transportation - 10.7%
3,000,000 New Jersey Economic Development Authority (American Airlines, Inc. Project),
7.100%, 11/01/31 (Alternative Minimum Tax) 11/01 at 102 Baa2 3,267,150
3,500,000 New Jersey Highway Authority (Garden State Parkway), Senior Parkway Revenue
Refunding Bonds, 1992 Series,
6.250%, 1/01/14 1/02 at 102 AA- 3,777,095
5,000,000 New Jersey Turnpike Authority, Turnpike Revenue Bonds, Series 1991 A
(Refunding Bonds),
6.900%, 1/01/14 1/99 at 100 Baa1 5,006,850
New Jersey Turnpike Authority, Turnpike Revenue Bonds, Series 1991 C:
9,000,000 6.500%, 1/01/08 No Opt. Call Aaa 10,368,090
1,675,000 6.500%, 1/01/16 No Opt. Call Baa1 1,947,556
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Transportation (continued)
$ 4,300,000 The Port Authority of New York and New Jersey, Special Project Bonds,
Series 1R, Delta Air Lines, Inc. Project, LaGuardia Airport Passenger
Terminal, 6.950%, 6/01/08 6/02 at 102 BBB- $4,695,514
4,500,000 The Port Authority of New York and New Jersey Consolidated Bonds,
Eighty-Fourth Series,
6.000%, 1/15/28 (Alternative Minimum Tax) 1/03 at 101 AA- 4,764,555
3,150,000 The Port Authority of New York and New Jersey Consolidated Bonds,
Ninety-Fifth Series,
6.125%, 7/15/29 (Alternative Minimum Tax) 7/04 at 101 AA- 3,375,666
5,000,000 Port Authority of New York and New Jersey, Consolidated Bonds, One Hundred
Second Series (Revenue Bonds), Non-AMT Bonds,
5.875%, 10/15/27 10/02 at 101 Aaa 5,311,550
4,350,000 The Port Authority of New York and New Jersey, Special Project Bonds,
Series 6, JFK International Air Terminal LLC Project,
5.750%, 12/01/25 (Alternative Minimum Tax) 12/07 at 100 Aaa 4,560,845
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. Guaranteed - 19.7%
5,600,000 New Jersey Economic Development Authority, Lease Rental Bonds, 1992
Series (Liberty State Park Project),
6.800%, 3/15/22 (Pre-refunded to 3/15/02) 3/02 at 102 Aaa 6,214,264
New Jersey Economic Development Authority, Revenue Bonds (New Jersey
Performing Arts Center Site Acquisition Project), 1991 Series:
610,000 6.600%, 6/15/04 (Pre-refunded to 6/15/01) 6/01 at 102 Aaa 664,979
3,800,000 6.750%, 6/15/12 (Pre-refunded to 6/15/01) 6/01 at 102 Aaa 4,158,264
4,875,000 New Jersey Health Care Facilities Financing Authority, Revenue Bonds,
St. Peter's Medical Center Issue, Series E,
6.875%, 7/01/11 (Pre-refunded to 7/01/01) 7/01 at 102 Aaa 5,350,800
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 97,633
355,000 6.800%, 8/01/19 (Pre-refunded to 2/01/01) 2/01 at 102 AAA 385,502
9,300,000 New Jersey Highway Authority (Garden State Parkway), Senior Parkway
Revenue Bonds, 1989 Series,
7.250%, 1/01/16 (Pre-refunded to 1/01/99) 1/99 at 102 Aaa 9,653,400
35,000 New Jersey Wastewater Treatment Trust, Wastewater Treatment Insured Bonds,
Series 1988 A,
7.375%, 5/15/08 (Pre-refunded to 7/01/98) 7/98 at 102 Aaa 35,704
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+*** 8,976,458
3,000,000 6.750%, 9/15/09 (Pre-refunded to 9/15/01) 9/01 at 101 1/2 Aaa 3,284,070
850,000 6.800%, 9/15/10 (Pre-refunded to 9/15/01) 9/01 at 101 1/2 AA+*** 931,643
1,500,000 The Board of Education of the Township of Bedminster, Certificates of
Participation, in the County of Somerset, New Jersey,
7.125%, 9/01/10 3/01 at 102 A1 1,641,840
7,000,000 The Bergen County Utilities Authority, 1992 Water Pollution Control System
Revenue Bonds, Series A,
6.500%, 12/15/12 (Pre-refunded to 6/15/02) 6/02 at 102 Aaa 7,731,220
7,800,000 County of Essex, New Jersey, Fiscal Year Adjustment Bonds, Series 1991,
6.500%, 12/01/11 (Pre-refunded to 12/01/01) 12/01 at 101 Aaa 8,489,130
4,095,000 The Board of Education of the Township of Evesham, in the County of
Burlington, New Jersey, Certificates of Participation,
6.875%, 9/01/11 (Pre-refunded to 9/01/01) 9/01 at 102 Aaa 4,514,778
8,200,000 The City of Jersey (Hudson County, New Jersey), Fiscal Year Adjustment
Bonds, Series A 1991,
6.600%, 5/15/11 (Pre-refunded to 5/15/01) 5/01 at 102 Aaa 8,924,142
950,000 The Mercer County Improvement Authority, Mercer County, New Jersey, Revenue
Bonds (County Courthouse Project), Series 1991,
6.600%, 11/01/14 (Pre-refunded to 11/01/00) 11/00 at 102 Aa2*** 1,023,863
3,500,000 The Monmouth County Improvement Authority (Monmouth County, New Jersey),
Sewage Facilities Revenue Refunding Bonds, Series 1991,
6.750%, 2/01/13 (Pre-refunded to 2/01/01) 2/01 at 102 Aaa 3,799,530
1,200,000 County of Passaic, New Jersey, General Improvement Bonds,
6.700%, 9/01/10 (Pre-refunded to 9/01/99) 9/99 at 102 N/R*** 1,263,611
6,000,000 Puerto Rico Electric Power Authority, Power Revenue Bonds, Series P,
7.000%, 7/01/11 (Pre-refunded to 7/01/01) 7/01 at 102 Aaa 6,615,600
2,450,000 University of Medicine and Dentistry of New Jersey Bonds, Series E,
6.500%, 12/01/18 (Pre-refunded to 12/01/01) 12/01 at 102 AA-*** 2,685,395
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Utilities - 7.7%
$ 400,000 New Jersey Economic Development Authority, Fixed Rate Pollution Control
Revenue Bonds, 1985 Series (Jersey Central Power and Light Company Project),
7.100%, 7/01/15 7/01 at 103 Baa1 $ 439,523
3,700,000 Pollution Control Financing Authority of Camden County (Camden County,
New Jersey), Solid Waste Disposal and Resource Recovery System Revenue
Bonds, Series 1991B,
7.500%, 12/01/09 (Alternative Minimum Tax) 12/01 at 102 B2 3,704,698
3,500,000 Pollution Control FInancing Authority of Camden County (Camden County,
New Jersey), Solid Waste Disposal and Resource Recovery System Revenue
Bonds, Series 1991A,
7.500%, 12/01/10 (Alternative Minimum Tax) 12/01 at 102 B2 3,504,444
8,000,000 Pollution Control Financing Authority of Middlesex County (New
Jersey), Pollution Control Revenue Refunding Bonds, Series 1992
(Amerada Hess Corporation Project),
6.875%, 12/01/22 12/02 at 102 N/R 8,752,160
6,000,000 Puerto Rico Electric Power Authority, Power Revenue Refunding Bonds, Series Y,
7.000%, 7/01/07 No Opt. Call Aaa 7,156,740
10,000,000 The Union County Utilities Authority (New Jersey), Solid Waste System
Revenue Bonds, Series D,
6.850%, 6/15/14 (Alternative Minimum Tax) 6/02 at 102 Aaa 10,365,100
- ------------------------------------------------------------------------------------------------------------------------------------
Water and Sewer - 6.8%
5,000,000 New Jersey Economic Development Authority, Water Facilities Revenue Bonds,
Series 1991 (New Jersey-American Water Company, Inc. Project),
7.400%, 11/01/01 (Alternative Minimum Tax) No Opt. Call N/R 5,172,100
7,500,000 New Jersey Economic Development Authority, Water Facilities Revenue Bonds,
New Jersey-American Water Company, Series 96,
6.000%, 5/01/36 (Alternative Minimum Tax) 5/06 at 102 Aaa 8,073,524
2,250,000 New Jersey Water Supply Authority, Water System Revenue Bonds, Series 1988
(Delaware and Raritan System),
7.875%, 11/01/13 (Alternative Minimum Tax) 11/98 at 102 A+ 2,319,750
Cape May County Municipal Utilities Authority, Sewer Revenue Refunding Bonds,
Series 1992-A:
2,000,000 6.000%, 1/01/11 1/03 at 102 Aaa 2,162,300
7,600,000 5.750%, 1/01/16 1/03 at 102 Aaa 7,966,776
4,000,000 Passaic Valley Sewerage Commissioners (State of New Jersey), Sewer System
Bonds, Series D,
5.800%, 12/01/18 12/02 at 102 Aaa 4,218,560
- ------------------------------------------------------------------------------------------------------------------------------------
$ 399,610,000 Total Investments - (cost $400,262,336) - 98.0% 430,251,496
=============
Other Assets Less Liabilities - 2.0% 8,626,453
--------------------------------------------------------------------------------------------------------------------
Net Assets - 100% $438,877,949
====================================================================================================================
* 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).
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
Portfolio of Investments
NUVEEN NEW JERSEY PREMIUM INCOME MUNICIPAL FUND, INC. (NNJ)
June 30, 1998
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Capital Goods - 1.8%
$ 4,880,000 New Jersey Economic Development Authority, Economic Development Bonds
(Bridgewater Resources Inc. Project), 1994 Series A,
8.375%, 11/01/04 (Alternative Minimum Tax) No Opt. Call N/R $5,026,400
- ------------------------------------------------------------------------------------------------------------------------------------
Education and Civic Organizations - 10.9%
790,000 Higher Education Assistance Authority (State of New Jersey), Student
Loan Revenue Bonds, 1992 Series A, New Jersey Class Loan Program,
6.125%, 7/01/09 (Alternative Minimum Tax) 7/02 at 102 A+ 823,346
4,795,000 Higher Education Assistance Authority (State of New Jersey), Student Loan
Revenue Bonds, 1993 Series A, New Jersey Class Loan Program,
5.300%, 7/01/10 (Alternative Minimum Tax) 7/03 at 102 A+ 4,900,394
New Jersey Educational Facilities Authority, Revenue Bonds, Series 1996A,
Trenton State College Issue:
4,000,000 5.100%, 7/01/21 7/06 at 101 Aaa 3,954,600
3,750,000 5.125%, 7/01/24 7/06 at 101 Aaa 3,718,050
3,600,000 New Jersey Economic Development Authority, Economic Development Bonds
(Yeshiva K'Tana of Passaic-1992 Project),
8.000%, 9/15/18 No Opt. Call N/R 4,556,628
890,000 New Jersey Educational Facilities Authority, Trenton State College Issue,
Revenue Bonds, Series 1976 D,
6.750%, 7/01/08 7/98 at 100 A+ 891,976
2,095,000 New Jersey Educational Facilities Authority, Refunding Revenue Bonds,
Trenton State College Issue, Series 1992 E,
6.000%, 7/01/09 7/02 at 102 Aaa 2,272,949
1,500,000 New Jersey Educational Facilities Authority, Higher Education Facilities,
Trust Fund Bonds, Series 1995 A,
5.125%, 9/01/02 No Opt. Call Aaa 1,558,575
1,000,000 New Jersey Educational Facilities Authority, Revenue Bonds, New Jersey
Institute of Technology Issue, Series 1994A,
6.000%, 7/01/24 7/04 at 102 Aaa 1,088,760
2,500,000 New Jersey Educational Facilities Authority, Revenue Bonds, Rowan College
of New Jersey Issue, Series 1996 E,
6.000%, 7/01/21 7/06 at 101 Aaa 2,711,900
3,330,000 New Jersey Educational Facilities Authority, Revenue Bonds, Montclair State
University, Series 1996-C (Dormitory/Cafeteria Facility),
5.400%, 7/01/12 7/06 at 10 Aaa 3,486,277
- ------------------------------------------------------------------------------------------------------------------------------------
Forest and Paper Products - 0.4%
1,140,000 New Jersey Economic Development Authority, Economic Growth Bonds, Composite
Issue-1992 Second Series T,
5.300%, 12/01/07 (Alternative Minimum Tax) 12/03 at 102 Aa3 1,194,378
- ------------------------------------------------------------------------------------------------------------------------------------
Health Care - 4.4%
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 1,141,307
800,000 7.000%, 7/01/04 No Opt. Call Aaa 912,080
45,000 New Jersey Health Care Facilities Financing Authority, Revenue Bonds,
St. Peter's Medical Center Issue, Series F,
5.000%, 7/01/11 7/03 at 102 Aaa 45,543
895,000 New Jersey Health Care Facilities Financing Authority, Refunding Revenue
Bonds, Wayne General Hospital Corp. Issue (FHA Insured Mortgage), Series B,
5.750%, 8/01/11 8/04 at 102 AAA 951,081
2,000,000 New Jersey Health Care Facilities Financing Authority, Revenue Bonds,
Monmouth Medical Center Issue, Series C, 6.250%, 7/01/16 7/04 at 102 Aaa 2,199,620
7,000,000 Puerto Rico Industrial, Medical, Educational, and Environmental Pollution
Control Facilities Financing Authority, Adjustable Rate Industrial Revenue
Bonds, 1983 Series A (American Home Products Corporation Project),
5.100%, 12/01/18 12/03 at 103 A2 6,881,980
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Housing/Multifamily - 12.1%
$ 2,250,000 New Jersey Housing Finance Agency, Special Pledge Revenue Obligations,
1975 Series One,
9.000%, 11/01/18 11/98 at 102 A1 $ 2,306,678
4,000,000 New Jersey Housing and Mortgage Finance Agency, Multi-Family Housing Revenue
Refunding Bonds (Presidential Plaza at Newport Project-FHA Insured Mortgages),
1991 Series 1,
7.000%, 5/01/30 11/01 at 102 AAA 4,329,800
2,875,000 New Jersey Housing and Mortgage Finance Agency, Multi-Family Housing
Revenue Bonds, 1995 Series A,
6.000%, 11/01/14 5/05 at 102 Aaa 3,061,185
7,000,000 New Jersey Housing and Mortgage Finance Agency, Multi-Family Housing
Revenue Bonds, 1997 Series A,
5.550%, 5/01/27 (Alternative Minimum Tax) 11/07 at 101 1/2 Aaa 7,171,150
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+ 2,537,550
8,000,000 6.950%, 11/01/13 5/02 at 102 A+ 8,620,560
3,815,000 New Jersey Housing and Mortgage Finance Agency, Housing Revenue Refunding
Bonds, 1992 Series One,
6.700%, 11/01/28 11/02 at 102 A+ 4,086,094
915,000 Housing Finance Corporation of the City of Long Branch, New Jersey,
Section 8 Assisted Housing Revenue Bonds, Washington Manor Associates,
Ltd., 1980 Elderly Project,
10.000%, 10/01/11 10/98 at 100 N/R 928,871
- ------------------------------------------------------------------------------------------------------------------------------------
Housing/Single Family - 3.3%
1,000,000 New Jersey Housing and Mortgage Finance Agency, Home Buyer Revenue Bonds,
1995 Series O,
6.300%, 10/01/23 (Alternative Minimum Tax) 10/05 at 101 1/2 Aaa 1,068,480
525,000 New Jersey Housing and Mortgage Finance Agency, Home Buyer Revenue Bonds,
Series 1996-P,
5.650%, 4/01/14 4/06 at 101 1/2 Aaa 548,158
1,000,000 New Jersey Housing and Mortgage Finance Agency, Home Buyer Revenue Bonds,
1996 Series Q,
5.875%, 4/01/17 (Alternative Minimum Tax) 4/06 at 101 1/2 Aaa 1,047,910
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 2,056,255
1,500,000 5.850%, 4/01/29 (Alternative Minimum Tax) 10/07 at 101 1/2 Aaa 1,562,655
2,500,000 New Jersey Housing and Mortgage Finance Agency, Home Buyer Revenue Bonds,
1996 Series S,
6.050%, 10/01/28 (Alternative Minimum Tax) 4/07 at 101 1/2 Aaa 2,647,750
- ------------------------------------------------------------------------------------------------------------------------------------
Industrial/Other - 1.3%
2,500,000 New Jersey Economic Development Authority, Economic Growth Bond, Composite
Issue-1992 Second Series H,
5.300%, 12/01/07 (Alternative Minimum Tax) 12/03 at 102 Aa3 2,619,250
1,015,000 New Jersey Economic Development Authority, Economic Growth Bonds,
Richard L Tauber Composite Issue-1993 Series H-2,
5.000%, 10/01/05 (Alternative Minimum Tax) 10/03 at 102 A 1,054,636
- ------------------------------------------------------------------------------------------------------------------------------------
Long Term Care - 1.3%
3,255,000 New Jersey Economic Development Authority (Morris Hall/St. Lawrence, Inc.
Project), Series 1993A,
6.150%, 4/01/13 4/03 at 102 A+ 3,478,521
- ------------------------------------------------------------------------------------------------------------------------------------
Tax Obligation/General - 9.7%
State of New Jersey, General Obligation Bonds, Series D:
2,760,000 5.750%, 2/15/06 No Opt. Call Aa1 3,020,489
4,000,000 5.800%, 2/15/07 No Opt. Call Aa1 4,417,720
2,500,000 6.000%, 2/15/11 No Opt.Call Aa1 2,825,800
1,560,000 6.000%, 2/15/13 No Opt. Call Aa1 1,762,036
785,000 County of Morris, New Jersey, General Improvement Bonds of 1993,
5.125%, 5/13/11 No Opt. Call Aaa 823,481
4,000,000 County of Passaic, State of New Jersey, General Obligation Refunding Bonds,
Series 1993,
5.125%, 9/01/12 No Opt.Call Aaa 4,161,520
5,000,000 Commonwealth of Puerto Rico, Public Improvement Bonds of 1995
(General Obligation Bonds),
5.750%, 7/01/24 7/05 at 101 1/2 Aaa 5,301,300
650,000 The Board of Education of the Southern Gloucester County, Regional High
School District, Gloucester County, New Jersey, School District Bonds,
Series 1993,
5.000%, 10/01/14 No Opt. Call Aaa 663,033
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Tax Obligation/General (continued)
Sparta Township School District, General Obligation Bonds (Unlimited Tax):
$ 1,100,000 5.800%, 9/01/19 9/06 at 100 Aaa $1,162,348
1,100,000 5.800%, 9/01/20 9/06 at 100 Aaa 1,160,830
1,100,000 5.800%, 9/01/21 9/06 at 100 Aaa 1,157,893
- ------------------------------------------------------------------------------------------------------------------------------------
Tax Obligation/Limited - 11.1%
3,485,000 New Jersey Economic Development Authority, Revenue Bonds (Public Schools
Small Project Loan Program), Series 1993,
5.400%, 8/15/12 8/03 at 102 AAA 3,603,142
1,500,000 New Jersey Economic Development Authority, Market Transition Facility
Senior Lien Revenue Bonds, Series 1994A,
7.000%, 7/01/04 No Opt. Call Aaa 1,711,005
New Jersey Transportation Trust Fund Authority, Transportation System Bonds,
1995 Series A:
750,000 5.500%, 6/15/12 6/05 at 102 Aaa 789,240
5,000,000 5.000%, 6/15/15 6/05 at 102 Aaa 4,985,750
1,100,000 New Jersey Transportation Trust Fund Authority, Transportation System Bonds,
1995 Series B,
5.500%, 6/15/15 6/05 at 102 Aaa 1,146,156
1,275,000 Camden County Improvement Authority (Camden County, New Jersey), County
Guaranteed Lease Revenue Bonds, Series of 1995,
5.625%, 10/01/15 10/05 at 102 Aaa 1,338,648
1,000,000 Hudson County Improvement Authority, Utility System Revenue Bonds,
Series 1997, Harrison Franchise Acquisition Project,
5.350%, 1/01/27 1/08 at 101 1/2 Aaa 1,021,120
1,000,000 The Jersey City Sewerage Authority (Hudson County, New Jersey), Sewer
Revenue Refunding Bonds (Series 1993),
6.250%, 1/01/14 No Opt. Call Aaa 1,153,710
The State of New Jersey, as Lessee, and The Mercer County Improvement
Authority, as Lessor, Relating to the Richard J. Hughes Justice Complex:
750,000 6.050%, 1/01/11 8/98 at 100 Aa 751,080
1,000,000 6.050%, 1/01/12 No Opt. Call Aa 1,001,440
1,500,000 6.050%, 1/01/16 No Opt. Call Aa 1,502,160
510,000 The Board of Education of the Township of Piscataway in the County of
Middlesex, New Jersey, Certificates of Participation, 1993 Series,
5.375%, 12/15/10 6/03 at 102 Aaa 531,604
8,160,000 Puerto Rico Public Buildings Authority, Public Education and Health
Facilities Refunding Bonds, Series M, Guaranteed by the Commonwealth
of Puerto Rico,
5.750%, 7/01/15 7/03 at 101 1/2 A 8,566,042
2,250,000 Western Monmouth Utilities Authority (Monmouth County, New Jersey),
Revenue Refunding Bonds, 1995 Series A,
5.600%, 2/01/14 2/05 at 102 Aaa 2,373,570
- ------------------------------------------------------------------------------------------------------------------------------------
Transportation - 21.7%
New Jersey Turnpike Authority, Turnpike Revenue Bonds, Series 1991 C:
1,000,000 6.500%, 1/01/08 No Opt. Call Baa1 1,137,920
7,920,000 6.500%, 1/01/16 No Opt. Call Baa1 9,208,742
4,575,000 6.500%, 1/01/16 No Opt. Call Aaa 5,413,689
4,245,000 Delaware River Port Authority, Revenue Bonds, Series of 1995,
5.500%, 1/01/26 1/06 at 102 Aaa 4,386,146
3,000,000 The Port Authority of New York and New Jersey, Consolidated Bonds,
Ninety-Sixth Series,
6.600%, 10/01/23 (Alternative Minimum Tax) 10/04 at 101 Aaa 3,316,740
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 1,285,584
2,500,000 5.750%, 11/01/14 (Alternative Minimum Tax) 5/05 at 101 Aaa 2,636,225
6,000,000 Port Authority of New York and New Jersey, Series 112,
5.250%, 12/01/13 (Alternative Minimum Tax) 6/05 at 101 AA- 6,091,560
1,500,000 Port Authority of New York and New Jersey, Consolidated Bonds, One Hundred
and Sixth Series,
6.000%, 7/01/16 (Alternative Minimum Tax) 7/06 at 101 AA- 1,612,665
2,500,000 Port Authority of New York and New Jersey, One Hundredth Series,
5.750%, 12/15/20 6/05 at 101 Aaa 2,633,500
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 10,596,900
11,000,000 5.750%, 12/01/25 (Alternative Minimum Tax) 12/07 at 100 Aaa 11,533,170
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Guaranteed - 6.0%
$ 1,250,000 New Jersey Health Care Facilities Financing Authority, Revenue Bonds,
Community Memorial Hospital Association Issue, Series C,
8.000%, 7/01/14 (Pre-refunded to 7/01/98) 7/98 at 102 A*** $1,275,150
2,000,000 New Jersey Health Care Facilities Financing Authority, Revenue Bonds,
Newton Memorial Hospital Issue, Series A,
7.500%, 7/01/19 (Pre-refunded to 7/01/99) 7/99 at 102 A-*** 2,113,420
2,420,000 New Jersey Turnpike Authority, Turnpike Revenue Bonds, 1984 Series,
10.375%, 1/01/03 No Opt. Call AAA 2,799,117
State of New Jersey, General Obligation Bonds (Various Bonds):
3,300,000 6.800%, 9/15/10 (Pre-refunded to 9/15/01) 9/01 at 101 1/2 AA+*** 3,616,965
2,385,000 6.800%, 9/15/11 (Pre-refunded to 9/15/01) 9/01 at 101 1/2 AA+*** 2,614,079
250,000 The Board of Education of the Township of Franklin, in the County of Somerset,
New Jersey, Certificates of Participation, Series 1989,
6.900%, 12/15/00 (Pre-refunded to 6/15/99) 6/99 at 10 Aaa 261,258
3,500,000 Puerto Rico Electric Power Authority, Power Revenue Bonds, Series R,
6.250%, 7/01/17 (Pre-refunded to 7/01/02) 7/02 at 101 1/2 Baa1*** 3,815,070
- ------------------------------------------------------------------------------------------------------------------------------------
Utilities - 9.6%
6,600,000 Pollution Control Financing Authority of Camden County (Camden County,
New Jersey), Solid Waste Disposal and Resource Recovery System Revenue
Bonds, Series 1991 C,
7.125%, 12/01/01 (Alternative Minimum Tax) No Opt. Call B2 6,605,940
6,500,000 Pollution Control Financing Authority of Camden County (Camden County,
New Jersey), Solid Waste Disposal and Resource Recovery System Revenue
Bonds, Series 1991 D,
7.250%, 12/01/10 (Alternative Minimum Tax) 12/01 at 102 B2 6,557,460
1,000,000 The Essex County Utilities Authority (Essex County, New Jersey), Solid Waste
System Revenue Bonds (Secured by a County Deficiency Agreement with the
County of Essex), Solid Waste System Revenue Bonds, Tax Exempt Series 1996A,
5.600%, 4/01/16 4/06 at 102 Aaa 1,050,430
3,500,000 Puerto Rico Electric Power Authority, Power Revenue Bonds, Series X,
5.500%, 7/01/25 7/05 at 10 Aaa 3,597,125
1,000,000 Puerto Rico Electric Power Authority, Power Revenue Refunding Bonds, Series Z,
5.250%, 7/01/21 7/05 at 100 Aaa 1,005,520
7,425,000 The Union County Utilities Authority (New Jersey), Solid Waste System Revenue
Bonds, 1991 Series A,
7.200%, 6/15/14 (Alternative Minimum Tax) 6/02 at 102 BB 7,435,618
- ------------------------------------------------------------------------------------------------------------------------------------
Water and Sewer - 6.3%
1,485,000 New Jersey Economic Development Authority, Water Facilities Refunding Bonds
(Elizabeth Water Company Project - 1991 Series A),
6.700%, 8/01/21 (Alternative Minimum Tax) 8/01 at 102 A 1,595,275
3,100,000 New Jersey Economic Development Authority, Water Facilities Revenue Refunding
Bonds (Hackensack Water Company Project - 1994 Series B),
5.900%, 3/01/24 (Alternative Minimum Tax) 3/04 at 102 Aaa 3,270,623
5,250,000 Cape May County Municipal Utilities Authority, Sewer Revenue Refunding Bonds,
Series 1992-A,
5.750%, 1/01/16 1/03 at 102 Aaa 5,503,365
3,000,000 North Hudson Sewer Authority, Sewer Revenue Bonds, Series 1996,
5.125%, 8/01/22 8/06 at 101 Aaa 2,971,200
1,040,000 Passaic Valley Sewerage Commissioners (State of New Jersey), Sewer System
Bonds, Series D,
5.750%, 12/01/10 12/02 at 102 Aaa 1,117,302
1,000,000 The Stony Brook Regional Sewerage Authority (Princeton, New Jersey),
Revenue Refunding Bonds,
1993 Series B, 5.450%, 12/01/12 No Opt. Call Aa 1,073,520
1,500,000 The Wanaque Valley Regional Sewerage Authority (Passaic County, New Jersey),
Sewer Revenue Refunding Bonds (1993 Series B),
5.750%, 9/01/18 No Opt. Call Aaa 1,647,840
- ------------------------------------------------------------------------------------------------------------------------------------
$ 259,285,000 Total Investments - (cost $259,623,186) - 99.9% 274,151,582
=============
Other Assets Less Liabilities - 0.1% 124,208
--------------------------------------------------------------------------------------------------------------------
Net Assets - 100% $274,275,790
====================================================================================================================
* 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.
</TABLE>
<PAGE>
<TABLE>
Portfolio of Investments
NUVEEN PENNSYLVANIA INVESTMENT QUALITY MUNICIPAL FUND (NQP)
June 30, 1998
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Education and Civic Organizations - 13.5%
$ 4,970,000 Pennsylvania Higher Education Assistance Agency, Student Loan Adjustable
Rate Tender Revenue Refunding Bonds, 1985 Series A,
6.800%, 12/01/00 No Opt. Call Aaa $5,262,485
4,000,000 Pennsylvania Higher Education Assistance Agency, Student Loan Revenue
Bonds, Fixed Rate Bonds, 1991 Series C,
7.150%, 9/01/21 (Alternative Minimum Tax) 9/01 at 102 Aaa 4,328,880
3,000,000 Pennsylvania Higher Education Assistance Agency, Student Loan Revenue Bonds,
Fixed Rate Bonds, 1992 Series C,
6.400%, 3/01/22 (Alternative Minimum Tax) 9/02 at 102 Aaa 3,135,360
10,580,000 Pennsylvania Higher Educational Facilities Authority, Revenue Bonds
(Thomas Jefferson University-Life Sciences Building Project), 1989 Series A,
6.000%, 7/01/19 7/99 at 102 Aa 10,978,654
3,825,000 The Pennsylvania State University Refunding Bonds, Series 1992,
6.250%, 3/01/11 3/01 at 102 AA- 4,115,126
4,500,000 Delaware County Authority (Commonwealth of Pennsylvania), University Revenue
Bonds, Series of 1991 (Villanova University),
6.900%, 8/01/16 8/01 at 100 Aaa 4,842,630
3,400,000 Lehigh County, General Purpose Authority, College Revenue Bonds, Series of 1992
(Allentown College of St. Francis de Sales Project),
6.750%, 12/15/12 6/02 at 100 AAA 3,669,348
2,900,000 Scranton-Lackawanna Health and Welfare Authority, City of Scranton,
Lackawanna County, Pennsylvania, University Revenue Bonds, Series of 1992
(University of Scranton Project), 1992 Series A,
6.500%, 3/01/13 3/02 at 102 A- 3,111,033
8,445,000 Swarthmore Borough Authority (Borough of Swarthmore, Pennsylvania),
Swarthmore College Revenue Bonds, Series of 1998,
5.000%, 9/15/28 (WI) 9/08 at 100 Aaa 8,232,355
645,000 The General Municipal Authority of the City of Wilkes-Barre, College
Misericordia Revenue Bonds, Series A of 1992,
7.750%, 12/01/12 12/00 at 100 N/R 708,558
565,000 The General Municipal Authority of the City of Wilkes-Barre, College
Misericordia Revenue Bonds, Refunding Series B of 1992,
7.750%, 12/01/12 12/02 at 102 N/R 620,675
- ------------------------------------------------------------------------------------------------------------------------------------
Health Care - 3.5%
3,520,000 The Hospitals and Higher Education Facilities Authority of Philadelphia,
Hospital Revenue Refunding Bonds, Series of 1991 (Magee Rehabilitation
Hospital Project),
7.000%, 12/01/10 12/01 at 102 Aaa 3,871,648
2,500,000 Saint Mary Hospital Authority, Hospital Revenue Bonds, Series 1992A
(Franciscan Health System/Saint Mary Hospital of Langhorne, Inc.),
6.500%, 7/01/12 7/02 at 102 Aaa 2,724,100
5,500,000 Health Care Facilities Authority of Sayre, Variable Rate Hospital Revenue
Bonds (VHA of Pennsylvania, Inc. Capital Asset Financing Program),
Series of 1985E (Guthrie Healthcare System Conversion),
7.200%, 12/01/20 12/01 at 103 Aaa 6,056,215
- ------------------------------------------------------------------------------------------------------------------------------------
Housing/Multifamily - 0.3%
995,000 Urban Redevelopment Authority of Pittsburgh, Redevelopment Mortgage Revenue
Bonds, 1992 Series C,
7.125%, 8/01/13 (Alternative Minimum Tax) 8/02 at 102 A 1,047,984
- ------------------------------------------------------------------------------------------------------------------------------------
Housing/Single Family - 12.7%
5,000,000 Pennsylvania Housing Finance Agency, Single Family Mortgage Revenue Bonds,
Series 1997-59A,
5.750%, 10/01/23 (Alternative Minimum Tax) 10/07 at 101 1/2 AA+ 5,116,000
5,000,000 Pennsylvania Housing Finance Agency, Single Family Mortgage Revenue Bonds,
Series W,
7.265%, 10/01/10 (Alternative Minimum Tax) 10/99 at 102 AA+ 5,189,750
5,100,000 Pennsylvania Housing Finance Agency, Single Family Mortgage Revenue Bonds,
Series 1992-33,
6.900%, 4/01/17 (Alternative Minimum Tax) 4/02 at 102 AA+ 5,423,544
1,000,000 Pennsylvania Housing Finance Agency, Single Family Mortgage Revenue Bonds,
Series 1992-34B,
7.000%, 4/01/24 (Alternative Minimum Tax) 4/02 at 102 AA+ 1,072,430
2,000,000 Pennsylvania Housing Finance Agency, Single Family Mortgage Revenue Bonds,
Series 1995-46,
6.200%, 10/01/14 (Alternative Minimum Tax) 10/05 at 102 AA+ 2,112,140
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Housing/Single Family (continued)
$ 1,000,000 Pennsylvania Housing Finance Agency, Single Family Mortgage Revenue Bonds,
Series 1996-48,
6.150%, 4/01/25 (Alternative Minimum Tax) 4/06 at 102 AA+ $1,047,690
5,725,000 Pennsylvania Housing Finance Agency, Single Family Mortgage Revenue Bonds,
Series 1996-49,
6.450%, 4/01/25 (Alternative Minimum Tax) 4/06 at 102 AA+ 6,112,869
4,000,000 Pennsylvania Housing Finance Agency, Single Family Mortgage Revenue Bonds,
Series 1996-50B,
6.350%, 10/01/27 (Alternative Minimum Tax) 4/06 at 102 AA+ 4,244,280
5,000,000 Pennsylvania Housing Finance Agency, Single Family Mortgage Revenue Bonds,
Series 1996-52B,
6.250%, 10/01/24 (Alternative Minimum Tax) 4/06 at 102 AA+ 5,275,750
11,855,000 Allegheny County Residential Finance Authority, Single Family Mortgage
Revenue Bonds, 1994 Series Y,
0.000%, 5/01/27 (Alternative Minimum Tax) No Opt. Call Aaa 1,767,581
210,000 Redevelopment Authority of the City of Altoona (Altoona, Pennsylvania),
Home Improvement Loan Revenue Bonds, Series of 1991 (Cities of Altoona and
Meadville Program) (FHA Title I Insured Loans),
7.150%, 12/01/09 (Alternative Minimum Tax) 12/01 at 102 A 222,657
2,060,000 Redevelopment Authority of the County of Berks (Pennsylvania), Senior Single
Family Mortgage Revenue Bonds, 1986 Series A,
8.000%, 12/01/17 (Alternative Minimum Tax) No Opt. Call A+ 2,251,044
2,865,000 Urban Redevelopment Authority of Pittsburgh, Mortgage Revenue Bonds,
1991 Series G,
7.050%, 4/01/23 (Alternative Minimum Tax) 10/01 at 102 AAA 3,023,119
1,635,000 Urban Redevelopment Authority of Pittsburgh, Mortgage Revenue Bonds,
1996 Series C,
6.550%, 4/01/28 (Alternative Minimum Tax) 4/06 at 102 AAA 1,744,005
1,450,000 Urban Redevelopment Authority of Pittsburgh, Mortgage Revenue Bonds,
1997 Series A,
6.250%, 10/01/28 (Alternative Minimum Tax) 10/07 at 102 AAA 1,533,622
- ------------------------------------------------------------------------------------------------------------------------------------
Industrial/Other - 0.4%
1,250,000 Philadelphia Authority for Industrial Development Revenue Bonds,
Series of 1992 (National Board of Medical Examiners Project),
6.750%, 5/01/12 5/02 at 102 A+ 1,372,225
- ------------------------------------------------------------------------------------------------------------------------------------
Long Term Care - 1.1%
3,225,000 Montgomery County Higher Education and Health Authority, Mortgage Revenue
Bonds, Series of 1996 (Waverly Heights Project), 6.375%, 1/01/26 1/06 at 101 BBB 3,431,303
630,000 The Hospitals and Higher Education Facilities Authority of Philadelphia,
Hospital Revenue Bonds (Children's Seashore House), Series 1992A,
7.000%, 8/15/03 8/02 at 102 A- 691,501
- ------------------------------------------------------------------------------------------------------------------------------------
Tax Obligation/General - 6.5%
6,000,000 Commonwealth of Pennsylvania, General Obligation Bonds, First Series of 1992,
6.375%, 9/15/11 3/02 at 101 1/2 AA- 6,490,380
1,355,000 Bensalem Township School District, Bucks County, Pennsylvania, General
Obligation Bonds, Series of 1996,
5.850%, 7/15/12 7/06 at 100 Aaa 1,453,725
10,000,000 Pittsburgh General Obligation Refunding Bonds, Series A,
5.000%, 3/01/02 No Opt. Call Aaa 10,287,700
5,000,000 State Public School Building Authority (Commonwealth of Pennsylvania),
School Revenue Bonds (Hazelton Area School District Project),
Series J of 1991,
6.500%, 3/01/08 3/01 at 100 Aaa 5,297,950
- ------------------------------------------------------------------------------------------------------------------------------------
Tax Obligation/Limited - 0.3%
1,000,000 York County Solid Waste and Refuse Authority (Commonwealth of Pennsylvania),
Solid Waste System Refunding Revenue Bonds (County Guaranteed),
Series of 1997,
5.500%, 12/01/12 No Opt. Call Aaa 1,076,530
- ------------------------------------------------------------------------------------------------------------------------------------
Transportation - 1.4%
1,650,000 Pennsylvania Turnpike Commission, Pennsylvania Turnpike Revenue Bonds,
Series N of 1991,
6.500%, 12/01/13 12/01 at 102 A1 1,790,547
735,000 Pennsylvania Turnpike Commission, Pennsylvania Turnpike Revenue Bonds,
Series O of 1992,
5.500%, 12/01/17 12/01 at 102 Aaa 752,706
2,500,000 County of Allegheny, Pennsylvania Airport Revenue Bonds, Series 1992A
and 1992B (Greater Pittsburgh International Airport),
6.625%, 1/01/22 (Alternative Minimum Tax) 1/02 at 102 Aaa 2,708,500
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Guaranteed - 48.5%
$ 2,000,000 Pennsylvania Higher Educational Facilities Authority (Commonwealth
of Pennsylvania), Lycoming College Revenue Bonds, Series of 1988,
8.375%, 10/01/18 (Pre-refunded to 10/01/98) 10/98 at 102 N/R*** $2,063,480
4,500,000 Pennsylvania Turnpike Commission, Pennsylvania Turnpike Revenue Bonds,
Series I of 1986,
7.200%, 12/01/17 (Pre-refunded to 12/01/01) 12/01 at 102 Aaa 5,021,325
4,000,000 State of Pennsylvania, General Obligation Bonds, Second Series 1991A,
6.600%, 11/01/11 (Pre-refunded to 11/01/01) 11/01 at 101 1/2 AAA 4,374,760
6,300,000 Allegheny County Hospital Development Authority, Hospital Revenue Bonds,
Series 1991 A (St. Margaret Memorial Hospital),
7.125%, 10/01/21 (Pre-refunded to 10/01/01) 10/01 at 100 BBB+*** 6,873,300
Bethlehem Authority, Northhampton 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 3,259,612
4,000,000 6.250%, 11/15/21 (Pre-refunded to 11/15/01) 11/01 at 100 Aaa 4,281,920
8,250,000 Blair County Hospital Authority, Hospital First Mortgage Revenue Bonds,
Series of 1989 (Mercy Hospital, Sublessee),
8.125%, 2/01/14 (Pre-refundedto 2/01/99) 2/99 at 102 N/R*** 8,624,138
5,000,000 Butler County Hospital Authority (Butler County, Pennsylvania), Hospital
Revenue Bonds, Series 1991 A (North Hills Passavant Hospital),
7.000%, 6/01/22 (Pre-refunded to 6/01/01) 6/01 at 102 Aaa 5,492,200
3,400,000 Erie County Hospital Authority, Hospital Revenue Bonds (Hamot Medical Center),
1991 Series A,
7.100%, 2/15/10 (Pre-refunded to 2/15/01) 2/01 at 102 Aaa 3,718,104
2,875,000 Franklin County Industrial Development Authority, Hospital Revenue
Refunding Bonds (The Chambersburg Hospital), Series of 1991,
6.700%, 7/01/08 (Pre-refunded to 7/01/99) 7/99 at 102 Aaa 3,017,054
2,000,000 Hampton Township School District (Allegheny County, Pennsylvania), General
Obligation Bonds, Series of 1995,
6.750%, 11/15/21 (Pre-refunded to 11/15/04) 11/04 at 100 Aaa 2,280,720
4,000,000 Lower Pottsgrove Township Authority, Montgomery County, Pennsylvania,
Guaranteed Sewer Revenue Bonds, Series of 1991 (Guaranteed by the Township
of Lower Pottsgrove),
6.700%, 11/01/16 (Pre-refunded to 11/01/99) 11/99 at 10 Aaa 4,156,800
3,130,000 McKean County Solid Waste Authority (McKean County, Pennsylvania),
Guaranteed Solid Waste Revenue Bonds, Series of 1992,
6.650%, 1/01/12 (Pre-refunded to 1/01/02) 1/02 at 100 Aaa 3,394,892
Philadelphia Authority for Industrial Development, Convertible Project
Revenue Bonds (PGH Development Corporation), Series of 1989:
4,885,000 7.125%, 7/01/17 (Pre-refunded to 7/01/99) 7/99 at 102 AA*** 5,144,149
1,000,000 7.000%, 7/01/17 (Pre-refunded to 7/01/99) 7/99 at 10 Aaa 1,052,130
4,270,000 City of Philadelphia, Pennsylvania, Gas Works Revenue Bonds, Thirteenth Series,
7.700%, 6/15/21 (Pre-refunded to 6/15/01) 6/01 at 102 Aaa 4,780,863
8,530,000 The Hospitals and Higher Education Facilities Authority of 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) 8/01 at 102 Aa*** 9,443,563
3,250,000 The School District of Philadelphia, Pennsylvania, General Obligation Bonds,
Series B of 1991,
7.000%, 7/01/05 (Pre-refunded to 7/01/01) 7/01 at 102 Aaa 3,545,393
1,850,000 The School District of Philadelphia, Pennsylvania, General Obligation Bonds,
Series A of 1992,
6.500%, 5/15/05 (Pre-refunded to 5/15/02) 5/02 at 100 3/4 Aaa 2,020,385
10,625,000 City of Philadelphia, Pennsylvania, Water and Sewer Revenue Bonds,
Sixteenth Series,
7.000%, 8/01/18 (Pre-refunded to 8/01/01) 8/01 at 100 AAA 11,536,519
8,800,000 The Hospitals and Higher Education Facilities Authority of Philadelphia,
Hospital Revenue Bonds, Series of 1991 (Presbyterian Medical Center
of Philadelphia),
7.250%, 12/01/21 (Pre-refunded to 12/01/01) 12/01 at 102 N/R*** 9,827,312
6,110,000 The Hospitals and Higher Education Facilities Authority of Philadelphia,
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) 2/02 at 102 Aaa 6,701,142
The Philadelphia Municipal Authority, Philadelphia,
Pennsylvania, Justice Lease Revenue Bonds, 1991 Series B:
1,500,000 7.100%, 11/15/11 (Pre-refunded to 11/15/01) 11/01 at 102 Aaa 1,670,835
9,900,000 7.125%, 11/15/18 (Pre-refunded to 11/15/01) 11/01 at 102 Aaa 11,035,332
3,000,000 The Pittsburgh Water and Sewer Authority, Water and Sewer System Revenue
Refunding Bonds, Series of 1986,
7.625%, 9/01/04 No Opt. Call Aaa 3,428,520
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Guaranteed (continued)
$ 7,065,000 The Pittsburgh Water and Sewer Authority, Water and Sewer System Revenue
Refunding Bonds, Series A of 1991,
6.500%, 9/01/14 (Pre-refunded to 9/01/01) 9/01 at 102 Aaa $7,711,165
3,730,000 Scranton-Lackawanna Health and Welfare Authority, City of Scranton,
Lackawanna County, Pennsylvania, University Revenue Bonds,
1990 Series A,
7.400%, 6/15/10 (Pre-refunded to 6/15/00) 6/00 at 102 N/R*** 4,037,016
8,475,000 Somerset County General Authority, Commonwealth of Pennsylvania, Commonwealth
Lease Revenue Bonds, Series of 1991,
7.000%, 10/15/13 (Pre-refunded to 10/15/01) 10/01 at 100 Aaa 9,247,072
2,545,000 Temple University of the Commonwealth System of Higher Education, Hospital
Revenue Bonds (FHA Insured Mortgage), Series A,
7.250%, 8/01/11 (Pre-refunded to 8/01/98) 8/98 at 100 Aaa 2,552,762
3,500,000 Upper Merion Area School District, Montgomery County, Pennsylvania
General Obligation Bonds, Series of 1993,
6.900%, 9/01/16 (Pre-refunded to 9/01/01) 9/01 at 100 Aa*** 3,795,050
3,000,000 Warrington Township Municipal Authority, Bucks County, Pennsylvania,
Water and Sewer Revenue Bonds, Series of 1991,
7.100%, 12/01/21 (Pre-refunded to 11/15/15) 11/15 at 100 Aaa 3,605,460
5,000,000 West Chester Area School District, Chester and Delaware Counties,
Pennsylvania, General Obligation Bonds, Series A of 1991,
6.700%, 1/15/11 (Pre-refunded to 1/15/01) 1/01 at 100 Aa1*** 5,321,200
5,450,000 The Municipal Authority of the Borough of West View (Allegheny County,
Pennsylvania), Special Obligation Bonds, Series of 1985A,
9.500%, 11/15/14 No Opt. Call Aaa 7,693,002
5,000,000 County of Westmoreland, Commonwealth of Pennsylvania, General Obligation
Bonds, Series of 1992,
6.700%, 8/01/09 (Pre-refunded to 8/01/01) 8/01 at 100 Aaa 5,388,800
- ------------------------------------------------------------------------------------------------------------------------------------
Utilities - 11.3%
5,000,000 Beaver County Industrial Development Authority (Pennsylvania), Pollution
Control Revenue Refunding Bonds, 1989 Series A (Ohio Edison Company
Beaver Valley Project),
7.750%, 9/01/24 9/99 at 102 Baa3 5,263,700
3,750,000 Delaware County Industrial Development Authority, Pollution Control Revenue
Refunding Bonds, 1991 Series A (Philadelphia Electric Company Project),
7.375%, 4/01/21 4/01 at 102 Baa1 4,062,675
400,000 Greater Lebanon Refuse Authority, Lebanon County, Pennsylvania, Solid Waste
Revenue Bonds, Series of 1992,
7.000%, 11/15/04 11/02 at 100 A- 426,852
Lancaster County Solid Waste Management Authority, Resource
Recovery System Revenue Bonds, 1998 Series A (AMT):
3,780,000 5.250%, 12/15/07 (Alternative Minimum Tax) No Opt. Call Aaa 3,977,014
3,900,000 5.250%, 12/15/08 (Alternative Minimum Tax) No Opt. Call Aaa 4,103,540
4,000,000 Lehigh County Industrial Development Authority, Pollution Control Revenue
Refunding Bonds, 1995 Series A (Pennsylvania Power and Light Company Project),
6.150%, 8/01/29 8/05 at 102 Aaa 4,404,760
3,000,000 Luzerne County Industrial Development Authority, Exempt Facilities Revenue
Refunding Bonds, 1992 Series A (Pennsylvania Gas and Water Company Project),
7.200%, 10/01/17 (Alternative Minimum Tax) 10/02 at 102 A- 3,318,810
3,550,000 Luzerne County Industrial Development Authority, Exempt Facilities Revenue
Bonds, 1992 Series B (Pennsylvania Gas and Water Company Project),
7.125%, 12/01/22 (Alternative Minimum Tax) 12/02 at 102 A- 3,921,330
5,000,000 Luzerne County Industrial Development Authority, Exempt Facilities Revenue
Refunding Bonds, 1994 Series A (Pennsylvania Gas and Water Company Project),
7.000%, 12/01/17 (Alternative Minimum Tax) 12/04 at 102 Aaa 5,683,950
5,500,000 Montgomery County Industrial Development Authority (Pennsylvania), Resource
Recovery Revenue Bonds (Montgomery County Project), Series 1989,
7.500%, 1/01/12 (Mandatory put 1/01/99) 1/03 at 100 A- 6,025,580
- ------------------------------------------------------------------------------------------------------------------------------------
Water and Sewer - 1.3%
4,390,000 Fairview Township Authority, York County, Pennsylvania, Guaranteed Sewer
RevenueBonds, Series of 1991 (Guaranteed by the Township of Fairview, York
County, Pennsylvania),
6.700%, 11/01/21 11/01 at 100 Aaa 4,722,367
- ------------------------------------------------------------------------------------------------------------------------------------
$ 348,845,000 Total Investments - (cost $338,246,502) - 100.8% 366,201,152
=============
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Temporary Investments in Short-Term Municipal Securities - 0.2%
$ 800,000 Allegheny County Hospital Development Authority (Allegheny County,
============= Pennsylvania), Health Center Revenue Bonds, Series 1990 D
(Presbyterian-University Health System, Inc.), Variable Rate Demand Bonds,
3.600%, 3/01/20+ VMIG-1 $ 800,000
--------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - (1.0)% (3,862,104)
--------------------------------------------------------------------------------------------------------------------
Net Assets - 100% $ 363,139,048
====================================================================================================================
* 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).
+ The security has a maturity of more than one year, but has variable
rate and demand features which qualify it as a short-term security. The rate
disclosed is that currently in effect. This rate changes periodically based on
market conditions or a specified market index.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
Portfolio of Investments
NUVEEN PENNSYLVANIA PREMIUM INCOME MUNICIPAL FUND 2 (NPY)
June 30, 1998
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Capital Goods - 0.6%
$ 2,000,000 New Morgan Industrial Development Authority (Pennsylvania), Solid Waste
Disposal Revenue Bonds (New Morgan Landfill Company, Inc. Project),
Series 1994,
6.500%, 4/01/19 (Alternative Minimum Tax) 4/04 at 102 A $2,179,860
- ------------------------------------------------------------------------------------------------------------------------------------
Education and Civic Organizations - 14.9%
10,000,000 Pennsylvania Higher Education Assistance Agency, Student Loan Revenue
Bonds, 1988 Series D,
6.050%, 1/01/19 (Alternative Minimum Tax) 1/03 at 102 Aaa 10,645,700
10,000,000 Pennsylvania Higher Education Assistance Agency, Student Loan Revenue Bonds,
1984 Series A,
4.625%, 12/01/00 No Opt. Call AAA 10,101,100
3,250,000 Pennsylvania Higher Education Facility Authority, College Revenue Refunding
Bonds (Allegheny College), Series 1993A,
6.100%, 11/01/08 11/03 at 102 Aaa 3,577,860
6,365,000 Pennsylvania Higher Educational Facilities Authority (Thomas Jefferson
University-Life Sciences Building Project), 1989 Series A,
6.000%, 7/01/19 7/99 at 102 Aa 6,604,833
4,615,000 Pennsylvania Higher Educational Facilities Authority (Commonwealth of
Pennsylvania), Widener University Revenue Bonds, 1993 Series A,
5.250%, 7/15/11 7/03 at 102 AAA 4,730,837
Pennsylvania Higher Educational Facilities Authority (Commonwealth of
Pennsylvania), LaSalle University Revenue Bonds, Series of 1998:
500,000 5.250%, 5/01/18 5/08 at 101 Aaa 503,870
1,000,000 5.250%, 5/01/23 5/08 at 101 Aaa 1,002,800
3,000,000 Chester County Health and Education Facilities Authority, College Revenue
Bonds, Series of 1998 (Immaculata College),
5.625%, 10/15/27 10/08 at 102 BBB- 2,995,440
5,000,000 Gettysburg Municipal Authority, Adams County, Gettysburg College Revenue
Bonds, Series of 1998,
5.000%, 8/15/23 8/08 at 101 Aaa 4,870,600
1,350,000 Lancaster Higher Education Authority, City of Lancaster, Pennsylvania,
College Revenue Bonds, Series of 1993 (Franklin and Marshall College Project),
5.700%, 4/15/13 4/03 at 100 Aaa 1,419,390
1,005,000 The Hospitals and Higher Education Facilities Authority of Philadelphia,
Community College Revenue Bonds (Community College of Philadelphia),
Series of 1994,
6.100%, 5/01/10 5/04 at 102 Aaa 1,097,279
3,340,000 State Public School Building Authority (Commonwealth of Pennsylvania),
College Revenue Bonds (Northampton County Area Community College
Project), Series U of 1993,
5.850%, 3/15/15 3/03 at 100 Aaa 3,471,830
1,465,000 The General Municipal Authority of the City of Wilkes-Barre, College
Misericordia Revenue Bonds, Refunding Series B of 1992,
7.750%, 12/01/12 12/02 at 102 N/R 1,609,361
- ------------------------------------------------------------------------------------------------------------------------------------
Health Care - 15.5%
1,230,000 Pennsylvania Economic Development Financing Authority, Series A of 1998
(Northwestern Human Services, Inc. Project),
5.250%, 6/01/28 6/08 at 100 BBB 1,161,833
4,700,000 Pennsylvania Higher Educational Facilities Authority
(Commonwealth of Pennsylvania), The University of Pennsylvania
Health Services Revenue Bonds, Series A of 1996,
5.750%, 1/01/22 1/06 at 101 AA 4,958,265
8,500,000 Allegheny County Hospital Development Authority (Allegheny County,
Pennsylvania), Hospital Revenue Bonds, Series A of 1996
(South Hills Health System),
5.875%, 5/01/26 5/06 at 102 Aaa 9,068,225
14,000,000 Allegheny County Hospital Development Authority, Health Center Revenue
Bonds, Series 1997A (University of Pittsburgh Medical Center System),
5.625%, 4/01/27 4/07 at 102 Aaa 14,595,420
2,100,000 Delaware County Authority (Commonwealth of Pennsylvania), Hospital Revenue
Bonds, Series of 1994 (Crozer-Chester Medical Center),
5.300%, 12/15/11 12/03 at 102 Aaa 2,150,988
2,030,000 Franklin County Industrial Development Authority, Hospital Revenue Refunding
Bonds (The Chambersburg Hospital), Series 1998,
5.000%, 7/01/08 No Opt. Call Aaa 2,080,608
2,300,000 Franklin County Industrial Development Authority, Refunding Bonds
(The Chambersburg Hospital),
5.000%, 7/01/18 7/08 at 100 Aaa 2,247,399
1,000,000 Montgomery County Higher Education and Health Authority, Health Care Revenue
Bonds, Series 1997A (Holy Redeemer Health),
5.250%, 10/01/27 10/07 at 101 Aaa 1,001,180
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Health Care (continued)
$ 8,400,000 Montgomery County Higher Education and Health Authority, Series 1998
(Pottstown Healthcare Corporation),
5.000%, 1/01/27 (WI) 1/09 at 101 AAA $8,109,360
2,500,000 Montgomery County Higher Educational and Health Authority (Pennsylvania),
Hospital Revenue Bonds, Series A of 1993 (Abington Memorial Hospital),
6.000%, 6/01/22 6/03 at 102 Aaa 2,681,525
The Hospitals and Higher Education Facilities Authority of Philadelphia
(Pennsylvania), Health System Revenue Bonds, Series 1997A (Jefferson
Health System):
1,400,000 5.500%, 5/15/07 No Opt. Call AA- 1,493,520
1,000,000 5.500%, 5/15/08 No Opt. Call AA- 1,068,680
City of Pottsville Hospital Authority, Hospital Revenue Bonds
(The Pottsville Hospital and Warne Clinic), Series of 1998:
1,500,000 5.500%, 7/01/18 7/08 at 100 BBB 1,489,935
2,000,000 5.625%, 7/01/24 7/08 at 100 BBB 2,002,260
1,000,000 Washington County Hospital Authority (The Washington Hospital Project),
Revenue Bonds Series 1998, 5.100%, 7/01/18 7/08 at 101 Aaa 983,870
- ------------------------------------------------------------------------------------------------------------------------------------
Housing/Multifamily - 4.0%
5,000,000 Pennsylvania Housing Finance Agency, Rental Housing Refunding Bonds,
Issue 1992, 6.400%, 7/01/12 7/02 at 102 Aaa 5,327,550
4,345,000 Bucks County Redevelopment Authority, Pennsylvania, Second Lien Multifamily Mortgage Revenue
Bonds, Section 8 Assisted (Country Commons Apartments), Series 1993A, 6.200%, 8/01/14
(Alternative Minimum Tax) 8/03 at 100 Baa2 4,443,327
1,740,000 Luzerne County Housing Corporation, Mortgage Revenue Refunding Bonds, Series 1993 (FHA Insured
Mortgage Loan-Freeland Apartments Section 8 Assisted Project),
6.125%, 7/15/23 7/03 at 100 Aaa 1,788,981
2,345,000 Swissvale Housing Development Corporation (An Instrumentality of the Allegheny County Housing
Authority), Multifamily Mortgage Revenue Refunding Bonds, Series 1993C (FHA Insured Mortgage
Loan - Section 8 Assisted Swissvale Project), 6.100%, 7/01/22 7/03 at 100 Aa 2,396,567
- ------------------------------------------------------------------------------------------------------------------------------------
Housing/Single Family - 8.3%
1,645,000 Pennsylvania Housing Finance Agency, Single Family Mortgage Revenue Bonds, Series 1997-59A,
5.700%, 4/01/17 (Alternative Minimum Tax) 10/07 at 101 1/2 AA+ 1,671,353
1,650,000 Pennsylvania Housing Finance Agency, Single Family Mortgage Revenue Bonds, Series 1997-58A,
5.950%, 10/01/28 4/07 at 101 1/2 AA+ 1,721,759
2,000,000 Pennsylvania Housing Finance Agency, Single Family Mortgage Revenue Bonds, Series 1993-37A,
5.450%, 10/01/17 10/03 at 102 AA+ 2,026,100
1,120,000 Pennsylvania Housing Finance Agency, Single Family Mortgage Revenue Bonds, Series 1996-47,
6.750%, 10/01/06 (Alternative Minimum Tax) No Opt. Call AA+ 1,284,125
3,305,000 Pennsylvania Housing Finance Agency, Single Family Mortgage Revenue Bonds, Series 1996-51,
6.375%, 4/01/28 (Alternative Minimum Tax) 4/06 at 102 AA+ 3,510,439
2,750,000 Pennsylvania Housing Finance Agency, Single Family Mortgage Revenue Bonds, Series 1997-54A,
6.150%, 10/01/22 (Alternative Minimum Tax) 10/06 at 102 AA+ 2,886,180
Pennsylvania Housing Finance Agency, Single Family Mortgage Revenue Bonds, Series 1997-56A:
1,500,000 6.050%, 10/01/16 (Alternative MinimumTax) 4/07 at 102 AA+ 1,577,340
4,000,000 6.150%, 10/01/27 (Alternative Minimum Tax) 4/07 at 102 AA+ 4,205,200
1,700,000 Pennsylvania Housing Finance Agency, Single Family Mortgage Revenue Bonds, Series 1998-62A
Bonds, 5.500%, 10/01/22 (Alternative MinimumTax) 4/08 at 101 1/2 AA+ 1,713,022
2,460,000 Urban Redevelopment Authority of Pittsburgh, Mortgage Revenue Bonds, 1992 Series C-1,
6.800%,10/01/25 (Alternative Minimum Tax) 4/03 at 102 AAA 2,616,062
1,375,000 Urban Redevelopment Authority of Pittsburgh, Mortgage Revenue Bonds, 1992 Series D,
6.500%, 4/01/17 4/03 at 102 AAA 1,449,951
615,000 Urban Redevelopment Authority of Pittsburgh, Mortgage Revenue Bonds, 1994 Series B,
6.950%, 10/01/10 (Alternative Minimum Tax) 4/04 at 102 AAA 670,264
1,500,000 Urban Redevelopment Authority of Pittsburgh, Mortgage Revenue Bonds, 1996 Series C,
6.500%, 10/01/23 (Alternative Minimum Tax) 4/06 at 102 AAA 1,604,880
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Housing/Single Family (continued)
Urban Redevelopment Authority of Pittsburgh, Mortgage Revenue Bonds, 1997 Series A:
$ 1,100,000 6.150%, 10/01/16 (Alternative Minimum Tax) 10/07 at 102 AAA $ 1,163,756
1,000,000 6.200%, 10/01/21 (Alternative Minimum Tax) 10/07 at 102 AAA 1,056,150
- ------------------------------------------------------------------------------------------------------------------------------------
Industrial/Other - 0.7%
2,165,000 Montgomery County Industrial Development Authority, Health Facilities Revenue Bonds, Series of 1993
(ECRI Project), 6.850%, 6/01/13 6/03 at 102 N/R 2,302,629
- ------------------------------------------------------------------------------------------------------------------------------------
Long Term Care - 2.1%
Philadelphia Industrial Development Authority, Health Care
Facilities Revenue Bonds, Series 1998 (Paul's Run):
1,350,000 5.750%, 5/15/18 5/08 at 102 N/R 1,349,892
1,650,000 5.875%, 5/15/28 5/08 at 102 N/R 1,663,200
4,000,000 Philadelphia Hospital and Higher Educational Facilities Authority of Philadelphia, Revenue Refunding
Bonds, Series of 1992 (Philadelphia MR Project), 5.625%, 8/01/04 8/03 at 102 BBB+ 4,234,920
- ------------------------------------------------------------------------------------------------------------------------------------
Tax Obligation/General - 7.4%
2,000,000 Bangor Area School District, Northampton County, Pennsylvania, General Obligation Bonds, Series B of
1996, 5.500%, 3/15/18 3/06 at 100 Aaa 2,058,640
2,500,000 Bensalem Township School District, Bucks County, Pennsylvania General Obligation Bonds, Series of
1996, 5.875%, 7/15/16 7/06 at 100 Aaa 2,662,900
4,305,000 County of Montgomery, Pennsylvania, General Obligation Bonds, Series B of 1996,
5.375%, 10/15/21 10/06 at 100 Aaa 4,373,708
7,800,000 North Pennsylvania School District, Montgomery and Bucks Counties, Pennsylvania, General Obligation Bonds,
Series of 1996, 5.125%, 3/01/17 3/06 at 100 Aa 7,790,172
2,000,000 The School District of Philadelphia, Pennsylvania, General Obligation Refunding Bonds, Series A of
1995, 6.250%, 9/01/09 No Opt. Call Aaa 2,286,500
2,500,000 Schuylkill Valley School District, Berks County, Pennsylvania, General Obligation Bonds, Series of 1993,
5.850%, 4/15/13 4/03 at 100 Aaa 2,649,350
4,000,000 Wallenpaupack Area School District, Wayne and Pike Counties, Pennsylvania, General Obligation Bonds,
Series of 1993, 5.500%, 4/01/11 4/01 at 100 Aaa 4,082,960
- ------------------------------------------------------------------------------------------------------------------------------------
Tax Obligation/Limited - 10.9%
Pennsylvania Industrial Development Authority, Economic Development Revenue Bonds, Series 1994:
2,000,000 7.000%, 7/01/06 No Opt. Call Aaa 2,332,180
1,550,000 7.000%, 1/01/07 No Opt. Call Aaa 1,811,129
1,000,000 7.000%, 7/01/07 No Opt. Call Aaa 1,176,500
10,000,000 Dauphin County General Authority, School Revenue Bonds, Series of 1997 (School District Pooled
Financing Program II), 4.450%, 9/01/32 (Mandatory put 3/01/02) No Opt. Call Aaa 10,049,900
4,060,000 Delaware Valley Regional Finance Authority, Local Government Revenue Bonds, Series A,
6.000%, 4/15/26 4/06 at 100 Aaa 4,395,194
17,900,000 The Harrisburg Authority, Dauphin County, Pennsylvania, Tax-Exempt Revenue Bonds (The City of
Harrisburg Project), Series II of 1997, 5.625%, 9/15/22 9/07 at 100 AAA 18,669,163
- ------------------------------------------------------------------------------------------------------------------------------------
Transportation - 0.3%
1,000,000 The Philadelphia Parking Authority, Airport Parking Revenue Bonds, Series of 1997,
5.750%, 9/01/07 No Opt. Call Aaa 1,089,470
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. Guaranteed - 14.4%
1,670,000 Pennsylvania Higher Educational Facilities Authority, College and University Revenue Bonds,
9th Series, 7.625%, 7/01/15 No Opt. Call Aaa 1,994,698
750,000 Allegheny County Hospital Development Authority (Allegheny County, Pennsylvania), Health and
Education Revenue Bonds, Series 1992 (The Rehabilitation Institute of Pittsburgh Project),
7.000%, 6/01/22 (Pre-refunded to 6/01/02) 6/02 at 102 N/R*** 838,020
3,000,000 Allegheny County Hospital Development Authority (Pennsylvania), Health Center Revenue Bonds,
Series 1992A(Presbyterian University Health System, Inc. Project), 6.250%, 11/01/23
(Pre-refunded to 11/01/02) 11/02 at 100 Aaa 3,250,560
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Guaranteed (continued)
$ 9,065,000 Bethlehem Area School District, Northampton and Lehigh Counties, Pennsylvania, General Obligation
Bonds, Series of 1993, 5.600%, 9/01/12 (Pre-refunded to 3/01/01) 3/01 at 100 Aaa $ 9,431,679
Bethlehem Authority, Northampton and Lehigh Counties,
Pennsylvania, Water Revenue Bonds, Series A of 1992:
3,785,000 6.100%, 11/15/18 (Pre-refunded to 11/15/02) 11/02 at 100 Aaa 4,087,535
3,100,000 6.100%, 11/15/21 (Pre-refunded to 11/15/02) 11/02 at 100 Aaa 3,347,783
1,500,000 Fort LeBoeuf School District (Erie County, Pennsylvania), General Obligation Bonds, Series A of 1993,
5.800%, 1/01/16 (Pre-refunded to 1/01/03) 1/03 at 100 Aaa 1,601,025
3,500,000 Hollidaysburg Sewer Authority, Guaranteed Sewer Revenue Bonds, Series of 1993, 6.100%, 1/01/23
(Pre-refunded to 1/01/03) 1/03 at 100 Aaa 3,778,425
1,500,000 Ligonier Valley School District (Westmoreland County, Pennsylvania), General Obligation Bonds,
Series of 1994, 6.000%, 3/01/23 (Pre-refunded to 3/01/04) 3/04 at 100 Aaa 1,633,680
1,300,000 City of Philadelphia, Pennsylvania, Water and Sewer Revenue Bonds, Sixteenth Series,
7.500%, 8/01/10 (Pre-refunded to 8/01/01) 8/01 at 102 AAA 1,453,205
The Hospitals and Higher Education Facilities Authority of
Philadelphia, Hospital Revenue Bonds, Series of 1993
(Presbyterian Medical Center of Philadelphia):
1,000,000 6.500%, 12/01/11 12/03 at 102 AAA 1,148,000
3,690,000 6.650%, 12/01/19 12/03 at 102 AAA 4,414,384
1,750,000 Pine-Richland School District (Allegheny County, Pennsylvania), General Obligation Bonds, Series A of
1993, 6.100%, 9/01/18 (Pre-refunded to 9/01/03) 9/03 at 100 Aaa 1,907,605
5,000,000 The Pittsburgh (Pennsylvania), Water and Sewer Authority, Water and Sewer System Subordinate
Revenue Bonds, Series B of 1995, 5.750%, 9/01/25 (Pre-refunded to 9/01/05) 9/05 at 100 Aaa 5,454,150
3,660,000 Rose Tree Media School District, Delaware County, Pennsylvania, General Obligation Bonds, Series of
1993, 6.700%, 3/15/12 (Pre-refunded to 9/15/01) 9/01 at 100 Aaa 3,955,069
1,650,000 The Municipal Authority of the Borough of West View (Allegheny County, Pennsylvania), Special
Obligation Bonds, Series of 1985A, 9.500%, 11/15/14 No Opt. Call Aaa 2,329,074
- ------------------------------------------------------------------------------------------------------------------------------------
Utilities - 13.5%
6,000,000 Beaver County Industrial Development Authority, Pennsylvania, Exempt Facilities Revenue Bonds, 1998
Series A, 5.375%, 6/01/28 (Alternative Minimum Tax) 6/08 at 102 Aaa 6,044,400
7,590,000 Indiana County Industrial Development Authority (Pennsylvania), Pollution Control Revenue Bonds,
1997 Series A (Metropolitan Edison Company Project), 5.950%, 5/01/27
(Alternative MinimumTax) 5/07 at 102 Aaa 8,124,640
15,000,000 Lehigh County Industrial Development Authority, Pollution Control Revenue Refunding Bonds, 1992
Series A (Pennsylvania Power and Light Company Project), 6.400%, 11/01/21 11/02 at 102 Aaa 16,457,400
7,350,000 Luzerne County Industrial Development Authority, Exempt Facilities Revenue Refunding Bonds, 1992
Series A (Pennsylvania Gas and Water Company Project), 7.200%, 10/01/17
(Alternative Minimum Tax) 10/02 at 102 A- 8,131,085
4,500,000 Luzerne County Industrial Development Authority, Exempt Facilities Revenue Bonds, 1992 Series B
(Pennsylvania Gas and Water Company Project), 7.125%, 12/01/22
(Alternative Minimum Tax) 12/02 at 102 A- 4,970,700
3,575,000 Montgomery County Industrial Development Authority, Pollution Control Revenue Refunding Bonds,
1991 Series B (Philadelphia Electric Company Project), 6.700%, 12/01/21 12/01 at 102 Aaa 3,890,065
- ------------------------------------------------------------------------------------------------------------------------------------
Water and Sewer - 5.5%
1,975,000 Delaware County Industrial Development Authority, Water Facilities Revenue Refunding Bonds
(Philadelphia Suburban Water Company Project), Series of 1992,
6.500%, 6/01/10 6/02 at 102 Aaa 2,153,046
5,500,000 Northumberland County Industrial Development Authority, Exempt Facilities Revenue Bonds, 1993
Series (Roaring Creek Water Company Project), 6.375%, 10/15/23
(Alternative Minimum Tax) 10/03 at 102 N/R 5,702,455
City of Philadelphia, Pennsylvania, Water and Wastewater Revenue Bonds, Series 1995:
3,000,000 6.750%, 8/01/05 No Opt.Call Aaa 3,420,180
2,730,000 6.250%, 8/01/10 No Opt.Call Aaa 3,128,907
City of Philadelphia, Pennsylvania, Water and Wastewater Revenue Bonds, Series 1993:
2,335,000 5.750%, 6/15/13 6/03 at 102 Aaa 2,480,423
2,300,000 5.500%, 6/15/14 6/03 at 102 Aaa 2,362,076
- ------------------------------------------------------------------------------------------------------------------------------------
$ 327,255,000 Total Investments - (cost $326,761,509) - 98.1% 345,485,510
=============
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Temporary Investments in Short-Term Municipal Securities - 0.7%
$ 2,400,000 Allegheny County Hospital Development Authority (Allegheny County,
============= Pennsylvania), Health Center Revenue Bonds, Series 1990 A
(Presbyterian-University Health System, Inc.), Variable Rate Demand
Bonds, 3.600%, 3/01/20+ VMIG-1 $2,400,000
--------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 1.2% 4,237,844
--------------------------------------------------------------------------------------------------------------------
Net Assets - 100% $ 352,123,354
===================================================================================================================
* 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).
+ The security has a maturity of more than one year, but has variable
rate and demand features which qualify it as a short-term security. The rate
disclosed is that currently in effect. This rate changes periodically based on
market conditions or a specified market index.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
Statement of Net Assets
June 30, 1998
<CAPTION>
New Jersey New Jersey Pennsylvania Pennsylvania
Investment Quality Premium Income Investment Quality Premium Income 2
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets
Investments in municipal securities, at market
value (note 1) $430,251,496 $274,151,582 $366,201,152 $345,485,510
Temporary investments in short-term municipal
securities, at amortized cost, which approximates
market value (note 1) -- -- 800,000 2,400,000
Cash 4,003,382 -- 62,167 8,617,737
Receivables:
Interest 7,495,861 4,790,428 6,052,424 5,035,044
Investments sold 350,000 55,000 -- 60,000
Other assets 20,390 25,588 28,751 25,915
- ------------------------------------------------------------------------------------------------------------------------------------
Total assets 442,121,129 279,022,598 373,144,494 361,624,206
- ------------------------------------------------------------------------------------------------------------------------------------
Liabilities
Cash overdraft -- 3,486,194 -- --
Payable for investments purchased 1,229,315 -- 8,223,544 8,074,743
Accrued expenses:
Management fees (note 6) 229,391 144,646 190,468 184,860
Other 182,059 207,269 204,658 233,938
Preferred share dividends payable 33,795 51,356 52,513 30,968
Common share dividends payable 1,568,620 857,343 1,334,263 976,343
- ------------------------------------------------------------------------------------------------------------------------------------
Total liabilities 3,243,180 4,746,808 10,005,446 9,500,852
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets (note 7) $438,877,949 $274,275,790 $363,139,048 $352,123,354
====================================================================================================================================
Preferred shares, at liquidation value $130,000,000 $ 91,600,000 $110,000,000 $118,100,000
====================================================================================================================================
Preferred shares outstanding 5,200 3,664 4,400 4,724
====================================================================================================================================
Common shares outstanding 19,731,074 11,907,540 15,884,079 15,747,463
====================================================================================================================================
Net asset value per Common share outstanding (net assets less Preferred shares
at liquidation value, divided by
Common shares outstanding) $ 15.65 $ 15.34 $ 15.94 $ 14.86
====================================================================================================================================
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
Statement of Operations
Year Ended June 30, 1998
<CAPTION>
New Jersey New Jersey Pennsylvania Pennsylvania
Investment Quality Premium Income Investment Quality Premium Income 2
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Investment Income (note 1) $26,227,003 $15,333,181 $22,325,746 $19,009,187
- ------------------------------------------------------------------------------------------------------------------------------------
Expenses
Management fees (note 6) 2,782,068 1,747,972 2,318,967 2,228,612
Preferred shares - auction fees 325,000 229,001 274,998 295,249
Preferred shares - dividend disbursing agent fees 20,533 33,830 23,119 33,933
Shareholders' servicing agent fees and expenses 56,531 31,375 61,691 50,528
Custodian's fees and expenses 74,140 57,891 66,591 65,814
Directors'/Trustees' fees and expenses (note 6) 5,256 3,534 4,523 4,235
Professional fees 18,122 17,090 17,685 17,395
Shareholders' reports - printing and mailing expenses 95,458 53,617 66,494 85,419
Stock exchange listing fees 24,727 27,559 28,372 27,554
Investor relations expense 36,581 22,631 32,749 30,552
Other expenses 28,547 26,792 23,806 24,063
- ------------------------------------------------------------------------------------------------------------------------------------
Total expenses 3,466,963 2,251,292 2,918,995 2,863,354
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income 22,760,040 13,081,889 19,406,751 16,145,833
- ------------------------------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain from Investments
Net realized gain from investment transactions
(notes 1 and 4) 1,145,279 1,139,335 736,176 2,190,521
Net change in unrealized appreciation or
depreciation of investments 4,551,886 6,532,010 670,433 8,353,368
- ------------------------------------------------------------------------------------------------------------------------------------
Net gain from investments 5,697,165 7,671,345 1,406,609 10,543,889
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $28,457,205 $20,753,234 $20,813,360 $26,689,722
====================================================================================================================================
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
Statement of Changes in Net Assets
<CAPTION>
New Jersey Investment Quality New Jersey Premium Income
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended
6/30/98 6/30/97 6/30/98 6/30/97
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operations
Net investment income $ 22,760,040 $ 22,951,956 $ 13,081,889 $ 12,911,202
Net realized gain (loss) from investment transactions
(notes 1 and 4) 1,145,279 626,155 1,139,335 (823,979)
Net change in unrealized appreciation or
depreciation of investments 4,551,886 6,063,373 6,532,010 7,032,022
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations 28,457,205 29,641,484 20,753,234 19,119,245
- -----------------------------------------------------------------------------------------------------------------------------------
Distributions to Shareholders (note 1)
From undistributed net investment income:
Common shareholders (18,755,870) (18,519,904) (10,251,340) (10,008,574)
Preferred shareholders (4,393,050) (4,188,974) (3,059,919) (2,744,682)
From accumulated net realized gains
from investment transactions:
Common shareholders (592,823) -- -- --
Preferred shareholders (132,888) -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets from distributions to shareholders (23,874,631) (22,708,878) (13,311,259) (12,753,256)
- -----------------------------------------------------------------------------------------------------------------------------------
Capital Share Transactions (note 2)
Net proceeds from Common shares issued to shareholders
due to reinvestment of distributions 2,673,402 2,351,238 760,188 --
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets 7,255,976 9,283,844 8,202,163 6,365,989
Net assets at beginning of year 431,621,973 422,338,129 266,073,627 259,707,638
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets at end of year $438,877,949 $431,621,973 $274,275,790 $266,073,627
===================================================================================================================================
Balance of undistributed net investment income
at end of year $ 560,057 $ 948,937 $ 607,954 $ 837,324
===================================================================================================================================
<CAPTION>
Pennsylvania Investment Quality Pennsylvania Premium Income 2
- ----------------------------------------------------------------------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended
6/30/98 6/30/97 6/30/98 6/30/97
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operations
Net investment income $ 19,406,751 $ 19,790,342 $ 16,145,833 $ 16,358,970
Net realized gain (loss) from investment transactions
(notes 1 and 4) 736,176 360,973 2,190,521 (266,763)
Net change in unrealized appreciation or
depreciation of investments 670,433 2,891,910 8,353,368 10,125,469
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations 20,813,360 23,043,225 26,689,722 26,217,676
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions to Shareholders (note 1)
From undistributed net investment income:
Common shareholders (15,952,202) (15,875,077) (12,188,569) (12,220,049)
Preferred shareholders (3,634,806) (3,710,061) (4,129,260) (4,109,035)
From accumulated net realized gains from
investment transactions:
Common shareholders (828,412) (395,040) -- --
Preferred shareholders (192,317) (90,536) -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets from distributions to shareholders (20,607,737) (20,070,714) (16,317,829) (16,329,084)
- ----------------------------------------------------------------------------------------------------------------------------------
Capital Share Transactions (note 2)
Net proceeds from Common shares issued to shareholders
due to reinvestment of distributions 2,184,617 1,952,811 -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets 2,390,240 4,925,322 10,371,893 9,888,592
Net assets at beginning of year 360,748,808 355,823,486 341,751,461 331,862,869
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets at end of year $363,139,048 $360,748,808 $352,123,354 $341,751,461
==================================================================================================================================
Balance of undistributed net investment income
at end of year $ 529,828 $ 710,085 $ 141,590 $ 313,586
==================================================================================================================================
See accompanying notes to financial statements.
</TABLE>
<PAGE>
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 the specific identification
method. Securities purchased or sold on a when-issued or delayed delivery basis
may have extended settlement periods. The securities so purchased are subject to
market fluctuation during this period. The Funds have instructed the custodian
to segregate assets in a separate account with a current value at least equal to
the amount of the when-issued and delayed delivery purchase commitments. At June
30, 1998, New Jersey Investment Quality, Pennsylvania Investment Quality and
Pennsylvania Premium Income 2 had when-issued and delayed delivery purchase
commitments of $1,229,315, $8,223,544 and $8,074,743, respectively. There were
no such outstanding purchase commitments in New Jersey Premium Income.
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, 1998, have been
designated Exempt Interest Dividends. Net realized capital gain and market
discount distributions are subject to federal taxation.
Dividends and Distributions to Shareholders
Tax-exempt net investment income is declared as a dividend monthly and payment
is made or reinvestment is credited to shareholder accounts on the first
business day after month end. Net realized capital gains and/or market discount
from investment transactions, if any, are distributed to shareholders not less
frequently than annually. Furthermore, capital gains are distributed only to the
extent they exceed available capital loss carryforwards.
Distributions to shareholders of tax-exempt net investment income, net realized
capital gains and/or market discount are recorded on the ex-dividend date. The
amount and timing of 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.
<PAGE>
Preferred Shares
The Funds have issued and outstanding $25,000 stated value Preferred shares.
Each Fund's Preferred shares are issued in more than one Series. The dividend
rate on each Series may change every seven days, as set by the auction agent.
The number of shares outstanding, by Series and in total, were as follows:
<TABLE>
<CAPTION>
New Jersey New Jersey Pennsylvania Pennsylvania
Investment Premium Investment Premium
Quality Income Quality Income 2
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Number of Shares:
Series M 3,200 -- -- 844
Series T -- 624 -- --
Series W -- 1,440 2,400 --
Series Th 2,000 1,600 2,000 2,080
Series F -- -- -- 1,800
- ---------------------------------------------------------------------------------------------------------
Total 5,200 3,664 4,400 4,724
=========================================================================================================
</TABLE>
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, 1998.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of increases and decreases in net
assets from operations during the reporting period.
2. Fund Shares
Transactions in Common shares were as follows:
<TABLE>
<CAPTION>
New Jersey Investment Quality New Jersey Premium Income
- ---------------------------------------------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended
6/30/98 6/30/97 6/30/98 6/30/97
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares issued to shareholders
due to reinvestment
of distributions 161,805 150,625 49,041 --
=========================================================================================================
<CAPTION>
Pennsylvania
Pennsylvania Investment Quality Premium Income 2
- ---------------------------------------------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended
6/30/98 6/30/97 6/30/98 6/30/97
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares issued to shareholders
due to reinvestment of
distributions 128,464 118,967 -- --
=========================================================================================================
</TABLE>
3. Distributions to Common Shareholders
The Funds declared Common share dividend distributions from their tax-exempt net
investment income which were paid August 3, 1998, to shareholders of record on
July 15, 1998, as follows:
<TABLE>
<CAPTION>
New Jersey New Jersey Pennsylvania Pennsylvania
Investment Premium Investment Premium
Quality Income Quality Income 2
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Dividend per share $ .0795 $ .0720 $ .0840 $ .0620
=========================================================================================================
</TABLE>
<PAGE>
4. Securities Transactions
Purchases and sales (including maturities) of investments in municipal
securities and temporary municipal investments during the fiscal year ended June
30, 1998, were as follows:
<TABLE>
<CAPTION>
New Jersey New Jersey Pennsylvania Pennsylvania
Investment Premium Investment Premium
Quality Income Quality Income 2
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Purchases:
Investments in municipal securities $26,970,668 $39,214,548 $47,146,967 $117,039,087
Temporary municipal investments 51,100,000 12,300,000 63,165,000 91,600,000
Sales and Maturities:
Investments in municipal securities 30,405,185 34,552,850 32,879,697 109,393,086
Temporary municipal investments 51,100,000 12,300,000 62,365,000 90,325,000
=========================================================================================================
</TABLE>
At June 30, 1998, the identified cost of investments owned for federal income
tax purposes was the same as the cost for financial reporting purposes for each
Fund.
At June 30,1998, the following Funds had unused capital loss carryforwards
available for federal income tax purposes to be applied against future capital
gains, if any. If not applied the carryforwards will expire as follows:
<TABLE>
<CAPTION>
New Jersey Pennsylvania
Premium Premium
Income Income 2
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Expiration year:
2002 $3,583,548 $ --
2003 129,409 67,894
2004 650,143 40,999
2005 174,583 169,168
- ---------------------------------------------------------------------------------------------------------
Total $4,537,683 $278,061
=========================================================================================================
</TABLE>
5. Unrealized Appreciation (Depreciation)
Gross unrealized appreciation and gross unrealized depreciation of investments
at June 30, 1998, were as follows:
<TABLE>
<CAPTION>
New Jersey New Jersey Pennsylvania Pennsylvania
Investment Premium Investment Premium
Quality Income Quality Income 2
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Gross unrealized:
appreciation $30,081,552 $15,338,926 $27,963,524 $18,741,165
depreciation (92,392) (810,530) (8,874) (17,164)
- ---------------------------------------------------------------------------------------------------------
Net unrealized appreciation $29,989,160 $14,528,396 $27,954,650 $18,724,001
=========================================================================================================
</TABLE>
<PAGE>
6. Management Fee and Other Transactions with Affiliates
Under the Funds' investment management agreements with Nuveen Advisory Corp.
(the "Adviser"), a wholly owned subsidiary of The John Nuveen Company, each Fund
pays an annual management fee, payable monthly, at the rates set forth below,
which are based upon the average daily net asset value of each Fund:
Average Daily Net Asset Value Management Fee
- -------------------------------------------------------------------------------
For the first $125 million .6500 of 1%
For the next $125 million .6375 of 1
For the next $250 million .6250 of 1
For the next $500 million .6125 of 1
For the next $1 billion .6000 of 1
For net assets over $2 billion .5875 of 1
===============================================================================
The fee compensates the Adviser for overall investment advisory and
administrative services and general office facilities. The Funds pay no
compensation directly to those of its Directors/Trustees who are affiliated with
the Adviser or to their officers, all of whom receive remuneration for their
services to the Funds from the Adviser.
7. Composition of Net Assets At June 30, 1998, net assets consisted of:
<TABLE>
<CAPTION>
New Jersey New Jersey Pennsylvania Pennsylvania
Investment Premium Investment Premium
Quality Income Quality Income 2
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Preferred shares, $25,000 stated value per share,
at liquidation value $130,000,000 $91,600,000 $110,000,000 $118,100,000
Common shares, $.01 par value per share 197,311 119,075 158,841 157,475
Paid-in surplus 277,529,872 171,962,679 224,443,348 215,278,352
Balance of undistributed net investment income 560,057 607,954 529,828 141,590
Accumulated net realized gain (loss) from
investment transactions 601,549 (4,542,314) 52,381 (278,064)
Net unrealized appreciation of investments 29,989,160 14,528,396 27,954,650 18,724,001
- ---------------------------------------------------------------------------------------------------------
Net assets $438,877,949 $274,275,790 $363,139,048 $352,123,354
=========================================================================================================
Authorized shares:
Common 200,000,000 200,000,000 Unlimited Unlimited
Preferred 1,000,000 1,000,000 Unlimited Unlimited
=========================================================================================================
</TABLE>
<PAGE>
<TABLE>
Financial Highlights
Selected data for a Common share outstanding
throughout each period is as follows:
<CAPTION>
Investment Operations
------------------------------------
Net
Realized/
Beginning Net Unrealized
Net Asset Investment Investment
Value Income Gain (Loss) Total
<S> <C> <C> <C> <C>
New Jersey Investment Quality
Year Ended 6/30:
1998 $15.41 $1.16 $ .29 $1.45
1997 15.05 1.18 .34 1.52
1996 15.06 1.17 (.01) 1.16
1995 14.73 1.20 .40 1.60
1994 15.88 1.20 (1.07) .13
<CAPTION>
New Jersey Premium Income
<S> <C> <C> <C> <C>
Year Ended 6/30:
1998 14.71 1.10 .65 1.75
1997 14.18 1.09 .51 1.60
1996 13.97 1.08 .20 1.28
1995 13.46 1.06 .55 1.61
11 mos. ended
6/30/94 14.52 .94 (1.12) (.18)
12/17/92 to
7/31/93 14.05 .40 .68 1.08
<CAPTION>
Pennsylvania Investment Quality
<S> <C> <C> <C> <C>
Year ended 6/30:
1998 15.91 1.23 .10 1.33
1997 15.72 1.26 .22 1.48
1996 15.86 1.28 (.08) 1.20
1995 15.49 1.29 .41 1.70
1994 16.42 1.30 (.86) .44
<CAPTION>
Pennsylvania Premium Income 2
<S> <C> <C> <C> <C>
Year ended 6/30:
1998 14.20 1.02 .67 1.69
1997 13.57 1.04 .63 1.67
1996 13.25 1.04 .33 1.37
1995 12.53 1.05 .77 1.82
1994 14.35 1.00 (1.71) (.71)
<PAGE>
<CAPTION>
Less Distributions
-------------------------------------------------------------------
Net Net
Investment Investment Capital Capital
Income Income Gains Gains
To Common To Preferred To Common To Preferred
Shareholders Shareholders+ Shareholders Shareholders+ Total
<S> <C> <C> <C> <C> <C>
New Jersey Investment Quality
Year Ended 6/30:
1998 $ (.95) $(.22) $(.03) $(.01) $(1.21)
1997 (.95) (.21) -- -- (1.16)
1996 (.94) (.23) -- -- (1.17)
1995 (1.01) (.24) (.02) -- (1.27)
1994 (1.07) (.14) (.06) (.01) (1.28)
<CAPTION>
New Jersey Premium Income
<S> <C> <C> <C> <C> <C>
Year Ended 6/30:
1998 (.86) (.26) -- -- (1.12)
1997 (.84) (.23) -- -- (1.07)
1996 (.81) (.26) -- -- (1.07)
1995 (.81) (.28) (.01) -- (1.10)
11 mos. ended
6/30/94 (.71) (.17) -- -- (.88)
12/17/92 to
7/31/93 (.34) (.06) -- -- (.40)
<CAPTION>
Pennsylvania Investment Quality
<S> <C> <C> <C> <C> <C>
Year ended 6/30:
1998 (1.01) (.23) (.05) (.01) (1.30)
1997 (1.01) (.24) (.03) (.01) (1.29)
1996 (1.05) (.25) (.03) (.01) (1.34)
1995 (1.07) (.26) -- -- (1.33)
1994 (1.16) (.16) (.04) (.01) (1.37)
<CAPTION>
Pennsylvania Premium Income 2
<S> <C> <C> <C> <C> <C>
Year ended 6/30:
1998 (.77) (.26) -- -- (1.03)
1997 (.78) (.26) -- -- (1.04)
1996 (.78) (.27) -- -- (1.05)
1995 (.81) (.29) -- -- (1.10)
1994 (.79) (.18) -- -- (.97)
<PAGE>
<CAPTION>
Total Returns
------------------------------
Organization and
Offering Costs and
Preferred Share Ending
Underwriting Net Asset Ending Based on Based on Net
Discounts Value Market Value Market Value** Asset Value**
<S> <C> <C> <C> <C> <C>
New Jersey Investment Quality
Year Ended 6/30:
1998 $-- $15.65 $17.1250 11.38% 8.12%
1997 -- 15.41 16.3125 16.50 8.92
1996 -- 15.05 14.8750 8.17 6.28
1995 -- 15.06 14.6250 3.03 9.71
1994 -- 14.73 15.2500 (4.63) (.27)
<CAPTION>
New Jersey Premium Income
<S> <C> <C> <C> <C> <C>
Year Ended 6/30:
1998 -- 15.34 15.5625 11.12 10.35
1997 -- 14.71 14.8125 20.95 9.94
1996 -- 14.18 13.0000 4.24 7.37
1995 -- 13.97 13.2500 14.60 10.39
11 mos. ended
6/30/94 -- 13.46 12.3750 (13.16) (2.61)
12/17/92 to
7/31/93 (.21) 14.52 15.0000 2.27 5.78
<CAPTION>
Pennsylvania Investment Quality
<S> <C> <C> <C> <C> <C>
Year ended 6/30:
1998 -- 15.94 17.2500 8.77 7.02
1997 -- 15.91 16.8750 9.75 8.01
1996 -- 15.72 16.3750 12.74 6.00
1995 -- 15.86 15.5000 2.32 9.77
1994 -- 15.49 16.2500 (.39) 1.23
<CAPTION>
Pennsylvania Premium Income 2
<S> <C> <C> <C> <C> <C>
Year ended 6/30:
1998 -- 14.86 13.4375 6.27 10.29
1997 -- 14.20 13.3750 14.82 10.61
1996 -- 13.57 12.3750 2.21 8.39
1995 -- 13.25 12.8750 11.50 12.87
1994 (.14) 12.53 12.3750 (10.29) (7.60)
<PAGE>
<CAPTION>
Ratios/Supplemental Data
---------------------------------------------------
Ratio of Net
Ratio of Investment
Ending Expenses to Income to Portfolio
Net Assets Average Average Turnover
(000) Net Assets++ Net Assets++ Rate
<S> <C> <C> <C> <C>
New Jersey Investment Quality
Year Ended 6/30:
1998 $438,878 .79% 5.20% 6%
1997 431,622 .80 5.36 15
1996 422,338 .81 5.33 16
1995 420,944 .85 5.57 13
1994 259,718 .82 5.39 5
<CAPTION>
New Jersey Premium Income
<S> <C> <C> <C> <C>
Year Ended 6/30:
1998 274,276 .83 4.81 13
1997 266,074 .83 4.91 18
1996 259,708 .86 4.90 32
1995 257,251 .94 5.08 15
11 mos. ended
6/30/94 113,458 .91* 4.72* 12
12/17/92 to
7/31/93 118,885 .97* 3.75* 5
<CAPTION>
Pennsylvania Investment Quality
<S> <C> <C> <C> <C>
Year ended 6/30:
1998 363,139 .80 5.34 9
1997 360,749 .81 5.52 8
1996 355,823 .82 5.53 12
1995 355,831 .87 5.70 9
1994 191,718 .84 5.54 3
<CAPTION>
Pennsylvania Premium Income 2
<S> <C> <C> <C> <C>
Year ended 6/30:
1998 352,123 .82 4.63 32
1997 341,751 .83 4.85 29
1996 331,863 .84 4.90 19
1995 326,771 .92 5.20 5
1994 139,053 .90 4.70 11
* Annualized.
** Total Investment Return on Market Value is the combination of reinvested
dividend income, reinvested capital gains distributions, if any, and
changes in stock price per share. Total Return on Net Asset Value is the
combination of reinvested dividend income, reinvested capital gains
distributions, if any, and changes in net asset value per share. Total
returns are not annualized.
+ The amounts shown are based on Common share equivalents.
++ Ratios do not reflect the effect of dividend payments to Preferred
shareholders.
</TABLE>
Building a Better Portfolio Can Make You a Successful Investor
Nuveen Family of Mutual Funds
Nuveen offers a variety of funds designed to help you reach your financial
goals.
Growth
Nuveen Rittenhouse
Growth Fund
Growth and Income
European Value Fund
Growth and
Income Stock Fund
Balanced Stock
and Bond Fund
Balanced Municipal
and Stock Fund
Tax-Free Income
National Funds
Long-Term
Insured
Intermediate-Term
Limited-Term
State Funds
Alabama
Arizona
California
Colorado
Connecticut
Florida
Georgia
Kansas
Kentucky
Louisiana
Maryland
Massachusetts
Michigan
Missouri
New Jersey
New Mexico
New York
North Carolina
Ohio
Pennsylvania
South Carolina
Tennessee
Virginia
Wisconsin
Successful investors know that a well-diversified portfolio - one that balances
different types of investments, levels of risk and tax management - can be the
foundation for building and sustaining wealth. That's why Nuveen offers you and
your financial adviser a wide range of quality investments that can help you
build a better portfolio in the pursuit of your financial goals
Exchange-Traded Funds
Nuveen Exchange-Traded Funds offer investors actively managed portfolios of
investment-grade quality municipal bonds. The fund shares are listed and traded
on the New York and American stock exchanges. Exchange-traded funds provide the
investment convenience, price visibility and liquidity of common stocks.
MuniPreferred(R)
Nuveen MuniPreferred offers investors a AAA rated investment with an attractive
tax-free yield for the cash reserves portion of an investment portfolio.
MuniPreferred shares are backed 2-to-1 by the long-term portfolios of Nuveen
dual-class exchange-traded funds and are available for national as well as a
wide variety of state-specific portfolios.
Mutual Funds
Nuveen offers a family of equity, balanced and municipal bond funds featuring
Premier AdvisersSM including Institutional Capital Corporation, Rittenhouse
Financial Services, and Nuveen Advisory Corp. Each brings a specialized
expertise in a particular investment style or asset class, time-tested
investment strategies and a focus on consistent, long-term performance. With
Nuveen's Premier Adviser funds, you have all the advantages of a family of funds
plus the benefits of specialized investment expertise.
Private Asset Management
Rittenhouse Financial Services and Nuveen Asset Management offer comprehensive,
customized investment management solutions to investors with assets of $250,000
or more to invest. A range of actively managed growth, balanced and municipal
income-oriented portfolios are available, all based upon a disciplined
investment philosophy.
Defined Portfolios
Nuveen Defined Portfolios are fixed portfolios of quality securities that are a
convenient, attractive alternative to purchasing individual securities. They
provide low-cost diversification to reduce risk, experienced, professional
security selection and surveillance and daily liquidity at that day's net asset
value for quick access to your assets.
<PAGE>
Fund Information
Board of Trustees
Robert P. Bremner
Lawrence H. Brown
Anthony T. Dean
Anne E. Impellizzeri
Peter R. Sawers
William J. Schneider
Timothy R. Schwertfeger
Judith M. Stockdale
Fund Manager
Nuveen Advisory Corp.
333 West Wacker Drive
Chicago, IL 60606
Custodian, Transfer Agent
and Shareholder Services
The Chase Manhattan Bank
4 New York Plaza
New York, NY 10004-2413
(800) 257-8787
Legal Counsel
Morgan, Lewis &
Bockius LLP
Washington, D.C.
Independent Auditors
Ernst & Young LLP
Chicago, IL
Year 2000
The concern that computer systems may have problems processing date-related
information in the year 2000 and beyond has challenged businesses and
organizations to thoroughly review all aspects of their operations. We have
undertaken just such an approach at Nuveen in preparation for the millennium.
Over the last 10 years, our trading, fund management and pricing systems at
Nuveen - the systems that directly affect our investors and their financial
advisers - have been updated or replaced to address the Year 2000 concerns. We
continue to work closely with our transfer agent, custodian and other service
partners to monitor readiness and address other remaining systems issues. Our
initial testing indicates we are on schedule, and we have targeted year-end 1998
to complete verification of vendor compliance and service partner readiness.
However, we can give no complete assurance at this time that the steps we have
taken will be sufficient to prevent any problems that would impact the Nuveen
Exchange-Traded Funds.
Each fund intends to repurchase shares of its own common or preferred
stock in the future at such times and in such amounts as is deemed advisable. No
shares were repurchased during the 12-month period ended June 30, 1998. Any
future repurchases will be reported to shareholders in the next annual or
semiannual report.
<PAGE>
Serving Investors for Generations
Photo of: John Nuveen, Sr.
John Nuveen, Sr.
Since our founding in 1898, John Nuveen & Co. has been synonymous with
investments that withstand the test of time. Today we offer a broad range of
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:
1898 - 1998
NUVEEN
OUR SECOND CENTURY
helping investors sustain the wealth of a lifetime.(tm)
John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, IL 60606-1286
www.nuveen.com
FAN-2-6-98
