NUVEEN Exchange-Traded Funds
October 31, 1998
Annual Report
Dependable, tax-free income to help you keep more of what you earn.
NQI
Insured Quality
NIO
Insured Opportunity
NIF
Premier Insured Income
NPX
Insured Premium Income 2
Photo of: People walking along the beach.
<PAGE>
Highlights
As of October 31, 1998
Contents
1 Dear Shareholder
3 Portfolio Manager's Comments
5 NQI Performance Overview
6 NIO Performance Overview
7 NIF Performance Overview
8 NPX Performance Overview
9 Shareholder Meeting Report
13 Report of Independent Auditors
14 Portfolio of Investments
41 Statement of Net Assets
42 Statement of Operations
43 Statement of Changes in Net Assets
45 Notes to Financial Statements
50 Financial Highlights
52 Building Better Portfolios
53 Fund Information
Credit Quality Performance Highlights
================================================================================
Nuveen Insured Quality Municipal Fund, Inc. (NQI)
o Competitive taxable-equivalent yield of
8.52% for investors in the 31% federal
income tax bracket
o One-year taxable-equivalent total return
on share price of 8.89% for investors in
the 31% federal income tax bracket
o Outperformed Lipper's peer group average
and paralleled the Lehman Brothers Insured
Municipal Bond Index
Pie Chart:
Insured 76%
U.S. Guaranteed 24%
Nuveen Insured Municipal Opportunity Fund, Inc. (NIO)
o Competitive taxable-equivalent yield of
8.26% for investors in the 31% federal
income tax bracket
o One-year taxable-equivalent total return on
share price of 14.86% for investors in the
31% federal income tax bracket
o Due to its shorter duration, the fund
provided a better risk versus reward
comparison than the Lehman Brothers Insured
Municipal Bond Index
Pie Chart:
Insured 66%
U.S. Guaranteed 34%
Nuveen Premier Insured Municipal Income Fund, Inc. (NIF)
o Competitive taxable-equivalent yield of
7.72% for investors in the 31% federal
income tax bracket
o One-year taxable-equivalent total return on
share price of 16.78% for investors in the
31% federal income tax bracket
o Outperformed Lipper's peer group average
Pie Chart:
Insured 60%
U.S. Guaranteed 40%
Nuveen Insured Premium Income Municipal Fund 2 (NPX)
o Competitive taxable-equivalent yield of
7.68% for investors in the 31% federal
income tax bracket
o One-year taxable-equivalent total return on
share price of 19.04% for investors in the
31% federal income tax bracket
o Outperformed the Lehman Brothers Insured
Municipal Bond Index and Lipper's peer
group average
Pie Chart:
Insured 85%
U.S. Guaranteed 15%
<PAGE>
Photo of: Timothy R. Schwertfeger
Chairman of the Board
Sidebar text: Wealth takes a lifetime to build. Once achieved, it should
be preserved.
Dear Shareholder
I'm pleased to report that over the 12 months ended October 31, 1998, the Nuveen
Exchange-Traded Funds covered in this report have continued to perform well,
meeting their primary objective of providing you with attractive levels of
tax-free income and after-tax total returns. The strong market for fixed-income
securities, bolstered by investor demand for quality investments, benefited
these four funds and led to equal (NQI) or higher share prices (NIO, NIF, and
NPX) than those posted a year ago. Attractive tax-free income, enhanced by
strong share price performance, illustrates once again that Nuveen's
Exchange-Traded Funds can provide an excellent investment option for
income-oriented investors.
The Year in Review
Over the past year, the markets endured bouts of volatility, as the Asian
financial crisis spilled over into emerging markets and affected economies
around the globe. Investors responded by seeking a haven from the uncertainty in
more conservative investments, such as municipal bond funds. As interest rates
continued to trend downward, the competitive yields offered by our
exchange-traded funds stimulated additional investor interest and demand, which
led to improved share prices overall. In this environment, the market for
exchange-traded municipal bond funds has been exceptionally strong. These funds
continue to represent a bright spot among fixed-income investments, offering
attractive income in a market that places a high premium on yield.
In the coming months, we will continue to watch several key factors affecting
the future of the economy, including corporate earnings reports, wage and
employment figures, U.S. consumer confidence levels, the continuing impact of
foreign financial turmoil, and any further interest rate indications from the
Federal Reserve. These factors will influence the outlook for fixed-income
markets into the coming year.
Municipals Very Attractively Priced
Over the past year, rising prices drove yields on 30-year Treasuries to their
lowest levels since 1977. The story in the municipal market, however, was quite
different. With yields on the long Treasury bond pushing below 5% at times, the
yield on the Bond Buyer 40, an unmanaged index of long-term municipal bonds,
fell just 27 basis points - from 5.40% to 5.13% - compared with the 100-basis
point drop in Treasury yields over the past 12 months. As of October 31, 1998,
the ratio of municipal yields to Treasury yields stood at 98.8%, compared with
the more typical range of 86-87%. Over the past few months, this ratio has
ranged as high as 100.6%. For investors, this means that quality municipal bonds
currently offer about the same yield as Treasury bonds with comparable
maturities - even before the tax advantages of municipal bonds are taken into
account. On an after-tax basis in today's market, municipal bonds present an
exceptionally attractive investment option relative to Treasuries.
One of the main factors in the steep decline in Treasury yields during the past
year was the strong interest in these investments by international investors. As
the financial turmoil in Asia continued to spread to economies worldwide and the
dollar strengthened against foreign currencies, the demand for U.S.
dollar-denominated Treasury securities increased. In the municipal market, where
foreign demand was limited by an inability to benefit from the tax advantages of
munis, low interest rates and a strong economy combined to generate high levels
of new issuance and a dramatic increase in the refinancing of existing bonds.
The first ten months of 1998 saw $234 billion of municipal issuance, up 32% over
the same period in 1997. In terms of total municipal issuance, this puts 1998 on
pace to be the second largest year on record.
In addition, the continued strength of the U.S. economy has brought about
improvements in the fundamental financial health of many municipalities and
boosted the overall credit quality of municipal bonds. In the third quarter of
1998, upgraded issues by the two major rating agencies outnumbered downgrades by
a margin of 7 to 2.
Nuveen Expertise Is Key
The key to taking advantage of the exceptional values currently available in the
municipal market is the expertise of a proven investment manager. At Nuveen, we
recognize the value of time-tested expertise. The high level of recent
municipal issuance, for example, highlights the value of Nuveen's in-depth
knowledge of the municipal market, as our portfolio management teams carefully
analyze the flood of issues to select those securities best suited to help the
funds achieve their investment objectives.
As a further enhancement to our management capabilities, Nuveen has assembled a
strong core of Premier Advisers(SM), managers who are experts in their
particular area of the market who can provide time-tested experience and
insight. In addition to Nuveen Advisory Corp., our Premier Adviser for tax-free
investing, you can rely on other Nuveen Premier Advisers(SM) to share their
wisdom on the equity market, including Institutional Capital Corporation for
equity value investing and Rittenhouse Financial Services for equity growth
investing. For more infor mation about our funds, including charges and
expenses, contact your financial adviser for a prospectus, or call Nuveen at
(800) 621-7227. Please read the prospectus carefully before you invest or
send money.
We encourage you to talk with your financial adviser about the ways Nuveen's
expanding selection of investments can assist you in establishing a diversified
portfolio designed to help you build and sustain long-term financial security.
For more than 100 years, investors have known they can count on Nuveen. We are
grateful for the confidence you have shown in us, and we intend to continue
earning your trust in the years ahead.
Sincerely,
Timothy R. Schwertfeger
Chairman of the Board
December 15, 1998
Sidebar text: "The key to taking advantage of the exceptional values currently
available in the municipal market is the expertise of a proven
investment manager."
<PAGE>
Nuveen Exchange-Traded Funds
Portfolio Manager's Comments
Portfolio manager Steve Krupa discusses the municipal market environment, fund
performance, and the outlook for the Nuveen national insured exchange-traded
funds. Steve, who has served as portfolio manager for the Insured Quality and
Insured Opportunity funds since their inceptions, assumed management
responsibilities for the Premier Insured Income and Insured Premium Income 2
funds on July 1, 1998, as part of Nuveen's efforts to maximize the efficient use
of staff resources and portfolio manager expertise. Steve is a 20-year veteran
of Nuveen.
What outside factors influenced the municipal bond market the most over the past
year?
The third quarter of 1998 saw an acceleration of trends that has been apparent
in the fixed-income markets over the past 12 months: declining interest rates
and the increased ratio of municipal to Treasury yields. The cause in both cases
was heightened concern about the condition of the global financial system. While
the U.S. economy exhibited continued growth, the impact of the financial turmoil
in Southeast Asia, Russia, and other emerging markets was felt in the U.S.
equity market.
A desire to cushion this impact and avert a domestic credit crunch prompted the
Federal Reserve to ease short-term interest rates in late September, the first
rate cut in almost three years. In response to concerns that the initial
quarter-point cut might not be sufficient, the Fed reduced rates again in
October and November, bringing the federal funds rate to 4.75%. The Fed
indicated that this accommodative stance was intended to sustain U.S. economic
growth going forward, while also adding some stability to global markets.
How have these outside factors affected municipal bond issuance?
In response to an environment of low interest rates and continued economic
growth, municipal bond issuance over the past year has been among the heaviest
in years. As of the end of October, total issuance in 1998 - both new deals and
refundings - was on pace to become the second largest year on record. Another
point concerns the level of insured bonds that have been brought to market. For
the month of September, insured bonds made up 56% of all issuance. Most notable
among the flood of new bonds was the $7 billion Long Island Power Authority
(LIPA) offering. The first part of the LIPA issuance, which exceeded $3.5
billion, the largest issuance in municipal bond history, came to market in May,
and another segment was brought out in October. Increased municipal supply has
been met with strong investor demand, due in part to recent volatility in the
equity markets. Demand from institutional buyers such as insurance companies has
also increased, as these investors recognize the exceptionally attractive values
currently offered by municipal bonds.
What were the funds' total returns for the past year?
For the fiscal year ended October 31, 1998, the Nuveen Exchange-Traded Funds
covered in this report produced the following total returns on net asset value
(NAV), compared to the total return of the Lehman Brothers Insured Municipal
Bond Index *:
Lehman Brothers Insured
Taxable-Equivalent Municipal Bond Index
Fund Total Return Total Return Total Return
- --------------------------------------------------------------
NQI 8.43% 11.19% 8.51%
- --------------------------------------------------------------
NIO 7.99% 10.82% 8.51%
- --------------------------------------------------------------
NIF 8.35% 11.04% 8.51%
- --------------------------------------------------------------
NPX 9.28% 11.74% 8.51%
- --------------------------------------------------------------
* The Lehman Brothers Insured 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.
What were the funds' durations, and what role does duration play regarding
investment risk?
The following chart illustrates the funds' durations compared to that of the
insured Lehman index, as of October 31, 1998:
Fund Fund Duration* Insured Lehman Brothers Duration
- -------------------------------------------------------------
NQI 7.47 years 8.41 years
- -------------------------------------------------------------
NIO 7.48 years 8.41 years
- -------------------------------------------------------------
NIF 8.24 years 8.41 years
- -------------------------------------------------------------
NPX 9.44 years 8.41 years
- -------------------------------------------------------------
* The fund duration listed in the chart takes into account the leveraging
process for each fund and therefore differs from the duration of the actual
portfolio of individual bonds that comprise the fund. Fund duration is also
known as leverage adjusted duration. Any future reference to duration, unless
otherwise noted, will be to fund duration.
Fund 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, longer
duration enables a fund to participate more fully in market gains. However, when
rates rise, longer duration can make the fund more vulnerable to potential price
declines. As interest rates trended downward over the past year, funds with
durations shorter than that of the index generally tended to underperform the
market.
For the three funds with durations shorter than the Insured Lehman Index (NQI,
NIO, and NIF), why are they shorter considering the trend is for lower rates?
For the funds with durations shorter than that of the Lehman index (NQI, NIO,
and NIF), we held bonds purchased during higher interest rate environments
rather than sell them in an attempt to lengthen duration and capture slightly
higher total returns. In the low interest rate environment of the past year, any
bonds we would have sold would have been replaced with issues offering lower
yields, which could have impacted the monthly dividend. In keeping with the
funds' objectives, our focus for all four of the funds in this report will
continue to be on maintaining the attractiveness and stability of the funds'
dividends as long as possible.
How have the dividends been affected?
In this low interest rate environment, good call protection helped support the
dividend of NPX and protect the income of this fund from erosion. As of October
31, 1998, this fund has provided shareholders with 24 consecutive months of
steady income. However, declining interest rates played a role in reducing the
income levels of NQI, NIO, and NIF, as proceeds from higher-yielding bonds that
matured or were called from these funds were reinvested in bonds paying
relatively lower current interest rates. Over the past year, the change in
income level earned by these funds necessitated dividend reductions. Despite
these adjustments, the Nuveen national insured funds continue to provide very
competitive current market yields. The following chart highlights the four
funds' market yields and their taxable-equivalent yields at the 31% federal
income tax bracket, as of October 31, 1998:
Fund Market Yield Taxable-Equivalent Yield
- ---------------------------------------------------------
NQI 5.88% 8.52%
- ---------------------------------------------------------
NIO 5.70% 8.26%
- ---------------------------------------------------------
NIF 5.33% 7.72%
- ---------------------------------------------------------
NPX 5.30% 7.68%
- ---------------------------------------------------------
What effect was there to the funds' share price performance?
As Tim mentioned in his letter to shareholders, share price performance among
many of the Nuveen Exchange-Traded Funds has generally been strong over the past
12 months. For a few funds, however, like NQI and NPX, market reaction to the
effect of bond calls over the past year resulted in their share prices trading
at discounts to their NAVs. NQI closed with the same share price for this year
as it did on October 31, 1997, NPX saw its discount narrow dramatically over the
year by more than 560 basis points, and NIO and NIF closed the year at premiums
to their NAVs. Meanwhile, a strong bond market performance boosted all four of
the funds' NAVs compared to a year ago. The accompanying chart is as of October
31, 1998:
Premium (+)
Fund Market Price Net Asset Value Discount (-)
- ----------------------------------------------------------
NQI $15.6250 $16.02 -2.47%
- ----------------------------------------------------------
NIO $16.6250 $16.04 +3.65%
- ----------------------------------------------------------
NIF $16.8750 $16.18 +4.30%
- ----------------------------------------------------------
NPX $13.6875 $14.10 -2.93%
- ----------------------------------------------------------
Were there any particular sectors where Nuveen looked for undervalued
securities?
Over the past year, we found value in the healthcare and utilities sectors,
currently the two largest issuers in the municipal market, by taking advantage
of the competitive environment created by deregulation and consolidation. The
heavy volume in these two sectors provided addition al opportunities to find
value, as hospital and utility bonds often offered above-market yields and
special call provisions to attract buyers. During the first half of 1998, we
focused on California bonds, which have recently outper formed the market.
Currently, we favor bonds issued by the city and state of New York, as we
anticipate that high state taxes and improved credit quality will enhance the
performance of these bonds. Bonds added to our portfolios over the past year
tended to be in the 20-year maturity range, as we believe these bonds provide
the most value by offering yields close to those of longer bonds, but with less
volatility.
What is Nuveen's outlook for the future?
Looking ahead, our focus for the Nuveen national insured funds will continue to
be supporting the stability of the funds' income streams, especially if we
remain in a lower interest rate environment. NQI, NIO, and NIF have already
entered into a period where bond calls can affect their portfolios, while NPX
will begin to face bond calls over the next three years. In NQI and NIO, we plan
to lengthen the funds' durations while trying to limit any impact on their
dividends by preempting selected bond calls. This involves selling shorter
duration bonds prior to their call dates and replacing them with high-quality,
longer duration bonds offering attractive yields. Overall, we will continue to
monitor the market for value opportunities. We expect that supply will continue
to be plentiful, which should enhance our ability to find and take advantage of
such opportunities. Nuveen's expertise as an experienced investment manager
knowledgeable about the unique aspects of the municipal bond market is key to
our ability to select the right securities for our funds and add value for our
investors.
The past year offered excellent justification for buying insured funds, as
economic crises abroad caused the investment industry to reassess the premium
placed on security risk. With the increased awareness of investment risk
globally, these funds offered shareholders attractive yields and after-tax total
returns. The current market environment - influenced by declining interest
rates, benign inflation, and strong municipal supply - has helped to position
municipal bonds as one of the most compelling values in today's marketplace. We
expect that the excellent municipal-to-Treasury ratio, combined with continued
volatility in the equity markets and investors' increasing awareness of the need
for asset allocation rebalancing, will result in growing demand for municipal
bond funds. We believe that investors who take advantage of current
opportunities in the municipal market should be rewarded with healthy returns
and attractive yields in the months ahead, as the market recognizes the value of
these quality investments.
<PAGE>
Nuveen Insured Quality Municipal Fund, Inc.
Performance Overview
As of October 31, 1998
NQI
Portfolio Statistics
==================================================
Inception Date 12/90
- --------------------------------------------------
Share Price $15 5/8
- --------------------------------------------------
Net Asset Value $16.02
- --------------------------------------------------
Current Market Yield Per Share 5.88%
- --------------------------------------------------
Taxable-Equivalent Yield
(Federal Only)(1) 8.52%
- --------------------------------------------------
Fund Net Assets ($000) $863,179
- --------------------------------------------------
Effective Maturity (Years) 18.95
- --------------------------------------------------
Fund Duration (Years) 7.47
- --------------------------------------------------
Annualized Total Return
==================================================
On Share Price On NAV
- --------------------------------------------------
1-Year 6.13% 8.43%
- --------------------------------------------------
3-Year 8.39% 7.37%
- --------------------------------------------------
5-Year 4.75% 6.16%
- --------------------------------------------------
Since Inception 7.43% 8.73%
- --------------------------------------------------
Taxable-Equivalent Total Return(2)
==================================================
On Share Price On NAV
- --------------------------------------------------
1-Year 8.89% 11.19%
- --------------------------------------------------
3-Year 11.13% 10.23%
- --------------------------------------------------
5-Year 7.78% 9.10%
- --------------------------------------------------
Since Inception 10.50% 11.78%
- --------------------------------------------------
Top Five Sectors (as a % of total investments)
==================================================
U.S. Guaranteed 24%
- --------------------------------------------------
Health Care 19%
- --------------------------------------------------
Utilities 16%
- --------------------------------------------------
Housing (Single Family) 13%
- --------------------------------------------------
Tax Obligation (General) 8%
- --------------------------------------------------
Bar Chart:
1997-1998 Monthly Tax-Free Dividends Per Share(3)
11/97 0.0795
12/97 0.0795
1/98 0.0795
2/98 0.0795
3/98 0.0795
4/98 0.0795
5/98 0.0765
6/98 0.0765
7/98 0.0765
8/98 0.0765
9/98 0.0765
10/98 0.0765
Share Price Performance
Line Chart:
11/7/97 15.813
15.813
15.813
15.875
15.875
15.875
16.25
16.438
16.438
16.563
16.438
16.25
16.438
16.5
16.438
16.125
16.313
16.188
16.313
16.188
15.813
15.938
15.875
15.75
15.563
15.313
15.25
15.375
15.625
15.813
16
15.75
15.563
15.813
15.938
15.813
16
15.875
15.688
15.625
15.688
15.688
15.625
15.375
15.438
15.5
15.875
15.875
16.125
15.63
10/31/98 15.63
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%.
2 Taxable-equivalent total return is based on the annualized total return and a
federal income tax rate of 31%. 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 $0.01 per
share.
<PAGE>
Nuveen Insured Municipal Opportunity Fund, Inc.
Performance Overview
As of October 31, 1998
NIO
Portfolio Statistics
==================================================
Inception Date 9/91
- --------------------------------------------------
Share Price $16 5/8
- --------------------------------------------------
Net Asset Value $16.04
- --------------------------------------------------
Current Market Yield Per Share 5.70%
- --------------------------------------------------
Taxable-Equivalent Yield (Federal Only)(1) 8.26%
- --------------------------------------------------
Fund Net Assets ($000) $1,892,589
- --------------------------------------------------
Effective Maturity (Years) 16.92
- --------------------------------------------------
Fund Duration (Years) 7.48
- --------------------------------------------------
Annualized Total Return
==================================================
On Share Price On NAV
- --------------------------------------------------
1-Year 12.03% 7.99%
- --------------------------------------------------
3-Year 10.65% 7.60%
- --------------------------------------------------
5-Year 7.49% 6.44%
- --------------------------------------------------
Since Inception 8.20% 8.56%
- --------------------------------------------------
Taxable-Equivalent Total Return(2)
==================================================
On Share Price On NAV
- --------------------------------------------------
1-Year 14.86% 10.82%
- --------------------------------------------------
3-Year 13.62% 10.50%
- --------------------------------------------------
5-Year 10.55% 9.40%
- --------------------------------------------------
Since Inception 11.20% 11.51%
- --------------------------------------------------
Top Five Sectors (as a % of total investments)
==================================================
U.S. Guaranteed 34%
- --------------------------------------------------
Health Care 16%
- --------------------------------------------------
Utilities 15%
- --------------------------------------------------
Housing (Single Family) 12%
- --------------------------------------------------
Transportation 5%
- --------------------------------------------------
1997-1998 Monthly Tax-Free Dividends Per Share
11/97 0.082
12/97 0.082
1/98 0.082
2/98 0.082
3/98 0.082
4/98 0.082
5/98 0.079
6/98 0.079
7/98 0.079
8/98 0.079
9/98 0.079
10/98 0.079
Line Chart:
Share Price Performance
11/7/97 15.938
16
16.063
16.188
16.375
16.563
16.438
16.5
16.5
16.75
16.688
16.5
16.688
16.75
16.563
16.438
16.438
16.375
16.438
16.25
15.875
16
15.938
15.688
15.938
15.813
15.563
15.688
15.813
16.063
16.125
16.063
16.063
16.125
16.313
16.188
15.938
15.938
16
16
16.188
16.125
16.125
16.063
16.063
16.125
16.563
16.625
16.875
16.56
10/31/98 16.63
Weekly Closing Price
Past performance is not predictive of future results.
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%.
2 Taxable-equivalent total return is based on the annualized total return and a
federal income tax rate of 31%. It represents the return on a taxable
investment necessary to equal the return of the Nuveen fund on an after-tax
basis.
<PAGE>
Nuveen Premier Insured Municipal Income Fund, Inc.
Performance Overview
As of October 31, 1998
NIF
Portfolio Statistics
==================================================
Inception Date 12/91
- --------------------------------------------------
Share Price $16 7/8
- --------------------------------------------------
Net Asset Value Per Share $16.18
- --------------------------------------------------
Current Market Yield 5.33%
- --------------------------------------------------
Taxable-Equivalent Yield (Federal Only)(1) 7.72%
- --------------------------------------------------
Fund Net Assets ($000) $450,466
- --------------------------------------------------
Effective Maturity (Years) 15.99
- --------------------------------------------------
Fund Duration (Years) 8.24
- --------------------------------------------------
Annualized Total Return
==================================================
On Share Price On NAV
- --------------------------------------------------
1-Year 14.06% 8.35%
- --------------------------------------------------
3-Year 11.77% 7.61%
- --------------------------------------------------
5-Year 8.15% 6.16%
- --------------------------------------------------
Since Inception 8.13% 8.35%
- --------------------------------------------------
Taxable-Equivalent Total Return(2)
==================================================
On Share Price On NAV
- --------------------------------------------------
1-Year 16.78% 11.04%
- --------------------------------------------------
3-Year 14.65% 10.36%
- --------------------------------------------------
5-Year 11.15% 8.97%
- --------------------------------------------------
Since Inception 11.04% 11.15%
- --------------------------------------------------
Top Five Sectors (as a % of total investments)
==================================================
U.S. Guaranteed 40%
- --------------------------------------------------
Utilities 17%
- --------------------------------------------------
Health Care 12%
- --------------------------------------------------
Tax Obligation (Limited) 10%
- --------------------------------------------------
Housing (Multifamily) 6%
- --------------------------------------------------
Bar Chart:
1997-1998 Monthly Tax-Free Dividends Per Share(3)
11/97 0.078
12/97 0.078
1/98 0.078
2/98 0.078
3/98 0.078
4/98 0.078
5/98 0.078
6/98 0.078
7/98 0.075
8/98 0.075
9/98 0.075
10/98 0.075
Line Chart:
Share Price Performance
11/7/97 15.625
15.688
15.688
15.813
15.938
16.125
16.125
16.25
16.188
16.438
16.188
16.188
16.25
16.375
16.188
16.25
16.25
16.188
15.813
15.813
16.125
16.25
16.25
16
15.938
15.813
15.875
15.688
15.75
15.938
16.063
15.875
15.875
16.125
16.063
15.875
15.75
15.688
15.75
15.813
15.938
15.938
15.938
15.938
16.063
16
16.688
16.5
16.5
16.69
10/31/98 16.88
Weekly Closing Price
Past performance is not predictive of future results.
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%.
2 Taxable-equivalent total return is based on the annualized total return and a
federal income tax rate of 31%. 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 $0.0211
per share.
<PAGE>
Nuveen Insured Premium Income Municipal Fund 2
Performance Overview
As of October 31, 1998
NPX
Portfolio Statistics
==================================================
Inception Date 7/93
- --------------------------------------------------
Share Price $13 11/16
- --------------------------------------------------
Net Asset Value Per Share $14.10
- --------------------------------------------------
Current Market Yield 5.30%
- --------------------------------------------------
Taxable-Equivalent Yield (Federal Only)(1) 7.68%
- --------------------------------------------------
Fund Net Assets ($000) $793,862
- --------------------------------------------------
Effective Maturity (Years) 16.15
- --------------------------------------------------
Fund Duration (Years) 9.44
- --------------------------------------------------
Annualized Total Return
==================================================
On Share Price On NAV
- --------------------------------------------------
1-Year 16.35% 9.28%
- --------------------------------------------------
3-Year 12.83% 8.36%
- --------------------------------------------------
5-Year 6.09% 5.59%
- --------------------------------------------------
Since Inception 4.31% 5.72%
- --------------------------------------------------
Taxable-Equivalent Total Return(2)
==================================================
On Share Price On NAV
- --------------------------------------------------
1-Year 19.04% 11.74%
- --------------------------------------------------
3-Year 15.68% 10.88%
- --------------------------------------------------
5-Year 9.02% 8.24%
- --------------------------------------------------
Since Inception 7.07% 8.27%
- --------------------------------------------------
Top Five Sectors (as a % of total investments)
==================================================
Utilities 20%
- --------------------------------------------------
Tax Obligation (General) 17%
- --------------------------------------------------
U.S. Guaranteed 15%
- --------------------------------------------------
Tax Obligation (Limited) 12%
- --------------------------------------------------
Housing (Multifamily) 9%
- --------------------------------------------------
Bar Chart:
1997-1998 Monthly Tax-Free Dividends Per Share
11/97 0.0605
12/97 0.0605
1/98 0.0605
2/98 0.0605
3/98 0.0605
4/98 0.0605
5/98 0.0605
6/98 0.0605
7/98 0.0605
8/98 0.0605
9/98 0.0605
10/98 0.0605
Line Chart:
Share Price Performance
11/7/97 12.438
12.438
12.688
12.75
12.625
12.75
12.875
13
13.063
13.375
13.375
13.188
13.5
13.438
13.188
13.063
13.375
13.375
12.813
13.188
12.938
13.125
13
13.063
12.688
12.688
12.625
12.688
12.813
13
12.938
13.063
12.875
12.813
13.063
12.938
12.875
13
13.125
12.875
12.938
13.063
12.938
13.063
13.188
13.313
13.563
13.563
13.625
13.75
10/31/98 13.69
Weekly Closing Price
Past performance is not predictive of future results.
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%.
2 Taxable-equivalent total return is based on the annualized total return and a
federal income tax rate of 31%. It represents the return on a taxable
investment necessary to equal the return of the Nuveen fund on an after-tax
basis.
<PAGE>
<TABLE>
<CAPTION>
Shareholder Meeting Report
NQI
- ------------------------------------------------------------------------------------------------------------------------------------
Approval of the Directors was reached as follows:
Preferred Preferred Preferred Preferred
Common Shares Shares Shares Shares
Shares Series-M Series-T Series-W Series-F
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
Robert P. Bremner
For 33,004,504 2,228 2,301 2,172 1,873
Withhold 181,262 62 11 -- 126
- ------------------------------------------------------------------------------------------------------------------------------------
Total 33,185,766 2,290 2,312 2,172 1,999
====================================================================================================================================
Lawrence H. Brown
For 33,012,534 2,283 2,301 2,172 1,873
Withhold 173,232 7 11 -- 126
- ------------------------------------------------------------------------------------------------------------------------------------
Total 33,185,766 2,290 2,312 2,172 1,999
====================================================================================================================================
Anthony T. Dean
For 33,016,002 2,278 2,301 2,172 1,873
Withhold 169,764 12 11 -- 126
- ------------------------------------------------------------------------------------------------------------------------------------
Total 33,185,766 2,290 2,312 2,172 1,999
====================================================================================================================================
Anne E. Impellizzeri
For 32,992,692 2,283 2,301 2,172 1,873
Withhold 193,074 7 11 -- 126
- ------------------------------------------------------------------------------------------------------------------------------------
Total 33,185,766 2,290 2,312 2,172 1,999
====================================================================================================================================
Peter R. Sawers
For 33,009,597 2,278 2,301 2,172 1,873
Withhold 176,169 12 11 -- 126
- ------------------------------------------------------------------------------------------------------------------------------------
Total 33,185,766 2,290 2,312 2,172 1,999
====================================================================================================================================
William J. Schneider
For -- 2,228 2,301 2,172 1,873
Withhold -- 62 11 -- 126
- ------------------------------------------------------------------------------------------------------------------------------------
Total -- 2,290 2,312 2,172 1,999
====================================================================================================================================
Timothy R. Schwertfeger
For -- 2,283 2,301 2,172 1,873
Withhold -- 7 11 -- 126
- ------------------------------------------------------------------------------------------------------------------------------------
Total -- 2,290 2,312 2,172 1,999
====================================================================================================================================
Judith M. Stockdale
For 32,954,610 2,233 2,301 2,172 1,869
Withhold 231,156 57 11 -- 130
- ------------------------------------------------------------------------------------------------------------------------------------
Total 33,185,766 2,290 2,312 2,172 1,999
====================================================================================================================================
Ratification of auditors was reached as follows:
For 32,609,608 2,283 2,298 2,172 1,985
Against 79,280 -- -- -- --
Abstain 496,878 7 14 -- 14
- ------------------------------------------------------------------------------------------------------------------------------------
Total 33,185,766 2,290 2,312 2,172 1,999
====================================================================================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Shareholder Meeting Report
NIO
- ------------------------------------------------------------------------------------------------------------------------------------
Approval of the Directors was reached as follows:
Preferred Preferred Preferred Preferred Preferred Preferred
Common Shares Shares Shares Shares Shares Shares
Shares Series-M Series-T Series-W Series-TH Series-TH-2 Series-F
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
Robert P. Bremner
For 72,885,685 3,716 3,446 3,447 3,704 3,653 3,480
Withhold 457,843 6 59 46 37 2 2
- ------------------------------------------------------------------------------------------------------------------------------------
Total 73,343,528 3,722 3,505 3,493 3,741 3,655 3,482
====================================================================================================================================
Lawrence H. Brown
For 72,895,146 3,716 3,446 3,487 3,704 3,653 3,480
Withhold 448,382 6 59 6 37 2 2
- ------------------------------------------------------------------------------------------------------------------------------------
Total 73,343,528 3,722 3,505 3,493 3,741 3,655 3,482
====================================================================================================================================
Anthony T. Dean
For 72,902,788 3,706 3,446 3,487 3,704 3,653 3,480
Withhold 440,740 16 59 6 37 2 2
- ------------------------------------------------------------------------------------------------------------------------------------
Total 73,343,528 3,722 3,505 3,493 3,741 3,655 3,482
====================================================================================================================================
Anne E. Impellizzeri
For 72,878,080 3,716 3,446 3,487 3,704 3,653 3,480
Withhold 465,448 6 59 6 37 2 2
- ------------------------------------------------------------------------------------------------------------------------------------
Total 73,343,528 3,722 3,505 3,493 3,741 3,655 3,482
====================================================================================================================================
Peter R. Sawers
For 72,889,817 3,716 3,446 3,483 3,704 3,653 3,480
Withhold 453,711 6 59 10 37 2 2
- ------------------------------------------------------------------------------------------------------------------------------------
Total 73,343,528 3,722 3,505 3,493 3,741 3,655 3,482
====================================================================================================================================
William J. Schneider
For -- 3,716 3,446 3,447 3,704 3,653 3,480
Withhold -- 6 59 46 37 2 2
- ------------------------------------------------------------------------------------------------------------------------------------
Total -- 3,722 3,505 3,493 3,741 3,655 3,482
====================================================================================================================================
Timothy R. Schwertfeger
For -- 3,716 3,446 3,487 3,704 3,653 3,480
Withhold -- 6 59 6 37 2 2
- ------------------------------------------------------------------------------------------------------------------------------------
Total -- 3,722 3,505 3,493 3,741 3,655 3,482
====================================================================================================================================
Judith M. Stockdale
For 72,847,481 3,716 3,446 3,447 3,704 3,653 3,480
Withhold 496,047 6 59 46 37 2 2
- ------------------------------------------------------------------------------------------------------------------------------------
Total 73,343,528 3,722 3,505 3,493 3,741 3,655 3,482
====================================================================================================================================
Ratification of auditors was reached as follows:
For 72,657,955 3,716 3,468 3,421 3,709 3,643 3,480
Against 199,745 -- 3 -- 31 12 --
Abstain 485,828 6 34 72 1 -- 2
- ------------------------------------------------------------------------------------------------------------------------------------
Total 73,343,528 3,722 3,505 3,493 3,741 3,655 3,482
====================================================================================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Shareholder Meeting Report
NIF
- ------------------------------------------------------------------------------------------------------------------------------------
Approval of the Directors was reached as follows:
Preferred Preferred
Common Shares Shares
Shares Series-TH Series-F
====================================================================================================================================
<S> <C> <C> <C>
Robert P. Bremner
For 17,008,176 2,337 2,187
Withhold 147,799 25 2
- ------------------------------------------------------------------------------------------------------------------------------------
Total 17,155,975 2,362 2,189
====================================================================================================================================
Lawrence H. Brown
For 17,008,355 2,337 2,187
Withhold 147,620 25 2
- ------------------------------------------------------------------------------------------------------------------------------------
Total 17,155,975 2,362 2,189
====================================================================================================================================
Anthony T. Dean
For 17,008,355 2,337 2,187
Withhold 147,620 25 2
- ------------------------------------------------------------------------------------------------------------------------------------
Total 17,155,975 2,362 2,189
====================================================================================================================================
Anne E. Impellizzeri
For 17,002,225 2,337 2,187
Withhold 153,750 25 2
- ------------------------------------------------------------------------------------------------------------------------------------
Total 17,155,975 2,362 2,189
====================================================================================================================================
Peter R. Sawers
For 17,005,355 2,337 2,187
Withhold 150,620 25 2
- ------------------------------------------------------------------------------------------------------------------------------------
Total 17,155,975 2,362 2,189
====================================================================================================================================
William J. Schneider
For -- 2,337 2,187
Withhold -- 25 2
- ------------------------------------------------------------------------------------------------------------------------------------
Total -- 2,362 2,189
====================================================================================================================================
Timothy R. Schwertfeger
For -- 2,337 2,187
Withhold -- 25 2
- ------------------------------------------------------------------------------------------------------------------------------------
Total -- 2,362 2,189
====================================================================================================================================
Judith M. Stockdale
For 17,000,868 2,337 2,187
Withhold 155,107 25 2
- ------------------------------------------------------------------------------------------------------------------------------------
Total 17,155,975 2,362 2,189
====================================================================================================================================
Ratification of auditors was reached as follows:
For 17,021,173 2,354 2,187
Against 18,665 8 2
Abstain 116,137 -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Total 17,155,975 2,362 2,189
====================================================================================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Shareholder Meeting Report
NPX
- ------------------------------------------------------------------------------------------------------------------------------------
Approval of the Trustees was reached as follows:
Preferred Preferred Preferred Preferred Preferred
Common Shares Shares Shares Shares Shares
Shares Series-M Series-T Series-W Series-TH Series-F
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Robert P. Bremner
For 34,173,828 1,853 1,950 1,751 1,986 1,912
Withhold 306,575 -- -- 8 1 2
- ------------------------------------------------------------------------------------------------------------------------------------
Total 34,480,403 1,853 1,950 1,759 1,987 1,914
- ------------------------------------------------------------------------------------------------------------------------------------
Lawrence H. Brown
For 34,174,433 1,853 1,950 1,755 1,986 1,912
Withhold 305,970 -- -- 4 1 2
- ------------------------------------------------------------------------------------------------------------------------------------
Total 34,480,403 1,853 1,950 1,759 1,987 1,914
- ------------------------------------------------------------------------------------------------------------------------------------
Anthony T. Dean
For 34,181,114 1,853 1,950 1,755 1,986 1,909
Withhold 299,289 -- -- 4 1 5
- ------------------------------------------------------------------------------------------------------------------------------------
Total 34,480,403 1,853 1,950 1,759 1,987 1,914
- ------------------------------------------------------------------------------------------------------------------------------------
Anne E. Impellizzeri
For 34,157,048 1,853 1,949 1,749 1,974 1,912
Withhold 323,355 -- 1 10 13 2
- ------------------------------------------------------------------------------------------------------------------------------------
Total 34,480,403 1,853 1,950 1,759 1,987 1,914
- ------------------------------------------------------------------------------------------------------------------------------------
Peter R. Sawers
For 34,176,844 1,853 1,949 1,749 1,974 1,912
Withhold 303,559 -- 1 10 13 2
- ------------------------------------------------------------------------------------------------------------------------------------
Total 34,480,403 1,853 1,950 1,759 1,987 1,914
- ------------------------------------------------------------------------------------------------------------------------------------
William J. Schneider
For -- 1,853 1,950 1,751 1,986 1,912
Withhold -- -- -- 8 1 2
- ------------------------------------------------------------------------------------------------------------------------------------
Total -- 1,853 1,950 1,759 1,987 1,914
- ------------------------------------------------------------------------------------------------------------------------------------
Timothy R. Schwertfeger
For -- 1,853 1,950 1,755 1,986 1,912
Withhold -- -- -- 4 1 2
- ------------------------------------------------------------------------------------------------------------------------------------
Total -- 1,853 1,950 1,759 1,987 1,914
- ------------------------------------------------------------------------------------------------------------------------------------
Judith M. Stockdale
For 34,156,524 1,853 1,944 1,749 1,986 1,912
Withhold 323,879 -- 6 10 1 2
- ------------------------------------------------------------------------------------------------------------------------------------
Total 34,480,403 1,853 1,950 1,759 1,987 1,914
- ------------------------------------------------------------------------------------------------------------------------------------
Ratification of auditors was reached as follows:
For 33,949,562 1,850 1,950 1,755 1,987 1,914
Against 103,630 -- -- 4 -- --
Abstain 427,211 3 -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Total 34,480,403 1,853 1,950 1,759 1,987 1,914
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Report of Independent Auditors
The Board of Directors, Trustees and Shareholders
Nuveen Insured Quality Municipal Fund, Inc.
Nuveen Insured Municipal Opportunity Fund, Inc.
Nuveen Premier Insured Municipal Income Fund, Inc.
Nuveen Insured Premium Income Municipal Fund 2
We have audited the accompanying statements of net assets, including the
portfolios of investments, of Nuveen Insured Quality Municipal Fund, Inc.,
Nuveen Insured Municipal Opportunity Fund, Inc., Nuveen Premier Insured
Municipal Income Fund, Inc. and Nuveen Insured Premium Income Municipal Fund 2
as of October 31, 1998, and the related statements of operations and 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
October 31, 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 Insured Quality Municipal Fund, Inc., Nuveen Insured Municipal
Opportunity Fund, Inc., Nuveen Premier Insured Municipal Income Fund, Inc. and
Nuveen Insured Premium Income Municipal Fund 2 at October 31, 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.
Ernst & Young LLP
Chicago, Illinois
December 11, 1998
<PAGE>
<TABLE>
Portfolio of Investments
Nuveen Insured Quality Municipal Fund, Inc. (NQI)
October 31, 1998
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alabama - 1.0%
$ 8,500,000 The Special Care Facilities Financing Authority of the City of Birmingham-
Medical Center East, Health Care Facility Revenue Refunding Bonds,
Medical Center East, Series 1986 (Birmingham, Alabama),
7.250%, 7/01/15 No Opt. Call AAA $8,528,220
- ------------------------------------------------------------------------------------------------------------------------------------
Alaska - 0.6%
5,000,000 Municipality of Anchorage, Alaska, Senior Lien Refunding Electric
Revenue Bonds, Series 1989, 7.125%, 6/01/06 6/99 at 102 AAA 5,215,800
- ------------------------------------------------------------------------------------------------------------------------------------
Arizona - 5.1%
5,000,000 City of Phoenix (Arizona), Civic Improvement Corporation, Wastewater
System Lease Revenue Bonds, Series 1993, 6.125%, 7/01/23
(Pre-refunded to 7/01/03) 7/03 at 102 AAA 5,584,650
10,000,000 Industrial Development Authority of The County of Pima (Arizona),
Health Care System Revenue Bonds, Carondelet Health Services, Inc.,
St. Joseph's and St. Mary's Hospitals and Health Centers Issue,
Series 1991, 6.750%, 7/01/16 7/01 at 102 AAA 10,888,900
Business Development Finance Corporation, Tucson (Arizona),
Local Development Lease Revenue Refunding Bonds, Series 1992:
3,020,000 6.250%, 7/01/08 (Pre-refunded to 7/01/02) 7/02 at 102 AAA 3,339,546
6,980,000 6.250%, 7/01/08 7/02 at 102 AAA 7,669,066
15,250,000 City of Tucson, Arizona, Water System Revenue Bonds, Series 1991,
7.100%, 7/01/18 (Pre-refunded to 7/01/01) 7/01 at 102 AAA 16,881,903
- ------------------------------------------------------------------------------------------------------------------------------------
Arkansas - 2.3%
9,450,000 Arkansas Development Finance Authority, Single Family Mortgage Revenue
Bonds, 1995 Series B (Mortgage-Backed Securities Program),
6.700%, 7/01/27 (Alternative Minimum Tax) 7/05 at 102 AAA 10,234,256
Pope County, Arkansas, Solid Waste Disposal Revenue Bonds,
Series 1991 (Arkansas Power & Light Company Project):
6,400,000 8.000%, 1/01/21 (Alternative Minimum Tax) 1/01 at 102 BBB+ 6,937,984
2,250,000 8.000%, 1/01/21 (Alternative Minimum Tax) 1/01 at 102 AAA 2,472,638
- ------------------------------------------------------------------------------------------------------------------------------------
California - 11.6%
9,650,000 Certificates of Participation (1991 Financing Project), County of Alameda,
California, Alameda County Public Facilities Corporation, 6.000%, 9/01/21 9/06 at 102 AAA 10,648,100
12,695,000 Antioch Area Public Facilities Financing Agency, Community Facilities
District No. 1989-1, Series 1993 Special Tax Bonds, 5.000%, 8/01/18 8/02 at 102 AAA 12,736,132
11,000,000 California Health Facilities Financing Authority, Kaiser Permanente
Revenue Bonds, Series 1998A, 5.000%, 6/01/24 6/08 at 102 AAA 10,960,180
8,500,000 California Health Facilities Financing Authority, Insured Revenue Bonds
(Sutter Health), Series 1998A, 5.000%, 8/15/37 8/08 at 101 AAA 8,420,185
California Housing Finance Agency, Home Mortgage Revenue Bonds,
1997 Series E:
3,000,000 5.650%, 8/01/17 (Alternative Minimum Tax) 8/07 at 102 AAA 3,145,140
14,075,000 5.750%, 2/01/29 (Alternative Minimum Tax) 8/07 at 102 AAA 14,788,040
5,500,000 California Statewide Communities Development Authority, Certificates of
Participation, The Salk Institute for Biological Studies, San Diego,
California, 6.200%, 7/01/24 7/04 at 102 AAA 6,123,040
5,000,000 Inland Empire Solid Waste Financing Authority, Revenue Bonds, 1996
Series B 0 (Landfill Improvement Financing Project), 6.000%, 8/01/16
(Alternative Minimum Tax) 8/06 at 102 AAA 5,427,95
11,270,000 Los Angeles County Metropolitan Transportation Authority (California),
Proposition A, Sales Tax Revenue Refunding Bonds, Series 1993-A,
5.000%, 7/01/21 7/03 at 100 AAA 11,261,660
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
California (continued)
$ 6,910,000 Ontario Redevelopment Financing Authority (San Bernardino County,
California), 1993 Revenue Bonds (Ontario Redevelopment Project No. 1),
5.850%, 8/01/22 8/03 at 102 AAA $7,350,65
8,500,000 Airports Commission, City and County of San Francisco, California,
San Francisco International Airport, Second Series Revenue Bonds,
Issue 11 (Noise Insulation Program), 6.250%, 5/01/26
(Alternative Minimum Tax) 5/05 at 101 AAA 9,366,490
- ------------------------------------------------------------------------------------------------------------------------------------
Colorado - 3.0%
1,600,000 Adams County, Colorado, Single Family Revenue Refunding Bonds,
1991 Series A-2, 8.700%, 6/01/12 6/01 at 103 AAA 1,727,312
5,630,000 E-470 Public Highway Authority, Arapahoe County, Colorado, Capital
Improvement Trust Fund Highway Revenue Bonds (E-470 Project), Vehicle
Registration Fee Bonds, 6.150%, 8/31/26 8/05 at 103 AAA 6,375,919
Colorado Health Facilities Authority, Insured Hospital Revenue
Bonds (PSL Healthcare System Project), Series 1991 A:
5,000,000 7.250%, 2/15/16 (Pre-refunded to 2/15/01) 2/01 at 102 AAA 5,490,350
4,500,000 6.250%, 2/15/21 (Pre-refunded to 2/15/01) 2/01 at 102 AAA 4,845,285
6,500,000 Colorado Health Facilities Authority, Revenue Bonds, Series 1998 (Sisters
of Charity of Leavenworth Health Services Corporation), 5.000%, 12/01/25 6/08 at 101 AAA 6,390,800
155,000 El Paso County, Colorado, Colorado Local Single Family Mortgage Revenue
Bonds, 1990 Series A, 7.850%, 9/01/09 (Alternative Minimum Tax) 9/00 at 102 AAA 161,941
815,000 Jefferson County, Colorado, Single Family Revenue Refunding Bonds,
Series 1991A, 8.875%, 10/01/13 4/01 at 103 AAA 869,923
- ------------------------------------------------------------------------------------------------------------------------------------
District of Columbia - 1.3%
10,000,000 District of Columbia (Washington, D.C.), General Obligation Bonds
(Series 1990B), 7.500%, 6/01/10 (Pre-refunded to 6/01/00) 6/00 at 102 AAA 10,804,800
- ------------------------------------------------------------------------------------------------------------------------------------
Florida - 1.2%
9,845,000 Florida Housing Finance Agency, Single Family Mortgage Revenue Bonds,
1994 Series B, 6.650%, 7/01/26 (Alternative Minimum Tax) 7/04 at 102 AAA 10,558,763
- ------------------------------------------------------------------------------------------------------------------------------------
Hawaii - 2.9%
6,130,000 Department of Budget and Finance of the State of Hawaii, Special Purpose
Revenue Bonds (Hawaiian Electric Company, Inc. and Subsidiaries
Projects), Series 1992, 6.550%, 12/01/22 (Alternative Minimum Tax) 12/02 at 103 AAA 6,774,999
16,180,000 Department of Budget and Finance of the State of Hawaii, Special Purpose
Revenue Bonds (Hawaii Electric Company, Inc. and Subsidiaries Project),
Series 1996A, 6.200%, 5/01/26 (Alternative Minimum Tax) 5/06 at 101 AAA 17,851,556
- ------------------------------------------------------------------------------------------------------------------------------------
Illinois - 11.3%
5,000,000 Central Lake County Joint Action Water Agency, Lake County, Illinois,
Water Revenue Bonds, Series 1991, 7.000%, 5/01/20
(Pre-refunded to 5/01/01) 5/01 at 102 AAA 5,495,500
10,000,000 City of Chicago, General Obligation Bonds, Project Series 1995,
6.125%, 1/01/16 7/05 at 102 AAA 11,152,00
Chicago School Reform Board of Trustees of the Board of Education of the
City of Chicago, Illinois, Unlimited Tax General Obligation
Bonds (Dedicated Tax Revenues), Series 1997A:
20,000,000 5.250%, 12/01/27 12/07 at 102 AAA 20,293,000
10,000,000 5.250%, 12/01/30 12/07 at 102 AAA 10,146,500
6,000,000 City of Chicago (Illinois), Chicago-O'Hare International Airport, General
Airport Second Lien Revenue Refunding Bonds, 1994 Series A,
6.375%, 1/01/12 1/05 at 102 AAA 6,713,340
6,280,000 Public Building Commission of Chicago (Illinois), Building Revenue Bonds,
Series A of 1990 (Board of Education of the City of Chicago),
7.125%, 1/01/15 1/00 at 102 AAA 6,725,252
6,825,000 Public Building Commission of Chicago (Illinois), Building Revenue Bonds,
Series A of 1993 (Board of Education of the City of Chicago),
5.750%, 12/01/18 12/03 at 102 AAA 7,310,121
18,880,000 Illinois Health Facilities Authority, FHA Insured Mortgage Revenue Bonds,
Series 1996 (Sinai Health System), 6.000%, 2/15/24 2/06 at 102 AAA 20,864,288
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Illinois (continued)
$ 305,000 City of Moline, Illinois, City of Rock Island, Illinois, City of Urbana,
Illinois, Single Family Mortgage Revenue Bonds (GNMA Mortgage-Backed
Securities Program), Series 1990, 8.050%, 8/01/23
(Alternative Minimum Tax) 8/00 at 102 AAA $ 319,210
7,700,000 Board of Trustees of Southern Illinois University, Southern Illinois
University Medical Facilities System Revenue Bonds, Series 1997,
5.875%, 4/01/23 4/07 at 102 AAA 8,369,053
- ------------------------------------------------------------------------------------------------------------------------------------
Indiana - 6.1%
9,050,000 Indiana Development Finance Authority, Environmental Revenue Bonds,
Series 1993B (PSI Energy, Inc.), 5.750%, 2/15/28
(Alternative Minimum Tax) 2/03 at 102 AAA 9,478,880
1,900,000 Indiana Housing Finance Authority, Residential Mortgage Bonds,
1988 Series R-A, 8.375%, 1/01/20 (Alternative Minimum Tax) 1/99 at 102 1/2 Aa 1,952,117
7,855,000 Indiana Housing Finance Authority, Single Family Mortgage Revenue Bonds
(GNMA Collateralized Home Mortgage Program), 1990 Series C,
7.800%, 1/01/22 (Alternative Minimum Tax) 7/00 at 102 Aaa 8,216,487
6,000,000 Jasper County, Indiana, Collateralized Pollution Control Refunding
Revenue Bonds (Northern Indiana Public Service Company Project),
Series 1991, 7.100%, 7/01/17 7/01 at 102 AAA 6,565,980
9,645,000 Marion County Convention and Recreational Facilities Authority (Indiana),
Excise Taxes Lease Rental Revenue Bonds, Series 1991B, 7.000%, 6/01/21
(Pre-refunded to 6/01/01) 6/01 at 102 AAA 10,622,135
4,230,000 City of Rockport, Indiana, Pollution Control Revenue Refunding Bonds
(Indiana Michigan Power Company Project), Series B, 7.600%, 3/01/16 3/01 at 102 AAA 4,639,887
10,000,000 Hospital Authority of St. Joseph County (Indiana), Fixed Rate Hospital
Revenue Refunding Bonds, Series 1991A (Memorial Hospital of South Bend
Project), 7.000%, 8/15/20 (Pre-refunded to 8/15/01) 8/01 at 102 AAA 11,067,200
- ------------------------------------------------------------------------------------------------------------------------------------
Iowa - 0.7%
5,305,000 City of Mason, Iowa, Hospital Revenue Bonds (Sisters of Mercy Health
Corporation), 1991 Series L, 7.000%, 8/15/21 (Pre-refunded to 8/15/01) 8/01 at 102 AAA 5,875,659
- ------------------------------------------------------------------------------------------------------------------------------------
Louisiana - 2.6%
2,005,000 Louisiana Housing Finance Agency, GNMA Collateralized Single Family
Mortgage Revenue Bonds, Series 1988, 8.300%, 11/01/20
(Alternative Minimum Tax) 11/00 at 100 Aaa 2,069,200
13,170,000 City of New Orleans, Louisiana, General Obligation Refunding Bonds,
Series 1995, 6.200%, 10/01/21 10/05 at 102 AAA 14,848,385
5,275,000 Orleans Levee District (A Political Subdivision of the State of
Louisiana), Public Improvement Bonds, Series 1986, 5.950%, 11/01/15 12/05 at 103 AAA 5,814,211
- ------------------------------------------------------------------------------------------------------------------------------------
Maine - 1.6%
12,745,000 Maine State Housing Authority, Mortgage Purchase Bonds, 1991 Series A,
7.400%, 11/15/22 5/01 at 102 AAA 13,527,543
- ------------------------------------------------------------------------------------------------------------------------------------
Massachusetts - 2.0%
7,100,000 Massachusetts Housing Financing Agency, Single Family Housing
Revenue Bonds, Series 12, 7.500%, 12/01/13 6/99 at 102 AAA 7,376,687
10,000,000 Massachusetts Turnpike Authority, Metropolitan Highway System
Revenue Bonds, 1997 Series C (Senior), 5.000%, 1/01/37 1/07 at 102 AAA 9,774,300
- ------------------------------------------------------------------------------------------------------------------------------------
Michigan - 2.4%
4,380,000 Board of Control of Grand Valley State University, Michigan, General
Revenue and Refunding Bonds, Series 1997, 5.250%, 10/01/22 10/07 at 101 AAA 4,462,913
16,500,000 Michigan State Hospital Finance Authority, Revenue and Refunding Bonds
(St. John Health System), Series 1998A, 5.000%, 5/15/28 5/08 at 101 AAA 16,138,320
- ------------------------------------------------------------------------------------------------------------------------------------
Minnesota - 1.3%
9,775,000 Minneapolis/Saint Paul Housing Finance Board (Single Family Mortgage
Revenue Bonds (Minneapolis/Saint Paul Family Housing Program, Phase VI),
8.300%, 8/01/21 (Alternative Minimum Tax) 8/00 at 100 AAA 9,993,276
1,403,000 City of St. Louis Park, Minnesota, Single Family Residential Mortgage
Revenue Refunding Bonds (GNMA Mortgage-Backed Securities Program),
Series 1991-A, 7.250%, 4/20/23 4/01 at 102 Aaa 1,478,538
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Mississippi - 2.6%
$ 2,545,000 Harrison County, Wastewater Management District (Mississippi), Wastewater
Treatment Facilities Revenue Refunding Bonds, Series 1991A,
8.500%, 2/01/13 No Opt. Call AAA $3,557,477
2,715,000 Harrison County, Wastewater Management District (Mississippi), Wastewater Treatment
Facilities Revenue Refunding Bonds, Series 1991B, 7.750%, 2/01/14 No Opt. Call AAA 3,604,868
4,725,000 Mississippi Housing Finance Corporation, Single Family Mortgage Purchase
Revenue Bonds, Series 1989 (GNMA Mortgage-Backed Securities Program),
8.250%, 10/15/18 (Alternative Minimum Tax) 10/99 at 102 AAA 4,932,428
8,700,000 Mississippi Home Corporation, Single Family Mortgage Revenue Bonds,
Series 1996C, 7.600%, 6/01/29 (Alternative Minimum Tax) 6/06 at 105 Aaa 9,939,576
- ------------------------------------------------------------------------------------------------------------------------------------
Missouri - 0.6%
5,000,000 St. Louis Municipal Finance Corporation, City Justice Center, Leasehold
Revenue Improvement Bonds, Series 1996A (City of St. Louis, Missouri,
Lessee), 6.000%, 2/15/19 2/06 at 102 AAA 5,591,800
- ------------------------------------------------------------------------------------------------------------------------------------
Nevada - 2.1%
3,270,000 Clark County, Nevada, Industrial Development Revenue Bonds (Nevada Power
Company Project), Series 1990, 7.800%, 6/01/20 (Alternative Minimum Tax) 6/00 at 102 AAA 3,522,869
13,185,000 Washoe County, Nevada, Hospital Refunding Revenue Bonds (Washoe Medical
Center, Inc. Project), Series 1994A, 6.000%, 6/01/19 6/04 at 102 AAA 14,470,801
- ------------------------------------------------------------------------------------------------------------------------------------
New Jersey - 0.5%
3,750,000 New Jersey Health Care Facilities Financing Authority, Revenue Bonds,
Monmouth Medical Center Issue, Series C, 6.250%, 7/01/24 7/04 at 102 AAA 4,176,113
- ------------------------------------------------------------------------------------------------------------------------------------
New Mexico - 2.6%
5,000,000 City of Albuquerque, New Mexico, Airport Revenue Bonds, Series 1995A,
6.600%, 7/01/16 (Alternative Minimum Tax) 7/00 at 105 AAA 5,441,150
6,000,000 City of Farmington, New Mexico, Pollution Control Refunding Revenue Bonds
(Southern California Edison Company Four Corners Project),
1991 Series A, 7.200%, 4/01/21 4/01 at 102 A+ 6,520,140
3,850,000 New Mexico Mortgage Finance Authority, Multifamily Housing Refunding
Revenue Bonds, 1990 Series A - Tax-Exempt (Fannie Mae Collateralized),
7.625%, 1/01/24 1/01 at 102 AAA 4,110,145
5,750,000 City of Santa Fe, New Mexico, Revenue Bonds, Series 1994A,
6.300%, 6/01/24 (Pre-refunded to 6/01/04) 6/04 at 100 AAA 6,437,988
- ------------------------------------------------------------------------------------------------------------------------------------
New York - 12.4%
The City of New York, General Obligation Bonds, Fiscal 1991 Series A:
2,000,000 8.000%, 3/15/11 3/00 at 101 1/2 AAA 2,144,200
6,000,000 7.250%, 3/15/19 3/00 at 101 1/2 AAA 6,364,140
17,700,000 New York City Housing Development Corporation, Multi-Unit Mortgage
Refunding Bonds (FHA Insured Mortgage Loans), 1991 Series A,
7.250%, 6/01/19 6/01 at 102 AAA 18,947,496
10,335,000 New York City, New York, Municipal Water Finance Authority, Water and
Sewer System Revenue Bonds, Fiscal 1996 Series A, 6.000%, 6/15/25
(Pre-refunded to 6/15/05) 6/05 at 101 AAA 11,648,268
5,000,000 New York City Transit Authority, Transit Facilities Revenue Bonds,
Series 1990 (Livingston Plaza Project), 7.500%, 1/01/20
(Pre-refunded to 1/01/00) 1/00 at 102 AAA 5,330,950
7,000,000 New York State Energy Research and Development Authority, Facilities
Refunding Revenue Bonds, Series 1995 A (Consolidated Edison Company
of New York, Inc. Project), 6.100%, 8/15/20 7/05 at 102 A+ 7,634,480
11,950,000 New York State Finance Agency, Housing Project Mortgage Revenue Bonds,
1996 Series A Refunding, 6.125%, 11/01/20 5/06 at 102 AAA 13,033,985
20,250,000 New York State Medical Care Facilities Finance Agency,
St. Luke's-Roosevelt Hospital Center FHA-Insured Mortgage Revenue Bonds,
1989 Series B, 7.450%, 2/15/29 (Pre-refunded to 2/15/00) 2/00 at 102 AAA 21,663,248
12,000,000 New York State Medical Care Facilities Finance Agency, New York Hospital
FHA-Insured Mortgage Revenue Bonds, 1994 Series A, 6.900%, 8/15/34
(Pre-refunded to 2/15/05) 2/05 at 102 AAA 14,118,960
6,055,000 New York State Medical Care Facilities Finance Agency, Hospital and
Nursing Home Insured Mortgage Revenue Bonds, 1989 Series A,
7.600%, 2/15/29 2/99 at 102 AA 6,246,883
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
North Dakota - 3.3%
$ 21,075,000 Mercer County, North Dakota, Pollution Control Refunding Revenue Bonds,
Second 1995 Series (Basin Electric Power Cooperative-Antelope Valley
Unit 1 and Common Facilities), 6.050%, 1/01/19 1/05 at 102 AAA $23,286,821
5,000,000 Oliver County, North Dakota (Square Butte Electric Cooperative),
Pollution Control Revenue Refunding Bonds, Series 1998A, 5.300%, 1/01/27 1/09 at 102 AAA 5,128,250
- ------------------------------------------------------------------------------------------------------------------------------------
Ohio - 0.6%
5,000,000 County of Lucas, Ohio, Hospital Improvement and Refunding Revenue Bonds,
Series 1993 (The Toledo Hospital), 5.000%, 11/15/22 11/03 at 102 AAA 4,907,300
- ------------------------------------------------------------------------------------------------------------------------------------
Oklahoma - 1.4%
1,365,000 Oklahoma Housing Finance Agency, Single Family Mortgage Revenue Bonds,
1991 Series A, 7.200%, 3/01/11 3/01 at 102 AAA 1,440,061
9,900,000 Pottawatomie County Development Authority, Water Revenue Bonds,
Series 1990 (North Deer Creek Reservoir Project), 7.375%, 7/01/26
(Pre-refunded to 7/01/00) 7/00 at 102 AAA 10,716,552
- ------------------------------------------------------------------------------------------------------------------------------------
Oregon - 1.2%
10,000,000 Oregon Health Sciences University, Insured Revenue Bonds, 1995 Series B,
5.250%, 7/01/25 7/06 at 102 AAA 10,101,200
- ------------------------------------------------------------------------------------------------------------------------------------
Pennsylvania - 5.1%
7,000,000 County of Allegheny, Pennsylvania, Airport Revenue Refunding Bonds,
Series 1997A (Pittsburgh International Airport), 5.250%, 1/01/16
(Alternative Minimum Tax) 1/08 at 101 AAA 7,157,290
7,000,000 Berks County Municipal Authority (Pennsylvania), Hospital Revenue Bonds
(The Reading Hospital and Medical Center Project), Series B of 1994,
6.100%, 10/01/23 10/04 at 102 AAA 7,766,710
7,250,000 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 8,148,493
14,190,000 City of Philadelphia, Pennsylvania, Water and Sewer Revenue Bonds,
Sixteenth Series, 7.000%, 8/01/21 (Pre-refunded to 8/01/01) 8/01 at 102 AAA 15,704,641
5,000,000 Health Care Facilities Authority of Sayre (Pennsylvania), Series 1991A
Revenue Bonds, Guthrie Healthcare System, 7.100%, 3/01/17 3/01 at 102 AAA 5,435,200
- ------------------------------------------------------------------------------------------------------------------------------------
Rhode Island - 2.3%
12,500,000 Rhode Island Depositors Economic Protection Corporation, Special
Obligation Bonds, 1991 Series A, 7.500%, 8/01/14
(Pre-refunded to 8/01/01) 8/01 at 102 AAA 13,989,625
5,050,000 Rhode Island Port Authority and Economic Development Corporation, Airport
Revenue Bonds, 1994 Series A, 6.625%, 7/01/24 (Alternative Minimum Tax) 7/04 at 102 AAA 5,677,412
- ------------------------------------------------------------------------------------------------------------------------------------
Tennessee - 0.6%
5,170,000 The Health, Educational and Housing Facilities Board of the County of
Sullivan, Tennessee, Hospital Revenue Bonds, Series 1993 (Holston Valley
Health Care, Inc.), 5.750%, 2/15/13 2/03 at 102 AAA 5,581,635
- ------------------------------------------------------------------------------------------------------------------------------------
Texas - 3.9%
8,000,000 Abilene Health Facilities Development Corporation (Texas), Hospital
Revenue Refunding and Improvement Bonds (Hendrick Medical Center
Project), Series 1995C, 6.150%, 9/01/25 9/05 at 102 AAA 8,949,680
4,000,000 Brazos County Health Facilities Development Corporation (Texas),
Franciscan Services Corporation, Obligated Group Revenue Bonds,
Series 1997A, 5.375%, 1/01/22 7/07 at 102 AAA 4,097,640
Brazos River Authority (Texas), Revenue Refunding Bonds (Houston
Industries Incorporated Project), Series 1998C:
1,750,000 5.125%, 5/01/19 11/08 at 102 AAA 1,754,532
2,000,000 5.125%, 11/01/20 11/08 at 102 AAA 1,999,999
Harris County Hospital District, Refunding Revenue Bonds, Series 1990:
3,000,000 7.500%, 2/15/03 No Opt. Call AAA 3,297,059
5,000,000 7.400%, 2/15/10 No Opt. Call AAA 6,080,999
7,450,000 Matagorda County Navigation, District Number One (Texas), Pollution
Control Revenue Refunding Bonds (Central Power and Light Company
Project), Series 1995, 6.100%, 7/01/28 7/00 at 102 AAA 7,857,216
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Utah - 2.0%
$ 10,770,000 Intermountain Power Agency (Utah), Power Supply Revenue Refunding Bonds,
1993 Series A, 5.000%, 7/01/23 7/03 at 100 A+ $10,464,454
6,000,000 Salt Lake City, Utah, Hospital Revenue Refunding Bonds
(IHC Hospitals, Inc.), Series 1988 A, 8.000%, 5/15/07 5/00 at 100 AAA 7,218,479
- ------------------------------------------------------------------------------------------------------------------------------------
Vermont - 0.1%
1,230,000 Vermont Housing Finance Agency, Single Family Housing Bonds, Series 9,
6.000%, 5/01/37 (Alternative Minimum Tax) 6/07 at 101 1/2 AAA 1,304,119
- ------------------------------------------------------------------------------------------------------------------------------------
$ 789,113,000 Total Investments - (cost $777,485,367) - 98.3% 848,625,493
============= --------------------------------------------------------------------------------------------------------------------
Temporary Investments in Short-Term Municipal Securities - 0.2%
$ 1,600,000 Geisinger Authority Health System, Series 1998B, Variable Rate
Demand Bonds, 3.700%, 8/15/28+ VMIG-1 1,600,000
500,000 Illinois Health Facilities Authority, The University of Chicago Hospitals,
Series 1998, Variable Rate Demand Bonds, 3.700%, 8/01/26+ VMIG-1 500,000
- ------------------------------------------------------------------------------------------------------------------------------------
$ 2,100,000 Total Temporary Investments - 0.2% 2,100,000
============ --------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 1.5% 12,453,858
--------------------------------------------------------------------------------------------------------------------
Net Assets - 100% $863,179,351
====================================================================================================================
All of the bonds in the portfolio, excluding temporary investments in
short-term municipal securities, are either covered by Original Issue Insurance,
Secondary Market Insurance, or are backed by an escrow or trust containing
sufficient U.S. government or U.S. government agency securities, any of which
ensure the timely payment of principal and interest.
* 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.
+ 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>
Portfolio of Investments
Nuveen Insured Municipal Opportunity Fund, Inc. (NIO)
October 31, 1998
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alabama - 2.2%
$ 3,850,000 Alabama Housing Finance Authority, Multifamily Housing Revenue Refunding
Bonds (GNMA Collateralized - Royal Hills), 1995 Series F,
6.500%, 7/20/30 7/05 at 103 Aaa $4,207,665
11,000,000 The Special Care Facilities Financing Authority of the City of
Birmingham (Alabama), Baptist Medical Centers Revenue Bonds,
Series 1995-B (Baptist Health System, Inc.) , 5.875%, 11/15/20 5/05 at 102 AAA 11,414,370
The Special Care Facilities Financing Authority of the City of
Birmingham (Alabama), Baptist Medical Centers Revenue Bonds,
Series 1996-A (Baptist Health System, Inc.):
7,465,000 5.875%, 11/15/19 11/06 at 102 AAA 7,736,875
10,000,000 5.875%, 11/15/26 11/06 at 102 AAA 10,325,100
3,745,000 City of Demopolis, Alabama, General Obligation Warrants,
Series 1991, 6.900%, 6/01/16 (Pre-refunded to 6/01/01) 6/01 at 102 AAA 4,120,511
4,250,000 County Board of Education of Shelby County, Alabama, Capital Outlay
Refunding School Warrants, Series 1995, 5.875%, 2/01/17 2/05 at 102 AAA 4,577,463
- ------------------------------------------------------------------------------------------------------------------------------------
Alaska - 1.1%
4,000,000 Alaska Energy Authority, Power Revenue Bonds, Second Series
(Bradley Lake Hydroelectric Project), 7.250%, 7/01/21 7/00 at 102 AAA 4,292,280
15,950,000 Alaska State Housing Finance Corporation, Governmental Purpose Bonds,
1995 Series A, 5.875%, 12/01/30 12/05 at 102 AAA 16,815,447
- ------------------------------------------------------------------------------------------------------------------------------------
Arizona - 1.0%
5,000,000 Coconino County, Arizona, Pollution Control Corporation, Pollution
Control Revenue Refunding Bonds (Arizona Public Service Company),
1993 Series A, 5.875%, 8/15/28 8/03 at 102 A- 5,181,900
11,625,000 The Industrial Development Authority of the County of Pima (Arizona),
Industrial Development Lease Obligation Refunding Revenue Bonds,
1988 Series A (Irvington Project), 7.250%, 7/15/10 1/02 at 103 AAA 13,004,771
- ------------------------------------------------------------------------------------------------------------------------------------
Arkansas - 0.7%
11,920,000 Arkansas Development Finance Authority, Single Family Mortgage Revenue
Bonds, 1990 Series A (GNMA-Backed Securities Program), 7.400%, 9/01/23
(Alternative Minimum Tax) 9/01 at 102 AAA 12,723,408
- ------------------------------------------------------------------------------------------------------------------------------------
California - 10.0%
6,135,000 California Housing Finance Agency, Housing Revenue Bonds (Insured),
1994 Series C, 6.250%, 8/01/25 8/04 at 102 AAA 6,548,806
5,000,000 California Housing Finance Agency, Multifamily Housing Revenue
Bonds III, 1998 Series B, 5.500%, 8/01/39 (Alternative Minimum Tax) 8/08 at 101 1/2 AAA 5,125,800
California Health Facilities Financing Authority, Insured Health
Facility Revenue Bonds, 1991 Series D (Catholic Healthcare West):
9,000,000 6.500%, 7/01/16 (Pre-refunded to 7/01/01) 7/01 at 102 AAA 9,861,750
14,000,000 6.650%, 7/01/21 (Pre-refunded to 7/01/01) 7/01 at 102 AAA 15,393,560
California Rural Home Mortgage Finance Authority, Single Family
Mortgage Revenue Bonds (Mortgage-Backed Securities Program),
1996 Series A:
3,475,000 7.550%, 11/01/26 (Alternative Minimum Tax) No Opt. Call AAA 3,975,921
2,885,000 7.750%, 5/01/27 (Alternative Minimum Tax) No Opt. Call AAA 3,354,793
7,000,000 California Statewide Communities Development Authority, Certificates of Participation,
Huntington Memorial Hospital, 5.800%, 7/01/26 7/06 at 102 AAA 7,477,260
3,100,000 Campbell Union School District, Santa Clara County, California, 1994 General Obligation Bonds,
Series A, 6.250%, 8/01/19 (Pre-refunded to 8/01/04) 8/04 at 102 AAA 3,555,359
8,200,000 Castaic Lake Water Agency (California), Refunding Revenue Certificates of Participation
(Water System Improvement Projects), Series 1994A, 6.300%, 8/01/20 8/04 at 102 AAA 9,180,228
11,750,000 East Bay Municipal Utility District (Alameda and Contra Costa Counties, California), Water System
Subordinated Revenue Refunding Bonds, Series 1993A, 5.000%, 6/01/21 6/03 at 102 AAA 11,741,540
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
California (continued)
$ 5,500,000 Fallbrook Union High School District (San Diego County, California),
1994 General Obligation Bonds, Series A, 6.250%, 9/01/19
(Pre-refunded to 9/01/04) 9/04 at 102 AAA $6,317,025
6,530,000 La Quinta Financing Authority, Local Agency Revenue Bonds, Series 1991
(City Hall Project), 6.650%, 10/01/18 (Pre-refunded to 10/01/00) 10/00 at 102 AAA 7,061,803
9,000,000 County of Orange, California, Refunding Recovery Bonds, 1995 Series A,
5.750%, 6/01/15 6/05 at 102 AAA 9,777,060
12,500,000 County of Orange, California, 1996 Recovery Certificates of Participation,
Series A, 6.000%, 7/01/26 7/06 at 102 AAA 14,033,500
6,500,000 City of Salinas, California, Housing Facility Refunding Revenue Bonds,
Series 1994A (GNMA Collateralized - Villa Serra Project),
6.600%, 7/20/30 7/04 at 102 AAA 7,034,950
18,000,000 Airports Commission, City and County of San Francisco, California,
San Francisco International Airport, Second Series Revenue Bonds,
Issue 13B, 5.500%, 5/01/26 (Alternative Minimum Tax) 5/06 at 101 AAA 18,623,520
8,500,000 Airports Commission, City and County of San Francisco, California,
San Francisco International Airport, Second Series Revenue Bonds,
Issue 11 (Noise Insulation Program), 6.250%, 5/01/26
(Alternative Minimum Tax) 5/05 at 101 AAA 9,366,490
20,395,000 San Joaquin Hills Transportation Corridor Agency, Toll Road Refunding
Revenue Bonds, Series 1997A, 5.250%, 1/15/30 1/07 at 102 AAA 20,903,855
11,000,000 Santa Ana Financing Authority, Police Administration and Housing Facility
Lease Revenue Bonds, Series 1994A, 6.250%, 7/01/24 No Opt. Call AAA 13,218,810
5,500,000 Santa Clara County Financing Authority, Lease Revenue Bonds (VMC Facility
Replacement Project), 1994 Series A, 6.750%, 11/15/20
(Pre-refunded to 11/15/04) 11/04 at 102 AAA 6,487,140
- ------------------------------------------------------------------------------------------------------------------------------------
Colorado - 0.8%
14,150,000 Board of Water Commissioners, City and County of Denver, Colorado,
Certificates of Participation, Series 1991, 6.625%, 11/15/11 11/01 at 101 AAA 15,403,266
- ------------------------------------------------------------------------------------------------------------------------------------
Connecticut - 0.2%
2,500,000 State of Connecticut, Health and Educational Facilities Authority,
Revenue Bonds, Choate Rosemary Hall Issue, Series A, 7.000%, 7/01/25
(Pre-refunded to 7/01/04) 7/04 at 101 AAA 2,915,550
- ------------------------------------------------------------------------------------------------------------------------------------
District of Columbia - 2.2%
19,355,000 District of Columbia (Washington, D.C.), General Obligation Bonds
(Series 1989A), 7.500%, 6/01/09 (Pre-refunded to 6/01/99) 6/99 at 102 AAA 20,245,717
6,000,000 District of Columbia, Hospital Improvement and Refunding Revenue Bonds
(Children's Hospital Issue), Series 1992A, 6.250%, 7/15/19 7/02 at 102 AAA 6,534,780
4,860,000 District of Columbia Housing Finance Agency, Collateralized Single
Family Mortgage Revenue Bonds, Series 1988C, 7.850%, 12/01/22
(Alternative Minimum Tax) 6/00 at 102 AAA 5,067,716
4,820,000 District of Columbia Housing Finance Agency, Collateralized Single
Family Mortgage Revenue Bonds, Series 1990B, 7.100%, 12/01/24
(Alternative Minimum Tax) 12/01 at 102 AAA 5,093,439
5,000,000 District of Columbia, Revenue Bonds (The American College of
Obstetricians and Gynecologists Issue), Series 1991, 6.500%, 8/15/18 8/01 at 102 AAA 5,433,600
- ------------------------------------------------------------------------------------------------------------------------------------
Florida - 1.2%
2,189,000 Housing Finance Authority of Dade County (Florida), Single Family
Mortgage Revenue Refunding Bonds, 1991 Series D, 6.950%, 12/15/12 12/01 at 102 AAA 2,327,454
2,745,000 Escambia County Housing Finance Authority (Florida), Single Family
Mortgage Revenue Bonds (Multi-County Program), Series 1995,
6.950%, 10/01/27 (Alternative Minimum Tax) 4/05 at 102 AAA 2,980,878
8,800,000 Florida Housing Finance Agency, Home Ownership Revenue Refunding Bonds,
1987 Series G1, 8.595%, 11/01/17 No Opt. Call AAA 10,419,024
7,000,000 City of South Miami (Florida), Health Facilities Revenue Bonds,
Series 1998 (Baptist Health Systems Obligated Group),
5.000%, 11/15/28 (WI) 11/08 at 101 AAA 6,908,720
- ------------------------------------------------------------------------------------------------------------------------------------
Georgia - 1.0%
8,315,000 The Fulton-De Kalb Hospital Authority, Georgia, Revenue Certificates,
Series 1991 (Grady Memorial Hospital), 6.900%, 1/01/15
(Pre-refunded to 1/01/01) 1/01 at 102 AAA 9,039,569
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Georgia (continued)
$ 5,000,000 The Hospital Authority of Hall County and The City of Gainesville,
Revenue Anticipation Certificates (Northeast Georgia Healthcare
Project), Series 1995, 6.000%, 10/01/20 10/05 at 102 AAA $5,554,500
5,000,000 The Glynn-Brunswick Memorial Hospital Authority, Revenue Anticipation
Certificates (Southeast Georgia Health Systems Project), Series 1996,
5.250%, 8/01/13 8/06 at 102 AAA 5,218,750
- ------------------------------------------------------------------------------------------------------------------------------------
Hawaii - 1.4%
24,250,000 Department of Budget and Finance of the State of Hawaii, Special Purpose
Revenue Bonds (Hawaii Electric Company, Inc. and Subsidiaries Project),
Series 1996A, 6.200%, 5/01/26 (Alternative Minimum Tax) 5/06 at 101 AAA 26,755,268
- ------------------------------------------------------------------------------------------------------------------------------------
Idaho - 0.6%
Idaho Housing Agency, Single Family Mortgage Bonds, 1994 Series B:
2,870,000 6.750%, 7/01/22 No Opt. Call Aa 3,234,347
2,755,000 6.900%, 7/01/26 (Alternative Minimum Tax) No Opt. Call Aa 3,157,230
4,305,000 Idaho Housing Agency, Single Family Mortgage Bonds, 1995 Series B,
6.600%, 7/01/27 (Alternative Minimum Tax) 1/05 at 102 Aaa 4,615,778
- ------------------------------------------------------------------------------------------------------------------------------------
Illinois - 9.7%
6,515,000 City of Berwyn, Illinois, Revenue Bonds, Series 1991 (MacNeal Memorial
Hospital Association Project), 7.000%, 6/01/15 (Pre-refunded to 6/01/01) 6/01 at 102 AAA 7,173,341
4,055,000 Central Lake County Joint Action Water Agency, Lake County, Illinois,
General Obligation Water Refunding Bonds, Series 1992, 6.000%, 2/01/19 2/03 at 102 Aa 4,313,385
10,000,000 City of Chicago (Illinois), General Obligation Adjustable Rate Bonds,
Central Public Library Project, Series C of 1988, 6.850%, 1/01/17
(Pre-refunded to 7/01/02) 7/02 at 101 1/2 AAA 11,209,700
15,000,000 Chicago School Reform Board of Trustees of the Board of Education
of the City of Chicago, Illinois, Unlimited Tax General Obligation Bonds
(Dedicated Tax Revenues), Series 1997A, 5.250%, 12/01/27 12/07 at 102 AAA 15,219,750
6,500,000 City of Chicago (Illinois), Chicago Midway Airport Revenue Bonds,
Series 1998A, 5.125%, 1/01/31 (Alternative Minimum Tax) 1/09 at 101 AAA 6,339,450
5,750,000 City of Chicago, Illinois, Motor Fuel Tax Revenue Bonds, Series 1990,
6.500%, 1/01/16 (Pre-refunded to 1/01/01) 1/01 at 100 AAA 6,098,968
8,000,000 City of Chicago, Water Revenue Bonds, Series 1995,
5.000%, 11/01/25 11/06 at 102 AAA 7,854,640
The County of Cook, Illinois, General Obligation Bonds, Series 1991:
18,430,000 6.750%, 11/01/18 (Pre-refunded to 11/01/01) 11/01 at 102 AAA 20,400,720
26,475,000 6.250%, 11/01/21 (Pre-refunded to 11/01/01) 11/01 at 102 AAA 28,932,145
6,370,000 City of Decatur, Macon County, Illinois (Decatur Memorial Hospital),
Hospital Facility Revenue Bonds, Series 1991B, 7.750%, 10/01/21
(Pre-refunded to 10/01/01) 10/01 at 102 AAA 7,204,279
Board of Governors of State Colleges and Universities, Eastern
Illinois University, Auxiliary Facilities System Revenue Bonds,
Series 1989:
12,355,000 0.000%, 10/01/09 10/04 at 74 1/16 AAA 6,943,757
16,470,000 0.000%, 4/01/16 10/04 at 47 1/16 AAA 5,750,501
2,065,000 Illinois Housing Development Authority, Residential Mortgage Revenue
Bonds, 1989 Series A, 7.400%, 2/01/20 (Alternative Minimum Tax) 8/99 at 102 Aa1 2,123,708
20,000,000 Illinois Health Facilities Authority, Brokaw-Mennonite Association,
Revenue Refunding Bonds, Series 1992 (BroMenn Healthcare),
6.250%, 8/15/18 8/02 at 102 AAA 21,811,400
3,500,000 Illinois Health Facilities Authority, Revenue Bonds, Series 1990
(Alexian Brothers Medical Center, Inc. Project), 7.125%, 1/01/21 1/01 at 102 AAA 3,787,175
2,500,000 Illinois Health Facilities Authority, Revenue Bonds, Series 1991
(Memorial Medical Center System Project), Springfield, Illinois,
7.100%, 10/01/21 (Pre-refunded to 10/01/01) 10/01 at 102 AAA 2,783,250
State of Illinois, Civic Center Bonds (Dedicated Tax Revenue),
Series 1990-A:
1,385,000 7.000%, 12/15/10 (Pre-refunded to 12/15/00) 12/00 at 102 AAA 1,510,800
3,615,000 7.000%, 12/15/10 12/00 at 102 AAA 3,925,022
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Illinois (continued)
Participations, The State of Illinois, Department of Central Management
Services, Illinois Student Assistance Commission:
$ 2,965,000 6.875%, 7/01/07 7/02 at 102 AAA $3,317,301
6,085,000 6.950%, 7/01/13 7/02 at 102 AAA 6,777,960
4,560,000 County of Macon, Illinois, Revenue Bonds, Millikin University,
Series 1995, 6.250%, 10/01/16 10/05 at 100 AAA 5,105,923
5,000,000 Regional Transportation Authority, Cook, DuPage, Kane, Lake, McHenry
and Will Counties, Illinois, General Obligation Bonds, Series 1994D,
6.750%, 6/01/25 (Pre-refunded to 6/01/04) 6/04 at 102 AAA 5,790,850
- ------------------------------------------------------------------------------------------------------------------------------------
Indiana -4.8%
10,500,000 Hospital Authority of the City of Fort Wayne, Indiana, Revenue Bonds,
Series 1992 (Parkview Memorial Hospital, Inc. Project), 6.400%, 11/15/22 11/02 at 102 A+ 11,358,270
7,750,000 Indiana Health Facility Financing Authority Hospital Revenue Bonds,
Series 1997A (Sisters of St. Francis Health Services, Inc. Project),
5.375%, 11/01/27 11/07 at 102 AAA 7,878,805
2,600,000 Indiana Health Facility Financing Authority, Hospital Revenue Bonds,
Series 1991 (Community Hospitals of Indiana), 7.000%, 7/01/21
(Pre-refunded to 7/01/01) 7/01 at 102 AAA 2,868,424
10,000,000 Indiana Health Facility Financing Authority, Hospital Revenue Refunding
and Improvement Bonds, Series 1995 (Community Hospitals Projects),
5.700%, 5/15/22 5/06 at 102 AAA 10,599,800
1,875,000 Indiana Housing Finance Authority, Single Family Mortgage Revenue Bonds
(GNMA Collateralized Home Mortgage Program), 1990 Series B,
7.800%, 1/01/22 (Alternative Minimum Tax) 7/00 at 102 Aaa 1,963,125
685,000 Indiana Housing Finance Authority, Single Family Mortgage Revenue Bonds
(GNMA Collateralized Home Mortgage Program), 1990 Series D,
7.800%, 1/01/22 (Alternative Minimum Tax) 7/00 at 102 Aaa 715,633
12,250,000 City of Lawrenceburg, Indiana, Pollution Control Revenue Refunding Bonds
(Indiana Michigan Power Company Project), Series D, 7.000%, 4/01/15 4/02 at 102 AAA 13,570,918
12,950,000 Marion County Convention and Recreational Facilities Authority (Indiana),
Excise Taxes Lease Rental Revenue Bonds, Series 1991B, 7.000%, 6/01/21
(Pre-refunded to 6/01/01) 6/01 at 102 AAA 14,261,965
9,545,000 New Prairie School Building Corporation (LaPonte and St. Joseph Counties,
Indiana), First Mortgage Bonds, Series 1994, 7.200%, 7/15/21
(Pre-refunded to 7/15/04) 7/04 at 102 AAA 11,282,954
14,000,000 Holy Cross Health System Corporation, Indiana Hospital Revenue Bonds
Issues, Hospital Authority of St. Joseph County, Hospital Revenue
Refunding Bonds, Series 1991 (Holy Cross Parkview Hospital, Inc.),
7.000%, 12/01/12 (Pre-refunded to 12/01/01) 12/01 at 102 AAA 15,610,420
- ------------------------------------------------------------------------------------------------------------------------------------
Iowa - 1.3%
5,000,000 City of Davenport, Iowa, Hospital Facility Revenue Bonds (Mercy Hospital
Project), Series 1992, 6.250%, 7/01/22 (Pre-refunded to 7/01/02) 7/02 at 102 AAA 5,521,750
11,400,000 City of Davenport, Iowa, Insured Hospital Revenue Bonds (St. Luke's
Hospital), 1990 Series A, 7.400%, 7/01/20 (Pre-refunded to 7/01/00) 7/00 at 102 AAA 12,338,790
7,000,000 Polk County, Iowa, Health Facilities Revenue Bonds, Catholic Health
Corporation (Mercy Health Center of Central Iowa Project), Series 1991,
6.750%, 11/01/15 (Pre-refunded to 11/01/01) 11/01 at 101 AAA 7,685,580
- ------------------------------------------------------------------------------------------------------------------------------------
Kansas - 0.1%
1,880,000 Sedgwick County, Kansas, and Shawnee County, Kansas, GNMA Collateralized
Mortgage Revenue Bonds, Senior 1991 Series A, 7.300%, 12/01/12 6/01 at 103 Aaa 1,997,199
- ------------------------------------------------------------------------------------------------------------------------------------
Kentucky - 1.2%
10,000,000 City of Danville, Kentucky, Multi-City Lease Revenue Bonds (Louisville
and Jefferson County Metropolitan Sewer District Sewer and Drainage
System Revenue Project), Series 1991-G, 6.800%, 3/01/19
(Pre-refunded to 3/01/02) 3/02 at 102 AAA 11,156,300
53,000,000 Jefferson County, Kentucky, Capital Projects Corporation, Lease
Revenue Bonds, Series 1989B, 0.000%, 8/15/19
(Pre-refunded to 2/15/01) 2/01 at 24 11/16 AAA 11,999,730
- ------------------------------------------------------------------------------------------------------------------------------------
Louisiana - 2.7%
15,650,000 Louisiana Public Facilities Authority, Hospital Revenue Refunding Bonds
(Southern Baptist Hospital Project), Series 1992, 6.800%, 5/15/12
(Pre-refunded to 5/15/02) 5/02 at 102 AAA 17,533,947
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Louisiana (continued)
$ 5,670,000 Louisiana Public Facilities Authority, Hospital Revenue Bonds
(Franciscan Missionaries of Our Lady Health System Project),
Series 1998A, 5.000%, 7/01/25 7/08 at 101 AAA $5,567,146
5,775,000 Louisiana Public Facilities Authority, Hospital Revenue Bonds
(Franciscan Missionaries of Our Lady Health System Project),
Series 1998C, 5.000%, 7/01/28 7/08 at 101 AAA 5,665,102
5,340,000 Public Improvement Bonds, Issue of 1992, City of New Orleans, Louisiana,
7.000%, 9/01/19 (Pre-refunded to 9/01/02) 9/02 at 100 AAA 5,966,916
8,995,000 Orleans Levee District (A Political Subdivision of the State of
Louisiana), Public Improvement Bonds, Series 1986, 5.950%, 11/01/15 12/05 at 103 AAA 9,914,469
3,000,000 Parish of St. Charles, State of Louisiana, Pollution Control Revenue
Bonds (Louisiana Power and Light Company Project), Series 1991,
7.500%, 6/01/21 (Alternative Minimum Tax) 6/01 at 102 AAA 3,302,040
3,500,000 Hospital Service District No. 1 of the Parish of Tangipahoa,
State of Louisiana, Hospital Revenue Bonds (Series 1994),
6.250%, 2/01/24 2/04 at 102 AAA 3,876,180
- ------------------------------------------------------------------------------------------------------------------------------------
Maine - 0.6%
10,500,000 Maine Health and Higher Educational Facilities Authority, Revenue Bonds,
Series 1991, 6.375%, 7/01/21 7/01 at 102 AAA 11,320,575
- ------------------------------------------------------------------------------------------------------------------------------------
Massachusetts - 4.8%
5,050,000 Massachusetts Health and Educational Facilities Authority, Revenue
Bonds, Fallon Healthcare System Issue, Series A, 6.750%, 6/01/20
(Pre-refunded to 6/01/01) 6/01 at 102 AAA 5,532,023
6,000,000 Massachusetts Health and Educational Facilities Authority, Revenue
Bonds, Brigham and Women's Hospital Issue, Series D,
6.750%, 7/01/24 (Pre-refunded to 7/01/01) 7/01 at 102 AAA 6,589,680
10,500,000 Massachusetts Health and Educational Facilities Authority, Revenue
Bonds, New England Medical Center Hospitals Issue, Series F,
6.625%, 7/01/25 7/02 at 102 AAA 11,580,555
5,850,000 Massachusetts Health and Educational Facilities Authority, Revenue
Bonds, South Shore Hospital Issue, Series D, 6.500%, 7/01/22 7/02 at 102 AAA 6,427,337
8,400,000 Massachusetts Health and Educational Facilities Authority, Revenue
Bonds, Berkshire Health Systems Issue, Series D, 6.000%, 10/01/13 10/05 at 102 AAA 9,278,388
7,000,000 Massachusetts Health and Educational Facilities Authority Revenue
Bonds, Baystate Medical Center Issue, Series E, 6.000%, 7/01/26 7/06 at 102 AAA 7,810,040
20,000,000 Massachusetts Health and Educational Facilities Authority, Revenue
Bonds, Boston Medical Center Issue, Series A, 5.000%, 7/01/29 7/08 at 101 AAA 19,583,800
13,590,000 Massachusetts Housing Finance Agency, Single Family Housing Revenue
Bonds, Series 17, 7.150%, 12/01/24 (Alternative Minimum Tax) 6/01 at 102 Aa 14,311,901
4,020,000 Massachusetts Housing Finance Agency, Single Family Housing Revenue
Bonds, Series 11, 7.750%, 12/01/20 (Alternative Minimum Tax) 6/99 at 102 Aa3 4,180,076
4,865,000 Massachusetts Housing Finance Agency, Housing Revenue Refunding
Bonds, 1995 Series A, 6.100%, 12/01/16 12/05 at 102 AAA 5,164,149
- ------------------------------------------------------------------------------------------------------------------------------------
Michigan - 5.9%
5,930,000 Cheboygan Area Schools, Counties of Cheboygan and Presque Isle,
State of Michigan, 1996 School Building and State Bonds (General
Obligation - Unlimited Tax), 5.700%, 5/01/16 5/07 at 100 AAA 6,408,610
11,245,000 The Economic Development Corporation of the City of Detroit, Resource
Recovery Revenue Bonds, Series 1991A, 6.875%, 5/01/09
(Alternative Minimum Tax) 5/01 at 102 AAA 12,172,038
20,300,000 City of Detroit, Michigan, Sewage Disposal System Revenue Bonds,
Series 1991, 6.625%, 7/01/21 (Pre-refunded to 7/01/01) 7/01 at 102 AAA 22,231,139
13,500,000 City of Detroit, Michigan, Water Supply System Revenue and Revenue
Refunding Bonds, Series 1993, 5.000%, 7/01/23 7/04 at 102 AAA 13,320,045
8,000,000 Gaylord Community Schools, Counties of Otsego and Antrim,
State of Michigan, 1992 School Building and Site and Refunding Bonds,
0.000%, 5/01/21 (Pre-refunded to 5/01/07) 5/07 at 37 3/4 AAA 2,111,920
8,500,000 County of Jackson Hospital Finance Authority, Hospital Revenue Refunding
Bonds (W. A. Foote Memorial Hospital, Jackson Michigan),
Series 1993A, 5.250%, 6/01/23 6/03 at 102 AAA 8,548,960
10,880,000 Lincoln Consolidated School District, Counties of Washtenaw and Wayne,
State of Michigan, 1998 School Building and Site Bonds (General
Obligation - Unlimited Tax), 5.000%, 5/01/28 (WI) 5/08 at 100 AAA 10,649,279
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Michigan (continued)
$ 3,000,000 Michigan State Hospital Finance Authority, Revenue and Refunding Bonds
(MidMichigan Obligated Group), Series 1997A, 5.125%, 6/01/24 12/07 at 102 AAA $2,957,790
3,640,000 Michigan State Housing Development Authority, Rental Housing Revenue
Bonds, 1991 Series A, 7.150%, 4/01/10 (Alternative Minimum Tax) 1/02 at 102 AA- 3,920,862
10,000,000 Michigan Strategic Fund Limited Obligation Refunding Revenue Bonds
(The Detroit Edison Company Pollution Control Bonds Project),
Collateralized Series 1991DD, 6.875%, 12/01/21 12/01 at 102 AAA 10,981,600
27,000,000 Okemos Public School, County of Ingham, State of Michigan, 1991 School
Building and Site Bonds, Series I, 0.000%, 5/01/21
(Pre-refunded to 5/01/06) 5/06 at 34 17/32 AAA 6,838,020
2,975,000 Tecumseh Public Schools, County of Lenawee, State of Michigan,
1998 School Building and Site Bonds (General Obligation -
Unlimited Tax), 5.000%, 5/01/21 (DD) 5/08 at 100 AAA 2,941,323
7,590,000 Western Townships Utilities Authority, Sewage Disposal System Refunding
Bonds, Series 1991, 6.500%, 1/01/19 1/02 at 100 AAA 8,154,924
- ------------------------------------------------------------------------------------------------------------------------------------
Minnesota - 0.7%
6,635,000 Minnesota Housing Finance Agency, Single Family Mortgage Bonds,
1994 Series M, 6.700%, 7/01/26 (Alternative Minimum Tax) 1/04 at 102 AA 7,101,042
5,000,000 Minnesota Housing Finance Agency, Single Family Mortgage Bonds,
1992 Series E, 6.850%, 1/01/24 (Alternative Minimum Tax) 7/02 at 102 AA+ 5,315,000
- ------------------------------------------------------------------------------------------------------------------------------------
Missouri - 0.5%
2,965,000 Missouri Housing Development Commission, Single Family Mortgage
Revenue Bonds (GNMA Mortgage-Backed Securities Program),
Series 1989A, 7.900%, 2/01/21 (Alternative Minimum Tax) 2/99 at 102 AAA 3,039,362
5,295,000 Missouri Housing Development Commission, Single Family Mortgage
Revenue Bonds (GNMA Mortgage-Backed Securities Program),
1991 Series C, 6.900%, 7/01/18 1/02 at 102 AAA 5,633,192
- ------------------------------------------------------------------------------------------------------------------------------------
Montana - 1.5%
26,000,000 City of Forsyth, Rosebud County, Montana, Pollution Control Revenue
Refunding Bonds (Puget Sound Power and Light Company Colstrip Project),
Series 1992, 6.800%, 3/01/22 3/02 at 102 AAA 28,590,380
- ------------------------------------------------------------------------------------------------------------------------------------
Nebraska - 0.2%
4,000,000 Hospital Authority No.1 of Lancaster County, Nebraska, Hospital Revenue
Bonds, Series 1997B (Bryan Memorial Hospital Project), 5.375%, 6/01/22 6/08 at 101 AAA 4,114,560
- ------------------------------------------------------------------------------------------------------------------------------------
Nevada - 2.9%
29,775,000 Clark County, Nevada, Industrial Development Revenue Bonds (Nevada Power
Company Project), Series 1990, 7.800%, 6/01/20 (Alternative Minimum Tax) 6/00 at 102 AAA 32,077,501
11,000,000 Clark County, Nevada, Las Vegas-McCarran International Airport Passenger
Facility Charge Revenue Bonds, 1992 Series A, 6.000%, 7/01/22
(Pre-refunded to 7/01/02) 7/02 at 102 AAA 12,058,310
5,725,000 Nevada Housing Division, Single Family Program Bonds, 1994 Issue B-1
Senior Bonds, 6.700%, 10/01/17 4/04 at 102 Aa2 6,125,407
4,415,000 Nevada Housing Division, 6.950%, 10/01/26 (Alternative Minimum Tax) 4/04 at 102 Aa2 4,749,039
- ------------------------------------------------------------------------------------------------------------------------------------
New Hampshire - 0.3%
4,950,000 New Hampshire Higher Educational and Health Facilities Authority,
Hospital Revenue Bonds, Lakes Region Hospital Association Issue,
Series 1993, 5.750%, 1/01/11 1/03 at 102 AAA 5,336,447
- ------------------------------------------------------------------------------------------------------------------------------------
New York - 5.1%
10,000,000 Long Island Power Authority (New York), Electric System General Revenue
Bonds, Series 1998A, 5.250%, 12/01/26 6/08 at 101 AAA 10,248,400
8,265,000 The City of New York, General Obligation Bonds, Fiscal 1992 Series C,
Fixed Rate Bonds, Subseries C-1, 6.250%, 8/01/10
(Pre-refunded to 8/01/02) 8/02 at 101 1/2 AAA 9,111,667
10,000,000 The City of New York, General Obligation Bonds, Fiscal 1998 Series H,
5.125%, 8/01/25 8/08 at 101 AAA 10,034,300
10,000,000 New York City (New York), Municipal Water Finance Authority, Water and
Sewer System Revenue Bonds, Fiscal 1996 Series B, 5.750%, 6/15/26 6/06 at 101 AAA 10,760,600
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
New York (continued)
Dormitory Authority of the State of New York, City University
System Consolidated, Third General Resolution Revenue Bonds,
1994 Series 2:
$ 3,000,000 6.250%, 7/01/19 (Pre-refunded to 7/01/04) 7/04 at 100 AAA $3,359,340
6,400,000 6.750%, 7/01/24 (Pre-refunded to 7/01/04) 7/04 at 102 AAA 7,431,040
18,220,000 New York State Energy Research and Development Authority, Electric
Facilities Revenue Bonds, Series 1989 C (Consolidated Edison Company
of New York, Inc. Project), 7.250%, 11/01/24 (Alternative Minimum Tax) 11/00 at 100 AAA 18,459,046
7,000,000 New York State Energy Research and Development Authority, Electric
Facilities Revenue Bonds, Series 1990 A (Consolidated Edison of
New York, Inc. Project), 7.500%, 7/01/25 (Alternative Minimum Tax) 7/99 at 101 AAA 7,250,880
3,000,000 State of New York Mortgage Agency, Homeowner Mortgage Revenue Bonds,
Series KK, 7.800%, 10/01/20 (Alternative Minimum Tax) 10/99 at 102 Aa2 3,115,980
15,600,000 Port Authority of New York and New Jersey, Consolidated Revenue Bonds,
Ninety-Seventh Series, 6.650%, 1/15/23 (Alternative Minimum Tax) 1/05 at 101 AAA 17,620,200
- ------------------------------------------------------------------------------------------------------------------------------------
North Carolina - 2.6%
45,000,000 City of Charlotte, North Carolina, Certificates of Participation,
Series 1991 (Convention Facility Project), 6.750%, 12/01/21
(Pre-refunded to 12/01/01) 12/01 at 102 AAA 49,934,700
- ------------------------------------------------------------------------------------------------------------------------------------
Ohio - 3.3%
12,550,000 City of Cleveland, Ohio, Waterworks Improvement First Mortgage Revenue
Bonds, Series F, 1992 A, 6.500%, 1/01/21 (Pre-refunded to 1/01/02) 1/02 at 102 AAA 13,836,375
5,000,000 Columbus Municipal Airport Authority (Ohio), Airport Improvement Revenue
Bonds (Port Columbus International Airport Project), Series 1998B,
5.000%, 1/01/28 1/08 at 101 AAA 4,935,400
9,000,000 County of Lucas, Ohio, Hospital Improvement Revenue Bonds, Series 1992
(St. Vincent Medical Center), 6.625%, 8/15/22 (Pre-refunded to 8/15/02) 8/02 at 102 AAA 9,982,800
9,105,000 Ohio Housing Finance Agency, Residential Mortgage Revenue Bonds (GNMA
Mortgage-Backed Securities Program), 1995 Series A-2, 6.625%, 3/01/26
(Alternative Minimum Tax) 3/05 at 102 AAA 9,830,942
Ohio Air Quality Development Authority, Air Quality Development
Revenue Refunding Bonds (JMG Funding Limited Partnership
Project), Series 1994:
13,750,000 6.375%, 1/01/29 (Alternative Minimum Tax) 10/04 at 102 AAA 15,314,063
8,000,000 6.375%, 4/01/29 (Alternative Minimum Tax) 10/04 at 102 AAA 8,910,000
- ------------------------------------------------------------------------------------------------------------------------------------
Oklahoma - 2.7%
3,360,000 Norman Regional Hospital Authority (Norman, Oklahoma), Hospital
Revenue Bonds, Series 1991, 6.900%, 9/01/21 (Pre-refunded to 9/01/01) 9/01 at 102 AAA 3,716,160
680,000 Oklahoma Housing Finance Agency, Single Family Mortgage Revenue Bonds,
1991 Series A, 7.150%, 3/01/07 3/01 at 102 AAA 716,652
37,625,000 Oklahoma Housing Finance Agency, GNMA Collateralized Single Family
Mortgage Revenue Bonds, Series 1987A, 7.997%, 8/01/18
(Alternative Minimum Tax) No Opt. Call AAA 44,305,319
1,365,000 Tulsa County Home Finance Authority, GNMA Collateralized Mortgage
Revenue Bonds, Series 1991C, 7.100%, 6/01/22 (Alternative Minimum Tax) 12/01 at 102 AAA 1,441,645
- ------------------------------------------------------------------------------------------------------------------------------------
Oregon - 0.3%
5,500,000 State of Oregon, Housing and Community Services Department Mortgage
Revenue Bonds (Single-Family Mortgage Program), 1995 Series A,
6.450%, 7/01/26 (Alternative Minimum Tax) 7/05 at 102 Aa2 5,934,995
- ------------------------------------------------------------------------------------------------------------------------------------
Pennsylvania - 5.7%
14,700,000 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 16,011,093
7,000,000 Beaver County (Pennsylvania), Industrial Development Authority, Pollution
Control Revenue Refunding Bonds, 1991 Series A, Pennsylvania Power
Company, Mansfield Project), 7.150%, 9/01/21 9/01 at 102 AAA 7,698,740
24,800,000 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 27,312,488
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Pennsylvania (continued)
Delaware County Industrial Development Authority, Pollution
Control Revenue Refunding Bonds, 1991 Series A (Philadelphia
Electric Company Project):
$ 5,000,000 7.375%, 4/01/21 4/01 at 102 BBB+ $5,382,050
5,000,000 7.375%, 4/01/21 4/01 at 102 AAA 5,471,600
10,000,000 The Harrisburg Authority (Dauphin County, Pennsylvania), Commonwealth
of Pennsylvania Lease Bonds, Series of 1991, 6.625%, 6/01/13
(Pre-refunded to 6/01/01) 6/01 at 101 AAA 10,837,900
7,120,000 Lehigh County, Pennsylvania, General Purpose Authority, Hospital
Revenue Bonds (Lehigh Valley Hospital, Inc.), Series A of 1994,
6.250%, 7/01/22 (Pre-refunded to 7/01/04) 7/04 at 102 AAA 8,079,562
9,000,000 Montgomery County Higher Education and Health Authority (Pennsylvania),
Hospital Revenue Bonds, Series 1998A (Abington Memorial Hospital),
5.000%, 6/01/28 6/08 at 101 AAA 8,802,360
8,950,000 Montgomery County Industrial Development Authority, Pollution Control
Revenue Refunding Bonds, 1992 Series A (Philadelphia Electric Company
Project), 6.625%, 6/01/22 6/02 at 102 AAA 9,855,651
7,000,000 Certificates of Participation, Commonwealth of Pennsylvania, Harristown
Development Corporation, 6.250%, 5/01/16 11/01 at 102 AAA 7,581,350
- ------------------------------------------------------------------------------------------------------------------------------------
Puerto Rico - 1.3%
25,400,000 Puerto Rico Highway and Transportation Authority, Transportation Revenue
Bonds (Series A), 5.000%, 7/01/28 7/08 at 101 AAA 25,409,398
- ------------------------------------------------------------------------------------------------------------------------------------
Rhode Island - 3.8%
38,650,000 The Convention Center Authority (Rhode Island), Revenue Bonds,
1991 Series A, 6.700%, 5/15/20 (Pre-refunded to 5/15/01) 5/01 at 102 AAA 42,235,561
2,195,000 Providence Housing Development Corporation (Rhode Island), Mortgage
Revenue Refunding Bonds, Series 1994A, FHA Insured Mortgage
Loan-Barbara Jordan Apartments Project), 6.750%, 7/01/25 7/04 at 102 AAA 2,384,911
5,140,000 Rhode Island Depositor's Economic Protection Corporation, Special
Obligation Bonds, 1991 Series A, 7.100%, 8/01/18
(Pre-refunded to 8/01/01) 8/01 at 102 AAA 5,699,952
20,475,000 Rhode Island Depositor's Economic Protection Corporation, Special
Obligation Refunding Bonds, 1992 Series B, 5.250%, 8/01/21
(Pre-refunded to 2/01/11) 2/11 at 100 AAA 21,593,140
- ------------------------------------------------------------------------------------------------------------------------------------
South Carolina - 1.1%
5,275,000 Lexington County Health Services District, Inc., South Carolina,
Hospital Revenue Bonds, Series 1991, 6.750%, 10/01/18
(Pre-refunded to 10/01/01) 10/01 at 102 AAA 5,831,882
22,000,000 Piedmont Municipal Power Agency (South Carolina), Electric Revenue
Bonds, 1988 Refunding Series, 0.000%, 1/01/13 No Opt. Call AAA 11,187,386
3,775,000 South Carolina Jobs-Economic Development Authority, Hospital Facilities
Revenue Bonds, Series 1995 (Oconee Memorial Hospital, Inc.),
6.150%, 3/01/15 3/05 at 102 AAA 4,125,985
- ------------------------------------------------------------------------------------------------------------------------------------
South Dakota - 0.1%
1,635,000 South Dakota Health and Educational Facilities Authority, Revenue Bonds,
Series 1989 (Rapid City Regional Hospital), 7.000%, 9/01/14 9/99 at 102 AAA 1,713,644
- ------------------------------------------------------------------------------------------------------------------------------------
Tennessee - 0.6%
2,250,000 Chattanooga-Hamilton County Hospital Authority, Hospital Revenue Bonds
(Erlanger Medical Center), Series 1998A, 5.000%, 10/01/28 4/08 at 101 AAA 2,220,660
7,500,000 Metropolitan Nashville Airport Authority (Tennessee), Airport Improvement
Revenue Bonds, Refunding Series 1991C, 6.600%, 7/01/15 7/01 at 102 AAA 8,148,450
- ------------------------------------------------------------------------------------------------------------------------------------
Texas - 4.9%
6,000,000 Brazos County Health Facilities Development Corporation (Texas),
Franciscan Services Corporation, Obligated Group Revenue Bonds,
Series 1997A, 5.375%, 1/01/28 7/07 at 102 AAA 6,146,460
9,500,000 Coastal Bend Health Facilities Development Corporation (Texas),
Incarnate Word Health Services Revenue Bonds, Series 1993-A,
6.000%, 11/15/22 11/02 at 102 AAA 10,351,200
165,000 East Texas Housing Finance Corporation, Single Family Mortgage
Revenue Bonds (GNMA Mortgage-Backed Securities Program), Series 1990,
7.750%, 6/01/17 (Alternative Minimum Tax) 6/00 at 103 AA+ 173,545
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Texas (continued)
$ 1,480,000 Gulf Coast Water Authority (Texas), Water System Contract Revenue
Bonds (South Project), Series 1998B, 5.000%, 8/15/22 8/08 at 100 AAA $1,460,627
Harris County, Texas, Toll Road Senior Lien Revenue Bonds,
Series 1989:
9,000,000 0.000%, 8/15/18 (Pre-refunded to 8/15/09) 8/09 at 53 27/32 AAA 3,035,610
39,000,000 0.000%, 8/15/19 (Pre-refunded to 8/15/09) 8/09 at 50 1/4 AAA 12,279,540
7,280,000 0.000%, 8/15/20 (Pre-refunded to 8/15/09) 8/09 at 46 29/32 AAA 2,139,810
5,085,000 0.000%, 8/15/21 (Pre-refunded to 8/15/09) 8/09 at 43 25/32 AAA 1,395,222
3,250,000 Harris County (Texas), Health Facilities Development Corporation,
Hospital Revenue Bonds (Memorial Hermann Hospital System Project),
Series 1998, 5.125%, 6/01/22 6/08 at 101 AAA 3,210,415
14,160,000 City of Houston, Texas, Water and Sewer System, Junior Lien Revenue
Refunding Bonds, Series 1991C, 6.375%, 12/01/17
(Pre-refunded to 12/01/01) 12/01 at 102 AAA 15,366,432
13,500,000 Matagorda County Navigation District Number One (Texas), Pollution
Control Revenue Refunding Bonds (Central Power and Light Company
Project), Series 1996, 6.125%, 5/01/30 (Alternative Minimum Tax) 5/06 at 102 AAA 14,863,500
3,945,000 Ratama Development Corporation, Special Facilities Revenue Bonds
(Retama Park Racetrack Project), Series 1993, 10.000%, 12/15/17 No Opt. Call AAA 6,427,194
14,590,000 Texas Department of Housing and Community Affairs, Single Family
Mortgage Revenue Bonds, 1996 Series D, 6.250%, 9/01/28
(Alternative Minimum Tax) 9/06 at 102 AAA 15,571,323
- ------------------------------------------------------------------------------------------------------------------------------------
Utah - 0.9%
6,130,000 Utah Housing Finance Agency, Multifamily Housing Refunding Bonds,
1992 Issue A (FHA Insured Mortgage Loans), 7.400%, 7/01/24 1/02 at 102 AAA 6,613,596
3,480,000 Utah Housing Finance Agency, Single Family Mortgage Bonds, 1994
Issue D (Federally Insured or Guaranteed Mortgage Loans),
6.750%, 1/01/27 (Alternative Minimum Tax) 7/04 at 102 Aaa 3,713,891
7,185,000 Utah Water Finance Agency, Revenue Bonds (Timpanos Loan Financing
Program), Series 1998B, 5.000%, 6/01/19 6/08 at 100 AAA 7,170,917
- ------------------------------------------------------------------------------------------------------------------------------------
Virginia - 0.5%
8,000,000 Industrial Development Authority of Loudoun County, Virginia, Hospital
Revenue Bonds (Loudoun Hospital Center), Series 1995, 5.800%, 6/01/20 6/05 at 102 AAA 8,548,480
- ------------------------------------------------------------------------------------------------------------------------------------
Washington - 2.2%
2,515,000 Public Utility District No. 1 of Douglas County, Washington, Wells
Hydro-Electric Revenue Bonds, Series of 1990, 7.800%, 9/01/18
(Alternative Minimum Tax) 9/00 at 102 A+ 2,706,970
4,250,000 Public Utility District No. 1 of Snohomish County, Washington, Generation
System Revenue Bonds, Series 1989, 6.650%, 1/01/16 No Opt. Call AAA 4,701,988
19,750,000 Washington Health Care Facilities Authority, Revenue Bonds, Series 1989
(Group Health Cooperative of Puget Sound, Seattle), 7.200%, 12/01/15 12/99 at 102 AAA 20,872,788
4,100,000 Washington Public Power Supply System, Nuclear Project No. 1 Refunding
Revenue Bonds, Series 1992A, 6.250%, 7/01/17 7/02 at 102 Aaa 4,477,405
8,500,000 Washington Public Power Supply System, Nuclear Project No. 3 Refunding
Revenue Bonds, Series 1993B, 5.600%, 7/01/17 7/03 at 102 AAA 8,805,575
- ------------------------------------------------------------------------------------------------------------------------------------
West Virginia - 1.1%
10,000,000 The County Commission of Harrison County, West Virginia, Solid Waste
Disposal Revenue Bonds (West Penn Power Company Harrison Station
Project), Series B, 6.300%, 5/01/23 (Alternative Minimum Tax) 5/03 at 102 A+ 10,703,600
4,100,000 West Virginia Water Development Authority, Water Development Revenue
Refunding Bonds (Loan Program), 1991 Series A, 7.000%, 11/01/25 11/01 at 102 AAA 4,532,959
5,050,000 State of West Virginia, University of West Virginia Board of Trustees,
Dormitory Revenue Bonds (West Virginia University Project),
1992 Series A, 6.750%, 5/01/17 (Pre-refunded to 5/01/02) 5/02 at 100 AAA 5,556,009
- ------------------------------------------------------------------------------------------------------------------------------------
Wisconsin - 3.4%
8,270,000 Wisconsin Housing and Economic Development Authority, Housing
Revenue Bonds, 1992 Series A, 6.850%, 11/01/12 11/02 at 102 AAA 8,935,072
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Wisconsin (continued)
$ 8,150,000 Wisconsin Health and Educational Facilities Authority, Revenue Bonds,
Series 1991 (St. Luke's Medical Center Project), 7.100%, 8/15/19
(Pre-refunded to 8/15/01) 8/01 at 102 AAA $9,042,587
17,710,000 Wisconsin Health and Educational Facilities Authority, Revenue Bonds,
Series 1991-B (Novus Health Group), 6.750%, 12/15/20
(Pre-refunded to 12/15/01) 12/01 at 102 AAA 19,648,004
10,000,000 Wisconsin Health and Educational Facilities Authority, Revenue Bonds,
Series 1990A (Marshfield Clinic Project), 7.250%, 8/01/15
(Pre-refunded to 8/01/00) 8/00 at 102 AAA 10,828,899
15,000,000 Wisconsin Health and Educational Facilities Authority, Revenue Bonds,
Series 1997 (Marshfield Clinic Project), 5.750%, 2/15/27 2/07 at 102 AAA 16,000,949
- ------------------------------------------------------------------------------------------------------------------------------------
$1,877,174,000 Total Investments - (cost $1,711,830,329) - 99.2% 1,877,624,142
============== --------------------------------------------------------------------------------------------------------------------
Temporary Investments in Short-Term Municipal Securities - 0.6%
5,200,000 Roanoke Industrial Development Authority, Hospital Revenue Bonds,
Series B (Carilion Health System), Variable Rate Demand Bonds,
3.700%, 7/01/19+ VMIG -1 5,200,000
4,400,000 Roanoke Industrial Development Authority, Hospital Revenue Bonds,
Series 1995A (Carilion Health System), Variable Rate Demand Bonds,
3.700%, 7/01/19+ VMIG-1 4,400,000
1,300,000 Schuykill County Industrial Development Authority, Schuykill County,
Pennsylvania, Resource Recovery Refunding Revenue Binds (Northeastern
Power Company Project), Series 1997B, Variable Rate Demand Bonds,
3.850%, 12/01/22+ (Alternative Minimum Tax) A-1+ 1,300,000
- ------------------------------------------------------------------------------------------------------------------------------------
$ 10,900,000 Total Temporary Investments - 0.6% 10,900,000
============ --------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 0.2% 4,064,593
--------------------------------------------------------------------------------------------------------------------
Net Assets - 100% $1,892,588,735
====================================================================================================================
All of the bonds in the portfolio, excluding temporary investments in
short-term municipal securities, are either covered by Original Issue Insurance,
Secondary Market Insurance, or are backed by an escrow or trust containing
sufficient U.S. government or U.S. government agency securities, any of which
ensure the timely payment of principal and interest.
* 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.
+ 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.
(WI) Security purchased on a when-issued basis (note 1).
(DD) Security purchased on a delayed delivery basis (note 1).
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
Portfolio of Investments
Nuveen Premier Insured Municipal Income Fund, Inc. (NIF)
October 31, 1998
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alabama - 1.6%
$ 2,250,000 BMC Special Care Facilities Financing Authority of the City of
Montgomery, Revenue Bonds, Series 1992-A (Baptist Medical Center),
5.750%, 1/01/22 1/02 at 100 AAA $2,325,015
3,000,000 BMC Special Care Facilities Financing Authority of the City of
Montgomery, Revenue Bonds, Series 1992-B (Baptist Medical Center),
6.700%, 12/01/10 12/02 at 102 AAA 3,350,070
Water Revenue Bonds, Series 1996 of West Morgan-East Lawrence
Water Authority:
1,000,000 5.625%, 8/15/21 8/06 at 102 AAA 1,068,210
400,000 5.625%, 8/15/25 8/06 at 102 AAA 427,604
- ------------------------------------------------------------------------------------------------------------------------------------
Arkansas - 1.3%
5,555,000 Sebastian County (Arkansas), Community Junior College District, General
Obligation Refunding and Improvement Bonds, Series 1997, 5.600%, 4/01/17 4/07 at 101 Aaa 5,925,907
- ------------------------------------------------------------------------------------------------------------------------------------
California - 18.6%
4,000,000 State of California Veteran's General Obligation Bonds, Series BH,
5.400%, 12/01/16 (Alternative Minimum Tax) 12/08 at 101 AAA 4,117,560
1,090,000 Housing Authority of the County of Kern, Guaranteed Tax-Exempt Mortgage
Obligations, 1994 Series A, Subseries I, 7.150%, 12/30/24
(Alternative Minimum Tax) No Opt. Call AAA 1,290,211
595,000 Housing Authority of the County of Kern, Guaranteed Tax-Exempt Mortgage
Obligations, 1994 Series A Subseries III, 7.450%, 6/30/25
(Alternative Minimum Tax) No Opt. Call AAA 695,043
6,045,000 La Verne - Grand Terrace Housing Finance Agency, Single Family
Residential Mortgage Revenue Bonds, 1984 Series A, 10.250%, 7/01/17 No Opt. Call AAA 9,231,984
5,840,000 Lancaster Redevelopment Agency, Lancaster Residential Redevelopment
Project Area, Tax Allocation Refunding Bonds, Issue of 1992,
6.100%, 8/01/19 8/01 at 102 AAA 6,290,614
5,040,000 Northern California Power Agency, Hydroelectric Project Number One
Revenue Bonds, 1992 Refunding Series A, 10.000%, 7/01/04 No Opt. Call AAA 6,600,233
5,000,000 Ontario Redevelopment Financing Authority (San Bernardino County,
California), 1995 Revenue Refunding Bonds (Ontario Redevelopment
Project No. 1), 7.400%, 8/01/25 No Opt. Call AAA 6,884,700
1,340,000 Pomona Public Financing Authority, California, 1992 Revenue Bonds,
Series A, (Water Treatment Project), 6.100%, 7/01/17 7/02 at 102 AAA 1,460,895
8,880,000 City of Pomona, California, Single Family Mortgage Revenue Refunding
Bonds (GNMA and FHLMC Mortgage-Backed Securities), Series 1990B,
7.500%, 8/01/23 No Opt. Call AAA 11,773,814
10,305,000 City of San Bernardino, California, Single Family Mortgage Revenue
Refunding Bonds (GNMA Mortgage Backed Securities), Series 1990A,
7.500%, 5/01/23 No Opt. Call AAA 13,265,523
14,755,000 County of San Bernardino, California, Single Family Mortgage Revenue
Bonds (GNMA Mortgage-Backed Securities), 1988 Series A, 8.300%, 9/01/14
(Alternative Minimum Tax) No Opt. Call AAA 19,750,600
2,000,000 City of Santa Barbara, California, Certificates of Participation
(1992 Water System Improvement Project and Refunding), 6.700%, 4/01/27 4/02 at 102 AAA 2,200,080
- ------------------------------------------------------------------------------------------------------------------------------------
Colorado - 0.3%
1,225,000 Summit School District RE-1, Summit County, Colorado, General
Obligation Improvement Bonds, Series 1994, 6.700%, 12/01/14
(Pre-refunded to 12/01/04) 12/04 at 100 AAA 1,410,980
- ------------------------------------------------------------------------------------------------------------------------------------
District of Columbia - 1.2%
2,000,000 District of Columbia (Washington, D.C.), Hospital Revenue Bonds
(National Rehabilitation Hospital, Inc. Issue), Series 1989A, Medlantic
Healthcare Group, 7.125%, 11/01/19 (Pre-refunded to 11/01/99) 11/99 at 102 AAA 2,118,220
3,385,000 District of Columbia (Washington, D.C.), General Obligation Bonds
(Series 1998A), 5.000%, 6/01/17 6/08 at 101 AAA 3,358,563
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Florida - 3.5%
$ 3,750,000 Florida Housing Finance Agency, Housing Revenue Bonds, 1997 Series J-1
(Willow Lake Apartment Project), 5.350%, 7/01/27
(Alternative Minimum Tax) 1/08 at 102 AAA $3,828,788
6,750,000 Polk County Industrial Development Authority, Industrial Development
Variable Rate Revenue Bonds, 1985 Series 2 (Winter Haven Hospital
Project), 6.250%, 9/01/15 9/02 at 103 AAA 7,439,513
4,200,000 Financing Corporation for the School Board of Sarasota County, Florida,
Lease Revenue Bonds, Series 1990, 7.250%, 7/01/10
(Pre-refunded to 7/01/00) 7/00 at 101 AAA 4,501,476
- ------------------------------------------------------------------------------------------------------------------------------------
Georgia - 3.6%
Development Authority of Burke County, Georgia, Pollution
Control Revenue Bonds (Oglethorpe Power Corporation Vogtle
Project):
3,555,000 7.800%, 1/01/08 (Pre-refunded to 1/01/03) 1/03 at 103 AAA 4,190,172
10,000,000 8.000%, 1/01/15 (Pre-refunded to 1/01/03) 1/03 at 103 AAA 11,863,200
- ------------------------------------------------------------------------------------------------------------------------------------
Illinois - 9.6%
10,000,000 City of Chicago (Illinois), General Obligation Adjustable Rate
Bonds, Central Public Library Project, Series C of 1988,
6.850%, 1/01/17 (Pre-refunded to 7/01/02) 7/02 at 101 1/2 AAA 11,209,700
8,200,000 Board of Education of the City of Chicago, General Obligation
Lease Certificates, 1992 Series A, 6.250%, 1/01/15 No Opt. Call AAA 9,571,614
2,600,000 The County of Cook, Illinois, General Obligation Bonds, Series 1991,
6.250%, 11/01/21 (Pre-refunded to 11/01/01) 11/01 at 102 AAA 2,841,306
10,150,000 Onterie Center Housing Finance Corporation (An Illinois Not For
Profit Corporation), Mortgage Revenue Refunding Bonds, Series 1992A
(FHA Insured Mortgage Loan-Onterie Center Project), 7.050%, 7/01/27 7/02 at 102 AAA 10,891,255
3,225,000 Regional Transportation Authority, Cook, DuPage, Kane, Lake, McHenry
and Will Counties, Illinois, General Obligation Bonds, Series 1992A,
9.000%, 6/01/09 No Opt. Call AAA 4,481,202
4,000,000 Public Building Commission of St. Clair County, Illinois,
St. Clair County, Illinois, Public Building Revenue Bonds, Series 1992,
6.350%, 12/01/09 (Alternative Minimum Tax) 12/02 at 102 AAA 4,371,640
- ------------------------------------------------------------------------------------------------------------------------------------
Indiana - 4.8%
2,000,000 Fremont Middle School Building Corporation, First Mortgage Bonds,
Series 1992, Fremont, Indiana, 6.750%, 3/15/13
(Pre-refunded to 3/15/02) 3/02 at 101 AAA 2,210,580
2,500,000 Indiana Bond Bank, Special Program Bonds, Series 1985A, 9.000%, 8/01/09
(Pre-refunded to 2/01/99) 2/99 at 101 1/2 AAA 2,648,775
5,375,000 Indiana Health Facility Financing Authority, Hospital Revenue Refunding
and Improvement Bonds, Series 1992 (Community Hospitals Projects),
6.400%, 5/01/12 5/02 at 102 AAA 5,847,194
7,000,000 Southwest Allen Multi School Building Corporation, First Mortgage
Refunding Bonds, Series 1992B, Ft. Wayne, Indiana, 6.375%, 1/15/09 1/02 at 101 AAA 7,574,210
3,000,000 Wheeler-Union Township School Building Corporation (Porter County,
Indiana), First Mortgage Bonds, Series 1997A, 5.625%, 1/15/15 7/07 at 102 AAA 3,213,930
- ------------------------------------------------------------------------------------------------------------------------------------
Kentucky - 1.6%
6,500,000 County of Daviess, Kentucky, Insured Hospital Revenue Bonds, 1992
(ODCH, Inc. Project), Series A, 6.250%, 8/01/22 8/02 at 102 AAA 7,108,140
- ------------------------------------------------------------------------------------------------------------------------------------
Louisiana - 2.2%
Louisiana Public Facilities Authority, Hospital Revenue Bonds
(Our Lady of Lourdes Regional Medical Center Project), Series
1992:
5,000,000 6.375%, 2/01/12 (Pre-refunded to 2/01/03) 2/03 at 102 AAA 5,585,000
4,000,000 6.450%, 2/01/22 (Pre-refunded to 2/01/03) 2/03 at 102 AAA 4,483,040
- ------------------------------------------------------------------------------------------------------------------------------------
Massachusetts - 4.7%
3,000,000 Framingham Housing Authority, GNMA Collateralized Mortgage Revenue Bonds
(Beaver Terrace Apartments), 6.650%, 2/20/32 8/01 at 102 AAA 3,206,940
8,335,000 Massachusetts Health and Educational Facilities Authority, Revenue Bonds,
New England Medical Center Hospitals Issue, Series F, 6.625%, 7/01/25 7/02 at 102 AAA 9,192,755
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Massachusetts (continued)
$ 8,270,000 Massachusetts Housing Finance Authority, Single Family Housing
Revenue Bonds, Series 59, 5.500%, 12/01/30 (Alternative Minimum Tax) 6/08 at 101 AAA $8,584,177
- ------------------------------------------------------------------------------------------------------------------------------------
Michigan - 0.5%
2,000,000 Paw Paw Public Schools, County of Van Buren, State of Michigan,
1995 School Building and Site Bonds, 5.625%, 5/01/25
(Pre-refunded to 5/01/05) 5/05 at 100 AAA 2,188,660
- ------------------------------------------------------------------------------------------------------------------------------------
Minnesota - 0.4%
1,770,000 Minnesota Housing Finance Agency, Rental Housing Bonds, 1995 Series D
(Non-AMT), 5.950%, 2/01/18 2/05 at 102 AAA 1,872,589
- ------------------------------------------------------------------------------------------------------------------------------------
Mississippi - 0.6%
2,360,000 Mississippi Home Corporation, Single Family Senior Revenue Refunding
Bonds, Series 1990A, 9.250%, 3/01/12 9/00 at 103 AAA 2,524,610
- ------------------------------------------------------------------------------------------------------------------------------------
Missouri - 3.9%
7,495,000 The Industrial Development Authority of Jefferson County, Missouri,
Housing Revenue Bonds (Richardson Road Apartments Project),
Series 1985, 11.000%, 12/15/15 (Pre-refunded to 8/15/07) 8/07 at 100 AAA 11,176,694
4,000,000 Health and Educational Facilities Authority of the State of Missouri,
Educational Facilities Revenue Bonds (Saint Louis University),
Series 1996, 5.200%, 10/01/26 10/06 at 102 AAA 4,041,520
2,250,000 The Industrial Development Authority of The City of University City,
Missouri, Multifamily Housing Revenue Refunding Bonds (GNMA
Collateralized-Canterbury Gardens Project), Series 1995A,
6.000%, 12/20/30 12/05 at 102 AAA 2,357,775
- ------------------------------------------------------------------------------------------------------------------------------------
Montana - 3.2%
13,000,000 City of Forsyth, Rosebud County, Montana, Pollution Control
Revenue Refunding Bonds (Puget Sound Power and Light Company
Colstrip Project), Series 1992, 6.800%, 3/01/22 3/02 at 102 AAA 14,295,190
- ------------------------------------------------------------------------------------------------------------------------------------
Nebraska - 0.6%
2,500,000 Nebraska Investment Finance Authority, Multifamily Housing Revenue
Bonds (Cambury Hills Apartments Project), Series 1997,
5.875%, 10/01/29 (Alternative Minimum Tax) 10/07 at 101 AAA 2,601,050
- ------------------------------------------------------------------------------------------------------------------------------------
Nevada - 3.7%
10,250,000 Humboldt County, Nevada, Variable Rate Demand Pollution Control
Refunding Revenue Bonds (Sierra Pacific Power Company Project),
Series 1987, 6.550%, 10/01/13 5/02 at 102 AAA 11,281,765
5,050,000 Washoe County, Nevada, Variable Rate Demand Gas and Water Facilities
Refunding Revenue Bonds (Sierra Pacific Power Company Project),
Series 1987, 6.300%, 12/01/14 7/02 at 102 AAA 5,503,339
- ------------------------------------------------------------------------------------------------------------------------------------
New Hampshire - 0.7%
3,000,000 New Hampshire Higher Educational and Health Facilities Authority,
Hospital Revenue Bonds, Concord Hospital Issue, Series 1996,
6.000%, 10/01/26 10/06 at 102 AAA 3,355,080
- ------------------------------------------------------------------------------------------------------------------------------------
New Jersey - 1.4%
6,000,000 The Union County Utilities Authority (New Jersey), Solid Waste Bonds,
County Deficiency Agreement, Series 1998A, 5.350%, 6/01/23
(Alternative Minimum Tax) 6/08 at 101 AAA 6,100,800
- ------------------------------------------------------------------------------------------------------------------------------------
New York - 5.5%
7,645,000 Metropolitan Transportation Authority, Transit Facilities Revenue
Bonds, Series J, 9.100%, 7/01/05 No Opt. Call AAA 9,856,163
1,425,000 The City of New York, General Obligation Bonds, Fiscal 1990 Series H,
7.875%, 8/01/00 No Opt. Call AAA 1,531,818
The City of New York, General Obligation Bonds, 1992 Series C:
6,910,000 6.625%, 8/01/14 (Pre-refunded to 8/01/02) 8/02 at 101 1/2 AAA 7,707,898
90,000 6.625%, 8/01/14 8/02 at 101 1/2 AAA 99,863
The City of New York, General Obligation Bonds, Fiscal 1992
Series C, Subseries C-1:
4,950,000 6.625%, 8/01/15 (Pre-refunded to 8/01/02) 8/02 at 101 1/2 AAA 5,521,577
50,000 6.625%, 8/01/15 8/02 at 101 1/2 AAA 55,202
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Ohio - 0.6%
$ 2,690,000 County of Cuyahoga, Ohio, Hospital lmprovement and Refunding
Revenue Bonds, Series 1997 (The MetroHealth System Project),
5.500%, 2/15/27 2/07 at 102 AAA $2,822,348
- ------------------------------------------------------------------------------------------------------------------------------------
Oklahoma - 2.8%
7,975,000 Oklahoma Housing Finance Agency, GNMA Collateralized Single Family
Mortgage Revenue Bonds, Series 1987A, 7.997%, 8/01/18
(Alternative Minimum Tax) No Opt. Call AAA 9,390,961
3,000,000 Tulsa Industrial Authority, Multifamily Housing Revenue Refunding Bonds
(GNMA Collateralized - Country Club of Woodland Hills Development),
Series 1995, 6.250%, 11/01/27 11/05 at 103 Aaa 3,223,890
- ------------------------------------------------------------------------------------------------------------------------------------
Pennsylvania - 6.4%
8,000,000 Allegheny County Hospital Development Authority, Health Center
Revenue Refunding Bonds, Series 1998B (UPMC Health System),
5.000%, 11/01/18 10/08 at 101 Aaa 7,915,200
19,140,000 Montgomery County Industrial Development Authority, Pollution Control
Revenue Refunding Bonds, 1992 Series A (Philadelphia Electric Company
Project), 6.625%, 6/01/22 6/02 at 102 AAA 21,076,777
- ------------------------------------------------------------------------------------------------------------------------------------
Rhode Island - 3.6%
1,900,000 The Convention Center Authority (Rhode Island), Revenue Bonds,
1991 Series A, 6.700%, 5/15/20 (Pre-refunded to 5/15/01) 5/01 at 102 AAA 2,076,263
12,750,000 Rhode Island Depositor's Economic Corporation, Special Obligation
Bonds, 1992 Series A, 6.625%, 8/01/19 (Pre-refunded to 8/01/02) 8/02 at 102 AAA 14,277,833
- ------------------------------------------------------------------------------------------------------------------------------------
South Carolina - 2.3%
9,450,000 South Carolina Public Service Authority, Santee Cooper, Revenue
Bonds, 1991 Series D, 6.500%, 7/01/24 (Pre-refunded to 7/01/02) 7/02 at 102 AAA 10,533,726
- ------------------------------------------------------------------------------------------------------------------------------------
South Dakota - 0.5%
2,100,000 South Dakota Health and Educational Facilities Authority, Vocational
Education Program Revenue Bonds, Series 1993B, 5.700%, 8/01/23 8/03 at 102 AAA 2,244,039
- ------------------------------------------------------------------------------------------------------------------------------------
Texas - 4.4%
5,000,000 Brazos River Authority (Texas), Collateralized Pollution Control
Revenue Bonds (Texas Utilities Electric Company Project),
Series 1993A, 6.050%, 4/01/25 (Alternative Minimum Tax) 4/03 at 102 AAA 5,392,550
1,645,000 Corpus Christi (Texas), Housing Finance Corporation, Single Family
Mortgage Senior Revenue Refunding Bonds, Series 1991A,
7.700%, 7/01/11 7/01 at 103 AAA 1,807,822
1,510,000 City of El Paso (Texas), Property Finance Authority, Inc., Single
Family Mortgage Revenue Bonds (GNMA Mortgage-Backed Securities
Program), Series 1992A, 8.700%, 12/01/18 (Alternative Minimum Tax) 6/02 at 103 Aaa 1,628,022
5,210,000 Harris County, Texas, Toll Road Senior Lien Revenue Refunding Bonds,
Series 1992A, 6.500%, 8/15/17 (Pre-refunded to 8/15/02) 8/02 at 102 AAA 5,816,496
1,600,000 Harris County, Texas, Toll Road Senior Lien Revenue Refunding Bonds,
Series 1992B, 6.625%, 8/15/17 1/99 at 101 AAA 1,620,512
3,145,000 Rio Grande Valley Health Facilities Development Corporation (Texas),
Hospital Revenue Bonds (Valley Baptist Medical Center Project),
Series 1992A, 6.375%, 8/01/22 8/02 at 102 AAA 3,452,801
- ------------------------------------------------------------------------------------------------------------------------------------
Utah - 0.3%
1,490,000 State Board of Regents of the State of Utah, Weber State University,
Student Facilities System Revenue Bonds, Series 1992,
6.250%, 4/01/10 (Pre-refunded to 4/01/02) 4/02 at 100 AAA 1,612,180
- ------------------------------------------------------------------------------------------------------------------------------------
Washington - 2.3%
1,085,000 North Franklin School District No. J51-162, Franklin and Adams
Counties, Washington, Unlimited Tax General Obligation Bonds,
Series 1992, 6.700%, 12/01/10 (Pre-refunded to 12/01/02) 12/02 at 100 AAA 1,208,950
Puyallup School District No. 3, Pierce County, Washington, Unlimited
Tax General Obligation and Refunding Bonds, 1992 Series A:
2,000,000 6.650%, 12/01/07 (Pre-refunded to 12/01/02) 12/02 at 100 AAA 2,223,120
4,750,000 6.700%, 12/01/09 (Pre-refunded to 12/01/02) 12/02 at 100 AAA 5,288,840
1,325,000 City of Richland, Washington, Electric Revenue Bonds, 1992,
6.700%, 11/01/11 (Pre-refunded to 11/01/02) 11/02 at 100 AAA 1,472,565
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
West Virginia - 1.5%
$ 6,000,000 Mason County, West Virginia, Pollution Control Revenue Bonds
(Appalachian Power Company Project), Series I, 6.850%, 6/01/22 6/02 at 102 AAA $6,641,100
- ------------------------------------------------------------------------------------------------------------------------------------
$ 387,625,000 Total Investments - (cost $399,242,939) - 98.2% 442,188,021
=============
Temporary Investments in Short-Term Municipal Securities - 0.4%
$ 1,900,000 Geisinger Authority Health System, Series 1998B, Variable Rate
============ Demand Bonds, 3.300%, 8/15/28+ VMIG-1 1,900,000
--------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 1.4% 6,378,006
--------------------------------------------------------------------------------------------------------------------
Net Assets - 100% $450,466,027
====================================================================================================================
All of the bonds in the portfolio, excluding temporary investments in
short-term municipal securities, are either covered by Original Issue Insurance,
Secondary Market Insurance, or are backed by an escrow or trust containing
sufficient U.S. government or U.S. government agency securities, any of which
ensure the timely payment of principal and interest.
* 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.
+ 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>
Portfolio of Investments
Nuveen Insured Premium Income Municipal Fund 2 (NPX)
October 31, 1998
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alabama - 2.1%
$ 10,000,000 The Health Care Authority of the City of Huntsville, Health Care
Facilities Revenue Bonds, Series 1994-A, 4.650%, 6/01/24 6/04 at 110 AAA $10,267,800
2,500,000 City of Mobile, Alabama, General Obligation Refunding Warrants,
Series 1996, 5.750%, 2/15/16 2/06 at 102 AAA 2,706,425
1,600,000 City of Northport (Alabama), General Obligation Warrants,
Series 1996-B, 5.700%, 3/01/21 3/06 at 102 AAA 1,719,312
2,000,000 City of Scottsboro (Alabama), General Obligation School Warrants,
Series 1996-B, 5.750%, 7/01/14 7/06 at 102 AAA 2,189,620
- ------------------------------------------------------------------------------------------------------------------------------------
Alaska - 0.9%
3,940,000 Alaska Housing Finance Corporation, Mortgage Revenue Bonds,
1996 Series A, 6.050%, 12/01/17 6/06 at 102 AAA 4,217,731
3,000,000 Municipality of Anchorage, Alaska, 1989 General Obligation Refunding
Water Bonds, 6.250%, 6/01/23 6/99 at 100 AAA 3,050,730
- ------------------------------------------------------------------------------------------------------------------------------------
California - 6.5%
6,450,000 California Housing Finance Agency, Multi-Unit Rental Housing Revenue
Bonds, 1992 Series A, 6.625%, 2/01/24 (Alternative Minimum Tax) 2/03 at 102 Aa2 6,823,520
6,500,000 California Housing Finance Agency, Multifamily Housing Revenue
Bonds III, 1997 Series A, 5.950%, 8/01/28 (Alternative Minimum Tax) 2/07 at 102 AAA 6,867,185
2,500,000 California Housing Finance Agency, Home Mortgage Revenue Bonds,
1996 Series D, 6.150%, 8/01/28 (Alternative Minimum Tax) 8/07 at 102 AAA 2,691,375
10,355,000 State of California Various Purpose General Obligation Bonds,
11.000%, 8/01/03 No Opt. Call AAA 13,602,121
3,000,000 M-S-R Public Power Agency, California, San Juan Project Revenue Bonds,
Series F, 6.000%, 7/01/20 7/03 at 102 AAA 3,296,850
3,500,000 Northern California Power Agency, Hydroelectric Project Number One
Revenue Bonds, 1993 Refunding Series A, 5.500%, 7/01/16 7/03 at 102 AAA 3,663,590
6,850,000 County of Orange, California, 1996 Recovery Certificates of
Participation, Series A, 6.000%, 7/01/26 7/06 at 102 AAA 7,690,358
San Leandro Housing Finance Corporation, Mortgage Revenue
Refunding Bonds, Series 1993A (FHA-Insured Mortgage Loan-Ashland
Village Apartments Section 8 Assisted Project):
1,735,000 6.550%, 1/01/12 1/02 at 102 AAA 1,835,630
5,100,000 6.650%, 1/01/25 1/02 at 102 AAA 5,395,137
- ------------------------------------------------------------------------------------------------------------------------------------
Colorado - 1.3%
9,425,000 Town of Castle Rock, Colorado, Multifamily Housing Revenue Bonds
(The Pines at Castle Rock Project (Phase II), 1996 Series A,
6.200%, 12/01/28 (Alternative Minimum Tax) 12/06 at 101 AAA 10,057,889
- ------------------------------------------------------------------------------------------------------------------------------------
District of Columbia - 3.7%
5,000,000 District of Columbia (Washington, D.C.), General Obligation Refunding
Bonds, Series 1993B, 5.500%, 6/01/12 No Opt. Call AAA 5,432,200
5,000,000 District of Columbia, Hospital Improvement and Refunding Revenue
Bonds (Children's Hospital Issue), Series 1992A, 6.250%, 7/15/19 7/02 at 102 AAA 5,445,650
245,000 District of Columbia (Washington D.C.), General Obligation Refunding
Bonds, 1994 Series A-1, 6.500%, 6/01/09 No Opt. Call AAA 291,707
4,755,000 District of Columbia (Washington, D.C.), General Obligation Refunding
Bonds, Series 1994A, 6.500%, 6/01/09 No Opt. Call AAA 5,559,641
3,775,000 District of Columbia Housing Finance Agency, Collateralized Single
Family Mortgage Revenue Bonds, Series 1990C-4, 6.350%, 12/01/24
(Alternative Minimum Tax) 6/03 at 102 AAA 3,982,021
4,030,000 District of Columbia Housing Finance Agency, Mortgage Revenue
Refunding Bonds, Series 1993A (FHA-Insured Mortgage Loan-Southview
Apartments II Section 8 Assisted Project), 6.000%, 1/01/25 7/03 at 102 AAA 4,186,404
4,885,000 Washington Convention Center Authority (Washington, D.C.), Senior
Lien Dedicated Tax Revenue Bonds, Series 1998, 5.000%, 10/01/18 10/08 at 101 AAA 4,827,162
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Florida - 2.0%
$ 16,425,000 Miami - Dade County, Florida, Subordinate Special Obligation Bonds,
Series 1997B, 5.000%, 10/01/37 4/08 at 102 AAA $16,298,856
- ------------------------------------------------------------------------------------------------------------------------------------
Georgia - 0.5%
645,000 Housing Authority of Fulton County, Georgia, Single Family Mortgage
Revenue Refunding Bonds (GNMA Mortgage-Backed Securities Program),
Series 1996A, 6.200%, 9/01/27 (Alternative Minimum Tax) 9/06 at 102 AAA 686,454
3,000,000 Municipal Electric Authority of Georgia, Power Revenue Bonds, Series EE,
6.000%, 1/01/22 1/04 at 102 AAA 3,299,010
- ------------------------------------------------------------------------------------------------------------------------------------
Illinois - 24.6%
2,500,000 City of Aurora, Kane, DuPage, Kendall and Will Counties, Illinois,
General Obligation Corporate Purpose Bonds, Series 1996,
5.800%, 1/01/14 (Pre-refunded to 1/01/05) 1/05 at 100 AAA 2,748,725
1,500,000 City of Chicago, General Obligation Bonds, Series 1995, 6.125%, 1/01/16 7/05 at 102 AAA 1,672,800
City of Chicago, Chicago Midway Airport Revenue Bonds, 1994 Series A:
1,100,000 6.100%, 1/01/08 (Alternative Minimum Tax) 1/04 at 102 AAA 1,203,378
2,750,000 6.250%, 1/01/14 (Alternative Minimum Tax) 1/04 at 102 AAA 3,025,990
9,000,000 City of Chicago, Chicago-O'Hare International Airport, International
Terminal Special Revenue Bonds, Series 1992, 6.750%, 1/01/18
(Alternative Minimum Tax) 1/02 at 102 AAA 9,835,740
8,235,000 City of Chicago (Illinois), Chicago-O'Hare International Airport,
General Airport Second Lien Revenue Refunding Bonds,
1994 Series A, 6.375%, 1/01/15 1/05 at 102 AAA 9,218,835
1,735,000 City of Chicago Sales Tax Revenue Bonds, Series 1997, 6.000%, 1/01/08 No Opt. Call AAA 1,959,943
City of Chicago Tax Increment Allocation Bonds (Central Loop
Redevelopment Project), Series 1997A:
6,000,000 5.250%, 6/01/06 No Opt. Call AAA 6,451,800
12,250,000 5.250%, 6/01/07 No Opt. Call AAA 13,182,470
The County of Cook, Illinois, General Obligation Bonds,
Series 1992A, 6.500%:
14,815,000 6.500%, 11/15/12 (Pre-refunded to 11/15/02) 11/02 at 102 AAA 16,624,949
30,000,000 6.600%, 11/15/22 (Pre-refunded to 11/15/02) 11/02 at 102 AAA 33,776,700
3,000,000 Community College District No. 508, Cook County, Illinois,
Certificates of Participation, 8.750%, 1/01/06 No Opt. Call AAA 3,847,500
2,000,000 Illinois Development Finance Authority, Mortgage Revenue Refunding
Bonds, Series 1997A (FHA-Insured Mortgage Loans Section 8 Assisted
Projects), 5.750%, 7/01/18 7/07 at 102 Aaa 2,104,120
Illinois Development Finance Authority, School District Program
Revenue Bonds, Series 1995 (Indian Prairie Community Unit School
District Number 204 Project):
3,635,000 7.750%, 12/30/03 No Opt. Call AAA 4,298,424
4,340,000 7.750%, 12/30/04 No Opt. Call AAA 5,241,592
1,950,000 Illinois Health Facilities Authority, Health Facilities Refunding
Revenue Bonds (SSM Health Care), Series 1992AA, 6.550%, 6/01/14 No Opt. Call AAA 2,334,540
Illinois Health Facilities Authority (Lutheran General HealthSystem),
Revenue Bonds, Series 1993A:
4,355,000 6.125%, 4/01/12 No Opt. Call AAA 4,847,855
5,000,000 6.250%, 4/01/18 No Opt. Call AAA 5,593,250
5,000,000 Illinois Health Facilities Authority, FHA-Insured Mortgage Revenue
Bonds, Series 1996 (Sinai Health System), 6.000%, 2/15/24 2/06 at 102 AAA 5,525,500
3,765,000 Illinois Housing Development Authority, Housing Development Bonds,
1993 Series A, 6.000%, 7/01/18 1/04 at 102 A+ 3,922,452
1,770,000 Illinois Health Facilities Authority, Revenue Bonds, Series 1991
(Elmhurst Memorial Hospital), 6.625%, 1/01/22 1/02 at 102 AAA 1,930,628
4,000,000 The Illinois State Toll Highway Authority, Toll Highway Priority
Revenue Bonds, 1992 Series A, 6.200%, 1/01/16 1/03 at 102 AAA 4,372,480
13,825,000 School District Number 46, Kane, Cook and DuPage Counties, Illinois
(Elgin School District Number U-46), School Bonds, Series 1997,
7.800%, 1/01/12 No Opt. Call Aaa 18,252,871
2,600,000 Community Unit School District Number 115, Kendall and Kane Counties,
Illinois (Yorkville), School Bonds, Series 1996, 7.000%, 1/01/07 No Opt. Call AAA 3,082,040
4,035,000 Community Consolidated School District Number 41 (Lake Villa),
Lake County, Illinois, General Obligation School Bonds, Series 1997,
8.750%, 11/01/14 No Opt. Call AAA 5,808,584
4,035,000 Community High School District No. 157, McHenry and Lake Counties,
Illinois, (Richmond-Burton), General Obligation School Bonds,
Series 1998, 9.000%, 12/01/17 No Opt. Call AAA 6,001,699
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Illinois (continued)
$ 6,000,000 Metropolitan Pier and Exposition Authority (Illinois), Dedicated
State Tax Revenue Bonds (McCormick Place Expansion), Series A 1993,
6.500%, 6/15/07 (Pre-refunded to 6/15/03) 6/03 at 102 AAA $6,783,060
Metropolitan Pier and Exposition Authority (Illinois), McCormick
Place Expansion Project Bonds, Series 1992A:
6,335,000 6.500%, 6/15/22 (Pre-refunded to 6/15/03) 6/03 at 102 AAA 7,161,781
165,000 6.500%, 6/15/22 6/03 at 102 AAA 183,625
3,680,000 City of Peoria, City of Moline and City of Freeport, Illinois,
Collateralized Single Family Mortgage Revenue Bonds, Series 1995A,
7.600%, 4/01/27 (Alternative Minimum Tax) 10/05 at 105 AAA 4,209,589
- ------------------------------------------------------------------------------------------------------------------------------------
Indiana - 2.6%
1,000,000 Fort Wayne South Side School Building Corp., First Mortgage Bonds,
Series 1994, Allen County, Indiana, 6.125%, 1/15/12
(Pre-refunded to 1/15/04) 1/04 at 102 AAA 1,119,990
Indiana Health Facility Financing Authority, Hospital Revenue Bonds,
Series 1997A (Sisters of St. Francis Health Services, Inc. Project):
2,170,000 5.500%, 11/01/06 No Opt. Call AAA 2,368,533
2,005,000 5.500%, 11/01/07 No Opt. Call AAA 2,191,645
2,220,000 Indiana Municipal Power Agency, Power Supply System Revenue Bonds,
1993 Series A, 6.125%, 1/01/19 1/03 at 102 AAA 2,420,422
2,000,000 Indiana Transportation Finance Authority, Highway Revenue Refunding
Bonds, Series 1996B, 6.000%, 12/01/06 No Opt. Call AAA 2,265,820
9,770,000 Northwest Allen Building Corporation, First Mortgage Bonds, Series 1995
Allen County, Indiana, 5.500%, 6/01/15 6/05 at 102 AAA 10,305,982
- ------------------------------------------------------------------------------------------------------------------------------------
Kansas - 0.6%
1,970,000 City of Olathe, Kansas and Labette County, Kansas, Collateralized
Single Family Mortgage Refunding Revenue Bonds, Series A-I,
8.100%, 8/01/23 (Alternative Minimum Tax) 2/05 at 105 Aaa 2,221,884
2,330,000 Sedgwick County, Kansas and Shawnee County, Kansas, Collateralized
Single Family Mortgage Refunding Revenue Bonds, Series A-II,
8.050%, 5/01/24 (Alternative Minimum Tax) 11/04 at 105 Aaa 2,622,811
- ------------------------------------------------------------------------------------------------------------------------------------
Kentucky - 1.9%
15,000,000 County of Jefferson, Kentucky, Health System Revenue Bonds, Series 1998
(Alliant Health System, Inc.), 5.125%, 10/01/18(DD) 10/08 at 101 AAA 15,052,500
- ------------------------------------------------------------------------------------------------------------------------------------
Maine - 0.7%
3,250,000 Finance Authority of Maine, Electric Rate Stabilization Revenue
Refunding Bonds, Series 1998A (Penobscot Energy Recovery Company, LP),
5.000%, 7/01/18 7/08 at 102 AAA 3,235,668
1,745,000 Maine Turnpike Authority, Turnpike Revenue Bonds, Series 1994,
7.500%, 7/01/09 No Opt. Call AAA 2,214,370
- ------------------------------------------------------------------------------------------------------------------------------------
Maryland - 0.5%
3,575,000 Maryland Transportation Authority, Special Obligation Revenue Bonds,
Baltimore/Washington International Airport Projects, Series 1994-A
(Qualified Airport Bonds), 6.400%, 7/01/19 (Alternative Minimum Tax) 7/04 at 102 AAA 3,811,057
- ------------------------------------------------------------------------------------------------------------------------------------
Massachusetts - 2.5%
5,000,000 Massachusetts Housing Finance Agency, Housing Project Revenue,
6.150%, 10/01/15 4/03 at 102 AAA 5,299,500
8,300,000 Massachusetts Housing Finance Agency, Single Family Housing
Revenue Bonds, Series 48, 6.350%, 6/01/26 (Alternative Minimum Tax) 6/06 at 102 AAA 8,902,829
5,000,000 Massachusetts Housing Finance Authority, Single Family Housing Revenue
Bonds, Series 53, 6.150%, 12/01/29 (Alternative Minimum Tax) 6/07 at 102 AAA 5,344,850
- ------------------------------------------------------------------------------------------------------------------------------------
Michigan - 3.3%
4,425,000 Central Michigan University Board of Trustees, General Revenue
Bonds, Series 1998, 5.000%, 10/01/27 10/08 at 100 AAA 4,368,139
10,000,000 Michigan State Housing Development Authority, Rental Housing Revenue
Bonds, 1997 Series A, 6.000%, 4/01/16 (Alternative Minimum Tax) 4/07 at 102 AAA 10,695,000
10,000,000 County of Monroe, Michigan, Pollution Control Revenue Bonds (The Detroit
Edison Company Project), Series CC-1992, 6.550%, 9/01/24
(Alternative Minimum Tax) 9/03 at 103 AAA 11,123,500
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Minnesota - 0.8%
$ 4,425,000 Minnesota Housing Finance Agency, Rental Housing Bonds, 1995 Series D
(Non-AMT), 5.950%, 2/01/18 2/05 at 102 AAA $4,681,473
1,850,000 Minnesota Housing Finance Agency, Single Family Mortgage Bonds,
1996 Series H, 6.000%, 1/01/21 1/06 at 102 AA 1,941,557
- ------------------------------------------------------------------------------------------------------------------------------------
Missouri - 3.0%
1,000,000 The Industrial Development Authority of the City of Hazelwood, Missouri,
Multifamily Housing Revenue Refunding Bonds (GNMA Collateralized - The
Lakes Apartments Project), Series 1996, 6.000%, 9/20/16 9/06 at 102 AAA 1,066,760
8,000,000 City of Kansas City, Missouri, General Improvement Airport Refunding
Revenue Bonds, Series 1995, 6.750%, 9/01/09 9/05 at 101 AAA 9,307,600
4,500,000 Land Clearance For Redevelopment Authority of Kansas City, Missouri,
Lease Revenue Bonds (Municipal Auditorium and Muehlebach Hotel
Redevelopment Project), Series 1995A, 5.900%, 12/01/18 12/05 at 102 AAA 4,914,495
1,000,000 Kansas City Municipal Assistance Corporation, Leasehold Revenue
Capital Improvement Bonds (Kansas City, Missouri, Lessee),
Series 1996B, 5.750%, 1/15/14 1/06 at 101 AAA 1,085,660
1,030,000 Missouri Housing Development Commission, Multifamily Housing
Revenue Bonds (Brookstone Village Apartments Project),
1996 Series A, 6.000%, 12/01/16 (Alternative Minimum Tax) 12/06 at 102 AAA 1,091,501
3,415,000 Health and Educational Facilities Authority of the State of Missouri,
Health Facilities Revenue Bonds (Health Midwest), Series 1992B,
6.250%, 2/15/22 2/02 at 102 AAA 3,705,617
2,700,000 The Industrial Development Authority of the County of St. Louis,
Missouri, Multifamily Housing Revenue Refunding Bonds (GNMA
Collateralized - South Summit Apartments Project), Series 1997A,
6.050%, 4/20/27 4/07 at 102 AAA 2,892,483
- ------------------------------------------------------------------------------------------------------------------------------------
Nevada - 3.4%
2,905,000 Clark County, Nevada, General Obligation - Limited Tax (Additionally
Secured with Pledged Revenues), Airport Bonds, Series June 1, 1991,
10.000%, 6/01/01 No Opt. Call AAA 3,354,955
5,000,000 Clark County, Nevada, Industrial Development Revenue Bonds (Nevada Power
Company Project), Series 1992A, 6.700%, 6/01/22
(Alternative Minimum Tax) 6/02 at 102 AAA 5,483,100
Clark County School District, Nevada, General Obligation
(Limited Tax), School Improvement Bonds, Series May 1, 1995A:
7,295,000 7.250%, 6/15/03 No Opt. Call AAA 8,324,252
8,320,000 7.250%, 6/15/04 No Opt. Call AAA 9,673,997
- ------------------------------------------------------------------------------------------------------------------------------------
New York - 13.1%
Long Island Power Authority, Electric System General Revenue Bonds,
Series 1998A:
25,000,000 5.000%, 12/01/18 6/08 at 101 AAA 25,097,250
20,000,000 5.250%, 12/01/26 6/08 at 101 AAA 20,496,800
4,090,000 Metropolitan Transportation Authority, Commuter Facilities Revenue
Bonds, Series 1994A, 8.000%, 7/01/07 No Opt. Call AAA 5,200,721
5,000,000 Metropolitan Transportation Authority, Transit Facilities Revenue Bonds,
Series K, 6.300%, 7/01/06 No Opt. Call AAA 5,726,150
4,985,000 Metropolitan Transportation Authority, Transit Facilities Revenue Bonds,
Series O, 8.000%, 7/01/07 No Opt. Call AAA 6,338,776
4,000,000 The City of New York, General Obligation Bonds, Fiscal 1995 Series E,
8.000%, 8/01/05 No Opt. Call AAA 4,918,320
5,000,000 The City of New York General Obligation Bonds, Fiscal 1997 Series E,
6.000%, 8/01/08 8/06 at 101 1/2 AAA 5,617,700
The City of New York General Obligation Bonds, Fiscal 1993 Series A, 5.750%:
320,000 5.750%, 8/01/10 (Pre-refunded to 8/01/02) 8/02 at 101 1/2 AAA 347,222
2,180,000 5.750%, 8/01/10 8/02 at 101 1/2 AAA 2,348,318
5,230,000 Dormitory Authority of the State of New York, Maimonides Medical Center,
FHA-Insured Mortgage Hospital Revenue Bonds, Series 1996A,
5.750%, 8/01/14 2/06 at 102 AAA 5,700,962
4,000,000 Dormitory Authority of the State of New York, St. John's University,
Insured Revenue Bonds, Series 1998, 5.250%, 7/01/25 7/08 at 101 AAA 4,099,760
New York State Medical Care Facilities Finance Agency, New York
Hospital FHA-Insured Mortgage Revenue Bonds, 1994 Series A:
3,000,000 6.750%, 8/15/14 (Pre-refunded to 2/15/05) 2/05 at 102 AAA 3,506,010
2,500,000 6.800%, 8/15/24 (Pre-refunded to 2/15/05) 2/05 at 102 AAA 2,928,275
6,150,000 New York State Medical Care Facilities Finance Agency, Mental Health Services
Facilities Improvement Revenue Bonds, 1995 Series C, 6.000%, 8/15/15 2/05 at 102 AAA 6,744,890
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
New York (continued)
$ 3,000,000 New York State Thruway Authority, Highway and Bridge Trust Fund Bonds,
Series 1995B, 6.000%, 4/01/05 No Opt. Call AAA $3,332,130
1,070,000 City of Niagara Falls, Niagara County, New York, Public Improvement Serial
Bonds, Series 1994, 7.500%, 3/01/09 No Opt. Call AAA 1,361,971
- ------------------------------------------------------------------------------------------------------------------------------------
Ohio - 2.8%
City of Cleveland, Ohio, Waterworks Improvement First Mortgage
Revenue Bonds, Series F, 1992:
1,915,000 6.250%, 1/01/15 (Pre-refunded to 1/01/02) 1/02 at 102 AAA 2,097,078
85,000 6.250%, 1/01/15 1/02 at 102 AAA 91,909
5,000,000 Fairfield City School District, County of Butler, Ohio, School
Improvement Bonds, Series 1995, 6.000%, 12/01/20 12/05 at 100 AAA 5,471,150
2,250,000 Hamilton County, Ohio, Sewer System Improvement and Refunding Revenue
Bonds, 1993 Series A (The Metropolitan Sewer District of Greater
Cincinnati), 5.450%, 12/01/09 No Opt. Call AAA 2,489,783
5,805,000 Ohio Housing Finance Agency, Single Family Mortgage Revenue Bonds
(GNMA Mortgage-Backed Securities Program), 1989 Series A,
7.650%, 3/01/29 (Alternative Minimum Tax) 9/99 at 102 AAA 5,972,126
5,500,000 Ohio Air Quality Development Authority, State of Ohio, Collateralized
Pollution Control Revenue Refunding Bonds, Series 1992 (The Cleveland
Electric Illuminating Company Project), 8.000%, 12/01/13 6/02 at 103 AAA 6,355,965
- ------------------------------------------------------------------------------------------------------------------------------------
Oklahoma - 2.5%
8,425,000 McGee Creek Authority (Oklahoma), Water Revenue Bonds, Series 1992,
6.000%, 1/01/23 No Opt. Call AAA 9,722,113
6,000,000 Norman Regional Hospital Authority (Norman, Oklahoma), Hospital Revenue
Bonds, Series 1991, 6.900%, 9/01/21 (Pre-refunded to 9/01/01) 9/01 at 102 AAA 6,636,000
3,500,000 Oklahoma Turnpike System, Second Senior Revenue Bonds, Series 1998B,
5.250%, 1/01/28 1/09 at 100 AAA 3,564,645
- ------------------------------------------------------------------------------------------------------------------------------------
Pennsylvania - 4.1%
3,755,000 Allegheny County Residential Finance Authority, Single Family Mortgage
Revenue Bonds, 1996 Series AA, 6.450%, 5/01/28
(Alternative Minimum Tax) 11/06 at 102 Aaa 4,032,607
6,000,000 Cambria County Industrial Development Authority (Pennsylvania), Pollution
Control Revenue Refunding Bonds, 1995 Series A (Pennsylvania Electric
Company Project), 5.800%, 11/01/20 11/05 at 102 AAA 6,494,220
4,750,000 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 5,251,695
1,000,000 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 1,150,770
2,680,000 The School District of Philadelphia, Pennsylvania, General Obligation
Refunding Bonds, Series A of 1995, 6.250%, 9/01/08 No Opt. Call AAA 3,096,552
University of Pittsburgh - of the Commonwealth System of Higher
Education, University Capital Project Bonds (Pennsylvania), 1992 Series A:
1,395,000 6.125%, 6/01/21 (Pre-refunded to 6/01/02) 6/02 at 102 AAA 1,533,440
4,105,000 6.125%, 6/01/21 6/02 at 102 AAA 4,466,938
5,750,000 York County Solid Waste and Refuse Authority (Commonwealth of
Pennsylvania), Solid Waste System Refunding Revenue Bonds (County
Guaranteed), Series of 1997, 5.500%, 12/01/07 No Opt. Call AAA 6,339,260
- ------------------------------------------------------------------------------------------------------------------------------------
Puerto Rico - 2.0%
13,000,000 Puerto Rico Electric Power Authority, Power Revenue Refunding Bonds,
Series W, 7.000%, 7/01/07 No Opt. Call AAA 15,795,260
- ------------------------------------------------------------------------------------------------------------------------------------
South Carolina - 0.9%
6,500,000 Piedmont Municipal Power Agency (South Carolina), Electric Revenue Bonds,
1992 Refunding Series, 6.300%, 1/01/22 (Pre-refunded to 1/01/03) 1/03 at 102 AAA 7,243,860
- ------------------------------------------------------------------------------------------------------------------------------------
Tennessee - 0.2%
1,500,000 Knoxville's Community Development Corporation, Multifamily Mortgage
Revenue Bonds (GNMA Mortgage-Backed Security Program-Morningside Gardens
Project) Series 1993, 6.200%, 7/20/28 7/03 at 101 AAA 1,571,790
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Texas - 1.4%
State of Texas, Veteran's Housing Assistance Bonds, Series 1993,
General Obligation Bonds:
$ 8,295,000 6.800%, 12/01/23 (Alternative Minimum Tax) 12/03 at 102 AAA $8,981,660
1,655,000 6.800%, 12/01/23 (Alternative Minimum Tax) 12/03 at 102 AA 1,788,145
- ------------------------------------------------------------------------------------------------------------------------------------
Utah - 0.5%
3,600,000 State Board of Regents of the State of Utah, Student Loan Revenue Bonds,
Series 1993B, 5.900%, 11/01/13 (Alternative Minimum Tax) 11/03 at 102 Aaa 3,812,328
- ------------------------------------------------------------------------------------------------------------------------------------
Virginia - 0.3%
2,250,000 Virginia Housing Development Authority, Multifamily Housing Revenue Bonds,
Series B, 6.050%, 5/01/17 (Alternative Minimum Tax) 5/08 at 102 AAA 2,412,270
- ------------------------------------------------------------------------------------------------------------------------------------
Washington - 6.3%
2,500,000 City of Tacoma, Washington, Sewer Revenue Bonds, 1995 Series B,
6.375%, 12/01/15 12/05 at 100 AAA 2,816,300
8,100,000 Washington Health Care Facilities Authority, Revenue Bonds, Series 1992
(Virginia Mason Obligated Group, Seattle), 6.300%, 2/15/17 2/03 at 102 AAA 8,868,042
6,130,000 Washington Health Care Facilities Authority, Revenue Bonds, Series 1992
(Swedish Hospital Medical Center, Seattle), 6.300%, 11/15/22
(Pre-refunded to 11/15/02) 11/02 at 102 AAA 6,828,330
3,750,000 Washington Public Power Supply System, Nuclear Project No. 1 Refunding
Revenue Bonds, Series 1993B, 5.600%, 7/01/15 7/03 at 102 AAA 3,924,225
10,500,000 Washington Public Power Supply System, Nuclear Project No. 1 Refunding
Revenue Bonds, Series 1996A (Bonneville Power Administration),
5.750%, 7/01/11 7/06 at 102 AAA 11,502,645
2,000,000 Washington Public Power Supply System, Nuclear Project No. 1 Refunding
Revenue Bonds, Series 1997A, 5.125%, 7/01/14 7/07 at 102 AAA 2,039,400
Washington Public Power Supply System, Nuclear Project No. 3 Refunding
Revenue Bonds, Series 1989A:
6,295,000 5.600%, 7/01/17 7/03 at 102 AAA 6,521,305
5,535,000 6.000%, 7/01/18 (Pre-refunded to 7/01/99) 7/99 at 100 AAA 5,647,471
1,465,000 Yakima School District No. 7, Yakima County, Washington, Unlimited Tax
General Obligation Bonds, Series 1995, 6.250%, 12/01/07 No Opt. Call AAA 1,650,220
- ------------------------------------------------------------------------------------------------------------------------------------
West Virginia - 2.8%
20,000,000 The County Commission of Pleasants County, West Virginia, Pollution
Control Revenue Bonds (Monongahela Power Company Pleasants Station
Project), 1995 Series C, 6.150%, 5/01/15 5/05 at 102 AAA 22,183,999
- ------------------------------------------------------------------------------------------------------------------------------------
Wisconsin - 1.0%
2,000,000 Wisconsin Health and Educational Facilities Authority, Revenue Bonds,
Series 1992 (Children's Hospital of Wisconsin, Inc. Project),
6.500%, 8/15/10 (Pre-refunded to 8/15/02) 8/02 at 102 AAA 2,231,319
5,000,000 Wisconsin Health and Educational Facilities Authority, Revenue Bonds,
Series 1995 (Mercy Health System Corporation), 6.125%, 8/15/13 8/05 at 102 AAA 5,527,399
- ------------------------------------------------------------------------------------------------------------------------------------
$ 710,305,000 Total Investments - (cost $734,136,902) - 98.8% 784,252,722
============= --------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 1.2% 9,608,856
--------------------------------------------------------------------------------------------------------------------
Net Assets - 100% $793,861,578
====================================================================================================================
All of the bonds in the portfolio are either covered by Original Issue
Insurance, Secondary Market Insurance, or are backed by an escrow or trust
containing sufficient U.S. government or U.S. government agency securities, any
of which ensure the timely payment of principal and interest.
* 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.
(DD) Security purchased on a delayed delivery basis (note 1).
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
Statement of Net Assets
October 31, 1998
<CAPTION>
Insured Insured Premier Insured
Quality Opportunity Insured Income Premium Income 2
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets
Investments in municipal securities,
at market value (note 1) $848,625,493 $1,877,624,142 $442,188,021 $784,252,722
Temporary investments in short-term municipal securities,
at amortized cost, which approximates market value (note 1)2,100,000 10,900,000 1,900,000 --
Cash 233,160 51,026 37,578 --
Receivables:
Interest 15,825,315 36,652,932 8,053,438 15,480,890
Investments sold 230,481 2,396,130 150,000 14,500,348
Other assets 29,921 66,047 17,576 24,721
- ------------------------------------------------------------------------------------------------------------------------------------
Total assets 867,044,370 1,927,690,277 452,346,613 814,258,681
- ------------------------------------------------------------------------------------------------------------------------------------
Liabilities
Cash overdraft -- -- -- 2,090,059
Payable for investments purchased -- 26,880,201 -- 15,037,548
Accrued expenses:
Management fees (note 6) 459,876 987,138 243,817 423,793
Other 420,075 683,951 150,091 498,471
Preferred share dividends payable 104,275 183,809 47,560 94,270
Common share dividends payable 2,880,793 6,366,443 1,439,118 2,252,962
- ------------------------------------------------------------------------------------------------------------------------------------
Total liabilities 3,865,019 35,101,542 1,880,586 20,397,103
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets (note 7) $863,179,351 $1,892,588,735 $450,466,027 $793,861,578
====================================================================================================================================
Preferred shares, at liquidation value $260,000,000 $ 600,000,000 $140,000,000 $268,900,000
====================================================================================================================================
Preferred shares outstanding 10,400 24,000 5,600 10,756
====================================================================================================================================
Common shares outstanding 37,657,429 80,587,879 19,188,247 37,239,037
====================================================================================================================================
Net asset value per Common share outstanding (net assets less Preferred shares
at liquidation value, divided by Common shares
outstanding) $ 16.02 $ 16.04 $ 16.18 $ 14.10
====================================================================================================================================
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statement of Operations
Year Ended October 31, 1998
Insured Insured Premier Insured
Quality Opportunity Insured Income Premium Income 2
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment Income (note 1) $51,360,720 $111,523,378 $25,867,304 $41,732,808
- ------------------------------------------------------------------------------------------------------------------------------------
Expenses
Management fees (note 6) 5,352,056 11,494,612 2,835,848 4,915,697
Preferred shares - auction fees 628,629 1,500,000 349,999 672,250
Preferred shares - dividend disbursing agent fees 36,712 59,999 19,998 50,001
Shareholders' servicing agent fees and expenses 123,850 194,523 48,722 71,909
Custodian's fees and expenses 109,252 207,864 71,300 105,602
Directors'/Trustees' fees and expenses (note 6) 7,918 17,391 4,140 7,239
Professional fees 21,458 24,613 20,148 21,829
Shareholders' reports - printing and mailing expenses 192,621 410,450 100,973 182,501
Stock exchange listing fees 32,748 68,007 24,262 32,547
Portfolio insurance expense 121,940 236,890 -- 27,453
Investor relations expense 73,107 150,947 36,126 61,980
Other expenses 42,867 88,032 26,325 41,391
- ------------------------------------------------------------------------------------------------------------------------------------
Total expenses 6,743,158 14,453,328 3,537,841 6,190,399
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income 44,617,562 97,070,050 22,329,463 35,542,409
- ------------------------------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain from Investments
Net realized gain from investment transactions
(notes 1 and 4) 6,071,593 4,892,106 980,248 5,306,267
Net change in unrealized appreciation or
depreciation of investments 7,097,066 17,252,534 6,160,462 14,400,072
- ------------------------------------------------------------------------------------------------------------------------------------
Net gain from investments 13,168,659 22,144,640 7,140,710 19,706,339
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $57,786,221 $119,214,690 $29,470,173 $55,248,748
====================================================================================================================================
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
Statement of Changes in Net Assets
<CAPTION>
Insured Quality Insured Opportunity
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended
10/31/98 10/31/97 10/31/98 10/31/97
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operations
Net investment income $ 44,617,562 $ 45,571,378 $ 97,070,050 $ 98,183,669
Net realized gain (loss) from investment transactions
(notes 1 and 4) 6,071,593 448,311 4,892,106 (765,609)
Net change in unrealized appreciation
or depreciation of investments 7,097,066 10,103,347 17,252,534 23,097,394
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations 57,786,221 56,123,036 119,214,690 120,515,454
- -----------------------------------------------------------------------------------------------------------------------------------
Distributions to Shareholders (note 1)
From undistributed net investment income:
Common shareholders (35,204,129) (36,606,433) (77,561,303) (78,482,463)
Preferred shareholders (9,554,564) (9,532,872) (20,642,256) (20,702,910)
From accumulated net realized gains
from investment transactions:
Common shareholders (453,849) (2,596,924) -- (1,903,809)
Preferred shareholders (19,266) (659,152) -- (488,200)
- -----------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets from distributions to shareholders (45,231,808) (49,395,381) (98,203,559) (101,577,382)
- -----------------------------------------------------------------------------------------------------------------------------------
Capital Share Transactions (note 2)
Net proceeds from Common shares issued to shareholders due to
reinvestment of distributions 2,263,160 2,330,125 9,806,987 5,101,250
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets 14,817,573 9,057,780 30,818,118 24,039,322
Net assets at beginning of year 848,361,778 839,303,998 1,861,770,617 1,837,731,295
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets at end of year $863,179,351 $848,361,778 $1,892,588,735 $1,861,770,617
===================================================================================================================================
Balance of undistributed net investment income
at end of year $ 607,620 $ 748,751 $ 1,000,488 $ 2,133,997
===================================================================================================================================
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
Statement of Changes in Net Assets (continued)
<CAPTION>
Premier Insured Income Insured Premium Income 2
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended
10/31/98 10/31/97 10/31/98 10/31/97
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operations
Net investment income $ 22,329,463 $ 22,687,584 $ 35,542,409 $ 37,191,148
Net realized gain (loss) from investment transactions
(notes 1 and 4) 980,248 647,328 5,306,267 6,081,917
Net change in unrealized appreciation or
depreciation of investments 6,160,462 6,330,640 14,400,072 14,037,201
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations 29,470,173 29,665,552 55,248,748 57,310,266
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions to Shareholders (note 1)
From undistributed net investment income:
Common shareholders (17,721,831) (17,900,403) (27,350,824) (27,035,440)
Preferred shareholders (4,817,384) (4,895,368) (9,249,566) (9,390,887)
From accumulated net realized gains
from investment transactions:
Common shareholders (400,607) -- -- --
Preferred shareholders (110,068) -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets from distributions to shareholders (23,049,890) (22,795,771) (36,600,390) (36,426,327)
- -----------------------------------------------------------------------------------------------------------------------------------
Capital Share Transactions (note 2)
Net proceeds from Common shares issued to shareholders due to
reinvestment of distributions 872,626 168,892 -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets 7,292,909 7,038,673 18,648,358 20,883,939
Net assets at beginning of year 443,173,118 436,134,445 775,213,220 754,329,281
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets at end of year $450,466,027 $443,173,118 $793,861,578 $775,213,220
===================================================================================================================================
Balance of undistributed net investment
income at end of year $ 295,556 $ 505,308 $ 715,168 $ 1,773,149
===================================================================================================================================
See accompanying notes to financial statements.
</TABLE>
<PAGE>
Notes to Financial Statements
1. General Information and Significant Accounting Policies
The National Funds (the "Funds") covered in this report and their corresponding
New York Stock Exchange symbols are Nuveen Insured Quality Municipal Fund, Inc.
(NQI), Nuveen Insured Municipal Opportunity Fund, Inc. (NIO), Nuveen Premier
Insured Municipal Income Fund, Inc. (NIF) and Nuveen Insured Premium Income
Municipal Fund 2 (NPX).
Each Fund invests primarily in a diversified portfolio of municipal obligations
issued by state and local government authorities. The Funds are registered under
the Investment Company Act of 1940 as closed-end, diversified management
investment companies.
The following is a summary of significant accounting policies followed by the
Funds in the preparation of their financial statements in accordance with
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
October 31, 1998, Insured Opportunity and Insured Premium Income 2 had
outstanding when-issued and delayed delivery purchase commitments of $20,498,995
and $15,037,548, respectively. There were no such outstanding purchase
commitments in either of the other Funds.
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.
Federal Income Taxes
Each Fund is a separate taxpayer for federal income tax purposes. Each Fund
intends to comply with the requirements of the Internal Revenue Code applicable
to regulated investment companies and to distribute all of its 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 Fund
intends to satisfy conditions which will enable interest from municipal
securities, which is exempt from regular federal income tax, to retain such
tax-exempt status when distributed to shareholders of the Funds. All monthly
tax-exempt income dividends paid during the fiscal year ended October 31, 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 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,
except for Insured Quality Series F which has lengthened its current dividend
period from seven days to five years. The number of Preferred shares
outstanding, by Series and in total, at October 31, 1998, is as follows:
<TABLE>
<CAPTION>
Premier Insured
Insured Insured Insured Premium
Quality Opportunity Income Income 2
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Number of shares:
Series M 2,600 4,000 -- 2,080
Series T 2,600 4,000 -- 2,200
Series W 2,600 4,000 -- 2,080
Series Th -- 4,000 2,800 2,200
Series Th2 -- 4,000 -- --
Series F 2,600 4,000 2,800 2,196
- ---------------------------------------------------------------------------------------------------------
Total 10,400 24,000 5,600 10,756
=========================================================================================================
</TABLE>
Insurance
The Funds invest in municipal securities which are either covered by insurance
or are backed by an escrow or trust account containing sufficient U.S.
government or U.S. government agency securities, both of which ensure the timely
payment of principal and interest. Each insured municipal security is covered by
Original Issue Insurance, Secondary Market Insurance or Portfolio Insurance.
Such insurance does not guarantee the market value of the municipal securities
or the value of the Funds' shares. Original Issue Insurance and Secondary Market
Insurance remain in effect as long as the municipal securities covered thereby
remain outstanding and the insurer remains in business, regardless of whether
the Funds ultimately dispose of such municipal securities. Consequently, the
market value of the municipal securities covered by Original Issue Insurance or
Secondary Market Insurance may reflect value attributable to the insurance.
Portfolio Insurance is effective only while the municipal securities are held by
the Funds. Accordingly, neither the prices used in determining the market value
of the underlying municipal securities nor the net asset value of the Funds'
shares include value, if any, attributable to the Portfolio Insurance. Each
policy of the Portfolio Insurance does, however, give the Funds the right to
obtain permanent insurance with respect to the municipal security covered by the
Portfolio Insurance policy at the time of its sale.
Derivative Financial Instruments
The Funds may invest in certain derivative financial instruments including
futures, forward, swap and option contracts, and other financial instruments
with similar characteristics. Although the Funds are authorized to invest in
such financial instruments, and may do so in the future, they did not make any
such investments during the fiscal year ended October 31, 1998.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of increases and decreases in net
assets from operations during the reporting period. Actual results may differ
from those estimates.
<PAGE>
2. Fund Shares
Transactions in Common shares were as follows:
<TABLE>
<CAPTION>
Insured Quality Insured Opportunity
- ----------------------------------------------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended
10/31/98 10/31/97 10/31/98 10/31/97
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares issued to shareholders
due to reinvestment
of distributions 140,631 150,998 606,605 324,092
==========================================================================================================
<CAPTION>
Premier Insured Income Insured Premium Income 2
- ----------------------------------------------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended
10/31/98 10/31/97 10/31/98 10/31/97
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares issued to shareholders
due to reinvestment
of distributions 54,102 10,669 -- --
==========================================================================================================
</TABLE>
3. Distributions to Common Shareholders
The Funds declared Common share dividend distributions from their tax-exempt net
investment income which were paid on December 1, 1998, to shareholders of record
on November 15, 1998, as follows:
<TABLE>
<CAPTION>
Premier Insured
Insured Insured Insured Premium
Quality Opportunity Income Income 2
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Dividend per share $.0765 $.0790 $.0750 $.0605
=========================================================================================================
</TABLE>
4. Securities Transactions
Purchases and sales (including maturities) of investments in municipal
securities and temporary municipal investments for the fiscal year ended October
31, 1998, were as follows:
<TABLE>
<CAPTION>
Premier Insured
Insured Insured Insured Premium
Quality Opportunity Income Income 2
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Purchases:
Investments in municipal securities $132,375,226 $237,987,109 $45,783,278 $254,232,375
Temporary municipal investments 84,610,000 127,200,000 27,600,000 132,150,000
Sales and Maturities:
Investments in municipal securities 134,100,294 214,493,687 47,608,241 236,318,289
Temporary municipal investments 85,410,000 117,700,000 25,700,000 132,150,000
=========================================================================================================
</TABLE>
At October 31, 1998, the identified cost of investments owned for federal income
tax purposes was the same as the cost for financial reporting purposes for each
Fund.
At October 31, 1998, Insured Premium Income 2 had unused capital loss
carryforwards of $16,029,037 available for federal income tax purposes to be
applied against future capital gains, if any. If not applied, $1,918,696 of the
carryforward will expire in the year 2002, $12,029,555 will expire in the year
2003 and $2,080,786 will expire in the year 2004.
<PAGE>
5. Unrealized Appreciation (Depreciation)
Gross unrealized appreciation and gross unrealized depreciation of investments
at October 31, 1998, were as follows:
<TABLE>
<CAPTION>
Premier Insured
Insured Insured Insured Premium
Quality Opportunity Income Income 2
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Gross unrealized:
appreciation $71,155,290 $165,793,813 $43,029,882 $50,132,941
depreciation (15,164) -- (84,800) (17,121)
- ---------------------------------------------------------------------------------------------------------
Net unrealized appreciation $71,140,126 $165,793,813 $42,945,082 $50,115,820
=========================================================================================================
</TABLE>
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 October 31, 1998, net assets consisted of:
<TABLE>
<CAPTION>
Premier Insured
Insured Insured Insured Premium
Quality Opportunity Income Income 2
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Preferred shares, $25,000 stated value per share,
at liquidation value $260,000,000 $ 600,000,000 $140,000,000 $268,900,000
Common shares, $.01 par value per share 376,574 805,879 191,882 372,390
Paid-in surplus 525,010,838 1,120,862,058 266,053,774 489,883,197
Balance of undistributed net investment income 607,620 1,000,488 295,556 715,168
Accumulated net realized gain (loss) from
investment transactions 6,044,193 4,126,497 979,733 (16,124,997)
Net unrealized appreciation of investments 71,140,126 165,793,813 42,945,082 50,115,820
- -----------------------------------------------------------------------------------------------------------------
Net assets $863,179,351 $1,892,588,735 $450,466,027 $793,861,578
=================================================================================================================
Authorized shares:
Common 200,000,000 200,000,000 200,000,000 Unlimited
Preferred 1,000,000 1,000,000 1,000,000 Unlimited
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
8. Investment Composition
At October 31, 1998, the revenue sources by municipal purpose, expressed as a
percent of total investments, were as follows:
<TABLE>
<CAPTION>
Premier Insured
Insured Insured Insured Premium
Quality Opportunity Income Income 2
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Education and Civic Organizations 2% 1% 1% 2%
Health Care 19 16 12 9
Housing/Multifamily 4 3 6 9
Housing/Single Family 13 12 6 6
Tax Obligation/General 8 4 4 17
Tax Obligation/Limited 8 5 10 12
Transportation 5 5 3 8
U.S. Guaranteed 24 34 40 15
Utilities 16 15 17 20
Water and Sewer 1 5 1 2
- --------------------------------------------------------------------------------------------------------
100% 100% 100% 100%
========================================================================================================
</TABLE>
All of the long-term and intermediate-term investments owned by the Funds are
either covered by insurance issued by several private insurers or are backed by
an escrow or trust containing U.S. government or U.S. government agency
securities, both of which ensure the timely payment of principal and interest in
the event of default. Such insurance or escrow, however, does not guarantee the
market value of the municipal securities or the value of any of the Funds'
shares.
All of the temporary investments in short-term municipal securities have credit
enhancements (letters of credit, guarantees or insurance) issued by third party
domestic or foreign banks or other institutions.
For additional information regarding each investment security, refer to the
Portfolio of Investments of each Fund.
<PAGE>
Financial Highlights
Selected data for a Common share outstanding throughout each period is
as follows:
<TABLE>
<CAPTION>
Investment Operations
--------------------------------
Net Realized/
Beginning Net Unrealized
Net Asset Investment Investment
Value Income Gain (Loss) Total
<S> <C> <C> <C> <C>
Insured Quality
Year Ended 10/31:
1998 $15.68 $1.18 $ .36 $ 1.54
1997 15.50 1.22 .28 1.50
1996 15.79 1.24 (.12) 1.12
1995 14.50 1.27 1.32 2.59
1994 16.58 1.27 (2.04) (.77)
<CAPTION>
Insured Opportunity
<S> <C> <C> <C> <C>
Year Ended 10/31:
1998 15.78 1.21 .28 1.49
1997 15.54 1.23 .28 1.51
1996 15.60 1.24 .02 1.26
1995 14.04 1.25 1.60 2.85
1994 16.24 1.24 (2.18) (.94)
<CAPTION>
Premier Insured Income
<S> <C> <C> <C> <C>
Year Ended 10/31:
1998 15.84 1.16 .38 1.54
1997 15.49 1.19 .36 1.55
1996 15.53 1.19 (.03) 1.16
1995 14.05 1.20 1.51 2.71
1994 16.28 1.19 (2.21) (1.02)
<CAPTION>
Insured Premium Income 2
<S> <C> <C> <C> <C>
Year Ended 10/31:
1998 13.60 .95 .53 1.48
1997 13.04 1.00 .54 1.54
1996 13.03 .99 -- .99
1995 10.99 1.00 2.08 3.08
1994 14.29 .98 (3.16) (2.18)
<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>
Insured Quality
Year Ended 10/31:
1998 $ (.94) $(.25) $(.01) $-- $(1.20)
1997 (.98) (.25) (.07) (.02) (1.32)
1996 (.98) (.25) (.14) (.04) (1.41)
1995 (1.01) (.29) -- -- (1.30)
1994 (1.04) (.26) (.01) -- (1.31)
<CAPTION>
Insured Opportunity
<S> <C> <C> <C> <C> <C>
Year Ended 10/31:
1998 (.97) (.26) -- -- (1.23)
1997 (.98) (.26) (.02) (.01) (1.27)
1996 (.98) (.26) (.06) (.02) (1.32)
1995 (.98) (.31) -- -- (1.29)
1994 (1.00) (.25) (.01) -- (1.26)
<CAPTION>
Premier Insured Income
<S> <C> <C> <C> <C> <C>
Year Ended 10/31:
1998 (.92) (.25) (.02) (.01) (1.20)
1997 (.94) (.26) -- -- (1.20)
1996 (.94) (.26) -- -- (1.20)
1995 (.94) (.29) -- -- (1.23)
1994 (.96) (.25) -- -- (1.21)
<CAPTION>
Insured Premium Income 2
<S> <C> <C> <C> <C> <C>
Year Ended 10/31:
1998 (.73) (.25) -- -- (.98)
1997 (.73) (.25) -- -- (.98)
1996 (.71) (.27) -- -- (.98)
1995 (.75) (.29) -- -- (1.04)
1994 (.78) (.20) -- -- (.98)
<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>
Insured Quality
Year Ended 10/31:
1998 $-- $16.02 $15.6250 6.13% 8.43%
1997 -- 15.68 15.6250 10.57 8.22
1996 -- 15.50 15.1250 8.54 5.49
1995 -- 15.79 15.0000 22.62 16.43
1994 -- 14.50 13.1250 (19.13) (6.43)
<CAPTION>
Insured Opportunity
<S> <C> <C> <C> <C> <C>
Year Ended 10/31:
1998 -- 16.04 16.6250 12.03 7.99
1997 -- 15.78 15.7500 10.18 8.32
1996 -- 15.54 15.2500 9.77 6.50
1995 -- 15.60 14.8750 22.78 18.74
1994 -- 14.04 13.0000 (13.60) (7.59)
<CAPTION>
Premier Insured Income
<S> <C> <C> <C> <C> <C>
Year Ended 10/31:
1998 -- 16.18 16.8750 14.06 8.35
1997 -- 15.84 15.6875 12.09 8.56
1996 -- 15.49 14.8750 9.23 5.93
1995 -- 15.53 14.5000 24.14 17.73
1994 -- 14.05 12.5000 (14.53) (8.06)
<CAPTION>
Insured Premium Income 2
<S> <C> <C> <C> <C> <C>
Year Ended 10/31:
1998 -- 14.10 13.6875 16.35 9.28
1997 -- 13.60 12.4375 15.45 10.15
1996 -- 13.04 11.4380 6.95 5.70
1995 -- 13.03 11.3750 23.46 26.20
1994 (.14) 10.99 9.8750 (23.99) (18.24)
<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>
Insured Quality
Year Ended 10/31:
1998 $ 863,179 .79% 5.21% 16%
1997 848,362 .79 5.44 8
1996 839,304 .80 5.50 33
1995 849,583 .81 5.73 30
1994 801,482 .82 5.64 22
<CAPTION>
Insured Opportunity
<S> <C> <C> <C> <C>
Year Ended 10/31:
1998 1,892,589 .77 5.17 12
1997 1,861,771 .78 5.34 8
1996 1,837,731 .78 5.38 18
1995 1,841,780 .79 5.59 16
1994 1,717,023 .79 5.44 20
<CAPTION>
Premier Insured Income
<S> <C> <C> <C> <C>
Year Ended 10/31:
1998 450,466 .79 5.00 10
1997 443,173 .80 5.18 4
1996 436,134 .80 5.22 3
1995 436,920 .81 5.40 5
1994 408,690 .81 5.30 4
<CAPTION>
Insured Premium Income 2
<S> <C> <C> <C> <C>
Year Ended 10/31:
1998 793,862 .79 4.53 31
1997 775,213 .80 4.89 37
1996 754,329 .86 4.78 32
1995 427,908 .83 5.07 30
1994 385,692 .83 4.83 25
* 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>
<PAGE>
Building a Better Portfolio Can Make You a Successful Investor
Nuveen Family of Mutual Funds
Nuveen offers a variety of funds designed to help you reach your financial
goals.
Growth
Nuveen Rittenhouse
Growth Fund
Growth and Income
European Value Fund
Growth and
Income Stock Fund
Balanced Stock
and Bond Fund
Balanced Municipal
and Stock Fund
Tax-Free Income
National Funds
Long-Term
Insured
Intermediate-Term
Limited-Term
State Funds
Arizona
California
Colorado
Connecticut
Florida
Georgia
Kansas
Kentucky
Louisiana
Maryland
Massachusetts
Michigan
Missouri
New Jersey
New Mexico
New York
North Carolina
Ohio
Pennsylvania
Tennessee
Virginia
Wisconsin
Successful investors know that a well-diversified portfolio - one that balances
different types of investments, levels of risk and tax management - can be the
foundation for building and sustaining wealth. That's why Nuveen offers you and
your financial adviser a wide range of quality investments that can help you
build a better portfolio in the pursuit of your financial goals
Exchange-Traded Funds
Nuveen Exchange-Traded Funds offer investors actively managed portfolios of
investment-grade quality municipal bonds. The fund shares are listed and traded
on the New York and American stock exchanges. Exchange-traded funds provide the
investment convenience, price visibility and liquidity of common stocks.
MuniPreferred(R)
Nuveen MuniPreferred offers investors a AAA rated investment with an attractive
tax-free yield for the cash reserves portion of an investment portfolio.
MuniPreferred shares are backed 2-to-1 by the long-term portfolios of Nuveen
dual-class exchange-traded funds and are available for national as well as a
wide variety of state-specific portfolios.
Mutual Funds
Nuveen offers a family of equity, balanced and municipal bond funds featuring
Premier AdvisersSM including Institutional Capital Corporation, Rittenhouse
Financial Services, and Nuveen Advisory Corp. Each brings a specialized
expertise in a particular investment style or asset class, time-tested
investment strategies and a focus on consistent, long-term performance. With
Nuveen's Premier Adviser funds, you have all the advantages of a family of funds
plus the benefits of specialized investment expertise.
Private Asset Management
Rittenhouse Financial Services and Nuveen Asset Management offer comprehensive,
customized investment management solutions to investors with assets of $250,000
or more to invest. A range of actively managed growth, balanced and municipal
income-oriented portfolios are available, all based upon a disciplined
investment philosophy.
Defined Portfolios
Nuveen Defined Portfolios are fixed portfolios of quality securities that are a
convenient, attractive alternative to purchasing individual securities. They
provide low-cost diversification to reduce risk, while also offering
experienced, professional security selection and surveillance. In addition,
Nuveen Defined Portfolios provide daily liquidity at that day's net asset value
for quick access to your assets.
<PAGE>
Fund Information
Board of Directors/Trustees
Robert P. Bremner
Lawrence H. Brown
Anthony T. Dean
Anne E. Impellizzeri
Peter R. Sawers
William J. Schneider
Timothy R. Schwertfeger
Judith M. Stockdale
Fund Manager
Nuveen Advisory Corp.
333 West Wacker Drive
Chicago, IL 60606
Custodian, Transfer Agent
and Shareholder Services
The Chase Manhattan Bank
4 New York Plaza
New York, NY 10004-2413
(800) 257-8787
Legal Counsel
Morgan, Lewis &
Bockius LLP
Washington, D.C.
Independent Auditors
Ernst & Young LLP
Chicago, IL
Year 2000
The concern that computer systems may have problems processing date-related
information in the year 2000 and beyond has challenged businesses and
organizations to thoroughly review all aspects of their operations. We have
undertaken just such an approach at Nuveen in preparation for the millennium.
Over the last 10 years, our trading, fund management and pricing systems at
Nuveen - the systems that directly affect our investors and their financial
advisers - have been updated or replaced to address the Year 2000 concerns.
We continue to work closely with our transfer agent, custodian and other service
partners to monitor readiness and address other remaining systems issues. Our
initial testing indicates we are on schedule, and we have targeted year-end 1998
to complete verification of vendor compliance and service partner readiness.
However, we can give no complete assurance at this time that the steps we have
taken will be sufficient to prevent any problems that would impact the Nuveen
Exchange-Traded Funds.
Each fund intends to repurchase shares of its own common or preferred stock in
the future at such times and in such amounts as is deemed advisable. No shares
were repurchased during the 12-month period ended October 31, 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.
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
investments designed for risk-sensitive individuals seeking to build and sustain
wealth. In fact, more than 1.3 million investors have trusted Nuveen to help
them maintain the lifestyle they currently enjoy.
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 products and services to
help meet your unique circumstances and financial planning needs. Our equity,
balanced, and income funds, along with our unit trusts and private asset
management, can form the foundation of a tax-efficient and risk-resistant
portfolio.
Talk with your financial adviser to learn more about how Nuveen investment
products and services can help you build and sustain your long-term financial
security. Or call us at (800) 257-8787 for more information, including a
prospectus where applicable. Please read that information carefully before you
invest.
LOGO:
NUVEEN 1898 1998
OUR SECOND CENTURY
helping investors sustain the wealth of a lifetime(tm).
John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, IL 60606-1286
www.nuveen.com
FAN-4-10-98
