DiVall Insured Income Properties 2, L.P.



QUARTERLY NEWS



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|A publication of The Provo Group, Inc. |  | SECOND QUARTER 2003
|-------------------------------------- |  | -------------------



Consent Results:DONT SELL!



THE RESULTS OF THE CONSENTS HAVE
BEEN TABULATED. The majority of units voted not to sell the Partnership. Fourteen percent (14%) of units voted to sell (vs. 26% in the 2001 vote), which was significantly below the majority required of fifty-one percent (51%). Therefore, we
will continue to operate the Partnership. As you will note in the remainder of this Newsletter, we continue to dispose of properties that we dont feel will fit our risk profile for future years. We will, of course, continue to monitor limited
partner preferences with our biennial vote.



BEWARE OF OFFERS
TO PURCHASE YOUR UNITS . . .

Large distribution coming November 15, 2003



We have already closed the sales of two properties during the third quarter and we expect
distributions associated with these sales of $32 per unitpayable with the November 15, 2003 distribution. We have an additional sale pending with an anticipated third quarter closing. If this sale closes we will distribute an additional
$11 per unit with the November 15, 2003 distribution.



DISTRIBUTION HIGHLIGHTS



| |  |  | $845,000 total amount distributed for the Second Quarter 2003 which is $402,000 higher than originally projected primarily because the sale of the S. Milwaukee property
closed in the Second Quarter instead of the First Quarter as planned.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | $18.26 per unit (approx.) for the Second Quarter 2003, of this approximately $8.68wasreturn of
capital. The annualized operating return (net of the return of capital) is 7.8%.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | $1,165 to $1,016 range of distributions per unit from the first unit sold to the last unit sold before the offering closed (3/90) respectively. (Distributions are from
both cash flow from operations and net cash activity from financing and investing activities).
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



SEE INSIDE



|Property Sales      |  | 2  
|------------------- |  | ---
|Litigation Issues   |  | 2-3
|Questions & Answers |  | 3  



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|PAGE 2 |  | DIVALL 2 |  | 2 Q 03
|------ |  | -------- |  | ------



PROPERTY HIGHLIGHTS



Consistent
with our expressed intent to prune away properties that have more perceived tenant risk in the future, we have had considerable sales success as noted below:



Property Sales



| |  |  | Former Hardees (S. Milwaukee, WI).The sale with QSRE, L.L.C. (operator of Pizza Hut, Taco Bell and KFC) closed on April 18, 2003. The net sales proceeds of $410,000
will be distributed with the August 15, 2003 distribution.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Hardees (Fond du Lac, WI).The sale with Milwaukee Street Partners, LLC closed on July 30, 2003. The net sales proceeds of $700,000 will be distributed with the
November 15, 2003 distribution.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Omega Restaurants (Milwaukee, WI).The sale of this property with the tenant closed on July 28, 2003. The net sales proceeds of $800,000 will be distributed with the November
15, 2003 distribution.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Former Fiesta Time (Twin Falls, ID). The property is currently under contract with a closing anticipated in the third quarter. Net proceeds from the sale will approximate
$520,000, and if the sale closes in the third quarter we will distribute the proceeds with the November 15, 2003 distribution.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Litigation Issues



We set a goal in our correspondence to you on January 31, 2003, to substantially resolve our litigation issues in the following six months. Six months later heres
where we stand . . .



| |  | Mulberry Street Grill (Phoenix, AZ)
|- |  | -----------------------------------

| |  |  | Case settled.
| | - |  | -------------

| |  |  | Future ground lease liabilities extinguished.
| | - |  | ---------------------------------------------



| |  | Village Inn (Grand Forks, ND)
|- |  | -----------------------------

| |  |  | Case settled.
| | - |  | -------------

| |  |  | Tenant paid $50,000.
| | - |  | --------------------



| |  | Fiesta Time (Twin Falls, ID)
|- |  | ----------------------------

| |  |  | Case won.
| | - |  | ---------

| |  |  | Tenant evicted.
| | - |  | ---------------

| |  |  | Tenant paid $30,000.
| | - |  | --------------------

| |  |  | Property under contract for sale.
| | - |  | ---------------------------------



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| |  | Popeyes (Park Forest, IL)This tenant was delinquent at June 30, 2003 in the amount of $136,610. The delinquent amount represents 2001 and 2002 percentage rents as well
as the related late fees. Although this tenant is in default they remain current with their fixed rent. We are actively pursuing the collection of the past due balance. This tenant continues to seek a settlement which is not in the best interest of
the partnership and smells of a stalling tactic in our litigation process.
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



QUESTIONS & ANSWERS



| |  | When can I expect my next distribution mailing?
|- |  | -----------------------------------------------

Your distribution correspondence for the Third Quarter of 2003 is scheduled to be mailed on November 15, 2003.



| |  | If I have questions or comments, how can I reach your office?
|- |  | -------------------------------------------------------------



|MAIL:   |  | Investor Relations, 101 W. 11thStreet, Suite 1110
|------- |  | -------------------------------------------------
|        |  | Kansas City, MO 64105                            
|PHONE:  |  | 800-547-7686 OR (816) 421-7444 EXTENSION 224     
|FAX:    |  | (816) 221-2130                                   
|E-MAIL: |  | mevans@theprovogroup.com                         



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DIVALL INSURED INCOME PROPERTIES 2 L.P.

STATEMENTS OF INCOME AND CASH FLOW CHANGES

FOR THE THREE MONTH PERIOD ENDED
JUNE 30, 2003



|                                                                     |  | PROJECTED            |            |   | ACTUAL               |   |            | VARIANCE      | 
|-------------------------------------------------------------------- |  | -------------------- | ---------- | - | -------------------- | - | ---------- | ------------- | 
|                                                                     |  | 2NDQUARTER06/30/2003 |            |   | 2NDQUARTER06/30/2003 |   |            | BETTER(WORSE) | 
|OPERATING REVENUES                                                   |  |                      |            |   |                      |   |            |               | 
|Rental income                                                        |  | $                    | 470,050    |   |                      | $ | 474,644    |               | 
|Interest income                                                      |  |                      | 4,500      |   |                      |   | 3,567      |               | 
|Lease termination fee                                                |  |                      | 0          |   |                      |   | 50,000     |               | 
|Other income                                                         |  |                      | 0          |   |                      |   | 1,450      |               | 
|                                                                     |  |                      |            |   |                      |   |            |               | 
|TOTAL OPERATING REVENUES                                             |  | $                    | 474,550    |   |                      | $ | 529,661    |               | 
|                                                                     |  |                      |            |   |                      |   |            |               | 
|OPERATING EXPENSES                                                   |  |                      |            |   |                      |   |            |               | 
|Insurance                                                            |  | $                    | 8,685      |   |                      | $ | 8,682      |               | 
|Management fees                                                      |  |                      | 50,919     |   |                      |   | 50,647     |               | 
|Overhead allowance                                                   |  |                      | 4,110      |   |                      |   | 4,091      |               | 
|Advisory Board                                                       |  |                      | 2,189      |   |                      |   | 2,188      |               | 
|Administrative                                                       |  |                      | 23,944     |   |                      |   | 32,609     |               | 
|Professional services                                                |  |                      | 13,500     |   |                      |   | 22,721     |               | 
|Auditing                                                             |  |                      | 18,000     |   |                      |   | 18,000     |               | 
|Legal                                                                |  |                      | 12,000     |   |                      |   | 31,635     |               | 
|Property Expenses                                                    |  |                      | 5,250      |   |                      |   | 3,839      |               | 
|                                                                     |  |                      |            |   |                      |   |            |               | 
|TOTAL OPERATING EXPENSES                                             |  | $                    | 138,597    |   |                      | $ | 174,412    |               | 
|                                                                     |  |                      |            |   |                      |   |            |               | 
|INVESTIGATION AND RESTORATION EXPENSES                               |  | $                    | 0          |   |                      | $ | 62         |               | 
|                                                                     |  |                      |            |   |                      |   |            |               | 
|NON-OPERATING EXPENSES                                               |  |                      |            |   |                      |   |            |               | 
|Uncollectible Receivable                                             |  | $                    | 24,150     |   |                      | $ | 0          |               | 
|Depreciation                                                         |  |                      | 76,659     |   |                      |   | 71,757     |               | 
|Amortization                                                         |  |                      | 3,990      |   |                      |   | 5,025      |               | 
|Property Write-down                                                  |  |                      | 0          |   |                      |   | 15,189     |               | 
|                                                                     |  |                      |            |   |                      |   |            |               | 
|TOTAL NON-OPERATING EXPENSES                                         |  | $                    | 104,799    |   |                      | $ | 91,970     |               | 
|                                                                     |  |                      |            |   |                      |   |            |               | 
|TOTAL EXPENSES                                                       |  | $                    | 243,395    |   |                      | $ | 266,444    |               | 
|                                                                     |  |                      |            |   |                      |   |            |               | 
|NET INCOME                                                           |  | $                    | 231,155    |   |                      | $ | 263,217    |               | 
|                                                                     |  |                      |           
|                                                                     |  |                      |            |   |                      |   |            | VARIANCE      | 
|OPERATING CASH RECONCILIATION:                                       |  |                      |            |   |                      |   |            |               | 
|Depreciation and amortization                                        |  |                      | 80,649     |   |                      |   | 76,781     |               | 
|Recovery of amounts previously written off                           |  |                      | 0          |   |                      |   | (1,556     | )             | 
|Property Write-down                                                  |  |                      | 0          |   |                      |   | 15,189     |               | 
|(Increase) Decrease in current assets                                |  |                      | 299,416    |   |                      |   | 134,555    |               | 
|Increase (Decrease) in current liabilities                           |  |                      | (3,208     | ) |                      |   | (10,040    | )             | 
|(Increase) Decrease in cash reserved for payables                    |  |                      | 2,283      |   |                      |   | 10,040     |               | 
|Current cash flows advanced from (reserved for) future distributions |  |                      | (166,335   | ) |                      |   | (69,235    | )             | 
|                                                                     |  |                      |            |   |                      |   |            |               | 
|Net Cash Provided From Operating Activities                          |  | $                    | 443,960    |   |                      | $ | 418,951    |               | 
|                                                                     |  |                      |            |   |                      |   |            |               | 
|CASH FLOWS (USED IN) FROM INVESTING AND FINANCING ACTIVITIES         |  |                      |            |   |                      |   |            |               | 
|Indemnification Trust (Interest earnings reinvested)                 |  |                      | (1,500     | ) |                      |   | (855       | )             | 
|Sales Deposits received                                              |  |                      | 0          |   |                      |   | 7,500      |               | 
|Net sale proceeds from sale of property                              |  |                      | 0          |   |                      |   | 417,098    |               | 
|Recovery of amounts previously written off                           |  |                      | 0          |   |                      |   | 1,556      |               | 
|                                                                     |  |                      |            |   |                      |   |            |               | 
|Net Cash (Used In) From Investing And Financing Activities           |  | $                    | (1,500     | ) |                      | $ | 425,299    |               | 
|                                                                     |  |                      |            |   |                      |   |            |               | 
|Total Cash Flow For Quarter                                          |  | $                    | 442,460    |   |                      | $ | 844,250    |               | 
|                                                                     |  |                      |           
|Cash Balance Beginning of Period                                     |  |                      | 1,183,196  |   |                      |   | 806,151    |               | 
|Less 1st quarter distributions paid 5/03                             |  |                      | (887,000   | ) |                      |   | (510,000   | )             | 
|Change in cash reserved for payables or future distributions         |  |                      | 164,052    |   |                      |   | 59,195     |               | 
|                                                                     |  |                      |            |   |                      |   |            |               | 
|Cash Balance End of Period                                           |  | $                    | 902,709    |   |                      | $ | 1,199,596  |               | 
|                                                                     |  |                      |           
|Cash reserved for 2nd quarter 2003 L.P. distributions                |  |                      | (443,000   | ) |                      |   | (845,000   | )             | 
|Cash reserved for payment of accrued expenses                        |  |                      | (222,850   | ) |                      |   | (108,381   | )             | 
|Cash advanced from (reserved for) future distributions               |  |                      | (184,735   | ) |                      |   | (192,235   | )             | 
|                                                                     |  |                      |            |   |                      |   |            |               | 
|Unrestricted Cash Balance End of Period                              |  | $                    | 52,124     |   |                      | $ | 53,980     |               | 
|                                                                     |  |                      |            |   |                      |   |            |               | 
|                                                                     |  |                      |           
|                                                                     |  | PROJECTED            |            |   | ACTUAL               |   |            | VARIANCE      | 
|*Quarterly Distribution                                              |  | $                    | 443,000    |   |                      | $ | 845,000    |               | 
|Mailing Date                                                         |  |                      | 08/15/2003 |   |                      |   | (enclosed) |               | 

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|* |  | Refer to distribution letter for detail of quarterly distribution.
|- |  | ------------------------------------------------------------------





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PROJECTIONS FOR

DISCUSSION PURPOSES



DIVALL INSURED INCOME PROPERTIES 2 LP

2003 PROPERTY SUMMARY

AND RELATED RECEIPTS

AS OF JUNE 30,2003



|PORTFOLIO                   |  | (Note 1)        |  | REAL ESTATE |  |                | EQUIPMENT |         |   | TOTALS |                    
|--------------------------- |  | --------------- |  | ----------- |  | -------------- | --------- | ------- | - | ------ | -------------------
|CONCEPT                     |  | LOCATION        |  | COST        |  | ANNUALBASERENT |           | % YIELD |   |        | LEASEEXPIRATIONDATE
|APPLEBEES                  |  | COLUMBUS, OH    |  | 1,059,465   |  | 135,780        |           | 12.82   | % |        |                    
|BLOCKBUSTER                 |  | OGDEN, UT       |  | 646,425     |  | 104,500        |           | 16.17   | % |        |                    
|DENNYS                     |  | PHOENIX, AZ     |  | 972,726     |  | 65,000         |           | 6.68    | % |        |                    
|CHINESE SUPER BUFFET (5)    |  | PHOENIX, AZ     |  | 865,900     |  | 64,371         |           | 7.43    | % |        |                    
|VACANT (8)                  |  | TWIN FALLS, ID  |  | 699,032     |  | 30,000         |           | 4.29    | % |        |                    
|HARDEES (3)                |  | FOND DU LAC, WI |  | 849,767     |  | 50,860         |           | 5.99    | % |        | (2                 
|HOOTERS                    |  | R. HILLS, TX    |  | 1,246,719   |  | 95,000         |           | 7.62    | % |        |                    
|DAYTONAS BAR AND GRILL (7) |  | DES MOINES, IA  |  | 845,000     |  | 60,000         |           | 7.10    | % |        |                    
|KFC                         |  | SANTA FE, NM    |  | 451,230     |  | 60,000         |           | 13.30   | % |        |                    
|MIAMI SUBS (9)              |  | PALM BEACH, FL  |  | 743,625     |  | 55,000         |           | 7.40    | % |        |                    

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|Note 1: |  | This property summary includes only property and equipment held by the Partnership during 2003.
|------- |  | -----------------------------------------------------------------------------------------------

|2: |  | The lease was terminated and the equipment sold to Hardees Food Systems in conjunction with their assumption of the Terratron leases in November 1996.
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------

|3: |  | These leases were assumed by Hardees Food Systems at a reduced rental rate from that stated in the original leases. The property was sold in July 2003 at a sales price of
$720,000.
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4: |  | Village Inn vacated the property in February 2002; however, Village Inn was charged monthly rent until a lease termination and settlement agreement was executed in June 2003. (The
charges were not recorded for accounting purposes beginning January 2003.) The Partnership received a $50,000 lease termination fee from Village Inn. The property was leased to a new tenant, Panda Buffet, in February 2003 with rent to commence in
July 2003.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|5: |  | Chinese Super Buffet obtained possession of the property in August 2002 and rent commenced in January 2003.
|-- |  | -----------------------------------------------------------------------------------------------------------

|6: |  | Tenant, Paul Bouraxis, executed agreement to purchase property at a price of $825,000. Closing was July 28, 2003.
|-- |  | -----------------------------------------------------------------------------------------------------------------

|7: |  | Hickory Parks lease expired on December 31, 2002; however, Management executed a 5 year lease directly with the subtenant, Daytonas Bar and Grill.
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------

|8: |  | The Partnership received $30,000 in past rent upon eviction of Fiesta Time from the property in February 2003. Management executed a contract to sell sell the property in the Third
Quarter of 2003 for $555,000.
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|9: |  | Although the property continues to operate as a Miami Subs restaurant a new lease was executed in the Fourth Quarter of 2003.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------



1



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PROJECTIONS FOR

DISCUSSION PURPOSES



DIVALL INSURED INCOME PROPERTIES 2 LP

2002 PROPERTY SUMMARY

AND RELATED RECEIPTS



|PORTFOLIO                              |  | (Note 1)         |  | REAL ESTATE |  |                | EQUIPMENT |         |   | TOTALS |                    
|-------------------------------------- |  | ---------------- |  | ----------- |  | -------------- | --------- | ------- | - | ------ | -------------------
|CONCEPT                                |  | LOCATION         |  | COST        |  | ANNUALBASERENT |           | % YIELD |   |        | LEASEEXPIRATIONDATE
|OMEGA RESTAURANT (5) (6)               |  | MILWAUKEE, WI    |  | 1,010,045   |  | 50,021         |           | 4.95    | % |        |                    
|
                                    |  |                |  |             |  |                |           |         |   |        |                    
|
                                    |  |                |  |             |  |                |           |         |   |        |                    
|POPEYES                               |  | PARK FOREST, IL  |  | 580,938     |  | 77,280         |           | 13.30   | % |        |                    
|SUNRISE PRESCHOOL                      |  | PHOENIX, AZ      |  | 1,084,503   |  | 123,318        |           | 11.37   | % |        |                    
|                                       |  |                  |  |             |  |                |           |         |   |        |                    
|PANDA BUFFET(FORMERLY VILLAGE INN) (4) |  | GRAND FORKS, ND  |  | 739,375     |  | 16,250         |           | 2.20    | % |        |                    
|WENDYS                                |  | AIKEN, SC        |  | 633,750     |  | 90,480         |           | 14.28   | % |        |                    
|WENDYS                                |  | CHARLESTION, SC  |  | 580,938     |  | 77,280         |           | 13.30   | % |        |                    
|WENDYS                                |  | N. AUGUSTA, SC   |  | 660,156     |  | 87,780         |           | 13.30   | % |        |                    
|WENDYS                                |  | AUGUSTA, GA      |  | 728,813     |  | 96,780         |           | 13.28   | % |        |                    
|WENDYS                                |  | CHARLESTON, SC   |  | 596,781     |  | 76,920         |           | 12.89   | % |        |                    
|WENDYS                                |  | AIKEN, SC        |  | 776,344     |  | 96,780         |           | 12.47   | % |        |                    
|WENDYS                                |  | AUGUSTA, GA      |  | 649,594     |  | 86,160         |           | 13.26   | % |        |                    
|WENDYS                                |  | CHARLESTON, SC   |  | 528,125     |  | 70,200         |           | 13.29   | % |        |                    
|WENDYS                                |  | MT. PLEASANT, SC |  | 580,938     |  | 77,280         |           | 13.30   | % |        |                    
|WENDYS                                |  | MARTINEZ, GA     |  | 633,750     |  | 84,120         |           | 13.27   | % |        |                    
|                                       |  |                  |  |             |  |                |           |         |   |        |                    
|PORTFOLIO TOTALS                       |  |                  |  | 18,163,939  |  | 1,831,160      |           | 10.08   | % |        |                    
|                                       |  |                  |  |             |  |                |           |         |   |        |                    

---

|Note 1: |  | This property summary includes only property and equipment held by the Partnership during 2003.
|------- |  | -----------------------------------------------------------------------------------------------

|2: |  | The lease was terminated and the equipment sold to Hardees Food Systems in conjunction with their assumption of the Terratron leases in November 1996.
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------

|3: |  | These leases were assumed by Hardees Food Systems at a reduced rental rate from that stated in the original leases. The property was sold in July 2003 at a sales price of
$720,000.
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4: |  | Village Inn vacated the property in February 2002; however, Village Inn was charged monthly rent until a lease termination and settlement agreement was executed in June 2003. (The
charges were not recorded for accounting purposes beginning January 2003.) The Partnership received a $50,000 lease termination fee from Village Inn. The property was leased to a new tenant, Panda Buffet, in February 2003 with rent to commence in
July 2003.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|5: |  | Chinese Super Buffet obtained possession of the property in August 2002 and rent commenced in January 2003.
|-- |  | -----------------------------------------------------------------------------------------------------------

|6: |  | Tenant, Paul Bouraxis, executed agreement to purchase property at a price of $825,000. Closing was July 28, 2003.
|-- |  | -----------------------------------------------------------------------------------------------------------------

|7: |  | Hickory Parks lease expired on December 31, 2002; however, Management executed a 5 year lease directly with the subtenant, Daytonas Bar and Grill.
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------

|8: |  | The Partnership received $30,000 in past rent upon eviction of Fiesta Time from the property in February 2003. Management executed a contract to sell sell the property in the Third
Quarter of 2003 for $555,000.
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|9: |  | Although the property continues to operate as a Miami Subs restaurant a new lease was executed in the Fourth Quarter of 2003.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------



2