UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-21212
---------------------
Nuveen Insured California Tax-Free Advantage Municipal Fund
------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
Nuveen Investments
333 West Wacker Drive
Chicago, IL 60606
------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
Jessica R. Droeger
Nuveen Investments
333 West Wacker Drive
Chicago, IL 60606
------------------------------------------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: (312) 917-7700
-------------------
Date of fiscal year end: August 31
------------------
Date of reporting period: August 31, 2004
------------------
Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
ANNUAL REPORT August 31, 2004
Nuveen Investments
Municipal Closed-End
Exchange-Traded
Funds
NUVEEN INSURED CALIFORNIA PREMIUM INCOME MUNICIPAL FUND, INC.
NPC
NUVEEN INSURED CALIFORNIA PREMIUM INCOME MUNICIPAL FUND 2, INC.
NCL
NUVEEN CALIFORNIA PREMIUM INCOME MUNICIPAL FUND
NCU
NUVEEN CALIFORNIA DIVIDEND ADVANTAGE MUNICIPAL FUND
NAC
NUVEEN CALIFORNIA DIVIDEND ADVANTAGE MUNICIPAL FUND 2
NVX
NUVEEN CALIFORNIA DIVIDEND ADVANTAGE MUNICIPAL FUND 3
NZH
NUVEEN INSURED CALIFORNIA DIVIDEND ADVANTAGE MUNICIPAL FUND
NKL
NUVEEN INSURED CALIFORNIA TAX-FREE ADVANTAGE MUNICIPAL FUND
NKX
Photo of: Man and woman sitting on porch.
Photo of: 2 children sitting in the grass.
DEPENDABLE,
TAX-FREE INCOME BECAUSE
IT'S NOT WHAT YOU EARN,
IT'S WHAT YOU KEEP.(R)
Logo: NUVEEN Investments
Photo of: Woman
Photo of: Man and child
Photo of: Woman
NOW YOU CAN RECEIVE YOUR NUVEEN FUND REPORTS FASTER.
NO MORE WAITING.
SIGN UP TODAY TO RECEIVE NUVEEN FUND INFORMATION BY E-MAIL.
It only takes a minute to sign up for E-Reports. Once enrolled, you'll receive
an e-mail as soon as your Nuveen Investments Fund information is ready -- no
more waiting for delivery by regular mail. Just click on the link within the
e-mail to see the report, and save it on your computer if you wish.
------------------
DELIVERY DIRECT TO
YOUR E-MAIL INBOX
------------------
IT'S FAST, EASY & FREE:
WWW.INVESTORDELIVERY.COM
if you get your Nuveen Fund dividends
and statements from your financial advisor or brokerage account.
OR
WWW.NUVEEN.COM/CORPORATE/ENROLLMENT if you get your Nuveen Fund dividends and
statements directly from Nuveen.
(Be sure to have the address sheet that accompanied this report handy. You'll
need it to complete the enrollment process.)
Logo: NUVEEN Investments
Photo of: Timothy R. Schwertfeger
Timothy R. Schwertfeger
Chairman of the Board
Chairman's
LETTER TO SHAREHOLDERS
Once again, I am pleased to report that over the most recent reporting period
your Fund continued to provide you with monthly income free from both federal
and California state income taxes, as well as with an attractive total return.
For more specific information about the performance of your Fund, please see the
Portfolio Managers' Comments and Performance Overview sections of this report.
With long-term interest rates still near historic lows, many investors have
begun to wonder whether these interest rates will rise, and whether that makes
this the time to adjust their holdings of fixed-income investments. No one knows
what the future will bring, which is why we think a well-balanced portfolio that
is structured and carefully monitored with the help of an investment
professional is an important component in achieving your long-term financial
goals. A well-diversified portfolio
"OUR MISSION CONTINUES TO BE TO ASSIST YOU AND YOUR FINANCIAL ADVISOR BY
OFFERING THE INVESTMENT SERVICES AND PRODUCTS THAT CAN HELP YOU TO SECURE YOUR
FINANCIAL OBJECTIVES."
may actually help to reduce your overall investment risk, and we believe that a
municipal bond investment like your Nuveen California Fund can be an important
building block in a portfolio designed to perform well through a variety of
market conditions.
As in past reports, I'd also like to direct your attention to the inside front
cover, which explains the quick and easy process to begin receiving these Fund
reports via e-mail and the internet. Thousands of Nuveen Fund shareholders
already have signed-up, and they are getting their Fund information faster and
more conveniently than ever. I urge you to consider joining them.
At Nuveen Investments, our mission continues to be to assist you and your
financial advisor by offering the investment services and products that can help
you to secure your financial objectives. We are grateful that you have chosen us
as a partner as you pursue your financial goals, and we look forward to
continuing to earn your trust in the months and years ahead.
Sincerely,
/s/ Timothy R. Schwertfeger
Timothy R. Schwertfeger
Chairman of the Board
October 15, 2004
Nuveen California Municipal Closed-End Exchange-Traded Funds
(NPC, NCL, NCU, NAC, NVX, NZH, NKL, NKX)
Portfolio Managers'
PERSPECTIVE
Portfolio managers Dan Solender and Scott Romans discuss the market environment,
key investment strategies, and the annual performance of these eight Nuveen
California Funds. With twelve years of investment experience, including eight at
Nuveen, Dan assumed portfolio management responsibility for NPC and NCL in May
2004. Scott, who joined Nuveen in 2000, has managed NCU, NAC, NVX, NZH, NKL and
NKX since January 2003
WHAT FACTORS AFFECTED THE U.S. ECONOMY AND MUNICIPAL MARKET DURING THE ANNUAL
REPORTING PERIOD ENDED AUGUST 31, 2004?
Over the entire 12 months, the U.S. economy demonstrated evidence of improvement
in a number of key areas, although the recovery slowed somewhat in the last five
months of the period. After surging at the fastest pace in almost 20 years (7.4%
annualized) during the third quarter of 2003, the U.S. gross domestic product
(GDP) expanded at annualized rates of 4.2% in the fourth quarter of 2003 and
4.5% in the first quarter of 2004. However, during the second quarter of 2004
rising energy prices restrained consumer spending, which in turn impacted
economic momentum and GDP growth in the second quarter moderated to 3.3%
annualized.
Higher energy costs also fueled increased worries about the future rate of
inflation. While rises in consumer prices were relatively tame over this fiscal
year, the annualized rise of 3.7% in the Consumer Price Index for the eight
months ended August 2004 was running well ahead of the 1.9% increase for all of
2003. During the second quarter of 2004 in particular, inflation concerns,
combined with the general pace of economic recovery and continued geopolitical
uncertainty, caused heightened volatility in the longer-term fixed-income
markets.
This volatility can be seen in the yield of the Bond Buyer 25 Revenue Bond
Index, a widely followed long-term municipal bond index, over the course of this
fiscal year (September 1, 2003 through August 31, 2004). At the start of the
period, the index yield was 5.41%, still close to its mid-August 2003 peak of
5.50%. From there, the yield dropped steadily over the next seven months to
4.73% by mid-March 2004. As investors increasingly anticipated action by the
Federal Reserve in response to a series of improved employment reports, the
index yield began to climb again, rising more than 80 basis points over the next
12 weeks to 5.45%, before retreating to end August 2004 at 5.13%.
4
Between June and August 2004, the Fed moved twice to increase the short-term fed
funds rate by a total of 50 basis points in an attempt to promote a sustainable
economic recovery without increasing inflationary pressures. (On September 21,
following the close of this reporting period, the Fed added another 25 basis
points to its fed funds target rate, bringing it to 1.75%.) Historically,
longer-term interest rates often have moved in the same direction when the Fed
has adjusted short-term rates up or down.
Municipal supply nationwide continued to be relatively strong over the entire
12-month reporting period, with $369.5 billion in new bonds coming to market.
Looking just at 2004, new issue supply reached $241 billion for the first eight
months a decrease of 5% from January-August 2003's record $254 billion.
HOW ABOUT MARKET AND ECONOMIC CONDITIONS IN CALIFORNIA?
The biggest story in California over this 12-month period was voters' approval
of $15 billion in economic recovery bonds (ERBs) in March 2004 and the state's
subsequent issuance of $11 billion of ERBs in May and June. This essentially
resolved the cash flow crisis that was facing California on June 30 when the
state's fiscal year ended. While many observers believe work remains to address
the state's longer-term deficit problems, the ERBs improved the state's balance
sheet liquidity and, combined with California's steadily recovering economy, led
all three major credit rating agencies to upgrade the state's $33 billion of
outstanding general obligation debt. In May 2004, Moody's revised its rating of
California GOs to A3 from Baa1, followed in August 2004 by Standard & Poor's
upgrade to A from BBB. S&P also removed California from its credit watch. (On
September 7, following the end of this reporting period, Fitch moved its rating
for California to A- from BBB.)
During the 12-month reporting period ended August 2004, issuers in California
sold $58.6 billion in new municipal bonds, down 8% from the previous 12-month
period. For the first eight months of 2004, supply was slightly more plentiful,
due in part to the ERBs, with issuance totaling $42.7 billion, on par with
January-August 2003 levels.
On July 31, 2004, the state enacted its $105 billion fiscal 2005 budget, closing
a $14 billion structural gap through a combination of expenditure cuts,
borrowing and fund transfers, but no new tax increases. While we believe this
represents meaningful
5
progress toward fiscal balance in California, the potential still exists for
smaller, but significant, deficits to re-emerge in fiscal 2006 and 2007 if no
further action is taken by that time. This is partially the result of budget
compromises--which offered future concessions for current spending
cuts--negotiated with various constituents, including education groups, unions
representing state workers, and Native Americans. These deals could limit the
state's ability to address future gaps. On a positive note, in July 2004, the
state controller's office reported that fiscal 2004 general fund revenues
totaled $75.5 billion, an increase of 10% from fiscal 2003, and current economic
data suggest that revenue growth assumptions in the 2005 budget are reasonable.
California continued to benefit from the stability provided by a diverse state
economy. Overall, the general economic downturn of the past several years has
had a limited impact, despite severe weakness in the Silicon Valley area which
skewed economic and job performance statistics for the entire state. Recent
indicators suggest that the employment picture in Silicon Valley is stabilizing,
while the jobless rate in California as a whole dropped to 5.8% in August 2004,
compared with 6.8% in August 2003. The national average in August 2004 was 5.4%.
Personal income growth in California consistently has outpaced the national
average over the past two years, which benefits the state budget since personal
income taxes represent approximately 50% of the state's general fund revenues.
California's housing market also continued to be very strong, both in the Bay
area and Southern California, with tight inventories of homes for sale and
foreclosure rates at the lowest level in 10 years.
IN THIS ENVIRONMENT, WHAT KEY STRATEGIES WERE USED TO MANAGE THE NUVEEN
CALIFORNIA FUNDS DURING THE 12 MONTHS ENDED AUGUST 31, 2004?
As the market continued to anticipate increased interest rates, our major focus
during this reporting period remained on efforts to find bonds that we thought
represented good value or that we judged would have attractive total return
potential under a variety of market scenarios. With the yield curve relatively
steep during this period, our purchase activity focused on finding attractive
securities in the long-intermediate part of the curve (i.e., bonds that mature
in 15 to 20 years). In many cases, these bonds offered yields similar to those
of longer-term bonds with less inherent interest rate risk and greater
6
total return prospects. We believe this yield curve positioning also may help
the Funds produce more consistent returns over time as interest rates rise and
fall.
Much of the municipal bond issuance in California during this fiscal year period
came from the general tax obligation sector (GOs), and we increased each Fund's
allocation to this sector, except NZH where we maintained our exposure at August
2003 levels. In NPC and NCL, our purchases in this sector included several
insured school district GOs with premium coupons that we believed could help to
mitigate the effects on the Funds' price and NAV performance if interest rates
continued to rise. In NCU, NAC, NVX, NZH, NKL and NKX, we bought and
occasionally sold California GOs in an attempt to take advantage of general
market moves. As the credit ratings on noninsured California GOs were upgraded
in recent months, their prices improved and this helped the performance of these
six Funds.
We also found several opportunities in NAC, NVX and NZH to increase our
weightings in nonrated land-secured securities, an area we research very
carefully. This past fiscal year saw a sizable number of small, attractively
priced land-secured deals come market, and we focused in particular on
purchasing bonds with relatively higher coupons. In cases where our research
showed the likelihood of strengthening credit situations, we were willing to buy
bonds out further on the yield curve than our targeted range, as we believed
these bonds might increase in value if their issuing entities received ratings
upgrades.
Some of these purchases were financed through the sale of lower-yielding bonds
and bonds with relatively short call dates. In addition, we diversified credit
risk at the issuer level by reducing concentrated positions in certain
lower-rated and non-rated holdings in NCU, NAC, NVX, NZH, NKL and NKX. Since
lower-rated bonds generally performed well over the 12 month period, we
considered it a good time to take advantage of opportunities to sell these bonds
at what we thought were very attractive prices. However, we were careful to
balance these efforts against the goal of building and maintaining the Funds'
income streams. Even as we sold some BBB rated bonds, we continued to add other
BBB and sub-investment grade securities to the portfolios.
7
HOW DID THE FUNDS PERFORM?
Individual results for these Nuveen California Funds, as well as for relevant
benchmarks, are presented in the accompanying table.
TOTAL RETURNS ON NET ASSET VALUE
For periods ended 8/31/04
(Annualized)
NONINSURED FUNDS 1-YEAR 5-YEAR 10-YEAR
--------------------------------------------------------------------------------
NCU 12.94% 8.24% 8.06%
--------------------------------------------------------------------------------
NAC 12.11% 9.69% NA
--------------------------------------------------------------------------------
NVX 12.11% NA NA
--------------------------------------------------------------------------------
NZH 13.36% NA NA
--------------------------------------------------------------------------------
Lehman Brothers
CA Tax-Exempt
Bond Index1 8.04% 6.60% 6.67%
--------------------------------------------------------------------------------
Lipper CA
Municipal Debt Funds
Average2 11.91% 7.50% 7.09%
--------------------------------------------------------------------------------
INSURED FUNDS 1-YEAR 5-YEAR 10-YEAR
--------------------------------------------------------------------------------
NPC 10.64% 8.09% 7.64%
--------------------------------------------------------------------------------
NCL 10.02% 8.08% 7.66%
--------------------------------------------------------------------------------
NKL 12.53% NA NA
--------------------------------------------------------------------------------
NKX 12.86% NA NA
--------------------------------------------------------------------------------
Lehman Brothers
Insured CA Tax-Exempt
Bond Index3 7.47% 6.87% 6.84%
--------------------------------------------------------------------------------
Lipper CA
Insured Municipal
Debt Funds
Average4 10.42% 7.43% 7.18%
--------------------------------------------------------------------------------
Past performance is not predictive of future results.
For additional information, see the individual Performance Overview for your
Fund in this report.
For the 12 months ended August 31, 2004, the annual total returns on net asset
value (NAV) for all four noninsured Funds outperformed the return on the Lehman
Brothers CA Tax-Exempt Bond Index. All of these Funds also surpassed the average
return for their Lipper California peer group for this period. Among the insured
Funds, the total returns on NAV for all four Funds outperformed the Lehman
Brothers Insured CA Tax-Exempt Bond Index. NPC, NKL and NKX also performed
better than their insured Lipper peer group, while NCL's return trailed this
measure.
1 The Lehman Brothers California Tax-Exempt Bond Index is an unleveraged,
unmanaged index comprising a broad range of investment-grade California
municipal bonds. Results for the Lehman index do not reflect any expenses.
2 The Lipper California Municipal Debt Funds category average is calculated
using the returns of all leveraged and unleveraged closed-end exchange-traded
funds in this category for each period as follows: 1 year, 30 funds; 5 years,
19 funds; and 10 years, 17 funds. Fund and Lipper returns assume reinvestment
of dividends.
3 The Lehman Brothers Insured California Tax-Exempt Bond Index is an
unleveraged, unmanaged index comprising a broad range of insured California
municipal bonds. Results for the Lehman index do not reflect any expenses.
4 The Lipper Insured California Municipal Debt Funds category average is
calculated using the returns of all closed-end exchange-traded funds in this
category for each period as follows: 1 year, 13 funds; 5 years, 7 funds; and
10 years, 6 funds. Fund and Lipper returns assume reinvestment of dividends.
8
One of the primary factors benefiting the 12-month performance of each of these
Funds relative to that of the unleveraged Lehman indexes was their use of
financial leverage. While leveraging can add volatility to the Funds' NAVs and
share prices, especially when substantial shifts in interest rates occur, this
strategy also can provide opportunities for additional income and total return
for common shareholders when short-term interest rates remain low and long-term
rates are relatively steady or falling.
While no single factor explains all of the differences in the Funds'
performances relative to each other, several Funds did benefit more than others
from their duration, sector or credit quality positioning over this period. For
example, the performance of NZH was helped by the fact that it is the newest of
the four uninsured Funds and, consequently, had a substantially lower exposure
to shorter-duration bonds than the other three uninsured Funds over the 12
months - a time when shorter-duration bonds tended to underperform
longer-duration bonds. NCU did well because of its relatively large sector
allocations to bonds backed by revenues from the 1998 master tobacco settlement
agreement and to unenhanced state general obligation bonds. Both of these
sectors were among the strongest performers for the Fund.
Relative to the other uninsured Funds, NAC had a higher weighting in bonds with
shorter durations, and this hurt the Fund relative to the three other uninsured
Funds. NAC also had a more modest exposure to tobacco settlement bonds, which
also affected its relative performance. NVX had a relatively lower exposure to
state general obligation bonds and a relatively higher weighting in multifamily
housing bonds, which generally were weaker performers over the period. The
returns of NAC, NVX and NZH were also boosted by the strong performance of their
nonrated land-secured holdings.
Looking at the four insured Funds, NKX and NKL were helped by the fact that they
can maintain an exposure of up to 20% in non-insured bond, because lower-rated
bonds tended to significantly outperform AAA-rated insured bonds over this
fiscal year period. In addition, NCL had a number of housing bond calls, which
slightly impacted its performance.
9
HOW ABOUT THE FUNDS' DIVIDENDS AND SHARE PRICES?
With short-term interest rates remaining at or near historically low levels
throughout this reporting period, the leveraged structures of these eight Funds
continued to support their dividend-paying capabilities. The extent of this
benefit is tied in part to the short-term rates the Funds pay their
MuniPreferred(R) shareholders. (The Fund's leverage themselves by issuing
MuniPreferred shares, which pay dividends based on current short-term notes and
do not bear the risk of principal loss or gain.) During periods of low
short-term rates, the Funds generally pay relatively lower dividends to their
MuniPreferred shareholders, which can leave more earnings to support common
share dividends. During this reporting period, this strategy enabled us to
increase the dividends of NPC and NAC, while helping to maintain the dividends
of NCL, NCU, NVX, NZH, NKL and NKX throughout the period.
All of these Funds seek to pay stable dividends at rates that reflect each
Fund's past results and projected future performance. During certain periods,
each Fund may pay dividends at a rate that may be more or less than the amount
of net investment income actually earned by the Fund during the period. If a
Fund has cumulatively earned more than it has paid in dividends, it holds the
excess in reserve as undistributed net investment income (UNII) as part of the
Fund's NAV. Conversely, if a Fund has cumulatively paid dividends in excess of
its earnings, the excess constitutes negative UNII that is likewise reflected in
the Fund's NAV. Each Fund will, over time, pay all of its net investment income
as dividends to shareholders. As of August 31, 2004, all of the Funds in this
report had positive UNII balances except NKX, which had a negative UNII balance.
As of August 31, 2004, NCL was trading at a slight premium to its net asset
value, while the other seven Funds were trading at share prices below their
NAVs. In each case, the Funds were trading roughly in line with their average
discount across the entire 12-month period.
HOW WERE THE FUNDS POSITIONED IN TERMS OF CREDIT QUALITY AND BOND CALLS AS OF
AUGUST 31, 2004?
Given the current geopolitical and economic climate, we continued to believe
that maintaining strong credit quality was an important requirement. As of
August 31, 2004, the four uninsured Funds continued to offer excellent credit
quality, with allocations of bonds rated AAA/U.S. guaranteed and AA ranging from
70% in NVX to 67% in NCU, 63% in
10
NZH and 62% in NAC. NPC and NCL continued to be 100% invested in insured and/or
U.S. guaranteed securities. NKL and NKX, which are allowed to invest up to 20%
in uninsured investment-grade quality securities, held 80% and 82% of their
portfolios, respectively, in insured bonds as of August 31, 2004.
At the end of August 2004, potential call exposure for these Funds during
2004-2005 ranged from 17% in NCU, 7% in NCL, 5% in NPC, 2% in NZH and NAC, 1% in
NVX, and 0% in NKL and NKX. For all of the Funds, the number of actual bond
calls depends largely on market interest rates.
11
Nuveen Insured California Premium Income Municipal Fund, Inc.
NPC
Performance
OVERVIEW As of August 31, 2004
FUND SNAPSHOT
------------------------------------
Share Price $15.81
------------------------------------
Common Share
Net Asset Value $16.23
------------------------------------
Premium/(Discount) to NAV -2.59%
------------------------------------
Market Yield 5.84%
------------------------------------
Taxable-Equivalent Yield1 8.92%
------------------------------------
Net Assets Applicable to
Common Shares ($000) $104,618
------------------------------------
Average Effective
Maturity (Years) 17.23
------------------------------------
Leverage-Adjusted Duration 8.25
------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 11/19/92)
------------------------------------
ON SHARE PRICE ON NAV
------------------------------------
1-Year 11.80% 10.64%
------------------------------------
5-Year 6.87% 8.09%
------------------------------------
10-Year 8.17% 7.64%
------------------------------------
SECTORS
(as a % of total investments)
------------------------------------
Tax Obligation/General 31%
------------------------------------
U.S. Guaranteed 22%
------------------------------------
Water and Sewer 17%
------------------------------------
Tax Obligation/Limited 14%
------------------------------------
Education and
Civic Organizations 6%
------------------------------------
Utilities 6%
------------------------------------
Other 4%
------------------------------------
Pie Chart:
CREDIT QUALITY
(as a % of total investments)
Insured 78%
Insured and U.S. Guaranteed 3%
U.S. Guaranteed 19%
Bar Chart:
2003-2004 MONTHLY TAX-FREE DIVIDENDS PER SHARE2
Sep 0.076
Oct 0.076
Nov 0.076
Dec 0.077
Jan 0.077
Feb 0.077
Mar 0.077
Apr 0.077
May 0.077
Jun 0.077
Jul 0.077
Aug 0.077
Line Chart:
SHARE PRICE PERFORMANCE
Weekly Closing Price
Past performance is not predictive of future results.
9/1/03 15.02
15.16
15.2
15.04
15.35
15.36
15.3
15.32
15.44
15.39
15.75
15.79
15.72
15.64
15.88
16.07
16.12
16.31
16.42
16.09
16.06
16.21
16.09
16.27
16.22
16.41
16.27
16.34
16.65
16.43
15.62
14.79
14.35
14.14
13.77
13.8
14.15
14.29
14.31
14.21
13.76
13.89
14.38
14.66
14.61
14.45
14.88
15.27
15.07
15.39
8/31/04 15.49
1 Taxable-equivalent yield represents the yield that must be earned on a
fully taxable investment in order to equal the yield of the Fund on an
after-tax basis. It is based on a combined federal and state income tax
rate of 34.5%. For investments that generate qualified dividend income, the
taxable-equivalent yield is lower.
2 The Fund also paid shareholders capital gains and net ordinary income
distributions in December 2003 of $0.0615 per share.
12
Nuveen Insured California Premium Income Municipal Fund 2, Inc.
NCL
Performance
OVERVIEW As of August 31, 2004
FUND SNAPSHOT
------------------------------------
Share Price $15.18
------------------------------------
Common Share
Net Asset Value $15.12
------------------------------------
Premium/(Discount) to NAV 0.40%
------------------------------------
Market Yield 6.01%
------------------------------------
Taxable-Equivalent Yield1 9.18%
------------------------------------
Net Assets Applicable to
Common Shares ($000) $192,035
------------------------------------
Average Effective
Maturity (Years) 18.39
------------------------------------
Leverage-Adjusted Duration 7.91
------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 3/18/93)
------------------------------------
ON SHARE PRICE ON NAV
------------------------------------
1-Year 12.71% 10.02%
------------------------------------
5-Year 7.22% 8.08%
------------------------------------
10-Year 8.63% 7.66%
------------------------------------
SECTORS
(as a % of total investments)
------------------------------------
Tax Obligation/Limited 32%
------------------------------------
Tax Obligation/General 21%
------------------------------------
Water and Sewer 15%
------------------------------------
Education and
Civic Organizations 9%
------------------------------------
Utilities 8%
------------------------------------
U.S. Guaranteed 5%
------------------------------------
Other 10%
------------------------------------
Pie Chart:
CREDIT QUALITY
(as a % of total investments)
Insured 95%
Insured and U.S. Guaranteed 3%
U.S. Guaranteed 2%
Bar Chart:
2003-2004 MONTHLY TAX-FREE DIVIDENDS PER SHARE
Sep 0.076
Oct 0.076
Nov 0.076
Dec 0.076
Jan 0.076
Feb 0.076
Mar 0.076
Apr 0.076
May 0.076
Jun 0.076
Jul 0.076
Aug 0.076
Line Chart:
SHARE PRICE PERFORMANCE
Weekly Closing Price
Past performance is not predictive of future results.
9/1/03 14.69
14.62
14.74
14.7
14.95
14.84
14.92
14.93
15.2
15.26
15.19
15.32
15.33
15.3
15.33
15.43
15.6
15.59
15.53
15.52
15.46
15.44
15.51
15.53
15.55
15.73
15.63
15.66
15.85
15.7
14.88
14.1
13.55
13.37
13.16
13.23
13.42
13.97
13.85
13.77
13.16
13.21
13.65
13.88
14.11
13.86
14.24
14.52
14.7
14.9
8/31/04 15.08
1 Taxable-equivalent yield represents the yield that must be earned on a
fully taxable investment in order to equal the yield of the Fund on an
after-tax basis. It is based on a combined federal and state income tax
rate of 34.5%. For investments that generate qualified dividend income, the
taxable-equivalent yield is lower.
13
Nuveen California Premium Income Municipal Fund
NCU
Performance
OVERVIEW As of August 31, 2004
FUND SNAPSHOT
------------------------------------
Share Price $13.67
------------------------------------
Common Share
Net Asset Value $14.51
------------------------------------
Premium/(Discount) to NAV -5.79%
------------------------------------
Market Yield 6.41%
------------------------------------
Taxable-Equivalent Yield1 9.79%
------------------------------------
Net Assets Applicable to
Common Shares ($000) $83,772
------------------------------------
Average Effective
Maturity (Years) 16.82
------------------------------------
Leverage-Adjusted Duration 9.64
------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 6/18/93)
------------------------------------
ON SHARE PRICE ON NAV
------------------------------------
1-Year 12.04% 12.94%
------------------------------------
5-Year 6.82% 8.24%
------------------------------------
10-Year 8.44% 8.06%
------------------------------------
SECTORS
(as a % of total investments)
------------------------------------
Tax Obligation/Limited 25%
------------------------------------
Tax Obligation/General 18%
------------------------------------
Healthcare 16%
------------------------------------
Water and Sewer 10%
------------------------------------
Utilities 8%
------------------------------------
Housing/Multifamily 6%
------------------------------------
Transportation 6%
------------------------------------
Other 11%
------------------------------------
Pie Chart:
CREDIT QUALITY
(as a % of total investments)
AAA/U.S. Guaranteed 60%
AA 7%
A 14%
BBB 13%
NR 1%
BB or Lower 5%
Bar Chart:
2003-2004 MONTHLY TAX-FREE DIVIDENDS PER SHARE
Sep 0.073
Oct 0.073
Nov 0.073
Dec 0.073
Jan 0.073
Feb 0.073
Mar 0.073
Apr 0.073
May 0.073
Jun 0.073
Jul 0.073
Aug 0.073
Line Chart:
SHARE PRICE PERFORMANCE
Weekly Closing Price
Past performance is not predictive of future results.
9/1/03 13.02
13.18
13.19
13.31
13.45
13.43
13.28
13.35
13.57
13.65
13.65
13.69
13.66
13.64
13.6
13.61
13.62
13.71
13.8
13.87
13.77
13.78
13.77
13.84
13.87
14.03
14.1
14.11
14.02
14.07
13.6
12.92
12.87
12.75
12.37
12.17
12.18
12.99
12.65
12.51
12.6
12.52
12.8
12.81
12.8
12.84
13.14
13.18
13.23
13.36
8/31/04 13.67
1 Taxable-equivalent yield represents the yield that must be earned on a
fully taxable investment in order to equal the yield of the Fund on an
after-tax basis. It is based on a combined federal and state income tax
rate of 34.5%. For investments that generate qualified dividend income, the
taxable-equivalent yield is lower.
14
Nuveen California Dividend Advantage Municipal Fund
NAC
Performance
OVERVIEW As of August 31, 2004
FUND SNAPSHOT
------------------------------------
Share Price $15.00
------------------------------------
Common Share
Net Asset Value $15.59
------------------------------------
Premium/(Discount) to NAV -3.78%
------------------------------------
Market Yield 6.56%
------------------------------------
Taxable-Equivalent Yield1 10.02%
------------------------------------
Net Assets Applicable to
Common Shares ($000) $365,066
------------------------------------
Average Effective
Maturity (Years) 19.04
------------------------------------
Leverage-Adjusted Duration 8.82
------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 5/26/99)
------------------------------------
ON SHARE PRICE ON NAV
------------------------------------
1-Year 12.07% 12.11%
------------------------------------
5-Year 6.50% 9.69%
------------------------------------
Since
Inception 6.35% 7.90%
------------------------------------
SECTORS
(as a % of total investments)
------------------------------------
Tax Obligation/Limited 25%
------------------------------------
Tax Obligation/General 15%
------------------------------------
Transportation 14%
------------------------------------
Healthcare 10%
------------------------------------
Utilities 9%
------------------------------------
Water and Sewer 8%
------------------------------------
Education and
Civic Organizations 7%
------------------------------------
Housing/Multifamily 5%
------------------------------------
Other 7%
------------------------------------
Pie Chart:
CREDIT QUALITY
(as a % of total investments)
AAA/U.S. Guaranteed 54%
AA 8%
A 16%
BBB 14%
NR 8%
Bar Chart:
2003-2004 MONTHLY TAX-FREE DIVIDENDS PER SHARE
Sep 0.081
Oct 0.081
Nov 0.081
Dec 0.082
Jan 0.082
Feb 0.082
Mar 0.082
Apr 0.082
May 0.082
Jun 0.082
Jul 0.082
Aug 0.082
Line Chart:
SHARE PRICE PERFORMANCE
Weekly Closing Price
Past performance is not predictive of future results.
9/1/03 14.48
14.56
14.68
14.75
14.74
14.54
14.52
14.7
14.88
14.82
14.72
14.97
15.13
15.13
15.33
15.21
15.29
15.33
15.29
15.46
15.13
15.2
15.17
15.14
15.25
15.45
15.63
15.62
15.42
15.3
14.92
14.38
14.23
14.13
13.55
13.22
13.53
14.16
14.08
13.97
13.93
13.91
14.23
14.2
14.25
14.09
14.35
14.61
14.65
14.84
8/31/04 14.87
1 Taxable-equivalent yield represents the yield that must be earned on a
fully taxable investment in order to equal the yield of the Fund on an
after-tax basis. It is based on a combined federal and state income tax
rate of 34.5%. For investments that generate qualified dividend income, the
taxable-equivalent yield is lower.
15
Nuveen California Dividend Advantage Municipal Fund 2
NVX
Performance
OVERVIEW As of August 31, 2004
FUND SNAPSHOT
------------------------------------
Share Price $14.08
------------------------------------
Common Share
Net Asset Value $14.97
------------------------------------
Premium/(Discount) to NAV -5.95%
------------------------------------
Market Yield 6.48%
------------------------------------
Taxable-Equivalent Yield1 9.89%
------------------------------------
Net Assets Applicable to
Common Shares ($000) $221,395
------------------------------------
Average Effective
Maturity (Years) 18.50
------------------------------------
Leverage-Adjusted Duration 9.67
------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 3/27/01)
------------------------------------
ON SHARE PRICE ON NAV
------------------------------------
1-Year 13.60% 12.11%
------------------------------------
Since
Inception 4.43% 7.46%
------------------------------------
SECTORS
(as a % of total investments)
------------------------------------
Tax Obligation/Limited 29%
------------------------------------
Tax Obligation/General 21%
------------------------------------
Education and
Civic Organizations 11%
------------------------------------
Water and Sewer 9%
------------------------------------
Utilities 6%
------------------------------------
Transportation 6%
------------------------------------
Healthcare 6%
------------------------------------
Housing/Multifamily 6%
------------------------------------
Other 6%
------------------------------------
Pie Chart:
CREDIT QUALITY
(as a % of total investments)
AAA/U.S. Guaranteed 68%
AA 2%
A 12%
BBB 12%
NR 6%
Bar Chart:
2003-2004 MONTHLY TAX-FREE DIVIDENDS PER SHARE
Sep 0.076
Oct 0.076
Nov 0.076
Dec 0.076
Jan 0.076
Feb 0.076
Mar 0.076
Apr 0.076
May 0.076
Jun 0.076
Jul 0.076
Aug 0.076
Line Chart:
SHARE PRICE PERFORMANCE
Weekly Closing Price
Past performance is not predictive of future results.
9/1/03 13.52
13.5
13.55
13.72
13.8
13.59
13.65
13.74
13.97
14
13.82
14.1
14.18
14.01
14.05
14.02
14.02
14.2
14.26
14.28
14.11
14.31
14.3
14.2
14.32
14.35
14.52
14.53
14.49
14.19
13.95
13.35
13.06
12.92
12.61
12.41
12.75
13.05
13.09
12.99
12.96
13.14
13.42
13.35
13.37
13.3
13.4
13.68
13.65
13.88
8/31/04 13.93
1 Taxable-equivalent yield represents the yield that must be earned on a fully
taxable investment in order to equal the yield of the Fund on an after-tax
basis. It is based on a combined federal and state income tax rate of 34.5%.
For investments that generate qualified dividend income, the
taxable-equivalent yield is lower.
16
Nuveen California Dividend Advantage Municipal Fund 3
NZH
Performance
OVERVIEW As of August 31, 2004
FUND SNAPSHOT
------------------------------------
Share Price $13.33
------------------------------------
Common Share
Net Asset Value $14.65
------------------------------------
Premium/(Discount) to NAV -9.01%
------------------------------------
Market Yield 6.48%
------------------------------------
Taxable-Equivalent Yield1 9.89%
------------------------------------
Net Assets Applicable to
Common Shares ($000) $353,360
------------------------------------
Average Effective
Maturity (Years) 18.18
------------------------------------
Leverage-Adjusted Duration 10.11
------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 9/25/01)
------------------------------------
ON SHARE PRICE ON NAV
------------------------------------
1-Year 11.97% 13.36%
------------------------------------
Since
Inception 2.19% 6.83%
------------------------------------
SECTORS
(as a % of total investments)
------------------------------------
Tax Obligation/Limited 31%
------------------------------------
Tax Obligation/General 21%
------------------------------------
Utilities 9%
------------------------------------
Water and Sewer 9%
------------------------------------
Healthcare 8%
------------------------------------
Transportation 6%
------------------------------------
Housing/Multifamily 6%
------------------------------------
Education and
Civic Organizations 5%
------------------------------------
Other 5%
------------------------------------
Pie Chart:
CREDIT QUALITY
(as a % of total investments)
AAA/U.S. Guaranteed 61%
AA 2%
A 16%
BBB 13%
NR 8%
Bar Chart:
2003-2004 MONTHLY TAX-FREE DIVIDENDS PER SHARE
Sep 0.072
Oct 0.072
Nov 0.072
Dec 0.072
Jan 0.072
Feb 0.072
Mar 0.072
Apr 0.072
May 0.072
Jun 0.072
Jul 0.072
Aug 0.072
Line Chart:
SHARE PRICE PERFORMANCE
Weekly Closing Price
Past performance is not predictive of future results.
9/1/03 12.87
12.85
13.11
13.2
13.17
13.1
13.12
13.13
13.29
13.41
13.54
13.4
13.62
13.55
13.43
13.32
13.31
13.5
13.74
13.71
13.51
13.69
13.81
13.61
13.7
13.77
13.9
13.87
13.93
13.58
13.26
12.86
12.51
12.53
12.09
12.04
12.25
12.44
12.33
12.3
12.26
12.46
12.65
12.65
12.66
12.69
12.77
13.07
13.01
13.16
8/31/04 13.27
1 Taxable-equivalent yield represents the yield that must be earned on a fully
taxable investment in order to equal the yield of the Fund on an after-tax
basis. It is based on a combined federal and state income tax rate of 34.5%.
For investments that generate qualified dividend income, the
taxable-equivalent yield is lower.
17
Nuveen Insured California Dividend Advantage Municipal Fund
NKL
Performance
OVERVIEW As of August 31, 2004
FUND SNAPSHOT
------------------------------------
Share Price $14.67
------------------------------------
Common Share
Net Asset Value $15.35
------------------------------------
Premium/(Discount) to NAV -4.43%
------------------------------------
Market Yield 6.22%
------------------------------------
Taxable-Equivalent Yield1 9.50%
------------------------------------
Net Assets Applicable to
Common Shares ($000) $234,186
------------------------------------
Average Effective
Maturity (Years) 20.68
------------------------------------
Leverage-Adjusted Duration 7.29
------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 3/25/02)
------------------------------------
ON SHARE PRICE ON NAV
------------------------------------
1-Year 12.54% 12.53%
------------------------------------
Since
Inception 5.69% 9.45%
------------------------------------
SECTORS
(as a % of total investments)
------------------------------------
Tax Obligation/Limited 29%
------------------------------------
Tax Obligation/General 26%
------------------------------------
Utilities 13%
------------------------------------
Water and Sewer 11%
------------------------------------
Education and
Civic Organizations 6%
------------------------------------
Healthcare 5%
------------------------------------
Other 10%
------------------------------------
Pie Chart:
CREDIT QUALITY
(as a % of total investments)
Insured 80%
AAA (Uninsured) 1%
AA (Uninsured) 3%
A (Uninsured) 11%
BBB (Uninsured) 5%
Bar Chart:
2003-2004 MONTHLY TAX-FREE DIVIDENDS PER SHARE2
Sep 0.076
Oct 0.076
Nov 0.076
Dec 0.076
Jan 0.076
Feb 0.076
Mar 0.076
Apr 0.076
May 0.076
Jun 0.076
Jul 0.076
Aug 0.076
Line Chart:
SHARE PRICE PERFORMANCE
Weekly Closing Price
Past performance is not predictive of future results.
9/1/03 14.55
14.26
14.35
14.42
14.47
14.32
14.36
14.51
14.84
14.75
14.65
14.8
14.6
14.74
14.74
14.6
14.75
14.83
14.97
14.96
14.76
14.9
14.97
15
15.16
15.25
15.1
15.11
15.25
15
14.42
13.85
13.48
13.38
13.29
13.23
13.21
13.59
13.4
13.4
13.17
13.25
13.5
13.8
13.93
13.85
13.95
14.2
14.21
14.2
8/31/04 14.62
1 Taxable-equivalent yield represents the yield that must be earned on a fully
taxable investment in order to equal the yield of the Fund on an after-tax
basis. It is based on a combined federal and state income tax rate of 34.5%.
For investments that generate qualified dividend income, the
taxable-equivalent yield is lower.
2 The Fund also paid shareholders a capital gains distribution in December 2003
of $0.1252 per share.
18
Nuveen Insured California Tax-Free Advantage Municipal Fund
NKX
Performance
OVERVIEW As of August 31, 2004
Pie Chart:
CREDIT QUALITY
(as a % of total investments)
Insured 82%
A (Uninsured) 12%
BBB (Uninsured) 6%
Bar Chart:
2003-2004 MONTHLY TAX-FREE DIVIDENDS PER SHARE
Sep 0.0755
Oct 0.0755
Nov 0.0755
Dec 0.0755
Jan 0.0755
Feb 0.0755
Mar 0.0755
Apr 0.0755
May 0.0755
Jun 0.0755
Jul 0.0755
Aug 0.0755
Line Chart:
SHARE PRICE PERFORMANCE
Weekly Closing Price
Past performance is not predictive of future results.
9/1/03 13.64
14.2
14.15
14.02
14.64
14.35
14.37
14.26
14.55
14.66
14.42
14.56
14.48
14.1
14.07
14
14.07
14.55
14.74
15
14.89
14.97
14.8
14.94
15.04
15.08
15
14.78
14.96
14.94
14.52
13.55
13.43
13.42
13.49
13.01
13.01
13.4
13.42
13.15
12.99
12.94
13.25
13.49
13.5
13.62
13.6
13.88
13.81
13.89
8/31/04 14.15
FUND SNAPSHOT
------------------------------------
Share Price $14.19
------------------------------------
Common Share
Net Asset Value $14.62
------------------------------------
Premium/(Discount) to NAV -2.94%
------------------------------------
Market Yield 6.38%
------------------------------------
Taxable-Equivalent Yield1 9.74%
------------------------------------
Net Assets Applicable to
Common Shares ($000) $86,008
------------------------------------
Average Effective
Maturity (Years) 21.08
------------------------------------
Leverage-Adjusted Duration 8.50
------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 11/21/02)
------------------------------------
ON SHARE PRICE ON NAV
------------------------------------
1-Year 11.54% 12.86%
------------------------------------
Since
Inception 2.83% 7.24%
------------------------------------
SECTORS
(as a % of total investments)
------------------------------------
Tax Obligation/General 32%
------------------------------------
Tax Obligation/Limited 29%
------------------------------------
Healthcare 12%
------------------------------------
Transportation 9%
------------------------------------
Water and Sewer 8%
------------------------------------
Other 10%
------------------------------------
1 Taxable-equivalent yield represents the yield that must be earned on a fully
taxable investment in order to equal the yield of the Fund on an after-tax
basis. It is based on a combined federal and state income tax rate of 34.5%.
For investments that generate qualified dividend income, the
taxable-equivalent yield is lower.
19
Report of
INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
THE BOARDS OF DIRECTORS, TRUSTEES AND SHAREHOLDERS
NUVEEN INSURED CALIFORNIA PREMIUM INCOME MUNICIPAL FUND, INC.
NUVEEN INSURED CALIFORNIA PREMIUM INCOME MUNICIPAL FUND 2, INC.
NUVEEN CALIFORNIA PREMIUM INCOME MUNICIPAL FUND
NUVEEN CALIFORNIA DIVIDEND ADVANTAGE MUNICIPAL FUND
NUVEEN CALIFORNIA DIVIDEND ADVANTAGE MUNICIPAL FUND 2
NUVEEN CALIFORNIA DIVIDEND ADVANTAGE MUNICIPAL FUND 3
NUVEEN INSURED CALIFORNIA DIVIDEND ADVANTAGE MUNICIPAL FUND
NUVEEN INSURED CALIFORNIA TAX-FREE ADVANTAGE MUNICIPAL FUND
We have audited the accompanying statements of assets and liabilities, including
the portfolios of investments, of Nuveen Insured California Premium Income
Municipal Fund, Inc., Nuveen Insured California Premium Income Municipal Fund 2,
Inc., Nuveen California Premium Income Municipal Fund, Nuveen California
Dividend Advantage Municipal Fund, Nuveen California Dividend Advantage
Municipal Fund 2, Nuveen California Dividend Advantage Municipal Fund 3, Nuveen
Insured California Dividend Advantage Municipal Fund and Nuveen Insured
California Tax-Free Advantage Municipal Fund as of August 31, 2004, and the
related statements of operations, changes in net assets and the financial
highlights for the periods indicated therein. These financial statements and
financial highlights are the responsibility of the Funds' management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). 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 and financial highlights. Our procedures
included confirmation of investments owned as of August 31, 2004, by
correspondence with the custodian and brokers or other appropriate auditing
procedures where replies from brokers were not received. 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 position of Nuveen
Insured California Premium Income Municipal Fund, Inc., Nuveen Insured
California Premium Income Municipal Fund 2, Inc., Nuveen California Premium
Income Municipal Fund, Nuveen California Dividend Advantage Municipal Fund,
Nuveen California Dividend Advantage Municipal Fund 2, Nuveen California
Dividend Advantage Municipal Fund 3, Nuveen Insured California Dividend
Advantage Municipal Fund and Nuveen Insured California Tax-Free Advantage
Municipal Fund at August 31, 2004, the results of their operations, changes in
their net assets and financial highlights for the periods indicated therein in
conformity with U.S. generally accepted accounting principles.
/s/ Ernst & Young LLP
Chicago, Illinois
October 15, 2004
20
Nuveen Insured California Premium Income Municipal Fund, Inc. (NPC)
Portfolio of
INVESTMENTS August 31, 2004
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 8.8%
$ 2,000 California Educational Facilities Authority, Revenue Bonds, 9/06 at 102.00 AAA $ 2,160,520
Santa Clara University, Series 1996, 5.750%, 9/01/26 -
MBIA Insured
2,125 California Educational Facilities Authority, Student Loan 3/08 at 102.00 Aaa 2,236,690
Revenue Bonds, Cal Loan Program, Series 2001A,
5.400%, 3/01/21 (Alternative Minimum Tax) - MBIA Insured
2,500 California State University, Systemwide Revenue Bonds, 5/14 at 100.00 AAA 2,705,975
Series 2004A, 5.000%, 11/01/18 - FSA Insured
2,000 University of California, Revenue Bonds, Multi-Purpose 9/10 at 101.00 AAA 2,054,120
Projects, Series 2002O, 5.125%, 9/01/31 - FGIC Insured
------------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE - 4.6%
3,000 California Health Facilities Financing Authority, Insured 8/08 at 101.00 AAA 3,103,260
Revenue Bonds, Sutter Health, Series 1998A,
5.375%, 8/15/30 - MBIA Insured
1,500 California Statewide Community Development Authority, 8/09 at 101.00 AAA 1,663,470
Certificates of Participation, Sutter Health Obligated Group,
Series 1999, 5.500%, 8/15/19 - FSA Insured
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 1.9%
1,000 ABAG Finance Authority for Non-Profit Corporations, 9/09 at 100.00 AAA 1,056,300
California, Multifamily Housing Revenue Bonds, Civic Center
Drive Apartments, Series 1999A, 5.800%, 9/01/20
(Alternative Minimum Tax) - FSA Insured
970 Los Angeles, California, FHA-Insured Section 8 Mortgage 1/05 at 100.00 AAA 971,164
Loan Revenue Refunding Bonds, Series 1993A,
6.300%, 1/01/25 - MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 0.5%
460 California Housing Finance Agency, Single Family Mortgage 2/07 at 102.00 AAA 482,305
Bonds II, Series 1997A-1, 6.000%, 8/01/20 (Alternative
Minimum Tax) - MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 41.3%
Bonita Unified School District, San Diego County, California,
General Obligation Bonds, Series 2004A:
1,890 5.250%, 8/01/23 - MBIA Insured 8/14 at 100.00 AAA 2,036,021
1,250 5.250%, 8/01/25 - MBIA Insured 8/14 at 100.00 AAA 1,330,975
California, Various Purpose General Obligation Bonds,
Series 2000:
7,995 5.750%, 3/01/22 - MBIA Insured 3/10 at 101.00 AAA 8,926,338
2,000 5.750%, 3/01/27 - MBIA Insured 3/10 at 101.00 AAA 2,186,220
2,000 California, General Obligation Veterans Welfare Bonds, 6/07 at 101.00 AAA 2,038,540
Series 2001BZ, 5.375%, 12/01/24 (Alternative Minimum
Tax) - MBIA Insured
750 California, General Obligation Bonds, Series 2004, 4/14 at 100.00 AAA 765,143
5.000%, 4/01/31 - AMBAC Insured
El Segundo Unified School District, Los Angeles County,
California, General Obligation Bonds, Series 2004:
2,580 5.250%, 9/01/21 - FGIC Insured 9/14 at 100.00 AAA 2,813,671
1,775 5.250%, 9/01/22 - FGIC Insured 9/14 at 100.00 AAA 1,925,165
1,225 Fresno Unified School District, Fresno County, California, 2/13 at 103.00 AAA 1,494,941
General Obligation Refunding Bonds, Series 1998A,
6.550%, 8/01/20 - MBIA Insured
2,500 Fresno Unified School District, Fresno County, California, 8/09 at 102.00 AAA 2,638,725
General Obligation Bonds, Series 2001A, 5.125%, 8/01/26 -
FSA Insured
1,180 Jurupa Unified School District, Riverside County, California, 8/13 at 100.00 AAA 1,248,216
General Obligation Bonds, Series 2004, 5.000%, 8/01/21 -
FGIC Insured
2,000 Los Angeles Unified School District, California, General 7/08 at 102.00 AAA 2,090,220
Obligation Bonds, Series 1997A, 5.000%, 7/01/21 -
FGIC Insured
21
Nuveen Insured California Premium Income Municipal Fund, Inc. (NPC) (continued)
Portfolio of INVESTMENTS August 31, 2004
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL (continued)
$ 3,000 Pomona Unified School District, Los Angeles County, California, 8/11 at 103.00 AAA $ 3,644,280
General Obligation Refunding Bonds, Series 1997A,
6.500%, 8/01/19 - MBIA Insured
San Diego Unified School District, San Diego County, California,
General Obligation Bonds, Election of 1998, Series 2001C:
1,335 5.000%, 7/01/21 - FSA Insured 7/11 at 102.00 AAA 1,411,549
3,500 5.000%, 7/01/22 - FSA Insured 7/11 at 102.00 AAA 3,679,585
4,895 5.000%, 7/01/23 - FSA Insured 7/11 at 102.00 AAA 5,116,890
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 19.4%
1,000 Brea and Olinda Unified School District, Orange County, 8/11 at 101.00 AAA 1,030,120
California, Refunding Certificates of Participation,
Series 2002A, 5.125%, 8/01/26 - FSA Insured
California Infrastructure Economic Development Bank, Revenue
Bonds, North County Center for Self-Sufficiency Corporation,
Series 2004:
1,215 5.000%, 12/01/19 - AMBAC Insured 12/13 at 100.00 AAA 1,296,952
1,615 5.000%, 12/01/21 - AMBAC Insured 12/13 at 100.00 AAA 1,703,583
2,000 California State Public Works Board, Lease Revenue Bonds, 11/09 at 101.00 AAA 2,201,800
Department of Health Services, Series 1999A,
5.750%, 11/01/24 - MBIA Insured
1,900 Corona-Norco Unified School District, Riverside County, 9/12 at 100.00 AAA 1,968,514
California, Special Tax Bonds, Community Facilities
District 98-1, Series 2002, 5.100%, 9/01/25 -
AMBAC Insured
5,000 El Monte, California, Senior Lien Certificates of 1/11 at 100.00 AAA 5,155,700
Participation, Department of Public Services Facility
Phase II, Series 2001, 5.250%, 1/01/34 - AMBAC Insured
895 Los Angeles Community Redevelopment Agency, California, 12/14 at 100.00 AAA 954,464
Tax Allocation Bonds, Bunker Hill Project, Series 2004A,
5.000%, 12/01/20 - FSA Insured
3,000 Santa Clara County Financing Authority, California, 11/07 at 102.00 AAA 3,108,150
Lease Revenue Bonds, VMC Facility Replacement Project,
Series 1994A, 5.000%, 11/15/22 - AMBAC Insured
2,805 Yucaipa-Calimesa Joint Unified School District, San 10/11 at 100.00 AAA 2,839,081
Bernardino County, California, General Obligation Refunding
Bonds, Series 2001A, 5.000%, 10/01/31 - MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED*** - 31.1%
6,000 Huntington Park Redevelopment Agency, California, No Opt. Call AAA 8,706,600
Single Family Residential Mortgage Revenue Refunding
Bonds, Series 1986A, 8.000%, 12/01/19
5,135 Palmdale Community Redevelopment Agency, California, No Opt. Call AAA 7,091,384
Single Family Restructured Mortgage Revenue Bonds,
Series 1986A, 8.000%, 3/01/16 (Alternative Minimum Tax)
6,220 Riverside County, California, GNMA Mortgage-Backed No Opt. Call AAA 9,471,816
Securities Program, Single Family Mortgage Revenue
Bonds, Series 1987A, 9.000%, 5/01/21 (Alternative
Minimum Tax)
1,485 San Jose, California, Single Family Mortgage Revenue No Opt. Call AAA 2,170,194
Bonds, Series 1985A, 9.500%, 10/01/13
4,800 University of California, Hospital Revenue Bonds, Davis 7/06 at 101.00 AAA 5,216,448
Medical Center, Series 1996, 5.750%, 7/01/24 (Pre-refunded
to 7/01/06) - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 7.7%
4,000 California Pollution Control Financing Authority, Revenue 12/04 at 100.00 AAA 4,044,040
Bonds, Southern California Edison Company, Series 1992B,
6.400%, 12/01/24 (Alternative Minimum Tax) - MBIA Insured
3,600 Sacramento Municipal Utility District, California, Electric No Opt. Call AAA 4,024,368
Revenue Refunding Bonds, Series 2003S,
5.000%, 11/15/13 - MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 23.9%
5,255 El Dorado Irrigation District, California, Water and Sewer 3/13 at 100.00 AAA 5,554,850
Certificates of Participation, Series 2003A,
5.000%, 3/01/20 - FGIC Insured
1,230 El Dorado Irrigation District, California, Water and Sewer 3/14 at 100.00 AAA 1,299,028
Certificates of Participation, Series 2004A,
5.000%, 3/01/21 (WI, settling 9/15/04) - FGIC Insured
3,000 Los Angeles, California, Wastewater System Revenue Bonds, 11/04 at 101.00 AAA 3,017,790
Series 1993D, 4.700%, 11/01/19 - FGIC Insured
3,400 San Diego Public Facilities Financing Authority, California, 5/07 at 101.00 AAA 3,637,388
Sewerage Revenue Bonds, Series 1997A,
5.250%, 5/15/22 - FGIC Insured
22
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER (continued)
$ 2,150 Santa Clara Valley Water District, California, Water Utility 6/10 at 100.00 AAA $ 2,195,967
System Revenue Bonds, Series 2000A, 5.125%, 6/01/31 -
FGIC Insured
2,310 Santa Fe Springs Public Financing Authority, California, 5/13 at 100.00 AAA 2,354,606
Water Revenue Bonds, Series 2003A, 5.000%, 5/01/33 -
MBIA Insured
1,345 West Basin Municipal Water District, California, Revenue 8/13 at 100.00 AAA 1,424,810
Certificates of Participation, Series 2003A,
5.000%, 8/01/20 - MBIA Insured
5,000 Wheeler Ridge-Maricopa Water District, Kern County, 11/06 at 102.00 AAA 5,472,050
California, Water Revenue Refunding Bonds, Series 1996,
5.700%, 11/01/15 - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
$ 129,790 Total Long-Term Investments (cost $132,901,995) - 139.2% 145,719,986
=============-----------------------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS - 1.0%
1,000 Puerto Rico Government Development Bank, Adjustable Refunding Bonds, A-1 1,000,000
Variable Rate Demand Obligations, Series 1985, 1.250%, 12/01/15 - MBIA Insured+
------------------------------------------------------------------------------------------------------------------------------------
$ 1,000 Total Short-Term Investments (cost $1,000,000) 1,000,000
=============-----------------------------------------------------------------------------------------------------------------------
Total Investments (cost $133,901,995) - 140.2% 146,719,986
--------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 2.8% 2,897,715
--------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (43.0)% (45,000,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 104,617,701
====================================================================================================================
All of the bonds in the portfolio are either covered by
Original Issue Insurance, Secondary Market Insurance or
Portfolio 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.
(1) All percentages shown in the Portfolio of Investments are
based on net assets applicable to Common shares.
* Optional Call Provisions (not covered by the report of
independent registered public accounting firm): 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 registered
public accounting firm): Using the higher of Standard &
Poor's or Moody's rating.
*** Securities are backed by an escrow or trust containing
sufficient U.S. Government or U.S. Government agency
securities which ensures the timely payment of principal and
interest. Such securities are normally considered to be
equivalent to AAA rated securities.
(WI) Security purchased on a when-issued basis.
+ 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.
23
Nuveen Insured California Premium Income Municipal Fund 2, Inc. (NCL)
Portfolio of
INVESTMENTS August 31, 2004
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 13.0%
California Educational Facilities Authority, Revenue Bonds,
Santa Clara University, Series 1996:
$ 2,400 5.750%, 9/01/21 - MBIA Insured 9/06 at 102.00 AAA $ 2,618,016
3,000 5.750%, 9/01/26 - MBIA Insured 9/06 at 102.00 AAA 3,240,780
2,000 California Educational Facilities Authority, Revenue Bonds, 11/10 at 100.00 Aaa 2,274,380
University of the Pacific, Series 2000, 5.875%, 11/01/20 -
MBIA Insured
2,125 California Educational Facilities Authority, Student Loan 3/08 at 102.00 Aaa 2,236,690
Revenue Bonds, Cal Loan Program, Series 2001A,
5.400%, 3/01/21 (Alternative Minimum Tax) - MBIA Insured
California Infrastructure Economic Development Bank, Revenue
Bonds, Asian Art Museum of San Francisco, Series 2000:
1,295 5.500%, 6/01/19 - MBIA Insured 6/10 at 101.00 AAA 1,450,076
1,000 5.500%, 6/01/20 - MBIA Insured 6/10 at 101.00 AAA 1,086,150
5,380 California State University, Systemwide Revenue Bonds, 5/14 at 100.00 AAA 5,895,673
Series 2004A, 5.000%, 11/01/16 - FSA Insured
6,000 University of California, Revenue Bonds, Multi-Purpose 5/13 at 100.00 AAA 6,137,760
Projects, Series 2003A, 5.000%, 5/15/27 - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE - 4.7%
1,450 California Health Facilities Financing Authority, Insured 7/06 at 102.00 AAA 1,575,904
Health Facility Revenue Refunding Bonds, Mark Twain-
St. Joseph's Healthcare Corporation, Series 1996A,
6.000%, 7/01/19 - MBIA Insured
5,000 California Health Facilities Financing Authority, Insured 7/06 at 102.00 AAA 5,412,700
Health Facility Revenue Refunding Bonds, Catholic
Healthcare West, Series 1996A, 6.000%, 7/01/25 -
MBIA Insured
1,755 University of California, Hospital Revenue Bonds, UCLA 5/12 at 101.00 AAA 1,952,648
Medical Center, Series 2004A, 5.500%, 5/15/18 -
AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 4.7%
ABAG Finance Authority for Non-Profit Corporations, California,
Multifamily Housing Revenue Bonds, Civic Center Drive
Apartments, Series 1999A:
4,000 5.800%, 9/01/20 (Alternative Minimum Tax) - FSA Insured 9/09 at 100.00 AAA 4,225,200
1,370 5.875%, 3/01/32 (Alternative Minimum Tax) - FSA Insured 9/09 at 100.00 AAA 1,422,759
3,110 Los Angeles Community Redevelopment Agency, California, 6/05 at 105.00 AAA 3,337,590
FNMA-Collateralized Section 8 Multifamily Housing
Revenue Refunding Bonds, Angelus Plaza, Series 1995A,
7.400%, 6/15/10
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 0.6%
1,150 California Housing Finance Agency, Single Family Mortgage 8/07 at 101.50 AAA 1,201,865
Bonds, Series 1997C-2-II, 5.625%, 8/01/20 (Alternative
Minimum Tax) - MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 28.3%
1,460 ABC Unified School District, Los Angeles County, California, 8/10 at 101.00 AAA 1,666,619
General Obligation Bonds, Series 2000B, 5.750%, 8/01/16 -
FGIC Insured
485 California, General Obligation Veterans Welfare Bonds, 12/04 at 101.00 AAA 489,059
Series 1997BH, 5.500%, 12/01/24 (Alternative Minimum
Tax) - FSA Insured
2,500 California, Various Purpose General Obligation Bonds, 9/09 at 101.00 AAA 2,698,850
Series 1999, 5.500%, 9/01/24 - FSA Insured
California, Various Purpose General Obligation Bonds,
Series 2000:
7,995 5.750%, 3/01/22 - MBIA Insured 3/10 at 101.00 AAA 8,926,338
2,000 5.750%, 3/01/27 - MBIA Insured 3/10 at 101.00 AAA 2,186,220
4,900 California, General Obligation Bonds, Series 2003, 2/13 at 100.00 AAA 4,989,082
5.000%, 2/01/31 - MBIA Insured
3,000 California, General Obligation Veterans Welfare Bonds, 6/07 at 101.00 AAA 3,057,810
Series 2001BZ, 5.375%, 12/01/24 (Alternative Minimum
Tax) - MBIA Insured
24
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL (continued)
California, General Obligation Bonds, Series 2004:
$ 2,500 5.000%, 2/01/18 - AMBAC Insured 2/14 at 100.00 AAA $ 2,683,325
2,250 5.000%, 4/01/31 - AMBAC Insured 4/14 at 100.00 AAA 2,295,428
2,575 Calipatria Unified School District, Imperial County, 8/06 at 102.00 AAA 2,795,497
California, General Obligation Bonds, Series 1996A,
5.625%, 8/01/13 - AMBAC Insured
Fresno Unified School District, Fresno County, California,
General Obligation Bonds, Series 2001F:
1,065 5.125%, 8/01/21 - FSA Insured 8/09 at 102.00 AAA 1,154,524
1,160 5.125%, 8/01/22 - FSA Insured 8/09 at 102.00 AAA 1,255,236
1,220 5.125%, 8/01/23 - FSA Insured 8/09 at 102.00 AAA 1,315,538
1,500 Hacienda La Puente Unified School District, Los Angeles 8/10 at 101.00 AAA 1,572,075
County, California, General Obligation Bonds, Election
of 2000, Series 2000A, 5.250%, 8/01/25 - MBIA Insured
Kern Community College District, California, General
Obligation Bonds, Series 2003A:
3,655 5.000%, 11/01/20 - FGIC Insured 11/13 at 100.00 AAA 3,893,964
2,665 5.000%, 11/01/21 - FGIC Insured 11/13 at 100.00 AAA 2,822,555
1,750 Lake Tahoe Unified School District, El Dorado County, 8/09 at 100.00 AAA 1,861,072
California, General Obligation Bonds, Series 1999A,
5.250%, 8/01/24 - FGIC Insured
Manteca Unified School District, San Joaquin County,
California, General Obligation Bonds, Series 2004:
1,000 5.250%, 8/01/21 - FSA Insured 8/14 at 100.00 AAA 1,089,920
1,000 5.250%, 8/01/22 - FSA Insured 8/14 at 100.00 AAA 1,083,990
1,270 Merced City School District, Merced County, California, 8/13 at 100.00 AAA 1,335,697
General Obligation Bonds, Series 2004, 5.000%, 8/01/22 -
FGIC Insured
1,125 San Diego Unified School District, California, General No Opt. Call AAA 495,169
Obligation Bonds, Election of 1998, Series 1999A,
0.000%, 7/01/21 - FGIC Insured
2,000 San Francisco Community College District, California, 6/10 at 102.00 Aaa 2,045,820
General Obligation Bonds, Series 2002A, 5.000%, 6/15/26 -
FGIC Insured
2,445 Washington Unified School District, Yolo County, 8/13 at 100.00 AAA 2,586,345
California, General Obligation Bonds, Series 2004A,
5.000%, 8/01/21 - FGIC Insured
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 44.9%
Anaheim Public Finance Authority, California, Subordinate Lease
Revenue Bonds, Public Improvement Project, Series 1997C:
5,130 0.000%, 9/01/18 - FSA Insured No Opt. Call AAA 2,671,550
8,000 0.000%, 9/01/21 - FSA Insured No Opt. Call AAA 3,458,080
1,535 California Infrastructure Economic Development Bank, 12/13 at 100.00 AAA 1,628,835
Revenue Bonds, North County Center for Self-Sufficiency
Corporation, Series 2004, 5.000%, 12/01/20 -
AMBAC Insured
3,500 California Department of Transportation, Federal Highway No Opt. Call AAA 3,888,640
Grant Anticipation Bonds, Series 2004A, 5.000%, 2/01/15 -
FGIC Insured
3,450 California State Public Works Board, Lease Revenue Bonds, 11/09 at 101.00 AAA 3,798,105
Department of Health Services, Series 1999A,
5.750%, 11/01/24 - MBIA Insured
5,000 Compton Community Redevelopment Agency, California, 8/05 at 102.00 AAA 5,315,500
Tax Allocation Refunding Bonds, Merged Area
Redevelopment Projects, Series 1995A, 6.500%, 8/01/13 -
FSA Insured
4,000 Contra Costa County, California, Refunding Certificates 11/07 at 102.00 AAA 4,344,200
of Participation, Merrithew Memorial Hospital Replacement
Project, Series 1997, 5.500%, 11/01/22 - MBIA Insured
6,000 El Monte, California, Senior Lien Certificates of 1/11 at 100.00 AAA 6,221,940
Participation, Department of Public Services Facility
Phase II, Series 2001, 5.000%, 1/01/21 - AMBAC Insured
3,000 Galt Schools Joint Powers Authority, Sacramento County, 11/07 at 102.00 AAA 3,344,760
California, Revenue Refunding Bonds, High School and
Elementary School Facilities, Series 1997A,
5.875%, 11/01/24 - MBIA Insured
5,000 Kern County Board of Education, California, Refunding 5/08 at 102.00 AAA 5,130,550
Certificates of Participation, Series 1998A,
5.200%, 5/01/28 - MBIA Insured
5,000 La Quinta Redevelopment Agency, California, Tax 9/07 at 102.00 AAA 5,117,200
Allocation Refunding Bonds, Redevelopment Project
Area 1, Series 1998, 5.200%, 9/01/28 - AMBAC Insured
25
Nuveen Insured California Premium Income Municipal Fund 2, Inc. (NCL) (continued)
Portfolio of INVESTMENTS August 31, 2004
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED (continued)
$ 4,000 Los Angeles, California, Certificates of Participation, 6/13 at 100.00 AAA $ 4,054,880
Municipal Improvement Corporation, Series 2003AW,
5.000%, 6/01/33 - AMBAC Insured
1,000 Los Angeles Community Redevelopment Agency, 12/14 at 100.00 AAA 1,066,440
California, Tax Allocation Bonds, Bunker Hill Project,
Series 2004A, 5.000%, 12/01/20 - FSA Insured
3,865 Los Angeles County Metropolitan Transportation 7/10 at 101.00 AAA 4,018,672
Authority, California, Second Senior Lien Proposition C
Sales Tax Revenue Bonds, Series 2000A, 5.250%, 7/01/30 -
FGIC Insured
1,890 Menifee Union School District, Riverside County, 9/06 at 102.00 AAA 2,073,935
California, Certificates of Participation, School Projects,
Series 1996, 6.125%, 9/01/24 - FSA Insured
2,690 Norwalk Community Facilities Financing Authority, 9/05 at 102.00 AAA 2,851,938
Los Angeles County, California, Tax Allocation Revenue
Refunding Bonds, Series 1995A, 6.000%, 9/01/15 -
FSA Insured
2,780 Pittsburg Redevelopment Agency, California, Tax Allocation No Opt. Call AAA 3,091,888
Refunding Bonds, Los Medanos Community Development
Project, Series 2003A, 5.000%, 8/01/12 - MBIA Insured
4,140 Plumas County, California, Certificates of Participation, 6/13 at 101.00 AAA 4,214,851
Capital Improvement Program, Series 2003A,
5.000%, 6/01/28 - AMBAC Insured
2,000 Poway Redevelopment Agency, California, Tax Allocation 12/10 at 102.00 AAA 2,210,160
Refunding Bonds, Paguay Redevelopment Project,
Series 2000, 5.750%, 6/15/33 - MBIA Insured
1,000 Rocklin Unified School District, Placer County, California, 9/13 at 100.00 AAA 1,031,070
Special Tax Bonds, Community Facilities District 1,
Series 2004, 5.000%, 9/01/25 - MBIA Insured
5,000 San Bernardino Joint Powers Financing Authority, California, 9/09 at 102.00 AAA 5,546,700
Refunding Certificates of Participation, Police Station
Financing Project, Series 1999, 5.500%, 9/01/20 -
MBIA Insured
3,500 San Francisco Bay Area Rapid Transit District, California, 7/09 at 101.00 AAA 3,750,005
Sales Tax Revenue Bonds, Series 1999, 5.500%, 7/01/34 -
FGIC Insured
1,930 Santa Margarita/Dana Point Authority, Orange County, No Opt. Call AAA 2,030,572
California, Refinancing Revenue Bonds, Improvement
Districts 1, 2, 2A and 8, Series 1994A, 7.250%, 8/01/05 - MBIA
Insured
5,450 Visalia, California, Refunding Certificates of Participation, 12/06 at 102.00 AAA 5,637,535
Motor Vehicle License Fee Enhancement, Series 1996A,
5.375%, 12/01/26 - MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 6.6%
6,500 Foothill/Eastern Transportation Corridor Agency, 1/10 at 65.32 AAA 3,273,985
California, Toll Road Revenue Refunding Bonds,
Series 1999, 0.000%, 1/15/18 - MBIA Insured
4,000 Orange County Transportation Authority, California, 8/13 at 100.00 AAA 4,309,440
Toll Road Revenue Bonds, 91 Express Lanes Project,
Series 2003A, 5.000%, 8/15/18 - AMBAC Insured
5,000 San Francisco Airports Commission, California, Revenue 5/11 at 100.00 AAA 5,093,900
Refunding Bonds, San Francisco International Airport,
Second Series 2001, Issue 27A, 5.250%, 5/01/31
(Alternative Minimum Tax) - MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED*** - 7.9%
2,865 Central Unified School District, Fresno County, California, 9/04 at 101.00 AAA 2,932,643
General Obligation Bonds, Series 1993,
5.625%, 3/01/18 - AMBAC Insured
3,000 Escondido Union High School District, San Diego County, 11/06 at 102.00 AAA 3,234,990
California, General Obligation Bonds, Series 1996,
5.700%, 11/01/10 - MBIA Insured
2,500 Oakland, California, Insured Revenue Bonds, 1800 1/10 at 100.00 AAA 2,911,850
Harrison Foundation - Kaiser Permanente, Series 1999A,
6.000%, 1/01/29 (Pre-refunded to 1/01/10) -
AMBAC Insured
4,320 Riverside County, California, GNMA Mortgage-Backed No Opt. Call AAA 6,130,814
Securities Program, Single Family Mortgage Revenue
Bonds, Series 1987B, 8.625%, 5/01/16 (Alternative
Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 12.1%
3,740 California Pollution Control Financing Authority, Revenue 9/09 at 101.00 AAA 3,888,590
Refunding Bonds, Southern California Edison Company,
Series 1999B, 5.450%, 9/01/29 - MBIA Insured
3,215 Modesto Irrigation District, California, Revenue Refunding 10/06 at 102.00 AAA 3,526,244
Bonds, Series 1996A, 6.000%, 10/01/15 - MBIA Insured
3,500 Puerto Rico Electric Power Authority, Power Revenue 7/12 at 101.00 AAA 3,677,065
Bonds, Series 2002II, 5.125%, 7/01/26 - FSA Insured
26
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES (continued)
$ 1,790 Sacramento City Financing Authority, California, Capital 12/09 at 102.00 AAA $ 2,050,141
Improvement Revenue Bonds, Solid Waste and
Redevelopment Projects, Series 1999,
5.800%, 12/01/19 - AMBAC Insured
1,950 Salinas Valley Solid Waste Authority, California, Revenue 8/12 at 100.00 AAA 2,008,832
Bonds, Series 2002, 5.250%, 8/01/27 (Alternative
Minimum Tax) - AMBAC Insured
Santa Clara, California, Subordinate Electric Revenue Bonds,
Series 2003A:
2,800 5.000%, 7/01/24 - MBIA Insured 7/13 at 100.00 AAA 2,901,976
5,000 5.000%, 7/01/28 - MBIA Insured 7/13 at 100.00 AAA 5,112,550
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 22.7%
2,975 Chino Basin Regional Finance Authority, California, 2/05 at 102.00 AAA 3,044,942
Sewerage System Revenue Bonds, Inland Empire
Utilities Agency, Series 1994, 6.000%, 8/01/16 -
AMBAC Insured
2,000 El Dorado Irrigation District, California, Water and Sewer 3/14 at 100.00 AAA 2,112,240
Certificates of Participation, Series 2004A,
5.000%, 3/01/21 (WI, settling 9/15/04) - FGIC Insured
2,700 Los Angeles County Sanitation Districts Financing 10/13 at 100.00 AAA 2,858,490
Authority, California, Senior Revenue Bonds, Capital
Projects, Series 2003A, 5.000%, 10/01/21 - FSA Insured
12,000 Orange County Sanitation District, California, Certificates 8/13 at 100.00 AAA 12,167,640
of Participation, Series 2003, 5.000%, 2/01/33 -
FGIC Insured
2,775 Pomona Public Financing Authority, California, Revenue 5/09 at 101.00 AAA 2,972,636
Bonds, Water Facilities Project, Series 1999AC,
5.500%, 5/01/29 - FGIC Insured
1,000 Sacramento County Sanitation District Financing 12/10 at 101.00 AAA 1,092,000
Authority, California, Revenue Bonds, Series 2000A,
5.500%, 12/01/20 - AMBAC Insured
1,520 San Buenaventura, California, Water Revenue Certificates 10/14 at 100.00 AAA 1,561,754
of Participation, Series 2004, 5.000%, 10/01/25 -
AMBAC Insured
3,675 San Dieguito Water District, California, Water Revenue 10/14 at 100.00 AAA 3,860,514
Bonds, Series 2004, 5.000%, 10/01/23 - FGIC Insured
Santa Clara Valley Water District, California, Certificates
of Participation, Series 2004A:
1,400 5.000%, 2/01/19 - FGIC Insured 2/14 at 100.00 AAA 1,495,872
445 5.000%, 2/01/20 - FGIC Insured 2/14 at 100.00 AAA 472,617
465 5.000%, 2/01/21 - FGIC Insured 2/14 at 100.00 AAA 490,891
2,130 Santa Rosa, Sonoma County, California, Wastewater 9/14 at 100.00 AAA 2,310,539
Revenue Bonds, Series 2004B, 5.000%, 9/01/18 -
FGIC Insured
2,000 South San Joaquin Irrigation District, San Joaquin 1/05 at 100.00 AAA 2,024,440
County, California, Revenue Refunding Certificates of
Participation, Series 1993, 5.500%, 1/01/15 -
AMBAC Insured
2,500 West Basin Municipal Water District, California, Revenue 8/13 at 100.00 AAA 2,538,550
Certificates of Participation, Series 2003A,
5.000%, 8/01/30 - MBIA Insured
Yorba Linda Water District, California, Certificates of
Participation, Highland Reservoir Renovation, Series 2003:
2,010 5.000%, 10/01/28 - FGIC Insured 10/13 at 100.00 AAA 2,056,331
2,530 5.000%, 10/01/33 - FGIC Insured 10/13 at 100.00 AAA 2,580,801
------------------------------------------------------------------------------------------------------------------------------------
$ 273,720 Total Long-Term Investments (cost $263,591,647) - 145.5% 279,559,607
=============-----------------------------------------------------------------------------------------------------------------------
27
Nuveen Insured California Premium Income Municipal Fund 2, Inc. (NCL) (continued)
Portfolio of INVESTMENTS August 31, 2004
PRINCIPAL MARKET
AMOUNT (000) DESCRIPTION(1) RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS - 1.5%
$ 800 Irvine, California, Assessment District 93-14 Variable A-1+ $ 800,000
Rate Limited Obligation Improvement Bonds,
Series 2000, 1.320%, 9/02/25+
2,000 Puerto Rico Government Development Bank, Adjustable A-1 2,000,000
Refunding Bonds, Variable Rate Demand Obligations,
Series 1985, 1.250%, 12/01/15 - MBIA Insured+
------------------------------------------------------------------------------------------------------------------------------------
$ 2,800 Total Short-Term Investments (cost $2,800,000) 2,800,000
=============-----------------------------------------------------------------------------------------------------------------------
Total Investments (cost $266,391,647) - 147.0% 282,359,607
--------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 2.5% 4,675,224
--------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (49.5)% (95,000,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 192,034,831
====================================================================================================================
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 Portfolio 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.
(1) All percentages shown in the Portfolio of Investments are
based on net assets applicable to Common shares.
* Optional Call Provisions (not covered by the report of
independent registered public accounting firm): 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 registered
public accounting firm): Using the higher of Standard &
Poor's or Moody's rating.
(WI) Security purchased on a when-issued basis.
+ 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.
28
Nuveen California Premium Income Municipal Fund (NCU)
Portfolio of
INVESTMENTS August 31, 2004
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES - 5.4%
$ 1,500 California County Tobacco Securitization Agency, Tobacco 6/12 at 100.00 Baa3 $ 1,298,835
Settlement Asset-Backed Bonds, Alameda County
Tobacco Asset Securitization Corporation, Series 2002,
5.750%, 6/01/29
3,720 California Statewide Financing Authority, Tobacco Settlement 5/12 at 100.00 Baa3 3,202,325
Asset-Backed Bonds, Pooled Tobacco Securitization
Program, Series 2002A, 5.625%, 5/01/29
------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 2.0%
1,500 University of California, Revenue Bonds, Multi-Purpose 5/13 at 100.00 AAA 1,638,495
Projects, Series 2003A, 5.125%, 5/15/17 - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE - 22.3%
1,500 California Health Facilities Financing Authority, Revenue 12/09 at 101.00 A3 1,606,080
Bonds, Cedars-Sinai Medical Center, Series 1999A,
6.125%, 12/01/30
5,150 California Health Facilities Financing Authority, Hospital 11/04 at 101.00 BB+ 4,835,902
Revenue Bonds, Downey Community Hospital, Series 1993,
5.750%, 5/15/15
1,500 California Infrastructure Economic Development Bank, 8/11 at 102.00 A 1,544,340
Revenue Bonds, Kaiser Hospital Assistance LLC,
Series 2001A, 5.550%, 8/01/31
8,100 California Statewide Community Development Authority, No Opt. Call AAA 8,650,962
Revenue Refunding Bonds, Sherman Oaks Health System,
Series 1998A, 5.000%, 8/01/22 - AMBAC Insured
2,000 Loma Linda, California, Hospital Revenue Bonds, Loma Linda 12/04 at 101.00 BB+ 2,026,100
University Medical Center, Series 1993A, 6.000%, 12/01/06
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 9.1%
1,600 California Statewide Community Development Authority, 7/08 at 101.00 BBB 1,667,328
Revenue Refunding Bonds, Irvine Apartment Communities
Development, Series 1998A, 5.250%, 5/15/25
(Mandatory put 5/15/13)
5,580 Los Angeles Community Redevelopment Agency, California, 6/05 at 105.00 AAA 5,988,344
FNMA-Collateralized Section 8 Multifamily Housing
Revenue Refunding Bonds, Angelus Plaza, Series 1995A,
7.400%, 6/15/10
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 2.3%
865 California Housing Finance Agency, Single Family Mortgage 2/07 at 102.00 AAA 906,944
Bonds II, Series 1997A-1, 6.000%, 8/01/20 (Alternative
Minimum Tax) - MBIA Insured
810 California Housing Finance Agency, Home Mortgage Revenue 8/05 at 102.00 AAA 833,911
Bonds, Series 1994F-3, 6.100%, 8/01/15 (Alternative
Minimum Tax) - MBIA Insured
145 California Rural Home Mortgage Finance Authority, No Opt. Call AAA 151,303
Single Family Mortgage Revenue Bonds, Mortgage-Backed
Securities Program, Series 1996C, 7.500%, 8/01/27
(Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 27.3%
4,000 California, General Obligation Veterans Welfare Bonds, 12/04 at 101.00 A 4,000,960
Series 1999BR, 5.300%, 12/01/29 (Alternative
Minimum Tax)
California, General Obligation Bonds, Series 2003:
1,000 5.250%, 11/01/19 - RAAI Insured 11/13 at 100.00 AA 1,081,520
1,055 5.250%, 2/01/21 8/13 at 100.00 A 1,126,529
1,500 5.000%, 2/01/31 - MBIA Insured 2/13 at 100.00 AAA 1,527,270
California, General Obligation Bonds, Series 2004:
1,750 5.000%, 4/01/22 4/14 at 100.00 A 1,820,893
1,750 5.000%, 2/01/23 2/14 at 100.00 A 1,807,680
1,400 5.200%, 4/01/26 4/14 at 100.00 A 1,451,156
1,000 Fremont Unified School District, Alameda County, California, 8/12 at 101.00 AAA 1,057,810
General Obligation Bonds, Series 2002A,
5.000%, 8/01/21 - FGIC Insured
29
Nuveen California Premium Income Municipal Fund (NCU) (continued)
Portfolio of INVESTMENTS August 31, 2004
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL (continued)
$ 2,250 Los Angeles Unified School District, California, General 7/13 at 100.00 AAA $ 2,365,448
Obligation Bonds, Series 2003A, 5.000%, 7/01/22 -
FSA Insured
6,000 North Orange County Community College District, California, No Opt. Call AAA 1,763,520
General Obligation Bonds, Series 2003B, 0.000%, 8/01/27 -
FGIC Insured
3,000 Pomona Unified School District, Los Angeles County, 8/11 at 103.00 AAA 3,567,030
California, General Obligation Refunding Bonds,
Series 1997A, 6.150%, 8/01/15 - MBIA Insured
1,200 Riverside Community College District, California, General 8/14 at 100.00 AAA 1,300,788
Obligation Bonds, Series 2004A, 5.250%, 8/01/22 -
MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 38.8%
1,000 Bell Community Redevelopment Agency, California, Tax 10/13 at 100.00 AA 1,053,340
Allocation Bonds, Bell Project Area, Series 2003,
5.625%, 10/01/33 - RAAI Insured
985 Beverly Hills Public Financing Authority, California, Lease 6/13 at 100.00 Aaa 1,093,902
Revenue Refunding Bonds, Series 2003A,
5.250%, 6/01/15 - MBIA Insured
California, Economic Recovery Revenue Bonds, Series 2004A:
1,720 5.000%, 7/01/15 7/14 at 100.00 AA- 1,897,607
1,000 5.000%, 7/01/16 7/11 at 100.00 AA- 1,070,020
5,920 California State Public Works Board, Lease Revenue 11/09 at 101.00 AAA 6,622,112
Bonds, Department of Veterans Affairs, Southern
California Veterans Home - Chula Vista Facility,
Series 1999A, 5.600%, 11/01/19 - AMBAC Insured
Golden State Tobacco Securitization Corporation, California,
Enhanced Tobacco Settlement Asset-Backed Bonds, Series 2003B:
1,000 5.500%, 6/01/33 6/13 at 100.00 A- 1,028,220
1,000 5.625%, 6/01/33 6/13 at 100.00 A- 1,036,960
3,500 Livermore Redevelopment Agency, California, Tax Allocation 8/11 at 100.00 AAA 3,556,105
Revenue Bonds, Livermore Redevelopment Project Area,
Series 2001A, 5.000%, 8/01/26 - MBIA Insured
1,890 Los Angeles Community Redevelopment Agency, California, 12/04 at 101.00 BBB- 1,905,026
Tax Allocation Multifamily Housing Bonds, Grand Central
Square/Bunker Hill Project, Series 1993A,
5.750%, 12/01/13 (Alternative Minimum Tax)
2,000 Oakland Redevelopment Agency, California, Subordinate 3/13 at 100.00 AAA 2,255,060
Lien Tax Allocation Bonds, Central District Redevelopment
Project, Series 2003, 5.500%, 9/01/15 - FGIC Insured
1,000 Poway, California, Community Facilities District 88-1, 8/08 at 102.00 N/R 1,114,840
Special Tax Refunding Bonds, Parkway Business Centre,
Series 1998, 6.500%, 8/15/09
3,000 Sacramento City Financing Authority, California, Lease No Opt. Call AA- 3,333,570
Revenue Refunding Bonds, Series 1993B, 5.400%, 11/01/20
1,500 Sacramento City Financing Authority, California, Lease No Opt. Call AAA 1,708,845
Revenue Refunding Bonds, Series 1993A, 5.400%, 11/01/20 -
MBIA Insured
San Marcos Public Facilities Authority, California, Revenue
Refunding Bonds, Series 1998:
1,500 5.800%, 9/01/18 9/08 at 101.00 Baa3 1,603,380
1,000 5.800%, 9/01/27 9/08 at 101.00 Baa3 1,048,550
2,050 Santa Barbara County, California, Certificates of Participation, 12/11 at 102.00 AAA 2,235,771
Series 2001, 5.250%, 12/01/19 - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 8.4%
3,000 California Infrastructure Economic Development Bank, 7/13 at 100.00 AAA 3,153,930
First Lien Revenue Bonds, San Francisco Bay Area Toll
Bridge, Series 2003A, 5.000%, 7/01/22 - FSA Insured
2,000 Foothill/Eastern Transportation Corridor Agency, California, 1/10 at 100.00 BBB- 1,787,280
Toll Road Revenue Bonds, Series 1995A, 5.000%, 1/01/35
2,000 San Francisco Airports Commission, California, Revenue 5/06 at 102.00 AAA 2,125,620
Bonds, San Francisco International Airport, Second Series,
Issue 10A, 5.700%, 5/01/26 (Alternative Minimum Tax) -
MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED*** - 6.4%
2,750 Puerto Rico, Public Improvement General Obligation Bonds, 7/10 at 100.00 AAA 3,165,332
Series 2000, 5.750%, 7/01/21 (Pre-refunded to 7/01/10) -
MBIA Insured
2,000 Vista, California, Mobile Home Park Revenue Bonds, Vista 3/09 at 102.00 N/R*** 2,231,700
Manor Mobile Home Park Project, Series 1999A,
5.750%, 3/15/29
30
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 11.5%
California Department of Water Resources, Power Supply
Revenue Bonds, Series 2002A:
$ 400 5.375%, 5/01/17 - XLCA Insured 5/12 at 101.00 AAA $ 442,988
2,250 5.125%, 5/01/18 5/12 at 101.00 A2 2,405,655
275 Los Angeles Department of Water and Power, California, 7/13 at 100.00 AAA 290,147
Power System Revenue Bonds, Series 2003A-2,
5.000%, 7/01/21 - MBIA Insured
1,500 Merced Irrigation District, California, Revenue Refunding 9/05 at 102.00 Baa3 1,552,995
Bonds, Electric System Project, Series 2001,
6.500%, 9/01/22
4,580 Sacramento Municipal Utility District, California, Electric 8/12 at 100.00 AAA 4,939,209
Revenue Refunding Bonds, Series 2002Q,
5.250%, 8/15/20 - FSA Insured
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 14.5%
5,000 Culver City, California, Wastewater Facilities Revenue 9/09 at 102.00 AAA 5,484,600
Refunding Bonds, Series 1999A, 5.700%, 9/01/29 -
FGIC Insured
3,495 Orange County Sanitation District, California, Certificates 8/13 at 100.00 AAA 3,766,806
of Participation, Series 2003, 5.250%, 2/01/21 -
FGIC Insured
1,000 Sacramento County Water Financing Authority, California, 6/13 at 100.00 AAA 1,048,670
Revenue Bonds, Agency Zones 40-41 System Projects,
Series 2003, 5.000%, 6/01/22 - AMBAC Insured
1,795 Woodbridge Irrigation District, California, Certificates 7/13 at 100.00 BBB+ 1,824,348
of Participation, Water Systems Project, Series 2003,
5.500%, 7/01/33
------------------------------------------------------------------------------------------------------------------------------------
$ 121,985 Total Long-Term Investments (cost $118,587,913) - 148.0% 124,004,061
=============-----------------------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS - 1.2%
1,000 California Statewide Community Development Authority, A-1+ 1,000,000
Certificates of Participation, John Muir/Mount Diablo
Health System, Variable Rate Demand Obligations,
Series 1997, 1.220%, 8/15/27, AMBAC Insured+
------------------------------------------------------------------------------------------------------------------------------------
$ 1,000 Total Short-Term Investments (cost $1,000,000) 1,000,000
=============-----------------------------------------------------------------------------------------------------------------------
Total Investments (cost $119,587,913) - 149.2% 125,004,061
--------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 2.1% 1,767,568
--------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (51.3)% (43,000,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 83,771,629
====================================================================================================================
(1) All percentages shown in the Portfolio of Investments are
based on net assets applicable to Common shares.
* Optional Call Provisions (not covered by the report of
independent registered public accounting firm): 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 registered
public accounting firm): Using the higher of Standard &
Poor's or Moody's rating.
*** Securities are backed by an escrow or trust containing
sufficient U.S. Government or U.S. Government agency
securities which ensures the timely payment of principal and
interest. Such securities are normally considered to be
equivalent to AAA rated securities.
N/R Investment is not rated.
+ 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.
31
Nuveen California Dividend Advantage Municipal Fund (NAC)
Portfolio of
INVESTMENTS August 31, 2004
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES - 5.2%
$ 5,000 California Statewide Community Development Authority, 11/09 at 102.00 N/R $ 5,199,900
Certificates of Participation, Pride Industries and Pride
One Inc., Series 1999, 7.250%, 11/01/29
5,200 Golden State Tobacco Securitization Corporation, California, 6/13 at 100.00 BBB 4,855,708
Tobacco Settlement Asset-Backed Bonds, Series 2003A-1,
6.250%, 6/01/33
Northern California Tobacco Securitization Authority, Tobacco
Settlement Asset-Backed Bonds, Series 2001A:
2,500 5.250%, 6/01/31 6/11 at 100.00 BBB 1,987,800
4,500 5.375%, 6/01/41 6/11 at 100.00 BBB 3,422,925
3,635 Southern California Tobacco Securitization Authority, Tobacco 6/12 at 100.00 BBB 3,587,636
Settlement Asset-Backed Bonds, Senior Series 2001A,
5.250%, 6/01/27
------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 10.5%
615 California Statewide Community Development Authority, 10/13 at 100.00 N/R 607,349
Revenue Bonds, Notre Dame de Namur University,
Series 2003, 6.500%, 10/01/23
3,000 Long Beach Bond Financing Authority, California, Lease 11/11 at 100.00 AAA 3,381,300
Revenue Refunding Bonds, Long Beach Aquarium of the
South Pacific, Series 2001, 5.500%, 11/01/17 -
AMBAC Insured
700 University of California, Certificates of Participation, 1/10 at 101.00 Aa2 736,414
San Diego and Sacramento Campus Projects,
Series 2002A, 5.250%, 1/01/22
6,000 University of California, Revenue Bonds, Multi-Purpose 9/08 at 101.00 Aa2 6,582,900
Projects, Series 2000K, 5.000%, 9/01/12
University of California, Revenue Bonds, Multi-Purpose
Projects, Series 2002O:
10,770 5.000%, 9/01/20 - FGIC Insured 9/10 at 101.00 AAA 11,344,795
11,305 5.000%, 9/01/21 - FGIC Insured 9/10 at 101.00 AAA 11,859,171
3,500 University of California, Revenue Bonds, Multi-Purpose 5/13 at 100.00 AAA 3,823,155
Projects, Series 2003A, 5.125%, 5/15/17 - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE - 14.0%
8,400 California Health Facilities Financing Authority, Revenue 10/08 at 101.00 AAA 9,303,168
Bonds, Kaiser Permanente System, Series 1998B,
5.250%, 10/01/14 (Optional put 10/01/08)
15,000 California Health Facilities Financing Authority, Revenue 12/09 at 101.00 A3 16,060,800
Bonds, Cedars-Sinai Medical Center, Series 1999A,
6.125%, 12/01/30
2,160 California Health Facilities Financing Authority, Revenue 3/13 at 100.00 A 2,262,470
Bonds, Adventist Health System/West, Series 2003A,
5.000%, 3/01/15
8,000 Central California Joint Powers Health Finance Authority, 2/10 at 101.00 Baa2 8,213,040
Certificates of Participation, Community Hospitals of
Central California Obligated Group, Series 2000,
6.000%, 2/01/30
10,500 Duarte, California, Certificates of Participation, City of 4/09 at 101.00 BBB 9,863,385
Hope National Medical Center, Series 1999A,
5.250%, 4/01/31
2,800 Upland, California, Certificates of Participation, San Antonio 1/05 at 101.00 A- 2,853,424
Community Hospital, Series 1993, 5.250%, 1/01/08
2,500 Whittier, California, Health Facility Revenue Bonds, 6/12 at 101.00 A 2,612,400
Presbyterian Intercommunity Hospital, Series 2002,
5.600%, 6/01/22
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 7.3%
7,250 California Statewide Community Development Authority, 7/08 at 101.00 BBB 7,677,098
Revenue Refunding Bonds, Irvine Apartment Communities
Development, Series 1998A, 4.900%, 5/15/25
(Mandatory put 5/15/08)
5,250 California Statewide Community Development Authority, 8/12 at 105.00 Aaa 5,890,395
GNMA Collateralized Housing Revenue Refunding Bonds,
Crowne Pointe Project, Series 2002F, 6.750%, 8/20/37
5,000 Contra Costa County, California, Multifamily Housing 6/09 at 102.00 N/R 4,923,800
Revenue Bonds, Delta View Apartments Project,
Series 1999C, 6.750%, 12/01/30 (Alternative Minimum Tax)
32
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY (continued)
$ 7,500 San Bernardino County Housing Authority, California, No Opt. Call BBB+ $ 8,042,550
Multifamily Housing Revenue Refunding Bonds, Equity
Residential Properties/Redlands Lawn and Tennis
Apartments, Series 1999A, 5.200%, 6/15/29
(Mandatory put 6/15/09)
------------------------------------------------------------------------------------------------------------------------------------
LONG-TERM CARE - 2.4%
8,500 Riverside County Public Financing Authority, California, 5/09 at 101.00 BBB- 8,602,085
Certificates of Participation, Air Force Village West,
Series 1999, 5.800%, 5/15/29
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 22.3%
California, General Obligation Refunding Bonds, Series 2002:
8,000 5.000%, 2/01/12 No Opt. Call A 8,807,840
4,435 6.000%, 4/01/16 - AMBAC Insured No Opt. Call AAA 5,335,305
California, General Obligation Bonds, Series 2003:
2,000 5.250%, 11/01/19 - RAAI Insured 11/13 at 100.00 AA 2,163,040
5,200 5.250%, 2/01/20 8/13 at 100.00 A 5,580,432
California, General Obligation Bonds, Series 2004:
5,000 5.125%, 4/01/23 4/14 at 100.00 A 5,227,050
4,150 5.125%, 4/01/25 4/14 at 100.00 A 4,295,997
1,000 Los Angeles Community College District, Los Angeles 8/11 at 100.00 AAA 1,016,030
County, California, General Obligation Bonds, Election
of 2001, Series 2001A, 5.000%, 6/01/26 - MBIA Insured
18,500 Los Angeles Unified School District, California, General 7/09 at 101.00 AAA 19,523,605
Obligation Bonds, Series 1999C, 5.250%, 7/01/24 -
MBIA Insured
10,845 Los Angeles Unified School District, California, General 7/12 at 100.00 AAA 11,526,283
Obligation Bonds, Series 2002E, 5.000%, 7/01/19 -
MBIA Insured
3,335 Moreno Valley Unified School District, Riverside County, 8/14 at 100.00 AAA 3,634,883
California, General Obligation Bonds, Series 2004A,
5.250%, 8/01/21 - FSA Insured
1,750 Oakland Unified School District, Alameda County, California, 8/08 at 101.00 AAA 1,819,983
General Obligation Bonds, Series 2001, 5.125%, 8/01/21 -
FSA Insured
5,000 San Diego Unified School District, San Diego County, 7/13 at 101.00 AAA 5,653,700
California, General Obligation Bonds, Series 2003E,
5.250%, 7/01/20 - FSA Insured
2,700 Ventura County Community College District, California, 8/12 at 101.00 AAA 2,958,120
General Obligation Bonds, Series 2002A, 5.000%, 8/01/15 -
MBIA Insured
3,605 West Contra Costa Unified School District, Contra Costa 8/11 at 101.00 AAA 3,793,686
County, California, General Obligation Bonds, Series 2003B,
5.000%, 8/01/21 - FSA Insured
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 38.1%
Brentwood Infrastructure Financing Authority, Contra
Costa County, California, Capital Improvement
Revenue Bonds, Series 2001:
1,110 5.375%, 11/01/18 - FSA Insured 11/11 at 100.00 AAA 1,235,796
1,165 5.375%, 11/01/19 - FSA Insured 11/11 at 100.00 AAA 1,291,204
1,990 Brentwood Infrastructure Financing Authority, California, 9/12 at 100.00 AAA 2,072,127
Infrastructure Revenue Refunding Bonds, Series 2002A,
5.125%, 9/02/24 - FSA Insured
7,400 California, Economic Recovery Revenue Bonds, 7/14 at 100.00 AA- 8,164,124
Series 2004A, 5.000%, 7/01/15
2,000 Capistrano Unified School District - Talega, Orange County, 9/13 at 100.00 N/R 2,042,500
California, Special Tax Bonds, Community Facilities
District 90-2, Series 2003, 6.000%, 9/01/33
3,490 Fontana, California, Senior Special Tax Refunding Bonds, 9/08 at 102.00 AAA 3,823,365
Heritage Village Community Facilities District 2,
Series 1998A, 5.250%, 9/01/17 - MBIA Insured
1,125 Fontana, California, Special Tax Bonds, Sierra Community 9/14 at 100.00 N/R 1,133,831
Facilities District 22, Series 2004, 6.000%, 9/01/34
3,980 Garden Grove, California, Certificates of Participation, 3/12 at 101.00 AAA 4,353,841
Financing Project, Series 2002A, 5.500%, 3/01/22 -
AMBAC Insured
4,500 Inglewood Redevelopment Agency, California, Tax Allocation No Opt. Call AAA 5,015,025
Refunding Bonds, Merged Area Redevelopment Project,
Series 1998A, 5.250%, 5/01/23 - AMBAC Insured
33
Nuveen California Dividend Advantage Municipal Fund (NAC) (continued)
Portfolio of INVESTMENTS August 31, 2004
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED (continued)
$ 2,000 Lee Lake Water District, Riverside County, California, 9/13 at 102.00 N/R $ 2,176,220
Special Tax Bonds, Community Facilities District 1 of
Sycamore Creek, Series 2003, 6.500%, 9/01/24
2,200 Lincoln, California, Special Tax Bonds, Lincoln Crossing 9/13 at 102.00 N/R 2,332,220
Community Facilities District 03-1, Series 2003A,
6.500%, 9/01/25
1,500 Lincoln, California, Special Tax Bonds, Lincoln Crossing 9/13 at 102.00 N/R 1,524,750
Community Facilities District 03-1, Series 2004,
6.000%, 9/01/34
5,000 Los Angeles County Metropolitan Transportation Authority, 7/08 at 101.00 AAA 5,121,400
California, Second Senior Lien Proposition C Sales Tax
Revenue Refunding Bonds, Series 1998A,
5.000%, 7/01/23 - AMBAC Insured
10,000 Los Angeles County Public Works Financing Authority, 10/07 at 101.00 AA 10,673,000
California, Revenue Bonds, Regional Park and Open Space
District, Series 1997A, 5.000%, 10/01/16
9,200 Norco Redevelopment Agency, California, Tax Allocation 3/11 at 102.00 AAA 9,779,048
Refunding Bonds, Project Area 1, Series 2001,
5.000%, 3/01/19 - MBIA Insured
5,545 Oakland Joint Power Financing Authority, California, No Opt. Call AAA 6,392,110
Lease Revenue Refunding Bonds, Oakland Convention
Centers, Series 2001, 5.500%, 10/01/14 - AMBAC Insured
3,290 Oakland Redevelopment Agency, California, Subordinate 3/13 at 100.00 AAA 3,699,375
Lien Tax Allocation Bonds, Central District Redevelopment
Project, Series 2003, 5.500%, 9/01/16 - FGIC Insured
4,000 Orange County Local Transportation Authority, California, No Opt. Call AAA 4,467,440
Limited Sales Tax Revenue Refunding Bonds, Measure M,
Series 1997A, 5.700%, 2/15/08 - AMBAC Insured
5,600 Palm Springs Financing Authority, California, Lease Revenue 11/11 at 101.00 AAA 5,861,128
Refunding Bonds, Convention Center Project, Series 2001A,
5.000%, 11/01/22 - MBIA Insured
8,100 Poway Redevelopment Agency, California, Tax Allocation 12/10 at 102.00 AAA 8,951,148
Refunding Bonds, Paguay Redevelopment Project,
Series 2000, 5.750%, 6/15/33 - MBIA Insured
1,055 Poway Redevelopment Agency, California, Tax Allocation 12/11 at 101.00 AAA 1,168,233
Bonds, Paguay Redevelopment Project, Series 2001,
5.375%, 12/15/16 - AMBAC Insured
1,860 Riverside Redevelopment Agency, California, Tax Allocation 8/13 at 100.00 AAA 1,994,645
Refunding Bonds, Merged Project Areas, Series 2003,
5.250%, 8/01/22 - MBIA Insured
5,815 Riverside County Public Financing Authority, California, No Opt. Call N/R 6,061,905
Junior Lien Reassessment Revenue Bonds, Rancho
Villages Project, Series 1999B, 6.000%, 9/02/07
1,725 Rohnert Park Finance Authority, California, Senior Lien 9/13 at 100.00 BBB 1,693,364
Revenue Bonds, Rancho Feliz Mobile Home Park,
Series 2003A, 5.750%, 9/15/38
1,120 Rohnert Park Finance Authority, California, Subordinate Lien 9/13 at 100.00 N/R 1,097,286
Revenue Bonds, Rancho Feliz Mobile Home Park,
Series 2003B, 6.625%, 9/15/38
2,500 Sacramento City Financing Authority, California, Lease No Opt. Call AAA 2,866,825
Revenue Refunding Bonds, Series 1993A,
5.400%, 11/01/20 - AMBAC Insured
1,150 Sacramento, California, Special Tax Bonds, North Natomas 9/14 at 100.00 N/R 1,172,069
Community Facilities District 4, Series 2003C,
6.000%, 9/01/33
24,060 San Jose Redevelopment Agency, California, Tax Allocation 8/08 at 102.00 A 24,437,501
Bonds, Merged Area Redevelopment Project, Series 1998,
5.250%, 8/01/29
2,695 San Jose Financing Authority, California, Lease Revenue 6/12 at 100.00 AAA 2,932,969
Refunding Bonds, Civic Center Project, Series 2002B,
5.250%, 6/01/19 - AMBAC Insured
1,595 San Marcos Public Facilities Authority, California, 9/09 at 102.00 N/R 1,615,432
Special Tax Bonds, Community Facilities District 99-1,
Series 2003B, 6.000%, 9/01/24
2,810 West Patterson Financing Authority, California, 9/13 at 103.00 N/R 2,983,883
Special Tax Bonds, Community Facilities District 01-1,
Series 2003B, 7.000%, 9/01/38
1,350 West Patterson Financing Authority, California, 9/13 at 103.00 N/R 1,360,841
Special Tax Bonds, Community Facilities District 01-1,
Series 2004A, 6.125%, 9/01/39
------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 19.9%
8,150 Foothill/Eastern Transportation Corridor Agency, California, 1/10 at 101.00 BBB- 8,200,449
Toll Road Revenue Refunding Bonds, Series 1999,
5.750%, 1/15/40
8,515 Los Angeles Harbors Department, California, Revenue 8/11 at 100.00 AAA 9,291,057
Refunding Bonds, Series 2001B, 5.500%, 8/01/18
(Alternative Minimum Tax) - AMBAC Insured
34
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION (continued)
$ 23,000 Port of Oakland, California, Revenue Bonds, Series 2000K, 5/10 at 100.00 AAA $ 24,758,120
5.750%, 11/01/29 (Alternative Minimum Tax) - FGIC Insured
5,000 San Francisco Airports Commission, California, Revenue 5/06 at 101.00 AAA 5,270,500
Bonds, San Francisco International Airport, Second Series,
Issue 13B, 5.625%, 5/01/21 (Alternative Minimum Tax) -
MBIA Insured
23,275 San Francisco Airports Commission, California, Revenue 5/10 at 101.00 AAA 25,036,685
Bonds, San Francisco International Airport, Second Series,
2000 Issue 24A, 5.750%, 5/01/30 (Alternative Minimum
Tax) - FSA Insured
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED*** - 1.6%
5,000 Puerto Rico, Public Improvement General Obligation 7/10 at 100.00 AAA 5,755,150
Bonds, Series 2000, 5.750%, 7/01/16 (Pre-refunded
to 7/01/10) - MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 12.8%
California Department of Water Resources, Power Supply
Revenue Bonds, Series 2002A:
2,500 5.375%, 5/01/17 - XLCA Insured 5/12 at 101.00 AAA 2,768,675
9,750 5.125%, 5/01/18 5/12 at 101.00 A2 10,424,505
3,630 Imperial Irrigation District, California, Certificates of 11/13 at 100.00 AAA 3,876,005
Participation, Electric System Revenue Bonds, Series 2003,
5.250%, 11/01/23 - FSA Insured
7,000 Los Angeles Department of Water and Power, California, 7/11 at 100.00 AAA 7,528,640
Power System Revenue Bonds, Series 2001A-1,
5.250%, 7/01/21 - FSA Insured
8,370 Los Angeles Department of Water and Power, California, 7/11 at 100.00 AAA 9,243,242
Power System Revenue Refunding Bonds, Series 2001A-2,
5.375%, 7/01/19 - MBIA Insured
1,200 Los Angeles Department of Water and Power, California, 7/13 at 100.00 AAA 1,266,096
Power System Revenue Bonds, Series 2003A-2,
5.000%, 7/01/21 - MBIA Insured
7,000 Merced Irrigation District, California, Revenue Refunding 9/05 at 102.00 Baa3 7,249,900
Bonds, Electric System Project, Series 2001,
6.750%, 9/01/31
4,000 Modesto Irrigation District, California, Certificates 7/14 at 100.00 AAA 4,313,920
of Participation, Capital Improvements, Series 2004A,
5.000%, 7/01/18 - FSA Insured
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 11.0%
11,000 California Department of Water Resources, Water System 12/11 at 100.00 AAA 11,791,450
Revenue Bonds, Central Valley Project, Series 2001W,
5.250%, 12/01/22 - FSA Insured
14,000 Orange County Water District, California, Revenue 8/09 at 101.00 AA+ 14,696,780
Certificates of Participation, Series 1999A, 5.375%, 8/15/29
8,250 Pico Rivera Water Authority, California, Revenue Bonds, 12/11 at 102.00 N/R 8,361,705
Series 2001A, 6.250%, 12/01/32
5,115 San Francisco City and County Public Utilities Commission, 11/12 at 100.00 AAA 5,473,612
California, Water Revenue Bonds, Series 2002A,
5.000%, 11/01/18 - MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
$ 500,790 Total Long-Term Investments (cost $502,905,914) - 145.1% 529,830,718
=============-----------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 2.8% 10,235,489
--------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (47.9)% (175,000,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 365,066,207
====================================================================================================================
(1) All percentages shown in the Portfolio of Investments are
based on net assets applicable to Common shares.
* Optional Call Provisions (not covered by the report of
independent registered public accounting firm): 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 registered
public accounting firm): Using the higher of Standard &
Poor's or Moody's rating.
*** Securities are backed by an escrow or trust containing
sufficient U.S. Government or U.S. Government agency
securities which ensures the timely payment of principal and
interest. Such securities are normally considered to be
equivalent to AAA rated securities.
N/R Investment is not rated.
See accompanying notes to financial statements.
35
Nuveen California Dividend Advantage Municipal Fund 2 (NVX)
Portfolio of
INVESTMENTS August 31, 2004
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES - 5.1%
$ 4,625 California County Tobacco Securitization Agency, Tobacco 6/12 at 100.00 Baa3 $ 3,797,310
Settlement Asset-Backed Bonds, Stanislaus County
Tobacco Funding Corporation, Series 2002A,
5.500%, 6/01/33
3,200 Golden State Tobacco Securitization Corporation, 6/13 at 100.00 BBB 2,988,128
California, Tobacco Settlement Asset-Backed Bonds,
Series 2003A-1, 6.250%, 6/01/33
3,000 Northern California Tobacco Securitization Authority, 6/11 at 100.00 BBB 2,281,950
Tobacco Settlement Asset-Backed Bonds, Series 2001A,
5.375%, 6/01/41
2,800 Southern California Tobacco Securitization Authority, 6/12 at 100.00 BBB 2,283,764
Tobacco Settlement Asset-Backed Bonds, Senior
Series 2001A, 5.500%, 6/01/36
------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 15.3%
2,000 California Educational Facilities Authority, Revenue Bonds, 6/11 at 101.00 AAA 2,091,220
Stanford University, Series 2001Q, 5.250%, 12/01/32
6,375 California Educational Facilities Authority, Student Loan 3/08 at 102.00 Aaa 6,710,070
Revenue Bonds, Cal Loan Program, Series 2001A,
5.400%, 3/01/21 (Alternative Minimum Tax) -
MBIA Insured
California State Public Works Board, Lease Revenue Bonds,
University of California System, Series 2002A:
8,880 5.375%, 10/01/16 - FSA Insured 10/12 at 100.00 AAA 9,835,488
10,570 5.375%, 10/01/18 - FSA Insured 10/12 at 100.00 AAA 11,591,802
620 California Statewide Community Development Authority, 10/13 at 100.00 N/R 612,287
Revenue Bonds, Notre Dame de Namur University,
Series 2003, 6.500%, 10/01/23
3,000 Long Beach Bond Financing Authority, California, Lease 11/11 at 101.00 AAA 3,121,980
Revenue Refunding Bonds, Long Beach Aquarium of the
South Pacific, Series 2001, 5.250%, 11/01/30 -
AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE - 8.2%
2,000 California Health Facilities Financing Authority, Revenue 4/12 at 100.00 BBB+ 2,085,500
Bonds, Casa Colina Inc., Series 2001, 6.000%, 4/01/22
500 California Infrastructure Economic Development Bank, Revenue 8/11 at 102.00 A 514,780
Bonds, Kaiser Hospital Assistance LLC, Series 2001A,
5.550%, 8/01/31
5,355 California Statewide Community Development Authority, No Opt. Call A 5,755,233
Revenue Bonds, Kaiser Permanente System, Series 2002E,
4.700%, 11/01/36 (Mandatory put 6/01/09)
2,185 California Statewide Community Development Authority, No Opt. Call A 2,489,436
Health Facility Revenue Refunding Bonds, Memorial
Health Services, Series 2003A, 6.000%, 10/01/11
2,500 California Statewide Community Development Authority, 6/13 at 100.00 AAA 2,729,600
Hospital Revenue Bonds, Monterey Peninsula Hospital,
Series 2003B, 5.250%, 6/01/18 - FSA Insured
3,000 Central California Joint Powers Health Finance Authority, 2/10 at 101.00 Baa2 3,079,890
Certificates of Participation, Community Hospitals of
Central California Obligated Group, Series 2000,
6.000%, 2/01/30
1,500 Whittier, California, Health Facility Revenue Bonds, 6/12 at 101.00 A 1,567,440
Presbyterian Intercommunity Hospital, Series 2002,
5.600%, 6/01/22
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 8.1%
2,450 ABAG Finance Authority for Non-Profit Corporations, No Opt. Call Baa2 2,685,911
California, Multifamily Housing Revenue Refunding Bonds,
United Dominion/2000 Post Apartments, Series 2000B,
6.250%, 8/15/30 (Mandatory put 8/15/08)
4,750 California Statewide Community Development Authority, 7/08 at 101.00 BBB 5,029,823
Revenue Refunding Bonds, Irvine Apartment Communities
Development, Series 1998A, 4.900%, 5/15/25
(Mandatory put 5/15/08)
5,962 California Statewide Community Development Authority, 6/11 at 102.00 AAA 6,198,513
Multifamily Housing Revenue Refunding Bonds,
Claremont Village Apartments, Series 2001D,
5.500%, 6/01/31 (Alternative Minimum Tax) (Mandatory
put 6/01/16)
36
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY (continued)
$ 3,500 California Statewide Community Development Authority, 8/12 at 105.00 Aaa $ 3,926,930
GNMA Collateralized Housing Revenue Refunding Bonds,
Crowne Pointe Project, Series 2002F, 6.750%, 8/20/37
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 1.3%
2,830 California Rural Home Mortgage Finance Authority, Single 6/11 at 102.00 AAA 2,922,994
Family Mortgage Revenue Bonds, Mortgage-Backed
Securities Program, Series 2001A, 5.650%, 12/01/31
(Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
LONG-TERM CARE - 0.7%
1,550 California Health Facilities Financing Authority, Revenue 1/13 at 100.00 A 1,598,670
Bonds, Northern California Retired Officers Community
Corporation - Paradise Valley Estates, Series 2002,
5.125%, 1/01/22
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 31.1%
5,000 California, General Obligation Refunding Bonds, No Opt. Call A 5,504,900
Series 2002, 5.000%, 2/01/12
7,225 California, General Obligation Veterans Welfare Bonds, 6/06 at 101.00 AAA 7,411,549
Series 2001BV, 5.600%, 12/01/32 - FSA Insured
California, General Obligation Bonds, Series 2003:
3,000 5.250%, 2/01/20 8/13 at 100.00 A 3,219,480
1,400 5.250%, 2/01/21 8/13 at 100.00 A 1,494,920
1,350 California, General Obligation Bonds, Series 2004, 4/14 at 100.00 A 1,397,493
5.125%, 4/01/25
3,615 Colton Joint Unified School District, San Bernardino County, 8/12 at 102.00 AAA 4,010,409
California, General Obligation Bonds, Series 2002A,
5.500%, 8/01/22 - FGIC Insured
Contra Costa County Community College District, California,
General Obligation Bonds, Series 2002:
3,005 5.000%, 8/01/21 - FGIC Insured 8/12 at 100.00 AAA 3,162,282
3,300 5.000%, 8/01/22 - FGIC Insured 8/12 at 100.00 AAA 3,454,638
1,325 Golden West Schools Financing Authority, California, No Opt. Call AAA 1,644,338
Revenue Bonds, School District General Obligation
Refunding Program, Series 1998A, 6.650%, 8/01/13 -
MBIA Insured
8,330 Los Angeles Unified School District, California, General 7/10 at 100.00 AAA 8,749,915
Obligation Bonds, Series 2000D, 5.375%, 7/01/25 -
FGIC Insured
10,840 Los Angeles Unified School District, California, General 7/12 at 100.00 AAA 11,520,969
Obligation Bonds, Series 2002E, 5.000%, 7/01/19 -
MBIA Insured
1,250 Los Angeles Unified School District, California, General 7/13 at 100.00 AAA 1,359,900
Obligation Bonds, Series 2003A, 5.250%, 7/01/20 -
FSA Insured
2,000 Puerto Rico, Public Improvement General Obligation No Opt. Call AAA 2,340,260
Refunding Bonds, Series 2001A, 5.500%, 7/01/20 -
MBIA Insured
4,050 Santa Rosa High School District, Sonoma County, 5/11 at 101.00 AAA 4,259,750
California, General Obligation Bonds, Series 2001,
5.300%, 5/01/26 - FGIC Insured
1,160 Saugus Union School District, Los Angeles County, 8/12 at 100.00 AAA 1,220,714
California, General Obligation Bonds, Series 2002A,
5.000%, 8/01/21 - FGIC Insured
7,600 Southwestern Community College District, San Diego 8/11 at 101.00 AAA 8,098,408
County, California, General Obligation Bonds, Series 2001,
5.375%, 8/01/25 - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 44.0%
9,000 Anitoch Area Public Facilities Financing Agency, California, 8/11 at 100.00 AAA 9,388,890
Special Tax Bonds, Community Facilities District 1989-1,
Series 2001, 5.250%, 8/01/25 - MBIA Insured
4,500 California, Economic Recovery Revenue Bonds, 7/14 at 100.00 AA- 4,964,670
Series 2004A, 5.000%, 7/01/15
4,900 California State Public Works Board, Lease Revenue Bonds, 12/13 at 100.00 A- 5,409,453
Department of Corrections, Series 2003C, 5.500%, 6/01/16
1,200 Capistrano Unified School District - Talega, Orange County, 9/13 at 100.00 N/R 1,225,500
California, Special Tax Bonds, Community Facilities
District 90-2, Series 2003, 6.000%, 9/01/33
4,000 Daly City Housing Development Finance Agency, California, 12/13 at 102.00 A- 4,131,840
Mobile Home Park Revenue Bonds, Franciscan Mobile Home
Park Project, Series 2002A, 5.850%, 12/15/32
4,845 Encinitas Public Financing Authority, California, Lease 4/08 at 102.00 AAA 5,001,930
Revenue Bonds, Acquisition Project, Series 2001A,
5.250%, 4/01/31 - MBIA Insured
37
Nuveen California Dividend Advantage Municipal Fund 2 (NVX) (continued)
Portfolio of INVESTMENTS August 31, 2004
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED (continued)
$ 750 Fontana, California, Special Tax Bonds, Sierra Community 9/14 at 100.00 N/R $ 755,888
Facilities District 22, Series 2004, 6.000%, 9/01/34
4,000 Industry Urban Development Agency, California, Tax 5/07 at 101.50 AAA 4,359,560
Allocation Refunding Bonds, Civic, Recreational and
Industrial Redevelopment Project 1, Series 2002,
5.500%, 5/01/19 - MBIA Insured
2,000 Lake Elsinore Public Financing Authority, California, 10/13 at 102.00 N/R 2,051,900
Local Agency Revenue Refunding Bonds, Series 2003H,
6.000%, 10/01/20
1,265 Lee Lake Water District, Riverside County, California, 9/13 at 102.00 N/R 1,376,459
Special Tax Bonds, Community Facilities District 1 of
Sycamore Creek, Series 2003, 6.500%, 9/01/24
1,320 Lincoln, California, Special Tax Bonds, Lincoln Crossing 9/13 at 102.00 N/R 1,399,332
Community Facilities District 03-1, Series 2003A,
6.500%, 9/01/25
1,000 Lincoln, California, Special Tax Bonds, Lincoln Crossing 9/13 at 102.00 N/R 1,016,500
Community Facilities District 03-1, Series 2004,
6.000%, 9/01/34
8,000 Los Angeles County Metropolitan Transportation Authority, 7/08 at 101.00 AAA 8,194,240
California, Second Senior Lien Proposition C Sales Tax
Revenue Refunding Bonds, Series 1998A, 5.000%, 7/01/23 -
AMBAC Insured
5,000 Los Angeles County Metropolitan Transportation Authority, No Opt. Call AAA 5,667,800
California, Second Senior Lien Proposition C Sales Tax
Revenue Refunding Bonds, Series 2003A, 5.250%, 7/01/13 -
MBIA Insured
3,295 Oakland Redevelopment Agency, California, Subordinate 3/13 at 100.00 AAA 3,704,997
Lien Tax Allocation Bonds, Central District Redevelopment
Project, Series 2003, 5.500%, 9/01/16 - FGIC Insured
2,000 Orange County, California, Special Tax Bonds, Community 8/11 at 101.00 N/R 2,006,960
Facilities District 02-1 of Ladera Ranch, Series 2003A,
5.550%, 8/15/33
2,000 Puerto Rico Public Finance Corporation, Commonwealth No Opt. Call BBB+ 2,318,620
Appropriation Bonds, Series 2002E, 6.000%, 8/01/26
6,000 Riverside County Redevelopment Agency, California, 10/11 at 102.00 AAA 6,246,420
Tax Allocation Bonds, Jurupa Valley Project Area,
Series 2001, 5.250%, 10/01/35 - AMBAC Insured
1,055 Rohnert Park Finance Authority, California, Senior Lien 9/13 at 100.00 BBB 1,035,651
Revenue Bonds, Rancho Feliz Mobile Home Park,
Series 2003A, 5.750%, 9/15/38
700 Rohnert Park Finance Authority, California, Subordinate 9/13 at 100.00 N/R 685,804
Lien Revenue Bonds, Rancho Feliz Mobile Home Park,
Series 2003B, 6.625%, 9/15/38
700 Sacramento, California, Special Tax Bonds, North Natomas 9/14 at 100.00 N/R 713,433
Community Facilities District 4, Series 2003C,
6.000%, 9/01/33
975 San Marcos Public Facilities Authority, California, Special 9/09 at 102.00 N/R 987,490
Tax Bonds, Community Facilities District 99-1, Series 2003B,
6.000%, 9/01/24
Santa Clara Valley Transportation Authority, California,
Sales Tax Revenue Bonds, Series 2001A:
16,090 5.000%, 6/01/25 - MBIA Insured 6/11 at 100.00 AAA 16,482,113
2,000 5.000%, 6/01/26 - MBIA Insured 6/11 at 100.00 AAA 2,040,600
1,930 West Patterson Financing Authority, California, Special 9/13 at 103.00 N/R 2,027,890
Tax Bonds, Community Facilities District 01-1,
Series 2003B, 6.750%, 9/01/30
850 West Patterson Financing Authority, California, Special 9/13 at 103.00 N/R 856,826
Tax Bonds, Community Facilities District 01-1,
Series 2004A, 6.125%, 9/01/39
3,045 Yucaipa Redevelopment Agency, California, Mobile Home 5/11 at 102.00 N/R 3,093,598
Park Revenue Bonds, Rancho del Sol and Grandview,
Series 2001A, 6.750%, 5/15/36
------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 9.0%
7,000 Foothill/Eastern Transportation Corridor Agency, California, 1/14 at 101.00 BBB- 5,482,820
Toll Road Revenue Refunding Bonds, Series 1999,
0.000%, 1/15/27
5,585 Port of Oakland, California, Revenue Bonds, Series 2002N, 11/12 at 100.00 AAA 5,924,568
5.000%, 11/01/16 (Alternative Minimum Tax) -
MBIA Insured
2,000 San Francisco Airports Commission, California, Revenue 5/12 at 100.00 AAA 2,130,240
Refunding Bonds, San Francisco International Airport,
Second Series 2002, Issue 28A, 5.250%, 5/01/17
(Alternative Minimum Tax) - MBIA Insured
San Francisco Airports Commission, California, Revenue Bonds,
San Francisco International Airport, Second Series 2003, Issue 29A:
2,430 5.250%, 5/01/18 (Alternative Minimum Tax) - FGIC Insured 5/13 at 100.00 AAA 2,590,866
2,555 5.250%, 5/01/19 (Alternative Minimum Tax) - FGIC Insured 5/13 at 100.00 AAA 2,708,990
38
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION (continued)
$ 1,000 San Francisco Airports Commission, California, Revenue 5/13 at 100.00 AAA $ 1,087,380
Bonds, San Francisco International Airport, Second
Series 2003, Issue 29B, 5.125%, 5/01/17 - FGIC Insured
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 9.0%
5,000 Anaheim Public Finance Authority, California, Second Lien 10/14 at 100.00 AAA 5,429,900
Electric Distribution Revenue Bonds, Series 2004,
5.250%, 10/01/21 - MBIA Insured
6,000 California Department of Water Resources, Power Supply 5/12 at 101.00 A2 6,415,080
Revenue Bonds, Series 2002A, 5.125%, 5/01/18
Los Angeles Department of Water and Power, California, Power
System Revenue Bonds, Series 2003A-2:
750 5.000%, 7/01/21 - MBIA Insured 7/13 at 100.00 AAA 791,310
1,000 5.000%, 7/01/23 - MBIA Insured 7/13 at 100.00 AAA 1,043,090
3,000 Merced Irrigation District, California, Revenue Refunding 9/05 at 102.00 Baa3 3,109,890
Bonds, Electric System Project, Series 2001,
6.850%, 9/01/36
1,000 Merced Irrigation District, California, Revenue Certificates 9/05 at 103.00 Baa3 1,044,570
of Participation, Electric System Project, Series 2002,
6.500%, 9/01/34
2,000 Santa Clara, California, Subordinate Electric Revenue Bonds, 7/13 at 100.00 AAA 2,171,200
Series 2003A, 5.250%, 7/01/20 - MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 13.0%
2,740 California Department of Water Resources, Water System 12/12 at 100.00 AAA 2,931,745
Revenue Bonds, Central Valley Project, Series 2002Z,
5.000%, 12/01/18 - FGIC Insured
4,900 East Bay Municipal Utility District, Alameda and Contra 6/11 at 100.00 AAA 4,999,470
Costa Counties, California, Water System Subordinated
Revenue Bonds, Series 2001, 5.000%, 6/01/26 -
MBIA Insured
2,655 El Dorado Irrigation District, California, Water and Sewer 3/14 at 100.00 AAA 2,821,041
Certificates of Participation, Series 2004A,
5.000%, 3/01/20 (WI, settling 9/15/04) - FGIC Insured
6,885 San Diego Public Facilities Financing Authority, California, 8/12 at 100.00 AAA 7,245,361
Subordinate Lien Water Revenue Bonds, Series 2002,
5.000%, 8/01/21 - MBIA Insured
10,000 San Francisco City and County Public Utilities Commission, 4/13 at 100.00 AAA 10,858,600
California, Clean Water Revenue Refunding Bonds,
Series 2003A, 5.250%, 10/01/20 - MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
$ 306,522 Total Long-Term Investments (cost $310,078,141) - 144.8% 320,679,129
=============-----------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 4.9% 10,716,271
--------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (49.7)% (110,000,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 221,395,400
====================================================================================================================
(1) All percentages shown in the Portfolio of Investments are
based on net assets applicable to Common shares.
* Optional Call Provisions (not covered by the report of
independent registered public accounting firm): 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 registered
public accounting firm): Using the higher of Standard &
Poor's or Moody's rating.
N/R Investment is not rated.
(WI) Security purchased on a when-issued basis.
See accompanying notes to financial statements.
39
Nuveen California Dividend Advantage Municipal Fund 3 (NZH)
Portfolio of
INVESTMENTS August 31, 2004
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES - 5.2%
$ 11,240 California County Tobacco Securitization Agency, Tobacco 6/12 at 100.00 Baa3 $ 9,228,490
Settlement Asset-Backed Bonds, Merced County Tobacco
Funding Corporation, Series 2002A, 5.500%, 6/01/33
6,100 Golden State Tobacco Securitization Corporation, California, 6/13 at 100.00 BBB 5,696,119
Tobacco Settlement Asset-Backed Bonds, Series 2003A-1,
6.250%, 6/01/33
4,200 Southern California Tobacco Securitization Authority, 6/12 at 100.00 BBB 3,425,646
Tobacco Settlement Asset-Backed Bonds, Senior
Series 2001A, 5.500%, 6/01/36
------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 7.8%
3,825 California Educational Facilities Authority, Student Loan 3/08 at 102.00 Aaa 4,026,042
Revenue Bonds, Cal Loan Program, Series 2001A,
5.400%, 3/01/21 (Alternative Minimum Tax) - MBIA Insured
3,600 California State Public Works Board, Lease Revenue Bonds, 10/12 at 100.00 AAA 3,968,928
University of California System, Series 2002A,
5.375%, 10/01/17 - FSA Insured
620 California Statewide Community Development Authority, 10/13 at 100.00 N/R 612,287
Revenue Bonds, Notre Dame de Namur University,
Series 2003, 6.500%, 10/01/23
7,595 San Francisco State University Foundation Inc., California, 9/11 at 100.00 AAA 7,773,482
Auxiliary Organization Student Housing Revenue Bonds,
Series 2001, 5.000%, 9/01/26 - MBIA Insured
2,990 University of California, Revenue Bonds, Multiple Purpose 9/08 at 101.00 Aa2 3,071,806
Projects, Series 2000K, 5.000%, 9/01/23
3,820 University of California, Revenue Bonds, Research Facilities, 9/09 at 101.00 AAA 3,900,258
Series 2001E, 5.000%, 9/01/26 - AMBAC Insured
4,000 University of California, Revenue Bonds, Multi-Purpose 5/13 at 100.00 AAA 4,179,120
Projects, Series 2003A, 5.000%, 5/15/23 - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE - 12.5%
California Health Facilities Financing Authority, Revenue
Bonds, Casa Colina Inc., Series 2001:
4,000 6.000%, 4/01/22 4/12 at 100.00 BBB+ 4,171,000
2,000 6.125%, 4/01/32 4/12 at 100.00 BBB+ 2,058,440
9,000 California Infrastructure Economic Development Bank, 8/11 at 102.00 A 9,266,040
Revenue Bonds, Kaiser Hospital Assistance LLC,
Series 2001A, 5.550%, 8/01/31
7,665 California Statewide Community Development Authority, 11/09 at 102.00 A 8,061,894
Insured Mortgage Hospital Revenue Bonds, Mission
Community Hospital, Series 2001, 5.375%, 11/01/21
6,525 California Statewide Community Development Authority, No Opt. Call A 7,430,605
Health Facility Revenue Refunding Bonds, Memorial
Health Services, Series 2003A, 6.000%, 10/01/12
6,450 California Statewide Community Development Authority, 6/13 at 100.00 AAA 7,042,368
Hospital Revenue Bonds, Monterey Peninsula Hospital,
Series 2003B, 5.250%, 6/01/18 - FSA Insured
Central California Joint Powers Health Finance Authority,
Certificates of Participation, Community Hospitals of Central
California Obligated Group, Series 2000:
1,770 6.000%, 2/01/20 2/10 at 101.00 Baa2 1,854,783
1,740 6.000%, 2/01/30 2/10 at 101.00 Baa2 1,786,336
2,500 Whittier, California, Health Facility Revenue Bonds, 6/12 at 101.00 A 2,612,400
Presbyterian Intercommunity Hospital, Series 2002,
5.600%, 6/01/22
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 9.0%
4,750 ABAG Finance Authority for Non-Profit Corporations, No Opt. Call Baa2 5,196,785
California, Multifamily Housing Revenue Refunding Bonds,
United Dominion/2000 Post Apartments, Series 2000A,
6.400%, 8/15/30 (Alternative Minimum Tax)
(Mandatory put 8/15/08)
40
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY (continued)
$ 4,000 ABAG Finance Authority for Non-Profit Corporations, No Opt. Call Baa2 $ 4,385,160
California, Multifamily Housing Revenue Refunding Bonds,
United Dominion/2000 Post Apartments, Series 2000B,
6.250%, 8/15/30 (Mandatory put 8/15/08)
5,250 California Statewide Community Development Authority, 8/12 at 105.00 Aaa 5,890,395
GNMA Collateralized Housing Revenue Refunding Bonds,
Crowne Pointe Project, Series 2002F, 6.750%, 8/20/37
7,500 San Bernardino County Housing Authority, California, No Opt. Call BBB+ 8,042,550
Multifamily Housing Revenue Refunding Bonds, Equity
Residential Properties/Redlands Lawn and Tennis
Apartments, Series 1999A, 5.200%, 6/15/29
(Mandatory put 6/15/09)
3,610 San Bernardino County Housing Authority, California, 11/11 at 105.00 Aaa 3,886,598
GNMA Collateralized Multifamily Mortgage Revenue
Bonds, Pacific Palms Mobile Home Park, Series 2001A,
6.700%, 12/20/41
San Jose, California, Multifamily Housing Revenue Bonds, GNMA
Mortgage-Backed Securities Program, Lenzen Housing, Series 2001B:
1,250 5.350%, 2/20/26 (Alternative Minimum Tax) 8/11 at 102.00 AAA 1,287,938
2,880 5.450%, 2/20/43 (Alternative Minimum Tax) 8/11 at 102.00 AAA 2,958,653
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 0.6%
1,960 California Housing Finance Agency, Home Mortgage Revenue 2/08 at 101.50 AAA 2,041,771
Bonds, Series 1998B, 5.150%, 2/01/18 (Alternative
Minimum Tax) - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
INDUSTRIALS - 1.3%
4,715 California Pollution Control Financing Authority, Solid Waste No Opt. Call BBB 4,763,282
Disposal Revenue Bonds, Waste Management Inc.,
Series 2002B, 4.450%, 7/01/27 (Alternative Minimum
Tax) (Mandatory put 7/01/05)
------------------------------------------------------------------------------------------------------------------------------------
LONG-TERM CARE - 1.5%
California Health Facilities Financing Authority, Insured
Senior Living Revenue Bonds, Aldersly, Series 2002A:
1,500 5.125%, 3/01/22 3/12 at 101.00 A 1,547,970
1,315 5.250%, 3/01/32 3/12 at 101.00 A 1,333,989
2,450 California Health Facilities Financing Authority, Revenue 1/13 at 100.00 A 2,526,930
Bonds, Northern California Retired Officers Community
Corporation - Paradise Valley Estates, Series 2002,
5.125%, 1/01/22
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 30.3%
8,500 California, General Obligation Veterans Welfare Bonds, 12/04 at 101.00 A 8,606,165
Series 1997BH, 5.500%, 12/01/18 (Alternative Minimum Tax)
10 California, General Obligation Veterans Welfare Bonds, 12/06 at 102.00 A 10,404
Series 1997BJ, 5.500%, 12/01/18 (Alternative Minimum Tax)
9,335 California, General Obligation Bonds, Series 2002, No Opt. Call AAA 11,189,024
6.000%, 2/01/16 - FSA Insured
California, General Obligation Refunding Bonds, Series 2002:
8,450 5.000%, 2/01/12 No Opt. Call A 9,303,281
2,780 6.000%, 4/01/16 - AMBAC Insured No Opt. Call AAA 3,344,340
14,300 California, General Obligation Veterans Welfare Bonds, 6/07 at 101.00 AAA 14,645,202
Series 2001BZ, 5.350%, 12/01/21 (Alternative Minimum
Tax) - MBIA Insured
9,000 California, General Obligation Bonds, Series 2004, 4/14 at 100.00 A 9,408,690
5.125%, 4/01/23
1,840 Compton Unified School District, Los Angeles County, 9/13 at 100.00 AAA 2,029,226
California, General Obligation Bonds, Series2003A,
5.250%, 9/01/18 - MBIA Insured
3,000 Contra Costa County Community College District, California, 8/12 at 100.00 AAA 3,124,200
General Obligation Bonds, Series 2002, 5.000%, 8/01/23 -
FGIC Insured
2,500 Fullerton Joint Union High School District, Orange County, 8/12 at 100.00 Aaa 2,592,300
California, General Obligation Bonds, Series 2002A,
5.000%, 8/01/23 - FSA Insured
2,260 Jurupa Unified School District, Riverside County, California, 8/11 at 101.00 AAA 2,390,899
General Obligation Bonds, Series 2002, 5.125%, 8/01/22 -
FGIC Insured
Los Angeles Unified School District, California, General
Obligation Bonds, Series 2003A:
3,750 5.250%, 7/01/20 - FSA Insured 7/13 at 100.00 AAA 4,079,700
7,200 5.000%, 7/01/22 - FSA Insured 7/13 at 100.00 AAA 7,569,432
41
Nuveen California Dividend Advantage Municipal Fund 3 (NZH) (continued)
Portfolio of INVESTMENTS August 31, 2004
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL (continued)
$ 1,525 Lucia Mar Unified School District, San Luis Obispo County, 8/14 at 100.00 Aaa $ 1,653,085
California, General Obligation Bonds, Series 2004A,
5.250%, 8/01/22 - FGIC Insured
2,710 Pajaro Valley Unified School District, Santa Cruz County, 8/13 at 100.00 AAA 2,850,188
California, General Obligation Bonds, Series 2003,
5.000%, 8/01/22 - FSA Insured
870 Puerto Rico, Public Improvement General Obligation Refunding 7/11 at 100.00 AAA 904,896
Bonds, Series 2001, 5.000%, 7/01/24 - FSA Insured
5,000 Riverside Unified School District, Riverside County, California, 2/12 at 101.00 AAA 5,111,800
General Obligation Bonds, Series 2002A, 5.000%, 2/01/27 -
FGIC Insured
10,810 San Diego Unified School District, San Diego County, 7/11 at 102.00 AAA 11,084,790
California, General Obligation Bonds, Election of 1998,
Series 2001C, 5.000%, 7/01/26 - FSA Insured
4,000 San Diego Unified School District, San Diego County, 7/12 at 101.00 AAA 4,516,520
California, General Obligation Bonds, Election of 1998,
Series 2002D, 5.250%, 7/01/21 - FGIC Insured
1,000 Saugus Union School District, Los Angeles County, California, 8/12 at 100.00 AAA 1,035,310
General Obligation Bonds, Series 2002A, 5.000%, 8/01/24 -
FGIC Insured
1,630 West Contra Costa Unified School District, Contra Costa 8/11 at 101.00 AAA 1,706,382
County, California, General Obligation Bonds, Series 2003C,
5.000%, 8/01/22 - FGIC Insured
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 45.5%
4,000 Beaumont Financing Authority, California, Local Agency 9/12 at 102.00 N/R 4,180,320
Revenue Bonds, Series 2002A, 6.750%, 9/01/25
7,135 Brentwood Infrastructure Financing Authority, Contra 11/11 at 100.00 AAA 7,318,084
Costa County, California, Capital Improvement Revenue
Bonds, Series 2001, 5.000%, 11/01/25 - FSA Insured
7,350 California, Economic Recovery Revenue Bonds, 7/14 at 100.00 AA- 8,108,961
Series 2004A, 5.000%, 7/01/15
3,350 California State Public Works Board, Lease Revenue Bonds, 12/12 at 100.00 AAA 3,667,446
Department of General Services, Capital East End,
Series 2002A, 5.250%, 12/01/17 - AMBAC Insured
8,210 California State Public Works Board, Lease Revenue Bonds, 12/13 at 100.00 A- 9,063,594
Department of Corrections, Series 2003C, 5.500%, 6/01/16
2,630 California State Public Works Board, Lease Revenue Bonds, No Opt. Call AAA 2,947,862
Department of Corrections, Series 2001B, 5.250%, 1/01/12 -
AMBAC Insured
4,510 California State Public Works Board, Lease Revenue Bonds, 12/11 at 102.00 AAA 4,622,119
Department of Mental Health, Hospital Addition,
Series 2001A, 5.000%, 12/01/26 - AMBAC Insured
9,000 California State Public Works Board, Lease Revenue 3/12 at 100.00 AAA 9,171,900
Bonds, Department of General Services, Series 2002B,
5.000%, 3/01/27 - AMBAC Insured
Capistrano Unified School District - Talega, Orange County,
California, Special Tax Bonds, Community Facilities District
90-2, Series 2003:
1,750 5.875%, 9/01/23 9/13 at 100.00 N/R 1,805,493
550 6.000%, 9/01/33 9/13 at 100.00 N/R 561,688
1,810 Cerritos Public Financing Authority, California, Tax Allocation No Opt. Call AAA 2,004,068
Revenue Bonds, Los Cerritos Redevelopment Projects,
Series 2002A, 5.000%, 11/01/14 - AMBAC Insured
1,270 Coalinga Public Financing Authority, California, Local No Opt. Call AAA 1,533,944
Obligation Senior Lien Revenue Bonds, Series 1998A,
6.000%, 9/15/18 - AMBAC Insured
2,000 Daly City Housing Development Finance Agency, 12/13 at 102.00 A- 2,096,440
California, Mobile Home Park Revenue Bonds, Franciscan
Mobile Home Park Project, Series 2002A, 5.800%, 12/15/25
1,125 Fontana, California, Special Tax Bonds, Sierra Community 9/14 at 100.00 N/R 1,133,831
Facilities District 22, Series 2004, 6.000%, 9/01/34
1,000 Fullerton Community Facilities District 1, California, Special 9/12 at 100.00 N/R 1,041,500
Tax Bonds, Amerige Heights, Series 2002, 6.100%, 9/01/22
3,000 Lake Elsinore Public Financing Authority, California, Local 10/13 at 102.00 N/R 3,077,850
Agency Revenue Refunding Bonds, Series 2003H,
6.000%, 10/01/20
5,250 Lammersville School District, San Joaquin County, 9/12 at 101.00 N/R 5,567,573
California, Special Tax Bonds, Community Facilities District
of Mountain House, Series 2002, 6.300%, 9/01/24
42
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED (continued)
$ 2,000 Lee Lake Water District, Riverside County, California, Special 9/13 at 102.00 N/R $ 2,176,220
Tax Bonds, Community Facilities District 1 of Sycamore
Creek, Series 2003, 6.500%, 9/01/24
2,200 Lincoln, California, Special Tax Bonds, Lincoln Crossing 9/13 at 102.00 N/R 2,332,220
Community Facilities District 03-1, Series 2003A,
6.500%, 9/01/25
1,500 Lincoln, California, Special Tax Bonds, Lincoln Crossing 9/13 at 102.00 N/R 1,524,750
Community Facilities District 03-1, Series 2004,
6.000%, 9/01/34
5,425 Lodi, California, Certificates of Participation, Public 10/12 at 100.00 AAA 5,524,060
Improvement Financing Project, Series 2002,
5.000%, 10/01/26 - MBIA Insured
6,075 Los Angeles County Metropolitan Transportation Authority, No Opt. Call AAA 6,886,377
California, Second Senior Lien Proposition C Sales Tax
Revenue Refunding Bonds, Series 2003A,
5.250%, 7/01/13 - MBIA Insured
1,000 Monterey County, California, Certificates of Participation, 8/11 at 100.00 Aaa 1,099,560
Master Plan Financing, Series 2001, 5.250%, 8/01/15 -
MBIA Insured
1,000 Norco, California, Special Tax Bonds, Community Facilities 9/12 at 102.00 N/R 1,025,560
District 01-1, Series 2002, 6.750%, 9/01/22
3,000 Oakland Redevelopment Agency, California, Subordinate 3/13 at 100.00 AAA 3,329,550
Lien Tax Allocation Bonds, Central District Redevelopment
Project, Series 2003, 5.500%, 9/01/19 - FGIC Insured
4,520 Ontario Redevelopment Financing Authority, California, 8/11 at 101.00 AAA 4,695,692
Lease Revenue Bonds, Capital Projects, Series 2001,
5.000%, 8/01/24 - AMBAC Insured
2,000 Orange County, California, Special Tax Bonds, Community 8/11 at 101.00 N/R 2,006,960
Facilities District 02-1 of Ladera Ranch, Series 2003A,
5.550%, 8/15/33
11,165 Palm Desert Financing Authority, California, Tax Allocation 4/12 at 102.00 AAA 11,446,135
Revenue Refunding Bonds, Project Area 1, Series 2002,
5.100%, 4/01/30 - MBIA Insured
3,250 Pomoma Public Financing Authority, California, Revenue 2/11 at 100.00 AAA 3,293,453
Refunding Bonds, Merged Redevelopment Projects,
Series 2001AD, 5.000%, 2/01/27 - MBIA Insured
5,500 Puerto Rico Highway and Transportation Authority, Highway 7/12 at 100.00 A 5,713,895
Revenue Bonds, Series 2002D, 5.375%, 7/01/36
1,735 Rohnert Park Finance Authority, California, Senior Lien 9/13 at 100.00 BBB 1,703,180
Revenue Bonds, Rancho Feliz Mobile Home Park,
Series 2003A, 5.750%, 9/15/38
1,125 Rohnert Park Finance Authority, California, Subordinate Lien 9/13 at 100.00 N/R 1,102,185
Revenue Bonds, Rancho Feliz Mobile Home Park,
Series 2003B, 6.625%, 9/15/38
1,700 Roseville, California, Special Tax Bonds, Crocker Ranch 9/09 at 103.00 N/R 1,734,034
Community Facilities District 1, Series 2003,
6.000%, 9/01/27
1,150 Sacramento, California, Special Tax Bonds, North Natomas 9/14 at 100.00 N/R 1,172,069
Community Facilities District 4, Series 2003C,
6.000%, 9/01/33
14,505 San Diego Redevelopment Agency, California, Subordinate 9/11 at 101.00 AAA 14,794,665
Tax Allocation Bonds, Centre City Project, Series 2001A,
5.000%, 9/01/26 - FSA Insured
8,725 San Francisco Bay Area Rapid Transit District, California, 7/11 at 100.00 AAA 8,904,037
Sales Tax Revenue Bonds, Series 2001, 5.000%, 7/01/26 -
AMBAC Insured
2,085 San Marcos Public Facilities Authority, California, Special 9/07 at 102.00 N/R 2,149,635
Tax Revenue Bonds, Community Facilities District 99-1,
Series 2002, 6.300%, 9/01/20
1,595 San Marcos Public Facilities Authority, California, Special 9/09 at 102.00 N/R 1,615,432
Tax Bonds, Community Facilities District 99-1, Series 2003B,
6.000%, 9/01/24
1,595 Santa Clara Valley Transportation Authority, California, 6/11 at 100.00 AAA 1,660,188
Sales Tax Revenue Bonds, Series 2001A, 5.000%, 6/01/22 -
MBIA Insured
2,810 West Patterson Financing Authority, California, Special 9/13 at 103.00 N/R 2,983,883
Tax Bonds, Community Facilities District 01-1,
Series 2003B, 7.000%, 9/01/38
1,375 West Patterson Financing Authority, California, Special 9/13 at 103.00 N/R 1,386,041
Tax Bonds, Community Facilities District 01-1,
Series 2004A, 6.125%, 9/01/39
2,500 Yucaipa-Calimesa Joint Unified School District, San Bernardino 10/11 at 100.00 AAA 2,540,875
County, California, General Obligation Refunding Bonds,
Series 2001A, 5.000%, 10/01/26 - MBIA Insured
43
Nuveen California Dividend Advantage Municipal Fund 3 (NZH) (continued)
Portfolio of INVESTMENTS August 31, 2004
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 9.4%
$ 11,750 Foothill/Eastern Transportation Corridor Agency, California, 1/14 at 101.00 BBB- $ 9,065,008
Toll Road Revenue Refunding Bonds, Series 1999,
0.000%, 1/15/28
1,500 Port of Oakland, California, Revenue Refunding Bonds, 11/07 at 102.00 AAA 1,667,955
Series 1997I, 5.600%, 11/01/19 - MBIA Insured
1,000 Port of Oakland, California, Revenue Bonds, Series 2002M, 11/12 at 100.00 AAA 1,077,990
5.250%, 11/01/20 - FGIC Insured
San Francisco Airports Commission, California, Revenue Bonds,
San Francisco International Airport, Second Series 2003, Issue 29B:
4,110 5.125%, 5/01/17 - FGIC Insured 5/13 at 100.00 AAA 4,469,132
10,625 5.125%, 5/01/18 - FGIC Insured 5/13 at 100.00 AAA 11,496,675
5,140 5.125%, 5/01/19 - FGIC Insured 5/13 at 100.00 AAA 5,526,579
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED*** - 0.4%
1,380 Puerto Rico, Public Improvement General Obligation 7/11 at 100.00 AAA 1,543,447
Refunding Bonds, Series 2001, 5.000%, 7/01/24
(Pre-refunded to 7/01/11) - FSA Insured
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 13.3%
15,000 California Pollution Control Financing Authority, Remarketed 4/11 at 102.00 AAA 16,258,800
Revenue Bonds, Pacific Gas and Electric Company,
Series 1996A, 5.350%, 12/01/16 (Alternative Minimum
Tax) - MBIA Insured
California Department of Water Resources, Power Supply
Revenue Bonds, Series 2002A:
3,500 5.375%, 5/01/17 - XLCA Insured 5/12 at 101.00 AAA 3,876,145
9,000 5.125%, 5/01/18 5/12 at 101.00 A2 9,622,620
1,200 Los Angeles Department of Water and Power, California, 7/13 at 100.00 AAA 1,266,096
Power System Revenue Bonds, Series 2003A-2,
5.000%, 7/01/21 - MBIA Insured
1,600 Merced Irrigation District, California, Revenue Certificates 9/05 at 103.00 Baa3 1,671,312
of Participation, Electric System Project, Series 2002,
6.500%, 9/01/34
5,000 Merced Irrigation District, California, Revenue Certificates 9/13 at 102.00 Baa3 5,103,650
of Participation, Electric System Project, Series 2003,
5.700%, 9/01/36
2,250 Salinas Valley Solid Waste Authority, California, Revenue 8/12 at 100.00 AAA 2,325,285
Bonds, Series 2002, 5.125%, 8/01/22 (Alternative
Minimum Tax) - AMBAC Insured
6,085 Southern California Public Power Authority, Revenue Bonds, 7/13 at 100.00 AAA 6,729,462
Magnolia Power Project, Series 2003-1A,
5.250%, 7/01/16 - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 12.8%
8,000 California Department of Water Resources, Water System 6/13 at 100.00 AAA 9,051,440
Revenue Bonds, Central Valley Project, Series 2003Y,
5.250%, 12/01/13 - FGIC Insured
7,000 Carmichael Water District, Sacramento County, California, 9/09 at 102.00 AAA 7,152,670
Water Revenue Certificates of Participation, Series 1999,
5.125%, 9/01/29 - MBIA Insured
2,000 El Dorado Irrigation District, California, Water and Sewer 3/14 at 100.00 AAA 2,125,080
Certificates of Participation, Series 2004A,
5.000%, 3/01/20 (WI, settling 9/15/04) - FGIC Insured
1,000 Pico Rivera Water Authority, California, Revenue Bonds, 12/11 at 102.00 N/R 1,013,540
Series 2001A, 6.250%, 12/01/32
44
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER (continued)
San Diego Public Facilities Financing Authority, California,
Subordinate Lien Water Revenue Bonds, Series 2002:
$ 2,500 5.000%, 8/01/23 - MBIA Insured 8/12 at 100.00 AAA $ 2,603,500
6,260 5.000%, 8/01/24 - MBIA Insured 8/12 at 100.00 AAA 6,481,041
San Francisco City and County Public Utilities Commission,
California, Clean Water Revenue Refunding Bonds, Series 2003A:
3,315 5.250%, 10/01/18 - MBIA Insured 4/13 at 100.00 AAA 3,642,486
12,000 5.250%, 10/01/19 - MBIA Insured 4/13 at 100.00 AAA 13,103,040
------------------------------------------------------------------------------------------------------------------------------------
$ 505,980 Total Long-Term Investments (cost $516,108,449) - 149.6% 528,760,181
=============-----------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 3.3% 11,600,038
--------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (52.9)% (187,000,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 353,360,219
====================================================================================================================
(1) All percentages shown in the Portfolio of Investments are
based on net assets applicable to Common shares.
* Optional Call Provisions (not covered by the report of
independent registered public accounting firm): 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 registered
public accounting firm): Using the higher of Standard &
Poor's or Moody's rating.
*** Securities are backed by an escrow or trust containing
sufficient U.S. Government or U.S. Government agency
securities which ensures the timely payment of principal and
interest. Such securities are normally considered to be
equivalent to AAA rated securities.
N/R Investment is not rated.
(WI) Security purchased on a when-issued basis.
See accompanying notes to financial statements.
45
Nuveen Insured California Dividend Advantage Municipal Fund (NKL)
Portfolio of
INVESTMENTS August 31, 2004
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES - 2.0%
$ 4,500 Golden State Tobacco Securitization Corporation, California, 6/13 at 100.00 BBB $ 4,750,380
Tobacco Settlement Asset-Backed Revenue Bonds,
Series 2003A-2, 7.900%, 6/01/42
------------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 9.6%
1,000 California Educational Facilities Authority, Revenue Bonds, 3/09 at 101.00 Aa3 1,083,750
Claremont University Center, Series 1999B, 5.250%, 3/01/18
1,675 California Educational Facilities Authority, Revenue Bonds, 10/12 at 100.00 A2 1,718,734
University of San Diego, Series 2002A, 5.250%, 10/01/30
9,000 California State University, Systemwide Revenue Bonds, 11/12 at 100.00 AAA 9,308,790
Series 2002A, 5.125%, 11/01/26 - AMBAC Insured
1,000 California Statewide Community Development Authority, 8/12 at 100.00 A 1,030,340
Student Housing Revenue Bonds, EAH - East Campus
Apartments LLC - U.C. Irvine Project, Series 2002A,
5.500%, 8/01/22 - ACA Insured
9,000 University of California, Revenue Bonds, Multi-Purpose 9/08 at 101.00 Aa2 9,271,890
Projects, Series 2000K, 5.300%, 9/01/30
------------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE - 7.5%
5,000 ABAG Finance Authority for Non-Profit Corporations, 4/12 at 100.00 A 5,238,900
California, Insured Revenue Bonds, Sansum-Santa Barbara
Medical Foundation Clinic, Series 2002A, 5.600%, 4/01/26
California Health Facilities Financing Authority, Revenue
Bonds, Cedars-Sinai Medical Center, Series 1999A:
2,500 6.125%, 12/01/30 12/09 at 101.00 A3 2,676,800
3,000 6.250%, 12/01/34 12/09 at 101.00 A3 3,219,120
2,815 California Health Facilities Financing Authority, Revenue 8/13 at 100.00 AAA 2,974,048
Bonds, Lucile Salter Packard Hospital, Series 2003C,
5.000%, 8/15/20 - AMBAC Insured
3,380 Rancho Mirage Joint Powers Financing Authority, California, 7/14 at 100.00 A3 3,561,607
Revenue Bonds, Eisenhower Medical Center,
Series 2004, 5.875%, 7/01/26
------------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 0.9%
1,905 Los Angeles, California, GNMA Mortgage-Backed Securities 7/11 at 102.00 AAA 2,036,388
Program, Multifamily Housing Revenue Bonds, Park Plaza
West Senior Apartments, Series 2001B, 5.300%, 1/20/21
(Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
INDUSTRIALS - 1.3%
3,000 California Pollution Control Financing Authority, Solid Waste No Opt. Call BBB+ 3,138,510
Disposal Revenue Bonds, Republic Services Inc.,
Series 2002C, 5.250%, 6/01/23 (Alternative Minimum
Tax) (Mandatory put 12/01/17)
------------------------------------------------------------------------------------------------------------------------------------
LONG-TERM CARE - 3.6%
3,000 ABAG Finance Authority for Non-Profit Corporations, 11/12 at 100.00 A 3,111,900
California, Insured Senior Living Revenue Bonds,
Odd Fellows Home of California, Series 2003A,
5.200%, 11/15/22
5,000 California Statewide Community Development Authority, 11/13 at 100.00 A 5,234,400
Revenue Bonds, Jewish Home for the Aging, Series 2003,
5.000%, 11/15/18
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 38.1%
5,920 Cajon Valley Union School District, San Diego County, 8/10 at 102.00 AAA 6,084,102
California, General Obligation Bonds, Series 2002B,
5.125%, 8/01/32 - MBIA Insured
California, General Obligation Refunding Bonds, Series 2002:
1,000 6.000%, 4/01/16 - AMBAC Insured No Opt. Call AAA 1,203,000
9,000 5.000%, 2/01/22 - MBIA Insured 2/12 at 100.00 AAA 9,375,840
2,900 California, General Obligation Bonds, Series 2003, 5.000%, 2/01/21 8/13 at 100.00 A 3,032,530
Compton Community College District, Los Angeles County,
California, General Obligation Bonds, Series 2004A:
2,315 5.250%, 7/01/22 - MBIA Insured 7/14 at 100.00 AAA 2,508,071
2,560 5.250%, 7/01/23 - MBIA Insured 7/14 at 100.00 AAA 2,756,378
46
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL (continued)
$ 2,415 El Monte Union High School District, Los Angeles County, 6/13 at 100.00 AAA $ 2,468,927
California, General Obligation Bonds, Series 2003A,
5.000%, 6/01/28 - FSA Insured
10,000 Fremont Unified School District, Alameda County, California, 8/12 at 101.00 AAA 10,307,900
General Obligation Bonds, Series 2002A,
5.000%, 8/01/25 - FSA Insured
2,070 Fresno Unified School District, Fresno County, California, 8/10 at 102.00 AAA 2,142,036
General Obligation Bonds, Series 2002G,
5.125%, 8/01/26 - FSA Insured
Fresno Unified School District, Fresno County, California,
General Obligation Bonds, Series 2002B:
1,135 5.125%, 8/01/23 - FGIC Insured 8/10 at 102.00 AAA 1,194,508
1,190 5.125%, 8/01/24 - FGIC Insured 8/10 at 102.00 AAA 1,245,085
1,245 5.125%, 8/01/25 - FGIC Insured 8/10 at 102.00 AAA 1,295,037
1,255 5.125%, 8/01/26 - FGIC Insured 8/10 at 102.00 AAA 1,298,674
5,000 Los Angeles Unified School District, California, General 7/12 at 100.00 AAA 5,159,100
Obligation Bonds, Series 2002E, 5.125%, 1/01/27 -
MBIA Insured
Los Angeles Unified School District, California, General
Obligation Bonds, Series 2003A:
4,700 5.000%, 7/01/22 - FSA Insured 7/13 at 100.00 AAA 4,941,157
3,500 5.000%, 1/01/28 - MBIA Insured 7/13 at 100.00 AAA 3,591,525
1,500 Madera Unified School District, Madera County, California, 8/12 at 100.00 AAA 1,530,900
General Obligation Bonds, Series 2002,
5.000%, 8/01/28 - FSA Insured
2,500 Oakland Unified School District, Alameda County, California, 8/12 at 100.00 AAA 2,686,475
General Obligation Bonds, Series 2002, 5.250%, 8/01/21 -
FGIC Insured
3,300 Peralta Community College District, Alameda County, 8/09 at 102.00 AAA 3,354,846
California, General Obligation Bonds, Election of 2000,
Series 2001A, 5.000%, 8/01/31 - FGIC Insured
3,250 San Diego Unified School District, San Diego County, 7/11 at 102.00 AAA 3,416,758
California, General Obligation Bonds, Election of 1998,
Series 2001C, 5.000%, 7/01/22 - FSA Insured
3,500 San Mateo County Community College District, California, 9/12 at 100.00 AAA 3,582,250
General Obligation Bonds, Series 2002A,
5.000%, 9/01/26 - FGIC Insured
2,980 Santa Clarita Community College District, Los Angeles 8/11 at 101.00 AAA 3,083,704
County, California, General Obligation Bonds,
Series 2002, 5.125%, 8/01/26 - FGIC Insured
2,460 Vacaville Unified School District, Solano County, California, 8/11 at 101.00 AAA 2,517,195
General Obligation Bonds, Series 2002,
5.000%, 8/01/26 - FSA Insured
10,000 Vista Unified School District, San Diego County, California, 8/12 at 100.00 AAA 10,414,000
General Obligation Bonds, Series 2002A,
5.000%, 8/01/23 - FSA Insured
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 42.3%
1,450 Baldwin Park Public Financing Authority, California, 8/13 at 102.00 BBB 1,477,898
Sales Tax and Tax Allocation Bonds, Puente Merced
Redevelopment Project, Series 2003, 5.250%, 8/01/21
6,895 Brea and Olinda Unified School District, Orange County, 8/11 at 101.00 AAA 7,102,677
California, Refunding Certificates of Participation,
Series 2002A, 5.125%, 8/01/26 - FSA Insured
2,290 Burbank Public Financing Authority, California, Revenue 12/13 at 100.00 AAA 2,502,878
Refunding Bonds, Golden State Redevelopment Project,
Series 2003A, 5.250%, 12/01/19 - AMBAC Insured
2,200 California Infrastructure Economic Development Bank, 9/13 at 101.00 AAA 2,249,544
Los Angeles County, Revenue Bonds, Department of Public
Social Services, Series 2003, 5.000%, 9/01/28 -
AMBAC Insured
5,100 California State Public Works Board, Lease Revenue Bonds, 12/13 at 100.00 A- 5,655,084
Department of Corrections, Series 2003C, 5.500%, 6/01/15
7,035 Corona-Norco Unified School District, Riverside County, 9/13 at 100.00 AAA 7,180,695
California, Special Tax Bonds, Community Facilities
District 98-1, Series 2003, 5.000%, 9/01/28 - MBIA Insured
3,145 Culver City Redevelopment Agency, California, Tax Allocation 5/11 at 101.00 AAA 3,251,490
Revenue Bonds, Redevelopment Project, Series 2002A,
5.125%, 11/01/25 - MBIA Insured
1,020 Desert Sands Unified School District, Riverside County, 3/12 at 101.00 AAA 1,079,690
California, Refunding Certificates of Participation,
Series 2002, 5.000%, 3/01/20 - MBIA Insured
8,720 El Monte, California, Senior Lien Certificates of Participation, 1/11 at 100.00 AAA 9,042,553
Department of Public Services Facility Phase II,
Series 2001, 5.000%, 1/01/21 - AMBAC Insured
4,000 Folsom Public Financing Authority, California, Special Tax 9/12 at 102.00 AAA 4,233,960
Revenue Bonds, Series 2004A, 5.000%, 9/01/21 - AMBAC Insured
47
Nuveen Insured California Dividend Advantage Municipal Fund (NKL) (continued)
Portfolio of INVESTMENTS August 31, 2004
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED (continued)
$ 2,115 Inglewood Redevelopment Agency, California, Tax Allocation No Opt. Call AAA $ 2,357,062
Refunding Bonds, Merged Area Redevelopment Project,
Series 1998A, 5.250%, 5/01/23 - AMBAC Insured
3,500 La Quinta Redevelopment Agency, California, Tax Allocation 9/11 at 102.00 AAA 3,581,410
Bonds, Redevelopment Project Area 1, Series 2001,
5.100%, 9/01/31 - AMBAC Insured
3,400 La Quinta Redevelopment Agency, California, Tax Allocation 9/12 at 102.00 AAA 3,576,256
Bonds, Redevelopment Project Area 1, Series 2002,
5.000%, 9/01/22 - AMBAC Insured
1,460 Los Angeles, California, Certificates of Participation, 6/13 at 100.00 AAA 1,480,031
Municipal Improvement Corporation, Series 2003AW,
5.000%, 6/01/33 - AMBAC Insured
7,000 Los Angeles, California, Certificates of Participation, Real 4/12 at 100.00 AAA 7,241,150
Property Acquisition Program, Series 2002,
5.200%, 4/01/27 - AMBAC Insured
4,690 Los Angeles County Metropolitan Transportation Authority, 7/08 at 101.00 AAA 4,803,873
California, Second Senior Lien Proposition C Sales Tax
Revenue Refunding Bonds, Series 1998A,
5.000%, 7/01/23 - AMBAC Insured
8,470 Ontario Redevelopment Financing Authority, California, 8/11 at 101.00 AAA 8,828,112
Lease Revenue Bonds, Capital Projects, Series 2001,
5.200%, 8/01/29 - AMBAC Insured
5,000 Palm Desert Financing Authority, California, Tax Allocation 4/12 at 102.00 AAA 5,131,950
Revenue Refunding Bonds, Project Area 1, Series 2002,
5.000%, 4/01/25 - MBIA Insured
4,475 Riverside County, California, Asset Leasing Corporate 6/12 at 101.00 AAA 4,755,627
Leasehold Revenue Bonds, Riverside County Hospital
Project, Series 1997B, 5.000%, 6/01/19 - MBIA Insured
3,175 San Buenaventura Public Facilities Financing Authority, 2/11 at 101.00 AAA 3,300,476
California, Certificates of Participation, Series 2001C,
5.250%, 2/01/31 - AMBAC Insured
3,730 San Diego Redevelopment Agency, California, Subordinate 9/09 at 101.00 Baa2 3,774,611
Tax Increment and Parking Revenue Bonds, Centre City
Project, Series 2003B, 5.250%, 9/01/26
4,000 San Jose Financing Authority, California, Lease Revenue 9/11 at 100.00 AAA 4,252,920
Refunding Bonds, Convention Center Project, Series 2001F,
5.000%, 9/01/19 - MBIA Insured
2,160 Temecula Redevelopment Agency, California, Tax Allocation 8/08 at 102.00 AAA 2,205,166
Revenue Bonds, Redevelopment Project 1, Series 2002,
5.125%, 8/01/27 - MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 5.5%
2,250 California Infrastructure Economic Development Bank, 7/13 at 100.00 AAA 2,291,355
First Lien Revenue Bonds, San Francisco Bay Area Toll
Bridge, Series 2003A, 5.000%, 7/01/36 - AMBAC Insured
7,500 Foothill/Eastern Transportation Corridor Agency, California, 1/14 at 101.00 BBB- 5,757,000
Toll Road Revenue Refunding Bonds, Series 1999,
0.000%, 1/15/29
San Francisco Airports Commission, California, Revenue Bonds,
San Francisco International Airport, Second Series 2003, Issue 29A:
2,185 5.250%, 5/01/16 (Alternative Minimum Tax) - FGIC Insured 5/13 at 100.00 AAA 2,352,568
2,300 5.250%, 5/01/17 (Alternative Minimum Tax) - FGIC Insured 5/13 at 100.00 AAA 2,466,014
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED*** - 1.9%
4,000 Southern California Metropolitan Water District, Water 1/08 at 101.00 AAA 4,410,800
Revenue Bonds, Series 1997A, 5.000%, 7/01/30
(Pre-refunded to 1/01/08) - MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 19.4%
9,000 Anaheim Public Finance Authority, California, Revenue 10/12 at 100.00 AAA 9,182,520
Bonds, Electric System Distribution Facilities,
Series 2002A, 5.000%, 10/01/27 - FSA Insured
10,000 California Pollution Control Financing Authority, Remarketed 4/11 at 102.00 AAA 10,839,200
Revenue Bonds, Pacific Gas and Electric Company,
Series 1996A, 5.350%, 12/01/16 (Alternative
Minimum Tax) - MBIA Insured (PLG)
6,000 California Department of Water Resources, Power Supply 5/12 at 101.00 A2 6,415,080
Revenue Bonds, Series 2002A, 5.125%, 5/01/18
3,000 Los Angeles Department of Water and Power, California, 7/11 at 100.00 AAA 3,226,560
Power System Revenue Bonds, Series 2001A-1,
5.250%, 7/01/21 - FSA Insured
775 Los Angeles Department of Water and Power, California, 7/13 at 100.00 AAA 817,687
Power System Revenue Bonds, Series 2003A-2,
5.000%, 7/01/21 - MBIA Insured
6,000 Northern California Power Agency, Revenue Refunding 7/08 at 101.00 AAA 6,146,820
Bonds, Hydroelectric Project 1, Series 1998A,
5.200%, 7/01/32 - MBIA Insured
48
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES (continued)
$ 3,000 Sacramento Municipal Utility District, California, Electric 8/11 at 100.00 AAA $ 3,055,470
Revenue Bonds, Series 2001N, 5.000%, 8/15/28 -
MBIA Insured
5,630 Southern California Public Power Authority, Subordinate 7/12 at 100.00 AAA 5,832,680
Revenue Refunding Bonds, Transmission Project,
Series 2002A, 4.750%, 7/01/19 - FSA Insured
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 16.8%
3,000 California Department of Water Resources, Water System 12/12 at 100.00 AAA 3,170,010
Revenue Bonds, Central Valley Project, Series 2002X,
5.150%, 12/01/23 - FGIC Insured
6,100 East Bay Municipal Utility District, Alameda and Contra 6/11 at 100.00 AAA 6,223,830
Costa Counties, California, Water System Subordinated
Revenue Bonds, Series 2001, 5.000%, 6/01/26 -
MBIA Insured
9,000 Eastern Municipal Water District, California, Water and 7/11 at 100.00 AAA 9,111,060
Sewer Revenue Certificates of Participation,
Series 2001B, 5.000%, 7/01/30 - FGIC Insured
4,500 Los Angeles County Sanitation Districts Financing Authority, 10/13 at 100.00 AAA 4,708,800
California, Senior Revenue Bonds, Capital Projects,
Series 2003A, 5.000%, 10/01/23 - FSA Insured
3,605 Manteca Financing Authority, California, Sewer Revenue 12/13 at 100.00 Aaa 3,734,924
Bonds, Series 2003A, 5.000%, 12/01/33 - MBIA Insured
9,185 Orange County Sanitation District, California, Certificates 8/13 at 100.00 AAA 9,313,314
of Participation, Series 2003, 5.000%, 2/01/33 -
FGIC Insured
Semitropic Water Storage District, Kern County, California,
Water Banking Revenue Bonds, Series 2004A:
1,315 5.500%, 12/01/20 - XLCA Insured 12/14 at 100.00 AAA 1,476,508
1,415 5.500%, 12/01/21 - XLCA Insured 12/14 at 100.00 AAA 1,581,220
------------------------------------------------------------------------------------------------------------------------------------
$ 336,260 Total Long-Term Investments (cost $331,830,403) - 148.9% 348,724,088
=============-----------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 1.5% 3,462,408
--------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (50.4)% (118,000,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 234,186,496
====================================================================================================================
FORWARD SWAP CONTRACTS OUTSTANDING AT AUGUST 31, 2004:
SWAP UNREALIZED
EFFECTIVE TERMINATION APPRECIATION
NOTIONAL AMOUNT DATE(2) DATE (DEPRECIATION)
------------------------------------------------------------------------------------------------------------------------------------
Agreement with Morgan Stanley dated August 4, 2004, to pay semi-annually the
notional amount multiplied by 5.660% (annualized) and receive quarterly the
notional amount multiplied by the three-month USD-LIBOR. $10,600,000 2/16/05 2/16/35 $ (525,571)
Agreement with Morgan Stanley dated August 5, 2004, to pay quarterly the
notional amount multiplied by 4.337% (annualized) and receive quarterly the
notional amount multiplied by the daily arithmetic average of the weekly
BMA Municipal Swap Index for the quarter. 12,900,000 12/09/04 12/09/24 (408,208)
Agreement with Morgan Stanley dated August 10, 2004, to pay semi-annually
the notional amount multiplied by 5.489% (annualized) and receive quarterly
the notional amount multiplied by the three-month USD-LIBOR. 3,100,000 1/14/05 1/14/35 (67,598)
------------------------------------------------------------------------------------------------------------------------------------
$(1,001,377)
------------------------------------------------------------------------------------------------------------------------------------
At least 80% of the Fund's net assets (including net assets
applicable to Preferred shares) are invested in municipal
securities that are either covered by Original Issue
Insurance, Secondary Market Insurance or Portfolio Insurance
which ensures the timely payment of principal and interest.
Up to 20% of the Fund's net assets (including net assets
applicable to Preferred shares) may be invested in municipal
securities that are (i) either backed by an escrow or trust
containing sufficient U.S. Government or U.S. Government
agency securities (also ensuring the timely payment of
principal and interest), or (ii) municipal bonds that are
rated, at the time of investment, within the four highest
grades (Baa or BBB or better by Moody's, S&P or Fitch) or
unrated but judged to be of comparable quality by the
Adviser.
(1) All percentages shown in the Portfolio of Investments are
based on net assets applicable to Common shares.
(2) Effective date represents the date on which both the Fund
and counterparty commence interest payments on each forward
swap contract.
* Optional Call Provisions (not covered by the report of
independent registered public accounting firm): 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 registered
public accounting firm): Using the higher of Standard &
Poor's or Moody's rating.
(PLG) Portion of security, with an aggregate market value of
$1,083,900, has been pledged to collateralize the net
payment obligations under forward swap contracts.
See accompanying notes to financial statements.
49
Nuveen Insured California Tax-Free Advantage Municipal Fund (NKX)
Portfolio of
INVESTMENTS August 31, 2004
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES - 2.0%
$ 1,625 Golden State Tobacco Securitization Corporation, California, 6/13 at 100.00 BBB $ 1,715,415
Tobacco Settlement Asset-Backed Revenue Bonds,
Series 2003A-2, 7.900%, 6/01/42
------------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE - 18.7%
2,700 California Health Facilities Financing Authority, Revenue 12/09 at 101.00 A3 2,897,208
Bonds, Cedars-Sinai Medical Center, Series 1999A,
6.250%, 12/01/34
1,500 California Health Facilities Financing Authority, Revenue 11/08 at 101.00 AAA 1,513,830
Bonds, UCSF - Stanford Healthcare, Series 1998A,
5.000%, 11/15/31 - FSA Insured
1,800 California Infrastructure Economic Development Bank, 8/11 at 102.00 A 1,853,208
Revenue Bonds, Kaiser Hospital Assistance LLC,
Series 2001A, 5.550%, 8/01/31
6,000 California Statewide Community Development Authority, No Opt. Call AAA 6,408,120
Revenue Refunding Bonds, Sherman Oaks Health System,
Series 1998A, 5.000%, 8/01/22 - AMBAC Insured
2,000 California Statewide Community Development Authority, 6/13 at 100.00 AAA 2,122,960
Hospital Revenue Bonds, Monterey Peninsula Hospital,
Series 2003B, 5.250%, 6/01/23 - FSA Insured
1,260 Rancho Mirage Joint Powers Financing Authority, California, 7/14 at 100.00 A3 1,327,700
Revenue Bonds, Eisenhower Medical Center, Series 2004,
5.875%, 7/01/26
------------------------------------------------------------------------------------------------------------------------------------
LONG-TERM CARE - 5.8%
1,000 ABAG Finance Authority for Non-Profit Corporations, 11/12 at 100.00 A 1,037,300
California, Insured Senior Living Revenue Bonds, Odd Fellows
Home of California, Series 2003A, 5.200%, 11/15/22
2,000 California Health Facilities Financing Authority, Revenue 1/13 at 100.00 A 2,042,480
Bonds, Northern California Retired Officers Community
Corporation - Paradise Valley Estates, Series 2002,
5.250%, 1/01/26
1,815 California Statewide Community Development Authority, 11/13 at 100.00 A 1,900,087
Revenue Bonds, Jewish Home for the Aging, Series 2003,
5.000%, 11/15/18
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 48.7%
1,000 Berryessa Union School District, Santa Clara County, 8/12 at 100.00 AAA 1,052,340
California, General Obligation Bonds, Series 2003C,
5.000%, 8/01/21 - FSA Insured
2,000 Butte-Glenn Community College District, Butte and Glenn 8/12 at 101.00 Aaa 2,051,280
Counties, California, General Obligation Bonds,
Series 2002A, 5.000%, 8/01/26 - MBIA Insured
California, General Obligation Refunding Bonds, Series 2002:
1,500 5.000%, 2/01/12 No Opt. Call A 1,651,470
3,750 5.000%, 4/01/27 - AMBAC Insured 4/12 at 100.00 AAA 3,822,113
3,000 5.250%, 4/01/30 - XLCA Insured 4/12 at 100.00 AAA 3,126,450
500 California, General Obligation Bonds, Series 2004, 4/14 at 100.00 A 516,015
5.250%, 4/01/34
450 Fremont Unified School District, Alameda County, California, 8/12 at 101.00 AAA 463,855
General Obligation Bonds, Series 2002A, 5.000%, 8/01/25 -
FSA Insured
Hacienda La Puente Unified School District, Los Angeles County,
California, General Obligation Bonds, Series 2003B:
4,500 5.000%, 8/01/26 - FSA Insured 8/13 at 100.00 AAA 4,615,380
2,030 5.000%, 8/01/27 - FSA Insured 8/13 at 100.00 AAA 2,077,583
2,000 Los Angeles, California, General Obligation Bonds, 9/12 at 100.00 AAA 2,094,620
Series 2002A, 5.000%, 9/01/22 - MBIA Insured
10,750 Los Angeles Unified School District, California, General 7/13 at 100.00 AAA 11,301,583
Obligation Bonds, Series 2003A, 5.000%, 7/01/22 -
FSA Insured (PLG)
1,000 Murrieta Valley Unified School District, Riverside County, 9/13 at 100.00 AAA 1,025,870
California, General Obligation Bonds, Series 2003A,
5.000%, 9/01/26 - FGIC Insured
50
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL (continued)
$ 3,000 San Diego Unified School District, California, General 7/10 at 100.00 AAA $ 3,133,410
Obligation Bonds, Election of 1998, Series 2000B,
5.125%, 7/01/22 - MBIA Insured
3,855 San Rafael City High School District, Marin County, 8/12 at 100.00 AAA 3,934,413
California, General Obligation Bonds, Series 2003A,
5.000%, 8/01/28 - FSA Insured
905 San Rafael Elementary School District, Marin County, 8/12 at 100.00 AAA 923,643
California, General Obligation Bonds, Series 2003C,
5.000%, 8/01/28 - MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 43.2%
550 Baldwin Park Public Financing Authority, California, 8/13 at 102.00 BBB 560,582
Sales Tax and Tax Allocation Bonds, Puente Merced
Redevelopment Project, Series 2003, 5.250%, 8/01/21
2,025 Burbank Public Financing Authority, California, Revenue 12/13 at 100.00 AAA 2,176,004
Refunding Bonds, Golden State Redevelopment Project,
Series 2003A, 5.250%, 12/01/22 - AMBAC Insured
4,000 California State Public Works Board, Lease Revenue Bonds, 12/12 at 100.00 AAA 4,065,960
Department of General Services, Capital East End,
Series 2002A, 5.000%, 12/01/27 - AMBAC Insured
2,000 California State Public Works Board, Lease Revenue Bonds, 12/13 at 100.00 A- 2,207,940
Department of Corrections, Series 2003C, 5.500%, 6/01/16
1,610 Folsom Public Financing Authority, California, Special Tax 9/12 at 102.00 AAA 1,704,169
Revenue Bonds, Series 2004A, 5.000%, 9/01/21 -
AMBAC Insured
5,540 Irvine, California, Public Facilities and Infrastructure 9/13 at 100.00 AAA 5,722,488
Authority, Assessment Revenue Bonds, Series 2003C,
5.000%, 9/02/21 - AMBAC Insured
2,000 Los Angeles, California, Certificates of Participation, 6/13 at 100.00 AAA 2,027,440
Municipal Improvement Corporation, Series 2003AW,
5.000%, 6/01/33 - AMBAC Insured
1,770 Los Angeles Unified School District, Los Angeles County, 10/12 at 100.00 AAA 1,798,745
California, Certificates of Participation, Series 2002C,
Administration Building Project II, 5.000%, 10/01/27 -
AMBAC Insured
1,500 Los Osos, California, Improvement Bonds, Community 9/10 at 103.00 AAA 1,520,220
Services Wastewater Assessment District 1, Series 2002,
5.000%, 9/02/33 - MBIA Insured
1,165 Poway, California, Housing Revenue Bonds, Poinsettia 5/13 at 102.00 BBB+ 1,162,821
Mobile Home Park Project Revenue Bonds, Series 2003,
5.000%, 5/01/23
San Buenaventura, California, Certificates of Participation,
Golf Course Financing Project, Series 2002D:
3,000 5.000%, 2/01/27 - AMBAC Insured 2/12 at 100.00 AAA 3,045,360
3,300 5.000%, 2/01/32 - AMBAC Insured 2/12 at 100.00 AAA 3,341,481
1,200 San Diego Redevelopment Agency, California, Subordinate 9/09 at 101.00 Baa2 1,214,352
Tax Increment and Parking Revenue Bonds, Centre City
Project, Series 2003B, 5.250%, 9/01/26
1,220 San Jose Redevelopment Agency, California, Tax Allocation 8/10 at 101.00 AAA 1,234,091
Bonds, Merged Area Redevelopment Project, Series 2002,
5.000%, 8/01/32 - MBIA Insured
2,770 San Jose Financing Authority, California, Lease Revenue 6/12 at 100.00 AAA 2,805,484
Refunding Bonds, Civic Center Project, Series 2002B,
5.000%, 6/01/32 - AMBAC Insured
2,390 Solano County, California, Certificates of Participation, 11/12 at 100.00 AAA 2,522,095
Series 2002, 5.250%, 11/01/24 - MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 13.8%
5,480 Bay Area Governments Association, California, BART SFO 8/12 at 100.00 AAA 5,578,366
Extension, Airport Premium Fare Revenue Bonds,
Series 2002A, 5.000%, 8/01/26 - AMBAC Insured
2,000 Foothill/Eastern Transportation Corridor Agency, California, 1/10 at 100.00 BBB- 1,787,280
Toll Road Revenue Bonds, Series 1995A, 5.000%, 1/01/35
3,135 San Francisco Airports Commission, California, Revenue 5/08 at 101.00 AAA 3,205,349
Bonds, San Francisco International Airport, Second Series,
Issue 16B, 5.000%, 5/01/24 - FSA Insured
1,300 San Francisco Airports Commission, California, Revenue 5/10 at 101.00 AAA 1,328,561
Bonds, San Francisco International Airport, Second
Series 2000, Issue 26B, 5.000%, 5/01/25 - FGIC Insured
51
Nuveen Insured California Tax-Free Advantage Municipal Fund (NKX) (continued)
Portfolio of INVESTMENTS August 31, 2004
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION(1) PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED*** - 1.9%
$ 1,495 Southern California Metropolitan Water District, Water 1/08 at 101.00 AAA $ 1,648,537
Revenue Bonds, Series 1997A, 5.000%, 7/01/30
(Pre-refunded to 1/01/08) - MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 5.4%
1,000 Anaheim Public Finance Authority, California, Second Lien 10/14 at 100.00 AAA 1,085,980
Electric Distribution Revenue Bonds, Series 2004,
5.250%, 10/01/21 - MBIA Insured
3,055 Los Angeles Department of Water and Power, California, 7/11 at 100.00 AAA 3,271,386
Power System Revenue Bonds, Series 2001A-1,
5.250%, 7/01/22 - FSA Insured
275 Los Angeles Department of Water and Power, California, 7/13 at 100.00 AAA 290,147
Power System Revenue Bonds, Series 2003A-2,
5.000%, 7/01/21 - MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 11.5%
1,335 Manteca Financing Authority, California, Sewer Revenue 12/13 at 100.00 Aaa 1,383,113
Bonds, Series 2003A, 5.000%, 12/01/33 - MBIA Insured
San Diego Public Facilities Financing Authority, California,
Subordinate Lien Water Revenue Bonds, Series 2002:
3,000 5.000%, 8/01/22 - MBIA Insured 8/12 at 100.00 AAA 3,140,580
2,500 5.000%, 8/01/23 - MBIA Insured 8/12 at 100.00 AAA 2,603,500
1,180 South Feather Water and Power Agency, California, Water 4/13 at 100.00 BBB 1,165,875
Revenue Certificates of Participation, Solar Photovoltaic
Project, Series 2003, 5.375%, 4/01/24
1,600 Sunnyvale Financing Authority, California, Water and 10/11 at 100.00 AAA 1,630,992
Wastewater Revenue Bonds, Series 2001,
5.000%, 10/01/26 - AMBAC Insured
------------------------------------------------------------------------------------------------------------------------------------
$ 125,335 Total Long-Term Investments (cost $126,191,253) - 151.0% 129,837,231
=============-----------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 1.3% 1,170,683
--------------------------------------------------------------------------------------------------------------------
Preferred Shares, at Liquidation Value - (52.3)% (45,000,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 86,007,914
====================================================================================================================
FORWARD SWAP CONTRACTS OUTSTANDING AT AUGUST 31, 2004:
SWAP UNREALIZED
EFFECTIVE TERMINATION APPRECIATION
NOTIONAL AMOUNT DATE(2) DATE (DEPRECIATION)
------------------------------------------------------------------------------------------------------------------------------------
Agreement with Morgan Stanley dated August 4, 2004, to pay semi-annually the
notional amount multiplied by 5.660% (annualized) and receive quarterly the
notional amount multiplied by the three-month USD-LIBOR. $3,800,000 2/16/05 2/16/35 $(188,412)
Agreement with Morgan Stanley dated August 5, 2004, to pay quarterly the
notional amount multiplied by 4.337% (annualized) and receive quarterly the
notional amount multiplied by the daily arithmetic average of the weekly
BMA Municipal Swap Index for the quarter. 4,700,000 12/09/04 12/09/24 (148,727)
Agreement with Morgan Stanley dated August 10, 2004, to pay semi-annually
the notional amount multiplied by 5.489% (annualized) and receive quarterly
the notional amount multiplied by the three-month USD-LIBOR. 1,100,000 1/14/05 1/14/35 (23,986)
------------------------------------------------------------------------------------------------------------------------------------
$(361,125)
------------------------------------------------------------------------------------------------------------------------------------
At least 80% of the Fund's net assets (including net assets
applicable to Preferred shares) are invested in municipal
securities that are either covered by Original Issue
Insurance, Secondary Market Insurance or Portfolio Insurance
which ensures the timely payment of principal and interest.
Up to 20% of the Fund's net assets (including net assets
applicable to Preferred shares) may be invested in municipal
securities that are (i) either backed by an escrow or trust
containing sufficient U.S. Government or U.S. Government
agency securities (also ensuring the timely payment of
principal and interest), or (ii) municipal bonds that are
rated, at the time of investment, within the four highest
grades (Baa or BBB or better by Moody's, S&P or Fitch) or
unrated but judged to be of comparable quality by the
Adviser.
(1) All percentages shown in the Portfolio of Investments are
based on net assets applicable to Common shares.
(2) Effective date represents the date on which both the Fund
and counterparty commence interest payments on each forward
swap contract.
* Optional Call Provisions (not covered by the report of
independent registered public accounting firm): 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 registered
public accounting firm): Using the higher of Standard &
Poor's or Moody's rating.
*** Securities are backed by an escrow or trust containing
sufficient U.S. Government or U.S. Government agency
securities which ensures the timely payment of principal and
interest. Such securities are normally considered to be
equivalent to AAA rated securities.
(PLG) Portion of security, with an aggregate market value of
$420,520, has been pledged to collateralize the net payment
obligations underforward swap contracts.
See accompanying notes to financial statements.
52
Statement of
ASSETS AND LIABILITIES August 31, 2004
INSURED INSURED CALIFORNIA CALIFORNIA
CALIFORNIA CALIFORNIA PREMIUM DIVIDEND
PREMIUM INCOME PREMIUM INCOME 2 INCOME ADVANTAGE
(NPC) (NCL) (NCU) (NAC)
------------------------------------------------------------------------------------------------------------------------------------
ASSETS
Investments, at market value (cost $133,901,995,
$266,391,647, $119,587,913 and
$502,905,914, respectively) $146,719,986 $282,359,607 $125,004,061 $529,830,718
Cash 159,835 170,665 332,887 515,594
Receivables:
Interest 2,324,775 3,887,604 1,564,903 7,708,040
Investments sold 2,875,000 2,920,000 -- 2,300,575
Other assets 5,824 23,112 1,015 32,330
------------------------------------------------------------------------------------------------------------------------------------
Total assets 152,085,420 289,360,988 126,902,866 540,387,257
------------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Payable for investments purchased 2,317,659 2,090,420 -- --
Forward swaps, at value -- -- -- --
Accrued expenses:
Management fees 80,947 153,810 68,726 171,562
Other 60,221 65,543 61,450 137,257
Preferred share dividends payable 8,892 16,384 1,061 12,231
------------------------------------------------------------------------------------------------------------------------------------
Total liabilities 2,467,719 2,326,157 131,237 321,050
------------------------------------------------------------------------------------------------------------------------------------
Preferred shares, at liquidation value 45,000,000 95,000,000 43,000,000 175,000,000
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common shares $104,617,701 $192,034,831 $ 83,771,629 $365,066,207
====================================================================================================================================
Common shares outstanding 6,444,462 12,699,376 5,774,216 23,412,013
====================================================================================================================================
Net asset value per Common share outstanding
(net assets applicable to Common
shares, divided by Common
shares outstanding) $ 16.23 $ 15.12 $ 14.51 $ 15.59
====================================================================================================================================
NET ASSETS APPLICABLE TO COMMON SHARES CONSIST OF:
------------------------------------------------------------------------------------------------------------------------------------
Common shares, $.01 par value per share $ 64,445 $ 126,994 $ 57,742 $ 234,120
Paid-in surplus 89,182,546 175,963,672 78,361,540 332,503,040
Undistributed (Over-distribution of) net investment income 1,521,582 1,960,798 986,193 4,254,915
Accumulated net realized gain (loss) from investments 1,031,137 (1,984,593) (1,049,994) 1,149,328
Net unrealized appreciation (depreciation) of investments
and forward swap transactions 12,817,991 15,967,960 5,416,148 26,924,804
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common shares $104,617,701 $192,034,831 $ 83,771,629 $365,066,207
====================================================================================================================================
Authorized shares:
Common 200,000,000 200,000,000 Unlimited Unlimited
Preferred 1,000,000 1,000,000 Unlimited Unlimited
====================================================================================================================================
See accompanying notes to financial statements.
53
Statement of
ASSETS AND LIABILITIES August 31, 2004 (continued)
INSURED
CALIFORNIA CALIFORNIA INSURED CALIFORNIA
DIVIDEND DIVIDEND CALIFORNIA TAX-FREE
ADVANTAGE 2 ADVANTAGE 3 DIVIDEND ADVANTAGE
(NVX) (NZH) (NKL) (NKX)
------------------------------------------------------------------------------------------------------------------------------------
ASSETS
Investments, at market value (cost $310,078,141,
$516,108,449, $331,830,403 and
$126,191,253, respectively) $320,679,129 $528,760,181 $348,724,088 $129,837,231
Cash 363,738 1,061,106 584,066 167,926
Receivables:
Interest 4,446,932 7,705,144 4,016,262 1,428,400
Investments sold 8,831,283 5,190,300 -- --
Other assets 20,118 11,042 17,850 2,530
------------------------------------------------------------------------------------------------------------------------------------
Total assets 334,341,200 542,727,773 353,342,266 131,436,087
------------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Payable for investments purchased 2,796,034 2,106,240 -- --
Forward swaps, at value -- -- 1,001,377 361,125
Accrued expenses:
Management fees 93,271 149,097 99,015 35,850
Other 51,446 97,989 46,156 24,731
Preferred share dividends payable 5,049 14,228 9,222 6,467
------------------------------------------------------------------------------------------------------------------------------------
Total liabilities 2,945,800 2,367,554 1,155,770 428,173
------------------------------------------------------------------------------------------------------------------------------------
Preferred shares, at liquidation value 110,000,000 187,000,000 118,000,000 45,000,000
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common shares $221,395,400 $353,360,219 $234,186,496 $ 86,007,914
====================================================================================================================================
Common shares outstanding 14,790,660 24,112,833 15,259,759 5,883,302
====================================================================================================================================
Net asset value per Common share outstanding
(net assets applicable to Common
shares, divided by Common
shares outstanding) $ 14.97 $ 14.65 $ 15.35 $ 14.62
====================================================================================================================================
NET ASSETS APPLICABLE TO COMMON SHARES CONSIST OF:
------------------------------------------------------------------------------------------------------------------------------------
Common shares, $.01 par value per share $ 147,907 $ 241,128 $ 152,598 $ 58,833
Paid-in surplus 210,031,425 342,483,606 216,623,412 83,000,891
Undistributed (Over-distribution of) net investment income 2,094,498 2,702,190 1,051,760 (58,110)
Accumulated net realized gain (loss) from investments (1,479,418) (4,718,437) 466,418 (278,553)
Net unrealized appreciation (depreciation) of investments
and forward swap transactions 10,600,988 12,651,732 15,892,308 3,284,853
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common shares $221,395,400 $353,360,219 $234,186,496 $ 86,007,914
====================================================================================================================================
Authorized shares:
Common Unlimited Unlimited Unlimited Unlimited
Preferred Unlimited Unlimited Unlimited Unlimited
====================================================================================================================================
See accompanying notes to financial statements.
54
Statement of
OPERATIONS Year Ended August 31, 2004
INSURED INSURED CALIFORNIA CALIFORNIA
CALIFORNIA CALIFORNIA PREMIUM DIVIDEND
PREMIUM INCOME PREMIUM INCOME 2 INCOME ADVANTAGE
(NPC) (NCL) (NCU) (NAC)
------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME $ 7,579,840 $14,419,506 $6,443,414 $27,027,961
------------------------------------------------------------------------------------------------------------------------------------
EXPENSES
Management fees 960,645 1,829,431 812,288 3,379,181
Preferred shares - auction fees 112,878 238,296 107,861 438,968
Preferred shares - dividend disbursing agent fees 10,028 20,053 10,028 20,053
Shareholders' servicing agent fees and expenses 11,352 17,639 7,028 6,988
Custodian's fees and expenses 39,692 68,932 31,835 117,321
Directors'/Trustees' fees and expenses 2,150 5,215 2,058 10,962
Professional fees 13,297 18,033 6,845 22,938
Shareholders' reports - printing and mailing expenses 10,145 15,041 9,156 29,324
Stock exchange listing fees 11,002 12,566 505 12,467
Investor relations expense 14,879 21,246 8,516 40,502
Portfolio insurance expense 4,849 4,023 -- --
Other expenses 14,317 22,543 12,068 22,123
------------------------------------------------------------------------------------------------------------------------------------
Total expenses before custodian fee credit and
expense reimbursement 1,205,234 2,273,018 1,008,188 4,100,827
Custodian fee credit (5,517) (9,498) (8,090) (15,013)
Expense reimbursement -- -- -- (1,579,881)
------------------------------------------------------------------------------------------------------------------------------------
Net expenses 1,199,717 2,263,520 1,000,098 2,505,933
------------------------------------------------------------------------------------------------------------------------------------
Net investment income 6,380,123 12,155,986 5,443,316 24,522,028
------------------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENTS
Net realized gain (loss) from investments 1,060,439 6,591,551 262,244 3,065,461
Change in net unrealized appreciation (depreciation)
of investments 3,379,499 127,122 4,594,174 14,927,705
Change in net unrealized appreciation (depreciation)
of forward swap transactions -- -- -- --
------------------------------------------------------------------------------------------------------------------------------------
Net gain from investments 4,439,938 6,718,673 4,856,418 17,993,166
------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS
From net investment income (324,673) (727,279) (329,173) (1,400,301)
From accumulated net realized gains from investments (18,045) -- -- --
------------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets applicable to Common shares
from distributions to Preferred shareholders (342,718) (727,279) (329,173) (1,400,301)
------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets applicable to Common shares
from operations $10,477,343 $18,147,380 $9,970,561 $41,114,893
====================================================================================================================================
See accompanying notes to financial statements.
55
Statement of
OPERATIONS Year Ended August 31, 2004 (continued)
INSURED
CALIFORNIA CALIFORNIA INSURED CALIFORNIA
DIVIDEND DIVIDEND CALIFORNIA TAX-FREE
ADVANTAGE 2 ADVANTAGE 3 DIVIDEND ADVANTAGE
(NVX) (NZH) (NKL) (NKX)
------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME $16,198,925 $26,060,005 $17,258,841 $ 6,278,116
------------------------------------------------------------------------------------------------------------------------------------
EXPENSES
Management fees 2,096,817 3,376,035 2,228,420 842,387
Preferred shares - auction fees 275,922 469,069 295,990 112,878
Preferred shares - dividend disbursing agent fees 20,053 20,053 20,053 10,028
Shareholders' servicing agent fees and expenses 2,677 5,300 2,783 1,507
Custodian's fees and expenses 77,128 120,170 74,650 31,150
Directors'/Trustees' fees and expenses 9,037 14,765 9,413 3,673
Professional fees 22,155 31,930 23,643 13,669
Shareholders' reports - printing and mailing expenses 27,466 38,511 28,486 6,616
Stock exchange listing fees 1,293 2,108 1,334 186
Investor relations expense 28,876 46,781 30,796 12,828
Portfolio insurance expense -- -- -- --
Other expenses 19,925 22,936 18,508 8,593
------------------------------------------------------------------------------------------------------------------------------------
Total expenses before custodian fee credit and
expense reimbursement 2,581,349 4,147,658 2,734,076 1,043,515
Custodian fee credit (22,853) (12,703) (18,174) (8,720)
Expense reimbursement (984,583) (1,601,012) (1,047,792) (415,255)
------------------------------------------------------------------------------------------------------------------------------------
Net expenses 1,573,913 2,533,943 1,668,110 619,540
------------------------------------------------------------------------------------------------------------------------------------
Net investment income 14,625,012 23,526,062 15,590,731 5,658,576
------------------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENTS
Net realized gain (loss) from investments 734,631 (325,341) 657,530 40,760
Change in net unrealized appreciation (depreciation)
of investments 10,663,642 21,760,890 13,017,888 5,191,150
Change in net unrealized appreciation (depreciation)
of forward swap transactions -- -- (1,001,377) (361,125)
------------------------------------------------------------------------------------------------------------------------------------
Net gain from investments 11,398,273 21,435,549 12,674,041 4,870,785
------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS
From net investment income (861,160) (1,597,236) (854,403) (347,495)
From accumulated net realized gains from investments -- -- (143,985) --
------------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets applicable to Common shares
from distributions to Preferred shareholders (861,160) (1,597,236) (998,388) (347,495)
------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets applicable to Common shares
from operations $25,162,125 $43,364,375 $27,266,384 $10,181,866
====================================================================================================================================
See accompanying notes to financial statements.
56
Statement of
CHANGES IN NET ASSETS
INSURED CALIFORNIA INSURED CALIFORNIA CALIFORNIA PREMIUM
PREMIUM INCOME (NPC) PREMIUM INCOME 2 (NCL) INCOME (NCU)
---------------------------- ------------------------------ ---------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
8/31/04 8/31/03 8/31/04 8/31/03 8/31/04 8/31/03
------------------------------------------------------------------------------------------------------------------------------------
OPERATIONS
Net investment income $ 6,380,123 $ 6,404,829 $ 12,155,986 $ 12,528,913 $ 5,443,316 $ 5,563,735
Net realized gain (loss)
from investments 1,060,439 524,720 6,591,551 (166,188) 262,244 982,095
Change in net unrealized
appreciation (depreciation)
of investments 3,379,499 (3,552,084) 127,122 (6,281,308) 4,594,174 (5,507,976)
Change in net unrealized appreciation
(depreciation) of forward
swap transactions -- -- -- -- -- --
Distributions to
Preferred Shareholders:
From net investment income (324,673) (382,478) (727,279) (863,570) (329,173) (383,629)
From accumulated net realized
gains from investments (18,045) (42,365) -- -- -- --
------------------------------------------------------------------------------------------------------------------------------------
Net increase in net
assets applicable
to Common shares
from operations 10,477,343 2,952,622 18,147,380 5,217,847 9,970,561 654,225
------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS
From net investment income (5,990,256) (6,218,425) (11,576,056) (11,323,762) (5,058,214) (5,043,780)
From accumulated net
realized gains
from investments (339,859) (490,993) -- -- -- --
------------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets applicable to
Common shares from
distributions to
Common shareholders (6,330,115) (6,709,418) (11,576,056) (11,323,762) (5,058,214) (5,043,780)
------------------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Common shares:
Net proceeds from sale of shares -- -- -- -- -- --
Net proceeds from shares issued
to shareholders due to
reinvestment
of distributions 43,490 47,136 282,847 416,645 -- --
Preferred shares offering costs -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares from
capital share transactions 43,490 47,136 282,847 416,645 -- --
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets
applicable to Common shares 4,190,718 (3,709,660) 6,854,171 (5,689,270) 4,912,347 (4,389,555)
Net assets applicable
to Common shares
at the beginning of period 100,426,983 104,136,643 185,180,660 190,869,930 78,859,282 83,248,837
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common
shares at the end of period $104,617,701 $100,426,983 $192,034,831 $185,180,660 $83,771,629 $78,859,282
====================================================================================================================================
Undistributed (Over-distribution of)
net investment income
at the end of period $ 1,521,582 $ 1,458,167 $ 1,960,798 $ 2,165,243 $ 986,193 $ 930,997
====================================================================================================================================
See accompanying notes to financial statements.
57
Statement of
CHANGES IN NET ASSETS (continued)
CALIFORNIA CALIFORNIA CALIFORNIA
DIVIDEND ADVANTAGE (NAC) DIVIDEND ADVANTAGE 2 (NVX) DIVIDEND ADVANTAGE 3 (NZH)
----------------------------- ------------------------------ ----------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
8/31/04 8/31/03 8/31/04 8/31/03 8/31/04 8/31/03
------------------------------------------------------------------------------------------------------------------------------------
OPERATIONS
Net investment income $ 24,522,028 $ 24,749,658 $ 14,625,012 $ 14,805,600 $ 23,526,062 $ 23,556,209
Net realized gain (loss)
from investments 3,065,461 1,584,946 734,631 (1,481,214) (325,341) 2,071,600
Change in net unrealized
appreciation
(depreciation) of
investments 14,927,705 (12,671,586) 10,663,642 (7,762,388) 21,760,890 (17,764,997)
Change in net unrealized
appreciation
(depreciation) of forward
swap transactions -- -- -- -- -- --
Distributions to
Preferred Shareholders:
From net investment income (1,400,301) (1,616,891) (861,160) (1,015,700) (1,597,236) (1,834,161)
From accumulated net realized
gains from investments -- -- -- (49,489) -- --
------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets
applicable to Common shares
from operations 41,114,893 12,046,127 25,162,125 4,496,809 43,364,375 6,028,651
------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS
From net investment income (22,967,185) (21,948,762) (13,489,082) (13,178,729) (20,833,489) (20,833,487)
From accumulated net
realized gains
from investments -- -- -- (430,161) -- --
------------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets applicable
to Common shares from
distributions to
Common shareholders (22,967,185) (21,948,762) (13,489,082) (13,608,890) (20,833,489) (20,833,487)
------------------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Common shares:
Net proceeds from sale of shares -- -- -- (1,664) -- 171,736
Net proceeds from shares issued
to shareholders due to
reinvestment of distributions -- -- -- -- -- --
Preferred shares offering costs -- -- -- 21,719 -- (7,528)
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets
applicable to Common
shares from
capital share transactions -- -- -- 20,055 -- 164,208
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets
applicable to Common shares 18,147,708 (9,902,635) 11,673,043 (9,092,026) 22,530,886 (14,640,628)
Net assets applicable to
Common shares
at the beginning of period 346,918,499 356,821,134 209,722,357 218,814,383 330,829,333 345,469,961
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common
shares at the end of period $365,066,207 $346,918,499 $221,395,400 $209,722,357 $353,360,219 $330,829,333
====================================================================================================================================
Undistributed (Over-distribution of)
net investment income at
the end of period $ 4,254,915 $ 4,145,773 $ 2,094,498 $ 1,819,993 $ 2,702,190 $ 1,609,827
====================================================================================================================================
See accompanying notes to financial statements.
58
INSURED CALIFORNIA INSURED CALIFORNIA
DIVIDEND ADVANTAGE (NKL) TAX-FREE ADVANTAGE (NKX)
------------------------------ -----------------------------
FOR THE
PERIOD 11/21/02
(COMMENCEMENT
YEAR ENDED YEAR ENDED YEAR ENDED OF OPERATIONS)
8/31/04 8/31/03 8/31/04 THROUGH 8/31/03
------------------------------------------------------------------------------------------------------------------------------------
OPERATIONS
Net investment income $ 15,590,731 $ 15,106,899 $ 5,658,576 $ 3,748,945
Net realized gain (loss) from investments 657,530 2,233,096 40,760 (319,256)
Change in net unrealized appreciation
(depreciation) of investments 13,017,888 (9,779,462) 5,191,150 (1,545,173)
Change in net unrealized appreciation
(depreciation) of forward
swap transactions (1,001,377) -- (361,125) --
Distributions to Preferred Shareholders:
From net investment income (854,403) (1,085,060) (347,495) (233,784)
From accumulated net realized
gains from investments (143,985) (87,519) -- --
------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets applicable
to Common shares from operations 27,266,384 6,387,954 10,181,866 1,650,732
------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS
From net investment income (13,916,900) (13,916,900) (5,329,761) (3,552,809)
From accumulated net realized gains
from investments (1,910,520) (784,735) -- --
------------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets applicable to
Common shares from distributions to
Common shareholders (15,827,420) (14,701,635) (5,329,761) (3,552,809)
------------------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Common shares:
Net proceeds from sale of shares (1,575) 9,614 -- 83,983,125
Net proceeds from shares issued
to shareholders due to
reinvestment of distributions -- -- 15,233 4,206
Preferred shares offering costs (1,401) (7,636) -- (1,044,953)
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets applicable
to Common shares from capital
share transactions (2,976) 1,978 15,233 82,942,378
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares 11,435,988 (8,311,703) 4,867,338 81,040,301
Net assets applicable to Common shares
at the beginning of period 222,750,508 231,062,211 81,140,576 100,275
------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common
shares at the end of period $234,186,496 $222,750,508 $86,007,914 $81,140,576
====================================================================================================================================
Undistributed (Over-distribution of)
net investment income at
the end of period $ 1,051,760 $ 236,194 $ (58,110) $ (37,648)
====================================================================================================================================
See accompanying notes to financial statements.
59
Notes to
FINANCIAL STATEMENTS
1. GENERAL INFORMATION AND SIGNIFICANT ACCOUNTING POLICIES
The California Funds (the "Funds") covered in this report and their
corresponding Common share stock exchange symbols are Nuveen Insured California
Premium Income Municipal Fund, Inc. (NPC), Nuveen Insured California Premium
Income Municipal Fund 2, Inc. (NCL), Nuveen California Premium Income Municipal
Fund (NCU), Nuveen California Dividend Advantage Municipal Fund (NAC), Nuveen
California Dividend Advantage Municipal Fund 2 (NVX), Nuveen California Dividend
Advantage Municipal Fund 3 (NZH), Nuveen Insured California Dividend Advantage
Municipal Fund (NKL) and Nuveen Insured California Tax-Free Advantage Municipal
Fund (NKX). Common shares of Insured California Premium Income (NPC), Insured
California Premium Income 2 (NCL) and California Dividend Advantage (NAC) are
traded on the New York Stock Exchange while Common shares of California Premium
Income (NCU), California Dividend Advantage 2 (NVX), California Dividend
Advantage 3 (NZH), Insured California Dividend Advantage (NKL) and Insured
California Tax-Free Advantage (NKX) are traded on the American Stock Exchange.
The Funds are registered under the Investment Company Act of 1940, as amended,
as closed-end management investment companies.
Prior to the commencement of operations of Insured California Tax-Free Advantage
(NKX), the Fund had no operations other than those related to organizational
matters, the initial capital contribution of $100,275 by Nuveen Advisory Corp.
(the "Adviser"), a wholly owned subsidiary of Nuveen Investments, Inc., and the
recording of the organization expenses ($11,500) and its reimbursement by Nuveen
Investments, LLC, also a wholly owned subsidiary of Nuveen Investments, Inc.
Each Fund seeks to provide current income exempt from both regular federal and
California state income taxes, and in the case of Insured California Tax-Free
Advantage (NKX) the alternative minimum tax applicable to individuals, by
investing primarily in a diversified portfolio of municipal obligations issued
by state and local government authorities within the state of California.
The following is a summary of significant accounting policies followed by the
Funds in the preparation of their financial statements in accordance with U.S.
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, evaluations
of anticipated cash flows or collateral and general market conditions. If it is
determined that market prices for a security are unavailable or inappropriate,
the Board of Directors/Trustees of the Funds, or its designee, may establish a
fair value for the security. 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 with a current value at least equal to the amount of the
when-issued and delayed delivery purchase commitments. At August 31, 2004,
Insured California Premium Income (NPC), Insured California Premium Income 2
(NCL), California Dividend Advantage 2 (NVX), and California Dividend Advantage
3 (NZH) had outstanding when-issued purchase commitments of $1,285,608,
$2,090,420, $2,796,034 and $2,106,240, respectively. There were no such
outstanding purchase commitments in any of the other Funds.
Investment Income
Interest income, which includes the amortization of premiums and accretion of
discounts for financial reporting purposes, is recorded on an accrual basis.
60
Income Taxes
Each Fund is a separate taxpayer for federal income tax purposes. Each Fund
intends to distribute all net investment income and net capital gains to
shareholders and to otherwise comply with the requirements of Subchapter M of
the Internal Revenue Code applicable to regulated investment companies.
Therefore, no federal income tax provision is required. Furthermore, each Fund
intends to satisfy conditions which will enable interest from municipal
securities, which is exempt from regular federal and California state income
taxes, and in the case of Insured California Tax-Free Advantage (NKX) the
alternative minimum tax applicable to individuals, 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 August 31, 2004, have been
designated Exempt Interest Dividends. Net realized capital gains and ordinary
income distributions made by the Funds are subject to federal taxation.
Dividends and Distributions to Common Shareholders
Dividends from tax-exempt net investment income are declared monthly. 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 Common shareholders of tax-exempt net investment income, net
realized capital gains and/or market discount, if any, 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 U.S.
generally accepted accounting principles.
Preferred Shares
The Funds have issued and outstanding $25,000 stated value Preferred shares as a
means of effecting financial leverage. Each Fund's Preferred shares are issued
in one or more Series. The dividend rate on each Series may change every seven
days, as set pursuant to a dutch auction process by the auction agent, and is
payable at or near the end of each rate period. The number of Preferred shares
outstanding, by Series and in total, for each Fund is as follows:
INSURED INSURED
CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA
PREMIUM PREMIUM PREMIUM DIVIDEND
INCOME INCOME 2 INCOME ADVANTAGE
(NPC) (NCL) (NCU) (NAC)
--------------------------------------------------------------------------------
Number of shares:
Series M -- -- 1,720 --
Series T 1,800 1,900 -- --
Series TH -- 1,900 -- 3,500
Series F -- -- -- 3,500
--------------------------------------------------------------------------------
Total 1,800 3,800 1,720 7,000
================================================================================
INSURED INSURED
CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA
DIVIDEND DIVIDEND DIVIDEND TAX-FREE
ADVANTAGE 2 ADVANTAGE 3 ADVANTAGE ADVANTAGE
(NVX) (NZH) (NKL) (NKX)
--------------------------------------------------------------------------------
Number of shares:
Series M 2,200 3,740 -- --
Series T -- -- 2,360 --
Series TH -- 3,740 -- 1,800
Series F 2,200 -- 2,360 --
--------------------------------------------------------------------------------
Total 4,400 7,480 4,720 1,800
================================================================================
Insured California Tax-Free Advantage (NKX) issued the Preferred shares listed
above on January 17, 2003.
Insurance
Insured California Premium Income (NPC) and Insured California Premium Income 2
(NCL) 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.
Insured California Dividend Advantage (NKL) and Insured California Tax-Free
Advantage (NKX) invest at least 80% of their net assets (including net assets
applicable to Preferred shares) in municipal securities that are covered by
insurance. Each Fund may also invest up to 20% of its net assets (including net
assets applicable to Preferred shares) in municipal securities which are either
(i) backed by an escrow or trust containing sufficient U.S. Government or U.S.
Government agency securities, or (ii) municipal bonds that are rated, at the
time of investment, within the four highest grades (Baa or BBB or better by
Moody's, S&P or Fitch) or unrated but judged to be of comparable quality by the
Adviser.
61
Notes to
FINANCIAL STATEMENTS (continued)
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' Common 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, in contrast, 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 Common share net
asset value of the Funds 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.
Forward Swap Transactions
The Funds may invest in certain derivative financial instruments. The Funds' use
of forward interest rate swap transactions is intended to mitigate the negative
impact that an increase in long-term interest rates could have on Common share
net earnings. Forward interest rate swap transactions involve each Fund's
agreement with the counterparty to pay, in the future, a fixed rate payment in
exchange for the counterparty paying the Fund a variable rate payment. The
amount of the payment obligation is based on the notional or nominal amount of
the forward swap contract. The Funds may close out a contract prior to the
effective date. When a forward swap is terminated, it does not involve the
delivery of securities or other underlying assets or principal, but rather is
settled in cash. The fund intends to, but is not obligated to, terminate its
forward swaps before the effective date. Accordingly, the risk of loss with
respect to the swap counterparty on such transactions is limited to the credit
risk associated with a counterparty failing to honor its commitment. To minimize
such credit risk, all counterparties are required to segregate collateral daily
(based on the daily valuation of each swap) on behalf of each Fund with a value
approximately equal to the amount of any unrealized gain. Reciprocally, when any
of the Funds have an unrealized loss on a swap contract, the Funds have
instructed the custodian to segregate assets of the Funds as collateral with a
value approximately equal to the amount of the unrealized loss. The Funds help
reduce the credit risks associated with forward swap transactions by entering
into agreements only with counterparties the Adviser believes have the financial
resources to honor their obligations and by having the Adviser monitor the
financial stability of the swap counterparties.
Custodian Fee Credit
Each Fund has an arrangement with the custodian bank whereby certain custodian
fees and expenses are reduced by credits earned on each Fund's cash on deposit
with the bank. Such deposit arrangements are an alternative to overnight
investments.
Offering Costs
Nuveen Investments, LLC has agreed to pay all Common share offering costs (other
than the sales load) that exceed $.03 per Common share for Insured California
Dividend Advantage (NKL) and Insured California Tax-Free Advantage (NKX).
Insured California Dividend Advantage's (NKL) and Insured California Tax-Free
Advantage (NKX) share of Common share offering costs ($449,461 and $176,250,
respectively) were recorded as a reduction of the proceeds from the sale of
Common shares.
Costs incurred by Insured California Dividend Advantage (NKL) and Insured
California Tax-Free Advantage (NKX) in connection with their offering of
Preferred shares ($1,372,225 and $1,044,953, respectively) were recorded as a
reduction to paid-in surplus.
Indemnifications
Under the Funds' organizational documents, its Officers and Directors/Trustees
are indemnified against certain liabilities arising out of the performance of
their duties to the Funds. In addition, in the normal course of business, the
Funds enter into contracts that provide general indemnifications to other
parties. The Funds' maximum exposure under these arrangements is unknown as this
would involve future claims that may be made against the Funds that have not yet
occurred. However, the Funds have not had prior claims or losses pursuant to
these contracts and expect the risk of loss to be remote.
Use of Estimates
The preparation of financial statements in conformity with U.S. 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 applicable to Common shares from operations during the
reporting period. Actual results may differ from those estimates.
62
2. FUND SHARES
Transactions in Common and Preferred shares were as follows:
INSURED CALIFORNIA INSURED CALIFORNIA CALIFORNIA
PREMIUM INCOME (NPC) PREMIUM INCOME 2 (NCL) PREMIUM INCOME (NCU)
---------------------- ----------------------- -----------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
8/31/04 8/31/03 8/31/04 8/31/03 8/31/04 8/31/03
---------------------------------------------------------------------------------------------------------
Common shares:
Shares sold -- -- -- -- -- --
Shares issued to shareholders
due to reinvestment
of distributions 2,632 2,919 18,275 27,169 -- --
---------------------------------------------------------------------------------------------------------
2,632 2,919 18,275 27,169 -- --
=========================================================================================================
Preferred shares sold -- -- -- -- -- --
=========================================================================================================
CALIFORNIA DIVIDEND CALIFORNIA DIVIDEND CALIFORNIA DIVIDEND
ADVANTAGE (NAC) ADVANTAGE 2 (NVX) ADVANTAGE 3 (NZH)
---------------------- ----------------------- -----------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
8/31/04 8/31/03 8/31/04 8/31/03 8/31/04 8/31/03
---------------------------------------------------------------------------------------------------------
Common shares:
Shares sold -- -- -- -- -- --
Shares issued to shareholders
due to reinvestment
of distributions -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------
-- -- -- -- -- --
=========================================================================================================
Preferred shares sold -- -- -- -- -- --
=========================================================================================================
INSURED INSURED
CALIFORNIA DIVIDEND CALIFORNIA TAX-FREE
ADVANTAGE (NKL) ADVANTAGE (NKX)
----------------------- ----------------------------
FOR THE
PERIOD 11/21/02
(COMMENCEMENT
OF OPERATIONS)
YEAR ENDED YEAR ENDED YEAR ENDED THROUGH
8/31/04 8/31/03 8/31/04 8/31/03
---------------------------------------------------------------------------------------------------------
Common shares:
Shares sold -- -- -- 5,875,000
Shares issued to shareholders
due to reinvestment
of distributions -- -- 1,017 285
---------------------------------------------------------------------------------------------------------
-- -- 1,017 5,875,285
=========================================================================================================
Preferred shares sold -- -- -- 1,800
=========================================================================================================
3. SECURITIES TRANSACTIONS
Purchases and sales (including maturities) of investments in long-term municipal
securities during the fiscal year ended August 31, 2004, were as follows:
INSURED INSURED
CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA
PREMIUM PREMIUM PREMIUM DIVIDEND
INCOME INCOME 2 INCOME ADVANTAGE
(NPC) (NCL) (NCU) (NAC)
--------------------------------------------------------------------------------
Purchases $37,127,043 $ 99,813,434 $23,666,372 $61,642,400
Sales and maturities 47,391,120 110,917,788 25,671,007 70,802,274
================================================================================
INSURED INSURED
CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA
DIVIDEND DIVIDEND DIVIDEND TAX-FREE
ADVANTAGE 2 ADVANTAGE 3 ADVANTAGE ADVANTAGE
(NVX) (NZH) (NKL) (NKX)
--------------------------------------------------------------------------------
Purchases $42,662,858 $66,856,413 $51,972,040 $26,916,385
Sales and maturities 44,262,814 73,528,408 46,813,443 25,789,188
================================================================================
63
Notes to
FINANCIAL STATEMENTS (continued)
4. INCOME TAX INFORMATION
The following information is presented on an income tax basis. Differences
between amounts for financial statement and federal income tax purposes are
primarily due to timing differences in recognizing income on taxable market
discount securities and timing differences in recognizing certain gains and
losses on security transactions.
At August 31, 2004, the cost of investments were as follows:
INSURED INSURED
CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA
PREMIUM PREMIUM PREMIUM DIVIDEND
INCOME INCOME 2 INCOME ADVANTAGE
(NPC) (NCL) (NCU) (NAC)
--------------------------------------------------------------------------------
Cost of investments $133,737,287 $266,233,116 $119,537,477 $502,733,488
================================================================================
INSURED INSURED
CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA
DIVIDEND DIVIDEND DIVIDEND TAX-FREE
ADVANTAGE 2 ADVANTAGE 3 ADVANTAGE ADVANTAGE
(NVX) (NZH) (NKL) (NKX)
--------------------------------------------------------------------------------
Cost of investments $310,069,762 $516,101,852 $331,891,010 $126,187,279
================================================================================
Gross unrealized appreciation and gross unrealized depreciation of investments
at August 31, 2004, were as follows:
INSURED INSURED
CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA
PREMIUM PREMIUM PREMIUM DIVIDEND
INCOME INCOME 2 INCOME ADVANTAGE
(NPC) (NCL) (NCU) (NAC)
------------------------------------------------------------------------------------------------------------
Gross unrealized:
Appreciation $12,982,699 $16,359,657 $ 6,527,906 $28,972,543
Depreciation -- (233,166) (1,061,322) (1,875,313)
------------------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments $12,982,699 $16,126,491 $ 5,466,584 $27,097,230
============================================================================================================
INSURED INSURED
CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA
DIVIDEND DIVIDEND DIVIDEND TAX-FREE
ADVANTAGE 2 ADVANTAGE 3 ADVANTAGE ADVANTAGE
(NVX) (NZH) (NKL) (NKX)
------------------------------------------------------------------------------------------------------------
Gross unrealized:
Appreciation $12,618,304 $15,618,180 $17,003,578 $3,828,292
Depreciation (2,008,937) (2,959,851) (170,500) (178,340)
------------------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments $10,609,367 $12,658,329 $16,833,078 $3,649,952
============================================================================================================
64
The tax components of undistributed net investment income and net realized gains
at August 31, 2004, were as follows:
INSURED INSURED
CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA
PREMIUM PREMIUM PREMIUM DIVIDEND
INCOME INCOME 2 INCOME ADVANTAGE
(NPC) (NCL) (NCU) (NAC)
----------------------------------------------------------------------------------------------------------
Undistributed net tax-exempt income $1,758,461 $2,781,051 $1,358,334 $6,014,505
Undistributed net ordinary income * 350,095 2,752 -- --
Undistributed net long-term capital gains 784,567 -- -- 1,149,328
==========================================================================================================
INSURED INSURED
CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA
DIVIDEND DIVIDEND DIVIDEND TAX-FREE
ADVANTAGE 2 ADVANTAGE 3 ADVANTAGE ADVANTAGE
(NVX) (NZH) (NKL) (NKX)
----------------------------------------------------------------------------------------------------------
Undistributed net tax-exempt income $3,197,604 $4,445,944 $2,129,949 $388,572
Undistributed net ordinary income * 17,650 -- -- --
Undistributed net long-term capital gains -- -- 617,799 --
==========================================================================================================
* Net ordinary income consists of taxable market discount income and net
short-term capital gains, if any.
The tax character of distributions paid during the fiscal years ended August 31,
2004 and August 31, 2003, was designated for purposes of the dividends paid
deduction as follows:
INSURED INSURED
CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA
PREMIUM PREMIUM PREMIUM DIVIDEND
INCOME INCOME 2 INCOME ADVANTAGE
2004 (NPC) (NCL) (NCU) (NAC)
----------------------------------------------------------------------------------------------------------
Distributions from net tax-exempt income $6,242,243 $12,293,836 $5,391,619 $24,320,851
Distributions from net ordinary income * 59,796 -- -- --
Distributions from net long-term capital gains 357,419 -- -- --
==========================================================================================================
INSURED INSURED
CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA
DIVIDEND DIVIDEND DIVIDEND TAX-FREE
ADVANTAGE 2 ADVANTAGE 3 ADVANTAGE ADVANTAGE
2004 (NVX) (NZH) (NKL) (NKX)
----------------------------------------------------------------------------------------------------------
Distributions from net tax-exempt income $14,342,456 $22,428,037 $14,773,957 $5,673,304
Distributions from net ordinary income * -- -- 1,816,883 --
Distributions from net long-term capital gains -- -- 237,622 --
==========================================================================================================
INSURED INSURED
CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA
PREMIUM PREMIUM PREMIUM DIVIDEND
INCOME INCOME 2 INCOME ADVANTAGE
2003 (NPC) (NCL) (NCU) (NAC)
----------------------------------------------------------------------------------------------------------
Distributions from net tax-exempt income $6,123,025 $12,130,717 $5,376,229 $23,425,975
Distributions from net ordinary income * 459,740 -- 40,993 --
Distributions from net long-term capital gains 533,358 -- -- --
==========================================================================================================
INSURED INSURED
CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA
DIVIDEND DIVIDEND DIVIDEND TAX-FREE
ADVANTAGE 2 ADVANTAGE 3 ADVANTAGE ADVANTAGE
2003 (NVX) (NZH) (NKL) (NKX)
----------------------------------------------------------------------------------------------------------
Distributions from net tax-exempt income $14,174,057 $22,678,767 $15,008,754 $3,339,890
Distributions from net ordinary income * 540 -- 872,254 --
Distributions from net long-term capital gains 479,390 -- -- --
==========================================================================================================
* Net ordinary income consists of taxable market discount income and net
short-term capital gains, if any.
65
Notes to
FINANCIAL STATEMENTS (continued)
At August 31, 2004, the following Funds had unused capital loss carryforwards
available for federal income tax purposes to be applied against future capital
gains, if any. If not applied, the carryforwards will expire as follows:
INSURED INSURED
CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA
PREMIUM PREMIUM DIVIDEND DIVIDEND TAX-FREE
INCOME 2 INCOME ADVANTAGE 2 ADVANTAGE 3 ADVANTAGE
(NCL) (NCU) (NVX) (NZH) (NKX)
---------------------------------------------------------------------------------------------------------
Expiration year:
2005 $ -- $1,049,994 $ -- $ -- $ --
2006 -- -- -- -- --
2007 -- -- -- -- --
2008 -- -- -- -- --
2009 1,544,084 -- -- -- --
2010 440,510 -- -- -- --
2011 -- -- -- 4,394,597 218,696
2012 -- -- 1,479,418 323,840 --
---------------------------------------------------------------------------------------------------------
Total $1,984,594 $1,049,994 $1,479,418 $4,718,437 $218,696
=========================================================================================================
Insured California Tax-Free Advantage (NKX) elected to defer net realized losses
from investments incurred from November 1, 2003 through August 31, 2004
("post-October") losses in accordance with Federal income tax regulations.
Post-October losses of $59,857 were treated as having arisen on the first day of
the following fiscal year.
5. MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES
As approved by the Board of Directors/Trustees, effective August 1, 2004, a
complex-wide management fee structure was adopted for all funds sponsored by
Nuveen Advisory Corp. (the "Adviser"), a wholly owned subsidiary of Nuveen
Investments, Inc. and its affiliates. This fee structure separates each fund's
management fee into two components - a complex-level component, based on the
aggregate amount of all funds assets managed by the Adviser and its affiliates,
and a specific fund-level component, based only on the amount of assets within
each individual fund. This pricing structure enables Nuveen fund shareholders to
benefit from growth in the assets within each individual fund as well as from
growth in the amount of complex-wide assets managed by the Adviser and its
affiliates. Under no circumstances will this pricing structure result in a fund
paying management fees at a rate higher than would otherwise have been
applicable had the complex-wide management fee structure not been implemented.
As a consequence of this new management fee structure, the funds' effective
management fees were reduced by approximately .006% as of September 30, 2004.
Effective August 1, 2004, the annual fund-level fee, payable monthly, for each
of the Funds is based upon the average daily net assets (including net assets
attributable to Preferred shares) of each Fund as follows:
INSURED CALIFORNIA PREMIUM INCOME (NPC)
INSURED CALIFORNIA PREMIUM INCOME 2 (NCL)
AVERAGE DAILY NET ASSETS (INCLUDING NET ASSETS CALIFORNIA PREMIUM INCOME (NCU)
ATTRIBUTABLE TO PREFERRED SHARES) FUND-LEVEL FEE RATE
--------------------------------------------------------------------------------
For the first $125 million .4500%
For the next $125 million .4375
For the next $250 million .4250
For the next $500 million .4125
For the next $1 billion .4000
For the next $3 billion .3875
For net assets over $5 billion .3750
================================================================================
66
CALIFORNIA DIVIDEND ADVANTAGE (NAC)
CALIFORNIA DIVIDEND ADVANTAGE 2 (NVX)
CALIFORNIA DIVIDEND ADVANTAGE 3 (NZH)
INSURED CALIFORNIA DIVIDEND ADVANTAGE (NKL)
INSURED CALIFORNIA TAX-FREE ADVANTAGE (NKX)
AVERAGE DAILY NET ASSETS (INCLUDING NET ASSETS
ATTRIBUTABLE TO PREFERRED SHARES) FUND-LEVEL FEE RATE
--------------------------------------------------------------------------------
For the first $125 million .4500%
For the next $125 million .4375
For the next $250 million .4250
For the next $500 million .4125
For the next $1 billion .4000
For net assets over $2 billion .3750
================================================================================
Effective August 1, 2004, the annual complex-level fee, payable monthly, which
is additive to the fund-level fee, for all Nuveen sponsored funds in the U.S.,
is based on the aggregate amount of total fund assets managed as follows:
COMPLEX-LEVEL ASSETS(1) COMPLEX-LEVEL FEE RATE
--------------------------------------------------------------------------------
For the first $55 billion .2000%
For the next $1 billion .1800
For the next $1 billion .1600
For the next $3 billion .1425
For the next $3 billion .1325
For the next $3 billion .1250
For the next $5 billion .1200
For the next $5 billion .1175
For the next $15 billion .1150
For Managed Assets over $91 billion (2) .1400
================================================================================
(1) The complex-level fee component of the management fee for the funds is
calculated based upon the aggregate Managed Assets ("Managed Assets" means
the average daily net assets of each fund including assets attributable to
all types of leverage used by the Nuveen funds) of Nuveen-sponsored funds in
the U.S.
(2) With respect to the complex-wide Managed Assets over $91 billion, the fee
rate or rates that will apply to such assets will be determined at a later
date. In the unlikely event that complex-wide Managed Assets reach $91
billion prior to a determination of the complex-level fee rate or rates to
be applied to Managed Assets in excess of $91 billion, the complex-level fee
rate for such complex-wide Managed Assets shall be .1400% until such time as
a different rate or rates is determined.
Each Fund paid through July 31, 2004, an annual management fee, payable monthly,
at the rates set forth below, which were based upon the average daily net assets
(including net assets attributable to Preferred shares) of each Fund as follows:
INSURED CALIFORNIA PREMIUM INCOME (NPC)
INSURED CALIFORNIA PREMIUM INCOME 2 (NCL)
AVERAGE DAILY NET ASSETS (INCLUDING NET ASSETS CALIFORNIA PREMIUM INCOME (NCU)
ATTRIBUTABLE TO PREFERRED SHARES) MANAGEMENT FEE RATE
--------------------------------------------------------------------------------
For the first $125 million .6500%
For the next $125 million .6375
For the next $250 million .6250
For the next $500 million .6125
For the next $1 billion .6000
For the next $3 billion .5875
For net assets over $5 billion .5750
================================================================================
CALIFORNIA DIVIDEND ADVANTAGE (NAC)
CALIFORNIA DIVIDEND ADVANTAGE 2 (NVX)
CALIFORNIA DIVIDEND ADVANTAGE 3 (NZH)
INSURED CALIFORNIA DIVIDEND ADVANTAGE (NKL)
INSURED CALIFORNIA TAX-FREE ADVANTAGE (NKX)
AVERAGE DAILY NET ASSETS (INCLUDING NET ASSETS
ATTRIBUTABLE TO PREFERRED SHARES) MANAGEMENT FEE RATE
--------------------------------------------------------------------------------
For the first $125 million .6500%
For the next $125 million .6375
For the next $250 million .6250
For the next $500 million .6125
For the next $1 billion .6000
For net assets over $2 billion .5750
================================================================================
67
Notes to
FINANCIAL STATEMENTS (continued)
The management 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 or its affiliates. The Board of
Directors/Trustees has adopted a deferred compensation plan for independent
Directors/Trustees that enables Directors/Trustees to elect to defer receipt of
all or a portion of the annual compensation they are entitled to receive from
certain Nuveen advised Funds. Under the plan, deferred amounts are treated as
though equal dollar amounts had been invested in shares of select Nuveen advised
Funds.
For the first ten years of California Dividend Advantage's (NAC) operations, the
Adviser has agreed to reimburse the Fund, as a percentage of average daily net
assets (including net assets attributable to Preferred shares), for fees and
expenses in the amounts and for the time periods set forth below:
YEAR ENDING YEAR ENDING
JULY 31, JULY 31,
--------------------------------------------------------------------------------
1999* .30% 2005 .25%
2000 .30 2006 .20
2001 .30 2007 .15
2002 .30 2008 .10
2003 .30 2009 .05
2004 .30
================================================================================
* From the commencement of operations.
The Adviser has not agreed to reimburse California Dividend Advantage (NAC) for
any portion of its fees and expenses beyond July 31, 2009.
For the first ten years of California Dividend Advantage 2's (NVX) operations,
the Adviser has agreed to reimburse the Fund, as a percentage of average daily
net assets (including net assets attributable to Preferred shares), for fees and
expenses in the amounts and for the time periods set forth below:
YEAR ENDING YEAR ENDING
MARCH 31, MARCH 31,
--------------------------------------------------------------------------------
2001* .30% 2007 .25%
2002 .30 2008 .20
2003 .30 2009 .15
2004 .30 2010 .10
2005 .30 2011 .05
2006 .30
================================================================================
* From the commencement of operations.
The Adviser has not agreed to reimburse California Dividend Advantage 2 (NVX)
for any portion of its fees and expenses beyond March 31, 2011.
For the first ten years of California Dividend Advantage 3's (NZH) operations,
the Adviser has agreed to reimburse the Fund, as a percentage of average daily
net assets (including net assets attributable to Preferred shares), for fees and
expenses in the amounts and for the time periods set forth below:
YEAR ENDING YEAR ENDING
SEPTEMBER 30, SEPTEMBER 30,
--------------------------------------------------------------------------------
2001* .30% 2007 .25%
2002 .30 2008 .20
2003 .30 2009 .15
2004 .30 2010 .10
2005 .30 2011 .05
2006 .30
================================================================================
* From the commencement of operations.
68
The Adviser has not agreed to reimburse California Dividend Advantage 3 (NZH)
for any portion of its fees and expenses beyond September 30, 2011.
For the first ten years of Insured California Dividend Advantage's (NKL)
operations, the Adviser has agreed to reimburse the Fund, as a percentage of
average daily net assets (including net assets attributable to Preferred
shares), for fees and expenses in the amounts and for the time periods set forth
below:
YEAR ENDING YEAR ENDING
MARCH 31, MARCH 31,
--------------------------------------------------------------------------------
2002* .30% 2008 .25%
2003 .30 2009 .20
2004 .30 2010 .15
2005 .30 2011 .10
2006 .30 2012 .05
2007 .30
================================================================================
* From the commencement of operations.
The Adviser has not agreed to reimburse Insured California Dividend Advantage
(NKL) for any portion of its fees and expenses beyond March 31, 2012.
For the first eight years of Insured California Tax-Free Advantage's (NKX)
operations, the Adviser has agreed to reimburse the Fund, as a percentage of
average daily net assets (including net assets attributable to Preferred
shares), for fees and expenses in the amounts and for the time periods set forth
below:
YEAR ENDING YEAR ENDING
NOVEMBER 30, NOVEMBER 30,
--------------------------------------------------------------------------------
2002* .32% 2007 .32%
2003 .32 2008 .24
2004 .32 2009 .16
2005 .32 2010 .08
2006 .32
================================================================================
* From the commencement of operations.
The Adviser has not agreed to reimburse Insured California Tax-Free Advantage
(NKX) for any portion of its fees and expenses beyond November 30, 2010.
6. SUBSEQUENT EVENT - DISTRIBUTIONS TO COMMON SHAREHOLDERS
The Funds declared Common share dividend distributions from their tax-exempt net
investment income which were paid on October 1, 2004, to shareholders of record
on September 15, 2004, as follows:
INSURED INSURED
CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA
PREMIUM PREMIUM PREMIUM DIVIDEND
INCOME INCOME 2 INCOME ADVANTAGE
(NPC) (NCL) (NCU) (NAC)
--------------------------------------------------------------------------------
Dividend per share $.0770 $.0760 $.0730 $.0820
================================================================================
INSURED INSURED
CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA
DIVIDEND DIVIDEND DIVIDEND TAX-FREE
ADVANTAGE 2 ADVANTAGE 3 ADVANTAGE ADVANTAGE
(NVX) (NZH) (NKL) (NKX)
--------------------------------------------------------------------------------
Dividend per share $.0760 $.0720 $.0760 $.0755
================================================================================
69
Financial
HIGHLIGHTS
Selected data for a Common share outstanding throughout each period:
Investment Operations Less Distributions
---------------------------------------------------------------- ---------------------------------
Distributions Distributions
from Net from Net
Beginning Net Investment Capital Investment Capital
Common Realized/ Income to Gains to Income to Gains to
Share Net Unrealized Preferred Preferred Common Common
Net Asset Investment Investment Share- Share- Share- Share-
Value Income Gain (Loss) holders+ holders+ Total holders holders Total
====================================================================================================================================
INSURED CALIFORNIA
PREMIUM INCOME (NPC)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 8/31:
2004 $15.59 $ .99 $ .68 $(.05) $ -- $1.62 $(.93) $(.05) $ (.98)
2003 16.17 .99 (.45) (.06) (.01) .47 (.97) (.08) (1.05)
2002 16.04 1.05 .03 (.09) -- .99 (.86) -- (.86)
2001 15.08 1.04 .99 (.21) -- 1.82 (.86) -- (.86)
2000 14.81 1.09 .30 (.24) -- 1.15 (.88) -- (.88)
INSURED CALIFORNIA
PREMIUM INCOME 2 (NCL)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 8/31:
2004 14.60 .96 .53 (.06) -- 1.43 (.91) -- (.91)
2003 15.08 .99 (.51) (.07) -- .41 (.89) -- (.89)
2002 15.01 1.02 (.02) (.10) -- .90 (.83) -- (.83)
2001 14.09 1.01 .91 (.22) -- 1.70 (.78) -- (.78)
2000 13.70 1.02 .41 (.24) -- 1.19 (.80) -- (.80)
CALIFORNIA PREMIUM
INCOME (NCU)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 8/31:
2004 13.66 .94 .85 (.06) -- 1.73 (.88) -- (.88)
2003 14.42 .96 (.78) (.07) -- .11 (.87) -- (.87)
2002 14.22 .99 .13 (.10) -- 1.02 (.82) -- (.82)
2001 13.34 1.00 .90 (.23) -- 1.67 (.79) -- (.79)
2000 13.19 1.03 .14 (.23) -- .94 (.79) -- (.79)
====================================================================================================================================
Total Returns
-----------------
Based
Offering on
Costs and Ending Common
Preferred Common Based Share
Share Share Ending on Net
Underwriting Net Asset Market Market Asset
Discounts Value Value Value* Value*
================================================================================
INSURED CALIFORNIA
PREMIUM INCOME (NPC)
--------------------------------------------------------------------------------
Year Ended 8/31:
2004 $-- $16.23 $15.8100 11.80% 10.64%
2003 -- 15.59 15.0700 1.55 2.82
2002 -- 16.17 15.8500 6.73 6.47
2001 -- 16.04 15.6900 14.12 12.43
2000 -- 15.08 14.5625 .84 8.34
INSURED CALIFORNIA
PREMIUM INCOME 2 (NCL)
--------------------------------------------------------------------------------
Year Ended 8/31:
2004 -- 15.12 15.1800 12.71 10.02
2003 -- 14.60 14.3200 2.69 2.71
2002 -- 15.08 14.8000 5.57 6.29
2001 -- 15.01 14.8300 11.99 12.45
2000 -- 14.09 14.0000 3.58 9.21
CALIFORNIA PREMIUM
INCOME (NCU)
--------------------------------------------------------------------------------
Year Ended 8/31:
2004 -- 14.51 13.6700 12.04 12.94
2003 -- 13.66 13.0200 (.91) .69
2002 -- 14.42 14.0000 4.84 7.48
2001 -- 14.22 14.1700 12.84 12.92
2000 -- 13.34 13.3125 5.93 7.63
================================================================================
Ratios/Supplemental Data
----------------------------------------------------------------------------------------------
Before Credit/Reimbursement After Credit/Reimbursement**
------------------------------- ----------------------------
Ratio of Net Ratio of Net
Ratio of Investment Ratio of Investment
Ending Expenses Income to Expenses Income to
Net to Average Average to Average Average
Assets Net Assets Net Assets Net Assets Net Assets
Applicable Applicable Applicable Applicable Applicable Portfolio
to Common to Common to Common to Common to Common Turnover
Shares (000) Shares++ Shares++ Shares++ Shares++ Rate
=========================================================================================================================
INSURED CALIFORNIA
PREMIUM INCOME (NPC)
-------------------------------------------------------------------------------------------------------------------------
Year Ended 8/31:
2004 $104,618 1.17% 6.17% 1.16% 6.17% 25%
2003 100,427 1.17 6.13 1.16 6.14 26
2002 104,137 1.21 6.65 1.19 6.66 30
2001 103,068 1.22 6.77 1.21 6.79 21
2000 96,903 1.25 7.65 1.24 7.66 27
INSURED CALIFORNIA
PREMIUM INCOME 2 (NCL)
-------------------------------------------------------------------------------------------------------------------------
Year Ended 8/31:
2004 192,035 1.19 6.38 1.19 6.38 35
2003 185,181 1.20 6.53 1.19 6.54 22
2002 190,870 1.23 6.83 1.22 6.84 6
2001 189,633 1.24 7.01 1.24 7.02 18
2000 177,977 1.28 7.65 1.26 7.66 26
CALIFORNIA PREMIUM
INCOME (NCU)
-------------------------------------------------------------------------------------------------------------------------
Year Ended 8/31:
2004 83,772 1.23 6.62 1.22 6.63 19
2003 78,859 1.24 6.72 1.24 6.72 24
2002 83,249 1.27 7.07 1.26 7.08 10
2001 82,067 1.32 7.36 1.30 7.38 18
2000 76,878 1.38 8.09 1.36 8.10 19
=========================================================================================================================
Preferred Shares at End of Period
-------------------------------------------
Aggregate Liquidation
Amount and Market Asset
Outstanding Value Coverage
(000) Per Share Per Share
=======================================================================
INSURED CALIFORNIA
PREMIUM INCOME (NPC)
-----------------------------------------------------------------------
Year Ended 8/31:
2004 $45,000 $25,000 $83,121
2003 45,000 25,000 80,793
2002 45,000 25,000 82,854
2001 45,000 25,000 82,260
2000 45,000 25,000 78,835
INSURED CALIFORNIA
PREMIUM INCOME 2 (NCL)
-----------------------------------------------------------------------
Year Ended 8/31:
2004 95,000 25,000 75,535
2003 95,000 25,000 73,732
2002 95,000 25,000 75,229
2001 95,000 25,000 74,903
2000 95,000 25,000 71,836
CALIFORNIA PREMIUM
INCOME (NCU)
-----------------------------------------------------------------------
Year Ended 8/31:
2004 43,000 25,000 73,704
2003 43,000 25,000 70,848
2002 43,000 25,000 73,400
2001 43,000 25,000 72,714
2000 43,000 25,000 69,696
=======================================================================
* Total Investment Return on Market Value is the combination of changes in
the market price per share and the effect of reinvested dividend income and
reinvested capital gains distributions, if any, at the average price paid
per share at the time of reinvestment. Total Return on Common Share Net
Asset Value is the combination of changes in Common Share net asset value
per share, reinvested dividend income at net asset value and reinvested
capital gains distributions at net asset value, if any. Total returns are
not annualized.
** After custodian fee credit and expense reimbursement, where applicable.
+ The amounts shown are based on Common share equivalents.
++ Ratios do not reflect the effect of dividend payments to Preferred
shareholders; income ratios reflect income earned on assets attributable to
Preferred shares.
See accompanying notes to financial statements.
70-71 spread
FINANCIAL HIGHLIGHTS (continued)
Selected data for a Common share outstanding throughout each period:
Investment Operations Less Distributions
---------------------------------------------------------------- ---------------------------------
Distributions Distributions
from Net from Net
Beginning Net Investment Capital Investment Capital
Common Realized/ Income to Gains to Income to Gains to
Share Net Unrealized Preferred Preferred Common Common
Net Asset Investment Investment Share- Share- Share- Share-
Value Income Gain (Loss) holders+ holders+ Total holders holders Total
====================================================================================================================================
CALIFORNIA DIVIDEND
ADVANTAGE (NAC)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 8/31:
2004 $14.82 $1.05 $ .76 $(.06) $ -- $1.75 $(.98) $-- $ (.98)
2003 15.24 1.06 (.47) (.07) -- .52 (.94) -- (.94)
2002 15.13 1.07 -- (.10) -- .97 (.86) -- (.86)
2001 13.82 1.07 1.28 (.23) -- 2.12 (.81) -- (.81)
2000 13.33 1.07 .52 (.26) -- 1.33 (.84) -- (.84)
CALIFORNIA DIVIDEND
ADVANTAGE 2 (NVX)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 8/31:
2004 14.18 .99 .77 (.06) -- 1.70 (.91) -- (.91)
2003 14.79 1.00 (.62) (.07) -- .31 (.89) (.03) (.92)
2002 15.11 1.06 (.40) (.11) -- .55 (.87) -- (.87)
2001(a) 14.33 .34 .90 (.05) -- 1.19 (.29) -- (.29)
CALIFORNIA DIVIDEND
ADVANTAGE 3 (NZH)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 8/31:
2004 13.72 .98 .88 (.07) -- 1.79 (.86) -- (.86)
2003 14.33 .98 (.66) (.08) -- .24 (.86) -- (.86)
2002(b) 14.33 .83 .09 (.08) -- .84 (.72) -- (.72)
INSURED CALIFORNIA
DIVIDEND ADVANTAGE (NKL)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 8/31:
2004 14.60 1.02 .84 (.06) (.01) 1.79 (.91) (.13) (1.04)
2003 15.14 .99 (.49) (.07) (.01) .42 (.91) (.05) (.96)
2002(c) 14.33 .34 .92 (.03) -- 1.23 (.30) -- (.30)
INSURED CALIFORNIA
TAX-FREE ADVANTAGE (NKX)
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 8/31:
2004 13.79 .96 .84 (.06) -- 1.74 (.91) -- (.91)
2003(d) 14.33 .64 (.33) (.04) -- .27 (.60) -- (.60)
====================================================================================================================================
Total Returns
-----------------
Based
Offering on
Costs and Ending Common
Preferred Common Based Share
Share Share Ending on Net
Underwriting Net Asset Market Market Asset
Discounts Value Value Value** Value**
=====================================================================================
CALIFORNIA DIVIDEND
ADVANTAGE (NAC)
-------------------------------------------------------------------------------------
Year Ended 8/31:
2004 $ -- $15.59 $15.0000 12.07% 12.11%
2003 -- 14.82 14.3000 4.79 3.37
2002 -- 15.24 14.5500 3.67 6.75
2001 -- 15.13 14.8900 15.06 15.85
2000 -- 13.82 13.7500 (2.18) 10.80
CALIFORNIA DIVIDEND
ADVANTAGE 2 (NVX)
-------------------------------------------------------------------------------------
Year Ended 8/31:
2004 -- 14.97 14.0800 13.60 12.11
2003 -- 14.18 13.2400 (.95) 2.16
2002 -- 14.79 14.2800 (.27) 3.90
2001(a) (.12) 15.11 15.2100 3.40 7.55
CALIFORNIA DIVIDEND
ADVANTAGE 3 (NZH)
-------------------------------------------------------------------------------------
Year Ended 8/31:
2004 -- 14.65 13.3300 11.97 13.36
2003 .01 13.72 12.7100 (3.20) 1.68
2002(b) (.12) 14.33 14.0000 (1.68) 5.32
INSURED CALIFORNIA
DIVIDEND ADVANTAGE (NKL)
-------------------------------------------------------------------------------------
Year Ended 8/31:
2004 -- 15.35 14.6700 12.54 12.53
2003 -- 14.60 14.0000 (.35) 2.70
2002(c) (.12) 15.14 15.0000 2.05 7.84
INSURED CALIFORNIA
TAX-FREE ADVANTAGE (NKX)
-------------------------------------------------------------------------------------
Year Ended 8/31:
2004 -- 14.62 14.1900 11.54 12.86
2003(d) (.21) 13.79 13.5600 (5.79) .34
=====================================================================================
Ratios/Supplemental Data
----------------------------------------------------------------------------------------------
Before Credit/Reimbursement After Credit/Reimbursement***
------------------------------- -------------------------------
Ratio of Net Ratio of Net
Ratio of Investment Ratio of Investment
Ending Expenses Income to Expenses Income to
Net to Average Average to Average Average
Assets Net Assets Net Assets Net Assets Net Assets
Applicable Applicable Applicable Applicable Applicable Portfolio
to Common to Common to Common to Common to Common Turnover
Shares (000) Shares++ Shares++ Shares++ Shares++ Rate
==========================================================================================================================
CALIFORNIA DIVIDEND
ADVANTAGE (NAC)
--------------------------------------------------------------------------------------------------------------------------
Year Ended 8/31:
2004 $365,066 1.14% 6.38% .70% 6.83% 12%
2003 346,918 1.15 6.44 .70 6.88 11
2002 356,821 1.18 6.76 .72 7.22 33
2001 354,197 1.19 7.03 .72 7.50 17
2000 323,326 1.24 7.93 .75 8.43 25
CALIFORNIA DIVIDEND
ADVANTAGE 2 (NVX)
--------------------------------------------------------------------------------------------------------------------------
Year Ended 8/31:
2004 221,395 1.18 6.24 .72 6.70 13
2003 209,722 1.18 6.30 .73 6.75 40
2002 218,814 1.19 6.82 .73 7.28 32
2001(a) 223,440 1.05* 5.23* .62* 5.65* 40
CALIFORNIA DIVIDEND
ADVANTAGE 3 (NZH)
--------------------------------------------------------------------------------------------------------------------------
Year Ended 8/31:
2004 353,360 1.20 6.32 .73 6.78 13
2003 330,829 1.20 6.33 .73 6.79 48
2002(b) 345,470 1.15* 6.01* .69* 6.47* 49
INSURED CALIFORNIA
DIVIDEND ADVANTAGE (NKL)
--------------------------------------------------------------------------------------------------------------------------
Year Ended 8/31:
2004 234,186 1.18 6.28 .72 6.74 14
2003 222,751 1.18 6.00 .72 6.46 71
2002(c) 231,062 1.10* 4.98* .60* 5.47* 12
INSURED CALIFORNIA
TAX-FREE ADVANTAGE (NKX)
--------------------------------------------------------------------------------------------------------------------------
Year Ended 8/31:
2004 86,008 1.23 6.17 .73 6.67 20
2003(d) 81,141 1.14* 5.25* .67* 5.72* 45
==========================================================================================================================
Preferred Shares at End of Period
-------------------------------------------
Aggregate Liquidation
Amount and Market Asset
Outstanding Value Coverage
(000) Per Share Per Share
=======================================================================
CALIFORNIA DIVIDEND
ADVANTAGE (NAC)
-----------------------------------------------------------------------
Year Ended 8/31:
2004 $175,000 $25,000 $77,152
2003 175,000 25,000 74,560
2002 175,000 25,000 75,974
2001 175,000 25,000 75,600
2000 175,000 25,000 71,189
CALIFORNIA DIVIDEND
ADVANTAGE 2 (NVX)
-----------------------------------------------------------------------
Year Ended 8/31:
2004 110,000 25,000 75,317
2003 110,000 25,000 72,664
2002 110,000 25,000 74,731
2001(a) 110,000 25,000 75,782
CALIFORNIA DIVIDEND
ADVANTAGE 3 (NZH)
-----------------------------------------------------------------------
Year Ended 8/31:
2004 187,000 25,000 72,241
2003 187,000 25,000 69,229
2002(b) 187,000 25,000 71,186
INSURED CALIFORNIA
DIVIDEND ADVANTAGE (NKL)
-----------------------------------------------------------------------
Year Ended 8/31:
2004 118,000 25,000 74,616
2003 118,000 25,000 72,193
2002(c) 118,000 25,000 73,954
INSURED CALIFORNIA
TAX-FREE ADVANTAGE (NKX)
-----------------------------------------------------------------------
Year Ended 8/31:
2004 45,000 25,000 72,782
2003(d) 45,000 25,000 70,078
=======================================================================
* Annualized.
** Total Investment Return on Market Value is the combination of changes in
the market price per share and the effect of reinvested dividend income and
reinvested capital gains distributions, if any, at the average price paid
per share at the time of reinvestment. Total Return on Common Share Net
Asset Value is the combination of changes in Common Share net asset value
per share, reinvested dividend income at net asset value and reinvested
capital gains distributions at net asset value, if any. Total returns are
not annualized.
*** After custodian fee credit and expense reimbursement, where applicable.
+ The amounts shown are based on Common share equivalents.
++ Ratios do not reflect the effect of dividend payments to Preferred
shareholders; income ratios reflect income earned on assets attributable to
Preferred shares.
(a) For the period March 27, 2001 (commencement of operations) through August
31, 2001.
(b) For the period September 25, 2001 (commencement of operations) through
August 31, 2002.
(c) For the period March 25, 2002 (commencement of operations) through August
31, 2002.
(d) For the period November 21, 2002 (commencement of operations) through
August 31, 2003.
See accompanying notes to financial statements.
72-73 spread
Board Members
AND OFFICERS
The management of the Funds, including general supervision of the duties
performed for the Funds by the Adviser, is the responsibility of the Board
Members of the Funds. The number of board members of the Funds is currently set
at seven. None of the board members who are not "interested" persons of the
Funds has ever been a director or employee of, or consultant to, Nuveen or its
affiliates. The names and business addresses of the board members and officers
of the Funds, their principal occupations and other affiliations during the past
five years, the number of portfolios each oversees and other directorships they
hold are set forth below.
NUMBER OF
PORTFOLIOS IN
POSITION(S) YEAR FIRST PRINCIPAL OCCUPATION(S) FUND COMPLEX
NAME, BIRTHDATE HELD WITH ELECTED OR INCLUDING OTHER DIRECTORSHIPS OVERSEEN BY
AND ADDRESS THE FUNDS APPOINTED(2) DURING PAST 5 YEARS BOARD MEMBER
------------------------------------------------------------------------------------------------------------------------------------
BOARD MEMBER WHO IS AN INTERESTED PERSON OF THE FUNDS:
------------------------------------------------------------------------------------------------------------------------------------
Timothy R. Schwertfeger (1) Chairman of 1994 Chairman and Director (since 1996) of Nuveen Investments, 145
3/28/49 the Board Inc. and Nuveen Investments, LLC; Director (since 1992) and
333 W. Wacker Drive and Trustee Chairman (since 1996) of Nuveen Advisory Corp. and Nuveen
Chicago, IL 60606 Institutional Advisory Corp.; Chairman and Director (since
1997) of Nuveen Asset Management, Inc.; Director (since
1996) of Institutional Capital Corporation; Chairman and
Director (since 1999) of Rittenhouse Asset Management, Inc.;
Chairman of Nuveen Investments Advisers Inc. (since 2002).
BOARD MEMBERS WHO ARE NOT INTERESTED PERSONS OF THE FUNDS:
------------------------------------------------------------------------------------------------------------------------------------
Robert P. Bremner Board member 1997 Private Investor and Management Consultant. 145
8/22/40
333 W. Wacker Drive
Chicago, IL 60606
------------------------------------------------------------------------------------------------------------------------------------
Lawrence H. Brown Board member 1993 Retired (1989) as Senior Vice President of The Northern 145
7/29/34 Trust Company; Director, Community Advisory Board for
333 W. Wacker Drive Highland Park and Highwood, United Way of the North
Chicago, IL 60606 Shore (since 2002).
------------------------------------------------------------------------------------------------------------------------------------
Jack B. Evans Board member 1999 President, The Hall-Perrine Foundation, a private philanthropic 145
10/22/48 corporation (since 1996); Director and Vice Chairman, United
333 W. Wacker Drive Fire & Casualty Company; formerly Director, Federal Reserve
Chicago, IL 60606 Bank of Chicago; formerly, President and Chief Operating
Officer, SCI Financial Group, Inc., a regional financial
services firm.
------------------------------------------------------------------------------------------------------------------------------------
William C. Hunter Board member 2004 Dean and Distinguished Professor of Finance, School of 145
3/6/48 Business at the University of Connecticut (since 2003);
333 W. Wacker Drive previously Senior Vice President and Director of Research
Chicago, IL 60606 at the Federal Reserve Bank of Chicago (1995-2003);
Director, Credit Research Center at Georgetown University;
Director of Xerox Corporation (since 2004).
74
NUMBER OF
PORTFOLIOS IN
POSITION(S) YEAR FIRST PRINCIPAL OCCUPATION(S) FUND COMPLEX
NAME, BIRTHDATE HELD WITH ELECTED OR INCLUDING OTHER DIRECTORSHIPS OVERSEEN BY
AND ADDRESS THE FUNDS APPOINTED(2) DURING PAST 5 YEARS BOARD MEMBER
------------------------------------------------------------------------------------------------------------------------------------
BOARD MEMBERS WHO ARE NOT INTERESTED PERSONS OF THE FUNDS (CONTINUED):
------------------------------------------------------------------------------------------------------------------------------------
William J. Schneider Board member 1997 Senior Partner and Chief Operating Officer, Miller-Valentine 145
9/24/44 Group, Vice President, Miller-Valentine Realty, a construction
333 W. Wacker Drive company; Chair, Miami Valley Hospital; Chair, Dayton
Chicago, IL 60606 Development Coalition; formerly, Member, Community
Advisory Board, National City Bank, Dayton, Ohio and
Business Advisory Council, Cleveland Federal Reserve Bank.
------------------------------------------------------------------------------------------------------------------------------------
Judith M. Stockdale Board member 1997 Executive Director, Gaylord and Dorothy Donnelley 145
12/29/47 Foundation (since 1994); prior thereto, Executive Director,
333 W. Wacker Drive Great Lakes Protection Fund (from 1990 to 1994)
Chicago, IL 60606
NUMBER OF
PORTFOLIOS IN
POSITION(S) YEAR FIRST FUND COMPLEX
NAME, BIRTHDATE HELD WITH ELECTED OR PRINCIPAL OCCUPATION(S) OVERSEEN BY
AND ADDRESS THE FUNDS APPOINTED(3) DURING PAST 5 YEARS OFFICER
------------------------------------------------------------------------------------------------------------------------------------
OFFICERS OF THE FUNDS:
------------------------------------------------------------------------------------------------------------------------------------
Gifford R. Zimmerman Chief 1988 Managing Director (since 2002), Assistant Secretary and 145
9/9/56 Administrative Associate General Counsel, formerly, Vice President and
333 W. Wacker Drive Officer Assistant General Counsel of Nuveen Investments, LLC;
Chicago, IL 60606 Managing Director (since 2002), General Counsel and
Assistant Secretary, formerly, Vice President of Nuveen
Advisory Corp. and Nuveen Institutional Advisory Corp.;
Managing Director (since 2002), Assistant Secretary and
Associate General Counsel, formerly, Vice President (since
2000), of Nuveen Asset Management, Inc. Assistant
Secretary of Nuveen Investments, Inc. (since 1994); Assistant
Secretary of NWQ Investment Management Company, LLC
(since 2002); Vice President and Assistant Secretary of
Nuveen Investments Advisers Inc. (since 2002); Managing
Director, Associate General Counsel and Assistant Secretary
of Rittenhouse Asset Management, Inc. (since 2003);
Chartered Financial Analyst.
------------------------------------------------------------------------------------------------------------------------------------
Michael T. Atkinson Vice President 2000 Vice President (since 2002), formerly, Assistant Vice 145
2/3/66 and Assistant President (since 2000), previously, Associate of Nuveen
333 W. Wacker Drive Secretary Investments, LLC.
Chicago, IL 60606
75
Board Members
AND OFFICERS (CONTINUED)
NUMBER OF
PORTFOLIOS IN
POSITION(S) YEAR FIRST FUND COMPLEX
NAME, BIRTHDATE HELD WITH ELECTED OR PRINCIPAL OCCUPATION(S) OVERSEEN BY
AND ADDRESS THE FUNDS APPOINTED(3) DURING PAST 5 YEARS OFFICER
------------------------------------------------------------------------------------------------------------------------------------
OFFICERS OF THE FUNDS (CONTINUED):
------------------------------------------------------------------------------------------------------------------------------------
Peter H. D'Arrigo Vice President 1999 Vice President of Nuveen Investments, LLC (since 1999), 145
11/28/67 and Treasurer prior thereto, Assistant Vice President (since 1997); Vice
333 W. Wacker Drive President and Treasurer of Nuveen Investments, Inc. (since
Chicago, IL 60606 1999); Vice President and Treasurer of Nuveen Advisory Corp.
and Nuveen Institutional Advisory Corp (since 1999); Vice
President and Treasurer of Nuveen Asset Management, Inc.
(since 2002) and of Nuveen Investments Advisers Inc. (since
2002); Assistant Treasurer of NWQ Investment Management
Company, LLC (since 2002); Vice President and Treasurer of
Nuveen Rittenhouse Asset Management, Inc. (since 2003);
Chartered Financial Analyst.
------------------------------------------------------------------------------------------------------------------------------------
Jessica R. Droeger Vice President 2000 Vice President (since 2002) and Assistant General Counsel 145
9/24/64 and Secretary (since 1998); formerly, Assistant Vice President (since 1998)
333 W. Wacker Drive of Nuveen Investments, LLC; Vice President (since 2002)
Chicago, IL 60606 and Assistant Secretary (since 1998), formerly Assistant
Vice President of Nuveen Advisory Corp. and Nuveen
Institutional Advisory Corp.
------------------------------------------------------------------------------------------------------------------------------------
Lorna C. Ferguson Vice President 1998 Managing Director (since 2004) formerly, Vice President of 145
10/24/45 Nuveen Investments, LLC; Managing Director (since 2004)
333 W. Wacker Drive formerly, Vice President (since 1998) of Nuveen Advisory
Chicago, IL 60606 Corp. and Nuveen Institutional Advisory Corp.
------------------------------------------------------------------------------------------------------------------------------------
William M. Fitzgerald Vice President 1995 Managing Director (since 2002) of Nuveen Investments, 145
3/2/64 LLC; Managing Director (since 2001), formerly Vice President
333 W. Wacker Drive of Nuveen Advisory Corp. and Nuveen Institutional Advisory
Chicago, IL 60606 Corp. (since 1995); Managing Director of Nuveen Asset
Management, Inc. (since 2001); Vice President of Nuveen
Investment Advisers Inc. (since 2002); Chartered Financial Analyst.
------------------------------------------------------------------------------------------------------------------------------------
Stephen D. Foy Vice President 1998 Vice President (since 1993) and Funds Controller (since 1998) 145
5/31/54 and Controller of Nuveen Investments, LLC and Vice President and Funds
333 W. Wacker Drive Controller (since 1998) of Nuveen Investments, Inc.;
Chicago, IL 60606 Certified Public Accountant.
76
NUMBER OF
PORTFOLIOS IN
POSITION(S) YEAR FIRST FUND COMPLEX
NAME, BIRTHDATE HELD WITH ELECTED OR PRINCIPAL OCCUPATION(S) OVERSEEN BY
AND ADDRESS THE FUNDS APPOINTED(3) DURING PAST 5 YEARS OFFICER
------------------------------------------------------------------------------------------------------------------------------------
OFFICERS OF THE FUNDS (CONTINUED):
------------------------------------------------------------------------------------------------------------------------------------
James D. Grassi Vice President 2004 Vice President and Deputy Director of Compliance 145
4/13/56 and Chief (since August 2004) of Nuveen Investments, LLC,
333 W. Wacker Drive Compliance Nuveen Investments Advisers Inc., Nuveen Asset
Chicago, IL 60606 Officer Management Inc., Nuveen Advisory Corp., Nuveen
Institutional Advisory Corp. and Rittenhouse Asset
Management, Inc.; formerly, Senior Attorney
(1994-July 2004), The Northern Trust Company.
------------------------------------------------------------------------------------------------------------------------------------
David J. Lamb Vice President 2000 Vice President (since 2000) of Nuveen Investments, 145
3/22/63 LLC, previously Assistant Vice President (since 1999);
333 W. Wacker Drive prior thereto, Associate of Nuveen Investments, LLC;
Chicago, IL 60606 Certified Public Accountant.
------------------------------------------------------------------------------------------------------------------------------------
Tina M. Lazar Vice President 2002 Vice President (since 1999), previously, Assistant Vice 145
8/27/61 President (since 1993) of Nuveen Investments, LLC.
333 W. Wacker Drive
Chicago, IL 60606
------------------------------------------------------------------------------------------------------------------------------------
Larry W. Martin Vice President 1988 Vice President, Assistant Secretary and Assistant General 145
7/27/51 and Assistant Counsel of Nuveen Investments, LLC; Vice President and
333 W. Wacker Drive Secretary Assistant Secretary of Nuveen Advisory Corp. and Nuveen
Chicago, IL 60606 Institutional Advisory Corp.; Assistant Secretary of Nuveen
Investments, Inc. and (since 1997) Nuveen Asset Management,
Inc.; Vice President (since 2000), Assistant Secretary and
Assistant General Counsel (since 1998) of Rittenhouse Asset
Management, Inc.; Vice President and Assistant Secretary of
Nuveen Investments Advisers Inc. (since 2002); Assistant
Secretary of NWQ Investment Management Company, LLC
(since 2002).
------------------------------------------------------------------------------------------------------------------------------------
Edward F. Neild, IV Vice President 1996 Managing Director (since 2002) of Nuveen Investments, LLC; 145
7/7/65 Managing Director (since 1997), formerly Vice President
333 W. Wacker Drive (since 1996) of Nuveen Advisory Corp. and Nuveen Institutional
Chicago, IL 60606 Advisory Corp.; Managing Director of Nuveen Asset Management,
Inc. (since 1999). Chartered Financial Analyst.
(1) Mr. Schwertfeger is an "interested person" of the Funds, as defined in the
Investment Company Act of 1940, because he is an officer and board member
of the Adviser.
(2) Board members serve an indefinite term until his/her successor is elected.
The year first elected or appointed represents the year in which the board
member was first elected or appointed to any fund in the Nuveen Complex.
(3) Officers serve one year terms through July of each year. The year first
elected or appointed represents the year in which the Officer was first
elected or appointed to any fund in the Nuveen Complex.
77
Reinvest Automatically
EASILY AND CONVENIENTLY
SIDEBAR TEXT: NUVEEN MAKES REINVESTING EASY. A PHONE CALL IS ALL IT TAKES TO SET
UP YOUR REINVESTMENT ACCOUNT.
NUVEEN CLOSED-END EXCHANGE-TRADED FUNDS
DIVIDEND REINVESTMENT PLAN
Your Nuveen Closed-End Exchange-Traded Fund allows you to conveniently reinvest
dividends and/or capital gains distributions in additional fund shares.
By choosing to reinvest, you'll be able to invest money regularly and
automatically, and watch your investment grow through the power of tax-free
compounding. Just like dividends or distributions in cash, there may be times
when income or capital gains taxes may be payable on dividends or distributions
that are reinvested.
It is important to note that an automatic reinvestment plan does not ensure a
profit,nor does it protect you against loss in a declining market.
EASY AND CONVENIENT
To make recordkeeping easy and convenient, each month you'll receive a statement
showing your total dividends and distributions, the date of investment, the
shares acquired and the price per share, and the total number of shares you own.
HOW SHARES ARE PURCHASED
The shares you acquire by reinvesting will either be purchased on the open
market or newly issued by the Fund. If the shares are trading at or above net
asset value at the time of valuation, the Fund will issue new shares at the
then-current market price. If the shares are trading at less than net asset
value, shares for your account will be purchased on the open market. Dividends
and distributions received to purchase shares in the open market will normally
be invested shortly after the dividend payment date. No interest will be paid on
the dividends or distributions awaiting reinvestment. Because the market price
may increase before purchases are completed, the average purchase price per
share may exceed the market price at the time of valuation, resulting in the
acquisition of fewer shares than if the dividend or distribution had been paid
in shares issued by the Fund. A pro rata portion of any applicable brokerage
commissions on open market purchases will be paid by Plan participants. These
commissions usually will be lower than those charged on individual transactions.
FLEXIBLE
You may change your distribution option or withdraw from the Plan at any time,
should your needs or situation change. Should you withdraw, you can receive a
certificate for all whole shares credited to your reinvestment account and cash
payment for fractional shares, or cash payment for all reinvestment account
shares, less brokerage commissions and a $2.50 service fee.
You can reinvest whether your shares are registered in your name, or in the name
of a brokerage firm, bank, or other nominee. Ask your investment advisor if his
or her firm will participate on your behalf. Participants whose shares are
registered in the name of one firm may not be able to transfer the shares to
another firm and continue to participate in the Plan.
The Fund reserves the right to amend or terminate the Plan at any time. Although
the Fund reserves the right to amend the Plan to include a service charge
payable by the participants, there is no direct service charge to participants
in the Plan at this time.
For more information on the Nuveen Automatic Reinvestment Plan or to enroll in
or withdraw from the Plan, speak with your financial advisor or call us at (800)
257-8787.
78
Other Useful
INFORMATION
QUARTERLY PORTFOLIO OF INVESTMENTS AND PROXY VOTING INFORMATION
Each Fund's (i) quarterly portfolio of investments and (ii) information
regarding how the Funds voted proxies relating to portfolio securities held
during the most recent 12-month period ended June 30, 2004, are available
without charge, upon request, by calling Nuveen Investments toll-free at (800)
257-8787 or on Nuveen's web site at www.nuveen.com.
You may also obtain this and other Fund information directly from the Securities
and Exchange Commission ("SEC"). The SEC may charge a copying fee for this
information. Visit the SEC on-line at http://www.sec.gov or in person at the
SEC's Public Reference Room in Washington, D.C. Call the SEC at 1-202-942-8090
for room hours and operation. You may also request Fund information by sending
an e-mail request to publicinfo@sec.gov or by writing to the SEC's Public
References Section at 450 Fifth Street NW, Washington, D.C. 20549.
GLOSSARY OF TERMS USED IN THIS REPORT
AVERAGE ANNUAL TOTAL RETURN: This is a commonly used method to express an
investment's performance over a particular, usually multi-year time period. It
expresses the return that would have been necessary each year to equal the
investment's actual cumulative performance (including change in NAV or market
price and reinvested dividends and capital gains distributions, if any) over the
time period being considered.
AVERAGE EFFECTIVE MATURITY: The average of all the maturities of the bonds in a
fund's portfolio, computed by weighting each maturity date (the date the
security comes due) by the market value of the security. This figure does not
account for the likelihood of prepayments or the exercise of call provisions.
LEVERAGE-ADJUSTED DURATION: Duration is a measure of the sensitivity of a bond
or bond fund's value to changes when interest rates change. Generally, the
longer a bond or fund's duration, the more the price of the bond or fund will
change as interest rates change. Leverage-adjusted duration takes into account
the leveraging process for a Fund and therefore is longer than the duration of
the Fund's portfolio of bonds.
MARKET YIELD (ALSO KNOWN AS DIVIDEND YIELD OR CURRENT YIELD): An investment's
current annualized dividend divided by its current market price.
NET ASSET VALUE (NAV): A Fund's common share NAV per share is calculated by
subtracting the liabilities of the Fund (including any MuniPreferred shares
issued in order to leverage the Fund) from its total assets and then dividing
the remainder by the number of shares outstanding. Fund NAVs are calculated at
the end of each business day.
TAXABLE-EQUIVALENT YIELD: The yield necessary from a fully taxable investment to
equal, on an after-tax basis, the yield of a municipal bond investment.
BOARD OF DIRECTORS/TRUSTEES
Robert P. Bremner
Lawrence H. Brown
Jack B. Evans
William C. Hunter
William J. Schneider
Timothy R. Schwertfeger
Judith M. Stockdale
FUND MANAGER
Nuveen Advisory Corp.
333 West Wacker Drive
Chicago, IL 60606
CUSTODIAN
State Street Bank & Trust
Boston, MA
TRANSFER AGENT AND
SHAREHOLDER SERVICES
State Street Bank & Trust
Nuveen Funds
P.O. Box 43071
Providence, RI 02940-3071
(800) 257-8787
LEGAL COUNSEL
Chapman and Cutler LLP
Chicago, IL
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Ernst & Young LLP
Chicago, IL
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 fiscal year ended August 31, 2004. Any future
repurchases will be reported to shareholders in the next annual or semiannual
report.
79
Nuveen Investments:
SERVING Investors
For GENERATIONS
Photo of: 2 women looking at a photo album.
Since 1898, financial advisors and their clients have relied on Nuveen
Investments to provide dependable investment solutions. For the past century,
Nuveen Investments has adhered to the belief that the best approach to investing
is to apply conservative risk-management principles to help minimize volatility.
Building on this tradition, we today offer a range of high quality equity and
fixed-income solutions that are integral to a well-diversified core portfolio.
Our clients have come to appreciate this diversity, as well as our continued
adherence to proven, long-term investing principles.
WE OFFER MANY DIFFERENT INVESTING SOLUTIONS FOR OUR CLIENTS' DIFFERENT NEEDS.
Managing $100 billion in assets, Nuveen Investments offers access to a number of
different asset classes and investing solutions through a variety of products.
Nuveen Investments markets its capabilities under four distinct brands: Nuveen,
a leader in tax-free investments; NWQ, a leader in value-style equities;
Rittenhouse, a leader in growth-style equities; and Symphony, a leading
institutional manager of market-neutral alternative investment portfolios.
FIND OUT HOW WE CAN HELP YOU REACH YOUR FINANCIAL GOALS.
To learn more about the products and services Nuveen Investments offers and for
a prospectus, where applicable, talk to your financial advisor, or call us at
(800) 257-8787. Please read the information carefully before you invest.
Learn more
about Nuveen Funds at
WWW.NUVEEN.COM/ETF
o Share prices
o Fund details
o Daily financial news
o Investor education
o Interactive planning tools
Logo: NUVEEN Investments
EAN-B-0804D
ITEM 2. CODE OF ETHICS.
As of the end of the period covered by this report, the registrant has adopted
a code of ethics that applies to the registrant's principal executive officer,
principal financial officer, principal accounting officer or controller, or
persons performing similar functions. The registrant has posted such code of
ethics on its website at www.nuveen.com/etf.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The registrant's board of directors determined that the registrant had at least
one "audit committee financial expert" (as defined in Item 3 of Form N-CSR)
serving on its Audit Committee. The registrant's audit committee financial
expert was William E. Bennett, who was "independent" for purposes of Item 3 of
Form N-CSR.
Although Mr. Bennett served as the audit committee financial expert during the
reporting period, he unexpectedly resigned from the Board effective April 30,
2004. Since that time, the Audit Committee determined that Jack B. Evans, the
Chairman of the Audit Committee, qualifies as an audit committee financial
expert and recommended to the full Board that he be designated as such. On July
26, 2004, the full Board voted to so designate Mr. Evans. Accordingly for this
reporting period, the registrant did not have a designated "audit committee
financial expert" from April 30, 2004 to July 26, 2004. Mr. Evans, who is
independent for purposes of Item 3 of Form N-CSR, served as the registrant's
audit committee financial expert from July 26, 2004 to the end of the reporting
period on August 31, 2004
Mr. Bennett was formerly Executive Vice President and Chief Credit Officer of
First Chicago Corporation and its principal subsidiary, The First National Bank
of Chicago. As part of his role as Chief Credit Officer, Mr. Bennett set policy
as to accrual of assets/loans; designated performing/non-performing assets; set
the level of reserves against the credit portfolo; and determined the carrying
value of credit related assets and exposure. Among other things, Mr. Bennett was
also responsible for the oversight of the internal analysis function including
setting ground rules for the review and preparation of financial analysis and
financial statements for use in making credit and risk decisions for clients.
Mr. Bennett has significant experience reviewing, analyzing and evaluating
financial statements of domestic and international companies in a variety of
industries with complex accounting issues.
Mr. Evans was formerly President and Chief Operating Office of SCI Financial
Group, Inc., a full service registered broker-dealer and registered investment
adviser ("SCI"). As part of his role as President and Chief Operating Officer,
Mr. Evans actively supervised the Chief Financial Officer (the "CFO") and
actively supervised the CFO's preparation of financial statements and other
filings with various regulatory authorities. In such capacity, Mr. Evans was
actively involved in the preparation of SCI's financial statements and the
resolution of issues raised in connection therewith. Mr. Evans has also served
on the audit committee of various reporting companies. At such companies, Mr.
Evans was involved in the oversight of audits, audit plans, and the preparation
of financial statements. Mr. Evans also formerly chaired the audit committee of
the Federal Reserve Bank of Chicago.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
NUVEEN INSURED CALIFORNIA TAX-FREE ADVANTAGE MUNICIPAL FUND
The following tables show the amount of fees that Ernst & Young LLP, the Fund's
auditor, billed to the Fund during the Fund's last two full fiscal years. For
engagements with Ernst & Young LLP entered into on or after May 6, 2003, the
Audit Committee approved in advance all audit services and non-audit services
that Ernst & Young LLP provided to the Fund, except for those non-audit services
that were subject to the pre-approval exception under Rule 2-01 of Regulation
S-X (the "pre-approval exception"). The pre-approval exception for services
provided directly to the Fund waives the pre-approval requirement for services
other than audit, review or attest services if: (A) the aggregate amount of all
such services provided constitutes no more than 5% of the total amount of
revenues paid by the Fund during the fiscal year in which the services are
provided; (B) the Fund did not recognize the services as non-audit services at
the time of the engagement; and (C) the services are promptly brought to the
Audit Committee's attention, and the Committee (or its delegate) approves the
services before the audit is completed.
The Audit Committee has delegated certain pre-approval responsibilities to its
Chairman (or, in his absence, any other member of the Audit Committee).
SERVICES THAT THE FUND'S AUDITOR BILLED TO THE FUND
AUDIT FEES BILLED AUDIT-RELATED FEES TAX FEES ALL OTHER FEES
FISCAL YEAR ENDED TO FUND BILLED TO FUND BILLED TO FUND BILLED TO FUND
------------------------------------------------------------------------------------------------------------------------------------
August 31, 2004 $ 8,316 $ 0 $ 1,115 $ 2,500
------------------------------------------------------------------------------------------------------------------------------------
Percentage approved N/A 0% 0% 0%
pursuant to
pre-approval
exception
------------------------------------------------------------------------------------------------------------------------------------
August 31, 2003 $10,500 $ 0 $ 0 $ 900
------------------------------------------------------------------------------------------------------------------------------------
Percentage approved N/A 0% 0% 0%
pursuant to
pre-approval
exception
------------------------------------------------------------------------------------------------------------------------------------
The above "Tax Fees" were billed for professional services for tax advice, tax
compliance and tax planning.
SERVICES THAT THE FUND'S AUDITOR BILLED TO THE
ADVISER AND AFFILIATED FUND SERVICE PROVIDERS
The following tables show the amount of fees billed by Ernst & Young LLP to
Nuveen Advisory Corp. ("NAC" or the "Adviser"), and any entity controlling,
controlled by or under common control with NAC ("Control Affiliate") that
provides ongoing services to the Fund ("Affiliated Fund Service Provider"), for
engagements directly related to the Fund's operations and financial reporting,
during the Fund's last two full fiscal years.
The table also shows the percentage of fees subject to the pre-approval
exception. The pre-approval exception for services provided to the Adviser and
any Affiliated Fund Service Provider (other than audit, review or attest
services) waives the pre-approval requirement if: (A) the aggregate amount of
all such services provided constitutes no more than 5% of the total amount of
revenues paid to Ernst & Young LLP by the Fund, the Adviser and Affiliated Fund
Service Providers during the fiscal year in which the services are provided that
would have to be pre-approved by the Audit Committee; (B) the Fund did not
recognize the services as non-audit services at the time of the engagement; and
(C) the services are promptly brought to the Audit Committee's attention, and
the Committee (or its delegate) approves the services before the Fund's audit is
completed.
FISCAL YEAR ENDED AUDIT-RELATED FEES TAX FEES BILLED TO ALL OTHER FEES
BILLED TO ADVISER AND ADVISER AND BILLED TO ADVISER
AFFILIATED FUND AFFILIATED FUND AND AFFILIATED FUND
SERVICE PROVIDERS SERVICE PROVIDERS SERVICE PROVIDERS
------------------------------------------------------------------------------------------------------------------------------------
August 31, 2004 $ 0 $ 0 $ 0
------------------------------------------------------------------------------------------------------------------------------------
Percentage approved 0% 0% 0%
pursuant to
pre-approval
exception
------------------------------------------------------------------------------------------------------------------------------------
August 31, 2003 $ 0 $ 0 $ 0
------------------------------------------------------------------------------------------------------------------------------------
Percentage approved N/A N/A N/A
pursuant to
pre-approval
exception
------------------------------------------------------------------------------------------------------------------------------------
NON-AUDIT SERVICES
The following table shows the amount of fees that Ernst & Young LLP billed
during the Fund's last two full fiscal years for non-audit services. For
engagements entered into on or after May 6, 2003, the Audit Committee is
required to pre-approve non-audit services that Ernst & Young LLP provides to
the Adviser and any Affiliated Fund Services Provider, if the engagement related
directly to the Fund's operations and financial reporting (except for those
subject to the de minimis exception described above). The Audit Committee
requested and received information from Ernst & Young LLP about any non-audit
services that Ernst & Young LLP rendered during the Fund's last fiscal year to
the Adviser and any Affiliated Fund Service Provider. The Committee considered
this information in evaluating Ernst & Young LLP independence.
FISCAL YEAR ENDED TOTAL NON-AUDIT FEES
BILLED TO ADVISER AND
AFFILIATED FUND SERVICE TOTAL NON-AUDIT FEES
PROVIDERS (ENGAGEMENTS BILLED TO ADVISER AND
RELATED DIRECTLY TO THE AFFILIATED FUND SERVICE
TOTAL NON-AUDIT FEES OPERATIONS AND FINANCIAL PROVIDERS (ALL OTHER
BILLED TO FUND REPORTING OF THE FUND) ENGAGEMENTS) TOTAL
------------------------------------------------------------------------------------------------------------------------------------
August 31, 2004 $ 3,615 $ 0 $ 0 $ 3,615
August 31, 2003 $ 900 $ 0 $ 0 $ 900
Audit Committee Pre-Approval Policies and Procedures. Generally, the audit
committee must approve (i) all non-audit services to be performed for the Fund
by the Fund's independent accountants and (ii) all audit and non-audit services
to be performed by the Fund's independent accountants for the Affiliated Fund
Service Providers with respect to operations and financial reporting of the
Fund. Regarding tax and research projects conducted by the independent
accountants for the Fund and Affiliated Fund Service Providers (with respect to
operations and financial reports of the Fund) such engagements will be (i)
pre-approved by the audit committee if they are expected to be for amounts
greater than $10,000; (ii) reported to the audit committee chairman for his
verbal approval prior to engagement if they are expected to be for amounts under
$10,000 but greater than $5,000; and (iii) reported to the audit committee at
the next audit committee meeting if they are expected to be for an amount under
$5,000.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable at this time.
ITEM 6. SCHEDULE OF INVESTMENTS.
See Schedule I in Item 1.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
In the rare event that a municipal issuer held by the Fund were to issue a proxy
or that the Fund were to receive a proxy issued by a cash management security,
the Adviser would either engage an independent third party to determine how the
proxy should be voted or vote the proxy with the consent, or based on the
instructions, of the Fund's Board of Directors or Trustees or its
representative. In the case of a conflict of interest, the proxy would be
submitted to the applicable Fund's Board to determine how the proxy should be
voted. A member of the Adviser's legal department would oversee the
administration of the voting, and ensure that records were maintained in
accordance with Rule 204-2(c)(2) under the Investment Advisers Act of 1940 (17
CFR 275.204-2(c)(2)), reports were filed with the SEC on Form N-PX, and the
results were provided to the Board of Directors or Trustees and made available
to shareholders as required by applicable rules.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable at this time.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
In the event of a vacancy on the Board, the nominating and governance committee
receives suggestions from various sources, including shareholders, as to
suitable candidates. Suggestions should be sent in writing to Lorna Ferguson,
Vice President for Board Relations, Nuveen Investments, 333 West Wacker Drive,
Chicago, IL 60606. The nominating and governance committee sets appropriate
standards and requirements for nominations for new directors and reserves the
right to interview all candidates and to make the final selection of any new
directors.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive and principal financial officers,
or persons performing similar functions, have concluded that the
registrant's disclosure controls and procedures (as defined in Rule
30a-3(c) under the Investment Company Act of 1940, as amended (the
"1940 Act") (17 CFR 270.30a-3(c))) are effective, as of a date within
90 days of the filing date of this report that includes the disclosure
required by this paragraph, based on their evaluation of the controls
and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR
270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")(17 CFR
240.13a-15(b) or 240.15d-15(b)).
(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act
(17 CFR 270.30a-3(d)) that occurred during the registrant's last
fiscal half-year (the registrant's second fiscal half-year in the case
of an annual report) that has materially affected, or is reasonably
likely to materially affect, the registrant's internal control over
financial reporting.
ITEM 12. EXHIBITS.
File the exhibits listed below as part of this Form. Letter or number the
exhibits in the sequence indicated.
(a)(1) Any code of ethics, or amendment thereto, that is the subject of the
disclosure required by Item 2, to the extent that the registrant intends to
satisfy the Item 2 requirements through filing of an exhibit: Not applicable
because posted on registrant's website at www.nuveen.com/etf.
(a)(2) A separate certification for each principal executive officer and
principal financial officer of the registrant as required by Rule 30a-2(a) under
the 1940 Act (17 CFR 270.30a-2(a)) in the exact form set forth below: Ex-99.CERT
Attached hereto.
(a)(3) Any written solicitation to purchase securities under Rule 23c-1 under
the 1940 Act (17 CFR 270.23c-1) sent or given during the period covered by the
report by or on behalf of the registrant to 10 or more persons. Not applicable.
(b) If the report is filed under Section 13(a) or 15(d) of the Exchange Act,
provide the certifications required by Rule 30a-2(b) under the 1940 Act (17 CFR
270.30a-2(b)); Rule 13a-14(b) or Rule 15d-14(b) under the Exchange Act (17 CFR
240.13a-14(b) or 240.15d-14(b)), and Section 1350 of Chapter 63 of Title 18 of
the United States Code (18 U.S.C. 1350) as an exhibit. A certification furnished
pursuant to this paragraph will not be deemed "filed" for purposes of Section 18
of the Exchange Act (15 U.S.C. 78r), or otherwise subject to the liability of
that section. Such certification will not be deemed to be incorporated by
reference into any filing under the Securities Act of 1933 or the Exchange Act,
except to the extent that the registrant specifically incorporates it by
reference. Ex-99.906 CERT attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Nuveen Insured California Tax-Free Advantage Municipal Fund
------------------------------------------------------------
By (Signature and Title)* /s/ Jessica R. Droeger
----------------------------------------------
Jessica R. Droeger
Vice President and Secretary
Date: November 5, 2004
-------------------------------------------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ Gifford R. Zimmerman
----------------------------------------------
Gifford R. Zimmerman
Chief Administrative Officer
(Principal Executive Officer)
Date: November 5, 2004
-------------------------------------------------------------------
By (Signature and Title)* /s/ Stephen D. Foy
----------------------------------------------
Stephen D. Foy
Vice President and Controller
(Principal Financial Officer)
Date: November 5, 2004
-------------------------------------------------------------------
* Print the name and title of each signing officer under his or her signature.