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, 2006 ------------------ 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, 2006 Nuveen Investments Municipal Closed-End 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: Woman and man at the beach. Photo of: A child. 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: Woman Photo of: Man and child 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/ACCOUNTACCESS 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 twelve-month period covered by this report your Fund continued to provide you with attractive monthly tax-free income. For more details about the management strategy and performance of your Fund, please read the Portfolio Manager's Comments, the Dividend and Share Price Information, and the Performance Overview sections of this report. For some time, I've used these letters to remind you that municipal bonds can be an important building block in a well balanced investment portfolio. In addition to providing attractive tax-free monthly income, a municipal bond investment like your Fund may help you achieve and benefit from greater portfolio diversification. Portfolio diversification is a recognized way to try to reduce some of the risk that comes with investing. For more information about this important investment strategy, I encourage you to contact your personal financial advisor. "IN ADDITION TO PROVIDING ATTRACTIVE TAX-FREE MONTHLY INCOME, A MUNICIPAL BOND INVESTMENT LIKE YOUR FUND MAY HELP YOU ACHIEVE AND BENEFIT FROM GREATER PORTFOLIO DIVERSIFICATION." We also are pleased to be able to offer you a choice concerning how you receive your shareholder reports and other Fund information. As an alternative to mailed copies, you can sign up to receive future Fund reports and other Fund information by e-mail and the Internet. The inside front cover of this report contains information on how you can sign up. 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. At Nuveen Investments, our mission continues to be to assist you and your financial advisor by offering investment services and products that can help you to secure your financial objectives. Sincerely, /s/ Timothy R. Schwertfeger Timothy R. Schwertfeger Chairman of the Board October 16, 2006 Nuveen Investments California Municipal Closed-End Funds (NPC, NCL, NCU, NAC, NVX, NZH, NKL, NKX) Portfolio Manager's COMMENTS Portfolio manager Scott Romans reviews economic and municipal market conditions at both the national and state levels, key investment strategies and the annual performance of these eight Funds. Scott, who joined Nuveen Investments in 2000, has managed NCU, NAC, NVX, NZH, NKL, and NKX since 2003. He assumed portfolio management responsibility for NPC and NCL in 2005. WHAT FACTORS AFFECTED THE U.S. ECONOMY AND MUNICIPAL MARKET DURING THE ANNUAL REPORTING PERIOD ENDED AUGUST 31, 2006? During this reporting period, we saw increases in interest rates across virtually the entire yield curve, resulting in a general decline in bond prices. Through much of the period, however, rates at the longer end of the curve remained more stable than those at the short end. Between September 1, 2005 and August 31, 2006, the Federal Reserve announced increases in the fed funds rate at seven of its eight Open Market Committee meetings, leaving the rate unchanged at the August 8, 2006 session. These seven 0.25% increases raised the short-term target by 175 basis points, from 3.50% to 5.25%, its highest level since March 2001. By comparison, the yield on the benchmark 10-year U.S. Treasury note rose 71 basis points during this period to end August 2006 at 4.73%. As short-term rates approached and exceeded the levels of long-term rates, the yield curve flattened and then inverted. In the municipal market, the yield on the Bond Buyer 25 Revenue Bond Index, a widely followed measure of longer-term municipal market rates, stood at 4.91% at the end of August 2006, an increase of just four basis points from the end of August 2005. Despite rising interest rates, elevated energy prices and a softening housing market, the overall economy remained relatively resilient. After expanding at a rate of 4.2% in the third quarter of 2005, the U.S. gross domestic product (GDP) growth rate slowed to 1.8% in the fourth quarter of 2005, then rebounded sharply to 5.6% in the first quarter of 2006 (all GDP numbers annualized). In the second quarter of 2006, GDP growth moderated to 2.6% with the deceleration reflecting a decline in federal spending as well as a major downturn in residential investment. In general, the jobs picture remained positive, with national unemployment at 4.7% in August 2006, down from 4.9% in August 2005. However, the markets continued to keep a close eye on inflation trends, as the year- 4 over-year increase in the Consumer Price Index registered 3.8% in August 2006. During the first eight months of 2006, the increase in inflation was driven mainly by higher energy and transportation costs, rising at an annualized rate of 4.6%, compared with 3.4% for all of 2005. Over the 12 months ended August 2006, municipal bond issuance nationwide totaled $368.2 billion, down 7% from the previous 12 months. This total reflected the general decrease in the supply of municipal securities during 2006. During the first eight months of 2006, $235.5 billion in new securities came to market, off 15% from the same period in 2005. A major factor in 2006's drop-off was the sharp reduction in pre-refunding volume, which fell more than 56% from 2005 levels as rising interest rates made advance refundings less economically attractive. Overall, demand for municipal bonds, especially those offering higher yields, continued to be strong and broad-based, with individual investors, property and casualty insurance companies, and hedge funds all participating in the market. HOW WERE THE ECONOMIC AND MARKET ENVIRONMENTS IN CALIFORNIA DURING THIS PERIOD? California ranked as the 15th fastest growing state economy in the nation in 2005, led by the leisure and hospitality sector, professional and business services, and construction. California's $1.6 trillion economy remained diverse, with international trade, technology, financial services and defense serving as additional key drivers. Over the past six months, the state's ports benefited from the nearly 10% growth in Asian trade, while Mexico remained California's largest international trading partner. In August 2006, California's unemployment rate was 4.9%, down from 5.2% in August 2005. While approximately 20% of the jobs created in California during the 12-month period were generated by the construction industry, concerns about the disproportionate impact of a housing slowdown on the California economy have not yet been realized. Population trends in the state, with growth of more than 8% over the past five years, remained positive. 5 Due to strong revenue growth resulting from economic expansion, California's fiscal condition improved over the past 12 months, as personal income tax receipts for fiscal 2006 surpassed the previous peak posted in 2001. The state's general fund ended fiscal 2006 with an estimated balance of $6.5 billion, and plans call for carrying forward the majority of these funds into fiscal 2007 to offset a $3.7 billion deficit in the $125.6 billion fiscal 2007 budget and prepay internal and external debt. Even withimprovements, however, California's budget remained structurally imbalanced, and deficits in excess of $3 billion were forecast for fiscal 2008 and 2009. Citing the improved tax revenue trends, both Moody's and Standard & Poor's upgraded California's general obligation bonds to A1 and A+, respectively, from A2 and A in May 2006. For the 12 months ended August 31, 2006, municipal issuance in California totaled $51.0 billion, on par with issuance for the previous 12 months. During the first eight months of 2006, however, California supply declined sharply, falling 20% from that of January-August 2005, to $30.3 billion. California remained the largest state issuer in the nation for both the 12-month and year-to-date periods. A referendum authorizing the issuance of $37 billion of additional general obligation debt, down from the original proposal of $68 billion, is scheduled to appear on the state's November 2006 ballot. If passed, this referendum would increase California's general fund-supported debt by 67%. WHAT KEY STRATEGIES WERE USED TO MANAGE THE CALIFORNIA FUNDS DURING THIS REPORTING PERIOD? As short term interest rates rose and the municipal bond yield curve flattened during this 12-month period, we continued to emphasize a disciplined approach to duration1 management and yield curve positioning. Over this period, two factors caused the durations of some of these California Funds to shorten more quickly relative to the general market. First, with the flattening of the curve, we saw a major acceleration in advance refunding2 activity during the first half of this period. While these pre-refundings benefited the Funds' performance in the short-term, they also had a shortening effect on the Funds' durations. The second factor was the natural tendency of a bond's duration to shorten as time passes. During the second half of this period, we took a proactive 1 Duration is a measure of a bond's price sensitivity as interest rates change, with longer duration bonds displaying more sensitivity to these changes than bonds with shorter durations. 2 Advance refundings, also known as pre-refundings or refinancings, occur when an issuer sells new bonds and uses the proceeds to fund principal and interest payments of older, existing bonds. This process often results in lower borrowing costs for bond issuers. 6 approach to mitigating some of the potential risks associated with these changes in duration. (A fund's price performance can also be hampered if the fund's duration is too short during a period when the market rallies.) Because interest rates at the longer end of the yield curve remained relatively low over this period, we believed the most prudent approach to maintaining the Funds' durations within our preferred strategic range was the use of forward interest rate swaps, a type of derivative financial instrument. As discussed in previous shareholder reports, we began using these swaps strategies in late 2004 in an effort to control interest rate risk, that is, to reduce the impact of movements in interest rates on the value of the Funds' investments. The swaps are not an attempt to profit from correctly predicting the timing and direction of interest rate movements. Instead, our sole objective is to manage the durations of these Funds without having a negative impact on their income streams or common share dividends over the short term. In line with this objective, we placed swaps on NAC in June 2006, and NPC, NCL, and NVX in July 2006. These swaps performed as expected for the remainder of the period. In NKL and NKX, where we had implemented swaps in a previous period, the natural reduction in duration that occurs with the passage of time had brought these funds close enough to duration targets to allow us to remove the swaps during this period. (NCU and NZH did not use swaps during this period because we believed their durations were appropriate relative to the general market.) We also purchased a small number of U.S. Treasury note futures contracts for NAC. This strategy also enhanced our management of the Funds' yield curve positioning. Because of the low, longer term interest rate environment over the past few years that, as noted, made advance refundings more attractive, the potential call exposure for bonds in these Funds had become unevenly distributed along the yield curve. Forward interest rate swaps provided a way to smooth out these distributions and neutralize the Funds' over or under exposure to certain parts of the yield curve. 7 Overall, portfolio turnover was relatively light during much of this period, because the rate environment was not advantageous for active trading. In addition, as previously mentioned, issuance in California declined sharply during the first eight months of 2006. In watching the market for potential new additions for our portfolios, we focused mainly on attractively priced, premium coupon3 bonds maturing in 15 to 25 years. Overall, we believed that bonds in this part of the yield curve offered strong performance potential, better value, and attractive reward opportunities without excessive risk. Since California is a relatively high-quality state, much of the new supply was highly rated and/or insured, and the majority of our new purchases were higher-rated credits. One of our major purchases during this period was A+ rated bonds issued by the California Statewide Community Development Authority for the Kaiser Permanente Hospital System, which we added to NCU, NAC, NVX and NZH. We also continued to emphasize maintaining weightings of lower-quality bonds in the four uninsured Funds (NCU, NAC, NVX, and NZH) and NKL and NKX (which can invest up to 20% of their assets in non AAA rated insured investment-grade quality securities). However, as credit spreads continued to narrow and municipal supply tightened in 2006, we generally found fewer attractively structured lower-rated credit opportunities in the California market, and we added very little in the way of new positions at the lower end of the credit spectrum. Overall, these California Funds continued to have good exposure to the lower-rated credit categories. Given market concerns about oil prices, inflation and the actions of the Federal Reserve over the past 12 months, we did see some volatility in longer term yields over this period, with rates peaking in October 2005 and again in June 2006. These spikes in rates provided us with opportunities to sell a few of our holdings that were purchased when yields were lower and replace them with similar, newer credits with comparatively higher yields. This allowed us to maintain much of the Funds' current favorable portfolio characteristics while strengthening their future income streams. We also sold some of our holdings of state of California general obligation bonds (G.O.) when we believed that current prices made these bonds attractive sales candidates. 3 Premium coupon bonds are credits that, at the time of purchase, are trading above their par values because their coupons are higher than the current coupon levels of par bonds with similar durations. Historically, these bonds have held their value better than current coupon bonds when interest rates rise. 8 HOW DID THE FUNDS PERFORM? Individual results for these Nuveen California Funds, as well as relevant index and peer group information, are presented in the accompanying table. TOTAL RETURNS ON NET ASSET VALUE* For periods ended 8/31/06 UNINSURED FUNDS 1-YEAR 5-YEAR 10-YEAR -------------------------------------------------------------------------------- NCU 2.72% 6.62% 7.43% -------------------------------------------------------------------------------- NAC 3.63% 7.00% NA -------------------------------------------------------------------------------- NVX 3.82% 6.48% NA -------------------------------------------------------------------------------- NZH 3.81% NA NA -------------------------------------------------------------------------------- Lehman Brothers CA Tax-Exempt Bond Index4 3.32% 5.02% 6.13% -------------------------------------------------------------------------------- Lipper CA Municipal Debt Funds Average5 4.10% 6.27% 6.66% -------------------------------------------------------------------------------- INSURED FUNDS -------------------------------------------------------------------------------- NPC 2.23% 5.74% 6.79% -------------------------------------------------------------------------------- NCL 2.91% 5.83% 7.03% -------------------------------------------------------------------------------- NKL 3.62% NA NA -------------------------------------------------------------------------------- NKX 3.43% NA NA -------------------------------------------------------------------------------- Lehman Brothers Insured CA Tax-Exempt Bond Index4 3.42% 4.95% 6.20% -------------------------------------------------------------------------------- Lipper Insured CA Municipal Debt Funds Average6 3.63% 5.17% 6.48% -------------------------------------------------------------------------------- *Annualized. Past performance is not predictive of future results. Current performance may be higher or lower than the data shown. Returns do not reflect the deduction of taxes that shareholders may have to pay on Fund distributions or upon the sale of Fund shares. For additional information, see the individual Performance Overview for your Fund in this report. For the 12 months ended August 31, 2006, the total returns on NAV for NAC, NVX and NZH exceeded the return on the Lehman Brothers California Tax-Exempt Bond Index, while NCU trailed this measure. The returns on all four uninsured Funds underperformed the Lipper California peer group. Among the insured Funds, NKL outperformed the return on the Lehman Brothers Insured California Tax-Exempt Bond Index, while NKX performed 4 The Lehman Brothers California Tax-Exempt Bond Index is an unleveraged, unmanaged index comprising a broad range of investment-grade California municipal bonds, while the Lehman Brothers Insured California Tax-Exempt Bond Index is an unleveraged, unmanaged index containing a broad range of insured California municipal bonds. Results for the Lehman indexes do not reflect any expenses. 5 The Lipper California Municipal Debt Funds category average is calculated using the returns of all closed-end funds in this category for each period as follows: 1 year, 26 funds; 5 years, 15 funds ; and 10 years, 13 funds. Fund and Lipper returns assume reinvestment of dividends. 6 The Lipper Insured California Municipal Debt Funds average is calculated using the returns of all closed-end funds in its category for each period as follows: 1 year, 13 funds ; 5 years, 8 funds; and 10 years, 6 funds. Fund and Lipper returns assume reinvestment of dividends. 9 in line with the index return and NPC and NCL lagged the index return. The return on NKL performed relatively in line with the average return for the Lipper Insured California peer group, while NPC, NCL and NKX trailed the group average. Factors that influenced the Funds' returns during this period included yield curve positioning and duration management; allocations to lower-rated credits in the four uninsured Funds, NKL, and NKX; and pre-refunding activity. The use of hedges in NPC, NCL, NAC, NVX, NKL and NKX was also a positive contributor to the performances of these Funds. As the yield curve continued to flatten over the course of this period, bonds with effective maturities between two and six years were the most adversely impacted, generally underperforming long-intermediate bonds (those with maturities between 17 and 22 years) and longer bonds (those with maturities of at least 22 years). Yield curve positioning or, more specifically, greater exposure to those parts of the yield curve that performed well helped the performances of these Funds during this period. Bonds rated BBB or lower and non-rated bonds generally outperformed other credit quality sectors during this period and the four uninsured Funds as well as NKL and NKX (which can invest up to 20% of their assets in non AAA rated insured investment-grade quality securities) benefited from their allocations of lower-quality credits. The performance of this sector was largely the result of investor demand for the higher yields typically associated with lower-quality bonds, which drove up their value. As of August 31, 2006, bonds rated BBB or lower and non-rated bonds accounted for 15% to 18% of the of the four noninsured Funds, while NKL and NKX each had an allocation of 6% to bonds rated BBB. This allocation accounted for much of the performance differential between NKL and NKX and NPC and NCL, which, as 100% insured Funds, cannot hold any lower-rated credits. Among the lower-rated holdings making positive contributions to the total returns of NCU, NAC, NVX, NZH, NKL and NKX during this period were industrial development bonds and health care (including hospitals) credits, which ranked as the top performing 10 revenue sectors in the Lehman Brothers municipal index, as well as bonds backed by the 1998 master tobacco settlement agreement, which comprised approximately 1% to 4% of the portfolios of these six Funds as of August 31, 2006. As noted earlier, we continued to see a number of advance refundings, which can benefit the Funds through price appreciation and enhanced credit quality. During this reporting period, advance refundings ranged from 5% to 12% of these Funds' portfolios, with NPC and NCU representing the lower end of the range, which hampered their performance. While advance refundings generally enhanced performance for this 12-month period, the rising interest rate environment meant that the Funds' holdings of previously pre-refunded bonds tended to underperform the general municipal market. A higher number of bond calls affecting approximately 4.5% of NCU's portfolio (compared with approximately 1% in NAC, NVX and NZH) also detracted from this Fund's performance. HOW WERE THE FUNDS POSITIONED IN TERMS OF CREDIT QUALITY AND BOND CALLS AS OF AUGUST 31, 2006? We continued to believe that maintaining strong credit quality was an important requirement. As of August 31, 2006, the four uninsured Funds continued to offer excellent credit quality, with allocations of bonds rated AAA/U.S. guaranteed and AA ranging from 69% in NAC and NZH to 72% in NVX and NCU. NPC and NCL continued to be 100% invested in insured and/or U.S. guaranteed securities, while NKL and NKX, which can invest up to 20% of their assets in non AAA rated insured investment-grade quality securities, had allocated 83% and 84% of their portfolios, respectively, to insured and U.S. guaranteed bonds. As of August 31, 2006, potential call exposure for the period September 2006 through the end of 2008 ranged from 4% in NZH to 6% in NKL, to 10% in NVX and NKX, 12% in NAC, 13% in NPC and NCU, and 15% in NCL. The number of actual bond calls in all of these Funds depends largely on future market interest rates. 11 Dividend and Share Price INFORMATION All of the Funds in this report use leverage to potentially enhance opportunities for additional income for common shareholders. The benefits of leveraging are tied in part to the short-term rates leveraged Funds pay their MuniPreferred(R) shareholders. During periods of low short-term rates, these Funds generally pay lower dividends to their MuniPreferred shareholders, which can leave more earnings to support common share dividends. Conversely, when short-term interest rates rise, as they did during this reporting period, the Funds' borrowing costs also rise, reducing the extent of the benefits of leveraging and impacting the Funds' income streams and total returns. The Funds' income streams were also affected as the proceeds from older, higher-yielding bonds that matured or were called were reinvested into bonds currently available in the market, which generally offered lower yields. These factors resulted in a single monthly dividend reduction in NKL and NKX and two in NPC, NCL, NCU, NAC, NVX and NZH over the 12-month period ended August 31, 2006. Due to capital gains generated by normal portfolio activity, common shareholders of the following Funds received capital gains and net ordinary income distributions at the end of December 2005, as follows: LONG-TERM CAPITAL GAINS ORDINARY INCOME (PER SHARE) (PER SHARE) -------------------------------------------------------------------------------- NPC $0.1367 $0.0109 -------------------------------------------------------------------------------- NCU $0.0122 -- -------------------------------------------------------------------------------- NAC $0.0334 -- -------------------------------------------------------------------------------- All of the Funds in this report 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, 2006, NPC, NCL, NCU, NAC, NVX, and NZH had positive UNII balances for both financial statement and tax purposes, while NKL and NKX had negative UNII balances for financial statement purposes and positive UNII balances for tax purposes. 12 At the end of the reporting period, the Funds' share prices were trading at premiums or discounts to their NAVs as shown in the accompanying chart: 8/31/06 12-MONTH AVERAGE PREMIUM/DISCOUNT PREMIUM/DISCOUNT -------------------------------------------------------------------------------- NPC -3.21% - 1.74% -------------------------------------------------------------------------------- NCL -5.34% - 3.09% -------------------------------------------------------------------------------- NCU -4.24% - 4.65% -------------------------------------------------------------------------------- NAC +2.44% +.62% -------------------------------------------------------------------------------- NVX -2.67% - 4.26% -------------------------------------------------------------------------------- NZH -1.26% - 4.13% -------------------------------------------------------------------------------- NKL +1.29% - 2.03% -------------------------------------------------------------------------------- NKX -4.36% - 4.07% -------------------------------------------------------------------------------- 13 Nuveen Insured California Premium Income Municipal Fund, Inc. NPC Performance OVERVIEW As of August 31, 2006 Pie Chart: CREDIT QUALITY (as a % of total investments) Insured 71% U.S. Guaranteed 29% Bar Chart: 2005-2006 MONTHLY TAX-FREE DIVIDENDS PER SHARE2 Sep 0.0705 Oct 0.0705 Nov 0.0705 Dec 0.0705 Jan 0.0705 Feb 0.0705 Mar 0.067 Apr 0.067 May 0.067 Jun 0.0635 Jul 0.0635 Aug 0.0635 Line Chart: SHARE PRICE PERFORMANCE Weekly Closing Price Past performance is not predictive of future results. 9/01/05 15.91 16.08 16.14 16.21 16.21 16.35 16.2 16 16.14 16.04 16.04 15.87 15.82 15.76 15.71 15.71 15.65 15.64 15.64 15.6 15.67 15.7 15.61 15.61 15.61 15.53 15.62 15.54 15.55 15.4 15.29 15.45 15.46 15.46 15.3 15.45 15.42 15.15 15.08 14.94 14.99 15 15 15.03 14.89 15.01 14.83 14.97 14.9 14.93 14.93 14.93 14.85 14.98 14.95 15.07 15.09 15.23 15.12 15.12 15.02 15.04 14.95 14.89 14.9 14.78 14.86 14.97 14.87 14.8 14.8 14.52 14.39 14.42 14.43 14.4 14.66 14.52 14.54 14.56 14.74 14.74 14.84 14.95 14.95 15 15.15 15.36 15.44 15.45 15.44 15.41 15.46 15.51 15.75 15.7 15.76 15.75 15.87 15.7 15.47 15.38 15.4 15.29 15.34 15.5 15.73 15.89 15.88 15.88 15.87 15.8 15.8 16.1 16.1 16.25 16.2 16.05 15.68 16.08 15.59 15.72 15.9 16.04 16.25 16.29 15.9 15.86 15.85 15.85 15.87 15.62 15.41 15.5 15.3 15.25 15.2799 15.34 15.21 15.24 15.35 15.35 15.35 15.42 15.57 15.23 15.39 15.4 15.46 15.5 15.65 15.42 15.45 15.85 15.8 15.84 15.34 15.34 15.65 15.76 15.51 15.3 15.49 15.85 15.85 15.61 15.61 15.67 15.6 15.45 15.7 15.86 15.8 15.57 15.43 15.24 15.69 15.53 15.6799 15.41 15.4101 15.4101 15.43 15.42 15.41 15.35 15.03 14.67 14.55 14.69 14.73 14.74 14.72 14.78 14.81 14.83 14.85 14.73 14.71 14.71 14.82 14.71 14.76 14.73 14.82 14.77 14.8 14.66 14.84 14.63 14.68 14.8 14.76 14.88 14.83 14.73 14.74 14.7 14.62 14.6105 14.68 14.64 14.64 14.61 14.61 14.58 14.69 14.69 14.7601 14.78 14.66 14.83 14.76 14.79 14.79 14.81 14.88 14.89 15.02 14.97 14.84 14.8001 14.85 14.88 14.95 15.01 15.09 15.11 15.11 15.07 14.98 15 14.98 8/31/06 15.08 FUND SNAPSHOT ------------------------------------ Common Share Price $15.08 ------------------------------------ Common Share Net Asset Value $15.58 ------------------------------------ Premium/(Discount) to NAV -3.21% ------------------------------------ Market Yield 5.05% ------------------------------------ Taxable-Equivalent Yield1 7.71% ------------------------------------ Net Assets Applicable to Common Shares ($000) $100,581 ------------------------------------ Average Effective Maturity on Securities (Years) 15.37 ------------------------------------ Leverage-Adjusted Duration 8.26 ------------------------------------ AVERAGE ANNUAL TOTAL RETURN (Inception 11/19/92) ------------------------------------ ON SHARE PRICE ON NAV ------------------------------------ 1-Year 1.00% 2.23% ------------------------------------ 5-Year 5.66% 5.74% ------------------------------------ 10-Year 7.04% 6.79% ------------------------------------ INDUSTRIES (as a % of total investments) ------------------------------------ U.S. Guaranteed 29.3% ------------------------------------ Tax Obligation/General 21.8% ------------------------------------ Tax Obligation/Limited 17.8% ------------------------------------ Water and Sewer 17.7% ------------------------------------ Education and Civic Organizations 6.0% ------------------------------------ Other 7.4% ------------------------------------ 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%. When comparing this Fund to investments that generate qualified dividend income, the Taxable-Equivalent Yield is lower. 2 The Fund paid shareholders capital gains and net ordinary income distributions in December 2005 of $0.1476 per share. 14 Nuveen Insured California Premium Income Municipal Fund 2, Inc. NCL Performance OVERVIEW As of August 31, 2006 Pie Chart: CREDIT QUALITY (as a % of total investments) Insured 74% U.S. Guaranteed 26% Bar Chart: 2005-2006 MONTHLY TAX-FREE DIVIDENDS PER SHARE Sep 0.066 Oct 0.066 Nov 0.066 Dec 0.066 Jan 0.066 Feb 0.066 Mar 0.0625 Apr 0.0625 May 0.0625 Jun 0.059 Jul 0.059 Aug 0.059 Line Chart: SHARE PRICE PERFORMANCE Weekly Closing Price Past performance is not predictive of future results. 9/01/05 15.13 15.21 15.32 15.25 15.29 15.2 15.2 15.18 15.08 15.15 15.18 15.08 14.91 14.96 14.99 14.98 15 14.89 15.09 15.03 15.15 15.1 15.11 15.17 15.15 14.97 15.05 14.9 14.82 14.78 14.65 14.65 14.62 14.7 14.67 14.8 14.79 14.61 14.8 14.55 14.49 14.5 14.46 14.4 14.3 14.45 14.45 14.43 14.4 14.19 14 13.99 13.86 13.9 13.8701 13.86 13.82 13.84 13.78 13.78 13.85 13.78 13.74 13.85 13.98 13.89 13.9 13.92 13.87 13.8 13.76 13.73 13.69 13.62 13.67 13.68 13.72 13.76 13.78 13.8 13.89 13.92 13.99 14.2 14.2 14.48 14.39 14.44 14.44 14.46 14.44 14.4 14.5 14.45 14.38 14.4 14.54 14.54 14.53 14.54 14.47 14.54 14.59 14.7 14.69 14.71 14.77 14.81 14.85 14.8 14.86 14.9 14.89 14.87 14.81 15 15 15.15 15.01 14.98 14.98 14.96 14.95 15.09 15.17 15.11 15.05 14.9 14.8 14.82 14.8 14.71 14.77 14.699 14.68 14.77 14.76 14.82 14.71 14.74 14.69 14.66 14.39 14.47 14.55 14.45 14.62 14.57 14.65 14.67 14.53 14.53 14.54 14.75 14.82 14.79 14.64 14.59 14.52 14.45 14.5 14.56 14.5399 14.55 14.45 14.42 14.42 14.59 14.53 14.53 14.46 14.46 14.46 14.35 14.28 14.19 14.18 14.36 14.5 14.25 14.14 14.13 13.95 13.97 13.97 14.08 14.1299 14.12 14.06 14.04 14.12 14.13 14.07 14.16 14.1 14.15 14.16 14.15 13.98 14.02 13.97 13.91 13.88 13.96 14.06 14.03 13.79 13.79 13.8899 13.79 13.7899 13.89 13.9 13.86 13.9699 13.99 14.05 13.8901 13.83 13.69 13.7199 13.52 13.6501 13.71 13.69 13.78 13.91 13.94 13.95 14.14 13.98 13.95 14.06 14.12 14.21 14.1 14 14.07 14.1 14.12 14.1 14.11 14.15 14.16 14.19 14.14 14.22 14.11 14.1 14.21 14.16 14.18 14.2399 8/31/06 14.1899 FUND SNAPSHOT ------------------------------------ Common Share Price $14.19 ------------------------------------ Common Share Net Asset Value $14.99 ------------------------------------ Premium/(Discount) to NAV -5.34% ------------------------------------ Market Yield 4.99% ------------------------------------ Taxable-Equivalent Yield1 7.62% ------------------------------------ Net Assets Applicable to Common Shares ($000) $190,571 ------------------------------------ Average Effective Maturity on Securities (Years) 15.20 ------------------------------------ Leverage-Adjusted Duration 8.44 ------------------------------------ AVERAGE ANNUAL TOTAL RETURN (Inception 3/18/93) ------------------------------------ ON SHARE PRICE ON NAV ------------------------------------ 1-Year -0.63% 2.91% ------------------------------------ 5-Year 5.00% 5.83% ------------------------------------ 10-Year 7.19% 7.03% ------------------------------------ INDUSTRIES (as a % of total investments) ------------------------------------ Tax Obligation/Limited 27.3% ------------------------------------ U.S. Guaranteed 25.9% ------------------------------------ Water and Sewer 15.8% ------------------------------------ Tax Obligation/General 14.3% ------------------------------------ Utilities 6.6% ------------------------------------ Other 10.1% ------------------------------------ 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%. When comparing this Fund to investments that generate qualified dividend income, the Taxable-Equivalent Yield is lower. 15 Nuveen California Premium Income Municipal Fund NCU Performance OVERVIEW As of August 31, 2006 Pie Chart: CREDIT QUALITY (as a % of total investments) AAA/U.S. Guaranteed 66% AA 6% A 10% BBB 13% BB or Lower 4% N/R 1% Bar Chart: 2005-2006 MONTHLY TAX-FREE DIVIDENDS PER SHARE2 Sep 0.067 Oct 0.067 Nov 0.067 Dec 0.067 Jan 0.067 Feb 0.067 Mar 0.0635 Apr 0.0635 May 0.0635 Jun 0.0595 Jul 0.0595 Aug 0.0595 Line Chart: SHARE PRICE PERFORMANCE Weekly Closing Price Past performance is not predictive of future results. 9/01/05 14.43 14.43 14.48 14.5 14.44 14.48 14.5 14.35 14.3 14.23 14.1 14.06 14.03 14.09 14.19 13.89 13.91 13.79 13.95 13.9 13.87 13.98 13.95 13.96 13.95 13.95 14 13.9 13.92 13.88 13.9 13.88 13.92 13.9 13.92 13.96 14.05 14.09 14 14.03 14 14.02 14.07 14.07 13.95 13.92 13.94 13.82 13.69 13.69 13.7 13.55 13.8 13.8 13.76 13.76 13.7 13.49 13.45 13.4 13.5 13.55 13.5 13.57 13.9 13.78 13.83 13.81 13.74 13.77 13.77 13.9 14.11 14 13.92 13.87 13.73 13.66 13.67 13.64 13.51 13.49 13.54 13.62 13.62 13.651 13.75 13.88 14 14 14.02 14.2 14.12 14.1 13.96 14 14.02 14.13 14.12 14.15 14.15 14.3 14.2 14.2 14.23 14.5 14.23 14.24 14.5 14.45 14.6 14.5 14.44 14.3 14.28 14.26 14.25 14.26 14 14.03 14.02 14.18 14.12 14.15 14.25 14.2 13.96 14.03 13.99 14.08 14.0001 13.92 13.85 13.92 13.92 14.11 14.03 14.06 14.04 14.02 14.099 14.1 14 14.02 13.95 13.86 13.9 14.01 13.9 14.05 13.901 13.87 13.92 13.8 13.82 13.67 13.6 13.55 13.46 13.58 13.55 13.65 13.69 13.8 13.65 13.66 13.66 13.82 13.83 14.05 13.99 14.05 13.97 14.05 14.05 14.02 14.04 13.95 13.76 13.7401 13.88 13.95 13.81 13.9 13.72 13.7301 13.85 13.83 13.8 13.85 13.98 13.91 13.86 13.72 13.73 13.67 13.65 13.5416 13.44 13.51 13.4 13.36 13.37 13.28 13.11 13.11 13.17 13.03 13.07 13.06 13.16 13.22 13.21 13.22 13.32 13.28 13.22 13.25 13.3 13.3 13.28 13.2899 13.3 13.35 13.4 13.54 13.62 13.58 13.6301 13.83 13.98 13.89 13.87 13.88 13.88 13.96 13.95 14 13.87 13.66 13.65 13.83 13.85 13.86 13.97 13.95 13.95 13.95 13.88 13.99 13.99 13.91 13.95 8/31/06 14.01 FUND SNAPSHOT ------------------------------------ Common Share Price $14.01 ------------------------------------ Common Share Net Asset Value $14.63 ------------------------------------ Premium/(Discount) to NAV -4.24% ------------------------------------ Market Yield 5.10% ------------------------------------ Taxable-Equivalent Yield1 7.79% ------------------------------------ Net Assets Applicable to Common Shares ($000) $84,467 ------------------------------------ Average Effective Maturity on Securities (Years) 16.85 ------------------------------------ Leverage-Adjusted Duration 7.86 ------------------------------------ AVERAGE ANNUAL TOTAL RETURN (Inception 6/18/93) ------------------------------------ ON SHARE PRICE ON NAV ------------------------------------ 1-Year 3.14% 2.72% ------------------------------------ 5-Year 6.05% 6.62% ------------------------------------ 10-Year 7.86% 7.43% ------------------------------------ INDUSTRIES (as a % of total investments) ------------------------------------ Tax Obligation/Limited 32.6% ------------------------------------ Tax Obligation/General 19.8% ------------------------------------ Water and Sewer 12.1% ------------------------------------ U.S. Guaranteed 11.2% ------------------------------------ Health Care 9.6% ------------------------------------ Other 14.7% ------------------------------------ 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%. When comparing this Fund to investments that generate qualified dividend income, the Taxable-Equivalent Yield is lower. 2 The Fund paid shareholders a capital gains distribution in December 2005 of $0.0122 per share. 16 Nuveen California Dividend Advantage Municipal Fund NAC Performance OVERVIEW As of August 31, 2006 Pie Chart: CREDIT QUALITY (as a % of total investments) AAA/U.S. Guaranteed 66% AA 3% A 16% BBB 8% N/R 7% Bar Chart: 2005-2006 MONTHLY TAX-FREE DIVIDENDS PER SHARE2 Sep 0.0785 Oct 0.0785 Nov 0.0785 Dec 0.0785 Jan 0.0785 Feb 0.0785 Mar 0.0745 Apr 0.0745 May 0.0745 Jun 0.0705 Jul 0.0705 Aug 0.0705 Line Chart: SHARE PRICE PERFORMANCE Weekly Closing Price Past performance is not predictive of future results. 9/01/05 16.09 16.14 16.12 16.16 16.11 16.2 16.15 16.06 16.04 15.89 15.85 15.83 15.77 15.89 15.81 15.65 15.63 15.59 15.65 15.61 15.67 15.71 15.72 15.67 15.64 15.56 15.54 15.59 15.28 15.03 14.99 15 14.97 14.95 14.9 15 15.08 15.06 14.98 14.9 14.97 15.03 15 14.99 15.08 14.95 15.04 15 15.04 14.91 14.92 14.89 14.89 14.94 14.9401 14.91 14.99 15.06 15.2 15.3 15.35 15.26 15.35 15.63 15.64 15.55 15.6 15.6 15.73 15.87 15.8 15.8 15.94 15.85 15.87 16.05 15.86 15.89 15.9 15.96 15.96 15.96 16.0299 16.1399 16.1399 16.29 16.35 16.27 16.3 16.27 16.2 16.18 16.1 16.01 15.97 15.97 16.1 16.1 16.15 16.16 16.16 16.15 16.24 16.21 16.21 16.32 16.3199 16.34 16.31 16.15 16.15 16.05 16.05 15.89 15.9 16.04 15.981 15.93 16.03 15.91 15.9 15.9 15.98 16.01 16.16 16.03 16.01 15.93 15.98 16.03 16.2 16 15.89 15.76 15.84 15.87 15.84 15.85 15.7 15.6 15.65 15.65 15.6 15.58 15.67 15.67 15.74 15.82 15.67 15.64 15.71 15.57 15.46 15.19 15.15 15.01 15.01 15.18 15.3 15.29 15.23 15.3 15.26 15.25 15.25 15.24 15.24 15.41 15.43 15.4 15.44 15.63 15.5 15.54 15.84 15.57 15.34 15.48 15.33 15.2 15.25 15.23 15.37 15.44 15.5 15.57 15.7 15.56 15.52 15.78 15.87 15.77 15.83 15.85 15.7 15.63 15.55 15.22 15.2899 15.31 15.25 15.34 15.35 15.28 15.3 15.21 15.12 15.1 15.15 15.15 15.18 15.34 15.26 15.28 15.45 15.3651 15.32 15.14 15.16 15.28 15.24 15.23 15.41 15.4 15.45 15.41 15.37 15.35 15.44 15.46 15.6901 15.71 15.74 15.84 15.89 15.89 15.82 15.7 15.89 15.8699 15.66 15.74 15.65 15.67 15.53 15.58 15.68 15.6 15.79 15.73 15.77 15.88 15.91 8/31/06 15.97 FUND SNAPSHOT ------------------------------------ Common Share Price $15.97 ------------------------------------ Common Share Net Asset Value $15.59 ------------------------------------ Premium/(Discount) to NAV 2.44% ------------------------------------ Market Yield 5.30% ------------------------------------ Taxable-Equivalent Yield1 8.09% ------------------------------------ Net Assets Applicable to Common Shares ($000) $365,516 ------------------------------------ Average Effective Maturity on Securities (Years) 16.87 ------------------------------------ Leverage-Adjusted Duration 7.73 ------------------------------------ AVERAGE ANNUAL TOTAL RETURN (Inception 5/26/99) ------------------------------------ ON SHARE PRICE ON NAV ------------------------------------ 1-Year 5.47% 3.63% ------------------------------------ 5-Year 8.03% 7.00% ------------------------------------ Since Inception 7.33% 7.51% ------------------------------------ INDUSTRIES (as a % of total investments) ------------------------------------ Tax Obligation/Limited 24.5% ------------------------------------ U.S. Guaranteed 15.0% ------------------------------------ Tax Obligation/General 13.6% ------------------------------------ Transportation 12.8% ------------------------------------ Health Care 7.3% ------------------------------------ Education and Civic Organizations 7.3% ------------------------------------ Housing/Multifamily 5.5% ------------------------------------ Utilities 5.4% ------------------------------------ Water and Sewer 5.3% ------------------------------------ Other 3.3% ------------------------------------ 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%. When comparing this Fund to investments that generate qualified dividend income, the Taxable-Equivalent Yield is lower. 2 The Fund paid shareholders a capital gains distribution in December 2005 of $0.0334 per share. 17 Nuveen California Dividend Advantage Municipal Fund 2 NVX Performance OVERVIEW As of August 31, 2006 Pie Chart: CREDIT QUALITY (as a % of total investments) AAA/U.S. Guaranteed 71% AA 1% A 12% BBB 9% N/R 7% Bar Chart: 2005-2006 MONTHLY TAX-FREE DIVIDENDS PER SHARE Sep 0.0725 Oct 0.0725 Nov 0.0725 Dec 0.0725 Jan 0.0725 Feb 0.0725 Mar 0.0685 Apr 0.0685 May 0.0685 Jun 0.0655 Jul 0.0655 Aug 0.0655 Line Chart: SHARE PRICE PERFORMANCE Weekly Closing Price Past performance is not predictive of future results. 9/01/05 15.16 15.25 15.17 15.24 15.1 15.12 15.14 15.05 14.95 14.87 14.85 14.94 14.9 14.98 14.95 14.7 14.6 14.43 14.49 14.68 14.57 14.6 14.65 14.64 14.52 14.4 14.42 14.23 14.09 13.97 13.75 13.86 13.86 13.91 13.97 13.97 14.11 13.98 13.9 14.16 14.12 14.14 14.14 14.24 14.17 14.12 14.19 14.19 14.2 14.11 13.95 13.9 14.03 14 14.05 14.06 14.12 14.04 14.16 14.19 14.2 14.25 14.2 14.21 14.25 14.2 14.25 14.35 14.34 14.5 14.5 14.44 14.44 14.6 14.47 14.46 14.54 14.57 14.6 14.59 14.57 14.6 14.67 14.52 14.52 14.75 14.82 14.85 15 15.24 15.32 15.05 15.21 15.35 15.14 15.27 15.14 15.2 15.17 15.35 15 15.06 15.2 15.07 15.11 15.23 15.23 15.1 15.1 14.84 14.99 15.04 14.92 14.8 14.75 14.8 14.8 14.84 14.9 14.8 14.82 14.9 14.79 14.92 14.9 14.949 14.63 14.75 14.76 14.57 14.57 14.67 14.67 14.62 14.5 14.52 14.55 14.6 14.53 14.47 14.55 14.51 14.43 14.59 14.52 14.54 14.55 14.6 14.4 14.4 14.42 14.41 14.41 14.6 14.45 14.35 14.3 14.38 14.45 14.3576 14.42 14.42 14.2 14.19 14.28 14.35 14.35 14.4 14.29 14.31 14.38 14.65 14.72 14.85 14.75 14.54 14.67 14.8 14.73 14.65 14.76 14.75 14.78 14.65 14.8 14.7 14.73 14.68 14.72 14.77 14.9 14.93 14.92 14.94 14.77 14.75 14.68 14.45 14.48 14.43 14.49 14.54 14.36 14.26 14.13 14.14 14.07 14.07 14.14 14.1 14.15 14.28 14.15 14.18 14.2 14.19 14.12 14.09 14.09 14.19 14.1 14 14.11 14.05 14.17 14.31 14.23 14.44 14.52 14.7 14.68 14.7 14.7 14.74 14.81 14.74 14.68 14.77 14.7701 14.69 14.52 14.66 14.67 14.77 14.75 14.68 14.66 14.68 14.75 14.8 14.8 14.87 14.9 8/31/06 14.95 FUND SNAPSHOT ------------------------------------ Common Share Price $14.95 ------------------------------------ Common Share Net Asset Value $15.36 ------------------------------------ Premium/(Discount) to NAV -2.67% ------------------------------------ Market Yield 5.26% ------------------------------------ Taxable-Equivalent Yield1 8.03% ------------------------------------ Net Assets Applicable to Common Shares ($000) $227,160 ------------------------------------ Average Effective Maturity on Securities (Years) 14.99 ------------------------------------ Leverage-Adjusted Duration 8.42 ------------------------------------ AVERAGE ANNUAL TOTAL RETURN (Inception 3/27/01) ------------------------------------ ON SHARE PRICE ON NAV ------------------------------------ 1-Year 4.19% 3.82% ------------------------------------ 5-Year 6.10% 6.48% ------------------------------------ Since Inception 6.25% 7.38% ------------------------------------ INDUSTRIES (as a % of total investments) ------------------------------------ Tax Obligation/Limited 20.0% ------------------------------------ U.S. Guaranteed 16.9% ------------------------------------ Tax Obligation/General 12.9% ------------------------------------ Education and Civic Organizations 10.3% ------------------------------------ Water and Sewer 9.7% ------------------------------------ Health Care 8.5% ------------------------------------ Housing/Multifamily 7.9% ------------------------------------ Transportation 6.8% ------------------------------------ Other 7.0% ------------------------------------ 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%. When comparing this Fund to investments that generate qualified dividend income, the Taxable-Equivalent Yield is lower. 18 Nuveen California Dividend Advantage Municipal Fund 3 NZH Performance OVERVIEW As of August 31, 2006 Pie Chart: CREDIT QUALITY (as a % of total investments) AAA/U.S. Guaranteed 68% AA 1% A 15% BBB 8% N/R 8% Bar Chart: 2005-2006 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 0.068 Apr 0.068 May 0.068 Jun 0.0655 Jul 0.0655 Aug 0.0655 Line Chart: SHARE PRICE PERFORMANCE Weekly Closing Price Past performance is not predictive of future results. 9/01/05 14.5 14.64 14.65 14.72 14.73 14.75 14.71 14.67 14.57 14.46 14.41 14.53 14.53 14.45 14.19 14.08 14.1 13.86 14 14.04 14.01 14 14.02 13.89 13.86 13.9 14 13.95 13.83 13.66 13.8 13.69 13.7 13.73 13.64 13.73 13.62 13.58 13.57 13.61 13.69 13.74 13.8 13.84 13.9 13.78 13.99 13.8 13.69 13.66 13.57 13.65 13.76 13.67 13.83 13.71 13.641 13.66 13.62 13.85 13.88 14.03 13.89 13.88 13.84 13.83 14 14.05 14.01 13.95 14.04 13.95 14.05 14.02 13.93 13.9 14.06 14.08 14.15 14.13 14.18 14.2001 14.39 14.45 14.45 14.48 14.49 14.5 14.66 14.64 14.71 14.64 14.57 14.64 14.58 14.52 14.54 14.58 14.53 14.59 14.65 14.85 14.77 14.67 14.54 14.6 14.65 14.74 14.65 14.51 14.5 14.59 14.57 14.47 14.3 14.42 14.56 14.56 14.55 14.49 14.46 14.5 14.5 14.64 14.71 14.75 14.56 14.53 14.43 14.42 14.4 14.4 14.3 14.25 14.21 14.29 14.41 14.25 14.23 14.2 14.38 14.29 14.39 14.4 14.5 14.5 14.5 14.6 14.5 14.5 14.55 14.5 14.43 14.35 14.19 14.2 14.01 14.08 14.22 14.1 14.11 14.14 14.11 14.15 14.2 14.3 14.3 14.4 14.42 14.24 14.45 14.39 14.41 14.45 14.48 14.36 14.31 14.42 14.3 14.18 14.33 14.38 14.35 14.26 14.24 14.35 14.45 14.47 14.43 14.53 14.52 14.45 14.5 14.52 14.46 14.43 14.5 14.19 14.1 14.12 14.22 14.1932 14.26 14.12 14.05 14.07 14.02 14.02 14.05 14.01 14.11 14.2 14.2 14.24 14.16 14.15 14.09 14.05 14.08 14.13 14.08 14.06 14.2 14.09 14.22 14.28 14.21 14.28 14.31 14.4 14.5 14.53 14.56 14.49 14.54 14.61 14.56 14.66 14.58 14.55 14.39 14.49 14.5226 14.52 14.6 14.52 14.58 14.6 14.64 14.67 14.74 14.83 14.82 8/31/06 14.84 FUND SNAPSHOT ------------------------------------ Common Share Price $14.84 ------------------------------------ Common Share Net Asset Value $15.03 ------------------------------------ Premium/(Discount) to NAV -1.26% ------------------------------------ Market Yield 5.30% ------------------------------------ Taxable-Equivalent Yield1 8.09% ------------------------------------ Net Assets Applicable to Common Shares ($000) $362,473 ------------------------------------ Average Effective Maturity on Securities (Years) 16.56 ------------------------------------ Leverage-Adjusted Duration 7.81 ------------------------------------ AVERAGE ANNUAL TOTAL RETURN (Inception 9/25/01) ------------------------------------ ON SHARE PRICE ON NAV ------------------------------------ 1-Year 8.50% 3.81% ------------------------------------ Since Inception 6.08% 6.98% ------------------------------------ INDUSTRIES (as a % of total investments) ------------------------------------ Tax Obligation/Limited 27.6% ------------------------------------ Tax Obligation/General 16.5% ------------------------------------ Health Care 11.0% ------------------------------------ Water and Sewer 9.1% ------------------------------------ U.S. Guaranteed 8.0% ------------------------------------ Transportation 7.1% ------------------------------------ Housing/Multifamily 6.7% ------------------------------------ Utilities 6.1% ------------------------------------ Education and Civic Organizations 5.2% ------------------------------------ Other 2.7% ------------------------------------ 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%. When comparing this Fund to investments that generate qualified dividend income, the Taxable-Equivalent Yield is lower. 19 Nuveen Insured California Dividend Advantage Municipal Fund NKL Performance OVERVIEW As of August 31, 2006 Pie Chart: CREDIT QUALITY (as a % of total investments) Insured 74% U.S. Guaranteed 9% GNMA/FNMA Guaranteed 1% AA (Uninsured) 3% A (Uninsured) 7% BBB (Uninsured) 6% Bar Chart: 2005-2006 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 0.068 Jul 0.068 Aug 0.068 Line Chart: SHARE PRICE PERFORMANCE Weekly Closing Price Past performance is not predictive of future results. 9/01/05 15.01 15.07 15.1 15.16 15.22 15.25 15.33 15.31 15.31 15.26 15.3 15.23 15.22 15.04 14.89 14.97 14.92 14.82 15 14.99 14.97 14.86 14.99 15.03 15.03 14.96 15.01 14.96 14.63 14.5 14.25 14.32 14.3 14.39 14.36 14.47 14.71 14.65 14.6 14.67 14.6 14.59 14.56 14.52 14.54 14.42 14.45 14.42 14.45 14.35 14.35 14.25 14.24 14.12 14.1 14.12 14.15 14.2001 14.2 14.25 14.38 14.29 14.2899 14.35 14.41 14.41 14.57 14.53 14.6 14.71 14.79 14.661 14.89 14.88 14.95 14.91 14.99 15.01 14.89 14.88 14.88 14.98 15.02 15.1 15.1 15.0801 15.14 15.01 15.21 15.25 15.23 15.22 15.18 15.37 15.23 15.23 15.24 15.2 15.2 15.09 15.15 15.0701 15.14 15.07 15.12 15.3 15.16 15.2999 15.22 15.21 15.17 15.13 15.24 15.18 15.19 15.16 15.16 15.14 15.16 15.06 15.35 15.3101 15.36 15.25 15.25 15.29 15.2 15.25 15.3199 15.3 15.25 15.27 15.16 15.069 15.08 15.1 15.09 15.18 15.25 15.2 15.34 15.41 15.26 15.3 15.32 15.22 15.28 15.34 15.25 15.35 15.34 15.2 15.33 15.35 15.25 15.239 15.18 15.23 15.33 15.42 15.36 15.1 15.1 15.26 15.25 15.29 15.29 15.14 15.25 15.34 15.48 15.4 15.27 15.45 15.5 15.4 15.35 15.38 15.42 15.16 15.15 15.14 15.24 15.13 15.39 15.31 15.42 15.43 15.46 15.57 15.46 15.37 15.52 15.43 15.34 15.46 15.4 15.01 15.0599 14.98 15.02 14.89 14.9999 14.96 14.93 14.85 14.65 14.6 14.66 14.64 14.5701 14.78 14.9 14.78 14.85 14.8001 14.82 14.74 14.9 14.92 14.74 14.81 14.7899 14.85 14.86 15.06 14.93 15.06 15.15 15.08 15.25 15.34 15.35 15.56 15.3 15.3599 15.39 15.46 15.36 15.35 15.35 15.4 15.4099 15.41 15.46 15.46 15.42 15.46 15.41 15.51 15.5 15.57 15.5999 8/31/06 15.7 FUND SNAPSHOT ------------------------------------ Common Share Price $15.70 ------------------------------------ Common Share Net Asset Value $15.50 ------------------------------------ Premium/(Discount) to NAV 1.29% ------------------------------------ Market Yield 5.20% ------------------------------------ Taxable-Equivalent Yield1 7.94% ------------------------------------ Net Assets Applicable to Common Shares ($000) $236,525 ------------------------------------ Average Effective Maturity on Securities (Years) 18.34 ------------------------------------ Leverage-Adjusted Duration 7.58 ------------------------------------ AVERAGE ANNUAL TOTAL RETURN (Inception 3/25/02) ------------------------------------ ON SHARE PRICE ON NAV ------------------------------------ 1-Year 10.72% 3.62% ------------------------------------ Since Inception 7.54% 8.11% ------------------------------------ INDUSTRIES (as a % of total investments) ------------------------------------ Tax Obligation/Limited 28.6% ------------------------------------ Tax Obligation/General 20.6% ------------------------------------ Water and Sewer 11.8% ------------------------------------ Utilities 11.5% ------------------------------------ U.S. Guaranteed 9.0% ------------------------------------ Education and Civic Organizations 5.8% ------------------------------------ Other 12.7% ------------------------------------ 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%. When comparing this Fund to investments that generate qualified dividend income, the Taxable-Equivalent Yield is lower. 20 Nuveen Insured California Tax-Free Advantage Municipal Fund NKX Performance OVERVIEW As of August 31, 2006 Pie Chart: CREDIT QUALITY (as a % of total investments) Insured 81% U.S. Guaranteed 3% A (Uninsured) 10% BBB (Uninsured) 6% Bar Chart: 2005-2006 MONTHLY TAX-FREE DIVIDENDS PER SHARE Sep 0.063 Oct 0.063 Nov 0.063 Dec 0.063 Jan 0.063 Feb 0.063 Mar 0.063 Apr 0.063 May 0.063 Jun 0.059 Jul 0.059 Aug 0.059 Line Chart: SHARE PRICE PERFORMANCE Weekly Closing Price Past performance is not predictive of future results. 9/01/05 14.44 14.59 14.5 14.64 14.66 14.61 14.67 14.7 14.57 14.42 14.41 14.41 14.46 14.46 14.56 14.59 14.7 14.51 14.53 14.21 14.35 14.5 14.55 14.6 14.6 14.26 14.28 14.45 14.31 14.3 14.31 14.31 14.3 14.25 14.16 14.2 13.92 13.87 13.83 13.84 13.89 14.08 14 13.93 13.77 13.95 13.82 13.93 13.93 13.63 13.89 13.8501 13.6 13.5799 13.55 13.49 13.4 13.54 13.54 13.6 13.59 13.46 13.67 13.62 13.55 13.49 13.45 13.44 13.45 13.45 13.74 13.45 13.42 13.37 13.43 13.36 13.44 13.51 13.48 13.58 13.95 13.67 13.52 13.689 13.689 13.76 13.93 14.07 14.2 14.25 14.27 14.3 14.3 14.24 14.31 14.43 14.45 14.35 14.6 14.48 14.52 14.41 14.41 14.48 14.34 14.44 14.42 14.74 14.6599 14.6 14.41 14.41 14.44 14.39 14.35 14.3 14.25 14.04 14.2 14.22 14.16 14.17 14.1601 14.46 14.4 14.48 14.47 14.35 14.6 14.26 14.36 14.32 14.21 14.3199 14.31 14.4 14.13 14.35 14.25 14.28 14.3 14.37 14.28 14.39 14.361 14.37 14.4 14.48 14.49 14.5 14.51 14.52 14.32 14.52 14.39 14.49 14.45 14.41 14.39 14.32 14.3 14.31 14.43 14.48 14.39 14.43 14.43 14.46 14.52 14.67 14.53 14.49 14.37 14.48 14.42 14.1 14.02 14.06 14.4 14.2 14.15 14.15 14.06 14.1 14.11 14.11 14.18 14.34 14.29 14.51 14.8899 14.47 14.4 14.16 14.3 14.43 14.34 14 13.9 13.8 14 13.92 13.95 14.08 13.62 13.69 13.42 13.4 13.51 13.5675 13.68 13.83 13.76 13.83 13.79 13.71 13.71 13.7 13.76 13.36 13.68 13.72 13.8 14 13.99 14.05 14.39 14.3 14.4 14.28 14.26 14.25 14.66 14.35 14.45 14.5399 14.5 14.56 14.51 14.54 14.32 14.31 14.25 14.2 14.05 14.08 14.09 14.09 14 13.96 14.12 14.12 14.19 8/31/06 14.27 FUND SNAPSHOT ------------------------------------ Common Share Price $14.27 ------------------------------------ Common Share Net Asset Value $14.92 ------------------------------------ Premium/(Discount) to NAV -4.36% ------------------------------------ Market Yield 4.96% ------------------------------------ Taxable-Equivalent Yield1 7.57% ------------------------------------ Net Assets Applicable to Common Shares ($000) $87,775 ------------------------------------ Average Effective Maturity on Securities (Years) 18.80 ------------------------------------ Leverage-Adjusted Duration 7.56 ------------------------------------ AVERAGE ANNUAL TOTAL RETURN (Inception 11/21/02) ------------------------------------ ON SHARE PRICE ON NAV ------------------------------------ 1-Year 4.56% 3.43% ------------------------------------ Since Inception 4.49% 6.90% ------------------------------------ INDUSTRIES (as a % of total investments) ------------------------------------ Tax Obligation/General 31.5% ------------------------------------ Tax Obligation/Limited 29.0% ------------------------------------ Transportation 9.4% ------------------------------------ Health Care 8.7% ------------------------------------ Water and Sewer 8.1% ------------------------------------ Other 13.3% ------------------------------------ 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%. When comparing this Fund to investments that generate qualified dividend income, the Taxable-Equivalent Yield is lower. 21 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 (the "Funds"), as of August 31, 2006, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of 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. We were not engaged to perform an audit of the Funds' internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds' internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of August 31, 2006, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial positions of Nuveen Insured 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, 2006, the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein in conformity with U.S. generally accepted accounting principles. /s/ Ernst & Young LLP Chicago, Illinois October 13, 2006 22 Nuveen Insured California Premium Income Municipal Fund, Inc. (NPC) Portfolio of INVESTMENTS August 31, 2006 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ EDUCATION AND CIVIC ORGANIZATIONS - 8.5% (6.0% OF TOTAL INVESTMENTS) $ 2,125 California Educational Facilities Authority, Student Loan Revenue 3/08 at 102.00 Aaa $ 2,201,819 Bonds, Cal Loan Program, Series 2001A, 5.400%, 3/01/21 - MBIA Insured (Alternative Minimum Tax) 2,500 California State University, Systemwide Revenue Bonds, 5/14 at 100.00 AAA 2,684,025 Series 2004A, 5.000%, 11/01/18 - FSA Insured 1,500 California State University, Systemwide Revenue Bonds, 5/15 at 100.00 AAA 1,589,130 Series 2005A, 5.000%, 11/01/25 - AMBAC Insured 2,000 University of California, Revenue Bonds, Multi-Purpose Projects, 9/10 at 101.00 AAA 2,097,220 Series 2002O, 5.125%, 9/01/31 - FGIC Insured ------------------------------------------------------------------------------------------------------------------------------------ 8,125 Total Education and Civic Organizations 8,572,194 ------------------------------------------------------------------------------------------------------------------------------------ HEALTH CARE - 4.7% (3.3% OF TOTAL INVESTMENTS) 3,000 California Health Facilities Financing Authority, Insured Revenue 8/08 at 101.00 AAA 3,113,160 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 1,588,755 Certificates of Participation, Sutter Health Obligated Group, Series 1999, 5.500%, 8/15/19 - FSA Insured ------------------------------------------------------------------------------------------------------------------------------------ 4,500 Total Health Care 4,701,915 ------------------------------------------------------------------------------------------------------------------------------------ HOUSING/SINGLE FAMILY - 0.1% (0.2% OF TOTAL INVESTMENTS) 130 California Housing Finance Agency, Single Family Mortgage 2/07 at 102.00 AAA 133,215 Bonds II, Series 1997A-1, 6.000%, 8/01/20 - MBIA Insured (Alternative Minimum Tax) ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/GENERAL - 31.2% (21.8% OF TOTAL INVESTMENTS) 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 2,055,583 1,250 5.250%, 8/01/25 - MBIA Insured 8/14 at 100.00 AAA 1,359,513 2,000 California, General Obligation Veterans Welfare Bonds, 6/07 at 101.00 AAA 2,037,740 Series 2001BZ, 5.375%, 12/01/24 - MBIA Insured (Alternative Minimum Tax) 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 2,813,696 1,775 5.250%, 9/01/22 - FGIC Insured 9/14 at 100.00 AAA 1,935,780 1,225 Fresno Unified School District, Fresno County, California, 2/13 at 103.00 AAA 1,450,633 General Obligation Refunding Bonds, Series 1998A, 6.550%, 8/01/20 - MBIA Insured 1,180 Jurupa Unified School District, Riverside County, California, 8/13 at 100.00 AAA 1,254,600 General Obligation Bonds, Series 2004, 5.000%, 8/01/21 - FGIC Insured 1,130 Los Angeles Community College District, Los Angeles County, 8/15 at 100.00 AAA 1,200,501 California, General Obligation Bonds, Series 2005A, 5.000%, 8/01/24 - FSA Insured 3,000 Pomona Unified School District, Los Angeles County, California, 8/11 at 103.00 AAA 3,460,260 General Obligation Refunding Bonds, Series 1997A, 6.500%, 8/01/19 - MBIA Insured 160 Roseville Joint Union High School District, Placer County, 8/15 at 100.00 AAA 169,371 California, General Obligation Bonds, Series 2006B, 5.000%, 8/01/27 - FGIC Insured 3,000 Sacramento City Unified School District, Sacramento County, 7/15 at 100.00 Aaa 3,174,300 California, General Obligation Bonds, Series 2005, 5.000%, 7/01/27 - MBIA Insured 23 Nuveen Insured California Premium Income Municipal Fund, Inc. (NPC) (continued) Portfolio of INVESTMENTS August 31, 2006 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/GENERAL (continued) 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 $ 1,437,288 3,500 5.000%, 7/01/22 - FSA Insured 7/11 at 102.00 AAA 3,768,170 4,895 5.000%, 7/01/23 - FSA Insured 7/11 at 102.00 AAA 5,270,055 ------------------------------------------------------------------------------------------------------------------------------------ 28,920 Total Tax Obligation/General 31,387,490 ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/LIMITED - 25.5% (17.8% OF TOTAL INVESTMENTS) 1,000 Brea and Olinda Unified School District, Orange County, 8/11 at 101.00 AAA 1,046,110 California, Certificates of Participation Refunding, 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 1,288,070 1,615 5.000%, 12/01/21 - AMBAC Insured 12/13 at 100.00 AAA 1,702,678 195 Capistrano Unified School District, Orange County, California, 9/15 at 100.00 AAA 206,667 Special Tax Bonds, Community Facilities District, Series 2005, 5.000%, 9/01/24 - FGIC Insured 1,900 Corona-Norco Unified School District, Riverside County, 9/12 at 100.00 AAA 2,024,488 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 Participation, 1/11 at 100.00 AAA 5,196,700 Department of Public Services Facility Phase II, Series 2001, 5.250%, 1/01/34 - AMBAC Insured 150 Hesperia Community Redevelopment Agency, California, 9/15 at 100.00 AAA 159,669 Tax Allocation Bonds, Series 2005A, 5.000%, 9/01/20 - XLCA Insured 1,400 Indian Wells Redevelopment Agency, California, Tax Allocation 9/13 at 100.00 AAA 1,477,308 Bonds, Consolidated Whitewater Project Area, Series 2003A, 5.000%, 9/01/20 - AMBAC Insured 345 Los Angeles Community Redevelopment Agency, California, 9/15 at 100.00 Aaa 358,634 Lease Revenue Bonds, Manchester Social Services Project, Series 2005, 5.000%, 9/01/37 - AMBAC Insured 895 Los Angeles Community Redevelopment Agency, California, 12/14 at 100.00 AAA 951,815 Tax Allocation Bonds, Bunker Hill Project, Series 2004A, 5.000%, 12/01/20 - FSA Insured 1,000 Los Angeles County Metropolitan Transportation Authority, 7/13 at 100.00 AAA 1,067,970 California, Proposition A First Tier Senior Sales Tax Revenue Bonds, Series 2003B, 5.000%, 7/01/19 - MBIA Insured 165 Rialto Redevelopment Agency, California, Tax Allocation Bonds, 9/15 at 100.00 AAA 171,608 Merged Project Area, Series 2005A, 5.000%, 9/01/35 - XLCA Insured 205 Roseville, California, Certificates of Participation, Public 8/13 at 100.00 AAA 213,936 Facilities, Series 2003A, 5.000%, 8/01/25 - AMBAC Insured 3,000 Santa Clara County Financing Authority, California, Lease 11/07 at 102.00 AAA 3,094,380 Revenue Bonds, VMC Facility Replacement Project, Series 1997A, 5.000%, 11/15/22 - AMBAC Insured 3,565 Sweetwater Union High School District Public Financing 9/15 at 100.00 AAA 3,750,986 Authority, California, Special Tax Revenue Bonds, Series 2005A, 5.000%, 9/01/25 (WI/DD, Settling 9/01/06) - FSA Insured 2,805 Yucaipa-Calimesa Joint Unified School District, San Bernardino 10/11 at 100.00 AAA 2,887,888 County, California, General Obligation Refunding Bonds, Series 2001A, 5.000%, 10/01/31 - MBIA Insured ------------------------------------------------------------------------------------------------------------------------------------ 24,455 Total Tax Obligation/Limited 25,598,907 ------------------------------------------------------------------------------------------------------------------------------------ TRANSPORTATION - 2.4% (1.7% OF TOTAL INVESTMENTS) 2,400 San Diego Unified Port District, California, Revenue Bonds, 9/14 at 100.00 AAA 2,508,576 Series 2004B, 5.000%, 9/01/29 - MBIA Insured ------------------------------------------------------------------------------------------------------------------------------------ U.S. GUARANTEED - 41.9% (29.3% OF TOTAL INVESTMENTS) (4) 2,000 California State Public Works Board, Lease Revenue Bonds, 11/09 at 101.00 AAA 2,154,400 Department of Health Services, Series 1999A, 5.750%, 11/01/24 (Pre-refunded 11/01/09) - MBIA Insured California, Various Purpose General Obligation Bonds, Series 2000: 7,995 5.750%, 3/01/22 (Pre-refunded 3/01/10) - MBIA Insured 3/10 at 101.00 AAA 8,668,739 2,000 5.750%, 3/01/27 (Pre-refunded 3/01/10) - MBIA Insured 3/10 at 101.00 AAA 2,163,720 24 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ U.S. GUARANTEED (4) (continued) $ 2,500 Fresno Unified School District, Fresno County, California, 8/09 at 102.00 AAA $ 2,628,025 General Obligation Bonds, Series 2001A, 5.125%, 8/01/26 - FSA Insured (ETM) 6,000 Huntington Park Redevelopment Agency, California, Single No Opt. Call AAA 8,445,420 Family Residential Mortgage Revenue Refunding Bonds, Series 1986A, 8.000%, 12/01/19 (ETM) 5,135 Palmdale Community Redevelopment Agency, California, No Opt. Call AAA 6,781,076 Single Family Restructured Mortgage Revenue Bonds, Series 1986A, 8.000%, 3/01/16 (Alternative Minimum Tax) (ETM) 6,220 Riverside County, California, GNMA Mortgage-Backed No Opt. Call AAA 9,309,346 Securities Program Single Family Mortgage Revenue Bonds, Series 1987A, 9.000%, 5/01/21 (Alternative Minimum Tax) (ETM) 1,485 San Jose, California, Single Family Mortgage Revenue Bonds, No Opt. Call AAA 2,012,873 Series 1985A, 9.500%, 10/01/13 (ETM) ------------------------------------------------------------------------------------------------------------------------------------ 33,335 Total U.S. Guaranteed 42,163,599 ------------------------------------------------------------------------------------------------------------------------------------ UTILITIES - 3.2% (2.2% OF TOTAL INVESTMENTS) 345 Merced Irrigation District, California, Electric System Revenue 9/15 at 100.00 AAA 364,079 Bonds, Series 2005, 5.125%, 9/01/31 - XLCA Insured 2,600 Sacramento Municipal Utility District, California, Electric No Opt. Call AAA 2,830,802 Revenue Refunding Bonds, Series 2003S, 5.000%, 11/15/13 - MBIA Insured ------------------------------------------------------------------------------------------------------------------------------------ 2,945 Total Utilities 3,194,881 ------------------------------------------------------------------------------------------------------------------------------------ WATER AND SEWER - 25.3% (17.7% OF TOTAL INVESTMENTS) 5,255 El Dorado Irrigation District, California, Water and Sewer 3/13 at 100.00 AAA 5,564,572 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 1,298,819 Certificates of Participation, Series 2004A, 5.000%, 3/01/21 - FGIC Insured 235 Healdsburg Public Financing Authority, California, Wastewater 4/16 at 100.00 AAA 246,764 Revenue Bonds, Series 2006, 5.000%, 4/01/36 - MBIA Insured 220 Marina Coast Water District, California, Enterprise Certificate 6/16 at 100.00 AAA 231,339 of Participation, Series 2006, 5.000%, 6/01/31 - MBIA Insured 1,500 Placerville Public Financing Authority, California, Wastewater 9/16 at 100.00 AAA 1,572,435 System Refinancing and Improvement Project Revenue Bonds, Series 2006, 5.000%, 9/01/34 - XLCA Insured 750 Sacramento County Sanitation District Financing Authority, 12/14 at 100.00 AAA 799,770 California, Revenue Bonds, Series 2004A, 5.000%, 12/01/21 - AMBAC Insured 3,400 San Diego Public Facilities Financing Authority, California, 5/07 at 101.00 AAA 3,467,150 Sewerage Revenue Bonds, Series 1997A, 5.250%, 5/15/22 - FGIC Insured 2,150 Santa Clara Valley Water District, California, Water Utility 6/10 at 100.00 AAA 2,231,055 System Revenue Bonds, Series 2000A, 5.125%, 6/01/31 - FGIC Insured 1,310 Santa Fe Springs Public Financing Authority, California, 5/13 at 100.00 AAA 1,375,369 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 1,425,108 Certificates of Participation, Series 2003A, 5.000%, 8/01/20 - MBIA Insured 25 Nuveen Insured California Premium Income Municipal Fund, Inc. (NPC) (continued) Portfolio of INVESTMENTS August 31, 2006 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ WATER AND SEWER (continued) $ 2,000 Westlands Water District, California, Revenue Certificates 3/15 at 100.00 AAA $ 2,085,060 of Participation, Series 2005A, 5.000%, 9/01/30 - MBIA Insured 5,000 Wheeler Ridge-Maricopa Water District, Kern County, 11/06 at 102.00 AAA 5,116,250 California, Water Revenue Refunding Bonds, Series 1996, 5.700%, 11/01/15 - AMBAC Insured ------------------------------------------------------------------------------------------------------------------------------------ 24,395 Total Water and Sewer 25,413,691 ------------------------------------------------------------------------------------------------------------------------------------ $ 129,205 Total Investments (cost $133,619,422) - 142.8% 143,674,468 =============----------------------------------------------------------------------------------------------------------------------- Other Assets Less Liabilities - 1.9% 1,906,201 -------------------------------------------------------------------------------------------------------------------- Preferred Shares, at Liquidation Value - (44.7)% (45,000,000) -------------------------------------------------------------------------------------------------------------------- Net Assets Applicable to Common Shares - 100% $ 100,580,669 ==================================================================================================================== FORWARD SWAPS OUTSTANDING AT AUGUST 31, 2006: FIXED RATE FLOATING RATE UNREALIZED NOTIONAL RATE PAID RATE RECEIVED PAYMENT PAYMENT EFFECTIVE TERMINATION APPRECIATION COUNTERPARTY AMOUNT BY THE FUND (5) BY THE FUND (5) FREQUENCY FREQUENCY DATE (6) DATE (DEPRECIATION) ------------------------------------------------------------------------------------------------------------------------------------ Goldman Sachs $4,900,000 5.681% 3 Month USD-LIBOR Semi-Annually Quarterly 7/27/07 7/27/12 $(106,401) JPMorgan 7,700,000 5.630% 3 Month USD-LIBOR Semi-Annually Quarterly 7/27/07 7/27/10 (112,708) JPMorgan 3,100,000 3 Month USD-LIBOR 5.869% Semi-Annually Quarterly 7/27/07 7/27/34 189,309 Morgan Stanley 7,300,000 3 Month USD-LIBOR 5.816% Semi-Annually Quarterly 7/27/07 7/27/29 359,290 ------------------------------------------------------------------------------------------------------------------------------------ $ 329,490 ==================================================================================================================================== USD-LIBOR (United States Dollar-London Inter-Bank Offered Rates) All of the bonds in the Portfolio of Investments 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 unless otherwise noted. (2) 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. Certain mortgage-backed securities may be subject to periodic principal paydowns. (3) Ratings (not covered by the report of independent registered public accounting firm): Using the higher of Standard & Poor's or Moody's rating. Ratings below BBB by Standard & Poor's Group or Baa by Moody's Investor Service, Inc. are considered to be below investment grade. (4) Backed by an escrow or trust containing sufficient U.S. Government or U.S. Government agency securities which ensure the timely payment of principal and interest. (5) Represents the annualized rate paid or received by the Fund. (6) Effective date represents the date on which both the Fund and counterparty commence interest payment accruals on each forward swap contract. WI/DD Purchased on a when-issued or delayed delivery basis. (ETM) Escrowed to maturity. See accompanying notes to financial statements. 26 Nuveen Insured California Premium Income Municipal Fund 2, Inc. (NCL) Portfolio of INVESTMENTS August 31, 2006 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ EDUCATION AND CIVIC ORGANIZATIONS - 5.6% (3.8% OF TOTAL INVESTMENTS) $ 620 California Educational Facilities Authority, Revenue Bonds, 11/10 at 100.00 Aaa $ 672,539 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 2,201,819 Revenue Bonds, Cal Loan Program, Series 2001A, 5.400%, 3/01/21 - MBIA Insured (Alternative Minimum Tax) 1,500 California State University, Systemwide Revenue Bonds, 5/15 at 100.00 AAA 1,589,130 Series 2005A, 5.000%, 11/01/25 - AMBAC Insured 6,000 University of California, Revenue Bonds, Multi-Purpose 5/13 at 100.00 AAA 6,282,960 Projects, Series 2003A, 5.000%, 5/15/27 - AMBAC Insured ------------------------------------------------------------------------------------------------------------------------------------ 10,245 Total Education and Civic Organizations 10,746,448 ------------------------------------------------------------------------------------------------------------------------------------ HEALTH CARE - 1.8% (1.2% OF TOTAL INVESTMENTS) 1,450 California Health Facilities Financing Authority, Insured 1/07 at 102.00 AAA 1,481,624 Health Facility Revenue Refunding Bonds, Mark Twain St. Joseph's Healthcare Corporation, Series 1996A, 6.000%, 7/01/19 - MBIA Insured 1,755 University of California, Hospital Revenue Bonds, UCLA 5/12 at 101.00 AAA 1,927,903 Medical Center, Series 2004A, 5.500%, 5/15/18 - AMBAC Insured ------------------------------------------------------------------------------------------------------------------------------------ 3,205 Total Health Care 3,409,527 ------------------------------------------------------------------------------------------------------------------------------------ HOUSING/SINGLE FAMILY - 0.6% (0.4% OF TOTAL INVESTMENTS) 1,100 California Housing Finance Agency, Single Family Mortgage 8/07 at 101.50 AAA 1,126,532 Bonds, Series 1997C-2-II, 5.625%, 8/01/20 - MBIA Insured (Alternative Minimum Tax) ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/GENERAL - 21.1% (14.3% OF TOTAL INVESTMENTS) 1,460 ABC Unified School District, Los Angeles County, California, 8/10 at 101.00 AAA 1,589,385 General Obligation Bonds, Series 2000B, 5.750%, 8/01/16 - FGIC Insured 1,425 Bassett Unified School District, Los Angeles County, 8/16 at 100.00 AAA 1,541,081 California, General Obligation Bonds, Series 2006B, 5.250%, 8/01/30 - FGIC Insured 4,400 California, General Obligation Bonds, Series 2003, 2/13 at 100.00 AAA 4,564,692 5.000%, 2/01/31 - MBIA Insured California, General Obligation Bonds, Series 2004: 1,000 5.000%, 2/01/18 - AMBAC Insured 2/14 at 100.00 AAA 1,069,560 2,250 5.000%, 4/01/31 - AMBAC Insured 4/14 at 100.00 AAA 2,347,223 3,000 California, General Obligation Veterans Welfare Bonds, 6/07 at 101.00 AAA 3,056,610 Series 2001BZ, 5.375%, 12/01/24 - MBIA Insured (Alternative Minimum Tax) 1,910 Fresno Unified School District, Fresno County, California, No Opt. Call AAA 2,366,337 General Obligation Bonds, Series 2002A, 6.000%, 8/01/26 - MBIA Insured 1,255 Los Angeles Community College District, Los Angeles County, 8/15 at 100.00 AAA 1,333,299 California, General Obligation Bonds, Series 2005A, 5.000%, 8/01/24 - FSA Insured 2,200 Los Angeles Unified School District, California, General 7/13 at 100.00 AAA 2,356,772 Obligation Bonds, Series 2003F, 5.000%, 7/01/17 - FSA Insured Los Rios Community College District, Sacramento, El Dorado and Yolo Counties, California, General Obligation Bonds, Series 2006C: 2,110 5.000%, 8/01/21 - FSA Insured 8/14 at 102.00 AAA 2,273,209 3,250 5.000%, 8/01/22 - FSA Insured 8/14 at 102.00 AAA 3,493,132 3,395 5.000%, 8/01/23 - FSA Insured 8/14 at 102.00 AAA 3,637,505 1,270 Merced City School District, Merced County, California, 8/13 at 100.00 AAA 1,343,127 General Obligation Bonds, Series 2004, 5.000%, 8/01/22 - FGIC Insured 305 Roseville Joint Union High School District, Placer County, 8/15 at 100.00 AAA 322,864 California, General Obligation Bonds, Series 2006B, 5.000%, 8/01/27 - FGIC Insured 27 Nuveen Insured California Premium Income Municipal Fund 2, Inc. (NCL) (continued) Portfolio of INVESTMENTS August 31, 2006 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/GENERAL (continued) $ 2,500 Sacramento City Unified School District, Sacramento County, 7/15 at 100.00 Aaa $ 2,645,250 California, General Obligation Bonds, Series 2005, 5.000%, 7/01/27 - MBIA Insured 1,125 San Diego Unified School District, California, General No Opt. Call AAA 586,485 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 2,094,960 General Obligation Bonds, Series 2002A, 5.000%, 6/15/26 - FGIC Insured 1,000 San Ramon Valley Unified School District, Contra Costa 8/14 at 100.00 AAA 1,056,480 County, California, General Obligation Bonds, Series 2004, 5.000%, 8/01/24 - FSA Insured 2,445 Washington Unified School District, Yolo County, California, 8/13 at 100.00 AAA 2,599,573 General Obligation Bonds, Series 2004A, 5.000%, 8/01/21 - FGIC Insured ------------------------------------------------------------------------------------------------------------------------------------ 38,300 Total Tax Obligation/General 40,277,544 ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/LIMITED - 40.4% (27.3% OF TOTAL INVESTMENTS) 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 3,086,157 8,000 0.000%, 9/01/21 - FSA Insured No Opt. Call AAA 4,140,160 California Infrastructure Economic Development Bank, Revenue Bonds, North County Center for Self-Sufficiency Corporation, Series 2004: 1,535 5.000%, 12/01/20 - AMBAC Insured 12/13 at 100.00 AAA 1,622,280 1,780 5.000%, 12/01/23 - AMBAC Insured 12/13 at 100.00 AAA 1,867,523 3,725 California State Public Works Board, Lease Revenue Bonds, 1/16 at 100.00 AAA 4,041,290 Department of Corrections, Series 2005J, 5.000%, 1/01/17 - AMBAC Insured 380 Capistrano Unified School District, Orange County, California, 9/15 at 100.00 AAA 402,735 Special Tax Bonds, Community Facilities District, Series 2005, 5.000%, 9/01/24 - FGIC Insured 4,000 Contra Costa County, California, Certificates of Participation 11/07 at 102.00 AAA 4,156,040 Refunding, Merrithew Memorial Hospital Replacement, Series 1997, 5.500%, 11/01/22 - MBIA Insured 6,000 El Monte, California, Senior Lien Certificates of Participation, 1/11 at 100.00 AAA 6,198,840 Department of Public Services Facility Phase II, Series 2001, 5.000%, 1/01/21 - AMBAC Insured 8,280 Fontana Public Financing Authority, California, Tax Allocation 10/15 at 100.00 AAA 8,661,046 Revenue Bonds, North Fontana Redevelopment Project, Series 2005A, 5.000%, 10/01/32 - AMBAC Insured 3,000 Galt Schools Joint Powers Authority, Sacramento County, 11/07 at 102.00 AAA 3,136,800 California, Revenue Refunding Bonds, High School and Elementary School Facilities, Series 1997A, 5.875%, 11/01/24 - MBIA Insured 285 Hesperia Community Redevelopment Agency, California, 9/15 at 100.00 AAA 303,371 Tax Allocation Bonds, Series 2005A, 5.000%, 9/01/20 - XLCA Insured 1,810 Kern County Board of Education, California, Certificates of 5/08 at 102.00 AAA 1,880,029 Participation Refunding, Series 1998A, 5.200%, 5/01/28 - MBIA Insured 5,000 La Quinta Redevelopment Agency, California, Tax Allocation 9/07 at 102.00 AAA 5,157,950 Refunding Bonds, Redevelopment Project Area 1, Series 1998, 5.200%, 9/01/28 - AMBAC Insured 2,300 Long Beach Bond Finance Authority, California, Multiple Project 8/15 at 100.00 AAA 2,420,727 Tax Allocation Bonds, Housing and Gas Utility Financing Project Areas, Series 2005A-1, 5.000%, 8/01/25 - AMBAC Insured 685 Los Angeles Community Redevelopment Agency, California, 9/15 at 100.00 Aaa 712,071 Lease Revenue Bonds, Manchester Social Services Project, Series 2005, 5.000%, 9/01/37 - AMBAC Insured 1,000 Los Angeles Community Redevelopment Agency, California, 12/14 at 100.00 AAA 1,063,480 Tax Allocation Bonds, Bunker Hill Project, Series 2004A, 5.000%, 12/01/20 - FSA Insured 1,250 Los Angeles County Metropolitan Transportation Authority, 7/13 at 100.00 AAA 1,334,963 California, Proposition A First Tier Senior Sales Tax Revenue Bonds, Series 2003B, 5.000%, 7/01/19 - MBIA Insured 4,000 Los Angeles, California, Certificates of Participation, 6/13 at 100.00 AAA 4,146,840 Municipal Improvement Corporation, Series 2003AW, 5.000%, 6/01/33 - AMBAC Insured 2,780 Pittsburg Redevelopment Agency, California, Tax Allocation No Opt. Call AAA 2,986,109 Refunding Bonds, Los Medanos Community Development Project, Series 2003A, 5.000%, 8/01/12 - MBIA Insured 28 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/LIMITED (continued) $ 4,140 Plumas County, California, Certificates of Participation, 6/13 at 101.00 AAA $ 4,333,172 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 2,186,920 Refunding Bonds, Paguay Redevelopment Project, Series 2000, 5.750%, 6/15/33 - MBIA Insured 325 Rialto Redevelopment Agency, California, Tax Allocation Bonds, 9/15 at 100.00 AAA 338,016 Merged Project Area, Series 2005A, 5.000%, 9/01/35 - XLCA Insured 1,000 Rocklin Unified School District, Placer County, California, 9/13 at 100.00 AAA 1,052,860 Special Tax Bonds, Community Facilities District 1, Series 2004, 5.000%, 9/01/25 - MBIA Insured 405 Roseville, California, Certificates of Participation, Public 8/13 at 100.00 AAA 422,654 Facilities, Series 2003A, 5.000%, 8/01/25 - AMBAC Insured 5,000 San Bernardino Joint Powers Financing Authority, California, 9/09 at 102.00 AAA 5,353,000 Certificates of Participation Refunding, Police Station Financing Project, Series 1999, 5.500%, 9/01/20 - MBIA Insured 5,510 Sweetwater Union High School District Public Financing 9/15 at 100.00 AAA 5,763,956 Authority, California, Special Tax Revenue Bonds, Series 2005A, 5.000%, 9/01/28 (WI/DD, Settling 9/01/06) - FSA Insured ------------------------------------------------------------------------------------------------------------------------------------ 83,185 Total Tax Obligation/Limited 76,768,989 ------------------------------------------------------------------------------------------------------------------------------------ TRANSPORTATION - 6.9% (4.7% OF TOTAL INVESTMENTS) 6,500 Foothill/Eastern Transportation Corridor Agency, California, 1/10 at 65.32 AAA 3,687,125 Toll Road Revenue Refunding Bonds, Series 1999, 0.000%, 1/15/18 - MBIA Insured 4,000 Orange County Transportation Authority, California, Toll Road 8/13 at 100.00 AAA 4,284,600 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 5,171,900 Refunding Bonds, San Francisco International Airport, Second Series 2001, Issue 27A, 5.250%, 5/01/31 - MBIA Insured (Alternative Minimum Tax) ------------------------------------------------------------------------------------------------------------------------------------ 15,500 Total Transportation 13,143,625 ------------------------------------------------------------------------------------------------------------------------------------ U.S. GUARANTEED - 38.3% (25.9% OF TOTAL INVESTMENTS) (4) 1,380 California Educational Facilities Authority, Revenue Bonds, 11/10 at 100.00 Aaa 1,508,326 University of the Pacific, Series 2000, 5.875%, 11/01/20 (Pre-refunded 11/01/10) - MBIA Insured California Infrastructure Economic Development Bank, Revenue Bonds, Asian Art Museum of San Francisco, Series 2000: 1,295 5.500%, 6/01/19 (Pre-refunded 6/01/10) - MBIA Insured 6/10 at 101.00 AAA 1,398,859 1,000 5.500%, 6/01/20 (Pre-refunded 6/01/10) - MBIA Insured 6/10 at 101.00 AAA 1,080,200 3,450 California State Public Works Board, Lease Revenue Bonds, 11/09 at 101.00 AAA 3,716,340 Department of Health Services, Series 1999A, 5.750%, 11/01/24 (Pre-refunded 11/01/09) - MBIA Insured 2,500 California, Various Purpose General Obligation Bonds, 9/09 at 101.00 AAA 2,669,075 Series 1999, 5.500%, 9/01/24 (Pre-refunded 9/01/09) - FSA Insured California, Various Purpose General Obligation Bonds, Series 2000: 7,995 5.750%, 3/01/22 (Pre-refunded 3/01/10) - MBIA Insured 3/10 at 101.00 AAA 8,668,739 1,900 5.750%, 3/01/27 (Pre-refunded 3/01/10) - MBIA Insured 3/10 at 101.00 AAA 2,055,534 2,580 Central Unified School District, Fresno County, California, 9/06 at 100.00 AAA 2,606,626 General Obligation Bonds, Series 1993, 5.625%, 3/01/18 - AMBAC Insured (ETM) 3,000 Escondido Union High School District, San Diego County, 11/06 at 102.00 AAA 3,069,900 California, General Obligation Bonds, Series 1996, 5.700%, 11/01/10 - MBIA Insured (ETM) Fresno Unified School District, Fresno County, California, General Obligation Bonds, Series 2001F: 1,065 5.125%, 8/01/21 - FSA Insured (ETM) 8/09 at 102.00 AAA 1,124,789 1,160 5.125%, 8/01/22 - FSA Insured (ETM) 8/09 at 102.00 AAA 1,225,122 1,220 5.125%, 8/01/23 - FSA Insured (ETM) 8/09 at 102.00 AAA 1,288,491 1,500 Hacienda La Puente Unified School District, Los Angeles 8/10 at 101.00 AAA 1,610,910 County, California, General Obligation Bonds, Series 2000A, 5.250%, 8/01/25 (Pre-refunded 8/01/10) - MBIA Insured Kern Community College District, California, General Obligation Bonds, Series 2003A: 3,655 5.000%, 11/01/20 (Pre-refunded 11/01/13) - FGIC Insured 11/13 at 100.00 AAA 3,976,019 2,665 5.000%, 11/01/21 (Pre-refunded 11/01/13) - FGIC Insured 11/13 at 100.00 AAA 2,899,067 29 Nuveen Insured California Premium Income Municipal Fund 2, Inc. (NCL) (continued) Portfolio of INVESTMENTS August 31, 2006 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ U.S. GUARANTEED (4) (continued) $ 3,190 Kern County Board of Education, California, Certificates of 5/08 at 102.00 AAA $ 3,342,546 Participation Refunding, Series 1998A, 5.200%, 5/01/28 (Pre-refunded 5/01/08) - MBIA Insured 1,750 Lake Tahoe Unified School District, El Dorado County, California, 8/09 at 100.00 AAA 1,840,510 General Obligation Bonds, Series 1999A, 5.250%, 8/01/24 (Pre-refunded 8/01/09) - FGIC Insured 3,865 Los Angeles County Metropolitan Transportation Authority, 7/10 at 101.00 AAA 4,145,792 California, Proposition C Second Senior Lien Sales Tax Revenue Bonds, Series 2000A, 5.250%, 7/01/30 (Pre-refunded 7/01/10) - FGIC Insured Manteca Unified School District, San Joaquin County, California, General Obligation Bonds, Series 2004: 1,000 5.250%, 8/01/21 (Pre-refunded 8/01/14) - FSA Insured 8/14 at 100.00 AAA 1,109,260 1,000 5.250%, 8/01/22 (Pre-refunded 8/01/14) - FSA Insured 8/14 at 100.00 AAA 1,109,260 3,215 Modesto Irrigation District, California, Revenue Refunding 10/06 at 102.00 AAA 3,285,859 Bonds, Series 1996A, 6.000%, 10/01/15 (Pre-refunded 10/01/06) - MBIA Insured 2,500 Oakland, California, Insured Revenue Bonds, 1800 Harrison 1/10 at 100.00 AAA 2,699,375 Foundation - Kaiser Permanente, Series 1999A, 6.000%, 1/01/29 (Pre-refunded 1/01/10) - AMBAC Insured 4,320 Riverside County, California, GNMA Mortgage-Backed No Opt. Call AAA 5,861,030 Securities Program Single Family Mortgage Revenue Bonds, Series 1987B, 8.625%, 5/01/16 (Alternative Minimum Tax) (ETM) 1,690 Sacramento City Financing Authority, California, Capital 12/09 at 102.00 AAA 1,842,083 Improvement Revenue Bonds, Solid Waste and Redevelopment Projects, Series 1999, 5.800%, 12/01/19 (Pre-refunded 12/01/09) - AMBAC Insured 1,000 Sacramento County Sanitation District Financing Authority, 12/10 at 101.00 AAA 1,088,490 California, Revenue Bonds, Series 2000A, 5.500%, 12/01/20 (Pre-refunded 12/01/10) - AMBAC Insured 3,500 San Francisco Bay Area Rapid Transit District, California, 7/09 at 101.00 AAA 3,727,115 Sales Tax Revenue Bonds, Series 1999, 5.500%, 7/01/34 (Pre-refunded 7/01/09) - FGIC Insured 4,000 Visalia, California, Certificates of Participation Refunding, 12/06 at 102.00 AAA 4,098,520 Motor Vehicle License Fee Enhancement, Series 1996A, 5.375%, 12/01/26 (Pre-refunded 12/01/06) - MBIA Insured ------------------------------------------------------------------------------------------------------------------------------------ 63,530 Total U.S. Guaranteed 73,047,837 ------------------------------------------------------------------------------------------------------------------------------------ UTILITIES - 9.8% (6.6% OF TOTAL INVESTMENTS) 3,740 California Pollution Control Financing Authority, Revenue 9/09 at 101.00 AAA 3,930,291 Refunding Bonds, Southern California Edison Company, Series 1999B, 5.450%, 9/01/29 - MBIA Insured 670 Merced Irrigation District, California, Electric System Revenue 9/15 at 100.00 AAA 707,051 Bonds, Series 2005, 5.125%, 9/01/31 - XLCA Insured 3,500 Puerto Rico Electric Power Authority, Power Revenue Bonds, 7/12 at 101.00 AAA 3,707,445 Series 2002II, 5.125%, 7/01/26 - FSA Insured 100 Sacramento City Financing Authority, California, Capital 12/09 at 102.00 AAA 108,485 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 2,041,123 Bonds, Series 2002, 5.250%, 8/01/27 - AMBAC Insured (Alternative Minimum Tax) Santa Clara, California, Subordinate Electric Revenue Bonds, Series 2003A: 2,800 5.000%, 7/01/24 - MBIA Insured 7/13 at 100.00 AAA 2,942,072 5,000 5.000%, 7/01/28 - MBIA Insured 7/13 at 100.00 AAA 5,230,650 ------------------------------------------------------------------------------------------------------------------------------------ 17,760 Total Utilities 18,667,117 ------------------------------------------------------------------------------------------------------------------------------------ WATER AND SEWER - 23.3% (15.8% OF TOTAL INVESTMENTS) 1,700 Castaic Lake Water Agency, California, Revenue Certificates 8/14 at 100.00 AAA 1,804,261 of Participation, Series 2004A, 5.000%, 8/01/20 - AMBAC Insured 2,975 Chino Basin Regional Finance Authority, California, Sewerage 2/07 at 100.00 AAA 2,980,831 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 2,111,900 Certificates of Participation, Series 2004A, 5.000%, 3/01/21 - FGIC Insured 460 Healdsburg Public Financing Authority, California, Wastewater 4/16 at 100.00 AAA 483,028 Revenue Bonds, Series 2006, 5.000%, 4/01/36 - MBIA Insured 30 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ WATER AND SEWER (continued) $ 2,700 Los Angeles County Sanitation Districts Financing Authority, 10/13 at 100.00 AAA $ 2,872,233 California, Senior Revenue Bonds, Capital Projects, Series 2003A, 5.000%, 10/01/21 - FSA Insured 430 Marina Coast Water District, California, Enterprise Certificate 6/16 at 100.00 AAA 452,162 of Participation, Series 2006, 5.000%, 6/01/31 - MBIA Insured 12,000 Orange County Sanitation District, California, Certificates 8/13 at 100.00 AAA 12,472,079 of Participation, Series 2003, 5.000%, 2/01/33 - FGIC Insured 2,775 Pomona Public Financing Authority, California, Revenue Bonds, 5/09 at 101.00 AAA 2,915,609 Water Facilities Project, Series 1999AC, 5.500%, 5/01/29 - FGIC Insured 750 Sacramento County Sanitation District Financing Authority, 12/14 at 100.00 AAA 799,770 California, Revenue Bonds, Series 2004A, 5.000%, 12/01/21 - AMBAC Insured 1,520 San Buenaventura, California, Water Revenue Certificates 10/14 at 100.00 AAA 1,595,650 of Participation, Series 2004, 5.000%, 10/01/25 - AMBAC Insured 3,675 San Dieguito Water District, California, Water Revenue Bonds, 10/14 at 100.00 AAA 3,896,603 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 1,486,632 445 5.000%, 2/01/20 - FGIC Insured 2/14 at 100.00 AAA 470,814 465 5.000%, 2/01/21 - FGIC Insured 2/14 at 100.00 AAA 490,756 2,130 Santa Rosa, Sonoma County, California, Wastewater Revenue 9/14 at 100.00 AAA 2,292,732 Bonds, Series 2004B, 5.000%, 9/01/18 - FGIC Insured 2,500 West Basin Municipal Water District, California, Revenue 8/13 at 100.00 AAA 2,604,425 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 2,105,696 2,530 5.000%, 10/01/33 - FGIC Insured 10/13 at 100.00 AAA 2,637,854 ------------------------------------------------------------------------------------------------------------------------------------ 42,465 Total Water and Sewer 44,473,035 ------------------------------------------------------------------------------------------------------------------------------------ $ 275,290 Total Investments (cost $267,368,873) - 147.8% 281,660,654 =============----------------------------------------------------------------------------------------------------------------------- Other Assets Less Liabilities - 2.1% 3,910,577 -------------------------------------------------------------------------------------------------------------------- Preferred Shares, at Liquidation Value - (49.9)% (95,000,000) -------------------------------------------------------------------------------------------------------------------- Net Assets Applicable to Common Shares - 100% $ 190,571,231 ==================================================================================================================== FORWARD SWAPS OUTSTANDING AT AUGUST 31, 2006: FIXED RATE FLOATING RATE UNREALIZED NOTIONAL RATE PAID RATE RECEIVED PAYMENT PAYMENT EFFECTIVE TERMINATION APPRECIATION COUNTERPARTY AMOUNT BY THE FUND (5) BY THE FUND (5) FREQUENCY FREQUENCY DATE (6) DATE (DEPRECIATION) ------------------------------------------------------------------------------------------------------------------------------------ JPMorgan $4,900,000 3 Month USD-LIBOR 5.869% Semi-Annually Quarterly 7/27/07 7/27/34 $299,230 Morgan Stanley 6,200,000 3 Month USD-LIBOR 5.811% Semi-Annually Quarterly 7/27/07 7/27/24 273,219 Morgan Stanley 5,400,000 3 Month USD-LIBOR 5.816% Semi-Annually Quarterly 7/27/07 7/27/29 265,777 ------------------------------------------------------------------------------------------------------------------------------------ $838,226 ==================================================================================================================================== USD-LIBOR (United States Dollar-London Inter-Bank Offered Rates) All of the bonds in the Portfolio of Investments 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 unless otherwise noted. (2) 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. Certain mortgage-backed securities may be subject to periodic principal paydowns. (3) Ratings (not covered by the report of independent registered public accounting firm): Using the higher of Standard & Poor's or Moody's rating. Ratings below BBB by Standard & Poor's Group or Baa by Moody's Investor Service, Inc. are considered to be below investment grade. (4) Backed by an escrow or trust containing sufficient U.S. Government or U.S. Government agency securities which ensure the timely payment of principal and interest. (5) Represents the annualized rate paid or received by the Fund. (6) Effective date represents the date on which both the Fund and counterparty commence interest payment accruals on each forward swap contract. WI/DD Purchased on a when-issued or delayed delivery basis. (ETM) Escrowed to maturity. See accompanying notes to financial statements. 31 Nuveen California Premium Income Municipal Fund (NCU) Portfolio of INVESTMENTS August 31, 2006 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ CONSUMER STAPLES - 6.5% (4.4% OF TOTAL INVESTMENTS) $ 1,500 California County Tobacco Securitization Agency, Tobacco 6/12 at 100.00 Baa3 $ 1,559,280 Settlement Asset-Backed Bonds, Alameda County Tobacco Asset Securitization Corporation, Series 2002, 5.750%, 6/01/29 310 California County Tobacco Securitization Agency, Tobacco 6/15 at 100.00 BBB 301,432 Settlement Asset-Backed Bonds, Sonoma County Tobacco Securitization Corporation, Series 2005, 4.250%, 6/01/21 3,540 California Statewide Financing Authority, Tobacco Settlement 5/12 at 100.00 Baa3 3,656,537 Asset-Backed Bonds, Pooled Tobacco Securitization Program, Series 2002A, 5.625%, 5/01/29 ------------------------------------------------------------------------------------------------------------------------------------ 5,350 Total Consumer Staples 5,517,249 ------------------------------------------------------------------------------------------------------------------------------------ EDUCATION AND CIVIC ORGANIZATIONS - 2.1% (1.4% OF TOTAL INVESTMENTS) 70 California Educational Facilities Authority, Revenue Bonds, 10/15 at 100.00 A3 71,874 University of Redlands, Series 2005A, 5.000%, 10/01/35 California Educational Facilities Authority, Revenue Bonds, University of the Pacific, Series 2006: 45 5.000%, 11/01/21 11/15 at 100.00 A2 47,660 60 5.000%, 11/01/25 11/15 at 100.00 A2 62,989 1,500 University of California, Revenue Bonds, Multi-Purpose 5/13 at 100.00 AAA 1,617,975 Projects, Series 2003A, 5.125%, 5/15/17 - AMBAC Insured ------------------------------------------------------------------------------------------------------------------------------------ 1,675 Total Education and Civic Organizations 1,800,498 ------------------------------------------------------------------------------------------------------------------------------------ HEALTH CARE - 14.3% (9.6% OF TOTAL INVESTMENTS) 4,705 California Health Facilities Financing Authority, Hospital 11/06 at 100.00 BB 4,706,035 Revenue Bonds, Downey Community Hospital, Series 1993, 5.750%, 5/15/15 480 California Health Facilities Financing Authority, Revenue Bonds, 11/15 at 100.00 A3 492,288 Cedars-Sinai Medical Center, Series 2005, 5.000%, 11/15/34 1,500 California Infrastructure Economic Development Bank, Revenue 8/11 at 102.00 A+ 1,588,185 Bonds, Kaiser Hospital Assistance LLC, Series 2001A, 5.550%, 8/01/31 2,180 California Statewide Community Development Authority, 3/16 at 100.00 A+ 2,231,666 Revenue Bonds, Kaiser Permanante System, Series 2006, 5.000%, 3/01/41 730 California Statewide Community Development Authority, 8/16 at 100.00 A+ 771,887 Revenue Bonds, Kaiser Permanente System, Series 2001C, 5.250%, 8/01/31 2,100 California Statewide Community Development Authority, No Opt. Call AAA 2,250,024 Revenue Bonds, Sherman Oaks Health System, Series 1998A, 5.000%, 8/01/22 - AMBAC Insured ------------------------------------------------------------------------------------------------------------------------------------ 11,695 Total Health Care 12,040,085 ------------------------------------------------------------------------------------------------------------------------------------ HOUSING/MULTIFAMILY - 1.9% (1.3% OF TOTAL INVESTMENTS) 1,600 California Statewide Community Development Authority, 7/08 at 101.00 BBB 1,642,336 Revenue Refunding Bonds, Irvine Apartment Communities Development, Series 1998A, 5.250%, 5/15/25 (Mandatory put 5/15/13) ------------------------------------------------------------------------------------------------------------------------------------ HOUSING/SINGLE FAMILY - 0.4% (0.1% OF TOTAL INVESTMENTS) 240 California Housing Finance Agency, Single Family Mortgage 2/07 at 102.00 AAA 245,935 Bonds II, Series 1997A-1, 6.000%, 8/01/20 - MBIA Insured (Alternative Minimum Tax) 35 California Rural Home Mortgage Finance Authority, No Opt. Call AAA 35,647 Mortgage-Backed Securities Program Single Family Mortgage Revenue Bonds, Series 1996C, 7.500%, 8/01/27 (Alternative Minimum Tax) ------------------------------------------------------------------------------------------------------------------------------------ 275 Total Housing/Single Family 281,582 ------------------------------------------------------------------------------------------------------------------------------------ INDUSTRIALS - 0.6% (0.4% OF TOTAL INVESTMENTS) 500 California Pollution Control Financing Authority, Solid Waste 1/16 at 102.00 BBB 515,250 Disposal Revenue Bonds, Waste Management Inc., Series 2002A, 5.000%, 1/01/22 (Alternative Minimum Tax) ------------------------------------------------------------------------------------------------------------------------------------ 32 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/GENERAL - 29.4% (19.8% OF TOTAL INVESTMENTS) California, General Obligation Bonds, Series 2003: $ 1,000 5.250%, 11/01/19 - RAAI Insured 11/13 at 100.00 AA $ 1,081,700 1,500 5.000%, 2/01/31 - MBIA Insured 2/13 at 100.00 AAA 1,556,145 California, General Obligation Bonds, Series 2004: 1,750 5.000%, 4/01/22 4/14 at 100.00 A+ 1,838,323 1,400 5.200%, 4/01/26 4/14 at 100.00 A+ 1,493,912 4,000 California, General Obligation Veterans Welfare Bonds, 12/06 at 100.00 A1 4,002,040 Series 1999BR, 5.300%, 12/01/29 (Alternative Minimum Tax) 1,000 Fremont Unified School District, Alameda County, California, 8/12 at 101.00 AAA 1,063,040 General Obligation Bonds, Series 2002A, 5.000%, 8/01/21 - FGIC Insured 6,000 Hartnell Community College District, California, General 6/16 at 100.00 AAA 6,363,117 Obligation Bonds, Series 2006B, 5.000%, 6/01/29 - FSA Insured 2,250 Los Angeles Unified School District, California, General 7/13 at 100.00 AAA 2,379,105 Obligation Bonds, Series 2003A, 5.000%, 7/01/22 - FSA Insured 3,000 Pomona Unified School District, Los Angeles County, California, 8/11 at 103.00 AAA 3,419,970 General Obligation Refunding Bonds, Series 1997A, 6.150%, 8/01/15 - MBIA Insured 15 Riverside Community College District, California, General 8/14 at 100.00 AAA 16,346 Obligation Bonds, Series 2004A, 5.250%, 8/01/22 - MBIA Insured 135 Roseville Joint Union High School District, Placer County, 8/15 at 100.00 AAA 142,907 California, General Obligation Bonds, Series 2006B, 5.000%, 8/01/27 - FGIC Insured 1,355 San Jose-Evergreen Community College District, Santa Clara 9/15 at 100.00 AAA 1,438,156 County, California, General Obligation Bonds, Series 2005A, 5.000%, 9/01/25 - MBIA Insured ------------------------------------------------------------------------------------------------------------------------------------ 23,405 Total Tax Obligation/General 24,794,761 ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/LIMITED - 48.4% (32.6% OF TOTAL INVESTMENTS) 1,000 Bell Community Redevelopment Agency, California, Tax 10/13 at 100.00 AA 1,077,920 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 1,074,665 Revenue Refunding Bonds, Series 2003A, 5.250%, 6/01/15 - MBIA Insured California Infrastructure Economic Development Bank, Revenue Bonds, North County Center for Self-Sufficiency Corporation, Series 2004: 1,695 5.000%, 12/01/22 - AMBAC Insured 12/13 at 100.00 AAA 1,783,767 1,865 5.000%, 12/01/24 - AMBAC Insured 12/13 at 100.00 AAA 1,951,965 5,920 California State Public Works Board, Lease Revenue Bonds, 11/09 at 101.00 AAA 6,306,872 Department of Veterans Affairs, Southern California Veterans Home - Chula Vista Facility, Series 1999A, 5.600%, 11/01/19 - AMBAC Insured 905 California, Economic Recovery Revenue Bonds, Series 2004A, 7/14 at 100.00 AA- 981,129 5.000%, 7/01/15 165 Capistrano Unified School District, Orange County, California, 9/15 at 100.00 AAA 174,872 Special Tax Bonds, Community Facilities District, Series 2005, 5.000%, 9/01/24 - FGIC Insured 130 Hesperia Community Redevelopment Agency, California, 9/15 at 100.00 AAA 138,380 Tax Allocation Bonds, Series 2005A, 5.000%, 9/01/20 - XLCA Insured Irvine, California, Unified School District, Community Facilities District Special Tax Bonds, Series 2006A: 80 5.000%, 9/01/26 9/06 at 103.00 N/R 80,721 185 5.125%, 9/01/36 9/06 at 103.00 N/R 187,020 2,500 Kern County Board of Education, California, Certificates of 6/16 at 100.00 AAA 2,624,800 Participation, Series 2006A, 5.000%, 6/01/31 - MBIA Insured 3,500 Livermore Redevelopment Agency, California, Tax Allocation 8/11 at 100.00 AAA 3,609,760 Revenue Bonds, Livermore Redevelopment Project Area, Series 2001A, 5.000%, 8/01/26 - MBIA Insured 310 Los Angeles Community Redevelopment Agency, California, 9/15 at 100.00 Aaa 322,251 Lease Revenue Bonds, Manchester Social Services Project, Series 2005, 5.000%, 9/01/37 - AMBAC Insured 1,595 Los Angeles Community Redevelopment Agency, California, 12/06 at 100.00 BBB- 1,596,818 Tax Allocation Multifamily Housing Bonds, Grand Central Square/Bunker Hill Project, Series 1993A, 5.750%, 12/01/13 (Alternative Minimum Tax) 33 Nuveen California Premium Income Municipal Fund (NCU) (continued) Portfolio of INVESTMENTS August 31, 2006 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/LIMITED (continued) $ 2,000 Los Angeles County Metropolitan Transportation Authority, 7/13 at 100.00 AAA $ 2,135,940 California, Proposition A First Tier Senior Sales Tax Revenue Bonds, Series 2003B, 5.000%, 7/01/19 - MBIA Insured 3,230 Murrieta Redevelopment Agency, California, Tax Allocation 8/15 at 100.00 AAA 3,363,076 Bonds, Series 2005, 5.000%, 8/01/35 - MBIA Insured 2,000 Oakland Redevelopment Agency, California, Subordinate 3/13 at 100.00 AAA 2,208,120 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 1,056,990 Special Tax Refunding Bonds, Parkway Business Centre, Series 1998, 6.500%, 8/15/09 155 Rialto Redevelopment Agency, California, Tax Allocation 9/15 at 100.00 AAA 161,208 Bonds, Merged Project Area, Series 2005A, 5.000%, 9/01/35 - XLCA Insured 190 Roseville, California, Certificates of Participation, Public 8/13 at 100.00 AAA 198,282 Facilities, Series 2003A, 5.000%, 8/01/25 - AMBAC Insured 1,500 Sacramento City Financing Authority, California, Lease No Opt. Call AAA 1,680,900 Revenue Refunding Bonds, Series 1993A, 5.400%, 11/01/20 - MBIA Insured 3,000 Sacramento City Financing Authority, California, Lease Revenue No Opt. Call AA- 3,299,580 Refunding Bonds, Series 1993B, 5.400%, 11/01/20 San Marcos Public Facilities Authority, California, Revenue Refunding Bonds, Series 1998: 1,500 5.800%, 9/01/18 9/08 at 101.00 Baa3 1,561,050 1,000 5.800%, 9/01/27 9/08 at 101.00 Baa3 1,040,700 2,050 Santa Barbara County, California, Certificates of Participation, 12/11 at 102.00 AAA 2,227,592 Series 2001, 5.250%, 12/01/19 - AMBAC Insured ------------------------------------------------------------------------------------------------------------------------------------ 38,460 Total Tax Obligation/Limited 40,844,378 ------------------------------------------------------------------------------------------------------------------------------------ TRANSPORTATION - 3.3% (2.3% OF TOTAL INVESTMENTS) 780 Bay Area Toll Authority, California, Revenue Bonds, 4/16 at 100.00 AA 822,799 San Francisco Bay Area Toll Bridge, Series 2006, 5.000%, 4/01/31 2,000 Foothill/Eastern Transportation Corridor Agency, California, 1/10 at 100.00 BBB- 2,001,440 Toll Road Revenue Bonds, Series 1995A, 5.000%, 1/01/35 ------------------------------------------------------------------------------------------------------------------------------------ 2,780 Total Transportation 2,824,239 ------------------------------------------------------------------------------------------------------------------------------------ U.S. GUARANTEED - 16.6% (11.2% OF TOTAL INVESTMENTS) (4) California Department of Water Resources, Power Supply Revenue Bonds, Series 2002A: 400 5.375%, 5/01/17 (Pre-refunded 5/01/12) - XLCA Insured 5/12 at 101.00 AAA 440,756 2,250 5.125%, 5/01/18 (Pre-refunded 5/01/12) 5/12 at 101.00 Aaa 2,450,588 1,200 California Health Facilities Financing Authority, Revenue Bonds, 12/09 at 101.00 A3 (4) 1,306,620 Cedars-Sinai Medical Center, Series 1999A, 6.125%, 12/01/30 (Pre-refunded 12/01/09) 3,000 California Infrastructure Economic Development Bank, No Opt. Call AAA 3,324,990 First Lien Revenue Bonds, San Francisco Bay Area Toll Bridge, Series 2003A, 5.000%, 7/01/22 - FSA Insured (ETM) Golden State Tobacco Securitization Corporation, California, Enhanced Tobacco Settlement Asset-Backed Bonds, Series 2003B: 1,000 5.625%, 6/01/33 (Pre-refunded 6/01/13) 6/13 at 100.00 AAA 1,113,040 1,000 5.500%, 6/01/33 (Pre-refunded 6/01/13) 6/13 at 100.00 AAA 1,105,640 2,000 Puerto Rico, General Obligation and Public Improvement 7/10 at 100.00 AAA 2,153,680 Bonds, Series 2000, 5.750%, 7/01/21 (Pre-refunded 7/01/10) - MBIA Insured 2,000 Vista, California, Mobile Home Park Revenue Bonds, Vista 3/24 at 100.00 N/R (4) 2,140,960 Manor Mobile Home Park Project, Series 1999A, 5.750%, 3/15/29 (Pre-refunded 3/15/24) ------------------------------------------------------------------------------------------------------------------------------------ 12,850 Total U.S. Guaranteed 14,036,274 ------------------------------------------------------------------------------------------------------------------------------------ UTILITIES - 6.6% (4.4% OF TOTAL INVESTMENTS) 275 Los Angeles Department of Water and Power, California, 7/13 at 100.00 AAA 292,317 Power System Revenue Bonds, Series 2003A-2, 5.000%, 7/01/21 - MBIA Insured 34 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ UTILITIES (continued) $ 295 Merced Irrigation District, California, Electric System Revenue 9/15 at 100.00 AAA $ 311,314 Bonds, Series 2005, 5.125%, 9/01/31 - XLCA Insured 4,580 Sacramento Municipal Utility District, California, Electric 8/12 at 100.00 AAA 4,947,362 Revenue Refunding Bonds, Series 2002Q, 5.250%, 8/15/20 - FSA Insured ------------------------------------------------------------------------------------------------------------------------------------ 5,150 Total Utilities 5,550,993 ------------------------------------------------------------------------------------------------------------------------------------ WATER AND SEWER - 17.7% (12.0% OF TOTAL INVESTMENTS) 1,125 Burbank, California, Wastewater System Revenue Bonds, 6/14 at 100.00 AAA 1,186,605 Series 2004A, 5.000%, 6/01/23 - AMBAC Insured 1,095 California Statewide Community Development Authority, 10/13 at 100.00 AAA 1,173,435 Water and Wastewater Revenue Bonds, Pooled Financing Program, Series 2003A, 5.250%, 10/01/23 - FSA Insured 5,000 Culver City, California, Wastewater Facilities Revenue Refunding 9/09 at 102.00 AAA 5,359,250 Bonds, Series 1999A, 5.700%, 9/01/29 - FGIC Insured 205 Healdsburg Public Financing Authority, California, Wastewater 4/16 at 100.00 AAA 215,262 Revenue Bonds, Series 2006, 5.000%, 4/01/36 - MBIA Insured 3,495 Orange County Sanitation District, California, Certificates 8/13 at 100.00 AAA 3,740,244 of Participation, Series 2003, 5.250%, 2/01/21 - FGIC Insured 370 Sacramento County Sanitation District Financing Authority, 6/16 at 100.00 AAA 390,576 California, Revenue Bonds, Series 2006, 5.000%, 12/01/36 - FGIC Insured 1,000 Sacramento County Water Financing Authority, California, 6/13 at 100.00 AAA 1,057,130 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+ 1,868,936 of Participation, Water Systems Project, Series 2003, 5.500%, 7/01/33 ------------------------------------------------------------------------------------------------------------------------------------ 14,085 Total Water and Sewer 14,991,438 ------------------------------------------------------------------------------------------------------------------------------------ $ 117,825 Total Long-Term Investments (cost $118,969,909) - 147.8% 124,839,083 =============----------------------------------------------------------------------------------------------------------------------- SHORT-TERM INVESTMENTS - 0.7% (0.5% OF TOTAL INVESTMENTS) 200 California Department of Water Resources, Power Supply A-1+ 200,000 Revenue Bonds, Variable Rate Demand Obligations, Series 2002C-7, 3.270%, 5/01/22 - FSA Insured (5) 200 City and County of San Francisco Finance Corporation, A-1+ 200,000 California, Moscone Center Expansion Project, Lease Revenue Bonds, Series 2000-2, Variable Rate Demand Obligations, 3.260%, 4/01/30 - AMBAC Insured (5) 200 East Bay Municipal Utility District, Alameda and Contra A-1+ 200,000 Costa Counties, California, Water System Subordinated Revenue Bonds, Variable Rate Demand Obligations, Series 2005B-2, 3.260%, 6/01/38 - XLCA Insured (5) ------------------------------------------------------------------------------------------------------------------------------------ $ 600 Total Short-Term Investments (cost $600,000) 600,000 =============----------------------------------------------------------------------------------------------------------------------- Total Investments (cost $119,569,909) - 148.5% 125,439,083 -------------------------------------------------------------------------------------------------------------------- Other Assets Less Liabilities - 2.4% 2,027,933 -------------------------------------------------------------------------------------------------------------------- Preferred Shares, at Liquidation Value - (50.9)% (43,000,000) -------------------------------------------------------------------------------------------------------------------- Net Assets Applicable to Common Shares - 100% $ 84,467,016 ==================================================================================================================== (1) All percentages shown in the Portfolio of Investments are based on net assets applicable to Common shares unless otherwise noted. (2) 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. Certain mortgage-backed securities may be subject to periodic principal paydowns. (3) Ratings (not covered by the report of independent registered public accounting firm): Using the higher of Standard & Poor's or Moody's rating. Ratings below BBB by Standard & Poor's Group or Baa by Moody's Investor Service, Inc. are considered to be below investment grade. (4) Backed by an escrow or trust containing sufficient U.S. Government or U.S. Government agency securities which ensure the timely payment of principal and interest. Such investments are normally considered to be equivalent to AAA rated securities. (5) Investment has a maturity of more than one year, but has variable rate and demand features which qualify it as a short-term investment. The rate disclosed is that in effect at the end of the reporting period. This rate changes periodically based on market conditions or a specified market index. N/R Not rated. (ETM) Escrowed to maturity. See accompanying notes to financial statements. 35 Nuveen California Dividend Advantage Municipal Fund (NAC) Portfolio of INVESTMENTS August 31, 2006 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ CONSUMER STAPLES - 1.9% (1.3% OF TOTAL INVESTMENTS) $ 1,330 California County Tobacco Securitization Agency, Tobacco 6/15 at 100.00 BBB $ 1,293,239 Settlement Asset-Backed Bonds, Sonoma County Tobacco Securitization Corporation, Series 2005, 4.250%, 6/01/21 5,200 Golden State Tobacco Securitization Corporation, California, 6/13 at 100.00 BBB 5,708,404 Tobacco Settlement Asset-Backed Bonds, Series 2003A-1, 6.250%, 6/01/33 ------------------------------------------------------------------------------------------------------------------------------------ 6,530 Total Consumer Staples 7,001,643 ------------------------------------------------------------------------------------------------------------------------------------ EDUCATION AND CIVIC ORGANIZATIONS - 10.6% (7.3% OF TOTAL INVESTMENTS) 290 California Educational Facilities Authority, Revenue Bonds, 10/15 at 100.00 A3 297,763 University of Redlands, Series 2005A, 5.000%, 10/01/35 California Educational Facilities Authority, Revenue Bonds, University of the Pacific, Series 2006: 200 5.000%, 11/01/21 11/15 at 100.00 A2 211,824 265 5.000%, 11/01/25 11/15 at 100.00 A2 278,200 615 California Statewide Community Development Authority, 10/13 at 100.00 N/R 659,391 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 3,254,310 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 729,918 San Diego and Sacramento Campus Projects, Series 2002A, 5.250%, 1/01/22 6,000 University of California, Revenue Bonds, Multiple Purpose 9/08 at 101.00 AA 6,217,740 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 11,355,350 11,305 5.000%, 9/01/21 - FGIC Insured 9/10 at 101.00 AAA 11,919,427 3,500 University of California, Revenue Bonds, Multi-Purpose 5/13 at 100.00 AAA 3,775,275 Projects, Series 2003A, 5.125%, 5/15/17- AMBAC Insured ------------------------------------------------------------------------------------------------------------------------------------ 36,645 Total Education and Civic Organizations 38,699,198 ------------------------------------------------------------------------------------------------------------------------------------ HEALTH CARE - 10.6% (7.3% OF TOTAL INVESTMENTS) 2,160 California Health Facilities Financing Authority, Health Facility 3/13 at 100.00 A 2,268,691 Revenue Bonds, Adventist Health System/West, Series 2003A, 5.000%, 3/01/15 1,990 California Health Facilities Financing Authority, Revenue 11/15 at 100.00 A3 2,040,944 Bonds, Cedars-Sinai Medical Center, Series 2005, 5.000%, 11/15/34 9,280 California Statewide Community Development Authority, 3/16 at 100.00 A+ 9,499,936 Revenue Bonds, Kaiser Permanante System, Series 2006, 5.000%, 3/01/41 3,095 California Statewide Community Development Authority, 8/16 at 100.00 A+ 3,272,591 Revenue Bonds, Kaiser Permanente System, Series 2001C, 5.250%, 8/01/31 8,000 Central California Joint Powers Health Finance Authority, 2/10 at 101.00 Baa2 8,383,600 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 A- 10,766,385 Hope National Medical Center, Series 1999A, 5.250%, 4/01/31 2,500 Whittier, California, Health Facility Revenue Bonds, 6/12 at 101.00 A 2,669,050 Presbyterian Intercommunity Hospital, Series 2002, 5.600%, 6/01/22 ------------------------------------------------------------------------------------------------------------------------------------ 37,525 Total Health Care 38,901,197 ------------------------------------------------------------------------------------------------------------------------------------ 36 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ HOUSING/MULTIFAMILY - 8.1% (5.5% OF TOTAL INVESTMENTS) $ 5,170 California Statewide Community Development Authority, 8/12 at 105.00 Aaa $ 5,768,893 GNMA Collateralized Housing Revenue Refunding Bonds, Crowne Pointe Project, Series 2002F, 6.750%, 8/20/37 7,250 California Statewide Community Development Authority, 7/08 at 101.00 BBB 7,345,120 Revenue Refunding Bonds, Irvine Apartment Communities Development, Series 1998A, 4.900%, 5/15/25 (Mandatory put 5/15/08) 5,000 Contra Costa County, California, Multifamily Housing Revenue 6/09 at 102.00 N/R 5,233,250 Bonds, Delta View Apartments Project, Series 1999C, 6.750%, 12/01/30 (Alternative Minimum Tax) 320 Independent Cities Lease Finance Authority, California, 5/16 at 100.00 N/R 324,915 Mobile Home Park Revenue Bonds, San Juan Mobile Estates Project, Series 2006A, 5.850%, 5/15/41 1,725 Rohnert Park Finance Authority, California, Senior Lien 9/13 at 100.00 A- 1,870,590 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 1,204,515 Revenue Bonds, Rancho Feliz Mobile Home Park, Series 2003B, 6.625%, 9/15/38 7,500 San Bernardino County Housing Authority, California, No Opt. Call A- 7,712,100 Multifamily Housing Revenue Refunding Bonds, Equity Residential Properties/Redlands Lawn and Tennis Apartments, Series 1999A, 5.200%, 6/15/29 (Mandatory 6/15/09) ------------------------------------------------------------------------------------------------------------------------------------ 28,085 Total Housing/Multifamily 29,459,383 ------------------------------------------------------------------------------------------------------------------------------------ INDUSTRIALS - 0.7% (0.4% OF TOTAL INVESTMENTS) 2,000 California Pollution Control Financing Authority, Solid Waste 1/16 at 102.00 BBB 2,061,000 Disposal Revenue Bonds, Waste Management Inc., Series 2002A, 5.000%, 1/01/22 (Alternative Minimum Tax) ------------------------------------------------------------------------------------------------------------------------------------ LONG-TERM CARE - 2.4% (1.6% OF TOTAL INVESTMENTS) 8,500 Riverside County Public Financing Authority, California, 5/09 at 101.00 BBB- 8,799,795 Certificates of Participation, Air Force Village West, Series 1999, 5.800%, 5/15/29 ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/GENERAL - 19.8% (13.6% OF TOTAL INVESTMENTS) 2,000 California, General Obligation Bonds, Series 2003, 11/13 at 100.00 AA 2,163,400 5.250%, 11/01/19 - RAAI Insured California, General Obligation Bonds, Series 2004: 5,000 5.125%, 4/01/23 4/14 at 100.00 A+ 5,332,650 4,150 5.125%, 4/01/25 4/14 at 100.00 A+ 4,409,417 California, General Obligation Refunding Bonds, Series 2002: 8,000 5.000%, 2/01/12 No Opt. Call A+ 8,511,280 4,435 6.000%, 4/01/16 - AMBAC Insured No Opt. Call AAA 5,211,657 5,000 Coast Community College District, Orange County, California, 8/16 at 100.00 AAA 5,340,350 General Obligation Bonds, Series 2006B, 5.000%, 8/01/24 - FSA Insured 5,000 Fresno Unified School District, Fresno County, California, No Opt. Call AAA 6,194,600 General Obligation Bonds, Series 2002A, 6.000%, 8/01/26 - MBIA Insured 10,845 Los Angeles Unified School District, California, General 7/12 at 100.00 AAA 11,510,883 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 3,634,283 California, General Obligation Bonds, Series 2004A, 5.250%, 8/01/21 - FSA Insured 5,210 Oak Valley Hospital District, Stanislaus County, California, 7/14 at 101.00 Aaa 5,422,881 General Obligation Bonds, Series 2005, 5.000%, 7/01/35 - FGIC Insured 1,750 Oakland Unified School District, Alameda County, California, 8/08 at 101.00 AAA 1,813,140 General Obligation Bonds, Series 2001, 5.125%, 8/01/21 - FSA Insured 575 Roseville Joint Union High School District, Placer County, 8/15 at 100.00 AAA 608,678 California, General Obligation Bonds, Series 2006B, 5.000%, 8/01/27 - FGIC Insured 5,000 San Diego Unified School District, San Diego County, 7/13 at 101.00 AAA 5,479,000 California, General Obligation Bonds, Series 2003E, 5.250%, 7/01/20 - FSA Insured 2,865 San Ramon Valley Unified School District, Contra Costa 8/16 at 100.00 AAA 3,086,608 County, California, General Obligation Bonds, Series 2006, 5.000%, 8/01/21 - MBIA Insured 37 Nuveen California Dividend Advantage Municipal Fund (NAC) (continued) Portfolio of INVESTMENTS August 31, 2006 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/GENERAL (continued) $ 3,605 West Contra Costa Unified School District, Contra Costa 8/11 at 101.00 AAA $ 3,827,681 County, California, General Obligation Bonds, Series 2003B, 5.000%, 8/01/21 - FSA Insured ------------------------------------------------------------------------------------------------------------------------------------ 66,770 Total Tax Obligation/General 72,546,508 ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/LIMITED - 35.7% (24.5% OF TOTAL INVESTMENTS) Beaumont Financing Authority, California, Local Agency Revenue Bonds, Series 2004D: 1,000 5.500%, 9/01/24 9/14 at 102.00 N/R 1,051,430 615 5.800%, 9/01/35 9/14 at 102.00 N/R 650,123 1,990 Brentwood Infrastructure Financing Authority, California, 9/12 at 100.00 AAA 2,094,853 Infrastructure Revenue Refunding Bonds, Series 2002A, 5.125%, 9/02/24 - FSA Insured 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 1,196,547 1,165 5.375%, 11/01/19 - FSA Insured 11/11 at 100.00 AAA 1,255,835 3,895 California, Economic Recovery Revenue Bonds, Series 2004A, 7/14 at 100.00 AA- 4,222,647 5.000%, 7/01/15 2,000 Capistrano Unified School District, Orange County, California, 9/13 at 100.00 N/R 2,117,520 Special Tax Bonds, Community Facilities District 90-2 - Talega, Series 2003, 6.000%, 9/01/33 710 Capistrano Unified School District, Orange County, California, 9/15 at 100.00 AAA 752,479 Special Tax Bonds, Community Facilities District, Series 2005, 5.000%, 9/01/24 - FGIC Insured 3,490 Fontana, California, Senior Special Tax Refunding Bonds, 9/08 at 102.00 AAA 3,659,963 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 1,194,244 Facilities District 22, Series 2004, 6.000%, 9/01/34 3,980 Garden Grove, California, Certificates of Participation, 3/12 at 101.00 AAA 4,326,738 Financing Project, Series 2002A, 5.500%, 3/01/22 - AMBAC Insured Hesperia Community Redevelopment Agency, California, Tax Allocation Bonds, Series 2005A: 540 5.000%, 9/01/20 - XLCA Insured 9/15 at 100.00 AAA 574,808 2,850 5.000%, 9/01/35 - XLCA Insured 9/15 at 100.00 AAA 2,959,839 4,500 Inglewood Redevelopment Agency, California, Tax Allocation No Opt. Call AAA 5,022,945 Refunding Bonds, Merged Area Redevelopment Project, Series 1998A, 5.250%, 5/01/23 - AMBAC Insured Irvine, California, Unified School District, Community Facilities District Special Tax Bonds, Series 2006A: 345 5.000%, 9/01/26 9/06 at 103.00 N/R 348,108 795 5.125%, 9/01/36 9/06 at 103.00 N/R 803,681 675 Lammersville School District, San Joaquin County, California, 9/16 at 100.00 N/R 682,371 Community Facilities District 2002, Mountain House Special Tax Bonds, Series 2006, 5.125%, 9/01/35 2,000 Lee Lake Water District, Riverside County, California, Special 9/13 at 102.00 N/R 2,225,660 Tax Bonds, Community Facilities District 1 of Sycamore Creek, Series 2003, 6.500%, 9/01/24 1,985 Lincoln, California, Special Tax Bonds, Lincoln Crossing 9/13 at 102.00 N/R 2,200,214 Community Facilities District 03-1, Series 2003A, 6.500%, 9/01/25 1,360 Lincoln, California, Special Tax Bonds, Lincoln Crossing 9/13 at 102.00 N/R 1,452,018 Community Facilities District 03-1, Series 2004, 6.000%, 9/01/34 1,290 Los Angeles Community Redevelopment Agency, California, 9/15 at 100.00 Aaa 1,340,981 Lease Revenue Bonds, Manchester Social Services Project, Series 2005, 5.000%, 9/01/37 - AMBAC Insured 5,000 Los Angeles County Metropolitan Transportation Authority, 7/08 at 101.00 AAA 5,137,100 California, Proposition C Second Senior Lien Sales Tax Revenue Refunding Bonds, Series 1998A, 5.000%, 7/01/23 - AMBAC Insured 3,555 Los Angeles County Public Works Financing Authority, 10/07 at 101.00 AA 3,641,493 California, Revenue Bonds, Regional Park and Open Space District, Series 1997A, 5.000%, 10/01/16 1,530 Moreno Valley Unified School District, Riverside County, 3/14 at 100.00 AAA 1,603,532 California, Certificates of Participation, Series 2005, 5.000%, 3/01/24 - FSA Insured 38 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/LIMITED (continued) $ 9,200 Norco Redevelopment Agency, California, Tax Allocation 3/11 at 102.00 AAA $ 9,707,472 Refunding Bonds, Project Area 1, Series 2001, 5.000%, 3/01/19 - MBIA Insured 5,545 Oakland Joint Power Financing Authority, California, Lease No Opt. Call AAA 6,230,473 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 3,636,371 Lien Tax Allocation Bonds, Central District Redevelopment Project, Series 2003, 5.500%, 9/01/16 - FGIC Insured 5,600 Palm Springs Financing Authority, California, Lease Revenue 11/11 at 101.00 AAA 5,862,976 Refunding Bonds, Convention Center Project, Series 2001A, 5.000%, 11/01/22 - MBIA Insured 1,000 Palmdale Community Redevelopment Agency, California, 12/14 at 100.00 AAA 1,052,020 Tax Allocation Bonds, Merged Redevelopment Project Areas, Series 2004, 5.000%, 12/01/24 - AMBAC Insured 1,055 Poway Redevelopment Agency, California, Tax Allocation 12/11 at 101.00 AAA 1,148,927 Bonds, Paguay Redevelopment Project, Series 2001, 5.375%, 12/15/16 - AMBAC Insured 8,100 Poway Redevelopment Agency, California, Tax Allocation 12/10 at 102.00 AAA 8,857,026 Refunding Bonds, Paguay Redevelopment Project, Series 2000, 5.750%, 6/15/33 - MBIA Insured 620 Rialto Redevelopment Agency, California, Tax Allocation 9/15 at 100.00 AAA 644,831 Bonds, Merged Project Area, Series 2005A, 5.000%, 9/01/35 - XLCA Insured 1,860 Riverside Redevelopment Agency, California, Tax Allocation 8/13 at 100.00 AAA 1,990,516 Refunding Bonds, Merged Project Areas, Series 2003, 5.250%, 8/01/22 - MBIA Insured 770 Roseville, California, Certificates of Participation, Public 8/13 at 100.00 AAA 803,564 Facilities, Series 2003A, 5.000%, 8/01/25 - AMBAC Insured 2,500 Sacramento City Financing Authority, California, Lease No Opt. Call AAA 2,831,475 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 1,229,362 Community Facilities District 4, Series 2003C, 6.000%, 9/01/33 2,695 San Jose Financing Authority, California, Lease Revenue 6/12 at 100.00 AAA 2,901,464 Refunding Bonds, Civic Center Project, Series 2002B, 5.250%, 6/01/19 - AMBAC Insured 24,060 San Jose Redevelopment Agency, California, Tax Allocation 8/08 at 102.00 A 24,765,680 Bonds, Merged Area Redevelopment Project, Series 1998, 5.250%, 8/01/29 1,595 San Marcos Public Facilities Authority, California, 9/09 at 102.00 N/R 1,672,134 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 3,172,237 Special Tax Bonds, Community Facilities District 01-1, Series 2003B, 7.000%, 9/01/38 2,000 West Patterson Financing Authority, California, 9/13 at 102.00 N/R 2,139,800 Special Tax Bonds, Community Facilities District 01-1, Series 2004B, 6.000%, 9/01/39 1,350 West Patterson Financing Authority, California, 9/13 at 103.00 N/R 1,461,753 Special Tax Bonds, Community Facilities District 2001-1, Series 2004A, 6.125%, 9/01/39 ------------------------------------------------------------------------------------------------------------------------------------ 122,705 Total Tax Obligation/Limited 130,623,210 ------------------------------------------------------------------------------------------------------------------------------------ TRANSPORTATION - 18.7% (12.8% OF TOTAL INVESTMENTS) 1,430 Bay Area Toll Authority, California, Revenue Bonds, 4/16 at 100.00 AA 1,508,464 San Francisco Bay Area Toll Bridge, Series 2006, 5.000%, 4/01/31 8,150 Foothill/Eastern Transportation Corridor Agency, California, 1/10 at 101.00 BBB- 8,474,370 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 9,085,505 Refunding Bonds, Series 2001B, 5.500%, 8/01/18 - AMBAC Insured (Alternative Minimum Tax) 120 Palm Springs Financing Authority, California, Palm Springs 7/14 at 102.00 N/R 122,881 International Airport Revenue Bonds, Series 2006, 5.450%, 7/01/20 (Alternative Minimum Tax) 23,000 Port of Oakland, California, Revenue Bonds, Series 2000K, 5/10 at 100.00 AAA 24,338,600 5.750%, 11/01/29 - FGIC Insured (Alternative Minimum Tax) 23,275 San Francisco Airports Commission, California, Revenue 5/10 at 101.00 AAA 24,929,387 Bonds, San Francisco International Airport, Second Series 2000, Issue 24A, 5.750%, 5/01/30 - FSA Insured (Alternative Minimum Tax) ------------------------------------------------------------------------------------------------------------------------------------ 64,490 Total Transportation 68,459,207 ------------------------------------------------------------------------------------------------------------------------------------ 39 Nuveen California Dividend Advantage Municipal Fund (NAC) (continued) Portfolio of INVESTMENTS August 31, 2006 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ U.S. GUARANTEED - 21.9% (15.0% OF TOTAL INVESTMENTS) (4) California Department of Water Resources, Power Supply Revenue Bonds, Series 2002A: $ 1,500 5.375%, 5/01/17 (Pre-refunded 5/01/12) - XLCA Insured 5/12 at 101.00 AAA $ 1,652,835 9,750 5.125%, 5/01/18 (Pre-refunded 5/01/12) 5/12 at 101.00 Aaa 10,619,213 15,000 California Health Facilities Financing Authority, Revenue Bonds, 12/09 at 101.00 A3 (4) 16,332,750 Cedars-Sinai Medical Center, Series 1999A, 6.125%, 12/01/30 (Pre-refunded 12/01/09) 8,400 California Health Facilities Financing Authority, Revenue Bonds, 10/08 at 101.00 AAA 8,762,124 Kaiser Permanente System, Series 1998B, 5.250%, 10/01/14 (ETM) 5,000 California Statewide Community Development Authority, 11/09 at 102.00 N/R (4) 5,653,950 Certificates of Participation, Pride Industries and Pride One Inc., Series 1999, 7.250%, 11/01/29 (Pre-refunded 11/01/09) 10,900 Los Angeles Unified School District, California, General 7/09 at 101.00 AAA 11,534,271 Obligation Bonds, Series 1999C, 5.250%, 7/01/24 (Pre-refunded 7/01/09) - MBIA Insured Northern California Tobacco Securitization Authority, Tobacco Settlement Asset-Backed Bonds, Series 2001A: 2,500 5.250%, 6/01/31 (Pre-refunded 6/01/11) 6/11 at 100.00 AAA 2,685,825 4,500 5.375%, 6/01/41 (Pre-refunded 6/01/11) 6/11 at 100.00 AAA 5,840 Orange County Water District, California, Revenue 8/09 at 101.00 AA+ (4) 6,183,976 Certificates of Participation, Series 1999A, 5.375%, 8/15/29 (ETM) 4,000 Orange County Water District, California, Revenue 8/09 at 101.00 AA+ (4) 4,253,600 Certificates of Participation, Series 1999A, 5.375%, 8/15/29 (Pre-refunded 8/15/09) 4,000 Puerto Rico, General Obligation and Public Improvement 7/10 at 100.00 AAA 4,307,360 Bonds, Series 2000, 5.750%, 7/01/16 (Pre-refunded 7/01/10) - MBIA Insured 2,860 Tobacco Securitization Authority of Southern California, 6/12 at 100.00 AAA 3,100,640 Tobacco Settlement Asset-Backed Bonds, San Diego County Tobacco Asset Securitization Corporation, Senior Series 2001A, 5.250%, 6/01/27 (Pre-refunded 6/01/12) ------------------------------------------------------------------------------------------------------------------------------------ 74,250 Total U.S. Guaranteed 79,945,419 ------------------------------------------------------------------------------------------------------------------------------------ UTILITIES - 7.8% (5.4% OF TOTAL INVESTMENTS) 3,630 Imperial Irrigation District, California, Certificates 11/13 at 100.00 AAA 3,883,265 of 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 7,409,080 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 8,971,468 Power System Revenue 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 1,275,564 Power System Revenue Bonds, Series 2003A-2, 5.000%, 7/01/21 - MBIA Insured 5,500 Los Angeles Department of Water and Power, California, 7/15 at 100.00 AAA 5,790,510 Power System Revenue Bonds, Series 2005A-1, 5.000%, 7/01/31 - FSA Insured 1,270 Merced Irrigation District, California, Electric System 9/15 at 100.00 AAA 1,340,231 Revenue Bonds, Series 2005, 5.125%, 9/01/31 - XLCA Insured ------------------------------------------------------------------------------------------------------------------------------------ 26,970 Total Utilities 28,670,118 ------------------------------------------------------------------------------------------------------------------------------------ 40 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ WATER AND SEWER - 7.7% (5.3% OF TOTAL INVESTMENTS) $ 9,165 California Department of Water Resources, Water System 12/11 at 100.00 AAA $ 9,769,065 Revenue Bonds, Central Valley Project, Series 2001W, 5.250%, 12/01/22 - FSA Insured 875 Healdsburg Public Financing Authority, California, 4/16 at 100.00 AAA 918,803 Wastewater Revenue Bonds, Series 2006, 5.000%, 4/01/36 - MBIA Insured 835 Marina Coast Water District, California, Enterprise Certificate 6/16 at 100.00 AAA 878,036 of Participation, Series 2006, 5.000%, 6/01/31 - MBIA Insured 8,250 Pico Rivera Water Authority, California, Revenue Bonds, 12/11 at 102.00 N/R 8,865,450 Series 2001A, 6.250%, 12/01/32 2,250 Sacramento County Sanitation District Financing Authority, 6/16 at 100.00 AAA 2,382,480 California, Revenue Bonds, Series 2006, 5.000%, 12/01/31 - FGIC Insured 5,115 San Francisco City and County Public Utilities Commission, 11/12 at 100.00 AAA 5,445,017 California, Water Revenue Bonds, Series 2002A, 5.000%, 11/01/18 - MBIA Insured ------------------------------------------------------------------------------------------------------------------------------------ 26,490 Total Water and Sewer 28,258,851 ------------------------------------------------------------------------------------------------------------------------------------ $ 500,960 Total Investments (cost $503,466,600) - 145.9% 533,425,529 =============----------------------------------------------------------------------------------------------------------------------- Other Assets Less Liabilities - 2.0% 7,090,635 -------------------------------------------------------------------------------------------------------------------- Preferred Shares, at Liquidation Value - (47.9)% (175,000,000) -------------------------------------------------------------------------------------------------------------------- Net Assets Applicable to Common Shares - 100% $ 365,516,164 ==================================================================================================================== FORWARD SWAPS OUTSTANDING AT AUGUST 31, 2006: FIXED RATE FLOATING RATE UNREALIZED NOTIONAL RATE PAID RATE RECEIVED PAYMENT PAYMENT EFFECTIVE TERMINATION APPRECIATION COUNTERPARTY AMOUNT BY THE FUND (5) BY THE FUND (5) FREQUENCY FREQUENCY DATE (6) DATE (DEPRECIATION) ------------------------------------------------------------------------------------------------------------------------------------ JPMorgan $44,000,000 5.547% 3 Month USD-LIBOR Semi-Annually Quarterly 7/10/07 7/10/11 $ (643,790) JPMorgan 14,500,000 3 Month USD-LIBOR 5.813% Semi-Annually Quarterly 7/10/07 7/10/27 679,122 Morgan Stanley 24,500,000 5.560% 3 Month USD-LIBOR Semi-Annually Quarterly 7/10/07 7/10/12 (410,279) Morgan Stanley 31,200,000 3 Month USD-LIBOR 5.691% Semi-Annually Quarterly 7/10/07 7/10/37 1,213,376 ------------------------------------------------------------------------------------------------------------------------------------ $ 838,429 ==================================================================================================================================== USD-LIBOR (United States Dollar-London Inter-Bank Offered Rates) FUTURES CONTRACTS OUTSTANDING AT AUGUST 31, 2006: UNREALIZED CONTRACT NUMBER OF CONTRACT ORIGINAL VALUE AT APPRECIATION TYPE POSITION CONTRACTS EXPIRATION VALUE AUGUST 31, 2006 (DEPRECIATION) ------------------------------------------------------------------------------------------------------------------------------------ U.S. 10-Year Treasury Notes Long 51 12/06 $5,448,786 $5,476,125 $27,339 ==================================================================================================================================== (1) All percentages shown in the Portfolio of Investments are based on net assets applicable to Common shares unless otherwise noted. (2) 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. Certain mortgage-backed securities may be subject to periodic principal paydowns. (3) Ratings (not covered by the report of independent registered public accounting firm): Using the higher of Standard & Poor's or Moody's rating. Ratings below BBB by Standard & Poor's Group or Baa by Moody's Investor Service, Inc. are considered to be below investment grade. (4) Backed by an escrow or trust containing sufficient U.S. Government or U.S. Government agency securities which ensure the timely payment of principal and interest. Such investments are normally considered to be equivalent to AAA rated securities. (5) Represents the annualized rate paid or received by the Fund. (6) Effective date represents the date on which both the Fund and counterparty commence interest payment accruals on each forward swap contract. N/R Not rated. (ETM) Escrowed to maturity. See accompanying notes to financial statements. 41 Nuveen California Dividend Advantage Municipal Fund 2 (NVX) Portfolio of INVESTMENTS August 31, 2006 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ CONSUMER STAPLES - 4.0% (2.7% OF TOTAL INVESTMENTS) $ 825 California County Tobacco Securitization Agency, Tobacco 6/15 at 100.00 BBB $ 802,197 Settlement Asset-Backed Bonds, Sonoma County Tobacco Securitization Corporation, Series 2005, 4.250%, 6/01/21 4,625 California County Tobacco Securitization Agency, Tobacco 6/12 at 100.00 Baa3 4,750,569 Settlement Asset-Backed Bonds, Stanislaus County Tobacco Funding Corporation, Series 2002A, 5.500%, 6/01/33 3,200 Golden State Tobacco Securitization Corporation, California, 6/13 at 100.00 BBB 3,512,864 Tobacco Settlement Asset-Backed Bonds, Series 2003A-1, 6.250%, 6/01/33 ------------------------------------------------------------------------------------------------------------------------------------ 8,650 Total Consumer Staples 9,065,630 ------------------------------------------------------------------------------------------------------------------------------------ EDUCATION AND CIVIC ORGANIZATIONS - 15.1% (10.3% OF TOTAL INVESTMENTS) 2,000 California Educational Facilities Authority, Revenue Bonds, 6/11 at 101.00 AAA 2,112,680 Stanford University, Series 2001Q, 5.250%, 12/01/32 180 California Educational Facilities Authority, Revenue Bonds, 10/15 at 100.00 A3 184,819 University of Redlands, Series 2005A, 5.000%, 10/01/35 California Educational Facilities Authority, Revenue Bonds, University of the Pacific, Series 2006: 125 5.000%, 11/01/21 11/15 at 100.00 A2 132,390 165 5.000%, 11/01/25 11/15 at 100.00 A2 173,219 6,375 California Educational Facilities Authority, Student Loan 3/08 at 102.00 Aaa 6,605,456 Revenue Bonds, Cal Loan Program, Series 2001A, 5.400%, 3/01/21 - MBIA Insured (Alternative Minimum Tax) California State Public Works Board, Lease Revenue Bonds, University of California, UCLA Replacement Hospital Project, Series 2002A: 8,880 5.375%, 10/01/16 - FSA Insured 10/12 at 100.00 AAA 9,699,535 10,570 5.375%, 10/01/18 - FSA Insured 10/12 at 100.00 AAA 11,445,406 620 California Statewide Community Development Authority, 10/13 at 100.00 N/R 664,752 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 3,171,120 Revenue Refunding Bonds, Long Beach Aquarium of the South Pacific, Series 2001, 5.250%, 11/01/30 - AMBAC Insured ------------------------------------------------------------------------------------------------------------------------------------ 31,915 Total Education and Civic Organizations 34,189,377 ------------------------------------------------------------------------------------------------------------------------------------ HEALTH CARE - 12.4% (8.5% OF TOTAL INVESTMENTS) 2,000 California Health Facilities Financing Authority, Revenue 4/12 at 100.00 BBB+ 2,146,060 Bonds, Casa Colina Inc., Series 2001, 6.000%, 4/01/22 1,240 California Health Facilities Financing Authority, Revenue 11/15 at 100.00 A3 1,271,744 Bonds, Cedars-Sinai Medical Center, Series 2005, 5.000%, 11/15/34 500 California Infrastructure Economic Development Bank, 8/11 at 102.00 A+ 529,395 Revenue Bonds, Kaiser Hospital Assistance LLC, Series 2001A, 5.550%, 8/01/31 955 California State Public Works Board, Revenue Bonds, 11/14 at 100.00 AAA 1,005,615 University of California - Davis Medical Center, Series 2004II-A, 5.000%, 11/01/22 - MBIA Insured 2,185 California Statewide Community Development Authority, No Opt. Call A+ 2,390,237 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 2,690,925 Hospital Revenue Bonds, Monterey Peninsula Hospital, Series 2003B, 5.250%, 6/01/18 - FSA Insured 5,775 California Statewide Community Development Authority, 3/16 at 100.00 A+ 5,911,868 Revenue Bonds, Kaiser Permanante System, Series 2006, 5.000%, 3/01/41 1,925 California Statewide Community Development Authority, 8/16 at 100.00 A+ 2,035,457 Revenue Bonds, Kaiser Permanente System, Series 2001C, 5.250%, 8/01/31 42 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ HEALTH CARE (continued) $ 5,355 California Statewide Community Development Authority, No Opt. Call A+ $ 5,459,369 Revenue Bonds, Kaiser Permanente System, Series 2002E, 4.700%, 11/01/36 (Mandatory put 6/01/09) 3,000 Central California Joint Powers Health Finance Authority, 2/10 at 101.00 Baa2 3,143,850 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 1,601,430 Presbyterian Intercommunity Hospital, Series 2002, 5.600%, 6/01/22 ------------------------------------------------------------------------------------------------------------------------------------ 26,935 Total Health Care 28,185,950 ------------------------------------------------------------------------------------------------------------------------------------ HOUSING/MULTIFAMILY - 11.5% (7.9% OF TOTAL INVESTMENTS) 2,450 ABAG Finance Authority for Non-Profit Corporations, No Opt. Call BBB 2,542,267 California, Multifamily Housing Revenue Refunding Bonds, United Dominion/2000 Post Apartments, Series 2000B, 6.250%, 8/15/30 (Mandatory put 8/15/08) 3,445 California Statewide Community Development Authority, 8/12 at 105.00 Aaa 3,844,069 GNMA Collateralized Housing Revenue Refunding Bonds, Crowne Pointe Project, Series 2002F, 6.750%, 8/20/37 5,962 California Statewide Community Development Authority, 6/11 at 102.00 AAA 6,486,358 Multifamily Housing Revenue Refunding Bonds, Claremont Village Apartments, Series 2001D, 5.500%, 6/01/31 (Mandatory put 6/01/16) (Alternative Minimum Tax) 3,250 California Statewide Community Development Authority, 7/08 at 101.00 BBB 3,292,640 Revenue Refunding Bonds, Irvine Apartment Communities Development, Series 1998A, 4.900%, 5/15/25 (Mandatory put 5/15/08) 4,000 Daly City Housing Development Finance Agency, California, 12/13 at 102.00 A- 4,399,120 Mobile Home Park Revenue Bonds, Franciscan Mobile Home Park Project, Series 2002A, 5.850%, 12/15/32 205 Independent Cities Lease Finance Authority, California, 5/16 at 100.00 N/R 208,149 Mobile Home Park Revenue Bonds, San Juan Mobile Estates Project, Series 2006A, 5.850%, 5/15/41 1,055 Rohnert Park Finance Authority, California, Senior Lien 9/13 at 100.00 A- 1,144,042 Revenue Bonds, Rancho Feliz Mobile Home Park, Series 2003A, 5.750%, 9/15/38 700 Rohnert Park Finance Authority, California, Subordinate Lien 9/13 at 100.00 N/R 752,822 Revenue Bonds, Rancho Feliz Mobile Home Park, Series 2003B, 6.625%, 9/15/38 3,045 Yucaipa Redevelopment Agency, California, Mobile Home 5/11 at 102.00 N/R 3,400,352 Park Revenue Bonds, Rancho del Sol and Grandview, Series 2001A, 6.750%, 5/15/36 ------------------------------------------------------------------------------------------------------------------------------------ 24,112 Total Housing/Multifamily 26,069,819 ------------------------------------------------------------------------------------------------------------------------------------ HOUSING/SINGLE FAMILY - 0.3% (0.1% OF TOTAL INVESTMENTS) 710 California Rural Home Mortgage Finance Authority, 6/11 at 102.00 AAA 721,907 Mortgage-Backed Securities Program Single Family Mortgage Revenue Bonds, Series 2001A, 5.650%, 12/01/31 (Alternative Minimum Tax) ------------------------------------------------------------------------------------------------------------------------------------ INDUSTRIALS - 0.6% (0.4% OF TOTAL INVESTMENTS) 1,250 California Pollution Control Financing Authority, Solid Waste 1/16 at 102.00 BBB 1,288,125 Disposal Revenue Bonds, Waste Management Inc., Series 2002A, 5.000%, 1/01/22 (Alternative Minimum Tax) ------------------------------------------------------------------------------------------------------------------------------------ LONG-TERM CARE - 0.7% (0.5% OF TOTAL INVESTMENTS) 1,550 California Health Facilities Financing Authority, Cal-Mortgage 1/13 at 100.00 A+ 1,612,744 Insured Revenue Bonds, Northern California Retired Officers Community Corporation - Paradise Valley Estates, Series 2002, 5.125%, 1/01/22 ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/GENERAL - 18.8% (12.9% OF TOTAL INVESTMENTS) 1,000 California, General Obligation Bonds, Series 2004, 5.125%, 2/01/27 2/14 at 100.00 A+ 1,056,110 5,000 California, General Obligation Refunding Bonds, Series 2002, No Opt. Call A+ 5,319,550 5.000%, 2/01/12 4,225 California, General Obligation Veterans Welfare Bonds, 12/06 at 101.00 AAA 4,273,250 Series 2001BV, 5.600%, 12/01/32 - FSA Insured 3,615 Colton Joint Unified School District, San Bernardino County, 8/12 at 102.00 AAA 3,995,623 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 3,191,911 3,300 5.000%, 8/01/22 - FGIC Insured 8/12 at 100.00 AAA 3,489,519 43 Nuveen California Dividend Advantage Municipal Fund 2 (NVX) (continued) Portfolio of INVESTMENTS August 31, 2006 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/GENERAL (continued) $ 1,325 Golden West Schools Financing Authority, California, No Opt. Call AAA $ 1,567,952 General Obligation Revenue Refunding Bonds, School District Program, Series 1998A, 6.650%, 8/01/13 - MBIA Insured 10,840 Los Angeles Unified School District, California, General 7/12 at 100.00 AAA 11,505,575 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 1,359,287 Obligation Bonds, Series 2003A, 5.250%, 7/01/20 - FSA Insured 2,000 Puerto Rico, General Obligation and Public Improvement Bonds, No Opt. Call AAA 2,308,180 Series 2001A, 5.500%, 7/01/20 - MBIA Insured 355 Roseville Joint Union High School District, Placer County, 8/15 at 100.00 AAA 375,792 California, General Obligation Bonds, Series 2006B, 5.000%, 8/01/27 - FGIC Insured 4,050 Santa Rosa High School District, Sonoma County, California, 5/11 at 101.00 AAA 4,312,319 General Obligation Bonds, Series 2001, 5.300%, 5/01/26 - FGIC Insured ------------------------------------------------------------------------------------------------------------------------------------ 39,965 Total Tax Obligation/General 42,755,068 ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/LIMITED - 29.3% (20.0% OF TOTAL INVESTMENTS) Beaumont Financing Authority, California, Local Agency Revenue Bonds, Series 2004D: 650 5.500%, 9/01/24 9/14 at 102.00 N/R 683,430 385 5.800%, 9/01/35 9/14 at 102.00 N/R 406,987 4,900 California State Public Works Board, Lease Revenue Bonds, 12/13 at 100.00 A 5,411,168 Department of Corrections, Series 2003C, 5.500%, 6/01/16 2,105 California, Economic Recovery Revenue Bonds, Series 2004A, 7/14 at 100.00 AA- 2,282,073 5.000%, 7/01/15 1,200 Capistrano Unified School District, Orange County, California, 9/13 at 100.00 N/R 1,270,512 Special Tax Bonds, Community Facilities District 90-2 - Talega, Series 2003, 6.000%, 9/01/33 435 Capistrano Unified School District, Orange County, California, 9/15 at 100.00 AAA 461,026 Special Tax Bonds, Community Facilities District, Series 2005, 5.000%, 9/01/24 - FGIC Insured 4,845 Encinitas Public Financing Authority, California, Lease Revenue 4/08 at 102.00 AAA 5,037,734 Bonds, Acquisition Project, Series 2001A, 5.250%, 4/01/31 - MBIA Insured 750 Fontana, California, Special Tax Bonds, Sierra Community 9/14 at 100.00 N/R 796,163 Facilities District 22, Series 2004, 6.000%, 9/01/34 1,785 Hawthorne Community Redevelopment Agency, California, 9/16 at 100.00 AAA 1,913,395 Project Area 2 Tax Allocation Bonds, Series 2006, 5.250%, 9/01/36 - XLCA Insured 335 Hesperia Community Redevelopment Agency, California, 9/15 at 100.00 AAA 356,594 Tax Allocation Bonds, Series 2005A, 5.000%, 9/01/20 - XLCA Insured 4,000 Industry Urban Development Agency, California, Tax Allocation 5/07 at 101.50 AAA 4,107,320 Refunding Bonds, Civic, Recreational and Industrial Redevelopment Project 1, Series 2002, 5.500%, 5/01/19 - MBIA Insured Irvine, California, Unified School District, Community Facilities District Special Tax Bonds, Series 2006A: 215 5.000%, 9/01/26 9/06 at 103.00 N/R 216,937 495 5.125%, 9/01/36 9/06 at 103.00 N/R 500,405 2,000 Lake Elsinore Public Finance Authority, California, Local Agency 10/13 at 102.00 N/R 2,168,020 Revenue Refunding Bonds, Series 2003H, 6.000%, 10/01/20 415 Lammersville School District, San Joaquin County, California, 9/16 at 100.00 N/R 419,532 Community Facilities District 2002, Mountain House Special Tax Bonds, Series 2006, 5.125%, 9/01/35 1,265 Lee Lake Water District, Riverside County, California, Special 9/13 at 102.00 N/R 1,407,730 Tax Bonds, Community Facilities District 1 of Sycamore Creek, Series 2003, 6.500%, 9/01/24 1,195 Lincoln, California, Special Tax Bonds, Lincoln Crossing 9/13 at 102.00 N/R 1,324,562 Community Facilities District 03-1, Series 2003A, 6.500%, 9/01/25 905 Lincoln, California, Special Tax Bonds, Lincoln Crossing 9/13 at 102.00 N/R 966,232 Community Facilities District 03-1, Series 2004, 6.000%, 9/01/34 800 Los Angeles Community Redevelopment Agency, California, 9/15 at 100.00 Aaa 831,616 Lease Revenue Bonds, Manchester Social Services Project, Series 2005, 5.000%, 9/01/37 - AMBAC Insured 44 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/LIMITED (continued) $ 8,000 Los Angeles County Metropolitan Transportation Authority, 7/08 at 101.00 AAA $ 8,219,360 California, Proposition C Second Senior Lien 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 5,503,550 California, Proposition C Second Senior Lien 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 3,641,898 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 2,065,240 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- 2,366,900 Appropriation Bonds, Series 2002E, 6.000%, 8/01/26 385 Rialto Redevelopment Agency, California, Tax Allocation 9/15 at 100.00 AAA 400,419 Bonds, Merged Project Area, Series 2005A, 5.000%, 9/01/35 - XLCA Insured 6,000 Riverside County Redevelopment Agency, California, 10/11 at 102.00 AAA 6,350,280 Tax Allocation Bonds, Jurupa Valley Project Area, Series 2001, 5.250%, 10/01/35 - AMBAC Insured 475 Roseville, California, Certificates of Participation, Public 8/13 at 100.00 AAA 495,705 Facilities, Series 2003A, 5.000%, 8/01/25 - AMBAC Insured 700 Sacramento, California, Special Tax Bonds, North Natomas 9/14 at 100.00 N/R 748,307 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 1,022,151 Tax Bonds, Community Facilities District 99-1, Series 2003B, 6.000%, 9/01/24 1,530 San Marcos Public Facilities Authority, California, Tax 8/15 at 100.00 AAA 1,590,756 Allocation Bonds, Project Areas 2 and 3, Series 2005C, 5.000%, 8/01/35 - AMBAC Insured 1,930 West Patterson Financing Authority, California, Special 9/13 at 103.00 N/R 2,152,568 Tax Bonds, Community Facilities District 01-1, Series 2003B, 6.750%, 9/01/30 500 West Patterson Financing Authority, California, Special 9/13 at 102.00 N/R 534,950 Tax Bonds, Community Facilities District 01-1, Series 2004B, 6.000%, 9/01/39 850 West Patterson Financing Authority, California, Special 9/13 at 103.00 N/R 920,363 Tax Bonds, Community Facilities District 2001-1, Series 2004A, 6.125%, 9/01/39 ------------------------------------------------------------------------------------------------------------------------------------ 62,320 Total Tax Obligation/Limited 66,573,883 ------------------------------------------------------------------------------------------------------------------------------------ TRANSPORTATION - 10.0% (6.8% OF TOTAL INVESTMENTS) 1,930 Bay Area Toll Authority, California, Revenue Bonds, 4/16 at 100.00 AA 2,035,899 San Francisco Bay Area Toll Bridge, Series 2006, 5.000%, 4/01/31 7,000 Foothill/Eastern Transportation Corridor Agency, California, 1/14 at 101.00 BBB- 6,300,700 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 5,876,984 5.000%, 11/01/16 - MBIA Insured (Alternative Minimum Tax) (7) San Francisco Airports Commission, California, Revenue Bonds, San Francisco International Airport, Second Series 2003, Issue 29A: 2,430 5.250%, 5/01/18 - FGIC Insured (Alternative Minimum Tax) 5/13 at 100.00 AAA 2,582,410 2,555 5.250%, 5/01/19 - FGIC Insured (Alternative Minimum Tax) 5/13 at 100.00 AAA 2,704,110 1,000 San Francisco Airports Commission, California, Revenue Bonds, 5/13 at 100.00 AAA 1,070,770 San Francisco International Airport, Second Series 2003, Issue 29B, 5.125%, 5/01/17 - FGIC Insured 2,000 San Francisco Airports Commission, California, Revenue 5/12 at 100.00 AAA 2,115,660 Refunding Bonds, San Francisco International Airport, Second Series 2002, Issue 28A, 5.250%, 5/01/17 - MBIA Insured (Alternative Minimum Tax) ------------------------------------------------------------------------------------------------------------------------------------ 22,500 Total Transportation 22,686,533 ------------------------------------------------------------------------------------------------------------------------------------ 45 Nuveen California Dividend Advantage Municipal Fund 2 (NVX) (continued) Portfolio of INVESTMENTS August 31, 2006 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ U.S. GUARANTEED - 24.6% (16.9% OF TOTAL INVESTMENTS) (4) $ 9,000 Anitoch Area Public Facilities Financing Agency, California, 8/11 at 100.00 AAA $ 9,707,579 Special Tax Bonds, Community Facilities District 1989-1, Series 2001, 5.250%, 8/01/25 (Pre-refunded 8/01/11) - MBIA Insured 6,000 California Department of Water Resources, Power Supply 5/12 at 101.00 Aaa 6,534,900 Revenue Bonds, Series 2002A, 5.125%, 5/01/18 (Pre-refunded 5/01/12) 7,530 Los Angeles Unified School District, California, General 7/10 at 100.00 AAA 8,044,525 Obligation Bonds, Series 2000D, 5.375%, 7/01/25 (Pre-refunded 7/01/10) - FGIC Insured 1,375 Lucia Mar Unified School District, San Luis Obispo County, 8/14 at 100.00 Aaa 1,525,233 California, General Obligation Bonds, Series 2004A, 5.250%, 8/01/21 (Pre-refunded 8/01/14) - FGIC Insured 3,000 Northern California Tobacco Securitization Authority, 6/11 at 100.00 AAA 3,239,250 Tobacco Settlement Asset-Backed Bonds, Series 2001A, 5.375%, 6/01/41 (Pre-refunded 6/01/11) 12,090 Santa Clara Valley Transportation Authority, California, 6/11 at 100.00 AAA 12,879,355 Sales Tax Revenue Bonds, Series 2001A, 5.000%, 6/01/25 (Pre-refunded 6/01/11) - MBIA Insured 1,160 Saugus Union School District, Los Angeles County, California, 8/12 at 100.00 AAA 1,249,784 General Obligation Bonds, Series 2002A, 5.000%, 8/01/21 (Pre-refunded 8/01/12) - FGIC Insured 6,200 Southwestern Community College District, San Diego County, 8/11 at 101.00 AAA 6,774,492 California, General Obligation Bonds, Series 2001, 5.375%, 8/01/25 (Pre-refunded 8/01/11) - AMBAC Insured 2,710 Southwestern Community College District, San Diego County, 8/14 at 100.00 AAA 2,959,889 California, General Obligation Bonds, Series 2004, 5.000%, 8/01/21 (Pre-refunded 8/01/14) - FGIC Insured 2,800 Tobacco Securitization Authority of Southern California, 6/12 at 100.00 AAA 3,071,656 Tobacco Settlement Asset-Backed Bonds, San Diego County Tobacco Asset Securitization Corporation, Senior Series 2001A, 5.500%, 6/01/36 (Pre-refunded 6/01/12) ------------------------------------------------------------------------------------------------------------------------------------ 51,865 Total U.S. Guaranteed 55,986,663 ------------------------------------------------------------------------------------------------------------------------------------ UTILITIES - 4.8% (3.3% OF TOTAL INVESTMENTS) 5,000 Anaheim Public Finance Authority, California, Second Lien 10/14 at 100.00 AAA 5,411,700 Electric Distribution Revenue Bonds, Series 2004, 5.250%, 10/01/21 - MBIA Insured 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 797,228 1,000 5.000%, 7/01/23 - MBIA Insured 7/13 at 100.00 AAA 1,054,880 500 Los Angeles Department of Water and Power, California, 7/15 at 100.00 AAA 526,410 Power System Revenue Bonds, Series 2005A-1, 5.000%, 7/01/31 - FSA Insured 790 Merced Irrigation District, California, Electric System 9/15 at 100.00 AAA 833,687 Revenue Bonds, Series 2005, 5.125%, 9/01/31 - XLCA Insured 2,000 Santa Clara, California, Subordinate Electric Revenue Bonds, 7/13 at 100.00 AAA 2,172,360 Series 2003A, 5.250%, 7/01/20 - MBIA Insured ------------------------------------------------------------------------------------------------------------------------------------ 10,040 Total Utilities 10,796,265 ------------------------------------------------------------------------------------------------------------------------------------ WATER AND SEWER - 14.1% (9.7% OF TOTAL INVESTMENTS) 2,740 California Department of Water Resources, Water System 12/12 at 100.00 AAA 2,918,895 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 5,094,726 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 2,810,583 Certificates of Participation, Series 2004A, 5.000%, 3/01/20 - FGIC Insured 545 Healdsburg Public Financing Authority, California, Wastewater 4/16 at 100.00 AAA 572,283 Revenue Bonds, Series 2006, 5.000%, 4/01/36 - MBIA Insured 750 Sacramento County Sanitation District Financing Authority, 6/16 at 100.00 AAA 794,160 California, Revenue Bonds, Series 2006, 5.000%, 12/01/31 - FGIC Insured 1,700 San Buenaventura, California, Wastewater Revenue 3/14 at 100.00 AAA 1,781,702 Certificates of Participation, Series 2004, 5.000%, 3/01/24 - MBIA Insured 46 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ WATER AND SEWER (continued) $ 6,885 San Diego Public Facilities Financing Authority, California, 8/12 at 100.00 AAA $ 7,313,247 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 10,846,299 California, Clean Water Revenue Refunding Bonds, Series 2003A, 5.250%, 10/01/20 - MBIA Insured ------------------------------------------------------------------------------------------------------------------------------------ 30,175 Total Water and Sewer 32,131,895 ------------------------------------------------------------------------------------------------------------------------------------ $ 311,987 Total Investments (cost $315,496,436) - 146.2% 332,063,859 =============----------------------------------------------------------------------------------------------------------------------- Other Assets Less Liabilities - 2.2% 5,096,014 -------------------------------------------------------------------------------------------------------------------- Preferred Shares, at Liquidation Value - (48.4)% (110,000,000) -------------------------------------------------------------------------------------------------------------------- Net Assets Applicable to Common Shares - 100% $ 227,159,873 ==================================================================================================================== FORWARD SWAPS OUTSTANDING AT AUGUST 31, 2006: FIXED RATE FLOATING RATE UNREALIZED NOTIONAL RATE PAID RATE RECEIVED PAYMENT PAYMENT EFFECTIVE TERMINATION APPRECIATION COUNTERPARTY AMOUNT BY THE FUND (5) BY THE FUND (5) FREQUENCY FREQUENCY DATE (6) DATE (DEPRECIATION) ------------------------------------------------------------------------------------------------------------------------------------ Goldman Sachs $38,500,000 5.681% 3 Month USD-LIBOR Semi-Annually Quarterly 7/27/07 7/27/12 $(836,012) JPMorgan 12,000,000 5.716% 3 Month USD-LIBOR Semi-Annually Quarterly 7/27/07 7/27/14 (326,975) JPMorgan 6,500,000 3 Month USD-LIBOR 5.869% Semi-Annually Quarterly 7/27/07 7/27/34 396,938 Morgan Stanley 13,700,000 3 Month USD-LIBOR 5.811% Semi-Annually Quarterly 7/27/07 7/27/24 603,726 Morgan Stanley 18,500,000 3 Month USD-LIBOR 5.816% Semi-Annually Quarterly 7/27/07 7/27/29 910,532 ------------------------------------------------------------------------------------------------------------------------------------ $ 748,209 ==================================================================================================================================== USD-LIBOR (United States Dollar-London Inter-Bank Offered Rates) (1) All percentages shown in the Portfolio of Investments are based on net assets applicable to Common shares unless otherwise noted. (2) 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. Certain mortgage-backed securities may be subject to periodic principal paydowns. (3) Ratings (not covered by the report of independent registered public accounting firm): Using the higher of Standard & Poor's or Moody's rating. Ratings below BBB by Standard & Poor's Group or Baa by Moody's Investor Service, Inc. are considered to be below investment grade. (4) Backed by an escrow or trust containing sufficient U.S. Government or U.S. Government agency securities which ensure the timely payment of principal and interest. (5) Represents the annualized rate paid or received by the Fund. (6) Effective date represents the date on which both the Fund and counterparty commence interest payment accruals on each forward swap contract. (7) Portion of the investment, with an aggregate market value of $705,028, has been pledged to collateralize the net payment obligations under forward swap contracts. N/R Not rated. See accompanying notes to financial statements. 47 Nuveen California Dividend Advantage Municipal Fund 3 (NZH) Portfolio of INVESTMENTS August 31, 2006 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ CONSUMER STAPLES - 2.2% (1.5% OF TOTAL INVESTMENTS) $ 1,340 California County Tobacco Securitization Agency, Tobacco 6/15 at 100.00 BBB $ 1,302,962 Settlement Asset-Backed Bonds, Sonoma County Tobacco Securitization Corporation, Series 2005, 4.250%, 6/01/21 6,100 Golden State Tobacco Securitization Corporation, California, 6/13 at 100.00 BBB 6,696,397 Tobacco Settlement Asset-Backed Bonds, Series 2003A-1, 6.250%, 6/01/33 ------------------------------------------------------------------------------------------------------------------------------------ 7,440 Total Consumer Staples 7,999,359 ------------------------------------------------------------------------------------------------------------------------------------ EDUCATION AND CIVIC ORGANIZATIONS - 7.9% (5.2% OF TOTAL INVESTMENTS) 290 California Educational Facilities Authority, Revenue Bonds, 10/15 at 100.00 A3 297,763 University of Redlands, Series 2005A, 5.000%, 10/01/35 California Educational Facilities Authority, Revenue Bonds, University of the Pacific, Series 2006: 200 5.000%, 11/01/21 11/15 at 100.00 A2 211,824 270 5.000%, 11/01/25 11/15 at 100.00 A2 283,449 3,825 California Educational Facilities Authority, Student Loan 3/08 at 102.00 Aaa 3,963,274 Revenue Bonds, Cal Loan Program, Series 2001A, 5.400%, 3/01/21 - MBIA Insured (Alternative Minimum Tax) 3,600 California State Public Works Board, Lease Revenue Bonds, 10/12 at 100.00 AAA 3,898,152 University of California, UCLA Replacement Hospital Project, Series 2002A, 5.375%, 10/01/17 - FSA Insured 620 California Statewide Community Development Authority, 10/13 at 100.00 N/R 664,752 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 7,967,687 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 AA 3,060,355 Projects, Series 2000K, 5.000%, 9/01/23 4,000 University of California, Revenue Bonds, Multi-Purpose 5/13 at 100.00 AAA 4,218,320 Projects, Series 2003A, 5.000%, 5/15/23 - AMBAC Insured 3,820 University of California, Revenue Bonds, Research Facilities, 9/09 at 101.00 AAA 3,956,527 Series 2001E, 5.000%, 9/01/26 - AMBAC Insured ------------------------------------------------------------------------------------------------------------------------------------ 27,210 Total Education and Civic Organizations 28,522,103 ------------------------------------------------------------------------------------------------------------------------------------ HEALTH CARE - 16.4% (11.0% OF TOTAL INVESTMENTS) 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+ 4,292,120 2,000 6.125%, 4/01/32 4/12 at 100.00 BBB+ 2,138,940 2,020 California Health Facilities Financing Authority, Revenue Bonds, 11/15 at 100.00 A3 2,071,712 Cedars-Sinai Medical Center, Series 2005, 5.000%, 11/15/34 9,000 California Infrastructure Economic Development Bank, 8/11 at 102.00 A+ 9,529,110 Revenue Bonds, Kaiser Hospital Assistance LLC, Series 2001A, 5.550%, 8/01/31 6,525 California Statewide Community Development Authority, No Opt. Call A+ 7,249,275 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 6,942,587 Hospital Revenue Bonds, Monterey Peninsula Hospital, Series 2003B, 5.250%, 6/01/18 - FSA Insured 7,665 California Statewide Community Development Authority, 11/09 at 102.00 A 8,045,874 Insured Mortgage Hospital Revenue Bonds, Mission Community Hospital, Series 2001, 5.375%, 11/01/21 9,425 California Statewide Community Development Authority, 3/16 at 100.00 A+ 9,648,373 Revenue Bonds, Kaiser Permanante System, Series 2006, 5.000%, 3/01/41 3,145 California Statewide Community Development Authority, 8/16 at 100.00 A+ 3,325,460 Revenue Bonds, Kaiser Permanente System, Series 2001C, 5.250%, 8/01/31 48 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ HEALTH CARE (continued) 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 $ 1,865,173 1,740 6.000%, 2/01/30 2/10 at 101.00 Baa2 1,823,433 2,500 Whittier, California, Health Facility Revenue Bonds, 6/12 at 101.00 A 2,669,050 Presbyterian Intercommunity Hospital, Series 2002, 5.600%, 6/01/22 ------------------------------------------------------------------------------------------------------------------------------------ 56,240 Total Health Care 59,601,107 ------------------------------------------------------------------------------------------------------------------------------------ HOUSING/MULTIFAMILY - 10.0% (6.7% OF TOTAL INVESTMENTS) 4,750 ABAG Finance Authority for Non-Profit Corporations, No Opt. Call BBB 4,926,035 California, Multifamily Housing Revenue Refunding Bonds, United Dominion/2000 Post Apartments, Series 2000B, 6.400%, 8/15/30 (Mandatory put 8/15/08) (Alternative Minimum Tax) 4,000 ABAG Finance Authority for Non-Profit Corporations, No Opt. Call BBB 4,150,640 California, Multifamily Housing Revenue Refunding Bonds, United Dominion/2000 Post Apartments, Series 2000B, 6.250%, 8/15/30 (Mandatory put 8/15/08) 5,165 California Statewide Community Development Authority, 8/12 at 105.00 Aaa 5,763,314 GNMA Collateralized Housing Revenue Refunding Bonds, Crowne Pointe Project, Series 2002F, 6.750%, 8/20/37 2,000 Daly City Housing Development Finance Agency, California, 12/13 at 102.00 A- 2,183,180 Mobile Home Park Revenue Bonds, Franciscan Mobile Home Park Project, Series 2002A, 5.800%, 12/15/25 325 Independent Cities Lease Finance Authority, California, 5/16 at 100.00 N/R 329,992 Mobile Home Park Revenue Bonds, San Juan Mobile Estates Project, Series 2006A, 5.850%, 5/15/41 1,735 Rohnert Park Finance Authority, California, Senior Lien 9/13 at 100.00 A- 1,881,434 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 1,209,893 Revenue Bonds, Rancho Feliz Mobile Home Park, Series 2003B, 6.625%, 9/15/38 3,610 San Bernardino County Housing Authority, California, 11/11 at 105.00 Aaa 3,944,900 GNMA Collateralized Multifamily Mortgage Revenue Bonds, Pacific Palms Mobile Home Park, Series 2001A, 6.700%, 12/20/41 7,500 San Bernardino County Housing Authority, California, No Opt. Call A- 7,712,100 Multifamily Housing Revenue Refunding Bonds, Equity Residential Properties/Redlands Lawn and Tennis Apartments, Series 1999A, 5.200%, 6/15/29 (Mandatory 6/15/09) 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 1,299,675 2,880 5.450%, 2/20/43 (Alternative Minimum Tax) 8/11 at 102.00 AAA 2,978,525 ------------------------------------------------------------------------------------------------------------------------------------ 34,340 Total Housing/Multifamily 36,379,688 ------------------------------------------------------------------------------------------------------------------------------------ INDUSTRIALS - 0.6% (0.3% OF TOTAL INVESTMENTS) 2,000 California Pollution Control Financing Authority, Solid Waste 1/16 at 102.00 BBB 2,061,000 Disposal Revenue Bonds, Waste Management Inc., Series 2002A, 5.000%, 1/01/22 (Alternative Minimum Tax) ------------------------------------------------------------------------------------------------------------------------------------ LONG-TERM CARE - 1.5% (0.9% OF TOTAL INVESTMENTS) 2,450 California Health Facilities Financing Authority, Cal-Mortgage 1/13 at 100.00 A+ 2,549,176 Insured Revenue Bonds, Northern California Retired Officers Community Corporation - Paradise Valley Estates, Series 2002, 5.125%, 1/01/22 California Health Facilities Financing Authority, Insured Senior Living Revenue Bonds, Aldersly Project, Series 2002A: 1,500 5.125%, 3/01/22 3/12 at 101.00 A+ 1,562,190 1,315 5.250%, 3/01/32 3/12 at 101.00 A+ 1,367,192 ------------------------------------------------------------------------------------------------------------------------------------ 5,265 Total Long-Term Care 5,478,558 ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/GENERAL - 24.8% (16.5% OF TOTAL INVESTMENTS) 9,335 California, General Obligation Bonds, Series 2002, No Opt. Call AAA 10,966,198 6.000%, 2/01/16 - FSA Insured 1,750 California, General Obligation Bonds, Series 2004, 2/14 at 100.00 A+ 1,848,193 5.125%, 2/01/27 49 Nuveen California Dividend Advantage Municipal Fund 3 (NZH) (continued) Portfolio of INVESTMENTS August 31, 2006 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/GENERAL (continued) California, General Obligation Refunding Bonds, Series 2002: $ 8,450 5.000%, 2/01/12 No Opt. Call A+ $ 8,990,040 2,780 6.000%, 4/01/16 - AMBAC Insured No Opt. Call AAA 3,266,834 10 California, General Obligation Veterans Welfare Bonds, 12/06 at 102.00 AA- 10,227 Series 1997BJ, 5.500%, 12/01/18 (Alternative Minimum Tax) 14,300 California, General Obligation Veterans Welfare Bonds, 6/07 at 101.00 AAA 14,566,551 Series 2001BZ, 5.350%, 12/01/21 - MBIA Insured (Alternative Minimum Tax) 3,000 Contra Costa County Community College District, California, 8/12 at 100.00 AAA 3,164,820 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 2,621,875 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 2,405,567 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 4,077,862 7,200 5.000%, 7/01/22 - FSA Insured 7/13 at 100.00 AAA 7,613,136 870 Puerto Rico, General Obligation and Public Improvement 7/11 at 100.00 AAA 910,568 Bonds, Series 2001, 5.000%, 7/01/24 - FSA Insured Riverside Community College District, California, General Obligation Bonds, Series 2005: 2,675 5.000%, 8/01/21 - FSA Insured 8/15 at 100.00 AAA 2,864,551 5,000 5.000%, 8/01/24 - FSA Insured 8/15 at 100.00 AAA 5,311,950 575 Roseville Joint Union High School District, Placer County, 8/15 at 100.00 AAA 608,678 California, General Obligation Bonds, Series 2006B, 5.000%, 8/01/27 - FGIC Insured 10,810 San Diego Unified School District, San Diego County, 7/11 at 102.00 AAA 11,638,262 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 4,351,440 California, General Obligation Bonds, Election of 1998, Series 2002D, 5.250%, 7/01/21 - FGIC Insured 2,715 San Jose-Evergreen Community College District, 9/15 at 100.00 AAA 2,881,620 Santa Clara County, California, General Obligation Bonds, Series 2005A, 5.000%, 9/01/25 - MBIA Insured 1,630 West Contra Costa Unified School District, Contra Costa 8/11 at 101.00 AAA 1,722,943 County, California, General Obligation Bonds, Series 2003C, 5.000%, 8/01/22 - FGIC Insured ------------------------------------------------------------------------------------------------------------------------------------ 83,610 Total Tax Obligation/General 89,821,315 ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/LIMITED - 41.4% (27.6% OF TOTAL INVESTMENTS) 4,000 Beaumont Financing Authority, California, Local Agency 9/12 at 102.00 N/R 4,422,880 Revenue Bonds, Series 2002A, 6.750%, 9/01/25 7,135 Brentwood Infrastructure Financing Authority, Contra Costa 11/11 at 100.00 AAA 7,498,671 County, California, Capital Improvement Revenue Bonds, Series 2001, 5.000%, 11/01/25 - FSA Insured 8,210 California State Public Works Board, Lease Revenue Bonds, 12/13 at 100.00 A 9,066,467 Department of Corrections, Series 2003C, 5.500%, 6/01/16 3,350 California State Public Works Board, Lease Revenue Bonds, 12/12 at 100.00 AAA 3,614,885 Department of General Services, Capital East End Project, Series 2002A, 5.250%, 12/01/17 - AMBAC Insured 4,000 California State Public Works Board, Lease Revenue Bonds, 3/12 at 100.00 AAA 4,144,760 Department of General Services, Series 2002B, 5.000%, 3/01/27 - AMBAC Insured 4,510 California State Public Works Board, Lease Revenue Bonds, 12/11 at 102.00 AAA 4,723,143 Department of Mental Health, Hospital Addition, Series 2001A, 5.000%, 12/01/26 - AMBAC Insured 2,815 California, Economic Recovery Revenue Bonds, 7/14 at 100.00 AA- 3,051,798 Series 2004A, 5.000%, 7/01/15 Capistrano Unified School District, Orange County, California, Special Tax Bonds, Community Facilities District 90-2 - Talega, Series 2003: 1,750 5.875%, 9/01/23 9/13 at 100.00 N/R 1,865,552 550 6.000%, 9/01/33 9/13 at 100.00 N/R 582,318 715 Capistrano Unified School District, Orange County, California, 9/15 at 100.00 AAA 757,778 Special Tax Bonds, Community Facilities District, Series 2005, 5.000%, 9/01/24 - FGIC Insured 50 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/LIMITED (continued) $ 1,810 Cerritos Public Financing Authority, California, Tax Allocation No Opt. Call AAA $ 1,972,049 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 1,515,491 Obligation Senior Lien Revenue Bonds, Series 1998A, 6.000%, 9/15/18 - AMBAC Insured 1,125 Fontana, California, Special Tax Bonds, Sierra Community 9/14 at 100.00 N/R 1,194,244 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 1,066,380 Tax Bonds, Amerige Heights, Series 2002, 6.100%, 9/01/22 550 Hesperia Community Redevelopment Agency, California, 9/15 at 100.00 AAA 585,453 Tax Allocation Bonds, Series 2005A, 5.000%, 9/01/20 - XLCA Insured Irvine, California, Unified School District, Community Facilities District Special Tax Bonds, Series 2006A: 350 5.000%, 9/01/26 9/06 at 103.00 N/R 353,154 805 5.125%, 9/01/36 9/06 at 103.00 N/R 813,791 3,000 Lake Elsinore Public Finance Authority, California, Local 10/13 at 102.00 N/R 3,252,030 Agency Revenue Refunding Bonds, Series 2003H, 6.000%, 10/01/20 685 Lammersville School District, San Joaquin County, California, 9/16 at 100.00 N/R 692,480 Community Facilities District 2002, Mountain House Special Tax Bonds, Series 2006, 5.125%, 9/01/35 5,250 Lammersville School District, San Joaquin County, California, 9/12 at 101.00 N/R 5,684,175 Special Tax Bonds, Community Facilities District of Mountain House, Series 2002, 6.300%, 9/01/24 2,000 Lee Lake Water District, Riverside County, California, Special 9/13 at 102.00 N/R 2,225,660 Tax Bonds, Community Facilities District 1 of Sycamore Creek, Series 2003, 6.500%, 9/01/24 1,985 Lincoln, California, Special Tax Bonds, Lincoln Crossing 9/13 at 102.00 N/R 2,200,214 Community Facilities District 03-1, Series 2003A, 6.500%, 9/01/25 1,360 Lincoln, California, Special Tax Bonds, Lincoln Crossing 9/13 at 102.00 N/R 1,452,018 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 5,639,450 Improvement Financing Project, Series 2002, 5.000%, 10/01/26 - MBIA Insured 1,310 Los Angeles Community Redevelopment Agency, California, 9/15 at 100.00 Aaa 1,361,771 Lease Revenue Bonds, Manchester Social Services Project, Series 2005, 5.000%, 9/01/37 - AMBAC Insured 3,075 Los Angeles County Metropolitan Transportation Authority, No Opt. Call AAA 3,384,683 California, Proposition C Second Senior Lien 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 1,068,510 Master Plan Financing, Series 2001, 5.250%, 8/01/15 - MBIA Insured 1,675 Moreno Valley Unified School District, Riverside County, 3/14 at 100.00 AAA 1,751,129 California, Certificates of Participation, Series 2005, 5.000%, 3/01/26 - FSA Insured 3,000 Oakland Redevelopment Agency, California, Subordinate 3/13 at 100.00 AAA 3,301,260 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 4,760,102 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 2,065,240 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 11,715,993 Revenue Refunding Bonds, Project Area 1, Series 2002, 5.100%, 4/01/30 - MBIA Insured 3,250 Pomona Public Financing Authority, California, Revenue 2/11 at 100.00 AAA 3,347,760 Refunding Bonds, Merged Redevelopment Projects, Series 2001AD, 5.000%, 2/01/27 - MBIA Insured 625 Rialto Redevelopment Agency, California, Tax Allocation 9/15 at 100.00 AAA 650,031 Bonds, Merged Project Area, Series 2005A, 5.000%, 9/01/35 - XLCA Insured 780 Roseville, California, Certificates of Participation, Public 8/13 at 100.00 AAA 814,000 Facilities, Series 2003A, 5.000%, 8/01/25 - AMBAC Insured 1,700 Roseville, California, Special Tax Bonds, Community 9/09 at 103.00 N/R 1,798,889 Facilities District 1 - Crocker, Series 2003, 6.000%, 9/01/27 51 Nuveen California Dividend Advantage Municipal Fund 3 (NZH) (continued) Portfolio of INVESTMENTS August 31, 2006 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/LIMITED (continued) $ 1,150 Sacramento, California, Special Tax Bonds, North Natomas 9/14 at 100.00 N/R $ 1,229,362 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 15,084,619 Lien 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 9,077,316 Sales Tax Revenue Bonds, Series 2001, 5.000%, 7/01/26 - AMBAC Insured 1,595 San Marcos Public Facilities Authority, California, Special 9/09 at 102.00 N/R 1,672,134 Tax Bonds, Community Facilities District 99-1, Series 2003B, 6.000%, 9/01/24 8,710 South Orange County Public Financing Authority, California, 8/15 at 100.00 AAA 9,154,384 Special Tax Revenue Bonds, Ladera Ranch, Series 2005A, 5.000%, 8/15/32 - AMBAC Insured 2,810 West Patterson Financing Authority, California, Special 9/13 at 103.00 N/R 3,172,237 Tax Bonds, Community Facilities District 01-1, Series 2003B, 7.000%, 9/01/38 2,000 West Patterson Financing Authority, California, Special 9/13 at 102.00 N/R 2,139,800 Tax Bonds, Community Facilities District 01-1, Series 2004B, 6.000%, 9/01/39 1,375 West Patterson Financing Authority, California, Special 9/13 at 103.00 N/R 1,488,823 Tax Bonds, Community Facilities District 2001-1, Series 2004A, 6.125%, 9/01/39 2,500 Yucaipa-Calimesa Joint Unified School District, 10/11 at 100.00 AAA 2,584,250 San Bernardino County, California, General Obligation Refunding Bonds, Series 2001A, 5.000%, 10/01/26 - MBIA Insured ------------------------------------------------------------------------------------------------------------------------------------ 141,120 Total Tax Obligation/Limited 149,997,134 ------------------------------------------------------------------------------------------------------------------------------------ TRANSPORTATION - 10.6% (7.1% OF TOTAL INVESTMENTS) 1,690 Bay Area Toll Authority, California, Revenue Bonds, 4/16 at 100.00 AA 1,782,730 San Francisco Bay Area Toll Bridge, Series 2006, 5.000%, 4/01/31 11,750 Foothill/Eastern Transportation Corridor Agency, California, 1/14 at 101.00 BBB- 10,554,907 Toll Road Revenue Refunding Bonds, Series 1999, 0.000%, 1/15/28 3,000 Port of Oakland, California, Revenue Bonds, Series 2002M, 11/12 at 100.00 AAA 3,241,260 5.250%, 11/01/20 - FGIC Insured 1,500 Port of Oakland, California, Revenue Refunding Bonds, 11/07 at 102.00 AAA 1,562,895 Series 1997I, 5.600%, 11/01/19 - MBIA 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 4,400,865 10,625 5.125%, 5/01/18 - FGIC Insured 5/13 at 100.00 AAA 11,338,363 5,140 5.125%, 5/01/19 - FGIC Insured 5/13 at 100.00 AAA 5,469,628 ------------------------------------------------------------------------------------------------------------------------------------ 37,815 Total Transportation 38,350,648 ------------------------------------------------------------------------------------------------------------------------------------ U.S. GUARANTEED - 11.9% (8.0% OF TOTAL INVESTMENTS) (4) 11,240 California County Tobacco Securitization Agency, Tobacco 6/12 at 100.00 Baa3 (4) 12,166,625 Settlement Asset-Backed Bonds, Merced County Tobacco Funding Corporation, Series 2002A, 5.500%, 6/01/33 (Pre-refunded 6/01/12) California Department of Water Resources, Power Supply Revenue Bonds, Series 2002A: 3,500 5.375%, 5/01/17 (Pre-refunded 5/01/12) - XLCA Insured 5/12 at 101.00 AAA 3,856,615 9,000 5.125%, 5/01/18 (Pre-refunded 5/01/12) 5/12 at 101.00 Aaa 9,802,350 1,840 Compton Unified School District, Los Angeles County, California, 9/13 at 100.00 AAA 2,026,981 General Obligation Bonds, Series 2003A, 5.250%, 9/01/18 (Pre-refunded 9/01/13) - MBIA Insured 1,525 Lucia Mar Unified School District, San Luis Obispo County, 8/14 at 100.00 Aaa 1,691,622 California, General Obligation Bonds, Series 2004A, 5.250%, 8/01/22 (Pre-refunded 8/01/14) - FGIC Insured 5,500 Puerto Rico Highway and Transportation Authority, Highway 7/12 at 100.00 AAA 5,995,660 Revenue Bonds, Series 2002D, 5.375%, 7/01/36 (Pre-refunded 7/01/12) 1,000 Saugus Union School District, Los Angeles County, California, 8/12 at 100.00 AAA 1,077,400 General Obligation Bonds, Series 2002A, 5.000%, 8/01/24 (Pre-refunded 8/01/12) - FGIC Insured 52 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ U.S. GUARANTEED (4) (continued) $ 1,905 Southwestern Community College District, San Diego County, 8/14 at 100.00 AAA $ 2,080,660 California, General Obligation Bonds, Series 2004, 5.000%, 8/01/22 (Pre-refunded 8/01/14) - FGIC Insured 4,200 Tobacco Securitization Authority of Southern California, 6/12 at 100.00 AAA 4,607,484 Tobacco Settlement Asset-Backed Bonds, San Diego County Tobacco Asset Securitization Corporation, Senior Series 2001A, 5.500%, 6/01/36 (Pre-refunded 6/01/12) ------------------------------------------------------------------------------------------------------------------------------------ 39,710 Total U.S. Guaranteed 43,305,397 ------------------------------------------------------------------------------------------------------------------------------------ UTILITIES - 9.1% (6.1% OF TOTAL INVESTMENTS) 15,000 California Pollution Control Financing Authority, Remarketed 4/11 at 102.00 AAA 16,061,246 Revenue Bonds, Pacific Gas and Electric Company, Series 1996A, 5.350%, 12/01/16 - MBIA Insured (Alternative Minimum Tax) 1,200 Los Angeles Department of Water and Power, California, 7/13 at 100.00 AAA 1,275,564 Power System Revenue Bonds, Series 2003A-2, 5.000%, 7/01/21 - MBIA Insured 1,285 Merced Irrigation District, California, Electric System Revenue 9/15 at 100.00 AAA 1,356,061 Bonds, Series 2005, 5.125%, 9/01/31 - XLCA Insured 5,000 Merced Irrigation District, California, Revenue Certificates 9/13 at 102.00 Baa3 5,275,300 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 2,341,688 Bonds, Series 2002, 5.125%, 8/01/22 - AMBAC Insured (Alternative Minimum Tax) 6,085 Southern California Public Power Authority, Revenue Bonds, 7/13 at 100.00 AAA 6,643,846 Magnolia Power Project, Series 2003-1A, 5.250%, 7/01/16 - AMBAC Insured ------------------------------------------------------------------------------------------------------------------------------------ 30,820 Total Utilities 32,953,705 ------------------------------------------------------------------------------------------------------------------------------------ WATER AND SEWER - 13.6% (9.1% OF TOTAL INVESTMENTS) 1,070 Burbank, California, Wastewater System Revenue Bonds, 6/14 at 100.00 AAA 1,131,504 Series 2004A, 5.000%, 6/01/22 - AMBAC Insured 5,000 California Department of Water Resources, Water System 6/13 at 100.00 AAA 5,492,700 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 7,262,150 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 2,117,200 Certificates of Participation, Series 2004A, 5.000%, 3/01/20 - FGIC Insured 890 Healdsburg Public Financing Authority, California, Wastewater 4/16 at 100.00 AAA 934,553 Revenue Bonds, Series 2006, 5.000%, 4/01/36 - MBIA Insured 850 Marina Coast Water District, California, Enterprise Certificate 6/16 at 100.00 AAA 893,809 of Participation, Series 2006, 5.000%, 6/01/31 - MBIA Insured 1,000 Pico Rivera Water Authority, California, Revenue Bonds, 12/11 at 102.00 N/R 1,074,600 Series 2001A, 6.250%, 12/01/32 1,380 Sacramento County Sanitation District Financing Authority, 6/16 at 100.00 AAA 1,456,742 California, Revenue Bonds, Series 2006, 5.000%, 12/01/36 - FGIC Insured 1,000 San Buenaventura, California, Wastewater Revenue 3/14 at 100.00 AAA 1,048,060 Certificates of Participation, Series 2004, 5.000%, 3/01/24 - MBIA Insured 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 2,637,350 6,260 5.000%, 8/01/24 - MBIA Insured 8/12 at 100.00 AAA 6,593,470 53 Nuveen California Dividend Advantage Municipal Fund 3 (NZH) (continued) Portfolio of INVESTMENTS August 31, 2006 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ WATER AND SEWER (continued) 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 $ 3,595,548 12,000 5.250%, 10/01/19 - MBIA Insured 4/13 at 100.00 AAA 13,015,559 1,955 Westlands Water District, California, Revenue Certificates 3/15 at 100.00 AAA 2,059,397 of Participation, Series 2005A, 5.000%, 9/01/23 - MBIA Insured ------------------------------------------------------------------------------------------------------------------------------------ 46,220 Total Water and Sewer 49,312,642 ------------------------------------------------------------------------------------------------------------------------------------ $ 511,790 Total Investments (cost $521,149,817) - 150.0% 543,782,656 =============----------------------------------------------------------------------------------------------------------------------- Other Assets Less Liabilities - 1.6% 5,690,101 -------------------------------------------------------------------------------------------------------------------- Preferred Shares, at Liquidation Value - (51.6)% (187,000,000) -------------------------------------------------------------------------------------------------------------------- Net Assets Applicable to Common Shares - 100% $ 362,472,757 ==================================================================================================================== (1) All percentages shown in the Portfolio of Investments are based on net assets applicable to Common shares unless otherwise noted. (2) 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. Certain mortgage-backed securities may be subject to periodic principal paydowns. (3) Ratings (not covered by the report of independent registered public accounting firm): Using the higher of Standard & Poor's or Moody's rating. Ratings below BBB by Standard & Poor's Group or Baa by Moody's Investor Service, Inc. are considered to be below investment grade. (4) Backed by an escrow or trust containing sufficient U.S. Government or U.S. Government agency securities which ensure the timely payment of principal and interest. Such investments are normally considered to be equivalent to AAA rated securities. N/R Not rated. See accompanying notes to financial statements. 54 Nuveen Insured California Dividend Advantage Municipal Fund (NKL) Portfolio of INVESTMENTS August 31, 2006 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ CONSUMER STAPLES - 2.3% (1.6% OF TOTAL INVESTMENTS) $ 4,500 Golden State Tobacco Securitization Corporation, California, 6/13 at 100.00 BBB $ 5,463,450 Tobacco Settlement Asset-Backed Revenue Bonds, Series 2003A-2, 7.900%, 6/01/42 ------------------------------------------------------------------------------------------------------------------------------------ EDUCATION AND CIVIC ORGANIZATIONS - 8.7% (5.8% OF TOTAL INVESTMENTS) 1,675 California Educational Facilities Authority, Revenue Bonds, 10/12 at 100.00 A2 1,743,407 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 9,497,700 Series 2002A, 5.125%, 11/01/26 - AMBAC Insured 9,000 University of California, Revenue Bonds, Multiple Purpose 9/08 at 101.00 AA 9,250,110 Projects, Series 2000K, 5.300%, 9/01/30 ------------------------------------------------------------------------------------------------------------------------------------ 19,675 Total Education and Civic Organizations 20,491,217 ------------------------------------------------------------------------------------------------------------------------------------ HEALTH CARE - 5.6% (3.8% OF TOTAL INVESTMENTS) 5,000 ABAG Finance Authority for Non-Profit Corporations, 4/12 at 100.00 A 5,329,850 California, Cal-Mortgage Insured Revenue Bonds, Sansum-Santa Barbara Medical Foundation Clinic, Series 2002A, 5.600%, 4/01/26 2,815 California Health Facilities Financing Authority, Revenue 8/13 at 100.00 AAA 2,964,308 Bonds, Lucile Salter Packard Children's Hospital, Series 2003C, 5.000%, 8/15/20 - AMBAC Insured 1,090 California State Public Works Board, Revenue Bonds, 11/14 at 100.00 AAA 1,150,081 University of California - Davis Medical Center, Series 2004II-A, 5.000%, 11/01/21 - MBIA Insured 3,380 Rancho Mirage Joint Powers Financing Authority, California, 7/14 at 100.00 A3 3,753,186 Revenue Bonds, Eisenhower Medical Center, Series 2004, 5.875%, 7/01/26 ------------------------------------------------------------------------------------------------------------------------------------ 12,285 Total Health Care 13,197,425 ------------------------------------------------------------------------------------------------------------------------------------ HOUSING/MULTIFAMILY - 1.2% (0.8% OF TOTAL INVESTMENTS) 1,000 California Statewide Community Development Authority, 8/12 at 100.00 A 1,053,790 Student Housing Revenue Bonds, EAH - Irvine East Campus Apartments, LLC Project, Series 2002A, 5.500%, 8/01/22 - ACA Insured 1,905 Los Angeles, California, GNMA Mortgage-Backed Securities 7/11 at 102.00 AAA 1,995,316 Program Multifamily Housing Revenue Bonds, Park Plaza West Senior Apartments, Series 2001B, 5.300%, 1/20/21 (Alternative Minimum Tax) ------------------------------------------------------------------------------------------------------------------------------------ 2,905 Total Housing/Multifamily 3,049,106 ------------------------------------------------------------------------------------------------------------------------------------ INDUSTRIALS - 1.3% (0.8% OF TOTAL INVESTMENTS) 3,000 California Pollution Control Financing Authority, Solid Waste No Opt. Call BBB+ 3,198,060 Disposal Revenue Bonds, Republic Services Inc., Series 2002C, 5.250%, 6/01/23 (Mandatory put 12/01/17) (Alternative Minimum Tax) ------------------------------------------------------------------------------------------------------------------------------------ LONG-TERM CARE - 3.5% (2.4% OF TOTAL INVESTMENTS) 3,000 ABAG Finance Authority for Non-Profit Corporations, 11/12 at 100.00 A 3,137,340 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 5,222,750 Revenue Bonds, Jewish Home for the Aging, Series 2003, 5.000%, 11/15/18 ------------------------------------------------------------------------------------------------------------------------------------ 8,000 Total Long-Term Care 8,360,090 ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/GENERAL - 30.6% (20.6% OF TOTAL INVESTMENTS) 5,920 Cajon Valley Union School District, San Diego County, 8/10 at 102.00 AAA 6,235,714 California, General Obligation Bonds, Series 2002B, 5.125%, 8/01/32 - MBIA Insured 2,900 California, General Obligation Bonds, Series 2003, 5.000%, 2/01/21 8/13 at 100.00 A+ 3,061,965 1,750 California, General Obligation Bonds, Series 2004, 5.125%, 2/01/27 2/14 at 100.00 A+ 1,848,193 8,250 California, General Obligation Refunding Bonds, Series 2002, 2/12 at 100.00 AAA 8,601,037 5.000%, 2/01/22 - MBIA Insured 55 Nuveen Insured California Dividend Advantage Municipal Fund (NKL) (continued) Portfolio of INVESTMENTS August 31, 2006 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/GENERAL (continued) Compton Community College District, Los Angeles County, California, General Obligation Bonds, Series 2004A: $ 1,315 5.250%, 7/01/22 - MBIA Insured 7/14 at 100.00 AAA $ 1,431,917 2,560 5.250%, 7/01/23 - MBIA Insured 7/14 at 100.00 AAA 2,782,208 230 El Monte Union High School District, Los Angeles County, 6/13 at 100.00 AAA 240,497 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 10,526,500 General Obligation Bonds, Series 2002A, 5.000%, 8/01/25 - FGIC Insured 5,000 Los Angeles Unified School District, California, General 7/12 at 100.00 AAA 5,263,200 Obligation Bonds, Series 2002E, 5.125%, 1/01/27 - MBIA Insured Los Angeles Unified School District, California, General Obligation Bonds, Series 2003A: 3,700 5.000%, 7/01/22 - FSA Insured 7/13 at 100.00 AAA 3,912,306 3,500 5.000%, 1/01/28 - MBIA Insured 7/13 at 100.00 AAA 3,679,480 1,000 Los Rios Community College District, Sacramento, 8/14 at 102.00 AAA 1,066,400 El Dorado and Yolo Counties, California, General Obligation Bonds, Series 2006C, 5.000%, 8/01/25 - FSA Insured 1,500 Madera Unified School District, Madera County, California, 8/12 at 100.00 AAA 1,561,035 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 2,699,325 General Obligation Bonds, Series 2002, 5.250%, 8/01/21 - FGIC Insured 375 Roseville Joint Union High School District, Placer County, 8/15 at 100.00 AAA 396,964 California, General Obligation Bonds, Series 2006B, 5.000%, 8/01/27 - FGIC Insured 3,250 San Diego Unified School District, San Diego County, 7/11 at 102.00 AAA 3,499,015 California, General Obligation Bonds, Election of 1998, Series 2001C, 5.000%, 7/01/22 - FSA Insured 1,160 San Gabriel Unified School District, Los Angeles County, 8/15 at 100.00 AAA 1,239,506 California, General Obligation Bonds, Series 2005, 5.000%, 8/01/22 - FSA Insured 3,500 San Mateo County Community College District, California, 9/12 at 100.00 AAA 3,671,745 General Obligation Bonds, Series 2002A, 5.000%, 9/01/26 - FGIC Insured 10,000 Vista Unified School District, San Diego County, California, 8/12 at 100.00 AAA 10,549,400 General Obligation Bonds, Series 2002A, 5.000%, 8/01/23 - FSA Insured ------------------------------------------------------------------------------------------------------------------------------------ 68,410 Total Tax Obligation/General 72,266,407 ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/LIMITED - 42.4% (28.6% OF TOTAL INVESTMENTS) 1,450 Baldwin Park Public Financing Authority, California, 8/13 at 102.00 BBB 1,524,197 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 7,212,928 California, Certificates of Participation Refunding, Series 2002A, 5.125%, 8/01/26 - FSA Insured 2,290 Burbank Public Financing Authority, California, Revenue 12/13 at 100.00 AAA 2,472,353 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 2,310,154 Los Angeles County, Revenue Bonds, Department of Public Social Services, Series 2003, 5.000%, 9/01/28 - AMBAC Insured 3,100 California State Public Works Board, Lease Revenue Bonds, 11/15 at 100.00 AAA 3,240,058 Department of Health Services, Richmond Lab, Series 2005B, 5.000%, 11/01/30 - XLCA Insured 465 Capistrano Unified School District, Orange County, California, 9/15 at 100.00 AAA 492,821 Special Tax Bonds, Community Facilities District, Series 2005, 5.000%, 9/01/24 - FGIC Insured 7,035 Corona-Norco Unified School District, Riverside County, 9/13 at 100.00 AAA 7,349,394 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 3,284,512 Revenue Bonds, Redevelopment Project, Series 2002A, 5.125%, 11/01/25 - MBIA Insured 8,720 El Monte, California, Senior Lien Certificates of Participation, 1/11 at 100.00 AAA 9,008,981 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 4,228,080 Revenue Bonds, Series 2004A, 5.000%, 9/01/21 - AMBAC Insured 56 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/LIMITED (continued) $ 355 Hesperia Community Redevelopment Agency, California, 9/15 at 100.00 AAA $ 377,883 Tax Allocation Bonds, Series 2005A, 5.000%, 9/01/20 - XLCA Insured 2,115 Inglewood Redevelopment Agency, California, Tax Allocation No Opt. Call AAA 2,360,784 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 3,667,930 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 3,593,868 Bonds, Redevelopment Project Area 1, Series 2002, 5.000%, 9/01/22 - AMBAC Insured 845 Los Angeles Community Redevelopment Agency, California, 9/15 at 100.00 Aaa 878,394 Lease Revenue Bonds, Manchester Social Services Project, Series 2005, 5.000%, 9/01/37 - AMBAC Insured 4,690 Los Angeles County Metropolitan Transportation Authority, 7/08 at 101.00 AAA 4,818,600 California, Proposition C Second Senior Lien Sales Tax Revenue Refunding Bonds, Series 1998A, 5.000%, 7/01/23 - AMBAC Insured 1,460 Los Angeles, California, Certificates of Participation, 6/13 at 100.00 AAA 1,513,597 Municipal Improvement Corporation, Series 2003AW, 5.000%, 6/01/33 - AMBAC Insured 7,000 Los Angeles, California, Certificates of Participation, 4/12 at 100.00 AAA 7,345,310 Series 2002, 5.200%, 4/01/27 - AMBAC Insured 8,470 Ontario Redevelopment Financing Authority, California, 8/11 at 101.00 AAA 8,988,195 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 5,235,800 Revenue Refunding Bonds, Project Area 1, Series 2002, 5.000%, 4/01/25 - MBIA Insured 405 Rialto Redevelopment Agency, California, Tax Allocation 9/15 at 100.00 AAA 421,220 Bonds, Merged Project Area, Series 2005A, 5.000%, 9/01/35 - XLCA Insured 4,475 Riverside County, California, Asset Leasing Corporate Leasehold 6/12 at 101.00 AAA 4,726,629 Revenue Bonds, Riverside County Hospital Project, Series 1997B, 5.000%, 6/01/19 - MBIA Insured 505 Roseville, California, Certificates of Participation, Public 8/13 at 100.00 AAA 527,013 Facilities, Series 2003A, 5.000%, 8/01/25 - AMBAC Insured 3,175 San Buenaventura, California, Certificates of Participation, 2/11 at 101.00 AAA 3,331,147 Series 2001C, 5.250%, 2/01/31 - AMBAC Insured 3,730 San Diego Redevelopment Agency, California, Subordinate 9/09 at 101.00 Baa2 3,859,991 Lien 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 4,213,360 Refunding Bonds, Convention Center Project, Series 2001F, 5.000%, 9/01/19 - MBIA Insured 1,000 Shasta Joint Powers Financing Authority, California, Lease 4/13 at 100.00 AAA 1,064,840 Revenue Bonds, County Administration Building Project, Series 2003A, 5.250%, 4/01/23 - MBIA Insured 2,160 Temecula Redevelopment Agency, California, Tax Allocation 8/08 at 102.00 AAA 2,238,494 Revenue Bonds, Redevelopment Project 1, Series 2002, 5.125%, 8/01/27 - MBIA Insured ------------------------------------------------------------------------------------------------------------------------------------ 95,585 Total Tax Obligation/Limited 100,286,533 ------------------------------------------------------------------------------------------------------------------------------------ TRANSPORTATION - 4.9% (3.3% OF TOTAL INVESTMENTS) 7,500 Foothill/Eastern Transportation Corridor Agency, California, 1/14 at 101.00 BBB- 6,728,100 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 - FGIC Insured (Alternative Minimum Tax) 5/13 at 100.00 AAA 2,334,367 2,300 5.250%, 5/01/17 - FGIC Insured (Alternative Minimum Tax) 5/13 at 100.00 AAA 2,453,479 ------------------------------------------------------------------------------------------------------------------------------------ 11,985 Total Transportation 11,515,946 ------------------------------------------------------------------------------------------------------------------------------------ 57 Nuveen Insured California Dividend Advantage Municipal Fund (NKL) (continued) Portfolio of INVESTMENTS August 31, 2006 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ U.S. GUARANTEED - 13.4% (9.0% OF TOTAL INVESTMENTS) (4) $ 6,000 California Department of Water Resources, Power Supply 5/12 at 101.00 Aaa $ 6,534,900 Revenue Bonds, Series 2002A, 5.125%, 5/01/18 (Pre-refunded 5/01/12) California Health Facilities Financing Authority, Revenue Bonds, Cedars-Sinai Medical Center, Series 1999A: 2,500 6.125%, 12/01/30 (Pre-refunded 12/01/09) 12/09 at 101.00 A3 (4) 2,722,125 1,000 6.250%, 12/01/34 (Pre-refunded 12/01/09) 12/09 at 101.00 A3 (4) 1,092,490 2,250 California Infrastructure Economic Development Bank, 1/28 at 100.00 AAA 2,506,950 First Lien Revenue Bonds, San Francisco Bay Area Toll Bridge, Series 2003A, 5.000%, 7/01/36 (Pre-refunded 1/01/28) - AMBAC Insured 2,185 El Monte Union High School District, Los Angeles County, 6/13 at 100.00 Aaa 2,367,426 California, General Obligation Bonds, Series 2003A, 5.000%, 6/01/28 (Pre-refunded 6/01/13) - FSA Insured Fresno Unified School District, Fresno County, California, General Obligation Bonds, Series 2002B: 1,135 5.125%, 8/01/23 - FGIC Insured (ETM) 8/10 at 102.00 AAA 1,210,863 1,190 5.125%, 8/01/24 - FGIC Insured (ETM) 8/10 at 102.00 AAA 1,269,540 1,245 5.125%, 8/01/25 - FGIC Insured (ETM) 8/10 at 102.00 AAA 1,329,623 1,255 5.125%, 8/01/26 - FGIC Insured (ETM) 8/10 at 102.00 AAA 1,327,589 2,070 Fresno Unified School District, Fresno County, California, 8/10 at 102.00 AAA 2,189,729 General Obligation Bonds, Series 2002G, 5.125%, 8/01/26 - FSA Insured (ETM) 3,000 Peralta Community College District, Alameda County, 8/09 at 102.00 AAA 3,184,620 California, General Obligation Bonds, Election of 2000, Series 2001A, 5.000%, 8/01/31 (Pre-refunded 8/01/09) - FGIC Insured 2,980 Santa Clarita Community College District, Los Angeles 8/11 at 101.00 AAA 3,222,721 County, California, General Obligation Bonds, Series 2002, 5.125%, 8/01/26 (Pre-refunded 8/01/11) - FGIC Insured 2,460 Vacaville Unified School District, Solano County, California, 8/11 at 101.00 AAA 2,646,591 General Obligation Bonds, Series 2002, 5.000%, 8/01/26 (Pre-refunded 8/01/11) - FSA Insured ------------------------------------------------------------------------------------------------------------------------------------ 29,270 Total U.S. Guaranteed 31,605,167 ------------------------------------------------------------------------------------------------------------------------------------ UTILITIES - 17.0% (11.5% OF TOTAL INVESTMENTS) 9,000 Anaheim Public Finance Authority, California, Revenue Bonds, 10/12 at 100.00 AAA 9,446,760 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 10,707,496 Revenue Bonds, Pacific Gas and Electric Company, Series 1996A, 5.350%, 12/01/16 - MBIA Insured (Alternative Minimum Tax) 3,000 Los Angeles Department of Water and Power, California, 7/11 at 100.00 AAA 3,175,320 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 823,802 Power System Revenue Bonds, Series 2003A-2, 5.000%, 7/01/21 - MBIA Insured 830 Merced Irrigation District, California, Electric System 9/15 at 100.00 AAA 875,899 Revenue Bonds, Series 2005, 5.125%, 9/01/31 - XLCA Insured 6,000 Northern California Power Agency, Revenue Refunding Bonds, 7/08 at 101.00 AAA 6,194,640 Hydroelectric Project 1, Series 1998A, 5.200%, 7/01/32 - MBIA Insured 3,000 Sacramento Municipal Utility District, California, Electric 8/11 at 100.00 AAA 3,124,020 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 5,838,592 Revenue Refunding Bonds, Transmission Project, Series 2002A, 4.750%, 7/01/19 - FSA Insured ------------------------------------------------------------------------------------------------------------------------------------ 38,235 Total Utilities 40,186,529 ------------------------------------------------------------------------------------------------------------------------------------ 58 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ WATER AND SEWER - 17.4% (11.8% OF TOTAL INVESTMENTS) $ 3,000 California Department of Water Resources, Water System 12/12 at 100.00 AAA $ 3,213,270 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 6,342,414 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 9,261,900 Sewerage System Revenue Certificates of Participation, Series 2001B, 5.000%, 7/01/30 - FGIC Insured 570 Healdsburg Public Financing Authority, California, Wastewater 4/16 at 100.00 AAA 598,534 Revenue Bonds, Series 2006, 5.000%, 4/01/36 - MBIA Insured 4,500 Los Angeles County Sanitation Districts Financing Authority, 10/13 at 100.00 AAA 4,749,750 California, Senior Revenue Bonds, Capital Projects, Series 2003A, 5.000%, 10/01/23 - FSA Insured 3,050 Manteca Financing Authority, California, Sewerage Revenue 12/13 at 100.00 Aaa 3,056,009 Bonds, Series 2003B, 5.000%, 12/01/33 - MBIA Insured 500 Marina Coast Water District, California, Enterprise Certificate 6/16 at 100.00 AAA 525,770 of Participation, Series 2006, 5.000%, 6/01/31 - MBIA Insured 9,185 Orange County Sanitation District, California, Certificates of 8/13 at 100.00 AAA 9,546,338 Participation, Series 2003, 5.000%, 2/01/33 - FGIC Insured 870 Sacramento County Sanitation District Financing Authority, 6/16 at 100.00 AAA 918,381 California, Revenue Bonds, Series 2006, 5.000%, 12/01/36 - 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 1,453,825 1,415 5.500%, 12/01/21 - XLCA Insured 12/14 at 100.00 AAA 1,563,334 ------------------------------------------------------------------------------------------------------------------------------------ 39,505 Total Water and Sewer 41,229,525 ------------------------------------------------------------------------------------------------------------------------------------ $ 333,355 Total Investments (cost $329,482,118) - 148.3% 350,849,455 =============----------------------------------------------------------------------------------------------------------------------- Other Assets Less Liabilities - 1.6% 3,675,134 -------------------------------------------------------------------------------------------------------------------- Preferred Shares, at Liquidation Value - (49.9)% (118,000,000) -------------------------------------------------------------------------------------------------------------------- Net Assets Applicable to Common Shares - 100% $ 236,524,589 ==================================================================================================================== At least 80% of the Fund's net assets (including net assets attributable 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 attributable 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) 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 unless otherwise noted. (2) 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. Certain mortgage-backed securities may be subject to periodic principal paydowns. (3) Ratings (not covered by the report of independent registered public accounting firm): Using the higher of Standard & Poor's or Moody's rating. Ratings below BBB by Standard & Poor's Group or Baa by Moody's Investor Service, Inc. are considered to be below investment grade. (4) Backed by an escrow or trust containing sufficient U.S. Government or U.S. Government agency securities which ensure the timely payment of principal and interest. Such investments are normally considered to be equivalent to AAA rated securities. (ETM) Escrowed to maturity. See accompanying notes to financial statements. 59 Nuveen Insured California Tax-Free Advantage Municipal Fund (NKX) Portfolio of INVESTMENTS August 31, 2006 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ CONSUMER STAPLES - 2.3% (1.5% OF TOTAL INVESTMENTS) $ 1,625 Golden State Tobacco Securitization Corporation, California, 6/13 at 100.00 BBB $ 1,972,913 Tobacco Settlement Asset-Backed Revenue Bonds, Series 2003A-2, 7.900%, 6/01/42 ------------------------------------------------------------------------------------------------------------------------------------ HEALTH CARE - 12.9% (8.7% OF TOTAL INVESTMENTS) 1,500 California Health Facilities Financing Authority, Revenue 11/08 at 101.00 AAA 1,545,015 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+ 1,905,822 Revenue Bonds, Kaiser Hospital Assistance LLC, Series 2001A, 5.550%, 8/01/31 2,000 California Statewide Community Development Authority, 6/13 at 100.00 AAA 2,130,040 Hospital Revenue Bonds, Monterey Peninsula Hospital, Series 2003B, 5.250%, 6/01/23 - FSA Insured 4,060 California Statewide Community Development Authority, No Opt. Call AAA 4,350,046 Revenue Bonds, Sherman Oaks Health System, Series 1998A, 5.000%, 8/01/22 - AMBAC Insured 1,260 Rancho Mirage Joint Powers Financing Authority, California, 7/14 at 100.00 A3 1,399,117 Revenue Bonds, Eisenhower Medical Center, Series 2004, 5.875%, 7/01/26 ------------------------------------------------------------------------------------------------------------------------------------ 10,620 Total Health Care 11,330,040 ------------------------------------------------------------------------------------------------------------------------------------ HOUSING/MULTIFAMILY - 1.4% (0.9% OF TOTAL INVESTMENTS) 1,165 Poway, California, Housing Revenue Bonds, Revenue Bonds, 5/13 at 102.00 BBB+ 1,183,349 Poinsettia Mobile Home Park, Series 2003, 5.000%, 5/01/23 ------------------------------------------------------------------------------------------------------------------------------------ LONG-TERM CARE - 5.7% (3.8% OF TOTAL INVESTMENTS) 1,000 ABAG Finance Authority for Non-Profit Corporations, California, 11/12 at 100.00 A 1,045,780 Insured Senior Living Revenue Bonds, Odd Fellows Home of California, Series 2003A, 5.200%, 11/15/22 2,000 California Health Facilities Financing Authority, Cal-Mortgage 1/13 at 100.00 A+ 2,095,780 Insured Revenue 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 1,895,858 Revenue Bonds, Jewish Home for the Aging, Series 2003, 5.000%, 11/15/18 ------------------------------------------------------------------------------------------------------------------------------------ 4,815 Total Long-Term Care 5,037,418 ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/GENERAL - 47.0% (31.5% OF TOTAL INVESTMENTS) 2,000 Butte-Glenn Community College District, Butte and Glenn 8/12 at 101.00 Aaa 2,095,720 Counties, California, General Obligation Bonds, Series 2002A, 5.000%, 8/01/26 - MBIA Insured California, General Obligation Bonds, Series 2004: 1,000 5.125%, 2/01/27 2/14 at 100.00 A+ 1,056,110 500 5.250%, 4/01/34 4/14 at 100.00 A+ 530,775 California, General Obligation Refunding Bonds, Series 2002: 1,500 5.000%, 2/01/12 No Opt. Call A+ 1,595,865 3,750 5.000%, 4/01/27 - AMBAC Insured 4/12 at 100.00 AAA 3,922,500 3,000 5.250%, 4/01/30 - XLCA Insured 4/12 at 100.00 AAA 3,185,880 450 Fremont Unified School District, Alameda County, California, 8/12 at 101.00 AAA 473,693 General Obligation Bonds, Series 2002A, 5.000%, 8/01/25 - FGIC 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 4,715,370 2,030 5.000%, 8/01/27 - FSA Insured 8/13 at 100.00 AAA 2,125,917 10,500 Los Angeles Unified School District, California, General 7/13 at 100.00 AAA 11,102,486 Obligation Bonds, Series 2003A, 5.000%, 7/01/22 - FSA Insured 60 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/GENERAL (continued) $ 2,000 Los Angeles, California, General Obligation Bonds, 9/12 at 100.00 AAA $ 2,115,380 Series 2002A, 5.000%, 9/01/22 - MBIA Insured 1,000 Murrieta Valley Unified School District, Riverside County, 9/13 at 100.00 AAA 1,048,390 California, General Obligation Bonds, Series 2003A, 5.000%, 9/01/26 - FGIC Insured 140 Roseville Joint Union High School District, Placer County, 8/15 at 100.00 AAA 148,200 California, General Obligation Bonds, Series 2006B, 5.000%, 8/01/27 - FGIC Insured 3,000 San Diego Unified School District, California, General 7/10 at 100.00 AAA 3,158,460 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 4,011,860 California, General Obligation Bonds, Series 2003A, 5.000%, 8/01/28 - FSA Insured ------------------------------------------------------------------------------------------------------------------------------------ 39,225 Total Tax Obligation/General 41,286,606 ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/LIMITED - 43.3% (29.0% OF TOTAL INVESTMENTS) 550 Baldwin Park Public Financing Authority, California, 8/13 at 102.00 BBB 578,144 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 2,172,926 Refunding Bonds, Golden State Redevelopment Project, Series 2003A, 5.250%, 12/01/22 - AMBAC Insured 2,000 California State Public Works Board, Lease Revenue Bonds, 12/13 at 100.00 A 2,208,640 Department of Corrections, Series 2003C, 5.500%, 6/01/16 4,000 California State Public Works Board, Lease Revenue Bonds, 12/12 at 100.00 AAA 4,164,000 Department of General Services, Capital East End Project, Series 2002A, 5.000%, 12/01/27 - AMBAC Insured 170 Capistrano Unified School District, Orange County, California, 9/15 at 100.00 AAA 180,171 Special Tax Bonds, Community Facilities District, Series 2005, 5.000%, 9/01/24 - FGIC Insured 1,610 Folsom Public Financing Authority, California, Special Tax 9/12 at 102.00 AAA 1,701,802 Revenue Bonds, Series 2004A, 5.000%, 9/01/21 - AMBAC Insured 130 Hesperia Community Redevelopment Agency, California, 9/15 at 100.00 AAA 138,380 Tax Allocation Bonds, Series 2005A, 5.000%, 9/01/20 - XLCA Insured 5,540 Irvine Public Facilities and Infrastructure Authority, California, 9/06 at 103.00 AAA 5,730,244 Assessment Revenue Bonds, Series 2003C, 5.000%, 9/02/21 - AMBAC Insured 315 Los Angeles Community Redevelopment Agency, California, 9/15 at 100.00 Aaa 327,449 Lease Revenue Bonds, Manchester Social Services Project, Series 2005, 5.000%, 9/01/37 - AMBAC Insured 1,770 Los Angeles Unified School District, California, Certificates 10/12 at 100.00 AAA 1,838,995 of Participation, Administration Building Project II, Series 2002C, 5.000%, 10/01/27 - AMBAC Insured 2,000 Los Angeles, California, Certificates of Participation, 6/13 at 100.00 AAA 2,073,420 Municipal Improvement Corporation, Series 2003AW, 5.000%, 6/01/33 - AMBAC Insured 1,500 Los Osos, California, Improvement Bonds, Community 9/10 at 103.00 AAA 1,555,995 Services Wastewater Assessment District 1, Series 2002, 5.000%, 9/02/33 - MBIA Insured 500 Paramount Redevelopment Agency, California, Tax 8/13 at 100.00 AAA 531,455 Allocation Bonds, Redevelopment Project Area 1, Series 2003, 5.000%, 8/01/19 - MBIA Insured 150 Rialto Redevelopment Agency, California, Tax Allocation 9/15 at 100.00 AAA 156,008 Bonds, Merged Project Area, Series 2005A, 5.000%, 9/01/35 - XLCA Insured 190 Roseville, California, Certificates of Participation, Public 8/13 at 100.00 AAA 198,282 Facilities, Series 2003A, 5.000%, 8/01/25 - AMBAC Insured 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 3,105,540 3,300 5.000%, 2/01/32 - AMBAC Insured 2/12 at 100.00 AAA 3,402,894 1,200 San Diego Redevelopment Agency, California, Subordinate 9/09 at 101.00 Baa2 1,241,820 Lien Tax Increment and Parking Revenue Bonds, Centre City Project, Series 2003B, 5.250%, 9/01/26 61 Nuveen Insured California Tax-Free Advantage Municipal Fund (NKX) (continued) Portfolio of INVESTMENTS August 31, 2006 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/LIMITED (continued) $ 2,770 San Jose Financing Authority, California, Lease Revenue 6/12 at 100.00 AAA $ 2,864,402 Refunding Bonds, Civic Center Project, Series 2002B, 5.000%, 6/01/32 - AMBAC Insured 1,220 San Jose Redevelopment Agency, California, Tax Allocation 8/10 at 101.00 AAA 1,253,245 Bonds, Merged Area Redevelopment Project, Series 2002, 5.000%, 8/01/32 - MBIA Insured 2,390 Solano County, California, Certificates of Participation, 11/12 at 100.00 AAA 2,563,849 Series 2002, 5.250%, 11/01/24 - MBIA Insured ------------------------------------------------------------------------------------------------------------------------------------ 36,330 Total Tax Obligation/Limited 37,987,661 ------------------------------------------------------------------------------------------------------------------------------------ TRANSPORTATION - 14.0% (9.4% OF TOTAL INVESTMENTS) 5,480 Bay Area Governments Association, California, BART SFO 8/12 at 100.00 AAA 5,697,172 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- 2,001,440 Toll Road Revenue Bonds, Series 1995A, 5.000%, 1/01/35 1,300 San Francisco Airports Commission, California, Revenue 5/10 at 101.00 AAA 1,360,229 Bonds, San Francisco International Airport, Second Series 2000, Issue 26B, 5.000%, 5/01/25 - FGIC Insured 3,135 San Francisco Airports Commission, California, Revenue 5/08 at 101.00 AAA 3,213,720 Bonds, San Francisco International Airport, Second Series Issue 16B, 5.000%, 5/01/24 - FSA Insured ------------------------------------------------------------------------------------------------------------------------------------ 11,915 Total Transportation 12,272,561 ------------------------------------------------------------------------------------------------------------------------------------ U.S. GUARANTEED - 4.8% (3.2% OF TOTAL INVESTMENTS) (4) 1,000 Berryessa Union School District, Santa Clara County, 8/12 at 100.00 AAA 1,077,400 California, General Obligation Bonds, Series 2003C, 5.000%, 8/01/21 (Pre-refunded 8/01/12) - FSA Insured 1,000 California Health Facilities Financing Authority, Revenue Bonds, 12/09 at 101.00 A3 (4) 1,092,490 Cedars-Sinai Medical Center, Series 1999A, 6.250%, 12/01/34 (Pre-refunded 12/01/09) 1,940 California Statewide Community Development Authority, 8/08 at 102.00 AAA 2,032,519 Revenue Bonds, Sherman Oaks Health System, Series 1998A, 5.000%, 8/01/22 (Pre-refunded 8/01/08) - AMBAC Insured ------------------------------------------------------------------------------------------------------------------------------------ 3,940 Total U.S. Guaranteed 4,202,409 ------------------------------------------------------------------------------------------------------------------------------------ UTILITIES - 5.6% (3.8% OF TOTAL INVESTMENTS) 1,000 Anaheim Public Finance Authority, California, Second Lien 10/14 at 100.00 AAA 1,082,340 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 3,233,534 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 292,317 Power System Revenue Bonds, Series 2003A-2, 5.000%, 7/01/21 - MBIA Insured 310 Merced Irrigation District, California, Electric System Revenue 9/15 at 100.00 AAA 327,143 Bonds, Series 2005, 5.125%, 9/01/31 - XLCA Insured ------------------------------------------------------------------------------------------------------------------------------------ 4,640 Total Utilities 4,935,334 ------------------------------------------------------------------------------------------------------------------------------------ WATER AND SEWER - 12.1% (8.1% OF TOTAL INVESTMENTS) 215 Healdsburg Public Financing Authority, California, Wastewater 4/16 at 100.00 AAA 225,763 Revenue Bonds, Series 2006, 5.000%, 4/01/36 - MBIA Insured 1,125 Manteca Financing Authority, California, Sewerage Revenue 12/13 at 100.00 Aaa 1,127,216 Bonds, Series 2003B, 5.000%, 12/01/33 - MBIA Insured 170 Marina Coast Water District, California, Enterprise Certificate 6/16 at 100.00 AAA 178,762 of Participation, Series 2006, 5.000%, 6/01/31 - MBIA Insured 370 Sacramento County Sanitation District Financing Authority, 6/16 at 100.00 AAA 390,576 California, Revenue Bonds, Series 2006, 5.000%, 12/01/36 - FGIC 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 3,172,290 2,500 5.000%, 8/01/23 - MBIA Insured 8/12 at 100.00 AAA 2,637,350 62 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE ------------------------------------------------------------------------------------------------------------------------------------ WATER AND SEWER (continued) $ 1,180 South Feather Water and Power Agency, California, Water 4/13 at 100.00 BBB $ 1,232,416 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 1,655,392 Wastewater Revenue Bonds, Series 2001, 5.000%, 10/01/26 - AMBAC Insured ------------------------------------------------------------------------------------------------------------------------------------ 10,160 Total Water and Sewer 10,619,765 ------------------------------------------------------------------------------------------------------------------------------------ $ 124,435 Total Long-Term Investments (cost $125,092,502) - 149.1% 130,828,056 =============----------------------------------------------------------------------------------------------------------------------- SHORT-TERM INVESTMENTS - 0.1% (0.1% OF TOTAL INVESTMENTS) 100 California Department of Water Resources, Power Supply A-1+ 100,000 Revenue Bonds, Variable Rate Demand Obligations, Series 2002C-7, 3.270%, 5/01/22 - FSA Insured (5) ------------------------------------------------------------------------------------------------------------------------------------ $ 100 Total Short-Term Investments (cost $100,000) 100,000 =============----------------------------------------------------------------------------------------------------------------------- Total Investments (cost $125,192,502) - 149.2% 130,928,056 -------------------------------------------------------------------------------------------------------------------- Other Assets Less Liabilities - 2.1% 1,846,749 -------------------------------------------------------------------------------------------------------------------- Preferred Shares, at Liquidation Value - (51.3)% (45,000,000) -------------------------------------------------------------------------------------------------------------------- Net Assets Applicable to Common Shares - 100% $ 87,774,805 ==================================================================================================================== At least 80% of the Fund's net assets (including net assets attributable 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 attributable 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) 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 unless otherwise noted. (2) 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. Certain mortgage-backed securities may be subject to periodic principal paydowns. (3) Ratings (not covered by the report of independent registered public accounting firm): Using the higher of Standard & Poor's or Moody's rating. Ratings below BBB by Standard & Poor's Group or Baa by Moody's Investor Service, Inc. are considered to be below investment grade. (4) Backed by an escrow or trust containing sufficient U.S. Government or U.S. Government agency securities which ensure the timely payment of principal and interest. Such investments are normally considered to be equivalent to AAA rated securities. (5) Investment has a maturity of more than one year, but has variable rate and demand features which qualify it as a short-term investment. The rate disclosed is that in effect at the end of the reporting period. This rate changes periodically based on market conditions or a specified market index. See accompanying notes to financial statements. 63 Statement of ASSETS AND LIABILITIES August 31, 2006 INSURED INSURED CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA PREMIUM DIVIDEND PREMIUM INCOME PREMIUM INCOME 2 INCOME ADVANTAGE (NPC) (NCL) (NCU) (NAC) ------------------------------------------------------------------------------------------------------------------------------------ ASSETS Investments, at value (cost $133,619,422, $267,368,873, $119,569,909 and $503,466,600, respectively) $143,674,468 $281,660,654 $125,439,083 $533,425,529 Cash -- -- 564,998 -- Receivables: Interest 2,350,526 3,635,322 1,584,183 7,501,106 Investments sold 3,082,986 5,508,000 -- 365,650 Variation margin on futures contracts -- -- -- 11,953 Unrealized appreciation on forward swaps 435,891 838,226 -- 838,429 Other assets 8,262 37,071 999 49,683 ------------------------------------------------------------------------------------------------------------------------------------ Total assets 149,552,133 291,679,273 127,589,263 542,192,350 ------------------------------------------------------------------------------------------------------------------------------------ LIABILITIES Cash overdraft 14,998 111,976 -- 1,268,553 Payable for investments purchased 3,733,339 5,745,167 -- -- Unrealized depreciation on forward swaps 106,401 -- -- -- Accrued expenses: Management fees 78,025 151,357 68,539 214,436 Other 31,552 66,693 43,285 114,096 Preferred share dividends payable 7,149 32,849 10,423 79,101 ------------------------------------------------------------------------------------------------------------------------------------ Total liabilities 3,971,464 6,108,042 122,247 1,676,186 ------------------------------------------------------------------------------------------------------------------------------------ Preferred shares, at liquidation value 45,000,000 95,000,000 43,000,000 175,000,000 ------------------------------------------------------------------------------------------------------------------------------------ Net assets applicable to Common shares $100,580,669 $190,571,231 $ 84,467,016 $365,516,164 ==================================================================================================================================== Common shares outstanding 6,455,666 12,716,370 5,774,216 23,450,261 ==================================================================================================================================== Net asset value per Common share outstanding (net assets applicable to Common shares, divided by Common shares outstanding) $ 15.58 $ 14.99 $ 14.63 $ 15.59 ==================================================================================================================================== NET ASSETS APPLICABLE TO COMMON SHARES CONSIST OF: ------------------------------------------------------------------------------------------------------------------------------------ Common shares, $.01 par value per share $ 64,557 $ 127,164 $ 57,742 $ 234,503 Paid-in surplus 89,361,743 176,229,375 78,298,267 333,112,547 Undistributed (Over-distribution of) net investment income 422,103 129,491 34,045 136,735 Accumulated net realized gain (loss) from investments and derivative transactions 347,730 (1,044,806) 207,788 1,207,682 Net unrealized appreciation (depreciation ) of investments and derivative transactions 10,384,536 15,130,007 5,869,174 30,824,697 ------------------------------------------------------------------------------------------------------------------------------------ Net assets applicable to Common shares $100,580,669 $190,571,231 $ 84,467,016 $365,516,164 ==================================================================================================================================== 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. 64 INSURED INSURED CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA DIVIDEND DIVIDEND DIVIDEND TAX-FREE ADVANTAGE 2 ADVANTAGE 3 ADVANTAGE ADVANTAGE (NVX) (NZH) (NKL) (NKX) ----------------------------------------------------------------------------------------------------------------------------------- ASSETS Investments, at value (cost $315,496,436, $521,149,817, $329,482,118 and $125,192,502, respectively) $332,063,859 $543,782,656 $350,849,455 $130,928,056 Cash -- -- -- 474,536 Receivables: Interest 4,347,136 7,564,105 4,035,483 1,451,477 Investments sold 226,600 365,650 -- -- Variation margin on futures contracts -- -- -- -- Unrealized appreciation on forward swaps 1,584,221 -- -- -- Other assets 29,233 26,464 28,248 3,520 ----------------------------------------------------------------------------------------------------------------------------------- Total assets 338,251,049 551,738,875 354,913,186 132,857,589 ----------------------------------------------------------------------------------------------------------------------------------- LIABILITIES Cash overdraft 53,237 1,933,247 197,805 -- Payable for investments purchased -- -- -- -- Unrealized depreciation on forward swaps 836,012 -- -- -- Accrued expenses: Management fees 106,958 148,182 97,330 35,437 Other 63,326 110,423 63,397 21,463 Preferred share dividends payable 31,643 74,266 30,065 25,884 ----------------------------------------------------------------------------------------------------------------------------------- Total liabilities 1,091,176 2,266,118 388,597 82,784 ----------------------------------------------------------------------------------------------------------------------------------- Preferred shares, at liquidation value 110,000,000 187,000,000 118,000,000 45,000,000 ----------------------------------------------------------------------------------------------------------------------------------- Net assets applicable to Common shares $227,159,873 $362,472,757 $236,524,589 $ 87,774,805 =================================================================================================================================== Common shares outstanding 14,790,660 24,112,833 15,264,555 5,883,302 =================================================================================================================================== Net asset value per Common share outstanding (net assets applicable to Common shares, divided by Common shares outstanding) $ 15.36 $ 15.03 $ 15.50 $ 14.92 =================================================================================================================================== NET ASSETS APPLICABLE TO COMMON SHARES CONSIST OF: ----------------------------------------------------------------------------------------------------------------------------------- Common shares, $.01 par value per share $ 147,907 $ 241,128 $ 152,646 $ 58,833 Paid-in surplus 210,049,075 342,513,152 216,696,084 83,000,891 Undistributed (Over-distribution of) net investment income 53,273 283,661 (95,484) (166,320) Accumulated net realized gain (loss) from investments and derivative transactions (406,014) (3,198,023) (1,595,994) (854,153) Net unrealized appreciation (depreciation) of investments and derivative transactions 17,315,632 22,632,839 21,367,337 5,735,554 ----------------------------------------------------------------------------------------------------------------------------------- Net assets applicable to Common shares $227,159,873 $362,472,757 $236,524,589 $ 87,774,805 =================================================================================================================================== Authorized shares: Common Unlimited Unlimited Unlimited Unlimited Preferred Unlimited Unlimited Unlimited Unlimited =================================================================================================================================== See accompanying notes to financial statements. 65 Statement of OPERATIONS Year Ended August 31, 2006 INSURED INSURED CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA PREMIUM DIVIDEND PREMIUM INCOME PREMIUM INCOME 2 INCOME ADVANTAGE (NPC) (NCL) (NCU) (NAC) ------------------------------------------------------------------------------------------------------------------------------------ INVESTMENT INCOME $ 7,066,532 $13,680,129 $ 6,142,005 $26,722,379 ------------------------------------------------------------------------------------------------------------------------------------ EXPENSES Management fees 925,758 1,789,822 811,073 3,350,026 Preferred shares - auction fees 112,573 237,653 107,570 437,184 Preferred shares - dividend disbursing agent fees 10,000 20,000 10,000 20,000 Shareholders' servicing agent fees and expenses 10,766 16,116 8,242 5,812 Custodian's fees and expenses 35,356 76,028 40,385 135,251 Directors'/Trustees' fees and expenses 3,310 6,462 2,782 11,152 Professional fees 14,865 19,809 14,242 23,489 Shareholders' reports - printing and mailing expenses 12,018 31,201 11,458 40,411 Stock exchange listing fees 10,024 10,046 491 10,033 Investor relations expense 15,098 29,210 13,393 49,588 Other expenses 12,142 22,432 12,499 24,585 ------------------------------------------------------------------------------------------------------------------------------------ Total expenses before custodian fee credit and expense reimbursement 1,161,910 2,258,779 1,032,135 4,107,531 Custodian fee credit (10,773) (8,807) (12,314) (20,891) Expense reimbursement -- -- -- (1,054,676) ------------------------------------------------------------------------------------------------------------------------------------ Net expenses 1,151,137 2,249,972 1,019,821 3,031,964 ------------------------------------------------------------------------------------------------------------------------------------ Net investment income 5,915,395 11,430,157 5,122,184 23,690,415 ------------------------------------------------------------------------------------------------------------------------------------ REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) from investments 338,450 306,694 287,143 1,496,422 Net realized gain (loss) from futures -- -- -- 102,063 Net realized gain (loss) from forward swaps -- -- -- -- Change in net unrealized appreciation (depreciation) of investments (3,110,907) (4,684,758) (2,003,316) (8,347,244) Change in net unrealized appreciation (depreciation) of futures -- -- -- 27,339 Change in net unrealized appreciation (depreciation) of forward swaps 329,490 838,226 -- 838,429 ------------------------------------------------------------------------------------------------------------------------------------ Net realized and unrealized gain (loss) (2,442,967) (3,539,838) (1,716,173) (5,882,991) ------------------------------------------------------------------------------------------------------------------------------------ DISTRIBUTIONS TO PREFERRED SHAREHOLDERS From net investment income (1,180,659) (2,543,117) (1,190,250) (4,964,723) From accumulated net realized gains (120,330) -- (11,180) (111,335) ------------------------------------------------------------------------------------------------------------------------------------ Decrease in net assets applicable to Common shares from distributions to Preferred shareholders (1,300,989) (2,543,117) (1,201,430) (5,076,058) ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets applicable to Common shares from operations $ 2,171,439 $ 5,347,202 $ 2,204,581 $12,731,366 ==================================================================================================================================== See accompanying notes to financial statements. 66 INSURED INSURED CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA DIVIDEND DIVIDEND DIVIDEND TAX-FREE ADVANTAGE 2 ADVANTAGE 3 ADVANTAGE ADVANTAGE (NVX) (NZH) (NKL) (NKX) ------------------------------------------------------------------------------------------------------------------------------------ INVESTMENT INCOME $15,970,147 $25,990,365 $17,082,231 $ 6,241,863 ------------------------------------------------------------------------------------------------------------------------------------ EXPENSES Management fees 2,104,016 3,393,539 2,210,635 841,555 Preferred shares - auction fees 274,800 467,803 294,787 112,573 Preferred shares - dividend disbursing agent fees 20,000 20,000 20,000 10,000 Shareholders' servicing agent fees and expenses 2,967 4,860 2,929 1,248 Custodian's fees and expenses 85,029 127,319 87,202 35,729 Directors'/Trustees' fees and expenses 7,629 12,397 8,029 2,992 Professional fees 22,197 30,063 22,595 14,365 Shareholders' reports - printing and mailing expenses 29,838 41,504 30,189 14,086 Stock exchange listing fees 1,258 2,052 1,298 501 Investor relations expense 33,493 50,314 34,993 14,783 Other expenses 20,400 24,964 21,021 13,765 ------------------------------------------------------------------------------------------------------------------------------------ Total expenses before custodian fee credit and expense reimbursement 2,601,627 4,174,815 2,733,678 1,061,597 Custodian fee credit (13,983) (27,031) (11,031) (9,053) Expense reimbursement (935,350) (1,637,956) (1,057,192) (421,856) ------------------------------------------------------------------------------------------------------------------------------------ Net expenses 1,652,294 2,509,828 1,665,455 630,688 ------------------------------------------------------------------------------------------------------------------------------------ Net investment income 14,317,853 23,480,537 15,416,776 5,611,175 ------------------------------------------------------------------------------------------------------------------------------------ REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) from investments 686,754 1,057,466 106,122 38,746 Net realized gain (loss) from futures -- -- -- -- Net realized gain (loss) from forward swaps -- -- 772,782 297,454 Change in net unrealized appreciation (depreciation) of investments (4,193,089) (5,851,121) (4,883,419) (1,917,395) Change in net unrealized appreciation (depreciation) of futures -- -- -- -- Change in net unrealized appreciation (depreciation) of forward swaps 748,209 -- 191,673 72,274 ------------------------------------------------------------------------------------------------------------------------------------ Net realized and unrealized gain (loss) (2,758,126) (4,793,655) (3,812,842) (1,508,921) ------------------------------------------------------------------------------------------------------------------------------------ DISTRIBUTIONS TO PREFERRED SHAREHOLDERS From net investment income (3,160,483) (5,401,864) (3,404,610) (1,222,097) From accumulated net realized gains -- -- -- -- ------------------------------------------------------------------------------------------------------------------------------------ Decrease in net assets applicable to Common shares from distributions to Preferred shareholders (3,160,483) (5,401,864) (3,404,610) (1,222,097) ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets applicable to Common shares from operations $ 8,399,244 $13,285,018 $ 8,199,324 $ 2,880,157 ==================================================================================================================================== See accompanying notes to financial statements. 67 Statement of CHANGES IN NET ASSETS 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 8/31/06 8/31/05 8/31/06 8/31/05 8/31/06 8/31/05 ------------------------------------------------------------------------------------------------------------------------------------ OPERATIONS Net investment income $ 5,915,395 $ 6,103,373 $ 11,430,157 $ 11,662,340 $ 5,122,184 $ 5,201,876 Net realized gain (loss) from investments 338,450 1,025,239 306,694 572,385 287,143 986,152 Net realized gain (loss) from futures -- -- -- -- -- -- Net realized gain (loss) from forward swaps -- -- -- -- -- -- Change in net unrealized appreciation (depreciation) of investments (3,110,907) 347,962 (4,684,758) 3,008,579 (2,003,316) 2,456,342 Change in net unrealized appreciation (depreciation) of futures -- -- -- -- -- -- Change in net unrealized appreciation (depreciation) of forward swaps 329,490 -- 838,226 -- -- -- Distributions to Preferred shareholders: From net investment income (1,180,659) (659,626) (2,543,117) (1,431,484) (1,190,250) (676,918) From accumulated net realized gains (120,330) (53,379) -- -- (11,180) -- ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets applicable to Common shares from operations 2,171,439 6,763,569 5,347,202 13,811,820 2,204,581 7,967,452 ------------------------------------------------------------------------------------------------------------------------------------ DISTRIBUTIONS TO COMMON SHAREHOLDERS From net investment income (5,325,135) (5,939,147) (9,670,803) (11,212,178) (4,451,921) (4,954,280) From accumulated net realized gains (881,569) (1,006,068) -- -- (70,445) -- ------------------------------------------------------------------------------------------------------------------------------------ Decrease in net assets applicable to Common shares from distributions to Common shareholders (6,206,704) (6,945,215) (9,670,803) (11,212,178) (4,522,366) (4,954,280) ------------------------------------------------------------------------------------------------------------------------------------ CAPITAL SHARE TRANSACTIONS Net proceeds from Common shares issued to shareholders due to reinvestment of distributions 106,152 73,727 -- 260,359 -- -- Preferred shares offering costs adjustments -- -- -- -- -- -- ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets applicable to Common shares from capital share transactions 106,152 73,727 -- 260,359 -- -- ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets applicable to Common shares (3,929,113) (107,919) (4,323,601) 2,860,001 (2,317,785) 3,013,172 Net assets applicable to Common shares at the beginning of year 104,509,782 104,617,701 194,894,832 192,034,831 86,784,801 83,771,629 ------------------------------------------------------------------------------------------------------------------------------------ Net assets applicable to Common shares at the end of year $100,580,669 $104,509,782 $190,571,231 $194,894,832 $84,467,016 $86,784,801 ==================================================================================================================================== Undistributed (Over-distribution of) net investment income at the end of year $ 422,103 $ 1,022,294 $ 129,491 $ 935,376 $ 34,045 $ 556,302 ==================================================================================================================================== See accompanying notes to financial statements. 68 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 8/31/06 8/31/05 8/31/06 8/31/05 8/31/06 8/31/05 ------------------------------------------------------------------------------------------------------------------------------------ OPERATIONS Net investment income $ 23,690,415 $ 24,302,547 $ 14,317,853 $ 14,459,716 $ 23,480,537 $ 23,508,682 Net realized gain (loss) from investments 1,496,422 480,737 686,754 383,423 1,057,466 462,942 Net realized gain (loss) from futures 102,063 -- -- -- -- -- Net realized gain (loss) from forward swaps -- -- -- -- -- -- Change in net unrealized appreciation (depreciation) of investments (8,347,244) 11,381,369 (4,193,089) 10,159,524 (5,851,121) 15,832,228 Change in net unrealized appreciation (depreciation) of futures 27,339 -- -- -- -- -- Change in net unrealized appreciation (depreciation) of forward swaps 838,429 -- 748,209 -- -- -- Distributions to Preferred shareholders: From net investment income (4,964,723) (2,855,101) (3,160,483) (1,768,569) (5,401,864) (3,098,457) From accumulated net realized gains (111,335) (64,137) -- -- -- -- ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets applicable to Common shares from operations 12,731,366 33,245,415 8,399,244 23,234,094 13,285,018 36,705,395 ------------------------------------------------------------------------------------------------------------------------------------ DISTRIBUTIONS TO COMMON SHAREHOLDERS From net investment income (21,230,311) (23,037,818) (12,379,782) (13,489,083) (20,073,933) (20,833,488) From accumulated net realized gains (782,285) (1,086,300) -- -- -- -- ------------------------------------------------------------------------------------------------------------------------------------ Decrease in net assets applicable to Common shares from distributions to Common shareholders (22,012,596) (24,124,118) (12,379,782) (13,489,083) (20,073,933) (20,833,488) ------------------------------------------------------------------------------------------------------------------------------------ CAPITAL SHARE TRANSACTIONS Net proceeds from Common shares issued to shareholders due to reinvestment of distributions 532,651 77,239 -- -- -- -- Preferred shares offering costs adjustments -- -- -- -- -- 29,546 ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets applicable to Common shares from capital share transactions 532,651 77,239 -- -- -- 29,546 ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets applicable to Common shares (8,748,579) 9,198,536 (3,980,538) 9,745,011 (6,788,915) 15,901,453 Net assets applicable to Common shares at the beginning of year 374,264,743 365,066,207 231,140,411 221,395,400 369,261,672 353,360,219 ------------------------------------------------------------------------------------------------------------------------------------ Net assets applicable to Common shares at the end of year $365,516,164 $374,264,743 $227,159,873 $231,140,411 $362,472,757 $369,261,672 ==================================================================================================================================== Undistributed (Over-distribution of) net investment income at the end of year $ 136,735 $ 2,641,354 $ 53,273 $ 1,278,398 $ 283,661 $ 2,278,927 ==================================================================================================================================== See accompanying notes to financial statements. 69 Statement of CHANGES IN NET ASSETS (continued) INSURED CALIFORNIA INSURED CALIFORNIA DIVIDEND ADVANTAGE (NKL) TAX-FREE ADVANTAGE (NKX) ------------------------------ --------------------------- YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED 8/31/06 8/31/05 8/31/06 8/31/05 ------------------------------------------------------------------------------------------------------------------------------------ OPERATIONS Net investment income $ 15,416,776 $ 15,469,138 $ 5,611,175 $ 5,637,385 Net realized gain (loss) from investments 106,122 750,281 38,746 161,272 Net realized gain (loss) from futures -- -- -- -- Net realized gain (loss) from forward swaps 772,782 (2,892,459) 297,454 (1,073,407) Change in net unrealized appreciation (depreciation) of investments (4,883,419) 9,357,072 (1,917,395) 4,006,973 Change in net unrealized appreciation (depreciation) of futures -- -- -- -- Change in net unrealized appreciation (depreciation) of forward swaps 191,673 809,703 72,274 288,851 Distributions to Preferred shareholders: From net investment income (3,404,610) (1,886,679) (1,222,097) (753,416) From accumulated net realized gains -- (45,704) -- -- ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets applicable to Common shares from operations 8,199,324 21,561,352 2,880,157 8,267,658 ------------------------------------------------------------------------------------------------------------------------------------ DISTRIBUTIONS TO COMMON SHAREHOLDERS From net investment income (13,002,466) (13,733,781) (4,377,177) (5,003,747) From accumulated net realized gains -- (759,922) -- -- ------------------------------------------------------------------------------------------------------------------------------------ Decrease in net assets applicable to Common shares from distributions to Common shareholders (13,002,466) (14,493,703) (4,377,177) (5,003,747) ------------------------------------------------------------------------------------------------------------------------------------ CAPITAL SHARE TRANSACTIONS Net proceeds from Common shares issued to shareholders due to reinvestment of distributions 73,640 -- -- -- Preferred shares offering costs adjustments -- (54) -- -- ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets applicable to Common shares from capital share transactions 73,640 (54) -- -- ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets applicable to Common shares (4,729,502) 7,067,595 (1,497,020) 3,263,911 Net assets applicable to Common shares at the beginning of year 241,254,091 234,186,496 89,271,825 86,007,914 ------------------------------------------------------------------------------------------------------------------------------------ Net assets applicable to Common shares at the end of year $236,524,589 $241,254,091 $87,774,805 $89,271,825 ==================================================================================================================================== Undistributed (Over-distribution of) net investment income at the end of year $ (95,484) $ 899,990 $ (166,320) $ (178,221) ==================================================================================================================================== See accompanying notes to financial statements. 70 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. 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 or certain U.S. territories. 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. Investment 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 market price quotes are not readily available (which is usually the case for municipal securities), the pricing service establishes fair 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. Prices of forward swap contacts are also provided by an independent pricing service approved by each Fund's Board of Directors/Trustees. Futures contracts are valued using the closing settlement price, or, in the absence or such a price, at the mean of the bid and asked prices. If the pricing service is unable to supply a price for a municipal bond, forward swap contract or futures contact, each Fund may use a market price or fair market value quote provided by a major broker/dealer in such investments. If it is determined that the market price or fair market value for an investment is unavailable or inappropriate, the Board of Trustees of the Funds, or its designee, may establish a fair value for the investment. Temporary investments in securities that have variable rate and demand features qualifying them as short-term investments are valued at amortized cost, which approximates market value. Investment Transactions Investment transactions are recorded on a trade date basis. Realized gains and losses from transactions are determined on the specific identification method. Investments purchased on a when-issued or delayed delivery basis may have extended settlement periods. Any investments 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/delayed delivery purchase commitments. At August 31, 2006, Insured California Premium Income (NPC) and Insured California Premium Income 2 (NCL) had outstanding when-issued/delayed delivery purchase commitments of $3,733,339 and $5,745,167, 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. Investment income also includes paydown gains and losses, if any. Income Taxes Each Fund is a separate taxpayer for federal income tax purposes. Each Fund intends to distribute substantially 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, 2006, have been designated Exempt Interest Dividends. Net realized capital gains and ordinary income distributions paid by the Funds are subject to federal taxation. 71 Notes to FINANCIAL STATEMENTS (continued) 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 Preferred shares, $25,000 stated value per share, as a means of effecting financial leverage. Each Fund's Preferred shares are issued in one or more Series. The dividend rate paid by the Funds on each Series is determined every seven days, pursuant to a dutch auction process overseen by the auction agent, and is payable at 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 ========================================================================================================= Insurance Insured California Premium Income (NPC) and Insured California Premium Income 2 (NCL) invest only 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 attributable 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 attributable 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) 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. 72 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 are authorized to invest in certain derivative financial instruments. The Funds' use of forward interest rate swap transactions is intended to help the Fund manage its overall interest rate sensitivity, either shorter or longer, generally to more closely align the Fund's interest rate sensitivity with that of the broader municipal market. Forward interest rate swap transactions involve each Fund's agreement with a counterparty to pay, in the future, a fixed or variable rate payment in exchange for the counterparty paying the Fund a variable or fixed rate payment, the accruals for which would begin at a specified date in the future (the "effective date"). The amount of the payment obligation is based on the notional amount of the forward swap contract and the termination date of the swap (which is akin to a bond's maturity). The value of the Fund's swap commitment would increase or decrease based primarily on the extent to which long-term interest rates for bonds having a maturity of the swap's termination date increases or decreases. The Funds may terminate a swap contract prior to the effective date, at which point a realized gain or loss is recognized. When a forward swap is terminated, it ordinarily does not involve the delivery of securities or other underlying assets or principal, but rather is settled in cash on a net basis. Each Fund intends, 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 pay any realized gain to the Fund upon termination. To reduce such credit risk, all counterparties are required to pledge 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 above a pre-determined threshold. Reciprocally, when any of the Funds have an unrealized loss on a swap contract, the Funds have instructed the custodian to pledge assets of the Funds as collateral with a value approximately equal to the amount of the unrealized loss above a pre-determined threshold. Collateral pledges are monitored and subsequently adjusted if and when the swap valuations fluctuate, either up or down, by at least the predetermined threshold amount. Futures Contracts The Funds are authorized to invest in futures contracts for the purposes of hedging against changes in values of a Fund's securities or changes in the prevailing levels of interest rates, as a substitute for a position in the underlying asset, or to enhance the portfolio's return. Upon entering into a futures contract, a Fund is required to deposit with the broker an amount of cash or liquid securities equal to a specified percentage of the contract amount. This is known as the "initial margin." Subsequent payments ("variation margin") are made or received by a Fund each day, depending on the daily fluctuation of the value of the contract. During the period the futures contract is open, changes in the value of the contract are recognized as an unrealized gain or loss by "marking-to-market" on a daily basis to reflect the changes in market value of the contract. When the contract is closed, a Fund records realized gains or losses equal to the difference between the value of the contract on the closing date and value of the contract when originally entered into. Risks of investments in futures contracts include the possible adverse movement of the value of the securities or indices underlying the contracts, the possibility that there may not be a liquid secondary market for the contracts and/or that a change in the value of the contract may not correlate with a change in the value of the underlying securities or indices. 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. Indemnifications Under the Funds' organizational documents, their 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. 73 Notes to FINANCIAL STATEMENTS (continued) 2. FUND SHARES Transactions in Common 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 8/31/06 8/31/05 8/31/06 8/31/05 8/31/06 8/31/05 --------------------------------------------------------------------------------------------------------- Common shares issued to shareholders due to reinvestment of distributions 6,731 4,473 -- 16,994 -- -- ========================================================================================================= 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 8/31/06 8/31/05 8/31/06 8/31/05 8/31/06 8/31/05 --------------------------------------------------------------------------------------------------------- Common shares issued to shareholders due to reinvestment of distributions 33,399 4,849 -- -- -- -- ========================================================================================================= INSURED INSURED CALIFORNIA DIVIDEND CALIFORNIA TAX-FREE ADVANTAGE (NKL) ADVANTAGE (NKX) --------------------------------------------------------------------------------------------------------- YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED 8/31/06 8/31/05 8/31/06 8/31/05 --------------------------------------------------------------------------------------------------------- Common shares issued to shareholders due to reinvestment of distributions 4,796 -- -- -- ========================================================================================================= 3. INVESTMENT TRANSACTIONS Purchases and sales (including maturities but excluding short-term investments and derivative transactions) during the fiscal year ended August 31, 2006, were as follows: INSURED INSURED CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA PREMIUM PREMIUM PREMIUM DIVIDEND INCOME INCOME 2 INCOME ADVANTAGE (NPC) (NCL) (NCU) (NAC) --------------------------------------------------------------------------------------------------------- Purchases $15,633,431 $38,063,401 $25,282,371 $68,921,094 Sales and maturities 13,172,344 40,252,952 26,869,773 72,072,388 ========================================================================================================= INSURED INSURED CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA DIVIDEND DIVIDEND DIVIDEND TAX-FREE ADVANTAGE 2 ADVANTAGE 3 ADVANTAGE ADVANTAGE (NVX) (NZH) (NKL) (NKX) --------------------------------------------------------------------------------------------------------- Purchases $29,101,136 $52,091,968 $11,566,593 $4,749,929 Sales and maturities 30,856,789 54,390,357 12,318,501 5,629,297 ========================================================================================================= 74 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 the treatment of paydown gains and losses, timing differences in recognizing taxable market discount and timing differences in recognizing certain gains and losses on investment transactions. To the extent that differences arise that are permanent in nature, such amounts are reclassified within the capital accounts on the Statement of Assets and Liabilities, based on their Federal tax basis treatment and have no impact on the net asset value of the Funds. Temporary differences do not require reclassification. At August 31, 2006, the cost of investments was as follows: INSURED INSURED CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA PREMIUM PREMIUM PREMIUM DIVIDEND INCOME INCOME 2 INCOME ADVANTAGE (NPC) (NCL) (NCU) (NAC) ------------------------------------------------------------------------------------------------------------ Cost of investments $133,583,833 $267,204,885 $119,512,129 $503,240,581 ============================================================================================================ INSURED INSURED CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA DIVIDEND DIVIDEND DIVIDEND TAX-FREE ADVANTAGE 2 ADVANTAGE 3 ADVANTAGE ADVANTAGE (NVX) (NZH) (NKL) (NKX) ------------------------------------------------------------------------------------------------------------ Cost of investments $315,484,862 $521,162,872 $330,937,963 $125,670,971 ============================================================================================================ Gross unrealized appreciation and gross unrealized depreciation of investments at August 31, 2006, 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 $10,091,147 $14,503,375 $5,935,353 $30,199,111 Depreciation (512) (47,606) (8,399) (14,163) ------------------------------------------------------------------------------------------------------------ Net unrealized appreciation (depreciation) of investments $10,090,635 $14,455,769 $5,926,954 $30,184,948 ============================================================================================================ INSURED INSURED CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA DIVIDEND DIVIDEND DIVIDEND TAX-FREE ADVANTAGE 2 ADVANTAGE 3 ADVANTAGE ADVANTAGE (NVX) (NZH) (NKL) (NKX) ------------------------------------------------------------------------------------------------------------ Gross unrealized: Appreciation $16,779,565 $23,164,411 $21,558,143 $5,747,342 Depreciation (200,568) (544,627) (1,646,651) (490,257) ------------------------------------------------------------------------------------------------------------ Net unrealized appreciation (depreciation) of investments $16,578,997 $22,619,784 $19,911,492 $5,257,085 ============================================================================================================ The tax components of undistributed net tax-exempt income, net ordinary income and net long-term capital gains at August 31, 2006, the Funds' tax year end, 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 * $757,514 $744,833 $324,441 $1,642,940 Undistributed net ordinary income ** 46,081 3,783 -- 121 Undistributed net long-term capital gains 347,730 -- 213,601 1,235,021 ============================================================================================================ 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 * $1,042,127 $1,925,249 $782,973 $195,333 Undistributed net ordinary income ** -- -- -- -- Undistributed net long-term capital gains -- -- 49,448 -- ============================================================================================================ * Undistributed net tax-exempt income (on a tax basis) has not been reduced for the dividend declared on August 1, 2006, paid on September 1, 2006. ** Net ordinary income consists of taxable market discount income and net short-term capital gains, if any. 75 Notes to FINANCIAL STATEMENTS (continued) The tax character of distributions paid during the tax years ended August 31, 2006 and August 31, 2005, 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 2006 (NPC) (NCL) (NCU) (NAC) ------------------------------------------------------------------------------------------------------------ Distributions from net tax-exempt income $6,489,050 $12,330,721 $5,697,561 $26,436,381 Distributions from net ordinary income ** 79,771 -- -- -- Distributions from net long-term capital gains *** 1,001,943 -- 81,625 893,620 ============================================================================================================ INSURED INSURED CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA DIVIDEND DIVIDEND DIVIDEND TAX-FREE ADVANTAGE 2 ADVANTAGE 3 ADVANTAGE ADVANTAGE 2006 (NVX) (NZH) (NKL) (NKX) ------------------------------------------------------------------------------------------------------------ Distributions from net tax-exempt income $15,681,327 $25,609,086 $16,451,218 $5,633,072 Distributions from net ordinary income ** -- -- -- -- Distributions from net long-term capital gains *** -- -- -- -- ============================================================================================================ INSURED INSURED CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA PREMIUM PREMIUM PREMIUM DIVIDEND INCOME INCOME 2 INCOME ADVANTAGE 2005 (NPC) (NCL) (NCU) (NAC) ------------------------------------------------------------------------------------------------------------ Distributions from net tax-exempt income $6,520,209 $12,725,281 $5,644,396 $25,851,246 Distributions from net ordinary income ** 377,496 -- -- -- Distributions from net long-term capital gains 785,476 -- -- 1,150,437 ============================================================================================================ INSURED INSURED CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA DIVIDEND DIVIDEND DIVIDEND TAX-FREE ADVANTAGE 2 ADVANTAGE 3 ADVANTAGE ADVANTAGE 2005 (NVX) (NZH) (NKL) (NKX) ------------------------------------------------------------------------------------------------------------ Distributions from net tax-exempt income $15,245,298 $23,895,351 $15,677,229 $5,801,023 Distributions from net ordinary income ** -- -- 116,229 -- Distributions from net long-term capital gains -- -- 689,397 -- ============================================================================================================ ** Net ordinary income consists of taxable market discount income and net short-term capital gains, if any. *** The Funds designated as a long-term capital gain dividend, pursuant to Internal Revenue Code Section 852(b)(3), the amount necessary to reduce the earnings and profits of the Funds related to net capital gain to zero for the tax year ended August 31, 2006. 76 At August 31, 2006, 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 PREMIUM DIVIDEND DIVIDEND TAX-FREE INCOME 2 ADVANTAGE 2 ADVANTAGE 3 ADVANTAGE (NCL) (NVX) (NZH) (NKX) ------------------------------------------------------------------------------------------------------------ Expiration year: 2009 $ 585,620 $ -- $ -- $ -- 2010 440,510 -- -- -- 2011 -- -- 2,849,060 278,553 2012 -- 406,014 323,840 -- 2013 -- -- -- -- 2014 -- -- -- 85,788 ------------------------------------------------------------------------------------------------------------ Total $1,026,130 $406,014 $3,172,900 $364,341 ============================================================================================================ Insured California Premium Income 2 (NCL) elected to defer net realized losses from investments incurred from November 1, 2005 through August 31, 2006 ("post-October losses") in accordance with Federal income tax regulations. Post-October losses of $18,677 were treated as having arisen on the first day of the following year. 5. MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES Each Fund's management fee is separated into two components - a complex-level component, based on the aggregate amount of all fund assets managed by Nuveen Asset Management (the "Adviser"), a wholly owned subsidary of Nuveen Investments, Inc. ("Nuveen"), 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. The annual fund-level fee, payable monthly, for each Fund 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) AVERAGE DAILY NET ASSETS INSURED CALIFORNIA PREMIUM INCOME 2 (NCL) (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 ================================================================================ CALIFORNIA DIVIDEND ADVANTAGE (NAC) CALIFORNIA DIVIDEND ADVANTAGE 2 (NVX) CALIFORNIA DIVIDEND ADVANTAGE 3 (NZH) AVERAGE DAILY NET ASSETS INSURED CALIFORNIA DIVIDEND ADVANTAGE (NKL) (INCLUDING NET ASSETS INSURED CALIFORNIA TAX-FREE ADVANTAGE (NKX) 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 ================================================================================ 77 Notes to FINANCIAL STATEMENTS (continued) 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 stated in the table below. As of August 31, 2006, the complex-level fee rate was .1863%. COMPLEX-LEVEL COMPLEX-LEVEL ASSETS(1) 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. 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 its 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. 78 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. 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. 79 Notes to FINANCIAL STATEMENTS (continued) 6. NEW ACCOUNTING PRONOUNCEMENT Financial Accounting Standards Board Interpretation No. 48 On July 13, 2006, the Financial Accounting Standards Board (FASB) released FASB Interpretation No. 48 Accounting for Uncertainty in Income Taxes (FIN 48). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. FIN 48 requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Fund's tax returns to determine whether the tax positions are "more-likely-than-not" of being sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax benefit or expense in the current year. Adoption of FIN 48 is required for fiscal years beginning after December 15, 2006 and is to be applied to all open tax years as of the effective date. At this time, management is evaluating the implications of FIN 48 and does not expect the adoption of FIN 48 will have a significant impact on the net assets or results of operations of the Funds. 7. SUBSEQUENT EVENTS Distributions to Common Shareholders The Funds declared Common share dividend distributions from their tax-exempt net investment income which were paid on October 2, 2006, to shareholders of record on September 15, 2006, as follows: INSURED INSURED CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA PREMIUM PREMIUM PREMIUM DIVIDEND INCOME INCOME 2 INCOME ADVANTAGE (NPC) (NCL) (NCU) (NAC) -------------------------------------------------------------------------------- Dividend per share $.0605 $.0560 $.0565 $.0675 ================================================================================ INSURED INSURED CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA DIVIDEND DIVIDEND DIVIDEND TAX-FREE ADVANTAGE 2 ADVANTAGE 3 ADVANTAGE ADVANTAGE (NVX) (NZH) (NKL) (NKX) -------------------------------------------------------------------------------- Dividend per share $.0655 $.0655 $.0650 $.0590 ================================================================================ 80 Financial HIGHLIGHTS 81 Financial HIGHLIGHTS Selected data for a Common share outstanding throughout each period: Investment Operations Less Distributions ----------------------------------------------------------------- ----------------------------------- Distributions Distributions from Net from Net Beginning Investment Capital Investment Capital Common Net Income to Gains to Income to Gains to Share Net Realized/ Preferred Preferred Common Common Net Asset Investment Unrealized Share- Share- Share- Share- Value Income Gain (Loss) holders+ holders+ Total holders holders Total ==================================================================================================================================== INSURED CALIFORNIA PREMIUM INCOME (NPC) ------------------------------------------------------------------------------------------------------------------------------------ Year Ended 8/31: 2006 $16.21 $ .92 $(.38) $(.18) $(.02) $ .34 $(.83) $(.14) $ (.97) 2005 16.23 .95 .22 (.10) (.01) 1.06 (.92) (.16) (1.08) 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) INSURED CALIFORNIA PREMIUM INCOME 2 (NCL) ------------------------------------------------------------------------------------------------------------------------------------ Year Ended 8/31: 2006 15.33 .90 (.28) (.20) -- .42 (.76) -- (.76) 2005 15.12 .91 .29 (.11) -- 1.09 (.88) -- (.88) 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) CALIFORNIA PREMIUM INCOME (NCU) ------------------------------------------------------------------------------------------------------------------------------------ Year Ended 8/31: 2006 15.03 .89 (.30) (.21) -- .38 (.77) (.01) (.78) 2005 14.51 .90 .60 (.12) -- 1.38 (.86) -- (.86) 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) ==================================================================================================================================== 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: 2006 $ -- $15.58 $15.08 1.00% 2.23% 2005 -- 16.21 15.90 7.58 6.74 2004 -- 16.23 15.81 11.80 10.64 2003 -- 15.59 15.07 1.55 2.82 2002 -- 16.17 15.85 6.73 6.47 INSURED CALIFORNIA PREMIUM INCOME 2 (NCL) ----------------------------------------------------------------------------------------- Year Ended 8/31: 2006 -- 14.99 14.19 (.63) 2.91 2005 -- 15.33 15.05 5.10 7.42 2004 -- 15.12 15.18 12.71 10.02 2003 -- 14.60 14.32 2.69 2.71 2002 -- 15.08 14.80 5.57 6.29 CALIFORNIA PREMIUM INCOME (NCU) ----------------------------------------------------------------------------------------- Year Ended 8/31: 2006 -- 14.63 14.01 3.14 2.72 2005 -- 15.03 14.37 11.76 9.75 2004 -- 14.51 13.67 12.04 12.94 2003 -- 13.66 13.02 (.91) .69 2002 -- 14.42 14.00 4.84 7.48 ========================================================================================= 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: 2006 $100,581 1.16% 5.89% 1.15% 5.90% 9% 2005 104,510 1.14 5.85 1.13 5.86 9 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 INSURED CALIFORNIA PREMIUM INCOME 2 (NCL) ------------------------------------------------------------------------------------------------------------------------- Year Ended 8/31: 2006 190,571 1.20 6.05 1.19 6.05 14 2005 194,895 1.17 6.03 1.17 6.03 7 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 CALIFORNIA PREMIUM INCOME (NCU) ------------------------------------------------------------------------------------------------------------------------- Year Ended 8/31: 2006 84,467 1.23 6.09 1.21 6.10 20 2005 86,785 1.21 6.08 1.20 6.09 13 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 ========================================================================================================================= 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: 2006 $45,000 $25,000 $80,878 2005 45,000 25,000 83,061 2004 45,000 25,000 83,121 2003 45,000 25,000 80,793 2002 45,000 25,000 82,854 INSURED CALIFORNIA PREMIUM INCOME 2 (NCL) ---------------------------------------------------------------------- Year Ended 8/31: 2006 95,000 25,000 75,150 2005 95,000 25,000 76,288 2004 95,000 25,000 75,535 2003 95,000 25,000 73,732 2002 95,000 25,000 75,229 CALIFORNIA PREMIUM INCOME (NCU) ---------------------------------------------------------------------- Year Ended 8/31: 2006 43,000 25,000 74,109 2005 43,000 25,000 75,456 2004 43,000 25,000 73,704 2003 43,000 25,000 70,848 2002 43,000 25,000 73,400 ====================================================================== * Total 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, 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. 82-83 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 Investment Capital Investment Capital Common Net Income to Gains to Income to Gains to Share Net Realized/ Preferred Preferred Common Common Net Asset Investment Unrealized Share- Share- Share- Share- Value Income Gain (Loss) holders+ holders+ Total holders holders Total ==================================================================================================================================== CALIFORNIA DIVIDEND ADVANTAGE (NAC) ------------------------------------------------------------------------------------------------------------------------------------ Year Ended 8/31: 2006 $15.98 $1.01 $ (.25) $(.21) $ -- $ .55 $(.91) $(.03) $ (.94) 2005 15.59 1.04 .50 (.12) -- 1.42 (.98) (.05) (1.03) 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) CALIFORNIA DIVIDEND ADVANTAGE 2 (NVX) ------------------------------------------------------------------------------------------------------------------------------------ Year Ended 8/31: 2006 15.63 .97 (.19) (.21) -- .57 (.84) -- (.84) 2005 14.97 .98 .71 (.12) -- 1.57 (.91) -- (.91) 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) CALIFORNIA DIVIDEND ADVANTAGE 3 (NZH) ------------------------------------------------------------------------------------------------------------------------------------ Year Ended 8/31: 2006 15.31 .97 (.20) (.22) -- .55 (.83) -- (.83) 2005 14.65 .97 .68 (.13) -- 1.52 (.86) -- (.86) 2004 13.72 .98 .88 (.07) -- 1.79 (.86) -- (.86) 2003 14.33 .98 (.66) (.08) -- .24 (.86) -- (.86) 2002(a) 14.33 .83 .09 (.08) -- .84 (.72) -- (.72) INSURED CALIFORNIA DIVIDEND ADVANTAGE (NKL) ------------------------------------------------------------------------------------------------------------------------------------ Year Ended 8/31: 2006 15.81 1.01 (.25) (.22) -- .54 (.85) -- (.85) 2005 15.35 1.01 .52 (.12) -- 1.41 (.90) (.05) (.95) 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(b) 14.33 .34 .92 (.03) -- 1.23 (.30) -- (.30) INSURED CALIFORNIA TAX-FREE ADVANTAGE (NKX) ------------------------------------------------------------------------------------------------------------------------------------ Year Ended 8/31: 2006 15.17 .95 (.25) (.21) -- .49 (.74) -- (.74) 2005 14.62 .96 .57 (.13) -- 1.40 (.85) -- (.85) 2004 13.79 .96 .84 (.06) -- 1.74 (.91) -- (.91) 2003(c) 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: 2006 $ -- $15.59 $15.97 5.47% 3.63% 2005 -- 15.98 16.07 14.62 9.41 2004 -- 15.59 15.00 12.07 12.11 2003 -- 14.82 14.30 4.79 3.37 2002 -- 15.24 14.55 3.67 6.75 CALIFORNIA DIVIDEND ADVANTAGE 2 (NVX) ---------------------------------------------------------------------------------------- Year Ended 8/31: 2006 -- 15.36 14.95 4.19 3.82 2005 -- 15.63 15.19 14.98 10.80 2004 -- 14.97 14.08 13.60 12.11 2003 -- 14.18 13.24 (.95) 2.16 2002 -- 14.79 14.28 (.27) 3.90 CALIFORNIA DIVIDEND ADVANTAGE 3 (NZH) ---------------------------------------------------------------------------------------- Year Ended 8/31: 2006 -- 15.03 14.84 8.50 3.81 2005 -- 15.31 14.49 15.75 10.69 2004 -- 14.65 13.33 11.97 13.36 2003 .01 13.72 12.71 (3.20) 1.68 2002(a) (.12) 14.33 14.00 (1.68) 5.32 INSURED CALIFORNIA DIVIDEND ADVANTAGE (NKL) ---------------------------------------------------------------------------------------- Year Ended 8/31: 2006 -- 15.50 15.70 10.72 3.62 2005 -- 15.81 15.00 9.00 9.46 2004 -- 15.35 14.67 12.54 12.53 2003 -- 14.60 14.00 (.35) 2.70 2002(b) (.12) 15.14 15.00 2.05 7.84 INSURED CALIFORNIA TAX-FREE ADVANTAGE (NKX) ---------------------------------------------------------------------------------------- Year Ended 8/31: 2006 -- 14.92 14.27 4.56 3.43 2005 -- 15.17 14.38 7.46 9.84 2004 -- 14.62 14.19 11.54 12.86 2003(c) (.21) 13.79 13.56 (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: 2006 $365,516 1.13% 6.22% .83% 6.51% 13 2005 374,265 1.12 6.22 .75 6.59 4 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 CALIFORNIA DIVIDEND ADVANTAGE 2 (NVX) ----------------------------------------------------------------------------------------------------------------------- Year Ended 8/31: 2006 227,160 1.16 5.94 .73 6.36 9 2005 231,140 1.16 5.94 .70 6.40 3 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 CALIFORNIA DIVIDEND ADVANTAGE 3 (NZH) ----------------------------------------------------------------------------------------------------------------------- Year Ended 8/31: 2006 362,473 1.16 6.08 .70 6.54 10 2005 369,262 1.17 6.05 .70 6.51 5 2004 353,360 1.20 6.32 .73 6.78 13 2003 330,829 1.20 6.33 .73 6.79 48 2002(a) 345,470 1.15* 6.01* .69* 6.47* 49 INSURED CALIFORNIA DIVIDEND ADVANTAGE (NKL) ----------------------------------------------------------------------------------------------------------------------- Year Ended 8/31: 2006 236,525 1.17 6.12 .71 6.58 3 2005 241,254 1.16 6.06 .71 6.51 4 2004 234,186 1.18 6.28 .72 6.74 14 2003 222,751 1.18 6.00 .72 6.46 71 2002(b) 231,062 1.10* 4.98* .60* 5.47* 12 INSURED CALIFORNIA TAX-FREE ADVANTAGE (NKX) ----------------------------------------------------------------------------------------------------------------------- Year Ended 8/31: 2006 87,775 1.22 5.97 .73 6.46 4 2005 89,272 1.21 5.95 .73 6.43 3 2004 86,008 1.23 6.17 .73 6.67 20 2003(c) 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: 2006 $175,000 $25,000 $77,217 2005 175,000 25,000 78,466 2004 175,000 25,000 77,152 2003 175,000 25,000 74,560 2002 175,000 25,000 75,974 CALIFORNIA DIVIDEND ADVANTAGE 2 (NVX) --------------------------------------------------------------------- Year Ended 8/31: 2006 110,000 25,000 76,627 2005 110,000 25,000 77,532 2004 110,000 25,000 75,317 2003 110,000 25,000 72,664 2002 110,000 25,000 74,731 CALIFORNIA DIVIDEND ADVANTAGE 3 (NZH) --------------------------------------------------------------------- Year Ended 8/31: 2006 187,000 25,000 73,459 2005 187,000 25,000 74,367 2004 187,000 25,000 72,241 2003 187,000 25,000 69,229 2002(a) 187,000 25,000 71,186 INSURED CALIFORNIA DIVIDEND ADVANTAGE (NKL) --------------------------------------------------------------------- Year Ended 8/31: 2006 118,000 25,000 75,111 2005 118,000 25,000 76,113 2004 118,000 25,000 74,616 2003 118,000 25,000 72,193 2002(b) 118,000 25,000 73,954 INSURED CALIFORNIA TAX-FREE ADVANTAGE (NKX) --------------------------------------------------------------------- Year Ended 8/31: 2006 45,000 25,000 73,764 2005 45,000 25,000 74,595 2004 45,000 25,000 72,782 2003(c) 45,000 25,000 70,078 ==================================================================== * Annualized. ** Total 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, 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 September 25, 2001 (commencement of operations) through August 31, 2002. (b) For the period March 25, 2002 (commencement of operations) through August 31, 2002. (c) For the period November 21, 2002 (commencement of operations) through August 31, 2003. See accompanying notes to financial statements. 84-85 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 Fund is currently set at nine. 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 (since 1996) and Director of Nuveen Investments, 167 3/28/49 the Board Inc., Nuveen Investments, LLC, Nuveen Advisory Corp. and 333 W. Wacker Drive and Board Nuveen Institutional Advisory Corp.(3); formerly, Director Chicago, IL 60606 Member (1996-2006) of Institutional Capital Corporation; Chairman and Director (since 1997) of Nuveen Asset Management; Chairman and Director of Rittenhouse Asset Management, Inc. (since 1999); Chairman of Nuveen Investments Advisers Inc. (since 2002). BOARD MEMBERS WHO ARE NOT INTERESTED PERSONS OF THE FUNDS: ------------------------------------------------------------------------------------------------------------------------------------ Robert P. Bremner Lead Independent 1997 Private Investor and Management Consultant. 167 8/22/40 Board member 333 W. Wacker Drive Chicago, IL 60606 ------------------------------------------------------------------------------------------------------------------------------------ Lawrence H. Brown Board member 1993 Retired (since 1989) as Senior Vice President of The 167 7/29/34 Northern Trust Company; Director (since 2002) Community 333 W. Wacker Drive Advisory Board for Highland Park and Highwood, United Chicago, IL 60606 Way of the North Shore. ------------------------------------------------------------------------------------------------------------------------------------ Jack B. Evans Board member 1999 President, The Hall-Perrine Foundation, a private philanthropic 167 10/22/48 corporation (since 1996); Director and Vice Chairman, United 333 W. Wacker Drive Fire Group, a publicly held company; Adjunct Faculty Member, Chicago, IL 60606 University of Iowa; Director, Gazette Companies; Life Trustee of Coe College and Iowa College Foundation; formerly, Director, Alliant Energy; formerly, Director, Federal Reserve 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, Tippie College of Business, University of Iowa (since 167 3/6/48 June 2006); formerly, Dean and Distinguished Professor of Finance, 333 W. Wacker Drive School of Business at the University of Connecticut (2003-2006); Chicago, IL 60606 previously, Senior Vice President and Director of Research at the Federal Reserve Bank of Chicago (1995-2003); Director (since 1997), Credit Research Center at Georgetown University; Director (since 2004) of Xerox Corporation; Director, SS&C Technologies, Inc. (May 2005 - October 2005). ------------------------------------------------------------------------------------------------------------------------------------ David J. Kundert Board member 2005 Retired (since 2004) as Chairman, JPMorgan Fleming Asset 165 10/28/42 Management, President and CEO, Banc One Investment 333 W. Wacker Drive Advisors Corporation, and President, One Group Mutual Chicago, IL 60606 Funds; prior thereto, Executive Vice President, Banc One Corporation and Chairman and CEO, Banc One Investment Management Group; Board of Regents, Luther College; member of the Wisconsin Bar Association; member of Board of Directors, Friends of Boerner Botanical Gardens. 86 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 Chairman of Miller-Valentine Partners Ltd., a real estate 167 9/24/44 investment company; formerly, Senior Partner and Chief 333 W. Wacker Drive Operating Officer (retired, 2004) of Miller-Valentine Chicago, IL 60606 Group; formerly, Vice President, Miller-Valentine Realty; Board Member, Chair of the Finance Committee and member of the Audit Committee of Premier Health Partners, the not-for-profit company of Miami Valley Hospital; Vice President, Dayton Philharmonic Orchestra Association; Board Member, Regional Leaders Forum, which promotes cooperation on economic development issues; Director, Dayton 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 167 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 ------------------------------------------------------------------------------------------------------------------------------------ Eugene S. Sunshine Board member 2005 Senior Vice President for Business and Finance, 167 1/22/50 Northwestern University (since 1997); Director (since 2003), 333 W. Wacker Drive Chicago Board Options Exchange; formerly, Director Chicago, IL 60606 National Mentor Holdings, a privately-held, national provider of home and community-based services; Chairman (since 1997), Board of Directors, Rubicon, a pure captive insurance company owned by Northwestern University; Director (since 1997), Evanston Chamber of Commerce and Evanston Inventure, a business development organization. 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(4) DURING PAST 5 YEARS OFFICER ------------------------------------------------------------------------------------------------------------------------------------ OFFICERS OF THE FUND: ------------------------------------------------------------------------------------------------------------------------------------ Gifford R. Zimmerman Chief 1988 Managing Director (since 2002), Assistant Secretary and 167 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 (2002-2004), General Counsel (1998-2004) and Assistant Secretary, formerly, Vice President of Nuveen Advisory Corp. and Nuveen Institutional Advisory Corp.(3); Managing Director (since 2002) and Assistant Secretary and Associate General Counsel, formerly, Vice President (since 1997), of Nuveen Asset Management; Managing Director (since 2004) and Assistant Secretary (since 1994) of Nuveen Investments, Inc.; 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. and Symphony Asset Management LLC (since 2003); Assistant Secretary of Tradewinds NWQ Global Investors, LLC (since 2006); Chartered Financial Analyst. 87 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(4) DURING PAST 5 YEARS OFFICER ------------------------------------------------------------------------------------------------------------------------------------ OFFICERS OF THE FUNDS (CONTINUED): ------------------------------------------------------------------------------------------------------------------------------------ Julia L. Antonatos Vice President 2004 Managing Director (since 2005), formerly Vice President 167 9/22/63 (since 2002); formerly, Assistant Vice President (since 2000) 333 W. Wacker Drive of Nuveen Investments, LLC; Chartered Financial Analyst. Chicago, IL 60606 ------------------------------------------------------------------------------------------------------------------------------------ Michael T. Atkinson Vice President 2000 Vice President (since 2002), formerly, Assistant Vice 167 2/3/66 and Assistant President (since 2000) of Nuveen Investments, LLC. 333 W. Wacker Drive Secretary Chicago, IL 60606 ------------------------------------------------------------------------------------------------------------------------------------ Peter H. D'Arrigo Vice President 1999 Vice President and Treasurer of Nuveen Investments, LLC 167 11/28/67 and of Nuveen Investments, Inc. (since 1999); Vice President 333 W. Wacker Drive and Treasurer of Nuveen Asset Management (since 2002) Chicago, IL 60606 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. and Symphony Asset Management LLC (since 2003); Treasurer, Tradewinds NWQ Global Investors, LLC (since 2006); formerly, Vice President and Treasurer (1999-2004) of Nuveen Advisory Corp. and Nuveen Institutional Advisory Corp.(3); Chartered Financial Analyst. ------------------------------------------------------------------------------------------------------------------------------------ John N. Desmond Vice President 2005 Vice President, Director of Investment Operations, Nuveen 167 8/24/61 Investments, LLC (since January 2005); formerly, Director, 333 W. Wacker Drive Business Manager, Deutsche Asset Management (2003-2004), Chicago, IL 60606 Director, Business Development and Transformation, Deutsche Trust Bank Japan (2002-2003); previously, Senior Vice President, Head of Investment Operations and Systems, Scudder Investments Japan, (2000-2002), Senior Vice President, Head of Plan Administration and Participant Services, Scudder Investments (1995-2002). ------------------------------------------------------------------------------------------------------------------------------------ Jessica R. Droeger Vice President 1998 Vice President (since 2002), Assistant Secretary and 167 9/24/64 and Secretary Assistant General Counsel (since 1998) formerly, Assistant 333 W. Wacker Drive Vice President (since 1998) of Nuveen Investments, LLC; Chicago, IL 60606 Vice President (2002-2004) and Assistant Secretary (1998-2004) formerly, Assistant Vice President of Nuveen Advisory Corp. and Nuveen Institutional Advisory Corp.(3); Vice President and Assistant Secretary (since 2005) of Nuveen Asset Management. ------------------------------------------------------------------------------------------------------------------------------------ Lorna C. Ferguson Vice President 1998 Managing Director (since 2004), formerly, Vice President of 167 10/24/45 Nuveen Investments, LLC, Managing Director (2004) formerly, 333 W. Wacker Drive Vice President (1998-2004) of Nuveen Advisory Corp. and Chicago, IL 60606 Nuveen Institutional Advisory Corp.(3); Managing Director (since 2005) of Nuveen Asset Management. ------------------------------------------------------------------------------------------------------------------------------------ William M. Fitzgerald Vice President 1995 Managing Director (since 2002), formerly, Vice President of 167 3/2/64 Nuveen Investments; Managing Director (1997-2004) of 333 W. Wacker Drive Nuveen Advisory Corp. and Nuveen Institutional Advisory Chicago, IL 60606 Corp.(3); Managing Director (since 2001) of Nuveen Asset Management; Vice President (since 2002) of Nuveen Investments Advisers Inc.; Chartered Financial Analyst. 88 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(4) DURING PAST 5 YEARS OFFICER ------------------------------------------------------------------------------------------------------------------------------------ OFFICERS OF THE FUNDS (CONTINUED): ------------------------------------------------------------------------------------------------------------------------------------ Stephen D. Foy Vice President 1998 Vice President (since 1993) and Funds Controller (since 1998) 167 5/31/54 and Controller of Nuveen Investments, LLC; formerly, Vice President and 333 W. Wacker Drive Funds Controller (1998-2004) of Nuveen Investments, Inc.; Chicago, IL 60606 Certified Public Accountant. ------------------------------------------------------------------------------------------------------------------------------------ Walter M. Kelly Chief 2003 Assistant Vice President and Assistant Secretary of the 167 2/24/70 Compliance Nuveen Funds (since 2003); Assistant Vice President and 333 West Wacker Drive Officer Assistant General Counsel (since 2003) of Nuveen Investments, Chicago, IL 60606 LLC; previously, Associate (2001-2003) a the law firm of Vedder, Price, Kaufman & Kammholz. ------------------------------------------------------------------------------------------------------------------------------------ David J. Lamb Vice President 2000 Vice President (since 2000) of Nuveen Investments, 167 3/22/63 LLC; Certified Public Accountant. 333 W. Wacker Drive Chicago, IL 60606 ------------------------------------------------------------------------------------------------------------------------------------ Tina M. Lazar Vice President 2002 Vice President of Nuveen Investments, LLC (since 1999). 167 8/27/61 333 W. Wacker Drive Chicago, IL 60606 ------------------------------------------------------------------------------------------------------------------------------------ Larry W. Martin Vice President 1988 Vice President, Assistant Secretary and Assistant General 167 7/27/51 and Assistant Counsel of Nuveen Investments, LLC; formerly, Vice President 333 W. Wacker Drive Secretary and Assistant Secretary of Nuveen Advisory Corp. and Nuveen Chicago, IL 60606 Institutional Advisory Corp.(3); Vice President (since 2005) and Assistant Secretary of Nuveen Investments, Inc.; Vice President (since 2005) and Assistant Secretary (since 1997) of Nuveen Asset Management; 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), Symphony Asset Management LLC (since 2003) and Tradewinds NWQ Global Investors, LLC (since 2006). (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) Nuveen Advisory Corp. and Nuveen Institutional Advisory Corp. were reorganized into Nuveen Asset Management, effective January 1, 2005. (4) 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. 89 ANNUAL INVESTMENT MANAGEMENT AGREEMENT APPROVAL PROCESS The Board of Trustees is responsible for overseeing the performance of the investment adviser to the Funds and determining whether to continue the advisory arrangements. At a meeting held on May 23-25, 2006 (the "May Meeting"), the Board of Trustees of the Funds, including the independent Trustees, unanimously approved the continuance of the Investment Management Agreement between each Fund and NAM (the "Fund Adviser"). THE APPROVAL PROCESS During the course of the year, the Board received a wide variety of materials relating to the services provided by the Fund Adviser and the performance of each Fund. To assist the Board in its evaluation of the advisory contract with the Fund Adviser at the May Meeting, the independent Trustees received extensive materials in advance of their meeting which outlined, among other things: o the nature, extent and quality of services provided by the Fund Adviser; o the organization and business operations of the Fund Adviser, including the responsibilities of various departments and key personnel; o the Fund's past performance, the Fund's performance compared to funds of similar investment objectives compiled by an independent third party and to customized benchmarks; o the profitability of the Fund Adviser and certain industry profitability analyses for unaffiliated advisers; o the expenses of the Fund Adviser in providing the various services; o the advisory fees (gross and net management fees) and total expense ratios of the Fund, including comparisons of such fees and expenses with those of comparable, unaffiliated funds based on information and data provided by Lipper (the "Peer Universe") as well as compared to a subset of funds within the Peer Universe (the "Peer Group") to the respective Fund (as applicable); o the advisory fees the Fund Adviser assesses to other types of investment products or clients; o the soft dollar practices of the Fund Adviser, if any; and o from independent legal counsel, a legal memorandum describing, among other things, the duties of the Trustees under the Investment Company Act of 1940 (the "1940 Act") as well as the general principles of relevant state law in reviewing and approving advisory contracts; the requirements of the 1940 Act in such matters; an adviser's fiduciary duty with respect to advisory agreements and compensation; the standards used by courts in determining whether investment company boards of directors have fulfilled their duties; and factors to be considered by the Board in voting on advisory agreements. At the May Meeting, the Fund Adviser made a presentation to and responded to questions from the Board. After the presentations and after reviewing the written materials, the independent Trustees met privately with their legal counsel to review the Board's duties in reviewing advisory contracts and consider the renewal of the advisory contracts. It is with this background that the Trustees considered the advisory contract with the Fund Adviser. The independent Trustees, in consultation with independent counsel, reviewed the factors set out in judicial decisions and SEC directives relating to the renewal of advisory contracts. As outlined in more detail below, the Trustees considered all factors they believed relevant with respect to each Fund, including the following: (a) the nature, extent and quality of the services to be provided by the Fund Adviser; (b) the investment performance of the Fund and the Fund Adviser; (c) the costs of the services to be provided and profitability of the Fund Adviser and its affiliates; (d) the extent to which economies of scale would be realized as the Fund grows; and (e) whether fee levels reflect these economies of scale for the benefit of Fund investors. A. NATURE, EXTENT AND QUALITY OF SERVICES In reviewing the Fund Adviser, the Trustees considered the nature, extent and quality of the Fund Adviser's services. The Trustees reviewed materials outlining, among other things, the Fund Adviser's organization and business; the types of services that the Fund Adviser or its affiliates provide and are expected to provide to the Funds; the performance record of the applicable Fund (as described in further detail below); and any initiatives and enhancements Nuveen has taken for its municipal fund product line. In connection with their continued service as Trustees, the Trustees also have a good understanding of the Fund Adviser's organization, operations and personnel. In this regard, the Trustees are familiar with and have evaluated the professional experience, qualifications and credentials of the Fund Adviser's personnel. The Trustees further reviewed materials describing, among other things, the teams and personnel involved in the investment, research, risk-management and operational processes involved in managing municipal funds 90 and their respective functions. Given the Trustees' experience with the Funds and Fund Adviser, the Trustees recognized the demonstrated history of care and depth of experience of the respective personnel in managing these Funds. In this regard, the Trustees considered the continued quality of the Fund Adviser's investment process in making portfolio management decisions as well as additional refinements and improvements adopted to the portfolio management processes noted below. With respect to the services provided to municipal funds, including the Funds, the Trustees noted that the Fund Adviser continues to make refinements to its portfolio management process including, among other things, the increased use of derivatives to enhance management of risk, additional analytical software for research staff and improved municipal pricing processes. In addition to advisory services, the independent Trustees considered the quality of any administrative or non-advisory services provided. The Fund Adviser provides the Funds with such administrative and other services (exclusive of, and in addition to, any such services provided by others for the Funds) and officers and other personnel as are necessary for the operations of the respective Fund. In connection with the review of the Investment Management Agreement, the Trustees considered the extent and quality of these other services which include, among other things, providing: product management (e.g., product positioning, performance benchmarking, risk management); fund administration (e.g., daily net asset value pricing and reconciliation, tax reporting, fulfilling regulatory filing requirements); oversight of third party service providers; administration of board relations (e.g., organizing board meetings and preparing related materials); compliance (e.g., monitoring compliance with investment policies and guidelines and regulatory requirements); and legal support (e.g., helping prepare and file registration statements, amendments thereto, proxy statements and responding to regulatory requests and/or inquiries). As the Funds operate in a highly regulated industry and given the importance of compliance, the Trustees considered, in particular, the additions of experienced personnel to the compliance teams and the enhancements to technology and related systems to support the compliance activities for the Funds (including a new reporting system for quarterly portfolio holdings). In addition to the foregoing, the Trustees also noted the additional services that the Fund Adviser or its affiliates provide to closed-end funds, including, in particular, secondary market support activities. The Trustees recognized Nuveen's continued commitment to supporting the secondary market for the common shares of its closed-end funds through a variety of initiatives designed to raise investor and analyst awareness and understanding of closed-end funds. These efforts include providing advertising and other media relations programs, continued contact with analysts, maintaining and enhancing its website for closed-end funds, and targeted advisor communication programs. With respect to funds that utilize leverage through the issuance of preferred shares, the Trustees noted Nuveen's continued support for the preferred shares by maintaining, among other things, an in-house preferred trading desk; designating a product manager whose responsibilities include creating and disseminating product information and managing relations in connection with the preferred share auction; and maintaining systems necessary to test compliance with rating agency requirements. Based on their review, the Trustees found that, overall, the nature, extent and quality of services provided (and expected to be provided) to the respective Funds under the Investment Management Agreement were of a high level and were satisfactory. B. THE INVESTMENT PERFORMANCE OF THE FUND AND FUND ADVISER The Board considered the investment performance for each Fund, including the Fund's historic performance as well as its performance compared to funds with similar investment objectives identified by an independent third party (the "Performance Peer Group") and portfolio level performance against customized benchmarks, as described below. In evaluating the performance information, in certain instances, the Trustees noted that the closest Performance Peer Group for a Fund still may not adequately reflect such Fund's investment objectives, strategies and portfolio duration, thereby limiting the usefulness of the comparisons of such Fund's performance with that of the Performance Peer Group. With respect to state specific municipal funds, the Trustees recognized that certain state municipal funds do not have a corresponding state specific Performance Peer Group in which case their performance is measured against a more general municipal category for various states. The closed-end state municipal funds that do not have corresponding state-specific Performance Peer Groups are from Arizona, Connecticut, Georgia, Maryland, Massachusetts, Missouri, North Carolina, Ohio, Texas, and Virginia. Further, due to a lack of state-specific unleveraged categories, certain unleveraged state municipal funds are included in their leveraged state category (such as, the Nuveen California Select Tax-Free Income Fund, Nuveen California Municipal Value Fund, Nuveen New York Select Tax-Free Income Fund and Nuveen New York Municipal Value Fund). In reviewing performance, the Trustees reviewed performance information including, among other things, total return information compared with the Fund's Performance Peer Group for the one-, three- and five-year periods (as applicable) ending December 31, 2005. The Trustees also reviewed the Fund's portfolio level performance (which does not reflect fund level fees and expenses) compared to customized portfolio-level benchmarks for the one- and three-year periods ending December 31, 2005 (as applicable). This analysis is designed to assess the efficacy of investment decisions against appropriate measures of risk and total return, within specific market segments. This information supplements the Fund performance information provided to the Board at each of their quarterly meetings. Based on their review, the Trustees determined that the respective Fund's absolute and relative investment performance over time had been satisfactory. C. FEES, EXPENSES AND PROFITABILITY 1. FEES AND EXPENSES In evaluating the management fees and expenses of a Fund, the Board reviewed, among other things, the Fund's advisory fees (net and gross management fees) and total expense ratios (before and after expense reimbursements and/or waivers) in absolute terms as well as comparisons to the gross management fees (before waivers), net management fees (after waivers) and total expense ratios (before and after waivers) of comparable funds in the Peer Universe and the Peer Group. The Trustees reviewed data regarding the construction of Peer Groups as well as the methods of measurement for the fee and expense analysis and the performance analysis. In certain cases, due to the small number of peers in the Peer Universe, the Peer Universe and Peer Group may be the same. Further, the Trustees recognized that in certain cases the closest Peer Universe and/or Peer Group did not adequately reflect the Fund's investment objectives and strategies limiting the usefulness of comparisons. In reviewing comparisons, 91 ANNUAL INVESTMENT MANAGEMENT AGREEMENT APPROVAL PROCESS (continued) the Trustees also considered the size of the Peer Universe and/or Peer Group, the composition of the Peer Group (including differences in the use of leverage and insurance) as well as differing levels of fee waivers and/or expense reimbursements. In this regard, the Trustees considered the fund-level and complex-wide breakpoint schedules (described in further detail below) and any fee waivers and reimbursements provided by Nuveen (applicable, in particular, for certain funds launched since 1999). Based on their review of the fee and expense information provided, the Trustees determined that each Fund's net total expense ratio was within an acceptable range compared to peers. 2. COMPARISONS WITH THE FEES OF OTHER CLIENTS The Trustees further reviewed data comparing the advisory fees of the Fund Adviser with fees the Fund Adviser charges to other clients, including municipal managed accounts. In general, the fees charged for separate accounts are somewhat lower than the fees assessed to the Funds. The Trustees recognized that the differences in fees are attributable to a variety of factors, including the differences in services provided, product distribution, portfolio investment policies, investor profiles, account sizes and regulatory requirements. The Trustees noted, in particular, that the range of services provided to the Funds is more extensive than that provided to managed separate accounts. As described in further detail above, such additional services include, but are not limited to, providing: product management, fund administration, oversight of third party service providers, administration of board relations, and legal support. Funds further operate in a highly regulated industry requiring extensive compliance functions compared to the other investment products. In addition to the costs of the additional services, administrative costs may also be greater for funds as the average account size for separate accounts is notably larger than the retail accounts of funds. Given the differences in the product structures, particularly the extensive services provided to closed-end municipal funds, the Trustees believe such facts justify the different levels of fees. 3. PROFITABILITY OF FUND ADVISER In conjunction with its review of fees, the Trustees also considered the profitability of Nuveen Investments for advisory activities (which incorporated Nuveen's wholly-owned affiliated sub-advisers). The Trustees reviewed data comparing Nuveen's profitability with other fund sponsors prepared by three independent third party service providers as well as comparisons of the revenues, expenses and profits margins of various unaffiliated management firms with similar amounts of assets under management prepared by Nuveen. The Trustees further reviewed the 2005 Annual Report for Nuveen Investments. In considering profitability, the Trustees recognized the inherent limitations in determining profitability as well as the difficulties in comparing the profitability of other unaffiliated advisers. Profitability may be affected by numerous factors, including the methodology for allocating expenses, the adviser's business mix, the types of funds managed, the adviser's capital structure and cost of capital. Further, individual fund or product line profitability of other sponsors is generally not publicly available. Accordingly, the profitability information that is publicly available from various investment advisory or management firms may not be representative of the industry. Notwithstanding the foregoing, in reviewing profitability, the Trustees reviewed Nuveen's methodology and assumptions for allocating expenses across product lines to determine profitability. In this regard, the methods of allocation used appeared reasonable. The Trustees also, to the extent available, compared Nuveen's profitability margins (including pre- and post-marketing profit margins) with the profitability of various unaffiliated management firms. The Trustees noted that Nuveen's profitability is enhanced due to its efficient internal business model. The Trustees also recognized that while a number of factors affect profitability, Nuveen's profitability may change as fee waivers and/or expense reimbursement commitments of Nuveen to various funds in the Nuveen complex expire. To keep apprised of profitability and developments that may affect profitability, the Trustees have requested profitability analysis be provided periodically during the year. Based on their review, the Trustees were satisfied that the Fund Adviser's level of profitability was reasonable in light of the services provided. In evaluating the reasonableness of the compensation, the Trustees also considered any other revenues paid to the Fund Adviser as well as any indirect benefits (such as soft dollar arrangements, if any) the Fund Adviser and its affiliates are expected to receive that are directly attributable to their management of the Funds, if any. See Section E below for additional information. Based on their review of the overall fee arrangements of the applicable Fund, the Trustees determined that the advisory fees and expenses of the respective Fund were reasonable. 92 D. ECONOMIES OF SCALE AND WHETHER FEE LEVELS REFLECT THESE ECONOMIES OF SCALE With respect to economies of scale, the Trustees recognized the potential benefits resulting from the costs of a fund being spread over a larger asset base as a fund grows. To help ensure the shareholders share in these benefits, the Trustees have reviewed and considered the breakpoints in the advisory fee schedules that reduce advisory fees as the applicable Fund's assets grow. In addition to advisory fee breakpoints as assets in a respective Fund rise, after lengthy discussions with management, the Board also approved a complex-wide fee arrangement that was introduced on August 1, 2004. Pursuant to the complex-wide fee arrangement, the fees of the funds in the Nuveen complex, including the Funds, are reduced as the assets in the fund complex reach certain levels. In evaluating the complex-wide fee arrangement, the Trustees considered, among other things, the historic and expected fee savings to shareholders as assets grow, the amount of fee reductions at various asset levels, and that the arrangement would extend to all funds in the Nuveen complex. The Trustees noted that 2005 was the first full year to reflect the fee reductions from the complex wide fee arrangement. The Trustees also considered the impact, if any, the complex-wide fee arrangement may have on the level of services provided. Based on their review, the Trustees concluded that the breakpoint schedule and complex-wide fee arrangement currently was acceptable and desirable in providing benefits from economies of scale to shareholders. E. INDIRECT BENEFITS In evaluating fees, the Trustees also considered any indirect benefits or profits the Fund Adviser or its affiliates may receive as a result of its relationship with each Fund. In this regard, the Trustees considered revenues received by affiliates of the Fund Adviser for serving as agent at Nuveen's preferred trading desk and for serving as a co-manager in the initial public offering of new closed-end exchange traded funds. In addition to the above, the Trustees considered whether the Fund Adviser received any benefits from soft dollar arrangements. With respect to NAM, the Trustees noted that NAM does not currently have any soft dollar arrangements and does not pay excess brokerage commissions (or spreads on principal transactions) in order to receive research services; however, the Fund Adviser may from time to time receive and have access to research generally provided to institutional clients. The Trustees did not identify any single factor discussed previously as all-important or controlling. The Trustees, including a majority of independent Trustees, concluded that the terms of the Investment Management Agreements were fair and reasonable, that the Fund Adviser's fees are reasonable in light of the services provided to each Fund, and that the renewal of the Investment Management Agreements should be approved. 93 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 FUNDS DIVIDEND REINVESTMENT PLAN Your Nuveen Exchange-Traded Closed-End 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 dividends and distributions awaiting reinvestment. Because the market price of the shares may increase before purchases are completed, the average purchase price per share may exceed the market price at the time of valuation, resulting in the acquisition of fewer shares than if the dividend or distribution had been paid in shares issued by the Fund. A pro rata portion of any applicable brokerage commissions on open market purchases will be paid by Plan participants. These commissions usually will be lower than those charged on individual transactions. 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. CALL TODAY TO START REINVESTING DIVIDENDS AND/OR DISTRIBUTIONS 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. 94 Other Useful INFORMATION QUARTERLY PORTFOLIO OF INVESTMENTS AND PROXY VOTING INFORMATION Each Fund's (i) quarterly portfolio of investments, (ii) information regarding how the Funds voted proxies relating to portfolio securities held during the 12-month period ended June 30, 2006, and (iii) a description of the policies and procedures that the Funds used to determine how to vote proxies relating to portfolio securities are available without charge, upon request, by calling Nuveen Investments toll-free at (800) 257-8787 or on Nuveen's website 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. CEO CERTIFICATION DISCLOSURE Each Fund's Chief Executive Officer has submitted to the New York Stock Exchange the annual CEO certification as required by Section 303A.12(a) of the NYSE Listed Company Manual. Each Fund has filed with the Securities and Exchange Commission the certification of its Chief Executive Officer and Chief Financial Officer required by Section 302 of the Sarbanes-Oxley Act. 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 expected period over which a bond's principal and interest will be paid, and consequently is a measure of the sensitivity of a bond's or bond Fund's value to changes when market interest rates change. Generally, the longer a bond's 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 David J. Kundert William J. Schneider Timothy R. Schwertfeger Judith M. Stockdale Eugene S. Sunshine FUND MANAGER Nuveen Asset Management 333 West Wacker Drive Chicago, IL 60606 CUSTODIAN State Street Bank & Trust Company Boston, MA TRANSFER AGENT AND SHAREHOLDER SERVICES State Street Bank & Trust Company 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 period covered by this report. Any future repurchases will be reported to shareholders in the next annual or semiannual report. 95 Photo of: 2 women looking at a photo album. Nuveen Investments: SERVING Investors For GENERATIONS 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 more than $149 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 six distinct brands: Nuveen, a leader in fixed-income 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; Santa Barbara a leader in growth equities; and Tradewinds NWQ, a leader in global equities. FIND OUT HOW WE CAN HELP YOU REACH YOUR FINANCIAL GOALS. To learn more about the products and services Nuveen Investments offers, talk to your financial advisor, or call us at (800) 257-8787. Please read the information provided carefully before you invest. Be sure to obtain a prospectus, where applicable. Investors should consider the investment objective and policies, risk considerations, charges and expenses of the Fund carefully before investing. The prospectus contains this and other information relevant to an investment in the Fund. For a prospectus, please contact your securities representative or Nuveen Investments, 333 W. Wacker Dr., Chicago, IL 60606. Please read the prospectus carefully before you invest or send money. o Share prices Learn more o Fund details about Nuveen Funds at o Daily financial news WWW.NUVEEN.COM/ETF o Investor education o Interactive planning tools Logo: NUVEEN Investments EAN-B-0806D 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. There were no amendments to or waivers from the Code during the period covered by this report. The registrant has posted the code of ethics on its website at www.nuveen.com/etf. (To view the code, click on the Investor Resources drop down menu box, click on Fund Governance and then click on Code of Conduct.) ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. The registrant's Board of Directors or Trustees determined that the registrant has 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 is Jack B. Evans, Chairman of the Audit Committee, who is "independent" for purposes of Item 3 of Form N-CSR. Mr. Evans was formerly President and Chief Operating Officer 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 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 to its accountant 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 (1) BILLED TO FUND (2) BILLED TO FUND (3) BILLED TO FUND (4) ---------------------------------------------------------------------------------------------------------------------- August 31, 2006 $ 9,342 $ 0 $ 400 $ 2,900 ---------------------------------------------------------------------------------------------------------------------- Percentage approved 0% 0% 0% 0% pursuant to pre-approval exception ---------------------------------------------------------------------------------------------------------------------- August 31, 2005 $ 8,764 $ 0 $ 692 $ 2,700 ---------------------------------------------------------------------------------------------------------------------- Percentage approved 0% 0% 0% 0% pursuant to pre-approval exception ---------------------------------------------------------------------------------------------------------------------- (1) "Audit Fees" are the aggregate fees billed for professional services for the audit of the Fund's annual financial statements and services provided in connection with statutory and regulatory filings or engagements. (2) "Audit Related Fees" are the aggregate fees billed for assurance and related services reasonably related to the performance of the audit or review of financial statements and are not reported under "Audit Fees". (3) "Tax Fees" are the aggregate fees billed for professional services for tax advice, tax compliance, and tax planning. (4) "All Other Fees" are the aggregate fees billed for products and services other than "Audit Fees", "Audit Related Fees", and "Tax Fees". 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 Asset Management ("NAM" or the "Adviser"), and any entity controlling, controlled by or under common control with NAM ("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 tables also show 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 (1) SERVICE PROVIDERS --------------------------------------------------------------------------------------------------- August 31, 2006 $ 0 $ 2,200 $ 0 --------------------------------------------------------------------------------------------------- Percentage approved 0% 0% 0% pursuant to pre-approval exception --------------------------------------------------------------------------------------------------- August 31, 2005 $ 0 $ 2,200 $ 0 --------------------------------------------------------------------------------------------------- Percentage approved 0% 0% 0% pursuant to pre-approval exception --------------------------------------------------------------------------------------------------- (1) The amounts reported for the Fund under the column heading "Tax Fees" represents amounts billed to the Adviser exclusively for the preparation for the Fund's tax return, the cost of which is borne by the Adviser. In the aggregate, for all Nuveen funds for which Ernst & Young LLP serves as independent registered public accounting firm, these fees amounted to $275,000 in 2006 and $282,575 in 2005. 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. 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's 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 FEE OPERATIONS AND FINANCIAL PROVIDERS (ALL OTHER BILLED TO FUND REPORTING OF THE FUND) ENGAGEMENTS) TOTAL ---------------------------------------------------------------------------------------------------------------------- August 31, 2006 $ 3,300 $ 2,200 $ 0 $ 5,500 August 31, 2005 $ 3,392 $ 2,200 $ 0 $ 5,593 "Non-Audit Fees billed to Adviser" for both fiscal year ends represent "Tax Fees" billed to Adviser in their respective amounts from the previous table. 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. The registrant's Board of Directors or Trustees has a separately designated Audit Committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended (15 U.S.C. 78c(a)(58)(A)). The members of the audit committee are Robert P. Bremner, Lawrence H. Brown, Jack B. Evans, William J. Schneider and Eugene S. Sunshine. ITEM 6. SCHEDULE OF INVESTMENTS. See Portfolio of Investments in Item 1. ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. The registrant invests its assets primarily in municipal bonds and cash management securities. On rare occasions the registrant may acquire, directly or through a special purpose vehicle, equity securities of a municipal bond issuer whose bonds the registrant already owns when such bonds have deteriorated or are expected shortly to deteriorate significantly in credit quality. The purpose of acquiring equity securities generally will be to acquire control of the municipal bond issuer and to seek to prevent the credit deterioration or facilitate the liquidation or other workout of the distressed issuer's credit problem. In the course of exercising control of a distressed municipal issuer, NAM may pursue the registrant's interests in a variety of ways, which may entail negotiating and executing consents, agreements and other arrangements, and otherwise influencing the management of the issuer. NAM does not consider such activities proxy voting for purposes of Rule 206(4)-6 under the 1940 Act, but nevertheless provides reports to the registrant's Board of Trustees on its control activities on a quarterly basis. In the rare event that a municipal issuer were to issue a proxy or that the registrant were to receive a proxy issued by a cash management security, NAM 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 registrant's Board of Trustees or its representative. A member of NAM's legal department would oversee the administration of the voting, and ensure that records were maintained in accordance with Rule 206(4)-6, reports were filed with the SEC on Form N-PX, and the results provided to the registrant's Board of Trustees and made available to shareholders as required by applicable rules. ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. THE PORTFOLIO MANAGER The following individual has primary responsibility for the day-to-day implementation of the registrant's investment strategies: NAME FUND Scott R. Romans Nuveen Insured California Tax-Free Advantage Municipal Fund Other Accounts Managed. In addition to managing the registrant, the portfolio manager is also primarily responsible for the day-to-day portfolio management of the following accounts: NUMBER OF PORTFOLIO MANAGER TYPE OF ACCOUNT MANAGED ACCOUNTS ASSETS ------------------------------------------------------------------------------------------- Scott R. Romans Registered Investment Company 28 $6.15 billion Other Pooled Investment Vehicles 0 $0 Other Accounts 4 $.25 million * Assets are as of August 31, 2006. None of the assets in these accounts are subject to an advisory fee based on performance. Compensation. Each portfolio manager's compensation consists of three basic elements--base salary, cash bonus and long-term incentive compensation. The compensation strategy is to annually compare overall compensation, including these three elements, to the market in order to create a compensation structure that is competitive and consistent with similar financial services companies. As discussed below, several factors are considered in determining each portfolio manager's total compensation. In any year these factors may include, among others, the effectiveness of the investment strategies recommended by the portfolio manager's investment team, the investment performance of the accounts managed by the portfolio manager, and the overall performance of Nuveen Investments, Inc. (the parent company of NAM). Although investment performance is a factor in determining the portfolio manager's compensation, it is not necessarily a decisive factor. The portfolio manager's performance is evaluated in part by comparing manager's performance against a specified investment benchmark. This fund-specific benchmark is a customized subset (limited to bonds in each Fund's specific state and with certain maturity parameters) of the S&P/Investortools Municipal Bond index, an index comprised of bonds held by managed municipal bond fund customers of Standard & Poor's Securities Pricing, Inc. that are priced daily and whose fund holdings aggregate at least $2 million. As of August 30, 2006, the S&P/Investortools Municipal Bond index was comprised of 47,346 securities with an aggregate current market value of $879 billion. Base salary. Each portfolio manager is paid a base salary that is set at a level determined by NAM in accordance with its overall compensation strategy discussed above. NAM is not under any current contractual obligation to increase a portfolio manager's base salary. Cash bonus. Each portfolio manager is also eligible to receive an annual cash bonus. The level of this bonus is based upon evaluations and determinations made by each portfolio manager's supervisors, along with reviews submitted by his peers. These reviews and evaluations often take into account a number of factors, including the effectiveness of the investment strategies recommended to the NAM's investment team, the performance of the accounts for which he serves as portfolio manager relative to any benchmarks established for those accounts, his effectiveness in communicating investment performance to stockholders and their representatives, and his contribution to the NAM's investment process and to the execution of investment strategies. The cash bonus component is also impacted by the overall performance of Nuveen Investments, Inc. in achieving its business objectives. Long-term incentive compensation. Each portfolio manager is eligible to receive bonus compensation in the form of equity-based awards issued in securities issued by Nuveen Investments, Inc. The amount of such compensation is dependent upon the same factors articulated for cash bonus awards but also factors in his long-term potential with the firm. Material Conflicts of Interest. Each portfolio manager's simultaneous management of the registrant and the other accounts noted above may present actual or apparent conflicts of interest with respect to the allocation and aggregation of securities orders placed on behalf of the Registrant and the other account. NAM, however, believes that such potential conflicts are mitigated by the fact that the NAM has adopted several policies that address potential conflicts of interest, including best execution and trade allocation policies that are designed to ensure (1) that portfolio management is seeking the best price for portfolio securities under the circumstances, (2) fair and equitable allocation of investment opportunities among accounts over time and (3) compliance with applicable regulatory requirements. All accounts are to be treated in a non-preferential manner, such that allocations are not based upon account performance, fee structure or preference of the portfolio manager. In addition, NAM has adopted a Code of Conduct that sets forth policies regarding conflicts of interest. Beneficial Ownership of Securities. As of the August 31, 2006, the portfolio manager beneficially owned the following dollar range of equity securities issued by the Registrant and other Nuveen Funds managed by NAM's municipal investment team. --------------------------------------------------------------------------------------------------------------------------- DOLLAR RANGE OF DOLLAR EQUITY RANGE OF SECURITIES EQUITY BENEFICIALLY SECURITIES OWNED IN BENEFICIALLY THE OWNED IN REMAINDER FUND OF NUVEEN FUNDS MANAGED BY NAM'S MUNICIPAL NAME OF PORTFOLIO INVESTMENT MANAGER FUND TEAM --------------------------------------------------------------------------------------------------------------------------- Scott R. Romans Nuveen Insured California Tax-Free Advantage Municipal Fund $0 $10,000-$50,000 --------------------------------------------------------------------------------------------------------------------------- PORTFOLIO MANAGER BIO: Scott R. Romans, PhD, joined Nuveen Investments in 2000 as a senior analyst in the education sector. In 2003, he was assigned management responsibility for several closed- and open-ended municipal bond funds most of which are state funds covering California and other western states. Currently, he manages investments for 29 Nuveen-sponsored investment companies. 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. There have been no material changes to the procedures by which shareholders may recommend nominees to the registrants Board implemented after the registrant last provided disclosure in response to this item. 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 second fiscal quarter of the period covered by this 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 the code is posted on registrant's website at www.nuveen.com/etf and there were no amendments during the period covered by this report. (To view the code, click on the Investor Resources drop down menu box, click on Fund Governance and then Code of Conduct.) (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 8, 2006 ------------------------------------------------------------------- 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 8, 2006 ------------------------------------------------------------------- By (Signature and Title)* /s/ Stephen D. Foy ---------------------------------------------- Stephen D. Foy Vice President and Controller (principal financial officer) Date: November 8, 2006 ------------------------------------------------------------------- * Print the name and title of each signing officer under his or her signature.