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)
Kevin J. McCarthy
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: February 28
------------------
Date of reporting period: February 28, 2009
------------------
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 | Nuveen Investments
February 28, 2009 | MUNICIPAL CLOSED-END FUNDS
[PHOTO OF: SMALL CHILD]
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
It's not what you earn, it's what you keep.(R) | LOGO: NUVEEN Investments
[PHOTO OF: MAN WORKING ON COMPUTER]
LIFE IS COMPLEX. NUVEEN
MAKES THINGS
E-simple.
--------------------------------------------------------------------------------
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.
FREE E-REPORTS RIGHT TO YOUR E-MAIL!
www.investordelivery.com | www.nuveen.com/accountaccess
If you receive your Nuveen Fund OR If you receive your Nuveen Fund
dividends and statements from your | dividends and statements directly
financial advisor or brokerage account. from Nuveen.
LOGO: NUVEEN Investments
Chairman's
LETTER TO SHAREHOLDERS
[PHOTO OF ROBERT P. BREMNER] | Robert P. Bremner | Chairman of the Board
Dear Shareholders,
I write this letter in a time of continued uncertainty about the current state
of the U.S. financial system and pessimism about the future of the global
economy. Many have observed that the conditions that led to the crisis have
built up over time and will complicate and extend the course of recovery. At the
same time, government officials in the U.S. and abroad have implemented a wide
range of programs to restore stability to the financial system and encourage
economic recovery. It is believed that these efforts will moderate the extent of
the downturn and hasten the inevitable recovery, even though it is hard to
envision that outcome in the current environment.
As you will read in this report, the continuing financial and economic problems
are weighing heavily on the values of equities and fixed-income assets and
unfortunately the performance of your Nuveen Fund has been similarly affected.
In addition to the financial statements, I hope that you will carefully review
the Portfolio Manager's Comments, the Common Share Dividend and Share Price
Information and the Performance Overview sections of this report and please note
this is a six month annual report. During the current fiscal period, the Board
of Directors/Trustees approved a change in the Funds' fiscal and tax year end
from August 31 to February 28/29. These comments highlight the manager's pursuit
of investment strategies that depend on thoroughly researched securities,
diversified portfolio holdings and well established investment disciplines to
achieve your Fund's investment goals. The Fund Board believes that a consistent
focus on long-term investment goals provides the basis for successful investment
over time and we monitor your Fund with that objective in mind.
Nuveen continues to work on resolving the issues related to the auction rate
preferred shares situation, but the unsettled conditions in the credit markets
have slowed progress. Nuveen is actively pursuing a number of solutions, all
with the goal of providing liquidity for preferred shareholders while preserving
the potential benefits of leverage for common shareholders. We appreciate the
patience you have shown as we work through the many issues involved. Please
consult the Nuveen website: www.nuveen.com, for the most recent information.
On behalf of myself and the other members of your Fund's Board, we look forward
to continuing to earn your trust in the months and years ahead.
Sincerely,
/s/ Robert P. Bremner
----------------------------------
Robert P. Bremner
Chairman of the Nuveen Fund Board
April 20, 2009
Portfolio Manager's COMMENTS
Nuveen Investments Municipal Closed-End Funds | NPC, NCL, NCU, NAC, NVX, NZH,
NKL, NKX
During the current fiscal period, the Board of Directors/Trustees approved a
change in the Funds' fiscal and tax year end from August 31 to February 28/29.
Portfolio manager Scott Romans reviews economic and municipal market conditions
at both the national and state levels, key investment strategies, and the
six-month performance of these Nuveen California Municipal Funds. Scott, who
joined Nuveen 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. ECONOMIC AND MUNICIPAL MARKET ENVIRONMENTS DURING
THE SIX-MONTH PERIOD ENDED FEBRUARY 28, 2009?
During this period, downward pressure on the economy continued and stress in the
financial and credit markets led to increased price volatility for most
securities, reduced liquidity and a general flight to quality. In an effort to
improve overall economic conditions, the Federal Reserve (Fed) cut the fed funds
target interest rate in December 2008 to between zero and 0.25%, its lowest
level on record. (On March 18, 2009, following the end of this reporting period,
the Fed announced that, in addition to maintaining the fed funds rate at its
0-0.25% level, it would buy $300 billion in Treasury securities over the next
six months in an effort to improve conditions in private credit markets and up
to an additional $750 billion of agency mortgage-backed securities to bolster
the housing market.)
After declining at an annual rate of 0.5% in the third quarter of 2008, Gross
domestic product (GDP) -- a measure of national economic output -- contracted at
an annual rate of 6.2% in the fourth quarter of 2008, the weakest performance
since 1982. Signs of a deepening housing recession continued to trouble the
economy, with the price of a single-family home falling a record 18.2% in 2008.
In the labor markets, February 2009 marked the fourteenth consecutive month of
job losses and the third straight month employment losses topped 600,000, the
first such occurrence since records began in 1939. The national unemployment
rate for February 2009 was 8.1%, its highest point in more than 25 years. At the
same time, inflation remained subdued. The Consumer Price Index (CPI),
reflecting large drops in energy and transportation prices, registered a
Certain statements in this report are forward-looking statements. Discussions of
specific investments are for illustration only and are not intended as
recommendations of individual investments. The forward-looking statements and
other views expressed herein are those of the portfolio manager as of the date
of this report. Actual future results or occurrences may differ significantly
from those anticipated in any forward-looking statements and the views expressed
herein are subject to change at any time, due to numerous market and other
factors. The Funds disclaim any obligation to update publicly or revise any
forward-looking statements or views expressed herein.
4
0.2% year-over-year gain in February 2009, while the core CPI (which excludes
food and energy) rose 1.8%. Both numbers were within the Fed's unofficial
objective of 2.0% or lower.
Beginning in October, the nation's financial institutions and financial markets
-- including the municipal bond market -- experienced significant turmoil.
Reductions in demand decreased valuations of municipal bonds across all credit
ratings. The municipal market is one in which dealer firms make markets in bonds
on a principal basis using their proprietary capital, and during the recent
market turmoil these firms' capital was severely constrained. As a result, some
firms were unwilling to commit their capital to purchase and to serve as a
dealer for municipal bonds. This reduction in dealer involvement in the market
was accompanied by significant net selling pressure by investors, particularly
with respect to lower-rated municipal bonds, as institutional investors
generally removed money from the municipal bond market, at least in part because
of their need to reduce the leveraging of their municipal investments. This
deleveraging was in part driven by the overall reduction in the amount of
financing available for such leverage, the increased costs of such leverage
financing, and the need to reduce leverage levels that had recently increased
due to the decline in municipal bond prices.
Municipal bond prices were further negatively impacted by concerns that the need
for further deleveraging and a supply overhang (a large amount of new issues
that were postponed) would cause selling pressure to persist for a period of
time. In addition to falling prices, the following market conditions resulted in
greater price volatility of municipal bonds - wider credit spreads (i.e., lower
quality bonds fell in price more than higher quality bonds); significantly
reduced liquidity (i.e., the ability to sell bonds at a price close to their
carrying value), particularly for lower quality bonds; and a lack of price
transparency (i.e., the ability to accurately determine the price at which a
bond would likely trade). Reduced liquidity was most pronounced in mid-October,
although it improved considerably after that period.
Municipal bond market performance over this period also was significantly
impacted by concerns about the credit markets, downgrades of municipal bond
insurers, and institutional investors' need to unwind various leveraging
strategies. These events created surges of selling pressure, as many municipal
bond owners tried to sell holdings of longer-maturity bonds into a market
already experiencing a lack of liquidity. Combined with the Fed rate cuts, this
produced a steepening of the municipal yield curve. In this environment, bonds
with shorter maturities generally outperformed longer maturity bonds, and higher
quality bonds tended to outperform lower quality credits.
5
Over the six months ended February 28, 2009, municipal bond issuance nationwide
totaled $139.5 billion, a drop of 22% compared with the twelve-month period
ended February 29, 2008. While market conditions during this period impacted the
demand for municipal bonds, we continued to see demand from investors attracted
by higher interest rates and yields relative to taxable bonds.
HOW WERE THE ECONOMIC AND MARKET ENVIRONMENTS IN CALIFORNIA DURING THIS PERIOD?
Employment declines, especially in the construction, finance and manufacturing
sectors, far outpaced the modest gains reported in education/health services,
government and leisure and hospitality, the only sectors to report positive
growth. As of February 2009, California's unemployment rate had risen to 10.5%,
its highest level since April 1983, up from 6.2% in February 2008. On the
positive side, the state's economy remained relatively diverse, with technology
providing some recent economic support, especially in the areas of renewable
energy and medical equipment. Because of its exposure to riskier,
non-traditional mortgage products, the state's housing market was hit hard by
the sub-prime mortgage crisis as well as the downturn in the housing sector.
Foreclosures in California, which reached a rate twice the U.S. average, have
driven reductions in home prices throughout the state. According to the Standard
& Poor's (S&P)/Case-Shiller home price index of 20 major metropolitan areas,
housing prices in San Francisco, Los Angeles and San Diego fell 32.4%, 25.8% and
24.9%, respectively, between January 2008 and January 2009, compared with an
average decrease of 19.0% nationwide. The severe decline in California's housing
industry had ramifications far beyond the significant job losses in
construction, impacting sellers of building supplies and home furnishings,
mortgage lenders, real estate agents and finance companies, among others.
Declining home values also contributed to a sharp downturn in both consumer
spending and government tax revenues, with weaker tax collections forcing
downward revisions to revenue estimates from state and local governments.
The California legislature adopted a revised 2009-2010 state budget closing the
gap with $15 billion in spending cuts, $11.4 billion in new borrowing, $12.8
billion in new taxes and $2 billion from federal stimulus funds. The spending
cuts were spread across a number of budget categories, with the brunt being
borne by K-14 education ($8.4 billion), health and human services and state
payrolls. Tax increases included a one-percent increase in the state sales tax,
increased vehicle license fees, a 0.5% surcharge on personal income taxes, and a
reduction in the dependent tax credit. However, final approval of several
elements of the budget remain subject to voter approval, with a special election
scheduled for May 19, 2009. In addition, the delay in
6
passing the state budget for fiscal 2009-2010 exacerbated California's ongoing
cash-flow problems, limiting the state's ability to borrow in the short-term
markets to smooth out uneven cashflows and meet priority payments, including
debt service on bonds. In March 2009, following the end of this reporting
period, the California legislative analyst's office announced that a new gap of
$8 billion had opened in the state budget.
As of February 2009, Moody's, S&P, and Fitch listed their ratings on
California's general obligation (GOs) bonds at A1, A, and A+, respectively. This
reflected S&P's rating downgrade from A+ on February 3, 2009. (In March 2009,
following the end of this reporting period, Moody's and Fitch also lowered their
ratings on California GOs to A2 and A, respectively.) For the six months ended
February 28, 2009, municipal issuance in California totaled $12.4 billion, a
decrease of 46% from the previous six months.
WHAT KEY STRATEGIES WERE USED TO MANAGE THE CALIFORNIA FUNDS DURING THIS
REPORTING PERIOD?
During this period, as the municipal market was pressured by price volatility
and lack of liquidity, we continued to focus on finding bonds that offered
relative value, preserving liquidity and investing for the long term.
Our investment activity during this period was largely driven by opportunities
created by the market turmoil and market conditions resulting from that stress.
This was true in both the new issuance municipal bond market and the secondary
markets. In the new issuance (or primary) market, we were able to purchase bonds
with better structures (i.e., higher coupons, longer call protection) than we
have seen in a long time, as market conditions required issuers to enhance
offerings to make them more attractive to buyers. In the secondary markets, we
found bonds, especially lower-rated credits, at extremely discounted prices as
the result of selling by some municipal market participants, particularly in
November and December 2008. We even occasionally were able to purchase AAA
insured bonds being sold under duress. In both the primary and secondary
markets, we were focused on using a fundamental approach to discover undervalued
sectors and individual credits with the potential to perform well over the long
term. Many of the opportunities we found during this period were in health care.
One example of a newly issued bond that we added to NAC, NCU, NVX and NZH was a
BBB rated credit issued by Loma Linda University Medical Center, which offered a
coupon of 8.25% with a maturity of 12/01/38. In the secondary market, an example
of a bond we purchased at an exceptional discount was a non-rated bond issued
for ValleyCare Health System in Livermore, which we added to NAC, NVX and NZH.
7
During this period, a number of bond calls provided some of the capital
necessary for purchases. We also monitored the types of credits and bond
structures that were attractive to the retail market and took advantage of
strong bids to sell bonds where we believe we had extracted the performance
potential into relatively consistent retail demand. In addition, we lightened
our positions in California general obligation bonds, due to their exposure to
the state's ongoing economic problems, as well as in a variety of Puerto Rico
issues.
As a key dimension of risk management, a disciplined approach to duration(1)
positioning remained an important component of our management strategies. As
part of this approach, we continued to use inverse floating rate securities(2)
in all eight of these Funds. Inverse floaters typically provide the dual benefit
of bringing the Funds' durations closer to our strategic target and enhancing
their income-generation capabilities. NCL and NZH also invested in additional
types of derivatives(3) intended to reduce its duration and help us manage
common share net asset value (NAV) volatility without having a negative impact
on income streams or common share dividends over the short term. As of February
28, 2009, the inverse floaters remained in place in all of the Funds and NCL and
NZH continued to use derivative positions.
----------
(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) An inverse floating rate security, also know as inverse floaters, is a
financial instrument designed to pay long-term tax-exempt interest at a rate
that varies inversely with a short-term tax-exempt interest rate index. For the
Nuveen Funds, the index typically used is the Securities Industry and Financial
Markets (SIFM) Municipal Swap Index (previously referred to as the Bond Market
Association Index or BMA). Inverse floaters, including those inverse floating
rate securities in which the Funds invested during the reporting period, are
further defined within the Notes to Financial Statements and Glossary of Terms
Used in this Report sections of this shareholder report.
(3) Each Fund may invest in derivatives instruments such as forwards, futures,
option and swap transactions. For additional information on derivative
instruments in which each Fund was invested during and at the end of the
reporting period, see the Portfolio of Investments, Financial Statements and
Notes to Financial Statements sections of this shareholder report.
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.
Average Annual Total Returns on Common Share Net Asset Value*
For periods ended 2/28/09
Six-Month 1-Year 5-Year 10-Year
Non-insured Funds
NCU -6.92% -0.81% 1.64% 4.27%
NAC -11.45% -5.43% 0.78% N/A
NVX -7.40% -1.96% 1.98% N/A
NZH -12.54% -6.27% 0.22% N/A
Lipper CA Municipal Debt
Funds Average(4) -11.72% -5.61% 0.54% 3.57%
Barclays Capital CA Municipal
Bond Index(5) -1.36% 3.93% 3.02% 4.42%
S&P CA Municipal Bond Index(6) -3.34% 3.07% 2.85% 4.34%
Insured Funds
NPC -2.43% 4.06% 2.48% 4.49%
NCL -5.40% 1.55% 1.43% 4.13%
NKL -4.50% 3.07% 2.40% N/A
NKX -6.42% -0.13% 2.11% N/A
Lipper Single-State
Insured Municipal Debt
Funds Average(7) -6.22% 1.74% 1.39% 4.30%
Barclays Capital Insured CA
Municipal Bond Index(5) 0.07% 5.89% 3.05% 4.57%
S&P CA Municipal Bond
Index(6) 3.34% 3.07% 2.85% 4.34%
For the six months ended February 28, 2009, the total returns on common share
NAV for NCU, NAC and NVX exceeded the average return for the Lipper California
Municipal Debt Funds Average, while NZH underperformed this measure. All four of
the non-insured Funds underperformed the unleveraged Barclays Capital California
Municipal Bond Index and the S&P California Municipal Bond Index.
Among the insured Funds, NPC, NCL and NKL outperformed the average return for
the Lipper Single-State Insured Municipal Debt Funds Average for this six-month
period,
----------
* Six-month returns are cumulative. one-, five- and ten-year returns are
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.
(4) The Lipper California Municipal Debt Funds Average is calculated using the
returns of all closed-end funds in this category for each period as follows: 1
year, 24 funds; 5 years, 24 funds; and 10 years, 12 funds. Fund and Lipper
returns assume reinvestment of dividends.
(5) The Barclays Capital (formerly Lehman Brothers) California Municipal Bond
Index is an unleveraged, unmanaged index comprising a broad range of
investment-grade California municipal bonds, while the Barclays Capital
(formerly Lehman Brothers) Insured California Municipal Bond Index is an
unleveraged, unmanaged index containing a broad range of insured California
municipal bonds. Results for the Barclays Capital indexes do not reflect any
expenses.
(6) The Standard & Poor's (S&P) California Municipal Bond Index is an
unleveraged, market value-weighted index designed to measure the performance of
the investment-grade California municipal bond market.
(7) The Lipper Single-State Insured Municipal Debt Funds Average is calculated
using the returns of all closed-end funds in this category for each period as
follows: 1 year, 44 funds; 5 years, 44 funds; and 10 years, 24 funds. Fund and
Lipper returns assume reinvestment of dividends.
9
while NKX trailed this return. NPC also outperformed the S&P California
Municipal Bond Index, while NKL, NCL and NKX underperformed this measure. All
four insured Funds underperformed the Barclays Capital Insured California
Municipal Bond Index. Shareholders of the insured Funds should note that the
Lipper Single-State Insured Municipal Debt Funds average includes bonds from
states in addition to California, which may make direct comparisons between the
Funds and this benchmark less meaningful.
Key management factors that influenced the Funds' returns during this period
included duration and yield curve positioning, the use of derivatives, credit
exposure and sector allocations. In addition, the use of leverage had a
generally detrimental effect on the Funds' performances over this period. The
impact of leverage is discussed in more detail on page 11.
Over the course of this reporting period, the yield curve remained steep. Given
this interest rate environment, bonds in the Barclays Capital California
Municipal Bond Index with maturities between two and eight years benefited the
most, with bonds maturing in approximately five years performing the best.
Because they were less sensitive to interest rate changes, these bonds generally
outperformed credits with longer maturities, as bonds with the longest
maturities (20 years and longer) posted a loss for the period. In general, these
Funds tended to have relatively less exposure to the outperforming shorter end
of the yield curve and comparatively heavier exposure to the underperforming
longest part of the curve. Overall, NCL, NKL and NCU had the most advantageous
duration and yield curve positionings for the municipal market environment of
this six-month period, that is, they were more heavily weighted in the areas of
the yield curve that performed well. In contrast, NKX, NAC and NZH were not as
well positioned, with more exposure to the underperforming long part of the
curve.
As mentioned previously, NCL and NZH used derivative positions to synthetically
shorten duration and move it closer to our strategic duration target. During
this period, in contrast to historical trends, yields in the taxable markets and
the municipal market moved in opposite directions, due in part to the general
flight to quality. As municipal market performance lagged the gains in the
taxable markets, these derivative positions performed poorly, hurting their
total return performance. In addition, the inverse floaters used by all eight of
these Funds generally had a negative impact on performance. This resulted from
the fact that the inverse floaters effectively increased the Funds' exposure to
longer maturity bonds at a time when shorter maturities were in favor in the
market.
10
Credit exposure was also an important factor in performance. Because risk-averse
investors generally sought higher quality investments as disruptions in the
financial markets deepened, bonds with higher credit quality typically performed
very well. At the same time, securities rated BBB or below and non-rated bonds
generally posted poor returns. In general, insured holdings where the insurers
backing the bonds had been downgraded traded to their underlying (or issuer)
credit ratings. As a result, insured bonds with an underlying rating of BBB
generally were more adversely affected in terms of performance during this
period than insured bonds with underlying credits rated AA or A. Overall, NPC
was the most positively impacted by its credit exposure, while NAC, NVX and NZH
were the most negatively impacted.
During this period, pre-refunded(8) bonds, which are backed by U.S. Treasury
securities, were one of the top performing segments of the market, due primarily
to their shorter effective maturities, higher credit quality and perceived
safety. Among these Funds, NPC and NVX held the heaviest weightings of
pre-refunded bonds. Additional sectors of the market that generally contributed
to the Funds' returns included general obligation and other tax-backed bonds,
water and sewer and education credits.
Holdings that generally detracted from the Funds' performances included
transportation and industrial development revenue (IDR) bonds. The health care
revenue sector also underperformed the overall municipal market. NZH, NCU, NAC
and NKX, in particular, had heavier weightings in health care than the market as
a whole. Alongside current coupon bonds in these sectors, zero coupon bonds were
among the worst performing categories in the municipal market, as were
lower-rated bonds backed by the 1998 master tobacco settlement agreement, which
comprised approximately 2% of NKL and NKX and 4% of NCU, NAC, NVX, and NZH as of
February 28, 2009.
IMPACT OF THE FUNDS' CAPITAL STRUCTURES AND LEVERAGE STRATEGIES ON PERFORMANCE
In addition to the factors previously discussed, another factor impacting the
six-month returns of these Funds relative to those of the unleveraged Barclays
Capital California and Insured California Municipal Bond Indexes and the S&P
California Municipal Bond Index was the Funds' use of financial leverage. While
leverage offers opportunities to generate additional income and total returns
for common shareholders, the benefits provided by leveraging are influenced by
the price movements of the bonds in each Fund's portfolio. During this period,
declining valuations had a negative effect on performance that was magnified by
the use of leverage.
----------
(8) Pre-refundings or refinancings, also known as advance refundings, 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.
11
RECENT DEVELOPMENTS REGARDING BOND INSURANCE COMPANIES
Another factor that had an impact on the performance of these Funds was their
position in bonds backed by municipal bond insurers that experienced downgrades
in their credit ratings. During the period covered by this report ACA, AGC,
AMBAC, FGIC, FSA, MBIA, RAAI and SYNCORA (formerly XLCA) experienced one or more
rating reductions by at least one or more rating agencies. At the time this
report was prepared, at least one rating agency has placed each of these
insurers except AGC on "negative credit watch," "credit outlook developing" or
"rating withdrawn," which may presage one or more rating reductions for such
insurer or insurers in the future. As concern increased about the balance sheets
of these insurers, prices on bonds insured by these companies - especially those
bonds with weaker underlying credits -declined, detracting from the Funds'
performance. By the end of this period, most insured bonds were being valued
according to their fundamentals as if they were uninsured. On the whole, the
holdings of all of our Funds continued to be well diversified not only between
insured and uninsured bonds, but also within the insured bond category. It is
important to note that municipal bonds historically have had a very low rate of
default.
RECENT DEVELOPMENTS IN THE AUCTION RATE PREFERRED SECURITIES MARKETS
As noted in the last shareholder report, beginning in February 2008, more shares
were submitted for sale in the regularly scheduled auctions for the auction rate
preferred shares issued by these Funds than there were offers to buy. This meant
that these auctions "failed to clear," and that many or all of the Funds'
auction rate preferred shareholders who wanted to sell their shares in these
auctions were unable to do so. This decline in liquidity in auction rate
preferred shares did not lower the credit quality of these shares, and auction
rate preferred shareholders unable to sell their shares received distributions
at the "maximum rate" applicable to failed auctions, as calculated in accordance
with the pre-established terms of the auction rate preferred shares.
These developments generally have not affected the portfolio management or
investment policies of these Funds. However, one continuing implication for
common shareholders of these auction failures is that the Funds' cost of
leverage will likely be higher, at least temporarily, than it otherwise would
have been had the auctions continued to be successful. As a result, the Funds'
future common share earnings may be lower than they otherwise might have been.
As noted in the last shareholder report, the Funds' Board of Directors/Trustees
authorized a plan to use tender option bonds
12
(TOBs), also known as floating rate securities, to refinance a portion of the
Funds' outstanding auction rate preferred shares.
On January 8, 2009, thirty-five Nuveen closed-end municipal funds called for
redemption at par a portion of their outstanding auction rate preferred shares.
This series of redemptions collectively totaled $250.1 million. This new series
of redemptions brings the total amount of Nuveen's municipal closed-end funds'
auction rate preferred share redemptions to nearly $2 billion of the original
$11 billion outstanding.
As of February 28, 2009, the cummulative amount of auction rate preferred
securities redeemed by the Funds are as shown in the accompanying chart:
Auction Rate % of Original
Preferred Shares Auction Rate
Fund Redeemed Preferred Shares
NCL $15,175,000 16.0%
NCU $2,125,000 4.9%
NAC $39,475,000 22.6%
NZH $32,925,000 17.6%
NKL $9,750,000 8.3%
NKX $45,000,000 100.0%
As noted in the last shareholder report, NKX's redemptions were achieved through
the issuance of variable rate demand preferred shares (VRDP) in conjunction with
the proceeds from the creation of TOBs. VRDP is a new instrument designed to
replace the auction rate preferred shares used as leverage in Nuveen closed-end
Funds. VRDP is offered only to qualified institutional buyers, defined pursuant
to Rule 144A under the Securities Act of 1933. As of February 28, 2009, NKX
issued $35.5 million of VRDP and redeemed all of its outstanding auction rate
preferred shares.
While the Funds' Board of Directors/Trustees and management continue to work to
resolve this situation, the Funds cannot provide any assurance on when the
remaining outstanding auction rate preferred shares might be redeemed.
On March 30, 2009, subsequent to the reporting period, thirty-four Nuveen
closed-end municipal funds (none of which are included in this shareholder
report) called for redemption at par a portion of their outstanding auction-rate
preferred shares. This series of redemptions will collectively total more than
$287 million. Each of the funds will be using TOBs to finance the partial
redemption of its auction rate preferred shares.
For up-to-date information, please visit the Nuveen CEF Auction Rate Preferred
Resource Center at:
http://www.nuveen.com/ResourceCenter/AuctionRatePreferred.aspx.
13
Common Share
Dividend and Share Price INFORMATION
During the six-month reporting period ended February 28, 2009, NCL, NCU, NAC,
NVX, NZH and NKL each had an increase in their monthly dividends. The dividends
of NPC and NKX remained stable throughout the reporting period.
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 2008 as follows:
Long-Term Short-Term Capital Gains
Capital Gains and/or Ordinary Income
(per share) (per share)
NPC $0.0548 $0.0899
NCL $0.1312 $0.0119
NCU $0.0061 --
NAC $0.1213 $0.1421
NVX $0.0334 $0.0016
NKL $0.0074 $0.0298
NKX $0.0516 --
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 February 28, 2009, all of
the Funds in this report had positive UNII balances for both financial reporting
and tax purposes.
14
COMMON SHARE REPURCHASES AND SHARE PRICE INFORMATION
On July 30, 2008, the Funds' Board of Directors/Trustees approved an open-market
share repurchase program under which each Fund may repurchase up to 10% of its
outstanding common shares. As of February 28, 2009, the Funds repurchased common
shares as shown in the accompanying table:
Common Shares % of Outstanding
Fund Repurchased Common Shares
NPC 6,200 0.1%
NCL 41,800 0.3%
NCU 14,700 0.3%
NVX 18,300 0.1%
NZH 12,900 0.1%
NKL 19,000 0.1%
Since the inception of this program, common shares were repurchased at a
weighted average price and a weighted average discount per common share as shown
in the accompanying table:
Weighted Average Weighted Average
Price Per Share Discount Per Share
Fund Repurchased Repurchased
NPC $12.00 15.30%
NCL $10.67 17.79%
NCU $9.67 22.26%
NVX $10.26 21.40%
NZH $9.31 19.85%
NKL $10.76 21.01%
As of February 28, 2009, the Funds' common share prices were trading at
discounts to their common share NAVs as shown in the accompanying table:
2/28/09 Six-Month
Discount Average Discount
NPC -14.18% -11.35%
NCL -15.25% -12.30%
NCU -18.67% -13.50%
NAC -10.58% -10.25%
NVX -18.59% -13.83%
NZH -11.27% -9.28%
NKL -17.46% -10.70%
NKX -8.56% -6.91%
15
NPC Performance OVERVIEW Nuveen | Insured California Premium Income Municipal
Fund, Inc.
as of February 28, 2009
FUND SNAPSHOT
-------------------------------------------------------------------------------
Common Share Price $ 12.04
-------------------------------------------------------------------------------
Common Share Net Asset Value $ 14.03
-------------------------------------------------------------------------------
Premium/(Discount) to NAV -14.18%
-------------------------------------------------------------------------------
Market Yield 6.03%
-------------------------------------------------------------------------------
Taxable-Equivalent Yield(3) 9.26%
-------------------------------------------------------------------------------
Net Assets Applicable to Common Shares ($000) $ 90,531
-------------------------------------------------------------------------------
Average Effective Maturity on Securities (Years) 14.74
-------------------------------------------------------------------------------
Leverage-Adjusted Duration 10.99
-------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 11/19/92)
-------------------------------------------------------------------------------
ON SHARE PRICE ON NAV
-------------------------------------------------------------------------------
6-Month (Cumulative) -9.25% -2.43%
-------------------------------------------------------------------------------
1-Year -4.06% 4.06%
-------------------------------------------------------------------------------
5-Year 0.28% 2.48%
-------------------------------------------------------------------------------
10-Year 3.09% 4.49%
-------------------------------------------------------------------------------
INDUSTRIES
(as a % of total investments)
-------------------------------------------------------------------------------
U.S. Guaranteed 30.4%
-------------------------------------------------------------------------------
Tax Obligation/Limited 24.3%
-------------------------------------------------------------------------------
Tax Obligation/General 22.4%
-------------------------------------------------------------------------------
Water and Sewer 12.9%
-------------------------------------------------------------------------------
Other 10.0%
-------------------------------------------------------------------------------
INSURERS
(as a % of total Insured investments)
-------------------------------------------------------------------------------
MBIA 39.9%
-------------------------------------------------------------------------------
FSA 19.7%
-------------------------------------------------------------------------------
FGIC 18.6%
-------------------------------------------------------------------------------
AMBAC 17.9%
-------------------------------------------------------------------------------
Other 3.9%
-------------------------------------------------------------------------------
Credit Quality (as a % of total investments)(1,2)
[PIE CHART]
Insured 70%
U.S. Guaranteed 30%
2008-2009 Monthly Tax-Free Dividends Per Common Share(4)
[BAR CHART]
Mar $ 0.0605
Apr 0.0605
May 0.0605
Jun 0.0605
Jul 0.0605
Aug 0.0605
Sep 0.0605
Oct 0.0605
Nov 0.0605
Dec 0.0605
Jan 0.0605
Feb 0.0605
Common Share Price Performance -- Weekly Closing Price
[LINE CHART]
3/01/08 $ 13.705
14.15
13.6
13.81
13.96
14.79
14.8
14.28
14.12
14.15
14.25
14.25
14.54
14.47
14.54
14.13
13.81
13.76
13.618
13.9
13.51
13.64
13.72
13.66
13.625
13.75
13.89
13.89
13.64
13.16
12.02
11.83
8.3
10.46
11.14
11.57
12.1
11.3892
10
10.44
9.99
8.7332
10.04
10.47
10.84
12.45
11.69
11.924
12.37
12.6704
12.46
12.1
2/28/09 12.04
(1) The percentages shown in the foregoing chart may reflect the ratings on
certain bonds insured by ACA, AGC, AMBAC, FGIC, FSA, MBIA, RAAI and
SYNCORA as of February 28, 2009. Please see the Portfolio Manager's
Commentary for an expanded discussion of the affect on the Fund of changes
to the ratings of certain bonds in the portfolio resulting from changes to
the ratings of the underlying insurers both during the period and after
period end.
(2) Primarily all of the Fund's net assets (including net assets attributable
to Auction Rate Preferred shares) are invested in municipal securities
that guarantee the timely payment of principal and interest. See Notes to
Financial Statements, Footnote 1 - Insurance, for more information.
(3) 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 34.9%. When comparing this Fund to investments that generate
qualified dividend income, the Taxable-Equivalent Yield is lower.
(4) The Fund paid shareholders capital gains and net ordinary income
distributions in December 2008 of $0.1447 per share.
16
NCL Performance OVERVIEW | Nuveen Insured California Premium Income Municipal
Fund 2, Inc.
as of February 28, 2009
Credit Quality (as a % of total investments)(1,2,3)
[PIE CHART]
Insured 86%
U.S. Guaranteed 14%
2008-2009 Monthly Tax-Free Dividends Per Common Share(5)
[BAR CHART]
Mar $ 0.053
Apr 0.053
May 0.053
Jun 0.053
Jul 0.053
Aug 0.053
Sep 0.056
Oct 0.056
Nov 0.056
Dec 0.056
Jan 0.056
Feb 0.056
Common Share Price Performance -- Weekly Closing Price
[LINE CHART]
3/01/08 $ 12.89
12.95
12.7
12.55
12.93
13.19
13.13
13.11
13.16
13.21
13.3
13.3
13.4
13.31
13.32
12.74
12.58
12.56
12.69
12.7799
12.5
12.47
12.49
12.45
12.58
12.56
12.66
12.87
12.7
11.74
11.06
10.8
7.77
9.52
10.68
10.3
12.3614
11.41
10.51
9.89
9.15
7.8
9.07
9.05
9.97
11.25
10.667
10.28
10.7
10.79
11.2
10.29
2/28/09 10.89
FUND SNAPSHOT
-------------------------------------------------------------------------------
Common Share Price $ 10.89
-------------------------------------------------------------------------------
Common Share Net Asset Value $ 12.85
-------------------------------------------------------------------------------
Premium/(Discount) to NAV -15.25%
-------------------------------------------------------------------------------
Market Yield 6.17%
-------------------------------------------------------------------------------
Taxable-Equivalent Yield(4) 9.48%
-------------------------------------------------------------------------------
Net Assets Applicable to Common Shares ($000) $ 162,831
-------------------------------------------------------------------------------
Average Effective Maturity on Securities (Years) 17.42
-------------------------------------------------------------------------------
Leverage-Adjusted Duration 13.77
-------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 3/18/93)
ON SHARE PRICE ON NAV
-------------------------------------------------------------------------------
6-Month (Cumulative) -9.95% -5.40%
-------------------------------------------------------------------------------
1-Year -7.71% 1.55%
-------------------------------------------------------------------------------
5-Year -1.44% 1.43%
-------------------------------------------------------------------------------
10-Year 2.39% 4.13%
-------------------------------------------------------------------------------
INDUSTRIES
(as a % of total investments)(2)
-------------------------------------------------------------------------------
Tax Obligation/Limited 38.8%
-------------------------------------------------------------------------------
Tax Obligation/General 16.0%
-------------------------------------------------------------------------------
Water and Sewer 15.1%
-------------------------------------------------------------------------------
U.S. Guaranteed 13.5%
-------------------------------------------------------------------------------
Utilities 5.3%
-------------------------------------------------------------------------------
Other 11.3%
-------------------------------------------------------------------------------
INSURERS
(as a % of total Insured investments)
-------------------------------------------------------------------------------
MBIA 27.3%
-------------------------------------------------------------------------------
AMBAC 27.0%
-------------------------------------------------------------------------------
FGIC 24.8%
-------------------------------------------------------------------------------
FSA 18.7%
-------------------------------------------------------------------------------
Other 2.2%
-------------------------------------------------------------------------------
(1) The percentages shown in the foregoing chart may reflect the ratings on
certain bonds insured by ACA, AGC, AMBAC, FGIC, FSA, MBIA, RAAI and
SYNCORA as of February 28, 2009. Please see the Portfolio Manager's
Commentary for an expanded discussion of the affect on the Fund of changes
to the ratings of certain bonds in the portfolio resulting from changes to
the ratings of the underlying insurers both during the period and after
period end.
(2) Excluding investments in derivatives.
(3) Primarily all of the Fund's net assets (including net assets attributable
to Auction Rate Preferred shares) are invested in municipal securities
that guarantee the timely payment of principal and interest. See Notes to
Financial Statements, Footnote 1 - Insurance, for more information.
(4) 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 34.9%. When comparing this Fund to investments that generate
qualified dividend income, the Taxable-Equivalent Yield is lower.
(5) The Fund paid shareholders capital gains and net ordinary income
distributions in December 2008 of $0.1431 per share.
17
NCU Performance OVERVIEW | Nuveen California Premium Income Municipal Fund
as of February 28, 2009
FUND SNAPSHOT
-------------------------------------------------------------------------------
Common Share Price $ 10.06
-------------------------------------------------------------------------------
Common Share Net Asset Value $ 12.37
-------------------------------------------------------------------------------
Premium/(Discount) to NAV -18.67%
-------------------------------------------------------------------------------
Market Yield 6.62%
-------------------------------------------------------------------------------
Taxable-Equivalent Yield(2) 10.17%
-------------------------------------------------------------------------------
Net Assets Applicable to Common Shares ($000) $ 71,260
-------------------------------------------------------------------------------
Average Effective Maturity on Securities (Years) 15.80
-------------------------------------------------------------------------------
Leverage-Adjusted Duration 11.53
-------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 6/18/93)
-------------------------------------------------------------------------------
ON SHARE PRICE ON NAV
-------------------------------------------------------------------------------
6-Month (Cumulative) -17.22% -6.92%
-------------------------------------------------------------------------------
1-Year -13.44% -0.81%
-------------------------------------------------------------------------------
5-Year -0.72% 1.64%
-------------------------------------------------------------------------------
10-Year 2.38% 4.27%
-------------------------------------------------------------------------------
INDUSTRIES
(as a % of total investments)
-------------------------------------------------------------------------------
Tax Obligation/Limited 30.1%
-------------------------------------------------------------------------------
Tax Obligation/General 20.8%
-------------------------------------------------------------------------------
Health Care 15.5%
-------------------------------------------------------------------------------
U.S. Guaranteed 10.5%
-------------------------------------------------------------------------------
Water and Sewer 6.8%
-------------------------------------------------------------------------------
Utilities 5.2%
-------------------------------------------------------------------------------
Other 11.1%
-------------------------------------------------------------------------------
Credit Quality (as a % of total investments)(1)
[PIE CHART]
AAA/U.S. Guaranteed 27%
AA 42%
A 16%
BBB 11%
BB or Lower 3%
N/R 1%
2008-2009 Monthly Tax-Free Dividends Per Common Share(3)
[BAR CHART]
Mar $ 0.0535
Apr 0.0535
May 0.0535
Jun 0.0535
Jul 0.0535
Aug 0.0535
Sep 0.0555
Oct 0.0555
Nov 0.0555
Dec 0.0555
Jan 0.0555
Feb 0.0555
Common Share Price Performance -- Weekly Closing Price
[LINE CHART]
3/01/08 $ 12.48
12.89
12.26
12.35
12.622
12.75
12.97
12.966
12.72
12.75
12.81
12.73
12.77
12.8
12.839
12.58
12.55
12.29
12.29
12.41
12.17
12.15
12.22
12.2601
12.28
12.36
12.58
12.76
12.44
11.72
10.76
10.55
7.69
8.859
10.25
9.95
10.62
9.84
8.58
8.85
8.34
7.76
8.55
8.6
9.22
10.51
10.06
10
10.22
10.3
10.41
9.52
2/28/09 10.06
(1) The percentages shown in the foregoing chart may reflect the ratings on
certain bonds insured by ACA, AGC, AMBAC, FGIC, FSA, MBIA, RAAI and
SYNCORA as of February 28, 2009. Please see the Portfolio Manager's
Commentary for an expanded discussion of the affect on the Fund of changes
to the ratings of certain bonds in the portfolio resulting from changes to
the ratings of the underlying insurers both during the period and after
period end.
(2) 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 34.9%. When comparing this Fund to investments that generate
qualified dividend income, the Taxable-Equivalent Yield is lower.
(3) The Fund paid shareholders a capital gains distribution in December 2008
of $0.0061 per share.
18
NAC Performance OVERVIEW | Nuveen California Dividend Advantage Municipal Fund
as of February 28, 2009
Credit Quality (as a % of total investments)(1)
[PIE CHART]
AAA/U.S. Guaranteed 34%
AA 25%
A 25%
BBB 8%
BB or Lower 1%
N/R 7%
2008-2009 Monthly Tax-Free Dividends Per Common Share(3)
[BAR CHART]
Mar $ 0.0615
Apr 0.0615
May 0.0615
Jun 0.0615
Jul 0.0615
Aug 0.0615
Sep 0.063
Oct 0.063
Nov 0.063
Dec 0.063
Jan 0.063
Feb 0.063
Common Share Price Performance -- Weekly Closing Price
[LINE CHART]
3/01/08 $ 13.43
13.54
13.15
13.04
13.49
13.67
14.11
13.91
13.91
14.11
14.18
14.08
14.02
13.98
13.96
13.66
13.41
13.4
13.4432
13.19
13.06
13.11
13.46
13.47
13.14
13.25
13.44
13.46
13.63
12.79
11.98
11.1
8.15
9.6
10.9
11.01
11.21
10.25
8.76
9.73
9.1
7.57
9.27
9
10.17
11.3
10.55
10.4
10.51
10.69
11.15
9.92
2/28/09 10.82
FUND SNAPSHOT
-------------------------------------------------------------------------------
Common Share Price $ 10.82
-------------------------------------------------------------------------------
Common Share Net Asset Value $ 12.10
-------------------------------------------------------------------------------
Premium/(Discount) to NAV -10.58%
-------------------------------------------------------------------------------
Market Yield 6.99%
-------------------------------------------------------------------------------
Taxable-Equivalent Yield(2) 10.74%
-------------------------------------------------------------------------------
Net Assets Applicable to Common Shares ($000) $ 284,221
-------------------------------------------------------------------------------
Average Effective Maturity on Securities (Years) 18.08
-------------------------------------------------------------------------------
Leverage-Adjusted Duration 13.76
-------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 5/26/99)
-------------------------------------------------------------------------------
ON SHARE PRICE ON NAV
-------------------------------------------------------------------------------
6-Month (Cumulative) -14.14% -11.45%
-------------------------------------------------------------------------------
1-Year -10.38% -5.43%
-------------------------------------------------------------------------------
5-Year -0.14% 0.78%
-------------------------------------------------------------------------------
Since Inception 3.12% 4.55%
-------------------------------------------------------------------------------
INDUSTRIES
(as a % of total investments)
-------------------------------------------------------------------------------
Tax Obligation/Limited 25.6%
-------------------------------------------------------------------------------
U.S. Guaranteed 20.5%
-------------------------------------------------------------------------------
Transportation 13.9%
-------------------------------------------------------------------------------
Health Care 13.5%
-------------------------------------------------------------------------------
Tax Obligation/General 6.4%
-------------------------------------------------------------------------------
Education and Civic Organizations 5.0%
-------------------------------------------------------------------------------
Water & Sewer 4.2%
-------------------------------------------------------------------------------
Other 10.9%
-------------------------------------------------------------------------------
(1) The percentages shown in the foregoing chart may reflect the ratings on
certain bonds insured by ACA, AGC, AMBAC, FGIC, FSA, MBIA, RAAI and
SYNCORA as of February 28, 2009. Please see the Portfolio Manager's
Commentary for an expanded discussion of the affect on the Fund of changes
to the ratings of certain bonds in the portfolio resulting from changes to
the ratings of the underlying insurers both during the period and after
period end.
(2) 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 34.9%. When comparing this Fund to investments that generate
qualified dividend income, the Taxable-Equivalent Yield is lower.
(3) The Fund paid shareholders capital gains and net ordinary income
distributions in December 2008 of $0.2634 per share.
19
NVX Performance OVERVIEW | Nuveen California Dividend Advantage Municipal Fund 2
as of February 28, 2009
FUND SNAPSHOT
-------------------------------------------------------------------------------
Common Share Price $ 10.51
-------------------------------------------------------------------------------
Common Share Net Asset Value $ 12.91
-------------------------------------------------------------------------------
Premium/(Discount) to NAV -18.59%
-------------------------------------------------------------------------------
Market Yield 6.91%
-------------------------------------------------------------------------------
Taxable-Equivalent Yield(2) 10.61%
-------------------------------------------------------------------------------
Net Assets Applicable to Common Shares ($000) $ 190,824
-------------------------------------------------------------------------------
Average Effective Maturity on Securities (Years) 14.24
-------------------------------------------------------------------------------
Leverage-Adjusted Duration 12.04
-------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 3/27/01)
-------------------------------------------------------------------------------
ON SHARE PRICE ON NAV
-------------------------------------------------------------------------------
6-Month (Cumulative) -13.83% -7.40%
-------------------------------------------------------------------------------
1-Year -12.78% -1.96%
-------------------------------------------------------------------------------
5-Year -0.29% 1.98%
-------------------------------------------------------------------------------
Since Inception 1.49% 4.41%
-------------------------------------------------------------------------------
INDUSTRIES
(as a % of total investments)
-------------------------------------------------------------------------------
U.S. Guaranteed 31.0%
-------------------------------------------------------------------------------
Tax Obligation/Limited 15.3%
-------------------------------------------------------------------------------
Health Care 9.8%
-------------------------------------------------------------------------------
Tax Obligation/General 9.0%
-------------------------------------------------------------------------------
Transportation 7.6%
-------------------------------------------------------------------------------
Water and Sewer 6.5%
-------------------------------------------------------------------------------
Education and Civic Organizations 5.5%
-------------------------------------------------------------------------------
Utilities 4.8%
-------------------------------------------------------------------------------
Other 10.5%
-------------------------------------------------------------------------------
Credit Quality (as a % of total investments)(1)
[PIE CHART]
AAA/U.S. Guaranteed 39%
AA 29%
A 14%
BBB 11%
BB or Lower 1%
N/R 6%
2008-2009 Monthly Tax-Free Dividends Per Common Share(3)
[BAR CHART]
Mar $ 0.0575
Apr 0.0575
May 0.0575
Jun 0.0575
Jul 0.0575
Aug 0.0575
Sep 0.0605
Oct 0.0605
Nov 0.0605
Dec 0.0605
Jan 0.0605
Feb 0.0605
Common Share Price Performance -- Weekly Closing Price
[LINE CHART]
3/01/08 $ 13.2
13.3
12.79
12.92
13.27
13.59
13.56
13.48
13.34
13.32
13.33
13.38
13.47
13.4
13.47
13.08
12.77
12.71
12.9399
12.88
12.66
12.65
12.74
12.72
12.75
12.61
12.67
12.89
12.78
12.4
11.34
10.89
7.63
9.37
10.65
10.63
10.86
10.28
9
9.91
8.93
8.35
9.54
9.38
9.9
11.2301
10.45
10.5
10.91
10.8
10.99
9.96
2/28/09 10.51
(1) The percentages shown in the foregoing chart may reflect the ratings on
certain bonds insured by ACA, AGC, AMBAC, FGIC, FSA, MBIA, RAAI and
SYNCORA as of February 28, 2009. Please see the Portfolio Manager's
Commentary for an expanded discussion of the affect on the Fund of changes
to the ratings of certain bonds in the portfolio resulting from changes to
the ratings of the underlying insurers both during the period and after
period end.
(2) 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 34.9%. When comparing this Fund to investments that generate
qualified dividend income, the Taxable-Equivalent Yield is lower.
(3) The Fund paid shareholders capital gains and net ordinary income
distributions in December 2008 of $0.035 per share.
20
NZH Performance OVERVIEW | Nuveen California Dividend Advantage Municipal Fund 3
as of February 28, 2009
Credit Quality (as a % of total investments)(1,2)
[PIE CHART]
AAA/U.S.
Guaranteed 33%
AA 28%
A 21%
BBB 11%
BB or Lower 1%
N/R 6%
2008-2009 Monthly Tax-Free Dividends Per Common Share
[BAR CHART]
Mar $ 0.059
Apr 0.059
May 0.059
Jun 0.059
Jul 0.059
Aug 0.059
Sep 0.0615
Oct 0.0615
Nov 0.0615
Dec 0.0615
Jan 0.0615
Feb 0.0615
Common Share Price Performance -- Weekly Closing Price
[LINE CHART]
3/01/08 $ 12.62
12.96
12.62
12.66
13.0198
13.08
13.08
13.18
13.15
13.27
13.3
13.28
13.33
13.35
13.44
13.13
12.63
12.5
12.69
12.69
12.5
12.57
12.57
12.89
13
12.72
12.87
13.05
12.86
12.35
11.6
10.78
7.75
9
10.4
10.5
10.9
9.84
8.62
9.8
8.13
7.38
8.85
8.63
9.44
10.44
9.69
9.65
10.355
10.48
10.72
9.45
2/28/09 10.23
FUND SNAPSHOT
-------------------------------------------------------------------------------
Common Share Price $ 10.23
-------------------------------------------------------------------------------
Common Share Net Asset Value $ 11.53
-------------------------------------------------------------------------------
Premium/(Discount) to NAV -11.27%
-------------------------------------------------------------------------------
Market Yield 7.21%
-------------------------------------------------------------------------------
Taxable-Equivalent Yield(3) 11.08%
-------------------------------------------------------------------------------
Net Assets Applicable to Common Shares ($000) $ 278,056
-------------------------------------------------------------------------------
Average Effective Maturity on Securities (Years) 16.91
-------------------------------------------------------------------------------
Leverage-Adjusted Duration 13.47
-------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 9/25/01)
-------------------------------------------------------------------------------
ON SHARE PRICE ON NAV
-------------------------------------------------------------------------------
6-Month (Cumulative) -17.58% -12.54%
-------------------------------------------------------------------------------
1-Year -12.11% -6.27%
-------------------------------------------------------------------------------
5-Year 0.06% 0.22%
-------------------------------------------------------------------------------
Since Inception 0.82% 2.75%
-------------------------------------------------------------------------------
INDUSTRIES
(as a % of total investments)(2)
-------------------------------------------------------------------------------
Tax Obligation/Limited 26.1%
-------------------------------------------------------------------------------
Health Care 17.8%
-------------------------------------------------------------------------------
U.S. Guaranteed 17.1%
-------------------------------------------------------------------------------
Tax Obligation/General 12.3%
-------------------------------------------------------------------------------
Water and Sewer 5.5%
-------------------------------------------------------------------------------
Transportation 4.9%
-------------------------------------------------------------------------------
Consumer Staples 3.9%
-------------------------------------------------------------------------------
Other 12.4%
-------------------------------------------------------------------------------
(1) The percentages shown in the foregoing chart may reflect the ratings on
certain bonds insured by ACA, AGC, AMBAC, FGIC, FSA, MBIA, RAAI and
SYNCORA as of February 28, 2009. Please see the Portfolio Manager's
Commentary for an expanded discussion of the affect on the Fund of changes
to the ratings of certain bonds in the portfolio resulting from changes to
the ratings of the underlying insurers both during the period and after
period end.
(2) Excluding investments in derivatives.
(3) 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 34.9%. When comparing this Fund to investments that generate
qualified dividend income, the Taxable-Equivalent Yield is lower.
21
NKL Performance OVERVIEW | Nuveen Insured California Dividend Advantage
Municipal Fund
as of February 28, 2009
FUND SNAPSHOT
-------------------------------------------------------------------------------
Common Share Price $ 11.16
-------------------------------------------------------------------------------
Common Share Net Asset Value $ 13.52
-------------------------------------------------------------------------------
Premium/(Discount) to NAV -17.46%
-------------------------------------------------------------------------------
Market Yield 6.67%
-------------------------------------------------------------------------------
Taxable-Equivalent Yield(4) 10.25%
-------------------------------------------------------------------------------
Net Assets Applicable to Common Shares ($000) $ 206,467
-------------------------------------------------------------------------------
Average Effective Maturity on Securities (Years) 16.44
-------------------------------------------------------------------------------
Leverage-Adjusted Duration 12.22
-------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 3/25/02)
-------------------------------------------------------------------------------
ON SHARE PRICE ON NAV
-------------------------------------------------------------------------------
6-Month (Cumulative) -14.22% -4.50%
-------------------------------------------------------------------------------
1-Year -10.04% 3.07%
-------------------------------------------------------------------------------
5-Year -0.28% 2.40%
-------------------------------------------------------------------------------
Since Inception 1.77% 5.04%
-------------------------------------------------------------------------------
INDUSTRIES
(as a % of total investments)
-------------------------------------------------------------------------------
Tax Obligation/Limited 31.7%
-------------------------------------------------------------------------------
Tax Obligation/General 18.6%
-------------------------------------------------------------------------------
U.S. Guaranteed 14.9%
-------------------------------------------------------------------------------
Utilities 9.8%
-------------------------------------------------------------------------------
Water and Sewer 9.7%
-------------------------------------------------------------------------------
Health Care 4.0%
-------------------------------------------------------------------------------
Other 11.3%
-------------------------------------------------------------------------------
INSURERS
(as a % of total Insured investments)
-------------------------------------------------------------------------------
AMBAC 25.7%
-------------------------------------------------------------------------------
FSA 23.9%
-------------------------------------------------------------------------------
MBIA 23.5%
-------------------------------------------------------------------------------
FGIC 20.6%
-------------------------------------------------------------------------------
SYNCORA 4.3%
-------------------------------------------------------------------------------
Other 2.0%
-------------------------------------------------------------------------------
Credit Quality (as a % of total investments)(1,2,3)
[PIE CHART]
Insured 73%
U.S. Guaranteed 15%
GNMA/FNMA Guaranteed 1%
A (Uninsured) 5%
BBB (Uninsured) 6%
2008-2009 Monthly Tax-Free Dividends Per Common Share(5)
[BAR CHART]
Mar $ 0.0595
Apr 0.0595
May 0.0595
Jun 0.0595
Jul 0.0595
Aug 0.0595
Sep 0.062
Oct 0.062
Nov 0.062
Dec 0.062
Jan 0.062
Feb 0.062
Common Share Price Performance -- Weekly Closing Price
[LINE CHART]
3/01/08 $ 13.53
13.55
13.13
13.27
13.6
13.63
14.11
14
13.95
14.02
14.1
14.09
14
14.05
14.13
13.73
13.653
13.36
13.39
13.36
13.32
13.58
13.55
13.46
13.8399
13.45
13.5
13.65
13.71
13.6
12.3
11.52
8.28
10.039
11.16
11.84
12
11.26
9.9999
10.16
9.9
8.65
9.66
10.25
10.91
11.8
11.35
11.35
11.5056
11.83
11.7
10.61
2/28/09 11.16
(1) Excluding short-term investments.
(2) The percentages shown in the foregoing chart may reflect the ratings on
certain bonds insured by ACA, AGC, AMBAC, FGIC, FSA, MBIA, RAAI and
SYNCORA as of February 28, 2009. Please see the Portfolio Manager's
Commentary for an expanded discussion of the affect on the Fund of changes
to the ratings of certain bonds in the portfolio resulting from changes to
the ratings of the underlying insurers both during the period and after
period end.
(3) At least 80% of the Fund's net assets (including net assets attributable
to Auction Rate Preferred shares) are invested in municipal securities
that guarantee the timely payment of principal and interest. See Notes to
Financial Statements, Footnote 1 - Insurance, for more information.
(4) 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 34.9%. When comparing this Fund to investments that generate
qualified dividend income, the Taxable-Equivalent Yield is lower.
(5) The Fund paid shareholders capital gains and net ordinary income
distributions in December 2008 of $0.0372 per share.
22
NKX Performance OVERVIEW | Nuveen Insured California Tax-Free Advantage
Municipal Fund
as of February 28, 2009
Credit Quality (as a % of total investments)(1,2,3)
[PIA CHART]
Insured 72%
U.S. Guaranteed 15%
AA (Uninsured) 1%
A (Uninsured) 6%
BBB (Uninsured) 6%
2008-2009 Monthly Tax-Free Dividends Per Common Share(5)
[BAR CHART]
Mar $ 0.059
Apr 0.059
May 0.059
Jun 0.059
Jul 0.059
Aug 0.059
Sep 0.059
Oct 0.059
Nov 0.059
Dec 0.059
Jan 0.059
Feb 0.059
Common Share Price Performance -- Weekly Closing Price
[LINE CHART]
3/01/08 $ 13.61
13.85
14.25
13.96
14.05
14.1501
14.38
14.26
14.17
14.27
14.5
14.51
14.1
14.05
14.014
13.93
13.61
13.4599
13.66
13.68
13.5
13.28
13.28
13.46
13.38
13.45
13.78
13.93
13.62
13.15
11.73
11.8
8.136
9.835
10.9
11.8511
12.3
10.6
9.83
10.32
9.3
8.6
9.47
10.35
10.67
12.14
11.58
10.97
11.26
11.41
11.76
11.65
2/28/09 11.75
FUND SNAPSHOT
-------------------------------------------------------------------------------
Common Share Price $ 11.75
-------------------------------------------------------------------------------
Common Share Net Asset Value $ 12.85
-------------------------------------------------------------------------------
Premium/(Discount) to NAV -8.56%
-------------------------------------------------------------------------------
Market Yield 6.03%
-------------------------------------------------------------------------------
Taxable-Equivalent Yield(4) 9.26%
-------------------------------------------------------------------------------
Net Assets Applicable to Common Shares ($000) $ 75,661
-------------------------------------------------------------------------------
Average Effective Maturity on Securities (Years) 17.07
-------------------------------------------------------------------------------
Leverage-Adjusted Duration 13.81
-------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
(Inception 11/21/02)
-------------------------------------------------------------------------------
ON SHARE PRICE ON NAV
-------------------------------------------------------------------------------
6-Month (Cumulative) -11.55% -6.42%
-------------------------------------------------------------------------------
1-Year -8.01% -0.13%
-------------------------------------------------------------------------------
5-Year 0.62% 2.11%
-------------------------------------------------------------------------------
Since Inception 1.70% 3.76%
-------------------------------------------------------------------------------
INDUSTRIES
(as a % of total investments)
-------------------------------------------------------------------------------
Tax Obligation/Limited 31.5%
-------------------------------------------------------------------------------
Tax Obligation/General 16.7%
-------------------------------------------------------------------------------
U.S. Guaranteed 14.8%
-------------------------------------------------------------------------------
Health Care 11.9%
-------------------------------------------------------------------------------
Water and Sewer 10.0%
-------------------------------------------------------------------------------
Transportation 7.2%
-------------------------------------------------------------------------------
Other 7.9%
-------------------------------------------------------------------------------
INSURERS
(as a % of total Insured investments)
-------------------------------------------------------------------------------
AMBAC 45.0%
-------------------------------------------------------------------------------
MBIA 25.4%
-------------------------------------------------------------------------------
FSA 11.4%
-------------------------------------------------------------------------------
AGC 6.3%
-------------------------------------------------------------------------------
SYNCORA 5.1%
-------------------------------------------------------------------------------
FGIC 5.1%
-------------------------------------------------------------------------------
Other 1.7%
-------------------------------------------------------------------------------
(1) Excluding short-term investments.
(2) The percentages shown in the foregoing chart may reflect the ratings on
certain bonds insured by ACA, AGC, AMBAC, FGIC, FSA, MBIA, RAAI and
SYNCORA as of February 28, 2009. Please see the Portfolio Manager's
Commentary for an expanded discussion of the affect on the Fund of changes
to the ratings of certain bonds in the portfolio resulting from changes to
the ratings of the underlying insurers both during the period and after
period end.
(3) At least 80% of the Fund's net assets (including net assets attributable
to Auction Rate Preferred shares) are invested in municipal securities
that guarantee the timely payment of principal and interest. See Notes to
Financial Statements, Footnote 1 - Insurance, for more information.
(4) 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 34.9%. When comparing this Fund to investments that generate
qualified dividend income, the Taxable-Equivalent Yield is lower.
(5) The Fund paid shareholders a capital gains distribution in December 2008
of $0.0516 per share.
23
NPC NCL NCU | Shareholder MEETING REPORT
The annual meeting of shareholders was held in the offices of Nuveen Investments
on November 18, 2008; at this meeting the shareholders were asked to vote on the
election of Board Members, the elimination of Fundamental Investment Policies
and the approval of new Fundamental Investment Policies. The meeting was
subsequently adjourned to January 13, 2009 and additionally adjourned to March
17, 2009. The meeting for NKX adjourned again to March 18, 2009.
NPC NCL NCU
----------------------------------------------------------------------------------------------------------------------------------
Common and Common and Common and
Preferred Preferred Preferred Preferred Preferred Preferred
shares voting shares voting shares voting shares voting shares voting shares voting
together together together together together together
as a class as a class as a class as a class as a class as a class
----------------------------------------------------------------------------------------------------------------------------------
TO APPROVE THE ELIMINATION OF THE
FUNDAMENTAL POLICY RELATING TO
COMMODITIES.
For 3,016,892 350 6,007,942 587 2,668,033 194
Against 207,350 31 349,243 100 132,979 42
Abstain 213,590 13 465,208 45 176,856 6
Broker Non-Votes 862,903 932 1,953,027 1,656 823,997 686
----------------------------------------------------------------------------------------------------------------------------------
Total 4,300,735 1,326 8,775,420 2,388 3,801,865 928
==================================================================================================================================
TO APPROVE THE NEW FUNDAMENTAL
POLICY RELATING TO COMMODITIES.
For 2,974,906 352 5,965,027 588 2,652,616 194
Against 232,677 29 392,669 101 140,879 42
Abstain 230,249 13 464,697 43 184,373 6
Broker Non-Votes 862,903 932 1,953,027 1,656 823,997 686
----------------------------------------------------------------------------------------------------------------------------------
Total 4,300,735 1,326 8,775,420 2,388 3,801,865 928
==================================================================================================================================
TO APPROVE THE ELIMINATION OF THE
FUNDAMENTAL POLICIES RELATING TO
DERIVATIVES AND SHORT SALES.
For 2,996,272 346 6,031,353 604 2,656,600 194
Against 228,685 35 376,434 88 163,540 42
Abstain 212,875 13 414,606 40 157,728 6
Broker Non-Votes 862,903 932 1,953,027 1,656 823,997 686
----------------------------------------------------------------------------------------------------------------------------------
Total 4,300,735 1,326 8,775,420 2,388 3,801,865 928
==================================================================================================================================
TO APPROVE THE ELIMINATION OF THE
FUNDAMENTAL POLICIES PROHIBITING
INVESTMENT IN OTHER INVESTMENT
COMPANIES.
For 3,004,567 348 6,010,906 589 2,655,288 194
Against 217,385 33 395,961 103 173,044 42
Abstain 215,880 13 415,526 40 149,536 6
Broker Non-Votes 862,903 932 1,953,027 1,656 823,997 686
----------------------------------------------------------------------------------------------------------------------------------
Total 4,300,735 1,326 8,775,420 2,388 3,801,865 928
==================================================================================================================================
TO APPROVE THE ELIMINATION OF THE
FUNDAMENTAL POLICIES RELATING TO
INVESTMENTS IN INSURED MUNICIPAL
SECURITIES.
For 3,007,961 354 6,040,047 636 2,683,099 194
Against 222,270 29 370,273 57 145,910 42
Abstain 207,601 11 412,073 39 148,859 6
Broker Non-Votes 862,903 932 1,953,027 1,656 823,997 686
----------------------------------------------------------------------------------------------------------------------------------
Total 4,300,735 1,326 8,775,420 2,388 3,801,865 928
==================================================================================================================================
TO APPROVE THE NEW FUNDAMENTAL
POLICY RELATING TO INVESTMENTS
IN INSURED MUNICIPAL SECURITIES.
For 3,081,378 356 6,076,135 640 2,686,207 194
Against 149,089 27 355,481 53 137,400 42
Abstain 207,365 11 390,777 39 154,261 6
Broker Non-Votes 862,903 932 1,953,027 1,656 823,997 686
----------------------------------------------------------------------------------------------------------------------------------
Total 4,300,735 1,326 8,775,420 2,388 3,801,865 928
==================================================================================================================================
24
NPC NCL NCU
----------------------------------------------------------------------------------------------------------------------------------
Common and Common and Common and
Preferred Preferred Preferred Preferred Preferred Preferred
shares voting shares voting shares voting shares voting shares voting shares voting
together together together together together together
as a class as a class as a class as a class as a class as a class
----------------------------------------------------------------------------------------------------------------------------------
APPROVAL OF THE BOARD MEMBERS
WAS REACHED AS FOLLOWS:
John P. Amboian
For 4,136,830 -- 8,356,558 -- 3,622,568 --
Withhold 162,087 -- 410,628 -- 179,266 --
----------------------------------------------------------------------------------------------------------------------------------
Total 4,298,917 -- 8,767,186 -- 3,801,834 --
==================================================================================================================================
Robert P. Bremner
For 4,135,454 -- 8,360,158 -- -- --
Withhold 163,463 -- 407,028 -- -- --
----------------------------------------------------------------------------------------------------------------------------------
Total 4,298,917 -- 8,767,186 -- -- --
==================================================================================================================================
Jack B. Evans
For 4,136,830 -- 8,362,193 -- -- --
Withhold 162,087 -- 404,993 -- -- --
----------------------------------------------------------------------------------------------------------------------------------
Total 4,298,917 -- 8,767,186 -- -- --
==================================================================================================================================
William C. Hunter
For -- 1,075 -- 2,270 -- 846
Withhold -- 133 -- 84 -- 51
----------------------------------------------------------------------------------------------------------------------------------
Total -- 1,208 -- 2,354 -- 897
==================================================================================================================================
David J. Kundert
For 4,134,009 -- 8,359,232 -- 3,620,337 --
Withhold 164,908 -- 407,954 -- 181,497 --
----------------------------------------------------------------------------------------------------------------------------------
Total 4,298,917 -- 8,767,186 -- 3,801,834 --
==================================================================================================================================
William J. Schneider
For -- 1,075 -- 2,270 -- 846
Withhold -- 133 -- 84 -- 51
----------------------------------------------------------------------------------------------------------------------------------
Total -- 1,208 -- 2,354 -- 897
==================================================================================================================================
Judith M. Stockdale
For 4,136,567 -- 8,382,098 -- -- --
Withhold 162,350 -- 385,088 -- -- --
----------------------------------------------------------------------------------------------------------------------------------
Total 4,298,917 -- 8,767,186 -- -- --
==================================================================================================================================
Carole E. Stone
For 4,134,845 -- 8,382,098 -- -- --
Withhold 164,072 -- 385,088 -- -- --
----------------------------------------------------------------------------------------------------------------------------------
Total 4,298,917 -- 8,767,186 -- -- --
==================================================================================================================================
Terence J. Toth
For 4,135,008 -- 8,361,367 -- 3,618,526 --
Withhold 163,909 -- 405,819 -- 183,308 --
----------------------------------------------------------------------------------------------------------------------------------
Total 4,298,917 -- 8,767,186 -- 3,801,834 --
==================================================================================================================================
25
NAC NVX NZH |Shareholder MEETING REPORT (continued)
NAC NVX NZH
----------------------------------------------------------------------------------------------------------------------------------
Common and Common and Common and
Preferred Preferred Preferred Preferred Preferred Preferred
shares voting shares voting shares voting shares voting shares voting shares voting
together together together together together together
as a class as a class as a class as a class as a class as a class
----------------------------------------------------------------------------------------------------------------------------------
TO APPROVE THE ELIMINATION OF THE
FUNDAMENTAL POLICY RELATING TO
COMMODITIES.
For -- -- -- -- -- --
Against -- -- -- -- -- --
Abstain -- -- -- -- -- --
Broker Non-Votes -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
Total -- -- -- -- -- --
==================================================================================================================================
TO APPROVE THE NEW FUNDAMENTAL
POLICY RELATING TO COMMODITIES.
For -- -- -- -- -- --
Against -- -- -- -- -- --
Abstain -- -- -- -- -- --
Broker Non-Votes -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
Total -- -- -- -- -- --
==================================================================================================================================
TO APPROVE THE ELIMINATION OF THE
FUNDAMENTAL POLICIES RELATING TO
DERIVATIVES AND SHORT SALES.
For -- -- -- -- -- --
Against -- -- -- -- -- --
Abstain -- -- -- -- -- --
Broker Non-Votes -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
Total -- -- -- -- -- --
==================================================================================================================================
TO APPROVE THE ELIMINATION OF THE
FUNDAMENTAL POLICIES PROHIBITING
INVESTMENT IN OTHER INVESTMENT
COMPANIES.
For -- -- -- -- -- --
Against -- -- -- -- -- --
Abstain -- -- -- -- -- --
Broker Non-Votes -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
Total -- -- -- -- -- --
==================================================================================================================================
TO APPROVE THE ELIMINATION OF THE
FUNDAMENTAL POLICIES RELATING TO
INVESTMENTS IN INSURED MUNICIPAL
SECURITIES.
For 11,237,581 1,027 6,942,760 727 11,037,592 945
Against 693,189 147 497,671 61 763,332 213
Abstain 394,135 7 320,988 17 466,447 7
Broker Non-Votes 3,382,253 3,247 2,167,407 2,658 3,936,482 4,131
----------------------------------------------------------------------------------------------------------------------------------
Total 15,707,158 4,428 9,928,826 3,463 16,203,853 5,296
==================================================================================================================================
TO APPROVE THE NEW FUNDAMENTAL
POLICY RELATING TO INVESTMENTS IN
INSURED MUNICIPAL SECURITIES.
For 11,283,226 995 6,949,592 730 11,078,062 919
Against 614,486 174 471,662 58 724,720 199
Abstain 427,193 12 340,165 17 464,588 47
Broker Non-Votes 3,382,253 3,247 2,167,407 2,658 3,936,483 4,131
----------------------------------------------------------------------------------------------------------------------------------
Total 15,707,158 4,428 9,928,826 3,463 16,203,853 5,296
==================================================================================================================================
26
NAC NVX NZH
----------------------------------------------------------------------------------------------------------------------------------
Common and Common and Common and
Preferred Preferred Preferred Preferred Preferred Preferred
shares voting shares voting shares voting shares voting shares voting shares voting
together together together together together together
as a class as a class as a class as a class as a class as a class
----------------------------------------------------------------------------------------------------------------------------------
APPROVAL OF THE BOARD MEMBERS WAS
REACHED AS FOLLOWS:
John P. Amboian
For 15,127,521 -- 9,403,165 -- 15,516,758 --
Withhold 551,933 -- 519,643 -- 685,805 --
----------------------------------------------------------------------------------------------------------------------------------
Total 15,679,454 -- 9,922,808 -- 16,202,563 --
==================================================================================================================================
Robert P. Bremner
For -- -- -- -- -- --
Withhold -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
Total -- -- -- -- -- --
==================================================================================================================================
Jack B. Evans
For -- -- -- -- -- --
Withhold -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
Total -- -- -- -- -- --
==================================================================================================================================
William C. Hunter
For -- 4,200 -- 3,376 -- 5,037
Withhold -- 204 -- 70 -- 200
----------------------------------------------------------------------------------------------------------------------------------
Total -- 4,404 -- 3,446 -- 5,237
==================================================================================================================================
David J. Kundert
For 15,124,051 -- 9,412,194 -- 15,523,561 --
Withhold 555,403 -- 510,614 -- 679,002 --
----------------------------------------------------------------------------------------------------------------------------------
Total 15,679,454 -- 9,922,808 -- 16,202,563 --
==================================================================================================================================
William J. Schneider
For -- 4,200 -- 3,376 -- 5,037
Withhold -- 204 -- 70 -- 200
----------------------------------------------------------------------------------------------------------------------------------
Total -- 4,404 -- 3,446 -- 5,237
==================================================================================================================================
Judith M. Stockdale
For -- -- -- -- -- --
Withhold -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
Total -- -- -- -- -- --
==================================================================================================================================
Carole E. Stone
For -- -- -- -- -- --
Withhold -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
Total -- -- -- -- -- --
==================================================================================================================================
Terence J. Toth
For 15,127,721 -- 9,417,394 -- 15,517,299 --
Withhold 551,733 -- 505,414 -- 685,264 --
----------------------------------------------------------------------------------------------------------------------------------
Total 15,679,454 -- 9,922,808 -- 16,202,563 --
==================================================================================================================================
27
NKL NKX | Shareholder MEETING REPORT (continued)
NKL NKX
--------------------------------------------------------------------------------------------------------------------------
Common and Common and
Preferred Preferred Preferred Preferred
shares voting shares voting shares voting shares voting
together together together together
as a class as a class as a class as a class
--------------------------------------------------------------------------------------------------------------------------
TO APPROVE THE ELIMINATION OF THE FUNDAMENTAL
POLICY RELATING TO COMMODITIES.
For -- -- -- --
Against -- -- -- --
Abstain -- -- -- --
Broker Non-Votes -- -- -- --
--------------------------------------------------------------------------------------------------------------------------
Total -- -- -- --
==========================================================================================================================
TO APPROVE THE NEW FUNDAMENTAL
POLICY RELATING TO COMMODITIES.
For -- -- -- --
Against -- -- -- --
Abstain -- -- -- --
Broker Non-Votes -- -- -- --
--------------------------------------------------------------------------------------------------------------------------
Total -- -- -- --
==========================================================================================================================
TO APPROVE THE ELIMINATION OF THE FUNDAMENTAL
POLICIES RELATING TO DERIVATIVES AND SHORT SALES.
For -- -- -- --
Against -- -- -- --
Abstain -- -- -- --
Broker Non-Votes -- -- -- --
--------------------------------------------------------------------------------------------------------------------------
Total -- -- -- --
==========================================================================================================================
TO APPROVE THE ELIMINATION OF THE FUNDAMENTAL
POLICIES PROHIBITING INVESTMENT IN OTHER
INVESTMENT COMPANIES.
For -- -- -- --
Against -- -- -- --
Abstain -- -- -- --
Broker Non-Votes -- -- -- --
--------------------------------------------------------------------------------------------------------------------------
Total -- -- -- --
==========================================================================================================================
TO APPROVE THE ELIMINATION OF THE FUNDAMENTAL
POLICIES RELATING TO INVESTMENTS IN INSURED
MUNICIPAL SECURITIES.
For 7,222,107 745 2,581,702 177
Against 293,712 71 147,379 --
Abstain 388,950 19 131,052 --
Broker Non-Votes 2,753,761 2,284 820,106 --
--------------------------------------------------------------------------------------------------------------------------
Total 10,658,530 3,119 3,680,239 177
==========================================================================================================================
TO APPROVE THE NEW FUNDAMENTAL POLICY RELATING
TO INVESTMENTS IN INSURED MUNICIPAL SECURITIES.
For 7,245,969 741 2,587,732 177
Against 275,628 74 141,009 --
Abstain 383,172 20 131,392 --
Broker Non-Votes 2,753,761 2,284 820,106 --
--------------------------------------------------------------------------------------------------------------------------
Total 10,658,530 3,119 3,680,239 177
==========================================================================================================================
28
NKL NKX
--------------------------------------------------------------------------------------------------------------------------
Common and Common and
Preferred Preferred Preferred Preferred
shares voting shares voting shares voting shares voting
together together together together
as a class as a class as a class as a class
--------------------------------------------------------------------------------------------------------------------------
APPROVAL OF THE BOARD MEMBERS
WAS REACHED AS FOLLOWS:
John P. Amboian
For 10,233,212 -- 3,503,764 177
Withhold 412,637 -- 175,098 --
--------------------------------------------------------------------------------------------------------------------------
Total 10,645,849 -- 3,678,862 177
==========================================================================================================================
Robert P. Bremner
For -- -- -- --
Withhold -- -- -- --
--------------------------------------------------------------------------------------------------------------------------
Total -- -- -- --
==========================================================================================================================
Jack B. Evans
For -- -- -- --
Withhold -- -- -- --
--------------------------------------------------------------------------------------------------------------------------
Total -- -- -- --
==========================================================================================================================
William C. Hunter
For -- 3,024 -- 177
Withhold -- 59 -- --
--------------------------------------------------------------------------------------------------------------------------
Total -- 3,083 -- 177
==========================================================================================================================
David J. Kundert
For 10,226,916 -- 3,503,764 177
Withhold 418,933 -- 175,098 --
--------------------------------------------------------------------------------------------------------------------------
Total 10,645,849 -- 3,678,862 177
==========================================================================================================================
William J. Schneider
For -- 3,016 -- 177
Withhold -- 67 -- --
--------------------------------------------------------------------------------------------------------------------------
Total -- 3,083 -- 177
==========================================================================================================================
Judith M. Stockdale
For -- -- -- --
Withhold -- -- -- --
--------------------------------------------------------------------------------------------------------------------------
Total -- -- -- --
==========================================================================================================================
Carole E. Stone
For -- -- -- --
Withhold -- -- -- --
--------------------------------------------------------------------------------------------------------------------------
Total -- -- -- --
==========================================================================================================================
Terence J. Toth
For 10,235,003 -- 3,509,764 177
Withhold 410,846 -- 169,098 --
--------------------------------------------------------------------------------------------------------------------------
Total 10,645,849 -- 3,678,862 177
==========================================================================================================================
29
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 February 28,
2009, and the related statements of operations, changes in net assets and cash
flows (Nuveen Insured California Premium Income Municipal Fund 2, Inc. and
Nuveen Insured California Tax-Free Advantage Municipal Fund only) 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 February 28, 2009, by correspondence with the custodian
and brokers. 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 February 28, 2009, the results of their operations, the
changes in their net assets and their cash flows (Nuveen Insured California
Premium Income Municipal Fund 2, Inc. and Nuveen Insured California Tax-Free
Advantage Municipal Fund only) and the financial highlights for each of the
periods indicated therein in conformity with US generally accepted accounting
principles.
/s/ ERNST & YOUNG LLP
Chicago, Illinois
April 22, 2009
30
NPC | Nuveen Insured California Premium Income Municipal Fund, Inc.
| Portfolio of INVESTMENTS February 28, 2009
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
----------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 6.1% (4.1% OF TOTAL INVESTMENTS)
$ 2,125 California Educational Facilities Authority, Student Loan Revenue 3/09 at 101.00 Baa1 $ 1,991,019
Bonds, Cal Loan Program, Series 2001A, 5.400%, 3/01/21 - MBIA
Insured (Alternative Minimum Tax)
1,500 California State University, Systemwide Revenue Bonds, Series 5/15 at 100.00 Aa3 1,510,995
2005A, 5.000%, 11/01/25 - AMBAC Insured
2,000 California State University, Systemwide Revenue Bonds, Series 11/15 at 100.00 AA- 2,012,260
2005C, 5.000%, 11/01/27 - MBIA Insured
----------------------------------------------------------------------------------------------------------------------------------
5,625 Total Education and Civic Organizations 5,514,274
----------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE - 5.4% (3.7% OF TOTAL INVESTMENTS)
3,000 California Health Facilities Financing Authority, Insured Revenue 8/09 at 100.50 AA- 2,864,010
Bonds, Sutter Health, Series1998A, 5.375%, 8/15/30 - MBIA Insured
724 California Statewide Communities Development Authority, Revenue 7/18 at 100.00 AAA 471,295
Bonds, Saint Joseph Health System, Trust 2554, 18.216%, 7/01/47 -
FSA Insured (IF)
1,500 California Statewide Community Development Authority, Certificates 8/09 at 101.00 AAA 1,541,730
of Participation, Sutter Health Obligated Group, Series 1999,
5.500%, 8/15/19 - FSA Insured
----------------------------------------------------------------------------------------------------------------------------------
5,224 Total Health Care 4,877,035
----------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 0.2% (0.2% OF TOTAL INVESTMENTS)
180 California Housing Finance Agency, Home Mortgage Revenue Bonds, 2/16 at 100.00 Aa2 178,502
Series 2006H, 5.750%,8/01/30 - FGIC Insured (Alternative Minimum
Tax)
100 California Housing Finance Agency, Single Family Mortgage Bonds II, 8/09 at 100.00 AA 100,070
Series 1997A-1, 6.000%,8/01/20 - MBIA Insured (Alternative
Minimum Tax)
----------------------------------------------------------------------------------------------------------------------------------
280 Total Housing/Single Family 278,572
----------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 33.1% (22.4% 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 AA- 1,980,512
1,250 5.250%, 8/01/25 - MBIA Insured 8/14 at 100.00 AA- 1,286,775
2,000 California, General Obligation Veterans Welfare Bonds, Series 6/09 at 100.00 AA- 1,843,260
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 AA- 2,727,628
1,775 5.250%, 9/01/22 - FGIC Insured 9/14 at 100.00 AA- 1,872,714
565 Fontana Unified School District, San Bernardino County, California, 8/18 at 100.00 AAA 612,087
General Obligation Bonds, Trust 2668, 14.602%, 8/01/28 - FSA
Insured (IF)
1,225 Fresno Unified School District, Fresno County, California, General 2/13 at 103.00 AA- 1,415,671
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 AA- 1,210,550
General Obligation Bonds, Series2004, 5.000%, 8/01/21 - FGIC
Insured
31
NPC | Nuveen Insured California Premium Income Municipal Fund, Inc. (continued)
| Portfolio of INVESTMENTS February 28, 2009
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
----------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL (continued)
$ 3,000 Pomona Unified School District, Los Angeles County, California, 8/11 at 103.00 AA- $ 3,352,680
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 AA- 160,082
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 Aa3 3,012,750
California, General Obligation Bonds, Series 2005, 5.000%,
7/01/27 - MBIA Insured
San Diego Unified School District, San Diego County, California,
General Obligation Bonds, Election of 1998, Series 2001C:
1,335 5.000%, 7/01/21 - FSA Insured 7/11 at 102.00 AAA 1,436,647
3,500 5.000%, 7/01/22 - FSA Insured 7/11 at 102.00 AAA 3,766,490
4,895 5.000%, 7/01/23 - FSA Insured 7/11 at 102.00 AAA 5,267,705
----------------------------------------------------------------------------------------------------------------------------------
28,355 Total Tax Obligation/General 29,945,551
----------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 35.9% (24.3% OF TOTAL INVESTMENTS)
1,000 Brea and Olinda Unified School District, Orange County, California, 8/11 at 101.00 AAA 1,004,170
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 AA- 1,267,500
1,615 5.000%, 12/01/21 - AMBAC Insured 12/13 at 100.00 AA- 1,651,580
195 Capistrano Unified School District, Orange County, California, 9/15 at 100.00 AA- 174,944
Special Tax Bonds, Community Facilities District, Series 2005,
5.000%, 9/01/24 - FGIC Insured
595 Chino Redevelopment Agency, California, Merged Chino Redevelopment 9/16 at 101.00 A 458,156
Project Area Tax Allocation Bonds, Series 2006, 5.000%, 9/01/38 -
AMBAC Insured
1,900 Corona-Norco Unified School District, Riverside County, California, 9/12 at 100.00 A 1,826,185
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 A 4,447,750
Department of Public Services Facility Phase II, Series 2001,
5.250%, 1/01/34 - AMBAC Insured
2,400 Golden State Tobacco Securitization Corporation, California, 6/15 at 100.00 AAA 1,848,214
Enhanced Tobacco Settlement Revenue Bonds, Drivers Trust 2091,
11.707%, 6/01/45 - AGC Insured (IF)
1,000 Hesperia Public Financing Authority, California, Redevelopment and 9/17 at 100.00 Baa1 799,940
Housing Projects Tax Allocation Bonds, Series 2007A, 5.000%,
9/01/37 - SYNCORA GTY Insured
435 Indian Wells Redevelopment Agency, California, Tax Allocation 9/13 at 100.00 A 436,618
Bonds, Consolidated Whitewater Project Area, Series 2003A,
5.000%, 9/01/20 - AMBAC Insured
345 Los Angeles Community Redevelopment Agency, California, Lease 9/15 at 100.00 A2 291,549
Revenue Bonds, Manchester Social Services Project, Series 2005,
5.000%, 9/01/37 - AMBAC Insured
895 Los Angeles Community Redevelopment Agency, California, Tax 12/14 at 100.00 AAA 898,312
Allocation Bonds, Bunker Hill Project, Series 2004A, 5.000%,
12/01/20 - FSA Insured
1,500 Los Angeles, California, Municipal Improvement Corporation, Lease 1/17 at 100.00 AA- 1,375,725
Revenue Bonds, Police Headquarters, Series 2006A, 4.750%,
1/01/31 - FGIC Insured
3,150 Moreno Valley Community Redevelopment Agency, California, Tax 8/17 at 100.00 A 2,652,426
Allocation Bonds, Series 2007A, 5.000%, 8/01/38 - AMBAC Insured
7,000 Rancho Cucamonga Redevelopment Agency, California, Housing 9/17 at 100.00 AA- 5,798,520
Set-Aside Tax Allocation Bonds, Series 2007A, 5.000%, 9/01/34 -
MBIA Insured
165 Rialto Redevelopment Agency, California, Tax Allocation Bonds, 9/15 at 100.00 A- 140,719
Merged Project Area, Series2005A, 5.000%, 9/01/35 - SYNCORA GTY
Insured
32
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
----------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED (continued)
$ 205 Roseville, California, Certificates of Participation, Public 8/13 at 100.00 A+ $ 196,134
Facilities, Series 2003A, 5.000%,8/01/25 - AMBAC Insured
1,500 San Jose Redevelopment Agency, California, Tax Allocation Bonds, 8/15 at 100.00 AA- 1,329,210
Merged Project Area, Series2005A, 5.000%, 8/01/28 - MBIA Insured
3,565 Sweetwater Union High School District Public Financing Authority, 9/15 at 100.00 AAA 3,553,093
California, Special Tax Revenue Bonds, Series 2005A, 5.000%,
9/01/25 - FSA Insured
2,805 Yucaipa-Calimesa Joint Unified School District, San Bernardino 10/11 at 100.00 AA- 2,330,310
County, California, General Obligation Refunding Bonds, Series
2001A, 5.000%, 10/01/31 - MBIA Insured
----------------------------------------------------------------------------------------------------------------------------------
36,485 Total Tax Obligation/Limited 32,481,055
----------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 2.6% (1.8% OF TOTAL INVESTMENTS)
2,400 San Diego Unified Port District, California, Revenue Bonds, Series 9/14 at 100.00 AA- 2,333,976
2004B, 5.000%, 9/01/29 - MBIA Insured
----------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 44.9% (30.4% OF TOTAL INVESTMENTS) (4)
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 8,459,350
800 5.750%, 3/01/27 (Pre-refunded 3/01/10) - MBIA Insured 3/10 at 101.00 AAA 846,464
2,500 Fresno Unified School District, Fresno County, California, General 8/09 at 102.00 AAA 2,583,075
Obligation Bonds, Series2001A, 5.125%, 8/01/26 - FSA Insured (ETM)
6,000 Huntington Park Redevelopment Agency, California, Single Family No Opt. Call AAA 8,564,040
Residential Mortgage Revenue Refunding Bonds, Series 1986A,
8.000%, 12/01/19 (ETM)
5,135 Palmdale Community Redevelopment Agency, California, Single Family No Opt. Call AAA 6,969,376
Restructured Mortgage Revenue Bonds, Series 1986A, 8.000%,
3/01/16 (Alternative Minimum Tax) (ETM)
6,220 Riverside County, California, GNMA Mortgage-Backed Securities No Opt. Call AAA 8,972,038
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, Series No Opt. Call Aaa 1,985,059
1985A, 9.500%,10/01/13 (ETM)
2,150 Santa Clara Valley Water District, California, Water Utility 6/10 at 100.00 AA (4) 2,263,929
System Revenue Bonds, Series2000A, 5.125%, 6/01/31
(Pre-refunded 6/01/10) - FGIC Insured
----------------------------------------------------------------------------------------------------------------------------------
32,285 Total U.S. Guaranteed 40,643,331
----------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 0.2% (0.2% OF TOTAL INVESTMENTS)
345 Merced Irrigation District, California, Electric System Revenue 9/15 at 100.00 N/R 246,820
Bonds, Series 2005, 5.125%,9/01/31 - SYNCORA GTY Insured
----------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 19.1% (12.9% OF TOTAL INVESTMENTS)
5,255 El Dorado Irrigation District, California, Water and Sewer 3/13 at 100.00 AA- 5,277,334
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 AA- 1,221,230
Certificates of Participation, Series 2004A, 5.000%, 3/01/21 -
FGIC Insured
235 Healdsburg Public Financing Authority, California, Wastewater 4/16 at 100.00 AA- 208,581
Revenue Bonds, Series 2006, 5.000%, 4/01/36 - MBIA Insured
5,000 Indio Water Authority, California, Water Revenue Bonds, Series 4/16 at 100.00 A+ 4,381,000
2006, 5.000%, 4/01/31 - AMBAC Insured
220 Marina Coast Water District, California, Enterprise Certificate of 6/16 at 100.00 AA- 192,658
Participation, Series 2006, 5.000%, 6/01/31 - MBIA Insured
33
NPC | Nuveen Insured California Premium Income Municipal Fund, Inc. (continued)
| Portfolio of INVESTMENTS February 28, 2009
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
-----------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER (continued)
$ 1,500 Placerville Public Financing Authority, California, Wastewater 9/16 at 100.00 N/R $ 1,167,540
System Refinancing and Improvement Project Revenue Bonds,
Series 2006, 5.000%, 9/01/34 - SYNCORA GTY Insured
3,400 San Diego Public Facilities Financing Authority, California, 5/09 at 100.00 AA- 3,402,516
Sewerage Revenue Bonds, Series1997A, 5.250%, 5/15/22 - FGIC
Insured
1,345 West Basin Municipal Water District, California, Revenue 8/13 at 100.00 AA- 1,398,329
Certificates of Participation, Series 2003A, 5.000%, 8/01/20 -
MBIA Insured
-----------------------------------------------------------------------------------------------------------------------------------
18,185 Total Water and Sewer 17,249,188
-----------------------------------------------------------------------------------------------------------------------------------
$ 129,184 Total Investments (cost $132,699,261) - 147.5% 133,569,802
=============----------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 2.2% 1,961,536
-------------------------------------------------------------------------------------------------------------------
Auction Rate Preferred Shares, at Liquidation Value - (49.7)% (5) (45,000,000)
-------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 90,531,338
===================================================================================================================
Primarily all of the Fund's net assets (including net assets attributable
to Auction Rate Preferred shares) are invested in municipal securities
that guarantee the timely payment of principal and interest. See Notes to
Financial Statements, Footnote 1 - Insurance, for more information.
(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 Group ("Standard &
Poor's") or Moody's Investor Service, Inc. ("Moody's") rating. Ratings
below BBB by Standard & Poor's or Baa by Moody's are considered to be
below investment grade.
The Portfolio of Investments may reflect the ratings on certain bonds
insured by ACA, AGC, AMBAC, FGIC, FSA, MBIA, RAAI and SYNCORA as of
February 28, 2009. Please see the Portfolio Manager's Commentary for an
expanded discussion of the affect on the Fund of changes to the ratings of
certain bonds in the portfolio resulting from changes to the ratings of
the underlying insurers both during the period and after period end.
(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) Auction Rate Preferred Shares, at Liquidation Value as a percentage of
Total Investments is 33.7%.
N/R Not rated.
(ETM) Escrowed to maturity.
(IF) Inverse floating rate investment.
See accompanying notes to financial statements.
34
NCL | Nuveen Insured California Premium Income Municipal Fund 2, Inc.
| Portfolio of INVESTMENTS February 28, 2009
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
----------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 6.2% (4.0% OF TOTAL
INVESTMENTS)
$ 620 California Educational Facilities Authority, Revenue Bonds, 11/10 at 100.00 A2 $ 632,127
University of the Pacific, Series2000, 5.875%, 11/01/20 - MBIA
Insured
2,125 California Educational Facilities Authority, Student Loan Revenue 3/09 at 101.00 Baa1 1,991,019
Bonds, Cal Loan Program, Series 2001A, 5.400%, 3/01/21 - MBIA
Insured (Alternative Minimum Tax)
1,500 California State University, Systemwide Revenue Bonds, Series 5/15 at 100.00 Aa3 1,510,995
2005A, 5.000%, 11/01/25 - AMBAC Insured
6,000 University of California, Revenue Bonds, Multi-Purpose Projects, 5/13 at 100.00 AA 6,019,920
Series 2003A, 5.000%, 5/15/27 - AMBAC Insured (UB)
----------------------------------------------------------------------------------------------------------------------------------
10,245 Total Education and Civic Organizations 10,154,061
----------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE - 2.0% (1.3% OF TOTAL INVESTMENTS)
1,410 California Statewide Communities Development Authority, Revenue 7/18 at 100.00 AAA 917,854
Bonds, Saint Joseph Health System, Trust 2554, 18.216%, 7/01/47 -
FSA Insured (IF)
2,000 The Regents of the University of California, Medical Center Pooled 5/15 at 101.00 Aa2 1,748,480
Revenue Bonds, Series 2007A, 4.500%, 5/15/37 - MBIA Insured
650 University of California, Hospital Revenue Bonds, UCLA Medical 5/12 at 101.00 A 641,680
Center, Series 2004A, 5.500%, 5/15/18 - AMBAC Insured
----------------------------------------------------------------------------------------------------------------------------------
4,060 Total Health Care 3,308,014
----------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 2.2% (1.4% OF TOTAL INVESTMENTS)
345 California Housing Finance Agency, Home Mortgage Revenue Bonds, 2/16 at 100.00 Aa2 342,130
Series 2006H, 5.750%, 8/01/30 - FGIC Insured (Alternative
Minimum Tax)
2,170 California Housing Finance Agency, Home Mortgage Revenue Bonds, 2/16 at 100.00 AA- 2,129,443
Series 2006K, 5.500%, 2/01/42 - AMBAC Insured (Alternative
Minimum Tax)
1,100 California Housing Finance Agency, Single Family Mortgage Bonds, 8/09 at 100.00 AA 1,102,794
Series 1997C-2-II, 5.625%, 8/01/20 - MBIA Insured (Alternative
Minimum Tax)
----------------------------------------------------------------------------------------------------------------------------------
3,615 Total Housing/Single Family 3,574,367
----------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 25.1% (16.0% OF TOTAL INVESTMENTS)
1,460 ABC Unified School District, Los Angeles County, California, 8/10 at 101.00 AA- 1,549,994
General Obligation Bonds, Series 2000B, 5.750%, 8/01/16 - FGIC
Insured
1,425 Bassett Unified School District, Los Angeles County, California, 8/16 at 100.00 AA- 1,417,690
General Obligation Bonds, Series 2006B, 5.250%, 8/01/30 - FGIC
Insured
3,000 California State, General Obligation Bonds, Series 2006, 4.500%, 9/16 at 100.00 AAA 2,545,590
9/01/36 - FSA Insured
4,400 California, General Obligation Bonds, Series 2003, 5.000%, 2/01/31 - 2/13 at 100.00 AA- 4,148,276
MBIA Insured
3,000 California, General Obligation Veterans Welfare Bonds, Series 6/09 at 100.00 AA- 2,764,890
2001BZ, 5.375%, 12/01/24 - MBIA Insured (Alternative Minimum
Tax)
3,200 Coast Community College District, Orange County, California, 8/18 at 100.00 AAA 2,465,728
General Obligation Bonds, Series 2006C, 0.000%, 8/01/31 - FSA
Insured
1,105 Fontana Unified School District, San Bernardino County, 8/18 at 100.00 AAA 1,197,091
California, General Obligation Bonds, Trust 2668, 14.602%,
8/01/28 - FSA Insured (IF)
35
NCL | Nuveen Insured California Premium Income Municipal Fund 2, Inc.
| (continued)
| Portfolio of INVESTMENTS February 28, 2009
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
----------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL (continued)
$ 1,255 Los Angeles Community College District, Los Angeles County, 8/15 at 100.00 AAA $ 1,281,079
California, General Obligation Bonds, Series 2005A, 5.000%,
8/01/24 - FSA Insured
4,000 Los Angeles Unified School District, Los Angeles County, 7/17 at 100.00 AAA 3,930,160
California, General Obligation Bonds, Series 2007A, 4.500%,
7/01/24 - 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 (UB) 8/14 at 102.00 AAA 2,241,601
3,250 5.000%, 8/01/22 - FSA Insured (UB) 8/14 at 102.00 AAA 3,484,260
3,395 5.000%, 8/01/23 - FSA Insured (UB) 8/14 at 102.00 AAA 3,597,783
1,270 Merced City School District, Merced County, California, General 8/13 at 100.00 AA- 1,310,627
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 AA- 305,156
California, General Obligation Bonds, Series 2006B, 5.000%,
8/01/27 - FGIC Insured
2,500 Sacramento City Unified School District, Sacramento County, 7/15 at 100.00 Aa3 2,510,625
California, General Obligation Bonds, Series 2005, 5.000%,
7/01/27 - MBIA Insured
1,125 San Diego Unified School District, California, General Obligation No Opt. Call AA 623,396
Bonds, Election of 1998, Series 1999A, 0.000%, 7/01/21 - FGIC
Insured
2,000 San Francisco Community College District, California, General 6/10 at 102.00 Aa3 1,943,460
Obligation Bonds, Series 2002A, 5.000%, 6/15/26 - FGIC Insured
1,000 San Ramon Valley Unified School District, Contra Costa County, 8/14 at 100.00 AAA 1,020,430
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 AA- 2,508,301
General Obligation Bonds, Series 2004A, 5.000%, 8/01/21 - FGIC
Insured
----------------------------------------------------------------------------------------------------------------------------------
42,245 Total Tax Obligation/General 40,846,137
----------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 60.6% (38.8% 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 3,209,277
8,000 0.000%, 9/01/21 - FSA Insured No Opt. Call AAA 3,964,960
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 AA- 1,582,524
1,780 5.000%, 12/01/23 - AMBAC Insured 12/13 at 100.00 AA- 1,796,518
3,725 California State Public Works Board, Lease Revenue Bonds, 1/16 at 100.00 A 4,102,790
Department of Corrections & Rehabilitation, Series 2005J,
5.000%, 1/01/17 - AMBAC Insured
380 Capistrano Unified School District, Orange County, California, 9/15 at 100.00 AA- 340,917
Special Tax Bonds, Community Facilities District, Series 2005,
5.000%, 9/01/24 - FGIC Insured
6,000 El Monte, California, Senior Lien Certificates of Participation, 1/11 at 100.00 A 5,967,840
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 A 7,175,945
Revenue Bonds, North Fontana Redevelopment Project, Series
2005A, 5.000%, 10/01/32 - AMBAC Insured
4,695 Golden State Tobacco Securitization Corporation, California, 6/15 at 100.00 AAA 3,615,570
Enhanced Tobacco Settlement Revenue Bonds, Drivers Trust 2091,
11.707%, 6/01/45 - AGC Insured (IF)
2,000 Golden State Tobacco Securitization Corporation, California, 6/15 at 100.00 A 513,660
Enhanced Tobacco Settlement Revenue Bonds, Residual Series
2040, 9.080%, 6/01/45 - FGIC Insured (IF)
36
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
----------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED (continued)
Golden State Tobacco Securitization Corporation, California,
Tobacco Settlement Asset-Backed Revenue Bonds, Series 2005A:
$ 20,110 5.000%, 6/01/35 - FGIC Insured 6/15 at 100.00 A $ 16,267,783
2,345 5.000%, 6/01/38 - FGIC Insured 6/15 at 100.00 A 1,853,723
7,500 5.000%, 6/01/45 - FGIC Insured 6/15 at 100.00 A 5,641,875
1,255 Hesperia Public Financing Authority, California, Redevelopment and 9/17 at 100.00 Baa1 1,003,925
Housing Projects Tax Allocation Bonds, Series 2007A, 5.000%,
9/01/37 - SYNCORA GTY Insured
1,700 Hesperia Unified School District, San Bernardino County, 2/17 at 100.00 A 1,316,072
California, Certificates of Participation, Capital Improvement,
Series 2007, 5.000%, 2/01/41 - AMBAC Insured
1,810 Kern County Board of Education, California, Certificates of 5/10 at 100.00 AA- 1,810,272
Participation Refunding, Series 1998A, 5.200%, 5/01/28 - MBIA
Insured
5,000 La Quinta Redevelopment Agency, California, Tax Allocation 3/09 at 101.00 A+ 4,613,850
Refunding Bonds, Redevelopment Project Area 1, Series 1998,
5.200%, 9/01/28 - AMBAC Insured
2,185 Los Angeles Community Redevelopment Agency, California, Lease 9/15 at 100.00 A2 1,846,478
Revenue Bonds, Manchester Social Services Project, Series 2005,
5.000%, 9/01/37 - AMBAC Insured
1,000 Los Angeles Community Redevelopment Agency, California, Tax 12/14 at 100.00 AAA 1,003,700
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 1,341,213
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, Municipal 6/13 at 100.00 AA- 3,810,680
Improvement Corporation, Series 2003AW, 5.000%, 6/01/33 - AMBAC
Insured
3,000 Los Angeles, California, Municipal Improvement Corporation, Lease 1/17 at 100.00 AA- 2,751,450
Revenue Bonds, Police Headquarters, Series 2006A, 4.750%,
1/01/31 - FGIC Insured
6,120 Moreno Valley Community Redevelopment Agency, California, Tax 8/17 at 100.00 A 5,153,285
Allocation Bonds, Series 2007A, 5.000%, 8/01/38 - AMBAC Insured
4,140 Plumas County, California, Certificates of Participation, Capital 6/13 at 101.00 A 3,462,862
Improvement Program, Series 2003A, 5.000%, 6/01/28 - AMBAC
Insured
390 Poway Redevelopment Agency, California, Tax Allocation Refunding 12/10 at 102.00 AA 340,345
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 A- 277,173
Merged Project Area, Series 2005A, 5.000%, 9/01/35 - SYNCORA
GTY Insured
1,000 Rocklin Unified School District, Placer County, California, 9/13 at 100.00 AA- 941,030
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 A+ 387,484
Facilities, Series 2003A, 5.000%, 8/01/25 - AMBAC Insured
5,000 San Bernardino Joint Powers Financing Authority, California, 9/09 at 102.00 AA- 5,186,050
Certificates of Participation Refunding, Police Station
Financing Project, Series 1999, 5.500%, 9/01/20 - MBIA Insured
1,500 San Jose Redevelopment Agency, California, Tax Allocation Bonds, 8/15 at 100.00 AA- 1,329,210
Merged Project Area, Series 2005A, 5.000%, 8/01/28 - MBIA
Insured
5,510 Sweetwater Union High School District Public Financing Authority, 9/15 at 100.00 AAA 5,284,586
California, Special Tax Revenue Bonds, Series 2005A, 5.000%,
9/01/28 - FSA Insured
1,020 Washington Unified School District, Yolo County, California, 8/17 at 100.00 A 832,442
Certificates of Participation, Series 2007, 5.125%, 8/01/37 -
AMBAC Insured
----------------------------------------------------------------------------------------------------------------------------------
118,090 Total Tax Obligation/Limited 98,725,489
----------------------------------------------------------------------------------------------------------------------------------
37
NCL | Nuveen Insured California Premium Income Municipal Fund 2, Inc.
| (continued)
| Portfolio of INVESTMENTS February 28, 2009
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
----------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 7.2% (4.6% OF TOTAL INVESTMENTS)
$ 6,500 Foothill/Eastern Transportation Corridor Agency, California, Toll 1/10 at 65.32 AA $ 3,203,720
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 A1 4,249,640
Revenue Bonds, 91 Express Lanes Project, Series 2003A, 5.000%,
8/15/18 - AMBAC Insured
5,000 San Francisco Airports Commission, California, Revenue Refunding 5/11 at 100.00 AA- 4,193,600
Bonds, San Francisco International Airport, Second Series 2001,
Issue 27A, 5.250%, 5/01/31 - MBIA Insured (Alternative Minimum
Tax)
----------------------------------------------------------------------------------------------------------------------------------
15,500 Total Transportation 11,646,960
----------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 21.2% (13.5% OF TOTAL INVESTMENTS) (4)
1,380 California Educational Facilities Authority, Revenue Bonds, 11/10 at 100.00 A2 (4) 1,490,234
University of the Pacific, Series2000, 5.875%, 11/01/20
(Pre-refunded 11/01/10) - 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 8,459,350
1,900 5.750%, 3/01/27 (Pre-refunded 3/01/10) - MBIA Insured 3/10 at 101.00 AAA 2,010,352
2,085 Central Unified School District, Fresno County, California, 3/09 at 100.00 A (4) 2,125,074
General Obligation Bonds, Series1993, 5.625%, 3/01/18 - AMBAC
Insured (ETM)
3,000 Escondido Union High School District, San Diego County, 5/09 at 100.00 AA (4) 3,023,610
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 1,100,390
1,160 5.125%, 8/01/22 - FSA Insured (ETM) 8/09 at 102.00 AAA 1,198,547
1,220 5.125%, 8/01/23 - FSA Insured (ETM) 8/09 at 102.00 AAA 1,260,541
1,500 Hacienda La Puente Unified School District, Los Angeles County, 8/10 at 101.00 AA (4) 1,605,615
California, General Obligation Bonds, Series 2000A, 5.250%,
8/01/25 (Pre-refunded 8/01/10) - MBIA 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 1,168,210
1,000 5.250%, 8/01/22 (Pre-refunded 8/01/14) - FSA Insured 8/14 at 100.00 AAA 1,168,210
1,610 Poway Redevelopment Agency, California, Tax Allocation Refunding 12/10 at 102.00 AA (4) 1,775,750
Bonds, Paguay Redevelopment Project, Series 2000, 5.750%,
6/15/33 (Pre-refunded 12/15/10) - MBIA Insured
4,320 Riverside County, California, GNMA Mortgage-Backed Securities No Opt. Call AAA 5,928,811
Program Single Family Mortgage Revenue Bonds, Series 1987B,
8.625%, 5/01/16 (Alternative Minimum Tax) (ETM)
1,000 Sacramento County Sanitation District Financing Authority, 12/10 at 101.00 AA (4) 1,087,030
California, Revenue Bonds, Series 2000A, 5.500%, 12/01/20
(Pre-refunded 12/01/10) - AMBAC Insured
905 University of California, Hospital Revenue Bonds, UCLA Medical 5/12 at 101.00 A (4) 1,026,252
Center, Series 2004A, 5.500%, 5/15/18 (Pre-refunded 5/15/12) -
AMBAC Insured
----------------------------------------------------------------------------------------------------------------------------------
31,140 Total U.S. Guaranteed 34,427,976
----------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 8.2% (5.3% OF TOTAL INVESTMENTS)
3,740 California Pollution Control Financing Authority, Revenue 9/09 at 101.00 AA- 3,376,734
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 N/R 479,331
Bonds, Series 2005, 5.125%, 9/01/31 - SYNCORA GTY Insured
100 Sacramento City Financing Authority, California, Capital 12/09 at 102.00 A 102,822
Improvement Revenue Bonds, Solid Waste and Redevelopment
Projects, Series 1999, 5.800%, 12/01/19 - AMBAC Insured
38
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
----------------------------------------------------------------------------------------------------------------------------------
UTILITIES (continued)
$ 1,950 Salinas Valley Solid Waste Authority, California, Revenue Bonds, 8/12 at 100.00 A $ 1,713,095
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 AA- 2,824,836
5,000 5.000%, 7/01/28 - MBIA Insured 7/13 at 100.00 AA- 4,902,500
----------------------------------------------------------------------------------------------------------------------------------
14,260 Total Utilities 13,399,318
----------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 23.6% (15.1% OF TOTAL INVESTMENTS)
2,975 Chino Basin Regional Finance Authority, California, Sewerage 8/09 at 100.00 AA- 2,986,037
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 AA- 1,985,740
Certificates of Participation, Series 2004A, 5.000%, 3/01/21 -
FGIC Insured
750 Fortuna Public Finance Authority, California, Water Revenue Bonds, 10/16 at 100.00 AAA 713,363
Series 2006, 5.000%,10/01/36 - FSA Insured
460 Healdsburg Public Financing Authority, California, Wastewater 4/16 at 100.00 AA- 408,287
Revenue Bonds, Series 2006, 5.000%, 4/01/36 - MBIA Insured
2,700 Los Angeles County Sanitation Districts Financing Authority, 10/13 at 100.00 AAA 2,809,890
California, Senior Revenue Bonds, Capital Projects, Series
2003A, 5.000%, 10/01/21 - FSA Insured
2,000 Los Angeles, California, Wastewater System Revenue Bonds, Series 6/15 at 100.00 AA 1,819,700
2005A, 4.500%, 6/01/29 - MBIA Insured
430 Marina Coast Water District, California, Enterprise Certificate of 6/16 at 100.00 AA- 376,560
Participation, Series 2006, 5.000%, 6/01/31 - MBIA Insured
12,000 Orange County Sanitation District, California, Certificates of 8/13 at 100.00 AAA 11,689,080
Participation, Series 2003, 5.000%, 2/01/33 - FGIC Insured (UB)
1,520 San Buenaventura, California, Water Revenue Certificates of 10/14 at 100.00 A 1,453,834
Participation, Series 2004, 5.000%, 10/01/25 - AMBAC Insured
1,000 San Diego County Water Authority, California, Water Revenue 5/18 at 100.00 AAA 972,990
Certificates of Participation, Series 2008A, 5.000%, 5/01/38 -
FSA Insured
3,675 San Dieguito Water District, California, Water Revenue Bonds, 10/14 at 100.00 AA+ 3,744,824
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 AA+ 1,471,091
445 5.000%, 2/01/20 - FGIC Insured 2/14 at 100.00 AA+ 462,127
465 5.000%, 2/01/21 - FGIC Insured 2/14 at 100.00 AA+ 477,949
2,500 West Basin Municipal Water District, California, Revenue 8/13 at 100.00 AA- 2,451,574
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 2,018,903
2,530 5.000%, 10/01/33 - FGIC Insured 10/13 at 100.00 AAA 2,512,163
----------------------------------------------------------------------------------------------------------------------------------
38,860 Total Water and Sewer 38,354,112
----------------------------------------------------------------------------------------------------------------------------------
$ 278,015 Total Investments (cost $261,746,670) - 156.3% 254,436,434
=============---------------------------------------------------------------------------------------------------------------------
Floating Rate Obligations - (12.3)% (20,060,000)
------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 5.0% 8,279,862
------------------------------------------------------------------------------------------------------------------
Auction Rate Preferred Shares, at Liquidation Value - (49.0)% (5) (79,825,000)
------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $162,831,296
==================================================================================================================
39
NCL | Nuveen Insured California Premium Income Municipal Fund 2, Inc.
| (continued)
| Portfolio of INVESTMENTS February 28, 2009
Investments in Derivatives
FORWARD SWAPS OUTSTANDING AT FEBRUARY 28, 2009:
FUND FIXED RATE UNREALIZED
NOTIONAL PAY/RECEIVE FLOATING RATE FIXED RATE PAYMENT EFFECTIVE TERMINATION APPRECIATION
COUNTERPARTY AMOUNT FLOATING RATE INDEX (ANNUALIZED) FREQUENCY DATE (6) DATE (DEPRECIATION)
------------------------------------------------------------------------------------------------------------------------------------
Goldman Sachs $12,000,000 Receive 3-Month USD-LIBOR 2.749% Semi-Annually 1/15/10 1/15/39 $1,751,141
====================================================================================================================================
Primarily all of the Fund's net assets (including net assets
aibutable to Auction Rate Preferred shares) are invested in municipal
securities that guarantee the timely payment of principal and
interest. See Notes to Financial Statements, Footnote 1 - Insurance,
for more information.
(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 Group
("Standard & Poor's") or Moody's Investor Service, Inc. ("Moody's")
rating. Ratings below BBB by Standard & Poor's or Baa by Moody's are
considered to be below investment grade.
The Portfolio of Investments may reflect the ratings on certain bonds
insured by ACA, AGC, AMBAC, FGIC, FSA, MBIA, RAAI and SYNCORA as of
February 28, 2009. Please see the Portfolio Manager's Commentary for
an expanded discussion of the affect on the Fund of changes to the
ratings of certain bonds in the portfolio resulting from changes to
the ratings of the underlying insurers both during the period and
after period end.
(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) Auction Rate Preferred Shares, at Liquidation Value as a percentage
of Total Investments is 31.4%.
(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.
(IF) Inverse floating rate investment.
(UB) Underlying bond of an inverse floating rate trust reflected as a
financing transaction pursuant to the provisions of SFAS No. 140.
USD-LIBOR United States Dollar-London Inter-Bank Offered Rate.
See accompanying notes to financial statements.
40
NCU | Nuveen California Premium Income Municipal Fund
| Portfolio of INVESTMENTS February 28, 2009
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
----------------------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES - 6.1% (3.8% OF TOTAL INVESTMENTS)
$ 1,500 California County Tobacco Securitization Agency, Tobacco 6/12 at 100.00 Baa3 $ 1,144,395
Settlement Asset-Backed Bonds, Alameda County Tobacco Asset
Securitization Corporation, Series 2002, 5.750%, 6/01/29
265 California County Tobacco Securitization Agency, Tobacco 6/15 at 100.00 BBB 230,306
Settlement Asset-Backed Bonds, Sonoma County Tobacco
Securitization Corporation, Series 2005, 4.250%, 6/01/21
3,210 California Statewide Financing Authority, Tobacco Settlement 5/12 at 100.00 Baa3 2,410,935
Asset-Backed Bonds, Pooled Tobacco Securitization Program,
Series 2002A, 5.625%, 5/01/29
1,350 Golden State Tobacco Securitization Corporation, California, 6/22 at 100.00 BBB 529,281
Enhanced Tobacco Settlement Asset-Backed Bonds, Series 2007A-2,
0.000%, 6/01/37
----------------------------------------------------------------------------------------------------------------------------------
6,325 Total Consumer Staples 4,314,917
----------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 6.7% (4.2% OF TOTAL
INVESTMENTS)
70 California Educational Facilities Authority, Revenue Bonds, 10/15 at 100.00 A3 58,760
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 43,299
60 5.000%, 11/01/25 11/15 at 100.00 A2 53,522
1,112 California State Public Works Board, Lease Revenue Bonds, 3/18 at 100.00 AA- 945,311
University of California Regents, Trust 1065, 8.969%, 3/01/33
(IF)
2,000 California State University, Systemwide Revenue Bonds, Series 11/15 at 100.00 AA- 2,012,260
2005C, 5.000%, 11/01/27 - MBIA Insured
1,500 University of California, Revenue Bonds, Multi-Purpose Projects, 5/13 at 100.00 AA 1,644,300
Series 2003A, 5.125%, 5/15/17 - AMBAC Insured (UB)
----------------------------------------------------------------------------------------------------------------------------------
4,787 Total Education and Civic Organizations 4,757,452
----------------------------------------------------------------------------------------------------------------------------------
ENERGY - 0.4% (0.3% OF TOTAL INVESTMENTS)
500 Virgin Islands Public Finance Authority, Revenue Bonds, Refinery 1/15 at 100.00 BBB 303,745
Project Hovensa LLC, Series 2007, 4.700%, 7/01/22 (Alternative
Minimum Tax)
----------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE - 24.8% (15.5% OF TOTAL INVESTMENTS)
4,705 California Health Facilities Financing Authority, Hospital Revenue 5/09 at 100.00 CCC 3,565,920
Bonds, Downey Community Hospital, Series 1993, 5.750%, 5/15/15
155 California Health Facilities Financing Authority, Revenue Bonds, 4/16 at 100.00 A+ 126,516
Kaiser Permanante System, Series 2006, 5.000%, 4/01/37
1,335 California Health Facilities Financing Authority, Revenue Bonds, 11/16 at 100.00 AA- 1,005,776
Sutter Health, Series 2008, Trust 3146, 12.371%, 11/15/46 (IF)
1,500 California Infrastructure Economic Development Bank, Revenue 8/11 at 102.00 A+ 1,358,280
Bonds, Kaiser Hospital Assistance LLC, Series 2001A, 5.550%,
8/01/31
685 California Municipal Financing Authority, Certificates of 2/17 at 100.00 Baa2 444,332
Participation, Community Hospitals of Central California,
Series 2007, 5.250%, 2/01/46
41
NCU | Nuveen California Premium Income Municipal Fund (continued)
| Portfolio of INVESTMENTS February 28, 2009
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
----------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE (continued)
$ 377 California Statewide Communities Development Authority, Revenue 7/18 at 100.00 AAA $ 245,086
Bonds, Saint Joseph Health System, Trust 2554, 18.216%, 7/01/47 -
FSA Insured (IF)
1,000 California Statewide Community Development Authority, Insured 10/17 at 100.00 A 812,840
Health Facility Revenue Bonds, Henry Mayo Newhall Memorial
Hospital, Series 2007A, 5.000%, 10/01/37
490 California Statewide Community Development Authority, Revenue 3/16 at 100.00 A+ 393,279
Bonds, Kaiser Permanante System, Series 2006, 5.000%, 3/01/41
730 California Statewide Community Development Authority, Revenue 8/16 at 100.00 A+ 635,414
Bonds, Kaiser Permanente System, Series 2001C, 5.250%, 8/01/31
1,000 California Statewide Community Development Authority, Revenue 4/17 at 100.00 A+ 780,270
Bonds, Kaiser Permanente System, Series 2007A, 4.750%, 4/01/33
3,000 California Statewide Community Development Authority, Revenue 8/19 at 100.00 AA 3,050,280
Bonds, Methodist Hospital Project, Series 2009, 6.750%, 2/01/38
2,100 California Statewide Community Development Authority, Revenue No Opt. Call A1 2,225,349
Bonds, Sherman Oaks Health System, Series 1998A, 5.000%,
8/01/22 - AMBAC Insured
1,690 California Statewide Community Development Authority, Revenue 11/15 at 100.00 AA- 1,441,114
Bonds, Sutter Health, Series 2005A, 5.000%, 11/15/43
760 Loma Linda, California, Hospital Revenue Bonds, Loma Linda 12/18 at 100.00 BBB 748,668
University Medical Center, Series 2008A, 8.250%, 12/01/38
1,000 The Regents of the University of California, Medical Center Pooled 5/15 at 101.00 Aa2 874,240
Revenue Bonds, Series 2007A, 4.500%, 5/15/37 - MBIA Insured
----------------------------------------------------------------------------------------------------------------------------------
20,527 Total Health Care 17,707,364
----------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 0.5% (0.3% OF TOTAL INVESTMENTS)
160 California Housing Finance Agency, Home Mortgage Revenue Bonds, 2/16 at 100.00 Aa2 158,669
Series 2006H, 5.750%, 8/01/30 - FGIC Insured (Alternative
Minimum Tax)
175 California Housing Finance Agency, Single Family Mortgage Bonds 8/09 at 100.00 AA 175,123
II, Series 1997A-1, 6.000%, 8/01/20 - MBIA Insured (Alternative
Minimum Tax)
15 California Rural Home Mortgage Finance Authority, Mortgage-Backed No Opt. Call AAA 15,296
Securities Program Single Family Mortgage Revenue Bonds, Series
1996C, 7.500%, 8/01/27 (Alternative Minimum Tax)
----------------------------------------------------------------------------------------------------------------------------------
350 Total Housing/Single Family 349,088
----------------------------------------------------------------------------------------------------------------------------------
INDUSTRIALS - 0.6% (0.4% OF TOTAL INVESTMENTS)
500 California Pollution Control Financing Authority, Solid Waste 1/16 at 102.00 BBB 415,200
Disposal Revenue Bonds, Waste Management Inc., Series 2002A,
5.000%, 1/01/22 (Alternative Minimum Tax)
----------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 22.2% (13.8% OF TOTAL INVESTMENTS)
1,500 California, General Obligation Bonds, Series 2003, 5.000%, 2/01/31 - 2/13 at 100.00 AA- 1,414,185
MBIA Insured
4,000 California, General Obligation Veterans Welfare Bonds, Series 6/09 at 100.00 AA- 3,498,800
1999BR, 5.300%, 12/01/29 (Alternative Minimum Tax)
6,000 Hartnell Community College District, California, General 6/16 at 100.00 AAA 5,993,640
Obligation Bonds, Series 2006B, 5.000%, 6/01/29 - FSA Insured (UB)
3,000 Pomona Unified School District, Los Angeles County, California, 8/11 at 103.00 AA- 3,369,240
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 AA- 15,974
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 AA- 135,069
California, General Obligation Bonds, Series 2006B, 5.000%,
8/01/27 - FGIC Insured
1,355 San Jose-Evergreen Community College District, Santa Clara County, 9/15 at 100.00 Aa2 1,375,284
California, General Obligation Bonds, Series 2005A, 5.000%,
9/01/25 - MBIA Insured
----------------------------------------------------------------------------------------------------------------------------------
16,005 Total Tax Obligation/General 15,802,192
----------------------------------------------------------------------------------------------------------------------------------
42
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
----------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 48.2% (30.1% OF TOTAL INVESTMENTS)
$ 1,000 Bell Community Redevelopment Agency, California, Tax Allocation 10/13 at 100.00 BBB+ $ 832,050
Bonds, Bell Project Area, Series 2003, 5.625%, 10/01/33 - RAAI
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 AA- 1,722,408
1,865 5.000%, 12/01/24 - AMBAC Insured 12/13 at 100.00 AA- 1,873,635
5,920 California State Public Works Board, Lease Revenue Bonds, 11/09 at 101.00 A 6,125,957
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, 5.000%, 7/14 at 100.00 A+ 962,893
7/01/15
165 Capistrano Unified School District, Orange County, California, 9/15 at 100.00 AA- 148,030
Special Tax Bonds, Community Facilities District, Series 2005,
5.000%, 9/01/24 - FGIC Insured
500 Chino Redevelopment Agency, California, Merged Chino Redevelopment 9/16 at 101.00 A 385,005
Project Area Tax Allocation Bonds, Series 2006, 5.000%, 9/01/38 -
AMBAC Insured
4,350 Golden State Tobacco Securitization Corporation, California, 6/15 at 100.00 A 3,272,288
Tobacco Settlement Asset-Backed Revenue Bonds, Series 2005A,
5.000%, 6/01/45 - AMBAC Insured
Irvine, California, Unified School District, Community Facilities
District Special Tax Bonds, Series 2006A:
80 5.000%, 9/01/26 9/16 at 100.00 N/R 63,549
185 5.125%, 9/01/36 9/16 at 100.00 N/R 135,235
3,500 Livermore Redevelopment Agency, California, Tax Allocation Revenue 8/11 at 100.00 AA- 3,110,835
Bonds, Livermore Redevelopment Project Area, Series 2001A,
5.000%, 8/01/26 - MBIA Insured
310 Los Angeles Community Redevelopment Agency, California, Lease 9/15 at 100.00 A2 261,972
Revenue Bonds, Manchester Social Services Project, Series 2005,
5.000%, 9/01/37 - AMBAC Insured
2,000 Los Angeles, California, Municipal Improvement Corporation, Lease 1/17 at 100.00 AA- 1,834,300
Revenue Bonds, Police Headquarters, Series 2006A, 4.750%,
1/01/31 - FGIC Insured
3,230 Murrieta Redevelopment Agency, California, Tax Allocation Bonds, 8/15 at 100.00 AA- 2,755,158
Series 2005, 5.000%, 8/01/35 - MBIA Insured
1,000 Poway, California, Community Facilities District 88-1, Special Tax 5/09 at 100.00 N/R 1,011,500
Refunding Bonds, Parkway Business Centre, Series 1998, 6.500%,
8/15/09
155 Rialto Redevelopment Agency, California, Tax Allocation Bonds, 9/15 at 100.00 A- 132,190
Merged Project Area, Series 2005A, 5.000%, 9/01/35 - SYNCORA
GTY Insured
190 Roseville, California, Certificates of Participation, Public 8/13 at 100.00 A+ 181,783
Facilities, Series 2003A, 5.000%, 8/01/25 - AMBAC Insured
1,500 Sacramento City Financing Authority, California, Lease Revenue No Opt. Call AA 1,641,045
Refunding Bonds, Series 1993A, 5.400%, 11/01/20 - MBIA Insured
3,000 Sacramento City Financing Authority, California, Lease Revenue No Opt. Call AA- 3,282,090
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 3/09 at 101.00 Baa3 1,373,085
1,000 5.800%, 9/01/27 3/09 at 101.00 Baa3 807,030
325 San Mateo Union High School District, San Mateo County, 12/17 at 100.00 A 272,886
California, Certificates of Participation, Phase 1, Series
2007A, 5.000%, 12/15/30 - AMBAC Insured
2,050 Santa Barbara County, California, Certificates of Participation, 12/11 at 102.00 AA+ 2,195,407
Series 2001, 5.250%, 12/01/19 - AMBAC Insured
----------------------------------------------------------------------------------------------------------------------------------
36,425 Total Tax Obligation/Limited 34,380,331
----------------------------------------------------------------------------------------------------------------------------------
43
NCU | Nuveen California Premium Income Municipal Fund (continued)
| Portfolio of INVESTMENTS February 28, 2009
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
----------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 3.3% (2.1% OF TOTAL INVESTMENTS)
$ 780 Bay Area Toll Authority, California, Revenue Bonds, San Francisco 4/16 at 100.00 AA $ 768,690
Bay Area Toll Bridge, Series 2006F, 5.000%, 4/01/31 (UB)
220 Bay Area Toll Authority, California, Revenue Bonds, San Francisco 4/18 at 100.00 AA 213,699
Bay Area Toll Bridge, Series 2008, Trust 3211, 12.855%, 4/01/39 (IF)
2,000 Foothill/Eastern Transportation Corridor Agency, California, Toll 1/10 at 100.00 BBB- 1,402,260
Road Revenue Bonds, Series 1995A, 5.000%, 1/01/35
----------------------------------------------------------------------------------------------------------------------------------
3,000 Total Transportation 2,384,649
----------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 16.9% (10.5% OF TOTAL INVESTMENTS) (4)
2,250 California Department of Water Resources, Power Supply Revenue 5/12 at 101.00 Aaa 2,527,718
Bonds, Series 2002A, 5.125%, 5/01/18 (Pre-refunded 5/01/12)
3,000 California Infrastructure Economic Development Bank, First Lien No Opt. Call AAA 3,345,600
Revenue Bonds, San Francisco Bay Area Toll Bridge, Series
2003A, 5.000%, 7/01/22 - FSA Insured (ETM)
3,495 Orange County Sanitation District, California, Certificates of 8/13 at 100.00 AAA 4,024,912
Participation, Series 2003, 5.250%, 2/01/21 (Pre-refunded
8/01/13) - FGIC Insured
2,000 Puerto Rico, General Obligation and Public Improvement Bonds, 7/10 at 100.00 AA- (4) 2,128,340
Series 2000, 5.750%, 7/01/21 (Pre-refunded 7/01/10) - MBIA
Insured
----------------------------------------------------------------------------------------------------------------------------------
10,745 Total U.S. Guaranteed 12,026,570
----------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 8.3% (5.2% OF TOTAL INVESTMENTS)
890 Long Beach Bond Finance Authority, California, Natural Gas No Opt. Call A+ 656,927
Purchase Revenue Bonds, Series 2007A, 5.500%, 11/15/37
275 Los Angeles Department of Water and Power, California, Power 7/13 at 100.00 AA- 285,299
System Revenue Bonds, Series 2003A-2, 5.000%, 7/01/21 - MBIA
Insured
295 Merced Irrigation District, California, Electric System Revenue 9/15 at 100.00 N/R 211,049
Bonds, Series 2005, 5.125%, 9/01/31 - SYNCORA GTY Insured
4,580 Sacramento Municipal Utility District, California, Electric 8/12 at 100.00 AAA 4,728,209
Revenue Refunding Bonds, Series 2002Q, 5.250%, 8/15/20 - FSA
Insured
----------------------------------------------------------------------------------------------------------------------------------
6,040 Total Utilities 5,881,484
----------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 11.0% (6.8% OF TOTAL INVESTMENTS)
1,125 Burbank, California, Wastewater System Revenue Bonds, Series 6/14 at 100.00 AA- 1,143,112
2004A, 5.000%, 6/01/23 - AMBAC Insured
5,000 Culver City, California, Wastewater Facilities Revenue Refunding 9/09 at 102.00 AA 5,053,399
Bonds, Series 1999A, 5.700%, 9/01/29 - FGIC Insured
205 Healdsburg Public Financing Authority, California, Wastewater 4/16 at 100.00 AA- 181,953
Revenue Bonds, Series 2006, 5.000%, 4/01/36 - MBIA Insured
1,795 Woodbridge Irrigation District, California, Certificates of 7/13 at 100.00 BBB+ 1,435,478
Participation, Water Systems Project, Series 2003, 5.500%,
7/01/33
----------------------------------------------------------------------------------------------------------------------------------
8,125 Total Water and Sewer 7,813,942
----------------------------------------------------------------------------------------------------------------------------------
$ 113,329 Total Long-Term Investments (cost $111,432,207) - 149.0% 106,136,934
=============---------------------------------------------------------------------------------------------------------------------
44
PRINCIPAL
AMOUNT (000) DESCRIPTION (1) RATINGS (3) VALUE
-----------------------------------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS - 11.2% (7.0% OF TOTAL INVESTMENTS)
$ 8,000 California, General Obligation Bonds, Variable Rate Demand Obligations, Series A-1+ $ 8,000,000
2005B-4, 0.350%, 5/01/40 (5)
=============----------------------------------------------------------------------------------------------------------------------
Total Short-Term Investments (cost $8,000,000) 8,000,000
-------------------------------------------------------------------------------------------------------------------
Total Investments (cost $119,432,207) - 160.2% 114,136,934
-------------------------------------------------------------------------------------------------------------------
Floating Rate Obligations - (7.8)% (5,590,000)
-------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 5.0% 3,587,875
-------------------------------------------------------------------------------------------------------------------
Auction Rate Preferred Shares, at Liquidation Value - (57.4)% (6) (40,875,000)
-------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 71,259,809
===================================================================================================================
(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 Group ("Standard
& Poor's") or Moody's Investor Service, Inc. ("Moody's") rating. Ratings
below BBB by Standard & Poor's or Baa by Moody's are considered to be
below investment grade.
The Portfolio of Investments may reflect the ratings on certain bonds
insured by ACA, AGC, AMBAC, FGIC, FSA, MBIA, RAAI and SYNCORA as of
February 28, 2009. Please see the Portfolio Manager's Commentary for an
expanded discussion of the affect on the Fund of changes to the ratings
of certain bonds in the portfolio resulting from changes to the ratings
of the underlying insurers both during the period and after period end.
(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.
(6) Auction Rate Preferred Shares, at Liquidation Value as a percentage of
Total Investments is 35.8%.
N/R Not rated.
(ETM) Escrowed to maturity.
(IF) Inverse floating rate investment.
(UB) Underlying bond of an inverse floating rate trust reflected as a
financing transaction pursuant to the provisions of SFAS No. 140.
See accompanying notes to financial statements.
45
NAC | Nuveen California Dividend Advantage Municipal Fund
| Portfolio of INVESTMENTS February 28, 2009
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
----------------------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES - 5.3% (3.5% OF TOTAL INVESTMENTS)
$ 1,145 California County Tobacco Securitization Agency, Tobacco Settlement 6/15 at 100.00 BBB $ 995,097
Asset-Backed Bonds, Sonoma County Tobacco Securitization
Corporation, Series 2005, 4.250%, 6/01/21
7,500 Golden State Tobacco Securitization Corporation, California, 6/17 at 100.00 BBB 4,521,300
Enhanced Tobacco Settlement Asset-Backed Bonds, Series 2007A-1,
5.750%, 6/01/47
24,265 Golden State Tobacco Securitization Corporation, California, 6/22 at 100.00 BBB 9,513,336
Enhanced Tobacco Settlement Asset-Backed Bonds, Series 2007A-2,
0.000%, 6/01/37
----------------------------------------------------------------------------------------------------------------------------------
32,910 Total Consumer Staples 15,029,733
----------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 7.5% (5.0% OF TOTAL INVESTMENTS)
290 California Educational Facilities Authority, Revenue Bonds, 10/15 at 100.00 A3 243,435
University of Redlands, Series 2005A, 5.000%, 10/01/35
10,000 California Educational Facilities Authority, Revenue Bonds, 10/17 at 100.00 Aa1 9,320,700
University of Southern California, Series 2007A, 4.500%,
10/01/33 (UB)
California Educational Facilities Authority, Revenue Bonds,
University of the Pacific, Series 2006:
200 5.000%, 11/01/21 11/15 at 100.00 A2 192,442
265 5.000%, 11/01/25 11/15 at 100.00 A2 236,391
4,685 California State Public Works Board, Lease Revenue Bonds, 3/18 at 100.00 AA- 3,982,719
University of California Regents, Trust 1065, 8.969%, 3/01/33
(IF)
615 California Statewide Community Development Authority, Revenue 10/13 at 100.00 N/R 450,549
Bonds, Notre Dame de Namur University, Series 2003, 6.500%,
10/01/23
3,000 Long Beach Bond Financing Authority, California, Lease Revenue 11/11 at 100.00 A 2,988,690
Refunding Bonds, Long Beach Aquarium of the South Pacific,
Series 2001, 5.500%, 11/01/17 - AMBAC Insured
3,500 University of California, Revenue Bonds, Multi-Purpose Projects, 5/13 at 100.00 AA 3,836,700
Series 2003A, 5.125%, 5/15/17 - AMBAC Insured (UB)
----------------------------------------------------------------------------------------------------------------------------------
22,555 Total Education and Civic Organizations 21,251,626
----------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE - 20.2% (13.5% OF TOTAL INVESTMENTS)
2,160 California Health Facilities Financing Authority, Health Facility 3/13 at 100.00 A 2,154,233
Revenue Bonds, Adventist Health System/West, Series 2003A,
5.000%, 3/01/15
660 California Health Facilities Financing Authority, Revenue Bonds, 4/16 at 100.00 A+ 538,712
Kaiser Permanante System, Series 2006, 5.000%, 4/01/37
10,000 California Health Facilities Financing Authority, Revenue Bonds, 11/16 at 100.00 AA 8,681,900
Sutter Health, Series 2007A, 5.000%, 11/15/42 - MBIA Insured
5,655 California Health Facilities Financing Authority, Revenue Bonds, 11/16 at 100.00 AA- 4,260,420
Sutter Health, Series 2008, Trust 3146, 12.371%, 11/15/46 (IF)
1,120 California Statewide Communities Development Authority, Revenue 3/15 at 100.00 A 888,720
Bonds, Adventist Health System West, Series 2005A, 5.000%,
3/01/35
1,586 California Statewide Communities Development Authority, Revenue 7/18 at 100.00 AAA 1,032,423
Bonds, Saint Joseph Health System, Trust 2554, 18.216%, 7/01/47 -
FSA Insured (IF)
46
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
----------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE (continued)
California Statewide Communities Development Authority, Revenue
Bonds, ValleyCare Health System, Series 2007A:
$ 1,000 4.800%, 7/15/17 No Opt. Call N/R $ 790,190
3,325 5.125%, 7/15/31 7/17 at 100.00 N/R 1,855,184
19,420 California Statewide Community Development Authority, Revenue 3/16 at 100.00 A+ 15,586,685
Bonds, Kaiser Permanante System, Series 2006, 5.000%, 3/01/41
3,095 California Statewide Community Development Authority, Revenue 8/16 at 100.00 A+ 2,693,981
Bonds, Kaiser Permanente System, Series 2001C, 5.250%, 8/01/31
2,225 California Statewide Community Development Authority, Revenue 3/16 at 100.00 AAA 2,928,278
Bonds, Kaiser Permanente System, Trust 11672, 18.623%, 3/01/41 -
BHAC Insured (IF)
2,250 California Statewide Community Development Authority, Revenue 8/19 at 100.00 AA 2,287,710
Bonds, Methodist Hospital Project, Series 2009, 6.750%, 2/01/38
10,500 Duarte, California, Certificates of Participation, City of Hope 4/09 at 101.00 A+ 8,900,850
National Medical Center, Series 1999A, 5.250%, 4/01/31
2,860 Loma Linda, California, Hospital Revenue Bonds, Loma Linda 12/18 at 100.00 BBB 2,817,357
University Medical Center, Series 2008A, 8.250%, 12/01/38
2,570 Rancho Mirage Joint Powers Financing Authority, California, Revenue 7/17 at 100.00 A3 2,100,461
Bonds, Eisenhower Medical Center, Series 2007A, 5.000%, 7/01/38
----------------------------------------------------------------------------------------------------------------------------------
68,426 Total Health Care 57,517,104
----------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 2.2% (1.5% OF TOTAL INVESTMENTS)
5,000 Contra Costa County, California, Multifamily Housing Revenue Bonds, 6/09 at 102.00 N/R 3,897,950
Delta View Apartments Project, Series 1999C, 6.750%, 12/01/30
(Alternative Minimum Tax)
320 Independent Cities Lease Finance Authority, California, Mobile Home 5/16 at 100.00 N/R 214,637
Park Revenue Bonds, San Juan Mobile Estates, Series 2006B,
5.850%, 5/15/41
1,725 Rohnert Park Finance Authority, California, Senior Lien Revenue 9/13 at 100.00 A+ 1,313,243
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 874,082
Revenue Bonds, Rancho Feliz Mobile Home Park, Series 2003B,
6.625%, 9/15/38
----------------------------------------------------------------------------------------------------------------------------------
8,165 Total Housing/Multifamily 6,299,912
----------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 0.6% (0.4% OF TOTAL INVESTMENTS)
1,670 California Housing Finance Agency, California, Home Mortgage 2/17 at 100.00 AA- 1,165,946
Revenue Bonds, Series 2008, Trust 3137, 14.987%, 8/01/37
(Alternative Minimum Tax) (IF)
660 California Housing Finance Agency, Home Mortgage Revenue Bonds, 2/16 at 100.00 Aa2 654,509
Series 2006H, 5.750%, 8/01/30 - FGIC Insured (Alternative
Minimum Tax)
----------------------------------------------------------------------------------------------------------------------------------
2,330 Total Housing/Single Family 1,820,455
----------------------------------------------------------------------------------------------------------------------------------
INDUSTRIALS - 1.7% (1.1% OF TOTAL INVESTMENTS)
2,000 California Pollution Control Financing Authority, Solid Waste 1/16 at 102.00 BBB 1,660,800
Disposal Revenue Bonds, Waste Management Inc., Series 2002A,
5.000%, 1/01/22 (Alternative Minimum Tax)
5,120 California Statewide Communities Development Authority, Revenue No Opt. Call BB 3,161,754
Bonds, EnerTech Regional Biosolids Project, Series 2007A,
5.500%, 12/01/33 (Alternative Minimum Tax)
----------------------------------------------------------------------------------------------------------------------------------
7,120 Total Industrials 4,822,554
----------------------------------------------------------------------------------------------------------------------------------
47
NAC | Nuveen California Dividend Advantage Municipal Fund (continued)
| Portfolio of INVESTMENTS February 28, 2009
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
----------------------------------------------------------------------------------------------------------------------------------
LONG-TERM CARE - 2.1% (1.4% OF TOTAL INVESTMENTS)
$ 8,500 Riverside County Public Financing Authority, California, 5/09 at 101.00 BBB- $ 6,093,480
Certificates of Participation, Air Force Village West, Series
1999, 5.800%, 5/15/29
----------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 9.7% (6.4% OF TOTAL INVESTMENTS)
4,435 California, General Obligation Refunding Bonds, Series 2002, No Opt. Call A1 4,984,674
6.000%, 4/01/16 - AMBAC Insured
3,425 Coast Community College District, Orange County, California, 8/18 at 100.00 AAA 2,639,100
General Obligation Bonds, Series 2006C, 0.000%, 8/01/31 - FSA
Insured
5,150 Hacienda La Puente Unified School District Facilities Financing No Opt. Call AAA 5,344,722
Authority, California, General Obligation Revenue Bonds, Series
2007, 5.000%, 8/01/26 - FSA Insured
5,210 Oak Valley Hospital District, Stanislaus County, California, 7/14 at 101.00 A3 4,775,017
General Obligation Bonds, Series 2005, 5.000%, 7/01/35 - FGIC
Insured
575 Roseville Joint Union High School District, Placer County, 8/15 at 100.00 AA- 575,293
California, General Obligation Bonds, Series 2006B, 5.000%,
8/01/27 - FGIC Insured
5,000 San Diego Unified School District, San Diego County, California, 7/13 at 101.00 AAA 5,439,000
General Obligation Bonds, Series 2003E, 5.250%, 7/01/20 - FSA
Insured
3,605 West Contra Costa Unified School District, Contra Costa County, 8/11 at 101.00 AAA 3,728,976
California, General Obligation Bonds, Series 2003B, 5.000%,
8/01/21 - FSA Insured
----------------------------------------------------------------------------------------------------------------------------------
27,400 Total Tax Obligation/General 27,486,782
----------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 38.4% (25.6% 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 771,570
615 5.800%, 9/01/35 9/14 at 102.00 N/R 440,395
1,990 Borrego Water District, California, Community Facilities District 8/17 at 102.00 N/R 1,556,339
2007-1 Montesoro, Special Tax Bonds, Series 2007, 5.750%, 8/01/25
1,990 Brentwood Infrastructure Financing Authority, California, 9/12 at 100.00 AAA 2,012,587
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 1,171,427
1,165 5.375%, 11/01/19 - FSA Insured 11/11 at 100.00 AAA 1,229,471
2,000 Capistrano Unified School District, Orange County, California, 9/13 at 100.00 N/R 1,655,180
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 AA- 636,977
Special Tax Bonds, Community Facilities District, Series 2005,
5.000%, 9/01/24 - FGIC Insured
1,225 Chino Redevelopment Agency, California, Merged Chino Redevelopment 9/16 at 101.00 A 943,262
Project Area Tax Allocation Bonds, Series 2006, 5.000%, 9/01/38 -
AMBAC Insured
3,490 Fontana, California, Senior Special Tax Refunding Bonds, Heritage 3/09 at 102.00 AA- 3,510,731
Village Community Facilities District 2, Series 1998A, 5.250%,
9/01/17 - MBIA Insured
1,125 Fontana, California, Special Tax Bonds, Sierra Community Facilities 9/14 at 100.00 N/R 840,611
District 22, Series 2004, 6.000%, 9/01/34
3,980 Garden Grove, California, Certificates of Participation, Financing 3/12 at 101.00 A 4,180,791
Project, Series 2002A, 5.500%, 3/01/22 - AMBAC Insured
Golden State Tobacco Securitization Corporation, California,
Tobacco Settlement Asset-Backed Revenue Bonds, Series 2005A:
37,695 5.000%, 6/01/35 - FGIC Insured 6/15 at 100.00 A 30,492,989
4,395 5.000%, 6/01/38 - FGIC Insured 6/15 at 100.00 A 3,474,248
48
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
----------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED (continued)
$ 2,850 Hesperia Community Redevelopment Agency, California, Tax Allocation 9/15 at 100.00 Baa1 $ 2,241,126
Bonds, Series 2005A, 5.000%, 9/01/35 - SYNCORA GTY Insured
4,500 Inglewood Redevelopment Agency, California, Tax Allocation Refunding No Opt. Call A 4,378,230
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 9/16 at 100.00 N/R 274,054
795 5.125%, 9/01/36 9/16 at 100.00 N/R 581,145
675 Lammersville School District, San Joaquin County, California, 9/16 at 100.00 N/R 435,220
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 Tax 9/13 at 102.00 N/R 1,673,080
Bonds, Community Facilities District 1 of Sycamore Creek, Series
2003, 6.500%, 9/01/24
1,000 Lindsay Redevelopment Agency, California, Project 1 Tax Allocation 8/17 at 100.00 BBB+ 782,050
Bonds, Series 2007, 5.000%, 8/01/37 - RAAI Insured
1,290 Los Angeles Community Redevelopment Agency, California, Lease 9/15 at 100.00 A2 1,090,140
Revenue Bonds, Manchester Social Services Project, Series 2005,
5.000%, 9/01/37 - AMBAC Insured
1,750 Los Angeles County Metropolitan Transportation Authority, 7/09 at 100.00 A1 1,762,285
California, Proposition C Second Senior Lien Sales Tax Revenue
Refunding Bonds, Series 1998A, 5.000%, 7/01/23 - AMBAC Insured
1,530 Moreno Valley Unified School District, Riverside County, California, 3/14 at 100.00 AAA 1,547,350
Certificates of Participation, Series 2005, 5.000%, 3/01/24 -
FSA Insured
3,500 Murrieta Redevelopment Agency, California, Tax Allocation Bonds, 8/17 at 100.00 AA- 2,958,200
Series 2007A, 5.000%, 8/01/37 - MBIA Insured
9,200 Norco Redevelopment Agency, California, Tax Allocation Refunding 3/11 at 102.00 AA- 9,308,192
Bonds, Project Area 1, Series 2001, 5.000%, 3/01/19 - MBIA Insured
North Natomas Community Facilities District 4, Sacramento,
California, Special Tax Bonds, Series 2006D:
545 5.000%, 9/01/26 9/14 at 102.00 N/R 408,401
250 5.000%, 9/01/33 9/14 at 102.00 N/R 173,085
3,290 Oakland Redevelopment Agency, California, Subordinate Lien Tax 3/13 at 100.00 AA- 3,295,823
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 AA- 5,669,440
Refunding Bonds, Convention Center Project, Series 2001A, 5.000%,
11/01/22 - MBIA Insured
1,000 Palmdale Community Redevelopment Agency, California, Tax Allocation 12/14 at 100.00 A 956,800
Bonds, Merged Redevelopment Project Areas, Series 2004, 5.000%,
12/01/24 - AMBAC Insured
1,570 Poway Redevelopment Agency, California, Tax Allocation Refunding 12/10 at 102.00 AA 1,370,108
Bonds, Paguay Redevelopment Project, Series 2000, 5.750%, 6/15/33
- MBIA Insured
620 Rialto Redevelopment Agency, California, Tax Allocation Bonds, 9/15 at 100.00 A- 528,761
Merged Project Area, Series2005A, 5.000%, 9/01/35 - SYNCORA GTY
Insured
1,860 Riverside Redevelopment Agency, California, Tax Allocation Refunding 8/13 at 100.00 AA- 1,860,874
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 A+ 736,698
Facilities, Series 2003A, 5.000%, 8/01/25 - AMBAC Insured
2,500 Sacramento City Financing Authority, California, Lease Revenue No Opt. Call A 2,735,075
Refunding Bonds, Series 1993A, 5.400%, 11/01/20 - AMBAC Insured
1,150 Sacramento, California, Special Tax Bonds, North Natomas Community 9/14 at 100.00 N/R 888,927
Facilities District 4, Series 2003C, 6.000%, 9/01/33
49
NAC | Nuveen California Dividend Advantage Municipal Fund (continued)
| Portfolio of INVESTMENTS February 28, 2009
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
----------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED (continued)
$ 2,695 San Jose Financing Authority, California, Lease Revenue Refunding 6/12 at 100.00 AA+ $ 2,856,080
Bonds, Civic Center Project, Series 2002B, 5.250%, 6/01/19 -
AMBAC Insured
3,000 Santa Clara County Financing Authority, California, Insured Revenue 8/17 at 100.00 A+ 2,841,720
Bonds, El Camino Hospital, Series 2007A, 5.750%, 2/01/41 - AMBAC
Insured
1,000 Washington Unified School District, Yolo County, California, 8/17 at 100.00 A 816,120
Certificates of Participation, Series 2007, 5.125%, 8/01/37 -
AMBAC Insured
2,810 West Patterson Financing Authority, California, Special Tax Bonds, 9/13 at 103.00 N/R 1,918,078
Community Facilities District 01-1, Series 2003B, 7.000%, 9/01/38
2,000 West Patterson Financing Authority, California, Special Tax Bonds, 9/13 at 102.00 N/R 1,180,000
Community Facilities District 01-1, Series 2004B, 6.000%, 9/01/39
1,350 West Patterson Financing Authority, California, Special Tax Bonds, 9/13 at 103.00 N/R 811,863
Community Facilities District 2001-1, Series 2004A, 6.125%,
9/01/39
----------------------------------------------------------------------------------------------------------------------------------
123,935 Total Tax Obligation/Limited 108,995,503
----------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 20.8% (13.9% OF TOTAL INVESTMENTS)
1,430 Bay Area Toll Authority, California, Revenue Bonds, San Francisco 4/16 at 100.00 AA 1,409,265
Bay Area Toll Bridge, Series 2006F, 5.000%, 4/01/31 (UB)
830 Bay Area Toll Authority, California, Revenue Bonds, San Francisco 4/18 at 100.00 AA 806,229
Bay Area Toll Bridge, Series2008, Trust 3211, 12.855%, 4/01/39
(IF)
8,150 Foothill/Eastern Transportation Corridor Agency, California, Toll 1/10 at 101.00 BBB- 5,865,555
Road Revenue Refunding Bonds, Series 1999, 5.750%, 1/15/40
8,515 Los Angeles Harbors Department, California, Revenue Refunding 8/11 at 100.00 AA 8,601,768
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 97,756
International Airport Revenue Bonds, Series 2006, 5.450%,
7/01/20 (Alternative Minimum Tax)
23,000 Port of Oakland, California, Revenue Bonds, Series 2000K, 5.750%, 5/10 at 100.00 AA- 19,768,499
11/01/29 - FGIC Insured(Alternative Minimum Tax)
23,275 San Francisco Airports Commission, California, Revenue Bonds, San 5/10 at 101.00 AAA 22,634,471
Francisco International Airport, Second Series 2000, Issue 24A,
5.750%, 5/01/30 - FSA Insured (Alternative Minimum Tax)
----------------------------------------------------------------------------------------------------------------------------------
65,320 Total Transportation 59,183,543
----------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 30.7% (20.5% OF TOTAL INVESTMENTS) (4)
9,750 California Department of Water Resources, Power Supply Revenue 5/12 at 101.00 Aaa 10,953,443
Bonds, Series 2002A, 5.125%, 5/01/18 (Pre-refunded 5/01/12)
115 California Department of Water Resources, Water System Revenue 12/11 at 100.00 AAA 127,206
Bonds, Central Valley Project, Series 2001W, 5.250%, 12/01/22
(Pre-refunded 12/01/11) - FSA Insured
1,500 California Health Facilities Financing Authority, Revenue Bonds, 12/09 at 101.00 N/R (4) 1,578,285
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, 4/09 at 101.00 AAA 8,509,956
Kaiser Permanente System, Series 1998B, 5.250%, 10/01/14 (ETM)
715 California Statewide Community Development Authority, Revenue 10/15 at 100.00 N/R (4) 789,789
Bonds, Thomas Jefferson School of Law, Series 2005A, 4.875%,
10/01/31 (Pre-refunded 10/01/15)
4,850 Golden State Tobacco Securitization Corporation, California, 6/13 at 100.00 AAA 5,329,277
Tobacco Settlement Asset-Backed Bonds, Series 2003A-1, 6.250%,
6/01/33 (Pre-refunded 6/01/13)
1,940 Lincoln, California, Special Tax Bonds, Lincoln Crossing Community 9/13 at 102.00 N/R (4) 2,355,141
Facilities District 03-1, Series 2003A, 6.500%, 9/01/25
(Pre-refunded 9/01/13)
50
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
----------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED (4) (continued)
$ 1,335 Lincoln, California, Special Tax Bonds, Lincoln Crossing Community 9/13 at 102.00 N/R (4) $ 1,591,988
Facilities District 03-1, Series 2004, 6.000%, 9/01/34
(Pre-refunded 9/01/13)
10,845 Los Angeles Unified School District, California, General Obligation 7/12 at 100.00 AA (4) 12,091,632
Bonds, Series 2002E, 5.000%, 7/01/19 (Pre-refunded 7/01/12) -
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 2,722,275
4,500 5.375%, 6/01/41 (Pre-refunded 6/01/11) 6/11 at 100.00 AAA 4,912,605
5,840 Orange County Water District, California, Revenue Certificates of 8/09 at 101.00 AAA 5,990,847
Participation, Series 1999A, 5.375%, 8/15/29 (ETM)
6,530 Poway Redevelopment Agency, California, Tax Allocation Refunding 12/10 at 102.00 AA (4) 7,202,264
Bonds, Paguay Redevelopment Project, Series 2000, 5.750%,
6/15/33 (Pre-refunded 12/15/10) - MBIA Insured
4,000 Puerto Rico, General Obligation and Public Improvement Bonds, 7/10 at 100.00 AA- (4) 4,256,680
Series 2000, 5.750%, 7/01/16 (Pre-refunded 7/01/10) - MBIA
Insured
2,860 Tobacco Securitization Authority of Southern California, Tobacco 6/12 at 100.00 AAA 3,197,594
Settlement Asset-Backed Bonds, San Diego County Tobacco Asset
Securitization Corporation, Senior Series 2001A, 5.250%, 6/01/27
(Pre-refunded 6/01/12)
700 University of California, Certificates of Participation, San Diego 1/10 at 101.00 Aaa 733,509
and Sacramento Campus Projects, Series 2002A, 5.250%, 1/01/22
(Pre-refunded 1/01/10)
11,305 University of California, Revenue Bonds, Multi-Purpose Projects, 9/10 at 101.00 AA (4) 12,078,149
Series 2002O, 5.000%, 9/01/21 (Pre-refunded 9/01/10) - FGIC
Insured
2,500 Whittier, California, Health Facility Revenue Bonds, Presbyterian 6/12 at 101.00 A+ (4) 2,850,075
Intercommunity Hospital, Series 2002, 5.600%, 6/01/22
(Pre-refunded 6/01/12)
----------------------------------------------------------------------------------------------------------------------------------
80,185 Total U.S. Guaranteed 87,270,715
----------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 4.4% (3.0% OF TOTAL INVESTMENTS)
3,630 Imperial Irrigation District, California, Certificates of 11/13 at 100.00 AAA 3,731,894
Participation, Electric System Revenue Bonds, Series 2003,
5.250%, 11/01/23 - FSA Insured
3,775 Long Beach Bond Finance Authority, California, Natural Gas Purchase No Opt. Call A+ 2,558,733
Revenue Bonds, Series 2007A, 5.000%, 11/15/35
5,500 Los Angeles Department of Water and Power, California, Power System 7/15 at 100.00 AAA 5,398,085
Revenue Bonds, Series 2005A-1, 5.000%, 7/01/31 - FSA Insured (UB)
1,270 Merced Irrigation District, California, Electric System Revenue 9/15 at 100.00 N/R 908,583
Bonds, Series 2005, 5.125%, 9/01/31 - SYNCORA GTY Insured
----------------------------------------------------------------------------------------------------------------------------------
14,175 Total Utilities 12,597,295
----------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 6.3% (4.2% OF TOTAL INVESTMENTS)
875 Healdsburg Public Financing Authority, California, Wastewater 4/16 at 100.00 AA- 776,633
Revenue Bonds, Series 2006, 5.000%, 4/01/36 - MBIA Insured
2,500 Indio Water Authority, California, Water Revenue Bonds, Series 4/16 at 100.00 A+ 2,190,500
2006, 5.000%, 4/01/31 - AMBAC Insured
835 Marina Coast Water District, California, Enterprise Certificate of 6/16 at 100.00 AA- 731,226
Participation, Series 2006, 5.000%, 6/01/31 - MBIA Insured
8,250 Pico Rivera Water Authority, California, Revenue Bonds, Series 12/11 at 102.00 N/R 6,453,398
2001A, 6.250%, 12/01/32
51
NAC | Nuveen California Dividend Advantage Municipal Fund (continued)
| Portfolio of INVESTMENTS February 28, 2009
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
------------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER (continued)
$ 2,250 Sacramento County Sanitation District Financing Authority, 6/16 at 100.00 AA $ 2,198,993
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 AA- 5,406,350
California, Water Revenue Bonds, Series 2002A, 5.000%, 11/01/18 -
MBIA Insured
------------------------------------------------------------------------------------------------------------------------------------
19,825 Total Water and Sewer 17,757,100
------------------------------------------------------------------------------------------------------------------------------------
$ 480,846 Total Investments (cost $461,033,038) - 149.9% 426,125,802
=============-----------------------------------------------------------------------------------------------------------------------
Floating Rate Obligations - (4.5)% (12,865,000)
--------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 2.3% 6,485,085
--------------------------------------------------------------------------------------------------------------------
Auction Rate Preferred Shares, at Liquidation Value - (47.7)% (5) (135,525,000)
--------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 284,220,887
====================================================================================================================
(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 Group ("Standard
& Poor's") or Moody's Investor Service, Inc. ("Moody's") rating. Ratings
below BBB by Standard & Poor's or Baa by Moody's are considered to be
below investment grade.
The Portfolio of Investments may reflect the ratings on certain bonds
insured by ACA, AGC, AMBAC, FGIC, FSA, MBIA, RAAI and SYNCORA as of
February 28, 2009. Please see the Portfolio Manager's Commentary for an
expanded discussion of the affect on the Fund of changes to the ratings
of certain bonds in the portfolio resulting from changes to the ratings
of the underlying insurers both during the period and after period end.
(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) Auction Rate Preferred Shares, at Liquidation Value as a percentage of
Total Investments is 31.8%. N/R Not rated.
(ETM) Escrowed to maturity.
(IF) Inverse floating rate investment.
(UB) Underlying bond of an inverse floating rate trust reflected as a
financing transaction pursuant to the provisions of SFAS No. 140.
See accompanying notes to financial statements.
52
NVX | Nuveen California Dividend Advantage Municipal Fund 2
| Portfolio of INVESTMENTS February 28, 2009
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
----------------------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES - 6.1% (3.9% OF TOTAL INVESTMENTS)
$ 710 California County Tobacco Securitization Agency, Tobacco Settlement 6/15 at 100.00 BBB $ 617,047
Asset-Backed Bonds, Sonoma County Tobacco Securitization
Corporation, Series 2005, 4.250%, 6/01/21
4,625 California County Tobacco Securitization Agency, Tobacco Settlement 6/12 at 100.00 Baa3 3,288,421
Asset-Backed Bonds, Stanislaus County Tobacco Funding
Corporation, Series 2002A, 5.500%, 6/01/33
4,000 Golden State Tobacco Securitization Corporation, California, 6/17 at 100.00 BBB 2,411,360
Enhanced Tobacco Settlement Asset-Backed Bonds, Series 2007A-1,
5.750%, 6/01/47
13,480 Golden State Tobacco Securitization Corporation, California, 6/22 at 100.00 BBB 5,284,969
Enhanced Tobacco Settlement Asset-Backed Bonds, Series 2007A-2,
0.000%, 6/01/37
----------------------------------------------------------------------------------------------------------------------------------
22,815 Total Consumer Staples 11,601,797
----------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 8.6% (5.5% OF TOTAL INVESTMENTS)
2,000 California Educational Facilities Authority, Revenue Bonds, 6/11 at 101.00 AAA 2,044,280
Stanford University, Series 2001Q, 5.250%, 12/01/32
180 California Educational Facilities Authority, Revenue Bonds, 10/15 at 100.00 A3 151,097
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 120,276
165 5.000%, 11/01/25 11/15 at 100.00 A2 147,187
6,375 California Educational Facilities Authority, Student Loan Revenue 3/09 at 101.00 Baa1 5,973,056
Bonds, Cal Loan Program, Series 2001A, 5.400%, 3/01/21 - MBIA
Insured (Alternative Minimum Tax)
2,945 California State Public Works Board, Lease Revenue Bonds, 3/18 at 100.00 AA- 2,503,545
University of California Regents, Trust 1065, 8.969%, 3/01/33
(IF)
620 California Statewide Community Development Authority, Revenue 10/13 at 100.00 N/R 454,212
Bonds, Notre Dame de Namur University, Series 2003, 6.500%,
10/01/23
3,000 Long Beach Bond Financing Authority, California, Lease Revenue 11/11 at 101.00 A 2,421,300
Refunding Bonds, Long Beach Aquarium of the South Pacific,
Series 2001, 5.250%, 11/01/30 - AMBAC Insured
2,680 University of California, Revenue Bonds, Multi-Purpose Projects, 5/13 at 100.00 AA 2,624,551
Series 2003A, 5.000%, 5/15/33 - AMBAC Insured (UB)
----------------------------------------------------------------------------------------------------------------------------------
18,090 Total Education and Civic Organizations 16,439,504
----------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE - 15.4% (9.8% OF TOTAL INVESTMENTS)
2,000 California Health Facilities Financing Authority, Revenue Bonds, 4/12 at 100.00 BBB+ 1,869,960
Casa Colina Inc., Series 2001, 6.000%, 4/01/22
415 California Health Facilities Financing Authority, Revenue Bonds, 4/16 at 100.00 A+ 338,735
Kaiser Permanante System, Series 2006, 5.000%, 4/01/37
3,515 California Health Facilities Financing Authority, Revenue Bonds, 11/16 at 100.00 AA- 2,648,166
Sutter Health, Series 2008, Trust 3146, 12.371%, 11/15/46 (IF)
500 California Infrastructure Economic Development Bank, Revenue Bonds, 8/11 at 102.00 A+ 452,760
Kaiser Hospital Assistance LLC, Series 2001A, 5.550%, 8/01/31
2,520 California Statewide Communities Development Authority, Revenue 3/15 at 100.00 A 1,999,620
Bonds, Adventist Health System West, Series 2005A, 5.000%,
3/01/35
53
NVX | Nuveen California Dividend Advantage Municipal Fund 2 (continued)
| Portfolio of INVESTMENTS February 28, 2009
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
----------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE (continued)
California Statewide Communities Development Authority, Revenue
Bonds, Saint Joseph Health System, Trust 2554:
$ 1,325 18.184%, 7/01/47 - FSA Insured (IF) 7/18 at 100.00 AAA $ 862,522
998 18.216%, 7/01/47 - FSA Insured (IF) 7/18 at 100.00 AAA 649,333
California Statewide Communities Development Authority, Revenue
Bonds, ValleyCare Health System, Series 2007A:
1,000 4.800%, 7/15/17 No Opt. Call N/R 790,190
2,225 5.125%, 7/15/31 7/17 at 100.00 N/R 1,241,439
2,185 California Statewide Community Development Authority, Health No Opt. Call A+ 2,313,981
Facility Revenue Refunding Bonds, Memorial Health Services,
Series 2003A, 6.000%, 10/01/11
2,500 California Statewide Community Development Authority, Hospital 6/13 at 100.00 AAA 2,676,675
Revenue Bonds, Monterey Peninsula Hospital, Series 2003B, 5.250%,
6/01/18 - FSA Insured
1,755 California Statewide Community Development Authority, Revenue Bonds, 3/16 at 100.00 A+ 1,408,581
Kaiser Permanante System, Series 2006, 5.000%, 3/01/41
425 California Statewide Community Development Authority, Revenue Bonds, 8/16 at 100.00 A+ 369,933
Kaiser Permanente System, Series 2001C, 5.250%, 8/01/31
6,020 California Statewide Community Development Authority, Revenue Bonds, 11/15 at 100.00 AA- 5,133,435
Sutter Health, Series 2005A, 5.000%, 11/15/43
2,000 Loma Linda, California, Hospital Revenue Bonds, Loma Linda 12/18 at 100.00 BBB 1,970,180
University Medical Center, Series 2008A, 8.250%, 12/01/38
5,785 Rancho Mirage Joint Powers Financing Authority, California, Revenue 7/17 at 100.00 A3 4,728,081
Bonds, Eisenhower Medical Center, Series 2007A, 5.000%, 7/01/38
----------------------------------------------------------------------------------------------------------------------------------
35,168 Total Health Care 29,453,591
----------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 5.3% (3.3% OF TOTAL INVESTMENTS)
5,962 California Statewide Community Development Authority, Multifamily 6/11 at 102.00 AAA 6,206,561
Housing Revenue Refunding Bonds, Claremont Village Apartments,
Series 2001D, 5.500%, 6/01/31 (Mandatory put 6/01/16)
(Alternative Minimum Tax)
205 Independent Cities Lease Finance Authority, California, Mobile Home 5/16 at 100.00 N/R 137,502
Park Revenue Bonds, San Juan Mobile Estates, Series 2006B,
5.850%, 5/15/41
1,055 Rohnert Park Finance Authority, California, Senior Lien Revenue 9/13 at 100.00 A+ 803,172
Bonds, Rancho Feliz Mobile Home Park, Series 2003A, 5.750%,
9/15/38
700 Rohnert Park Finance Authority, California, Subordinate Lien Revenue 9/13 at 100.00 N/R 546,301
Bonds, Rancho Feliz Mobile Home Park, Series 2003B, 6.625%,
9/15/38
3,045 Yucaipa Redevelopment Agency, California, Mobile Home Park Revenue 5/11 at 102.00 N/R 2,392,913
Bonds, Rancho del Sol and Grandview, Series 2001A, 6.750%, 5/15/36
----------------------------------------------------------------------------------------------------------------------------------
10,967 Total Housing/Multifamily 10,086,449
----------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 1.4% (0.9% OF TOTAL INVESTMENTS)
410 California Housing Finance Agency, Home Mortgage Revenue Bonds, 2/16 at 100.00 Aa2 406,589
Series 2006H, 5.750%, 8/01/30 - FGIC Insured (Alternative Minimum
Tax)
3,290 California Housing Finance Agency, Home Mortgage Revenue Bonds, 2/16 at 100.00 Aa2 1,846,776
Series 2007M, Trust 1021, 7.230%, 8/01/31 (Alternative Minimum
Tax) (IF)
440 California Rural Home Mortgage Finance Authority, Mortgage-Backed 6/11 at 102.00 AAA 419,976
Securities Program Single Family Mortgage Revenue Bonds, Series
2001A, 5.650%, 12/01/31 (Alternative Minimum Tax)
----------------------------------------------------------------------------------------------------------------------------------
4,140 Total Housing/Single Family 2,673,341
----------------------------------------------------------------------------------------------------------------------------------
INDUSTRIALS - 1.6% (1.0% OF TOTAL INVESTMENTS)
1,250 California Pollution Control Financing Authority, Solid Waste 1/16 at 102.00 BBB 1,038,000
Disposal Revenue Bonds, Waste Management Inc., Series 2002A,
5.000%, 1/01/22 (Alternative Minimum Tax)
54
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
----------------------------------------------------------------------------------------------------------------------------------
INDUSTRIALS (continued)
$ 3,175 California Statewide Communities Development Authority, Revenue No Opt. Call BB $ 1,960,658
Bonds, EnerTech Regional Biosolids Project, Series 2007A, 5.500%,
12/01/33 (Alternative Minimum Tax)
----------------------------------------------------------------------------------------------------------------------------------
4,425 Total Industrials 2,998,658
----------------------------------------------------------------------------------------------------------------------------------
LONG-TERM CARE - 2.2% (1.4% OF TOTAL INVESTMENTS)
1,550 California Health Facilities Financing Authority, Cal-Mortgage 1/13 at 100.00 A+ 1,514,970
Insured Revenue Bonds, Northern California Retired Officers
Community Corporation - Paradise Valley Estates, Series 2002,
5.125%, 1/01/22
3,750 California Statewide Communities Development Authority, Revenue 12/17 at 100.00 Baa1 2,701,200
Bonds, Inland Regional Center Project, Series 2007, 5.375%,
12/01/37
----------------------------------------------------------------------------------------------------------------------------------
5,300 Total Long-Term Care 4,216,170
----------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 10.5% (6.7% OF TOTAL INVESTMENTS)
10,000 California State, General Obligation Bonds, Series 2006CD, 4.600%, 12/15 at 100.00 AA- 7,538,700
12/01/32 (Alternative Minimum Tax)
3,615 Colton Joint Unified School District, San Bernardino County, 8/12 at 102.00 AA- 3,770,264
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 AA 3,098,335
3,300 5.000%, 8/01/22 - FGIC Insured 8/12 at 100.00 AA 3,415,335
2,000 Puerto Rico, General Obligation and Public Improvement Bonds, Series No Opt. Call AA- 1,886,980
2001A, 5.500%, 7/01/20 - MBIA Insured
355 Roseville Joint Union High School District, Placer County, 8/15 at 100.00 AA- 355,181
California, General Obligation Bonds, Series 2006B, 5.000%,
8/01/27 - FGIC Insured
----------------------------------------------------------------------------------------------------------------------------------
22,275 Total Tax Obligation/General 20,064,795
----------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 24.2% (15.3% 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 501,521
385 5.800%, 9/01/35 9/14 at 102.00 N/R 275,695
1,240 Borrego Water District, California, Community Facilities District 8/17 at 102.00 N/R 969,779
2007-1 Montesoro, Special Tax Bonds, Series 2007, 5.750%, 8/01/25
4,900 California State Public Works Board, Lease Revenue Bonds, Department 12/13 at 100.00 A2 5,174,988
of Corrections, Series 2003C, 5.500%, 6/01/16
2,105 California, Economic Recovery Revenue Bonds, Series 2004A, 5.000%, 7/14 at 100.00 A+ 2,239,657
7/01/15
1,200 Capistrano Unified School District, Orange County, California, 9/13 at 100.00 N/R 993,108
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 AA- 390,260
Special Tax Bonds, Community Facilities District, Series 2005,
5.000%, 9/01/24 - FGIC Insured
4,845 Encinitas Public Financing Authority, California, Lease Revenue 4/09 at 101.00 AA 4,857,016
Bonds, Acquisition Project, Series 2001A, 5.250%, 4/01/31 - MBIA
Insured
750 Fontana, California, Special Tax Bonds, Sierra Community Facilities 9/14 at 100.00 N/R 560,408
District 22, Series 2004, 6.000%, 9/01/34
1,785 Hawthorne Community Redevelopment Agency, California, Project Area 2 9/16 at 100.00 A- 1,573,121
Tax Allocation Bonds, Series 2006, 5.250%, 9/01/36 - SYNCORA GTY
Insured
1,800 Hesperia Unified School District, San Bernardino County, California, 2/17 at 100.00 A 1,393,488
Certificates of Participation, Capital Improvement, Series 2007,
5.000%, 2/01/41 - AMBAC Insured
Irvine, California, Unified School District, Community Facilities
District Special Tax Bonds, Series 2006A:
215 5.000%, 9/01/26 9/16 at 100.00 N/R 170,787
495 5.125%, 9/01/36 9/16 at 100.00 N/R 361,845
55
NVX | Nuveen California Dividend Advantage Municipal Fund 2 (continued)
| Portfolio of INVESTMENTS February 28, 2009
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
----------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED (continued)
$ 2,000 Lake Elsinore Public Finance Authority, California, Local Agency 10/13 at 102.00 N/R $ 1,748,400
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 267,580
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 Tax 9/13 at 102.00 N/R 1,058,223
Bonds, Community Facilities District 1 of Sycamore Creek, Series
2003, 6.500%, 9/01/24
800 Los Angeles Community Redevelopment Agency, California, Lease 9/15 at 100.00 A2 676,056
Revenue Bonds, Manchester Social Services Project, Series 2005,
5.000%, 9/01/37 - AMBAC Insured
2,795 Los Angeles County Metropolitan Transportation Authority, 7/09 at 100.00 A1 2,814,621
California, Proposition C Second Senior Lien Sales Tax Revenue
Refunding Bonds, Series 1998A, 5.000%, 7/01/23 - AMBAC Insured
495 North Natomas Community Facilities District 4, Sacramento, 9/14 at 102.00 N/R 342,708
California, Special Tax Bonds, Series 2006D, 5.000%, 9/01/33
2,000 Orange County, California, Special Tax Bonds, Community Facilities 8/11 at 101.00 N/R 1,591,820
District 02-1 of Ladera Ranch, Series 2003A, 5.550%, 8/15/33
385 Rialto Redevelopment Agency, California, Tax Allocation Bonds, 9/15 at 100.00 A- 328,343
Merged Project Area, Series 2005A, 5.000%, 9/01/35 - SYNCORA GTY
Insured
475 Roseville, California, Certificates of Participation, Public 8/13 at 100.00 A+ 454,456
Facilities, Series 2003A, 5.000%, 8/01/25 - AMBAC Insured
700 Sacramento, California, Special Tax Bonds, North Natomas Community 9/14 at 100.00 N/R 541,086
Facilities District 4, Series 2003C, 6.000%, 9/01/33
San Buenaventura Redevelopment Agency, California, Merged Project
Areas Tax Allocation Bonds, Series 2008:
1,000 7.750%, 8/01/28 8/16 at 102.00 A 1,005,940
1,325 8.000%, 8/01/38 8/16 at 102.00 A 1,318,627
1,530 San Marcos Public Facilities Authority, California, Tax Allocation 8/15 at 100.00 A 1,305,075
Bonds, Project Areas 2 and 3, Series 2005C, 5.000%, 8/01/35 -
AMBAC Insured
825 San Mateo Union High School District, San Mateo County, California, 12/17 at 100.00 A 692,711
Certificates of Participation, Phase 1, Series 2007A, 5.000%,
12/15/30 - AMBAC Insured
1,330 Washington Unified School District, Yolo County, California, 8/17 at 100.00 A 1,085,440
Certificates of Participation, Series 2007, 5.125%, 8/01/37 -
AMBAC Insured
1,930 West Patterson Financing Authority, California, Special Tax Bonds, 9/13 at 103.00 N/R 1,334,634
Community Facilities District 01-1, Series 2003B, 6.750%, 9/01/30
500 West Patterson Financing Authority, California, Special Tax Bonds, 9/13 at 102.00 N/R 295,000
Community Facilities District 01-1, Series 2004B, 6.000%, 9/01/39
850 West Patterson Financing Authority, California, Special Tax Bonds, 9/13 at 103.00 N/R 511,173
Community Facilities District 2001-1, Series 2004A, 6.125%,
9/01/39
10,000 Western Placer Unified School District, Placer County, California, 8/18 at 100.00 AAA 9,258,899
Certificates of Participation, Series 2008, 5.000%, 8/01/47 -
AGC Insured
----------------------------------------------------------------------------------------------------------------------------------
51,425 Total Tax Obligation/Limited 46,092,465
----------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 11.9% (7.6% OF TOTAL INVESTMENTS)
1,930 Bay Area Toll Authority, California, Revenue Bonds, San Francisco 4/16 at 100.00 AA 1,902,015
Bay Area Toll Bridge, Series 2006F, 5.000%, 4/01/31 (UB)
1,430 Bay Area Toll Authority, California, Revenue Bonds, San Francisco 4/18 at 100.00 AA 1,389,046
Bay Area Toll Bridge, Series 2008, Trust 3211, 12.855%, 4/01/39
(IF)
7,000 Foothill/Eastern Transportation Corridor Agency, California, Toll 1/14 at 101.00 BBB- 6,189,120
Road Revenue Refunding Bonds, Series 1999, 0.000%, 1/15/27
5,585 Port of Oakland, California, Revenue Bonds, Series 2002N, 5.000%, 11/12 at 100.00 AA- 5,386,174
11/01/16 - MBIA Insured (Alternative Minimum Tax)
56
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
----------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION (continued)
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 AA- $ 2,381,351
2,555 5.250%, 5/01/19 - FGIC Insured (Alternative Minimum Tax) 5/13 at 100.00 AA- 2,475,335
1,000 San Francisco Airports Commission, California, Revenue Bonds, San 5/13 at 100.00 AA- 1,046,750
Francisco International Airport, Second Series 2003, Issue 29B,
5.125%, 5/01/17 - FGIC Insured
2,000 San Francisco Airports Commission, California, Revenue Refunding 5/12 at 100.00 AA- 1,971,660
Bonds, San Francisco International Airport, Second Series 2002,
Issue 28A, 5.250%, 5/01/17 - MBIA Insured (Alternative Minimum
Tax)
----------------------------------------------------------------------------------------------------------------------------------
23,930 Total Transportation 22,741,451
----------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 48.8% (31.0% OF TOTAL INVESTMENTS) (4)
9,000 Anitoch Area Public Facilities Financing Agency, California, 8/11 at 100.00 AA (4) 9,870,659
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 Revenue 5/12 at 101.00 Aaa 6,740,580
Bonds, Series 2002A, 5.125%, 5/01/18 (Pre-refunded 5/01/12)
450 California Statewide Community Development Authority, Revenue 10/15 at 100.00 N/R (4) 497,070
Bonds, Thomas Jefferson School of Law, Series 2005A, 4.875%,
10/01/31 (Pre-refunded 10/01/15)
4,000 Daly City Housing Development Finance Agency, California, Mobile 12/13 at 102.00 N/R (4) 4,779,960
Home Park Revenue Bonds, Franciscan Mobile Home Park Project,
Series 2002A, 5.850%, 12/15/32 (Pre-refunded 12/15/13)
4,900 East Bay Municipal Utility District, Alameda and Contra Costa 6/11 at 100.00 AAA 5,316,451
Counties, California, Water System Subordinated Revenue Bonds,
Series 2001, 5.000%, 6/01/26 (Pre-refunded 6/01/11) - MBIA
Insured
2,985 Golden State Tobacco Securitization Corporation, California, 6/13 at 100.00 AAA 3,279,978
Tobacco Settlement Asset-Backed Bonds, Series 2003A-1, 6.250%,
6/01/33 (Pre-refunded 6/01/13)
1,170 Lincoln, California, Special Tax Bonds, Lincoln Crossing Community 9/13 at 102.00 N/R (4) 1,420,368
Facilities District 03-1, Series 2003A, 6.500%, 9/01/25
(Pre-refunded 9/01/13)
885 Lincoln, California, Special Tax Bonds, Lincoln Crossing Community 9/13 at 102.00 N/R (4) 1,055,363
Facilities District 03-1, Series 2004, 6.000%, 9/01/34
(Pre-refunded 9/01/13)
7,530 Los Angeles Unified School District, California, General Obligation 7/10 at 100.00 AA- (4) 7,976,604
Bonds, Series 2000D, 5.375%, 7/01/25 (Pre-refunded 7/01/10) -
FGIC Insured
9,510 Los Angeles Unified School District, California, General Obligation 7/12 at 100.00 AA (4) 10,603,174
Bonds, Series 2002E, 5.000%, 7/01/19 (Pre-refunded 7/01/12) -
MBIA Insured
3,000 Northern California Tobacco Securitization Authority, Tobacco 6/11 at 100.00 AAA 3,275,070
Settlement Asset-Backed Bonds, Series 2001A, 5.375%, 6/01/41
(Pre-refunded 6/01/11)
2,000 Puerto Rico Public Finance Corporation, Commonwealth Appropriation No Opt. Call AAA 2,326,500
Bonds, Series 2002E, 6.000%, 8/01/26 (ETM)
6,000 Riverside County Redevelopment Agency, California, Tax Allocation 10/11 at 102.00 A (4) 6,736,020
Bonds, Jurupa Valley Project Area, Series 2001, 5.250%, 10/01/35
(Pre-refunded 10/01/11) - AMBAC Insured
12,090 Santa Clara Valley Transportation Authority, California, Sales Tax 6/11 at 100.00 AAA 13,117,526
Revenue Bonds, Series2001A, 5.000%, 6/01/25 (Pre-refunded
6/01/11) - MBIA Insured
4,050 Santa Rosa High School District, Sonoma County, California, General 5/11 at 101.00 A+ (4) 4,448,885
Obligation Bonds, Series2001, 5.300%, 5/01/26 (Pre-refunded
5/01/11) - FGIC Insured
6,200 Southwestern Community College District, San Diego County, 8/11 at 101.00 AA- (4) 6,878,466
California, General Obligation Bonds, Series 2001, 5.375%,
8/01/25 (Pre-refunded 8/01/11) - AMBAC Insured
2,800 Tobacco Securitization Authority of Southern California, Tobacco 6/12 at 100.00 AAA 3,152,688
Settlement Asset-Backed Bonds, San Diego County Tobacco Asset
Securitization Corporation, Senior Series 2001A, 5.500%, 6/01/36
(Pre-refunded 6/01/12)
1,500 Whittier, California, Health Facility Revenue Bonds, Presbyterian 6/12 at 101.00 A+ (4) 1,710,045
Intercommunity Hospital, Series 2002, 5.600%, 6/01/22
(Pre-refunded 6/01/12)
----------------------------------------------------------------------------------------------------------------------------------
84,070 Total U.S. Guaranteed 93,185,407
----------------------------------------------------------------------------------------------------------------------------------
57
NVX | Nuveen California Dividend Advantage Municipal Fund 2 (continued)
| Portfolio of INVESTMENTS February 28, 2009
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
----------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 7.6% (4.8% OF TOTAL INVESTMENTS)
$ 5,000 Anaheim Public Finance Authority, California, Second Lien Electric 10/14 at 100.00 AA- $ 5,207,250
Distribution Revenue Bonds, Series 2004, 5.250%, 10/01/21 - MBIA
Insured
2,355 Long Beach Bond Finance Authority, California, Natural Gas Purchase No Opt. Call A+ 1,596,243
Revenue Bonds, Series 2007A, 5.000%, 11/15/35
1,000 Los Angeles Department of Water and Power, California, Power System 7/13 at 100.00 AA- 1,019,870
Revenue Bonds, Series 2003A-2, 5.000%, 7/01/23 - MBIA Insured
500 Los Angeles Department of Water and Power, California, Power System 7/15 at 100.00 AAA 490,735
Revenue Bonds, Series 2005A-1, 5.000%, 7/01/31 - FSA Insured (UB)
Merced Irrigation District, California, Electric System Revenue
Bonds, Series 2005:
790 5.125%, 9/01/31 - SYNCORA GTY Insured 9/15 at 100.00 N/R 565,182
1,500 5.250%, 9/01/36 - SYNCORA GTY Insured 9/15 at 100.00 N/R 1,053,360
2,000 Santa Clara, California, Subordinate Electric Revenue Bonds, Series 7/13 at 100.00 AA- 2,105,360
2003A, 5.250%, 7/01/20 - MBIA Insured
4,000 Southern California Public Power Authority, Natural Gas Project 1 No Opt. Call A 2,541,880
Revenue Bonds, Series 2007A, 5.000%, 11/01/33
----------------------------------------------------------------------------------------------------------------------------------
17,145 Total Utilities 14,579,880
----------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 10.3% (6.5% OF TOTAL INVESTMENTS)
1,400 Castaic Lake Water Agency, California, Certificates of 8/16 at 100.00 AA- 1,329,874
Participation, Series 2006C, 5.000%, 8/01/36 - MBIA Insured
545 Healdsburg Public Financing Authority, California, Wastewater 4/16 at 100.00 AA- 483,731
Revenue Bonds, Series 2006, 5.000%, 4/01/36 - MBIA Insured
750 Sacramento County Sanitation District Financing Authority, 6/16 at 100.00 AA 732,998
California, Revenue Bonds, Series 2006, 5.000%, 12/01/31 - FGIC
Insured
1,700 San Buenaventura, California, Wastewater Revenue Certificates of 3/14 at 100.00 AA 1,716,473
Participation, Series 2004, 5.000%, 3/01/24 - MBIA Insured
4,785 San Diego Public Facilities Financing Authority, California, 8/12 at 100.00 AA- 4,813,997
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 AA- 10,534,998
California, Clean Water Revenue Refunding Bonds, Series 2003A,
5.250%, 10/01/20 - MBIA Insured
----------------------------------------------------------------------------------------------------------------------------------
19,180 Total Water and Sewer 19,612,071
----------------------------------------------------------------------------------------------------------------------------------
$ 318,930 Total Long-Term Investments (cost $311,157,161) - 153.9% 293,745,579
=============---------------------------------------------------------------------------------------------------------------------
58
PRINCIPAL
AMOUNT (000) DESCRIPTION (1) RATINGS (3) VALUE
-----------------------------------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS - 3.7% (2.3% OF TOTAL INVESTMENTS)
$ 7,000 California, General Obligation Bonds, Variable Rate Demand Obligations, Series A-1+ $ 7,000,000
2003C-1, 0.400%, 5/01/33 (5)
=============----------------------------------------------------------------------------------------------------------------------
Total Short-Term Investments (cost $7,000,000) 7,000,000
-------------------------------------------------------------------------------------------------------------------
Total Investments (cost $318,157,161) - 157.6% 300,745,579
-------------------------------------------------------------------------------------------------------------------
Floating Rate Obligations - (1.7)% (3,305,000)
-------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 1.7% 3,383,524
-------------------------------------------------------------------------------------------------------------------
Auction Rate Preferred Shares, at Liquidation Value - (57.6)% (6) (110,000,000)
-------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 190,824,103
===================================================================================================================
(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 Group ("Standard
& Poor's") or Moody's Investor Service, Inc. ("Moody's") rating. Ratings
below BBB by Standard & Poor's or Baa by Moody's are considered to be
below investment grade.
The Portfolio of Investments may reflect the ratings on certain bonds
insured by ACA, AGC, AMBAC, FGIC, FSA, MBIA, RAAI and SYNCORA as of
February 28, 2009. Please see the Portfolio Manager's Commentary for an
expanded discussion of the affect on the Fund of changes to the ratings
of certain bonds in the portfolio resulting from changes to the ratings
of the underlying insurers both during the period and after period end.
(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.
(6) Auction Rate Preferred Shares, at Liquidation Value as a percentage of
Total Investments is 36.6%.
N/R Not rated.
(ETM) Escrowed to maturity.
(IF) Inverse floating rate investment.
(UB) Underlying bond of an inverse floating rate trust reflected as a
financing transaction pursuant to the provisions of SFAS No. 140.
See accompanying notes to financial statements.
59
NZH | Nuveen California Dividend Advantage Municipal Fund 3
| Portfolio of INVESTMENTS February 28, 2009
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
----------------------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES - 6.2% (3.9% OF TOTAL INVESTMENTS)
$ 1,150 California County Tobacco Securitization Agency, Tobacco Settlement 6/15 at 100.00 BBB $ 999,442
Asset-Backed Bonds, Sonoma County Tobacco Securitization
Corporation, Series 2005, 4.250%, 6/01/21
7,500 Golden State Tobacco Securitization Corporation, California, 6/17 at 100.00 BBB 4,521,300
Enhanced Tobacco Settlement Asset-Backed Bonds, Series 2007A-1,
5.750%, 6/01/47
29,660 Golden State Tobacco Securitization Corporation, California, 6/22 at 100.00 BBB 11,628,500
Enhanced Tobacco Settlement Asset-Backed Bonds, Series 2007A-2,
0.000%, 6/01/37
----------------------------------------------------------------------------------------------------------------------------------
38,310 Total Consumer Staples 17,149,242
----------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 5.3% (3.4% OF TOTAL INVESTMENTS)
290 California Educational Facilities Authority, Revenue Bonds, 10/15 at 100.00 A3 243,435
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 192,442
270 5.000%, 11/01/25 11/15 at 100.00 A2 240,851
3,825 California Educational Facilities Authority, Student Loan Revenue 3/09 at 101.00 Baa1 3,583,834
Bonds, Cal Loan Program, Series 2001A, 5.400%, 3/01/21 - MBIA
Insured (Alternative Minimum Tax)
6,000 California State University, Systemwide Revenue Bonds, Series 11/15 at 100.00 AA- 6,036,780
2005C, 5.000%, 11/01/27 - MBIA Insured
620 California Statewide Community Development Authority, Revenue 10/13 at 100.00 N/R 454,212
Bonds, Notre Dame de Namur University, Series 2003, 6.500%,
10/01/23
4,000 University of California, Revenue Bonds, Multi-Purpose Projects, 5/13 at 100.00 Aa1 4,084,880
Series 2003A, 5.000%, 5/15/23 - AMBAC Insured (UB)
----------------------------------------------------------------------------------------------------------------------------------
15,205 Total Education and Civic Organizations 14,836,434
----------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE - 28.2% (17.8% 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+ 3,739,920
2,000 6.125%, 4/01/32 4/12 at 100.00 BBB+ 1,699,160
670 California Health Facilities Financing Authority, Revenue Bonds, 4/16 at 100.00 A+ 546,874
Kaiser Permanante System, Series 2006, 5.000%, 4/01/37
2,000 California Health Facilities Financing Authority, Revenue Bonds, 11/16 at 100.00 AA 1,736,380
Sutter Health, Series 2007A, 5.000%, 11/15/42 - MBIA Insured
12,665 California Health Facilities Financing Authority, Revenue Bonds, 11/16 at 100.00 AA- 10,953,004
Sutter Health, Tender Option Bond Trust 3175, 13.766%, 11/15/46
(IF)
9,000 California Infrastructure Economic Development Bank, Revenue Bonds, 8/11 at 102.00 A+ 8,149,680
Kaiser Hospital Assistance LLC, Series 2001A, 5.550%, 8/01/31
2,520 California Statewide Communities Development Authority, Revenue 3/15 at 100.00 A 1,999,620
Bonds, Adventist Health System West, Series 2005A, 5.000%,
3/01/35
1,594 California Statewide Communities Development Authority, Revenue 7/18 at 100.00 AAA 1,037,305
Bonds, Saint Joseph Health System, Trust 2554, 18.216%, 7/01/47 -
FSA Insured (IF)
60
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
----------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE (continued)
California Statewide Communities Development Authority, Revenue
Bonds, ValleyCare Health System, Series 2007A:
$ 1,000 4.800%, 7/15/17 No Opt. Call N/R $ 790,190
3,435 5.125%, 7/15/31 7/17 at 100.00 N/R 1,916,558
6,525 California Statewide Community Development Authority, Health No Opt. Call A+ 6,959,826
Facility Revenue Refunding Bonds, Memorial Health Services,
Series 2003A, 6.000%, 10/01/12
6,450 California Statewide Community Development Authority, Hospital 6/13 at 100.00 AAA 6,905,822
Revenue Bonds, Monterey Peninsula Hospital, Series 2003B,
5.250%, 6/01/18 - FSA Insured
4,500 California Statewide Community Development Authority, Insured 7/17 at 100.00 AAA 4,222,575
Health Facility Revenue Bonds, Catholic Healthcare West, Series
2008K, 5.500%, 7/01/41 - AGC Insured
7,665 California Statewide Community Development Authority, Insured 11/09 at 102.00 A+ 7,688,608
Mortgage Hospital Revenue Bonds, Mission Community Hospital,
Series 2001, 5.375%, 11/01/21
12,425 California Statewide Community Development Authority, Revenue 3/16 at 100.00 A+ 9,972,429
Bonds, Kaiser Permanante System, Series 2006, 5.000%, 3/01/41
645 California Statewide Community Development Authority, Revenue 8/16 at 100.00 A+ 561,427
Bonds, Kaiser Permanente System, Series 2001C, 5.250%, 8/01/31
2,950 Loma Linda, California, Hospital Revenue Bonds, Loma Linda 12/18 at 100.00 BBB 2,906,016
University Medical Center, Series 2008A, 8.250%, 12/01/38
Rancho Mirage Joint Powers Financing Authority, California, Revenue
Bonds, Eisenhower Medical Center, Series 2007A:
5,790 5.000%, 7/01/38 7/17 at 100.00 A3 4,732,167
2,500 5.000%, 7/01/47 7/17 at 100.00 A3 1,974,250
----------------------------------------------------------------------------------------------------------------------------------
88,334 Total Health Care 78,491,811
----------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 3.6% (2.3% OF TOTAL INVESTMENTS)
325 Independent Cities Lease Finance Authority, California, Mobile Home 5/16 at 100.00 N/R 217,991
Park Revenue Bonds, San Juan Mobile Estates, Series 2006B,
5.850%, 5/15/41
1,735 Rohnert Park Finance Authority, California, Senior Lien Revenue 9/13 at 100.00 A+ 1,320,856
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 877,984
Revenue Bonds, Rancho Feliz Mobile Home Park, Series 2003B,
6.625%, 9/15/38
3,610 San Bernardino County Housing Authority, California, GNMA 11/11 at 105.00 Aaa 3,650,685
Collateralized Multifamily Mortgage Revenue Bonds, Pacific Palms
Mobile Home Park, Series 2001A, 6.700%, 12/20/41
San Jose, California, Multifamily Housing Revenue Bonds, GNMA
Mortgage-Backed Securities Program, Lenzen Housing, Series 2001B:
1,250 5.350%, 2/20/26 (Alternative Minimum Tax) 8/11 at 102.00 AAA 1,226,763
2,880 5.450%, 2/20/43 (Alternative Minimum Tax) 8/11 at 102.00 AAA 2,718,000
----------------------------------------------------------------------------------------------------------------------------------
10,925 Total Housing/Multifamily 10,012,279
----------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 3.8% (2.4% OF TOTAL INVESTMENTS)
2,655 California Housing Finance Agency, California, Home Mortgage 2/17 at 100.00 AA- 1,853,644
Revenue Bonds, Series 2008, Trust3137, 14.987%, 8/01/37
(Alternative Minimum Tax) (IF)
675 California Housing Finance Agency, Home Mortgage Revenue Bonds, 2/16 at 100.00 Aa2 669,384
Series 2006H, 5.750%, 8/01/30 - FGIC Insured (Alternative
Minimum Tax)
14,505 California Housing Finance Agency, Home Mortgage Revenue Bonds, 2/16 at 100.00 Aa2 8,142,092
Series 2007M, Trust 1021, 7.230%, 8/01/31 (Alternative Minimum
Tax) (IF)
----------------------------------------------------------------------------------------------------------------------------------
17,835 Total Housing/Single Family 10,665,120
----------------------------------------------------------------------------------------------------------------------------------
61
NZH | Nuveen California Dividend Advantage Municipal Fund 3 (continued)
| Portfolio of INVESTMENTS February 28, 2009
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
----------------------------------------------------------------------------------------------------------------------------------
INDUSTRIALS - 1.8% (1.1% OF TOTAL INVESTMENTS)
$ 2,000 California Pollution Control Financing Authority, Solid Waste 1/16 at 102.00 BBB $ 1,660,800
Disposal Revenue Bonds, Waste Management Inc., Series 2002A,
5.000%, 1/01/22 (Alternative Minimum Tax)
5,205 California Statewide Communities Development Authority, Revenue No Opt. Call BB 3,214,244
Bonds, EnerTech Regional Biosolids Project, Series 2007A,
5.500%, 12/01/33 (Alternative Minimum Tax)
----------------------------------------------------------------------------------------------------------------------------------
7,205 Total Industrials 4,875,044
----------------------------------------------------------------------------------------------------------------------------------
LONG-TERM CARE - 1.8% (1.1% OF TOTAL INVESTMENTS)
2,450 California Health Facilities Financing Authority, Cal-Mortgage 1/13 at 100.00 A+ 2,394,630
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+ 1,464,795
1,315 5.250%, 3/01/32 3/12 at 101.00 A+ 1,138,396
----------------------------------------------------------------------------------------------------------------------------------
5,265 Total Long-Term Care 4,997,821
----------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 19.5% (12.3% OF TOTAL INVESTMENTS)
9,335 California, General Obligation Bonds, Series 2002, 6.000%, 2/01/16 - No Opt. Call AAA 10,698,190
FSA Insured
10 California, General Obligation Veterans Welfare Bonds, Series 6/09 at 100.00 AA- 10,000
1997BJ, 5.500%, 12/01/18 (Alternative Minimum Tax)
14,300 California, General Obligation Veterans Welfare Bonds, Series 6/09 at 100.00 AA- 13,695,396
2001BZ, 5.350%, 12/01/21 - MBIA Insured (Alternative Minimum Tax)
3,000 Contra Costa County Community College District, California, General 8/12 at 100.00 AA 3,065,220
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 Aa3 2,533,525
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 AA- 2,343,665
General Obligation Bonds, Series 2002, 5.125%, 8/01/22 - FGIC
Insured
870 Puerto Rico, General Obligation and Public Improvement Bonds, 7/11 at 100.00 AAA 837,453
Series 2001, 5.000%, 7/01/24 - FSA Insured
575 Roseville Joint Union High School District, Placer County, 8/15 at 100.00 AA- 575,293
California, General Obligation Bonds, Series 2006B, 5.000%,
8/01/27 - FGIC Insured
10,810 San Diego Unified School District, San Diego County, California, 7/11 at 102.00 AAA 11,633,073
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, California, 7/12 at 101.00 AA 4,320,400
General Obligation Bonds, Election of 1998, Series 2002D,
5.250%, 7/01/21 - FGIC Insured
2,715 San Jose-Evergreen Community College District, Santa Clara County, 9/15 at 100.00 Aa2 2,755,644
California, General Obligation Bonds, Series 2005A, 5.000%,
9/01/25 - MBIA Insured
1,630 West Contra Costa Unified School District, Contra Costa County, 8/11 at 101.00 AA- 1,662,828
California, General Obligation Bonds, Series 2003C, 5.000%,
8/01/22 - FGIC Insured
----------------------------------------------------------------------------------------------------------------------------------
52,005 Total Tax Obligation/General 54,130,687
----------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 41.3% (26.1% OF TOTAL INVESTMENTS)
2,040 Borrego Water District, California, Community Facilities District 8/17 at 102.00 N/R 1,595,443
2007-1 Montesoro, Special Tax Bonds, Series 2007, 5.750%, 8/01/25
7,135 Brentwood Infrastructure Financing Authority, Contra Costa County, 11/11 at 100.00 AAA 7,150,412
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 A2 8,670,745
Department of Corrections, Series 2003C, 5.500%, 6/01/16
62
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
----------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED (continued)
$ 4,000 California State Public Works Board, Lease Revenue Bonds, Department 3/12 at 100.00 A $ 3,717,040
of General Services, Series 2002B, 5.000%, 3/01/27 - AMBAC Insured
4,510 California State Public Works Board, Lease Revenue Bonds, Department 12/11 at 102.00 A 4,241,430
of Mental Health, Hospital Addition, Series 2001A, 5.000%,
12/01/26 - AMBAC Insured
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 1,608,950
550 6.000%, 9/01/33 9/13 at 100.00 N/R 455,175
715 Capistrano Unified School District, Orange County, California, 9/15 at 100.00 AA- 641,462
Special Tax Bonds, Community Facilities District, Series 2005,
5.000%, 9/01/24 - FGIC Insured
2,160 Chino Redevelopment Agency, California, Merged Chino Redevelopment 9/16 at 101.00 A 1,663,222
Project Area Tax Allocation Bonds, Series 2006, 5.000%, 9/01/38 -
AMBAC Insured
1,125 Fontana, California, Special Tax Bonds, Sierra Community Facilities 9/14 at 100.00 N/R 840,611
District 22, Series 2004, 6.000%, 9/01/34
1,000 Fullerton Community Facilities District 1, California, Special Tax 9/12 at 100.00 N/R 881,960
Bonds, Amerige Heights, Series 2002, 6.100%, 9/01/22
5,000 Golden State Tobacco Securitization Corporation, California, Tobacco 6/15 at 100.00 A 3,761,250
Settlement Asset-Backed Revenue Bonds, Series 2005A, 5.000%,
6/01/45 - AMBAC Insured
Irvine, California, Unified School District, Community Facilities
District Special Tax Bonds, Series 2006A:
350 5.000%, 9/01/26 9/16 at 100.00 N/R 278,026
805 5.125%, 9/01/36 9/16 at 100.00 N/R 588,455
3,000 Lake Elsinore Public Finance Authority, California, Local Agency 10/13 at 102.00 N/R 2,622,600
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 441,667
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 4,588,920
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 Tax 9/13 at 102.00 N/R 1,673,080
Bonds, Community Facilities District 1 of Sycamore Creek, Series
2003, 6.500%, 9/01/24
1,000 Lindsay Redevelopment Agency, California, Project 1 Tax Allocation 8/17 at 100.00 BBB+ 782,050
Bonds, Series 2007, 5.000%, 8/01/37 - RAAI Insured
5,425 Lodi, California, Certificates of Participation, Public Improvement 10/12 at 100.00 AA- 5,426,519
Financing Project, Series 2002, 5.000%, 10/01/26 - MBIA Insured
1,310 Los Angeles Community Redevelopment Agency, California, Lease 9/15 at 100.00 A2 1,107,042
Revenue Bonds, Manchester Social Services Project, Series 2005,
5.000%, 9/01/37 - AMBAC Insured
1,675 Moreno Valley Unified School District, Riverside County, California, 3/14 at 100.00 AAA 1,677,194
Certificates of Participation, Series 2005, 5.000%, 3/01/26 - FSA
Insured
North Natomas Community Facilities District 4, Sacramento,
California, Special Tax Bonds, Series 2006D:
545 5.000%, 9/01/26 9/14 at 102.00 N/R 408,401
250 5.000%, 9/01/33 9/14 at 102.00 N/R 173,085
3,000 Oakland Redevelopment Agency, California, Subordinate Lien Tax 3/13 at 100.00 AA- 2,901,720
Allocation Bonds, Central District Redevelopment Project, Series
2003, 5.500%, 9/01/19 - FGIC Insured
4,520 Ontario Redevelopment Financing Authority, California, Lease Revenue 8/11 at 101.00 A+ 4,560,906
Bonds, Capital Projects, Series 2001, 5.000%, 8/01/24 - AMBAC
Insured
2,000 Orange County, California, Special Tax Bonds, Community Facilities 8/11 at 101.00 N/R 1,591,820
District 02-1 of Ladera Ranch, Series 2003A, 5.550%, 8/15/33
63
NZH | Nuveen California Dividend Advantage Municipal Fund 3 (continued)
| Portfolio of INVESTMENTS February 28, 2009
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
----------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED (continued)
$ 11,165 Palm Desert Financing Authority, California, Tax Allocation Revenue 4/12 at 102.00 AA- $ 9,531,337
Refunding Bonds, Project Area 1, Series 2002, 5.100%, 4/01/30 -
MBIA Insured
3,250 Pomona Public Financing Authority, California, Revenue Refunding 2/11 at 100.00 AA- 3,066,115
Bonds, Merged Redevelopment Projects, Series 2001AD, 5.000%,
2/01/27 - MBIA Insured
6,000 Puerto Rico Highway and Transportation Authority, Highway Revenue No Opt. Call BBB 4,876,740
Bonds, Series 2007N, 5.250%, 7/01/39 - FGIC Insured
625 Rialto Redevelopment Agency, California, Tax Allocation Bonds, 9/15 at 100.00 A- 533,025
Merged Project Area, Series 2005A, 5.000%, 9/01/35 - SYNCORA GTY
Insured
780 Roseville, California, Certificates of Participation, Public 8/13 at 100.00 A+ 746,265
Facilities, Series 2003A, 5.000%, 8/01/25 - AMBAC Insured
1,145 Sacramento, California, Special Tax Bonds, North Natomas Community 9/14 at 100.00 N/R 885,062
Facilities District 4, Series 2003C, 6.000%, 9/01/33
14,505 San Diego Redevelopment Agency, California, Tax Allocation Bonds, 9/11 at 101.00 AAA 14,272,340
Centre City Project, Series 2001, 5.000%, 9/01/26 - FSA Insured (UB)
2,300 San Francisco Bay Area Rapid Transit District, California, Sales 7/11 at 100.00 AA+ 2,314,996
Tax Revenue Bonds, Series 2001, 5.000%, 7/01/26 - AMBAC Insured
1,345 San Mateo Union High School District, San Mateo County, California, 12/17 at 100.00 A 1,129,329
Certificates of Participation, Phase 1, Series 2007A, 5.000%,
12/15/30 - AMBAC Insured
8,710 South Orange County Public Financing Authority, California, Special 8/15 at 100.00 A 7,165,891
Tax Revenue Bonds, Ladera Ranch, Series 2005A, 5.000%, 8/15/32 -
AMBAC Insured
2,810 West Patterson Financing Authority, California, Special Tax Bonds, 9/13 at 103.00 N/R 1,918,078
Community Facilities District 01-1, Series 2003B, 7.000%, 9/01/38
2,000 West Patterson Financing Authority, California, Special Tax Bonds, 9/13 at 102.00 N/R 1,180,000
Community Facilities District 01-1, Series 2004B, 6.000%, 9/01/39
1,375 West Patterson Financing Authority, California, Special Tax Bonds, 9/13 at 103.00 N/R 826,898
Community Facilities District 2001-1, Series 2004A, 6.125%,
9/01/39
2,500 Yucaipa-Calimesa Joint Unified School District, San Bernardino 10/11 at 100.00 AA- 2,220,475
County, California, General Obligation Refunding Bonds, Series
2001A, 5.000%, 10/01/26 - MBIA Insured
----------------------------------------------------------------------------------------------------------------------------------
128,520 Total Tax Obligation/Limited 114,715,736
----------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 7.7% (4.9% OF TOTAL INVESTMENTS)
1,690 Bay Area Toll Authority, California, Revenue Bonds, San Francisco 4/16 at 100.00 AA 1,665,495
Bay Area Toll Bridge, Series 2006F, 5.000%, 4/01/31 (UB)
11,750 Foothill/Eastern Transportation Corridor Agency, California, Toll 1/14 at 101.00 BBB- 10,243,298
Road Revenue Refunding Bonds, Series 1999, 5.875%, 1/15/28
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 AA- 4,302,143
5,140 5.125%, 5/01/19 - FGIC Insured 5/13 at 100.00 AA- 5,300,265
----------------------------------------------------------------------------------------------------------------------------------
22,690 Total Transportation 21,511,201
----------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 27.1% (17.1% OF TOTAL INVESTMENTS) (4)
4,000 Beaumont Financing Authority, California, Local Agency Revenue 9/12 at 102.00 N/R (4) 4,767,880
Bonds, Series 2002A, 6.750%, 9/01/25 (Pre-refunded 9/01/12)
11,240 California County Tobacco Securitization Agency, Tobacco Settlement 6/12 at 100.00 N/R (4) 12,297,796
Asset-Backed Bonds, Merced County Tobacco Funding Corporation,
Series 2002A, 5.500%, 6/01/33 (Pre-refunded 6/01/12) (5)
California Department of Water Resources, Power Supply Revenue
Bonds, Series 2002A:
3,500 5.375%, 5/01/17 (Pre-refunded 5/01/12) - SYNCORA GTY Insured 5/12 at 101.00 Aaa 3,959,060
9,000 5.125%, 5/01/18 (Pre-refunded 5/01/12) 5/12 at 101.00 Aaa 10,110,870
64
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
----------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED (4) (continued)
$ 720 California Statewide Community Development Authority, Revenue 10/15 at 100.00 N/R (4) $ 795,312
Bonds, Thomas Jefferson School of Law, Series 2005A, 4.875%,
10/01/31 (Pre-refunded 10/01/15)
1,770 Central California Joint Powers Health Finance Authority, 2/10 at 101.00 AAA 1,873,687
Certificates of Participation, Community Hospitals of Central
California Obligated Group, Series 2000, 6.000%, 2/01/20
(Pre-refunded 2/01/10)
2,000 Daly City Housing Development Finance Agency, California, Mobile 12/13 at 102.00 N/R (4) 2,385,440
Home Park Revenue Bonds, Franciscan Mobile Home Park Project,
Series 2002A, 5.800%, 12/15/25 (Pre-refunded 12/15/13)
5,690 Golden State Tobacco Securitization Corporation, California, 6/13 at 100.00 AAA 6,252,286
Tobacco Settlement Asset-Backed Bonds, Series 2003A-1, 6.250%,
6/01/33 (Pre-refunded 6/01/13)
1,940 Lincoln, California, Special Tax Bonds, Lincoln Crossing Community 9/13 at 102.00 N/R (4) 2,355,141
Facilities District 03-1, Series 2003A, 6.500%, 9/01/25
(Pre-refunded 9/01/13)
1,335 Lincoln, California, Special Tax Bonds, Lincoln Crossing Community 9/13 at 102.00 N/R (4) 1,591,988
Facilities District 03-1, Series 2004, 6.000%, 9/01/34
(Pre-refunded 9/01/13)
1,525 Lucia Mar Unified School District, San Luis Obispo County, 8/14 at 100.00 A1 (4) 1,781,520
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 Revenue 7/12 at 100.00 AAA 6,117,265
Bonds, Series 2002D, 5.375%, 7/01/36 (Pre-refunded 7/01/12)
4,725 San Francisco Bay Area Rapid Transit District, California, Sales 7/11 at 100.00 AA+ (4) 5,139,335
Tax Revenue Bonds, Series 2001, 5.000%, 7/01/26 (Pre-refunded
7/01/11) - AMBAC Insured
7,595 San Francisco State University Foundation Inc., California, 9/11 at 101.00 AA (4) 8,375,538
Auxiliary Organization Student Housing Revenue Bonds, Series
2001, 5.000%, 9/01/26 (Pre-refunded 9/01/11) - MBIA Insured
4,200 Tobacco Securitization Authority of Southern California, Tobacco 6/12 at 100.00 AAA 4,729,032
Settlement Asset-Backed Bonds, San Diego County Tobacco Asset
Securitization Corporation, Senior Series 2001A, 5.500%, 6/01/36
(Pre-refunded 6/01/12)
2,500 Whittier, California, Health Facility Revenue Bonds, Presbyterian 6/12 at 101.00 A+ (4) 2,850,075
Intercommunity Hospital, Series 2002, 5.600%, 6/01/22
(Pre-refunded 6/01/12)
----------------------------------------------------------------------------------------------------------------------------------
67,240 Total U.S. Guaranteed 75,382,225
----------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 3.3% (2.1% OF TOTAL INVESTMENTS)
3,815 Long Beach Bond Finance Authority, California, Natural Gas Purchase No Opt. Call A+ 2,585,845
Revenue Bonds, Series 2007A, 5.000%, 11/15/35
1,285 Merced Irrigation District, California, Electric System Revenue 9/15 at 100.00 N/R 919,315
Bonds, Series 2005, 5.125%, 9/01/31 - SYNCORA GTY Insured
5,000 Merced Irrigation District, California, Revenue Certificates of 9/13 at 102.00 Baa3 3,632,100
Participation, Electric System Project, Series 2003, 5.700%,
9/01/36
2,250 Salinas Valley Solid Waste Authority, California, Revenue Bonds, 8/12 at 100.00 A 2,102,985
Series 2002, 5.125%, 8/01/22 - AMBAC Insured (Alternative
Minimum Tax)
----------------------------------------------------------------------------------------------------------------------------------
12,350 Total Utilities 9,240,245
----------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 8.7% (5.5% OF TOTAL INVESTMENTS)
1,070 Burbank, California, Wastewater System Revenue Bonds, Series 2004A, 6/14 at 100.00 AA- 1,092,984
5.000%, 6/01/22 - AMBAC Insured
7,000 Carmichael Water District, Sacramento County, California, Water 9/09 at 102.00 AA- 6,492,850
Revenue Certificates of Participation, Series 1999, 5.125%,
9/01/29 - MBIA Insured
1,125 Fortuna Public Finance Authority, California, Water Revenue Bonds, 10/16 at 100.00 AAA 1,070,044
Series 2006, 5.000%, 10/01/36 - FSA Insured
890 Healdsburg Public Financing Authority, California, Wastewater 4/16 at 100.00 AA- 789,946
Revenue Bonds, Series 2006, 5.000%, 4/01/36 - MBIA Insured
850 Marina Coast Water District, California, Enterprise Certificate of 6/16 at 100.00 AA- 744,361
Participation, Series 2006, 5.000%, 6/01/31 - MBIA Insured
65
NZH | Nuveen California Dividend Advantage Municipal Fund 3 (continued)
| Portfolio of INVESTMENTS February 28, 2009
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
-----------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER (continued)
$ 1,000 Pico Rivera Water Authority, California, Revenue Bonds, Series 12/11 at 102.00 N/R $ 782,229
2001A, 6.250%, 12/01/32
1,000 San Buenaventura, California, Wastewater Revenue Certificates of 3/14 at 100.00 AA 1,009,689
Participation, 5.000%, 3/01/24 - MBIA Insured Series 2004,
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 AA- 2,479,624
6,260 5.000%, 8/01/24 - MBIA Insured 8/12 at 100.00 AA- 6,160,653
3,315 San Francisco City and County Public Utilities Commission, 4/13 at 100.00 AA- 3,546,154
California, Clean Water Revenue Refunding Bonds, Series 2003A,
5.250%, 10/01/18 - MBIA Insured
-----------------------------------------------------------------------------------------------------------------------------------
25,010 Total Water and Sewer 24,168,534
-----------------------------------------------------------------------------------------------------------------------------------
$ 490,894 Total Investments (cost $484,796,116) - 158.3% 440,176,379
=============----------------------------------------------------------------------------------------------------------------------
Floating Rate Obligations - (4.9)% (13,650,000)
-------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 2.0% 5,604,246
-------------------------------------------------------------------------------------------------------------------
Auction Rate Preferred Shares, at Liquidation Value - (55.4)% (6) (154,075,000)
-------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 278,055,625
===================================================================================================================
Investments in Derivatives
FORWARD SWAPS OUTSTANDING AT FEBRUARY 28, 2009:
FUND FIXED RATE UNREALIZED
NOTIONAL PAY/RECEIVE FLOATING RATE FIXED RATE PAYMENT EFFECTIVE TERMINATION APPRECIATION
COUNTERPARTY AMOUNT FLOATING RATE INDEX (ANNUALIZED) FREQUENCY DATE (7) DATE (DEPRECIATION)
-----------------------------------------------------------------------------------------------------------------------------------
Citigroup Inc. $10,000,000 Receive 3-Month USD-LIBOR 5.323% Semi-Annually 7/29/09 7/29/38 $ (3,279,628)
Goldman Sachs 3,000,000 Receive 3-Month USD-LIBOR 2.749 Semi-Annually 1/15/10 1/15/39 437,785
-----------------------------------------------------------------------------------------------------------------------------------
$ (2,841,843)
===================================================================================================================================
(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 Group
("Standard & Poor's") or Moody's Investor Service, Inc. ("Moody's")
rating. Ratings below BBB by Standard & Poor's or Baa by Moody's are
considered to be below investment grade.
The Portfolio of Investments may reflect the ratings on certain
bonds insured by ACA, AGC, AMBAC, FGIC, FSA, MBIA, RAAI and SYNCORA
as of February 28, 2009. Please see the Portfolio Manager's
Commentary for an expanded discussion of the affect on the Fund of
changes to the ratings of certain bonds in the portfolio resulting
from changes to the ratings of the underlying insurers both during
the period and after period end.
(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, or portion of investment, has been pledged to
collateralize the net payment obligations for investments in
derivatives.
(6) Auction Rate Preferred Shares, at Liquidation Value as a percentage
of Total Investments is 35.0%.
(7) 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.
(IF) Inverse floating rate investment.
(UB) Underlying bond of an inverse floating rate trust reflected as a
financing transaction pursuant to the provisions of SFAS No. 140.
USD-LIBOR United States Dollar-London Inter-Bank Offered Rate.
See accompanying notes to financial statements.
66
NKL | Nuveen Insured California Dividend Advantage Municipal Fund
| Portfolio of INVESTMENTS February 28, 2009
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
----------------------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES - 2.7% (1.8% OF TOTAL INVESTMENTS)
$ 14,155 Golden State Tobacco Securitization Corporation, California, 6/22 at 100.00 BBB $ 5,549,609
Enhanced Tobacco Settlement Asset-Backed Bonds, Series 2007A-2,
0.000%, 6/01/37
----------------------------------------------------------------------------------------------------------------------------------
EDUCATION AND CIVIC ORGANIZATIONS - 5.2% (3.4% OF TOTAL INVESTMENTS)
1,675 California Educational Facilities Authority, Revenue Bonds, 10/12 at 100.00 A2 1,649,406
University of San Diego, Series 2002A, 5.250%, 10/01/30
9,000 California State University, Systemwide Revenue Bonds, Series 11/12 at 100.00 Aa3 9,048,690
2002A, 5.125%, 11/01/26 - AMBAC Insured
----------------------------------------------------------------------------------------------------------------------------------
10,675 Total Education and Civic Organizations 10,698,096
----------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE - 6.2% (4.0% OF TOTAL INVESTMENTS)
5,000 ABAG Finance Authority for Non-Profit Corporations, California, 4/12 at 100.00 A+ 4,857,350
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 Bonds, 8/13 at 100.00 AA 2,850,328
Lucile Salter Packard Children's Hospital, Series 2003C, 5.000%,
8/15/20 - AMBAC Insured
1,748 California Statewide Communities Development Authority, Revenue 7/18 at 100.00 AAA 1,137,553
Bonds, Saint Joseph Health System, Trust 2554, 18.216%, 7/01/47 -
FSA Insured (IF)
5,000 California Statewide Community Development Authority, Revenue 3/16 at 100.00 A+ 4,013,050
Bonds, Kaiser Permanante System, Series 2006, 5.000%, 3/01/41
----------------------------------------------------------------------------------------------------------------------------------
14,563 Total Health Care 12,858,281
----------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 1.4% (0.9% OF TOTAL INVESTMENTS)
1,000 California Statewide Community Development Authority, Student 8/12 at 100.00 Baa1 885,450
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 Program 7/11 at 102.00 AAA 1,932,470
Multifamily Housing Revenue Bonds, Park Plaza West Senior
Apartments, Series 2001B, 5.300%, 1/20/21 (Alternative Minimum Tax)
----------------------------------------------------------------------------------------------------------------------------------
2,905 Total Housing/Multifamily 2,817,920
----------------------------------------------------------------------------------------------------------------------------------
HOUSING/SINGLE FAMILY - 0.2% (0.1% OF TOTAL INVESTMENTS)
435 California Housing Finance Agency, Home Mortgage Revenue Bonds, 2/16 at 100.00 Aa2 431,381
Series 2006H, 5.750%, 8/01/30 - FGIC Insured (Alternative
Minimum Tax)
----------------------------------------------------------------------------------------------------------------------------------
INDUSTRIALS - 1.3% (0.8% OF TOTAL INVESTMENTS)
3,000 California Pollution Control Financing Authority, Solid Waste No Opt. Call BBB 2,632,350
Disposal Revenue Bonds, Republic Services Inc., Series 2002C,
5.250%, 6/01/23 (Mandatory put 12/01/17) (Alternative Minimum Tax)
----------------------------------------------------------------------------------------------------------------------------------
LONG-TERM CARE - 1.4% (0.9% OF TOTAL INVESTMENTS)
3,000 ABAG Finance Authority for Non-Profit Corporations, California, 11/12 at 100.00 A+ 2,938,140
Insured Senior Living Revenue Bonds, Odd Fellows Home of
California, Series 2003A, 5.200%, 11/15/22
----------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 27.9% (18.0% OF TOTAL INVESTMENTS)
5,920 Cajon Valley Union School District, San Diego County, California, 8/10 at 102.00 AA- 5,920,710
General Obligation Bonds, Series 2002B, 5.125%, 8/01/32 - MBIA
Insured
900 California, General Obligation Bonds, Series 2003, 5.000%, 2/01/21 8/13 at 100.00 A1 904,329
8,250 California, General Obligation Refunding Bonds, Series 2002, 2/12 at 100.00 AA- 8,255,445
5.000%, 2/01/22 - MBIA Insured
67
NKL | Nuveen Insured California Dividend Advantage Municipal Fund (continued)
| Portfolio of INVESTMENTS February 28, 2009
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
----------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL (continued)
$ 3,375 Coast Community College District, Orange County, California, 8/18 at 100.00 AAA $ 2,600,573
General Obligation Bonds, Series 2006C, 0.000%, 8/01/31 - FSA
Insured
230 El Monte Union High School District, Los Angeles County, 6/13 at 100.00 AAA 224,975
California, General Obligation Bonds, Series 2003A, 5.000%,
6/01/28 - FSA Insured
1,365 Fontana Unified School District, San Bernardino County, California, 8/18 at 100.00 AAA 1,478,759
General Obligation Bonds, Trust 2668, 14.602%, 8/01/28 - FSA
Insured (IF)
10,000 Fremont Unified School District, Alameda County, California, 8/12 at 101.00 AA- 10,035,100
General Obligation Bonds, Series 2002A, 5.000%, 8/01/25 - FGIC
Insured
1,000 Los Rios Community College District, Sacramento, El Dorado and Yolo 8/14 at 102.00 AAA 1,040,210
Counties, California, General Obligation Bonds, Series 2006C,
5.000%, 8/01/25 - FSA Insured (UB)
1,500 Madera Unified School District, Madera County, California, General 8/12 at 100.00 AAA 1,502,280
Obligation Bonds, Series 2002, 5.000%, 8/01/28 - FSA Insured
2,000 Murrieta Valley Unified School District, Riverside County, 9/17 at 100.00 AAA 1,805,600
California, General Obligation Bonds, Series 2007, 4.500%,
9/01/30 - FSA Insured
2,500 Oakland Unified School District, Alameda County, California, 8/12 at 100.00 AA- 2,432,100
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 AA- 375,191
California, General Obligation Bonds, Series 2006B, 5.000%,
8/01/27 - FGIC Insured
3,250 San Diego Unified School District, San Diego County, California, 7/11 at 102.00 AAA 3,497,455
General Obligation Bonds, Election of 1998, Series 2001C,
5.000%, 7/01/22 - FSA Insured
3,500 San Mateo County Community College District, California, General 9/12 at 100.00 Aa1 3,533,600
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 10,185,497
General Obligation Bonds, Series 2002A, 5.000%, 8/01/23 - FSA
Insured
3,905 West Kern Community College District, California, General 11/17 at 100.00 A+ 3,722,832
Obligation Bonds, Election 2004, Series 2007C, 5.000%, 10/01/32 -
SYNCORA GTY Insured
----------------------------------------------------------------------------------------------------------------------------------
58,070 Total Tax Obligation/General 57,514,656
----------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 48.9% (31.7% OF TOTAL INVESTMENTS)
1,450 Baldwin Park Public Financing Authority, California, Sales Tax and 8/13 at 102.00 BBB 1,389,782
Tax Allocation Bonds, Puente Merced Redevelopment Project,
Series 2003, 5.250%, 8/01/21
6,895 Brea and Olinda Unified School District, Orange County, California, 8/11 at 101.00 AAA 6,923,752
Certificates of Participation Refunding, Series 2002A, 5.125%,
8/01/26 - FSA Insured
2,200 California Infrastructure Economic Development Bank, Los Angeles 9/13 at 101.00 A 2,084,478
County, Revenue Bonds, Department of Public Social Services,
Series 2003, 5.000%, 9/01/28 - AMBAC Insured
3,100 California State Public Works Board Bonds, Department of Health 11/15 at 100.00 A 2,774,872
Services, Richmond Lab, Series 2005B, 5.000%, 11/01/30 - SYNCORA
GTY Insured
465 Capistrano Unified School District, Orange County, California, 9/15 at 100.00 AA- 417,175
Special Tax Bonds, Community Facilities District, Series 2005,
5.000%, 9/01/24 - FGIC Insured
1,400 Chino Redevelopment Agency, California, Merged Chino Redevelopment 9/16 at 101.00 A 1,078,014
Project Area Tax Allocation Bonds, Series 2006, 5.000%, 9/01/38 -
AMBAC Insured
7,035 Corona-Norco Unified School District, Riverside County, California, 9/13 at 100.00 AA- 6,880,652
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 AA- 2,532,574
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 A 8,673,261
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 Revenue 9/12 at 102.00 A 3,803,400
Bonds, Series 2004A, 5.000%, 9/01/21 - AMBAC Insured
5,815 Golden State Tobacco Securitization Corporation, California, 6/15 at 100.00 AAA 4,478,070
Enhanced Tobacco Settlement Revenue Bonds, Drivers Trust 2091,
11.707%, 6/01/45 - AGC Insured (IF)
68
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
----------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED (continued)
$ 8,780 Golden State Tobacco Securitization Corporation, California, 6/15 at 100.00 A $ 6,604,755
Tobacco Settlement Asset-Backed Revenue Bonds, Series 2005A,
5.000%, 6/01/45 - AMBAC Insured
1,300 Hesperia Public Financing Authority, California, Redevelopment and 9/17 at 100.00 Baa1 1,039,922
Housing Projects Tax Allocation Bonds, Series 2007A, 5.000%,
9/01/37 - SYNCORA GTY Insured
2,115 Inglewood Redevelopment Agency, California, Tax Allocation No Opt. Call A 2,057,768
Refunding Bonds, Merged Area Redevelopment Project, Series
1998A, 5.250%, 5/01/23 - AMBAC Insured
3,500 La Quinta Redevelopment Agency, California, Tax Allocation Bonds, 9/11 at 102.00 A+ 3,082,310
Redevelopment Project Area 1, Series 2001, 5.100%, 9/01/31 -
AMBAC Insured
3,400 La Quinta Redevelopment Agency, California, Tax Allocation Bonds, 9/12 at 102.00 A+ 3,302,454
Redevelopment Project Area 1, Series 2002, 5.000%, 9/01/22 -
AMBAC Insured
845 Los Angeles Community Redevelopment Agency, California, Lease 9/15 at 100.00 A2 714,084
Revenue Bonds, Manchester Social Services Project, Series 2005,
5.000%, 9/01/37 - AMBAC Insured
1,640 Los Angeles County Metropolitan Transportation Authority, 7/09 at 100.00 A1 1,651,513
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, Municipal 6/13 at 100.00 AA- 1,390,898
Improvement Corporation, Series 2003AW, 5.000%, 6/01/33 - AMBAC
Insured
7,000 Los Angeles, California, Certificates of Participation, Series 4/12 at 100.00 AA- 7,021,420
2002, 5.200%, 4/01/27 - AMBAC Insured
8,470 Ontario Redevelopment Financing Authority, California, Lease 8/11 at 101.00 A+ 8,427,481
Revenue Bonds, Capital Projects, Series 2001, 5.200%, 8/01/29 -
AMBAC Insured
5,000 Palm Desert Financing Authority, California, Tax Allocation Revenue 4/12 at 102.00 AA- 4,497,750
Refunding Bonds, Project Area 1, Series 2002, 5.000%, 4/01/25 -
MBIA Insured
3,000 Puerto Rico Highway and Transportation Authority, Highway Revenue No Opt. Call BBB 2,438,370
Bonds, Series 2007N, 5.250%, 7/01/39 - FGIC Insured
405 Rialto Redevelopment Agency, California, Tax Allocation Bonds, 9/15 at 100.00 A- 345,400
Merged Project Area, Series 2005A, 5.000%, 9/01/35 - SYNCORA GTY
Insured
4,475 Riverside County, California, Asset Leasing Corporate Leasehold 6/12 at 101.00 AA- 4,180,590
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 A+ 483,159
Facilities, Series 2003A, 5.000%, 8/01/25 - AMBAC Insured
3,175 San Buenaventura, California, Certificates of Participation, Series 2/11 at 101.00 A 2,737,644
2001C, 5.250%, 2/01/31 - AMBAC Insured
3,730 San Diego Redevelopment Agency, California, Subordinate Lien Tax 9/09 at 101.00 Baa2 3,150,134
Increment and Parking Revenue Bonds, Centre City Project, Series
2003B, 5.250%, 9/01/26
4,000 San Jose Financing Authority, California, Lease Revenue Refunding 9/11 at 100.00 AA+ 4,170,440
Bonds, Convention Center Project, Series 2001F, 5.000%, 9/01/19 -
MBIA Insured
1,000 San Jose Redevelopment Agency, California, Tax Allocation Bonds, 8/15 at 100.00 AA- 886,140
Merged Project Area, Series 2005A, 5.000%, 8/01/28 - MBIA Insured
2,160 Temecula Redevelopment Agency, California, Tax Allocation Revenue 8/09 at 101.00 AA- 2,017,030
Bonds, Redevelopment Project 1, Series 2002, 5.125%, 8/01/27 -
MBIA Insured
----------------------------------------------------------------------------------------------------------------------------------
110,185 Total Tax Obligation/Limited 101,235,292
----------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 5.3% (3.4% OF TOTAL INVESTMENTS)
7,500 Foothill/Eastern Transportation Corridor Agency, California, Toll 1/14 at 101.00 BBB- 6,466,425
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 AA- 2,162,604
2,300 5.250%, 5/01/17 - FGIC Insured (Alternative Minimum Tax) 5/13 at 100.00 AA- 2,265,914
----------------------------------------------------------------------------------------------------------------------------------
11,985 Total Transportation 10,894,943
----------------------------------------------------------------------------------------------------------------------------------
69
NKL | Nuveen Insured California Dividend Advantage Municipal Fund (continued)
| Portfolio of INVESTMENTS February 28, 2009
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
----------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 23.0% (14.9% OF TOTAL INVESTMENTS) (4)
$ 6,000 California Department of Water Resources, Power Supply Revenue 5/12 at 101.00 Aaa $ 6,740,580
Bonds, Series 2002A, 5.125%, 5/01/18 (Pre-refunded 5/01/12)
35 California Department of Water Resources, Water System Revenue 12/12 at 100.00 AAA 39,665
Bonds, Central Valley Project, Series 2002X, 5.150%, 12/01/23
(Pre-refunded 12/01/12) - FGIC Insured
2,250 California Infrastructure Economic Development Bank, First Lien 1/28 at 100.00 AAA 2,518,650
Revenue Bonds, San Francisco Bay Area Toll Bridge, Series 2003A,
5.000%, 7/01/36 (Pre-refunded 1/01/28) - AMBAC Insured
9,000 Eastern Municipal Water District, California, Water and Sewerage 7/11 at 100.00 AA (4) 9,789,210
System Revenue Certificates of Participation, Series 2001B,
5.000%, 7/01/30 (Pre-refunded 7/01/11) - FGIC 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 A+ (4) 1,208,060
1,190 5.125%, 8/01/24 - FGIC Insured (ETM) 8/10 at 102.00 A+ (4) 1,264,375
1,245 5.125%, 8/01/25 - FGIC Insured (ETM) 8/10 at 102.00 A+ (4) 1,309,977
1,255 5.125%, 8/01/26 - FGIC Insured (ETM) 8/10 at 102.00 A+ (4) 1,309,354
2,070 Fresno Unified School District, Fresno County, California, General 8/10 at 102.00 AAA 2,179,772
Obligation Bonds, Series 2002G, 5.125%, 8/01/26 - FSA Insured
(ETM)
4,500 Golden State Tobacco Securitization Corporation, California, 6/13 at 100.00 AAA 5,499,000
Tobacco Settlement Asset-Backed Revenue Bonds, Series 2003A-2,
7.900%, 6/01/42 (Pre-refunded 6/01/13)
5,000 Los Angeles Unified School District, California, General Obligation 7/12 at 100.00 AA (4) 5,595,050
Bonds, Series 2002E, 5.125%, 1/01/27 (Pre-refunded 7/01/12) -
MBIA Insured
3,380 Rancho Mirage Joint Powers Financing Authority, California, Revenue 7/14 at 100.00 A3 (4) 3,975,928
Bonds, Eisenhower Medical Center, Series 2004, 5.875%, 7/01/26
(Pre-refunded 7/01/14)
2,980 Santa Clarita Community College District, Los Angeles County, 8/11 at 101.00 AA- (4) 3,288,341
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 2,707,205
General Obligation Bonds, Series 2002, 5.000%, 8/01/26
(Pre-refunded 8/01/11) - FSA Insured
----------------------------------------------------------------------------------------------------------------------------------
42,500 Total U.S. Guaranteed 47,425,167
----------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 15.1% (9.8% OF TOTAL INVESTMENTS)
9,000 Anaheim Public Finance Authority, California, Revenue Bonds, 10/12 at 100.00 AAA 9,011,340
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 AA- 9,619,600
Revenue Bonds, Pacific Gas and Electric Company, Series 1996A,
5.350%, 12/01/16 - MBIA Insured (Alternative Minimum Tax)
2,490 Long Beach Bond Finance Authority, California, Natural Gas Purchase No Opt. Call A+ 1,687,747
Revenue Bonds, Series 2007A, 5.000%, 11/15/35
830 Merced Irrigation District, California, Electric System Revenue 9/15 at 100.00 N/R 593,799
Bonds, Series 2005, 5.125%, 9/01/31 - SYNCORA GTY Insured
1,775 Northern California Power Agency, Revenue Refunding Bonds, 7/10 at 100.00 AA- 1,616,368
Hydroelectric Project 1, Series 1998A, 5.200%, 7/01/32 - MBIA
Insured
3,000 Sacramento Municipal Utility District, California, Electric Revenue 8/11 at 100.00 AA- 2,941,410
Bonds, Series 2001N, 5.000%, 8/15/28 - MBIA Insured
5,630 Southern California Public Power Authority, Subordinate Revenue 7/12 at 100.00 AAA 5,777,506
Refunding Bonds, Transmission Project, Series 2002A, 4.750%,
7/01/19 - FSA Insured
----------------------------------------------------------------------------------------------------------------------------------
32,725 Total Utilities 31,247,770
----------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 15.0% (9.7% OF TOTAL INVESTMENTS)
2,965 California Department of Water Resources, Water System Revenue 12/12 at 100.00 AAA 3,090,775
Bonds, Central Valley Project, Series 2002X, 5.150%, 12/01/23 -
FGIC Insured
750 Fortuna Public Finance Authority, California, Water Revenue Bonds, 10/16 at 100.00 AAA 713,363
Series 2006, 5.000%, 10/01/36 - FSA Insured
570 Healdsburg Public Financing Authority, California, Wastewater 4/16 at 100.00 AA- 505,921
Revenue Bonds, Series 2006, 5.000%, 4/01/36 - MBIA Insured
70
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
-----------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER (continued)
$ 4,500 Los Angeles County Sanitation Districts Financing Authority, 10/13 at 100.00 AAA $ 4,627,980
California, Senior Revenue Bonds, Capital Projects, Series
2003A, 5.000%, 10/01/23 - FSA Insured
2,085 Manteca Financing Authority, California, Sewerage Revenue Bonds, 12/13 at 100.00 A3 2,089,128
Series 2003B, 5.000%, 12/01/33 - MBIA Insured
500 Marina Coast Water District, California, Enterprise Certificate of 6/16 at 100.00 AA- 437,860
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 8,947,017
Participation, Series 2003, 5.000%, 2/01/33 - FGIC Insured (UB)
8,000 San Diego County Water Authority, California, Water Revenue 5/18 at 100.00 AAA 7,783,920
Certificates of Participation, Series 2008A, 5.000%, 5/01/38 -
FSA Insured
Semitropic Water Storage District, Kern County, California, Water
Banking Revenue Bonds, Series 2004A:
1,315 5.500%, 12/01/20 - SYNCORA GTY Insured 12/14 at 100.00 A 1,382,828
1,415 5.500%, 12/01/21 - SYNCORA GTY Insured 12/14 at 100.00 A 1,476,156
-----------------------------------------------------------------------------------------------------------------------------------
31,285 Total Water and Sewer 31,054,948
-----------------------------------------------------------------------------------------------------------------------------------
$ 335,483 Total Long-Term Investments (cost $326,828,622) - 153.6% 317,298,553
=============----------------------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS - 1.0% (0.6% OF TOTAL INVESTMENTS)
$ 2,000 California, General Obligation Bonds, Variable Rate Demand A-1+ $ 2,000,000
Obligations, Series 2003C-1, 0.400%, 5/01/33 (5)
=============----------------------------------------------------------------------------------------------------------------------
Total Short-Term Investments (cost $2,000,000) 2,000,000
-------------------------------------------------------------------------------------------------------------------
Total Investments (cost $328,828,622) - 154.6% 319,298,553
-------------------------------------------------------------------------------------------------------------------
Floating Rate Obligations - (3.7)% (7,635,000)
-------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 1.5% 3,053,606
-------------------------------------------------------------------------------------------------------------------
Auction Rate Preferred Shares, at Liquidation Value - (52.4)% (6) (108,250,000)
-------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 206,467,159
===================================================================================================================
At least 80% of the Fund's net assets (including net assets attributable
to Auction Rate Preferred shares) are invested in municipal securities
that guarantee the timely payment of principal and interest. See Notes to
Financial Statements, Footnote 1 - Insurance, for more information.
(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 Group ("Standard
& Poor's") or Moody's Investor Service, Inc. ("Moody's") rating. Ratings
below BBB by Standard & Poor's or Baa by Moody's are considered to be
below investment grade.
The Portfolio of Investments may reflect the ratings on certain bonds
insured by ACA, AGC, AMBAC, FGIC, FSA, MBIA, RAAI and SYNCORA as of
February 28, 2009. Please see the Portfolio Manager's Commentary for an
expanded discussion of the affect on the Fund of changes to the ratings
of certain bonds in the portfolio resulting from changes to the ratings
of the underlying insurers both during the period and after period end.
(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.
(6) Auction Rate Preferred Shares, at Liquidation Value as a percentage of
Total Investments is 33.9%.
N/R Not rated.
(ETM) Escrowed to maturity.
(IF) Inverse floating rate investment.
(UB) Underlying bond of an inverse floating rate trust reflected as a
financing transaction pursuant to the provisions of SFAS No. 140.
See accompanying notes to financial statements.
71
NKX | Nuveen Insured California Tax-Free Advantage Municipal Fund
| Portfolio of INVESTMENTS February 28, 2009
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
----------------------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES - 3.1% (2.2% OF TOTAL INVESTMENTS)
$ 6,070 Golden State Tobacco Securitization Corporation, California, 6/22 at 100.00 BBB $ 2,379,804
Enhanced Tobacco Settlement Asset-Backed Bonds, Series 2007A-2,
0.000%, 6/01/37
----------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE - 17.2% (11.9% OF TOTAL INVESTMENTS)
1,800 California Infrastructure Economic Development Bank, Revenue Bonds, 8/11 at 102.00 A+ 1,629,936
Kaiser Hospital Assistance LLC, Series 2001A, 5.550%, 8/01/31
662 California Statewide Communities Development Authority, Revenue 7/18 at 100.00 AAA 430,610
Bonds, Saint Joseph Health System, Trust 2554, 18.216%, 7/01/47 -
FSA Insured (IF)
4,000 California Statewide Community Development Authority, Insured 7/17 at 100.00 AAA 3,753,400
Health Facility Revenue Bonds, Catholic Healthcare West, Series
2008K, 5.500%, 7/01/41 - AGC Insured
1,815 California Statewide Community Development Authority, Revenue 3/16 at 100.00 A+ 1,456,737
Bonds, Kaiser Permanante System, Series 2006, 5.000%, 3/01/41
1,120 California Statewide Community Development Authority, Revenue 3/16 at 100.00 AAA 1,474,010
Bonds, Kaiser Permanente System, Trust 11672, 18.623%, 3/01/41 -
BHAC Insured (IF)
4,060 California Statewide Community Development Authority, Revenue No Opt. Call A1 4,302,341
Bonds, Sherman Oaks Health System, Series 1998A, 5.000%, 8/01/22 -
AMBAC Insured
----------------------------------------------------------------------------------------------------------------------------------
13,457 Total Health Care 13,047,034
----------------------------------------------------------------------------------------------------------------------------------
HOUSING/MULTIFAMILY - 1.4% (1.0% OF TOTAL INVESTMENTS)
1,165 Poway, California, Housing Revenue Bonds, Revenue Bonds, Poinsettia 5/13 at 102.00 AA- 1,081,504
Mobile Home Park, Series 2003, 5.000%, 5/01/23
----------------------------------------------------------------------------------------------------------------------------------
LONG-TERM CARE - 3.8% (2.6% OF TOTAL INVESTMENTS)
1,000 ABAG Finance Authority for Non-Profit Corporations, California, 11/12 at 100.00 A+ 979,380
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+ 1,866,280
Insured Revenue Bonds, Northern California Retired Officers
Community Corporation - Paradise Valley Estates, Series 2002,
5.250%, 1/01/26
----------------------------------------------------------------------------------------------------------------------------------
3,000 Total Long-Term Care 2,845,660
----------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL - 18.7% (13.0% OF TOTAL INVESTMENTS)
2,000 Butte-Glenn Community College District, Butte and Glenn Counties, 8/12 at 101.00 A1 2,010,960
California, General Obligation Bonds, Series 2002A, 5.000%,
8/01/26 - MBIA Insured
55 California State, General Obligation Bonds, Series 2002, 5.250%, 4/12 at 100.00 A1 54,102
4/01/30 - SYNCORA GTY Insured
515 Fontana Unified School District, San Bernardino County, California, 8/18 at 100.00 AAA 557,920
General Obligation Bonds, Trust 2668, 14.602%, 8/01/28 - FSA
Insured (IF)
450 Fremont Unified School District, Alameda County, California, 8/12 at 101.00 AA- 451,580
General Obligation Bonds, Series 2002A, 5.000%, 8/01/25 - FGIC
Insured
2,000 Los Angeles, California, General Obligation Bonds, Series 2002A, 9/12 at 100.00 AA 2,076,860
5.000%, 9/01/22 - MBIA Insured
1,000 Murrieta Valley Unified School District, Riverside County, 9/13 at 100.00 AA- 1,005,600
California, General Obligation Bonds, Series 2003A, 5.000%,
9/01/26 - FGIC Insured
72
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
----------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/GENERAL (continued)
$ 1,000 Murrieta Valley Unified School District, Riverside County, 9/17 at 100.00 AAA $ 902,800
California, General Obligation Bonds, Series 2007, 4.500%,
9/01/30 - FSA Insured
140 Roseville Joint Union High School District, Placer County, 8/15 at 100.00 AA- 140,071
California, General Obligation Bonds, Series 2006B, 5.000%,
8/01/27 - FGIC Insured
3,000 San Diego Unified School District, California, General Obligation 7/10 at 100.00 AA 3,120,000
Bonds, Election of 1998, Series 2000B, 5.125%, 7/01/22 - MBIA
Insured
3,855 San Rafael City High School District, Marin County, California, 8/12 at 100.00 AAA 3,868,107
General Obligation Bonds, Series 2003A, 5.000%, 8/01/28 - FSA
Insured
----------------------------------------------------------------------------------------------------------------------------------
14,015 Total Tax Obligation/General 14,188,000
----------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED - 45.5% (31.5% OF TOTAL INVESTMENTS)
550 Baldwin Park Public Financing Authority, California, Sales Tax and 8/13 at 102.00 BBB 527,159
Tax Allocation Bonds, Puente Merced Redevelopment Project,
Series 2003, 5.250%, 8/01/21
1,165 Burbank Public Financing Authority, California, Revenue Refunding 12/13 at 100.00 A 1,087,131
Bonds, Golden State Redevelopment Project, Series 2003A, 5.250%,
12/01/22 - AMBAC Insured
4,000 California State Public Works Board, Lease Revenue Bonds, 12/12 at 100.00 A 3,710,000
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 AA- 152,516
Special Tax Bonds, Community Facilities District, Series 2005,
5.000%, 9/01/24 - FGIC Insured
525 Chino Redevelopment Agency, California, Merged Chino Redevelopment 9/16 at 101.00 A 404,255
Project Area Tax Allocation Bonds, Series 2006, 5.000%, 9/01/38 -
AMBAC Insured
1,610 Folsom Public Financing Authority, California, Special Tax Revenue 9/12 at 102.00 A 1,530,869
Bonds, Series 2004A, 5.000%, 9/01/21 - AMBAC Insured
2,195 Golden State Tobacco Securitization Corporation, California, 6/15 at 100.00 AAA 1,690,346
Enhanced Tobacco Settlement Revenue Bonds, Drivers Trust 2091,
11.707%, 6/01/45 - AGC Insured (IF)
3,285 Golden State Tobacco Securitization Corporation, California, 6/15 at 100.00 A 2,471,141
Tobacco Settlement Asset-Backed Revenue Bonds, Series 2005A,
5.000%, 6/01/45 - AMBAC Insured
1,000 Hesperia Public Financing Authority, California, Redevelopment and 9/17 at 100.00 Baa1 799,940
Housing Projects Tax Allocation Bonds, Series 2007A, 5.000%,
9/01/37 - SYNCORA GTY Insured
5,540 Irvine Public Facilities and Infrastructure Authority, California, 9/13 at 100.00 A 5,052,702
Assessment Revenue Bonds, Series 2003C, 5.000%, 9/02/21 - AMBAC
Insured
315 Los Angeles Community Redevelopment Agency, California, Lease 9/15 at 100.00 A2 266,197
Revenue Bonds, Manchester Social Services Project, Series 2005,
5.000%, 9/01/37 - AMBAC Insured
1,770 Los Angeles Unified School District, California, Certificates of 10/12 at 100.00 A+ 1,648,171
Participation, Administration Building Project II, Series 2002C,
5.000%, 10/01/27 - AMBAC Insured
2,000 Los Angeles, California, Certificates of Participation, Municipal 6/13 at 100.00 AA- 1,905,340
Improvement Corporation, Series 2003AW, 5.000%, 6/01/33 - AMBAC
Insured
1,500 Los Angeles, California, Municipal Improvement Corporation, Lease 1/17 at 100.00 AA- 1,375,725
Revenue Bonds, Police Headquarters, Series 2006A, 4.750%,
1/01/31 - FGIC Insured
1,500 Los Osos, California, Improvement Bonds, Community Services 9/10 at 103.00 AA- 1,130,925
Wastewater Assessment District 1, Series 2002, 5.000%, 9/02/33 -
MBIA Insured
150 Rialto Redevelopment Agency, California, Tax Allocation Bonds, 9/15 at 100.00 A- 127,926
Merged Project Area, Series 2005A, 5.000%, 9/01/35 - SYNCORA GTY
Insured
190 Roseville, California, Certificates of Participation, Public 8/13 at 100.00 A+ 181,783
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 AA- 2,810,760
3,300 5.000%, 2/01/32 - AMBAC Insured 2/12 at 100.00 AA- 2,925,384
73
NKX | Nuveen Insured California Tax-Free Advantage Municipal Fund (continued)
| Portfolio of INVESTMENTS February 28, 2009
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
----------------------------------------------------------------------------------------------------------------------------------
TAX OBLIGATION/LIMITED (continued)
$ 1,200 San Diego Redevelopment Agency, California, Subordinate Lien Tax 9/09 at 101.00 Baa2 $ 1,013,448
Increment and Parking Revenue Bonds, Centre City Project, Series
2003B, 5.250%, 9/01/26
2,770 San Jose Financing Authority, California, Lease Revenue Refunding 6/12 at 100.00 AA+ 2,699,171
Bonds, Civic Center Project, Series 2002B, 5.000%, 6/01/32 -
AMBAC Insured
1,000 San Jose Redevelopment Agency, California, Tax Allocation Bonds, 8/15 at 100.00 AA- 886,140
Merged Project Area, Series 2005A, 5.000%, 8/01/28 - MBIA Insured
----------------------------------------------------------------------------------------------------------------------------------
38,735 Total Tax Obligation/Limited 34,397,029
----------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 10.5% (7.2% OF TOTAL INVESTMENTS)
5,480 Bay Area Governments Association, California, BART SFO Extension, 8/12 at 100.00 A 5,204,574
Airport Premium Fare Revenue Bonds, Series 2002A, 5.000%,
8/01/26 - AMBAC Insured
2,000 Foothill/Eastern Transportation Corridor Agency, California, Toll 1/10 at 100.00 BBB- 1,402,260
Road Revenue Bonds, Series 1995A, 5.000%, 1/01/35
1,300 San Francisco Airports Commission, California, Revenue Bonds, San 5/10 at 101.00 AA- 1,303,315
Francisco International Airport, Second Series 2000, Issue 26B,
5.000%, 5/01/25 - FGIC Insured
----------------------------------------------------------------------------------------------------------------------------------
8,780 Total Transportation 7,910,149
----------------------------------------------------------------------------------------------------------------------------------
U.S. GUARANTEED - 21.4% (14.8% OF TOTAL INVESTMENTS) (4)
1,000 Berryessa Union School District, Santa Clara County, California, 8/12 at 100.00 AAA 1,117,750
General Obligation Bonds, Series 2003C, 5.000%, 8/01/21
(Pre-refunded 8/01/12) - FSA Insured
California State, General Obligation Bonds, Series 2002:
1,290 5.000%, 4/01/27 (Pre-refunded 4/01/12) - AMBAC Insured 4/12 at 100.00 AAA 1,425,798
2,945 5.250%, 4/01/30 (Pre-refunded 4/01/12) - SYNCORA GTY Insured 4/12 at 100.00 A1 (4) 3,277,196
500 California, General Obligation Bonds, Series 2004, 5.250%, 4/01/34 4/14 at 100.00 AAA 578,590
(Pre-refunded 4/01/14)
1,625 Golden State Tobacco Securitization Corporation, California, 6/13 at 100.00 AAA 1,985,750
Tobacco Settlement Asset-Backed Revenue Bonds, Series 2003A-2,
7.900%, 6/01/42 (Pre-refunded 6/01/13)
2,030 Hacienda La Puente Unified School District, Los Angeles County, 8/13 at 100.00 AAA 2,316,210
California, General Obligation Bonds, Series 2003B, 5.000%,
8/01/27 (Pre-refunded 8/01/13) - FSA Insured
1,260 Rancho Mirage Joint Powers Financing Authority, California, Revenue 7/14 at 100.00 A3 (4) 1,482,151
Bonds, Eisenhower Medical Center, Series 2004, 5.875%, 7/01/26
(Pre-refunded 7/01/14)
1,220 San Jose Redevelopment Agency, California, Tax Allocation Bonds, 8/10 at 101.00 AA (4) 1,301,594
Merged Area Redevelopment Project, Series 2002, 5.000%, 8/01/32
(Pre-refunded 8/01/10) - MBIA Insured
2,390 Solano County, California, Certificates of Participation, Series 11/12 at 100.00 AA (4) 2,711,407
2002, 5.250%, 11/01/24 (Pre-refunded 11/01/12) - MBIA Insured
----------------------------------------------------------------------------------------------------------------------------------
14,260 Total U.S. Guaranteed 16,196,446
----------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 3.0% (2.1% OF TOTAL INVESTMENTS)
1,000 Anaheim Public Finance Authority, California, Second Lien Electric 10/14 at 100.00 AA- 1,041,450
Distribution Revenue Bonds, Series 2004, 5.250%, 10/01/21 - MBIA
Insured
945 Long Beach Bond Finance Authority, California, Natural Gas Purchase No Opt. Call A+ 697,523
Revenue Bonds, Series 2007A, 5.500%, 11/15/37
275 Los Angeles Department of Water and Power, California, Power System 7/13 at 100.00 AA- 285,299
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 N/R 221,780
Bonds, Series 2005, 5.125%, 9/01/31 - SYNCORA GTY Insured
----------------------------------------------------------------------------------------------------------------------------------
2,530 Total Utilities 2,246,052
----------------------------------------------------------------------------------------------------------------------------------
74
PRINCIPAL OPTIONAL CALL
AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE
-----------------------------------------------------------------------------------------------------------------------------------
WATER AND SEWER - 14.4% (10.0% OF TOTAL INVESTMENTS)
$ 1,000 Castaic Lake Water Agency, California, Certificates of 8/16 at 100.00 AA- $ 949,910
Participation, Series 2006C, 5.000%, 8/01/36 - MBIA Insured
750 Fortuna Public Finance Authority, California, Water Revenue Bonds, 10/16 at 100.00 AAA 713,363
Series 2006, 5.000%, 10/01/36 - FSA Insured
215 Healdsburg Public Financing Authority, California, Wastewater 4/16 at 100.00 AA- 190,830
Revenue Bonds, Series 2006, 5.000%, 4/01/36 - MBIA Insured
770 Manteca Financing Authority, California, Sewerage Revenue Bonds, 12/13 at 100.00 A3 771,525
Series 2003B, 5.000%, 12/01/33 - MBIA Insured
170 Marina Coast Water District, California, Enterprise Certificate of 6/16 at 100.00 AA- 148,872
Participation, Series 2006, 5.000%, 6/01/31 - MBIA Insured
San Diego Public Facilities Financing Authority, California,
Subordinate Lien Water Revenue Bonds, Series 2002:
3,000 5.000%, 8/01/22 - MBIA Insured 8/12 at 100.00 AA- 3,002,220
2,500 5.000%, 8/01/23 - MBIA Insured 8/12 at 100.00 AA- 2,479,625
1,180 South Feather Water and Power Agency, California, Water Revenue 4/13 at 100.00 BBB 1,010,316
Certificates of Participation, Solar Photovoltaic Project,
Series 2003, 5.375%, 4/01/24
1,600 Sunnyvale Financing Authority, California, Water and Wastewater 10/11 at 100.00 AAA 1,600,304
Revenue Bonds, Series 2001, 5.000%, 10/01/26 - AMBAC Insured
-----------------------------------------------------------------------------------------------------------------------------------
11,185 Total Water and Sewer 10,866,965
-----------------------------------------------------------------------------------------------------------------------------------
$ 113,197 Total Long-Term Investments (cost $111,763,265) - 139.0% 105,158,643
=============----------------------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS - 5.3% (3.7% OF TOTAL INVESTMENTS)
$ 4,000 California, General Obligation Bonds, Variable Rate Demand A-1+ $ 4,000,000
Obligations, Series 2003C-1, 0.400%, 5/01/33 (5)
=============----------------------------------------------------------------------------------------------------------------------
Total Short-Term Investments (cost $4,000,000) 4,000,000
-------------------------------------------------------------------------------------------------------------------
Total Investments (cost $115,763,265) - 144.3% 109,158,643
-------------------------------------------------------------------------------------------------------------------
Variable Rate Demand Preferred Shares, at Liquidation Value - (46.9%) (6) (35,500,000)
-------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 2.6% 2,002,709
-------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares - 100% $ 75,661,352
===================================================================================================================
At least 80% of the Fund's net assets (including net assets attributable to
Variable Rate Demand Preferred shares) are invested in municipal securities
that guarantee the timely payment of principal and interest. See Notes to
Financial Statements, Footnote 1 - Insurance, for more information.
(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 Group ("Standard &
Poor's") or Moody's Investor Service, Inc. ("Moody's") rating. Ratings
below BBB by Standard & Poor's or Baa by Moody's are considered to be below
investment grade.
The Portfolio of Investments may reflect the ratings on certain bonds
insured by ACA, AGC, AMBAC, FGIC, FSA, MBIA, RAAI and SYNCORA as of
February 28, 2009. Please see the Portfolio Manager's Commentary for an
expanded discussion of the affect on the Fund of changes to the ratings of
certain bonds in the portfolio resulting from changes to the ratings of the
underlying insurers both during the period and after period end.
(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.
(6) Variable Rate Demand Preferred Shares, at Liquidation Value as a percentage
of Total Investments is 32.5%.
N/R Not rated.
(IF) Inverse floating rate investment.
See accompanying notes to financial statements.
75
| Statement of ASSETS & LIABILITIES February 28, 2009
INSURED CALIFORNIA INSURED CALIFORNIA
PREMIUM INCOME PREMIUM INCOME 2
(NPC) (NCL)
-----------------------------------------------------------------------------------------------------
ASSETS
Investments, at value (cost $132,699,261 $261,746,670,
$ 111,432,207 and $461,033,038 respectively) $ 133,569,802 $ 254,436,434
Short-term investments, (at cost, which approximates value) -- --
Cash 195,337 4,010,105
Receivables:
Interest 2,378,903 3,484,085
Investments sold -- 175,000
Unrealized appreciation on forward swaps -- 1,751,141
Deferred offering costs -- --
Other assets 426 24,650
-----------------------------------------------------------------------------------------------------
Total assets 136,144,468 263,881,415
-----------------------------------------------------------------------------------------------------
LIABILITIES
Floating rate obligations -- 20,060,000
Payables:
Auction Rate Preferred share dividends 165,525 288,968
Common share dividends 345,206 652,822
Common shares repurchased -- --
Offering costs -- --
Unrealized depreciation on forward swaps -- --
Variable Rate Demand Preferred shares, at liquidation value -- --
Accrued expenses:
Management fees 68,061 120,822
Other 34,338 102,507
-----------------------------------------------------------------------------------------------------
Total liabilities 613,130 21,225,119
-----------------------------------------------------------------------------------------------------
Auction Rate Preferred shares, at liquidation value 45,000,000 79,825,000
-----------------------------------------------------------------------------------------------------
Net assets applicable to Common shares $ 90,531,338 $ 162,831,296
=====================================================================================================
Common shares outstanding 6,453,632 12,674,570
=====================================================================================================
Net asset value per Common share outstanding
(net assets applicable to Common shares,
divided by Common shares outstanding) $ 14.03 $ 12.85
=====================================================================================================
NET ASSETS APPLICABLE TO COMMON SHARES CONSIST OF:
-----------------------------------------------------------------------------------------------------
Common shares, $.01 par value per share $ 64,536 $ 126,746
Paid-in surplus 89,352,261 175,794,038
Undistributed (Over-distribution of) net investment income 141,089 813,804
Accumulated net realized gain (loss) from investments
and derivative transactions 102,911 (8,344,197)
Net unrealized appreciation (depreciation ) of investments
and derivative transactions 870,541 (5,559,095)
-----------------------------------------------------------------------------------------------------
Net assets applicable to Common shares $ 90,531,338 $ 162,831,296
=====================================================================================================
Authorized shares:
Common 200,000,000 200,000,000
Auction Rate Preferred and Variable Rate Demand Preferred 1,000,000 1,000,000
=====================================================================================================
CALIFORNIA
CALIFORNIA PREMIUM DIVIDEND ADVANTAGE
INCOME (NCU) (NAC)
-----------------------------------------------------------------------------------------------------
ASSETS
Investments, at value (cost $132,699,261 $261,746,670,
$ 111,432,207 and $461,033,038 respectively) $ 106,136,934 $ 426,125,802
Short-term investments, (at cost, which approximates value) 8,000,000 --
Cash 412,616 869,539
Receivables:
Interest 1,558,273 7,792,886
Investments sold 2,040,000 --
Unrealized appreciation on forward swaps -- --
Deferred offering costs -- --
Other assets 6,289 38,197
-----------------------------------------------------------------------------------------------------
Total assets 118,154,112 434,826,424
-----------------------------------------------------------------------------------------------------
LIABILITIES
Floating rate obligations 5,590,000 12,865,000
Payables:
Auction Rate Preferred share dividends 18,479 472,350
Common share dividends 298,674 1,421,875
Common shares repurchased 29,503 --
Offering costs -- --
Unrealized depreciation on forward swaps -- --
Variable Rate Demand Preferred shares, at liquidation value -- --
Accrued expenses:
Management fees 56,364 190,508
Other 26,283 130,804
-----------------------------------------------------------------------------------------------------
Total liabilities 6,019,303 15,080,537
-----------------------------------------------------------------------------------------------------
Auction Rate Preferred shares, at liquidation value 40,875,000 135,525,000
-----------------------------------------------------------------------------------------------------
Net assets applicable to Common shares $ 71,259,809 $ 284,220,887
=====================================================================================================
Common shares outstanding 5,760,488 23,480,254
=====================================================================================================
Net asset value per Common share outstanding
(net assets applicable to Common shares,
divided by Common shares outstanding) $ 12.37 $ 12.10
=====================================================================================================
NET ASSETS APPLICABLE TO COMMON SHARES CONSIST OF:
-----------------------------------------------------------------------------------------------------
Common shares, $.01 par value per share $ 57,605 $ 234,803
Paid-in surplus 78,170,697 333,574,030
Undistributed (Over-distribution of) net investment income 88,253 675,633
Accumulated net realized gain (loss) from investments
and derivative transactions (1,761,473) (15,356,343)
Net unrealized appreciation (depreciation ) of investments
and derivative transactions (5,295,273) (34,907,236)
-----------------------------------------------------------------------------------------------------
Net assets applicable to Common shares $ 71,259,809 $ 284,220,887
=====================================================================================================
Authorized shares:
Common Unlimited Unlimited
Auction Rate Preferred and Variable Rate Demand Preferred Unlimited Unlimited
=====================================================================================================
See accompanying notes to financial statements.
76
CALIFORNIA CALIFORNIA
DIVIDEND DIVIDEND
ADVANTAGE 2 (NVX) ADVANTAGE 3 (NZH)
-----------------------------------------------------------------------------------------------------
ASSETS
Investments, at value (cost $311,157,161, $484,796,116,
$326,828,622 and $111,763,265, respectively) $ 2 93,745,579 $ 440,176,379
Short-term investments, (at cost, which approximates value) 7,000,000 --
Cash 107,703 2,505,723
Receivables:
Interest 4,522,869 7,642,508
Investments sold -- --
Unrealized appreciation on forward swaps -- 437,785
Deferred offering costs -- --
Other assets 21,675 28,566
-----------------------------------------------------------------------------------------------------
Total assets 305,397,826 450,790,961
-----------------------------------------------------------------------------------------------------
LIABILITIES
Floating rate obligations 3,305,000 13,650,000
Payables:
Auction Rate Preferred share dividends 201,725 13,435
Common share dividends 864,731 1,420,342
Common shares repurchased 3,147 --
Offering costs -- --
Unrealized depreciation on forward swaps -- 3,279,628
Variable Rate Demand Preferred shares, at liquidation value -- --
Accrued expenses:
Management fees 113,888 162,028
Other 85,232 134,903
-----------------------------------------------------------------------------------------------------
Total liabilities 4,573,723 18,660,336
-----------------------------------------------------------------------------------------------------
Auction Rate Preferred shares, at liquidation value 110,000,000 154,075,000
-----------------------------------------------------------------------------------------------------
Net assets applicable to Common shares $ 190,824,103 $ 278,055,625
=====================================================================================================
Common shares outstanding 14,779,122 24,119,434
=====================================================================================================
Net asset value per Common share outstanding
(net assets applicable to Common shares,
divided by Common shares outstanding) $ 12.91 $ 11.53
=====================================================================================================
NET ASSETS APPLICABLE TO COMMON SHARES CONSIST OF:
-----------------------------------------------------------------------------------------------------
Common shares, $.01 par value per share $ 147,791 $ 241,194
Paid-in surplus 209,967,760 342,700,428
Undistributed (Over-distribution of) net investment income 886,607 1,629,645
Accumulated net realized gain (loss) from investments
and derivative transactions (2,766,473) (19,054,062)
Net unrealized appreciation (depreciation) of investments
and derivative transactions (17,411,582) (47,461,580)
-----------------------------------------------------------------------------------------------------
Net assets applicable to Common shares $ 190,824,103 $ 278,055,625
=====================================================================================================
Authorized shares:
Common Unlimited Unlimited
Auction Rate Preferred and Variable Rate Demand Preferred Unlimited Unlimited
=====================================================================================================
INSURED CALIFORNIA INSURED CALIFORNIA
DIVIDEND ADVANTAGE TAX-FREE ADVANTAGE
(NKL) (NKX)
-----------------------------------------------------------------------------------------------------
ASSETS
Investments, at value (cost $311,157,161, $484,796,116,
$326,828,622 and $111,763,265, respectively) $ 317,298,553 $ 105,158,643
Short-term investments, (at cost, which approximates value) 2,000,000 4,000,000
Cash 239,533 475,936
Receivables:
Interest 4,101,325 1,482,404
Investments sold -- --
Unrealized appreciation on forward swaps -- --
Deferred offering costs -- 520,032
Other assets 21,442 426
-----------------------------------------------------------------------------------------------------
Total assets 323,660,853 111,637,441
-----------------------------------------------------------------------------------------------------
LIABILITIES
Floating rate obligations 7,635,000 --
Payables:
Auction Rate Preferred share dividends 214,904 --
Common share dividends 906,669 335,146
Common shares repurchased -- --
Offering costs -- 83,263
Unrealized depreciation on forward swaps -- --
Variable Rate Demand Preferred shares, at liquidation value -- 35,500,000
Accrued expenses:
Management fees 106,787 42,042
Other 80,334 15,638
-----------------------------------------------------------------------------------------------------
Total liabilities 8,943,694 35,976,089
-----------------------------------------------------------------------------------------------------
Auction Rate Preferred shares, at liquidation value 108,250,000 --
-----------------------------------------------------------------------------------------------------
Net assets applicable to Common shares $ 206,467,159 $ 75,661,352
=====================================================================================================
Common shares outstanding 15,267,005 5,886,667
=====================================================================================================
Net asset value per Common share outstanding
(net assets applicable to Common shares,
divided by Common shares outstanding) $ 13.52 $ 12.85
=====================================================================================================
NET ASSETS APPLICABLE TO COMMON SHARES CONSIST OF:
-----------------------------------------------------------------------------------------------------
Common shares, $.01 par value per share $ 152,670 $ 58,867
Paid-in surplus 216,827,017 83,077,655
Undistributed (Over-distribution of) net investment income 662,312 249,837
Accumulated net realized gain (loss) from investments
and derivative transactions (1,644,771) (1,120,385)
Net unrealized appreciation (depreciation) of investments
and derivative transactions (9,530,069) (6,604,622)
=====================================================================================================
Net assets applicable to Common shares $ 206,467,159 $ 75,661,352
=====================================================================================================
Authorized shares:
Common Unlimited Unlimited
Auction Rate Preferred and Variable Rate Demand Preferred Unlimited Unlimited
=====================================================================================================
See accompanying notes to financial statements.
77
| Statement of OPERATIONS
INSURED CALIFORNIA INSURED CALIFORNIA
PREMIUM INCOME (NPC) PREMIUM INCOME 2 (NCL)
---------------------------- -----------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED
2/28/09 8/31/08 2/28/09 8/31/08
-----------------------------------------------------------------------------------------------------------
INVESTMENT INCOME $ 3,577,883 $ 7,281,324 $ 6,780,306 $ 14,344,641
-----------------------------------------------------------------------------------------------------------
EXPENSES
Management fees 428,387 906,873 756,210 1,750,979
Auction fees 55,788 112,500 99,066 237,344
Dividend disbursing agent fees 4,959 10,000 9,918 20,000
Shareholders' servicing agent fees
and expenses 3,055 8,083 5,006 13,391
Interest expense -- -- 225,768 40,691
Custodian's fees and expenses 11,968 51,209 21,505 70,900
Directors'/Trustees' fees and expenses 1,694 3,510 2,710 6,800
Professional fees 14,668 18,332 20,285 25,570
Shareholders' reports - printing
and mailing expenses 12,612 15,312 20,834 38,137
Stock exchange listing fees 4,571 9,385 4,564 9,367
Investor relations expense 8,729 14,047 15,855 26,761
Amortization of offering costs -- -- -- --
Other expenses 9,960 14,874 10,570 22,375
-----------------------------------------------------------------------------------------------------------
Total expenses before custodian fee
credit and expense reimbursement 556,391 1,164,125 1,192,291 2,262,315
Custodian fee credit (447) (11,540) (18,908) (20,298)
Expense reimbursement -- -- -- --
-----------------------------------------------------------------------------------------------------------
Net expenses 555,944 1,152,585 1,173,383 2,242,017
-----------------------------------------------------------------------------------------------------------
Net investment income 3,021,939 6,128,739 5,606,923 12,102,624
-----------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) from:
Investments 78,582 328,360 (7,018,034) 1,445,377
Forward swaps -- 863,429 -- 856,758
Futures -- -- (913,786) --
Change in net unrealized appreciation
(depreciation) of:
Investments (4,835,228) (1,420,724) (8,290,218) (7,171,193)
Forward swaps -- (364,728) 1,751,141 (656,230)
-----------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) (4,756,646) (593,663) (14,470,897) (5,525,288)
-----------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO AUCTION RATE PREFERRED
SHAREHOLDERS
From net investment income (684,653) (1,447,316) (1,221,762) (3,061,483)
From accumulated net realized gains (157,410) (25,344) (278,398) --
-----------------------------------------------------------------------------------------------------------
Decrease in net assets applicable to
Common shares from distributions
to Auction Rate Preferred shareholders (842,063) (1,472,660) (1,500,160) (3,061,483)
-----------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares
from operations $ (2,576,770) $ 4,062,416 $(10,364,134) $ 3,515,853
===========================================================================================================
CALIFORNIA PREMIUM
INCOME (NCU)
-----------------------------
SIX MONTHS
ENDED YEAR ENDED
2/28/09 8/31/08
---------------------------------------------------------------------------
INVESTMENT INCOME $ 3,001,382 $ 6,389,691
---------------------------------------------------------------------------
EXPENSES
Management fees 362,448 786,957
Auction fees 52,930 107,500
Dividend disbursing agent fees 4,957 10,000
Shareholders' servicing agent fees
and expenses 2,708 5,736
Interest expense 69,040 92,394
Custodian's fees and expenses 11,470 29,070
Directors'/Trustees' fees and expenses 1,293 2,909
Professional fees 12,357 13,445
Shareholders' reports - printing
and mailing expenses 11,662 8,496
Stock exchange listing fees 405 709
Investor relations expense 7,646 12,510
Amortization of offering costs -- --
Other expenses 9,378 15,410
---------------------------------------------------------------------------
Total expenses before custodian fee
credit and expense reimbursement 546,294 1,085,136
Custodian fee credit (7,909) (13,211)
Expense reimbursement -- --
---------------------------------------------------------------------------
Net expenses 538,385 1,071,925
---------------------------------------------------------------------------
Net investment income 2,462,997 5,317,766
---------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) from:
Investments (1,743,990) 118,683
Forward swaps -- 239,634
Futures -- --
Change in net unrealized appreciation
(depreciation) of:
Investments (5,711,715) (2,804,244)
Forward swaps -- 1,018
---------------------------------------------------------------------------
Net realized and unrealized gain (loss) (7,455,705) (2,444,909)
---------------------------------------------------------------------------
DISTRIBUTIONS TO AUCTION RATE PREFERRED
SHAREHOLDERS
From net investment income (599,218) (1,399,028)
From accumulated net realized gains (13,364) --
---------------------------------------------------------------------------
Decrease in net assets applicable to
Common shares from distributions
to Auction Rate Preferred shareholders (612,582) (1,399,028)
---------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares
from operations $ (5,605,290) $ 1,473,829
==========================================================================
See accompanying notes to financial statements.
78
CALIFORNIA DIVIDEND CALIFORNIA DIVIDEND
ADVANTAGE (NAC) ADVANTAGE 2 (NVX)
---------------------------- -----------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED
2/28/09 8/31/08 2/28/09 8/31/08
-----------------------------------------------------------------------------------------------------------
INVESTMENT INCOME $ 13,130,567 $ 27,872,039 $ 8,613,518 $ 16,999,827
-----------------------------------------------------------------------------------------------------------
EXPENSES
Management fees 1,327,961 3,202,468 945,178 2,046,464
Auction fees 168,013 425,770 136,369 275,000
Dividend disbursing agent fees 9,918 20,000 9,918 20,000
Shareholders' servicing agent fees
and expenses 2,181 3,895 696 1,908
Interest expense 205,016 374,756 48,186 190,552
Custodian's fees and expenses 45,199 163,424 35,733 96,770
Directors'/Trustees' fees and expenses 4,956 12,491 3,676 7,274
Professional fees 26,723 32,767 20,813 24,722
Shareholders' reports - printing
and mailing expenses 30,467 53,728 23,311 35,728
Stock exchange listing fees 4,598 9,459 1,036 1,816
Investor relations expense 27,244 46,677 18,799 21,070
Amortization of offering costs -- -- -- --
Other expenses 12,621 26,003 39,293 1,450
-----------------------------------------------------------------------------------------------------------
Total expenses before custodian fee
credit and expense reimbursement 1,864,897 4,371,438 1,283,008 2,722,754
Custodian fee credit (22,946) (49,217) (15,251) (34,119)
Expense reimbursement (104,782) (497,428) (222,098) (587,369)
-----------------------------------------------------------------------------------------------------------
Net expenses 1,737,169 3,824,793 1,045,659 2,101,266
-----------------------------------------------------------------------------------------------------------
Net investment income 11,393,398 24,047,246 7,567,859 14,898,561
-----------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) from:
Investments (16,935,690) 4,832,689 (2,624,444) (313,737)
Forward swaps -- 4,168,843 -- 1,314,381
Futures -- -- -- --
Change in net unrealized appreciation
(depreciation) of:
Investments (31,383,162) (18,634,531) (19,142,795) (6,006,208)
Forward swaps -- (2,275,676) -- (396,451)
-----------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) (48,318,852) (11,908,675) (21,767,239) (5,402,015)
-----------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO AUCTION RATE PREFERRED
SHAREHOLDERS
From net investment income (2,075,909) (5,502,755) (1,602,421) (3,691,110)
From accumulated net realized gains (449,153) (260,925) (186,582) --
-----------------------------------------------------------------------------------------------------------
Decrease in net assets applicable to
Common shares from distributions
to Auction Rate Preferred shareholders (2,525,062) (5,763,680) (1,789,003) (3,691,110)
-----------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares
from operations $(39,450,516) $ 6,374,891 $(15,988,383) $ 5,805,436
===========================================================================================================
CALIFORNIA DIVIDEND
ADVANTAGE 3 (NZH)
-----------------------------
SIX MONTHS
ENDED YEAR ENDED
2/28/09 8/31/08
---------------------------------------------------------------------------
INVESTMENT INCOME $ 13,580,693 $ 27,744,430
---------------------------------------------------------------------------
EXPENSES
Management fees 1,370,737 3,238,100
Auction fees 197,142 459,548
Dividend disbursing agent fees 9,909 20,000
Shareholders' servicing agent fees
and expenses 1,197 3,315
Interest expense 160,672 72,436
Custodian's fees and expenses 58,925 147,034
Directors'/Trustees' fees and expenses 5,458 12,533
Professional fees 28,994 35,261
Shareholders' reports - printing
and mailing expenses 30,987 48,260
Stock exchange listing fees 1,690 2,962
Investor relations expense 27,696 46,560
Amortization of offering costs -- --
Other expenses 11,458 27,782
---------------------------------------------------------------------------
Total expenses before custodian fee
credit and expense reimbursement 1,904,865 4,113,791
Custodian fee credit (18,806) (60,420)
Expense reimbursement (344,404) (1,068,648)
---------------------------------------------------------------------------
Net expenses 1,541,655 2,984,723
---------------------------------------------------------------------------
Net investment income 12,039,038 24,759,707
---------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) from:
Investments (10,532,016) (978,786)
Forward swaps -- (1,478,000)
Futures (1,011,691) (291,364)
Change in net unrealized appreciation
(depreciation) of:
Investments (37,615,750) (14,054,312)
Forward swaps (2,246,298) 57,314
---------------------------------------------------------------------------
Net realized and unrealized gain (loss) (51,405,755) (16,745,148)
---------------------------------------------------------------------------
DISTRIBUTIONS TO AUCTION RATE PREFERRED
SHAREHOLDERS
From net investment income (2,211,134) (6,076,255)
From accumulated net realized gains -- --
---------------------------------------------------------------------------
Decrease in net assets applicable to
Common shares from distributions
to Auction Rate Preferred shareholders (2,211,134) (6,076,255)
---------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares
from operations $(41,577,851) $ 1,938,304
===========================================================================
See accompanying notes to financial statements.
79
| Statement of OPERATIONS (continued)
INSURED CALIFORNIA INSURED CALIFORNIA
DIVIDEND ADVANTAGE (NKL) TAX-FREE ADVANTAGE (NKX)
---------------------------- -----------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED
2/28/09 8/31/08 2/28/09 8/31/08
-----------------------------------------------------------------------------------------------------------
INVESTMENT INCOME $ 8,624,407 $ 17,573,242 $ 3,089,087 $ 6,514,310
-----------------------------------------------------------------------------------------------------------
EXPENSES
Management fees 976,435 2,158,393 351,326 829,062
Auction fees 134,267 295,000 19,156 114,925
Dividend disbursing agent fees 9,918 20,000 12,389 11,028
Shareholders' servicing agent fees
and expenses 755 2,025 372 996
Interest expense 86,575 3,167 377,150 66,087
Custodian's fees and expenses 25,382 103,861 11,011 40,157
Directors'/Trustees' fees and expenses 3,618 8,358 1,201 3,178
Professional fees 21,516 26,405 12,637 13,962
Shareholders' reports - printing
and mailing expenses 22,732 35,898 8,712 17,031
Stock exchange listing fees 1,071 1,876 412 722
Investor relations expense 19,145 31,530 6,894 12,352
Amortization of offering costs -- -- 136,341 --
Other expenses 10,169 20,755 741 32,083
-----------------------------------------------------------------------------------------------------------
Total expenses before custodian fee
credit and expense reimbursement 1,311,583 2,707,268 938,342 1,141,583
Custodian fee credit (21,040) (19,336) (8,252) (21,466)
Expense reimbursement (306,138) (793,160) (108,950) (339,627)
-----------------------------------------------------------------------------------------------------------
Net expenses 984,405 1,894,772 821,140 780,490
-----------------------------------------------------------------------------------------------------------
Net investment income 7,640,002 15,678,470 2,267,947 5,733,820
-----------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) from:
Investments (1,321,731) 1,337,028 (1,135,147) 1,101,623
Forward swaps -- 731,015 -- 128,891
Futures -- -- -- --
Change in net unrealized appreciation
(depreciation) of:
Investments (14,959,271) (6,994,006) (6,558,916) (3,013,642)
Forward swaps -- (24,419) -- (12,888)
-----------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) (16,281,002) (4,950,382) (7,694,063) (1,796,016)
-----------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO AUCTION RATE PREFERRED
SHAREHOLDERS
From net investment income (1,586,640) (3,886,043) (13,824) (1,400,428)
From accumulated net realized gains (201,085) (116,419) (42,336) --
-----------------------------------------------------------------------------------------------------------
Decrease in net assets applicable to
Common shares from distributions
to Auction Rate Preferred shareholders (1,787,725) (4,002,462) (56,160) (1,400,428)
-----------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares
from operations $(10,428,725) $ 6,725,626 $ (5,482,276) $ 2,537,376
===========================================================================================================
See accompanying notes to financial statements.
80
| Statement of CHANGES in NET ASSETS
INSURED CALIFORNIA PREMIUM INCOME (NPC)
---------------------------------------------
SIX MONTHS
ENDED YEAR ENDED YEAR ENDED
2/28/09 8/31/08 8/31/07
-------------------------------------------------------------------------------------------
OPERATIONS
Net investment income $ 3,021,939 $ 6,128,739 $ 5,834,849
Net realized gain (loss) from:
Investments 78,582 328,360 132,902
Forward swaps -- 863,429 159,600
Futures -- -- --
Change in net unrealized appreciation
(depreciation) of:
Investments (4,835,228) (1,420,724) (2,928,553)
Forward swaps -- (364,728) 35,238
Futures -- -- --
Distributions to Auction Rate Preferred
shareholders:
From net investment income (684,653) (1,447,316) (1,373,537)
From accumulated net realized gains (157,410) (25,344) (118,110)
-------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares
from operations (2,576,770) 4,062,416 1,742,389
-------------------------------------------------------------------------------------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS
From net investment income (2,344,919) (4,689,975) (4,725,196)
From accumulated net realized gains (934,738) (86,562) (486,696)
-------------------------------------------------------------------------------------------
Decrease in net assets applicable to
Common shares from distributions to
Common shareholders (3,279,657) (4,776,537) (5,211,892)
-------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Common shares:
Net proceeds from shares issued to
shareholders due to
reinvestment of distributions -- -- 65,214
Repurchased (74,494) -- --
-------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares from
capital share transactions (74,494) -- 65,214
-------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares (5,930,921) (714,121) (3,404,289)
Net assets applicable to Common
shares at the beginning of period 96,462,259 97,176,380 100,580,669
-------------------------------------------------------------------------------------------
Net assets applicable to Common
shares at the end of period $ 90,531,338 $ 96,462,259 $ 97,176,380
===========================================================================================
Undistributed (Over-distribution of)
net investment income
at the end of period $ 141,089 $ 149,112 $ 158,730
===========================================================================================
INSURED CALIFORNIA PREMIUM INCOME 2 (NCL)
--------------------------------------------
SIX MONTHS
ENDED YEAR ENDED YEAR ENDED
2/28/09 8/31/08 8/31/07
-------------------------------------------------------------------------------------------
OPERATIONS
Net investment income $ 5,606,923 $ 12,102,624 $ 11,372,772
Net realized gain (loss) from:
Investments (7,018,034) 1,445,377 (30,877)
Forward swaps -- 856,758 419,200
Futures (913,786) -- --
Change in net unrealized appreciation
(depreciation) of:
Investments (8,290,218) (7,171,193) (6,140,606)
Forward swaps 1,751,141 (656,230) (181,996)
Futures -- -- --
Distributions to Auction Rate Preferred
shareholders:
From net investment income (1,221,762) (3,061,483) (3,120,823)
From accumulated net realized gains (278,398) -- --
-------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares
from operations (10,364,134) 3,515,853 2,317,670
-------------------------------------------------------------------------------------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS
From net investment income (4,271,704) (8,125,762) (8,545,402)
From accumulated net realized gains (1,819,712) -- --
-------------------------------------------------------------------------------------------
Decrease in net assets applicable to
Common shares from distributions to
Common shareholders (6,091,416) (8,125,762) (8,545,402)
-------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Common shares:
Net proceeds from shares issued to
shareholders due to
reinvestment of distributions -- -- --
Repurchased (446,744) -- --
-------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares from
capital share transactions (446,744) -- --
-------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares (16,902,294) (4,609,909) (6,227,732)
Net assets applicable to Common
shares at the beginning of period 179,733,590 184,343,499 190,571,231
-------------------------------------------------------------------------------------------
Net assets applicable to Common
shares at the end of period $162,831,296 $179,733,590 $184,343,499
===========================================================================================
Undistributed (Over-distribution of)
net investment income
at the end of period $ 813,804 $ 707,293 $ (179,908)
===========================================================================================
See accompanying notes to financial statements.
81
| Statement of CHANGES in NET ASSETS (continued)
CALIFORNIA PREMIUM INCOME (NCU)
---------------------------------------------
SIX MONTHS
ENDED YEAR ENDED YEAR ENDED
2/28/09 8/31/08 8/31/07
-------------------------------------------------------------------------------------------
OPERATIONS
Net investment income $ 2,462,997 $ 5,317,766 $ 5,169,371
Net realized gain (loss) from:
Investments (1,743,990) 118,683 (251,856)
Forward swaps -- 239,634 (57,143)
Futures -- -- --
Change in net unrealized appreciation
(depreciation) of:
Investments (5,711,715) (2,804,244) (2,648,488)
Forward swaps -- 1,018 (1,018)
Futures -- -- --
Distributions to Auction Rate Preferred
shareholders:
From net investment income (599,218) (1,399,028) (1,400,856)
From accumulated net realized gains (13,364) -- (50,482)
-------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares
from operations (5,605,290) 1,473,829 759,528
-------------------------------------------------------------------------------------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS
From net investment income (1,923,138) (3,707,671) (3,863,107)
From accumulated net realized gains (35,229) -- (177,846)
-------------------------------------------------------------------------------------------
Decrease in net assets applicable to
Common shares from distributions to
Common shareholders (1,958,367) (3,707,671) (4,040,953)
-------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Common shares:
Net proceeds from shares issued to
shareholders due to
reinvestment of distributions -- -- 14,098
Repurchased (142,381) -- --
-------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares from
capital share transactions (142,381) -- 14,098
-------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares (7,706,038) (2,233,842) (3,267,327)
Net assets applicable to Common
shares at the beginning of period 78,965,847 81,199,689 84,467,016
-------------------------------------------------------------------------------------------
Net assets applicable to Common
shares at the end of period $ 71,259,809 $ 78,965,847 $ 81,199,689
===========================================================================================
Undistributed (Over-distribution of)
net investment income
at the end of period $ 88,253 $ 150,354 $ (60,685)
===========================================================================================
CALIFORNIA DIVIDEND ADVANTAGE (NAC)
---------------------------------------------
SIX MONTHS
ENDED YEAR ENDED YEAR ENDED
2/28/09 8/31/08 8/31/07
-------------------------------------------------------------------------------------------
OPERATIONS
Net investment income $ 11,393,398 $ 24,047,246 $ 23,391,916
Net realized gain (loss) from:
Investments (16,935,690) 4,832,689 1,330,465
Forward swaps -- 4,168,843 (824,000)
Futures -- -- 29,877
Change in net unrealized appreciation
(depreciation) of:
Investments (31,383,162) (18,634,531) (14,848,472)
Forward swaps -- (2,275,676) 1,437,247
Futures -- -- (27,339)
Distributions to Auction Rate Preferred
shareholders:
From net investment income (2,075,909) (5,502,755) (5,740,999)
From accumulated net realized gains (449,153) (260,925) (310,662)
-------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares
from operations (39,450,516) 6,374,891 4,438,033
-------------------------------------------------------------------------------------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS
From net investment income (8,875,536) (17,328,427) (18,656,213)
From accumulated net realized gains (6,184,699) (838,245) (1,250,132)
-------------------------------------------------------------------------------------------
Decrease in net assets applicable to
Common shares from distributions to
Common shareholders (15,060,235) (18,166,672) (19,906,345)
-------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Common shares:
Net proceeds from shares issued to
shareholders due to
reinvestment of distributions -- -- 475,567
Repurchased -- -- --
-------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares from
capital share transactions -- -- 475,567
-------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares (54,510,751) (11,791,781) (14,992,745)
Net assets applicable to Common
shares at the beginning of period 338,731,638 350,523,419 365,516,164
-------------------------------------------------------------------------------------------
Net assets applicable to Common
shares at the end of period $284,220,887 $338,731,638 $350,523,419
===========================================================================================
Undistributed (Over-distribution of)
net investment income
at the end of period $ 675,633 $ 234,601 $ (979,692)
===========================================================================================
See accompanying notes to financial statements.
82
CALIFORNIA DIVIDEND ADVANTAGE 2 (NVX)
---------------------------------------------
SIX MONTHS
ENDED YEAR ENDED YEAR ENDED
2/28/09 8/31/08 8/31/07
-------------------------------------------------------------------------------------------
OPERATIONS
Net investment income $ 7,567,859 $ 14,898,561 $ 14,244,418
Net realized gain (loss) from:
Investments (2,624,444) (313,737) (394,576)
Forward swaps -- 1,314,381 352,500
Futures -- -- --
Change in net unrealized appreciation
(depreciation) of:
Investments (19,142,795) (6,006,208) (8,830,002)
Forward swaps -- (396,451) (351,758)
Futures -- -- --
Distributions to Auction Rate Preferred
shareholders:
From net investment income (1,602,421) (3,691,110) (3,680,820)
From accumulated net realized gains (186,582) -- --
-------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares
from operations (15,988,383) 5,805,436 1,339,762
-------------------------------------------------------------------------------------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS
From net investment income (5,371,458) (10,247,217) (11,272,438)
From accumulated net realized gains (517,910) -- --
-------------------------------------------------------------------------------------------
Decrease in net assets applicable to
Common shares from distributions to
Common shareholders (5,889,368) (10,247,217) (11,272,438)
-------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Common shares:
Net proceeds from shares issued to
shareholders due to
reinvestment of distributions -- -- 104,551
Repurchased (188,113) -- --
-------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares from
capital share transactions (188,113) -- 104,551
-------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares (22,065,864) (4,441,781) (9,828,125)
Net assets applicable to Common
shares at the beginning of period 212,889,967 217,331,748 227,159,873
-------------------------------------------------------------------------------------------
Net assets applicable to Common
shares at the end of period $190,824,103 $212,889,967 $217,331,748
===========================================================================================
Undistributed (Over-distribution of)
net investment income
at the end of period $ 886,607 $ 265,440 $ (655,912)
===========================================================================================
CALIFORNIA DIVIDEND ADVANTAGE 3 (NZH)
---------------------------------------------
SIX MONTHS
ENDED YEAR ENDED YEAR ENDED
2/28/09 8/31/08 8/31/07
-------------------------------------------------------------------------------------------
OPERATIONS
Net investment income $ 12,039,038 $ 24,759,707 $ 23,582,231
Net realized gain (loss) from:
Investments (10,532,016) (978,786) (1,177,206)
Forward swaps -- (1,478,000) (401,000)
Futures (1,011,691) (291,364) --
Change in net unrealized appreciation
(depreciation) of:
Investments (37,615,750) (14,054,312) (15,582,514)
Forward swaps (2,246,298) 57,314 (652,859)
Futures -- -- --
Distributions to Auction Rate Preferred
shareholders:
From net investment income (2,211,134) (6,076,255) (6,425,421)
From accumulated net realized gains -- -- --
-------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares
from operations (41,577,851) 1,938,304 (656,769)
-------------------------------------------------------------------------------------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS
From net investment income (8,904,831) (17,085,692) (18,308,241)
From accumulated net realized gains -- -- --
-------------------------------------------------------------------------------------------
Decrease in net assets applicable to
Common shares from distributions to
Common shareholders (8,904,831) (17,085,692) (18,308,241)
-------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Common shares:
Net proceeds from shares issued to
shareholders due to
reinvestment of distributions -- -- 298,310
Repurchased (120,362) -- --
-------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares from
capital share transactions (120,362) -- 298,310
-------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares (50,603,044) (15,147,388) (18,666,700)
Net assets applicable to Common
shares at the beginning of period 328,658,669 343,806,057 362,472,757
-------------------------------------------------------------------------------------------
Net assets applicable to Common
shares at the end of period $278,055,625 $328,658,669 $343,806,057
===========================================================================================
Undistributed (Over-distribution of)
net investment income
at the end of period $ 1,629,645 $ 718,052 $ (878,892)
===========================================================================================
See accompanying notes to financial statements.
83
| Statement of CHANGES in NET ASSETS (continued)
INSURED CALIFORNIA DIVIDEND ADVANTAGE (NKL)
---------------------------------------------
SIX MONTHS
ENDED YEAR ENDED YEAR ENDED
2/28/09 8/31/08 8/31/07
-------------------------------------------------------------------------------------------
OPERATIONS
Net investment income $ 7,640,002 $ 15,678,470 $ 15,395,108
Net realized gain (loss) from:
Investments (1,321,731) 1,337,028 653,722
Forward swaps -- 731,015 (200,000)
Futures -- -- --
Change in net unrealized appreciation
(depreciation) of:
Investments (14,959,271) (6,994,006) (8,944,129)
Forward swaps -- (24,419) 24,419
Futures -- -- --
Distributions to Auction Rate Preferred
shareholders:
From net investment income (1,586,640) (3,886,043) (4,037,528)
From accumulated net realized gains (201,085) (116,419) (10,666)
-------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares
from operations (10,428,725) 6,725,626 2,880,926
-------------------------------------------------------------------------------------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS
From net investment income (5,686,357) (10,952,422) (11,778,209)
From accumulated net realized gains (568,639) (340,878) (39,709)
-------------------------------------------------------------------------------------------
Decrease in net assets applicable to
Common shares from distributions to
Common shareholders (6,254,996) (11,293,300) (11,817,918)
-------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Common shares:
Net proceeds from shares issued to
shareholders due to
reinvestment of distributions -- -- 335,845
Repurchased (204,888) -- --
-------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares from
capital share transactions (204,888) -- 335,845
-------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares (16,888,609) (4,567,674) (8,601,147)
Net assets applicable to Common
shares at the beginning of period 223,355,768 227,923,442 236,524,589
-------------------------------------------------------------------------------------------
Net assets applicable to Common
shares at the end of period $206,467,159 $223,355,768 $227,923,442
===========================================================================================
Undistributed (Over-distribution of)
net investment income
at the end of period $ 662,312 $ 310,679 $ (520,310)
===========================================================================================
INSURED CALIFORNIA TAX-FREE ADVANTAGE (NKX)
---------------------------------------------
SIX MONTHS
ENDED YEAR ENDED YEAR ENDED
2/28/09 8/31/08 8/31/07
-------------------------------------------------------------------------------------------
OPERATIONS
Net investment income $ 2,267,947 $ 5,733,820 $ 5,654,749
Net realized gain (loss) from:
Investments (1,135,147) 1,101,623 91,706
Forward swaps -- 128,891 (57,143)
Futures -- -- --
Change in net unrealized appreciation
(depreciation) of:
Investments (6,558,916) (3,013,642) (2,767,618)
Forward swaps -- (12,888) 12,888
Futures -- -- --
Distributions to Auction Rate Preferred
shareholders:
From net investment income (13,824) (1,400,428) (1,431,890)
From accumulated net realized gains (42,336) -- --
Net increase (decrease) in net assets
applicable to Common shares
from operations (5,482,276) 2,537,376 1,502,692
-------------------------------------------------------------------------------------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS
From net investment income (2,083,880) (4,167,394) (4,166,045)
From accumulated net realized gains (303,752) -- --
-------------------------------------------------------------------------------------------
Decrease in net assets applicable to
Common shares from distributions to
Common shareholders (2,387,632) (4,167,394) (4,166,045)
-------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Common shares:
Net proceeds from shares issued to
shareholders due to
reinvestment of distributions -- 17,615 32,211
Repurchased -- -- --
-------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares from
capital share transactions -- 17,615 32,211
-------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
applicable to Common shares (7,869,908) (1,612,403) (2,631,142)
Net assets applicable to Common
shares at the beginning of period 83,531,260 85,143,663 87,774,805
-------------------------------------------------------------------------------------------
Net assets applicable to Common
shares at the end of period $ 75,661,352 $ 83,531,260 $ 85,143,663
===========================================================================================
Undistributed (Over-distribution of)
net investment income
at the end of period $ 249,837 $ 51,473 $ (109,506)
===========================================================================================
See accompanying notes to financial statements.
84
|Statement of CASH FLOWS
INSURED CALIFORNIA
PREMIUM INCOME 2 (NCL)
----------------------------
SIX MONTHS
ENDED YEAR ENDED
2/28/09 8/31/08
------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCREASE (DECREASE) IN NET ASSETS APPLICABLE TO COMMON
SHARES FROM OPERATIONS $(10,364,134) $ 3,515,853
Adjustments to reconcile the net increase (decrease) in net assets applicable
to Common shares from operations to net cash provided by (used in)
operating activities:
Purchases of investments (24,566,262) (34,316,455)
Proceeds from sales and maturities of investments 22,624,491 35,625,054
Proceeds from (Purchases of) short-term investments, net -- --
Proceeds from terminated forward swaps -- 856,758
Proceeds from closed/expired futures contracts (913,786) --
Amortization (Accretion) of premiums and discounts, net (223,123) (221,538)
(Increase) Decrease in receivable for interest 146,364 79,581
(Increase) Decrease in receivable for investments sold (175,000) 7,643,125
(Increase) Decrease in other assets 16,941 1,252
Increase (Decrease) in payable for investments purchased -- (1,235,799)
Increase (Decrease) in payable for Auction Rate Preferred shares redeemed
and/or noticed for redemption, at liquidation value (7,575,000) 7,575,000
Increase (Decrease) in payable for Auction Rate Preferred share dividends 261,942 6,682
Increase (Decrease) in Variable Rate Demand Preferred shares offering
cost payable -- --
Increase (Decrease) in accrued management fees (24,664) (2,402)
Increase (Decrease) in accrued other liabilities 17,123 12,394
Net realized (gain) loss from investments 7,018,034 (1,445,377)
Net realized (gain) loss from forward swaps -- (856,758)
Net realized (gain) loss from futures 913,786 --
Change in net unrealized (appreciation) depreciation of investments 8,290,218 7,171,193
Change in net unrealized (appreciation) depreciation of forward swaps (1,751,141) 656,230
Taxes paid on undistributed capital gains (812) (1,360)
-------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) operating activities (6,305,023) 25,063,433
-------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (Decrease) in cash overdraft balance -- (4,976,292)
Increase (Decrease) in floating rate obligations 9,000,000 11,060,000
Increase (Decrease) in Variable Rate Demand Preferred shares -- --
Cash distributions paid to Common shareholders (6,052,234) (8,158,035)
Cost of Common shares repurchased (446,744) --
(Increase) Decrease in deferred Variable Rate Demand Preferred share
offering cost -- --
Increase (Decrease) in Preferred shares -- (15,175,000)
-------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities 2,501,022 (17,249,327)
-------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH (3,804,001) 7,814,106
Cash and cash equivalents at the beginning of period 7,814,106 --
-------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT THE END OF PERIOD $ 4,010,105 $ 7,814,106
=============================================================================================================
INSURED CALIFORNIA
TAX-FREE ADVANTAGE (NKX)
----------------------------
SIX MONTHS
ENDED YEAR ENDED
2/28/09 8/31/08
-------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCREASE (DECREASE) IN NET ASSETS APPLICABLE TO COMMON
SHARES FROM OPERATIONS $ (5,482,276) $ 2,537,376
Adjustments to reconcile the net increase (decrease) in net assets applicable
to Common shares from operations to net cash provided by (used in)
operating activities:
Purchases of investments (3,226,053) (34,917,108)
Proceeds from sales and maturities of investments 11,401,613 44,533,576
Proceeds from (Purchases of) short-term investments, net (4,000,000) --
Proceeds from terminated forward swaps -- 128,891
Proceeds from closed/expired futures contracts -- --
Amortization (Accretion) of premiums and discounts, net (88,183) (171,570)
(Increase) Decrease in receivable for interest 122,582 (68,845)
(Increase) Decrease in receivable for investments sold -- 942,803
(Increase) Decrease in other assets 3,191 (95)
Increase (Decrease) in payable for investments purchased -- (984,700)
Increase (Decrease) in payable for Auction Rate Preferred shares redeemed
and/or noticed for redemption, at liquidation value (45,000,000) 45,000,000
Increase (Decrease) in payable for Auction Rate Preferred share dividends (10,368) 5,374
Increase (Decrease) in Variable Rate Demand Preferred shares offering
cost payable (91,737) 175,000
Increase (Decrease) in accrued management fees (1,043) 8,503
Increase (Decrease) in accrued other liabilities (24,814) 4,572
Net realized (gain) loss from investments 1,135,147 (1,101,623)
Net realized (gain) loss from forward swaps -- (128,891)
Net realized (gain) loss from futures -- --
Change in net unrealized (appreciation) depreciation of investments 6,558,916 3,013,642
Change in net unrealized (appreciation) depreciation of forward swaps -- 12,888
Taxes paid on undistributed capital gains (6,518) --
-------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) operating activities (38,709,543) 58,989,793
-------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (Decrease) in cash overdraft balance -- (3,248,892)
Increase (Decrease) in floating rate obligations (3,750,000) 3,750,000
Increase (Decrease) in Variable Rate Demand Preferred shares -- 35,500,000
Cash distributions paid to Common shareholders (2,385,993) (4,149,397)
Cost of Common shares repurchased -- --
(Increase) Decrease in deferred Variable Rate Demand Preferred share
offering cost 8,758 (528,790)
Increase (Decrease) in Preferred shares -- (45,000,000)
-------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities (6,127,235) (13,677,079)
-------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH (44,836,778) 45,312,714
Cash and cash equivalents at the beginning of period 45,312,714 --
-------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT THE END OF PERIOD $ 475,936 $ 45,312,714
=============================================================================================================
See accompanying notes to financial statements.
85
| Statement of CASH FLOWS (continued)
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Non-cash financing activities included herein consist of reinvestments of Common
share distributions of $17,615 for Insured California Tax-Free Advantage (NKX)
for the fiscal year ended August 31, 2008.
Cash paid for interest (excluding amortization of offering costs, where
applicable) was as follows:
INSURED CALIFORNIA INSURED CALIFORNIA
PREMIUM INCOME 2 (NCL) TAX-FREE ADVANTAGE (NKX)
-----------------------------------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED
2/28/09 8/31/08 2/28/09 8/31/08
--------------------------------------------------------------------------------
Cash paid for interest $ 225,768 $ 40,691 $ 368,392 $ 66,087
================================================================================
See accompanying notes to financial statements.
86
| Notes to FINANCIAL STATEMENTS
1. GENERAL INFORMATION AND SIGNIFICANT ACCOUNTING POLICIES
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) (collectively,
the "Funds"). 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 NYSE Alternext US
(formerly 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.
During the current fiscal period, the Board of Directors/Trustees of the Funds
approved a change in the Funds' fiscal and tax year ends from August 31 to
February 28/29.
The following is a summary of significant accounting policies followed by the
Funds in the preparation of their financial statements in accordance with US
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. Prices
of forward swap contracts 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 of such a price,
at the mean of the bid and asked prices. When market price quotes are not
readily available (which is usually the case for municipal securities), the
pricing service or, in the absence of a pricing service for a particular
investment or derivative instrument, the Board of Directors/Trustees of the
Fund, or its designee, may establish fair value using a wide variety of market
data including yields or prices of investments of comparable quality, type of
issue, coupon, maturity and rating, market quotes or indications of value from
security dealers, evaluations of anticipated cash flows or collateral, general
market conditions and other information and analysis, including the obligor's
credit characteristics considered relevant. Temporary investments in securities
that have variable rate and demand features qualifying them as short-term
investments are valued at amortized cost, which approximates 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/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 February 28, 2009, there
were no such outstanding purchase commitments in any of the 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.
87
| Notes to FINANCIAL STATEMENTS (continued)
Income Taxes
Each Fund is a separate taxpayer for federal income tax purposes. Each Fund
intends to distribute substantially all of its 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. Net realized capital gains
and ordinary income distributions paid by the Funds are subject to federal
taxation.
For all open tax years and all major taxing jurisdictions, management of the
Funds has concluded that there are no significant uncertain tax positions that
would require recognition in the financial statements. Open tax years are those
that are open for examination by taxing authorities (i.e., generally the last
four tax year ends and the interim tax period since then). Furthermore,
management of the Funds is also not aware of any tax positions for which it is
reasonably possible that the total amounts of unrecognized tax benefits will
significantly change in the next twelve months.
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 at least 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 US
generally accepted accounting principles.
Auction Rate Preferred Shares
The following Funds have issued and outstanding Auction Rate Preferred shares,
$25,000 stated value per share, as a means of effecting financial leverage. Each
Fund's Auction Rate 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. As of February 28, 2009, the number of
Auction Rate 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 -- -- 1,635 --
Series T 1,800 1,597 -- --
Series TH -- 1,596 -- 2,710
Series F -- -- -- 2,711
--------------------------------------------------------------------------------
Total 1,800 3,193 1,635 5,421
================================================================================
88
INSURED
CALIFORNIA CALIFORNIA CALIFORNIA
DIVIDEND DIVIDEND DIVIDEND
ADVANTAGE 2 ADVANTAGE 3 ADVANTAGE
(NVX) (NZH) (NKL)
--------------------------------------------------------------------------------
Number of shares:
Series M 2,200 3,081 --
Series T -- -- 2,165
Series TH -- 3,082 --
Series F 2,200 -- 2,165
--------------------------------------------------------------------------------
Total 4,400 6,163 4,330
================================================================================
Beginning in February 2008, more shares for sale were submitted in the regularly
scheduled auctions for the Auction Rate Preferred shares issued by the Funds
than there were offers to buy. This meant that these auctions "failed to clear,"
and that many Auction Rate Preferred shareholders who wanted to sell their
shares in these auctions were unable to do so. Auction Rate Preferred
shareholders unable to sell their shares received distributions at the "maximum
rate" applicable to failed auctions as calculated in accordance with the
pre-established terms of the Auction Rate Preferred shares.
These developments have generally not affected the portfolio management or
investment policies of the Funds. However, one implication of these auction
failures for Common shareholders is that the Funds' cost of leverage will likely
be higher, at least temporarily, than it otherwise would have been had the
auctions continued to be successful. As a result, the Funds' future Common share
earnings may be lower than they otherwise would have been.
As of February 28, 2009, Insured California Premium Income 2 (NCL), California
Premium Income (NCU), California Dividend Advantage (NAC), California Dividend
Advantage 3 (NZH), Insured California Dividend Advantage (NKL) and Insured
California Tax-Free Advantage (NKX) redeemed $15,175,000, $2,125,000,
$39,475,000, $32,925,000, $9,750,000 and $45,000,000 of their outstanding
Auction Rate Preferred shares, respectively, at liquidation value. Insured
California Premium Income (NPC) and California Dividend Advantage 2 (NVX) have
not redeemed any of their Auction Rate Preferred shares.
Variable Rate Demand Preferred Shares
On August 7, 2008, Insured California Tax-Free Advantage (NKX) issued 355 Series
1 Variable Rate Demand Preferred shares, $100,000 liquidation value per share,
in a privately negotiated offering. Proceeds of this offering along with the
proceeds from the Fund's creation of tender option bonds (TOBs), also known as
"floaters" or floating rate obligations, were used to redeem all of the Fund's
outstanding Auction Rate Preferred shares totaling $45,000,000. The Variable
Rate Demand Preferred shares were offered to institutional buyers as defined
pursuant to Rule 144A under the Securities Act of 1933, have a maturity date of
August 1, 2038 and include a liquidity feature that allows the Variable Rate
Demand Preferred shareholders to have their shares purchased by the liquidity
provider in the event that sell orders are not matched with purchase orders in a
remarketing. Dividends on the Variable Rate Demand Preferred shares (which are
treated as interest payments for financial reporting purposes) are set weekly at
a rate established by a remarketing agent; therefore, the liquidation value of
the Variable Rate Demand Preferred shares approximates fair value.
Subject to certain conditions, Variable Rate Demand Preferred shares may be
redeemed, in whole or in part, at any time at the option of the Fund. The Fund
may also redeem certain of the Variable Rate Demand Preferred shares if the Fund
fails to maintain certain asset coverage requirements and such failures are not
cured by the applicable cure date. The redemption price per share is equal to
the sum of the liquidation value per share plus any accumulated but unpaid
dividends.
Insured California Tax-Free Advantage (NKX) had all of its $35,500,000 Variable
Rate Demand Preferred shares outstanding for the six months ended February 28,
2009, with an annualized interest rate of 1.99%.
For financial reporting purposes only, Variable Rate Demand Preferred shares, at
the liquidation value are recorded as a liability on the Statement of Assets and
Liabilities and the dividends paid on the Variable Rate Demand Preferred shares
are included as a component of "Interest expense" on the Statement of
Operations.
89
| Notes to FINANCIAL STATEMENTS (continued)
Insurance
Except to the extent that each of Insured California Premium Income (NPC) and
Insured California Premium Income 2 (NCL) invests in temporary investments, all
of the assets of each Fund will be invested in municipal securities that are
covered by insurance guaranteeing the timely payment of principal and interest
or backed by an escrow or trust account containing sufficient U.S. government or
U.S. government agency securities to ensure timely payment of principal and
interest. Insurers must have a claims paying ability rated "Aaa" by Moody's or
"AAA" by S&P. Municipal securities backed by an escrow account or trust account
will not constitute more than 20% of the Fund's assets.
Under normal circumstances, Insured California Dividend Advantage (NKL) and
Insured California Tax-Free Advantage (NKX) will invest at least 80% of their
net assets (including net assets attributable to Auction Rate Preferred shares
or Variable Rate Demand Preferred shares) in municipal securities that are
covered by insurance guaranteeing the timely payment of principal and interest.
For purposes of this 80% test, insurers must have a claims paying ability rated
at least "A" at the time of purchase by at least one independent rating agency.
In addition, each of Insured California Dividend Advantage (NKL) and Insured
California Tax-Free Advantage (NKX) will invest at least 80% of its net assets
(including net assets attributable to Auction Rate Preferred shares or Variable
Rate Demand Preferred shares) in municipal securities that are rated at least
"AA" at the time of purchase (based on the higher of the rating of the insurer,
if any, or the underlying security) by at least one independent rating agency,
or are unrated but judged to be of similar credit quality by Nuveen Asset
Management (the "Adviser"), a wholly owned subsidiary of Nuveen Investments,
Inc. ("Nuveen"), or municipal bonds backed by an escrow or trust account
containing sufficient U.S. government or U.S. government agency securities or
U.S. Treasury-issued State and Local Government Series securities to ensure
timely payment of principal and interest. Each of Insured California Dividend
Advantage (NKL) and Insured California Tax-Free Advantage (NKX) may also invest
up to 20% of its net assets (including net assets attributable to Auction Rate
Preferred shares or Variable Rate Demand Preferred shares) in municipal
securities rated below "AA" but at least "BBB" (based on the higher rating of
the insurer, if any, or the underlying bond) or are unrated but judged to be of
comparable quality by the Adviser.
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.
Inverse Floating Rate Securities
Each Fund is authorized to invest in inverse floating rate securities. An
inverse floating rate security is created by depositing a municipal bond,
typically with a fixed interest rate, into a special purpose trust created by a
broker-dealer. In turn, this trust (a) issues floating rate certificates, in
face amounts equal to some fraction of the deposited bond's par amount or market
value, that typically pay short-term tax-exempt interest rates to third parties,
and (b) issues to a long-term investor (such as one of the Funds) an inverse
floating rate certificate (sometimes referred to as an "inverse floater") that
represents all remaining or residual interest in the trust. The income received
by the inverse floater holder varies inversely with the short-term rate paid to
the floating rate certificates' holders, and in most circumstances the inverse
floater holder bears substantially all of the underlying bond's downside
investment risk and also benefits disproportionately from any potential
appreciation of the underlying bond's value. The price of an inverse floating
rate security will be more volatile than that of the underlying bond because the
interest rate is dependent on not only the fixed coupon rate of the underlying
bond but also on the short-term interest paid on the floating rate certificates,
and because the inverse floating rate security essentially bears the risk of
loss of the greater face value of the underlying bond.
90
A Fund may purchase an inverse floating rate security in a secondary market
transaction without first owning the underlying bond (referred to as an
"externally-deposited inverse floater"), or instead by first selling a
fixed-rate bond to a broker-dealer for deposit into the special purpose trust
and receiving in turn the residual interest in the trust (referred to as a
"self-deposited inverse floater"). The inverse floater held by a Fund gives the
Fund the right (a) to cause the holders of the floating rate certificates to
tender their notes at par, and (b) to have the broker transfer the fixed-rate
bond held by the trust to the Fund, thereby collapsing the trust. An investment
in an externally-deposited inverse floater is identified in the Portfolio of
Investments as "(IF) - Inverse floating rate investment." An investment in a
self-deposited inverse floater is accounted for as a financing transaction in
accordance with Statement of Financial Accounting Standards No. 140 (SFAS No.
140) "Accounting for Transfers and Servicing of Financial Assets and
Extinguishment of Liabilities." In such instances, a fixed-rate bond deposited
into a special purpose trust is identified in the Portfolio of Investments as
"(UB) - Underlying bond of an inverse floating rate trust," with the Fund
accounting for the short-term floating rate certificates issued by the trust as
"Floating rate obligations" on the Statement of Assets and Liabilities. In
addition, the Fund reflects in Investment Income the entire earnings of the
underlying bond and the related interest paid to the holders of the short-term
floating rate certificates is included as a component of "Interest expense" on
the Statement of Operations.
During the six months ended February 28, 2009, each Fund invested in externally
deposited inverse floaters and/or self-deposited inverse floaters.
Each Fund may also enter into shortfall and forbearance agreements (sometimes
referred to as a "recourse trust" or "credit recovery swap") (such agreements
referred to herein as "Recourse Trusts") with a broker-dealer by which a Fund
agrees to reimburse the broker-dealer, in certain circumstances, for the
difference between the liquidation value of the fixed-rate bond held by the
trust and the liquidation value of the floating rate certificates issued by the
trust plus any shortfalls in interest cash flows. Under these agreements, a
Fund's potential exposure to losses related to or on inverse floaters may
increase beyond the value of a Fund's inverse floater investments as a Fund may
potentially be liable to fulfill all amounts owed to holders of the floating
rate certificates. At period end, any such shortfall is recognized as
"Unrealized depreciation on Recourse Trusts" on the Statement of Assets and
Liabilities.
At February 28, 2009, the Funds were not invested in any externally-deposited
Recourse Trusts.
INSURED INSURED INSURED INSURED
CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA
PREMIUM PREMIUM PREMIUM DIVIDEND DIVIDEND DIVIDEND DIVIDEND TAX-FREE
INCOME INCOME 2 INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3 ADVANTAGE ADVANTAGE
(NPC) (NCL) (NCU) (NAC) (NVX) (NZH) (NKL) (NKX)
-------------------------------------------------------------------------------------------------------------------------------
Maximum exposure to
Recourse Trusts $ -- $ -- $ -- $ -- $ -- $ -- $ -- $ --
===============================================================================================================================
The average floating rate obligations outstanding and average annual interest
rate and fees related to self-deposited inverse floaters during the six months
ended February 28, 2009, were as follows:
INSURED INSURED
CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA
PREMIUM PREMIUM PREMIUM DIVIDEND
INCOME INCOME 2 INCOME ADVANTAGE
(NPC) (NCL) (NCU) (NAC)
-------------------------------------------------------------------------------------------------------------------------------
Average floating rate obligations $ -- $ 19,910,829 $ 5,999,867 $ 16,061,901
Average annual interest rate and fees --% 2.29% 2.32% 2.57%
===============================================================================================================================
INSURED INSURED
CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA
DIVIDEND DIVIDEND DIVIDEND TAX-FREE
ADVANTAGE 2 ADVANTAGE 3 ADVANTAGE ADVANTAGE
(NVX) (NZH) (NKL) (NKX)
-------------------------------------------------------------------------------------------------------------------------------
Average floating rate obligations $ 4,065,044 $ 14,073,978 $ 7,520,884 $ 808,011
Average annual interest rate and fees 2.39% 2.30% 2.32% 4.45%
===============================================================================================================================
91
| Notes to FINANCIAL STATEMENTS (continued)
Forward Swap Transactions
Each Fund is authorized to invest in forward interest rate swap transactions.
Each Fund's 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. Insured California
Premium Income 2 (NCL) and California Dividend Advantage 3 (NZH) invested in
forward interest rate swap transactions during the six months ended February 28,
2009.
Futures Contracts
Each Fund is authorized to invest in futures contracts. 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 or expired, a Fund records a realized gain or loss equal to
the difference between the value of the contract on the closing date and value
of the contract when originally entered into. Cash held by the broker to cover
initial margin requirements on open futures contracts, if any, is recognized on
the Statement of Assets and Liabilities. Additionally, the Statement of Assets
and Liabilities reflects a receivable or payable for the variation margin, when
applicable. Insured California Premium Income 2 (NCL) and California Dividend
Advantage 3 (NZH) invested in futures contracts during the six months ended
February 28, 2009.
Risks of investments in futures contracts include the possible adverse movement
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.
Market and Credit Risk
In the normal course of business each Fund may invest in financial instruments
and enter into financial transactions where risk of potential loss exists due to
changes in the market (market risk) or failure of the other party to the
transaction to perform (credit risk). Similar to credit risk, each Fund may be
exposed to counterparty risk, or the risk that an institution or other entity
with which the Fund has unsettled or open transactions will default. The
potential loss could exceed the value of the financial assets recorded on the
financial statements. Financial assets, which potentially expose each Fund to
credit risk, consist principally of cash due from counterparties on forward,
option and swap transactions. The extent of each Fund's exposure to credit and
counterparty risks in respect to these financial assets approximates their
carrying value as recorded on the Statement of Assets and Liabilities.
92
Each Fund helps manage credit risk by entering into agreements only the Adviser
believes have the financial resources to honor their obligations and by having
the Adviser monitor the financial stability of the counterparties. Additionally,
counterparties may be required to pledge collateral daily (based on the daily
valuation of the financial asset) on behalf of each Fund with a value
approximately equal to the amount of any unrealized gain above a pre-determined
threshold. Reciprocally, when each Fund has an unrealized loss, 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 valuations fluctuate, either up or down, by at least
the predetermined threshold amount.
Zero Coupon Securities
Each Fund is authorized to invest in zero coupon securities. A zero coupon
security does not pay a regular interest coupon to its holders during the life
of the security. Tax-exempt income to the holder of the security comes from
accretion of the difference between the original purchase price of the security
at issuance and the par value of the security at maturity and is effectively
paid at maturity. Such securities are included in the Portfolios of Investments
with a 0.000% coupon rate in their description. The market prices of zero coupon
securities generally are more volatile than the market prices of securities that
pay interest periodically.
Offering Costs
Costs incurred by Insured California Tax-Free Advantage (NKX) in connection with
its offering of Variable Rate Demand Preferred shares ($530,000) were recorded
as a deferred charge which will be amortized over the 30-year life of the shares
and are recognized as "Amortization of offering costs" on the Statement of
Operations.
Custodian Fee Credit
Each Fund has an arrangement with the custodian bank whereby certain custodian
fees and expenses are reduced by net credits earned on each Fund's cash on
deposit with the bank. Such deposit arrangements are an alternative to overnight
investments. Credits for cash balances may be offset by charges for any days on
which a Fund overdraws its account at the custodian bank.
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 US 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.
93
| Notes to FINANCIAL STATEMENTS (continued)
2. FAIR VALUE MEASUREMENTS
During the current fiscal period, the Funds adopted the provisions of Statement
of Financial Accounting Standards No. 157 (SFAS No. 157) "Fair Value
Measurements." SFAS No. 157 defines fair value, establishes a framework for
measuring fair value in generally accepted accounting principles, and expands
disclosure about fair value measurements. In determining the value of each
Fund's investments various inputs are used. These inputs are summarized in the
three broad levels listed below:
Level 1 - Quoted prices in active markets for identical securities.
Level 2 - Other significant observable inputs (including quoted prices for
similar securities, interest rates, prepayment speeds, credit
risk, etc.).
Level 3 - Significant unobservable inputs (including management's
assumptions in determining the fair value of investments).
The inputs or methodology used for valuing securities are not an indication of
the risk associated with investing in those securities.
The following is a summary of each Fund's fair value measurements as of February
28, 2009:
INSURED CALIFORNIA PREMIUM INCOME (NPC) LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
----------------------------------------------------------------------------------------------------
Investments $ -- $ 133,569,802 $ -- $ 133,569,802
====================================================================================================
INSURED CALIFORNIA PREMIUM INCOME 2 (NCL) LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
----------------------------------------------------------------------------------------------------
Investments $ -- $ 254,436,434 $ -- $ 254,436,434
Derivatives* -- 1,751,141 -- 1,751,141
----------------------------------------------------------------------------------------------------
Total $ -- $ 256,187,575 $ -- $ 256,187,575
====================================================================================================
CALIFORNIA PREMIUM INCOME (NCU) LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
----------------------------------------------------------------------------------------------------
Investments $ -- $ 114,136,934 $ -- $ 114,136,934
====================================================================================================
CALIFORNIA DIVIDEND ADVANTAGE (NAC) LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
----------------------------------------------------------------------------------------------------
Investments $ -- $ 426,125,802 $ -- $ 426,125,802
====================================================================================================
CALIFORNIA DIVIDEND ADVANTAGE 2 (NVX) LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
----------------------------------------------------------------------------------------------------
Investments $ -- $ 300,745,579 $ -- $ 300,745,579
====================================================================================================
CALIFORNIA DIVIDEND ADVANTAGE 3 (NZH) LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
----------------------------------------------------------------------------------------------------
Investments $ -- $ 440,176,379 $ -- $ 440,176,379
Derivatives* -- (2,841,843) -- (2,841,843)
----------------------------------------------------------------------------------------------------
Total $ -- $ 437,334,536 $ -- $ 437,334,536
====================================================================================================
INSURED CALIFORNIA DIVIDEND ADVANTAGE (NKL) LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
----------------------------------------------------------------------------------------------------
Investments $ -- $ 319,298,553 $ -- $ 319,298,553
====================================================================================================
INSURED CALIFORNIA TAX-FREE ADVANTAGE (NKX) LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
----------------------------------------------------------------------------------------------------
Investments $ -- $ 109,158,643 $ -- $ 109,158,643
====================================================================================================
* Represents net unrealized appreciation (depreciation). Derivatives may include
outstanding futures, forward and swap contracts. See Investments in Derivatives
within the Fund's Portfolio of Investments.
94
3. FUND SHARES
Common Shares
On July 30, 2008, the Funds' Board of Directors/Trustees approved an open market
share repurchase program under which each Fund may repurchase an aggregate of up
to 10% of its outstanding Common shares.
Transactions in Common shares were as follows:
INSURED CALIFORNIA PREMIUM INCOME (NPC) INSURED CALIFORNIA PREMIUM INCOME 2 (NCL)
------------------------------------------ ------------------------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED YEAR ENDED ENDED YEAR ENDED YEAR ENDED
2/28/09 8/31/08 8/31/07 2/28/09 8/31/08 8/31/07
--------------------------------------------------------------------------------------------------------------------------------
Common shares:
Issued to shareholders due
to reinvestment of distributions -- -- 4,166 -- -- --
Repurchased (6,200) -- -- (41,800) -- --
--------------------------------------------------------------------------------------------------------------------------------
Weighted average Common share:
Price per share repurchased $ 12.00 -- -- $ 10.67 -- --
Discount per share repurchased 15.30% -- -- 17.79% -- --
================================================================================================================================
CALIFORNIA PREMIUM INCOME (NCU) CALIFORNIA DIVIDEND ADVANTAGE (NAC)
------------------------------------------ ------------------------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED YEAR ENDED ENDED YEAR ENDED YEAR ENDED
2/28/09 8/31/08 8/31/07 2/28/09 8/31/08 8/31/07
--------------------------------------------------------------------------------------------------------------------------------
Common shares:
Issued to shareholders due
to reinvestment of distributions -- -- 972 -- -- 29,993
Repurchased (14,700) -- -- -- -- --
--------------------------------------------------------------------------------------------------------------------------------
Weighted average Common share:
Price per share repurchased $ 9.67 -- -- -- -- --
Discount per share repurchased 22.26% -- -- -- -- --
================================================================================================================================
CALIFORNIA DIVIDEND ADVANTAGE 2 (NVX) CALIFORNIA DIVIDEND ADVANTAGE 3 (NZH)
------------------------------------------ ------------------------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED YEAR ENDED ENDED YEAR ENDED YEAR ENDED
2/28/09 8/31/08 8/31/07 2/28/09 8/31/08 8/31/07
--------------------------------------------------------------------------------------------------------------------------------
Common shares:
Issued to shareholders due
to reinvestment of distributions -- -- 6,762 -- -- 19,501
Repurchased (18,300) -- -- (12,900) -- --
--------------------------------------------------------------------------------------------------------------------------------
Weighted average Common share:
Price per share repurchased $ 10.26 -- -- $ 9.31 -- --
Discount per share repurchased 21.40% -- -- 19.85% -- --
================================================================================================================================
INSURED CALIFORNIA DIVIDEND ADVANTAGE (NKL) INSURED CALIFORNIA TAX-FREE ADVANTAGE (NKX)
------------------------------------------ ------------------------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED YEAR ENDED ENDED YEAR ENDED YEAR ENDED
2/28/09 8/31/08 8/31/07 2/28/09 8/31/08 8/31/07
--------------------------------------------------------------------------------------------------------------------------------
Common shares:
Issued to shareholders due
to reinvestment of distributions -- -- 21,450 -- 1,226 2,139
Repurchased (19,000) -- -- -- -- --
--------------------------------------------------------------------------------------------------------------------------------
Weighted average Common share:
Price per share repurchased $ 10.76 -- -- -- -- --
Discount per share repurchased 21.01% -- -- -- -- --
================================================================================================================================
95
| Notes to FINANCIAL STATEMENTS (continued)
Preferred Shares
Insured California Premium Income (NPC) and California Dividend Advantage 2
(NVX) did not redeem and/or notice for redemption any of their Auction
Rate-Preferred shares during the six months ended February 28, 2009, or during
the fiscal years ended August 31, 2008 and August 31, 2007. Transactions in
Auction Rate Preferred shares were as follows:
INSURED CALIFORNIA
PREMIUM INCOME 2 (NCL)
---------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED YEAR ENDED
2/28/09 8/31/08 8/31/07
---------------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
--------------------------------------------------------------------------------------------------------------------------------
Auction Rate Preferred shares redeemed
and/or noticed for redemption:
Series T -- $ -- 303 $ 7,575,000 -- $ --
Series TH -- -- 304 7,600,000 -- --
--------------------------------------------------------------------------------------------------------------------------------
Total -- $ -- 607 $ 15,175,000 -- $ --
================================================================================================================================
CALIFORNIA
PREMIUM INCOME (NCU)
---------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED YEAR ENDED
2/28/09 8/31/08 8/31/07
---------------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
--------------------------------------------------------------------------------------------------------------------------------
Auction Rate Preferred shares redeemed
and/or noticed for redemption:
Series M 85 $2,125,000 -- $ -- -- $ --
================================================================================================================================
CALIFORNIA DIVIDEND
ADVANTAGE (NAC)
---------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED YEAR ENDED
2/28/09 8/31/08 8/31/07
---------------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
--------------------------------------------------------------------------------------------------------------------------------
Auction Rate Preferred shares redeemed
and/or noticed for redemption:
Series TH -- $ -- 790 $ 19,750,000 -- $ --
Series F -- -- 789 19,725,000 -- --
--------------------------------------------------------------------------------------------------------------------------------
Total -- $ -- 1,579 $ 39,475,000 -- $ --
================================================================================================================================
96
CALIFORNIA DIVIDEND
ADVANTAGE 3 (NZH)
------------------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED YEAR ENDED
2/28/09 8/31/08 8/31/07
------------------------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
----------------------------------------------------------------------------------------------------------------------------------
Auction Rate Preferred shares redeemed
and/or noticed for redemption:
Series M 117 $ 2,925,000 542 $13,550,000 -- $ --
Series TH 117 2,925,000 541 13,525,000 -- --
----------------------------------------------------------------------------------------------------------------------------------
Total 234 $ 5,850,000 1,083 $27,075,000 -- $ --
==================================================================================================================================
INSURED CALIFORNIA
DIVIDEND ADVANTAGE (NKL)
------------------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED YEAR ENDED
2/28/09 8/31/08 8/31/07
------------------------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
----------------------------------------------------------------------------------------------------------------------------------
Auction Rate Preferred shares redeemed
and/or noticed for redemption:
Series T -- $ -- 195 $ 4,875,000 -- $ --
Series F -- -- 195 4,875,000 -- --
----------------------------------------------------------------------------------------------------------------------------------
Total -- $ -- 390 $ 9,750,000 -- $ --
==================================================================================================================================
INSURED CALIFORNIA
TAX-FREE ADVANTAGE (NKX)
------------------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED YEAR ENDED
2/28/09 8/31/08 8/31/07
------------------------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
----------------------------------------------------------------------------------------------------------------------------------
Auction Rate Preferred shares redeemed
and/or noticed for redemption:
Series TH -- $ -- 1,800 $ 45,000,000 -- $ --
==================================================================================================================================
Transactions in Variable Rate Demand Preferred shares were as follows:
INSURED CALIFORNIA
TAX-FREE ADVANTAGE (NKX)
------------------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED YEAR ENDED
2/28/09 8/31/08 8/31/07
------------------------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
----------------------------------------------------------------------------------------------------------------------------------
Variable Rate Demand Preferred shares
issued:
Series 1 -- $ -- 355 $ 35,500,000 -- $ --
==================================================================================================================================
97
| Notes to FINANCIAL STATEMENTS (continued)
4. INVESTMENT TRANSACTIONS
Purchases and sales (including maturities but excluding short-term investments
and derivative transactions) during the six months ended February 28, 2009, were
as follows:
INSURED INSURED
CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA
PREMIUM PREMIUM PREMIUM DIVIDEND
INCOME INCOME 2 INCOME ADVANTAGE
(NPC) (NCL) (NCU) (NAC)
-----------------------------------------------------------------------------------------------------------------------------
Purchases $ 860,000 $24,566,262 $14,888,097 $61,804,250
Sales and maturities 3,886,299 22,624,491 18,079,390 86,395,712
=============================================================================================================================
INSURED INSURED
CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA
DIVIDEND DIVIDEND DIVIDEND TAX-FREE
ADVANTAGE 2 ADVANTAGE 3 ADVANTAGE ADVANTAGE
(NVX) (NZH) (NKL) (NKX)
-----------------------------------------------------------------------------------------------------------------------------
Purchases $20,653,313 $39,866,957 $12,610,310 $ 3,226,053
Sales and maturities 26,763,192 39,099,487 8,972,910 11,401,613
=============================================================================================================================
5. INCOME TAX INFORMATION
The following information is presented on an income tax basis. Differences
between amounts for financial statement and federal income tax purposes are
primarily due to timing differences in recognizing taxable market discount,
timing differences in recognizing certain gains and losses on investment
transactions and the treatment of investments in inverse floating rate
transactions subject to SFAS No.140, if any. 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 presented in the
annual report, based on their federal tax basis treatment; temporary differences
do not require reclassification. Temporary and permanent differences do not
impact the net asset values of the Funds.
At February 28, 2009, 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 $132,641,546 $241,393,745 $113,774,317 $447,859,681
=============================================================================================================================
INSURED INSURED
CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA
DIVIDEND DIVIDEND DIVIDEND TAX-FREE
ADVANTAGE 2 ADVANTAGE 3 ADVANTAGE ADVANTAGE
(NVX) (NZH) (NKL) (NKX)
------------------------------------------------------------------------------------------------------------------------------
Cost of investments $314,934,096 $471,068,341 $321,003,834 $115,744,035
==============================================================================================================================
98
Gross unrealized appreciation and gross unrealized depreciation of investments
at February 28, 2009, 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 $ 7,279,289 $ 6,299,872 $ 3,455,098 $ 12,507,270
Depreciation (6,351,033) (13,346,007) (8,682,489) (47,106,672)
------------------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of
investments $ 928,256 $ (7,046,135) $(5,227,391) $(34,599,402)
==============================================================================================================================
INSURED INSURED
CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA
DIVIDEND DIVIDEND DIVIDEND TAX-FREE
ADVANTAGE 2 ADVANTAGE 3 ADVANTAGE ADVANTAGE
(NVX) (NZH) (NKL) (NKX)
------------------------------------------------------------------------------------------------------------------------------
Gross unrealized:
Appreciation $ 12,759,781 $ 11,732,164 $ 10,497,124 $ 2,882,194
Depreciation (30,253,253) (56,273,721) (19,839,820) (9,467,586)
------------------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of
investments $(17,493,472) $(44,541,557) $(9,342,696) $(6,585,392)
==============================================================================================================================
The tax components of undistributed net tax-exempt income, net ordinary income
and net long-term capital gains at February 28, 2009, 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 * $639,719 $1,643,978 $339,004 $2,376,082
Undistributed net ordinary income ** 81,675 39,546 -- 811,589
Undistributed net long-term capital gains 49,280 374,633 -- 693,760
==============================================================================================================================
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 * $1,922,975 $3,076,255 $1,515,438 $557,045
Undistributed net ordinary income ** -- -- -- 20,873
Undistributed net long-term capital gains -- -- -- --
==============================================================================================================================
* Undistributed net tax-exempt income (on a tax basis) has not been reduced
for the dividend declared on February 3, 2009, paid on March 2, 2009.
** Net ordinary income consists of taxable market discount income and net
short-term capital gains, if any.
99
| Notes to FINANCIAL STATEMENTS (continued)
The tax character of distributions paid during the six months ended February 28,
2009, and during the tax years ended August 31, 2008 and August 31, 2007, 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
FOR THE SIX MONTHS ENDED FEBRUARY 28, 2009 (NPC) (NCL) (NCU) (NAC)
------------------------------------------------------------------------------------------------------------------------------
Distributions from net tax-exempt income*** $2,881,331 $5,194,372 $2,510,654 $10,494,023
Distributions from net ordinary income ** 678,143 174,474 -- 3,578,861
Distributions from net long-term capital gains**** 413,615 1,923,636 48,738 3,054,991
==============================================================================================================================
INSURED INSURED
CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA
DIVIDEND DIVIDEND DIVIDEND TAX-FREE
ADVANTAGE 2 ADVANTAGE 3 ADVANTAGE ADVANTAGE
FOR THE SIX MONTHS ENDED FEBRUARY 28, 2009 (NVX) (NZH) (NKL) (NKX)
------------------------------------------------------------------------------------------------------------------------------
Distributions from net tax-exempt income*** $6,778,776 $11,094,973 $7,072,249 $2,395,806
Distributions from net ordinary income ** 32,516 -- 616,317 --
Distributions from net long-term capital gains**** 672,624 -- 153,290 408,931
==============================================================================================================================
** Net ordinary income consists of taxable market discount income and net
short-term capital gains, if any.
*** The Funds hereby designate these amounts paid during the six months ended
February 28, 2009, as Exempt Interest Dividends.
**** The Funds designated as a long-term capital gain dividend, pursuant to the
Internal Revenue Code Section 852(b)(3), the amount necessary to reduce
earnings and profits of the Funds related to net capital gain to zero for
the six months ended February 28, 2009.
INSURED INSURED
CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA
PREMIUM PREMIUM PREMIUM DIVIDEND
INCOME INCOME 2 INCOME ADVANTAGE
2008 (NPC) (NCL) (NCU) (NAC)
------------------------------------------------------------------------------------------------------------------------------
Distributions from net tax-exempt income $6,134,637 $11,218,712 $5,106,134 $22,909,598
Distributions from net ordinary income ** 65,183 -- -- --
Distributions from net long-term capital gains 46,723 -- -- 1,099,170
==============================================================================================================================
INSURED INSURED
CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA
DIVIDEND DIVIDEND DIVIDEND TAX-FREE
ADVANTAGE 2 ADVANTAGE 3 ADVANTAGE ADVANTAGE
2008 (NVX) (NZH) (NKL) (NKX)
------------------------------------------------------------------------------------------------------------------------------
Distributions from net tax-exempt income $13,977,615 $23,159,643 $14,876,094 $5,562,376
Distributions from net ordinary income ** -- -- -- --
Distributions from net long-term capital gains -- -- 457,297 --
==============================================================================================================================
100
INSURED INSURED
CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA
PREMIUM PREMIUM PREMIUM DIVIDEND
INCOME INCOME 2 INCOME ADVANTAGE
2007 (NPC) (NCL) (NCU) (NAC)
---------------------------------------------------------------------------------------------------------------------------
Distributions from net tax-exempt income $6,064,156 $11,716,879 $5,291,072 $24,556,552
Distributions from net ordinary income ** 46,600 -- -- 395
Distributions from net long-term capital gains 604,806 -- 228,328 1,560,803
===========================================================================================================================
INSURED INSURED
CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA
DIVIDEND DIVIDEND DIVIDEND TAX-FREE
ADVANTAGE 2 ADVANTAGE 3 ADVANTAGE ADVANTAGE
2007 (NVX) (NZH) (NKL) (NKX)
---------------------------------------------------------------------------------------------------------------------------
Distributions from net tax-exempt income $15,011,893 $24,913,042 $15,884,429 $5,618,698
Distributions from net ordinary income ** -- -- -- --
Distributions from net long-term capital gains -- -- 50,375 --
===========================================================================================================================
** Net ordinary income consists of taxable market discount income and net
short-term capital gains, if any.
At February 28, 2009, the Funds' tax year end, the following Funds had unused
capital loss carryforwards available for federal income tax purposes to be
applied against future capital gains, if any. If not applied, the carryforwards
will expire as follows:
INSURED INSURED
CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA
PREMIUM DIVIDEND DIVIDEND DIVIDEND DIVIDEND TAX-FREE
INCOME ADVANTAGE ADVANTAGE 2 ADVANTAGE 3 ADVANTAGE ADVANTAGE
(NCU) (NAC) (NVX) (NZH) (NKL) (NKX)
---------------------------------------------------------------------------------------------------------------------------
Expiration:
February 28, 2011 $ -- $ -- $ -- $ 2,816,211 $ -- $ --
February 29, 2012 -- -- -- 323,840 -- --
February 29, 2016 -- -- -- 3,869,938 -- --
February 28, 2017 88,523 14,137,598 926,547 4,536,999 240,670 590,949
---------------------------------------------------------------------------------------------------------------------------
Total $ 88,523 $14,137,598 $926,547 $11,546,988 $ 240,670 $ 590,949
===========================================================================================================================
The Funds have elected to defer net realized losses from investments incurred
from November 1, 2008 through February 28, 2009, the Funds' tax year end,
("post-October losses") in accordance with federal income tax regulations.
Post-October losses are treated as having arisen on the first day of the
following fiscal year:
INSURED INSURED
CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA
PREMIUM PREMIUM PREMIUM DIVIDEND
INCOME INCOME 2 INCOME ADVANTAGE
(NPC) (NCL) (NCU) (NAC)
---------------------------------------------------------------------------------------------------------------------------
Post-October capital losses $ 28,044 $8,852,567 $1,652,580 $2,780,771
===========================================================================================================================
INSURED INSURED
CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA
DIVIDEND DIVIDEND DIVIDEND TAX-FREE
ADVANTAGE 2 ADVANTAGE 3 ADVANTAGE ADVANTAGE
(NVX) (NZH) (NKL) (NKX)
---------------------------------------------------------------------------------------------------------------------------
Post-October capital losses $1,697,447 $7,534,294 $1,282,001 $529,436
===========================================================================================================================
101
| Notes to FINANCIAL STATEMENTS (continued)
6. MANAGEMENT FEES 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 the
Adviser, 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 Auction Rate
Preferred shares or Variable Rate Demand Preferred shares) of each Fund as
follows:
INSURED CALIFORNIA PREMIUM INCOME (NPC)
INSURED CALIFORNIA PREMIUM INCOME 2 (NCL)
AVERAGE DAILY NET ASSETS (INCLUDING NET ASSETS ATTRIBUTABLE CALIFORNIA PREMIUM INCOME (NCU)
TO AUCTION RATE PREFERRED SHARES OR VARIABLE RATE DEMAND 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)
INSURED CALIFORNIA DIVIDEND ADVANTAGE (NKL)
AVERAGE DAILY NET ASSETS (INCLUDING NET ASSETS ATTRIBUTABLE TO INSURED CALIFORNIA TAX-FREE ADVANTAGE (NKX)
AUCTION RATE PREFERRED SHARES OR VARIABLE RATE DEMAND 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
==========================================================================================================================
102
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 following table.
As of February 28, 2009, the complex-level fee rate was .2000%.
The complex-level fee schedule is as follows:
COMPLEX-LEVEL ASSET BREAKPOINT LEVEL (1) EFFECTIVE RATE AT BREAKPOINT LEVEL
--------------------------------------------------------------------------------
$55 billion .2000%
$56 billion .1996
$57 billion .1989
$60 billion .1961
$63 billion .1931
$66 billion .1900
$71 billion .1851
$76 billion .1806
$80 billion .1773
$91 billion .1691
$125 billion .1599
$200 billion .1505
$250 billion .1469
$300 billion .1445
================================================================================
(1) The complex-level fee component of the management fee for the funds is
calculated based upon the aggregate daily net assets of all Nuveen funds,
with such daily managed assets defined separately for each fund in its
management agreement, but which generally includes assets attributable to
preferred stock issued by or borrowings (including the issuance of
commercial paper or notes) by such fund but to exclude assets attributable
to investments in other Nuveen funds.
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.
103
| Notes to FINANCIAL STATEMENTS (continued)
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 Auction Rate Preferred shares or
Variable Rate Demand Preferred shares), for fees and expenses in the amounts and
for the time periods set forth below:
YEAR ENDING YEAR ENDING
JULY 31, JULY 31,
--------------------------------------------------------------------------------
1999* .30% 2005 .25%
2000 .30 2006 .20
2001 .30 2007 .15
2002 .30 2008 .10
2003 .30 2009 .05
2004 .30
================================================================================
* From the commencement of operations.
The Adviser has not agreed to reimburse California Dividend Advantage (NAC) for
any portion of its fees and expenses beyond July 31, 2009.
For the first ten years of California Dividend Advantage 2's (NVX) operations,
the Adviser has agreed to reimburse the Fund, as a percentage of average daily
net assets (including net assets attributable to Auction Rate Preferred shares
or Variable Rate Demand 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 Auction Rate Preferred shares
or Variable Rate Demand 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.
104
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 Auction Rate
Preferred shares or Variable Rate Demand 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 Auction Rate
Preferred shares or Variable Rate Demand 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.
7. NEW ACCOUNTING PRONOUNCEMENTS
Financial Accounting Standards Board Statement of Financial Accounting Standards
No. 161 (SFAS No. 161)
In March 2008, the FASB issued SFAS No. 161, "Disclosures about Derivative
Instruments and Hedging Activities." This standard is intended to enhance
financial statement disclosures for derivative instruments and hedging
activities and enable investors to understand: a) how and why a fund uses
derivative instruments, b) how derivative instruments and related hedge items
are accounted for, and c) how derivative instruments and related hedge items
affect a fund's financial position, results of operations and cash flows. SFAS
No. 161 is effective for financial statements issued for fiscal years and
interim periods beginning after November 15, 2008. As of February 28, 2009,
management does not believe the adoption of SFAS No. 161 will impact the
financial statement amounts; however, additional footnote disclosures may be
required about the use of derivative instruments and hedging items.
8. SUBSEQUENT EVENTS
Distributions to Common Shareholders
The Funds declared Common share dividend distributions from their tax-exempt net
investment income which were paid on April 1, 2009, to shareholders of record on
March 15, 2009, 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 $.0580 $.0555 $.0630
================================================================================
INSURED INSURED
CALIFORNIA CALIFORNIA CALIFORNIA CALIFORNIA
DIVIDEND DIVIDEND DIVIDEND TAX-FREE
ADVANTAGE 2 ADVANTAGE 3 ADVANTAGE ADVANTAGE
(NVX) (NZH) (NKL) (NKX)
--------------------------------------------------------------------------------
Dividend per share $.0660 $.0640 $.0635 $.0590
================================================================================
105
| Financial HIGHLIGHTS
Selected data for a Common share outstanding throughout each period:
Investment Operations
-------------------------------------------------------------------
Distributions Distributions
from Net from
Beginning Investment Capital
Common Net Income to Gains to
Share Net Realized/ Auction Rate Auction Rate
Net Asset Investment Unrealized Preferred Preferred
Value Income Gain (Loss) Shareholders+ Shareholders+ Total
----------------------------------------------------------------------------------------------------------------------------
INSURED CALIFORNIA PREMIUM INCOME (NPC)
----------------------------------------------------------------------------------------------------------------------------
Year Ended 2/28:
2009(b) $ 14.93 $ .47 $ (.74) $ (.11) $ (.02) $ (.40)
Year Ended 8/31:
2008 15.04 .95 (.10) (.22) --**** .63
2007 15.58 .90 (.40) (.21) (.02) .27
2006 16.21 .92 (.38) (.18) (.02) .34
2005 16.23 .95 .22 (.10) (.01) 1.06
2004 15.59 .99 .68 (.05) -- 1.62
INSURED CALIFORNIA PREMIUM INCOME 2 (NCL)
----------------------------------------------------------------------------------------------------------------------------
Year Ended 2/28:
2009(b) 14.13 .44 (1.12) (.10) (.02) (.80)
Year Ended 8/31:
2008 14.50 .95 (.44) (.24) -- .27
2007 14.99 .89 (.46) (.25) -- .18
2006 15.33 .90 (.28) (.20) -- .42
2005 15.12 .91 .29 (.11) -- 1.09
2004 14.60 .96 .53 (.06) -- 1.43
============================================================================================================================
Less Distributions
-------------------------------------
Net Ending
Investment Capital Common
Income to Gains to Share Ending
Common Common Net Asset Market
Shareholders Shareholders Total Value Value
-------------------------------------------------------------------------------------------------------
INSURED CALIFORNIA PREMIUM INCOME (NPC)
-------------------------------------------------------------------------------------------------------
Year Ended 2/28:
2009(b) $ (.36) $ (.14) $ (.50) $ 14.03 $ 12.04
Year Ended 8/31:
2008 (.73) (.01) (.74) 14.93 13.89
2007 (.73) (.08) (.81) 15.04 14.96
2006 (.83) (.14) (.97) 15.58 15.08
2005 (.92) (.16) (1.08) 16.21 15.90
2004 (.93) (.05) (.98) 16.23 15.81
INSURED CALIFORNIA PREMIUM INCOME 2 (NCL)
-------------------------------------------------------------------------------------------------------
Year Ended 2/28:
2009(b) (.34) (.14) (.48) 12.85 10.89
Year Ended 8/31:
2008 (.64) -- (.64) 14.13 12.66
2007 (.67) -- (.67) 14.50 13.71
2006 (.76) -- (.76) 14.99 14.19
2005 (.88) -- (.88) 15.33 15.05
2004 (.91) -- (.91) 15.12 15.18
=======================================================================================================
Auction Rate Preferred Shares Variable Rate Demand Preferred Shares
at End of Period at End of Period
------------------------------------- -------------------------------------
Aggregate Liquidation Aggregate Liquidation
Amount and Market Asset Amount and Market Asset
Outstanding Value Coverage Outstanding Value Coverage
(000) Per Share Per Share (000) Per Share Per Share
-------------------------------------------------------------------------------------------------------------------------
INSURED CALIFORNIA PREMIUM INCOME (NPC)
-------------------------------------------------------------------------------------------------------------------------
Year Ended 2/28:
2009(b) $ 45,000 $ 25,000 $ 75,295 $ -- $ -- $ --
Year Ended 8/31:
2008 45,000 25,000 78,590 -- -- --
2007 45,000 25,000 78,987 -- -- --
2006 45,000 25,000 80,878 -- -- --
2005 45,000 25,000 83,061 -- -- --
2004 45,000 25,000 83,121 -- -- --
INSURED CALIFORNIA PREMIUM INCOME 2 (NCL)
-------------------------------------------------------------------------------------------------------------------------
Year Ended 2/28:
2009(b) 79,825 25,000 75,996 -- -- --
Year Ended 8/31:
2008 87,400 25,000 76,411 -- -- --
2007 95,000 25,000 73,511 -- -- --
2006 95,000 25,000 75,150 -- -- --
2005 95,000 25,000 76,288 -- -- --
2004 95,000 25,000 75,535 -- -- --
=========================================================================================================================
106
Ratios/Supplemental Data
-------------------------------------------------------
Ratios to Average Net Assets
Applicable to Common Shares
Total Returns Before Credit/Reimbursement
-------------------- ----------------------------------------
Based Ending
on Net
Based Common Assets
on Share Net Applicable Expenses Expenses Net
Market Asset to Common Including Excluding Investment
Value** Value** Shares (000) Interest++(a) Interest++(a) Income++
------------------------------------------------------------------------------------------------------------------------------
INSURED CALIFORNIA PREMIUM INCOME (NPC)
------------------------------------------------------------------------------------------------------------------------------
Year Ended 2/28:
2009(b) (9.25)% (2.43)% $ 90,531 1.27%* 1.27%* 6.88%*
Year Ended 8/31:
2008 (2.21) 4.23 96,462 1.19 1.19 6.24
2007 4.61 1.70 97,176 1.22 1.16 5.84
2006 1.00 2.23 100,581 1.16 1.16 5.89
2005 7.58 6.74 104,510 1.14 1.14 5.85
2004 11.80 10.64 104,618 1.17 1.17 6.17
INSURED CALIFORNIA PREMIUM INCOME 2 (NCL)
------------------------------------------------------------------------------------------------------------------------------
Year Ended 2/28:
2009(b) (9.95) (5.40) 162,831 1.53* 1.24* 7.15*
Year Ended 8/31:
2008 (3.06) 1.86 179,734 1.23 1.21 6.56
2007 1.26 1.18 184,343 1.24 1.18 6.00
2006 (.63) 2.91 190,571 1.20 1.20 6.05
2005 5.10 7.42 194,895 1.17 1.17 6.03
2004 12.71 10.02 192,035 1.19 1.19 6.38
==============================================================================================================================
Ratios/Supplemental Data
----------------------------------------------------
Ratios to Average Net Assets
Applicable to Common Shares
After Credit/Reimbursement***
----------------------------------------
Expenses Expenses Net Portfolio
Including Excluding Investment Turnover
Interest++(a) Interest++(a) Income++ Rate
-------------------------------------------------------------------------------------------------
INSURED CALIFORNIA PREMIUM INCOME (NPC)
-------------------------------------------------------------------------------------------------
Year Ended 2/28:
2009(b) 1.27%* 1.27%* 6.88%* 1%
Year Ended 8/31:
2008 1.17 1.17 6.25 17
2007 1.20 1.14 5.87 9
2006 1.15 1.15 5.90 9
2005 1.13 1.13 5.86 9
2004 1.16 1.16 6.17 25
INSURED CALIFORNIA PREMIUM INCOME 2 (NCL)
-------------------------------------------------------------------------------------------------
Year Ended 2/28:
2009(b) 1.50* 1.21* 7.17* 9
Year Ended 8/31:
2008 1.22 1.19 6.57 12
2007 1.22 1.17 6.01 19
2006 1.19 1.19 6.05 14
2005 1.17 1.17 6.03 7
2004 1.19 1.19 6.38 35
=================================================================================================
* Annualized.
** Total Return Based 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. The last dividend declared in the
period, which is typically paid on the first business day of the following
month, is assumed to be reinvested at the ending market price. The actual
reinvestment for the last dividend declared in the period may take place
over several days, and in some instances may not be based on the market
price, so the actual reinvestment price may be different from the price
used in the calculation. Total returns are not annualized.
Total Return Based 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. The last dividend declared in the period, which is typically paid
on the first business day of the following month, is assumed to be
reinvested at the ending net asset value. The actual reinvest price for
the last dividend declared in the period may often be based on the Fund's
market price (and not its net asset value), and therefore may be different
from the price used in the calculation. Total returns are not annualized.
*** After custodian fee credit and expense reimbursement, where applicable.
**** Rounds to less than $.01 per share.
+ The amounts shown are based on Common share equivalents.
++ Ratios do not reflect the effect of dividend payments to Auction Rate
Preferred shareholders; income ratios reflect income earned on assets
attributable to Auction Rate Preferred shares or Variable Rate Demand
Preferred shares, where applicable.
(a) Interest expense arises from payments to Variable Rate Demand Preferred
shareholders and the application of SFAS No. 140 to certain inverse
floating rate transactions entered into by the Fund, where applicable, as
both are more fully described in Footnote 1 - Variable Rate Demand
Preferred Shares and Inverse Floating Rate Securities, respectively.
(b) For the six months ended February 28, 2009.
See accompanying notes to financial statements.
107
| Financial HIGHLIGHTS (continued)
Selected data for a Common share outstanding throughout each period:
Investment Operations
----------------------------------------------------------------------
Distributions Distributions
from Net from
Beginning Investment Capital
Common Net Income to Gains to
Share Net Realized/ Auction Rate Auction Rate
Net Asset Investment Unrealized Preferred Preferred
Value Income Gain (Loss) Shareholders+ Shareholders+ Total
------------------------------------------------------------------------------------------------------------------------
CALIFORNIA PREMIUM INCOME (NCU)
------------------------------------------------------------------------------------------------------------------------
Year Ended 2/28:
2009(b) $ 13.67 $ .43 $ (1.29) $ (.10) $ --**** $ (.96)
Year Ended 8/31:
2008 14.06 .92 (.43) (.24) -- .25
2007 14.63 .90 (.52) (.24) (.01) .13
2006 15.03 .89 (.30) (.21) -- .38
2005 14.51 .90 .60 (.12) -- 1.38
2004 13.66 .94 .85 (.06) -- 1.73
CALIFORNIA DIVIDEND ADVANTAGE (NAC)
------------------------------------------------------------------------------------------------------------------------
Year Ended 2/28:
2009(b) 14.43 .49 (2.07) (.09) (.02) (1.69)
Year Ended 8/31:
2008 14.93 1.02 (.50) (.23) (.01) .28
2007 15.59 1.00 (.56) (.24) (.01) .19
2006 15.98 1.01 (.25) (.21) -- .55
2005 15.59 1.04 .50 (.12) -- 1.42
2004 14.82 1.05 .76 (.06) -- 1.75
========================================================================================================================
Less Distributions
--------------------------------------
Net Ending
Investment Capital Common
Income to Gains to Share Ending
Common Common Net Asset Market
Shareholders Shareholders Total Value Value
--------------------------------------------------------------------------------------------------
CALIFORNIA PREMIUM INCOME (NCU)
--------------------------------------------------------------------------------------------------
Year Ended 2/28:
2009(b) $ (.33) $ (.01) $ (.34) $ 12.37 $ 10.06
Year Ended 8/31:
2008 (.64) -- (.64) 13.67 12.58
2007 (.67) (.03) (.70) 14.06 13.03
2006 (.77) (.01) (.78) 14.63 14.01
2005 (.86) -- (.86) 15.03 14.37
2004 (.88) -- (.88) 14.51 13.67
CALIFORNIA DIVIDEND ADVANTAGE (NAC)
--------------------------------------------------------------------------------------------------
Year Ended 2/28:
2009(b) (.38) (.26) (.64) 12.10 10.82
Year Ended 8/31:
2008 (.74) (.04) (.78) 14.43 13.44
2007 (.80) (.05) (.85) 14.93 14.34
2006 (.91) (.03) (.94) 15.59 15.97
2005 (.98) (.05) (1.03) 15.98 16.07
2004 (.98) -- (.98) 15.59 15.00
==================================================================================================
Auction Rate Preferred Shares Variable Rate Demand Preferred Shares
at End of Period at End of Period
------------------------------------- -------------------------------------
Aggregate Liquidation Aggregate Liquidation
Amount and Market Asset Amount and Market Asset
Outstanding Value Coverage Outstanding Value Coverage
(000) Per Share Per Share (000) Per Share Per Share
-------------------------------------------------------------------------------------------------------------------
CALIFORNIA PREMIUM INCOME (NCU)
-------------------------------------------------------------------------------------------------------------------
Year Ended 2/28:
2009(b) $ 40,875 $ 25,000 $ 68,584 $ -- $ -- $ --
Year Ended 8/31:
2008 43,000 25,000 70,910 -- -- --
2007 43,000 25,000 72,209 -- -- --
2006 43,000 25,000 74,109 -- -- --
2005 43,000 25,000 75,456 -- -- --
2004 43,000 25,000 73,704 -- -- --
CALIFORNIA DIVIDEND ADVANTAGE (NAC)
-------------------------------------------------------------------------------------------------------------------
Year Ended 2/28:
2009(b) 135,525 25,000 77,430 -- -- --
Year Ended 8/31:
2008 135,525 25,000 87,485 -- -- --
2007 175,000 25,000 75,075 -- -- --
2006 175,000 25,000 77,217 -- -- --
2005 175,000 25,000 78,466 -- -- --
2004 175,000 25,000 77,152 -- -- --
===================================================================================================================
108
Ratios/Supplemental Data
-------------------------------------------------------
Ratios to Average Net Assets
Applicable to Common Shares
Total Returns Before Credit/Reimbursement
-------------------- ----------------------------------------
Based Ending
on Net
Based Common Assets
on Share Net Applicable Expenses Expenses Net
Market Asset to Common Including Excluding Investment
Value** Value** Shares (000) Interest++(a) Interest++(a) Income++
------------------------------------------------------------------------------------------------------------------------
CALIFORNIA PREMIUM INCOME (NCU)
------------------------------------------------------------------------------------------------------------------------
Year Ended 2/28:
2009(b) (17.22)% (6.92)% $ 71,260 1.57%* 1.37%* 7.06%*
Year Ended 8/31:
2008 1.51 1.81 78,966 1.34 1.23 6.56
2007 (2.21) .82 81,200 1.29 1.21 6.14
2006 3.14 2.72 84,467 1.23 1.23 6.09
2005 11.76 9.75 86,785 1.21 1.21 6.08
2004 12.04 12.94 83,772 1.23 1.23 6.62
CALIFORNIA DIVIDEND ADVANTAGE (NAC)
------------------------------------------------------------------------------------------------------------------------
Year Ended 2/28:
2009(b) (14.14) (11.45) 284,221 1.31* 1.17* 7.92*
Year Ended 8/31:
2008 (.84) 1.85 338,732 1.26 1.15 6.77
2007 (5.19) 1.16 350,523 1.17 1.12 6.24
2006 5.47 3.63 365,516 1.13 1.13 6.22
2005 14.62 9.41 374,265 1.12 1.12 6.22
2004 12.07 12.11 365,066 1.14 1.14 6.38
========================================================================================================================
Ratios/Supplemental Data
----------------------------------------------------
Ratios to Average Net Assets
Applicable to Common Shares
After Credit/Reimbursement***
----------------------------------------
Expenses Expenses Net Portfolio
Including Excluding Investment Turnover
Interest++(a) Interest++(a) Income++ Rate
-------------------------------------------------------------------------------------------
CALIFORNIA PREMIUM INCOME (NCU)
-------------------------------------------------------------------------------------------
Year Ended 2/28:
2009(b) 1.55%* 1.35%* 7.08%* 14%
Year Ended 8/31:
2008 1.33 1.21 6.57 5
2007 1.27 1.19 6.16 11
2006 1.21 1.21 6.10 20
2005 1.20 1.20 6.09 13
2004 1.22 1.22 6.63 19
CALIFORNIA DIVIDEND ADVANTAGE (NAC)
-------------------------------------------------------------------------------------------
Year Ended 2/28:
2009(b)
Year Ended 8/31: 1.22* 1.08* 8.01* 14
2008 1.10 .99 6.93 19
2007 .94 .89 6.47 20
2006 .83 .83 6.51 13
2005 .75 .75 6.59 4
2004 .70 .70 6.83 12
===========================================================================================
* Annualized.
** Total Return Based 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. The last dividend declared in the
period, which is typically paid on the first business day of the following
month, is assumed to be reinvested at the ending market price. The actual
reinvestment for the last dividend declared in the period may take place
over several days, and in some instances may not be based on the market
price, so the actual reinvestment price may be different from the price
used in the calculation. Total returns are not annualized.
Total Return Based 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. The last dividend declared in the period, which is typically paid
on the first business day of the following month, is assumed to be
reinvested at the ending net asset value. The actual reinvest price for
the last dividend declared in the period may often be based on the Fund's
market price (and not its net asset value), and therefore may be different
from the price used in the calculation. Total returns are not annualized.
*** After custodian fee credit and expense reimbursement, where applicable.
**** Rounds to less than $.01 per share.
+ The amounts shown are based on Common share equivalents.
++ Ratios do not reflect the effect of dividend payments to Auction Rate
Preferred shareholders; income ratios reflect income earned on assets
attributable to Auction Rate Preferred shares or Variable Rate Demand
Preferred shares, where applicable.
(a) Interest expense arises from payments to Variable Rate Demand Preferred
shareholders and the application of SFAS No. 140 to certain inverse
floating rate transactions entered into by the Fund, where applicable, as
both are more fully described in Footnote 1 - Variable Rate Demand
Preferred Shares and Inverse Floating Rate Securities, respectively.
(b) For the six months ended February 28, 2009.
See accompanying notes to financial statements.
109
| Financial HIGHLIGHTS (continued)
Selected data for a Common share outstanding throughout each period:
Investment Operations
--------------------------------------------------------------------
Distributions Distributions
from Net from
Beginning Investment Capital
Common Net Income to Gains to
Share Net Realized/ Auction Rate Auction Rate
Net Asset Investment Unrealized Preferred Preferred
Value Income Gain (Loss) Shareholders+ Shareholders+ Total
------------------------------------------------------------------------------------------------------------------------
CALIFORNIA DIVIDEND ADVANTAGE 2 (NVX)
------------------------------------------------------------------------------------------------------------------------
Year Ended 2/28:
2009(b) $ 14.39 $ .51 $ (1.47) $ (.11) $ (.01) $ (1.08)
Year Ended 8/31:
2008 14.69 1.01 (.37) (.25) -- .39
2007 15.36 .96 (.62) (.25) -- .09
2006 15.63 .97 (.19) (.21) -- .57
2005 14.97 .98 .71 (.12) -- 1.57
2004 14.18 .99 .77 (.06) -- 1.70
CALIFORNIA DIVIDEND ADVANTAGE 3 (NZH)
------------------------------------------------------------------------------------------------------------------------
Year Ended 2/28:
2009(b) 13.62 .50 (2.13) (.09) -- (1.72)
Year Ended 8/31:
2008 14.25 1.03 (.70) (.25) -- .08
2007 15.03 .98 (.73) (.27) -- (.02)
2006 15.31 .97 (.20) (.22) -- .55
2005 14.65 .97 .68 (.13) -- 1.52
2004 13.72 .98 .88 (.07) -- 1.79
========================================================================================================================
Less Distributions
--------------------------------------
Net Ending
Investment Capital Common
Income to Gains to Share Ending
Common Common Net Asset Market
Shareholders Shareholders Total Value Value
----------------------------------------------------------------------------------------------------
CALIFORNIA DIVIDEND ADVANTAGE 2 (NVX)
----------------------------------------------------------------------------------------------------
Year Ended 2/28:
2009(b) $ (.36) $ (.04) $ (.40) $ 12.91 $ 10.51
Year Ended 8/31:
2008 (.69) -- (.69) 14.39 12.67
2007 (.76) -- (.76) 14.69 13.73
2006 (.84) -- (.84) 15.36 14.95
2005 (.91) -- (.91) 15.63 15.19
2004 (.91) -- (.91) 14.97 14.08
CALIFORNIA DIVIDEND ADVANTAGE 3 (NZH)
----------------------------------------------------------------------------------------------------
Year Ended 2/28:
2009(b) (.37) -- (.37) 11.53 10.23
Year Ended 8/31:
2008 (.71) -- (.71) 13.62 12.87
2007 (.76) -- (.76) 14.25 13.52
2006 (.83) -- (.83) 15.03 14.84
2005 (.86) -- (.86) 15.31 14.49
2004 (.86) -- (.86) 14.65 13.33
====================================================================================================
Auction Rate Preferred Shares Variable Rate Demand Preferred Shares
at End of Period at End of Period
------------------------------------- -------------------------------------
Aggregate Liquidation Aggregate Liquidation
Amount and Market Asset Amount and Market Asset
Outstanding Value Coverage Outstanding Value Coverage
(000) Per Share Per Share (000) Per Share Per Share
---------------------------------------------------------------------------------------------------------------------
CALIFORNIA DIVIDEND ADVANTAGE 2 (NVX)
---------------------------------------------------------------------------------------------------------------------
Year Ended 2/28:
2009(b) $ 110,000 $ 25,000 $ 68,369 $ -- $ -- $ --
Year Ended 8/31:
2008 110,000 25,000 73,384 -- -- --
2007 110,000 25,000 74,394 -- -- --
2006 110,000 25,000 76,627 -- -- --
2005 110,000 25,000 77,532 -- -- --
2004 110,000 25,000 75,317 -- -- --
CALIFORNIA DIVIDEND ADVANTAGE 3 (NZH)
---------------------------------------------------------------------------------------------------------------------
Year Ended 2/28:
2009(b) 154,075 25,000 70,117 -- -- --
Year Ended 8/31:
2008 159,925 25,000 76,377 -- -- --
2007 187,000 25,000 70,963 -- -- --
2006 187,000 25,000 73,459 -- -- --
2005 187,000 25,000 74,367 -- -- --
2004 187,000 25,000 72,241 -- -- --
=====================================================================================================================
110
Ratios/Supplemental Data
---------------------------------------------------------
Ratios to Average Net Assets
Applicable to Common Shares
Total Returns Before Credit/Reimbursement
-------------------- ------------------------------------------
Based Ending
on Net
Based Common Assets
on Share Net Applicable Expenses Expenses Net
Market Asset to Common Including Excluding Investment
Value** Value** Shares (000) Interest++(a) Interest++(a) Income++
--------------------------------------------------------------------------------------------------------------------------
CALIFORNIA DIVIDEND ADVANTAGE 2 (NVX)
--------------------------------------------------------------------------------------------------------------------------
Year Ended 2/28:
2009(b) (13.83)% (7.40)% $ 190,824 1.37%* 1.32%* 7.85%*
Year Ended 8/31:
2008 (2.80) 2.76 212,890 1.25 1.16 6.56
2007 (3.39) .46 217,332 1.25 1.17 5.97
2006 4.19 3.82 227,160 1.16 1.16 5.94
2005 14.98 10.80 231,140 1.16 1.16 5.94
2004 13.60 12.11 221,395 1.18 1.18 6.24
CALIFORNIA DIVIDEND ADVANTAGE 3 (NZH)
--------------------------------------------------------------------------------------------------------------------------
Year Ended 2/28:
2009(b) (17.58) (12.54) 278,056 1.39* 1.27* 8.50*
Year Ended 8/31:
2008 .46 .60 328,659 1.21 1.19 6.96
2007 (4.12) (.32) 343,806 1.22 1.16 6.16
2006 8.50 3.81 362,473 1.16 1.16 6.08
2005 15.75 10.69 369,262 1.17 1.17 6.05
2004 11.97 13.36 353,360 1.20 1.20 6.32
==========================================================================================================================
Ratios/Supplemental Data
-----------------------------------------------------
Ratios to Average Net Assets
Applicable to Common Shares
After Credit/Reimbursement***
----------------------------------------
Expenses Expenses Net Portfolio
Including Excluding Investment Turnover
Interest++(a) Interest++(a) Income++ Rate
---------------------------------------------------------------------------------------------
CALIFORNIA DIVIDEND ADVANTAGE 2 (NVX)
---------------------------------------------------------------------------------------------
Year Ended 2/28:
2009(b) 1.12%* 1.07%* 8.10%* 7%
Year Ended 8/31:
2008 .97 .88 6.85 20
2007 .89 .81 6.33 21
2006 .73 .73 6.36 9
2005 .70 .70 6.40 3
2004 .72 .72 6.70 13
CALIFORNIA DIVIDEND ADVANTAGE 3 (NZH)
---------------------------------------------------------------------------------------------
Year Ended 2/28:
2009(b) 1.12* 1.00* 8.76* 9
Year Ended 8/31:
2008 .88 .86 7.29 23
2007 .81 .76 6.56 23
2006 .70 .70 6.54 10
2005 .70 .70 6.51 5
2004 .73 .73 6.78 13
=============================================================================================
* Annualized.
** Total Return Based 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. The last dividend declared in the
period, which is typically paid on the first business day of the following
month, is assumed to be reinvested at the ending market price. The actual
reinvestment for the last dividend declared in the period may take place
over several days, and in some instances may not be based on the market
price, so the actual reinvestment price may be different from the price
used in the calculation. Total returns are not annualized.
Total Return Based 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. The last dividend declared in the period, which is typically paid
on the first business day of the following month, is assumed to be
reinvested at the ending net asset value. The actual reinvest price for
the last dividend declared in the period may often be based on the Fund's
market price (and not its net asset value), and therefore may be different
from the price used in the calculation. 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 Auction Rate
Preferred shareholders; income ratios reflect income earned on assets
attributable to Auction Rate Preferred shares or Variable Rate Demand
Preferred shares, where applicable.
(a) Interest expense arises from payments to Variable Rate Demand Preferred
shareholders and the application of SFAS No. 140 to certain inverse
floating rate transactions entered into by the Fund, where applicable, as
both are more fully described in Footnote 1 - Variable Rate Demand
Preferred Shares and Inverse Floating Rate Securities, respectively.
(b) For the six months ended February 28, 2009.
See accompanying notes to financial statements.
111
| Financial HIGHLIGHTS (continued)
Selected data for a Common share outstanding throughout each period:
Investment Operations
----------------------------------------------------------------------
Distributions Distributions
from Net from
Beginning Investment Capital
Common Net Income to Gains to
Share Net Realized/ Auction Rate Auction Rate
Net Asset Investment Unrealized Preferred Preferred
Value Income Gain (Loss) Shareholders+ Shareholders+ Total
---------------------------------------------------------------------------------------------------------------------------------
INSURED CALIFORNIA DIVIDEND ADVANTAGE (NKL)
---------------------------------------------------------------------------------------------------------------------------------
Year Ended 2/28:
2009(b) $ 14.61 $ .50 $ (1.07) $ (.10) $ (.01) $ (.68)
Year Ended 8/31:
2008 14.91 1.03 (.33) (.25) (.01) .44
2007 15.50 1.01 (.57) (.26) --**** .18
2006 15.81 1.01 (.25) (.22) -- .54
2005 15.35 1.01 .52 (.12) -- 1.41
2004 14.60 1.02 .84 (.06) (.01) 1.79
INSURED CALIFORNIA TAX-FREE ADVANTAGE (NKX)
---------------------------------------------------------------------------------------------------------------------------------
Year Ended 2/28:
2009(b) 14.19 .39 (1.32) --**** (.01) (.94)
Year Ended 8/31:
2008 14.47 .97 (.30) (.24) -- .43
2007 14.92 .96 (.46) (.24) -- .26
2006 15.17 .95 (.25) (.21) -- .49
2005 14.62 .96 .57 (.13) -- 1.40
2004 13.79 .96 .84 (.06) -- 1.74
=================================================================================================================================
Less Distributions
----------------------------------------
Net Ending
Investment Capital Common
Income to Gains to Share Ending
Common Common Net Asset Market
Shareholders Shareholders Total Value Value
-------------------------------------------------------------------------------------------------------------
INSURED CALIFORNIA DIVIDEND ADVANTAGE (NKL)
-------------------------------------------------------------------------------------------------------------
Year Ended 2/28:
2009(b) $ (.37) $ (.04) $ (.41) $ 13.52 $ 11.16
Year Ended 8/31:
2008 (.72) (.02) (.74) 14.61 13.50
2007 (.77) --**** (.77) 14.91 14.24
2006 (.85) -- (.85) 15.50 15.70
2005 (.90) (.05) (.95) 15.81 15.00
2004 (.91) (.13) (1.04) 15.35 14.67
INSURED CALIFORNIA TAX-FREE ADVANTAGE (NKX)
-------------------------------------------------------------------------------------------------------------
Year Ended 2/28:
2009(b) (.35) (.05) (.40) 12.85 11.75
Year Ended 8/31:
2008 (.71) -- (.71) 14.19 13.78
2007 (.71) -- (.71) 14.47 14.47
2006 (.74) -- (.74) 14.92 14.27
2005 (.85) -- (.85) 15.17 14.38
2004 (.91) -- (.91) 14.62 14.19
=============================================================================================================
Auction Rate Preferred Shares Variable Rate Demand Preferred Shares
at End of Period at End of Period
------------------------------------- -------------------------------------
Aggregate Liquidation Aggregate Liquidation
Amount and Market Asset Amount and Market Asset
Outstanding Value Coverage Outstanding Value Coverage
(000) Per Share Per Share (000) Per Share Per Share
---------------------------------------------------------------------------------------------------------------------------
INSURED CALIFORNIA DIVIDEND ADVANTAGE (NKL)
---------------------------------------------------------------------------------------------------------------------------
Year Ended 2/28:
2009(b) $ 108,250 $ 25,000 $ 72,683 $ -- $ -- $ --
Year Ended 8/31:
2008 118,000 25,000 72,321 -- -- --
2007 118,000 25,000 73,289 -- -- --
2006 118,000 25,000 75,111 -- -- --
2005 118,000 25,000 76,113 -- -- --
2004 118,000 25,000 74,616 -- -- --
INSURED CALIFORNIA TAX-FREE ADVANTAGE (NKX)
---------------------------------------------------------------------------------------------------------------------------
Year Ended 2/28:
2009(b) -- -- -- 35,500 100,000 313,131
Year Ended 8/31:
2008 -- -- -- 35,500 100,000 335,299
2007 45,000 25,000 72,302 -- -- --
2006 45,000 25,000 73,764 -- -- --
2005 45,000 25,000 74,595 -- -- --
2004 45,000 25,000 72,782 -- -- --
===========================================================================================================================
112
Ratios/Supplemental Data
-------------------------------------------------------
Ratios to Average Net Assets
Applicable to Common Shares
Total Returns Before Credit/Reimbursement
---------------------- ----------------------------------------
Based Ending
on Net
Based Common Assets
on Share Net Applicable Expenses Expenses Net
Market Asset to Common Including Excluding Investment
Value** Value** Shares (000) Interest++(a) Interest++(a) Income++
----------------------------------------------------------------------------------------------------------------------------------
INSURED CALIFORNIA DIVIDEND ADVANTAGE (NKL)
----------------------------------------------------------------------------------------------------------------------------------
Year Ended 2/28:
2009(b) (14.22)% (4.50)% $ 206,467 1.32%* 1.23%* 7.36%*
Year Ended 8/31:
2008 (.03) 2.98 223,356 1.19 1.19 6.52
2007 (4.64) 1.13 227,923 1.21 1.16 6.12
2006 10.72 3.62 236,525 1.17 1.17 6.12
2005 9.00 9.46 241,254 1.16 1.16 6.06
2004 12.54 12.53 234,186 1.18 1.18 6.28
INSURED CALIFORNIA TAX-FREE ADVANTAGE (NKX)
----------------------------------------------------------------------------------------------------------------------------------
Year Ended 2/28:
2009(b) (11.55) (6.42) 75,661 2.57* 1.54* 5.89*
Year Ended 8/31:
2008 .12 2.97 83,531 1.33 1.26 6.28
2007 6.35 1.69 85,144 1.27 1.21 5.95
2006 4.56 3.43 87,775 1.22 1.22 5.97
2005 7.46 9.84 89,272 1.21 1.21 5.95
2004 11.54 12.86 86,008 1.23 1.23 6.17
==================================================================================================================================
Ratios/Supplemental Data
--------------------------------------------------------
Ratios to Average Net Assets
Applicable to Common Shares
After Credit/Reimbursement***
-------------------------------------------
Expenses Expenses Net Portfolio
Including Excluding Investment Turnover
Interest++(a) Interest++(a) Income++ Rate
-------------------------------------------------------------------------------------------------------
INSURED CALIFORNIA DIVIDEND ADVANTAGE (NKL)
-------------------------------------------------------------------------------------------------------
Year Ended 2/28:
2009(b) .99%* .90%* 7.69%* 3%
Year Ended 8/31:
2008 .83 .83 6.88 6
2007 .78 .73 6.55 12
2006 .71 .71 6.58 3
2005 .71 .71 6.51 4
2004 .72 .72 6.74 14
INSURED CALIFORNIA TAX-FREE ADVANTAGE (NKX)
-------------------------------------------------------------------------------------------------------
Year Ended 2/28:
2009(b) 2.25* 1.22* 6.21* 3
Year Ended 8/31:
2008 .91 .83 6.70 28
2007 .77 .71 6.45 15
2006 .73 .73 6.46 4
2005 .73 .73 6.43 3
2004 .73 .73 6.67 20
=======================================================================================================
* Annualized.
** Total Return Based 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. The last dividend declared in the
period, which is typically paid on the first business day of the following
month, is assumed to be reinvested at the ending market price. The actual
reinvestment for the last dividend declared in the period may take place
over several days, and in some instances may not be based on the market
price, so the actual reinvestment price may be different from the price
used in the calculation. Total returns are not annualized.
Total Return Based 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. The last dividend declared in the period, which is typically paid
on the first business day of the following month, is assumed to be
reinvested at the ending net asset value. The actual reinvest price for
the last dividend declared in the period may often be based on the Fund's
market price (and not its net asset value), and therefore may be different
from the price used in the calculation. Total returns are not annualized.
*** After custodian fee credit and expense reimbursement, where applicable.
**** Rounds to less than $.01 per share.
+ The amounts shown are based on Common share equivalents.
++ Ratios do not reflect the effect of dividend payments to Auction Rate
Preferred shareholders; income ratios reflect income earned on assets
attributable to Auction Rate Preferred shares or Variable Rate Demand
Preferred shares, where applicable.
(a) Interest expense arises from payments to Variable Rate Demand Preferred
shareholders and the application of SFAS No. 140 to certain inverse
floating rate transactions entered into by the Fund, where applicable, as
both are more fully described in Footnote 1 - Variable Rate Demand
Preferred Shares and Inverse Floating Rate Securities, respectively.
(b) For the six months ended February 28, 2009.
See accompanying notes to financial statements.
113
Board Members & 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
(referred to herein as "independent board members") 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.
YEAR FIRST NUMBER PRINCIPAL
YEAR FIRST OF PORTFOLIOS OCCUPATION(S)
NAME, ELECTED OR IN FUND COMPLEX INCLUDING OTHER
BIRTHDATE POSITION(S) HELD APPOINTED OVERSEEN BY DIRECTORSHIPS
& ADDRESS WITH THE FUNDS AND TERM(1) BOARD MEMBER DURING PAST 5 YEARS
------------------------------------------------------------------------------------------------------------------------------------
INDEPENDENT BOARD MEMBERS:
o ROBERT P. BREMNER Private Investor and Management
8/22/40 Chairman of Consultant; Treasurer and Director,
333 W. Wacker Drive the Board 1997 193 Humanities Council of Washington D.C.
Chicago, IL 60606 and Board member
o JACK B. EVANS President, The Hall-Perrine Foundation, a
10/22/48 private philanthropic corporation (since
333 W. Wacker Drive Board member 1999 193 1996); Director and Vice Chairman, United
Chicago, IL 60606 Fire Group, a publicly held company;
Member of the Board of Regents for the
State of Iowa University System; Director,
Gazette Companies; Life Trustee of Coe
College and Iowa College Foundation;
Member of the Advisory Council of the
Department of Finance in the Tippie
College of Business, University of Iowa;
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.
o WILLIAM C. HUNTER Dean, Tippie College of Business,
3/6/48 University of Iowa (since July 2006);
333 W. Wacker Drive Board member 2004 193 formerly, Dean and Distinguished Professor
Chicago, IL 60606 of Finance, School of Business at the
University of Connecticut (2003-2006);
previously, Senior Vice President and
Director of Research at the Federal
Reserve Bank of Chicago (1995-2003);
Director (since 2004) of Xerox
Corporation; Director (since 2005), Beta
Gamma Sigma International Honor Society;
Director, SS&C Technologies, Inc. (May
2005-October 2005); formerly Director
(1997-2007), Credit Research Center at
Georgetown University.
o DAVID J. KUNDERT Director, Northwestern Mutual Wealth
10/28/42 Management Company; Retired (since 2004)
333 W. Wacker Drive Board member 2005 193 as Chairman, JPMorgan Fleming Asset
Chicago, IL 60606 Management, President and CEO, Banc One
Investment Advisors Corporation, and
President, One Group Mutual Funds; prior
thereto, Executive Vice President, Banc
One Corporation and Chairman and CEO, Banc
One Investment Management Group; Member,
Board of Regents, Luther College; member
of the Wisconsin Bar Association; member
of Board of Directors, Friends of Boerner
Botanical Gardens; member of Investment
Committee, Greater Milwaukee Foundation.
o WILLIAM J. SCHNEIDER Chairman of Miller-Valentine Partners
9/24/44 Ltd., a real estate investment company;
333 W. Wacker Drive Board member 1997 193 Senior Partner and Chief Operating Officer
Chicago, IL 60606 (retired, 2004) of Miller-Valentine Group;
Member, University of Dayton Business
School Advisory Council; member, Dayton
Philharmonic Orchestra Board; formerly,
member, Business Advisory Council,
Cleveland Federal Reserve Bank; formerly,
Director, Dayton Development Coalition.
114
YEAR FIRST NUMBER PRINCIPAL
YEAR FIRST OF PORTFOLIOS OCCUPATION(S)
NAME, ELECTED OR IN FUND COMPLEX INCLUDING OTHER
BIRTHDATE POSITION(S) HELD APPOINTED OVERSEEN BY DIRECTORSHIPS
& ADDRESS WITH THE FUNDS AND TERM(1) BOARD MEMBER DURING PAST 5 YEARS
------------------------------------------------------------------------------------------------------------------------------------
INDEPENDENT BOARD MEMBERS:
o JUDITH M. STOCKDALE Executive Director, Gaylord and Dorothy
12/29/47 Donnelley Foundation (since 1994); prior
333 W. Wacker Drive Board member 1997 193 thereto, Executive Director, Great Lakes
Chicago, IL 60606 Protection Fund (from 1990 to 1994).
o CAROLE E. STONE Director, Chicago Board Options Exchange
6/28/47 (since 2006); Commissioner, New York State
333 W. Wacker Drive Board member 2007 193 Commission on Public Authority Reform
Chicago, IL 60606 (since 2005); formerly, Chair New York
Racing Association Oversight Board
(2005-2007); formerly, Director, New York
State Division of the Budget (2000-2004),
Chair, Public Authorities Control Board
(2000-2004) and Director, Local Government
Assistance Corporation (2000-2004).
o TERENCE J. TOTH Director, Legal & General Investment
9/29/59 Management America, Inc. (since 2008);
333 W. Wacker Drive Board Member 2008 193 Managing Partner, Musso Capital Management
Chicago, IL 60606 (since 2008); Private Investor (since
2007); CEO and President, Northern Trust
Investments (2004-2007); Executive Vice
President, Quantitative Management &
Securities Lending (2004-2007); prior
thereto, various positions with Northern
Trust Company (since 1994); Member:
Goodman Theatre Board (Since 2004);
Chicago Fellowship Boards (since 2005),
University of Illinois Leadership Council
Board (since 2007) and Catalyst Schools of
Chicago Board (since 2008); formerly
Member: Northern Trust Mutual Funds Board
(2005-2007), Northern Trust Investments
Board (2004-2007), Northern Trust Japan
Board (2004-2007), Northern Trust
Securities Inc. Board (2003-2007) and
Northern Trust Hong Kong Board
(1997-2004).
INTERESTED BOARD MEMBER:
o JOHN P. AMBOIAN Chief Executive Officer (since July 2007)
6/14/61 and Director (since 1999) of Nuveen
333 W. Wacker Drive Board Member 2008 193 Investments, Inc.; Chief Executive Officer
Chicago, IL 60606 (since 2007) of Nuveen Asset Management,
Rittenhouse Asset Management, Nuveen
Investments Advisors, Inc. formerly,
President (1999-2004) of Nuveen Advisory
Corp. and Nuveen Institutional Advisory
Corp.(3)
115
NUMBER
OF PORTFOLIOS
NAME, YEAR FIRST IN FUND COMPLEX PRINCIPAL
BIRTHDATE POSITION(S) HELD ELECTED OR OVERSEEN OCCUPATION(S)
AND ADDRESS WITH THE FUNDS APPOINTED(4) BY OFFICER DURING PAST 5 YEARS
------------------------------------------------------------------------------------------------------------------------------------
OFFICERS OF THE FUNDS:
o GIFFORD R. ZIMMERMAN Managing Director (since 2002), Assistant
9/9/56 Chief Secretary and Associate General Counsel of
333 W. Wacker Drive Administrative 1988 193 Nuveen Investments, LLC; Managing Director
Chicago, IL 60606 Officer (since 2002), Associate General Counsel
and Assistant Secretary, of Nuveen Asset
Management; Vice President and Assistant
Secretary of NWQ Investment Management
Company, LLC. (since 2002), Nuveen
Investments Advisers Inc. (since 2002),
Symphony Asset Management LLC, and NWQ
Investment Management Company, LLC (since
2003), Tradewinds Global Investors, LLC,
and Santa Barbara Asset Management, LLC
(since 2006), Nuveen HydePark Group LLC
and Nuveen Investment Solutions, Inc.
(since 2007); Managing Director (since
2004) and Assistant Secretary (since 1994)
of Nuveen Investments, Inc.; formerly,
Managing Director (2002-2004), General
Counsel (1998-2004) and Assistant
Secretary of Nuveen Advisory Corp. and
Nuveen Institutional Advisory Corp.(3);
Chartered Financial Analyst.
o WILLIAM ADAMS IV Executive Vice President of Nuveen
6/9/55 Investments, Inc.; Executive Vice
333 W. Wacker Drive Vice President 2007 121 President, U.S. Structured Products of
Chicago, IL 60606 Nuveen Investments, LLC, (since 1999),
prior thereto, Managing Director of
Structured Investments.
o MARK J.P. ANSON President and Executive Director of Nuveen
6/10/59 Investments, Inc. (since 2007); President
333 W. Wacker Drive Vice President 2009 193 of Nuveen Investments Institutional
Chicago, IL 60606 Services Group LLC (since 2007);
previously, Chief Executive Officer of the
British Telecom Pension Scheme (2006-2007)
and Chief Investment Officer of Calpers
(1999-2006); PhD, Chartered Financial
Analyst, Chartered Alternative Investment
Analyst, Certified Public Accountant,
Certified Management Accountant and
Certified Internal Auditor.
o CEDRIC H. ANTOSIEWICZ Managing Director, (since 2004)
1/11/62 previously, Vice President (1993-2004) of
333 W. Wacker Drive Vice President 2007 121 Nuveen Investments, LLC.
Chicago, IL 60606
o NIZIDA ARRIAGA Vice President of Nuveen Investments, LLC
6/1/68 (since 2007); previously, Portfolio
333 W. Wacker Drive Vice President 2009 193 Manager, Allstate Investments, LLC
Chicago, IL 60606 (1996-2006); Chartered Financial Analyst.
o MICHAEL T. ATKINSON Vice President (since 2002) of Nuveen
2/3/66 Vice President Investments, LLC.; Vice President of
333 W. Wacker Drive and Assistant 2000 193 Nuveen Asset Management (since 2005).
Chicago, IL 60606 Secretary
o MARGO L. COOK Executive Vice President (since Oct 2008)
4/11/64 of Nuveen Investments, Inc.; previously,
333 W. Wacker Drive Vice President 2009 193 Head of Institutional Asset Management
Chicago, IL 60606 (2007-2008) of Bear Stearns Asset
Management; Head of Institutional Asset
Mgt (1986-2007) of Bank of NY Mellon;
Chartered Financial Analyst.
o LORNA C. FERGUSON Managing Director (since 2004), formerly,
10/24/45 Vice President of Nuveen Investments, LLC;
333 W. Wacker Drive Vice President 1998 193 Managing Director (since 2005) of Nuveen
Chicago, IL 60606 Asset Management; Managing Director
(2004-2005), formerly, Vice President
(1998-2004) of Nuveen Advisory Corp. and
Nuveen Institutional Advisory Corp.(3)
116
NUMBER
OF PORTFOLIOS
NAME, YEAR FIRST IN FUND COMPLEX PRINCIPAL
BIRTHDATE POSITION(S) HELD ELECTED OR OVERSEEN OCCUPATION(S)
AND ADDRESS WITH THE FUNDS APPOINTED(4) BY OFFICER DURING PAST 5 YEARS
------------------------------------------------------------------------------------------------------------------------------------
OFFICERS OF THE FUNDS:
o STEPHEN D. FOY Vice President (since 1993) and Funds
5/31/54 Vice President Controller (since 1998) of Nuveen
333 W. Wacker Drive and Controller 1998 193 Investments, LLC; Vice President (since
Chicago, IL 60606 2005) of Nuveen Asset Management;
Certified Public Accountant.
o WILLIAM T. HUFFMAN Chief Operating Officer, Municipal Fixed
5/7/69 Income (since 2008) of Nuveen Asset
333 W. Wacker Drive Vice President 2009 193 Management; previously, Chairman,
Chicago, IL 60606 President and Chief Executive Officer
(2002 - 2007) of Northern Trust Global
Advisors, Inc. and Chief Executive Officer
(2007) of Northern Trust Global
Investments Limited; CPA.
o WALTER M. KELLY Senior Vice President (since 2008), Vice
2/24/70 Chief Compliance President (2006-2008) formerly, Assistant
333 W. Wacker Drive Officer and 2003 193 Vice President and Assistant General
Chicago, IL 60606 Vice President Counsel (2003-2006) of Nuveen Investments,
LLC; Vice President (since 2006) and
Assistant Secretary (since 2008) of Nuveen
Asset Management.
o DAVID J. LAMB Senior Vice President (since 2009),
3/22/63 formerly Vice President (2000-2009) of
333 W. Wacker Drive Vice President 2000 193 Nuveen Investments, LLC; Vice President of
Chicago, IL 60606 Nuveen Asset Management (since 2005);
Certified Public Accountant.
o TINA M. LAZAR Senior Vice President (since 2009),
8/27/61 formerly, Vice President of Nuveen
333 W. Wacker Drive Vice President 2002 193 Investments, LLC (1999-2009); Vice
Chicago, IL 60606 President of Nuveen Asset Management
(since 2005).
o LARRY W. MARTIN Vice President, Assistant Secretary and
7/27/51 Vice President Assistant General Counsel of Nuveen
333 W. Wacker Drive and Assistant 1988 193 Investments, LLC; Vice President (since
Chicago, IL 60606 Secretary 2005) and Assistant Secretary of Nuveen
Investments, Inc.; Vice President (since
2005) and Assistant Secretary (since 1997)
of Nuveen Asset Management; Vice President
and Assistant Secretary of Nuveen
Investments Advisers Inc. (since 2002);
NWQ Investment Management Company, LLC
(since 2002), Symphony Asset Management
LLC (since 2003), Tradewinds Global
Investors, LLC, Santa Barbara Asset
Management LLC (since 2006) and of Nuveen
HydePark Group, LLC and Nuveen Investment
Solutions, Inc. (since 2007); formerly,
Vice President and Assistant Secretary of
Nuveen Advisory Corp. and Nuveen
Institutional Advisory Corp.(3)
o KEVIN J. MCCARTHY Managing Director (since 2008), formerly,
3/26/66 Vice President Vice President (2007-2008), Nuveen
333 W. Wacker Drive and Secretary 2007 193 Investments, LLC; Vice President, and
Chicago, IL 60606 Assistant Secretary, Nuveen Asset
Management, Rittenhouse Asset Management,
Inc., Nuveen Investment Advisers Inc.,
Nuveen Investment Institutional Services
Group LLC, NWQ Investment Management
Company, LLC, Tradewinds Global Investors
LLC, NWQ Holdings, LLC, Symphony Asset
Management LLC, Santa Barbara Asset
Management LLC, Nuveen HydePark Group, LLC
and Nuveen Investment Solutions, Inc.
(since 2007); prior thereto, Partner,
Bell, Boyd & Lloyd LLP (1997-2007).
117
NUMBER
OF PORTFOLIOS
NAME, YEAR FIRST IN FUND COMPLEX PRINCIPAL
BIRTHDATE POSITION(S) HELD ELECTED OR OVERSEEN OCCUPATION(S)
AND ADDRESS WITH THE FUNDS APPOINTED(4) BY OFFICER DURING PAST 5 YEARS
------------------------------------------------------------------------------------------------------------------------------------
OFFICERS OF THE FUNDS:
o JOHN V. MILLER Managing Director (since 2007), formerly,
4/10/67 Vice President (2002-2007) of Nuveen Asset
333 W. Wacker Drive Vice President 2007 193 Management and Nuveen Investments, LLC;
Chicago, IL 60606 Chartered Financial Analyst.
o GREGORY MINO Vice President of Nuveen Investments, LLC
1/4/71 (since 2008); previously, Director
333 W. Wacker Drive Vice President 2009 193 (2004-2007) and Executive Director
Chicago, IL 60606 (2007-2008) of UBS Global Asset
Management; previously, Vice President
(2000-2003) and Director (2003-2004) of
Merrill Lynch Investment Managers;
Chartered Financial Analyst.
o CHRISTOPHER M. ROHRBACHER Vice President, Nuveen Investments, LLC
8/1/71 Vice President (since 2008); Vice President and Assistant
333 W. Wacker Drive and Assistant 2008 193 Secretary, Nuveen Asset Management (since
Chicago, IL 60606 Secretary 2008); prior thereto, Associate, Skadden,
Arps, Slate Meagher & Flom LLP
(2002-2008).
o JAMES F. RUANE Vice President, Nuveen Investments, LLC
7/3/62 Vice President (since 2007); prior thereto, Partner,
333 W. Wacker Drive and Assistant 2007 193 Deloitte & Touche USA LLP (2005-2007),
Chicago, IL 60606 Secretary formerly, senior tax manager (2002-2005);
Certified Public Accountant.
o MARK L. WINGET Vice President, Nuveen Investments, LLC
12/21/68 Vice President (since 2008); Vice President and Assistant
333 W. Wacker Drive and Assistant 2008 193 Secretary, Nuveen Asset Management (since
Chicago, IL 60606 Secretary 2008); prior thereto, Counsel, Vedder
Price P.C. (1997-2007).
(1) For California Premium Income (NCU), California Dividend Advantage (NAC),
California Dividend Advantage 2 (NVX), California Dividend Advantage 3
(NZH), Insured California Dividend Advantage (NKL), and Insured California
Tax-Free Advantage (NKX), Board Members serve three year terms, except for
two board members who are elected annually by the holders of Preferred
shares. The Board of Trustees for NCU, NAC, NVX, NZH, NKL, and NKX is
divided into three classes, Class I, Class II, and Class III, with each
being elected to serve until the third succeeding annual shareholders'
meeting subsequent to its election or thereafter in each case when its
respective successors are duly elected or appointed, except two board
members are elected by the holders of Preferred shares to serve until the
next annual shareholders' meeting subsequent to its election or thereafter
in each case when its respective successors are duly elected or appointed.
For Insured California Premium Income (NPC) and Insured California Premium
Income 2 (NCL), the Board Members serve a one year term to serve until the
next annual meeting or until their successors shall have been duly elected
and qualified. The first year elected or appointed represents the year in
which the board member was first elected or appointed to any fund in the
Nuveen Complex.
(2) Mr. Amboian is an interested trustee because of his position with Nuveen
Investments, Inc. and certain of its subsidiaries, which are affiliates of
the Nuveen Funds.
(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.
118
Reinvest Automatically EASILY and CONVENIENTLY
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 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
greater of the net asset value or 95% of 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. If the Plan Agent begins purchasing Fund shares on
the open market while shares are trading below net asset value, but the Fund's
shares subsequently trade at or above their net asset value before the Plan
Agent is able to complete its purchases, the Plan Agent may cease open-market
purchases and may invest the uninvested portion of the distribution in
newly-issued Fund shares at a price equal to the greater of the shares' net
asset value or 95% of the shares' market value on the last business day
immediately prior to the purchase date. 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.
119
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.
120
NOTES
121
NOTES
122
NOTES
123
NOTES
124
NOTES
125
Glossary of TERMS USED in this REPORT
o AUCTION RATE BOND: An auction rate bond is a security whose interest
payments are adjusted periodically through an auction process, which
process typically also serves as a means for buying and selling the bond.
Auctions that fail to attract enough buyers for all the shares offered for
sale are deemed to have "failed", with current holders receiving a
formula-based interest rate until the next scheduled auction.
o 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 common share NAV or market price and reinvested dividends and capital
gains distributions, if any) over the time period being considered.
o AVERAGE EFFECTIVE MATURITY: The average of the number of years to maturity
of the bonds in a Fund's portfolio, computed by weighting each bond's time
to maturity (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 unless an escrow account has been
established to redeem the bond before maturity. The market value weighting
for an investment in an inverse floating rate security is the value of the
portfolio's residual interest in the inverse floating rate trust, and does
not include the value of the floating rate securities issued by the trust.
o INVERSE FLOATERS: Inverse floating rate securities are created by
depositing a municipal bond, typically with a fixed interest rate, into a
special purpose trust created by a broker-dealer. This trust, in turn, (a)
issues floating rate certificates typically paying short-term tax-exempt
interest rates to third parties in amounts equal to some fraction of the
deposited bond's par amount or market value, and (b) issues an inverse
floating rate certificate (sometimes referred to as an "inverse floater")
to an investor (such as a Fund) interested in gaining investment exposure
to a long-term municipal bond. The income received by the holder of the
inverse floater varies inversely with the short-term rate paid to the
floating rate certificates' holders, and in most circumstances the holder
of the inverse floater bears substantially all of the underlying bond's
downside investment risk. The holder of the inverse floater typically also
benefits disproportionately from any potential appreciation of the
underlying bond's value. Hence, an inverse floater essentially represents
an investment in the underlying bond on a leveraged basis.
o 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.
o MARKET YIELD (ALSO KNOWN AS DIVIDEND YIELD OR CURRENT YIELD): An
investment's current annualized dividend divided by its current market
price.
o NET ASSET VALUE (NAV): A Fund's NAV per common share is calculated by
subtracting the liabilities of the Fund (including any Preferred shares
issued in order to leverage the Fund) from its total assets and then
dividing the remainder by the number of common shares outstanding. Fund
NAVs are calculated at the end of each business day.
o 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.
o ZERO COUPON BOND: A zero coupon bond does not pay a regular interest
coupon to its holders during the life of the bond. Tax-exempt income to
the holder of the bond comes from accretion of the difference between the
original purchase price of the bond at issuance and the par value of the
bond at maturity and is effectively paid at maturity. The market prices of
zero coupon bonds generally are more volatile than the market prices of
bonds that pay interest periodically.
126
Other Useful INFORMATION
QUARTERLY PORTFOLIO OF INVESTMENTS AND PROXY VOTING INFORMATION
You may obtain (i) each Fund's quarterly portfolio of investments, (ii)
information regarding how the Funds voted proxies relating to portfolio
securities held during the twelve-month period ended June 30, 2008, and (iii) a
description of the policies and procedures that the Funds used to determine how
to vote proxies relating to portfolio securities 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 (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 100 F Street NE, Washington, D.C. 20549.
CEO CERTIFICATION DISCLOSURE
Each Fund's Chief Executive Officer has submitted to the New York Stock Exchange
(NYSE) 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.
COMMON AND PREFERRED SHARE INFORMATION
Each Fund intends to repurchase and/or redeem shares of its own common or
preferred stock in the future at such times and in such amounts as is deemed
advisable. During the period covered by this report, the Funds repurchased
and/or redeemed shares of their common and/or preferred stock as shown in the
accompanying table:
COMMON SHARES PREFERRED SHARED
FUND REPURCHASED REDEEMED
NPC 6,200 --
NCL 41,800 85
NCU 14,700 --
NVX 18,300 --
NZH 12,900 234
NKL 19,000 --
Any future repurchases and/or redemptions will be reported to shareholders in
the next annual or semi-annual report.
BOARD OF DIRECTORS/TRUSTEES
John P. Amboian
Robert P. Bremner
Jack B. Evans
William C. Hunter
David J. Kundert
William J. Schneider
Judith M. Stockdale
Carole E. Stone
Terence J. Toth
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
127
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.
Nuveen Investments is a global investment management firm that seeks to help
secure the long-term goals of institutions and high net worth investors as well
as the consultants and financial advisors who serve them. Nuveen Investments
markets its growing range of specialized investment solutions under the
high-quality brands of HydePark, NWQ, Nuveen, Santa Barbara, Symphony,
Tradewinds and Winslow Capital. In total, the Company managed $119 billion of
assets on December 31, 2008.
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.
Learn more about Nuveen Funds at: www.nuveen.com/cef
Share prices
Fund details
Daily financial news
Investor education
Interactive planning tools
EAN-B-0209D
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/CEF/Info/Shareholder.
(To view the code, 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 ("Board") 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, 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)
------------------------------------------------------------------------------------------------------------------------------------
February 28, 2009(5) $ 11,059 $ 0 $ 0 $ 850
------------------------------------------------------------------------------------------------------------------------------------
Percentage approved 0% 0% 0% 0%
pursuant to
pre-approval
exception
------------------------------------------------------------------------------------------------------------------------------------
August 31, 2008 $ 11,215 $ 0 $ 0 $ 800
------------------------------------------------------------------------------------------------------------------------------------
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
for agreed upon procedures engagements performed for leveraged funds.
(5) Fund changed fiscal year from August to February starting in 2009.
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 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 SERVICE PROVIDERS
--------------------------------------------------------------------------------------------------------------
February 28, 2009(1) $ 0 $ 0 $ 0
--------------------------------------------------------------------------------------------------------------
Percentage approved 0% 0% 0%
pursuant to
pre-approval
exception
--------------------------------------------------------------------------------------------------------------
August 31, 2008 $ 0 $ 0 $ 0
--------------------------------------------------------------------------------------------------------------
Percentage approved 0% 0% 0%
pursuant to
pre-approval
exception
--------------------------------------------------------------------------------------------------------------
(1) Fund changed fiscal year from August to February starting in 2009.
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 pre-approval 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 FEES OPERATIONS AND FINANCIAL PROVIDERS (ALL OTHER
BILLED TO FUND REPORTING OF THE FUND) ENGAGEMENTS) TOTAL
-----------------------------------------------------------------------------------------------------------------------------
February 28, 2009(1) $ 850 $ 0 $ 0 $ 850
August 31, 2008 $ 800 $ 0 $ 0 $ 800
"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.
(1) Fund changed fiscal year from August to February starting in 2009.
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 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, Jack B. Evans, Terence J. Toth, William J. Schneider and
David J. Kundert.
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 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 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 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:
TYPE OF ACCOUNT NUMBER OF
PORTFOLIO MANAGER MANAGED ACCOUNTS ASSETS*
--------------------------------------------------------------------------------
Scott R. Romans Registered Investment Company 28 $5.241 billion
Other Pooled Investment Vehicles 0 $0
Other Accounts 3 $.381 million
* Assets are as of February 28, 2009. 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 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 the 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 February 28, 2009, the
S&P/Investortools Municipal Bond index was comprised of 51,571 securities with
an aggregate current market value of $1,024 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. In connection with the acquisition of Nuveen
Investments, Inc., by a group of investors led by Madison Dearborn Partners in
November 2007, certain employees, including portfolio managers, received profit
interests in Nuveen's parent. These profit interests entitle the holders to
participate in the appreciation in the value of Nuveen beyond the issue date and
vest over five to seven years, or earlier in the case of a liquidity event.
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 February 28, 2009, 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
EQUITY
SECURITIES
BENEFICIALLY
OWNED IN
THE
REMAINDER
DOLLAR OF NUVEEN
RANGE OF FUNDS
EQUITY MANAGED BY
SECURITIES NAM'S
BENEFICIALLY MUNICIPAL
NAME OF PORTFOLIO OWNED IN INVESTMENT
MANAGER FUND FUND TEAM
-------------------------------------------------------------------------------------------------------------------------
Scott R. Romans Nuveen Insured California Tax-Free Advantage Municipal Fund $0 $10,001--$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. He has been Vice President
of NAM since 2004, Portfolio Manager since 2003, and was, formerly, Assistant
Vice President (2003-2004) and Senior Analyst (2000-2003). Currently, he manages
investments for 29 Nuveen-sponsored investment companies. He holds an
undergraduate degree from the University of Pennsylvania and an MA and PhD from
the University of Chicago.
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 registrant's 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/CEF/Info/
Shareholder and there were no amendments during the period covered by this
report. (To view the code, 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/ Kevin J. McCarthy
-----------------------------------------------
Kevin J. McCarthy
Vice President and Secretary
Date: May 8, 2009
--------------------------------------------------------------------
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: May 8, 2009
--------------------------------------------------------------------
By (Signature and Title) /s/ Stephen D. Foy
-----------------------------------------------
Stephen D. Foy
Vice President and Controller
(principal financial officer)
Date: May 8, 2009
--------------------------------------------------------------------